WITTENSLEGER -v- THE STATE OF WESTERN AUSTRALIA [2014] WASCA 205

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2014] WASCA 205
Court:	THE COURT OF APPEAL (WA)
Case No:	CACR:199/2013	Heard:	24 JULY 2014
Coram:	McLURE P MAZZA JA HALL J	Delivered:	7/11/14
No of pages:	39	Judgment Part:	1 of 1
Result:	Application for leave to appeal against conviction refused Appeal against conviction dismissed Application for leave to appeal against sentence refused Appeal against sentence dismissed
Category:	B
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Parties:	ARDEN RODRICK WITTENSLEGER THE STATE OF WESTERN AUSTRALIA
Catchwords:	Criminal law Application for leave to appeal against conviction Application for leave to appeal against sentence Fraud Whether deceit or fraudulent means made out on evidence Totality principle Whether total effective sentence of 8 years disproportionate to total criminal conduct
Legislation:	Criminal Code (WA), s 409
Case References:	Anderson v The State of Western Australia [No 3] [2014] WASCA 190 Barrett v The State of Western Australia [2007] WASCA 21 Birks v The State of Western Australia [2007] WASCA 29; (2007) 33 WAR 291 Bolitho v The State of Western Australia [2007] WASCA 102; (2007) 34 WAR 215 Crofts v The Queen [1996] HCA 22; (1996) 186 CLR 427 Davis v The Queen [2002] WASCA 298 Dyers v The Queen [2002] HCA 45; (2002) 210 CLR 285 Graham-Helwig v The State of Western Australia [2005] WASCA 127; (2005) 30 WAR 221 Grubb v The Queen [2002] WASCA 158 Hladin v The State of Western Australia [2005] WASCA 50; (2005) 156 A Crim R 176 Hunter v The State of Western Australia [2014] WASCA 184 Jones v Dunkel [1959] ALR 367; (1959) 101 CLR 298 Kelly v The State of Western Australia [2013] WASCA 200 Magar v The State of Western Australia [2011] WASCA 122 Narrier v The State of Western Australia [2008] WASCA 191; (2008) 38 WAR 161 Nikaghanri v The State of Western Australia [2009] WASCA 192 Oblak v The State of Western Australia [2007] WASCA 176 Pollock v The State of Western Australia [2011] WASCA 133 R v Apostilides [1984] HCA 38; (1984) 154 CLR 563 Shepherd v The Queen [1990] HCA 56; (1990) 170 CLR 573 Skipworth v The State of Western Australia [2008] WASCA 64 Suresh v The Queen [1998] HCA 23; (1998) 72 ALJR 769 The State of Western Australia v Chapman [2012] WASCA 203 TKWJ v The Queen [2002] HCA 46; (2002) 212 CLR 124 Wilhelm v The State of Western Australia [2013] WASCA 273

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : WITTENSLEGER -v- THE STATE OF WESTERN AUSTRALIA [2014] WASCA 205 CORAM : McLURE P

MAZZA JA

HALL J

HEARD : 24 JULY 2014 DELIVERED : 7 NOVEMBER 2014 FILE NO/S : CACR 199 of 2013

CACR 200 of 2013

BETWEEN : ARDEN RODRICK WITTENSLEGER

Appellant

AND

THE STATE OF WESTERN AUSTRALIA

Respondent

ON APPEAL FROM:

Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA

Coram : CURTHOYS DCJ

File No : IND 332 of 2012

Catchwords:

Criminal law - Application for leave to appeal against conviction - Application for leave to appeal against sentence - Fraud - Whether deceit or fraudulent means made out on evidence - Totality principle - Whether total effective sentence of 8 years disproportionate to total criminal conduct

Legislation:

Criminal Code (WA), s 409

Result:

Application for leave to appeal against conviction refused

Appeal against conviction dismissed
Application for leave to appeal against sentence refused
Appeal against sentence dismissed

Category: B

Representation:

Counsel:

Appellant : Mr I A Morison

Respondent : No appearance

Solicitors:

Appellant : Legal Aid (WA)

Respondent : Director of Public Prosecutions (WA)

Case(s) referred to in judgment(s):

Anderson v The State of Western Australia [No 3] [2014] WASCA 190
Barrett v The State of Western Australia [2007] WASCA 21
Birks v The State of Western Australia [2007] WASCA 29; (2007) 33 WAR 291
Bolitho v The State of Western Australia [2007] WASCA 102; (2007) 34 WAR 215
Crofts v The Queen [1996] HCA 22; (1996) 186 CLR 427
Davis v The Queen [2002] WASCA 298
Dyers v The Queen [2002] HCA 45; (2002) 210 CLR 285
Graham-Helwig v The State of Western Australia [2005] WASCA 127; (2005) 30 WAR 221
Grubb v The Queen [2002] WASCA 158
Hladin v The State of Western Australia [2005] WASCA 50; (2005) 156 A Crim R 176
Hunter v The State of Western Australia [2014] WASCA 184
Jones v Dunkel [1959] ALR 367; (1959) 101 CLR 298
Kelly v The State of Western Australia [2013] WASCA 200
Magar v The State of Western Australia [2011] WASCA 122
Narrier v The State of Western Australia [2008] WASCA 191; (2008) 38 WAR 161
Nikaghanri v The State of Western Australia [2009] WASCA 192
Oblak v The State of Western Australia [2007] WASCA 176
Pollock v The State of Western Australia [2011] WASCA 133
R v Apostilides [1984] HCA 38; (1984) 154 CLR 563
Shepherd v The Queen [1990] HCA 56; (1990) 170 CLR 573
Skipworth v The State of Western Australia [2008] WASCA 64
Suresh v The Queen [1998] HCA 23; (1998) 72 ALJR 769
The State of Western Australia v Chapman [2012] WASCA 203
TKWJ v The Queen [2002] HCA 46; (2002) 212 CLR 124
Wilhelm v The State of Western Australia [2013] WASCA 273

1 McLURE P: I agree with Hall J.

2 MAZZA JA: I agree with the orders proposed by Hall J in each appeal for the reasons that he gives.

3 HALL J: These are applications for leave to appeal against conviction and for leave to appeal against sentence.

4 The appellant was convicted after a trial in the District Court of 86 counts of fraud contrary to s 409(1)(c) of the Criminal Code (WA). He was acquitted on one count (count 76). He was sentenced to 4 years' imprisonment on each of the counts of which he was convicted. The sentences on counts 1 and 2 were made cumulative and the sentences on all other counts were ordered to be concurrent. The total effective sentence was therefore one of 8 years' imprisonment.

5 The charges were all in similar terms. They alleged that on various dates between 14 May 2009 and 13 July 2010 the appellant, with intent to defraud by deceit or fraudulent means, gained a benefit namely a quantity of money for the proprietor of Nirranda Pty Ltd trading as James Brae & Brodrick. The money was alleged to have been obtained from a finance company. The 'proprietor' who obtained the benefit was, in effect, the appellant. The total amount of money obtained was approximately $6.5 million.

The prosecution case

6 The prosecution case was that at all times the appellant was a director of the company called Nirranda Pty Ltd. That company was the trustee of a trust called The Wittensleger Family Trust, which traded as a business called James Brae & Brodrick (JBB). The business provided accountancy and bookkeeping services from offices situated in Hay Street, East Perth.

7 From about 2007 the appellant began making applications on behalf of some of his clients for fee funding loans from Hunter Premium Funding Ltd (Hunter). Hunter, a wholly owned subsidiary of Allianz Australia Ltd, is a finance company that offers a number of distinct funding products. One of these products was known as 'professional fee funding'. Another was insurance premium funding.

Professional fee funding was a product offered to clients of accountants and lawyers. Accountants or lawyers could make an

application on behalf of a client for a loan from Hunter to cover the cost of professional services that had been completed. Such a loan would be made on the basis of an invoice that was due and payable. If approved, Hunter would pay the invoice by disbursing funds directly to the lawyer or accountant. The client on whose behalf the invoice had been paid would then be liable to repay the loan to Hunter in instalments with interest.

9 The second product offered by Hunter was insurance premium funding. This product was available to the clients of insurance brokers to provide funds to pay an insurance premium. As with the professional fee funding product, where a loan was approved Hunter would pay the premium directly to the insurance underwriter or the insurance company. The broker's client would then be responsible for repaying the loan to Hunter in instalments with interest.

10 From about 2007 the appellant commenced applying on behalf of some of his clients for professional fee funding loans from Hunter. This was done pursuant to an agreement between JBB and Hunter that permitted loans to be approved more expeditiously, subject to limits on the amount to be loaned to any individual client and the total amount loaned in any one year. However, in 2008 Hunter made a commercial decision to withdraw the professional fee funding product from the market. This decision was made in the context of the global financial crisis. Hunter determined that this product was no longer commercially viable and, furthermore, it had been advised by its own credit insurer that insurance coverage to cover Hunter for losses on this type of product would no longer be available.

