FEDERAL COURT OF AUSTRALIA

Williams v Keelty [2001] FCA 1301

SEARCH WARRANTS – validity of search warrants – whether the issuing officer had power to issue warrants under the Crimes Act (1914) Cth – whether there was power for members of the Australian Federal Police to act as executing officers in relation to the warrants – whether an offence against the Corporations Law is deemed to be an offence against the Commonwealth – whether the Crimes Act is, in relation to the Corporations Law of NSW, applied by force of NSW law as a law of that state

Whether the warrants issued are bad on their face – whether a failure to identify the offence to which the warrant relates invalidates the warrants – whether a failure to attach “Attachment A” listing “HIH and its subsidiaries” for the purpose of the second condition to the warrants results in invalidity – whether the invalid portions of the warrant can be severed – whether warrants are invalid for lack of clarity

Whether the issuing officer had “reasonable grounds for suspecting” that there were in existence things which would afford evidence of the commission of the offences for which the warrants were sought; and for suspecting that there was evidential material at the premises the subject of the warrant – whether the issuing officer took into account irrelevant considerations in deciding whether or not to issue the warrant – whether the issuing officer acted mechanically or under dictation

Whether warrants were issued for an improper purpose – improper purpose must be the “initiating and abiding purpose” – improper purpose can be established by inference – onus of proof in circumstances where the issue of search warrants is challenged on administrative law grounds – whether warrants were issued to obtain material for use by the applicant for the warrant in civil proceedings, which could not have been obtained by discovery – whether there was a duty of disclosure imposed on the applicant for the warrant to disclose the imminence and nature of the civil proceedings to the issuing officer – in circumstances where there has not been a misrepresentation – whether documents seized in the process of executing the warrants can be used for a purpose collateral to that for which they were issued – whether the warrants sought to obtain information in general, rather than documents that were pertinent to the specified offences – whether warrants were issued for the purpose of generating publicity for the Australian Securities Investment Commission – whether the issue of the warrants constitutes a contempt of court on which the applicants can base an application for injunctive relief – existence of undertaking proffered by ASIC

Documents seized pursuant to warrant were given by AFP to ASIC – whether Crimes Act authorises the AFP to relinquish custody of documents – whether natural justice requires that the applicants be given notice that the statutory power would be exercised

Whether copying of computer records was lawful

Whether service of section 30 notice at time of the execution of the search warrants was lawful

WORDS AND PHRASES – “reasonable grounds for suspecting”, “make things available”, “relating to”, “of”

 

Corporations Law ss 180, 181, 182, 184, 1317FB, 1317FP, 1317N

Australian Federal Police Act 1979 (Cth)

Australian Securities and Investment Commission Act 1989 (Cth) s 11(7), 13, 30, 63(1), 33

Corporations (Commonwealth Authorities and Officers) Regulations, Reg 3(1)(d), (1)(h)

Corporations (NSW) Act ss 29(2), 31, 58

Corporations (WA) Act ss 29, 31

Corporations Act 1989 (Cth) ss 5, 45(1), 40, 47, 3(1), 5(a), 3(3)

Crimes (Search Warrants and Powers of Arrest) Amendment Act 1994 (Cth)

Crimes Act 1914 (Cth) ss 3F(5), 3, 3C, 3D(3), 3C(1), 3E(1), (3), (4), (5)(a), (c), 3ZV(1), 3L(2), (3), 3F(1), 3ZT

Acts Interpretation Act (1901) (Cth) s 38(1), 22(3)

Australian Capital Territory (Self-Government) Act 1988 s 23(1)(h)(i)

 

 

Australian Competition & Consumer Commission v J McPhee & Son (Aust) Pty Ltd (No 2) (1997) 148 ALR 601 applied

Australian Securities Commission v Burns (1993) 41 FCR 407 applied

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

Brambles Holdings Ltd v Trade Practices Commission (No 2) (1980) 32 ALR 328 applied

Carmody v MacKellar (1997) 76 FCR 115 referred to

Challenge Plastics Pty Ltd v Collector of Customs (No 2) (1994) 49 FCR 541 distinguished

Chong v Schultz (2000) 112 ACrimR 59; [2000] FCA 582 referred to

Coward v Allen (1984) 52 ALR 320 referred to

Donnelly v Amalgamated Television Services Pty Ltd (1998) 45 NSWLR 570 considered

Dunesky & Bay Wool Pty Ltd v Elder (1994) 54 FCR 540 cited

Esso Australia Ltd v Federal Commissioner of Taxation (1998) 157 ALR 652 referred to

Federal Commissioner of Taxation v De Vonk (1995) 61 FCR 564 applied

Flanagan v Federal Commissioner of Taxation (1996) 60 FCR 149 cited

George v Rockett (1990) 170 CLR 104 applied, cited

Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125 cited

Grollo v MacAuley (Commissioner of the Australian Federal Police) (1995) 56 FCR 533 cited

