R v Gore[2021] QCA 147

SUPREME COURT OF QUEENSLAND

1. [1]
   MORRISON JA: I agree with the reasons of McMurdo JA, and with the proposed order.
2. [2]
   McMURDO JA: The appellant was tried by a judge alone in the District Court on 12 charges of fraud contrary to s 408C(1)(d) of the Criminal Code. The appellant was acquitted on six of the charges, and convicted on the others.^[1] He appeals against the convictions on the ground that they were unreasonable and could not be supported having regard to the evidence.^[2]
3. [3]
   The appellant was involved in the conduct of the operations of a group of companies which relevantly included Arion Property Pty Ltd, later called Arion Group Pty Ltd (“AG”), and Arion Financial Pty Ltd (“AF”). He was not an appointed director of either company, but he had the day to day management of their affairs, through representing himself as a “consultant” and/or “sales manager”. In that capacity, he procured loans to be made by a number of investors to AG and AF, each made on an unsecured basis and recorded by a short written agreement which described the transaction as a debenture. The loans were for terms of 90 to 120 days, with interest to be paid, on repayment of the principal, at rates ranging from 6.15 to 8.75 per cent per annum.
4. [4]
   Twelve of these loans each became the subject of a charge that the appellant thereby dishonestly gained a benefit or advantage for AG and/or AF as the borrower.^[3] There was no issue that each loan was made, it conferred a benefit on one or both of the Arion companies and that this was gained by the conduct of the appellant. The issue on each charge was whether the appellant had done so dishonestly.
5. [5]
   At the commencement of the trial, the prosecutor provided a document containing the particulars alleged for each count. The particulars of the appellant’s dishonesty, in each case, were that the investor was persuaded to make the loan by representations to the effect that the loans would be repaid with interest by the agreed date (if the lender had not elected to extend the loan) when, at the same time, the appellant knew that:

“(a)Arion Financial and/or Arion Property was in a precarious financial position and had a number of debts to pay;

2. (b)
   there was no real prospect of Arion Financial and/or Arion Property having the capacity to repay the money invested by the complainant by the end of the investment period; and/or

3. (c)
   there was no real prospect of Arion Financial and/or Arion Property having the capacity to pay the promised interest rate on the investment at the end of the investment period.”

6. [6]
   The loans in question were made on various dates from 12 July 2013 to 12 May 2014. The amounts of the loans ranged from $30,000 to $150,000, and they totalled $800,000. During that period, eight of them reached their date for repayment, and none was repaid, and nor was any interest paid.^[4]
7. [7]
   In the reasoning of the trial judge, the loans fell into three categories. The first five of the loans, the last of which was made on 20 November 2013, were made at times at which the judge was not satisfied, beyond reasonable doubt, of the absence of a real prospect that the principal would be repaid on the due date. Those loans were the subject of counts 1, 2, 4, 5 and 6, on which the appellant was therefore acquitted. Secondly, there was count 11, which was a loan made on 14 February 2014, for which the judge was not satisfied that any relevant act which constituted the alleged offence had occurred in Queensland. For that reason, the appellant was acquitted on that charge.^[5] There were then the six other loans, the first of which was made on 18 December 2013, which were the subject of the charges on which the appellant was convicted.
8. [8]
   In essence, the doubts which the trial judge held as to the appellant’s dishonesty in the first category of transactions were dispelled for the later transactions, because of the evidence of the appellant’s knowledge of a substantial debt owed by AG to the Australian Tax Office (ATO). There was evidence that on 13 December 2013, the appellant had telephoned someone from the ATO about this debt, and promised that it would be paid by monthly payments of $10,000.
9. [9]
   The appellant’s argument is that the trial judge made factual errors in assessing the effect of the evidence about this debt to the ATO, by which his Honour became satisfied of the appellant’s guilt for the later transactions. It is submitted that absent those errors, and upon the premise of the judge’s conclusions about the earlier loans (that is, his verdicts of not guilty), it was not open to his Honour to convict the appellant on any charge.

The evidence

10. [10]
    In 2012, a company called Sleipner Financial Pty Ltd (“Sleipner”) conducted a financial planning business, in which the appellant was involved. Sleipner was an authorised corporate representative of MyAdviser, which was wholly owned by IOOF Limited. MyAdviser held an Australian Financial Services licence for the provision of its services, and as its representative, Sleipner conducted its business under the authority of that licence.^[6] In 2013, the business of Sleipner was sold to AF, and it became a corporate authorised representative in place of Sleipner. AF was thereby authorised to provide advice to its clients about superannuation and insurance.
11. [11]
    AF was incorporated on 8 April 2013. Its initial directors were a Mr Cooper and a Mr Hedge. They were also the initial directors of Arion Property Pty Ltd (as AG was then called), which was incorporated at about the same time. Mr Cooper resigned as a director of each company on 20 August 2013, and it appears that their only nominated director, at any relevant time from then on, was Mr Hedge.
12. [12]
    Mr Hedge was introduced to these companies, and to the appellant, by Mr Hedge’s solicitor, a Mr Clarke. In March 2013, Mr Hedge met the appellant at the Gold Coast, in the company of the appellant’s wife, Marina Gore, and Mr Cooper. Through Mr Clarke, he had met Mr Cooper previously. The purpose of the meeting was to invite Mr Hedge to become a director of the Arion companies, to which he then agreed. He was an experienced company director who lived in New South Wales, and he attended the premises of the Arion companies at the Gold Coast, he said, “at least twice or three times a year”.
13. [13]
    When asked what was the business of Arion companies, he said:

“Arion Financial was to receive monies from investors and Arion Properties changed its name to Arion Group and it became really, nothing more than a company through which payments were made.”