11 On 18 November 2008 Mr Bradley Bartlem, the Chief Executive Officer of Hunter, wrote to the appellant giving 45 days notice of the cancellation of the professional fee funding agreement. Accordingly, from that time the appellant knew that loans from Hunter to pay professional fees billed to his clients would no longer be available. He was aware, however, that insurance premium funding would continue to be available.

12 The appellant had formed a friendly relationship with a Hunter assessment manager based in Melbourne, Mr Tony Meilak. Meilak was a long term employee of Hunter and held a delegation that provided him with authority to approve loans of up to $100,000 without having to seek confirmation from others within the company. The appellant entered into an arrangement with Meilak whereby he would continue to make applications for professional fee funding under cover of applications for insurance premium funding. This was done in order to make it appear that the applications were for insurance premium funding and in the knowledge that Hunter was no longer in the market for professional fee funding. The appellant was neither a licensed insurance broker nor a licensed finance broker at the time.

13 Between 14 May 2009 and 13 July 2010 the appellant completed 87 such applications, which purported to be applications on behalf of clients for loans to meet the payment of insurance premiums. The amounts sought ranged from $52,500 (count 64) to $94,000 (counts 47 and 75). In fact, the appellant did not broker commercial insurance policies on behalf of any of the clients to whom the applications related. The clients in whose names the applications were made did not authorise them and, indeed, were unaware that they were made.

14 The applications lodged by the appellant fell into three categories. The first category involved the appellant preparing applications purportedly on behalf of businesses, companies and trust funds who were clients or former clients of his accounting business. A second category of application related to companies and businesses with which the appellant was directly involved. The third category involved applications in the name of companies or individuals with whom the appellant had no direct connection at all.

15 In many instances a document which appeared to be an invoice for professional services was attached to the application. The invoices equated with the amount being sought for the loan. These documents were sent directly to Meilak. Notwithstanding the obvious inconsistency between applications for a loan to pay insurance premiums and invoices for professional fees, the loans were approved by Meilak and funds were disbursed directly to a bank account of JBB controlled by the appellant. Whilst the invoices appeared to indicate that the clients in question were indebted to JBB for professional services rendered, they were false in that no such services had in fact been rendered. The clients in question had not received the services referred to and were unaware of the invoices.

16 The appellant directly received all of the funds into a bank account in the name of JBB and operated by him. The purported borrowers, being unaware of the loans, made no repayments. However the appellant made repayments on some of the loans and some of the earlier ones were repaid in full. The prosecution case was that the appellant used loan funds to make repayments in order to maintain the pretence that the loans were genuine. Each of the applications was for a loan of less than $100,000 and this ensured that they could be approved by Meilak without the necessity of being referred to other employees within Hunter. On some occasions the appellant submitted multiple applications on the same day to ensure that the amount of individual applications did not exceed $100,000. For example on 20 October 2009 he submitted two applications, both for $78,000, purportedly on behalf of two related client companies. The total amount obtained in respect of the 86 counts of which the appellant was convicted was $6,519,303.

17 On or about 8 July 2010 the appellant lodged an application on behalf of a company called Esplanade Holdings (WA) Pty Ltd. This was a company which had no previous connection with the appellant. He had never undertaken any professional services for that company and had no financial interest in it. The application sought a loan of $87,550. By this time the size and number of the loans had raised concern at Hunter and the loan was not approved. Senior management at Hunter requested that the appellant attend a meeting in Sydney. At that meeting he was shown copies of the loan applications which he had submitted over the previous year. He initialled those copies as acknowledgement that he had prepared, signed and lodged them.

18 Funding for the appellant's companies was terminated by Hunter. As there had been some repayments on earlier loans, the total amount of the debt in relation to the loans the subject of the convictions was $2,500,171.78. The appellant's total debt to Hunter was much larger than this as he also owed money in respect of other loans that were not the subject of charges. The $2.5 million amount remained owing at the time of trial.

19 In summary, the prosecution case was that the appellant, with intent to defraud, deceived Hunter by submitting false applications for insurance premium funding and thereby gained a benefit for himself. The applications were alleged to be false because they purported to be for insurance premium funding. The deceit also extended to the invoices, which were false in that the appellant had not undertaken professional services for the clients on whose behalf the applications were made. Evidence in regard to the invoices was also relevant to prove that the appellant had an intent to defraud and to prove the benefit that he obtained.

The defence case

20 The defence case was that the appellant had entered into a loan facility arrangement with Hunter. The arrangement was that Hunter would advance monies to Nirranda on the basis that the appellant would repay the loans from future earnings of the JBB group of companies. In support of loan applications he would provide invoices which reflected anticipated income from future or projected work.

21 The defence case was that the loan arrangement was agreed by the appellant and Meilak. The facility was to be secured over property owned by companies within the appellant's group. For this purpose a list of assets was prepared, though no security documentation was ever drawn up.

22 Hunter did not have any specific documentation to deal with a facility of this type and Meilak told the appellant to use the premium funding application forms and submit them with invoices representing future work. None of the invoices contained an allowance for GST and this was said to support the claim that they were not for work already done.

23 In essence the defence was that there was no deceit because Meilak, and therefore Hunter, was aware that the applications were not for insurance premium funding but were direct loans to the appellant's company. There was no dispute that the applications were not for insurance premium funding for the entities named in them. Nor was there any dispute that the invoices attached to some of the applications were not for work done and had not been rendered to the entities named on them.

24 The following admissions were formally made on behalf of the appellant (ts 269 and exhibit 19). Exhibit 2 referred to in the admissions was the bundle of premium funding applications and accompanying invoices:

1. I personally prepared, signed and submitted by email each and every premium funding application contained in exhibit 2.

2. None of the premium funding applications contained in exhibit 2 related to applications for funding to pay for insurance policies.

3. None of the purported borrowers in each and every premium funding application contained in exhibit 2 had applied for a policy of insurance with Allianz Australia Ltd and none of the purported borrowers had an insurance premium payable to Allianz Australia Ltd in the amount described in section 4 of the respective premium funding application forms.

4. None of the invoices attached to the premium funding applications contained in exhibit 2 concerned past work actually performed by me, or James Brae & Brodrick, for or on behalf of the non-related entitles to whom they were addressed.

5. None of the invoices attached to the premium funding applications contained in exhibit 2 were ever sent to the non-related entities named on each respective invoice.

6. None of the non-related entitles named as the purported borrowers in schedule 1 of each and every premium funding application contained in exhibit 2 had any knowledge that the premium funding application in which they were named had been submitted to Hunter Premium Funding Ltd.

The Hunter witnesses

25 Given the admissions made by the appellant, the evidence of the witnesses from Hunter was of critical importance.

Bradley Allan Bartlem

26 Mr Bartlem was the Chief Executive Officer of Hunter. He had been in that role since 2008.

27 Mr Bartlem said that Hunter was a wholly owned subsidiary of Allianz Australia Ltd. Its business consists of lending money to people and businesses to pay their insurance premiums. The insurance does not have to be from Allianz Australia Ltd and in fact the majority of Hunter's business relates to the payment of premiums to other insurance companies.

28 In the past Hunter has offered a number of other different funding products. One of those was professional fee funding. Hunter exited from that product in 2008. The company no longer had the ability to engage in that business because it could no longer obtain credit insurance cover to protect it from the risk of loss. At that time Mr Bartlem wrote a letter to all of Hunter's customers notifying them that the company was exiting the professional fee funding business. That letter included the following:

Please accept this letter as giving you 45 days written notice of cancellation of the current Professional Fee Funding Agreement, in accordance with clause 16.

The recent credit crisis has resulted in our requirement to reconsider our involvement in the fee funding business as we currently manage it, along with recent advice from our credit insurer that they are not prepared to continue cover for this product.

As your facility is presently in a current status, we will continue to allow all existing deals to continue until completion; however we will not be accepting any new loans, as per clause 3.2 of the agreement. Should any deals not remain current and up to date, then we will request repayment of your facility.

We regret having to provide this notification, but given the current credit market and the fact that the current credit insurer has declined cover on this business and poor financial performance of your facility overall we are left with no other choice.

29 This letter was sent to clients on 18 November 2008. A copy addressed to the appellant was produced and tendered in evidence (exhibit 1). Mr Bartlem believed that the letter was sent to the appellant but he accepted in cross-examination that he could not categorically say that it was received.

30 Mr Bartlem said that Tony Meilak was Hunter's head risk officer. In that role he was responsible for a team of people who would assess loan applications. He described Meilak as 'our gatekeeper' in respect of incoming business. Meilak held a delegation in relation to the authorisation of loans.

