R v Ludwig[2020] QDCPR 7

DISTRICT COURT OF QUEENSLAND

Introduction

1. [1]
   This is an application for disclosure of the following documents:

1. (a)
   The Click POS and other sales records maintained for and on behalf of Cap Coast Pty Ltd (in Liq) for the period 1 January 2014 until 1 April 2015;

2. (b)
   A copy of the backup described by Cor Cordis in its report dated 16 April 2016; and

3. (c)
   All documents obtained by the Queensland Police Service from Cor Cordis in its execution by search warrant in relation to the defendant, Cap Coast Telecoms and Leading Edge Telecom including financial records and correspondence.

2. [2]
   There was a further subsidiary application that the trial, due to commence in the week commencing 2 March 2020, be delisted.

Charges

3. [3]
   The defendant is charged on Indictment 231 of 2018 with the following counts:

1. (a)
   Count 1 – that on divers date between 1 October 2014 and 13 March 2015 at Rockhampton and elsewhere in the state of Queensland, the defendant dishonestly caused a pecuniary detriment to Leading Edge Group Limited and the detriment caused to Leading Edge Group Limited was in the value of more than $30,000.

2. (b)
   Count 2 – that on divers date between 22 October 2014 and 21 January 2015 at Rockhampton and elsewhere in the state of Queensland, the defendant dishonestly applied to the use of divers persons, property namely money, banking credits and mobile telephones belonging to Cap Coast Telecoms Pty Ltd and that the defendant was a director of Cap Coast Telecoms Pty Ltd and the property was of a value of more than $30,000.^[1]

Prosecution case

4. [4]
   The prosecution case is that on or about 7 and 8 January 2015, the defendant, on behalf of Cap Coast, dishonestly ordered a volume of stock from Telstra which was acquired on account of the Leading Edge Group (“LEG”) with the intention of retaining the proceeds from the sale of the goods ordered to the detriment of LEG. The alleged value of the stock was $2,387,160.70. During the period 9 January 2015 until 16 January 2015, the defendant, through Cap Coast, received stock with a value of $2,190,315.31. It is alleged that part of the stock is missing and valued in the amount of $1,227,956.20. In the period between 9 January 2015 and 20 March 2015, the defendant sold the January 2015 stock and he personally retained or transferred to third parties the proceeds he received from the January 2015 stock. In the period 1 October 2014 and 30 March 2015, the defendant made third party payments to the detriment of Cap Coast and the complainant. It is alleged by the Crown that the payments were part of the defendants plan to defraud the complainant.

Defence material

5. [5]
   The defendant relies on an affidavit of Patrick David Meehan filed 24 February 2020. The Cor Cordis chartered accountants report to creditors dated 16 April 2016 is produced and marked as Exhibit PDM01.

6. [6]
   In the report it was noted that the liquidators had identified numerous payments (representing voidable transactions) were made to the defendant, his brother, his mother, entities associated with the defendant and Mr Stephen O'Neill and Mr John Narramore. It was believed these payments were voidable.

7. [7]
   The liquidator determined there had been a plan to liquidate the company to avoid payment of debts owing to LEG, to extract cash from the company prior to liquidation for the personal benefit of the defendant, Robert Ludwig and Mary Ludwig, to sell $450,000 worth of stock (LEG stock) prior to liquidation and extract proceeds of those sales from the company for their personal benefit; to ensure movement of assets in the two years prior to liquidation could not be unwound; to ensure the defendant retained his interest to a personal property at Gracemere and Southport; to avoid paying GST and PAYG taxes owed by the company; and to protect the director’s interests in motor vehicles owned by the company.

8. [8]
   The affidavit also exhibits a search warrant executed by the police on Cor Cordis dated 21 January 2016.

9. [9]
   A police statement of Eugene De Francesco dated 8 February 2016 is attached. Mr De Francesco was the general manager of the complainant LEG. He states that between 1 May 2010 and 6 February 2012 Cap Coast (operated by the defendant) entered into six Telstra nominated dealership agreements with LEG and Telstra for stores in Yeppoon, Rockhampton South, Rockhampton and Gladstone, Gracemere and Emerald. Cap Coast and the defendant also entered into a number of written licence agreements with LEG. Members of LEG are able to purchase goods from suppliers namely Telstra on LEG’s account. Cap Coast entered into a written credit application dated 16 June 2011 with LEG by which credit was granted to Cap Coast. The credit limit was $1.2m as at January 2015.

