Trade Practices Commission v Vales Wine Company Pty Ltd

(1996) 66 FCR 336
[1996] ATPR 41-918

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(Judgment by: O'Loughlin J)

Trade Practices Commission, v
The Vales Wine Company Pty Ltd
Michael Gunther Baron Von Berg & Claude Virgilio Curtis, Defendants

Court:

Judge:
O'Loughlin J

Subject References:
Trade Practices
prosecution
falsely representing that goods are of a particular composition
essential ingredients of offence
whether knowledge of falsity required
whether offence made out if purchaser of goods knew of falsity
whether offence made out if no inducement to purchaser
extent to which prosecution must prove composition of goods
Prosecution
Trade Practices
see above
Accomplice
evidence of
warning
Particulars
particulars of offence charged
sufficiency of

Legislative References:
Australian Wine and Brandy Corporation Act 1980 (Cth) - the Act
Customs Act 1901 (Cth) - the Act
P4 Standards (Wine and Wine Products) of the National Health and Medical Research Council's Food Standards Code 1987 - the Act
Sales Tax Assessment Act (No1) 1930 (Cth) - the Act

Case References:
Giorgianni v The Queen - (1985) 156 CLR 473
Piddington v Bennett & Wood Pty Ltd - (1940) 63 CLR 533
Natta v Canham - (1991) 32 FCR 282
Murphy v Farmer - (1988) 165 CLR 19
Dickenson v Fletcher - (1873) LR 9 CP l
Sternberg v The Queen - (1953) 88 CLR 646
Davidson v Watson - (1953) 28 ALJ 63
Given v CV Holland (Holdings) Pty Ltd - (1977) 29 FLR 212
Darwin Bakery Pty Ltd v Sully - (1981) 51 FLR 90
Riley McKay Pty Ltd v Bannerman - (1977) 31 FLR 129
Revlon Manufacturing Ltd v Commissioner of Taxation of the Commonwealth of Australia - (Full Court of the Federal Court of Australia, 14 December 1995, unreported)
R v Teitler - [1959] VR 32
R v Baskerville - [1916] 2 KB 658
Steele v Mirror Newspapers Ltd - (1974) 2 NSWLR 348
R v Brett - (1961) Tas SR 178
Johnson v Miller - (1937) 59 CLR 467
Goodbee v Samuels - (1973) 5 SASR 236

Hearing date: 10-14 July 1995 & 17-20 July 1995 & 24-28 July 1995 & 31 July 1995 & 1-3 August 1995 & 7-10 August 1995 & 11 December 1995
Judgment date: 10 May 1996

Adelaide

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Judgment by:
O'Loughlin J

1. Introduction

The Vales Wine Company Pty Ltd has been charged with having committed, on various dates between January 1991 and October 1992, eleven breaches of the provisions of par79(1)(a) of the Trade Practices Act 1974 (Cth) ("the TPA"). In most cases I will refer to it as "the company" although there were documents that were tendered in evidence that referred to it by the initials TVWC and others that referred to it as SVW, the initials for Southern Vales Winery, the company's former name. In addition to the charges against the company, Michael Gunther Baron von Berg ("Mr von Berg") and Claude Virgilio Curtis ("Mr Curtis") faced, on a separate information, four charges under par79(1)(b) of the TPA of aiding, abetting, counselling or procuring the commission of the last four of the eleven offences that were allegedly committed by the company; those four alleged offences were said to have occurred between 1 June and 1 October 1992. They are the counts numbered 7, 8, 9 and 10 in the relevant information. The remaining counts against Mr von Berg and Mr Curtis in that separate information were withdrawn prior to trial.

2. S.79 and S.53 of the TPA

Paragraphs (a) and (b) of subs79(1) of the TPA provide as follows:-

"79(1)

A person who -

(a)

contravenes;

(b)

aids, abets, counsels or procures a person to contravene;

(c)

...

(d)

...

(e)

...

a provision of Part V other than s52, 65Q or 65R or sub-section 65F(9) is guilty of an offence punishable on conviction -

(f)

in the case of a person not being a body corporate - by a fine not exceeding $40,000; or

(g)

in the case of a person being a body corporate - by a fine not exceeding $200,000."

It was alleged by the prosecution that, in respect of all counts, the relevant provision of Part V of the TPA that was breached was par53(a) of the Act; that paragraph is in the following terms:-

"53.

A corporation shall not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services -

(a)

falsely represent that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or a particular previous use;

(aa)

...".

3. The Charges

The prime allegation with respect to each of the eleven counts was that the company sold wine that was not true to description. This is not an exact statement of the charges as the identification of the components that made up the wine was a matter of dispute. However, it serves as a useful method of introducing the relevant facts. Mr von Berg and Mr Curtis, both of whom were represented by Mr Borick and Mr Hopton, pleaded "not guilty" to the four counts alleged against them. The company did not, however, appear and leave was granted to the prosecution to proceed against it ex parte. The eleven charges against the company and the four charges against Mr von Berg and Mr Curtis were heard together.

As the eleven counts against the company and the four counts against Mr von Berg and Mr Curtis followed a pattern it will not be necessary to itemise each of the charges. Choosing at random I set out, in full, the ninth count against the company; it alleged that the company:-

"Between about the 16th day of June 1992 and about the 1st day of October 1992, at McLaren Vale in the said State or elsewhere, did, in the course of its trade or commerce, and in the connection with the supply or possible supply of goods, falsely represent that goods were of a particular composition, contrary to section 53(a) and section 79(1)(a) of the Trade Practices Act 1974.

Particulars

The defendant did, through its servants or agents, falsely represent that 113,000 litres of wine sold to Chateau Yaldara Pty Ltd pursuant to Order Number 14193 dated 16 June 1992 was 1991 vintage Shiraz wine, when in fact the said wine did not contain at least 80% Shiraz and at least 95% of the 1991 vintage as required by the P4 Standards (Wine and Wine Products) of the National Health and Medical Research Council's Food Standards Code 1987."

The corresponding charge against Mr von Berg and Mr Curtis alleged in the eighth count in the separate information that they:-

"Between about the 16th day of June 1992 and about the 26th day of October 1992, at McLaren Vale in the said State or elsewhere, did aid, abet, counsel or procure the Vales Wine Co Pty Ltd in falsely representing, in the course of the said company's trade or commerce and in the connection with the supply or possible supply of goods, that goods were of a particular composition; contrary to section 53(a) and section 79(1)(b) of the Trade Practices Act 1974.

Particulars

(a)

The Vales Wine Co Pty Ltd ('the Vales') did through its servants and agents falsely represent that 113,000 litres of wine sold to Chateau Yaldara Pty Ltd pursuant to Order no. 14193 was 1991 Shiraz wine, when in fact the wine supplied contained

(i)

less than 80% variety requirement and

(ii)

less than the 95% vintage requirement

contained within the P4 Standards (Wine and Wine Products) of the National Health and Medical Research Council's Food Standards Code 1987.

(b)

The false representations referred to in paragraph (a) comprised descriptions of the wine as 1991 Shiraz in oral and written communications including purchase orders, cartnotes, invoices and other documentation pertaining to the said sale.

(c)

The defendants were directors of the Vales at all relevant times.

(d)

By words and conduct the defendants authorised, sanctioned or permitted servants of the Vales to represent that wine sold on behalf of the Vales was of a particular variety and/or vintage notwithstanding that the 80% variety requirement and/or the 95% vintage requirement contained within the P4 Standards (Wine and Wine Products) of the National Health and Medical Research Council's Food Standards Code 1987 would not be met."

In seven of the eleven charges against the company, (and Count 9 is one of those seven) the thrust of the prosecution's case was the alleged failures to comply with the P4 Standards of the 1987 Food Standards Code. In the remaining four counts, Nos. 2, 3, 6 and 11, the case for the prosecution was that the company had falsely represented that the particular wine was 100% of a named variety and of a nominated vintage. Nevertheless, in the Particulars of the alleged offences to which Counts 2, 3, 6 and 11 refer there were unnecessary and unhelpful references to supposed failures to comply with the P4 Standards. For example in Count 2, the draftsperson alleged that the company falsely represented that goods were of a specific composition. To support that allegation it was particularised that the company, through its servants or agents, had falsely represented that 30,000 litres of wine sold to Andrew Garrett Wines pursuant to Order Number 5560 dated 19 September 1991 was 100% 1990 Vintage Cabernet Sauvignon. However, the draftsperson then asserted that the wine that was sold was "less than the 80% variety requirement and 95% vintage requirement contained within the P4 Standards ..." when, the assertion should have been that the wine was "less than the 100% variety requirement and 100% vintage requirement ...". With inconsequential variations, the same concluding averment appears in Counts 3, 6 and 11. In each of these cases the P4 Standards had no application to the transaction. In each transaction the allegation was that the company had falsely represented that the wine that was supplied was of a higher standard, that is, it was 100% as to both variety and vintage. This same error permeated through to the tenth count against Mr von Berg and Mr Curtis.

4. The elements of the offences

In my opinion it is incumbent upon the prosecution to prove, in each of the eleven counts against the company:-

•

that the company made a representation that the wine that it was offering to supply or that it did supply was of a particular composition

•

that the representation was false

•

that the representation was made by the company in trade or commerce

•

that the representation was made in connection with the supply of the wine.

In addition, in the case of Mr von Berg and separately, in the case of Mr Curtis, the prosecution must also prove that each aided, abetted, counselled or procured the company to contravene the legislation in each of the four counts that has been proffered against him. Every element of each charge must be proved beyond reasonable doubt.

The defence has disputed the alleged falsity of the various representations; it has also claimed that the prosecution must, when proving a representation, prove the composition of the particular wine. Subject to those matters the evidence is clear, in respect of each count, that each representation was made by the company in trade or commerce and in connection with the supply of wine. It will not therefore be necessary to refer further to those two elements. This then leaves for determination in respect of each count the following questions:-

•

did the company make a representation?

•

if it did, what was the representation?

•

if it did, was the representation false?

As to Mr von Berg and Mr Curtis, and in respect of each count, the onus is on the prosecution to prove that the defendants, knowing the essential facts of each offence, intentionally aided, abetted, counselled or procured the acts of the company in its conduct as the principal offender. I reject the proposition that was advanced by the defence that to be guilty of aiding, abetting, counselling or procuring, the defendants had to participate in the giving or the making of the false representation. I take the law on this subject to be that as described by Gibbs CJ in Giorgianni v The Queen (1985) 156 CLR 473 at 487-488:-

"My view of the law may be summed up very shortly. No one may be convicted of aiding, abetting, counselling or procuring the commission of an offence unless, knowing all the essential facts which made what was done a crime, he intentionally aided, abetted, counselled or procured the acts of the principal offender. Wilful blindness, in the sense that I have described, is treated as equivalent to knowledge but neither negligence nor recklessness is sufficient."

5. Details of the charges

A summary of the challenged transactions is set out hereunder. The first entry on the left is the relevant count in the information against the company. Mr von Berg and Mr Curtis are charged with aiding, abetting, counselling or procuring the commission of Counts 8, 9, 10 and 11 only. The second entry is the date of the customer's purchase order. Next is the name of the customer followed by the details of the wine that was ordered. In respect of each transaction, delivery cartnotes and stock transfer records were tendered but I will not detail them; I will merely list the delivery dates and the volumes of each delivery in the last 2 columns. It will be seen that the quantity of wine delivered did not always match the amount ordered. Mr Fragos, the company's winemaker and the principal witness for the prosecution, asserted that it was an acceptable practice in the bulk wine trade to make deliveries which did not match the order exactly. Mr Fragos said a discrepancy of this sort is most often explained by factors such as the vendor not wishing to be left with a small volume of the wine or the need to top up a tanker to reduce its air content. There was no evidence to the contrary; I accept Mr Fragos' explanation.

6. The legislative background

Before proceeding to a consideration of the facts in this matter, it will be useful to refer to the relevant legislative background. The P4 Standards (Wine and Wine Products) of the National Health and Medical Research Council Food Standards Code 1987 ("the P4 Standards") were published in the Commonwealth of Australia Gazette No 27, on 27 August 1987. Their legislative force is to be found (via the Food Act 1985 (SA)) in the regulations that were made pursuant to that Act on 28 July 1988 and published in the South Australian Government Gazette on the same date at pages 553-563. Under the P4 Standards, as they operated at the time of the transactions that are the subject of the eleven charges, a wine could not be designated as being of a specific variety or from a specific locality unless the wine contained, at least, 80% of that variety or unless, at least, 80% of it came from that locality. Furthermore, it could not be designated as being of a specific year or vintage unless 95% of the wine was of that year or vintage. The relevant extracts from the P4 Standards were as follows:-

"12.

(a) ...

(b)

...

(c)

Where the name or description of any variety of wine or any wine product specified in this Standard includes a reference to -

(i)

a variety of grapes from which the product or a portion of the product was made;

(ii)

a locality from which any of the grapes used in the manufacture of the product originated;

(iii)

the year in which the grapes used in the manufacture of the product were harvested or the vintage,

that name or description shall include in descending order of proportion the names of all such varieties of grapes, all such localities or, as the case may be, all such years or vintages.

(d)

Paragraph (c) of this clause -

(i)

does not prohibit the designation of a product as being -

(A)

of a specific variety or from a specific locality if 800 mL/L or more of the product is of that variety or from that locality;

(B)

of a specific year or vintage if 950 mL/L or more of the product is of that year or vintage;

(ii)

in the case of fortified wine, does not operate so as to include added grape spirit or brandy.

For the purposes of this Standard, the year of harvesting and the vintage shall be regarded as synonymous."

In addition to the P4 Standards, it is necessary to refer to Australian Wine and Brandy Corporation Act 1980 (Cth). In 1989 amendments were made to the Act with the introduction of Part VIA, entitled "Label Integrity Program". Section 39A expresses the object of the new part in these words:-

"39A.

The object of this Part is to advance the objects of this Act by helping to ensure the truth, and the reputation for truthfulness, of statements made on wine labels, or made for commercial purposes in other ways, about the vintage, variety or region of origin of wine manufactured in Australia."

That object is pursued in the amending legislation with the requirement that wine manufacturers are to maintain detailed written records of all stock movements. In his second reading speech, the Minister for Primary Industries and Energy emphasised the importance of the amending legislation when he said:-

"The need for record keeping arises from a circumstance believed to be unique to the wine industry - that there is no known technical means of assessing a wine to determine its vintage, variety or region of origin."

(Commonwealth of Australia: House of Representatives; Weekly Hansard No 14, 1989; 25 October 1989, p1832)

The new Part VIA thereafter sets out the nature of the records that must now be kept by wine manufacturers. Section 39F of Part VIA was of particular significance to the operations of Vales Wine Company Pty Ltd as it was principally a wine manufacturer that received "wine goods" (which by definition includes "grapes") for processing at its winery. It states:-

"39F.

A wine manufacturer who receives wine goods for processing at the manufacturer's winery must make and keep a record in writing of their receipt showing:

(a)

the date of their receipt; and

(b)

their quantity; and

(c)

their vintage, variety and region of origin; and

(d)

the identity of their supplier.

Penalty: $15,000."

Although seven of the eleven counts in these proceedings are concerned with alleged failures to comply with the P4 Standards, it has been necessary to make reference to the 1989 amendments to the Australian Wine and Brandy Corporation Act because several witnesses as well as counsel on occasions referred to the P4 Standards and the Label Integrity Program interchangeably as if they were one and the same. They are not of course. Despite this confusion I am of the opinion that it is not a cause for concern. Witnesses were attuned to the 80% and 95% requirements of the P4 Standards and they were the issues of importance in the seven counts to which reference has been made.

The origin of these prosecutions was a visit to the company's winery on 5 November 1992 by an Inspector acting under powers contained in the Australian Wine and Brandy Corporation Act 1980 (Cth). I understand that the Inspector formed the opinion that the company's records did not comply with the requirements of that Act and as a consequence search warrants were obtained and executed against the company on 17 December 1992 and later on 12 February 1993. As the time within which to lay charges for alleged breaches of the Australian Wine and Brandy Corporation Act expired some time in May 1993, a decision was made to proceed under the TPA. Initially, those proceedings were against the company only. Later, separate proceedings were instituted against Mr von Berg and Mr Curtis.