31 In mid July 2010 Hunter conducted a portfolio review of its loans in Western Australia as a result of a change in State management. In the course of this review a number of irregularities became apparent. In particular a large number of approved loan applications had been made by the appellant. On examination all of them purported to be in respect of premiums for insurance obtained from Allianz. However, when checks were made Allianz had no record of a relationship with the appellant. Further, all of the loans had been approved by Meilak. This was unusual because Hunter had an electronic customer service mailbox for the receipt of applications. When such applications were received they went into a work queue and were distributed to the next person within the assessment team who was available. That process appeared to have been circumvented in respect of these applications. In addition all of the applications appeared to have been signed by the appellant rather than the customer who was applying for the loan. Mr Bartlem also noticed that all of the loans fell below $100,000, which was the upper limit of Meilak's delegated sole authority. None of the applications had been subject to the credit checks that were normally done.

32 On becoming aware of these discrepancies Mr Bartlem requested that the appellant attend a meeting at Hunter in Sydney on 16 July 2010. By the time that meeting was held enquiries had been made by Hunter which had determined that none of the customers named in the applications had insurance policies with Allianz. At the meeting, when the discrepancies were put to the appellant, he said that the loans were 'actually fee funding loans'. He pointed to invoices attached to the applications and asserted that Hunter would have known that they were professional fee funding loans because of the attachment of those invoices.

33 Mr Bartlem gave evidence that he was unaware of the invoices until that day and that it was 'highly unorthodox' to see an invoice for professional fees attached to an application for premium funding. He said that it was essentially the role of Meilak to intercept this type of application. When the appellant was asked at the meeting why he had submitted applications in this form he said that he was instructed to do so by Meilak. The appellant also said that the invoices were addressed to customers who he had performed services for.

34 When asked whether a person could apply for a loan on the basis of documentation which included a quote for intended future work from someone else Mr Bartlem said:

Look it's not something we would do. I - I can't comment on what others may do but it's something that we certainly wouldn't advocate.

All right and was it something that you ever did when you did offer the professional fee funding agreement?---No (ts 145).

35 On further investigation Hunter became aware that all of the money had been paid out to an account controlled by the appellant. When asked at the meeting whether he was in a position to repay the money the appellant said that it was held in his trust account and that there were a number of legal issues that he needed to go through. The appellant subsequently proposed a commercial agreement to pay the money back to Hunter over a period of time. This was rejected by Mr Bartlem.

36 In cross-examination it was put to Mr Bartlem that at the 10 July 2010 meeting he had conceded that errors had been made at Hunter's end and that they had provided the wrong paperwork. He denied this. He was then asked:

Do you remember saying that the error was at your end and the officer involved ie Mr Meilak had been sacked?---We had discussions that Tony Meilak had operated outside his - his - his remit and that he had been - I don't think that Tony had been terminated at that point in time.

Now - - -?---I think he'd been stood down as well as (indistinct). I don't think he had been terminated at that point of time. No.

37 Mr Bartlem was then asked:

I mean you were - what I suggest is you said at the meeting that - that you were aware that no form of insurance funding for customers was ever involved?---No. I put it to Mr Wittensleger at that meeting that there was no - that these loans were fraudulent in the event that they related to premium funding, was related to premium funding, and there was no premium funding involved (ts 157).

38 A little later it was put to Mr Bartlem that he knew or believed that the loans the subject of the applications were being made to the appellant and Nirranda Pty Ltd. He responded as follows:

So if you're asserting - if that was the case, and Mr Wittensleger needed the sum of money you talked about, why wouldn't he just ask for one loan off us if that's who we were lending to? Why the elaborate charade?

Mr Bartlem, the way it goes is I answer (sic) the questions but let me answer it, let me put this to you: You don't know what was discussed between Mr Wittensleger and your manager Mr Meilak do you?---No I don't.

No you don't. So what I want to suggest to you is that the reason why money was demanded from Wittensleger and Nirranda by Hunter Premium was because Hunter knew when they paid the money and they received the applications the money was going to Wittensleger and Nirranda?---That's not correct (ts 163).

Nigel Frederick Thomas

39 Mr Thomas was the General Manager of Hunter Premium Funding. He held that position from about September 2008.

40 Mr Thomas said that prior to 2008 Hunter had provided professional fee funding. This would enable approved lawyers and accountants to seek loans for their clients to meet professional fees. Hunter would give the lawyers or accountants concerned an annual limit of fee funding and a limit in respect of any one individual fee.

41 The appellant's firm, JBB, had such an arrangement from 2005. The annual limit of that arrangement was $75,000 with a limit of $18,750 in respect of any one client. Originally the arrangement required clients to deal directly with Hunter but that was modified in 2007. At that time an agreement called an 'Easy Fee Agreement' was entered into (exhibit 10). This agreement enabled monies to be advanced to the appellant's company Nirranda Pty Ltd on the basis of professional services rendered and fees presently due and owing. Nirranda's client would then be liable to repay Hunter by instalments together with interest. Mr Thomas said that this arrangement provided clients with the opportunity to pay off a fee that had actually been incurred. It did not apply to future fees, only current fees that were due. Clause 16.1 of the agreement provided that either party could terminate it by giving the other 45 days written notice.

42 A decision was made by Hunter to cease providing professional fee funding around November 2008. Notices of termination of Easy Fee Agreements were then sent on 18 November 2008.

43 Shortly before the termination letter was sent the appellant wrote to Hunter proposing the continuation of his professional fee agreement. An email and attached letter to this effect was sent to Hunter on 17 November 2008 (ts 191). There was no change to Hunter's decision to discontinue the agreement. Another similar proposal was sent by the appellant to Mr Thomas by email on 23 October 2009. Again there was no reversal of Hunter's decision.

44 In September 2009 the appellant met with Mr Thomas and the then State Manager of Hunter. At this meeting the appellant presented his thoughts and ideas on why JBB could do professional fee funding in a different way that would produce good results for Hunter. During the meeting the appellant referred to the fact that he was making premium funding applications and that he was signing those applications pursuant to powers of attorney. He did not indicate that the premium funding applications were in fact for professional fees (ts 194).

45 In July 2010 an audit was undertaken of applications that had been submitted by the appellant. It was discovered that loan funds were being paid directly to JBB. This was considered to be an anomaly as in the normal course of business premium funding would be paid to an insurance underwriter or an insurance company. The payment of loan funds to JBB was outside of Hunter's standard business rules. Mr Thomas rang the appellant to advise him that payments made in this way were outside Hunter's business practice and would have to be changed. At this time Mr Thomas had not seen any of the application forms himself.

46 Shortly after this Mr Thomas became aware that there were some problems with the loans. The appellant telephoned and said that he had been told that Meilak's authorities had been suspended. The appellant seemed to be quite distressed and then said:

Well look mate, I don't want Tony to get in trouble but he's approved a couple of fee funding deals for me as premium funding.

47 Mr Thomas then said:

Well you know we can't do professional fee funding anymore and we don't have credit insurance in place to cover that particular product so that puts us at risk in a sense that we are fully exposed for this business.

48 Mr Thomas was present at the meeting with the appellant in Sydney on 16 July 2010. The appellant was shown the loan application forms and said that he had signed them on behalf of the borrowers under powers of attorney. The appellant offered to provide security for the outstanding loans on condition that Hunter would acknowledge that it was responsible for the wrong documents being used and that it knew that the loans were for professional fee funding. That was not acceptable to either Mr Thomas or Mr Bartlem. Mr Thomas told the appellant that Hunter was not in a position to agree to something that was untrue (ts 201). Mr Thomas reiterated that he was unaware that the loans were not for premium funding in a subsequent telephone conversation with the appellant.

Marc Andrew Gross

49 Mr Gross was the National Credit and Risk Manager for Hunter. The Credit Assessment Manager, Tony Meilak, reported directly to him.

50 Meilak would report on a monthly basis on what loans were outstanding, the ageing of loans and the credit strategy. It was the responsibility of Meilak's team to check applications to ensure that they were correctly completed and to approve loans based on the company rules. Loans that were under $100,000 could be approved by the Credit and Assessment Manager (Meilak) without the need for referral to a second person. For loans greater than $50,000 but below $100,000 a credit check was required.

51 In July 2010 Mr Gross became aware of issues regarding applications made by the appellant. On examination of the loan applications a number of irregularities were observed. These included that settlements were being paid directly to JBB rather than an insurance underwriter or insurance company. He also noted that all of the applications related to the same insurance company, Allianz, and that they were all signed by the same person. Under the company's rules and procedures the named borrower in the application was required to sign it. On further investigation it became apparent that credit checks that were required for loans of this type had not occurred and that this requirement had been overridden by Meilak. The loan applications had also all been emailed directly to Meilak rather than being submitted to the central business mailbox.

52 An email dated 16 September 2009 sent from Meilak to the appellant was obtained by Mr Gross in the course of an investigation. The email stated:

Arden, mate, initial payment dishonoured. I need to sort it urgently. As by rights it needs to go to the credit insurers and if it goes there we won't be able to do any more funding for you.

53 That email contained a reference number in the heading which referred to one of the applications that was the subject of the charges.

54 It was put to Mr Gross in cross-examination that Meilak was a long-term, trusted employee who had broad authority. In particular he was asked:

He was almost a law unto himself wasn't he?---Well I disagree. He has - he had to - had to follow the business rules that were effectively placed upon him. He had to follow the rules of the - of the organisation, and they were set down, and he was well aware of them (ts 157).

