SUPREME COURT OF QUEENSLAND

CITATION:	R v Muller [2024] QCA 261	
PARTIES:	R
v
MULLER, Craig Anthony
(appellant)	
FILE NOS:	CA No 84 of 2023
DC No 137 of 2020	
DIVISION:	Court of Appeal	
PROCEEDING:	Appeal against Conviction	
ORIGINATING COURT:	District Court at Cairns – Date of Conviction: 12 May 2023 (Morzone KC DCJ)	
DELIVERED ON:	20 December 2024	
DELIVERED AT:	Brisbane	
HEARING DATE:	14 October 2024	
JUDGES:	Mullins P and Flanagan and Brown JJA	
ORDERS:	1.	The appeal against conviction is allowed.
2.	The conviction on each count is set aside.
3.	A new trial is ordered on each count.	
CATCHWORDS:	CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS – MISDIRECTION OR NON-DIRECTION – where the appellant was convicted of two counts of fraud following a trial by jury – where the appellant was charged as a party to the offending of a principal offender who pleaded guilty – whether the trial judge erred in failing to identify the knowledge, belief or intent which was said by the Crown to render the principal offender’s act dishonest and then in failing to instruct the jury to decide whether the principal offender had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest – whether the trial judge failed to adequately direct the jury about the Crown’s error in conflating directorship of a company with ownership of that company
Criminal Code (Qld), s 7, s 408C, s 668E
Orreal v The Queen (2021) 274 CLR 630; [2021] HCA 44, cited
Peters v The Queen (1998) 192 CLR 493; [1998] HCA 7, cited
R v Jayaweera [2022] QCA 103, cited
R v Lyons [2021] QCA 136, cited
R v Mirotsos [2022] QCA 76, considered
R v Tahiata [2024] QCA 59, cited	
COUNSEL:	S C Holt KC for the appellant
A J Walklate for the respondent	
SOLICITORS:	Jones + Associates for the appellant
Director of Public Prosecutions (Queensland) for the respondent	
[1]	MULLINS P:  I agree with Brown JA.
[2]	FLANAGAN JA:  I agree with Brown JA.
[3]	BROWN JA:  Craig Muller, the appellant, and two other co-accused were charged with a number of fraud offences on a multi-count indictment.  Following a seven-day trial, the appellant was found guilty of both offences for which he was charged.  The counts pertaining to the appellant were:
Count 2:	That on divers dates between the first day of March, 2016 and the twenty-eighth day of February, 2018 at Cairns and elsewhere in the State of Queensland, GRAEME CLIFFORD KING and CRAIG ANTHONY MULLER dishonestly gained a benefit for GRAEME CLIFFORD KING.
And GRAEME CLIFFORD KING was a director of Airfirst Pty Ltd.
And the yield to GRAEME CLIFFORD KING from the dishonesty was of a value of more than $30,000.
Count 4:	That on divers dates between the first day of March, 2017 and the thirty-first day of December, 2017 at Cairns and elsewhere in the State of Queensland, GRAEME CLIFFORD KING and CRAIG ANTHONY MULLER dishonestly gained a benefit for GRAEME CLIFFORD KING.
And GRAEME CLIFFORD KING was a director of Airfirst Pty Ltd.
[4]	He was sentenced to two years’ imprisonment on Count 2 and nine months’ imprisonment on Count 4, to be served concurrently, with the whole term of imprisonment suspended immediately with an operational period of two years.
Grounds of appeal
[5]	Under amended grounds of appeal, the appellant appeals his conviction on two grounds, namely that:
(a)	that there was a miscarriage of justice because the learned trial judge erred in failing to identify the knowledge, belief or intent which was said by the Crown to render Mr King’s act dishonest and then in failing to instruct the jury to decide whether Mr King had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest; and
(b)	there was a miscarriage of justice because the trial judge failed to adequately direct the jury about the significance to proof of the appellant’s state of mind of the Crown’s error conflating directorship of a company with ownership of that company.
Factual background
[6]	The appellant was a builder by trade.  His company was Craig Muller Constructions Pty Ltd (CMC).
[7]	The appellant, through CMC, was engaged as a sub-contractor for a company called Airfirst Pty Ltd (Airfirst).
[8]	Airfirst was a panel contractor for Telstra which carried out electrical and air-conditioning installation.
[9]	Airfirst was run by three co-directors: Ms Borzi, Mr Reid and Mr King.  Share ownership was divided equally between Ms Borzi, Mr Reid and a corporate entity affiliated with Mr King, Four Kings (Qld) Pty Ltd (Four Kings).  Graeme King was Airfirst’s primary point of contact for sub-contractors for the Telstra work and approved or rejected quotes and organised for payment of invoices via Ms Borzi.  In that role, he engaged CMC as a sub-contractor.
[10]	Airfirst did not compete with other possible contractors for jobs up to $250,000 for Telstra as it was a single select tenderer.  For jobs greater than $250,000, Airfirst submitted a quote and competed with other contractors to win the work.
[11]	Some of the quotes submitted by Airfirst to Telstra included quotes from sub-contractors, such as CMC for the electrical or any air-conditioning component, together with Airfirst’s own quote.  The quote included Airfirst’s markup but did not include a breakdown of a sub-contractor’s quote to them.
