AI-generated summaries. Not legal advice. Always verify against the official judgment on NSW Caselaw.
← All decisions
1
Supreme Court 8 October 2007

R (Cth) v Petroulias (No. 30)

[2007] NSWSC 1119

Fraud & dishonesty
CRIMINAL LAW TRIAL BY JURY APPLICATION FOR VERDICT BY DIRECTION CROWN CASE THAT REVENUE PUT AT RISK

Citation: R (Cth) v Petroulias (No. 30) [2007] NSWSC 1119
Court: Supreme Court of New South Wales
Date: 8 October 2007
Judge(s): Johnson J

Background

The accused was a former officer of the Australian Taxation Office (ATO) facing three counts on indictment. The first count alleged he defrauded the Commonwealth by putting its revenue at risk, through causing Private Binding Rulings and Advance Opinions to issue to taxpayers by dishonest means, contrary to s 29D of the Crimes Act 1914 (Cth). The second count alleged he agreed to receive money on an understanding that his exercise of duty as a Commonwealth officer would be affected, contrary to s 73 of the same Act. The third count alleged unauthorised disclosure of documents obtained through his official position.

The Crown's case was that the accused exercised control over the issuance of rulings and opinions inside and outside the ATO, acted in a position of conflict of interest, concealed the number of rulings issued, and participated in an arrangement with another individual (referred to in the judgment as Mr Morgan) to receive money in exchange for improperly exercising his duties.

At the close of the Crown case, the accused applied for verdicts by direction on the first and second counts, arguing that the evidence was legally insufficient to support a guilty verdict on either. No such application was made in respect of the third count.

  • Whether the Crown had adduced sufficient evidence on each element of the s 29D fraud charge, specifically causation, dishonest means, and deprivation (framed as "putting revenue at risk").
  • Whether "putting revenue at risk" requires proof that the tax rulings issued were legally incorrect, or whether other forms of financial risk to the Commonwealth suffice.
  • Whether there was sufficient evidence that the accused caused the rulings to issue, given that a Crown witness (Mr Aivaliotes) disavowed being the accused's "puppet" and asserted his own professional responsibility for the rulings.
  • Whether the Crown had adduced sufficient evidence on the second count that the accused agreed to receive a benefit on an understanding that his exercise of duty would be affected improperly.

Decision

On the applicable legal standard, Johnson J applied the well-established test from Doney v The Queen (1990) 171 CLR 207: a verdict by direction is warranted only where the evidence, taken at its highest, cannot sustain a guilty verdict. Even tenuous or weak evidence must be left to the jury if it is capable of supporting a conviction.

On causation under the first count, the accused argued that because a Crown witness (Mr Aivaliotes) expressly disowned the characterisation of himself as the accused's "puppet" and accepted professional responsibility for the rulings, the Crown could not establish that the accused caused the rulings to issue. Johnson J rejected this. The court was satisfied that the evidence identified by the Crown, centring on the accused's exercise of control both inside and outside the ATO, provided a clear evidentiary foundation upon which the jury could be satisfied beyond reasonable doubt on causation.

On the "putting revenue at risk" element, the accused's central argument was that the Crown could not establish this without proving the rulings were legally wrong. The court undertook a detailed analysis of the legislative and policy framework governing private binding rulings and fringe benefits tax opinions, together with relevant authorities on the s 29D offence. Johnson J concluded that the Crown was not required to prove the rulings were incorrect. It was sufficient for the Crown to show, by reference to evidence of the accused's dishonest conduct (including acting in a conflict of interest, concealing rulings, and improperly disclosing client information), that the Commonwealth's revenue was put at risk in the requisite sense.

On the second count, Johnson J accepted the Crown's submission that the offence under s 73 did not require proof that the rulings themselves were wrong. The combination of direct evidence, including testimony from Mr Morgan, and inferences available from documentary evidence, was capable of supporting a finding that the accused agreed to receive money on an understanding that his exercise of duty would be improperly affected. Both counts were accordingly left to the jury.

Orders Made

  • The application for a verdict by direction on the first count (s 29D, Crimes Act 1914 (Cth)) is refused.
  • The application for a verdict by direction on the second count (s 73, Crimes Act 1914 (Cth)) is refused.
  • Both counts, together with the third count (in respect of which no application was made), are to proceed to the jury.

Key Takeaways

  • Under the Doney v The Queen standard, a trial judge must leave a count to the jury if any evidence, however tenuous, is capable of supporting a guilty verdict when taken at its highest.
  • A charge of defrauding the Commonwealth by "putting revenue at risk" under s 29D of the Crimes Act 1914 (Cth) does not necessarily require the Crown to prove that the tax rulings in question were legally incorrect. Evidence of dishonest conduct, such as acting in a conflict of interest or concealing official activity, may suffice to establish the risk element.
  • Where a Crown witness disputes a characterisation advanced in an earlier proceeding (here, the "puppet" description of Mr Aivaliotes), that does not automatically defeat the causation element if other evidence is capable of supporting the inference of the accused's control.
  • The offence under s 73 of the Crimes Act 1914 (Cth), agreeing to receive a benefit on an understanding that the exercise of duty will be affected, can be established without proof that the official acts performed were substantively wrong or unlawful.
  • In circumstantial cases, the Crown at the close of its case need only demonstrate that an inference consistent with guilt is reasonably open on the evidence. It is not required, at that stage, to exclude all inferences inconsistent with guilt.

Legislation and Cases Referenced

Legislation
- Crimes Act 1914 (Cth), ss 29D, 70, 73
- Evidence Act 1995
- Income Tax Assessment Act 1936 (Cth)
- Fringe Benefits Tax Assessment Act 1986 (Cth)
- Jury Act 1977

Cases
- Doney v The Queen [1990] 171 CLR 207
- R v JMR (1991) 57 A Crim R 39
- Director of Public Prosecutions (Cth) v Neamati [2007] NSWSC 746
- R (Cth) v Petroulias (No. 1) [2006] NSWSC 788
- R (Cth) v Petroulias (No. 29) [2007] NSWSC 1005
- Royall v The Queen (1991) 172 CLR 378
- Peters v The Queen (1998) 192 CLR 493
- Wai Yu-Tsang v The Queen [1992] 1 AC 269
- R v Allsop (1976) 64 Cr App R 29
- Commissioner of Taxation v Indooroopilly Children Services (Qld) Pty Limited [2007] FCAFC 16
- Pearce v R (2005) 216 ALR 690
- Wills v Petroulias (2003) 58 NSWLR 598
- R v Petroulias (2005) 62 NSWLR 663
- CTC Resources NL v Commissioner of Taxation (1994) 48 FCR 397