55 Mr Gross said that Meilak did not comply with the terms of his delegated authority and that he approved applications that he should not have done (ts 159). Meilak was dismissed in relation to his involvement in the approval of loans to JBB. He was also subsequently charged with fraud, though this related to other unrelated allegations. Mr Gross said that Meilak had never explained the nature of the facility he had set up with the appellant (ts 263).

The appellant's evidence

56 The appellant said that JBB was set up in approximately 1997 as a trading name for Nirranda Pty Ltd. Nirranda was a holding company that held a number of business interests. One of these was a business providing accounting services, tax advice, corporate and management planning.

57 The appellant said that in approximately 2005 he arranged a finance facility for Nirranda with a company called Centrepoint Finance. He said that the facility was unique in nature because it enabled Nirranda to obtain loans on the basis of invoices for future or projected work for other companies within the same group. He said that the only security that Centrepoint required was an assignment of the invoice in question, a guarantee from Nirranda and a personal guarantee (ts 681). He said he had never seen or heard of a similar facility and that in his experience other banks and finance companies never allowed loans on the basis of billings to related entities. He said that this facility continued for approximately 12 months and that Centrepoint then stopped the facility in about 2006.

58 The appellant then said that he negotiated a similar arrangement with a Queensland company called Smart Fee. He said that once he began to receive documentation from Smart Fee it became apparent that they were an agent for Hunter. He said that he informed the Managing Director of Smart Fee that the funding model was based on invoicing related entities for future work. He said that the model was attractive because the interest rates were substantially less than those that a bank would charge for a traditional loan facility. About a year after the Smart Fee arrangement commenced the Managing Director of Smart Fee telephoned the appellant and said that he was not happy with the fact that the facility was being used to fund loans to related entities. This caused the appellant to seek alternative arrangements.

59 The appellant said that in about 2007 he decided to approach Hunter directly. He met with Meilak at the Hunter office in Victoria. He explained how the Nirranda group was structured and the funding history with Centrepoint and Smart Fee. He told Meilak that he was looking for a similar facility with Hunter and that he wished to extend it from billing primarily to related entities to also include billing to clients. He said that he offered Meilak security over the assets of the Nirranda group. He said that Meilak agreed that Hunter would provide the facility and a professional fee funding agreement was prepared. This agreement related to the provision of loans to meet professional fees incurred by clients. The appellant said he signed this agreement notwithstanding that it did not reflect the facility that he said he had agreed with Meilak. He said that he raised his concerns that the document was inadequate and that Meilak said:

Don't worry that's all I have at the moment but I will refer it to my legal people. We'll get a new document and a new agreement and also set you up on what they call their Easy Fees or Easy Fund system to reflect the unique nature of your facility' (ts 693).

60 The appellant said that when Hunter took the professional fee funding product off the market in 2008 he was required to fill out application forms that nominated an insurer. He said that he asked Meilak what he should put in this section of the application and was told to nominate Allianz. Although there was a change in the nature of the applications the appellant said that he had no recollection of receiving the letter of 18 November 2008 terminating the professional fee funding agreement. He said that even if he had received this letter he would not have considered it as applying to his facility as that facility was not a traditional fee funding product. He said that he attached invoices to the application forms even though they were not apparently relevant to applications for premium funding because his facility was unique and to make the applications stand out (ts 708). He said that notwithstanding the appearance of the applications they were never intended to be loans on behalf of clients. Nirranda was the borrower and accepted liability for the debt.

61 The appellant said in July 2010 he was contacted by Mr Thomas and told that there was a problem with the account into which loans were being paid. He said that he sensed something was not right and Meilak was vague when he rang him for clarification. He assumed that there was an issue regarding documentation. At the meeting on 16 July 2010 he said that it became obvious that something irregular or improper had been done by Meilak. He wanted to distance himself from any wrongdoing by Meilak and wanted to get the proper documentation and security in place (ts 726).

62 The appellant asked another associate to attend the meeting in order to provide guarantees by way of additional security. These documents were completed and signed and the appellant said that at the conclusion of the meeting he believed that Hunter had adequate security and that the outstanding loans would be resolved by way of a repayment plan. However, he subsequently received a letter from Hunter which alleged that he had acted fraudulently. He denied this in a telephone conversation with Mr Bartlem.

63 The appellant said that on 17 November 2008 he sent a letter to Hunter enclosing a discussion paper (exhibit 12, 14 and 14A). The purpose of the discussion paper was to persuade Hunter that they should reconsider their decision to withdraw the traditional fee funding product from the market. The appellant considered that there were deficiencies in Hunter's traditional fee funding product and that the product could be done better (ts 878).

64 In cross-examination the appellant conceded that documentation to provide security for the facility that he claimed he had with Hunter was not put in place. He said that this was a failure on the part of Meilak. He accepted that the only security documentation ever signed was that prepared following the meeting of 16 July 2010 (ts 917 - 918). He also accepted in cross-examination that despite being concerned that the applications he submitted did not reflect the facility arrangement that he claimed to have he did not raise his concerns with other officers of Hunter with whom he had contact, including Thomas and Bartlem. He also accepted that he was aware that Hunter had withdrawn the professional fee funding product from the market in November 2008, though he continued to deny that he had received the termination letter of 18 November 2008.

65 The appellant accepted that he had signed the professional fee agreement on 21 May 2007 but he denied that that document reflected the facility that he negotiated with Meilak. He said that he only signed that agreement at the insistence of Meilak and in the expectation that a more appropriate agreement would be prepared (ts 932 - 933). He accepted that in the email of 17 November 2008 he had referred to 'the termination of our Hunter professional fee funding agreement' but maintained that this did not indicate his awareness of the termination of the agreement between Hunter and JBB, but was a reference to Hunter's standard professional fee agreements and that the word 'our' was a typographical error.

66 The appellant's account of the meeting of 16 July 2010 differed from that of Bartlem and Thomas. He denied that at the meeting he said that the invoices attached to the applications represented work that had been completed. He accepted that he had signed the applications but denied that he had ever claimed to have done so pursuant to powers of attorney.

Appeal against conviction - Grounds of appeal

67 The grounds of appeal against conviction are as follows:

1. The verdicts of guilty should be set aside because they are unreasonable and cannot be supported on the evidence, in that the only officer of the complainant finance company to whom the Appellant directed the premium loan applications and with whom the Appellant dealt (the complainant's credit assessment officer - Mr Meilak), was, on the prosecution case, aware (as the Appellant knew) that the information in the applications was false; it following that there was no case to answer.

2. The verdicts of guilty should be set aside because they are unreasonable and cannot be supported on the evidence, in that the prosecution evidence upon an issue central to the prosecution case - whether the complainant's chief executive officer had sent and the Appellant had received a letter of 18 November 2008 terminating the complainant's fee funding facility - was inadmissible alternatively was so lacking in cogency, strength or credibility that it was not open to the jury as a matter of fact to be satisfied beyond reasonable doubt of that alleged fact.

3. The learned trial Judge erred in law in admitting evidence as to the issue of the authenticity of the invoices annexed to the premium loan applications, which issue was irrelevant, alternatively made irrelevant by the Appellant's formal admissions.

4. In the alternative to Ground 1, the learned trial Judge erred in law in refusing the Appellant's application to abort the trial after the prosecution witness Bartlem in re-examination gave an unresponsive answer that there had been collusion between Mr Meilak and the Appellant; which evidence was irrelevant, of no probative value, and caused a prejudice to the Appellant that was incapable of being repaired by a direction.

5. In the alternative to Ground 1, the learned trial Judge erred in law:

(a) in directing the jury during the charge to the jury that it could not consider what evidence Mr Meilak might have given if he had been called;

(b) in failing to direct the jury as to the possibility of an inference that Mr Meilak would not have assisted the prosecution case; and

(c) in failing to direct the jury as to the unfairness of the position in which the Appellant was placed by reason of the failure of the prosecution to call Mr Meilak.

6. The learned trial Judge erred in law by failing in his charge to the jury to give a fair and balanced presentation of the prosecution and defence case, in that the learned trial Judge:

(a) failed to provide an analysis, or a sufficient analysis, of the evidence relating to the arguments and issues raised by defence counsel;

(b) prepared and gave each member of the jury a schedule to take with them into the jury room referring to certain evidence in the case, which schedule placed greater emphasis on the prosecution case than the defence case and was liable to be given undue weight by the jury.

7. The conduct of the learned prosecutor brought about a substantial miscarriage of justice in that:

(a) the learned prosecutor failed without explanation or strong and satisfactory grounds, to call Meilak as a witness when Meilak's evidence was necessary to give a complete account of the events upon which the prosecution was based;

(b) the learned prosecutor submitted to the jury in his opening statement that the Appellant had created and acted pursuant to a 'Ponzi scheme', a proposition which was irrelevant, unproven and prejudicial.

