Sigalla v R

[2021] NSWCCA 22

Court of Criminal Appeal

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:

Sigalla v R [2021] NSWCCA 22

Hearing dates:

1 July 2020

Date of orders:

3 March 2021

Decision date:

03 March 2021

Before:

Hoeben CJ at CL at [1]
Brereton JA at [2]
Cavanagh J at [156]

Decision:

1.   Extend time for filing the Notice of Appeal to the date on which it was filed.

2.   Dismiss the appeal against the convictions.

3.   Grant leave to appeal against the sentences and allow the appeal.

4.   Quash the sentence imposed by the trial judge and in lieu thereof substitute a sentence of 9 years and 6 months, commencing on 22 November 2016 and expiring on 21 May 2026, with a non-parole period of five years and nine months, expiring on 21 August 2022.

Catchwords:

CRIME – Appeals – Appeal against conviction – Corporations Act 2001 (Cth) s 184(2) – Dishonest use of position as director to gain benefit through transfers of funds and issuing of shares – Verdicts of guilty on all twenty-four counts – Whether trial judge misdirected jury as to elements of the offence – Alleged conflation of physical and mental elements – Whether jury required to be directed to be satisfied beyond reasonable doubt that the applicant did not have an honest belief that he was entitled to the funds paid to him – Appeal against conviction dismissed

CRIME – Appeals – Appeal against sentence – Ten year sentence – Whether totality of criminal behaviour wrongly considered before individual sentences for each offence – Whether sentences should have been wholly concurrent – Whether inconsistency of co-offender’s sentence gives rise to justifiable sense of grievance – Whether trial judge erred in finding that lack of remorse prevented any prospects of rehabilitation – Appeal against sentence allowed – Sentence quashed and applicant resentenced to aggregate term of nine years and six months

Legislation Cited:

Corporations Act 2001 (Cth), ss 9, 184(2)(a), 206B, 206BA, 1309(1)

Crimes Act 1900 (NSW), s 173

Crimes Act 1914 (Cth), ss 16A(2), 16B

Crimes (Sentencing Procedure) Act 1999 (NSW), s 21A(2)(m)

Criminal Appeal Rules 1952 (NSW), rr 3B, 4

Criminal Code (Cth), ss 2.2, 9.1, 9.5

Criminal Code 1899 (Qld), s 22(2)

Cases Cited:

ARS v R [2011] NSWCCA 266

Attorney-General v Tichy (1982) 30 SASR 84

BP v R (2010) 201 A Crim R 379; [2010] NSWCCA 159

Channon v R [2020] NSWCCA 112

Director of Public Prosecutions (Cth) v Beattie (2017) 270 A Crim R 556; [2017] NSWCCA 301

Green v The Queen (2011) 244 CLR 462; [2011] HCA 49

Hili v The Queen (2010) 242 CLR 520; [2010] HCA 45

House v The King (1936) 55 CLR 499; [1936] HCA 40

Johnson v The Queen (2004) 78 ALJR 616; [2004] HCA 15

Kwok v R (2007) 175 A Crim R 278; [2007] NSWCCA 281

Lowe v The Queen (1984) 154 CLR 606; [1984] HCA 46

MacLeod v The Queen (2003) 214 CLR 230; [2003] HCA 24

Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25

Mill v The Queen (1988) 166 CLR 59; [1988] HCA 70

MLP v R [2014] NSWCCA 183

Pearce v The Queen (1998) 194 CLR 610; [1998] HCA 57

Peters v The Queen (1998) 192 CLR 493; [1998] HCA 7

Postiglione v The Queen (1997) 189 CLR 295; [1997] HCA 26

R v Barakat [2004] NSWCCA 201

R v Condon (1995) 83 A Crim R 335; [1995] NSWSC 119

R v Dale [2012] QCA 303

R v Falconer [2018] NSWSC 1765

R v Gittani [2002] NSWCCA 139

R v Harris (2007) 171 A Crim R 267; [2007] NSWCCA 130

R v MMK (2006) 164 A Crim R 418; [2006] NSWCCA 272

R v Pan [2005] NSWCCA 114

R v Perrin [2018] 2 Qd R 174; [2017] QCA 194

R v Rossi (1988) 142 LSJS 451

R v Sigalla [2017] NSWSC 52

R v Simpson (2001) 53 NSWLR 704; [2001] NSWCCA 534

R v Tadrosse (2005) 65 NSWLR 740; [2005] NSWCA 145

Re Hiss 333 NE 2d 429 (1975)

Thorn v R (2009) 198 A Crim R 135; [2009] NSWCCA 294

Vaovasa v R (2007) 174 A Crim R 15; [2007] NSWCCA 253

WC v R [2016] NSWCCA 173

WLP v R [2014] NSWCCA 183

Zaidi v Health Care Complaints Commission (1998) 44 NSWLR 82; [1998] NSWSC 335

Texts Cited:

DA Thomas, Principles of Sentencing (2nd ed, 1979, Heinemann)

Category:

Principal judgment

Parties:

Andrew John Sigalla (Applicant)
Crown (Respondent)

Representation:

Counsel:
J Stratton SC, A Cook (Applicant)
P McDonald SC, T Epstein (Respondent)

Solicitors:
The Law Practice (Applicant)
Commonwealth Director of Public Prosecutions (Respondent)

File Number(s):

CCA 2013/151155
2013/355116

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Criminal

Citation:

[2017] NSWSC 52

Date of Decision:

10 February 2017

Before:

Adamson J

File Number(s):

2013/151155
2013/355116

HEADNOTE

[This headnote is not to be read as part of the decision]

The applicant was convicted on 24 counts of dishonestly using his position as a director of TZ Limited with the intention of directly or indirectly gaining an advantage for himself or a third party, contrary to s 184(2)(a) of the Corporations Act 2001 (Cth) and sentenced to imprisonment for terms which totalled 78 years but were partially accumulated to result in a total effective sentence of 10 years. He appealed from the convictions on grounds of misdirection of the jury as to the elements of an offence contrary to s 184(2)(a) of the Corporations Act; and failure to direct the jury that it could not convict unless satisfied beyond reasonable doubt that the applicant did not have an honest belief that he was entitled to the funds paid to him or at his direction. He sought leave to appeal from the sentences on grounds relating to the application of the totality principle; parity; and a holding that his failure to acknowledge wrongdoing or express remorse precluded a finding that he had any prospects of rehabilitation.

Held (per Brereton JA; Hoeben CJ at CL and Cavanagh J agreeing), dismissing the appeal against conviction and granting leave to appeal and allowing the appeal against sentence, quashing the sentences imposed by the trial judge and substituting new sentences for each count totalling total 69 years and nine months, partially accumulated to result in an overall effective sentence of nine years and six months, with a non-parole period of five years and nine months: [149]-[154] (Brereton JA).

As to the conviction appeal

1. Even if the directions were theoretically deficient, they were not practically so in the context of this trial, as it was conducted. It was not an issue at trial that the transactions did not involve a use by the applicant of his position as a director; the predominant issue was of whether the use was a dishonest one. The inference that the transactions were a manifestation of a use by the applicant of his position was inescapable, from the circumstance that his only role in and connection with the company was as a director, and from the flow of funds to the benefit of him or his companies. Furthermore, the applicant had ample opportunity to object to the directions at trial yet did not do so, and ought not be permitted to raise this issue on appeal: [70]-[78] (Brereton JA).

   Criminal Appeal Rules 1952 (NSW) r 4; ARS v R [2011] NSWCCA 266, applied; Kwok v R (2007) 175 A Crim R 278; [2007] NSWCCA 281, considered.

2. There was no requirement for a direction that the applicant could be convicted only if the jury were satisfied that he did not have an honest belief that he was entitled to the funds paid to him or at his direction. A defence of this kind, which is in the nature of a ‘claim of right’, is logically incompatible with an offence containing a dishonesty element, and directions as to such an argument are unnecessary and inappropriate: [79]-[96] (Brereton JA).

   MacLeod v The Queen (2003) 214 CLR 230; [2003] HCA 24, applied; R v Perrin [2018] 2 Qd R 174; [2017] QCA 194; R v Dale [2012] QCA 303, considered.

As to the sentence appeal

1. (Per Brereton JA; Hoeben CJ at CL agreeing) The trial judge erred in considering totality as an aggravating factor when assessing individual sentences. The principle of totality is a mitigating factor to be considered when assessing the overall effective sentence: [113]-[122] (Brereton JA).

   Thorn v R (2009) 198 A Crim R 135; [2009] NSWCCA 294; Tadrosse v R (2005) 65 NSWLR 740; [2005] NSWCA 145; Johnson v The Queen (2004) 78 ALJR 616; [2004] HCA 15; Pearce v The Queen (1998) 194 CLR 610; [1998] HCA 57; Postiglione v The Queen (1997) 189 CLR 295; [1997] HCA 26; Mill v The Queen (1988) 166 CLR 59; [1988] HCA 70, applied.

2. (Per Cavanagh J, contra) The trial judge’s remarks should be read as demonstrating an acknowledgement and adoption of the correct approach to the totality principle: [157]-[162] (Cavanagh J).

   Johnson v The Queen (2004) 78 ALJR 616; [2004] HCA 15; Mill v The Queen (1988) 166 CLR 59; [1988] HCA 70; DA Thomas, Principles of Sentencing (2nd ed, 1979, Heinemann), considered.

3. The trial judge was not required to impose wholly concurrent sentences in respect of offending found to form part of a single course of conduct: [123]-[126] (Brereton JA).

   R v MMK (2006) 164 A Crim R 418; [2006] NSWCCA 272, applied; House v The King (1936) 55 CLR 499; [1936] HCA 40, considered.

4. Although the applicant’s co-offender received a significantly lesser sentence, this was justifiable on the basis of both respective criminality and subjective factors, and did not give rise to a justifiable sense of grievance on the part of the applicant: [128]-[141] (Brereton JA).

   Channon v R [2020] NSWCCA 112, applied; R v Pan [2005] NSWCCA 114, considered.

5. The trial judge erred in holding that the applicant’s lack of remorse and failure to acknowledge his wrongdoing precluded a finding that he had any prospects of rehabilitation. Remorse is not a prerequisite to prospects of rehabilitation, although it may inform the extent of such prospects. The applicant did have some prospects of rehabilitation, indicated by his prior good character, education, and the support of his family: [142]-[148] (Brereton JA).

   WC v R [2016] NSWCCA 173; MLP v R [2014] NSWCCA 183; BP v R (2010) 201 A Crim R 379; [2010] NSWCCA 159; Zaidi v Health Care Complaints Commission (1998) 44 NSWLR 82; [1998] NSWSC 335, applied.

Judgment

1. HOEBEN CJ at CL: I agree with Brereton JA and the orders which he proposes.

2. BRERETON JA: On 22 November 2016, following a trial in the Supreme Court before Adamson J and a jury, the applicant Andrew John Sigalla was convicted, on an indictment presented by the Commonwealth Director of Public Prosecutions, of 24 counts of dishonestly using his position as a director of TZ Limited with intent to gain a benefit for himself or a third party, in contravention of s 184(2)(a) of the Corporations Act 2001 (Cth) (“Corporations Act”). On 10 February 2017, the applicant was sentenced to an effective total term of imprisonment of ten years, commencing on 22 November 2016 and expiring on 21 November 2026, with a non-parole period of six years expiring on 21 November 2022. The applicant appeals from the conviction, and seeks leave to appeal from the sentence.

