R v Medich (No 8)

Ronald Edward Medich (“the accused”) has pleaded not guilty to an indictment alleging:

The trial is listed to commence on 30 January 2017 with an estimate of three to four months.

In respect of count 1 it is the Crown case that in March 2009, the accused recruited Lucky Gattellari (“Gattellari”) to arrange the murder of the deceased, and further that he financed such arrangement. It will be alleged by the Crown that the accused’s motive for the murder was to resolve an ongoing dispute with the deceased. It will be further alleged that the murder was a means of the accused “saving face”, in circumstances where he believed that the deceased had deceived and swindled him of millions of dollars.

In respect of count 2 it is the Crown case that at about the same time (i.e. March 2009) the accused also recruited Gattellari to intimidate the deceased’s wife, Kimberly McGurk, in order that she pay the accused monies that he believed he was owed by the deceased. The act of intimidation was originally intended to occur a short time after the death of the deceased. However, it was delayed due to the intense scrutiny surrounding the accused and Gattellari following the deceased’s murder. The plan was reinstated in 2010 when, on the Crown case, it appeared obvious to the accused that the deceased’s wife proposed to continue litigation against him which had been commenced by the deceased. On the Crown case, Gattellari enlisted persons to carry out the intimidation of the deceased’s wife, and the accused provided the funds for that purpose.

There is no issue that the deceased was murdered, nor is there any issue that the deceased’s wife was the subject of intimidation. The fundamental issue in respect of both counts in the indictment is the same, namely whether the accused arranged for the murder of the deceased, and the intimidation of the deceased’s wife, by directing, encouraging and financing such matters.

The Crown seeks to lead evidence of the relationship between the accused and the deceased, and the relationship between the accused and Gattellari. The accused objects to the admission of that evidence. This judgment deals with those issues.

In order for the present issues to be placed into their proper context, it is necessary for me to set out the Crown Case Statement which is in the following terms:

As to the relationship between the deceased and the accused, the Crown seeks to rely on evidence from:

As to the relationship between the accused and Gattellari, the Crown will rely principally on Gattellari.

The Crown presses the following evidence of Mathieson which is contained in the first of his statements dated 26 February 2010:

The Crown presses the contents of paragraphs 9 to 11 of a statement made by the deceased’s wife on 15 October 2009, to the extent that those paragraphs contain what the Crown described as “a general observation of the relationship between the deceased and the accused, i.e. that they initially worked together well and had close contact but fell out over several disputes”. More specifically, ccontained within those paragraphs are two particular matters of which the Crown seeks to lead evidence, namely:

Paragraphs 9 to 11 of the statement of the deceased’s wife are in the following terms:

Ms McClymont is a journalist who has worked for the Sydney Morning Herald since 1990. She made a statement to police on 7 September 2009 in which she made reference to the fact that in or about mid-July 2009 she commenced working on what she described in her statement as “the McGurk story”. In the course of researching and publishing parts of that story, Ms McClymont met with the deceased, who spoke about his relationship with the accused. Paragraph 26 of her statement is in the following terms:

The Crown presses the bolded portion of that paragraph.

The Crown will seek to lead evidence of what it alleges was the “unusually close relationship” between the accused and Gattellari. That evidence comes from Gattellari and falls into the following broad categories:

As to the first of those categories, the Crown proposes to call evidence from Gattellari that the accused wanted to obtain information that would assist him and disadvantage his wife, and that he utilised Gattellari to arrange for his wife to be followed. The Crown asserts that this evidence reflects the “inherent trust” which existed between the accused and Gattellari, and the close nature of their relationship during the period following the deceased’s murder.

As to the second category, the Crown proposes to call evidence from Gattellari, Mathieson and others that following the murder of the deceased, but prior to the intimidation of the deceased’s wife, the accused transferred his shares in Amazing Loans (as well as other shareholdings) to Riv Developments (which was controlled by Gattellari) and that he asked Gattellari to put pressure on Mathieson (the Director of Amazing Loans) to recover money that the accused had earlier invested in that company. It will be alleged that Gattellari then arranged, on behalf of the accused, for another person, Kim Shipley to travel to Hawaii in February 2010 in order to convince Mathieson to buy back the accused’s shares. The Crown will also rely upon the fact that the accused granted Gattellari Power of Attorney over his affairs as an indication of the trust which existed between them.

Finally, the Crown proposes to call evidence from Gattellari and others in order to establish that the accused engaged Gattellari on and from about 2008 to attempt to collect outstanding debts for him. It will be alleged that the attempts involved the making of threats and the recruiting, by Gattellari, of other persons to deliver such threats to people on the accused’s behalf.

