New South Wales Court of Criminal Appeal CITATION: R v Hay; Hay v R [2009] NSWCCA 228 HEARING DATE(S): 19 June 2009 JUDGMENT DATE: 8 September 2009 JUDGMENT OF: Young JA at [1]; Hidden J at [141]; Latham J at [142] DECISION: (1) The appeal against conviction is dismissed; (2) The Crown appeal against sentence is dismissed; (3) Leave is given to Mr Hay to appeal against sentence; but (4) Mr Hay's appeal against sentence is dismissed. CATCHWORDS: CRIMINAL LAW- appeals- conviction appeal- interpretation and application of Income Tax Assessment Act 1936 (Cth)- remarks of Crown Prosecutor- whether directions to jury adequate- whether unsafe and unsatisfactory verdict. CRIMINAL LAW- appeals- sentencing- Crown appeal against sentence- inadequacy of sentence. CRIMINAL LAW- appeals- sentencing- severity. Crimes Act 1914 (Cth), ss 5, 16A, 20BA, 29D, 86(1) LEGISLATION CITED: Criminal Appeal Act 1912, s 6(1) Criminal Code Act 1995 (Cth), Div 134 Income Tax Assessment Act 1936 (Cth), Divisions 10B, 10BA, ss 124ZAB, 124ZAC CATEGORY: Principal judgment Commissioner of Taxation v Faywin Investments Pty Ltd (1990) 22 FCR 461 Commissioner of Taxation v Lau (1984) 6 FCR 202 (FC) Coppleson v Federal Commissioner of Taxation (1981) 34 ALR 377; 52 FLR 95 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; 218 CLR 471 Everett v The Queen [1944] HCA 49; 181 CLR 295 Faywin Investments Pty Ltd v Federal Commissioner of Taxation (1989) 89 ALR 599 Federal Commissioner of Taxation v Coppleson (1981) 39 ALR 30; 57 FLR 234 Griffiths v The Queen [1977] HCA 44; 137 CLR 293 Hitch v Stone (2001) 73 TC 600 ICT Pty Ltd v Sea Containers Ltd (1995) 39 NSWLR 640 M v The Queen [1994] HCA 63; 181 CLR 487 McCullough v R (1982) 6 A Crim R 274 Paintin and Nottingham Ltd v Miller Gale and Winter [1971] NZLR 164 Pearce v R (2005) 216 ALR 690 Quinlan v R [2006] NSWCCA 284 R v Cook [2004] NSWCCA 52 CASES CITED : R v DDR [1998] 3 VR 580 R v Harris (2007) 171 A Crim R 267 Reg v Hay [1968] Qd R 459 R v Heyde (1990) 20 NSWLR 234 R v Kopa; Ex parte Director of Public Prosecutions (Cth) (2004) 206 ALR 197 R v Lucas [1981] 1 QB 720 R v M [1991] 2 Qd R 68 R v House (1921) 16 Cr App Rep 49 R v Roulston [1976] 2 NZLR 644 R v Stitt (1998) 102 A Crim R 428 R v Teasdale [2004] NSWCCA 91 R v Verma (1987) 30 A Crim R 441 R v Wall [2002] NSWCCA 42 R v Wheeler [2000] NSWCCA 34 Raftland Pty Ltd v Federal Commissioner of Taxation (2008) 82 ALJR 934 Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449 Snook v London and West Riding Investments Ltd [1967] 2 QB 786 PARTIES: Roderick Leonard Hay (Appellant/Respondent in Crown sentence appeal/Applicant in sentence appeal) Regina FILE NUMBER(S): CCA 2008/948 COUNSEL: I Barker QC (Appellant/Respondent in Crown sentence appeal/Applicant in sentence appeal) W Roser SC and T McDonald (Crown) SOLICITORS: Jeffreys & Associates (Appellant/Respondent in Crown sentence appeal/Applicant in sentence appeal) Commonwealth Director of Public Prosecutions LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): 08/11035 LOWER COURT JUDICIAL OFFICER: Flannery DCJ LOWER COURT DATE OF DECISION: 30 July 2008 (jury returned verdicts); 6 March 2009 (sentence) IN THE COURT OF CRIMINAL APPEAL 2008/948 YOUNG JA HIDDEN J LATHAM J Tuesday 8 September 2009 REGINA v HAY; HAY v REGINA Headnote The appellant, Mr Hay, is a filmmaker who, with his accountant, set up several partnerships to fund the production of several of his films such that there was a separate partnership formed for each of the films. There was a group of investors who formed each partnership and most of the investors were clients of the accountant. The partnership allowed investors to take advantage of tax deductions made available to investors in Australian films under the Income Tax Assessment Act 1936. Hay was charged with five counts of being knowingly concerned in defrauding the Commonwealth by allowing his accountant to lodge tax returns for the partnerships and the individual investors claiming deductions for amounts much greater than the amounts expended by the partners in producing each film. A jury in the District Court found him guilty on all five counts after a three-week trial. The Crown's case was that inducements were offered to investors whereby the scheme would give Hay money to make his films and would also allow the investor to claim a much larger income tax deduction in their tax return than the money they would actually have to invest in the films. The inducement was that, if an investor invested $x amount, Hay would give them a "loan" or "subsidy" for $y amount and the taxpayer would claim as a tax deduction $x+y amount. The Crown's case was that there was no actual money available to the production of the films from the "loans" or "subsidies" or "round robin of cheques" and that the only money actually used in the production costs was that which had been actually invested by the investors in the individual film schemes so that that was the only amount which could be claimed as a deduction in partnership and individual tax returns. At trial, the Crown Prosecutor abandoned a case of "sham" i.e. that the partnerships, transactions and films were, themselves, not intended to have legal effect. It was also found by the trial judge (and the judge hearing the case against the accountant) that the partnership documents were intended to have legal effect and that the bank transactions were not artificial. Throughout the trial, the Crown Prosecutor sought to make a distinction between what he called "technical" or "legal" sham, which he accepted was not the case here, and his use of "sham" and similar words in his addresses to the jury. The trial judge directed that "sham" not be used and it was not used during the latter part of the trial. The Crown appeals against the sentence. Hay appeals against his conviction and sentence. The principal ground of appeal against conviction was that the Crown Prosecutor inflamed the jury by his improper use of the emotive word "sham". However, on review of the whole of the trial, this ground was not established. The Crown appealed the sentence on the ground that each of the sentences making up the three years six months is manifestly inadequate. Hay sought leave to appeal the sentence on the grounds that it was too severe. Neither sentence appeal succeeded. IN THE COURT OF CRIMINAL APPEAL 2008/948 YOUNG JA HIDDEN J LATHAM J Tuesday 8 September 2009 REGINA v HAY; HAY v REGINA Judgment 1 YOUNG JA: Roderick Leonard Hay was charged before her Honour Judge Flannery and a jury in the District Court with five counts of being knowingly concerned in defrauding the Commonwealth. 2 The first count was that: "Between about 24 September 1995 and 13 March 2001 at Sydney, NSW (Mr Hay) was knowingly concerned in Peter Gabriel Agoston defrauding the Commonwealth, namely the Commissioner of Taxation, by causing to be lodged with the Australian Taxation Office a partnership income tax return for the financial year ended 30 June 1996 in respect of the Supreme Champions of the World Film Partnership and individual income tax returns for the said financial year in respect of partners in the said partnership, which income tax returns falsely overstated the amount of expenditure by the partners of the said film partnership upon the production of an Australian film during the said financial year." 3 The second count was in the same terms save that the film referred to was Supreme Champions of the World Film Partnership No 2 and the financial year involved was that which ended on 30 June 1997. 4 The third count was in similar terms save that: (a) the dates were "between about 8 October 1997 and 23 May 2001"; (b) the financial year involved was that which ended 30 June 1998; and (c) the partnership was the Change of Heart Film Partnership. 5 Count 4 was in similar terms save that: (a) the dates were "between about 8 October 1997 and 23 May 2001"; (b) the financial year involved was that which ended 30 June 1999; and (c) the partnership was the Change of Heart Film Partnership. 6 Count 5 was in similar terms save that: (a) the dates were "between about 1 October 1999 and 23 May 2001"; (b) the financial year involved was that which ended 30 June 2000; and (c) the partnership was Height of Passion Film Partnership. 7 Section 29D of the Crimes Act 1914 (Cth) provided: "A person who defrauds the Commonwealth or a public authority under the Commonwealth is guilty of an indictable offence." 8 The prescribed penalty was 1000 penalty units or imprisonment for 10 years or both. That section was repealed by Act 137 of 2000 which came into force on 24 May 2001 and replaced by more detailed provisions that occur in Division 134 of the Criminal Code Act 1995 (Cth). Section 5 of the 1914 Act, as it was, provided that a person who "aids, abets, counsels, procures, or … is in any way directly or indirectly knowingly concerned" in an offence by another is taken to have committed that offence. 