Regina v Ronen

[2004] NSWSC 1285

Reported Decision: 211 FLR 281

Supreme Court

CITATION:	Regina v Ronen & Ors [2004] NSWSC 1285
HEARING DATE(S):
JUDGMENT DATE:	15 March 2004
JUDGMENT OF:	Whealy J at 1
DECISION:	The applications are dismissed
CATCHWORDS:	Indictiment - bad for duplicity - oppressive - Conspiracy to defraud - nature of charge - Deprivation or imperilment - two charges? - Crimes Act (Cth) s 29D and s 86(2)
LEGISLATION CITED:	Crimes Act 1914
CASES CITED:	Petroulias v Wills NSWSC 1190 per Simpson J Wills v Petroulias [2003] NSWCA 390 Johnson v Miller (1937) 59 CLR 467 S v Regina (1989) 168 CLR 266 King v Regina (1986) 161 CLR 423 Saffron (1989) 17 NSWLR 395 Stanton v Abernathy (1990) 19 NSWLR 656 Walsh v Tattersall (1996) 188 CLR 77 The Law of Criminal Conspiracy by Peter Gillies 2nd Edition 1990 at p 216 Gerakiteys v The Queen (1983) 153 CLR 317 Griffiths (1966) 1 QB 589 Mok (1987) 27 A Crim R 438 Peters v The Queen (1998) 192 CLR 493 R v Ghosh (1982) QB 1053 Spies v The Queen (2000) 201 CLR 603 at 603.1 R v Iannelli (2003) 56 NSWLR 247 R v Scott (1975) AC 819 Caratti v R (2000) WASCA 279
PARTIES :	Regina v Ida Ronen Regina v Nitzan Ronen Regina v Izhar Ronen
FILE NUMBER(S):	SC 70222/03; 70032/03; 70223/03
COUNSEL:	Mr T. Game SC; Ms S, McNaughton - Crown Mr R. Richter QC; Mr N. Rosenbaum - Accused Ida Ronen Mr I. Hill QC; Mr E. Power - Accused Nitzan Ronen Mr. R. Van de Wiel QC; Mr P. Jones - Accused Izhar Ronen
SOLICITORS:	Ms P. Musgrave - Cth DPP Watsons Solicitors - Accused

LOWER COURTJURISDICTION:	Local Court
LOWER COURT FILE NUMBER(S):
LOWER COURT JUDICIAL OFFICER :

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
CRIMINAL LIST

WHEALY J

MONDAY 15 March 2004

70032/03 - REGINA v Nitzan RONEN
70222/03 - REGINA v Ida RONEN
70223/03 - REGINA v Izhar RONEN

JUDGMENT - Argument re Indictment

1 HIS HONOUR: There is before the Court for determination an argument relating to the indictment, the particulars of the indictment and the nature of the case the Crown proposes to bring before the jury. Initially, the accused argued that the indictment should be quashed on the basis that it was oppressive; alternatively, the indictment and particulars were said to be guilty of duplicity requiring the Crown to elect for a specific particularisation of the agreement. This, it was argued, was required to make it clear whether the Crown is alleging deprivation or imperilment. I shall in due course explain in more detail the way in which the issues have arisen.

2 As the argument progressed, however, it became clear that, from the perspective of the accused, the issues had become more refined and more precise. There remain essentially two points at issue. The first I shall describe as the major argument. The second, without belittling its importance, I shall describe as the minor argument.

The major argument

3 The major argument focuses on whether the Crown, having regard to the indictment and the particulars, must now elect as to the nature of the case it proposes to present. The basis of this argument is the assertion that the indictment, when read with the particulars, charges two substantive offences and is for that reason bad for duplicity.

The Crown case

4 On 2 February 2004, an indictment was presented against each of the accused and each was arraigned on that occasion. The indictment charges that Ida Ronen, Nitzan Ronen and Izhar Ronen, between about 1 October 1991 and 15 September 1995, at the Sydney in the State of New South Wales, did conspire with each other to defraud the Commonwealth, namely the Commissioner of Taxation, contrary to s 86A of the Crimes Act 1914. There is a further charge that Ida Ronen, Nitzan Ronen and Izhar Ronen, between about 16 September 1995 and 5 February 2001 at Sydney in the State of New South Wales, did conspire with each other and George Segal to commit an offence against s 29D of the Crimes Act 1914, that is to defraud the Commonwealth, namely the Commissioner of Taxation, contrary to s 86(2) of the Crimes Act 1914.

5 The nature of the Crown case may be briefly stated. It is set out, however, in greater detail in a document that has been placed before me and described as “an overview of the Crown case”.

6 In essence, the case involves an allegation of conspiracy to defraud the Commonwealth of income tax between 1991 and February 2001, involving income generated by four retail outlets associated with the accused. In one manner or another, each of the accused were or are directors and shareholders of a number of companies involved in the retail and wholesale clothing industry. Dolina Enterprises, Dolina Fashion Group and a joint venture (all collectively known as "Dolina Australia") were involved in the manufacture and sale of garment retailing through major outlets such as Coles/Myer, David Jones and Rockmans. These sales, in the main, did not involve cash sales.

