Court of Criminal Appeal Supreme Court New South Wales Medium Neutral Citation: Pratten v R [2021] NSWCCA 251 Hearing dates: 26 and 27 July 2021 Date of orders: 25 October 2021 Decision date: 25 October 2021 Before: Gleeson JA at [1] Johnson J at [323] Beech-Jones J at [326] Decision: (1) Extend the time for filing of the notice of application for leave to appeal to 12 June 2019. (2) Grant leave to appeal a gainst conviction on grounds 1, 1A, 4 and 6. (3) Refuse leave to appeal under r 4.15 of the Supreme Court (Criminal Appeal) Rules 2021 (NSW) on grounds 2, 3, 5 and 6 (insofar as ground 6 challenges directions, or omission to direct the jury). (4) Appeal dismissed. Catchwords: CRIMINAL LAW — appeal against conviction — seven offences of dishonestly obtaining a financial advantage by deception by lodging tax returns which did not disclose all assessable income — whether monies paid to appellant or to third parties at his direction were income of appellant or loans — whether trial miscarried because evidence wrongfully admitted that amended notices of assessment were issued to appellant — whether trial judge erred in directions given to jury concerning elements of the offences and on tax law — whether a Shepherd direction required as to appellant's control of Vanuatu company making payments to him or to third parties at his direction — whether verdicts were unreasonable and not supported by the evidence — whether proviso applied notwithstanding evidence wrongfully admitted — Criminal Appeal Act 1912 (NSW), s 6(1) EVIDENCE — fresh evidence — distinction between "new evidence" and "fresh evidence" — whether significant possibility that jury acting reasonably would have acquitted appellant based on new evidence CRIME — appeals — appeal against refusal to discharge jury — where trial judge ruled that Crown case confined to payments made by Vanuatu insurance company — where Crown relied on earlier payments made at direction of appellant from another Vanuatu company to rebut defence submission — whether fundamental change in Crown case — whether miscarriage of justice Legislation Cited: Criminal Appeal Act 1912 (NSW), ss 5(1)(b), 6(1) Criminal Appeal Rules (NSW), r 4 Criminal Code Act 1995 (Cth), s 134.2(1) Evidence Act 1995 (NSW), ss 55, 97, 101, 135, 136, 137 Income Tax Assessment Act 1936 (Cth), ss 6(1), 19, Pt X, 316(1), 340, 456(1) Income Tax Assessment Act 1997 (Cth), ss 4-15, 6-5(1), 6-5(4) Legal Profession Act 2004 (NSW), s 728 Proceeds of Crime Act 2002 (Cth), s 37(1) Supreme Court (Criminal Appeal) Rules 2021 (NSW), r 4.15 Tax Administration Act 1953 (Cth), Pt IVC Cases Cited: Arthur Murray (NSW) Pty Ltd v Federal Commissioner of Taxation (1965) 114 CLR 314; [1965] HCA 58 Aussie Airlines Pty Limited v Australian Airlines Pty Limited & Qantas Airlines Limited (1996) 65 FCR 215; [1996] FCA 813 Bainton v Rajski (1992) 29 NSWLR 539 Barton v Walker (1979) 2 NSWLR 740 BCM v The Queen [2013] HCA 48; (2013) 88 ALJR 101 British American Tobacco Australia Ltd v Peter Gordon [2007] NSWSC 109 Bywater Investments Ltd v Federal Commissioner of Taxation (2016) 260 CLR 169; [2016] HCA 45 Castagna v R; Agius v R (2019) 278 A Crim R 194; [2019] NSWCCA 114 Charisteas v Charisteas [2021] HCA 29 Crofts v The Queen (1996) 186 CLR 427; [1996] HCA 22 Director of Public Prosecutions (Cth) v Pratten (No 2) (2017) 94 NSWLR 194; [2017] NSWCCA 42 DJ Singh v DH Singh and Others (No 2) [2018] NSWCA 31 Dovade Pty Ltd v Westpac Banking Group (1999) 46 NSWLR 168; [1999] NSWCA 113 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63 Elomar v R; Hasan v R; Cheikho v R; Cheikho v R; Jamal v R (2014) 300 FLR 323; [2014] NSWCCA 303 Federal Commissioner of Taxation v Mochkin (2003) 127 FCR 185; [2003] FCAFC 15 Federal Commissioner of Taxes (South Australia) v Executor Trustee and Agency Co of South Australia Ltd (1938) 63 CLR 108; [1938] HCA 69 Filippou v The Queen (2015) 256 CLR 47; [2015] HCA 29 Gallagher v The Queen (1986) 160 CLR 392; [1986] HCA 26 GBF v R [2020] HCA 40; (2020) 384 ALR 569 Greenhalgh v R [2017] NSWCCA 94 Hamide v R (2019) 101 NSWLR 455; [2019] NSWCCA 219 House v The King (1936 55 CLR 499; [1936] HCA 40 Hughes v The Queen (2017) 263 CLR 338; [2017] HCA 20 Ivanoff v The Queen [2015] VSCA 116 Kalbasi v State of Western Australia (2018) 264 CLR 62; [2018] HCA 7 Kostov v Director of Public Prosecutions (NSW) (No 2) [2020] NSWCA 94 M v The Queen (1994) 181 CLR 487; [1994] HCA 63 Maric v The Queen (1978) 52 ALJR 631 MFA v The Queen (2002) 213 CLR 606; [2002] HCA 53 MRW v R [2011] NSWCCA 260 Nudd v The Queen [2006] HCA 9; (2006) 80 ALJR 614 Obeid v R (2017) 96 NSWLR 155; [2017] NSWCCA 221 Pell v The Queen (2020) 268 CLR 123; [2020] HCA 12 Pratten v R [2014] NSWCCA 117 Re Eric Abraham & Houda Jury; Ex parte Westpac Banking Corporation [1997] FCA 600 Re Polites; Ex parte The Hoyts Corporation Pty Ltd (1991) 173 CLR 78; [1991] HCA 25 RPS v The Queen (2000) 199 CLR 620; [2000] HCA 3 Rural and General Insurance v Goldsmiths Lawyers [2012] NSWSC 358 R v Abou-Chabake (2004) 149 A Crim R 417; [2004] NSWCCA 356 R v AH (1997) 42 NSWLR 702 R v Baden-Clay (2016) 258 CLR 308; [2016] HCA 35 R v Davidson (2009) 75 NSWLR 150; [2009] NSWCCA 150 R v Jo [2012] QCA 356 R v Pratten (No 17) [2015] NSWSC 642 R v Pratten (No 19) [2015] NSWSC 1111 R v Pratten (No 20) [2015] NSWSC 1102 R v Pratten (No 25) [2016] NSWSC 539 R v Quach [2002] NSWCCA 519 R v Zaiter [2004] NSWCCA 35 S & M Motor Repairs Pty Ltd v Caltex Oil (Australia) Pty Ltd (1988) 12 NSWLR 358; (1998) 91 FLR 175 Scott v Commissioner of Taxation (NSW) (1935) 35 SR (NSW) 215 Shepherd v The Queen (1990) 170 CLR 573; [1990] HCA 56 SKA v The Queen (2011) 243 CLR 400; [2011] HCA 13 Smith v The Queen (2001) 206 CLR 650; [2001] HCA 50 Taylor v R [2020] NSWCCA 355 The Queen v Baden-Clay (2016) 258 CLR 308; [2016] HCA 35 Trevascus v R [2021] NSWCCA 104 Washer v Western Australia (2007) 234 CLR 492; [2003] HCA 48 Waterhouse v Independent Commission Against Corruption (No 3) [2016] NSWCA 134 Weiss v The Queen (2005) 224 CLR 300; [2005] HCA 81 Wilde v R (1988) 164 CLR 365; [1988] HCA 6 Xie v R [2021] NSWCCA 1 Texts Cited: RW Parsons, Income Taxation in Australia: Principles of Income, Deductibility and Tax Accounting Category: Principal judgment Parties: Timothy Charles Pratten (Appellant) Commonwealth Director of Public Prosecutions (Respondent) Representation: Counsel: Timothy Charles Pratten (Self-represented) (Appellant) T McDonald SC / T Epstein (Respondent) Solicitors: Commonwealth Director of Public Prosecutions (Respondent) File Number(s): 2010/315475 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Criminal Citation: - Date of Decision: 09 September 2016 Before: Rothman J File Number(s): 2010/315475 Judgment 1. GLEESON JA: The appellant, Mr Timothy Charles Pratten, seeks leave to appeal against his convictions of seven offences of dishonestly obtaining a financial advantage by deception, of which he was found guilty on 9 September 2016, after a trial by jury before a Supreme Court judge (Rothman J). Those offences were contrary to s 134.2(1) of the Criminal Code Act 1995 (Cth) (the Code) which provides: 134.2 Obtaining a financial advantage by deception (1) A person commits an offence if: (a) the person, by a deception, dishonestly obtains a financial advantage from another person; and (b) the other person is a Commonwealth entity. 1. The trial was a retrial. Mr Pratten's prior convictions by jury were quashed on appeal: Pratten v R [2014] NSWCCA 117. The charges related to a failure by Mr Pratten to disclose assessable income in seven tax returns with a resultant reduction in his liability to pay income tax. Counts 1 and 2 related to the financial years ending 30 June 2003 and 30 June 2004 respectively, both returns being lodged on 18 August 2005. Count 3 related to the financial year ending 30 June 2005, the return being lodged on 21 June 2006. Counts 4 to 7 related to the four subsequent financial years ending 30 June 2006 to 2009 respectively, the returns being lodged on 29 September 2009. 2. Mr Pratten was sentenced on 29 April 2016 to a total of 5 years' imprisonment, with a non-parole period of 2 years: R v Pratten (No 25) [2016] NSWSC 539. An appeal against sentence by the Commonwealth Director of Public Prosecutions (the Director) was allowed. On 17 March 2017, Mr Pratten was resentenced to a total sentence of 6 years and 4 months' imprisonment, with a non-parole period of 3 years and 9 months, which included a partially concurrent sentence for an offence contrary to s 37(1) of the Proceeds of Crime Act 2002 (Cth) (being imprisonment for 6 months): Director of Public Prosecutions (Cth) v Pratten (No 2) (2017) 94 NSWLR 194; [2017] NSWCCA 42. Mr Pratten was released on parole on 19 October 2019. 3. Mr Pratten's grounds of appeal raise the following issues: 1. the admissibility of evidence given by an officer of the Australian Taxation Office (ATO) that the Commissioner of Taxation had issued Mr Pratten amended notices of assessment for the 2002 to 2009 tax years (ground 1A), or alternatively, the failure by the primary judge to give the jury directions sufficient to extinguish or diminish the prejudice of such evidence (ground 1); 2. the directions given in relation to two elements of the offences: "deception" and "financial advantage" (grounds 2 and 3); 3. the directions given in relation to tax law, specifically those concerning the derivation of ordinary income (ground 5); 4. the refusal of the application to discharge the jury (ground 4); 5. the failure of the primary judge to give a Shepherd direction as to proof of Mr Pratten's control of a company in Vanuatu (ground 6); and 6. whether the verdicts on all counts are unreasonable and cannot be supported by the evidence, specifically, the sufficiency of evidence that Mr Pratten controlled a company in Vanuatu (ground 6). 1. As will be seen, several of the grounds raised additional issues. 2. Leave to appeal is required insofar as the grounds involve a question of mixed fact and law: Criminal Appeal Act 1912 (NSW), s 5(1)(b). Grounds 1, 4 and 6 fall into this category. 3. Mr Pratten accepted that he also requires leave pursuant to r 4 of the Criminal Appeal Rules (NSW) insofar as the grounds complain of matters where no direction in the terms sought had been requested during the trial; this involves grounds 1, 2, 3, 5 and (part of) 6. At the time of the hearing, the Criminal Appeal Rules had been repealed and replaced by the Supreme Court (Criminal Appeal) Rules 2021 (NSW), which came into force on 1 May 2021. The equivalent provision, in almost identical terms in the new rules, is r 4.15. 4. Mr Pratten also requires an extension of time up to 12 June 2019 when his application for leave to appeal was filed. The extension was not opposed by the Crown and should be granted; the delay, although extensive, was satisfactorily explained in Mr Pratten's affidavit of 11 April 2019. 5. Whilst Mr Pratten was represented by counsel at trial, he was self-represented in this Court. His written submissions on appeal exceeded 300 pages. In oral argument, Mr Pratten gave a more concise identification of the essential points he relied upon. The Crown's case 1. In broad outline, the Crown case was that insurance premiums in excess of $19 million, collected in Australia by an insurance broker controlled by Mr Pratten, were transferred to an insurance company incorporated in Vanuatu. Of the $19 million, amounts in excess of $4.5 million were returned to Mr Pratten or transferred to third parties at his direction, including to entities associated with him in Australia. The Crown case was that the amounts returned to Mr Pratten, and transferred to his associated entities and third parties at his direction, constituted ordinary income which should have been declared in his tax returns and that, by dishonestly failing to declare these amounts, Mr Pratten obtained a financial advantage by deception for the income tax years ending 30 June 2003 to 30 June 2009, being a resultant reduction in his liability to pay income tax. 2. The circumstances of the alleged offending were more complex. Up to June 2002, an Australian insurer, Rural & General Insurance Ltd (RGIL), provided insurance to small businesses for commercial risks. Mr Pratten was a director of RGIL and indirectly a shareholder in RGIL. From July 2002, RGIL ceased to underwrite new business and went into runoff as a result of being unable to meet the new prudential and licensing requirements for Australian insurers introduced by the Federal government following the collapse of the HIH Insurance Group. 3. Mr Pratten changed his business operations in response to the legislative amendments. On 15 August 2002, an insurance broker, Presidential Financial Services Pty Ltd, changed its name to Rural & General Insurance Broking Pty Ltd (RGIB). Mr Pratten and Mr Aaron Stephenson were directors of RGIB. 71 Cowper Street Holdings Pty Ltd (71 Cowper Street), a company owned and operated by Mr Pratten as sole director and shareholder, was the majority shareholder in RGIB. On 20 August 2002, the Vanuatu accounting firm, BDO Chartered Accountants (BDO), of which Mr Pratten was a client, incorporated a company in Vanuatu originally under the name Rural & General International Insurance Limited (RGII), which changed its name in March 2005 to Commercial Pacific Insurance Limited (CPI). 4. RGII/CPI was set up by BDO to underwrite insurance provided to Australian small businesses. The initial shareholders of RGII/CPI were Global Nominees Limited and Credit Facilities Limited, nominee companies of BDO. 5. RGIB entered into an insurance agency agreement with RGII/CPI on 23 August 2002, under which RGIB issued cover notes and insurance policies on behalf of RGII/CPI in return for a commission equal to 33 per cent of the net premiums received. The Crown case was that CPI effectively used RGIB to sell CPI's insurance policies in Australia, and that the two companies did not operate at arm's length. There was evidence that incorporating a foreign insurance company in Vanuatu, which did not carry on any business in Vanuatu, had certain commercial advantages including no or minimal requirement to pay tax, total secrecy, total flexibility for meetings, rules and other formalities, and no requirements as to capital backing to underwrite insurance (Exs O and P). 6. From December 2005, reinsurance of the risks insured by RGII/CPI was placed through a London broker, Alsford Page & Gems Ltd. Mr Don Cantwell was a broker with that company. He gave evidence at the trial that he first met Mr Pratten in 2005, when Mr Pratten told him that CPI was set up to take over the business of RGIB and that CPI was "mine". 7. Up until June 2004, the director of RGII/CPI was Global Nominees Limited, and the secretary was Credit Facilities Limited, both BDO nominee companies. In June 2004, Mr Pratten became a client of another Vanuatu accounting firm, PKF Vanuatu Chartered Accountants (PKF), and the directors of RGII/CPI changed to Astrolabe Limited and Astrolabe Nominees Limited, two nominee companies administered by PKF. The shareholders of CPI became two other Vanuatu-based nominee companies used by PKF, Garde Limited and Tenir Limited. The principals or employees of PKF included Mr Robert Agius, Mr Iain Johns and Ms Kelly Fawcett. 8. During the tax years of 2003 to 2009, RGIB remitted premiums received for policies issued on behalf of RGII/CPI, totalling $19,049,046, either to the bank account of Vanuatu International Trust Company Limited (VITCO) (from 2 October 2002 to 1 June 2004), a trust company controlled and administered by BDO, or the bank account of International Finance Trust Company Limited (IFTCO) (from 15 June 2004 to 26 July 2009), a trust company controlled and administered by PKF. 9. Ms Rosanna Celona, a forensic accountant, gave evidence of the premiums collected and remitted by RGIB to VITCO and IFTCO, prepared an analysis of the VITCO and IFTCO transfers, and the payments into and out of Mr Pratten's account with the St George Bank in Sydney. Of the total payments of $5,009,732 made from the VITCO and IFTCO accounts to Australia, amounts totalling $2,913,006 (over the seven-year period from 30 June 2002 to 30 June 2009) were made directly to the personal bank account of Mr Pratten. The remaining payments (totalling $2,096,726 over the same period) were made to third parties and applied either in the acquisition of assets in the names of those parties, or in the payment of monies owing to them by Mr Pratten, or in the payment of other expenses owed by Mr Pratten. 10. The assets acquired were a Robinson R44 helicopter, three rural properties, a hardware business at Stroud (a small country town north of Newcastle, New South Wales), and a Mitsubishi truck. The expenses related to those assets, and also a motor vessel "Los Lobos", school fees of Mr Pratten's two daughters, rent on a Darling Point property in Sydney (which was occupied by Mr Pratten), and architectural fees for a proposed residence at Port Vila in Vanuatu. Details of the direct and third-party payments relating to these properties, assets and expenses, which were spread over more than one tax year, are shown in the table attached to this judgment as Schedule 1. 11. Other than the first five payments for the purchase of a rural property known as Skallet in the tax year ending 30 June 2003 (totalling $458,835), the Crown case was that the monies transferred from the VITCO and IFTCO accounts to Australia were the premiums that had been sent to CPI by RGIB, which were then returned to Mr Pratten, either as remuneration for services or distribution of profits. The Crown case was that Mr Pratten had a beneficial interest in CPI and, although Mr Pratten may not have controlled all of CPI, he was nonetheless able to give directions for monies to be paid from CPI to himself or entities associated with him. 12. The payments utilised for the purchase of Skallet occurred prior to the incorporation of RGII/CPI on 20 August 2002. There was evidence that those monies had come from a loan by RGIL to Griffith Narrandera Primary Property Developments Pty Ltd (GNPPD), a company incorporated in Australia of which Mr Pratten was the sole director and held 50 per cent of the Class A shares, whilst 100 per cent of the Class H shares were owned by Mr Pratten's company, 71 Cowper Street (see [12] above). Following legal argument, the Crown case was confined to payments received by Mr Pratten, or made at his direction, from CPI. As a result, the jury was directed that it could only take into account the Skallet payments as proof that Mr Pratten controlled Pacific Property Investments Ltd (PPI), a Vanuatu-incorporated company to which Mr Pratten had directed the five payments as the purchaser of Skallet, and that the payments could not be used to establish Mr Pratten's guilt in relation to the counts on the indictment. 13. The Crown case was that the payments made by CPI directly to Mr Pratten and to third parties, recorded in Schedule 1 to this judgment, were made on Mr Pratten's instructions or at his direction. The Crown alleged that those payments were income, in the ordinary meaning of that term, in the hands of Mr Pratten, and derived from CPI, none of which was declared as income in his tax returns. The Crown further alleged that Mr Pratten was aware that the amounts should have been included as income and dishonestly, and by deception, understated his income in his tax returns and thereby obtained a financial advantage from the Commonwealth, being a lesser liability to tax. 14. It is necessary to say something more about some of the third-party payments relating to the assets purchased in the name of an entity other than Mr Pratten. Helicopter 1. The helicopter was purchased in June 2005 for $180,000 in the name of "Sonarpia Pty Ltd", as trustee of the Pratten Family Trust. Mr Pratten and his daughters were named as the primary beneficiaries of that discretionary trust, which was formed in May 2003. A file note by Stacks Law Firm, Taree, Mr Pratten's solicitors, recorded that the helicopter was purchased with money from Mr Pratten on loan to the trust. Mr Pratten described himself as the owner of the helicopter in correspondence in January 2007 with Heliflite, a helicopter distributor, and in an email to his then accountant, Mr John Greer, in May 2008. 2. Following the purchase of the helicopter, $72,378 was paid from the IFTCO account in the financial years ending 30 June 2006 and 2008 for expenses relating to the running and maintenance of the helicopter. Motor vessel – "Los Lobos" 1. The motor vessel was a 45-foot "sports fishing" boat registered in the name of a BDO nominee company, Global Nominees Limited, on or about 1 November 1999. After 2004, the vessel was registered in the name of Astrolabe Services Limited, a PKF-associated company. The evidence established, and Mr Pratten accepted, as did defence counsel in closing address, that he was the beneficial owner of the vessel. In the financial years ending 30 June 2005 to 30 June 2007, $263,897 was transferred from the IFTCO account for expenses in relation to "Los Lobos", including fees for use of a slipway and repairs to the vessel. Real property assets 1. The real property assets, comprising "Skallet" at Terreel Road, Wards River (a grazing property), the "Macedo" block (a 50 acre block adjoining Skallet), and a development block at Mill Creek Road, Stroud (the Stroud development block), were each purchased in the name of PPI. 2. The Crown case was that Mr Pratten controlled PPI. Before June 2004, the sole director of PPI was Global Nominees Limited, the BDO nominee company. From July 2004, PPI was "administered" by PKF; its sole director was changed to Astrolabe Services Limited, the PKF nominee company. In an intercepted telephone call on 3 December 2008, following the execution of search warrants by the AFP, Mr Pratten told Mr Andrew Neill of PKF that the AFP was particularly interested in PPI, "but … that's OK that's all owned by me that's no problems I don't care everybody knows it's the property so I've got no issues with that. …". (1) Skallet 1. Mr Pratten negotiated the purchase of Skallet for $485,000 with Elders Gloucester in around May 2002. He told his solicitor, Mr Ray Martin of Gloucester, on 9 May 2002, that he had a private agreement with a very good friend and business colleague, Mr Adrian Sinclair, who was based in Vanuatu, that he himself would not be the purchaser but that a Vanuatu company would purchase the property. That company was PPI. On 1 June 2002, Mr Pratten advised Mr Martin that either himself or GNPPD would lease the property for a 20-year period to carry on the farm and farm-related business. Mr Pratten described his occupation of the farm as being at the "whim" of PPI, however, no lease of Skallet was ultimately entered into with PPI. 2. On 29 July 2002, five payments totalling $458,835 were transferred from the VITCO account to Mr Martin for the purchase of Skallet, including for stamp duty and legal expenses. The purchase was completed on around 20 August 2002. Although these payments were ultimately not relied upon as evidence on count 1, the Crown relied upon these payments as evidence of Mr Pratten's control of PPI, which the Crown alleged had purchased the Skallet property for his benefit. 3. There was evidence that Mr Pratten had inspected the property and had communicated with the vendor's agent about issues with the property, including the septic system, prior to settlement. There was also evidence that Mr Pratten conducted a pre-settlement check of the property and had found that the cattle yards had been removed and that the fencing was cut, damaged and left open. He sent a letter to the vendor's agent on 5 August 2002 stating that "the deal is off". He instructed Mr Martin on 7 August 2002 that settlement may proceed if the cattle yards are returned to the property. The Crown relied upon the nature of these communications as evidence of Mr Pratten giving instructions in relation to the property, rather than merely acting as a representative of BDO in relation to the purchase by PPI, to establish Mr Pratten's beneficial ownership of Skallet. 4. Skallet was used by Mr Pratten to operate a business under the name "Myidaho Natural Beef", which was owned by Mr Pratten. In a finance application dated 18 August 2008 for the lease of a tractor, Mr Pratten described his assets as including "my farm … I have no debt – hence I will have tax problem [sic] this year for the farm's operations because it will turn a profit and I have only very few expenses". 5. In the 2005 to 2008 tax years, payments were made to third parties from the accounts of VITCO and IFTCO in relation to expenses incurred for the Skallet property. The Crown alleged that these amounts constituted income received by Mr Pratten. In his email communications with PKF, Mr Pratten's requests for monies relating to Skallet were variously expressed as payment of specific invoices by "TT", as assistance in financing specified purchases, and as an "advance" of funds, "loans", and "loan amounts". (2) Stroud development block 1. In about March 2004, Mr Pratten negotiated a deed of option for PPI to purchase the Stroud development block for $140,000. PPI exercised that option in August 2004 and contracts were exchanged on 16 August 2004 for $150,000. Completion of the sale occurred in February 2006. Again, the solicitor acting on the purchase was Mr Martin. The formal admissions made by Mr Pratten at trial included that payment of the option fee, legal fees, purchase price and other expenses relating to this property, totalling $178,699, was made from the accounts of VITCO or IFTCO (Ex 2). 2. The Crown case was that Mr Pratten was the beneficial owner of the Stroud development block. When PPI changed accountants from BDO to PKF in June 2004, Mr Pratten sent an email to Mr Iain Johns of PKF attaching an email from Mr Lindsay Barrett of BDO and correspondence from Mr Martin about the exercise of the option to purchase the Stroud development block and said, "I received this from Lindsay regarding a property. I will talk to you later about how things work". The Crown relied upon this communication as evidence of Mr Pratten directing how the transaction was to occur. 3. Subsequently, on 8 November 2004, Mr Johns of PKF sent an email to Mr Martin enquiring as to the status of the contract and noted, "[w]e are waiting for our client to arrive in Vanuatu (anticipated to be around 20th of this month) whereupon we will be in a position to proceed with the FIRB matters". There was evidence that Mr Pratten arrived in Vanuatu on 18 November 2004. The Crown relied upon these circumstances for an inference that Mr Pratten was the "client" of PKF Vanuatu who was obtaining the benefit of the transaction involving the purchase of the Stroud development block. 