Author: Rozenes, M.and J. McCarthy Date: 16/06/1992 Venue: National Conference on Investigation and Prosecution of Complex White Collar Crime, 15-17 June 1992
With the establishment on 1 January 1991 of the new national scheme for the regulation of companies and the securities and futures industries, we are now seeing an increased emphasis on the investigation and prosecution of corporate fraud. Notwithstanding the so called "excesses of the 80's", to date there have been very few trials in Australia in the corporate fraud area. While I do not propose to go into the reasons for that in this paper, suffice to say all that is about the change. Many of the cases involving corporate fraud that are now in the pipeline can be characterised by not only their seriousness, but also their complexity. We are now facing the real prospect of extremely large and complex corporate fraud trials in this country, the like of which we have hitherto rarely seen. This, however, has led to a very real concern whether our criminal justice system will be able to cope if these cases are to be prosecuted in accordance with more traditional notions of how a criminal trial is conducted. One has only to look to recent experience in the United Kingdom to see the impact of "mega" trails on the criminal justice system. A number of the trials conducted by the Serious Fraud Office have taken more than a year to complete, and have cost 10s of millions of dollars - and all this after the "reforms" effected by the Criminal Justice Act 1987! It is I believe generally recognised that something must be done to address the very real problems posed by complex fraud prosecutions if they are not to overwhelm our criminal justice system. If we are to reduce the length of complex fraud trials, and indeed ensure that some of these cases will be triable in the first place, changes are required in essentially three areas. First, new procedures must be established designed to identify the real issues in dispute as between the prosecution and the defence prior to empanelling the jury. Secondly, certain rules of evidence should be modified in recognition of the fact that complex fraud cases are essentially document orientated. Specific provision should also be made for evidence to be given in a form which will assist the jury's comprehension of the issues. The third change that is needed has already been foreshadowed in the title of this paper. Procedural reform and changes to the rules of evidence, and how evidence is presented, will not be truly effective in shortening complex fraud trials unless there is a change in attitude on the part of the courts and legal practitioners. The key personnel in the trial process must be committed to ensuring that the trial proceeds as smoothly and efficiently as circumstances permit.
A Limited Form of Criminal Pleading
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. It may then become apparent that a great deal of the trial will have been taken up with the prosecution proving matters which were never really in dispute. This is particularly so in the case of large fraud trials which tend to be very document intensive. It is usually the case that the documents are rarely in dispute; rather it is the inferences to be drawn from those documents that form the basis of the real issues in the case. However, as the onus rests on the prosecution to prove the guilt of the defendant, it is for the prosecution to prove all the facts upon which it wishes to rely. The defence is under no obligation at law to concede those facts it does not dispute. Save for a defence based on alibi, the defence can keep any defence to the charge up its sleeve until the last possible moment when, in its judgment, it is likely to have the greatest impact. The defence may at an earlier stage voluntarily disclose its hand to a greater or lesser extent or make some concessions. However, all too rarely does the defence see it as in its interest to agree to facts and 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 that 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 disputed that it is legitimate for the prosecution to be put to its proof on 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 twelve 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 a particular defendant was knowingly and dishonestly involved in the fraud. The problem is not limited to document intensive cases. Let me digress a little and relate the story of a celebrated drug trial conducted in Melbourne some years ago. The prosecution case called a substantial number of eye witnesses to the movements of various accused, both in Australia and overseas. These witnesses were cross-examined at great length concerning their ability and opportunity to make the observations. Their general credit was attacked and it was suggested that they had various motives to lie about their observations. The trial judge of course had no ability to control the cross-examination as he had no knowledge of the defence. After many months the Crown case closed. The defence was, yes it is true they were the persons observed as alleged but they believed they were transacting the importation of diamonds and not heroin. During the prosecution case whenever the trial judge inquired of defence counsel where all this cross-examination was going, the inevitable and equally unexaminable answer was, "Bear with me, your Honour, it will all become clear in the end". Some sceptics may say that there was never a real defence and that the accused simply instructed their counsel to examine the case up hill and down dale. When at the end it was clear that the eye witness evidence was solid, the defence became a "confess and avoid". In the end the trial took some six months resulting in a conviction and great expense to the community. 