Commonwealth Director of Public Prosecutions (CDPP)

The new procedures for the prosecution of complex fraud - will they work?

Date of Publication: 
1 September 1993

Author: Rozenes, M. Date: September 1993 Venue: 28th Australian Legal Convention

Introduction

In Australia there is now a very real concern whether our criminal justice system can cope with the complex fraud trial. In his Fraud Trials Committee Report, Lord Roskill stated:

"The public no longer believes that the legal system ... is capable of bringing the perpetrators of serious frauds expeditiously and effectively to book. The overwhelming weight of the evidence laid before us suggests that the public is right. In relation to such crimes, and to the skilful and determined criminals who commit them, the present legal system is archaic, cumbersome and unreliable. At every stage ... the present arrangements offer an open invitation to blatant delay and abuse."1

While Lord Roskill was speaking in 1986 of the position in England and Wales, the gloomy picture he painted is equally applicable to Australia in 1993. I do not believe it is overstating the position to say that the criminal justice system in Australia is in danger of collapse under the weight of extremely lengthy trials. Trials taking more than two months to complete, which up until ten years ago were a rarity, are now all too commonplace, and in recent years we have seen the emergence of the "mega" or "super" trial - often but not always involving allegations of fraud - which may run for upwards of a year or even more. The reconstruction in the courtroom of a series of complex commercial transactions will inevitably be a difficult matter, and such trials will always take longer than the "average" trial. Yet many complex fraud trials are still taking far longer to complete than they should. In my opinion the main cause of the excessive length and cost of complex fraud trials is deficiencies in our procedural and evidentiary rules. In a typical trial the real issues between the prosecution and the defence may not start to emerge until prosecution witnesses are being cross examined, and may not become clear until after the defence has embarked upon its case. Only then may it become apparent that a large part of the trial has been taken up with the prosecution proving matters which were never really in dispute, but which it was nevertheless necessary for the prosecution to prove because they were not conceded by the defence. In a recent fraud trial conducted in Victoria,2 which incidentally took nearly two years to complete and is the longest criminal trial in Victorian legal history, the defence of one of the two accused to what was in effect a false prospectus charge was that he had not seen, nor was he aware of, the prospectus. Nevertheless, all of the evidence led by the Crown establishing the fact that the prospectus was false was challenged despite the fact that that was irrelevant to the accused's defence. While the other accused did little to challenge the Crown's evidence, nor was he prepared to concede it, with the result that the Crown was required to strictly prove each and every bit of evidence irrespective of whether it was in dispute. The need to spend much of the trial proving matters which are not really in dispute is regrettably the hallmark of the fraud trial. Much of the prosecution evidence in such cases will consist of documentary evidence of what will often be a large number of complex transactions. Yet is it usually the case that the documents themselves are rarely in dispute; rather it is whether the inference of dishonesty can be drawn from those documents which will usually form the real issue in the case - was the defendant sufficiently aware of what was going on; did the defendant realise that an ordinary person would regard what he or she was doing as dishonest? Of course, as the onus rests on the prosecution to prove the guilt of the accused, it is for the prosecution to prove all the facts upon which it wishes to rely, and the defence is under no obligation at law to concede those facts it does not dispute. Further, save for a defence of alibi, the defence can keep any defence to the charge up its sleeve until when, in its judgment, it is likely to have the greatest impact. The defence may of course at an earlier stage voluntarily disclose its hand to some extent or make some concessions in terms of strict proofs. However, all too rarely does the defence see it is as being in its interest to agree to facts or to simplify the issues to be considered by the jury. There is always the possibility that the prosecution will falter in its proof of some formal yet nevertheless essential fact. At the very least, there is always the possibility that the sheer weight of facts which the prosecution must prove will muddy the waters, and make it easier for the defence to introduce doubt in the mind of the jury. As things presently stand it cannot be denied that it is a legitimate tactic for the defence to require the prosecution to be put to its proof of all the facts in the case, whether or not they are disputed. But is it justice? Is it justice to take upwards of a year or perhaps more out of the lives of at least 12 jurors to try a case where, although the prosecution case is concerned with a large number of complex commercial transactions, the fact that those transactions took place is not in dispute; rather the real issue is whether the defendant was knowingly and dishonestly involved in the fraud. Is it justice where a jury is expected to reach a verdict upon evidence which may have been given many months beforehand. As Mann LJ observed in relation to the Blue Arrow trial:

"The awesome time-scale of the trial, the multiplicity of issues, the distance between evidence, speeches and retirement and not least the two prolonged periods of absence by the jury (amounting to 126 days) could be regarded as combining to destroy a basic assumption. This assumption is that a jury determine guilt or innocence upon evidence which they are able as humans both to comprehend and remember, and upon which they have been addressed at a time when the parties can reasonably expect the speeches to make an impression upon the deliberation."3

