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Court of Criminal Appeal 30 June 2010

Barnes v R

[2010] NSWCCA 136

Fraud & dishonesty
CRIMINAL LAW CONVICTION APPEAL CRIMINAL LAW EVIDENCE

Citation: Barnes v R [2010] NSWCCA 136
Court: Court of Criminal Appeal, New South Wales
Date: 30 June 2010
Judge(s): Macfarlan JA; Hidden J; Johnson J

Background

The appellant was the managing director of a mining company listed on the Australian Stock Exchange (ASX). He was convicted in the District Court on two counts under s 1309(1) of the Corporations Act 2001 (Cth), which makes it an offence for a corporate officer to knowingly make available, or permit the making available of, information to a financial market operator where that information is false or misleading in a material particular.

The convictions related to two documents lodged with the ASX: the company's Half Yearly Report for the period ended 31 December 2003, and its Annual Report for the financial year ended 30 June 2004. Both documents contained statements about share subscription proceeds and loan arrangements that the prosecution alleged were materially false. The appellant was sentenced to nine months' imprisonment, with release on recognizance after six months.

On appeal, the appellant challenged the convictions on multiple grounds, including that the evidence was insufficient to establish his knowledge of the relevant contents of the reports, and that a purported directors' minute had been improperly admitted into evidence.

  • Whether there was sufficient evidence that the appellant knew the allegedly false or misleading statements had been included in the reports provided to the ASX
  • Whether there was sufficient evidence of the falsity of those statements
  • Whether there was sufficient evidence that the appellant knew the statements to be false
  • Whether a purported directors' minute dated 12 February 2004 was wrongly admitted into evidence, and if so, whether that error affected the verdicts

Decision

The Court of Criminal Appeal found that the evidence adduced at trial was not capable of establishing the knowledge element required for conviction under s 1309(1). The prosecution needed to prove not only that the reports contained false or misleading statements, but that the appellant, as the relevant officer, knew of the specific content and knew it to be false or misleading. The Court found the trial evidence inadequate to support those elements.

On the evidentiary ground, the Court granted leave to appeal and found that the directors' minute of 12 February 2004 had been admitted on a confined basis, namely as evidence that certain letters existed, rather than as proof of the truth of the assertions it contained. A reference in the minute to the tabling of the Half Yearly Financial Statements at the meeting was not admissible even for that limited non-hearsay purpose, because it only had relevance if accepted as proof of the fact that those statements were actually tabled.

The Court identified a real chance that the jury used that reference in the minute to conclude that the appellant was aware of the contents of the Half Yearly Report, a use that was inconsistent with the restricted basis on which the minute had been admitted. At minimum, the trial judge should have directed the jury clearly about the limited use it could make of the document, or should have excised the reference before the minute was tendered.

The Court further found that the contamination from the first count carried through to the second, because the jury may have reasoned from its (impermissible) conclusions about the Half Yearly Report to inferences about the Annual Report. As the evidence provided no proper foundation for conviction on either count, and no circumstances warranted a retrial, the Court directed verdicts of acquittal on both counts.

Orders Made

  • Leave to appeal granted in respect of the wrongful admission of the purported directors' minute of 12 February 2004
  • Appeal allowed and convictions quashed on both counts
  • Verdicts and judgments of acquittal entered on both counts

Key Takeaways

  • A conviction under s 1309(1) of the Corporations Act 2001 (Cth) requires proof that the officer knew the specific false or misleading statements had been included in the relevant document; general involvement in a company's affairs is not sufficient to establish that knowledge element.
  • Where a document such as a directors' minute is admitted into evidence for a non-hearsay purpose only, any part of that document that is irrelevant unless treated as proof of the truth of its contents should be excised before the document is tendered, or the jury should receive a firm and specific direction about the limits of its use.
  • A real chance of jury misuse of improperly admitted evidence is sufficient to warrant quashing a conviction, even if the evidence was nominally admitted for a permissible purpose.
  • Evidentiary contamination on one count can infect a related count where the jury's reasoning on the first count was likely to have influenced its conclusions on the second.
  • The Court of Criminal Appeal directed acquittals rather than a retrial because the trial evidence itself provided no proper foundation for conviction on either charge.

Legislation and Cases Referenced

Legislation
- Corporations Act 2001 (Cth), s 1309(1)
- Criminal Appeal Act 1912 (NSW), s 5(1)

Cases
- R v R (1989) 18 NSWLR 74
- The Commissioner of Taxes (South Australia) v The Executor Trustee Agency Co of South Australia Ltd [1938] HCA 69; (1938) 63 CLR 108
- The State of South Australia v The Commonwealth of Australia [1992] HCA 7; (1991-1992) 174 CLR 235