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Barry Lane
1 August, 2005  
Lies, damned lies and the Edwards' direction

Courts are far more benign institutions than tribunals when dealing with lying defendants. The case of Melbourne Mafioso Domenico Italiano shows the distinction in operation

As the lyrics of that old standard by Alan Jay Lerner mockingly declare:

How could you believe me when I said I loved you when you know I’ve been a liar all my life?

imageIn a forensic sense it depends a bit on whether “one” is an inquisitorial tribunal or a court. If the former, the relevant body not bound by the rules of evidence, is at liberty to pursue its own inquiries, subject, of course, to the rules of natural justice and is usually concerned to determine the truth of the issue.

A court, on the other hand, is constrained not only by the normal statutory and other rules of evidence, but by common law rules relating to jury directions. In addition, courts do not seek to search for the truth.

The following cases illustrate the dichotomy.

By notice dated August 24, 1989, the Assistant Director, Office Of Fair Trading and Business Affairs, took action in the Victorian Civil and Administrative Tribunal against Maldonfield Pty Ltd, the holder of a motorcar traders licence.

The assistant director was concerned about a number of aspects of Maldonfield’s trading including “floating” numerous cheques which were not paid on presentation. Approximately 500 cheques in excess of $2 million had been written on accounts with various banks over a number of years although the tribunal accepted that at the time of the hearing only $10,000 was owed to the ANZ Bank.

In addition, the assistant director was troubled by breaches of the Motor Car Traders Act 1986 and the Fair Trading Act 1985 in relation to transactions by Domenico Michael Italiano and the association between Maldonfield and Italiano as an employee and director.

By the time the tribunal commenced its deliberations on March 2, 1999, Italiano, known to his friends as “Mick”, had resigned as a director of Maldonfield and, so far as the tribunal was concerned, was no longer of interest to it. The only director remaining at the time of the hearing was Italiano’s wife, Marian Anne Schumann.

From the time Maldonfield obtained its motor car traders licence in the early 1990s, the Motor Car Traders Licensing Authority had taken exception to Italiano’s participation in the company’s business and had, in 1993 and 1994, refused applications by the company for permission to employ him.

The licensee required this permission because Italiano had been convicted by the Magistrates’ Court at Preston on June 14, 1983 after pleading guilty to two counts of obtaining property by deception. He was fined $100 on each charge.

It became clear that Italiano had been connected with the company from the time it obtained its licence – indeed it was conceded before the tribunal by Maldonfield’s counsel that Mick “essentially is the company”.

Italiano and Schumann told the tribunal that the reason why they took no notice of the authority’s orders in 1993 and 1994 was because they “misunderstood” the nature of Mick’s court appearance in 1983. They thought that he had not been “convicted” but had only been fined and given a bond.

The tribunal had difficulty with those explanations; indeed it is possible to get the impression from the tribunal’s reasons for decision, which were handed down on April 13, 1999, that Italiano was afflicted with persistent and morbid amnesia and other cognitive deficits.

On April 13, 1999, the tribunal (Deputy President Baker-Smith and members Greenberger and Carrigan) cancelled Maldonfield’s licence. It was not impressed with Italiano or Schumann or their evidence. An appeal to the Supreme Court was dismissed by Justice Howard Nathan on December 14, 1999.

Nathan observed:

“The particulars attached to the application were full and detailed. [Schumann] was apprised of the matters to which her company had pleaded guilty in the Magistrates’ Court. She had full knowledge of the alleged lapses of her husband, and also that he continued to be employed by the company of which she was the director, in breach of the authority’s ruling. She knew the reasons alleged to provide grounds for disqualifying Maldonfield were also the reasons which could be used to disqualify its directors. In my view her purported ignorance of the charges or matters alleged against her is feigned…

The power of the Act to protect the public from unfit used car merchants is not to be flummoxed by the manoeuvre of a director resigning, thereby avoiding the tribunal’s attention and leaving a patsy, in this case his wife, in his stead. Nor for her then to assert, she can avoid disqualification because she has been left standing alone.”

While all this was going on, Mick Italiano decided to branch out into a new field of entrepreneurial activity – the charity raffle business. He and a couple of characters, by the name of Cherry and Lagunda, established in 1997 the Youth Motor Sport Federation.

The venture was short-lived and ended in tears when Italiano pleaded guilty in the County Court to three counts of conspiracy to defraud after it was discovered that raffles of luxury cars obtained on behalf of the federation (ex sales tax, of course) were not actually being “won” by people who had bought tickets but by people associated with the promoters. The “winners” paid a discounted price for the vehicles supplied or provided other consideration in the form of debt forgiveness.

imageOn September 10, 2002, Italiano was sentenced to a term of two and a half years imprisonment, two years of which was suspended for three years. He was obliged to serve six months in choky. The sentencing judge accepted that Italiano had one minor 20-year-old prior, that he was close to being a first offender and that he was unlikely to re-offend.