Hammond v The Commonwealth (1982) 152 CLR 188 applied

Harts Australia Ltd v Australian Federal Police (2001) 46 ATR 338; [2001] FCA 175 referred to

Harts Australia Ltd & Harts Pty Ltd v Commissioner Australian Federal Police (1997) 75 FCR 145 cited

Johns v Australian Securities Commission (1992) 178 CLR 408 distinguished

Shaaban Bin Hussien v Chong Fook Cam [1970] AC 942 cited

Joye v Beach Petroleum NL & Cortaus Ltd (in liq) (1996) 67 FCR 275 referred to

Karina Fisheries Pty Ltd v Mitson (1990) 96 ALR 629 referred to

Kazar v Deuus (1998) 88 FCR 218 cited

Lego Australia Pty Ltd v Paraggio (1994) 52 FCR 542 applied

Lord (Liquidator of Dallhold Investment Pty Ltd (in liq)) v Commissioner of Australian Federal Police (1997) 74 FCR 61 cited

Malubel Pty Ltd v Elder (1998) 88 FCR 242 referred to

Malubel Pty Ltd v Elder (No 2) (1999) 73 ALJR 269 referred to

Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 applied

Ousley v R (1997) 192 CLR 69 cited

Ozzy Tyre & Tube Pty Ltd v Chief Executive Officer of Customs [2000] FCA 891 referred to

Parker v Churchill (1985) 9 FCR 316 applied

Parker v Churchill (1986) 9 FCR 334, referred to

Plenty v Dillon (1991) 171 CLR 635 referred to

Love & Peters v Attorney General (NSW) (1998) 84 ALR 319 cited

Puglisi v Australian Fisheries Management Authority (1997) 148 ALR 393 applied, cited

Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266 cited

R v Hughes (2000) 171 ALR 155; [2000] HCA 22

Refrigerated Express Lines Australasia Pty Ltd v Australian Meat & Livestock Corp (1979) 42 FLR 204 referred to

Smiles v Commissioner of Taxation (1992) 35 FCR 405 applied

Spratt v Hermes (1965) 114 CLR 226 cited

Tooheys Ltd v Commissioner of Stamp Duties (NSW) (1961) 105 CLR 602 referred to

Warringah Shire Council v Pittwater Provisional Council (1992) 26 NSWLR 491 cited

Welfare v Birdon Sands Pty Ltd (1997) 79 FCR 220 applied

Gollan v Nugent (1988) 166 CLR 18 referred to

RAYMOND REGINALD WILLIAMS v MICHAEL JOSEPH KEELTY, COMMISSIONER OF AUSTRALIAN FEDERAL POLICE, AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION AND PAUL GERARD GARDINER

 

N 1010 OF 2001

 

 

RODNEY STEPHEN ADLER AND ADLER CORPORATION PTY LIMITED v PAUL GERARD GARDINER, THE COMMISSIONER OF AUSTRALIAN FEDERAL POLICE AND AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION

 

N 1014 OF 2001

 

 

 

 

 

 

HELY J

13 SEPTEMBER 2001

SYDNEY

TABLE OF CONTENTS

 

 

The decision to apply for search warrants............................................................... 3

Australian Federal Police (“AFP”) become involved.............................................. 6

The application for the search warrants.................................................................. 7

The issue of the warrants......................................................................................... 8

The tactical briefing.................................................................................................. 11

The execution of the warrants.................................................................................. 13

The standstill agreement.......................................................................................... 14

Mr Williams – Mosman premises........................................................................... 14

Mr Williams – the accountant’s premises............................................................... 15

Mr Adler – Bellevue Hill premises.......................................................................... 16

Adler Corporation Pty Limited premises................................................................. 18

The involvement of Ms Redfern in the execution of the warrants........................ 21

Discussion re s 30 notice.......................................................................................... 22

The s 30 notice.......................................................................................................... 23

Events subsequent to execution – admissions........................................................ 23

Events subsequent to execution – discovery in the Supreme Court...................... 25

Events subsequent to execution – Ms Balding....................................................... 25

The release of the documents to ASIC.................................................................... 26

Lack of power to issue the warrants........................................................................ 27

Deemed offences under Commonwealth law........................................................... 28

Deemed offences under State law........................................................................... 30

Potential problems with s 31..................................................................................... 31

Corporations Law 2001............................................................................................ 37

Whether the warrants are bad on their face............................................................ 37

Identification of the offence..................................................................................... 37

Non-attachment of Attachment A............................................................................ 43

Lack of clarity........................................................................................................... 45

Reasonable grounds to suspect the commission of offences.................................. 47

Did the issuing officer take into account irrelevant considerations?..................... 59

