Smith v The Queen
[2012] VSCA 187
•17 August 2012
SUPREME COURT OF VICTORIA
COURT OF APPEAL
| S APCR 2009 0780 | |
| MICHAEL PETER SMITH | Appellant |
| v | |
| THE QUEEN | Respondent |
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| JUDGES | BUCHANAN, REDLICH JJA and COGHLAN AJA | |
| WHERE HELD | MELBOURNE | |
| DATE OF HEARING | 31 May 2012 | |
| DATE OF JUDGMENT | 17 August 2012 | |
| MEDIUM NEUTRAL CITATION | [2012] VSCA 187 | 1st Revision 20 August 2012 – [19] |
| JUDGMENT APPEALED FROM | R v Michael Peter Smith (Unreported, County Court of Victoria, Judge Wood, 13 August 2009) | |
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CRIMINAL LAW – Conspiracy to defraud – Lies by the accused – Post offence conduct – Acts in furtherance of a conspiracy – Whether implied admissions – Whether the directions referred to in Edwards v R (1993) 178 CLR 193 and Zoneff v R (2000) 200 CLR 234 were required – Whether prosecutor failed to comply with the rule in Browne v Dunn (1893) 6 R 7 – Inferences to be drawn from demeanour – Browne v Dunn warning required – Evidence of suspicion inadmissible –Appeal allowed – New trial ordered.
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Appearances: | Counsel | Solicitors |
| For the Appellant | Mr P F Tehan QC with Mr P J Doyle | PW Dwyer |
| For the Crown | Mr P B Kidd SC with Mr D B Bongiorno | Mr C Hyland, Solicitor for Public Prosecutions |
BUCHANAN JA:
I agree with Redlich JA.
REDLICH JA:
Following a 33-day trial the appellant was convicted in the County Court on three counts of conspiracy to defraud. A total effective sentence of six years and six months’ imprisonment was imposed with a non-parole period of four years and four months. Leave to appeal against his conviction and sentence was granted on 2 February 2012 by Maxwell P.
On all three counts the appellant was alleged to have conspired with John Cappellin and Peter Tierney to defraud Victoria University of Technology (‘the University’) of millions of dollars by processing false claims for payment of work performed by Cappellin’s companies. Count 1 concerned false claims for maintenance works between March 1996 and March 2001. Count 2 involved false claims for ‘backflow plumbing’ works between 1 September 1998 and 11 December 2000. Count 3 concerned false claims for ‘thermal imaging’ and electrical works between 15 December 1998 and 9 March 2001.
The essence of each conspiracy was that Cappellin’s companies, MBM and FMG, submitted heavily inflated invoices as well as bogus quotations from purported other competitors which were processed to finance racehorses in which the appellant and Cappellin had a mutual interest. Each of the three conspiracies was constituted by an alleged tacit agreement between the appellant, Cappellin and Tierney and rested upon circumstantial evidence.
The appellant was the Executive General Manager of Resources of the University and was responsible for budget allocations in areas including human resources, student services and administration and, most relevantly, facilities and maintenance. The University comprised 12 campuses and a student village. The appellant managed a budget which at one point reached $8 million. Tierney was the
Director of Facilities of the University. He was the appellant’s immediate subordinate and reported directed directly to the appellant. His duties included managing the finances for building maintenance, cleaning and security, and approving tenders for contract work in those areas. The immediate subordinate of Tierney was one Chris Browney.
The appellant, Tierney and Browney were all empowered to authorise payments to contractors within delegated limits. Initially, the appellant was empowered to authorise payments up to $100,000 but his delegation increased to half a million dollars after July 1998.
Cappellin was in business as a building contractor. He contracted to the University for building and maintenance work through MBM and FMG. He was introduced to the appellant through Browney and Tierney in early 1996 at a lunch at the Flower Drum restaurant. Thereafter, Cappellin frequently took the appellant, Tierney and others out to lunch. He would always insist upon paying. During the period of the fraud, Cappellin was engaged by the University to do a great deal of work which included renovation work, repairs to lifts, the installation of a laundry, the installation of backflow plumbing valves and the ‘thermal imaging’ of switchboards which was a process designed to detect fire dangers in electrical equipment.
The evidence established that Cappellin submitted forged quotes which purported to be from other suppliers. The quotes Cappellin submitted on behalf of his own company would always be the lowest and he would be allocated the work. In reality, the winning quote contained a greatly inflated profit-margin. No issue was taken at the trial that this conduct occurred or that it was fraudulent. The sole issue was whether the appellant was a party to the conspiratorial agreement between Cappellin and Tierney.
The evidence established that the fraud commenced by Cappellin acting on his own behalf and that Tierney became a conspirator when he realised that the invoices for the backflow plumbing works were inflated.
Cappellin and Tierney gave evidence for the Crown. They had earlier pleaded guilty to offences reflecting their role in the conspiracy. It was Cappellin’s evidence that all of the quotes were inflated but that he never told anyone that the invoices were inflated. He testified that the fundamental purpose for inflating the prices was to enable him to acquire and maintain the horses. Tierney testified that he realised that the quotes Cappellin prepared were inflated. Although it was his task to get competing quotes, he did not do so and left that to Cappellin. Although there was no discussion as to how Cappellin was to arrange two more quotes beside his own, it was obvious to Tierney that they were from Cappellin. Tierney never discussed the fact that Cappellin’s invoices were inflated with the appellant. The appellant’s direction was that so long as there were three quotes, a work order could be raised.