It was submitted on behalf of the defence that the provisions of the Australian Wine and Brandy Corporation Act have a direct and material effect upon the conduct of the prosecution in its presentation of this case. For example, it was asserted that the provisions of that Act that dealt with "label claims" were highly relevant to the prosecution. I find myself unable to agree with the propositions that have been advanced by counsel for the defence in this area. There can be no doubt that if one statute permits conduct that is identified as an offence under another statute, the provisions of the first statute would normally constitute a defence to a charge that had been brought under the second statute; but it has not been suggested that such is the case here. The case that the defendants must meet is that the company allegedly breached par53(a) because of its failure to comply with the P4 Standards in seven transactions and because of its failure to comply with representations in four other transactions. The fact that the subject matters of the charges may be addressed additionally in the Australian Wine and Brandy Corporation Act is not of significance unless there is conflicting material in that statute and the P4 Standards.

It was submitted by the defence that there was such conflicting material. Counsel pointed to the provisions of s39x of the Australian Wine and Brandy Corporation Act, claiming that it effectively allowed a wine manufacturer, who was uncertain about the variety of the wine that it had manufactured, to record a variety that it considered most likely to be the variety. Even if this be the correct interpretation of the section (as to which I have reservations) it is not relevant in the present proceedings. It has not been suggested that at the times when these offences were allegedly committed, the defendants were experiencing, in the words of s39x, "uncertainty about the variety of wine goods" that were being offered for sale. On the contrary, the prosecution alleged that in each case the company asserted, through its agents, that it had for sale a wine of a specific variety and a specific vintage and that Mr von Berg and Mr Curtis knew of that assertion in each of the four transactions that are the subject of the charges against them. The defence of Mr von Berg and Mr Curtis was not that they were uncertain about the variety of wine in each of the transactions; the defence was that they believed, upon information given to them by Mr Fragos that the wine that was offered for sale and subsequently sold was, true to its varietal and vintage description.

The provisions of the Australian Wine and Brandy Corporation Act are of great importance to the wine industry. Its provisions impact upon all wine manufacturers. However, having regard to the material facts of this case, I am unable to see how any of its provisions affect the presentation of the case for the prosecution.

7. Background Facts

From about 1988 the company had carried on business at McLaren Vale as a wine manufacturer. The company owned some wine but, in the main, it used its 100 or so storage tanks to hold the wine of its customers. Those customers were, mostly, the owners on whose behalf it had crushed grapes and processed grape juice into wine. Its largest customer had been the McLaren Vale Marketing Group ("MVG" or "the Marketing Group"). The identity and corporate structure of that Group was not the subject of specific evidence but it seems sufficient to say that it was in the nature of a co-operative of grape growers from within the McLaren Vale district. By arrangement, the individual growers would deliver their grapes to the company but look to the Marketing Group for ultimate payment. The winery recorded the individual grape grower as the supplier of the grapes but it named the Marketing Group as the "owner" of the resultant wine.

The company also engaged in the business of selling the wine that it held in storage on behalf of the Marketing Group. This was another area where the evidence was quite confusing. However, when the company did sell wine that "belonged" to the Marketing Group it did not account to individual grape growers for the sale of the wine; details of the wine sold were given only to the Marketing Group and out of the proceeds of sale the winery made payment only to the Marketing Group. Presumably the Marketing Group thereafter settled with the individual grape growers but how and when that was done was not established in evidence.

8. Sales Record or Blend Profile

The Crown opened its case upon the premise that there were internal computer generated records among the company's papers that would show that wines supplied by the company, allegedly in fulfilment of particular orders, did not comply with the P4 Standards. The company had never disclosed the contents of those records to any purchaser of wine, or indeed to any third party, because the information in them showed that the wine supplied did not accord with the description of the wine that had been sold. Those records were described by various names during the course of the trial, but the most common terms were "Sales Record" or "Blend Profile". I will refer to such a document as a "Sales Record" because part of the information that was disclosed in it was the composition of the different wines that were in the product that had been sold and this composition was also, on occasions, referred to as "the Blend Profile". To avoid confusion any reference hereafter to "the Blend Profile" will be a reference to the information about a wine that was listed in a Sales Record.

Exhibit MF55 was said to be the "Sales Record" that was compiled by the company for its internal purposes with respect to the wine that was sold to Chateau Yaldara Pty Ltd ("Chateau Yaldara") as a 1991 Shiraz. That was the sale to which the ninth count against the company referred. In fact, the wine that was purchased by Chateau Yaldara was dispatched by four separate deliveries and the company compiled a separate Sales Record for each delivery. Those Sales Records were Exs.MF60, MF63, MF65 and MF66. It will be sufficient to refer to Ex.MF55 as it was a document that incorporated the whole of the information that was contained in the four separate Sales Records.

According to the P4 Standards if a wine manufacturer, such as the company, had received an order to supply 1991 Shiraz, it would have been sufficient if it supplied wine that was 80% Shiraz. The remaining 20% could have been another wine, or indeed, two or more other wines of any variety. The ultimate choice of additional wines might be governed by matters such as taste or cost. Although not all witnesses used the same terminology, most would have described such a wine as a "varietal" to distinguish it from a "blend". A "blend" was not held out as complying with the 80% rule. A blended wine might be described as a "Dry Red" or a "Dry White". It might also be described by the detail of the wines that were in the blend. That was the case with respect to the eighth count. It referred to a "Cabernet Merlot" because the purchaser had ordered a blended wine containing 55% Cabernet Sauvignon and 45% Merlot.

If an order specified a vintage (such as 1991) then the P4 Standards required that at least 95% of the end product had to be from that vintage. In South Australia the annual vintage commences in February and concludes in late April and it is customary to use the word "vintage" and the word "year" interchangeably when referring to a wine: (see the last sentence of par12 of the P4 Standards).

I return to the information that was set out in Ex.MF55; it included the following details:-

The information listed under the heading "components" was that which was sometimes referred to as "the Blend Profile". If Ex.MF55 was, in all material respects, accurate, it revealed that the 114,700 litres of wine that was supplied by the company to Chateau Yaldara was only 62.36% Shiraz and only 86.95% 1991 vintage. It also disclosed that the 114,700 litres was a blend or mixture of eight different wines, three of which were owned by the company and five of which were owned by the Marketing Group. The entries under the headings "Total Cost" were, as I understand the evidence, the various amounts that the Marketing Group had nominated as its sales prices or the company's internal costings of its own products. The price stipulated by Chateau Yaldara in its Purchase Order, Ex.MF56, was $1.00 per litre. The sale price of $114,700.00 therefore exceeded "Total Cost" of $96,833.23 by $17,866.77.

The allegations that are particularised with respect to each of the eleven counts would establish (if proved) a regular and recurring course of conduct. In the eleven counts that have been alleged against the company, it is claimed that it, through its servants or agents, falsely represented that quantities of wine that it was offering for sale or that it had sold to customers were of certain varieties and vintages when, in fact, the wine did not contain the requisite components to comply with the represented varieties and vintages. In some transactions there had been requests or orders for wines from nominated regions. But no evidence was led by the prosecution that the company had breached the rule in the P4 Standards that required, at least, 80% of a wine to come from the nominated region.

9. Monthly Stocktakes - Tank Files

The company used a computer to generate monthly stocktakes. Exhibit D17, which was an example of these stocktakes, featured prominently in the trial, particularly during the cross-examination of Mr Fragos. The stocktakes were sometimes called "Tank Files" and on other occasions they were referred to as "Tank Ledgers". I will refer to them as "Tank Files". They were, in fact, hard copies of computer printouts. Mr Fragos recognised Ex.D17 as a record of a stocktake of the company's wines but he could not specify its date or its author. The document, consisting of seven pages, listed each of the company's tanks or "Vessels" by its identifying number and stated its capacity. The volume of wine in the tank as at the date of the stocktake was then recorded followed by a description of the wine.

If two or more wines had been placed in the same tank each wine was identified by variety and volume. Two codes, called the "wine code" and the "sort code", were given to each separate wine (even though it might have become part of a blended wine). This was to ensure that upon ultimate sale of the wine, or of the blend of which the wine formed part, the relevant owner of the wine could be determined. Finally, by use of acronyms, there was a reference in the Tank File to the owner of each wine. The largest owner of wines was the Marketing Group. On occasions the Marketing Group's wine was placed in a storage tank with wine belonging to the company or to some other third party.

A random example, extracted in abbreviated form, indicates the type of information that can be obtained from reading a Tank File such as Ex.D17. On page 2 of the Tank File it was recorded that tank T2.41 was full with a total capacity of 24,900 litres. The volumes of the various wines that made up the blend that was in the tank, the variety of the wines, and their ownership was as follows:-

In reality, this tank was a blend of four wines -

The wines were, however, recorded separately and in the detail that I have shown to distinguish ownership and to identify different batches of the wine. In that blended form it could perhaps have been sold as a Dry Red or, perhaps, as a non-vintage Cabernet/Merlot, but as there was no evidence on that subject I make no finding on an available description for the wine. I do however find that, if those records truly reflect the components of the wine, it could not have passed the 80% variety test nor could it have passed the 95% vintage test.

Other exhibits that came into evidence as similar stocktakes on a calendar monthly basis included Exhibits R9, R2, R3, and R8 for the months of April, May, June and July 1992 respectively. Mr Borick relied on those documents extensively, as he proceeded to establish, through his cross- examination of Mr Fragos, that there were numerous discrepancies in the records of the company. The type of discrepancies may be demonstrated by comparing the records of two successive months. Exhibit R9 was the Tank File for the month of April 1992. At p5 the tank numbered SS101 was recorded as having a capacity of 114,700 litres. It was also recorded that the tank was full at the date of the stocktake. The contents of the tank at that date were said to be:-

Exhibit R2 was the Tank File for the following month, May 1992. It likewise recorded tank SS101 as having a capacity of 114,700 litres and, as was the case with the Tank File for April, Ex.R9, it also recorded the tank as being full. The components making up the contents of the tank as at the end of May were, however, different from those as at the end of April. The May components were listed as follows:-

In April there were four components listed as being included in tank SS101, each marked by me in these reasons with an asterisk, that were not listed in the May Tank File, namely:-

It was, of course, impossible for those wines to be removed from the blend of which they formed part. In Ex.R9, the Tank File for the month of April 1992, there were 54,832 litres of 1991 Shiraz, but that had grown to 59,094 litres in May, an increase of 4,262 litres. The volume of 1990 Shiraz also grew from 12,143 litres in April to 12,431 litres in May, an increase of 288 litres; presumably this was achieved by adding the company's 288 litres of 1990 Shiraz to the Marketing Group's 12,143 litres of the same wine.

These increases of 4262 and 288 litres total 4550 and that total conveniently matches the total of the four components that were no longer listed in the May Tank File. The blend components in Tank SS101 for April 1992 show that the Marketing Group owned two batches of 1991 Shiraz - 1,661 litres and 54,823 litres. The 1661 litres of 1991 Shiraz was one of the four missing components but because of common ownership it could have been added to the 54,823 litres. However, that only accounts for a part of the inconsistency. If a volume of liquid was withdrawn from Tank SS101 after the April stock take it would not be possible to nominate that it was, in whole or in part, a particular variety. The only way to account for the withdrawal would be to reduce rateably the volume of each component. Mr Fragos could not explain how the other two components (the 1,001 litres of 1991 Cabernet Sauvignon and the 1600 litres of 1991 Merlot) came to be absent from the Tank File for the month of May 1992. Indeed, there could not be a rational explanation. Either the records for April were wrong and someone made appropriate corrections sometime during the month of May, or the May figures were wrong. Either way, unexplained contradictions such as this (and there were others) prevents one from relying on the documents at face value.

This example, which was not an isolated example, revealed that the computer records that were maintained by the company were unreliable. As a result there is a need to take extreme care when using or referring to those records. Counsel for the defence compiled, in an appendix to his written submissions, a list of almost 100 occasions where alleged discrepancies in the company's records have occurred. It is not necessary to make an itemised summary of these issues. It is sufficient to say that time and again Mr Fragos had to concede that he had no explanation for these discrepancies.

The defence was highly critical of the manner in which the prosecution presented its case and much time and attention was devoted in written submissions to such complaints. In one material aspect, these complaints had an effect on the presentation of the case for the prosecution. Mr Martin QC, counsel for the prosecution, acknowledged (T879) that the case had been prepared upon the premise that the contents of the Sales Records were accurate and that they proved that the wines that had been sold or offered for sale were not true to description. He had not seen nor, so far as he knew, had those instructing him seen the Tank Files, the computer generated monthly stocktakes of the Company. As a consequence, the case for the prosecution had commenced with it unaware of the fact that there were discrepancies between the Sales Records and the Tank Files.

On the other hand, the defence had become aware of those discrepancies and had, during the course of directions hearings, signalled, but without particularising, that they would be mounting a defence that had as its base the unreliability of the company's records. The defence was not required to disclose its hand and the prosecution was at fault in failing, properly, to investigate the documentary records of the company. All had been seized as a result of the execution of search warrants and were available for the prosecution to analyse. The tactical decision of the defence cannot be criticised but it did cause some confusion. It also caused the prosecution to shift ground and to move away from its earlier reliance on the documentary evidence. The defence criticised this shift but I do not think that it can complain when the prosecution concedes that it cannot, despite its opening to the contrary, place total reliance on the documentary records. The prosecution had thought that the Sales Records would make its task easy; it found out that such was not the case. That did not therefore mean that the prosecution had to capitulate; nor did it mean that the prosecution should be deterred from pressing ahead relying on other evidence.

There were other areas of complaint addressed by the defence where it was not so readily apparent that there was cause for concern. For example, at p27 of his written submissions, counsel for the defendants complained that the prosecution "did not discharge its duty to the court and the accused" as a result of its failure to call a variety of witnesses. There then followed a list of nominated persons who were in some way associated with the company, such as accountants, auditors or employees. The complaint extended to a failure to call witnesses from the company's banker, the Securities Commission and the Australian Wine and Brandy Corporation. There was then a final complaint that the prosecution "did not assist the court in calling any expert evidence in areas of accounting, computing or winemaking".

I must say that I found myself puzzled by these submissions. I cannot see, and the submissions did not address, with the requisite degree of particularity, how the failure of the prosecution to call these witnesses caused any prejudice to the defence or constituted any unfairness to the accused. A notable example was the subject of the company's accounting to the Marketing Group. The prosecution attempted, unsuccessfully, to lead evidence on this subject through those witnesses who had been called as part of the case for the prosecution. It could have, as the defence pointed out, led evidence from a variety of executives in the Marketing Group but it failed to do so. Perhaps such evidence might have been relevant. It might have rounded off the picture of how the financial arrangements between the company, the Group and the growers was orchestrated; but it was not necessary to have this evidence either for the purpose of assessing the strength of the prosecution case or for affording fair play to the defence. Another example was the failure on the part of the prosecution to call accounting, auditing and computing witnesses. I fail to see how the presence of those witnesses could have assisted the defence. The prosecution's case, based on the specific evidence of the Sales Records, had been eroded; the defence had achieved its objective. Having the prosecution call such witnesses would not have further assisted the defence.

Mr Borick complained that the prosecution did not call any of the company's cellar hands, inferring by his complaints that they would have been able to give meaningful evidence about the components that were in various storage tanks. But he did not explain, nor can I understand, how such employees would have been able to assist the Court. With the passage of time it would be unreasonable to expect them to rely on their memories. They might have been able to speak to the company's records but I doubt that they could have contradicted their contents. If their evidence would have been to the effect that the company's records were unreliable, it was not needed; that had already been established. If their evidence would have asserted that the records were accurate, that would not have assisted the defence.

10. Michael Fragos

In January 1991, when the company allegedly committed the first of the offences charged against it, Mr Rodney Bourchier was its general manager and winemaker. He was assisted by Mr Michael Fragos who, although qualified as a winemaker, was employed as a laboratory assistant. Mr Fragos had joined the company in January 1990. In January 1991, Mr von Berg was a director of the company having been so appointed in the preceding August. Mr Curtis was not appointed a director until August 1991, although he had on an earlier occasion served as a director of the company. Neither Mr von Berg nor Mr Curtis was involved in the day to day management of the company until October 1991 when Mr Bourchier was dismissed.

The first witness for the prosecution was Mr Fragos; he had been granted immunity from prosecution.

On 24 October 1991 Mr Fragos had written a letter (Ex.MF82) that was addressed to The Vales Wine Company and marked for the attention of the Board of Directors. In it he said:-

"All wines made during the 1990 and 1991 vintages have been made in accordance with the P4 standards for National Health and Medical Research Council Food Standards Code 1987."

