Scahill v Director of Public Prosecutions (Cth)

1. [1]

   BASTEN JA: On 23 July 2018 the Commonwealth Director of Public Prosecutions presented an indictment against the appellant, Phillip John Scahill, alleging four offences involving dealing with money that he believed to be the proceeds of crime between 1 May and 25 July 2014. Counts 1 and 2 involved amounts in excess of $100,000, contrary to s 400.4(1) of the Criminal Code (Cth). Count 3 involved an amount in excess of $50,000, contrary to s 400.5(1) of the Criminal Code, and count 4 an amount in excess of $10,000, contrary to s 400.6(1) of the Criminal Code.

2. [2]

   On 23 July 2018 the appellant entered pleas of not guilty to each count; on 15 August 2018 a jury returned verdicts of guilty on all counts.

3. [3]

   The appellant appeals against his convictions and seeks leave to appeal with respect to his sentence. If he requires leave to appeal against his convictions under s 5(1)(b) of the Criminal Appeal Act 1912 (NSW), he should have leave. For the reasons set out below, the appeal should be upheld and the convictions quashed. It will not be necessary to address the sentence appeal.

Grounds of appeal

1. [4]

   Omitting reference to authorities, which were otiose in such a context, the grounds relied upon in a notice of appeal filed on 20 March 2019 were as follows:

Prosecution case

1. [5]

   The appellant was the principal of an accounting firm Scahill & Co with offices in Parramatta. The money the subject of the counts was said to have been proceeds of crime, being payments made to one Anthony Parker who, as a bag handler at Sydney International Airport, had been involved in the importation of commercial quantities of cocaine. He was alleged to have been paid amounts totalling several times the amounts paid to the appellant. The prosecutor did not allege that the appellant was involved in Mr Parker’s activities; rather the case was that the appellant believed that the moneys that he was dealing with were the proceeds of crime.

2. [6]

   Mr Parker was in a de facto relationship with Siobhan Oliver who worked for Rush Recruitment, a labour hire company operating from the same premises as the appellant’s accounting firm. The appellant met Mr Parker at a party at Rush Recruitment at the end of 2012. The appellant prepared the personal tax returns of Mr Parker and Ms Oliver for the 2012/2013 financial year. Mr Parker’s return showed an income of some $113,000 from his employment, with no income from shares or other investments.

3. [7]

   In early 2013, Mr Parker and Ms Oliver took steps to buy a block of land at Wedderburn in south-western Sydney, on which to build a house. They approached the appellant for a loan of $200,000 to purchase the land. On about 31 January 2013 that amount was transferred from the appellant’s trust account to a bank account in the name of Ms Oliver. It was recorded by the appellant as a “loan” to Ms Oliver. In March 2013 the amount was repaid by Mr Parker in cash. The cash was placed by the appellant in a safety deposit box at his bank in the first half of 2013. It was removed on 25 July 2014, shortly after the execution of search warrants at his business and home addresses.

4. [8]

   The provenance of the $200,000 loan to Ms Oliver was confused. The appellant’s records showed an amount of $200,000 being transferred from a company known as Prime Appointments Pty Ltd to another company, IRB Consulting Pty Ltd. It was IRB Consulting that provided the loan to Ms Oliver. The principals of those companies had no knowledge of the transactions.

5. [9]

   The appellant obtained a new mobile phone on the morning of 25 July 2014 in the name “Steven Abbott”. On that afternoon, the appellant’s motor vehicle was stopped and searched near the firm’s premises in Parramatta. The mobile phone was located in a backpack containing some $225,000 in cash. The amount of $200,000 became the subject of count 2.

6. [10]

   From September 2013 the appellant had been involved in the planning and management of the Parker/Oliver residential development on the land purchased by Mr Parker at Wedderburn. The appellant had requested money at various times from Mr Parker and Ms Oliver in relation to the development. A search of the appellant’s business premises on 25 July 2014 uncovered a sum of $49,932 in a drawer of the appellant’s desk. The money was contained in a number of envelopes and wrappings. Ms Oliver’s fingerprints were identified on paper wrapped around $10,000 in cash. This amount became the subject of count 4.