To establish that the appellant was a party to the conspiratorial agreements the prosecution relied upon evidence that none of the suspect transactions were recorded on the University’s computerised central system of recording works orders, known as BEAMS. The prosecution contended that BEAMS was bypassed to avoid others knowing what was going on and to enable Cappellin to simply obtain the work and have the invoices easily processed by Tierney or the appellant. The prosecution relied heavily upon the appellant’s interest in a number of thoroughbred horses purchased by Cappellin. Transaction receipts tendered in relation to those horses revealed a mutual interest between Cappellin and the appellant. Cappellin testified that around 24 horses were purchased and trained at his expense, wholly or partly on the appellant’s behalf. Whilst admitting that he had a joint involvement with Cappellin in some of those horses, the appellant testified that his financial interest in the horses was nowhere as extensive as that alleged by Cappellin. According to Cappellin, the horses were purchased on the unspoken understanding that they would be paid for out of the inflated invoices he submitted to the University with the appellant’s tacit approval. The prosecution relied upon the fact that there were no bank records of the appellant or his wife paying any money to Cappellin in relation to these horses.
The appellant gave evidence. It was the defence case that the appellant was ignorant of any agreement to defraud the University. The appellant never saw any of the quotes that were submitted to Tierney and relied upon and trusted Tierney. He said he had no reason to query the invoices presented by Cappellin’s companies and was never told that the quotes or the invoices were inflated. He maintained that he had a relatively small share in the horse interests and that there was no motivation for him to be a party to such a fraud on the University. The BEAMS system was not used, he explained, because the staff resisted it and the system was chaotic. The appellant maintained that he adhered to a proper tendering process because approval based on three quotes for works over $50,000 was an established practice at the University.
The appellant relies on the following grounds of appeal:
1. The trial miscarried by reason of:
(a)The learned trial judge leaving to the jury evidence of post offence conduct as evidence of consciousness of guilt;
(b)The failure of the learned trial judge to give a Zoneff direction in respect of post offence conduct relied on by the Crown;
(c)Alternatively, the failure of the learned trial judge to give an Edwards direction in respect of post offence conduct relied on by the Crown.
2.The trial miscarried due to the failure of the learned trial judge to give a Zoneff warning in respect of lies which the Crown alleged were told by the appellant in his evidence at the trial.
3.The trial miscarried by reason of the learned prosecutor’s failure to comply with the rule in Browne v Dunn.
The appellant abandoned a further ground which alleged a failure by the trial judge to give a Liberato direction but relied upon this alleged failure in support of a fifth ground which alleged that the aggregate of errors by the trial judge caused the trial to miscarry.
It is convenient to deal with Grounds 1 and 3 which arise as a consequence of certain evidence given by Tierney concerning conversations which he had with the appellant following the commencement of an investigation by the Deputy Vice Chancellor, Mr Hamerston of aspects of Thermal Imaging claims. The prosecutor in closing address placed particular emphasis upon these conversations.
In Tierney’s evidence-in-chief he said:
If I could move forward to early 2001. Do you recall having a conversation or a meeting with Mr Michael Hamerston who was the deputy Vice-Chancellor of the TAFE and acting General Executive Manager of resources?---Yes.
Did that relate to a request for a thermal imaging report on one of the switchboards?---It did, yes.
And did you then make arrangements to meet Mr Dench or Mr Cappellin in relation to that?---I phoned Mr Cappellin and he arranged for Mr Dench to supply the report.
Did you obtain a report and hand that on to Mr Hamerston?---I did.
Within a week or so of that meeting and the request by Mr Hamerston, did you have another meeting with Mr Cappellin or a conversation with him?---I would have had a conversation with him, yes.
Well, was there any discussion about the processing of thermal imaging claims after that request from Mr Hamerston?---Yes, I told him I wasn’t going to process any more at that stage.
FOREMAN: Excuse me, Your Honour, didn’t hear that last comment.
HIS HONOUR: ‘I told him I wasn’t going to process any more certainly at that stage’, was that the answer?---That’s correct, yes, sorry.
FOREMAN: Thank you, Your Honour.
The prosecutor: And was this a case of ceasing to process them or were they on hold, can you tell us what the – what you agreed to do?---Well, Cappellin was under the opinion that they were just on hold at this stage.
At or around the same time did you have any contact with Mr Michael Smith after you had had your meeting with Hamerston?---Yes, Mr Smith was away, on sick leave at that time.
And so I take it it’s telephone contact, is it?---That’s correct.
What was the substance of the telephone conversations?---I informed him that Hamerston was on the warpath and was looking into things.
When you say looking into things, what was he looking into?---Well, he was looking into various aspects of thermal imaging, every, all aspects of what had been – - -
HIS HONOUR: Sorry, all aspects of?---All aspects of thermal imaging, backflow valves, general maintenance items.
THE PROSECUTOR: Did Mr Smith want to, did he ask you any questions about what was happening?---Yes.
What did he ask you about?---Well, he seemed very distressed about, about this investigation by Hamerston.
And what level of contact was there between you and Mr Smith by way of telephone over this period?---Quite frequent.
Who was calling whom?---Mr Smith was calling me.
Did he express any concerns to you about Mr Hamerston’s inquiry?---Yes, he did.