His oral evidence and the company's records contradicted that assertion. In fact his oral evidence was to the effect that blending in respect of those two vintages was so extensive that up to 75% to 80% of the wine stocks in the winery were blends. The general effect of his evidence was that he knew that the company was selling wine that was not true to description. He acknowledged that he had been a knowing participant in such sales and that, at times, his participation had even extended to giving purchasers false declarations about the components or Blend Profiles of the wines. It was his evidence that his participation commenced under instructions from Mr Bourchier but that he continued the practice under the supervision, and with the knowledge, of Mr von Berg and Mr Curtis after Mr Bourchier had been dismissed.

With the exception of the wine that was the subject of the eleventh count against the company, it was the evidence of Mr Fragos that he did not blend the wines from the 1990 or the 1991 vintages, nor did he, in any material way, assist in blending them. His knowledge of the compositions of the wines came either from what Mr Bourchier had told him or from what he gleaned from the records. What Mr Bourchier told Mr Fragos about the composition of the wines is admissible against the company but it is not admissible against either Mr von Berg or Mr Curtis. Neither of them were involved in the management of the company until after Mr Bourchier's dismissal.

In his evidence-in-chief Mr Fragos asserted that the Sales Records were accurate in recording the components in the wines that were sold to the various purchasers. That evidence cannot be unequivocally accepted. Having regard to the totality of the evidence I cannot, with confidence, look at any Blend Profile in a Sales Record and have the required satisfaction beyond reasonable doubt that its contents truly and accurately reflect the components that were sold to an individual purchaser.

That does not mean that the contents of the Sales Records are to be totally ignored. There is, for example, supporting evidence in the person of Mr Haden that points to blends being offered for sale as varietals. I accept Mr Fragos' evidence that Mr Bourchier told him that blending was taking place within the winery; I also accept that, with the exception of the eleventh count, the wines that were sold were wines that had been "made" by Mr Bourchier during his period as winemaker at the winery. Finally, I accept from the general content of the records of the company, and in particular the Tank Files, that blending was rife in the winery in the period up to and including the 1991 Vintage. The question that must be asked separately in respect of each count, is whether those general findings, together with such specific findings (if any) that are peculiar to a particular count, are sufficient to bring down a verdict or verdicts of "Guilty".

11. Rodney Bourchier

Mr Bourchier also gave evidence for the prosecution. He disclaimed all knowledge of any malpractice, seeking to shift blame onto the shoulders of Mr Fragos. In doing this, he created a bad impression; I find myself unable to rely on his evidence. He was in conflict with most witnesses, and his obvious hostility was sufficient to raise doubts about the calibre of his evidence. Furthermore, he was denounced by Mr Haden, a witness upon whom I felt I could rely. I accept Mr Haden as a witness of truth in all respects. I accept his evidence in preference to all other witnesses where there is any conflict.

There were two areas of importance where the evidence of Mr Bourchier clashed with that of Mr Fragos. Mr Bourchier said that prior to him leaving the company in October 1991 Mr Fragos was responsible for maintaining the computer records of the company with respect to wine stocks and that Mr Fragos performed all blending of wines. Mr Fragos said that it was Mr Bourchier who performed those activities. I have no hesitation in accepting Mr Fragos in the resolution of this dispute. Mr Bourchier created an impression of assertiveness bordering on bullying. His age was not specified but I would suggest that he was, at least, in his late 40's. Mr Fragos was a young graduate in his mid twenties in new employment. It would be unlikely for a winemaker of the calibre and personality of Mr Bourchier, who had recently installed a computer system in the winery, to hand over the new computer and his role as winemaker to a new employee. Mr Bourchier's denial of responsibility was an attempt on his part to distance himself from any aspect of the winery's operations that might otherwise have led him into difficulty. He had not been given immunity from prosecution.

12. John Haden

Mr Haden was appointed the acting general manager and a director of the company in October 1991, shortly after the departure of Mr Bourchier. He had earlier served the company as Chairman of Directors and general manager during 1989 and 1990 but had terminated his involvement with the company (other than as a shareholder) when he failed to obtain re- election as a director in June 1990. From his re-appointment as a director until his resignation, 4 months later, on 19 February 1992, Mr Haden served under the Chairmanship of Mr von Berg. Mr Curtis was the only other director at that time.

According to Mr Haden, Mr von Berg and Mr Curtis involved themselves in the day to day operations of the winery. He said that Mr von Berg had frequent contact with him and with other members of the staff whilst Mr Curtis "was involved on a regular basis, intimately concerned with the winery" (T.742).

Mr Haden became concerned about the company's wines and its records as a result of an incident that occurred on 6 February 1992. The company was negotiating an order for the export of some wine to Finland; this particular transaction was sometimes referred to as the "Alko" transaction and sometimes as the "Aus Flavour" transaction. Mr Haden explained that he was due at a meeting of the Marketing Group to discuss with the members the prices they were seeking for the "Alko" transaction. He said that he asked Mr Fragos to give him the details of the Blend Profiles (that is, the components of the wine) that were the subject of the intended sale. This information was not immediately forthcoming and he had to press Mr Fragos until he finally received it. The wines that were on offer in the "Alko" transaction were held out to be a 1990 Shiraz, a 1991 Shiraz and a 1991 Cabernet Sauvignon. But the respective Sales Records, which are Exs.MF3, MF4 and MF5, showed that none of the three wines complied with the 95% vintage requirement and two of them did not comply with the 80% variety requirement. When asked how he reacted to this information, Mr Haden said that he expressed extreme alarm to Mr Fragos who responded by saying that "these were arrangements that had been established in the era of Mr Bourchier" (T745). According to Mr Haden, Mr Fragos claimed that he was "merely implementing those previously established arrangements" (T745).

Mr Haden said that he rang Mr von Berg as soon as he discovered this information, telling him of the description of the wines and of the components that had been presented in the Sales Records. He recalled that Mr von Berg expressed surprise; Mr Haden then went on to say:-

"Yes. I think he said something along these lines: that we can't do anything about it at this stage, and then I do recall him saying 'Don't worry about it, John'." (T746)

In addition to his phone call to Mr von Berg, Mr Haden also rang Mr Curtis and arranged to meet him at the winery on Friday 7 February; he had in his diary a note for that day which read: "Told CC re blends (in office)" (T747). When asked to recount his conversation with Mr Curtis, Mr Haden replied that it was not a "free-flowing conversation" (T747). He added "I was stunned, and I think he was stunned" (T747). His evidence then continued:-

"How was it left in that conversation? ... It was left that (sic) we at that stage could not resolve anything about it, but that the essence of it was that it was impossible to do much about it given the extent to which the whole thing had gone ahead.

Right. Was there any plan or course of action or just to let it ride? ... No. It was proposed that something should appear in the minutes and something should be said to Mr Fragos about it."

Mr Haden questioned Mr Fragos about the blends that had been disclosed in MF3, MF4 and MF5; at first Mr Fragos told him that there were no others. But Mr Haden found out differently on the following Tuesday, 11 February 1992, when he obtained from Mr Fragos Ex.JFH18, a document containing details of two more objectionable blends. The next day Mr Haden found another of these blends. He confronted Mr Fragos:-

"I asked him again why he hadn't produced these before, and as best I can recall, the answer was on the lines that it was on computer and he hadn't realised, something like that. By this time I was expressing myself in fairly strong terms." (T750)

It was Mr Haden's evidence, which I accept, that he told both Mr von Berg and Mr Curtis of his discoveries.

The prosecution had earlier applied to tender the Sales Records Exs.MF3, MF4 and MF5 through Mr Fragos; at that stage Mr Haden had not given evidence. Mr Borick objected claiming, correctly in my opinion, that they were not admissible in evidence against his clients. Mr Martin did not pursue the tender against them at that stage and they were received into evidence against the company only.

However, the events that flowed from these Sales Records are important in the case against Mr von Berg and Mr Curtis for other reasons. First, Mr Fragos had given evidence that he knew that the three wines that were being offered in the "Alko" transaction were not true to description and the contents of the Sales Records afford some support to that state of knowledge. Secondly, Mr Fragos showed Mr Haden the Sales Records. As a result of comparing them against the three wines that had been allegedly offered for sale in the "Alko" transaction, there is an inference that Mr Haden thereby had come to suspect that the company might be engaging in some form of improper activity. Thirdly, I accept Mr Haden's evidence that he told Mr von Berg and Mr Curtis what he had learnt. This finding leads then to the further finding that in February 1992 Mr von Berg and Mr Curtis knew that Mr Fragos had company documents in his possession that supported his admission to Mr Haden that the company had been offering wine for sale that did not match its description. The subsequent conduct of Mr von Berg and Mr Curtis is to be assessed bearing in mind that they had that knowledge from, at least, February 1992.

Following on Mr Haden's discovery about the "Alko" transaction there was a meeting of the Board of Directors of the company on 13 February 1992. Mr Fragos was summoned to the meeting and, according to Mr Haden, he was "directed to be meticulous about blend profiles" (T.751). Mr Fragos denied that he was given such a direction but I prefer the evidence of Mr Haden. Mr Haden could not, however, recall any further detail of conversations about objectionable blends. He resigned as a director and as acting general manager on 19 February 1992.

The prosecution sought leave to recall Mr Haden in rebuttal on various topics, one of which was the subject of much debate and which led, ultimately, to me receiving evidence de bene esse . The subject was Mr Haden's knowledge (if any) about the manner in which the Marketing Group received information from the company about sales of wine and how the Group thereafter accounted to individual growers. The issue had arisen as a result of Mr von Berg's evidence that the company had, on occasions, sent false sales information to the Marketing Group. Initially I was of the view that the matter was one of importance, but, on reflection I now consider that my first impressions were wrong. In any case, as events transpired, it was a "storm in a tea-cup". All Mr Haden could say was that:-

"As a grower (of grapes), my expectation was more that accurate information would come from the winery to the group, and the group would do its job properly and disperse money to growers." (T1501- 1502)

However in deference to counsel and to the heat that the controversy generated I feel that I should state, briefly, my reasons for concluding that the evidence with respect to Mr Haden's knowledge should be rejected. Despite the enormity of the proposition - that the winery was engaging in a fraudulent practise involving its largest customer - it was not an issue that was relevant to any issue in the trial. The questions asked of Mr von Berg had gone only to his credit; it was not appropriate for the prosecution to seek to contradict them whether through the evidence of Mr Haden or otherwise: Piddington v Bennett & Wood Pty Ltd (1940) 63 CLR 533. In that case a witness for the plaintiff, in an action for damages for personal injuries arising out of a motor vehicle accident, gave evidence that he had seen the accident. In cross-examination he said that he saw it at the time he was returning from a banking errand for a Major Jarvie. Counsel for the defence sought to lead evidence from the bank manager that there had been no operation on the Major's account on the day of the accident. It was held by Dixon Evatt & McTiernan JJ (Latham CJ and Starke J dissenting) that the bank manager's evidence was inadmissible. As a Full Court of this Court said in Natta v Canham (1991) 32 FCR 282 at 295:-

"It is a long-standing principle of the common law not always observed in practice that, save for certain exceptional cases, evidence cannot be adduced to contradict the denials of a witness in cross-examination on matters going to "collateral issues" affecting credit only."

13. The remaining Witnesses for the Prosecution

The remaining witnesses for the prosecution were winemakers or senior executives from the purchasers of the wines that were the subject of the eleven counts and some wine brokers who had been engaged in particular sales. They confirmed that they had ordered certain wines and that the Blend Profiles of the wines particularised in the Sales Records (which were not previously disclosed to the purchasers) did not accord with what they had ordered. Most had ordered as a result of first sampling the wine and each conceded that the relevant Blend Profile (if true to the description in the company's Sales Records) could not have been detected as being a wine different to that which had been ordered. This evidence accords with what was said in the Minister's second reading speech and shows how much our wine industry is dependent upon the integrity of winemakers and wine manufacturers.

14. The case for the defence

Mr von Berg and Mr Curtis gave evidence. Each denied any knowledge of false representations and false sales, claiming that those matters were the province of either Mr Bourchier or Mr Fragos as the winemakers. There were a few examples of unusual Blend Profiles appearing in various documents where irrefutable evidence pointed to Mr von Berg and Mr Curtis having knowledge of them. Their explanation was that they had been told by Mr Fragos that they had no need to concern themselves with those documents as they had been compiled for "accounting purposes".

For example, Mr Fragos gave evidence of an incident that occurred on an occasion when he was in Mr von Berg's office. He said that as he made his way to the office he gave Mrs Shreeve, the office manager, a copy of a Sales Record for a transaction (the details of which he did not remember). He went on to say:-

"... I had given it to Mrs Shreeve on my way through to see Mr von Berg, and a couple of minutes after I had started talking with Mr von Berg, Mrs Shreeve entered and basically asked me, or said these - 'The components of this wine doesn't add up to 80 per cent.' She said that to both myself and Mr von Berg, and Mr von Berg replied, 'Ignore it, Marilyn, just you know, get out the invoice'." (T150)

Mrs Shreeve, who gave evidence for the defence, claimed that she had no memory of any such incident (T1464) but conceded that possibly it might have happened. Mr von Berg recalled such an incident but he said that he told Mrs Shreeve not to worry as it was solely for accounting purposes. (T1081- 1082)

Mr Curtis acknowledged that some such incident occurred. He said that he recalled an occasion when he and Mr Fragos were in Mr von Berg's office. Mrs Shreeve entered the room, holding a piece of paper in her hand:-

"... she said something along the lines that: the wine as described on the document would not comply with the P4 standard. She was told by Mr Von Berg: that's fine, invoice it, there isn't a problem, invoice it." (T1289)

He added that neither he nor Mr Fragos said anything and that he did not see the piece of paper. In cross-examination he said that he thought the incident had occurred "post February 1992" (T1289). Most significantly however, Mr Curtis made no mention of Mr von Berg explaining that the Sales Record was solely for accounting purposes.

The final witness to whom reference must be made is Mrs Marilyn Shreeve. Mrs Shreeve had worked at the winery as an office manager and book-keeper since July 1991. Initially, she gave her evidence-in-chief persuasively, even though it quickly became apparent that she was highly protective of Messrs von Berg and Curtis. She conceded some knowledge of Mr Fragos involving himself with a false declaration and she also said that there had been a need for her to question Mr Fragos about a Sales Record. She said that his explanation was that "it was his way of accounting" (T1465). This answer is similar to the explanation from Messrs von Berg and Curtis that documents had been prepared for "accounting purposes". Under cross-examination Mrs Shreeve began to deteriorate; she was garrulous at times and evasive on other occasions. Her willingness to assist Messrs von Berg and Curtis cast a doubt upon the impartiality of her evidence. I would not be prepared to rely on her evidence on an important issue unless there was some independent measure of support.

15. Must the Prosecution prove what components were in the wines?

Before commencing an individual consideration of each of the counts, it is convenient to consider a preliminary but important argument that was raised by the defence. Insofar as it was alleged in each count that the company falsely represented "that goods were of a particular composition" it was the case for the defence that the prosecution was required to prove beyond reasonable doubt what components were in the wine. In the ninth count against the company the relevant extract from the "Particulars" that dealt with the subject of the composition of the wine was as follows:-

"... when in fact the said wine did not contain at least 80% Shiraz and at least 95% of the 1991 vintage as required by the P4 Standards ...".

In the matching count against the directors there has been a change in the language of the "Particulars". The relevant extract was as follows:-

"... when in fact the wine supplied contained

(i)

less than the 80% variety requirement and

(ii)

less that the 95% vintage requirement contained within the P4 Standards...".

No explanation was offered for this change in language but, on the other hand, no complaint was made about it by the defence. It is a dangerous practice to make grammatical changes when addressing the same subject unless, of course, a different emphasis is intended. In this case, it would seem that it was a case of inept drafting. Both sets of "Particulars" have addressed the 80% rule and the 95% rule, the first by saying that the wine did not contain those percentages and the second by saying that the wine contained less than those percentages. I am prepared to consider the submission that has been advanced by the defence on the premise that the end result of both sets of "Particulars" is the same.

Bearing in mind that the words of par53(a) of the TPA that relate to these charges are that a corporation shall not:-

"... falsely represent that goods are of a particular ... composition ..."

does that mean that the prosecution must prove the actual composition of the wine? Or is it sufficient to prove, even though the exact composition was unknown, that the wine was not, at least, 80% of the required variety or that the wine was not, at least, 95% of the required vintage?