[12]	Mr King pleaded guilty to fraud in his role as a director of Airfirst.  Broadly, he gave evidence at the appellant’s trial to the effect that he dishonestly operated a scheme whereby:
(a)	CMC provided quotes for carrying out Telstra work the subject of a tender;
(b)	he instructed CMC to inflate their quotes or invoices by a certain amount, beyond the amount for which they would have otherwise claimed payment, which was then submitted to Telstra by Airfirst as part of its quote for the work to be carried out; 
(c)	after Telstra paid the invoice, Airfirst would then pay CMC the inflated amount;
(d)	an invoice for the markup, or “top-up amount”, which Mr King had advised should be made to CMC’s invoices was then the subject of an invoice created by Mr King and issued to CMC generally for payment to a company owned by Mr King, Four Kings, but in other instances Mr King directed a third party to invoice CMC for “consultation and design for Southport stairs” and a “specialised condenser” for Mr King’s motorcycle;
(e)	the invoices provided to CMC by Mr King would include a description for work not actually done or goods and services Four Kings never delivered; and
(f)	the appellant would transfer the top-up amount, as directed by Mr King.  In at least one case the invoice was issued after the money had been transferred by the appellant.
[13]	In the case of count 2, the top-up amount was alleged to have been paid to bank accounts controlled by Mr King.  In the case of count 4, the top-up amounts were alleged to have been paid to a third-party company on behalf of Mr King, relating to a Ducati motorcycle and another company relating to vehicle modifications.
[14]	The appellant was charged with the two counts of fraud as a party to Mr King’s offending as principal under ss 7(1)(b) or 7(1)(c) of the Criminal Code (Qld).  It was not alleged that CMC retained any of the top-up amount.  Rather, the Crown alleged that the appellant knew what Mr King was doing and his motive was to assist in Mr King’s fraud so that his sub-contracting work continued.  There was no evidence that the appellant was promised any favouritism from Mr King but the Crown’s case was that the appellant believed that by keeping Mr King happy he was ensuring continued access to the sub-contracted work for Airfirst.
[15]	At trial, it was uncontroversial, and evidence was given, that Mr King had pleaded guilty to the two counts of fraud to which the appellant was said to be a party.  It was a matter opened by the Crown and counsel for the defence stated in his opening that it was already established beyond reasonable doubt that a person such as Mr King committed the offences.  The Crown identified the real issue for the trial as being whether the appellant knew that he was participating in Mr King’s fraud.  The defence contended that the principal issue for trial was whether the prosecution could establish beyond reasonable doubt that, when Mr King was engaging in fraudulent conduct the subject of counts 2 and 4, the appellant did in fact provide assistance that enabled Mr King to commit the offences and the appellant knew that what Mr King was doing was, in fact, dishonest.
[16]	While there was considerable evidence about the surreptitious nature of Mr King and the appellant’s conduct, there was a failure by the Crown to properly outline facts relied upon to identify Mr King’s state of mind to characterise his conduct as dishonest, which subsequently led to the directions failing to identify Mr King’s alleged state of mind of which the appellant had to have knowledge.  For the reasons set out below I consider that there has been a miscarriage of justice.
[17]	The Crown sought to prove that the appellant was criminally liable as a party to an offence under ss 7(1)(b) or 7(1)(c) of the Criminal Code.  In order to be found liable as a party, the Crown needed to prove beyond reasonable doubt that: 
(a)	Mr King committed the principal offence (i.e. he dishonestly gained a benefit or advantage, pecuniary or otherwise);
(b)	the appellant knew all the essential facts or circumstances of the offence which established the crime was committed by the principal offender, namely Mr King; and
(c)	with that knowledge, the appellant intentionally assisted Mr King to commit that crime.
[18]	The appellant and Mr King were charged under:
(a)	in respect of count 2, ss 408C(1)(d), 408C(2)(a) and 408C(2)(d) of the Criminal Code; and
(b)	in respect of count 4, ss 408C(1)(d) and 408C(2)(a) of the Criminal Code.
[19]	The additional matters charged under s 408C(2) exposed the defendant to an increased maximum penalty of 14 years’ imprisonment.
[20]	The elements common to both counts required the Crown to prove that the defendant:
(a)	dishonestly;
(b)	gained a benefit or advantage, pecuniary or otherwise;
(c)	for any person,
in circumstances where:
(d)	relevant to the present case, the defendant was a director of a corporation; and
(e)	the victim is a corporation.
[21]	Those elements are determinative of count 4, however, count 2 required the Crown to additionally prove that the property of yield to the offender from the dishonesty is of a value of at least $30,000 but less than $100,000.
[22]	In order to succeed in demonstrating that the defendant was liable to the increased penalty under s 408C(2), the Crown had to establish in the present case, beyond reasonable doubt, that Mr King dishonestly gained a benefit or advantage while he was a director of Airfirst, in circumstances where Airfirst was the victim of the dishonesty, and the yield to Mr King from his dishonesty was to the value of $30,000 or more.  For both counts, Mr King’s state of mind, relied upon to establish dishonesty, was therefore a critical issue to identify before being able to establish whether or not the appellant had knowledge of the essential facts of the offences committed by Mr King.
Identification of the knowledge, belief or intent which was said to render Mr King’s act dishonest
[23]	The element of dishonesty in cases of fraud requires that the Crown identifies its case as to the basis of dishonesty and that the Court gives clear directions to the jury.
[24]	“Dishonesty” requires the prosecution to prove only that what the defendant did was dishonest by the standards of ordinary, honest people.  It is an objective assessment.
[25]	For the purposes of s 408C, this Court has followed the approach to “dishonesty” adopted by the High Court in Peters v The Queen,  particularly Toohey and Gaudron JJ, who stated:
“In a case in which it is necessary for a jury to decide whether an act is dishonest, the proper course is for the trial judge to identify the knowledge, belief or intent which is said to render that act dishonest and to instruct the jury to decide whether the accused had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest...”
