Martorano v R

BELL CJ: This is a conviction appeal brought by Mr Robert Frank Martorano (the Appellant) who, between 9 February and 27 March 2024, stood trial by jury alongside his co-accused, Mr Steven Davies (Mr Davies), in respect of two offences to which they each pleaded not guilty (together, the co-accused).

The Appellant was found guilty on Count 1:

The co-accused were found not guilty on Count 3:

The maximum sentence for a breach of s 135.1(5) of the Criminal Code Act 1995 (Cth) (Criminal Code) is 5 years’ imprisonment.

The sentencing hearing was held on 23 August 2024 in the District Court before Girdham SC DCJ (the trial judge). The Appellant was sentenced to a term of two years and six months’ imprisonment, commencing on the day of sentence. An order was made for the Appellant’s release pursuant to s 20(1)(b) of the Crimes Act 1914 (Cth) after serving a term of imprisonment of 15 months, on the condition that he enter a recognizance of $2000, that he be of good behaviour for two years following his release, and that he appear before the Court when asked to do so. The Appellant is due for release on 22 November 2025, and his sentence expires on 22 February 2027.

On 22 May 2025, the Appellant filed a notice of appeal against both his conviction and sentence. The appeal from sentence was subsequently withdrawn.

The following summary is adapted from the trial judge’s “Statement of Facts After Trial” (SOFAT).

The Appellant’s impugned acts contrary to s 135.1(5) of the Criminal Code concerned his dealings with two entities: Premier Protection Agency Pty Ltd (Old Premier) and Premier Protection Agency (Aust) Pty Ltd (New Premier).

Old Premier was incorporated on 9 May 1997, placed in liquidation on 7 February 2014, and deregistered in 2019: SOFAT [4] (see [20] below). The company was originally incorporated under the name “Magtek Security and Investigations Pty Ltd” but changed its name to “Premier Protection Agency Pty Ltd” on 30 April 1998: SOFAT [3]. Old Premier conducted a business of “providing security, investigative, and vetting services” and had clients from both the private and public sectors: SOFAT [3]. Those clients included ASIC, CrimTrac, and the Department of Defence.

Until 17 January 2013, the Appellant was the director, secretary, and sole shareholder of Old Premier.

There was no dispute that between tax years 2003/4 and 2012/3, Old Premier failed to lodge numerous income tax returns (ITRs) and Business Activity Statements (BAS). It was the Appellant’s case at trial that his accountant, Ms White, was responsible for failing to prepare and lodge his tax returns. A Statement of Agreed Facts under s 191 of the Evidence Act 1995 (NSW) was signed by the parties before the trial on 11 December 2023, and recorded as follows:

On 17 January 2013, the Appellant resigned as director and secretary of Old Premier, and sold his shares to Mr Davies, who became secretary, director and sole shareholder. Two days earlier, on 15 January 2013, New Premier was incorporated: SOFAT [2].

15 January 2013 was also the date from which the jury found the Appellant committed a series of illegal acts contrary to s 135.1(5) of the Criminal Code. Those acts comprised the transfer of assets including cash, contracts and staff from Old Premier to New Premier, notwithstanding that Old Premier owed debts to creditors, including considerable tax obligations to the ATO.

The Appellant was New Premier’s sole director, secretary, and shareholder at all times: SOFAT [5]. As with Old Premier, New Premier conducted a business of providing security, investigative and vetting services, and had both public and private sector clients.

Notwithstanding having purportedly ceased his directorship of Old Premier shortly after the incorporation of New Premier, the Appellant remained the sole signatory to Old Premier’s bank account, a Westpac Bank Account with account number 032 206,142 086 (over which Mr Davies at no point obtained any control) (Old Premier’s Bank Account): SOFAT [11].

The Schedule of Deposits of both Old Premier’s Bank Account and New Premier’s Bank Account between January 2013 and February 2014 indicated that money was transferred to and from the companies’ accounts, ultimately resulting in Old Premier being in a net negative position of $119,696.00: SOFAT [14].

