Taylor v R

1. [1]

   BASTEN JA: Between September 2009 and February 2012 the applicant, Adam John Taylor, was employed as the manager and licensee of the Hurlstone Park Hotel, also known as “Grumpy’s Hotel”. On 4 November 2015 the applicant was convicted of two charges of stealing money from the owner of the hotel, in his capacity as an employee, being offences under s 156 of the Crimes Act 1900 (NSW). The amount involved exceeded $500,000, although it was broken down into two separate counts, to reflect two different ways in which the money was taken. These will be explained below.

2. [2]

   The applicant was sentenced on 29 February 2016 to imprisonment for four years, with a non-parole period of 2 years and 8 months. By notice of appeal filed on 17 August 2016 he sought leave to appeal against his convictions. The applicant required leave because the grounds of appeal included factual issues and were not limited to a question of law alone. [1] There should be a grant of leave to appeal, but the appeal must be dismissed.

Factual background

1. [3]

   The two elements of the system by which the applicant extracted money from the hotel may be briefly stated, because the takings were largely undisputed and the trial turned on whether the applicant had authority to do what he did. In brief, the defence case was that he was entitled to the cash pursuant to a bonus scheme which was a term of his employment.

2. [4]

   The hotel was owned by a company, Ash-Stan Wright Consultants Pty Ltd, the directors of which were Rosalind Ashton, Graham Standen and Carole Wright. Each of them, described as “Director/Co-Owner”, was a signatory to a letter dated 21 August 2009 to the applicant, containing an offer of employment. That letter specified a commencement salary of $80,000, to increase, following the completion of a three month trial period, to $85,000. There were other entitlements within the package. The letter continued:

3. [5]

   The September letter commenced:

4. [6]

   Several elements of this document were unclear and were the subject of oral testimony. It may be noted that, assuming a weekly turnover of $700,000, the bonus payable would have been $260,000 per annum.

5. [7]

   The money was taken by the applicant from two sources. The first source involved the supply of cash to an ATM in the hotel. As the manager of the hotel, one of the applicant’s functions was to restock the cash in the ATM. As the ATM maintained its own record of payments to customers, it was possible to compare amounts contained in the daily trading sheets (prepared by the applicant for the hotel) with the bank records showing the amounts which were ultimately reimbursed by the operator of the ATM, a company known as Banktech Group Pty Ltd. The amount recorded on the daily trading sheets exceeded the amount reimbursed by Banktech. It was the prosecution case that the applicant took the difference. Thus, for example, the daily trading sheet for 10 September 2010 showed total takings of some $19,000 of which $14,760 were shown as having been used to restock the ATM. The Banktech record for 11 September 2010 showed an amount of $13,760 as the relevant credit to the hotel. That amount was credited to the hotel bank account with NAB. The difference, being $1,000, was the amount which the applicant was said to have stolen.

6. [8]

   The second technique also relied upon false entries on the daily trading sheet. The sheet contained details of the takings from the poker machines. There was a line on the printed sheet which allowed an entry for “less jackpot payout”. It was common ground at the trial that this line was redundant because the poker machines themselves had, since August 2006, contained an electronic system which automatically deducted the jackpot payouts from the printout produced by each machine. It was the prosecution case that where the daily trading sheet recorded an amount for the jackpot payout it represented cash taken by the applicant.

7. [9]

   Count 1 on the indictment, alleging a theft of $254,580, related to entries in the daily trading sheets of the inflated amount of cash to restock the ATM. Count 2, alleging the theft of $277,702.85, related to amounts recorded by way of jackpot payouts on the daily trading sheets. Although the documentation, which covered some 30 months of the operation of the hotel, was voluminous, the two techniques to falsify the records were readily capable of mechanical checking and reporting. On the prosecution case, the discrepancies in the records were discovered by an accountant, Bryan Johnson, who was engaged by a prospective purchaser of the hotel and who concluded that the accounts were inaccurate. When he reported his findings to the owners in late 2011, he was employed by them to undertake a thorough audit of the discrepancies in the poker machine takings. He also audited the ATM accounts for a one month period. Following that, Carole Wright made a more complete audit of the ATM settlements and, having identified regular discrepancies, employed Mr Richard Hayes to undertake a more complete audit. These results led to suspicion first attaching to the applicant in November 2011. In January 2012 a private investigator, Michael Gerondis, undertook a detailed inquiry and gave advice to the owners as to how to deal with the applicant.

8. [10]

   On 13 February 2012 there was a meeting at the hotel attended by Mr Gerondis, Mr Johnson and the applicant. In the course of conversations on that day the applicant was said to have made a number of admissions. The admissibility of those admissions was the subject of a ground of appeal. The outcome of the meetings on that day was an offer by the applicant to repay some of the money which had been taken and, on 29 February 2012, having obtained legal advice, the applicant entered into a deed, agreeing to repay an identified amount.

9. [11]

   The applicant did not meet his obligations under the deed and the owners referred the matter to the police. A police forensic accountant, Scott Wallace, then undertook a further audit of the hotel accounts and also prepared a table of “unexplained wealth” as a result of his investigation of the applicant’s bank accounts for the period 1 September 2009 to 14 February 2012. The analysis of accounts in the names of the applicant and his partner resulted in a total value of unexplained funds in an amount a little short of $1 million.

10. [12]

    The defence case did not challenge the discrepancies identified in the daily trading sheets for the hotel; rather, it focused on the crudeness of the variations to the records as a basis for submitting that all of the amounts taken were taken with the knowledge of Carole Wright, who was not only a director of the owner of the hotel, but also the hotel’s bookkeeper. She was cross-examined at some length in an attempt to demonstrate that, as a responsible, knowledgeable and diligent bookkeeper, she could not but have identified the discrepancies. It was submitted that her denials were simply implausible and, accordingly, the money taken by the applicant was taken with the knowledge and approval of a director of the owner.

11. [13]

    There was no doubt that the hotel was not a financial success at the time the applicant was employed; the financial viability of the business remained tenuous throughout his employment and the owners continued to seek prospective purchasers, through an agent, John Musca. The defence called two partners, Marcus Levy and Michael Sanchez, who were introduced by Mr Musca as potential purchasers. They made an offer of $10.5 million for the hotel, which was said to be some three times the value of the hotel, calculated on the trading profit revealed in its accounts. It was the defence case that Carole Wright had told the prospective purchasers that the takings from the hotel were significantly higher, when account was taken of “black money” not revealed in the accounts. This evidence was said to display knowledge on Mrs Wright’s part of the arrangements by which the applicant was receiving additional moneys, far beyond his salary.

The trial and grounds of appeal

1. [14]

   The trial took place in the District Court before Acting Judge Garling, sitting without a jury. The trial ran for some 18 days, from 5 November until 2 December 2015. On 4 December 2015, the trial judge delivered judgment, finding the applicant guilty of each charge.

2. [15]

   The grounds of appeal filed by the applicant were discursive and read as follows:

3. [16]

   Although ground 1 (unreasonable verdicts) was addressed first in the course of submissions, it is logical to deal first with the challenge to the admissibility of certain evidence (ground 2). Having identified the proper evidential basis for the judgment, it is then appropriate to deal with the challenge to particular matters, as set out in grounds 3 and 4, and to address the unreasonable verdict ground in that context.

(a) admissions – 13 February 2013

1. [17]

   The first set of admissions took place at the meeting between the applicant and Messrs Gerondis and Johnson on 13 February 2012. Mr Gerondis gave evidence that he took handwritten notes during the meeting, which were typed up shortly thereafter; the original notes are no longer available. The typed document became Ex A3 at the trial.

2. [18]

   The typed version recorded Mr Johnson explaining to the applicant that the purpose of the meeting was to reconcile the banking and the ATM records. The discrepancies which had been identified were explained. The following conversation then took place: [2]

3. [19]

   Mr Johnson also gave an account of that conversation in his oral evidence, in the following terms: [3]

4. [20]

   There was no further conversation elicited from Mr Johnson before Graham Standen entered the room. However, Mr Gerondis had said that the conversation continued, with several questions and answers about where the money had gone, with the applicant indicating that it had been spent on bills and living expenses.

5. [21]

   Mr Johnson also gave evidence of a part of the conversation after Mr Gerondis had left the room, in the following terms: [4]

6. [22]

   In the course of cross-examination of Mr Johnson, the basic admission was confirmed: [5]

7. [23]

   In cross-examination, the following exchange took place in relation to the discussion after Mr Gerondis had left the room: [6]

8. [24]

   It is clear on the transcript that Mr Johnson was not effectively challenged in respect of this conversation. He had given evidence in an earlier hearing (on 20 April 2015) but it is far from clear from the exchange set out above that the challenge to his evidence at trial went to the same point; Mr Johnson clearly thought that it did not.

9. [25]

   The second admission, namely that he had continued the exercise of false book entries in the daily trading sheets over a long period because nobody had questioned the transaction, was entirely consistent as an explanation of his conduct, and inconsistent with the defence that Carole Wright had known about the transactions and approved them.

10. [26]

    The third admission was made after Graham Standen came into the room with Mr Gerondis. Mr Gerondis recorded the applicant stating: [7]

11. [27]

    Mr Standen had a somewhat different recollection. He said that after Mr Johnson and Mr Gerondis and the applicant had been in the office for “probably 40 minutes”, [8] Mr Gerondis came out and took him into the office and the following conversation took place:

12. [28]

    Although he gave no evidence of receiving an apology, he did state that it was the applicant who had asked him to come in and who wanted to talk to him, “because I treated him like a son and that was too much for me to have to go in there and face him, but anyway, I did for a very short time.” [9] Whether or not there was an apology, there was an admission and Mr Standen agreed that the applicant had offered to pay it back and provide his flat as collateral.

13. [29]

    The fourth admission was in more general terms. Carole Wright’s son, Mark Wright, was a senior fire fighter with the New South Wales Fire Brigade and had been in that position for in excess of 30 years, [10] but had also assisted with wages at the hotel.

14. [30]

    A conversation was elicited from Mr Wright in relation to the day of the applicant’s dismissal when he said he saw him at the hotel. [11]

15. [31]

    This admission was also at a level of generality; there was no indication as to precisely what conduct had been the subject of the agreement. In contrast, the apology to Mr Standen, as recorded by Mr Gerondis, appeared to constitute an admission to count 1, but with a suggestion that there may have been prior knowledge of at least one director in relation to the takings which became the subject of count 2 (“Carole knows about the pokie money”).