[26]	In R v Lyons, Mullins JA (as her Honour then was) said the following about the Court’s directions to the jury in dishonesty cases, by reference to the passage in Peters v The Queen referred to above:
“In relation to the element of dishonesty, the purpose of the suggested direction in the above passage as to the knowledge, belief or intent with which the accused person did the dishonest act is to assist the jury in applying the test of whether the act was dishonest by the standards of ordinary, honest people. It ensures the issue of dishonesty is not left at large, but focuses the jury’s assessment of the evidence to decide whether the element of dishonesty has been proved beyond reasonable doubt by considering the knowledge, belief or intent with which the relevant act was committed. To enable the trial judge to give such a direction, the prosecution case must articulate clearly the knowledge, belief or intent with which the accused person is alleged to have done the dishonest act which is the subject of the particular charge of fraud.”
[27]	In R v Mirotsos, Bond JA stated:  
“[28]	Before this Court, the Crown argued that its case concerning dishonesty was that the appellant knew that the transactions were either unauthorised or that they were not for a legitimate purpose of the company. However, the Crown did not frame its case in that way at trial. The particulars did not suggest that it formed part of the Crown case at trial to suggest that dishonesty was established by reference to what the Crown alleged and proved was the appellant’s state of knowledge, belief or intent as to whether the expenditure was authorised by [the company the subject of the fraud] or as to the legitimacy of the purpose of the expenditure. No such suggestion was made when the case was opened by the Crown. Nor was any such suggestion made in closing argument by the Crown.
[29]	Yet the law is clear that in a case of this nature, the Crown must articulate clearly the relevant aspect of the accused’s knowledge, belief or intent which, on the Crown case, rendered the accused’s conduct dishonest and the trial judge must:
(a)	identify for the jury the knowledge, belief or intent of the accused which was said to render the impugned conduct by the accused dishonest; and
(b)	instruct the jury to decide whether the accused had that knowledge, belief or intent and, if so, to determine whether, on that account, the conduct was dishonest by the standards of ordinary honest people.” (footnote omitted).
How was dishonesty identified at trial?
[28]	The Crown provided particulars of counts 2 and 4 which outlined the allegedly dishonest conduct in which Mr King was said to have engaged but did not provide particulars as to what knowledge, belief or intent Mr King held when doing the acts which it contended constituted dishonesty.
[29]	As stated above, the Crown relied on Mr King’s guilty plea to prove that he had committed the offences the subject of counts 2 and 4, which was agreed by the defence.  However, while by the guilty plea Mr King admitted the elements of the offence, the essential facts relied upon to prove the elements of counts 2 and 4 still had to be articulated for the jury to determine whether the appellant knew all the essential facts and circumstances that established that the offence was committed by the principal offender.
[30]	Considerable evidence was led, including from Mr King, Mr Reid and Ms Borzi.  The evidence also included various documents evidencing transactions involving inflated amounts in the invoices ultimately provided to and paid by Telstra and evidencing transfers to bank accounts controlled by Mr King.  There was evidence of the appellant’s involvement and state of mind through a number of conversations he had including, with Mr King and his father, which were the subject of telephone intercepts.
[31]	Notwithstanding that the increased quoted amount, containing the top-up amount, was submitted to Telstra and paid to Airfirst, the Crown’s case was that Mr King, by diverting the top-up amount to himself, was stealing his co-directors “rightful and lawful share” of that money, based on evidence of the co-directors.  Mr King’s evidence was that Airfirst had not lost money by his conduct, although he had previously given evidence he was “effectively ripping off” his partners “[t]o a point”.  According to Mr King, Telstra was paying the top-up amount to which Airfirst was arguably never entitled, the underlying premise of such a case is questionable.  Mr Reid gave evidence that Airfirst was entitled to the profits in the amount of the top-up sum, as Mr King should have used his industry knowledge to the company's benefit and, instead of attaching his own personal mark-up to the sub-contractor’s quote, he should have incorporated it for the benefit of Airfirst.  Ms Borzi claimed that Airfirst had lost profits because, on her investigations, the company suffered a shortfall as a result of the inflated quotes coming in after the original quote had been submitted to Telstra and Airfirst paying the inflated amount.  She was not challenged in that regard in cross-examination.  In at least one case in respect of work done at Peregian Beach, there was evidence Ms Borzi had questioned the invoice of CMC and Mr King told the appellant to tell her that it was an oversight and provide a credit note.  There was no forensic evidence analysing whether there was a loss to Airfirst nor does it appear evidence was given as to which amended inflated quotes were approved by Telstra.  In the Crown’s closing, the prosecutor gave a detailed outline of the actions of Mr King and the actions of the appellant, which were said to constitute knowing assistance and aiding of Mr King, and the evidence said to demonstrate that the appellant was dishonest.  While the prosecutor identified the conduct which was said to be dishonest in her closing, namely that Mr King was syphoning-off profits from Airfirst and stealing his co-directors’ rightful and lawful share, the prosecutor did not articulate with any precision what Mr King’s knowledge or belief was when engaging in various conduct, nor his intention when the acts were done, which they contended made the act dishonest.
[32]	The appellant did not give evidence.  However, some evidence of his state of mind was available through his conversations with his father and Mr King.  The defence contended that the appellant was not liable as an accessory because:
(a)	he believed Mr King was a director of and owned Airfirst but did not know that Mr King had co-directors who were entitled to a share of Airfirst’s profits; and
(b)	when he paid top-up amounts to Four Kings, he believed that was part of a “company tax arrangement”.
[33]	The defence squarely raised as an issue the appellant’s knowledge of Mr King’s dishonesty both in its opening and closing addresses.  The defence identified that, while the jury could accept Mr King had committed fraud:
“… if it is alleged that a person has aided another then that person - the prosecution must prove that that person had actual knowledge or expectation of the essential facts of that offence, that is King committing fraud. That is all the central matters which make the acts done a crime, including the state of mind of Mr King when he committed the offence...”
