Citation: R v Thompson; R v Farrugia (No.2) [2019] NSWDC 329
Court: District Court of New South Wales
Date: 25 June 2019
Judge: Smith SC, DCJ
Background
Two accused, both former executives, faced trial on three counts arising from alleged conduct within Hastie Services Pty Ltd, a subsidiary of Hastie Group Limited. The Crown alleged that between November 2008 and June 2011, they conspired with colleagues to falsify the company's financial books in order to improve reported earnings before interest and tax (EBIT) results on an ongoing basis.
At the close of the Crown case, both accused applied for directed verdicts of not guilty on all three counts. A directed verdict is a ruling by the judge, before the matter reaches the jury, that the evidence is legally insufficient to support a conviction.
The judge granted directed verdicts on counts 2 and 3 but declined to do so on count 1, allowing that count to proceed to the jury. These reasons explain the basis for each ruling.
Legal Issues
- Whether, on each count, there was any evidence upon which a jury, properly directed, could convict the accused
- Whether inferences available from the course of conduct of the alleged conspirators were sufficient to support the existence of an ongoing agreement to falsify books, as charged in count 1
- Whether the evidence was sufficient to establish the elements of the offences charged in counts 2 and 3
Decision
The applicable test. The court confirmed the established principle from Doney v The Queen (1990): a directed verdict is only appropriate where there is no evidence upon which a jury, properly directed, could convict. The question is whether any logical basis exists in the evidence to find each element of the offence established. The distinction between a permissible inference and mere speculation can be genuinely difficult, but the court must take the Crown's case at its highest.
Count 1: conspiracy to falsify books (not directed). The court found it was open to a jury to infer an ongoing agreement to make illegitimate adjustments to EBIT results. A series of emails from November 2008 onwards showed repeated requests, across multiple participants, to make entries increasing EBIT without legitimate justification. An April 2009 email, in particular, suggested one accused had a practice of seeking such adjustments, and subsequent emails in July 2009 reinforced the inference of a continuing arrangement. Notwithstanding direct evidence tending against the Crown's case, the court regarded those matters as questions of weight for the jury, not as grounds for a directed verdict at this stage.
Counts 2 and 3: insufficient evidence. The court directed verdicts of not guilty on the remaining counts. In relation to count 3 specifically, the Crown's case required a finding that both accused were involved in concealing a $1.45 million item from auditors. The only evidence connected the concealment to two other witnesses, both of whom said they alone dealt with the auditor. There was no evidence, and no available inference, that the accused had any role in deciding what was disclosed to auditors. The suggestion that the accused "must have discussed" the concealment was, in the court's view, speculation rather than a logical inference from the available evidence.
Orders Made
No orders were made in this decision.
Key Takeaways
- A directed verdict requires more than a weak Crown case; the judge must be satisfied there is no logical basis in the evidence from which a jury could find each element of the offence established, taking the Crown's case at its highest.
- Where the Crown relies on a course of conduct to establish an ongoing conspiracy, the timing, subject matter, and context of each act will be examined to determine whether the inference of a common continuing agreement is logically available.
- Evidence that other individuals, not the accused, made decisions about what was disclosed to auditors, and their direct testimony to that effect, was sufficient to create an evidentiary gap the Crown could not bridge through assertion alone.
- The District Court confirmed that the question of what evidence to accept, and what weight to give it, is ordinarily for the jury; the directed verdict jurisdiction is a narrow one reserved for cases of genuine evidential insufficiency.
- Under s 11.5 of the Criminal Code (Cth), a conspiracy charge requires proof that the accused and at least one other person entered into an agreement, that both intended the offence would be committed pursuant to that agreement, and that a party to the agreement committed an overt act in furtherance of it.
Legislation and Cases Referenced
Legislation
- Corporations Act 2001 (Cth), s 1307(1)
- Criminal Code Act 1995 (Cth), ss 5.6(1), 11.5(1), 11.5(2)
Cases
- Doney v The Queen (1990) 171 CLR 207
- Commonwealth Director of Public Prosecutions v Poniatowska (2011) 244 CLR 408
- Minister for Immigration & Citizenship v SZMDS (2010) 240 CLR 611
- R v Barbouttis (1995) 37 NSWLR 256