Caratti v Commissioner of the Australian Federal Police (No 2)

[2016] FCA 1132

FEDERAL COURT OF AUSTRALIA

Caratti v Commissioner of the Australian Federal Police (No 2)

[2016] FCA 1132

File number:

NSD 86 of 2015

Judge:

WIGNEY J

Date of judgment:

15 September 2016

Catchwords:

ADMINISTRATIVE LAW – application for judicial review pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) and relief under s 39B of the Judiciary Act 1903 (Cth) regarding decisions to issue search warrants under s 3E of the Crimes Act 1914 (Cth)

CRIMINAL LAW – practice and procedure – search warrants – whether information on oath before an issuing officer was sufficient to support the issue of search warrants under s 3E of the Crimes Act 1914 (Cth) – whether there was reasonable grounds for suspecting that there were things at certain premises in respect of which there were reasonable grounds for suspecting that the things would afford evidence as to the commission of the offences to which the search warrants related – where the applicant claimed that the offences were described in terms that were broader than the information before the issuing officer justified – whether the descriptions of the offences in the search warrants were adequate to indicate the authorised area of search and seizure – seizure of electronic equipment and storage devices – where applicant claimed that a paragraph in the search warrants purported to authorise the seizure of a storage device where the device was not itself evidential material and seizure was not authorised under s 3F or s 3L of the Crimes Act – severance – whether an invalid part of a search warrant can and should be severed – lawful execution of search warrants – where applicant claimed that the warrants were executed unreasonably and excessively – where the applicant claimed that executing officers and constables assisting did not understand or misunderstood the offences described in the search warrants – where applicant claimed that officers of the Australian Federal Police placed excessive reliance on officers of the Australian Taxation Office – where applicant claimed that executing officers and constables assisting searched and seized by reference to a document other than the search warrant – where the applicant claimed that electronic equipment were seized in circumstances not authorised by s 3F and s 3L of the Crimes Act – appropriate relief to grant when the Court finds that items seized where not lawfully seized – whether the court retained a discretion not to order the return of unlawfully seized items – relevant considerations in the exercise of the Courts discretion not to order the return of unlawfully seized items.

Legislation:

A New Tax System (Goods and Services Tax) Act 1999 (Cth), ss 11-25, 17-5, 33-5

Administrative Decisions (Judicial Review) Act1977 (Cth)

Crimes Act 1914 (Cth), Pt IAA, ss 3E, 3F, 3L

Criminal Code Act 1995 (Cth), ss 11.1, 134.2(1), 135.1(3)

Judiciary Act 1903 (Cth), s 39B

Proceeds of Crime Act 2002 (Cth)

Taxation Administration Act 1953 (Cth)

Cases cited:

Adler v Gardiner [2002] FCA 1141

Australian Broadcasting Corporation v Cloran (1984) 4 FCR 151

Baker v Campbell (1983) 153 CLR 52

Beneficial Finance Corporation v Commissioner of Australian Federal Police (1991) 31 FCR 523

Cassaniti v Croucher (1997) 37 ATR 269

CC v Rayney (2012) 42 WAR 498

Chong v Schultz [2000] FCA 582

Crowley v Murphy [1981] FCA 26

Different Solutions Pty Ltd v Commissioner, Australian Federal Police [2008] FCA 1686

Dunesky v Elder (1994) 54 FCR 540

Dunesky v The Commonwealth [1996] FCA 624

George v Rockett (1990) 170 CLR 104

Ghani v Jones [1970] 1 QB 693

Grollo v Macauley (1995) 56 FCR 533

Harts Australia Ltd v Commissioner, Australian Federal Police (1997) 75 FCR 145

Harts Australia v Commissioner of Australian Federal Police (2002) 117 FCR 358

Harts v Commissioner of Australian Federal Police [2002] FCAFC 392; (2002) 196 ALR 1

Kennedy v Baker (2004) 135 FCR 520

New South Wales v Corbett (2007) 230 CLR 606

Ozzy Tyre & Tube Pty Ltd v CEO of Customs [2000] FCA 891

Parker v Churchill (1986) 9 FCR 334

Peters v Attorney-General for New South Wales (1988) 16 NSWLR 24

Polley v Johnson [2015] NSWCA 256

Propend Finance Pty Ltd v Commissioner Australian Federal Police (1994) 35 ALD 25

Puglisi v Australian Fisheries Management Authority [1997] FCA 846

Shaaban bin Hussien v Chong Fook Kam [1970] AC 942

TheQueen v Tillett; Ex parte Newton (1969) 14 FLR 101

Williams v Keelty (2001) 111 FCR 175

Wright v Queensland Police Service [2002] 2 Qd R 667

Zhang v Commissioner, Australian Federal Police (2009) 111 ALD 123

Date of hearing:

19 - 23 October 2015, 2 December 2015

Date of last submissions:

1 December 2015

Registry:

New South Wales

Division:

General Division

National Practice Area:

Administrative and Constitutional Law and Human Rights

Category:

Catchwords

Number of paragraphs:

488

Counsel for the Applicant:

Mr P Bruckner with Mr R Johnson

Solicitor for the Applicant:

Wilson & Atkinson

Counsel for the First and Third Respondents:

Ms K Stern SC with Mr D Hume

Solicitor for the First and Third Respondents:

Australian Government Solicitor

Counsel for the Second Respondent:

The second respondent filed a submitting appearance, save as to costs.

ORDERS

NSD 86 of 2015

BETWEEN:

ALLEN CARATTI

Applicant

AND:

COMMISSIONER OF THE AUSTRALIA FEDERAL POLICE

First Respondent

KEVIN TAVENER

Second Respondent

FEDERAL COMMISSIONER OF TAXATION

Third Respondent

JUDGE:	WIGNEY J
DATE OF ORDER:	15 SEPTEMBER 2016

THE COURT ORDERS THAT:

1.Within 14 days the parties should confer in an endeavour to agree on the appropriate orders to give effect to the relevant findings and conclusions in the judgment, including in relation to costs. 

2.In the event that the parties reach agreement in relation to the orders to give effect to the judgment, short minutes of those orders are to be provided to the Associate to Wigney J within 14 days.

3.In the event that the parties are unable to agree in relation to the orders to give effect to the judgment, the parties are within 21 days to each file written submissions in relation to the proposed orders, such written submissions not to exceed 5 pages (excluding the attached proposed orders).  The written submissions should also indicate if a further oral hearing is requested.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

OVERVIEW OF FACTS, ISSUES & CONTENTIONS	[4]
UNCONTROVERSIAL FACTS	[13]
The joint investigation	[15]
The Starbrake allegations	[21]
The Westend allegations	[26]
Whitby Land Company allegations	[33]
The Gucce Holdings allegations	[37]
The search warrants	[43]
The execution of the warrants	[56]
Execution at the Wickham Street premises	[64]
The Duncraig Road premises	[74]
The Cornish Turn premises	[78]
The Osborne Park premises	[80]
The Irvin Street premises	[83]
The Wright Road premises	[85]
Motor vehicles	[87]
The AFP’s undertaking	[88]
GROUNDS OF CHALLENGE AND RELEVANT ISSUES	[89]
THE VALIDITY OF THE WARRANTS – GROUNDS 1A, 1B, AND 1C	[105]
Ground 1B — are the offences to which the warrants related sufficiently described to define the permissible area of the search?	[111]
The Starbrake offences	[122]
The Westend offence	[141]
The Whitby Land Company offence	[147]
The Gucce Holdings Offence	[155]
Conclusion in relation to ground 1B	[161]
Ground 1A - was the information before the issuing officer sufficient to ground the issue of the warrants?	[163]
Were the offences broader than justified by the information?	[169]
Were the dates in the offences wrong?	[182]
Conclusion in relation to ground 1A	[199]
Ground 1C – the “storage medium” paragraph	[200]
Severance	[227]
Conclusion in relation to the validity of the search warrants	[238]
GROUND 2 - WERE THE WARRANTS LAWFULLY EXECUTED?	[250]
Relevant provisions and principles	[267]
Evidence and findings in relation to the execution of the warrants	[278]
Sufficiency of the briefings	[297]
Federal Agents’ understanding of the warrants	[305]
The involvement of tax officers	[313]
The tax officers’ understanding of the warrants	[325]
Mr Irvin’s Search Relevances Document	[335]
Other aspects of the execution	[347]
Burden of proof	[357]
Conclusion in relation to the execution of the warrants	[360]
GROUND 3 – WAS ANY ELECTRONIC EQUIPMENT UNLAWFULLY SEIZED?	[362]
The Compaq and Toshiba laptops	[366]
The portable hard drives seized by Mr Andrews	[389]
The external hardware seized by Mr Khan	[399]
The Seagate and Imation storage devices seized at Wickham Street	[406]
The Strontium storage device	[419]
The TDK storage device	[426]
The Blackberry mobile devices	[428]
Conclusion in relation to seizure of electronic devices	[432]
REMEDIES	[434]
SUMMARY OF FINDINGS AND CONCLUSIONS	[481]
DISPOSITION	[488]

WIGNEY J:

1. This matter concerns a scenario that is all too frequently encountered when search warrants are employed to facilitate the investigation of complex commercial or tax-related criminal offences.  That scenario involves three potentially problematic features.  The first feature is the issue and utilisation of so called “three condition” search warrants which define the object of the search in a broad, non-specific fashion.  The warrants are often lengthy, overly complex and, regrettably, sometimes poorly drafted.  The second feature is that the execution of the warrants is frequently, and unavoidably, carried out by teams of officers, many of whom have had little or no past involvement in the relevant investigation.  The officers accordingly have little or no background knowledge or experience to assist them in the often complex and difficult task of executing the warrants.  That frequently results in the execution of the warrants in a manner which is apt to create the perception, at least, that the officers do not really know what they should be searching for or seizing, and are instead simply seizing anything that looks even remotely like it might be relevant to the investigation.  The third feature is that the execution of the warrants these days almost invariably involves the search and seizure of computer equipment and electronic data storage devices.  That circumstances requires the executing officers, or forensic officers who are assisting them, to navigate the labyrinthine statutory provisions that deal with the search and seizure of such items. 

2. The confluence of these three features often results in a judicial review challenge, by the occupier of the premises that were the subject of the warrants, or persons otherwise affected by the execution of the warrants (usually the target of the criminal investigation), to both the issue and execution of the warrants in question.  Orders are generally sought for the return of the items said to have been unlawfully seized.  Frequently that comprises a vast quantity of material.

3. That is what has occurred in this matter.

   OVERVIEW OF FACTS, ISSUES & CONTENTIONS

4. On 23 January 2015, a member of the Australian Federal Police applied for, and a magistrate issued, search warrants pursuant to s 3E of the Crimes Act 1914 (Cth) in respect of five premises and two motor vehicles located in Western Australia. A further search warrant was applied for and issued in respect of other premises on 4 March 2015. The search warrants were applied for as part of a joint criminal investigation being undertaken by the AFP and the Australian Taxation Office. That investigation focused on the activities of Mr Allen Caratti, Mr Carrati’s de facto partner, Ms Tina Bazzo, and various companies allegedly associated with them. Those companies included Starbrake Pty Ltd, Whitby Land Company Pty Ltd, Westend Asset Pty Ltd, Mammoth Nominees Pty Ltd, Mammoth Investments Pty Ltd, Forest Hope Pty Ltd and Gucce Holdings Pty Ltd. The premises and motor vehicles covered by the search warrants included residential premises linked to Mr Caratti, business premises associated with the relevant companies, and premises associated with lawyers and advisers who had apparently been retained by Mr Caratti to provide advice in relation to the transactions the subject of the investigation.