10. [10]
    On 7 January 2015, Cap Coast placed six separate large orders with Telstra via its online ordering website “Order Express”. These orders were dispatched to Cap Coast stores from 7 January 2015 until 16 January 2015. The total value of the goods delivered was $2,190,315.31. On 17 January 215 and 18 January 2015, LEG sent representatives to Cap Coast stores who found that each of the stores had been closed with no sign of any stock being in the stores. The defendant declined to speak to LEG’s representatives. Mr De Francesco became aware of investigations conducted by Cor Cordis. Some of the stock was returned to the liquidators. It was alleged that the defendant had advised his staff not to enter the goods into POS system.^[2] Mr De Francesco alleges that the defendant has made no effort to make any payments for the outstanding amounts.

11. [11]
    In an addendum statement, the documents relevant to the orders are produced by him.

12. [12]
    Kara Romito has provided a statement dated 7 April 2016. She was a former employee of Cap Coast. She started working for the defendant in May 2010 and was responsible for stock control. Predominantly, the defendant was the only person who would order stock such as mobile phones and tablet devices. Robert Ludwig, the defendant’s brother, also had access to order stock as did Kirsten Mitchell. Kirsten Mitchell left the company in September 2014. The normal process by which stock would be ordered would be the store managers would advise the defendant they needed stock and he would order the stock through Telstra. The phones would be dispatched directly to the LEG store, LEG would pay Telstra and then forward a further invoice to Cap Coast Telecoms for payment. Once stock was received by the various stores, the staff members would open the boxes and ensure they matched the orders. Ms Romito noticed from a time in May 2014 the money in the normal operating account had diminished from what it normally was.

13. [13]
    In June 2014, the defendant called a meeting just after LEG head office had increased their fees. The defendant was very concerned.

14. [14]
    In January 2015, the defendant told her that all stores would be closing down and he was trying to sell the stores but Telstra wasn’t approving the prospecting buyer. About halfway through her first week back at work, huge orders of mobile phones began arriving at each of the stores. The defendant instructed her to tell staff members to bring all the phones into the head office at Denham Street, Rockhampton. There was a further conversation with the defendant in which he alleged there had been an issue with Telstra and too much stock had been sent, none of the phones were to be entered onto the system and were to be transported to the head office at Denham Street. All of the phones arrived in boxes stacked everywhere. Once they arrived, the defendant asked staff in the head office to enter the phones on the Click POS system which was the inventory used to sell the stock. As far as she was aware, all of the phones were entered onto the system. The whole thing seemed very suspicious and strange to her. The defendant asked her to do up some invoices in order to sell some of the phones. Some of the invoices were made out to other LEG stores, the majority though were made out to a business called Sky Tree. The defendant instructed them to enter random amounts.

15. [15]
    On 16 January 2015, when she arrived at work there was a truck parked at the back of the office. The defendant asked them to clean out the office and pack everything, including computers, onto the back of the truck.

Defence submissions

16. [16]
    The defence submits that the defendant is defending the allegations on the basis he had an honest claim of right to conduct himself as he did in the relevant period.^[3]  He says that he placed Cap Coast into liquidation on or about 15 January 2015, after he received a demand from LEG for payment of arrears against a credit account, maintained for the benefit of Cap Coast by LEG in the amount of $1,800,000 which Cap Coast could not immediately pay. He maintains that the January 15 stock was entered into the Cap Coast Click POS system and some or all of this stock was sold in the period 9 January 2015 to 20 January 2015.  He alleges the Click POS records will identify the third parties to whom the January 2015 stock was sold. 

17. [17]
    He also believes an examination of the backup will disclose emails sent by the defendant to the complainant which affirms he acted reasonably and not dishonestly when he placed Cap Coast into liquidation.

18. [18]
    He alleges that the documents are relevant to his defence. He does not have these documents available. He alleges the liquidators have possession of these records.

19. [19]
    It is alleged also the defendant is being prosecuted by the Commonwealth DPP for offences relating to alleged breaches of duty as a director and for money laundering. The brief of evidence prepared by the CDPP confirms that ASIC Investigators have obtained a copy of the backup from liquidators which has not yet been disclosed.

20. [20]
    The defendant also submits the Click POS records would assist the prosecution in determining the quantum of the loss and gauge as to whether he acted dishonestly at the time.

