R v Reid, Reid and Dasborough

[2006] SADC 132

DISTRICT COURT OF SOUTH AUSTRALIA

(Criminal)

R v REID, REID AND DASBOROUGH

[2006] SADC 132

Reasons for Ruling of His Honour Judge Tilmouth

8 December 2006

CRIMINAL LAW - EVIDENCE - RELEVANCE - PARTICULAR CASES

Cross-admissibility - Test - appropriate direction.  Accused charged with up to 69 counts of defrauding the Commonwealth or obtaining a gain.

Held: Evidence on all charges "cross-admissible" for the purposes of proving fraudulent or dishonest intention or to rebut defences of mistaken or innocent

R v Finlayson (1912) 14 CLR 675, 678-679, 681; R v Phan (1990) 54 SASR 561, 570, applied.
R v Gibbs (1992) 58 SASR 347; R v Hayes (1986) 128 LSJS 460.; R v Mussolino (2003) 86 SASR 37 [2-10], discussed.

CRIMINAL LAW - JURISDICTION, PRACTICE AND PROCEDURE - WARRANTS, ARREST, SEARCH, SEIZURE AND INCIDENTAL POWERS

Attack on validity of execution of warrant because no examination to determine whether items may be seized under the warrant occurred within the meaning of s3K(2) of The Crimes Act 1914 (Cth).

Held: Officer already had necessary belief so that the question of s3K(2) examination did not arise.

For the purposes of forming a belief on reasonable grounds to suspect there was evidential material on certin premises and in order to obtain a search warrant with respect thereto, a police officer was shown certain confidential material by ASIC.

Held: No evidence was obtained which was capable of exclusion and the warrant, even if obtained on the strength of an unauthorised disclosure, should not be excluded in the exercise of discretion.

Held also: Although the disclosure was not authorised as required by s127 of the Australian Securities and Investments Commission Act, the disclosure was limited and discreet, and one understood to be in accordance with a memorandum of understanding between ASIC and the ATO permitting such disclosure, accordingly there was no breach of the minimum standards expected and required of those entrusted with the powers of law enforcement, calling for exclusion.

Evidence was seized under a search warrant and immediately given to the ATO for further investigation.  It was contended that the handing over to the ATO was unlawful so that the evidence concerned should be excluded.

Held: S3F(5) of the Crimes Act is facultative and did not require the officer making the material available, to form the view that it was necessary for the purposes of investigation or prosecution to do so. In any case such a belief was necessarily held in this instance and it was the warrant and not s3F(5) which authorised making the material available.

Evidence was sought to be led of the acquisition of business records obtained by an officer of the Australian Tax Office otherwise than under warrant.

Held: s263 of the Income Tax Assessment Act was not directed to obtaining evidence. The material was handed over by persons in charge of premises where it had been left abandoned, so that tacit consent to taking was evident, so that no illegality emerged.

Crimes Act 1914 (Cth) ss3D, 3B and 3F; Income Tax Assessment Act (1936) s263; Australian Securities and Investment Commission Act 2001 (Cth) s127, referred to.
Dunesky v Commonwealth of Australia (1996) 89 A Crim R 372, 385; Williams v Keelty (2001) 111 FCR 175, [288]; Robinson v Woolworths Ltd (2005) 64 NSWLR 612, (2005) 227 ALR 353; (2005) 158 A Crim R 546; Johns v Australian Securities Commission and Others (1992) 178 CLR 408, applied.
ASIC v Rich (2005) 52 ACSR 374 [2005] NSWSC 62; Katsuno v The Queen (1999) 199 CLR 40 at 57 [24]; Bunning v Cross (1977) 141 CLR 54; Citibank Ltd v Federal Commissioner of Taxation (1988) 33 ALR 144, discussed.

CRIMINAL LAW - EVIDENCE - MISCELLANEOUS MATTERS

Evidence of officers of the Australian Tax Office concerning the administration of the A New System (Goods and Services Tax) Act 1999.

Held: not to be impermissible evidence of legal matters, but evidence of what the ATO did and why.

Held: evidence retrieved from a laptop is real or original evidence, not subject to the computer records provision of the Evidence Act 1995 (Cth) or s45A of the Evidence Act SA.

Held Further that documents produced or generated by ATO computer systems were "Commonwealth documents or records" within the meaning of the Evidence Act 1995 (Cth). Part 6A of the Evidence Act SA is excluded by the Commonwealth Act.

Evidence of applications for money and financial circumstances of entities associated with the accused, held admissible to prove either a motive for dishonesty or spending at a greater rate than could be explained by legitimate income.

Evidence Act 1995 (Cth) s182, Part 4.3, referred to.
Caratti v The Queen (2000) 157 FLR 241; R v Mackrae-Bathory [2006] VSCA 179; R v Panagiotou (1982) 6 A Crim R 174; 101 LSJS 25; Driscoll v The Queen (1977) 137 CLR 517, 531-532; R v Billick and Starke (1984) 36 SASR 321, 325-326, discussed.

CRIMINAL LAW - EVIDENCE - RELEVANCE - PARTICULAR CASES

The prosecution sought to introduce evidence of events occurring subsequent to the charges, linking the accused with various persons involved in running the entities making false claims for GST refunds, subject to various charges.

Held: Such evidence was relevant and admissible to prove the nature and content of the business dealings and the structure and chain-of-command existing between them.  As such that evidence involved no question of the admission of propensity evidence or calling for the application of any special test of admission.

R v Domokos & Ors (2005) 92 SASR 258; R v Burns & Collins (2001) 123 A Crim R 226, discussed.

CRIMINAL LAW - EVIDENCE - SIMILAR FACTS - RELEVANCE

The prosecution sought to adduce evidence in relation to the financial position of an entity associated with the accused, which inherently contained evidence of dishonesty, outside the ambit of the charged offences.

Held: Although the evidence was admissible to prove motive, the prosecution cannot lead it in such a way as to convey evidence of dishonesty, as it fails to pass the high threshold established by Pfennig.

Phillips v The Queen (2006) 80 ALJR 537; Sutton v The Queen (1983) 152 CLR 528 at 542; R v Nieterink (1999) 76 SASR 56, discussed.

R v REID, REID AND DASBOROUGH
[2006] SADC 132

The charges

1. Three accused are presently before the court, charged on information laid by the Commonwealth Director of Public Prosecutions, containing 69 counts, each one with respect to a single Business Activity Statement (“BAS”) submitted to the Commissioner of Taxation (at times hereinafter referred to as “ATO”). Counts 1 to 40 relate to those received in 2001. Counts 41-69 relate to the BAS statements lodged in 2002.

2. Counts 1-15 and counts 21-69 charge the offence of obtaining a gain contrary to s135.1(1) of the Criminal Code 1995 (Cth). Counts 16-20 charge defrauding the Commonwealth contrary to s29D of the Crimes Act 1914 (Cth), alleged against Maxwell and Edna Reid alone. This section applies to those charges as they allegedly took place before the Criminal Code (above) came into effect on 24 May 2001.  The sums said to be unlawfully claimed from the ATO in the respective BAS statements, total $6.9m.  Of those claims $4.12m was paid over in the course of 2001, whereas nothing was released with respect to the 2002 claims.

3. Counts 1-37 (including the defrauding counts 16-20) and counts 52-69, are alleged against both Maxwell and Edna Reid, whilst counts 27-51 (except counts 38 and 39) are pressed against all three accused.  Count 38 relates to Mr Reid and Mr Dasborough.  Count 39 relates solely to Mr Reid.  Edna Reid therefore faces trial on 67 counts (all counts excepting counts 38 and 39), Mr Dasborough 24 counts (counts 27-51, excluding count 39) and Mr Reid stands trial on them all.

4. It is the prosecution case that dishonest claims were made falsely claiming refunds of goods and services tax in the sums specified in the charges, variously by the accused at the time of each respective charge, through a number of corporate or other entities, registered with the ATO. The acts connecting them directly to each charge are either that they signed or completed sections of the relevant BAS forms, or forwarded false invoices to the ATO in support of the claimed refund. Maxwell Reid alone is alleged to have prepared the underlying false invoices, upon which the refunds were based.

5. The accused Maxwell John Reid and Edna Reid were arraigned and pleaded not guilty on 18 September 2006 to the respective charges against them, at the commencement of a lengthy voir dire hearing. Mr Dasborough was excused at his request and with the consent of the other parties, from attending on the preliminary arguments, so that this ruling does not pertain directly to him.[1]  No application for severance was made by any accused.  What follows is a brief summary of the prosecution case.

   [1] S285A Criminal Law Consolidation Act 1935 (SA), and refer to ruling on 18 September 2006.

   The Brief Facts

6. In a nutshell the prosecution places the charges into three categories, the first two in 2001 and the last in 2002.  The first pertains to counts 16-20 inclusive.  These focus around false claims for GST refunds in early 2001, based on purchases never made, including mining equipment said to have been purchased from Hitachi and a plane allegedly bought from Cessna Pacific. This was at a time when money was alleged to have been scarce. The former led to refunds of over $554,000 and  $350,000 in the case of the latter, all paid out on the strength of  invoices which were neither GST invoices nor prepared for the purposes of making genuine “taxable sales”.

7. These refunds were applied to various business ventures and enterprises and other expenses, all under the control of Mr Reid, in order to paint a picture of a successful large scale businessman.

8. These five counts relate to Gemstone Exploration Pty Ltd which operated out of the City Gate Building, Wright Road, Coober Pedy.  Edna Reid was nominated Director and Secretary; the other Director was a Mr David Brown, a local indigenous man.  In September 2000, Mr and Mrs Reid approached the Aboriginal and Torres Strait Islander Commission (ATSIC) for funding, supported by a business plan, claiming extensive mining operations were carried out by Gemstone Exploration, when it had not.  The funding was in the event refused.  By the end of 2000 the company was bereft of funds and all attempts at mining failed to yield any opal of value.  Mr Dasborough is not charged with any offence during this stage, so they are irrelevant to him.

9. The second stage had commenced in June 2001.  By July the Gemstone Exploration Pty Ltd account was again “in the red”.  This involved a scheme involving Mr Reid and in the case of five entities, Mr Dasborough by setting up corporate entities controlled by Mr Reid, creating a false picture of multi million dollar opal trading going on as between them.  Twelve of those entities submitted BAS forms claiming entitlements to goods and service tax refunds based on fabricated invoices, recording “entirely fictitious” opal trading through a “round robin of invoices” among 17 entities, in all connected to Mr Reid.  This phase ended in March 2002 and embraces counts 1-15 and 21-40, inclusive.