7 However, in addition to the sales at the major outlets, Nitzan and Izhar, through their companies, supplied garments to four smaller retail outlets. These were managed by their mother, the accused Mrs Ida Ronen. Those outlets retailed garments to the public generally. The retail outlets were Ronen Young Fashions at 216-224 Commonwealth Street, Surry Hills; Dolina On Fovo at 17-51 Foveaux Street, Surry Hills; Fashion Bargains at 1-15 Foveaux Street, Surry Hills; and Warehouse at 132-142 Epsom Road, Rosebery. The last three businesses returned their income for income tax purposes through On Fovo Pty Limited. The income of Ronen Young Fashions was returned in the tax return of Mrs Ida Ronen.

8 As I understand the Crown case, it is said that customers of the four retail outlets paid for the garments by cheque, EFTPOS, credit or cash. The gravamen of the offence is that Mrs Ronen, on behalf of herself and her sons, skimmed from the takings most, if not all, of the cash; and diverted it to other purposes. For example, it is alleged that at the time that the skim of cash takings was brought to a halt in February 2001, only 10 percent was being banked and the remaining 90 percent was being distributed directly to the Ronens.

9 There is no need at this stage to detail the way the alleged skim took place. It is the Crown case, however, that it took place at Mrs Ronen's premises at Thornton Street, Darling Point, and that records were kept at her apartment showing the actual takings of each retail outlet. The reduced amount of cash, together with cheques, would then be sent to be deposited at the bank through employees of the Dolina Group. The amounts returned by On Fovo Pty Limited and Mrs Ronen represented only the moneys banked and not the larger amounts of cash skimmed and kept by or on behalf of each of the accused. The red books seized at Mrs Ronen’s apartment contained a generally consistent system of recording both the actual takings of the retail outlets and the split of the cash between Nitzen, Izhar and, at various times, Mrs Ronen herself.

10 The Crown case is based in part on a significant body of material that was seized on 7 February 2001 by way of search warrant. There are also a significant number of telephone calls intercepted, the intercepts centring on Mrs Ronen's home telephone at her premises at Darling Point. There is, of course, other evidence, but I need not pause to detail it at this stage.

11 For completeness, I should indicate that the conspiracy alleged by the Crown is represented by two counts in the indictment in order to reflect a change made to the name and precise wording of the section under which the first count was drafted. This came into effect at about the time of the commencement date of the second count.

12 I turn now to the particulars of the conspiracy. This is a document prepared by the Crown. It is a detailed document and I do not proposed to set it out in full. It provides at the commencement: -

“The conspiracy alleged was an agreement between about October 1991 and the date of the arrest of the accused persons, namely 7 February 2001, to defraud the Commonwealth of income tax by concealing from the revenue a substantial proportion of cash income from the takings of four retail clothing outlets (as those outlets came into existence) associated with the accused persons Ida Ronen, Nitzan Ronen and Izhar Ronen.”

13 The particulars gave details of the four retail outlets. The first was identified as “Ronen Young Fashions” (RYF) a business owned and managed by Ida Ronen. The remaining three outlets were said to be businesses owned by On Fovo Pty Limited (On Fovo) and managed by Ida Ronen. The parties to the agreement were identified as each of the accused, it being alleged that the three individuals remained parties to the conspiracy throughout its duration.

14 The particulars then provide detail of the concealment of cash allegedly effected by the accused Ida Ronen. This was said to usually involve the following: -

“(i) All cash taking were delivered to or collected by Mrs Ronen and taken to her home prior to them being banked.
(ii) Mrs Ronen took out a substantial proportion of cash which was not banked in the ordinary course of business.
(iii) Mrs Ronen caused only a limited proportion of cash actually taken to be banked in the ordinary course of business
(iv) A substantial proportion of the unbanked cash was distributed by Mrs Ronen to herself, Nitzan Ronen and Izhar Ronen.
(v) The distribution was made according to a formula or formulae.
(vi) Mrs Ronen recorded the actual takings and subsequent distribution of cash in a set of books kept by her at her home.
(vii) Regular accounting and reporting between the Ronens occurred, at least during the period of surveillance (that being from the beginning of April 2000 to 7 February 2001), as to actual takings and proposed distribution of cash.”

15 The particulars indicated that, so far as the cash was concerned, only the banked cash was recorded in the books of account of RYF and On Fovo, and only this proportion was declared as income. Further, the particulars identified, at least during the period of surveillance, that a substantial proportion of the unbanked cash was remitted overseas on behalf of the accused in a manner such as to make it undetectable by the authorities. Again, during the period of surveillance at least, monies to be distributed to Mrs Ronen’s sons were retained by her in a safe in her bedroom until distributed. Bundles of money to be distributed to Nitzan and Izhar were wrapped in paper on which were recorded details, including the break down of the total amounts.

16 The following is then stated at page 2 of the particulars: -

“The unbanked cash was not declared as income by On Fovo Pty Limited, Mrs Ronen, Nitzan Ronen or Izhar Ronen, all of whom filed or caused to be filed tax returns during the relevant period (at least from the financial year ending 30 June 1993), up to and including the financial year ending 30 June 1999. The parties intended to deprive the Commonwealth of income tax or at least the opportunity to obtain income tax in relation to the unbanked cash (underlining added).”

