R v Alex & Ors (Trial Ruling No 7)

These are my reasons for having refused an application made on 23 July 2024, at the conclusion of the summing up in this trial, for a re-direction concerning two groups of invoices that were included in the Crown’s evidence (Ex 1/TB-295 and TB-302). The invoices were relevant to two Payroll Services Agreements that were relied upon by the accused but which the Crown submitted were shams, not intended to be performed according to their terms and not in fact observed or implemented. The first Agreement was made between GHR Consolidated Pty Ltd (GHRC) and Prime Services (Queensland) Pty Ltd (Prime) (Ex GA-14). The second was made between Civil Personnel Consolidated Pty Ltd (CPC) and Prime (Ex GA-13). It was not in contest that both Agreements were made on 16 August 2018. The passage in respect of which redirection was sought appears at pp 110-111 of the transcript of Day 3 of the summing up.

Ms Dorling, an accountant who throughout the charge period worked on contract to GHRC/CPC in their office, gave evidence that in June 2019 she prepared the invoices in question at the direction of Mr Kirschberg. He was at that time a director of both GHRC and CPC. Ms Dorling duly prepared the invoices and distributed them to Mr Kirschberg and Mr McAndrew, amongst others, under cover of an email dated 24 June 2019 (Ex 5, Tab 11, p 38, row 1146). Each invoice was in the name of Prime, addressed to GHRC or CPC, containing a one line claim for “Labour Hire Charges & Management Fee” in a global sum. The documents in Ex 1/TB-295 and TB-302 included schedules that Mr Kirschberg had provided to Ms Dorling in which he set out the amounts to be shown on the invoices together with the calculations by which he had derived the amounts. Although prepared in June 2019 the invoices specified that the “Labour Hire Charges & Management Fee” were due for services provided between 27 January 2019 and 28 April 2019. Each invoice specified a “Due Date” for payment that fell within that range.

In support of the application for re-direction it was submitted that at T 110-111 of the summing up my reference to the content of the invoices and to Mr Kirschberg’s calculation sheets amounted to an argument in support of the Crown’s contention that the Agreements were shams and that it went beyond the arguments in support of that contention that the Crown itself had articulated in final address. I reject that characterisation. This was a reference to evidence, not an argument, and it was necessary for the purpose of correcting erroneous assertions of fact made in closing address by counsel for Mr McAndrew concerning invoicing and payment under the Agreements.

Mr McAndrew’s counsel submitted the following to the jury (Day 87):

There were two distinct misrepresentations in those passages, one as to invoicing in accordance with the Agreements and one concerning payment in accordance with the invoices (and, hence, in accordance with the Agreements). The first misrepresentation was that Prime rendered invoices “according to the rates that were listed at the back of the payroll services agreements”. There was not tendered a single Prime invoice in which payment for Prime’s purported supply of workers to GHRC/CPC was claimed at the rates set out in either of the Agreements. Nor did any witness give secondary evidence that any invoices were prepared or rendered on that basis.

To the contrary, the only relevant invoices tendered in evidence were those in Ex 1/TB-295 and TB-302, which were not drawn up “according to the rates that were listed at the back of the payroll services agreements” but were in each case one line claims for a single global figure. The schedules by which Mr Kirschberg derived the global figures that he instructed Ms Dorling to put on the invoices did not, on the face of them, apply the rates specified in the Agreements distributively according to the number of hours worked by personnel in each of the various categories. The schedules uniformly applied the hourly rates for the lowest skilled and lowest paid category of worker specified in the table at the back of each Agreement. In the first of Mr Kirschberg’s schedules, relating to GHRC for 27 January 2019, he set out in numbers the rates that that his calculations utilised, being those for the lowest category. Consistent use of the lowest rates throughout the schedules could be confirmed by simple arithmetic.

Counsel’s second evidentiary misrepresentation was that GHRC “paid the invoices that they received”. Undisputed bank records showed that GHRC and CPC made weekly transfers to Prime’s bank account. Ms Dorling testified, without challenge, that those payments preceded the preparation of invoices. To the extent that there were any invoices they were self generated by Ms Dorling on behalf of GHRC/CPC long after weekly and other periodic bank transfers had been made, in amounts and on dates that did not correspond with any of the subsequent invoices. Further, the transfers into Prime’s bank account were not of amounts calculated “according to the rates that were listed at the back of the payroll services agreements”. They were weekly transfers of amounts representing the total of net pay due to the workers for the relevant week. GHRC/CPC also made monthly or other periodic transfers representing the total superannuation and other entitlements due to the workers. Payslips and other documents tendered by the Crown and by Mr George Alex showed that the payments from GHRC/CPC to Prime’s bank account of workers’ net wages and superannuation and other entitlements were, in total combination, very much less than the amounts that would be payable from GHRC/CPC to Prime if the hourly rates specified in the schedules to the Agreements were applied.