(b) admissibility of admissions

1. [32]

   By the time of the trial, the significance of the admissions lay not in the fact that the applicant admitted that he had taken money, but in his acceptance that he was not entitled to do so. The importance of that proposition in the prosecution case was that, subject to the equivocal suggestion as to what Carole Wright knew, as recorded by Mr Gerondis, he did not proffer the explanation upon which he relied at trial, nor did he indicate that there was an agreed basis for the calculation of the bonus to which he was entitled.

2. [33]

   The first basis of challenge to the oral admissions appears to have been that there was a degree of inconsistency in the evidence of the three principal witnesses and it was therefore not possible to identify an actual “admission”. The evidence was clearly capable of constituting an admission (and indeed a repeated admission) that he had taken money to which he was not entitled. The judge rejected the objection taken on this basis and was correct to do so. Within the terms of s 88 of the Evidence Act 1995 (NSW), it was “reasonably open” to find that the applicant had made the admissions. Ground 2(a) must be rejected.

3. [34]

   The second limb of the objection alleged that the applicant was questioned by, or in the presence of, “an investigating official” who was at the time performing functions in connection with the investigation of the commission or possible commission of an offence, within the terms of s 85(1) of the Evidence Act and under s 281 of the Criminal Procedure Act 1986 (NSW) imposing, as a condition of admissibility, electronic recording of the questioning.

4. [35]

   The definition of “investigating official” in the Dictionary to the Evidence Act (and in s 281(4) of the Criminal Procedure Act) is, in effect, a police officer or another person appointed under an Australian law whose functions include the prevention or investigation of offences. Mr Gerondis was a licensed private investigator: he was not a police officer. The judge correctly rejected the submission that he was an “investigating official”. No plausible argument has been presented to demonstrate error in that regard.

5. [36]

   Thirdly, it was submitted that the conduct was influenced by “violent, oppressive, inhumane or degrading conduct” on the part of Mr Gerondis, or a threat of such conduct. Section 84 of the Evidence Act requires that the Court be satisfied that the admission was not so influenced, otherwise it will be inadmissible.

6. [37]

   The judge did not accept that any “substantial threat” had been made to the applicant. [12] In particular, he rejected the proposition that the applicant had not been given a chance to get legal advice; rather, he accepted that the admissions had been made whilst the agents of the owners were still seeking to resolve what had happened to the money.

7. [38]

   In the circumstances set out above, there was no basis, on any view of the conversation, for the suggestion that Mr Gerondis had been threatening violence or inhumane or degrading conduct. Accordingly, the admissions could not have been influenced by such conduct. If the term “oppressive” could be satisfied by some lesser conduct or threatened conduct, its precise nature was not explored.

8. [39]

   The judge accepted the evidence given by Messrs Johnson and Gerondis as to what happened in the course of the interview, preferring Mr Johnson where they differed. The applicant did not give evidence on the voir dire. The submissions on the appeal did not suggest that the objections to admissibility had been reopened after the applicant gave evidence as part of the defence case. Indeed, the final submissions with respect to the admissions were limited to some general statements in relation to the unreliability of the various accounts. [13] It will be necessary to return to these submissions in respect of the challenge to the reasonableness of the verdict; at present it is sufficient to say that no argument was presented at that stage supporting inadmissibility.

9. [40]

   Finally, the applicant contended that evidence of the admissions should have been rejected by the Court in the exercise of its discretion to reject admissions where it would be “unfair” to the accused to use the evidence. [14] The alleged unfairness relied upon the same material as that cited above, the applicant submitting that, if it did not satisfy the higher hurdle of inadmissibility, it nevertheless warranted discretionary exclusion.

10. [41]

    In substance the argument rested on the proposition that the applicant had been told that if he did not accept responsibility for the losses, the information obtained by the investigators would be put in the hands of the police. The applicant then said that he had taken the money. The cross-examination of Mr Johnson confirmed this account. [15] It was not suggested to Mr Johnson that fairness required any other course to be taken.

11. [42]

    Mr Gerondis had a somewhat different recall of the conversation to that accepted by Mr Johnson. Mr Gerondis was cross-examined to suggest that Mr Johnson’s recounting of the conversation was correct. It was not suggested to Mr Gerondis that the investigators should have taken other steps in fairness to the applicant. [16]

12. [43]

    The trial judge, in his final judgment, said that there had been “no evidence of unfair handling of the interview or discussions”. He noted that Mr Gerondis had previously been a senior police officer, but said that the admissions seemed to be spontaneous. [17] It was not demonstrated on the appeal that that conclusion was wrong.

13. [44]

    It follows that, the various bases for challenging the evidence of the admissions having been rejected, ground 2(a) must be rejected.

(c) admissibility of deed

1. [45]

   In the course of the meeting on 13 February 2012, the applicant offered to repay the money he had taken and to provide security in the form of his equity in a flat in Darlinghurst, on condition that the owners would not report the discrepancies to the police. Following that meeting, he spoke to a solicitor and a deed was prepared between him and his partner on the one hand and the owner of the hotel on the other. The recitals recorded his admission to removing money from the hotel and his willingness to repay to the owner an amount of $275,000. The deed, which was dated 29 February 2012, contained a confidentiality clause by which each of the parties agreed not to disclose the terms of the deed or any matter relating to the claim to any person other than their own legal advisors, accountant or auditor, “except as may be required by law.” [18] There was a specific obligation on the owner not to disclose such matters to its insurer, [19] and further an undertaking by the owner “that it will not make any complaint or lodge any report in respect of any matters, facts, alleged facts or circumstances relating in any way to the claim or the terms and conditions of this Deed to any police or similar authority.” [20]

2. [46]

   The issue as to the admissibility of the deed was raised in the prosecution case at the stage when the oral admissions were sought to be tendered. The deed was tendered as evidence that, having obtained legal advice, the applicant maintained his acceptance that he was not entitled to the moneys taken. (He agreed that the amount of $275,000 which he had promised to repay was not the full amount of the money taken but an amount that he had agreed upon because he thought he could pay it.) [21]

3. [47]

   In somewhat generic terms, the same provisions of the Evidence Act were relied upon as a basis for rejecting the admissibility of the deed. The trial judge noted the submission that the deed had been executed as “a result of pressure.” [22] However, the judge was satisfied that “it was the accused who was attempting to head off any police action by offering to pay a least part of the money back and he quite voluntarily entered the deed.” [23] The objective circumstances supported that conclusion. The deed was executed some two weeks after the applicant resigned from his position at the conclusion of the meeting on 13 February. In the meantime, he had had ample opportunity to obtain legal advice and had done so.

4. [48]

   In the course of oral argument, the challenge focused on what was described as a principle articulated by Ryan J in Australian Competition and Consumer Commission v Pratt (No 3). [24] That case related to an investigation between representatives of the ACCC and the Visy Group of companies, which resulted in a set of consent orders. The document noted an agreement that the ACCC would not seek a separate pecuniary penalty against Mr Pratt on three grounds, one of which accepted that there had been a contravention of s 155 of the Trade Practices Act 1974 (Cth). The question was whether that document could be tendered as an admission in later proceedings. The applicant relied upon the following statement by Ryan J: [25]

5. [49]

   Those propositions may be accepted and may apply, as the judge also noted, to pleadings. However, the case does not assist the applicant. Ryan J stated, before considering the particular documents before him, “it is a question of fact whether a pleading or analogous statement in previous proceedings constitutes an admission available to be adduced in later civil or criminal proceedings against the party on whose behalf the pleading was filed or the statement was made.” [26] Further, following the passage relied on by the applicant, the judge immediately acknowledged: [27]

6. [50]

   There was no reason to suppose that the statements relied on in the deed did not constitute representations of the actual facts, as understood by the applicant. They were consistent with the oral admissions. Their significance in the prosecution case was that they were made after the applicant had obtained legal advice.

7. [51]

   In the course of the hearing in this Court, the applicant also submitted that the deed should have been excluded pursuant to the discretion in s 138 of the Evidence Act, on the ground that it was “obtained … improperly or in contravention of an Australian law”. The impropriety relied upon was said to be a breach of the confidentiality provision in cl 5 of the deed. If the impropriety arose from the disclosure of the deed, then the applicant needed to establish that the prosecution had obtained the deed by improper or illegal means. There was an exception to the non-disclosure requirements, to permit such disclosure “as may be required by law.” There was no evidence to support the conclusion that the deed had been improperly obtained.

8. [52]

   There was a second aspect of cl 5, to which the applicant made reference, which purported to preclude the owner of the hotel reporting the conduct to the police. The basis for reliance on that provision was somewhat vague. Whether the provision was effective and enforceable was not in issue in the criminal proceedings. Even assuming that there was a breach of contract on the part of the owners in reporting the applicant’s conduct to police, that fact provided no proper basis for rejecting the deed as improperly obtained.

9. [53]

   It follows that ground 2(b), challenging the admissibility of the deed, must be rejected.

(d) letter of 16 April 2012

1. [54]

   On 16 April 2012, the applicant’s solicitors wrote to the solicitors for the hotel owner advising that the applicant would be unable to comply with his promise to repay the moneys under the deed because he had not been able to secure finance. The inference to be drawn from the letter was contrary to evidence which the applicant gave at trial under cross-examination that he did not complete his obligation under the deed because he had discovered he had a defence to the claims against him. The letter of 16 April was tendered to demonstrate that he did not proceed because he could not raise the money.

2. [55]

   The applicant objected that the letter was inadmissible because it was subject to immunity from disclosure as a without prejudice communication in the course of settling a dispute, for the purposes of s 119 of the Evidence Act. In circumstances where the applicant was unable to fulfil his obligations under the deed, the protection given by s 119 may well be engaged. However, that in turn would raise a question as to whether the use of the document, to cast doubt on evidence given by the applicant in the witness box, would fall within an exception.

3. [56]

   None of these issues was properly addressed in the course of the appeal. Nor do they need to be resolved. The relevance of the letter was limited and there is no basis for thinking that it played any part in the reasoning of the trial judge. It tended to contradict the applicant’s testimony that he believed he had a defence to the charges that he had misappropriated the money. His own belief in that regard and the time at which it arose depended squarely upon such considerations as whether the letter setting out the bonus scheme was a fabrication or not. His reason for not honouring the deed was insignificant in this context.

