R. v. DONNELLY; R. v. TROTH [2001] NSWCCA 125

New South Wales Court of Criminal Appeal

CITATION : R. v. DONNELLY; R. v. TROTH [2001] NSWCCA 125 FILE NUMBER(S) : CCA 60685/2000; 60749/2000 HEARING DATE(S) : 27/03/01 JUDGMENT DATE : 4 May 2001

REGINA PARTIES : JOHN BERNARD DONNELLY JOHN CHARLES TROTH JUDGMENT OF : Powell JA at 1; Heydon JA at 92; Simpson J at 93

LOWER COURT JURISDICTION : District Court LOWER COURT FILE NUMBER(S) : 96/11/0720 LOWER COURT JUDICIAL Shillington DCJ OFFICER :

Crown: M.C. Grogan COUNSEL : Appellant Donnelly: D.A. Wetmore Appellant Troth: Ms. L.M. McSpedden Crown: S.E. O'Connor SOLICITORS : Appellant Donnelly: Whitfields Appellant Troth: Bicknell & Monteith (North Sydney) CATCHWORDS : CRIMINAL LAW - Appeal - Verdict - Whether unreasonable, or cannot be supported, having regard to the evidence - Role of appellate court CASES CITED: M. v. The Queen (1994) 181 CLR 487 DECISION : In each case:; 1. Appeal against conviction dismissed.; 2. Leave to appeal against sentence refused