9 I assume that the reason why the terminal date of 23 May 2001 was chosen in counts 3, 4 and 5 because that was the last day of operation of s 29D of the 1914 Act. 10 The trial took place before her Honour Judge Flannery and a jury. It lasted from 30 June 2008 to 30 July 2008. The jury found the accused guilty on all five counts. The accused was sentenced to a total of three and a half years imprisonment with a single non parole period of two years one month from 6 March 2009. 11 There are three appeals before the Court: A. An appeal by Mr Hay against conviction. The grounds for this appeal are: "(1) The trial judge erred in law in determining that the provisions of Division 10BA and 10B of the Income Tax Assessment Act 1936 (Cth) require that any amount claimed as a deduction for income tax purposes must be expended directly in producing the film and that the relevant consideration is not the payment made to the film company by the investors, but how the film company deals with the money. (2) The trial judge erred in law in failing to direct the jury that the taxpayers' investment in each film in each case was an amount which the taxpayer could claim as a deduction for income tax purposes pursuant to the provisions of Division 10B and 10BA of the Income Tax Assessment Act 1936 . (3) (Abandoned). (4) (Abandoned). (5) The trial judge erred in law in failing to adequately direct the jury concerning the use it might make of allegedly false invoices created by the appellant. (6) There has been a miscarriage of justice in that the verdict of the jury is unsafe and unsatisfactory as it was not, upon the whole of the evidence, open to the jury to be satisfied beyond reasonable doubt that the accused was guilty. (7) The trial judge erred in law in holding that there was a case to answer, because the Crown expressly abandoned sham as a ground of criminality … and absent sham there was no evidence upon which the jury could reasonably find the accused did not believe that Peter Agoston did not honestly believe the investors had a right to claim the full amount of their investment in the respective films as tax deductions, and they therefore could not reasonably find a case of fraud. (8) The trial judge erred in failing to discharge the jury or to direct the jury … they could not find sham because: (a) the Crown Prosecutor expressly abandoned sham as a ground of criminality; (b) her Honour specifically found that the Crown could not rely upon sham but the Crown Prosecutor nonetheless put a case of sham to the jury." 12 B. The Crown appealed against sentence on the ground that each of the sentences making up the three years six months is manifestly inadequate. 13 C. Mr Hay sought leave to appeal against sentence on the following grounds: "(1) There was no proved loss of the Commonwealth of Australia. (2) There was no personal enrichment of the appellant. (3) The appellant is a person of good character. (4) There was considerable delay between the commission of the offences and the prosecution of the appellant. (5) There was evidence that the appellant would suffer a substantial financial loss if it was not able to complete the film project known as 'How Much is Enough'." 14 I will first endeavour to give a summary of the essential facts and circumstances, then deal with the conviction appeal ground by ground, and then, briefly, with the sentence appeals. 15 A convenient place to commence is the summary given by her Honour in her remarks prior to sentence. She said: "Between 1995 and 2000, divisions 10B and 10BA of the Income Tax Assessment Act allow tax deductions to investors in the production of a film where certain qualifying conditions were met. One of those conditions was that the money an investor contributed had to be expended directly in producing a film. Between 1995 and 2001, Peter Agoston was a chartered accountant and a tax agent. During the same period the offender produced and directed four films. In relation to each of those films a group of investors formed a partnership and made investments in the making of those films. A majority of the investors who participated in the partnerships were clients of Peter Agoston. It was the Crown case that to attract investors to invest in his films, the offender and Peter Agoston offered inducements to potential investors. To do this they set up a scheme which would give the offender money to make his films and to allow the investor to claim a much larger income tax deduction in their tax return, than the money they would actually have to invest in the films. It was the Crown case that Agoston approached a number of his clients and asked them whether they were interested in investing in a particular film being made by the offender. Prior to these conversations it was agreed between the offender and Agoston that they would offer these investors an inducement to invest. This inducement was if the investor invested an amount of for example $40,850, the offender would give them a loan or subsidy of $54,150 and the taxpayer would then be able to claim as a tax deduction on their income tax return $95,000. It was the Crown case that the promise to the investors of the money from the loans or subsidy did not exist but was created by a round robin series of cheques created by the offender and Agoston which were placed in a number of bank accounts controlled by the offender and/or Agoston, at the same time with the last cheque in the round robin going back into the account which drew the original cheque. The cheques drawn in these round robins were from bank accounts which had none or insufficient funds to cover the amounts of the cheques drawn. It was the Crown case that in carrying out this round robin it gave the appearance that money had moved from one account to another and that the money from the round robin was used for the production of the particular film they were dealing with at the time. It was also the Crown case that to cover up the scheme the amount of the last round robin cheque and the investor's actual invested funds became the budget asserted by the offender of the production costs of making the film. In relation to each count, the jury was satisfied that during the period alleged in the indictment in relation to each count, deductions were claimed in tax returns Peter Agoston caused to be lodged for amounts much greater than the amounts expended directly by the partners in the partnership in producing the relevant film, Mr Agoston did not honestly believe that the partners had a right to claim the full amount of their investment in the respective films in their income tax returns, that he intended by causing the tax returns to be lodged, to deprive the Australian Taxation Office of money it was entitled to, knowing that the investors whose tax returns he caused to be lodged had no right to all of the deduction claim and that the offender participated in the offence knowing the essential matters that constituted the offence committed by Mr Agoston. The amount falsely claimed was $8,881,130 and an estimate of the revenue defrauded from the Australian Tax Office as a result of these fraudulent claims, is $4,200,000. The ATO issued amended assessments to all investors in the schemes and subsequently negotiated settlements with them. The Crown accepts that it cannot say that the Australian Taxation Office has suffered any loss." 16 Mr Agoston was also charged with corresponding offences under s 29D of the Crimes Act 1914 (Cth). However, on 13 February 2009, his Honour Judge Geraghty had to decide in the District Court whether, pursuant to s 20BA of the Crimes Act 1914 he should dismiss the case against Mr Agoston. His Honour noted that in February 2008, Mr Agoston had made an application for a stay which Freeman DCJ refused, but found that Mr Agoston was unfit to be tried. Judge Geraghty found that there was a prima facie case against Mr Agoston, but that in the light of the accused's age, mental condition, character and antecedents, it was inappropriate to inflict a punishment, and accordingly the charge should be dismissed. Judge Geraghty recognised that Mr Agoston was 82, his mental condition was such that he was unfit to stand trial and he was suffering from dementia. 17 In submissions to the Court, at [14], the Crown said: "It was the Crown case that there was no actual money available from either the promised 'loans', 'subsidies' or 'round robin of cheques' to be used in the production costs of the films. And, no actual money from this source was ever used in the production of any of the films. The only money used in the production costs of the making of the various films was that which had been actually invested by the various investors in the individual film schemes and that was the only money which could have been claimed by the investors as a deduction in their partnership and individual tax returns to the Australian Tax Office pursuant to Division 10B and Division 10BA Income Tax Assessment Act 1936." 