8. A substantial miscarriage of justice occurred by reason of the conduct of the defence case by the Appellant's learned trial counsel:

Particulars

Learned trial counsel for the Appellant:

(1) in making failed the no case submission, failed to invoke the ground stated in Ground 1 (complainant's knowledge of false applications);

(2) failed to object to:

(a) the admissibility of the evidence referred to in Ground 2 (18 November 2008 letter);

(b) the admissibility of the evidence referred to in Ground 3 (invoices);

(c) the admissibility of the evidence of the forensic accountant Mr Orsi as to the Appellant engaging in a 'Ponzi scheme';

(d) submissions made to the jury by the learned prosecutor that the Appellant had created and acted pursuant to a 'Ponzi scheme';

(e) the comments made by the learned trial Judge at the conclusion of the charge referred to in Ground 5 (Meilak not called);

(f) the Judge's schedule (Ground 6).

Appeal against conviction - Ground 1 - Was anyone deceived?

68 The appellant submits that Meilak knew that the premium loan applications were false in the sense that the appellant did not intend that the loans would be used to pay insurance premiums. The decisions to lend the money were made by Meilak and he held a senior position with Hunter. The appellant submits that for these reasons no-one within Hunter lent money in the mistaken belief that they were lending to pay an insurance premium.

69 There is an obvious and fatal flaw in this argument. The unequivocal evidence of the Hunter witnesses was that Meilak had no authority to approve these loans. That was so whether they were professional fee loans or loans to the appellant on the 'unique' facility basis he suggested. Any authority to approve professional fee loans ended when Hunter withdrew from that product at the end of 2008. There is simply no basis for suggesting that Meilak ever had authority to approve a facility of the extraordinary nature suggested by the appellant. If Meilak purported to approve the loans he was acting without the authority of Hunter and any knowledge of the falsity of the applications held by him could not be imputed to Hunter.

70 In any event, the only evidence that Meilak was aware of the true basis upon which the appellant was obtaining funds from Hunter came from the appellant. His evidence that Meilak had approved the facility, failed to put in place the appropriate documentation and required the appellant to prepare and submit false applications against his wishes was highly implausible. It was clearly open to the jury to reject the evidence of the appellant and to conclude that the false applications had been completed by the appellant with the intention of defrauding Hunter and obtaining a benefit for himself. Whether, and to what extent, Meilak was aware of the deception was immaterial in these circumstances.

71 There was clear evidence that both the premium funding applications and the accompanying invoices were false. Both had been completed by the appellant. The Hunter witnesses were clear in their evidence that had the truth been known to them these loans would never have been approved. The obvious inference to be drawn from the false applications and invoices is that they were intended to conceal the true nature of the applicant's dealings with Hunter. Whether or not Meilak knew the truth, the irresistible conclusion is that the applications were intended to deceive Hunter, or were the fraudulent means whereby the appellant obtained the loan funds. The active concealment of a true state of affairs falls within the expression 'other fraudulent means' in s 409: Graham-Helwig v The State of Western Australia [2005] WASCA 127; (2005) 30 WAR 221 [14].

72 This ground is not reasonably arguable and leave in respect of it should be refused.

Appeal against conviction - Ground 2 - 18 November 2008 letter

73 The appellant submits that the evidence of Mr Bartlem that a letter terminating the professional fee funding agreement was sent to the appellant on 18 November 2008 was inadmissible. This is said to be because Mr Bartlem could not categorically say that the letter was sent to the appellant. It is also suggested that the evidence regarding the letter was so lacking in cogency, strength or credibility that it was not open to the jury to be satisfied beyond reasonable doubt of 'that alleged fact'.

74 The significance of the termination letter was that it provided an explanation for why the appellant had commenced submitting false applications for premium funding. The evidence was that prior to the termination a professional fee funding arrangement had been in place. If the appellant was aware that that arrangement had been terminated and the reasons why Hunter had withdrawn from that product he would know that obtaining loans of that type was no longer possible.

75 The letter was tendered without objection. In cross-examination Mr Bartlem conceded that he could not categorically say that the letter had been received by the appellant, but there was no suggestion from the defence that for this reason the letter was inadmissible and should be withdrawn. In any event, the evidence of Mr Bartlem provided a sufficient basis for the tender of the letter. His evidence was that a letter of this type had been sent to all clients who had a professional fee funding arrangement. A copy of a letter bearing the appellant's address was produced. In the absence of objection, the belief of Mr Bartlem that the letter would have been posted and received in the normal course provided a sufficient basis for its tender.

76 In any event, despite the appellant's denial to having received the letter, there was other evidence which strongly supported an inference that he was aware of the termination of the professional fee funding agreement. On 17 November 2008 he sent a letter by email to Mr Thomas referring to the termination of the professional fee agreement. The purpose of this letter was to persuade Hunter not to terminate the agreement. It was headed 'The Termination of Our Hunter Professional Fee Funding (PFF) Agreement'. It refers to the decision by Hunter to withdraw this product having the potential to compromise the appellant's company financially (exhibit 12). This indicates that even though the appellant had not yet received the termination letter he was aware of the decision to terminate the agreement. The appellant's suggestion that the reference to 'our' agreement in the letter should not have been understood as the agreement which his company had entered into was unbelievable.

77 The evidence of the termination letter was not lacking in cogency, strength or credibility. Furthermore, as a non-critical part of a circumstantial case it was not necessary that receipt of the letter be proved beyond reasonable doubt: Shepherd v The Queen [1990] HCA 56; (1990) 170 CLR 573.

78 This ground is not reasonably arguable and leave in respect of it should be refused.

Appeal against conviction - Ground 3 - Invoices irrelevant

79 The appellant submits that the invoices for professional fees attached to the premium loan applications were irrelevant. Much of the trial was taken up by the prosecution seeking to impugn the invoices and the defence seeking to justify them. It is said that the appellant's admissions rendered evidence as to the falsity of the invoices irrelevant and this evidence would have prejudiced the jury against the appellant.

80 The prosecution case was not merely that the appellant had sought to obtain loans for professional fees by disguising them as applications for loans to pay premiums. The extent of the deceit or fraudulent means extended well beyond that. On the face of the applications they appeared to be for loans to named entities in order to pay insurance premiums. On any view they were not that. On closer inspection the invoices gave the impression that the applications may have been for loans to the named entities to meet professional fees owed to the appellant's company. But they were not that either.

81 Evidence that the invoices were false, that the entities to whom they addressed were unaware of them and that the work referred to in them had not been undertaken was relevant because it went to proof of the deceit or fraudulent means used by the appellant. It was also relevant to proof of benefit. The benefit alleged in the charges was money for the 'proprietor, Nirranda Pty Ltd trading as JBB'. This reflected the name of the bank account into which the loan funds were paid. The evidence was that the appellant controlled that account and had used the funds for the benefit of himself and his group of companies. They had not been used, as the invoices might have suggested, for the benefit of the clients named on the invoices.

82 The evidence of the falsity of the invoices was also relevant to proof of the intention to defraud. To defraud is to deprive a person of something (including money) that has economic value by dishonest means: Bolitho v The State of Western Australia [2007] WASCA 102; (2007) 34 WAR 215, Hunter v The State of Western Australia [2014] WASCA 184 [39]. The dishonest means utilised by the appellant included not only the false applications but also the invoices. The invoices formed part of the elaborate contrivance set up by the appellant to conceal the real and fraudulent nature of his dealings with Hunter.

83 This ground is not reasonably arguable and leave in respect of it should be refused.

Appeal against conviction - Ground 4 - Failure to abort trial

84 In cross-examination Mr Bartlem was asked whether Hunter was insured in respect of the losses it had suffered on the loans. He confirmed that Hunter had fidelity cover. He was then asked:

And to trigger that, as I understand it, when one makes an insurance claim, maybe your house gets burgled or something, you need to make a complaint to the police?---No. In this particular - that - that's something you have to do but in fidelity cover all we have to do is satisfy loss is that an employee has to be involved. So it's got to be - it's not a crime policy, it's fidelity cover. Fidelity meaning that an employee of the company is responsible - has colluded with a third party to commit a fraud.

Right. Or - or that employee has - has done something wrong.---As long as there's a loss, yes, I guess (ts168).

85 The issue was then taken up in re-examination:

Sir, you just at the tail end of that cross-examination you were asked about Hunter Premium Finance utilising fidelity policy and you gave evidence that in order for the fidelity policy to be triggered there had to be a demonstration of an employee being in collusion with a third party in relation to the fraud?---Correct.

And did the fidelity policy pay out in relation to this matter?---Yes. The - I guess our internal investigations and the emails that we collected satisfied our insurer that there was absolute collusion between Mr Meilak and Mr Wittensleger (ts 168).