We should also not lose sight of the fact that these "mega" trials involve an enormous drain, not just on the criminal justice system, but on the administration of justice generally. Mr Justice Wood has recently referred to the devastating effect that these mega trials have on the remainder of the civil and criminal lists. Referring to a trial which had lasted some nine months, his Honour noted that that one trial "alone forced the postponement of 132 short trials in the District Court, and its cost to the community was estimated by the trial judge to have been $5.5 million."4 While I believe that the main cause of the excessive length and cost of complex fraud prosecutions are deficiencies in our procedural and evidentiary rules, nevertheless the key figures in the trial process - the prosecution, defence and the judiciary - must also share part of the blame and must assume part of the burden of reform. The prosecution has not always done all it could in order to prepare a case in such a way that it can be presented to the jury as simply as possible, and so that the prosecution case is kept within manageable limits. On too many occasions prosecuting authorities have been unable to resist the temptation to charge a multiplicity of offences, and/or defendants, although often the inevitable consequence of this is to consign all involved to an unnecessarily long, expensive and perhaps an unmanageable trial. The eventual fate of the Blue Arrow indictment at the hands of the English Court of Appeal is an object lesson for all prosecutors on the dangers inherent in overloading the indictment.5 Rarely will the charges disclosed by the available evidence represent such an "indivisible unity" that to reduce the number of charges and/or defendants will either effectively destroy the prosecution case or so emasculate it that it is but a mere shadow of the criminality disclosed by the investigation. In any event, prosecutors must learn that it simply may not be feasible for the charges to reflect the full criminality of the case. Even if it means that 90% of the criminal conduct disclosed by the available evidence must be "dropped off" to keep the case within manageable limits, then so be it. The difference in the penalty imposed for a $20 million, as opposed to a $200 million fraud, will not be all that great, and in any event a bird in the hand is better than nothing at all in the bush. Granted there will be occasions when to reduce the prosecution case will in fact be to weaken it. To proceed on charges which reflect only a discrete aspect of the criminality disclosed by all the available evidence may make it easier, for example, for the defence to advance some innocent explanation which would not be available if all possible charges were proceeded with. That, however, may be the price the prosecution will have to pay in order to secure a manageable trial. As the Court of Appeal observed in the Blue Arrow appeal, "a fear of failure on the few ought not to inform a decision to proceed on the many."6 On the defence side, some defence counsel have stretched their ethical obligations to the limit in "aiding and abetting" a defendant who perceives it as in his or her best interest to delay and obfuscate, and generally to play the system for all it is worth. Regrettably, such tactics are not always unsuccessful. By the time the matter comes on for trial, memories may have faded or important evidence may no longer be available. During the trial it is relatively easy under our existing procedures for the defence to promote confusion, which it can then exploit to its advantage. Even if such tactics are unsuccessful to the extent the defendant does not avoid conviction, a plea in mitigation that the offences occurred a long time ago, and that the defendant has had the matter hanging over his or her head for a long time, does not always fall on deaf ears. For its part the judiciary has not always availed itself of the opportunities that are already available to ensure that court time is utilised to the best effect. Some judges have been unduly concerned that if they adopt a robust approach during the trial they will be perceived as being less than impartial. The role of the judge in the trial of a complex fraud case is crucial. Such cases require the best judges to try them efficiently and fairly. By that I mean that care must be taken to ensure that only those senior judges who are highly experienced in the criminal jurisdiction and who have an appreciation of commercial matters are chosen to try these cases. However, while the existing culture must share some of the blame, so long as we cling to our traditional notions of how a trial is conducted these cases will continue to be costly, lengthy and oppressive to all concerned. The present approach is not in the interests of justice and is finally being recognised as such. Certainly it is a system which we can no longer afford. Indeed, in this context we have been living beyond our means for some time. The plain fact of the matter is that our criminal justice system was not designed to deal with the complex fraud case which, after all, is a relatively new phenomenon. If these cases are to be kept within manageable limits, and indeed if some of them are to be triable at all, it is absolutely essential that new procedures be introduced which are designed to crystallise the issues in dispute prior to empanelling the jury so that the case can be presented as simply as possible to the jury with the minimum of interruption.

The SCAG Initiative

It is an indication of the concern of government as to the devastating effect that lengthy criminal trials are having on our criminal justice system that the Commonwealth, State and Territories have been able to reach broad agreement in a relatively short period on a package of legislative and administrative measures designed to deal with the problems of complex criminal trials in general, and complex fraud trials in particular, although at this stage only one jurisdiction, Victoria, has gone so far as to enact legislation containing its version of the package.7 The genesis of the package of reforms is a series of resolutions passed at the National Crime Authority's 1992 National Complex White Collar Crime Conference. Many of those resolutions were based in turn on recommendations made by Professor Mark Aronson in a draft of his report "Managing Complex Criminal Trials : Reform of the Rules of Evidence and Procedure." 8 The resolutions passed at the 1992 NCA Conference were considered at a special meeting of the Standing Committee of Attorneys-General (SCAG) held on 7 August 1992 when Ministers agreed in principle to a number of proposals based on the conference resolutions. While it is obviously desirable that each jurisdiction enact uniform legislation, the Committee recognised that each jurisdiction would have to make its own decisions as to the content of its legislation in this area. In broad terms, the aims of the SCAG package are:

  • to allow judges to exercise greater control over the pre-trial process as well as the actual trial,
  • to shorten trials,
  • to narrow the issues to be decided by the jury,
  • to streamline the presentation of evidence to the jury, including permitting evidence to be presented in a form which will aid the jury's comprehension of the evidence.