In my opinion, the answer to this question must be that it will be sufficient if the prosecution proves, beyond reasonable doubt, that one or other of the required percentages has not been achieved. A simple hypothetical example makes that answer obvious: imagine that a winery sells 100,000 litres of wine, representing that it is a 1991 Shiraz: imagine further that there is unchallenged evidence that the winery had only 10,000 litres of 1991 Shiraz in stock at the relevant time, that the product that was delivered to the purchaser contained those 10,000 litres but that the balance was a red wine of unknown components from another of the company's storage tanks. Proof of those matters beyond reasonable doubt would, in my opinion, demand a conviction even though no one could say what were the components of the wine that had been sold. I cannot subscribe to a view that the inability to identify the balance of the components must allow for a reasonable hypotheses - or even a possibility - that there may be in the unknown components enough 1991 Shiraz to add to the known 10,000 litres so as to achieve compliance with the P4 Standards. It would be sufficient to know that it did not contain identified components that would permit it to be described as a 1991 Shiraz. I therefore reject the defence's submission that the prosecution must, in each of the eleven counts against the company and the four counts against the directors, prove the composition of the wine that was sold. It will be sufficient if the prosecution proves beyond reasonable doubt that the wine that was sold either did not match the specific order or, in other cases, failed to match one or other of the minimum requirements of the P4 Standards.

16. The relevant test of "falsity"

In par53(a) of the TPA, the legislation has proscribed against a corporation "falsely" representing that goods are (inter alia) of a particular composition. The defence has submitted that the word "falsely" must be construed as meaning "intentionally untrue". This is not a live issue in this trial because the case for the prosecution is that in each case Mr Fragos knew that the representation was untrue when it was initially made. As I find myself unable to agree, however, that it is the correct interpretation of the word "falsely" I set out hereunder my reasons.

The defence relied upon the decision of the High Court in Murphy v Farmer (1988) 165 CLR 19, a decision that dealt with the forfeiture provisions of sub-par 229(1)(i) of the Customs Act 1901 (Cth):-

"229(1)

The following goods shall be forfeited to the Crown: ...

(i)

All goods in respect of which any entry, invoice, declaration, answer, statement or representation which is false or wilfully misleading in any particular has been delivered, made or produced ...".

In that case, the respondent had, in the course of importing a motor car, given a wrong answer when completing a form. The answer was not however deliberately or intentionally wrong.

At first instance the trial Judge had held that "false" in s229 meant deliberately or intentionally untrue and the New South Wales Court of Appeal, agreeing with the trial Judge, dismissed the appeal. In the High Court, the majority, Deane, Dawson and Gaudron JJ (Brennan and Toohey JJ dissenting) concluded that the appeal should be dismissed. They said that if it were necessary, they would incline to the view that the word "false" should be read as meaning "purposely untrue". However, they went on to find that it was "unnecessary to dispose of the appeal on that basis". They added:-

"It seems to us that, regardless of what view one takes of the comparative weight of the competing arguments and presumptions, the latent ambiguity of the word 'false' remains." (p28)

Noting that the section was to be seen as "penal or quasi-penal in character" the majority concluded that it attracted the rule in Dickenson v Fletcher (1873) LR 9 CP l at 7:-

"... those who contend that [a] penalty may be inflicted, must shew that the words of the Act distinctly enact that it shall be incurred under the present circumstances. They must fail, if the words are merely equally capable of a construction that would, and one that would not, inflict the penalty."

In the course of their reasons, the majority noted that the word "false", as previously used in subs234(d) of the Customs Act, had been interpreted as meaning "contrary to fact": Sternberg v The Queen (1953) 88 CLR 646 at 653. The legislation had then provided that:-

"No person shall -

...

(d)

make any entry which is false in any particular."

(See also Davidson v Watson (1953) 28 ALJ 63 at 64, another prosecution under the former par 234(d) of the Customs Act where the High Court in a joint judgment said that "false" meant "contrary to fact").

The High Court decisions in Sternberg v The Queen (supra) and Davidson v Watson (supra) were relied on by Franki J in Given v CV Holland (Holdings) Pty Ltd (1977) 29 FLR 212 in concluding that a representation that is in fact not correct comes within the language of par53(a) of the TPA even if it is not false to the knowledge of the person making the representation. The decision in Given v CV Holland was approved by a Full Court of this Court in Darwin Bakery Pty Ltd v Sully (1981) 51 FLR 90. That Full Court also referred with approval to the remarks of Bowen CJ in Riley McKay Pty Ltd v Bannerman (1977) 31 FLR 129 at 134 where the Chief Justice said, when speaking of par53(a) and other provisions of the TPA:-

"These provisions prescribed absolute breaches ... If a corporation does make such a representation there is a breach of s53(a) and it is irrelevant whether there was a guilty mind or not." (p134)

The most recent decision on this subject appears in Revlon Manufacturing Ltd v Commissioner of Taxation of the Commonwealth of Australia (Full Court of the Federal Court of Australia, 14 December 1995, unreported). In that case the court had to consider the meaning of the word "false" in s45 of the Sales Tax Assessment Act (No1) 1930 (Cth). Sub- section 45(2) relevantly provided:-

"(2)

Where -

(a)

a taxpayer -

(i)

makes a statement that to a taxation officer ... is false or misleading in a material particular;

(ii)

...

the taxpayer is liable to pay, by way of penalty, additional tax equal to double the amount of the excess."

Beaumont J, in the course of his reasons, considered but rejected a proposition that the decision in Murphy v Farmer (supra) might apply to the interpretation of the meaning of the word "false" in subs45(2). His Honour noted the concern of the majority in Murphy v Farmer (supra) with respect to the penalty of automatic forfeiture and their comment that it could be "devastating and quite disproportionate" (Murphy v Farmer (1988) 165 CLR 19 at 28) to the value of the goods or the importance of the wrong statement. Beaumont J noted that the same disproportionality was not present in the Sales Tax Assessment Act (No1) 1930 (Cth). Nor did the word "wilfully" appear in that Act as it did in the provision of the Customs Act 1901 (Cth) that was under consideration in Murphy v Farmer (supra). His Honour concluded that it was not necessary for the Commissioner to demonstrate that the tax-payer knew that the values for sales tax, as returned by it, were false.

These four decisions of the Federal Court all point to criteria having been set for offences against par53(a) of the TPA. It seems clear that knowledge of the falsity of the representation is not an essential ingredient of the offence. The decision in Murphy v Farmer (supra) was confined to a particular section in the Customs Act 1901 (Cth). It did not purport to spread its application to the TPA or to the decisions under the TPA to which reference has been made.

17. Mr Fragos: credibility and accomplice warning

A most important factor in this case is the credibility of Mr Fragos. Counsel for the defence, in submitting that he should be regarded as an inherently unreliable witness, asserted that he had misled both the prosecution and the court. If I reject his evidence I would consider it difficult, if not impossible, to do other than acquit all defendants of all charges. If I accept him it will not lead, automatically, to convictions because my acceptance of his evidence will be subject to certain qualifications. In my opinion, the issue of his credibility must be resolved at this stage and before embarking on an assessment of other issues where the value of his evidence would or might have a material effect.

Mr Borick correctly submitted that the issue of credibility is not to be resolved by making a simple choice between the evidence of Mr Fragos on the one hand and that of Messrs von Berg and Curtis on the other. It is essential that a judge sitting without a jury be conscious of the third possibility: the judge might be unable to say where the truth lay. It would not be sufficient for me to have a preference for the evidence of Mr Fragos. A mere preference is indicative of the existence of a reasonable doubt as to guilt and a verdict of "not guilty" would be the consequence: R v Calides (1983) 34 SASR 355; Liberato v R (1985) 159 CLR 507 at 515 per Brennan J in his dissenting judgment.

At the outset it should be acknowledged that Mr Fragos has given evidence on oath in which he confessed that he knowingly involved himself in selling wines that he did not believe were true to description. Next it must be remembered that he initially denied any wrong doing and that he is now giving evidence with immunity from prosecution.

Mr Fragos was interviewed by officers of the Trade Practices Commission (the "TPC") on 26 March and 18 May 1994. The records of those interviews are, respectively Exs.R10 and R11. In the first interview he was initially questioned about the supply of wines to Andrew Garrett Wines (they being the wines that are the subject of Counts 2 and 3 against the company). The Sales Records containing the Blend Profiles of the wines that had allegedly been delivered to Andrew Garrett Wines were placed before him. Of them he said:-

"I had to assume to a certain extent; I didn't know if they were correct". (Ex.R10: p20)

In the space of two pages of this record of interview Mr Fragos changed his story saying:-

"It's a payment thing. It's not representing what was in it anyway. It's a payment thing. It might have been juggled around for payments." (Ex.R10: p21)

He was attempting to avoid responsibility first by asserting that he did not know if the records were correct and then by suggesting that the documents were not intended to reflect what had been sold.

His evidence in court was that the records were correct save that on some occasions internal records were altered so that the company might receive preferential earlier payments for its wines. But as a result of the work of the defence, Mr Fragos was eventually forced to concede that the records were pitted with inaccuracies. The subject of preferential payments is addressed in more detail in the consideration of Count 2.

As a witness, Mr Fragos left much to be desired. He stumbled over his answers and was, often, difficult to understand. Many of his answers were convoluted. There were also areas of his evidence where he was in conflict with Mr Haden. One important conflict concerned the date when Mr Haden first found out about the "Alko" transaction. Mr Haden said that this occurred in February 1992 and his diary confirmed his evidence. Mr Fragos was wrong when he said that Mr Haden first found out three months earlier in November.

The discrepancies in Mr Fragos' evidence, were, understandably, the subject of a concentrated attack by counsel for the defence in his closing submissions. In written memoranda, forming part of those submissions, counsel listed numerous areas of Mr Fragos' evidence and the reasons why they constituted lies, errors, contradictions, inconsistencies or discrepancies. I do not find it necessary to examine and comment on each individually. Some I do not agree with because of findings that I have made where I have been prepared to accept Mr Fragos' evidence. Some are arguably a gloss that may not be accurate. But I agree with many of them.

As Mr Martin acknowledged in his final submissions, the evidence of Mr Fragos about the records of the company was most unsatisfactory in places. The prosecution was compelled to recognise that Mr Fragos had not been frank about these records until concessions were extracted from him during his cross-examination.

Despite these short-comings, it does not mean that Mr Fragos is to be summarily dismissed as a wholly unreliable witness. There were areas where his evidence gained some measure of support. For example, what Mr Haden discovered in February 1992 constituted support for Mr Fragos' general assertion that the company had been involved in offering wine for sale that was not true to description. I have come to the conclusion that there are areas of Mr Fragos' evidence that I should accept. For example, I accept his evidence that there was a practice in the winery of offering wine for sale, and selling wine, that did not match its description. I accept that this practice was in operation under the control of Mr Bourchier when Mr Fragos joined the company and under the control of Mr Fragos after Mr Bourchier's dismissal. Other areas of his evidence that I am prepared to accept have been noted under the heading "Michael Fragos".

I did not believe Mr Bourchier when he said that he was unaware of and had no involvement in presenting wines that were not true to description. In the head-on collision between Mr Bourchier and Mr Fragos on this subject, I prefer and accept the evidence of Mr Fragos.

Both counsel acknowledged that the conduct and admissions of Mr Fragos warranted an "accomplice warning". Mr Borick submitted that it would not be sufficient for me to "sternly warn" myself of the danger of relying on the evidence of Mr Fragos and then to say that I believed him. He submitted that the proper approach was to ask whether there exists any substantial evidence implicating the defendants upon which the court could properly convict disregarding the evidence of Mr Fragos. He submitted that the decision of the Victorian Full Court in R v Teitler [1959] VR 321 was authority for that proposition. But that is not the case. The reference in Teitler's (supra) case to disregarding the evidence of an accomplice came at the appellate level when the Full Court was considering whether to quash a conviction because the trial Judge had failed to give an accomplice warning to the jury. As O'Bryan and Lowe JJ said at p330:-

"In our opinion, the practice of the court is to quash a conviction where part of the evidence against the accused has been that of an accomplice and when no proper warning as to the use of that evidence has been given, unless there was, apart from the evidence of the accomplice, substantial evidence implicating the applicant and upon which the jury could properly have convicted the applicant even if they had disregarded the evidence of the accomplice."

Where an accomplice warning has been given by the trial judge it is illogical to suggest that the evidence of an accomplice should be disregarded. If that were the case it would be of little value for the prosecution to present any accomplice to the court as a witness. In my opinion the correct view is that, in the absence of corroboration, the court is required to warn itself of the danger of relying upon the evidence of an accomplice. But having taken that warning into account, the court is thereafter entitled to rely upon the evidence or those parts of the evidence that the Court accepts. This is merely an adaptation of the well known warning in R v Baskerville (1916) 2 KB 658 at 663:-

"... it has long been a rule of practice at common law for the judge to warn the jury of the danger of convicting a prisoner on the uncorroborated testimony of an accomplice or accomplices, and, in the discretion of the judge, to advise them not to convict upon such evidence; but the judge should point out to the jury that it is within their legal province to convict upon such unconfirmed evidence ...".

18. The credibility of Mr von Berg and Mr Curtis

There was evidence, which I accept, that in early 1992 the company was in financial difficulties. It was under pressure from its banker and it needed funds to meet the costs of the forthcoming vintage. There was also uncontested evidence that the value of the company's wine stocks for blended dry white or blended dry red wine were, at that time, as little as 50 or 60 cents per litre. These prices were to be compared with $1.50 per litre for top varietals. Both Mr von Berg and Mr Curtis acknowledged in cross-examination that if the company's stocks had been blended in the manner asserted by Mr Fragos and then sold as such it would have caused financial difficulties for the company.

Mr Curtis had invested heavily in the company; he mentioned a figure of $520,000. I dismiss as fanciful his suggestion that the investment had been "written off". If by that he meant that his investment had diminished to a "nil" value, he would still have made every endeavour to resurrect the company financially and so restore some of the value of his "lost" investment. I find that Mr Curtis had a powerful incentive to help the company make a financial recovery. Mr von Berg's position was different. He had not invested in the company but he was Chairman of Directors and that represented a position of remuneration. Both Mr Curtis and Mr von Berg put their characters in issue and nothing was advanced in cross-examination (beyond the circumference of this case) to suggest that they should not be given maximum consideration for previous good character. As to their conduct with respect to these present charges, their evidence- in-chief was to the effect that they had not in any way behaved in a manner that was contrary to the law or contrary to acceptable business practise. It will be necessary to say more about their conflict later in these reasons.

I accept that I should not place any reliance on evidence that pointed to the winery obtaining low prices for its wines during 1991 and 1992. The prosecution attempted to advance an argument to the effect that the low prices that the company obtained for varietals was synonymous with knowledge that it was actually receiving a high price for blends. However, Mr von Berg pointed to matters such as competition in the bulk wine trade which were sufficient to raise doubts in my mind about the correlation between the price of varietals and the price of blends. The subject of ruling prices in the trade in 1991 and 1992 was one that could have been addressed directly by the prosecution:-

"If a party wishing to prove a particular fact relied upon seeks to do so by inference from other facts, and fails to give or call available direct evidence of the fact, and there is no sufficient explanation for the failure to call that evidence, then, there will properly be less confidence in drawing the inference in question."

(Steele v Mirror Newspapers Ltd (1974) 2 NSWLR 348 at 360 per Moffitt P).

During his evidence-in-chief and also in cross-examination Mr von Berg was insistent that when he questioned Mr Fragos about the "Alko" transaction and the Blend Profiles that were listed on the Sales Records, Mr Fragos said that the information disclosed was an "accounting exercise" (T1075) or an "accounting matter" (T1163). Mr von Berg claimed that he accepted that explanation. Mr Curtis' evidence was to the same effect; he said that Mr Fragos had said: "it's for accounting purposes". (T1271)

It might be thought that the claimed explanation that the information was an "accounting exercise" is supported by what Mr Fragos said to the officers of the TPC when he was first questioned (see earlier in these reasons where reference is made to his record of interview Ex.R10: p21 and his explanation that it was "a payment thing"). But I am not prepared to accept such a proposition. Mr Fragos was, according to his evidence on oath, lying when he made that statement; he was then trying to maintain his innocence. I prefer to assess the evidence of Mr von Berg and Mr Curtis on this subject independently.