4. [57]

   The letter may also have had some possible relevance had it been necessary to determine whether his obligations under the deed had been fulfilled or not and, if not, why not. This too was an entirely tangential issue of no material significance.

5. [58]

   In these circumstances, it is not necessary to determine whether the letter should not have been admitted on the basis that it constituted a without prejudice communication in the course of a civil dispute. Admission of that evidence could not possibly constitute a miscarriage of justice. Ground 2(c) must be rejected.

Remaining grounds 1,3 and 4

1. [59]

   It is convenient to deal with the remaining grounds together, being the course adopted by the parties to the appeal. The specific challenges mounted in grounds 3 and 4 will be addressed in the course of considering whether the verdicts were unsupportable on the evidence.

2. [60]

   As has been explained, the applicant’s case at trial was not that he did not take the money as alleged, but that he had authority to do so. That authority was said to derive from the letter of 28 September 2009, purportedly signed by Carole Wright, and setting out a basis for calculation of bonus payments, in addition to his salary. He sought to demonstrate that the alleged arrangement was plausible on two bases. The first was that the recording of deductions on the daily trading sheets was so patently a device that Carole Wright, as a competent bookkeeper with experience of the business, could not have failed to identify the fraud, had it been such. Secondly, he relied on evidence of an offer of $10.5 million for purchase of the hotel, which must have reflected knowledge of the deductions from the reported turnover and thus a level of profitability well in excess of that declared by the hotel in its records.

3. [61]

   It is convenient to start by stating the principles to be applied in assessing the grounds which all concern the judge’s assessment of the evidence.

(a) relevant legal principles

1. [62]

   The ultimate finding of a judge sitting without a jury as to the guilt of an accused person has the same effect “for all purposes” as a verdict of a jury. [28] As explained in Filippou v The Queen, [29] that language engages s 6(1) of the Criminal Appeal Act, which provides that the court shall allow an appeal against conviction, relevantly for present purposes, “if it is of opinion that the verdict of the jury should be set aside on the ground that it is unreasonable, or cannot be supported, having regard to the evidence”. [30] (This is commonly identified as the first limb in s 6(1).)

2. [63]

   The third and fourth grounds of appeal [31] do not state the basis on which the alleged errors fall within the scope of s 6(1). That is not to say that they are not available, but rather emphasises the difficulties in applying the language of s 6(1), the historical background to which was considered in Fleming v The Queen, [32] in the context of a trial conducted by a judge alone, who is required to state his or her findings of fact and process of reasoning. [33]

3. [64]

   In Filippou, the joint reasons stated:

4. [65]

   Although this language picks up errors of law and thus tends to overlap with the second limb, [38] the focus of the first limb is on the verdict and the evidence available to support it. That point aside, the joint reasons appeared to accept the constrained approach identified at [10] (by use of the words “only if”) subject to the qualification that “in most cases a doubt experienced by an appellate court will be a doubt which the judge ought to have experienced”. [39] The joint reasons then said that “[t]he third limb covers cases where, by reason of irregularity or otherwise, an accused has not received a trial according to law or has not received a fair trial.” [40] The reference for the last proposition to the judgment in Weiss v The Queen [41] indicates that the Court had in mind those cases where, for example because of a denial of procedural fairness at trial, the Court should not dismiss the appeal although persuaded that the evidence proved the guilt of the accused beyond reasonable doubt.

5. [66]

   There may be cases in which it can be said, by reference to the reasoning of the trial judge, that some important element of the defence case has been overlooked and not determined. Otherwise, it would appear that complaints as to specific findings of fact and a failure to consider specific evidence should generally be addressed within the terms of the first limb.

6. [67]

   The Court in Filippou, consistently with statements in Fleming, rejected the suggestion that s 6(1) conferred an appeal “by way of rehearing”. [42] However, this language leaves open two questions, namely the scope of an appeal with respect to (a) intermediate findings of fact and (b) the reasoning process adopted by the trial judge in reaching the ultimate finding as to guilt. Clearly the approach to a judgment (which is required to include reasons and findings of intermediate fact) cannot be equated with the approach to a jury verdict (which is opaque in both respects).

7. [68]

   So far as the first limb of s 6(1) is concerned, it would be open to an appellant to establish that an intermediate finding of fact which was essential to the chain of reasoning leading to the ultimate finding of guilt, could be reviewed on the basis that it was unreasonable and not supported by the evidence. Thus, although the focus remains squarely on the verdict, the fact that the process of reasoning is revealed will allow greater opportunities for appellate challenge.

8. [69]

   A challenge to the process of reasoning may, in some cases, constitute a challenge to the adequacy of the reasons as found in the judgment, and thus a possible breach of s 133(2) of the Criminal Procedure Act. That in turn may be seen to invoke either the second or third limb of s 6(1) of the Criminal Appeal Act.

9. [70]

   Some further guidance in this regard is to be found in the separate judgment of Gageler J in Filippou. With respect to the first limb, he stated at [83]:

10. [71]

    In dealing with the third limb, Gageler J stated: [43]

11. [72]

    By reference to Simic v The Queen [44] Gageler J adopted a positive principle reflecting the last statement, namely that unless the error involved a misstatement of an important matter of fact, resulting in the accused losing a real opportunity of acquittal, thus giving rise to a substantial miscarriage of justice, the third limb would not be engaged. [45]

12. [73]

    Gageler J then addressed the manner in which the reasons for judgment might be considered: [46]

13. [74]

    The structure of the applicant’s submissions demonstrated the difficulties he faced in an appeal subject to the constraints identified above. In the trial, the defence focused on the evidence of Carole Wright and of her daughter, Donna Wright, in order to demonstrate that they, contrary to their denials, must have known at all relevant times that the applicant was taking money from the cash available in the hotel in the manner described above. Part of that case was that the money was not taken by the applicant personally, but was set aside and delivered by courier to Carole Wright each week, to be disbursed at her direction. Further, much was sought to be made of Carole Wright’s close involvement in the affairs of the hotel, in her role as bookkeeper and the unlikelihood that she failed to notice the discrepancies in the accounts. The submissions quoted extensively from the cross-examination of Carole Wright (and Donna Wright); they did not address the manner in which the trial judge had dealt with the evidence, nor the critical fact that the ultimate determination turned, in fundamental respects, on findings of credibility, primarily in respect of Carole Wright and the applicant himself. For reasons which will be explained below, the ultimate finding was undoubtedly open to the trial judge and, absent any good reason to doubt his assessment of the credibility of the witnesses, this Court should not entertain a relevant doubt as to the guilt of the applicant in respect of both counts.

(b) the bonus scheme

1. [75]

   The existence of a bonus scheme was central to the case for the applicant, as it would have provided authority for taking the money which formed the basis of the charges. It was therefore necessary for the prosecution to demonstrate beyond reasonable doubt that no such scheme existed. Thus, although, technically, it was not the ultimate finding made by the trial judge, in a practical sense, it was determinative of the ultimate finding.

2. [76]

   The ground of appeal did not complain about the reasoning of the trial judge with respect to that finding, but rather attacked the underlying finding of fact which was that the letter which purported to set out the bonus scheme was not, as the applicant put it, composed or authored by Carole Wright. That conclusion required acceptance of the evidence of Carole Wright, rejection of the evidence of the applicant, and an assessment of the inherent implausibility of the letter, judged by its content and context.

3. [77]

   In assessing the applicant’s submissions, it is necessary to bear in mind certain aspects of the course of the trial. In opening the case for the prosecution, an explanation was given as to how the takings were made. The prosecutor first called witnesses who were able to explain the examining and analysis of the daily trading sheets, bank statements and other records held by the hotel. That evidence continued throughout day 1 and for much of day 2. The prosecution then called Carole Wright who gave evidence-in-chief up to the point at which objection was taken to the admissibility of the deed and related documents. A voir dire was then held, in the course of which Ms Wright was cross-examined. Her cross-examination continued for much of day 3, although it was not completed on that day. Other witnesses, including the investigators, Gerondis and Johnson and the co-owner, Graham Standen, were called on day 4, being 10 November 2015. Their evidence, partly given on a voir dire, included the admissions made by the applicant on 13 February 2012. The other significant aspect of the course of the evidence was that, in the course of her cross-examination on day 2, Ms Wright was shown a copy of the letter dated 28 September 2009, apparently signed by her and dealing with the alleged bonus system.

4. [78]

   On 10 November 2015 the applicant made a number of admissions, pursuant to s 184 of the Evidence Act. The document included the following statements:

5. [79]

   The admissions meant that the primary issue in the case was no longer an accounting for the discrepancies in the records and the unexplained wealth of the applicant, but rather whether the moneys taken were taken with authority. (There was no issue as to the amounts which were the subject of the counts.)

6. [80]

   The source of that authority was said to be the letter of 28 September 2009 (Ex 10), together with an email purportedly from Carole Wright to the applicant dated 22 March 2010 (Ex 11) stating:

7. [81]

   Carole Wright gave evidence that she did not have a computer nor an email address before 16 June 2010. [47] There was independent corroboration of both facts, to which the defence had no specific response. The trial judge assessed the response of Carole Wright when she was shown the letter of 28 September 2009 in the following terms: [48]

8. [82]

   The judge then made a number of points about the content of the letter. In brief,

9. [83]

   On the basis of those factors, the judge stated that he had “great difficulty accepting this as a genuine letter or a genuine offer”. [57] The judge also considered the evidence given by the applicant in relation to the letter and email and revisited his “impression” as to Mrs Wright’s response when she was first shown the letter in the witness box. [58] He compared the letter with the offer of employment (Ex 9) which was signed by three of the owners. The judge stated: [59]

10. [84]

    Ground 4 alleged, amongst other things, that the judge failed to “consider” the evidence of Carole Wright in proper detail, particularly the inconsistencies and credit issues arising from her evidence. However, that was simply not so: the judge explained in more than sufficient detail the challenges taken to her evidence and her credibility by counsel for the applicant and expressly acknowledged that the case for the applicant required “a careful consideration of the evidence of [Carole] Wright and other witnesses and careful consideration of the accused and his witnesses’ evidence.” [60] That consideration was not cursory: further, no submissions were put in support of ground 4 other than those set out in consideration of the other grounds. To the extent that submissions in support of ground 3 took issue with the findings that (a) the bonus proposed in the letter was calculated on a “totally unrealistic basis”, (b) no such bonus scheme existed and (c) the appellant’s evidence could not be accepted, they did little more than quibble with aspects of the judge’s reasoning. The proposition that the findings made by the judge were not reasonably open lacked substance.

