Regina v Ronen

[2004] NSWSC 1282

CITATION:	Regina v Ronen & Ors [2004] NSWSC 1282
HEARING DATE(S):
JUDGMENT DATE:	3 February 2004
JUDGMENT OF:	Whealy J at 1
DECISION:	I order that a preliminary hearing be held prior to the commencement of the trial for the taking of evidence of witnesses Jennifer Lawler and Ian Geller. I grant leave to the Crown to issue subpoenas in relation to both persons.
CATCHWORDS:	Criminal trial - preliminary hearing - nature of accountant claims benefit of confidentiality clause - Basha enquiry - extent of power
LEGISLATION CITED:	Crimes Act 1914 NSW Evidence Act 1995
CASES CITED:	Mooney v James (1969) VLR 22 at 28 R v Basha (1989) 39 ACrimR 337 R v Palmer (unreported NSWCCA 4 September 1992)
PARTIES :	Regina v Ida Ronen Regina v Nitzan Ronen Regina 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

TUESDAY 3 February 2004

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

JUDGMENT - On application to examine witnesses prior to commencement of trial; see p 26 of transcript

1 HIS HONOUR: There is before the Court an application for an order for the examination of witnesses at a preliminary hearing prior to the commencement of the trial.

2 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 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.

3 Each of the accused has pleaded not guilty to the charges in the indictment.

4 The trial is scheduled to commence in early March 2004.

5 The nature of the Crown case may be briefly stated. It is set out, however, in more detail in a document that has been placed before me 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 fashion 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 sale 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 distributed directly to the Ronens.

9 There is no reason for me 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 own 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.

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 The particular matter requiring a ruling by the Court at this preliminary stage arises in somewhat unusual circumstances. The argument is centred on two or possibly three material witnesses in the trial. The first of these is Jennifer Lawler. As I understand it, she is currently a payroll clerk employed by the Dolina Australia Group. She has been since February 1994 the Group's payroll clerk. In addition, she has had the task of recording and paying expenses and making deposits on behalf of Ronen Young Fashions and On Fovo Pty Limited.

12 In that capacity it appears she has received instructions and directions from Mrs Ida Ronen. These directions included, following receipt of cash from Mrs Ida Ronen, the writing of bank deposit slips in a National Australia Bank deposit book. Mrs Lawler's duties also have included from time to time entering payments and deposits for these companies into a MYOB software package.

13 Miss Lawler provided a statement to the ACC dated 13 March 2001. This forms part of the prosecution brief. No application was made for the cross-examination of Miss Lawler at the committal which took place in March 2003. She has been subpoenaed to give evidence in the trial and is plainly, from the Crown perspective, a material witness. Between September and November 2003 the Commonwealth Director of Public Prosecutions, whom I will refer to as the CDPP, has endeavoured to confer with Miss Lawler in relation to her statement and the evidence she is likely to give at the trial. The steps taken have not been successful in securing her attendance at conference. Those step are outlined in the affidavit of Penelope Mary Musgrave sworn 26 November 2003.

14 Miss Musgrave said that on 13 October, following a letter sent from the CDPP to Miss Lawler in the preceding month, she spoke to Miss Lawler on the telephone and asked her whether she was available for conference. Miss Lawler said, "Is it compulsory?" Miss Musgrave told her it was not. At the end of this conversation, Miss Lawler apparently told Miss Musgrave she would telephone her later to arrange a suitable time for a conference. Subsequently, an appointment was arranged to conference her with prosecuting counsel, the proposed conference date and time being 12 November 2003 at 9am. A letter was sent to Miss Lawler confirming these arrangements.

15 Miss Musgrave received an email from Miss Lawler late in the afternoon of the day prior to the proposed conference. The email is in these terms:

"In reference to our meeting tomorrow morning I will not be attending. If you have any questions that you would like to ask me, please fax a list" to a fax number that was set out in the email.”

16 On 14 November 2003, Miss Musgrave was informed by Miss Wade, an ACC case officer, that Mr Stevenson, an investigator with the ACC, had received a telephone call from a solicitor whose name was Mr John Laxon. Mr Laxon said that he had received instructions to act for Jennifer Lawler. Miss Musgrave spoke to Mr Laxon on the telephone on 17 November. He confirmed to her that he was acting for Miss Lawler, and that she did not wish to attend a conference. Miss Musgrave asked why it was that she was unable to attend a conference with prosecuting counsel. Mr Laxon said he did not have complete instructions so as to be able to answer that question. She then asked him to obtain those instructions and in fact emailed Mr Laxon on 19 November confirming this conversation. As I understand it, Miss Musgrave has not heard further from Mr Laxon in that regard.