10. Many of the invoices relating to the fictitious trade between the 17 entities were found and taken in December 2001 when police and tax officers searched the Wright Road office under warrant.  Copies of some were also found on a laptop computer said to belong to Mr Reid, and seized by the liquidator of Gemstone Exploration in late 2003.  Both “seizures” are the subject of separate preliminary submissions, considered later in these reasons.

11. The third and last phase of the scheme began in May 2002 and ended in October 2002, by setting up and registering with the ATO a further 49 entities. Once again the scheme was said to be characterised by pretending multi-million dollar opal trading was carried on.  This stage is charged on counts 41-69 inclusive.  In this instance 18 of those corporate entities submitted false BAS forms claiming refunds.  In this case as in the earlier two phases no BAS form was submitted by the supposed selling entity, reflecting the GST obligation to report lying on that side of the transaction.

12. The prosecution contends that by April 2002 there was no money available, the refunds obtained during the second phase likewise being dispatched. The prosecution contends that at least 95% of the refunds were funnelled, directly or indirectly back to Gemstone Exploration which was controlled by Mr Reid. Opal mining continued to prove unprofitable; in the main only “worthless potch” was mined.  In February 2002 Mr Reid secured a loan of $250,000 from Cash Resources Australia.  Mr Dasborough was the nominated Director of five entities and he is also alleged to have signed fraudulent BAS forms and in some cases faxed related invoices to the ATO.  Another five were used to submit fake claims, signed by a Mr Noel Smith and a further five by a Mr Craig Hyland, both associates of Mr Reid.  The prosecution alleges that these men, as well as others, were registered with the ATO as Directors of the separate entities with which they were associated, as mere “figureheads”.  This occurred for two reasons, firstly to distance Mr Reid or place him at arms length from the fraudulent claims and secondly because he was subject of an order of the Federal Court prohibiting him from being a Director of a company at all relevant times.

13. The prosecution case against Edna Reid is that she knowingly participated in the scheme, in that she kept the accounts for Gemstone Exploration and she completed the sale and purchase figures on all the 67 BAS forms, some of which were also signed by her, which relate to her charges.

14. In early 2003 Mr Reid and his associates were evicted from the City Gate Building because of unpaid rent.  They as well as Smith and Hyland went to Adelaide, where Mr Reid negotiated to buy a company, Battstone Australia.  The evidence in relation to this transaction is also subject of objection, to be considered later in these reasons.

    Cross-admissibility

15. The prosecution has repeatedly referred to the entire transaction over the course of time from January 2001 to late 2002 as a “scam”.  Whether the case ultimately goes to the jury on that, or on some other basis, remains to be seen. However during the course of the trial question arose whether the evidence on one particular count, would be admissible on another count or counts, and whether evidence of other uncharged claims for GST refunds was equally admissible and if so on what basis.  The principles relating to the reception of the latter evidence was discussed at much length in R v Nieterink.[2]  In the event the prosecution did not press for any uncharged acts to be left to the jury, although it maintained the counts relating to each accused would be “cross-admissible” in the case relating to that accused.

    [2] (1996) 76 SASR 56 at 66

16. There is a long line of authority to the effect that in cases such as this, the evidence on each count is admissible on the others, for the purpose of proving guilty knowledge of a dishonest scheme or system, and in order to rebut any potential defence that the relevant claims were made innocently: The King v Finlayson,[3] R v Phan, [4] a principle established in R v Rhodes[5] and now well acknowledged: R v Rogan,[6]  R v Trinidad[7] and R v Lang.[8]

    [3] (1912) 14 CLR 675, 678- 679, 681

    [4] (1990) 54 SASR 561, 570

    [5] [1899] 1 QB, 77

    [6] [1916] NZLR 265

    [7] (1951) 53 WALR 53

    [8] (1964) 81 WN (Pt 1) (NSW) 276

17. In the Finlayson Griffith CJ recognized this category of evidence as an exception to the prima facie rule of exclusion, one “dictated by common sense”:[9] 

    An essential element in the case is the fraud of the accused. Fraud may be established in as many ways as it may be committed. We all know that when a man is charged with one offence you cannot prove that he has been guilty of another offence for the purpose of showing that he is a man of bad character, and so likely to have committed the offence with which he is charged. But there are exceptions to that rule which are dictated by common sense. The rule has been laid down in several cases, amongst others in the leading case of Makin v Attorney-General of New South Wales[10], where it was applied to a trial for murder. In R v Bond[11], the rule was concisely laid down by Bray J in words which I should like to adopt as my own. He said: 'A careful examination of the cases where evidence of this kind has been admitted shows that they may be grouped under three heads. Where the prosecution seeks to prove a system or course of conduct. Where the prosecution seeks to rebut a suggestion on the part of the prisoner of accident or mistake. 'I need not read the third. A little further on he said: 'The ground on which in cases of this class evidence is admitted of acts not charged in the indictment is, in my opinion, that the case which the prosecution seeks to prove is that the prisoner has in his mind a scheme or plan (say) for obtaining money by fraud, that the act with which the prisoner is charged is part of a planned fraud, and that the other acts of which evidence is sought to be given when proved will show the existence of the plan, and, therefore, the guilty mind of the prisoner. 'I adopt that as the rule applicable to the present case. It was, therefore, permissible in order to show that the acts with which the accused was charged in the indictments were parts of a scheme or system, to show that he had done the same thing with regard to other employées'. 

    [9] At 678

    [10] [1894] AC 57

    [11] (1906) 2 KB 389 at 414

18. In the same case, Isaacs J noted such evidence was admissible “to show not that the defendant did the acts which form the basis of the charge, but that, if he did such acts he did them intentionally and not accidentally, or inadvertently, or innocently or that they formed part of a system”.

19. A number of cases inform the content of an appropriate direction in this context, including R v Hayes,[12] R v Gibbs,[13] R v Zoneff[14]  and R v Mussolino.[15]   The following trial directions were approved in in Gibbs[16] and later in Mussolino :[17]

    Evidence of similar conduct on other occasions, either before or after the particular incident with which the accused is charged and you are considering, is admissible in order to supply evidence of the required intention on his part; that is to say, for the purpose of showing a dishonest intent, or a guilty state of mind accompanying the transaction which forms the basis of that particular charge. Evidence of conduct on other occasions (that is, other counts) may be given in order to establish a formulated plan or system, to establish that the accused has done similar things, on other occasions, as part of a system practised by him and according to a plan. Evidence of that kind may be brought in aid to support the case for the prosecution on the issue of the accused's intention to defraud, and to discredit a defence that he had no such intention, a defence that he had a mistaken or innocent purpose, or a reasonable or honest motive, in carrying the particular transaction into effect. But, before you can take those other transactions, or that evidence of similar conduct on other occasions, into your deliberations, you must be satisfied that the facts, which are alleged to constitute each of those transactions, are proved upon the evidence; in other words, that the facts required to be proved in relation to each transaction have been proved.

    If those facts are proved, then you may consider whether the evidence, relating to the transactions on which each separate charge is based, shows that it was part of a plan or scheme designed by the accused, or to which he was a party, for the purpose of obtaining money deceitfully. You may ask yourselves whether there is a peculiarity, similarity, or repetition of the circumstances of each transaction; whether there is some kind of nexus or connection which binds the alleged crimes together; whether the evidence shows that there was such a unity of character about all of the transactions as to indicate that they were all part of one dishonest expedition, and that each transaction was accompanied by a guilty mind on the part of the accused.

    If you are satisfied that any particular transaction charged was part of a plan, scheme or system adopted by the accused in order to obtain, or attempt to obtain, the property from the various persons concerned (referred to in the eight counts) by the making of false pretences with regard to these cheques, then that circumstance may be taken into consideration in determining whether the accused had a guilty mind and an intent to defraud in respect of each transaction alleged.

    Remember, however, that a plan or system is not necessarily criminal. Conduct of a similar character, taken alone, may be innocent, as the accused would have you, here, accept that his conduct was (that he had no awareness of the theft of these cheques and the fact that they were invalid orders); conduct, as I say, of a similar character, taken alone, may be innocent, but, if repeated in all essential elements and details, you may well infer that the conduct was designed and intentional and motivated by no other purpose or desire than dishonestly to benefit the doer of the act, or some other person, to the loss or detriment of another person (that is, the people parting with the cash). But I stress, again, that each count must be considered separately and that the evidence of other alleged offences charged as the basis of the separate counts can only be taken into consideration if those acts have been proved to your satisfaction to be criminal, and the evidence as a whole discloses what may be called a formulated plan or system on the part of the accused. It does not suffice merely that the evidence in support one charge makes it more comfortable to convict on the other charges. It must be evidence with respect to each separate count which satisfies you of the accused's guilt beyond reasonable doubt." 

    [12] (1986) 128 LSJS 460

    [13] (1992) 58 SASR 347

    [14] [2001] SASC 443 [127] [121-130]

    [15] (2003) 86 SASR 37 [2-10], refer also to R v Van Heytmanak [2006] SASC 338.

    [16] (at 350)

    [17] (above at 39)

1. Equally trial directions as follows were upheld in Hayes[18] and approved in Mussolino: [19]

   In order to supply evidence of the required intent on his part, that is to say, for the purpose of showing a dishonest intent or a guilty state of mind, accompanying the transaction which forms the basis of the particular charge. Evidence of conduct on other occasions may be given in order to establish a formulated plan or system, that the accused has done similar things on other occasions as part of a system practiced by him and according to a plan ... If those facts are proved, then you may consider whether the evidence, relating to the transaction on which each separate charge is based, shows that it was part of a plan or scheme designed by the accused for the purpose of obtaining money dishonestly ... But I stress that each count must be considered separately and that the evidence of other acts charged as a basis of the separate counts can only be taken into consideration if those acts have been proved to your satisfaction, and the evidence as a whole discloses what may be called a formulated plan or system on the part of the accused. I also stress that it does not suffice merely that the evidence and support of one charge makes it more comfortable to convict on the other charges. It must be evidence with respect to each separate count which will bring home the guilt of the accused to a reasonable mind with sure conviction, that is, convinces you of his guilt beyond reasonable doubt.

   [18] (at 468).

   [19] (above at 40).

2. Such evidence where properly admissible is not evidence of so called 'similar facts' as such; it is admissible as circumstantial evidence from which the jury might infer the requisite mental intent. It remains unclear whether reception lies outside the principle stated in Pfennig v The Queen for the reasons advanced in R v Domokos, or is justified on account of a “strong degree of probative force” or having “a really material bearing on the issues to be decided”: Phillips v The Queen.[20]  Given the reference by Griffith CJ  to Makin in the passage quoted from Finlayson (above)  the latter probably represents the better view in principle.  That appears to have been the approach taken in R v Sadeed.[21] Either way the result is the same. Evidence of this kind would also be received under the “coincidence rule” established by s98 of the uniform Evidence Act 1995 (Cth): R v Tamotsu.[22]

   [20] (2006) 80 ALJR 537 [79].