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 the sort of complex fraud case we are to be confronted with in the not too distant future is to be kept within manageable limits, and indeed if some of these cases 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 for the jury with the minimum of interruption. In a number of jurisdictions the courts have attempted to make not just fraud but all trials more manageable by establishing a system of pre-trial reviews. Unfortunately, pre-trial reviews suffer from a number of disadvantages. Whilst they do provide an opportunity for the issues in contention to be ascertained, rarely do they achieve that objective to any marked extent. All too frequently the defence is insufficiently prepared to be able to indicate what it sees as the issues in the case and to make any concessions as to facts not in dispute, even if it would otherwise have been prepared to do so. 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. In short, most systems of pre-trial review suffer from the disadvantage that they lack "teeth", and do not force the parties to focus on what are the real issues in the case. In 1987, following publication in the previous year of the Report of the Fraud Trials Committee chaired by Lord Roskill, the United Kingdom Parliament passed the Criminal Justice Act, the aim of which was to make both the investigation and prosecution of serious and complex fraud cases more efficient and effective. Of the provisions dealing the prosecution of complex fraud cases, perhaps the most significant feature was the introduction of the "preparatory hearing" procedure. Whereas a pre-trial review occurs outside the trial, under the Criminal Justice Act the preparatory hearing is part of the trial, although the jury is not empanelled until it is completed. The purposes of a preparatory hearing are to be found in s7 of the Act. They are -
- to identify issues which are likely to be material to the verdict of the jury,
- to assist with the jury's comprehension of any such issues,
- to expedite the proceedings before the jury, and
- to assist the judge's management of the trial.
For the purposes of a preparatory hearing, the prosecution is required to provide full and timely disclosure of its case. While that of course represents no great change from existing practice, that disclosure is now made under the supervision of the court. Provision is made in ss9(4) for the court to order the prosecution to provide the court and the defendant with a "case statement". The prosecution case statement must cover such matters as the principal facts of the prosecution case and the witnesses who will speak to those facts, any exhibits relevant to those facts, and any proposition of law on which the prosecution proposes to rely. In addition, the court may also order the prosecution to prepare its evidence and other explanatory material in a form that is likely to aid its comprehension by the jury. The court may also order the prosecution to give notice "of documents the truth of the contents of which ought in the prosecution's view to be admitted and of any other matters which in their view ought to be agreed." 1 However, the radical change effected by the preparatory hearing procedure is that it provides for a complementary system of defence disclosure. After the prosecution has supplied its case statement the court is empowered by ss9(5) to order the defendant - "(i) to give the court and prosecution a statement in writing setting out in general terms the nature of his defence and indicating the principal matters on which he takes issue with the prosecution; (ii) to give the court and prosecution notice of any objections that he has to the case statement; (iii) to inform the court and prosecution of any point of law (including a point as to the admissibility of evidence) which he wishes to take and any authority on which he intends to rely for that purpose; (iv) to give the court and the prosecution a notice stating the extent to which he agrees with the prosecution as to documents and other matters to which a notice under ss(4)(c) above relates and the reason for any disagreement." Pursuant to s9(3) of the Act the court may also determine at the preparatory hearing any question of law relating to the admissibility of evidence, and indeed any other question of law relating to the case, thus minimising the potential for the trial before the jury to be interrupted. Late last year a Crimes (Fraud) Bill was introduced in the Victorian Parliament. This Bill was also designed to simplify the prosecution of complex fraud cases, and adopted a number of the provisions of the U.K. Act, including the preparatory hearing procedure. I am firmly in favour of a preparatory hearing procedure on the lines established by the Criminal Justice Act and proposed in the Victorian Bill. 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 wishes 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 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 spending valuable court and legal resources proving matters that are not in dispute. Indeed, I see considerable merit in such a preparatory hearing procedure being introduced for the prosecution of other types of offences, such as drug cases, where trials can be quite lengthy. However, for the present I am content for the new procedures to be adopted for complex fraud cases where the need is most pressing. If such a preparatory hearing procedure is established, there are three related issues that must be resolved
- should committal proceedings be abolished in the case of serious and complex fraud,
- how is a system of defence disclosure to be enforced, and
- the problem of interlocutory appeals from rulings given in the course of the preparatory hearing.