18 The Crown then analysed the collection of monies for the first film, "Supreme Champions of the World 1" in 1995/1996. Essentially, what happened was this: "(a) on 24 September 1995, the appellant made application for a provisional certificate in relation to the making of [this film]. He stated … that the budget was $1,500,180 with $1,300,000 coming from private investment… . On 30 November 1995, on the basis of [this] information, the Department granted a certificate; (b) prior to 18 December 1995, arrangements were made between the appellant and Mr Agoston in relation to obtaining investors… . [On that day], Mr Agoston wrote to potential investors informing them that a provisional certificate had been obtained in relation to the proposed film. He [also] informed investors that … their investment would include a subsidy which would allow the investor to 'achieve a 13.16% return' on their 'own' money put into the film, [thus] if an investor invested $86,000 they would be able to obtain a deduction of $200,000; (c) On 1 May 1996, a round robin of cheques was [sent out] by the appellant and Mr Agoston [providing a subsidy to the investors and receiving back the same amount as an investment]". It is unnecessary to go further into the details of how that physically occurred. 19 In his judgment on the s 20BA application in respect of Mr Agoston, Judge Geraghty said at p 9, [5]: "It was also submitted that the bank transactions were certainly not sham. Firstly, the documents were carefully drafted and executed and they were meant to be enforceable. Clearly the participants intended to create proper legal relationships, rights and liabilities. I stop to observe that whatever the intention of the participants there is no doubt that the documents are in order and were scrupulously executed. Not only were the documents carefully drafted and executed, but the bank transactions were not artificial. Funds were actually moved from account to account, not just by way of an artificial round robin of cheques, they were genuine subsidies, genuine loans, genuine unit trust loans, even though the monies were in the account for very short periods … ". 20 Notwithstanding that, his Honour found at pp 11 and following that the claimed expenditure in each of the films was incorrectly stated and grossly overstated by approximately $8.8 million. Further, his Honour found that Mr Agoston knew when he lodged the income tax returns that the expenditure was falsely overstated and that he and his various clients were not really entitled to the tax benefit arising from those falsely overstated expenditure. His Honour then asked himself, "What is the basis of this conclusion?" His answer was that he was not concerned with whether the loans or subsidies claimed were legally real monies or not, but was inclined to think they were for a very short time. 21 His Honour based his conclusion on the following: (a) Mr Agoston was an experienced accountant specializing in providing investments for Australian film productions and arranging tax benefits for his clients from those enterprises; (b) he was the executive producer of the various films and charged a considerable amount of money for this role; (c) well before any production or incurring of costs, each investor contributed and a subsidy was offered to each investor. The relevant amounts were computed well before any production was made; (d) only the amount actually supplied by the investors was ever expended on the production of the film and on one occasion a bank loan had to be obtained as the monies which were lent and re-borrowed were never needed nor expended; (e) invoices were raised and sometimes replaced to reflect the amounts of production calculated before production had been begun not the true amount of expenditure which in each year was considerably less; (f) in any of the five years not one dollar of the additional amounts borrowed was in fact used or expended in production. It must be inferred that these additional amounts were never intended to be available for expenditure or use in production. His Honour said at 17: "Whatever about the validity and enforceability of the agreements and supporting documents, and whatever about the reality of the monies lent or subsidised, … I have concluded that there was never any intention that the additional monies would be used in production and expended." 22 As I said earlier, Mr Hay's trial commenced on 30 June 2008. Mr W Roser SC was the Crown Prosecutor and Mr C Jeffreys, solicitor, appeared for the accused. On day 2 of the trial, Mr Jeffreys said to the judge: "I understand the position having discussed it with him [ie the Crown Prosecutor] yesterday he is not maintaining, even though he uses the word in his opening 'sham' he is not maintaining it is a sham so far as the legal concept of sham is concerned. Crown Prosecutor: The technical term. Jeffreys: It is not a technical term, legal construction is known as the sham. Is that right? Crown Prosecutor: Yes." 23 I will come back to this point when dealing with grounds (7) and (8). 24 There is little point in delving deeply into Divisions 10B or 10BA of the Income Tax Assessment Act 1936. Essentially, Division 10B provides for expenses of a capital nature on films (and other industrial property) being written off over the period of the copyright. Division 10BA deals with Australian films and allows capital expenditure to be written off for a shorter period. Section 124ZAB of the Act provides for a person to apply to the relevant Minister for a certificate stating that the proposed film will be a qualifying Australian film. The Minister issues a provisional certificate in the first instance and then a final certificate under s 124ZAC after the film is completed. 25 With this background I now turn to the various grounds of appeal on the conviction appeal. 26 Ground (1) concerns the proper interpretation of Divisions 10BA and 10B treating them globally. 27 Mr I Barker QC, who appeared for the appellant, put that these Divisions were enacted to promote the Australian Film Industry. The legislation is directed to the taxpayer and the taxpayer's available deduction. The focus must be on the position of the taxpayer because it is his or her return that is relied upon by the Crown as being false. This being so, the basal argument is that it is not significant exactly how the money was used, the taxpayer is entitled to take the position that he or she subscribes to a film, the money will be used for the film and that the deduction will be available. 28 I will deal with the cases in a moment that are of some guidance on this point. However, I should first make two observations: (i) that even if this submission were correct, as I read the relevant Divisions of the Act, ultimately it is a matter for the Commissioner to decide whether the deduction should be allowed, that is, the taxpayer may make a claim for a deduction in the light of his or her knowledge, but in the ultimate it is the Commissioner's decision as to whether the deduction is allowed; (ii) that if the circumstances are such that the taxpayer has good reason to know that the monies are not being invested in a film, then probably, despite the focus on the taxpayer, the deduction should not be claimed. 29 I now turn to the cases considering the Income Tax Assessment Act 1936 commencing with those cited by Mr Barker. 30 In Commissioner of Taxation v Lau (1984) 6 FCR 202 (FC), the question was over a deduction claimed by a taxpayer who had entered into a commercial venture involving the growing of pine trees. Essentially, the court held that where parties to a transaction are at arm's length and monies are outlaid by a taxpayer for a real or genuine commercial purpose, any inquiry as to the manner in which those funds were subsequently applied by the recipients is immaterial as to whether the taxpayer is entitled to a deduction. As Beaumont J said in that case at 218: "The reason is that, where … the parties are at arm's length, the use made of the funds by the other parties to the transactions is not capable of throwing any light upon the purpose for which the taxpayer incurred the outgoings." 31 Faywin Investments Pty Ltd v Federal Commissioner of Taxation (1989) 89 ALR 599, was a case where the taxpayer paid $600,000 to the producer of an Australian film. The Income Tax Assessment Act 1936 at that time allowed a deduction of 150% for capital monies expended to the extent to which those monies are expended directly in producing a film. Lockhart J said (at 609) that the deduction was available to passive investors so long as there was, in a practical and commercial sense, a link between their contributions and the expenditure of film production expenses. This link is not to be determined by tracing the actual expenditure of contributions into the precise components included in the production expenses. 32 The case went on appeal to the Full Court and is reported as Commissioner of Taxation v Faywin Investments Pty Ltd (1990) 22 FCR 461. The Commissioner's principal point was that the facts showed that the contribution made by Faywin was not used to produce a film, but rather to repay bridging finance. The Full Court dismissed the appeal saying that the requirement that the monies be expended directly in production meant that there be a sufficiently close connection between the outlay and the production process. 