While the package of reforms agreed to in principle by SCAG is wide-ranging, the centrepiece is the introduction of a "directions hearing" procedure to be conducted prior to the empanelment of the jury. This directions hearing procedure essentially provides for a limited form of criminal pleading. In a number of jurisdictions the courts have attempted to make not just fraud trials but all trials more manageable by establishing a system of pre-trial reviews. Unfortunately, pre-trial reviews suffer from a number of disadvantages. For example, rulings given in the course of a pre-trial review may not be binding on the trial judge, and thus issues which should have been settled at the pre-trial review may be reargued at the trial, particularly if the judge who presided at the pre-trial review is not the trial judge. However, whereas a pre-trial review occurs outside the trial, the proposed directions hearing will be part of the trial, although the jury will not be empanelled until it is completed. The purposes of the directions hearing are essentially to identify, prior to the empanelment of the jury, the issues which are likely to be material to the verdict of the jury, to expedite the proceedings in front of the jury and aid its comprehension of the issues, and to assist in the judge's management of the trial generally. The trial judge will be able to determine any disputed questions of law or fact which would otherwise be determined in a voir dire in the trial proper. For the purposes of the directions hearing procedure the prosecution will be required to provide full and timely disclosure of its case. While that obligation should represent no great change from existing best practice, such disclosure will now be made under the supervision of the court. Under the Crimes (Criminal Trials) Act 1993 of Victoria, the prosecution will be required to file with the court and serve on the defendant a "case statement" within the time frame set by the court in the directions hearing.9 This prosecution case statement must contain a concise account of the facts and inferences on which the prosecution case is based, together with any other material the prosecution is ordered by the court to provide.10 The case statement will also include witness statements, an exhibit list, a statement of any propositions of law on which the prosecution proposes to rely, and the statements of expert witnesses.11 Where it would be impracticable for copies of certain documentary exhibits to be made, they will be made available to the defendant for inspection. 12 The radical change which will be effected by the directions hearing procedure is that it provides for a complementary system of defence disclosure. Again using the example of the Victorian legislation, following service of the prosecution case statement the defendant will be required to serve a response to that statement which indicates the facts and inferences in the prosecution case statement with which issue is taken.13 The defence response must include the statements of any expert witnesses whom the defence intends to call at the trial,14 a reply to any propositions of law stated in the prosecution case statement 15 and any propositions of law on which the defence proposes to rely.16 The Victorian Act further provides that once the indictment has been filed the defendant must indicate which of the elements of the offence charged are admitted.17 This requirement will apply whether or not the case is to be the subject of a directions hearing. Although prior to becoming the Commonwealth Director of Public Prosecutions I more frequently appeared at the defence side of the bar table, I have no difficulty with a directions hearing procedure along the lines that have been proposed. While such a system of defence disclosure does represent a modification to a defendant's existing right to make no concessions at trial and to require the prosecution to prove all the facts upon which it is to rely, I believe such a departure is in truth a relatively minor one and can be justified, particularly when balanced against the intractable problems that serious and complex fraud cases pose for our criminal justice system if they are to be prosecuted in accordance with traditional procedures. I see no virtue in "trial by ambush" and in spending valuable court and legal resources proving matters which are not in dispute. While I am firmly of the view that the proposed directions hearing procedure is a principled response to the problems that complex fraud trials pose for our criminal justice system, the question must be asked whether it is workable. I fear that it is not, at least in its present form.

The Issue of Sanctions

The proposed directions hearing procedure is not, of course, a novel one in that it is largely based on the preparatory hearing procedure provided for in the Criminal Justice Act 1987 (UK). Despite the optimism with which the Criminal Justice Act was received within the UK, it would seem the new procedures have not led to shorter and less expensive trials overall. While that part of the trial after the jury has been empanelled may be a little shorter and less prone to interruption, UK experience would suggest that any savings gained may be lost by a protracted preparatory hearing. In the Guinness case, for example, the preparatory hearing for the first trial occupied 52 sitting days spread over some 13 months.18 Further, in some cases the defence response to the prosecution case statement has been quite uninformative and of little help in identifying and narrowing the issues.19 The Blue Arrow trial, which of course was conducted under the new procedures, is the second longest criminal trial in English history. There is now a real concern whether the Criminal Justice Act procedures can achieve real efficiencies, at least in their present form. As Professor Mark Aronson has recently observed:

"It is a sobering exercise to read the Serious Fraud Office submission to Lord Runciman's Royal Commission on Criminal Justice. ... Gone is the almost unbounded faith in the ability of a pre-trial directions scheme to persuade or cajole an accused into defining the real issues in dispute before the Crown opens its case. Gone is the faith once placed in the efficacy of a judge's power to comment in disparaging terms to the jury on an accused's tactics, as a mechanism for expediting the trial. Instead, there is a call for judges with more spine, and with more power (quite unspecified) to compel defence compliance with its disclosure obligations."20

It is all well and good to establish new procedures which in theory will confine the trial to the issues genuinely in dispute. However, they will not be effective in achieving greater efficiency in the trial process unless they are enforceable. An obligation to identify the issues genuinely in dispute without an effective means of enforcing that obligation is in truth no obligation at all. In so far as the prosecution is concerned, the courts already possess sufficient powers to ensure that in framing the indictment the prosecution pays due regard to the limitations of jury trial, and that generally the prosecution complies with its obligations under the new procedures. Again, the Blue Arrow trial is an object lesson to the judiciary on the need to be forceful in using its powers of amendment and severance should it appear that the prosecution is hell-bent on proceeding on an indictment which may result in an unmanageable trial. The fundamental question, however, is how to ensure the defence complies with its obligations to identify those issues which are genuinely in dispute. If we can learn anything from the recent UK experience it is that the defence must be provided with real incentives, in the form of carrots and sticks, to play the game in accordance with the spirit of the new procedures. In his Report, Professor Aronson rightly identified the issue of sanctions in the event of non-compliance by the defence with its obligations under the new procedures as presenting the major obstacle in any move to a system of defence disclosure. However, save for empowering the court to take into account an accused's obstructiveness if and when it comes to imposing sentence, and modifying the rules relating to the Crown splitting its case, Professor Aronson is content to rely on the hope that "the dynamics of this exercise will see common sense prevail."21 Frankly, I am not as sanguine as he appears to be that this will suffice, even if defence counsel are briefed sufficiently early, and there is a timely provision of the prosecution case statement. While Professor Aronson is essentially arguing that with counsel of good will and a strong judge all things are possible, experience has demonstrated that all too often one if not both of these commodities are missing. The Criminal Justice Act attempted to address the issue of sanctions by permitting the court, or any other party with leave, to "make such comment as appears ... to be appropriate and the jury may draw such inference as appears proper" where there is a departure at the trial from the case disclosed at the preparatory hearing, or where there has been a "failure to comply with a requirement imposed" at the preparatory hearing.22 Professor Aronson rejects the idea that unco-operativeness on the part of the defence can have any evidentiary consequences. While he does not object to that part of the Criminal Justice Act provision permitting comment on a departure from the defence case indicated at the preparatory hearing, on the basis that comment is already permitted where the defence changes stories23 he is opposed to the jury being permitted to draw an adverse inference from the accused's lack of co-operation:

"Where the defence has kept all issues open, it cannot be appropriate for the prosecution, or the judge, to invite the jury to find that fact as a further indication of guilt. A defendant can be bloody-minded, without being guilty. In addition, the tactical responses to any invitation to draw an adverse inference could be too distracting. The defendant could blame, and even sack, his or her lawyer, saying that all tactical decisions were in the hands of the legal representative. Finally, and more crucially, it would be difficult to construct an adverse inference which could permissibly be drawn from an accused refusing to narrow the issues, whilst at the same time maintaining the position that the accused's silence at the investigative stages cannot count against them. One could not, in practice, quarantine an adverse inference from a person's silence in court from a similar inference from their silence during the investigation."24

Apart from these more philosophical objections, Professor Aronson also derives some comfort from the fact that in any event the sanction of adverse comment in the Criminal Justice Act does not appear to have proved successful in diminishing obstructionist tactics by the defence.25 Mr Justice Wood is also not an enthusiast of the sanction of adverse comment, although perhaps for reasons that are more pragmatic than philosophical. In 1992 his Honour observed:

"Any direction or comment would, almost certainly, have to be approached in similar fashion to evidence of lies, with appropriate observations as to the caution needed and reference made to the availability of inferences and explanations other than that the defence was recently invented, or that the accused has by the course taken displayed a consciousness of his guilt.