4. There was evidence of monies transferred from IFTCO for the payment of legal and architectural fees associated with the Stroud development block in the financial year ending 30 June 2007, that Mr Pratten communicated with the architect, Mr Hugh Slayter, about development of the property, and that invoices for Mr Slayter's fees addressed to Mr Pratten c/- RGIB were paid from the IFTCO account. Mr Slayter gave evidence that when he met Mr Pratten in 2006, Mr Pratten said to him words to the effect: I have a property at Stroud. I want to go commercial – I remember him saying that they had to get, people at Stroud had to go a long way to go to a supermarket, so he thought it was a good position to put a supermarket just outside of town. 1. The Crown relied upon this, and other evidence (including the intercepted telephone call referred to at [28] above), as indicative of Mr Pratten's beneficial ownership of the Stroud development block and pointed to the fact that Mr Pratten also personally paid for some expenses in relation to the development of this property. (3) Macedo block 1. In February 2007, Mr Pratten negotiated the purchase of the Macedo block for $150,000 from Mr George Macedo, being 50 acres of grazing land adjoining Skallet. In a letter to his solicitor at Stacks, Taree, dated 15 February 2007, after describing himself as the owner of the property immediately adjacent to the 50 acres owned by Mr Macedo, Mr Pratten explained that he sought to purchase the Macedo block in order "to expand my own grazing property". Mr Pratten paid $15,000 to Mr Macedo on about 26 February 2007 from his personal bank account which he told his solicitor was the deposit. In a letter to Mr Macedo dated 10 May 2007, Mr Pratten described the $15,000 as an amount paid for an option to purchase the property and said, "I confirm my agreement to purchase the section of your land located at Lot 70 XXX". 2. In his email communications with PKF, Mr Pratten's requests for monies relating to the purchase of the Macedo block were variously described as "loans", or requests that the "directors agree" to the payments, or in the case of stamping and registration fees, a "recommendation that this account be settled ASAP …". An amount of $104,744 was paid by instalments from the IFTCO account, with the property ultimately purchased in the name of PPI. Stroud hardware store 1. In January 2003, Mr Pratten negotiated with Elders Real Estate, Stroud, to purchase the premises and business of the Stroud hardware store at 71 Cowper Street, Stroud, for $220,000. Contracts for the sale of the land and for the sale of the business were signed by Mr Pratten as the purchaser. Again, Mr Martin acted as solicitor on the purchase. Mr Pratten later decided that the purchaser should be a company and acquired a shelf company which changed its name to 71 Cowper Street. 2. An amount of $219,983 was transferred from VITCO to Mr Martin in May 2003 for the purchase of the property and business. Although 71 Cowper Street granted a registered mortgage over the property in favour of PPI (wrongly described in the mortgage as Pacific Properties Pty Ltd) securing an amount of $220,000, in an email dated 19 December 2007 (see [46] below), Mr Pratten described the Stroud hardware store as his own, gave instructions on how to deal with the store in the event of his death, and made no reference to any debt owing to PPI in respect of that property or the business. Mitsubishi truck 1. In May 2007, Mr Pratten negotiated the purchase of a property at Boundary Street, Paddington, for $1,000,000 in the name of 71 Cowper Street. On 23 August 2007, Mr Pratten's solicitor, Mr Tony Marshall of Stacks, Taree, requested that Mr Pratten arrange the transfer of $255,000 into the firm's trust account in anticipation of settlement. That transfer was made from the IFTCO account on 31 August 2007, however, the transaction ultimately did not proceed. On 29 November 2007, about $110,000 of the monies held on trust by Stacks was applied to pay the balance of the purchase price of a Mitsubishi cattle truck, which Mr Pratten had purchased earlier on about 20 July 2007 for about $114,910, paying a deposit of $5,000 on 3 August 2007. 2. Although the invoice for the cattle truck was issued in the name of Myidaho Natural Beef, Mr Pratten's farming business, the vehicle was registered in the name of Mr Pratten's company, 71 Cowper Street. In correspondence with a motorcycle club on 30 May 2008, offering assistance with obtaining public liability insurance, Mr Pratten referred to having purchased the truck from a club member and described the vehicle as his own stating, "… [r]ecently I purchased a cattle truck". Port Vila property 1. In August 2006, Mr Pratten discussed with Mr Slayter, the architect, a proposal to develop a block of land at Port Vila, Vanuatu, with a view to having a place to live in Vanuatu. In an email to Mr Slayter in August 2007, Mr Pratten referred to changes to the proposed designs for the property. The Crown relied on this email to support an inference that the property was intended for Mr Pratten's personal use. In a later email to Mr Slayter in June 2008, Mr Pratten described the property as his "one day retirement home in Port Vila". Invoices issued by Mr Slayter to RGIB for services in respect of the Port Vila residences, totalling $7,579, were paid by transfers from IFTCO in May and October 2007. The Crash email 1. In an email dated 19 December 2007 sent by Mr Pratten to his co-director of RGIB, Mr Stephenson, prior to flying to Vanuatu, Mr Pratten gave instructions about how his assets were to be dealt with in the event of his death (the "Crash" email). The email included instructions about: * valuing "my piece of the business and take it or sell out", and putting the money into trust for his daughters, with his mother to receive monthly payments for life; * selling the helicopter ("say $220,000"), the boat ("say $220,000 as well"), and the Stroud Hardware store ("say $450,000"); and * "[t]he vanautau [sic] stuff will be taken care of – farm and local properties – business interests etc, here and there should all be sold and any money kept offshore for when the girls are older. Should earn a fair bit of interest – they might decide to live o/s anyway so money can stay offshore". 1. The Crown relied upon these statements by Mr Pratten as being inconsistent with the monies from CPI being loans and as admissions that Mr Pratten owned the assets and properties referred to in the email. Lodgement of tax returns 1. Mr Pratten's tax returns for the years ending 30 June 2003 to 30 June 2005 were prepared by Mr John Greer of Griffiths, Forrest & Greer Accountants. Mr Pratten changed accountants in 2008 and his tax returns for the 2006 to 2009 tax years were prepared by Mr Stuart Berry and Ms Megan Hamberger of Addison Partners Pty Ltd. 2. Two of the questions in the tax returns enquired about whether Mr Pratten had a direct or indirect interest in any "controlled foreign company" (Q18), and whether he owned or had interests in any "assets located outside Australia" which had a total value of $50,000 or more (Q19). Mr Greer prepared draft tax returns for Mr Pratten on 21 November 2007 which answered "Y" to both questions. Mr Greer gave evidence that the draft returns were never sent to Mr Pratten. Mr Greer drew these questions to Mr Pratten's attention in an email dated 26 November 2007. On 17 December 2007, Mr Pratten responded to Mr Greer by email stating: I have a beneficial interest in Commercial Pacific Insurance Ltd (CPI) which is a Vanuatu registered insurance company. My beneficial interest is that I will receive 25% of the profits of the company after it is wound up and by constitution it has to be within 10 years of its operations, ie 2012. 1. Mr Greer replied to Mr Pratten by email on 19 December 2007 concerning questions 18 and 19 as follows: Q 18 - You do not have an interest in a controlled foreign company if you do not have at least 50 % interest or control with other Australian interests. Q 19 – This question only needs to be answered Y if your current equity value of the shares is greater than $50,000, … - you may not have any present equity in the company or know what that equity would be worth! 1. Mr Greer gave evidence that he was unable to answer questions 18 and 19 without further information, which Mr Pratten said he would provide, but nothing was forthcoming. In cross-examination, Mr Greer agreed that having a beneficial interest whereby Mr Pratten was to receive 25 per cent of the profits of a company after it was would up within ten years of operation would not be sufficient to change the response to questions 18 and 19 from no to yes. He also accepted that Mr Pratten never told him that he had a shareholding overseas. 2. On 4 December 2008, the day after the execution of the search warrants by the AFP, Mr Pratten spoke to Mr Greer by telephone; the 2006 and 2007 tax returns had still not been lodged. Mr Pratten told Mr Greer that he would "work it out exactly what has to be done there … year 2006 and 2007" and asked Mr Greer, "can you bear with me for a week?". Mr Pratten then telephoned Mr Berry and requested that he prepare his 2006 and 2007 tax returns. When Mr Pratten's 2006 and 2007 tax returns were lodged by Mr Berry, questions 18 and 19 were answered in the negative. The Crown relied upon this chronology of events as evidence that Mr Pratten changed accountants in order to avoid disclosing in his tax returns his foreign interests and assets. Evidence inconsistent with loans 1. To the extent that Mr Pratten referred in some communications with PKF to the transfers from the IFTCO account as "loans" or "advances", the Crown case was that this was a false trail designed to disguise the nature of the payments, and that the payments were made following a direction by Mr Pratten, rather than any formal application, which was inconsistent with features of a loan. The Crown contended that Mr Pratten was directing BDO and PKF to return to him in Australia monies to which he was entitled and that the Vanuatu accountants involved in the transactions were simply acting as a "post box" for Mr Pratten in Vanuatu. The Crown case emphasised that the commercial features of the transactions were inconsistent with the monies being loans; for example, if CPI had lent money to finance the purchase of the helicopter, it would have obtained a charge over the helicopter, which it did not. 2. To show that the payments were inconsistent with the purported "loans", the Crown relied upon the fact that the purported loans increased in value over the years but were never repaid, that no record was kept of interest payments owing on the loans, and the transactions were not the subject of any formal documentation. The Crown also relied upon the typically informal nature of Mr Pratten's requests to PKF, such as the request in an email to PKF dated 27 April 2007 where Mr Pratten wrote "I have seven (7) payment requests altogether … Please confirm that these payments will go forward ASAP please", as being inconsistent with the alleged loans. 3. The Crown contended that the absence of records kept of the quantum of the loans suggested that they were shams. The Crown pointed to steps taken by Mr Pratten on 4 December 2008, the day after the execution of the search warrants, to reconstruct the amount of the alleged loans, as being inconsistent with the monies being loans. The transcripts of the telephone intercepts recorded Mr Pratten: 1. asking Ms Kelly Fawcett of PKF at 8.49 am for a "dollar for dollar" calculation of all the loans over the years, and stating that he wanted to make sure that "all loan agreements are up to date" so that if the authorities decide to suggest that it is income, and he lost on the argument that the monies were loans, he would be able to argue there were deductions available in relation to each such amount; and 2. asking Mr Greer at 9.24 am about loans (which was inconsistent with Mr Pratten having received previous advice about loans from Mr Greer, as Mr Pratten had claimed in his evidence). 1. The Crown also relied upon two contemporaneous documents as being inconsistent with the alleged loans from CPI. One was the "Crash" email referred to at [46] above, in which Mr Pratten treated various assets as his own and made no mention of the obligation to repay debts or loans in respect of those assets. The other was the finance application referred to at [32] above, in which Mr Pratten made no mention of any loans, other than a car lease, and recorded his assets as including properties in Paddington and Woolloomooloo, properties overseas, and also "in the Hunter region, my farm, some commercial properties etc" (which the Crown submitted was a reference inferentially to the rural properties and the Stroud hardware store). The defence case 1. At trial, Mr Pratten made formal admissions (Ex 2) in relation to: * his directorships and shareholdings in RGIL, RGIB, 71 Cowper Street, GNPPD, Sonarpia, and the relationship between RGIB and CPI; * his personal bank accounts with St George Bank; * the funds flowing from RGIB to VITCO and IFTCO for the 2003 to 2009 financial years, and the payments totalling in excess of $5 million sent from the Vanuatu accounts of VITCO and IFTCO to him directly ($2,096,726), or to specified third parties ($2,913,006); * expenses incurred in relation to the three properties, the Stroud hardware store, the motor vessel, his daughters' school fees, the purchase of the Mitsubishi cattle truck, helicopter maintenance and the architectural fees for the proposed residence in Port Vila; and * the amount of assessable income declared in his tax returns for 2003 to 2009 tax years, and the electronic lodgement of those tax returns by his accountants. 1. The defence case was that the payments received by Mr Pratten or third parties at his direction from the VITCO and IFTCO accounts were not income of Mr Pratten because the monies were loans from CPI which had to be repaid, and loans are not assessable income. Defence counsel opened the defence case in these terms: Let me make it quite clear, as clear as I possibly can, the payments were loans made by CPI. 1. Defence counsel identified the key issues at trial as being whether those monies could be characterised as income (as opposed to loans), and whether Mr Pratten acted honestly in declaring the amounts of assessable income in his income tax returns. 2. Mr Pratten gave evidence and was cross-examined over 11 days. He denied that the amounts paid from the Vanuatu accounts of VITCO and IFTCO to him directly or to specified third parties were income received by him. He gave evidence that he started borrowing money from RGII/CPI in 2003 and had negotiated the loans with BDO and PKF. He said the loans from CPI had to be repaid and had been documented by individual loan documents when BDO was administering RGII/CPI and were recorded in a loan account which he signed off annually when PKF was administering RGII/CPI. He gave conflicting evidence as to whether interest was payable on the alleged loans; he said that interest was payable if the loans were not paid back, that the loans were interest free, that he had not paid any interest, that the loans had not been finalised as he had not received his payout from CPI which would be balanced against the loans, and that "one cancels the other out". The defence case pointed to some documentation that appeared to confirm the existence of loans; an unsigned loan agreement with RGII/CPI dated 9 December 2003 for $126,759, and sole director resolutions of RGII/CPI for this loan and a further loan of $75,000 on 6 January 2003. Mr Pratten also said that several of the disputed payments were reimbursements from CPI for expenses he had incurred, such as at Officeworks and legal fees paid to solicitors. 3. Mr Pratten gave evidence that he changed accountants at the end of 2008 from Mr Greer to Mr Berry because, unlike Mr Berry, Mr Greer did not understand the cattle grazing business and Mr Pratten had missed out on deductions in relation to Myidaho Natural Beef as a result. Mr Pratten also said that he changed accountants because Mr Berry was "cheaper". 4. Mr Pratten denied that he was the beneficial owner of either CPI or PPI, or that he controlled either of those companies. He also denied that the rural properties in New South Wales and the Port Vila property were his personally. According to Mr Pratten, either Mr Juris Ozols, a solicitor in Vanuatu, or Mr Agius, a partner of PKF Vanuatu, controlled CPI. Mr Pratten described himself as the agent of PPI in Australia. In closing address, defence counsel submitted that, even if the jury was satisfied that Mr Pratten controlled CPI, CPI had genuinely loaned Mr Pratten the monies in issue and that loans are not assessable income. 5. Mr Pratten denied having an intention to deceive the ATO in lodging his tax returns or having an intention to pay less tax than was legally required. When taken through each of his tax returns in cross-examination, he denied he had deliberately failed to declare income. The jury may be taken by the guilty verdicts to have rejected this evidence. Rulings on fresh or new evidence on appeal 1. Mr Pratten sought to rely upon fresh and new evidence on appeal. It is necessary to deal with this application before addressing the grounds of appeal. 2. There is a distinction to be made between "new evidence" and "fresh evidence". Fresh evidence is evidence not available to the accused at the time of the trial, actually or constructively. Evidence is constructively available if it could have been discovered, or available at the trial by the exercise of due diligence: R v Abou-Chabake (2004) 149 A Crim R 417; [2004] NSWCCA 356 at [63] (Kirby J). 3. The documentary material sought to be relied upon fell into seven categories: 1. extracts of transcripts of evidence of two Crown witnesses at Mr Pratten's first trial; 2. a subpoena to produce filed 27 May 2015 issued to the Commissioner of the AFP and related correspondence from the Commissioner objecting to the subpoena; 3. documents relating to Mr Pratten's tax affairs, including notices of amended assessment dated 4 August 2010 for the financial years ended 30 June 2003 to 2009, objections lodged by Mr Pratten, the Commissioner of Taxation's decision in relation to objections, and the Administrative Appeals Tribunal (the Tribunal) decision to adjourn Mr Pratten's application for review; 4. documents relating to the ATO's general processes and functions, being financial statements of the ATO for the years 2002-2003 to 2015-2016; 5. a transcript of evidence of Mr Michael Cranston in separate criminal proceedings in the District Court in 2019; 6. a report by M Chesterman, J Chan and S Hampton entitled "Managing Prejudicial Publicity" dated February 2001; and 7. a report of Ms Jane Goodman-Delahunty dated 7 July 2021. 1. The Crown objected to all of the material in items (1) to (7) above on the ground of relevance. Objection was also taken to the report in item (7) on the ground that the report was in the form of "advice" which sought to usurp the function of an appellate court in relation to questions which were matters of law for the Court to determine. 2. In his reply submissions, Mr Pratten indicated that he did not press the material in items (2), (4) and (5). The transcript of separate criminal proceedings, item (5), was not pressed following a concession made by senior counsel for the Crown for the purposes of the appeal that the ATO processes are fallible and may be, at times, attended by error. That leaves for consideration items (1), (3), (6) and (7). Legal principles 1. In MRW v R [2011] NSWCCA 260 at [46], Bathurst CJ identified three questions that need to be considered where a conviction is sought to be quashed and a new trial ordered on the basis of fresh evidence: First, is the evidence fresh evidence in the sense that it was not available to the appellant at the time of trial …; second, was it credible or capable of belief and third, was there a significant possibility that the jury acting reasonably would have acquitted the appellant. 1. The third proposition in MRW v R expressed in terms of a "significant possibility" is derived from the formulation of Mason and Deane JJ in Gallagher v The Queen (1986) 160 CLR 392 at 402; [1986] HCA 26, with which Gibbs CJ at 399 and Dawson J at 421 substantially agreed. The ultimate question for an appellate court is whether there has been a miscarriage of justice at the trial: Gallagher v The Queen. 2. As explained in Xie v R [2021] NSWCCA 1 at [434] (Bathurst CJ, R A Hulme and Beech-Jones JJ): With the first question, where the material in question is evidence that was in existence as at the time of the trial, the relevant issue is whether that material "could not then have been available to the appellant by the exercise on his part of reasonable diligence in the preparation of his case" (Ratten v The Queen (1974) 131 CLR 510 at 516 per Barwick CJ). If the material does not meet the first of the above tests, that is, if it is not fresh evidence but only new evidence, then there would only be a miscarriage of justice if the appellant satisfies this Court that the new evidence is such that, taken with the evidence at the trial, the conclusion should be drawn that he was innocent or that his guilt was not established beyond reasonable doubt (Ratten at 518 and 520). Application of principles 1. Applying these principles, all of the material in items (1), (3), (6) and (7) is inadmissible on appeal. 2. As to item (1), the short extracts from the transcript of evidence given by two witnesses at the first trial (FA Gerald Fletcher and FA Thomas Walker) is not fresh evidence. The material was in existence at the time of the second trial and could have been used by defence counsel in cross-examination of FA Walker who gave evidence at the second trial. Nor does this material meet the third criteria referred to in MRW v R at [46], set out above. Moreover, no attempt was made in the course of Mr Pratten's oral submissions to explain the relevance of this material on appeal. 3. As to item (3), the documents are not fresh evidence, but only new evidence relating to Mr Pratten's tax affairs. Mr Pratten submitted that these documents were relevant to show that proceedings under Pt IVC of the Tax Administration Act 1953 (Cth) (TAA 1953) to review the Commissioner's objection decision were on foot before the Tribunal at the time of the second trial. However, Mr Pratten could have sought to adduce such evidence at the second trial through cross-examination of the Crown witnesses or the tender of documents. None of this material, taken with the evidence at trial, supports the conclusion that there is a significant possibility that the jury acting reasonably would have acquitted Mr Pratten. 4. As to item (6), no submission was made by Mr Pratten in support of the admission of this document, being an empirical study of the impact of pre-trial publicity on juries. The report is not fresh evidence, but only new evidence, as it can be inferred that the report was available to the defence at the trial through the exercise of due diligence. In any event, the report is plainly inadmissible. 5. As to item (7), the report of Ms Goodman-Delahunty, a forensic and legal psychology consultant, is fresh evidence. The report gives "advice" on four questions: (1) the persuasiveness of evidence of amended tax assessments given by Mr Steven Barns of the ATO; (2) the trial judge's explanation of Mr Barns' evidence; (3) whether certain remarks of the trial judge in summing up cast suspicion or doubt on Mr Pratten's proper fiscal conduct prior to 2003; and (4) whether the trial judge's remarks in summing up could have tainted Mr Pratten's character. 6. The wrongful admission of evidence can amount to an irregularity or failure to strictly comply with the rules of procedure and evidence and as thus be a miscarriage of justice within the third limb" of s 6(1): GBF v The Queen (2020) 94 ALJR 1037; [2020] HCA 40 at [24]. 7. Mr Pratten's contention that the report is relevant because it goes to the facts in issue on grounds 1 and 1A involves a misunderstanding of the nature of the report. The "advice" or opinion of a person claiming to be an expert in assessing the impact or effect on the jury of certain evidence, or the remarks of the trial judge during the trial and in summing up, is not relevant to a fact in issue in a criminal trial. In purporting to address questions of law or questions of mixed fact and law, the report seeks to usurp the functions of an appellate court. The report is not relevant to the appeal. GROUNDS OF APPEAL 1. It is convenient to address the grounds of appeal in the following order: * challenges to the directions to the jury which are the subject of grounds 2, 3 and 5; * failure to discharge the jury (ground 4); * challenge to the admissibility of certain evidence given by Mr Barns (grounds 1 and 1A); * failure to give a Shepherd direction regarding the control of CPI (ground 6); and * unreasonable verdict (ground 6). Ground 2: Direction as to deception 1. Ground 2 contends: The trial judge erred in failing to direct the jury as to the specific act of deception on the Crown case, and instead, misdirected the jury as to the element of deception thereby causing the trial to miscarry. Background 1. The trial judge gave both written and oral directions as to the elements of the offence under sub-s 134.2(1) of the Code in these terms: [6] In order to prove the offences, the Crown must prove beyond reasonable doubt that: (a) Mr Pratten gained a financial advantage from the Commonwealth; (b) He did so by deception; (c) He acted dishonestly. 1. As to the element of dishonesty, the trial judge directed the jury, both in writing and orally, that: [10] "Dishonesty" or "dishonestly" must be given their ordinary meaning. It has an objective and subjective aspect. That is, it must be dishonest by the standards of ordinary people and known to the defendant to be dishonest according to those standards. [11] In other words, in this case, in relation to each year that is subject to a charge, you, the jury, must be satisfied: (a) that there were amounts of income received by Mr Pratten that were his income and not declared; and (b) he acted dishonestly in not declaring them and knew he was acting dishonestly. The second element in (b) above, involves a number of aspects: (i) "Dishonesty" or "dishonestly" is to be given its ordinary meaning; (ii) In order to have acted "dishonestly", Mr Pratten, in the circumstances of this case, must have: • Known the amounts were income in his hands; • Deliberately failed to declare them; and • Acted with the purpose, by deceiving the Commonwealth, of obtaining a financial advantage. 