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High Court judgments

Every Issue

Cite as: September 2013 87 (9) LIJ, p.62

Corporations law

Financial services – market manipulation – what is an “artificial price”

Procedure – whether case stated raised hypothetical issues

In DPP (Cth) v JM [2013] HCA 30 (27 June 13), s1041A of the Corporations Act 2001 (Cth) creates the offence of engaging in transactions in a financial market that have the effect of creating an “artificial price” for financial products (including shares) in the market. JM was charged of conspiring with his daughter in 2006 to cause her to purchase on the ASX, through one company she controlled, shares in X Ltd at the close of the day’s trading in order to leave the closing price of the shares above the price at which JM’s lenders could make a margin call on his assets. The trial judge in the Victorian Supreme Court stated a case for the Court of Appeal under s30(2) of the Criminal Procedure Act 2009 (Vic). The original case contained questions as to the meaning of the term “artificial price” in the circumstances of the case that were set out referring essentially to what the prosecution contended. The Court of Appeal (Vic) directed the trial judge to reformulate the question to be whether the phrase “artificial price” was used as a legal term or not and if as a legal term whether it referred to the learning of American courts on “cornering” and “squeezing” markets. The Court of Appeal (Vic) answered the question as reformulated as importing the American jurisprudence. The DPP was granted special leave to appeal. In a joint judgment the High Court concluded that questions can be stated before a trial on the basis of the what is alleged and while the process may be contingent on findings of fact it was not hypothetical. The High Court found the original questions were proper and the reformulated one was inappropriate and did not raise an issue that would arise in the trial. The Court referred to the difference between a question of law and a question of fact and how the meaning of everyday words used in a statute is ascertained. The Court reviewed the history of the provisions and concluded the American jurisprudence (Cargill Inc v Harding [1971] USC 443) arose in limited circumstances in trading in finite quantities of physical goods on futures markets and was not applicable to trading of listed securities on the Australian Stock Exchange. The Court concluded that where the price of a security was set by a transaction that had the sole or dominant purpose of creating a particular price for that security the price revealed was an “artificial price”. Question as posed by trial judge answered accordingly.

Criminal law

Sentencing – existence of alternative charge with lesser penalty

In Elias v Q; Issa v Q [2013] HCA 31 (27 June 13), M failed to answer bail in March 2006 at his trial in the Supreme Court of Victoria for drug trafficking contrary to s233B(11)(b) of the Customs Act 1901 (Cth). M went into hiding and then fled to Greece where he was arrested in June 2007. M was sentenced to imprisonment in absentia. E and I gave M support while he was a fugitive in Australia. They were charged with the common law offence of attempting to pervert the course of justice which by virtue of s320 of the Crimes Act 1958 (Vic) carries a penalty of a maximum of 25 years imprisonment. The Commonwealth offence of attempting to pervert the course of justice in s43 of the Crimes Act 1914 (Cth) carries a maximum penalty of five years imprisonment. E and I were each sentenced to imprisonment for eight years. Their appeal to the Victorian Court of Appeal (where five justices sat) was dismissed. In the appeal they argued that the decision of the Court of Appeal in R v Liang (1995) 124 FLR 350 required the sentencing judge to take into account the lesser penalty provided for the Commonwealth offence they could have been charged with. The Victorian Court of Appeal concluded this sentence was inadequate for their offending. Their appeal to the High Court was dismissed; French CJ, Hayne, Kiefel, Bell and Keane JJ jointly. The High Court concluded there was no principle of sentencing that required the fact that an alternative offence with a different penalty that could have been brought be taken into account. The Court observed that the time to dispute the exercise of the prosecutorial discretion as to which charge to proceed with was before the plea was entered. Appeal dismissed.

Criminal law

Whether manslaughter open – decision of High Court in favour of co-accused – whether material difference

In Nguyen v Q [2013] HCA 32 (27 June 2013), N and another (also named Nguyen) and a third person were charged with a murder. All were convicted. N and Nguyen both appealed to the Court of Appeal (Vic) contending the trial judge should have directed the jury that a verdict of manslaughter was open. The Court of Appeal allowed Nguyen’s appeal but dismissed that of N. The prosecution was granted special leave to appeal against Nguyen’s success and Nguyen cross appealed again contending the jury should have been directed that a verdict of manslaughter was open. This argument was accepted by the High Court: R v Nguyen [2010] HCA 38. The appeal by N was allowed on the basis that there was no material difference in his circumstances and those of Nguyen and the like direction should have been given: French CJ, Kiefel, Bell, Gageler, Keane JJ jointly. Appeal allowed. New trial ordered.

THOMAS HURLEY is a Victorian barrister, ph 9225 7034, email The full version of these judgments can be found at


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