5. The search warrants issued on 23 January 2015 were executed by members of the AFP (or “Federal Agents” as they apparently like to be called), assisted by employees of the ATO (or “tax officers” as they tend to be called), on various days between 28 and 30 January 2015.  The 4 March 2015 search warrant was executed on 5 March 2015.  The Federal Agents who executed the warrants seized a very large number of documents and other items, mainly computers and electronic storage devices, that they believed fell within the terms of the warrants.

6. Mr Caratti promptly commenced this proceeding against the Commissioner of the AFP, the magistrate who issued the warrants, the Commissioner of Taxation, a number of individual Federal Agents and a tax officer.  He challenged both the validity of the search warrants and the lawfulness of the actions of the Federal Agents and tax officers pursuant to (or purportedly pursuant to) the warrants.  The relief sought by Mr Caratti, pursuant to both the Administrative Decisions (Judicial Review) Act 1977 (Cth) and s 39B of the Judiciary Act 1903 (Cth), included various declarations as well as orders quashing the decisions to issue the search warrants. It would be fair to say, however, that the principal relief sought by Mr Caratti was the return of the items seized under the warrants.

7. The proceedings were defended by the Commissioner of the AFP.  The magistrate who issued the search warrants filed a submitting appearance.  The claims against the individual officers were dropped.  Mr Caratti ultimately did not press any claims for relief against the Commissioner of Taxation.

8. While Mr Carrati’s claims have at times lacked clarity and have undergone a somewhat dramatic metamorphosis over time (including during the hearing), they ultimately raised four broad categories of issues. 

9. First, were the search warrants lawfully issued? Was the information before the issuing officer (the magistrate) capable of establishing the criteria or conditions for the issue of a search warrant in s 3E of the Crimes Act? Were there defects on the face of the warrants that meant that the warrants did not properly define the scope of the authorised search and seizure? Mr Caratti’s main arguments concerning the validity of the warrants related to, or arose from, what he contended were defective or deficient descriptions of the offences to which the warrants related.

10. Second, did the Federal Agents who executed the warrants, and the tax officers who assisted them, engage in conduct that was not authorised by the warrants or the relevant provisions of the Crimes Act? In particular, did they intentionally or unintentionally search for or seize items that they were not authorised to seize under the warrants? Did they otherwise act unreasonably, excessively or improperly? Mr Caratti’s basic contentions were that the executing officers and the officers assisting them did not understand (and indeed could not understand) the warrant conditions, in particular the descriptions of the offences in the third condition of the warrants, and did not seize items by reference to the warrants. Rather, they acted instead on the basis of instructions (written and oral) provided by certain tax officers which, in Mr Caratti’s submission, were based on a flawed understanding of the warrant conditions.

11. Third, were certain computers and other items of electronic equipment lawfully seized pursuant to the warrants and the specific provisions in the Crimes Act that deal with the search and seizure of such items? In particular, did the executing officers properly turn their minds to whether only the data on the equipment, as opposed to the equipment itself, fell within the terms of the warrants? Were the circumstances such that the executing officers should have copied the data on the equipment, as they were authorised to do under the relevant statutory provisions, rather than seize the equipment?

12. Fourth, if any of these questions are answered in the affirmative, with the result that some or all of the items seized under the warrants were not lawfully seized, what is the appropriate remedy?  In particular, should the Commissioner of the AFP be ordered to return all unlawfully seized items to Mr Caratti?  Does the Court retain the discretion to refrain from ordering the return of items found to have been unlawfully seized under a search warrant?

    UNCONTROVERSIAL FACTS

13. The parties read a large number of affidavits, some of them very lengthy.  They also tendered an equally large number of documentary exhibits.  Most of the evidence concerned the actions of the Federal Agents and tax officers before and during the execution of the warrants.  Many, if not most, of the deponents of affidavits were cross-examined, generally to little effect. At the end of the day, most of the evidence, and most of the cross-examination, was of little, if any, moment in resolving the key issues.

14. Following is a brief summary of the material facts established by evidence which was either uncontroversial or not substantially challenged.  The contentious facts will be considered later in the context of the grounds of Mr Caratti’s challenge to the execution of the warrants and the seizure of specific items.

    The joint investigation

15. In May 2014, the AFP and the ATO entered into an agreement, called a “Joint Agency Agreement”, to conduct a joint investigation into “suspected non-declaration of income, the deception of the ATO in order to refrain or limit the taxation paid by the CARATTI Group and the deception of the ATO in order to dishonestly obtain tax refunds”.  The joint investigation was to be called “Operation Caballus” (curiously, the Latin expression for “horse”).

16. The agreement provided the following background to the investigation. 

    In 2008, Project CABALLUS was formed by the ATO to identify risks associated with the principal individuals of the CARATTI Group, primarily Allen CARATTI, born 24 February 1956 (CARATTI) and his de facto partner Tina BAZZO (BAZZO), born 24 February 1966.  The CARATTI Group has a history of non-compliance with the ATO dating back to the 1970’s and despite the continued scrutiny of the ATO and repeated audits they continue to operate in a highly non-complaint manner. 

    Operation CABALLUS will investigate the CARATTI group’s involvement in false or misleading lodgement of business income tax returns and business activity statements, the non-declaration of income, the provision of forged documents, the deception of the ATO in order to refrain or limit the taxation paid by their companies and the deception of the ATO in order to dishonestly obtain refunds from the ATO.

    It is estimated that the value of the alleged fraudulent activity is greater than $15 million.

17. The “mission” of Operation Caballus was said to include the investigation and prosecution of offences alleged to have been committed by members of the so-called “Caratti Group”, including Mr Caratti, Ms Bazzo and companies allegedly associated with them. Those offences were said to include forgery, contrary to s 145.1 of the Criminal Code Act 1995 (Cth), and fraud upon the ATO, contrary to various provisions in Part 7.3 of the Criminal Code. The AFP’s “primary focus” was to lead the investigation and prosecution of any Criminal Code offences. The ATO’s primary focus was to support the investigation and prosecution of those offences. It was specifically envisaged that the AFP would apply for and execute search warrants with “support” from the ATO. Federal Agent Alexander Nicholson was appointed senior investigating officer of Operation Caballus.

1. It is clear from the evidence of Federal Agent Nicholson, together with various operational documents prepared in the course of the investigation (including the Terms of Reference and Investigation Plan of Operation Caballus), that information concerning the suspected offences by Mr Caratti first emerged in the context of audits conducted by the ATO into the taxation affairs of Mr Caratti and companies allegedly owned, controlled or managed by him or Ms Bazzo.  The ATO had referred that information to the AFP for the investigation of suspected serious criminal offences.  The ATO was to assist the AFP in the investigation and possible prosecution of those offences.  The effect of the largely unchallenged evidence of Federal Agent Nicholson was that, while there was a nexus with the ongoing or past ATO audits, the criminal investigation was not intended in any way to assist the ATO in relation to that audit activity. To the extent that the purpose of Operation Caballus included any assistance to the ATO, the assistance was to be provided to the ATO’s criminal investigation arm in respect of possible offences under the Taxation Administration Act 1953 (Cth).

2. The evidence concerning the purpose and respective roles of the AFP and ATO in pursuance of Operation Caballus was initially of some importance. That was because Mr Caratti’s challenge to the issue and execution of the warrants initially included a claim that the AFP applied for the warrants for improper and unlawful purposes. The unlawful purposes were alleged to include the sharing of “financial information” with the ATO so as to assist the ATO in issuing assessments or amended assessments to Mr Carratti, Ms Bazzo or the companies associated with them. It was also contended that any purpose of assisting the ATO to prosecute offences under the Taxation Administration Act would be unlawful. It is, however, unnecessary to consider those contentions or the evidence that was led in relation to them. That is because ultimately Mr Caratti did no pursue any claims involving the allegation of improper or unlawful purpose.

3. It would appear that of the various ATO “referrals” to the AFP, four specific groups of allegations or transactions became the main focus of the joint criminal investigation.  The following summary of the four groups of allegations is based largely on the affidavit sworn in support of the search warrant application.

   The Starbrake allegations

4. The first group of allegations concerned a company called Starbrake Pty Ltd.  At the relevant time Mr Caratti was a director of Starbrake and beneficially owned all of its shares.  In late 2004 Starbrake purchased land at 52 Callaway Street, Wangara, Western Australia.  In July 2008, Starbrake granted a company called Rocla Pty Ltd a lease and exclusive licence to extract sand from the Callaway Street property.  Rocla allegedly paid Starbrake $7,700,000 (inclusive of GST of $700,000) as either a royalty payment, payment for the grant of the licence, or as a prepayment for sand to be extracted from the land.

5. On 17 October 2008 Starbrake lodged a Business Activity Statement (BAS) for the purposes of A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act).  The BAS was referrable to the period 1 July 2008 to 30 September 2008.  Starbrake did not declare, or otherwise bring to account in the BAS, the $700,000 portion of the payment received by it which represented the GST collected in relation to its supply of the licence (or extracted sand) to Rocla.

6. In February 2012 Starbrake lodged its income tax return for the year ending 30 June 2009.  The income declared or disclosed in the return did not include the $7,000,000 payment (excluding GST) received from Rocla.

7. The ATO conducted an audit of Starbrake.  In the course of that audit, the ATO ascertained that Starbrake’s general ledger recorded the $7,700,000 receipt by Starbrake as a loan from Mammoth Nominees Pty Ltd.  Mr Caratti was a director and sectary of Mammoth Nominees.  The registered office of Mammoth Nominees was Mr Caratti’s home address.  The ATO also obtained copies of emails sent to and received by Mr Joseph Catenacci, an accountant or tax agent who appears to have been retained by Starbrake.  Those emails suggested that the accounting classification of the $7,700,000 receipt by Starbrake was changed in about December 2011.  It was originally classified as income, however in December 2011 Mr Catenacci was allegedly instructed to classify the receipt as a loan from Mammoth Nominees. 

8. The allegation being investigated was that Mr Caratti, as sole director of Starbrake, directed the reclassification of the receipt from Rocla so as to obtain a financial benefit.  That financial benefit was said to be the understatement of Starbrake’s income for the year ending 30 June 2009, as well as the non-remittance to the ATO of the GST collected by Starbrake (the GST portion of the payment) in relation to its supply to Rocla.  That remittance should have been included as part of the BAS for the quarter ending 30 September 2008.

   The Westend allegations

9. The second group of allegations concerned a company called Westend Asset Pty Ltd.  The sole director of Westend was Ms Bazzo’s mother, Ms Josephine Bazzo.  Beyond that somewhat indirect connection, there was apparently no evidence to suggest that Mr Caratti had any direct or indirect interest in Westend.  Despite this, it appears that the AFP alleged that Westend was controlled by Mr Caratti.  

10. In 2002, Westend purchased land in Darch, Western Australia, for the purposes of undertaking a residential housing development.  It would appear that the land cost somewhere in the order of $7,600,000.  The residential development became known as the Ashdale Mews Estate development.  The development apparently proceeded and in due course Westend sold the developed parcels of land.  Those sales were said to have occurred between September 2003 and December 2008.

11. The ATO commenced an audit of Westend in 2009.  In the course of that audit it was ascertained that Westend had not reported or declared the land sales as part of its business operations for tax purposes.  It had not declared any before tax profits made from its sales of the developed land. 

12. In the course of the audit, Westend provided the ATO with copies of tax invoices from Mammoth Nominees addressed to Westend for work supposedly carried out in relation to the development.  Those tax invoices totalled $5,400,000.  Presumably the invoices were provided for the purpose of demonstrating that the expenses reflected in the invoices reduced any pre-tax profit made by Westend from the development.