1. As to the element of deception, the trial judge instructed the jury: I didn't give you directions about deception. Part of the reason for that is I don't think in this case it is a matter of great moment, that is, if you were ultimately to come to the view that the Crown had proved beyond reasonable doubt that Mr Pratten receive [sic] income and was acting dishonestly by community standards and knew he was acting dishonestly by community standards, then deception almost follows because the filing of a tax return that did not disclose that income would be a deception. Nevertheless, deception is an element of the offence and, as a matter of formality, I have to tell you that you have to find that there was deception involved in that which Mr Pratten did in order for you to find guilt. The reason that it is more complicated is that, frankly, the Commonwealth Criminal Code under which Mr Pratten has been charged is one of the more complicated criminal statutes on the books. So what I am really saying to you is you have to find deception as well, but in some practical senses, in fact almost every practical sense, the term deception in this case and the term dishonesty in this case, in terms of a mental element, overlap significantly. I do have to tell you, however, that you can deceive someone, that is, be involved in deception, through reckless behaviour, you don't have to intend to deceive somebody. So as I said, you may think if you came to the conclusion that Mr Pratten acted dishonestly and knew the amounts were income and should have been declared, then there was an actual and known deception of the Tax Office. But if you were to have issues about deception, as distinct from dishonesty, you should understand that deception can be caused by recklessness, that is, by a deliberate disregard of consequences known to the accused or the substantial risk that what he was doing would deceive the Australian Taxation Office. 1. Later in the summing up, the trial judge directed the jury that they needed to be satisfied beyond reasonable doubt "that the accused acted dishonestly, that he engaged in deception and that he obtained a financial advantage, that is, he received income he did not declare". Submissions 1. The principal submissions advanced by Mr Pratten were that the trial judge: 1. failed to give a direction that the jury had to be satisfied beyond reasonable doubt that Mr Pratten had committed the particular deception alleged by the Crown, which Mr Pratten described as "the avoidance", namely, that Mr Pratten changed his accountants in 2008 from Mr Greer to Mr Berry to avoid disclosure of his interests in Vanuatu after a query was made by Mr Greer in relation to questions 18 and 19 of his tax returns; 2. had conflated the elements of deception and dishonesty in the directions to the jury; and 3. failed to give a direction that the element of deception was the "physical" element of the offence. 1. In addition, complaint was made that the Crown Prosecutor had failed to draw these matters to the attention of the trial judge. Consideration 1. For the purpose of Ch 7 of the Code ("The proper administration of government"), in which the offence under sub-s 134.2(1) is contained: * "deception" is defined in s 133.1 of the Code: 133.1 Definitions In this Part: … deception means an intentional or reckless deception, whether by words or other conduct, and whether as to fact or as to law, and includes: (a) a deception as to the intentions of the person using the deception or any other person; and (b) conduct by a person that causes a computer, a machine or an electronic device to make a response that the person is not authorised to cause it to do. * "dishonesty" is defined in s 130.3 of the Code: 130.3 Dishonesty For the purposes of this Chapter, dishonest means: (a) dishonest according to the standards of ordinary people; and (b) known by the defendant to be dishonest according to the standards of ordinary people. * the determination of dishonesty is a matter for the trier of fact; in this case, the jury: Code, s 130.4. 1. Mr Pratten's challenge to the direction on deception is based on a misconception that the Crown relied upon Mr Pratten's conduct in changing accountants in 2008 to prove the act of deception. That was not the Crown case. The act of deception relied upon by the Crown was Mr Pratten causing his tax returns to be lodged whilst knowingly under-declaring his income. Mr Pratten was cross-examined about his intention to deceive the Commonwealth in relation to his tax returns. 2. The evidence relating to Mr Pratten's change of accountants in 2008 was relevant to the Crown's circumstantial case about Mr Pratten's state of mind and whether he acted dishonestly. The evidence was also relevant to assessing whether Mr Pratten was being truthful when he gave evidence that he did not have an interest in CPI or PPI. 3. The jury was correctly directed as to the elements of the offences, relevantly, that dishonesty and deception are separate elements of the offences. The direction as to deception correctly distinguished the act of deception as an element of the offence from the "mental element" of the offence involving dishonesty. 4. Although the trial judge did not expressly describe the alleged act of "deception" as "conduct" or the "physical" element of the offence, the directions identified the nature of the conduct relied upon by the Crown as the act of deception: causing tax returns to be lodged in which Mr Pratten's income was knowingly under-declared. That was sufficient. It was not necessary for the directions, which contrasted the act of deception relied upon by the Crown from the mental element of dishonesty, to describe the act of deception as the "physical" element of the offence. 5. The direction correctly noted that in practical terms there was a significant overlap between the fault element of dishonesty (that Mr Pratten had received income and acted dishonestly in not declaring that income in his tax returns and knew he was acting dishonestly) and the "physical" element of deception (Mr Pratten's conduct in causing tax returns to be lodged in which his income was knowingly under-declared). That does not mean that the directions as to the elements of dishonesty and deception were conflated. The directions were clear that dishonesty and deception are separate elements of the offence. 6. Given the above, the complaint that the Crown Prosecutor did not draw the asserted deficiencies in the directions to the trial judge's attention is misconceived. Rule 4.15 1. Rule 4.15 of the Supreme Court (Criminal Appeal) Rules provides: No direction, omission to direct, or decision as to the admission or rejection of evidence, given by a trial judge may, without the leave of the Court, be allowed as a ground for appeal or an application for leave to appeal unless objection was taken at the trial to the direction, omission, or decision by the appellant or applicant for leave. 1. In Obeid v R (2017) 96 NSWLR 155; [2017] NSWCCA 221 at [24]-[25], Bathurst CJ (Leeming JA, R A Hulme, Hamill and N Adams JJ agreeing) accepted, as Basten JA pointed out Greenhalgh v R [2017] NSWCCA 94 at [14], that the exercise of the discretion to grant leave conferred by the former r 4 (which was in almost equivalent terms to r 4.15) cannot be proscribed. In Trevascus v R [2021] NSWCCA 104 at [32], Bellew J observed that in Obeid, Bathurst CJ went on to formulate a number of propositions in relation to the operation of r 4, which Bellew J summarised as follows: (1) the discretion conferred by rule 4 will be exercised in an applicant's favour where there has been a miscarriage of justice, such that the applicant has lost a real chance of acquittal; (2) if a necessary element of a fair trial according to law has been overlooked, leave should generally be granted; and (3) the giving of proper directions by the trial judge to the jury as to the elements of the offence is a necessary element of a fair trial. 1. In Greenhalgh v R at [17]-[19], Basten JA said of the significance of legal representation at trial for the operation of r 4: [17] The discretionary power conferred by r 4 has a number of particular features which affect its application. Where, as in this case and in most serious criminal trials, there is legal representation at trial the following principle, stated by Gleeson CJ in Nudd (at [9]), is applicable: A criminal trial is conducted as adversarial litigation. A cardinal principle of such litigation is that, subject to carefully controlled qualifications, parties are bound by the conduct of their counsel, who exercise a wide discretion in deciding what issues to contest, what witnesses to call, what evidence to lead or to seek to have excluded, and what lines of argument to pursue…. It is the fairness of the process that is in question; not the wisdom of counsel. As a general rule, counsel's decisions bind the client. If it were otherwise, the adversarial system could not function. [18] Inherent in that proposition is the need to assess unfairness "by reference to an objective standard, and without an investigation of the subjective reasons for that conduct" (Nudd at [9]). Accepting that there may be unusual cases where the reason why an act or omission occurred may be relevant, the Chief Justice nevertheless reiterated (Nudd at [10]): As a matter of principle, such objectivity is consistent with the assumptions on which the adversarial system operates. As a matter of practicality, it avoids the difficulties inherent in turning a criminal appeal into an investigation of the performance of trial counsel. [19] An objective assessment may be inconclusive. In some cases it will be possible to infer that a step was not taken which might have been taken, for tactical reasons. However, in most cases it will be difficult to know from reading the transcript of the trial whether some tactical advantage may have been perceived, whether a step was not taken based on instructions as to how the case should be run, or whether it was omitted through inadvertence. 1. The statement by Gleeson CJ in Nudd v The Queen [2006] HCA 9; (2006) 80 ALJR 614 at [9], to which Basten JA referred in Greenhalgh v R at [17], was affirmed in The Queen v Baden-Clay (2016) 258 CLR 308; [2016] HCA 35 at [48]. 2. As there was no objection at trial to the directions on deception, r 4.15 applies. I would refuse leave. In any event, for the reasons given, ground 2 has not been made out. Ground 3: Direction as to financial advantage 1. Ground 3 contends: The trial judge erred in directing the jury as to the constitution of financial advantage, an essential element of each offence, in a way that confused and conflated the financial advantage alleged on the Crown case, that of being a lesser liability to tax consequent on failing to declare income, with that of a financial advantage resting on undisclosed income alone, so that it cannot be certain that the jury verdicts of guilty were rendered unanimously on a properly informed basis, thus causing the trial to miscarry. Background 1. In the general written directions, the trial judge directed the jury: 7. In the particular circumstances of these offences: (a) There is no issue that, if there were a financial advantage, it was from the Commonwealth; (b) That, if one or more of the disputed amounts in any one year to which the Crown have referred were income of Mr Pratten, it was required to be declared and, since it was not declared, was a financial advantage unless there is a reasonable possibility on the evidence before you (being evidence you accept) that there were sufficient business deductions to negate wholly any such income. (Emphasis added.) 1. During legal argument about the general directions proposed to be given to the jury, defence counsel foreshadowed that the issue of deductions was not going to be the subject of a submission by the defence and requested that par [7(b)] be taken out of the general directions. The trial judge disagreed and indicated that par [7(b)] would remain and there would be some comment about deductions, consistent with the decision of this Court on the first conviction appeal and the tax law directions: Pratten v R [2014] NSWCCA 117 at [106]. 2. In the tax law directions, the trial judge directed the jury on the concept of deductions: Taxable income 19. Taxable income is calculated by determining the assessable income minus all allowable deductions. Tax will be assessed on the taxable income, less losses, which have arisen from previous tax years, that meet the rules allowing them to be carried forward. Deductions 20. A taxpayer may deduct from their assessable income any "loss or outgoing" to the extent that it is incurred in gaining or producing their assessable income, or if it is necessarily incurred in carrying on a business, but may not deduct capital expenditure or private expenditure. 21. Where assessable income exceeds allowable deductions, the balance is taxable income. 1. The trial judge also gave the following oral directions: So, if Mr Pratten in fact received income that he did not declare, that is, a financial advantage from the Commonwealth, and got a tax advantage for it, that is a financial advantage from the Commonwealth. But the Crown also needs to prove beyond reasonable doubt that he did so as a matter of deception and he did so dishonestly. Now, not much attention has been paid to deception. You can deceive the Commonwealth recklessly. I do not think anyone is putting that. In some senses, in a case such as this, if you found the receipt of income that was not declared and was not offset by allowable deductions such that there was a financial advantage and you found that Mr Pratten knew that it was income, that is, knew it was dishonest, you would probably not trouble yourself with the question of deception for very long, and for that reason, neither of the parties have paid much attention to it. (Emphasis added.) Submissions 1. Mr Pratten's challenge to the direction on financial advantage relied upon the following propositions: 1. the direction on financial advantage conflated the financial advantage alleged on the Crown case (being a lesser liability to tax consequent on failing to declare income) with that of the financial advantage resting on undisclosed income alone; 2. to the extent that on occasions the trial judge referred to the failure to declare "income", there was a possibility or likelihood that the jury reasoned to verdicts of guilt based upon a misunderstanding of the element of financial advantage, relying upon undeclared income alone to prove financial advantage; and 3. the general directions at [7(b)] were legally incorrect as deductions do not "negate" income, rather deductions reduce assessable income to taxable income from which a taxpayer's liability for tax is calculated. 1. Again, Mr Pratten complained that the Crown Prosecutor had failed to draw these matters to the attention of the trial judge. Consideration Whether the direction conflated financial advantage with undisclosed income alone 1. Section 4-15 of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997) provides that "taxable income" for the income year is to be calculated as follows: … Taxable Income = Assessable Income – Deductions 1. The statutory regime relating to Mr Pratten's liability for income tax was explained in Pratten v R [2014] NSWCCA 117 at [87]: The statutory regime provided that income tax became due and payable by the appellant 21 days after the due date for lodgement of his return or after a notice of assessment was given, whichever was the later: s 204(1) of the Income Tax Assessment Act 1936 (Cth) (ITAA36). The appellant was deemed to have received a notice of assessment of his taxable income and of the tax payable on that taxable income on the filing of each of his tax returns: s 166A of ITAA36. The amount of tax which by s 204(1) then became due and payable was the amount specified in each return. Once that tax-related liability was due and payable, the amount of the tax was a debt due to the Commonwealth and payable to the Commissioner of Taxation: Taxation Administration Act 1953 (Cth), Schedule 1, s 255-5. 1. The adequacy of the trial judge's directions and summing up will necessarily depend upon the circumstances of the case and the nature of the issues involved at the trial. In RPS v The Queen (2000) 199 CLR 620; [2000] HCA 3, Gaudron ACJ, Gummow, Kirby and Hayne JJ said at [41]: … The fundamental task of a trial judge is, of course, to ensure a fair trial of the accused. That will require the judge to instruct the jury about so much of the law as they need to know in order to dispose of the issues in the case. No doubt that will require instructions about the elements of the offence, the burden and standard of proof and the respective functions of judge and jury. Subject to any applicable statutory provisions it will require the judge to identify the issues in the case and to relate the law to those issues. It will require the judge to put fairly before the jury the case which the accused makes. … (Citations omitted.) 1. The Crown case was that the financial advantage obtained by Mr Pratten was a lesser liability to tax consequent on failing to declare income. That is, by not declaring income, the amount of income tax that Mr Pratten was deemed by the lodging of the return to be assessed as liable to pay, was less than it would have been had that amount been declared as income. 2. In oral argument, Mr Pratten accepted that the trial judge directed the jury to take into consideration the question of deductions in determining whether there had been proper disclosure of taxable income. Nonetheless, Mr Pratten submitted that the jury must have been overwhelmed by the so-called "conflated" direction in the first sentence of the oral directions, which referred to "income that he did not declare" (see [103] above), such that financial advantage could be concluded by the jury on (undisclosed) income alone, without taking into consideration the possibility of deductions. I reject this submission. 3. The directions and summing up are to be taken as a whole. Mr Pratten's contention erroneously takes out of context the abbreviated reference in one sentence of the oral directions to undeclared income from the remainder of the directions on the element of financial advantage. The jury was correctly directed to consider the question of allowable deductions and to determine whether Mr Pratten received income that was not declared and was not offset by allowable deductions such that there was a financial advantage, that is, a lesser liability to tax. Use of the word "negate" 1. Accepting that deductions "reduce" assessable income, there is no substance in Mr Pratten's contention that the jury was misdirected by the use of the word "negate" in par [7(b)] of the general directions. 2. First, given the immediately preceding reference in par [7(b)] of the general directions to "business deductions", the context in which the word "negate" was used in par [7(b)] was that "deductions" reduce assessable income. 3. Second, the concept that deductions "reduce" assessable income was explained to the jury in the tax law directions at pars [19], [20] and [21], which were consistent with s 4-15 of the ITAA 1997 (see [102] above). Those tax law directions were repeated in the oral directions (see [103] above). Taken together, the general directions, the tax law directions and the oral directions correctly explained to the jury that taxable income is calculated by determining the taxpayer's assessable income minus allowable deductions. 4. Given the above, the complaint that the Crown Prosecutor did not draw the asserted deficiencies in the directions to the trial judge's attention is misconceived. 5. As there was no objection at trial to the directions on financial advantage, r 4.15 applies. I would refuse leave. In any event, for the reasons given, ground 3 has not been made out. Ground 5: Directions on tax law as to derivation of ordinary income 1. Ground 5 contends: The trial judge erred in his directions as to how the jury was to approach the question of derivation of ordinary income. Background 1. The jury was provided with written directions on tax law which relevantly included: Assessable income 12. Australian taxpayers are required to include in their returns all income derived directly or indirectly from all sources whether in or out of Australia in the twelve months of the relevant financial year or other approved substituted accounting period. 13. The time at which income is derived is, relevantly, when it is paid to or dealt with as directed by the taxpayer or on her, his or its behalf. An item of an income character is derived when it has "come home" to the taxpayer. The fact, if it be the fact, that income is earned illegally, immorally or invalidly does not preclude derivation of income. An item of an income character that has been derived will be income in the amount of its realisable value. 14. The assessable income of an Australian resident (which includes Mr Pratten) includes: a) Assessable income earned in Australia and assessable income earned overseas; b) Assessable income to which the taxpayer is entitled and which is dealt with on the person's behalf or as the person directs. 15. Not all money or items of value received by a taxpayer are assessable income, for example, loan monies are generally not treated as assessable income for companies, trusts or individuals. 16. The general rule relating to "loans", described in 15 above, does not apply in two circumstances: (a) the amount, although described as a loan, is not really a loan in that it is not genuine, has no legal effect i.e. is not to be repaid; (b) if the amount were an advance on income being an amount paid before the taxpayer is entitled to be paid which, in practical terms, was not intended to be repaid other than in the sense that it is required to be worked off later or credited against future income due or to be due later. Ordinary income 17. Assessable income consists of ordinary income and statutory income. Ordinary income, usually, excludes distributions from a trustee of a trust to a beneficiary of that trust and excludes genuine loans. 18. Otherwise, an item is ordinary income if the item has been derived in circumstances that gives it, in other respects, an income character. Some criteria for determining whether an amount (or a gain) is income include: a) The character of an item as income must be judged in the circumstances of its derivation by the taxpayer, and without regard to the character it would have had if it had been derived by another person; b) To have the character of income an item must be a gain by the taxpayer who derived it; c) There is no gain unless an item is derived by the taxpayer beneficially; d) There is no gain if an item is derived by the taxpayer from himself; e) There is no gain if an item is derived by the taxpayer as a contribution to capital; f) A gain that is a mere gift does not have the character of income; g) A mere windfall gain does not have the character of income; h) A capital gain does not ordinarily have the character of income; i) A gain that is one of a number derived periodically has the character of income; j) A gain (other than a capital gain) derived from property (e.g. rent) has the character of income; k) A gain that is a reward for services rendered or to be rendered has the character of income; and l) A gain that arises from an act done in carrying on a business (including an isolated business venture) has the character of income. (Emphasis added.) 1. The tax law directions also included pars [19], [20] and [21], which are set out at [102] above. 2. In the summing up, the trial judge succinctly summarised the respective cases of the Crown and the defence on whether the monies received by Mr Pratten and his associated entities in Australia were assessable income or loans: The Crown case is, in a nutshell, that Mr Pratten diverted money to Vanuatu, utilising Vanuatu's corporate secrecy regime. Then, aware that loans, if genuine, would not be income, he transferred the money out of Vanuatu to his account, or to the account of one or more of his companies, calling them loans to evade tax, all the while having no intention or requirement to repay the monies. In a nutshell that is the Crown case. In that way these monies were brought home to Mr Pratten by Mr Pratten as part of a deliberate scheme to deceive the Australian Government and the tax department. … The accused says, bearing in mind it is for the Crown to prove its case, not the accused to disprove it, that there is sufficient detail in the documents to show that the money received was in the category of loans, including, in that regard, that the Crown has not proved beyond reasonable doubt that they were not genuine loans. Mr Pratten gives evidence that the monies received were loans. It is not for Mr Pratten to disprove. It is for the Crown to prove. Even if you were to disbelieve Mr Pratten, it is still for the Crown to prove otherwise. 1. Later in the summing up, the trial judge stated: In essence, were the loans genuine? Were the monies genuine loans? And did Mr Pratten understand that they were not genuine loans, that is, that they were not needed to be repaid? If both of those are answered, one way or the other, that will answer to a large degree all of the issues that I have said have to be answered in order for you to find a verdict one way or the other. Ultimately, the questions that you have to answer and the verdicts that you reach depend upon three simple questions. In each year to which the charges relate were the amounts Mr Pratten received, either directly or indirectly, from IFTCO or VITCO, that is, the amounts he received himself or the payments made by IFTCO and VITCO to third parties, were they income of Mr Pratten? Secondly, did Mr Pratten know the receipts and payments were income that was required to be declared? Thirdly, did he dishonestly deceive the Commonwealth to obtain a financial advantage in not declaring them? They are the three simple questions. (Emphasis added.) Submissions 1. In writing, Mr Pratten submitted that the directions on tax law misdirected the jury as to the concept of derivation of ordinary income for three reasons: 1. the directions confused the concept of derivation of income with that of the timing of when an item becomes income; 2. the directions gave the impression that the fact that monies were dealt with by Mr Pratten or on his behalf was sufficient to conclude that those monies were assessable income; and 3. the trial judge failed to direct the jury that in order to be satisfied that an amount was ordinary income of Mr Pratten, the jury had to be satisfied that any undeclared income originated from CPI. 1. The third submission can be put aside as it was not pressed. 