Money laundering, structuring, implications of Lordianto v The Queen [2019] HCA 39

Money laundering can be committed recklessly. When you add that fact to what you have learnt from Lordianto v The Queen [2019] HCA 39 (13 November 2019), the implications are startling.

Suppose you are expecting a large deposit in your bank account, say $100,000. As far as you can see, there is no reason why that would not appear in your bank account as a single transaction.

Surprisingly, you find that there has been a series of deposits, each under $10,000, to make up the expected $100,000. For example, 11 deposits: 10 of $9,990 and one of $100.

Knowing what you do know, after reading Lordianto and learning about cuckoo smurfing, you must be alert to the risk that what has gone on is called structuring, and it is an offence against the anti-money laundering legislation.

Structuring is arranging transactions to avoid detection by agencies who have due diligence obligations under that legislation. In New Zealand, it is an offence against the Anti-money Laundering and Countering Financing of Terrorism Act 2009, s 101.

This is not your offence, but the question is whether you know that there is a risk that structuring has been committed, and whether objectively it is unreasonable for you to take that risk. This recklessness comes into play because it is a way that money laundering can occur. And you are presumed to know the law, for example the prescribed threshold for the bank having to report the relevant transaction, as set out in the AML/CFT (Definitions) Regulations 2011.

Money laundering is an offence defined in s 243 of the Crimes Act 1961. If you “deal with” the deposits, by transferring them (or strictly in legal terms, exercising your rights pursuant to the chose in action referable to the credit in your account) to anyone, and that dealing involves concealment (which it necessarily does, because concealment is defined to include converting it from one form to another), with the necessary state of mind, the offence of money laundering is committed.

Recklessness as to whether the deposits are proceeds of the offence of structuring is the catch that could easily criminalise a person who in all other respects expects to be the recipient of lawful funds.

Furthermore, the structured funds could be restrained under the Criminal Proceeds (Recovery) Act 2009, preventing you from accessing them.

Differing desirability: admission of improperly obtained evidence in New South Wales

Illegal video surveillance of animal cruelty, producing a series of recordings, followed by application for a search warrant, and then the obtaining of admissions by a trick, led to challenges to the admissibility of evidence in Kadir v The Queen [2020] HCA 1 (5 February 2020).

The three groups of challenged evidence were the video recordings, the information obtained in the search, and the admissions made to a civilian informant.

At first instance, all the challenged evidence was held inadmissible, because it flowed from the illegal surveillance, and the weighing exercise required by the legislation led to that result.

On appeal, the Court of Criminal Appeal (NSW) held that all the evidence was admissible.

The High Court of Australia held that the video surveillance evidence was inadmissible, but the other evidence (search, admissions) was admissible.

This was not held to be a suitable occasion for clarifying the law on how appeals under this legislation should be approached (at [8]). For a review of issues that need attention, see Chris Edmonds, “Appeals from Discretions, Satisfactions, and Value Judgments: Reviewing the House Rules” (2017) 41(2) Melbourne University Law Review 647.

Decision criterion

The statutory decision process here as set out in s 138 of the Evidence Act 1995 (NSW) (reproduced at [10]) requires that the evidence to which it applies “is not to be admitted unless the desirability of admitting the evidence outweighs the undesirability of admitting evidence that has been obtained in the way in which the evidence was obtained.”

That looks quite simple. It lacks the encumbrance of the New Zealand requirement (s 30 of the Evidence Act 2006): (2)(b) the judge shall “... determine whether or not the exclusion of the evidence is proportionate to the impropriety by means of a balancing process that gives appropriate weight to the impropriety and takes proper account of the need for an effective and credible system of justice.”

You don’t have to be Wittgenstein to know that the meaning of “the need for an effective and credible system of justice” can only be ascertained from the way it is applied in cases. It is what we might nowadays call a meta-level explanation of the shape of the boundary between cases where improperly obtained evidence is admissible, and those where it is inadmissible. Is it a useful part of the statutory criteria, or is the NSW provision an adequate alternative?

The NSW provision has been fleshed out by case law. The words desirability and undesirability refer to (at [13]) the public interest in all relevant evidence being before the fact-finding tribunal, and the public interest in not giving curial approval, or encouragement, to illegally or improperly obtaining evidence generally.

No doubt, a scholar of Australian evidence law could sort out admissibility decisions under provisions like s 138 into those resulting in admission, and those resulting in exclusion, of improperly obtained evidence in criminal cases, and could claim that the shape of the boundary between those decisions reflects some abstraction such as the need for an effective and credible system of justice. The only useful point in doing that would be to provide a framework for predicting the correct result of undecided cases, or to identify cases that have been decided wrongly. Hardly a useless exercise.

To what extent is the decision in Kadir determined by precedents illustrating the seriousness of the illegality, the seriousness of the alleged offending, and the relative weighs of the matters that are to be taken into account pursuant to s 138(3)? Without reference to other cases the appeal outcomes could seem to be just differences in opinion, not really legal determinations.