13. During an interview conducted by the ATO in January 2010, Mr Caratti and his tax agent, Mr Hendricus Schokker, told the ATO that the development work reflected in the invoices was in fact carried out by a company called Mammoth Investments Pty Ltd, supposedly on behalf of Mammoth Nominees.  Mr Caratti and various members of his family were directors of Mammoth Investments.

14. The allegation being investigated as part of operation Caballus was that the invoices totalling $5,400,000 were false.  An analysis conducted by the ATO from financial records and other information revealed that the cost of any work carried out by Mammoth Investments totalled just over $2,000,000; that Westend never paid Mammoth Investments (or Mammoth Nominees) $5,400,000 in respect of any works, but that the invoices were nevertheless treated as a loan expense; and that the invoices were created in June 2009, after the ATO’s audit had commenced.  Mr Caratti’s brother, Mr John Caratti, told the ATO in the course of an interview that the invoices were false and were created by Mr Caratti. 

15. It was alleged, in short, that Mr Caratti created the false invoices to inflate Westend’s expenses in relation to the development and therefore reduce any tax liability in respect of profits earned by Westend from the development.

    Whitby Land Company allegations

16. The third group of allegations concerned a company called Whitby Land Company Pty Ltd.  Mr Caratti was a director of Whitby Land Company. 

17. In January 2008, Whitby Land Company acquired land at 293 Nicholson Road, Forrestdale, Western Australia.  It would appear that Whitby Land Company subdivided and developed the Nicholson Road land into residential lots.  The lots were subsequently sold for a total amount of about $24,000,000.  Those sales appear to have occurred during 2011 and 2012. 

18. Despite its involvement in the enterprise responsible for the development and sale of the Nicholson Road land, Whitby Land Company was never registered under the GST Act. It follows that it never reported or remitted any GST payable and collected by it in respect of its supply of the developed lots. The ATO assessed Whitby Land Company’s GST liability as being in the order of $1.5 million.

19. The allegation being investigated was that Mr Caratti, as a director of Whitby Land Company, deliberately failed to register Whitby Land Company for GST and deliberately failed to remit the GST portion of the consideration it received from the land sales. 

    The Gucce Holdings allegations

20. The fourth group of allegations concerned two companies:  Gucce Holdings Pty Ltd and Forest Hope Pty Ltd.  Ms Bazzo was a director of both companies.  Mr Caratti had been a director of Gucce Holdings, though at a time well before the events the subject of the relevant allegations.  He was a director of Forest Hope up to a time just before the most significant events the subject of the investigation.

21. In December 2009, Gucce Holdings and Forrest Hope entered into a joint venture agreement in relation to the subdivision of land in Avery, Western Australia.  Gucce had a 50% interest in that land.

22. Gucce Holdings retained Mammoth Nominees to do civil and earth works in relation to the subdivision.  Mammoth Nominees issued forty invoices to Gucce Holdings and Forest Hope in relation to the works.  The invoices totalled $15,040,672.14, including GST of $1,367,344.  Each of the invoices was signed-off by an independent site supervisor.  Between August 2011 and December 2012, Gucce Holdings paid $14,153,499.33 to Mammoth in respect of the work.

23. In May 2013, the ATO commenced an audit of Gucce Holdings. During the audit it was ascertained that Gucce Holdings had claimed input tax credits under the GST Act in respect of the works carried out by Mammoth Nominees. The input tax credits claimed by Gucce Holdings totalled $2,218,953.22. In simple terms, the amount of the input tax credits to which Gucce Holdings was legitimately entitled to claim equalled the amount of the GST it paid in respect of Mammoth Nominee’s supplies: see s 11-25 and s 17-5 of the GST Act. It appeared that Gucce Holdings had claimed more input tax credits than it was legitimately able to claim.

24. In the course of the audit, Gucce Holdings endeavoured to support its entitlement to claim input tax credits referable to the supplies by Mammoth Nominees by providing detailed information, including invoices, suggesting that Gucce had in fact paid $22,847,181 to Mammoth Nominees for the works.  That was a considerably larger amount than the amount reflected in the 40 invoices signed off by the independent site supervisor.

25. The allegation being investigated was that Mr Caratti and Ms Bazzo colluded to overstate the input tax credits which Gucce was entitled to claim and created false invoices to substantiate that claim. 

    The search warrants

26. In January 2015, Federal Agent Nicholson decided that the criminal investigation of the four groups of allegations would be advanced if search warrants were obtained and executed in respect of premises associated with Mr Caratti, Ms Bazzo, the relevant companies and their advisers.  Those premises were:

    ·44 – 48 Wickham Street, East Perth, being the registered business address of Gucce Holdings and Mammoth Nominees;

    ·2 Duncraig Road, Applecross, Western Australia, being Mr Caratti’s residential premises and the registered office of Whitby Land Company;

    ·7 Cornish Turn, Baldivis, Western Australia, being the residential address of Mr Schokker, Mr Caratti’s accountant or tax adviser;

    ·517 Great Eastern Highway, Redcliffe, Western Australia, being the registered business address of Mammoth Investments;

    ·3/14-16 Irvin Street, Perth, Western Australia, being the officers of a firm of solicitors that acted for Starbrake in relation to the purchase of the Calloway Street property;

    ·Unit 4B/176 Main Street, Osborne Park, Western Australia, being the officers of Mr Catanecci, the accountant or tax agent that provided accounting services for Starbrake; and  

    ·Two motor vehicles apparently associated with Mr Caratti and Ms Bazzo. 

27. Federal Agent Nicholson told the AFP case officer for Operation Caballus, Federal Agent Szolnoki, of the decision to apply for search warrants.  Federal Agent Szolnoki in due course swore an affidavit for the purposes of the application.  That affidavit was sworn on 23 January 2015.  Federal Agent Szolnoki’s evidence was that a draft of the affidavit was provided to Perth Magistrates Court on 22 January 2015.  The magistrate issued and signed search warrants in respect of each of the premises on 27 January 2015.

28. The content of Federal Agent Szolnoki’s affidavit is of some considerable significance.  That is because one of Mr Caratt’s grounds of challenge to the search warrant is that the search permitted by the warrants exceeded what was justified by the material that was before the magistrate.  As will be seen, the main basis for that argument was that the offences specified in the search warrants were, in Mr Caratti’s submission, broader than justified by the information in the affidavit.

29. The search warrants the subject of the application were so-called “three condition” warrants.  A three condition warrant is a warrant drafted in such a way that the “evidential material” to be searched for and seized is defined by way of three conditions, each of which must be met.  The first condition is usually that the evidential material comprises “things” which are items of a particular description, such as a type of document or other item, such as a computer, mobile phone or hard-drive.  The second condition is ordinarily that the “things” relate to particular persons or companies.  The third and perhaps most important condition is that there are reasonable grounds for suspecting that the “things” will afford evidence as to the commission of particular offences specified in the warrant. 

30. In his affidavit, Federal Agent Szolnoki deposed that he suspected “and an issuing officer may be properly satisfied” that evidential material which satisfied three conditions would be at the relevant premises.  The three conditions referred to in the affidavit were the three conditions specified in the warrants that were the subject of the application.  The warrants (including the three conditions) are extracted in full later in these reasons.

31. The affidavit then detailed information concerning each of the four groups of allegations that have just been summarised.  Federal Agent Szolnoki deposed that the information had been obtained by him and other AFP officers in the course of their duties and that he believed it to be true and correct. 

32. After setting out the information relating to the four groups of allegations, Federal Agent Szolnoki deposed as follows: 

    I suspect that the things described above will provide evidence of the following:

    That Allen CARATTI, as sole director of STARBRAKE, reclassified income received by STARBRAKE, as a loan, in order to avoid paying lawful taxation, which resulted in him dishonestly obtaining a financial benefit from a Commonwealth entity, namely the Australian Tax Office.

    That Allen CARATTI and Hank SCHOKKER, through the entity WESTEND, engaged in criminal activity, by falsifying costs incurred by WESTEND, in order to avoid paying lawful taxation, attempting to dishonestly obtain a financial benefit from a Commonwealth entity, namely the Australian Tax Office.

    That Allen CARATTI, as director of WHITBY, deliberately withheld Goods and Service Tax payable to a Commonwealth entity, namely the Australian Tax Office, in order to dishonestly obtain a financial advantage, by failing to meet taxation obligations. 

    That Allen CARATTI and Tina BAZZO through their controlled entities MAMMOTH and GUCCE, formed an agreement to created false invoices, in order to attempt to claim Goods and Services Tax Credits, from a Commonwealth entity, namely the Australian Tax Office, in order to dishonestly obtain a financial benefit. 

33. On 20 February 2015, Federal Agent Nicholson decided that a further search warrant should be applied for in respect of premises at 5 Wright Road, Harrisdale Western Australia.  That task was allocated to Federal Agent van Tooren, who in due course swore an affidavit for the purposes of the application.  That affidavit, which was sworn on 4 March 2015, annexed the affidavit earlier sworn by Federal Agent Szolnoki.  It also contained additional information linking the premises at 5 Wright Road Harrisdale to Mr Caratti, Ms Bazzo and companies associated with them. 

34. Each of the warrants issued by the magistrate was in relevantly the same terms.  There are some differences in the list of persons or companies referred to in the second condition, though those differences ultimately do not bear in any material way on the issues raised by Mr Caratti in relation to either the validity of the warrants or the lawfulness of the search and seizure at particular premises.  It is sufficient to set out, by way of example, the main operative parts of the warrant (omitting the notes concerning legal professional privilege and the statutory definitions of expressions such as “evidential material”) that was issued in relation to Mr Caratti’s residential premises.

    COMMONWEALTH OF AUSTRALIA

    CRIMES ACT 1914: Section 3E

    SEARCH WARRANT FOR PREMISES

    TO: Gary Geza Stephen SZOLNOKI

    a constable within the meaning of the Crimes Act 1914, who is the executing officer in relation to this warrant;

    AND TO any other constable whose name may be written on this warrant in accordance with section 3C(1) of the Crimes Act 1914, in which event that constable shall be the executing officer in relation to this warrant:

    WHEREAS I Kevin M. Tavener, an issuing officer within the meaning of the Crimes Act 1914, am satisfied by information on oath within the meaning of the Crimes Act 1914 that there are reasonable grounds for suspecting that there is) at premises located at:

    2 Duncraig Road, Applecross, Western Australia 6153, further described as a large residential house.

    evidential material, as defined in the Crimes Act 1914, which satisfies ALL of the following THREE conditions, namely:

    FIRST CONDITION

    things which are:

    ŸPersonal or laptop computers and peripheral devices;

    ŸMobile telephones, Subscriber Identity Module (SIM) Cards, computer hard drives and equipment, faxes or any other electronic storage medium;

    ŸIdentification documents; and

    ŸEmails, email addresses, user names and passwords.

    originals or copies of any one or more of the following, including any of them which are stored on a computer, or on a computer storage device, or on any other type of storage medium or storage device:

    ŸBusiness records including general correspondence, invoice books, receipts, purchase orders, confirmation of orders, balance sheets, journals, ledgers, cash books, cash payment books, books of accounts, contracts, agreements, diaries, notes including handwritten notes, facsimile communications, address  books, working papers, price lists, quotations, orders, invoices, commercial invoices, tax invoices, business cards, payment records, purchase records, sales records, sales orders, catalogues, delivery dockets, accounts payable, accounts receivable, minutes, telephone records, desk calendars and blotters, single transaction permissions, continuing permissions, computer files or records, electronic mail records and other records;

    ŸBanking and other financial institution records including bank statements, bank books, deposit books, bank vouchers, deposit and withdrawal slips, cheque books, cheque butts, or other correspondence with financial institutions;

    ŸTaxation records, including documents concerning the preparation and completion of business activity statements and taxation returns;

    ŸNotebooks, diaries, telephone numbers, handwritten notes;

    ŸConveyancing files, including but not limited to contracts of sale, copies of payments, file notes, correspondence with vendor and purchaser, invoices and receipts detailing payments into solicitors trust accounts;

    ŸTrust documents and deeds;

    ŸTrust files; and

    ŸLand title documents.