33 In the present case, her Honour told the jury at p 14 of her summing up on 29 July 2008, that Division 10BA meant that the investors' contribution monies are to be expended directly in producing the film. She said: "'Directly' means that there be a sufficiently close connection between the outlay and the production process." She continued at 15: "The Crown case here is that deductions were claimed in tax returns Peter Agoston caused to be lodged for amounts much greater than the amounts expended directly by the partners in the partnership in producing the relevant film; that Mr Agoston did not honestly believe that the partners had a right to claim the full amount of their investment in the respective films in their income tax returns and that he intended by causing the tax returns to be lodged to deprive the Australian Tax Office of money it was entitled to knowing that the investors whose tax returns he caused to be lodged had no right to all of the deduction claimed and that Mr Hay, the accused, participated in the offence knowing the essential matters that constituted the offence committed by Mr Agoston." 34 Her Honour told the jury at p 22 of the summing up that the Crown's case was that the accused and Mr Agoston were: "engaged in a scheme which was intended to give the appearance that the deductions planned by the partners in the partnership satisfied the qualifying conditions for deductions set out in [Divisions 10B and 10BA] … when they well knew that the investors did not qualify for the extent of the deduction claimed because they knew that the deductions were only available for direct expenditure on the production of the film and the only money to be spent on the production of the film was the money the investors advanced and did not include the monies they borrowed pursuant to the loan agreements." 35 In my view, that was a perfectly proper direction. 36 It may be that, had the taxpayer been charged with making a false return, he or she could well have said that they bona fide believed that the money was being used for film production purposes. I will not speculate on whether that is correct or not. However, that was not the case before the court on this occasion. On this occasion, the key question was whether Mr Agoston submitted income tax returns falsely overstating the amount of expenditure on the film. Mr Agoston had full knowledge of what the expenses of the film were. 37 Accordingly, I would respectfully say that Mr Barker's submission that one must focus on the taxpayer may be 100% correct, but so far as this case is concerned, is also 100% irrelevant. 38 Indeed, the complaint made by Mr Barker is not in the judge's direction to the jury at all, but rather in her short judgment on 24 July 2008 rejecting an application for verdicts by direction. The vital paragraph is that her Honour said: "In the absence of an allegation of sham I am not prepared to find that the round robin of cheques in each instance could not amount to payment but it seems to me that, as the legislation requires the amount claimed as a deduction must be expended directly in producing the film, the relevant consideration is not the payment made to the film company by the investors, but how the film company deals with the money." 39 It may well be that, read in isolation, one can say that that statement as a broad proposition is wrong. However, it must be remembered that it was said in connection with an application for verdicts by direction on the basis that, as the Crown had disavowed sham, the round robin of cheques must be considered to amount to payment and thus, the Crown could not prove that the amounts claimed as tax deductions were claimed dishonestly. Her Honour then said that the Crown had claimed that as the only monies available were the monies investors contributed other than the subsidies or loans, the amounts claimed in each relevant tax return were false. What it would seem she meant by the statement that is complained about is that, in the circumstances of this case, the accused and Mr Agoston well knew what money was being paid to the film company and what was not. Her Honour's directions to the jury show that this is what she told the jury. Whether, literally, the statement complained about in the first ground is 100% correct or not, it has no bearing on the result of the trial. 40 Accordingly, in my view, the first ground of appeal does not succeed. 41 Ground (2) is in like plight and accordingly it also does not succeed. 42 I should note that there were extensive submissions from the Crown as to how one construes statutes. I have not referred to these because, with great respect, when there are decisions on the sections involved from the Full Federal Court, it is of little use to consider general principles of statutory interpretation. 43 As to ground (5), the trial judge is alleged to have erred in law in failing adequately to direct the jury concerning the use it might make of allegedly false invoices created by the appellant. 44 There seems little doubt that the appellant did create what were called "updated invoices" in 1998 to replace ones issued in 1996. 45 Her Honour did say to the jury, p 25 of her summing up, that the Crown alleged that the invoices concerned showed that Mr Agoston did not honestly believe that the partners had a right to claim the full amount of their investment. 46 At p 31 her Honour said: "The Crown also relies upon the invoices produced by the accused after the Tax Office started asking questions about the deductions claimed in the relevant tax returns. The Crown says you would find that these invoices were inconsistent with the invoices which had already been supplied by the accused to Mr Agoston and the Crown reminded you that the invoices often had the same date as the original invoice which claimed a much smaller amount. The Crown submits that you would find the accused manufactured these invoices which shows not only that he participated in Peter Agoston's fraud but he knew that what Peter Agoston was doing was fraudulent." 47 Her Honour also put the defence case, namely that there was correspondence and testimony from witnesses that established that the invoices were not manufactured as suggested by the Crown. 48 When the jury were sent out, the appellant's solicitor said: "Your Honour so far as the concept of manufacturing invoices is concerned that is very much akin to evidence collateral of guilt such as flight or lies. In my submission your Honour would give a similar direction in relation to flight and lies. What happens here is that the Crown case is that because the whistle has been blown effectively that these documents are created to cover the commission of the actual crime. So that they are not part of the crime, they're covering the crime so that they are very much or very similar to a lie being spoken. There may be all sorts of reasons why somebody may tell a lie but that doesn't necessarily mean that you could be satisfied beyond reasonable doubt they are guilty of the original offence. I was just having a quick look at what the Court of Criminal Appeal said in Cook your Honour which was then followed in Quinlan I think. And that really picks up Lucas and Heyde." 49 The citation of R v Cook is [2004] NSWCCA 52; Quinlan v R [2006] NSWCCA 284; R v Lucas [1981] 1 QB 720 and R v Heyde (1990) 20 NSWLR 234. 50 The Crown, however said those directions were quite sufficient. The judge then declined to give any further direction saying: "Because the Crown case is that the offence is not concluded at the lodgement of the tax return it seems to me that I have been fairly thorough in relation to the circumstantial evidence directions and I don't know that the jury wouldn't understand the way they can use that material and what they have to be satisfied of before they can." 51 This was a reference to her Honour's directions in respect of each count on the indictment, an example of which is the direction at pages 22 to 23 of the summing up: "In relation to the first count on the indictment, the further circumstances upon which the Crown relies to establish that the tax returns falsely overstated the amount of expenditure by the partners and that Mr Agoston did not honestly believe that the partners had a right to claim the full amount of their investment are the invoices dated 30 April 1996, 26 May 1996 and 30 September 1996 … which appear in exhibit A … which were supplied by the accused to Peter Agoston in his capacity as accountant for the film partnership which add up to $644,488 and which are marked as 'paid'. The Crown says from the detail on these invoices and the dates they were provided you would infer that they reflect the production costs of Supreme Champions of the World 1, and not $1,480,000 the amount claimed by the partnership in their tax returns and that in response to a tax office enquiry about the production costs the fresh invoice was supplied dated 9 May 1996 showing that the production costs were what was claimed in the partnership income as total expenses. The Crown says that you would infer that the invoice was manufactured and did not therefore reflect the amount expended directly on production and you would infer from this correspondence that Peter Agoston did not honestly believe that the partners had a right to claim the full amount of their investment in the film in their income-tax returns." 