R v Alex, George (Trial Ruling No 1)

1. [1]

   The trial of George Alex and five others commenced before me on Monday 12 February 2024, with a jury originally of 15 and now of 14. The principal charge is that between 1 July 2018 and 21 July 2020 the accused conspired with each other and with other persons to cause loss to the Commonwealth, contrary to s 135.4(3) of the Criminal Code (Cth). The second charge is that during the same period the accused conspired to deal with proceeds of crime in excess of $1 million, contrary to s 400.3(1) of the Criminal Code.

2. [2]

   The underlying facts of the conspiracy to cause loss alleged in count 1 relate to a labour hire business carried on in Queensland by GHR Consolidated Pty Ltd (GHRC) and Civil Personnel Consolidated Pty Ltd (CPC). It is alleged that five of the accused (not Arthur Alex) caused Pay As You Go (PAYG) amounts that were withheld from wages, of labour hire workers and administrative staff engaged in the GHRC/CPC business, not to be remitted to the Australian Taxation Office (“ATO”), contrary to ss 16-70 to 16-85 of Sched 1 to the Taxation Administration Act 1953 (Cth). The Crown also alleges that from 6 March 2020 to 20 July 2020 Arthur Alex joined the conspiracy to cause loss to the Commonwealth and that in that period its object embraced the non-remittance to the ATO of PAYG that was deducted from wages of employees of Superform (Queensland) Pty Ltd (Superform).

3. [3]

   The facts alleged in support of count 2 are that the accused dealt with the PAYG withholding amounts that had not been remitted, pursuant to the conspiracy in count 1. On the basis of the allegations in support of count 1, the funds so dealt with are said to have been proceeds of crime.

4. [4]

   These reasons explain a ruling that I made during the course of the trial concerning a Crown proposal to reduce the number of audio recordings of intercepted conversations that it would tender and play back to the jury.

Crown’s pre-trial estimate of the volume of its case

1. [5]

   At the commencement of the trial the Crown’s estimate of its likely duration was six months. The Crown indicated that it would tender several thousand pages of banking records, commercial documents and emails and that it would call approximately 20 witnesses. In those respects, the Crown case, which closed on 23 May 2024 (Day 63), has substantially conformed to estimates. The number of witnesses was reduced to 17. The Crown notified the accused and the Court prior to trial that it would tender 140 hours of conversations that had been recorded through telephone intercepts and surveillance devices during the charge period. That body of evidence comprised approximately 960 recordings, accompanied by 7,800 pages of transcript as an aid to listening. The playback of the 140 hours of conversations would occupy about 6-7 full weeks of court hearing time.

The investigation

1. [6]

   During the investigation, by 4 January 2019 the Australian Federal Police (“AFP”) had obtained telephone intercept and surveillance device warrants with respect to phone services and premises used by some of the accused and their associates. Over the next 18½ months, up to 21 July 2020, more than 100,000 phone calls and person-to-person conversations were intercepted and recorded. That figure was provided by the officer in charge of the investigation, Inspector Bell (T 3137). Early in this period of electronic surveillance, on 25 January 2019, Prime Services (Queensland) Pty Ltd (Prime Services), lodged Business Activity Statements with the ATO. Those BASs disclosed that during the first two quarters of the 2019 financial year, ending 30 September 2018 and 31 December 2018, Prime Services had withheld $3.63 million from wages, none of which had been remitted. The net wages from which that large amount of PAYG had been deducted had been paid to construction workers and administrative staff who were engaged in the labour hire business of GHRC/CPC.

2. [7]

   For reasons that have not emerged from the evidence the ATO did not, in response to Prime Services’ disclosure, exercise its statutory powers to obtain information and evidence pursuant to s 353-10 of Sched 1 to the Taxation Administration Act, nor did it enforce its right to examine business records pursuant to s 353-15. The ATO does not appear to have made any enquiry of the sole director of Prime Services, Kevin McHugh, or anyone else to ascertain whether the wage earners from whose pay the large amounts had been withheld were still employed, or what if any provision was being made for compliant remittance of withheld amounts in the future.

