Silbersher, Alexander v Gerkens, Maurice W

CATCHWORDS

Administrative law - judicial review - decision of stipendiary magistrate in extradition proceedings - decision that the applicant be returned from Victoria to Queensland to appear before the Brisbane Magistrates' Court to answer charges brouaht against him in Queensland - applicant a resident of Victoria - whether application for extradition made "in good faith in the interests of lustice" - whether it would be unjust or oppressive to return the applicant to Queensland - whether error of law - whether 8.9 of the Administrative Decisions (Judicial Review) Act 1977 operates to divest State courts of iurisdiction to hear an application for review under s.19 of the Service and Execution of Process Act 1901 - discretion and duty of Haulstrates and Justices of the Peace under para.l8(6)(c) of the Service and

Execution of Process Act 1901 - whether different considerations apply where defendant is charaed with an offence auainst Commonwealth law - the proper test to be applied under para.l8(6)(c) of the Service and Execution of Process Act 1901.

Administrative Decisions (Judicial Review)

Act 1977, s.9(1)

Crimes Act 1914, para.86(l)(e)

Service and Execution of Process Act 1901, s.18, s.19(1)

ALEXANDER SILBERSHER v. MAURICE W. GERKENS AND PHILLIP G. CURRY

VG 214 of 1984

LOCKHART J.

SYDNEX

14 SEPTEMBER 1984

IN THE FEDERAL COURT OF AUSTRALIA )

)

VICTORIAN DISTRICT REGISTRY	)	No. VG 214 of 1984
)
GENERAL DIVISION

BETWEEN:

&EXANDER

SILBERSHGR

Applicant

AND	: MAURICE W. GERKENS and

PHILLIP GEORGE CURRY

Respondents

JUDGE MAKING ORDER:

LOCKHART J.

HIERE MADE: SYDNEY

DATE OF ORDER:

14 SEPTMBER 1984

COURT ORDERS THAT:

1. The application be dismissed with costs.

EN THE F

ED=

COURT OF AUSTRALIA )

)

VICTORIAN DISTRICT RMISTRY

) No. VG 214 of 1984

)

GENERAL DIVISION

)

BETWEEN:

ALEXANDER SILBERSHER

Applicant

MAURICE W. GERKENS and

PHILLIP GEORGE

CURRY

Respondents

CORAM: Lockhart J.

14 September 1984

REASONS FOR JUDGMENT

LOCKHART J.

The applicant in this matter, Alexander Silbersher. brings this application pursuant to the Administrative Decisions (Judicial Review) Act 1977 ("the Judicial Review Act") seeking an order of review of a decision made by the first respondent, Haurice W. Gerkens

S.M. ("the Magistrate") on 27 June 1984 that the applicant be returned

to Queensland to appear in the Brisbane Magistrates' Court to answer

charues brouuht auainst him in Queensland.

The applicant has been

charged with the

indictable offences of conspiring with certain

persons in 1977 and

1978 to defraud the Commonwealth in contravention

of para. 86(l)(e) of the Crimes Act 1914. Other persons have been similarly charged. The charges were made followinu years of intensive investiuation into the affairs of Brian Janes Maher and others and many companies controlled by them or in which they have interests. The applicant is a qualified solicitor who carried on business in Viktoria from which he derived experience in tax avoidance schemes.

2 .

Followinu the making of complaints against the applicant in Queensland, a warrant (perhaps there was more than one warrant. but the evidence before me is unclear on this aspect) was issued out of the Brisbane Mauistrates' Court for the apprehension of the applicant to brinu him before that Court to answer the complaints. As the applicant resides in Victoria the warrant could not be executed without first beinu endorsed by a mauistrate in Victoria pursuant to

sub-S. 18(1) of the Service and Execution of Process Act 1901 ("the

Service and Execution of Process Act"). It is necessary to set out the relevant provisions of the Service and Execution of Process Act to understand the issues in this case.

"	18. (1) Where a Court, a Judge, a Police,

Stipendiary or Special Magistrate. a Coroner. a

Justice of the Peace or an officer of a court has,

in accordance with section sixteen or the law of a

State of part of the Commonwealth, issued a warrant

for the apprehension	of a person, a Magistrate,
Justice of the Peace	or officer of a court who has

persons under the law ofanother State or part of

the Commonwealth, being a State or part of the

Commonwealth in or on his way to which the person

against whom the warrant has been issued is or is

supposed to be, may, on being satisfied that the

warrant was issued by the Court. Judge. Magistrate.

power to issue warrants for the apprehension of proof on oath, in the case of a warrant issued by a Maqistrate, Coroner, Justice of the Peace or officer of a court. of the signature of the person by whom the warrant was Issued), make an endorsement on the warrant in the form. or to the effect of the form, in the Second Schedule to this Act authorizing its execution in that other State or part of the Commonwealth.

( 2 )

A warrant so endorsed is sufficient

authority to the person bringing the warrant, to

all constables and persons to whom the warrant is

directed and to all constables and peace officers

in that other State or part of the Commonwealth to

execute the warrant in that other State or part of

3 .

the Commonwealth, to apprehend the person auainst whom the warrant was issued and to bring that person before a Police, Stipendiary or Special

Magistrate or a Justice of the Peace who has power to issue warrants for the apprehension of persons under the law of that State or part of the Commonwealth.

