FEDERAL COURT OF AUSTRALIA

Chong v Schultz [2000] FCA 582

CRIMINAL LAW – search warrants – judicial review of issue – construction – whether offence disclosed – warrant stating person “avoided the payment of income tax by directing income tax [sic] into” certain accounts thereby defrauding the Commonwealth – warrant further stating person gave false information to trustee in bankruptcy contrary to s 276A of the Bankruptcy Act – such offence created by s 267A

Crimes Act 1914 (Cth) s 3E(5)(a)

Beneficial Finance Corporation Ltd v Commissioner of Australian Federal Police (1991) 31 FCR 523 applied

Harts Australia Ltd v Commissioner, Australian Federal Police (1997) 94 177 at 183 applied

Parker v Churchill (1986) 9 FCR 334 at 340 applied

West v Lawday (1865) 11 HLC 375 at 384 applied

JOHN CHONG & ORS V GRANT DAMIEN SCHULTZ & ORS

NO. V 197 OF 2000

HEEREY J

1 MAY 2000

MELBOURNE

THE COURT ORDERS THAT:

1.         The application is dismissed.

2.         The applicants pay the respondents’ costs fixed at  $5,000.

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

REASONS FOR JUDGMENT

1                     The applicants attack the validity of search warrants which were issued by a magistrate on 5 April 2000 on the application of Paul Andrew Erdmann, an Australian Federal Police officer and the second respondent.  After there had been part execution of the warrants at various premises I made an ex parte order on 6 April restraining the respondents from taking any further steps in execution of the warrants or reading, copying, disposing of, destroying or otherwise dealing with documents or other materials already taken in execution of the warrants.

2                     An initiating application was filed the next day.  The applicants seek declarations that the search warrants were invalid, a permanent injunction in terms of the interim injunction already granted, and an injunction restraining the respondents or any other Federal Police officer or Australian Taxation officer from using any of the information contained in the documents or materials taken in the process of executing the warrants.  Also a return of such documents or materials is sought. 

3                     The matter came on for hearing before me today and was by consent treated as a final hearing. 

4                     One of the grounds relied upon by the applicants was that the warrants had been issued for a collateral purpose, namely to assist the Australian Taxation Office in the recovery of tax allegedly due and in contesting appeals to the Administrative Appeals Tribunal against assessments. Mr Erdmann gave evidence and was cross‑examined.  Ultimately that ground was abandoned.  The sole remaining ground relates to the form of the warrants.  It is said that contrary to s 3E(5)(a) of the Crimes Act 1914 (Cth) the warrants do not state “(a) the offence to which the warrant relates”. 

5                     The warrant in the case of each of the premises concerned is for the seizure of evidential material, as defined in the Crimes Act, which satisfies all of three conditions.  The first condition is that the things are “originals or copies of any of the following”.  There follows a list of various types of documents such as bank account statements, banking records, Health Insurance Commission documents and correspondence, etc.  The second condition is “things which relate to any or one or more of the following”.  There follow a number of identified individuals and companies.  The third condition is as follows:

“Things as to which there are reasonable grounds for suspecting that they will afford evidence as to the commission of the following offence against the law of the Commonwealth:

[i]       That between 1 July 1992 to 30 June 1997, Dr Jessica Suk Yin Ho-Chong did in the State of Victoria, avoid the payment of income tax by directing income tax [sic] derived by her into an account operated by her brother in law and other company accounts, thereby Defrauding the Commonwealth, contrary to section 29D Commonwealth Crimes Act 1914;

[ii]      That on 12 October 1992, Dr Jessica Suk Yin Ho-Chong did, in the State of Victoria, give false information to the Trustee in Bankruptcy, contrary to section 276A of the Bankruptcy Act 1966.”

6                     Senior counsel for the applicants argued that neither [i] nor [ii] disclose any offence.  As to [i], he submitted that there is no such offence as "redirecting income tax" derived by a person.  As to [ii] he pointed out, correctly, that there is no s 276A in the Bankruptcy Act.  However, there is a s 267A which makes it an offence for a bankrupt to give a statement to a trustee under s 139U that is false or misleading in a material particular.  The penalty provided is imprisonment for twelve months.