What were those concerns?---Well, just that I suspect that we were being found out.
HIS HONOUR: Sorry?---That we would be, that we were being found out on the illegal activities that had been going on.
What?---That Hamerston was about to - - -
Are you saying that or is Mr Smith saying that? You are vague on who says what?---I think we were both concerned, yes, Hamerston was going to have an investigation, and that we would be found out for the activities that we had been carrying on over that number of years.
Being what?---Sorry?
Being what activities?---The illegal activities that were being carried on.
THE PROSECUTOR: When you say the illegal activities, Mr Tierney, which illegal activities are we talking about?---Of the quoting system.
And when you say the quoting system, does that relate to all three groups or just - - -?---Yes.
Maintenance backflow?---Yes, yes.
Was there anything said during that, those conversations with Mr Smith, about the claims that had been made and the quote system?---Mr Smith said, ‘Things will be OK as long as we have got three quotes’.
When he had called, were you home every time he called?---No.
Did he ever leave any messages for you?---Yes, he left quite a few abusive messages at times.
When you say abusive messages what do you mean by that?---Um - - -
And if you have any recollection, please just tell us what you recall?---I’m just trying to think of one that’s, you know – ‘Ring me back you little so-and-so, so-and-so’, using quite a lot of four letter words.
HIS HONOUR: Earlier you said there were telephone calls between yourself and Mr Smith?---Yes.
About this - - -?---Yes.
- - - issue.And then you were asked by the prosecutor, being calls made to your home?---Yes.
Was that the only place to which calls were made about the issue?---Yes.
By Mr Smith?---Yes.
THE PROSECUTOR: When messages were left, you have described his saying, ‘Call me back’, I would ask you to detail for us what sort of language he was using precisely, Mr Tierney?---Um, very aggressive language, verbalising me.
And you said so-and-so so-and-so, do you have any recollection of what the precise language?---Yes.
What was it?---‘Ring me back you fucking little cunt’.
From the message you received, could you pick up the tone of Mr Smith’s voice on those calls?---Yes.
And what do you say as to the tone of it? Yes, what do you say as to the tone of it, was he aggressive, was he calm, was he agitated, can you tell us?---Agitated, very agitated. These calls by the way were generally late afternoon.
Much of this evidence was given in an unsatisfactory form which did not seek to distinguish between what the appellant said and Tierney’s assumptions as to what the appellant thought. Tierney, without objection, was permitted to state what he considered were the appellant’s concerns about Mr Hamerston’s investigation.
Tierney was cross-examined about these matters as follows:
Mr Smith, you know, I think you have confirmed this in evidence-in-chief, had an unhappy relationship with Mr Hamerston?---That’s correct.
Mr Hamerston worked at the university?---Yes.
Mr Smith worked at the TAFE?---Initially, yes.
I should say TAFE or institute, whatever it was called before the amalgamation in mid 98?---Yes.
After mid 98, there were, in some senses, Mr Hamerston and Mr Smith on sort of equivalent academic levels, if I put it that way, is that fair?---Yes.
Mr Smith saw him in some ways as being a competitor?---You would have to ask Mr Smith that.
He expressed to you that – did he ever express to you that he thought Mr Hamerston had it in for him?---Yes.
It was Mr Hamerston who was conducting the investigation that was occurring in 2001, correct?---Yes.
At that time you became aware that he was asking all sorts of questions about what works had been approved and what had occurred within the university, correct?---Yes.
You have mentioned that Mr Smith was very anxious about these investigations and he was telephoning you?---That’s correct, yes.
He was telephoning you because he thought Mr Hamerston had it in for him.
THE PROSECUTOR: One, he can’t say that, with respect; and two, it is an attack on Mr Hamerston’s credit.
HIS HONOUR: It wasn’t put to Hamerston, was it?
MR HOLDING: No, that is fair, Your Honour. I withdraw that. Were you asked this question at committal in relation to those discussions, page 2195, ‘The only matter I wanted to ask you about other than that was you do refer in your statement to some conversations with Mr Smith perhaps at the time it became obvious that police were investigating, that Mr Smith was concerned to know just what the state of the police investigations were?’ Answer: ‘Yes, he was, yes.’ ‘That did not amount’ – and then you interrupted the question, ‘It wasn’t a police investigation at that stage.’ Question: ‘Sorry, university investigations, Vice-chancellor or Professor Hamerston, sorry?’ ‘Yes, that’s right.’ Question: ‘Not Vice-chancellor, what that amounted to was statements of concern by him just to know what was being investigated and what the state of investigation was?’ Answer: ‘That’s right.’ ‘In no sense did it amount to a sense of wrongdoing by him?’ Answer: ‘No.’ Were you asked those questions and did you give those answers?---If that is what is there, yes I would have said that.
Those discussions on the phone with Mr Smith was him wanting to know what was going on?---Yes.
He never made any admission to you that he had made some sort of guilty agreement with Mr Cappellin, did he?---No.
He didn’t?---He didn’t.
You agree with me?---Yes.
The appellant was not asked any questions in evidence-in-chief about these conversations with Tierney or any concern that he may have had over the Hamerston investigation. Because of submissions made by the prosecutor during his closing address, defence counsel submitted in his closing address that it had been unnecessary for him to ask the appellant any questions about this issue because it had already been dealt with once Mr Tierney conceded that the appellant made no admissions during those conversations.