( 3 ) Subject to this section. the Maqistrate or

Justice of the Peace before whom the person is brought may -

by warrant under his hand, order the person was issued and. for that purpose, to be delivered into the custody of the person bringing the warrant or of a constable or

to be returned to the State or part of the

other person to whom

the warrant was

originally directed: or

admit the person

to bail, on such

recognizances as he thinks fit. on condition that the person appears at such time. and at such place in the State or part of the

Commonwealth in which the original warrant was issued, as the Magistrate or Justice

specifies to answer the charge

or complaint

or to be dealt

with according to law.

~~	A warrant issued under paraqraph (a) of the

last preceding sub-section may be executed

accordinu to its tenor.

( 5 ) The Mauistrate or Justice of the Peace

before whom the person is brought has. for the

purposes of this section, the same power to remand

the person and admit him to bail

for that purpose

as he has in the case of persons apprehended under

warrants issued by him.

( 6 )

If, on the application of the person

apprehended, it appears to the Magistrate

Justice of the Peace before whom	a person is
brought under this section that -

(a) the charge I s of a trivial nature;

(b)

the application for the return

of the person

has not been made in good faith in the

interests of justicer or

(c)

for any reason, it would be unjust or

oppressive to return the person either

at all

or until the expiration of a certain period.

the Maqistrate or Justice of the Peace may -

(d) order the discharge of the person:

(e)	order that the person be returned after the expiration of a period specified in the order and order his release on bail until the expiration of that period; or

(f) make such other order as he thinks	just.
19.(1) Where -

(a)

a person apprehended is dissatisfied with an

order made under sub-section ( 3 ) or (6)

the last preceding section: or

(b) a Mauistrate or Justice of the Peace

has

made, under sub-section (3) or ( 6 ) of the

last preceding section. an order for the

discharqe of an apprehended person, or an

order for the return or admittance to bail of

such a person under the terms

of which the

person is not. or may not be, required

return or be returned within three

months

after the date of the order to the State or

part of the Commonwealth

in which the

original warrant was issued,

warrant, as the case requires. may apply to a Judae

of the Supreme Court of the State or part of the

the apprehended person or the person brinuing the sitting in chambers, for a review of the order, and

the Judge may review the

order."

The warrant was endorsed in accordance with sub-S. 18(1), and

the applicant was duly

apprehended and brought before a magistrate in

Melbourne. He was remanded to appear at the Melbourne Maaistrates' Court on 28 May 1984 when it was foreshadowed that an application would be made for the extradition of the applicant to Brisbane. The applicant was released on bail. Subsequently, the extradition proceedings were heard by the Maqistrate. The applicant was

represented by

counsel.

Application was made on behalf of the

applicant. pursuant to sub-s.18(6) of the Service and Execution of Process Act, for an order discharging the applicant on the uround that the application for his return to Queensland "had not been made in

good faith in the interests of justice" (para. 18(6)(b)) or. alternatively, that

"It would be unjust or

oppressive" to return the

applicant to Queensland (para. 18(6)

(c)

On 27 June 1984 the Magistrate held that neither uround had been established and he made orders that the applicant be returned to Queensland and that bail be fixed in the sum of $10,000. with a surety of $10,000, to appear In the Brisbane Magistrates' Court on 16 July 1984. Certain special conditione relevant to bail were imposed by the Magistrate. I should say at this staue that during the course of argument before me I drew the attention of counsel to the fact that the Magistrate's orders of 27 June, as recorded In a document in evidence before me entitled "Certificate of Summary Conviction or Order" were:

"Current bail discharged. of $10,000 to appear In the Brisbane Hauistrates'

Order that defendant be returned to the State of

Queensland.

Court on 16.7.84. .

Also the Magistrate's

reasons for his decision conclude with

the words "I propose to bail Hr. Silbersher for appearance before an

appropriate court in Queensland."

It appears to me that paras. (a) and (b) of sub-S. 18(3) of the Service and Executlon of Process Act provide alternatives; yet the Hauistrate, if his orders were correctly recorded, had possibly both ordered the return of the applicant to Queensland and admitted him to

bail, so that the orders were arguably bad.

After some discussion it

was agreed

by all parties before me that in substance the Mauistrate

had acted only under

para. 18(3)(b) i.e. he had admitted the applicant

to bail on certain conditions. I therefore proceeded on that basis.

The prosecution tendered before the Magistrate a document entitled "Statement of Facts Re Charges of Conspiracy to Defraud the Commonwealth" which set out the facts upon which the prosecution relied in support of the charges of conspiracy to defraud the Commonwealth. I annex to my reasons for judgment a copy of that document so that the issues raised in the application before the Magistrate and before this Court may be properly understood.

The committal proceedinus in Brisbane were oriuinally scheduled to be heard earlier than 16 July; but, as the applicant had applied to the Magistrate under sub-s. 18(6) for an order that he be discharued, the committal proceedings in Brisbane were adjourned to 16 July. They have in fact been adjourned again to October this year pending the outcome of the litigation in this Court and certain

litigation in the Supreme

Court of Victoria.

