The Commissioner of the Australian Federal Police v Cranston and 65 Ors (No 8)

[2018] NSWSC 365

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:	The Commissioner of the Australian Federal Police v Cranston and 65 Ors (No 8) [2018] NSWSC 365
Hearing dates:	12-14 September; 15-17 November 2017
Decision date:	22 March 2018
Jurisdiction:	Common Law
Before:	Fullerton J
Decision:	1. The application by each of the defendants for a stay of the examination proceedings is refused. 2. The application by the third defendant for a revocation of the examination order is refused. 3. The applications by the second, third and fourth defendants for orders in respect of the Sworn Asset Statements already provided by them are refused. 4. The balance of the notices of motion of each of the first to fourth defendants is reserved. 5. Costs reserved.
Catchwords:	PROCEEDS OF CRIME – Practice and procedure – Application for stay of examination orders under Proceeds of Crime Act 2002 (Cth) (“POC Act”) pending hearing and determination of related criminal proceedings – whether compulsory examination may lead to prejudice in the conduct of the applicants’ defences in their criminal trials – whether any potential prejudice the applicants may face in their criminal trials could be overcome by means other than a stay, including orders under s 266A of the POC Act – whether the non-judicial character of the examinations exposes the administration of justice to risk – whether the AFP’s policies and procedures for dealing with compulsorily acquired information is adequate to ameliorate the risk of prohibited disclosure of that information – whether a non-disclosure order under s 266A(2)(b) protects against the risk of disclosure of compulsorily acquired information. STATUTORY CONSTRUCTION – meaning of ‘circumstances pertaining to’ in s 319(3) of the POC Act.
Legislation Cited:	Australian Federal Police Act 1979 (Cth) Civil Procedure Act 2005 (NSW) Court Suppression and Non-publication Orders Act 2010 (NSW) Crimes (Taxation Offences) Act 1980 (Cth) Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Act 2016 (Cth) Crimes Legislation Amendment Bill (No 2) 2011 (Cth) Criminal Assets Recovery Act 1990 (NSW) Criminal Code Act 1995 (Cth) Criminal Procedure Act 1986 (NSW) Evidence Act 1995 (NSW) Proceeds of Crime Act 2002 (Cth) Ritchie v State of Western Australia [2016] WASCA 134 Supreme Court Act 1970 (NSW) Taxation Administration Act 1953 (Cth) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Cameron v Cole (1944) 68 CLR 571 Commissioner of the Australian Federal Police v Elzein [2017] NSWCA 142 Commissioner of the Australian Federal Police v Cacu [2017] NSWCA 5 Commissioner of the Australian Federal Police v Cranston & Ors (No 1) [2017] NSWSC 624 Commissioner of the Australian Federal Police v Cranston & Ors (No 5) (2017) NSWSC 1850 Commissioner of the Australian Federal Police v Kaur [2016] VSC 423 Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103 Commissioner of the Australian Federal Police v W (No 1) [2016] NSWSC 683 Commissioner of the Australian Federal Police v W (No 3) [2016] NSWSC 1200 Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46; [2015] HCA 5 Director of Public Prosecutions (Cth) v Galloway [2017] VSCA 120 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Lakis v Lardis [2016] NSWSC 1459 Lam v Commissioner of the Australian Federal Police [2017] VSCA 9 Lee v The Queen (2014) 253 CLR 455; [2014] HCA 20 R v Independent Broad-based Anti-corruption Commissioner (2016) 256 CLR 459; [2016] HCA 8 R v Seller; R v McCarthy [2012] NSWSC 934 Ruzehaji v Commissioner of Australian Federal Police [2015] SASCFC 182; (2015) 124 SASR 355 Zhao v The Commissioner of the Australian Federal Police [2014] VSCA 137 X7 v Australian Crime Commission (2013) 248 CLR 92; [2013] HCA 29 Lee v New South Wales Crime Commission (No 1) (2013) 251 CLR 196; [2013] HCA 39
Category:	Procedural and other rulings
Parties:	The Commissioner of the Australian Federal Police (Plaintiff) Adam Michael Cranston (1st Defendant) Jason Cornell Onley (2nd Defendant) Simon Paul Anquetil (3rd Defendant) Dev Menon (4th Defendant)
Representation:	Counsel: D McLure SC / G O’Mahoney / K Anderson (Plaintiff) T Game SC / S Palaniappan 12-14 September (1st Defendant) M Hassall 15-17 November (1st Defendant) G Bashir SC / R Johnson (2nd Defendant) A Cameron (Solicitor) 12-14 September (3rd Defendant) A Ahmad 15-17 November (3rd Defendant) P Bruckner / E Bishop (4th Defendant)   Solicitors: Criminal Assets Litigation, Australian Federal Police (Plaintiff) Musgrave Legal (1st Defendant) Pure Legal (2nd Defendant) TressCox Lawyers (3rd Defendant) Hardinlaw (4th Defendant)
File Number(s):	2017/146280

Judgment

1. HER HONOUR: Adam Michael Cranston, Jason Cornell Onley, Simon Anquetil and Dev Menon are the first to fourth defendants in civil proceedings brought by the Commissioner of the Australian Federal Police under the Proceeds of Crime Act 2002 (Cth) (“the POC Act”) against 66 defendants of whom 23 are natural persons (“the POC Act proceedings”).

2. The substantive relief sought in the POC Act proceedings includes orders that the property itemised in each of Schedules 1-100 and 102-111 to the summons be forfeited to the Commonwealth pursuant to ss 47 and 49 of the POC Act. It also includes orders that eight of the 66 defendants (including the four defendants) pay a pecuniary penalty to the Commonwealth pursuant to s 116 in an amount to be determined by the Court under Division 2 of Part 2-4, referable to what the Commissioner alleges is the value of the benefits they each derived from their involvement in a conspiracy to defraud the Australian Taxation Office (“the ATO”) with the intention of dishonestly causing a loss to the Commonwealth in the amount of $83,735,535.28 contrary to s 135.4 of the Criminal Code Act 1995 (Cth) (“the taxation fraud conspiracy”).

3. By notices of motion filed between 26 June 2017 and 11 September 2017 (as amended and as further amended), they each seek various forms of relief from a number of ex parte orders made consequent upon the return of the summons in the POC Act proceedings which was filed instanter on 16 May 2017 pursuant to rule 6.15 of the Uniform Civil Procedure Rules 2005 (NSW) (see Commissioner of the Australian Federal Police v Cranston & Ors (No 1) [2017] NSWSC 624).

4. Although the relief the defendants seek is not exclusively referable to the power to stay proceedings under s 319 of the POC Act, the operation and scope of that provision was the principle focus of the competing submissions of the parties. For that reason, I propose to refer to the proceedings by motion as “the stay applications”.

The ex parte hearing on 16 May 2017

5. The ex parte orders made on 16 May 2017 include the following:

1. Orders made under ss 18 and 19 of the POC Act restraining each of the four defendants (and other named individuals and entitles) from dealing with property itemised in the schedules to the summons and any other property held by them, including property not already specified in the schedules acquired by each of them after the date of the orders (“the restraining orders”). (Section 26(4) of the Act obliges the Court to consider an application for restraining orders without notice having been given to any person if the Commissioner requests the Court do so.)

2. Orders made under s 38 of the POC Act for the Official Trustee in Bankruptcy, the Australian Financial Security Authority (“AFSA”), to take custody and control of the property the subject of restraint. (In an updated interim report of the Official Trustee dated 14 November 2017, the net value of the property under its custody and control is valued at $39,510,780.19. The value of restrained property not held by the Official Trustee at that date, being funds in specified superannuation funds and term deposits, is valued at $1,878,071.79. The total of both amounts is $41,388,851.98.)

3. Orders made under s 180 of the POC Act that each of the defendants be examined in relation to their own affairs (broadly defined in the Dictionary to the Act) and in relation to the affairs of each other and six other defendants to the POC proceedings (“the Examination Orders”). (Section 182 obliges the Court to consider an application for an examination order without notice having been given to any person if the Commonwealth requests the Court to do so.)

4. Orders made under s 39(1)(ca) of the POC Act that each of the defendants provide of a sworn asset statement, in the form of schedule 101 to the summons, setting out their interests in property valued at AUD5,000 or more and all liabilities valued at AUD5,000 or more (“the Sworn Asset Statements”).

6. The relief sought in the stay proceedings concern the Examination Orders in (3) and the orders for the provision of Sworn Asset Statements in (4) above.

7. By s 18(1)(a) of the POC Act the Court was obliged to make the restraining orders if certain conditions were met. Those conditions included, relevantly so far as the four defendants were concerned, that the Court was satisfied that there were reasonable grounds to suspect that they had each committed a serious offence or offences (as defined in the Dictionary to the Act) and that there was evidence that an authorised officer (also as defined in the Dictionary) suspects that they each committed that offence and that the suspicion is held on reasonable grounds.

8. In support of the application for the issue of the restraining orders (and for the making of Examination Orders under s 180 and orders for the provision of Sworn Asset Statements under s 39), the Commissioner relied upon the affidavit of Federal Agent Burtenshaw sworn 15 May 2017. Federal Agent Burtenshaw is an authorised officer under the Act. The affidavit comprised 790 paragraphs to which he exhibited materials in six lever arch folders (“the first Burtenshaw affidavit”). Significant parts of that affidavit were also read by the Commissioner as respondent to the stay proceedings.

9. In the first Burtenshaw affidavit, Federal Agent Burtenshaw deposed to holding the reasonable suspicion that each of the four defendants (and the fifth, sixth and seventh defendants) have committed the following serious offences (as defined):

1. The taxation fraud conspiracy;

2. Dealing in money or property worth AUD100,000 or more which is reasonably suspected of being proceeds of crime, contrary to s 400.9(1) of the Schedule to the Criminal Code Act 1995 (Cth) (“the Criminal Code”)

3. Entering into (or aiding and abetting another person to enter into) an arrangement or transaction with the knowledge, belief or intention of securing the inability of a company to pay income tax and goods and services tax, contrary to ss 5(1), 6(1), 7(1) and 18 of the Crimes (Taxation Offences) Act 1980 (Cth);

4. Dishonestly causing a loss to a Commonwealth entity, contrary to s 135.1(3) of the Criminal Code; and

5. Obtaining a financial benefit from a Commonwealth entity through deception, contrary to s 134.2(1) of the Criminal Code.

10. None of the four defendants has been charged with offences (ii) to (v). There was no evidence adduced on the stay applications that criminal proceedings in respect of those offences are under consideration by prosecuting authorities at this time. Each of the four defendants were, however, charged with the taxation fraud conspiracy in the days following the making of the ex parte orders in the civil proceedings.

11. Each of the offences in (i) to (v) above are relevant to the forfeiture orders the Commissioner seeks under ss 47 and 49 of the POC Act.