Suspicion that evidential material is at the premises to be searched.................... 60

Acting mechanically or under dictation.................................................................... 60

Improper purpose and contempt

            Improper purpose – some principles............................................................ 61

Multiple purposes..................................................................................................... 65

Onus of proof............................................................................................................ 65

A duty of disclosure?................................................................................................ 66

Contempt of Court.................................................................................................... 67

Were the warrants issued to obtain documents for the Supreme

            Court proceedings?....................................................................................... 69

Ms Redfern’s credit................................................................................................. 73

Were the warrants sought to obtain information in general, rather than

            documents that were pertinent to the offences specified in the

            third condition?............................................................................................. 74

Were the warrants applied for for the purpose of generating publicity

            for ASIC........................................................................................................ 76

Release of the documents to ASIC.......................................................................... 78

Copying the computer records................................................................................. 81

Section 30 notice to Peter H Hunt & Associates.................................................... 83

Conclusion................................................................................................................. 85

 

 

 

 

 

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1010 OF 2001

 

BETWEEN:	RAYMOND REGINALD WILLIAMS APPLICANT
AND:                 BETWEEN:         AND:	MICHAEL JOSEPH KEELTY, COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE FIRST RESPONDENT   AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION SECOND RESPONDENT   PAUL GERARD GARDINER THIRD RESPONDENT   N 1014 OF 2001   RODNEY STEPHEN ADLER FIRST APPLICANT   ADLER CORPORATION PTY LIMITED (ACN 054 924 373) SECOND APPLICANT   PAUL GERARD GARDINER FIRST RESPONDENT   THE COMMISSIONER OF AUSTRALIAN FEDERAL POLICE SECOND RESPONDENT   AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION THIRD RESPONDENT
JUDGE:	HELY J
DATE:	13 SEPTEMBER 2001
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1                     Mr Williams and Mr Adler were, for a time, directors of HIH Insurance Ltd (“HIH”).  HIH and other companies within the HIH Group were placed into provisional liquidation on 15 March 2001.  The failure of HIH has resulted in much public comment and concern.  It is probably the biggest corporate collapse in Australia’s history.  On 18 June 2001 the terms of reference for a Royal Commission into the collapse of HIH were announced by the Australian government.  Those terms include an examination of the conduct of directors of HIH, including whether their decisions or actions constituted a breach of the law.  The announcement noted that the Australian Securities & Investment Commission (“ASIC”) is also investigating certain matters surrounding the failure of HIH and that there would need to be co-operation between the Royal Commission and ASIC in order to avoid duplication of functions, and other potential disadvantages.

2                     On 27 February 2001 ASIC commenced an investigation pursuant to s 13(1) of the Australian Securities & Investment Commission Act 1989 (Cth) (“ASIC Act”)in relation to suspected contraventions of ss 180, 181 and 182 of the Corporations Law regarding a $10 million payment by an HIH subsidiary to Pacific Eagle Equity Ltd (“PEE”) on or about 15 June 2000.  In very general terms, it appeared that PEE used the funds to acquire shares in HIH itself.  It also acquired securities of other companies from Adler Corporation Pty Limited.

3                     Thereafter the range of the investigation was extended from time to time to include suspected contraventions of other provisions of the Corporations Law and other occurrences or transactions.  In an affidavit (exhibit 10 to affidavit of Leon Zwier of 2 July 2001, tab 5 (LZ 10, T 5)), filed in Supreme Court proceedings to which reference will shortly be made, Jennifer Balding, then a senior lawyer in the Enforcement Program of the ASIC NSW Regional Office, described herself as being responsible for the conduct of at least the initial phase of the investigation.  Before me Ms Redfern, then ASIC’s NSW General Counsel, gave evidence (T 210) that in May and June 2001 Glen Unicomb was the principal officer of the HIH investigation, reporting to Alan Turton.

4                     On 22 May 2001 ASIC commenced proceedings in the Supreme Court of NSW against Mr Adler, Mr Williams and Dominic Fodera.  In those proceedings, declarations are sought that the payment of $10 million by an HIH subsidiary to PEE on or about 15 June 2000, and the sale of securities by Adler Corporation to PEE resulted in contravention of various provisions of the Corporations Law.  Orders are sought that each of the defendants in those proceedings should be disqualified from managing corporations for such period as the Court thinks fit.  Orders are also sought for the payment of compensation to HIH, and for pecuniary penalties.

5                     In an outline of submissions lodged with the Supreme Court on 23 May 2001, “dstore”, “Planet Soccer” and Nomad Technologies Ltd were identified as companies in which PEE purchased shares from Adler Corporation.  In addition, loans were allegedly made to “Morehuman” Pty Ltd and Pacific Capital Partners Pty Ltd, companies said to be associated with Mr Adler (LZ 10, T 2).