On 3 July 1984 the applicant applied, pursuant to sub-s.l9(1) of the Service and Execution of Process Act, to the Supreme Court of Victoria for a review of the Magistrate's orders of 27 June 1984. The applicant requested the Supreme Court to adlourn the proceeding before it pending the hearing of the application to this Court under the Judicial Review Act. I was told from the Bar table that the ground

1 .

for the adjournment application was that sub-s.9(1) of

the Judicial

Review Act,

which limits the jurisdiction of

State courts in certain

matters, was said to apply

to the proceeding before the Supreme Court

so that it was without jurisdiction to hear it. The Supreme Court declined to adjourn the proceeding, whereupon the applicant withdrew it.

It was

not disputed before this Court that the decision of

the Magistrate under challenge in

this case is a decision to which the

Judiclal Review Act applies and that	the applicant is a person
aggrieved by that decision.

The applicant's

principal

submissions

arose from the

following passage from the Magistrate's reasons for decision:

"The suggeated grounds of injustice and oppression

are: -

(1)

that the defendant would become involved

in lengthy committal proceedinus and

possibly a longer trial

in a State in

which he

does not reside; andlor

(11)

that the evidence upon which the Crown

intends to rely does not disclose an

offence .

"It is clear that

I am entitled to take into

account (and I do so) the fact that extradition of the respondent to Queensland will involve him in

very substantial inconvenience

and expense.

Indeed, it is not difficult to imagine that the

cost of accommodation over many months and the

disruption of his means of livelihood would be

ruinous. Balanced against these factors must be

the gravity of the allegations and the right of the

community to expect that offenders will be brought

to justice. It is not in dispute for the purpose

of this proceeding that the public purse has been

defrauded of revenue amountinu to some

$16,900.000.00. The allegations then are very

serious indeed and. albeit that he will suffer

greatly as a result, it is my view that the

respondent should be extradited unless he can

succeed on uround (11). I turn to that question."

It was submitted by the applicant that this passage revealed a fundamental misconception by the Magistrate of his function under para. 18(6)(b) in that he treated the matters described in paras. (1) and (ii) of his reasons as raising separate and independent issues rather than one issue with two limbs, both relating to the question whether it would be unjust or oppressive to return the applicant to Queensland.

Then it was submitted that this particular passage from the Maaistrate's reasons. whether read alone or in the context of his reasons as a whole, demonstrated that the Hauistrate overlooked a basic matter namely, that a5 the offences with which the applicant has been charqed are offences against Commonwealth law, the prosecution can prosecute the applicant in whichever part of Australia it chooses, not only Queensland. The prosecution is entitled now to charge the

applicant in

Victoria with the same offences with which he has

been

charged in Queensland. Victoria is said to be the more appropriate forum because the applicant resides and carries on business there and his alleged involvement in the matters the subject of the charues against. him occurred in. or primarily in, Victoria. It was arqued that it would obviously be more convenient to the applicant if he were charged in Victoria, and if the committal proceedings and any subsequent trial were heard there.

It was asserted that the Mauistrate should have balanced aaainst the inconvenience and expense to the applicant of the committal proceedings being conducted in Queensland. not the right of the community to expect that offenders will be brought to justice, but

the right of the prosecution in a conspiracy trial to proceed in the place of its choice. If these matters had been weighed by the Magistrate it was asserted that he may have concluded that. as the prosecution could choose to prosecute the applicant in Victoria, in all the circumstances it would be unjust or oppressive to return him to Queensland. The circumstance referred to by the Mauistrate namely:

"The gravity of the allegations and the riuht of

the community to expect that offenders will be

brouqht to justice"

was said to be essentially irrelevant because it would be present as a consideration wherever the prosecution chose to lay its information against the applicant.

Thie summarises briefly the principal arqument advanced by

counsel for the applicant.

The circumstances in which a Magistrate or Justice of the Peace may find that it would be unjust

or oppressive to return a

person to the State or part of the Commonwealth in which the oriuinal warrant was issued have been considered in various cases including O'Donnell v. Heslop (1910) V.R. 162; Re Alsterqren and Nosworthy (1947) V . L . R . 23; Aston v. Irvine (1955) 92 C.L.R. 353; In the Hatter

10.

of Jack Mandel (1958) V.R. 494: Walker v. Duncan (1975) 6 A.L.R. 254:

m	v. ycen Huizen (1978) 22 A.L.R. 101 and White v. Cassidv (1979)

40 F.L.R. 249.

In Aston v. Irvine the judgment was that of all seven

members of the High Court. Their Honours overruled a challenue to the validity of ss. 18 and 19 of the Service and Execution of Process Act and said of para. 18(6)(c) at pp. 366 and 367:

"It would be unjust or oppressive to return the

accused to Adelaide if the facts as they are

alleged or appear make it clear that there was no

indictable conspiracy. On this ground it is urged

that we should decide in favour of their immediate

discharge. To refuse to give effect to this

contention means no more than that the men

must be

remanded to Adelaide.

