Citation: R v Curtis [2016] NSWSC 660
Court: Supreme Court of New South Wales
Date: 26 May 2016
Judge: McCallum J
Background
The accused stood charged with conspiracy to commit insider trading, contrary to the Corporations Act 2001 (Cth). The Crown alleged that he and a co-conspirator, an equities dealer employed by a large fund manager, agreed to "front-run" the fund manager's trades. Under the alleged scheme, the co-conspirator would identify trading opportunities based on his inside knowledge of the fund manager's intended trades and pass instructions to the accused, who would execute trades through a company he controlled.
The co-conspirator had pleaded guilty to his own insider trading and to tipping offences connected to the alleged scheme. He gave evidence for the Crown under a cooperation undertaking and with the benefit of an indemnity, and his credit was substantially attacked in cross-examination. The Crown's documentary evidence included records of 45 occasions on which the accused's trading closely matched the fund manager's trading in the same stock, on or about the same day, in the same direction.
Before the jury retired, the accused sought a ruling on whether the Crown could use those 45 instances of matching trades as coincidence evidence, specifically to prove by improbability reasoning that he had committed particular acts and held particular states of mind.
Legal Issues
- Whether the 45 instances of matching trades were admissible under the coincidence rule in s 98 of the Evidence Act 1995 (NSW) to prove that the accused committed the acts and held the states of mind identified in the Crown's coincidence notice.
- Whether, even if the evidence was capable of sustaining those inferences, its use for a coincidence purpose should be excluded under s 101 of the Evidence Act because its probative value did not substantially outweigh its prejudicial effect on the accused.
- How the coincidence evidence interacted with the evidence already before the jury for another purpose, namely as proof of overt acts pursuant to the alleged unlawful agreement.
Decision
McCallum J observed that the 45 trades were, on any view, already before the jury for a separate and accepted purpose: proving overt acts pursuant to the alleged conspiracy. The accused did not contest admissibility of that evidence for that purpose. The question was whether the Crown could also address the jury using improbability reasoning, inviting them to infer from the striking similarities across the 45 occasions that the accused had entered into the unlawful agreement itself.
Her Honour accepted that the similarities were striking. On each of the 45 occasions, the accused's company and the fund manager traded in the same stock, on or about the same day, at about the same time, and in the same direction. In many instances the accused opened his position before the fund manager began trading and closed it before the fund manager finished. The pattern was capable, in principle, of supporting the inferences sought by the Crown.
However, McCallum J found that using this evidence for a coincidence purpose would create a real risk of juror confusion. The primary task for the jury was to determine whether the Crown had proved beyond reasonable doubt that an unlawful agreement was formed before the trading began, as described by the co-conspirator. Allowing the Crown to separately address improbability reasoning as an additional route to the same conclusion risked undermining the jury's focus on that central question. Her Honour was not persuaded that the probative value of the improbability reasoning substantially outweighed that prejudicial effect, as required by s 101.
The ruling was carefully confined. The Crown remained entitled to rely on the 45 trades as part of its circumstantial case when addressing the jury on the existence of the agreement. The ruling operated only to prevent the Crown from additionally invoking improbability reasoning, under the coincidence rule, as a separate basis for inferring that the unlawful agreement described in the indictment existed.
Orders Made
• Evidence of the 45 trades cannot be used to prove the unlawful agreement alleged by the Crown by improbability reasoning
• The Crown is constrained from addressing the jury on the basis of improbability reasoning by reference to the 45 trades
• The Crown may address on the basis that the evidence is part of the circumstantial case to support the existence of the unlawful agreement
Key Takeaways
- Under s 101 of the Evidence Act 1995 (NSW), coincidence evidence is only admissible if its probative value substantially outweighs its prejudicial effect on the accused; that threshold was not met on the facts of this case.
- Where evidence is already admissible for a separate, non-coincidence purpose, its additional use for improbability reasoning under the coincidence rule requires independent justification and is not automatic.
- A ruling excluding coincidence evidence does not necessarily prevent the same evidence from being used as part of a broader circumstantial case; the two modes of reasoning are conceptually distinct.
- The Supreme Court identified a specific form of prejudice arising in conspiracy cases: permitting improbability reasoning alongside other permitted uses of the same evidence risks confusing the jury about what it must find, and how, to establish the anterior unlawful agreement beyond reasonable doubt.
- Section 192A of the Evidence Act permits pre-trial or mid-trial rulings on the admissibility or use of proposed evidence, and such rulings may appropriately be deferred where the evidence is being admitted in any event for another purpose.
Legislation and Cases Referenced
Legislation:
- Evidence Act 1995 (NSW), ss 98, 101, 192A
- Corporations Act 2001 (Cth), ss 1043A(1)(d), 1311(1)
- Crimes Act 1914 (Cth), s 21E
Cases:
No cases were cited in the portions of the judgment provided.