52 The appellant says that the evidence relating to the creation of the invoices was tendered as evidence of consciousness of guilt and that the trial judge should have given the jury a direction that: (a) they would need to be satisfied that there were in fact false invoices; (b) they were created because the appellant intended to have Agoston use them to mislead the Australian Tax Office as to the true position; (c) the appellant created false invoices because he knew that without them he would be implicated in the offence charged and that in effect he created the false invoices because of a realisation of guilt; (d) the realisation of guilt must relate to an involvement in Agoston's crime at the time of commission of the crime and not that the false invoices were created at a time when the appellant came to realise that Agoston had committed the crime; (e) people do not always act rationally and that conduct of the sort contended by the Crown may be explained in other ways. 53 Apart from referring to the Court of Criminal Appeal decisions in Cook, Quinlan and Heyde and the English Court of Appeal decision in Lucas, the appellant's solicitor at trial did not request a direction in the specific terms now formulated. 54 It is instructive to return to what was said by Ipp JA in Cook when summarising the principles applicable to the use of lies or flight, as they were expounded in Heyde and Lucas. The conditions laid down in Lucas, corresponding to the direction which the appellant now maintains ought to have been given, are directed to the capacity of the evidence of lies or flight to amount to corroboration. This exposes the flaw in the appellant's argument. At no time did the Crown rely upon the creation of allegedly false invoices by the appellant as corroborative or supportive of the commission of the offence. The appellant's conduct in the creation of the false invoices was, according to the Crown case, proof of the offence itself, in that it established the appellant's knowledge of, and assistance in, the defrauding of the Commonwealth by Mr Agoston. Contrary to what the appellant's solicitor said, the creation of the false invoices was evidence of the crime, not "covering the crime". 55 Therefore, ground (5) fails. 56 Ground (6) says that the verdict of the jury was unsafe and unsatisfactory. 57 It is clear that when considering this ground, as four Justices in the High Court said in M v The Queen [1994] HCA 63; 181 CLR 487 at 492-3: "The question is one of fact which the court must decide by making its own independent assessment of the evidence and determining whether, notwithstanding that there is evidence upon which a jury might convict, 'nonetheless it would be dangerous in all the circumstances to allow the verdict of guilty to stand'." 58 In performing this task the court must give full regard to the role of the jury as the body primarily entrusted with the responsibility of reaching the verdict and who had the advantage of seeing and hearing the witnesses. 59 The matter was only briefly argued; indeed, even the written submissions were brief. I can see nothing that would enable me to reach the required conclusion, except the matters considered under grounds (7) and (8). I will thus return to this ground after considering grounds (7) and (8). 60 Grounds (7) and (8). These were added by leave during the hearing though they had been foreshadowed earlier. 61 Ground (7) is "that the trial judge erred in law in holding there was a case to answer, because the Crown expressly abandoned sham as a ground of criminality … and absent sham there was no evidence upon which the jury could reasonably find the accused did not believe that Peter Agoston did not honestly believe the investors had a right to claim the full amount of their investment in the respective films as tax deductions, and they therefore could not reasonably find a case of fraud." 62 Ground (8) is "that the trial judge erred in failing to discharge the jury or to direct the jury they could not find sham because: (a) the Crown Prosecutor expressly abandoned sham as a ground of criminality; (b) her Honour specifically found that the Crown could not rely upon sham but the Crown Prosecutor nonetheless put a case of sham to the jury." 63 These two grounds have caused me greater concern than any of the others. 64 The word "sham" has a very definite meaning. It certainly has a definite meaning in law. Mr Roser for the Crown kept saying that is its "technical" meaning, but I venture to think it is also its ordinary meaning. 65 Australia has rejected the view that even "artificial and contrived transactions for tax avoidance purposes" can be classed as shams: Raftland Pty Ltd v Federal Commissioner of Taxation [2008] HCA 21; (2008) 82 ALJR 934 at 960 [129]. 66 There have been many occasions over the last 30 years or so where the courts have had to consider whether documents are a sham. In England the leading case is Snook v London and West Riding Investments Ltd [1967] 2 QB 786, where Diplock LJ said at 802 that it: "is clear in legal principle, morality and the authorities … that for acts or documents to be a 'sham', with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating." 67 Snook has been followed in this Court in ICT Pty Ltd v Sea Containers Ltd (1995) 39 NSWLR 640 and by the High Court in Raftland (at 963; [144] ff). 68 It is not necessary for present purposes to provide a detailed essay on what is or is not considered a sham or the distinction between a sham and an artificial document. I will merely refer to Hitch v Stone (2001) 73 TC 600 at 659 (CA) per Arden LJ and Young, Croft & Smith on Equity (Thomson Reuters, Sydney, 2009) at [6.3.40]. 69 However, the definitive treatment of sham is in the High Court's judgment in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; 218 CLR 471 at 486 [46]. The High Court said: "Each of these transactions was legally effective. None of the transactions … could be said to be a sham. The primary judge was wrong to characterise them, as he did by his references to 'artifice', 'façade' and 'charade', as shams. 'Sham' is an expression which has a well-understood legal meaning. It refers to steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences." 70 In Raftland at [81]. Kirby J reminded readers that: "[many years ago] in Paintin and Nottingham Ltd v Miller Gale and Winter [1971] NZLR 164 at 175, Turner J, in the New Zealand Court of Appeal had warned against allowing the word 'sham to become a legal shibboleth' so that 'on its mere utterance it [is] to be expected that contracts will wither like one who encounters the gaze of a basilisk'." 71 It is this danger identified by Turner J and reaffirmed by Kirby J in the High Court which concerned me in the instant case. 72 Especially in view of the emotive overtones the word "sham" possesses, it would have been much better for the Crown Prosecutor to have avoided the word "sham" altogether. However, apart from discussions in the absence of the jury, the only use of the word was in the opening address on 7 July, three weeks before the jury verdict, and there was no further mention of the word "sham". 73 It is clear, as his Honour Judge Geraghty said in the proceedings involving Mr Agoston, that documents created in this case were intended to have effect. Indeed, the Crown accepted that they were not a sham "in the technical sense". The problem that arises is that, despite this concession, the Crown at the first part of the trial consistently used the words "sham" or "smokescreen". 74 Mr Barker has provided the Court with a large number of instances when this occurred and I will now deal with the most significant of them. 75 In the absence of the jury, at the commencement of the trial there was considerable discussion between counsel and the judge which involved "shams". As I have noted, the solicitor for the accused objected to the word being used and the Crown Prosecutor said he was not alleging that what occurred was a sham in the "technical sense". At T34-35 on 1 July the Crown Prosecutor said: "We say this is a sham, but we don't go as far as to say it is a legal sham as such. It is a sham doing it" 76 The Crown Prosecutor then referred to Pearce v R (2005) 216 ALR 690 at 741 [252] per Steytler J (with whom Murray J agreed): "While it was common cause that the loan agreements entered into by the franchisees were not 'shams' in the technical sense of that word (as to which see Snook … ), Mr Maidment [the Crown Prosecutor], in his opening described them as 'utterly and entirely bogus. … The way the facts concerning the so-called loan were to be and were presented to the taxpayers was to be and was thoroughly misleading. The facts presented were intended to deceive the taxpayers and ultimately the Australian Taxation Office'." 