R v Macdonald; R v Edward Obeid; R v Moses Obeid (No 3) [2019] NSWSC 898

Supreme Court New South Wales

Medium Neutral Citation: R v Macdonald; R v Edward Obeid; R v Moses Obeid (No 3) [2019] NSWSC 898 Decision date: 18 June 2019 Jurisdiction: Common Law Before: Fullerton J Decision: Evidence admitted – see [16]-[18] and [35] Catchwords: EVIDENCE — Documentary evidence — Whether draft documents pertaining to acquisition of property admissible EVIDENCE — Witness evidence — Whether inference available as to provenance and purpose of water licence enquiry Legislation Cited: Evidence Act 1995 (NSW) 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: Objection is taken by Moses Obeid (principally on the grounds of relevance) to a large number of draft documents in the Crown tender bundle which relate to the purchase of Cherrydale Park by Locaway Pty Ltd (Locaway) by a contract dated 27 September 2007 under vendor finance from Mr John Cherry through the Cherry Superannuation Fund. 2. As at the date of contract (and as at 15 November 2007, the date of settlement) Locaway was trustee of the Moona Plains Family Trust (MPF Trust) under a trust deed dated 25 October 1994. The appointee of the MPF trust was Edward Obeid. The primary beneficiaries under the trust were each of Edward Obeid's sons with the discretionary beneficiaries also his sons, daughters and his wife, together with other beneficiaries. Of the two issued shares in Locaway as the trustee company, one was held by Paul Obeid and the other by the Obeid Corporation Pty Ltd as trustee for the Obeid Family Trust No 1. 3. In the Crown's submission, after settlement of the conveyance of Cherrydale Park, the various attempts to change the legal ownership of Cherrydale Park, initially in October 2008 and then again in February and March 2009, by Moses Obeid and Edward Obeid (through Mr Cordato, the solicitor who acted on the initial purchase of the property), were with the objective of distancing the Obeid family from ownership of the property. 4. The Crown submitted that those attempts should be seen in the context of the fact that by October 2008 Cherrydale Park was within the Mount Penny Coal Release Area, the subject of the EOI process, and also by the fact that, on the Crown case, Cherrydale Park was included in that process as a result of misconduct by Mr Macdonald, particularised as the third act of misconduct committed by him in furtherance of the conspiracy (see alleged acts of misconduct numbered three and four in the Crown's letter of 1 May 2019 providing further and better particulars of the conspiracy). 5. In the Crown's submission, the attempts to distance the Obeid family from ownership of Cherrydale Park in October 2008 (within the period framing the conspiracy) and in 2009 (after the conspiracy had been executed) are also to be viewed against the circumstances in which Donola, a rural property adjoining Cherrydale Park, was purchased in October 2008 by Geble Pty Ltd (Geble). Geble was a shelf company acquired by Mr Rumore, solicitor, for that purpose and on the instructions of Moses Obeid (and/or his brothers) with Geble as trustee for the Elbeg Unit Trust. Mr Rumore was the sole director of Geble on settlement. Mr Campo became the sole director and shareholder of that company on 17 November 2008. The Elbeg Unit Trust was purportedly settled on 6 August 2008 by a Deed of Settlement executed by Geble as trustee. The unit holders of the trust included United Pastoral Group (UPG) as trustee for the MPF Trust (see following) and Challenge Property Investment Group Pty Ltd as Trustee for the Triulcio Family Trust. Messrs Rocco and Ross Triulcio were associated with Edward Obeid and Moses Obeid. 6. In the Crown's submission, the attempts to change the legal ownership of Cherrydale Park are also to be viewed in the context of the agreement pursuant to which Coggan Creek (another property adjoining Cherrydale Park) was to be purchased by Justin Kennedy Lewis Pty Ltd pursuant to a sales agreement with the vendor dated 7 November 2008. Mr Lewis is a friend and associate of Moses Obeid. 7. It forms no part of the Crown case that Mr Lewis' purchase of Coggan Creek through Justin Kennedy Lewis Pty Ltd as trustee for the Justin Kennedy Lewis Family Trust was financed by Edward Obeid or Moses Obeid or anyone associated with them. It is also no part of the Crown case that the settlement monies for the purchase of Donola were provided by Moses Obeid or Edward Obeid or entities associated with them. It is the Crown case, however, that with the registered proprietors of the properties adjoining Cherrydale Park being friends or associates of the Obeid family, a unified approach by them as the landowners would ultimately lead to their mutual advantage under the terms of the Landowners Agreement with a mining company (as to which see [13] below) pursuant to which a very significant dividend would devolve to Obeid family interests through Locaway (or UPG) as trustee for the MPF Trust and through the 50% interest held by UPG as a unit holder in the Elbeg Unit Trust. 