3. Although originally the conviction appeal arguably raised questions of fact, it is now confined to questions of law and so lies as of right, save for two matters. First, it requires an extension of time because it was filed significantly out of time. [1] Although the chronology is not entirely clear, it appears that a notice of intention to appeal was filed within time on 1 March 2017. An extension of time was granted until 1 September 2017, but a further extension was refused. The Notice of Appeal was ultimately not filed until 19 December 2019. However, while drawing attention to the delay, the Crown did not oppose an extension of time. Secondly, because the remaining grounds of appeal are complaints about directions to which objection was not taken at trial, they require leave. [2] This issue is addressed below, in the context of the relevant grounds of appeal.

BACKGROUND

1. Criminal Appeal Rules 1952 (NSW) r 3B.

2. Criminal Appeal Rules 1952 (NSW) r 4.

The company and its officers

4. The applicant became a founding shareholder and director of Telezygology Inc (“TZI”) (a company incorporated in the United States, and not the company referred to in the indictment) after being approached by an inventor who wanted to commercialise his inventions. On 14 February 2002, TZI applied to be registered in Australia as a foreign corporation, with the applicant as a director.

5. The company of direct relevance to the offence, TZ Limited (“TZL”), had been incorporated in Australia as a public company in 1996, but was relevantly relisted on the Australian Stock Exchange in early 2004, when it acquired 100% of TZI. TZL’s main function was to raise funds for the operations of its wholly owned subsidiary TZI, which continued to operate the business and develop technology in the United States.

6. The applicant was a director of TZL between 2004 and 2005, and from 29 January 2007 until 18 June 2009. The conduct the subject of the charges of which the applicant was convicted occurred between 8 December 2006 and 2 March 2009 or thereabouts. For the period between 2006 and January 2007, during which the conduct the subject of the first two counts occurred, he was not formally appointed as a director, and the Crown relied on the extended definition of a director in s 9 of the Corporations Act. Although in issue at the trial, the jury’s verdict resolved that question adversely to the applicant, and it is not in dispute in this Court. Thus it is no longer in dispute that the applicant was a director of TZL, whether by formal appointment or via the extended definition, at all relevant times.

7. Other directors of TZL at relevant times included Mr Kelliher, Mr Leibowitz, and Mr Falconer. Falconer was a chartered accountant at Dunbar Associates Pty Ltd (“Dunbar Associates”), and the company secretary, as a well as a director of TZL throughout the relevant period. Dunbar Associates provided accounting and corporate secretarial services to TZL from about 2004. Dunbar Associates employed one Mr Fagredin as an intermediate accountant from 2004, and he performed day-to-day banking and bookkeeping functions for TZL from 2004 to May 2009, reporting directly to Falconer, who finalised and approved all of Fagredin’s reports drafted for TZL. Fagredin simply followed instructions given to him by Falconer and, at times, the applicant. Fagredin required authorisation from Falconer for any transactions which he undertook, including when he became an authorised signatory on TZL’s accounts at some time in 2006.

8. In a separate proceeding,[3] Falconer pleaded guilty to six offences: five contrary to s 184(2) of the Corporations Act and one contrary to s 1309(1) of that Act. Most of the offences to which Falconer pleaded guilty involved a series of transactions and, save for two counts, the matters to which he pleaded guilty reflected several, though not all, of the counts of which the applicant was ultimately found guilty. Falconer was a beneficiary of three of the transactions in respect of which the applicant was charged and convicted. On the Crown case, Falconer performed the ministerial acts which implemented the relevant transaction in several of the counts which alleged that the applicant had, directly or via related entities, received a benefit.

   3. R v Falconer [2018] NSWSC 1765.

The alleged offences in overview

9. As ultimately amended and left to the jury, the charges in the indictment, all of which resulted in convictions, were that the applicant, contrary to subsection 184(2)(a) of the Corporations Act:

1. on or about 8 December 2006 at Sydney and elsewhere in the State of New South Wales, did use his position as a director (as defined in s.9 of the Corporations Act 2001) of TZ Limited ("TZ") dishonestly with the intention of directly gaining a benefit for ZMS Investments Pty Ltd ("ZMS") and himself in that he caused $300,000 of funds of TZ to be transferred to ZMS;

2. on or about 28 December 2006 at Sydney and elsewhere in the State of New South Wales, did use his position as a director (as defined in s.9 of the Corporations Act 2001) of TZ Limited (“TZ”) dishonestly with the intention of directly gaining a benefit for Chyron Services Ltd (“Chyron”) and John Falconer in that he caused $300,000 of funds of TZ to be transferred to Chyron;

3. on or about 2 February 2007 at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited ("TZ") dishonestly with the intention of directly gaining a benefit for Joyeagle Ltd (“Joyeagle”), John Falconer and/or himself in that he caused to be issued by TZ to Joyeagle 847,458 fully paid ordinary shares in TZ without payment of any subscription for the said shares;

4. on or about 5 July 2007 at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited (''TZ") dishonestly with the intention of directly gaining a benefit for Golf Link Partners Pty Ltd ("Golf Link") and himself in that he caused $300,000 of funds of TZ to be transferred to Golf Link;

5. on or about 19 July 2007 at Sydney and elsewhere in the State of New South Wales did use his position as a director of TZ Limited (“TZ”) dishonestly with the intention of directly gaining a benefit for Linda Lau, Profit Pearl Holdings Ltd (“Profit Pearl”) and John Falconer in that he caused $400,000 of funds of TZ to be transferred to Linda Lau of which $300,000 was for the purchase of certain shares in Reader China Group Ltd;

6. on or about 14 February 2008 at Sydney and elsewhere in the State of New South Wales did use his position as a director of TZ Limited (“TZ”) dishonestly with the intention of directly gaining a benefit for ZMS Investments Pty Ltd (“ZMS") and himself in that he caused $200,000 of funds of TZ to be transferred to ZMS;

7. on or about 20 February 2008 at Sydney and elsewhere in the State of New South Wales did use his position as a director of TZ Limited (“TZ”) dishonestly with the intention of directly gaining a benefit for BZI Pty Ltd (“BZI") and himself in that he caused $500,000 of funds of TZ to be transferred to BZI;

8. on or about 25 February 2008 at Sydney and elsewhere in the State of New South Wales did use his position as a director of TZ Limited (“TZ”) dishonestly with the intention of directly gaining a benefit for BZI Pty Ltd (“BZI”) and himself in that he caused $68,000 of funds of TZ to be transferred to BZI;

9. on or about 3 March 2008, at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited (“TZ”) dishonestly with the intention of directly gaining a benefit for BZI Pty Limited (“BZI") and himself, in that he caused $300,000 of funds of TZ to be transferred to BZI;

10. on or about 20 March 2008, at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited (''TZ") dishonestly with the intention of directly gaining a benefit for ZMS Investments Pty Ltd ("ZMS") in that he caused $300,000 of funds of TZ to be transferred to Heidtman & Co Lawyers on account of a creditor of the said ZMS;

11. on or about 17 July 2008, at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited (“TZ”) dishonestly with the intention of directly gaining a benefit for BZI Pty Ltd ("BZI") and himself in that he caused $500,000 of funds of TZ to be transferred to BZI;

12. on or about 21 July 2008, at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited (“TZ”) dishonestly with the intention of directly gaining a benefit for BZI Pty Ltd (“BZI”) and himself in that he caused $167,783.37 of funds of TZ to be transferred to BZI;

13. on or about 23 July 2008, at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited (“TZ”) dishonestly with the intention of directly gaining a benefit for BZI Pty Ltd (“BZI”) and himself in that he caused $600,000 of funds of TZ to be transferred to BZI;

14. on or about 18 August 2008, at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited (“TZ”) dishonestly with the intention of directly gaining a benefit for BZI Pty Ltd (“BZI*) and himself in that he caused $525,000 of funds of TZ to be transferred to BZI;

1. on or about 24 September 2008, at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited (“TZ") dishonestly with the intention of directly gaining a benefit for BZI Pty Ltd (“BZI”) and himself in that he caused $500,000 of funds of TZ to be transferred to BZI;

2. on or about 13 October 2008, at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited (“TZ”) dishonestly with the intention of directly gaining a benefit for himself in that he caused $300,000 of funds of TZ to be transferred to himself;

3. on or about 16 October 2008, at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited (“TZ”) dishonestly with the intention of directly gaining a benefit for BZI Pty Ltd ("BZI") and himself in that he caused $400,000 of funds of TZ to be transferred to BZI;

4. on or about 20 October 2008, at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited ("TZ") dishonestly with the intention of directly gaining a benefit for himself in that he caused $300,000 of funds of T2 to be transferred to himself;

5. on or about 26 November 2008, at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited (“TZ”) dishonestly with the intention of directly gaining a benefit for BZI Pty Ltd (“BZI") and himself in that he caused $200,000 of funds of TZ to be transferred to BZI;

6. on or about 10 December 2008, at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited (“TZ”) dishonestly with the intention of directly gaining a benefit for BZI Pty Ltd (“BZI”) and himself in that he caused $669,534 of funds of TZ to be transferred to BZI;

7. on or about 15 December 2008, at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited ("TZ") dishonestly with the intention of directly gaining a benefit for BZI Pty Ltd ("BZI") and himself in that he caused $782,000 of funds of TZ to be transferred to BZI;

8. on or about 23 January 2009, at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited (“TZ”) dishonestly with the intention of directly gaining a benefit for BZI Pty Ltd (“BZI") and himself in that he caused $307,000 of funds of TZ to be transferred to BZI;

9. on or about 2 March 2009, at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited (“TZ”) dishonestly with the intention of directly gaining a benefit for BZI Pty Ltd (“BZI") and himself in that he caused $250,000 of funds of TZ to be transferred to BZI; and

10. on or about 2 March 2009, at Sydney and elsewhere in the State of New South Wales, did use his position as a director of TZ Limited (“TZ”) dishonestly with the intention of directly gaining a benefit for BZI Pty Ltd (“BZI") and himself in that he caused $50,000 of funds of TZ to be transferred to BZI.

10. In respect of each count, the Crown case was that the applicant used his position as director of TZL dishonestly by causing funds to be transferred (or, in the case of count 3, shares to be issued), to the benefit of himself or a third party, when he knew that he was not entitled to do so, with that knowledge rendering the conduct dishonest.

11. As is apparent, the alleged beneficiary of the charged transactions varied between the counts. In all but two of the charged instances (counts 2 and 5, in which Falconer was the sole alleged beneficiary), it was alleged that there was a benefit for the applicant, either directly and/or via private companies controlled by him, namely ZMS Investments Proprietary Limited (“ZMS”) or BZI Limited (“BZI”). The applicant’s wife was the only shareholder in ZMS, and he and his wife were the directors. BZI was the trustee of the Sigalla Family Trust; at all relevant times, the applicant and his wife were the only shareholders in BZI; both were directors, and the applicant was the secretary.

12. In short, the Crown contended that the applicant caused the charged transactions, in some cases by using his own position to authorise the transaction, either directly via internet transfer, or by using his own signature (which generally required another authorised signatories’ signature); and in others by agreeing with or generally directing Falconer to induce an authorised signatory (often Fagredin) to approve the transaction or use another authorised signatories’ signature without their authorisation. In many instances, the transfer of funds to the applicant coincided with him having a pressing obligation to a third party – most notably arising from betting transactions – and the proceeds of the transfer to the applicant were immediately applied to meet that obligation.

13. At trial, the applicant did not dispute the occurrence of any of the transactions alleged by the Crown, but he denied that he acted dishonestly. As will appear below, at the trial, some issues other than dishonesty were raised, including whether the applicant came within the extended definition of a director under s 9 of the Corporations Act, whether he could be said to have caused certain transactions which had apparently been implemented by others (in particular, it was said that he was unable to cause certain transfers of funds, or to cause shares to be issued in TZL), and whether the Golf Link transaction was part of an agreed rebate.