17 Finally, there are particulars given of particular steps taken in furtherance of the conspiracy from 1 July 2000. These steps came about as a consequence of the introduction of the Goods and Services Tax at that time. One additional step involved Mrs Ronen’s de facto husband, George Segal, assisting Mrs Ronen in making additional calculations taking into account the GST. These calculations were recorded in computer spread sheets produced by a computer kept at their home. The second step taken was the creation of a set of false till rolls for each retail outlet, reflecting a reduced amount of cash than that actually taken by each retail outlet. These false till rolls were created on a cash register kept at Mrs Ronen’s apartment.

18 From the foregoing, it will be seen that the Crown case is that the accused agreed to defraud the Commonwealth by agreeing to dishonestly deprive the Commonwealth of, or to jeopardise the Commonwealth’s entitlement to, income tax. The means by which the agreement was effected was by concealing from, and by failing to declare to, the Australia Tax Office, a substantial proportion of the cash income on the takings of the four retail clothing outlets (as these outlets came into existence).

Arguments on behalf of the accused

19 Mr Richter QC provided the principal arguments on which each of the accused relied in relation to this first matter. Senior counsel began his argument by referring the Court to a series of New South Wales decisions given in recent times involving one Nicholas Petroulias. There are two decisions of Simpson J dated 16 December 2002 and 3 March 2003. There are two decisions of the Court of Appeal consequent upon Simpson J’s decisions. These are decisions given 3 October and 22 December 2003. There is no need for me to refer in great detail to the course of and result of these decisions. It is sufficient to say that Simpson J had before her an argument on a point of law arising out the committal proceedings involving Mr Petroulias. In that case the charge, ultimately before the magistrate at committal, was a charge under s 29D of the Crimes Act 1914. This was a charge: -

“That the defendant did defraud the Commonwealth, namely the Australian Taxation Office, in that while an officer of the Australian Taxation Office he did by dishonest means assist taxpayers to avoid the payment of tax.”

20 Simpson J’s determination focussed essentially upon the arguments relating to the charge as framed before the learned magistrate at committal. Her Honour said [Petroulias v Wills NSWSC 1190] at para 49: -

“I am satisfied that in order to make out that charge - as framed - it will be necessary that the Crown establish the tax was in fact payable, and was in fact avoided by the applicant’s dishonest actions. The charge as framed is not apt to encompass, as the subject matter of the fraud – that is, the right or opportunity or valuable thing of which the Commonwealth was allegedly defrauded – the right or opportunity to litigate the liability to taxation of the person seeking the rulings.”

21 Her Honour held that, in the absence of evidence that the tax rulings were incorrect, and in the absence of evidence that the tax would have been payable in the circumstances outlined in the applications, it was not open to the magistrate to commit the applicant for trial on the s 29D charge as formulated. This, her Honour said, was an error of law on the part of the magistrate.

22 In her second decision, Simpson J, in the exercise of her discretion, quashed the order of the magistrate committing the applicant for trial on the charge under s 29D of the Crimes Act 1914 (Cth). In the Court of Appeal, the Court by its first ruling (Wills v Petroulias [2003] NSWCA 286) granted leave to appeal and allowed the appeal with costs. The Court set aside the order quashing the committal.

23 In so doing, Spigelman CJ (with whom Handley and Santow JJA agreed) said at paras 72 and 73: -

“72. It is in my opinion sufficient for the purposes of the element of deprivation, to establish that a lawful right, interest or opportunity which had not previously been resolved one way or another has been resolved, so that its very resolution constitutes the relevant detriment. That will be sufficient so long as there is a bona fide claim which, if correct, would be of value.
73. To use the terminology of King CJ in Kastratovic at 65, the Crown must establish a ‘genuine dispute’. To use the terminology of Toohey and Gaudron JJ in Peters at (25), the Crown must establish that it was ‘genuinely asserting’ a position. It is enough for that purpose to establish that a particular position was being taken by the Commission of Taxation with respect to these matters. It is not, in my opinion, necessary to establish that the position is in some sense a justifiable or correct or even arguable position, although it is likely that in the course of establishing what the belief is, some of the arguments supporting the position will appear in the relevant evidence.”

24 Spigelman CJ also held (at paras 50 and 51) that the original formulation of the charge, that the opponent had assisted “taxpayers to avoid the payment of taxation”, required the claimant to demonstrate an actual loss of revenue. In this regard, the Court of Appeal did not differ from the view taken by Simpson J in relation to the actual charge as originally framed at committal.

25 There is no need for me to refer to the complications which made necessary the second decision of the Court of Appeal (Wills v Petroulias [2003] NSWCA 390) since nothing in that decision bears on the present argument. In the result, however the matter was remitted to the magistrate to make the order of committal authorised by law and to amend the order accordingly.

26 The thrust of Mr Richter QC’s argument, focus, however, not on the outcome of this spate of litigation but on the rationale behind the proposition which found favour with Simpson J and which was not disturbed by the Court of Appeal in the subsequent appeals. This proposition was that the particular charge under s 29D, framed in the manner it had been, required the Crown to establish that the tax was in fact payable and in fact, avoided by the applicant’s dishonest actions. In other words, the particular charge required that the Crown prove that the defendant assisted in a situation which resulted in an actual deprivation, that is a loss of revenue. The corollary, to this proposition, advanced by Mr Richter, is that in a fraud charge where what is alleged is simply an imperilment then the charge needs to be framed in that way to reflect the difference between deprivation and imperilment.

