Braysich v The Queen

• Jurisdiction: Australia Federal only
• Judge: French CJ,Crennan,Kiefel JJ.,Heydon J.,Bell J.
• Judgment Date: 11 May 2011
• Neutral Citation: 2011-0511 HCA A,[2011] HCA 14
• Court: High Court
• Docket Number: P32/2010
• Date: 11 May 2011

Jeffrey Joseph Braysich

Appellant

and

The Queen

Respondent

[2011] HCA 14

French CJ, Heydon, Crennan, Kiefel and Bell JJ

P32/2010

HIGH COURT OF AUSTRALIA

Braysich v The Queen

Criminal law — Evidence — Burden of proof — Defences — Directions to jury — Appellant charged with creating a false or misleading appearance of active trading in securities — Appellant deemed to have created false or misleading appearance of active trading if proved to have caused a sale of securities where, to his knowledge, there was no change in beneficial ownership of securities — Section creating offence included a defence to prove that the purpose or purposes of the trades was not or did not include purpose of creating a false or misleading appearance of active trading (‘proscribed purpose’) — Where appellant did not give direct evidence of whether subjective purpose or purposes included proscribed purpose — Trial judge ruled defence not raised and withheld defence from jury — Whether character evidence as to honesty and other evidence in defence case sufficient to require defence to be left to jury — Whether, taking evidence at its highest, jury could conclude on balance of probabilities that appellant lacked proscribed purpose.

Corporations — Financial services and markets — Market misconduct and other prohibited conduct — False trading and market rigging.

Words and phrases — ‘balance of probabilities’, ‘evidential burden’, ‘false or misleading appearance of active trading’, ‘legal burden’.

Corporations Act 2001 (Cth), s 1401.

Corporations Law, ss 998, 1311(1).

Representation

M J McCusker QC with S J Lemonis for the appellant (instructed by Ainslie van Onselen)

W B Zichy-Woinarski QC with W F Gillan for the respondent (instructed by Commonwealth Director of Public Prosecutions)

ORDER

1. Appeal allowed.

2. Set aside the order of the Court of Appeal of the Supreme Court of Western Australia made on 16 October 2009 dismissing the appeal against conviction and, in its place, order that:

(a) the appeal to that Court be allowed;

(b) the appellant's convictions be quashed; and

(c) the matter be remitted to the District Court of Western Australia for a new trial.

French CJ, Crennan and Kiefel JJ.

Introduction

1 Following a trial before a judge and a jury in the District Court of Western Australia, the appellant, a stockbroker, was convicted on 10 November 2007 of 25 counts of creating a false or misleading appearance of active trading in securities on the stock market. The offence was created by s 998(1), read with s 1311(1), of the Corporations Law of Western Australia, as incorporated into the Corporations Act 2001 (Cth) (‘the Corporations Act’) by operation of s 1401 of that Act 1.

2 The convictions should be quashed. The trial miscarried. The Crown case on each of the counts was that the appellant had caused a sale of listed shares to be made in circumstances in which, to the appellant's knowledge, there was no change in their beneficial ownership. If that fact were established he was, by force of s 998(5) of the Corporations Law, deemed to have created a false or misleading appearance of active trading in the shares. The finding of fact and the application of the deeming provision were therefore sufficient for conviction. The appellant, however, wished to rely at trial upon a statutory defence, under s 998(6) of the Corporations Law, that the purpose or purposes for which he caused the sales to take place did not include the purpose of creating a false or misleading appearance of active trading. It is common ground that he would have had the burden of establishing that defence on the balance of probabilities.

3 The trial judge ruled at the close of the appellant's testimony that he had not raised the statutory defence. On the basis of that ruling his Honour refused to allow the appellant to call expert evidence to rebut an expert witness called by the Crown in anticipation of the appellant's reliance upon the defence. Counsel was not permitted to address the jury on the defence and the jury were told that it had no application to the appellant. The defence was able to be availed of by his co-accused, who had been his client and one of the principals in the impugned transactions. The trial judge directed the jury accordingly.