The Crown originally filed a tendency notice in respect of the evidence which is the subject of the present objection, but has since abandoned reliance upon such notice. Leaving aside the evidence of Ms McClymont, the Crown seeks to lead the evidence on the basis that it generally establishes the nature of the relationship between the accused and the deceased, and the accused and Gattellari, at material times.

The Crown submitted that the evidence of Mathieson was highly relevant and probative in light of the fact that the events about which Mathieson gives evidence occurred at or about the time at which, on the Crown case, the relationship between the accused and the deceased had irretrievably broken down, and only a short time prior to the accused’s approach to Gattellari to engage him to take steps to arrange the deceased’s murder.

The Crown further submitted that what the deceased had allegedly said to Mathieson demonstrated “the toxicity” of his (i.e. the deceased’s) relationship with the accused, and demonstrated in particular that it had not improved since February 2009. The Crown further submitted that Mathieson’s evidence demonstrated the fact that “the venom” which existed between the deceased and the accused had increased in the period leading up to the deceased’s death.

In terms of the evidence of the deceased’s wife, the Crown submitted that the deceased’s belief about the accused fabricating evidence against him was a further illustration of the “toxic” state of his relationship with the accused in 2009.

As to the evidence of Ms McClymont, the Crown submitted that the deceased’s statements to her were admissible pursuant to s. 66A of the Evidence Act 1995 (NSW) (“the Act”) as evidence of his contemporaneous feelings, intentions, knowledge and state of mind.

The evidence of the surveillance said to have been arranged in respect of the accused’s wife was said by the Crown to demonstrate the inherent trust between he and Gattellari, and the close nature of their relationship at that time. A similar submission was made in relation to the evidence of the transfer of shares, and the granting of a power of attorney by the accused to Gattellari. It was submitted that such evidence demonstrated the “intense bond and level of trust” between the accused and Gattellari. It was further submitted that the evidence served to place the accused’s request to Gattellari to have the deceased’s wife intimidated into the proper context. The Crown further submitted that this evidence was capable of rebutting the suggestion that Gattellari had committed any act for his own reasons, and of his own accord.

Finally, the Crown submitted that the evidence of Gattellari’s “debt collecting” carried out on behalf of the accused was further evidence of the extent and depth of the relationship between the accused and Gattellari. It was submitted that in the absence of such evidence, the jury would be left with the artificial view that the accused and Gattellari were involved in a conventional business relationship. It was submitted that the evidence provided the proper context of what the Crown alleges was the true nature of their relationship.

Although the written submissions of the accused raised issues as to the relevance of the evidence, senior counsel clarified in oral submissions that the accused’s principal position (perhaps with the exception of the evidence of Ms McClymont) was that the evidence should be excluded pursuant to s. 137 of the Act. As I observed at the time, reliance upon s. 137 necessarily involves an acceptance that the evidence is relevant under s. 55.

In respect of each category of the evidence, senior counsel for the accused submitted that the probative value of the evidence was low, and was substantially outweighed by the danger of unfair prejudice. In articulating the nature of that unfair prejudice, senior counsel for the accused relied upon a number of matters.

Firstly, senior counsel relied on the fact that the relationship between the accused and the deceased was of a business, as opposed to a personal, nature. In that regard, senior counsel sought to distinguish a number of authorities in which “relationship evidence” had been found to be relevant and admissible.

Secondly, senior counsel pointed to the fact that on 1 June 2016 the parties had executed a Statement of Agreed Facts pursuant to s. 191 of the Act which extended to some 100 paragraphs and 15 pages, and which detailed a number of objective circumstances in respect of the business relationship that existed between the accused and the deceased. It was submitted that the nature and extent of that relationship, and its deterioration, were evident from those agreed facts. It was submitted that in circumstances where the accused had made lengthy and detailed admissions, there should be some limit placed upon the extent to which the Crown was permitted to lead further evidence of the same subject matter.

Thirdly, senior counsel submitted that the evidence of utterances of the deceased gave rise to a real danger that the jury may, in a case involving allegations of serious violence, draw inappropriate inferences or place too much weight on that evidence.

Fourthly, in respect of the evidence of Ms McClymont, senior counsel submitted that the evidence was not admissible pursuant to s. 66A of the Act because (inter alia) it was not relevant to a fact in issue.