Almost always where a line of defence turns up in the Crown case, it will be better to accept the comment and risk of inference, particularly if little else is available. Any competent counsel should be able to draft a case statement which is sufficiently wide to render it at least arguable, whether the comment or inference is available and if not, to dress up an explanation for any apparent departure from its case statement. At worst, the fault could be attributed to error or misunderstanding on the part of the defence legal representatives. This approach is likely to be productive of a good deal of argument, and it may turn out that the value to the prosecution case of the comment and of any direction concerning the available inferences, is outweighed by the risk of creating an appeal point."26 Certainly the Criminal Justice Act provision appears to have been ineffective as a deterrent where an accused is minded to be unco-operative. Indeed, in the view of the Serious Fraud Office the powers contained in s10 are "not thought to be any sort of a deterrent at all."27 Limited as the provision is to departures from the defence case indicated at the preparatory hearing or a failure to comply with a requirement imposed at that hearing, there would seem to be nothing to prevent the defence simply stating at the preparatory hearing that all facts are denied, and accordingly it will be requiring all facts to be strictly proved.28 Even where the tactics adopted by the defence are such that comment may be made, it would seem that many judges are loath to exercise their s10 powers.29 While Professor Aronson considers that an accused's right to silence "includes the right to be free of an adverse inference of guilt from that person's lack of co-operation with the prosecution at trial", 30 for my part I do not take such a purist view of the right to silence. On the other hand, nor can I be categorised as a "minimalist" on this issue. If we are to require an accused to identify those issues which are genuinely in dispute, then I see nothing wrong on principle in the jury being invited to take into account the accused's silence or obstruction as a further indication of guilt. Of course, given the limited area in which adverse comment can be made, and the other criticisms that can be made of the Criminal Justice Act provision, it would be unwise to rely solely on the prospect of adverse comment to deter the accused who is minded not to comply with his or her disclosure obligations. Nevertheless, while its limitations should be recognised, at the very least the sanction of adverse comment on the lines of the Criminal Justice Act provision should be included in any legislation implementing the SCAG package of reforms.31 For my part I would go further and endorse a proposal made by Mr Justice Wood at the 1992 NCA Conference that the trial judge should have a discretion to exclude a previously undisclosed line of defence, in much the same way that a court may now refuse an accused leave to call evidence of an undisclosed alibi.32 There can be little doubt that such a provision would provide a powerful incentive to the defence not to try and ambush the prosecution for it is one that, if ignored, strikes at the heart of the defendant's prospects of securing an acquittal. The Achilles heel of such a proposal is, of course, the trial judge. Experience with alibi provisions does not inspire one with confidence that trial judges would be prepared to take a robust approach to applications for leave. However, I do not believe the legislation should go so far as to preclude altogether the defence relying on an undisclosed line of defence. Where an accused had complied with his or her disclosure obligations during the directions hearing it would be unfair to preclude that accused from relying on a line of defence which only emerged for the first time after the prosecution had opened its case to the jury. One of the acknowledged faults of the Criminal Justice Act model is that it allows the defence too much latitude in preparing its reply to the prosecution case statement.33 For example, the defendant need only set out in general terms the nature of his or her defence and indicate the principal matters on which he or she takes issue with the prosecution.34 It is not clear whether the equivalent provision in the Victorian legislation will demand any greater particularity on the part of the defence in preparing its response to the prosecution case statement. There is considerable merit in a proposal by the current Director of the UK Serious Fraud Office that the prosecution should be required to produce a schedule of facts with each statement of fact cross-referenced to the evidence. The defence would then be required to indicate whether each fact relied on by the prosecution was agreed to and, if the defence did not agree to a particular statement of fact, it would be required to state whether the objection was one of law or of fact. Objections of law would then be the subject of a ruling by the judge at the preparatory hearing. The prosecution would then produce a single document for approval by the judge with alternative statements of fact where there was disagreement. If, on the other hand, the defence failed in whole or in part to respond to the prosecution schedule of facts, that schedule would be given to the jury with a comment that, while the defence had been required to respond to that schedule, it had failed to do so save for disagreeing with it.35 Nevertheless, no matter how a defendant's disclosure obligations are couched in the legislation, there will still be some defendants who will be prepared to wear the consequences of adverse comment for non-compliance if they see some tactical advantage in so doing. There are, however, two further measures which would do much to inhibit an accused who is minded to adopt such obstructionist tactics. English legislation and the SCAG package of reforms both provide for the sanction of costs where there has been a failure to comply with the disclosure requirements. S19 of the Prosecution of Offences Act 1985 (UK) provides for an order for costs to be made where either party has incurred costs as a result of an improper or unnecessary act of the other party. Under s19A of the same Act an order for costs may be made against a party's legal representative in respect of the improper, unreasonable or negligent act or omission of that legal representative.36 While the possibility of a costs order is unlikely to deter an obstructive accused who is either impecunious or for whom such an order would be little more than a minor financial irritant, the prospect of paying the costs incurred by the prosecution in strictly proving the indisputable could well deter the accused who does not fall into either category. The sanction likely to prove most useful in deterring an accused from adopting such obstructionist tactics is one which enables the accused's conduct during the trial to be taken into account at sentence. In this regard, in 1991 Mark Weinberg Q.C. proposed that an accused should receive a discounted sentence for co-operation short of a plea:

"An accused who has co-operated in identifying and limiting the issues in dispute ought, in my opinion, to receive a significant sentencing discount if he or she is convicted. This discount should be available because the accused has saved the community a considerable amount of time and expense in trying him or her. Those who take pointless objections to evidence, and who put the Crown to its proof on every issue irrespective of whether there really is a basis for challenging that part of the Crown case, should be treated as having shown no remorse, and as meriting a heavier sentence than those who have behaved in a sensible manner." 37

