Zoeller, G. v The Federal Republic of Germany

Re: GUENTER ZOELLER
And: THE FEDERAL REPUBLIC OF GERMANY; CLEMENT BRIAN CONROY and THE DIRECTOR OF
PUBLIC PROSECUTIONS
No. G709 of 1987
Extradition

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Sheppard J.(1)

CATCHWORDS

Extradition - application by Federal Republic of Germany for extradition of person alleged to be guilty of offences against `German criminal code and German Tax code - whether undertaking given in requests seeking extradition comply with requirements of Australian Act - whether crimes for which extradition sought "extradition crimes".

Extradition (Foreign states) Act 1966, 55. 4, 11, 12, 13, 16, 17, 18.

HEARING

SYDNEY

#DATE 22:3:1988

Counsel for the Applicant: Mr. J.J. Spigelman, Q.C. with Mr. J.J. Spigelman, Q.C. with Mr. T.F. Robertson

Instructed by: Barker, Gosling Murphy & Moloney,

Counsel for the First and Third Respondents: Mr. R. Burbidge, Q.C. with Mr. P. Dwyer

Instructed by: Director of Public Prosecutions, Sydney Office

ORDER

The applicant, Guenter Zoeller, be released from custody.

The respondents, the Federal Republic of Germany and the Director of Public Prosecutions, pay to the applicant his costs of the application.

There be liberty to apply

NOTE: Settlement and entry of orders is dealt with in Order 36

of the Federal Court Rules.

JUDGE1

HIS HONOUR

This is an application in the alternative under s. 18 of the Extradition (Foreign States) Act 1966 ("the Act") for review of a magistrate's decision to commit the applicant to prison pursuant to s. 17 of that Act or for judicial review of the decision under s. 5 of the Administrative Decisions (Judicial Review) Act 1977. The magistrate is the second respondent and has submitted to such order as the Court may make except as to costs.

Little turns on which of the two statutes is relied upon for the Court's jurisdiction to review. As was suggested in argument, the Court may have certain discretions under the Judicial Review Act which it does not have under the Extradition Act, but it is unlikely that it would exercise its discretion in relation to a matter covered by the Extradition Act in such a way as to bring about a result not in accordance with that Act.
At the commencement of the proceedings counsel for the first and third respondents ("the respondents") submitted that I should dismiss the first respondent, the Federal Republic of Germany, from the proceedings because it was an inappropriate party. I think this may be so, but I notice that it has been joined as a party in a number of similar applications which have come before the Court. The matter is not of moment and I do not propose to accede to the application which was made.

The Legislation
In order that the submissions which were made by the parties may be understood, it is necessary to refer at some length to the relevant provisions of the Act and to the facts of the matter. The starting point is s. 12 which provides that- where the Act applies in relation to a foreign state, every fugitive from that state is liable, subject to the Act and to any limitations, conditions, exceptions or qualifications to which the application of the Act in relation to that state is subject, to be apprehended and surrendered to that state as provided by the Act. Section Il provides that, where regulations for the time being in force provide that the Act applies in relation to a foreign state, the Act applies in relation to that state. The relevant regulations are the Extradition (Federal Republic of Germany) Regulations ("the regulations"). Regulation 3 provides that the Act applies to the Federal Republic of Germany, subject to limitations, conditions, exceptions or qualifications specified in reg. 4 later to be referred to.
The word "fugitive" is defined, insofar as it is relevant, in sub-sec. 4(1) of the Act to mean a person accused of an extradition crime that is alleged to have been committed at a place in a foreign state or within the jurisdiction of a foreign state. Sub-section 4(2) provides that a reference in the Act to a fugitive from a foreign state shall be read as a reference to a fugitive accused of an extradition crime that is alleged to have been committed at a place in that state or within the jurisdiction of that state.
"Extradition crime" is defined in sub-sec. 4(1A) with which is it is necessary to read sub-sec. 4(18). The two sub-sections are as follows:-

"(1A) An offence against the law of, or of a part of, a foreign state (including an offence against such a law relating to taxation, customs duties, foreign exchange control or any other revenue matter) for which a requisition for the surrender of a person has been made to the Attorney-General is an extradition crime for the purposes of this Act if, but only if-

(a) the maximum penalty for the offence is death or imprisonment for not less than 12 months; and

(b) had a relevant act or omission by the person taken place, at the time when the requisition was made, in, or within the jurisdiction of, the part of Australia where the person was found, that act or omission would have constituted an offence against the law in force in that part of Australia the maximum

penalty for which is death or

imprisonment for not less than 12 months.

(1B) The reference in paragraph (1A) (b) to a relevant act or omission by a person is a reference to-

(a) an act or omission by the person-

(i) which is, in or in connection with the relevant requisition, alleged to have taken place; or

(ii) of which evidence is produced in connection with the relevant requisition; or

(b) any act or omission that is equivalent to an act or omission referred to in paragraph (a)".

Sub-section 13(2) of the Act is as follows:-

"13. (2) A person is not liable to be surrendered to a foreign state unless provision is made by a law of that state, or by a treaty in force between Australia and that state, or that state has given an undertaking, by virtue of which the person will not, unless he has left, or had an opportunity of leaving, that state-

(a) be detained or tried in that state for any offence that is alleged to have been committed, or was committed, before his surrender other than-

(i) the offence in respect of which the person was surrendered or any other offence of which the person could be convicted upon proof of the facts on which the surrender of the person was ordered; or

(ii) any other extradition crime in respect of which the

Attorney-General consents to his being so detained or tried, as the case may be; or

(b) be detained in that state for the purpose of his being surrendered to another country for trial or punishment for any offence that is alleged to have been committed, or was committed, before his surrender to that state other than-

(i) an offence of which the person could be convicted upon proof of the facts on which the surrender of the person to that state was ordered; or

(ii) any other offence in respect of which the Attorney-General consents to his being so

detained".

Section 16 provides for the issue of warrants by magistrates and for the apprehension of fugitives in respect of whom warrants have been issued. Section 17 provides for proceedings after apprehension of a fugitive. A number of the provisions of sub-sec. 17(6) are relevant to be considered. So far as material, the sub-section provides as follows:-

"17(6) If the person was apprehended under a warrant issued in pursuance of an authority by the Attorney-General ... and-

(a) there is produced to the Magistrate-

(i) in the case of a person who is accused of an extradition crime-

(A) a duly authenticated foreign warrant in

respect of the person issued in the foreign state that made the

requisition for the

surrender of the person or a duly authenticated copy of such a warrant;

(B) a duly authenticated statement in writing setting out a

description of each

offence for which the surrender of the Person is requested an the

penalty applicable to each such offence; and

(C) a duly authenticated statement in writing setting out all the acts or omissions in respect of which the surrender of the person is

requested; or

(ii) . . . . . . . . . . . . . . . . .

and, if the application of this Act to the foreign state that made the requisition for the surrender of the person is subject to any limitations, conditions, exceptions or

qualifications, any other documents required by those limitations,

conditions, exceptions or

qualifications to be produced; and

(b) the Magistrate is satisfied, after taking into account any evidence properly adduced by the person, that the person is liable to be

surrendered to the foreign state that made the requisition for the

surrender,

the Magistrate shall either-

(c) by warrant in accordance with the form prescribed for the purposes of this sub-section, commit the person to prison to await the warrant of the Attorney-General for the surrender of the person; or

(d) . . . . . . . . . . . . . . . . . . . .

but otherwise the Magistrate shall order that the person be released".

Also of relevance is sub-sec. 17(6A) of the Act. It is as follows:-

"17(6A) A person referred to in paragraph

(6) (b) is not entitled to adduce, and a Magistrate is not entitled to receive, evidence to controvert an allegation that the person has committed an act or omission in respect of which the surrender of the person is requested".

Section 18 provides for the review of the magistrate's decision upon application by the fugitive. The application may be made to this Court or to the Supreme Court of the State or Territory in which the magistrate was sitting. The application is for a review of the validity of the decision of the magistrate. Sub-section 18(3) provides that the Court shall have regard only to the material that was before the magistrate and shall, if satisfied that the decision of the magistrate was valid, make an order confirming the decision, or, if not so satisfied, order that the fugitive be released.
It remains to refer to reg. 4 of the regulations; see Statutory Rule No. 294 of 1986. The material part of it is as follows:-

"4. (1) A person is not liable to be surrendered to the requesting state in respect of an offence (in this sub-regulation referred to as the `first-mentioned offence' ) to which a requisition by that state for the surrender of a person relates if-

. . . . . . . . . . . . . . . .

(b) had the relevant act or omission in relation to the

first-mentioned offence been

alleged to have been committed by the person in, or within the

jurisdiction of, the part of

Australia where the person was found, the period within which proceedings could, in accordance with the law in force in that

part of Australia, have been

commenced against the person in respect of the offence

constituted under that law by the act or omission would, at the

time when the requisition was

made, have expired;

. . . . . . . . . . . . . . . . . ."

