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Court of Criminal Appeal 11 December 2000

R v O'Halloran

[2000] NSWCCA 528

Fraud & dishonesty

Citation: R v O'Halloran [2000] NSWCCA 528
Court: NSW Court of Criminal Appeal
Date: 11 December 2000
Judges: Spigelman CJ, Mason P, Heydon JA

Background

The appellant was a former chairman of a listed public company, Jeffries Industries Limited. He was charged under s 998 of the Corporations Law with conduct intended to create a false or misleading appearance with respect to the price of securities. The Crown alleged he instructed a broker to sell 170,000 shares in Jeffries down to a price of thirteen cents during the final five minutes of trading on 28 April 1995.

The timing was significant. Jeffries' articles of association provided a formula for converting preference shares into ordinary shares, and that formula depended on the weighted average sale price of ordinary shares over the twenty trading days immediately before the conversion date. The Crown's case was that the instruction artificially depressed the share price on that final trading day, thereby artificially increasing the rate at which preference shareholders could convert their holdings.

The appellant sought to quash the indictment by notice of motion before Barr J in the Supreme Court, arguing several constitutional and procedural grounds. Barr J dismissed the motion, and the appellant appealed to the Court of Criminal Appeal under s 5F(3)(b) of the Criminal Appeal Act 1912 (NSW). No leave was required as Barr J had certified the matter as appropriate for appeal.

  • Whether the Commonwealth Director of Public Prosecutions had power to bring the prosecution under the federal-State legislative scheme, with particular reference to ss 51(i) and 51(xx) of the Constitution (trade and commerce, and corporations powers)
  • Whether s 51(v) of the Constitution (postal, telegraphic and telephonic services) independently supported the prosecution
  • Whether the indictment was bad for duplicity
  • Whether the instruction given to the broker was capable of falling within s 998 of the Corporations Law
  • Whether the prosecution constituted an abuse of process by relying on share sales other than those at thirteen and fourteen cents

Decision

The Court of Criminal Appeal unanimously dismissed the appeal, with Spigelman CJ and Mason P agreeing with the reasons of Heydon JA.

On the constitutional questions concerning ss 51(i) and 51(xx), the Court upheld Barr J's conclusions that sufficient constitutional support existed for the Commonwealth Director of Public Prosecutions to bring the prosecution under the federal-State cooperative scheme established by the Corporations Act 1989 (Cth) and the Corporations (New South Wales) Act 1990. The legislative framework was designed to administer and enforce the Corporations Law on a national basis, as if it were a single Commonwealth law.

On the s 51(v) question (postal and communications services), the Court declined to decide whether that head of power independently supported the prosecution. Heydon JA noted that the question had broad implications beyond this case, including for the operation of consumer protection provisions in the Trade Practices Act 1974 relying on s 6(3). Because sufficient constitutional support existed on other grounds, and because the Court had not received full submissions on the point, expressing any view on s 51(v) was considered undesirable.

The Court also rejected the arguments that the indictment was bad for duplicity, that the alleged instruction was incapable of falling within s 998, and that reliance on a broader range of share sales amounted to an abuse of process.

Orders Made

  • Appeal dismissed.

Key Takeaways

  • The Court of Criminal Appeal confirmed that the cooperative federal-State scheme under the Corporations Act 1989 (Cth) and the Corporations (New South Wales) Act 1990 validly empowered the Commonwealth Director of Public Prosecutions to prosecute offences under the Corporations Law of New South Wales.
  • Heydon JA expressly declined to rule on whether s 51(v) of the Constitution (the communications power) could independently support such a prosecution, treating the issue as unresolved and potentially significant for the validity of consumer protection provisions under the Trade Practices Act.
  • An instruction to a broker to sell shares at artificially low prices during a critical pricing period was held capable of constituting conduct falling within s 998 of the Corporations Law, which prohibits creating a false or misleading appearance with respect to the price of securities.
  • No abuse of process arose from the Crown relying on the full range of relevant share sales, rather than limiting its case to the sales at the lowest prices.
  • Duplicity in the indictment was rejected in the circumstances of this charge.

Legislation and Cases Referenced

Legislation:
- Corporations Act 1989 (Cth)
- Corporations (New South Wales) Act 1990
- Criminal Appeal Act 1912 (NSW)
- Director of Public Prosecutions Act 1983 (Cth)
- Australian Securities and Investments Commission Act 1989 (Cth)
- Trade Practices Act 1974 (Cth)
- Acts Interpretation Act 1901 (Cth)
- Interpretation Act 1987 (NSW)
- Securities Industry Act 1970 (NSW)
- Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth)

Key Cases:
- Fame Decorator Agencies Pty Ltd v Jeffries Industries Ltd (1998) 28 ACSR 58
- R v Hughes (2000) 74 ALJR 802
- Walton v Gardiner (1993) 177 CLR 378
- Gould v Brown (1998) 193 CLR 346
- Victoria v The Commonwealth (1996) 187 CLR 416
- Re Nolan; Ex parte Young (1991) 172 CLR 460
- Herald and Weekly Times Ltd v Commonwealth (1966) 115 CLR 418
- Jones v Commonwealth (No 2) (1966) 112 CLR 206
- Wells v John R Lewis (International) Pty Ltd (1975) 25 FLR 194
- Australian Securities Commission v Nomura International Plc (1998) 160 ALR 246
- R v Masters (1992) 26 NSWLR 450
- Rogers v R (1994) 181 CLR 251