86 The appellant submits that it was not the prosecution case that Meilak was aware of the falsity of the premium loan applications and that Mr Bartlem's final answer was therefore irrelevant and prejudicial. It is said that the evidence of Mr Bartlem that the appellant and Meilak had colluded together was so prejudicial that it required the discharge of the jury. The point apparently sought to be made is that, whilst it was the appellant's case that Meilak was acting illegally, the appellant claimed to be an unwitting party to any such illegality. This sits uncomfortably with ground 1.

87 An application was made to the trial judge to discharge the jury. In the course of that application it was conceded that the witness had been asked about fraud charges that Meilak was facing (albeit that they related to a separate matter). It was said that the forensic value of this was to support a submission that Meilak was an employee who 'was in essence a law unto himself'. The implication was that if Meilak was behaving unlawfully that was not something to which the appellant was a party.

88 The forensic decision by trial counsel to cross-examine Mr Bartlem about the recovery that Hunter had made under its fidelity policy ran the obvious risk of producing an answer such as that given. The questions invited the witness to provide an explanation of the basis on which the claim under the fidelity policy had been paid out. The re-examination only confirmed what had been said in cross-examination.

89 The submission that the prosecution case was not that Meilak was aware of the falsity of the premium applications misrepresents the nature of that case. It was part of the prosecution case that Meilak had acted contrary to the business rules of Hunter and subverted its normal procedures for dealing with applications. Whilst the prosecution did not seek to establish the extent of Meilak's knowledge or involvement, it was not the prosecution case that he was acting properly or with the authority of the company, to the contrary.

90 The defence strategy of admitting the falsity of the applications but seeking to place the entire blame for that falsity on Meilak was a high risk one. That was particularly so when all the false applications were completed and signed by the appellant. The possibility of collusion was obvious, but the fact that that possibility was raised could hardly have obscured the essential question for the jury: whether the appellant, with intent to defraud, by deceit or fraudulent means had obtained a benefit for himself.

91 The trail judge decided not to discharge the jury. The reasons that he gave for that decision are not altogether clear. He did note that the questions asked in re-examination followed on from questions that had been put to Mr Bartlem in cross-examination. His Honour said that the matter could be dealt with by way of a direction. He gave a direction to the jury that Mr Bartlem's evidence regarding the findings of the internal investigation were hearsay and should be ignored. It might have been preferable to add that the evidence was also irrelevant. However, the question is whether the evidence caused such irremediable prejudice as to make the trial an unfair one. See Crofts v The Queen [1996] HCA 22; (1996) 186 CLR 427 [440] - [441].

92 In Narrier v The State of Western Australia [2008] WASCA 191; (2008) 38 WAR 161 Buss JA (with whom Martin CJ and Wheeler JA agreed) said that in considering whether a substantial miscarriage of justice has occurred as a consequence of a trial judge failing to discharge a jury it is necessary to take into account all of the circumstances of the trial. The circumstances include the degree to which the evidence was prejudicial to the accused in the context of the issues in dispute at the trial, the stage of the trial at which the relevant evidence was adduced; whether the evidence was adduced inadvertently and whether any direction by the trial judge to the jury was likely to overcome the prejudicial nature of the evidence [41].

93 There was clear evidence that Meilak had acted improperly. There was also clear evidence that the appellant had submitted false applications and obtained the benefit of the loans. Whether or not they had colluded and if so to what extent, were not questions that required resolution. Evidence that an internal investigation at Hunter had concluded that they had colluded was self-evidently made in a different context. This was but a brief mention at an early stage of the trial. In any event, the jury were directed to ignore this evidence and there is no reason to think that that direction was not followed.

94 This ground is not reasonably arguable and leave in respect of it should be refused.

Appeal against conviction - Ground 5 - Absence of Meilak

95 Meilak was not called as a witness at the trial. A reason for this was given by the trial prosecutor. He said:

Meilak has never provided a statement to the State. Now, there's no basis for us to call him on the - when he hasn't provided a statement. He's never co-operated with this prosecution (ts 703).

96 The trial judge directed the jury that they should not speculate as to what Meilak would have said if he had been called as a witness. The appellant submits that this direction was in error and that his Honour should have directed the jury that they could infer from the prosecution's failure to call Meilak that his evidence would not have assisted the prosecution case.

97 This ground of appeal is entirely misconceived. There was no obligation on the prosecution to call Meilak as a witness. In a criminal trial the prosecutor alone bears the responsibility of deciding whether a person will be called as a witness for the State. A decision of the prosecutor not to call a particular person as a witness will only constitute a ground for setting aside a conviction if, when viewed against the conduct of the trial as a whole, it is seen to give rise to a miscarriage of justice: R v Apostilides [1984] HCA 38; (1984) 154 CLR 563. In this case, Meilak's failure to co-operate with the prosecution and the evidence of the Hunter witnesses provided good reason to doubt that if called he would be an honest or reliable witness.

98 The appellant essentially suggests that the trial judge should have given a direction in accordance with Jones v Dunkel [1959] ALR 367; (1959) 101 CLR 298. That cannot be accepted for two reasons. First, there was a satisfactory explanation for why the prosecution did not call Meilak. Secondly, such directions should not be given in criminal trials save in very exceptional circumstances (of which this was not one): Dyers v The Queen [2002] HCA 45; (2002) 210 CLR 285. This limitation applies equally to the defence and the prosecution: Dyers, Gaudron & Hayne JJ [16] - [17].

99 Leave in respect of this ground should be refused.

Appeal against conviction - Ground 6 - Summing up

100 The appellant submits that the trial judge failed to provide an analysis, or sufficient analysis, of the evidence relating to the arguments and issues brought up by defence counsel. It is also submitted that a schedule of the evidence provided by the trial judge to the jury referred to evidence of prosecution witnesses but provided little information about the defence case.

101 Bearing in mind that the trial went for more than two weeks the trial judge's summing up was remarkably brief. It was not a model of its type. But one thing his Honour did do was summarise the defence case. He pointed out that the crux of the defence case was that the appellant had a unique facility to borrow funds on the basis of work to be performed in the future. He said that the appellant gave Hunter a list of assets and that this was said to be consistent with an intention to provide security for the facility and inconsistent with an intention to defraud. He noted that the defence case was that incorrect forms were used at the insistence of Meilak. He said that the defence challenged whether the letter of 18 November 2010 terminating the professional fee funding arrangement was ever sent. He said that the defence challenged the credibility of the Hunter witnesses and claimed that Hunter had turned a blind eye to what was going on.

102 The submissions in support of this ground provide no details as to why the trial judge's account of the defence case is said to be deficient. It is not suggested that what his Honour said was incorrect or incomplete in any particular. There is no merit in this aspect of the ground of appeal.

103 In the course of the summing up the trial judge provided a schedule of evidence to the jury. It was a schedule that his Honour had himself prepared. He introduced it in the following way:

I'll hand out to you one way in which you might choose to approach the - how you consider these charges; how you approach that consideration is entirely up for me - up - sorry, not for me, for you. It's just a way that I approached it; I found it useful. You may or may not find it useful.

Let me first of all explain how I've approached it. As I've said, how you approach it is entirely a matter for you. You'll see from the left under the heading 'Charge' I've got the charge number. I've then got the witnesses that gave evidence relevant to those.

I've grouped them in various groups. The date of the application, whether an invoice was sent or not. Where the date of the invoice is different I've put that date in, otherwise where it's 'yes' it's simply that the invoice was on the same date, and then the amount of it. I've then grouped them.

…

I've also totalled them up just using the Autosum function of Excel. So if the additions are wrong, blame Excel. And I then totalled up also all the totals, and that's just - to - really to give you a guide so that you have something to work with, and a way of approaching it (ts 1267 - 1269).

104 The schedule was not marked or formally incorporated into the record of the proceedings. It should have been. However, the appellant makes no complaint as to the accuracy of the schedule. His complaints, essentially, are that the trial judge failed to tell the jury that the schedule was not evidence and was not intended to displace or be a substitute for the oral directions and that the schedule solely summarised evidence in the prosecution case.

105 The primary role of the trial judge in summing up is to give directions as to the law and to relate those directions to the evidence. The provision by a trial judge during summing up of a written summary of the evidence or any part of it is unorthodox. Sometimes schedules of evidence are prepared by the parties and tendered in evidence, particularly where the evidence is voluminous or complex. A trial judge may order that the jury be given any record or thing that may assist them to understand the issues or the law, or to understand and assess the evidence: s 110 Criminal Procedure Act 2004 (WA). A trial judge can also direct a party to adduce evidence in the form of a chart, summary or other explanatory document if it is so complex or voluminous that it would be difficult to assess or comprehend if adduced in narrative form: s 27B Evidence Act 1906 (WA). No such orders or directions were made here. The trial judge simply produced his chart in summing up. No doubt his Honour was trying to be helpful, but given the casual way in which he introduced it and his disavowal that the figures were correct it is difficult to see what utility it had.