The expression "relevant act or omission" is defined in reg. 2 in the following terms:-

"'relevant act or omission', in relation to an offence to which a requisition for the surrender of a person relates, means an act or omission by the person-

(a) that is, in or in connection with the requisition, alleged to have taken place; or

(b) of which evidence is produced in connection with the requisition;"

The Requests

The evidence in the case consists of a number of documents and also some oral evidence given on the applicant's behalf before the magistrate by an expert in the law of Germany. I shall defer reference to his evidence until I come to the matter in respect of which it is relevant. The critical documents are two requests, one dated 30 June 1987 and one dated 11 August 1987, from the Embassy of the Federal Republic of Germany to the Department of Foreign Affairs submitting warrants of arrest for the applicant and the warrants themselves. The two requests are in English. The four warrants were issued in German and have been translated into English. It is necessary to refer to the terms of the requests and the warrants in some detail.
The request dated 30 June 1987 submitted a warrant of arrest dated 10 June 1986 issued in Coblenz. The essential statements in the request are as follows:-

"The German Government requests the

extradition of Mr. ZOELLER from Australia via of the German justice authorities,

Malaysia and the United Arab Emirates for the purpose of prosecution, by air at the expense of the German justice authorities

accompanied by German police officers. A request will be made by the Government of the Federal Republic of Germany to the

Government(s) concerned for approval of transit of the person.

It is assured, that the Government of the Federal Republic of Germany is prepared to extradite to Australia persons who are wanted for the same or similar criminal offences, who do not have German citizenship, under the stipulations and conditions of its domestic extradition law.

Furthermore it is assured that the extradited person will not be sentenced, nor be subjected to any other restriction of his personal liberty, nor be prosecuted by measure, which could not also have been taken in absence, in the Federal Republic of Germany without consent of the Australian Government for any offence committed before his extradition other than the offences for which extradition has been approved.

It is also assured that the extradited person will not be re-extradited, handed over or deported to a third country from the Federal Republic of Germany without the consent of the Australian Government, and that he will be allowed to leave the Federal Republic of Germany after final completion of the proceedings for which the extradition has been approved".

The German Offences

The warrant of 10 June 1986 specified two charges, namely:-

"1. On March 2, 1982 in Mainz the applicant violated his obligation to look after third party pecuniary interests which had been assigned to him by private act and thus having inflicted damage to that person whose pecuniary interests he had to safeguard".

and

"2. On March 18, 1982 in Montabaur, acting conjointly, having made incorrect declarations to the Revenue Authority on material taxation matters and thus unlawfully curtailed taxes".

The second request was in similar language to the first. It referred to three warrants dated respectively 9 October 1986, 10 June 1987 and 24 June 1987. The first of these warrants charged the applicant with the following:-

"... having misused on March 23, 1983 in Mainz the authority assigned to him by private act to look after third party's property or to have someone else look after it and thus having inflicted damage to that person whose pecuniary interests he had to safeguard".

The warrant of 10 June 1987 charged the applicant with:-

" .... having made incorrect and incomplete declarations to the revenue authorities on material tax-relevant facts during the period of November 6, 1980 through July 31, 1984 in Bingen and Mainz thus acting in a

continuation of offence".

The warrant of 24 June 1987 charged the applicant with:-

" .... having misused in November and December 1980 and in October 1981 in Mainz and at other places the authority assigned to him by private act to look after third party's property or to have someone else look after it and thus having inflicted damage to that person- whose pecuniary interests he had to safeguard".

It is to be observed that the first of the charges in the warrant dated 10 June 1986, the charge in the warrant of 9 October 1986 and the charge in the warrant of 24 June 1987 are of a similar nature. The second charge in the warrant of 10 June 1986 and the charge in the warrant of 10 June 1987 are different. They relate to breaches of the German income tax law. I propose to refer to the first of the charges in the warrant of 10 June 1986, the charge in the warrant of 9 October 1986 and the charge in the warrant of 24 June 1987 as the misappropriation charges and the second charge in the warrant of 10 June 1986 and the charge in the warrant of 10 June 1987 as the income tax charges. In order of the dates upon which the offences are charged the misappropriation charges are the first, third and fifth charges and the income tax charges the second and fourth charges.

Provisions of the German Law Relied Upon
Annexed to each of the warrants is a statement of the sections of the German Criminal Code or the German Tax Code which are said to provide for each offence or to be relevant to the charging of it. The provisions of the German Criminal Code which are said to constitute the misappropriation offences are, according to the warrants, to be found in s. 266, para. 1 which, under the heading, "Misappropriation", provides:-

"Everyone, who misuses the power assigned to him by law, public authority or private act to manage third party property or have someone else put under such an obligation or who violates the obligation given to him by law, public authority, private act or fiduciary relation to look after third party pecuniary interests and thus inflicts damage to the person whose property interests he has to manage, will be imprisoned up to five years or imposed a fine".

In the warrant of 24 June 1987 (but not in the warrants of 10 June 1986 or 9 October 1986) there is reference to s. 78 of the Criminal Code which provides for certain periods of limitation. The relevant provisions of s. 78 are as follows:-

"III. Insofar as prosecution is barred by limitation, the period of limitation is

. . . . . . . . . . . . . . . . . . .

4. five years for all acts which carry a maximum penalty of imprisonment over one year up to and including five years.

5. three years for all other acts.

. . . . . . . . . . . . . . . . . . . .

Section 78 c paragraph 1, sentence 1

Interruption

The period of limitation is interrupted by the first examination of the person charged, the notification that preliminary proceedings have been instituted against him or the order of this examination respectively

notification'.(sic)

The provisions of the Criminal Code and the Tax code relevant to the first of the income tax offences are to be found in s. 25, para. 2 and s. 53 of the criminal Code and paragraph 1, sub-paragraph 1 of s. 370 of the Tax Code. These provisions are said to be as follows:-

Criminal Code

"Section 25, paragraph 2

If several persons commit the criminal offence conjointly, each one will be punished as offender (joint offender).

Section 53

I. If someone has committed several criminal offences, which are

sentenced summarily, and by that is imposed several prison sentences or several fines, a cumulative sentence is awarded to him.

II. If prison sentence and fine coincide, a cumulative sentence is awarded. The court may also award a separate fine; if in these cases fines shall be imposed because of several criminal offences, a cumulative fine is awarded.

III. Section 52, paragraph 3 and 4 apply accordingly".

There is no reference to the detail of s. 52, paragraphs 3 and 4.

Tax Code

Section 370, paragraph 1, sub-paragraph 1.

"Everyone will be imprisoned up to five years or imposed a fine who makes incorrect or incomplete declarations to the Revenue Authorities or other Authorities on material taxation matters".

The provision of the Tax Code which relates to the second of the tax offences is the above quoted s. 370, paragraph 1, sub-paragraph 1. No reliance is apparently placed upon any provision of the Criminal Code.

The Facts Alleged in the Warrants
In each of the warrants there are detailed a series of allegations relied upon by the respondents to show the nature of the case to be made against the applicant in relation to each charge. The submissions relied upon by counsel for the applicant make it necessary to refer to the detail of these allegations. I propose to deal with the facts alleged in respect of each of the misappropriation offences first of all and then go to the facts alleged in relation to each of the income tax offences. The statements of the facts come from the words used in the warrants, but in some cases the words are not direct quotations. This is because I have engaged in some editing, the omission of German names and the adoption of some English equivalents which are not used in the warrants. I have done this in the interests of clarity. I have not always troubled to distinguish between that which is a direct quotation and that which is not.

The First Misappropriation Charge
The facts alleged in relation to the misappropriation charge
in the warrant of 10 June 1986 are as follows:-

1. Between 1974 and September 1983 the applicant was one of

several directors of a company, German Plant and Equipment Leasing Company Limited ("the Leasing Company"). The objects of the company were to purchase land, build shopping centres, office buildings, plants and all kinds of other facilities for the purpose of leasing and selling.

2. For this purpose the company used a number of subsidiaries.

3. In 1977 the Leasing Company began to lease real estate by

means of what are described in the warrant as real property investment funds also known as Real Value Funds

(Real-Wert-Fonds). Each of the funds apparently had a separate legal existence. Such a fund offers investors the opportunity to invest in a major real estate project particularly for industrial or commercial purposes.

4. In order to invest in this way an investor needed to become a

member of an investment company, described in the warrant as a limited partnership. Another undertaking, Capital and Value Co-operative Society for Private Investments ("the Co-operative") acted as marketing company to place the limited partner's shares of the Real Value Funds on behalf of the Leasing Company.

5. The selling activities of the Co-operative took place on the

basis of an agreement ("the co-operative agreement") with the Leasing Company dated 16 February 1978. The agreement was entered into by a related company, German Plant and Equipment Leasing Real Estate Company Limited ("the Real Estate Leasing Company") in place of the Leasing Company.