He explained that he was not “involved in actually raising money [from investors]”, and that “[the appellant], his sale staff did that, but they were targeting self-managed superannuation funds.” The financial planning business which had been acquired from Sleipner had a number of clients who had established their self-managed superannuation funds. In the evidence, Mr Hedge was describing the targeting of these clients as investors. These clients included five who were persuaded to make, in aggregate, the 12 loans which became the subject of the charges in this case.

14. [14]
    Below is a table setting out the relevant details of the loans, as it appears in the Reasons, to which I have added the column headed “Cumulative Total Owing”:

15. [15]
    The two Arion companies were conducted effectively as the one entity. Each company had one trading bank account and the relevant bank statements were in evidence. Funds were frequently moved from one account to the other as required, but in aggregate, there were never large sums to the credit of the two accounts for very long. The bank statements were reliable evidence of both the companies’ shortage of cash and their major source of funds. There is no challenge to this passage from the Reasons:

“[294]A perusal of the bank statements of both entities, once the loan payments between each are excluded from consideration, reveals that the main sources of income of any significant value are the debenture investments the subject of this trial - they total $800,000 – as well as other similarly styled entries, which suggests they too are debenture payments, and payments from 1835, but only between 27 March 2014 and 13 June 2014. The latter category totals $224,200.

[295]Broadly speaking, any money received into the AF Westpac account was quickly dispersed, often recorded in the bank statement as being a loan payment to AP/AG, leaving very low balances in the account. Again broadly speaking, any money received into the AG Westpac account was dispersed, although initially that account tended to have higher balances at any given time than the AF account. However from about October 2013 at the latest, there was often a very low balance in the AG Westpac account also, and the position seems to generally deteriorate as time goes on. …”

(Footnotes omitted.)

16. [16]
    His Honour’s reference to “payments from 1835” were to payments from a company called 1835 Developments Pty Ltd (“1835”). It was a company involved in property development, which under an agreement with AG, paid a commission for each Arion client introduced to 1835 by AG who contracted to purchase land under what was described as a “long term settlement contract”. Mr Hedge’s evidence was that the intended business model of the Arion companies was to derive income from the introduction of investors in property transactions, and that “the concept of the debentures was merely an interim measure while the various options and long-term settlement contracts [through 1835] were prepared and … marketed”. Although there was to be some income derived from other sources, the business of the Arion companies was “essentially focussed on the sale of property”.
17. [17]
    Another witness, Mr Mey, who was employed as a bookkeeper by Sleipner and then the Arion companies, said that the companies had no sources of income other than “deposits coming in from clients and customers”. He said that the companies’ employees and creditors were being paid by “the money [coming] in from the potential clients and customers that had invested in the Arion Group.” To his knowledge, the Arion companies had no credit facility from which they could raise funds (other than by loans from clients). Mr Mey was in constant contact with the appellant, weekly or fortnightly, to obtain his authority to pay creditors and wages. From his evidence, it was clear that the appellant was constantly reviewing the companies’ cash positions, and deciding which creditors should be paid from the funds which were then available.
18. [18]
    The evidence included accounting records of AG and AF during the relevant period. There were the general ledgers for each company, as maintained by Mr Mey with the use of a standard accounting software package. There was no question that these records were maintained during the period, and reconciled by Mr Mey monthly. In some key respects however, they were inaccurate.
19. [19]
    Most notably, the accounts did not record the loans made by the so called debenture holders, including the five complainants in this case. This can be seen from the balance sheets as at 30 June 2014 for each company. Neither company recorded any of these loans in its balance sheet. The liabilities of AG as shown in its balance sheet amounted to $440,060.07, and largely comprised unremitted PAYG and employer’s superannuation contributions totalling $257,351.76. There was an item in its balance sheet described as “Loan Account”, which was in the amount of $43,500, but it is clear that from the general ledger that this was unrelated to any of the loans, the subject of this case. Similarly, the balance sheet of AF, as at 30 June 2014, showed total liabilities of $49,444.05, largely comprised of outstanding tax, PAYG and superannuation withholdings.
20. [20]
    A possible explanation for these omissions from the balance sheets could have been that as they were being made the receipt was recorded as income of the company. Mr Hedge gave evidence of discussions with Mr Mey, in which Mr Hedge had questioned the recording of the debentures as income, Mr Hedge being concerned that the Arion company would have to pay tax on that income.
21. [21]
    Moreover, only some of those loans were recorded even as income. Apart from the loans which became the subject of counts 1, 2 and 4, which were recorded in the general ledger of AF as “sales”, none of the loans which were the subject of the trial were recorded as income in the general ledger of either company. Curiously, each of the other nine loans was recorded, in the general ledger for AG, as a receipt from 1835. As the trial judge noted:

“The simple process of comparing these entries in the AG general ledger with the AG Westpac account statements shows that those entries [of receipts from 1835] are payments which include the debenture investments the subject of the trial, and similarly styled entries from other named entities (including [certain persons] whom Mr Mey said had received refunds from their debenture investments) and which appear to be other debenture investments themselves.”^[7]

22. [22]
    The trial judge carefully compared the entries in this part of the general ledger with the statements for AG’s bank account, noting that the first entry in the bank statements which was there described as a receipt from 1835 was dated 27 March 2014, and was for $43,000. Yet prior to that entry, there were 22 entries in the AG general ledger, under the heading “Accounts Receivable”, which recorded a payment by 1835 into the AG account. Following that deposit on 27 March 2014, there were 32 entries, under this heading in the general ledger which were described as receipts from 1835, six of which were shown by the bank statements as having been made by someone else (including three payments which were the subject of this trial). His Honour accepted that the remaining 26 receipts recorded as payments by 1835 to AG, were truly payments by 1835, and the total of them and the amount of $43,000 paid on 27 March 2014 was $224,200. His Honour was prepared to accept that 1835 paid as much as that sum to AG. There is no challenge to any of those findings.
23. [23]
    In this way, the general ledger of AG, in its treatment of loans from Arion clients, including those which are the subject of this case,^[8] disguised the relevant transactions and misrepresented the extent of the revenue from 1835. On the unchallenged findings of the trial judge, there were, in truth, some funds which 1835 provided, but only from late March 2014, and totalling only a small fraction of the subject loans.
24. [24]
    In the general ledger for AG were also recorded what were purported “sales” by AG to 1835. They were recorded as the subject of certain invoices, from 1 January to 1June 2014, which with one adjustment totalled $1,079,972.28. However, as just discussed, from the bank statements, there were no corresponding payments by 1835 to AG.
25. [25]
    It appears that 1835 was not dealing with the Arion companies at arm’s length. Mr Mey said that he had authority to operate not only the bank accounts for the Arion companies, but also that for 1835. The business conducted by 1835 may have been productive of income for AG, but the extent to which it was able or willing to support the Arion companies to pay their debts as they fell due could be gauged by the extent and timing of such payments as 1835 did make to AG.
26. [26]
    It is argued for the appellant that there was another source of funding, which was Mr Hedge. He had agreed to be a director of the companies, he said, upon the assurance of Mr Clark that “under no circumstances was [he] to be made bankrupt” if he became a director. He said that it was from this source that AG had paid outstanding PAYG withholdings at the end of June 2014.
27. [27]
    AG had substantial liabilities for unremitted PAYG and superannuation contributions. The general ledger for AF recorded only small sums withheld as PAYG and superannuation contributions and all in the month of June 2014. For AG, however, the general ledger recorded a steadily increasing amount of PAYG withheld from employees but not paid to the ATO. An amount of $29,444.44 was owing at 12 July 2013, and by 13 December 2013, the balance had risen to $144,907.28. By 13June 2014, it was $249,975.28, which was the amount shown for this item in the balance sheet as of 30 June 2014. The general ledger recorded nothing paid to reduce this increasing balance.
28. [28]
    Mr Hedge testified that in March 2014, he asked Mr Mey to show him the accounts, because Mr Hedge had not seen any accounts “for months”. Mr Mey showed him the accounts and Mr Hedge asked why such “a large payment outstanding for tax” had not been paid. Mr Mey told him that the appellant “didn’t want to [pay] or something like that”. Consequently, Mr Hedge said he rang the ATO and enquired as to the position, and was told that “a commitment was made last December the 13^th, to pay $10,000 a month and you haven’t paid anything.” He asked the ATO officer who had made that commitment, and was told that it was Mr Mey. Mr Hedge then confronted Mr Mey about the matter, and Mr Mey denied that he had spoken to anyone from the ATO. Mr Hedge then rang the appellant and said “Craig, we’ve got to get rid of this bloke, he’s lying to me. I said, he’s just told me point blank, the ATO – he didn’t call the ATO and yet the ATO said that he did a deal with them in December. And [the appellant] said, it was me, I impersonated Mario [Mey].” That evidence was not challenged in cross-examination.
29. [29]
    Mr Hedge said that following this conversation with the appellant, Mr Hedge “did a deal with the ATO to pay them $62,000 a month over four months.” He said he then rang the appellant who told him “that’s fine”.
30. [30]
    On 28 April 2014, Mr Hedge and the appellant exchanged emails, from which it appears that Mr Hedge was asking for some funds for himself from the Arion companies, and the appellant was telling him that the ATO would have to be paid in priority to him. The appellant wrote that “I’m sorry if this has caused you any grief but I’m sure you will agree the ATO is the priority. I just didn’t think of it at the time you called. It was only yesterday when I was planning the week ahead that I realised we had committed to you and we also had the ATO to cover.”
31. [31]
    In cross-examination, Mr Hedge said that he then went overseas, and on his return in mid-June 2014, he discovered a letter to him from the ATO which demanded payment of “$200,000 or $300,000, I forget which, by the – it was 25 of June, I think”. The letter was dated 2 June 2014, demanding payment within 21 days. It would appear that this was a director penalty notice sent to Mr Hedge under the Taxation Administration Act 1953 (Cth). Mr Hedge then contacted Mr Clarke and required him to “honour” his promise that if Mr Hedge became a director of the Arion companies, under no circumstances was he to be made bankrupt. Mr Hedge gave evidence that Mr Clarke honoured that promise and that the debt to the ATO was somehow paid.
32. [32]
    No correspondence or other documents from the ATO were tendered. There was no challenge to Mr Hedge’s evidence or any suggestion that, in this respect, the general ledger for the AG had not accurately recorded the unremitted PAYG.
33. [33]
    Evidence was given by each of the lenders which proved that each of the subject loans had been made.
34. [34]
    Evidence was given by Ms Pollock, who was employed by MyAdvisor Pty Ltd at relevant times. She was involved in the appointment of AF as an authorised corporate representative. She said that there was no authority given by MyAdvisor, an Arion company to present investments to clients on behalf of anyone but MyAdvisor. And she was unaware of 1835.
35. [35]
    Evidence was given by a Mr Green, who was employed as an IT manager at AF. He recalled that the appellant did not want the appellant’s name to appear on any email address used by the company. It appeared to Mr Green that the appellant was managing the company.
36. [36]
    Another witness, a former employee of Sleipner, was called in the prosecution case, but their evidence need not be discussed here.
37. [37]
    The appellant neither called nor gave evidence.