   [21] [2004] QCA 32

   [22] (1999) 109 A Crim R 197

3. But as such it remains subject to the law relating to the reception of circumstantial evidence and the cases that expound it, so that the jury cannot view the evidence of other transactions as an indispensable basis for an inference of guilty knowledge, unless at the end of the day they are satisfied of the existence of those transactions beyond reasonable doubt: Chamberlain v The Queen[23] and Shepherd v The Queen.[24]   The same conclusion arises by application of the Pfennig principle as   “ … it should not be used to draw an inference adverse to the accused unless it is the only reasonable inference in the circumstances”: Phillips v The Queen.[25]

   [23] (No 2)(1984) 153 CLR 521, 535

   [24] (No 5)(1990) 170 CLR 573 576

   [25] Above at [63].

4. From these authorities the following principles may be extracted:

   1.In an appropriate case where the evidence justifies it, the whole of the course of dealing on the part of the accused, might be relevant where it proves or establishes a formulated plan or system, or where the accused has done similar things on other occasions as part of a system practiced by him or her, according to that plan, or where it discloses a peculiarity, similarity, or repetition of the circumstances of each transaction, or where there is some kind of nexus or connection which binds the alleged crimes together in such a way that shows there was such a unity of character about all of the transactions.

   2.Such evidence is admissible to prove a fraudulent or dishonest intent with respect to each of the counts and/or to discredit defences that there was no such intention, of mistaken or innocent purpose, or reasonable or honest motive or belief in carrying the particular transaction into effect.

   3.All of the evidence tending to demonstrate such an intention or rebut such defences is relevant to all counts in which proof of such an intention is a necessary ingredient.

   4.The jury ought to be directed that whilst it must separately examine the evidence relating to each particular count, they are entitled to have regard to the wider context in which that alleged offence is said to have been committed and that conduct of a consistent type, persisting over a significant period of time lend important colour or explanation to a specific transaction and assist in identifying what must have been the actual state of mind or state of realization accompanying a particular act.  

   5.Before the jury would be entitled take those other transactions or that other evidence into account in their deliberations, they must be satisfied that the facts which are alleged to constitute each of those transactions, are proved upon the evidence beyond reasonable doubt.

   6.The jury should be directed that they must not, after having come to a decision in respect of one charge, assume that decision has equal application to the other charges, that each charge must be the subject of separate independent deliberation and they must not think or reason that should they find the accused guilty of one charge, he or she is therefore guilty of any or all of the other charges.

   7.In the context of such directions the trial judge should remind the jury that they may find the accused not guilty of all charges, guilty of some and not guilty of others, or guilty of all charges.

5. It would also be appropriate to remind the jury in a case such as the present where multiple accused are involved, that their verdicts in relation to the counts on which they are jointly charged may be different as between the accused.  As well the jury should be cautioned not to think that because there are so many counts, that something must be wrong or the accused must be guilty of at least some of the offences.  And consistent with principle, it would be necessary to direct the jury that they must not think that if an accused is guilty of another charge or act, he or she is generally the type of person likely to commit the crime charged: BRS v The Queen.[26]

   [26] (1997) 191 CLR 275

6. In due course the jury would have to be directed consistently with these principles, in the context of the facts identified and relied on by the prosecution as establishing the underlying plan or system, said to be applicable to each accused.

   The Tax Office evidence

7. It was submitted by defence counsel for the accused Maxwell Reid, supported in part by counsel for the accused Edna Reid, that evidence proposed to be given by officers of the Tax Department, Mr Fort and Mr Morris, ought to be excluded entirely as it involved no more than the expression of opinions on matters of law, which were for the court to determine.

8. In two statements, Mr Fort who is described as the “Manager, Goods and Services Tax (GST) Review and Litigation Team”, provides a summary of the operation of the A New System (Goods and Services Tax) Act 1999 (“The GST Act” or “GST Legislation”). In the course of doing so, he at times quotes various sections of relevance whilst at others he refers to several technical terms defined therein.  His review covers GST registration by an “entity”, the liability to pay GST on “supplies and acquisitions”, making GST adjustments and the accounting requirements of the Commissioner of Taxation for establishing liability to pay or to obtain a GST refund  in each “tax reporting period”.

9. For the purposes of this case, the procedures according to these proposed witnesses are that the relevant entity determines the amount of input tax credits it is entitled to claim and offsets this against the GST it is liable to remit to the ATO. Where the credits exceed the liabilities – that is where GST paid on purchases exceeds GST received on sales - that entity is entitled to a refund from the Australian Tax Office.  The flat GST rate is 10% on both sales and purchases.

10. The standard method of accounting to the tax office for this purpose is by submitting a Business Activity Statement form in each tax period – usually monthly in this case.  To illustrate the application of the legislation by reference to Count 1, the allegation (against Mr and Mrs Reid) is that between 23 July 2001 and 19 October 2001 they “dishonestly prepared, completed or submitted a claim for a credit” of goods and services tax in the name of Port Headland Marble, claiming a refund of $76,543.  The applicable BAS statement sought a refund in that sum by claiming purchases of $841,982 supported by an invoice rendered allegedly by Gemco Australia for a parcel of unpolished opal.

11. The premise on which this submission was based is uncontroversial enough. The fundamental proposition, that it is the function of the court to determine the proper construction of the relevant statutory scheme and for the jury to determine whether the proven facts amount to compliance or otherwise, is not in dispute: Marquis Camden v Commissioners of Inland Revenue:[27] This is consistent with the position outlined by King CJ in F v R,[28] in a passage subsequently quoted with approval by the High Court in Rogers v Whitaker[29] and with the approach of Mulligan J in Austrust Pty Ltd v Astley.[30]

    [27] [1914] 1 KB 641.

    [28] (1983) 33 SASR 189 at 194.

    [29] (1992) 175 CLR 479 at 488.

    [30] (1993) 60 SASR 354 at 374-375.

12. In terms, the statements of Mr Fort (and to a lesser extent Mr Morris) as presently couched, are capable of being construed as intruding upon this principle. However, their purpose in substance, rather than in form, is to achieve something quite different.  The evidence is intended to succinctly outline to the jury, the goods and services tax scheme, the way it is administered by the Australian Tax Office and the way in which various provisions relevant to this case are interpreted for the purposes of administration.  If so confined, or so qualified, the proposed evidence does not infringe the basic principle outlined above. 

13. The position is not unlike that considered in Caratti v The Queen.[31] There a trial judge admitted evidence of the views of the Commissioner of Taxation as to the meaning of the legal requirements and definitions relating to Group Tax Instalment deductions that should, on the prosecution case, have been paid to the Commissioner under the Income Assessment Act 1936 (Cth).  This was upheld on appeal on the basis that the evidence was admissible as an account of what the Australian Tax Office “did and why” and not on the basis that it necessarily reflected the legal position.[32]

    [31] (2000) 157 FLR 241

    [32] Malcolm CJ, Kennedy and Anderson JJ concurring (At [158]).

14. It was accepted by the Court, as it must be in this matter, that the “true issue was not concerned with the Commissioner’s view, but what the law was relating to”, the taxation regime concerned.  In that context the Court went on to observe:[33]

    … whether or not the criteria applied by the Commissioner accurately reflected the substantive laws are matters for the jury to determine in accordance with directions concerning the relevant law given by the learned trial judge.  Such directions were given.

    Accordingly, in due course it will become necessary to direct the jury on the legislative scheme and in particular the legal requirements relating to submission of the BAS forms, the criteria applicable to GST refunds, and as to the manner in which they are made.

    [33] (At [161]).

15. As the Court went on to observe in Caratti, such evidence is not only relevant, it is central. The narrative of the dealings by the Australian Tax Office with the various accused and of the numerous conversations two of them had with tax officials, would be incomprehensible and given without context or without an adequate appreciation of the basis upon which those dealings were conducted on both sides.  Although the evidence in Caratti was somewhat different, the principle is the same.  Without an explanation of the GST scheme as it applies to the charges, one hopefully in comprehensible terms to a jury, it would be left to ponder throughout the course of the trial how the evidence fits into the legislative scheme, a situation that is plainly untenable.

16. Provided the evidence is led in this way and for that purpose, it is admissible for the reasons mentioned.  Of course it would be necessary, depending upon how the evidence falls, to direct the jury that such evidence is not led for other purposes and it would also have to be made clear that the legal effect of the goods and services tax scheme so far as it applies to the charges, is a question of law upon which the directions of a trial judge bind them.

17. The present case poses a situation quite different to that confronting the Court of Criminal Appeal (Vic) in R v Mackrae-Bathory,[34] a case involving prosecutions on charges of dishonestly causing loss to the Commonwealth contrary to s135.1(5) of the Criminal Code (above).  Instead of pointing to the legal effect of the applicable legislation, the prosecution called a social security department analyst to give evidence of “his understanding” of the qualification of the accused to receive special benefits under the Social Security Act (Cth) (1991). He was then asked:[35]

    To your knowledge in the circumstances of [the accused] under the legislation as it then applied, will she be eligible for any special benefit, Centrelink benefit? – No, she would not.

    [34] [2006] VSCA 179

    [35] (At [63]).

18. The Court of Criminal Appeal accepted that evidence as to the practice of the Department was admissible, but not that the witness was able to give evidence in this form, as to “the legal provisions of the Act”.[36]  The conviction on the relevant Count was quashed because the trial judge directed the jury the witnesses’ evidence “no special benefits would apply” to the accused, was in effect the end of the matter.[37] The fault, as it appears from the court’s reasons, was that “the jury were not instructed as to the legal prerequisites for special benefits, and they were not provided with any direction as to the evidence relevant to determine whether those prerequisites apply to the case”.[38] 

    [36] (At [65]).

    [37] (At [79]).

    [38] (At [80]).

    Unlawful Seizure of Laptop?

19. The factual background to the objection to this evidence commences with a warrant being issued by a Magistrate on 16 December 2003 pursuant to s3D of the Crimes Act (above) to a Ms Leske an Australian Federal Police Officer, with respect  to premises of Ashmans Business and Financial Services Pty, Level 1, 120 Hutt Street, Adelaide in this State. 