6. Between May 1978 and September 1983 the applicant was a

co-director of the Real Estate Leasing Company. According to the agreement the Co-operative took over the selling activities for the shares "based on own costs". Insofar as the Co-operative received direct payment by the Real Value Funds for selling the shares, these payments reduced its own costs. These amounted to 15 per cent of the sold net worth i.e. 5 per cent by a fund company known as the Fund Company for Marketing Services and 10 per cent by another company known as the General Shareholding Trust Company, for procuring net worth.

7. Besides its selling activities for the Leasing Company and

its subsidiaries, the Co-operative was also engaged in selling closed real estate funds for a company, Money and Value Investment Company. costs not directly accountable to individual funds or one of the two fund lines were allocated based on defined quotas to the co-operative partners, the Leasing company and Money and Value Investment company.

8. Based on the co-operative agreement with the Leasing Company

and/or the Real Estate Leasing Company, the Co-operative was entitled to ask for adequate payments on account of the expected selling expenses.

9. The warrant continues by giving some detail of financial

problems encountered by the Co-operative and the causes of them. It then says that, since the co-operative urgently needed additional liquidity in December 1981 because of year-end business and related huge liabilities from commission promises and certain other liabilities to which reference is made, the Real Estate Leasing company on 22 December 1981 granted the Co-operative an interest bearing loan in the amount of 10 million Deutschmarks. On 30 December 1981 it granted the co-operative an additional loan in the sum of 5 million Deutschmarks. Repayment of the loans was to be made on 25 January 1982 and 29 January 1982.

10. Since the Co-operative at that time did not dispose of liquid

resources to reduce the loan including interest the applicant gave an order to handle the 15 million Deutschmarks as advance on selling expenses for the year 1982 without bearing any interest.

11. The Co-operative was not entitled to an advance on selling

expenses of such an amount. The actual selling expenses in 1981 amounted to 3.460 million Deutschmarks, in 1982 to 3.263 million Deutschmarks, and in 1983 to 8.854 million Deutschmarks.

12. Consequently it was a liquidity grant outside of the

co-operative agreement which became necessary because the Co-operative sustained a loss due to its activities for its co-operative partner, Money and Value Investment Company, which was not made good by it.

13. The applicant violated his duties insofar as he renounced

interest on the liquidity grant.

14. Since the 15 million Deutschmarks were compensated by actual

selling expenses only in July 1983 the Real Estate Leasing Company sustained a loss of interest amounting to at least 1.3 million Deutschmarks because it used certain covering credits which are referred to in the warrant.

15. The applicant knew that his grant was not an adequate payment

on account "in the frame of" (within the terms of) the co-operative agreement.

16. The applicant knew about the circumstances which had caused

the strains on liquidity by the end of 1981. particulars of the basis of his knowledge are provided. These refer to his position as director of the co-operative and certain other companies whose activities had caused the liquidity problems.

17. These acts are liable to prosecution according to s. 266,

paragraph 1, of the German criminal Code.

The Second Misappropriation Charge

The matters alleged in relation to the second of the misappropriation charges, namely that which is charged in the warrant of 9 October 1986, are as follows:-

1. Again reference is made to the applicant being a director of

the Leasing Company and to the objects of that company.

2. During the period 1977 to 1983 the Leasing Company and its

subsidiaries leased real estate by way of real property investment funds (Real Value Funds) The funds we re established in the form of a limited partnership. Until "the issue of the fund" the partnership only existed in the form of a legal title and/or management company.

3. By the end of 1982 or the beginning of 1983 the real value

fund companies began to acquire "participations" in other real property investment companies which were initiated and marketed by a company described as RSB Investment Company Limited in Mainz under the name "Boden-Wert-Fonds".

4. In December 1982 seven real value fund management companies

had acquired limited partner shares each amounting to 1 million Deutschmarks or thereabouts in a Boden-Wert-Fond which may be briefly described as BWF21.

5. According to the provisions of the partnership agreement

payment of 50 per cent would be made on 30 March 1983 and 50 per cent on 30 June 1983.

6. Because the seven management companies had not been converted

into active real value' fund companies by March 1983 and consequently had no income to fulfil their obligations to BWF2l, the Leasing Company granted to the management companies interest bearing loans in the amount of their "participations in the company". These were based on loan agreements dated 23 March 1983 which were arranged by the applicant and given by him and one of his co-directors at that time. With these loans the seven companies paid up their shares.

7. According to the provisions of the loan agreements, the

loans, including the accrued interest, should have been paid back by 31 December 1983. A repayment did not take place because the seven companies "were never issued and marketed" as real value fund companies.

8. At the time the applicant granted this loan he knew already

in his capacity as "inventor" of the real value funds concept and financial partner of RSB Investment Company that the value of the participations acquired by the seven companies at the time they paid up their shares had fallen below their nominal value by at least 1,092,983.60 Deutschamrks and that the claim for repayment of the loan had been reduced at least by such an amount.

9. This act is liable to prosecution according to s. 266, para 1

of the German Criminal Code.

The Third Misappropriation Charge

The third of the misappropriation charges is referred to in the warrant of 24 June 1987. In summary the facts alleged are as follows:-

1. The applicant was a director of the Leasing Company earlier

referred to which had the object of purchasing land and equipment, building shopping centres, office buildings, plant and other facilities for the purpose of leasing and selling.

2. The applicant was granted "a percentage participation" in the

annual profit of the Leasing Company which was dependant upon the number and magnitude of the transactions done by the company and its subsidiaries.

3. In the autumn of 1980 in the ordinary course of its business

a subsidiary of the Leasing Company, German Movable Equipment Leasing Company Limited, decided to establish a company, Aero Lloyd Company Limited, for the purpose of operating "several airliners". One of the main shareholders of the Aero Lloyd Company was intended to be a Mr. Grunewald who is said to be a witness.

4. in order to procure the required funds for Mr. Grunewald to

join the Aero Lloyd Company, it was agreed between Mr. Grunewald and the management of the Leasing Company that Mr. Grunewald should become a partner in a leasing transaction with another company, industrial Plant and Equipment Leasing Company Limited, which was also a subsidiary of the Leasing Company. The leasing transaction related to a lava mine owned by Mr. Grunewald. Mr. Grunewald was to sell the mine for 9 million Deutschmarks to the industrial Leasing Company and then lease it back "on a monthly leasing rate".

5. The industrial Leasing Company reviewed the documents

submitted by Mr. Grunewald as lessee with respect to his financial position and the state of the mine and passed them on via the management of the Leasing Company to the Chairman of the Board of Directors because all transactions involving more than 6 million Deutchmarks required the authorization of the Board.

6. The Department manager of the Central Leasing Department of

the West German Land Bank in charge of the pre-audit on behalf of the Chairman of the Board refused the investment arguing that he had learnt about financial difficulties of Mr. Grunewald. As a consequence the management of the Leasing Company withdrew the documents submitted to the board of Directors.

7. in order to secure nevertheless Mr. Grunewald with the funds

for his participation in the Aero Lloyd Company and to improve business results, the applicant, after discussion with Mr. Grunewald, and knowing of his bad financial position and, as a consequence, the refusal of the Board of Directors, gave instructions to the management of the industrial Leasing Company, which was bound by the instructions of the management of the Leasing Company, to enter into the transaction at a purchase price of not more than 6 million Deutschmarks, which required no authorization of the Board of Directors, and without any further review of the financial position of the witness, Grunewald, and the profitability of the mine.

8. The purchase money, reduced to 5.563 million Deutchmarks by

some administrative fees, was paid out to Mr. Grunewald in several instalments in December 1980 and January 1981.

9. Eight months later, in October 1981, Mr. Grunewald was unable

to pay the monthly leasing rate of 67,635 Deutschmarks because of his bad financial position and the low profits resulting from the lava mine. On 23 December 1981 the industrial Leasing Company terminated the lease.

10. Up to then no other use of the lava mine was possible lacking

any purchaser. There is no exploitation of lava any more. The damage incurred by the Industrial Leasing Company, and thus by the Leasing Company, amounted to at least 5 million Deutschmarks.

11. Without the binding instruction of the applicant to enter

into the contract without any further review the responsible manager of the industrial Leasing Company would have found out in the course of a normal review process that neither the financial situation of Mr. Grunewald nor the returns from the lava mine would justify the transaction, because Mr. Grunewald would only have been able to pay the leasing rate for a short period of time. In those circumstances the contract would not have been concluded.

12. By the conclusion of the contract and the associated increase

of the annual returns of the Leasing Company the income of the applicant was increased at the end of the year due to his percentage participation.

13. This act is liable to prosecution according to s. 266, para.

1 of the German Criminal Code.