Onus

The party seeking to adduce the evidence must satisfy the judge that the desirability of admitting the evidence outweighs the undesirability of admitting it: s 138(1). This is clearer as to onus than is the New Zealand provision, which has caused some confusion: see my note on Kearns here.

It’s not an all-or-none question

Kadir illustrates the need to address each category of challenged evidence in turn, rather than lump them all together as happened at first instance. This is because the weighing factors differ with context (at [42]).

The search warrant was obtained in reliance on the improper surveillance, but the agency seeking the warrant (the RSPCA) was unaware of the illegality (at [38], [41], [47]-[48]). That was a significant difference from the position of the informant who carried out the surveillance, who had trespassed to place the camera.

The trick involved in obtaining the admissions did not depend on the illegal surveillance (although the admissions were obtained by the person who had carried out the surveillance), and it was no more objectionable than tricks routinely used to collect evidence ([50]-[51]).

Relevant to the admissibility of the search and the admissions evidence was the absence of the element of criminality that had been involved in the obtaining of the surveillance evidence.

Furthermore, and this might cause the brow to wrinkle (but it’s just a consequence of the separate consideration of the categories of evidence), exclusion of the surveillance evidence increased the importance of the remaining evidence for the prosecution case. The public interest in excluding the surveillance evidence resulted in an enhanced public interest in admitting the other evidence (at [42], [47]).

The absence of lawful means of getting the evidence

The significance of the impracticability of any alternative lawful means of getting the evidence that was obtained by unlawful surveillance was a matter over which the courts differed in this case. At first instance the parties had apparently assumed that this factor weighed in favour of admitting the evidence, and the judge had found it difficult to gauge the weight to give this (at [3]-[4]). The Court of Criminal Appeal accepted that this factor weighed in favour of admitting the first of the series of video recordings in view of the likely inefficacy of an anonymous complaint (at [36]). The High Court’s determination is at [20], emphasising at [37] that here the difficulty of getting the evidence lawfully weighed against admitting the surveillance evidence.

The significance of the impracticability of alternative lawful means of obtaining the evidence can vary with circumstances, but it may weigh in favour of admitting the evidence if there is urgency. It is likely to weigh against admission if there was deliberate or reckless illegality. It is likely to be neutral if the impropriety was neither deliberate nor reckless ([20]). [1]

Did the illegality link to the obtaining of the evidence?

The admissions were made to the person who conducted the illegal surveillance. Although the surveillance was a step leading to the conversations, that was all: [51], endorsing the CCA decision on this point. No information obtained illegally was used by the informer in her conversation eliciting the admissions. Although there was a “bare connection”, admission of the evidence was unlikely to convey curial approval or encouragement of the contravention.

This gets around the “but for” objection: no conversation would have occurred but for the illegal surveillance. The judge at first instance had applied “but for” reasoning (at [34]-[35]).

The use of unlawfully obtained information in the application for the search warrant

Here the RSPCA was unaware of the illegality and it put forward the unlawfully obtained information in good faith in its application for the search warrant (at [41]). What if it had known? Would it have been sufficient to disclose the illegality to the official considering the application? What could that official be expected to do in the face of such disclosure? In any event, how should a court address the validity of a search warrant issued on improperly obtained information? For the New Zealand position, see R v Alsford [2017] NZSC 42, holding by a majority that improperly obtained evidence (here referring to evidence that a court has ruled inadmissible, but applicable pari passu) may be advanced in support of an application for a warrant if it is identified as such, and its impropriety will be a balancing factor in considering the admissibility of evidence obtained by the warrant (Alsford at [100]).

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[1] In New Zealand we are less inclined to allow the absence of, or failure to use, available lawful means of obtaining the evidence to be used as a factor weighing in favour of admission of the evidence. See the Law Commissions Second Review of the Evidence Act 2006 (February, 2019) at [7.36]-[7.40]. It is difficult to see, in principle, how urgency - one of the excuses for failure to use known lawful alternatives - can do anything other than reduce the weight to be given to impropriety. An exception to our disinclination to admit evidence obtained unlawfully, when there was a known lawful alternative means of getting it, is Robinson v R [2017] NZCA 347 at [26], where the fact that a search warrant could have been obtained (but wasn't) weighed heavily in favour of admission of the evidence obtained in the search of a storage unit. This decision, of a Divisional bench (one permanent Court of Appeal Judge, sitting with two High Court Judges), does not refer to the leading case, R v Williams [2007] NZCA 52, [2007] 3 NZLR 207 at [127] which describes deliberate decisions not to employ lawful techniques of investigation as aggravating impropriety. Williams is a decision of a bench of permanent members of the Court (two of whom became members of the Supreme Court). The Robinson bench breached, unwittingly, the law as stated in Williams. The Law Commission did not refer to Robinson in its Second Review. Again, a "Charlie Foxtrot" occurred in Moore v R [2017] NZCA 577 at [19], where failure to obtain a warrant to search a vehicle which had been secured at a police station was treated as raising inevitability of discovery "if a warrant had been obtained". This time the bench consisted of permanent members, so there isn't even a status excuse for the Court's failure to follow the law. Also not cited by the Law Commission. Even so, had the correct reasoning been used in Robinson and Moore, the results of the appeals would have been the same, so these cases are examples of right result, wrong reasoning.