12. In summary, s 47 of the POC Act obliges the Court to make a forfeiture order in respect of property restrained under s 18 where the restraining order has been in place for six months and the Court is satisfied that a person whose conduct formed the basis of the restraining orders engaged in conduct constituting one or more serious offences.

13. “Serious offence” is defined in s 338 of the POC Act to include:

(a) an indictable offence punishable by imprisonment for 3 or more years, involving:

…

(ii) unlawful conduct constituted by or relating to a breach of section 81 of the Proceeds of Crime Act 1987 or Part 10.2 of the Criminal Code (money-laundering); or

(iii) unlawful conduct by a person that causes, or is intended to cause, a benefit to the value of at least $10,000 for that person or another person; or

(iv) unlawful conduct by a person that causes, or is intended to cause, a loss to the Commonwealth or another person of at least $10,000; or

(aa) unlawful conduct by a person that consists of an indictable offence (the 3 year offence ) punishable by imprisonment for 3 or more years and one or more other indictable offences that, taken together with the 3 year offence, constitute a series of offences:

(i) that are founded on the same facts or are of a similar character; and

(ii) that cause, or are intended to cause, a benefit to the value of at least $10,000 for that person or another person, or a loss to the Commonwealth or another person of at least $10,000; or

…

(g) an offence against section 11.1, 11.2, 11.2A, 11.4 or 11.5 of the Criminal Code or former section 5, 7, 7A or 86 of the Crimes Act 1914 (extensions of criminal responsibility) in relation to an offence referred to in this definition; or

…

14. Subsections 47(2) and (3) make it clear that in considering whether forfeiture orders should be made, the Court need not find that a person committed a particular offence. It is sufficient if the Court is satisfied that “some serious offence or other was committed”. Each of the offences in [9] above is a serious offence. A doubt as to whether a person engaged in conduct constituting a serious offence will not justify the Court refusing to make a forfeiture order.

15. Similar provisions apply in respect of a forfeiture order under s 49 of the POC Act. That section obliges the Court to make a forfeiture order in respect of the defendants’ property restrained under s 19 where the Court is satisfied that the property is the proceeds of one or more indictable offences (as defined). Each of the offences in [9] is an indictable offence.

16. Section 329 of the POC Act provides that property is the proceeds of an offence if it is wholly or partly derived or realised, directly or indirectly, from the commission of the offence. Section 329 further provides that property can be the proceeds of an offence even if no person has been convicted of the offence.

17. After considering Federal Agent Burtenshaw’s affidavit and the material exhibited to it, I was satisfied that the statutory preconditions for the issue of the restraining orders under ss 18 and 19 were met (see Cranston (No 1) at [14])

Examinations Orders

18. Under s 180 of the POC Act, on the making of a restraining order the Court may, at that time or at some later time, make an examination order in respect of a person who is a suspect in relation to the restraining order.

19. Section 180 provides as follows:

180  Examination orders relating to restraining orders

(1)  If a restraining order is in force, the court that made the restraining order, or any other court that could have made the restraining order, may make an order (an examination order) for the examination of any person, including:

(a)  a person whose property is, or a person who has or claims an interest in property that is, the subject of the restraining order; or

(b)  a person who is a suspect in relation to the restraining order; or

(c)  the spouse or de facto partner of a person referred to in paragraph (a) or (b);

about the affairs of a person referred to in paragraph (a), (b) or (c).

(2)  The examination order ceases to have effect if the restraining order to which it relates ceases to have effect.

20. The “affairs” of a person as defined is a term of broad import:

affairs of a person includes, but is not limited to:

(a)  the nature and location of property of the person or property in which the person has an interest; and

(b)  any activities of the person that are, or may be, relevant to whether or not the person has engaged in unlawful activity of a kind relevant to the making of an order under this Act.

21. “Property” is defined as:

… real or personal property of every description, whether situated in Australia or elsewhere and whether tangible or intangible, and includes an interest in any such real or personal property.

Sworn Asset Statements

22. Section 39(1)(ca) provides:

The court that made a restraining order, or any other court that could have made the restraining order, may make any ancillary orders that the court considers appropriate and, without limiting the generality of this, the court may make any one or more of the following orders:

…

(ca) an order directing the suspect in relation to the restraining order to give a sworn statement to a specified person, within a specified period, setting out all of his or her interests in property, and his or her liabilities;

…

23. Again, after considering the first Burtenshaw affidavit and the material exhibited to it, I was satisfied that each of the four defendants (and each of the fifth to ninth defendants) should be examined in relation to their own affairs and in relation to the affairs of each other. I was also satisfied that each of the four defendants should provide a Sworn Asset Statement particularising their respective interests in property (as defined) and their liabilities to facilitate the ongoing investigation into their net asset positions.

24. In coming to that view, I read and accepted the concerns expressed by Federal Agent Burtenshaw in paragraphs 785-789 of his affidavit that the examination orders should be made and the examinations conducted before the finalisation of any pending criminal proceedings, having regard to the likely delay in the finalisation of those proceedings impeding the Commissioner’s legitimate interest in both progressing the POC Act proceedings (including the seeking of forfeiture orders of restrained property under ss 47 and 49 of the POC Act and pecuniary penalty orders under s 116 of the Act) and impeding the Commissioner’s legitimate interests, consistent with the statutory objects in s 5 of the Act, in seeking to identify and locate property that might be the subject of applications for the issue of additional restraining orders with a view to securing the payment of any pecuniary penalty. Section 142 of the Act is facilitative of that approach. It provides as follows:

142  Charge on property subject to restraining order

(1) If:

(a) a pecuniary penalty order is made against a person in relation to an indictable offence; and

(b) a restraining order is, or has been, made against:

(i) the person's property; or

(ii) another person's property in relation to which an order under subsection 141(1) is, or has been, made; and

(c) the restraining order relates to that offence or a related offence;

then, upon the making of the later of the orders, there is created, by force of this section, a charge on the property to secure the payment to the Commonwealth of the penalty amount.

(2) The charge ceases to have effect in respect of the property:

(a) if the pecuniary penalty order was made in relation to the person's conviction of the indictable offence and that conviction is quashed--upon the order being discharged under Division 5; or

(b) upon the discharge of the pecuniary penalty order or the restraining order by a court hearing an appeal against the making of the order; or

(c) upon payment to the Commonwealth of the penalty amount in satisfaction of the pecuniary penalty order; or

(d) upon the sale or other disposition of the property:

(i) under an order under Division 4 of Part 4-1; or

(ii) by the owner of the property with the consent of the court that made the pecuniary penalty order; or

(iii) if the restraining order directed the Official Trustee to take custody and control of the property--by the owner of the property with the consent of the Official Trustee; or

(e) upon the sale of the property to a purchaser in good faith for value who, at the time of purchase, has no notice of the charge;

whichever first occurs.

(3) The charge:

(a) is subject to every encumbrance on the property (other than an encumbrance in which the person referred to paragraph (1)(a) has an interest) that came into existence before the charge and that would, apart from this subsection, have priority over the charge; and

(b) has priority over all other encumbrances; and

(c) subject to subsection (2), is not affected by any change of ownership of the property.

(4) Subsection 73(2) of the Personal Property Securities Act 2009 applies to the charge (to the extent, if any, to which that Act applies in relation to the property charged).

25. In making the examination orders, I accepted Federal Agent Burtenshaw’s expressed concern that the four defendants (and other defendants identified and unidentified interested parties) may take steps to dissipate property which the Commissioner had not, as at 16 May 2017, identified (including bank accounts, both within and beyond the jurisdiction); a risk which Federal Agent Burtenshaw considered was exacerbated by the large number of bank accounts he suspected had been utilised in furtherance of the taxation fraud conspiracy and as to which he suspected the defendants and their associates have continued access both directly and indirectly through entities they control.

The issue of the examination notices

26. On 5 and 6 June 2017 examination notices under s 183 of the Act were served on each of the persons the subject of the examination orders made on 16 May 2017 (including the first to the fourth defendants) under the hand of either Deputy President the Hon DA Cowdroy OAM QC or Deputy President S E Frost. By that time the criminal proceedings in which each of the four defendants were charged with the taxation fraud conspiracy had commenced by the filing of CAN notices in the Local Court.

27. Section 183 provides:

183  Examination notices

(1)  An approved examiner may, on application by the responsible authority, give to a person who is the subject of an examination order a written notice (an examination notice) for the examination of the person.

(2)  However, the approved examiner must not give the examination notice if:

(a)  an application has been made under section 42 for the restraining order to which the notice relates to be revoked; and

(b)  the court to which the application is made orders that examinations are not to proceed.

(3)  The fact that criminal proceedings have been instituted or have commenced (whether or not under this Act) does not prevent the approved examiner giving the examination notice.

Approved examiners

(4)  An approved examiner is a person who holds an appointment under this section.

(5) The Minister may appoint as an approved examiner:

(a)  a person who holds an office, or is included in a class of people, specified in the regulations; or

(b)  a person who:

(i)  is enrolled as a legal practitioner of the High Court, of another federal court or of the Supreme Court of a State or Territory; and

(ii)  has been so enrolled for at least 5 years; and

(iii)  has indicated to the Minister that the person is willing to be appointed.

(6)  An approved examiner may resign his or her appointment by giving the Minister a written resignation. The resignation takes effect on the day it is received by the Minister or, if a later day is specified in the resignation, on that later day.

(7) The Minister may revoke an appointment of an approved examiner.

28. The examination notice served on the second defendant was exhibited to the affidavit of his solicitor of 29 June 2017 and read without objection in the proceedings. Save for the name of the approved examiner, examination notices in identical terms were served on each of the other three defendants. The Notices are in the following terms:

Proceeds of Crime Act 2002

NOTICE TO ATTEND EXAMINATION

Under section 183 of the Proceeds of Crime Act 2002 (Cth) I require you to attend an examination at the time and place mentioned below.

TIME:      10:00am – 4:00pm

WHEN:   22 June 2017

PLACE:   Administrative Appeal Tribunal

Hearing Room 4.05

Level 4, 83 Clarence Street

Sydney NSW 2000

You must produce the documents identified in Schedule 1 at the commencement of the examination at 10:00am on 22 June 2017 at the place listed above.

[Signed]

The Hon. D A Cowdroy OAM QC, Deputy President

Approved examiner under section 183 of the Proceeds of Crime Act 2002.

Dated: 5 June 2017

29. A schedule identifying the documents in each of fourteen listed categories for the period 1 July 2013 to the date of the examination that the examinee was required to produce was attached to the notice. The schedule reads as follows:

1. Any passport issued to you by any country.

2. Any account at a financial institution, in Australia and outside of Australia:

a. in your name, either solely or jointly; or

b. controlled by you, either in whole or in part, or in relation to which you are a signatory.

3. Any investments owned by you, either in whole or in part, or held wholly or partly on your behalf.

4. Any assets owned by you for a value in excess of AUD5,000, either in whole or in part, or held wholly or partly on your behalf.

