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37
Court of Criminal Appeal 17 February 2012

DSJ v R; NS v R

[2012] NSWCCA 9

Also reported as (2012) 215 A Crim R 349
Fraud & dishonesty
EVIDENCE ADMISSIBILITY COINCIDENCE EVIDENCE S 98 EVIDENCE ACT 1995 (CTH) SIGNIFICANT PROBATIVE VALUE WHETHER R V ZHANG WAS CORRECTLY DECIDED

Citation: DSJ v R; NS v R [2012] NSWCCA 9
Court: Court of Criminal Appeal, NSW
Date: 17 February 2012
Judges: Bathurst CJ, Allsop P, Whealy JA, McClellan CJ at CL, McCallum J

Background

Two accused men faced charges of insider trading under the Corporations Act 2001 (Cth). The first appellant (DSJ) faced 10 counts of procuring another person to trade in securities while possessing inside information, contrary to s 1043A(1)(d). The second appellant (NS) faced 10 corresponding counts of intentionally acquiring financial products while in possession of inside information passed to him, contrary to s 1043A(1)(c). The alleged inside information concerned seven listed companies and was said to have been obtained through DSJ's employment at Moody's.

The Crown's case was circumstantial and built around a scheme: DSJ would obtain confidential information through his employment, pass it to NS, and NS would then trade in the relevant securities. Each pair of charges was said to represent one instance of the scheme in action. The Crown intended to lead coincidence evidence, meaning that the evidence going to each count would be tendered as evidence on every other count, on the basis that such repeated similar conduct was too improbable to have occurred by coincidence.

Before trial, both accused applied for the counts to be tried separately and for a ruling that the coincidence evidence was inadmissible. Hall J dismissed those applications. The accused appealed to the Court of Criminal Appeal.

  • Whether the trial judge correctly applied s 98 of the Evidence Act 1995 (NSW) in assessing whether the Crown's coincidence evidence had "significant probative value"
  • Whether, in assessing significant probative value under s 98, a judge must consider alternative explanations or inferences inconsistent with guilt
  • Whether R v Zhang [2005] NSWCCA 437 was correctly decided, and how it relates to the approach taken in DAO v R [2011] NSWCCA 63
  • Whether Hall J erred in refusing to sever the counts, given the interdependence of the severance and coincidence evidence questions

Decision

The Court allowed the appeal, with Whealy JA delivering the principal judgment, and Bathurst CJ, Allsop P, McClellan CJ at CL, and McCallum J each agreeing with his reasons and the proposed orders.

On the central question of how s 98 operates, the Court confirmed that a judge assessing "significant probative value" under s 98(1)(b) is not engaged in fact-finding. The word "could" in the statutory definition of probative value means the court asks whether the evidence has the capacity to rationally affect the assessment of the probability of a fact in issue to a significant extent. The court is not required to assess whether the evidence would in fact achieve that result, nor to evaluate the reliability or credibility of the evidence as a jury would.

Critically, however, the Court held that a judge performing this task must consider whether the evidence reveals a real possibility of an alternative explanation inconsistent with guilt. The availability of such an alternative hypothesis is directly relevant to whether the evidence has significant probative value. This is not the same as finding that an alternative explanation is more probable than the Crown's case, and it does not involve reaching any conclusion on reliability or credibility. Rather, the judge must ask whether a real alternative possibility substantially diminishes the capacity of the coincidence evidence to prove the facts in issue significantly.

Hall J had erred by failing to take account of such alternative possibilities in the limited manner required. The Court noted, for example, that the judge had not adequately turned his mind to whether innocent explanations for communications between the two men, or the breadth of Moody's corporate information, might have diminished the apparent cogency of the coincidence evidence. The matter was remitted to Hall J for reconsideration on the correct approach. The Court expressly acknowledged that, applying the correct test, Hall J might well reach the same conclusions he had originally reached.

Orders Made

  • The appeal was allowed.
  • The order made by Hall J on 23 August 2011 dismissing the applications that the charges in the indictment (other than charges 6 to 9) be tried separately was set aside.
  • The motions were referred back to the trial judge for reconsideration in light of the Court of Criminal Appeal's rulings.

Key Takeaways

  • Under s 98(1)(b) of the Evidence Act 1995 (NSW), a judge assessing whether coincidence evidence has "significant probative value" asks whether the evidence has the capacity to rationally affect the assessment of the probability of a fact in issue to a significant extent. The inquiry turns on possibility, not probability, and does not extend to evaluating the reliability or credibility of the evidence.

  • A judge performing the s 98 assessment must nonetheless consider whether the evidence, viewed together with other evidence the tendering party intends to rely on, discloses a real possibility of an alternative explanation inconsistent with guilt. That consideration is limited: the judge does not conclude that the alternative is more probable, nor does the judge engage in the fact-finding role reserved for the jury.

  • Evidence from the opposing party is not to be taken into account when assessing significant probative value under s 98(1)(b). The section directs attention only to the evidence adduced or to be adduced by the party seeking to tender the coincidence evidence.

  • The Court of Criminal Appeal reconciled the approaches in DAO v R [2011] NSWCCA 63 and R v Zhang [2005] NSWCCA 437, confirming that both are consistent with the principle that the judge's task is to assess the capacity of the evidence, not to predict or substitute for the jury's ultimate finding.

  • Failure to consider alternative inferences in the limited manner required by s 98 constitutes error, even where the coincidence evidence is otherwise strong. Remittal for reconsideration does not predetermine the outcome on the correct approach.

Legislation and Cases Referenced

Legislation:
- Evidence Act 1995 (NSW), ss 55, 56, 97, 98, 101, 135, 137
- Corporations Act 2001 (Cth), ss 1043A(1)(c), (d)
- Criminal Procedure Act 1986 (NSW), s 21
- Evidence Act 1977 (Qld)

Cases:
- R v Shamouil [2006] NSWCCA 112; (2006) 66 NSWLR 228
- R v Zhang [2005] NSWCCA 437; 158 A Crim R 504
- DAO v R [2011] NSWCCA 63; (2011) 278 ALR 765
- DAO v R [2011] HCATrans 298
- Dasreef Pty Ltd v Hawchar [2011] HCA 21
- Pfennig v R (1995) 182 CLR 461
- Hoch v The Queen (1988) 165 CLR 292
- Director of Public Prosecutions (UK) v Boardman [1975] AC 421
- Phillips v The Queen (2006) 225 CLR 303; [2006] HCA 4
- Papakosmas v The Queen (1999) 196 CLR 297
- House v The King (1936) 55 CLR 499
- R v Cook [2004] NSWCCA 52
- R v Mundine [2008] NSWCCA 55
- Samadi and Djait v Regina [2008] NSWCCA 330
- Lodhi v R [2007] NSWCCA 360
- Gardiner v R [2006] NSWCCA 190; (2006) 162 A Crim R 233
- R v Ceissman [2010] NSWCCA 50
- R v Fletcher (2005) 156 A Crim R 308
- R v Lockyer (1996) 89 A Crim R 457
- Markby v The Queen (1978) 140 CLR 108