For a decision

at this stage

for their return does not. of course, mean that we

hold that there was a conspiracy. That is

essentially a matter of fact depending upon proof

beyond reasonable doubt at the trial. Indeed such

a decision ought nnt to foreclose the accused even

upon a point of law that miqht otherwise be raised

upon the committal proceedings in Adelaide or at

the trial. All that it means is that upon the

facts suggested for the prosecution, if made out,

what in law may amount to an indictable conspiracv

may reasonably be found.

It is not enough that the

information as laid is open to criticism, as very

likely it is.

In the circumstances of this case it

must appear that upon the suggested facts the

charge of conspiracy is misconceived."

The

Legislature

has

conferred a

wide

discretion upon

Magistrates and Justices of the Peace under para. 18(6)(c). It is not desirable that I should attempt to do what other courts have consistently declined to do namely, to lay down precise rules as to what is included within the scope of the words: "for any reason it would be unjust or oppressive". But the court whose assistance is sought to return a person to a part of the Commonwealth in which the original warrant for his apprehension issued does not examine disputed

11.

questions of fact or determine doubtful or difficult questions of law. The exercise of the power conferred by para. 18(6)(c) is called for if it is clear that there is no reasonable prospect of any case being made out against the defendant should he be returned OK that the charge is misconceived or without foundation. The question of the guilt or innocence of the defendant is not to be dealt with by the court whose assistance is sought. However. if it is a clear case that there is no substance in the charue brought auainst the defendant, then the court exercising jurisdiction under para. 18(l)(c) should interfere.

It is true that it does not appear from any of the reported cases to which counsel for the applicant referred me that the

question

arose whether different considerations might apply under para. 18(6)(c) where the defendant was charged with an offence against Commonwealth law so that the prosecution could charge him and proceed against him in any State or part of the Commonwealth. But the prosecution has apprently decided in the present case that charges should be brought against the applicant and various other persons in Queensland. I was told from the Bar table that some defendants have been extradited from Western Australia where they reside. I do not know why the prosecution chose to proceed in Queensland. The defendant Maher and other defendants reside, so I was told, in Queensland. This may have some bearing on the prosecution's decision. But it was not suggested that the charges should not have been brought in Queensland. The prosecution may have very good reasons for

proceeding there.

Even if it

had been a relevant consideration for

12.

the Magistrate in the

present case that the prosecution could proceed

auainst the applicant in Victoria, it cannot in my opinion be suggested that he failed to consider it merely because he did not refer to it. But if the Magistrate did fail to consider this matter (assuming its relevance), although a ground of review may then have been made out (paras. 5(l)(e) and 5(2)(b) of the Judicial Review Act).

I am not persuaded that his decision would have been in any way

different from the one which he in fact made. Indeed,

I think it

unlikely that

he would have reached a different conclusion.

I would

not therefore have granted relief to the applicant in those circumstances. I leave open the question whether it was relevant for the Magistrate to consider the fact that the prosecution could have

charged the applicant and proceeded against him

in Victoria.

All the Maqistrate

said in the portion of his reasons

presently under consideration was that,

on the one hand, he took into

account the considerable inconvenience and expense that would attend the applicant if the committal proceedings were heard in Queensland but, on the other hand, he considered the very serious nature of the

charges involved and the

public interest in the proper enforcement by

the Crown of the criminal law. In my view, these were matters which the Magistrate was entitled to consider and evaluate in the process of balancing the various elements In the case before him.

Nor is there any

substance in the submission

that the

Magistrate severed impermissibly the considerations nunbered (1) and (11) in the portion of his reasons extracted above. All he was doing.

13.

as I read his reasons, was to consider two submissions put to him by counsel for the applicant and, for convenience, to deal with them

separately. He was not suggesting that they were	two	discrete
matters.

The applicant then submitted that the Magistrate posed the wrona question when he said. in the course of his reasons:

"The question

therefore becomes - does the

statement of facts (Ex. C ) as clarified by the

concessions made by Mr. Flood, justify me in

finding that there is an arguable case against the

respondent so that, to use the words of Madden C.J.

(supra), he is not being 'sent back to be tried on

an alleged issue which does not really exist'?"

It was submitted that the correct test to be applied under para.l8(6)(c) le. not whether the Magistrate is satisfied that there is "an arguable case" against a defendant but whether, in the words of the High Court in Aston v. Irvine (at p.366):

"It would be unjust or oppressive to return the

accused to ... if the facts as they are alleged or

appear make it clear that there

was no indictable

conspiracy.

It was suggested in argument that KDonnell v. Heslop was inconsistent with the later judgment of the High Court in Aston v. Irvine and that the Magistrate erred in applyinu the earlier case. It

is hardly suprising that the two judgments are couched in different

language: but I see no difference of substance between the two. If the Magistrate had referred to Aston v. Irvine rather than O'Donnell v. Heslop, he would not in my view have posed a test that differed

14.

except in verbiage from the one which he expounded. A s t o n v. Irvine dealt only briefly with the proper test to apply under para. 18(6)(c) because the judgment was principally concerned with constitutional questions. CDonnell v. Heslop. and some of the other cases which I cited above, analyse in more detail para. 18(6)(c). I reject this submission.

