Supreme Court New South Wales Medium Neutral Citation: R v Macdonald; R v Edward Obeid; R v Moses Obeid (No 2) [2019] NSWSC 775 Decision date: 18 June 2019 Jurisdiction: Common Law Before: Fullerton J Decision: Evidence not admitted Catchwords: EVIDENCE — Hearsay — Exceptions — Business records EVIDENCE — Admissibility of admission made with authority Legislation Cited: Evidence Act 1995 (NSW), ss 69, 87(1)(a) Category: Procedural rulings Parties: The Crown Ian Michael Macdonald (Accused) Edward Moses Obeid (Accused) Moses Edward Obeid (Accused) Representation: Counsel: S Callan / R Rodger (Crown) M Cunneen SC / J Davidson (Accused Macdonald) CT Barry QC (Accused Edward Obeid) MJ Neil QC / M Kalyk (Accused Moses Obeid) Solicitors: Solicitor for Public Prosecutions (Crown) HWL Ebsworth Lawyers (Accused Macdonald) M Bowe (Accused Edward Obeid) Murphy's Lawyers Inc (Accused Moses Obeid) File Number(s): 2015/212910; 2015/214251; 2015/212851 Judgment 1. HER HONOUR: The Crown proposes to tender a succession of emails of 9 and 10 November 2010 passing between Mr Sassine, a chartered accountant who acted from time to time on behalf of members of the Obeid family (including on behalf of the Obeid Family Trust 1 and 2); Mr Chalabian, a partner in the legal firm Lands Legal; Mr Grant, a partner and tax consultant with PKF Australia, a firm of chartered accountants and business advisers; and Paul Obeid, Moses Obeid's brother and Edward Obeid's son (pages 5749-5755 and 5765-5766 of the Crown Tender Bundle). 2. The subject matter of the email trail appears to concern advice Mr Chalabian sought from Mr Grant on the tax implications (in particular, the assessment of capital gains tax) on what was, in November 2010, the proposed transfer under a Transfer Deed dated 20 October 2010 of the rights and interests in the Mount Penny Joint Venture with Cascade Coal Pty Ltd (Cascade Coal) (initially held by Buffalo Resources Pty Ltd as trustee for Warbie Pty Ltd (Warbie) as to a 12% interest and Equitexx Pty Limited (Equitexx) as to an 88% interest and then held by South East Investment Group Pty Limited (SEIG), as trustee for the same beneficial interests) to Coal & Minerals Group Pty Limited for $60 million (payable in two cash tranches of $30 million). Equitexx was the trustee for the Obeid Family Trust No 2 of which Paul Obeid, Gerard Obeid, Moses Obeid, Damian Obeid and Edward Obeid Jnr were the declared beneficiaries. Mr Sassine was the sole director and shareholder of Equitexx and Gardner Brook was the sole director and shareholder of Warbie. 3. In the letter of 9 November 2010 formally seeking the tax advice from Mr Grant, annexed to an email of the same date, Mr Chalabian represented that he was "acting on behalf of South East Investment Group". He signed the letter in his capacity as a Solicitor/Director of Lands Legal. As at the date of the letter Mr Chalabian was also the sole director and shareholder of SEIG. He was appointed to that position as and from May 2010. 4. In the letter formally seeking Mr Grant's advice, Mr Chalabian set out, in summary, the various arrangements comprehended by the Joint Venture Agreement. He also represented that in September 2010 Cascade Coal had made an "unsolicited approach to the Beneficiaries" to purchase their interest in the Joint Venture, an offer which Mr Chalabian represented was "consummated by the sale of the Beneficiary's rights in the Joint Venture by Transfer Deed dated 20 October 2010". 5. The letter of instruction to Mr Grant concluded with the following: The intention of Beneficiaries was that its interest in the Joint Venture was a long term investment as this was the ideal manner to maximise its return from its investment by the exploration and exploitation of coal from Mount Penny. 1. In the email which attached the letter of instruction, Mr Chalabian invited Mr Sassine to "confirm the background facts [in the letter] are correct". He also asked Mr Grant whether he required "further detail and input". 2. The following day, 10 November 2010, Mr Grant responded to the email (copying both Mr Chalabian and Mr Sassine) asking for the following additional information: Does the Obeid Family Trust have a history of acquiring assets for long term investment? Can you provide some history please. Have they purchased mining tenements before and what has been the result of that holding. If they don't have a history in mining, why did they choose this investment? What process did they undertake to identify the investment? The investment profile of the trust per the actions of the trustee could be important. 1. Mr Sassine responded to that email an hour later. After providing the commercial history of Equitexx as trustee for the Obeid Family Trust No 2 as an investment company holding equities and interests in "privately owned/run companies and trusts, some of which own investment properties, some own restaurant businesses", he stated that: Neither the trustee nor the trust itself has had any past involvement in mining… as far as the reasons for this investment and the process they took in identifying this investment, if you think this is very important, I will need to have Paul Obeid provide a reply… let me know. 1. Later that morning Paul Obeid sent an email to Mr Sassine in which the following information was provided: Hi Sid, As discussed we bought the property [Cherrydale Park] originally for own private use, as a weekender. It was a marvelous property with an enormous amount of money having been spent by the previous owner on both the extensive garden and the home itself. After we acquired the property we learned of the mining potential and then reverted to discussions with the various mining companies who developed interest in acquiring it from us. We didn't want to just sell the property but we wanted to develop an interest in the mining operations in the hope that it could provide a long term income stream to fund our many projects and lifestyle. 