Theophanous v The Queen

Theophanous was convicted in the Supreme Court of Victoria of two counts of conspiracy to defraud the Commonwealth. The Crown alleged that Theophanous, along with others, conspired to defraud the Commonwealth by dishonestly causing the payment of certain moneys to companies associated with Theophanous, which were not entitled to them. Theophanous appealed his conviction to the High Court of Australia.

The High Court was required to determine whether the trial judge had erred in law in admitting certain evidence, specifically evidence of Theophanous's prior convictions and evidence relating to the financial affairs of companies not directly involved in the conspiracy. The central legal issue was whether this evidence was unfairly prejudicial to the appellant and therefore inadmissible, or whether it was relevant to establishing the existence of the conspiracy and Theophanous's participation in it.

Gleeson CJ and Hayne J, in separate but concurring judgments, held that the admission of the evidence of prior convictions was a material irregularity that had occasioned a substantial miscarriage of justice. Their Honours reasoned that the prejudicial effect of this evidence, which suggested a propensity on the part of Theophanous to engage in dishonest conduct, far outweighed its probative value. The evidence relating to the financial affairs of other companies was also found to be of questionable relevance and potentially misleading. Consequently, the convictions were quashed, and a new trial was ordered.