Saunders, Dr Brian v Commissioner, Australian Federal Police

[1997] FCA 1364

FEDERAL COURT OF AUSTRALIA

PRACTICE AND PROCEDURE - discovery - challenge to validity of search warrant - specific discovery of information backing warrant - allegations of non-disclosure of material facts - public interest immunity claim and claim for non-disclosure under s 16 of Income Tax Assessment Act - admission of omission of pleaded material - admission sufficient to put relevant facts properly before the court - no legitimate forensic purpose served by production of information.

Judiciary Act 1903 s 39B

Income Tax Assessment Act 1937

Karina Fisheries Pty Ltd v Mitson (1990) 26 FCR 473
Propend Finance Pty Ltd v Commissioner, Australian Federal Police 1994 ATC 4399
Arno v Forsyth (1986) 9 FCR 576 considered
Beneficial Finance Corporation Ltd v Commissioner of Australian Federal Police (1991) 103 ALR 167 considered
Croft v Jumeau (1990) 22 FCR 276
R v Saleam (1989) 16 NSWLR 14
Attorney-General (NSW) v Stuart (1994) 34 NSWLR 667
Alister v R (1984) 154 CLR 404

DR BRIAN SAUNDERS v COMMISSIONER, AUSTRALIAN FEDERAL POLICE
WAG 59 OF 1997

FRENCH J
PERTH
20 NOVEMBER 1997

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAG 59  of   1997

BETWEEN:

DR BRIAN SAUNDERS

APPLICANT

AND:

COMMISSIONER AUSTRALIAN FEDERAL POLICE

RESPONDENT

JUDGE:

FRENCH J

DATE OF ORDER:

20 NOVEMBER 1997

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

On the Applicant’s motion filed 8 September 1997 for specific discovery:

1. The motion is dismissed.

2. Costs of the motion will be reserved.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAG 59 of 1997

BETWEEN:	DR BRIAN SAUNDERS APPLICANT
AND:	COMMISSIONER AUSTRALIAN FEDERAL POLICE RESPONDENT

JUDGE:	FRENCH J
DATE:	20 NOVEMBER 1997
PLACE:	PERTH

REASONS FOR JUDGMENT ON MOTION FOR SPECIFIC DISCOVERY
ON INFORMATION BACKING WARRANT

The application which commenced these proceedings was filed on 20 May 1997 by Dr Brian Saunders (“Saunders”) claiming orders against the Commissioner of the Australian Federal Police for the return of certain documents seized under warrant and declarations that their seizure and retention by the Commissioner were unlawful. The application was brought under s 39B of the Judiciary Act 1903.

Orders were made on 21 May for the delivery up of the documents to the Registrar of this Court pending the outcome of the application.  On 6 June, orders were made for the filing of affidavits and the listing of the application for an expedited hearing. 

According to his affidavit sworn in support of the application, Saunders is a mining engineer and prospector in dispute with the Australian Taxation Office with respect to income tax assessments issued to him for the years 1984 to 1992 inclusive.  Applications for review of decisions on his objections to these assessments have been lodged with the Administrative Appeals Tribunal. 

Saunders has been subject to audit by the Australian Taxation Office, a summons to appear before the Royal Commission into the Commercial Activities of Government, an application to the Supreme Court for a mareva injunction and a Departure Prohibition Order which was served on him on 4 December 1996 by the Australian Taxation Office.  He has consulted a number of legal practitioners about these and other matters relating to his mining activities.

On 12 February 1997, a search warrant was executed at a self storage premises in Osborne Park at which documents in his possession were located.  These included documents belonging to him and to Bewick Moreing Pty Ltd, the trustee company of a discretionary family trust associated with him.  On the same day a search warrant was executed at his residence at 258 Marine Parade, Swanbourne.  He has raised claims of legal professional privilege in respect of a number of the many thousands of documents which were seized.  His solicitors wrote to the Commissioner claiming privilege in respect of those documents.  Their letter was sent on 14 May 1997. 