8. I am not of the view that there is any unfair prejudice to any of the accused which would necessitate the rejection of the tender of the evidence relating to the acquisition of the adjoining properties, Coggan Creek and Donola, in the exercise of discretion. I am satisfied that any risk that the jury might approach this body of evidence as if there is some uncharged conspiracy between Moses Obeid (and other members of his family) and Mr Lewis and/or Messrs Triulcio can be cured by appropriate directions. That said, as I noted in the course of argument, the Crown will doubtless be alert to ensure that no inadmissible hearsay is led from Mr Rumore (or from any other witness or the tender of any correspondence) in the process of proving the negotiations that preceded the purchase of Coggan Creek and Donola, and the various transactions that resulted in the ultimate settlement of those purchases. 9. The various attempts to change the legal ownership of Cherrydale Park between October 2008 and March 2009 (on the Crown case motivated by Moses Obeid and Edward Obeid's desire to conceal the legal ownership of the property, irrespective of whether that was itself an act in furtherance of the conspiracy - as to which to date no submissions have been advanced) included the proposed appointment of UPG as the new trustee company for the MPF Trust. The shares in UPG were wholly owned by Mr Andrew Kaidbay who was also the sole director of the company. Mr Kaidbay is also associated with Edward Obeid and Moses Obeid. 10. In order for the appointment of UPG as trustee to be affected, an assignment of the first registered mortgage to the Cherry Superannuation Fund from Locaway was necessary. This required the consent of Mr Cherry as the mortgagee. On 6 March 2009, after Mr Cherry was informed by Mr Cordato that the assignment was to "protect the privacy of our clients" and that UPG "was a nominee company which had been incorporated for that purpose", a Deed of Consent, executed by Paul Obeid and Damian Obeid for Locaway, Mr Kaidbay for UPG, and personally by Moses Obeid and his brothers as beneficiaries under the MPF Trust, was forwarded to Mr Cherry's solicitors, together with an Application to Record New Registered Proprietor signed by Mr Kaidbay. On 6 March 2009, the lawyers for Mr Cherry advised that he was not prepared to agree to the change of trustee. The Deed of Consent was accordingly unexecuted and ineffective. 11. Notwithstanding that state of affairs, Locaway and UPG continued to act as if the transfer of legal ownership of Cherrydale Park had been legally affected. This is said by the Crown to be evidenced in a number of Deeds, many of which are in draft. Principal among them is a Call Option Deed dated 5 January 2009 between Locaway and UPG, [1] which, on the Crown case, was designed to ensure that the anticipated and significant profit on the sale of Cherrydale Park to Cascade under the Letter of Agreement between Cascade Coal, UPG, Geble and Justin Kennedy Lewis Pty Ltd dated 5 June 2009 which would have seen Cherrydale Park transferred to Cascade Coal at a multiple of four times its value ($4.25 million to $17 million) would devolve back to Locaway since, if the sale of Cherrydale Park had come to pass under the Call Option Deed [2] there would have been an obligation on UPG to pay to Locaway the purchase price, as defined in the Call Option Deed, of $5 million plus 50% of any amount over $5 million (which was $12 million) which UPG was able to sell Cherrydale Park for within a period of 10 years after the date it exercises the Call Option, being $11 million in total. [3] 12. In the Crown's submission these various documents, apparently drawn in anticipation of Mr Cherry's consent as mortgagee to the transfer of legal ownership of Cherrydale Park to UPG, are what underpinned Mr Rumore's instructions from Moses Obeid and/or his brothers to draft two agreements (detailed below), both of which name UPG as the owner of Cherrydale Park. In the Crown's submission, this reinforces the inference that there was a strong desire on behalf of Moses Obeid and Edward Obeid to ensure that the anticipated benefits that would flow to them from their coordinated use of the confidential information Mr Macdonald had provided to them would not be lost, and that their ownership and control over the properties within the Mount Penny Coal Release Area was not exposed, thereby ensuring that their participation in the conspiracy which generated that financial return would be concealed. 