5. Any property in which you have an interest.

6. The ownership of any motor vehicle owned by you, either in whole or in part, or held wholly or partly on your behalf.

7. Any motor vehicle owned by any corporation of which you are a director, secretary or shareholder.

8. Any documents evidencing your income and/or employment including, but not limited to, any contracts of employment, directors fees, drawdown of monies from any business or corporation in which you have any interest, group certificates or payslips issued to you.

9. Documents prepared and submitted by you, or your accountants on your behalf, being copies of Taxation returns or any other documents lodged, to the Australian Taxation Office in relation to your individual tax returns.

10. Notices of Assessment issued by the Australian Taxation Office in respect to yourself.

11. The transfer of any monies by you in or out of Australia to any person.

12. Any loans to you by any financial institution or any other person or entity.

13. Any loans by you to any other person or entity.

14. All documents including business activity statements, interim accounts, year-end accounts, tax statements, cash book journals, bank reconciliations, books, drafts, notes, invoices, receipts in relation to the financial affairs of any business operated by you as a sole trader, in a partnership or in any other capacity in Australia and outside Australia.

30. In the correspondence that attached the examination notices, the defendants were advised, inter alia, that pursuant to s 188 of the POC Act, their examination was to take place in private and that answers given and documents produced at the examination will be confidential pursuant to directions that will be given by the approved examiner. The defendants were also advised of their right to be legally represented at the examination.

31. By ss 195 and 196 of the POC Act, the failure to attend for examination as required by the service of an examination notice under s 183 of the Act, and/or a refusal or failure to make an affirmation or answer questions required by the examiner, are criminal offences. While the privilege against self-incrimination is expressly abrogated for the purposes of the examination, s 198 provides that an answer given or a document produced in the examination is not admissible in evidence in criminal proceedings against the person except in certain identified circumstances, none of which are presently relevant.

The scheduling of the examinations

32. The examination of the first defendant was scheduled for 21 June 2017 with the examination of the second defendant scheduled to proceed on 22 June 2017. The examination of the third defendant was scheduled for 19 June 2017 and the examination of the fourth defendant on 27 June 2017.

33. The order in which the examinations were to have been conducted was doubtless with a view to the Commissioner gathering information to investigate and trace the proceeds of crime (including the proceeds of the taxation fraud conspiracy and the reinvestment of the proceeds of that offence) in what he considered was a timely, efficient and structured way commensurate with the powers provided for in the POC Act and its statutory objects, and consistent with the overriding purpose of the Civil Procedure Act 2005 (NSW).

34. The statutory objectives in s 5 of the POC Act, relevant for present purposes include:

(a) to deprive persons of the proceeds of offences, the instruments of offences, and benefits derived from offences, against the laws of the Commonwealth or the non‑governing Territories; and

…

(ba) to deprive persons of unexplained wealth amounts that the person cannot satisfy a court were not derived from certain offences; and

…

(d) to prevent the reinvestment of proceeds, instruments, benefits, literary proceeds and unexplained wealth amounts in further criminal activities; and

(da) to undermine the profitability of criminal enterprises; and

(e) to enable law enforcement authorities effectively to trace proceeds, instruments, benefits, literary proceeds and unexplained wealth amounts;

…

35. On 15 June 2017 I vacated the examination of the third defendant scheduled for 19 June 2017 in order to permit consideration of what his counsel foreshadowed at that time as an application to stay the POC Act proceedings in their entirety pending the finalisation of the criminal proceedings. That application was listed before me for hearing on 21 June 2017.

36. On that date, the hearing of the stay application was vacated upon the third defendant filing an amended notice of motion (with leave) in which, in the alternative to a stay of the POC Act proceedings, a number of other orders were sought, including an order revoking the order for his examination or setting it aside, or, in the alternative, an order that the examination notice be stayed pending finalisation of the criminal proceedings, or, further in the alternative, that the examination be limited in scope and be otherwise conducted in accordance with a number of stipulated procedures.

37. The third defendant’s notice of motion also sought orders restraining the Commissioner’s use of the Sworn Asset Statement that had been served by him in accordance with the orders made on 16 May 2017; any material obtained derivatively from that material and an order prohibiting disclosure of that material under s 266A(2) of the POC Act pending finalisation of the criminal proceedings.

38. In light of the application by the third defendant for the range of relief sought by the amended notice of motion of 21 June 2017, and the stated intention of each of the first, second and fourth defendants to make applications for relief of the same or a similar kind, the Commissioner undertook to defer the examinations of all four defendants until seven days after the determination of any stay applications. (The specific relief sought by each of the four defendants in the notices of motion upon which they ultimately moved in the stay proceedings is set out at paragraphs 185 and following.)

Service of the Sworn Asset Statements

39. In compliance with the orders made ex parte on 16 May 2017, Sworn Asset Statements have been served by all four defendants. Section 39A(1) provides that the privilege against self-incrimination is expressly abrogated in respect of the giving of a sworn statement. Additionally, a Sworn Asset Statement is not admissible in civil or criminal proceeding against the person making it, except in a limited class of proceedings including proceedings against the person for giving false or misleading information or in proceedings for relief under the Act or enforcement of a confiscation order.

40. The Sworn Asset Statements are currently in the sole and exclusive custody of the Criminal Assets Confiscation Taskforce (“CACT”), the Criminal Assets Litigation team (“CAL”) and counsel briefed by CAL. CACT is subject to internal governance by the procedures that obtain within the ambit of the Organised Crime and Cyber portfolio of the AFP (“the OCC”). CACT, under the current command of A/Commissioner Neil Gaughan, has a separate reporting structure to that of the investigative and prosecutorial arm of the Australian Federal Police (“AFP”). The members of CACT and CAL are also subject to a Standard Operating Procedure (“SOP”) which has issued as part of the Commissioner’s governance framework. The SOP is designed to protect and safeguard the risk of leakage of compulsorily acquired material to the criminal investigative branch of the AFP or to the prosecution.

41. A/Commissioner Gaughan gave evidence in the stay proceedings that the Sworn Asset Statements have not been, and will not be, disclosed to anyone involved in the criminal investigation or prosecution of the defendants. The extent to which the SOP operates to address the risk of the inadvertent disclosure of the content of the Sworn Asset Statements, and the inadvertent disclosure of the product of any compulsory examination of each of the defendants under s 180 of the POC Act (this material being collectively referred to in this judgment as Coercive Material interchangeably with compulsorily acquired information), was the subject of considerable contention in the proceedings and the subject of submissions by the parties to which I will later refer.

The orders under s 266A of the POC Act

42. On 21 June 2017 I made an order under s 266A(2)(b), by consent, in the following terms:

Until further order, the plaintiff is prohibited from disclosing to the ATO, any foreign authority or to any State or Commonwealth agency with power to investigate or prosecute offences, information obtained directly or derivatively from Defendants 1, 2, 3, 4 or from Daniel Clarke pursuant to orders made on 16 May 2017 pursuant to ss 39 and 180 of the Proceeds of Crime Act 2002.

43. On 17 July 2017 I made a further order that:

In respect of the amended notice of motion filed 29 June 2017 by the 2nd defendant, noting that the 1st defendant joins in seeking the relief in paragraph 12, the Court orders, by consent:

1. Until further order, there is to be no publication or other disclosure of information that comprises evidence that has been obtained from the First and/or Second Defendant pursuant to orders made on 16 May 2017 under s 39 and s 180 of the Proceeds of Crime Act 2002 (Cth).

44. The extent to which the orders under s 266A(2)(b) (collectively referred to in this judgment as “the non-disclosure orders”) also operate to address the risk of the disclosure of Coercive Material, and the authorities that have considered that question to date, was also the subject of competing submissions.

45. Section 266A(2) was introduced by the passage of the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Act2016 (Cth). It commenced on 1 March 2016. It confers on the Court an express power to prohibit the disclosure of compulsorily acquired information during the pendency of criminal proceedings by providing that a person may disclose compulsorily acquired information to an authority described in the following table and for a purpose described in that table, but only if:

(a) the person believes on reasonable grounds that the disclosure will serve that purpose; and

(b)  a court has not made an order prohibiting the disclosure of the information to the authority for that purpose. (Emphasis added.)

Recipients and purposes of disclosure
Item	Authority to which disclosure may be made	Purpose for which disclosure may be made
1	Authority with one or more functions under this Act	Facilitating the authority’s performance of its functions under this Act
2	Authority of the Commonwealth, or of a State or Territory, that has a function of investigating or prosecuting offences against a law of the Commonwealth, State or Territory	Assisting in the prevention, investigation or prosecution of an offence against that law that is punishable on conviction by imprisonment for at least 3 years or for life
2A	Authority of a foreign country that has a function of investigating or prosecuting offences against a law of the country	Assisting in the prevention, investigation or prosecution of an offence against that law constituted by conduct that, if it occurred in Australia, would constitute an offence against a law of the Commonwealth, or of a State or Territory, punishable on conviction by imprisonment for at least 3 years or for life
2B	Authority of a State, or a *self‑governing Territory, that has a function under a *corresponding law of the State or Territory	Any one or more of the following purposes: (a) engaging in proceedings under that *corresponding law; (b) engaging in proceedings for the forfeiture of things under a law of that State or Territory; (c) deciding whether to institute proceedings of a kind referred to in paragraph (a) or (b)
2C	Authority of a foreign country that has one or more of the following functions: (a) investigating or prosecuting offences against a law of the country; (b) identifying, locating, tracing, investigating or confiscating *proceeds or *instruments of crime under a law of the country	Assisting in identification, location, tracing, investigation or confiscation of *proceeds or *instruments of crime, if the identification, location, tracing, investigation or confiscation could take place under this Act, or under a *corresponding law of a State or a *self‑governing Territory, if the proceeds or instruments related to an offence against a law of the Commonwealth, State or Territory
3	Australian Taxation Office	Protecting public revenue

The commencement of criminal proceedings

46. On 17 May 2017 (the day after the POC Act proceedings commenced and ex parte orders were made) the first, second and fourth defendants were arrested and charged that between June 2016 and May 2017 they conspired with each other and with four other named people (being the third, fifth, sixth and the seventh defendants to the POC Act proceedings) to dishonestly cause a loss to the ATO contrary to s 135.4(3) of the Criminal Code. On 18 May 2017 the third defendant was arrested and charged with the same offence.

47. Upon their arrest the defendants were granted bail on condition, inter alia, that they not communicate with each other or with a number of individuals, each of whom were criminally charged with the taxation fraud conspiracy and with other offences. Those individuals are also defendants in the civil proceedings.

48. Specifically, they include the seventh and ninth defendants to the POC Act proceedings who had been charged with demanding money with menaces contrary to s 249K(1)(a) of the Crimes Act 1900 (NSW), an offence allegedly committed between 25 January and 17 May 2017 during the currency of the taxation fraud conspiracy (“the blackmail offence”), and the eighth defendant who had been charged with dealing with property reasonably suspected of being the proceeds of crime contrary to s 400.9(1A) of the Criminal Code.