Mr Fragos gave evidence that he met with Mr Curtis in late 1991 and discussed with him the possibility of processing Mr Curtis' grapes in the 1992 vintage. Mr Fragos said, and Mr Curtis denied, that during the course of this meeting Mr Fragos showed Mr Curtis (on the computer screen) the details of the various Tank Files. According to Mr Fragos, the display demonstrated that many of the wines - perhaps as much as 80% - had been extensively blended. Generally, the November 1991 Tank File, Ex.A13 supports Mr Fragos' evidence with respect to the subject of blending. It does not, of course, assist in determining whether such a meeting with Mr Curtis took place.

Mr Curtis, in denying that such a meeting took place in November 1991, said, nevertheless, that he had a meeting with Mr Fragos in early 1992 after Mr Haden had raised the question of the "Alko" transaction. After such an interval of time it would not be difficult to accept that the two men might be able to agree that a particular meeting occurred but be unable to agree on its date. The matter of importance is the fact that by February 1992 Mr Haden had alerted Mr von Berg and Mr Curtis to the alleged problem of blending. Mr Curtis, through his meeting with Mr Fragos (which I find took place on some unspecified date but no later than February 1992) had also seen evidence of the existence of that problem when he examined the computer records with Mr Fragos. It was Mr Curtis' evidence that Mr Fragos said on that occasion (as well as on other occasions) that the computer entries were for accounting purposes and that they did not represent the wines that were in the tanks.

If it be accepted that Mr von Berg and Mr Curtis learnt by February 1992 that the company had compiled documents that incorrectly listed the Blend Profiles of the wines, one would have expected them, as directors of the company, to be concerned. Consider, for example, what Mr Curtis said in evidence-in-chief. After learning of the incorrect Blend Profiles Mr Curtis explained that he went to see Mr Fragos and said to him:-

"John Haden has just shown me a peculiar wine mixture." (T1270)

At T1271 Mr Curtis said that Mr Fragos replied to him saying:-

"... yes, you should see them all, there's plenty on the computer."

Mr Curtis' evidence continued thereafter:-

"So he ran the computer and I saw a number of mixtures and I asked him: what the hell's this about, what sort of rubbish is this? He replied: look, I have no idea what it is because I've inherited these records from Bourchier. Bourchier left, he passworded the computer. When I was able to get in this is what I found. He said: it is not right because the real wine is the wine that's on the tank cards and he signalled behind us the tank cards on the wall.

Were the tank cards on that wall in the office? ... Yes, the tank cards were on the wall. Now, I inspected the tank cards and the tank cards showed pure lines on their definitions. Now, I asked him again and he said no, we did not make wines like this or any where near this mixture. I spent some time with him - necessarily how many I saw, exactly I saw but he rolled the machine and he showed me the mixtures. Now, I know for a fact that that is not winemaking. There's no reason known to man why anyone would make such a concoction of mixtures. It is not saleable. It is not to anyone's advantage to make that sort of wine mixture." (T1271)

The puzzling aspect of Mr Curtis' evidence with respect to this occasion is his claim that Mr Fragos told him that the Blend Profiles of the wines were truly recorded on the tank cards. Why would a businessman such as Mr Curtis, with his background as a grapegrower and his knowledge of the Label Integrity Program and the P4 Standards, tolerate such an outrageous situation? Why would he not issue immediate orders to take the true records (the tank cards) and using them, "rewrite" the company's other records, including its computer programs, to accord with the truth.

The same conclusion may be made with respect to the evidence of Mr von Berg. In his evidence-in-chief he talked of the occasion when he questioned Mr Fragos about the contents of the Sales Records. He said:-

"I sat him down and asked him basically what this blend component was on the bottom of the sales sheet. He replied to me: don't worry about it, it's for accounting purposes. I said: well, thank god for that because - you know, these blends are hopeless. I mean, why would you put this in here, this in here, this in here. He replied: well, look, don't worry about that, they're just purely to reconcile payments to the marketing group as an accounting document and what's in the wines is on the tank files, or tank cards." (T1074)

These two men, Mr von Berg and Mr Curtis, were well educated, experienced, business men. With the departure of Mr Haden, they were responsible for running the winery. They had, on their own admission, discovered that the newly appointed winemaker, a young man in his twenties, was operating a system within the winery that necessitated the compilation of false documents. That fact, without more, would be alarming. Yet they were content to do nothing to correct the situation and - worse - nothing to stop the continuation of the use of such documents because they claimed satisfaction with their winemaker's explanation that the false documents were for "accounting purposes". Neither was able to explain how the sale of Product A could justify the preparation of a document that purported to describe Product B as the subject of the sale. Asked in cross-examination why it was recorded in the minutes of a Board Meeting on 13 February 1992 that a direction had issued to Mr Fragos to be "meticulous" about the wine standards, Mr von Berg could only reply:-

"We were concerned that - I mean, these sort of records around the place, anybody could pick them up. In fact, even our Auditors, pick them up and there had to be, if this was the accounting exercise, then obviously, the actual operational and mechanical exercise in the winery had to be right, because something has to back it up. So that was the rationale." (T1164)

The defendants were given every opportunity to explain the so called "accounting purposes". Mr von Berg's answer, as appears from a long passage in his cross-examination was nonsensical:-

"All right. You said he explained it as an accounting exercise. What did you understand he meant?...There were large or various volumes of wine in the winery which were owned by the marketing group.

Yes?...There are large and small growers and there is this reconciliation which has to go to the growers on a pro rata basis for the amount of wines, or grapes, they actually put into the winery. I have been advised that it is very complex. We had chartered accountants looking at it from the marketing group and also our own and it is a method by which, on a pro rata or percentage basis, you are able to acquit to all growers to the marketing group.

Would you mind explaining to his Honour how you accepted that a sheet which showed a particular delivery of 1990 Shiraz to Ausflavour could validly account to the various growers when it is accounting to growers for cab sav, riesling, shiraz, riesling, merlot, riesling, grenache, chenin blanc and Cellar White?...Mm.

How could that possibly be an accounting to the growers for the sale of a 1990 shiraz if those components were not in the shiraz?...Yes. If you go right back to 1988 when the company started and there is a multiplying effect all the way through, that reconciliation gets worse as time goes on. In fact these figures here would look worse in two years because of the on effect and I think one of the winemakers explained that in terms of ullage tanks. It just goes on and on because the records, in terms of the financial records and control of wine in from the marketing group, were not kept correctly with wine codes, the actual wine codes.

Now, are you saying that when a 1990 shiraz was sold - no matter who to, Ausflavour in this instance let us say - a 1990 shiraz was sold or even when the sample was being prepared, for the purposes of accounting, it would show that cab sav, riesling, riesling, merlot, riesling, etcetera had been sold?...On this sheet it would indicate that, yes.

So that from an accounting point of view where the winery is about to, if you like, account to the marketing group, for wine that has not been sold?... Yes.

It is not going to account for the Shiraz that has been sold, it is going to account for Cab Sav riesling - a small amount of the Shiraz that has been sold?...Yes.

But it is going to account not for all the Shiraz that has been sold, but for Cab Sav, riesling, Merlot, Grenache, Chenin Blanc, and cellar white, none of which have been sold?...I don't know.

Come on, Mr von Berg, you are the one who accepted this explanation?...Yes.

Is that what you understood at the time?...Yes." (T1168)

The illogicality of this explanation should be self-evident. It can be even better understood by use of a hypothetical example: assumed that the wine that is offered for sale is a 1991 Shiraz. Such a wine must contain at least 80% Shiraz and 95% of all components in the wine must come from the 1991 vintage. It would be possible that the balance of 20% might comprise a variety of wines owned by different people: indeed the 80% Shiraz might be owned by 2 or more people. Why would any business house, when selling wine on behalf of those owners account to anyone other than those owners for wine other than the wine that comprised the product sold? That question was never answered.

I cannot accept Mr von Berg's evidence about the so-called "accounting purposes". Under cross-examination he said:-

"Right. Well, now you had within the records of the company under your control documents which on the face of them were grossly misleading, correct?... Yes.

And could give the impression that The Vales Winery was engaged in fraud?...Yes.

Why did not you set about correcting that situation?...Because Mr Fragos had always said that these documents that I have in front of me here are accounting records. These are basically held down in the administration accounting area to reconcile payment to the grape growers from the marketing group." (T1166)

Later he said that it had not occurred to him to suggest to Mr Fragos some alternative arrangement:-

"Did it not occur to you to speak with Mr Fragos about making some record or some alteration to ensure that these documents could not be misunderstood?...No." (T1167)

Here is a business man who has made a point of impressing upon the Court his good character yet he admits that he would permit his company to engage in practices which he acknowledged could give the impression of fraud. There is no doubt in my mind that Mr von Berg's evidence about the so- called "accounting exercise" was untruthful. I find that Mr Fragos did not at any time use these words or any words having a like or similar effect in explaining to Mr von Berg the information that was contained in the Sales Records.

Mr Curtis' explanation about the workings of the "accounting system" was not as involved as that of Mr von Berg, but it was equally unsatisfactory. He was content to say "I explained it to myself" (T1352). Thereafter, in response to further questions in cross- examination, his attempts to describe how he explained the system to himself were hopelessly inadequate.

One section in the cross-examination of Mr Curtis accurately reflected his evasive and contradictory answers. It started with him saying that as directors of the company they would "(set) about the task of checking its wine stocks, attaining some bases of information of the wine stocks, and that's what we did" (T1318). He was then asked whether in late 1991 he looked at the records of the wine stocks or talked to Mr Fragos about the wine stocks. He answered "No" to both questions. But it was in this period, as he acknowledged, that the company obtained the expert views of a Ms Dunsford about the state of the company's wines and he also acknowledged that he was "keen to see what state the wines were in and whether they were marketable" (T1320). When asked whether he would have had some discussion with Mr von Berg or Mr Haden about Ms Dunford's report he answered "Possibly, yes". There then followed a rather amazing piece of contradiction:-

"Surely you would have; you wanted to know what the state of the wines were. You had just had an independent expert's report; surely there must have been some discussion about it?...Well, it wasn't - okay, it wasn't of immense interest for us to know the state of the wine. It was more imperative for us to have some documentation on the state of the wine in case the marketing group - independent documentation, assessment of the wine. Just in case the marketing group so wished to question prices sold, etcetera, etcetera." (T1320)

Mr Curtis did not impress me when he gave his evidence. His counsel argued strenuously to persuade me to accept Mr Curtis as a truthful witness. Mr Borick submitted that, during his cross-examination, Mr Curtis demonstrated a strong personal dislike for the aggressive questioning of Mr Martin and Mr Martin's "repeated attempts to put words into his mouth." Referring to passages in the cross-examination containing exchanges between Mr Martin and Mr Curtis, Mr Borick submitted that Mr Curtis' "... wariness continued throughout his cross-examination and had a great deal to do with answers that otherwise would be criticised as being evasive".

Mr Borick also described the contradictions in Mr Curtis' evidence-in-chief and cross-examination as "nitpicking over minor inconsistencies". I reject Mr Borick's evaluation of Mr Curtis and of his evidence. On far too many occasions he was plainly evasive and overly defensive. A simple example, taken at random, appears at T1376:-

"Were there any tastings in that context?...Yes.

Thank you. Were there times when you and Mr Fragos had tastings of your wines?...Yes.

Thank you. Were there tasting when you and Mr Fragos considered some of the bulk wines?...No. Whose bulk wine - what bulk wines?

The bulk wine that was being held at the winery? ...Which vintage, which year? There is distinction. We're into, 92, there's new vintage wines."

There were four questions in that passage; all were general, lacking specificity. Nevertheless all were capable of a simple "yes" or "no" or perhaps "I can't remember". Mr Curtis had no trouble answering the first two questions but, inexplicably, he became defensive in replying to the next two. The questions did not carry any sinister overtones but one gained the impression throughout Mr Curtis' cross- examination that he was forever alert in case he fell into some trap. He was asked whether there may have been a wine tasting with Mr von Berg and Mr Fragos on 10 August 1992. His answer: "well, if you so wish show me a tasting note ..." (T1376) was cut short; a sense of understandable exasperation is reflected in the next question from the cross-examiner:-

"Look, Mr Curtis, just answer the question and do not come back to me with questions about showing you things. My question is quite simple. Might there have been a tasting on 10 August 1992 at which you and Mr Von Berg attended?...There may have been. I can't identify the day and I can't identify the situation." (T1377)

Another example of Mr Curtis' evasiveness appears at T1291-1292 when he was being questioned about a conversation that he might have had with Mrs Shreeve about records that were sent by the company to the Marketing Group. But the specific line of questioning which led me to conclude that Mr Curtis was being deliberately evasive was that dealing with his knowledge or lack of knowledge about the Sales Records. They were the documents upon which the prosecution had pinned its case on the first day of the trial, 10 July 1995. Mr Curtis was being cross-examined on this subject on 9 August 1995. In the intervening period of time the subject of the Sales Records had been repeatedly raised and he had been present in court throughout the proceedings with only short absences. I am satisfied that if, in 1992, Mr Curtis had become aware of the existence of such documents, he like Mr Haden, would have been amazed and, if Mr von Berg is to be believed, he would have been assured that there was no cause for concern as they were only for "accounting purposes". Either way, with his knowledge of the winery and bearing in mind what Mr Haden had told him in February 1992, he would have known with certainty whether he had ever seen a Sales Record, particularly one that was fraudulently deceptive. I find his answers on this subject untruthful:-

"I give you another opportunity to think about that answer. Now, the sales records has become quite an important document in this trial, has not it, in one form or another?...Yes

It is hotly in issue about whether it is reliable?...Yes.

Do you now seriously say that you cannot remember whether or not that was a document that regularly appeared in your in tray from the office administration?...Yes, I cannot really say whether it regularly appeared in my in tray or whether it appeared in the in tray at all, or whether I saw it in other situations." (T1380)

I am fortified in reaching this conclusion because of his concession later in his cross-examination that he may been incorrect (T1393) and because of what he said on this subject in evidence-in-chief. He had been asked to describe, with respect to the period February to May 1992, what documents were sent by the company to the Marketing Group. His answer was:-

"... they would have been equivalent to the sales records". (T1287)

Both Mr von Berg and Mr Curtis were forced to advance an explanation for their knowledge about the abnormal blendings of wines. Mr von Berg had to acknowledge that his initials appeared on Ex.D47 and Mr Curtis had to acknowledge that his handwriting appeared on Ex.D12. Ex.D12 was the Tank File for September 1991 (although that does not mean that Mr Curtis saw it on that date). Ex.D47 comprised several documents; they preceded an order from Orlando Wyndham Pty Ltd (which is the subject of Count 11 against the company) for 198,000 litres of 1991 Cabinet Sauvignon. Both exhibits disclosed information that supported the practise of blending or mixing wines.

The contrary picture, the one that is based on Mr Fragos' evidence is that, at least from February 1992 when Mr Haden made his discovery about the "Alko" transaction, both Mr von Berg and Mr Curtis knew that the winery was offering wine for sale that was not true to its description. On an occasion in February 1992 there was, according to the evidence of Mr Fragos, a meeting between him, Mr von Berg and Mr Curtis. This was not the meeting arising out of the Mr Haden's discovery about the "Alko" transaction. It was a meeting that, according to Mr Fragos, occurred shortly after Mr Haden left the company. According to Mr Fragos, he was instructed by Mr von Berg and Mr Curtis at that meeting to deal "directly with them on any relevant matters pertaining to wine sales ...". Later there was another meeting between the three men. As to this meeting the evidence of Mr Fragos was as follows:-

"What was discussed in that particular meeting was that Mr von Berg and Mr Curtis recognised that there were numerous blends of wines which were being stored in the winery and that discussion was - was based around what we were going to do with those particular wines and regards to sale of the wine.

Yes, go on?...I was asked the price they - a non- vintage dry white and non-vintage dry red would fetch in the bulk market at that particular time versus what price a varietal wine would fetch in the bulk market, which I gave the answers based on my knowledge of the bulk wine market at that particular time.

And what were those answers?...The dry red and dry white were around the market for 50 to 60 cents per litre and the varietal wines, for something like chardonnay, cabernet sauvignon or shiraz was in the vicinity of about $1.50 per litre.

All right. Go on, what was said then?...Following my answering the questions that were directed at me I - Mr von Berg and Mr Curtis discussed the implications of these prices based on the volume of wine that was in - that was in question whether to pursue the wines as varietals or to sell them as non- vintage dry reds or non-vintage dry whites, and after they discussed it for a couple of minutes, they came up with the conclusion that I was to pursue selling these wines as varietal wines and the basis of their decision was that the company could ill afford to sell - to sell these wines as dry white and dry red ...". (T144)

Both Mr von Berg and Mr Curtis have denied that any such instructions were ever issued to Mr Fragos.