I have no doubt the accused's co-operation, or lack of it, should be taken into account at sentence. However, although an offender may now receive a substantial reduction in sentence for a timely plea of guilty, it would be counterproductive to, in effect, equate co-operation in the trial process with a timely plea of guilty such that in either case the offender is entitled to the same substantial reduction in sentence. Where would be the incentive for the accused to plead guilty at an early stage if the accused can still receive a reduction of similar proportions provided he or she complies with the disclosure obligations on the defence? Given that the size of the reduction will diminish the longer a plea of guilty or an indication to plead guilty is delayed, you would have the absurd situation that an offender would receive only a small reduction in sentence for a change of plea made at the eleventh hour in the face of an overwhelming prosecution case yet receive a significantly greater reduction by deciding to maintain his or her plea of not guilty and co-operating in the trial process. In my view there is little the court can offer by way of a discount on sentence in return for the defendant's co-operation in identifying the real issues in the case, and if the worst a defendant can expect is some slight increase in the sentence which would otherwise have been imposed if he or she had co-operated then common sense, at least from the defendant's perspective, may well dictate that the defendant play the game for all it is worth and concede nothing.38 While a co-operative defendant should have that factor taken into account at sentence, legislation implementing the SCAG package must go further and provide that unreasonable lack of co-operation on the part of the defendant is a circumstance of aggravation warranting a more severe sentence than would otherwise have been appropriate.39 Professor Aronson considers that a sentence over and above the tariff on account of the accused's obstructive tactics at trial would constitute an infringement of the accused's right to make any defence, and for that reason he does not support such an approach.40 However, under the proposed new procedures the accused will not have the right to make any defence. He or she will be under a duty to respond to the case statement provided by the prosecution by, inter alia, indicating those aspects of the prosecution case with which issue is taken. If the defence response is to the effect that most or indeed all of the prosecution case is in issue, and as a result the prosecution is required to strictly prove, for example, a multitude of documents although there is no reasonable basis for challenging those documents, that is not putting a defence. It is wasting time.

Conclusion

Mr Justice Henry, the trial judge in both Guinness trials, has recently observed:

"The indications are that serious fraud is on the increase. We have to be able to deal with it : to deter it, to detect it, and to punish it. Our criminal justice system must play its proper part in this. It must be fair but inevitable. It must be more powerful than the most powerful. It must be effective in convicting the guilty and acquitting both the innocent and those not proved to be guilty. The trials leading to these verdicts must be manageable (for if not manageable, fairness is threatened), and it must not be wasteful either of time or of money. That specification is what we require of the system." 41

Judged against such standards, our present system for dealing with complex fraud cases fares rather poorly. Mr Justice Henry went on to identify the reasons why that is so. They apply equally to the Australian context:

"The complexities (real and simulated) of serious fraud make that a testing specification for an adversarial criminal justice system which evolved in an oral tradition, memory-based, with short trials and no documents, and in which protections designed for the vulnerable, the weak and the suggestible (into which categories those accused of serious fraud tend not to fall) were extended to all accused. So it is not surprising that serious fraud is today near the limit of criminal jurisprudence, where there is the risk that a system designed for very different trials may be tested to destruction."42

Viewed in the abstract the SCAG package of reforms is a principled response to the very real problems that these cases pose for our criminal justice system. However, recent UK experience demonstrates that mere reform of some of our more archaic rules of procedure and evidence will not, of itself, be enough. As Professor Levi has observed, "it is illusory to think that it is possible to have " a government of laws, not of men" for in the complexity of the real world, rules are not self-interpreting, and decisions inevitably are taken by people."43 All participants in the trial process must be committed to ensuring that the trial proceeds as smoothly and as efficiently as the circumstances permit. As I have indicated, unless the defence is provided with real incentives to comply with its disclosure obligations, I doubt whether some defendants will have that commitment. For its part the prosecution must be prepared to present a case which pays due regard to the limitations of jury trial. If, however, it should fail in its duty to proceed on charges which will ensure a manageable trial, the judiciary must be prepared to intervene. We must make the proposed new procedures work, for if they fail to achieve real efficiencies in the trial of serious and complex frauds then inevitably there will be pressure either to turn a blind eye to the fact that what has been done constitutes a serious crime and deal with the matter by some civil action,44 or to dispense altogether with some of the fundamental tenets of our criminal justice system, such as trial by jury. Neither alternative, in my view, is acceptable.