The Reasons

38. [38]
    After setting out the evidence, directing himself in all necessary respects and ruling that he could not be satisfied that any relevant act, for count 11, occurred within Queensland, the trial judge turned to consider the remaining counts.
39. [39]
    His Honour referred to the particulars, as set out above at [4]. He upheld a submission that proof of the allegation in paragraph (a) of the particulars, namely that AF and/or AG was in a precarious financial position and had a number of debts to pay, of itself, could not prove any dishonesty.^[9] He added that it did not follow that this particular was an irrelevant allegation, because it could inform the basis for the knowledge particularised in paragraphs (b) and/or (c).^[10]
40. [40]
    His Honour rejected a submission for the appellant that the evidence raised the operation of s 24 of the Criminal Code, so that the prosecution would have to prove that the appellant did not hold an honest and reasonable, albeit mistaken, belief that funds would be available to repay the capital and interest on each of the loans at the end of the respective investments periods.^[11] Correctly, his Honour concluded that the prosecution case, involving an allegation of actual knowledge of an incapacity to repay the principal and interest, left no room for the operation of s 24.^[12]
41. [41]
    His Honour referred to evidence by one of the lenders^[13] that she was told something to the effect that their money would be placed in a separate debenture account with Westpac. His Honour said that it was unnecessary to make a finding about that evidence, because there was no allegation by the prosecution that the appellant represented that the loans would be kept separate from the borrower’s funds, and it was irrelevant to the prosecution case as it was particularised.^[14]
42. [42]
    The trial judge accepted that another lender^[15] had been told by the appellant that Arion was a large international company, with millions of dollars in funds so that it could pay a good interest rate. Whilst accepting that the representation was made (and that it was false), his Honour said that it should not be used to prove the dishonesty which was alleged and defined in the particulars.^[16]
43. [43]
    His Honour considered that a “cautious approach” was required in the assessment of the evidence of Mr Mey,^[17] and the business records which he maintained.^[18] It was at that point of the judgment that his Honour discussed the content of the AG general ledger, in which his Honour compellingly explained why Mr Mey’s testimony, as to the extent of funds coming from 1835, was to be rejected. The judge said that where there was a discrepancy between an entry in the general ledgers and the bank statements, he considered the bank statements to be “the accurate source”.^[19]
44. [44]
    His Honour explored the question of when 1835 began as “an operating entity”, ultimately concluding that this was no later than 1 January 2014,^[20] on the basis of another entry of 1 January 2014 in the AG general ledger (to which ledger I have referred earlier at [18]-[24]) in combination with evidence of one of the complainants, Mr Bruce.
45. [45]
    The judge considered the evidence, such as it was, as to 1835’s financial position. That evidence consisted of that company’s bank statements for a period from 11 February to 9 May 2014, during which there were total deposits of $142,407.85 which were almost immediately disbursed by payments to various entities including AG.
46. [46]
    The judge considered that 1835 had “at best, a limited capacity to provide any loans to [the Arion companies]”.^[21] He observed that its bank statements did not support aproposition that 1835 may have been in a position to lend funds which would have enabled AF or AG to pay the principal and interest on any of the debenture investments, given its own ongoing commitments.^[22] He thereby rejected asubmission for the appellant that he should assume, unless the prosecution proved otherwise, that 1835 was in a position to provide funds of that order to the Arion companies.^[23]
47. [47]
    The trial judge found that the appellant was so involved in the daily operations of the Arion companies that he was effectively in control of them, with a “controlling involvement in and general knowledge of the financial status of each entity at all times relevant to the charges before the Court.”^[24] There is no challenge to that finding. His Honour noted that the appellant was Mr Mey’s point of contact for any authority to make any payment to a creditor, as funds became available to the Arion companies. His Honour observed that this was supported by evidence of text messages involving the appellant.^[25]
48. [48]
    His Honour noted evidence that once Mr Hedge became more involved in the daily business operations, which was from April 2104, Mr Hedge never made a payment without the appellant’s concurrence.^[26] The judge noted a concession by the appellant’s then counsel that the appellant was “certainly conscious of what was going on in the business”.
49. [49]
    The trial judge found that the appellant’s conduct was at least the major cause, in each instance, of the loan being made,^[27] and a substantial or significant cause,^[28] by which one or other of the Arion companies gained the alleged benefit or advantage.^[29]
50. [50]
    His Honour considered that the issue of dishonesty turned upon the true financial positions of the two Arion companies, of which he found that the appellant had knowledge.^[30] He observed, correctly, that the positions of the two companies should not be considered separately, because it was demonstrated that funds were shared between them using effectively the one pool of funds.^[31]
51. [51]
    His Honour said that it was necessary to consider the bank statements for the companies as well as other financial records such as the general ledgers for both entities. He accepted a submission by the appellant that caution should be exercised when assessing the financial position of the companies by reference to the points in time captured by a reconstruction of the transactions which had been admitted as part of a large number of documents (including many of the accounting records) which had been tendered without objection.^[32]
52. [52]
    His Honour observed that a perusal of the bank statements, once the loan payments between the two Arion companies were excluded from consideration, revealed that the main sources of income of any significant value were the debenture investments the subject of this case, together with similarly styled entries (suggesting that they too were debenture investments) and payments from 1835 to the extent of $224,200.^[33] He observed that according to the bank statements, “by the latter part of 2013 onwards, the combined entities were living hand to mouth.”^[34]
53. [53]
    His Honour then turned to the event of 13 December 2013, when the appellant contacted the ATO, representing himself to be Mr Mey. The judge said that the appellant then made “an arrangement^[35] to pay $200,000 or $300,000 by monthly instalments of $10,000 per month.” An amount of $200,000 or $300,000 was not suggested by the evidence of this conversation, which I have described earlier at [28]. The evidence from AG’s general ledger was that the unremitted PAYG totalled $144,907.28 as at 13 December 2013. His Honour said that the appellant must have been aware of this debt (for the PAYG amounts) for “a few weeks at least” prior to his call to the ATO.^[36]
54. [54]
    The trial judge referred to evidence that the appellant had prepared a projected profit and loss statement for the first half of the 2013-14 financial year, which was consistent with the business model as Mr Hedge had described it.^[37] The projection budgeted on receipts from the sale of property, by way of commissions, in an amount of $330,000 per month.^[38] His Honour found that it must have been apparent to the appellant that these projections were “vastly overshooting the actual [income] within a matter of a few months”.^[39] His Honour continued:^[40]