Directions given as to the dishonesty
[34]	At the trial, Morzone KC DCJ provided the jury with a written document as to the elements that had to be proven and the related question trails.  His Honour engaged with Counsel at some length about the directions to be given to the jury.  Neither took issue with what was proposed.
[35]	His Honour outlined the essential matters to prove the offence the subject of counts 2 and 4, involving Mr King as the principal offender, which included:
“Count 2: Fraud, as a director, to the value of $30,000 or more.
1.	Mr King had particular knowledge, belief or intent.
2.	With that knowledge, belief or intent between 1 March 2016 and 28 February 2018 Mr King did the acts relied on as constituting the offence.
3.	Mr King did that act dishonestly by the standards of ordinary honest people?
4.	By doing the act Mr King gained a benefit for himself of being $105,600.
5.	By doing the act Mr King was a director of the company Airfirst Pty Ltd.
6.	The money, or the yield to Mr King, was of a value of $30,000 or more?
Count 4: Fraud, as a director.
1.	Mr King had particular knowledge, belief or intent.
2.	With that knowledge, belief or intent between 1 March 2017 and 31 December 2017 Mr King did the acts relied on as constituting the offending.
3.	Mr King did that act dishonestly by the standards of ordinary honest people?
4.	By doing the act Mr King gained a benefit for himself of $21,812.45.
5.	By doing the act Mr King was a director of the company Airfirst Pty Ltd.”
[36]	Specific to the appellant, his Honour provided written directions as to the law which applies to ss 7(1)(b) and 7(1)(c) for count 2.  The document stated, amongst other things:
“Alleged that the defendant CRAIG ANTHONY MULLER is liable for this offence because on divers dates between 1/3/16 to 28/2/18, he aided or enabled or assisted Mr King to dishonestly gain a benefit by the following conduct:
1.	Mr Muller knew Mr King was a director of Airfirst Pty Ltd.
2.	Mr King, representing Airfirst Pty. Ltd., provided subcontract work to Mr Muller's business.
3.	Mr Muller provided legitimate quotes for his assessment of work to Airfirst Pty. Ltd., care of Mr King.
4.	Mr King instructed Mr Muller to inflate the value on the initial quote and submit a further quote and/or invoice which Mr Muller knew did not accurately represent the work. Mr Muller complied with these instructions.
5.	Upon payment to Mr Muller's business for the above work, Mr Muller paid money to bank accounts controlled by Mr King.  The total paid by Mr Muller, and fraudulently gained by Mr King, was $105,600.”
[37]	Question 4 of the question trail in the document provided to the jury provided that:
“Are you satisfied beyond reasonable doubt that the defendant had actual knowledge or expectation of the essential facts of that offence, that is, all the essential matters which make the acts done a crime, including the state of mind of Mr King when that person committed the offence?”
[38]	The matters outlined as essential to prove fraud in relation to count 2 were that:
“1.	Mr King had particular knowledge, belief or intent.
2.	With that knowledge, belief or intent between 1 March 2016 and 28 February 2018 Mr King did the acts relied on as constituting the offence.
3.	Mr King did that act dishonestly by the standards of ordinary honest people? …”
[39]	Similar directions were given in relation to count 4.
[40]	In oral directions, the learned trial judge stated:
“So they are the underlying matters for Mr King to have committed the offences to which he is - the offence to which he pleaded guilty to in respect of count 2. In respect of count 4, you will see the difference is the yield amount, such that that factor is not in the consideration. So paragraph - for the first element for count 4, Mr King had particular knowledge, belief or intent. Here, again, it is of a similar vein but, ultimately, the purpose to which the money was put was directed to third parties, and he had those directed payments made. The second is with that knowledge or belief or intent between the 1st of March 2017 and the 31st of December 2017, Mr King did the acts relied on as constituting the offending. Third, Mr King did the act dishonestly by the standards of honest - ordinary honest people. Four, by doing the act, Mr King gained a benefit for himself of $21,812.45. And five, by doing the act, Mr King was a director of the company Airfirst Pty Ltd.
So in relation to the primary offending, Mr King is the perpetrator. In this case, the Prosecution allege that he as perpetrator committed the offences in counts 2 and 4 with a certain state of mind - with his knowledge, belief or intent held at the time - and the element of knowledge requires proof of actual knowledge against him, to which he has accepted, and a person had natural actual knowledge of a circumstance or result if he or she is aware that it exists or that it will exist in the ordinary course of events. This is to be determined objectively, not by the defendant’s standards - that is, Mr King in relation to this aspect - but whether that defendant, Mr King, was acting dishonestly by the standards of ordinary honest people, then the Prosecution would have satisfied the court in that case for Mr King beyond reasonable doubt that by acting with that knowledge, belief or intent, that the defendant, Mr King, did - what Mr King did was dishonest by the standards of ordinary honest people.
So keep in mind that the references there are to Mr King as the defendant in the original proceeding. A person’s act or omission in relation to property may be dishonest even though he or she is willing to pay for the property or he or she intends to afterwards restore the property or to make restitution of the property or to afterwards fulfil his or her obligation or to make good any detriment.”
Did the directions given to the jury adequately identify Mr King’s state of mind?
[41]	The appellant complains that the Crown failed to identify what Mr King’s relevant knowledge, belief or intent was when Mr King directed the appellant to inflate the invoices.
[42]	The appellant submits that the Crown needed to say that:
(a)	first, when Mr King directed the appellant to inflate the sum on the invoices with his own markup, Mr King was not authorised to do so; and
(b)	secondly, Mr King knew that he was not authorised to do so.