14. The limitation of actions according to s. 78 of the German

Criminal Code which normally begins to run five years after the accomplishment of the act, has been interrupted, according to s. 78c, by the notification of the institution of preliminary proceedings against the applicant in a letter dated 15 August 1986 to the defence counsel or (sic) the applicant.

The First income Tax Charge

The first of the income tax offences is the second offence charged in the warrant of 10 June 1986. in summary the facts alleged against the applicant are as follows:-

1. The applicant is charged with one Herbert Paulus who was the

managing director of the P.T. Paulus Trust Tax Consultancy Company Limited, and two other persons, Mr. Kuhl and Mr. Grothe. On 18 March 1982 at Bingen Mr. Paulus submitted to the revenue office in Montabaur a tax declaration made on behalf of the applicant and his wife.

2. According to a plan developed during the second half of 1981

by the applicant, Mr. Paulus, Mr. Kuhl and Mr. Grothe, the applicant's declaration included professional expenses (tax deductions) claimed in connection with income from capital investments which he incurred based on contracts with Mr. Grothe dated May 28 "through" 30, 1980.

3. The persons charged, i.e. the applicant, Mr. Paulus, Mr. Kuhl

and Mr. Grothe, were "joint initiators" of two real estate value funds. In the second half of 1981 Mr. Grothe informed Mr. Paulus and "via him" also Mr. Ruhl and the applicant, that he, Mr. Grothe, was in possession of "a carry-loss-forward" in the amount of five to six million Deutschmarks extending beyond the end of 1981. He was therefore in a position to obtain tax-deductible income which would also be considered tax-deductible expenses on the

"He (Mr. Grothe) suggested to take over a placing guarantee for the two above-mentioned Real Estate Value Funds, which ought to be reimbursed by the persons charged Messrs. Kuhl, Zoller and Paulus in the amount of 80 per cent of revenues from those funds, because they were the beneficiaries via (Money and Value investment Company). The money flowing to the person charged Mr. Groth should flow back via a contra transaction in one of the next years. Following this suggestion the persons charged Messrs. Kuhl, Zoller and Paulus entered into written agreements with the person charged' Mr. Groth, which were backdated into 1980. The eighty percent share of the proceeds for the person charged, Mr. Zoller, amounted to 1,126,900 Deutschmarks. In his income tax declaration for 1981 the person charged (the applicant) claimed professional expenses (tax

deductions) for income from capital

investments in the same amount after having paid this amount in December 1981 to an account of the person charged Mr. Grothe at the Bankhaus Martens & Weyhausen in Bremen".

4. The warrant further says:-

"The only purpose of the contractual agreements between the persons charged at the date of their convention was to prepare the assertion of fiscal deductions.

insofar as the person charged Mr. Grothe had to provide any real performances in the sense of the contract, they could not be

accomplished, because both Real Estate Value Funds had already been placed by the end of

1980. The amount paid to the person charged Mr. Grothe flew (sic) back in 1982 to the person charged Mr. Zoller, in form of tax-free revenues from a disposal of an investment in a company. Because in November 1982 he sold his participation in the limited partnership ... (Property Duisburg Munzstr. Limited Partnership) in the nominal value of 400,000 Deutschmarks to the ..... (Johann Grothe Limited Partnership) of which the person charged Mr. Grothe was a limited partner, for a purchasing price of 1,650,000 Deutschmarks, whilst the purchasing price was prohibitively (sic) increased by the amount paid in December 1981 including the accrued interests up to November 1982".

5. The applicant's income tax was reduced by 631,064

Deutschmarks by the wrongly asserted amount of professional expenses.

6. The acts charged are liable to prosecution according to ss.

25, para. 2 and 53 of the German Criminal Code and s. 370, para. 1, sub-para. 1 of the German Tax Code.

The second income Tax Charge

The second income tax charge is charged in the warrant dated 10 June 1987. The facts relied upon may be summarized as follows:-

1. Between 1978 and 1984 the applicant, together with Messrs.

Kuhl and Paulus and a Mr. Gabbert, were business partners working together in the development and marketing of tax-privileged capital investments in the form of participations in closed real-property investment funds under the name "Boden-Wert-Fonds" These funds had been developed by a company in Mainz which was the earlier referred to RSB investment Company Limited.

2. All the persons charged participated in the financial results

of the RSB Company by way of loans described by the translator of the warrant as "a kind of silent partnership loans-which entitled them to a share of the company profit". As at 1979 the percentages to which each of the persons charged were entitled were Kuhl, 45 per cent, Paulus. 19 per cent, Gabbert, 9 per cent and the applicant, 27 per cent.

3. Additionally, several other companies had been "switched in"

for the purpose of the marketing and administration of the "fund participations". These companies "assumed different functions" and by that achieved revenues which "flew" to Messrs. Kuhl and Paulus and also the applicant. One of these companies was the Agency, Leasing and Exploitation Company Limited in which Mr. Kuhl was entitled to 50 per cent, Mr. Paulus to 20 per cent and the applicant to 30 per cent.

4. In the course of business activities earnings were moved from

RSB investments to Agency, Leasing and Exploitation. This resulted in a decrease of income for Mr. Gabbert. Messrs. Kuhl, Paulus and the applicant did not wish Mr. Gabbert to participate in the earnings of Agency, Leasing and Exploitation but did not want Mr. Gabbert to suffer from any movement of earnings. In 1979 an agreement was reached whereby Mr. Gabbert was to receive equivalent amounts in the form alleged of consulting fees paid by a company, General Shareholders Trust Company Limited and Agency, Leasing and Exploitation.

5. Based on this agreement the amounts were determined by the

end of each year and contracts, back dated to the beginning of the respective tax years, with the General shareholders Trust Company and Agency, Leasing and Exploitation were drafted showing the "corresponding" consulting fees which were paid to Mr. Gabbert. The amounts were treated as general operating expenses on behalf of the two companies and thus treated as a reduction of income for the purposes of the tax returns. The amounts in question were of the order of 300,000 Deutschmarks for each of the years 1979~ 1981 and 1982 and 750,000 Deutschmarks for the year 1980.

6. The tax returns were prepared at the instigation of Mr.

Paulus by employees of his Trust Tax Consultancy Company. They did not know about the fictitious operating expenses. The returns were signed by the Directors, none of them amongst the persons charged and subsequently submitted to the revenue authority in Bingen.

7. By the understatement of the income during the period 1979 to

1982, tax amounting to 275,806 Deutschmarks was unlawfully avoided.

8. The act is said to be liable to prosecution according to s.

370, para. 1 of the German Tax Code.

The Applicant's First Submission - "prosecuted by measure which could not also have been taken in absence"

The first submission made by counsel for the applicant concentrates attention on the words of the requests, "nor be prosecuted by measure, which could not also have been taken in absence, in the Federal Republic of Germany without consent of the Australian Government for any offence committed before his extradition other than the offences for which extradition has been approved". The submission is based upon sub-sec. 13(2) of the Act which has been earlier quoted. There is no treaty between Australia and the Federal Republic of Germany so that it is that part of the sub-section which refers to an undertaking which must be considered. What is required is an undertaking by virtue of which the applicant will not, unless he has left, or had an opportunity of leaving, Germany, be detained or tried in Germany for any of fence that is alleged to have been committed before his surrender other than the offence in respect of which the applicant was surrendered, any other offence of which he could be convicted upon proof of the facts on which the surrender was ordered or any other extradition crime in respect of which the Attorney-General consents to his being so detained or tried. it is the submission of counsel for the applicant that there is not contained in the requests any such undertaking.
A reading of the requests discloses that the relevant undertaking, which is expressed as an assurance, may be divided into three parts. They are as follows:-

1. The applicant will not be sentenced in the Federal Republic

of Germany without consent of the Australian Government for any offence committed before his extradition other than the of fences for which extradition has been approved.

2. The applicant will not be subjected to any other restriction

of his personal liberty in the Federal Republic of Germany without consent of the Australian Government for any offence committed before his extradition other than the offences for which extradition has been approved.

3. The applicant will not be prosecuted by measure, which could

not also have been taken in absence, in the Federal Republic of Germany without consent of the Australian Government for any offence committed before his extradition other than the of fence for which extradition has been approved.