Another attack on the Magistrate's reasons was founded upon the following words towards

the end of those reasons:

"If I were asked, as indeed I am, to evaluate the

inferences arisins from the allesed facts, I would

adopt the words of Hood J. in &-re Marshall C19013

26 V.L.R. 816 at 820:

'I think there is enough evidence,

although if the prisoner were brought to

trial before me. and I had to deal with

him upon no more evidence than is here

qiven I should advise the jury to acquit

him. but I should certainly not withdraw

the case from them.

' ' I

It was submitted that this passage, whether read alone or as part of the reasons as a whole (especially the passage the subject of the lastmentioned submission), demonstrates that the Maqistrate applied the wronq test. I was told from the Bar table that the case before the Magistrate was conducted by counsel for the applicant on the basis that the alleged conspiracy, to which the applicant was said to be a party, involved three phases:-

15.

Phase 1, which included the sale by the target company of its assets to the new company; the payment by the new company to the target company of the purchase price of those assets: the transfer of the issued shares in the capital of the target company from its shareholders (the vendor shareholders) to the acquisition company: and the payment of the purchase price for those shares by the acquisition

company to the

vendor shareholders.

Phases 2 6 3, which included a loan by the target company to the banker company of an amount representing the sale price of the tarqet company's assets to the new company; a loan by the banker company to the acquisition company of the money necessary to enable the

acquisition company to purchase

the shares in the tarqet company from

the vendor shareholder:

the transfer by

the taruet company

to the

acquistion company of	the shares in its capital and of its books and
records.

The applicant asserted that any involvement

on his part was

in the steps contemplated in Phase

1. not those included in the other

two phases.

The applicant asserted that the

steps involved in those

two phases were carried out without

his knowledge.

The prosecution

alleaed that, even if there were no evidence of any express knowledge

by the applicant of the steps

phases

2 and 3, in all the

circumstances that knowledae should be imputed to

him by reason of the

matters asserted	in the statement of facts, in particular paraqraph
13.

16.

The applicant submitted to this Court that, in the passage from the Magistrate's reasons presently under consideration, he was saying that. if he were considering the material before him as a trial

Judge on a criminal trial of the applicant, he would advise the jury to acquit the applicant because it could not be satisfied beyond reasonable doubt of the applicant's knowledge of the elements of phases 2 and 3; but he would not withdraw the case from them. There was some discussion before me about the meaning of the word "advise"

in the context of Hood J.'s judgment In Re Marshall and I was referred

in this connection to the judgment of the Full Court of the Supreme Court of Victoria in Attornev-General's Reference (No. 1 of 1983) (1983) 2 V.R. 410 (at p.414). I do not find it necessary to add my

voice to this discussion because,

in my opinion, the Magistrate, in

this concluding portion of his reasons, undertook a task which he was

not required to undertake namely, his own assessment of the guilt or

innocence of the applicant. The Magistrate was dealing with a submission apparently put to him on the applicant's behalf that he should "evaluate the inferences arising from the alleged facts". However, this was a task of supererogation. No error on the part of the Nqlstrate has been established.

In the course of

argument some other points

were relied upon

by counsel for

the applicant; but they were there disposed of

sufficiently and I see no useful purpose in reiterating them here.

17.

has

not been

shown that

the

Magistrate erred in any

respect relied on by the applicants. It is not necessary therefore for the Court to consider the interesting question, argued on both sides. whether s . 9 of the Judicial Review Art operates to divest State courts of jurisdiction to hear an application for review under s.19 of the Service and Execution of Process Act.

The application should be dismissed

with costs.

I certlfy thmt thm and the /6

procodlng pases mre a true copy ot the

Rems.ns fcr Jddgment heretn of hts Honour

JUSIICS

Lockhart LL

Assoclate

Thls 1s t h e annexure referred

t o i n t h e reasons

for

judgment

t h e Honourable Mr.

J u s t l c e J .S .Lockhar t

i n A .

S i l b e r s h e r v.

M.W. Gerkens

and

P.G.

Curry, No. VG214 of 1 9 8 4 da ted

ALEXANDER SILBERSHER

L/'

STATEMENT OF FACTS RE CHARGES OF CONSPIFWCY TO DEFRAUD

THE CO?lnONWEALTH

The

c h a r g e s of conspiracy

r e l a t e

t o

t h e d e f e n d a n t ' s

l n v o l v e w n t

w l t h

t h e

tt.e

o r g a n l s a t l o n h e a d e d b y B r a m

Jmes

W I E R

based

I n

Southpor t ,

Queens land

whose principals were BRIAN JAnES MAHE.9. JOHN PATRICK DOHIIELLY. LLGYD ERROL

FAINT,

LEE

GABRIEL HURLEY

and A L A N RGY

PALMER

and hh lch opera ted

under

the

rime

o f

C o r n e r c i a l

S e c u r l t l e s

B e t w e e n

1 9 7 2

a n d

1 9 7 8

t h l s

o r g a n i s a t l o n

p u t

m t o

e f f e c t

a n

a r r a n g e T e n t

r n v o l v l n g

s o r e

900

c c q p a n l e s

( t a r g e t

c o r r p a n l e s )

w l t h

s u b s t a n t l a l

c u r r e n t

y e a r

p r o f l t s

w h l c h

I t

i s a l l c g e d

d e f r a u d e d

t h e

C o r m o n w e a l t h

i n

t h e

f o r n

t h e

C o r ~ ~ l s s l o n f r

o f

Taxa t lon

o f

many mllllons of

d o l l a r s Income

t a x

r e v e n u e .

well

C o r n e r c l a l

S e c u r l t l e s

Ltd

marke

ted

and

opera

ted

o ther

tax

avordance schemes wl th

whlch

tbe

p resent

c h a r g e s

are

not

concerned

2 .