The prosecutor cross-examined the appellant about these issues in the following way:
Had anything happened in that period between January to April 2001 that caused you to be concerned about your position with Mr Cappellin?---January and April 2001?
Yes?---Mr Cappellin was sick. He came, he saw the horses and he said he wouldn’t be paying for the Count Piccolo horse.
Is there some trouble at VUT by now?---I wasn’t there.
No. You became aware, did you not, that Mr Hamerston was on the trial of thermal imaging and backflow plumbing invoices?---No.
You didn’t know that at all?---No.
When do you say you became aware of that?---I can’t be sure but it would be much later than that.
HIS HONOUR: The same year, 2001?---Yes, Your Honour.
THE PROSECUTOR: I suggest you were backtracking away from Mr Cappellin and the nature of your relationship at that stage?---No, I can’t remember having done that.
This is - - -?---This whole – my deteriorating relationship with Mr Cappellin was based around him reneging on this particular arrangement.
I suggest to you things went cool with Mr Cappellin to some extent because of Testarossa and the fact that you had missed your opportunity to get in on the best horse that raced around Melbourne for a long time?---Not at all, no.
Not at all?---No.
Indeed, I suggest you knocked it back because you didn’t like the blood lines?---No.
I suggest that your ego had taken a bit of a belting because of that failure and that’s why things cooled, because you weren’t there when Testarossa was doing so well?---No.
That was the extent of the prosecutor’s cross-examination of the appellant touching upon conversations about which Tierney had testified.
In closing address the prosecutor made the following submissions:
You might well think that things did fall over in 2001 after the year got going. People were away, Mr Tierney was away too at some stage and was unwell. Bit of paperwork started to float to the surface there. I think Mr Hunter or Davidson and you know Mr Hammerstein is starting to make some enquiries. All of a sudden these people don’t want to know each other and they go their separate directions. Not hard to work out why, I suggest to you.
A little later in closing he said:
I think on 12 January of 2001 certainly wasn’t there, and later on, throughout that early part of that year it ends up that people, I suggest to you, you might expect, are backing away from each other because Mr Hamerston’s making some inquiries. Mr Tierney was off sick. Mr Smith was off sick. A few bits of paperwork were floating through the system. Mr Hamerston’s making inquiries. All of sudden people are starting to distance themselves from other people. Because it wasn’t going to be too hard to drill down and find out about those purchase orders that were all signed off.
Later again the prosecutor returned to this subject and said:
Early in 2001, Mr Hamerston requested a thermal imaging report and I think he said he phoned Cappellin and he arranged for Dench to supply the report and he told Cappellin he wouldn’t process any more thermal imaging claims, this is 2001. Hamerston is clearly asking for thermal imaging reports. We know that there’s a bit of enquiry going on. The thermal imaging reports were rarely provided. You might think it would lead to questions being asked, once even a simple look at the paperwork is done, there’s trouble, and Peter Tierney and Michael Smith, we suggest, were going to be revealed and we say that’s why Michael Smith was, according now to Peter Tierney, making frantic calls to Mr Tierney at his home; not at work, at his home, he was off sick, Michael Smith.
We suggest to you that you might well think he was terrified of being unmasked in this involvement. There’s nothing put in the cross-examination of Hamerston about Michael Smith ringing him up. You might think he might ring him up and ask him, ‘What’s going on?’ Hamerston, ‘Is there a problem; what’s the problem?’ Logically you might think that, but, no, he’s subordinate; Peter Tierney is the one who is called and he is distressed and obviously showing a fair degree of angst when he makes those calls.
Smith’s away on sick leave, there’s telephone comment. ‘I informed him Hamerston was on the warpath and was looking into things.’ He was looking into various aspects of thermal imaging, backflow valves and general maintenance items, and he seemed distressed about this investigation by Hamerston. You might well understand why too.
There was subsequently frequent contact with Mr Smith, ‘He was calling me, he expressed concerns.’ He said, ‘I suspect that we were being found out,’ that’s Tierney saying that, ‘That the[y] were being found out on the illegal activities that had been going on, the activities that we had been carrying on over a number of years.’ I asked him what are the illegal activities, and he said, ‘It means the quoting system on all three groups, thermal imaging, backflow and maintenance.’ Smith’s response was, ‘Well, things will be OK as long as we’ve got three quotes.’
Well, that wasn’t quite as leaving it like that. There was abusive messages left on Tierney’s phone at home in fairly colourful language, demand that he ring him back; not colourful, perhaps even foul language, in an agitated tone.
Shortly thereafter, the prosecutor returned again to this subject:
Smith had always been I think he said unhappy with the relationship with Hamerston, and he was anxious during the Hamerston investigation. I think it was put to him, well, Smith never made any admissions to you on the phone when you were speaking, but he had some guilty agreement with Cappellin. Well of course not. It’s not the sort of thing you’re going to talk about. What he wanted to know was what was going on, what’s Hamerston after? What are we in strife of? Didn’t need to regurgitate the old news. The old news was that these blokes had been in it from the start together. That’s a given. That’s why you don’t ask questions about that. What’s Hamerston up to? With respect, that investigation was going do exactly what happened, they were gone. This was discovered fairly quickly.