49. The father of the first defendant, Michael Cranston, was charged with two counts of abuse of public office contrary to s 142(2)(1) of the Criminal Code. He is not a party to the POC Act proceedings.

50. The criminal proceedings as they involve the first to the fourth defendants are currently being processed in the Local Court in accordance with relevant parts of the Criminal Procedure Act 1986 (NSW) as a strictly indictable offence. The Commonwealth Director of Public Prosecutions (“the CDPP”) has the conduct of the criminal proceedings.

The facts underpinning the taxation fraud conspiracy and the blackmail offence

51. A number of Statements of Facts have been served by the CDPP in the course of the criminal proceedings to date. They include documents referred to in the evidence before me as “the Conspiracy Statement of Facts”, and “the Blackmail Statement of Facts”. Neither of the documents was tendered in its entirety. Parts of each were, however, extracted in Ms Musgrave’s affidavit of 29 August 2017 and Ms Perry’s affidavit of 12 September 2017 (respectively the solicitors for the first and second defendants) as a source of some of the essential facts upon which both the taxation fraud conspiracy and the blackmail charges are said to be based. Both affidavits were read without objection in support of the first and second defendant’s notice of motion and relied upon in support of the relief sought by the other two defendants.

51. Relevant parts of Federal Agent Burtenshaw’s affidavit detailing the facts and circumstances giving rise to his suspicion that both offences were committed was also read by the Commissioner without objection.

52. From this evidence, the essential features of both offences may be summarised as follows:

1. Federal Agent Burtenshaw describes three levels of companies involved in the taxation fraud conspiracy including Plutus Payroll Australia Pty Ltd (“Plutus”), a company which provided a payroll administration service to a large number of corporate entities (“Client Companies”).

2. In excess of two hundred Client Companies engaged Plutus to provide payroll management services for their employees and/or contractors including:

1. payment of salary wages and invoices;

2. payment of superannuation obligations;

3. managing rostered leave arrangements and timesheets; and

4. managing salary sacrificing and novated lease payments.

3. This payroll management function necessitated transferring Client Companies’ funds to Plutus. These funds represented the gross value of the companies’ employees and/or contractors’ salaries, including superannuation and PAYGW liabilities due to the ATO.

4. The regular transfers of funds from Client Companies to Plutus were made on the understanding that, after payment of wages and salaries, Plutus would withhold and remit to the ATO the required PAYGW contributions.

5. Plutus did not charge fees for providing those services. It claimed on its website that it was able to put in place a “zero-sum structure” because it provided other industry-based financial services.

6. It is not alleged by the prosecution that the Client Companies benefited from the taxation fraud conspiracy. Neither does Federal Agent Burtenshaw suspect they are in any way implicated in the taxation fraud conspiracy, or that they benefited from the criminal conduct of the four defendants among the eight defendants who were named as co-conspirators.

7. The co-conspirators incorporated several other companies as part of the scheme (referred to interchangeably as “Second Tier Companies” or “Bot Companies”). The co-conspirators also recruited third parties to become directors and shareholders of these companies (“the Straw Directors”). The Straw Directors were company directors in name only. The co-conspirators maintained full control over the Second Tier Companies and their operations.

8. One of the co-conspirators was assigned the role of recruiting and managing the Straw Directors to ensure they had no unsupervised involvement in the companies for which they were ostensibly and legally responsible.

9. Upon receipt of the payroll funds into Plutus’ bank accounts or accounts associated with that company, a portion of the payments received was transferred into accounts operated by the Second Tier or Bot Companies. The amount transferred was generally sufficient for that company to meet the employees’ or contractors’ salary and superannuation entitlements of the Client Companies but not sufficient to meet the PAYGW obligation arising from that payment. The portion of Client Company funds retained by Plutus (representing the monies required to be paid to the ATO in accordance with the relevant PAYGW obligations of the Client Companies) was then transferred to another company (or direct in to bank accounts operated by the conspirators) for the ultimate benefit of them and their associates.

10. Paragraph 17 of the Conspiracy Statement of Facts alleges that “the conspiracy resulted in a loss to the Commonwealth of AU$89,487,489.00.

11. There is a body of primary and secondary evidence identifying bank accounts allegedly used for the inter-company bank transfers undertaken in the course of the conspiracy, examples of which include a number of Commonwealth Bank accounts opened in the names of the Second Tier or Bot Companies. Excel spreadsheets detailing their use were seized during the execution of search warrants. Intercept material also revealed the use of internet banking tokens associated with those accounts, in particular by the fifth and sixth defendants to the POC Act proceedings and named conspirators.

12. Upon the ATO becoming aware of what was suspected to be a large-scale taxation fraud, an investigation was launched and tax assessments raised against the second tier Bot Companies, and their directors. Garnishee Notices were issued to the companies and Director Penalty Notices issued to the Straw Directors.

13. In response to the issue of the Garnishee Orders to the Second Tier Companies Plutus commenced to pay the Client Companies’ employees their entitlements directly from its bank account at the direction of the co-conspirators. This attracted the issue of a Garnishee Notice to Plutus in relation to outstanding liabilities of $46,632.355 including PAYGW liabilities, after which Plutus ceased operating.

14. The blackmail offence is said to be constituted by the seventh and ninth defendants demanding that they be paid a large quotient of the misappropriated PAYGW payments from the fraudulent scheme over the period 1 February 2017 until June 2017 into the trust account of Lands Legal, the forty-seventh defendant.

15. The prosecution allege, and Federal Agent Burtenshaw suspects, that in response to that blackmail demand Plutus made all employee/contractor wage and salary payments that would otherwise have been liable to be paid by the Bot Companies and, between 1 February 2017 and 20 April 2017, remitted all the funds that were due to the ATO in accordance with the obligations imposed by the PAYGW system to the trust account of Lands Legal in the amount of $24,244,740.80.

16. The fourth defendant, a solicitor employed by another firm of solicitors, prepared a deed designed to encompass the terms of the blackmail demand and the payment of funds demanded. He also prepared affidavits for the directors of the Second Tier Bot Companies in which they deposed to their preparedness to assume liability for the payment of the ATO tax debt with the intention of shielding the co-conspirators from any liability or action

The current status of the criminal proceedings involving the first to the fourth defendants

54. On 8 August 2017 a brief of evidence was served electronically on each of the four defendants in accordance with the orders made in the Local Court pursuant to the procedures provided for in s 183 of the Criminal Procedure Act. The electronic brief was further supplemented by service of a hard copy. The briefed material is voluminous comprising, inter alia, a significant amount of financial data including financial and banking records, together with many hours of electronic surveillance evidence and a large number of witness and police statements. As at 8 August 2017 the brief comprised the equivalent of 99 lever arch folders or 22,000 folio pages.

55. By letter dated 23 August 2017 the solicitor for the CDPP with carriage of the criminal proceedings advised each of the solicitors for the four defendants that at the scheduled mention date in the Local Court on 29 August 2017 an application would be made for an extension of three months for the service of the remainder of the brief of evidence. That evidence comprised what was described as a significant quantity of digital items and other property seized during search warrants executed following the arrest of the defendants in May 2017; additional police statements, 40 further witness statements and what was described as “detailed evidence from the Australian Taxation Office” for the successive financial years between 2014 and 2017 with a corresponding financial analysis of that evidence.

56. At the mention on 29 August 2017, orders were made in accordance with that timetable with the matter next listed for replies to the brief of evidence on 19 December 2017. An order was also made for the prosecution to serve on each of the defendants a document distinguishing the evidence and disclosable material for each of them on or before 12 December 2017.

57. On the reasonable assumption that the CDPP intends to present a joint indictment against each of the seven alleged conspirators in the taxation fraud conspiracy (including the four defendants), and after taking account of the length and complexity of the police investigation that preceded the defendants’ arrest on that charge and the nature of the evidence that it is intended to adduce in proof of it, in my view, a trial is unlikely to be convened before early 2020 at the earliest.

The statutory scheme under the POC Act

58. Before turning to the evidence and the competing submissions of the parties as to whether the interests of justice dictate that their examinations be stayed under s 319 of the POC Act (and whether they are entitled to relief from other orders made ex parte on 16 May 2017), it needs to be recognised that the legislature has expressly provided in various parts of the POC Act for the co-existence of civil proceedings under the POC Act (including, in this case, the compulsory examination of the defendants) and criminal proceedings involving the same or similar subject matter.

59. By way of example, s 183(3) provides that an approved examiner may issue an examination notice despite the fact that criminal proceedings have been instituted or commenced, while s 186(4) provides that the institution or commencement of criminal proceeding does not prevent the examination of a person upon whom a notice has been served.

60. To similar effect, s 319 both as it is currently in force following the passage of the 2016 amending Act and before it was amended, provides (and provided) that the mere pendency of criminal proceedings will not attract the power to stay proceedings under the Act.

61. As noted by Basten JA in Commissioner of Australian Federal Police v Elzein [2017] NSWCA 142 at [131], it is hardly surprising that s 319 is expressed in that way since it would be incoherent to confer the power to make an examination order under s 180, and to allow for an examination order to issue where criminal proceedings have been commenced, and then to order a stay of that order under s 319 merely on the basis that the power has been exercised.

62. It remains useful, however, to review the authorities that have considered the basis upon which the power to stay might be executed (both before and after s 319 was amended), in particular those authorities that have considered the situation where, as is the case here, the same or similar subject matter integral to a particular criminal charge (or the evidence that has been served by the prosecution in support of it) is likely to be traversed in POC Act proceedings, including in examination proceedings. A review of the authorities will elucidate the principles that have emerged as to scope and operation of the statutory discretion in s 319(1), which is to be exercised in the context of s 317 which provides that the onus to satisfy the Court that the interests of justice dictate that proceedings under the Act be stayed is on the defendants.

63. Prior to the passage of the amending Act in 2016, s 319 read as follows:

The fact that criminal proceedings have been instituted or have commenced (whether or not under this Act) is not a ground on which a court may stay proceedings under this Act that are not criminal proceedings.

64. Section 319 currently provides as follows:

(1)  A court may stay proceedings (the POCA proceedings) under this Act that are not criminal proceedings if the court considers that it is in the interests of justice to do so.

(2)  The court must not stay the POCA proceedings on any or all of the following grounds:

(a)  on the ground that criminal proceedings have been, are proposed to be or may be instituted or commenced (whether or not under this Act) against the person subject to the POCA proceedings;

(b)  on the ground that criminal proceedings have been, are proposed to be or may be instituted or commenced (whether or not under this Act) against another person in respect of matters relating to the subject matter of the POCA proceedings;

(c)  on the ground that:

(i)  a person may consider it necessary to give evidence, or to call evidence from another person, in the POCA proceedings; and

(ii)  the evidence is or may be relevant (to whatever extent) to a matter that is, or may be, at issue in criminal proceedings that have been, are proposed to be or may be instituted or commenced (whether or not under this Act) against the person or any other person;

(d)  on the ground that POCA proceedings in relation to another person have been, are to be or may be stayed.