17 It appears that Miss Lawler's position has remained unaltered since that time. There is no direct evidence as to why Miss Lawler has refused to be involved in the interview with the legal representatives of the Crown. Mr Rickter of Queen's Counsel has suggested that perhaps Miss Lawler's attitude may be simply that she does not want to be a party to "downing" the accused, particularly in the light of her continued employment with the Dolina Group. All this is purely speculative and there is no hard evidence before me as to why Miss Lawler has taken the stance she has.

18 I turn now to the position of Mr Ian Geller, the second material witness. He is a chartered accountant with Krochmalik & Hurwitz Accountants who carry on practice at 30 Carrington Street, Sydney. That firm provided during the period of the alleged conspiracy, and continues to provide, accounting services to the accused. Mr Geller provided a brief and non-contentious statement to the ACC dated 10 April 2001. There was a second statement dated 17 September 2001. It, however, principally annexes certain documents.

19 Prior to the commencement of the committal in this matter on 10 March 2003, attempts were made by the ACC to conference Mr Geller. Letters were written in February 2003 by the ACC to Krochmalik & Hurwitz. On 28 February 2003 the ACC received a letter from the accountants, on behalf of Mr Geller, in which he declined to attend a conference unless compelled by law to do so. Attached to that letter was a copy of a letter to Mr Geller and also to his partner, Mr Hurwitz. This copy letter was from Mrs Ida Ronen's solicitors, Watsons, and was dated 27 February 2003. The copy letter is quite a long one and I do not propose to set it out in full detail.

20 The letter to Mr Geller from Watsons informed him that the request that he attend the conference was an informal request which he was entirely free to decline “without repercussions”. There were a number of other matters raised in the letter but on page 2 Mr Geller was reminded by Watsons that he was bound by certain obligations of confidentiality not to disclose to any third party any matter whatsoever pertaining to the Ronens and On Fovo Pty Limited. The letter specifically pointed out to Mr Geller that this extended to “all matters that had been indicated in the ACC letter as matters which Mr Goodchild had wanted to question him about”. I should add that Mr Ken Goodchild was at that time, as I understand it, the Director of Financial Investigations at the Australian Crime Commission. On page 3 of the letter, Watsons continued by reminding Mr Geller that any breach by him of his fiduciary and contractual obligations by providing information to Mr Goodchild or otherwise to the ACC without permission would render him liable to the Ronens and On Fovo Pty Limited. It would put in serious question his character for professional purposes and his fitness to hold particular professional qualifications and registrations and would expose him to disciplinary action. There was then subsequent correspondence between the CDPP and Watsons. I do not think I need set that out in detail.

21 The committal took place but no application was made for the cross-examination of Mr Geller at committal. On 13 August 2003 a subpoena was served on Mr Geller for his attendance to give evidence at the trial. On 3 September 2003 a request was sent to Mr Geller by the CDPP requesting his attendance at a conference with prosecuting counsel. On 15 October 2003, Miss Musgrave spoke to Mr Geller by telephone. Mr Geller said in relation to his availability to attend a conference: "If they give me the okay then I have no problem, but I have been instructed by the defence not to speak to you."

22 So it was that on 18 November 2003 Miss Musgrave again wrote to Mr Geller requesting his attendance at a conference with the prosecution. On 21 November 2003 a response was received by the CDPP from Krochmalik & Hurwitz, in which Mr Geller declined to attend the conference “unless compelled by law to do so”. Attached to that letter is a copy of a letter to Mr Geller, and also to his partner Mr Hurwitz, from Mrs Ida Ronen's solicitors Watsons dated 21 November 2003. On the same day the CDPP received a letter from Watsons Solicitors dated 21 November 2003.

23 This latter letter confirmed the stance taken by the Ronens; that is, that the retainer given to Mr Geller and the firm to act on behalf of the Ronens and certain companies gave rise to contractual as well as fiduciary obligations which were not limited to but extended at least to an obligation of confidentiality; and that the Ronens had confirmed to Mr Geller and his partner that in the absence of express permission from the Ronens, which had not been given, the obligations of confidentiality and privilege continued to bind Mr Geller and the firm not to disclose to any third party any matter whatsoever pertaining to any of them or the companies. There are other matters raised in the letter which I need not mention at this point.

24 The summary position is that Mr Geller, it would seem, is not entirely unwilling to confer with the Crown but does not wish to run the risk of the threatened proceedings arising out of the existence of the alleged obligation of confidentiality arising out of the relationship between himself and the Ronens and certain companies.

25 Confidentiality clauses and agreements of this kind of course have been held to be unenforceable where they have been sought to be used to obstruct the administration of the criminal law. This is because to do so would be contrary to public policy (see Hayden & Ors (1984) 156 CLR 532 at 545, 553, 574, 586).