4 The Court of Appeal of the Supreme Court of Western Australia (Pullin, Buss and Miller JJA) dismissed an appeal against conviction 2. It held that the statutory defence was properly withheld from the jury and the objection to the appellant's expert evidence properly allowed. The Court of Appeal also held

that, in any event, there had been no substantial miscarriage of justice and that, had it come to a different view of the trial judge's rulings, it would have dismissed the appeal 3. In this Court, the Crown expressly disclaimed reliance upon and support for that aspect of the Court of Appeal's decision. The appeal to this Court is brought by special leave granted on 30 July 2010 by Hayne and Bell JJ. Its outcome turns upon whether the trial judge erred in withdrawing the statutory defence from the jury and in not permitting the appellant to call expert evidence said to be relevant to that defence. In our opinion his Honour did so err.

The statutory framework

5 The indictment, dated 9 August 2007, alleged contraventions by the appellant of ss 998(1) and 1311(1) of the Corporations Act. The reference to those provisions was incomplete. The conduct said to constitute the offences occurred in 1998. The relevant offence creating provisions at that time were ss 998 and 1311 of the Corporations Law, given statutory force in Western Australia by the Corporations (Western Australia) Act 1990 (WA).

6 Section 1401 of the Corporations Act relevantly incorporates into that Act provisions of the Corporations Law of the various States and Territories which had given rise to criminal liabilities in existence immediately before the commencement of the Act on 15 July 2001 4. That section creates new and substituted liabilities under the incorporated provisions which are equivalent to the old liabilities. It follows that the matter founding the jurisdiction of the District Court of Western Australia was the justiciable controversy arising from contested allegations of contraventions by the appellant of the ‘substituted, carbon-copy’ of ss 998 and 1311 of the Corporations Law 5.

7 The relevant parts of s 998 as it stood at the time of the alleged offences were:

‘(1) A person shall not create, or do anything that is intended or likely to create, a false or misleading appearance of active trading in any securities on a stock market or a false or misleading appearance with respect to the market for, or the price of, any securities.

…

(5) Without limiting the generality of subsection (1), a person who:

(a) enters into, or carries out, either directly or indirectly, any transaction of sale or purchase of any securities, being a transaction that does not involve any change in the beneficial ownership of the securities;

…

shall be deemed to have created a false or misleading appearance of active trading in those securities on a stock market.

(6) In a prosecution of a person for a contravention of subsection (1) constituted by an act referred to in subsection (5), it is a defence if it is proved that the purpose or purposes for which the person did the act was not, or did not include, the purpose of creating a false or misleading appearance of active trading in securities on a stock market.

…

(9) The reference in paragraph (5)(a) to a transaction of sale or purchase of securities includes:

• (a) a reference to the making of an offer to sell or buy securities; and

• (b) a reference to the making of an invitation, however expressed, that expressly or impliedly invites a person to offer to sell or buy securities.’

Section 1311, a general offence provision, provided that a person doing an act that the person was forbidden to do by or under a provision of the Corporations Law was guilty of an offence unless that or another provision of the Law provided that the person was guilty, or not guilty, of an offence.

8 Section 998 of the Corporations Act, now repealed, differed slightly in its language from s 998 of the Corporations Law 6. The operation of s 1401 of the Corporations Act is such that the text of s 998 of the Corporations Law is the applicable text for the purposes of this appeal.

The charges against the appellant

9 The indictment contained 26 counts against the appellant 7, which took the following three forms:

The appellant was convicted on all but one of the counts 11.

• 1. That the appellant created a false or misleading appearance of active trading in the ordinary fully paid shares of Intrepid Mining Corporation NL (‘Intrepid’) on the Australian Stock Exchange (‘the ASX’), in that he caused to be made an offer to buy [a number of] ordinary fully paid shares in Intrepid and thereby caused to be carried out a transaction that did not involve any change in the beneficial ownership of [an equal or lesser number of] the shares, contrary to ss 998(1) and 1311(1) of the Corporations Act 8.

• 2. As above, save that the charge was that the appellant caused to be made an offer to sell 9.

• 3. As in 1 above, save that the allegation was that he ‘caused to be carried out a transaction that did not involve any change in the beneficial ownership in respect of [a number of] ordinary fully paid shares in Intrepid’. The charge did not indicate whether the transaction involved an offer to sell or to buy the shares 10.

10 An account of the evidence at trial and the conduct of the trial is set out in the reasons for judgment of Bell J 12. It is sufficient for the purposes of these reasons to refer to salient features of the prosecution and defence cases and the contested rulings...