(3)  Paragraph (2)(a) applies even if the circumstances pertaining to the POCA proceedings are or may be the same as, or substantially similar to, the circumstances pertaining to the criminal proceedings.

(4)  Paragraph (2)(b) applies even if the subject matter of the POCA proceedings is the same as, or substantially similar to, the matter at issue in the criminal proceedings.

(5)  Paragraph (2)(d) applies even if the staying of the POCA proceedings would avoid a multiplicity of POCA proceedings.

(6)  In considering whether a stay of the POCA proceedings is in the interests of justice, the court must have regard to the following matters:

(a)  that the POCA proceedings, and any criminal proceedings of a kind referred to in paragraph (2)(a) or (b), should proceed as expeditiously as possible;

(b)  the cost and inconvenience to the Commonwealth of retaining property to which the POCA proceeding relates and being unable to expeditiously realise its proceeds;

(c)  the risk of a *proceeds of crime authority suffering any prejudice (whether general or specific) in relation to the conduct of the POCA proceedings if the proceedings were stayed;

(d)  whether any prejudice that a person (other than a proceeds of crime authority) would suffer if the POCA proceedings were not stayed may be addressed by the court by means other than a stay of the proceedings;

(e)  any orders (other than an order for the stay of the POCA proceedings) that the court could make to address any prejudice that a person (other than a proceeds of crime authority) would suffer if the proceedings were not stayed.

65. The significance of the amendments to s 319, and their impact on the applications for relief in this case, was also the subject of competing submissions to which I will later refer. There was, however, some common ground on how s 319 should be construed.

66. In common with the submitted position of the Commissioner, the final submissions of the first, second and fourth defendant proceeded on the basis that “POC Act proceedings”, as that term is used in s 319(1), includes examination proceedings authorised under s 180. That is, those parties were agreed that s 319 is the source of statutory power in the POC Act to both stay the examination orders until the conclusion of the criminal proceedings (the application of the second and fourth defendants) or to stay the proceedings temporarily referable to some other time frame (the application of the first defendant). It may also be a source of power to limit the scope of the examination proceedings by an appropriately framed order. At the conclusion of the hearing that question was reserved pending the Court’s determination of the stay applications in respect of the examinations generally, the examination proceedings and the Sworn Asset Statements.

67. Treating an examination ordered under the POC Act as a “POC Act proceeding” is consistent with Elzein where, at [49], Basten JA noted that in the absence of any submission which addressed that specific question from the parties to those proceedings, it should be accepted that s 319 operates with respect to proceedings for examination orders under s 180 and to the conduct of examinations, as it does to the ancillary orders requiring the furnishing of Sworn Asset Statements. Mr Ahmad, counsel for the third defendant, made no reference to his Honour’s approach when he questioned whether s 319 had any application to the relief he sought on behalf of the third defendant. In circumstances where Mr Ahmad’s submission was not developed, I propose to take the same approach as taken by Basten JA in Elzein (neither Beazley P or Simpson JA considered the question).

68. It was also accepted by the first, second and fourth defendants (cf the third defendant to whom I will separately refer) that they bear the evidential and persuasive onus of establishing, on the balance of probabilities, that a stay of the examination orders (and ancillary orders) is in the interests of justice (see ss 317(1) and (2) of the POC Act). They also accepted (with some qualification in the case of the first defendant) that to attract the power to stay the examinations, or to qualify the obligation of the defendants to otherwise submit to a compulsory process of questioning by limiting the scope of the examinations, they were obliged to demonstrate a real, as opposed to a speculative or theoretical, risk of prejudice to the conduct of their defences to the taxation fraud conspiracy. They also accepted that the prejudice needed to be for reasons other than the mere pendency of the criminal trial and the bare fact of a coincidence or similarity in the circumstances pertaining to each proceedings, or a substantial similarity in the subject matter of both proceedings (see generally Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103 at [59]; Elzein; and Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46; [2015] HCA 5 and Zhao v The Commissioner of the Australian Federal Police [2014] VSCA 137).

69. In recognition of settled authority in this Court, other intermediate State courts and the High Court, it was also common ground between the parties that the statutory power to stay the examinations in the interests of justice is to be determined in the context of the POC Act manifesting a clear legislative intention that proceedings under the Act, whether they are proceedings in which one or more of the substantive remedies under the confiscation scheme in Chapter 2 of the Act are at issue, or an examination conducted pursuant to an examination order made under s 180(1) may, and often will, proceed concurrently with pending criminal proceedings in respect of the same or related conduct.

The authorities

70. Relevant provisions of the POC Act (although neither s 319 nor s 266A as currently in force) were most recently examined by the High Court in Zhao.

71. The issue in Zhao was whether forfeiture proceedings due to be heard in the Supreme Court of Victoria should be stayed until the completion of pending criminal proceedings. The defendant complained that he would be prejudiced by disclosures that might need be made by him as a defendant in the forfeiture proceedings becoming available to the prosecution in his criminal proceedings, in circumstances where the offence specified as the basis for the forfeiture proceedings (namely, dealing with the proceeds of crime contrary to s 400.4(1) of the Criminal Code) raised identical issues to those in the pending criminal proceedings (namely, aiding and abetting another to deal with property that was the proceeds of crime).

72. The Court of Appeal of Victoria stayed the forfeiture proceedings until the hearing and determination of the criminal proceedings. They did so primarily on the basis that were the proceedings not stayed in advance of the defendant’s criminal trial, the prosecutor would be informed of his likely defence because the defendant could not realistically defend the forfeiture proceedings without telegraphing that defence. They were also satisfied the Commissioner would suffer no prejudice were the hearing of the forfeiture proceedings delayed.

73. The Commissioner appealed to the High Court. The High Court found there was no error in the approach of the Supreme Court. The plurality considered that the risk of prejudice to the defendant if the stay were not granted was real ([47]); the interest of justice were not served by requiring him to defend the forfeiture proceedings before the criminal proceedings were finalised; and the Commissioner would suffer no relevant prejudice from a delay in the continuation of the forfeiture proceedings ([50]).

70. The Court also held at [42] that it was unnecessary on the application for the stay for the defendant to say more than he did in identifying the risk of prejudice since “… the circumstances relevant to both proceedings [were] substantially identical”, and to have required the defendant to provide a more specific account of prejudice would be to make the risk of prejudice a reality ([43]).

71. On the issue of delay the Court said at [39]:

It may be accepted that forfeiture proceedings should not be unduly delayed. No litigation should be delayed except for good cause, especially criminal proceedings. On the other hand nothing in the POC Act or in the nature of forfeiture proceedings under the Act suggests that they must proceed at all costs. It could hardly be said, from any point of view, that they are more important than criminal proceedings and should be given priority.

76. In considering the operation of s 319 as it then operated (that is, prior to the 2016 amendment) the Court said:

[34] The Commissioner is correct to observe that the POC Act, in the provisions it makes both for restraining orders and for forfeiture orders, contemplates that such orders may be made regardless of whether a person is charged with an offence having some connection with the forfeiture proceedings. It may also be accepted that the civil proceedings under the POC Act are separate and distinct from any criminal proceedings and it is possible that they may be conducted regardless of the criminal proceedings. They are unaffected by the outcome of criminal proceedings. So much is evident from s 80. It follows that the fact that criminal proceedings have been brought may generally be considered not to be an impediment to the continuation of the forfeiture proceedings.

[35] The assumptions upon which the POC Act is founded in this regard are not novel. They are reflected in s 319, but a provision of this kind is strictly unnecessary. Courts will not grant a stay of civil proceedings merely because related charges have been brought against a person and criminal proceedings are pending. More is required. To warrant a stay of the forfeiture proceedings, it must be apparent that the person whose property is in question is at risk of prejudice in the conduct of his or her defence in the criminal trial.

[36] Section 319 impliedly acknowledges what is in any case true: that the courts have the power to control their proceedings and to order a stay in an appropriate case. It will be appropriate to do so where the interests of justice require such an order. Section 319 is not expressed to refer specifically to a circumstance where the issues in the forfeiture proceedings and the criminal proceedings are substantially identical. The POC Act does not presume to say what a court should do in such a circumstance.

77. As noted above, upon the passage of the 2016 amending Act s 319 has been significantly recast. It now provides specifically for the fact that the Court must not stay the POC Act proceedings on the ground that the circumstances pertaining to those proceedings are the “same as or substantially similar to the circumstances pertaining to the criminal proceedings”, factors which in Zhao the High Court considered warranted a stay and, further, that an assessment of whether the interests of justice require a stay involves a discretionary assessment informed by the matters set out in s 319(6), including in s 319(6)(e) whether such prejudice as might attract consideration of a stay can be addressed by other means.

78. The High Court also observed in Zhao at [46] that the effect of s 266A (as it was in force at that time) meant that evidence given by the respondent in the forfeiture proceedings may have been provided to the prosecuting authorities, even if it were inadmissible in those proceedings. Despite the assurances of counsel for the Commissioner that it was not intended that there would be disclosure, the Court was of the view that because s 266A (as it then stood) would not render the provision of the respondent’s evidence to the prosecution unlawful, and were his evidence to be in the possession of the prosecution this might affect the conduct of the defence to the criminal proceedings, the Court of Appeal's view that protective orders under s 266A would not suffice to remove the risk of prejudice to the respondent’s defence was correct.

79. Section 266A as it stood prior to the amending Act provided:

266A  Disclosure

(1)  This section applies if a person obtains information:

(a)  as a direct result of:

(i)  the person being given a sworn statement under an order made under paragraph 39(1)(ca), (d) or (da); or

(ii) the exercise of a power (by the person or someone else), or performance (by the person) of a function, under Part 3‑1, 3‑2, 3‑3, 3‑4 or 3‑5; or

(b)  as a result of a disclosure, or a series of disclosures, under this section.

(2)  The person may disclose the information to an authority described in an item of the following table for a purpose described in that item if the person believes on reasonable grounds that the disclosure will serve that purpose…

(The Table of Recipients and the purpose for which disclosure may be made is in identical terms to s 266A prior to the amending Act as set out earlier.)

80. As Adamson J noted in Commissioner of the Australian Federal Police v W(No 1) [2016] NSWSC 683 at [36], s 319(1) (as amended) clarifies that the Court may grant a stay of civil proceedings under the POC Act if the Court considers that it is in the interests of justice to do so, with the addition of subsections 319(2)-(5) prohibiting a court from staying proceedings on the grounds specified and mandating that the matters prescribed in s 319(6) must be considered. Her Honour also observed at [45] that the prohibited grounds listed in ss 319(2)-(5) are the very matters which the High Court in Zhao considered germane (although not determinative) as to whether the interests of justice warranted a stay.