The

allegations

a g a i n s t

t h e

d e f e n d a n t

S r l b e r s h e r

a r e t h a t h e a c t e d

J o r n t l y w i t h

RONALD

WARREN

UOSS

t h e V l c t o r l a n a g e n t

€ o r

Connerc l a l

S e c u r l t l e s

L t d

b e t w e e n

J u n e

1377

and

Ju ly

1978 .

5 r ; Z S

was

based

I n

F c r t h

d u r i n g t h i s p e r i o d a n d a t t e n d e d

a t

t h e V l c t o r l a n o i f r c e p e r l o d l c a l l y b u t t h e

d a y

t o

d a y o p e r a t l o n s

o f

t h e

o f f l c e

were

conducted

SILBERSHbR

T h e

c u r r e n t

y e a r

p r o f i t

s t r i p p l n g

activities

I n v o l v e d

i n l t l a l l y

t h e

s e e k l n g o u t

a n d a c q u l s r t i o n b y t h e

o r g a n i s a t l o n o f t a r g e t c o z p a n l e s

w h l c h

h a d

d e r i v e d

s u b s t a n t i a l

p r o € l t s

d u r l n g

y e a r of

1ncor.e.

Khen

agree-ent

was

reached

t o t h e

a c q u i s r t l o n

o f

t a r g e t co?pany

I t was

p u t

I n t o a

cashed

cond l t lon

converting

i t s n e t

a s s e t s

t o

c a s h

Th:s

was

n o m a l l y

d o n e

b y

s e l l z n g

t h e

b u s i n e s s

t h e t a r c e t c c n p m y t o

new

e n k l t y

c o n t r o l l e d

t h e

o r i g m a l

v e n d o r

s h a r e h o l d e r s

t h e

t a r e e t

c o n p a n y .

The

t a r g e t

c o n p a n y t h e n l o a n e d t o

o r s a n l s a t l o n

e - t l t y

( t h e banker

c o c p a n j )

t h e

a n o u n t

of i t s n e t assets.

T h l s

e n t l t y

r e t a i n e d

t h e

h ' J l I R

o r g a n r s a t l o n f e e

f o r

t h e

a r r a n g e m e n t

u s u a l l y

c a l c * d l a t c d

t h e b a s l s

10%-12%

o f

t h e c u r r e n t

y e a r

p r o f l t

l o a n e d t h e b a l a n c e b c m g t h e

p u r c h a s e

p r l c e

o f

t h e

t a r g e t

c o m p a n y ' s

s h a r e s

t o

t h e

HAhE.9

o c g a n l s a t l o n

a c q u r s l t i o n

c o x p a n y .

T b e

a c q u l s l t i o n

company

then

pa ld

tbe

vendor

s h a r e h o l d e r s

t h e

a T o u n t

t h e p u r c h a s e p r l c e

t h e

s h a r e ;

l n

t h e

t a r g e t

coppany.

A l l t h e s e

t r a n s a c t i o n s

w e r e

c a r r r e d

o u t

b y

means

o € a

round

robln

cheques

which

requi red

a c t u a l c a s h

t h e

o r g a n l s a t l o n t o a c q u i r e

t h e

s h a r e s

i n t h e

t a r g e t

company.

The

f e e

r e t a l n e d

I n the

banker

corpany

has

removed

and

dispersed

among

t h o s e s h a r i n g

i t w l t h l n a

few

days

4 .

T h e

p u r c h a s e

p r i c e

p a i d

€or

the

t a r g e t

c o m p a n y ' s

s h a r e s

was

c a l c u l a t e d

a t an l l a b i l i t y o n

anoun

ich

t ook

accoun t of

t ha t

company ' s

pcospec t rve

i ncone

t ax

i t s c u r r e n t

y e a r

p r o f i t s

e . g .

t a r g e t

conpany

wlth

u r r e n t

y e a r p r o f i t o f

$100000

would

purchased

f o r say

$90000

and

10% o r $10000

and

o t h e r a s s e t s

would

charged by

way

o €

f e e

t o

t h e W

o r g a n r s a t l o r i

w l t h no p r o v l s i o n

for t h e approx ima te ly $46000

mco?e

t a x whlch would

payab le on

t h e

c u r r e n t

year p r o f r t of

$100000.

The r e s u l t was

t h a t a t

. . e

c o n c l u s i o n

o f

t h e

t r a n s a c t i o n s

d e s c r i b e d

t h e

t a r e e t

c o v p a n y ' s

c a s h

h a d

b e e n

removed

and

was

r n t r l n s i c a l l y v a l u e l e s s .