It is the third of these undertakings with which the submission is directly concerned, but the terms of that undertaking ought not be construed in isolation. In order to reach a conclusion on the submission, one needs to take into account the ambit of all. The undertakings deal with three situations, sentencing, other restrictions of personal liberty, and prosecution. These are not in terms the situations referred to in para. 13(2) (a). Only two are there provided for, namely, detention and trial although it may be said that detention would embrace both sentencing and any other restriction of personal liberty. Furthermore, there is, in substance, no material difference between prosecution and trial. So, despite the different language of the undertaking and the Act, both appear to be dealing with the same matters. But it is when one comes to the detail of the language used in the third undertaking, which relates to prosecution, that the problem emerges.
In the submission of counsel for the applicant the words contravene the Act because they limit the undertaking which it requires in that they would enable the German Government to prosecute the applicant for an offence for which he could have been prosecuted in his absence, irrespective of whether the offence was an extradition crime and whether or not the Attorney-General had consented to the prosecution. In counsel's submission that is the plain and ordinary meaning of the words. if counsel be right in that submission, it is common ground that the request is bad because sub-sec. 13(2) provides that a person is not liable to be surrendered to a foreign state unless- relevantly, the state has undertaken that the person will not be prosecuted except for of fences of the kind specified in sub-paras. (a)(i) and (ii). One does not know for what offences a person might be prosecuted in his absence in Germany, but they may well include offences which do not fall within the descriptions of offences in the two sub-paragraphs.
In the submission of counsel for the respondents the construction of the words contended for by counsel for the applicant is erroneous. Counsel for the respondents rely upon the words "by measure'. They say that this is a reference to a procedural provision and not to a substantive provision of the German law. Thus, so counsel say, the words in question relate to the procedure whereby the extradited person will be dealt with and not to the offence with which he is to be charged. It follows, according to the submission, that the proper construction of the words is that the applicant will not be dealt with differently from the way in which he would be dealt with if he were prosecuted in his absence. Presumably this would involve his not being required to answer questions either by a prosecutor or examining magistrate against his will and not being liable to be called as the first witness at his trial and subjected to questioning either about his background or the circumstances of the alleged offences, again contrary to his will.
The question is which of these meanings is the correct one.
Two general matters should first be referred to. Firstly, it is to be observed that the requests are not to be treated as translations of documents, originally in German, into English, but as documents which originated in the English language. One is not, therefore, in a situation where one wonders whether some mistake has been made in the rendering of the language from German into English; for the purposes of this case the documents must be taken to have originated in English and not German.
Secondly, it is to be emphasized that the undertaking which sub-sec. 13(2) requires is a matter of substantial importance. This is made clear by the opening words of the sub-section, namely, "A person is not liable to be surrendered to a foreign state unless that state has given an undertaking ." The section evinces an intention to restrict the right of a requesting state to prosecute the extradited person once he has been returned to that state. The very clear words of the section show that it was the intention of parliament that a person extradited pursuant to such a request should not be prosecuted in the country to which he was extradited for any of fence other than those which are specified, that is to say, the offence in respect of which he was surrendered, any other offence of which he could be convicted upon proof of the facts on which his surrender was ordered, or any other "extradition crime" in respect of which the Attorney-General consents to his being tried. The use of the expression "extradition crime" further limits the class of offence for which an extradited person may be prosecuted unless of course he has left, or had an opportunity of leaving, the country to which he has been returned.
Whilst one ought to look at the substance of requests of this kind and not be over-zealous in finding deficiencies in them due to the use of language which is not strictly in conformity with the Act or which is inelegant or inappropriate, one must be satisfied in the end that the requesting state has understood the conditions upon which the Australian Act will permit extradition. If one is not satisfied that it has, there is the danger that the requesting state will misunderstand its obligations with the consequence that the extradited person may be prosecuted for an offence which the authority to extradite did not permit. If this were to occur, there would be no sanction against the wrongful course which had been taken. It is true that there is some protection because of the need for the Attorney-General's consent. If it appeared that consent were sought to prosecute the extradited person for an offence which was not an extradition crime, the consent may well be refused. But one could not be sure of this and, in any event, the fact that the Attorney-General would have power to refuse consent does not provide an answer to the point which is relied upon.
Against that background it is necessary to consider each of the possible constructions which has been advanced. Whether one adopts the interpretation contended for by counsel for the applicant or that contended for by counsel for the respondents, that part of the undertaking which comprises the words, "which could not also have been taken in absence", relates to something additional to or different from what the Act contemplates. That is common ground. it is therefore not a case where the use of inappropriate language has led to a problem which is to be solved by deciding whether the language is sufficient to comply with a statutory requirement; it is a case where one needs to determine whether the language used is contrary to the Act or whether, although it is used in relation to a matter as to which the Act has nothing to say, it does not offend any of its provisions. If one accepts the submission made by counsel for the applicant, the purpose of the language was to preserve to the German prosecuting authorities the right to prosecute the applicant for any offence for which he might have been tried in his absence. if one accepts the submission made by counsel for the respondents the purpose of the words was to yield certain rights the prosecuting authorities would otherwise have had, including rights to interrogate the applicant, or to have him examined by a judicial officer, if necessary against his will.
Although it is the language of the requests which must guide one in reaching a conclusion about their meaning, there are some general matters which need to be mentioned. i think it unlikely that the German prosecuting authorities would have intended to bring about a change in the ordinary procedures which apply in Germany to the prosecution of offences. i can think of no reason why they should. The ordinary rule is that the law relating to procedure is governed by the law of `the forum. A fortiori will that be so when the offences~ if they were committed, were committed in Germany and arose out of transactions which themselves were carried out in Germany. There seems absolutely no reason why the of fences should not be prosecuted according to German law and procedure. No rule based on international comity suggests, let alone requires, otherwise.
On the other hand, it may not have seemed unreasonable to a prosecuting authority in another country to retain to itself the right to prosecute an offender for an offence for which he could have been prosecuted in his absence. The view may have been taken that such a reservation would be quite harmless simply because the accused could have been prosecuted for such an offence in any event. But the trouble with that approach is that the Act does not permit such a reservation unless the offence for which the prosecution might be brought, whether in the absence of the accused or not, is necessarily one of those specified in the two sub-paragraphs of para. 13(2) (a) of the Act.
Counsel for the respondents saw the force of these considerations, but submitted that there was a difficulty in construing the words as contended for by counsel for the applicant because of the use of the phrase "by measure" and the verb "taken". if the relevant words bore the meaning for which counsel for the applicant contended, one would have expected the assurance to read, "nor be prosecuted for an offence, which could not also have been prosecuted in absence". But the words are not "prosecuted for an offence"; they are "prosecuted by measure taken".
A reference to standard dictionaries does not provide support for the contention of counsel for the respondents that "measure" is more appropriately used in a procedural sense. The shorter Oxford Dictionary gives as one meaning "a legislative enactment proposed or adopted". if one were to ask the question, "By what measures does Australian law protect the community against acts of violence?" one would not expect the response to relate to procedure but to the substantive provisions of the criminal law relating to murder, manslaughter, assault, armed robbery and so on. it could not be suggested that the word "measures" used in the question was at all inappropriate, let alone a wrong use of language, if it were the substantive provisions which the interrogator required to know. But that conclusion is not determinative of the question raised by the submission. The word "measure" could be used in a procedural sense. it would not be an inappropriate use of language so to use it. There is thus an ambiguity.
Before reaching a conclusion on the meaning of the words in question, one needs to consider the context in which the words are used, the nature and purpose of the requests and the surrounding circumstances to the extent that there is evidence of them. it is here that one needs to bring into consideration the terms of the first and second undertakings earlier set out. since they both deal with detention (the terminology used in the section) whether by way of sentencing or other restrictions of liberty, they may be considered together. Both assure the Australian Government in clear language that the applicant will not be detained in the Federal Republic of Germany without the consent of the Australian Government for any offence committed before his extradition other than the offences for which extradition has been approved. if the two stood alone, that is in the absence of the third, there would be a question whether the section was complied with because there would be no reference, at least expressly, to trial. This indeed is the gravamen of another submission relied upon by counsel for the applicant in the event that i should rule against their first submission.
In passing I should mention that there could be another objection of a different kind. None of the undertakings say, at least in terms, that the applicant will not be detained or prosecuted for "any other extradition crime" without the consent of the Australian Government. The undertaking, subject to the submission now under consideration, forgoes prosecution for all offences, other than those for which the applicant is extradited or of fences based on the same facts as those offences, whether extradition crimes or not, without the Australian Government's consent. The fact that this so raises a difficulty because the only crimes for which the Act permits prosecution, even with the consent of the Attorney-General, are extradition crimes. It does not permit prosecution for any crime whatsoever, notwithstanding that the Attorney-General may give his consent to the prosecution. I shall deal separately with a submission based on this matter.