The appellant contends the Crown did not make its case in those terms.
[43]	While the appellant acknowledged that it may be inferred that the Crown contended Mr King lacked authority on the basis that the prosecutor submitted he was syphoning-off profits and the appellant was assisting him to steal others’ rightful and lawful share of those profits, the Crown did not articulate the basis upon which it was said the conduct was unauthorised or that Mr King knew it was unauthorised.  The appellant contends that the Crown did not articulate why and how Mr King’s conduct was dishonest by reference to his state of mind at the time of doing the relevant act and nor was the jury given directions in that regard.
[44]	Counsel on behalf of the respondent contends that its case was that Mr King had intended to syphon off profits from Airfirst and the appellant’s knowledge of Mr Reid being a director was part of the basis upon which the jury could infer that he knew Mr King had no authority to take the monies by the scheme.  It was submitted that, even if Airfirst did not lose money, it did not matter since the evidence showed Mr King was acting without authorisation.
[45]	According to the Crown, given the evidence that was led, including from Mr King, the jury could have had little doubt as to what the intent of the principal offender was, namely, to take a benefit of monies the subject of the scheme, and there was an arrangement with the appellant to that end.  The Crown further contends that it could be inferred by the jury that the conduct was dishonest because of that intention and the way the scheme was carried out.  The Crown relies on not only the quotes and false invoices of CMC and Four Kings but also the telephone intercepts and the evidence of deliberate lies to Ms Borzi, made to cover up what had occurred, to infer that Mr King’s acts were unauthorised by Airfirst and the appellant’s knowledge and involvement in the scheme.
[46]	While it may be accepted that the Crown had considerable evidence of the conduct of Mr King and participation of the appellant in the scheme, which may have allowed the jury to infer from the conduct of the scheme by Mr King and the appellant that the evidence relied upon by the Crown gave rise to an irresistible inference that Mr King was defrauding Airfirst because he had no entitlement to the funds and the appellant must have known that, as was submitted to this Court by counsel for the respondent, the prosecutor did not frame the case in that way and there was no direction to that effect.  Consistent with the approach of the Crown in the trial, the directions given referred to the acts relied upon constituting the fraud but not to Mr King’s accompanying state of mind to demonstrate that the acts were, as the Crown’s case appears to be, unauthorised and Mr King knew that to be the case.
[47]	The High Court and this Court have made clear that directions must be given to a jury identifying the knowledge, belief and intention of the primary offender, in this case Mr King, to establish the offence of fraud.  These directions were necessary in order to instruct the jury as to what was required to be established to demonstrate the knowledge, belief or intention giving rise to dishonesty that the appellant, who was said to have aided or assisted, procured or counselled the offence, must have known.  The difficulty with the trial judge’s written direction to the jury that Mr King had “particular knowledge, belief or intent” and with “that particular knowledge, belief or intent … Mr King did the acts relied on as constituting the offence”, and the oral directions were that neither specified what that particular knowledge, belief or intent was said to be at the time.  While his Honour referred to Mr King engaging in the process of obtaining inflated invoices from CMC “with the intent of gaining his benefit through a system where those matters would be presented to Telstra or a tender process, and his role as a director of Airfirst” that focussed attention on what Mr King was doing and did not identify the basis upon which he was said to have lacked authority to do so and his knowledge, intent or belief in doing so which gave rise to dishonesty.  The written directions to the jury similarly focussed on the conduct of Mr King and the appellant’s knowledge Mr King was a director and that his inflated invoice did accurately represent the work to be done.  They did not, however, adequately address the relevant state of mind of Mr King of which the appellant was alleged to have knowledge.  The directions therefore failed to identify the alleged state of mind of Mr King in performing the acts which constituted the offences to which Mr King had pleaded guilty.
[48]	The lack of direction in this regard was particularly significant where the Crown was relying on what was done and what was said, and the inferences drawn from those matters, to prove its case beyond reasonable doubt.  Knowledge of the appellant of the essential acts constituting the offence by Mr King was identified as a central issue by both the Crown and the defence.  Moreover, the defence, however, had raised alternative inferences that the Crown were required to exclude beyond reasonable doubt in relation to the appellant’s knowledge.  Those matters were in addition to the lurking possibility that, without proper directions, the jury may have considered that Mr King was defrauding Telstra and that the appellant knew that when that was not in fact the Crown case.  Without clear identification of that knowledge, belief or intent, the jury could not assess whether the appellant knew the essential facts of the offence, including the state of mind of Mr King.  The directions did not turn the jury’s mind to the question that they had to answer.
[49]	Given the failure to give a direction about a key element of the offences of which the appellant must have knowledge, and where alternative possibilities were raised as to the appellant’s knowledge, there is a reasonable possibility that the lack of direction could have affected the verdict and the jury might reasonably have acquitted the appellant.  In the circumstances, there was a miscarriage of justice.  For the reasons outlined below this is not an appropriate case for the Court to apply the proviso.
Did the trial judge fail to direct the jury properly as to the appellant’s state of mind due to the Crown’s conflation of directorship with shareholding?
[50]	As to the second ground, counsel for the appellant contends there were two elements of the case against the appellant which required the Crown to focus on what he knew of Mr King’s state of mind:
(a)	first, that the appellant knew all the essential facts or circumstances which must be established by the Crown to show that the crime was committed by the principal offender (including proving Mr King’s state of mind); and
(b)	secondly, that with that knowledge, the appellant intentionally assisted or encouraged Mr King to commit the crime.
[51]	According to the appellant, the Crown’s case was that, because the appellant knew that Mr King had at least one co-director, he also knew that by cutting the co-director out of the top-up amount, Mr King was syphoning-off profits to which another or others were entitled.