Defence counsel reminded the jury of Tierney’s cross-examination and in particular his answers to the effect that the appellant had never made any admissions that he had some guilty agreement with Cappellin. Defence counsel then said to the jury:
‘He never made any admission to you that he had made some sort of guilty agreement with Capellin, did he?’ ‘No.’ ‘He didn’t. do you agree with me?’ ‘Yes.’ Now, is the learned prosecutor really suggesting that Mr Tierney didn’t understand what I was putting to him? I was confronting him with what happened in relation to those conversations and putting it to him, Mr Smith wanted to know what was going on, and he never made any guilty admission about this, and he agreed with it.
My learned friend has put some sort of a spin on that, some sort of semantics that Tierney didn’t understand those questions or why would Smith say this? I mean, if you wanted to be, if you want to be literal about it in that sense, what Tierney had actually said in relation to some of the things that Smith said was that, ‘Was there anything said during those conversations with Mr Smith about the claims that had been made, and the quote system?’ ’Mr Smith said, “Things will be OK as long as we’ve got three quotes.”’
Now that’s a pretty odd thing to say if you know that all the quotes are false. If Mr Smith thinks that there’s been favouritism given to Mr Cappellin, that he’s always ensured that there was a competitive process, that’s something that an innocent person would say. But perhaps the point of it is this – Mr Tierney jumps all over the place. He’s not reliable. Look at what he’s said in relation to the works at the time with the police, as to how these agreements arose.
And also, consider this – I put the case, the defence case to Mr Capellin, as a requirement, a matter of fairness. You’re supposed to give a witness an opportunity to respond. The accused doesn’t have to give evidence. He gets in the witness box, and I don’t even bother to ask him about it, because I think I’ve dealt with the issue. Mr Tierney’s conceded that there was no admissions in that conversation.
So you don’t get Mr Smith’s version, and the learned prosecutor doesn’t ask him one question about it. Doesn’t put it to him. ‘Didn’t you say this?’ ‘Didn’t this happen?’ So when you go back into the jury room to consider, ‘What does Mr Smith say about this?’ It’s not there. It’s not there for you. Is that fair? You’d convict somebody on that basis? When they’ve never been asked, ‘Well, what do you say you said in that conversation?’
The Crown did not indicate at any stage of the trial that this evidence of post offence conduct should be treated as evidence of a consciousness of guilt. Neither party invited the trial judge to give a direction to the jury on the basis that the post offence conduct should be so understood.
The trial judge charged the jury in the following manner concerning this issue:
Mr Smith said at 1251 between January ‘01 and April ‘01 Mr Cappellin was sick and you remember him saying that Mr Cappellin reneged on the arrangement and refused to pay for Count Piccolo. Mr Tierney – I do not propose to go to it in much detail. It was referred to by the prosecutor the other day; he specifically referred you to the telephone call at 566. Mr Tierney was talking about getting the thermal imaging report from Mr Dench and he gave it to Mr Hamerston and then Mr Tierney told Cappellin that he, Tierney, was not going to process any more thermal imaging claims because Mr Hamerston had requested one of these claims.
At 567 he said that Mr Smith was away on sick leave at that time and he said that he spoke with Mr Smith on the phone, 567, and told Mr Smith that Mr Hamerston was on the war path and was looking into things; various aspects of thermal imaging. He said that Mr smith appeared to be very distressed about the investigation of Hamerston. He said there was quite frequent telephone contact. Mr Smith was calling Mr Tierney and he expressed concerns about Mr Hamerston’s enquiry and he said the concerns that he suspected that they had, they being Smith and Tierney, was that they would be found out on illegal activities going on.
‘Are you saying that or is Mr Smith saying that, you are vague on who said what?’ ‘I think we are both concerned, yes, Hamerston was going to have the investigation and that we would be found out for the activities that we’d been carrying on over that number of years.’ ‘Being what activities?’ ‘The illegal activities were being carried on.’
‘Was there anything said that those conversations with Mr Smith about claims that had been made and the quote system?’ Answer: ‘Mr Smith said things would be OK as long as we’ve got three quotes.’ ‘When he had called were you home every time he called?’ ‘No.’ ‘Did he ever leave messages for you?’ ‘Yes, he left quite a few abusive messages at times.’ Then he said what that was, the substance. He said shortly after their conversation he, Tierney, went to Japan because Testarossa was racing there or something to that effect and that he had been back to Australia for a couple of weeks and that is the time when Mr Hamerston asked for these reports and what Mr Tierney did was to resign and return back to Japan.
That is, the prosecutor suggests to you, a very important piece of evidence and it is for you to assess the importance of it and significance. I indicated to you yesterday that there is no corroboration in this case of the evidence of Mr Tierney and Mr Cappellin, they being accomplices. I want to make it plain that whatever view you take of that phone call as reported by Mr Tierney, that cannot amount to corroboration as a matter of law. It is something which, if you accept what he said, was said between the two of them and it is entirely a matter for you as to what significance you place upon it.
The trial judge repeated the cross-examination of Tierney on this subject which ended with Tierney’s acceptance that the appellant had never made any admission that he had a guilty arrangement with Cappellin. His Honour then reminded the jury that the appellant was not taken to that telephone conversation when he gave his evidence.
During the course of summarising the prosecutor’s closing address, the jury were reminded that the prosecutor had rhetorically asked why the appellant, if he was not a party to the fraudulent agreement, had not gone to Mr Hamerston to enquire and why he had preferred to ask Mr Tierney about it.