14. However, the dominant issue at trial was whether the applicant acted dishonestly while a director. His case was that he was entitled to receive the money he received. The applicant gave evidence that it was an industry standard that people who raise capital charge a commission, and that he had always been paid commissions outside of his consultancy agreements for capital raising. He said that he was owed the money, on account of past commissions earned for capital raising, or by way of the return of money deposited in the TZL bank account by his clients, or both. He at times referred to a "claim of right" in respect of these payments.

The circumstances of the offences

15. The circumstances the subject of the offences charged in the indictment fall into five categories, as follows:

1. secret commission for capital raising through issue of convertible notes to Oasis (Counts 1, 2 and 3);

2. Golf Link transaction and loan to Mr Jeff O’Donnell (Counts 4, 6 and 7);

3. purchase of shares in Reader China Group (Count 5);

4. property at Ingleburn (Counts 10, 17 and 21); and

5. gambling debts (Counts 8, 9, 11, 12, 13, 14, 15, 16, 18, 19, 20, 22, 23 and 24).

16. The following summary is largely based on that contained in the respondent’s written submissions. There was not, at least in this court, significant controversy as to the facts.

Counts 1, 2 and 3: Secret commission for capital raising through issue of convertible notes to Oasis

17. In the latter part of 2006, Andrew Lai, a Hong Kong resident, introduced Linda Lau, also a Hong Kong resident, to DKR Soundshore Oasis Holding Fund Limited (“Oasis”). Each played a part in negotiations that culminated in Oasis purchasing, on 1 December 2006, 200 convertible notes issued by TZL for $20 million (“the Oasis Transaction”). TZL agreed to pay to Lai’s company Yorkshire Capital Ltd a commission of 6% (or $1.2 million) (of which he privately agreed to pay Lau 1%), and to Lau a commission of 0.5% (or $100,000). Lai issued an invoice to TZL for his commission of $1.2 million on 1 December 2006, and Lau issued an invoice to TZL for $100,000 on 12 December 2006. [4]

    4. All monetary sums are in AUD.

18. On 8 December 2006, Falconer sent a facsimile to Mr Navarro, TZL's then bank manager at the National Australia Bank (“NAB”), requesting that $300,000 be paid to ZMS from a bank account of TZL. The same day, an amount of $300,000 was transferred out of a bank account of TZL and credited to ZMS’s account with NAB. Although the facsimile appeared to have been signed by Kelliher, his evidence was that he was in Chicago at the time and did not authorise his electronic signature to be used on the document. The receipt was recorded in the ledger of ZMS, by the applicant's accountant, Fiona Wilkie of William Buck, on instructions from the applicant, as "income fees received Joyeagle $300,000". This transaction conferred a benefit of $300,000 on the applicant and his company ZMS, and was the subject of Count 1.

19. On 27 December 2006 a facsimile, signed by Falconer and apparently signed by Kelliher (who did not recall signing it), was sent to Navarro, requesting the transfer of $1.2 million to Yorkshire Capital Ltd, $100,000 to Mr Chan (Ms Lau's son), and $300,000 to Chyron Services Ltd (“Chyron”), a company incorporated in the British West Indies and beneficially owned by Falconer. On 28 December 2006, an amount of $300,000 was transferred from TZL and credited to a bank account for Chyron. This conferred a benefit of $300,000 on Falconer and his company Chyron, and was the subject of Count 2.

20. On 9 January 2007 Falconer, as secretary of TZL, sent an email to Computershare Registry Service, requesting that it issue 847,458 shares in TZL to Joyeagle Ltd (“Joyeagle”), a company incorporated in the British Virgin Islands and beneficially owned by Falconer. The accompanying documentation announced to the ASX that the shares were to be issued "to external advisers in respect of the recent capital raising and acquisition of the Intevia Business Unit announced yesterday". On or about 29 January 2007, TZL issued 847,458 shares in TZL, worth $500,000, to Joyeagle. This transaction was recorded in the TZL General Ledger as an "issue of shares in lieu of final payment to external” [sic]. It conferred a corresponding benefit on Falconer and his company Joyeagle, and was the subject of Count 3.

21. The transactions were not disclosed to TZL's shareholders or auditor, or to the ASX, as related party benefits.

22. The Crown case was that the applicant caused each of the three transactions to be made by agreement with Falconer, and that they communicated to obtain secret commissions from the capital raising, by way of liquidated sums and a share issue. Arrangements between the applicant and Falconer to take these benefits (in addition to the legitimate commissions payable to Lai and Lau) were recorded by Falconer in a diary note, as follows (AS referring to the applicant and JF to Falconer):

“13 Nov 06    Oasis note deal is 6% to Andy and 6% to Linda split 4 ways (AL-LL-AS-JF) - 50% shares at 59c and 50% cash - JF needs HK entity to take up 6% and distribute.

29 Nov 06    AJS confirmed HK is 50/50

4 Dec 06    He now says the split is 6% to Andy and the other 6% is ½% to Linda and the balance 50/50. Andy will not now take his 6% in cash and shares. Only cash.”

23. Between 11 and 27 December 2006, the applicant and Falconer exchanged emails about an invoice, purportedly from Lau, for $1.2 million, which was sent from the applicant's email account to Falconer on 27 December 2006, claiming payment of AUD$700,000 in cash payable to Chyron, and AUD$500,000 payable in shares (874,457 shares at $0.59) to be issued to Chyron, for a "success fee for convertible note issue as per agreement as per our mandate agreement: 6.0% of AUD twenty million (20M)". Lau gave evidence that she had not had any discussions with the applicant or Falconer about any arrangements pursuant to which they would receive a commission or fees for their work; she was not party to a deal in which 12% was split between her, Lai, the applicant, and Falconer; she did not know of, nor did she have any involvement with, Chyron; and she had no knowledge of, nor any involvement in, the invoice from Chyron for $1.2 million in respect of the Oasis Transaction. The Crown case was that the invoice was fabricated to account for the benefits taken by the applicant and Falconer, and that the $700,000 cash payment claimed in the invoice concealed the $300,000 payments illegitimately made to ZMS and Chyron.

24. The applicant denied that he was a director of TZL at the time of counts 1 and 2, stating that his only role at that time was to assist with capital raising. His case was that:

1. the transaction the subject of Count 1 represented a payment that was due to him for the successful Oasis Transaction;

2. in respect of Count 2, he was unable to cause the transfer of any funds as he was not a signatory on any bank account; he only later found out that Chyron was one of Falconer's clients; and on the date of the transaction, he was overseas with his family; and

3. in respect of Count 3, he was unable to cause shares to be issued in the company, as the only person with that ability was Falconer; and that he understood Joyeagle was a company associated with Stephen Harvey, a client of Falconer.

Counts 4, 6 and 7: Golf Link transaction and loan to O'Donnell

25. In October 2003, TZI effected a reverse takeover of CED Australia Ltd (CED), a public company listed on the ASX. Following the takeover, CED changed its name to TZ Limited. Before the reverse takeover, CED owned various businesses, including Golf Link, which provided software to the Australian Golf Union that facilitated the calculation of handicaps. After the takeover, TZL decided to sell the Golf Link business, in order to raise funds. The applicant, who was responsible for conducting the sale on behalf of TZL, negotiated a sale price of $2 million to a consortium of four buyers, which included Golf Link Partners Pty Ltd (Golf Link Partners), of which O'Donnell was the principal.

26. By arrangement with the applicant, O'Donnell invested in the TZ group. However, despite repeated requests, the applicant did not produce to him proof of his shareholding. In June 2007, O'Donnell and the applicant exchanged several emails about this issue, culminating in an offer by the applicant to lend O'Donnell $300,000. On 5 July 2007, on written instructions of Falconer, $300,000 was transferred from a TZL bank account to a Golf Link Partners account. O'Donnell then transferred the $300,000 from Golf Link Partners' account to his own account, on the basis that it was money that the applicant had lent to him personally.

27. The transfer of $300,000 to Golf Link Partners, in satisfaction of the applicant’s personal obligation to advance that sum to O’Donnell, conferred a benefit of that amount on the applicant, and on Golf Link Partners. It was the subject of Count 4. The written instruction from Falconer to Navarro stated that the transfer was to an account in the name of Linda Lau, but the account details provided were those for an account in the name of Golf Link Partners. The transaction was recorded in the ledger of TZL by Fagredin, on the instruction of Falconer, as a consulting fee to Lau.

28. On 14 February 2008, $200,000 was transferred from the TZL bank account to the ZMS bank account, on written instructions signed by Falconer and Fagredin. The relevant bank statement for the ZMS account shows that the $200,000 received on 14 February 2008 placed the account in funds to meet a cheque for $200,000 in favour of O'Donnell. O'Donnell's evidence was that this was an additional amount lent to him by the applicant because he still had not received all his share certificates.

29. The payment of $200,000 to ZMS conferred a benefit of that amount on the applicant and his company ZMS, and was the subject of Count 6. This transfer followed a series of communications between the applicant and Falconer. On 14 February 2008, the applicant sent an email to Fagredin and Falconer, instructing Fagredin that "[t]he $300,000 needs to be transferred to ZMS account first thing in the morning. John will confirm." A copy of this email bears a handwritten note from Fagredin "less $100k for credit cards". The payment was recorded in TZL's ledger as a consulting fee paid to Yorkshire Capital.

30. On 20 February 2008, $500,000 was paid from a TZL bank account to an account in the name of BZI, on written instructions signed by Falconer and Fagredin. The transfer of $500,000 to the BZI account placed it in funds to meet a cheque in the amount of $104,370 in favour of "Berndale", which was deposited into a bank account for Berndale Securities Ltd, the trust account for BBY Limited (BBY), a company through which ZMS and BZI operated share trading accounts. An amount of $300,000 was transferred from BZI to ZMS, placing it in funds to pay a cheque in the amount of $300,000 in favour of the applicant. That cheque was deposited into the applicant's bank account and placed it in funds to pay a cheque of $300,000 in favour of O'Donnell. O'Donnell's evidence was that this was a further amount lent to him by the applicant because he still had not received all his share certificates. Part of the balance of the $500,000 was transferred, by way of electronic transfers on 22 February 2008 of $20,000 and $22,000, to the applicant's bank account and his NAB Gold Rewards Visa card.

31. The transfer of $500,000 to BZI conferred a benefit on the applicant and his company BZI of that amount, and was the subject of Count 7. It had been the subject of email correspondence dated 20 February 2008 between Navarro, Fagredin, and Falconer, copied to the applicant. In one of the emails, Navarro recorded that he "[j]ust spoke to Andrew as well, as he is trying to have $500k transferred to BZI. You can include instructions for such on the same written request [...]". In the final email, Falconer (copying the applicant) instructed Fagredin to complete the written instructions required by NAB for the transfer to BZI, which he described as a "payment for sub-underwriting fees." The transaction was recorded in TZL's ledger as a fee paid to an unidentified entity for sub-underwriting services, and in the general ledger of BZI as a loan from the applicant.

32. On 17 October 2008, the applicant, O'Donnell, and Luik Holdings Pty Ltd (“Luik”), a company associated with O'Donnell, entered into a Deed of Acknowledgement of Debt, which recorded that Luik was indebted to the applicant in the sum of $1 million. By a Deed of Mutual Release dated 27 April 2009, each of the parties discharged the others from their respective obligations.

33. The applicant accepted that he had caused the $300,000 referred to in Count 4 to be transferred to Golf Link, but said that the transaction was part of a rebate that TZL had agreed to pay Golf Link Partners, as a partial refund for the sale price of the business on account of defective software. He said that the payment the subject of Count 6 was either commission owing to him or the return of money deposited in the TZL bank account by his clients, or both; and that the payment the subject of Count 7 was on account of commission owed to the applicant by TZL in respect of capital raising.