It has been argued that committal proceedings constitute a significant factor in the delay in bringing matters on for trial, and that at least for serious and complex fraud cases there is a cogent case of dispensing with them altogether. Indeed, bypassing the committal stage is an integral part of the new procedures established by the Criminal Justice Act, as well as those proposed in the Victorian Bill. Under the Criminal Justice Act the new procedures are triggered by the issue by the prosecution of what is called a "transfer notice" which has the effect of bringing the case immediately before the Crown Court. One of the conditions that must be satisfied before a transfer notice can be issued is that a committal hearing must not have commenced. As a "trade off" for allowing the prosecution to bypass committal proceedings, ss6(1) of the Criminal Justice Act makes provision for a defendant to apply to the Crown Court for the dismissal of a transferred charge on the ground that the evidence disclosed by the prosecution would not be sufficient for a jury properly to convict the defendant of it. Certainly in some cases the time taken to complete a committal hearing can be quite unreasonable and can constitute the main reason for delay in bringing cases on for trial. We are all aware of cases where the committal hearing has dragged on for not just months but years, often being heard in a piecemeal fashion, where prosecution witnesses are subjected to a meandering and generally inept cross-examination for sometimes weeks on end in the vain hope of being able to formulate some defence, and where the presiding magistrate appears quite incapable of exercising any control over the hearing. Thankfully, these cases are not the norm, although I would have to say that as Commonwealth Director of Public Prosecutions I seem to have inherited more than my fair share of them. The primary function of committal proceedings is, of course, to ensure there is sufficient evidence against the defendant to justify a trial, and I would concede that the application for discharge mechanism provided for in the Criminal Justice Act as well as the Victorian Bill provides a suitable alternative to that function. However, committal proceedings do serve a variety of other useful purposes apart from the elimination of weak cases, most of which could not be accommodated within the confines of an application for discharge mechanism. One of the advantages of committal proceedings from the prosecution's point of view is that the prosecution can compel the attendance of a reluctant witness who has refused to make or sign a statement. Alternatively, although a statement has been obtained from a witness, nevertheless there may be advantages in seeing how the witness, who may be crucial to the prosecution case, actually performs under cross-examination. Following cross-examination of key prosecution witnesses it may be clear to a defendant that it is in his or her best interest to plead guilty. However, even if a testing of the prosecution case at the committal hearing does not produce a plea of guilty, it should ensure that the prosecution is in a better position to assess the strength of its case before making the final decision to proceed to trial. Committal proceedings can also provide advantages of a more tactical nature for the prosecution, as well as the defence. A proper testing of the prosecution case may expose certain weaknesses which, while not fatal, nevertheless will have to be cured before the case comes on for trial. It may be clear following the committal hearing that it would be more appropriate to try the defendant on other, perhaps lesser, charges. Many of these advantages would be lost under a transfer mechanism of the kind established by the Criminal Justice Act. To the extent the finger can be pointed at the committal hearing as a cause of unreasonable delay in bringing cases on for trial, the appropriate remedy is not to dispense with it, even in complex fraud cases, but to reform the committal hearing so it can run on far tighter lines than may be the case at present. For example, sufficient magistrates should be available to ensure that a committal can be completed in one continuous sitting rather than in a piecemeal fashion as is not infrequently the case in at least two Australian jurisdictions. Further, there should be no absolute right to cross-examine all prosecution witnesses in committal hearings, Rather, a defendant should require leave before doing so, which leave should only be granted if the defendant can demonstrate that the interests of just so require. 2 Magistrates should also have sufficient power to cut short protracted cross-examination if it considered that further cross-examination of the witness is unlikely to further assist the magistrate in performing his or her task.
The Issue of Sanctions
It is sometimes said by those who argue against the imposition of sanctions that with counsel of goodwill and a strong judge all things are possible. Experience has demonstrated that all too often one, if not both, of these commodities is missing. A system of prosecution and defence disclosure conducted under the supervision of the court must have real "teeth" to be effective, and to ensure the parties act in accordance with the spirit of the new procedures. In so far as disclosure by the prosecution is concerned, the appropriate remedy for non-compliance is, of course, to grant a stay of the prosecution. The real question is how to ensure the defence complies with its obligation to identify those issues which are genuinely in dispute. The Criminal Justice Act attempted to address this issue by permitting the court, or a party with leave, to comment on the fact that a party had introduced evidence at the trial which departed from its case as disclosed at the preparatory hearing. 3 However, in the view of the Serious Fraud Office this provision is "not thought to be any sort of deterrent at all". 4 Limited as it is to departures from the defence case indicated at the preparatory hearing, there would seem to be little to prevent the defence simply stating at the preparatory hearing that all elements of the offence are denied, and that it will require all facts to be strictly proved. In my view provision should also be made for costs to be awarded against a defendant who has been convicted in respect of costs incurred by the prosecution where in the opinion of the court the defendant had unreasonably refused to admit facts which were never really in dispute, or to adequately identify the issues in the case. In delivering the Third AIJA oration on "Complex Fraud Trials - Reducing Their Length and Cost", Mark Weinberg QC also proposed that a defendant be provided with a positive incentive for co-operating in identifying, and limiting, the issues in dispute in the form of a discount on sentence if convicted. Mark stated that - "This discount should be available because the accused has saved the community a considerable amount of time, and expense, in trying him. Those who take pointless objections to evidence, and who put the Crown to its proof on every issue irrespective of whether there is really a basis for challenging that part of the Crown case, should be treated as having no remorse, and as meriting a heavier sentence than those who have behaved in a sensible manner." I have no doubt that it is essential for defendants to be provided at the very least with such an incentive to comply with their obligation to identify the real issues in the case. But I am concerned that a sentence discount either alone or accompanied by an order for costs might not, as a matter of forensic reality, constitute a sufficiently powerful incentive. Why not empower the judge to make an adverse comment on the failure by the accused to make obvious concessions? Such a sanction, aimed as it is at the prospects of conviction, would be of real concern to an accused.
The Problem of Interlocutory Appeals
As mentioned earlier, the Criminal Justice Act provides for rulings to be given at the preparatory hearing on any question as to the admissibility of evidence or other question of law relating to the case. These rulings are binding during the trial proper unless the interests of justice require the ruling to be either varied or discharged. 5 A preparatory hearing procedure forces the parties to prepare their case well before the jury is empanelled. They will have the opportunity to anticipate many of the points of law, and have them dealt with, well before the trial before the jury commences. The power to give rulings at the preparatory hearing thus enables the trial to proceed with a minimum of interruption, and involves a saving of valuable trial time. Curiously, however, the Criminal Justice Act provides for a self-contained system of interlocutory appeals from rulings given in the course of a preparatory hearing. In the experience of the Serious Fraud Office, however, such interlocutory appeals "have a huge potential for causing great delay and expense". 6 The inclusion of a system of interlocutory appeals was not in response to any recommendations made by the Roskill Committee. Indeed, in the context of challenging the decision to issue a transfer notice, the Roskill Committee had argued against providing for interlocutory appeals. 7 While the Victorian Crimes (Fraud) Bill does not reproduce the Criminal Justice Act's regime of interlocutory appeals, nor on the other hand does it specifically preclude such appeals, although it does provide that the actual order that a preparatory hearing be held is not liable to be challenged. 8 There are of course arguments that can be advanced in support of the retention of any rights of appeal or review of general application that may be available to challenge rulings given in the course of a preparatory hearing. If the ruling is incorrect, then there is obvious merit in it being corrected at the earliest possible opportunity. Otherwise the trial will proceeding on a misconceived basis, with the prospect of a successful appeal and possible re-trial, or indeed an acquittal, after what may have been lengthy and costly proceedings. On the other hand, a preparatory hearing procedure is not a pre-trial review but part of the trial itself. To render rulings given in the course of a preparatory hearing immune from interlocutory challenge would be consistent with the general principle that no right of appeal may be exercised while the trial is in progress. Rather, the appropriate time for a right of appeal to be exercised is if and when the defendant has been convicted. Further, the argument that interlocutory appeals avoid wasted trials (which I suggest is in any event more theoretical than real) must be balanced against the potential for considerable delay and fragmentation of the prosecution process caused by such appeals. On balance, and with one qualification, I believe it is crucial for rulings given in the course of a preparatory hearing to be immune from interlocutory challenge. The one qualification I would make is where the effect of the ruling is not concerned with how the trial proceeds, but rather that it will not proceed at all (because, for example, the court has agreed with a defence submission that it would be an abuse of process to allow the trial to proceed by reason of delay). As the effect of such a ruling is that the trial cannot proceed, it would be perfectly appropriate to allow the ruling to be tested in a higher court. Apart from this, the exercise of any rights of appeal should be deferred until the conclusion of the trial. As many of the complex fraud cases that are likely to come before the courts will be prosecuted by my Office, if committal proceedings are to be retained as I have recommended, it is imperative that the decisions of magistrates in committal proceedings should be excluded from review under the Administrative Decisions (Judicial Review) Act 1977, as has been recommended by the Administrative Review Council. 