I return to the significance which the first two undertakings have in the matter now under consideration. The question is whether one should take the view that the undertakings relating to sentencing and other restrictions of liberty embrace also trial. This view is open because there could be no conviction, and thus no sentence, in the absence of a trial or plea of guilty. similar considerations apply in relation to other restrictions of liberty except insofar as the applicant may be denied his freedom pending trial. But in that event the restriction is related to or connected with the trial which is to take place.
The problem is that the words of the first two undertakings do not stand alone. They must be considered along with those of the third undertaking which deals specifically with prosecution, in other words, trial, as opposed to detention. Trial is the other matter in respect of which para. 13(2) (a) of the Act requires an undertaking. I think that the fact that trial is expressly dealt with tends to make it difficult for the respondents to say that it is encompassed within the undertakings relating to sentencing and other restrictions of liberty. On the other hand, it is also difficult, if the undertaking in relation to trial is not limited in the same way as the undertakings in relation to detention, to see what practical purpose it was intended to serve. Read in the way contended for by counsel for the applicants, it would permit a trial for an offence not permitted by the Australian statute, but prohibit sentencing and/or detention for the offence. That consideration suggests, notwithstanding that the language of the third undertaking is capable of suggesting otherwise, that it was not intended to be out of step with the first and second undertakings and was intended to be similarly circumscribed. The consideration is not conclusive, but, in my opinion, it is necessary to give it weight.
So, on the one hand, the language used and the likelihood that the German authorities would wish to retain an unfettered right to prosecute the applicant for all offences for which he could have been tried in his absence, militate in favour of the applicant; on the other hand, the fact that the language is also capable of bearing the meaning contended for by the respondents, coupled with the important fact (subject to the failure to limit the ambit of any right to prosecute the applicant to the prosecution of him for an "extradition crime") that the undertaking qua detention is adequately expressed militate the other way.
At this point a further factor needs to be brought into account. it is that, if the words of the third undertaking have the meaning contended for by the respondents, there is no relevant undertaking which expressly deals with trial as opposed to detention. The undertaking, construed in the way contended for by the respondents, will have a limited and irrelevant effect, at least insofar as the statute is concerned. Unless one construes the first two undertakings as encompassing trial as well as detention, the section will not be complied with. Counsel for the applicant relied upon that submission very strongly in the event that i should construe the third undertaking unfavourably to them.
I confess to having had difficulty in endeavouring to arrive at a conclusion as to what the true construction of the undertaking is. On balance, however, I tend to prefer the construction advanced by counsel for the applicant. I think it more in accordance with the probability of what was intended, and, more importantly, that it imposes less strain on the language which has been used than would the adoption of the meaning contended for be counsel for the respondents.
There is another consideration. Notwithstanding the beneficial construction which requests of this kind should receive, a Court needs to be satisfied that they are in fact clear and unambiguous as to matters which are of critical importance in relation to the conditions upon which the Act authorizes extradition. If there is real doubt whether the words of the undertaking do comply with the section, one should not leave the matter in that state. One needs to be satisfied that the requesting state has appreciated fully the nature of the undertakings which it is obliged to give in order to secure the surrender to it of a person in this jurisdiction. If there is a real question whether it has, then I do not think that one can be satisfied that the undertakings which are given do comply with the statute. If, contrary to my primary conclusion, I had tended to favour the construction advocated by the respondents, I would nevertheless have concluded that the words which have been used lack that degree of certainty which it is necessary that they should have in order for the Court to be satisfied that proper and adequate undertakings complying with the section have been given. In those circumstances I have reached the conclusion that the first submission relied upon by counsel for the applicants
That conclusion means that the applicant has succeeded in his application to have the magistrate's decision reviewed and is entitled to an order releasing him from custody. It is strictly unnecessary to deal with the remainder of the submissions which were made on his behalf, but, since the matter was argued fully, I feel I should express a view about a number of them.

The Applicant's Second Submission - No Reference in Undertaking to "Extradition Crime"
The second submission relied upon by counsel for the applicant has already been mentioned in my treatment of the first. In counsel's submission the undertaking in the two requests reserved to the German Government a right to detain or try the applicant with the consent of the Australian Government for any offence. Sub-paragraph l3(2)(a)(ii) of the Act requires an undertaking to the effect that detention or trial with the consent of the Australian Attorney-General is to be limited to "extradition crimes" only. These are defined in sub-sec. 4(1A). I think the submission is correct. The Act does not intend the Attorney-General to have power to consent to the trial of an extradited person for any offence whatever. Omitting from account the crime for which extradition is sought and crimes based on the same facts as that crime, it intends the prosecutor's right to prosecute for any other offence to be limited to a right to prosecute for "extradition crimes". As earlier said, it may be unlikely that the Attorney-General would give his consent to the trial of an extradited person for an offence that was not an extradition crime because to do so would failure to limit the category of of fence in the way for which the Act provides leaves open the possibility that consent might be given for the trial of the extradited person for an of fence which was not an extradition crime. The point may be regarded by some as technical, but extradition is a serious affair. The Act spells out clearly what is required. If its requirements are not met, there can be no extradition.
It was submitted by counsel for the respondents that a proper reading of the undertaking disclosed that it was intended to be restricted so as to permit prosecution of extradition crimes only. I have considered this submission, but I am unable to restrict the meaning of the undertaking in the way contended for. I cannot perceive within the words which are used any justification for doing so.
I would therefore uphold the applicant's second submission along with the first.

The Applicant's Third submission - Handing Over or Deportation to Third Country
The third submission is based upon that part of the undertaking in the two requests which assures the Australian Government that the applicant will not be re-extradited, handed over or deported to a third country from the Federal Republic of Germany without the consent of the Australian Government. paragraph l3(2)(b) of the Act requires an undertaking to the effect that the applicant will not be "detained for the purpose of his being surrendered to another country". It is submitted that there is no adequate undertaking with respect to detention, counsel saying that a matter of this kind cannot be left to inference. In my opinion a fair reading of the words used shows that the provisions of the Act have been complied with. The undertaking covers re-extradition, handing over or deportation to a third country. Handing over and deportation would be likely to involve detention. The undertaking which is required is one which says that the person will not be detained for the purpose of his being surrendered to another country. If a person were to be extradited to another country, it is difficult to think of his being detained otherwise than for the purpose of his being handed over or deported to that country. Effectively, therefore, the undertaking covers the necessary ground and I do not think that the requests are contrary to the Act in this respect. The third submission is therefore rejected.

The Applicant's Fourth Submission - Specific Identification of Offence
The fourth submission says that it is a mandatory requirement of the legislation that the foreign state expressly requests surrender of the person for an offence which is specifically identified; sub-sub-para. 17(6)(a)(i)(a). Each of the requests seeks extradition "for the purpose of prosecution". It was submitted that the annexing of the warrants in which the offences are identified was insufficient to comply with the statute. But the requests open with the submission of the warrants in which the offences are identified and the warrants were in each case attached to the relevant request. It was also submitted that the requests were deficient because they did not contain statements setting out all the acts and omissions in respect of which the applicant's surrender was requested; see sub-subpara. 17(6)(a)(i)(C).
In my opinion it is to the substance, rather than the form, of what has been done that one needs to have regard. The requests incorporated the warrants by reference. A reading of the requests and the warrants, subject to certain further submissions later to be dealt with, discloses that each of the offences for which the extradition of the applicant was sought was described along with the penalty applicable thereto, and that the acts or omissions in respect of which the surrender was requested were set out. The fourth submission is a accordingly, rejected.

The Applicant's Fifth Submission - Statements in Warrants not Made for Purpose of Extradition Act
The fifth submission claimed that each of the statements in the warrants was included in a warrant of arrest issued for the purposes of German municipal law. They were therefore not stated with a view to complying with the provisions of sub-sec. 17(6) of the Act. That may be so, but if the statements, on a fair reading of them, do state the acts or omissions in respect of which the surrender is requested, it is not to the point that they are found in a document prepared for the purposes of the German local law. Indeed, the fact that they were prepared for the purposes of the German law enables one to be confident that the various acts and omissions upon which it is intended to rely in the prosecution have been comprehensively stated. It is important that they should be. Although it matters not whether the statement of them is contained in the request, the warrant, or in some other document, the Court needs to know what they are in order to determine whether the conduct relied upon would constitute an offence if committed in Australia; sub-sec. 4(1A) of the Act.
The submission is rejected.
The Applicant's Remaining Submissions - Facts Alleged in Warrants Disclose No Extradition Crime
Counsel's submissions then turn to the detail of each of the warrants with a view to showing that the crimes for which extradition was sought were not "extradition crimes". In particular it was submitted that, had the relevant acts or omissions alleged against the applicant taken place in Australia, the acts or omissions would not have constituted an offence against the law in force in Australia, the maximum penalty for which was imprisonment for not less than 12 months. This group of submissions requires an examination of each of the acts and omissions alleged in relation to each offence for the purpose of seeing whether they would have constituted an offence punishable in Australia by imprisonment for not less than 12 months.
In relation to the misappropriation charges, counsel for the respondents relied in the alternative on s. 173 of the Crimes Act 1900 (NSW), sub-sec. 229(1) of the Companies Code (NSW) and sub-sec. 229(4) of that Code. Section 173 of the Crimes Act (NSW) provides, so far as it is relevant, that whosoever, being a director or officer of any body corporate or public company, fraudulently takes, or applies, for his own use or benefit, or any use or purpose other than the use or purpose of such body corporate or company, the property of such body corporate or company, shall be liable to penal servitude for 10 years. Subsection 229(1) of the Companies Code (NSW) obliges officers of corporations at all times to act honestly in the exercise of their powers and the discharge of the duties of their offices. Where the offence is committed with intention to deceive or defraud the company, members or creditors of the company or creditors of any other person or for any other fraudulent purpose, the penalty is $20,000 or imprisonment for 5 years or both. Sub-section 229(4) of the Companies Code provides that an officer or an employee of a corporation shall not make improper use of his position as such an officer or employee to gain, directly or indirectly, advantage for himself or for any other person or to cause detriment to the corporation. The penalty is $20,000 or imprisonment for 5 years or both. By sub-sec. 229(5) an officer in relation to a corporation includes a director, secretary or executive officer of the corporation.
The Companies and Securities (Interpretation and Miscellaneous Provisions) (Application of Laws) Act 1981 (NSW) adopts the Companies and securities (Interpretation and Miscellaneous Provisions) Act 1980 (C'th). Section 34 of the latter Act, as adapted by the former Act, provides that, notwithstanding anything in any other law, proceedings for an offence against a relevant Code (in this case the Companies Code (NSW) may be instituted within the period of 5 years after the act or omission alleged to constitute the offence or, with the consent of the Ministerial Council, at any later time.