Count 5: Purchase of shares in Reader China Group

34. Lau invited the applicant to invest in Reader China Group Ltd (“Reader”), a company through which Lau and Lai conducted a business in China. They negotiated a share subscription agreement which, in a draft dated 3 July 2007, specified that the applicant and ZMS would subscribe for shares. When Lau met with the applicant in Hong Kong to execute the agreement, the applicant told her that the shares would be subscribed in the name of Profit Pearl Holdings Ltd (“Pearl”), a company beneficially owned by Falconer. Lau arranged for the transaction documents to be amended to reflect the identity of the new subscriber, and the executed agreement, dated 20 July 2007, nominated Pearl as the subscriber. The consideration for the share subscription, which was expressed in HK dollars, was equivalent to AU$300,000.

35. On 19 July 2007, on written instructions signed by Falconer and Fagredin, an amount of $400,000 was transferred out of a TZL bank account into an HSBC account of Lau. Of the amount received by Lau, approximately $300,000 was for the share subscription in Reader. Falconer instructed Fagredin to record the payment of $400,028 ($28 being for bank fees) as "consulting fees" in TZL's general ledger, and in an email to the applicant dated 21 July 2007, Falconer described the transfer to Lau as an amount to pay consultant fees. In a subsequent email dated 7 September 2007 to Lau, the applicant stated "[d]on't tell John about reader he won't be happy". In her evidence, Lau denied having received the funds as payment for consultant fees, and said that the amount was for the subscription for the shares. The transaction conferred a benefit of $100,000 on Lau and $300,000 on the applicant, being the price for the subscription for the shares in Reader.

34. The applicant’s evidence in chief was that the payment the subject of Count 5 was on account of commission owed to the applicant by TZL for capital raising. In cross-examination, however, he said that the money was owed to him in respect of an overpayment from the Golf Link transaction.

Counts 10, 17 and 21: Property at Ingleburn

37. On 5 June 2006, ZMS borrowed $10,006,201 from Perpetual Investment Management Limited (“Perpetual”), for the purpose of developing an industrial estate at Ingleburn (“Perpetual Loan”). Under the loan agreement, ZMS was obliged to pay interest on the loan each month. In the second half of 2007 and the first months of 2008, ZMS was incurring interest on the Perpetual Loan of approximately $90,000 to $100,000 per month. As at February 2008, ZMS had defaulted in respect of several months of interest payments, and was in arrears to the extent of $600,000.

38. Heidtman & Co Lawyers (“Heidtman”) acted for Perpetual. Where a Perpetual client was in arrears and Heidtman was in communications with a client about the arrears, Heidtman would obtain payment on behalf of Perpetual.

39. On 12 February 2008, the applicant sent an email to Falconer stating "I really need to pay perpetual asap so they stop from suing me. The CB funds are released on Friday, can I get an advance before then?". Later that day, Falconer sent an email to Fagredin, instructing him to transfer $300,000 to Heidtman and to “[m]ark the payment 'Sigalla' as he authorised it". The applicant subsequently instructed Fagredin to hold off on making the transfer, but on 20 March 2008, sent an email to Fagredin instructing him to transfer $300,000 to Heidtman on behalf of ZMS, stating "John as ok please do ASAP and send me a copy". On the same day, $300,000 was transferred from the TZL account to a bank account of Heidtman, on instructions signed by Falconer and Fagredin which stated that the transaction was on "behalf of ZMS Investment". Upon Heidtman receiving the $300,000 into its trust account, the funds were transferred to Perpetual and recorded in the ZMS Perpetual account as "Interest Receipt”. This effected a reduction in ZMS’s indebtedness to Perpetual, and thus a benefit to the applicant’s company ZMS, in that amount, and was the subject of Count 10.

40. As at 30 September 2008, ZMS was in arrears by at least $150,000. On 13 October 2008, Perpetual issued a Default Notice to ZMS. ZMS responded that it would pay $300,000 within the next few days. Perpetual’s agreement to this proposal was communicated by an email to the applicant dated 14 October 2008, asking "can you arrange the bank cheque asap". On 15 October 2008, BZI paid $300,000 by cheque to Perpetual; however, the cheque was dishonoured by NAB, as there were insufficient funds in BZI's account. On 16 October 2008, $400,000 was transferred electronically, by someone using the applicant's internet access details, from TZL to BZI. On the same day, written instructions were sent to NAB to transfer $300,000 from the BZI account to Perpetual, and a $300,000 payment, described as "Interest Receipt”, was recorded in Perpetual’s account for ZMS. The transfer of $400,000 on 16 October 2008 conferred a benefit of that amount on the applicant and his company BZI, and was the subject of Count 17.

41. On 13 November 2008, Perpetual stipulated a deadline of 12 December 2008 for ZMS to refinance the Perpetual Loan. On 11 December 2008, an email was sent to Perpetual advising that ZMS proposed to pay $500,000 the next day, being $43,802.85 for interest in arrears, and the remainder as a principal reduction, on condition that Perpetual agree to extend the deadline to 31 January 2009. Perpetual agreed. On 15 December 2008, $782,000 was transferred electronically, by someone using the applicant's internet access details, from TZL to BZI. The $782,000 transferred to BZI was used to fund a cheque for $500,000 to "Pay Cash"; a deposit slip indicated that it was used to credit the Perpetual account for ZMS. On 15 December 2008, two payments totalling $500,000 were recorded in the Perpetual account for ZMS – $43,802.85 as “Interest Receipt", and $456,197.15 as "Principal Decrease". The transfer of $782,000 to BZI on 15 December 2008 conferred a benefit of that amount on the applicant and his company BZI, and was the subject of Count 21.

42. The applicant said that the payment the subject of Count 10 was on account of commission owed to the applicant by TZL in respect of capital raising, and that the payments the subject of Counts 17 and 21 were either commission owing to him or the return of money deposited in the TZL bank account by his clients, or both.

Counts 8, 9, 11, 12, 13, 14, 15, 16, 18, 19, 20, 22, 23 and 24: gambling debts

43. The Crown case was that this category reflected transactions in which amounts of money were transferred from TZL for the benefit of the applicant (either to his personal bank account or to BZI), to place him in funds to make on-payments to Tom and Bill Waterhouse Pty Ltd (“Waterhouse”) (with which he had a credit betting agreement under which he had a set credit limit for racing bets on account), or, in the case of Count 11, another gambling platform. Tom Waterhouse gave evidence that while most client accounts were required to be settled weekly, some clients who were known for a long period of time, including the applicant, were afforded greater flexibility, so that for example an account might be required to be settled once it reached a certain amount, rather than on a weekly basis. From time to time, as his account reached a certain level of debt, the applicant was required to pay off a portion of the account, in order to be permitted to continue to place bets.

44. On 25 February 2008, on written instructions signed by Falconer and Fagredin, an amount of $68,000 was transferred from TZL to BZI. Immediately before this transfer was effected, the applicant sent an email to Fagredin and Falconer stating "John [Falconer] can you please get Farook [Fagredin] to transfer the last 68,000 to zms account for the sub underwriting today." The transaction was described on the TZL General Ledger as "balance of sub underwriting”. The money was then transferred to ZMS, with the description in the BZI ledger of "loan as" [‘as’ referring to Andrew Sigalla], thereby placing the ZMS account in funds to meet a cheque for $110,000 in favour of Waterhouse, which was used to reduce the applicant's gambling debt to that company. As at 23 February 2008, his debt to Waterhouse was $347,500. The transfer of $68,000 conferred a benefit on the applicant and his company BZI of that amount, and was the subject of Count 8.

45. On 3 March 2008, on written instructions from the applicant and Fagredin, $300,000 was transferred from TZL to a BZI account. On the last business day preceding this transaction, Friday 29 February 2008, the BZI account had been overdrawn, and the inward transfer permitted a number of cheques to be met, including one for $109,888.57 in favour of "Berndale Securities", which was deposited into a bank account of Berndale Securities Ltd, the trust account for BBY; and one for $100,000 to "Tom and Bill Waterhouse", which reduced the applicant's gambling debt to Waterhouse. On or about 3 March 2008, the applicant's debt to Waterhouse was $355,150. The transfer of $300,000 conferred a benefit on the applicant and his company BZI of that amount, and was the subject of Count 9.

46. On 17 July 2008, on written instructions signed by Fagredin and Falconer, $500,000 was transferred from TZL to BZI. The $500,000 placed BZI in funds to pay:

1. a cheque for $87,780.15 to Berndale Securities, the trust account for BBY, which was credited to BZI's account with BBY;

2. a cheque for $200,000 to Eskanders Betstar Pty Ltd (Betstar), to meet gambling debts owed by the applicant. As at 17 July 2008, the applicant's betting account with Betstar was in debit to the extent of $230,839.75.

The transfer of $500,000 conferred a benefit on the applicant and his company BZI of that amount, and was the subject of Count 11.

47. On 21 July 2008, on written instructions signed by Falconer and Fagredin, $167,783.37 was transferred from TZL to BZI. This followed an email sent on 20 July 2008 by the applicant to Mr Sommerlad of NAB, explaining that the BZl account was overdrawn because Fagredin could not transfer funds from TZL to BZI until a drawdown from the TZL term deposit had cleared. The applicant advised that TZL now had cleared funds, and that Fagredin would email the relevant request for a transfer (from TZL to BZI). The $167,783.37 placed the BZI account in funds to meet a cheque for $200,000 in favour of Waterhouse, which reduced the applicant's gambling debt to Waterhouse. As at 19 July 2008, his debt to Waterhouse was $863,599. The transfer of $167,783.37 conferred a benefit on the applicant and his company BZI of that amount, and was the subject of Count 12.

48. On 23 July 2008, $600,000 was transferred from TZL to BZI. on written instructions signed by Falconer and Fagredin, which were forwarded by email from the applicant to Sommerlad with a note "James [Sommerlad]. This will be quicker. Please confirm when completed". The $600,000 placed the BZI account in funds to meet a cheque for $250,000 to Waterhouse, which reduced the applicant's gambling debt to Waterhouse. As has been noted, at 19 July 2008, his debt to Waterhouse was $863,500. The balance of the $600,000 was used by BZI for cheques in the amount of $69,932.53 and $77,850.84, both in favour of Berndale Securities, the trust account for BBY, which were credited to BZI's account with BBY. The transfer of $600,000 conferred a benefit on the applicant and his company BZI of that amount, and was the subject of Count 13.

49. On 18 August 2008, the applicant sent an email to Fagredin, instructing him to transfer $525,000 to BZI “for share purchase". The same day, on written instructions signed by Falconer and Fagredin, $525,000 was transferred from TZL to BZI; and $500,000 was transferred from the BZI account to the applicant's personal bank account, which placed his personal account in funds to meet a cheque for $500,000 to Waterhouse, reducing his gambling debt to Waterhouse. As at 16 August 2008, his debt to Waterhouse was $1,943,280. The transfer of $525,000 conferred a benefit on the applicant and his company BZI of that amount, and was the subject of Count 14.

50. Early on the morning of 24 September 2008, the applicant sent an email to Fagredin and Falconer, instructing Fagredin to transfer $500,000 to BZl "first thing this morning". Later on 24 September 2008, the applicant sent an email to Sommerlad, advising that Fagredin had faxed the funds transfer request and requesting that Sommerlad process this request "straight way", because the applicant was about to fax another transfer request that he needed "actioned ASAP." The same day, on written instructions signed by Falconer and Fagredin, $500,000 was transferred from TZL to BZI, and $400,000 was then transferred from the BZI account to the applicant's personal account, and then, on written instructions signed by the applicant, to Waterhouse, reducing the applicant's gambling debt to Waterhouse which, as at 20 September 2008, was $1,604,430. The transfer of $500,000 conferred a benefit on the applicant and his company BZI of that amount, and was the subject of Count 15.