27 Against the background of this claimed distinction in relation to a fraud charge, senior counsel’s argument progressed as follows: So it is that in relation to a conspiracy to defraud charge, it will be necessary for the prosecution to specify whether the alleged conspirators agreed to defraud the Commonwealth of income tax by agreeing to deprive it of revenue in that regard. If that is not the case, and the prosecution case is simply that the conspirators agreed merely to imperil the interests of the Commonwealth, then the case needs to be specified in that way.

28 Mr Richter argued that, as a consequence, the two situations related in fact to two different agreements. An agreement to deprive the Commissioner of Taxation, he said, was not the same as an agreement to imperil the Commissioner in relation to tax to which he might be entitled. Viewed in this way, agreements of the two kinds constituted different substantive offences. It was for this reason that there was duplicity in the charge represented by the indictment in the present case and the particulars. Which case did the accused have to meet? Was it a case where it was said the accused agreed to defraud the Commonwealth by agreeing dishonestly to deprive the Commonwealth of tax? Or was it a case where the agreement was one to jeopardise dishonestly the Commonwealth’s entitlement to income tax? Because these two agreements are different and because they reflect different substantive offences, there is a need, so it was argued, for the prosecution to elect.

Duplicity

29 The relevant group of principles which underpin Mr Richter’s submissions relate to the need for the provision of proper particulars and the avoidance of duplicity both in summary proceedings and trials on indictment. These principles are clearly understood and have not been put in issue on this application.

30 The principles as stated in an abundance of authorities but the following will be sufficient for present purposes: Johnson v Miller (1937) 59 CLR 467; S v Regina (1989) 168 CLR 266; King v Regina (1986) 161 CLR 423; Saffron (1989) 17 NSWLR 395; Stanton v Abernathy (1990) 19 NSWLR 656; Walsh v Tattersall (1996) 188 CLR 77.

31 These principles are designed to enable a defendant to know precisely the charge brought against him and to prevent a situation arising where a defendant cannot ascertain either on the face of the information, indictment or otherwise, what the precise offence may be. The principles are designed essentially to prevent unfairness and prejudice.

32 A very clear example is provided in Johnson v Miller. There the defendant was charged with a breach of the licensing laws in circumstances where some 30 persons were observed leaving his licensed premises during prohibited hours. The charge, however, was that only one offence had been committed. The prosecution refused to tell the defendant which of the 30 people was the one intended to be relied upon for the purposes of the prosecution. It was impossible for the defendant to prepare his defence in those circumstances. The position in that case gives a very clear example of the importance of the principles of fair conduct requiring particularisation and the need to avoid duplicity.

33 The principles relating to duplicity apply in the conspiracy context although reported cases confirming duplicity are not common (The Law of Criminal Conspiracy by Peter Gillies 2nd Edition 1990 at page 216). It is important to note that in the reported cases where a charge has been held to be not duplex, either on its own account or read in the light of particulars, the issue has often in fact been identified as one of determining whether the prosecution has failed to prove the conspiracy alleged because it has in fact proved several different conspiracies. The issue in cases of this kind has often been found, as a consequence, not to be one of duplicity but one of proof of the charge alleged (see Gerakiteys v The Queen (1983) 153 CLR 317; Griffiths (1966) 1 QB 589; Mok (1987) 27 A Crim R 438; Saffron (supra) in the judgment of Hope JA at 421 FF 426).

Resolution of the Issues

34 The starting point is the acknowledgement that neither charge is in any way duplicitous on its face. Mr Richter does not assert otherwise. The essential question is whether the one sentence in the particulars: -

“The parties intended to deprive the Commonwealth of income tax or at least the opportunity to obtain income tax in relation to the unbanked cash.”

brings about a situation where the charge relates to two different conspiracies.

35 The first broad area argued by Mr Richter is a conceptual one. But I do not think the conceptual argument has been placed on a sound basis. The first analogy Mr Richter advanced was that of a charge of murder. In relation to such a charge a jury might be satisfied beyond reasonable doubt that an accused had the requisite intention to sustain a conviction for murder where there was, for example, either an intention to kill or an intention to cause grievous bodily harm. However, he argued – no doubt correctly –that a charge of conspiracy to murder could only be founded on the basis of an agreement between one or more persons to kill the victim. If the agreement was simply to cause grievous bodily harm to the intended victim, this could not sustain a charge of conspiracy to kill.

36 This argument is plainly correct so far as it goes. But it cannot, in my opinion, aid in relation to the present problem. Like so many arguments by analogy, it is in truth a misleading analogy. The only intention that will sustain a conviction for conspiracy to murder is the intent to kill because the conspiracy is to bring about the death of the victim. An intent to inflict grievous bodily harm, as a matter of logic, does not reflect the consequence intended. However, in the present case the intention in the offence of conspiracy to defraud is the intention to place the property of the Commonwealth in jeopardy. This is clear from the authorities I will later discuss. A better analogy, in my view, albeit perhaps an imperfect one, is the illustration of an agreement between one or more persons to kill a third party either by means of shooting or stabbing to death. This illustration provides an example of but one conspiracy even though two possible methods of death are contemplated. An intention to deprive the Commonwealth of income tax or at least the opportunity to obtain income tax is, as a matter of logic and of expression, an apt method of describing an intention to place the property of the Commonwealth in jeopardy. There is however but one conspiracy not two.