It was put in mitigation by counsel for Italiano that he had been “devastated” by his involvement in the conspiracy, that his marriage had failed, that he had lost “his” motor car traders licence and that he had to sell all his assets to pay debts. Further, Mick was suffering from and being treated for depression which had reached “suicidal proportions”.

In October 2003, further misfortune visited Italiano when again he wound-up before the County Court. He was found guilty by a jury on a number of counts of theft and obtaining property by deception. These offences arose from dodgy trading in luxury motorcars which began in mid 2001.

In his defence, Mr Italiano relied on “claim of right”, a defence no doubt known to motor car traders following its successful use by one Mario Paul Salvo, a licensed trader (see R v Salvo [1980] VR 401 and [1981] 5 A.Crim.R. 1).

It is not apparent whether Italiano gave evidence at his trial.

On December 9, 2003, Mick was sentenced to four years imprisonment with a minimum of three years.

Distressed by those convictions and sentences, he appealed to the Supreme Court which unanimously upheld his appeal on the ground that the trial judge had misdirected the jury on that part of the prosecution’s case which relied on “consciousness of guilt” arising from a number of lies said to have been told by the accused.

Those lies were contained in his record of interview with the police, in intercepted telephone conversations with the victim of the frauds and with a potential purchaser of one of the motorcars. The lies were said to be 10 in number and are set out in paragraph 25 of Justice of Appeal Buchanan’s judgment. Buchanan then went on:

“26. The trial judge, as he was bound to do, told the jury that there might be reasons for the telling of the lies apart from a realisation of guilt. He gave as examples embarrassment or panic when confronted by the police and referred to the applicant’s suggestions that he had a poor memory and was not well when he was interviewed by the police. His Honour failed, however, to mention the possibility that the applicant lied because he feared Kalajdic and Aisbett, a possibility suggested in the applicant’s record of interview and the intercepted telephone conversations. Counsel also complained that the trial judge failed to relate each lie to particular counts, instead leaving all the lies to the jury as displaying a general consciousness of guilt.

27. In my opinion the trial judge was obliged to tell the jury that the applicant may have lied as a result of fear of violence by Kalajdic and Aisbett. The effect of the explanation that emerged from the evidence was diminished by its omission from the possible explanations listed by a judge constituted by his passing references to embarrassment, panic, poor memory and illness.

28. Further, each lie was relevant to a particular count or group of counts. In my view the trial judge’s failure to relate each lie to the appropriate count or counts could have brought about a miscarriage of justice: the jury may have reasoned that the applicant was guilty of a count concerning one motor car because he told a lie about the other motor car, that is, because he was a liar. A lie is only probative of guilt, as distinct form affecting the accused’s credit, if the accused tells the lie because he perceives that the truth is inconsistent with his innocence. The lie must relate to a material issue. As Deane, Dawson and Gaudron JJ. said in Edwards v R:

‘The jury should be instructed that they may take the lie into account only if they are satisfied … that it reveals a knowledge of the offence or some aspect of it and that it was told because the accused knew that the truth of the matter about which he lied would implicate him in the offence …’

29 In the present case the trial judge told the jury that they were required to find that ‘the only reasonable explanation that the accused did tell lies was his consciousness of guilt of this particular crime, that is, the count you are then considering, not of some other wrongdoing …’ Unfortunately his Honour neglected to identify ‘this particular crime’ to which each lie related. In my opinion his Honour’s directions as to lies exhibiting consciousness of guilt were defective.”

Vincent JA and Byrne AJA agreed.

imageThe convictions were set aside and a new trial ordered.

On Friday June 24, 2005, the day the Court of Appeal delivered judgment, Mick was released on bail pending the retrial. Sadly, the festivities following his victory in the court and his release from prison seemed to have got the better of him. By the following day he was dead, apparently from a heart attack brought on by a “Viagra-fuelled sex binge”.

A spicy account of Italiano’s last hours appeared in the Herald Sun on June 29, 2005.

A fitting coverage of the funeral itself was also published.

What is the lesson to be learned from all of this? If one is going to tell lies in defence of one’s misconduct, tell them to a court where an “unsworn statement” in the form of a police record of interview, an Edwards’ direction and the right not to give evidence can all be relied upon.

On the other hand, telling lies to an investigative tribunal can produce quite beastly outcomes.