On the evidence: the verdict in Lundy

Don’t let me fall into the trap of getting into an argument about the Lundy verdict. By verdict I mean the verdict reached by the Supreme Court justices.

I don’t think an appellate court should ever have to reach a verdict. But when it does, it can illustrate how fact-finding should rationally be undertaken.

Appellate courts usually consist of three or more judges, and differences are settled by majority vote. The defendant at a jury trial that has gone wrong may therefore end up being convicted by a majority in the appellate court. Twelve jurors or two judges – which would you prefer?

That’s the broad picture. In Lundy the Supreme Court mentioned the Court of Appeal’s point that this was a case which did not turn on the credibility of witnesses [85]. If it had been, no doubt the Court would have recognised that it was at some disadvantage because it did not hear and see the witnesses, and the disadvantage might – although not necessarily - have been such that it would not be proper for the appellate judges to try to reach a verdict.

When appellate judges reach verdicts, the right to a jury trial is limited. This was recognised at [34], where the Court refers to observations of the High Court of Australia in Weiss v R [2005] HCA 81 at [30]. Essentially, and if I might be cynical for just a moment, this means that the right to a jury trial is a right to an attempt at a lawfully conducted jury trial.

This was an entirely circumstantial case. So was Bain, and we remember how the Privy Council rejected any temptation to come to its own verdict. Even with the apparent change in approach brought about in Matenga (being more permissive of appellate court verdicts), the Privy Council said that the result in Bain would have been the same. So this whole area invites controversy.

Objections to the Lundy verdict focus on the alleged unreliability of evidence that stains on Mr Lundy’s shirt contained central nervous system tissue (“brain tissue”). Let’s put that evidence to one side, and consider what the verdict would have been without it.

The presence of Mrs Lundy’s DNA in the shirt stains was incontrovertible. The stains were not tiny: 25mm x 10mm, and 30mm x 20mm (noted at [75]). They were visible. I doubt that most people would wear [strictly on these facts, have possession of] a shirt with that staining, especially as it contained blood. And, how common is it to have blood of that quantity and from one’s partner on a shirt that has continued to be worn? Even supposing that 20% of people wear shirts with such staining – and I take this as an absurdly high occurrence in favour of the defence – this evidence strongly favours the prosecution case.

Attention then turns to the other evidence: motive, timing of food consumption, the neighbour’s observation of the open door, the fuel consumption and odometer evidence, the surprising absence of DNA evidence in Mr Lundy’s car or at the motel, the apparent staging of the burglary, the paint, and the child victim’s blood specks on Mr Lundy’s shirt. Taking all that together could firmly support the prosecution case, or weakly support the defence case, depending on the various likelihoods that fact-finders could reasonably attach to the various items of evidence.

If this other evidence in combination firmly supported the prosecution case it would be reasonable to conclude that Mr Lundy was guilty (remembering that this is ignoring the brain tissue evidence). If it weakly supported the defence case, then guilt could not be proved on the (generous to the defence) assumption that 20 per cent of people have their partner’s blood on their shirts to the extent that Mr Lundy did. If this figure is “only” 10 per cent, then guilt would be proved beyond reasonable doubt.

How do we know? This is Bayesian reasoning with conditional probabilities. Never mind if you don’t employ that somewhat mathematical approach, because common sense should tell you the same. [1]

The brain tissue evidence resulted in considerable expense and delay in the proceedings, and you could wonder whether the prosecution was over-egging its pudding. But it didn’t know whether the defence was going to have a ready answer to the DNA presence in the stains. This could be seen as a compliment to the skills of defence counsel, but we could wonder whether, in seeking to prove its case to a certainty rather than merely beyond reasonable doubt, there was (to pursue another culinary metaphor) unnecessary icing on the cake.