51. On 13 October 2008, $300,000 was transferred electronically, by someone using the applicant's internet access details, from TZL to the applicant's personal bank account. The transfer placed the applicant's account in funds to meet a cheque for $300,000 to Waterhouse, reducing the applicant's gambling debt to Waterhouse which, as at 13 October 2008, was $1,947,580. On 14 October 2008, Falconer sent an email to the applicant, stating "[p]lease tell me why you took $335k out of the TZL cheque account without any proper signed authority. This is not going to work if this continues. I am contacting the bank tomorrow to see what I can do to limit your ability to withdraw funds at your leisure. This is bullshit." The applicant replied "[y]ou told me not to use Farouk cause he was busy. It was for share purchase." The transfer of $300,000 conferred a benefit on the applicant of that amount, and was the subject of Count 16.

52. On 20 October 2008, $300,000 was transferred electronically, by someone using the applicant's internet access details, from TZL to the applicant's personal bank account. The $300,000 payment placed the applicant's account in funds to meet a cheque in the amount of $300,000 to Tom Waterhouse Pty Ltd, reducing the applicant's gambling debt to Waterhouse which, as at 15 October 2008, was $1,614,680. The transfer of $300,000 conferred a benefit on the applicant of that amount, and was the subject of Count 18.

53. On 26 November 2008, $200,000 was transferred electronically, by someone using the applicant's internet access details, from TZL to BZI. The $200,000 placed the BZI account in funds to meet a cheque for $200,000 in favour of Waterhouse, reducing the applicant's gambling debt to Waterhouse which, as at 26 November 2008, was $1,586,780. The transfer of $200,000 conferred a benefit on the applicant and his company BZI of that amount, and was the subject of Count 19.

54. On 10 December 2008, $669,534.89 was transferred electronically, by someone using the applicant's internet access details, from TZL to BZl. In part, the $669,534.89 funded a cheque in the amount of $382,540.01 to Berndale Securities, the trust account for BBY, which was credited to BZI's account with BBY. It also funded a cheque in the amount of $200,000 to Tom Waterhouse, reducing the applicant's gambling debt to Waterhouse which, as at 10 December 2008, was $841,220. The transfer of $669,534.89 conferred a benefit on the applicant and his company BZI of that amount, and was the subject of Count 20.

55. On 23 January 2009, $307,000 was transferred electronically, by someone using the applicant's internet access details, from TZL to BZI. On the same day, an amount of $300,000 was transferred electronically, by someone using the applicant's internet access details, from BZI to the applicant's personal bank account; and an amount of $300,000 was transferred from the applicant’s account to an ANZ account in the name of “Tom & Bill Waterhouse (Vic) Pty Ltd”, reducing the applicant's gambling debt to Waterhouse which, as at 26 January 2009, was $1,328,970. The transfer of $307,000 conferred a benefit on the applicant and his company BZI of that amount, and was the subject of Count 22.

56. On 2 March 2009, $250,000 was transferred electronically, by someone using the applicant's internet access details, from TZL to BZI. On the same day, $50,000 was transferred electronically, by someone using the applicant's internet access details, from the TZL credit card assigned to the applicant to BZI. These two transfers placed the BZI Account in funds to meet a cheque for $300,000 in favour of Tom Waterhouse, reducing the applicant's gambling debt to Waterhouse which, as at 28 February 2009, was $1,782,470. The transfers of $250,000 and $50,000 conferred a benefit on the applicant and his company BZI of those amounts, and were the subject of Counts 23 and 24 respectively.

57. The applicant's evidence in chief was that:

1. from around mid-2007, shareholders and clients of the applicant had deposited money into the TZL bank account for the applicant to use when Oasis was ready to redeem a note, or to combine with other shareholders to purchase those notes. The applicant considered that he held the money deposited into the TZL bank account by his clients on trust to purchase shares, off-market. The transactions in which money was transferred from TZL to Berndale Securities were in this category, as BZI's account with BBY was used to conduct the share trading;

2. the payments the subject of Counts 13, 14, 15, 16, 18, 19 and 22 were on account of commission owed to the applicant by TZL in respect of capital raising;

3. the payments the subject of Counts 9, 11, 12, 16, 17 and 21 (as well as 6 and 17) were either commission owing to the applicant, or the return of money deposited in the TZL bank account by his clients, or both;

4. the payment the subject of Count 8 was referable to a transaction in the USA, and was a reimbursement of sub-commissions that had been paid by the applicant personally on behalf of TZL;

5. in September 2008, there was a redemption of the Oasis notes. In the course of this transaction, the directors of TZL were given a non-recourse loan, with which they purchased shares in TZL or "mopped up" the shares from the redemption of the Oasis notes. The transaction the subject of Count 20 related to this non-recourse loan; and

6. the transactions the subject of Counts 23 and 24 were reimbursements of the applicant's relocation expenses when he moved to Chicago to become chairman of the company, as well as a reimbursement of money owed to him.

58. In cross-examination, in respect of Count 14 (which, in chief, he had said was commissions owing to him), the applicant stated that the money was "either commission owing to me or moneys that have been deposited into TZL's account for me to use ... to use to purchase shares for the clients who deposited the money in”. In respect of Counts 15 to 19, he proffered a new explanation, namely that the money might have related to a second non-recourse loan issued by TZL to the directors to purchase TZL shares.

59. As to the coincidence of timing between the applicant having pressing debts due and payable and the occurrence of transfers to him, it was submitted on his behalf that this did not render the transactions dishonest, as the requirement to pay a pressing obligation would simply provide an occasion for him to draw down what he was entitled to by way of commission, which had accrued earlier when capital had been raised.

The applicant’s entitlements and the Mandate Letter

60. As he claimed that the moneys transferred were, at least in substantial part, remuneration to which he was entitled, the applicant’s remuneration arrangements were relevant. The applicant’s remuneration arrangements with TZL may be summarised as follows:

1. the 2003 Consultancy Agreement: From 1 January 2003 to 25 January 2007, the applicant’s remuneration was governed by a consultancy agreement with TZI, which provided that he, through ZMS, would provide services to TZI for three years, at a rate of $16,666 per month or as otherwise agreed;

2. the 2007 Consultancy Agreement: From 25 January 2007 to 31 July 2008 the applicant’s remuneration was governed, in part, by this agreement, which provided for TZL to pay ZMS $25,000 per month (plus other benefits) for consultancy services;

3. the 2007 Executive Services Agreement: This agreement operated in tandem with the 2007 Consultancy Agreement from 25 January 2007 to 31 July 2008, and provided for TZL to pay the applicant $120,000 per annum for his services as an executive director; and

4. the 2008 Executive Services Agreement: This agreement provided for TZL to pay the applicant $120,000 per annum, plus US$400,000 per annum for services as executive chairman of TZL and president of TZL subsidiaries from 25 January 2007 onwards.

61. None of these agreements authorised any such “commissions” as the applicant claimed, although the executive services agreements made specific provision for a bonus payment if TZL was successfully listed on the NASDAQ. The 2007 Consultancy Agreement included a clause permitting additional “bonus plans” to be entered in to, but stated that any payment or other benefit paid to the applicant shall be governed entirely by the rules of such plans.

62. After he ceased to be a director of TZL in 2009, in the context of inquiries made by the new directors of the company, the applicant produced a document dated 22 July 2004 from ZMS to TZL which, on its face, might have justified at least some of the payments made to him (“the Mandate Letter”). The Mandate Letter was as follows:

“Further to our successful $12m capital raising and back door listing of Telezygology Inc. into Ced Australia in April, 2004 and subsequent name change to TZ Limited (TZL), we hereby outline the manner in which ZMS Investments Pty Ltd (ZMS) is willing to continue to assist TZ Limited (TZL) in realising its financial and strategic development objectives into the future. This letter now serves to formally engage ZMS Investments Pty Ltd as corporate advisor to TZL on an exclusive basis in relation to future capital raisings and acquisitions and its proposed Nasdaq listing.

I.    Scope of Work

In the context of this assignment our role may include: [...]

•   On-going assessment of the options available to TZL with respect to the raising of equity and/or debt capital as well as considerations of size, timing and the level of dilution;

•   [...] Negotiating the terms of any capital raising to ensure optimal pricing and efficient transaction execution;

•   Managing the process of any raising in conjunction with the stock brokers, legal and accounting advisers;

•   [...] Overall provide such other advice and assistance as TZL may reasonably request in relation to its capital structure and management of any capital raising process.

II.   Remuneration

For the services provided under this letter of engagement (Engagement) TZL agrees to pay to ZMS the following fees, costs and expenses (plus all applicable GST).

Success Fee

ZMS will be paid a fixed fee of 8% by TZL for assisting in securing any required new capital via either debt or equity. This fee will become payable at the time that the capital is made available to the Company and ZMS has the right to request this fee is payable in cash or shares in TZL or a combination of both. [...]”

63. The letter was purportedly signed by Leibowitz and Falconer on 26 July 2004. However, Leibowitz gave evidence that he did not recall having signed the letter; he did not believe that he had attended any board meeting which approved the terms of the Mandate Letter; he did not believe he had discussed the Mandate Letter with anyone, including Kelliher, Falconer or the applicant; and he had not given any authorisation for his electronic signature to be affixed to the document.

64. The Crown case was that the existence of the Mandate Letter was inconsistent with the applicant's consultancy agreements with TZL, which included capital raising in the scope of work and purported to constitute the entirety of any arrangement between the applicant and TZL. Although the letter, if authentic, led to many millions of dollars being paid to the applicant, there was no evidence of any correspondence between the directors about it, and none of the directors – including Leibowitz, Kelliher and Wilson – nor Fagredin, nor the accountants for ZMS, had any knowledge of it.

65. Moreover, there was evidence of a forensic computer expert, Rodney McKemmish, who analysed the metadata on the hard drive of Falconer's computer on which the Mandate Letter was found, that the signatures on the document were embedded images, and the letter to which the signatures were attached was created in August 2009.

66. The applicant said that the Mandate Letter came about after he had resigned from the board, in the context of a TZL board meeting in July 2004, following a discussion about the applicant's ongoing role in relation to capital raising. At the time, Leibowitz, Falconer and Kelliher were on the board. He gave the Mandate Letter to Falconer following the July 2004 board meeting, and asked him to give it to the other directors. There were no further discussions about the letter. Throughout the period between 2004 and 2006, he submitted invoices to TZL for reimbursement in relation to his role raising capital for TZL. To the extent that it was suggested by the Crown that the Mandate Letter was a recent invention that post-dated the transactions, the applicant’s response was that anything that occurred on Falconer's computer in 2009 had nothing to do with him.

The Conviction Appeal

Grounds of appeal

67. Originally, the notice of appeal raised the following grounds:

1. the trial judge misdirected the jury as to the elements of an offence contrary to s 184(2)(a) of the Corporations Act;

2. the trial judge erred in admitting evidence of the Perpetual Loan and the applicant’s gambling-related activities because that evidence was not relevant or was otherwise inadmissible;

3. the trial judge erred in refusing to admit evidence that supported the applicant’s case at trial; and

4. the applicant was denied a chance of acquittal that was fairly open to him on one or more of the 24 counts on the indictment, as a result of the conduct of the trial as a whole.

68. However, the grounds of appeal were amended, at a late stage, with one new ground (1A) being added, and grounds (2) and (3) being abandoned. The Crown did not oppose leave being granted to amend to add the new ground. The surviving grounds of appeal are that:

1. the trial judge misdirected the jury as to the elements of an offence contrary to s 184(2)(a) of the Corporations Act;

(1A)   the trial miscarried because the jury was not directed that in order to be satisfied that the applicant was guilty of the charges, the jury would have to be satisfied beyond reasonable doubt that the applicant did not have an honest belief that he was entitled to the funds paid to him or at his direction; and

1. the applicant was denied a chance of acquittal that was fairly open to him on one or more of the 24 counts on the indictment as a result of the conduct of the trial as a whole.