77 At T35 the Crown Prosecutor said: "We say here we do not have to go to the legal technical term of sham. But the whole process/scheme by the accused and Agoston in particular, were a sham." 78 In the Crown Prosecutor's opening address to the jury (T84), he said: "The issue in the trial is that the Crown alleges that the accused was knowingly concerned in Agoston defrauding the Commonwealth, which included, that was, to induce investors to invest in his films, the accused and Agoston set up a scheme. The Crown will allege this scheme was a total sham in which, by an artificial system of documents, which included loan agreements, round robin cheques and other documents which gave the appearance of legality, it allowed Agoston to make out and lodge with the Australian Taxation Office substantially inflated partnership and individual deductions in the income tax returns which the investors were not legally entitled to make." 79 On page 85 the Crown Prosecutor said: "The scheme, the sham the Crown will allege operated this way …" and later on that page: "Also to cover up the sham the scheme devised by the accused and Agoston …". 80 At T93, the Crown Prosecutor referred to a letter that the accused had written to various investors on 30 April 1996 which included the subsidy payment with a note "as an inducement to you to contribute funds to the partnership … and as a gift which is not recoverable by us in any form, we enclose a payment … ". The Crown Prosecutor commented: "As I have briefly outlined to you, this payment was a total sham. [The] accused had no money to give the investors." 81 Then, in talking of invoices of 30 June 1996 at page 93 of the transcript: "Three invoices totalled $644,488.49 … That total amount was what the Crown will allege was spent on the production of the film, not the sham amount of $1,480,000 the accused and Agoston asserted." 82 At T98, the Crown Prosecutor told the jury: "On 6 May 1997, Fittler wrote to the accused and, after stating that further to their meeting with Agoston, he set out what the Crown would allege is a sham of round robin transactions to be conducted by the accused and Agoston." (Tony Fittler was an adviser to Messrs Agoston and Hay). 83 However, it must be borne in mind that the Crown's opening address was made on 7 July 2008. It is of some significance that the jury went out to consider its verdict some three weeks later on 29 July 2008. 84 As to cheques of February 2000, the Crown Prosecutor told the jury in his opening address at T111: "These cheques, the Crown would allege, were a total sham." 85 However, no application was made after that opening to discharge the jury. The opening was made on 7 July 2008. The trial proceeded. 86 The Crown case finished on 23 July 2008. Immediately after it finished the accused's solicitor made an application for a verdict of acquittal by direction. The application starts at T705. 87 At the end of the submissions on this application the Crown Prosecutor at T725 referred to Coppleson v Federal Commissioner of Taxation (1981) 34 ALR 377; 52 FLR 95 per Hunt J and said: "What his Honour there says, 'whether the act or documents was never intended to be operative, according to its tenor at all but rather it was meant to cloak another and different transaction'. That's exactly the situation here, that there was no intent and your Honour heard the evidence from the investors, it was never their intention to be bound by loan agreements of millions of dollars. Their intention to invest a discreet sum in each of these films they participated in and nothing more and nothing less. These documents were formulated and presented and operated as the round robin did, as a cloak for another and different aspect and that was to give the appearance of legality to any person or any organisation looking at these agreements were in fact was to cloak what was actually occurring. But they are my submissions if I can assist." (What I have quoted is from the transcript. It does not quite make sense but that is of no moment as the meaning is clear). 88 The solicitor for the accused responded at T726 with: "I am, with the utmost respect, astounded in the last two minutes. We've been arguing this case for nearly a month that it's not a sham and now my friend in the last two minutes says it is a sham. It's remarkable. So I'm now going to have to take your Honour through the cases in relation to what's a sham. Because he's saying in the very last two minutes, he's saying that it never was the intention of the parties and all of these things were smoke and mirrors. That the parties never intended to be bound by these legal documents and that the legal documents are put in place to cover some other agreement. Now that is a classic sham and a month ago he said he wasn't relying on sham, he said it yesterday and he said it this morning and two minutes ago he's come to being a sham." He later continued (at T726): "When he [the Crown Prosecutor] started this morning, he was talking about a legal technical sham, I don't know what that is and then your Honour asked him and he said no and two minutes ago, the submissions in relation to Coppleson's case, he then speaks about classic sham. … If the position is that the Crown is contending that it is a sham and … your Honour, having considered Sharman [sic], finds that the evidence is not capable of establishing a sham, then your Honour directs the verdict of not guilty." The reference to Coppleson is per Hunt J esp at 381; 99 (the decision was reversed on another point in (1981) 39 ALR 30). "Sharman" is actually Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449 (FC). 89 The Crown Prosecutor replied at T726: "My case hasn't changed at all, I don't know what my friend's going on about. I said a month ago that we're not relying upon the strict technical sense of a sham. Again this morning I took your Honour to what Pearce says about what a sham is and also what we say, which is analogous to Pearce ; 'each of them knew that the loan agreements, which were not technically shams, would not result in any transfer of funds', it's totally different and that's what the situation is here." 90 Pearce was an appeal against conviction on counts under s 29D and section 86(1) of the Crimes Act 1914 (Cth). At [136] (p 718) Malcolm CJ followed Snook. At [137] (p 718) his Honour said: "In the present case, the prosecution expressly disavowed reliance upon the transaction being a sham or on notions of fiscal nullity." However, at [153] and following (pp 721-722) the Chief Justice identified the core of the fraud as being making false representations by the accused to prospective investors that their investment would be used in a way which would entitle them to get a tax deduction even though the loan agreements themselves were not shams. 91 I have already quoted (at [76] of this judgment) what Steytler J, with whom Murray J agreed, said at [252] (p 741). The result was that the Western Australian Court did not consider that there was anything amiss with the trial. The High Court declined to give special leave to appeal. 92 In the present case at T736 the learned trial judge said: "I am concerned about this issue of sham Mr Crown. It seems to me that when you said towards the end of your submissions before I adjourned that it was never the investors' intention to be bound by the loan agreements and that the documents were formulated and operated as a cloak for another and different purpose. You are there suggesting a sham." 93 The Crown Prosecutor replied: "Well I was referring to the evidence which the witnesses had given that they said we didn't – didn't enter – or borrow money – but three investors who were asked that particular question, that they didn't borrow money, the only money that was invested was what they actually paid and this was a cloak to cover up that situation. That's the limited basis that I'm referring to as a sham which is similar to the first Pearce." 94 Her Honour then ruled: "It seems to me Mr Crown given what you said at the outset in response to Mr Jeffreys' question whether or not you relied upon a sham, and your answer that you didn't, that you shouldn't make any submission to the jury ultimately that they were not bound by the loan agreements. So I just want to make that clear at this stage." 95 There does not appear to have been any further mention of shams or the like until the Crown's closing address. At T790 the Crown told the jury that the accused and Mr Agoston "were able to get or to give the face of this scheme legality by an elaborate scheme set up by the accused and Agoston". 