37 Secondly, Mr Richter sought to draw conceptual comfort from the distinction purportedly made by Simpson J in Petroulias. That case, however, turned upon the manner in which the charge had been framed at committal. Her Honour held, as I have indicated earlier, that the particular form of the charge required proof of the avoidance of tax. That is an understandable conclusion having regard to the form of the charge. But it does not at all follow where a charge of conspiracy to defraud is brought that the existence of an intention to deprive the Commonwealth of income tax or at least the opportunity to obtain income tax posits the existence of two separate agreements. I do not understand Simpson J’s decision as bearing on that issue at all. Nor do I consider that the point involved in her decision necessarily involved the proposition and corollary at the core of Mr Richter’s dichotomy between deprivation and imperilment.

38 There is a second basis which compellingly refutes Mr Richter’s argument. This relates to the decision of the High Court in Peters v The Queen (1998) 192 CLR 493. In that case, the appellant, a solicitor, stood trial in the County Court of Victoria on charges of conspiracy to defraud the Commonwealth. There was also a charge of conspiracy to pervert the course of justice but there was in an acquittal on that charge. The appellant however, was convicted of conspiracy to defraud. His appeal against conviction was dismissed by the Court of Appeal of the Supreme Court of Victoria as was his appeal to the High Court.

39 The particular charge of conspiracy to defraud arose out of a number of sham transactions created to disguise the assessable income of the appellant’s co-conspirator. The appellant’s case before the jury was that he was not party not any agreement to conceal the income by the sham transactions but was, as he claimed, merely acting as the solicitor in the transactions.

40 The precise issue which arose on the appeal related to the directions given by the trial judge. He had given directions in line with the decision of the English Court of Appeal in R v Ghosh (1982) QB 1053. The jury were instructed that they had to be satisfied that what the appellant agreed to do was dishonest by the current standards of ordinary and reasonable honest people and, if it was, the appellant must have realised he was dishonest by those standards. The point of contention in the various Courts of Appeal was that the trial judge misdirected the jury as to the test of dishonesty. The joint judgment of Toohey and Gaudron JJ (with whom Kirby J agreed) concluded that in the case of conspiracy to defraud it will ordinarily be sufficient for a judge to direct a jury as to the facts they must find if the agreed means are to be categorised as dishonest. Alternatively, it will be sufficient to instruct the jury that, if satisfied as to those facts, they will be satisfied that the agreed means were dishonest. Their Honours thought that it was only in the borderline case that it would be necessary for the question whether the means were to be so categorised to be left to the jury. It was in this area only that their Honours differed from the approach taken by McHugh J and Gummow J [para 34 at page 510].

41 McHugh J (with whom Gummow J agreed) did not consider that there was any need for the trial judge to have directed the jury that they had to be satisfied beyond reasonable doubt that what was intended to be done was dishonest according to the standard of ordinary reasonable honest people in the community and that the accused knew that what was intended was dishonest by those standards. This direction was unduly favourable to the appellant. His Honour however agreed that dishonestly per se was not a separate element of the crime of conspiracy to defraud.

42 It will be seen accordingly, that the joint judgment and that of Justice Kirby carried the day on the point. In the event, however, the appellant, as I have said, was unsuccessful.

43 The approach taken by Toohey and Gaudron JJ was endorsed in the later decision of Spies v The Queen (2000) 201 CLR 603 at 603.1; (see also R v Iannelli (2003) 56 NSWLR 247).

44 The matters at issue in Peters required the High Court to examine carefully the ingredients in a charge of conspiracy to defraud.

45 The joint judgment of Toohey and Gaudron JJ addressed the issue of dishonesty generally in its criminal context. Their Honours concluded that there were both incongruities and practical difficulties with the Ghosh test. Further, their Honours considered that the question as to the nature of the directions which should have been given to the jury in the instant trial with respect to dishonesty was to be answered by reference to the elements of the offence of conspiracy to defraud and the issues which arose at trial. Their Honours noted that in R v Scott (1975) AC 819 Viscount Dilhorne had said: -

“To defraud ordinarily means …to deprive a person dishonestly of something which is his or something to which he is or would or might but for the perpetration of the fraud be entitled.”

46 Their Honours noted in relation to this statement, at para 21: -

“The clear focus of that statement is that, for an agreement to constitute a conspiracy to defraud, it must be an agreement to bring about a result by dishonest means – means which, as that case decides, do not necessarily involve deception.”

47 The joint judgment then continued in its analysis of the question as to whether dishonesty is or is not a separate and distinct element of the offence of conspiracy to defraud and whether it must be proved as such. In conducting this analysis their Honours made a number of general observations about the elements of the offence of fraud and those elements in the context of conspiracy to defraud. At para 26 their Honours said: -

“Another matter which should be noted is that it is misleading to speak in terms of the purpose of a conspiracy to defraud, particularly as the purpose of the conspirators may be quite different from the fraud perpetrated. The purpose of conspirators is usually to obtain some financial advantage; the fraud, on the other hand, is in depriving others of their property or of the opportunity to protect their interests. And, as it is pointed out in Archbold , the conspirators may never intend or, even, foresee the probability that others will suffer economic loss. Rather, they may genuinely believe that there will be no loss because their venture will be brought to a successful financial conclusion to the advantage of all concerned, even those whose interests have been put at risk.”