20. Information that a laptop owned and previously used by Mr Reid when he was in Coober Pedy was located there, came to her attention as well as to Mr Jones, an investigator with the ATO.  Mr Broome, a director of Ashmans Business and Financial Services Pty Ltd, was appointed by the Supreme Court of South Australia as the official liquidator of Battsone Australia Pty Ltd on 3 June 2003.  He was appointed provisional liquidator of Australia Marble Pty Ltd the successor to Battstone on 14 July 2003, and then Official Liquidator on 12 August 2003.

21. In July 2003 Mr Broome organised for a security firm to seize and secure the assets of these companies, then located at the factory premises 1-17 London Road, Mile End.  Both Battstone Australia Pty Ltd and later Australian Marble Pty Ltd operated from these premises and both were, allegedly, under Mr Reid’s control.  On 15 July 2003 a delivery was made to Mr Broome’s office of the items removed from the London Road premises including the laptop. In the meantime ASIC prohibited interested parties from gaining access to the books and records of both companies (including seized computers).   Broome was also receiving telephone calls seeking return of the computer, so he requested ASIC to “take effective control of the books and records of both companies”. Statements on the court file show the laptop computer was securely kept on the premises until 19 December 2003 when the AFP took it under the warrant.

22. The warrant addressed to Ms Leske authorised her to enter and search the nominated premises and by virtue of ss3F(1) to “seize any other thing at the premises in the course of the search” upon three conditions being satisfied, which are irrelevant for the current purpose, except to note that they related to “the following which are stored on a computer”. Armed with that warrant Officer Leske went to the nominated address on 19 December 2003 and seized the laptop. A short time after leaving the subject premises she gave possession to Jones, who in turn handed it to a Mr Roach on 7 January 2004.  Roach then undertook an examination, removed the hard drive and proceeded to download the contents to an ATO computer for examination. Hard copies of many documents so retrieved and of undoubted relevance, are sought to be tendered by the prosecution. The warrant itself remained in force for a period of seven days from 16 December 2003, so that it expired on 23 December 2003, that is to say after seizure but before Roach commenced to make a detailed examination of the contents.

23. As noted, the warrant on its face was one issued pursuant to s3D of the Crimes Act (above).  Section 3F authorised the “executing officer” to enter the nominated premises to search for “evidential material” and to seize other “things” found on the premises in the course of the search, which the officer believes on reasonable grounds to be related to an offence or which was believed to be a “seizeable item”. The conditions narrow the lawful scope of the seizure so that what is taken must be connected to the charge or investigation. However, the conditions do not qualify or restrict the authorisation the warrant gives to seize “evidential material”, that is, “a thing relevant to an indictable offence”: S3C.

    Section 3E of the Crimes Act provides (so far as relevant): 

    When search warrants can be issued

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

24. The executing officer has the option of bringing equipment to the premises in order to examine items, or to remove the things found at the premises to another place for examination or processing, in either case for the purposes of determining whether the item may be seized under the warrant if “there are reasonable grounds to believe that the thing contains or constitutes evidentiary material”: s3K(2)(a)(ii). Sections 3K (1) and (2) then provide:-

    Use of equipment to examine or process things

    Use of equipment to examine or process things

    (1) The executing officer or constable assisting may bring to the warrant premises any equipment reasonably necessary for the examination or processing of a thing found at the premises in order to determine whether it is a thing that may be seized under the warrant.

    (2) A thing found at the premises may be moved to another place for examination or processing in order to determine whether it may be seized under a warrant if:

    (a) both of the following apply:

    (i) it is significantly more practicable to do so having regard to the timeliness and cost of examining or processing the thing at another place and the availability of expert assistance;

    (ii) there are reasonable grounds to believe that the thing contains or constitutes evidential material or

    (b) the occupier of the premises consents in writing.

25. The point taken for Mr Reid is that the necessary pre-seizure examination did not take place in order to “determine whether it is a thing that may be seized …” under s3K(2). Thus it was said the actions in handing over to Jones and then to Roach were “deliberate acts by officers of the AFP and the ATO in clear breach of the conditions attaching to the warrant”. Accordingly it was submitted, the evidence should be excluded by reason of unlawfulness or impropriety in the exercise of the discretion to exclude: R v Lobban.[39]

    [39] (2000) 77 SASR 24 at [89].

1. It may be readily accepted that legislation authorising the invasion of property for the purposes of seizure, requires strict compliance “as a reflection of the legislature’s concern to give a measure of protection”: George v Rockett,[40] Karina Fisheries Pty Ltd v Mitson,[41] Carbone v National Crime Authority,[42]Tran Nominees v Scheffler.[43] Nevertheless that principle is to be applied according to context and legislation purpose: Project Blue Sky Inc v Australian Broadcasting Authority (1988) 194 CLR 355. Indeed the Full Court of the Federal Court of Australia in Hart v Commissioner of Australian Federal Police[44] held a seizure to have been invalid and unauthorised, because the officers concerned had not considered whether the items contained evidentiary material:[45]

   Seizure, as noted earlier, is a matter of fact. It is a forcible taking of possession of things. Once the officers took the items the subject of Declarations 5(b) and (c), seizure had occurred. As earlier noted, once a purported seizure has been made without proper consideration of whether there were reasonable grounds for suspecting that the things seized are or contain evidential material or relate to an offence, the legal invalidity of that seizure does not ipso facto change its character as a seizure. Nor does it reduce the seizure to a pre-examination removal under s 3K. This is no mere technical quibble. A seizure of property belonging to another, purportedly pursuant to a warrant, is a serious and deliberate act that does not change its factual character because it is unauthorised by law.

   [40] (1990) 170 CLR 104 at [110-111].

   [41] (1990) 26 FCR 473, at 481

   [42] (1994) 52 FCR 576, at 521

   [43] (1986) 42 SASR 361, 369-370

   [44] (2002) 124 FCR 384

   [45] [At 103].

2. In so ruling the court recognised that effect had to be given “to the importance attached by the legislature to the use of search warrants as an important and legitimate tool in the detection and prosecution of criminal offences.” (at [68]).

3. The passages their Honours had in mind when stating “as noted earlier” seem to be the following:

   EXECUTION AND EXPIRY

   [86] Where s3K is relied upon, seizure is deferred until the completion of the examination of things moved from the warrant premises under that section. As already observed, the section involves a distinction between moving things from the warrant premises to another place for examination, on the one hand, and seizure of those things, on the other. S3K does not specify any time period for the completion of the examination. However, it is ancillary to s3F. It confers no free standing power of seizure. The purpose of the examination or processing which it authorizes under s3K(2) is to determine whether the things which have been moved from the premises "may be seized under the warrant". The power to seize still derives from s3F. If examination has not been completed the power to examine also lapses. Absent any other lawful basis for retaining the things moved, they must be returned.

   [92] The respondents contended that s3K(2) authorizes not only the removal to another place of computers or storage devices in or on which electronic material is stored, but the copying of such material onto storage devices brought to the premises for the purpose and the removal from the premises of those devices. It is a fundamental difficulty in the path of this approach to the construction of s3K(2) that the language of the subsection is quite specific. It provides that, in certain circumstances, "the things may be moved to another place". The provision only authorizes the moving of a thing to another place for the purpose described. The fact that the legislation, by virtue of the definition of "evidential material", contemplates that material in electronic form, may be "seized" (without identifying the manner by which it may be seized) does not demonstrate that material in electronic form can be "moved" in accordance with s3K(2) of the Crimes Act.

4. Austin J noted in ASIC v Rich (2005) 52 ACSR 374 [2005] NSWSC 62 that these provisions “do not cater for the electronic world”. His Honour concluded there that seizure of an electronic copy of an “electronic thing” through removal from the storage device, such as a laptop computer after downloading or copying was completed, regardless of whether the storage device is brought to the premises or found there and regardless of whether it is being used with or without the occupiers consent.[46]

   [46] At [238].

5. In response to the submission by counsel for Mr Reid, the prosecution filed further material in which Mr Jones of the Australian Taxation Office deposed to a meeting on 15 September 2003 with other colleagues, Leske of the Australian Federal Police and a Mr McCartney of the Australian Securities and Investments Commission (ASIC), during which McCartney informed them he held material said to come from a laptop computer seized by the liquidator of Battstone Australia Pty Ltd, a company linked closely to Mr Reid.  This company and its involvement arises again later in these reasons for quite a different reason.  On examining the disc containing that material it was found to be “password protected”.  Following further examination Leske formed the view that he:

   … suspects that this laptop computer actually belongs to Mr Max Reid and that an examination of it will yield evidential material relating to both the charges that are currently before the Adelaide District Court … .

   As a consequence the warrant referred to above was sought pursuant to s3E and subsequently executed, without employing the procedures provided for in s3K, or for that matter s3L of the Crimes Act. 

6. Neither of those two sections were triggered by the procedures adopted by Jones or Leske here. The relevant state of belief was already entertained by Leske, so there was no necessity for making any pre-seizure examination. At that time Leske already believed “there is … evidential material at the premises” so that no occasion for exercising the option to proceed under s3K(2) actually arose. That would only come into play on the contingency under s3E(c) that she held the lesser belief “there will be within the next 72 hours …”. Once in force, s3F(1)(c) authorised her as “executing officer” to search the premises for the “evidential material” specified in the warrant and to “seize things of that kind found at those premises”: A2 v Australian Crime Commission (2006).[47] 

   [47] 160 A Crim R 376, 380 [13].

7. The warrant itself therefore authorised the seizure of a laptop, providing it contained material of the kind described in each of the three conditions.  As Leske entertained the antecedent belief there was already evidential material related to the charges at the time the warrant was taken out and immediately prior to execution on the premises, there was no call to undertake the s3K examination.

8. Accordingly, it was lawful and plainly open to have seized the laptop in that state of belief without going through the s3K procedures, having regard to the operational realities in existence at the time: Hart v Commissioner of Australian Federal Police.[48] It would have been a hollow, unnecessary and rather artificial exercise to have required the executing officer to go through a s3K exercise, one involving a triumph of form over substance: Adams v Lambert.[49] On this view of matters there can be no illegality calling for exclusion.

   [48] (above at [68]).

   [49] (2006) 80 ALJR 679 [34].

9. The correct course to lawfully obtain the material for evidential purposes was by seeking a warrant. The liquidator retained secure possession of the computer for some time at the request of ASIC and “voluntarily” handed it to the AFP in the course of the ATO investigation.  This is not a case in which the seizure was in any sense “hostile” or “high-handed”. The officers concerned would be remiss in their duty if they failed to collect important evidence, as this plainly was.  Obtaining the warrant was a necessary formality in that situation, so any potential illegality or impropriety must necessarily be technical rather than substantial.  Nor is it possible to identify any unfairness to any one of the accused.  The seriousness of the charges also leans in favour of inclusion.