Fifthly, in terms of the evidence sought to be led to establish the relationship between the accused and Gattellari, it was submitted that parts of it were “obviously preposterous” or “inherently unconvincing” such that, even when taken at its highest, it had a low probative value. Further, it was submitted that part of the unfair prejudice arising from this evidence stemmed from the fact that if it were accepted, it would establish the accused having engaged in uncharged acts of criminality. It was submitted that no direction to the jury as to the limited basis on which the evidence was led could possibly overcome the unfair prejudice which would arise.

Before turning to the specific evidence, it is appropriate to canvass a number of general principles which apply to a determination of whether it should be admitted.

As senior counsel for the accused appeared to ultimately accept, evidence of the kind sought to be led by the Crown (leaving aside that of Ms McClymont which is in a slightly different category in terms of questions of admissibility) may be admissible as “relationship” evidence: see for example Wilson v The Queen (1970) 123 CLR 334; [1970] ALR 687; Ratten v The Queen [1972] AC 378; R v Serratore (1999) 48 NSWLR 101; [1999] NSWCCA 377. The reliance by senior counsel for the accused upon the fact that the relationship between the accused and the deceased was a business rather than a personal one is to draw a distinction without a difference: Standen v R [2015] NSWCCA 211 at [327] and following.

The essential issue for determination is whether, the evidence in each case should be excluded under s. 137 of the Act. In respect of the evidence of Ms McClymont, there is a preliminary question as to whether the evidence is admissible pursuant to s. 66A and I have considered that separately below.

Section 137 of the Act is in the following terms:

In determining whether evidence should be excluded pursuant to s. 137, the first step is to assess its probative value. The term “probative value” is defined in the Dictionary to the Act as follows:

In assessing probative value, I must take the evidence at its highest in terms of the effect that it could have upon the assessment of the probability of a fact in issue. In IMM v The Queen (2016) 330 ALR 382; [2016] HCA 14 the plurality said (at [45]):

Their Honours then said (at [47]):

In the present case, the facts in issue include:

Having assessed the probative value of the evidence, I must then consider whether such probative value as it is found to have is substantially outweighed by the danger of unfair prejudice. In this regard, it is important to bear in mind that evidence is not unfairly prejudicial simply because it inculpates an accused, or makes it more likely that he or she will be convicted. The unfair prejudice to which s. 137 is directed is prejudice which is unfair because there is a real risk that it will be misused by the jury in some unfair way, or will be used to make a decision on an improper basis, or to make a decision which is not logically connected with the issues in the case: Papakosmas v The Queen (1999) 196 CLR 297; [1999] HCA 37 at [91]; Festa v The Queen (2001) 208 CLR 593; [2001] HCA 72 at [22]; Standen (supra) at [333].

It is also important to bear in mind that the terms of s. 137, a decision to exclude the evidence does not require that I come to a determination that the evidence will be unfairly prejudicial. The section requires, in order for evidence to be excluded, that I conclude that its probative value is substantially outweigh by the danger that it might be unfairly prejudicial: Seven Network Limited v News Limited (No 8) [2005] FCA 1348 at [16].

With these principles in mind, I turn to consider the specific evidence which is the subject of objection.

In pressing the evidence of Mathieson, the Crown relied upon ss. 65(2)(b) and (c) of the Act, which are in the following terms:

The Crown focused in argument upon the contents of paragraph 24 of Mathieson’s statement in which he makes reference to the deceased having made statements to him to the effect that he (the deceased) wanted to “burn” the accused. On the Crown case this was said in or about June of 2008.

For the purposes of ss. 65(2)(b) and (c), the Crown submitted that the circumstances which made it unlikely that the representation was a fabrication, and the evidence which supported the proposition that the representation was made in circumstances that made it highly probable that it was reliable, were essentially two-fold. Firstly, the Crown pointed to email exchanges between the deceased and Mathieson regarding the sale of the shares in Amazing Loans. The Crown also pointed to the contents of paragraph 21 and following of the agreement under s. 191 of the Act which was made between the parties which, it was said, reflected a deterioration in the relationship between the accused and the deceased.

The announcement prepared for the purposes of the Australian Stock Exchange referred to in paragraph 28 of Mathieson’s statement is also referred to in the email correspondence to which I referred. The email correspondence is consistent with, and corroborates, the contents of paragraph 24 of Mathieson’s statement. I am satisfied, for the purposes of s. 65(2)(c) of the Act, that those circumstances render it highly probable that the representation is reliable.

There is no basis, in my view, on which to exclude the evidence pursuant to s. 137. The deteriorating nature of the relationship between the accused and the deceased is an important part of the Crown case and the evidence to be given by Mathieson is highly probative of that fact. I am unable to conclude that the probative value is outweighed by the danger of unfair prejudice to the accused. Accordingly, the evidence will be admitted.