11. [85]

    On the basis that the first limb of s 6(1) requires the Court to consider the evidence upon which the findings are based, there was evidence to support each of the matters identified above, assuming that they could themselves be described as findings. Indeed, there were other aspects of the evidence, as the respondent has pointed out, which were supportive of those findings. For example:

12. [86]

    The other two matters relied upon by the applicant were (a) the blatant nature of the entries on the daily trading sheets and (b) evidence of an offer to purchase the hotel at a price which was not consistent with the profits revealed by the hotel’s accounts. Although each of these matters may be relevant to questions of credit and relevant to other matters, these elements in the defence case were not directly related to the bonus system set out in the letter of 28 September 2009. In other words, it was possible that the applicant had some kind of express or implied authority to take the moneys, even though the letter itself was an ex post facto fabrication on his part. Further, the other two matters depended less on his credibility than on an assessment of the records and the evidence of other persons, including Carole Wright.

(c) patent discrepancies

1. [87]

   Whether the discrepancies were patent or not depended on who was looking at the records and for what purposes. However, the applicant’s case went further than simply stating that the discrepancies were patent; he also claimed that the additional moneys were included with the records and sent in the “duffle bag” to Carole Wright every Monday. The trial judge stated that, on the applicant’s evidence, Mrs Wright “directed him how to record the daily takings and where the money which was left over from the poker machine jackpots and the ATM were to be put aside, the ATM money has been inflated, the additional amounts taken out in cash and that the accused acting on her instructions did that each Monday and sent the cash money to [Carole].” [67] In short, Mrs Wright was not merely complicit in the scheme by which large sums of cash were removed from the takings and not accounted for, but was the instigator and administrator of the scheme. Of course, the trial judge did not need to be affirmatively satisfied as to the correctness of each element of the applicant’s claims, but rejection of significant parts of his claims would have seriously affected his credibility and the ability of his evidence to raise a reasonable doubt as to the prosecution case.

2. [88]

   The trial judge rejected the applicant’s evidence in relation to these issues. As he said, there were “many reasons” why he rejected the evidence, some of them being set out at pp 45-46. The judge had earlier summarised both the evidence and the submissions of counsel for the applicant, Mr McLachlan. [68]

3. [89]

   It was undoubtedly open to the trial judge to accept the evidence of both Carole and Donna Wright in relation to their respective activities. Donna Wright became involved in the operation of the hotel some 10 years before the applicant commenced to work there, her partner, Richard Hayes, having bought a 10% share in the hotel. Donna Wright did not visit the hotel, but received the daily trading sheets and other accounting documents from her mother, Carole Wright, and entered the relevant data onto an MYOB account on her computer. She took what she understood to be the relevant figures relating to the poker machines and the amounts used to replenish the ATM from the daily trading sheets. [69]

4. [90]

   Donna Wright was cross-examined at some length in an attempt to establish that she had access to all of the information which was necessary to determine that there were large discrepancies in the amounts recorded on the daily trading sheets. In particular, Ms Wright was taken to a daily trading sheet for 18 April 2010 which contained an item of $50 as the amount banked in respect of the ATM. (18 April was a Sunday.) The bank account for 20 April 2010 showed a credit of $4,300. Although the email was not tendered because Ms Wright was not able to be sure that it was hers, she accepted, on looking at the document, that she appeared to have raised the discrepancy with the applicant. The significance of the evidence was that rather than simply entering figures off the daily trading sheet onto her computer, she had sought to reconcile the figure with the hotel’s bank statements and had found a discrepancy. Her evidence was that she could not recall how that came about and had no recollection of raising an issue with the applicant. However, she did recall a time when the ATM was broken and speculated that the query could have arisen at that time. She did not accept that she otherwise reconciled the ATM details with the daily trading sheets, or undertook a bank statement reconciliation.

5. [91]

   Donna Wright was also cross-examined about her knowledge of “B money”, which involved cash from the bottle shop takings which was not declared. There was evidence confirming that such amounts were sent in an envelope to Carole Wright; the evidence did not support the proposition that any amounts, let alone the large sums extracted from the poker machine and ATM accounts, were included in the B money. Donna Wright denied that she saw any such amounts in the duffle bag.

6. [92]

   In his summary of the evidence, the judge referred to Donna Wright’s evidence, but without referring to the one discrepancy identified in April 2010. [70] He referred to her evidence with respect to the absence of cash in the duffle bag. [71] The submission made by the applicant was that “Donna Wright was doing more than simply entering gaming revenue figures from a DTS when she was preparing spread sheets.” [72] Much was sought to be made of the single discrepancy, five years before the trial, involving a query raised by Ms Wright indicating she had identified an understatement in the daily trading sheet. It was then submitted that, despite her express denials, she must have been aware of the 135 discrepancies, which were overstatements.

7. [93]

   The single query, together with her explanation that she had possibly noted the discrepancy because there had been an occasion when the ATM had broken down, was not a matter of obvious significance. As the prosecutor submitted, albeit in relation to the alleged knowledge of discrepancies on the part of Carole Wright, even if the judge had a reasonable doubt as to the correctness of her denials with respect to discrepancies, that did not establish that the applicant had authority to take the money. [73] Counsel for the applicant accepted that it was “as much as anything … a reasoning process.” [74] He then submitted:

8. [94]

   The judge understood that submission. In summarising the submissions of counsel for the applicant, the judge stated: [75]

9. [95]

   In the context of the trial, the evidence of Donna Wright was only indirectly relevant. To the extent that she denied seeing money in the duffle bag (other than the envelope of bottle sales cash) her evidence directly supported that of her mother and contradicted the defence case. However, her knowledge of discrepancies in the accounts, unless conveyed to Carole Wright, gave no support to the proposition that the applicant may have had authority to take the money. If the cross-examination had indeed provided a basis for a conclusion that Donna Wright was conscious of the discrepancies and understood their significance, it would have been necessary to put a further line of questions as to whether she discussed the matter with Carole Wright. That territory was not explored, possibly because counsel did not think that he had any relevant admission.

10. [96]

    Although it is correct to say that the trial judge did not expressly address the one instance in which there was evidence of Donna Wright raising an issue about a discrepancy with the applicant, the evidence had minor significance in the context of the issues exposed at the trial. There can be no criticism of the judge failing to deal with the specific attack on Donna Wright’s credit; nor did the evidence elicited in cross-examination provide a basis, either in isolation, or taken in the context of other evidence, to establish a reasonable doubt as to the guilt of the applicant.

11. [97]

    The challenge to Carole Wright’s knowledge of the discrepancies was potentially far more telling. Had she, as an owner, been aware of the removal of large sums of money from the takings at the hotel, even if the case based on express authority were not accepted, there would have been evidence capable of raising a reasonable doubt that the applicant may have been acting with implied authority.

12. [98]

    The trial judge well understood that the case presented by the applicant was that Carole Wright was not to be accepted in her denials (a) that she had instructed the applicant to remove money from the tills and put the money in the duffle bag every Monday to be couriered to her, (b) that she had instructed him as to how to fill in the daily trading sheets, (c) that she had then returned part of the money to him as a bonus, (d) that she had taken those steps without the knowledge of her co-owners (including her daughter’s partner, Richard Hayes). The trial judge accepted that, even without the defence evidence, unless he accepted Carole Wright’s evidence, the prosecution must fail. [76]

13. [99]

    If the judge had accepted evidence from the defence witnesses to the effect that large sums of money were sent to Carole Wright in the duffle bag, there would have been an independent basis for rejecting Carole Wright’s evidence, both that no money was transferred in that way and that she was not aware of the discrepancies in the daily trading sheets. However, the judge rejected the evidence of the defence witnesses (other than the accused, which he dealt with separately) for various reasons, both based on their credibility and on their limited roles in the running of the hotel. There is no challenge to the rejection of that evidence.

14. [100]

    The trial judge saw the submission that he should reject Carole Wright’s emphatic denials of the defence case with respect to the records as involving a number of inherently implausible steps. He stated: [77]

15. [101]

    There is no doubt that her evidence constituted an unequivocal rejection of the claims made against her in cross-examination. However, some of the questions were somewhat double-edged. For example, she was asked, and agreed, that as at 8 January 2010 the hotel finances were looking sick. [78] So much was expressly stated in an email from Carole Wright to her co-directors, Mr Standen and Ms Ashton. [79] She explained that the hotel was already paying off numerous bad debts by instalments. Her attention was also drawn to another statement in the letter:

16. [102]

    It was suggested to her that she had stated in evidence that the financial deterioration occurred about six months after the applicant had commenced employment; she was asked whether the two statements were not contradictory. When she was allowed to answer she said: [80]

17. [103]

    The descriptions given by Carole Wright and Donna Wright of their functions provided a reasonable basis for concluding that their denials of noticing the discrepancies in the daily trading sheets were plausible. The other steps taken by Carole Wright in the management of the hotel, including her exchanges with her co-owners about expenses and about the proposed sale of the hotel were either totally unscrupulous and disingenuous, or else provided strong support for her asserted lack of awareness of the discrepancies. Ultimately her credibility turned on an evaluative judgment. Subject to two further factors, acceptance of her evidence was not only open to the trial judge, but could not be faulted.

(d) the bottle shop cash

1. [104]

   The first of the two remaining matters concerned evidence as to cash taken from the bottle shop. With the protection of a certificate under s 128 of the Evidence Act granting immunity from prosecution, Mrs Wright gave evidence that she took $660 on a weekly basis from the bottle shop revenue; that a similar amount was taken by the other directors and principal shareholders (Ms Ashton and Mr Standen) jointly and $115 per week by the fourth shareholder, Richard Hayes. [81] Mr Standen denied knowledge of the arrangement, [82] but Ms Ashton, having been granted a s 128 certificate agreed that she took $660 on a weekly basis from the bottle shop before the applicant’s employment. Later she obtained the cash by direct transfer. She further gave evidence that her husband would take cash but would leave an IOU. She did not accept that any amount in excess of the regular $660 per week payments was collected during the applicant’s employment. [83] (That was the last evidence given in the prosecution case.)