IN THE COURT OF CRIMINAL APPEAL CCA 60685/2000 CCA 50749/2000 POWELL JA HEYDON JA SIMPSON J 4 May 2001

R. v. DONNELLY R. v. TROTH

JUDGMENT 1 POWELL JA: On 26 June 2000, the Appellants, John Bernard Donnelly ("Donnelly") and John Charles Troth ("Troth"), were jointly indicted before Shillington DCJ at the Sydney District Court on the following charge: "That they between 1 July 1993 and 1 July 1995 at Sydney in the State of New South Wales did conspire to cheat and defraud Cementaid (NSW) Pty. Limited." 2 To that charge the Appellants pleaded not guilty and they were tried before his Honour and a jury of twelve. 3 On 10 July 2000, following a trial which occupied a little over eleven days, the jury returned verdicts of guilty against each of the Appellants. 4 On 6 October 2000, Shillington DCJ sentenced each of the Appellants to imprisonment for a period of 3 years comprising a non-parole period of 2 years and 3 months to commence on 6 October 2000 and to expire on 5 January 2003, with a parole period of 9 months to commence on 6 January 2003 and to expire on 5 October 2003. 5 Cementaid (NSW) Pty. Limited ("Cementaid") - which was a subsidiary of a company known as Aldred & Co. Pty. Limited ("Aldred") - and which occupied factory premises at Lilyfield was, at all material times, a manufacturer of chemicals for use as ad-mixtures and additives for cement and concrete and as surface treatments for coating concrete and other building materials. The function of the chemicals manufactured by Cementaid was to alter the properties of cement and concrete so as to make the cement and concrete water-proof, or corrosion proof, or dust proof, or to stop oil or grease being absorbed into concrete, or to stop mould growing on brick work. All told, Cementaid made some thirty-three different products, most of which were made in the factory at Lilyfield. 6 The raw materials required by Cementaid took varying forms, some being in powder form and others being in a liquid form, some of the chemicals produced by Cementaid being water based and others using petroleum solvents such as xylene. Those raw materials were supplied by a variety of suppliers such as Orica Australia Pty. Limited (formerly called ICI Operations Pty. Limited) and Shell Chemicals (Australasia) Trading Pty. Limited. When delivered, the raw materials came in a variety of forms, some in bags, some in 20 litre pails, some in 200 litre drums and others, such as xylene, which came in bulk, in tankers which were then pumped out into underground tanks at the factory premises. 7 When required for manufacturing products, the raw materials were taken out of storage and placed into large vats, up to 9000 litres in capacity, where they were mixed. Once mixing was completed, the products were "drummed off" or decanted into various sized containers, such as 5 litres pails, 20 litre drums and 200 litre drums, the latter being the size of drum most commonly used. Because the 200 litre drum was the size of the drum most commonly used, and because of the nature of some of the chemicals supplied in such drums, some of the drums when returned to the factory could not be reused, or could not be reused without being refurbished, so that Cementaid was obliged to obtain regular supplies of refurbished 200 litre drums. Although Cementaid was capable of manufacturing thirty-three chemicals, two such chemicals, Caltide and 3CC which is similar to Caltide but incorporates one less component, represented 70% of Cementaid's business. It was usual to produce two batches of those products per week, each batch producing forty-four 200 litre drums of product. 8 The Appellant Troth was employed by Cementaid between 1988 and August 1995 as the senior factory operator. In that capacity he had two sets of duties, the first, as a factory operator, to run the factory, and the second, as the senior factory operator, to advise and assist other factory operators in other Cementaid factories around the country. 9 In his capacity as a factory operator, Troth was required to liaise with those members of Cementaid's staff who were selling product so as to ensure that, at all times, there was product available to fulfil orders; he was to purchase whatever raw materials and reconditioned drums might be needed from time to time in order that product might be manufactured to fulfil such orders as might from time to time be obtained; he was required to keep records of raw materials and refurbished drums supplied to the factory, of product manufactured, and of product delivered to interstate branches of Cementaid and, as well, was required, on a monthly basis, to conduct a physical stock-take of raw materials, refurbished drums and product in the factory premises, the results of which stock-take, together with the other records, were to be provided to Cementaid's accountancy staff in order that the information might be entered into the company's computer so that a monthly report might be produced - it would appear the computer had been so programmed as to produce a theoretical stock-sheet relating to raw materials, packages, drums and finished product held at the factory to enable there to be a reconciliation with the results of the monthly physical stock-take. 10 As the person responsible for ordering raw materials and refurbished drums, Troth had control of Cementaid's purchase order books. As supplies were required he would telephone suppliers, obtain a quote for delivery of the supplies in question, write out a purchase order and send it to the supplier or hand it to the supplier when the order was delivered. When supplies arrived at the factory premises, Troth was required to check the supplies which had been delivered against the order and against the supplier's delivery docket to ensure that what had been ordered had in fact been supplied and that the quantities recorded on the supplier's delivery docket had in fact been supplied and then, if the check were satisfactory, to stamp the supplier's delivery docket and sign it. The receipt of those materials was then to be entered by Troth in a Material Inwards Report. Either at the time of delivery or later the supplier would forward an invoice for the goods the subject of the delivery docket which invoice appears then to have been approved for payment by Troth. 11 When he produced product, Troth was required to prepare a production report listing the product he had produced on a day to day basis and showing the size of the container in which the product which had been produced had been stored. When product was transferred interstate, Troth was required to prepare a "Stock Transfers" record. 12 Although the materials which are before the Court are not entirely clear, it would appear that, prior to October 1993, the relevance of which date will shortly appear, Cementaid had but one supplier of refurbished 200 litre drums, that supplier being a company known as A1 Drums Pty. Limited ("A1 Drums"), which company, in addition to supplying refurbished drums to Cementaid seems also to have been used by Cementaid to remove from its premises for disposal or destruction, drums which were no longer able to be reused by Cementaid in its operations. A1 Drums, however, did not purchase from Cementaid for refurbishment drums which had previously been used by Cementaid because of its operations. 13 As from October, or, perhaps it was November, 1993 a company known as Drum Distributors NSW Pty. Limited ("Drum Distributors") commenced to supply Cementaid with refurbished drums and from time to time to remove from Cementaid's factory for disposal or destruction, drums which had previously been used but which were no longer capable of being used by Cementaid in the course of its operations. Despite this, A1 Drums continued its relationship with Cementaid as before, a situation which appears to have continued until about the end of June 1995. In addition, so the Appellants claimed, during that period of one year and eight months, Drum Distributors acquired from Mr. Troth for refurbishing drums which had been used by Cementaid in the course of its operations but which needed to be refurbished before they could be reused, those drums being paid for by cheques drawn to cash on Drum Distributors' bank account and deposited to the credit of Troth's personal bank account. 14 It was the dealings between Drum Distributors and Cementaid and the payments made by Drum Distributors to Troth in the period from late October, or early November, 1993 to the end of June 1995 which formed the basis for the charge upon which the Appellants were indicted and later convicted. Reduced to its most simple form, the Crown's case was that, as the result of an agreement between Troth and Donnelly, on some thirty occasions during that period: