New South Wales Supreme Court CITATION : Regina v Ronen & Ors [2004] NSWSC 1304 HEARING DATE(S) : JUDGMENT DATE : 1 December 2004 JUDGMENT OF : Whealy J at 1 DECISION : See Judgment CATCHWORDS : Conspiracy to defraud - Elements of the offence - Written directions to Jury Peters v R (1998) 192 CLR 493 CASES CITED : Saffron (No 1) v R (1988) 17 NSWLR 395 Ongley (1945) 57 WN 116 at 117 Regina v Ida Ronen PARTIES : Regina v Nitzan Ronen Regina v Izhar Ronen FILE NUMBER(S) : SC 70222/03; 70032/03; 70223/03 Mr T. Game SC; Ms S. McNaughton - Crown COUNSEL : Mr R. Richter QC; Mr N. Rosenbaum - Accused Ida Ronen Mr I. Hill QC; Mr E. Power - Accused Nitzan Ronen Mr R. Van de Wiel QC; Mr P. Jones - Accused Izhar Ronen SOLICITORS : Ms P. Musgrave - Cth DPP Watsons Solicitors - Accused LOWER COURT Local Court JURISDICTION : LOWER COURT FILE NUMBER(S) : LOWER COURT JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION CRIMINAL LIST WHEALY J WEDNESDAY 1 December 2004 70222/03 - REGINA v Ida RONEN 70032/03 - REGINA v Nitzan RONEN 70223/03 - REGINA v Izhar RONEN JUDGMENT - on his Honour's directions to the jury in relation to conspiracy to defraud, see page 7341 of the transcript. 1 HIS HONOUR: The issues that fall to be determined this morning relate in essence to arguments surrounding the statement of the central ingredients in a conspiracy to defraud case. 2 Yesterday I handed out a document to the parties. This was an endeavour by me to promote debate between counsel as to the statement to be made by me as the trial Judge in the charge to the jury relating to the nature of those central ingredients. 3 I will have that document or a copy of it marked for identification 191. I will mark the further documents handed up by the Crown today as MFI 192 and 193. The documents handed up today however relate to matters not concerned with this judgment except in a peripheral sense. 4 Returning to MFI 191. It sets out the central ingredients: "1. First, that there was in existence during the relevant period an agreement which had as its outcome or incidental to its outcome, the depriving of the Commissioner of Taxation of income tax on the income of On Fovo Pty Ltd and the income of Ida Ronen trading as Ronen Young Fashion; or the risk of that deprivation. 2. That each of the accused were parties to that agreement and remained so throughout the relevant period. 3. That the agreement between each of the accused contemplated and intended that the dishonest means to be used to deprive the Commissioner of income tax or to make the collection of tax more difficult was the concealment of the true income of On Fovo Pty Ltd and Ida Ronen trading as Ronen Young Fashion. 4. That in entering into the agreement each accused intended to prevent the Commissioner from collecting income tax that was or may be payable on those monies; or alternatively each accused intended to make it more difficult for the Commissioner to determine the taxable income of On Fovo Pty Ltd and Mrs Ida Ronen." 5 Before coming to the precise issues, I should remark that the nature of the crime of conspiracy to defraud has been commented upon in many decided cases. In a lengthy pre-trial decision I gave on 15 March 2004 headed "Judgment - Argument Re Indictment", I examined a number of the leading cases, albeit in a somewhat different context from the present situation. There I was principally but not solely concerned with the identification of the ingredients in an offence of conspiracy to defraud, particularly the mental elements in such a case. This was in the context of an argument about "duplicity". In what I am now about to say, which will be brief, I am indebted, of course, to the decisions mentioned in my earlier decision, particularly the High Court discussion in Peters v R (1998) 192 CLR 493 and that contained in the decision of the Court of Criminal Appeal and the Court of Appeal in Saffron (No 1) v R (1988) 17 NSWLR 395. There are other authorities referred to in my earlier decision which I will not repeat here, although their guidance will no doubt be obvious. 6 In a charge of conspiracy to defraud there is in relation to the particularisation of the charge and the evidence often some uncertainty about the commencement date of the alleged conspiracy. There is sometimes uncertainty about the width of its implementation, particularly in concealment of income cases. In addition, it is often the case that it is not necessary for the prosecution to identify in precise terms the quantum of any loss to an allegedly defrauded party, or for that matter that there has been in fact any loss. 7 These vagaries arise from the nature of a conspiracy to defraud and they have been commented on in a number of the decisions which I mentioned. 8 I will add to this judgment if I may a passage from the judgment of Sir Frederick Jordan in Ongley (1945) 57 WN 116 at 117. There the Chief Justice said: - "Although facts necessary to establish an agreement between the accused must be proved, it is not necessary to adduce such evidence of agreement as would be required in an action of assumpsit. The prosecution is not called upon to define the exact moment at which the conspiracy began or the exact act which the conspiracy began or the exact act which marked its inception: R v Pepper.(15) . If it is established that the accused did things which indicate that they were acting in concert to achieve a common purpose, this supplies all the evidence that is required to establish that they had agreed to achieve that purpose. Indeed, in a prosecution for conspiracy it is unusual for any other evidence of agreement to be tendered than is supplied by evidence of the respective overt acts." 9 The reason why these things are so is because it may often be impossible to know the nature and extent of the alleged agreement other than by the observation of the actions of the alleged conspirators and other persons during the course of its implementation. With those features in mind I turn to the particular submissions at T 7281 to 7283. Mr Richter QC made a number of submissions. They may be summarised as follows. 10 First, there is no need in paragraph 1 of the document setting out the ingredients of the offence, MFI 191, to refer to or to include the phrase "which had as its outcome or incidental to its outcome". Rather, this should be replaced by the phrase "which had as its object". 11 Secondly, Mr Richter put a submission that because of the simplicity of the issues, as they have ultimately emerged in the trial, it would be otiose, misleading and unnecessary to express the ingredient as it appears in MFI 191 as follows: "First, that there was in existence during the relevant period an agreement which had as its outcome or incidental to its outcome the depriving of the Commissioner of Taxation of income tax on the income of On Fovo Pty Ltd and the income of Ida Ronen trading as Ronen Young Fashion or the risk of that deprivation ." 12 Consistently with that submission, Mr Richter argued that when one turns to the remaining paragraphs of MFI 191 the references there to "depriving the Commissioner of Taxation of revenue or making the collection of tax more difficult" could be simplified by the omission of the words "or to make the collection of tax more difficult." Again, Mr Richter submitted that these words were otiose in relation to the ultimate issue and that they tended to introduce complexity, which is unnecessary and distracting. 13 As I understand Mr Richter's submission, he did not suggest that this was a case in which there was a live issue about the difference between deprivation and imperilment; but rather he said that because it was not a live issue the statement of the ingredients in the manner set out in MFI 191 may prove confusing to the jury and is in any event unnecessary. 14 The Crown opposed both these aspects of Mr Richter's submission and argued that, subject to a number of other minor differences in the statement of the ingredients which are not relevant for present purposes, the ingredients should remain in the form as presented in the draft document. 15 The third matter raised by Mr Richter appears at pages 7317 to 7318. There was some discussion between Mr Richter and myself about the need for a direction that highlighted that the Crown case in essence is that a considerable amount of money has been taken out of the revenue. Since this is so, the jury ought to be told, either by way of the ingredients or by way of a separate comment, that should the jury come to the conclusion that there was some relevantly insignificant deficiency in relation to the revenue situation, (but one that it fell nowhere near the amount of money mentioned by the Crown in evidence) that should be pointed out to the jury in some way. So, it will be seen that this third matter is somewhat different from the first two. 16 As to the first argument, it is my view that the word "object" has some ambiguity about it. I think that the ambiguity is really the subject of the type of comment that appears in Peters where the distinction is drawn between the object or purpose of the conspirators and the consequence, as it were, of the alleged conspiracy. 17 Let me give an example that is not the situation in this case, I hasten to add. Let it be assumed in a case somewhat similar as the present that the alleged conspirators agreed to take out all of the cash of certain trading businesses and to send it to the Hebrew University of Jerusalem to set up a Chair there of distinguished learning. There would be little doubt, in such an illustration, that the object or purpose of the conspirators would be charitable and educational; but nevertheless the outcome of the arrangement might still be properly described as an outcome to deprive the Commissioner of Income Tax or make the collection of tax more difficult. 18 So, I think it is best to avoid any ambiguity or confusion of that kind. Since the phrase that appears in the draft document is one that has appears to have obtained the sanction of the High Court of Australia, it seems to me that I ought to leave it as it is and not make that suggested change. 19 Moving to the second matter; I agree with Mr Richter up to this point; let it be assumed that, again quite removed from the facts of the present trial, there was a written agreement proposed by solicitors and signed by the people who were alleged to be conspirators and that it set out the precise details of a proposed enterprise. Further, let it be assumed that it was plain that the outcome and intention marked both the agreement and the enterprise as an agreement to deprive the Income Tax Commissioner of revenue. In such a case the very precise terms and formal nature of the agreement might make it clear that the agreement was one that could simply be described as an agreement to deprive the Commissioner of the income tax. It might, for example, expressly state in the agreement that that was so. A direction to the jury, in such a situation, might focus simply on deprivation. 20 By contrast where the alleged agreement, as is the case here, is said to be, according to the Crown case, inchoate, unstated and secreted away from public gaze, it seems to me it is more accurate and appropriate to state the essential ingredients by reference to terms that have been approved by authority of the highest order. Peters itself was a case that involved an agreement to use sham mortgages to avoid tax. It was about as clear a case as one might find where it could be said that the content of the agreement, and for that matter the intention of the conspirators, might well be stated in terms of deprivation rather than imperilment. Nevertheless, the High Court approved the trial Judge's statement of the relevant ingredients in the manner set out and quoted in McHugh J's judgment. (The court's only quarrel with the summing-up was in relation to the concept of dishonesty, a matter not relevant to the present discussion). 21 From reading Peters and other cases, it seems to me that this is so because the statement of the outcome of a conspiracy to defraud of the kind alleged here, and as well the statement of the necessary mental ingredients in such a conspiracy, is not a statement of alternative outcomes or alternative intentions. It is but the one. That was the thrust of my earlier decision. While I have reflected upon the arguments placed before me in the present debate, in the ultimate that remains my view. For those reasons I have come to the conclusion that I should not accede to Mr Richter's request in this regard. However, when the addresses have been concluded and it comes to the question of the final statement of central ingredients, if Mr Richter wishes to revisit this issue for any reason I will certainly entertain further submissions. But more importantly, if it becomes necessary to add some other direction for example, to avoid complexity, otiose matters and uncertainty, then it seems to me that something further could be said. 22 As presently advised I see no reason to depart from the statement of the essential ingredients in the terms that have been approved, both by the High Court of Australia and the Court of Appeal in New South Wales and the Court of Criminal Appeal, and I decline to do so. 23 So far as the third and final matter is concerned, it, as I say, falls into a different category. I think again all I will say, there have been discussions earlier today in relation to the need to fashion a direction that focuses the jury on the need to be satisfied beyond reasonable doubt that the Crown has proved the conspiracy which it has substantially, such a direction might also embrace in some form, a reference to quantum. 24 I think Mr Richter accepted yesterday that an appropriate direction to give the jury is one that points out the Crown case does not necessarily fail, if at the end of the day the jury is uncertain as to the amount, if any, said to have been involved in the implementation of the conspiracy. Perhaps the issue can be taken up in some way at a later point. I think all that may be required is an appropriate comment or direction but it will be necessarily a comment that is not inconsistent with the principal direction I read out in the transcript at the end of yesterday's hearing. 25 It is important to note that, although the Crown has led evidence of substantial amounts probably concealed from the revenue (Ms Wade's analysis, for example), the Crown case has from the outset made it plain that it is no part of the essential nature of the Crown case to demonstrate the quantum of the lost revenue, or, for that matter, that any precise amount of revenue has been lost. This aspect of the presentation of the Crown case accords with the nature of a conspiracy to defraud which is essentially concerned with the proof of an agreement rather than with the need to prove details of its implementation. ********** Last Modified: 07/16/2007 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.