2. [105]

   Carole Wright had given evidence that was internally inconsistent in relation to the bottle shop money and the use of cash for the payment of wages for overtime. It is not necessary to set out the inconsistencies: as the applicant conceded, the bottle shop money “was a relatively minimal amount.” [84]

3. [106]

   The judge noted an issue as to the accuracy of Carole Wright’s evidence. [85] He said that “the accused had suggested to her that they take cash money out of the bottle shop till to pay for his overtime which was to be paid in cash and to allow the owners to take cash and that was quite common in the industry.” The judge accepted that “over a period of 11 months the accused was paid overtime in cash and that other cash moneys were taken out of the hotel takings and paid to the owners.” He considered that some of the evidence was mistaken, particularly in relation to the times at which such arrangements were on foot. However, accepting that money was taken from the bottle shop till and was not declared in the accounts of the hotel or the recipients, while casting doubt on the reliability and credibility of each of the owners in different respects, that factor was discounted by the trial judge in his assessment of Carole Wright’s evidence on the key issue in the case. That was very much a matter for the trial judge in his assessment of the witness; that factor provided no basis for doubting evidence directly relevant to the authority of the applicant to take large sums of moneys as alleged in the charge.

(e) sale proposal for hotel

1. [107]

   The final basis upon which the defence sought to raise a reasonable doubt as to Carole Wright’s denials of knowledge of the takings depended upon the evidence of Messrs Levy and Sanchez who were friends of the applicant. Mr Levy gave evidence that, despite the reported profit for the 2010 financial year being around $300,000, they had been told by Carole Wright that some $600,000 was “coming out of the business in cash and alcohol.” [86] Mr Sanchez claimed he had been told that the current owners were taking “a fair bit of cash out of the business”, that an amount was mentioned “in the order of $300 or $400,000” and a fair amount of liquor stock.

2. [108]

   The significance of discussions with respect to the sale of the property were explored in some detail in the course of final submissions. The evidence was deployed in the following way. First, there was evidence to support the proposition that the value of a hotel was calculated as ten times the annual profit. Secondly, there was evidence that, on 8 July 2010, the owners had received an offer based on a gross sale price of $10.5 million. That implied annual profit of $1 million. Thirdly, it was clear that the declared annual profit was nothing like that figure, being approximately $300,000. Accordingly, it may be inferred that the offerors believed that an amount in the order of $700,000 had been taken but not accounted for. The appellant called the two principals of the offeror to give evidence that, at a meeting with the owners, Carole Wright had told them that certain amounts were disbursed and not accounted for in the hotel records.

3. [109]

   There were several problems with this evidence, so deployed. First, the contract was not a straightforward sale, but was described as a “put & call option”, with the proposed purchasers paying an option fee of $150,000 which would allow them to manage the hotel for a year before settlement. There were other conditions on the offer which rendered it unacceptable to the owners, despite evidence that they were anxious to sell.

4. [110]

   Secondly, the evidence of Messrs Levy and Sanchez, taken at face value, provided only uncertain support for the proposition that the bulk of the money not recorded in the accounts had not been taken by the owners at all, but paid to their manager as a bonus.

5. [111]

   Thirdly, the evidence was internally inconsistent. Mr Sanchez said that the disclosure by Carole Wright that the owners were taking money from the business was revealed at the first of two meetings, held in July 2010. There was evidence that no such meeting occurred and Mr Levy did not suggest that there were two meetings. There was a meeting on 2 August 2010 attended by Wright, Standen, Ashton and the hotel’s solicitor, Andrew Wennerbom. Mr Wennerbom rejected the proposition that there was any discussion of cash being taken out of the business, let alone hundreds of thousands of dollars. The critical conversation was also denied by Carole Wright and Graham Standen; no such conversation was put to Rosalind Ashton. Finally, there was evidence that the applicant was a friend of Levy and Sanchez and had been in touch with them at the time of the negotiations.

6. [112]

   The trial judge did not ignore this evidence. He expressly referred to the evidence of Mr Wennerbom, Mr Levy and Mr Sanchez. [87] Although he did not expressly make findings as to which of the three witnesses he accepted, he noted the prosecution submission that “the Court could not rely on the evidence of the other defence witnesses and particularly could not rely on the evidence of Sanchez.” [88] He also referred to the submissions for the applicant, outlining the manner in which the defence relied upon the evidence of Sanchez and Levy as support for the view that Carole Wright was “aware of the cash being taken out of the hotel’s earnings”, that the evidence was “consistent with cash being taken out of the business in order to set it aside for [Carole]’s retirement” and that there was no inconsistency in taking the money out of the business because, while that would reduce the purchase price, “they were still gaining the advantage of having the cash taken out.”

7. [113]

   So far as the defence case was concerned, the evidence regarding the sale negotiation was limited to such support as it gave for the proposition that, whatever the fate of the money, Carole Wright knew that hundreds of thousands of dollars (the figures varied between $300,000 plus alcohol and $600,000) was being taken out of the hotel earnings on an annual basis. The judge dealt with that evidence globally in a discussion as to whether it was plausible that Carole Wright would be engaged in such activity. He rejected the proposition in a lengthy passage in his reasons. [89]

8. [114]

   It follows that the proposition contained in ground 4 that the judge did not consider that evidence was simply fallacious.

Conclusions

1. [115]

   The challenge raised by the applicant in relation to the reasonableness of his convictions, the specific complaints as to the intermediate findings of fact and the alleged failure to consider specified matters are all without substance.

2. [116]

   As the trial judge noted, the case turned upon his acceptance of the evidence of Carole Wright and his rejection of the evidence of the applicant, in particular, and the other defence witnesses. The reasoning in support of his conclusions in both respects was sufficient to preclude a reasonable doubt as to the guilt of the applicant. The appeal must be dismissed.

3. [117]

   R A HULME J: I have had the considerable benefit of reading the judgments in draft of Basten JA and Schmidt J.

4. [118]

   Having considered the evidence for myself I am not persuaded that the verdicts of guilty are unreasonable or unsupported by the evidence. I am also in agreement with Basten JA that the specific grounds (2, 3 and 4) are not made out for the reasons his Honour has provided.

5. [119]

   Both of the draft judgments make it abundantly clear that this was a case in which the credibility of witnesses was crucial to determining whether the prosecution had proved its case beyond reasonable doubt. Schmidt J is especially critical of the evidence of Ms Carole Wright. It must be remembered, however, that the trial judge had the considerable advantage denied to this Court of seeing and hearing the evidence as it was given. The cross-examination of Ms Wright, in particular, was extensive. The trial judge's advantage was notably evident on the issue of the "bonus scheme" letter of 28 September 2009 (Exhibit 10) and Ms Wright's reaction when shown it during the cross-examination.

6. [120]

   I am satisfied that the trial judge sufficiently complied with the requirement of s 133 of the Criminal Procedure Act 1986 (NSW) to state applicable principles of law and findings of fact. After his Honour made findings accepting the admissions made by the applicant and concluding that his contention of a "bonus scheme" that he said was formulated by Ms Wright was false (findings that were well open to be made), the applicant's alternative case was largely in tatters. In this context, while the trial judge dealt with more than these issues, it was not required that he deal with every discrete point raised by the parties.

7. [121]

   There are some particular matters about which I wish to comment.

8. [122]

   One criticism of the prosecution case is that there was evidence of Mr Sanchez and Mr Levy of an offer of $10.5 million to buy the hotel which was said to be consistent with it having an annual profit of about $1 million. Mr Levy said that the "industry sort of bench mark" was that a hotel was valued at ten times its annual profit. With the profit on the books of this particular hotel being in the order of $300,000 pa, the value would be $3 million. However, the prospective purchasers were prepared to pay $7.5 million more, supposedly on an unsubstantiated gratuitous admission, to men who were hitherto strangers, of the commission of tax fraud involving the concealment of up to $600,000 pa of revenue (not profit). The trial judge was entitled to be unimpressed by the evidence of these men.

9. [123]

   A criticism made of Ms Wright is that she is said to be contradicted by other witnesses about cash being syphoned off from the bottle shop till. The fact is that Ms Wright was quite upfront about this issue. It was mentioned in paragraphs 20 to 22 of her police statement of 25 June 2013 (AB 1100-1). The issue was raised at the very beginning of her evidence in chief and the judge agreed to issue a certificate pursuant to s 128 of the Evidence Act 1995 (NSW).

10. [124]

    According to Mr Gerondis (Exhibit A3), but not Mr Standen who was present (T310-1), the applicant's admissions on 13 February 2012 included an assertion that Ms Wright was aware of "the pokie money". Assuming for the moment that Mr Gerondis was correct, a question remained as to whether the applicant was being truthful in saying this. His case, of course, was that Ms Wright knew about both the ATM and the poker machine money being taken. Accepting that he had confessed to the theft of the ATM money, there was no logical basis to think that she knew of the taking of money from one source but not the other.

11. [125]

    The deed involved an acceptance by the directors of a payment of $275,000; considerably less than the theft alleged in both counts of the indictment. However, this was not a concession by the directors that this was all the applicant had taken. The applicant agreed in cross-examination with a proposition that "That was an amount settled on; it was not the true amount of money that you had taken, but an amount that was settled upon that you could pay".

12. [126]

    Criticism has been made of the "tax fraud" (the bottle shop till money) engaged in by the directors which has been calculated to amount to $74,620pa. In the context of the overall money taken (by whomever), there is force in the applicant's concession in written submissions to which Basten JA has referred: "the bottle shop money was a relatively minimal amount".

13. [127]

    I agree with the orders proposed by Basten JA.

14. [128]

    SCHMIDT J: I have had the advantage of reading both Basten JA’s reasons in draft, as well as those of RA Hulme J. I agree with Basten JA that the evidence of the applicant’s admissions that he took money from the ATM; that he had continued the exercise of false book entries in daily trading sheets; and that Mrs Wright knew about the “pokie money”, were all admissible at the trial. I also agree that the deed by which the applicant agreed that he would repay $275,000, in return for which he would not be reported to police, was also admissible, as was the letter by which the applicant’s solicitors advised the company’s solicitors that he could not comply with the requirements of the deed, because he was not able to secure finance.

15. [129]

    Contrary to the conclusions which Basten JA and RA Hulme J have reached, however, I consider that relevant error on the trial judge’s part has been established, with the result that there must be a retrial.

16. [130]

    That conclusion flows from the obligations imposed by s 133(2) of the Criminal Procedure Act 1986 (NSW), which obliged his Honour to include in his judgment the principles of law which he applied, and the findings of fact on which he relied in reaching the conclusion that the prosecution had established beyond reasonable doubt, that the applicant was guilty of the two offences with which he had been charged.