Counsel for the prosecution submitted that because of the financial considerations, there was every motive for Mr von Berg and Mr Curtis to pursue the policy that Mr Fragos described in his evidence. He also submitted that there was no motive for Mr Fragos to lie about the instructions that he had been given. But that may not be the case. Mr Fragos at first denied, but later admitted to, conduct that constituted criminal activity. He changed his evidence and was given immunity from prosecution. Mr Fragos may well have thought that it was in his interests to implicate Mr von Berg and Mr Curtis in order to get that immunity. I make no finding to that effect but it is a factor that must be borne in mind as a possibility or even a probability when assessing the character and credit of Mr Fragos.

With that warning in mind, I nevertheless accept sections of the evidence of Mr Fragos. I am prepared to accept him as a witness of truth in respect of the section of his evidence where he explains that Mr von Berg and Mr Curtis told him to sell blended wines as varietals. I find that both Mr von Berg and Mr Curtis well knew and understood about the existence of the blending activities of the company. As I have said, both men accepted that if, in truth, 80% or so of the wines that were in storage were blends rather than varieties, it could be financially disastrous for the winery, and both accepted the approximate figures of $1.50 per litre for varietals and 50 or 60 cents for blends. Both men said in evidence that Mr Fragos had told them that the computer records (which, according to them, falsely detailed the wines in the tanks) had been compiled by Mr Bourchier, the man whom they did not trust and who had been dismissed the preceding October for reasons that included his alleged failure to keep appropriate records. In those circumstances I am confident that common practise and ordinary procedure would have demanded some form of investigation on the part of Mr von Berg and Mr Curtis if, contrary to the evidence of Mr Fragos, they were not party to the decision to sell blends as varietals.

I cannot believe that two experienced businessmen would have behaved in the way in which Mr von Berg and Mr Curtis claimed to have behaved. Assisted by the integrity of Mr Haden, who gave no evidence of hearing any explanation about "accounting" activities, I find myself able to accept the evidence of Mr Fragos to the effect that both Mr von Berg and Mr Curtis knew about the winery's practise of blending wines. I reject the evidence of Mr von Berg and Mr Curtis. I find that each lied when they said in evidence that they were told by Mr Fragos that the Sales Records were merely accounting records.

Counsel for the defence suggested that the defendants would be uncommonly stupid to "keep producing and retaining prima facie incriminating documents". He went on to say that the defence submitted that the converse was true, that is, "that they were not incriminating documents at all. The directors did nothing to change the existing system because they believed that they were not defrauding any body ...". That submission must be rejected; it is contrary to Mr von Berg's concessions in cross-examination at T1166 (which have already been quoted in these reasons) where he conceded that the Sales Records (as compiled for so-called accounting purposes) could give the impression that the company was engaging in fraud. These findings with respect to the credibility of Mr von Berg and Mr Curtis are of material importance; they will be matters to be taken into account when considering the four separate charges against each of the accused.

I turn now to a consideration of the individual counts.

19. Count 1

On 25 January 1991, Thomas Hardy & Sons Pty Ltd placed an order with the company for 80,000 litres of 1989 Southern Vales Chardonnay Dry White. No Sales Record was compiled with respect to this transaction but Mr Fragos' handwritten notes (Ex.A3) showing components of 75.78% Chardonnay and 24.24% Sauvignon Blanc were tendered. These notes, if accepted, would show that the wine that was delivered in satisfaction of this order breached the 80% variety requirement of the P4 Standards. The notes do not state any details about the vintage and Mr Fragos was not able to give any evidence on this subject. I am not prepared to rely on Mr Fragos' notes without other supporting evidence. Throughout the course of this trial the company's records have been shown to be unreliable. I have already alluded to this problem and I will discuss these shortcomings in detail when discussing some of the later charges. I am not prepared to record a conviction based only on the notes that were compiled by Mr Fragos.

20. Count 2

This count related to an order from Andrew Garrett Wines for "30,000 litres 100% 1990 McLaren Vale Cabernet Sauvignon dry red wine as per guarantee letter dated 13/9/91 ...". That order is Ex.MF8.

According to the evidence of Mr Fragos, Mr Randall, the winemaker at Andrew Garrett Wines, approached the company sometime in September 1991, inquiring whether it could supply 30,000 litres of 1990 Cabernet Sauvignon. Mr Fragos said that a sample of the company's stock was provided and that he, at the same time, acting on Mr Bourchier's instructions supplied a "letter of guarantee" to Andrew Garrett Wines. That letter, Ex.MF6, dated 13 September 1991 and marked for the attention of Warren Randall, read as follows:-

"Dear Warren

The 1990 Cabernet Sauvignon Dry Red Wine (Volume represented 30,000 litres) which Andrew Garrett Wines obtained samples from The Vales Wine Company on Thursday 20 August 1991 has been made and maintained in accordance with the P4 Standards for National Health and Medical Research Council Food Standards Code 1987.

Hence, I also have no reservations in assuring your company that the wine is 100% 1990 Cabernet Sauvignon from the McLaren Vale Region of South Australia."

There is, of course, a grammatical inconsistency in this document. Having asserted compliance with the P4 Standards the author proceeded to write "Hence, I also have no reservation in assuring your company that the wine is 100% 1990 Cabernet Sauvignon from the McLaren Vale region ...", as if compliance with the P4 Standards would achieve that result. However, as I have already said, compliance with the P4 Standards only required 80% of variety and locality and 95% of vintage. Nevertheless, it remains clear in my opinion that the author of the letter was holding out, in the name of the company, that the sample supplied not only complied with the P4 Standards, but more so, it was "100% 1990 Cabernet Sauvignon from the McLaren Vale region"; and, as the author of the letter, Mr Fragos confirmed that in his evidence (T153).

The consequential order from Andrew Garrett Wines (which contained a reference to the "guarantee letter") was dated 19 September 1991. The order was subsequently filled by the company but the question remains: what was delivered by the company to Andrew Garrett Wines in purported satisfaction of the order? If, as Mr Fragos claimed in his evidence-in-chief, the answer to that question is to be found in the company's internal Sales Records, then it becomes necessary, so far as this particular order is concerned, to have regard to Exs.MF13 and MF18. Mr Fragos identified these documents as specifically relating to the delivery of the alleged 1990 Cabernet Sauvignon to Andrew Garrett Wines. The first of these documents, Ex.MF13, records that 18385 litres of wine were despatched to Andrew Garrett Wines on 25 September 1991 in partial satisfaction of the order. The second document, Ex.MF18 records that 11240 litres of wine (making a total of 29,625 litres in answer to an order for 30,000 litres) were despatched to Andrew Garrett Wines on 4 February 1992 pursuant to the same order.

The Blend Profiles shown in Ex.MF13 and Ex.MF18, should have been consistent with an order for 100% 1990 McLaren Vale Cabernet Sauvignon. However, they were neither identical nor reflected the wine actually ordered by Andrew Garrett Wines. The information recorded in those exhibits included the following details:-

Exhibits MF13 and MF18 also contained information about the alleged ownership of the wine that was despatched in fulfilment of the orders. In this case the Marketing Group was shown as owning all the wine other than the 3973 litres of 1991 Cellar-White - Cabernet-Sauvignon. According to the entry on Ex.MF13 that wine was owned by the company.

After reading Ex.MF13 and Ex.MF18, the immediate inference would be that the two deliveries were different blends but Mr Fragos, with some obvious hesitation, suggested that such was not the case. He said that "it was one wine that was supplied in both instances to Andrew Garrett wines" (T165) adding that he remembered "some discussion at the time regarding this particular sale ..." to include as much of the company's wine as possible in the first delivery. The truth of the matter, as I find, was that the company delivered on both occasions a blended wine that comprised three components, namely the 1990 and 1991 Cabernet Sauvignon, both of which were owned by the Marketing Group, and a 1991 Cellar-White - Cabernet-Sauvignon that was owned by the company. The agreement was that Andrew Garrett Wines would make payment in equal instalments on 60, 90 and 120 days from delivery. By compiling internal Sales Records that purported to show a sale of wine that included all 3,973 litres of the company's Cellar- White - Cabernet-Sauvignon in the first delivery in September 1991, a fraud was thereby perpetrated on the Marketing Group: the company accelerated the receipt of its share of the purchase price, receiving all its money from the first delivery to Andrew Garrett Wines to the detriment of the Group.

The wine that was delivered to Andrew Garrett Wines in satisfaction of their purchase order No 5560 was, if the Sales Records are accepted as accurate, a combination of the information in the two sales records, that is:-

being

These figures show that the 1990 Cabernet Sauvignon component was 81.38%. That would have satisfied the P4 Standards of 80% for variety but it would have failed the 95% vintage test. However, in this case, the customer had ordered 100% 1990 Cabernet Sauvignon and Mr Fragos' declaration had claimed that what was being supplied was 100% 1990 Cabernet Sauvignon. (I have made no reference to the McLaren Vale locality as no evidence was led on that subject).

I am satisfied that Mr Fragos knew that what was supplied was not 100% 1990 Cabernet Sauvignon. Whether he had an exact knowledge of the blend components is another matter. The Sales Records that were compiled by Mr Fragos can only be relied on to a limited extent. Time and again, Mr Borick was able to demonstrate inaccuracies. But those inaccuracies do not explain away the claimed existence of the company's 3,973 litres of 1990 Cellar-White - Cabernet Sauvignon in the wine that was delivered to Andrew Garrett Wines. If 3,973 litres out of the total deliveries of 29,625 litres was the company's wine this meant that the company owned 13.4% of the product that was sold to Andrew Garrett Wines. As the order, at $1.20 per litre, was valued $35,550 the company's share of the sale price was $4,763.70.

The claimed presence of such a large proportion of wine belonging to the company cannot be ignored. Although I have no confidence in the integrity of the records it will be sufficient for a finding of "Guilty" if I am satisfied beyond reasonable doubt that some unspecified quantity of the company's Cellar-White - Cabernet Sauvignon was present in the wine; its presence would mean that the wine that was sold and delivered was not 100% 1990 Cabernet Sauvignon. If I accept Mr Fragos' evidence of the presence of the company's wine it means that the product that was delivered to the customer, while it might have been true to sample, was not true to description.

Mr Fragos knew that a fraud had been committed on the Marketing Group and that he had played a significant - if not the significant - role in the commission of that fraud. That is why he was hesitant in giving his evidence on this subject. I find that the blend components listed in Ex.MF13 and Ex.MF18 were deliberately misstated to insert all the company's wine, instead of a proportionate part, in the earlier of the two Sales Records. However that falsification of the records was for the specific purpose of creating, internally, a written record that would "justify" the company receiving money earlier than the due dates of its entitlements; it was not a falsification of the identification of the varieties of wines that constituted the blended product that was dispatched to Andrew Garrett Wines.

It was Mr Fragos' evidence that the business of the company was carried on upon the basis that the computer records were accurate and that he had no reason "to doubt that these records of particular blends in particular tanks were other than accurate". (T163) He reaffirmed later in his evidence-in-chief on the following day that he had no cause to doubt the accuracy of the computer records. (T177) In light of all of the evidence, examples of which have already been given I cannot accept that general assertion. On too many occasions the records have been shown to be inaccurate or to contain conflicting information. There is, nevertheless, evidence before the court that is, in my opinion, sufficient to sustain a conviction on this count. There can be no doubt that Andrew Garrett Wines ordered 100% 1990 Cabernet Sauvignon and there can be no doubt that the company held out (and in the relevant sense, falsely represented) that it was supplying 100% 1990 Cabernet Sauvignon. This count is not, therefore, dependant upon non-compliance with the P4 Standards. This is an occasion where I am able to find myself satisfied to the requisite degree that the wine that was represented was not the wine that was supplied.

The unique feature in respect of this count was the presence of the company's Cellar-White - Cabernet-Sauvignon and the amount of money that it generated for the company. Its presence was sufficient to destroy the purity of the 100% requirement. Having expressed doubts about Mr Fragos and the records of the company, and making due allowance for them, it is still sufficient if I am satisfied beyond reasonable doubt that some "foreign" wine found its way into the deliveries that were made to Andrew Garrett Wines. As long as I am satisfied that this "foreign" wine was not a 1990 Cabernet Sauvignon, the offence will be made out by its presence. I am prepared to accept Mr Fragos evidence that the wine that was sold to Andrew Garrett Wines, and to which this count relates, contained wine that was owned by the company and that the company's wine was a wine other than a 1990 Cabernet Sauvignon. I rely on my assessment of him as he gave his evidence on this subject. It was necessary for him to acknowledge his direct involvement in yet another fraud. Distasteful as his conduct may have been, it was believable. I find this charge against the company proved.

21. Count 3

When Andrew Garrett Wines ordered 30,000 litres of 100% 1990 Cabernet Sauvignon (Count 2) they included in Order Number 5560 (Ex.MF8) a further order for:-

"75,000 litres 100% 1990 McLaren Vale Shiraz dry red wine as per guarantee letter dated 13/9/91."

As no evidence was led about locality I will not address that issue. The relevant circumstances surrounding this order and the subsequent deliveries of wine march in parallel with the events relating to Count 2. Save for the change in the description of the wine, an identical "letter of guarantee" was sent by Mr Fragos to Mr Randall (Ex.MF7). The relevant Sales Records were identified by Mr Fragos as Exs.MF14 and MF19; they related respectively to deliveries of 45,507 litres on 25 September 1991 and 29,280 litres on 4 February 1992 (a total of 74,787 litres in satisfaction of the order for 75,000 litres). Both Sales Records display against the entry "Wine Description" the figures and words "1990 Shiraz". However, as was the case with the sales records for the 1990 Cabernet Sauvignon, the blend components, if correct, show that what was delivered to Andrew Garrett Wines was not 100% 1990 Shiraz.

With respect to Count 3 I am of the opinion that there is sufficient evidence before the court to make a finding that this charge has also been proved beyond reasonable doubt. I feel justified in coming to this conclusion without relying on the detail that is contained in the Sales Records Exs.MF14 and MF19. Putting to one side the doubts that have been raised about the reliability of the company's records there is the representation that the wine would be 100% McLaren Vale Shiraz. Even if one were to allow for the possibility that he might not have known the exact composition of the wine, Mr Fragos, as a winemaker and the assistant to Mr Bourchier, would have known whether the wine was "pure". His evidence, at its lowest level, was that the wine was not 100%. I discount the possibility that he was deliberately lying. No evidence pointed to such a possibility. In addition I am fortified by the presence of the company's wines in the blend. There was some Cellar-White Shiraz, a small quantity (262 litres) of Sauvignon Blanc and some 1991 Cellar-White. They totalled 12625 litres (or about 16%) out of consignments totalling 74787 litres. Sixteen percent was a large component and none of it was said to be the required 1990 Shiraz. The presence of one per cent of "foreign" wine would have been sufficient to breach the representation contained in the letter of guarantee. I find this charge proved.

22. Count 4

This count related to another order from Andrew Garrett Wines. On this occasion the order (Ex.MF20) dated 23 September 1991 was for 23,000 litres of "1991 Pinot Noir Champagne base wine". There was no requirement that the wine be 100%. The Sales Record (Ex.MF23) if accurate, disclosed that what was supplied in satisfaction of this order was a mixture or blend of five different wines totalling 25,040 litres. One such wine was said to be a 1990 Pinot Noir comprising 6,625 litres and another was said to be a 1991 Pinot Noir of 6,472 litres. If that were the truth then the Pinot Noir represented, by volume, 52.3% of the wine that was dispatched, thereby failing the 80% rule as to variety. The 1990 Pinot Noir of 6,625 litres would have accounted for 26.46% and so there would have been a breach of 95% rule as to vintage. But, as is the case when considering Count 1, I feel unable to rely on the accuracy of the Sales Records. In the absence of other evidence I am not prepared to enter a verdict of "Guilty". This charge will be dismissed.

23. Count 5

Count 5 suffers the same defects as Counts 1 and 4. I am not prepared to accept the Sales Records at face value. I find the company "Not Guilty" on this charge.