[52]	The appellant points to the fact that, in her closing address, the prosecutor contended on a number of occasions that Airfirst was being defrauded and the appellant knew it because he knew there was at least one other director, Mr Reid.  For example, the Crown stated in its closing that “[h]elping one [director] siphon off profits, even one dollar, is stealing [Mr] Reid’s rightful and lawful share of that one dollar … [t]hat is what this trial is really all about” or “ [e]very dollar Craig Muller knowingly inflated an invoice for and then transferred to Graeme King, knowing that Graeme King had at least a co-director, [Mr] Reid, helping, aiding, assisting King to steal [Mr] Reid’s rightful portion of that profit.”  The Crown contended that the appellant discovered that Mr Reid was a director after being copied into an email in which Mr Reid was identified in the signature block as being a director.
[53]	The prosecutor identified the central issue in the following terms:
“The acts that the Crown says Craig Muller did to enable, aid or assist King to commit the fraud are the acts that are detailed in that jury indictment that you got at the outset of the trial. It is not in dispute that Craig Muller did those acts insofar as he submitted quotes, he inflated quotes and submitted those and he submitted invoices with the inflated amounts, and then he transferred the funds to Graeme King.
So what that really leaves you is the central issues for this case. When Craig Muller did those acts, what did he know and what did he intend? Knowledge and intention. Of course the Crown case is that the acts done by Craig Muller are inherently dishonest, misrepresenting the value of your work in an inflated quote and charging someone for that is inherently dishonest. Charging for work not performed is inherently dishonest. And when Craig Muller did those acts he knew that Graeme King was not entitled to that money, because at least [Mr] Reid had some entitlement to it.
So by doing those acts he knew he was assisting King to rip off Airfirst, or at least another partner. And when he did those acts, that was his intention, to assist King to do that.”
[54]	The appellant contends that the Crown’s address in this regard invited incorrect reasoning on behalf of the jury and was required to be corrected by the trial judge in directions.
[55]	In his closing address, defence counsel did address the conflation of directorship and ownership, informing the jury that “[b]eing a director doesn’t give you … any legal entitlement to any funds, it is the shareholding”.  Defence counsel also sought directions to be given to the jury to correct the error made by the Crown.
[56]	Judge Morzone KC gave the jury directions in that regard when discussing whether there was a defence of honest claim of right, in which his Honour did identify the difference between ownership and being a director:
“It is not enough that the defendant believed that he was entitled to do what he did for the excuse to apply. The defendant must act without an intention to defraud. To defraud in this context means to do something dishonestly, so the requirement that the claim of right be honest and the requirement of the absence of an intention to defraud are really two ways of saying that the defendant must have honestly believed himself to be entitled to do what he did, and that obviously extends to the belief in Mr King being entitled to do what he did, which is where the questions go.
…
This case, of course, has the concepts that, not only of his entitlement, but his entitlement is tied up with consideration of Mr King’s entitlement and how you ought assess that in relation to Mr Muller’s honesty, so this is where the questions go to that must draw your attention. D1, are you satisfied beyond reasonable doubt that the defendant did not honestly believe that Mr King was in control of Airfirst PTY LTD and also in control of Four Kings (QLD) PTY LTD. Notice the “not”. That is there,  because the Prosecution must exclude the defence. That is where the onus falls.
…
Now, ownership is something different. Ownership comes from shareholding. A director and shareholder can be different people. They could be the same people. Ownership by way of matters, again, is something that could be subject of control by shareholders exercising rights. Here, you do not have evidence that Mr Muller was aware of particular shareholding. You know the shareholding, from the evidence, was a third each, but again, your focus here is not on what he does not know but was not told to him or realised.
So here [the prosecutor] relies upon the emails where Mr King describes himself as director, the extent of that control, to the extent of how he spoke, and how Mr Muller perceived what he was saying and doing so as to bring about his belief. Similarly for Four Kings. And you have understood, again, how those matters were spoken of by Mr Muller, how they may differ to what, in reality, things are as to Four Kings’ directorship and ownership, involving Mr King’s wife. And again, your focus here is on Mr Muller’s belief, not what he did not know.”
[57]	The appellant contends that the directions were inadequate because they:
(a)	dealt with the Crown’s mistake in the context of the question of honest claim of right and the trial judge’s use of the word “control”, not in the context of the appellant knowing of all of the essential facts of the offending and then intending to assist while having that knowledge;
(b)	did not clearly state that the prosecutor’s invitation for the jury to reason that knowledge of directorship was equivalent to knowledge of shareholding was wrong and should be completely disregarded; and
(c)	failed to direct the jury as to the consequences of being able to reason as they had been invited by the prosecutor:
(i)	while the trial judge told the jury that there was no evidence that the appellant was aware “of the particular shareholding”, the trial judge ought to have corrected the prosecutor’s submission and instructed the jury that the email signature identifying Mr Reid as a director could not establish that the appellant had knowledge of Mr Reid’s entitlement to profits; and
(ii)	while the trial judge acknowledged that it was only from drawing “inferences” that the jury might be able to determine what the appellant’s belief was as to Mr King’s “control” of the company, the trial judge ought to have identified that evidence and referred to it in the context of Mr King’s entitlement to the markup he claimed and reminded the jury that any inference consistent with guilt needed to be the only rational inference available on the evidence.