“Accepting that each new business venture starts out with a degree of honest optimism as to its prospects, it must have become quickly apparent to the defendant that the combined business’ income was falling far short of his hopes.”

55. [55]
    His Honour found that in 2013, there was “no pre-arranged capacity” for either Arion company to borrow from any entity other than as between themselves.^[41] He found that the appellant must have held some doubts or reservations, by October 2013, as to whether repayments could be made to cover any further debenture investments.^[42] However, he observed, that finding was insufficient for the prosecution to prove its case.^[43] His Honour then made the critical findings as to the appellant’s awareness, by reference to the Arion companies’ position with the ATO:^[44]

“[311]I am satisfied beyond reasonable doubt that once the defendant was aware that the ATO had detected the indebtedness of the Arion entities to the tune of $200,000 or $300,000, he then knew that there was no real prospect that either company had the capacity to repay the capital and/or the interest at the end of the investment period.

[312]I am satisfied that he must have known of this debt for some time prior to his telephone call to the ATO wherein he set up afailed instalment plan on 13 December 2013. Given his control of payments to creditors, he must have known that the PAYG component of the wages was not being paid for some time. In any event I consider it highly unlikely that he would have contacted the ATO on the same day that he became aware that they had detected the debt. I am therefore satisfied he knew for some time that the ATO had detected the debt, at least anumber of days but likely much longer, before he contacted them.”

56. [56]
    His Honour rejected any suggestion that the appellant may have been misled by the erroneous entries in the general ledgers, finding that the appellant could not have been under illusion as to the nature and extent of the payments which had been made by 1835 to either Arion company.^[45] His Honour found that there was “no real prospect of a sudden upsurge in the financial fortunes of the Arion companies at this time, let alone one to cover the tax debt and the ongoing liabilities, including the debenture investments.”^[46]
57. [57]
    His Honour was not prepared to find that the defendant knew of an incapacity to pay interest alone, which involved relatively small amounts which were more easily paid than the associated principal.^[47] However he was satisfied that when the loans the subject of counts 3, 7, 8, 9, 10 and 12 were made, the appellant was aware that there was no real prospect that one or both of the Arion companies had the capacity to repay the principal, or the combined principal and interest.^[48]

The appellant’s submissions

58. [58]
    The appellant challenges several findings by the trial judge as to AG’s liability to the ATO, and contends that absent those findings, the conclusions of guilt were not open. In this way, the appellant’s argument is put on the basis, and only on the basis, of the first limb of s 668E(1), namely that the findings of guilt were unreasonable or could not be supported having regard to the evidence.
59. [59]
    In Filippou v The Queen^[49] (“Filippou”), the High Court explained the application of the common form of criminal appeal provisions to a trial by a judge alone. French CJ, Bell, Keane and Nettle JJ there said:^[50]

“[9]As was also explained in Fleming, perforce of s 133 of the Criminal Procedure Act, each of the three limbs of s 6(1) of the Criminal Appeal Act is capable of application to the verdict of ajudge alone. For the purposes of the first limb, the question is whether, upon the evidence on which the judge acted, or upon which it was open to the judge to act, the judge’s finding of guilt is “unreasonable” or “cannot be supported”. For the purposes of the second limb, the question is whether the judge has erred in law in the sense of a departure from trial according to law. Under the third limb, the question is whether for any other reason there has been a miscarriage of justice.