Further affidavits in support of the application were filed in July and August 1997.  On 8 August a motion was filed on behalf of the applicant to amend the application.  The applicant also filed a motion on 8 September 1997 seeking an order in the following terms:

“The Respondent do provide the applicant by way of discovery pursuant to O 15 r 5 a copy of each Information placed before the Issuing Officer with respect to the decisions to issue the search warrants specified in the amended application.”

On 16 October, upon return of the two motions, orders were made in the following terms:

“1.The application is amended in terms of the minute filed on 8 September 1997 subject to the right of the respondent to challenge the sufficiency of pleadings on the hearing of the application.

2.The question whether all or any of the documents referred to in paragraph 2 of the amended application are subject to legal professional privilege be heard and determined after and separate from other questions raised by the application.”

On 21 October, an amended application was filed pursuant to the orders made on 16 October.  The applicant seeks a declaration that the search warrants were invalid on a number of grounds.  Grounds 1.1 to 1.5 inclusive assert that the warrants were “bad on their face” for various reasons which it is not necessary to elaborate now.  That is a matter which plainly can be resolved by reference to the warrant documents themselves.

Ground 1.6 however, is in the following terms in the amended application:

“1.6the decision by the Issuing Officer to issue each search warrant was not authorised by the provisions of section 3E of the Crimes Act 1914 in that it was made:

1.6.1without the respondent having drawn to the attention of the Issuing Officer, or the Issuing Officer giving any attention to, the possibility that things otherwise falling within the ambit of the terms of the search warrants sought by the Respondent would be subject to legal professional privilege;

1.6.2was based upon an information placed before the Issuing Officer which failed to disclose facts material to the decision whether or not to issue the search warrant;

PARTICULARS

A.One of the allegations made in the Information was that the Applicant had submitted to the ATO four documents, being photocopies of:

(i)a letter to Tonto Pty Ltd from Richard Forbes Donald Hill (“RFDH”) bearing date 25 September 1987,

(ii)a letter to the Applicant from RFDH bearing date 1 December 1988.

(iii)a letter from (sic) the Applicant from RFDH bearing date 20 June 1990

(iv)a letter to the Applicant from RFDH bearing date 4 January 1993,

each bearing an original signature of RFDH, which documents had been fabricated by the Applicant and contain false statements, the fabrication consisting of photocopying other documents and obtaining the signatures of RFDH on the photocopies at the one time.

B.In fact the Applicant had by the combination of his oral statement to Ian Kitney an ATO Officer in June 1996 and his written submission dated 23 December 1996 to the ATO, told the ATO prior to the issue of the Search Warrant of the fact that:

(a)the documents were photocopies of original facsimile transmissions received by the Applicant on thermal paper;

(b)that they were fading or, the Applicant considered, were at risk of fading;

(c)that the Applicant perceived that the documents were, because they were, firstly, merely faxes and not the original signed document and, secondly, were at risk of fading to illegibility, of limited value to him as original documents and that to overcome this problem the Applicant having photocopied the faxes onto bond paper with the facsimile transmission details and any signature deleted, treated the photocopies as original documents and forwarded them to RFDH to sign or resign as the case may be.

C.The Respondent failed to disclose to the Issuing Officer in the Information the information specified in paragraph B above.

D.One of the allegations made in the Information is that the Applicant had transferred, or caused the transfer, by Tonto Pty Ltd and Finwest Pty Ltd as companies associated with the Applicant of, large sums of money overseas in recent years amounting to an alienation of assets that would otherwise be available to the ATO as his creditor and/or amounting to “money laundering”.

