Reported Decision : (2002) 40 ACSR 593 New South Wales Court of Criminal Appeal CITATION : R v MANASSEH and AUSTIN [2002] NSWCCA 27 FILE NUMBER(S) : CCA 60149/01; 60436/01; 60437/01; 60450/01 HEARING DATE(S) : 14 September 2001 5 December 2001 JUDGMENT DATE : 25 February 2002 Maurice Showa Manasseh - First Appellant PARTIES : Leslie Raymond Austin - Second Appellant Crown - Respondent JUDGMENT OF : Sheller JA at 1; Simpson J at 80; Howie J at 81 LOWER COURT JURISDICTION : Supreme Court LOWER COURT FILE NUMBER(S) : 070038/00; 07204/00 LOWER COURT JUDICIAL Bell J OFFICER : DJ Hammerschlag SC/AF Fernon - First Appellant COUNSEL : DG Dalton - Second Appellant P Roberts SC/PR McGuire - Crown Landerer & Company - First Appellant SOLICITORS : Legal Aid Commission - Second Appellant Commonwealth Director of Public Prosecutions - Respondent CATCHWORDS : CORPORATIONS LAW - false or misleading appearance of active trading in shares - Corporations Law, s998 - 'relevant transaction' - 'interest' - 'beneficial ownership' - burden of proof - appeal upheld, convictions quashed Corporations Law Trade Practices Act 1974 Securities Industry Act 1970 (NSW) LEGISLATION CITED : Income Tax Assessment Act 1936 Companies (Western Australia) Code Securities Industry Code Queensland Criminal Code Trade Practices Commission v Australian Iron and Steel Pty Ltd (1990) ATPR 41-001 North v Marra Developments Ltd (1981) 148 CLR 42 Fame Decorator Agencies Pty Ltd v Jeffries Industries Ltd (1998) 28 ACSR 58 Cargill Inc v Hardin 452 F 2d 1154 (1971) Freeman v Laventhol & Horwath 915 F 2d 193 (1990) Donald v Australian Securities & Investment Commission [2000] FCA 1142 (20 October 2000) CASES CITED: Stanley Yeung Kai Yung v Hong Kong and Shanghai Banking Corporation [1981] AC 787 Lee v Lee's Air Farming Ltd [1961] AC 12 Hamilton v Whitehead (1988) 166 CLR 121 Mallan v Lee (1949) 80 CLR 198 Tesco Supermarkets Ltd v Nattrass [1972] AC 153 Cathels v Commissioner of Stamp Duties (1959) 62 SR (NSW) 455 Gartside v Inland Revenue Commissioners [1968] AC 553 KBT v The Queen (1997) 191 CLR 417 DECISION : 1. Appeals allowed; 2. Crown appeals dismissed; 3. Verdict against each appellant quashed; 4. Direct that a judgment and verdict of acquittal be entered in favour of each appellant IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF CRIMINAL APPEAL 60149/01 60436/01 60437/01 60450/01 SHELLER JA SIMPSON J HOWIE J Monday, 25 February 2002 MANASSEH and AUSTIN v THE QUEEN The appellants were both found guilty by a jury of creating a false or misleading appearance of active trading in shares on the Australian Stock Exchange (s998 of the Corporations Law ). The trial Judge ordered that each appellant be released without sentence being passed upon his giving security, without sureties, by recognizance that he would be of good behaviour for a period of three years. The appellants were business associates. The charges against the appellants were based on evidence relating to seventeen securities transactions, of which ten involved Mr Manasseh and nine involved Mr Austin. Both appellants were involved in two of the dealings. The majority of the transactions relied on by the Crown were between trust companies which held assets in trust for beneficiaries associated with Mr Manasseh, and between trust companies holding assets in trust for beneficiaries associated with Mr Austin. Although the Crown opened a case based on common purpose, during the hearing it abandoned that case and relied upon the deeming provisions in s998(5) of the Corporations Law. Each appellant appealed against his conviction. The Commonwealth Director of Public Prosecutions appealed against the sentences on the ground that they were manifestly inadequate. HELD (per Sheller JA, Simpson J and Howie J concurring): 1. The question was whether s998 applied to both principal and agent or only to the principal. The language of the provision was capable of embracing both. Section 998 applied to a person engaged in the proscribed conduct even though that person so engaged by dealing in the securities of another with or without the authority of that other. This section was concerned only with the creation of a false or misleading appearance of active trading in securities, not the ownership of the securities. The emphasis was on the nature of the activity not the status of the participants: North v Marra Developments Limited (1981) 148 CLR 42; Fame Decorator Agencies Pty Ltd v Jeffries Industries Ltd (1998) 28 ACSR 58. 2. The Crown did not need to show that the applicant knew or had in mind at the time of the contravening conduct that a false or misleading appearance was likely to be created by that conduct: see Donald v Australian Securities & Investment Commission [2000] FCA 1142 (20 October 2000). Once the statutory presumption in s998(5) was invoked it was no part of the Crown case to prove what the purpose or purposes were of the person engaged in the conduct described. For a defence to be made out under subs(6), it was for the person charged to persuade the jury on the balance of probabilities that the purpose or purposes were not or did not include the purpose of creating a false or misleading appearance of active trading of securities on a stock market. 3. Section 998(5) directed attention to a transaction of sale or purchase of securities which did not involve any change in the beneficial ownership of the securities. Subsection (7) equated a continuance of a person's interest in the securities before and after purchase with there being no change in beneficial ownership. The word "interest" in a statute will have a meaning consistent with its context and the language and objects of the statute: see Cathels v Commissioner of Stamp Duties (1959) 62 SR (NSW) 455; Gartside v Inland Revenue Commissioners [1968] AC 553. The appellant's submission that subs(7) could not apply for reason that neither had any interest in the securities purchased and sold was untenable. 4. The trial Judge's general directions regarding the meaning of "beneficial ownership" and "interest" were deficient. Ultimately, the jury were left to consider material which could not fairly resolve the issue. Appropriate directions would involve a more detailed process. The first step was to identify the person or persons said to have had an unchanged beneficial ownership of the securities before and after a particular transaction and, if reliance was to be placed on s998(7), to explain what the Crown said was the interest of that person or persons in the securities before and after the purchase or sale. Only when these persons and their alleged interests were identified could the trial Judge rule on whether the person or persons so identified could be found to have had beneficial ownership within the meaning of s998. If the trial Judge ruled that the identified person or persons could as a matter of law be found to have such a beneficial ownership or such interest, then it was a matter for the jury on the evidence to determine whether in fact they did and if so whether the beneficial interest changed and whether the interest continued after the transaction. The failure to give such directions resulted in a miscarriage of justice. 5. The reasoning of the High Court in KBT v The Queen (1997) 191 CLR 417 did not apply to the charges under s998 of the Law. Legislation Corporations Law Trade Practices Act 1974 Securities Industry Act 1970 (NSW) Income Tax Assessment Act 1936 Companies (Western Australia) Code Securities Industry Code Queensland Criminal Code Cases cited Trade Practices Commission v Australian Iron and Steel Pty Ltd (1990) ATPR 41001 North v Marra Developments Ltd (1981) 148 CLR 42 Fame Decorator Agencies Pty Ltd v Jeffries Industries Ltd (1998) 28 ACSR 58 Cargill Inc v Hardin 452 F 2d 1154 (1971) Freeman v Laventhol & Horwath 915 F 2d 193 (1990) Donald v Australian Securities & Investment Commission [2000] FCA 1142 (20 October 2000) Stanley Yeung Kai Yung v Hong Kong and Shanghai Banking Corporation [1981] AC 787 Lee v Lee's Air Farming Ltd [1961] AC 12 Hamilton v Whitehead (1988) 166 CLR 121 Mallan v Lee (1949) 80 CLR 198 Tesco Supermarkets Ltd v Nattrass [1972] AC 153 Cathels v Commissioner of Stamp Duties (1957) 62 SR (NSW) 455 Gartside v Inland Revenue Commissioners [1968] AC 553 KBT v The Queen (1997) 191 CLR 417 ORDERS 1. Appeals allowed; 2. Crown appeals dismissed; 3. Verdict against each appellant quashed; 4. Direct that a judgment and verdict of acquittal be entered in favour of each appellant. ********* IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF CRIMINAL APPEAL 60149/01 60436/01 60437/01 60450/01 SHELLER JA SIMPSON J HOWIE J Monday, 25 February 2002 MANASSEH and AUSTIN v THE QUEEN Judgment 1 SHELLER JA: Introduction The appellants, Maurice Showa Manasseh and Leslie Raymond Austin, were each separately indicted on a charge that between about 1 May 1997 and 6 June 1997 at Sydney they created a false or misleading appearance of active trading in shares in Diamond Rose NL (DRN) on the Australian Stock Exchange Limited. Both pleaded not guilty. They were tried together before Bell J and a jury. On 23 February 2001 the jury returned a verdict of guilty against each of them. On 13 June 2001 Bell J ordered that each appellant be released without sentence being passed upon his giving security, without sureties, by recognizance that he would be of good behaviour for a period of three years from the date of entering the recognizance. Each appellant appeals against his conviction. The Commonwealth Director of Public Prosecutions has appealed against the sentences on the ground that they were manifestly inadequate. Crown case 2 The charges against the appellants were laid under s998(1) of the Corporations Law (the Law). Section 998, so far as material, provided as follows: "(1) A person shall not create, or do anything that is intended or likely to create, a false or misleading appearance of active trading in any securities on a stock market or a false or misleading appearance with respect to the market for, or the price of, any securities. (5) Without limiting the generality of subsection (1), a person who: (a) enters into, or carries out, either directly or indirectly, any transaction of sale or purchase of any securities, being a transaction that does not involve any change in the beneficial ownership of the securities; (b) offers to sell any securities at a specified price where the person has made or proposes to make, or knows that an associate of the person has made or proposes to make, an offer to buy the same number, or substantially the same number, of securities at a price that is substantially the same as the first-mentioned price; or (c) offers to buy any securities at a specified price where the person has made or proposes to make, or knows that an associate of the person has made or proposes to make, an offer to sell the same number, or substantially the same number, of securities at a price that is substantially the same as the first-mentioned price; shall be deemed to have created a false or misleading appearance of active trading in those securities on a stock market. (6) In a prosecution of a person for a contravention of subsection (1) constituted by an act referred to in subsection (5), it is a defence if it is proved that the purpose or purposes for which the person did the act was not, or did not include, the purpose of creating a false or misleading appearance of active trading in securities on a stock market. (7) A purchase or sale of securities does not involve a change in the beneficial ownership for the purposes of this section if a person who had an interest in the securities before the purchase or sale, or an associate of the person in relation to those securities, has an interest in the securities after the purchase or sale. (9) The reference in paragraph (5)(a) to a transaction of sale or purchase of securities includes: (a) a reference to the making of an offer to sell or buy securities; and (b) a reference to the making of an invitation, however expressed, that expressly or impliedly invites a person to offer to sell or buy securities." "Securities" was defined by s92 of the Law to include shares in a body which by definition included a body corporate (s9 of the Law). 3 The case against each appellant was that he was involved in a series of transactions in shares in DRN which created a false or misleading appearance of active trading in securities. Although the Crown opened a case based on common purpose, during the hearing it abandoned that case and relied upon the deeming provisions in s998(5) of the Law. 4 In her explanation of the Crown case to the jury, Bell J provided a document, MFI 14, which stated as follows: "The Crown will prove the guilt of the accused if and only if in respect of any one of the transactions relied upon by it in the case made against that accused it establishes beyond reasonable doubt one or more of the following: (i) that he was a person who entered into a transaction of sale or purchase of shares in Diamond Rose NL being a transaction that did not involve any change in the beneficial ownership of those shares ('the first limb of the deeming provision'); (ii) that he was a person who offered to sell shares in Diamond Rose at a specified price where he had made or proposed to make (or knew that an associate had made or proposed to make) an offer to buy the same number, or substantially the same number, of Diamond Rose shares at a price that was substantially the same as the first mentioned price; or conversely that he was a person who offered to buy shares in Diamond Rose at a specified price where he had made or proposed to make (or knew that an associate had made or proposed to make) an offer to sell the same number, or substantially the same number, of Diamond Rose shares at a price that was substantially the same as the first mentioned price ('the second limb of the deeming provision')." 5 The Crown led evidence about seventeen transactions in DRN shares. The charges against the appellants were based on these transactions. Mr Manasseh was involved in ten of them (1-4, 8, 9, 12, 14, 16 and 17). Mr Austin was involved in nine (5, 6, 7, 9, 10, 11, 13, 14 and 15). In two of the transactions, 9 and 14, both Mr Manasseh and Mr Austin were involved. One transaction (6) in which Mr Austin was involved, and part of another transaction (16) in which Mr Manasseh was involved, were withdrawn from the jury's consideration. I shall refer to those transactions which were left to the jury as the "relevant transactions". 6 In most of the relevant transactions in which Mr Manasseh was involved the Crown relied upon both limbs as described in MFI 14. In one (9) it relied on the second limb only and in one (16) on the first limb only. Of the relevant transactions which involved Mr Austin, in only one did the Crown rely, or was the Crown permitted to rely, on both limbs (5). In transactions 7, 9, 10 and 11 it relied on the second limb only and in 13, 14 and 15 on the first limb only. History 7 The Crown alleged that in 1997 Mr Manasseh was a professional share trader who operated from a small serviced office in Chifley Tower. The lease for the office was in the name of Nissim Securities Pty Limited (Nissim), a share trading company controlled by Mr Manasseh. The lease was signed by Mr Manasseh and Mr Austin as tenants. Mr Austin made use of the office facilities. A witness for the Crown, John Stokes, gave evidence that occasionally he went to the office in Chifley Tower to collect cheques from Mr Austin. 8 The appellants were business associates. Before 1996 they were involved in various business enterprises together. In April 1997, Mr Austin and Mr Manasseh were the common directors and shareholders of several family companies, most of which they had set up for the purpose of share trading. The companies, with the exception of Landmark Agriculture Pty Limited (Landmark), held their shares in trust either for members of the Manasseh family or for members of the Austin family. The shareholders and directors of the eight share trading companies used by Mr Manasseh and Mr Austin during the period in question were as follows: Company Directors Shareholders Minosea PL (Minosea) Maurice Manasseh, Leslie Austin Nissim, Austin Family Securities PL (AFS), Gavilis PL (Gavilis) Shellplan PL (Shellplan) Maurice Manasseh, Leslie Austin Maurice Manasseh, Leslie Austin Ladali PL (Ladali) Maurice Manasseh, Leslie Austin Elsie Manasseh (the wife of Mr Manasseh), Jennifer Austin Rosemeath PL (Rosemeath) Maurice Manasseh, Leslie Austin Elsie Manasseh, Gary Lissa Nissim Maurice Manasseh, Elsie Manasseh Elsie Manasseh, Gavilis Cerberus PL (Cerberus) Leslie Austin, Jennifer Austin AFS AFS Jennifer Austin, Fergus Austin, Sarah Austin Jennifer Austin, Fergus Austin Landmark Jennifer Austin, Fergus Austin, Sarah Austin Fergus Austin, Sarah Austin 9 Glenoak Moonan Pastoral Company (Glenoak) was a business name registered to Mr Austin. Gavilis was a company whose shareholders were Gary Lissa and his wife, Vicky Lissa, who was also its director. Gary Lissa was an accountant. At the relevant time his company, G A Lissa & Co, acted as accountant for Mr Manasseh and his companies. Until January 1995, G A Lissa & Co had acted for Mr Austin and his companies. 10 The Crown called Mr Lissa. His evidence in chief was brief and dealt with the accountancy services performed for Mr Manasseh and companies with which he was associated and for Mr Austin and companies associated with him. Mr Hammerschlag of Senior Counsel appearing for Mr Manasseh cross-examined Mr Lissa. It is convenient as this point to refer to part of the evidence elicited in cross-examination. Mr Lissa agreed that Nissim, Minosea, Shellplan, Ladali and Rosemeath were companies associated with Mr Manasseh. By May and June 1997 Mr Austin had no involvement with those companies. He had become a director of Minosea, Shellplan, Ladali and Rosemeath because of the medical unfitness of Mrs Manasseh to assume that role. Mr Austin had never had any connection, direct or indirect, via directorship or shareholding with Nissim. Gavilis held its shares in Nissim in trust for interests associated with Mr Manasseh. Mr Lissa was asked about the position in 1997. The following question was put: "Q. Namely that Minosea, Shellplan, Ladali, Rosemeath and Nissim were exclusively Manasseh, and Austin Family Securities and Landmark were exclusively Austin? A. And Cerberus, yes. ….. Q. And in 1997 was it [Nissim] a trust company which held whatever it held exclusively for interest associated with Mr Manasseh? A. Mr Manasseh's family, yes. Q. Now can you just for the assistance of the jury give us a bit of an explanation as to what the significance of the fact would be that it's a trust company in relation to the shareholders and directors? A. A trustee company is a company which in simple terms is responsible for the management of the business. But it has absolutely no interest in the rights of the assets, it incurs liabilities on behalf of the trust but it then has right of indemnity from the assets held by that trust. Q. To put it simply, the trust company itself may hold things like shares but it holds those shares for the benefit of others? A. Yes it does. Q. And in this case it held those shares, or whatever assets, for the benefit of beneficiaries of the trust which were interest associated with Mr Manasseh's family? A. That's correct. Q. What role, so far as an interest in the assets of the company are concerned does a shareholder in the trust company or a director in the trust company have? A. None. Q. So is this correct, that the fact that Mr Austin happened to be a director of the trust company gave him no interest in the assets - HER HONOUR: One moment, Mr Hammerschlag I thought this line related to Nissim. HAMMERSCHLAG: I got it wrong your Honour. Your Honour is quite correct. Q. In relation to Nissim – I'm sorry, I'm just looking at the top of the page – the fact that Gavilis had a shareholding in the trustee company is of no significance at all from the assets point of view? A. That's correct. Q. In relation to Minosea, was Minosea a trust company as well? A. Yes it was. Q. And by 1997 was the position that Minosea was a trust company exclusively for interest [sic] associated with Mr Manasseh? A. Yes it was. Q. And it was a trust company which held assets in trust only for beneficiaries associated with Mr Manasseh? A. Yes. Q. And had nothing in that sense whatever to do with Mr Austin? A. No. Q. Now Mr Austin was a director of this trust company? A. Yes. Q. What significance would that have in 1997 in relation to any interest in the trust assets on the part of Mr Austin? A. None. Q. So the fact that he is a director of a trust company when one is looking at who owns the assets and what the benefits are is a matter of complete irrelevance is it? A. That's correct. Q. Let's have a look at the shareholders. Does the same apply in relation to Austin Family Securities, it was a shareholder in the trust company but not entitled to any of the assets under the trust? A. That's correct. Q. That was the position in 1997? A. Yes. Q. So may we take it that in relation to the assets of Minosea in whatever dealings it had, the fact that Austin Family Securities was a shareholder in that company is of absolutely no significance? A. That's correct. Q. And the same goes for Gavilis? A. Yes. Q. The fact that it was a shareholder in the trust company had absolutely no relevance so far as the assets were concerned? A. That's right. Q. Let's have a look then at Ladali. Was Ladali a trustee company? A. Yes it was. Q. And in 1997 was Ladali a trust company for interest associated exclusively with Mr Manasseh? A. Yes. Q. And not Mr Austin at all? A. That's correct. Q. And in 1997 if it be the case as the documents indicate that Jennifer Austin happened to be a shareholder and Leslie Austin happened to be a director of that trust company, what significance would that have in relation to an interest in underlying assets? A. No interest at all. Q. No interest at all? A. No. Q. In relation then Shellplan, was Shellplan a trust company? A. Yes it was. Q. And was Shellplan a trust company in 1997 that was associated exclusively with Mr Manasseh? A. Yes. Q. And was it a trust company so far as the assets were concerned in 1997 that had nothing whatever to do with Mr Austin? A. That's correct. Q. And in 1997 the fact that Mr Austin was a director or held shares in Shellplan, what significance did that have, if any, in relation to the underlying assets of which Ladali was trustee? A. No - Q. Shellplan? A. No interest at all. Q. No interest at all? A. No. Q. Tell me, Rosemeath, is this the annual return for Rosemeath prepared by your office (handed to witness)? A. Yes it is. Q. In 1997 to your knowledge what interest did Mr Austin have in Rosemeath? A. None at all. Q. None at all? A. No. Q. And the directors of Rosemeath were you and Mrs Manasseh? A. Yes. Q. To your knowledge did Mr Austin play any part at all with respect to Rosemeath? A. No. HER HONOUR: I'm sorry Mr Hammerschlag, a moment ago did you put to the witness that in 1997 he and Mrs Manasseh were the directors of Rosemeath? HAMMERSCHLAG: I was wrong, I should have said shareholders. HAMMERSCHLAG: Q. In 1997 you and Mrs Manasseh were the shareholders of Rosemeath? A. Yes. Q. And the directors were Mr Austin and Mr Manasseh? A. Yes. Q. So far as you know did Mr Austin have any interest in Rosemeath? A. No. Q. Was that exclusively a Manasseh company? A. Yes it was. ……… Q. You gave evidence a moment ago about the three companies, Cerberus, Austin Family Securities, and Landmark, do you recall that? A. Yes. Q. And having been shown the documents from the Australian Securities and Investments Commission, did you agree with the proposition that each of those companies were trustee companies? A. With the exception of Landmark Agricultural. Q. You said that you were not aware of the creation of that company as a trustee? A. That's right. Q. Then you were shown a document, is that right? A. Yes. Q. And you said – tell us what you said you were not aware of? A. The annual return showing trustee investment company. And I said that I was not involved in the establishment of the trust. Mr Austin may have given directions to a legal firm to prepare that. Q. So far as the other two companies were concerned, were you aware that they were indeed trustee companies? A. That's right, yes. Q. You had something to do with the creation of the trust? A. No I didn't. Austin Family Securities was set up some years ago by Minter Ellison. And Cerberus, I'm not certain. Q. You were aware were you not that the trust was a trust for persons associated with the interests of Les Austin, is that right? A. Yes, Austin Family Securities is a trustee of the Austin Family Trust. Q. In giving evidence about Nissim and Minosea, Ladali, Shellplan and Rosemeath, you indicated that Leslie Austin had no interest in the assets of those trustee companies, is that right? A. At the time of those sharetraders took place, yes. Q. In relation to Cerberus, Austin Family Securities and Landmark, assuming that they're all trustee companies, Maurice Manasseh had no interest in the assets of those companies, is that right? A. That's correct, yes. Q. And similarly, as you explained in relation to the companies associated with Mr Manasseh, the directors or shareholders of Cerberus, Austin Family Securities and Landmark Agricultural had no interest in the assets of those three companies, is that right? A. Again with the exception of Landmark, I'm not aware. Q. You see from the document which was filed with the Australian Securities and Investments Commission that it is described as a trustee company, is that right? A. Those documents would have been prepared from the instructions that Mr Austin would have given to the person in my office that handles companies secretarial matters. He was possibly describing it in that." 11 DRN was a speculative mining company. The executive director/chairman was Pnina Feldman, with whom Mr Manasseh was connected. In 1997 DRN made a public offer of shares. According to the prospectus, 50 million DRN shares were to be issued at 20 cents each to raise from the public $10 million to fund the company's future activities. Mr Manasseh put Ms Feldman in contact with stock brokers Reynolds & Co who became the sponsoring brokers for the float. 12 Mr Manasseh was a former employee of Pembroke Securities (Pembroke), a firm of stockbrokers. Mr Manasseh approached Rodney Adler, a director of FAI Insurances Limited, which was the parent company of Pembroke, and suggested to him that Pembroke become the underwriter to the float of the DRN shares. Nissim became the sub-underwriter of 100 per cent of the DRN shares on offer. The fee for underwriting was split between Pembroke and Nissim. The prospectus did not mention the existence of a sub-underwriter. Pembroke was paid a fee of $500,000 by DRN to act as underwriter. Pembroke, in turn, paid $400,000 to Nissim as sub-underwriter. 13 As all of the DRN shares on offer in the float were fully subscribed, the underwriters were not required to take up unsold shares. Of the 50 million shares available for allotment, about 1,055,000 were allotted to entities or persons associated with Mr Manasseh and Mr Austin as follows: Nissim 525,000 Minosea 100,000 Shellplan 50,000 Ladali 50,000 Rosemeath 50,000 Landmark 50,000 Cerebus 50,000 Glenoak 50,000 AFS 25,000 Leslie Austin 25,000 Jennifer Austin 10,000 Fergus Austin 10,000 Sarah Austin 10,000 1,055,000 14 Of the 525,000 shares allotted to Nissim, 250,000 were held on its behalf by a nominee, Concarr Nominees and 25,000 by another nominee, Reynolds Nominees. In addition to the above shares, Elsie Manasseh at some stage acquired some DRN shares in her own name. On 18 April 1997 shares in DRN were listed on the Stock Exchange. 15 The Stock Exchange Automated Trading System ('SEATS') is an electronic computerised trading system. Trades automatically occur when the price of a bid (an order to buy) equals the price of an ask (an order to sell). At the relevant time, every broking office had a designated trading representative who had access to SEATS and could enter orders to buy or sell on SEATS. The SEATS screen showed orders to buy and orders to sell in two columns side by side. The orders remained there until they were traded, cancelled or removed from the system by the broker. Stockbrokers could readily ascertain the position of the market by looking at the SEATS screen. 16 A crossing is a transaction in which the same broker is on both sides of the transaction. In a crossing the broker has at least two orders from two separate clients, one to sell stock and one to buy stock. The first condition for a crossing on SEATS is that the broker appear on the screen at the price that he/she wishes to cross at. The second condition is that the buy quote and sell quote be within one price set of each other. When entering the buy or sell, the parameter 'X' is added to the SEATS screen to denote a crossing. 17 For the relevant transactions Mr Manasseh used the following stockbrokers, John Stokes, who worked for Reynolds & Co, John Lee from Falkiners, James Thomas from Ord Minett, Evan Tong from Peak Lands Kirwin and Richard Day from Prudential-Bache Securities. Mr Austin used James Thomas, John Lee and John Stokes. The evidence showed that within a short period of time, usually less or slightly more than a minute and sometimes in the one telephone conversation, either Mr Manasseh or Mr Austin would instruct one of the brokers to sell a parcel or parcels of DRN shares on behalf of one of the share trading companies and instruct one of the brokers mentioned to buy an equal number or almost equal number of DRN shares on behalf of another of the eight share trading companies. In two transactions, (16) and (17), Mrs Manasseh was shown as the person for whom the order to sell or to buy was placed. In the case of transaction 11, the sales were by Landmark in which all the directors and shareholders were members of Mr Austin's family and the purchaser was Glenoak, Mr Austin's business name. In the case of transaction 15 the sale was by Glenoak and the purchase by Mr Austin himself. In most of the transactions the one party, either Mr Manasseh or Mr Austin, gave both the instructions to sell and the instructions to buy to the brokers. In transaction 9, Mr Austin placed the sell order and Mr Manasseh the buy order with different brokers. In transaction 14, Mr Austin placed the sell order and both Mr Austin and Mr Manasseh buy orders. 18 In some cases both the sell order and the buy order were placed with the same broker and there was a cross. This was the case for transaction 7. At 11 am on 7 May 1997, Mr Austin telephoned John Lee and instructed him to sell on behalf of Cerberus 91,500 DRN shares at $1.31. During the same telephone call Mr Austin instructed Mr Lee to buy on behalf of Landmark 91,500 DRN shares at $1.31. Mr Lee asked Mr Austin whether there was any association between the two companies. Mr Austin stated that they were separate entities. 19 In the case of transaction 8, at about 10.40 am on 8 May 1997 Mr Manasseh telephoned John Lee and instructed him to sell on behalf of Shellplan 100,000 DRN shares at $1.27. He then instructed Mr Lee to buy on behalf of Ladali 100,000 DRN shares at $1.27. Mr Lee asked Mr Manasseh whether there was any association between the two companies. Mr Manasseh stated that they were separate entities. 20 Transaction 11 involved similar crosses. In that case Mr Austin used John Lee. In relation to transaction 14, at about 12.40 pm on 30 May 1997 Mr Austin telephoned John Stokes and instructed him to sell on behalf of Minosea 100,000 DRN shares at $1.04. During the same conversation he instructed Mr Stokes to buy on behalf of Rosemeath 50,000 DRN shares at $1.04. At about 12.40 pm that day during the same telephone conversation, Mr Manasseh spoke to John Stokes and instructed him to buy on behalf of Nissim 50,000 DRN shares at $1.04. 21 In the case of each transaction the Crown alleged that it was inevitable, as in fact occurred, that the orders to sell given by Mr Manasseh or Mr Austin would be met by the orders to buy as each had been given at about the same time. 22 The Crown witnesses included the five brokers who took the orders, Gary Lissa and an expert witness, Alex Burt. Neither of the appellants gave evidence or called any witnesses. Grounds of Appeal 23 Mutatis mutandis each appellant relied upon the following grounds of appeal: 1. Her Honour erred in: (a) failing to discharge the jury; and ( b) not ordering a separate trial of the two accused following the abandonment by the Crown of its case based on common purpose between the accused Manasseh and the accused Austin. 2. Her Honour erred in: (a) failing to discharge the jury; (b) not ordering a separate trial of the two accused following her order that none of the evidence admitted as against one accused might be used against the other accused. 3. Her Honour erred in failing to order that none of the provisions of s998(5) of the Corporations Law applied against the accused and in particular that: (a) none of the transactions the subject of the charge (the 'Transactions') were entered into directly or indirectly by the accused; (b) none of the Transactions were carried out directly or indirectly by the accused; (c) none of the transactions involved the placing of an offer by the accused to buy or sell shares in the company Diamond Rose NL and in failing to remove the matter from the jury. 4. Her Honour erred in failing to order a directed verdict for the accused as a consequence of the matters in paragraph 3 above. 5. Her Honour erred in finding as a matter of law, and in directing the jury accordingly, that the accused had an 'interest', within the meaning of s998 of the Corporations Law, in the shares of Diamond Rose NL that were the subject of the Transactions. 6. Her Honour erred in failing to order a directed verdict for the accused on the basis that the accused held no 'interest' within the meaning of s998 of the Corporations Law, in the shares of Diamond Rose NL that were the subject of the Transactions. 7. Her Honour erred in failing to direct the jury that, to reach a plea of guilty, they must unanimously find that the accused entered into one of the Transactions and that such finding must be in relation to the same transaction. 8. The verdict was unsafe and unsatisfactory in that it was against the weight of evidence. 24 Mr Hammerschlag SC and Mr Fernon appeared for Mr Manasseh on the appeal. Mr Austin was represented by Mr Dalton, who applied to add an additional ground of appeal which in its final amended form was as follows: "9. The Appellant was so incompetently represented at trial such as to cause a substantial miscarriage of justice with particular respect to the following; that the legal representatives for the appellant at trial in all of the circumstances but particularly given her Honour's ruling regarding the operation of the deeming provision pursuant to s998(5) of the Corporations Law and the existence of the statutory defence pursuant to s998(6) did not call the appellant to give evidence and further (a) did not explain fully nor appropriately the rights of the appellant in respect of giving evidence; (b) did not obtain definite and specific instructions from the appellant as to whether he wished to give evidence or not in the circumstances then existing; and/or (c) did not explain fully nor appropriately to the appellant the consequences of not giving evidence." 25 The application to add this ground was not opposed. Mr Dalton also applied for the adjournment of Mr Austin's appeal. This was refused. The Court decided that the appeal on the original unamended grounds should go ahead on the basis that the Court would reserve its decision in both appeals and thereafter give time for Mr Austin to furnish any material, if so advised, in support of the additional ground. On the original unamended grounds Mr Austin adopted the arguments put by Mr Hammerschlag for Mr Manasseh. 26 After hearing argument on 14 September 2001 the Court reserved its decision. On 4 December 2001 the Court heard further evidence filed on behalf of Mr Austin, reserving its decision on admissibility, and heard argument on Mr Austin's ground of appeal 9. The Court again reserved its decision. 27 Grounds 3 and 4 and 5 and 6 would, if successful, entitle the appellants to acquittals. It is convenient to deal first with those grounds. Grounds 3 and 4 28 Mr Dalton accepted that these grounds could not be relied upon by Mr Austin in respect of transactions 11 and 15 in the first of which he used his business name, Glenoak, to purchase the shares and in the second of which he sold the shares using the name Glenoak and purchased them himself. 29 In written reasons for judgment Bell J gave on 19 February 2001 on an application by the appellants for directed verdicts, her Honour said: "10. The Crown submitted that the evidence was capable of establishing that the accused, Manasseh, controlled the various companies through which he conducted the subject transactions. He was the alter ego of the companies. In the Crown's submission the accused's liability was that of a principal. ….. 12. Each of the Manasseh companies is said to be a trustee company holding its assets for interests associated with Mr Manasseh. 13. No evidence has been led to establish that the purchase or sale of shares in any of the transactions was authorised by resolution of the Board of any of the companies. The proceedings have been conducted by both the Crown and the accused upon the basis that Mr Manasseh had effective control of each of the Manasseh companies. Mr Manasseh was a director of each of the Manasseh companies. Each company had two directors. Mrs Manasseh was the other director of Nissim Securities. Prior to February 1997 she was the second director of each of the Manasseh companies. Around that time she suffered from ill health and sought to resign from a number of her directorships. On 20 February 1997 Leslie Austin was appointed a director of each of the Manasseh companies save Nissim Securities (Mrs Manasseh continued as a director of this company). Leslie Austin's role in the Manasseh companies was a nominal one. 14. The Crown contended that s998(5) is concerned to impute criminal liability in respect of actions and not with considerations of contractual liability. It addresses 'transactions of sale and purchase' and not sales or purchases per se. In the Crown's submission a person may enter a transaction of sale notwithstanding that he or she does not own shares. Further, the Crown submitted that one must read subpara (a) in the context of subparas (b) and (c). The latter paragraphs, dealing with matching orders, are directed to offers to sell or to buy. There could be no issue but that a person may offer to buy or to sell that which he or she does not own. I consider there is merit to this submission. 15. I am in any event of the view that I should leave the matter to the jury upon the basis that it is a question of fact for them to determine whether the accused in each case entered into the transactions (or offered to buy or to sell shares) on behalf of the company such that their act was that of the company or whether they entered the transactions (or offered to buy or to sell shares) personally. In this regard I note Lee CJ at CL's observations in J [at 623-624]: 'It is apparent that in a case where the evidence shows that a director of a company is not only in a position of control but in fact personally controls the receipt and disposition of cheques paid to the company upon terms requiring the company to pay the whole or any part of the proceeds, it will be a question of fact for the jury whether his receipt and disposition of those moneys is to be regarded only as a receipt and disposition by the company or whether the conclusion is open that it is he personally, apart altogether from the company, who has received the cheques on terms.' 16. I am of the opinion that the deeming provisions are capable of application in the case the Crown makes against each accused. Accordingly, I decline to direct verdicts of acquittal in each case. 17. It will be necessary for me to direct the jury as to the distinction between acts done by a director on behalf of the company and acts done in a personal capacity; R v Maharaj (1995) 85 A Crim R 374." 30 In summing up to the jury Bell J said: "How then does the Crown seek to prove beyond reasonable doubt that it was Mr Manasseh who entered the transaction of sale and transaction of purchase in respect of those Diamond Rose shares on 1 May 1997? The Crown submits to you that the evidence in this case establishes that Mr Manasseh used various companies which he controlled as vehicles for his, that is Mr Manasseh's, share trading activities and that you would conclude that when Mr Manasseh gave instructions to Mr Lee and Mr Stokes and the other brokers he did so in his personal capacity and not on behalf of the company in any case. …. Thus the Crown contends it was Mr Manasseh who had effective control both of Minosea and of Shellplan and so the Crown submits he used those companies as vehicles for his share trading activities." 31 In similar fashion her Honour told the jury that the Crown said in the case it made against Mr Austin that the evidence of the accountant they might think established that Mr Austin made use of the three companies, Landmark, Cerberus and AFS in order to conduct his share trading activities. "They were vehicles used by him". 32 The appellants argue that as a matter of law it was not open to the jury to conclude that the appellants entered into the relevant transactions. They each submitted that s998(5) of the Law applied only to a person who entered into, or carried out, either directly or indirectly, a transaction of sale or purchase or offered to sell any securities or offered to buy any securities. In each of the relevant transactions, other than transactions 11 and 15, the person who entered into or carried out the transaction or sale or purchase or offered to sell or to buy securities was, it was said, not Mr Manasseh or Mr Austin, but the company or person which was the registered owner of the shares sold or which became the registered owner as the result of the purchase. It was either a company or, in two cases Mrs Manasseh, which was the seller or buyer. 33 In the relevant transactions, other than 11 and 15, when either appellant placed the order to sell or to purchase he did so on behalf of another party. Thus it could be said that the appellant on behalf of the particular company entered into or carried out directly a transaction of sale or purchase of or offered to sell or offered to buy shares. On the other hand it could be said that the company, by its agent the appellant, entered into or carried out indirectly the transaction of sale or purchase of or offered to sell or offered to buy the shares. As a matter of language both the agent and the principal entered into the transaction or offered to sell or buy. The question in such a case is whether s998 applied to both principal and agent or only to the principal. The language was capable of embracing both. 34 The appellants referred to the decision of Lockhart J in Trade Practices Commission v Australian Iron and Steel Pty Ltd (1990) ATPR 41-001. In the context of s50(1) of the Trade Practices Act 1974 which provided relevantly that a corporation shall not acquire "directly or indirectly" any shares in the capital or any assets of a body corporate in certain events, Lockhart J said at 51,032: "The words 'directly or indirectly' in subsec 50(1) plainly control the immediately preceding word 'acquire'. They relate to the method of acquisition, not its subject matter. They do not qualify the nature or character of the shares or assets the acquisition of which is prohibited. This follows not only from the syntax of subsec 50(1) but from its evident purpose. What is a 'direct' as opposed to an 'indirect' acquisition? A 'direct' acquisition is one by the corporation itself. An 'indirect' acquisition is an acquisition by someone on behalf of the corporation acting as agent, trustee or nominee." 35 Section 998(5) provided "[w]ithout limiting the generality of subsection (1)" that a person who engaged in the activities described in relation to any transaction of sale or purchase of any securities (my emphasis) "shall be deemed to have created a false or misleading appearance of active trading in those securities on a stock market". Subject to the defence provided for in s998(6), that person has offended s998(1). Section 998(5) must be so construed. Section 998(1) was directed against a person creating, or doing anything that was intended or likely to create, a false or misleading appearance of active trading in any securities on a stock market or a false or misleading appearance with respect to the market for, or the price of, any securities [my emphasis]. Its operation was not limited to the case where the person buys or sells that person's own securities. 36 North v Marra Developments Limited (1981) 148 CLR 42 concerned s70 of the Securities Industry Act 1970 (NSW) which in substance differed from s998(1) only by the expression "or cause to be created or do anything which is calculated to create" for the expression "or do anything that is intended or likely to create". At 58-59 in the reasons for judgment, with which on this point all members of the Court agreed, Mason J observed: "In terms the statutory prohibition is directed against activity which is designed to give the market for securities or the price of securities a false or misleading appearance. In this setting, 'calculated' means 'designed' or 'intended' rather than 'adapted' or 'suited'. It is not altogether easy to translate the generality of this language into a specific prohibition against injurious activity, whilst at the same time leaving people free to engage in legitimate commercial activity which will have an effect on the market and on the price of securities. Purchases or sales are often made for indirect or collateral motives, in circumstances where the transactions will, to the knowledge of the participants, have an effect on the market for, or the price of, shares. Plainly enough it is not the object of the section to outlaw all such transactions. It seems to me that the object of the section is to protect the market for securities against activities which will result in artificial or managed manipulation. The section seeks to ensure that the market reflects the forces of genuine supply and demand. By 'genuine supply and demand' I exclude buyers and sellers whose transactions are undertaken for the sole or primary purpose of setting or maintaining the market price. It is in the interests of the community that the market for securities should be real and genuine, free from manipulation. The section is a legislative measure designed to ensure such a market and it should be interpreted accordingly. I agree with Hope and Samuels JJA in rejecting the suggestion that the section strikes only at fictitious or colourable transactions. Transactions which are real and genuine but only in the sense that they are intended to operate according to their terms, like fictitious or colourable transactions, are capable of creating quite a false of misleading impression as to the market or the price. This is because they would not have been entered into but for the object on the part of the buyer or of the seller of setting and maintaining the price, yet in the absence of revelation of their true character they are seen as transactions reflecting genuine supply and demand and having as such an impact on the market. When purchases have been made of shares in a company at or about a particular level for the purpose of setting and maintaining a market price for those shares there is a breach of the statutory prohibition. At the very least purchases have then been made which are calculated to create 'a false or misleading appearance with respect to the market, for or the price of' the shares. In reality the purchases are calculated to create a false market or false price. The false or misleading appearance is that the market, in the absence of any disclosure that a market support operation is on foot, appears to be real or genuine, there being no overt sign of market support of manipulation. In passing I note that it is enough to breach the section that the activities are calculated to create a false or misleading appearance. It is not necessary that they do in fact create that appearance." Section 998(1) prohibited activity designed to give the market for securities or the price of securities a false or misleading appearance, that is to say, activity which resulted in artificial or managed manipulation. 37 In Fame Decorator Agencies Pty Ltd v Jeffries Industries Ltd (1998) 28 ACSR 58 there were recorded on the SEATS on 28 April 1995 offers to buy shares in the respondent company Jeffries which ranged from 35 cents on 31 March 1995 back to 13 cents on 9 March 1995. According to the SEATS' system if the appellant Fame wished to sell shares in Jeffries it was required to accept those bids in the sequence beginning with the latest and highest price. At 3.52 pm on 28 April as a result of a telephone conversation between Mr O'Halloran, who principally controlled Fame's business, and his stockbroker, Fame that afternoon accepted all the outstanding offers to buy the Jeffries' shares at prices down to and including some at 13 cents. The question before the trial judge was whether sales of 20,000 of the Jeffries' shares at 14 cents and 74,000 of the Jeffries' shares at 13 cents involved, inter alia, contravention of s998. The trial judge, Cohen J, said that the only conclusion that could be drawn was that 94,000 shares had been deliberately sold on 28 April at a price well below the previous sale prices in order to create an artificially low figure for purposes of the conversion calculation to be made in respect of certain preference shares held by Fame in Jeffries. 38 In the Court of Appeal, Gleeson CJ at 61 pointed out that the objective was unusual in that Mr O'Halloran, on behalf of Fame, set out to achieve a sale of its shares in Jeffries not at the highest possible price but at the lowest possible price. The Chief Justice referred to the judgment of Mason J in North and, at 62, to United States authority on similar legislation "where a price reflecting basic forces of supply and demand working in an open, efficient and well informed market, is contrasted with an artificial price resulting from manipulative conduct: see eg Cargill Inc v Hardin 452 F 2d 1154 (1971); Freeman v Laventhol & Horwath 915 F 2d 193 (1990)." At 62-63 the Chief Justice said: "Section 998 aims to preserve the integrity of the share market. Markets, in reflecting the interaction of forces of supply and demand, may suffer from a variety of imperfections, including mismatches of information, without such imperfections destroying their integrity. However, the conduct of a seller of thinly traded shares, calculated to effect sales at the lowest, rather than the highest, obtainable price, and timed so as to deflect the possibility of some purchasers bidding up the price, had both the purpose and effect of creating, temporarily, an artificial market and price. There is a difference between the market and the individual buyers who had current bonds immediately before the close of trading on 28 April 1995. The effect of Fame's conduct upon the market for shares in Jeffries, and the market price, was not merely incidental. The central object of such conduct was to influence the market price. As Mason J acknowledged in North , in individual cases there may be difficulty in determining whether the conduct of a buyer or a seller, unless fully disclosed, falsifies the assumptions upon which a market operates, and damages the integrity of the market. In the present case, however, Cohen J was right to conclude that both the purpose and the effect of Fame's conduct was to create an artificial market price for shares in Jeffries and that such conduct contravened s998." By a majority, Gleeson CJ and Powell JA, Priestley JA dissenting, the Court dismissed the appeal. 39 As these decisions demonstrate, the emphasis is on the nature of the activity not the status of the participants. The activity proscribed is that which results in artificial or managed manipulation. It matters not whether the person engaged in the proscribed activity is for the purpose using securities which belong to another party. Donald v Australian Securities & Investment Commission [2000] FCA 1142 (20 October 2000) concerned an order banning the applicant from acting as a representative of a securities dealer pursuant to s829 of the Law. Paragraph (d) conferred power to make a banning order if a person contravened a "securities law" which by definition included s998(1). The allegation against the applicant arose out of a transaction in which, acting as a representative of a securities dealer, he caused securities to be bought at a price higher than that available on the market. The applicant was carrying out an order placed by a client to sell shares in a listed company. He said that it was at the time his intention to purchase the shares "so that the shares would be purchased at a price higher than that at which they have previously been trading". The Administrative Appeals Tribunal upheld the ban, holding that the applicant's actions were likely to have created a false or misleading appearance with respect to the price of the shares purchased and that accordingly a breach of s998(1) had occurred. It was common ground that the relevant part of s998(1) was that which prohibited the doing of anything that was likely to create a false or misleading appearance with respect to the price of any securities. Heerey J referred to North and the reasons for judgment of Gleeson CJ in Fame. His Honour said: "21 Applying those principles I have no doubt that it was open to the Tribunal to find that what the applicant did was likely to create a false or misleading appearance with respect to the price of Burswood shares. I accept, as senior counsel for the applicant submitted, that share trading calls for skill and judgment. Timing can be critical. For example, a buyer might have to pay a premium over the market price to acquire a substantial parcel of a thinly traded stock. But the problem with this argument is that it is not what the applicant says happened. In his own carefully considered statement, made in circumstances where he was subject to a Commission enquiry, he said that the price had been 'unsatisfactory' and 'unreasonably low' compared with their 'true value' and that he intended to have the shares 'moved to a more reasonable level'. 22 This was plainly an artificial or managed manipulation of the price. In his own words, the applicant wanted to give the Burswood shares 'a bit of a nudge upwards' so that the price appeared higher than it would if the market had operated in accordance with the normal expectations of participants, with buyers buying for the lowest price obtainable and sellers selling for the highest." 40 Addressing whether mens rea was an ingredient of the offence, Heerey J concluded that the Tribunal was not required to find that the applicant knew or had in mind at the time of the contravening conduct that a false or misleading appearance was likely to be created by that conduct. His Honour continued: " Lack of Authority 30 It is apparent from par 19 of the Tribunal's reasons that it treated as a factor adverse to the applicant its finding that he had acted 'contrary to a client's instructions'. Although for other reasons the Tribunal reduced the period of the banning order from four years to two it seems likely that the finding of lack of authority operated against any further reduction. But was this a relevant matter for the purposes of s998 and the imposition of a banning order for a contravention? In my opinion not. Transactions on the stock exchange by dealers such as the applicant are legally binding, whether or not within the authority conferred by the client principal. For a potential buyer or seller of securities assessing the posted price for a sale, the possibility that it might have been made without the authority of a dealer principal is simply irrelevant. Sales might also have been made as a result of incompetent advice, or unsubstantiated rumour, or misunderstanding. All these may be considered, along with lack of authority, as examples of dealings by imperfectly informed participants in a market. But they do not, as Gleeson CJ points out in Fame , destroy the integrity of the market. 31 Conversely, if a dealer creates a false or misleading appearance with respect to the price of securities but does so with the express authority of the client that would not be a matter going to the mitigation of the period of a banning order. All it would show was that the client had also contravened s998(1)." 41 The careful reasoning of Heerey J demonstrates that s998(1) applied to a person engaged in the conduct described even though that person so engaged by dealing in the securities of another with or without the authority of that other. Accordingly, it was not alone an answer for either appellant, if the matter had proceeded without the prosecution relying on s998(5), to say that he was merely selling or buying the shares on behalf of the various share trading companies. 