…

[11]Beginning with the first limb of s 6(1) of the Criminal Appeal Act, it is clear from the terms of s 133(1) of the Criminal Procedure Act that the effect of the latter provision is to equate a judge’s finding of guilt to a jury’s finding of guilt “for all purposes”. It follows from the natural and ordinary meaning of the words of s 133(1) that, for the purposes of an appeal against conviction under s 5 of the Criminal Appeal Act, a judge’s finding of guilt is to be treated as if it were the same as a jury’s finding of guilt.

[12]Authority makes plain that a jury’s finding of guilt is not to be disturbed unless it appears that there is no or insufficient evidence to support the finding, or the evidence is all the one way, or the finding is otherwise unreasonable, or unless there has been a misdirection leading to a miscarriage of justice. It follows perforce of s 133(1) of the Criminal Procedure Act that, in the case of an appeal against a judge’s finding of guilt, the finding is not to be disturbed under the first limb of s 6(1) of the Criminal Appeal Act unless there is no or insufficient evidence to support the finding, or the finding is otherwise unreasonable, or the evidence was all the one way, or the judge has so misdirected himself or herself on a matter of law as to result in a miscarriage of justice. It is, however, to be borne steadily in mind that, as with a jury’s verdict, so also with the judgment and verdict of a judge alone, in most cases a doubt experienced by an appellate court will be a doubt which the judge ought to have experienced. To adopt and adapt the language of M v The Queen:

“It is only where a [judge’s] advantage in seeing and hearing the evidence is capable of resolving a doubt experienced by a court of criminal appeal that the court may conclude that no miscarriage of justice occurred … If the evidence, upon the record itself, contains discrepancies, displays inadequacies, is tainted or otherwise lacks probative force in such a way as to lead the court of criminal appeal to conclude that, even making full allowance for the advantages enjoyed by the [judge], there is a significant possibility that an innocent person has been convicted, then the court is bound to act and to set aside a verdict based upon that evidence.””^[51]

(Footnotes omitted.)

60. [60]
    Their Honours in Filippou explained that the task for the Court of Criminal Appeal in that case was to identify any error in the reasons of a trial judge, and then to determine whether the error was productive of a miscarriage of justice, by considering whether the trial judge had so erred in fact as to engage either the first or third limbs of the common form provision.^[52]
61. [61]
    In his separate judgment in Filippou, Gageler J said:^[53]

“[82]Under the first limb, which refers to the ground that a verdict “is unreasonable, or cannot be supported, having regard to the evidence”, a trial judge’s ultimate finding of guilt must be set aside on the same principle as a jury’s verdict of guilt must be set aside. That is to occur if the Court of Criminal Appeal concludes on the whole of the evidence that it was not open to the relevant tribunal of fact, whether it be a jury or a trial judge, to be satisfied beyond reasonable doubt that the accused was guilty. The Court of Criminal Appeal will conclude that it was not open to the tribunal of fact to be satisfied beyond reasonable doubt that the accused was guilty if its own review of the evidence leads it to have a reasonable doubt that the accused was guilty, unless the tribunal’s advantage in seeing and hearing the evidence is capable of resolving that doubt.

[83]Irrespective of whether it is applied in an appeal against conviction following a jury trial or in an appeal against conviction following a trial by judge alone, the question under the first limb is always whether the ultimate finding of guilt was one which was open to the tribunal of fact on the whole of the evidence.”

(Footnotes omitted.)

Whilst Gageler J considered that a mere error of fact on the part of a trial judge, as distinct from some error going to the trial process, might be argued in reliance on the third limb of the common form provision, he said that it was difficult to see how reliance on the third limb could add anything to the effect of the first limb.^[54]

62. [62]
    The appellant’s submissions conform with these principles. They challenge the judge’s findings in certain respects, and say that the errors of fact made by the judge were productive of a miscarriage of justice, of the kind described in the first limb of s 668E(1). To succeed, the appellant must establish that not only were the errors made, but that absent the findings which were wrongly made, it was not open to the judge to find that the appellant was guilty on these counts.
63. [63]
    It is further submitted that the appellant must be given the “full benefit of his acquittals” on the counts involving the loans which were made before December 2013. It is submitted that “[t]he operative findings underpinning the acquittals, while intermediate in relation to the charges upon which there were verdicts of guilty, are incontrovertible in relation to the acquittals and must not be traversed by the creation on appeal of a set of inconsistent verdicts.” The argument seeks support from the analysis of the High Court in Washer v Western Australia (“Washer”).^[55]
64. [64]
    In Washer, Gleeson CJ, Heydon and Crennan JJ discussed the incontrovertibility of an acquittal as follows:^[56]