3. [8]

   So far as the evidence shows, the ATO’s first response to the revelation of Prime Services’ very considerable default came two months later, on 29 March 2019, when a garnishee notice was issued against the company’s bank account – in which there was a credit balance of less than $1000. During the 18 months following Prime Services’ lodgement of its BASs up until arrests were made and the present charges were laid on 21 July 2020, the AFP continued to record the accused’s conversations. Over that period of electronic surveillance Prime Services and a further nine successive entities associated with the accused paid net wages to construction workers and administration staff of the GHRC/CPC business. The wage paying companies withheld PAYG at the rate of $100,000 to $160,000 per week. A total of a further $8.9 million was withheld during those 18 months and none of it was remitted to the ATO. Also during the period in which the AFP monitored the accused’s communications, PAYG of $3.048 million was withheld from the wages of Superform’s employees and was also not remitted. The total loss to the revenue over the period of the investigation was thus approximately $12 million. It has not been contested in the trial that the quantum of PAYG not remitted was of that order.

Pre-trial consideration of the volume of the Crown’s audio evidence

1. [9]

   The case has been in this Court’s list since 11 February 2022. During 2022 and early 2023 several directions hearings took place before me as the allocated trial judge. In those hearings the Crown quantified the audio content of its case, variously from time to time, in a range between 126 hours and 156 hours. I repeatedly and emphatically urged the Crown to review this material and to endeavour to reduce it, pointing out the enormous burden that would be placed upon the jury of listening to recordings of intercepted conversations over 30-35 sitting days, at between four and five hours per day. More than once I questioned whether such an extent of intercepted conversations could really be necessary to support the Crown’s allegations and whether it could be absorbed by the jury.

2. [10]

   The proceedings were listed before me on 16-20 July 2023 for a pre-trial hearing to resolve disputes about admissibility of evidence. The Crown maintained its intention to tender 140 hours of recordings. Some portions of the more than 7,800 pages of transcript were marked up in red to indicate proposed redactions. The Crown signalled its intention to delete the corresponding parts of the audio files. Its proposed edits would reduce the playing time to about 130 hours.

3. [11]

   The accused, in particular George Alex and Lindsay Kirschberg, opposed many of the Crown’s edits on the ground that retention was necessary to give context to the passages that the Crown would contend were incriminating. The intercepted conversations include social interactions and discussion of legitimate business dealings. The Crown’s position with respect to differences about editing were stated in a letter to the accused’s legal representatives dated 30 June 2023, as follows:

4. [12]

   That position was reiterated consistently when oral submissions were made concerning the audio evidence during the pre-trial hearing, on 19 and 20 July 2023 (T 181-210). The same approach was taken to entire conversations that one or more of the accused wanted to have played back to the jury but that the Crown had not proposed to tender at all. Those extra conversations have ceased to be significant because the accused who wished to have them included did not press that request during the course of the trial. Senior counsel for the prosecution said this on 19 July 2023 (at T 182):

5. [13]

   At the pre-trial hearing the accused sought exclusion of only a very few passages of the Crown’s audio material. All of the exclusion issues bar one were resolved by agreement. The residual disputed matter was ruled upon in a judgment published on 28 July 2023. In that judgment I recorded the following with respect to the proposed edits that the accused sought to retain:

6. [14]

   By the conclusion of the pre-trial hearing more than 90% of the Crown’s proposed 140 hours were attributable to its own selection. At most about 10 of those hours were attributable to passages that the Crown would have been willing to take out but that the accused wanted retained. In the interval of six months between the directions hearing and the commencement of the trial, the Crown informed the accused that it would tender and play the recordings, numbering approximately 960, in groups or “tranches” according to subject matter.

Crown’s proposal to reduce its audio evidence early in the trial

1. [15]

   The prosecutor’s opening address occupied the first five days of the trial. The next week was lost due to illness of two jurors. On the morning of Day 7, when the prosecutor’s opening was in its final stage, the Crown notified the defence that it proposed to delete more than 100 entire recordings, which would reduce the total replay time by 27 hours (approximately six full hearing days). The conversations to be deleted were within several of the tranches.

2. [16]

   The accused sought time to consider the proposed deletions but immediately protested at being put in the position of having to assess such a significant change after the trial had commenced. It is not reasonably practicable to replay and review any more than about five hours per day of this material. It is not much quicker to work off the accompanying transcripts, alone. The accused submitted that the proposed significant reduction of the tender material would require careful and time-consuming evaluation of the effect from the defence point of view.

