Edwards, John Francis v Von Einem S.M., Ian

[1984] FCA 334

I CATCHWORES

I	hanlstrative Law - iudiclal review - applicatlon for review of
I	declslon of stipendlarp maaistrate in committal proceedinus - charae
of conspiracy to Promote a scheme to defraud the Commonwealth of sales
tax - whether there was sufficient evldence CO place the aopeilant
upon hls trlal - whether mauistrate falled to observe the dlstinction
between avoidance and evasion of tax - whether mauistrate falled to
appreciate the relevance or importance of advices of solicltors and counsel on the question of mens rea - duty of the maqlstrace In commlttal groceedlnus.
Admmlstratlve Decislons (Judrclal Review) Act 1977
Crimes Act 1914. S. 86rl)(b), (c) Sales Tax Assessment Act No. 3 1930, S. 9 Judicia-r-r Act 1903, S . 68
I
Maulstratps (Summar-? Proceedlnus) Act 1375 (Vic), S . 5rj ( l ) (a ) , ( b )
I
J a N FF-LNCIS FDWARDS v. L X I VON EINEM m d R0EQ.T RICHFAD McDONALD
!
No. VG 191 of l934
S W J E Y . DAVIES and LOCXHART ZJ
12 OCTOBER 1984
l

l

LN-THE F'EDEXAL COURT OF AUSTRALIA )

) No. VG 191 of 1984

VICTORSAN REGISTRY	) )
GENERU. DIVISION	)

BEmEEN: JOHN FR3NCIS EDFIllRDS

Appellant

AND :

IAN VON EINEM and

ROBERT RICHARD McDONALD

Respondents

ORDER

JUDGES EWXING O R D E 2 : SWEENEY. DAVIES & LOCKHART JJ .

D A E OF ORDER:	12 XTOBER 1984
biUE?E MFDE:	MELBOURNE
THE COURT ORDERS THAT:

! 1. The sppeal be dismissed.

2. John Francis Edwards Day the costs of Ian Von Einem S.M. and

Robert Richard McDonald of thls appeal.

!

I

IN THE FEDERAL COURT OF AUSTRALIA

\

VICTORIA DISTRICT REGISTRY 1 No. VG 191 of 1984

GZNERAL DIVISION

On appeal from a slngle ]udge of the r'ederal Court	of
Australia

JOHN BETWEEN: FRULUCIS EDWARDS Appellant

IAN VON EIX'EM and

ROBERT RICHARD McDONPLD Respondenrs

Coram: Sweeney, Davles and Lockhart JJ.

Date : 12 October, 1984

?lace: Melbourne

Reasons fo r Judgment

Sweeney, J.

John Francis Edwards (the appellant) made appllcatlon to a

slngle ~ u d g e of chls court for review pursuant to the

i Administratlve Declslons Judlclal Revlew Act 1977 (the Judlclal

Review Act) of the decisions of Xr. I. Von Einem (the maglstrate)

2

made on 29 Aprll 1983 In the course of committal proceedlngs:

that ihere was at the close of tine Crown case

sufficient evldence to place the appellant upon h13

crlal In respecr of each of the tiiree charges of

consplracy against him:

that r'nere was a case to answer by the appellant in

respect of each of those charges;

not to discharge hlm out of custody as to tine

informatlon under enqulry but to caution hlm under

s.56(1)(5) of the Maglsrrates Summary Proceedlngs

Act 1975, Victorla (:he Act) and then to call upon

nlm to plead to those charges.

Two co-defendanrs of the appellant, Ian Grant and Ian Davld

Stafford Collle, made slmllar revlaw applicatlons to hls ilonour.

All three appllcatlons were dlsmlssed. Thls 1s an appeal by th2

appsllznr from hle Honour's ludgment dismlsslng hls appllcation.

The history of the matter was set out by hls Xonour. On 4

October, 1982 an information for an offence had been lald and sworn by Robert Richard McDonald (the second respondent) agalnst the appellant in whlch the second respondent alleged:-

"(a) that the .said John Francls Edwards at Xelbourne, Perth, Sydney and other Places, between 1 July 1979

and l8 March 1982 dld consplre with Stevsn John

Baker, Wllliam Leaver, Peta Joy Flshe?, Colin

Halley Coghlll, Ian Grant, Ian Davld Stafford

Collle and other persons to defraud the

3

Commonwealth c o n t r a r y t o s e c t l o n 8 6 ( l ) ( e ) of t h e

C r l m c s Act 1914;

( D ) that the sa id John F ranc l s Edwards a t Nelbourne,

Perth, Sydney and other places, between 1 J u l y 1979

and 18 March 1982 d id conspl re wi th S teven John

Baker , W i l l l a m L e a v e r , P e t a J o y S i s h e r , C o l l n

H a l l e y C o g h l l l , I a n G r a n r , I a n D a v l d S t a f f o r d

Co l l i e and o the r pe r sons t o p r e v e n t o r d e f e a t t h e

execut lon or snforcement of a l a w of Commonwealth namely sect ion 9 of t h e S a l e s Tax .&ssessmenr A c t

(No. 3) 1930 cont ra ry to s.86(1)(3) of the Crimes

A c t 1914;

-

( c ) E h a t t h e s a l d J o h n F r a n c l s Edwards a t t le lbourne,

P e r t h , Sydney and other places , between 1 Ju ly 1979

and 19 March 1982 dld consplre wlch Steven John

a a k e r , W l l l i a m L e a v e r , P e r a J o y F l s h e r , C o l l n

X a l l e y C o g h l l l , I a n G r a n t , I a n D a v l d S t a f f o r c ?

Co l l i e and o the r pe r sons t o p reven t o r 6 e f e a t Che

e x e c u t i o n e n f o r c e m e n t r of a l a w of t h s

Commonwealth namely s . 9 of t h e S a l e s Tax Assessment

A c t (NO. 7 ) 1930 cont ra ry CO s.a6(1)(~) of t h e

Crlmes A c t . "

On 11 Aprll 1983 proceedings ln res?ecr of these ln fo rma t lons

I began before the magls t ra te , by way of p r e l m l n a r y e x a m m a t l o n

conducted pursuant t o t'ne p rov l s ions of s.36(1) of the Act and

s .58 of t h e J u d i c i a r y A c r 1903. At a11 maCerlal tunes =he

mag l s t r a re was e x e r c i s l n g ~ u r l s d l c t l o n p u r s u a n t CO Ehat Act of t h e

Commonwealth, and lt was common ground between the p a r t l e s t h a c

any dec l s ion made ~a the cour se of the p roceedmgs was a d e c i s l o n

of a n a d m l n x t r a t i v e c h a r a c t e r made u n d e r t h a t enzc'ment (see Lamb

v Moss (1983) 49 A.L .R . 5 3 3 ) .

-

ATI t he conc lus lon of t h e Crown case, l n o r d e r to e x e r c u e h l s

~ u r l s d i c t l o n l n a c c o r d a n c e with l a w pu r suan t t o s . ; l ( l ) ( a ) and (b)

of t h e A c t , t h e m a g i s t r a t e was required:-

I

( a ) rf the v idence w a s n o t s u f f l c l e n t I n his opln lon

4

t o p u t the accused person on h l s t r l a l f o r a n

m d l c t a b l e o f f e n c e - t o o r d e r h i m t o be d i scha rged

o u t o f cus tody as t3 the inforrnat lon then under

enqul ry : o r

(b) r f i n h l s opinlon che vidence w a s s u f f l c l e n t o

pur; the accused upon hls t r i a l f o r =he i n d l c t a b l e

of fence w l c h xhich e was charged or lf, m h13

op in ion t he ev ldence g iven fo r the p r o s e c u t l o n

r a l s e d a s t rong o r p robab le presumption of g u i l c of

the accused person in respect of t inac harge , to

read the charge eo hlrn again and say t o h m t h e

worcis se t fortin i n S . 5 6 ( 1 ) (b) of t h r A c t and c a l l

upon hlm t o p l s a d g u i l t y o r no t guilty as =he cas2

may be.

On 27 Aprl l 1983 and a f t e r tine conclus lon of the ev ldence

! g i v e n f o r t h e p r o s e c u t l o n , t h e a p p e l l a n r s u b m l = t e d t o t h e

maglst ra5e:-

( a ) t h a t the evldence w a s n o t s u f f i c l r n t co p u t hlln

upon t r la l :

( b ) t h a t t h e e v l d e n c e d l d n o t c o n s t i t u t e a prlrna L'acle

I

c a s e a g a l n s t hlm 3r ralse a scrong or probaSle

presurnpclon of g u l l t s u c h a s t o perinlt t h e

m a q l s t r a t e t o p u t them upon t r l a l :

( c ) t h a t he be d l scha rged ou t of custody as t o t h e

I..

informatlon chen under snqulry.

Coghill zade slmllar submisslons, Grant made no submlsslons

and as yet has callsd no evidence. Collie made no submissions and

he has glven evldence. After hearing the submissions on behalf of Coghill and Zdwards the magistrate gave hls reasons on 29 Aprll

1983 which were applicable to all the defendants lncludlng the

appellant.

I

3is Worshlp, having formed the oplnlons that the evldence was

sufficlent to puc the defandants upon thelr trial and thac chars

was a strong or probable presumption of their gullc, dld noc

I

discharge them. Ze proceeded to cauilon them 13 terms of

S. 56 (1) (b) of the Xcc and each of them was called upon to plzad.

Zach pleado-d not gullty to each of the charges.

The proceedlngs before the magistrate related to a scheme

whlch, accordlng to ::?e prosecution, aaker had conceived under

whlch a wholesaler of goods would dlspose of them to conpany A

!

whlch was reglstered B S a wholesaler under the Sales Tax

Assessment Act (Nol) 1930. Company A would quote Its sales tax

exemptlon number and no sales tax would be payable. Company A

would then transfsr one undlvlded half lnterest in the goods to company B and the other such Interest to company C, whlch would then acquire from company B lts half interest In the goods, and

sell the goods to the retaller. Baker undertook to wholesalers

and retallers who agreed to particlpate In the scheme to pay any sales tax assessed to A, B or C provided that the assessment was

upheld upon flnal appeal and provided also that A , B or C dld not

. -

6

pay the arnount assessed. Partlclpatlng wholesalers and rrtallers were also assured Lhat elther Baker or A , B and C would be responslble for any legal costs ln defending the wholesaler or

retailer against acrlons or assessments or collection of sales tax

arislng from transactions Lnvolvlng the scheme.

The scheme was wldely promoted and adopced. -Wholesalers and

retailtrs who used it were not told of che details of the

arrangements between companies A, B and C. The lnvolces ~n

respect of the sales by company	C to the ratailers stated "Prlces
include any sales cax payable."	NO sales tax was ln fact lncluded

in the prlces stated m the Invoices.

Hls Xonour, In the light of the evldence to whlch he nad been

referred, stated that the appellant knew that salts Lax was not to

be paid by any party Involved	in the scheme. The lntsntlon was
that C would not register as	a wholesaler and would make no

returns of sales by it. A former shelf company of llztle, lf any, substance, C was thus building up a growlng potentlal llaolllty for sales tax, whlch ~c did not disclose to the revenue auchorltles and for whlch lt was naking no flnanclal povlslon. The savlngs so effecced made posslble che offer of dlscounts and the payment of remuneratron to the promoters of tine scheme

including the appellant, who is an accountant.

The committal proceedlngs so far as they had proceeded up t3

29 April 1983 requlred the maglstrate to conslder some 272

statements of witnesses, the vlva voce evldence of some 5 0

witnesses, a multitude of exhiblts, and submlssions made on behalf

I

7

of the prosecut ron and each of the defendants .

H i s Honour hea rd the sepa ra t e app l l ca t ions fo r r ev iew by the

a_opellant, Granr and Collie. In rhe course of a h e a r m g b e f o r e

h l m whlch extended over aDout 8 days, of whlch about 4 1 / 2 days

were d e v o t e d t o h e a r m g t h e a p p l i c a t l o n o f the a p p e l l a n t , he was

r e f e r r e d e x t e n s l v e l y t o the vidence vrhlch had been before the

m a g i s t r a t e .

HIS H o n o u r , h a v l n g r e v l e w e d t h e a v l d e n c e a g a l n s t t n e

appel lan t , went on to say : -

“ I t 1s apparent even on t h e s e f a c t s t h a t , l f by law

s a l e s t a x was payabla by C t hen , DY conductlng t h e

t r a n s a c t l o n s l n a manner thar r h e y would n o t come to t h e

n o t i c e o f the S a l e s Tax Depar&dent , a l though there was a

r isk t h a t tiney mlght, sales t a x would not be ?aid. I n

thac e v e n r t h e s c h e n e i n v o l v e d t n e c o m m i s s l o n o f

unlawful conduct t o t h e deCriment o f t h e Commonwealth.

R e ~ u s t l f l c a t i o n f o r c o n d u c t r n g t h e t r a n s a c t i o n s 13

thls way was t h a t t h e r e was genume acceptance of t h e

assurance of Baker that t h e n a t u r e of Che t r a n s a c t l o n s

bekureen A , S and C an8 the wholesaler and re ta l ler

c o n c e r n e d w e r e s u c h a s t o a S s o l v e t h a n a l l from

l l a b i l r t y f o r s a l e s t a x . Such onduct was t h e r e f o r e

l n t r l n s l c a l l y m n o c e n t and wou ld be so regarded by any

reasonable man. B u t tine vLew a l g h t w e l l be t aken thar-

the ‘ p o s s l b l l i t y ’ t h a t t h e r e was an venue of t a x

m m u n l t y l n Che Act which could be sx?lolted by aaker‘ S

sec re t fo rmula would be l i ’ < e l y t o D e questloned by any

hones t man es2eclall.y an accountant, as Sdwards was.

dould an honest man i n v l t e d t o e n t e r l n t o the schema and

p a r t l c l p a t e Ln lt for p rof i t have wanted t o know mora

abou t t he scheme? m a t c o u l d t h e r e b e r n t h e n a t u r e o f

the t r ansac r lons wh lch would absolve C , wno s o l d by

wholesale to a r e c a l l e r , f r o m l l a b i l l r y to pay s a l e s t + x

on h l s s a l e s ? H e might have wanted t o know why, whlla

learned oprn ions were be ing sough t a s t o the l i a b i l l t y

o f who lesa l e r and r e t a i l e r , an op rn ion was not sougnt as

CO the sales t a x L l a a l l t y of A, B and C. What could be

the ‘ m a g x ‘ of t h e n a t u r e of the t r ansac t ions be tween A,

B and C whlch could have the l ega l effect a l l eged? How

could Baker’ S c l a m t o s e c r e c y , e v e n a g a l n s t tinose

I o l n i n g i n the scheme, be accepted wi thout ques t lon?

The d i f f i c u l t y 1s tinat it may well be tinought CO be beyond t h e w r t o f an o rd ina ry p ro fes s lona l man t o

3

contemplate a basis upon whlch the lnterposltlon of

Intermediaries between the wholesaler and retaller would

exempt all the parties from llabllity to sales tax

especially as it must have been clear that the

transaction between C and the retaller was plainly a

sale by a whoesaler to a retaller.

In my view lt is unnecessary to proceed further to come

to a conclusion that in the absence of credibls evldence

from Zdwards as to his real state of nind che maglstrate

could well form the oplnlons whlch	he dld concernlng the
case agalnst Edwards."

Before us, the appellant did not submlt that there was no

evidence upon which the maglstrate could properly have reached the

decisions whlch he challenged. He relled only upon what he sald

were errors of law apparent on the face of hls dorshlp's reasons

for hls aeclsions, and the way In which hls Honour had dealt dlth

these questions. We were referred brlefly to only a small portlon

of the evidence.

It was submitted that the maglstrate erred In t'ne standard he

applled l.? saylng:

"A strong or probable presumpclon of yuilr appears

to be established 5y evldence or clrcumstances thar

polnt to the cmunssion of a crlme and to the

accused persons as the crlmlnals, dnlch

clrcumstances are not completely ex?lalned and

cleared up by the evldence of the accused."

The appellant submlttad that thls standard required n u n

to establish hls Innocence completely even before he wenr

into evldence.

In dealing wlth thls submlsslon hls Honour said:

9

"It appears to me, however, tnar t'ne maglstrats 1s

CO be undrrsLood d s saying that, where the question

whether there 1s a strong or probable presumptlon

of gullt arlses for declslon, an afflrmative answer

may be given where the evldence of the prosecution

or the clrcumstances point to =he commission of a

crlme by chs accused unless the mpllcatlon of the

accused In t'ne crlme arising Z r o m such evldence o r

clrcumscances 1s explained away by evldence of, or

called by, the accused. The word 'complecely' 111

the passage under dlscussion 1s inaptly included. evidence for the accused completely rebutted tha implicatlon of the accused arising from tne evidence of the Crown, but whether ic so weakaned chat impllcation that It could no longer be sald to be sufflclent elt'ner to requirs chat the accused oe

put upon hls trlal or to support the exlstence of 3

strong or probable presanpcion of gullt. Readlncj

=he reasons as a wnols I am not persuaded thac tna

inagistrate dld not so underscand the problem bafora

n1m. "

The aspellant submltted that tha maglstrate dld nor

correctly identify the elements of the offences alleged and

that he incorrectly applltd an ob~ectlve approach to tne

elemenc of dishonesty. It was submltted tnac the maglstrate

cook the vlew that ths fact Lhat the ap3ellant promoted 2

scheme which failed was sufficient to constlture the offences recelve. Several passages of the reasons wera sald co demonszrate thls error.

alleged, ~rrespecrive of whather the appellant belleved -,ne

scheme to ba lawful and not one whlch daprrved the

The magiscrate sald:

"The evldenca ln thls case as it presently stands

shows that each of the defendants agreed to promote

a szheme whereby sales tax would not	be	pald.
Wnether the scheme lnvolved an avoidance	or an

evasion of sales tax is In my view irrelevant. The

questlon is whether the non-payment of sales tax

was unlawful. In my vicw, such non-payment of

salss tax was a clear breach of the Sales Tax

Assessment Acts. It has been correctly conceded by

both defence Counsel who made subrnlsslons to me

that a defendant cannot excuse himself by saylng

tinat owing to hls lgnorance of tine law he dld not

reallse such an act was unlawful."

The appellant submltted that tine magistrate in chls

?assage had falled to appreciate the signlflcance of the

dlstlnction between avoldance and evasion of Lax. I= was

submitted that I f all that was Intended was avoldance of

sales tax then no offence as alleged would be establlshed.

I

In relatlon eo these submlsslons his Xonour sald:

"It is said that rhe passages referred to raveal

th+t the maglstrate took che vl2w that the relevanc

mens rea was establrshed once lt appeared chat the

agreement was to bring about a state of affairs in

which non-paymenc of sales tax was unlawful. In

rhls concaxt emphasls was placed on che sencence -

I

"hether the scheme involved an avordance or an

evaslon of sales cax 1s In my view Irrelevant'.

This sentence rnlghr lndlcace some error in the

rnaglstrate's approach if, as 1 s alleged by the appllcants, It related to the mztter of mens rda.

But on a correct readlng of the reasons It 1 s related solely to the issue of the unlawfulness 0: non-payment of sales tax.

The magistrac? dealt wlth the matter of mens raa In

those passages In Nhlch he drscussed the elsment of

dlshonesty. On a fair reading of tne reasons it 1s

apparenc that the magistrate was well aware and

acceptzd tnat dlshonesty was an esseneial element

ln the offence of conspiracy to defraud th2

Commonwealth.

I consider that the maglstrate	1s to be understood
as indicatlng that dishonesty	on the part of an ,

accused person had to be proved by tine Crown and that that element of dlshonesty would be

establlshed where a ]ury looklng ac the facts

proved, and applylng their own notlons of what 1 s

honest and what 1s not, concluded that the accused could not havc belleved that he was actlny

honestly. If the accused was a person of

sufflclent intelligence and experience to realize

=hac what he was dolng was drshonest according to

I	the standards of right minded people then In the absence of evidence to the contrary dlshonesty on the part of the accused mlght be found to exist.
Se went on to say that In hls view, and applylng
thls test, the element of dlshonesty had been
satlsflad by the evidence before hlm."

Later in hls reasons the magistrate sald that some

attempt had been inade by the defendants to suggest that they

wera entltlad to rely on an opinion of senlor counsel and an

advice from a Perth flrm of sollcltors. HIS Worship said:-

!

"I am not exactly sure how thls argument 1s put,

or, how such rellance would provlde a defence.

Nevertheless I should point out that those persons expressly stated that fney were not advising +S to

L. -ne sales tax liablllty (or by inference the

criminal liablllty) of A, B and C .

I would have thought It was abundantly clear to

each of the defendants who had read the Advlce that

they could not rely on it to provide a defence

wlthout flrsc sa'clsfylng themsalves of the legal

effectlveness of A, B and C."

ic was submltted that the maglstrate's fallura to

I appreclate both the relevance and lrnportance of the opinlons

Illustraced that he had not correctly identifled the elements

of the alleged offences In that he dld noc regard a belief by

the accused in the lawfulness of the schemes as negatlng the

necessary mental elements of the alleged offences.

als Honour rPferred to the fact that the reasonlng of

Yne magistrate was challenged also on the ground that In

discussing the relevance of reliance on the legal oplnions he

12

stated, "I am not exactly sure how this arguinent 1s put, or how such reliance vould provide a defence." H l s Honour

said : -

"This is a racher puzzllng statement because

reliance on legal oplnions would be relevant to the

existence of dishonesty In the mind of the accused.

According to circumstances a learned opinion thar a certain course was lawful could be slgnlficantly material m an assessment of the cradlbllity of a

statement by an accused that he really belleved

that his course of actlon was, according to the

test mentioned above, an honest me.

If the magistrate 1s to be understood to say that in formlng his opinion he considered that the

existence of a relevant legal opinion was of no

signlflcance that would be an error. However, the

magistrate did look at the matter on the basls thac

the opinions mlght be taken Into account on Yne

lssue of dlshonesty. He took the vlew that on the

issue of the accused's bellef that hls conduct was not dishonast because of the contents of relevant lsgal opinrons his scatement to that effect would

have to be examined in the llght of the actual

oplnion glven. In this respect the knowledge and

experlence of the accased In the area of sales tax

liability and business generally, and the

likelihood thar the person might seek further

assurances as to the lawfulness of the actual

conduct to be engaged In under the agreement were

relevant considerations. In the light of the

foregoing I am not satisfied that the maglstrate

mlsdirected hlmself 13 any respect."

For the pur2ose of attractlng ~urlsdlctlon, the declslon

of the maglstrate is characterlsed as being of an

administratlve nature. Ordinarlly, the reasons for such a

declsion should not be looked at over crltically. (see

Commonwealth v Duncan (1982) 44 ALR 249 per ?'rank1 J. at

p.255, per Kally J. at p.261; Tagle v Mlnlster for !

Immigratlon (1983) 46 ALR 379 at p.386; Lennell v Repatriation Commlssion Full Court unreported 3 February 1982). The magistrate's reasons should be consldered in the

13

context of the proceedings before hlm and of the stage which

they had reached. He had consldered a great volume 05

evidence and submisslons. ?le was rullng upon it at a 'clme when he had before h m the possibility that chere would be evidence given by or on behalf of the defendants. In these

clrcumstances lt was natural for him to lmlt what he sald at

rhe close of the Crown case.

I

I am not persuaded that a court of appeal, lacking the

advantage which his Honour had, of a detalled knowledge of the facts, should find any error In his re~ection of the criticisms xhhlch were made of the maglstrate's reasons. In

the lighz of this opinlon, no questlon of discretlon arlses.

I n his notlce of appeal the appellant sought an order that the matter Se remltted to the magistrate with directions

that he proceed to reconsider the evldence before him and

maks the declsion requlred by s.56(1)(0) of the Act

"accordlng to law". If t'ne appellant had been othennse successful, it would have been very dlfficulL for a court lacking a detalled knowledge of the evidence to have set out

an approprlate gulde to be followed by	'ihe magistrate In
reconsldering It.

14

I would dismiss t he appeal, wrth costs .

I c e r t l i y t h a t t h i s a n d t h e

precedmg thxr teen pages ( 1 3 ) a r e a

t r u e c o p y of t h a R e a s o n s f3.c

Judgment herein of t h e i-Ionourable

H r . J u s t l c e Sweeney.

Date: 1 2 October 1984

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2.

(i l l) cor.sp1rIr.g ulth other ?ersons ts srevenc

clefsac che execution or eniorcement of a iaw

of the Commonweaich. nanelp, 5 . 9 of che

Sales Tax Assessment Ace INo.7) 1930 (Cth)

contrary ;o s.86(l)(b) of the L'rnes Zc:

1914 (CC,?).

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of he Faclscrates (Summar-r ?roceed~nusI .%cc 1975 (Viccorla).

ELZC eiscclon has noc ye^ Seen nade.

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thar: t h e assessment 1 s upheld upon flnal appeal,

ana Srovlclnq	thac A , S o r C ao noc ?ay =he anounc
assessed."

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Scwever, L cake a differenc n e w from x a t of :he iearnec

trial Judge wlth respect to a passace of che reasons of the

learned Sclpecdiary .hlapsr;rar:e winch reads :

9.

i n e r e are ocher as2eccs of the rzasons ceilvered sy the

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l ea rnec Stipendiary Magiscrace w h ~ c n also g i ~ e conctm.

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12.

in the circumstances of t h e present case, 1: was necessary

for en2 srosecutlon to esr,ajilsh a conspiracy eo prevent or

aefraud :he operaclon of elther of the ajove seccisns. - L t was

r-herefgre necessary CO escajlish an arrangement vhereby a person

13.

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commlctal. m e reasons glven for 5 : s dclngr so do noc s a ~ e :c

clear eo one wnac were the elements of the crimes he found eo >e

proved. Is ~ h l s a "roper case for c5e Cow-, to Lncerfere?

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In these clrcumscances. I an OF the v ~ e w that che Court

f certlfy that thts and the 14-

3recedmg pages are a true copy of the

reasons for Judgment here in of The Honour-

able Mr. Justice T. 0 fi.+~S

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IN THE FEDERIU; COURT OF AUSTIWLIA )

No. VG 191 of 1384

VICTORIAN REGISTRY

GENERAL DIVISION

BETWEEEI : JOHN FRANCIS E D W D S

Appellant

E: LW VON EINEM and ROBERT RICHARD MCDONALD

Respondents

CORAM: SWEENEY. DAVIES & LOCKHART JJ.

12 OCTOBER 1984

This is another invocation of the Administrati.re Declslons (Judicial) Revlew Act 1977 ("the Judiclal Revlew Act") by a person

charaed with an indictable offence for the purpose of quashmu

I contemDoraneous proceedmus for h15 committal. The path f o r taklna

this course was laid by a Full Court of this Court in La.& v.

(1983) 49 A.L.R. 5 3 3 . But it cannot be emphaslsed too stronqlr that

- L v. M-0-55. althouuh brinuma wlthxn the scope of the Judicial

P e a w Act a very vide canae of declsions. stressed that the

discretion to arant rellef in respect of committal proceedinas should

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I be exercised only in evceptlonal clrcumstances, especrally =here the

I	declsion under revlew was	made in the course of those proceedings (D.
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I	5 4 6 ) .	&	L	v.'M=	IS also authority for the proposition that	thls
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Court's discretion to refuse rellef in proceedings under the Judicial

Review Act may be eserclsed notwithstanding that the statutory

pre-conditions to the ?rant of relief have been satisfied. The arwment before us proceeded on the assumption that Lamb v. Moss was correctly decided and governed the present appeal.

In the committal proceedings from which this case arises the

prosecution alleues that the appellant and others were partles to a

consplracy to defraud the Revenue of larue amounts of sales tax by

means of an elaborate scheme promoted throuuhout Australia and adopted

bp many people durinu the period 1979 to 1982.

On 11 April 1983 the appellant was charged in the

Mauistrates' Court at Melbourne with the followinu three offences:-

(a)	That he, at Melbourne, Perth, Sydney and other places,
between 1 July 1979 and 18 March 1982. consDired wlch
Steven John Baker. William Leaver. Peta Joy Fisher,

Collin Hal1e.J Couhill, Tan Grant. Tan David Stafford Collie and other persons to defraud the Commonwealth

contrary to para. 86( 1) (e) of the Crimes Act 1914 "the
Crimes Act" 1 :
(b)	That he. at the same times and places, conspired wlth
the same people to prevent or defeat the execution o r
enforcement of 5.9 of the Zales Tax Assessment Act
(No. 3 ) 1930 contrary to para. 86(l)(b) of the Crimes
-U: -and

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(C)	That he, at the same times and places. consplred with
the same people to prevent or defeat the execution or
enforcement of 5.9 of the Sales Tax Assessment Act (No.
- 7 ) 1930 contrary to para. 86(11(b) of the Crimes Act.

Similar charaes were lald aualnst other alleaed conspirators

lncludinu Grant and Collie. The informant In each case was the second

respondent who is an officer of the Australian Federal Police. The

proceedings were heard bp the first respondent. a Stipendlarp

Magistrate ("the Magistrate"). and were by way of preliminarzr

exammation conducted pursuant to sub-s.56(1) of the Macristrates'

(Summarv Proceedinus) Act (1975) ("+t&e Summar7 Proceedlnus Act") and

s . 6 8 of the Judlclarv Act 1903 ("the Judiclarv Act").

At the conclusion of the prosecution's case the Maqiscrate

was required by paras.	56(l)(a) and	(b) of the Sg-maarv	Proceedinos
A c t t0:-

"(a1 If t'ne evidence was not suiflcient in his oplnion to put the accused person on his trlal

f o r an Indictable offence - order him to be

discharged out of custody as to the

lnformation then under enquiry; or

(b) If in his opinion the evidence vas sufficient

to out the accused upon his trial f o r the

indictable offence with which he was charued

or if, in his opinion the vidence ui-?en

for the prosecutxon rased a stronu or

probable presumption of crullt of the accused

person in respect of that charge. read the

charqe to him auain and say to him the irords

4 .

set forth in paraqraph 56(l)(b) of the Summary

Proceedinus Act and call upon him to plead qu1t.r or not uuiltp as the case may be."

On 27 April 1983, after the conclusion of the evidence for

the prosecution. the appellant and Couhill submitted to the

Mauistrate:-

"(a) That the evidence before him gas not

sufficient to put them upon trial:

(b) That the evidence befor5 h m did not

constitute a prima facie case aaainst them or

raise a stronu or probable presumption of

their guullt such as to permit the Maqlstrate

to put them upon their trial; and

( c ) That the appellant and Couhlll ouqht to be

discharued out of custodv in respect of the

information then before hlm."

Grant made no submissions and as pet has called no evldence.

Collle made no submissions, but he uave vidence before the

Macrlstrate. .Mter hearlnu the appellant and Couhlll the Mauistrate

aave reasons for judqmsnt on 29 Apri l 1983 ghich were amlicable tc

all the accused. includlnu the appellant. The Maulstrate, havlncr

formed the opinion that r;he evrdence was sufflcient to put the

appellant and the orher accused upon their trial and that there was a

stronu or probable presumptlon of their uullt. did not dlscharue them.

He proceeded to caution the accused, includinu the appellant. in terms

of para. 56(l)(b) of the Summarv Proceedincr Act and they =ere called upon to plead to the charues. Each of the accused. includinu the

appellant. announced a plea of "not guilty" to each of the charaes.

5.

On 2 Map 1983 the appellant filed an application In this

Court for an order of review of the Maqistrate's decision that there

gas at the close of the prosecution's case sufflcient evidence to

place the appellant upon his trial in respect of each of the three

charges agalnst hiin and that there was a case to answer by the

appellant in respect of each of those charges. Slmilar applicatlons

were filed by Grant and Collie. The applications were heard by

Smithers J. who dismissed them and reserved costs. The appellant

appealed to a Full Court of this Court from his Honour's judq-ment.

One of the drfficulties inherent in applicatlons pursuant to

the Judicial Review Act which seek to challenue decisions of maglstrates In committal proceedings is that, In my experlence, thev often lnvolve this Court bema asked to consider a larue body of

evidence adduced before the magistrate. both oral and documentary.

Further, more often than not. the matters a e said to be urgent smce

the committal proceedings are still in prouress. Counsel and

solicltors are usually instructed at short, notlce and have onl:I a

aeneral famlliaritp with the matters. "his is not said crltically.

Indeed. from my observation. thep have conducted matters well in n e w

of the difficultles that necesszrily attend short notice and a larue

volume of material. However, as I observed ln Fermia v. &na (19

April 1984, unreported) much of the material before this Court

conslsts of statements from the Bar table concerning what had happened

before the magistrate. from which it 1 s not always eas? to dlstlnuulsh

between fact and argument. These and other difflculties attend the

determination of cases such as the present in consequence of the fact

6

that declslons of maaistrates made in committal proceedings are

susceptible of review under the Judicial Review Act. These matters

necessarllp place constralnts upon the Court when considering the

revlew of decisions of magistrates made ~n these circumstances. The

Court frequently feels that a complete and accurate picture of the

committal proceedings not i before It. These and other

considerations lend force to the view. expressed in L a m v. Moss. that

a superior court will conslder interfering in committal proceedlngs

only m exceptional circumstances, especially =hen those proceedinus

have not concluded.

The difficulties to which I have referred were manifest in

the present appeal. The commlttal proceedinus, at least to 29 April

1983, involved a larue volume of evidence includinu hundreds of paues

of transcript and multitudinous exhibits. We were told from the 9ar

table that there were 272 statements of witnesses and that evidence

had been uiven by 50 wltnesses. We xere referred to a small portlon

onlp of this evidence in araument. Indeed. counsel for the appellant

recoanised these difficulties and confined his attack upon the

decision of the Mauistrate essentially to errors of law whlch =ere

said to be apparent on the face of hls reasons for the decisions under

review.

Before turnins to the submissions of the parties it is

desirable to summarise the princi;ral features of the scheme for

avoidance or evasion (the dlstinctlon between the two has become

somewhat blurred in recent years) of sales tax involved in the present

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proceedlnus. I must emphasize. however, that my summary is

essentially taken from what, as I understand it. was the case for the

prosecution before the Magistrate.

A Mr. Baker concelved the scheme which was designed to

elimlnate the liability for payment of sales tax by wholesalers of

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goods. Normally a manufacturer would sell his Foods to a wholesaler who in turn would sell them to a retaller at a price which included

sales tax. The retaller would then sell the uoods to the publlc.

Under r-he scneme three companles ( B . B and C) were interposed bemeen

the wholesaler and the retailer. The wholesaler sold the uoods to

company B which was reuistered as a wholesaler under the Sales Tax

Assessment Act (No. 1) 1930 and which quoted its sales tax exemption

number on purchases ;Ihlch it made from the wholesaler. Company A then

transferred an undlvlded half Interest in the uoods to company B.

Company A then transferred che remainlna half Interest in the aoods to

company C. Company B transferred its half interest in che goods

acquired from company X to company C. Company C then sold the goods

to the retailer who in turn sold them to the Dublic. The invoice in

respect of the sale by company C to the retailer staced: "Prices

include any sales tax payable". No sales cax was in fact included in

the prlce of the goods purchased by the retailer from company C. seems that under the scheme company C did not reaister It

a awholesaler

under the Sales Tax Assessment Act (No. 1) 1930. The scheme proceeded

on the assumption that. by severing the chain of title to the aoods

between the wholesaler and the retailer (throuah the interposition of

companies A . B and C ) sales tax would not be payable by the wholesaler

I or the retaller. The commercial benefit to be uained bp the savma of I..

sales tax would be enjoyed b the wholesaler who would be able to sell

the uoods ultlmacely purchased by the retailer at a considerable

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dlscount. Other possible benefits to the wholesaler were also

envisaged bp the scheme. The vholesaler was to remunerate the author

and manaaer of the scheme.

The wholesaler and retailer were not perhaps intended to know

the precise nature of the transactions between the companles A . B and ,

C. It may have been intended that the Dromoters of the scheme

throuahout Australia could rely on the assertion of Baker that the

scheme would produce the result that sales tax would not be payable bp

the wholesaler or the retaller and that there was an arauable case , I

that companles A. B and C had no legal 1iablllt;y to pay the sales tax.

Baker obtained leual advlce from Messrs. Stone. James & Co.,

solicitors, of Perth, CO the effect that under the scheme. If

lmplemented in accordance wich the advice, "None of you, F., B. C,

wholesaler and retaller xould be Involved in a fraud". This advlce

was in substance confirmed bp Mr. N.H.M. Forsgth 0.C.. These advlces

were	all	available to	potential	promoters	of the	scheme.	Baker	i
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conceived and implemented the scheme. Collie and Grant were the main

promoters of the scheme in Melbourne. Coahhlll promoted the scheme in

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Sydney. and Melbourne. where the appellant was employed. It is not clear to me he aDparently operated as well from an office in

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how far the appellant was aware of the nature of the transactions

l	between companles	A ,	B	and C.	It appears that he was to be
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remunerated by commissions for his efforts In Dromotincr the scheme.

Notwithstanding that the scheme was implemented throughout Australia from 1979 to 1982 on a grand scale. it is not clear to me to what

extent the scheme. as implemented in practice. differed from the

scheme as formulated by Baker and others.

I have read a copy o€ the submlssions put to the Maglstrate

at the commlttal proceedings by counsel for the prosecution. I hzve read, of course, the Magistrate's reasons for his decision presently under challenue. I must say that I have some difficulty understandmu

precisely how the Crokn proposes to formulate Its case aaainst the

appellant. Also. certain observations made by the Mauistrate in the course of his reasons obviously assume knowledge by him of facts or

inferences or of submissions made to him by counsel for the defendants

t-ihich are not mentioned by him. I do not suaaest for a moment that

the Magistrate was under any duty to speclflcally mention these

matters ln his reasons. Indeed. It is not surprisina that he dld not

do so since the commlttal proceedinas were at an intermediate staue.

But this illustrates again the difficulty faced bv a superior court

hearing an application for judicial review of decisions made by

magistrates in the course of complicated committal proceedlngs. The

difficulty is plain enough for a trial judue but it is even greater	I
for an appellate court.

Various interpretations of the relevant events lnvolved in

the sales tax scheme before the Magistrate are possible. I hesitate

to mention them because there may be other possibilities. especially

10.

as we were referred In argument to a small seqment only of the

evidence before the Magistrate and not to the addresses of counsel for

any of the defendants. But it is necessary to analyse the

posslbilities to understand the reasons for the Magistrate's decision

and the submissions made to us challenging that decision. The Maqistrate's task was to consider and weigh all the evidence before him and to caution the appellant if he was of the opinion that there

was a stronu or probable presumption of guilt: see -a& v. Th e

Government of Ghana (1968) A.C. 192 per Lord Reid at p.229. Various

possible interpretations of the evidence were open to the Mauistrate

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for his consideratlon. He was in	a position to decide which of them,
if any. he should accept.

One possible construction of the facts is that he

participants in the scheme intended that no sales tax would be payable

bp anybody and that the intervention of companies A. B and C would

achleve that object. If so. and if the scheme had successfullv

ouerated to achieve that object. there could be no auestlon of any

consplracp to defraud the Commonwealth or to prevent or defeat the

execution or enforcement of the sales tax legislation.

A second possibility is that the participants did not succeed

in achievmq that object so that sales tax was payable by one of the

companies, perhaps the wholesaler o company C.

A third possibility is that the role of companies B . B and C

was a sham, intended by the participants, or some of them. to mask

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their real purpose of concealina from the Commlssioner of Taxatlon,

for as lonu as possible, the liability of he wholesaler to sales tax,

I this concealment to be achieved by various means includina the fact that company A quoted its sales tax exemption number on the sale bv the wholesaler to it.

A fourth possibllity is that the particlpants mav have

intended the scheme to operate accordinu to its tenor so that no sales

tax would be payable by anybody. but thought that. a worst, if anyone

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were liable, it would be company C on the basis that the transfer of

the property in the goods to It from companies A and B was the last

sale by wholesale. We were told from the Bar table that company C was

a company of straw. Hence, It may be that the participants thouuht

that in these circumstances all the Commissioner would find at the end

of the day would be a valueless shell. Smlthers S. appears to have

contemplated this last posslbllicy in the closing stages of his

reasons for 2udgnent.

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As I sald above, there may be other possibllities: but It is.

I think, helpful to keep In mind the ones I have mentloned when

considering the submissions of the appellant. Otherwise, one is

bereft of knowledue of the background to and the course f the lenathy

and complicated committal proceedings. thus makinu it difficult, If

not imposslble, to understand the reasons for the Magistrate's

declsion under review.

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I turn to the submissions of the appellant. It was submitted

that the reasons for decision of the Magistrate reflect a fundamental

mlsconception of the distinction between avoidance and evasion of tax

or other imposts and that this misconception also permeates the whole

of the prosecution's case against the appellant. Whether this

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submission will be shown to be correct will emerge in due course If

the committal proceedinas continue or if the appellant is committed

and stands trial. I am not persuaded, however, on the material to

whlch we have been referred, of the soundness of this submisslon.

More than one possible analysis of the circumstances mentioned by me

earlier is inconslstent with the correctness of this submission.

Also, there are references at more than one place in the Mauistrate's

reasons for his decislon which tend auainst the correctness	of the
submission.

It xas next submitted by the appellant that the Maqlstrate

fell into error in finding:

"The evidence in this case as it presently stands

shows that each of the defendants aureed to promote

a scheme whereby sales tax would not be paid.

Whether the scheme involved an avoidance or an

evaslon of sales tau is in my view irrelevant."

It was asserted that the second sentence in thls passaae

demonstrates a failure by the Maaistrate to appreciate the fundamental

distmctlon between the avoidance and evasion of sales tax. I have

already said that it has not been established that the Maaistrate

failed to observe that distinction. This passaae from his reasons is

an apposite example of a statement which is explicable by reference to

certain of the possible constructlons of the relevant events which

relate to the charqes. If, for example, what I described as the third

or fourth possibility is open on the evldence as a le itimate analysis

of the facts on which a jury could convict the appellant on any of the

three charues. the Maglstrate's statements in the parauraph under

attack are explicable and not shown to be in error. If che appellant

intended the scheme to be a sham and thus to deceive the Commissloner

in the hope that he would not discover the sale by the wholesaler to

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company A (the third possibility) then the Mauistrate's statement 1 s

not incorrect because the intent of the appellant would then have been

that sales tax would not be paid. If the appellant hoped that the

scheme would successfully avoid the payment of sales tax bp anvbodp

hut lntended that. if the hope be unfulfilled. then company C would be llable for the tax and the Commissioner would whistle for his money because company C was a company of straw (the fourth possibility).

then a jury may find that the appellant's intent as promoter of the scheme was that sales tax would not be pard. The scheme	may then be a
blend of avoldance and evasion.

The Mauistrate may have concluded that a jury could flnd

either of these two possibilities was the fact: hence his statement in

the impugned parauraphs. Again I must emphasize that the Masistrate

did not state all matters of fact relevant to his findinus. Nor is he

open to criticism on this account. But in order to test the soundness

of the appellant's submissions I find it helpful, indeed. necessary,

to examine the possible alternative findinas which may have been

present to the Maglstrate's mind on the material before him. That

14.

material, to which we were directed by the parties in aruument, leaves

at least the four possibilities to which I referred earlier open to

the magistrate. hiether he accepted any of those possibilities. or

others for that matter. as belnu available on the evidence, was a

matter for him. Plainly he must have rejected any innocent

explanatlon on the evldence as it stood at 29 April 1983. so he could

not have accepted what	I have described as the first and second
possibilities.

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The aDpellant submitted that the Mauistrate fell into error when he sald in the early part of hls reasons f o r decision:

“ A stronu or probable presumption of uuilt appears

to be established by evidence or circumstances that

point to the commission f a crme and to the

accused persons as the crlmlnals. which

circumstances are not completely explained and

cleared up by the evldence of the accused.“ (See

Irvlnes Justices	of the Peace 2nd Edition pp.
41-42)

The essence of the criticism of this statement by the

MaFistrate was that it demonstrates. so It was asserted. that he

applled an inappropriate test namely, that in committal proceedlngs	an
onus lies upon the defendant to establish by his evidence that

I circumstances in the prosecution’s case which point to his complicity

In the crlme with which	he	has been charged have	an	Innocent
explanation.

The passage from Irvine's Justices extracted by the

maaistrate is perhaps not entlrely appropriate for the staae	of
committal proceedings which had been reached in the present case

before the decisions under review were made. Althouuh the word

"completely" is accurately cited from Irvine's Justices it is. I

think, an unhappy expresslon.

Thls passacre from the Maulstrate's reasons is followed by the

I	followinu two paragraphs:-
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"I think it also follows from a decision in &

Roberts (1967). W.L.R. at 474 that an accused person should be discharged where no reasonable jury could convict on the present state of the

evidence.

However, it should be remembered that this court 1s

not requlred to determine the guilt or innocence of

each of the defendants but has the task of

determining whether or not there is sufficient

evidence to warrant sending the accused persons	for
trial before a jury."

In context of these two succeedinu paraaraphs and the Mauistrate's reasons as a whole. it has not been established that the Maulstrate my opinion. when the impuuned passaue is read in the

fell into error by applymg the wrong test. Smithers J. said at p . 18

of his reasons for ]udqaent in relation to the same submission:

"It appears to me. however. that the Magistrate is

to be understood as saylna that, where the question

whether there is a strong or probable presumption

of quilt arises for decision, an affirmative answer

may be given where the evidence of the prosecution

or the circumstances point to the commission of a

crime by the accused unless the implication of the

accused in the crime arising from such evidence or

16.

circumstances is explained away by evidence of, or called by, the accused. The word 'completely' in the passage under discussion is inaptly included.

The ultimate question would not be whether the evidence for the accused completely rebutted the implication of the accused arising from the

evidence of the Crown, but whether it so weakened

that implication that it could no lonqer be said to be sufflcient either to require that the accused be

put upon his trial or to support the existence of a

strona or probable presumption of uuilt. Reading

the reasons as a whole I am not persuaded that the

Magistrate did not so understand the problem before

him. 'I

I agree with hls Honour's statements.

The next statement of the Maqistrate attacked by the

appellant is in paragraph numbered 3 in his reasons winch relates to

the charge of conspiracy to defraud the Commonwealth where the

Maaistrate sald:

"Some atcempt has been made bp the defence to suaaest tiit they were entitled to rely on the

Opinlon of Mr. Forspth O.C. and an Advice from a firm of solicitors, i.e. Messrs. Stone James & Co..

I am not exactly sure how this arqument is put. or,

how such reliance would provide a defence.

I	Nevertheless I should point out that those persons exnresslv stated that they were not advising as to the sales tau liability (or by inference the
criminal liability) of A B and C. I would have
thought it was abundantly clear to each of the defendants who had read the Advice that they could not rely on it to provide a defence without first
satisfyinu themselves of the leual effectiveness of
A , B and C." (p. 7 )
The appellant challenged this passage on two Grounds. .First,

it was said that the Mauistrate erred in findinu that the only

relevance of any reliance bp the appellant and the other defendants

upon the advices of Mr. Forsytb 0.C. and Messrs. Stone James & Co. was

17.

by way of defence to the charge of conspxacy to defraud; whereas, in

truth, it is for the prosecution to neuative any innocent intent on

the part of the appellant and the other defendants by rellance on the

advices of the lawyers.

Obviously it would be relevant to the appellant’s defence

that he relied, if in fact he did. on those advices. On a fair

reading of this passaue from the Mauistrate’s reasons I do not think.

however, that he can be taken to have erred in the respect suuuested

by the appellant. As I read the passage the Maglstrate said that he

did not know at the staPe of the case which had then been reached haw

the appellant would pur; his case of reliance uDon the advices from the

lawyers or how, as he then understood the facts, a defence would be

afforded by reliance upon them. The Magistrate had not then heard

from the appellant or the other defendants.

In my opinion, the passaue to which the appellant’s complaint

1 s addressed is not reasonably susceptible of the constructlon

contended for bp the appellant namely. that the Mauistrate excluded as an element in the prosecution’s case the necessit7 for it to neaative any innocent intent by reliance on the advices. The Macristrate was

not addressmu himself to that question. He was simply dealinu wlth a

submlssion apparently made to him by counsel for the defence.

The second ground of attack was that the Magistrate was said

to have misconstrued the advices. He construed the advices as

expressly stating that the lawyers did not advise wlth respect to the

liability for sales tax of companies B . B or C. This is. perhaps, an

oversimplification of the effect upon a reader of the advices. I

think that someone readinq all the advices ln evldence before the

Magistrate would conclude, not only that the lawyers had advised that

the wholesaler and the retailer would not be liable for sales tax If

the scheme were implemented. but that it was reasonably arguable that

none of companies A , B or C would be liable for sales tax provlded

that the cautionary note sounded by Mr. Forsyth in his Opinion of 7

November l980 was observed, namely:-

“Great care must be taken to dot the	1 ‘ s and cross
the t’s at all points.”

I thmk it 1s perhaps an overstatement to say. as the

Maaistrate did, that the appellant and the other defendants could not rely on the advices of the solicitors to provlde a defence “without

first satisfying themselves of the legal effectiveness of A, B and C“,

lf he meant bp t‘hat statemenc that advice would first have to be

obtained by anpone seeklnu to Implement the scheme from his own

lawyers about the liablllty for sales tax of company A , B or C. I

have no doubt that it was lntended by Baker and the promoters of the

scheme that the advices would be widely circulated among potential

“purchasers” of the scheme whose Interest would be enlivened, more bv

subtle nuances, than by any dispassionate literal interpretation of

the languaqe used in them. However, the oversimplificatlon and

overstatement to which I have referred has not been shown to have led

the Maqistrate into any relevant error. He was S ;Imply crlticlsing

advance a foreshadowed	defence	of	the	appellant	and	the	ot'ner
defendants.

~ It was then submitted by the appellant that the Magistrate

I	I	erred in finding:
i

l	"The case involving each of the defendants before me has no bearinu on the principles that were expressed m" the judqment of the Court of Appeal
of New South Wales in R_ v. Cahill (1978) 2 N.S.W.
L.R. 453."
It was submitted that Cahill's Case bore directly on the

questions before the magistrate. It was common uround before us that

Cahill's Case is the only reported judqment dealing wlth para.

86(l)(b) of the Crlmes Act. In that case S I X persons had been

convlcted at a trial before a District Court Judge and a ?ury of

conspiracy to prevent the enforcement of che Mlqration Act 1958

contrary to para. 8611)(b) or (d) of the Crimes Act. The matter czme

before the Court of Appeal of New South Wales upon a case stated by

the learned trial Judge pursuant to S. 72 of the Judiciacv Act. The

Court of Appeal considered the construction of para. 86(l)(b), but not

In the context of committal proceedings before maglstrates. Also,

Cahill's Case concerned an alleued conspiracy of a very different kind

from the conspiracy asserted here. I thlnk It would be an unfalr

I

I

construction of that paragraph of the Magistrate's reasons challenged

bp the appellant in the present submission to say that he there

regarded the observations of the members of the Court of Appeal in

Cahill's Case relating to para. 86(l)(b) as irrelevant to the case In

2 0 .

hand. He simply distinguished the two cases because	of the absence of
any community of fact.

These were the submisslons of the appellant. I relect them.

It is unnecessary therefore to consider whether the Court should

exercise Lts discretion to urant relief under the Judicial Review Act.

However. I said earlier that residual dlscretion stlll remains in the

Court notwithstanding that the statutory pre-conditions for the arant

of relief under the Judicial Review Act may have been established in a

particular case. In a case like the present one, lnvolvlng the

I

declsions of a magistrate made in the course of committal proceedings

still pending, it is only in exceptional circumstances that the Court will intervene. I prefer to express no view on the question whether exceptional clrcumstances exist in the present case sufficient to

warrant intervention by this Court.

I would dismiss the appeal wlth costs. I

I certlfy that thls and the

precedmg pages are a true copy of the

Reasons for Judgment herem of hls Honour

I

IN ‘THE FEDERAL COURT OF AUS

’VICTORIAN DISTRICT REGISTR ’0 2 ; % f ? ) . 4

VG.191 of 1964

GENERAL	DIVISION	W	U ’ )	c
0	r,.
CI	21 ,l
‘v‘

oi, v Q 7-

ON APPEAL FXOMX’INGLE JUDGE OF THE FEDERAL COURT

OF AUSTRALIA

BIZI‘EEN : J O H N FXANCIS EIXlJARD.5

Appellant

AND	.	IAN VON EINEM S.M. and
ROBERT RICHARD McDONALD

Respondents

REASONS FOR JUDGMENT

CORAM : Sweeney, Davies and Lockhart JJ

-	12 October 1984
DAVIES. J : This is an appeal from a judgment of a sinqle Judge
of this Court dismissincr an application to review a decision of a
Stipendiary Magistrate made in the course of committal

l

proceedings.

The appellant, John Francis Edwards, had been charged with

three offences :

I

(i) conspiring with other persons to defraud the

Commonwealth contrary to s.86(l)(e) of the

Crimes Act 1914 (Cth); t

(ii) conspiring with other persons to prevent or

defeat the execution or enforcement of a law

of the Commonwealth, namely, s.9 of the

(iii) conspiring with other persons to prevent 0;'

defeat the execution orjenforcement of a law

of the Commonwealth. namelv. s . 9 of the

~~

Sales Tax Assessment-Act (NG.9)- ~ 1930-(Cthi

contrary to s.86(l)(b) of	the Crimes Act
1914 (Cth).

Pursuant to s.68 of the Judiciary Act 1903 (Cth), the

Haqistrates (Summarv Proceedinqs) Act 1975 (Victoria) applied to

the proceedings for the committal of Mr Edwards. Section 56 of

that Act provides that, after the evidence for the prosecution is

concluded, the Justice before whom the accused person is brought

I t

shall, if the evidence is not sufficient to put the accused

person on his trial for any indictable offence, order him to be

discharged out of custody or, if in the opinion of the Justice,

the evidence is sufficient to put the accused person upon his

-.

trial for the indictable offence with which he is charged or if

the evidence given for the prosecution raises a strong or

probable presumption of the guilt of the accused person, read the

charge to him again and advise him in the terms set out in

s.56(l)(b) of his right	to plead and caution him in the terms set
out in that paragraph.

At the conclusion of the prosecution evidence, the learned

Stipendiary Magistrate found that there was sufficient evidence

to place the accused persons, including Mr Edwards, upon their

trial and he proceeded to read the charges and to warn the

accused in the terms provided by s.56(l)(b). That was the

decision under review. By the decision, the learned Stipendiary

Magistrate did not commit Mr Edwards for trial for Mr Edwards was

then entitled to elect whether or not o call evidence. See s.59

- 4 3.

oi..the Hasistrates (Summary Proceedinss) A c t 1975 (Victoria

U

That election has not yet been made.

The facts which gave rise to the committal proceedings may

be simply stated. A Mr Baker conceived 3 scheme for the

non-payment of sales tax. Under the scheme, a wholesaler who

would ordinarily have sold goods to a retailer and would have

paid sales ,tax upon those sales was to sell the goods to a new

entity "A", which was to be a registered wholasaler and was to

quote its certificate thus rendering the wholesaler not liable to

sales tax, there were to be further transactions between entity

"A", entity "B" and entity "C" and finally enticy "C" was to sell

I ,

the goods to the retailer. An opinion was obtained from Stone

James & CO, solicitors, which included the following advice :

' l . . . You have not asked us to advise you on the

prospects of success of your proposals in relation

to A, B and C; nevertheless it is our view that they have legal merit and could be accepted by a

Court .	'I
"If a	court decides that sales tax liability does

arise in the subject transactions, ths tax will be

payable by A, B or C, ..."

"The position is that you appear to have an

arguable case that. A, B and C have no legal

liability to pay sales tax."

A further opinion was obtained from a Mr N.M. Forsyth, QC, who

specialised in taxation advice. He advised, incer alia :

"...in my opinion either the Aetailer nor

Wholesaler will incur any liability."

"That the scheme proposed would be unlawful anly if

delib rate were there conc alment or

non-disclosure in circumstances in which the law

required disclosure to be made."

Mr Baker published this statement :

""hat I undertake to 'Wholesaler' and 'Retailer' to

pay any sales tax assessed to A, B or C, providing !

that the assessment i s upheld upon final appeal..

and providing that	A , B or C do not pay the amowlt
assessed."

Mr Edwards was one of a number of persons who promoted this

sales tax scheme. Several organisations undertook the scheme and

sales tax which would ordincrily have been paid by wholesalers

was not paid. Indeed, if the wholesalers validly transferred the

goods to entity "A" which quoted its certificate, the wholesaler

was under no liability to pal sales tax upon its sales. Nor was

the retailer under any liability to pay sales tax. However, the (

.

prosecution alleged that it was a necessary consequence of the

scheme, if implemented, that liability to pay sales tax would

fall upon either the wholesaler or entity "A" or entity "C", that .

it was a-part of the scheme that no sales tax return would be

lodged in respect of the sales and that it was a further

consequence of the scheme, if implemented, that, as the goods

would be sold by these entities without sales tax being charged

and collected, no entity would be in a financial position to pay

the sales tax if called upon to do so by the Commissioner of

I (

Taxat ion. It was alleged by the prosecution that he

Commonwealth would be and wa: thereby defrauded.

I turn first to the conspiracy to defraud. It was

necessary that the prosecuticn show :

(a) that there was a scheme which, if put into effect, would defraud the Commonwealth;

(b) that Mr Edwards entered into an agreement or

arrangement to put that plan into effect;

and

(C) that in entering into that agreement or

arrangement, Mr Edwards had the necessary

mens rea or quilty mind.

a , ~ . * 5 .

- 4

I

With respect to (a), it was necessary for the prosecution

to prove that the plan, if given effect, would impose liability

!	'	for sales tax upon the wholesaler or upon one of the entities
1	"A", "B" or "C". Unless the wholesaler or entities "A", "B" or
i	"C" would be liable to pay sales tax, the Commonwealth of
Australia would not be defrauded and the plan could not have been a plan to defraud the Commonwealth. Moreover, the prosecution had t o show. that the plan intended there would not be payment of that liability or that in some manner the scheme put that payment
at risk. In this last respect, I simply note that the three

(

principal elements to be considered were : (i) the fact that it

was unlikly that the wholesaler or entities "A", "B" or "C"

would readily be able to meet any liability, for in their .

transactions they did not charge or receive sales tax or i;ts

equivalent and therefore would not have had the funds to make a

payment; Iii) the existence of the statement made by Mr Baker to

promoters of the scheme and to participants that, if "A". "B" or

"C" were unable to meet any sales tax for which they were

ultimately found liable, he would pay that liability; and (iii)

l

the extent to which it was planned as part of the scheme that the

wholesaler and entities "A", "B" and "C" would not disclose their

transactioTs to the Commissioner of Taxation.

I

With respect to (b), I need make only two observations.

The first is that there may be a distinction between the scheme

which	Mr	Edwards	assisted	to	promote	and	the	manner	of	its	l
I

implementation. If a number of persons agree to implement a

lawful scheme, those persons do not become unlawful conspirators

I

merely because, in the implementation of the scheme,- steps are

2 ,

6 . + .

'2 1 I

taken which are, in fact, unlawful.	The second is that care must	I
i
I

be take; with the application of the principle that it is not	I
I
necessary that each conspirator should know the whole of the

scheme or design provided that there is a conscious understanding

of a common design. It is not sufficient to prove that an

accused knew or believed that his actions were to form part of a

larger scheme. He would not be guilty of a criminal conspiracy

unless he was aware of the essential elements which rendered the

scheme unlawful.

(

As to (c), I would simply refer to the remarks of Viscount

Dilhorne, with whom the other Law Lords agreed, in E v Churchill

C19673 2 AC 224 at 237, where his Lordship said :

"In cases

of this kind, it is desirable to avoid

the use of the phrase 'mens rea,' which is capable

of different meanings, and to concentrate on the

terms or effect of the agreement made by the

alleged conspirators. The question is, 'What did

they agree to	do?' If what they agreed to do was,
on the facts	known to them, an unlawful act, they

are guilty of conspiracy and cannot excuse

themselves by saying that, owing to their

ignorance of the law, they did not realise that

such an act was a crime. If, on the facts known

to them, what they agreed to do was lawful, they (

are not rendered artificially guilty by the

existence of other facts, not known to them,

giving a different and criminal quality to the act

agreed upon. 'I,

and to E v Kamara C19743 AC 104 at 119-20, where Lord Hailsharn

said, inter alia,

"(1) It is common ground that the actus reus in a

conspiracy is the agreement to execute the illegal

conduct, and not the execution of it.	The crime
is complete when the agreement is made. This

proposition, first decided in 1610 in the

Poulterers' Case (1610) 9 Co.Rep.S5b, is too

familiar to require further authority.

( 2 ) In spite of this, mens rea is an essential

ingredient in the crime of conspiracy. This mens

rea consists in the intention to execute the

1 .

- ,r 7.

illegal elements in the conduct contemplated	by
the agreement, in the knowledge of those facts

which render the conduct illegal, cf. Res. 6

Churchill (No.2) C19673 2 AC 224.

( 3 ) It seems fairly clear that while a mistake of

law is not a good defence, a sincere belief in a

state of facts which- if true would render the

illegal conduct legal would be a good answer to

any charge of conspiracy. For instance, if

conspiracy to trespass be a crime, belief in a

state of facts which would give rise to an

enforceable right of way would be a defence.

Equally, it would be a defence to a charge of

conspiracy to defame by the publication of

defamatory matter that the accused genuinely and

without express malice believed in facts which

would establish privilege. a general On

principles in all these cases the burden would

rest on the prosecution to exclude these defences,

which I will describe as a claim of right made in

good faith. "

The prosecution was therefore bound to prove an agreement

-T

to commit an offence, but-was not bound to prove that the persons entering into the agreement had knowledge of the illegality of the act agreed to be done.

I ,

I now turn to the reasons delivered by the learned

l

Stipendiary Magistrate.

One aspect of those reasons challenged was the statement :

"It should of course be realised that these

proceedings are at this stage governed by section

56(l)(b) of the Magistrates (Summary Proceedings)

Act. This section provides the criteria to be

applied by a court when considering whether or not

an accused person should be cautioned, i.e. -

(i)

whether the evidence is sufficient to put indictable offence with which he is charged; or

(ii) if the evidence given by the prosecution

raises a strong probable presumption of the quilt of the accused person in respect

I

8 .

to that charge.

A strong or probable presumption of quilt appears

to be established by evidence or circumstances

that point to the commission of a crime, and to

the accused persons as the criminals, which

circumstances are not completely explained and

cleared up by the evidence of the accused. (See

Irvine's Justices of the Peace 2nd Edition

pp.41-42) ."

On this aspect,	I agree with the view of the learned trial Judge,
who said :

"Considerable emphasis was placed on the final

adjectival clause. It was said that its preserce

indicated that the magistrate's view was that the

necessary strong or probable presumption of guilt

was established where evidence or circumstances

pointed to the commission of a crime by the

accused, no matter how waveringly, unless the

implication of the accused arising therefrom vas

completely negatived by evidence of, or called by,

the accused. It appears to me, however, that the

Magistrate is to be understood as saying that,

where the question whether there is a strong or

probable presumption of guilt arises for decisicn,

an affirmative answer may be given where the

evidence of the prosecution or the circumstances

point to the commission of a crime by the accused

unless the implication of the accused in the crime

arising from such evidence or circumstances is

explained away by evidence of, or called by, the

accused. The word 'completely' in the passage

under discussion isnaptly included. Ibe

ultimate question would not be whether the

evidence for the accused completely rebutted the

implication of the accused arising from the

evidence of the Crown, but whether it so weakened

that implication that it could no longer be said

to be sufficient either to require that the

accused be put upon his trial or to support the

existence of a strong or probable presumption of

quilt. Reading the reasons as a whole I am cot

persuaded that he Magistrate did not so

understand the problem before him." (at pp.17-18

reasons for decision)

However, I take a different view from that of the learned

Maglstrate did not so understand the problem before

him. 'I

I aaree with his Honour"s statements.

The next statement of the MaTlstrate attacked by the . I

appellant is in paragraph numbered 3 in his reasons which relates to

the charcre of conspiracy to defraud the Commonwealth where the

Macfistrate said:

"Some attempt has been made by the defence to

suuuest that they were entitled to rely on the

Opinion of Mr. Forsyth P.C. and an Advice from a

firm of solicitors, i . e . Messrs. Stone James 6r Co..

I am not exactly sure how this arqument is put, or,

how such reliance would provide a defence.

Nevertheless I should polnk OUt that those persons

e_xprsrs-lx stated that they were not advising as to

the sales tax liability (Or by inference the

criminal liability) of A 3 and C . I would have

thought it was abundantly clear to each of t e

defendants who had read the Advice that they could

not rely on it to provide a defence without first

satisfylng themselves of the legal effectiveness of

A, B and C." (p. 7 )

The appellant challenged this passage on two arounds. First,

it was said that the Magistrate erred in findinq that the only

relevance of anv reliance by the appellant and the other defendants

upon the advices of Mr. Forsyth P.C. and Messrs. Stone James ki Co. was

i

!

'	r C U C K H L	LUUKl	05-5.74965	TEL	No
F

by way of defence to the C'hirqe' of ConSpiraCp to defraud1 whereas, in

truth, it is for the prosecution to negative any innocent intent on

I	the part of the appellant and the other defendants by reliance on the
I	advices of the lawyers. ,
Obviously it would be relevant to the appellant's defence that he relied, if in fact he did. on those advices. On a fair readins of this passage from the Magistrate's reasons I do not think, however, that he can be taken to have erred in the respect susuested
by the appellant. As I read the .passage the Magistrate said that he
did not know at the stage of the-case which had then been reached how the appellant would put his case b f reliance upon the advices from the lawyers or how, 8s he then undetstood the facts. a defence would be afforded by reliance upon them. The Mauistrate had not then heard from the appellant or the other defendants.
In my opinion, the passaue to which the appellant's complaint is addressed is not reasonably euscevtible of the construction
I	contended €or by the appellant namely, that the Maaistrate excluded as
an element in the prosecution's case the necessity for it to neqative
any innocent intent by reliance on the advices. The Mauistrate waa
not addressing himself to that question. He Was simply dealinu with a
submission apparently made to him by.counse1 for the defence.

The second ground of attack was that the Magistrate was said

to have misconstrued the advicee. He construed the advlces &S

expressly stating that the lawyers dld not advise with respect to the

..-

I FEDERAL COURT 03-6749G5 TEL No . 17,03,88 14:56 P.01

Ifability for sales tax of companies A. B or C. This I s . perhaps, an

oversimplification of the effect upon a reader of the advices. I

think that someone readina all the advices in evidence before the

MaTistrate would conclude, not only that the lawyers had advised that

1

the wholesaler and the retailer would not be liable fo r sales tax if

I

the scheme were implemented, but that it was reasonably arwable that

none of companies A, B Or C would be liable for sales tax provided that the cautionary note sounded by	Mr. Forsyth in his Opinion	of 7
November 1980 was observed, namely:-

“Great care musk be taken to	dot the i’s and cross
the t ’ s at all points.”

I think it I s perhaps sn overstatement to say, a5 the

Macfistrate did, that the appellant and the other defendants could n o t

rely on the advices of the sblicitocs to provide a defence “without

first satisfyinq themselvee of the leaal eifectiveness of A. B and C”.

if he meant by that statement that advice would first have to be

obtained by anyone seekins to implement the scheme from his own

lawvers about the liability for sales tax o f company A. B or C . I

have no doubt that it was intended by Baker and the promoters of the

scheme that the advices would be widely circulated amonu potential

“purchasers” of the scheme whose interest would be enlivened. more by

subtle nuances. than by any dispaus’ionate literal interpretation of

the languaqe used In them. However, the oversimplification and

overstatement to which I have referred has not been shown to have led

!

I

1

b.).' B

the'flaaistrate into any relevant error. He was simply cr~ticisina in

advance a foreshadowed	detence Or the appellant and the other
defendants.

it was then submitted by the appellant that the Mauistrate

erred in finding:

I

"The case involving each of the defendants before

me has no bearing on the principles that were

expressed in" the gudgment of the Court of Appeal

of Neu South Wales in BA v. c&huJ (1978) 2 N.S.W. L . R . 453 ."

It was submitted that Cahill'g-Case bore directly on the

questions before the magistrate. It was common around before us that

Cahill's Case I s the only reported judcnnent deallna W€th para.

86( 1) (b) of the Q-Ames-A&. In that case six persons had been

convicted at a trial before a District Court Judge and a jury of

conspiracy to prevent the enforcement of the Mictration Act 1958 contrary to para. B6(l)(b) or (6) of the crJ_mesAct:. The matter came before the Court of Appeal of New South Males upon a case stated by

the learned trial Judge pursuant to S. 72 of the Jufi.$-c&acv Act . The -

Court of Appeal considered the COnStrUCtlOn of para. 86(l)(b), but not

in the context of committal proceedlngs before magistrates. Also.

Cahill's Case concerned an alleged conspiracy Of a Very different kind

from the conspiracy asserted here.. I think it would be an unfair

construction of that paragraph of the Magistrate's rea80ns challenged

by the appellant in the present subtnisi3iOn to say that he there

regarded the observations of the members of the Court of Appeal in

@&iJl's Case relatlnu to para. 86(l)(b) as Irrelevant to the case In

!

'FEDERRL COURT 03-67'4965 TEL No. 17,03,88 l 4 :57 P.03

,.. .---m:r-- -,-- - -. I- r

. . . ..

1

hand. He nimply distinguished the two cases because Of the absence of any community of fact.

These were the 3Ubmis5iOnS of the appellant. I reject them.

It is unnecessary therefore to consider uhether the Court should

I

exercise its discretion to qrant relief under the Judicial Revlew-?+cL.

I

However, I said earlier that residual discretion still remains in the

Court notwithstanding that the statutory pre-conditions for the urant of relief under the Judici&l Review Act may have W e n established in a particular case. In 8. ca6e like the present one, involvincr the decisions of a magistrate made in the course of committal proceedings still pending, it is only in exceptional circumstances that the Court

will intervene. I prefer to express no view on the question whether

exceptional circumstances exist: In the present case sufficient to

warrant intervention by this Court.	I I
i
I .

I would dismiss the appeal with costs.

I

I cerllfy that this and the fy

preceding pages are a true copy of the

Reasons for Judgmcnt herein of his Honour

Mr. Justice Lockhart.

Aasociate

W-T.HE FEDERAL COURT OF AUSTPALIA )

NO. VG 191 of 1984

VJCTORIAN	REGISTRY	1
b

GENERAL DIVISION

I

- B JOHN FRANCIS EDWARDS

Appellant

m1	IAN VON EINEM and
m T RICHARD HcDONALD

Respondents

ORDER-

JUDGES MAKING ORDER:	SWFENEY. DAVIES & LOCKHART JJ.
DATE OF ORDER:	12 OCTOBER 1964
WHERE MADE:	MELBOURNE
THE COURT ORDERS THAT:

1. The anpeal be dismissed.

2. John Francis Edwards pay the costs of Ian Von Einem S.H. and

Robert Richard McDonald of this appeal.

NO. VG 191 of 1984

on appeal from a single judge of the Federal Court of

Australia

BETWEEN: JOHN FRANCIS EDWARDS Appellant

RND

IAN VON EINEEl and

ROEEKT RICHARD MCDONALD Respondents

Coram: Sweeney, Davies and Lockhart JJ.

Date : 12 October, 1984

Place: Melbourne

Reasons for Judgment

Sweeney, J.

John Francis Edwatds (the appellant) ,*made. appl icat ion to .a .

single judge Administrative -Decisions Judicial.Review Act 1977 (the J u d i c l a l of th i s 'court for review pursuant to the

Review A c t ) of the decisions of Mr. I. Von Einem (the magistrate)

made on 29 April 1983 in the cour8e of committal proceedings:

(a) that there was at the close of the Crown case

sufficient evidence to place the appellant upon his ..

trial. in respect of each of the three charges of

conspiracy against him;

( e ) that there was a case to answer by the appellant In

respect of each of those charges;

,

(c) not to discharge him out o f custody as to the

information unaer enquiry but to caution him under

s.56(l)(b) of the Magistrates Summary Proceedings

Act 1975, Victoria (the Act) and then to call upon him to plead to those charges.

Two co-defendant6 of the appellant, lan Grant and Ian David Stafford Collie, made similar review applications to his Honour. All three applications were dismissed. This is an appeal by the

'

appellant from his Honour's judgment dismissing his application.

The history of the matter was set out by his Honour. On 4

October, 1982 an information for.an offence had been laid and

Sworn by Robert .Richard McDonald. (the second respondent) against .

the appellant in-which the second.respondent alleged:"

" ( a ) that the said John Francis Edwards at Melbourne,

Perth, Sydney and obher places, between 1 July 1979

and 18 March 1982 did conspire with Steven John Baker, William Leaver, Pet4 JOY Fisher, colin Halley C o g h i l l , Ian Grant, Ian David Stafford

Collie and other persons to defraud the

Commonwealth contrary to eection 86(l)(e) of the

C r i m e s Act 19141

(b) that the said John Francis Edwards at Melbourne,

Perth, Sydney and other places, between l July 1979

and 18 March 1982 did conspire wlth Steven John

Baker, william Leaver, Peta Joy Fisher, Colin - -

Halley..Coghill, :Xan Grant, Ian Davld Stafford .

Collie and other, persons to prevenk 'or- defeat -the ..

execution or enforcement of a law of Commonwealth

8 ) that the s a i d John Francis Edwards at Melbourne,

Perth, Sydney and other places, between 1 July 1979

and 18 March 1982 dld consplre with Steven John

Baker, william Leaver, Peta Joy Fisher, colin

Halley Coghill, Ian Grant, Ian David Stafford execution or enforcernent of a law of the

Commonwealth namely s.9 of the Sales Tax Assessment

Act (NO. 7 ) 1930 contrary to s.86(l)(b) of the

crimes A c t . "

on 11 April 1983 proceedlngs in respect of these lnformations

began before the magistrate, by way of preliminary examination conducted pursuant to the provisions Of s.56(1) of the Act and S .68 of the Judiciary Act 1903. At all materlal times the

magistrate was exercising jurisdiction pursuant to that Act of the

Commonwealth, and it wa6 common ground between the parties that

any decision made in the course Of the proceedings was a decision

of an administrative character made under that enactment (see - La b

V - MOSS (1983) 49 A.L.R. 533).

At the conclusion o€.the Crown case, in order to exercise his jurisdiction in accordance with law pursuant to s.Sl(l)(a) and (b)

of the Act, the magistrate was requitedr-

(a) if the evidence was not sufficient in his opinron

..	I "	4
. \

to put the accused person on his trial for an

indlctable offence - to order him to be dlschargad

o u t of custody a6 to the information then under

enquiry; or , . . , . , ,

. _

(b) if in his opinion the evldence was sufficlent to

put the accused upon his trial for the indictable offence with which he was charged or if, in his

opinion the evidence given for the prosecution

raised a strong or probable preaumptlon o f guilt of

the accused person in respect of that charge, to

read the charge to him again and say tQ him the words set forth in s.56(1) (b) of the Act and call upon him to plead guilty or not guilty as the case may be.

On 27 April 1983 and after the COnClUSlOn of the evidence

given for the prosecution, the appellant submitted to the

magistrate;-

(a) that the ev idence was not sufficient to put him

upon trial:

..

(b)	that the evidence did not constitute a prima Eacie
case against him or .raise a strong - or probable -
presumption of .guilt . such as .to -permit the . I .

magistrate to put them upon trial;

(c) that he be discharged out of custody as to the

I S

5

information then under enquiry.

Coghlll made simllar submisslons, Grant made no submissions

and as yet has called no evidence. Collie made no submissions and

he has given evidence. A€ter hearing the submissions on behalf of

Coghill and Edwards the magistrate gave his reasons on 29 April

1983 which were appllcable to all the defendants includlng the

appellant.

Hi3 Worship, having formed the opinions that the evidence was

sufficient to put the defendants upon their trial and that there

was a strong or probable presumption of their guilt, did not

discharge them. ne proceeded to caution them in terms of

S .56(1) (b) oi the A c t and each Of them was called upon	t plead.
Each pleaded not guilty to each of the charges.

The proceedings before the magistrate related to a scheme

which, according to the prosecution, BaXer had conceived under

which a wholesaler of goods would dispose o€ them to company A which was registered as a wholesaler under the Sales Tax Assessment Act (Nol) 1930. Company A would quote its sales tax

exemption number and no sales tax would be payable. Company A

would then transfer one undivided .half interest in the goods to

company B and the other such interest to company C , wnich would

then acquire from company B its half intereat in the goods, and

sell the goods to the .retallsr. . . Baker undertook. to wholesalers	. . .
and retailers who agreed to participate in the scheme to pay any
6aleS t a x aasecoed to A,. B Qr C provided .that the assesment was ..

uphelcl upon final appeal and provided also that A, B or C did not

,I ' 3 : = 6

pay the amount assessed. Participating wholesalers and retallere

were also assured that either Baker or A , B and C would be

responsible for any legal costs in defending the wholesaler or

retailer against actions or assessments or collection of sales tax

arising from transactions involving the scheme.

The scheme was widely promoted and adopted. Wholesalers and retailers who used it were not told Of the details of the

arrangements between companies A, B and C. The invoices in

respect of the sales by company C to the retailers stated "Prices

include any sales tax payable." No sales tax was in fact included

in the prices stated in the invoices.

Hls Honour. in the light of the evidence to Which he had been

referred, stated that the appellant knew that sales tax was not to

be paid by any party involved in the Scheme. The intention was

that C would not register as a wholesaler and would make no

returns of sales by it. A former shelf company of little, if any,

-	substance, C was thus buildmg up a growing potential liability
for sales tax, which it did nor. disclose to the revenue authorities and €or which it was maXing no financial provision.
The savings so effected made possible the offer of discounts and
the payment of remuneration to the promoters Of the scheme

..

including the appellant, who is an accountant.

The committal proceedings 80 far as they had proceeded up to. .

29 April 1983- required. -the magistrate to consider some 2 7 2

statement6 of..witnesses, .the viva v o c e . evidence of eome 50

Witnesses, a multitude of exhibits, and submissions made on behalf

of the prosecution and each of the defendants.

His Honour heard the separate applications for review by the

appellant, Grant and Collie. In the. Course of a hearing before.. . , _

him which extended ave'r about 8 days, of which about 4 1/2 days were devoted to hearing the application of the appellant, he was referred extensively to the evidence which had been before the magistrate.

His Honour, having reviewed the evidence agalnst the appellant, went on to say:-

"It is apparent even on these facts that, if by law

sales tax	was payable by	C then, by conducting	the	4 ,
, I

transactions in a manner that they would not come to the

notice of the Sales Tax Dcparkent, although there was a

risk that they might, sales tax Would not be paid. In I

that event the scheme involved the commission of unlawful conduct to the detrment of the Commonwealth. The justification for conducting the transactions in this way was that there was genuine acceptance of the assurance of Baker that the nature of the transactions

between A, B and C and the wholesaler and retailer

concerned were such as to absolve them all from

liability for sales tax. Such conduct was therefore

intrinsically innocent and would be so regarded by any reasonable man. But the view might well be taken that the 'possibility' that there was an avenue of tax umunity in the Act which could be exploited by Baker's

secret formula would be likely to be questioned by any

honest man especially an accountant, as Edwards was.

Would an honest man invited to enter lnto the scheme and

participate in it for profit have wanted to know more about the scheme? What could there be in the nature of the transactions which would absolve C , who sold by wholesale to a retailer, from liability to pay sales tax

on his sales? - He-might have wan-ted to know-why; w h i l e . I.-..

learned opinions were being sought a8 to the liability o f wholesaler .and retailer, an opinion was not sought as

to the sales tax tiabilbty of A,I'B and-.C..- What, could be . . . .

the 'magic' of the nature	of the transactions between A,
B and C which could have	the legal effect alleged? HOW

could Baker'8 claim to secrecy, even against those .

joining in the scheme, be accepted without question?

The difficulty is that it may well be thought to be

beyond the w i t of an ordinary professional man to

contemplate a basis upon which the interposition of

intermediaries between the wholesaler and retailer would

exempt all the parties from liability to sales tax

especially as it mu6t have 'been clear that the

transaction between C and the retailer was plainly a

sale by a whoesaler to a retailer.

In my view it is unnecessary to proceed further to come

to a conclusion that in the absence of credible evidence

from Edwards as to his real state of mind the magistrate

could well form the opinions which	e did concerning	the
case against Edwards."

Before us, the appellant did not submit that there was no

evidence upon which the magistrate could properly have reached the decisions which he challenged. He relied Only upon what he said were errors of law apparent on the face Of his Worship's reasons

for his decisions, and the way in which his Honour had dealt with

these questlons. We were referred briefly	to only a small portion
of the evidence.

It was submitted that the magistrate erred in the standard applied in saymg:	he
-.

"A strong or probable presumptzon of guilt appears

to be established by evidence or circumstances that

point to the COmmiSSiOn of a crime and to the

accused persons as t h e criminals, Which

circumstances are not completely explained and

cleared up by the evidence of the accused."

..

The appellant submitted that th i s standard required him

to establish his znnocence' -completely - oven. be-8 he.:ulent-r. ::.

into evidence., . 1 I.\ ' :.'...*

In dealing with this submission his Honour said:

"It appears to me, however, that the rnaTistrate is

to be understood as saying that, where the question

whether there is a strong or probable presulflptron

of guilt arises for decision, an affirmatlve answer

may be given where the evidence of the prosecution

or the circumstances point to the commission of a crime by the accused unless the implication of the accused the crime arising from such evidence or

circumstances is explained away by evidence of, or

called by, the accused. The word 'completely' in the passage under discussion is inaptly Included. The ultimate question would not be whether the

evidence for the accused completely rebutted tne

implication of the aCCUS8d arising from the evidence o€ the Crown, but whether it so Weakened

that implication that it could no longer be sard to

be sufiicient either to require that the accused be

put upon his trial or to support the existence of a

strong or probable presumption o f guilt. Reading

the reasons as a whole I am not persuaded that he

magistrate did not so understand'the problem before

him. l'

The appellant submitted that the magistrate did not

correctly identify the elements Of the offences alleged and that he incorrectly applied an objective approach to t h e

element of dishonesty. It was eubmitted that the magistrate

took the view that the fact that the appellant promoted a

scheme which failed was sufficient to constltute the o€€ences alleged, irrespective of whether the appellant believed the scheme to be lawful and not one whlch deprived the Commonwealth of tax which it was lawfully entitled to receive. Several passages of rhe reasons were said to demonstrate this error.

The magistrate said: . . -

"The evidence in thin caoe as it presently stands

shows that each-of the defendants agreed to promote.. :

a scheme whereby eales tax would not be paid.

Whether the scheme involved an avoidance or an evasion Of aales tax is in my view Irrelevant. The

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. question is whether the non-payment of sales tax was unlawful. In my view, such non-payment of

sales tax was a clear breach of the Sales Tax

Assessment Acts. It has been correctly conceded by

both aefence counsel who made submissrons to me

that a defendant cannot excuse himself by saying that owing to his ignorance of the law he d i d not

reallse such an act was unlawful."

The appellant submitted that the magistrate in thLs

passage had f a l l e d to appreciate the significance of the

dlstinction between avoidance and evasion of tax. It was

submitted that if all that was intended was avoldance of

sales tax then no offence as alleged would be established.

In relation to these submissions his i-ionour sald:

"It is said that the passages referred to reveal

that the magistrate took the view that he relevant

mens rea was established once it appeared that the agreement was to bring about a state of affalrs in which non-payment of sales t a x was unlawful. In this context emphaaie was placed on the sentence - 'Whether the scheme involved an avoidance or an

evaslon of sales tax is In my view irrelevant'.

This sentence might indicate sone error in the magistrate's approach if. as is alleged by the applicants, it related to the matter of mens rea.

But on a correct reading of the reasons it is related solely to the issue of the unlavifulness of

non-payment of sales t a x .

m e magistrate dealt with the matter of mens rea in those passages in which he discussed the element of dishonesty. On a fair reading of the reasons it IS apparent that the magistrate was Well aware and

accepted that dishonesty was an essential element

in the offence	.of conspiracy to defraud the
Colnmonwealth.

I consider that the magistrate is to be -understood

as indicating that dishonesty on the part of an

accused person had to be pioved by +he Crown and

that that element of dishonesty would be

established where .a jury looking at the fact6

proved, and applying their own notions of what is

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honest and what is not, concluded that the accused

could not have believed that he was acting

honestly. If the accused was U person f i I

sufficient intelllgence and experience to realize . i

that what he was doing was dishonest according to I I

the standards of right minded people then in the

absence of evrdence to the. contrary dishonesty on

the part of the accused might be found to exist.

He went on to say that in his view, and applying this test, the element of dishonesty had been

satisfzed by the evidence before him.” I

Later in his reasons the magistrate said that some

attempt had been made by the dePendants to suggest that they

were entitled to rely on an opinion Of Senior counsel and an

advice from a Perth firm of solicitors. His Worship said:-

“1 am not exactly sure how this argument is put.

or, how such reliance would provide a defence.

Nevertheless I should point out that those persons

expressly stated that they were not advising as to

the sales tax liability (or by inference the

criminal liability) of A, B and C.

I would have thought it was abundantly clear to

each of the defendants who had read the Advice that they could not rely on it to provide a defence without first satisfying themselves of the legal effectiveness of A, B and C.”

It was submitted that the magistrate’n failure to

appreciate both the relevance and importance of the opinions

illustrated that he had not correctly identified the elements

of the alleged offences in that he did not regard a belief by

the accused in the lawfulness of t h e schemes as negating the

necessary mental elements.ot the alleged offences. :

Hie Honour referred to the fact that the reasoning Of

the magistrate was challenged also on the ground that in

discussing the relevance of reliance on the legal opinions he

stated, "I am not exactly sure how this argument is put, or

how such reliance would provide a defence." His Honour

sald : -

"This is a rather *puzzling -8takement ,because..#..

reliance on legal opinions would be relevant to the

.

existence of dishonesty in the mind of the accused. According to circumstances a learned opinion that a certain course was lawful could be significantly

material in an assessmont of the credzbility of a

statement by an Accused that he really believed

that hi5 course of action was, according	to the
test mentioned above, an honest one.

If the magistrate is to he understood to say that

in forming his opinion he considered that the

existence of a relevant legal opinion was of no

significance that would be an error. However, the

magistrate did look at the matter on the basis that

the opinions might be taken into account on the

issue of dishonesty. He toox the view that on the issue of the accused's belief that his conduct was not dishonest because of the contents of relevant legal opinions his statement to that effect would have to be examined in the light o€ the actual

opinion given. In this respect the knowledge and

experience of the accused in the area of sales tax

liability and business generally, and the

likelihood that the person might seek further

assurances as to the lawfulness of the actual conduct to be engaged in under the agreement were relevant considerationa. In the light of the foregoing I am not eatisPied that the magistrate misdirected himself in any respect."

For the purpose of attracting jurisdiction, the decision of th0 magistrate i s characterised as being of an administrative nature. Ordinarily, the reasons for such a decision should not be looked at over crltically. ( s e e

Commonwealth v,-Duncanb 9 . ~(19a2.1 a.44 .249 ,per Franki J. at -.. _,,_ ,

p.255, per Kelly J;-. at- p;261; Tagle. v Minister for . ,... - . .

Immigration (1983) 46 ALR 379 at p.386: Lennell v

Repatriation commission Pull Court unreported 3 February

1982). The magistrate's reasons should be considered in the

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. context of the proceedings before him and of the stage which they- had reached. He had considered B great volume of evidence and submissions. He was ruling upon it at a time when he had before him the possibility that there would be- .

evidence given by. or on behalf of the defendants. In these circumstances it was natural for him to limit what he said at the close of the Crown case.

I am not persuaded that a court of appeal, lacking the advantage which his Honour had, Of U detailed knowledge o f

the facts, should find any error in his rejection of the

criticisms which were made of the magistrate's reasons. In

the light of this opinion, no question of discretion arises.

In his notice of appeal the appellant sought an order

that the matter be remitted to the magistrate with directlons

that he proceed to reconsider the evidence before him and

make the decision required by s.56(l)(b) of the A c t

"according to law". If the appellant had been otherwise

-

~ u c c o s ~ ~ u l , i~ wuuld havs been vary difficult for P court lacking a detailed knowledge O f the evidence to have set out an appropriate guide to be followed by the magistrate in reconsidering it.

I . .'- .

.d. < P r 14

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I would dismiss the appeal, with costs .

I c e r t i f y t h a t th i s and t h e

preceding thirteen pages (13 1 are a

true copy of the Reasons for

Judgment herein of the Honourable

Mr. Justice Sweeney.

Date: 12 October 1984