“In whatever way the problem arises, and whether it takes the form of a question of admissibility of evidence, preclusion of proceedings, or the exercise of a discretion to stay proceedings, the underlying legal principles relating to double jeopardy require, in this application, an accurate identification of the effect of the earlier acquittal and its relationship to the later charge. Where the issue arises as one of the admissibility of evidence, then relevance is likely to be the focus of argument. Relevance will be decided in the light of the legal principles application to the prosecution and defence of the charge against the accused, as related to the facts and circumstances of the particular case. If, in this case, the appellant had a legal right, by reason of his acquittal, to be given the benefit of an assumption relevant to the assessment of the other evidence in the case, then evidence of the acquittal would be relevant. If the fact of the acquittal had some logical connection with the assessment of the probabilities concerning some fact or facts in issue, the evidence would be relevant. In either case, however, a decision about relevance requires consideration of the effect of the acquittal. Accepting that the appellant was entitled to “the full benefit of the acquittal”, the question is what that “full benefit” entailed.”

(Footnotes omitted.)

65. [65]
    In R v Storey^[57], Barwick CJ said:

“The correct principle relevant to the admissibility in a subsequent trial of evidence given in an earlier trial which has resulted in an acquittal is, in my opinion, no more than this: that a verdict of acquittal shall not be challenged in a subsequent trial: the accused in the hearing of a subsequent charge must be given the full benefit of his acquittal on the earlier occasion. Evidence which was admissible to establish the earlier offence is, in my opinion, not inadmissible merely because it was tendered in the earlier proceeding: but it may not be used for the purpose of challenging, or diminishing the benefit to the accused of, the acquittal. Such evidence will be admissible, provided it is relevant to the subsequent charge or to a defence to it but must only be allowed to be used to support that charge or negative a defence. Where evidence which would tend to prove the earlier charge or some element of it is admitted in the subsequent charge, the jury must be duly warned that they must accept the fact of the earlier acquittal and not use the evidence in any wise to reconsider the guilt of the accused of the earlier offence or to question or discount the effect of the acquittal.”

66. [66]
    In Rogers v The Queen,^[58] Deane and Gaudron JJ described the incontrovertible character of an acquittal as being founded upon “the need for decisions of the courts, unless set aside or quashed, to be accepted as incontrovertibly correct”.^[59] Similarly in R v Carroll,^[60] Gleeson CJ and Hayne J said that “the principle that an acquittal is incontrovertible is a principle founded in the finality of judicial proceedings and that it is what is decided in litigation that is final”.
67. [67]
    In the present case, however, the appellant was not convicted of these charges having been acquitted of the other charges at an earlier trial. Rather, within the one trial, there were verdicts of acquittal and conviction which were given at the same time. In reasoning that the appellant was guilty on the presently relevant charges, the trial judge was not constrained by the finality of a previous acquittal.
68. [68]
    The effect of an acquittal from a previous trial would have been to require the judge to proceed on the factual premise that the appellant had not acted dishonestly in relation to the earlier loans.^[61] In this case, the judge was not obliged to consider the counts the subject of this appeal upon that premise.
69. [69]
    Nor is this Court obliged to proceed upon that premise. This Court’s task is to determine whether it was open to the trial judge to convict the appellant. It is the reasonableness or otherwise of the trial judge’s conclusion of guilt, on each of the presently relevant charges, which must be considered, affected as the judge was by his reasoning on the other counts only in the way which I have described. Contrary to the appellant’s submission quoted earlier at [63], the dismissal of this appeal would not “create” a “set of … inconsistent verdicts.”
70. [70]
    The appellant’s argument challenges the following findings on the basis that there was insufficient evidence to support them:^[62]