The First Misappropriation Charge
Notwithstanding the apparent complexity of the matters alleged in relation to the first of the misappropriation charges, the gravamen of the allegedly unlawful conduct of the applicant may be simply stated. The Co-operative was encountering financial problems in 1982. It needed "additional liquidity" in December 1981 for the reasons given in the summary in para. 9 of these reasons relating to that offence. The applicant was a director of the Co-operative as well as of the Real Estate Leasing Company. He advanced 15 million Deutschmarks - 10 million on 22 December 1981 and 5 million on 30 December 1981 - to the Co-operative. The loans were to be repaid on 25 and 29 January 1982 respectively. The Co-operative could not repay the loans on the due dates and the applicant issued instructions to treat the 15 million Deutschmarks as an advance on selling expenses for the year 1982. The advance was not to carry interest. The Co-operative was not entitled to an advance of such a large amount. The selling expenses in 1981 had amounted to 3.460 million Deutschmarks and in 1982 to 3.263 million Deutschmarks, a total of less than 7 million Deutschmarks. The figure of 15 million Deutschmarks was only exceeded in 1983 when the selling expenses amounted to a further 8.854 million Deutschmarks. As a result the Real Estate Leasing Company, of which the applicant was a director, sustained a loss of interest amounting to at least 1.3 million Deutschmarks. It is alleged that the applicant knew that his grant of the advance "was not an adequate payment on account "in the frame of" the Co-operative agreement. I have earlier indicated that I think the words "in the frame of" mean "within the terms of". Much was made during the argument of the use of the expression "adequate payment". It was submitted that the fact that the payment may not have been adequate was scarcely an indication of fraudulent or dishonest conduct. But the various allegations need to be read as a whole. The word "adequate" needs to be understood in the light of the fact that the other allegations are that the applicant procured the advance against selling expenses which he knew were well below the amount of the advance. The advance was therefore not properly described as an advance against selling expenses; it was an advance made to tide the Co-operative over the financial difficulties which it was encountering. When it is said that the Co-operative was entitled to "adequate" payments on account of expected selling expenses, it is intended to assert that the Co-operative was entitled to no more than an amount sufficient to cover a proper estimate of these. When it is said that the applicant knew that his "grant" was not an "adequate payment on account", it is intended to assert that the advance was not adequate in the sense of "proper" or "appropriate". The essence of the allegation is that he knew that the amount advanced, if it were advanced as selling expenses, was excessive.
In those circumstances I have little difficulty in concluding that, had the acts been done in Australia, the applicant would have been shown to have made improper use of his position as an officer of the Real Estate Leasing Company to gain, directly or indirectly, an advantage for another person, namely the Co-operative. It follows that the case falls within sub-sec. 229(4) of the Code. I think there may also be a case against him under sub-sec. 229(1) of the Code in that he did not act honestly in the exercise of his powers, but I do not find it necessary to decide that matter.
I do not think that the case falls within s. 173 of the Crimes Act (N.S.W.). The only basis for saying that it does is that the applicant is alleged to have fraudulently applied, for a use or purpose other than the use or purpose of the body corporate or company, its property. I do not think that one can say that the advance was not made for the purposes of the Real Estate Leasing Company. I think the allegations show that it was made for its purposes. The vice of what was done was to make the advance against a liability to the Co-operative which the applicant knew did not exist.
There is a difficulty in the respondents' ability to rely upon the provisions of the Code because of the limitation of time imposed by s. 34 of the Interpretation and Miscellaneous Provisions Act. The period of five years had run prior to the issue of the request on 30 June 1987 although not before the issue of the warrant on 10 June 1986. However, it would have been open to the Ministerial Council to consent to the institution of a prosecution out of time. The relevant provisions of the regulations (reg. 4(l)(b)), which have been earlier set out, refer to "the period within which proceedings could, in accordance with the law in force in Australia, have been commenced against the person in respect of the offence ... ". Notwithstanding the expiry of the period of 5 years, a prosecution could have been instituted if the Ministerial Council had consented. The question is whether that circumstance warrants the conclusion that the case is affected by the regulation. I do not think the matter is without difficulty, but I think the better view is that the possibility that consent might be obtained means that the prosecution could have been instituted.

For the reasons I have given I would reject the submission made by counsel for the applicant in respect of the first offence and, if it were not for the views which I have formed in relation to the first and second submissions, would have confirmed the magistrate's decision in respect of that offence.

The Second Misappropriation Charge
I turn to the second of the misappropriation charges. The essential allegation against the applicant is that, at the time he granted the loan, he knew that the value of "the participations" acquired by the seven companies at the time they paid up their shares had fallen under the nominal value by at least 1,092,983.60 Deutschmarks "and the repayment claim of the loan had been reduced at least by such amount". I think the difficulty about this charge from the point of view of the respondents is in knowing precisely what is meant by the words "and the repayment claim of the loan had been reduced at least by such an amount". It has occurred to me that the gravamen of the allegation made against the applicant may be that he failed to obtain sufficient security to protect the amount which was involved, but the words which are used are not capable of sustaining that meaning. In my opinion the case is not shown to be within either s. 173 of the Crimes Act (N.S.W.) nor sub-sec. 229(1) of the Companies Code. That leaves sub-sec. 229(4) of the Code which would involve the prosecution establishing that the accused person made improper use of his position as an officer of the corporation to gain an advantage for himself or for another person. In the way that the allegations are couched I do not think that it emerges that this is a matter of which the applicant is accused. No other Australian offence was relied upon by the respondents. In those circumstances I think that the applicant's submission should be upheld and that, if he were to be extradited, he ought not to be extradited in respect of the second misappropriation charge.

The Third Misappropriation Charge
The allegations made in relation to the third misappropriation charge, if established, would disclose a course of underhand and dishonest dealing. In my opinion, the case plainly falls within sub-sec. 229(4) in that the applicant made improper use of his position as an officer of the Leasing Company to gain an advantage for himself, namely, an increase in his earnings. He did so by entering into a transaction which he knew the Board of Directors had disapproved. Furthermore, having agreed with Mr. Grunewald that the price should be 9 million Deutschmarks, he subsequently reduced the price to a figure below 6 million Deutschmarks so that the transaction would be within his own authority to effect.
Similar considerations arise in relation to the period within which an offence under s. 229(4) must be prosecuted as arose in relation to the first of the misappropriation charges. For the reasons given when that charge was being considered, I reject the submission made by counsel for the applicant based on this matter. Counsel for the applicant also relied upon the German limitation provision which is contained in s. 78 of the German Criminal Code earlier set out. But I think the allegation in the warrant that this period has been "interrupted" overcomes this matter. It follows that, if it were not for my conclusion on the first two submissions, I would have confirmed the magistrate's decision in relation to the third of the misappropriation charges.