96 At T791 the Crown also told the jury: "The system devised in the round robin of cheques was that on a given day a series of cheques would be drawn and deposited in accounts of companies which the accused controlled. From that round robin, although there was no actual money involved, each investor received a percentage of the round robin which was then added to their actual investment and from that the total was used as the tax deduction they claimed in their tax returns and the partnership returns. Although none of the money was used from the round robin in the production costs of the films, this was because, I would suggest you'd find, there was no actual money involved or available to be used in production. At about the same time a series of documents were also signed. This elaborate scheme by the accused and Agoston covered up what was actually occurring. But if anyone looked at the material they would form the view that money had actually been used in direct expenditure in producing the film and the tax deductions claim were genuine. So under the scheme set up by the accused and Agoston it was a win, win, win, for all concerned, except for the Commonwealth." 97 At T802 the Crown Prosecutor told the jury: "Then you have a series of documents allegedly executed on a certain date and you'll have those documents which it appears from the documents itself that some of those documents weren't even in existence when they are alleged to have been executed. But those documents sets up the smokescreen of what was actually occurring behind the scene." 98 Following that address, the solicitor for the accused asked the judge to discharge the jury. He said (T807): "My friend has said on a number of occasions in his address effectively that the documentation is a sham". This obviously surprised the Crown Prosecutor who said: "When did I say that?" The solicitor replied that when the prosecutor was going through the documents he said a series of documents were a smokescreen. He concluded (T807): "It flies in the face of everything we've debated in this Court in relation to sham, in relation to the investors being bound by the documentation and because he's gone on and on and on about it, it's my submission that the only way that justice can be given to the accused is to discharge the jury." 99 The Crown Prosecutor replied by saying that it has been the Crown's case from the inception that the only money used in the production was the actual investment invested by the investors not the money that was given back to them by way of subsidy. The accused's solicitor said (at T808): "That's a bit different from what he put your Honour that's my problem". The Crown, one might have thought a little ungraciously, said: "Well how many times do you want to have a go? It's not inconsistent with what I put. I put it a number of times and I put it in the opening and I put it in the closing the same way." The solicitor said: "Your Honour indicated your Honour wouldn't allow him to speak of shams". The Crown Prosecutor said: "I didn't speak of shams". Her Honour asked the solicitor for the accused what, if anything, she could do about it if she didn't discharge the jury. 100 The submission of Mr Hay's solicitor was, "Well he [the Crown Prosecutor] should say that there were agreements where people were actually bound and they can't ignore those things and it was wrong for [him] to say that those documents were a smokescreen. That's what I want him to say. And if he won't say it, then in my submission your Honour will say it." 101 After thinking about the matter over the lunch adjournment her Honour merely said at T808: "I don't propose to discharge the jury nor do I propose to ask the Crown to say anything to the jury nor will I say anything to the jury about those matters … ". 102 Her Honour then proceeded to sum up to the jury. After she had concluded the summing up, her Honour asked whether she should amend the charge. The response of the solicitor for the appellant, Mr Hay, was just to request a direction as to the significance of subsequent false statements: he did not ask for any further direction as to shams. 103 I have already set out the comments of the Crown Prosecutor in his closing address to the jury. The word "sham" was never mentioned. However, the word "smokescreen" was. There had been virtually no mention of the word "sham" in the trial before the jury since the opening address which was a month before the jury considered their verdict. Moreover, the question of sham, though emotive, was really a side issue and her Honour both: (a) cautioned the Crown Prosecutor not to use the word (a direction with which he complied); and (b) clearly indicated to the jury what they did need to consider. 104 The problem that this poses is that there are strong grounds for thinking that the jury's mind could have been poisoned by the Crown's opening. However, considerable time had passed since the word sham was last uttered. On the other hand, the continued tone of the Crown's address was on smokescreens. 105 In these circumstances, the questions we need to consider are should the trial judge have given some further direction to the jury and, if that be the case, should there be a new trial. 106 Although neither party suggested that the present case is one where the proviso to s 6(1) of the Criminal Appeal Act 1912 might be invoked as a case where no substantial miscarriage of justice has actually occurred, the principle that appellate courts should not too readily set aside the result of a trial on technical grounds must be borne in mind. 107 A disturbing aspect of this matter is that the present was a complex trial and one where the jury may well remember simple emotive tags such as "sham" for some time especially when the Crown's closing speech mentioned smokescreen. 108 However, this factor is lessened in my mind because the respondent was represented at trial by a solicitor of considerable experience as an advocate in criminal cases and he did not seek a discharge of the jury at any time because of the Crown's reference to sham. This is a relevant factor to take into account; see eg R v Verma (1987) 30 A Crim R 441. However, it does not prevent this Court, in a proper case, from setting aside the verdict: R v M [1991] 2 Qd R 68 at 70 and 83. 109 The tone of the address of the Crown Prosecutor to the jury may, especially in the absence of correction by the judge, mean that there has been a failure to afford the respondent a fair trial; see eg R v House (1921) 16 Cr App Rep 49 at 50-1; Reg v Hay [1968] Qd R 459; R v DDR [1998] 3 VR 580 and R v Teasdale [2004] NSWCCA 91. 110 As Tadgell JA said in DDR at 581: "It is no part of the duty of counsel for the Crown to excite passion". 111 The test that an appellate court must apply is whether "there is a real risk that the [remarks] … may have tipped the balance against the accused": R v Roulston [1976] 2 NZLR 644 at 654; McCullough v R (1982) 6 A Crim R 274 at 286. 112 Although the issue has caused me considerable concern, I do not believe that, applying the test in Roulston, that in all the circumstances the Crown's remarks may have tipped the balance against the accused. 113 I would thus not uphold grounds (7) and (8). 114 I now reconsider ground (6) adding in what I have noted concerned me with grounds (7) and (8). I do not consider that the additional material is sufficient to cause me to uphold ground (6). 115 Accordingly, in my view the appeal against conviction should be dismissed. 116 I now turn to the question of sentence. As indicated earlier both the Crown and Mr Hay complain about the sentence. I will first deal with the Crown appeal. 117 The Crown submits that the trial judge erred in 13 particular ways, viz: (1) The individual and total sentence imposed upon the respondent failed to reflect the objective seriousness of each of the offences and his total criminality. (2) The sentences did not give sufficient weight to the objective seriousness of each of the offences and the total criminality of the respondent. (3) The sentences gave insufficient weight to the aggravating features of the offences. (4) The sentences gave too much weight to the mitigating circumstances of the respondent. (5) The sentences gave undue weight to the subjective features of the respondent. (6) The sentences did not give sufficient weight to the elements of specific and general deterrence. (7) The sentences erred in finding that a significant measure of specific deterrence was not required to be imposed upon the respondent. (8) The sentences did not give sufficient weight to the legislative intention in relation to taxation offences. (9) The sentences erred in the characterisation of the offences as forming part of one single event. The five offences were separate and distinct which required them to be dealt with as such. (10) The judge erred in the structure of the sentences imposed. (11) The judge erred in the assessment of the objective criminality and seriousness of counts 1 and 2. Her assessment of the criminality was inconsistent with the jury verdicts. (12) The judge erred in mitigating the appropriate sentences by finding that the Australian Taxation Office did not suffer any loss of revenue from the criminality of the respondent. (13) The judge erred in holding that the offences were not committed by the respondent for his personal enrichment. 