42 The object and purpose of s998 was to prevent the creation of a false or misleading appearance of active trading in any securities on a stock market. Section 998(5) provided that a person who engaged in any of the activities described in paras (a), (b) or (c) should be deemed to have created a false or misleading appearance of active trading in those securities on a stock market. The statutory presumption that the person had created the false or misleading appearance of active trading flowed from proof of that person's involvement in any one or more or the activities described. It was no part of the Crown case to prove what the purpose or purposes were of the person engaged in the conduct described. Once the presumption arose the person charged was left with a defence under subs(6). It was for the defence to persuade the jury on the balance of probabilities that the purpose or purposes for which the person engaged in the activity were not or did not include the purpose of creating a false or misleading appearance of active trading of securities on a stock market. But this did not require that subs(5) be read as limited to deeming that a person has created a false or misleading appearance of active trading only where that person's activity was activity on his or her own behalf and not on behalf of another. The section was concerned with the creation of a false or misleading appearance of active trading in securities, not the ownership of the securities. 43 We were referred to other decisions. In Stanley Yeung Kai Yung v Hong Kong and Shanghai Banking Corporation [1981] AC 787 the plaintiff claimed that the bank had accepted and acted upon forged instruments of transfer of shares registered in the plaintiff's name. In third party proceedings the bank sought an indemnity from the plaintiff's brokers alleging a request by them to effect the transfers. It was submitted that the brokers warranted that the plaintiff's signatures on the transfers were genuine and the transfers were genuine instruments. The plaintiff proved the forgeries and obtained judgment against the bank. The bank obtained judgment against the brokers. The letters of request were signed and stamped with the broker's name. There was no qualification to the signature. The Court of Appeal in Hong Kong dismissed an appeal against the judgment in favour of the bank on the third party proceedings. 44 On appeal Lord Scarman, who delivered the judgment of the Privy Council, said at 794B: "The presentation was an ordinary stockbroking transaction, conducted in all good faith by the brokers on behalf of a customer in ignorance of the forgeries of the signature and stamp of the transferor. In presenting the documents the brokers were acting upon the instructions of the transferee." In fact, unknown to the brokers, the transferee, Mr Wong, had forged or procured to be forged, the plaintiff's signature and the stamp to the deeds of transfer. The bank registered the transfers and dispatched the certificates as requested. At 794-795 Lord Scarman said: " Counsel for the brokers urged upon the Board that 'the true requester' was not the brokers but Mr Wong, on whose behalf they wrote. The brokers acted, it was submitted, 'as a mere conduit pipe.' Their Lordships reject this view of the letters. The letters were the letters of the brokers notwithstanding the fact that they were written on behalf of Mr Wong. The brokers (as they have admitted in their pleading) made the request to the bank; and they requested the bank not only to effect the transfer but to send the new certificates, when prepared, to them. The fact that the request, by the law of agency, was also Mr Wong's request in the sense that it was made with his authority does not necessarily prevent it from being a request made by the brokers. There is nothing in the letters or in the signature, which in each case was unqualified, to suggest that the request being made was exclusively Mr Wong's and not theirs. On the contrary, the terms of the letters convey irresistibly the message that Stanley Yeung & Co., stockbrokers and members of the Far East Exchange, were making the request. The courts below were fully justified in so construing the letters. When, therefore, Mr Leggatt for the brokers opened the appeal by asking the question, 'Is it I, or my broker, who should be liable?', he was either misconstruing the letters, or basing himself on an incorrect view of the law. It is not the law that, if a principal is liable, his agent cannot be. The true principle of the law is that a person is liable for his engagements (as for his torts) even though he is acting for another, unless he can show that by the law of agency he is to be held to have expressly or impliedly negatived his personal liability. But, upon the view of the letters, which the courts below accepted and this Board believes to be correct, the brokers cannot avoid personal responsibility for whatever consequences the law attaches to the making of the request and the bank's compliance with it. It was their request – even though made on Mr Wong's behalf." There is no principle of the law of agency or of the law generally which supports or justifies a conclusion that s998(5) should be read so as not to apply to a person who engaged in the activities described not on his or her own behalf but on behalf of another. 45 In Mallan v Lee (1949) 80 CLR 198 a question arose whether the public officer of a company who made a false income tax return on behalf of the company should be charged as an accessory. A complaint was laid in a court of summary jurisdiction against a limited company and its public officer. The complaint against each arose from the act of the public officer. The company was charged with having contravened s230 of the Income Tax Assessment Act 1936 in that M, its public officer, on behalf of the company in a return had knowingly and wilfully understated the amount of the company's income for the year ended 31 August 1944. M was charged that he "by act was directly knowingly concerned in the commission of the offence above alleged – Crimes Act 1914 s5". Relevantly, s230 provided that any person who, or any company on whose behalf the public officer, or a director, servant or agent of the company, in any return knowingly and wilfully understated the amount of any income should be guilty of an offence. Section 5 of the Crimes Act provided for those who aided or abetted or were knowingly concerned in the commission of an offence against any Commonwealth law to be deemed to have committed that offence and to be punishable accordingly. 46 At 212 Latham CJ said: "I have dealt with the arguments which were presented on behalf of the appellant. They relate to the possibility of any person becoming punishable by reason of being knowingly concerned in the commission of an offence against s230. But in this case the particular person charged with the offence is the public officer of the company by reason of whose act the company is alleged to have committed the offence. No argument based upon this fact was addressed to this Court. But I agree with my brother Dixon, for the reasons which he states, that s230 makes it an offence for any person to understate or misstate income in any income-tax return, whether his own or that of another person. Thus the appellant, if guilty at all, is simply guilty of an offence against s230 and s5 of the Crimes Act has no application in the present case." 47 At 213-214 Dixon J said: "The charge against the appellant [the public officer] is that by act he was directly knowingly concerned in the commission of the offence above alleged. The charge refers to the Crimes Act 1914-1916, s5. I think that the charge against him should have been for an offence against so much of s230(1) as says that any person who in any return knowingly and wilfully understates the amount of any income shall be guilty of an offence. It was in my opinion neither necessary nor possible to treat the appellant's signature as public officer of the company's return, in which, according to the allegation, he knowingly and wilfully understated the income, as exposing him to liability under s5 of the Crimes Act as one knowingly concerned in the company's offence under s230(1). The company's offence consists only in its vicarious responsibility for his alleged act in knowingly and wilfully understating on behalf of the company in its return the amount of income derived by the company. That act amounts in my opinion to an offence by him under s230(1). The provision may be divided into two parts. The one part says that any person who in any return knowingly and wilfully understates the amount of any income or makes any misstatement affecting the liability of any person to tax or the amount of tax shall be guilty of an offence. The other part says that any company on whose behalf the public officer or a director servant or agent of the company in any return knowingly and wilfully understates the amount of any income or makes any misstatement affecting the liability of any person to tax or the amount of tax shall be guilty of an offence. A public officer cannot, I think, make his company responsible under the second part of the provision without himself becoming liable under the first part. The first part is not confined to a taxpayer making a return of his own income. This is designedly done because there are many cases in which persons may or must make returns of income in which they have no beneficial interest or which they do not derive." 48 At 218 McTiernan J agreed that is was not necessary to have recourse to s5 "because upon the allegations in the complaint a charge would lie against the appellant under s230". The point was that the public officer was guilty of the offence of understating the amount of income. It mattered not that the company was vicariously responsible for the act of the public officer. Section 998 of the Law was not confined in its application to persons on whose behalf the transactions were entered into and who were or became the registered holders of the securities being dealt in. 49 In Lee v Lee's Air Farming Limited [1961] AC 12 a widow sued under the New Zealand workers compensation legislation to recover compensation from a company formed by her husband, of which he was governing director and by which he was employed as chief pilot, when he was killed while piloting one of the company's aircraft in the course of flying on the company's business. The principal issue in the proceedings was whether the deceased was a worker within the meaning of the legislation, that is a person who had entered into or worked under a contract of service with an employer. There was no suggestion that the company was a sham. Lord Morris of Borth-Y-Gest gave the judgment of the Privy Council. At 27 his Lordship said: "The fact that so long as the deceased continued to be governing director, with amplitude of powers, it would be for him to act as agent of the company to give the orders does not alter the fact that the company and the deceased were two separate and distinct legal persons." 