7                     As to the first alleged offence, the relevant principles are to be found in a number of cases in this Court, particularly the decision of the Full Court in Beneficial Finance Corporation Ltd v Commissioner of Australian Federal Police (1991) 31 FCR 523.  Burchett J, with whom the other members of the Court relevantly for present purposes agreed, said (at 533):

“The authorities make it clear that the statement of the offence in a search warrant need not be made with the precision of an indictment.  That would be impossible, and indeed to attempt it would be irrational, bearing in mind the stage of the investigation at which a search warrant may issue.  The purpose of the statement of the offence in the warrant is not to define the issues for trial; but to set bounds to the area of search which the execution of the warrant will involve, as part of an investigation into a suspected crime.  The appropriate contrast is not with the sort of error which might vitiate an indictment, but with the failure to focus the statutory suspicion and belief upon any particular crime, with the result that a condition of the issue of the warrant is not fulfilled, and it purports to be a general warrant of the kind the law decisively rejected in the eighteenth century.”

8                     That case dealt with s 10 which was then the provision in the Crimes Act relating to warrants.  The presently relevant section, s 3E(5), was dealt with by a subsequent Full Court in Harts Australia Ltd v Commissioner, Australian Federal Police (1997) 94 ACrimR 177 at 183.  Their Honours applied the principles in Beneficial Finance to questions arising under s 3E.  Speaking of the judgment of Burchett J to which I have just referred, their Honours said:

“What that judgment makes clear is that the requirement to state the offence exists to set bounds to the area of search which the execution of the warrant would involve.  So seizure is authorised by reference to a particular offence:  see the cases referred to by Burchett J at 534.  What was required under s 10 was not the degree of particularity necessary to frame an indictment, nor was it necessary that the description of the offence be such as to permit the persons to whom the warrants were addressed to know ‘the exact object of the search’, a test that had been suggested by Jackson J in Parker v Churchill (1986) 9 FCR 334 at 348.  Rather, a broad approach was directed.  What is significant, however, is that the warrant disclose the nature of the events in question so as to indicate the area of search.  As Burchett J indicated in Beneficial Finance (at 543): 

‘The precision required in a given case in any particular respect may vary with the nature of the offence, the other circumstances revealed, the particularity achieved in other respects, and what is disclosed by the warrant read as a whole, and taking account of its recitals …’

A somewhat similar broad view of the requirement to stipulate offence was taken by another Full Court in Dunesky v Elder [(1994) 54 FCR 540] (at 557).”

9                     Applying those principles, it seems to me that there is an offence stated, namely the offence of defrauding the Commonwealth contrary to s 29D of the Crimes Act.  I think a reasonable reading of the paragraph in question would indicate that the word “tax” where secondly appearing has been inserted in error.  Such a reading is confirmed by looking, as one is entitled to do, at the context of the warrant as a whole, including the nature of the documents sought in the first condition and the persons identified in the second condition.  All this suggests to the reader that the subject of the warrant is a particular kind of category of the offence of defrauding the Commonwealth, namely defrauding in relation to income tax. 

10                  The old maxim falsa demonstratio non nocet can be applied; an imperfect or inaccurate description does not detract from the true nature of the subject mater:  West v Lawday (1865) 11 HL Cas 375 at 384 per Lord Westbury LC. 

11                  The argument as to the second offence can be disposed of shortly because there is direct authority, binding on me, that misdescription of the statute under which an offence is charged does not invalidate a warrant.  In Parker v Churchill (1986) 9 FCR 334 at 340 Jackson J, with the agreement for present purposes of the other members of the Court, said:

“As the primary judge observed, a reference in a search warrant to an incorrect section was held not to invalidate a search warrant in R v Trottier;  Ex parte McLoughlin (1966) CCC 321, and there seems no particular reason why it should.  A search warrant, insofar as it is based on s 10(b) of the Crimes Act authorises a Constable named in it to enter and seize ‘any such thing’, that is, any thing as to which there are reasonable grounds for believing that it will afford evidence as to the commission of an offence against a law of the Commonwealth or of a Territory.  The warrant must specify the offence or offences in question, R v Tillett; Ex parte Newton (1969) 14 FLR 101 at 113; Crawley v Murphy (1981) 52 FLR 123 at 143; Australian Broadcasting Commission v Cloran (1984) 4 FCR 151 at 153), but unless it be that the reference to an incorrect section has the result that the warrant does not specify any offence, or makes the warrant ambiguous so that it is not possible to tell what offence is referred to, I think that the reference to an incorrect section and the description of an offence does not of itself invalidate a warrant which, as is conceded in the present case, does state in otherwise intelligible terms an offence in relation to which s 10 is capable of operating.” (Emphasis in original)

12                 I see no reason why that statement is not applicable to s 3E(5)(a).  The offence of giving false information to a trustee in bankruptcy, which is undoubtedly an offence, is clearly stated.

13                  For those reasons the application will be dismissed.  There will be an order that the applicants pay the respondents’ costs, which were fixed by agreement at $5,000.

Associate:

Dated:              1 May 2000