48 Their Honours then examined the statement by the Model Criminal Code Officers Committee which had contended that dishonesty was an essential element of conspiracy to defraud. The joint judgment noted two difficulties in relation to the views which had been expressed. In relation to the second of these, their Honours (at para 30) said: -

“The second difficulty with the statement of the Model Criminal Code Officers that it is too broad to define conspiracy to defraud by reference to an intention to inflict economic loss or to imperil the economic interests of others is that it tends to assume that fraud does not involve an element of dishonesty over and above the use of dishonest means. As has already been pointed out, there are difficulties in attempting an exhaustive statement of what is involved in the notion of defrauding or in the offence of conspiracy to defraud. Ordinarily, however, fraud involves the intentional creation of a situation in which one person deprives another of money or property or puts the money or property of that other person at risk or prejudicially affects that person in relation to ‘some lawful right, interest, opportunity or advantage’, knowing that he or she as no right to deprive that person of that money or property or to prejudice his or her interests.” (Footnotes omitted)

49 Finally, their Honours said at para 33: -

“As already explained, ‘dishonesty’ does not appear in the statute establishing the offence of conspiracy to defraud the Commonwealth. But when properly analysed, the offence of conspiracy to defraud involves dishonesty at two levels. First, it involves an agreement to use dishonest means. Ordinarily, the means will be dishonest if they assert as true something which is false and which is known to be false or not believed to be true or if they are means which the conspirators know they have no right to use or do not believe they have any right to use the means in question. And quite apart from dishonest means, the offence involves an agreement to bring about a situation prejudicing or imperilling existing legal rights or interests of others. That, too, is dishonest by ordinary standards. If those matters are properly explained to a jury, further direction that the accused must have acted dishonestly is superfluous.”

50 The judgment of McHugh J contains an extremely thorough analysis of the offence of conspiracy to defraud both historically and conceptually. One particular matter analysed by McHugh J was the difficult area of intention in cases of conspiracy to defraud where relevant harm is suffered only by a person whose person or interests were not the object of the agreement. His Honour concluded (at para 69) that, although, it would be wrong to impute a constructive intention to defendants charged with conspiracy, it may nevertheless have been the situation that they intended to defraud a person even though that person or his or her interests were not the object of the conspiracy. At para 68 his Honour had said: -

“But this statement, although correct so far as it goes, overlooks the fact that a jury could find that the X company must inevitably have suffered loss or been prejudiced by the conspiracy and that the defendants knew it. It is no misuse of language in that context to say that the defendants intended to cause damage to the X company. At all events, a jury could find from those facts that the defendants intended to cause harm to the X company. No doubt when a person intends to do something, ordinarily he or she acts in order to bring about the occurrence of that thing. But a person may intend to do something even though it is the last thing that he or she wishes to bring about. Intention in this context is broader than a person’s inclination to act to achieve a result that he or she believes is desirable. If a person does something that is virtually certain to result in another event occurring and knows that event is certain or is virtually certain to occur, for legal purposes at least he or she intends it to occur.” (footnotes omitted)

51 McHugh J then went to examine the history of the crime of conspiracy to defraud and to examine its elements. At paras 73 and 74, McHugh J said: -

“73. Although most cases of conspiracy to defraud involve an agreement to use dishonest means which has the effect of inflicting economic loss on a third party, the infliction of such loss is not an essential element of the offence. It is sufficient that the conspirators intended to obtain some advantage for themselves by putting another persons property at risk or depriving another person of a lawful opportunity to obtain or protect property . (Underlining added).
74. Thus, in most cases, a conspiracy to defraud arises when two or more persons agree to use dishonest means with the intention of obtaining, making use of or prejudicing another persons economic right or interest or inducing another person to act or refrain from acting to his or her economic detriment…But in the vast majority of cases, conspiracies to defraud concern rights or interests having an economic value.”

52 His Honour then undertook an examination of the mental element in the crime of conspiracy to defraud. Again, his Honour was examining this in the light of the question whether dishonesty and knowledge of dishonesty were or were not elements of the offence. At para 79, McHugh J noted that proof of a conscious design on the point of the conspirators to use dishonest means is essential to proving the change. McHugh J said however, at para 84: -

“In most cases of conspiracy to defraud, to prove dishonest means the Crown will have to establish that the defendants intended to prejudice another person’s right or interest or performance of public duty by:

· making or taking advantage of representations or promises which they knew were false or would not be carried out;

· concealing facts which they had a duty to disclose; or

· engaging in conduct which they had no right to engage in.”

53 And at para 85 McHugh J concluded: -

“It follows that the mental element of the crime of conspiracy to defraud is the intention to prejudice the interests of a third person by the use of means that are dishonest.”

54 McHugh J then examined the trial judge’s directions in the appeal before the High Court. During the course of this examination, his Honour said (at para 88): -

“The case for the prosecution was the appellant agreed with Spong and others to conceal the correct amount of Spong’s income by sham mortgage transactions and that they intended by those means to deprive the Commissioner of Taxation of the tax payable on that income or alternatively to make it difficult for the Commissioner to determine the taxable income of Spong. Proof of those facts constituted a conspiracy to defraud the Commonwealth, and the trial judge was bound to tell the jury that the offence was made out if those facts were proved.”

55 McHugh J in fact formulated a direction he thought appropriate. It included the following direction: -

“Third, in entering into the agreement they intended to prevent the Commissioner from collecting the tax that was or might be payable on those monies or alternatively they intended to make it more difficult for the Commissioner to determine the taxable income of Spong.”