In the same period, the Appellant also debited Old Premier’s Bank Account by way of the following transactions: SOFAT [15]

The Crown’s case was that the Appellant had also attempted to novate Old Premier’s business to New Premier, including by transferring an ASIC contract from Old Premier to New Premier, and attempting (unsuccessfully) to do the same with a contract with CrimTrac, a former Australian Government agency in the Attorney General’s Department which has since been merged with the Australian Crime Commission.

Ralph Lee La Rocca was Old Premier’s accountant as of about December 2012: SOFAT [23]. Adam Shepard was a liquidator who at that time was working for Farnsworth Shepard. On 24 April 2013, the Appellant, Mr La Rocca, and Mr Shepard met to discuss, according to the evidence of Mr Shepard, the insolvency of Old Premier and “the likely appointment of a liquidator”.

Mr Shepard was subsequently contacted by Mr La Rocca in early 2014 asking for documentation to appoint a liquidator to Old Premier. Mr Shepard was appointed liquidator on 7 February 2014, and the company was subsequently wound up.

The loss to the Commonwealth caused by Old Premier’s unpaid tax liabilities was calculated as totalling $1,351,338.77, comprising the amount of unpaid GST and income tax, and unremitted PAYG liabilities for financial years 2003/4 to 2012/13: SOFAT [25]. That figure was contested at trial. In sentencing the Appellant, the trial judge proceeded on the basis that there was substantial loss to the Commonwealth, in excess of $1 million.

The grounds of appeal were as follows:

The Crown submitted that leave was required to bring the first ground of appeal, it being a “mixed question of law and fact” pursuant to s 5(1)(b) of the Criminal Appeal Act 1912 (NSW) (the CAA). If leave was required, it is granted. It was common ground that leave was not required in relation to the second ground of appeal.

Section 6(1) of the CAA enacts the “common form” criminal appeal provisions for appeals from a conviction on an indictment. It provides as follows:

The three “limbs” in s 6(1) of the CAA are:

An appellate court must allow an appeal if one of three limbs in s 6(1) is established, subject to the proviso that the court may nevertheless “dismiss the appeal if it considers that no substantial miscarriage of justice has actually occurred” (the proviso). The “substantial miscarriage of justice” test in the proviso is distinct from the “miscarriage of justice” test in the third limb and the inquiry required by the latter does not collapse into that of the former: see Brawn v R (2025) 99 ALJR 872; [2025] HCA 20 at [11] (Brawn); MDP v R (2025) 99 ALJR 969; [2025] HCA 24 at [107] (MDP).

The Crown bears the onus to satisfy the proviso (Brawn at [16]) and did not raise it in relation to either ground of appeal in the present case.

The third limb of s 6(1) requires the Appellant to establish there was an error or irregularity which was either “fundamental”, or “material…in the sense that [it] could realistically have affected the reasoning of the jury to a verdict of guilty that was returned by the jury in the criminal trial that occurred”: Brawn at [9]-[10]. As the High Court continued in Brawn at [10]:

In the language of Beech-Jones CJ at CL (as his Honour then was) in Zhou v R [2021] NSWCCA 278 at [22]:

In the present case, the Appellant did not contend that any of the asserted errors in ground 1 or 2 was fundamental (as to how that term is understood in this context, see Wilde v R (1988) 164 CLR 365 at 373; [1988] HCA 6; Weiss v R (2005) 224 CLR 300; [2005] HCA 81 at [46]; Baini v R (2012) 246 CLR 469; [2012] HCA 59 at [26]; Hofer v R (2021) 274 CLR 351; [2021] HCA 36 at [123], cited in MDP at [9]). The determination of the grounds of appeal ultimately depends on whether an irregularity occurred during the trial, and whether that irregularity was “material”.

It will be recalled that ground 1 of the appeal was that the trial miscarried by reason of the Crown Prosecutor attempting to tender, in the presence of the jury, the criminal record of Mr La Rocca (the criminal record). As noted above, Mr La Rocca became the accountant for the Appellant from about December 2012, and this was a fact before the jury.

