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7
Court of Criminal Appeal 1 July 2014

Pratten v R

[2014] NSWCCA 117

Fraud & dishonesty
CRIMINAL LAW APPEAL AGAINST CONVICTION

Citation: Pratten v R [2014] NSWCCA 117
Court: NSW Court of Criminal Appeal
Date: 1 July 2014
Judges: Meagher JA; Fullerton J; Hamill J

Background

The appellant was convicted by a jury on seven counts of dishonestly obtaining a financial advantage by deception, contrary to s 134.2(1) of the Criminal Code Act 1995 (Cth). The counts related to personal income tax returns lodged for each financial year from 2003 to 2009. The Crown alleged that the appellant knowingly understated his assessable income across those years by a combined total of approximately $5 million.

The understated income arose from payments made into the appellant's personal bank account, or directed by him to third parties, from trust accounts controlled by two Vanuatu accounting firms. These amounts were described at trial as the "disputed payments," with the central dispute being whether they constituted assessable income that the appellant knew he was required to declare.

The appeal challenged the convictions on multiple grounds. The Crown also cross-appealed against the sentences imposed. Central to the conviction appeal was the question of whether the jury had been adequately directed about the need for unanimity as to which specific payments, within each count, they found to be undisclosed income.

  • Whether the trial judge erred by failing to direct the jury that it must be unanimous as to which specific payments constituted the undisclosed income giving rise to each count's financial advantage
  • Whether lodging a tax return that understates taxable income is capable of constituting the "obtaining" of a financial advantage within s 134.2(1) of the Criminal Code Act 1995 (Cth)
  • Whether the admission into evidence of amended notices of assessment caused a miscarriage of justice
  • Whether the trial judge erred by not directing the jury that it had to be satisfied beyond reasonable doubt that no deductible expenses were associated with the undisclosed income amounts
  • Whether the verdicts were unreasonable or unsupported by the evidence
  • Whether a miscarriage of justice resulted from the Crown's failure to call an auditor who had prepared financial statements tendered by the defence

Decision

The critical issue on appeal concerned the absence of a unanimity direction relating to the specific payments underpinning each count. Each count covered a full financial year and encompassed multiple discrete "disputed payments." The Court found that the jury was never directed that, in order to convict on any count, it had to be unanimous as to which particular payment or payments within that year constituted income knowingly not disclosed. Given that some jurors may have fastened on different payments from others when reaching their guilty verdicts, this created a real risk that the verdicts were not the product of true unanimity on the elements of each offence.

The Court noted that neither the Crown nor the defence had requested such a direction at trial. However, consistent with principles established in cases such as Mraz v The Queen, that omission did not relieve the trial judge of the obligation to direct the jury correctly on the elements of the offence. Significantly, at the sentencing hearing, senior Crown counsel had conceded that the Crown could not assert the jury necessarily found all disputed payments were income, acknowledging the verdict rested on "some or all" of those amounts. That concession reinforced the conclusion that the jury may not have been unanimous as to the specific factual foundation for conviction.

On other grounds, the Court rejected the argument that a tax understatement could not constitute "obtaining" a financial advantage. The Court also dismissed grounds relating to the admission of amended assessments, the absence of a deductibility direction, and the Crown's failure to call the auditor. None of those grounds independently established error or miscarriage. The conviction appeal ultimately succeeded on the unanimity direction ground alone.

Orders Made

  • Appeal against conviction allowed
  • The appellant's convictions quashed
  • New trial of the appellant ordered

Key Takeaways

  • Where a single count of obtaining a financial advantage by deception encompasses multiple discrete alleged acts (here, separate payments across a financial year), a jury must be directed that it must be unanimous as to which particular act or acts satisfy the elements of the offence. Absent such a direction, there is a risk that individual jurors convicted on different factual bases.
  • A conviction cannot stand where the jury was never told that unanimity was required as to the specific factual foundation underlying each count, even where neither party requested such a direction at trial.
  • The Court of Criminal Appeal confirmed that lodging a tax return which understates assessable income is, in principle, capable of constituting the "obtaining" of a financial advantage by deception under s 134.2(1) of the Criminal Code Act 1995 (Cth). This ground of appeal was dismissed.
  • Failure by the Crown to call a witness does not automatically give rise to a miscarriage of justice. The appellant must demonstrate that the uncalled witness could have given relevant and admissible evidence significant to the central issues at trial. Here, an auditor who had expressed opinions on financial statements tendered by the defence was found not to meet that threshold.
  • Concessions made by the Crown at sentencing proceedings, to the effect that the jury did not necessarily find all disputed amounts were income, were treated by the Court as confirmatory of the fundamental deficiency in the jury directions at trial.

Legislation and Cases Referenced

Legislation
- Criminal Code Act 1995 (Cth), s 134.2
- Criminal Appeal Act 1912 (NSW), ss 5(1), 6(1)
- Evidence Act 1995 (NSW), ss 55(1), 136, 190
- Income Tax Assessment Act 1936 (Cth), s 204(1)
- Taxation Administration Act 1953 (Cth), Schedule 1, s 255-5

Cases
- Mraz v The Queen (No 1) [1955] HCA 59; 93 CLR 493
- BCM v The Queen [2013] HCA 48; 88 ALJR 101
- Handlen v The Queen [2011] HCA 51; 245 CLR 282
- Baiada Poultry Pty Ltd v The Queen [2012] HCA 14; 246 CLR 92
- Gassy v The Queen [2008] HCA 18; 236 CLR 293
- AK v Western Australia [2008] HCA 8; 232 CLR 438
- Cesan v The Queen [2008] HCA 52; 236 CLR 358
- M v The Queen [1994] HCA 63; 181 CLR 487
- MFA v The Queen [2002] HCA 53; 213 CLR 606
- R v Apostilides [1984] HCA 38; 154 CLR 363
- Cheung v The Queen [2001] HCA 67; 209 CLR 1
- KBT v The Queen [1997] HCA 54; 191 CLR 417
- Chapman v R [2013] NSWCCA 91
- Hannes v Director of Public Prosecutions (Cth) (No 2) [2006] NSWCCA 373
- Pratten v Commonwealth Director of Public Prosecutions [2013] NSWSC 594
- R v Beach (1994) 75 A Crim R 447
- Cramp v The Queen (1999) 110 A Crim R 198
- R v Clarke and Johnstone (1986) 21 A Crim R 135
- R v Brown (1984) 79 Cr App R 115
- Fermanis v The State of Western Australia [2007] WASCA 84; 33 WAR 434