   The ASIC Disclosure

10. A subsequent point agitated by defence counsel on the voir dire, was that  receiving the information from ASIC through McCartney as a prelude to forming the necessary belief required to secure the warrant, was itself a breach of the confidentiality provisions in the Australian Securities and Investments Commission Act 2001 (Cth). The general tenor of Part 7 of that Act, particularly Division 2, is to rigidly protect the confidentiality of information obtained under the coercive and admittedly intrusive procedures provided for under that Act. 

11. Pursuant to s127(4) the chairperson of ASIC may authorise such disclosure to an “agency” within the meaning of the Freedom of Information Act 1982 (Cth). Section 3 of the latter defines "agency" to mean a “Department”, in turn defined as being a 'Department of the Australian Public Service'. The Australian Tax Office is such a Department. No such authorization was sought or given in this instance.

12. The evidence discloses that for her part Ms Leske simply did not turn her mind to any question of improper or unlawful disclosure when she was shown the material on the computer disc held by McCartney. For his part Mr Jones was not aware of the relevant confidentiality provision.  Mr McCartney the ASIC investigation officer, permitted them to be shown “a sample of documents from the CD on the screen of an ASIC computer”, a CD obtained under notice served on Mr Broome in his capacity as liquidator of Battstone and Australian Marble. 

13. This was a brief and discrete exercise, giving limited recourse to Leske and Jones of a few documents on screen for the purpose of considering whether they might be relevant to the investigation. It did not include taking material in an enduring form or hard copy format, for use later in evidence. In so doing Mr McCartney believed he was acting in accordance with a current memorandum of understanding between ASIC and the ATO permitting him to “brief the ATO in relation to the documents that had been located to establish whether the documents were relevant to the ATO”. That memorandum of December 2003, between the ASIC and ATO, expressly acknowledges the s127 protection against disclosure (para 4.2).

14. It may well be that this “disclosure”, if that is what it was, was unauthorised, although it remains unclear whether Mr McCartney was protected by s127(3) on account of a disclosure made in the course of his duty: Simionato Holdings Pty Ltd v Federal Commissioner of Taxation.[50]  No evidence was directed to that question.  

    [50] (1995) 60 FCR 375

15. Assuming for the purpose of this ruling there was an unauthorized disclosure, that matter was serious as s127 is couched in intractable terms, designed to protect the confidentiality of documents to which it relates, for reasons of high principle. Any breach might also potentially constitute an offence under s70 of the Crimes Act.[51]

    [51] Johns v ASIC (1993 ) 178 CLR 408.

16. The strictures imposed by s127 are made clear by the decision of the High Court in Johns v Australian Securities Commission and Others[52] in which Brennan J said of it:-[53] 

    "A statute which confers a power to obtain information for a purpose defines, expressly or impliedly, the purpose for which the information when obtained can be used or disclosed. The statute imposes on the person who obtains information in exercise of the power a duty not to disclose the information obtained except for that purpose. If it were otherwise, the definition of the particular purpose would impose no limit on the use or disclosure of the information. The person obtaining information in exercise of such a statutory power must therefore treat the information obtained as confidential whether or not the information is otherwise of a confidential nature. Where and so far as a duty of non-disclosure or non-use is imposed by the statute, the duty is closely analogous to a duty imposed by equity on a person who receives information of a confidential nature in circumstances importing a duty of confidence."

    [52] (1992) 178 CLR 408.

    [53] (at 424).

17. This passage was quoted with approval in full by Gaudron, Gummow and Callinan JJ in Katsuno v The Queen.[54] As their Honours there point out:-[55]

    Agreement with Brennan J's judgment was expressed by Dawson J (at 435-436) and Gaudron J (at 458), and the reasoning of Toohey J (at 452-453) and McHugh J (at 468-469) was to the same effect. See also Sir Nicolas Browne-Wilkinson V-C in Marcel v Commissioner of Police of the Metropolis [1992] Ch 225 at 234 (affirmed on appeal [1992] Ch 241 at 261-262) and Sir Donald Nicholls V-C in Morris v Director of the Serious Fraud Office [1993] Ch 372 at 381.

    [54] (1999) 199 CLR 40 at 57 [24].

    [55] [Footnote 69].

18. The facts of Katsuno bear some analogy to the present.  Section 21 of the Juries Act 1967 (Vict)  provided:

    "(2) Subject to this Act the sheriff or any of his officers shall not make known to any person the names in any panel from which the jury is to be struck in any inquest', whilst Section 67(b) provided that the Supreme Court could fine any person exercising any duty under the Act or performing any function under the Act who without lawful excuse "subtracts destroys or permits any person to have access to any ... record of jurors summons list panel or card". 

19. It had apparently been a long-standing practice in Victoria for the Chief Commissioner of Police upon being provided in confidence by the sheriff with a copy of the panel from which a jury was to be struck, to provide the Director of Public Prosecutions with the details of any convictions and other information concerning persons named on the panel, purportedly to assist the prosecutor in exercising the right of peremptory challenge.   The Chief Commissioner's practice was held to be unlawful, being impliedly prohibited by s 21, on the express basis that the statutory power to obtain the information for a purpose was coupled with a duty not to disclose it, except for the statutory purpose. On the other hand the court proceeded to find  the illegality could not be viewed as a defect in the criminal process.

20. The breach of such an important safeguard as that conferred by s127 must necessarily give rise to the discretion to exclude evidence obtained as a consequence. In the event no such evidence was obtained or sought to be adduced. However, the “disclosure” founded the requisite belief necessary to issue the warrant. That being the case, and the warrant being duly issued and executed, there is no evidence over which the discretion to exclude is capable of operating.

21. In any case, although procedures provided for in the inter-departmental agreement were institutional, they were binding on the operatives. It is not for the court to dictate matters of policy or to enforce standards of investigation, as such. The guidelines themselves, although acknowledging s127, provide no mechanism for obtaining a formal delegation or particular authorization for which it provides, before briefing ATO investigators. As a matter of construction it appears to be predicated on an assumption that limited disclosure is permissible. That may well be a sensible and practical means of dealing with the problem of access to evidence between the two departments and it appears for that very reason that McCartney was very guarded and circumspect about what he would allow to be seen.

22. Even so, s127 does not on its face permit even that much. In this matter the “disclosure” was consequently unauthorised, but it did not taint the evidence, and it did not affect its reliability. Because those concerned acted genuinely according to established procedures, the illegality does not amount to a serious breach of the standards expected of them. There would appear to be no harm in one Department asking the other whether it was in possession of particular information that may be relevant to the other for investigative purposes. But at that point, further delving into the records would appear to require an authorization, statutory or delegated. This is a question both Departments might reconsider under the guidelines.

23. On the other hand, accepting that the warrant was obtained on the strength of material provided by an unauthorised disclosure, it is difficult to see how the proper exercise of discretion could lead to exclusion of evidentiary material subsequently obtained under it.  So far as the papers before the court take matters, the executing officer obtained the information in good faith and formed the belief necessary purely for the purposes of obtaining the warrant, without giving a moments thought to any question of irresponsible disclosure.  This situation arose in the course of a long running and complicated investigation. 

24. In weighing the discretion to exclude at common law, or to admit under the Evidence Act, assuming it arose in the circumstances, it is difficult to identify in this particular situation any breach of "the minimum standards which a society such as ours should expect and require of those entrusted with powers of law enforcement" or any conduct "quite inconsistent with" or "clearly inconsistent with" those standards: Ridgeway v The Queen,[56] Robinson v Woolworths Ltd.[57] To employ the words of Stephen and Aickin JJ in Bunning v Cross,[58] the circumstances entailed an “isolated and merely accidental non-compliance with statutory safeguards ... [involving]... no overt defiance of the will of the legislature or calculated disregard of the common law and … the reception of the evidence ... does not demean the court as a tribunal whose concern is in upholding the law”. 

    [56] (1994-95) 184 CLR 19, 37. Refer also to R v Dalley (2002) 132 A Crim R 169, Police v Jervis & Holland (1998) 70 SASR 29, 447, 449.

    [57] (2005) 64 NSWLR 612; (2005) 227 ALR 353; (2005) 158 A Crim R 546.

    [58] (1977) 141 CLR 54 at 77-78.

25. The actions of Leske and the others involved were in the circumstances “relatively remote from the real evil, a deliberate or reckless disregard of the law by those whose duty it is to enforce it”: Bunning v Cross[59] and there is nothing to suggest that those directly concerned were aware of any deficit in the procedure, or of any culpable impropriety on their part: Ousley v The Queen .[60]

    [59] [At 78].

    [60] (1997) 192 CLR 69.

    Computer Evidence

26. The next objection taken by the accused Maxwell Reid relates to the evidence of Messrs Roach (who retrieved invoices from the laptop seized Leske) and Wyers (an ATO officer who retrieved BAS information from tax office computer records).  A number of points were made by defence counsel relating to the admission of this so-called “computer evidence”. At common law, the computer records produced or generated by these proposed witnesses, might have struggled for admission: Myers v DPP,[61] R v Pettigrew,[62] R v Koliroff.[63]

    [61] [1965] AC1.

    [62] (1980) 71 Cr App R 39,

    [63] (2003) 226 LSJS 415, [2003] SADC 31.

27. The objection distils into the submission that what the witnesses produce into Court, could not be a “Commonwealth Document” or a “Commonwealth Record” within the meaning of the dictionary to the uniform Evidence Act 1995 (Cth), and that in any case the provisions of s45A of the Evidence Act 1929 (SA) applied to the reception of that material. Since there was non-compliance with the latter provision, the evidence was inadmissible.

28. The material examined by Mr Roach does not rely for admission on these provisions.  They apply to proof of computer records by establishing minimum requirements for admission, designed to protect the integrity and preserve the reliability of records generated in this way.  The evidence sought to be tendered here is not of that kind.  The material retrieved from the laptop was simply “real” or “original” evidence, as to which no special rules govern admissibility, save as to relevance, and subject always to discretionary exclusion: Driscoll v The Queen,[64] R v Bilick and  Starke.[65]Accordingly the special provisions relating to the admission of computer generated evidence, or for that matter the business records provisions, are not attracted, whether under Commonwealth or State laws.  It follows that the evidence of Mr Roach is admissible on that basis.

    [64] (1977) 137 CLR 517, 531-532.

    [65] (1984) 36 SASR 321, 325-326.