At the conclusion of his Honour’s directions to the jury the prosecutor requested the trial judge to give a further direction to the jury as to how the jury should deal with the lies which the prosecution alleged and the conduct of the appellant in his phone calls with Tierney. The prosecutor submitted that those matters had been raised with the jury as going to the ‘credibility of the appellant’s account’ and that those matters could only be used to undermine the appellant’s credibility. He requested that the jury be told that those matters could not be used in a forbidden way such as consciousness of guilt as the lies relied on by the Crown did not amount to an admission and went only to credit. The prosecutor then said:
As a matter of completeness too, Your Honour, it just occurs to me that what could, arguably, be said to be post offence conduct, the telephone conversations with Tierney, ought be seen in the same light as that. They purely go to his credit as to his denial of - - -
HIS HONOUR: I told them it doesn’t – incapable of being corroborative.
THE PROSECUTOR: Yes, yes, I appreciate that. I suppose if it’s incapable of being corroborative they couldn’t use it for any other purpose other than to test credit.
The trial judge gave the jury further directions in which he reminded them of the prosecutor’s submission that the appellant had told a number of lies in relation to various aspects of his evidence. His Honour then said:
The prosecutor puts it on the basis that, well, look, if you accept that Mr Smith was not being truthful with you in relation to all of that evidence or some of it, that would raise in your minds doubts as to his credibility. In other words, if you do not accept something that he has said on something which you regard as important, that may tend to undermine the value of his evidence in total. If you reach that conclusion, that is as far as it goes, it does not mean you can use it for any other purpose. It simply goes to the amount of faith or confidence that you feel you are able to place in the evidence of Mr Smith overall, if indeed, you find that these answers he gave were untruthful, or as The prosecutor put it, lies.
Similarly, although not in the same category, I referred to the telephone conversation that Mr Tierney described that he had with Mr Smith following the Hamerston investigation. That is another matter that really goes to the overall credit of Mr Smith; not any further. You could not use that conversation for any other purpose and I have told you it certainly does not amount to evidence capable of being corroborative of Mr Tierney, in the sense of Mr Tierney being an accomplice, as I have explained to you yesterday.
Initially the appellant submitted on appeal that the evidence of Tierney’s conversations with the appellant was irrelevant and should not have been admitted into evidence. Upon further consideration it was accepted during argument that acts of conspirators after the object of the conspiracy has been completed may be relevant as showing the existence of the conspiracy and as being in furtherance of the conspiracy if those acts were designed to conceal the existence of the conspiracy.[1]
[1]R v Su [1997] 1 VR 1, 40–44.
The appellant contended however, that although the prosecution had eschewed reliance upon the post offence conduct as consciousness of guilt, that is how the jury would have understood the following post offence conduct relied upon by the Crown:
(a) the assertion that the appellant had begun to distance himself from Cappellin because of Hamerston’s enquiries;
(b) the failure of the appellant to co-operate by contacting Mr Hamerston during the investigations;
(c) the frantic phone calls by the appellant to Tierney in which he allegedly revealed his concern that their illegal conduct would be ‘found out’;
(d) his anxiety, distress and agitation in leaving abusive messages for Tierney;
(e) the explanation to Tierney that their position could be defended by referring to the existence of three quotes;
(f) that absence of any more explicit admission to Tierney over the telephone because it may have been bugged.
The appellant contended that the prosecutor’s references in closing to this conduct implied that it was behaviour inconsistent with innocence and that it contained admissions of guilt. The suggestion was made explicitly when the prosecutor told the jury that in light of his conduct they ‘might well think that he was terrified of being unmasked in this involvement’.
Senior counsel for the Crown accepted that there was some difficulty in defending some of the phraseology used by the prosecutor at trial. Presumably he had in mind the language which suggested a consciousness of guilt. It was submitted however that the telephone calls were only a small part of the circumstantial case relied upon by the prosecution and were not relied upon as containing admissions. He asserted that the evidence had been introduced because it was in furtherance of the conspiracy and established the existence of the conspiracy at a time when there was a danger of the conspiracy being exposed. He maintained that it was in this sense that the conversations were said to go to the appellant’s credit. Further, it was contended that there had been no obligation on the prosecutor to cross examine the appellant as to these matters as the factual account of the conversation was not in dispute but that he had in any event put to the appellant that he was distancing himself from Cappellin in early 2001.
The Crown’s contentions cannot be sustained.
(1) Evidence of Tierney’s suspicions inadmissible
Firstly, Tierney’s evidence that he suspected that the appellant had a concern that they would be found out as to the illegal activities that had been going on was not admissible, as Tierney was not attributing such a statement to the appellant. It should have been discarded as it was not something the appellant had said.
(2) The Direction that the conversation went to credit was confusing
Secondly, following the prosecutor’s submission that the jury should be directed as to the limited purpose for which the alleged lies told by the appellant could be used, his Honour, also at the invitation of the prosecutor, addressed the telephone conversations with Tierney. In that further direction his Honour told the jury that the conversation was in a similar though not the same category as lies. That would only have served to confuse the jury.
The conversations did not bear upon the appellant’s credibility in the way that notion had been explained to the jury. The prosecutor was not asserting that the telephone conversations contained any untruths. They were either relied upon to infer that the conversations demonstrated a fear that his illegal activity was about to be exposed or as was suggested on appeal, that the telephone conversations furthered the conspiracy.