1. Paul Obeid's email was sent to Mr Grant and copied to Mr Chalabian. The email trail, including Paul Obeid's email, was produced under a notice issued by the ACCC to Lands Legal. The notice was not in evidence. 2. It is the content of the email from Paul Obeid in the context of the email trail which precedes it which, in the Crown's submission, is probative of Edward Obeid and Moses Obeid's motive in participating in the conspiracy, namely to secure a "long term income stream" from the exploitation of the information they hoped, or expected, would be acquired from agreeing with Mr Macdonald that he would misconduct himself by providing them with information concerning the coal exploration licence at Mount Penny in breach of his Ministerial duties. 3. Moses Obeid and Edward Obeid object to the tender of the email trail as containing inadmissible hearsay. They also submitted that, even were the emails prima facie admissible as an exception to the hearsay rule, they are not probative of any fact in issue and should be excluded on the grounds of relevance. 4. In the Crown's submission, the email trail qualifies for admission as an exception to the rule against hearsay under s 69 of the Evidence Act 1995 (NSW), as business records of Lands Legal. To the extent the Crown could not avail itself of the exception to the rule against hearsay in s 69, it relied upon the exception to the hearsay rule in s 87(1)(a) on the basis that I would be satisfied that it is reasonably open to find that the statements made by Paul Obeid were made with actual or ostensible authority on behalf of either or both Edward Obeid and/or Moses Obeid and that they constituted admissions (as defined in the Dictionary to the Evidence Act) for that reason. 5. I am not satisfied that the evidence is admissible under either provision. 6. Section 69 of the Evidence Act provides relevantly: 69 Exception: business records (1) This section applies to a document that: (a) either: (i) is or forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business, or (ii) at any time was or formed part of such a record, and (b) contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business. (2) The hearsay rule does not apply to the document (so far as it contains the representation) if the representation was made: (a) by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact, or (b) on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact. 1. In order for the email trail to qualify as business records, I would need to be satisfied, on the balance of probabilities, that the factual preconditions to the admissibility of the emails are met, relevantly, that the email trail forms part of the records belonging to or kept by the legal firm Lands Legal in the course of, or for the purposes of that business (s 69(1)(a)(i)), as distinct from the documents being held by Mr Chalabian or retained in his possession in his capacity as the sole director and shareholder of SEIG, that is, held by him in a private capacity. I would also need to be satisfied that the email trail (in particular the email from Paul Obeid to Mr Sassine), contains a "previous representation made or recorded in the document in the course of, or for the purposes of, the business" (s 69(1)(b)), that is, I would need to be satisfied that the representations by Paul Obeid were either made (in the email) in the course of Mr Chalabian's business as a partner of Lands Legal (that is, in explanation for how the documents came into existence) or recorded (in the email) for the purposes of the business (that is, why the documents came into existence). 2. Although Mr Chalabian initiated the email trail on 9 November 2010 by an email sent to Mr Grant and copied to Mr Sassine from a Lands Legal email account, and although he attached to that email the instruction letter to Mr Grant on Lands Legal letterhead in which he purported to "act for South East Investment Group Pty Limited", it is by no means clear that the probabilities favour a finding that the email from Paul Obeid (and the representations contained within it) sent to Mr Sassine, and which Mr Sassine forwarded to Mr Grant and copied to Mr Chalabian, was kept by Mr Chalabian as a business record of Lands Legal, or that the previous representations of Paul Obeid recorded in that email were made in the course of or for the purposes of Mr Chalabian's business. 3. I am not satisfied that preconditions to the admissibility of the email trail as a set of business records are met. 4. As noted above, the Crown also relies upon the contents of Paul Obeid's email to Mr Sassine of 10 November 2010 as an admission by either or both of Moses Obeid and Edward Obeid, and admissible against them pursuant to s 87(1)(a) of the Evidence Act. That section relevantly provides: Admissions made with authority (1) For the purpose of determining whether a previous representation made by a person is also taken to be an admission by a party, the court is to admit the representation if it is reasonably open to find that: (a) when the representation was made, the person had authority to make statements on behalf of the party in relation to the matter with respect to which the representation was made, or … 1. In order for the Crown to rely upon the exception to the hearsay rule in s 87(1)(a) to support the tender of the email trail, I would need to be satisfied that the previous representations made by Paul Obeid in his email to Mr Sassine are capable of constituting an admission (as defined) by either or both of Edward Obeid and Moses Obeid. "Admission" is defined in the Dictionary to the Evidence Act as: a previous representation that is: (a) made by a person who is or becomes a party to a proceeding (including a defendant in a criminal proceeding), and (b) adverse to the person's interest in the outcome of the proceeding. 