26 The third possible witness is Mr Geller's partner, Graham Hurwitz. His situation appears to be identical to that of Mr Geller although he has not provided a statement to the ACC or to the prosecution.

27 The materiality of the relevant witnesses, as appears from my brief summary of their respective positions, is this: Miss Lawler is a person who supplied the documentation as to deposited cash amounts; and Mr Geller apparently is the partner in the accountants' office who prepared the consequent tax returns. Each, it is said, did so on the instructions of the defendants, and these records, that is the deposit records and the tax returns, according to the Crown case are false records in relation to the actual income generated by the four retail outlets. In that regard, the records and also the witnesses are highly relevant, from the Crown perspective, to matters pertaining to the commission of the alleged offences.

28 In the circumstances I have outlined, the Crown has asked, now that the accused have been arraigned and pleaded not guilty, that a preliminary hearing be held for the purpose of enabling the Crown to ask questions of the two material witnesses, Miss Lawler and Mr Geller. One purpose of the preliminary hearing is to enable the Crown, and for that matter the defence, to know precisely what it is that each of the two witnesses would say in further amplification of the brief statements they have provided some considerable time ago.

29 The proposal is vehemently opposed by counsel for the accused. The main thrust of the defence argument has been advanced by Mr Rickter of Queen's Counsel, who appears for Mrs Ida Ronen. His submissions have been endorsed by Mr Hill of Queen's Counsel, who appears for Nitzan Ronen, and Mr van de Wiel QC, who appears for Izhar Ronen.

30 Mr Rickter has put his arguments in a number of ways. Firstly, he has argued that the real purpose of this application is to transform the Court into an instrument of gathering evidence for the prosecution. Categorised in that way the proposal is, so it is argued, "out of bounds and unwarranted".

31 Secondly, Mr Rickter has argued that there is no similarity between this proposal and that which commonly occurs in what is generally described as a Basha inquiry. In those well known circumstances, the defence is confronted with a statement from a witness in circumstances where it has not had the opportunity of examining his or her evidence at committal; and upon application by the defence is then permitted to remove the unfairness or prejudice caused by the absence of the witness at the committal.

32 Thirdly, Mr Rickter has pointed to the fact that in the case of Miss Lawler, as is shown by the correspondence, she had asked the Crown to fax her a list of questions that the Crown wished to ask. This was done at the same time she indicated that she intended to decline to attend a conference with the Crown.

33 In the case of Mr Geller it seems that there were discussions between counsel towards the end of last year when it was indicated to the Crown that they might, if they wished, supply details in writing of exactly what matters the prosecution wished to speak about with Mr Geller.

34 These proposals, Mr Rickter said, emanating from both Miss Lawler and the defence, had not been availed of by the Crown and, according to this aspect of his argument, this history lends considerable support to the proposition that the present application is both misconceived and unnecessary. In response to arguments advanced by the Crown, Mr Rickter accepted that both Miss Lawler and Mr Geller could be and no doubt would be called as witnesses at trial. There was, he argued forcefully, no warrant however for taking their evidence in a preliminary hearing at this stage. He suggested that the Crown's fears that the trial might miscarry in midstream unless the Crown's suggested procedures were adopted at this stage were in truth unlikely to materialise. Essentially, however, Mr Rickter repeated in additional submissions that the suggested procedures at this stage were not warranted or for that matter permissible.

35 It will be apparent that it has been necessary for me to come to a decision promptly in relation to this preliminary matter. I have endeavoured to give careful consideration to each of the competing arguments. I have come to the conclusion, after considering the matter, that I should make an order in the terms requested by the Crown. I shall state my reasons briefly.

36 The starting point is the general recognition of the Court's power, long-acknowledged, to regulate and control criminal proceedings, including the power to control and regulate the manner in which evidence is presented or elicited (Mooney v James 1969 VLR 22 at 28). Secondly, there are the provisions of the New South Wales Evidence Act 1995 (see especially s 11(1), s 26, s 29(1)). Thirdly, there is the fundamental obligation cast on the Court to ensure that a fair trial is held. It is in this context that procedures such as the Basha inquiry have evolved. The preliminary taking of evidence from a witness not called at the committal is however but one instance of the general proposition recognised in R v Basha, which is reported at (1989) 39 ACrimR 337. The general proposition, as I have described it, was expressed succinctly by Finlay J, with whom Gleeson CJ and Carruthers J agreed, in Palmer, an unreported decision of the New South Wales Court of Criminal Appeal delivered on 4 September 1992. In that case at page 19 his Honour said:

"The hearing of voir dire examinations by a Judge in the absence of the jury is usually to settle a question raised by either party concerning any fact which has to be assumed for the purpose of the trial proper; for example, the hostility, expertise or competence of witnesses, or the voluntariness of confessions. However, on occasion judges, as a matter of discretion, have allowed such an examination by way of voir dire when they have thought the interests of justice were best met by so doing.”