106 Whilst it was unnecessary and ill-advised for the trial judge to provide the schedule, in the absence of any identified factual error it is difficult to see how its provision caused any miscarriage of justice. The appellant's complaint about the trial judge's directions as to the use the jury could make of the schedule are without merit. It was clear from what his Honour said that the schedule was not evidence, was merely his own approach to the organisation of the evidence and that the jury were free to adopt or reject that approach as they saw fit. The complaint that the schedule only incorporated prosecution evidence overlooks that it had the limited purpose of organising the applications, documents and witnesses into groupings that related to each of the charges. It was clearly not intended to be a summary of the entire trial evidence.

107 Leave in respect of this ground of appeal should be refused.

Appeal against conviction - Ground 7 - Prosecutor's conduct

108 The appellant submits that the failure of the prosecutor to call Meilak caused a miscarriage of justice. He also submits that the prosecutor inappropriately told the jury that the appellant had engaged in a Ponzi scheme. It is said that these references were unnecessary, irrelevant and apt to confuse the jury.

109 I have referred earlier to the reasons given by the prosecutor for not calling Meilak. Meilak was a witness who may well have been in a position to provide relevant evidence. However, there was very good reason to doubt that if called he would have been an honest witness. In any event, the prosecution case turned upon whether the jury could be satisfied beyond reasonable doubt that the appellant had, with intent to defraud, deceived Hunter and thereby obtained a benefit. The appellant admitted the falsity of the applications and his explanation was highly implausible. By their verdicts, unsurprisingly, the jury rejected the appellant's explanation. The prosecution evidence against the appellant was overwhelming. When viewed against the conduct of the trial as a whole the failure to call Meilak as a witness did not give rise to a miscarriage of justice.

110 In his opening address the prosecutor likened the appellant's conduct to a Ponzi scheme. He said:

Ladies and gentlemen, no doubt many if not all of you would have heard of the expression 'Ponzi scheme'. Carlo Pietro Giovanni Ponzi emigrated from Italy to the United States in 1903. After he settled the - in the US, he called himself and became known as Charles Ponzi, and several years later Charles Ponzi was convicted of federal mail fraud offences and state larceny offences.

Mr Ponzi had attracted investors into a scheme he set up by promising outlandish return on their investments. He promised investors huge returns on their investments within short timeframes. But the Ponzi scheme was made of straw; there was no commercial operation in place that generated any income.

Early commercial - early investors were paid dividends on their investments from the funds which were received from others that joined in later. With each additional investor being brought into his scheme, Mr Ponzi needed increasing numbers of investors to just keep it going. Inevitably the scheme collapsed, Mr Ponzi was charged and convicted, and many investors were left high and dry.Now, Mr Ponzi was not the first nor the last promoter of such a scheme. His notoriety lies in the fact that the type of investment scheme which relies upon attracting increasing numbers of investors to keep the scheme afloat is often called a Ponzi scheme, and sometimes - you might have also heard the expression that these schemes are sometime called pyramid schemes.

Now, this case that's before you involves what could be described as a very particular type of Ponzi scheme. It was a scheme that did not depend upon attracting diverse investors, but one that involved the accused man, Arden Roderick Wittensleger, preparing, signing, and submitting applications to one particular employee of a finance company called Hunter Premium Funding Limited to obtain loans in order to make repayments on fraudulent loans he had taken out earlier from that same finance company (ts 105 - 106).

111 One of the prosecution witnesses, Camillo Orsi, also likened the appellant's conduct to a Ponzi scheme. Mr Orsi was a forensic accountant who had undertaken an analysis of the bank accounts controlled by the appellant into which the loan funds had been paid and from which repayments had been made. He was able to say that between 1 May 2009 and 31 August 2010 $9 million was received from Hunter in the form of loans. In the same period there was in excess of $15 million in expenditure. Even with deposits from Hunter the accounts were rarely in credit. The average deficit was approximately $60,000. The main expenditure from the accounts was repayments to Hunter. Mr Orsi concluded that the funds from Hunter were used predominantly to repay earlier loans also received from Hunter during the relevant period. In his opinion it would not have been possible for repayments to be made without receiving further loans. It was in this context that Mr Orsi said that what was done appeared to have 'elements of a Ponzi scheme in that the loans that Mr Wittensleger had applied for were actually used to repay back previous loans which it (sic, he) used to finance his business operations'.

112 In other respects what the appellant did was unlike a Ponzi scheme. He did not offer high interest rates to investors in order to attract them. He did not seek funds from investors, but rather made applications for finance. Likening the appellant's conduct to a Ponzi scheme was not particularly helpful but it was unlikely to have distracted the jury from a proper examination of the evidence. These were comparatively brief comments in a long trial and the extent of the similarities was explained. In any event, the trial judge directed the jury that:

Reference was also made to a Ponzi scheme. Whether it was a Ponzi scheme or not is really unimportant. The fact is that Mr Wittensleger was making these applications. Why he used the funds in that manner is not essential to your finding.

113 The jury could have been in no doubt that the question was not whether or not what was done was a Ponzi scheme but whether or not the appellant had defrauded Hunter.

114 This ground is not reasonably arguable and leave in respect of it should be refused.

Appeal against conviction - Ground 8 - Incompetence of counsel

115 The appellant submits that due to failures on the part of his trial counsel there was a miscarriage of justice. For an appeal to succeed on the basis that defence counsel was incompetent the appellant must demonstrate that counsel's conduct caused a miscarriage of justice. This is a heavy burden which is not easily discharged: TKWJ v The Queen [2002] HCA 46; (2002) 212 CLR 124 [74].

116 The first matter raised by the appellant is that it is said that trial counsel failed to support the appellant's no case submission on the ground stated in ground 1 of the appeal. That is not in fact correct. In his no case submission trial counsel asserted that Meilak had complete and unfettered authority to approve loans. It was also submitted that there was no evidence that Hunter had been induced to make the loans on the basis that they were for premium funding. The clear implication was that Meilak knew the true nature and therefore Hunter had not been deceived. In any event, this aspect of the ground depends upon the success of ground 1, which I have noted earlier is without merit.

117 The appellant also submits that trial counsel was incompetent because he failed to object to the evidence or submissions that were referred to in grounds 2, 3, 5, 6 and 7. This assumes that successful objections could and should have been made. There will be no miscarriage of justice if any objection would have been forlorn. Even if an objection had some prospect of success there will be no miscarriage of justice if it can be inferred that trial counsel could reasonably have made a forensic decision not to object. Furthermore, there can be no miscarriage of justice unless inadmissible evidence has occasioned material prejudice to the appellant: Suresh v The Queen [1998] HCA 23; (1998) 72 ALJR 769 [23]; Oblak v The State of Western Australia [2007] WASCA 176 [6] - [9]; Birks v The State of Western Australia [2007] WASCA 29; (2007) 33 WAR 291 [44] - [60].

118 Had objections be made to the letter and the invoices the subject of grounds 2 and 3, such objections would inevitably have failed. As to the evidence of Mr Orsi and the submissions of the prosecutor in regard to whether the appellant was engaging in a Ponzi scheme, for the reasons that I have stated no material prejudice could possibly have arisen in that respect. In regard to ground 5, the comments by the trial judge in regard to Meilak not being called were correct and any objection could not have succeeded. As to ground 6, an objection to the judge's evidence schedule might have resulted in that schedule not going to the jury, but in the absence of any suggestion that it contains material errors it is impossible to see how the failure to object resulted in material prejudice to the appellant.

119 This ground of appeal is without merit and leave in respect of it should be refused.

Sentence

120 The appellant was sentenced on 14 October 2013. A pre-sentence report and a psychologist's report were available at sentencing.

121 In sentencing the trial judge made the following findings of fact. The appellant had engaged in a deliberate and sustained fraud as a result of which he received the benefit of approximately $6.5 million. The appellant had prepared, signed and submitted false loan application forms in order to obtain loans from Hunter. He used some of the moneys obtained from the later loans to make repayments on the earlier ones. The appellant was aware when he made the applications that Hunter had withdrawn from the professional fee funding market. The invoices which were attached to the premium funding applications were described as 'entirely bogus'. His Honour said that the invoices 'were simply figures invented by you'. The appellant knew at all times that there was no basis for the applications he submitted. The outstanding loss to Hunter as a result of the fraud was $2,500,171.78.

122 The trial judge noted the appellant's personal circumstances and, in particular that he had previously been convicted of 46 counts of stealing in 1996 for which he received a total effective sentence of 4 years' imprisonment. His Honour noted that, whilst not an aggravating factor, those prior convictions highlighted the importance of personal deterrence. His Honour also noted that the psychological report stated that the appellant continued to deny his offending and was completely lacking in remorse. His Honour concluded that greed was a motivating factor in the appellant's conduct.

123 His Honour said:

In terms of the aggravating factors, of course you obtained funds over a long period of time from Hunter Premium. When you were in financial problems, rather than acknowledging them, you continued on that behaviour. Your conduct did involve careful planning and execution. It was sustained behaviour over a period of the charges. It did result in a benefit to you of a large amount of money and a loss.