What if the appeal had been heard under the new appeal criteria? How would the evidence be analyzed if the court simply had to ask itself whether the error at trial had created a real risk that the outcome of the trial had been affected? The error was material to one chain of evidence: stain – CNS tissue – (mRNA) – Victim1. Taking out this mRNA chain, the remaining chain was: stain – blood – DNA – Victim 1. Did the removal of the mRNA chain significantly weaken the link between the stain and Victim 1?
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[1] Oh alright, for you maths buffs: If the defendant was innocent, a huge coincidence had occurred: blood from each of the two victims was on his shirt. Such little information as there is online about transfer of blood to clothing suggests that about 3 per cent of people have blood from someone else on their clothing. This is much lower than the figures I assumed above. The ratio for the likelihood of the prosecution hypothesis to the likelihood of the defence hypothesis, the probability of finding the match given each hypothesis, would therefore be, for each of the blood sources (ie, the victims), 1 to 0.03, or 33.3 to 1. Combining these gives 33.3 x 33.3 = 1108.89 to 1. Assume, generously to the defence, that before considering this evidence we might expect that the probability of guilt compared to the probability of innocence could be, say, 0.2 to 0.8. This ratio is what is called called "the priors" combined with the other evidence in the case. On the blood evidence, and given this priors-in-combination assumption, the combined ratios are 1108.89 / 4 to 1 = 277 to 1. That is the ratio, given this evidence, of the probability of guilt to the probability of innocence. The probability of guilt would therefore be (converting the ratio to a fraction) 277 / 278 = 0.99. That is proof beyond reasonable doubt, on the basis of the assumption that was generous to the defence. Some people say, but you have just guessed at the priors, the whole thing is too subjective, where is the evidence? The answer is that the priors can vary a lot without having much effect on the result. If, instead of assuming priors combined with the other evidence of 0.2 to 0.8, we assume priors combined with the other evidence of 0.05 to 0.95 (very favourably to the defence, effectively an assumption of innocence), then the resulting probability of guilt after considering the blood evidence is 0.98. That is: (0.05 / 0.95) x 1108.89 = 58.36 to 1, so probability of guilt = 58.36 / 59.36 = 0.98.

Tempora mutantur nos et mutamur in illis - or do we?

Would the result in Lundy v R [2019] NZSC 152 have been the same if it had been determined under our current appeal provisions, s 232 of the Criminal Procedure Act 2011?

Applying the former law, the Supreme Court held that the wrongful admission of evidence at trial had not created a substantial miscarriage of justice because if the error had not occurred guilt would still have been proved beyond reasonable doubt, and the trial had not been unfair because the error was not fundamental. It was not necessary to consider the new law, or the extent to which the old law might be affected by the legislative change. But this is really the live issue for lawyers.

If the new law had applied to the Lundy appeal, s 232(4)(a) would be of central concern: did the error at trial create “a real risk” that the outcome of the trial was affected?

It is helpful to consider some dicta from the High Court of Australia in Baini v The Queen [2012] HCA 59. I have previously discussed this case here (December 13, 2012).  As a matter of interpretation, the Court had to ask what was the relevance of a former appeal provision (similar to our former one) to ascertaining the meaning of a new appeal provision. The new legislation considered in Baini is set out at [12], and although its form and language differs from ours, the difference is not presently material. The approach to its construction is described at [14]-[15]. The majority judges then made three observations:

At [29]:

“First, in many cases ... an appellate court will not be in a position to decide whether the appellant must have been convicted if the error had not been made. The nature of the error, irregularity or cause of complaint contemplated by [the legislation] will often prevent that conclusion from being reached by an appellate court on the record of the trial given the "natural limitations" [Footnote: See Dearman v Dearman (1908) 7 CLR 549 at 561; [1908] HCA 84; Fox v Percy (2003) 214 CLR 118 at 125-126 [23]; [2003] HCA 22.] that attend the appellate task.”

At [31]:

“If it is submitted that a guilty verdict was inevitable, an appellant need not prove his or her innocence to meet the point. An appellant will meet the point by showing no more than that, had there been no error, the jury may have entertained a doubt as to his or her guilt. As a practical matter, it will then be for the respondent to the appeal to articulate the reasoning by which it is sought to show that the appellant's conviction was inevitable.”

And at [32]:

“... the inquiry to be made is whether a guilty verdict was inevitable, not whether a guilty verdict was open. (Whether the verdict was open is the question presented by [the equivalent of New Zealand’s s 232(2)(a)].) If it is said that a guilty verdict was

inevitable (which is to say a verdict of acquittal was not open), the Court of

Appeal must decide that question on the written record of the trial with "the

'natural limitations' that exist in the case of any appellate court proceeding wholly or substantially on the record” [Footnote: Fox v Percy (2003) 214 CLR 118 at 125-126 [23]]. That the jury returned a guilty verdict may, in appropriate cases [Footnote: See generally Weiss (2005) 224 CLR 300 at 317 [43]; Baiada Poultry Pty Ltd v The Queen (2012) 86 ALJR 459 at 466 [28]; 286 ALR 421 at 430; [2012] HCA 14.], bear upon the question. But, at least in cases like the present where evidence has wrongly been admitted at trial and cases where evidence has wrongly been excluded, the Court of Appeal could not fail to be satisfied that there has been a substantial miscarriage of justice unless it determines that it was not open to the jury to entertain a doubt as to guilt [Footnote: cf R v Grills (1910) 11 CLR 400 at 431 per Isaacs J; [1910] HCA 68.] Otherwise, there has been a substantial miscarriage of justice because the result of the trial may have been different (because the state of the evidence before the jury would have been different) had the error not been made.”