Mr La Rocca was referred to in the Crown’s opening as follows:

There was some dispute as to whether the subject of the first ground of appeal was the tender, or the attempt to tender, the criminal record. On the Appellant’s case, the criminal record was “[t]endered but not admitted into evidence”. That dispute was largely semantic. In short, as will be seen, the Crown sought, in the presence of the jury, to tender the criminal record (the Crown Prosecutor said “I tender …”). This course was the subject of objection by Mr Stratton SC and, after certain matters were clarified, the tender was withdrawn, and the criminal record was not admitted into evidence.

In order properly to consider this ground of appeal, it is necessary to set out the relevant background leading to the tender or attempted tender of the criminal record.

On 20 February 2024, Mr Stratton’s cross-examination of Mr Shepard included the following exchange in relation to the handwriting appearing on two documents, both of which purported to be signed by Mr Davies:

On 6 March 2024, the Crown called Federal Agent Nagel, a Sergeant in the Australian Federal Police and the officer in charge of “Operation Spearfelt”: the investigation into the co-accused. Federal Agent Nagel gave evidence over several days. The following exchange occurred between him and the Crown Prosecutor at the conclusion of his examination in chief:

Federal Agent Nagel was not cross-examined in relation to Mr La Rocca.

Later that day, the Crown called Federal Agent Kazagrandi, a police officer attached to the Cyber Crime team of the Australian Federal Police. During Federal Agent Kazagrandi’s examination in chief, the following exchange occurred:

Federal Agent Kazagrandi also gave the following evidence of attempting to contact Mr La Rocca by telephone:

Federal Agent Kazagrandi was also not cross-examined about Mr La Rocca.

After the Crown called its final witness on 7 March 2024, the following exchange took place in the presence of the jury in which the Crown sought to tender Mr La Rocca’s criminal record:

It should be noted that the Crown Prosecutor did not refer to the name of the person with whom MFI 41 was associated, namely Mr La Rocca, nor his status as the Appellant’s accountant, when she made this application, and it is unlikely though not impossible that the members of the jury would have recalled that, on the previous day, the fleeting exchange relating to the marking of the document related to Mr La Rocca.

Returning to the actual attempt to tender MFI 41, the discussion between the trial judge and counsel continued in the absence of the jury as follows:

The trial judge later directed the jury when they returned to Court as follows:

A number of points should be made at this stage about the exchange set out in [43] above.

First, Mr Stratton candidly accepted and indeed volunteered before this Court that he was wrong to say that “no such questions were asked about Mr La Rocca” in relation to “his availability, and, in particular, his presence in New South Wales”. Indeed, Mr Shepard was asked whether Mr La Rocca still lived in New South Wales (see [35] above), and Mr Kazagrandi gave evidence that he had attempted to contact Mr La Rocca on multiple occasions: see [39] above.

Second, in relation to his statement about needing to “seek instructions about whether or not to seek a discharge of the jury” following the Crown Prosecutor’s attempt to have the criminal record admitted, Mr Stratton was asked whether it could be inferred instructions were sought regarding whether to apply for a discharge, and he confirmed they were:

Third, Mr Stratton accepted that it was, in light of some questions which had been asked as to where Mr La Rocca was living and, by inference, whether he was available to be called by the Crown as a witness, not unreasonable at least for the Crown to have apprehended that there was going to be a submission made that Mr La Rocca should have been called, and a Mahmood direction sought in relation to his not having been called. The form of such a direction, flowing from the decision in Mahmood v Western Australia (2008) 232 CLR 397; [2008] HCA 1, as suggested in the Criminal Trial Courts Bench Book published by the Judicial Commission of New South Wales is as follows:

In relation to the direction to the jury set out at [44] above, four further points should be noted. First, the direction was issued at the request of Mr Stratton: “I would ask that your Honour direct the jury that they should ignore what they've heard from the Crown”. Second, subsequent to suggesting that the direction be made but before it was issued, Mr Stratton sought instructions on the proposed content of the direction, and confirmed it was appropriate: “Would your Honour just pardon us for a moment? Thank you for that time, your Honour. We agree with your Honour’s proposal”. Third, the direction was carefully expressed so as not to identify either the criminal record or the person to whom it referred, thus reducing any risk of prejudice arising. Fourth, in the course of the hearing of the appeal, Mr Stratton was not critical of the content of the direction and accepted “it was entirely appropriate for her Honour to give (sic)” it.