2. In oral argument, Mr Pratten submitted that par [13] of the tax law directions, concerning the timing of receipt of income, was a "commanding" direction because the direction used the word "is" in the phrase "is paid to or dealt with as directed by the taxpayer" (see [118] above). Reference was made, by way of contrast, to the direction given in relation to the timing of receipt of income in Castagna v R; Agius v R (2019) 278 A Crim R 194; [2019] NSWCCA 114 at [73]. Consideration 1. In Scott v Commissioner of Taxation (NSW) (1935) 35 SR (NSW) 215, Jordan CJ said of the concept of "income" at 219: … The word "income" is not a term of art, and what forms of receipts are comprehended within it, and what principles are to be applied to ascertain how much of those receipts ought to be treated as income, must be determined in accordance with the ordinary concepts and usages of mankind, except in so far as the statute states or indicates an intention that receipts which are not income in ordinary parlance are to be treated as income, or that special rules are to be applied for arriving at the taxable amount of such receipts. (Citations omitted.) 1. That remains the position; there is no comprehensive definition in the income tax legislation of what is meant by "income". Thus, s 6-5(1) of the ITAA 1997 provides: Operative provisions 6-5 Income according to ordinary concepts (ordinary income) (1) Your assessable income includes income according to ordinary concepts, which is called ordinary income. … 1. The effect of s 6-5(1) is that whether an amount is ordinary income is assessed according to ordinary concepts. 2. Section 6-5(2) of the ITAA 1997 provides that assessable income of an Australian resident includes: … the ordinary income you derived directly or indirectly from all sources, whether in or out of Australia, during the income year. 1. In this case, the tax law directions addressed three related matters in determining the taxpayer's "ordinary income". 2. The first concerned the character of the taxpayer's receipts. This was the subject of par [18] of the tax law directions which identified the criteria for determining whether an amount (or a gain) is income. Those criteria were taken from RW Parsons' Income Taxation in Australia: Principles of Income, Deductibility and Tax Accounting at [2.7]. No complaint is made in relation to this aspect of the tax directions which instructed the jury about how they were to determine whether the particular amounts transferred from VITCO or IFTCO to Mr Pratten, to his associated entities or to third parties at his direction, were income. 3. The second concerned the taxpayer's entitlement to assessable income. This was dealt with in par [14] of the tax law directions. In the absence of actual receipt by the taxpayer, there must be some entitlement to receipt that meets the criteria of a gain in the sense that it has "come home" to a taxpayer in realised or realisable form: Federal Commissioner of Taxes (South Australia) v Executor Trustee and Agency Co of South Australia Ltd (1938) 63 CLR 108 at 155 (Dixon J); [1938] HCA 69. For an amount to have "come home", it needs to have been received or earned free of restriction: Arthur Murray (NSW) Pty Ltd v Commissioner of Taxation (1965) 114 CLR 314 at 318; [1965] HCA 58. 4. The jury was correctly directed in par [14(b)] of the tax directions that, in order to be ordinary income, Mr Pratten must have had an entitlement to the payments which were dealt with on his behalf or as he directed, being a reference back to the direction in the first sentence of par [13] addressing the time at which income is derived, namely, when it is dealt with as directed by the taxpayer or on his or her behalf. 5. The third concerned the time at which the derivation of income occurs, as to which s 6-5(4) of the ITAA 1997 provides: In working out whether you have derived an amount of ordinary income, and (if so) when you derived it, you are taken to have received the amount as soon as it is applied or dealt with in any way on your behalf or as you direct. (Emphasis in original.) 1. The effect of the predecessor to s 6-5(4) was considered in Federal Commissioner of Taxation v Mochkin (2003) 127 FCR 185; [2003] FCAFC 15, where the Full Federal Court (Sackville J, Merkel and Kenny JJ agreeing) rejected the submission that s 19 of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936) (now repealed) – the equivalent to s 6-5(4) of the ITAA 1997 – had the effect that income was deemed to be derived by the taxpayer whenever it was dealt with as the taxpayer directed. Sackville J said at [132]: Section 19 of the ITAA [1936] does not advance matters from the Commissioner's perspective. Section 19 does not say that income is deemed to be derived whenever it is dealt with as a Taxpayer directs. As was pointed out by the High Court in Permanent Trustee Co of New South Wales v Commissioner of Taxation (Cth) (1940) 6 ATD 5 at 12, the section: '… says that it shall be deemed to be derived income on the assumption that it is income and in other respects is derived notwithstanding that there is no actual payment over but a capitalisation or other dealing on behalf of the Taxpayer or under his direction.' (Emphasis added.) See also Brent v Commissioner of Taxation (Cth) (1971) 125 CLR 418 at 430-431, per Gibbs J. 1. These remarks were referred to with approval by this Court in Castagna at [144], a case involving s 6-5(4) of the ITAA 1997. 2. The difficulty with Mr Pratten's characterisation of par [13] of the tax law directions as a "commanding" direction that overrode the other directions on tax law is that this contention fails to have regard to the whole of the tax law directions in the context of the issues at trial. As the Crown submitted, the tax law directions and the summing up correctly directed the jury that they were required to determine: (1) whether Mr Pratten had an entitlement to the payments in issue; (2) whether those payments could be characterised as assessable income as opposed to a loan; and (3) whether those payments should have been included in his assessable income in the year in which Mr Pratten directed they be applied for his benefit. 3. The trial judge appropriately addressed the timing issue in the first sentence of par [13] of the tax law directions. This direction was repeated in par [14(b)] ("… and which is dealt with on the person's behalf or as the person directs"). The directions did not suggest that for the monies to be income of Mr Pratten it was sufficient that they were dealt with by him or on his behalf. Castagna 1. Mr Pratten's reliance on the tax direction given in Castagna (referred to at [73] of that judgment) is misplaced. In that case, direction 12 was amended by the trial judge to read: 12. One factor that you might take into account when considering whether an Australian taxpayer has "derived" an amount of income is that an Australian taxpayer may have derived income when it is either paid to them, or when it is applied or dealt with in any way on their behalf or as they direct. Another factor which you might take into account on this question is the parties and terms of the consultancy agreements … (Emphasis added.) 1. Mr Pratten highlighted the difference between the word "is" in par [13] of the tax law directions in this case and the word "may" in the first sentence of direction 12 in Castagna. But the correctness or adequacy of direction 12 was not in issue on the appeal in Castagna, nor was any comment made by the Court concerning the adequacy of that direction. Moreover, Castagna involved a different issue, namely, whether Dr Castagna or the company which had provided his services to Macquarie Bank under a legitimate consulting arrangement, which the Crown did not allege to be a sham, had derived the income paid under that agreement, and therefore whether Dr Castagna had dishonestly failed to declare those amounts paid to the company in his tax return. The issue on appeal was whether the trial judge had erred in failing to enter a verdict by direction because the payments in question were income of the company and not Dr Castagna. 2. In contrast to Castagna, the issues in the present case involved the characterisation of the payments from the VITCO and IFTCO accounts, as well as the timing of those payments. On the Crown case, Mr Pratten had an entitlement to the monies in CPI and derived income at the time when the payments were made either directly to him or to third parties at his direction. Unlike Castagna, many of the payments in question were made directly to Mr Pratten; other payments were made for his benefit (such as the payment of his rent and his children's school fees). The factual circumstances of this case are distinguishable from Castagna. 3. As there was no objection at trial to the tax law directions, r 4.15 applies. I would refuse leave. In any event, for the reasons given, ground 5 has not been made out. Ground 4: Failure to discharge the jury 1. Ground 4 contends: The trial judge erred in failing to discharge the jury on the appellant's application that there had been a fundamental change in the Crown case which thus substantially and irremediably prejudiced the appellant's defence thereby causing the trial to miscarry. Background 1. The circumstances in which the trial judge refused the application by defence counsel to discharge the jury were as follows. 2. The Crown Prosecutor opened the case on the basis that the monies paid directly into Mr Pratten's St George bank account from VITCO and IFTCO during the 2003 to 2009 financial years, without being declared, was "some $2.9 million", and that the payments made to third parties from the VITCO and IFTCO accounts during that period for the benefit of Mr Pratten, without being declared, "totalled some $2.1 million". 3. The Crown Prosecutor took the jury to Exhibit A which included a chart prepared by Ms Celona identifying the total transfers from VITCO in the 2003 financial year. These comprised $389,898 paid to Mr Pratten's St George bank account, $458,825 paid for the purchase of Skallet and $219,983 paid for the purchase of the Stroud hardware store. The Crown Prosecutor drew attention to the fact that RGII/CPI was not incorporated until August 2002 and that there was evidence that prior to this date some monies were held in the VITCO account on behalf of Mr Pratten. The Crown Prosecutor said: Now in that first year you will recall that Rural & General International Insurance didn't begin to operate until August 2002. There is evidence there was some moneys already in VITCO on behalf of Mr Pratten, so that might be one of the areas you will consider closely when you look at determining whether you accept that that was income that should have been declared or something else. 1. The evidence of "some moneys" held in the VITCO account on behalf of Mr Pratten was a reference to a letter dated 28 June 2002 from BDO to RGIL confirming that VITCO held $500,000 in trust for GNPPD and those monies were a loan from RGIL to GNPPD. It will be recalled that GNPPD was Mr Pratten's company (see [21] above). 2. On the ninth day of the trial, in the course of legal argument, the Crown Prosecutor referred to his opening concerning the payments which occurred prior to the incorporation of RGII/CPI and said: Your Honour will recall I opened saying that not all the money came from CPI but that because there was already money come [from] IFTCO which the Crown says came from, or there is an inference that it came from loans that GNPPD had. 1. The reference to "IFTCO" was an error, as the reference should have been to VITCO; however, nothing turns on this misdescription. Later on the ninth day of the trial, Mr Greer gave evidence that there was an outstanding loan from GNPPD to Mr Pratten. Thus, as the Crown Prosecutor had indicated in his opening address, there was evidence to suggest that the first five payments for Skallet were not sourced from CPI, but from a loan by RGIL to GNPPD. 2. On the discharge application the following day, defence counsel complained that the Crown's submission – that not all the money came from CPI – represented a fundamental change in the Crown case. Defence counsel indicated that Mr Pratten wished to go to the jury with the submission that the Crown theory did not hold up in relation to the Skallet purchase because the first five payments did not come from CPI and, accordingly, the jury should carefully scrutinise the rest of the Crown case. The submission continued that, by changing its case, the Crown was attempting to fix a gap in its case and, had defence counsel been aware of the way the Crown was now putting its case in relation to the first five payments, counsel would have cross-examined Mr Greer or Ms Celona, differently. 3. The trial judge refused the application to discharge the jury giving the following reasons: R v Pratten (No 20) [2015] NSWSC 1102. 4. First, the Crown had not confined its case in respect of count 1 to the proposition that the income was received exclusively from CPI; on count 1, the Crown had particularised an amount of $389,898 paid into Mr Pratten's personal bank account between 7 January 2003 and 6 June 2003, in addition to a further $678,808 paid from the VITCO account to third parties, predominately for the purchase of Skallet. 5. Second, whilst Mr Pratten may have understood the Crown case as confined to transfers from CPI, even if the Crown case was so confined, the Crown was entitled to show that those five payments were also made at the direction of Mr Pratten and for his benefit in order to persuade the jury that these payments were not inconsistent with the remainder of the Crown case. The trial judge observed that this was not coincidence or tendency evidence, but a means of undermining the submission that might have been made by the defence that the first five payments did not fit the majority of the Crown case and were inconsistent with guilt otherwise proved. 6. Third, the fact that the first five payments were not monies from CPI did not mean that the jury could not conclude that other payments of monies were from CPI. Nor did it deprive Mr Pratten of the opportunity to argue that there was a flaw in the Crown theory that gave rise to a reasonable hypothesis inconsistent with guilt in relation to all of the counts. 7. Fourth, it was not appropriate to discharge the jury given how far the trial had progressed. 8. The trial judge ruled that, as a matter of fairness, the Crown should be confined to putting its case on the basis that the monies received by Mr Pratten as income were the monies directly received from CPI or transferred to third parties at his direction from CPI. To the extent that there was any prejudice by failing to give appropriate notice to Mr Pratten, the judge directed that Ms Celona and Mr Greer be recalled for cross-examination if Mr Pratten so requested. Ultimately, Mr Pratten did not seek to further cross-examine those witnesses. Submissions 1. Mr Pratten contended that the trial miscarried as a result of the failure to discharge the jury based on a fundamental change in the Crown case. The asserted prejudice to the defence case was said to be that the Crown was permitted to fix up a hole or gap in its case, and Mr Pratten would have obtained different evidence to deal with the change in the Crown case. Legal principles: application to discharge the jury 1. Where a judge has refused to discharge the jury and the accused has been convicted, the appeal is "not against the failure to discharge the jury but against the conviction": Maric v The Queen (1978) 52 ALJR 631 at 634 (Gibbs ACJ). In Crofts v The Queen (1996) 186 CLR 427 at 440-441; [1996] HCA 22, the majority stated the principles in the following terms: It may be accepted that the Court of Criminal Appeal approached the matter with the correct principles in mind. No rigid rule can be adopted to govern decisions on an application to discharge a jury for an inadvertent and potentially prejudicial event that occurs during a trial. The possibilities of slips occurring are inescapable. Much depends upon the seriousness of the occurrence in the context of the contested issues; the stage at which the mishap occurs; the deliberateness of the conduct; and the likely effectiveness of a judicial direction designed to overcome its apprehended impact. As the court below acknowledged, much leeway must be allowed to the trial judge to evaluate these and other considerations relevant to the fairness of the trial, bearing in mind that the judge will usually have a better appreciation of the significance of the event complained of, seen in context, than can be discerned from reading transcript. Nevertheless, the duty of the appellate court, where the exercise of discretion to refuse a discharge is challenged, is not confined to examining the reasons given for the order to make sure that the correct principles were kept in mind. The appellate court must also decide for itself whether, in these circumstances, the result of the refusal to discharge the jury occasioned the risk of a substantial miscarriage of justice. In other words, can the appellate court say with assurance that, but for the admission of the inadmissible evidence, the conviction was inevitable? … (Emphasis added.) 1. Dawson J, although in dissent, made the following remarks at 432: Whether or not a jury should be discharged by reason of some incident which occurs during the course of a trial is a matter within the trial judge's discretion. But it is a discretion which is to be exercised in favour of a discharge only when that course is necessary to prevent a miscarriage of justice. It is in that sense that it has been said that the underlying principle is that of necessity and that "a high degree of need for such discharge" must appear before a discharge will be ordered. When a trial judge's refusal to discharge a jury is called in question, it must be borne in mind that he or she is ordinarily in a better position than an appeal court to assess whether, having regard to the course which the trial has taken and the atmosphere in which it has been conducted, any prejudice may be dispelled by a clear warning to the jury. (Citations omitted.) 1. In Hamide v R (2019) 101 NSWLR 455; [2019] NSWCCA 219, the Court (Bathurst CJ at [8], Bell P at [127], Davies J agreeing with Bell P) held that the relevant principles in determining an appeal against conviction on the ground that a miscarriage of justice was occasioned by a trial judge's refusal to discharge a jury are those stated in Crofts, not those in House v The King (1936) 55 CLR 499; [1936] HCA 40, even though a decision not to discharge a jury is a discretionary one. This is because the appeal under s 5(1) of the Criminal Appeal Act is against conviction; it is not against the failure to discharge the jury. Consideration 1. Mr Pratten's contention that he was prejudiced by the Crown's acknowledgment that the five payments for the purchase of Skallet came from monies in the VITCO account held for GNPPD, not CPI, ignores how the case was in fact opened to the jury by the Crown. As indicated, in opening address the Crown acknowledged that there was evidence that "some moneys" were already held by VITCO on behalf of Mr Pratten prior to the incorporation of RGII/CPI in August 2002. The Crown told the jury that this was one of the areas they would need to consider closely when determining whether those payments were income that should have been declared or were "something else". There was no change in the Crown case. 2. The effect of the trial judge's ruling was that the Crown was ultimately confined in the way in which it could rely upon the first five payments. In closing address, the Crown Prosecutor told the jury they could not use those payments as proof of Mr Pratten's guilt on count 1 of the indictment. The jury was also given directions to the same effect in the trial judge's summing up. There was no prejudice to Mr Pratten in the Crown case being confined in that manner. 3. Three further observations should be made concerning the asserted prejudice to the defence case. 4. First, Mr Pratten was given, but did not exercise, the opportunity to further cross-examine Mr Geer and Ms Celona. 5. Second, in closing address, Mr Pratten relied upon the first five payments to undermine the Crown case, which defence counsel described as the "house of cards" as the Crown could not explain where the five transactions came from and referred to these payments as "mystery transactions" which "demonstrates and shows that the Crown theory fails". 6. Third, although Mr Pratten asserted in this Court that he would have obtained different evidence to deal with the so-called change in the Crown case, such evidence was not foreshadowed before the trial judge. Mr Pratten had ample notice of the Crown's intention to rely upon the evidence of monies in the VITCO account, as the first five transactions formed part of Exhibit A which was tendered without objection. There is no merit in Mr Pratten's assertion that the defence was prejudiced because it could have sought more documents to make the same point, namely, that $500,000 in the VITCO account was held for GNPPD. I am not persuaded that the refusal to discharge the jury occasioned a risk of a substantial miscarriage of justice. Other issues raised under ground 4 1. Mr Pratten's submissions on ground 4 raised three other contentions: 1. the evidence of the first five payments was tendency evidence or, even if not adduced for a tendency purpose, was highly prejudicial and tendency reasoning may have been used by the jury. Accordingly, the trial judge should have rejected the evidence as tendency evidence under ss 97 and 101 of the Evidence Act 1995 (NSW), or as prejudicial evidence under ss 135 or 137; 2. the trial judge erred in admitting into evidence Mr Pratten's notices of assessment for the 1993 to 2002 financial years; and 3. the trial judge failed to give a direction as to how "control" of a company should be determined. (i) Tendency evidence 1. No submission was made at trial by defence counsel that the evidence of the first five payments was tendency evidence, or that the jury would likely use the evidence for tendency reasoning. Nor was any application made by defence counsel that this evidence should be excluded under ss 135 or 137 of the Evidence Act. 2. In closing address, the Crown submitted: We know the first five payments used to purchase Skallet came from VITCO and they came on 29 July 2002, a few weeks before RGI was incorporated on 20 August 2002. The Crown says you can take into account the fact that the Crown would ask you to accept that [Mr] Pratten diverted funds to Vanuatu and then used them for his benefit without declaring it as income, and on the face of it those five payments fit that pattern even though they obviously don't come from CPI or RGII. However, you cannot consider those first five payments in the attribution of guilt for the first charge as wherever those monies come from they were not from RGII. RGII didn't exist until the 20th of August, 2002. The Crown says you can also take into account the fact that these five payments and later payments were said by Mr Pratten and the Vanuatu financial services firms to have come from Pacific Property Investments Ltd or PPI, that the CPI financial statements for 2009 records a loan to PPI for, it is approximately 850,000, that Mr Pratten said CPI now owns PPI and that all the payments came from either VITCO or IFTCO as these matter support the Crown's contention that Mr Pratten used PPI as part of his false trail, a device to hide his use of monies from Vanuatu for his personal benefit and should have been declared as income. 1. As indicated, defence counsel described the Crown case as based on "speculation, conjecture and suspicion" as there was no evidence that the first five payments came from CPI, and submitted that these payments undermined the remainder of the Crown case: 10 June 2002, this is an important date in relation to the purchase of Skallett [sic]. And why is it important? Because that is the day that a deposit is paid by BDO for the purchase of Skallett [sic]. Guess what? That falls in the 2002 tax year. Mr Pratten is not charged with trying to obtain a financial advantage in regard to the 2002 tax return. So here the Crown is saying, Whoa, he's been really naughty in 03, 04, 05, yet in 02, when the deposit is paid, he's not charged. Doesn't form any of the charges. So how does the Crown explain that? Have you been given any plausible sensible explanation from the Crown about how you are to treat the deposit monies? Because they are not even part of the charges. So what have you got about Skallett [sic]? All you have really is a Crown theory. And what is it based on? Speculation, conjecture, and suspicion. … … So we go right to that first transaction, and this is what the Crown builds its whole theory and case around. Yet the Crown cannot explain to you where those five transactions came from. So down goes the house built on the cards, crashing down. Because right from the start the Crown is incapable of offering to you a sensible and plausible explanation as to how those monies got into the VITCO account, and that is how this whole Crown theory is completely half-baked. And you just go back one step to the deposit paid in the 2002 tax year, and he's not charged. Half-baked. … So what is the real point about Skallet? Well, the real point about Skallet is that it just demonstrates and shows you that the Crown theory fails, because there are five mystery transactions. 1. In summing up, the trial judge said of the first five payments: [301] The other aspect of the issue of the Skallett [sic] payments is the way in which the Crown puts it and why it puts it. It is unusual, to say the least, that an accused complains that he has not been charged for 2002. That does not mean the Crown says everything was kosher in 2002. It just means that there is no charge relating to 2002. [302] Likewise, in relation to the five payments that were made, the Crown is not saying they are not income. Only that these amounts cannot be used by you to found [sic] guilt in relation to that year. That is the amounts of 4 August 2002. What the Crown does use those payments for is to show a pattern and a pattern from very early. That is the way they seek to use it. You may accept that pattern, you may not, but that is in effect what the Crown does. The Crown also uses those payments to show a relationship with PPI. 1. After referring to the BDO letter which confirmed that BDO was holding $500,000 in trust for GNPPD (Mr Pratten's company) as at 28 June 2002, the trial judge continued: [304] What then happens is an amount is received from VITCO for the purchase of Skallett [sic] and you know that it was paid to the lawyers, the Office of State Revenue, another set of lawyers, et cetera. Those payments amount to $458,825. Mr Pratten says in his submissions that there is no evidence that that money came from CPI. Indeed, it could not have come from CPI because CPI was not yet incorporated. The Crown says they do not suggest it comes from CPI. What they do, however, suggest, and we know because there is evidence of it, is that it came from VITCO, and the inference is available to you to draw the conclusion that the money paid for PPI to buy Skallett [sic] was part of the $500,000 that was put into or available for GNPPD. [305] Of itself that is not directly material. What it does do, according to the Crown, is, with the other material, add to what the Crown says is the relationship between Mr Pratten and PPI. In other words, what you have is BDO holding money with conditions imposed by one Pratten company for the benefit of another Pratten company, which money at least inferentially was probably used to pay for Skallett [sic]. The Crown says that shows the relationship between Mr Pratten, on the one hand, and PPI, on the other. (Emphasis added.) 