13. The first of the two agreements drafted by Mr Rumore was a Landowners Deed, by which the owners of Cherrydale Park (stated to be UPG), Donola (Geble Pty Ltd) and Coggan Creek (Justin Kennedy Lewis Pty Ltd), agree to sell to the mining company (defined as the entity which is granted a coal exploration licence (over land) incorporating the properties), at a multiple of at least four times the value of each property, with one representative of the Land Alliance Group to negotiate with the mining company for the sale of the properties. The Landowners Deed passed through various drafts. In the first draft, dated November 2008, [4] Locaway was named as a party as the registered proprietor of Cherrydale Park; in the second draft, dated 8 December 2008 and exhibited as an amended version of the first draft with tracked changes, UPG was named as a party in the same capacity. [5] In the final, partially executed version of the Deed, dated 15 December 2008 (but on the Crown case likely to have been partially executed on or about 10 March 2009) UPG was named as Trustee. [6] 14. In the course of the preparation of the draft deeds queries were raised by Mr Rumore as the name of the so called "Obeid entity" entitled to that payment [7] with the final draft (albeit unsigned) in the name of UPG as trustee for "the # Trust". [8] 15. The second agreement drafted by Mr Rumore by about December 2008 was a Profit Sharing Deed. [9] The Crown's evidence did not include a fully executed version of that agreement. [10] Under that Deed, upon the sale of Coggan Creek to Monaro Coal (in the event that company as a wholly owned subsidiary of Monaro Mining was granted the coal exploration licence), Justin Kennedy Lewis Pty Ltd agreed to pay UPG 30% of the profit generated by the sale as a fee. 16. The Crown proposes to tender these documents (including those in draft and unexecuted) to prove the steps that were taken to ensure the landowners (identified in Mr Rumore's file note of 22 September 2009 as the "Obeid", "Justin Lewis" and "Triulucio" (sic) interests) undertook a united negotiation with a mining company for maximum financial return, with the Profit Sharing Deed a source of evidence as to the circumstances in which Justin Kennedy Lewis came to be involved in the purchase of Coggan Creek and the benefits the Obeid family interests would acquire by his involvement. 17. I am satisfied that the various steps taken by solicitors acting on behalf of Edward Obeid, or on behalf of Locaway as the purchaser of Cherrydale Park, which were directed to changing the legal ownership of Cherrydale Park, initially in October 2008 and reignited in the early part of 2009 are, in the context of all of the evidence in the Crown case, admissible in proof of the existence of the conspiracy, including its scope and object. 18. I also regard it as probative of the fact and degree of the control Edward Obeid and, through him Moses Obeid, exercised concerning the registered proprietorship of Cherrydale Park. I also regard the various related steps then taken by Moses Obeid to ensure that his friends and associates acquired property adjacent to Cherrydale Park in order to maximise the interest in mining rights they expected would be generated from the exploration of the Mount Penny Coal Release Area and the increased value of the landholdings that comprise that coal release area to a mining company, as evidence available to the Crown to prove the existence of the conspiracy, its scope and object. 19. I am also satisfied of the Crown's submission that the steps taken to change the ownership of Cherrydale Park were taken at the insistence of, or with the encouragement, of both Edward Obeid and Moses Obeid as evidence of their participation in the conspiracy, and that those steps were coordinate with the acquisition of the adjacent properties by their friends and associates, as also relevant on the same basis. 20. I accept that there may be other rational explanations, perhaps even sound commercial motivations for the various steps that were taken or proposed by Mr Rumore to acquire Coggan Creek and Donola on instructions from his clients, and the various steps taken by Mr Cordato on behalf of Locaway, to change the legal ownership of Cherrydale Park, the inference being that steps were taken on instructions from Edward Obeid. It will ultimately be a question for the jury as to whether they draw the inference for which the Crown contends in the light of all of the evidence to be adduced at trial. 21. It is both useful and appropriate in the context of that ruling to emphasise what the Crown contends were the motivations behind the acquisition of Cherrydale Park in September 2007 and other features of the purchase of the property at that time which are said by the Crown to be relevant to proof of its case against each of the accused. 22. At the outset, I note that it is no part of the Crown case that the acquisition of Cherrydale Park was an act in furtherance of the conspiracy, or an act evidencing the participation of Edward Obeid or Moses Obeid in the conspiracy that is alleged. As Ms Callan expressed it, the Crown's position is that while the reason the property was acquired "is neutral", within a relatively short period of time Edward Obeid and Moses Obeid (likely together with other members of the Obeid family) became aware of the prospect of significant underground coal reserves at Cherrydale Park and the successive acts of misconduct alleged against Mr Macdonald (acts Moses Obeid and Edward Obeid agreed he would commit) are to be interpreted in the context of that state of awareness or belief. 