3. [17]

   I accepted the accused’s submissions that they have an interest in the jury receiving recordings and parts of recordings that might be regarded as exculpatory, or that at least might provide relevant context and raise a reasonable doubt about whether the alleged criminal conspiracies were entered into. The accused proceeded to trial on the basis that, having considered so much of this material as the Crown had identified in July 2023, they were satisfied that it included sufficient conversations and parts of conversations from which to argue their respective defences.

4. [18]

   The volume is so enormous that it would have been very time-consuming and laborious for defence counsel to assess the effect of the selective deletions proposed on Day 7 of the trial. If only minor changes had been put forward by the Crown, such as deletion of 20 or so conversations totalling four or five hours’ play-back time, the task would have been manageable during out-of-court hours. However, a reduction of that scope would have achieved very little. The greater the scope of any proposed reduction, the greater the task of listening to the material that might be removed, assessing its impact and, if necessary, mounting an argument for retention. Defence counsel justifiably submitted that they were not able to divert their focus from the ongoing conduct of the trial to undertake that task.

5. [19]

   After the accused had stated their initial opposition and sought time to respond, the trial continued with oral evidence and playback of some of the Crown’s audio evidence. By the time the issue had to be decided, on Day 25 of the trial, I had listened to 25 hours of the recorded conversations as they were played to the jury. From that experience I was well able to appreciate the difficulty that counsel would face if they were obliged to review any significant number of conversations for the purpose of reconsidering their inclusion. The fact that the nominated deletions were spread across a number of the Crown’s tranches and concerned a number of subjects meant that the effect of removing each conversation would have to be considered in the context of others, both in the same tranche and generally.

6. [20]

   I have no doubt that a very considerable number of conversations could have been omitted from the Crown’s tender and that large parts of the remaining conversations could have been edited out, with no loss to the Crown’s proof and no disadvantage to the accused. That has become evident from having now listened to the whole of the audio material that was played back to the jury in the Crown case. If the Crown had taken a rigorous approach to culling its audio evidence at the pre-trial hearing of 16-20 July 2023, its tender would have been reduced by at least half or, more likely, by three quarters.

7. [21]

   Some of the conversations are unnecessary because they merely replicate the proof of transactions that are otherwise established by uncontested documents. Exhibit 6 is an example, comprising nearly three hours of conversations concerning acquisition of a residential unit at Surfers Paradise. That exhibit includes discussions with the representatives of a finance institution that, in the event, did not lend against the property. It includes several conversations with a real estate agent concerning extension of time to complete. On any view those peripheral aspects of the transaction have no bearing upon any issue in the case. Exhibit 26 includes phone calls between Mr Kirschberg and Ms Rostron in which they jointly attempted to conduct online transactions on an account maintained at a Singapore bank. Some of the calls did not result in the execution of a transaction. The calls include protracted silences during which the participants waited for online responses from the bank. Examples of this kind of irrelevant or peripheral material could be multiplied.

8. [22]

   Several conversations were recorded by a listening device installed in a residential unit at Surfers Paradise. Those recordings are up to an hour long. They are mostly unintelligible due to sound interference and distortion. The independent passages that can be heard are in some cases insufficiently connected to enable the listener to discern the sense of what is being said. I interrupted the playing of some of those surveillance device conversations, early in the replay, to indicate that if the content was of such poor quality throughout I would direct the jury to disregard the evidence because they would only be able to speculate as to what was said. Upon my intervention some of those recordings were then withdrawn from tender, either in whole or as to the greater part, without objection from any of the accused.

9. [23]

   The content of many of the calls is internally highly repetitive. That applies particularly to calls in which Mr McAndrew and Mr Kirschberg agonised over the availability of funds to meet both the needs of the GHRC/CPC business and the demands of Mr Loccisano and Mr George Alex. Numerous of the intercepted conversations wander into extensive exchanges concerning matters entirely unrelated to the subject matter of the case. In some cases I interrupted the replay to question the utility of the jury hearing the balance of a recording, after having read forward in the transcript and found nothing relevant. The Crown desisted from playing some of those calls, again without objection from the accused.

10. [24]

    The enormous quantity of audio evidence that the Crown has tendered and the inclusion within it of irrelevant or inconsequential content, indecipherable passages and extensive repetition are features that raise questions about the way in which the Crown undertook pre-trial selection and about the adequacy of pre-trial review by the accused’s representatives.