17. [131]

    They were both offences under s 156 of the Crimes Act 1900 (NSW), the first explained in the Crown opening to be that over the course of his employment the applicant had stolen $254,580 by inflating figures on daily trading sheets as to the topping up of the ATM machine, and skimming off the cash. The second was that he had stolen $277,702.85, by skimming money from poker machine takings, by double counting a deduction on the trading sheets by reason of the linked jackpot amount.

18. [132]

    Ground 3 of the appeal identified specific findings of fact which the applicant contended that his Honour should have made in relation to the bonus structure. He claimed this bonus structure had been agreed in September 2009, as he had been earlier promised in the letter of employment which the three directors had signed. Ground 4 identified errors into which it was alleged his Honour fell by failing to consider evidence regarding the proposed sale of Grumpy’s Hotel for $10.5 million; evidence as to the detection of an understatement of ATM takings, rather than an overstatement; and the credit issues which arose in relation to Mrs Carol Wright’s evidence. These aspects of the evidence all went to the resolution of conflicts in the evidence as to the extent of the directors’ knowledge of the cash payments which the applicant claimed had been made to him, in accordance with the terms of his employment.

19. [133]

    I consider that ground 4 of the appeal must be upheld.

The prosecution case

1. [134]

   The applicant came to police attention when approached by Mr Standen and Ms Ashton, both directors of the company which owned and operated the Hotel, after he reneged on an agreement which he had reached with the company, after both parties had taken legal advice. The company had employed the applicant as the manager and licensee of the Hotel, together with other employees, including various members of the directors’ and the applicant’s families. The deed provided that he would repay $275,000 and the company would not go to police or other authorities. The company later brought civil proceedings against the applicant when he did not comply with the deed.

2. [135]

   At trial, the prosecution case depended on the acceptance of the evidence of the three directors; Ms Ashton, Mr Standen and Mrs Wright, particularly that of Mrs Wright. The directors and Mr Hayes - Mrs Wright’s son-in-law - were the company’s shareholders. They each gave evidence, as did various employees called in both the prosecution and defence cases and the applicant.

3. [136]

   In opening, the Crown identified the real issue in the case to be why the discrepancies occurred and at whose direction, there being no issue that the applicant had received substantial amounts of money in excess of his salary package. Whether that money had been received lawfully or unlawfully, was thus in issue.

4. [137]

   The resolution of those issues was complicated by evidence which established that not only the applicant, but the three directors were involved in considerable tax fraud.

5. [138]

   On the admission of Ms Ashton and Mr Wright and contrary to the evidence of Mrs Wright, that fraud, which involved both undeclared cash and alcohol, predated the applicant’s employment in September 2009. Both Ms Ashton and Mrs Wright received certificates under s 128 of the Evidence Act 1995 (NSW).

6. [139]

   The prosecution case at trial was, nevertheless, that the evidence of Mrs Wright would be accepted; that it was the applicant who had raised the idea of him being paid the overtime he received in cash; and that it would be concluded that the applicant had not been authorised to take any cash from the Hotel’s takings.

The defence

1. [140]

   The applicant’s defence, in short, was that the three directors had not only agreed to pay him his overtime from undeclared cash, but that each Monday he sent Mrs Wright what was commonly referred to by those working at the Hotel as “B” or “black” money, which included cash taken from bottle shop takings, as well as the ATM and poker machine cash. The cash was sent each Monday by courier to Mrs Wright’s home, together with records of daily takings which disclosed the amount of the ATM and poker machine cash, as well as bottles of wine. Mr Standen also took undisclosed alcohol out of the business.

2. [141]

   The applicant’s case was that the directors had agreed to reward him handsomely for helping them to increase the Hotel’s turnover, including by keeping the Hotel open beyond its licensed trading hours. The cash payments he received were lawful and evidenced by the bonus scheme which had been implemented, as the employment letter which the three directors had signed, had promised him.

3. [142]

   This was not an entirely implausible defence, given the evidence of other witnesses, which corroborated aspects of the applicant’s evidence, including as to cash and alcohol taken out of the business and documents such as emails sent by Mrs Wright, in which she referred to fending off Tax Office enquiries into the Hotel’s alcohol sales. That suggested that after the applicant’s employment commenced, the directors, who did not themselves work at the Hotel, depended on him to facilitate the tax fraud which they continued to perpetrate. It was he who controlled both the alcohol and the very considerable cash takings which this business generated. It was he who directed other employees as to what was to be done with the cash.

4. [143]

   On the applicant’s case, the prosecution could thus not succeed, because the trial judge would be left with a reasonable doubt as to the evidence on which its case depended, namely, that he had received the cash without authorisation.

How credit issues had to be resolved

1. [144]

   Given that the resolution of what lay in issue at trial depended in considerable part on how his Honour resolved the numerous credit issues which arose, his Honour had to consider the conflicts in the evidence, particularly those raised by the evidence given by the three directors and that given by the applicant.

2. [145]

   Those conflicts had to be considered in light of what was not in dispute on the evidence. His Honour then had to consider the extent to which the witnesses’ respective evidence was corroborated or contradicted by that given by other witnesses. Given what was in issue, in his judgment his Honour had to explain why it was that he came to conclude, on critical matters, that the evidence given by other witnesses, particularly Mrs Wright, would be preferred over that given by the applicant.

3. [146]

   That was undoubtedly a difficult task. It had to be approached in the way discussed by Meagher JA in Beale v NSW Government Insurance Office of NSW (1997) 48 NSWLR 430 at 443 when referring to "three fundamental elements of a statement of reasons":

4. [147]

   That approach accords with that discussed in Fleming v The Queen (1998) 197 CLR 250; [1998] HCA 68 at [27] - [29] as to the requirements of (the then) s 33(2) of the Criminal Procedure Act, namely that a bare statement of the principles of law that the judge has applied and the findings of fact made is not sufficient. “Rather, there must be exposed the reasoning process linking them and justifying the latter and, ultimately, the verdict that is reached” (at [28]).

His Honour’s reasons

1. [148]

   In his Honour’s judgment, he commenced by reminding himself of a number of principles of law which he had to consider in arriving at his conclusions. They included that he had to consider each count separately; and that if he found the applicant guilty on one count, particularly if that was because he had doubts about the reliability of the main witnesses, he would have to consider how that affected his consideration of the other counts and how he would assess the witnesses and their reliability, honesty and accuracy. His Honour also noted that he was entitled to accept or reject the evidence of any witness, or to accept a part and to reject other parts of the witness’ evidence.

2. [149]

   His Honour outlined the Crown case before identifying the facts not in dispute. From pages 10 to 27, his Honour outlined the evidence given by various witnesses about relevant matters, before turning to the applicant’s evidence. His Honour then turned to Mrs Wright’s evidence. After observing the significant area of dispute to be the payment of a bonus in excess of the applicant’s wages and overtime, his Honour turned to the documentary evidence, commencing with the applicant’s employment letter, which promised that a bonus system would be introduced after three months.

3. [150]

   His Honour then explained how it came to be that after initially identifying the bonus letter to be one which she had created and signed, after investigation during an adjournment, Mrs Wright’s evidence was that the letter, and an email which referred to bonus, were a fabrication. His Honour concluded, for reasons then given, that the letter was not genuine and that Mrs Wright had never agreed to pay the applicant cash out of the cash she knew was being taken out of the Hotel’s earnings.

4. [151]

   His Honour found (at p 34) that “[t]he hotel from what we know of the trading could not afford to pay the bonus”. The basis of that conclusion was not disclosed and appears to be contrary to the evidence that, even on disclosed earnings, it was trading profitably. His Honour also considered that the bonus was “calculated on an unrealistic basis”, being calculated on turnover, which had little to do with profit and that “a more realistic way would be to calculate a bonus that would be on the net profit” (at p 35). The basis of that conclusion was not explained. It is difficult to understand.

5. [152]

   His Honour then gave further reasons for concluding that the bonus letter was a fabrication, before turning to outline the Crown case and that advanced for the defence. His Honour then returned to the onus which fell on the Crown, concluding that it had been met.

6. [153]

   His Honour then said (at p 43), somewhat curiously, that “[w]ithout the evidence of the applicant and his witnesses, I would have been satisfied that the ingredients of the charges providing I accepted the evidence of Carol Wright and the other main Crown witnesses”. He also noted that Mrs Wright and several of the Crown’s witnesses’ evidence was challenged by evidence given by the applicant which, if accepted, would lead to the conclusion that he was not guilty.

7. [154]

   His Honour then noted that careful consideration thus had to be given to their evidence. He then referred to what he described to be “background evidence”, which he accepted, as to the terms of the applicant’s employment; that before he was employed the Hotel at times struggled financially, but was able to meet its commitments; that there was a problem with cash flow; that the Hotel was for sale; that Mr Johnson had identified the sums taken out of the Hotel not being recorded in its takings; and that it was Mrs Wright who did the bookkeeping, assisted by her daughter and by her son, in relation to preparation of wages.

8. [155]

   On the issue of “whether the accused took out cash from the hotel takings at the direction of Carol and/or other owners and paid it to Carol”, his Honour concluded that the applicant’s evidence could not be accepted “in relation to this issue” (at pp 44 – 45).

9. [156]

   His Honour then referred to evidence, including certain evidence which corroborated that given by the applicant and contradicted that given by Mrs Wright, in relation to the “B” cash. His Honour rejected the evidence of other employees called in the defence case, on the basis that they were not “impressive witnesses”. The basis for those conclusions was not otherwise explained as it had to be, as was also explained in Beale at 440.

10. [157]

    This was not a case like that dealt with in W v R [2014] NSWCCA 110 at [148], which could be decided by considering the evidence of Mrs Wright, the evidence of the other witnesses, including the applicant, the inconsistencies in the evidence and after taking the applicant’s submissions into account, simply accepting Mrs Wright as reliable as to the occurrence of the events the subject of the charges on which the applicant was convicted. The contradictions between the evidence of the applicant, Mrs Wright and the other witnesses and the cases which the parties advanced in relation to those contradictions were simply too complex, to permit that approach to be open.

11. [158]

    His Honour concluded that the evidence given by the applicant about the bonus had been invented, to explain the cash he had taken. His Honour then said (at p 49) as to the “B” cash that “I am not sure how important an issue this is because we know that over a period of 11 months the accused was paid overtime in cash and that other cash moneys were taken out of the hotel takings and paid to the owners”, which he found was corroborated by a document in evidence.