    SECOND CONDITION

    and which relate to any one or more of the following:

    ŸAllen Bruce CARATTI;

    ŸTina Michelle BAZZO;

    ŸChristina Marcia CARATTI;

    ŸLiang Ll;

    ŸJosephine Lynette BAZZO;

    ŸRocla Pty Ltd;

    ŸMammoth Nominees Pty Ltd ACN 101 717 177;

    ŸMammoth Investments Pty Ltd ACN 008 735 797;

    ŸJoseph Catenacci Pty Ltd ACN 009 025 405;

    ŸJoseph CATENACCI;

    ŸNicholas CHANDLER;

    ŸStuart MACKINNON;

    ŸAndy LIU;

    ŸNancy MUSGRAVE;

    ŸEwing Consulting Engineers Pty Ltd;

    ŸIsaac Meyer ELLISON;

    ŸHenricus (Hank) SCHOKKER;

    ŸBendigo Bank account number: [NUMBER REDACTED];

    ŸBendigo Bank account number: [NUMBER REDACTED] ;

    ŸNational Australia Bank;

    ŸSuncorp Metway Bank;

    ŸBank of Western Australia (Bank West);

    ŸGucce Holdings Pty Ltd ACN 099 191 714;

    ŸWhitby Land Company Pty Ltd ACN 115 233 193;

    ŸWestend Asset Pty Ltd ACN 106 132 790;

    ŸForrest Hope Pty Ltd ACN 122 459 554;

    ŸStarbrake Pty Ltd ACN 107 942 058;

    ŸAshford Taxation;

    ŸClayton Utz Commercial Law Firm;

    ŸHerbert Smith Freehills;

    ŸWilson and Atkinson Law Firm;

    ŸI.M.E Nominees Pty Ltd;

    Ÿ[email protected];

    ŸGucce Group;

    Ÿ[email protected];

    Ÿ[email protected];

    Ÿ[email protected];

    ŸNicholas CHANDLER;

    Ÿ[email protected];

    Ÿ[PHONE NUMBER REDACTED]

    Ÿ[PHONE NUMBER REDACTED];

    ŸLot 3, Diagram 15871, Certificate of Title Volume 1267, Folio 569;

    ŸLot 9029 Broadway, Aveley Western Australia 6069;

    ŸSLS Accounting;

    Ÿ293 Nicholson Road, Forrestdale Western Australia 6112; and

    Ÿ52 Callaway Street, Wangara, Western Australia 6065.

    THIRD CONDITION

    and as to which there are reasonable grounds for suspecting that they will afford evidence as to the commission of the following indictable offence(s) against the laws of the Commonwealth:

    In 2008 at Perth in Western Australia, Allen CARATTI by a deception, in that he reclassified royalty income paid to Starbrake Pty Ltd into a loan from Mammoth Nominees Pty Ltd, dishonestly obtained a financial advantage by not paying income tax, from another person, namely the Australian Taxation Office, which is a Commonwealth entity, contrary to Section 134.2(1) of the Criminal Code 1995 (Cth).

    In 2008 at Perth in Western Australia, Allen CARATTI did fail to pass on Goods and Services Tax collected by Starbrake Pty Ltd to the Australian Taxation Office, with the intention of dishonestly causing a loss to another person, namely Australian Taxation Office, which is a Commonwealth entity, contrary to Section 135.1(3) of the Criminal Code 1995 (Cth).

    In 2008 at Perth in Western Australia, Allen CARATTI by a deception, in that he falsified costs incurred by Westend Asset Ply Ltd, attempted to dishonestly obtain a financial advantage by not paying income tax, from another person, namely the Australian Taxation Office, which is a Commonwealth entity, contrary to Sections 11.1 and 134.2(1) of the Criminal Code 1995 (Cth).

    Between 1 July 2010 and 31 December 2013 at Perth in Western Australia, Allen CARATTI by a deception, in that he caused the Whitby Land Company Pty Ltd to withhold Goods and Services Tax, dishonestly obtained a financial advantage from another person, namely the Australian Taxation Office, which is a Commonwealth entity, contrary to Section 134.2(1) of the Criminal Code 1995 (Cth).

    In December 2011 at Perth in Western Australia, Allen CARATTI and Tina BAZZO, by a deception, in that they falsified costs incurred by Gucce Holdings Pty Ltd, attempted to dishonestly obtain a financial advantage by overstating Goods and Services Tax input credits, from another person, namely the Australian Taxation Office, which is a Commonwealth entity, contrary to Sections 11.1 and 134.2(1) of the Criminal Code 1995 (Cth).

    Together with any storage medium or storage device which contains any of the above things and any manual, instruction, password or other thing which is needed to gain access to or interpret or decode any of the above things.

    I HEREBY issue this warrant which authorises you to enter and search the premises described above.

    AND by virtue of section 3F(1) of the Crimes Act 1914 this warrant authorises the executing officer or a constable assisting to do all of the following;

    -enter the premises described above;

    -search for and record fingerprints found at the premises and to take samples of things found at the premises for forensic purposes;

    -search the premises for any evidential material that satisfies ALL of the THREE conditions specified above and to seize any such evidential material that may be found;

    -seize any other thing found at the premises in the course of the search that the executing officer or the constable assisting believes on reasonable grounds to be:

    (i)evidential material in relation to an offence to which the warrant relates;

    (ii)evidential material in relation to another offence that is an indictable offence; or

    (iii)evidential material (within the meaning of the Proceeds of Crime Act 2002) or tainted property (within the meaning of that Act).

    if the executing officer or the constable assisting believes on reasonable grounds that seizure of the thing is necessary to prevent its concealment, loss or destruction or its use in committing an offence; and

    -seize any other thing found at the premises in the course of the search that the executing officer or the constable assisting believes on reasonable grounds to be a seizable item, in that it is a thing that would present a danger to a person or that could be used to assist a person to escape from lawful custody.

    AND THIS WARRANT AUTHORISES the executing officer or a constable assisting to conduct an ordinary search and a frisk search of any person who is at or near the premises when this warrant is executed if the executing officer or the constable suspects on reasonable grounds that the person has in his or her possession evidential material or any seizable item, in that it is a thing that would present a danger to a person or that could be used to assist a person to escape from lawful custody, and to seize any such evidential material or other thing that may be found;]

    Note that, by virtue of section 3ZR of the Crimes Act 1914, an ordinary search or a frisk search of a person under this warrant must, if practicable, be conducted by a person of the same sex as the person being searched.

    AND, by virtue of section 3G of the Crimes Act 1914, in executing this warrant:

    - the executing officer may obtain such assistance as is necessary and reasonable in the circumstances;

    - the executing officer, and any constable assisting in the execution of this warrant who is a police officer, may  use such force against persons or things as is necessary and reasonable in the circumstances; and

    - any person who has been authorised by the executing officer to assist in the execution of this warrant, but who is not a police officer, may use such force against things as is necessary and reasonable in the circumstances;

    AND the executing officer or a constable assisting may exercise such other of the powers available under Division 2 of Part 1AA of that Act as are appropriate in the circumstances of the case;

    AND if you exercise the power under section 3L(4) of the Crimes Act 1914 to secure electronic equipment on the premises, and if you then leave the premises, this warrant authorises a further entry to the premises to allow an expert to operate the equipment, provided that the further entry is made within 24 hours or that period is extended under section 3L(7) of that Act.

    The offences to which this warrant relates are those specified above in the third condition.

    (Personal identification details redacted where indicated)

1. A number of matters may be noted concerning the content of the warrants.  First, the first condition is drafted in extremely broad terms.  It would encompass most electronic devices capable of storing documents or data in electronic form and almost every conceivable type of document.  It would include, for example, any document which could be considered to be a business record, taxation record, notebook, diary, handwritten note or banking record.  The documents and other things that are listed in the first condition are not limited or restricted by reference to any period of time. That is not to say that the first condition is necessarily impermissibly wide or oppressive: cf. Propend Finance Pty Ltd v Commissioner Australian Federal Police (1994) 35 ALD 25 at 31-33. The first condition must be read together with the other two conditions. The point is that, in practical terms, the first condition contains no effective limit on the types of documents or other items that could be searched for or seized pursuant to the warrant.

2. Second, the second condition is also in very broad terms.  It comprises a very long list of not only persons and companies, but also bank accounts, email addresses and telephone numbers.  It is sufficient that the “thing” to be searched for and seized “relate to” any one or more of the persons, companies or other things included in the list.  The words “relate to” in that context are of potentially very wide import:  see Williams v Keelty (2001) 111 FCR 175 at 211-212 [158]. The result is that, like the first condition, the second condition does not significantly define or confine the types of documents or items that can be searched for and seized pursuant to the warrant.

3. Third, given the apparent breadth of the first two conditions, it is really the third condition that does most of the work in terms of properly defining and confining the scope of the search and seizure pursuant to the warrant.  But for the third condition, the warrants would effectively authorise the seizure of just about any document, and just about any electronic device capable of storing files and data, that was likely to be located in the relevant premises. 

4. Federal Agent Nicholson’s evidence was that the offences listed in the third condition accurately represented the allegations being investigated in respect of the conduct of Mr Caratti and Ms Bazzo.  He expressed the view that the descriptions of the offences were sufficiently specific to restrict the search and seizure under the warrants to the matters under investigation.  The main thrust of Mr Caratti’s challenge to the validity of the warrants was that, contrary to Federal Agent Nicholson’s view, the offences described in the third condition were so poorly drafted that they were not capable of properly defining or confining the scope of the search and seizure authorised by the warrants.  In Mr Caratti’s submission, the warrants therefore created no “intelligible search perimeter”, or such perimeter as was created was broader than was justified or warranted by the information that was put before the issuing magistrate.  Mr Caratti also contended that the poor drafting of the offences in the third condition of the warrants contributed to confusion and difficulties encountered by the Federal Agents and tax officers who were involved in the execution of the warrants.

   The execution of the warrants

5. Most of the contentious evidence related to what was allegedly said or done by certain Federal Agents and tax officers in preparation for, or in the course of, the execution of the warrants.  There was, however, no dispute about the basic facts and chronology concerning the execution of the warrants.  Following is a brief summary of some of the basic facts, though it does not purport to be comprehensive.  The affidavits filed by the parties contained excruciating, and in many respects largely unnecessary, detail in relation to the execution of the warrants.  Most of the detail turned out to be largely irrelevant to the issues and contentions ultimately pursued by Mr Caratti.

6. Prior to the execution of the warrants, Federal Agent Nicholson decided that it would be beneficial to have tax officers who had some knowledge of the business and tax affairs of Mr Caratti, Ms Bazzo and their business interests to be present during the execution of the warrants.  Federal Agent Nicholson believed that tax officers with that knowledge would be able to provide assistance to the executing officers in ascertaining what documents were covered by the three conditions in the warrant.  He intended that the tax officers would be present under the direction and control of the executing officers and other Federal Agents who were involved in the execution of the warrants. 

7. While that may have been Federal Agent Nicholson’s intention and belief, Mr Caratti contended that in reality the executing officers and Federal Agents needed to and did defer to the tax officers during the execution of the warrants, at least when it came to deciding whether or not a document could or should be seized.  He contended that it was probable, or there was at least a substantial risk, that the Federal Agents involved in the execution of the warrants simply accepted the advice of the tax officers and did not turn their minds to whether documents fell within the terms of the warrants.  That extensive reliance on the tax officers was said to be one aspect of the excessive and improper execution of the warrants.

8. On 22 January 2015, Federal Agent Nicholson distributed a draft Standard Tactical Plan to Federal Agents who were rostered to participate in the execution of the search warrants.  That document relevantly contained background information concerning Mr Caratti and Ms Bazzo and summarised the four groups of allegations or transactions (the Starbrake, Westend, Whitby Land and Gucce Holdings allegations) in terms similar to, though shorter than, the search warrant affidavit.  It also included details of the “substantive offences” in terms relevantly identical to the terms of the third condition of the warrants.  The draft Standard Tactical Plan was emailed to some tax officers.  It also appears to have been discussed at a meeting between the tax officers who were to assist in the execution of the warrants.  That meeting, which was arranged by Mr Eastaugh of the ATO, was held on 22 January 2015.

9. On 27 January 2015, Federal Agent Nicholson delivered a briefing to the Federal Agents and tax officers who were expected to be involved in the execution of the warrants.  The briefing utilised a “PowerPoint” presentation.  Much of the briefing concerned administrative and logistical arrangements.  There was, however, some attention given to the allegations and suspected offences.  That was no doubt because Federal Agent Nicholson was well aware that many of the Federal Agents and tax officers who were to be involved in the execution of the warrants had no previous knowledge of or involvement in the investigation concerning Mr Caratti and Ms Bazzo.  Federal Agent Nicholson asked a tax officer who had been involved in the ATO audits, Mr Peter Irvin, to provide some “background information” derived from the audit activity to those present at the briefing.  It would appear, however, that the treatment of the alleged offences at the briefing was fairly cursory.  The PowerPoint slides provided the following information concerning the allegations. 

   STARBRAKE: 

   Ÿ A company owned by A. CARATTI

   Ÿ Granted Rocla Pty Ltd (ROCLA) a lease and exclusive licence to carry out extraction of sand on land located at Wangara, WA

   Ÿ ROCLA made payment of $7.7 million to STARBRAKE ($7,000,000 royalty and $700,000 GST)

   Ÿ STARBRAKE reclassified the payment in its books to show a loan from Mammoth Nominees Pty Ltd (MAMMOTH) - A.CARATTI's primary company.

   FORRREST HOPE:

   Ÿ FORREST HOPE is a registered company in Australia; BAZZO is recorded as a co-director.

   Ÿ Part owned by GUCCE P/L which is BAZZO's primary company

   Ÿ FORREST HOPE set up for a land development in Aveley, WA. GUCCE on behalf of FH engaged MAMMOTH to do development works 

   Ÿ GUCCE and MAMMOTH overstated costs to support GUCCE claiming GST input credits

   WESTEND:

   Ÿ WESTEND relates to a property development in Darch, WA (historical 2003)

   Ÿ Legitimate work was completed on the WESTEND development totalling approximately $2,000,000

   Ÿ WESTEND subsequently attempted to claim works for taxation purposes totalling $5,400,000

   WHITBY:

   Ÿ Current land development in Armadale, Perth

   Ÿ At 31 December 2013, total sales identified for WHITBY were valued at $96,279,500

   Ÿ There is an existing GST debt of about $4,600,000

   Ÿ No taxes (GST or income tax) with respect to WHITBY have been paid by A. CARATTI or associated entities.

10. The oral briefing did not appear to add much of significance to the information in the slides.  No witness was able to recount any information of significance in relation to the alleged offences that was imparted during the briefing.

11. There were apparently also “premises-specific” briefings conducted by certain “Team Leaders” prior to the execution of the warrants at some of the premises.  It does not appear, however, that those briefings dealt in any substantive way with the offences in the third condition of the warrants.  In that regard,  the evidence suggested that the team leaders did little more than read out the third condition offences and, perhaps, emphasise that only documents that satisfied the warrant conditions could be seized.

12. Mr Caratti contended that such briefings as were given by Federal Agents and tax officers in relation to the execution of the warrants were insufficient and provided a “distorted” picture of the allegations.  That was said to be another aspect of the excessive and improper execution of the warrants.  The evidence said to support those contentions is addressed later.

    Execution at the Wickham Street premises

13. The warrant in respect of the premises at Wickham Street was executed over three days on 28, 29 and 30 January 2015.  It appears to have been the main warrant and the most complex search.  It certainly took the longest to execute and involved the largest number of people assisting.  Mr Caratti’s case concerning excessive or improper execution mainly focused on events that occurred during the execution of the warrant at the Wickham Street premises.

14. The search warrant in respect of the Wickham Street premises was “signed-over” to Federal Agent Niranjan Jirasinha: which meant that Federal Agent Szolnoki, who was initially named as the executing officer in that warrant, wrote Federal Agent Jirasinha’s name on the warrant as the executing officer. That process is permitted, or at least envisaged by, the definition of “executing officer” in s 3C of the Crimes Act.

15. More than 25 Federal Agents were involved at various times in the execution of the warrant at the Wickham Street premises.  Those that featured in the evidence included Federal Agents Wealands, Johnson, Joss, Fullerton, Rae, Leigh, Pluss and Mills.  Two employees of the AFP who specialised in computer forensics, Mr Keith Fell and Ms Casey Scott, assisted in respect of the search of computers and computer equipment and the copying of computer data. 

16. A large number of tax officers also assisted in some way with the execution of the Wickham Street warrant. Despite some initial suggestions to the contrary, it ultimately appeared to be accepted by Mr Caratti that the tax officers were authorised to assist in executing the warrant and were therefore “constables assisting” for the purposes of Part IAA of the Crimes Act: see the definition of “constable assisting” in s 3C of the Crimes Act. It would appear that upwards of 30 tax officers were involved in assisting in the execution of the Wickham Street premises. The main tax officers who featured in the evidence included Mr Irvin, Ms Amanda Milner, Mr Michael Crawshaw, Ms Melissa Randhas, Mr Michael Dunstan, Ms Ingrid Simon and Mr Dave Koopu. Up to 8 employees of the ATO who appeared to specialise in computer forensics also assisted. They included Mr Steve Ilett, Mr Mohammed Khan, Mr Chris Andrews and Mr Octavian Grigore.

17. The involvement of Mr Irvin and, perhaps to a lesser extent, Ms Milner, in the execution of the warrant at the Wickham Street premises was important to Mr Caratti’s case that the warrant was executed improperly.  Mr Caratti contended that Mr Irvin was effectively the “team leader” in relation to the execution of the warrant at the Wickham Street premises.  That was said to follow from the fact that he was apparently the person who possessed the most knowledge about the business and tax affairs of Mr Caratti, Ms Bazzo and their associated companies.  He was a senior auditor at the ATO and plainly had an extensive involvement with and knowledge of the ATO audit of Mr Caratti and companies associated with him.

18. Mr Caratti claimed that Federal Agent Jirasinha and the other constables assisting who were involved in the execution of the warrant at the Wickham Street premises invariably accepted and deferred to the advice of Mr Irvin.  Mr Caratti also contended that Federal Agents and tax officers involved in the execution also accepted, or at least had regard to, advice provided by Ms Milner and, perhaps to a lesser extent, Mr Crawshaw and Ms Ramdhas.  It followed, so Mr Caratti submitted, that Federal Agent Jirasinha and the constables assisting did not (or at least probably did not) turn their minds to the terms of the search warrant when deciding what documents to seize.  Rather, they treated Mr Irvin’s advice (and to a lesser extent the advice of Ms Milner, Mr Crawshaw and Ms Ramdhas) as a direction to seize.  The evidence said to support that contention is addressed later.

19. Importantly (at least for Mr Caratti’s case), the evidence revealed that Mr Irvin created a document that was, according to Mr Irvin, intended to assist searchers by informing them of some of the background to the allegations that were the subject of the warrant.  Curiously, and perhaps regrettably, it appears that he created that document without having read the search warrant, or at least without having read it in any great detail.  Mr Irvin provided the document to Federal Agent Szolnoki who approved it for distribution to those who assisted in the execution of the warrant.  The document was distributed to at least some of the officers who assisted in the execution of the warrant at the Wickham Street premises.  Some reliance appears to have been placed upon it by those who were engaged in the search of those premises.  The extent of that reliance is important.  The evidence concerning that issue is dealt with later in the context of Mr Caratti’s challenge to the execution of the warrants.

20. The content of the so-called “Search Relevances” document prepared by Mr Irvin and distributed to those responsible for the execution of the Wickham Street premises was of some relevance to Mr Caratti’s case that the search and seizure at those premises was excessive and outside the terms of the warrant.  He contended that the document was misleading and confusing and expanded the scope of the search and seizure beyond the terms of the warrant.  It is accordingly necessary to set out the terms of the document in full.

    1.Whitby     (Whitby Land Company Pty Ltd & Whitby Trust)

    Ÿ Subdivision of land known as Lot 22 Nicholson Road, aka 293 Nicholson Road, Jandakot/Canning Vale/Piara Waters.

    Ÿ Previous owner was Maria Jabado.

    Ÿ Purchaser was Whitby Land Company Pty Ltd in Nov-2007; $28M

    Ÿ May be a bare trust deed, indicating land held for benefit or MN

    Ÿ Client also maintained land held on trust for The Whitby Turst

    Ÿ In-house contractor was Mammoth Nominees Pty Ltd. (MN).

    Ÿ Ewing/VDM/BCA involved in contract design & administration

    Ÿ Development finance with Suncorp (>$100M), but loan in name of MN.

    Ÿ Loan drawdowns go to MN.

    Ÿ $150M subdivision, marketed as “Riva Estate”.

    Ÿ Client refers to it as “Riva” or “Lot 22 Piara Waters” or “293 Nicholson”

    Ÿ Development expenses all went to intercompany loan account, as liability owed to MN.

    Sales began in 2011

    2.Westend     (Westend Asset Pty Ltd)

    Ÿ Subdivision of 3 adjacent blocks known as

    Lot 1 Skeit Rd Landsdale,

    Lot 27 Landsdale Rd Darch, &

    Lot 28 Landsdale Rd Darch.

    Ÿ Sole Director was Josephine Bazzo (Tina’s mother), but most decisions made by Allen Caratti & Tina Bazzo

    Ÿ Estate called “Ashdale Mews”, in Darch.

    Ÿ Land acquired in 2003/2004

    Ÿ Initial contractor was Mammoth Investments Pty Ltd (MI), who only removed topsoil.

    Ÿ Outside contractor Works Infrastructure (WI) was engaged to complete the job

    Ÿ Ewing/VDM engaged as supervising engineers; approved progress claims

    Ÿ WI submitted progress claims to Ewing for approval

    Ÿ MI submitted much higher progress claims to Westend Asset (bypassed Ewing)

    Ÿ Hermans & Rossi engged to build footpaths and bin pads

    Ÿ Development finance with Suncorp, in name of Westend Asset

    Ÿ Loan drawdowns go to Mammoth Nominees (MN)

    Ÿ Real development expenses to outsiders, paid by MI

    Ÿ MI development expenses went to Westend intercompany loan account as $7M owed to MI.

    Ÿ Loan drawdowns went to Westend intercompany loan account as $7.1M owed by MN

    Ÿ Planner was Gene Koltasz from RPS Koltasz Smith; involved in tenders and costings for Allen Caratti on this development

    Ÿ Sales began in 2005

    Ÿ After bank loan paid off, settlements disbursed to MN.

    3.Starbrake    (Starbrake Pty Ltd, Starbrake Trust Pty Ltd, I.M.E. Nominees Pty Ltd)

    Ÿ Subject land is Lot 3 Calloway St, Wangara

    Ÿ Starbrake Pty Ltd acquired the land in Dec-2004

    Ÿ Starbrake signed a lease with Rocla Pty Ltd, whereby Rocla were granted exclusive licence to carry out operations on the land, to mine sand.

    Ÿ Rocla agreed to pay a Royalty of $7M exclusive of GST, by 1 July 2008 as part of the lease

    Ÿ Starbrake issued a Tax Invoice to Rocla for $7.7M inclusive of GST, dated 01/07/2008

    Ÿ Rocla paid $7.7M on 01/07/2008

    Ÿ 03/07/2008 Starbrake transferred $7.2M to [M]ammoth Nominees

    Ÿ Starbrake GL treats Royalty payment as Contract Income, in a GL Summary titled “Starbrake Trust Pty Ltd”

    Ÿ Starbrake initially recorded a “distribution” of $6,479,740 to Mammoth Nominees (MN)

    Ÿ After a query from Nick Ashford (employees at tax agent Joseph Catenacci) on 24 Nov-2011, Mr Ashford reclassified $7.7M as a loan from MN.

    Ÿ On 20 Dec-2011, Mr Catenacci e-mailed Andy Liu confirming the tax invoice had now been treated as a loan account entry, so no profit to distribute.

    Ÿ Starbrake lodged 2009 ITR; omitting the Royalty income, and lodged Sep-2008 BAS; omitting the $700,000 GST payable.

    Ÿ On 16 Jan-2012, Allen Caratti wrote to Joseph Catenacci, advising the $7.7M should have been treated as a loan from MN, and the transaction was being adjusted in MN’s accounts, and income tax and GST implications adjusted and paid as necessary

    Ÿ MN’s records did not disclose any loan made to Starbrake, and we saw no evidence of any “adjustments” in MN’s accounts

    Ÿ Starbrake Pty Ltd has since changed its name to I.M.E. Nominees Pty Ltd

    Ÿ Isaac Meyer Ellison (IME) has now replaced Allen Caratti as the sole Director

    4.        Forest Hope  Gucce Holdings Pty Ltd (“Gucce”)/ Forest Hope Joint Venture (“FHJV”)

    Ÿ Development known as ‘Aveley Green’ in Aveley (near Ellenbrook) – 4 stage development

    Ÿ Master lot acquired was Lot 9029 The Broadway (Deposited plan 61233)

    -also known as ‘Super Lot 1’.

    Ÿ Master lot acquired by Forest Hope Pty Ltd to be held by the FHJV.

    Ÿ JV participants include Gucce Holdings Trust (Gucce is trustee).

    Other JV’s include Parto Trust, Farah Investment Trust with links to individual Pourzand

    Ÿ Gucce directed by Ms Tina BAZZO

    Ÿ FHJV engaged Gucce to develop the land.

    Ÿ Gucce subcontracted work to Mammoth Nominees Pty Ltd (“Mammoth”).

    Mammoth director is Mr Allen CARATTI

    Ÿ Westcoast Engineering Pty Ltd (“WCE”) engaged as the site superintendent / certifying engineer.  WCE certified progress claims for all work done per documentation submitted by Mammoth

    Ÿ Gucce involved the work to FHJV equivalent to the WCE certified progress claims

    Ÿ FHJV claimed GST credits – COMPLIANT

    Ÿ Gucce failed to report all sales on BAS – NON-COMPLIANT

    Ÿ Mammoth invoiced Gucce the development work.  The transactions considered to be overstated / excessive compared to WCE certified work.  Some work considered not to have happened on basis it was not certified or FHJV had no awareness.

    Ÿ Gucce inflated GST credit claims using the Mammoth documentation – NON-COMPLIANT

1. As will be seen, Mr Caratti contended that the Search Relevances document impermissibly extended the scope of the warrant and was treated as a de facto or surrogate warrant by seizing officers.

2. A very large number of documents and other items were seized during the execution of the warrant at the Wickham Street premises. The seizures are recorded in a property seizure record that was prepared by Federal Agents Pluss and Fullerton. The property seizure record is over 70 pages long. The items seized included a large number of documents (hard copy and electronic) and many items of computer and electrical equipment. Mr Caratti contended that a number of hard drives and other electronic storage devices that were seized at the Wickham Street premises were not lawfully seized under the warrant or in accordance with the specific provisions in the Crimes Act that deal with the seizure of electronic equipment.

   The Duncraig Road premises

3. The search warrant in respect of the Duncraig Road premises was executed on 28 January 2015.  Federal Agent Szolnoki was the executing officer.  He was apparently assisted by Federals Agents Cook, Evans, Croft and Curavic and the computer forensics experts Mr Fell and Ms Scott.  For reasons that remained unexplained, it would appear that an AFP “canine team” also attended the premises. 

4. The tax officers who assisted included Mr Crawshaw, Mr Dunstan, Ms Ramhdas, Ms Amanda Conway, Ms Shezah Arif, Mr Shane Comerford and Mr Rick Owen. It would also appear that Mr Shaun Ellis and Mr William Elliot, computer forensics officers from the ATO, were also present, though they did not feature at all in the evidence.

5. A number of documents and items of equipment were seized during the execution of the Duncraig Road premises warrant.  They are recorded in a property seizure record that was completed by Federal Agent Curavic and which runs to five pages.

6. Mr Carratti specifically contended that some electronic storage devices and two Blackberry mobile devices were unlawfully seized from the Duncraig Road premises.

   The Cornish Turn premises

7. The warrant in respect of the Cornish Turn premises was signed over by Federal Agent Szolnoki to Federal Agent Nicholas Joss.  It was executed on 28 January 2015.  Federal Agent Joss appears to have been assisted by Federal Agents Lassiter, Baum, Bryce, Jowers, Standing and Bruhn.  A computer forensics officer from the ATO, Mr Octavin Grigore, was apparently involved in or assisted the search.  It would appear that there were other tax officers involved in the execution of this warrant, including Mr Jared Needham, Mr Nicholas Khoo, Mr Phillip Ryan, Mr Anand Gokhani and MrGraeme Walker.  They did not, however, feature at all in the evidence.

8. The items seized during the execution of the warrant in respect of the Cornish Turn premises were recorded in a property seizure record created by Federal Agent Standing. The items seized included a number of folders containing documents and two computers. Mr Caratti contended that the two computers seized during the execution of the warrant were not lawfully seized under the warrant or in accordance with the specific provisions in the Crimes Act that deal with the seizure of electronic equipment.

   The Osborne Park premises

9. The warrant in respect of the Osborne Park premises was signed over by Federal Agent Szolnoki to Federal Agent van Tooren.  It was executed on 28 January 2015.  Federal Agent van Tooren appears to have been assisted by Federal Agents Paynter, Stevens, Powers and Guarino, as well as three forensics officers from the ATO: Mr John Jensen, Mr Greg Thomas and Mr Ben White.

10. A number of items, including documents and computer hard drives, were seized during the execution of the Osborne Park premises warrant.  They are recorded in property seizure records completed by Federal Agent Stevens.

11. There was very little evidence concerning the execution of the Osborne Park premises.

    The Irvin Street premises

12. The warrant in relation to the Irvin Street premises was executed on 29 January 2015.  The warrant was apparently signed over by Federal Agent Szolnoki to Federal Agent van Tooren.  Federal Agent van Tooren, as executing officer, was assisted by Federal Agents Cook, Curavic and Croft.  Two AFP computer forensic specialists, Mr Fell and Ms Scott, assisted in the search of computers and computer equipment and the copying of data during the execution of the warrant.  Two tax officers assisted in the search: Mr Crawshaw and Mr Michael Dunstan.

13. The Irvin Street premises were the offices of a firm of solicitors, Birman & Ride.  It would appear that the solicitors were expecting a visit from the AFP.  Search and seizure pursuant to the warrant appeared to proceed in a cooperative fashion.  The solicitors facilitated access to the “information of interest”, which appeared to be in the form of electronic or computer documents.  The Federal Agents and tax officers considered each document and discussed whether it was inside or outside the terms of the warrant.  Federal Agent van Tooren’s evidence was that he generally accepted the views of the tax officers as to whether the documents were relevant.  The documents that he decided to seize were copied onto a USB device by the solicitors.  The property seizure record in relation to the Irvin Street premises (completed by Federal Agent Curavic) records that three USB devices containing files relating to Starbrake, Whitby Land Company and Mammoth Nominees were seized.

    The Wright Road premises

14. Federal Agent van Tooren was the executing officer in respect of the warrant for the Wright Road premises.  The warrant was executed on 5 March 2015.  Federal Agent van Tooren was assisted by Federal Agents Perrot, Stevens, Sullivan, Mills and Evans and a computer forensics employee, Mr Thomas Waghorn.  There were also a number of tax officers involved in the warrant execution, including Mr Eastaugh, Mr Irvin, Mr Dunstan, Mr Koopu and Mr Rimkus.

15. A number of documents were seized during the execution of the Wright Road premises warrant.  They are recorded in a property seizure record completed by Federal Agent Stevens which runs to 10 pages.

    Motor vehicles

16. There was very little, if any, evidence concerning the execution of the search warrants in respect of the two motor vehicles.  Mr Caratti did not advance any specific complaints or claims concerning the execution of these warrants or any items seized from the two vehicles.

    The AFP’s undertaking

17. On 30 January 2015, the AFP undertook not to inspect any of the material seized under the warrants pending the resolution of proceedings challenging the validity of the search and seizure.  That undertaking was later extended to cover the material seized at the Wright Road premises.

    GROUNDS OF CHALLENGE AND RELEVANT ISSUES

18. Mr Caratti’s challenge to the issue and execution of the warrants was initially wide-ranging.  He initially alleged, for example, that the warrants were unlawful because they were sought for an ulterior purpose.  He alleged that one of the purposes for applying for the warrants was to assist the ATO in relation to their audit and assessment activities relating to Mr Caratti and companies associated with him.  He also appeared to allege that there was an ulterior and improper motive in executing the warrants.  He contended, amongst other things, that the AFP intended to disseminate to the ATO items that were seized and information that was obtained in the course of the execution of the warrants.  He also initially alleged that it was impermissible or unreasonable for the AFP to have tax officers present and assisting during the execution of the warrants. Those contentions were ultimately not pressed by Mr Caratti. 

19. Mr Caratti amended his originating application and points of claim on a number of occasions.  Despite those repeated amendments, the scope and nature of aspects of Mr Caratti’s case continued to shift and remained somewhat unclear right up to the point of final submissions.  In his final submissions, Mr Caratti identified three grounds of challenge to the issue and execution of the warrants, though the first ground in fact comprised three separate grounds (grounds 1A, 1B and 1C).  Grounds 1A and 1B and 1C related to the validity of the search warrants.  Ground 2 to the execution of the warrants generally.  Ground 3 related specifically to the seizure of computer or electronic equipment.

20. Mr Caratti’s final submissions summarised grounds 1A, 1B and 1C in the following terms:

    1A.The search permitted by the warrants exceeded what was justified by the material before the issuing officer; the offences in condition 3 of the warrants (when taken together with other conditions) were broader than justified.

    1B.No intelligible search permitter existed and the warrants did not sufficiently specify the perimeters within which materials were to be searched for and seized or to sufficiently inform the occupiers of the perimeters, because the descriptions of offences were ambiguous, unintelligible or not offences.

    1C.The search permitted by the warrants exceeded what was justified by the material before the issuing officer, in that the three lines after the third condition purported to authorise that, wherever on a “storage medium or storage device” there exists a document or other information which is evidential material falling within the 3 conditions of the warrant, it follows that each such storage medium or storage device is itself evidential material.

21. Grounds 1A and 1B were closely related.  Both effectively hinged on what Mr Caratti submitted was the defective and deficient wording of the offences that comprised the third condition in each of the warrants. 

22. The crux of Mr Caratti’s submission in relation to ground 1A was that the information before the issuing officer (the magistrate) was not capable of satisfying the issuing officer that there were reasonable grounds to suspect that items located at the premises would afford evidence of the commission of the offences in the third condition of the warrant.  In Mr Caratti’s submission, the information before the issuing officer may have provided reasonable grounds for suspecting the commission of certain offences that involved discrete transactions and discreet timing.  The offences in the third condition, however, were drafted so broadly and ambiguously that they did not confine what could be searched for and seized to offences involving those discreet transactions and times.  In short, Mr Caratti submitted that the broad terms of the offences in the third condition of the warrants meant that the warrants were broader in scope than the material before the magistrate justified.  Mr Caratti also contended that the information before the magistrate suggested that the dates or date ranges specified in the alleged offences were incorrect.  The information suggested that if the offences were committed, they were committed on dates different to those particularised in the offences.

23. Mr Caratti’s basic contention in relation to ground 1B was to the effect that the warrants did not disclose the nature of the offences with sufficient clarity and particularity to define the permissible area of the search in terms capable of being understood by the occupier of the premises.  In short, he submitted that the offences as described in the third condition were so unclear and ambiguous that the warrants were unintelligible.  This was a challenge to the validity of the warrants on their face.

24. The critical issue in relation to both grounds 1A and 1B is the wording of the offences in the third condition. Were the offences in the third condition described in terms that were sufficiently clear and unambiguous to satisfy the requirements for the issue of a search warrant under the Crimes Act, both from the perspective of the sufficiency of the information before the issuing officer, and from the perspective of the matters that are required to be stated on the face of a warrant?

25. Ground 1C also appeared to raise issues concerning both the sufficiency of the information before the issuing officer and the validity of the warrants on their face.  Each of the warrants contained the following paragraph after the description of the offences in the third condition of the warrant:

    Together with any storage medium or storage device which contains any of the above things and any manual, instruction, password or other thing which is needed to gain access to or interpret or decode any of the above things.

26. While somewhat unclear, the inclusion of this paragraph appeared to suggest that a storage device, such as a computer, which contained an item that was “evidential material”, as defined in the Crimes Act and having regard to the three conditions in the warrant, was itself evidential material. The upshot of the inclusion of these words was, in Mr Caratti’s submission, that a computer containing an electronic file that might be evidence of any of the offences in the warrant could itself be seized, together with any manual or password needed to operate the computer. That would be the case even if the possibly thousands of other files on the computer were entirely irrelevant or unrelated to the suspected offences, and even if there were no reasonable grounds to suspect that the computer hardware itself would afford evidence of the commission of the offences. Was it open to the issuing officer to be satisfied that such a computer would itself be “evidential material”? Was a warrant that authorised the seizure of a computer in such circumstances contrary to the specific provisions in the Crimes Act dealing with the seizure of electronic equipment?

27. Mr Caratti’s central contention in relation to ground 2, which challenged the lawfulness of the execution of the warrants, was that the warrants were executed unreasonably and excessively because the executing officers and the officers who assisted them acted outside the authority of the warrants: they searched for and seized documents outside the scope of the warrants.  Mr Caratti contended that the officers were in fact confused as to what the warrants authorised and did not understand enough about the entities listed in the warrants, or their affairs or functions, to know the appropriate scope of the search and seizure pursuant to the warrants.  He relied on evidence that he contended indicated that the officers involved in the search interpreted the third condition in the warrants differently; that the briefings given to the officers were deficient; that the Federal Agents relied extensively and excessively on the advice of tax officers (including the advice in Mr Irvin’s “Search Relevances” document) that was not apparently constrained by the terms of the warrants; and that the tax officers themselves misunderstood the scope of the warrants.

28. On one level, the issues raised by this ground may be seen to be essentially evidential and factual: has Mr Caratti discharged his onus of proving that any or all of the executing officers and the officers who assisted them acted unreasonably, excessively or otherwise outside the authority conferred by the warrants?  Mr Caratti relied on some general allegations, such as inadequate briefings, as well as a number of specific allegations concerning the actions of individual officers?  The first question is whether any or all of those allegations has been made out. 

29. There is, however, a more fundamental question.  The relief sought by Mr Caratti included a declaration that “the execution of each of the Search Warrants was beyond power”.  He also sought orders which would have the effect of requiring the AFP to return all seized items.  He contended that such orders would be warranted if the execution of the warrants was beyond power, even if the warrants themselves were valid.  The fundamental issue that arises in this context is whether, if Mr Caratti made out any, or even all, of the factual allegations advanced by him concerning the execution of the warrants, it necessarily followed that the execution of all of the warrants was beyond power such that the return of all items seized was warranted?  Or does Mr Caratti have to demonstrate that such failures that he was able to prove were so fundamental or systematic that they infected the execution of the warrants in their entirety?

30. For example (and hypothetically), if Mr Caratti successfully demonstrated that some (but not all) Federal Agents who assisted in the execution of the Wickham Street premises warrant misunderstood the terms of the warrant, or relied on Mr Irvin or his Search Relevances document instead of the warrant, does it follow that the execution of the Wickham Street warrant in its entirety was beyond power?  That question must be considered in light of the fact that the execution of the Wickham street premises warrant involved many officers and took place over three days.  Can it be inferred from the actions of some officers that the actions of all, or even a substantial number of the other officers involved in the execution of the warrant were also unreasonable or excessive?  If not, why should the actions of only some officers effectively impugn the actions of all the officers? 

31. An even more difficult question is whether, if only the execution of, for example, the Wickham Street warrant was successfully impugned, would it necessarily follow that the execution of warrants other than the Wickham Street warrant were also beyond power?  Would it follow that items seized under the authority of all warrants should be returned?

32. Ground 3 related to the seizure of electronic items under the warrants. Mr Caratti contended that electronic equipment, computer material and digital storage media, such as computers, hard disks and USB devices containing data, were unlawfully seized. He contended that the devices (as opposed to the files or data stored on them) did not comprise evidential material as defined by the three conditions in the warrants and that the specific provisions of the Crimes Act that deal with the seizure of electronic items. Mr Caratti’s case concerning the seizure of electronic equipment was initially put at a general level. He appeared to contend that there was a general misunderstanding or failure to comply with the relevant provisions. Ultimately, however, his contentions were directed to the seizure of specific items.

33. Mr Caratti’s final written and oral submissions addressed only these three grounds (grounds 1A, 1B, 1C, 2 and 3).  To the extent that Mr Caratti’s originating application and points of claim (as amended) advanced grounds or contentions that extended beyond grounds 1A, 1B, 1C, 2 and 3, those grounds or contentions are taken to have been expressly abandoned.

    THE VALIDITY OF THE WARRANTS – GROUNDS 1A, 1B, AND 1C

34. The main provision of the Crimes Act dealing with the issue of search warrants is s 3E. As is common with most modern Commonwealth legislation, however, to make sense of s 3E it is also necessary to go to a number of definitional provisions. Relevantly, ss 3E(1) and (5) of the Crimes Act are in the following terms:

    3E  When search warrants can be issued

    (1)An issuing officer may issue a warrant to search premises if the officer is satisfied, by information on oath or affirmation, that three are reasonable grounds for suspecting that there is, or there will be within the next 72 hours, any evidential material at the premises.

    …

    (5)If an issuing officer issues a warrant, the officer is to state in the warrant:

    (a)the offence to which the warrant relates; and

    (b)a description of the premises to which the warrant relates or the name or description of the person to whom it relates; and

    (c)the kinds of evidential material that are to be searched for under the warrant; and

    (d)the name of the constable who, unless he or she inserts the name of another constable in the warrant, is to be responsible for executing the warrant; and

    (e)the time at which the warrant expires (see subsection (5A)); and

    (f)whether the warrant may be executed at any time or only during particular hours.

1. A number of difficulties would arise if the discretion not to order the return of illegally seized items only arose where there was positive evidence that the items would or may afford evidence of the alleged offence.  One difficulty would be that it may not be possible for the police to put such material before the court in a case, like the present one, where the police have effectively been prevented from inspecting the seized items.  A second difficulty is that such a rigid requirement or restriction would in many cases impose a significant and difficult burden on the Court.  It would effectively require the Court to put itself in the shoes of an executing officer and decide, in relation to each item seized, whether there are reasonable grounds to suspect that the item may afford evidence of the suspected offences.  That may well be a very difficult exercise where the alleged offences are complex and the investigation is at an early stage.  The burden would be particularly onerous in a case where a particularly large volume of material was seized. 

2. It is generally for the issuing officer (in relation to the issue of the warrant) or the police (in relation to the seizure of the item) to determine whether there were reasonable grounds to suspect that there may be evidential material at the relevant premises (in the case of the issue of a warrant) or that the item would afford evidence of the commission of an offence (in the case of the decision to seize an item).  It is not for the court to substitute its own opinion for the opinion of the issuing officer, in relation to the issue of the warrant (Williams v Keelty at 213 [166]) or the executing officer, in relation to the seizure of an item (Adler at 33-34 [39]). The effect of Mr Caratti’s submission, based on Rayney, is that in every case where the seizure of an item has been found to be unlawful, the Court has to effectively stand in the shoes of the executing officer and decide whether there are reasonable grounds to suspect that reach unlawfully seized item would afford evidence of the commission of the offence.  Only if such grounds were found to exist could the Court exercise its discretion not to order the return of the item. 

3. The better view is that the discretion not to order the return of illegally seized items is not necessarily restricted to cases where it has or can be shown that the seized items may afford evidence of the suspected offences.   That would no doubt be a relevant consideration, and in many cases would be a very weighty consideration, to be taken account in the exercise of the discretion.  Much will, however, depend on the particular facts and circumstances of the case.  Where, for example, it is apparent that the executing officer suspected, on apparently reasonable grounds, that the seized items could afford evidence of the commission of the offence, but the seizure was found to be invalid because there was a technical deficiency in the warrant, the genuinely held views of the officer may be sufficient to show that the seized item may be relevant.  It would not, in such circumstances, be necessary for the Court to consider for itself the potential relevance of the seized item.  The position may well be different in a case, like Rayney, where the police seized the items without turning their minds to whether there were reasonable grounds to suspect that the items would afford evidence of the commission of the offence.  In such a case, the absence of any evidence that the seized item may afford evidence of the commission of the offence may well be a very weighty consideration in the exercise of the discretion.  Even in such a case, however, it may well be appropriate for the Court to give the parties a further opportunity to lead evidence or advance arguments on that issue, as was done in both Cassaniti and Wright.

4. Third, Rayney provides no support for Mr Caratti’s contention that the discretion not to order the return of an illegally seized item only arises where there are criminal proceedings on foot.  Nor is that contention supported by either Puglisi or Wright.  In each of those cases criminal proceedings were on foot.  It does not follow that the discretion only arises, or should only be exercised, in such circumstances.

5. There is no basis in principle for limiting the exercise of the discretion to cases where criminal proceedings are already on foot.  That would be a particularly significant limitation, given that many, if not most, search warrants in complex matters are executed before charges are laid.  Often charges cannot be laid until the seized material is considered by the police or the relevant prosecuting authority.  Often that cannot occur until the proceedings challenging seizure of the material are heard and determined.  That is because interlocutory relief is often granted, or undertakings are frequently given, that have the effect of preventing the police from inspecting the seized material until the search warrant proceedings are resolved.   

6. Dunford J in Cassaniti did not consider that the discretion not to order the return of illegally seized items only arose only if criminal proceedings were on foot.  His Honour was, with respect, correct in not limiting the discretion to that circumstance.

7. If criminal proceedings are on foot, that would no doubt be a relevant consideration, perhaps a highly relevant consideration, in deciding whether or not to order the return of unlawfully seized items.  That does not mean, however, as Mr Caratti effectively contended, that the Court’s discretion not to order the return of unlawfully seized items only arises if criminal proceedings have already commenced.