I do not consider that the tender/attempt to tender the criminal record gave rise to a miscarriage of justice or caused the trial to miscarry. There was no material risk of prejudice. This is so for a number of reasons.

First, the criminal record was never before the jury and was not admitted into evidence. Nothing was said in relation to the nature, severity, number, or date of any convictions that might have been recorded on it.

Second, to the extent that there was an attempt to tender the criminal record the day after it had been marked for identification, that attempt did not identify whose record it was. That is to say, there was no repeated reference to Mr La Rocca in the jury’s presence linked to the criminal record.

Third, even if, when it was sought to tender MFI 41, one or more of the jurors remembered what that MFI was and to whom it related, the jury was instructed to disregard the attempted tender. In this context, and as I observed in Hamide v R [2019] NSWCCA 219 at [119]-[120]:

In Gilbert v The Queen (2000) 201 CLR 414; [2000] HCA 15 at [13], Gleeson CJ and Gummow J said:

I would reject the Appellant’s submission that it was “unlikely in the extreme” that the jury would follow the trial judge’s direction to ignore the attempt to tender MFI 41.

Fourth, no application was made to discharge the jury after the attempted tender of the criminal record (notwithstanding that Mr Stratton had sought instructions on whether to do so: see [47] above). This was a deliberate forensic decision. Except in exceptional cases, “parties are bound by the conduct of their counsel, who exercise a wide discretion in deciding what issues to contest, what witnesses to call, what evidence to lead or to seek to have excluded, and what lines of argument to pursue”: Hamilton (a pseudonym) v R (2021) 274 CLR 531; [2021] HCA 33 at [54], quoting Nudd v R (2006) 80 ALJR 614 at [9]; [2006] HCA 9.

In a related context, in Astill v R [2024] NSWCCA 118 at [62]-[63], I observed that:

If counsel made a rational forensic decision not to seek a discharge of the jury at trial, that will ordinarily be attributed considerable weight when resolving the question of whether an irregularity occurred during the trial which caused a miscarriage of justice: Dragojlovic v R (2013) 40 VR 71; [2013] VSCA 151 (Dragojlovic); Regina v Yeo [2005] NSWCCA 49 (Yeo); R v Strawhorn (2008) 19 VR 101; [2008] VSCA 101 (Strawhorn).

In Dragojlovic, although noting at [158] that a failure to seek a discharge at trial may be excused “in an appropriate case”, Redlich, Weinberg JJA and Bell AJA observed at [171]-[173]:

This Court made a similar point in Yeo, where Adams J (with whom Sheller JA and Sperling J agreed), said:

A failure to seek a discharge of the jury will be especially significant where it is evident that counsel was alive to the potential for prejudice, turned their mind to the possibility of making a discharge application, made a rational forensic decision against taking that approach, and proceeded to agree with the manner in which the judge proposed to instruct the jury. Such were the circumstances not only in the present case, but also in Strawhorn, in which Vincent, Nettle and Kellam JJA said at [145]:

Fifth, only passing reference was made to Mr La Rocca in the course of the evidence, final addresses and the summing up. To the extent that Mr La Rocca’s name appeared in various items of correspondence, that involved him passing on information rather than giving accounting advice to the Appellant. The Appellant did not seek to place either reliance or blame on Mr La Rocca in relation to the count in respect of which he was convicted; rather, much criticism was directed to an earlier accountant: see [11] above. Nor was Mr La Rocca’s role or involvement any material part of the Crown case. The relatively scant and neutral references to Mr La Rocca in the course of the trial which ran for over 30 days bear upon the materiality, or lack thereof, of what is now complained about in ground 1 of the Notice of Appeal. The trial ran for a further three weeks after the marking of the criminal record for identification and the attempt to tender it at the close of the Crown case.