12. [159]

    Even despite this and other evidence to which his Honour referred, which also contradicted parts of Mrs Wright’s evidence, his Honour concluded that “I have not[sic] reason for not accepting Carol’s evidence”. In the result the applicant was convicted.

13. [160]

    It is this part of his Honour’s judgment which I consider puts beyond question the errors into which his Honour fell.

The evidence

1. [161]

   If the evidence as to the admissions which, on the prosecution case, the applicant had made to Mr Johnson and Mr Gerondis was accepted, the applicant had not been authorised to take money from what was skimmed from the ATMs. That would have supported his conviction of the offence involving the ATM moneys, but not the offence involving the poker machine money which, he claimed Mrs Wright knew about.

2. [162]

   Further, the deed established that the directors were prepared to accept repayment of only $275,000, in return for which they agreed not to go to the police. On that evidence alone, the applicant could not have been convicted of the offence involving the poker machine money. That evidence thus had to be considered in light of the other relevant evidence in relation to the poker machine money.

3. [163]

   His Honour accepted Mrs Wright’s evidence, even though there was considerable evidence to which his Honour did not refer, which raised doubts as to the honesty and reliability of her evidence. That included the evidence of the directors as to the cash being taken out of the business, on Ms Ashton’s evidence, even before the applicant was employed. That was not only relevant to the resolution of the credibility of both the applicant and Mrs Wright, but also as to matters such as the source of the cash which was used to pay the applicant’s overtime and whether some or all of the other cash which he received, had been authorised.

4. [164]

   There was also evidence of strain between the directors during the applicant’s employment, concerns about its financial performance and a desire to sell the Hotel on terms which would support the directors in retirement.

5. [165]

   Why his Honour came to conclude that Mrs Wright’s evidence should be accepted, even when other evidence - particularly that given by other prosecution witnesses, including other directors and members of Mrs Wright’s own family, contradicted her evidence - was not, however, explained. In so far as his Honour did not refer to that evidence, it may be inferred that it was not considered (see Beale at 443).

6. [166]

   Contrary to Mrs Wright’s evidence-in-chief, in addition to the disclosed $300,000 profits, Ms Ashton’s evidence was that very considerable undisclosed cash was being taken out of the business each week, even before the applicant was employed. That was not disclosed to police and thus did not apparently become the subject of police investigation. Nor did the prosecution seek to establish the extent of what was being taken during the applicant’s employment, even from the bottle shop sales, which Mrs Wright only disclosed in her cross-examination, after she was given a s 128 certificate.

7. [167]

   The applicant’s evidence, to entirely contrary effect, was corroborated in various respects by other evidence called in the prosecution case, as well as finally, by part of Mrs Wright’s evidence.

8. [168]

   The prosecution case was, nevertheless, directed to establishing that the applicant deposited the cash into his accounts, without his employer’s authority or knowledge.

9. [169]

   In cross-examination, Mrs Wright denied that she knew the extent of all of the cash being taken out of the business each week, or that the money being skimmed from the poker machines and ATMs was sent to her by the applicant by courier each Monday, together with the trading records maintained in accordance with systems established even before the applicant was employed, as was his evidence. She also denied that he was authorised to receive any of the cash which he deposited into his own accounts.

10. [170]

    Mrs Wright then said that what was intended was that no more than two days’ takings from bottle shop sales was to be taken in cash and that as well as the overtime paid to the applicant, she was to receive $660 per week, as were Mr Standen and Ms Ashton together, and Mr Hayes was to receive $115. That amount of cash for the shareholders alone would have amounted to $74,620 per annum.

11. [171]

    Mrs Wright’s evidence was further, that it was the applicant who had suggested to her that undeclared cash could be so taken, in order that he could be paid for the overtime he was working; and that she had consulted the other two directors, who had then agreed to implement that scheme. On her evidence, the only cash the applicant was entitled to receive was what he had been paid for his 15 hours overtime per week, at $30 per hour, $450 per week. Exhibit C comprised documents he had signed acknowledging some of the payments he claimed he had received.

12. [172]

    In cross-examination, Mrs Wright also agreed that other employees were paid in cash and that she was being paid consultancy fees of $3,200 per fortnight and $3,200 was shared by Mr Standen and Ms Ashton. She denied, however, that she was being sent $10,000 cash per week. Mrs Wright also agreed that in January 2011 she had a concern about the amount of alcohol which Mr Standen was then taking out of the business, about which she wanted to set new ground rules.

13. [173]

    Other evidence, including that given by Ms Ashton and Mr Standen was to very different effect. How all of that evidence left open the conclusion that there was no reason for not accepting Mrs Wright’s evidence, as his Honour concluded, is not apparent and was not explained.

14. [174]

    In resolving the conflict in the evidence between the applicant and Mrs Wright, consideration also had to be given to their respective roles and background. This was the first time that the applicant had held the position of licensee of a hotel. By way of contrast, Mrs Wright and the other directors were very experienced hoteliers.

15. [175]

    Mrs Wright was referred to as the Hotel’s “book-keeper”, but on her own evidence and that of Mr Standen, her responsibilities were considerably greater than that description suggested. She was the director in charge of the financial operation of the Hotel, which operated in the highly regulated industry which she described in her evidence. As she explained in her evidence-in-chief, she oversaw the accounts, organised payments and ensured the Hotel’s finances were in shape, by managing overdrafts and receipts, to ensure that the company could make, for example, quarterly payments in relation to duty tax on its poker machines, which amounted to up to $220,000.

16. [176]

    Mr Standen had been the Hotel’s licensee for some years before the applicant’s predecessor had been engaged, he having worked in the industry for some 45 years. Together the three directors recruited the applicant and Mrs Wright negotiated his package.

17. [177]

    It was Mr Standen and Mrs Wright who instructed the applicant in the operation of the business and the systems under which it was operated. Mrs Wright denied, however, that she had directed the applicant to take cash from the ATM or poker machine takings. She also denied that on the checking undertaken of the records which she received each week from the applicant, about which there was no dispute and which on later investigation disclosed both the amounts which had been skimmed from the ATM and poker machine takings, neither she nor her daughter Ms Donna Wright, who assisted her, had ever identified the cash that was being taken. Obvious questions arose as to the truth of that evidence, given what the records disclosed and the evidence Mr Standen gave.

18. [178]

    Ms Donna Wright’s evidence-in-chief was that initially during the applicant’s employment, the bag sent to her mother each Monday contained various documents and wine, but no cash. This changed when her mother told her about the “B” money. In cross-examination, Ms Wright agreed that she had not referred to such cash in the statement which she had made to police. When pressed further, she conceded that she knew that over six or seven months about a thousand dollars per week was being sent to her mother, which she understood had something to do with the bottle shop till. She denied, however, that between $5,000 and $10,000 had ever been sent.

19. [179]

    Mr Standen’s evidence was that before his retirement he was the licensee and Ms Ashton looked after the books. In cross-examination he said that during Mr Taylor’s employment, Mrs Wright had told him that they were losing $10,000 a week; that problems beforehand had been minor; that they had got desperate and the applicant had offered to buy 10% of their shares, because they had no money; that Mrs Wright had been very particular with her work; that he had nothing to do with payment of wages and bonuses and that Mrs Wright could have introduced a bonus structure for the applicant; that after his employment turnover went up, but profits disappeared; that he had found out from the applicant that illegal hours were being traded; and that he directed that the Hotel close on time, even though the applicant later told him that Mrs Wright did not want strict hours to be traded.

20. [180]

    Mr Standen also said that he took alcohol from the Hotel, but the amount was recorded. He denied that any limit had been placed, or that he had taken any cash. He also denied telling prospective buyers that $500,000 to $600,000 cash was being taken out of the business. He said, however, that Ms Ashton could have picked up the discrepancies on the day sheets “straight away”, but that Mrs Wright had refused her help. When they first learned of the discrepancies, however, they did nothing from November 2011 until February 2012, when Mr Standen was referred to Mr Gerondis, who with Mr Johnson met to confront the applicant on 13 February 2012.

21. [181]

    Earlier, Mr Hayes had met with the applicant to instruct him in how to do the figures. Mr Standen also said that Mrs Wright wouldn’t spend any money on the Hotel. After re-examination, it was his Honour who asked Mr Standen if he was aware of cash being sent to Mrs Wright, the applicant being paid overtime in cash, and $660 cash being paid to him. Mr Standen said that it was Ms Ashton who could verify that, because it was she who would have taken the cash, but he accepted that there could have been cash taken out, which was not recorded in the books.

22. [182]

    The Crown also called Ms Nakwirot, who was employed as a duty manager at the Hotel. On her evidence the applicant instructed her to put the money left over every day from the jackpot amount into the safe, in the pencil case for the “B” money, which was for Mrs Wright. She also put the bottle shop money there, but that stopped after some months. Every Monday Ms Nakwirot found that money gone, and on some occasions, contrary to Mr Standen’s evidence, she paid the money to Mr Standen, when the applicant was not at the Hotel. The amounts in the bag varied, but she said that it was roughly $2,000. She understood “B” money to mean “Boss” money.

23. [183]

    Mr Wright’s evidence was that he had been involved in the Hotel since 1998 and that Mr Standen and Ms Ashton had retired from their hands-on roles in 2000. In evidence-in-chief, when describing what was in the bag sent to his mother from the Hotel on Mondays, he made no mention of any cash. In cross-examination, however, in direct conflict with the evidence given by Mrs Wright and Ms Donna Wright, Mr Wright said that they used to put a bottle shop till for one day during the week, in an envelope in the bag, but that he was “pretty sure it stopped when Adam came”. He also confirmed that had occurred for a few years during the time Mr Abrahams had been the previous licensee and manager. He said that the amount was usually $500, which he had assumed the partners had split between them.

24. [184]

    Mr Wright also said that he, too, had been paid in cash and that he also understood that “B” money referred to “black money”. He denied that there had been any financial problems before the applicant was employed, but agreed that the Hotel then had a loan of some $4 million for renovations which had been completed, including a new gaming room and that the number of poker machines had been increased to 21.

25. [185]

    Detective Sergeant Pollock’s evidence was that it was in May 2013, that police were approached by Mr Standen, Ms Ashton, a Mr Marlow of the Marlow Hotel Management Group and Mr Meredith, and that Mrs Wright had not then been involved. During the investigation, it was Mrs Wright, however, who had provided him with various documents and that she and other witnesses had later made statements.

