Forsyth, N.H.M. v Rodda, P.J
[1989] FCA 442
•11 AUGUST 1989
Re: NEIL HARRY MARK FORSYTH
And: PHILLIP JOHN RODDA and RICHARD DENIS O'DONOVAN
No. VG 462 of 1988
FED No. 442
Judicial Review
87 ALR 699
COURT
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Sheppard(1), Morling(1) and Gummow(1) JJ.
CATCHWORDS
Judicial Review - committal proceedings - appellant committed for trial on charges of conspiracy to defraud the Commonwealth, conspiracy to prevent or defeat the execution or enforcement of a law of the Commonwealth and of inciting, urging, aiding and encouraging others to commit those offences - appellant contended no evidence before magistrate to justify his committal - appellant also contended that magistrate had not properly "weighed" the evidence against applicant - exercise of Court's discretion - discussion of matters relevant to exercise of discretion in applications to review decisions made in committal proceedings.
Administrative Decisions (Judicial Review) Act 1977, s. 16
Crimes Act 1914, ss. 7, 86
Magistrates (Summary Proceedings) Act 1975 (Vic.), s. 59
HEARING
SYDNEY
#DATE 11:8:1989
Counsel for the Appellant: Mr. T.E.F. Hughes, Q.C., Mr.
P.J. O'Callaghan, Q.C. and Mr. A.J. Howard
Solicitors for the Appellant: Arthur Robinson & Hedderwicks
of Melbourne
Counsel for the Respondents: Mr. A.G. Uren, Q.C. and Mr.
N.A. Moshinsk
Solicitors for the Respondents: Director of Public
Prosecutions, Melbourne
ORDER
The appeal be dismissed.
The appellant pay to the respondents their costs of the appeal.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
This is an appeal from a judgment of a Judge of the Court (Wilcox J.) in which his Honour dismissed an application made by the appellant to review the decision of a magistrate, made on 1 August 1988, to commit the appellant for trial on a number of charges. The appellant is a senior member of the Victorian Bar who, for many years, has specialized in income tax matters. The first respondent is the magistrate. He has submitted to such order as the Court sees fit to make. The second respondent is the informant. The charges are for offences under s. 86 of the Crimes Act 1914, namely, for conspiracy to defraud the Commonwealth (para. 86(1)(e)), conspiracy to prevent or defeat the execution or enforcement of a law of the Commonwealth (para. 86(1)(b)) and of inciting, urging, aiding and encouraging others to commit those offences (paras. 86(1)(e) and (b) and s. 7A).
The criminal prosecution involves five persons in addition to the appellant, namely, Mr. J.M. Vereker, Mr. I.D. Swansson, Mr. J.T. Brown, Mr. L.H. Lithgow and Mr. S.G. Connell.
The committal hearing against the six accused persons commenced on 19 August 1985. On 23 June 1986 the magistrate found that there was a case to answer. All the accused sought judicial review of that decision in an application filed on 18 July 1986. An order for judicial review was made on 1 April 1987; see Vereker v. Rodda (1987) 72 ALR 49. There were appeals and cross-appeals from this decision. On 15 October 1987, the Full Court varied the orders made by the primary Judge but otherwise affirmed his decision; see O'Donovan v. Vereker (1987) 76 ALR 97. On 18 March 1988 the High Court refused special leave to appeal from the judgment of the Full Court.
The committal proceedings concluded on 1 August 1988 when the appellant and the other accused were committed for trial. On 26 August 1988 the application for judicial review in the present proceeding was filed. On 30 September 1988 an indictment was filed in the Supreme Court of Victoria charging each of the accused with the offences to which we have referred. The judgment dismissing the application for judicial review in this matter was delivered on 2 December 1988. The notice of appeal was filed on 23 December 1988. The Court was able to hear the appeal much earlier than 10 July when the hearing of it began but, for reasons which need not be gone into, acceded to an application by senior counsel for the appellant to postpone the hearing until 10 July. We mention the history of the matter to record the unfortunate state of affairs which exists. Almost four years have elapsed since the committal proceedings commenced. The charges themselves relate to events which occurred in 1978 and 1979 and are thus 10 years old.
Two matters have been argued before us. The principal submission is that a consideration of the evidence led before the magistrate discloses that there is no evidence that the appellant committed any of the offences for which he is charged. The second submission is that the magistrate did not properly discharge his function under s.59(7A) of the Magistrates (Summary Proceedings) Act 1975 (Vic.) which required him to form an opinion whether the evidence was "of sufficient weight" to support a conviction.
Relief under the Administrative Decisions (Judicial Review) Act 1977 ("the Judicial Review Act") pursuant to which the application is made, is discretionary (s. 16) and there are well considered principles which guide a court asked to review any aspect of committal proceedings in the exercise of its discretion. There are a number of authorities in which this is stated. For present purposes it is enough to refer only to some of them. In Lamb v. Moss (1983) 49 ALR 533 the Full Court said (p 546):-
"It is sufficient, for immediate purposes, to observe that there is a considerable body of authoritative judicial opinion that exceptional circumstances will generally be required before a superior court will consider interfering in committal proceedings, particularly at an interlocutory stage. Failure to permit criminal proceedings to follow their ordinary course will, in the absence of special circumstances, constitute an error of principle, as Gibbs A.C.J. pointed out in Sankey v. Whitlam (1978) 142 CLR 1 at p 26."
In the passage from his judgment to which the Full Court referred Gibbs A.C.J. (as he then was) said (p 26):-
"For these reasons I would respectfully endorse the observations of Jacobs J. (as he then was) in Shapowloff v. Dunn (1973) 2 NSWLR 468, at p 470, that a court will be reluctant to make declarations in a matter which impinges directly upon the course of proceedings in a criminal matter. Once criminal proceedings have begun they should be allowed to follow their ordinary course unless it appears that for some special reason it is necessary in the interests of justice to make a declaratory order. Although these remarks may be no more than mere 'administrative cautions' (cf. Ibeneweka v. Egbuna (1964) 1 WLR 219, at p 224) I nevertheless consider that if a judge failed to give proper weight to these matters it could not be said that he had properly exercised his discretion."
In Sankey v. Whitlam, proceedings in the Supreme Court of New South Wales for declaratory relief had been removed into the High Court pursuant to s. 40 of the Judiciary Act 1903 and Gibbs A.C.J. was not addressing his remarks to the exercise of discretion by this Court under the Judicial Review Act. Counsel for the appellant stressed in his submissions to us that the Judicial Review Act, as interpreted in Lamb v. Moss, is a statute which provides for review in this type of case. Nevertheless, what was said by Gibbs ACJ. in Sankey v. Whitlam has been treated, as the above extract from Lamb v. Moss indicates, as offering guidance for cases such as the present.
In Wong v. Evans (1985) 4 FCR 228 Wilcox J. said (pp 234-5):-
"The principle in relation to the proper exercise of discretion applies both in relation to review of the conduct of incompleted proceedings - Sankey v. Whitlam
(1978) 142 CLR 1 at 26; Lamb v. Moss
(1983) 49 ALR 533 at 564; R. v. Iorlano
(1983) 58 ALJR 22; Choo Cheng Kui v. Quinn unreported (Federal Court of Australia, Full Court, 25 September 1984) - and in relation to review of the ultimate decision of the magistrate to commit - Clyne v. Director of Public Prosecutions (1984) 58 ALJR 493 at 494, 502; Seymour v. Attorney-General unreported (Federal Court of Australia, Full Court, 7 November 1984). The reasons for that principle were articulated by Jenkinson J. in Seymour at p 7 of his judgment: 'Against the interest of the appellant in the result of the committal proceeding and in the conduct of that proceeding according to law must be weighed the public interest in the expeditious resolution of accusations of crime. The longer such an accusation remains unresolved the greater the risk of serious harm to the community. Those risks are multifarious: the fading of witness's recollections, the diminution of public confidence in the administration of the criminal law, the prolonging of fears and hatreds which the resolution of criminal charges tends to allay, and uncertainty as to the course which the life of the accused is to take, and not infrequently uncertainty as to the courses of other lives, are perhaps the more obvious and the most common. Those considerations of public interest are of great weight ...' There may be cases where the considerations referred to by Jenkinson J. are outweighed by the desirability of a prompt and authoritative decision upon a question of law underlying the prosecution case, as, for example, the validity of the Banking (Foreign Exchange) Regulations (Cth) considered in Clyne, but that qualification has no application to a case where the court is being invited, in the exercise of its power of review under the Administrative Decisions (Judicial Review) Act 1977 (Cth), to examine the detail of the evidence already considered by the magistrate in determining the existence of a case sufficient to warrant a decision to commit for trial and which may be examined afresh by the trial judge in connection with any submission that there is no case proper to go to the jury."
The approach adopted by Jenkinson and Wilcox JJ. in the Seymour and Wong cases was applied by Sheppard J. in Foord v. Whiddett (1985) 6 FCR 475. After citing the passage from the judgment of Wilcox J. in Wong which we have quoted, Sheppard J. said (p 485):-
"In my opinion the authorities to which I have referred provide powerful reasons why the discretion in this case should be exercised adversely to the applicant. This is a case where, notwithstanding that the evidence in support of the charge is in short compass, the fundamental submission of senior counsel for the applicant necessarily involves an examination of the detail of the evidence already considered by the magistrate in determining the existence of a case sufficient to warrant a decision to commit for trial. If there is a trial, the evidence will be given again. It will not come out perhaps precisely as it has come out before the magistrate. It will then need to be considered by a trial judge in connection with any submission that there is no case proper to go to the jury. It is my opinion that it is highly undesirable for courts of civil jurisdiction to be asked to interfere, in the way that this application does, with the due processes of the criminal law and its administration. If there were no more to the case, I would have no hesitation in deciding that my discretion should be exercised adversely to the applicant with the result that the application would be dismissed."
In Murphy v. Director of Public Prosecutions (1985) 7 FCR 55, Toohey J. reviewed (pp 55-57) the authorities on the exercise of discretion. After referring to a passage from the judgment of Sheppard J in Foord v. Whiddett in which he had said that he would not have thought that very different considerations applied in relation to the exercise of the Court's discretion in cases where a person has been committed as distinct from cases where review is sought in the course of committal proceedings, but before their conclusion, Toohey J. said (pp 57-58):-
"I would not dissent from that general proposition except to say that once committal proceedings have been completed an applicant may more readily be able to show that there are exceptional circumstances. ... But that of course must depend upon the circumstances of the particular case."
It remains to mention Kunakool v. Boys (1987) 77 ALR 435. In that case (at p 445) French J., after referring to the authorities, said that the Court will decline to review a committal decision where such review would involve an intricate consideration of the sufficiency of the evidence.
It is to be seen from this reference to authority that on applications to this Court for judicial review made in relation to committal proceedings, particular care attends the exercise of discretion in favour of granting an order for review, particularly where the matters relied upon in support of the application are, as here, based upon a submission that there is no evidence to support the charge which has been laid against the applicant.
Wilcox J was, of course, well aware of the principles propounded in these authorities. He referred to them in the course of his judgment. Nevertheless, he said:-
"A 'no evidence' argument necessarily involves consideration of the evidence tendered against the party making the submission. Counsel for the second respondent took the position that I ought not to go to that evidence, or to the magistrate's findings upon it. Notwithstanding this submission, and being conscious of the considerations referred to by counsel for the applicant, I decided to receive argument upon the 'no evidence' point, leaving until later a decision as to the appropriate course to take. It seemed to me that, if it truly was possible to conclude -- without descending to an intricate consideration of the evidence -- that there was no evidence to support the decision of the magistrate, that fact, in combination with the unusual burden of this trial, might constitute the type of exceptional circumstance spoken of in Lamb v. Moss. However, having considered the salient features of the evidence, and the submissions made by both parties thereon, without reaching a final view upon the question whether the matters relied upon could constitute 'exceptional circumstances', I am of the opinion that the Court ought not to interfere with the magistrate's decision upon this ground."
Wilcox J. then considered the matters relied upon by counsel for the appellant here and explained why he had concluded that the magistrate's decision should not be disturbed. Before us, counsel for the informant submitted that we should not follow the same course. We should apply the principles propounded in the cases to which we have referred and refuse to examine the evidence for the purpose of seeing whether the evidence was sufficient to warrant committal.
Counsel for the appellant approached the matter much as they had done before Wilcox J. They said that the circumstances of this case were exceptional and warranted a consideration of the evidence. Their case in this respect may be summarized as follows:
(a) Although the committal proceedings had occupied some 150
hearing days and given rise to a great deal of oral and documentary evidence, the case made against the appellant, as distinct from the other accused, was based substantially on documents and was within a short compass.
(b) The proposition that there was no evidence against him was
clearly correct and could be demonstrated as being so shortly and without the need to refer to the evidence at any great length.
(c) The quashing of committal proceedings as against the
appellant would avoid the need for a lengthy trial to take place, would obviate, from his point of view, the very substantial expense and time which such a trial would involve, and would release him from the worry and anxiety of a matter which had been pending for at least four years.
(d) The appellant was not the only one who would benefit by the
exercise of the Court's discretion; both the public, which had an interest in litigation being conducted expeditiously, and the Director of Public Prosecutions, would also benefit.
There was another matter going to the discretion of the Court which was discussed in argument but not made the subject of any submission by either counsel. As earlier noted, there has been pending in the Supreme Court of Victoria since 30 September 1988 the indictment which was then filed. The matter has thus moved beyond the committal stage. We asked counsel for the informant whether he wished to make any submission based on that circumstance. He declined to do so, apparently for the reason that no submissions based on that matter had been made to the primary Judge.
Wilcox J., having decided to embark upon a consideration of the substance of the matter upon which counsel for the appellant rely, it is difficult for us to adopt at the outset an approach which would involve our refusing to consider at all the submissions which were put to us on the no evidence point. The consequence would be that the appeal would be dismissed, not because we agreed or disagreed with Wilcox J.'s ultimate conclusion, but because we thought that his discretion had miscarried by reason of his having embarked upon the inquiry which led him to conclude that the magistrate was not shown to be in error. We have, accordingly, decided that we are constrained by the circumstances in which we find ourselves to give consideration to the submissions upon which counsel for the appellant have relied. We shall, however, say more of discretion in due course.
The critical documents in the case consist of a brief to advise dated 7 March 1979 delivered to the appellant and his advice given on 23 March 1979. In the proceedings the advice came to be known as the NIPAG advice, the acronym referring to the Norfolk Island Public Art Gallery. The appellant, as senior counsel, was asked to advise on a tax avoidance scheme. In the opening paragraph of his instructions the appellant was told that he was required to advise:-
"in relation to a proposal the objects of which are to eliminate the liability to income tax of companies which have been acquired with profits earned in the current year and where no form of loss has been introduced into the company before acquisition by the purchaser."
The appellant was referred to an earlier brief, advice given by him on 5 March 1979 and "to conferences in regard to this subject generally".
The scheme upon which the appellant's advice was sought was set out in his instructions in the following terms:-
"The parties to the proposal are as follows:-
(a) Q is an M.T.S. controlled trust.
(b) P is a group of three companies controlled by an independent third party.
(c) Art Gallery is a gallery which counsel can assume is one which qualifies under S 78(1)(a)(xxvii) of the Income Tax Assessment Act for donation. - The gallery has a trustee which is related to P.
(d) B.S. is a trust created in such a way that neither of Q nor P nor any person directly or indirectly associated with Q or P can benefit directly or indirectly at any time. The Trustee is an M.T.S. controlled company.
The proposal envisages:-
1. (i) Q fortuitously acquires for a nominal sum say $2.00 an object d'art which it recognises has substantial intrinsic value to the residents located within the vicinity of the Art Gallery.
(ii) Q sells the object d'art to B.S. for the same nominal sum but with a price escalation clause based upon the ability of B.S. to pay, but nevertheless not to exceed say $10,000,000.
(iii) B.S. sells the object d'art to the Art Gallery upon similar terms to those it acquired from Q i.e. $2.00 with a price escalation based upon its ability to pay restricted to (sic) of monies received from donations by Australian Companies which have ever been owned by Q after a certain date - say 10th March, 1979.
2. (i) Q purchases a Current Year Profit Company (C.Y.P.) for $900,000 which has $1m cash at bank.
(ii) C.Y.P. declares a dividend to Q of an amount equal to its revenue reserves. For the purposes of this example assume there are no reserves.
3. (i) Q agrees to sell C.Y.P. to P for a nominal sum - say $100, on the agreement that P will after acquisition cause C.Y.P. to make a donation of an amount sufficient to overcome its potential income tax liability i.e. its current year's profit.
(ii) A proposed minute of the trustees of Q is set out below which has the intention of creating the nexus between the loss on sale of shares in C.Y.P. and the escalating consideration from B.S. ........ ........ ........ ........ ......
4. C.Y.P. after purchase by P makes a donation to the Art Gallery of $1,000,000.
5. The Art Gallery on receipt of the donation, in accordance with its agreement with B.S. advances the $1,000,000 (less percentage kept to B.S. as part of the escalation in purchase price for the object d'art.)
6. B.S. on receipt of the $1,000,000
(minus) from the Art Gallery and in accordance with its agreement with Q makes an advance to (sic) the $1,000,000 (minus) to Q as part of its escalating purchase price for the object d'art."
"MTS" is a reference to Metropolitan Taxation Services (Aust.) Pty. Limited on whose behalf the appellant was asked to advise. The nature of the scheme is set out more comprehensively in the judgment of Northrop J. in O'Donovan v. Vereker (76 ALR at pp 102-104).
The appellant was asked a number of questions. We shall deal with these in the course of our reference to his advice of 23 March 1979. The advice opened with the following paragraphs:-
"1. Metropolitan Taxation Services ("MTS") is interested in acquiring the whole of the issued capital of companies with current year profits ("CYP") so that the vendors of those shares may sell them for a capital sum and effectively realize, inter alia, the benefit of the profits made in the current year without bearing the burden of taxation upon them. But if MTS is to do that, it must be reasonably assured that appropriate transactions may be entered into so that the potential tax liability of CYP in respect of the current year is diminished or extinguished. Not only is that a matter of great importance to MTS. It is also of importance to the vendors of the shares in CYP that they be assured that a mechanism exists, and will be implemented, whereby it is probable that CYP will not lawfully be liable to pay income tax. It can then not be said that the vendors of the shares were in any way accessory to any improper transactions concerning the assets of CYP.
2. I have previously given advice to MTS, both in conference and in writing, to the effect that the difficulties apparently created for dealers in CYPs by the enactment of sections 50A-N of the Income Tax Assessment Act would seem to disappear if CYP can, after its shares have changed hands, and notwithstanding that there is no continuing business etc., and notwithstanding that transactions are engaged in for the express purpose of creating a tax loss, obtain a 'full year deduction': see section 50C(3). One class of full year deduction is 'any deduction allowable to the company under section ... 78': section 50F(1)(c)."
The appellant then set out his understanding of the scheme and in para. 3(g) said:-
"3.(g) Q will sell all the shares in CYP for a nominal sum to P upon condition that P will, after acquiring the shares, cause CYP to make a donation of $800,000 to the specified fund of the Art Gallery."
The appellant then discussed the implications of a number of sections of the Income Tax Assessment Act 1936 in its then form, particularly ss. 78 and 78A. In relation to the second of those sections, he said:-
"Analytically, the question is how far one goes, beyond the quantum of the donation and the precise terms governing it, in determining 'the benefit derived'. The width of the language makes confident analysis impossible. No doubt also one should bear in mind what Mason J. said in F.C. of T. v. Students World (Australia) Pty. Ltd. (1978) 78 ATC at 4048:
'Although the traditional rule has been that clear words are required to impose a tax, so that the taxpayer has the benefit of any doubts or ambiguities, a provision introduced by way of an attack on tax avoidance should be given the wide meaning evidently intended: it should not be cut down in the interest of precision (Greenburgh v. I.R.C. (1972) AC 109 at p 137; I.R.C. v. Joiner (1975) 1 WLR 1701 at p 1706).' This passage was recently approved by Gibbs and Mason JJ. in F.C. of T. v. Lutovi Investments Pty. Ltd. (1978) ATC 4708 at
4714. A court pursuing that approach might perhaps conclude that the benefit derived by the Art Gallery from the gift was less than the amount of the gift because of the earlier purchase of the objet d'art at an inflated price. The terms of section 78A(4) no doubt support a wide approach. But, it may be asked, would a donor be deprived of his deduction merely because the euphoria induced in the trustees of the National Gallery by his large gift had made them improvidently pay a ridiculous sum for some so-called work of art (perhaps 'Blue Poles') which came onto the market? One can well imagine that in some cases there would be a direct relationship between the making of the gift and its utilization in a way which did not yield full value to the Art Gallery. And yet it would be surprising if that circumstance disentitled the donor to the whole amount (or any) of the deduction otherwise allowable. These considerations would seem to indicate that in assessing 'the benefit derived ... as a consequence of the gift', the field of investigation must be reasonably narrow."
The appellant's conclusions were reached in paras. 16 and 17 of his advice in which he said:-
"16. Applying traditional modes of legal analysis, it seems to me that the only relevant 'scheme or arrangement' is not one 'entered into in association with the making or receipt of the gift'. Nonetheless, it must be recognized that the width of the language and the circumstance that the section is obviously designed to counter artificial schemes involving gifts to charities, could conceivably lead a court to take a broader view of the reach of the paragraph.
17. I therefore conclude that it is a good deal more likely than not that section 78A(2) will not adversely affect the right to a deduction."
The appellant went on to consider the possible application of s. 260 of the Income Tax Assessment Act to the scheme and concluded that this was not a concern because of the decision of the High Court in Cridland v. Federal Commissioner of Taxation (1977) 140 CLR 330.
In para. 19 the appellant answered the first question in his brief in the affirmative. That question had asked him whether C.Y.P. (the current year profit company) would obtain a deduction under s. 78 of the Income Tax Assessment Act for the donation of $1 million "bearing in mind the amendments of recent times and specifically considering whether s. 78A(2) has any detrimental effect on the donation made by C.Y.P." The remaining questions were answered as follows:-
"2. Q. 'Overall, will the proposal achieve the objective of providing a 'full year deduction' to CYP and therefore overcome the provisions of sections 50A-50N so as to enable Q to be able to purchase companies with profits earned in the current year without first injecting any loss?' A. Subject to the various considerations I have mentioned in answering question 1, and to the terms of my advice of the 5th March, 1979, yes.
3. Q. 'Will Q be able to off-set the consideration received on the sale of the objet d'art against the loss on disposal of the shares in CYP to P?'
A. Yes, subject to section 52A. I have discussed the application of that section to somewhat similar arrangements in conference, and written some brief notes upon it, to which reference ought to be made. (I assume that Q carries on active share-trading business).
4. Q. 'Does section 260 or any other section of the Income Tax Assessment Act have any detrimental effect on the proposal?'
A. No.
5. Q. 'Should more than $10 million be required, counsel is requested to advise whether more than one sale of an objet d'art would in any way jeopardise the proposal. If so, alternatively, would an escalation in price to say $50 million jeopardize the proposal?' A. I think there is very little difference between a price inflated by $10 million odd and a price inflated by $50 million odd. Either is wholly artificial. Nonetheless, I have some slight preference for the sale of a number of objets d'art - preferably at a mixture of prices.
6. Q. 'Should counsel consider any alteration amendment or modification has the effect of enhancing the prospects of achieving the objectives of this proposal, then counsel is requested to so advise.' A. The only comment which occurs to me is that because CYP is making a gift, it is possible that a liquidator of CYP could seek to recover that gift from the donee pursuant to section 120 of the Bankruptcy Act 1966. This possibility of course would only arise if CYP became insolvent (e.g., if the Commissioner assessed it, disallowing the deduction claimed, and obtained judgment against it for the tax and had it wound up). A question would then arise as to whether the gift fell within section 120 or not."
The appellant concluded his advice by saying:-
"One final comment should be made, namely that a number of hazards now attend those engaging in artificial taxation schemes. First of all there is the risk of outright retrospective legislation, which can no longer be dismissed as negligible. Secondly, there are the usual risks that I am mistaken in my judgment or assessment, or have overlooked some point, or have approached the matter from a point of view which is not shared by a judge. Thirdly one must take into account the possibility that there will be a judicial reaction against artificial schemes of this kind. Fourthly, one should not underestimate the ingenuity of the Commissioner in finding some further way of making life unpleasant for participants in such arrangements."
In the course of the committal proceedings, counsel for the informant put the essence of the Crown case as being one in which the appellant knew that the NIPAG scheme necessarily involved stripping participating companies (i.e. the C.Y.P. or current year profit companies) of all their assets and that there was a risk that the scheme would fail. By the advice which he gave he thus lent himself to the scheme facilitating and encouraging its implementation in the knowledge that for a variety of reasons the scheme might be found not to achieve its purpose. The result would be that the C.Y.P. companies, although liable for substantial amounts of income tax, would have no funds or assets with which to meet them.
Counsel for the appellant said that a proper reading of the appellant's instructions of 7 March 1979 and his advice of 23 March 1979 did not disclose any matter which would establish that he knew that the implementation of the scheme would necessarily deprive the C.Y.P. companies of all their assets or which established or tended to establish that he was participating in an agreement or arrangement with the other accused whereby their object of achieving a situation in which the C.Y.P. companies were stripped of assets and thus paid no tax was achieved.
Counsel emphasized the nature of the evidence which the informant needed to establish before the prosecution could succeed. They referred to Hardie v. Hanson (1960) 105 CLR 451 where Dixon C.J. said (p 458), in relation to the expression "intent to defraud" used in the legislation in question in that case, that the intention "must be express or actual and real: nothing constructive imputed or implied will do". Similarly Kitto J. said (pp 463-4);-
"But the onus lay on the respondent to prove affirmatively that the carrying on of the company's business during the relevant fifteen months was characterized by an intent - which in the circumstances means an intent on the part of the appellant - to defraud creditors of the company. An actual purpose, consciously pursued, of swindling creditors out of their money had to be established against the appellant before a declaration under the section could be made. It was not enough for the respondent to prove that the appellant acted with blameworthy irresponsibility, knowing that he was gambling (in effect) with his creditors' money as well as his own, and with much more of their money than of his. And the respondent's case was still not made out by proof of the additional facts that the appellant, while thus indefensibly hazarding the assets available for the payment of debts, was drawing from the business for his own use substantially more than he was putting into it and must have realized that the excess would turn out to have been drawn at the expense of the creditors unless the business should be more successful than he had any right to expect."
Obviously the facts in Hardie's case were very different from those in question here but what Dixon C.J. and Kitto J. said emphasizes the nature of the matters - the positive state of mind - which the prosecution in a case of this kind must establish before it can succeed.
Counsel also referred to R. v. Tighe & Meagher (1926) 26 SR (N.S.W.) 94 at p 108, Georgianni v. The Queen (1985) 156 CLR 473 at p 479 and Gillick v. West Norfolk and Wisbech Area Health Authority (1986) AC 112 at p 190. We do not find it necessary to refer to what was said in these cases. They demonstrate that what was said in Hardie has been applied on a number of occasions. It is useful, however, to refer to a short passage from the judgment of Cussen ACJ. (as he then was) in R. v. Russell (1933) VLR 59 where his Honour said (p 67) that the person charged as a secondary party should in some way be "linked in purpose with the person actually committing the crime ..." This statement was cited (p 480) by Gibbs C.J. in his judgment in Georgianni (supra).
The magistrate purported to apply these principles. He said that he did not believe that there was sufficient evidence upon which a reasonable jury could be satisfied that the appellant was a party, prior to 31 May 1979, to the agreement into which the other accused, on the magistrate's findings, had entered. The magistrate continued:-
"It is my view that a reasonable jury could not be satisfied that prior to about that date Mr. Forsyth was aware of the essential elements of that agreement, due to insufficient evidence upon which it could be found that he knew that MTS had implemented the scheme. Accordingly, in those circumstances the necessary intent or mens rea could not be found against Mr. Forsyth."
Counsel for the informant before us made it clear that the informant did not accept this view of matters and submitted to us that the NIPAG advice, read against the background of the appellant's instructions, was capable of giving rise to inferences which, if drawn, could lead to the conclusion that the appellant well knew that a principal purpose of this scheme was to strip the C.Y.P. companies of their assets, thus ensuring that they would be in no position to pay any income tax for which they were lawfully assessed.
In order to reach his conclusion that there was a case against the appellant, the magistrate relied upon some further matters. These consisted of a further brief delivered to the appellant which became known as the Bexley brief and evidence of oral advice given to a Mr. Boerkamp and a Mr. Liebler.
The Bexley advice was given on 30 May 1989 in consequence of a memorandum delivered to the appellant by a solicitor. He was briefed to advise in respect of the proposed sale of shares in a company, Bexley Corporation Pty. Limited, which had earned substantial profits in the then current financial year, i.e. the year ending 30 June 1979. A number of facts were set out. It is unnecessary to refer to the detail of these, except in relation to para. 6 which told the appellant that it was envisaged that all assets of the company would be realized and all liabilities would be paid out or transferred. The appellant was asked a series of questions which he answered by making notes on the memorandum after a conference in which he gave oral advice to two officers of the Bexley Corporation, Messrs. Rice and Boerkamp. The appellant made a handwritten note of his answers to the six questions. He advised that the shareholders would not be liable to income tax on the sale of the shares in the company and on another matter to which it is unnecessary to refer. Questions 3, 4, 5 and 6 asked in the memorandum and the appellant's answers thereto were as follows:-
"3. Should the shareholders enquire into the affairs of the company after sale or seek the intention of the purchasers in relation to the company before the sale? Only so far as necessary to avoid suspecting or to dispel suspicion of fraud.
4. If the Company, for any reason is assessed to income tax at some later date, and such assessment for any reason is not paid, would the shareholders
(vendors) be in any way personally liable?
Not directly. Only liable to liquidator or Commissioner if knowingly parties to a fraudulent scheme.
5. How can this form of tax minimization result in legislation etc making the proceeds from sale taxable in the hands of the shareholders? Any legislation is possible - what is probable is ultimately a matter of personal judgement.
6. Are there any criminal or other charges the Tax Commissioner may pursue against the shareholders? Not in the absence of any fraud."
In the course of his evidence Mr. Boerkamp said:-
"I can clearly recollect during the discussion Mr. Forsyth telling us to write in our diary that there was in no way anything fraudulent or criminal in relation to what MTS were doing and that what MTS were doing was just a proper tax minimisation scheme."
Mr. Boerkamp was then referred to his diary and an entry which said:-
"Forsyth said that what MTS was doing with Bexley was in no way fraudulent so that we need not worry about any criminal charges."
Mr. Liebler was a member of a firm of solicitors who acted for a company, Construction Engineering Pty. Limited. He gave evidence of a telephone conversation with the appellant on 19 June 1979. He spoke to the appellant, at the behest of an accounting firm, Frank Jones & Associates, who were the accountants for Construction Engineering Pty. Limited, about its proposed entry into a NIPAG scheme. According to Mr. Liebler, the advice given by the appellant over the telephone was to the effect that in his view the proposed transactions would be such that there would be no element of impropriety or of defrauding the revenue. Mr. Liebler did not at first answer a question whether anything had been said concerning the degree of certainty which operated upon his mind as to "the ethicacy (sic) of the scheme". Mr. Liebler was pressed to answer this question and said:-
"The answer was that he gave me his view, there were no - elements of certainty and uncertainty weren't discussed."
In the magistrate's view, the Bexley brief, particularly the appellant's answer to question 6, which said, "Not in the absence of any fraud", and the relevant parts of the evidence of Mr. Boerkamp and Mr. Liebler tipped the scales against the appellant. The magistrate said:-
"I am satisfied that a reasonable jury could be satisfied beyond reasonable doubt that:
(a) at the time of the Bexley conference Mr. Forsyth had actual knowledge of the essential elements and facts of the agreement which I have found that a reasonable jury could be satisfied was entered into by Messrs. Connell, Lithgow, Swansson, Vereker and Brown;
(b) at the Bexley conference Mr. Forsyth intended to persuade or encourage Messrs. Rice and Boerkamp to have the Bexley Corporation participate in the NIPAG scheme and that, if Mr. Forsyth did not thereby enter into the main agreement with Messrs. Connell, Lithgow, Swansson, Vereker and Brown, he at least aided, abetted, counselled and procured them and MTS to carry out the unlawful agreement which I have previously stated could be found against them by a reasonable jury.
(c) Mr. Forsyth's advice to Mr. Liebler was intended to persuade and encourage Mr. Liebler to advise clients to enter the scheme, and was in furtherance of the main agreement, or by it he at least assisted Messrs. Connell, Lithgow, Swansson, Vereker & Brown and MTS carry out that agreement."
Further evidence needs to be referred to, some of it in relation to advice given by the appellant prior to the NIPAG advice. On 13 December 1978 the appellant wrote an advice which was headed, "Re Current Year Profit Companies". It is unnecessary to refer at length to this advice. The only relevant part of it is in para. 3 where the appellant said:-
"As they (the shareholders) were being paid a price for their shares which plainly indicated an assumption by the purchaser that the burden of tax would not ultimately be borne, the conclusion would seem to follow that it was probable that some step was involved which went further than (and was not as defensible as) an ordinary tax avoiding scheme - typically, the stripping of assets from the company so that the Commissioner could not recover tax properly due to him. It is possible that, in this situation, it might be alleged that the vendors committed some criminal offence - in particular, that they were engaging in a conspiracy to defraud the Commissioner, or that they were in breach of section 374C(2) of the Companies Act. My colleague Mr. A.P. Webb has given advice that it is 'plainly possible' that such an offence might be committed in such circumstances. I am more doubtful, but clearly I think that it is not a risk which vendors should run - especially if there is any practicable alternative."
The emphasis is ours.
On 21 December 1978 the appellant wrote a further advice in a matter which was entitled, "Re Disposition of Assets". In para. 2 the appellant said:-
"It is therefore proposed that steps be taken as a consequence of which Income Co. will no longer have assets available to satisfy the Commissioner's demands for tax if he should make any such demand and if he should take steps to enforce payment. My instructions do not phrase the proposal in this rather blunt way, but that, as it seems to me, is essentially what is involved."
In para. 4 the appellant said:-
"... my impression is that the Commissioner is becoming steadily more aggressive and determined in his response to tax avoidance schemes, and it may be that these characteristics will extend to questions of recovery of money and prosecution for offences as well as to investigation and assessment."
In para. 11 of the advice the appellant set out part of s. 86 of the Crimes Act including paras. (1)(b) and (e). He then said:-
"My criminal law is rather rusty. I have, however, looked at Scott v. Metropolitan Police Commissioner (1974) 3 WLR 741 where the House of Lords held that a conspiracy to defraud did not necessarily involve the deception of the person defrauded and that the charge could be supported by proof of an agreement by dishonest means to deprive another of something which is his or of something to which he is or would be entitled. I have also looked at the Australian Digest (2nd ed.) Vol. 7, col. 270-274 which contains a summary of a substantial number of cases concerned with conspiracy to cheat or defraud. Only a few of those are even remotely analogous to the present case and in them the analogy is very tenuous. One of the problems is the fluidity of the term 'dishonest' which is often relied upon in the judgments as a touchstone. But the Shorter Oxford Dictionary suggests that 'dishonest' in the relevant sense is a synonym for cheating and defrauding, so that the word really carries one no further. The importance of Scott's case is that it removes deception as the test. One is then left somewhat at large in determining what constitutes fraud. In this state of the law, it is in my opinion well arguable that a sufficiently clear case of the stripping of a company of assets with the sole or principal object of ensuring that it has no funds with which to pay a creditor (being the Commonwealth or public authority thereof) does constitute an offence under section 86. In this respect it does not seem to me to be of great significance that in all probability the tax will not be properly payable. The stripping transaction has no purpose or end other than to deal with the case where the tax is properly payable, and accordingly the question of whether there is an intent to defraud must I think be judged upon the hypothesis that the tax is properly payable."
On 2 March 1979 the appellant prepared some notes in relation to a conference he had had in a matter, "Metropolitan Taxation Services Re Section 52A". It is to be observed that these notes were prepared less than a week before the brief for the NIPAG advice was delivered. In para. 5 of his notes the appellant said:-
"If Q makes virtually no commercial profit (any commercial profit being derived by some other company or trust controlled by M.T.S.) then no criticism can be made of the directors of Q upon the basis that they have taken steps to dispose of assets available to them to satisfy any possible tax liability. The situation will not be one where there is first a tax liability, and then a transaction to deprive Q of assets with which to meet it. Instead the very transactions which create the tax liability (if any) will necessarily and of their essential nature leave Q without the assets to meet the tax - or rather will fail to produce assets with which to meet the tax. Q will not have (in the typical case) substantial net assets before the transactions, and will in any event have no greater net assets at the end of the transactions. The transactions will not reduce the net worth of Q; and neither will they increase it. If the transactions were not engaged in at all, there would be no basis upon which the Commissioner could assert a tax liability on the part of Q. Accordingly, from the point of view of Q's liability to tax, the Commissioner will not be worse off because Q has engaged in the transactions. That being so, it does not appear to me that it can reasonably be said that Q or any of its directors have committed a fraud or any other breach of the law in engaging in the transactions in that way."
It will be recalled that in his instructions for the NIPAG advice delivered on 2 March 1979, the appellant was referred to an earlier brief (which was not otherwise identified), his advice dated 5 March 1979 and to conferences in regard to the subject generally. There does not appear to be any advice dated 5 March 1979 in evidence, but it may be that this is a reference to the notes which are dated 2 March 1979.
It remains to mention a further advice given by the appellant on 21 December 1979 well after the date of the NIPAG advice. The advice was headed, "Re Felmark Shoe Co." That company was apparently considering entering into a NIPAG scheme. In para. 3 of the advice the appellant said:-
"It is true that the sale price is explicable only upon the assumption that the purchasers expect that the companies will not pay the income tax which will prima facie become leviable in respect of the profits of the current year to date. But that does not necessarily indicate any dishonest intention. Of course it is theoretically conceivable that the new directors intend simply to strip the companies of their assets, and leave nothing to pay the tax. That would be fraudulent and would expose those concerned to very substantial penalties under the criminal law. The alternative is that the purchasers expect to be able so to arrange the affairs of the companies (e.g., by causing them to engage in transactions, artificial or otherwise, which attract deductions in circumstances such that, notwithstanding sections 50A-N of the Income Tax Assessment Act, they may be offset against the profits so far made) that no income tax is lawfully payable in respect of the current year. From what I have been told, there seems to be no reason at all why the present directors of the company should assume that it is the unlawful, rather than the lawful course that is in contemplation."
It is next necessary to refer to some findings made by the magistrate in relation to some background matters. There was no challenge by counsel for the appellant to these findings. They were:-
"(a) each defendant (including the appellant) had a high degree of knowledge and experience of the law of taxation, the practices and attitudes of the Commissioner of Taxation and the operation of the tax minimisation industry;
(b) Messrs. Lithgow, Swansson, Connell, Vereker and Brown were all experienced promoters of tax schemes;
(c) Mr. Forsyth was aware of the experience and occupation of MTS and Mr. Brown;
(d) MTS charged fees for participants in their tax schemes;"
The magistrate also found that the decision to implement and operate the NIPAG scheme was made by M.T.S. and that the appellant did not have any control over the manner in which M.T.S. operated the scheme.
The essential basis for the attack made by counsel for the appellant on the magistrate's decision was provided by the 1978 advices, especially the second one dated 21 December 1978. Counsel relied particularly on so much of that advice as we have quoted. He contended that it plainly established that, rightly or wrongly, the appellant held the view in good faith that it was criminally wrong to strip a company of assets for the purpose of bringing about a situation under which it would not have the funds necessary to pay income tax for which it was assessable. But, so counsel submitted, it was not, and the appellant thought it was not, criminally wrong for a barrister, acting in good faith, to advise on the likely success or otherwise of a particular tax avoidance scheme where a necessary incident of the implementation of the scheme was the stripping of the assets of a company liable to pay income tax if the scheme failed. It was counsel's submission that the appellant's advices given both before and after the NIPAG advice consistently reflected the appellant's view that he was properly entitled to advise on the validity of the scheme in these circumstances. Indeed, counsel went further and said that the appellant was bound by the ethics of his profession to give advice about the scheme to the best of his ability. In this respect they referred to what Mason J. (as he then was) said (49 ALJ 570 at p 574) in the course of an address entitled, "Where Now?", which he delivered to the Eighteenth Australian Legal Convention, Canberra, on 8 July 1975, namely:-
"The taxpayer who wishes to reduce his liability to tax or death duty is, however, as much entitled to legal advice as any other member of the community, and the lawyer who practices in that field is as much entitled, and bound, to assist a client as the lawyer who practices in other fields of law."
The emphasis is ours.
Counsel emphasised that the statements in the advices upon which they relied were not statements in which the appellant had directed his mind to his own possible criminal liability but to the criminal liability of those who might participate in the schemes. But his view about the position of those persons qua the criminal law was a plain indication that he himself believed that he was acting honestly and not in any way contrary to the criminal law.
In counsel's submission, these considerations should lead us to conclude that the evidence, looked at as a whole, did not reveal any dishonest or fraudulent intent nor the participation by the appellant in any scheme or enterprise designed to strip companies liable to pay income tax of their assets. On the contrary, the two 1978 advices, and those given in May and June 1979, when looked at together, plainly revealed the appellant's view that no-one bona fide entering into a NIPAG scheme would commit a crime even though the scheme might fail and the companies be deprived of the assets which would otherwise have been available to meet their tax liabilities.
It was counsel's submission that this way of looking at the matter accounted for such statements as were made by the appellant in his written answers to the questions asked him on 30 May 1979 when he said that the shareholders of the C.Y.P. company would only be liable to a liquidator or the Commissioner if they were knowingly parties to a fraudulent scheme and that, in the absence of any fraud, they were not liable to be convicted of any criminal charges. Counsel said that the thread which thus ran through the advices was itself a manifestation of honesty even if the advice which was given was mistaken. There was a negation of fraudulent intent in the sense in which that expression had been explained in Hardie's case and the other cases relied upon.
Furthermore, as we have earlier mentioned, counsel for the appellant relied strongly on a submission that there was nothing arising from the NIPAG advice itself, including the appellant's instructions upon which that advice was based, to justify the conclusion that, in relation to that advice, the appellant's mind was turned at all to stripping. The advice was entirely concerned with the lawfulness of the scheme and with nothing else. In these circumstances, so counsel submitted, no inference to justify a finding of fraud or other dishonesty arose as a matter of law. Suggestions to the contrary involved speculation and conjecture and nothing more.
Counsel for the informant approached the matter from the opposite direction. They began with the scheme. They relied heavily upon its artificiality and indeed, in effect, submitted that it was on its face preposterous. They coupled that circumstance with the appellant's doubts expressed in the NIPAG advice about whether the scheme would succeed. We have quoted passages from the appellant's advice of 23 March 1979 in which these doubts appear and we do not refer to them all again. It is enough to refer to para. 21 which concluded the advice by drawing attention to the risk of "outright retrospective legislation, which can no longer be dismissed as negligible", the fact that the appellant himself might be mistaken or might have overlooked some point, and that there might be "a judicial reaction against artificial schemes of this kind". Counsel denied that there was no mention of stripping assets in the appellant's instructions of 7 March 1979 for the NIPAG advice. They pointed to para. 2(i) of the instructions earlier quoted in which it was said that Q would purchase a C.Y.P. company for $900,000 which had $1 million in cash at the bank. In counsel's submission the clear inference was that the $1 million represented the entirety of the company's assets; to use their expression, it was "cashed up".
They did not tie their flag to this masthead. In their submission they did not need to do so. There was ample indication in advices which preceded the NIPAG advice and also in advices which followed it which showed that the appellant was well aware that the stripping of assets was a necessary incident of the scheme. Indeed, one of those advices was headed, "Re Disposition of Assets", that being the advice of 2 March 1979. Counsel relied upon the blunt statement which opened para. 2 of the advice and upon the express reference to s. 86 and what was said thereafter in para. 7. Not to put too fine a point on it, counsel submitted that the scheme, artificial and preposterous as it was, was a mask or disguise for the real objective, namely, to strip the assets of the companies and thus deny the Commissioner the income tax which the companies were obliged to pay. The appellant was familiar, as the magistrate found, with the operation of the tax minimisation industry; he knew that Mr. Brown was an experienced promoter of tax schemes and of the experience and activities of Metropolitan Taxation Services. The doubts expressed by the appellant in the NIPAG advice were to be contrasted with the certainty with which the advice to the Bexley Corporation and Messrs. Boerkamp and Liebler was given. The inference was open that the appellant appreciated that the scheme was a doubtful one but advised as he did in order to provide those entering into it with a defence to any possible prosecution under s. 86 of the Crimes Act by providing, in the way he chose to look at the matter, the promoters and others participating in the scheme with the ability to say that they had entered into the scheme in good faith and that the stripping which occurred was an incidental consequence of their entry into it done without any dishonest intent.
In the course of his reasons for judgment the primary Judge said:-
"Counsel for the second respondent (the informant) submitted that the offence would be complete, so far as Mr. Forsyth is concerned, if, knowing of the promoters' unlawful purpose, he joined with them in effectuating that purpose -- by encouraging prospective participants -- even though his participation was restricted to the giving of honest legal advice; that is, honest in the sense that the advice not only stated what Mr. Forsyth believed to be the correct legal position, but that it stated the whole of his relevant understanding. I think that this analysis is correct; and the analysis points up the difficulty of finding that there is no case to answer. It is true that there is no direct evidence as to Mr. Forsyth's knowledge of the promoters' unlawful purpose. But there is circumstantial evidence. Mr. Forsyth was aware of the essential features of the scheme, including the fact that it would leave each of the CYP companies without the means to pay any tax which might ultimately be found to be due. He must also have been aware that this was not a necessary result of the use of s. 78 of the Act. He was aware of the proposed profit to be made by Q and the risks to which I have referred. I think that it is open to a jury to infer that he must have been aware of the second, and unlawful, purpose of the promoters in prosecuting this scheme.
However, whatever the correctness of the above analysis, in a forensic sense, the honesty of Mr. Forsyth's advices at the Bexley conference and to Mr. Liebler may turn out to be a critical question. It seems to me that a jury is more likely to impute to Mr. Forsyth the intention of joining in an unlawful conspiracy, if it takes the view that he deceived Messrs. Rice and Boerkamp and Mr. Liebler by telling them half-truths than if it regards him as having expressed a full and genuine opinion. A finding of deception would lead readily to an inference that Mr. Forsyth had a guilty mind, a condition explicable only by his knowledge of the unlawful purpose of the scheme."
The competing submissions of the parties, the decision of the magistrate and the reasons for judgment of the primary Judge serve to illustrate how unsatisfactory judicial review in a matter of this kind is. The guidance provided in the authorities earlier discussed cautions this Court against allowing applications under the Judicial Review Act to become the vehicle for a review of the evidence against an accused person and for a challenge to a magistrate's conclusion that an accused person has a case to answer and ought to be committed for trial.
Counsel for the appellant submitted to us that the evidence, when properly analyzed and understood, could not possibly sustain the informant's case. The gist of the submission was that it was clear beyond argument that the Crown had no case at all. We do not agree with this view. We think that the question whether there is a case to answer, involving as it does conflicting contentions by the parties that this or that inference is open or not open or that a jury would be entitled to draw, or not to draw, a variety of inferences said to be open on the evidence, poses, as it frequently does, a difficult problem. Take, for instance, the informant's contention that a critical matter is the likelihood or not of the scheme succeeding. The starting point for a consideration of that matter was said to be the extreme artificiality of the scheme, that itself making it less likely that it would run the gauntlet of challenge. This led to the appellant's own reservations about the success of the scheme, albeit that he expressed the clear view in para. 19 of the NIPAG advice that the current year profit company would obtain a deduction under s. 78 of the Income Tax Assessment Act, so that the scheme would succeed. The trouble is that what follows is so hedged with doubt and reservation that the advice given in answer to para. 1 of the appellant's instructions was largely undermined, if not negated.
The informant's case then moved through the NIPAG advice itself to the advisings given in May and June 1979 and the oral statements made to Mr. Boerkamp and Mr. Liebler. Each party seeks to place reliance on what the appellant there said. It is enough for us to say on this point that we find it difficult to perceive the ramifications of the appellant's statement made in answer to para. 6 of his Bexley advice which, in effect, was, that "in the absence of any fraud", there were no criminal or other charges which the Commissioner of Taxation might pursue against shareholders. This answer seems to us to beg the very question which the appellant was asked.
Having considered the matter in its entirety, we do not think that it can be said that the magistrate was plainly wrong in his decision that there was a case to answer. We think that the evidence in this matter may appeal to different judicial minds in a variety of ways. There are signs of this in the earlier case, O'Donovan v. Vereker. Each of the members of the Court (Fox J., Northrop J. and Pincus J.) approached the matter differently and saw the need to place varying degrees of emphasis on aspects of the evidence which was then the same as it is now. Wilcox J. approached the matter differently again. Significantly, no judge has yet expressed the opinion that the evidence is insufficient.
The essential nature of this matter, its long history and some of its inherent difficulties lead us to conclude, contrary to the way in which the matter was approached by the primary Judge, that this application for review, at least so far as the submission now under consideration is concerned, should have been dismissed on discretionary grounds. Our essential reasons for this conclusion are:-
1. The matter is not, as counsel for the appellant contended it
was, straightforward and clear cut. It involves difficult factual considerations principally in relation to whether it would be open to a jury on the face of the documentary evidence to draw inferences of various kinds.
A closer analysis by us (sitting as we do as a Full Court) of
the evidence might result, if our conclusions were plainly adverse to the appellant, in our making statements or expressing views which might pre-empt or inhibit the judge who presides at the trial and who, almost certainly, will be faced with a submission that the matter should not be left to the jury.
The appellant has not as yet given evidence. This is no
criticism of him. He was well entitled to stand on the submission that the Crown case revealed no evidence of his guilt. But the fact is that the magistrate had to judge the matter without the benefit of the direct evidence of intention which the appellant may have been able to give. That is why the case depends so much upon inferences arising from what the appellant said in his various advisings. A person's state of mind is never easy to prove.
The matter is now pending in the Supreme Court of Victoria.
As we have indicated, the informant made no submissions on the point but it is not readily apparent to us that the quashing of the committal proceedings will necessarily have any effect on the indictment which has been filed.
The appellant's rights are preserved, notwithstanding that
his application for judicial review may be dismissed. It is true that he has to undergo the ordeal and expense of a criminal trial. But this is the lot of many. It is the way in which our criminal process works. At the end of the Crown case, or after evidence given by the appellant or on his behalf, he may apply to have the case taken from the jury.
It remains to say that counsel for the appellant pressed upon
us considerations arising from the invidious position in which barristers advising in matters of this kind may find themselves. We have earlier referred to what Mason C.J. said about counsel's obligation to advise. Recently there have been published two papers concerning the possible criminal liability of members of the legal and accounting professions who give advice to persons in relation to conduct or proposed conduct which may be criminal in character. The two papers are, "Jeopardy of Lawyers and Accountants Acting on Commercial Transactions", a paper presented by McHugh J.A. to the Law Society of Western Australia Summer School, 11 February 1988, and "Criminal Liability of Professional Advisers", a paper presented by Mr. R.V. Gyles, Q.C. of the New South Wales Bar, to the Australian Bar Association Conference in Townsville in July 1988 (published in New South Wales Bar News, Summer 1988, p 25). The tension which exists in this area was, with respect, well highlighted by Brennan J. (when a Judge of this Court) in his judgment in Leary v. Federal Commissioner of Taxation (1980) 32 ALR 221 in which he said (pp 239-240):-
"The evidence in this case suggests that the scheme was promoted by members of the legal and accounting professions, who assumed the mantle of entrepreneurs. But it does not appear that any of the entrepreneurs in the present case assumed the functions of professional adviser to a client, nor does it appear that any professional adviser assumed the role of an entrepreneur. It has not been material to consider whether it is possible for the role of a professional adviser and the role of an entrepreneur properly to coincide or overlap, but the appearance of solicitors performing these respective roles in the present case leads me to invite attention to significant differences between the two functions. These differences do not arise out of any judicial view as to the lawfulness or morality of tax avoidance: as to which see FC of T v. Westraders Pty. Ltd.
(1980) 11 ATR 24; 30 ALR 353; IR Comrs. v. Westminster (Duke) (1936) AC 1; Latilla v. IR Comrs (1943) AC 377 at 381; Estate of Vicars (1944) 45 SR (NSW) 85 at 93; Re Weston's Settlements (1968) 1 Ch 223 at 245. They arise because the field of professional activity is co-extensive with a lawyer's professional duty. That duty is to give advice as to the meaning and operation of the law and to render proper professional assistance in furtherance of a client's interests within the terms of the client's retainer. It is a duty which is cast upon a lawyer, as a member of an independent profession, whether his services are sought with respect to the operation of taxing statutes, the provisions of a contract, charges under the criminal law or any other of the varied fields of professional concern. It is a duty which arises out of the relationship of lawyer and client. But activities of an entrepreneur in the promotion of a scheme in which taxpayers will be encouraged to participate falls outside the field of professional activity; those activities are not pursued in discharge of some antecedent professional duty. Entrepreneurial activity does not attract the same privilege nor the same protection as professional activity; and the promotion of a scheme in which particular clients may be advised to participate is pregnant with the possibility of conflict of entrepreneurial interest with professional duty."
The question of a barrister (or solicitor or accountant) involving himself in criminal liability because of advice given a client is no doubt a matter of substantial public importance. The limits of that liability may need working out more than they have been so far. But that is not a matter with which we can deal at large. The position of the appellant as a barrister in the factual matrix of this case is important, but, as in all cases, what has to be done is to consider the entirety of the evidence in the light of what is charged and come to the appropriate conclusion. That is what the magistrate here has endeavoured to do. We do not find in what he has decided any error which, in our opinion, is reviewable under the Judicial Review Act. The first submission made by counsel for the appellant is accordingly rejected.
The second submission was based upon the provisions of s. 59 of the Magistrates (Summary Proceedings) Act 1975 (Vic.). Subsection (7) of that Act provides that if, after hearing all the oral evidence and reading any statements, documents and exhibits admitted in evidence, the magistrate is of opinion that the evidence is not of sufficient weight to support a conviction for the offence charged, the magistrate must discharge the accused person. Subsection (7A) provides that, if after hearing the oral evidence and reading any statements, documents and exhibits admitted in evidence, the magistrate is of opinion that the evidence is of sufficient weight to support a conviction, the magistrate must direct that the accused person be tried for the offence at the next sittings in the Supreme Court or County Court. The submission concentrates attention on the expression, "sufficient weight" in each subsection and in short says that the magistrate did not weigh the evidence as he was required to do by the subsections with the consequence that he has not discharged his duty under the statute.
In order to deal with the submission adequately it is necessary to set out a further part of the magistrate's decision. We should explain that the magistrate gave a number of decisions in this matter. These need to be looked at collectively. Together they culminated in the magistrate's ultimate decision to commit the appellant for trial. The reasons of the magistrate which need to be considered for the purpose of this submission were given by him on 18 July 1988. In saying what he did, the magistrate was referring to submissions made to him by counsel for the appellant in relation to matters which had been dealt with in earlier reasons. That explains the form of them.
The relevant part of the magistrate's decision of 18 July 1988 is as follows:-
"Mr. O'Callaghan's submission (Mr. O'Callaghan was counsel for the appellant) that I made a fundamental error in my reasons of 6 June related to my findings that I was satisfied that a reasonable jury could be satisfied that there were reasonable hypotheses consistent with Mr. Forsyth's innocence, and, notwithstanding that view, I further found that the evidence is of sufficient weight to support a conviction. Mr. O'Callaghan submitted inter alia that (A) it is a contradiction in terms to say it is open to a jury to find competing hypotheses of guilt and innocence and also that it is open to find the innocent hypothesis is displaced; (B) it is not permissible to say that because there is a competing hypothesis consistent with guilt this displaces the innocent hypothesis; and (C) upon committal proceedings a magistrate is not only entitled, he is required, to weigh the evidence and, if he finds that it is open to the jury to find that there are competing hypotheses, he should find the evidence is not of sufficient weight to support a conviction.
As to whether or not I have weighed the evidence, I can only state that I have spent many hours carefully weighing and analysing the evidence as it relates to Mr. Forsyth and each of the other defendants to determine whether it is of sufficient weight to support a conviction. Mr. O'Callaghan further stated that effectively the court, in its findings of 6 June, was saying that the evidence is evenly balanced or is as equally consistent with innocence as with guilt. With respect, on this point Mr. O'Callaghan appears to have misinterpreted my finding that a reasonable jury could be satisfied that there are reasonable hypotheses consistent with Mr. Forsyth's innocence. I was not saying or intending to say that it is my view that the evidence is as equally consistent with innocence as with guilt or that it is evenly balanced. I was saying no more than I was satisfied a reasonable jury could or may, as distinct from would or must, be satisfied that there are reasonable hypotheses consistent with Mr. Forsyth's innocence.
I was not saying, nor am I of the view, that a reasonable jury must or would be satisfied that there are reasonable hypotheses consistent with Mr. Forsyth's innocence. If I were of that view, I would uphold Mr. O'Callaghan's submissions on the point and discharge Mr. Forsyth. However, the view I hold is that, in the present state of the evidence, I am satisfied on the one hand that a reasonable jury could be satisfied that there are reasonable hypotheses consistent with Mr. Forsyth's innocence but, on the other, I am satisfied that such a jury could be satisfied beyond reasonable doubt that there are no hypotheses reasonably consistent with his innocence.
Therefore, in those circumstances, at this stage of these proceedings, I am satisfied that my findings would not justify Mr. Forsyth being discharged but that the proper course is that it is for a jury to determine whether it would be satisfied that there are reasonable hypotheses consistent with Mr. Forsyth's innocence. Accordingly, having reconsidered my findings of 6 June on this point, I am satisfied that my findings of that date that the evidence is of sufficient weight to support a conviction in relation to Mr. Forsyth must stand."
The essence of the submission relied upon by counsel for the appellant before us was that the magistrate failed to appreciate the significance of the 1978 advisings and the advice given on 2 March 1979. The magistrate, according to counsel, found inconsistency between the two when no inconsistency in fact existed. Counsel also claimed that the magistrate was bound to discharge the appellant because he found that there were two competing inferences open, one consistent with guilt and the other consistent with innocence. In counsel's submission, that should have led him to discharge the appellant.
We think that the submission is answered by part of what the magistrate said in the passage quoted above from his decision. He said that, upon the present state of the evidence, he was satisfied on the one hand that a reasonable jury could be satisfied that there were reasonable hypotheses consistent with the appellant's innocence but, on the other, that he was satisfied that a jury could be satisfied beyond reasonable doubt that there were no hypotheses reasonably consistent with his innocence.
In any event, it appears to us that the second submission takes us into the ground covered by the first. It is really part of the overall complaint which the appellant makes of the magistrate's decision to commit him for trial. Looked at in this way, the submission raises similar considerations to those raised by the first with the consequence that all we have said about discretion applies equally to it.
We conclude our treatment of this submission by saying that the suggestion implicit in the submission that the magistrate failed properly to weigh the evidence is in the teeth of what is manifest on the face of the magistrate's reasons. Not only did he weigh the evidence; he was at pains to weigh it most carefully and anxiously before reaching his conclusion. In the course of exercising the jurisdiction it has in applications for judicial review and in appeals from the Administrative Appeals Tribunal, this Court in numerous judgments has emphasized that it is the substance of matters which will be looked at and that the form of language used by members of the administration and by tribunals will not be studied or sifted in a way that is destructive of the administrative process. The Court takes a broad and constructive view of decisions and allows for the fact that language used in reasons may have been better expressed or may reveal gaps in a chain of reasoning which need to be filled.
In the result the second submission relied upon by counsel for the appellant is rejected.
Before concluding we should mention that, in the course of their submissions, counsel for the informant made a formal submission that Lamb v. Moss was incorrectly decided. We did not hear argument on that submission. The case has been repeatedly followed and applied in this Court and it seems to us that any question of the correctness of the decision must be resolved by the High Court.
The appeal is dismissed with costs.
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