The First Tax Charge
I turn to the tax offences. The allegations made in respect of this offence show that the prosecution's case against the applicant is based upon the applicant having made a claim for tax deductions in respect of an amount paid in December 1981 into a bank account in the name of Mr. Grothe. The ostensible purpose of the payment could not be fulfilled because the Real Estate Value Funds which were involved "had already been placed by the end of 1980". The applicant received back the moneys he had paid into Mr. Grothe's account in the form of tax-free revenues. This occurred in 1982. As a consequence of these transactions the applicant's income was reduced by 631,064 deutschmarks.
The Australian offences relied upon by counsel for the respondents in order to establish that the offence was an extradition crime were those provided for in s. 29A, s. 29B, s. 29C, s. 29D, s. 86 and s. 86A of the Crimes Act 1914 (C'th). The offences provided for in ss. 86 and 86A are conspiracies of various kinds. In particular s. 86A provides that a person who conspires with another person to defraud the Commonwealth or a public authority under the Commonwealth is guilty of an indictable offence. The penalty is a fine of $200,000 or imprisonment for 20 years or both. Much of the argument in relation to the first of the tax offences was concentrated on whether the offence of conspiracy could be relied upon by the respondents. The argument was based, not on the provisions of the Australian section, but on submissions that the crime of conspiracy could not, in the circumstances of this case, be charged in Germany. In consequence the statements in the warrant which alleged conspiracy or conjoint action were irrelevant. It was submitted that they should be ignored and, once they were, it became inappropriate to have regard to conspiracy under the Australian law.
In support of their submissions counsel for the applicant referred to evidence given before the magistrate by Dr. W. Fritzemeyer, who was qualified to give evidence relating to the law of the Federal Republic of Germany. He said that agreements to commit crime can only be prosecuted in Germany where the crime which is agreed to be committed is itself punishable by a minimum sentence of one year's imprisonment. Otherwise the prosecution may only be brought against each participant for infringement of the substantive law which the participants agreed to contravene. The substantitive provision which is in question here is s. 370 of the Tax Code earlier set out which provides that everyone will be imprisoned for up to five years who makes incorrect or incomplete declarations to the revenue authorities on material taxation matters. The section does not provide for a minimum penalty of one year's imprisonment and, according to Dr. Fritzemeyer's evidence, it follows that, if it is alleged that there was an agreement to contravene s. 370, it is not permissible to charge the offence as a conspiracy; all that can be done is to charge each individual participant with a breach of s. 370.
Counsel for the respondents submitted that Dr. Fritzemeyer's evidence was inadmissible. These submissions were based on the provisions of sub-sec. 17(6) of the Act which, it was said, obliged the magistrate to commit the person to prison to await the warrant of the Attorney-General for his surrender if the magistrate were satisfied that the matters required by sub-para. (a)(i) of the sub-section had been complied with. Counsel for the applicant referred to the provisions of para. 17(6)(b) which oblige the magistrate to take into account evidence properly adduced by the person. But counsel for the respondents pointed to sub-sec. 17(6A) which provides that a person referred to in para. 17(6)(b) is not entitled to adduce, and a magistrate is not entitled to receive, evidence to controvert an allegation that the person has committed an act or omission in respect of which his surrender is requested.
In my opinion sub-sec. 17(6A) is limited to evidence which a person, whose extradition is sought, might wish to lead in an endeavour to show that he is not guilty of the conduct which is alleged against him by the requesting state. I do not think that it limits the ability of such a person to call evidence on a matter of the kind relied on here which goes to the question of the nature of the offence which is alleged to have been committed in the requesting state. Indeed, it is not unlikely that there will be cases where the requesting state and/or the Attorney-General will think it wise to inform the Court more clearly than may be done in the request and other supporting documents of the nature of relevant foreign law. It follows, in my opinion, that the evidence was admissible and, in default of there being any evidence to the contrary, established that it would not be appropriate for the German authorities to charge the applicant with a separate offence which was based on his having acted conjointly with others. The charge which was open was a charge under s. 370 of the Tax Code based on an allegation that the applicant had made an incorrect statement in his tax return.
In reaching this conclusion I have had regard to the provisions of the Criminal Code relied upon by counsel for the respondents. These have been earlier set out and comprise s. 25, paragraph 2 and s. 53. Section 25 provides that, if several persons commit a criminal of fence conjointly, each one will be punished as an offender. Section 53 makes provision in relation to an offender who has committed several criminal offences. In the absence of further elucidation, I find difficult to see what relevance this provision has. Section 25 is relevant, but does not on its face run counter to the evidence given by Dr. Fritzemeyer. A reading of it does not suggest he conclusion that it is a provision dealing with conspiracy. It is a provision which deals with the case of a criminal offence committed conjointly and which provides that each offender will be punished as an "offender". I cannot be positive about it, but it seems to me that it is more likely to be a provision pursuant to which each of the several participants is to be treated as a principal and punished accordingly. If that view be correct, s. 25 is consistent with Dr. Fritzemeyer's evidence or at least not in conflict with it.
In my opinion, the first of the taxation offences needs to be considered as a charge laid against the applicant for a breach of s. 370 of the German Tax Code and not as a charge of conspiracy. That means that neither s. 86 nor s. 86A of the Crimes Act (C'th) can be relied upon for the purpose of establishing that the offence is an extradition crime for the purposes of the Act.
There is then a question whether the various allegations which allege conjoint conduct on the part of the applicant and one or more of the persons with whom he stands accused should in some way be ignored. I do not think they can be ignored; they appear as part of the warrants which, for reasons already given, must be treated as part of the requests made by Germany for the extradition of the applicant. If, upon a proper reading, of the allegations, it were concluded that what was in effect charged was a conspiracy and not simply a breach of s. 370 of the Tax Code, and if it were further found that no such offence was known to the German law, the consequence would probably be that the respondents would fail in respect of the offence because it was not, within the provisions of sub-sec. 4(lA) of the Act, an offence against the law of a foreign state, i.e. Germany.
However, I do not think that the allegations should be read in this way. Once one understands the legal position in Germany, it becomes clear that no more is charged than a breach of s. 370 and that the allegations of conjoint conduct and the actions of the other offenders are relevant, not necessarily as allegations relevant to the guilt of the applicant, but as allegations which need to be made and understood for completeness. The essential allegations against the applicant are, as I have earlier stated them, namely, that he, knowingly falsified his income tax return by claiming an amount for deductions to which he was not entitled.
That then brings me to the other Australian offences which are relied upon by the respondents in order to establish that the crime is an extradition crime. The provisions of s. 29A provide for criminal conduct which may be subsumed under the phrase, false pretences; those of s. 290 for false representations; those of s. 29C provide for untrue statements made in applications for the grant of money; and those of s. 29D for the offence of fraud. In my opinion the allegations made in relation to the first of the tax offences are capable of establishing a case of false pretences under s. 29A and a case of fraud under s. 29D if the facts were alleged in relation to an Australian taxpayer in respect of his obligations under the Australian income tax legislation. There were submissions that there was no allegation of an intent to defraud, but in my opinion, a fair reading of the allegations made against the applicant discloses that his conduct in claiming the deductions is alleged to have been engaged in with knowledge that the claim was one to which he was not entitled. That is enough to establish fraudulent conduct. similar considerations apply in relation to s. 29D.
It follows that, in my opinion, the first of the taxation offences is an extradition crime.

The Second Tax Charge
That leaves the second of the taxation offences. In the consideration of this offence it is to be remembered that the of fence alleged is that the applicant made an incorrect or incomplete declaration to the revenue authorities on material taxation matters. It may be that a number of the allegations when read together, are sufficient to allege dishonest conduct on the part of the applicant. I express no concluded view because it is unnecessary to do so. Paragraph 6 of my statement of the allegations in relation to this offence says that the tax returns were prepared at the instigation of Mr. Paulus by employees of his company. The employees did not know about the fictitious operating expenses. Furthermore, the returns were signed by directors, none of them amongst the persons charged. There is thus no allegation against the applicant that he, directly or indirectly, made any incorrect or incomplete declaration to the revenue authorities in respect of the matters which are the subject of the charge. It may be that the applicant, if the various allegations were established, would be guilty of some other offence under German law, but the offence for which his extradition is sought is for a breach of s. 370 of the Tax Code. Statements in the warrant are relied upon to show compliance with the provisions of sub-sub-para. (i)(C) of para. 17(6) (a). That sub-paragraph requires a statement setting out all the acts or omissions in respect of which the surrender of the person is requested. The acts and omissions relied upon do not, in my opinion, show that a breach of s. 370 has been committed by the applicant. In those circumstances the magistrate could not have been satisfied that the applicant was a person liable to be surrendered as required by para. 17(6)(b) of the Act. It follows that the submissions made by counsel for the applicant in respect of the second of the taxation offences should be upheld.
Conclusions
In summary my conclusions are as follows:-

(a) The applicant is entitled to be released because neither of

the requests contained an undertaking which complied with the provisions of sub-sec. 13(2). That is because the words, "which could not also have been taken in absence", offend the sub-section, and also because the undertaking was not limited to an undertaking to prosecute the applicant only for crimes which are extradition crimes.

(b) Otherwise all submissions made on behalf of the applicant

should be rejected except those which relate to the second of the misappropriation offences and the second of the taxation offences. In my opinion, the applicant's extradition for these offences would be unlawful for the reasons which I have given.

The orders that I make are that the applicant be released. The respondents are to pay the applicant's costs of the application for review. There will be liberty to apply.

[1988] FCA 110

22 MARCH 1988