A t

t h i s s t a g e t h e

o r g a n l s a t r o n a c q u l s i t r o n

entity

owned

t h e

now

s t r l p p e d t a r g e t

company

and

would

have

become

r e s p o n s l b l e f o r

the

target

company meet ing

i t s lncome

tax

l l a b i l l t y on

i t s c u r r e n t

year p r o f r t l f

n o t h l n g f u r t h e r o c c u r r e d .

6 .

a v o i d

t h i s

u n a c c e p t a b l e

s l t u a t l o n

second

phase

was rxplemented.

I n

t h i s t h e r e

was

p u r p o r t e d

arms

l e n g t h

sale

o n o f

t h e t a r g e t

c o r p a n y p r r o r t o

t h e e n d o f t h e f l n a n c l a l y e a r I n w h i c h t h e c u r r e n t y e a r p r o f l t

was

d e r l v e d .

I n f a c t t h l s s a l e o n

was

sham

t r a n s a c t l o n t o

s t r a w

company

f l t t e d t o

pe r son

p rocured

on b e h a l f

t h e

o r g a n l s a t l o n

straw

d l r e c t o r .

The

s t e p s

lnvolved

t h l s p h a s e

were.

(1)

The purchase

f rom

company

b r o k e r s Of

shelf

corpany

which

would

f l t t e d t o

straw

d l r e c t o r a n d u s e d

s h a n p u r c h a s e r .

( 2 )

The

recruitment

p e r s o n s

t o

a c t

straw

d l r e c t o r s

The

c r l t e r e a

u s e d I n

s e l e c t l n e p e r s o n s f o r

t h i s

r o l e

were

f o l l o w s

(1)

r e s r d e n t

o u t s l d e

Q u e e n s l a n d .

(11)

l a c k of

cc rne rc ra l

kncwledge

and

expe r rence

(ill)

p o o r

f r n a n c l a l

c l r c u m s t a n c e s

( i v )

t r a n s i e n t

l l f e s t y l e

w i t h

a n

a t r l l r t y

t o disappear

n e c e s s a r y

( 3 )

The

a t t e n d a n c e of

t h e

s t r a w

d l r e c t o r s

a t

t h e

o r g a n l s a t l o n ' s

S o u t h T o r t

o f f i c e t o s i g n l i a s s e s o f	d o c c x e n t s p r e v r o u s l y p r e p a r e d	by	t h e	1 M i Z i i
o r g a n r s a t l o n .

T h o s e

p e r s o n s

s e l e c t e d

b e s t r a w d l r e c t o r s w e r e o f f e r e d a n a l l

e K p e n s e s

p a l d

t r l p

p l u s

p a y m e n t

t o

travel

t o

t h e

S o u t h p o r t

o f f l c e

a n d s r g n

documents .

The

s ta ted

purpose

o f

t h e

s i g n i n g

t h e s e

d o c u q e n t s

was

s a r d

t o

nake

t he

straw d i r e c t o r s

s e c r e t a r r e s

o f

c o 7 p a n l e s

s e c r e t a r y r e s r d e n t

i n

t h e

S t a t e

t h e companies'

r e g l s t r a t l o n was

required.

In f a c t and

unbeknown

t o t h e

straw

d l r e c t o r s

t h e s i g n e d d o c u r e n t s

had

t h e e f f e c t

o f

r . a k l n g

them

d i r e c t o r s a n d c o n t r o l l e r s

t h e

straw

corpan le s

vh lch

had

rchased

t he

on - so ld

t a rge t

coqan le s .

Thus

t he

straw

d l r e c t o r s

a s s m e d o u n e r s h r p

a n d c o n t r o l

o f

l a r g e

n w b e r

o f

t a r g e t

c o r p a n r e s

w h l c h h a d

been

s t r rpped

o f

t he l r

c u r r e n t y e a r p r o f i t s a n d

a l l

t h e l r

f u n d s b u t

wh-ch

s t l l l h a d

l m p e n d l n g

I n c o r e

t a x

l l a b l l l t y

r e s p e c t

t h e

c u r r e n t

y e a r

profit.

9 .

The

o n sa le

t r a n s a c t l o n s were

e f f e c t e d by

means

a round

robrn

cheques

lch

r equ l r e

t he

Inpu t

any

funds

t h e s t r a w d l r e c t o r s

o r

t h e r e s p e c t l v e p u r c ! - l s i n g

straw

c o n p a n i e s

t o

w h l c h t h e y h a d b e e n f l t t e d .

10.