81. In Elzein, Basten JA went on to say at [69]:

[69]   This statement of purpose [in the Explanatory Memorandum] failed to address the difficulty identified by the High Court in Zhao, namely that to require an applicant for a stay to explain how his or her answers to questions, or the provision of a written statement as to the source of funds to purchase property, would cause a risk of prejudice to his or her defence, would be to create the prejudice which the stay seeks to avoid. The present form of s 319(2)-(5) does not advance the situation greatly in favour of refusal of a stay. Even in the old form, the High Court stated that the terms of the section “suggest that a person charged with an offence which is relevant to forfeiture or other civil proceedings brought under the POC Act must do more than point to the existence of criminal proceedings in order to obtain a stay of the civil proceedings.”

82. It was this passage of the judgment in Elzein upon which the first defendant relied when responding to the Commissioner’s complaint that the generality of prejudice that it is said will result from his examinations at this time fails to address with appropriate specificity how the risk of prejudice to the conduct of their defence real and acute as distinct from being merely theoretical.

83. The Commissioner submitted that the preponderant weight of authority (including a number of cases to which I will presently refer) establish that no relevant prejudice lies in the abstract circumstance that a defendant’s answers under examination may influence, or even restrain the defence he or she intends to advance at his criminal trial. In the Commissioner's submission, it was necessary for the defendants in the stay proceedings to concretely identify a legitimate forensic choice in the conduct of their defence to the taxation fraud conspiracy which will be lost by the course of compulsory examination into their examinable affairs, accepting, as the Commissioner did, that the focus of the examinations is likely to include their conduct in deriving funds to acquire property (including the current location of any property not already identified) in addition to the way that the funds generated by the conspiracy were dealt with or dissipated whilst under their custody and control. In the Commissioner’s submission, none of the defendants has pointed to any relevant prejudice and that the generalised concern they express (or a concern expressed on their behalf by their solicitors) that they may feel constrained in the conduct of their defence to the criminal proceedings is not enough.

84. Each of the defendants referred to and expressly relied upon the observations of Adamson J in W (No 1) at [59] that whatever orders the Court might make under s 266A, there remains a risk that there will be disclosure of what occurs in the civil proceedings, through misunderstanding, inadvertence or mishap, to those involved in the prosecution.

[59]   I am not satisfied that the prejudice to the first defendant of being cross-examined in the civil proceedings or being required to give instructions for the cross-examination of the plaintiff’s witnesses could be overcome by means of orders under the Court Suppression and Non-publication Orders Act 2010 (NSW) or an order to close the Court under s 319A of the Proceeds of Crime Act. Moreover, there is a risk that, whatever orders I might make, there will be disclosure of what occurs in the civil proceedings, through misunderstanding, inadvertence or mishap, to those involved in the prosecution. I consider that Mr Moses set the bar too high when he submitted that there was no basis for a “reasonable apprehension” of inadvertent disclosure. I consider it to be relevant to take into account the possibility of inadvertent disclosure, even though the prospects of its occurring may be adjudged to be low.

85. Mr McLure SC, Counsel for the Commissioner, submitted that the approach taken by Adamson J departs from the approach mandated in McGlone, and McGlone is to be followed.

86. In dealing with the operation of s 319 (as amended), in Elzein, Basten JA also said:

[57] The starting point is s 319(1), which expressly acknowledges the jurisdiction of a court to stay proceedings if the court considers that to do so is “in the interests of justice”.

[58] The remaining subsections have two functions. The first, to be found in subs (2) with further explication in subss (3), (4) and (5), imposes a constraint on the grounds on which proceedings under the Act may be stayed. The second function, in subs (6), is to identify factors which the court must take into account in considering whether to grant a stay. On the one hand, the mandatory considerations will usually weigh in the balance against the grant of a stay; on the other hand, they recognise that there may be prejudice to a person if the proceedings are not stayed and, further, that there are orders the court may make which will address (in the sense of seeking to reduce) any such prejudice.

[59] Reading the section as a whole, it is clear that the prohibited grounds in subs (2) are not prohibited considerations. In other words, potential prejudice is to be taken into account, in accordance with subs (6), in circumstances where there are criminal proceedings pending against the person the subject of the proceedings under the Act. To say that the court “must not stay” the proceedings under the Act on the ground that criminal proceedings have been commenced against the person, is not to say that the existence of the criminal proceedings is to be disregarded. The existence of the criminal proceedings will be, in many cases, the source of some potential prejudice arising from the pursuit of proceedings under the Act, but it will not be enough in itself.

[60] There is a tension within these provisions. They accept that a court might order a stay simply on the basis that an accused should not be questioned about the subject matter of the criminal proceedings, whilst those proceedings remain on foot. However, they also assume that the court considering a stay could take account of the prejudice flowing from that situation, but must then address means of reducing or avoiding the prejudice by steps other than staying the proceedings.

87. In dealing with the amendment to s 266A in 2016 by the addition of subs 2(b), Basten JA accepted in Elzein at [76] that it was self-evident that the purpose of the amendment was to provide a mechanism whereby the disclosure of compulsorily acquired information obtained by the Commissioner under the POC Act to a prosecuting authority was prohibited where criminal proceedings are pending (see also Gleeson JA in Commissioner of the Australian Federal Police v Cacu [2017] NSWCA 5 at [87]).

88. In Elzein (decided after W (No 1)), Basten JA accepted that the terms of the Minister’s Second Reading Speech made it clear that the passage of the 2016 amending Act was to overcome the perceived effect of the judgment in Zhao. At [68] his Honour extracted relevant parts of the Explanatory Memorandum as they related to the amendments to s 319:

[68] Further, the amendments to s 319 were addressed in the explanatory memorandum which accompanied the Bill, in the following terms:

“Secondly, new subsections 319(2)-(5) clarify where a court must not grant a stay. These principles are designed to clarify the intention that concurrent civil and criminal proceedings are possible, and require specific consideration of the individual circumstances and associated risks of prejudice. The amendments clarify that proceedings under the Act may only be stayed where the granting of a stay is the only means of addressing the circumstances (ie. the prejudice that may result to a concurrent or subsequent criminal trial). The proposed amendments are primarily designed to ensure that the court will consider the individual circumstances of the proceedings, including the nature of the overlap between the civil and criminal proceedings, and prevent the risk that a person need only claim a risk of prejudice but not provide evidence explaining the nature of that risk.”

89. His Honour also commented at [79] that the form and effectiveness of an order under s 266A(2)(b) prohibiting disclosure by the Commissioner as the authority under the Commonwealth who has the function of investigating and prosecuting offences against the law of the Commonwealth to himself was “by no means obvious”. That passage, together with his Honour’s additional concern expressed at [78] that the prejudice occasioned by lawful disclosure to the prosecuting authorities may still arise, was also relied upon by the defendants as supporting their applications for a stay of the examination proceedings.

90. In the Commissioner’s submission, both of the passages in Elzein upon which the defendants relied were obiter dicta and neither should carry any weight as factors under s 319(6)(e) on the question whether it is in the interest of justice to stay the examination proceedings in this case. In that connection the Commissioner emphasised the binding terms of the non-disclosure order under s 266A(2)(b) made in these proceedings on 21 June 2017 as it relates to the information which has been acquired by him as a direct result of the examinations conducted to date and those that are pending (including each of the four defendants) and the provision of Sworn Asset Statements by those defendants that are the subjects of that order (including each of the four defendants) and the importance of A/Commissioner Gaughan’s evidence which addressed, in comprehensive terms, the framework that is currently in place to quarantine compulsorily acquired information from the prosecuting arm of the AFP. I will return to consider A/Commissioner Gaughan’s evidence and the submissions concerning it later.

91. Before turning to other authorities to which the parties referred and the principles the parties submitted should guide the exercise of the discretion to stay the examination proceedings in this case, mention should be made of the statutory regime in Part 3 Division 3 of the POC Act, which the Commissioner points to as further supporting his submission that the interests of justice in this case do not warrant a stay of the examination orders.

92. In combination with s 188, which provides that the examination is to take place in private and that the approved examiner may give directions about who may be present during the examination or part of it, s 193 makes specific provision for directions to be given at the discretion of an approved examiner (including on the application of the examinee's lawyer) to accommodate the potential for questions asked and information provided under compulsion to put at risk an examinee’s right to procedural fairness in the conduct of the POC Act proceedings and an examinee’s fundamental right to fair trial at risk, including, it must be assumed, any risk to the right of an examinee to mount a defence to a criminal charge.

93. Section 193 provides:

Approved examiner may restrict publication of certain material

(1)  The approved examiner may:

(a)  on his or her own initiative; or

(b)  at the request of the person being examined, or the responsible authority;

give directions preventing or restricting disclosure to the public of matters contained in answers given or documents produced in the course of the examination.

(2)  In deciding whether or not to give a direction, the approved examiner is to have regard to:

(a)  whether:

(i)  an answer that has been or may be given; or

(ii)  a document that has been or may be produced; or

(iii)  a matter that has arisen or may arise;

during the examination is of a confidential nature or relates to the commission, or to the alleged or suspected commission, of an offence against a law of the Commonwealth or a State or Territory; and

(b)  any unfair prejudice to a person's reputation that would be likely to be caused unless the approved examiner gives the direction; and

(c)  whether giving the direction is in the public interest; and

(d)  any other relevant matter.

94. The approved examiner may also, under s 192, refer any question of law arising at the examination to this Court for determination, including at the request of the examinee.

95. In the Commissioner’s submission, these provisions are part of the machinery in the Act which allow for the realisation of his legitimate interests in achieving the statutory objectives in s 5 of the Act whilst preserving the accusatorial nature of the process of criminal justice, and the various rights and freedoms inherent in that process which have not been modified or abolished by the legislative scheme in the POC Act, either expressly or by necessary intendment

96. Together with Elzein, relevant provisions of the POC Act were also recently considered by this Court in McGlone, decided before Elzein (which as already discussed considered the impacts of the amendments to ss 319 and 266A), and Cacu, a case which, although decided after the passage of the 2016 Act, concerned a decision of Button J made in accordance with ss 319 and 266A before amendment. Since the Court of Appeal in Cacu did not find error in the primary judge's decision to stay the examination proceedings, the Court did not need to re-exercise the discretion under the newly formulated s 319 of the Act and did not discuss at length how the amended s 266A(2)(b) might apply when the Court turns to consider the mandatory factors in s 319(6)(d) of the Act.

97. Critically for the outcome in Cacu (as Basten JA observed at [95] in Elzein) the Court accepted that at the time of the primary judge’s decision, the power of an approved examiner to prevent or restrict disclosure of the information revealed on examination did not extend to prohibiting disclosure which was permitted under s 266A(2) and, that being the case, the risk of derivative use of the information arising from a compulsory examination by the prosecution was at large.