24. Count 6

Angove's Pty Ltd placed a purchase order dated 4 November 1991 (Ex.MF35) with the company for 100,000 litres of "Southern Vales Cabernet Sauvignon 1990 vintage" at $1.60 per litre. This order had been preceded by some negotiations which included the company acquiring some wines contemporaneously from Angove's in a "back to back" transaction. As part of the negotiations, Mr Fragos submitted a declaration to Angove's (Ex.MF33) with respect to the wine to be supplied by the company asserting that the supplier's name was Southern Vales Wines, that the wine was 100% Cabernet Sauvignon, that it came, as to 100%, from the McLaren Vale district and that it was 100% 1990 vintage.

The Sales Record compiled for the internal use of the company (Ex.MF43) in respect of the Angove's order referred to the order number and along side the entry "wine description" there appeared the words and figures - "1990 Cabernet Sauvignon". However, if the blend components as listed in Ex.MF43 were correct, the wine dispatched was a mixture of seven wines. Particulars of those wines, as recorded in Ex.MF43, included the following information:-

The company was recorded as the owner of the 1991 Cellar White and all other components were owned by the Marketing Group. The company's wine appeared to account for approximately 10.16% of the sale price - or about $16,246.

If the blend components were correct, it meant that instead of getting a 100% 1990 Cabernet Sauvignon, Angove's received a dry red blend comprising only 79.27% 1990 Cabernet Sauvignon and a mixture of other red and white wines. Although this is very close to the 80% rule, neither that rule nor the 95% rule applied in this case because Mr Fragos had submitted to the purchaser, during the course of negotiations, a declaration that the wine that would be supplied would be 100% 1990 Cabernet Sauvignon.

Mr Fragos acknowledged (T181) that he did not believe that the company was supplying the wine that had been ordered. It is appropriate to mention at this stage that Mr Fragos had given general evidence about Mr Bourchier's explanations for blending wines. Those explanations had a financial base. For example, during the course of his evidence-in-chief, the following explanation from Mr Fragos was received in evidence against the company:-

"What did you say to him?---I questioned him on why he was adding one particular variety to another particular variety because it was quite a high percentage of a different variety and it was of a different colour as well. I asked him: why do you do that, what are you trying to achieve by doing this? His response was that the variety he was blending in was cheaper in cost and by putting a cheaper product in a more expensive product would bring the cost of the blend down quite considerably and then when the wine was sold the margin would be greater. That was his response.

Did you say anything to him about that?---No, I wasn't in a position to. I just said: okay."

Elsewhere, as I have earlier said, there was evidence to the effect that quality bulk wines such as Cabernet Sauvignon and Chardonnay might command as much as $1.50 per litre whilst blends that could only be sold as Dry Red or Dry White would sell for only 50 or 60 cents per litre. Count 6 throws up starkly not only how a purchaser can be deceived but also how a vendor (so long as he can accommodate his purchaser's taste buds) can profit by including inferior stock and selling it at an inflated price. The figures set out in Ex.MF43 revealed that the company was able to quit 10,155 litres of inferior stock worth perhaps as little as 50 cents per litre or thereabouts for $1.60 per litre. As with Counts 2 and 3, I find this charge proved. The presence of a substantial parcel of the company's white wine is enough to show that the delivery was not true to description. It may not be possible to state with confidence the exact details of the wine, but it is clear that it was not 100% 1990 Cabernet Sauvignon.

25. Count 7

This count is in the same category as Counts 1, 4 and 5. There will be verdict of "Not Guilty" in favour of the company.

26. Count 8

This count relates to a delivery of wine to Cranswick Smith & Sons Pty Ltd ("Cranswick Smith") pursuant to Order Number 666 dated 1 June 1992 (Ex.MF48). It is the first of the counts that involve Messrs von Berg and Curtis; the relevant count in the information that was laid against them is Count 7. Cranswick Smith had ordered a blended wine that was described in their order as 23,000 litres of "1989 Cabernet 55% Merlot 45%". According to the Sales Record (Ex.MF54) that was compiled internally with respect to this order, the product that was supplied by the company was 22,950 litres of wine having the six components that are listed hereunder:-

If the Sales Record truly disclosed the composition of the wine then it failed to satisfy the order. It contained 22.9% Cabernet Sauvignon and 62.82% Merlot. In addition it did not satisfy the 95% vintage test; only the first two entries (totalling 84.96%) came from the 1989 vintage. However, as I have already emphasised the defence has shown that the Sales Records cannot be taken at face value. This particular order demonstrates their unreliability. Exhibit R2 was the company's Tank File for the month of May 1992. It is a reasonable inference to accept that the wine that was delivered by the company to Cranswick Smith on 2 June 1992 would be listed among the wines recorded in Ex.R2. But an examination of Ex.R2 does not reveal any tank that held the six components in the proportions that were disclosed in the Sales Record (Ex.MF54). On the other hand, Ex.R2 recorded that Tank T1.35 had a capacity of 24,900 litres and that it was full. The contents of that Tank were then listed by volume, description, wine code, sort code and ownership. I have extracted and set out hereunder only the description and the volumes of the wines in that tank. I have then calculated and inserted the various percentages so that a sample comparison can be made with the contents of Ex.MF54.

If the wine delivered to Cranswick Smith was the wine in T1.35 then the blends recorded on the Tank File and the Sales Records should have been identical. However, according to the Tank File, Ex.R2, there were 8 different wines (as compared with six in the Sales Record Ex.MF54) in Tank T1.35, the two additional wines being the 1990 Merlot (199L) and the 1990 Cabernet Sauvignon (1295L). But Tank T1.35 also showed 672 litres of 1990 Shiraz whereas Ex.MF54 showed only 216 litres of that wine (a reduction of 456 litres). Subject to these three variations the remaining 5 wines that were listed in Ex.MF54 match, exactly by volume, the same 5 wines in Tank T1.35. The difference in volume of 1950 litres (24,900 - 22,950) is accounted for through the two missing wines and the drop in volume of the 1990 Shiraz.

In addition to Tank T1.35, Ex.R2 showed that at the end of May 1992 there were two other tanks at the winery with the same mixture and volumes of wine. But Ex.R3, the Tank File for the end of June 1992, shows that Tank T1.35 was empty whilst the other two, Tank T2.36 and Tank T2.37 were still full. In seeking satisfaction beyond reasonable doubt, I find that there remains an area of uncertainty. The probabilities are that 22,950 litres were withdrawn for the Cranswick Smith order from a tank of wine that then held 24,900 litres. I can not say what happened to the missing 1,950 litres. If I am correct it would mean that the product that was dispatched was a blend of 8 wines (as shown in Tank T1.35) and not 6 wines (as shown in the Sales Record Ex.MF54). I reject the assertion of Mr Fragos in his evidence-in-chief that Ex.MF54 was "accurate in portraying what was supplied to Cranswick Smith and Sons" (T195). In these circumstances I cannot be satisfied beyond reasonable doubt that the offence has been made out. I have therefore concluded that the company and Messrs von Berg and Curtis should be acquitted of these charges.

27. Count 9

This count relates to several deliveries of wine to Chateau Yaldara pursuant to an order for the supply of 113,000 litres of 1991 Shiraz (Ex.MF56). This order was met, by arrangement with the customer, by the following deliveries on the dates specified. The exhibit numbers of the Sales Records that were compiled in respect of each delivery appear in the left hand column.

The date of dispatch as recorded in Ex.MF66 is 1 September 1992 but cart notes dealing with this delivery and another order from Chateau Yaldara make it clear that 1 September could not be the correct date. Mr Fragos suggested it was a mistake on his part when making his entries in the computer and that the date should be 1 October. Nothing of note turns on the error in the date but it is yet another example of the unreliability of the company's records.

Bearing in mind that the wine that was ordered was a 1991 Shiraz, the product that was supplied by the company in the four separate deliveries that satisfied that order was, according to the Sales Records, a mixture of 8 different wines. One of those wines was a 1991 Shiraz but it only accounted for 51.52%. Four of the wines were from the 1991 vintage but they only accounted for 86.95%. If the Sales Records could be relied on there had been a failure to comply with both the 80% and the 95% rules.

In this particular case the wine that was sold to Chateau Yaldara could be traced back initially to Tank SS101. The Tank File for the month of May 1992 (Ex.R2) showed that Tank SS101 was a full tank of 114,700 litres having the same wines in the same proportions as the four Sales Records Exs.MF60, MF63, MF65 and MF66. Allowing for the two deliveries of 43,750 litres and 23,000 litres on 17 and 30 June (a total of 66,750) the Tank File for the month of June 1992 (Ex.R3) should have recorded a balance of 47,950 litres (114,700 - 66,750) either in Tank SS101 or, if it had been transferred, in some other tank. But a search of the June Tank File (Ex.R3) fails to reveal the whereabouts of the 47,950 litres even though there was evidence that the Chateau Yaldara order had been fulfilled. Once again the unreliability of the records makes it unsafe to convict. This charge and the corresponding charge against Mr von Berg and Mr Curtis must be dismissed.

28. Count 10

On 19 June 1992 Andrew Garrett Wines ordered 100,000 litres of 1991 McLaren Vale Shiraz. The order called for a Statutory Declaration as to "origin and variety" and it also contained an endorsement "subject to acceptance of Tank SS100 wine quality". No Statutory Declaration was produced and I would not be prepared to interpret the reference to a Statutory Declaration as meaning that the purchaser was insisting on 100% purity.

If the Sales Records, Exs.MF70, MF73 and MF77 are accepted as accurate the wine that was dispatched in satisfaction of this order would breach both the 80% and the 95% rule. I am not, however, prepared to rely on them for the reasons that I have already given. This charge must be dismissed. Count 9 in the information against Mr von Berg and Mr Curtis is the matching count and it should also be dismissed.

29. Count 11

This count related to the sale of 195,550 litres of wine to Orlando Wyndham that was allegedly held out as being 100% 1991 Cabernet Sauvignon. Exhibit MF107 was the Sales Record for this particular transaction. If it accurately recorded the Blend Profile, the component wines that were in the product that was delivered to the purchaser were as follows:-

Once again the inadequacies of the company's records and the errors that regularly appeared in them were demonstrated by Mr Borick during the course of Mr Fragos' cross- examination. Two examples of those errors will suffice. The first related to the Sales Record Ex.MF107. It recorded that a component of the blend included 3,317 litres of 1990 Merlot owned by the Marketing Group. However, Mr Fragos had to concede that all of the 1990 Merlot in the tanks that were listed in the Tank File (Ex.D17) were in blends; there was no way in which he could account for the source of this 3,317 litres of Merlot.

The second example related to Mr Fragos' notes. In the course of experimenting with blends for the intended sale to Orlando Wyndham, Mr Fragos compiled a draft blend (Ex.D50). This typed document was prepared from Mr Fragos' handwritten notes, (Ex.D70). According to the notes for the proposed blend, initially it would have included 12,757 litres of 1990 Shiraz; that would have constituted 10.04% by volume. The original notes also listed the various tanks from which the wines would be drawn to make up the blend; one of them was Tank SS97 but according to Exs.R3 and R7 (the Tank Files for June and July 1992) Tank SS97 contained an overwhelming preponderance of 1991 Shiraz. A mistake had been made in the compilation of the proposed blend in Ex.D50. Either there was an incorrect Tank reference or, as is more likely the case, the Shiraz should have been from the 1991 vintage.

Mr Fragos said in evidence-in-chief (T235) that he had a particular memory of this wine because it had proved difficult to sell. A sample had been sent to an overseas client but a purchase order had not been forthcoming. That sample was a blended wine but Mr Fragos could not identify its components at the time when the sample was first submitted. Mr Fragos said that he had a meeting with Mr von Berg and Mr Curtis; his evidence was as follows:-

"I was instructed we could no longer wait - or wouldn't wait any longer for this purchase order for this particular wine and that I was to contact the various wineries within Australia to see whether anyone had any interest in this particular blend." (T235)

Following upon these instructions Mr Fragos carried out some blending tests ("the second blend") on the wine in the laboratory. Asked to explain why he did this he said:-

"Well, the purpose was that there was this 1991 Cabernet Sauvignon which had been sitting around for quite a length of time and the reasons for the blend was to try and sell that particular wine ...". (T238)

It was Mr Fragos' evidence that Mr Curtis was directly and personally involved in the second blend. Counsel for the defence submitted that Mr Fragos' evidence about Mr Curtis' alleged involvement in these blendings and tastings was recent invention. He noted that Mr Fragos had made no mention of any such involvement by Mr Curtis on the two occasions when he was interviewed by officers of the TPC. This is true but it does not necessarily lead to a conclusion of recent invention because it is now known that Mr Fragos was lying during those interviews in an attempt to avoid admitting to his criminal conduct.

Samples of the second blend were dispatched to potential customers and, in due course, an order was received from Orlando Wyndham. Meanwhile, according to Mr Fragos, Mr Curtis had approached him and had discussed with him the possibility of adding small volumes of other wines to the second blend, thereby making a third blend. Mr Fragos said that he told Mr Curtis that it would be possible. According to Mr Fragos, after receiving Orlando Wyndham's order, a third blend was composed, again with the knowledge of Mr Curtis. That wine was dispatched to Orlando Wyndham in purported satisfaction of its order.

According to Mr Fragos, the wine, as finally dispatched, contained, as a component, 20,000 litres of 1992 Cabernet Sauvignon that was owned by a customer of the winery, a company that was referred to in the evidence as "Vinovation". This 1992 Cabernet Sauvignon was sometimes referred to as "the Vinovation wine". Despite the proven errors in the information that was contained in the Sales Record (Ex.MF107) and Mr Fragos' blend notes, certain circumstances surrounding this transaction were unique and distinguished it from others. The presence of the Vinovation wine was one such circumstance. Its volume of 20,000 litres and the total volume of the wine delivered of 195,550 litres (or perhaps 194,550 litres - there was a discrepancy of 1,000 litres) were other aspects. Putting to one side any requirement for a 100% 1991 Cabernet Sauvignon, the presence of the Vinovation wine alone would show that the 95% vintage requirement of the P4 Standards had not been complied with.

During his evidence-in-chief Mr Fragos, by use of the cellar work sheets, gave evidence (commencing at T247) of various events in connection with the blended wine that was ultimately sold to Orlando Wyndham. At T469, during his cross- examination, he identified the 20,000 litres of 1992 Cabernet Sauvignon as the Vinovation wine; he acknowledged that it had been included in the blended wine that was dispatched to Orlando Wyndham. The defence submitted that there was nothing in the company's work sheets that proved that the Vinovation wine actually formed part of the Orlando Wyndham transaction. That submission was based on the general unsatisfactory state of the company's records. I have not overlooked it. However, I accept Mr Fragos' evidence that the Vinovation wine was present in the blend. His evidence on that subject is supported by the contents of Ex.MF107. Mr Fragos' evidence on this subject was reaffirmed in re-examination commencing at T889 when he said he was able to track the Vinovation wine commencing with the weighbridge notes. At T906 he was asked:-

"Mr Fragos are you able to say from your own knowledge of this particular wine, and of events that occurred, whether or not the 20,000 litres from the vinovation cabernet sauvignon was included in the wine that was ultimately delivered to Orlando?"

Mr Fragos answered:-

"Yes it was included."

My willingness to accept Mr Fragos' evidence about the Vinovation wine stems, in part, from the fact that it was a wine that Mr Fragos had made in the 1992 vintage, in part from the fact that it did not belong to the company or the Marketing Group and in part from the fact that it could not be blended with the other components until the company was assured that a firm purchase order had been received. In addition, Mr Curtis in his evidence acknowledged that he knew of the Vinovation wine and of its intended use in the blend because, so he said, he warned Mr Fragos that the Vinovation wine could not exceed 5% of the blend. In other words, Mr Curtis acknowledged that the Orlando Wyndham transaction related to a wine from a vintage earlier than 1992. In fact, I am prepared to infer that Mr Curtis knew that the Orlando Wyndham order was an order for a 1991 Cabernet Sauvignon. Having regard to the totality of the evidence, I accept what Mr Fragos has said on this subject and I reject Mr Curtis denials.

I also accept Mr Fragos' evidence that he discussed with Mr von Berg the requirement from Orlando Wyndham that he (Mr Fragos) issue a Statutory Declaration that the wine was 100% 1991 McLaren Vale Cabernet Sauvignon. That evidence, although lengthy, is important. It is set out below:-

"... I approached Mr von Berg in his office at the winery and said that I was extremely uneasy with regards to filling out a declaration that 190,000- odd litres of wine would be 100 per cent 1991 McLaren Vale cabernet sauvignon.