7. [11]

   The sum of $53,850 in cash (count 3) was given to the appellant on 17 June 2014 by Mr Parker in a small blue bag following a request from the appellant. The cash was located in a blue bag during the search of the appellant’s home on 24 July 2014, together with a receipt with Mr Parker’s fingerprint on it.

8. [12]

   In approximately five weeks in May and early June 2014 the sum of $476,359.30 (the subject of count 1) was deposited in a trust account operated by the appellant in the name of “Jeremy Smith”. There were 60 individual deposits, each under $10,000. Mr Parker made 13 cash deposits and six other people made further deposits on his behalf, including Ms Oliver.

9. [13]

   The prosecution relied on a number of telephone intercepts, including conversations on or shortly after the day of Mr Parker’s arrest on 23 July 2014. On one occasion on 28 July, the appellant said, “Yeah and he’s been paying me in drug money”. Although the search warrants had been executed on 24 July 2014, they did not refer to drug offences.

Defence case at trial

1. [14]

   The thrust of the defence case was to rely upon absence of proof of knowledge or belief in the appellant as to the source of the amounts identified in the four counts. The appellant operated a firm providing accountancy services, but also assisting with development projects and investments for a range of clients. A number of people gave him large sums of money in cash, including Gregory Ian Mitchell (a sum in the order of $38,000), and Philip James Milne (about $40,000), each of whom gave evidence. Others who worked on the building at Wedderburn were paid in cash by Mr Parker.

2. [15]

   With respect to the money the subject of count 1, the evidence did not demonstrate the appellant was directly involved in depositing the moneys in the trust account, nor that Jeremy Smith was not a client of the firm, nor that the money was not deposited for the benefit of Mr Parker, as the repayment of a debt.

3. [16]

   The defence asserted that the intercepted telephone conversations were capable of conveying an innocent explanation, not consistent with the requisite knowledge or belief, and that the use of the safety deposit box for cash (count 2) was itself innocuous, undertaken on the advice of Mr Mitchell, and that there were reasons for closing the facility when the appellant became aware that investigations had commenced.

4. [17]

   To the extent that the appellant relied upon a positive case, beyond the evidence of Mr Mitchell and Mr Milne, who were called by the prosecution, and evidence of good character, that evidence was found in a recorded police interview. The interview covered some four hours and was undertaken on the evening on 8 September 2014, after his arrest.

The judge’s summing up to the jury

1. [18]

   The grounds of appeal identified above focused upon a supposed lack of balance in the manner in which the trial judge summed up to the jury. Ground 3 specifically alleged that the judge relied upon matters which tended to undermine the case for the accused, but which formed no part of the prosecution address. In submissions, the appellant asserted “advocacy” on the part of the trial judge in the manner in which he summed up the prosecution case, on the one hand, and a failure accurately to present the defence case, together with passages which undermined aspects of the defence case, when purporting to summarise it. In addition, it was contended that the judge fell into error by asserting a right to express views about the evidence, expressing such views and then directing the jury to ignore his views. It is convenient to deal with the last point first.

2. [19]

   The trial judge made the following statement early on in the summing up, after reminding the jury that the addresses by counsel which had just been completed were not evidence, but argument. He continued: [1]

3. [20]

   This passage contained a general statement of principle, together with an indication as to a possible application. There is no difficulty with the particular application: one legitimate task of a summing up is to identify what issues must necessarily be determined and which, in the particular circumstances of the case, appear not to be in dispute.

4. [21]

   The statement of the more general principle may be open to criticism. As the joint reasons explained in McKell v The Queen, [2] “there is no little tension between suggesting to the jury what they ‘might think’ about an aspect of the facts of the case and then directing them that they should feel free to ignore the suggestion if they think differently.” Indeed, “the jury are likely to be bemused by the tension between the suggestion and the direction.”