37 In my view, in the unusual circumstances revealed in the present matter, it is in the interests of justice that the procedure suggested by the Crown be adopted. Of course, I have taken into account Mr Rickter's forceful caveats but I do not accept that the ordering of the pre-trial evidence envisaged in the present application embroils or is likely to embroil the Court in becoming a coercive instrument involved in the Crown's investigatory tasks. On the contrary, I believe that the suggested procedure, in the unusual circumstances here, will lead to the more efficient and orderly running of the trial and will indicate precisely to the defence (if they do not already know it) the precise nature of the evidence they will have to meet. Moreover, it will provide this information well before trial and will reduce, or at least tend to reduce, the danger of an aborted trial.

38 This trial, it must be said, has all the hallmarks of a complex trial. It is likely to be lengthy and will plainly involve considerable time and expense. The prospect of a discharge of jury mid-stream is, in my view, by no means fanciful or unrealistic and the suggested procedure will have the capacity to reduce the risk of that occurring. Nor do I consider that the Court is bound to act by holding a preliminary inquiry only where it is the defence which seeks the hearing. There are many instances that can be envisaged where a duty will fall on a prosecutor to make such an application, even where an application had not been made by the defence.

39 There are four other matters that I wish to mention, albeit briefly. First, it is conceded by the defence that both Miss Lawler and Mr Geller may be called as witnesses at trial. There is no doubt that there are possible aspects of their evidence that, in the ordinary course, might well have to be explored during the preliminary hearing at trial in the absence of the jury. For example, whether either witness has any objection to answering questions put by the Crown and, if so, the nature and validity of those objections. In a theoretical sense, it may be possible that either witness may have an objection on the basis of self-incrimination. From the point of view of the Crown, it may be necessary to ascertain whether, for example, Miss Lawler is an unfavourable witness or unreliable in some respect. Moreover, because of the complex nature of the trial, particularly in relation to documentary material, it is possible that questioning may lead the witness to require, quite fairly, an opportunity to examine documents and reflect upon them before answering questions. Considerations of this kind lend support, in my view, to the proposition that the questioning should take place at this stage well in advance of the trial.

40 The second matter is that each of these two witnesses has a continuing and close business connection with the accused. This is one of the aspects that makes this an unusual circumstance in the present matter. Moreover, at least in the case of Mr Geller, it appears that his reluctance to confer with the Crown arises precisely because of the arrangements between his firm and the defendants. Perhaps it might be more accurate to say that his reluctance to confer with the Crown has arisen because of the threat of proceedings being instituted against him if he breaches confidentiality. This is an added feature that makes the present situation very unusual.

41 Although the position of Miss Lawler has not been made clear by any direct evidence, it seems to me to be a fair inference to draw from all the evidence that has been placed before me that this is not simply a situation where a citizen with no connection with either the Crown or any of the accused is simply unwilling to assist the prosecution. Of course, I am unable to draw any greater inference than that in all the circumstances and I do not do so.

42 The third matter is that it is plain that no specific prejudice will flow to any of the accused if the order sought is made. Mr Rickter quite fairly and candidly admitted that this was so.

43 The final matter is that the circumstances demonstrate that the Crown simply does not know the details or the ambit of the evidence that either of these two obviously material witnesses will give at the trial. This is essentially because each of the witnesses has, for their own reasons, declined to confer with the Crown. While it is true that the witnesses might be given a list of questions by the Crown, that, in my view, is no answer to the problems I foresee at trial.

44 The position of the Court must be that it is not in the ultimate concerned with perceived forensic advantages and disadvantages advocated by the competing parties in the trial. The Court's task is to ensure that a fair trial is held and the defence knows exactly the case it has to meet. Moreover, the Court has a power in appropriate circumstances to allow a preliminary hearing by way of voir dire when it is perceived that the interests of justice will be best met by adopting that course. For all the reasons I have given, I am satisfied that that is the case here.

45 I order that a preliminary hearing be held prior to the commencement of trial for the taking of evidence of witnesses Jennifer Lawler and Ian Geller.

46 I grant leave to the Crown to issue a subpoena directed to Miss Jennifer Lawler at 146 Victoria Street, Beaconsfield, New South Wales, such a subpoena requiring her attendance at this Court at 2pm tomorrow, 4 February 2004. I direct short service of the subpoena. Service is to be effected at the place of work of Miss Lawler prior to 5pm today.

47 In relation to Mr Geller, I grant leave to issue a subpoena returnable to Mr Ian Geller requiring his attendance at 10am on 5 February 2004 and I direct short service of the subpoena, service to be effected by 5pm at Mr Geller's place of work today, on 3 February 2004.

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Last Modified: 07/16/2007