   69. Moreover, ground (4) was relied on only insofar as it is related to new ground (1A). Thus the conviction appeal now involves only the adequacy of the directions given by the primary judge, as identified in amended grounds (1) and (1A) above.

Ground 1 – misdirection as to elements of offence

70. As has been noted, Ground 1 contends that the trial judge misdirected the jury as to the elements of an offence contrary to s 184(2)(a) of the Corporations Act. That section relevantly provides:

(2)    A director, other officer or employee of a corporation commits an offence if they use their position dishonestly:

(a)     with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the corporation;

71. At the conclusion of the summing up, the trial judge, without objection, provided to the jury a document entitled “Direction as to the elements of the offence”, which relevantly stated:

“1 In order to prove the commission of an offence against s 184(2)(a) of the Corporations Act 2001 (Cth), the Crown must establish beyond reasonable doubt all of the following elements:

(1) that at the relevant time of each count the accused was a director of TZ Limited (as defined in s 9 of the Corporations Act) and

(2)    that the accused used his position as a director dishonestly and

(3)    that the accused had the intention of directly gaining a benefit for himself or for a third party.”

72. In Kwok v R, the following directions which had been given by the trial judge were seemingly accepted as appropriate by this Court:

“1.    The Accused was a director of a corporation – Envirostar Energy Ltd.

2.    The accused used his position of director of Envirostar Energy Ltd with the intention of directly or indirectly gaining an advantage for Donaldson Industries Pty Ltd/MacArthur Transport Pty Ltd.

2.1    He did the alleged act (facilitated the lease)

2.2    He intended thereby to gain an advantage (rent) for Donaldson/MacArthur

3.    The accused used his position of director dishonestly

3.1    He had the alleged intent (he believed that there was a conflict of interest which should be disclosed, he decided that he not disclose it, and he deliberately concealed it).

3.2    Ordinary, decent people consider that, if a person has that state of mind, it is dishonest for that person to facilitate such a lease”. [5]

5. See (2007) 175 A Crim R 278; [2007] NSWCCA 281 at [72] (Santow JA, Hidden J and Howie J agreeing).

73. The applicant submitted that the directions given in the instant case were inadequate, in distinction to those given in Kwok, “because they erroneously conflated the physical element (use of position as a director) with the mental element of dishonesty, and that the failure to indicate to the jury that these were independent elements which required separate consideration was exacerbated by the absence of any reference at all in the summing up to the “use of position” element.” It was submitted that the appropriate direction was one to the effect that, for each of the 24 counts, the jury could convict only if satisfied beyond reasonable doubt:

1. that the applicant actually did the acts alleged by the Crown to have ‘caused’ the relevant transfer of funds or issue of shares;

2. that doing those acts constituted a use of his position as a director of TZ; and

3. that such use of position was dishonest and with the relevant intent.

74. The essential complaint was that the directions given did not adequately identify and direct attention to the second of those elements. It was submitted that the Crown failed to specify the particular act or omission said to constitute a ‘use’ of the applicant’s position as director of TZL, beyond the general proposition that he ‘caused’ the relevant transactions, and that no attention was paid to the nexus between his directorship and the alleged conduct. It was submitted that the possibility could not be excluded that the applicant might have been convicted on all counts, merely because the jury was satisfied that he was dishonest, notwithstanding that he denied anything to do with the transactions the subject of Counts 2 and 3, and even on the Crown case, had no involvement with the actual mechanism used to effect the transfers referred to in Counts 1 to 8 and 10 to 15.

75. It was not an issue at trial that the transactions did not involve a use by the applicant of his position as a director; as has been noted, the predominant issue was that of whether the use was a dishonest one. The applicant’s status as a director was not contentious (except in respect of the first two counts, in respect of which it was resolved adversely to him and is not the subject of appeal). The Crown case on ‘use of position’ was a circumstantial one, based upon the applicant’s role in TZL, his relationship with those who directly implemented relevant transactions where he did not do so himself (in particular, Falconer and Fagredin), and the accrual of benefits to him as a result. It was relevantly encapsulated in the following part of the Crown’s address:

“You may recall some of the evidence of Mr Sigalla where he’d say well, I wasn’t a signatory on the account; how could I have transferred the money across? That’s not what the Crown is alleging. The Crown is alleging that he caused, for example, in count number 1, that amount of money to be transferred across. And the use of the word “cause”, the Crown will say to you, means bring about/result in; that he used his position as a director to, as I said, bring about or make happen the transfer of those funds to ZMS.”

76. The applicant had no relationship with TZL other than as a director. This was not a case in which he had multiple roles and relationships, such that it might be said that some of his conduct did, but other did not, involve a use of his position as director. Although he did not directly implement some of the transactions, there was evidence of his influence: for example, Falconer’s diary note in relation to the transactions referred to in Counts 1, 2 and 3; the applicant’s execution of the subscription agreement for the shares in Reader China and subsequent email of 7 September 2007 to Lau, "[d]on't tell John about reader he won't be happy", in respect of Count 5; and the applicant’s involvement in procuring, and receipt of benefits from, the transactions in Counts 10, 11, 12, 13, 14 and 15. Even if the directions were theoretically deficient, they were not practically so in the context of this trial, as it was conducted. The inference that the transactions were a manifestation of a use by the applicant of his position was inescapable, from the circumstance that his only role in and connection with the company was as a director, and from the flow of funds to the benefit of him or his companies.

77. Moreover, no issue was taken with these directions at the trial, although there were several opportunities to do so. [6] Criminal Appeal Rules 1952 (NSW) r 4 is therefore engaged. Rule 4 is not a prophylactic where there has been a miscarriage of justice. However, its requirements are not mere technicalities: an accused who has been convicted on the basis of the issues agitated at trial is not entitled as of right to a new trial on issues which could and should have been, but were not, raised at that trial. As Bathurst CJ observed:

“Subsequent cases have established that the following matters are important in considering the operation of r 4:

• The requirements of r 4 are not mere technicalities. The Criminal Appeal Act does not exist to enable an accused who has been convicted on one set of issues to have a new trial under a new set of issues which could or should have been raised at the first trial: R v ITA [2003] NSWCCA 174; (2003) 139 A Crim R 340 at [94], citing with approval R v Fuge [2001] NSWCCA 208; (2001) 123 A Crim R 310, 319. See also Darwiche v R [2011] NSWCCA 62 at [170].

•   The applicant must establish that he or she has lost a real chance (or a chance fairly open) of being acquitted: Picken v R [2007] NSWCCA 319 at [20]-[21].

•   A failure by counsel to take objection or to raise an issue on summing-up may be explicable by the fact that counsel said nothing hoping to gain an advantage at a later stage, or that counsel took no objection as, in the atmosphere of the trial, counsel saw no injustice as to what was being done: Germakian v R [2007] NSWCCA 373; (2007) 70 NSWLR 467 at [10]-[13]; Sanchez v R [2009] NSWCCA 171; (2009) 196 A Crim R 472 at [58]-[61].

•   An unexplained failure to take the point at the trial is usually a reasonably reliable indicator of the fairness and adequacy of the summing-up: Tekely v R [2007] NSWCCA 75 at [88], [130].”^[7]

6. See T1184.23, T1315, and T1333.

7. ARS v R [2011] NSWCCA 266 at [148] (Bathurst CJ; James and Johnson JJ agreeing).

78. These considerations have even more force where, as here, the directions in question were reduced to writing and there was ample opportunity to dispute their sufficiency at the trial. In circumstances where the inference that the transactions involved a use of the applicant’s position as a director was practically inescapable, and the focus of the defence was a denial of dishonesty (the force of which might be prejudiced by pursuit of a ‘false issue’ about ‘use of position’), it is little surprise that no such objection was taken at the trial: no-one considered that there was an issue about ‘use of position’. Leave under r 4 should be refused in respect of this ground, which would in any event fail.

Ground 1A – absence of direction as to claim of right

79. Two days prior to the hearing of this appeal, the applicant sought leave to add an additional ground (1A), as follows:

(1A)   the trial miscarried because the jury was not directed that in order to be satisfied that the applicant was guilty of the charges, the jury would have to be satisfied beyond reasonable doubt that the applicant did not have an honest belief that he was entitled to the funds paid to him or at his direction.

80. The Crown did not oppose the applicant being permitted to amend to raise that ground, but submitted that it should fail, on the merits and also because it too would require leave under r 4, not having been raised at the trial.

81. At trial, the applicant’s defence was in the nature of a ‘claim of right’, in that he maintained that he was entitled to the money and shares in question, as remuneration for his fund-raising endeavours for the company. At times he even invoked the formula ‘claim of right’.

82. The judge gave the following written directions relevant to the element of ‘dishonesty’ (emphasis added):

“Direction for (2) - "dishonestly"

7    The Crown case is that the accused used his position as a director dishonestly by causing the transfer of funds from accounts held by TZ Limited that he was not entitled to , for his benefit or the benefit of a third party; or in the case of count 3 that he caused to be issued by TZ Limited to Joyeagle 847,458 fully pa id ordinary shares in TZ Limited without the payment of any subscription for the shares .

8    The Crown case is that at the time of each transaction the subject of the charges, the accused knew that he was not entitled to cause the transfer of the funds (or the issuing of shares) and this knowledge rendered his conduct dishonest.

9    Whether the accused "dishonestly" used his position is to be assessed according to the standards of ordinary, decent, people - meaning the ordinary notions of what the community would regard as dishonest.

10    This means that you must be satisfied that the evidence adduced by the Crown establishes beyond reasonable doubt that the conduct of the accused in his position as a director (at the time of the acts constituting the counts on the indictment) was dishonest according to the standards of ordinary, decent, people.”

83. In the course of summing-up, her Honour said:

“The direction for 2, "dishonestly". The way the Crown puts the case is set out in paragraph 7, and in paragraph 8 the Crown case is that at the time of each transaction the subject of the charges the accused knew that he was not entitled to cause the transfer of funds or the issuing of shares, and you will remember count 3 is the odd one out, because it relates to issue of shares, and this knowledge rendered his conduct dishonest.

Now, paragraph 9 is important. Sorry. It's all important. Each paragraph is important. Whether the accused dishonestly used his position is to be assessed according to the standards of ordinary, decent people, meaning the ordinary notions of what the community would regard as dishonest. This means that you must be satisfied that the evidence adduced by the Crown establishes beyond reasonable doubt that the conduct of the accused in his position as a director at the time of the acts constituting the counts on the indictment was dishonest

according to the standards of ordinary, decent people.”

84. Numerous other passages, in the Crown opening, the Crown closing, and the summing-up, emphasised that the dishonesty relied on by the Crown was that the applicant knew that he was not entitled to the funds or shares.

85. However, the trial judge did not give a specific direction that the applicant could only be convicted if the jury were satisfied beyond reasonable doubt that the applicant did not genuinely believe he had a claim of right. This was the gravamen of Ground 1A.

86. The course adopted by the judge was consistent with the position stated by the High Court in MacLeod v The Queen (“MacLeod”), ^[8] that in the context of an offence of which dishonesty is an element, a direction about the ‘claim of right’ defence is unnecessary and inappropriate. In question in that case was s 173 of the Crimes Act 1900 (NSW), which provided:

Whosoever, being a director, officer, or member, of any body corporate, or public company,

    fraudulently takes, or applies, for his own use or benefit, or any use or purpose other than the use or purpose of such body corporate, or company, or

fraudulently destroys any of the property of such body corporate, or company,

shall be liable to penal servitude for 10 years.