1. Self-evidently, both Moses Obeid and Edward Obeid are accused persons in a criminal trial and, that being the case, the first aspect of the definition of an admission is met. 2. The related, and more important question is whether the previous representations (contained in the email from Paul Obeid), even if made with authority, are adverse to the interests of either or both Moses Obeid and Edward Obeid in the outcome of the trial by being probative of their guilt, that is, whether the representations made by Paul Obeid, and attributed to the accused as admissions are capable of affecting, directly or indirectly, an assessment of the probability of the existence of facts in issue in the trial. 3. The Crown submitted that the statements made by Paul Obeid (as one of the beneficiaries of the Obeid Family Trust No 2) constitute an admission in the relevant sense where, upon Moses Obeid and Edward Obeid learning of the potential for the existence of a coal resource under Cherrydale Park, it is open to find they regarded the financial gain generated by a sale of the property to a mining company as less attractive in contrast to a long term income stream by them developing a commercial relationship with a mining company that might exploit the coal resource. 4. I would also need to be satisfied that it is reasonably open to find that when Paul Obeid made the representations relied upon by the Crown as constituting admissions by either or both of the accused in the sense submitted, he had the authority to make those various statements on behalf of either his brother or his father in response to the questions initially raised by Mr Grant in his email to Mr Sassine before he (Mr Grant) rendered the tax advice (set out in [2] above), questions which it is reasonable to assume were then raised by Mr Sassine with Paul Obeid. 5. As to that issue, the Crown relied upon what was said to be conduct of Paul Obeid by the instructions he gave to Mr Rumore, solicitor, from time to time between 23 June 2008 and 2 November 2009 (instructions accepted by Mr Rumore as sourcing from each of Paul Obeid, Moses Obeid and Gerard Obeid) as evidence upon which I could reasonably find that in November 2010, Paul Obeid had the authority to make statements on behalf of his brother, Moses Obeid, and his father when responding to Mr Sassine's question for the purposes of obtaining tax advice from Mr Grant about the circumstances in which Cherrydale Park was purchased in 2007, and the "mining potential" in the property that allowed not simply for the sale of the property to a mining company but for their involvement in "mining operations". 6. I am not persuaded that the actual or ostensible authority each of the Obeid brothers Moses, Paul and Gerard gave to each other to provide ongoing instructions to Mr Rumore to act for them (and their joint family interests) in the acquisition of properties adjoining Cherrydale Park and in the course of negotiations with Cascade Coal in pursuit of the Joint Venture Agreement, as a source of actual or even ostensible authority for Paul Obeid to act on the behalf of either Moses Obeid or Edward Obeid in providing information to an accountant (Mr Sassine) to relay to a tax advisor (Mr Grant) almost two years later. 7. The situation might have been different were the Crown to call Mr Sassine to give evidence as to the circumstances in which, in November 2010, he sought the information from Paul Obeid or, more generally, the nature of his relationship with Moses Obeid and Edward Obeid as other members of the Obeid family at that time. 8. Even were it reasonably open to find that Paul Obeid was providing information to Mr Sassine on behalf of all of the beneficiaries of the Obeid Family Trust No 2 (including Moses Obeid as a named beneficiary and Edward Obeid as a member of a class of beneficiaries) on the assumption that they would, or might, be adversely impacted as taxpayers upon the distribution of a trust income, I am not persuaded that the information Paul Obeid provided to Mr Sassine is capable of constituting an admission (as defined) by either or both Moses Obeid or Edward Obeid. The fact that Paul Obeid told Mr Sassine that Cherrydale Park was thought to have an exploitable underground coal resource (in circumstances where, on the Crown case, there is no evidence that when Cherrydale Park was acquired in September 2007 it was acquired with that knowledge or belief), coupled with the uncontroversial fact that discussions with mining companies were initiated by Moses Obeid in July 2008 and pursued by him after that date in the hope, perhaps even a high expectation, of generating a generous financial return to him and members of his family, is not, of itself, probative of the question whether either or both Moses Obeid and Edward Obeid participated in an unlawful agreement by which confidential information would be communicated to them in breach of Mr Macdonald's Ministerial obligations and duties concerning a coal exploration licence at Mount Penny with the objective of either or both of the accused advancing their financial prospects or positioning the Obeid family interests in some preferential arrangement with mining companies to achieve that objective. 9. The tender of pages 5749-5755 and 5765-5766 of the Crown Tender Bundle is rejected. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 July 2021