 

Footnotes 1 Fraud Trials Committee Report, London, 1986, page 1, paragraph 1. 2 The prosecution of Sir Andrew Grimwade and Jon Wilson (the Jetcorp trial) 3 R v. Cohen and Others, July 28, 1992; 142 NLJ Law Reports 1267 at 1268 4 Justice Wood, "A Time for Change - But How Much", paper presented at the 1992 NCA Conference on "National Complex White Collar Crime", page 2 5 The length of this trial, apparently the second longest criminal trial in English history, was not the result of delaying tactics by the defence. Indeed, before passing sentence the trial judge took the opportunity to observe that the defence had been conducted "skilfully and professionally throughout". Rather the Court of Appeal had "no doubt that the length and complexity of this trial were directly attributable to the length and complexity of the indictment." (R v. Cohen and others at 1268). The Blue Arrow trial, which involved only a single count indictment, demonstrates that the problem is not just one of multiple offences and/or defendants but one of multiple issues and complexity of those issues. 6 R v. Cohen and Others at 1268 7 Crimes (Criminal Trials) Act 1993 (Vic.) 8 The Australian Institute of Judicial Administration had commissioned Professor Aronson to conduct a research paper into the reform of the rules of evidence and procedure relating to complex criminal trials. Professor Aronson spoke to a draft of his report at the 1992 NCA Conference, and subsequently to his final report at the AIJA's 11th Annual Conference in August 1992. 9 Crimes (Criminal Trials) Act 1993 (Vic.), sub-section 8(1) 10 Ibid. paragraph 8(3)(b) 11 Ibid. paragraph 8(3)(c), (d), (e) and (f) 12 Ibid. paragraph 8(3)(d) 13 Ibid. paragraph 11(2)(a) 14 Ibid. paragraph 11(2)(b) 15 Ibid. paragraph 11(2)(c) 16 Ibid. paragraph 11(2)(d) 17 Ibid. section 4 18 Submission of the Serious Fraud Office to the Royal Commission on Criminal Justice, paragraph 4.21 19 Ibid. paragraph 2.30 20 Aronson, "Managing Complex Criminal Trials : Reform of the Rules of Evidence and Procedure", Australian Institute of Judicial Administration Incorporated, 1992, page 4. 21 Ibid. page 39. 22 Criminal Justice Act 1987, subsection 10(1). 23 Petty v. R; Maiden v. R (1991) 102 ALR 129. It would appear that subsection 10(1) of the Criminal Justice Act 1987, in so far as it relates to departures from the case indicated at the preparatory hearing, was intended to override the decision of the English Court of Appeal in R v. Hutchinson [1985] Crim. L. R. 730 where it was held that an admission made at a pre-trial review could not be used at the subsequent trial for evidentiary purposes unless the party affected consented to its introduction. See D.N. Kirk and A.J.J. Woodcock, "Serious Fraud : Investigation and Trial", Butterworths, 1992, page 78 at note 3. Consistent with his view that the jury should be able to draw an adverse inference from the fact that the accused departed from the defence case as indicated at the preparatory hearing, Professor Aronson has also recommended that "existing laws which override the right to silence in return for a "use immunity" or "derivative use immunity" should be altered so as to permit the use of a compelled answer where the person has contradicted it at his or her trial." (Aronson at page xi). In that context he argues that changes to section 597 of the Corporations Law and section 68 of the Australian Securities Commission Act effected by the Corporations Legislation (Evidence) Amendment Act 1992 which removed the "derivative use" protection from those provisions did not go far enough. He considers that any compelled answer obtained pursuant to an examination should, subject to the grant of leave, be admissible against the witness in any subsequent criminal proceedings against the witness if there is a direct contradiction of that answer in any evidence given by the same person. He argues that this is preferable to the prosecution being forced into a perjury trial, or into bluffing the witness that charges for perjury will be laid if he or she departs from the evidence given at the examination. He draws the parallel where an accused gives evidence which is in conflict with his or her evidence on a voir dire. (Ibid. at pages 15-16). I support this recommendation. Indeed, it has even been suggested that all immunity in relation to the compelled answer should be removed, on the basis that the status of a fiduciary carries with it the obligation to explain and answer for that person's stewardship. See Santow, "The Trial of Complex Corporate Transgressions - the United Kingdom Experience and the Australian Context" (1993) 67 ALJ 265 at 275-276. However, apart from the obvious philosophical objections which can be levelled at such a proposal, it could prove to be counter-productive to remove all protections from the compelled answer in that those examined may have little incentive to tell the truth. 24 Aronson at pages 39-40. 25 Ibid. page 40. 26 Wood at pages 20-21. 27 Submission of the Serious Fraud Office to the Royal Commission on Criminal Justice, paragraph 4.46. 28 The defence of one of the defendants in the second Guiness trial was that he intended to deny all facts as the prosecution interpreted them and to assert honesty. In another case the defence of one of the defendants was that the prosecution case was badly researched and that he would show at his trial why that was so. See Michael Levi, "The Investigation, Prosecution, and Trial of Serious Fraud", Research Study No. 14, The Royal Commission on Criminal Justice, London : HMSO, 1993, at page 183. Professor Aronson refers to one defence statement which he describes as "a two-page joke, in which all issues are kept open, all allegations denied, and, for good measure, mens rea is specifically denied". See Aronson at page 40. 29 Levi at page 110. 