And at [33]:

“...an appellate court can only be satisfied, on the record of the trial, that an error of the kind which occurred in this case did not amount to a "... miscarriage of justice" if the appellate court concludes from its review of the record that conviction was inevitable. It is the inevitability of conviction which will sometimes warrant the conclusion that there has not been a ... miscarriage of justice with the consequential obligation to allow the appeal and either order a new trial or enter a verdict of acquittal.”

There would be no “real risk” that the outcome of the trial had been affected by the error if the appeal court could be satisfied that the verdict was inevitable. That was the position in Lundy. The result would have been the same under our new law. On this view, our new law would continue the practice of sometimes allowing appeal courts to effectively act in place of a jury. It will be important to identify whether a case falls into the category mentioned at [29] of Baini, as opposed to the category mentioned at [31], and to decide whether this classification is determined by the respondent’s tactic in argument.

But the other view, and the one which I prefer, is (developing what is said at [31] above) that once the appellant shows a real risk that the verdict was adversely affected by the error, it is for the respondent to dispute that; the issue is not inevitability, just real risk. The appeal judges do not act as jurors; they just decide the real risk issue.

Update: A year later, on 18 December 2020, the New Zealand Supreme Court decided how appeals against conviction based on alleged error relating to a trial (ie not those involving allegedly unreasonable verdicts, unfairness or nullity) should be approached. Effectively, the Court read-in a proviso: if an error that is not immaterial or inconsequential is identified, and if it gave rise to a real risk that the result of the trial was affected, then the appeal court must decide whether it is satisfied of the appellant's guilt. The appeal will be allowed, provided (my word) that it will be dismissed if the appeal court is satisfied of the appellant's guilt: [Name Suppressed] v R [2020] NZSC 153. This is not the approach I have preferred. It amounts to a trial by appellate judges, in the appellant's absence, without witnesses appearing, and in reliance on the record of the trial in the lower court.

All in the way you look at it

De Silva v The Queen [2019] HCA 48 (13 December 2019) is one of those cases in which, for an uninvolved reader, the dissenting judgment is just as persuasive as the majority’s. Not to worry, no doubt you had to be there.

In determining whether the judge’s directions to the jury had been wrong, the majority pointed to the absence at trial of any request for clarification of them from defence counsel (at [35]).

I can’t help wondering whether it is overly ambitious to place weight on counsel’s failure to point to a perceived error. Counsel, being well versed in the law, will tend to hear the judge say what the judge means to say, even if the judge hasn’t said it. When counsel knows what the judge means, it is very difficult to misunderstand what the judge says in the way that a jury may misunderstand it.

Only after the event, when there has been time for considered reflection on how misunderstandings may have arisen, might errors become apparent.

Still, the case has some useful general points. Nettle J (dissenting in the result) mentions the standard direction on beyond reasonable doubt (at [47]). The majority emphasise that directions to juries should not include unnecessary matters (here, whether a statement was made, when it was obvious from the recorded interview that the statement was made) [33], and a Liberato direction (in NZ we call this a tripartite direction [1]) can, depending on the issues and the conduct of the trial, be given even if the defendant’s version of events only comes into evidence via a statement given to the police [13].

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[1] R v McI [1998] 1 NZLR 696 (CA) at 708, cited in R v MacDonald [2009] NZCA 428, (2009) 24 CRNZ 785 at [2], and Hazelwood v R [2013] NZCA 406 at [47].

New hardcopy edition of Misuse of Drugs

As any intelligent person knows, it is better to read about drug offences than to commit them.

With that in mind, it can only be helpful for me to point out that the new hardcopy edition of my textbook Misuse of Drugs can now be ordered here.

Suspicion

If you ever thought statutory interpretation could sometimes be a bit puzzling, take comfort from the High Court of Australia’s struggle in New South Wales v Robinson [2019] HCA 46 (4 December 2019). The Court split 4-3, and did well to limit itself to two judgments.

Of more general interest, something to add to your collection of dicta explaining what “reasonable grounds to suspect” means, see [55] of the minority judgment.

As Clive James said ...

Now that rain has stopped play at Seddon Park, let me share some of my favourite Clive James quotes:

From The Meaning of Recognition – New Essays 2001-2005:

“ ... she was talking too fast to hear herself think.”

“... there is a lingering aesthetic sense that appreciates a tall, slim female form draped in a black linen pants suit underpinned with strappy high-heeled sandals for the shapely feet, the toenails painted with the blood of slain lovers.”

“The concept was too subtle for her to grasp. It turned out that she was a lawyer. She can attack me as often as she likes, but I hope to God that she never defends me.”

“Those of us who have lost our hair find it hard to suppress the suspicion that it has been stolen in the night by those who have kept theirs.”

“... I found Moby Dick a hard read ...”.

“... academic politics in all their bitchy intricacy ...”.

“... you have to admire a country so democratic that a mentally handicapped man can become President.”

“As all you women in the audience know, the amount of hair on top of a mature man’s head is governed by the amount of testosterone he secretes, but the proportion is not direct. The proportion is inverse. Testosterone attacks the hair follicles. It fries and shrivels them like noodles in a wok of acid.”