8. (2003) 214 CLR 230; [2003] HCA 24 at [46] (Gleeson CJ, Gummow and Hayne JJ).

87. The offence was thus one of which, by reason of the word ‘fraudulently’, dishonesty was a specific component. Of the relevance of a defence of ‘claim of right’ in that context, it was said:

128. The third count to which Falconer pleaded guilty encapsulated the same conduct which was the subject of Count 5 against the applicant. The applicant had been sentenced to three years and six months imprisonment. Falconer received a sentence of one year and 10 months, implying a starting point of two years and three months before a 25% discount for his plea of guilty.

129. The total effective sentence received by the applicant for Counts 1 to 7 was four years and nine months; while the total effective sentence received by Falconer was two years and six months – implying a starting point of three years and four months.

130. The parity principle requires that any difference between sentences imposed on co-offenders for the same offence not be such as to give rise to a justifiable sense of grievance on the part of the offender with the heavier sentence, or to give an appearance that justice has not been done. [48] Equal justice requires that there should not be any marked disparity of sentence as between co-offenders such as to give rise to a justifiable sense of grievance. [49] As explained by Johnson J in R v Pan:

“The Parity Principle

[34]    The elimination of unjustifiable discrepancy in sentencing is a matter of abiding importance to the administration of justice and to the community – the issue is whether the particular sense of grievance or injustice is a legitimate one: Lowe v The Queen (1984) 154 CLR 606 at 611 per Mason J. The test for determining the existence of a sense of grievance is objective not subjective. What has to be demonstrated by the person complaining on the grounds of parity is not that he feels aggrieved, but that a reasonable mind looking overall at what has happened would see that the offender’s grievance is justified: R v Doggett (Court of Criminal Appeal, 24 March 1996, unreported) per Sully J; R v Ilbay [2000] NSWCCA 251 at paragraph 6.

[35]    Where there is a degree of disparity so as to invite a reduction in the sentence imposed, it is not necessary for the Court of Criminal Appeal to intervene if the result of doing so is to produce a sentence disproportionate to the objective and subjective criminality involved: R v Boney [2001] NSWCCA 432 at paragraph 15. A stage can be reached at which the inadequacy of the sentence imposed upon the co-offender is so great that the sense of grievance engendered can no longer be regarded as a legitimate one: R v Diamond (Court of Criminal Appeal, 18 February 1993, unreported, BC9302054); R v Boney, above, at paragraph 16.”[50]

48. Lowe v The Queen (1984) 154 CLR 606 at 623 (Dawson J; Wilson J agreeing); [1984] HCA 46.

49. Postiglione v The Queen (1997) 189 CLR 295 at 301 (Dawson and Gaudron JJ); [1997] HCA 26.

50. [2005] NSWCCA 114 at [34]-[35] (Johnson J; Giles JA and Hoeben J agreeing).

134. It may be accepted that the application of the principle is not relevantly affected by reason that the applicant was charged with seven counts while Falconer was charged with only three, encapsulating the same conduct: formal identity of charges is not a necessary condition of its application. [51]

     51. Green v The Queen (2011) 244 CLR 462 at 474 [30] (French CJ, Crennan and Kiefel JJ); [2011] HCA 49.

135. Although it is preferable for co-offenders to be sentenced by the same judge at the same time, that is by no means an absolute requirement. In this case, they were sentenced by the same judge, albeit at different times. “Considerable obstacles” confront an applicant contending for error based on parity where the sentencing judge is fully aware of the sentences imposed upon co-offenders and the reasons for them, and provides reasons for the disparity. [52] This is such a case.

     52. Channon v R [2020] NSWCCA 112 at [35] (RA Hulme J, Wilson J agreeing).

136. In sentencing Falconer, her Honour made these observations concerning parity:

“Parity

[159]    It was common ground that the principles of parity apply between the offender and Sigalla. Equal justice requires that, as between co-offenders, there should not be any marked disparity of sentence that gives rise to a justifiable sense of grievance: Postiglione v The Queen (1997) 189 CLR 295 at 301; [1997] HCA 26.

[160]    There are significant differences between the offender’s involvement and that of Sigalla. Further, as referred to above, the manner of charging them has been different.

[161]    The offender’s involvement in the Sigalla transfers (count 4) was that he was reckless as to the beneficiary of the transaction (s 184(2)(b) of the Corporations Act); whereas Sigalla himself was sentenced on the basis that the jury was satisfied that he had intended to benefit himself (s 184(2)(a) of the Corporations Act). Sigalla and his companies derived a substantially greater financial benefit from his criminality (in excess of $7.5 million) than did the offender ($1.416 million). Sigalla was not involved in the conduct the subject of counts 5 and 6 against the offender. Sigalla committed 11 further offences in respect of further transactions which were not the subject of charges against the offender. The offender played a direct role in causing the subject transactions to be falsely described in the accounts of TZ.

[162]    I accept that Sigalla was the principal architect of most of the offending conduct and that he was, as the offender and other witnesses called by the offender have deposed, a threatening and intimidating character who was bullying and abusive to those around him, including the offender. While the offender gained considerably from the offending conduct, I accept that he was not its progenitor. He appears to have been, in the context of his relationship with Sigalla, a weak man, who collaborated in Sigalla’s dishonesty. Nonetheless the offender extracted considerable sums from his offending, although his share was much smaller than Sigalla’s. TZ was a public company and needed more than one director. Had the offender not been willing to apply his signature, and that of other directors who had electronic signatures, Sigalla would not have been able to effect the transactions that were to his benefit.

[162]    There are also differences in the subjective circumstances of the offenders and in particular their ages, their attitude to their offending and the conviction of Sigalla following a trial as compared with the plea of guilty by the offender.” [53]

53. Primary judgment at [159]-[162].

137. At first, the applicant submitted that these findings were made in circumstances where the applicant was not present and not given the opportunity to call evidence, cross-examine Falconer’s witnesses or make submissions on the issue. This curious submission was abandoned during oral argument: the applicant had no standing to be heard in respect of Falconer’s sentencing proceedings.

138. Otherwise, the applicant invoked the following matters:

1. that it was not clear that the applicant could properly be described as the ‘principal architect’ of the conduct the subject of Counts 1 to 7;

2. that Falconer’s share of the benefits was not “much smaller than [the applicant’s]”, at least in respect of Counts 1, 2 and 3;

3. that at the time of Counts 1 and 2, the applicant was not formally a director (his liability depending on the extended definition), whereas Falconer was;

4. that while the applicant transferred the funds the subject of Counts 6 and 7 to O’Donnell, Falconer directed the implementation of the transactions the subject of Counts 1, 2, 3, 4 and 5; and

5. that the applicant derived a benefit of $300,000 from Count 1; Falconer derived benefits of $1.2 million from Counts 2, 3 and 5; and the benefit to the applicant from Counts 4, 6 and 7 was nominal in the sense that it merely placated a third party by making the applicant his creditor.

139. However, although Falconer may have benefitted more than the applicant from the transactions involved in Counts 1, 2 and 3, that is far from the exclusive comparator. The detriment to the company – preventing which is after all the chief object of the provision – is at least equally significant. There is a strong inference, from Falconer’s diary note, that (as her Honour found) the applicant was the principal architect of the transaction. As to Counts 4, 6 and 7, the effect of the payments was to discharge an obligation of the applicant to advance the loan to O’Donnell; there was no benefit to Falconer. The circumstance that Falconer may have performed the ministerial acts that implemented the transactions the subject of Counts 1, 2, 3, 4 and 5 does not elevate his responsibility above that of the applicant, who instigated and asked Falconer to implement them. That he was a director only by reason of the extended definition does not significantly affect his criminality. From the seven counts in question, the applicant received benefits amounting to approximately $1.7 million, while Falconer received some $800,000.

140. There were also the subjective considerations noted by her Honour: Falconer had expressed contrition; he had been in custody in Thailand in onerous conditions for three months pending his extradition; he had a lifelong history of depressive symptoms meeting the diagnostic criteria for Persistent Depressive Disorder, which, combined with his personality traits, provided some explanation for his engaging in irresponsible behaviours; and he was 70 years of age and suffered from physical ailments which would make custody more onerous for him.

141. Her Honour was entitled to conclude that there were differences between the applicant and Falconer, both as to their respective criminality, and in their subjective circumstances. The disparity in the sentences they received is amply explicable by those differences, and does not give rise to a justifiable sense of grievance on the part of the applicant. This ground fails.

Ground 3 – Rehabilitation

142. Her Honour’s observations about the applicant’s prospects of rehabilitation, and in particular that for there to be prospects of rehabilitation, it is necessary for there to be some acknowledgement of wrongdoing, which was entirely absent in the present case, have been set out above.

143. The prospects of rehabilitation are a mandatory consideration. [54] No doubt an acknowledgement of wrongdoing may be a significant element in rehabilitation. However, while the absence of true remorse may reduce the weight that can be given to prospects of rehabilitation, it does not necessarily nullify them. [55] Remorse is not a prerequisite to an assessment that an offender has some prospect of rehabilitation, and a plea of not guilty does not disentitle an offender from a finding that he or she has prospects of rehabilitation:

“[84]    This Court has observed that there can be rehabilitation without confession, and that offenders found guilty after trial are not to be automatically deprived of a finding of good prospects of rehabilitation unless they acknowledge their guilt: Alseedi v R [2009] NSWCCA 185 at [65]; Ali v R [2010] NSWCCA 35 at [48]. Nevertheless, it has been said that remorse will be a major factor in determining whether an offender is unlikely to reoffend and has good prospects of rehabilitation and that, without true remorse, it is difficult to see how either finding could be made: R v MAK [2006] NSWCCA 381; 167 A Crim R 159 at 169-170 [41]; Ali v R at [47].”[56]

54. Crimes Act 1914 (Cth) s 16A(2)(n) requires that the Court consider “the prospect of rehabilitation of the person”.

55. WC v R [2016] NSWCCA 173 at [57]-[61] (Campbell J; Hoeben CJ at CL and N Adams J agreeing).

56. BP v R (2010) 201 A Crim R 379; [2010] NSWCCA 159 at [84] (Johnson J; Hodgson JA and Rothman J agreeing).

144. In MLP v R, Bellew J (with whom Macfarlan JA and Adamson J agreed), said:

“[34]    Counsel for the applicant properly pointed out that a failure to express remorse does not disentitle an offender to a finding that his prospects of rehabilitation are good: BP v R [2010] NSWCCA 159 at [84] per Johnson J (Hodgson JA and Rothman J agreeing), citing Alseedi v R [2009] NSWCCA 185 at [65] and Ali v R [2010] NSWCCA 35 at [48]. However, remorse remains a major factor in determining whether an offender is likely to re-offend. Its absence renders it difficult to reach such a determination: R v MAK; R v MSK [2006] NSWCCA 381 at [41].”[57]

57. [2014] NSWCCA 183 at [34] (Bellew J; Macfarlan JA and Adamson J agreeing).