Prior to completion of the closing address on behalf of Mr McAndrew, in the absence of the jury, I pointed out to counsel that his submission as quoted above misrepresented unchallenged evidence and was insupportable (commencing at T 4400.49). I made the following observations (Day 88):

Counsel said he would take the above observations on notice. He concluded his address the next day without having withdrawn the misstatements. They required explicit correction in summing up, with reference to the evidence that unequivocally contradicted what counsel had told the jury. In the context of his address, counsel’s assertions would have been understood by the jury as supporting the affirmative case advanced on behalf of Mr McAndrew and also, particularly, Mr Kirschberg, that the Agreements were observed and performed on the part of GHRC/CPC and that the accused expected that Prime would perform its side of the contracts by remitting PAYG.

The closing address on behalf of Mr Kirschberg followed that of counsel for Mr McAndrew (Days 89-91), in circumstances where it was clear that the misstatements referred to above had not been withdrawn or qualified and that it could be expected that they would be corrected by the trial judge in summing up. Mr Kirschberg’s counsel was on notice to anticipate that the jury would be reminded of the actual evidence concerning Ex 1 TB-295 and TB-302 – evidence that those invoices did not reflect the rates in the schedules to the Agreements, that the transfers from GHRC/CPC to Prime long predated the self-generated invoices and that the transfers of funds were not in amounts that reflected the scheduled rates but were much smaller sums comprised of net pay, superannuation and other entitlements.

On Day 3 of the summing up at T 86-87 I quoted to the jury the above extract from the address of Mr McAndrew’s counsel, taken from T 4369. I directed the jury that counsel’s submission was not in accordance with the evidence. I identified some of the undisputed evidence to the contrary, including that the weekly payments from GHRC/CPC to Prime were not enough to cover tax and statutory obligations and that the transfers were not made in accordance with invoices, which on Ms Dorling’s evidence were prepared later. At T 110-111, in the passage with respect to which redirection was sought, I reminded the jury of the content of the only invoices in evidence, in Ex 1 TB-295 and TB-302, and I pointed out the rates used by Mr Kirschberg in the schedules by which he had instructed amounts for which the invoices were to be made out, in all cases the lowest rates in the schedules. I directed the jury as follows at T 111:

The Crown had referred to only one aspect of non-observance of the Payroll Services Agreements in support of its submission that they were shams. In closing address senior counsel for the Crown submitted the following (at T 3919-3921, Day 78):

Those submissions were to the same effect as the Crown’s opening at T 101, where the prosecutor expressed himself in language almost identical to the first paragraph quoted above when explaining the basis upon which the Crown would contend that the Payroll Services Agreements with Prime were shams. Between the opening and the closing the Crown had adduced evidence of non-observance of the Agreements by GHRC/CPC and Prime in respects additional to the fact that GHRC/CPC had carried out payroll computation and distribution, or “payroll processing”, which Prime had contracted to perform. In closing the Crown did not refer to those further aspects of non-observance as a basis for concluding that the accused intended the Agreements should not have their apparent, or any, legal consequences and that none of the individuals who executed the agreements as directors of the respective companies intended them to be binding or to be observed or performed.

Part of the further proof of departure from the Agreements, to which the Crown has not referred in support of its sham argument, was the very body of unchallenged evidence that contradicted the erroneous submission of Mr McAndrew’s counsel. That was the evidence that GHRC/CPC had never paid Prime for the provision of workers at the all-inclusive rates per hour prescribed in the fee schedules and instead had made weekly and other periodic transfers to Prime of significantly lower amounts, comprising workers’ net pay, superannuation and other entitlements only, with no component from which PAYG remittances by Prime could have been funded.