5. [22]

   That is not to say that expression of opinion by a trial judge will not, in some circumstances, be an appropriate part of the judicial function. The statement of principle in McKell commenced with the acknowledgment that comment on factual issues may be appropriate, as explained in RPS v The Queen. [3]

6. [23]

   While there may be risks in addressing the jury in the terms adopted by the trial judge in this case, such a direction will not of itself amount to a miscarriage. It will be relevant, however, to take it into account in considering specific expressions of opinion and whether the result may have been an unfair trial. This language was in fact repeated at the end of the summing up, in redirecting the jury as to certain aspects already addressed; if the initial statement was innocuous, the latter statement was not.

7. [24]

   Having outlined the elements of the charges, and given conventional directions as to the standard of proof, the burden on the prosecutor and such matters as circumstantial evidence, the judge turned to deal with the case for the prosecution. [4] The appellant submitted that the judge commenced with summary and description, but slid into advocacy. Central to this submission was the following passage concerning the loan to Ms Oliver: [5]

8. [25]

   This passage provided a faithful summary of the prosecution case. By way of illustration, the prosecutor took the jury to a page in the Scahill & Co accounting documents for Ms Oliver and explained: [6]

9. [26]

   The substance of the objection was not that the passage in the summing up inaccurately summarised the prosecution case, but rather that the language implied that the judge had formed a view favourable to the prosecution case, namely that the submission was well founded.

10. [27]

    Such a submission should be viewed with caution. It would have been obvious to the jury that the judge was in fact summing up the prosecution case, because he said so at the outset; they had the documentary evidence before them, but were being addressed orally. How a careful jury would have received the oral explanation given by the trial judge is difficult to discern from the printed transcript. A transcript of either an address or a summing up should not be examined, long after the event, with an eye attuned to possible misinterpretation. [7] That is particularly so where the choice is between characterisation as a fair summary of one party’s address, and advocacy in favour of or against that party.

11. [28]

    In my view the challenges of lack of balance and advocacy in relation to the summary of the prosecution case do not, in isolation, demonstrate a miscarriage of justice.

12. [29]

    The trial judge dealt with the defence case at somewhat greater length. He had with him a document entitled “short summary of defence case” provided by counsel for the accused, covering some 2.5 pages and dealing in order with each count. The first two pages of the summing up followed the format of that document with respect to count 1 and, in part, count 2. The judge then diverted to deal with what he described as “a slightly inadvertent error” in the closing address of senior counsel for the accused.

13. [30]

    The judge noted that the loan had been advanced to Ms Oliver at the end of January 2013, but had been repaid by Mr Parker in March of the same year. At an unspecified date, Mr Scahill had sought to lodge a caveat over the title of the Wedderburn property to secure a loan to purchase the land. Land and Property Information NSW (LPI) had queried the basis of the caveat given that the loan was to Ms Oliver, but the land was registered in the name of Mr Parker. The query was raised by a letter of 28 August 2013: the judge noted that, the loan having been repaid in March 2013, “Mr Scahill did not need to have a caveat against the property, because in the record of interview, he said the loan had been repaid by Mr Parker.”

14. [31]

    It is not entirely clear from the summing up what was the error to which the judge was referring. Reference was made to the query raised by LPI when the caveat was lodged. However the judge concluded that aspect of his evidence by saying: [8]

15. [32]

    The remark in question appears to have been made by Mr Bellanto QC in taking the jury through Mr Scahill’s record of interview, noting that he had said “that he loaned them the money but he had a caveat.” [9] (That answer in fact appeared in the record of interview in these terms.)

16. [33]

    In principle, there can be no objection to the trial judge correcting a misstatement by counsel. Indeed, apart from stating that the judge approached his summary of the defence case in a “prosecutorial manner”, little was made of this aspect of the summing up in submissions.

17. [34]

    Rather, the focus of the submissions was on the manner in which the judge dealt with the evidence of two defence witnesses, Mr Mitchell and Mr Milne. Reference has been made to Mr Mitchell in dealing with the prosecution case, in a passage extracted above.