From Cultural Amnesia:

“One famous compulsive fabulist, the Jeffrey Archer of his time, never recovered what was left of his credibility after Molnár said: ‘He’s such a liar that not even the opposite is true’.”

“As I write, the elite is in its last phase, where it begins to forget the car keys through the effort of remembering the door keys.”

“The hardest trick in an Italian poet’s book is to avoid rhyme ...”.

“He was the sort of writer who said ‘microphone’ when he meant ‘loudspeaker.’”

“... I became a scolding bore on the subject of the Cinquecento. On the Quattrocento, less hindered by academic assistance, I was capable of the odd independent judgement ...”.

“... a shock, as if Jane Austin had forgotten to mention money.”

“Written in an age when it was still assumed that children would not suffer brain damage from hearing a phrase they couldn’t immediately understand ...”.

“... the flouncing kick-line of the post-modern intellectual cabaret.”

“Expressing oneself clearly is the most complicated thing there is.”

“Like literary theory at a later time, however, analytical philosophy was a hard game to get out of after you had started drawing the salary.”

Appellate review to identify miscarriages of justice in conviction appeals

If you were ever worried about whether conviction appeals under s 232(2)(c) and (4) of the Criminal Procedure Act 2011 are determined by way of review or by rehearing, relax. Just by looking at Misa v R [2019] NZSC 134 you can see that the appeal court does not try to reach its own verdict (as it would if an appeal were to be heard by way of rehearing), so the approach is by way of review.

Just a wee cautionary note: don’t be confused by s 78 of the Senior Courts Act 2016, which provides that appeals to the Supreme Court are heard by way of rehearing. It just means a rehearing of the appeal in the court below, which was by way of review: see Sena v Police [2019] NZSC 55 (discussed here) at [25, fn 41] (referring to an identical earlier provision).

True, the Court in Misa does not declare itself to be conducting a review of what happened at the trial, but its focus was on substance rather than terminology. In substance ([48]): “the question is whether the error, irregularity, or occurrence in or in relation to or affecting this trial has created a real risk the outcome was affected. That, in turn, requires consideration of whether there is a reasonable possibility another verdict would have been reached.”

The second sentence elaborates the first which is a repetition of the statutory language of s 232(4)(a). That is, “real risk” equals “reasonable possibility” and “was” equals “would”.

On the facts, the proposed new evidence would not have made any material difference, so there was no error, irregularity or occurrence in or in relation to or affecting the trial that created a real risk that the outcome was affected (at [77]).

This conclusion was reached, not by the Court considering the whole of the evidence and reaching its own verdict, but by identifying the defence strategy at trial and assessing the effect of the proposed new evidence on that (at [74]). The defence strategy was to allege collusion as an explanation of the similarity of the evidence of two prosecution witnesses, thereby undermining them both. It was not to create differences between the witnesses. In the circumstances the chosen defence strategy was sound, and there had been no error of trial counsel in using it. Further, the proposed new evidence was not inconsistent with evidence that had been given at trial and it raised no new issues (see [76] and its references to the jury’s perspective).

But, you may say, won’t the Crown usually oppose the appeal against conviction by arguing that the conviction was inevitable on the evidence, so that to address that argument the appellate court will have to come to its own verdict? In other words, rehear the case on the record of the trial? That this is not precluded was recognised in Wiley v R [2016] NZCA 28 at [44], [49].

The Court in Misa did not have to address this aspect of Wiley, which was upheld in other respects (at [36]-[37]). Instead of arguing that the verdict was inevitable, the Crown here submitted, successfully, that the new evidence was inconsequential.

On being helpful

A defendant’s right to a fair trial is an absolute right, but is the right to procedural fairness absolute? Can a trial be fair if its procedure is less than fair?

At sentencing, the defendant may claim mitigation for having given assistance to the authorities. There may be good reasons for not making public the fact that such assistance was given, and procedures may be in place to provide information to the judge on a confidential basis. Such information can take the form of a memorandum prepared and agreed to by counsel for each side. But what if the prosecutor wishes to include information for the judge’s eyes only, favourable to the defendant, but where disclosure of it to the defendant might compromise ongoing investigations?

This was considered in HT v The Queen [2019] HCA 40 (13 November 2019). Three judgments were delivered, all agreeing in the result. The majority opinions were given jointly by Kiefel CJ, Bell and Keane JJ, with support from Gordon J. Generally, where this problem arises, counsel should approach the sentencing judge for an appropriate order restricting disclosure, for example to counsel for the defendant but not to the defendant, or for disclosure to independent counsel who will then obtain instructions from the defendant to the extent that it is possible to do so while still keeping the confidential information from the defendant. At the sentencing hearing suppression and non-publication orders, or an order for an in camera hearing, could also be made.