26. [186]

    The Detective had never, however, sought any documents over and above those provided by Mrs Wright. It may be inferred from his evidence and that of other witnesses, that what was not disclosed to police by the directors was the tax fraud in which they and the applicant had been involved.

27. [187]

    In Ms Ashton’s evidence-in-chief, she confirmed that she and Mr Standen were paid undeclared cash out of the Hotel’s takings, which they had decided to take “early in the piece”. She also received a s 128 certificate. Her evidence was that the amount was $660 per week, taken out of the bottle shop till, to make up money which they used for their living expenses. In cross-examination as to the time when these payments commenced, Ms Ashton said that she had received these payments even before the applicant was employed. It was usually she, not Mr Standen who went to the Hotel to collect that cash, although he also cash, for which he wrote an "i.o.u", which she later repaid. He also took alcohol.

28. [188]

    It follows that there can be no question that aspects of the applicant’s evidence were supported by the evidence given by the other two directors, as well as that given by Mr Wright, who his Honour found to be a man of good character. Other evidence called in the defence case, also supported relevant aspects of his evidence.

29. [189]

    The applicant’s brother Mr John Taylor gave evidence that while he worked at the Hotel as duty manager in 2011, every day he was putting money from the tills, the pokie and TAB earnings into the “B” envelope, which was sent to Mrs Wright weekly. This amounted to about $10,000. He also explained how he had been trained in these operations. In cross-examination he agreed, however, that this occurred only when he worked the day shift, a few times a month. He denied that he had fabricated his evidence to assist his brother.

30. [190]

    Mr Justin Taylor, who also came to be employed as a manager at the hotel, working 80 per cent night shifts, also explained how he had placed cash into the “B” money pencil case every day shift. He identified the lowest amount to have been $150 per day and up to three times more on busy days and if a major jackpot went off, between $2,000 to $3,000. His evidence was that the bag was sent off in a taxi once a week and was empty again at the start of the week. Mr Justin Taylor was not cross-examined.

31. [191]

    Mr Basnet, who was training to be a manager for the first four months of the applicant’s employment, before leaving to return overseas, gave evidence that he had heard Mrs Wright direct the applicant to “push” the trading hours and that he had sent a bag containing an envelope with cash and wine to Mrs Wright’s house on occasions when he worked a Monday day shift. He said that he had not looked inside the envelopes, which were of different sizes, but that he could feel the cash inside. In cross-examination he denied that his memory was faulty and said that he had not spoken to the applicant since his return from overseas some five weeks after she left the Hotel. He insisted that he had felt cash in the envelopes sent to Mrs Wright.

32. [192]

    In his evidence, the applicant said that it was Mrs Wright who had showed him the various reports he had to provide her and that she had also explained how the poker machine money was to be sent to her in the “B” money envelope, together with the ATM money. All of that money was kept off the books and sent by courier to Mrs Wright each Monday, together with up to six bottles of wine. He instructed other duty managers in those operations, which resulted in amounts from $5,000 upwards to $10,000 being sent to Mrs Wright. Mr Standen was also taking alcohol from the Hotel, which at one point was capped at $1,000 per week.

33. [193]

    In cross-examination the applicant explained that the Hotel came to trade outside its permitted trading hours, that being a proposal raised with him by the three directors, even before he was employed.

34. [194]

    The applicant’s evidence was that Mrs Wright used the “B” money to pay the cash which the directors each received, as well as overtime and his bonus payments, which he agreed could be as high as $5,000 per week. He claimed that hard copy records of the cash in the form of excel spread sheets which he described and which he claimed to have also signed, were kept in the Hotel office and also sent in the bag which went to Mrs Wright and later returned to the Hotel.

35. [195]

    There was, it appears, also no police investigation into this claim, but the applicant was cross-examined as to the unsuccessful attempts which on his evidence, had been made to obtain these records in the civil proceedings pursued against him by the company. The applicant denied fabricating this aspect of his evidence, or the letter and emails on which he relied to establish that payments made into his accounts had been authorised as overtime payments, reimbursement of expenses and bonus payments.

36. [196]

    The applicant was cross-examined as to how the bonus system operated by reference initially to turnover targets, and once the targets had been surpassed, by a share of net profits. He conceded his awareness of the cheating of the tax system involved in these arrangements and that he had been prepared to trade outside the law, to help better the business for a quick sale. He also explained his understanding that his bonus arrangement was to be kept from Mr Standen.

37. [197]

    In re-examination, the applicant also explained that the benefit to the shareholders, of keeping wages off the books, included that income tax did not need to be paid, nor payroll tax, workers compensation or superannuation.

38. [198]

    The evidence certainly established that the cash which this business generated was very considerable. The Hotel was trading beyond its permitted trading hours. In some weeks it had declared turnover from poker machines alone, in excess of $700,000. On the prosecution case, however, it was generating profits of only some $300,000 per year. On the evidence of the undeclared cash taken from bottle shop sales alone, it cannot be doubted that this was a considerable understatement of the actual profits.

39. [199]

    That this was so was supported by other evidence. Mr Levy was the CEO of Marvan Hotels, who confirmed that discussions had occurred before the termination of the applicant’s employment, for the purchase of the freehold going concern interest in the Hotel, for $10,500,000. The draft contract was in evidence. It disclosed profit of only $300,000. Mr Levy’s evidence was that he understood from what Mrs Wright had told them that additional cash takings and alcohol amounted to over $600,000. On the evidence the purchase price offered was consistent with actual revenue of some $1 million per annum.

40. [200]

    Mr Levy’s evidence was that not only had he and his father-in-law, Mr Sanchez, and their solicitor met with the Mrs Wright, Mr Standen and their solicitor, Mr Wennerbom, they had also met with the applicant. He said they had been concerned to establish the true amount of the revenue and that the applicant would stay, if they purchased the Hotel. The offer they made was not unconditional and it was not accepted, even though on the evidence Mrs Wright was anxious to sell her share of the business.

41. [201]

    Mr Sanchez’ recollection of the number of meetings they had attended and who was present differed to that of Mr Levy, but he also had a recollection that their offer was based on an understanding that significant undisclosed cash was being taken out of the business. In cross-examination, he agreed that was one of the things attractive to him about the Hotel, because it added value to the business, looking at it from the point of view of financing, because it would affect the valuation of the business.

42. [202]

    In cross-examination Mr Sanchez agreed that he had been disqualified from holding office as a director in March 2015, in circumstances explored with him, which founded the basis for submissions as to his credibility.

43. [203]

    The fact remains, however, that the offer made for the Hotel reflected takings very considerably greater than the disclosed profit, or undisclosed cash of only some $74,620.

44. [204]

    There was evidence that in some weeks as much as $10,000 cash was being sent to Mrs Wright. If that evidence were accepted, it would help explain how it was that the cash and alcohol being taken out of the business amounted to some $1 million per year. That all of this came from what was being taken from bottle shop sales each week, was not sought to be established on the evidence.

45. [205]

    Further, Mr Wennerbom, the Hotel’s solicitor, could not recollect any discussions about undeclared cash having taken place in his presence at the meeting where the purchase was negotiated, over the course of some three hours. He agreed that his recollection was not perfect, but denied that $600,000 cash had been discussed at the meeting he attended. He also said, however, that the proposed price was not negotiated at that meeting. He understood it had been discussed beforehand.

46. [206]

    It follows from all of this evidence that payments made to the applicant in cash for overtime was authorised; that the directors were taking considerable undeclared cash out of the business even before they employed the applicant; and that continued afterwards. The questions raised by the evidence thus included the extent of the cash which the directors were taking, its source and whether all of the cash which ended up in the applicant’s accounts, was authorised.

The appeal must be upheld

1. [207]

   It follows that in resolving the credit issues which arose, so that conclusions as to the factual matters in issue could be reached, his Honour had to explain, in the way discussed in Waterways Authority v Fitzgibbon (2005) 221 ALR 402; [2005] HCA 57 at [130] - [131], not only the result of his examination of the competing evidence on the factual matters in issue, but also his analysis of that evidence. He also had to explain why he rejected the applicant’s evidence on critical matters, even when corroborated by other prosecution witnesses such as Mr Standen, Ms Ashton and Mr Wright, and instead preferred that of Mrs Wright, even when her evidence was contradicted by theirs. He also had to explain why the evidence of other witnesses he found to be unimpressive was rejected, even when their evidence was consistent in part with the evidence of prosecution witnesses and in the case of Mr Justin Taylor, who was a witness of truth, on the prosecution case.

2. [208]

   This was undoubtedly a difficult task. The tax fraud lying at the heart of all of these issues made it particularly important for his Honour to explain how it was that he came to conclude that the prosecution had met the onus which fell upon it, to prove what was alleged against the applicant, beyond reasonable doubt.

3. [209]

   It was clearly not only the applicant who had a real motive not to tell the truth. The three directors each had obvious reasons for not disclosing the extent of their respective tax fraud. It was thus relevant for his Honour to consider that in part, not only was their evidence contradictory, it was also contradicted by other evidence called in the prosecution case, as well as by evidence called in the defence case, apart from that of the applicant, particularly that which the Crown accepted had been given by a witness of truth, Mr Justin Taylor.

4. [210]

   I am thus unable to agree with RA Hulme J that the trial judge’s undoubted advantage of having heard the evidence as it was given, provides a basis for the rejection of this appeal. His Honour was obliged to provide an explanation of his analysis of the critical evidence, in order to explain why it was that the evidence which contradicted that of Mrs Wright, which I have discussed, still left open the conclusion that her evidence could be accepted, so that his Honour was not left with a reasonable doubt as to the applicant’s guilt of the charges of which he was convicted.

5. [211]

   Like in Waterways Authority, the conclusion that Mrs Wright’s evidence was to be accepted and preferred to that of the applicant was not supported by a necessary analysis of the competing evidence. The absence of explanation for and reasoning in support of that conclusion also reveals that the process of fact finding miscarried in this case.

6. [212]

   In the result, I consider, that it must be concluded that his Honour fell into various of the errors of which the applicant complained, in relation to ground 4.

Orders

1. [213]

   I would order that:

   1. (1)

      Leave to appeal be granted.

   2. (2)

      The conviction be quashed.

   3. (3)

      The appeal be upheld.

2. [214]

   The matter be remitted to the District Court for retrial.