    1. (a)
       by 13 December 2013 the Arion entities were indebted to the Australian Taxation Office "to the tune of $200,000 or $300,000" because of non-payment of the PAYG tax component of wages;
    2. (b)
       a tax instalment arrangement entered into on 13 December 2013 related to a wages tax debt of $200,000 to $300,000;
    3. (c)
       entry into a tax instalment arrangement on 13 December 2013 was due to an inability to pay tax, as opposed to a mere preference to make payment by instalment; and
    4. (d)
       the defendant must have been aware for "a few weeks at least" prior to 13 December 2013 that "there was no real prospect that [AF] and/or [AG] had the capacity to repay either the money invested by each of the respective complainants in [counts 3, 7, 8, 9, 10, and 12] at the end of the respective investment periods, or the combined sum of the money invested and the interest that had accrued".
71. [71]
    It is argued that because those findings were essential to his Honour’s conclusion on the charges on which the appellant was convicted, the verdicts were unreasonable and cannot be supported.
72. [72]
    It is submitted for the appellant, correctly, that the evidence did not support a finding that the debt for unremitted PAYG was “to the tune of $200,000 or $300,000”. As I have discussed, the evidence of Mr Hedge was that the appellant admitted calling the ATO in December 2013 and making the arrangement to pay instalments of $10,000 per month. His Honour’s reference to the debt being within that range as at December 2013 was an error. According to the AG general ledger, the true figure as at 13December 2013 was just under $150,000. That error, however, is not significant for the purposes of this case. The fact that about $150,000 was then outstanding, rather than, say, $200,000, does not affect the fact that there existed a substantial debt to the ATO, resulting from a consistent failure to remit any of the tax deducted from the salaries and wages of the company’s employees at any time from the commencement of its operations. The importance of this debt has to be understood also from the circumstances, clearly proved by the evidence, of the absence of cash to pay the debt, the absence of any credit facility from which the required funds could be obtained and the absence, at that time, of any stream of income from what had been intended to be the core business of the Arion companies.
73. [73]
    The appellant’s argument suggests that the entry into this arrangement for the payment by instalments did not evidence an inability to pay the debt. It is suggested that the appellant may have made this arrangement with the ATO because of “a mere preference to make payment by instalment”.^[63] That submission cannot be accepted. The steady escalation of the amount of this debt, over the six months or so to 13 December 2013, could have had only one credible explanation, namely that the Arion companies were unable to pay these monies as they were falling due. It was not as if the companies were accumulating assets by using their scarce cash for investments, in preference to discharging their obligations under the relevant tax law. They were, as the judge found, “living hand to mouth”.^[64] The inference was compelling that when the appellant decided to contact the ATO about this debt in December 2013, he knew that the companies could not then pay the debt.
74. [74]
    It is important to understand the judge’s reasoning as to why this discussion between the appellant and the ATO was significant in the proof of the prosecution case. It was not that AG, or the Arion companies, became insolvent only at that point. Rather, it was that this event compellingly demonstrated an actual knowledge, no later than this point in time, of the financial position of the companies which had existed for a while.
75. [75]
    The evidence of what was paid, or more precisely not paid, to the ATO after 13 December 2013, is also telling. The notion that the appellant preferred to pay the debt by instalments is dispelled by the evidence that nothing was paid after this arrangement was made. Indeed, nothing was paid even after Mr Hedge’s arrangement with the ATO in April 2014.
76. [76]
    It is suggested that his Honour’s findings were inconsistent with the fact that “immediate payment was able to be made” after the ATO demand in June 2014. As I have discussed, although the demand itself was not in evidence, almost inevitably it was a director penalty notice under the Taxation Administration Act, putting Mr Hedge, as the director of the companies, on notice that he would be personally liable for the debt if it was not paid within 21 days. Because Mr Hedge would have had no answer to a claim by the ATO against him personally, there was the occasion for Mr Hedge to demand that it be paid by someone else, through the intervention of Mr Clarke. Importantly, it was evident that whoever it was who did pay the ATO, it was not one of the Arion companies. It was because they had been unable to pay the ATO that the debt continued to grow, ultimately causing the ATO to demand it from him as the company’s director.
77. [77]
    It is submitted that the PAYG debt was effectively irrelevant, because it was always able to be paid in the way in which it was ultimately paid, namely by Mr Hedge requiring Mr Clarke to make good on his promise to him. That argument cannot be accepted. The persistent non-payment of any PAYG, notwithstanding some pressure from the ATO, for its payment, is strong evidence of the companies’ insolvency. It cannot be supposed that the business model of the Arion companies was that those behind Mr Clarke would meet any debt of the company which might become the legal responsibility of Mr Hedge. It was not as if the benefactor, which ultimately paid the ATO, was instead financing the payment of the debts of the Arion companies as they fell due.
78. [78]
    At this point, it should be noted that the alleged knowledge of the appellant was of the absence of any real prospect that the companies would have the capacity to repay the investor by the end of the investment period, or in other words, at the expiry of the 90 or 120 day term of the loan. It is not unlikely that the appellant considered that he might be able to persuade his clients to extend the terms of these loans, or at least delay them from taking legal steps to recover their funds immediately upon the expiry of the original terms. However his alleged dishonesty was by procuring these loans knowing that the borrower would not be able to repay the principal, if and when required to do so according to the loan contract.
79. [79]
    Although there was not a specific argument to this effect, it should also be noted that it was no answer to the prosecution case to say that the Arion company might have been able to repay the principal at the end of theinvestment term, in preference to paying other creditors whose debts were due and owing.
80. [80]
    The arrangement made with the ATO, in December2 013, would have provided some relief for the company’s liquidity. Nevertheless, upon a consideration of all of the evidence, the companies remained unable to pay their debts as they fell due, as the appellant must have known. Having made the arrangement to pay $10,000 per month, the companies immediately and persistently ignored the arrangement and, moreover, continued to withhold tax from wages and salaries without remitting any of it to the ATO. His Honour was correct to find that by this time, there was no real prospect of a sudden upsurge in the fortunes of the Arion companies, by which the tax debt and other liabilities of the companies, including the subject loans, could be paid. Commencing with the first of the relevant loans, which was made on 18 December 2013, the appellant caused further monies to be borrowed without disclosing that there was no real prospect of their loans being repaid upon the agreed date for repayment.
81. [81]
    There was no inconsistency in the verdicts. The doubt in his Honour’s mind as to the appellant’s guilt for the earlier transactions was, as his Honour explained, dispelled by the unchallenged evidence of the appellant’s arrangement with the ATO. In my conclusion, it was open to the trial judge to convict the appellant on the subject counts.

Order

82. [82]
    I would order that the appeal be dismissed.
83. [83]
    BURNS J: I also agree with the reasons of McMurdo JA as well as the proposed order.