21. [21]
    The defendant complains about the state of the particulars and says that it has requested disclosure of these documents previously. It is submitted that in order for there to be fair trial, disclosure is necessary.

Crown submissions

22. [22]
    The prosecution submits that the defence issued a subpoena requesting material from Cor Cordis and LEG which material was produced to the Court on 2 November 2018. The QPS is not in possession of the material sought and therefore disclosure is not required.

23. [23]
    However in oral argument, Ms Whelan informed the court that she had spoken to the liquidators and LEG and the relevant documents (if they exist) can be obtained in a one to two week period.

24. [24]
    If they existed they would be provided to the defence.

25. [25]
    She conceded that as some of the witnesses alleged they were directed not to make entries as to the phones in the system the POS records could be important both in cross-examination and in the defence case.

Discussion

26. [26]
    The history of this matter is of concern to the Court.

27. [27]
    The indictment in this matter was presented on 13 February 2018. The matter was first mentioned on that day and there was no appearance for the defendant. The matter was further mentioned on 14 February 2018 at which time town agents appeared and the matter was listed for mention on 14 March 2018. The matter was further mentioned on 14 March 2018 and adjourned for mention on 26 April 2018. At a further mention on 26 April 2018, the Court ordered that the Crown provide particulars, a list of witnesses and a paginated indexed bundle of exhibits, and a list of admissions to be made by 5.00 pm 7 June 2018. The parties were to confer as to the contents of an agreed jury book by 21 June 2018 and the matter was to be mentioned on 28 June 2018 for the purpose of ensuring these directions are complied with. The matter was further mentioned on 28 June 2018. It was further mentioned on 26 July 2018. It was further mentioned on 6 September 2018. There was a further mention on 9 October 2018. The defence was told on this occasion that the Court expected the defence would inform the Court what was going to happen. On 2 November 2018, an order was made for the production of subpoenaed material.

28. [28]
    At a mention on 29 November 2018, the matter was adjourned again for mention. On 4 February 2019, the matter was adjourned again for mention. On 18 February 2019, the matter was again adjourned for mention. On 25 February 2019, leave was given for the parties to inspect the proceeds of subpoenaed documents.

29. [29]
    On 26 February 2019, the matter was again mentioned. On 26 March 2019, the matter was listed for further mention on 21 May 2019. On 27 March 2019, an order was made by myself that the defence and the Crown were permitted to inspect Cor Cordis documents.

30. [30]
    On 8 May 2019, the matter was further mentioned with a subpoena return date. Further, the Chief Judge ordered that the defence and Crown inspect documents from LEG and from Telstra Corporation.

31. [31]
    The matter was further mentioned on 21 May 2019. It was further mentioned on 24 May 2019. On 5 July 2019, the matter was listed for trial on the week commencing 9 December 2019.

32. [32]
    On 2 August 2019, a guilty plea was entered on another indictment.

33. [33]
    On 26 November 2019, the present trial was de-listed and re-listed for March 2020 for two weeks.

34. [34]
    On 21 February 2020, the defence appeared at the mention seeking a de-listing of the trial because of issues with the fees and the matter was listed for this application to be heard on 26 February 2020.

35. [35]
    The defence has had many opportunities to obtain these documents. Indeed, it has issued subpoenas to the relevant organisations in this case.

36. [36]
    The alleged offences in this matter occurred some five to six years ago now. The indictment has been before the Court for over two years.

37. [37]
    There is a public interest in serious criminal prosecutions to proceed reasonably swiftly. It is not in the public interest to have unnecessary delay.^[4]  The matter needs to be tried.  The matter has been listed for trial twice now. I was informed all of the witnesses have been organised for the trial.

38. [38]
    However the court needs to consider whether a fair trial will be achieved. The fact is the documents sought seem to be crucial to the defence. It would be unfair for the trial to proceed presently.^[5]

39. [39]
    However the matter must come on. At the mention on 27 February 2020 I will set new trial dates.

40. [40]
    Without binding any other judge who hears the matter, to my mind it would take very unusual circumstances for the defendant to obtain a further adjournment. If his lawyers are not funded, he will have to represent himself.^[6]

Conclusion

41. [41]
    With considerable reluctance I made the following orders on 26 February 2020:

1. (a)
   The trial is adjourned.

2. (b)
   The matter is to be mentioned at 9:30am on 27 February 2020.