9 If committal decisions continue to be reviewable under the AD(JR) Act then expect to have to add an extra twelve to eighteen months to the time that would otherwise have been needed to bring many of these cases on for trial. Those who argue that committal proceedings should continue to be reviewable under the AD(JR) Act often point to the fact that the Federal Court has consistently said that only in exceptional cases will it interfere in committal proceedings. However, the fact remains that once the jurisdiction of the Court has been properly enlivened by a sufficient application under the AD(JR) Act there is an obligation on the Court to entertain it. Our experience has been that the AD(JR) Act has provided fertile ground for defendants to delay, to their advantage, criminal proceedings against them. This is so even though the Federal Court has sought to list these matters quickly, and has generally dealt expeditiously with applications. Because of the delays in the criminal justice system in some STates, it is often necessary to wait a considerable length of time "in the queue" before lengthy trials can be set down for hearing. However, an AD(JR) Act application, although it will almost invariably be unsuccessful, can result in that court time being lost, and the matter not brought back on until very much later. It has, of course, always been the fear of my Office that merely to exclude committal decisions from review under the AD(JR) Act would simply result in defendants wishing to delay their prosecution, changing the target of their attack from the committal proceedings to the various decisions taken in connection with the prosecution process - the decision to institute or carry on a prosecution, to consent to a prosecution, to file an indictment, or, if a preparatory hearing procedure on the lines of the Criminal Justice Act is established, to issue a transfer notice. The question whether prosecution decisions should be subject to AD(JR) Act review involves no issue of principle, for the procedures and processes associated with the conduct of a criminal prosecution necessarily provide an adequate review of prosecution decisions. All that is achieved by the retention of prosecution decisions within the ambit of the AD(JR) Act is to provide an additional review mechanism which defendants can exploit to delay and frustrate the prosecution process. However, as a result of two recent decisions 10 it must now be doubted whether many of the decisions of an administrative character made by my Office in the prosecution process are in fact reviewable under the AD(JR)Act. Be that as it may, the matter should be put beyond doubt by expressly excluding prosecution decisions from review under the Act.
Evidential Problems in Fraud Cases
So far I have dealt with reform of the procedures governing the trial of a complex fraud case. However, a number of our rules of evidence, and the way evidence is traditionally presented, in their own way do much to frustrate the objective of a speedy trial which is confined to the real issues in dispute. The Roskill Committee concluded that "the rigidity and artificiality of the present rules (of evidence) are an obstruction to the just and expeditious disposal of fraud cases". 11 Much of the evidence in a fraud trial concerns documents, and it is the rules relating to the admissibility of documents that are the main culprit. As noted by the Roskill Committee, the reasons for this are historical. "There is, in the first place, a strong oral tradition in English justice. The English criminal trial is based on the testimony of witnesses attending at the trial and giving evidence from their own first-hand personal knowledge of the offence. Oral testimony is the main, and in some cases, the only form of evidence which can be presented before a court. A witness who appears in person can be seen as he gives his evidence, and the credibility of the testimony given tested by cross-examination. These aspects of trial procedure stem from the development of jury trial, where the assessment of the truth of the facts is made by a group of independent people who have not participated in the investigation and, until the trial starts, know nothing of the background to the affair. As a corollary, documents are treated by the law with suspicion, and their importance tends to be undervalued." 12 The second factor identified by the Roskill Committee for the "rigidity and artificiality" of our rules of evidence was a concern to protect defendants. They developed at a time when most defendants were illiterate, unrepresented and, until the end of the 19th century, unable to give evidence in their own defence. They thus ameliorated to some extent a criminal justice system that in many other respects was weighted heavily against the defendant. The compelling case for the reform of the rules of evidence relating to the admissibility of documents has been well argued by Mark Weinberg in the paper "Course of Evidence" he presented at the first of these conferences in July last year, and I do not believe it is necessary for me to reargue that case here. Rather I will content myself with briefly identifying the changes in this area which should be made. First, in the age of the photocopier, the facsimile and other means of automatically reproducing documents with complete accuracy there is now no justification for retaining the best evidence rule. Indeed, it should have been abolished years ago. Secondly, the hearsay rule in its application to documents should be modified to remove any requirement to call the person who supplied the information recorded in the document, save where a party can satisfy the court it is in the interests of justice that the person be called. Thirdly, the requirement for a witness to give oral testimony should be dispensed with where that evidence is not disputed, the evidence being given in the form of a written statement or report. It would still be open in such a case for the defence to require the maker of the statement to attend for cross-examination where the defence wishes to make some point not covered in the written statement. Fourthly, the presentation of evidence in the form of charts, graphics, schedules and other computer generated visual aids should not be dependent on the agreement of the other party. Seeing is believing, and there is no doubt we retain more of what we see than what we hear, the more so when what we are required to absorb is novel. Specific provision should be made permitting evidence to be presented in a form which will aid the jury's comprehension of the evidence. The defence will have the primary documents upon which the graphics etc are based, and will be able to ascertain for itself whether they are factual and non-interpretative. Finally, provision should be made for certain material, such as transcripts, the trial judge's summing up, charts, diagrams etc, to be given to the jury for the purpose of assisting it to understand the issues.