Mr McAndrew’s counsel advanced a submission about mutual performance of the Agreements that constituted an egregious misstatement of unchallenged evidence. It was inherent in the correction of his submission that the jury would be reminded of evidence tending to prove precisely the opposite, namely, that the Agreements were mutually disregarded. The circumstance that the reference of the jury to this evidence came in summing up, whereas the Crown had not relied upon it in support of its contention about the Agreements being shams, did not involve any unfairness. It was a product of Mr McAndrew’s counsel having run an affirmative argument without foundation.

When counsel for Mr Kirschberg sought a redirection concerning my reminder to the jury of the evidence about the invoices in Ex 1 TB-295 and T-302, he submitted the following (in writing, 23 July 2024, MFI 106 – marked on Day 7 of the summing up at T 394.3):

The written submissions on behalf of Mr Kirschberg sought that the proposed redirection should include a statement that the material features and circumstances of the invoices in Ex 1 TB-295 and T-302 “were not issues raised by the Crown in either their opening or closing arguments”. Counsel further stated:

Because I had warned Mr McAndrew’s counsel that he had misstated the evidence, Mr Kirschberg’s counsel was well aware when he subsequently delivered his final address that the misstatement was amenable to correction in summing up. He elected not to address the jury on the correct, undisputed facts concerning invoicing by Prime and payments by GHRC/CPC. If there were “a number of explanations for the matters raised” concerning the invoices in Ex 1 TB-295 and T-302, it was open to counsel to have submitted those explanations to the jury. He chose not to do so. There would have been no justification for me telling the jury that Mr Kirschberg had been left at a “significant disadvantage” with respect to addressing the jury on “a number” of unspecified “explanations for the matters raised”.

Notwithstanding the lack of merit in the broad, non-specific redirection formulated in the application, if there had been identified to the Court an arguable explanation for Mr Kirschberg’s instruction to Ms Dorling in June 2019 to prepare retrospective Prime invoices in the form and in the amounts that can be seen in Ex 1 TB-295 and TB-302, then I would have considered redirecting the jury that they should give consideration to that possible explanation. It might also have been appropriate to inform the jury that the possible explanation was available to Mr Kirschberg’s counsel and that he had omitted to articulate it in his address because the invoices had not been a focus of the Crown’s arguments.

With that in mind I invited counsel on two separate occasions to inform me what arguments he would have made with respect to the invoices, that he had not anticipated he would need to make by reason of the sequence in which matters were raised in other addresses and in the summing up. On Day 7 of the summing up, in the absence of jury, I recapitulated at T 394-395 the respects in which the submission of Mr McAndrew’s counsel had misrepresented the evidence. The following discussion then took place, from T 395.13:

There followed at T 396 an exchange in which Mr Kirschberg’s counsel submitted that the jury should be told the rates per worker per hour specified in the schedules to the Agreements “were the rates that GHRC/CPC could charge out, and were not necessarily the rates [at] which the workers were to be paid”. It would have been incorrect to tell the jury that the rates specified in the schedules to the Agreements were “the rates that GHRC/CPC could charge out”; that is, charge to its construction company clients. After some discussion counsel acknowledged that the scheduled rates were those to be paid by GHRC/CPC to Prime, not “rates that GHRC/CPC could charge out”: T 397.3. Counsel provided no further response to my question, “What do you want me to put to them as the explanations that you say would have been made in your address?”

On Day 8 of the summing up at T 423.48, at the conclusion of further argument regarding the proposed redirection, the following took place:

That was the end of counsel’s submissions. The redirection as outlined to the Court in writing was not justified by anything counsel had put. No further or different redirection was propounded. In all the circumstances outlined in these reasons, there was no occasion to redirect the jury and Mr Kirschberg’s application in that behalf was dismissed.

Counsel for Mr George Alex made written submissions (dated 24 July 2024, also part of MFI 106), seeking a redirection to the following effect:

The written submissions and further oral argument in support of this proposed withdrawal were to the effect that the summing up had “raised an argument which the Crown has not relied upon as a basis for a finding that the [Payroll Services Agreements] were a sham” and that the accused had been denied procedural fairness by the trial judge having identified a “disconnect” between the fee schedules to the Agreements and the rates on which Mr Kirschberg had calculated the amounts to be inserted in the retrospective, self generated invoices. It was submitted that the summing up had led to procedural unfairness “by offering the conclusion that the PSAs were sham”. I reject the submissions made on behalf of Mr George Alex for the reasons given above in relation to Mr Kirschberg’s application. The closing address for George Alex was delivered after the addresses on behalf of both Mr McAndrew and Mr Kirschberg.