30 Aronson at page xi. 31 While the SCAG package makes provision for adverse comment on the lines of the Criminal Justice Act model, section 15 of the Crimes (Criminal Trials) Act 1993 of Victoria limits the power to make adverse comment to a departure from a party's case as previously indicated at the directions hearing. Despite this, in one respect the Victorian provision is an improvement on section 10 of the Criminal Justice Act in that it is clear that a departure by the prosecution can be the subject of comment. There would appear to be some uncertainty whether this is permissible under the Criminal Justice Act provision. See Kirk and Woodcock, page 78 at note 3. 32 Wood at page 21. Mr Justice Wood also recommended that such a provision be supplemented "by the grant of leave to the Crown to re-open its case, or to call a case in reply, where there has been a departure from the general defence case statement [and] for the judge to explain why the Crown has been allowed to re-open its case" (ibid. page 21). Professor Aronson made a similar recommendation in his Report (Aronson at page xiii). The Crimes (Criminal Trials) Act 1993 (Vic.) provides in subsection 15(4) that "the court may allow the prosecutor after he or she has closed his or her case to call evidence in reply to evidence given by the defence which could not reasonably have been foreseen by the prosecutor having regard to the defence response served." However, Professor Aronson is surely right when he observes, in relation to an almost identical provision in an earlier version of the Victorian legislation, that it seems to add nothing to the common law position on the rule against splitting (ibid. page 104). 33 "There has been less variation over the content of defence case statements which often seem to reflect a desire to disclose as little as possible. The language of section 9(5) perhaps allows a defence case statement to be short and general. There is little incentive for the defendant to disclose his case where there is perceived to be a tactical advantage in delaying such disclosure until the last possible moment and, sometimes, such disclosure is never made. If two of the purposes behind ordering a preparatory hearing are to identify issues which are likely to be material to the verdict and to expedite the proceedings before the jury then those can easily be frustrated by the lack of full disclosure and co-operation by the defendants." Consultation Paper on Long Criminal Trials, The Lord Chancellors Department, Home Office, Legal Secretariat to the Law Officers, December 1992, paragraph 4.18. 34 Criminal Justice Act 1987, paragraph 9(5)(i). 35 George Staple, "Serious and Complex Fraud : A New Perspective", 56 Modern Law Review (March 1993), page 127 at 134. 36 It would appear, however, that comparatively few orders have been made under either section. See "Consultation Paper on Long Criminal Trials", paragraph 3.11. The first order made under section 19A was successfully appealed. See Levi, page 110 at note 30. Levi there refers to the existence of a Bar "flying squad" which will act for barristers who are unfortunate enough to be the recipient of an order under section 19A. Subsection 19(1) of the Crimes (Criminal Trials) Act 1993 (Vic) is to a similar effect as sections 19 and 19A of the Prosecution of Offences Act 1985. It provides: "19(1) Without limiting any other power of the court to award costs, the court may at any stage in a proceeding to which section 4 or 5 applies order- (a) a party, whether the Crown or the accused; or (b) a party's counsel or solicitor or, in the case of an employee solicitor, his or her employer personally to pay costs to another party within a specified time if the court is satisfied that there has been an unreasonable failure by that party or that party's counsel or solicitor, or a servant or agent of that party's solicitor, to comply with this Act or any order made under this Act." 37 Mark Weinberg Q.C., "Complex Fraud Trials - Reducing their Length and Cost", The Third Annual AIJA Oration in Judicial Administration, (1991 - 1992) 1 Journal of Judicial Administration 151 at 162. In the latter part of this passage Weinberg appears to be suggesting a link between the attitude adopted by the accused during the trial and the question whether the accused has demonstrated remorse for the purposes of sentence. However, just as a discount on sentence for a bare plea of guilty unaccompanied by remorse is justified on the pragmatic grounds that the State is thereby saved time and expense in trying the offender, and witnesses are spared any distress, embarrassment or inconvenience in giving evidence, a discount on sentence for co-operating in identifying the real issues in the case need only be justified on the same pragmatic grounds. It is neither logical nor necessary to link the accused's co-operation, or lack of it, with remorse, or lack of it. 38 While the SCAG package merely refers to the defendant's reasonable co-operation, or lack of it, being a matter to be taken into account by a sentencing court, the Victorian version of the SCAG package is consistent with the Weinberg proposal, which was also supported by Aronson. See Aronson at pages 92-94. As a result of an amendment effected by section 26 of the Crimes (Criminal Trials) Act 1993 (Vic), subsection 5(2C) of the Sentencing Act 1991 (Vic) now provides that "in sentencing an offender a court may have regard to the conduct of the offender on the trial as an indication of remorse on his or her part." 39 This would of course require abrogating the sentencing principle that it is impermissible to increase what is otherwise a proper sentence "in order to mark the court's disapproval of the accused's having put the issues to proof or having presented a time-wasting or even scurrilous defence." R v. Gray [1977] VR 225 per McInerney and Crockett JJ at 231; see also R v. Richmond [1920] VLR 9, per Cussen J. at 12. 40 Aronson at page 93. 41 Foreward by the Honourable Mr Justice Henry to Kirk and Woodcock, "Serious Fraud : Investigation and Trial" op. cit. 42 Ibid. 43 Levi at page 1. 44 The first move in this direction has already been made with the Corporate Law Reform Act 1992.