(3) A direction that the conversation was furtherance of the conspiracy
Thirdly, as became apparent during the oral argument, the Crown maintained that it was open to the jury to have viewed parts of the telephone conversations as conversations in furtherance of the conspiracy. Such an inference would depend upon precise findings as to what the appellant said and the exclusion of any innocent explanation for his conduct. No direction was given as to this explicit use of this evidence described by the trial judge as ‘very important.’ To treat it as evidence going to the appellant’s credit accompanied with directions that the jury should attach such significance to it as they saw fit was quite insufficient. It did not alert the jury to the process of inferential reasoning to which such evidence should have been subjected.
(4) An Edwards direction was required
Fourthly, an Edwards direction should be given if the prosecution contend that specified post offence conduct evidences a consciousness of guilt or if there is a perceptible risk that it will be so understood. It does not appear that the prosecutor took himself to be inviting consciousness of guilt reasoning although his belated request that the judge give a jury a Zoneff direction does indicate some recognition by the end of the trial that his submissions might be so regarded.
Here the Crown did not identify in advance the conduct which it sought to rely upon and which might demonstrate a consciousness of guilt.[2] Notwithstanding that the prosecutor eschewed such an intention, the explicit and implicit submissions that he made invited the jury to embark upon consciousness of guilt reasoning.
[2]R v Ciantar (2006) 16 VR 26, [82].
The absence of directions on the use to which the jury could put the evidence of post offence conduct was a particularly serious deficiency in the present circumstances. A jury cannot find conduct to constitute an admission of guilt if there is a reasonable possibility that the conduct occurred for a different reason.[3] A jury must be satisfied that there is no other explanation for the conduct reasonably open on the facts.[4] Hence an obligation is imposed upon the trial judge to identify possible motivations other than a consciousness of guilt for committing the post offence conduct. Common motivations for such conduct include confusion, fear of being wrongly accused, distress and shame.
[3]Edwards v R (1993) 178 CLR 193; R v McCullagh (No 2) [2005] VSCA 109.
[4]R v Ciantar (2006) 16 VR 26; R v Dickinson [2007] VSCA 111.
The Crown on appeal avoided any suggestion that the final direction might have satisfied the requirements of a Zoneff direction.[5] An Edwards direction should have been given. The Crown should have been required to precisely identify the conduct said to constitute an implied admission. The direction would then have focussed the jury’s attention upon whether explanations consistent with innocence could be excluded, before drawing any adverse inference from anything they found the appellant to have said.
[5]Zoneff v The Queen (2000) 200 CLR 234.
The absence of an Edwards direction was aggravated by the prosecutor’s failure to put such inferences to the appellant during cross-examination. Any innocent explanation for his conduct that he might have advanced was thus not placed before the jury.
The failure by defence counsel to seek an Edwards direction does not affect the judge’s obligation to give one. The judge has no authority to dispense with directions that the law requires him to give.[6] It may be that defence counsel for forensic reasons did not wish the judge to give an Edwards direction but there being a significant risk that the jury would act upon the prosecutor’s submissions and infer consciousness of guilt from post offence conduct, he was bound to draw that to the judge’s attention and remind the judge of the law.
(5) A direction concerning the inference to be drawn from the appellant’s demeanour during the conversation
[6]R v Hartwick [2005] VSCA 264; R v Chang (2003) 7 VR 236; R v Cardamone [2007] VSCA 77.
Fifthly, to the extent that the post offence conduct relied upon by the Crown concerned the appellant’s demeanour – here referring to the tone and manner in which the appellant expressed himself – there was a particularly acute danger of misinterpretation of what was in any event the unsatisfactory manner in which Tierney’s evidence was allowed to be given.[7] The evidence of the appellant’s demeanour during the telephone conversations was imprecise and unreliable. If his description of the manner in which the appellant spoke was to be admitted, it required a clear and careful warning about the dangers of drawing an inference from such demeanour.[8]
(6) The absence of any more explicit admission during the conversations because of a fear that the phone may be bugged
[7]R v Favata [2006] VSCA 44, [145]–[147].
[8]R v Barrett [2007] VSCA 95.
Sixthly, on appeal it was said that the prosecutor’s submission rested upon the premise that the appellant was seeking to conceal the conspiracy and would not say anything that overtly disclosed its existence. But the prosecutor’s suggestion that the appellant feared the phone was bugged and for that reason made no more explicit admission was, it appears, pure conjecture. If anything was said that was capable of supporting such an inference, it has not been drawn to our attention.
(7) Distancing himself from Cappellin and Tierney
Seventhly, the submission that the appellant had distanced himself from Cappellin and Tierney because of the Hamerston investigation was not conduct which could be characterised as in furtherance of the conspiracy. Its only potential relevance was as an implied admission of guilt and no direction in that regard was given.
(8) Alleged silence in response to Hamerston investigation
Eighthly, the Crown’s reliance on the appellant’s alleged silence in responding to the Hamerston inquiry was not said to be in furtherance of the conspiracy but evidenced a recognition of guilt. The appellant disputed that there was any evidentiary basis for the contention that he remained silent. Assuming that such a finding was open, it was not evidence of silence in the face of an allegation being made in the presence of the appellant.[9] Furthermore, whether any inference
could be drawn from the appellant’s failure to make a direct approach to Mr Hamerston also called for careful direction.
[9]R v Salahattin [1983] 1 VR 521.