The Obtaining of Foreign Evidence
In a complex corporate fraud it will often be the case that at least part of the evidence upon which the prosecution case rests will be located overseas. Obtaining that evidence in admissible form is one of the intractable problems facing the prosecution in fraud cases. Sometimes those problems can be almost insuperable. Apart from the difficulty in actually locating the relevant documents or witnesses, there are various obstacles that must be overcome in obtaining that evidence in a form which is admissible in an Australian court. The Mutual Assistance in Criminal Matters Act 1987 provides a legislative basis for Australia to enter into treaties and other arrangements with other countries for the purpose of obtaining, and providing assistance in criminal matters. Pursuant to s12 of that Act, the Attorney-General is empowered to request the appropriate authorities in another country to arrange for evidence to be taken in that other country, and for documents or other articles in that country to be produced for the purposes of a proceeding in relation to a criminal matter in Australia. However, the effectiveness of s12 is limited considerably by the fact that at present there is no mechanism under the Mutual Assistance Act which provides for the evidence so obtained to be admitted in the Australian proceedings. I understand, however, that amendments to the Mutual Assistance Act to remedy this deficiency are at present under consideration. The Act also suffers from the disadvantage that at present we only have a handful of mutual assistance treaties or arrangements with other countries. In mentioning this no criticism of the Attorney-General's Department is intended. The negotiation and implementation of bilateral treaties is a time consuming process. However, the fact remains that, even with the proposed amendments to the Mutual Assistance Act, it will be many years before the Act will be able to realise its full potential. In the meantime, the Commonwealth prosecutor can rely on the provision of Part IIIB of the Evidence Act 1905. Pursuant to those provisions a superior court may order -
- the examination of a person at a place outside Australia before a judge, an officer of the court or such other person as the court may appoint;
- the issue of a commission for the examination of a person at a place outside Australia; or
- the issue of a letter of request to the judicial authorities of a foreign country to take, or to cause to be taken, the evidence of a person.
While Part IIIB does provide for the admissibility of the evidence so obtained, each of the three means for obtaining overseas evidence has disadvantages. The first two suffer from the significant disadvantage that the order of the Australian court cannot operate to compel the attendance of the foreign witness before the court or person taking the evidence. Thus, they are likely to be only effective where the overseas witness is prepared and able to co-operate with the Australian authorities. On the other hand, while the domestic legislation in the other country will usually allow a court in that country to act on a letter of request issued by the Australian court, the fact that the evidence is taken by a foreign court rather than someone who is conversant with Australian legal requirements may result in the evidence being taken in a form which is either inadmissible in the Australian court or likely to be excluded in the exercise of the court's discretion. There are always going to be problems in obtaining overseas evidence under existing mechanisms. We therefore should be looking to more innovative solutions such as the use of satellite links. This has the distinct advantage of enabling the overseas witness to give his or her evidence to the jury directly.