[58]	According to the Crown, the prosecutor’s “flourish” in discussing the position of director had no impact on the issues and there was therefore no issue with the directions in that regard.  The prosecutor had, the Crown submits, framed the “real issue” in a number of ways in the closing, which indicated that the appellant was aware of Mr King’s fraud and his lack of authorisation to do with the money as he pleased.  In their written submissions before this Court, the Crown submitted that:
“… the prosecutor’s address targeted the appellant’s knowledge by personifying the company in terms of director(s) that the jury heard from and whom the appellant knew. This turn of phrase indicated only that the appellant knew that King was not entitled to act as he did.” 
[59]	Given the “plethora” of other evidence, the Crown submits it demonstrated that King was not entitled to the money and to treat it as his own and that was all that had to be made clear to the jury.
[60]	According to the Crown, it was clear that Airfirst ending up losing money, given that monies which the appellant received from Airfirst were transferred to the appellant’s company and from there to Four Kings and then to Mr King’s personal account or a third party at Mr King’s behest.  The apparent shortfall was supported by the evidence of Ms Borzi and Mr Reid and the fact that Mr King was not authorised to take the money and hide it in his companies or pay a third party.
[61]	The Crown submitted that, in the prosecutor’s closing, it was identified to the jury that the appellant’s knowledge of Mr King’s lack of authorisation was evident from the terms of his conversations with Mr King where he was told to inflate his quote for a job and the appellant knew that by inflating it he was dishonestly misrepresenting the cost of his work and knew it was wrong.
[62]	The Crown contends that the prosecutor did not submit that it was only directors who were deprived of the money which Mr King had the benefit of and that the prosecutor qualified that a director will have suffered a loss, as will other entities associated with the company, such as creditors.  It was further submitted by the Crown in written submissions that:
“Even if on a strict reading of the principles of company law it is inaccurate to refer to the directors being deprived of profit rather than the company itself or the shareholders or creditors etc, this is a distinction without consequence because what is really being communicated is that the appellant knew that King did not have the sole rights to that money to do with as he pleased because there were other associated parties to the company who he was aware of.”
[63]	The Crown also submitted that there was evidence from which the inference could be drawn that the appellant knew there were other people, other than Mr King, who had a lawful entitlement to the money and that the appellant knew that the money that he transferred to Mr King was not Mr King’s to do with as he pleased.
[64]	The Crown’s submissions, with respect, demonstrate the same lack of precision that permeated the trial.
Were the directions adequate to correct the error by the Crown?
[65]	As a matter of law being a director of a company does not of itself give rise to any entitlement to share in the profits of the company.  That is the right of shareholders.
[66]	The authorisation of a director to act is governed by the scope of the authority they may exercise on behalf of the company as a director.  The loss suffered by a company is not a loss suffered by directors, but the company and shareholders, albeit that it may have a broader effect on a company’s ability to meet its debts.  The prosecutor mixed different concepts in the analysis of the Crown’s case and address to the jury.  The linking of a directorship with loss suffered by Airfirst was incorrect as a matter of law.  They are distinct concepts and the linking of the two to submit that the appellant knew that Mr King was not entitled to use the monies as he did could have confused the jury and led the jury into error.
[67]	A significant part of the Crown’s case was that the appellant knew that at least Mr Reid was another director of Airfirst and therefore knew that in Mr King obtaining the amount of mark-up for himself he was acting dishonestly and obtaining a benefit to which he was not entitled.  While the fact Mr Reid was a director together with other evidence may have been sufficient for an inference that he knew that Mr Reid was also a shareholder or an “owner” of Airfirst, the fact Mr Reid was a director alone was framed by the prosecutor on more than one occasion as sufficient to demonstrate others were entitled to the funds the subject of the top-up amount and was not a proper basis upon which it could be contended Airfirst and/or Mr Reid suffered loss and that the appellant knew that to be the case.
[68]	While his Honour did address the different concepts his Honour was required to go further in the context of the elements of the offence, particularly given the reliance on s 408C(2).  The question of the identity of the the subject of Mr King’s fraud was significant both in terms of the offence and the appellant’s knowledge.
[69]	The charges against the appellant were not merely that he was a party to a fraud, but that he was a party to a fraud of a company of which Mr King was director, namely Airfirst, and that Airfirst was the victim of the fraud.  Thus, it was not sufficient to show Mr King was defrauding someone or some entity and the appellant knew that.  Rather, it had to be established that Mr King was defrauding Airfirst and the appellant knew that.  The basis upon which that was asserted had to be identified.  Moreover, where the appellant contended that he thought Mr King was entitled to do as he wished because he owned Airfirst and Four Kings, there was a significant risk the jury would incorrectly reason that the appellant knew that Mr King was not entitled to act as he did because he knew there was at least one other director of Airfirst.  It was central to directing the jury as to whether the appellant had knowledge of the essential facts.  The directions required his Honour to inform the jury at least that the Crown was incorrect in asserting that Mr King was syphoning off profits from Airfirst because there was at least one other director and that Mr King was not entitled to the funds.  That needed to be done explicitly in the context of directions as to the appellant’s knowledge of the essential facts of the offending by Mr King, rather than framing the question in terms of control, which can include a directorship.  Similarly, while his Honour spoke of the distinction between directorship and ownership arising from being a shareholder, he did not direct the jury that that would dictate whether another party had an entitlement to the funds in question.  His Honour’s direction in the context of the defence of honest claim of right, was not sufficient to ensure that the jury did not adopt an incorrect process to reason the appellant knew Mr King was acting dishonestly.
[70]	The directions that were given would not have alleviated the confusion to which the jury was exposed by the reasoning of the Crown that it was sufficient to show that Mr King was defrauding Airfirst and the appellant knew that by virtue of knowledge of the scheme and that there were other directors.  The direction was necessary to ensure that the jury correctly understood the basis upon which the appellant held the relevant knowledge that Mr King was defrauding Airfirst, which was a central issue to the case and could have affected their verdict.  There was therefore a miscarriage of justice.