56 His Honour found that the directions which the trial judge had given were in fact unduly favourable to the appellant and that therefore the fact that the jury had been directed in accordance with Ghosh constituted, in the end, no miscarriage of justice.

57 A reading of the various passages which I have set out in detail above, and indeed a consideration of the principles revealed by those passages, persuades me that the form of the particulars in the present matter does not introduce duplicity. Indeed, the method of statement of those particulars precisely accords with the identification of an essential ingredient in the charge of conspiracy to defraud. As McHugh J observed at para 90 of Peters, the trial judge in that case should have directed the jury that they could find the accused guilty if the prosecution had established beyond reasonable doubt that the accused, and at least one other of the parties to the alleged agreement, intended to deprive the Commissioner of the income tax payable on monies earned by Mr Spong or to prejudice the collection of that income tax by using sham transactions to conceal Spong’s ownership of the money.

58 Of course, it is highly improbable that conspirators proposing to conceal the existence of income from the Commissioner of Taxation would sit down and discuss whether their intention was one that might be described either in terms of deprivation or imperilment. That is very much the point of the observations contained in para 26 of the joint judgment in Peters; and of McHugh J’s remarks at para 68. On the other hand, the proper classification which may flow from an examination of all that co-conspirators do in furtherance of the agreement representing the conspiracy may be capable of satisfying a jury beyond reasonable doubt that the relevant intention involved in the use of the dishonest means may be properly stated, in the broader context, as one which had the object of depriving the Commonwealth of income tax or at least the opportunity to obtain income tax. This is particularly so in the case of concealment by the removal of cash from retail takings, the creation of false records and the distribution of cash monies to or for the benefit of the co-conspirators.

59 Moreover, as Mr Game SC pointed out the characterisation of the charge in the present matter is similar to the characterisation of the charge in both Peters; and in Caratti v R (2000) WASCA 279.

60 In Caratti, the appellant was convicted of one count of conspiracy in an indictment which alleged that he and others had conspired to defraud the Commonwealth, contrary to s 86A of the Crimes Act 1914. The trial judge had provided the jury with a written direction regarding the elements of the offence of conspiracy to defraud the Commonwealth. One of those directions was in the following terms: -

“3. The agreement must have been one to dishonestly deprive the Commonwealth of or to jeopardise the Commonwealth’s entitlement to group tax instalments.”

61 Malcolm CJ with whom Kennedy and Anderson JJA agreed found (at para 107) that the trial judge had properly direct the jury regarding the necessary elements of the offence of conspiracy to defraud. Malcolm CJ made express reference to the written directions which had been provided to the jury.

62 Thus, it will be seen that a particularisation of the relevant intention, as an essential element of the offence, expressed in terms similar to that criticised in the present matter passed muster in both Peters and Caratti.

63 The reasons, in my view, why the arguments of Mr Richter ought not to be accepted extend to all the matters I have discussed. But the principal criticism of his analysis, I would respectfully suggest, is that it confuses, on the one hand, the conspirators subjective intentions, express or implied, to be gleaned from the terms of their agreement; and the effect of the agreement, on the other hand, as to whether the alleged use of the dishonest means reveals an intention of prejudicing or imperilling existing legal rights or interests.

64 The distinction between the two situations may be seen from a careful appreciation of the Crown case in the present matter. The Crown case is that the existence of an agreement may be inferred from the conduct of the conspirators over a significant period of time. No doubt, it may be inferred that, according to the Crown case, the conspirators simply intended to have a considerable sum of money available to themselves which would not have been available had it been processed through the taxation system as and when the income should have been declared. The intention of the conspirators, in this subjective sense, was to make available for the benefit of each other a considerable sum of money which otherwise would not have available. Secondly, it was part and parcel of the agreement, according to the Crown case, that the intention of the conspirators might be achieved by a concealment of the true amount of the cash earned from the businesses owned by RYF and On Fovo. The concealment, which is to be inferred from the whole of the circumstances, was the dishonest means agreed between the parties to bring about the desired result of making available to them a considerable sum of money which would not otherwise have been available to them, had it been declared through the taxation system as and when it fell due to be so declared.

65 It is not as if the conspirators would have met, for example, in a coffee shop in Double Bay and asked themselves whether the agreement they were in the process of formulating was an agreement to actually deprive the Commonwealth; or whether it was an agreement merely to imperil the Commonwealth. It would be ludicrous to suggest that this was the likely content of any discussion between the alleged conspirators. Their agreement, as I understand the Crown case, if the prosecution can establish that case beyond reasonable doubt, is that they wanted to keep the income out of the taxation system altogether; and agreed to do so by concealing the bulk of the cash receipts from the business and by not declaring the income at the relevant time. As the years passed, and the duration of the alleged conspiracy extended significantly, there is no surprise in the allegation made in the Crown case that the conspirators made use of the money so secreted for a number of purposes beneficial to their respective financial well-being. All this, is merely illustrative of the conspirators’ subjective intentions in carrying out the actions they allegedly did.