Nettle and Edelman JJ accepted that suppression and in camera orders could be used, but they dissented by holding that the defendant must see everything that the judge sees [59]. It should only rarely not be possible for counsel to agree on a memorandum describing assistance given by the defendant, and the drafting of a suitable memorandum must be done in the light of the prosecutor’s duty of fairness. They pointed to the need for legislation to cover situations where agreement could not be reached.

In New Zealand it has been held that there is no power to exclude the public from a sentencing hearing, or to hear submissions in chambers. There are rules concerning assistance to the authorities: Criminal Procedure Rules 2012, r 5A.8. Sentencing involves deciding on a starting point in view of the seriousness of the offending and the role of the offender, and then adjusting it for mitigating or aggravating circumstances relating to the offender, and then giving credit for any assistance rendered by the offender to the authorities, and finally giving such credit as is appropriate in the circumstances for any guilty plea. In the result, the mitigatory effect of assistance to the authorities can be substantial. Failure to follow the sealed envelope procedure in the rules led to problems in AB(CA300/2017) v R[2018] NZCA 51 (not publicly available online), where on appeal credit by way of reduction of sentence by one third was considered appropriate, in the absence of a guilty plea, but where important information had been given in relation to serious offending. Orders were made suppressing the details of the assistance, the identifying particulars of the appellant, and limiting access to the court file. The Court noted that there have been cases where, when credit for assistance is combined with that for a guilty plea, a reduction from the appropriate sentence of up to 60 per cent has been approved.

An unreasonable jury verdict

The criminal courtroom can make innocence look like guilt.

A combination of circumstances persuaded a jury and a first appeal court that a murder had been committed by the defendant, but on second appeal the verdict was held to have been unreasonable, the conviction was quashed and an acquittal entered: Fennell v The Queen [2019] HCA 37 (6 November 2019).

It is worth reading the judgment for an illustration of how to take apart a prosecution case which relies on circumstantial evidence.

From the point of view of the law on how an appeal court may decide whether a jury verdict is reasonable, see [81]-[82]:

“[81] Where a court of criminal appeal is called upon to decide whether it considers that, upon the whole of the evidence, it was open to the jury to be satisfied beyond reasonable doubt that the accused was guilty of the offence charged, the court must not disregard or discount either that the jury is the body entrusted with primary responsibility of determining whether the prosecution has established the accused's guilt or that the jury has had the benefit of having seen and heard the witnesses. [M v The Queen (1994) 181 CLR 487 at 493.] At the same time, however, the court may take into account the realities of human experience, including the fallibility and plasticity of memory especially as time passes, the possibility of contamination of recollection, and the influence of internal biases on memory. [Bingham, "The Judge as Juror: the Judicial Determination of Factual Issues" (1985) 38 Current Legal Problems 1 at 16-18.] The court can also take into account the well-known scientific research that has revealed the difficulties and inaccuracies involved in assessing credibility and reliability. [Fox v Percy (2003) 214 CLR 118 at 129 [31]. See also Devlin, The Judge (1979) at 63; Bingham, "The Judge as Juror: the Judicial Determination of Factual Issues" (1985) 38 Current Legal Problems 1 at 7-8, 10-11; R (G) v Governors of X School [2012] 1 AC 167 at 196-197 [80].] And especially is that so in a case like this where the jury has been subjected to the seductive effects of a species of identification evidence that has in the past led to miscarriages of justice. [See R v Clout (1995) 41 NSWLR 312. See and compare Domican v The Queen (1992) 173 CLR 555 at 561.] ... .

“[82] In an appeal where a ground of appeal is that the verdict was unreasonable or cannot be supported having regard to the evidence, and particularly where the Crown case is based upon a number of matters of circumstantial evidence, it is necessary for the appellate court to assess the whole of the case and to weigh that case as a whole. A circumstantial case cannot be considered in a piecemeal fashion. [R v Hillier (2007) 228 CLR 618 at 638 [48]. And see my note on this case here.] A corollary of this principle, particularly in cases in which the conclusion is not clear-cut, is that a substantial error, or errors, by an intermediate court of appeal in the process of assessing the case as a whole can infect the entire process.”

Here, the first appeal court had made an important error. The credibility of a significant item of evidence (an assertion that a hammer had been lent to the defendant) was greatly over-estimated ([76]-[80], [89]). This error may, I suspect, have occurred because, if true, the evidence would have been highly probative. The treatment of other circumstances as also being more sinister than they were could have led the court to over-estimate the likelihood that the hammer had been correctly identified.

Generally speaking, two steps are involved: first, assessing the credibility - or reliability [1] - of the witness's testimony ("This is the hammer I lent the defendant"), and second, if it is sufficiently credible to satisfy the fact-finder that it is true, the assessment of its probative value on an issue in the case. There is not necessarily a standard of proof for deciding whether testimony is credible, although it is often said that if the evidence must be accepted before a verdict of guilty can be returned then the credibility of that item of evidence must be established beyond reasonable doubt. For less central testimony it is likely that credibility need only be established to a level that "satisfies" the fact-finder that it is true, and here satisfies means on the balance of probabilities. However, this is a rather vexed topic and jurisdictions may differ in how they express the requirement for acceptance of the truth of evidence.