You haven't explained what has become of the money or made any attempt to (sic) it and the stolen money, one can only assume, was used to fund an affluent lifestyle. It wasn't offending driven by any mental illness or psychological difficulty and it ended only because Hunter Finance became aware of what was happening as a result of a change in management. Although you weren't charged with causing a detriment, plainly there has been a loss to Hunter Premium, or at the very least to their insurers.

124 His Honour determined that the appropriate sentence in respect of each count was 4 years' imprisonment. He referred to the totality principle and the need to ensure that the total effective sentence bore a proper relationship to the overall criminality and was not crushing. He concluded that the total criminality of the offending warranted a total effective sentence of 8 years' imprisonment and ordered that the sentences on counts 1 and 2 be cumulative and the sentences on all other counts be concurrent. That sentence was backdated to the date when the appellant was convicted and had been remanded in custody, being 23 August 2013.

Personal circumstances

125 At the time of sentencing the appellant was 44 years old. He was born in Sri Lanka and his family emigrated to Australia when he was 5 years old. He had a stable and unremarkable childhood. He did well at school both academically and in sporting pursuits. After finishing Year 12 he undertook university studies in Perth and Melbourne and obtained a Degree in Business, Economics and Finance.

126 On leaving university the appellant set up a practice as a business and investment advisor. He built up a successful business. However, on 20 September 1996 he was convicted after his pleas of guilty of 46 counts of stealing as an agent. These charges related to the appellant stealing moneys that had been entrusted to him by clients of his financial planning business. One client entrusted him with an award of damages that she had received after being injured in a car accident. The appellant represented that the moneys had been invested with a range of reputable banks and investment funds. In fact no such investments were made and the appellant used the client's money to pay personal expenses and to make payments due to other clients. Small amounts of money were paid to the client and represented to be interest on the investments. When the client sought recovery of the money the appellant delayed, provided a cheque that was dishonoured and finally admitted that he had not invested the funds as directed. A total amount of $162,018.23 was stolen from this client. Two other clients had money stolen in the same fashion. The amounts involved were $8,926.12 and $24,999.80. None of the moneys were recovered.

127 The sentencing judge in that case concluded that the appropriate starting point was 6 years' imprisonment. A discount of 2 years was allowed for the early plea of guilty and other mitigating factors, in particular the appellant's then youth. The total effective sentence imposed was one of 4 years' imprisonment.

128 The appellant told the psychologist who prepared a report that on being released from prison he re-established his business. The business flourished, he took on a number of employees and was earning between $300,000 and $500,000 a year.

129 The appellant was married but separated at the time of sentencing. He has two children who were aged 18 and 15 years at the time. The separation had resulted in him having a poor relationship with his children, though that had improved after he was remanded in custody and they began visiting him in prison.

130 The psychologist concluded that the appellant's insight into his offending was limited due to his continued denial. Given his lack of insight and denial of his offending it was challenging to categorise his risk accurately. It appeared to the psychologist that the offending was driven by financial gain, sense of entitlement and poor moral development. There were no mental health or substance abuse issues.

Appeal against sentence - Grounds of appeal

131 The grounds of appeal are as follows:

1. The total effective sentence of 8 years was manifestly excessive having regard to the circumstances of the offending, the personal circumstances of the appellant and sentencing standards.

2. The total effective sentence of 8 years offended the first limb of the totality principle.

132 These two grounds raise the same issue. Although manifest excess is referred to in the first ground there is no suggestion that the individual sentences of 4 years on each count were inappropriate. Both grounds refer to the total effective sentence of 8 years' imprisonment and it is plain that it is the total effective sentence that is complained of.

Appeal against sentence - The merits

133 The totality principle has two limbs. The first limb is relied upon here. It requires the total effective sentence imposed on an offender who has committed multiple offences must bear a proper relationship to the overall criminality involved in all of the offences, having regard to the relevant circumstances, including those referable to the appellant personally.

134 The maximum penalty for each of the offences was 7 years' imprisonment: s 409(1)(h) of the Criminal Code (WA).

135 The factors relevant to sentencing in this case were as follows:

(1) The conduct continued over a 14 month period.

(2) During that period the appellant submitted 86 separate false applications, each of which he completed and signed.

(3) The fraud involved not merely the preparation of false applications but also false invoices which served to conceal the true nature of the fraud. This involved significant effort and a high degree of dishonesty on the part of the appellant.

(4) The total amount of money fraudulently obtained was very large, in excess of $6.5 million.

(5) Although some of the money was repaid or recovered, the victim of the fraud suffered a loss of $2.5 million.

(6) The appellant derived a personal benefit from the moneys fraudulently obtained using them to meet personal expenses.

136 There were no mitigating factors of any significance. Given the appellant's previous conviction for similar offending personal deterrence was an important consideration.

137 In written submissions counsel for the appellant submitted that in Skipworth v The State of Western Australia [2008] WASCA 64 the range of sentences for fraud were said to be between 1 year and 3 months and 6 years and 3 months. That is not correct. Pullin JA in Skipworth merely noted that the group of cases referred to by the parties in that case revealed a range of total sentences between 1 year and 4 months (in Davis v The Queen [2002] WASCA 298 which involved 12 offences and $191,000) and 6 years and 8 months (in Grubb v The Queen [2002] WASCA 158 which involved 33 offences and $5.2 million). There was no suggestion that this represented a comprehensive analysis of fraud cases or that the higher figure represented the upper end of the normal discretionary range. Indeed, it is clear from examination of other cases that similar high sentences have been imposed.

138 In The State of Western Australia v Chapman [2012] WASCA 203 the offender was convicted after trial of seven counts of stealing, seven counts of fraud and one count of obtaining property be deception. The offender and his wife had engaged in a scheme which involved false invoices and fake trust accounts to fraudulently obtain $1,705,328 and three paintings valued at $61,000. The offending occurred over an eight year period. The offender in that case was a public servant and abused his position of trust. On appeal his sentence was increased to one of 8 years' imprisonment.

139 In Nikaghanri v The State of Western Australia [2009] WASCA 192 the offender was convicted after trial of 26 counts of fraud, 18 of which were aggravated, and 25 counts of using another person's passport. The offender conducted an advance fee fraud scheme whereby victims were tricked into transferring money by being promised a significant financial benefit in return. The offending continued over a two and a half year period, involved five victims and a total amount of $132,429. An appeal against a total effective sentence of 6 years' imprisonment was dismissed.

140 In Barrett v The State of Western Australia [2007] WASCA 21 the offender was convicted after a fast-track plea of guilty of 54 counts of fraud. The offender engaged in a range of fraudulent activity in the course of operating a gardening and landscape business. Twenty-eight victims were involved and the total amount defrauded was $278,842.65. An appeal against a total effective sentence of 6 years and 6 months was dismissed.

141 There are many other cases involving fraud sentences. A review of a number of them was undertaken in Hladin v The State of Western Australia [2005] WASCA 50; (2005) 156 A Crim R 176. The facts of the offending and personal circumstances in other cases vary widely. More recent cases include Wilhelm v The State of Western Australia [2013] WASCA 273, Kelly v The State of Western Australia [2013] WASCA 200 and Anderson v The State of Western Australia [No 3] [2014] WASCA 190.

142 It is sufficient to note that there is no established range for fraud offences because of the very diverse circumstances in which the offence is committed and the personal circumstances of the offenders who commit them. See Pollock v The State of Western Australia [2011] WASCA 133. See also Magar v The State of Western Australia [2011] WASCA 122. Far less it is meaningful to say that there is any recognised limits on total effective sentences where there are multiple counts of fraud.

143 The appellant submits that his offending was not aggravated by a breach of a position of trust as in Chapman. However, the amount defrauded by the appellant was very much greater than in Chapman. The appellant also committed very many more offences than Chapman, 87 as compared to 15. Similarly, the amount defrauded by the appellant was very much greater than in either Nikaghanri or Barrett. Barrett also was a fast-track plea of guilty, unlike the appellant who went to trial. Accordingly, it is impossible to accept that the total effective sentence of 8 years imposed on the appellant is inconsistent with sentences imposed in other cases.

144 The appellant's offending was extremely serious. He engaged in a persistent course of fraudulent conduct. It involved repeated acts of submitting false application forms and the preparation of false documents to support them. He used his familiarity with the finance company's systems to manipulate them and thereby obtain very significant benefits for himself. His previous conviction and imprisonment for similar offending had not been effective in deterring him. In these circumstances the sentence imposed was, in my view, entirely appropriate.

145 The grounds of appeal against sentence are not reasonably arguable and leave in respect of them should be refused.

Orders

146 I would make the following orders:

(1) Leave to appeal against conviction refused.

(2) Appeal against conviction dismissed.

(3) Leave to appeal against sentence refused.

(4) Appeal against sentence dismissed.

Wittensleger v The State of Western Australia

[2014] WASCA 205

7 NOVEMBER 2014

WITTENSLEGER -v- THE STATE OF WESTERN AUSTRALIA [2014] WASCA 205