E.In fact:

(a)the Applicant had firstly, in response to an affidavit sworn on behalf of the ATO by Richard Lee Groser on 5 May 1995 in Supreme Court of Western Australia action CIV 1385 of 1995 in support of an application for a mareva injunction against the Applicant, by affidavit sworn by the Applicant on 11 May 1995, secondly by letter from the Applicant’s solicitors to the ATO dated 3 February 1997 and thirdly by letter dated 3 February 1997 from the Applicant to the Commonwealth Ombudsman copied by the Ombudsman to the ATO (together “the Applicant’s Response”) given an explanation to the ATO for each alleged transfer of funds;

(b)the Applicant had by the Applicant’s Response demonstrated that the ATO had mistakenly calculated that six overseas transfers by Tonto Pty Ltd totalling $1,030,652.00 had occurred in the period 7 April 1994 to 16 June 1994 when in fact only two such transfers totalling $415,828.23 had in fact occurred;

(c)the Applicant had by the Applicant’s Response asserted that of the $415,828.23 in fact transferred out of Australia by Tonto Pty Ltd, all of the funds were a repayment of funds previously borrowed by Tonto Pty Ltd from overseas and had identified the transactions amounting to the initial receipt from overseas of the funds by Tonto Pty Ltd;

(d)Finwest Pty Ltd carried on business as a money lender and $67,998 transferred overseas by Finwest Pty Ltd was a loan by it to a third party, Mr M. Stow, on commercial terms secured by a mortgage over real estate in Britain.

F.The Respondent failed to disclose to the Issuing Officer in the Information the information specified in paragraph E above.

G.The information specified in paragraphs B and E above was information which was material to the exercise by the Issuing Officer of her discretion as to whether or not to issue each of the Search Warrants and the terms to be contained in the Search Warrants if they were to be issued. “

Ground 1.6 is the only ground that raises the question of the content of the information provided to the Magistrate who issued the warrant.  It asserts in substance that certain material facts of an exculpatory or explanatory nature in relation to the applicant’s conduct were not placed before the Magistrate.  It would seem from the debate that took place in Court on 16 October, that were the non-inclusion of this material to be admitted by the Commissioner then there might be no need, from the applicant’s point of view, to seek production of the information.  Such an admission as to the non-disclosure of the exculpatory or explanatory material would not, of course, involve a concession as to the correctness of the assertion that such material existed that it would provide exculpation or explanation or that it was relevant to the exercise of the discretion to issue the warrant.

On 29 October, the Commissioner filed a response to the amended application.  He denied that the warrants were “bad on their face” as alleged in grounds 1.1 to 1.5.  As to ground 1.6.1 of the amended application, the Commissioner said that he did draw to the attention of the Issuing Officer the possibility that documents the subject of the warrant might be subject to legal professional privilege.  The text of the information in this respect was set out in the response.

In relation to the particulars in par 1.6.2 the Commissioner’s response was as follows:

“3.1.As to particular A, the respondent admits that there was information on oath contained in the Information and placed before the issuing officer as follows:

3.1.1.The applicant did submit to the Australian Taxation Office (“ATO”) photocopies of facsimiles addressed to the applicant from Donald Forbes Donald-Hill (“Donald-Hill”) and being the letters referred to in paragraphs (i) to (iv) in particular A of the application.

3.1.2.On 25 and 28 March 1994, the ATO notified the applicant that he was required to produce all four originals of the abovementioned facsimiles by 11 April 1994.  These originals were produced by the applicant through his solicitors on 30 March 1994.

3.1.3.On 26 May 1994, the abovementioned original documents were examined by forensic document examiner John D. Gregory (“Gregory”).  Gregory concluded that:

3.1.3.1.The document dated 1 December 1988 was in his opinion “suspect”.

3.1.3.2.The documents dated 20 June 1990 and 4 January 1993 respectively, were both fabricated; were signed at one time and were created on a common photocopier and were ‘manufactured’ after 4 January 1993.

3.1.3.3.The document dated 25 September 1987 was fabricated; signed at the same time as the other facsimiles and was created on a common photocopier with the other facsimiles.

3.1.4.The facsimiles dated 25 September 1987, 20 June 1990 and 4 January 1993, were fabricated by the applicant to document transactions he allegedly undertook with Donald-Hill.