Credibility and probative value are matters specific to the particular testimony that is being considered, but when it comes to assessing the verdict on the accepted evidence, it is all the accepted evidence that must be taken into account. This is why the court can say it is wrong to latch on to one item of evidence and claim that it creates a reasonable doubt about the defendant's guilt. There will be occasions where that can be done, for example if an alibi is accepted notwithstanding that the other evidence strongly supports an inference of guilt. But other than alibi evidence, and also evidence supporting an affirmative defence (where the defendant's actus reus and mens rea are not disputed), in most cases, including Fennell, all the accepted evidence must be considered in deciding whether guilt has been proved beyond reasonable doubt.

In the course of a criminal trial, as evidence of guilt appears to accumulate, further evidence may be given greater credibility than it deserves.

But that’s not all. References by the High Court of Australia in Fennell to Bingham remind us of how Lord Bingham, delivering the judgment of the Privy Council, analysed our notorious circumstantial evidence case, Bain v R [2007] UKPC 33 (10 May 2007), noted here. But the Bain appeal was different insofar as it involved fresh evidence which called into question whether the combined effect of the circumstantial evidence would, in its light, be sufficient to support a verdict of guilty. As there was fresh evidence, it was appropriate to order a retrial. It was not for the appellate court to itself come to a verdict on the new evidence. In contrast, Fennell was not a fresh evidence case. The prosecution relied on categories of evidence - alleged theft, alleged motive, alleged possession of the murder weapon, and alleged opportunity - and each was shown to be unreliable. This was a case of absence of reliable evidence, not a case of assessing on an overall view the probative value of reliable evidence. On finding the conviction unsound the Court could order an acquittal.
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[1] In New Zealand s 28 of the Evidence Act 2006 is relevant where the reliability of a defendant's statement is being considered, and this has been interpreted as meaning that the truthfulness of the evidence can be relevant to assessing its reliability, a position not criticised by the Law Commission in its Second Review of the Evidence Act 2006, NZLC R142 at [6.19]-[6.23]. In R v Wichman [2015] NZSC 198 at [76] the majority in its joint judgment observed in relation to the possibilities that someone who is innocent may be convicted on evidence which turns out not to have been reliable, that these risks "... are inherent in the criminal trial process and cannot be completely avoided. They can, however, be mitigated in various ways; in particular by recognising the risk of unreliability; the provision of a reliability screening process to be carried out by the judge; judicial warnings; jury assessment and the rules as to the burden and standard of proof."

Sentencing for methamphetamine dealing

In a splendidly clear judgment our Court of Appeal has revised the law on sentencing for methamphetamine dealing (importing, manufacturing, and supplying): Zhang v R [2019] NZCA 507.

The Court of five Judges helpfully sets out a summary of the judgment at [10], and adds at [11]:

“...Those who willingly participate in commercial-level dealing in methamphetamine will gain little succour from this judgment. Its benefits lie more for those who take a lesser role in methamphetamine offending, and particularly those who do so as a result of vulnerability.”

There is no need for me to summarise the case (six jointly heard appeals), as the Court has done the hard summarising work in [10] and [11].

I make two observations.

First: If you thought that in referring to only two stages of analysis the Court was overlooking the taking into account of an early guilty plea, don’t worry. Looking at the discussions of the cases appealed you can see, for example at [201] and [258] the traditional approach.

Second: You may remain confused over the way an appropriate sentence for a conspiracy is identified. At [239] the Court says that taking half the penalty identified for the full offence is the correct approach, citing in footnote 133 Parata v R [2017] NZCA 48 at [5]. Yes, you say, but in Parata no authority for that was given. I dare not suggest that there might be some confusion here between s 310(1) of the Crimes Act 1961 and s 311(1) of that Act which provides (materially) for half the penalty for the full offence if only the attempt is committed. But s 310 does not apply here either, because the penalties for conspiracy to deal in drugs are set out in s 6(2A) of the Misuse of Drugs Act 1975. They are 14, 10 and 7 years’ imprisonment, compared with, for the corresponding full offences, life, 14 and 8 years. The approach to sentencing in the drugs context for conspiracies has been to reduce the levels set out in the bands by about 30 per cent: R v Haarhaus HC Auckland CRI-2007-004-018646, 24 July 2009, applied in R v Feng [2016] NZHC 1333 (neither of these cases was referred to in Zhang). Nor did the Court refer to its earlier decision in R v Te Rure [2007] NZCA 305, [2008] 3 NZLR 627, where detailed consideration was given to conspiracy sentencing in the context of dealing guidelines. So, what should we do? Follow High Court authority which has not been overruled, and take (as the first step in setting a starting point) about 30 per cent off the penalty identified in the new bands if the full offence had been committed? Or follow Zhang which, for no apparent reason, halves the penalty for the full offence as identified in the bands?

You decide.