8. It follows that the discretion whether or not to order the return of unlawfully seized items is not as narrow as Mr Caratti would have it. 

9. What then is the nature of the discretion? What are the relevant considerations that should be taken into account in deciding whether unlawfully seized items should be returned?

10. The starting point, perhaps, is the prima facie entitlement of a person not to be unlawfully deprived of his or her goods.  That consideration would support the return of the unlawfully seized goods.  That is not, however, the end of the matter.  Weighed against that consideration is the significant public interest in the administration of, and non-interference with, the investigation and prosecution of criminal offences and the administration of justice.  The result is that a number of additional considerations would ordinarily come into play.

11. The list of relevant considerations is not limited to whether there are criminal proceedings on foot or whether there is evidence that the seized items will afford evidence of those offences.  All of the facts and circumstances surrounding the unlawful seizure must be considered.  Relevant considerations may include:  was the unlawful seizure deliberate, reckless or contumelious, or was it the product of mere technical deficiency or less serious conduct on the part of the seizing officer or agency; what is the nature of the items seized (for example, are they items that the party from whom they were seized requires to conduct their business); is there a risk that, if returned, the seized items might be destroyed, altered or secreted; the nature and seriousness of the alleged offences; whether criminal proceedings are on foot or are imminent, or whether the items need to be reviewed to determine if criminal proceedings can be commenced (as in Cassaniti); and the possible importance and probative value, if any, of the seized material.  That is not intended to be a complete list of potentially relevant considerations.  It is intended to be no more than indication of the types of matters that might be relevant.

12. Ultimately the question is whether, in all of the circumstances, the desirability of allowing the police to retain the illegally seized items outweighs the undesirability of permitting the police to retain the items having regard to the way in which they were obtained.  Or, put in another way, whether the undesirability of a person being unlawfully deprived of their goods is outweighed by the public interest in the police or investigating agencies being permitted to investigate and prosecute serious criminal conduct without undue interference.  In that regard, the discretion is somewhat similar to the discretion to admit unlawfully obtained evidence under s 138 of the Evidence Act.  That is not to suggest that the discretion is the same as the discretion in s 138 of the Evidence Act.  That discretion arises in a different context and at a different stage of the administration of criminal justice.  The point is that the exercise of the discretion, like the exercise of many discretionary powers, ultimately involves an exercise of balancing competing private and public interests. 

13. In the present case, the unlawful seizures appear not to have been deliberate, contumelious or even reckless. They appear to have been the product of an inadequate understanding, or perhaps a misunderstanding, of the circumstances in which an electronic storage device can be seized. Officers appeared to proceed on the basis that if the electronic device contained relevant files, that was sufficient to justify seizure. They did not appear to appreciate, or know about, the terms of s 3L of the Crimes Act. They also did not appear to appreciate the difference between the contents of the device meeting the conditions of the warrant, and the device itself satisfying those conditions.

14. Another relevant consideration is that it appears that the officers responsible for seizing the particular items genuinely formed the view that there were reasonable grounds to suspect that the files or data on the devices would afford evidence of the commission of the offences in the warrant.  The possible exceptions to this are the seizure of the Compaq and Toshiba computers and the TDK storage device, where the evidence tended to suggest that the consideration given to the third condition of the warrants was at best cursory.  In the case of the computers, for example, it appeared to be believed that it was sufficient for files on the computers to refer to one or more of the condition two entities.  Even in that case, however, the officers genuinely believed that the files on the computers were properly seizable under the warrants. 

15. In all the circumstances, it would be reasonable to infer that there are files or data on the devices that may afford evidence of the third condition offences, though it is not possible to say how important the evidence might be.  Criminal proceedings are not on foot against Mr Caratti or Ms Bazzo.  It may be inferred, however, that the AFP may need access to the seized material before considering and possibly taking advice on the question whether there are grounds to commence criminal proceedings.  The alleged offences are serious offences.

16. Another relevant consideration is that the exercise of the discretion in the circumstances of this case does not involve a stark choice between returning or not returning the items.  There is an available alternative course which allows for the retention of evidential material and the return of the electronic equipment that was unlawfully seized.  That alternative course is to permit the AFP to do what they should have done, or considered doing, in the first place:  to copy or take an image of the data or files on the unlawfully seized devices to the extent that that is practicable.  The computers and devices can then be returned.  That course would ensure that any evidential material is retained and preserved, but the devices themselves are returned.

17. On balance, and taking into account all the relevant facts and circumstances surrounding the unlawful seizure of the electronic devices, it would not be appropriate to simply order the return of the unlawfully seized equipment. The more appropriate course would be to permit the Commissioner to further inspect or interrogate the seized electronic items in order to confirm that there is data stored on them that satisfies the three conditions in the warrant. If that is confirmed to be the case, the Commissioner should be permitted to take an image of the device, or copy the data, in accordance with s 3L(1A) of the Crimes Act. The further inspection, and any forensic imaging or copying, should take place within a reasonable time (perhaps 28 days would be appropriate) and should occur in the presence of Mr Caratti’s representatives, if that is what he requests. Once the further inspection and any copying or imaging has taken place, the relevant devices should then be returned. There is no evidence to suggest that the devices themselves have any evidential value.

18. In the event of any dispute arising between the parties as a result of, or in the course of, the further inspection and copying, the parties should have leave to relist the matter for further argument concerning the process.  Such a dispute may arise, for example, if upon further inspection of the devices, Mr Caratti contended that there could be no reasonable basis for a suspicion that any data or file on one or more of the devices fell within the terms of the warrant.

19. The exercise of the court’s discretion in this way is, to a certain extent, consistent with the approach taken by Holmes J in Wright and Dunford J in Cassaniti.  It is also consistent with the view expressed by Burchett J in Parker v Churchill, where his Honour indicated (at 332) that had he found that documents were illegally seized “by reason of matters not involving deliberate or reckless disregard of the law”, he would have permitted inspection of the documents to enable more detailed argument to be advanced upon any claims that particular documents ought be retained.

20. Contrary to Mr Caratti’s apparent contention, the course that has been proposed would not undermine the need to ensure that warrants are lawfully executed.  Mr Caratti has achieved some measure of success.  He will have the electronic devices returned to him.  He will have the right to advance an argument that there could be no reasonable basis for suspecting that any data on the devices falls within the terms of the warrant.  He will also have the benefit of the Court’s findings that the electronic devices were, in the first instance at least, unlawfully seized.  If criminal proceedings are ever commenced against him, he may be able to argue that the data copied from these electronic devices was, at least in the first instance, unlawfully obtained evidence.  He could argue on that basis that the evidence should therefore be excluded pursuant to s 138 of the Evidence Act. 

21. Subject to entertaining further submissions on this point, if necessary, Mr Caratti’s success in relation to this aspect of the matter should also probably be reflected in the costs order or orders made in these proceedings.

22. Finally, and perhaps most significantly, it should be emphasised that the Commissioner and the AFP should not approach this aspect of this proceeding as providing some sort of precedent for what will occur in cases where electronic equipment is seized in circumstances where the requirements in either s 3F or s 3L are not satisfied. The fact that the Court has permitted the devices to be further inspected and copied in the particular circumstances of this case does not mean that the same approach will necessarily be taken in every case. Much will depend on the particular facts and circumstances of the case. The message that the Commissioner and the AFP should take from this matter is that they should pay closer attention to the relevant provisions of the Crimes Act, complex as they may be, because there may in due course come a case where the Court will order the return of unlawfully seized electronic devices where the relevant provisions are either ignored or overlooked.

    SUMMARY OF FINDINGS AND CONCLUSIONS

23. Following is a brief summary of the findings and conclusions relevant to Mr Caratti’s challenge to the issue and execution of the search warrants.

24. The search warrants were validly issued.  The information before the issuing officer was sufficient to support a finding that there were reasonable grounds for suspecting that there was, at the relevant premises, things with respect to which there were reasonable grounds for suspecting that they would afford evidence as to the commission of the offences set out in the third condition of the warrants.  Mr Caratti has not proved otherwise.  The search permitted by the warrants did not exceed what was justified by the material before the issuing officer.  These findings are subject to the finding in relation to the storage medium paragraph.

25. The search warrants were valid on their face. The warrants sufficiently specified the perimeters within which materials were able to be searched for and seized. They were capable of sufficiently informing the occupiers of the relevant premises of the authorised area of search and seizure. While the descriptions of the offences to which the warrants related, in the third condition of the warrants, were poorly drafted and, to a certain extent, lacked clarity and particularity, they were nonetheless sufficient for the purposes of a search warrant under s 3E of the Crimes Act. These findings are also subject to the finding in relation to the storage medium paragraph.

26. The storage medium paragraph in the warrants (the three lines after the third condition) was invalid. It purported to authorise the seizure of electronic devices (as opposed to the data stored on them) that did not comprise evidential material and in circumstances where the condition in s 3L(3)(a) was not satisfied. The storage medium paragraph is, however, able to be severed from the warrants. That paragraph did not form part of an inseparable context and, if the paragraph was severed, the warrants would not operate differently or produce different results from that which was intended. To the extent that any items may have been seized in reliance on this paragraph, the seizure of those items was appropriately dealt with in the context of Mr Caratti’s specific challenge to the seizure of those items.

27. The warrants as a whole were lawfully executed in accordance with their terms. They were not unreasonably or excessively executed by the executing officers or constables assisting.  These findings are subject to the findings concerning the seizure of individual items comprising computers or electronic storage devices or equipment.

28. A number of items of electronic equipment were unlawfully seized. Those items were the Compaq and Toshiba laptops seized at the Cornish Turn premises; the external hard drives seized by Mr Khan at the Wickham Street premises; the Seagate and Imation storage devices seized by Mr Ilett at the Wickham Street premises; and the Strontium and TDK storage devices seized at the Duncraig Road premises. Those items (as opposed to the data stored on them) did not constitute evidential material as specified in the warrants. There were no reasonable grounds for suspecting that the items (as opposed to the data stored on them) would afford evidence of the offences specified in the warrants. No seizing officer formed the view that there were such reasonable grounds. Seizure was therefore not authorised by s 3F(1)(c) of the Act. Nor were the items able to be seized under s 3L(2)(a) because the condition or circumstances in s 3L(3)(a) was not satisfied. There was nothing to suggest that it was not practicable to copy the data on these devices. No seizing officer formed the view that it was impracticable to copy the data.

29. The Court should not, in the exercise of its discretion, order the return of the items of electronic equipment that have been found to have been unlawfully seized until the Commissioner, through his officers, is given an opportunity to further inspect and, if satisfied in terms of s 3L(1A), copy the data pursuant to s 3L(1A)(a) of the Act. The items should then be returned. The further inspection and copying of the data should occur within a reasonable time and (if Mr Caratti so requests) in the presence of Mr Caratti or his representatives. The parties should have leave to have the matter relisted if any dispute arises in relation to the further inspection of the equipment and the copying of the data.

    DISPOSITION

1. The parties should confer in an endeavour to agree on the appropriate orders to give effect to the relevant findings and conclusions in this judgment.  Those orders should include an order or orders in relation to costs.  The parties should bring in short minutes of the proposed orders within 14 days of the publication of this judgment.  In the event that the parties are unable to agree on the appropriate orders, the parties should each file written submissions, not exceeding 5 pages (excluding the attachment) attaching the proposed orders.  The submissions should address why the orders advocated by the party should be made and why the orders proposed by the opposing party are not appropriate.  The written submissions should also indicate if an oral hearing is requested or required to resolve any issue concerning the proposed orders. 

I certify that the preceding four hundred and eighty-eight (488) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wigney.

Associate:

Dated:        15 September 2016