1. However the evidence of Mr Wyers does rely on the applicable statutory regime for admission.  Mr Wyers searched through various ATO computer systems to extract information held by it relating to 51 named entities, associated with the accused, on the prosecution case.  Upon examining that material he purports to have extracted the dates upon which those entities were first recorded by the ATO, the postal addresses assigned to them and other “contact details” as furnished to the Australian Taxation Office from time to time by those entities or their authorised officers.

2. As to this material, s182(4B) of the Evidence Act (above) deems any document in the possession of a Commonwealth entity, to be a Commonwealth document to which that Act applies, so the submission that the records were not “made by” an agency of the Commonwealth cannot succeed. No point was taken that the Commissioner of Taxation was other than a Commonwealth entity: ss4 and 4A Taxation Administration Act 1953 (Cth), s57 Public Service Act 1999 (Cth). Otherwise s5 of the Evidence Act (above) extends the application of s147 (computer produced evidence) and s182 (Commonwealth records), to all “proceedings in an Australian Court”, so those special provisions are applicable to this trial, although the Act as whole is not (s4).

3. As such, there is no other barrier to proof of these “Commonwealth Records” or “Commonwealth Documents” under Part 4.3 of the Evidence Act (Cth). As a consequence Part 6A of The Evidence Act (SA) does not apply to them. Accordingly the proposed evidence of Mr Wyers will be admitted.

   The ATSIC Loan

4. Next the prosecution seeks to prove an application by Gemstone Exploration Pty Ltd – which it is to be recalled was formed in August 2000 – by Mr and Mrs Reid, seeking financial assistance from The Aboriginal and Torres Strait Islander Commission (ATSIC) during the course of September and October 2000.  At this time Gemstone hired indigenous employees to assist with mining opals. The application presented Gemstone in glowing terms, but was unsuccessful.   

5. Such evidence is led by the prosecution, in conjunction with the bank records of Gemstone Exploration as exhibiting a strong and pressing need for money, as a prelude to the first of the charges chronologically speaking, commencing soon after (counts 16-20), and is therefore relevant as to motive. On that footing, the evidence is admissible. It connects with later evidence of a further quest for funds, around mid 2001 and again in February 2002.

   Evidence of mining operations

6. At around the same time as Gemstone Exploration was formed, a Mr Glenn Allport was employed.  According to him little opal was collected or mined.

7. The prosecution also proposes to call a Mr David Buck, who on 10 March 2001 commenced employment with Mr Reid as Manager of the Middleton Hotel, in Queensland. Reid is alleged to have told him that he made a $20,000 payment towards the purchase of the hotel.   Admissions were also made by him that he purchased the hotel for $280,000 on behalf of Gemstone Exploration, and that the Directors were Edna Reid and Graham Dasborough.  Buck remained Manager of the Middleton Hotel until 16 June 2001. He returned to Coober Pedy by August and commenced work on City Gate building for Mr Reid in the Gemstone Café & Bakery until April 2002. 

8. All this interrelated evidence is opposed on the grounds of relevance and prejudice.  However it is, like the ATSIC evidence, relevant and admissible, partly as admissions made by Mr Reid in his case, partly to show the need for money at times and therefore as to motive, and partly to show the business relationship and dealings between the accused when it arises, and the financial viability of entities under the control of the accused.  On this footing that evidence, like the earlier ATSIC evidence and other evidence to follow, is relevant and admissible on the limited basis mentioned.  As noted by King CJ in R v Panagiotou,[66] quite apart from admissions and evidence of actions, the material relating to finances and financial circumstances “if at all …  was relevant to prove either a motive for [dishonesty] or that the [accused] was spending money at a greater rate than could be explained by his legitimate income, or both”.

   [66] (1982) 6 A Crim R 174; 101 LSJS 25 (at 25 and 175 respectively).

   The Battstone evidence

9. The prosecution seek to prove through the two proposed witnesses, Battista and Trosi, certain dealings with Mr Reid between February 2003 and Easter 2003, relating to his dealings with Mr Battista’s company Battstone Australia Pty Ltd.  This is said to be irrelevant and prejudicial, particularly because the events took place some considerable  time after the last of the charges, which occurred no later than late October 2002.

10. Ms Chapman says Battstone was taken over in early 2003 by Opal Sales Victoria and Australian Marble, entities under the control of Mr Reid.  Mr Smith and Mr Hyland were figureheads of these entities, nominally installed as Directors by Mr Reid, just as they were earlier in the case of other entities to which some of the charges relate, counts 52-57 in the case of Smith and counts 58-64 in the case of Hyland.

11. On this basis, the prosecution contend the evidence is admissible to prove the nature and content of the business dealings between Mr Reid on the one hand, and Mr Smith and Hyland on the other and the entities connected to them, as well as the structure and chain-of-command within and as between them. The evidence is also proffered to rebut any prospective defence of innocent association.

12. When so viewed, the evidence of this nature entails no question of the admission of propensity evidence as such, or the disclosure of other offences.  Rather it is put forward as evidence of a continuing course of conduct or scheme, linking Mr Reid at least with Smith and Hyland and their mutual association with several of the entities submitting dishonest claims for GST refunds.

13. This basis of reception is supported by authority such as R v Domokos and Ors.[67] As explained in that case, this process does not call for any other special test of admission as explained in some detail by Doyle CJ: 

    [43] I am not persuaded that the challenged evidence had to satisfy the high standard that applies to the admission of similar fact evidence, as established by the High Court in Pfennig v The Queen (1995) 182 CLR 461. The test for the admissibility of such evidence was described by Mason CJ, Deane and Dawson JJ as follows (at 481-482):

    ... [T]he basis for the admission of similar fact evidence lies in its possessing a particular probative value or cogency such that, if accepted, it bears no reasonable explanation other than the inculpation of the accused in the offence charged. In other words, for propensity or similar fact evidence to be admissible, the objective improbability of its having some innocent explanation is such that there is no reasonable view of it other than as supporting an inference that the accused is guilty of the offence charged.

    I discussed this principle, and the circumstances in which it applies, at some length in R v Palaga (2001) 80 SASR 19. I will not repeat that discussion here. There I rejected a submission that whenever evidence discloses the commission of an offence other than the offence charged, and the evidence is tendered in proof of an offence, that evidence must meet the test stated in Pfennig. I drew on my reasons in R v Nieterink (1999) 76 SASR 56, and I do so again. On this point I refer also to the reasons of this Court in R v Burns (2001) 123 ACrimR 226.

    [44] Because of the manner in which the challenged evidence was used in the present case, I consider that it does not attract the principle stated in Pfennig. The evidence was not used, as similar fact evidence is often used, to establish a pattern or distinctive feature of offending conduct, the presence of which in the case of incidents charged could then be used to identify the appellants as the offenders, the appellants having been identified by other evidence as the offenders in instances in which the pattern or distinctive feature was present. Nor was the evidence used to argue that if the appellants imported drugs in the Marinescu and Roberts parcels, it was improbable that some person other than the appellants committed the offences charged. The challenged evidence was not used to prove a propensity to commit a crime of a particular type, or a crime involving a particular person. When evidence of other offences is used in those ways, the principle in Pfennig is attracted.

    [45] In the present case, as in Palaga, the challenged evidence was used in a different way. It was used to prove a course of conduct over a period of about eight months. The course of conduct involved the sending of money overseas by the appellants and their associates, and the sending of parcels to addresses to which the appellants were linked but using false names. When the whole course of conduct is surveyed, with the other circumstantial evidence, in particular the evidence of associations between the appellants, the whole picture, including the challenged evidence, has a persuasive effect. To my mind this is a case of proving something akin to an ongoing business enterprise, the existence of which then gives to things occurring in the course of that enterprise a significance that they would not otherwise have.

    [46] For those reasons I consider that the evidence was relevant, was strongly probative of the prosecution case, and was admissible without reference to the exclusionary principle stated in Pfennig.

    [67] (2005) 92 SASR 258.

14. The case of R v Burns & Collins (above) to which the Chief Justice made passing reference in Domokos, affords another illustration of the proper admission of evidence of circumstances and events consistent with the pursuit of a relevant commercial relationship. The joint judgement added:-

    [40] We think this case is more comparable with the circumstances considered in McGhee (1993) 61 SASR 208; 68 ACrimR 220 than those before the High Court in the cases cited. In this case the prosecution was entitled to establish the existence of ongoing arrangements involving the accused. It was a case where the commercial relationship was not over and done with. The evidence disclosed not just an initial shipment before the one the subject of the charge, but arrangements on foot to which the appellants were parties with respect to a third and fourth shipment of materials and drugs. Proof of the common intent of the accused to pursue other illegal activity associated with the commercial enterprise and their awareness of detailed arrangements was "substantially probative, not merely speculative": McGhee at 211; 222-223. It was properly admitted. So too the location of the conversations and the references within it to the imports completed or planned. Any evidence of uncharged acts "put in context" the immediate evidence of the offence charged. It was "not used to support a line of reasoning that involves inferring from the fact and nature of the uncharged acts that (an) accused is likely to be (an) offender": Doyle CJ in Nieterink (1999) 76 SASR 56 at 66.

15. It must follow that the proposed evidence of the Battsone Resosurces dealings is admissible to show, if it can, the continuing nature and extent of the joint activities and dealings between Mr Reid, Mr Smith and Mr Hyland and of the nature of the business relationship existing between them: refer also to R v Ngo & Le,[68] R v Long & McDonnell.[69]

    [68] (2002) 135 A Crim R 550.

    [69] (2002) 224 LSJS 193.

    The Cash Resources Issue

16. Defence counsel raise an important and troubling issue relating to proposed evidence that Gemstone Exploration, through Mr Reid, sought a factoring arrangement totalling $250,000 from a financier Cash Resources Australia, via its State Manager Mr Ciccolella in February 2002.  That application was based on debts owed to Gemstone Exploration at the time – which the prosecution does not presently allege to be false – secured by posting opals as security said to be worth some $1.4m.  These were lodged with Chubb Security (the witness Fiedler deposes). When later appraised they were found to be worthless.  Tender is opposed on the basis of irrelevance and “overriding prejudice”.

17. It may be accepted that evidence of the continuing trading position of Gemstone Exploration and its financial situation at this time, is admissible to prove motive, in conjunction with the other evidence of that kind. Proof of the need for funds is admissible as such, on that limited basis. The evidence concerning the value of the opal – or rather lack of it – is some evidence that Gemstone or associated entities were hardly finding much opal of any worth. However, Ms Chapman argues forcefully these events not only reveal a picture of being cash strapped, they go further to provide a concrete example of the fact that it and the other Reid controlled entities, were barely trading and were not mining or dealing in opal of any significant worth. It shows that Mr Reid knew this to be the case. This evidence, no doubt is otherwise admissible for these purposes. It would also be admissible on the bases mentioned in R v Panagiotou (above).