Limitations of the pre-trial hearing with respect audio evidence

1. [25]

   If the Crown had adopted a focussed and economic approach to the selection of conversations and parts of conversations for tender and if, at the pre-trial hearing, the accused had sought to include more of this material for context, I would certainly have ruled that much of what I have now heard during the trial could fairly and properly be left out of the Crown case. Without any such joinder of issue at the interlocutory stage it was not open to the Court to act on its own initiative to review the audio material for the purpose of finding and excluding the many hours of recordings that that have now been revealed as a waste of court time. If issue had been joined in the pre-trial hearing and if I had ruled that the Crown should not call substantial parts of this material, for example on the basis of s 135(b) and (c) of the Evidence Act 1995 (NSW), it would still have been open to the accused to tender in their own cases any extra material for which they could show relevance in light of the whole of the Crown’s evidence.

Inability to cure the Crown’s excessive tender during the trial

1. [26]

   The essential difficulty with the Crown’s notification on day 7 that it would refrain from playing 27 hours of conversations was one of timing. From the point of view of the other parties and from the perspective of the presiding judge who might have to rule upon contested deletions, it was not practical for the Crown to try to rationalise its audio evidence when the trial was underway. The accused’s legal representatives could not be expected to turn their attention to such a large issue while the oral evidence, the tender of documents and the playing of some of the conversations ran on. The trial would have to have been adjourned for at least a week to give a fair opportunity for the accused to adopt their respective positions. If they were not to acquiesce after due consideration, that time would have been wasted. It would likely have required several more days in the absence of the jury to argue out the position with respect to contested deletions.

2. [27]

   The chronology of interlocutory events shows that the Crown’s adherence to the tender of the whole 140 hours of conversations, right up until the seventh day of the trial, created a situation where all participants in the trial were for practical purposes committed to the whole lot being played to the jury. Evidence so unwieldy and difficult to review has a long lead time for consideration of tender or objection.

3. [28]

   As an alternative to eliminating from the Crown case a significant number of conversations in their entirety, on 21 March 2024 (Day 24) I asked all counsel to consider whether at least the playing of some of the conversations in court might be curtailed. That was to address the phenomenon, which by that stage had become apparent, of considerable repetition and patently irrelevant chatter in many of the recordings. The Crown had informed the Court that significant time would be required for editing the sound recordings to eliminate material of that kind, so that it would not be possible for the sound files to be adjusted while the trial continued. My suggestion of abridged playback, as a compromise, was opposed by defence counsel on the basis that that, also, would require diversion of their time to assess the impact of not bringing parts of the conversations to the jury’s attention.

4. [29]

   On 22 March 2024 (Day 25) the position was summed up in the following exchange between the bench and Crown counsel (at T 1536):

5. [30]

   For the above reasons, on 22 March 2024 (Day 25) I directed that by 27 March 2024 the accused respond to the Crown’s notification of intent to make deletions from Ex 10. That exhibit comprised 175 phone calls concerning distribution of funds. Some of the calls had been played to the jury. The Crown had proposed not to press 11 conversations in Exhibit 10, as part of its 27 hours. I required the accused to review that small number of calls and to adopt a position, so that the presentation of the exhibit to the jury could be completed.

6. [31]

   Otherwise, I indicated that the Court would not require the accused to respond to the balance of the Crown’s proposal, or any further proposal, for reduction of its tender of audio evidence. I encouraged all counsel to consider, to the extent that time would permit, deletions of whole conversations and/or abridged replaying of conversations. In the absence of any such consensual arrangement the Crown was required to tender in its case all the audio material of which it gave notice prior to the commencement of the trial.

7. [32]

   As the trial progressed counsel found time for review of audio exhibits that the Crown had intended to play towards the end of its case. At the parties’ request I stood the jury down for Monday 6 May, upon the counsel’s indication that with a day out of court they could likely reach agreement about the non-tender of at least several hours of the remaining conversations. It appears that in light of the 90 hours of this material that had been played up to that point, all counsel were able to conclude that a significant proportion of the remainder could be abandoned. In the result, by the close of the Crown case on 23 May 2024 (Day 63) 111 hours of hearing time had been occupied with the playback of audio evidence.