The

V i c t o r i a n

o f f r c a

was

conducted

SILBERSHER and WOSS €rom June

1 9 7 7

t o

J u n e

1 9 7 8 .

was

o p e r a t e d

t h r o u g h

Neetoe

P t y

L t d .

company

Inco rpora t ed

2 1

June

1977

and

control

led

SILBERSHER and WOSS and was

s i t u a t e d i n

l e a s e d

p r e m l s e s

t h e 5 t h

Floor,

4 6 1 Bourke

S t ree t ,

Helbourne

SILBERSHEA and WOSS were remunerated

c o m i s s l o n b a s l s r e c e l v l n g b e t w e e n

them 40% O E the

ne t

commiss ion

t r a n s a c t l o n

u n t l l

2 4

Aprrl

1978

uhe?

fo l lowing

change

i n

t h e

Head

O f f l c e s t r u c t u r e t h e l r p r o p o r t l o n o f t h e

commlssion was

r e d u c e d

t o

30% o f

t h e

n e t

d i s c o u n t .

They

s h a r e d

t h e l r

p r o p o r t l o n

o f

t h e

c o r m l s s 1 o n

e q u a l l y

11 Seventy-seven current year profrt cases have been ldentiflcd as having

been processed by the Victorian offlce while It was operated by SILEERSPER

and MOSS. The total amount of current year profits lnvolved In these cases was

$a 36.6 on which income tax of some $M16 9 could not be collected due to the

transactxons implemented

The total gross comisslon attrlbutable to these

71 current year proEit cases was approxlmately t l i 3 . 5

12 The

Head Office of Commerclal Securltles Ltd In Southport exercised

control over the operations of the Vlctorlan Offlce

P r l o r to taking over the

offlce SILDERSHER travelled to Southport f o r discusslons with the principals

of Comqercial Securities Ltd as to the modus operand1 of the Victorian office

under his management. There was constant contact between the Head Office

personnel and the Victorian Office by telephone, telex. letter and vacadex

MAHER and DOLMELLY attended the Victoria office reeularly 17 reiatlon to the

business operations. Enployees of the Vlctoria offlce Battagl~nl and Lopcs

travelled to Head Offlce to check that frles forwarded there were i n order

Head Offlce was lnvolved In each acqulsltlon supplyrng particulars of the

purchasing company the office holders on acquisition and the addrcss

O E the

registered office on acquisition and organising the banklng arrangerent- lhc

comm1sslon recelved by SILBERSHER vas paid by Head

Office

13 The activities of the Vlctorla offlce in respect of current )ear proElt

conpanles while under SILBERSHER'S control were

1 to obtain target companies t o be acquired whlch was done bf a d v e r t l z i n g

In the flnancial press and contactlng accountants.

2. tIegotlate the purchase prlce In accordance ulth the p,uidelmes lald down by Head Offlce on the basls of the fm;nclal accounts su?plled by the accountmts f o r the coma-{ belng acqulrcd

3 Prepare the documentatlon i n respect of the acqulsltlon i n accordancc ulth advice from Head Offlce as to the acqulsltron entltf the new office holders and the new reelstered offlce f o r the target company bemg purchased.

4 Prepare and foward a corrpany acquisition f o n detailing the

acqulsltion to Head Office for mplenentation of

the transactions

relating to settlement

5 Attend settlenent and pay to the vendor shareholders the purchase prlce being the value of the target coapany's net assets less the ccrnlss1c.n charged obtained by way of a telegraphic transfer f r m the Head OEflce on receipt of a cheque In favour of the organlsatlon's banker colpany

representlng the cashed up value

of the net assets of the target

conpany This cheque has deposited at the bank where the settlment took place and telegraphically transferred rmediately to the Head Office branch.

6 Obtain and forvard the target coropany's books and accounts to 'Jead Office.

1 . Lodge the relevant documents requrred as a result of the acquisition at the Corporate Affalrs Offlce and the Taxatlon office

14 At the end of these transactions the target corpany had bcen purch~scd

by a M E R organisatlon acqulsitron company and had been placed In a position

where it could not meet its tax obligatlons. It had no €unds

Its only

asset was a loan to an m-house banker company The loan was never repald I n any case and I n fact the bank company was not in a f1nanc:al posltlon to be able to repay the loan. The target company was thus effectlvely worthless

although It had an lmpendlng Income tax llablllty In respect of Its current year pro€it. The W E R organisatlon drd not put the target company through any arrangement designed to annihilate the prospectlve lncone tax llability on Its current year proflt but slnply purported to on sell the company by

means of the sham transactlons described 1n paragraphs 6-8 above

The facts

known by o r apparent to SILBERSHER demonstrate that he acted dlshorkstly.

knoulng that the tax llability

of the tareet conpany would not be p a d

15 The 2 separate charges of cosplracy reflect the fact that the

prlnclpalh of Comerclal Securltles Ltd chaneed ln approximately June 1977 when Lee Gabrlel Hurley ceased to be an equlty holder In the organlsatron Haher Donnelly Falnt and Palmer of the Head Offlcc organlsation have bcen charged wlth the offences of consplracy to defraud and face cornlttal

proceedings In the Brlsbane Hagrstrates Court corx-e-.clng on 16 J u l y 1784

HURLEY has been convlcted and sentenced WOSS and 2 other West Australlans

StI051 and TOLHURST have been charged In Perth ulth offences of cons?lracy to

defraud tb.e Comonwealth and an appllcatron for thelr extradrtlon to gueenslah:: on these charges has been llsted for hearmg In the Pcrth Hagistrates' Court on 20 June 1980

[1984] FCA 289

14 Sep 1984