18. The inherent danger with this evidence is that the Cash Resources transaction carries with it the direct implication that Mr Reid knew the opal was worthless and deliberately proffered it to Mr Cicolella as a substantial security, nevertheless.  This is  suggestive of dishonesty, a false pretence and a deception, outside the ambit of the charged events.  As such it is generally inadmissible: Perry v The Queen.[70] Thus to justify reception the common law requires a high threshold to be passed: Phillips v The Queen.[71] It would not be proper to admit the evidence as highly probative of the offences, at least at this stage, as it does not pass the high threshold required under the Pfennig principle in any guise. Furthermore it is difficult to think of a direction that could limit impermissible use: Sutton v The Queen.[72] In any case, as there is a reasonable view of the evidence consistent with innocence to the effect that it may have been of significant value, it must be excluded: Pfennig v The Queen.[73]

    [70] (1982) 150 CLR 580.

    [71] (2006) 80 ALJR 537 [79].

    [72] (1983) 152 CLR 528 at 542.

    [73] (1995) 182 CLR 461 at 485

19. Alternatively, it was submitted this evidence was admissible to place the charged acts in context, as capable of assisting the jury to better understand the nature of the relationship between the accused and relevant parties, or to explain what would otherwise appear to be surprising or unlikely conduct: R v Nieterink.[74] However evidence of this transaction does not serve any of these functions.  As a matter of fact it does not disclose a particular mode or manner of committing a crime, from which one could infer the crime in question was committed: Nieterink.[75]

    [74] (1999) 76 SASR 56 at [41].

    [75] Above at [413].

20. Should it turn out that the accused seek to prove that the subject parcel of opal was valuable, or that Gemstone Exploration and its related entities did mine opal of some substantial value, matters might stand differently.  But that situation stands to be judged according to the evidence as it has unfolded at that time and according to accepted principles of dealing with such a situation: R v Soma,[76] R v Killick.[77]

    [76] (2003) 212 CLR 299 [28-29], [46], [59-60], [113].

    [77] (1981) 147 CLR 565, 570-571, 576-577.

21. Following the above ruling the prosecution indicated nevertheless that it sought to prove the deposits into the Gemstone account received from Cash Resources, in May 2002.  This was vigorously opposed by defence counsel. However, such tender on that limited footing is not inconsistent with this ruling, which inherently accepted the relevance of the transaction. The evidence was disallowed insofar as it carried with it proof of the dishonest representation concerning opal said to be worth $1.4m, as being prima facie inadmissible, far too prejudicial and because the court was not satisfied an adequate direction duly protecting Mr Reid from the prejudice carried with it, could be formulated.

22. The evidence is otherwise relevant to the trading position and financial resources of Gemstone Exploration and it connects with the picture or pattern  of seeking money and then spending, once again as showing “a motive for [dishonesty], or that [Mr Reid] was spending money at a greater rate than could be explained by his legitimate income, or both”: R v Panagiotou (above).

    The Federal Court Order

23. The prosecution seeks to tender an order of the Federal Court banning Mr Reid from being a Director of a Corporation for the years covering and proximate to the charges.  It has applied to limit that evidence – by means of agreed facts if needs be – simply to the effect that he was legally prohibited from being a Director of a Corporation.  This is put forward for the limited purpose of explaining why he needed to install others as Directors, as mere figureheads for the entities involved in submitting the subject BAS forms.  There is also some evidence that he claimed to several ATO officers to be acting merely as a bookkeeper, for some of these entities.

24. This evidence is obviously admissible on that limited basis.  As the Court order itself is capable of suggesting other unspecified wrong-doing, it should not be admitted, unless no other means of proof remains reasonably open to the prosecution.

    The City Gate Seizures

25. The prosecution proposes to lead evidence that a large amount of paper work relating to the various entities as well as several persons said to be associated with them at various times, were found abandoned at the City Gate building, Coober Pedy.  The landlord, Mr Zarewicz first let part of those premises to Mr Reid in the latter stages of 2000. By mid 2001 the whole block was leased to him or Gemstone. As of early July 2002 Mr Zarewicz began to press for back payments in rent, so much so that by September 2002 proceedings were on foot in a Coober Pedy Court for recovery.  By March 2003 Mr Reid fell $65,000 in arrears, forcing Mr Zarewicz to change the locks on the doors of several of the upstairs apartment, including Apartment 1.  At that time he cleared the apartment, removing a “considerable number of dark coloured garbage bags along with several red, blue and white striped nylon bags”.  These contained personal items, plus a quantity of loose papers and various business records.  These were removed by Mr Zarewicz and the property manager of the building Carolyn Beckley, for storage.

26. On 8 June 2004 Ms Beckley advised Mr Jones from the Australian Taxation Office of the existence of these bags. Jones indicated interest in examining them, which he proceeded to do briefly, being permitted access by Ms Beckley.  Jones said he wished to take possession and he did so the following day, access to the storeroom being allowed once again by Ms Beckley.  The bags were by that time covered in dust and some of the plastic was torn.  Mr Jones gave her an Australian Taxation Office property receipt for the paper work he removed.

27. A lengthy submission was advanced by Mr Niarchos to the effect that this search and seizure was illegal and accordingly the material so seized should be excluded, no matter what its weight.  The documents concerned could hardly be more material: they comprise copies of many of the BAS statements concerned, with accompanying false invoices attached.  They were located in premises, the jury would be entitled to infer, vacated by Mr Reid and his cohorts. That fact leads to an inference of connection between him and them and with the seized documents.  The other material consisted of applications for the 2002 companies or entities, bank statements relating to the 2002 entities and some handwritten notes, which it is alleged can be linked to Mr Reid. 

28. It was submitted that the sole authority for lawfully acquiring this material in the way that Jones had, could only have come from s263 of the Income Tax Assessment Act 1936 (Cth) which provides:

    INCOME TAX ASSESSMENT ACT 1936 - SECT 263

    Access to books etc.

    (1)  The Commissioner, or any officer authorized by him in that behalf, shall at all times have full and free access to all buildings, places, books, documents and other papers for any of the purposes of this Act, and for that purpose may make extracts from or copies of any such books, documents or papers.

    (2)  An officer is not entitled to enter or remain on or in any building or place under this section if, on being requested by the occupier of the building or place for proof of authority, the officer does not produce an authority in writing signed by the Commissioner stating that the officer is authorised to exercise powers under this section.

    (3)  The occupier of a building or place entered or proposed to be entered by the Commissioner, or by an officer, under subsection (1) shall provide the Commissioner or the officer with all reasonable facilities and assistance for the effective exercise of powers under this section.

    Penalty:  30 penalty units.

    Note: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

1. The submission was this provision furnished the only means of seizure available to Jones; otherwise the documents could only have been lawfully taken under a valid warrant issued to Federal Police relating to the subject premises, under the Crimes Act (above). 

2. It is impossible to accept that submission.  The section is plainly directed to administrative enforcement of that Act in aid of the collection and recovery of tax: Simionato Holdings Pty Ltd v Federal Commissioner of Taxation.[78]  It does not direct attention to evidence received or taken by officers of the Department by non-coercive means, whether for administration or for investigative purposes. 

   [78] (1995) 60 FCR 375

3. It was emphatically submitted that there was no consent to removal, evident on the papers.  It is true that Ms Beckley does not affirmatively speak of consent in her statement, yet her words and actions amount to as much.  As those documents were under the control of the landlord or his agent, either were capable of giving consent, express or tacit, to their seizure: Chairman, National Crime Authority v Flack.[79]   In those circumstances there was no point in obtaining a warrant and it is hardly surprising that question did not even arise.  Even if it had, that warrant would of necessity be directed to the person in control of the premises, Mr Zarewicz or Ms Beckley in any case. 

   [79] (1998) 86 FCR 16.

4. The position at common law is that the police or authorised officers have no unrestricted right to enter or to search private premises or to seize items found within them, without the consent of the owner: Leech v Money[80] and Entick v Callington.[81]  Normally that power would only pertain under proper warrant in the context of an arrest: Levine v O’Keefe .[82]  Wright J said in R v Lushington: ex parteOtto:[83]

   [I]t is undoubted law that it is within the power of, and it is the duty of constables to retain for use in Court things which may be evidence of crime, and which have come into the possession of the constables without wrong on their part.  I think it is also undoubted law that when articles have once been produced in Court by witnesses it is right and necessary for the Court, or the constable in whose charge they are placed (as is generally the case), to preserve and retain them, so that they may always be available for the purposes of justice until the trial is concluded.

   [80] (1765) 19 ST TR 1001.

   [81] (1765) 95 ER 807.

   [82] [1930] VLR 70.

   [83] (1894) 1 QB 420 at 423-424.

5. The modern position seems to be that taken by Lord Denning M.R. in Ghani v Jones:[84] and refer Plenty v Dillon.[85]The situation confronting Mr Jones was one requiring no warrant or the invoking of no other statutory or common law power, in order to remove the papers lawfully. The taking was not coercive, or one achieved without consent and was quite outside and independent of the statutory authority conferred by s263. This is the point made by Lockhart J in Citibank Ltd v Federal Commissioner of Taxation in this very context:[86]

   The language of s 263 can be relied upon to support either a greater or a lesser degree of specificity in an authority issued for the purposes of s 263; but the section must be construed to give effect to its evident purpose having a proper regard for the rights of citizens to be secure from undue invasion into their premises, documents and privacy, and to the principles of statutory construction applicable where common law rights are an issue.

   This section does not confer in terms a power of search; but plainly the power of search exists, whether it be an express power or an implied power necessarily arising from the power of full and free access to buildings, places, books, documents and other papers and the power for that purpose to make extracts from or copies of such books, documents or papers.

   Counsel for Citibank placed strong reliance upon the line of authority concerning s 10 of the Crimes Act 1914 (Cth) and related sections in other legislation, in particular Crowley v Murphy (1981) 34 ALR 496; 52 FLR 123; Arno v Forsyth (1986) 65 ALR 125; R v Tillett; Ex parte Newton (1969) 14 FLR 101; Australian Broadcasting Corporation v Cloran (1984) 4 FCR 151; 57 ALR 742. These cases are not precisely in point when construing s263 of the Act, but they provide a useful analogy and background to the court’s consideration of the meaning and operation of the section. Those cases are part of a wider stream of authority, all of which emphasise the case with which courts must approach statutory encroachments upon the basic rights of people to freedom of the person, premises and property. The wider principles articulated by the warrant cases are equally applicable to s 263.