1. When summarising the defence case, the trial judge said: [337] The issue which Mr Grant in particular stressed was that, ultimately there is, in his view, no reason to go behind what is on the face of the documents. That is, if they call them 'loans', they are 'loans'. He says in relation to the monies, about which I spoke earlier, going to the purchase of Skallet that these were amounts that did not fit the Crown theory because they plainly did not come from CPI, which hadn't been incorporated at that time, and therefore the Crown theory is wrong. Essentially, Mr Grant says that the Crown case fits together only if you assume it is accurate at the outset. In other words, what Mr Grant says is the Crown case is that there is this massive deception, that there was a scheme to evade income tax, and if you accept that at the outset then, yes, you can question the loans, but, unless you accept that at the outset, the entries in the accounts and the references to loans in contemporaneous material are sufficient to shed doubt. You would not therefore be convinced beyond a reasonable doubt that the monies were other than loans and, therefore, they were not income and you could not return a verdict of guilty. 1. Following legal argument by defence counsel to the effect that the judge had not correctly summarised the defence case, the trial judge told the jury by way of clarification of the defence case: [375] One of the other matters that I wish to raise is that I said, apparently, although, frankly, I do not remember saying it, that Mr Grant had put the submission relating to the five payments for Skallett [sic] that if you found those five payments were the subject of deceit or dishonesty, you could use that to deal with the remaining payments that were made. If I said Mr Grant, I did not mean Mr Grant. Obviously, Mr Grant was submitting that there was never any deception or dishonesty and, whether or not the five payments that bought Skallet came out of monies that were held in trust for one or other of Mr Pratten or one of his companies, he would say and did say that it was, as I said to you earlier, inconsistent with the Crown case, because it cannot have been CPI money because CPI was not incorporated. He certainly did not say that if you found otherwise that would impact upon the findings you made elsewhere. If that was said at all, it was a statement by the Crown. So if I made a mistake there, I apologise. Relevant statutory provisions 1. The provisions of the Evidence Act that bear upon the present issues are: * the tendency rule in s 97(1): (1) Evidence of the character, reputation or conduct of a person, or a tendency that a person has or had, is not admissible to prove that a person has or had a tendency (whether because of the person's character or otherwise) to act in a particular way, or to have a particular state of mind unless— (a) the party seeking to adduce the evidence gave reasonable notice in writing to each other party of the party's intention to adduce the evidence, and (b) the court thinks that the evidence will, either by itself or having regard to other evidence adduced or to be adduced by the party seeking to adduce the evidence, have significant probative value. * section 101 of the Evidence Act, which, at the time of the trial, provided: (1) This section only applies in a criminal proceeding and so applies in addition to sections 97 and 98. (2) Tendency evidence about a defendant, or coincidence evidence about a defendant, that is adduced by the prosecution cannot be used against the defendant unless the probative value of the evidence substantially outweighs any prejudicial effect it may have on the defendant. (3) This section does not apply to tendency evidence that the prosecution adduces to explain or contradict tendency evidence adduced by the defendant. (4) This section does not apply to coincidence evidence that the prosecution adduces to explain or contradict coincidence evidence adduced by the defendant. * sections 135 and 137, which deal with the exclusion of prejudicial evidence: 135 General discretion to exclude evidence The court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might: (a) be unfairly prejudicial to a party, … 137 Exclusion of prejudicial evidence in criminal proceedings In a criminal proceeding, the court must refuse to admit evidence adduced by the prosecutor if its probative value is outweighed by the danger of unfair prejudice to the defendant. The nature of tendency evidence 1. In R v Quach [2002] NSWCCA 519 at [30], Spigelman CJ said of the differing tests for the admission of tendency evidence and evidence admitted for a purpose other than to show a tendency (as to which s 97 is irrelevant): As s 95 makes clear, evidence may be admitted if it is relevant for another purpose without passing the special test of the balance between probative value and prejudicial effects. Sections 97 and 98 identify distinct kinds of evidence and, apply to them a higher order of test, namely significant probative value. In criminal cases where such evidence is sought to be adduced by the prosecution, s 101(2) imposes a more stringent requirement for the balancing exercise, ie requiring the probative value to "substantially outweigh" any prejudicial effect. The lower order tests in ss 135 and 137 of the Act do, however, apply to evidence admitted for a purpose other than a tendency or coincidence purpose. 1. The leading authorities discussing the nature of tendency evidence are collected in Taylor v R [2020] NSWCCA 355 at [92]-[94] (Bell P). In Elomar v R; Hasan v R; Cheikho v R; Cheikho v R; Jamal v R (2014) 300 FLR 323; [2014] NSWCCA 303, the Court (Bathurst CJ, Hoeben CJ at CL and Simpson J) said of tendency evidence at [359]-[360]: [359] … Tendency evidence is evidence that provides the foundation for an inference. The inference is that, because the person had the relevant tendency, it is more likely that he or she acted in the way asserted by the tendering party, or had the state of mind asserted by the tendering party on an occasion the subject of the proceedings. Tendency evidence is a stepping stone. It is indirect evidence. It allows for a form of syllogistic reasoning. … [360] Tendency evidence is a means of proving, by a process of deduction, that a person acted in a particular way, or had a particular state of mind, on a relevant occasion, when there is no, or inadequate, direct evidence of that conduct or that state of mind on that occasion. 1. In Hughes v The Queen (2017) 263 CLR 338; [2017] HCA 20 at [70], Gageler J (in dissent as to the result, although the majority judgment did not address this issue) observed that: … Applied to evidence of past conduct, tendency reasoning is no more sophisticated than: he did it before; he has a propensity to do this sort of thing; the likelihood is that he did it again on the occasion in issue. Consideration 1. The first five payments were relevant to two issues; neither involved tendency reasoning. First, it was relevant to the relationship between Mr Pratten and PPI, the legal owner of Skallet (and other properties), which on the Crown case were beneficially owned by Mr Pratten. As Weinberg JA observed in Ivanoff v The Queen [2015] VSCA 116 at [17]: …. it has long been recognised that "relationship evidence", outside the bounds of tendency or coincidence, may be led if relevant, subject only to the possible exercise of judicial discretion. 1. Second, it was relevant as rebutting a defence that was reasonably anticipated (Ivanoff at [19]), being the foreshadowed submission by defence counsel, subsequently made in closing address, that the Crown case was a "house of cards" because the first five payments had not come from CPI. The Crown was entitled to rely upon the first five payments from monies held by VITCO on behalf of Mr Pratten's company, GNPPD, to rebut the foreshadowed defence submission that the Crown could not explain the source of the funds to purchase Skallet. 2. The evidence was not admitted "to prove" (in the language of s 97) that Mr Pratten had a tendency to act in a particular way, such as to receive income without declaring it. As such, the requirements of sS 97 and 101 are irrelevant: R v AH (1997) 42 NSWLR 702 at 708, cited in Quach at [32]. 3. Nor was the Crown's submission in closing address that the first five payments fit the "pattern" of funds coming from Vanuatu using the evidence for tendency purposes. As the Crown correctly submitted in this Court, the reference to the "pattern" was the use of funds in the VITCO account by Mr Pratten (in this instance, the proceeds of the loan from RGIL to GNPPD) for Mr Pratten's benefit, which were, relevantly, used here to finance the purchase of Skallet by PPI. 4. It can be readily inferred, given the prominent reliance placed on the first five payments for the "house of cards" submission in the defence closing address, that a forensic decision was made by defence counsel not to seek to exclude this evidence as prejudicial under either ss 135 or 137. 5. One further matter should be mentioned. Mr Pratten complained about the "kosher" comment by the trial judge in the summing up highlighted in the passage set out below: [301] The other aspect of the issue of the Skallett [sic] payments is the way in which the Crown puts it and why it puts it. It is unusual, to say the least, that an accused complains that he has not been charged for 2002. That does not mean the Crown says everything was kosher in 2002. It just means that there is no charge relating to 2002. (Emphasis added.) 1. The context of this remark concerned the submission by defence counsel that the absence of charges in the 2002 financial year cast doubt on the charges in subsequent years. Although other expressions than "kosher" might have been preferable to convey the point made in the summing up, the direction was nonetheless appropriate. As the Crown correctly submitted, without this direction the jury may have incorrectly speculated that the absence of charges for the 2002 tax year (the issue having been raised by defence counsel) was relevant to the determination of the charges on the indictment. The failure to seek a direction or redirection as to the "kosher" remark indicates that the point now taken was not considered by defence counsel to have been important in the circumstances of the case. 2. Mr Pratten requires leave under r 4.15 to raise the issues addressed above. I would refuse leave. In any event, for the reasons given, there is no merit in these complaints. (ii) The admissibility of the 1993-2002 notices of assessment 1. Mr Pratten's notices of assessment for the 1993 to 2002 financial years were tendered by the Crown and admitted over objection: R v Pratten (No 19) [2015] NSWSC 1111. In tendering these documents, the Crown indicated that it wished to dispel any notion that there had been prior accumulated wealth which could explain the transfers from the VITCO and IFTCO accounts. 2. In opposing the tender of these documents, defence counsel argued that: (1) the notices of assessment fell outside the charge period and therefore were not relevant, and (2) there was a risk of prejudice that the jury may speculate whether Mr Pratten had avoided tax during those years as there was evidence that he was running a major insurance company yet had only declared $50,000 in assessable income for those financial years. In the context of this objection, defence counsel indicated his qualified disavowal ("at the moment") of an earlier foreshadowed argument based on prior accumulated wealth, namely, that the money distributed by VITCO or IFTCO may have been monies earned by Mr Pratten in years prior to the 2003 to 2009 years in question. 3. In admitting the notices of assessment, the trial judge reasoned that in the absence of any attempt to deal with income in the years between 1993 and 2002 (and even if the defence did not raise the issue in these terms), the jury would be prone to speculate as to whether the monies received, or the benefit received during the charge years, were the result of earlier accumulated wealth that was distributed during the charge years and, therefore, not caught by the limited definitions of income for the purposes of this case: R v Pratten (No 19). 4. The trial judge gave the jury the following direction when admitting the 1993 to 2002 notices of assessment: … For years prior to any year for which there is any charge outstanding or arising in this case or as far as I am aware any other case, indeed I will tell you, before any other case [T]here is capacity for the Tax Office Commissioner to issue default summonses if he/she were so minded. None of that has happened so you can readily assume or presume that the assessments that you are about to receive are accurate. 1. Neither party made reference to the notices of assessment for 1993 to 2002 in closing addresses. 2. Contrary to Mr Pratten's contention, the trial judge did not err in admitting these documents into evidence. As to relevance, it is not to the point that Mr Pratten ultimately did not advance an argument based upon prior accumulated wealth. The notices of assessment for 1993 to 2002 were relevant and admissible to prove the Crown case that the monies received by Mr Pratten from the VITCO and IFTCO accounts from 2003 to 2009 were assessable income that had not been declared in his tax returns, by formally disproving any suggestion of prior accumulated wealth. 3. As to the risk of prejudice, the Crown correctly submitted that the direction given by the trial judge was sufficient to overcome the asserted prejudice arising from those documents. The direction made clear that the jury could readily assume that the earlier notices of assessment were accurate. (iii) Directions as to control of a company 1. Mr Pratten's contention that the trial judge failed to give a direction as to how "control" of a company should be determined was based upon the test stated by the High Court in Bywater Investments Ltd v Federal Commissioner of Taxation (2016) 260 CLR 169; [2016] HCA 45 in relation to the concept of "central management and control" as referred to in s 6(1) of the ITAA 1936. 2. Section 6(1) of the ITAA 1936 provides that a company is resident in Australia if it is incorporated in Australia or, if it is not incorporated in Australia, if it carries on business in Australia and has either its central management and control in Australia or its voting power controlled by shareholders who are residents of Australia. In Bywater, the joint judgment of French CJ, Kiefel, Bell and Nettle JJ held at [77] that the "residence of a company [for tax purposes] is first and last a question of fact and degree to be answered according to where the central management and control of the company actually abides" (emphasis in original). 3. The principles relating to a company's place of central management and control for the purpose of ascertaining whether a foreign company, such as CPI and PPI, is an Australian resident for tax purposes, have no relevance to the present case. It was not part of the Crown case that CPI and PPI were resident in Australia for tax purposes. The Crown correctly submitted that, whilst Mr Pratten's control of CPI and PPI formed part of the Crown's circumstantial case about receipt of income by Mr Pratten and his associated entities in Australia, the Crown was not required to prove that Mr Pratten controlled CPI or PPI in a way that met particular provisions of the tax legislation. 4. No further direction was requested by defence counsel at trial on the issue of control of CPI and PPI and, as the Crown correctly submitted, none was required in the circumstances of this case. Again, r 4.15 applies and I would refuse leave to raise this issue. Grounds 1 and 1A: The evidence of Mr Steven Barns 1. Grounds 1 and 1A relate to evidence given by Mr Steven Barns, an officer of the ATO. These grounds were advanced in the alternative: Ground 1 The trial judge erred in failing to give directions to the jury sufficient to extinguish, or alternatively insufficient to counter, the substantial prejudice arising from evidence given by a Crown witness, Mr Steven Barns, an officer of the Australian Taxation Office, as to amended assessments of the appellant's for the 2002 to 2009 income years, which was irrelevant to the facts to be determined in the trial and thus had no probative value, or alternatively the prejudicial effect of which substantially outweighed its probative value, thereby causing the trial to miscarry. Ground 1A The trial judge erred in allowing additional evidence to be given by Mr Steven Barns, over objection of the appellant, that amended assessments were issued to the appellant in which there 'was additional assessable income', which was irrelevant to the facts to be determined in the trial and thus had no probative value, or alternatively the prejudicial effect of which substantially outweighed its probative value, and further that the Crown's intention to lead such evidence effectively ambushed the appellant thus causing irremediable unfairness to the defence case, thereby causing the trial to miscarry. 1. Grounds 1 and 1A included two particulars of so-called "aggravation" of the prejudice: (1) the trial judge misdirected the jury concerning Mr Barns' evidence; and (2) the directions concerning Mr Barns' evidence were misleading as to the true legal position of the Commissioner and Mr Pratten in the statutory process of the tax system. The latter submission was a reference to the process of reviewing the Commissioner's decision in relation to a taxpayer's objection to a notice of assessment or amended notice of assessment by proceedings under Pt IVC of the TAA 1953. Background 1. Mr Barns gave general evidence about the ATO's administration of the tax system, including audits undertaken by the ATO, the self-assessment system of taxation, and income tax thresholds. He gave an explanation of various questions contained in income tax returns, including questions about income, deductions and foreign assets. He explained the information contained in Mr Pratten's income tax returns, including the losses claimed in the 2006 to 2009 financial years from the operation of the Myidaho Natural Beef business. Mr Barns also identified the notices of assessment and notices of refund issued by the ATO to Mr Pratten and gave evidence concerning an audit process in respect of Mr Pratten; Mr Pratten had been selected for an audit because the ATO had become aware that Mr Pratten had received funds from Vanuatu. No objection was taken to any of this evidence. 2. In examination-in-chief, Mr Barns gave the following evidence on 5 August 2015: Q. And when you say the relevant years, what years are they? A. I understand it's the 2003 to 2009 years. Q. And are you saying it's relevant years because did you do some, were you involved in an assessment of Mr Pratten's tax returns? A. Amended assessments. I actually did for the 2002 to 2009 years, as part of the audit process we did those years. 1. Shortly after this evidence, the Crown asked Mr Barns what happened to the tax paid by Mr Pratten for the years 2002 to 2009 to which Mr Barns responded that the "Commissioner accepted those original returns that were lodged as they were without any scrutiny. And it wasn't until – sorry". 2. Later that day, the Crown returned to the topic of the audit of Mr Pratten's tax affairs and asked Mr Barns: "What, did that result in something occurring at the end of it in terms of assessments?". Defence counsel objected to this question on the basis that it was counsel's understanding that there was to be no evidence about amended notices of assessment and submitted that the amended assessments were not relevant. 3. Argument on the objection took place on the following day. Defence counsel repeated his objection on the ground of relevance and argued that proof of the financial advantage could simply be satisfied by evidence that the income tax returns had been lodged by or on behalf of Mr Pratten and that Mr Pratten thereby avoided a liability to pay tax. It was submitted that there was a risk that admission of the amended notices of assessment, which indicated the Commissioner's view that Mr Pratten owed more tax than the tax assessed by reference to the income declared in his tax returns, would circumvent the jury's role in determining whether Mr Pratten obtained a financial advantage. It was also submitted that the evidence of Mr Barns referring to an amended assessment for the 2002 financial year was irrelevant because it was outside the charge period. 4. The Crown submitted that it relied upon the evidence of Mr Barns solely as formal proof that Mr Pratten was subject to a lesser liability to tax than he should have been. The Crown did not seek to tender the amended assessments, nor did the Crown adduce the evidence of Mr Barns to prove the ATO's position on what the ATO considered the correct quantum of Mr Pratten's taxable income to be. 5. The Crown acknowledged that the reference in questions to the 2002 tax year was an error, which could be appropriately dealt with by the trial judge's directions as to what the charge periods are. 6. The trial judge rejected the objection and Mr Barns gave the following evidence: Q. Mr Barns, you recall giving some evidence about the audit process, do you remember that? [A]: I do. Q. And as a result of the audit process did the ATO issue amended assessments based on such information as it had at the time regarding additional assessable income not originally disclosed in the returns lodged by Mr Pratten? A. Yes. Q. And there was additional assessable income in each of the years 2003 to 2009; is that right? A. Yes. 1. Immediately following Mr Barns' evidence, the trial judge directed the jury: Before the Crown calls its next witness ladies and gentlemen, can I just tell you something that I will probably repeat during the course of the directions that I give you, but what I want to tell you is this: Mr Barns' evidence is relevant to prove the elements of the tax system and the way the tax system works in practice, and/or at least worked in practice during the relevant years between 2002 and 2009. Documents have been tendered through Mr Barns, and to the extent that Mr Barns is a person who can tell us that, he has told us that how the documents work, but the documents themselves speak for themselves, and you may rely upon his factual explanation of the documents he has prepared, or have been obtained through him from the Tax Office, and any other fact. His evidence is not expert evidence. That is to the extent that it relates to questions of law, they are questions for me and I will tell you, particularly in relation to the Tax Act. The inferences you draw from the evidence that is relevant is inferences you will draw, if you are going to draw any, in light of the whole of the evidence, and that will be a matter for you, not a matter either for somebody who works for the Tax Department, or indeed for me. Any view I have of the evidence, if I disclose one, is something you can reject or keep. So you independently come to any inferences, and I will explain all of that in the fullness of time. The reasons I am telling you this at this stage is this: You heard some evidence that amended assessments were issued in the relevant years in question. That evidence has been adduced solely for the purposes, somewhat formally, to show that the Commonwealth does not agree that Mr Pratten does not owe any money. That is all it is for. The fact is, as I think it's a line out of the preamble in Superman, has powers far beyond those of mortal men, leaving aside the sexist nature of the statement, the Tax Commissioner's in the same boat. The Tax Commissioner has powers beyond me, beyond you, beyond anyone or anything to do with this courtroom, and the Tax Commissioner can issue an assessment for example on the basis of some information which doesn't come anywhere near proof, and require the taxpayer to disprove what he has assumed. In this courtroom, the Crown bears the onus, and has to prove that there was income and, therefore, your task and my task is very different from anything the Tax Commissioner is involved in. And that is why the evidence has been given, to explain to you the documents, to explain to you the process, but ultimately, whether something is income, should have been declared, was known to have been declared, and was dishonestly done for the purpose of obtaining a financial advantage, they are matters that the view of the Tax Commissioner matters nothing in relation to any of that. And that is why I'm telling you at this stage so you don't have a false impression of what it is Mr Barns is talking about. (Emphasis added.) 1. In summing up, the trial judge gave the following directions: [194] … I should at this point tell you that evidence has been given by people from the Tax Office and I will come to this probably later - I already have I think come to this - but thus far there is no truly expert evidence. That is, the issues of law are for me to decide and direct you on. [195] When evidence is given, for example by Mr Pratten, about whether a loan is income or not income, that certainly goes to his state of mind and is evidence of his state of mind and, if you accept it, it would be evidence relating to how he viewed certain items. [196] But it is not evidence of whether it was a loan and it is not evidence of what the tax law does with loans and it is not evidence of what is income. They are matters of law which I will tell you about. The same applies to the people from the Tax Department. [197] They have given you evidence about the practice of the Tax Department. They have given you evidence about what the Tax Department may or may not have done, but, in the end, whether it is income or loans, which is the essential issue you have to decide, is a matter for you, not the Tax Office, not Mr Pratten, not Mr Barns, not the Crown and not Mr Grant or Mr Dean. (Emphasis added.) 