145. The same view has been eloquently expressed, in the somewhat different context of professional regulation, by Tauro CJ of the Supreme Judicial Court of Massachusetts, in Re Hiss:

“Simple fairness and fundamental justice demand that the person who believes he is innocent though convicted should not be required to confess guilt to a criminal act he honestly believes he did not commit. For him, a rule requiring admission of guilt and repentance creates a cruel quandary:  he may stand mute and lose his opportunity; or he may cast aside his hard
maintained scruples and, paradoxically, commit what he regards as perjury to prove his worthiness to practise law. Men who are honest would prefer to relinquish the opportunity conditioned by this rule: ‘Circumstances may be made to bring innocence under the penalties of the law. If so brought, escape by confession of guilt … may be rejected, — preferring to be the victim of the law rather than its acknowledged transgressor — preferring death even to such certain infamy.’ Honest men would suffer permanent disbarment under such a rule. Others, less sure of their moral positions, would be tempted to believe to commit perjury by admitting to a non-existent offence (or to an offence they believe to be non-existent) to secure

58. 333 NE 2d 429 (1975) at 437 (Tauro CJ), cited by Mason P in Zaidi v Health Care Complaints Commission (1998) 44 NSWLR 82 at 98 (Priestley JA and Powell JA agreeing); [1998] NSWSC 335.

reinstatement. So regarded, this rule, intended to maintain the integrity of the Bar, would encourage corruption in these latter petitioners for reinstatement and, again paradoxically, might permit reinstatement of those least fit to serve.”[58]

146. With reference to that passage, Mason P said in Zaidi v Health Care Complaints Commission:[59]

“I would not disagree with the principle stated in the passage from Hiss that has been quoted. But the proposition which it states is a narrow one: confession is not a necessary pre-condition to reinstatement. (“Accordingly, we refuse to disqualify a petitioner for reinstatement solely because he continues to protest his innocence of the crime of which he was convicted”: Hiss (at 437).) I do not understand this Court ever to have asserted such a categorical proposition: see Dawson v Law Society of New South Wales (Court of Appeal, 21 December 1989, unreported), per Kirby P (at 17) and Mahoney JA (at 6-7). This said, there is no error in concluding in a particular context that continuing vigorous challenge to clearly established guilt may be indicative of continuing unfitness on one or other of the grounds indicated in the sentence underlined.”

59. (1998) 44 NSWLR 82 at 100 (Mason P, Priestley JA and Powell JA agreeing); [1998] NSWSC 335.

147. Her Honour’s statement, that “[i]n order for there to be prospects of rehabilitation, it is necessary for there to be some acknowledgement of wrongdoing, which is entirely absent in the present case”, was incorrect in principle. Although the respondent submitted that the conclusion that there could be no finding that there were prospects of rehabilitation was not in error in the circumstances of the case, given the findings about lack of remorse, hubris, sense of entitlement, and that he believed that the ends justified the means, there were contrary indicators: the applicant was of prior good character, having no relevant criminal record; he was well-educated, connected and intelligent; he is married with three daughters, and his wife and daughters continue to visit and support him in custody; and as her Honour accepted, he is unlikely to require assistance to reintegrate into the community notwithstanding a lengthy non-parole period. Those factors point to some prospect that he will one day be able to resume a worthwhile role as an honourable citizen.

148. Error in this respect is established.

Conclusion

149. I have concluded that the sentence was infected by two errors of principle, namely:

1. insofar as her Honour considered the ‘totality’ of the offending in fixing sentences for each individual offence; and

2. in failing to have regard to the applicant’s prospects of rehabilitation on the basis that there could be none without there being some acknowledgement of wrongdoing.

150. It does not follow, however, that the appeal must succeed: the Court must consider that some other sentence is warranted in law. As Sully J said in R v Simpson:

“Error once demonstrated, it does not follow automatically that this Court will, without more, intervene in fact and re-sentence. Before that can happen properly in law, the condition specified in s.6(3) of the Criminal Appeal Act 1912 (NSW) must be satisfied: that is to say, this Court must be persuaded, not only that error has been shown in the process of reasoning of the primary sentencing Court, but that some other sentence is ‘warranted in law’. I agree with the observations made in this connection by Lee AJ in Astill (No. 2)[1992] 64 A Crim R 289 at 303, 304.”[60]

60. (2001) 53 NSWLR 704; [2001] NSWCCA 534 at [100] (Sully J); see also R v Gittani [2002] NSWCCA 139 at [6] (Sully J; Ipp AJA and Bell J agreeing); R v Barakat [2004] NSWCCA 201 at [41] (Greg James J; Beazley JA and Dowd J agreeing).

151. I have referred, above, to the obviously great weight which her Honour gave to considerations of totality, in imposing a total effective sentence of only 10 years in the context where, if accumulated, the sentences would have totalled 78 years. That has given considerable cause to pause before deciding to proceed to resentence the applicant. Nonetheless, it seems to me inescapable in logic that the two errors identified have resulted in the applicant receiving sentences which, albeit only to a slight extent, exceeded those which would otherwise have been imposed. In other words, had the totality of his conduct not been used to aggravate the offending for individual offences, and had he been regarded as having some if modest prospects of rehabilitation, a slightly lesser sentence would, and ought to have been, imposed in each case.

152. But for those matters, her Honour’s statement of the relevant considerations, which has been summarised above, was not impugned, and I would adopt it. I would reduce, by between three and six months, each of the sentences imposed by her Honour which exceeded two years. However, I see no reason to depart from the approach to concurrency adopted by her Honour, and in particular the periods attributable exclusively by reference to each offence, which is reflected in the accumulation.

153. On that basis, I would resentence the applicant, as follows:

1. for Count 1, imprisonment of two years and nine months commencing on 22 November 2016;

2. for Count 2, imprisonment of two years and nine months commencing on 22 January 2017;

3. for Count 3, imprisonment of two years and nine months commencing on 22 March 2017;

4. for Count 4, imprisonment of two years and nine months commencing on 22 July 2017;

5. for Count 5, imprisonment of three years commencing on 22 October 2017;

6. for Count 6, imprisonment of two years and nine months commencing on 22 December 2017;

7. for Count 7, imprisonment of three years commencing on 22 February 2018;

8. for Count 8, imprisonment of one year commencing on 22 May 2018;

9. for Count 9, imprisonment of three years commencing on 22 September 2018;

10. for Count 10, imprisonment of three years commencing on 22 January 2019;

11. for Count 11, imprisonment of three years and six months commencing on 22 May 2019;

12. for Count 12, imprisonment of two years commencing on 22 September 2019;

1. for Count 13, imprisonment of three years and six months commencing on 22 January 2020;

2. for Count 14, imprisonment of three years and six months commencing on 22 May 2020;

3. for Count 15, imprisonment of three years and six months commencing on 22 September 2020;

4. for Count 16, imprisonment of three years commencing on 22 January 2021;

5. for Count 17, imprisonment of three years commencing on 22 May 2021;

6. for Count 18, imprisonment of three years commencing on 22 September 2021;

7. for Count 19, imprisonment of three years commencing on 22 January 2022;

8. for Count 20, imprisonment of three years and six months commencing on 22 May 2022;

9. for Count 21, imprisonment of three years and six months commencing on 22 September 2022;

10. for Count 22, imprisonment of three years commencing on 22 January 2023;

11. for Count 23, imprisonment of three years commencing on 22 May 2023; and

12. for Count 24, imprisonment of one year commencing on 22 September 2023.

154. This results in sentences which, if accumulated, total 69 years and nine months, as distinct from the 78 years imposed by her Honour. The overall effective sentence amounts to a total term of nine years and six months, commencing on 22 November 2016 and expiring on 21 May 2026, as distinct from the 10 years imposed by her Honour. Maintaining approximately the 60% proportionate non-parole period fixed by her Honour, the non-parole period would be five years and nine months, expiring on 21 August 2022.

Disposition

155. I propose the following orders:

1. extend time for instituting the appeal to the date upon which it was filed;

2. dismiss the appeal against the convictions on all counts;

3. grant leave to appeal against the sentences, and allow the appeal;

4. quash the sentences imposed by Adamson J and in lieu thereof the applicant is sentenced as follows:

1. for Count 1, imprisonment of two years and nine months commencing on 22 November 2016;

2. for Count 2, imprisonment of two years and nine months commencing on 22 January 2017;

3. for Count 3, imprisonment of two years and nine months commencing on 22 March 2017;

4. for Count 4, imprisonment of two years and nine months commencing on 22 July 2017;

5. for Count 5, imprisonment of three years commencing on 22 October 2017;

6. for Count 6, imprisonment of two years and nine months commencing on 22 December 2017;

7. for Count 7, imprisonment of three years commencing on 22 February 2018;

8. for Count 8, imprisonment of one year commencing on 22 May 2018;

9. for Count 9, imprisonment of three years commencing on 22 September 2018;

10. for Count 10, imprisonment of three years commencing on 22 January 2019;

11. for Count 11, imprisonment of three years and six months commencing on 22 May 2019;

12. for Count 12, imprisonment of two years commencing on 22 September 2019;

13. for Count 13, imprisonment of three years and six months commencing on 22 January 2020;

14. for Count 14, imprisonment of three years and six months commencing on 22 May 2020;

15. for Count 15, imprisonment of three years and six months commencing on 22 September 2020;

16. for Count 16, imprisonment of three years commencing on 22 January 2021;

17. for Count 17, imprisonment of three years commencing on 22 May 2021;

18. for Count 18, imprisonment of three years commencing on 22 September 2021;

19. for Count 19, imprisonment of three years commencing on 22 January 2022;

20. for Count 20, imprisonment of three years and six months commencing on 22 May 2022;

21. for Count 21, imprisonment of three years and six months commencing on 22 September 2022;

22. for Count 22, imprisonment of three years commencing on 22 January 2023;

23. for Count 23, imprisonment of three years commencing on 22 May 2023;

24. for Count 24, imprisonment of one year commencing on 22 September 2023; and

25. the overall effective sentence is a total term of nine years and six months, commencing on 22 November 2016 and expiring on 21 May 2026, with a non-parole period of five years and nine months, expiring on 21 August 2022.

156. CAVANAGH J: I agree with the orders proposed by Brereton JA in respect of both the conviction and sentence appeals. I make the following further comments in respect of the sentence appeal.

157. Whilst I generally agree with the reasons of Brereton JA, I interpret the sentencing judge’s remarks (in relation to the totality principle) at [77] of her Honour’s judgment somewhat differently.

158. As Brereton JA identifies, Johnson v The Queen [61] does not support an approach that involves determining the total effective sentence prior to determining the individual sentence for each offence.

     61. (2004) 78 ALJR 616; [2004] HCA 15.

159. Further, whilst s 16B of the Crimes Act 1914 (Cth) would seem to be irrelevant, there is nothing in ss 16A(2)(a), (b) or (c) which would tend to suggest that the proper approach is to have regard to the totality of the criminal conduct in fixing the appropriate sentence for each of the offences.

160. Indeed, [77] of her Honour’s judgment is in similar terms to the final sentence of the description of the totality principle in DA Thomas, Principles of Sentencing (2nd ed, 1979, Heinemann) at 56–57, cited in Mill v The Queen, [62] which is as follows: “[The Court] must look at the totality of the criminal behaviour and ask itself what is the appropriate sentence for all the offences.” This description of the principle and its approval in Mill v The Queen were specifically noted by Gummow, Callinan and Heydon JJ in Johnson v The Queen at [18]. As Brereton JA has discussed, their Honours then went on to affirm the approach taken in Mill v The Queen.

     62. (1988) 166 CLR 59 at 63 (Wilson, Deane, Dawson, Toohey and Gaudron JJ); [1988] HCA 70.

161. Rather than interpreting her Honour’s reference to s 16A of the Crimes Act and Johnson v The Queen as supporting the incorrect approach, I consider that her Honour’s reference to Johnson v The Queen demonstrates an intention to state and apply the principle correctly. Indeed, if not for the use of the plural (“sentences” rather than “sentence”) as highlighted in Brereton JA’s judgment, there could be no complaint. The use of the plural may be misplaced but it must be considered in the context of the paragraph as a whole.

162. I would thus interpret her Honour’s reference to Johnson v The Queen as an acknowledgment of the correct approach rather than an indication that her Honour was adopting a contrary approach.

163. Having said that, I agree with Brereton JA’s observations in respect of the prospects of rehabilitation and there must be resentencing. I thus agree with the orders proposed by Brereton JA.

**********

Endnotes

Decision last updated: 03 March 2021