23. Quite apart from what might have initially motivated Edward Obeid to enter into negotiations for the purchase of Cherrydale Park on behalf of Locaway, it is the Crown case that at the time the property was acquired in November 2007 Mr Macdonald was aware of that fact, and very likely told of that fact by Edward Obeid. The Crown seeks to prove the fact of Mr Macdonald's knowledge of the ownership of Cherrydale Park as at September 2007 for two related purposes. 24. First, as the factual foundation for proving that he lied to Mr Gibson (Mr Macdonald's Chief of Staff) when, in or around October/November 2009, at a time when there was media speculation that Edward Obeid had an interest in property in the Mount Penny area, he was told by Mr Macdonald that: No [Edward Obeid] doesn't own a property [at Mount Penny]. [Edward Obeid's] property is on the other side of the ridge, away from Mount Penny. 1. It is the Crown case that can be shown to be a lie deliberately told and with a consciousness of guilt by reason of the fact that (as the Crown will seek to prove) Mr Macdonald knew from as early as September 2007 that Cherrydale Park had been purchased by Edward Obeid (or that it was in the process of being purchased) and that with that knowledge by late May 2008 he directed that the Mount Penny Coal Release Area be designated so as to include that property (this is the third act of misconduct and an act in furtherance of the conspiracy identified by the Crown in its letter of 1 May 2019 providing further and better particulars of conspiracy charged [11] ). Self-evidently, the alleged lie to Mr Gibson (and repeated to Mr Mullard) is evidence admissible only against Mr Macdonald. Ms Cunneen took no objection to the evidence being admissible against Mr Macdonald for that purpose, no doubt reserving for the trial her submissions on the question whether the jury would find the lie proved. 2. The Crown also relies upon Mr Macdonald's knowledge that Edward Obeid purchased Cherrydale Park as at September 2007 (perhaps even earlier, during the final stages of the negotiations for the purchase of the property) in order to prove that it was with that state of knowledge that Mr Macdonald agreed to participate in the conspiracy and to commit the various acts of misconduct which concerned the issue of the Mount Penny coal exploration licence as the subject of the illegal agreement in which all three conspirators participated. The use of the evidence for that purpose is tendered by the Crown against all accused in proof of the existence of the conspiracy, including its nature and scope. 3. Objection was taken to the evidence being used for that purpose only by Mr Moses Obeid. 4. Part of the evidence the Crown proposes to adduce at the trial to establish the fact of Mr Macdonald's knowledge that contracts for Cherrydale Park had been exchanged by Edward Obeid (or Obeid family interests) in September 2007 concerns the negotiations for the sale of the property by Mr John Cherry, as vendor, to Locaway, as purchaser, with Edward Obeid representing the interests of Locaway in those negotiations. Those negotiations included Mr Cherry's offer of vendor finance through the Cherry Superannuation Fund. One of the terms upon which finance was to be provided concerned the eight water licences which were noted as the property of the vendors by the inclusion of the number of the individual licences on the contract for sale. Although the licences formed part of the property the subject of sale (and noted on contract for sale for that reason) they were only to be transferred upon discharge of the registered first mortgage over Cherrydale Park securing the loan offered by way of vendor finance. 5. That state of affairs was reflected in the letter from Mr Cherry's solicitors of 26 September 2007 to Damian Obeid, one of the four directors of Locaway, the remaining directors being his brothers Paul, Moses and Edward Jnr. The contract for sale was executed the following day with a deposit of $365,000 paid into an account in the name of the vendor's agent by a cheque drawn on the Obeid Corporation's ANZ Business Account. 6. The Crown also proposes to adduce evidence from Mr Cherry that without a licence to access water, or if the water licences that attached to Cherrydale Park were somehow compromised, the property would essentially become dry farming land. This would not only dramatically reduce the commercial value of the property but it would also undermine its value as security under the vendor finance loan agreement. 7. The grant of a water licence, and the entitlement of the licence holder to extract water under that licence was controlled the Department of Natural Resources. Mr Macdonald had no responsibility for the allocation of water rights or any Ministerial responsibilities over the issue of water licences. These are matters of fact and not in dispute. 