Sixth, the trial judge gave a very clear direction to the jury only to consider the evidence before it, to confine its consideration to “the evidence that you’ve heard and seen in the courtroom” and not to engage in any speculation. Again, this Court should proceed on the basis that the jury followed the trial judge’s clear directions.

For these reasons, ground 1 of the appeal should be dismissed.

The second ground of appeal arose out of a phone call between the co-accused which occurred on 1 June 2017 (the phone call) and which was recorded pursuant to a warrant. The transcript of the call was in evidence and the recording was tendered at trial. In the phone call, Mr Davies discussed with the Appellant a document he had downloaded from the internet “raising something about phoenixing”. The transcript of the phone call contained the following exchange:

In evidence was also the transcript of a second phone call, made an hour later, which contained more detail about what appeared to be the same article. The Appellant, however, was not party to this phone call: it was between Mr Davies and another man named “Gaz”. That conversation was not admitted against the Appellant. The Crown submitted, correctly in my view, that that conversation ought to play no role in the appeal.

During cross-examination at the trial, Mr Stratton brought Federal Agent Nagel’s attention to what he perceived to be the strong similarities between the document/article to which Mr Davies referred in the two phone calls and an article from the Monash Business School (the MBS Article). The Crown objected when Mr Stratton presented the witness with the MBS Article which became MFI 34 and which is referred to in the second ground of appeal which, it will be recalled, was in the following terms:

Mr Stratton’s cross examination of Federal Agent Nagel was relevantly as follows:

Interpolating here, the conversation at “page 699” and which continued on page 701 of the bundle was the second conversation in which Mr Davies participated but to which the Appellant was not a party.

After the Crown Prosecutor’s objection to the question at the end of the passage set out in [68] above, the following exchange then followed between the trial judge, the Crown Prosecutor and Mr Stratton, noting that he appeared for both accused at the trial:

Although there is an element of ambiguity about it, the “accused” to whom Mr Stratton appears to be referring in the above passage is in fact Mr Davies and not the Appellant. This is confirmed because, later in the trial, Mr Stratton sought to tender the MBS Article itself, in the course of which the following exchange occurred:

The second ground of appeal can be dealt with in short compass.

To the extent the first part of the ground complains of the trial judge’s upholding an objection by the Crown to a question sought to be asked by Mr Stratton of Federal Agent Nagel (see [68] above), the rejection of that question was entirely proper. The Federal Agent had indicated in earlier answers to questions by Mr Stratton that he had not been able to “track down” the article from which Mr Davies was apparently reading in the second conversation to which the Appellant was not a party. Mr Stratton’s line of questioning was plainly part of an endeavour to identify the article Mr Davies was apparently referring to through a witness who did not know what that article was. Any answer would necessarily have been speculative.

Turning to the second aspect of the second ground of appeal, namely the rejection of the attempt to tender the MBS article, whether the identification of the article was in some way relevant to a potential defence for Mr Davies, it had no apparent relevance to the Appellant. There was no evidence, for example, that he had ever read it, and even if he had, there was no attempt to explain how it could enhance his defence or how its ultimate non-admission occasioned a miscarriage of justice to him. The submission that the article’s identification and admission would support a submission that the co-accused possessed an “honest belief that what they were doing was not illegal” did not rise above assertion. Thus, Mr Stratton explained to her Honour that “We say that it's relevant as to the issue of honesty or otherwise of the accused Davies and that it's to establish that he's not making it up”. Whether there was any cogency in that contended-for relevance, it was not in relation to the Appellant.

This point was only reinforced by the fact that the phone call on 1 June 2017 in which the Appellant did participate and in which there was a reference to a document on the topic of phoenixing (see [65] above) occurred after the conduct of the parties that formed the basis of the phoenixing of Old and New Premier which occurred primarily in 2013 leading up to the appointment of Mr Shepard, the liquidator, in 2014.

For these short reasons, the second ground of appeal should also be rejected.

The appeal should be dismissed.

FREE JA: I agree with Bell CJ.

McGUIRE J: I agree with Bell CJ.