66 On the other hand, the Crown must prove as the necessary mental element of the crime of conspiracy to defraud that there was the intention to prejudice the interests of a third person by the use of means that were dishonest. This intention is not the subjective intention of the parties but one that is spelt out from their actions and in particular from the dishonest means they have chosen to fulfil their agreement. Once that is appreciated, it explains perfectly adequately that the expression of the intention – an essential ingredient in the Crown case – as an intention by the dishonest means of concealment and its consequential actions “to deprive the Commonwealth of income tax or at least the opportunity to obtain income tax in relation to the unbanked cash” – is but the one intention and not two. Relevantly, the Crown must prove that there was an agreement between the conspirators to conceal the true amount of the income of the relevant businesses and that those conspirators intended by such means (“concealing facts which they had a duty to disclose”) to deprive the Commissioner of the tax payable on that income or alternatively, to make it difficult for the Commissioner to determine the true taxable income. The Crown case is that there was but one agreement and that the alleged dishonest means and their implementation demonstrated beyond reasonable doubt the requisite mental element of the charge, namely the intention to prejudice legal rights or interests. The expression of that intention in the manner stated in the particulars does not result, in my view, in any duplicity. It remains but one intention and does not become two.

67 Moreover, it could not, in my view, be said that the provision of the particulars in the way they have been presented results in any unfairness or prejudice to the accused. The Crown case has been very extensively particularised and described in a manner which would not leave the accused in any doubt as to the case each is required to meet.

The minor argument

68 In his brief outline of submissions, Mr Richter briefly stated that the indictment failed to specify “that which the accused allegedly agreed to defraud”.

69 In its response, the prosecution stated the following: -

“ THE CROWN ALLEGES THAT IT IS THE TAX LIABILITY IN RELATION TO THE TAKINGS OF THE FOUR RETAIL OUTLETS WHICH IS THE SUBJECT OF THE CONSPIRACY TO DEFRAUD IN THE FIRST INSTANCE.”

70 The prosecution also indicated that On Fovo Pty Limited and Ida Ronen (for Ronen Young Fashions) were the entities which had the liability to declare income from the four retail outlets. The submission noted that if, as alleged, the fraud made available to all the accused income generated from all the four retail outlets, there was a subsequent liability arising in the case of Nitzan Ronen and Izhar Ronen in their own right.

71 Mr Richter argued that this matter remained in issue because it had the potential to affect the nature of the alleged conspiracy. He said that the prosecution statement was tantamount to extending the conspiracy, for example, to a conspiracy by all three accused to avoid the personal income tax of Izhar Ronen and Nitzan Ronen. If that is the situation, Mr Richter argued, these were different conspiracies than those which had been particularised.

72 In my opinion, however, it cannot be said that the prosecution position identify a conspiracy beyond that which has been particularised and which is the subject of the “overview of Crown case”. The Crown case remains, in my view, an allegation of conspiracy to defraud the Commonwealth of income tax between 1992 and February 2001 involving income generated by the identified four retail outlets. According to the tax legislation, the entities which have the liability to declare income from the four retail outlets are those that have been identified. But it is the tax liability in relation to the takings of those four retail outlets which is the subject of the conspiracy to defraud.

73 I do not consider that any duplicity, latent or otherwise has emerged at this stage in the presentation of the Crown case.

Arguments addressed by counsel on behalf of Nitzan and Izhar Ronen

74 Mr Hill QC, who appears for Nitzan Ronen, supported the submissions of Mr Richter. He suggested that a practical difficulty might arise for the jury in view of the manner in which the charges have been particularised. For example, he said the jury may find one conspirator guilty on the basis of “deprivation”, but another conspirator guilty on the basis of “imperilment”. The Court would not know, he argued, one way or the other. He suggested this possibility could be avoided by requiring the prosecution to make an election. He said there was a potential for an injustice occurring in the jury room.

75 Mr Van de Wiel QC appeared for Izhar Ronen. He adopted the submissions of both Mr Richter and Mr Hill. In addition, he pointed out that, in his client’s case, there had been disclosed, certainly in one year, a significant amount of money for assessment purposes. He said such a fact, which he intended to point out to the jury, would raise an issue as to whether all of the accused could be said to be of the same mind to deprive the Income Tax Commissioner; or was it the fact that one of the accused had been merely prepared to imperil. He put forward other considerations that were pertinent to his client’s position, particularly in relation to the Crown suggestion that there had been the removal of substantial sums of money to Israel. This, he said, did not involve his client.

76 I have of course, endeavoured to give careful consideration to these additional submissions. In the end, I have come to the conclusion that they do not alter the primary view I have expressed in relation to the Mr Richter’s arguments. Mr Hill’s argument I think can be answered by the proposition that if the jury are properly instructed in accordance with the essential agreements identified in Peters, no problem will arise. The jury will need to be satisfied beyond reasonable doubt if a finding of guilt is to be made, of the existence of the agreement to defraud which has as its outcome or incidental to its intended outcome a depriving of the Commonwealth of income tax or at least the opportunity to obtain income tax in relation to the relevant monies. The jury will need to be satisfied beyond reasonable doubt that the prosecution has established that each accused and at least one of the other parties to the alleged agreement intended, by use of dishonest means of concealment alleged by the Crown, to deprive the Commonwealth of the income tax on those monies or to prejudice the collection of that income tax. If the jury are not satisfied beyond reasonable doubt of the existence of the agreement, or the presence of the requisite intention, then the jury will not be satisfied of the guilt of each accused beyond reasonable doubt and will be obliged to acquit.

77 Finally, I do not consider that any of the submissions of Mr Van de Wiel dictate a different conclusion.

78 The applications are dismissed.

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Last Modified: 07/16/2007