It should be noted that in reaching this conclusion I have done so specifically by reference to the contents of paragraph 24 of Mathieson’s statement. The Crown indicated an intention to press the evidence contained in paragraphs preceding and succeeding paragraph 24. To a large extent, those paragraphs are expressed in a completely inadmissible form. It may be necessary to revisit the admissibility of those parts of Mathieson’s evidence once the Crown case has commenced.

I have previously set out paragraphs 9 to 11 of the statement of the deceased’s wife (at [12] above).

As to the first of the specific matters referred to at [11](i) above, the evidence in my view is plainly inadmissible. The deceased’s wife purports to give evidence that the deceased was “not comfortable” with the arrangement under which the accused had acted as his surety in respect of a bail undertaking. The only identified source of the lack of comfort which is disclosed in the statement is that according to the deceased’s wife, the deceased was “becoming frustrated” with the accused. That assertion, of itself, is inadmissible in that form. The source of the deceased’s frustration appears to have been alleged acts on the part of the accused which are said to have amounted to a fraud. The basis upon which the deceased took that view is not clear. Even if this evidence was admissible it is highly prejudicial, to the point where any slight probative value that it might have is substantially outweighed by the danger of unfair prejudice.

As far as the second matter is concerned the evidence is similarly inadmissible. It amounts to little more than evidence of an expression of an opinion of the deceased about the activities of the accused. There is nothing which would satisfy the requirements of ss. 65(2)(b) or (c) of the Act. Even if such evidence was admissible, it’s obviously prejudicial nature is such that it ought be excluded.

I have previously set out (at [13] above) the specific evidence of Ms McClymont upon which the Crown wishes to rely. In seeking to lead this evidence the Crown relied upon s. 66A of the Act which is in the following terms:

In support of the admissibility of the evidence, the Crown relied upon the decision in Serratore (supra) where Dunford J (with whom the other members of the Court agreed) concluded (at [29]) that statements made by the deceased to her mother and various girlfriends were admissible as an exception to the hearsay rule pursuant to s. 72 of the Act (which was the predecessor to s. 66A). However, the statements which were found to be admissible in that case were of an entirely different character. They included statements made by the deceased to the effect that she was in relationship with the appellant, that she was intending to terminate the relationship, and that she was intending to meet the appellant for the mutual return of mementos of the relationship. The statements of the deceased in the present case to Ms McClymont are far removed from such circumstances. In my view, the evidence in the present case does not fall within the terms of s. 66A. The evidence amounts, in effect, to the expression of an opinion by the deceased as to what he thought the accused intended to do.

I am fortified in these views by the observations of Gray J in R v Hillier (2004) 154 ACTR 46; [2004] ACTSC 81 at [25]:

In the present case, the state of mind of the deceased is not a fact in issue, nor is it relevant to a fact in issue. For these reasons, that part of Ms McClymont’s evidence identified by the Crown will not be admitted.

Even though the trial has not yet commenced, it is obvious that there will be a significant attack on the credibility of Gattellari, who has been sentenced for his part in the deceased’s murder, and whose sentence was significantly reduced on account of his assistance. It is the Crown case that the accused recruited Gattellari for the purposes of killing the deceased and intimidating his wife. The nature and extent of the relationship between the accused and Gattellari in those circumstances is clearly relevant to, and probative of, a number of facts in issue, and the jury will be directed as to the basis upon which the evidence is led, and the use to which it can be put.

The one exception is the evidence concerning the “debt collection” which was allegedly carried out by Gattellari at the accused’s request. As I have noted in [19] above, the Crown will seek to adduce evidence that these debt collecting activities involved the alleged communication of threats on behalf of the accused.

The fact that the accused engaged Gattellari to collect debts on his behalf is probative of the nature and extent of their relationship at material times, and is therefore admissible. There is, in my view, no danger of unfair prejudice to the accused if evidence is led in that form. However, such a danger does arise if the evidence includes reference to threats emanating from the accused to other persons. Given the nature of the charges against the accused, it is not difficult to envisage that if such evidence were admitted there may be propensity for the jury to engage in a process of impermissible reasoning, namely that because the accused was authorising Gattellari to engage in threatening behaviour on his behalf, he is more likely to have committed one or both of the offences alleged against him. I am satisfied that to the extent that this evidence involves allegations of threats, it should be excluded pursuant to s. 137 of the Act.