50 Mallan v Lee may be contrasted with Hamilton v Whitehead (1988) 166 CLR 121. The respondent, who was the managing director of a company, was charged with being knowingly concerned in the commission by the company of offences under s169 of the Companies (Western Australia) Code. This section provided that a person, other than a company or an agent of a company authorised for that purpose under the common or official seal of the company, should not issue to the public, offer to the public for subscription or purchase or invite the public to subscribe for or purchase any prescribed interest. The company was charged as the principal offender. The High Court held that the liability imposed on a company by s169 was direct, not vicarious. Accordingly, a person who had knowledge of all the material circumstances and whose conduct constituted the commission by the company of an offence against that section might be convicted, as an accessory, of being knowingly concerned in that offence. Mallan v Lee was distinguished. In a joint judgment Mason CJ, Wilson and Toohey JJ said at 127: "In contrast to the statutory provision under consideration in Mallan v Lee, s169 of the Code speaks directly to the company. It is not a case of a company being made liable for an act performed by a servant of the company on its behalf. The liability imposed is direct, not vicarious. The distinction was drawn by Viscount Haldane LC in Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705 at 713. Its significance is explained by Lord Reid in Tesco Supermarkets Ltd v Nattrass [1972] AC 153 at 170: 'I must start by considering the nature of the personality which by a fiction the law attributes to a corporation. A living person has a mind which can have knowledge or intention or be negligent and he has hands to carry out his intentions. A corporation has none of these: it must act through living persons, though not always one or the same person. Then the person who acts is not speaking or acting for the company. He is acting as the company and his mind which directs his acts is the mind of the company. There is no question of the company being vicariously liable. He is not acting as a servant, representative, agent or delegate. He is an embodiment of the company or, one could say, he hears and speaks through the persona of the company, within his appropriate sphere, and his mind is the mind of the company. If it is a guilty mind then that guilt is the guilt of the company. It must be a question of law whether, once the facts have been ascertained, a person in doing particular things is to be regarded as the company or merely as the company's servant or agent. In that case any liability of the company can only be a statutory or vicarious liability.' " 51 On the facts of that case the managing director, in placing the advertisement and in dealing with those who replied to it, was the company. His mind was the mind of the company. 52 In this case we need not consider whether the various share trading companies would have been liable if they had been charged under s998(1). Neither party suggested that Mr Manasseh or Mr Austin placed orders to sell or orders to buy "as the company" concerned. The Crown case was that each appellant was the alter ego of the share trading company and in that sense was the principal in each transaction. This was an unnecessary source of confusion. The appellants contended that Mr Manasseh or Mr Austin placed the order to buy or the order to sell on behalf of the trading company and for that reason did not contravene s998(1). 53 In Tesco v Nattrass the body corporate was charged with an offence under the Trade Descriptions Act 1968. Lord Reid said at 173E: "If the guilty man was in law identifiable with the company then whether his offence was serious or venial his act was the act of the company but if he was not so identifiable then no act of his, serious or otherwise, was the act of the company itself." 54 At 199C, Lord Diplock said: "But there are some civil liabilities imposed by statute which, exceptionally, exclude the concept of vicarious liability of a principal for the physical acts and state of mind of his agent; and the concept has no general application in the field of criminal law. To constitute a criminal offence, a physical act done by any person must generally be done by him in some reprehensible state of mind. Save in cases of strict liability where a criminal statute, exceptionally, makes the doing of an act a crime irrespective of the state of mind in which it is done, criminal law regards a person as responsible for his own crimes only. It does not recognise the liability of a principal for the criminal acts of his agent: because it does not ascribe to him his agent's state of mind." 55 The physical act of placing the order to buy or the order to sell was the physical act of the appellants. The relevant mind was the mind of the appellants. The purpose or purposes to be proved under subs(6), if subs(5) was invoked, was the purpose or purposes of the appellants. 56 The appellants contrasted the language of s998(5) with the language of its statutory predecessor, s124(3) of the Securities Industry Code, which relevantly provided that a person who - "(a) effects, takes part in, is concerned in or carries out, either directly or indirectly, any transaction of sale or purchase of any securities, being a transaction that does not involve any change in the beneficial owner of the securities" should be deemed to have created a false or misleading appearance of active trading in securities on a stock market. 57 The change of language is not immediately explicable but the phrase "enter into" according to the Macquarie Dictionary means "to take an interest or part in or engage in or assume the obligation of". Furthermore, "transaction" is a comprehensive word which in its ordinary sense covers an act, doing, negotiation or dealing. To my mind, quite clearly, both appellants entered into a transaction of sale or purchase. They did so by making arrangements with a broker for the sale or purchase of the securities. 58 The phrase "directly or indirectly" is of no significance in the present case. Each appellant directly entered into the relevant transaction. It matters not that it might be said that the companies whose securities, in the result, were "sold" or "bought" entered into the transaction indirectly. 59 As is apparent from Bell J's charge to the jury, which I have quoted, the jury was invited to consider whether in each case the appellant so controlled the activities of the company or other party concerned that the appellant himself should be treated as having entered into the transaction. The Crown did not put the case to the jury that it was open to them to find that the appellants had engaged in activity proscribed by s998(1) even though they had entered into the relevant transactions on behalf of a company or another person. While I think it was unnecessary and confusing to approach the matter in the way that the Crown chose, the jury was clearly satisfied that in one or more of the transactions with which each appellant was concerned the appellant had engaged in the proscribed activity. It was open to the jury so to find and the conclusion that followed had the same consequence in terms of each appellants' guilt. 60 In my opinion, grounds 3 and 4 fail. Grounds 5 and 6 61 These grounds are necessarily limited to those transactions in which the Crown relied upon, what her Honour called, the first limb of the deeming provision. As expressed the grounds went to error in finding as a matter of law and in directing the jury accordingly "that the accused had an 'interest' and failing to order a directed verdict on the basis that 'the accused held no interest' within the meaning of s998". But without any objection from the Crown the submission was directed more generally to the meaning of "beneficial ownership" in subs(5)(a) and "interest" in subs(7). 62 Section 998(5)(a) required, if the presumption was to follow from the activities described, that the transaction of sale or purchase referred to be "a transaction that does not involve any change in the beneficial ownership of the securities". Section 998(7) provided that a purchase or sale of securities did not involve a change in the beneficial ownership for the purposes of the section if a person who had an interest in the securities before the purchase or sale, or an associate of the person in relation to those securities, had an interest in the securities after the purchase or sale. The appellants submitted that s998(7) could not apply because the appellants had no interest upon which the section could operate. "Interest" was not defined but at its lowest, it was said, must be a right or entitlement capable of transfer by assignment, because it must be capable of a subject in a change of ownership. Subsection (5)(a) spoke of "change in the beneficial ownership of the securities". Subsection (7) extended the concept of unchanged beneficial ownership for the purposes of the section to the case where a person had an interest in the securities both before and after the purchase or sale. 63 In summing up to the jury, Bell J said: "There are some further general directions of law which I propose giving you. The first concerns the meaning of the term beneficial ownership, and for the purpose of the first limb of the deeming provision, on page 2 of the written directions you will see there is reference to beneficial ownership under that heading. You go back to the first page you see that the transaction is caught by the deeming provision if it did not involve a change in beneficial ownership. Going back to page 2 you see the law provides that there will not be a change in beneficial ownership for the purposes of the section if a person who had an interest in the shares before the purchase or sale, or an associate of the person in relation to those shares, has an interest after the purchase or sale. Beneficial ownership simply refers to a person who is entitled to the use and benefit of the property. Such a person may not, as it happens, hold the legal title to the property. Beneficial ownership is concerned with the person who has the use and the benefit of the property." 64 The references to page 2 of the written directions, MFI 14, were as follows: " Beneficial Ownership A purchase or sale of shares does not involve a change in the beneficial ownership of the shares for the purposes of this offence if the person who had an interest in the shares before the purchase or sale, or an associate of the person in relation to those shares, has an interest in the shares after the purchase or sale. Associate of the Person A person is an associate if he or she is a director of a company of which the accused is also a director provided it is proved that the associate knew or ought to have known of the material facts of the matter." 65 It is important to emphasise that subs (7), in referring to "a person" who had an interest in the securities before and after the sale or purchase, was not referring only to the person charged under subs (1). The appellants' submission that subs (7) could not apply for reason that neither had any interest in the securities purchased and sold is untenable. Their interest or lack of it was not decisive. The evidence of Mr Lissa, which was led in cross-examination on behalf of Mr Manasseh without any objection by Mr Austin, and which I have quoted earlier, was that the majority of the transactions were between one "Manasseh" company, that is to say a trust company which held assets in trust for "beneficiaries associated with Mr Manasseh", and another such trust company and between trust companies in similar fashion holding assets in trust for beneficiaries associated with Mr Austin. 