3.1.5.Save as aforesaid, the respondent denies each and every allegation made in paragraph A of the particulars in the application.

3.2.The respondent does not admit any of the allegations pleaded in paragraph B of the particulars in the application.

3.3.As to paragraph C of the particulars, the respondent admits that he did not disclose to the Issuing Officer in the Information any of the matters pleaded in paragraph B of the particulars and says further that at all material times he had no knowledge of any of the matters alleged in Paragraph B.

3.4.As to paragraph D, the respondent admits that there was information on oath contained in the Information and placed before the issuing officer as follows:

3.4.1.Tonto Pty Ltd on six occasions between 7 April 1994 and 16 June 1994, sent funds overseas.  These transfers totalled Pounds Sterling 596,394 (Australian Dollars $1,245,902.00).  In each case the sending party was St George Bank, the receiving institution was Barclays Bank PLC St Helier, Jersey, Channel Islands, the beneficiary was Halifax International (Jersey) Ltd account of Richard Forbes Donald-Hill Australia.

3.4.2.The applicant gave instructions to the St George Bank to transfer the abovementioned funds.

3.4.3.Enquiries with the Australian Transaction Document Agency revealed that Tonto Pty Ltd a company which the applicant has strong associations with, has on six occasions between 7 April 1994 and 16 June 1994, sent $1,245,902.00 overseas and that the money transfers are connected to the Applicant.

3.4.4.Companies which the applicant had either control of or has strong connections to between April 1994 and March 1996, have transferred in excess of four million Australian dollars overseas.

3.4.5.Save as aforesaid, the respondent denies each and every allegation made in paragraph D of the particulars in the application.

3.5.The respondent does not admit any of the matters pleaded in paragraph E in the particulars in the application.

3.6.As to paragraph F of the particulars, the respondent admits that he did not disclose to the Issuing Officer in the Information any of the matters pleaded in paragraph E of the particulars and says further that at all material times he had no knowledge of any of the matters alleged in paragraph E.

3.7.The respondent denies each and every allegation contained in paragraph G of the particulars.”

In written submissions filed on 14 October in support of his motion for discovery, Saunders argued that there is a strict duty of full disclosure of material fact in the Information.  Reference was made to Karina Fisheries Pty Ltd v Mitson (1990) 26 FCR 473 and Propend Finance Pty Ltd v Commissioner, Australian Federal Police 1994 ATC 4399.

The submission was made that it is not inappropriate in a challenge to the validity of a search warrant that the Information backing the warrant should be before the Court.  In Arno v Forsyth (1986) 9 FCR 576, a challenge to the validity of a search warrant was heard at first instance and an appeal before a Full Court on the basis that it could be determined without reference to the information which had been before the Justice. As to that, Lockhart J said at 582:

“This course was deliberately taken by the parties but it has certain unsatisfactory features.  The cases show that questions of validity of search warrants are generally decided with the information before the court and often turn on the terms of the information itself.”

In Beneficial Finance Corporation Ltd v Commissioner of Australian Federal Police (1991) 103 ALR 167 at 195, the Court was considering an appeal against a decision relating to the validity of warrants issued under s 10 of the Crimes Act.  At 195 Burchett J (Sheppard and Pincus JJ agreeing) said:

“If, in a case under s 10, an issue is raised as to the sufficiency of the “information on oath” which was placed before the justice, I do not think the nature of the proceedings is such as to preclude an applicant having access to the information, in the absence of a specific objection.”

And his Honour quoted from a passage in the judgment of Toohey J in Quartermaine v Netto (Toohey J, 14 December 1984, unreported) where his Honour said:

“I do not think that the information itself necessarily enjoys an immunity from production.  It may be largely formal in its language.  But it may be, on examination, that it details investigations being conducted, material which is protected by the public interest immunity of which Lord Wilberforce spoke [ie in Inland Revenue Commissioners v Rossminister Ltd [1980] AC 952 at 999].”