8. What is in dispute (although again the objection is only taken by Moses Obeid) is the identity of the person on whose behalf on 26 September 2007 at 6:32pm Mr Adam Badenoch, Mr Macdonald's Chief of Staff, sent an email to Mr Adam Gardoll (a person who worked in the Department of Natural Resources) which reads as follows: Hi Brian, As discussed, could you please chase up the following licence numbers for me. [The licence numbers are then set out in a sequence that corresponds with the sequence in which they are noted in the contract for sale.] Any info you might be able to provide, would be most appreciated. 1. There is no evidence that the email was responded to by return email. Mr Gardoll is not to be called in the Crown case. Mr Badenoch is under subpoena to be called as a Crown witness. He has declined to provide a witness statement. It is anticipated, however, that he will give evidence in accordance with the evidence he gave at the ICAC inquiry in October 2013. There is some suggestion that at trial the Crown will seek a grant of leave to cross-examine Mr Badenoch under s 38 of the Evidence Act 1995 (NSW). 2. The Crown contends that what emerges from Mr Badenoch's evidence is that despite his claim to have no recollection of sending the email, including no memory of the discussions with Mr Gardoll which preceded it and no memory of the person on whose behalf he had those discussions, he was able to reason to the conclusion that the enquiry about the water licences was not made on behalf of Edward Obeid (or any member of his family) and not an enquiry initiated by him or on his own behalf. He also said that he had a positive recollection that if the enquiry were made at the request of Mr Macdonald as the Minister to whom he was directly responsible, and Mr Macdonald said the enquiry was made on behalf of Edward Obeid, he would likely have remembered that fact. 3. As to the email to Mr Gardoll, he said that as 25 and 26 September 2007 were Parliamentary sitting days both for the Legislative Assembly and the Legislative Council, save only if Mr Macdonald and/or Edward Obeid had arranged "a pair", he expected that both members would be at Parliament House for the greater part of those sitting days. Despite being informed by Mr Temby QC, counsel assisting the Asst Commissioner, of the frequency of telephone contact between Mr Macdonald and Edward Obeid on 25 September, and despite the fact that it is clear from the text of the email that he made some enquiry of Mr Gardoll before sending the email, Mr Badenoch maintained the position that he could not comment upon the likelihood of making the enquiry on Mr Macdonald's behalf, despite being unable to nominate any other person who it might have been other than a generic class including "Members of Country Labor, a whole host of Mayors and shire Council members…". He was neither asked nor volunteered as to why, were an enquiry made of him by someone other than the Minister, he did not simply refer the enquiry to the relevant ministry rather than undertake the enquiries of Mr Gardoll himself. 4. Despite Mr Badenoch's inability (at least in his evidence before ICAC) to nominate Mr Macdonald as the person who made the enquiry of him about the water licences attaching to Cherrydale Park (or even the person who was most likely to have made that enquiry, assuming he is giving truthful evidence that he has no independent memory of the incident) and, despite the fact that there may be as a matter of logic other people who may have made that enquiry of him, in all the circumstances, as I see them prevailing at the relevant time, and in the wider context of the conspiracy the Crown alleges, I am satisfied there is an available inference (in my view a strong inference) that the enquiry Mr Badenoch made of Mr Gardoll was made on behalf of Mr Macdonald on Edward Obeid's behalf, even if there be other inferences which the jury might be invited to consider in submission by some or all of the accused. 5. I am fortified in that view given the evidence the Crown proposes to lead from Mr Cherry that Edward Obeid's expressed interest in the water licences being part of the property the subject of sale and Edward Obeid's claim to having "asked his mate who was the Head of the Department to look into [the licences]". Mr Cherry will also give evidence that before the conveyance of the property had settled he was contacted by someone from what he described as the "Department of Water" who claimed to have heard that Cherrydale Park may be sold, and that he was concerned about whether the unlimited water licence should be preserved. It was this enquiry which prompted Mr Cherry to raise the matter of the water licences with Edward Obeid. 6. Whilst it is clear that Mr Macdonald was not the Minister with responsibility for the issue of water licences, the fact that an enquiry was made of the relevant ministry via Mr Badenoch, and that Edward Obeid had claimed that he would ask "his mate" about the licences, provides further support for the Crown submission that the enquiry was in fact made of Mr Macdonald by Edward Obeid who, in turn, had Mr Badenoch make the enquiry on his behalf without Mr Macdonald revealing it was made at Edward's Obeid request.