The Present Culture
The deficiencies in our procedural and evidentiary rules I have referred to are not the only reasons for the excessive length and cost of complex fraud prosecutions. The key figures in the trial process - prosecution, defence and the courts - must also share some of the blame. The prosecution has not always done all it could to prepare a case in such a way that it can be presented to the jury as simply as possible, and that the prosecution case is kept within manageable limits. On some 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 a long, drawn out and expensive trial. In my view, 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. Care must be taken in the case if there are multiple defendants where it may become a virtual necessity for the prosecution to divide the case into a number of trials. Prosecutors must also avoid charging broad ranging conspiracy counts, although it must be accepted that in some cases only a conspiracy charge will adequately reflect the criminality disclosed by the evidence. On the defence side, some defence counsel have stretched to the limit their ethical obligations in aiding and abetting a defendant who perceives it as in his or her best interest to delay and obfuscate, and to generally 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 is no longer available. During the trial it is relatively easy for the defence under our existing procedures to promotion 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 their part the courts have no always availed themselves of the opportunities that are already available to prevent defence abuses, and to ensure that court time is utilised to the best effect. Some judges have been unduly concerned that if they adopt a more positive approach during the trial they will be perceived by the jury as less than impartial. However, having said that, at the end of the day even a strong judge is powerless to give the system more teeth than it already has. One of the virtues of a procedure which requires the parties to identify the issues genuinely in dispute prior to the jury being empanelled is that the trial judge can afford to be interventionist without running the risk that he or she will be viewed by the jury as favouring one side or the other. The role of the judge in the trial of a complex fraud case is crucial. These cases will require the best judges to try them. By that I mean that care should 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. I have no doubt that the Supreme Copurts must play a leading role and that it will therefore be necessary for that court in some jurisdictions to review their at present highly selective approach to the cases they are prepared to preside over.
The title of my paper is to some extent misleading in that it suggests there are essentially two alternative solutions to the daunting problems that the prosecution of complex fraud cases pose for our criminal justice system. Either the key personnel in the trial process can lift their game or you accept the existing culture but change some of the ground rules. However, neither will suffice in isolation. Changes to how we conduct a trial on the lines I have indicated are essential. On the other hand, the prosecution, defence and the courts must be committed to ensuring that the trial proceeds as smoothly and as efficiently as the circumstances permit. Without this commitment, the reforms I have indicated will not be as effective as they could be. I am cognizant of the fact that some of what I have said will not appeal to all and that it could be said that in essence what is being contended for is the abolition of some established protections for the accused in the criminal trial. The traditionalist will argue that the accused should never be obliged to say or do anything in the course of the prosecution case and that the prosecution must be prepared to prove and prove all facts and issues be they in dispute or not. I submit that this course is one which we, as a community, can no longer afford. I am seeking a new form of trial where what will be litigated is the real issue between the parties. It is only if we are prepared to grasp this nettle will be see a real possibility in dealing in a fair and acceptable way with the complex fraud trial of the future.
1 Paragraph 9(4)(c), Criminal Justice Act 1987 (UK). 2 A provision in such terms has already been made in the Justices Act 1921 (South Australia), by the Justices Amendment Act 1991 which, it is understood, is due to come into operation on 1 July 1992. Pursuant to the new ss106(1) the prosecution will only be required to call a witness whose statement has been filed in the Court for oral examination if the defence has given the requisite notice and the Court grants leave to do so. Pursuant to the new ss106(2), the Court is not to grant such leave "unless it is satisfied that there are special reasons for doing so". The special reasons for granting leave are set out in the new ss106(3). The Court must have regard to-
"(a) the need to ensure that the case for the prosecution is adequately disclosed; (b) the need to ensure that the issues for trial are adequately defined; (c) the Court's need to ensure (subject to this Act) that the evidence is sufficient to put the defendant on trial; and (d) the interests of justice ..."
3 S10, Criminal Justice Act 1987 4 Submission of the Serious Fraud Office to the Royal Commission on Criminal Justice, p4.6 5 ss9(10), Criminal Justice Act 1987 6 Serious Fraud Office submission to the Royal Commission on Criminal Justice, p4.39 7 "We are firmly of the view however that the prosecution's right to issue a transfer certificate should not be subject to challenge by the defence by way of an appeal or judicial review. Interlocutory appeals of this nature in criminal cases are not a feature of the present system. A right of appeal or review in these circumstances would provide an opportunity for delay in the proceedings and would undermine the purpose of the new procedure." Fraud Trails Committee Report, 1986, p.4.39 8 C9(2), Crimes (Fraud) Bill 1991 9 See Administrative Review Council Report No. 32 "Review of the AD(JR) Act: The Ambit of the Act", ps335-349 10 ABT v. Bond (1990) 170 CLR 321, particularly at 335-9, and Smiles v. Commissioner of Taxation and others, an unreported decision of Davies J, Federal Court of Australia, 13 May 1992 11 Fraud Trials Committee Report, 1986, p 5.1 12 Ibid at p 5.4