(9)Prosecutor’s failure to comply with rule in Browne v Dunn
Ninthly, none of the adverse inferences which the prosecutor intended to invite the jury to draw from the appellant’s conversations with Tierney were put to the appellant to provide him with an opportunity to respond to those suggestions. In particular it was not put to the appellant that his phone conversations with Tierney disclosed the existence of the conspiracy or were for the purpose of concealing the conspiracy. The prosecutor did not put the suggestion to the appellant that his calls to Tierney were motivated by a fear that he would be ‘unmasked as a conspirator’.[10] It was not suggested to him that his reference to the need for three quotes was designed to conceal the conspiracy. It was not suggested to him that he had refrained from making any more explicit disclosure of his role in the conspiracy because he feared speaking on the telephone. Neither was it suggested to him that his demeanour whilst talking with Tierney revealed a recognition of his guilt. Hence the appellant had no opportunity to respond to the suggestions made by the prosecutor for the first time in closing about the phone conversations with Tierney.
[10]The term employed by the prosecutor in closing address.
The appellant was also not asked why he had not made contact with Mr Hamerston. It was not suggested to him that he had distanced himself from Cappellin because of his fear as to the outcome of the Hamerston investigation. What was suggested in cross-examination, was that he had fallen out with Cappellin because of the financial disagreement over the horses.
The rule in Browne v Dunn[11] has particular application in circumstances where cross-examining counsel intends that inferences be drawn from the conduct of the witness.[12] All of these suggestions, later made in closing, were inferences that were plainly in dispute. The prosecutor was obliged to put such suggestions to the appellant if he intended to invite the jury to draw such inferences from the appellant’s conduct.[13] In R v Hillier Callinan J adverted to the prejudice lying in the denial of an opportunity by an accused to deal in cross-examination with specific imputations upon which the prosecution intends to rely in closing address.[14] The prosecutor was obliged to put those imputations to the appellant so that he might provide such explanation as he was able.[15]
[11](1893) 6 R 67.
[12]Allied Pastoral Holdings Pty Ltd v FCT (1983) 44 ALR 607, 623 (Hunt J).
[13]R v Morrow (2009) 26 VR 526, [50]–[55] (Redlich JA).
[14]R v Hillier(2007) 228 CLR 618, [65].
[15]R v Thompson (2008) 21 VR 135, [116].
(10) Trial judge failed to give any Browne v Dunn direction
Tenthly, despite complaint being made by defence counsel in closing that these matters had not been raised by the prosecutor during his cross-examination of the appellant, no direction or comment on the Crown’s failure to comply with the rule in Browne v Dunn was made during the charge. Instead, the trial judge’s treatment of the Crown’s argument on post offence conduct compounded the unfairness to the appellant which had been created by the Crown’s submission to the jury. The Crown’s argument was treated as a legitimate matter for the jury’s consideration, it being given relative prominence in what was a relatively brief summary of the evidence and counsel addresses.
Ordinarily a trial judge would be obliged to direct the jury that they should take into account that the prosecutor had failed to raise matters with an accused during the course of his evidence and that they may take that into account when considering whether or not they should accept the prosecutor’s arguments as to the facts to which those matters relate. That would not have been sufficient where post offence conduct was relied upon which could be regarded as being in furtherance of the crime or as containing implied admissions. At the very least, further directions were necessary dealing with the relevance of the post offence conduct and the process of reasoning which would permit adverse inferences to be drawn from that evidence.
I would uphold Grounds 1 and 3. The errors to which I have referred have given rise to the risk of a substantial miscarriage of justice which requires the verdict to be set aside and a new trial ordered.
In the event that there is to be a retrial, I should briefly also state my view in relation to Ground 2. Complaint is made that his Honour gave an inadequate Zoneff direction concerning the alleged lies told by the appellant in his evidence. The Crown did not suggest that those lies portrayed a consciousness of guilt but argued that they undermined his credibility. In the passage to which I have already referred, the trial judge directed the jury that the lies went only to the appellant’s credibility and could be used for no other purpose. As some of the alleged lies concerned the extent of the appellant’s interest in horses with Cappellin and as this was said to be the primary motivation for his participation in the conspiracy, it was submitted that if the jury considered he lied about this, there was a grave risk that they would conclude that the reason for such lies was his desire to conceal the fruits of the conspiracy.
The jury commenced its deliberations on 6 July 2009. They did not return a verdict until 16 July by a majority. The appellant pointed to the fact that some 7 days after the jury retired to consider its verdict, the jury asked a question concerning documents which evidenced an agreement by the appellant to sell his interest in two of the horses which he shared with Cappellin. These documents formed a basis for the Crown’s closing submission that the appellant had lied. This question, it was said, demonstrated the need for the trial judge to explain that a finding that the appellant lied could not be used as evidence of guilt.
Given that these lies were intimately connected to the asserted motive for the appellant’s involvement in the conspiracies and having regard to the importance
which the prosecution attached to them, a full Zoneff direction was necessary to ensure that the jury not treat them as supporting an inference of a consciousness of guilt. However I would not on this ground alone have concluded that there was a substantial miscarriage of justice.
If the Crown on a retrial relies again upon other post offence conduct in a manner which necessitates an Edwards direction, a Zoneff direction would be essential to distinguish these lies from such other post offence conduct.
COGHLAN AJA:
I also agree.
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