Croft v Jumeau (1990) 22 FCR 276 was mentioned as another example of a case in which the information backing a search warrant under challenge was before the court.

The Commissioner originally submitted that Saunders had not indicated a legitimate forensic purpose which would be served by the production of the information backing the warrant. It was said he must be able to demonstrate such a purpose which involved showing that it was at least “on the cards” that the information could assist his case - R v Saleam (1989) 16 NSWLR 14, 17-18; Attorney General (NSW) v Stuart (1994) 34 NSWLR 667 at 681 and Alister v R (1984) 154 CLR 404 at 414 and 455. That argument, I think, has been overtaken by the subsequent event of the filing of particulars of the non-disclosure ground 1.6 in the amended application and the response filed by the Commissioner.

The Commissioner also asserted that parts of the information comprised material provided to the relevant officer of the AFP, as an officer of the Commonwealth by the Australian Taxation Office under the provisions of s 16 of the Income Tax Assessment Act 1937 relating to the taxation affairs of Saunders.

The claim for public interest immunity is supported by an affidavit sworn by Stephen Paynter, who is an officer with the Australian Federal Police and officer-in charge of the investigation into possible taxation offences relating to Saunders. He objects to the disclosure of various parts of the information which involve intelligence obtained from other agencies at state, national and international levels. He says the disclosure of such information would seriously compromise the understanding of confidentiality and damage the relationship enabling the free flow of information between the Australian Federal Police and other agencies. This would necessarily jeopardise the effectiveness of ongoing and future investigations. Other material in the information is objected to on the basis that its disclosure would reveal police methods of operation in relation to Saunders and others suspected of criminal activities. He also sets out a large number of paragraphs of the information which are said to contain details of information provided to him by the Australian Taxation Office under s 16 of the Income Tax Assessment Act 1937. The s 16 objection is also supported by the affidavit of Sheila Rajen, the Manager, Prosecution Investigation Unit at the Australian Taxation Office.

The determination of the public interest immunity claim and, to a degree, the claim that some of the material in the information is covered by s 16 of the Income Tax Assessment Act would require that the Court inspect the information before making a determination.  The question is whether the admissions of fact already made on the amended pleadings are sufficient to allow the challenge based on ground 1.6.2 of the amended application to proceed without the requirement for production of the information. 

Saunders’ submissions following the amended application and response are concerned only in part with that question which is directly relevant to the decision whether or not to require production of the information. He says that the Commissioner has not admitted allegations in particulars B and E of ground 1.6.2, namely that the Australian Taxation Office had been told by the applicant of exculpatory or explanatory facts concerning the allegation that he fabricated documents and the transfer and laundering of funds allegation. Further it is said that the Commissioner has denied the allegation of the materiality of the information omitted. Neither of these matters goes to the question whether there has been an admission of the omission of the relevant material. The balance of the submission seeks to make a case that Saunders is not on a fishing expedition in pursuing his motion for discovery and attacks what is said to be an apparent excuse for the omission of the admitted material by the Commissioner. The s 16 argument is also addressed.

In my opinion, however, it is sufficient for present purposes that the fact of the non-inclusion of allegedly exculpatory material in the information is properly before the Court in the amended application and the response to it and is not disputed.  The balance of the application being concerned with the validity of the warrant on its face, I do not consider that there is any legitimate forensic purpose to be served by requiring production of the full information.  I will therefore dismiss the motion.

I certify that this and the preceding ten (10) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice French

Associate:

Dated:             20 November 1997

Counsel for the Applicant:	Mr W. Martin QC and Mr P.F. Fletcher
Solicitor for the Applicant:	Solomon Brothers
Counsel for the Respondent:	Mr S. Owen-Conway QC and Mr H. Dembo
Solicitor for the Respondent:	Commonwealth Director of Public Prosecutions
Date of Hearing:	16 October 1997
Date of Judgment:	20 November 1997