Citation: Isbester v R [2013] NSWCCA 230
Court: NSW Court of Criminal Appeal
Date: 14 October 2013
Judges: Hoeben CJ at CL, Latham J, Bellew J
Background
The appellant acted as a cash courier for a tax evasion scheme orchestrated by an accountant based in Vanuatu. The scheme involved a marina company sending funds overseas through fictitious invoices and sham loan arrangements, with the money intended to be returned to the company's directors as undisclosed dividends. The appellant received those funds into his business accounts and then physically delivered cash payments to the directors, in amounts typically between $10,000 and $30,000, at covert locations including parks and street-side meetings.
The directors lodged tax returns for the 2005 financial year that omitted the deemed dividends from their taxable income. On 6 April 2006, the Australian Tax Office issued a Notice of Assessment on that incomplete basis, crystallising the tax that had been evaded. The prosecution case was that cash the appellant delivered to the directors after that date represented proceeds of crime, specifically the tax revenue lost to the Commonwealth through the directors' dishonest conduct.
The appellant was tried before Tupman DCJ and a jury in the District Court over 21 days and was convicted of recklessly dealing with money that was the proceeds of crime, contrary to s 400.4(2) of the Criminal Code Act 1995 (Cth). He appealed to the Court of Criminal Appeal on two grounds.
Legal Issues
- Whether the jury's guilty verdict was unreasonable or unsupported by the evidence, specifically whether the cash delivered by the appellant could properly be characterised as "proceeds of crime" within the meaning of the Criminal Code Act 1995 (Cth).
- Whether the trial judge's directions to the jury on the elements of the offence, including how to calculate the relevant "proceeds of crime" amount, were legally adequate.
Decision
Ground 1: Unreasonable verdict
The central question on this ground was whether the cash the appellant delivered to the directors qualified as "proceeds of crime." The appellant argued that the cash could not be so characterised because it was the directors' own money, returned to them from the overseas scheme, rather than money derived from any criminal offence. The Court rejected this argument.
The Court held that the crime in question was the directors obtaining a financial advantage by deception from the Commonwealth, or alternatively conspiring to cause the Commonwealth a loss, by submitting tax returns that omitted the deemed dividends. The tax evaded represented the financial advantage gained. The cash delivered after 6 April 2006 was derived from that criminal conduct because it constituted the deemed dividends upon which tax had been dishonestly avoided. The jury was entitled to conclude that more than $100,000 of the cash delivered after that date was proceeds of crime, and that the appellant was at least reckless as to that fact, given the covert manner of delivery, the use of coded language, and the cash-only, off-system nature of the payments.
Ground 2: Inadequate jury directions
The appellant challenged the directions on two bases: first, that the directions were infected by the same error as Ground 1 regarding the characterisation of proceeds; and second, that there was an ambiguity in a written direction about how to calculate the $100,000 threshold. As to the first, the Court's rejection of Ground 1 disposed of this challenge. As to the second, the Court acknowledged a minor ambiguity in one written direction but noted that the correct mathematical process (applying a 48.5 percent tax rate to the dividends received) had been clearly stated three times in the directions. No objection had been raised at trial. The jury could not have been misled, and no substantial miscarriage of justice arose.
Orders Made
- Leave to appeal granted.
- Appeal dismissed.
Key Takeaways
- Under s 400.4(2) of the Criminal Code Act 1995 (Cth), cash can constitute "proceeds of crime" where it is derived from a criminal offence, even if it represents funds originally belonging to the recipient, provided the relevant crime is the dishonest obtaining of a financial advantage from the Commonwealth through tax evasion.
- The Court of Criminal Appeal confirmed that the critical date for establishing "proceeds of crime" in this context was the date the ATO issued its Notice of Assessment on the false returns, not any earlier point in the scheme.
- A courier who physically delivers cash need not be a participant in the underlying fraud to be convicted of recklessly dealing in proceeds of crime; recklessness as to the nature of the funds is sufficient.
- No error was established in the trial judge's directions where the correct legal test was stated clearly and repeatedly, even if a minor ambiguity appeared in one written passage, particularly where no objection was taken at trial.
- Circumstantial features such as covert delivery locations, off-system cash payments, and coded communications were relevant to the jury's assessment of whether the appellant was reckless as to the proceeds-of-crime character of the funds.
Legislation and Cases Referenced
Legislation
- Criminal Code Act 1995 (Cth), s 400.4(2)
- Income Tax Assessment Act 1936 (Cth)
- Taxation Administration Act 1953 (Cth)
Cases
- DPP v Jeffery (1992) 58 A Crim R 310
- Saffron v DPP (1989) 96 FLR 196