18. [35]

    The first reference to Mr Mitchell in the course of the summary of the defence case was in the following terms: [10]

19. [36]

    The reference to Mr Mitchell being “expert” in giving advice as to how to hold cash was, it may be accepted, expressed critically, perhaps sardonically. Such a view reflected the prosecution case rather than that presented for the accused; it cast the relationship between the accused and Mr Mitchell in an unfavourable light. The judge later, after objection had been taken to the unbalanced nature of his summing up, gave a further direction to the jury in relation to Mr Mitchell in neutral terms. [11]

20. [37]

    The appellant relied upon the statement by the judge that the evidence of a loan to Mr Mitchell came from Ms Landicho and not from Mr Mitchell himself as highlighting an inconsistency in the defence case. That was no doubt so; nevertheless, there was nothing unfair in recounting the evidence in that form. The statement was entirely accurate. The judge is not to be restricted to a verbatim repetition of counsel’s address.

21. [38]

    In my view, none of the matters noted above, either individually or cumulatively, demonstrated such unfairness in the summing up as to amount to a miscarriage. However, I take a different view with respect to the manner in which the judge dealt with the evidence of Mr Milne. As with Mr Mitchell, Mr Milne was called by the prosecutor. His evidence was that he gave sums in cash to Mr Scahill from time to time for Mr Scahill to hold for payment for future taxes. [12] The significance of his evidence to the defence case was to establish that Mr Scahill had clients, other than Mr Parker and Ms Oliver, who provided him with cash for investment and other purposes. It followed, so the contention ran, that he had no reason to believe that the cash provided by Mr Parker involved proceeds of crime.

22. [39]

    Two pages of the transcript of the summing up were devoted to Mr Milne. The key passages were as follows, commencing with a statement from the summary of the defence case: [13]

23. [40]

    Although parts of this passage correctly summarised Mr Milne’s evidence, other parts could only have been understood as an attack on his credibility. The passage italicised above was challenged as having the flavour of advocacy on behalf of the prosecution, although in circumstances where the prosecution called Mr Milne and made no challenge to his credibility. Mr Milne gave evidence that he made payments to Mr Scahill in cash; the prosecution accepted that evidence.

24. [41]

    It was also no part of the prosecution case to invite the jury to “wonder why” Mr Milne made these payments to Mr Scahill. The invitation in the summing up to take that course was a distraction.

25. [42]

    Following his account of Mr Milne’s evidence, the judge returned to the defence case summary to deal with count 4, which he set out in unchallenged terms. The judge then concluded this part of his summing up with the following statement: [14]

26. [43]

    Although the last passage was preceded, and indeed succeeded, by reference to the need for the prosecutor to prove each element of the charges beyond reasonable doubt, the passage in question came perilously close to reformulating the issues in a way which ignored the burden and standard of proof.

27. [44]

    Shortly before completing the summing up, the judge adjourned the court for lunch. After the jury had left the court room, the judge noted that he had still to refer to “consciousness of guilt” and to “character.” [15] He invited counsel to raise any other matters. Senior counsel for the accused immediately made a complaint that the judge had adopted a “somewhat selective approach” in summarising the defence case, had “embarked upon a criticism of Mr Mitchell, Mr Milne and Ms Landicho”, had thereby failed to summarise the respective cases as he had told the jury he would do, and thus “became, in a sense, an advocate for the Crown” so that the result was “an unfair summing up.”

28. [45]

    He sought an opportunity to consider what step he was seeking over the luncheon adjournment.

29. [46]

    After the break, senior counsel requested the judge to discharge the jury on the basis that it was no longer possible to remedy or correct the problem that had arisen. In the course of discussion counsel noted:

30. [47]

    The application to discharge the jury was rejected, but the trial judge agreed to give a number of further directions and then to deal with the defence case again by reference to the written summary of defence case.