Just pause there. Do we take it from that that you had been asked to declare that it was 100 per cent 1991 cabernet sauvignon, not just that it was a 1991 cabernet sauvignon that complied with the label integrity?...Not at that stage. They just requested a declaration if I remember correctly.

Anyway, you told him that you were not happy in declaring it was 100 per cent and you mention that in the context of 192,000 litres?...100 and - whatever the order was for.

Why did the size of the order make you feel uneasy about it?...It just seemed unlikely that a wine of that particular age and of that particular large volume would be 100 per cent, you know, true to variety.

How did Mr von Berg respond?...A conversation followed and it was decided that on a declaration I would put that some other varieties were present in this particular blend.

Did you do that?...Yes, I did.

Did you include all the other varieties and their percentages?...No, I did not.

Was anything said by Mr von Berg about how much of the other varieties you were to mention on the declaration with a view to the label integrity program?...No, he did not.

Let us go back a step. Going from memory again, when you filled out this declaration, percentages of other wines that you included, did they go above the 20 per cent?...No, they didn't.

Was there any reason why you kept them under the 20 per cent?...Basically to comply with the relevant purchase order.

Had you had any discussion with Mr von Berg about that issue of how much the percentages of the other should be?...Yes, I did.

What had been said about that?...Could you repeat that?

Did you keep this level of the other wines under 20 per cent of your own initiative or was that something that had been discussed with Mr von Berg? ...No, it was something that was discussed with Mr von Berg.

In this same discussion that we have been talking about?...Yes, in the same discussion.

What had been said about that?...Basically that we were to put a couple of other varieties in the declaration and to show - and have small percentages aligned to these particular varieties.

Who said that?...Mr von Berg.

So you prepared a declaration. Did you just send it off, or did you show it to Mr von Berg?...I filled it out there in front of him.

Did he see what was written on it?...Yes, he did.

Did he approve of it?...Yes, he did.

Did you send it off?...Yes, I did.

What happened then?...I received a call back from Orlando about an hour later. I wasn't available at the time I received the message. I then talked to someone from Orlando the following day and he said that he had received the declaration and that he was under the impression from the sale that the wine was to be 100 per cent 1991 McLaren Vale cabernet sauvignon and he basically said that for them to be able to use this particular wine for what they had bought it to they would need a declaration stating that the wine was 100 per cent McLaren Vale cabernet sauvignon and that in good faith between the two companies that we should send that declaration through.

What happened then?...I discussed the matter with Mr von Berg and basically relayed the contents of my telephone conversation to him and he subsequently instructed me to send them a particular declaration that they were pursuing.

Namely that it was 100 per cent?...Yes, 100 per cent 1991 McLaren Vale cabernet sauvignon.

Did you send that declaration?...I did." (T241-243)

The signed Declaration that was originally sent by Mr Fragos to Orlando Wyndham (Ex.MF85) was dated 17 August 1992 and was in the following terms:-

"1.

We hereby declare that the wine supplied against your Order No. 8792 has been made in accordance with the P4 standards for the National Health and Medical Research Council Food Standards Code (1987).

2.

Under the requirements of the Label Integrity Program contained in Part VIA AWBC Act (1980) as amended, we hereby declare that the wine contains the following varieties %

from the following region(s) %

from the following vintage(s) %

The later Declaration (Ex.MF89), dated 19 August 1992, listed only "100% Cabernet Sauvignon" for the "varieties". Otherwise it was in terms that were identical to those contained in Ex.MF85. Support for Mr Fragos's evidence about Mr von Berg's involvement in this transaction comes from Ex.MF90, a facsimile transmission from Mr Ivan Limb of Orlando Wyndham dated 17 August 1992. It had attached to it the form of the first declaration (with appropriate blank spaces for Mr Fragos to insert details of varieties, region and vintage). Endorsed on the transmission was Mr von Berg's note: "Michael, Have you completed this?"

Having accepted Mr Fragos on this subject and aided by a selective use of the contents of Ex.MF107 I am satisfied beyond reasonable doubt that the wine that was supplied to Orlando Wyndham was not 100% 1991 Cabernet Sauvignon. I am satisfied that Mr von Berg knew this. The presence of Mr von Berg's initials on Ex.D47 is further evidence that he was aware that a blended wine was to be supplied in fulfilment of this order. Exhibit D47 was a document that was compiled by and signed by Mr Fragos. It was submitted to the Marketing Group and it purported to disclose details of the wines that were "owned" by the Group that were intended for inclusion in the sale to Orlando Wyndham. It did not name the intended purchaser nor did it name the proposed component wines that were not owned by the Group, but it listed each of the Group's wine by vintage, variety, volume and a so-called "offer price".

When the contents of Ex.D47 are compared with the contents of Ex.MF107 there are discrepancies in the volumes of three of the wines but four wines are exact in all respects. The additional two wines in Ex.MF107 were the first entry, Vinovations's 20000 litres of 1992 Cabernet Sauvignon and the fourth entry, 1759 litres of 1991 Cabernet Sauvignon; it was recorded that this wine was owned by the company. I have no doubt that Ex.D47 was intended to relate to the Orlando Wyndham transaction and its contents disclosed that it was referrable to a blended wine. Mr von Berg said in his evidence-in-chief that he only received Ex.D47 after the sale but in cross-examination he accepted that he received it at about the time of the discussions between the company and the Marketing Group concerning the price that the Group wanted for its wine (T1192). Exhibit D47 is dated 5 August 1992; it preceded the deliveries to Orlando Wyndham which occurred on 17 and 18 August.

The circumstances relating to Mr Curtis and his alleged involvement in this transaction are quite different. There was no evidence that would suggest that he had any knowledge of or that he had any part to play in the giving of either of the two Statutory Declarations, Exs.MF85 and MF89. On the other hand, according to the evidence of Mr Fragos (all of which was denied by Mr Curtis) Mr Curtis was fully cognisant of the Orlando Wyndham transaction and actively participated with Mr Fragos in the creation of blends of the wine that was to be used in the transaction. In the circumstances of this case, I cannot find beyond reasonable doubt that Mr Curtis procured Mr Fragos to submit either of the statutory declarations to Orlando Wyndham. That translates into a finding that the evidence is insufficient to hold that Mr Curtis procured the company to falsely represent that the offered wine was 100% 1991 Cabernet Sauvignon. But I do not think that the matter ends there.

I have found that Mr Curtis knew that Orlando Wyndham had ordered 1991 Cabernet Sauvignon and I have found that Mr Curtis knew that Mr Fragos was intending to add the Vinovation wine into the blend once a firm order had been received. My acceptance of Mr Fragos's evidence, my rejection of Mr Curtis' denials and my assessment of all other relevant evidence has led me to conclude that Mr Curtis was involved in the compilation of the second and third blends. I find that he knew that 20,000 litres of Vinovation's 1992 Cabernet Sauvignon was included in the wine that was dispatched to Orlando Wyndham as a 1991 Cabernet Sauvignon. No matter what other wines made up the blend, it could not be called a 1991 vintage because the 1992 Vinovation wine accounted for about 10% of the blend.

I have earlier said that the proven existence of errors in the company's records does not mean that they and their contents are to be totally ignored. Some information can be relied on. For example, I am prepared to accept that the Sales Record (Ex.MF107) for the Orlando Wyndham transaction is evidence of an ultimate intended payment of about $27,127 to Vinovation. That calculation is derived from information extracted from the Sales Record. Despite all the errors that are now apparent in the company's records, it is hardly likely that the company would be paying out to a third party moneys of that magnitude if that third party was not entitled to them.

Based on the existence of the second statutory declaration, Ex.MF89, I am satisfied that the Crown has proved beyond reasonable doubt that the company falsely represented to Orlando Wyndham that it was supplying 100% 1991 Cabernet Sauvignon. That representation was false in two respects. First, the wine that was supplied was a blend and could not therefore be described as 100% 1991 Cabernet Sauvignon; secondly, the presence of the Vinovation wine meant that the wine could not be described as a 1991 Vintage. I am further satisfied that Mr von Berg knew about the two statutory declarations; he knew therefore and was actively involved in the company, though Mr Fragos, falsely representing to Orlando Wyndham that the wine that would be supplied by the company would be 100% 1991 Cabernet Sauvignon. That knowledge together with proof of the essential ingredients of the principal offence is sufficient to warrant a finding against Mr von Berg that he is "guilty" as charged.

The conduct of Mr Curtis must be separately assessed. There is an obligation on the prosecution to state clearly the offence with which a defendant is charged and the material facts that are relied upon as constituting the offence: c.f the remarks of Bunbury CJ with respect to the statutory obligation to give particulars in R v Brett (1961) Tas SR 178 at 185. As Dixon J (as he then was) said in Johnson v Miller (1937) 59 CLR 467 at 489:-

"For a defendant is entitled to be apprised not only of the legal nature of the offence with which he is charged but also of the particular act, matter or thing alleged as the foundation of the charge."

A defendant is entitled to particulars sufficient to identify the particular episode which is the subject matter of the charge and to indicate the nature of the charge: Goodbee v Samuels (1973) 5 SASR 236 at 239 per Mitchell J and the authorities there referred to by her Honour. But a variance between the particulars given and the evidence will not necessarily be fatal to the prosecution's case. As Mitchell J said in Goodbee v Samuels:-

"If there is any variance between the matters alleged in the particulars and the evidence tendered the Special Magistrate should at the time that evidence is tendered consider any prejudice which the defendant may suffer, and should also have regard to such variance in considering his verdict." (p239)

The tenth count against Mr von Berg and Mr Curtis, being the count that dealt with the wine that was sold to Orlando Wyndham, alleged that the two defendants:-

"... did aid, abet, counsel or procure the Vales Wine Co Pty Ltd in falsely representing ... that goods were of a particular composition."

The Particulars of that charge were said to be that the company represented that 198,000 litres of wine (it should have been 195,550) sold to Orlando Wyndham "was 100% 1991 Cabernet Sauvignon wine, when in fact the wine supplied contained:-

(i)

Less than 100% Cabernet Sauvignon

(ii)

Less than the 95% vintage requirement contained within the P4 Standards ...".

Although not expressed in the alternative, the Particulars continued in this manner:-

"By words and conduct the defendants authorised, sanctioned or permitted servants of the Vales to represent that wine sold on behalf of the Vales was of a particular variety and/or vintage notwithstanding that the 80% variety requirement and/or the 95% vintage requirement contained within the P4 Standards ... would not be met."

The failure of the person who drafted the Information and the Particulars to understand the subject is not to be used to disadvantage the prosecution unless prejudice or unfairness to the accused can be perceived. But I have come to the conclusion that no such prejudice or unfairness existed. Each of the defendants knew of the Orlando Wyndham transaction; each knew that a large order for wine had been received and each knew that the fundamental allegation facing him was that he in some way involved himself when the company allegedly falsely represented that the wine was of a particular composition. In other words, the case that each had to meet was that he separately knew that the composition of the wine that was dispatched was different to a requisite extent from the composition that had been represented.

In the case of Mr von Berg the evidence that I have accepted is that he knew from what Mr Fragos had told him and from Exs.MF85 and MF89 that the company was falsely representing that the wine was 100% 1991 Cabernet Sauvignon when in fact that was untrue. In the case of Mr Curtis the evidence that I have accepted is that he knew, at the least, that Orlando Wyndham had ordered 1991 Cabernet Sauvignon. In addition he knew, at the least, the 95% rule had been broken because of the use of the 1992 Vinovation Cabernet Sauvignon, and because of his involvement in the tastings and the second and third blends.

Notwithstanding the errors in the Information I do not consider that they can stand in the way of recording convictions against both Mr von Berg and Mr Curtis on this count.

Both men knew from February 1992, from what Mr Haden had told them, of allegations of blending. Both men had taken on a direct participating role in the management of the affairs of the company upon the resignation of Mr Haden, telling Mr Fragos that he was to refer all sales to one or other of them for approval. They knew that Mr Fragos had in his possession documents that reflected the blending of wines that would not meet the P4 Standards; they inquired of Mr Fragos and from him ascertained that blending throughout the winery was extensive. Both knew of the need to account to the Marketing Group with respect to the proceeds of the sale of the Group's wine. These findings lead to the inference that Mr von Berg and Mr Curtis would have needed to know about the ownership and cost of the wines that the company was offering for sale as part of their decision making process.

This leads me to conclude that both Mr von Berg and Mr Curtis had access to information such as that recorded in the Sales Records and were aware that the company was offering blends for sale as varietals. In fact, I am prepared to go further and accept Mr Fragos' evidence that they instructed him to continue the practise of offering blends for sale as varietals. That finding can be described as a general finding as to the course of conduct in which both men engaged. By adding to that their respective involvements in the Orlando Wyndham transaction (Mr Curtis in the blending exercises and Mr von Berg with respect to the Statutory Declarations and Ex.D47) I am satisfied beyond reasonable doubt that each of them is guilty of the offence as charged. Each of them knew that Mr Fragos had followed his instructions in falsely representing the wine to Orlando Wyndham as a 1991 Cabernet Sauvignon; each of them knew that the company, through the agency of Mr Fragos, in the language of par53(a) of the TPA had, in trade or commerce, in connection with the supply of goods falsely represented that the wine was of a particular composition.

It was not necessary for either Mr von Berg or Mr Curtis to be actually or constructively involved in the making of the false representation to Orlando Wyndham. If they, or either or them, had been so involved, it would have amounted to them or him aiding and abetting. But they are also charged with counselling or procuring. The procuring of the commission of an offence can be, but need not be personal. It can be achieved through the intervention of a third party such as Mr Fragos.

Counsel for the defence submitted the further argument that the eleventh count against the company had not been made out because Orlando Wyndham knew (because of the first declaration) that it was not getting 100% 1991 Cabernet Sauvignon and because there had not been a relevant representation that induced the purchaser to enter into a contract with the company. These arguments are not, in my opinion, available in answer to a charge that there has been a breach of par53(a) of the TPA. The legislation, so far as it relates to the facts of this case, prohibits a corporation (in the circumstances there stated) from falsely representing that goods are of a particular composition. That legislative mandate can be breached, in my opinion, even if the purchaser has knowledge of the breach. There is an outright prohibition against falsely representing that goods are of a particular composition so as to prevent, among other things, a purchaser making use, to its advantage, of the fact that such a representation has been made. There is nothing in par53(a) to suggest that there is to be an element of inducement. In fact a corporation can breach the provision by the mere making of an offer "in connection with the ... possible supply of goods ...".

It was also submitted on behalf of the defence that the second declaration, Ex.MF89, may not have preceded the delivery of the wine to Orlando Wyndham. I do not think, that, in the circumstances of this case, that is a matter upon which the defence can rely. Paragraph 53(a) of the TPA refers to a false representation that is made "in connection with" the supply or possible supply of goods. There is nothing in the legislation that requires the representation to be made before the supply. So long as it is made and it is false and it is made "in connection with" the supply or possible supply of goods it will be sufficient.

30. Conclusion

I found myself unable to accept Mr Fragos as a reliable witness in all matters. There were, however, areas that I have identified where I have accepted his evidence. In those cases there were particular reasons for doing so and I have stated those reasons. But his evidence was not sufficiently cogent to satisfy me in respect of any of the counts (other than Count 10 in relation to Mr Curtis) where the gravamen was the alleged failure to comply with the P4 Standards: nor could I rely, with confidence, on the Sales Records when considering those charges. I was satisfied that on each occasion the purchaser obtained a wine that was a mixture of several wines but I can not say with the requisite degree of certainty that one or other of the Standards had been breached save for the presence of the Vinovation wine. Counts 2, 3, 6 and 11 against the company were different. In each case it was represented that the product was 100% of a particular variety. In each case I found that I could rely on Mr Fragos' evidence and I gained support from the Sales Records that the purchaser was supplied with a blend. I had no need to go further. Being satisfied about that and the other elements of each charge and being satisfied beyond reasonable doubt that Mr von Berg and separately Mr Curtis knew of each essential element in respect of the last of the counts against them, I am satisfied that convictions should be recorded.

31. Orders

As a result of the findings that I have made, Counts 1, 4, 5, 7, 8, 9 and 10 against the company are dismissed. Counts 7, 8 and 9 against Mr von Berg and Mr Curtis are also dismissed. Convictions will be recorded against the company in respect of Counts 2, 3, 6 and 11 and a conviction will be recorded against Mr von Berg and Mr Curtis on Count 10.

I adjourn this matter to a date to be fixed when submissions on penalty and on any consequential matter including costs may be argued. Any party is at liberty to apply on seven day's notice.