98. The position that obtains after the 2016 amendment to s 266A, and therefore the position that obtains in this case, is that a non-disclosure order has been made by the Court which by its terms provides an absolute prohibition on disclosure of confidential material, inclusive of the product of the proposed examinations of the defendants.

1. whether any prejudice that a person (other than a proceeds of crime authority) would suffer if the POC Act proceedings were not stayed may be addressed by the court by means other than a stay of the proceedings

2. any orders (other than an order for the stay of the POC Act proceedings) that the court could make to address any prejudice that a person (other than a proceeds of crime authority) would suffer if the proceedings were not stayed

278. Mr McLure submitted that the Commissioner would suffer substantial prejudice were the examinations stayed. He submitted that will be the result irrespective of whether the examinations are stayed until the commencement of the trial by the presentation of an indictment in either the District Court or in this Court (the application of the first defendant) or at the conclusion of the trial (the application of the remaining defendants) since in either case that will involve a delay of some years. Mr McLure submitted that prejudice will also result were the Commissioner required to destroy the Sworn Asset Statements as it would were he restrained from using them for the purposes of the POC Act proceedings until some later date.

279. Mr McLure referred to paragraph 788 of the affidavit of Federal Agent Burtenshaw where he expressed the following concerns were the orders for the examination of the defendants and orders for them to provide Sworn Asset Statements not made expeditiously. Mr McLure submitted those concerns are no less valid now where orders are sought staying the effect of those orders.

I am concerned that if Examination Orders and Orders for Sworn Statement are not made until the conclusion of the criminal proceedings:

(a)   the Commissioner’s investigations will be impaired for an extended period of time as examinations and statements of affairs will not be available to him. These are investigative tools which are usually available to the Commissioner in proceedings such as these and are granted to facilitate the principal objects of the Act;

(b)   there will be a delay in the proceedings and interested parties to the proceedings and individuals who are sought to be made subject to the Examination Orders or the Orders for Statements may leave the country or become unavailable for the purposes of these orders;

(c)   there will be a delay in the proceedings and the Commissioner will not be able to progress the proceedings to realise the value of any restrained property in accordance with the principal objects of the Act. The Commissioner may be prevented from seeking forfeiture orders over any restrained property and will be unable to obtain a pecuniary penalty order (PPO) or to satisfy all of the PPO amount;

(d)   the Defendants (and other identified and unidentified interested parties) may take steps to dissipate property which the Commissioner has not identified and will have ample time to do so – in particular, any funds standing to the credit of bank accounts may be easily dissipated;

(e)   the risk of dissipation is exacerbated by the large number of bank accounts, entities and associates to which the individuals who are sought to be made subject to the Examination Orders or the Orders for Statements have access and whilst substantial efforts have been made by the AFP to identify, for example, all bank accounts within the jurisdiction, it may be that there are other accounts in Australia or overseas not captured by the orders sought presently which could be used in the aid of the flight of capital. The Suspected Offenders have demonstrated their ability to transfer large sums of money overseas; and

(f)   these proceedings will not be determined expeditiously.

280. A/Commissioner Gaughan gave evidence to similar effect. He was concerned that if the examinations were stayed the Commissioner would be limited in his capacity to identify other assets held either in the name of the defendants or subject to their control, and limited in his capacity to prevent the defendants and others into whose affairs the examinations will be focused, taking steps aimed at dissipating or otherwise placing beyond the reach of the Commissioner such assets that have not been identified. He was concerned that this will further limit the Commissioner’s capacity to determine whether any other benefits have been derived through the alleged criminal offending of the defendants.

281. A/Commissioner Gaughan also gave evidence that in the course of the investigations that ultimately resulted in the commencement of the civil proceedings, information was obtained which suggested that some of the defendants, and those whose affairs might also be the subject of examination, had taken steps (or contemplated taking steps) aimed at frustrating the efforts of law enforcement authorities. Ultimately, he expressed his concern that any further delay in the conduct of examinations enhances the potential that the examination process will be seriously compromised, including by some of the defendants communicating amongst themselves in relation to the answers already given by others under examination, despite prohibitions against that conduct occurring and despite the bail conditions which prohibit contact between them.

282. The defendants’ submission concerning the $24 million paid into the Lands Legal trust account pursuant to the Blackmail Offence, inclusive of the evidence of Federal Agent Burtenshaw given under cross-examination that he had no reason to suspect that any of the four defendants had access to or control over that money, and the submission advanced by Mr Ahmad that the Commissioner had failed to demonstrate that the defendants were capable of saying anything useful about the proceeds of their suspected offending beyond what was declared in their Sworn Asset Statements were, in Mr McLure’s submission, to misunderstand the Commissioner's position. Simply because Federal Agent Burtenshaw, on the information currently available to him, does not have any basis to suspect that any of the four defendants know anything about the provenance of that money, does not foreclose on the Commissioner's entitlement to examine each of them about their knowledge of the source of those funds as part of the examination of each of them into their “examinable affairs”. Mr McLure also invited me to take the approach that the Commissioner does not accept that it would be futile to ask any of the defendants further questions about the contents of their Sworn Asset Statements in circumstances where the reasonable suspicion expressed by Federal Agent Burtenshaw in his first affidavit, a suspicion upon which the Court relied in making the ex parte orders on 16 May 2017, hinges on the large-scale dishonest conduct in which each of the defendants is alleged to have engaged as evidenced by their participation in a scheme which had as its objective the concealment of funds from the ATO and the redirection of those funds to them personally or to entities they controlled.

283. Insofar as it was submitted that there was no evidence of the Commissioner holding any legitimate concern that there may be "still assets out there", I was reminded of the evidence of Mr Gaughan given in cross-examination by Mr Game:

As of 11 August [2017] I believe there was a reasonable suspicion, based on the allegations of the criminality and the significant dishonesty in relation to those allegations of criminality that there remains funds that have been shifted that we haven't been able to find and the potential exists that those funds have found their ways into the hands of others, and those funds are being used for various purposes. [T142 14 Sep 17]

284. The concerns expressed by both witnesses that the Commissioner’s legitimate interests in achieving the statutory objectives in s 5 of the Act will be prejudiced, are said by Mr McLure to be of particular significance given that the value of the assets presently restrained is less than the pecuniary penalty orders the Commissioner reasonably expects will be made in the substantive hearing.

285. Mr McLure acknowledged that the statement of facts prepared for the purposes of the committal proceedings, as with the particulars of the taxation fraud with which the defendants are charged, appoint the loss to the Commonwealth of something in the vicinity of $89 million. He submitted however that the total value of all benefits derived by the defendants as a result of their alleged offending (a sum that is neither derived from nor equal to that figure) is yet to be definitively determined for the purposes of the POC Act proceedings. That assessment is also likely to be the subject of further evidence, including expert evidence from a forensic accountant, when the POC Act proceedings are heard and determined. This, he submitted, is in contrast, to what is the total net value of property under current restraint at $41,833,851.98.

286. Mr Bruckner for the fourth defendant and Mr Ahmad for the third defendant contended that the Commissioner had failed to demonstrate any real likelihood of further property being identified and restrained as a result of questions asked of their clients under examination at this time (or, so it would seem from that submission, under examination at any time). Each of the defendants submitted that the Commissioner had failed to demonstrate that the value of the property currently restrained under the “all property” restraining orders made on 16 May 2017 is insufficient to meet any forfeiture or pecuniary penalty order that might be made against them in the civil proceedings.

287. I am prepared to accept that the defendant’s submission, developed at length by Mr Bruckner on their behalf, that the tax liability of the various corporations implicated in the taxation fraud does not represent the value of the benefits the defendants derived from what is alleged as their criminal involvement in the fraud. However, it does not follow that the examinations into their affairs would be inutile. I am also of the view that the fact that the defendants have provided Sworn Asset Statements in no way forecloses on what must be regarded as a possibility that there is further property yet to be identified by the Commissioner. Nor does the fact because certain electronic payments have been identified by the Commissioner as the mechanisms through which the fraud was perpetrated (and via which the monies due to the ATO were dissipated) foreclose on the possibility that the Commissioner’s information is incomplete. Equally it does not follow that because criminal proceedings have been initiated, that the investigation into the affairs of those charged with that offence are at an end for the purposes of the POC proceedings where they are each named as defendants. While I am able to confidently proceed on the assumption that the taxation fraud conspiracy charge was regularly and properly brought on the basis of evidence that was available to the Commissioner in May 2017, that is not inconsistent with POC Act investigations, continuing after that date in relation to other property that may reasonably be suspected to be proceeds of crime. It is uncontroversial that one of the objects of the Act that is capable of being realized by the examination regime in Part 3.1 of the Act is precisely to assist in such investigations.

Consideration of Relevant Matters under s 319(6)(e)

(e) any orders (other than an order for the stay of the POCA proceedings) that the court could make to address any prejudice that a person (other than a proceeds of crime authority) would suffer if the proceedings were not stayed.

288. The submissions which follow are interlinked with what each of the defendants claim in different ways and with differing emphasis is a real and demonstrable risk of prejudice to the conduct of their defence to the criminal proceedings generally were they to be compulsorily examined at this time given the extent of the overlap in the subject matter of both proceedings and the intersection of issues. In final submissions, this was the central basis upon which they contended that a stay of the examination orders under s 319 of the POC Act is required in the interests of justice.

289. Each of the defendants submitted that the risk of the examination proceedings impinging upon the matters which will inevitably arise as issues of proof in the criminal proceedings (and to a substantial extent) is a risk that cannot be meaningfully ameliorated by the non-disclosure order made by the Court on 3 June 2017, or for that matter any other orders that may be made by the examiner during the course of the examination. It was submitted that the weight of that fact alone necessitates a finding that they have discharged the onus of satisfying the Court that it is in the interests of justice that a stay be granted.

290. Despite the terms of the non-disclosure order which the defendants ultimately accepted does address the risk of disclosure to the prosecution, it was submitted that the incursions into the accusatorial process which are the inevitable result of the process of examination the Commissioner proposes to undertake ought attract greater weight in the discretionary assessment of whether a stay should be granted in the interests of justice than the emphasis the Commissioner gives to the non-disclosure order.

291. In addition to the submissions the Commissioner advanced concerning the scope of the non-disclosure order already in place, in final submissions the Commissioner consented to a further order expressly prohibiting disclosure within the AFP to any person involved in the criminal investigation or prosecution of the defendants (if such further order be thought necessary to clarify the application of the existing order to the AFP). It is clear that the capacity to make non-disclosure orders (and by necessary implication, the fact that they have already been made in these proceedings and their legal effect) is a matter to which the Court must have regard when considering whether a stay of these proceedings is in the interests of justice.

292. The Commissioner’s response to the reliance by each of the defendants on what the Commissioner accepts is a substantial overlap between the “subject matter” of the civil proceedings under the POC Act (relevantly here the examination proceedings) and the concurrent criminal proceedings (the language of s 319(4)) and the substantial similarity in “the circumstances pertaining” to both proceedings (being the language of s 319(3)), is twofold.