118 As to grounds (1) to (5) the Crown Prosecutor says that although her Honour referred to s 16A of the Crimes Act 1914 (Cth) she did not, in the Crown submission, actually apply it. 119 Section 16A(1) provides that the court must impose a sentence that is of "severity appropriate in all the circumstances of the offence", and s 16A(2) requires the court to take into account, inter alia: "(a) the nature and circumstances of the offences;… (j) the deterrent effect that any sentence or order under consideration may have on the person; (k) the need to ensure that the person is adequately punished for the offence". The Crown submits that in view of the respondent's very serious course of criminality, involving systematic sophisticated defrauding of the public purse of a very large sum of money on five separate occasions over a five year period, the sentence which was imposed was clearly not in accordance with s 16A. 120 As to grounds (6), (7) and (8) I note that the learned judge in her remarks on sentence said at 12-13: "The sentences I impose must reflect a significant measure for general deterrence. I am less persuaded about the need for those sentences to reflect a significant measure for specific deterrence. … I do not consider that the sentences I impose need reflect a significant measure for specific deterrence." That, the Crown puts, was an error. The Crown submits that Mr Hay's criminality was ongoing and premeditated, a direct attack on the public revenue for his own personal gain and enrichment. 121 The Crown quotes cases where appellate courts have said on more than one occasion that taxation fraud is a very serious offence; see eg R v Stitt (1998) 102 A Crim R 428 (NSWCCA) and R v Kopa; Ex parte Director of Public Prosecutions (Cth) (2004) 206 ALR 197 (Queensland Court of Criminal Appeal). 122 It is put that insufficient weight was given to the fact that the offences were committed over a long period and minimised the specific deterrence necessary in the sentences imposed. 123 Grounds (9) and (10) say that the remarks on sentence indicate that her Honour considered that the five offences were really part of the same course of criminal conduct whereas she should have considered them as separate and distinct offences which were required to be dealt with as such. 124 The Crown cites R v Harris (2007) 171 A Crim R 267, where the Court (McClellan CJ at CL, R S Hulme and Hislop JJ) said at [41]: "Considerations of general and personal deterrence demand that courts signal to would-be offenders, many of whom in this area [ie break enter and steal] are serial offenders, that they can expect punishment for each of their offences." That Court (at [46]) approved what Sully J had said as a member of a two-judge bench in R v Wheeler [2000] NSWCCA 34 at [36]-[37]: "It needs to be clearly understood by all concerned that a person who commits a deliberate series of discrete offences … must not be left with the idea that by intoning references to the principle of totality as though it were some magic mantra, he can escape effective punishment for the offences which follow successively one upon another throughout the whole course of a studied and deliberate course of criminal behaviour." 125 Ground (11) points out that her Honour said in sentencing that whilst she was satisfied beyond reasonable doubt that from about mid-January 1998 both Agoston and Hay did not honestly believe there was a right to claim the full amount of their investment as tax deductions, prior to that date she was not so satisfied beyond reasonable doubt. Her Honour said that, as she was not satisfied that when the offender caused the circular passing of cheques in respect of counts 1 and 2 he did so dishonestly, she would adjust the sentence accordingly. It is put that this is quite inconsistent with what the jury found on counts 1 and 2 which affected not only the individual sentences on counts 1 and 2 but also the total sentence involved because she considered the period of criminality a three year period instead of a five year period. 126 Ground (12) puts that whether or not there was any ultimate loss to the Australian Taxation Office was quite irrelevant in the assessment of the criminality of Hay. Whilst it would have been a serious aggravation if the revenue had suffered losses, it is an error to mitigate the objective seriousness of the offences by finding that the Taxation Office did not suffer any ultimate loss. 127 As to ground (13) the Crown says that the crimes did benefit Hay in a material way in that he was able to make his films because the investments were made. 128 As to good character, whilst it is conceded that Mr Hay was previously of good character, it is put that this is not as significant a matter when the need for general deterrence is strong. 129 Mr Hay puts that the Court must remember the principles governing Crown appeals, that normally such appeals should be limited to the rare and exceptional cases which involve substantial matters of principle which can provide guidance to sentencing courts: Griffiths v The Queen [1977] HCA 44; 137 CLR 293 at 310; Everett v The Queen [1994] HCA 49; 181 CLR 295 at 300; R v Wall [2002] NSWCCA 42 at [70]. In the present case, there is no need for this Court to give guidance to sentencing courts. There is nothing out of the ordinary in the way in which the sentences were imposed in the instant case after the trial judge had made careful and adequately reasoned findings of fact. Mr Hay also relies on his submissions in his appeal against sentence as to why the sentence was excessive. 130 I should turn to these now. Mr Hay, in his appeal against sentence, says that the sentences were manifestly excessive because: (1) there was no proved loss to the Commonwealth; (2) there was no personal enrichment; (3) the appellant is a person of good character; (4) there was considerable delay between the commission of the offences and the prosecution; (5) there was evidence that the appellant would suffer a substantial financial loss if he were not able to complete his current film "How Much is Enough". 131 Mr Barker submits as was submitted at trial, that the trial judge ought to have considered that periods of imprisonment, immediately suspended, was the appropriate sentence to be imposed in the matter. 132 As I mentioned earlier, the total sentences were three and a half years. However, unless the Court makes some different order, the respondent will be released from custody on 6 April 2011. 133 The maximum penalty on each count was 10 years imprisonment and/or a large fine. 134 As to the Crown's appeal, it would seem to me that the Crown is justified in criticising some aspects of the sentence passed by her Honour. I consider that there is merit in the Crown saying that her Honour's view that dishonesty commenced only from mid-January 1998 and accordingly she was looking at a three year period of criminality rather than a five year period was inconsistent with the way in which the jury must have approached the matter. In respect of counts 1 and 2, however, this only provided a six months adjustment in the sentence which in the overall sentencing was not really a matter of significance. 135 I do not consider that her Honour made an error in taking into account that the probabilities were that the Commonwealth suffered no loss. 136 It is true that in this sort of "white collar crime" deterrence plays a considerable part in the sentencing process and subjective elements a lesser part. However, subjective elements still come into the equation and here is a case of a 62 year old man who was guided by his accountant to participate in this illegal scheme in circumstances where he will lose his liberty for over two years and have his efforts in producing a film on soccer for the 2010 World Cup completely frustrated and the investment wasted. Yet his accountant, because of age and mental health, completely escapes any punishment. 137 I do not consider that in all the circumstances, despite errors, the sentence could be described as manifestly inadequate. 138 Passing to Mr Hay's appeal against sentence, he was of good character; there was delay between the commission of the offences and the prosecution. However, as to the question of no proved loss to the Commonwealth, this is of little relevance. As to the allegation there was no personal enrichment, the Crown is correct in saying that Mr Hay did receive benefits as a result of the scheme in being able to make his films for a profit. As to his complaint that he would suffer substantial financial loss if he was not able to complete "How Much is Enough", this is probably correct, but is not, to my mind, a significant factor when counterbalanced with all the other factors that come into the sentencing equation as pointed out in the Crown appeal. 139 In my view both the Crown and Mr Hay's appeals against sentence should be rejected. 140 Accordingly, I would propose that the orders of the Court be as follows: (1) The appeal against conviction is dismissed. (2) The Crown appeal against sentence is dismissed. (3) Leave is given to Mr Hay to appeal against sentence; but (4) Mr Hay's appeal against sentence is dismissed. 141 HIDDEN J: I agree with Young JA. 142 LATHAM J: I agree with Young 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. 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