   Officers of the Taxation Office do not need to rely on s 263 in most cases to obtain copies of documents or on s 264 to obtain information, and in most cases the Taxation Office rightly proceeds informally, with the relevant officer exercising his common law entitlement to ask questions, and relying upon the cooperation of the person to whom the questions are put: see Clough v Leahy (1904) 2 CLR 139 per Griffith CJ at 156-7; Williams, Investigations by Administrative Agencies, 1987, p 263. In the ordinary course of events most people will cooperate and give information or furnish documents or copies of them voluntarily. The s 263 power must, however, be relied upon in cases where there is no practical alternative to its exercise. These cases will include circumstances involving institutions such as banks which have a contractual duty to keep confidential the affairs of their clients.

   Plainly the revenue must be protected, but so must the rights of citizens. It is obvious that the Commissioner himself, in whom the s 263 power is primarily vested, cannot personally supervise each occasion of the exercise of the power. The Commissioner may, however, delegate this power to Deputy Commissioners, regional officers and others who can keep a watchful eye on the particular exercise of the power which is called for from time to time.

   The analogy with the requirements of a warrant under s 10 of the Crimes Act is here particularly close, and is founded in the common source of the law’s recognition of the need to balance the policies of law enforcement, whether of criminal or of revenue laws, and the commitment to the inviolability of the person which has been central to the history of English law: see Crowley v Murphy, supra (ALR at 513-14; FLR at 141).

   There is nothing singular about s 263 or the position of the Australian Taxation Office which calls for any lesser standards. It is important to mention at this point that the documents which the officer inspects and copies, when searching premises pursuant to s 263, arm him with material which he can use against the occupier of the premises being entered and against other persons whose documents are in the possession of the occupier or who are mentioned in the documents. None of the persons whose interests may be affected have any control over the exercise of the s 263 power except, in the case of the occupier, the right to require production of the requisite authority. It is no answer to say that the power must be exercised reasonably or that s 16 of the Act restricts the use to which the documents or their contents may be put. All statutory powers must, in the absence of specific statutory provision to the contrary, be exercised reasonably and for the purpose for which they are given. Section 16 ensures that taxation officers observe their statutory duty of secrecy with respect to the documents or their contents, but it does not prevent their use in courts where a taxation issue is involved. Accepting that statutory power will be exercised reasonably and for proper purposes, the power is in its nature a substantial intrusion upon individual rights, and the proper construction of s 263 and the requirements for an authorisation to exercise the s 263 power, have to be determined with the nature of that intrusion in mind.

   [84] [1970] 1 QB 693 at 709.

   [85] (1990-1991) 171 CLR 635.

   [86] (1988) 83 ALR 144 at 155

6. Mr Jones was a tax fraud officer, having no role or function in the administration of the Act.  He held no delegation under the section, which is not surprising given his investigative responsibilities.  Counsel was unable to clearly articulate an act of illegality or unfairness, except perhaps the prospect of some kind of suit in detinue by an as yet unidentified plaintiff.  No-one subsequently came forward claiming ownership of the seized material. It is impossible to think that any such action could have produced other than nominal damages.

7. In those circumstances the discretion to exclude is not enlivened, but even if it was, the combined circumstances lean heavily in favour of admission given the seriousness of the charges. The integrity and probity of the documents seized remain utterly unaffected by any supposed illegality. The proper exercise of discretion whether arising at common law or under the Commonwealth Evidence Act would accordingly be exercised favourably to the prosecution.  This situation was at worst for the prosecution one potentially involving “accidental non-compliance with statutory safeguards”. Bunning v Cross.[87]

   [87] (1977) 141 CLR 54 at 77-78.

   Making Fruits of “City Gate” Seizure available to the ATO

8. There was a very late application following a Rule 9 Notice filed on 6 November 2006 during the course of the trial, which commenced before the jury on 6 October 2006, although they were empanelled on 23 September 2006.  Earlier pre-trial matters were heard commencing on 18 September 2006, pertaining to other notices filed on 12, 15, 19, 22 and 27 September 2006 successively by the accused Maxwell Reid.

9. The gist of the point taken by his counsel was that there was such a breach of ss 3F(5) of the Crimes Act (above) following the execution of a search warrant at Wright Road Coober Pedy on 12 December 2001, that it calls for the exclusion of the fruits of that search.  It emerged during the course of the evidence given before the jury that the AFP officer to whom the warrant was directed as ‘executing officer’, was not personally involved in making the ‘things’ seized available to officers of another agency, namely the Australian Tax Office, or that he personally considered if it was ‘necessary to do so for the purpose of investigating or prosecuting an offence to which the things relate’.[88] 

   [88] Transcript 970, 1038-1041.

10. Although this point was raised well into the trial, it only triggered in the mind of counsel for the first time during the course of evidence on the topic, that a material non-compliance with the provision might have been involved.  Mr Niarchos raised the point at that time on 26 October, shortly after the subject evidence emerged.[89]  The point proved to be of some substance, owing to the concession by Mr Smart, to the extent that he conceded the officer concerned Mr Velickovic, was not even present when the bulk of the material was handed over to officers of the ATO on 13 December 2001 at about 2:30pm, he then being on leave, that is to say the day after the warrant was executed.

    [89] Transcript 1045.

11. In those circumstances given the contingencies and the factual basis underpinning the submission being accepted, an extension of time was granted in which to bring the application, the court being of the view that the circumstances justified waiving compliance with Rule 9 of the Criminal Rules 1992.  An order dismissing it under Rule 9.06 is therefore refused.

12. Section 3C of the Crimes Act provides that a member of the Australian Federal Police must usually personally execute the warrant, although he may obtain assistance from another constable, or another person specifically “authorised” to assist.  No such assistance or authorisation was proved in this case.

13. Section 3F(5) was first introduced as part of the wider amendments proposed by a committee chaired by former High Court Chief Justice Sir Harry Gibbs relating to search warrants and powers of arrest.[90]  It provides as follows:

    (5)If things are seized under a warrant, the warrant authorizes the executing officer to make the things available to officers of other agencies if it is necessary to do so for the purpose of investigating or prosecuting an offence to which the things relate.

    [90] Hansard, House of Representatives 17.11.93 p3030.

14. On a proper reading in the context of Part 1AA, s3F(5) is facultative in operation. At common law the obligation resting on a seizing officer was to retain those items taken for no longer than reasonably necessary to complete investigations or to preserve them for evidence: Ghani v Jones[91]and R v Lushington (above).  The decision in Marcel v Commissioner of Police of the Metropolis[92] confirms that the common law countenanced the communication of material seized under a warrant when “necessary for the purpose of the police investigation and prosecution”, although there was some limitation on the purposes for which it could be used. See also Inland Revenue Commissioners v Rossmines Ltd,[93] Taylor v Director of the Serious Fraud Office.[94] 

    [91] [1970] 1 QB 693 at 609.

    [92] [1992] Ch 225.

    [93] [1980] AC 952.

    [94] [1999] 2 AC 177.

15. This construction of the provision is confirmed by the Explanatory Memorandum to the Crimes (Search and Powers of Arrest) Amendment Bill) 1994 (Cth): which read: 

    “Subsection 3F(5) authorises the executing constable to make things seized under the warrant available to other agencies where it is necessary for the purposes of the investigation or prosecution of an offence to which the things relate.  Police do not always have the expertise to properly analyse the things seized.  In other cases police may seize items relevant to an offence appropriately dealt with by another agency (for example, Customs).  This was not addressed by the Gibbs Review but has been inserted to remove any doubt about the authority and reflects current practice.”

16. If anything it is the warrant itself, rather than the section which serves to authorise the executing officer to make the things seized available to officers of other agencies.  In the first place the third condition predicates the seizure of items for which reasonable grounds for expecting they will afford evidence as to the commission of the specified offences exists. Secondly, the warrant in this case does that expressly because it was endorsed ‘by virtue of Section 3G…in executing this warrant…the executing officer or a constable assisting may exercise such other of the powers available under Division 2 Part 1AA as are appropriate in the circumstances’.  That recital incorporates the power to make the things available to officers of other agencies.

17. So construed, the requirement that it should be “necessary to do so for the purpose of investigating or prosecuting an offence to which the things relate” in s3F(5), contains no precondition to the exercise of that power, but should be seen as imposing limitations on its exercise once made, which may be amenable to judicial review or suit in detinue, if and when exceeded.

18. Alternatively, as to the supposed requirement that Velickovic should have turned his mind to the necessity of making items available for the purpose of investigating or prosecuting, it is by no means clear that this state of belief has to be exercised at the precise time of making the things seized available to another agency.  As all the material before the court conclusively shows the warrant was sought through the agency of the AFP, given that the ATO lacked the necessary statutory power, and as it was always contemplated the material would then be handed to the ATO for investigation, the evidence ought to be admitted notwithstanding, quite apart from the prospect that it would or might be reintroduced later by either or both co-accused, a course ostensibly open to either, even upon exclusion against prosecution tender: Question of Law Reserved (No 3 of 1997).[95] The temporal deficiency could easily have been satisfied had Velickovic been present when the material was made available. 

    [95] 70 SASR 555.

19. Even then, it is clear from all the objective circumstances relating to the course of the investigation by the ATO, that it was understood following seizure that the material so taken was to be made available to it for the express purpose of investigating and prosecuting the offences nominated in the third condition of the warrant, relating to serious frauds on the Commonwealth. So the requisite state of mind was both one necessarily held in any event, antecedent to making the material available to the ATO and one also required by third condition of the warrant, the fulfilment of which has not been attacked by counsel.

20. It follows that should s3F(5) be read to have required as a precondition to its valid exercise, that the executing officer must hold the belief or formed the view that it was necessary for the purpose of the investigation or prosecution to do so, that was necessarily fulfilled in this instance. ATO officers were lawfully present and assisting in carrying out the search, no doubt for the purpose of assisting to determine if the documents taken were within the description contained in the warrant: Dunesky v Commonwealth of Australia.[96]  The situation is then, the same as in Williams v Keelty[97] namely “all that emerges is that the AFP has given the documents seized to [the ATO] for the purposes referred to in s3F(5)”.

    [96] (1996) 89 A Crim R 372, 385.

    [97] (2001) 111 FCR 175, [288].

21. In those circumstances any breach of s3F(5) – if there was one at all - was minor and highly technical in nature, one involving no ‘cutting of corners’. The probity of the evidence was unaffected, so that insofar as the discretion to exclude arises, the material should be admitted in any event. To the extent that it was maintained, leave to cross-examine Velickovic, was refused accordingly.

    Conclusion and formal orders 

22. The evidence in contention will be admitted, or excluded as the case may be, in accordance with the above reasons