293. The Commissioner has separately addressed what I am satisfied is the considerable weight that should be attributed to the terms of the non-disclosure order already made in the proceedings and the regime in place to manage Coercive Material. In my view the combined effect of this evidence ameliorates to a very significant degree the risk of the disclosure of information that may adversely impact on the defendant’s right to a fair trial conducted in accordance with adversarial principles.

294. The Commissioner further submitted that the prosecutor's duty of disclosure, which is binding through all phases, allows this Court to be satisfied that any inadvertent disclosure by CACT or CAL of the information obtained from the compulsory examination of the defendants would, in all likelihood, come to the attention of the prosecuting authorities as the preparations for trial continue. The Commissioner submitted that being the case, any inadvertent disclosure of Coercive Material would be susceptible to orders of the committing court or the trial court to protect against the risk of the trial being rendered unfair (see R v Seller; R v McCarthy [2012] NSWSC 934). The Commissioner submitted that because the current non-disclosure order under s 266A(2)(b) will remain in place until further order, and because the risk of any unauthorised disclosure of Coercive Material to the prosecution is already rationally reduced by the measures put in place by the Commissioner to quarantine that information, any risk of prejudice to the defendant’s conduct of the criminal proceedings in their ongoing preparations for trial, however theoretical, is so significantly minimised that the Court would find the defendants have failed to discharge the evidentiary and persuasive onus of demonstrating that the interests of justice necessitate staying their examinations.

295. The defendants contend that because the efficacy of both the non-disclosure orders and the regime for protecting the disclosure of Coercive Material (of which the SOP is the latest articulation) is unknown and untested the risk to the conduct of their criminal proceedings is global. It is in that connection that each of the first, second and third defendants adopted the fourth defendant’s submissions identifying what were said to be flaws in the SOP, flaws which Mr Bruckner submitted are already patent because of the difficulty that is inherent in accurately differentiating between Coercive Material which is not to be disclosed unless it is authorised, and information that is derived from the Coercive Material for which the SOP provides no limitation on disclosure or publication.

296. Whilst it is true that the SOP is a new initiative and to that extent untested, I am well satisfied that the Commissioner has comprehensively addressed the risks associated with the management of Coercive Material and the risks associated with the leakage of that material by the rigour of the procedures specifically designed to protect against that risk. I am also well satisfied that the systems that are currently in place to militate against the risk of the leakage of Coercive Material already in the Commissioner’s possession and the information that is likely to come into his possession are both rational and enforceable.

297. I was invited by counsel for the defendants to infer from the nature of the fraudulent scheme the subject of the taxation fraud conspiracy that the particulars of that charge may change over time, whether as the result of particulars of overt acts being served as the proceedings progress through the committal process in Local Court, or the service of further particulars before or even after arraignment in the District Court or in this Court.

298. From that presumed state of affairs, and for the purpose of the relief sought in these proceedings, it was submitted that because the criminal proceedings are at a “preliminary stage” each of the defendants will suffer a real and demonstrable prejudice were they compulsorily examined at a time when the prosecution case they are to meet has not been fully disclosed and where they have not been in a position to give detailed instructions to their legal representatives about the conduct of their defence. They submitted without a full appreciation of what will be put against them in their criminal trials, they should not be placed in a position where, by the answers given under compulsory questioning, they unwittingly prejudice any future defence they might mount to the criminal charges.

299. The defendants also invited me to find that it is reasonably possible that additional criminal charges might be laid against them as the criminal investigation continues and/or broadens and that is an additional source of a risk of prejudice to them given the terms of the examination notice and the scope of the examination. The potential for the laying of additional charges was said to resonate from suspicions held by Federal Agent Burtenshaw as expressed in his first affidavit being the offences set out in paragraph 9 above.

300. In responding to the submission that prejudice results from the fact that the examinations are to be undertaken at a time when the criminal proceedings are in the throes of what may prove to be a lengthy committal process in the Local Court and what might prove to be a further delay before a trial date is secured in either the District Court or this Court, Mr McLure submitted that was a factor which actually weighed against the stay of the examinations.

288. He submitted that the fact the criminal trial of the defendants are unlikely to be convened for some years is in direct contrast to the situation that obtained when the Commissioner sought to proceed with examinations of Mr McGlone and Mr Cacu. In both cases criminal trials were imminent and in each the persons to be examined had the onus of establishing aspects of their defence to the criminal charge on the balance of probabilities. In both cases the Court of Appeal was satisfied that requiring them to answer questions under examination about the vary matters upon which they may elect ultimately to defend criminal charges in imminent criminal proceedings was productive of a risk of prejudice to the conduct of those proceedings that was both real and acute, and a risk against which there were no, or no sufficient, protections.

289. The same can be said for the circumstances underlying the cases of W and Zhao. Although unlike McGlone and Cacu which concerned examinations the Commissioner sought to undertake, in W and Zhao the Court was satisfied that participation as defendants to civil proceedings under the POC Act would necessarily disclose or forecast their defence to a proceeds of crime offence and for that reason the interests of justice justified a stay of the civil proceedings. The same cannot be said to obtain here. Not only is any criminal trial of the defendant literally years from now, but even the broadest outline of any defence to the criminal conspiracy has not been the subject of submissions from any of the defendants other than, perhaps, Mr Bruckner’s approach to the cross-examination of Mr Ramsden and the implicit suggestion that the Plutus Group had no tax liability and, that being the case, such arrangements as were devised by the defendants in the management of Plutus’ affairs were not criminal.

290. I do not regard the timing of the prospective criminal trial on the taxation fraud conspiracy per se as a critical factor in determining whether the defendants have discharged the onus of demonstrating that it is in the interests of justice to stay the examination proceedings at this time.

291. Viewed from the Commissioner’s perspective, with the criminal prosecution still at a relatively preliminary stage, I accept that it could not be reasonably suggested that pressures of the kind referred to by Beazley JA in McGlone at [116] present. While it might be accepted that preparing for an examination where a criminal trial with penal consequences is imminent could be productive of a personal strain on the defendants or their resources in the sense considered relevant in McGlone, that is not this case.

292. It is clear that subject to the express limitation on the statutory power to grant a stay in ss 319(2)(a) and (3) on the sole basis of a similarity in the circumstances pertaining to the two proceedings, that a stay will be granted where it is in the interests of justice to do so and that the mandatory considerations in s 319(6)(a) – (e) inform that question. I also accept that the extent or degree of overlap in the circumstances pertaining to the two proceedings (including the coincidence of subject matter) is also a matter to be considered in the ultimate exercise of the statutory discretion, however, the question that remains is whether, in this case, as the defendants submitted, that it is enough to warrant a stay in the interests of justice or whether, as the Commissioner submitted, they need to demonstrate how their rights and interests in defending the criminal case will be prejudiced by an examination into their affairs for the purposes of the POC Act, even if the process of compulsory questioning will entail a traversing of the facts underlying their alleged participation in the taxation fraud conspiracy.

293. The Commissioner submitted that even accepting that there is an overlap or coincidence of the subject matter in each proceeding in this case, none of the defendants has identified, with sufficient particularity, any real prejudice to them in the conduct of their defence to the taxation fraud conspiracy were they are examined about their own affairs and about the affairs of their co-defendants for the purposes of the substantive POC Act proceedings and, that being the case, none of them has discharged the onus of satisfying the Court that it is in the interests of justice that their examination be stayed. In my view there is considerable force in that submission.

294. To the extent that each of the defendants complain about the potential for real prejudice in the conduct of their criminal trial were they to be examined at a time when they have not given full instructions to their legal representatives in the criminal proceedings (or their legal representatives have not sought instructions from them), the Commissioner submitted that is a consideration which is irrelevant to the question whether the interests of justice require a stay of the examination proceedings. The Commissioner submitted that is the case irrespective of whether instructions have not been sought or provided because the brief is not fully served, or for some other reason.

295. Mr McLure submitted that where there is a disclosure prohibition order under s 266A(2)(b) in place, the only way evidence given at an examination could affect the forensic decisions of a defendant in a later criminal trial is that if he/she wanted to give evidence different to the evidence given at the examination. In that situation the risk of prosecution for perjury or for giving false evidence at the examination would arise. In this connection I regard the observations of Gageler and Keane JJ in Lee No 1 at [323]-[324] as instructive. In their Honours’ views the risk that a defendant might be required under adherence to their oath or affirmation to give a consistent (even if incriminating) account. This cannot be regarded as the loss of a “legitimate forensic choice” prejudicing a fair trial. The law cannot be concerned with preventing “prejudice” generated by a defendant’s own unlawful behaviour directed at perverting the course of justice. To conclude otherwise would be to transmute a privilege against self-incrimination into a privilege to give false evidence in one’s defence. Applying the same analysis, there is no force in the defendants’ submission that, in effect, it is too early for them to be examined or that they want the opportunity to consider the evidence to be adduced against them in proof of the allegation of their criminal guilt before they are asked questions about “their affairs” and “the affairs of each other” as their affairs relate to matters relevant to the POC Act proceedings.

296. Mr McLure submitted that an examinee’s right to be represented in an examination, and for his legal representative to take objection to a particular question or line of questioning, for example, because questions are said to be improperly formulated or directed to a matter outside the scope of the examination - that is to say outside of the legitimate reach of questions concerning a defendant's examinable affairs does not depend upon the ambit of the prosecution brief of evidence, or a legal representative’s awareness of its contents. Neither does it depend upon having a comprehensive set of instructions responsive to that brief of evidence or to the prosecution case. Rather, it is necessary for the defendants in these proceedings to identify a legitimate forensic choice that they are at the least likely to make in the conduct of his defence to the criminal proceedings that is at risk of being lost, or in some demonstrable way negatively impacted upon, were he required to submit to compulsory examination whilst his criminal proceedings are in the process of passing through to arraignment and from there to trial. The Commissioner submitted that the evidence upon which the defendants relied in the stay proceedings did not go to the risk of prejudice formulated in that way, and no attempt has been made in submissions to address it with any particularity. I accept that submission.

297. In the result, I am not persuaded that the interests of justice warrant a stay of the examination proceedings or the making of any orders limiting the use to which the Commissioner may legitimately put the Sworn Asset Statements of the defendants in his possession.

298. Accordingly, I make the following orders:

1. The application by each of the defendants for a stay of the examination proceedings is refused.

2. The application by the third defendant for a revocation of the examination order is refused.

3. The applications by the second, third and fourth defendants for orders in respect of the Sworn Asset Statements already provided by them are refused.

4. I formally reserve consideration of the balance of the relief sought by each of the defendants in their notices of motion as variously amended dated June and September 2017.

5. I also reserve the question of costs.

6. As to (4) and (5) above, see judgment dated 27 April 2018.

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Amendments

29 June 2018 - [40] - CAL removed from second sentence and OCC replaced with CACT in third sentence

Decision last updated: 29 June 2018