66 In re-examination and without objection, Mr Lissa gave evidence as follows: "CROWN PROSECUTOR: Q. Mr Lissa, are you aware that Mr Manasseh conducted some of his sharetrading activities through the companies Nissim, Minosea, Shellplan, Ladali and Rosemeath? A. Yes. Q. And as I understand your evidence, and your view, any assets that were held in those companies names were not held on behalf of the company but for Mr Manasseh and his interests is that right? A. That's right. Q. And similarly, in relation to Cerberus, Landmark and Austin Family Securities, were you aware that Mr Austin conducted sharetrading activities through those three companies? A. In Cerberus and Austin Family Securities, and Landmark. Q. Is it your view that each of those companies were trustee companies, and any assets held by those companies would be not beneficially owned by the companies but held in trust for Mr Austin; possibly people associated with him? A. Yes. Again I have to exclude Landmark on the basis of my not having any knowledge about it." 67 The Crown had failed to elicit evidence about the terms of the trusts. Mr Hammerschlag submitted that beneficiaries in the trusts might have interests in the shares which were different before and after the purchase. A beneficiary under a discretionary trust had no interest in the underlying assets and would not be regarded as having a beneficial interest. Moreover, it was submitted that whilst, for example, Mr Manasseh or interests associated with him might have been beneficiaries under trusts for which the selling company and the buying company held the shares sold, it did not follow that the beneficiaries were identical. 68 The Court was taken to cases dealing with the use in various statutory provisions of the word "interest". I refer particularly to Cathels v Commissioner of Stamp Duties (1959) 62 SR (NSW) 455 and Gartside v Inland Revenue Commissioners [1968] AC 553. In Gartside Lord Reid said: "The word 'interest', as an ordinary word of the English language, is capable of having many meanings, and it is equally clear that in these provisions its meaning cannot be limited by any technicality of English law." 69 Three other members of the House agreed with Lord Reid. Lord Wilberforce said at 617E: "It can be accepted that 'interest' is capable of a very wide and general meaning. But the wide spectrum that it covers makes it all the more necessary, if precise conclusions are to be founded upon its use, to place it in a setting: Viscount Radcliffe, delivering the Board's judgment in Commissioner of Stamp Duties (Queensland) v Livingston [1965] AC 694 shows how this word has to do duty in several quite different legal contexts to express rights of very different characters and that to transfer a meaning from one context to another may breed confusion." 70 What emerges from these decisions is that the word "interest" in a statute will have a meaning consistent with its context and the language and objects of the statute. Section 998(5)(a) directed attention to a transaction of sale or purchase of securities which did not involve any change in the beneficial ownership of the securities. This was a legislative statement that a transaction of such a nature indicated that the person who entered into it had created a false or misleading appearance of active trading when there was none. Subsection (7) equated a continuance of a person's interest in the securities before and after purchase with unchanged beneficial ownership. The Crown alleged that in each of the relevant transactions a person had an interest in the securities before and after the purchase or sale. 71 For the Crown to make the case it alleged, it was necessary to identify the person or persons said to have had unchanged beneficial ownership of the securities before and after a particular transaction and, if reliance was to be placed on subs (7), to explain what the Crown said was the interest of that person or persons in the securities before and after the purchase or sale. Only when these persons and their alleged interests were identified could the trial Judge rule on whether the person or persons so identified could be found to have had at the relevant times beneficial ownership within the meaning of subs (5)(a) or an interest within the meaning of subs (7). If the trial Judge ruled that the identified person or persons as a matter of law could be found to have such a beneficial ownership or such an interest, then it was a matter for the jury on the evidence to determine whether in fact they did and if so whether the beneficial interest changed and whether the interest continued after the transaction. But it is a complete and inappropriate reversal of the process to sum up to the jury in the general terms chosen in the written direction MFI 14 about beneficial ownership and to say no more than her Honour said about the meaning of "interest". With due respect, Bell J's charge would inevitably have led the jury to conclude that the question for decision under subss (5)(a) and (7) was a simple one resolved by the evidence of Mr Lissa. But on the material before the jury, as indeed upon the material before this Court, the questions of whether any transaction involved any change in the beneficial ownership of securities within the meaning of s998(5)(a) or whether a person had an interest in the securities within the meaning of s998(7) before and after their purchase or sale were not questions the jury could fairly answer. 72 In my opinion, the evidence before the jury was not sufficient for the case to be left to it in reliance on the deeming provisions in subs(5). At that point in the trial it may have been possible to direct solely on what was described as the second limb of the deeming provision and omit from the jury's consideration those transactions in which reliance was placed solely on the first limb of the deeming provision. But as the matter proceeded it is not known upon which of the transactions the jury found against the appellants and the extent to which in doing so the jury applied the first limb of the deeming provision. The Crown chose to run the case in this way. The result was a miscarriage of justice. Accordingly, both appeals should be upheld, the verdicts quashed and a judgment and verdict of acquittal in favour of each appellant directed. 73 This conclusion makes it unnecessary to rule upon grounds 1 or 2 or separately upon ground 8 of the grounds of appeal or Mr Austin's additional ground 9 or the Crown's appeal against the sentences. It may be helpful to say something about ground 7. Ground 7 74 Bell J summed up as follows: "It is not necessary for the Crown to prove beyond reasonable doubt that in each of those ten transactions it has established that the accused is deemed to have created a false or misleading appearance of active trading. It would be sufficient if you were satisfied beyond reasonable doubt that in any one instance the Crown had established that the accused had engaged in a transaction that was caught by the operation of one of the deeming provisions, in such a case the accused would be guilty of the offence charged against him, unless you were satisfied that he had successfully raised the statutory defence." 75 In ground 7, the appellants relied upon a principle said to be found in the decision of the High Court in KBT v The Queen (1997) 191 CLR 417. In that case a man had been convicted of maintaining an unlawful sexual relationship with a child contrary to s229B(1) of the Queensland Criminal Code. That subsection provided: "Any adult who maintains an unlawful relationship of a sexual nature with a child under the age of 16 years is guilty of a crime and is liable to imprisonment for seven years". Subsection (1A) provided: "A person shall not be convicted of the offence defined in subsection (1) unless it is show that the offender, as an adult, has, during the period in which it is alleged that the offender maintained the relationship in issue with the child, done an act defined to constitute an offence of a sexual nature in relation to the child, other than an offence defined in s210 (1)(e) or (f), on 3 or more occasions and evidence of the doing of any such act shall be admissible and probative of the maintenance of the relationship notwithstanding that the evidence does not disclose the dates or the exact circumstances of those occasions." The offences defined in s210(1)(e) and (f) related to the exposure of a child under 16 to indecent material and the taking of indecent photographs or films of a child under 16. 76 At 422 in a joint judgment Brennan CJ and Toohey, Gaudron and Gummow JJ said: "The respondent now concedes that the trial judge should have directed the jury that they were required to be satisfied as to the commission of the same three acts constituting offences of a sexual nature before they could convict the appellant of the offence charged under s229B(1) of the Code. It is necessary to examine that concession because, unless correct, the appeal to this Court could not succeed. The offence created by s229B(1) is described in that subsection in terms of a course of conduct and, to that extent, may be compared with offences like trafficking in drugs or keeping a disorderly house. In the case of each of those latter offences, the actus reus is the course of conduct which the offence describes. However, an examination of subs(1A) makes it plain that that is not the case with the offence created by s229B(1). Rather, it is clear from the terms of subs(1A) that the actus reus of that offence is the doing, as an adult, of an act which constitutes an offence of a sexual nature in relation to the child concerned on three or more occasions. Once it is appreciated that the actus reus of the offence is as specified in subs(1A) rather than maintaining an unlawful sexual relationship, it follows, as was held by the Court of Appeal, that a person cannot be convicted under s229B(1) unless the jury is agreed as to the commission of the same three or more illegal acts." 77 Their Honours went on to observe that although proof of the dates or the exact circumstances of the occasions on which the acts were committed was not required, this did not detract from the need to prove the actual commission of acts which constituted offences of a sexual nature (423). 78 The structure of the offence described in the Queensland Code which depended upon proof that the person charged had done particular defined acts on three or more occasions during the period in question was entirely different from the structure of the offence under s998 of the Law. Under s998 each appellant was charged with creating a false or misleading appearance of active trading in securities. The question for the jury based on the evidence of the relevant transactions was whether they were satisfied beyond a reasonable doubt that that appellant had created that false or misleading appearance. One occasion was sufficient. The reasoning of the High Court in KBT has no application. Understandably no direction such as the one now propounded was sought from the trial Judge nor was any required to be given. This ground of appeal fails. 79 I propose the following orders: 1. Appeals allowed; 2. Crown appeals dismissed; 3. Verdict against each appellant quashed; 4. Direct that a judgment and verdict of acquittal be entered in favour of each appellant. 80 SIMPSON J: I agree with Sheller JA. 81 HOWIE J: I agree with Sheller JA. ********* 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.