1. Later in the summing up, the trial judge reiterated this direction: [209] In the end if the other elements are proved, the actual amounts of the income tax is almost irrelevant. In this regard I should tell you this: you have received some evidence from the Australian Taxation Office that it considers Mr Pratten owes some tax. That is its opinion. That opinion does not affect your task. Their view of the evidence is just that; it is their view of the income tax, but I should remind you, as I did when Mr Barns gave evidence, that the ATO, the Australian Taxation Office, and the Tax Commissioner have powers that are irrelevant for our purposes and go well beyond that which we do or should do in dealing with the matters that are before us and how the tax is calculated is a matter for them and rarely relevant for our purposes. [210] So you will have come to your own opinion as to whether income tax was payable and whether income was received and, in that sense, what is relevant about the Tax Department is that they say some tax is payable and therefore it is not as if all of this is academic. [211] If the Commonwealth, through the Tax Office, had said there was no tax payable, then, frankly, there could never be a financial advantage, but the fact that they say tax is payable doesn't mean there is a financial advantage, in other words, it is a necessary condition but it is not sufficient. (Emphasis added.) 1. Although grounds 1 and 1A are alternative grounds, Mr Pratten made composite submissions on these grounds under three headings: (1) relevance; (2) ambush; and (3) misdirection. It is convenient first to deal with the issues raised by ground 1A in the order of ambush and relevance. (i) Ambush 1. An understanding of Mr Pratten's complaint of ambush requires reference to some background matters. At Mr Pratten's first trial, the amended assessments for 2003 to 2009 were ultimately tendered without objection, subject to an order under s 136 of the Evidence Act limiting the use to which they could be put to proving that the assessments had been made and issued: see Pratten v R [2014] NSWCCA 117 at [97]. Ground 3 of Mr Pratten's appeal against conviction from the first trial contended that the trial miscarried because the amended assessments were admitted into evidence when they were not relevant and were therefore inadmissible. The Court refused leave to raise this ground under r 4, as it then was, and the ground was otherwise dismissed. Meagher JA said at [100]-[101]: [100] Whilst there may be force in the appellant's contention that the Tax Commissioner's opinion could not rationally affect the assessment of a fact in issue, there is equal force in the Crown's contention that no miscarriage of justice occurred by the admission of the assessments into evidence on a limited basis, because of the directions that were given. [101] The parties had agreed that the assessments would be admitted on a limited basis. The Crown contended that the assessments showed that the appellant had paid less tax than he would have been liable to pay had there been disclosure in the amounts the Crown alleged. That much would have been self-evident to the jury if it accepted that the appellant had deliberately understated his income in the various returns by the amounts of hundreds of thousands of dollars. That was, as the trial judge's directions made clear, one of the questions that the jury was called upon to answer. In our view, in the light of the clear directions given, the assessments would have had no impact on the jury's consideration of that question. For that reason, the admission of the evidence on the limited basis did not cause the trial to miscarry. 1. On 22 May 2015, prior to the second trial commencing, Mr Pratten sought an adjournment on the basis that three issues required resolution before the commencement of the trial. One issue was the admissibility of the amended assessments. Another issue was the relevance of particular expert evidence that would be adduced by the Crown. In opposing the adjournment, the Crown Prosecutor indicated that the Crown would not tender the "admitted" [sic] assessments, but would simply lead evidence of "what the additional income was, or what the tax tables were at the relevant years, and the calculation of what additional tax would have been payable relative to the returns that he lodged had the full amount of what the Crown alleges that his additional income had been disclosed". The trial judge said in the course of oral argument that he had previously ruled: The fact the tax department said you owed tax was sufficient only to overcome the issue as to whether or not you could ever have a disadvantage if the Commonwealth did or was not saying you owed money. That was the only aspect from my recollection. 1. The trial judge refused the adjournment application: R v Pratten (No 17) [2015] NSWSC 642. It is of assistance to reproduce [6]-[8] and [14] of the trial judge's reasons in full: [6] Mr Pratten puts three particular issues that require resolution before the commencement of the trial. The first of them is the admissibility of the amended tax assessments. The admissibility of the amended assessments was a matter upon which the Court ruled in the first trial. I have heard nothing to suggest that that ruling is sought to be challenged. On the contrary, the Crown has stated it does not wish to tender the amended assessments or the default tax assessments. [7] The fact that the amended assessments had been issued was adduced in the first trial for the sole purpose of establishing that they were issued and that the Commonwealth was a victim of the dishonest obtaining of a financial advantage by deception (i.e. that the Commonwealth alleged moneys were owing). The amended assessments were ruled inadmissible for the purpose of suggesting that the accused was required to pay amounts to the Commonwealth resulting from the allegedly false tax returns or to calculate the tax owing. The ruling resulted in the objection being withdrawn. [8] However, the statement from the Crown that the amended assessments are not sought to be tendered resolves any issue that otherwise may be thought to arise. … [14] Lastly, Mr Pratten submits that he wishes to obtain the services of a tax expert and adduce evidence from that tax expert in his defence case. I note that this matter has been the subject of indictment since at least 2012. There can be no suggestion that, as earlier stated, Mr Pratten has not been involved in the preparation of the first trial, the appeal and the collateral attack. There also can be no suggestion that since the determination of the Court of Criminal Appeal and the order for a retrial Mr Pratten has not had ample opportunity to obtain a tax expert. 1. At a pre-trial hearing held on 2 June 2015, Mr Pratten sought further and better particulars as to whether the Crown case included reliance upon statutory income rather than only ordinary income, and referred to the amended assessments as having been issued on the basis of only wages and salary, that is, ordinary income. The trial judge referred to the limited basis upon which the amended assessments were admitted at the first trial and stated: … so that I allowed to be admitted the fact that an assessment was made and the fact that the Commonwealth said you owed money in order to overcome any suggestion that the Commonwealth had not proved that it was not satisfied with the amount of tax that had been paid. Which seems to me to be a fundamental aspect of obtaining a financial advantage. So that a false assessment, at least on the view that I have already taken at your suggestion, are really at best peripheral and, at worse, irrelevant. Submissions 1. Mr Pratten submitted that he was taken by surprise by Mr Barns' evidence as there was no reference to the amended assessments in the particulars provided to Mr Pratten prior to trial, and the Crown Prosecutor had indicated in pre-trial argument that the Crown would not tender the amended assessments. 2. Mr Pratten further submitted that the Crown's reliance on Mr Barns' evidence "as part of the formal proof of the case", being that the Commissioner considered Mr Pratten owes money, was a failure by the prosecution to disclose all relevant evidence to an accused which amounted to a material procedural irregularity and required the quashing of the guilty verdicts. Consideration 1. The premise of Mr Pratten's submission that he was ambushed by Mr Barns' evidence is flawed. It is not in dispute that the Crown served as part of the pre-trial disclosure a witness statement by Mr Barns which annexed the amended assessments which had been allowed into evidence at the first trial by consent on a limited basis. Although the Crown had indicated at the pre-trial hearing in May 2015 that it would not tender the amended assessments at the second trial, the Crown did not indicate that it would not adduce evidence from Mr Barns that the amended assessments were issued. The evidence given by Mr Barns, to which objection was unsuccessfully taken, went no further than establishing that the audit process resulted in the ATO issuing amended assessments for Mr Pratten in each of the tax years of 2003 to 2009. 2. Mr Pratten submitted in this Court that he "was denied the opportunity to obtain expert evidence dealing with the workings of the tax system", a reference to the procedure by which a taxpayer is entitled to challenge amended assessments under Part IVC of the TAA 1953. The assertion of prejudice should be rejected. First, as the trial judge noted when rejecting the adjournment application on 22 May 2015, Mr Pratten had ample time to obtain a tax expert since the decision of the Court upholding the conviction appeal from the first trial and the order for a retrial: R v Pratten (No 17) at [14]. Second, no submission as to prejudice was made by defence counsel at trial. To the contrary, defence counsel successfully objected to the giving of tax directions dealing with a taxpayer's right to review an assessment or amended assessment. 3. Mr Pratten made a forensic decision at trial not to challenge the evidence given by Mr Barns that amended assessments were issued. Mr Pratten also made a forensic decision not to refer to his right to challenge the amended assessments under Part IVC of the TAA 1953 or the fact that he had commenced review proceedings under Pt IVC in the Tribunal. There was no breach of the Crown Prosecutor's duty of disclosure. Mr Pratten was on notice of the substance of the evidence that Mr Barns could give. The admissibility of Mr Barns' evidence, to which objection was taken by defence counsel, is a separate question. (ii) Relevance: 2003 to 2009 amended assessments 1. The principal submissions advanced by Mr Pratten concerning the admissibility of Mr Barns' evidence were as follows: 1. the evidence given by Mr Barns that amended assessments were issued for the 2003 to 2009 tax years was irrelevant; it could only be relevant to Mr Pratten's "civil liability to [pay] tax" and the admission of such evidence could have been misunderstood and misused by the jury; 2. Mr Barns' evidence was "unchallengeable evidence" in the sense that Mr Pratten could not have legally or practically contested the amended assessments in the context of the criminal trial and, in any event, the amended assessments were inconclusive prior to the conclusion of the Pt IVC tax proceedings brought by Mr Pratten in the Tribunal; 3. Mr Barns' evidence as to the amended assessments "and the characterisation of assessable income" was inadmissible opinion evidence; and 4. even if the evidence was relevant, its probative value was substantially outweighed by the danger of unfair prejudice because the evidence could have been, and was likely to have been, accepted by the jury as conclusive evidence that there was assessable income in each of the relevant years which had not been disclosed by Mr Pratten, being an essential element of the offences otherwise to be determined on the whole of the evidence. 1. The Crown submitted that the evidence that the ATO had issued amended assessments was relevant to show that the Commissioner did not agree with Mr Pratten when he said that he did not owe any additional tax and to rebut any suggestion to the converse that the Commonwealth agreed that no money was owed by Mr Pratten. 2. The Crown emphasised that the evidence was admitted on a very limited basis, and that the jury was properly directed as to that basis both following Mr Barns' evidence and in summing up. The Crown submitted that the jury was correctly directed that it was for them to determine whether the Crown had established beyond reasonable doubt whether an amount was income and had not been declared in Mr Pratten's tax returns. The Crown drew attention to the fact that the disputed evidence went to a matter that was not the subject of address by either the Crown or the defence in closing, although the trial judge referred to the matter in summing up. Consideration 1. The provisions of the Evidence Act that bear upon the admissibility of Mr Barns' evidence are: 55 Relevant evidence (1) The evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding. … 56 Evidence to be admissible (1) Except as otherwise provided by this Act, evidence that is relevant in a proceeding is admissible in the proceeding. (2) Evidence that is not relevant in the proceeding is not admissible. 1. The Dictionary to the Evidence Act provides: probative value of evidence means the extent to which the evidence could rationally affect the assessment of the probability of the existence of a fact in issue. 1. As explained in the joint judgment of Kiefel CJ, Bell, Keane and Edelman JJ in Hughes at [16], "[t]he facts in issue in a criminal proceeding are those which establish the elements of the offence". However, as observed by Gleeson CJ, Gaudron, Gummow and Hayne JJ in Smith v The Queen (2001) 206 CLR 650; [2001] HCA 50 at [7]: In determining relevance, it is fundamentally important to identify what are the issues at the trial. On a criminal trial the ultimate issues will be expressed in terms of the elements of the offence with which the accused stands charged. They will, therefore, be issues about the facts which constitute those elements. Behind those ultimate issues there will often be many issues about facts relevant to facts in issue. In proceedings in which the Evidence Act 1995 (NSW) applies, as it did here, the question of relevance must be answered by applying Pt 3.1 of the Act and s 55 in particular. Thus, the question is whether the evidence, if it were accepted, could rationally affect (directly or indirectly) the assessment by the tribunal of fact, here the jury, of the probability of the existence of a fact in issue in the proceeding. (Emphasis added.) (Citations omitted.) 1. Importantly, as the last sentence in the passage in Smith at [7] acknowledges, the definition of "relevant evidence" contained in s 55(1) of the Evidence Act makes clear that relevance may be indirect. 2. In Washer v Western Australia (2007) 234 CLR 492; [2003] HCA 48 at [5], Gleeson CJ, Heydon and Crennan JJ said that the determination of relevance: … requires consideration of the process of reasoning by which information as to the fact of the acquittal could rationally affect the assessment of the probabilities. The word "rationally" is significant in this context. In order to establish relevance, it is necessary to point to a process of reasoning by which the information in question could affect the jury's assessment of the probability of the existence of a fact in issue at the trial. 1. In this case, the Crown accepted that the offence under s 134.2 of the Code is complete upon the lodging of the relevant tax return when the advantage of being subject to a lesser liability is obtained: Pratten v R [2014] NSWCCA 117 at [89] (Meagher JA, Fullerton and Hamill JJ agreeing). 2. As Meagher JA observed in Mr Pratten's earlier appeal to this Court at [89]-[90] in relation to the same offences under s 134.2 of the Code: [89] … The financial advantage on which the Crown relies is that obtained, upon the lodgement of a return which understates income, in being subject to a debt which is due and payable to and recoverable by the Commonwealth that is less than the amount of the debt that would have been due and payable and recoverable had there been full disclosure. [90] It does not matter that what is claimed to be the financial advantage may turn out only to be temporary or that it may be overcome by subsequent events. As Nettle JA's discussion in R v Vasic [2005] VSCA 38; 11 VR 380 at [14]-[16] shows, the undefined expression "financial advantage" is a broad one capable of including the deferring of the incurring of a liability to pay a debt, or greater debt, as due to the Commonwealth. 1. In rejecting a submission that there was no financial advantage in merely delaying the requirement to pay tax due because any such advantage was offset by the statutory interest and penalties for late payment, the Court in Pratten v R adopted the reasoning in R v Jo [2012] QCA 356 at [44]-[45], as Meagher JA explained at [91]-[92]: [91] The argument put to this Court was rejected by the Court of Appeal of the Supreme Court of Queensland in R v Jo [2012] QCA 356. In that appeal the relevant charges also were made under s 134.2 of the Criminal Code Act. Four of the counts charged were that the appellant had by a deception dishonestly obtained a financial advantage from the Commonwealth by causing the lodgement with the Commissioner of Taxation of personal income tax returns which contained false information. As in this case, it was argued that there had been no financial advantage because long after the lodgement of the relevant returns amended assessments were issued making the appellant liable for the unpaid tax and imposed a compounding general interest charge. It was said that the appellant obtained no financial advantage by delaying the time at which those amounts became due and payable. The Court (Fraser JA, Muir JA and Fryberg J agreeing) rejected that argument. It was held at [44]-[45] that the offence was complete upon the lodging of the relevant return when the advantage of being subject to a lesser liability was obtained and that it was irrelevant that subsequently the taxpayer's dishonesty was or might be discovered and become the subject of an amended assessment and the imposition of interest and tax penalties. We agree with and adopt that reasoning. [92] The position argued for by the appellant ignores the fact that upon the lodgement of the return, assuming a lower liability to pay tax than would otherwise have been the case, the taxpayer was subject to a lesser liability. The fact of that lesser liability was itself a financial advantage. That was so notwithstanding that at some time in the future that position might change. 1. The Crown sought to distinguish the evidence which was held inadmissible in R v Jo from Mr Barns' evidence. The Crown argued that in R v Jo, the ATO officer had given evidence about the characterisation of payments as dividends rather than wages, and evidence as to whether the companies were entitled to a deduction. That factual distinction does not diminish the force of the remarks of Fraser JA in R v Jo that the opinion evidence given by the ATO officer was inadmissible. 2. In this case, the evidence given by Mr Barns that there was "additional" assessable income in each of the tax years of 2003 to 2009 involved the characterisation of undeclared amounts as income derived by Mr Pratten, rather than as a receipt not required to be declared as income. Although the specific item(s) of receipt by Mr Pratten were not identified by Mr Barns, his evidence was inadmissible opinion evidence as to the character of undeclared amounts. The opinion of the Commissioner that there was additional assessable income for the 2003 to 2009 tax years was not relevant to any fact in issue at the trial. Similarly, the evidence admitted through Mr Barns that the Commissioner considered that Mr Pratten owed money in respect of income tax for the 2003 to 2009 tax years was also inadmissible opinion evidence. 3. That the evidence of Mr Barns was admitted on the very limited basis, namely, to show "formally" that the Commissioner did not agree with Mr Pratten that he did not owe any money and that the prosecution was not academic, did not render the evidence relevant. The relevance objection raised by ground 1A has been made out. 4. The Crown submitted that if the Court reached the conclusion that the evidence of Mr Barns was wrongly admitted then the proviso in s 6(1) of the Criminal Appeal Act applies. The proviso is addressed below after dealing with the unreasonable verdict ground. (iii) Asserted misdirections to the jury 1. Mr Pratten also submitted that the trial judge misdirected the jury as to the effect of Mr Barns' evidence in the following respects: 1. the direction that the jury was free to accept or reject any of the evidence at the trial did not make sufficiently clear that the jury could accept or reject the evidence of Mr Barns; 2. the direction that "which part of the evidence you accept, and whether particular evidence has been controverted, is an issue that you take into account, and you can believe or not believe as you choose" could have, and likely did, cause the jury to accept Mr Barns' evidence concerning the amended assessments as Mr Pratten did not attempt to controvert the evidence; 3. the direction that the jury use their "common sense" would have "bolstered the jury's basic common sense logic, that is, that the Commissioner must have been right", as there was no evidence to the contrary that the Commissioner or Mr Barns was wrong; 4. describing the Commissioner's powers to be akin to that of "Superman" conveyed to the jury that the Commissioner's reassessment of Mr Pratten's assessable income was "unimpeachable, immutable and incontrovertible" so that there was "no need to consider further this essential element of each offence"; and 5. that the trial judge erred in failing to give a specific direction to the jury which addressed Mr Barns' evidence as to an amended assessment issued for the 2002 tax year: see [205] above. Consideration 1. Each of the directions referred to in (1), (2) and (3) above were part of the general directions given by the trial judge as to how the jury was to approach the evidence and submissions by the parties. Those directions would have been understood by the jury as applying to all the evidence, including the evidence of Mr Barns. 2. Contrary to Mr Pratten's submission, there was no conflict between the general directions and the specific direction given by the trial judge immediately after Mr Barns' evidence that "you may rely upon his factual explanation of the documents he has prepared, or have been obtained through him from the tax office, or any other fact". The specific direction as to how the jury could view Mr Barns' evidence would have been understood by the jury as subject to the general direction about acceptance or rejection of any evidence. 3. Nor does it follow from the absence of cross-examination of Mr Barns by defence counsel that the direction about acceptance of parts of the evidence, taking into account whether it had been controverted, created irremediable unfairness to Mr Pratten. There was no suggestion in the directions or the summing up that Mr Barns' evidence that amended assessments were issued should be accepted because he had not been cross-examined. The trial judge instructed the jury, both following Mr Barns' evidence and in summing up, that it was for them to determine whether the Crown had established beyond reasonable doubt whether an amount was income and had not been declared in Mr Pratten's tax returns. The jury were instructed that they could not take into account Mr Barns' evidence as opinion evidence. The jury was specifically directed in relation to the elements of the offences that the Commissioner's view that a receipt was income "matters nothing", and that the opinion of the ATO or Mr Barns did not affect the jury's task. 4. The direction referred to in (3) above that the jury should use their common sense did not suggest to the jury that "the Commissioner must have been right". 5. Mr Pratten's complaint that the "Superman" remark by the trial judge conveyed to the jury that there was no need to consider further the essential element of each offence relating to financial advantage ignored (1) the context of that remark, (2) the trial judge's directions immediately following the remark concerning the limited nature of Mr Barns' evidence, and (3) the direction that the issue of the amended assessments was a very different task to the proof of the Crown case. This aspect of the directions bears repeating: … In this courtroom, the Crown bears the onus, and has to prove that there was income and, therefore, your task and my task is very different from anything the Tax Commissioner is involved in. And that is why the evidence has been given, to explain to you the documents, to explain to you the process, but ultimately, whether something is income, should have been declared, was known to have been declared, and was dishonestly done for the purpose of obtaining a financial advantage, they are matters that the view of the Tax Commissioner matters nothing in relation to any of that. And that is why I'm telling you at this stage so you don't have a false impression of what it is Mr Barns is talking about. 1. The context of the "Superman" remark makes clear that the trial judge correctly directed the jury that the Commissioner's view in issuing amended assessments was not relevant to proof of the elements of the alleged offences. 2002 amended assessment 1. Mr Pratten's complaint that the Crown Prosecutor erroneously referred to the tax years 2002 to 2009 instead of 2003 to 2009 in his examination-in-chief of Mr Barns ignored two matters. 2. First, the Crown Prosecutor acknowledged this error a short time later and there was no objection by defence counsel to the Crown's response that the judge would direct "[t]he jury … in no uncertain terms what the charge periods are". Second, Mr Pratten's notice of assessment of the 2002 tax year was admitted into evidence with a direction that the jury should assume it was accurate. 3. At the outset of his closing address, the Crown Prosecutor told the jury that the income years in issue were 2003 to 2009. No reference was made to Mr Pratten's 2002 tax return having come under scrutiny of the ATO. The trial judge also directed the jury that the charges related to the 2003 to 2009 tax years. The jury would not have been mistaken as to the charge years, or misled by the Crown Prosecutor's single reference in examination-in-chief to an amended assessment in 2002. 4. Again, r 4.15 applies. I would not grant leave to raise this issue. In any event, no prejudice arose from the Crown Prosecutor's slip in referring to an amended assessment for the 2002 tax year. Conclusion on grounds 1 and 1A 1. Accordingly, the only aspect of these grounds that is upheld is the contention that the evidence of Mr Barns set out at [206] above was inadmissible and should not have been admitted. Consistent with GBF that is, or at least may be, sufficient to constitute a miscarriage of justice. However even if it is, this ground will not be made out if the Crown can satisfy the "proviso" to s 6(1) of the Criminal Appeal Act 1912. This is addressed at [308] to [321] below. Ground 6: Control of CPI, failure to give a Shepherd direction and unreasonable verdict 1. Ground 6 contends: There was insufficient evidence on which for the jury to conclude the appellant controlled 'Commercial Pacific Insurance Limited'; the trial judge erred in failing to give a 'Shepherd direction'; and mislead the jury as to law; the verdicts on all counts are unreasonable and cannot be supported having regard to the evidence. 1. This ground raised several issues concerning the asserted insufficiency of evidence that Mr Pratten controlled CPI, and whether this asserted insufficiency affected proof of the Crown case beyond reasonable doubt. Although no reference was made in Mr Pratten's submissions to the principles to be applied, this ground also invokes the power of the Court, conferred by s 6 of the Criminal Appeal Act, to set aside a jury verdict on the ground that it is "unreasonable, or cannot be supported, having regard to the evidence". Submissions 1. The principal submissions advanced by Mr Pratten were as follows: 1. Mr Pratten's 25 per cent interest in the profits of CPI upon the winding up of the company was an interest "in the final outcome of the business affairs of CPI, not an interest in CPI or of its property", and was no more than a mere expectancy; 2. the Crown was required to prove that CPI was a "controlled foreign entity" for the purposes of s 340 of the ITAA 1936, and had not done so; 3. the jury was not properly instructed on the law as to whether Mr Pratten had the "requisite threshold" interest in CPI to have required him to disclose this interest when answering questions 18 and 19 in his tax returns; 4. in order for the Crown to prove that Mr Pratten controlled CPI, it was necessary to establish that BDO and PKF were "immutably bound" to execute Mr Pratten's directions to make the payments on behalf of CPI, and that this was an aspect of the Crown case that required proof beyond reasonable doubt and should have attracted a Shepherd direction; and 5. the Court should entertain a doubt that the jury reasoned to its verdicts on a properly directed and considered basis, and to the criminal standard beyond reasonable doubt. Consideration 1. The Crown case that Mr Pratten had a beneficial interest in CPI was one of the ways in which the Crown alleged that Mr Pratten had an ability to direct the payments of monies from CPI to himself or to third parties for his benefit. Directions were given to the jury as to the meaning of the concept of "beneficial interest", both in the general written directions (pars [2]-[4]), and orally. The trial judge stated in summing up that "it would be impossible to come to a view on the evidence that Mr Pratten's beneficial interest, if he were to have one, in CPI was more than 25 per cent". There is no challenge to the adequacy of these directions or this aspect of the summing up. The trial judge's remarks on sentence 1. Although Mr Pratten gave evidence at trial describing his "beneficial interest" in CPI as "my future equitable interest" and denied that this was a current interest in CPI, the Crown characterised his interest as a beneficial interest in CPI. Mr Pratten submitted that the Crown's characterisation of his interest in CPI was wrong, given the remarks of the trial judge on sentence referring to Mr Pratten's email of 17 December 2017 to his accountant, Mr Greer, in which Mr Pratten stated that he had a 25 per cent interest in the profits of CPI upon winding up of the company (see [49] above): R v Pratten (No 25) at [69]. 2. Mr Pratten's submission relying upon the trial judge's remarks on sentence is flawed. The fact-finding exercise undertaken by the trial judge for the purpose of sentence is not relevant to the conviction appeal. The finding on sentence says nothing as to the sufficiency and quality of the evidence adduced at trial and whether it was capable of establishing the Crown case beyond reasonable doubt. Controlled foreign company 1. Mr Pratten's contention that the Crown was required to prove that CPI was a "controlled foreign company" for the purposes of income tax law, was a reference to Part X of the ITAA 1936, specifically, s 316(1) which provides for certain amounts to be included in a taxpayer's assessable income in respect of, relevantly, the attributable income of a "CFC" (controlled foreign company). 2. A company is a "CFC" at a particular time if, at that time, the company is a resident of a listed country or of an unlisted country, and any of the specified paragraphs in s 340(a)-(c) apply: ITAA 1936, s 340. The specified paragraphs list the degree of control interests in the CFC required of a group of 5 or fewer Australian entities (in aggregate not less than 50 per cent), together with some other requirements. Where a CFC has attributable income for a statutory accounting period in respect of an attributable taxpayer, the taxpayer's attribution percentage of the attributable income is included in the assessable income of the taxpayer of the year of income in which the end of the statutory accounting period occurs: ITAA 1936, s 456(1). 3. The Crown correctly submitted that it was not required to prove that CPI was a "controlled foreign company" for the purposes of Part X of the ITAA 1936 to make good its submission that Mr Pratten had a sufficient interest in, or control of, CPI to direct payments be made to him or to third parties for his benefit. That was because it was not part of the Crown case that Mr Pratten's assessable income included the attributable income of a foreign entity such as CPI. Questions 18 and 19 of the tax returns 1. The Crown relied upon the chronology of evidence relating to the preparation of the 2006 and 2007 draft tax returns by Mr Greer for an inference that Mr Pratten changed accountants in late 2008 in order to avoid disclosing in his tax returns his foreign interests and assets (see [49]-[52] above). This was relevant to the Crown's circumstantial case that Mr Pratten's state of mind was that he did not want to draw attention to his interest in assets in Vanuatu. The answers to questions 18 and 19 in the tax returns were not relied upon by the Crown as a particular of the alleged offences. 2. No direction was sought by defence counsel on the legal requirements in relation to questions 18 and 19 of the tax returns or the law about controlled foreign companies. As such, r 4.15 applies. 3. In closing address, the focus of the defence case on this issue was that the jury should accept Mr Pratten's evidence for the change in accountants and Mr Greer's evidence in cross-examination. Defence counsel submitted that: (1) the change in accountants was not in relation to questions 18 and 19 in the tax returns, "it was about primary production" and Mr Pratten's preference to use Mr Berry as his accountant given the long-standing relationship between them, Mr Berry's experience with primary production and because Mr Berry was "cheaper" than Mr Greer (see [61] above); and (2) Mr Greer accepted in cross-examination that Mr Pratten's description of his interest in CPI as an entitlement to receive 25 per cent of the profits of a company after it was wound up within ten years of operation would not be sufficient to change the response to questions 18 and 19 from no to yes. 4. Given the way the defence case was put in closing address, it is likely that defence counsel made a forensic decision not to seek a direction on the matters now complained of. To have done so had the potential of highlighting to the jury the converse of the defence case, namely, as the Crown alleged, that Mr Pratten had a beneficial interest in CPI and did not want to draw attention to his interests in assets in Vanuatu. Leave to raise these matters should be refused under r 4.15. Whether Shepherd direction was required 1. At the conclusion of the evidence, and immediately before closing addresses, defence counsel sought a Shepherd direction in relation to Mr Pratten's control of CPI and ability to direct BDO and PKF to make payments to him and third parties. Ultimately, this request was not pressed, and no comment was made or redirection sought by defence counsel following the trial judge's summing up on circumstantial evidence which did not include a Shepherd direction. As such, r 4.15 applies. 2. Mr Pratten submitted in this Court that a Shepherd direction should have been given because, if control of CPI was removed from the list of facts relied upon by the Crown to prove its case, then "at least to a large part", one was "left with an empty shell", adopting the language of Ipp JA in R v Zaiter [2004] NSWCCA 35 at [8]. 3. In the well-known passage in Shepherd v The Queen (1990) 170 CLR 573; [1990] HCA 56, Dawson J said at 579-580: … it may sometimes be necessary or desirable to identify those intermediate facts which constitute indispensable links in a chain of reasoning towards an inference of guilt. Not every possible intermediate conclusion of fact will be of that character. If it is appropriate to identify an intermediate fact as indispensable it may well be appropriate to tell the jury that that fact must be found beyond reasonable doubt before the ultimate inference can be drawn. But where - to use the metaphor referred to by Wigmore on Evidence … the evidence consists of strands in a cable rather than links in a chain, it will not be appropriate to give such a warning. It should not be given in any event where it would be unnecessary or confusing to do so. It will generally be sufficient to tell the jury that the guilt of the accused must be established beyond reasonable doubt and, where it is helpful to do so, to tell them that they must entertain such a doubt where any other inference consistent with innocence is reasonably open on the evidence. … But the jury may quite properly draw the necessary inference having regard to the whole of the evidence, whether or not each individual piece of evidence relied upon is proved beyond reasonable doubt, provided they reach their conclusion upon the criminal standard of proof. Indeed, the probative force of a mass of evidence may be cumulative, making it pointless to consider the degree of probability of each item of evidence separately. (Emphasis added.) 1. McHugh J said of the cumulative nature of circumstantial evidence at 593: In a particular case, an inference of guilt beyond reasonable doubt may not be able to be drawn unless each fact relied on to found the inference is established beyond reasonable doubt. This is likely to be the case where the incriminating facts relied on to establish the inference are few in number. But the more facts that are relied on to found the inference of guilt, the less likely it is that each or any fact will have to be proved beyond reasonable doubt to establish guilt beyond reasonable doubt. Consequently, even when guilt beyond reasonable doubt cannot be inferred unless certain facts are proved, it may still be open to infer guilt beyond reasonable doubt even though each fact is not proved to that standard. (Emphasis added.) 1. In R v Davidson (2009) 75 NSWLR 150; [2009] NSWCCA 150 at [8], Spigelman CJ explained that in determining whether the facts in a particular case should be considered "links in a chain" and therefore each fact is "indispensable to a conclusion of guilt", as opposed to "strands in a cable", there is a distinction between a case where there are only two intermediate facts such that it may assist the jury to give such a direction and a case where there are numerous separate facts of varying degrees of probative force "where it could very well be confusing to do so". James J agreed at [26]. Simpson J observed at [74]: Whether a fact on which the Crown relies as part of a circumstantial case is or is not "indispensable" may be tested by asking whether, in the absence of evidence of that fact, there would nonetheless be a case to go to the jury. If the answer is in the affirmative, even if the Crown case is weakened, even considerably, the fact is not "indispensable". Where the answer is in the negative, the fact is "indispensable" and the jury should be directed accordingly. 1. The Crown case did not contend that Mr Pratten controlled or had a beneficial interest in all of CPI; the Crown alleged that he was one of the controllers or beneficial owners of CPI and submitted that there was ample evidence for the jury to conclude that Mr Pratten had a sufficient interest in, or control of, CPI to direct that payments be made to him or to third parties for his benefit. That evidence, some of which has already been mentioned, included the following. 2. First, although Mr Cantwell, the agent of the London reinsurer, was challenged in cross-examination on his recollection that Mr Pratten told him in 2005 that CPI was "mine", and accepted that it was possible Mr Pratten may have said that he had an interest in CPI, Mr Cantwell adhered to his evidence that at one point Mr Pratten said, "it's mine". 3. Second, in the transcript of an intercepted telephone conversation between Mr Pratten and Mr Greer on 5 December 2008, Mr Pratten gave an abbreviated history of the establishment of the "company" and expressed that he no longer wanted the "company" now (where references to the "company" are to be understood as being to CPI, and references to "we" are to be understood as being to Mr Pratten): Mr Pratten: … the broking business started with the Vanuatu business in on twenty August two thousand and two … We had a seven year period in which um er I would get to have the company … Right and of course the company had to cease writing business on the thirtieth of June 2008 … Two months before um two months or three months before ah the period it had to cease writing business because of Australian laws … I don't want the company now … It's got no income and it's going to go exactly the same way as the old RGI company into run-off. 1. Third, there was evidence that Mr Pratten was able to control monies held on behalf of CPI and give directions as to the transfer of its monies, such as the direction given by Mr Pratten on 17 March 2006 to the accounts department of RGIB that monies held in the trust account of RGIB on behalf of CPI were to be transferred directly to Mr Pratten's personal account, described as a "premium transfer to CPI". 2. Fourth, Ms Candace Barcham, who worked for Mr Pratten at RGIB in 2006 and 2007, gave evidence that Mr Pratten said that he wanted to change the name of CPI, which the Crown relied upon for the inference that Mr Pratten could give instructions to change the name of CPI. 3. Fifth, Ms Emilia Kaszuba, a web designer, gave evidence of the work she was contracted to complete for Australian companies associated with Mr Pratten, including instructions given by Mr Pratten concerning the "R&G (Charles) Website" by email on 19 April 2005 from the email address of CPI in Vanuatu, to which Mr Pratten had access. Ms Kaszuba also gave evidence that she was retained by Mr Pratten in September 2005 to develop a web page for CPI, and all instructions in relation to CPI's website came from him. The Crown relied upon this evidence for the inference that Mr Pratten was doing work for his own company, CPI. 4. Sixth, two contemporaneous documents recording communications from Mr Pratten supported the Crown case that Mr Pratten was able to give directions to CPI for monies to be transferred from the VITCO and IFTCO accounts to himself or to third parties for his benefit, which were not loans that had to be repaid. 5. One document was the Crash email in December 2007, which treated various assets and properties in the names of third parties, such as PPI, as owned by Mr Pratten. The Crash email made no mention of any obligation of Mr Pratten to repay monies paid by CPI in connection with the purchase of those properties by PPI (the Macedo block, the Stroud development block and the Stroud hardware store). Nor was there any mention in this email of any obligation to repay monies paid by CPI directly to Mr Pratten's personal St George bank account or to third parties for his benefit. 6. The other document was the email sent by Mr Pratten to a financier, New Holland Finance, together with a completed finance application on 18 August 2008. The finance application contained a handwritten statement of Mr Pratten's assets and liabilities and their respective value. The finance application included reference to properties at Paddington and Woolloomooloo, as well as the statements, "I have several properties. Do you want me to list them all?" and "+ approximately $20 million other property". The word "nil" is written three times beside the entries for liabilities owing with respect to property, liabilities by way of bank overdraft, and liabilities owing by way of loan. The finance application concludes by recording that Mr Pratten's total liabilities are "[n]il personally". The covering email to the financier stated: My financials are limited to my Group Certificate - I am an employee of RGIB Insurance Broking Pty Ltd and am just starting to operate my farm enterprise as a business unit thus, I do not expect any income until later in this financial year. I have not finalised my current accounts for my tax year as I'm currently reviewing my personal affairs in respect of trusts and family matters concerning my estate should I pass on suffice to say however, my group certificate is as will be my tax statement for this year. I note you require a signed copy of my personal assets and liabilities, a copy is attached herewith taken from my original application (unfortunately the scanned quality is very poor) - there is not enough room on it to disclose all my assets however, if you would like me to put a full list together I can - the properties I have listed are in Paddington & Woolloomooloo in Sydney but, I also have properties in the Hunter region, my farm, some commercial properties etc as well as overseas - I estimate a combined value of appx $20m. I have no debt - hence I will have tax problem this year for the farm's operations because it will turn a profit and I have only very few expenses. The tractor lease will be a 100% tax deductible expense. (Emphasis added.) 1. The Crown accepted that the relationship between Mr Pratten and the Vanuatu accountants formed a central part of the Crown's circumstantial case as to Mr Pratten's ability to control CPI, but said that it was not critical to it. The Crown submitted that it was not required to prove those matters beyond reasonable doubt. The Crown said that its case in relation to the alleged undeclared income relied upon multiple different factors. 2. On the Crown case, the amounts transferred from the VITCO and IFTCO accounts to Mr Pratten, or to third parties for his benefit, were by way of distribution of his share of profits of CPI or remuneration for services. Contrary to Mr Pratten's submission, the possibility that BDO and PKF exercised independent judgement in considering Mr Pratten's requests for payments is not inconsistent with a finding of guilt; for example, a discretionary payment may fall within a taxpayer's ordinary income, such as a discretionary profit share (including the payment of a dividend which is not fixed by constitution of a company) or a bonus payable to an employee. 3. As to the first scenario, it was open to the jury on the Crown case to accept that the payments by CPI, or at least some of them in each tax year, were a distribution of Mr Pratten's share of profits of CPI as one of the beneficial owners of CPI. Such payments in the hands of Mr Pratten or paid to third parties at his direction constituted ordinary income which should have been declared in his tax returns. 4. As to the second scenario, it was open to the jury on the Crown case to accept that the payments by CPI, or at least some of them in each tax year, were remuneration for Mr Pratten's services provided to CPI. In this scenario it was not necessary for the Crown to show that Mr Pratten controlled CPI or directed the payments to occur. It was sufficient that Mr Pratten gave directions in relation to where those payments were to be made, either to his own bank accounts or to third parties for his benefit, and that those amounts could be characterised as Mr Pratten's ordinary income. 5. Contrary to Mr Pratten's submission, it was not necessary for the Crown to prove beyond reasonable doubt that BDO and PKF were "immutably bound" to execute Mr Pratten's directions. The Crown's circumstantial case was a "strands in a cable" type case, rather than a "links in a chain" type case. The trial judge did not err in not giving a Shepherd direction. Leave to rely upon this complaint should be refused under r 4.15. Whether the verdicts are unreasonable 1. A ground of appeal which asserts that the verdicts are unreasonable or cannot be supported having regard to the evidence requires that the Court address "whether it thinks that upon the whole of the evidence it was open to the jury to be satisfied beyond reasonable doubt that the accused was guilty": M v The Queen (1994) 181 CLR 487 at 493; [1994] HCA 63; MFA v The Queen (2002) 213 CLR 606; [2002] HCA 53 at [25], [58]; SKA v The Queen (2011) 243 CLR 400; [2011] HCA 13 at [11]-[12]. In answering this question, an appeal Court must bear steadily in mind the jury's advantage in resolving conflicts in the evidence of various witnesses. The question is one of fact which requires this Court to make "an independent assessment of the evidence, both as to its sufficiency and its quality": SKA at [14]; and disclosing in its reasons its assessment of the capacity of the evidence to support the verdicts: BCM v The Queen [2013] HCA 48; (2013) 88 ALJR 101 at [31]. It is not simply a matter of deciding whether as a matter of law there was evidence to support the verdict. This Court must determine whether, in all the circumstances, it would be dangerous to permit the verdict to stand: SKA at [14], citing M v The Queen at 492-493. These principles were confirmed in Pell v The Queen (2020) 268 CLR 123; [2020] HCA 12 at [43]-[45]. 2. In a circumstantial case such as the present, it is important to consider the totality of the evidence; the evidence is not to be looked at in a piecemeal fashion. As the joint judgment observed in The Queen v Baden-Clay at [47] "all of the circumstances established by the evidence are to be considered and weighed in deciding whether there is an inference consistent with innocence reasonably open on the evidence" (emphasis in original). A doubt that may be felt when considering one part of the evidence in isolation may be resolved when considering that evidence in the context of the evidence as a whole. Sufficiency and quality of the evidence that the payments were income 1. In accordance with the principles referred to above, I have undertaken an independent assessment of the evidence, both as to its sufficiency and to its quality. In approaching this task I have had regard to the elements of the offence; the accused's defence; the issues in contest at the trial; the manner in which the trial was conducted; the way in which the case was ultimately left to the jury; and the particulars of this ground of appeal, relevantly, the asserted insufficiency of the evidence of Mr Pratten's control of CPI. 2. The jury had to determine whether the payments made from the VITCO and IFTCO accounts to Mr Pratten or to third parties at his direction were (1) by way of loan, (2) by way of reimbursement to Mr Pratten of expenses paid by him on another's behalf, or (3) by way of distribution of the profits of CPI or remuneration for his services. 3. There was no issue at trial as to the source of the payments to Mr Pratten or to third parties for his benefit. The evidence established that in each of the tax years in question monies were paid by RGIB to VITCO or IFTCO as premiums due to RGII/CPI and that subsequently lesser amounts were paid out of those accounts either to RGIB, to Mr Pratten, or to or for the benefit of third parties at his direction. The payments back to RGIB were principally for commissions due under the agency agreement. The evidence included the formal admissions made by Mr Pratten in Ex 2 and the forensic analysis by Ms Celona. The amounts of these various payments are set out in the table below: Tax Year ending 30 June RGIB to CPI (VITCO/IFTCO) VITCO/IFTCO to RGIB VITCO/IFTCO to Mr Pratten VITCO/IFTCO to third party 2003 1,463,592 820,558 389,898 678,808 (see [284] below) 2004 2,449,990 1,231,015 269,117 6,250 2005 2,190,000 738,307 89,859 242,633 2006 3,883,464 1,522,857 645,022 350,388 2007 4,673,000 2,053,284 1,000,427 380,780 2008 4,378,000 2,314,360 422,369 400,014 2009 11,000 38,410 96,314 37,854 1. As indicated, the Crown case was confined to payments sourced from CPI and did not include the first five payments from the VITCO account in the 2003 tax year (totalling $458,825) for the purchase of Skallet. Thus, of the payments to third parties from the VITCO account for the 2003 tax year, totalling $678,808, only part of this amount ($219,983) was sourced from CPI; these payments from CPI related to the purchase of the Stroud hardware store: see [42] above. 2. As to the character of the payments, there was evidence supporting Mr Pratten's contention that the payments were by way of loan. That evidence included the accounts of CPI which showed CPI having made loans for the years ending 31 December 2003 ($797,110), 31 December 2004 ($853,577), 31 December 2005 ($1,516,657), 31 December 2006 ($4,464,000), and for the further period of 1 January 2007 to 30 June 2009 ($6,361,126). All loans were recorded as unsecured, except for the year ended 31 December 2006 which recorded the loans as secured. The borrowers were only identified in the accounts for the period ending 30 June 2009, which included Mr Pratten ($2,559,427) and PPI ($826,760). 3. The accounts of CPI for the relevant years are all dated and signed as audited by Mr Kym Butler: the year ending 31 December 2003 are dated August 2004; the year ending 31 December 2004 are dated August 2005; the year ending 31 December 2005 are dated June 2008; the year ending 31 December 2006 are dated June 2008; and the accounts for the 30-month period ending 30 June 2009 are dated 21 May 2012. The audit opinions for the years ending 31 December 2005, 31 December 2006 and the period ending 30 June 2009 are qualified. The 2005 and 2006 accounts contain a note that CPI did not provide details in relation to debts due from RGIB and commissions payable to it. The accounts for the period ending 30 June 2009 noted a post-balance date event in January 2011 that Mr Pratten sold two ordinary shares in 71 Cowper Street to CPI for $876,456 "to reduce the existing Unsecured Loan" owing from Mr Pratten. 4. There was evidence that in the period BDO was "administering" the affairs of CPI and PPI, the sole director of RGII/CPI signed written resolutions to make a loan to Mr Pratten of $75,000 on 6 January 2003 and $126,750 on 9 December 2003, and that there was an unsigned loan agreement between RGII/CPI and Mr Pratten dated 9 December 2003 for $126,750. 5. There was evidence that in the period when PKF was "administering" the affairs of CPI and PPI, Mr Pratten would make requests that payments from IFTCO be made either into his personal bank account or to a third party in payment of an expense or to enable the purchase of an asset to proceed. Those requests took several forms. Some requested that Mr Johns or Mr Agius of PKF "arrange payment of invoices by TT". Some requests were made to "borrow" funds, or that funds be "advanced". Some requests were expressed as "assistance in financing" purchases. One request in August 2007 referred to "confirmation that the loans are available" and made payment requests. Another request referred to the payment of "standard debts" and others referred to "property settlements". The "standard debts" included rent on the Darling Point property and school fees for Mr Pratten's daughters in Sydney. 6. There were other references in the evidence to monies being advanced by way of loan from CPI to Mr Pratten in the telephone intercept recordings. In a conversation on 3 December 2008 between Mr Pratten and Mr Agius shortly after search warrants had been executed on that day, Mr Pratten said: … I said well hang on a second um that's not quite how it works um money goes off overseas to an insurance company not a brokerage the brokerage puts the money into an insurance company the insurance company then pays claims has expenses and then after all that there may be a profit depending on what the I-B-N-R is and then after that um after that I may take a loan from time to time and that's about it for which I you know may or may not pay interest on and I've gotta pay it back one day so hello. 1. In another conversation around this time, Mr Pratten made similar statements concerning loans that were made from the profits of CPI. Mr Pratten told Mr Berry on 4 December 2008 that in relation to his "Vanuatu dealings" he had "always borrowed money over there in order to you know um buy things for the farm". 2. In a telephone conversation on 4 December 2008 with Kelly Fawcett of PKF, Mr Pratten was recorded as saying: … I wanna work out exactly dollar for dollar ah what all of the loans have been over the years … I wanna make sure that that's done so and I just wanna make sure cause if they , if they [sic] decide to say a lot of it is income or whatever and I argue that if I argue it successfully I argue it but if I argue it and lose there's a lot of that money was spent on business type things which are deductible this end you know what I mean. … And when I come over I'll have a look at all the transfers and work out which went where and what was for each one and ah there'll be … There'll be I imagine there'll be a couple of hundred but um it won't take that long to go through and determine what the hell goes on. 1. In another conversation on the same day, Mr Pratten asked Mr Greer: I did wanna ask you … with um er loans right … you know if if you take a loan from a company its gotta be … um what do you call it documented … [y]eah within seven years and yeah secured or repaid within seven years. … Yes well, I've got a feeling what they're gunna says is any money that came over to me personally from Vanuatu was income … But I've got it all loan documented you know. 1. In an email dated 12 December 2008, Mr Pratten said to Mr Berry: The moneys I borrowed are bundled up in a whole bunch of loans I have with another organisation and are not repayable as yet, there will be some interest payable I suppose, but, not yet sure. 1. Mr Pratten also gave evidence that the payments from the VITCO and IFTCO accounts to him or to third parties at his direction were loans or, in some cases, by way of reimbursement of expenses. 2. The jury was not obliged to accept Mr Pratten's evidence. 3. The jury was entitled to accept the evidence of the Crown witnesses and to consider their evidence in combination, as opposed to in a piecemeal way. There was evidence that in each of the financial years ending 30 June 2003 and 30 June 2004, Mr Pratten received payments from VITCO into his personal bank account, which were applied in part in payment of living and other personal expenses. In the year ending 30 June 2003, the amount withdrawn from Mr Pratten's personal bank account by ATM was $25,904.73 and the amount paid in satisfaction of VISA card purchases was $177,207.69. In the year ending 30 June 2004, the amount withdrawn by ATM was $51,340 and the amount paid in satisfaction of VISA card purchases was $75,405.05. Significant drawings by ATM continued for the following years in question from 2005 to 2009. 4. There was evidence that in each of the financial years ending 30 June 2005 to 30 June 2009, Mr Pratten received the benefit of payments made by IFTCO, on his behalf, in satisfaction of school fees totalling $99,230 and rent totalling $192,256, as shown in Schedule 1 to this judgment. As to the payment of school fees, in a letter dated 15 July 2005, Mr Pratten told Lane & Lane Lawyers that "[d]ue to Family Court matters, my funds have been difficult to access" and that he had arranged to telegraphically transfer the sum of $5,000 to Kambala on 18 July 2005. That payment was made by IFTCO on 20 July 2005, as promised by Mr Pratten. 5. The jury was required to assess whether the payments from the VITCO and IFTCO accounts to Mr Pratten or for his benefit were made by way of loans from CPI. In addressing that question, the jury was entitled to take into account the following matters. 6. First, there was no evidence of the making of any agreements for loans or the terms of any such agreements, other than assertions by Mr Pratten, and one unsigned loan agreement for $126,750 with RGII/CPI and sole director resolutions of RGII/CPI resolving to make loans to Mr Pratten on 6 January 2003 ($75,000) and on 9 December 2003 ($126,750) in the 2003 tax year. The total amount referred to in these documents ($201,750) was significantly less than the payments from VITCO in the 2003 tax year to Mr Pratten's personal bank account of $389,898, and for the benefit of third parties of $219,983 (relating to the purchase of the Stroud hardware store). 7. Second, Mr Pratten's contemporaneous statements referring to "loans" or "advances" did not identify the amounts he had "borrowed" or the terms of any arrangements. His evidence was extremely vague as to the time for repayment and whether the amounts would need to be repaid. His evidence was also unclear as to whether any interest was payable on the alleged borrowings and whether, and if so, how much interest was payable: see [60] above. 8. Third, Mr Pratten did not keep contemporaneous records of when and what amounts he had allegedly borrowed from RGII/CPI, which was consistent with him being under no obligation to repay the monies advanced or to pay interest on them. 9. Fourth, the evidence did not show that there had been any loan repayments by Mr Pratten to CPI at any time before December 2008 when the search warrants were executed. As indicated, the accounts of CPI for the period ending 30 June 2009 noted a post-balance date event in January 2011 which purported to reduce the existing unsecured loan owing from Mr Pratten: see [286] above. 10. Fifth, prior to 2009, Mr Pratten did not keep any systematic record of expenses paid with monies received from VITCO and IFTCO, or claim that any expenses were deductible, other than in tax returns lodged in September 2009 for the tax years ending 2007, 2008 and 2009. This was consistent with the monies being receipts which he did not treat as taxable, not because they were not income but because they were not to be declared as income. 11. Sixth, there were contemporaneous documents recording statements by Mr Pratten which were inconsistent with him having borrowed any monies from CPI: see [272]-[273] above. 12. On the whole of the evidence, it was open to the jury to be satisfied beyond reasonable doubt that the monies transferred from the VITCO and IFTCO accounts to Mr Pratten, or to third parties at his direction, were income to which he was entitled and were not loans that had to be repaid. The evidence referred to above, including the intercepted conversations, overwhelmingly supported the conclusion that, to the extent that these amounts were sometimes called "loans" or "advances", this was not the true position. The amounts were paid and received by Mr Pratten, or transferred at his direction, as either the return of his share of the profits of CPI or as remuneration for his services. 13. Having reviewed the evidence and the documents placed before this Court, excluding the evidence of Mr Barns which was wrongfully admitted, I have concluded that it was open to the jury to be satisfied beyond reasonable doubt that Mr Pratten was well aware that the payments from the VITCO and IFTCO accounts to him, or at his direction, were income in his hands that was required to be declared in his tax returns for the years in which it was received. It was also open to the jury to be satisfied beyond reasonable doubt that Mr Pratten therefore dishonestly, and by deception, obtained a financial advantage from the Commonwealth by understating his income in his tax returns which he caused to be lodged, being a resultant reduction in his liability to pay income tax. 14. I am satisfied, excluding the evidence of Mr Barns which was wrongfully admitted, that it would not be dangerous to allow the verdicts of guilty to stand. The proviso 1. The Crown submitted that, notwithstanding the wrongful admission of evidence of Mr Barns, its case against Mr Pratten was very strong and that the proviso applies. 2. Section 6(1) of the Criminal Appeal Act provides, in effect, that this Court shall allow an appeal against conviction if: (1) the verdict of the jury is unreasonable or cannot be supported having regard to the evidence; (2) the judgment of the court of trial is wrong by reason of a wrong decision of a question of law; or (3) for any other ground where there has been a miscarriage of justice, provided that the Court may dismiss the appeal if it considers that no substantial miscarriage of justice has actually occurred. 1. The proviso directs attention to whether the error identified as having occurred at trial is not such as to have occasioned any substantial miscarriage of justice. The proviso is capable of applying to the wrongful admission of evidence: Wilde v R (1988) 164 CLR 365 at 373; [1988] HCA 6; Kalbasi v State of Western Australia (2018) 264 CLR 62; [2018] HCA 7 at [12] (Kiefel CJ, Bell, Keane and Gordon JJ). The onus of proof for dismissal of an appeal under the proviso lies on the prosecution: GBF v R [2020] HCA 40; (2020) 384 ALR 569 at [24], citing Weiss v The Queen (2005) 224 CLR 300; [2005] HCA 81 at [18] (Gleeson CJ, Gummow, Kirby, Hayne, Callinan and Heydon JJ). 2. Three propositions which are fundamental to the application of the proviso are stated in Weiss at [39]. First, the appellate court must itself decide whether a substantial miscarriage of justice has actually occurred. Second, the task is objective and is to be performed regardless of the advantages and disadvantages of an appellate court deciding an appeal on the record of the trial. Third, the standard of proof of criminal guilt is beyond reasonable doubt. 3. There is "[n]o single universally applicable description of what constitutes 'no substantial miscarriage of justice'" (emphasis in original): Weiss at [44]. However, as was pointed out in Weiss at [44]: It cannot be said that no substantial miscarriage of justice has actually occurred unless the appellate court is persuaded that the evidence properly admitted at trial proved, beyond reasonable doubt, the accused's guilt of the offence on which the jury returned its verdict of guilty. (Emphasis added.) 1. In Filippou v The Queen (2015) 256 CLR 47; [2015] HCA 29, French CJ, Bell, Keane and Nettle JJ said at [15] that what is meant by "substantial miscarriage of justice" is that the possibility cannot be excluded beyond reasonable doubt that the applicant has been denied a chance of acquittal which was fairly open to him or her or that there was some other departure from a trial according to law that warrants that description. 2. In Kalbasi at [12], the joint judgment confirmed the position in Weiss that an appellate court must make its own independent assessment of the evidence and determine whether, making due allowance for the "natural limitations" that exist in proceeding wholly or substantially on the record, the accused was proved beyond reasonable doubt to be guilty of the offence on which the jury returned its verdict of guilty: Weiss at [41]. The joint judgment in Kalbasi further noted (at [15]) that Weiss requires the appellate court to consider the nature and effect of the error in every case. Application of principles 1. In this case, the question is whether there has been a substantial miscarriage of justice by reason of the wrongful admission of Mr Barns' evidence. An assessment of the nature and effect of that error directs attention to the significance of Mr Barns' evidence to the issues that the jury were required to determine and the directions given to the jury concerning that evidence. 2. As indicated, the issues the jury were required to determine included the proper characterisation of the payments from the VITCO and IFTCO accounts to Mr Pratten, or to third parties at his direction, specifically, whether or not the payments were loans (as Mr Pratten said in his evidence and some contemporaneous documents suggest), or the return of Mr Pratten's share of profits of CPI or remuneration for his services, being income that should have been declared in Mr Pratten's tax returns in the years in question (as the Crown alleged). 3. The evidence which was wrongfully admitted was opinion evidence; it was not relied upon by the Crown for proof of the charges. It was admitted on a very limited basis to show "formally" that the Commissioner of Taxation did not agree with Mr Pratten when he said that he did not owe any money and to show that the prosecution was not academic. In closing submissions, both the Crown and the defence treated Mr Barns' evidence accordingly; neither party referred to Mr Barns' evidence as irrelevant, which was wrongly admitted. 4. The jury was correctly directed that the opinions of the Commissioner of Taxation, the ATO and Mr Barns were not relevant to the elements of the offences, namely, "whether something is income, should have been declared, was known to have been declared, and was dishonestly done for the purpose of obtaining a financial advantage". The jury was also correctly directed that it was for them to determine whether the Crown had established beyond reasonable doubt whether an amount was income and had not been declared in Mr Pratten's tax returns. 5. In these circumstances, the jury's assessment of the evidence on the issues they were required to determine in order to arrive at verdicts of guilt would not have been affected by Mr Barns' evidence that the Commissioner of Taxation had issued amended notices of assessment for 2003 to 2009, which the jury had been told, correctly, did not affect their task. 6. There is no disadvantage in this Court deciding the appeal on the record of the trial, excluding the evidence wrongfully admitted. The error in admitting the opinion evidence of Mr Barns was not of a kind that could prevent this Court from having the capacity to assess whether the offences with which Mr Pratten was charged were proved beyond reasonable doubt: Kalbasi at [17]. 7. The strength of the Crown case was manifest. Having considered the evidence, I am satisfied that the evidence, properly admitted at trial, proved beyond reasonable doubt Mr Pratten's guilt of the offences on which the jury returned its verdicts of guilty. The possibility has been excluded beyond reasonable doubt that Mr Pratten has been denied a chance of acquittal which was fairly open to him. I consider that there has been no substantial miscarriage of justice. Accordingly, the proviso applies. Conclusion 1. I propose the following orders: 1. Extend the time for filing of the notice of application for leave to appeal to 12 June 2019. 2. Grant leave to appeal against conviction on grounds 1, 1A, 4 and 6. 3. Refuse leave to appeal under r 4.15 of the Supreme Court (Criminal Appeal) Rules 2021 (NSW) on grounds 2, 3, 5 and 6 (insofar as ground 6 challenges directions, or omission to direct the jury). 4. Appeal dismissed. 1. JOHNSON J: I have had the considerable advantage of reading the judgment of Gleeson JA concerning this appeal. I agree with his Honour's reasons and proposed orders. 2. With respect to the question whether the verdicts are unreasonable (at [278]-[306]), I have reviewed the evidence adduced at the trial (excluding the evidence of Mr Barns which was wrongfully admitted) and find that it was open to the jury to be satisfied beyond reasonable doubt of the guilt of Mr Pratten on each of the counts where a verdict of guilty was returned. 3. Concerning the application of the proviso (at [308]-[321]), I am well satisfied that this is a proper case for application of the proviso. As Gleeson JA has explained, this was a very powerful Crown case. After placing to one side the wrongly admitted evidence of Mr Barns, I am satisfied that the evidence proved beyond reasonable doubt the guilt of Mr Pratten of each of the offences upon which he was found guilty by the jury. 4. BEECH-JONES J: At the commencement of the hearing of this appeal, Mr Pratten applied for my disqualification on the basis of apprehended bias. When it is said that one member of an appellant court should be disqualified on the grounds of actual or apprehended bias, then the application is determined by the individual judge and not the Court as a whole (see Barton v Walker (1979) 2 NSWLR 740 at 756; Bainton v Rajski (1992) 29 NSWLR 539; see for example DJ Singh v DH Singh and Others (No 2) [2018] NSWCA 31 and Waterhouse v Independent Commission Against Corruption (No 3) [2016] NSWCA 134). After hearing Mr Pratten, I declined to disqualify myself. I stated that I would provide reasons at the time the Court published its substantive judgment. I now do so. 5. The basis for the application that I disqualify myself is my appearance as Counsel for the defendant in proceedings in August 2011 which were resolved by a judgment of Hall J delivered in April 2012 some six weeks after my appointment to this Court: Rural and General Insurance v Goldsmiths Lawyers [2012] NSWSC 358. In those proceedings, I acted for the former solicitor to Rural and General Insurance Broking Pty Ltd ("RGIB"). The solicitor had acted for RGIB in defamation proceedings against the Australian Prudential Regulatory Authority ("APRA") in the Supreme Court of the Australian Capital Territory (at [4]). In the proceedings before Hall J, RGIB was successful in reviewing the decision of a costs assessor who had declined to review the costs charged by the solicitor defendant to RGIB (at [75]). RGIB was also successful in obtaining an order under s 728 of the former Legal Profession Act 2004 (NSW) for the provision of an itemised bill costs ([81]). Thus, the subject matter of the proceedings was the decision of a costs assessor and the exercise of the discretion conferred by s 728 of the LPA 2004. I did not appear in the defamation proceedings and have no recollection of what they related to. 6. In his disqualification application, Mr Pratten stated that, during the hearing of the proceedings before Hall J, I cross examined him and put matters to him "adverse to [his] character". I do not recall doing so. There is no specific reference to any evidence given by Mr Pratten in cross examination in Hall J's judgment. However, it is clear that Mr Pratten swore affidavits that were read before Hall J (at [7]) and he gave oral evidence (at [82]). I will address the application on the basis that I did cross examine Mr Pratten and put to him matters that were adverse to his credit. It was not suggested that they related to any matter relevant to the facts of this appeal. 7. The governing principle applicable to an application to a judge to disqualify themselves is that "a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide" (Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63 at [6]; "Ebner"). Whether this test is satisfied is to be determined by a two-stage test, namely (Ebner at [8]): First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an 'interest' in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed. 1. The application of this test to the circumstance in which a judge has previously acted as the legal representative for one of the parties before him or her has arisen in a number of cases. They were recently reviewed by Bell P in Kostov v Director of Public Prosecutions (NSW) (No 2) [2020] NSWCA 94 at [25] to [40] ("Kostov"). Although this case concerns a judicial officer who previously acted against one of the parties to an appeal, those cases are still of relevance especially as I acted for Mr Pratten's former solicitor. 2. Two matters should be noted about the test for apprehended bias as it applies to a judicial officer's previous experience as a legal practitioner. First, in Re Polites; Ex parte The Hoyts Corporation Pty Ltd (1991) 173 CLR 78 at 87 to 88; [1991] HCA 25, Brennan, Gaudron and McHugh JJ noted that a prior relationship of legal adviser and client does not generally disqualify the legal adviser from later sitting in proceedings in which that client is a party, although the position may be different if the correctness or appropriateness of their advice is an issue in those proceedings. 3. Second, the knowledge attributed to the hypothetical fair minded lay observer includes a working understanding of the basic or ordinary practices, training and obligations of judges, barristers and solicitors (S & M Motor Repairs Pty Ltd v Caltex Oil (Australia) Pty Ltd (1988) 12 NSWLR 358; (1998) 91 FLR 175 at 380 to 381; British American Tobacco Australia Ltd v Peter Gordon [2007] NSWSC 109 (BATA) at [63]; Aussie Airlines Pty Limited v Australian Airlines Pty Limited & Qantas Airlines Limited (1996) 65 FCR 215 at 222; [1996] FCA 813; Charisteas v Charisteas [2021] HCA 29 (Charisteas) at [12], including what such practices might preclude (Charisteas at [14])). This imputed knowledge includes an understanding that barristers do not usually become associated or identified with their clients and that a "judge is a professional who by training, tradition and oath is required to discard irrelevant, immaterial and prejudicial material" (BATA at [63]; Kostov at [38] to [39]). 4. An example of this which has some relevance to this case, is Re Eric Abraham & Houda Jury; Ex parte Westpac Banking Corporation [1997] FCA 600 ("Jury"). In Jury, a debtor sought to resist the making of a sequestration order by the Federal Court by going behind the judgment in the Supreme Court on which the application for the sequestration order was based. The debtor contended that the judgement debt was affected by apprehended bias on the part of the judge who heard his case and entered judgment against him. That judge had advised the parties at the commencement of the proceedings that many years previously he had been briefed to appear on behalf of the prosecution at the committal proceedings of a witness who was to be called by the judgment debtor and in proceedings in which that witness had sought a stay of his prosecution. As counsel, the trial judge was not involved in the decision to prosecute the witness. In Jury, Lockhart J concluded that no apprehension of bias arose from the trial judge's involvement in earlier proceedings as Senior Counsel for a party. Implicit in his Honour's reasoning was that in previously appearing as counsel the trial judge was not to be imputed with a personal belief as to the allegations made against the witness, being the first step in Ebner, or as acting on them, being the second step in Ebner. The Court of Appeal addressed the same circumstances in Dovade Pty Ltd v Westpac Banking Group (1999) 46 NSWLR 168 at 180 to 181; [1999] NSWCA 113 on the basis of waiver. 5. One aspect of the practice of barristers and solicitors conducting court proceedings is that they may put adverse propositions to witnesses in cross examination provided there is a proper evidentiary basis for doing so. Consistent with the above authorities, the hypothetical reasonable lay observer is taken to understand that this is undertaken to advance their client's case and does not necessarily attribute to the barrister or the solicitor that they hold an opinion as to what was suggested to the witness. As noted, in this case the only matter specifically identified as potentially engaging the first limb of Ebner was Mr Pratten's recollection that something adverse to him, unrelated to this case, was suggested by me to him in the cross examination before Hall J over a decade ago. It follows that the reasonable hypothetical lay observer is not necessarily taken to attribute whatever suggestion that was put to be a personal view held by me then (much less now). Further, as for the second limb of the Ebner test, this application is taking place in a context where the subject matter of the appeal is the fairness of Mr Pratten's trial on matters unrelated to the issues in the proceedings before Hall J. This Court is not determining Mr Pratten's credibility as a witness itself. In all these circumstances, there is no "logical connection between the matter [identified by Mr Pratten] and the feared deviation from the course of deciding the case on its merits" (Ebner at [8]). 6. In relation to the substance of Mr Pratten's appeal, I have read the reasons of Gleeson JA and agree with them. In particular, in relation to the unreasonable verdict ground, having reviewed the record of the trial I am satisfied that "upon the whole of the evidence it was open to the jury to be satisfied beyond reasonable doubt" of Mr Pratten's guilt (M v The Queen (1994) 181 CLR 487 at 493; [1994] HCA 63). I agree with Gleeson JA's reasons in relation to the wrongful admission of the evidence concerning the amended assessments and the application of the "proviso" to s 6(1) of the Criminal Appeal Act 1912. 7. I agree with the orders proposed by Gleeson JA. ********** Schedule 1 (109277, rtf) Amendments 25 October 2021 - See [332]; Charisteas v Charisteas [2021] HCA 29 added to Coversheet. 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: 25 October 2021