Did the Proviso apply?
[71]	Section 668E of the Criminal Code provides that:
“(1)	The Court on any such appeal against conviction shall allow the appeal if it is of opinion that the verdict of the jury should be set aside on the ground that it is unreasonable, or can not be supported having regard to the evidence, or that the judgment of the court of trial should be set aside on the ground of the wrong decision of any question of law, or that on any ground whatsoever there was a miscarriage of justice, and in any other case shall dismiss the appeal.
(1A)	However, the Court may, notwithstanding that it is of the opinion that the point or points raised by the appeal might be decided in favour of the appellant, dismiss the appeal if it considers that no substantial miscarriage of justice has actually occurred. …”
[72]	The relevant principles to be applied were helpfully outlined by Flanagan JA in R v Tahiata.  The onus is on the respondent to establish that the case is within the proviso, namely that no substantial miscarriage of justice has occurred.
[73]	In Orreal v The Queen, Kiefel CJ and Keane J observed that, in determining whether the proviso applied, an appellate court:
“… must consider the whole of the record of the trial and the nature and effect of the error which gives rise to the miscarriage of justice in the particular case. As explained in Kalbasi v Western Australia, this is because some errors will prevent the appellate court from being able to assess whether guilt was proved beyond reasonable doubt. The examples there given include cases which turn on issues of contested credibility or cases where there has been a wrong direction on an element of liability in issue. What they have in common is that the appellate court cannot be satisfied that guilt has been proved.” (footnotes omitted).
[74]	While counsel for the respondent tried to maintain the guilty verdict on the basis that the proviso should be applied by the Court, by demonstrating the strong evidential basis for the Crown’s case which could support the elements of the offence and the appellant’s knowledge of the essential facts to establish he was an accessory, the present is not a case in which the proviso can be applied.
[75]	In R v Mirotsos, Bond JA stated, in rejecting a submission that it would be an appropriate case to apply the proviso when there was an error in the direction given as to dishonesty, that:
“… An appellate court must be able to assess for itself that the evidence properly admitted at trial establishes guilt to the requisite standard before it can conclude that no substantial miscarriage of justice has actually occurred. In this case, the critical issue was whether the Crown had excluded all reasonable hypotheses inconsistent with guilt, and those hypotheses all concerned something about the appellant’s state of mind. Moreover, the credibility and reliability of the evidence concerning discussions between the directors and of the explanations posited by the appellant were vital issues for the jury in this case. But this Court has the disadvantage of not having heard the evidence of the witnesses touching upon those subjects. Not having done so, and particularly where the critical issue involved an assessment of whether the Crown had proved to the criminal standard the appellant’s state of knowledge about particular facts, I form the view that I would be unable to discharge that task.” (footnotes omitted).
[76]	Similarly in R v Jayaweera Fraser and Bond JJA stated that:
“[12]	It is not uncommon in cases of this nature, and it was the case here, that there was no direct evidence of the relevant state of the accused’s knowledge, belief or intent, and the Crown had to invite the jury to reach the requisite conclusion by an inference from all the circumstances that it proved, that inference being reached according to the criminal standard. But it is critical that the Crown states clearly what its case is in that respect so that the trial judge may direct the jury according to the law, and not leave the jury in the position of making some sort of inquiry at large as to what it was that made conduct dishonest.
…
[18]	For those reasons, the directions which the trial judge gave on the element of dishonesty were inadequate and occasioned a miscarriage of justice.
[19]	The Crown invoked reliance on the proviso. By reference to a detailed evidence matrix, the Crown invited this Court to form the view that no substantial miscarriage of justice had actually occurred. But in order to reach that view this Court would have to be able to assess for itself that the evidence properly admitted at trial established guilt to the requisite standard, as was recently re-emphasised by the High Court in Orreal v The Queen.
[20]	The High Court also made clear in Orreal v The Queen that there are cases where the nature of the errors made would prevent an appellate court from being able to conduct that assessment, including cases which turn on issues of contested credibility and cases in which a wrong direction has been given on an element of liability in issue. This was such a case. The inadequate directions were given on an element of liability in issue, namely that of dishonesty. The fact that the jury returned guilty verdicts would have to be discarded from the appellate court's assessment of the whole record of trial, because of that fact, and also because of the global approach which the Crown took to the presentation of the evidence in the case. Then, the natural limitations which exist in the case of an appellate proceeding conducted wholly on the record would prevent this Court from carrying out the relevant assessment.” (emphasis added and footnotes omitted).
[77]	It is similarly the case here.  A critical issue in the present case was whether the Crown had proved beyond reasonable doubt the appellant’s knowledge of the essential elements constituting the offence by Mr King and, particularly, knowledge of Mr King’s state of mind necessary to establish dishonesty.  Accepting the Crown’s case that Mr King was not authorised to do as he did and knew he was not authorised, there was evidence from which knowledge of the appellant of Mr King’s state of mind could be inferred.  However, there were also other possibilities raised by the evidence by the defence which the Crown was required to exclude.  While the appellant did not give evidence, as was the case in Mirotsos, and was charged as an accessory, there was evidence supporting those possibilities from his conversations.  This Court is constrained in the same way as identified by Bond JA in Mirotsos and Fraser and Bond JJA in Jayaweera, where the direction on a critical element of dishonesty has been found to be in error and an assessment of the whole of the record of the trial would be required to be carried out.
[78]	Grounds 1 and 2 contained in the notice of appeal are established, and the proviso does not apply.
[79]	The orders that should be made are that:
1.	The appeal against conviction is allowed.
2.	The conviction on each count is set aside.
3.	A new trial is ordered on each count.