31. [48]

    Having given further directions, the judge repeated what he had said early in the summing up, distinguishing evidence from submissions and continued: [16]

32. [49]

    Having taken that course, the judge returned to the evidence of Messrs Mitchell and Milne, stating: [17]

33. [50]

    The judge then summarised the evidence of Mr Mitchell in neutral terms and completed the summing up with a direction with respect to Mr Scahill’s good character.

34. [51]

    The prosecutor indicated at trial, after the discharge application was made, that the steps ultimately taken were appropriate and would overcome any unfairness resulting from the conduct complained of by counsel for the accused. He maintained that position on appeal. Counsel for the appellant also maintained his submissions in support of a discharge of the jury, namely that the harm had been done and the jury would have been left with an impression which could not be dispelled by further directions.

35. [52]

    In my view, the appellant’s submissions should be accepted. Making allowance for a degree of hyperbole in the submissions made at trial, they constituted an immediate expression of concern which, for the most part, is borne out by reading the transcript of the summing up prior to the luncheon adjournment, and have been maintained in submissions in this Court. To put the matter negatively, this is not a case in which the Court could be satisfied from the silence of counsel at trial that any criticism, element of advocacy or lack of balance, apparent from the transcript of the summing up was not so understood by counsel at the time as requiring complaint. Rather, there was clearly substance to the challenges immediately made.

36. [53]

    The fatal flaw in the present case was the lengthy digression in relation to Mr Milne. Although there were suggestions in the summing up that the trial judge had taken rather longer than he expected, the time taken was by no means excessive, nor were the directions prolix; rather the contrary. However, the overall brevity tended to give greater weight to those passages relied upon as unbalanced.

37. [54]

    Further, although the other criticisms referred to above would not, either on their own or taken together, have warranted the conclusion that a fair trial had not been had, they nevertheless indicated elements of advocacy and lack of balance which gave additional colour to the criticisms of Mr Milne. If the criticisms had formed part of the prosecution case, and had not been made in the course of expressly summarising the defence case, a different conclusion may have been open.

38. [55]

    While it is possible that the subsequent neutral directions went some way to overcoming the unfairness caused by the earlier directions, the earlier directions were immediately followed by an adjournment, which would have allowed the jury some time for reflection before the counterbalancing directions were provided.

39. [56]

    Finally, the repetition by the trial judge, after the luncheon adjournment, of his entitlement to express an opinion about the facts of the case, may have appeared defensive to the jury and would certainly not have diminished the effect likely to have been conceded to the opinions which had been earlier expressed and were not retracted. If, as the High Court has recently stated, “judicial circumspection is required in the exercise of the discretion to comment”, [18] it is even more important to avoid, in most cases, explaining to the jury that, as the trial judge, one has an entitlement to comment.

Conclusions

1. [57]

   The trial of the appellant miscarried as a result of criticisms made of the witnesses supportive of the defence case and, in particular, one witness with respect to whom the criticisms formed no part of the prosecution case. These were not passing remarks, but formed a significant aspect of the summing up, read as a whole. Furthermore, there were other passages in the summing up which, even if not inappropriate in their own terms, tended to indicate a judicial view favouring the prosecution. These indications were not merely a reflection of the strength of the prosecution case: they contained at least hints of advocacy in favour of the prosecution. They tended to exacerbate, and certainly did not ameliorate, the effects of the attack on Mr Milne.

2. [58]

   It follows that the appeal from the four convictions must be upheld and the convictions set aside. The charges laid in the indictment being unresolved, there will need to be a further trial. It is not necessary or appropriate in these circumstances to address the appeal against sentence.

3. [59]

   I propose the following orders:

   1. (1)

      To the extent necessary, grant the applicant leave to appeal against his convictions.

   2. (2)

      Allow the appeal and set aside the convictions of the appellant with respect to the four charges contained in an indictment preferred by the Commonwealth Director of Public Prosecutions on 23 July 2018.

4. [60]

   WRIGHT J: I agree with the orders proposed by Basten JA for the reasons that his Honour has given.

5. [61]

   WILSON J: I agree with Basten JA’s reasons and with his Honour’s proposed orders.