6                     Jennifer Balding had the carriage of the Supreme Court proceedings, under the general supervision of Jan Redfern.

7                     On 25 May 2001 Mr Adler participated in a radio interview with Graham Richardson on Radio 2GB.  A transcript indicates that the following exchange took place during the course of this interview:

“RODNEY ADLER:    All that correspondence [relating to HIH] is sitting here in a file waiting for someone to pick it up and I have offered the file to ASIC and to APRA and no one yet has asked for my correspondence between me and the board to date.  As I sit here talking to you now, that file remains unopened by any regulatory authority and I am ready to give it to them.

GRAHAM RICHARDSON:     I find it extraordinary that ASIC, if they’ve gone and got truckloads of documents from HIH couldn’t have sent a cab around to your place to pick up a file.

RODNEY ADLER:      I’d even send the cab to them and pay for it myself.”

I admitted this evidence as proof of the fact of the interview only, and not as to the truth of the statements which Mr Adler made.  Ms Redfern denied any knowledge of this interview until after the institution of the present proceedings (T 232).  Mr Adler did not give evidence in these proceedings.

The decision to apply for search warrants

8                     At some stage ASIC decided to apply for search warrants with respect to various premises including the homes of Mr Williams and Mr Adler, the business premises of Mr Williams’ accountant and the offices occupied by Adler Corporation.  It is those search warrants, and various decisions taken in association with their issue and execution, which are the main subject of these proceedings.

9                     Ms Redfern’s evidence is that the decision to apply for the search warrants was made by Glen Unicomb, the principal investigator of the HIH investigation.  That investigation was not divided into civil and criminal components – there was simply one investigation into all aspects of the HIH matter.

10                  Neither Mr Unicomb nor Mr Turton was called to give evidence in these proceedings.  Nor have any documents been produced by ASIC which record the decision making process with respect to the application for the issue of the warrants.

11                  Discovery was required to be given (orders of 5 July 2001) of:

“5.       Internal notes, memoranda or other documents of [ASIC] relating to the obtaining or issue of the Search Warrants or the use of the material obtained thereunder.”

Document 79 was discovered, under a claim of client legal privilege.  It comprised a bundle of internal memoranda and notes (LZ 49).  On 19 July 2001 ASIC advised Mr Williams’ solicitors that document 79 includes various handwritten notes of Ms Balding.  With one exception ASIC indicated a willingness to produce those notes to avoid further arguments about privilege.  The exception was said to be a file note of a meeting between Ms Redfern, Ms Balding and counsel which recorded the advice of Mr Wigney of counsel.

12                  ASIC was required by notice to produce given on 17 July 2001 to produce:

“Documents recording or constituting:

(a)               the decision of the Australian Securities & Investment Commission or the warrant applicant to make application for the Search Warrants and the reasons for and purpose thereof;”

but the response “nothing to produce” was given to that notice (LZ 88).

13                  In an affidavit sworn on 23 July 2001 in relation to the notice to produce, Ms Redfern said:

“12.     Category 79 comprises:

(a)               Notes of meetings, relating to the application for the search warrant attended by ASIC lawyer and officers of the DPP in or about the period 6 June 2001 to 24 June 2001.

            ...

13.       (a)        On 6 June 2001 I attended a meeting at which the following were present:

                        Glen Unicomb and Jennifer Balding of ASIC, Mr Anthony Bannon SC, Mr Michael Wigney and Mr David Stack of counsel.  During the meeting ASIC sought the advice of counsel.  Document barcoded SBA155664 is Jennifer Balding’s notes of this meeting.  These notes reveal the content of legal advice given by Counsel.  The notes made by Ms Balding are confidential and were prepared for the dominant purpose of providing ASIC with legal advice.”

14                  The document bar coded as SBA155664 consists of handwritten notes of a meeting held on 6 June 2001, which have been completely blanked out apart from the names of those who attended the meeting (LZ 84).  Other notes record that as early as 8 June 2001 Ms Balding was giving consideration to “search warrant issues”.  A note by Ms Balding of 15 June 2001 records:

“-        Rang Austin

  -         Review role on warrant.”

“Austin” is Janet Austin, a solicitor employed by the Commonwealth DPP.

15                  Ms Redfern’s affidavits of 18 July 2001 filed in both proceedings contain the following:

“9.       I did not settle the applications for search warrants.  Nor was I involved in the application for the search warrants.  I did not attend the briefings to officers attending the execution of the search warrant.  I was not advised on any details as to the execution except that I was told that the execution would occur on Tuesday.  I was not asked to be on standby to answer any issues concerning the execution of the search warrant and I did not expect to be consulted or to provide any legal advice.”

16                  Ms Redfern was cross-examined to suggest that at the meeting of 6 June 2001, at which she was present, a decision was made to apply for the search warrants.  She denied that to be the case (T 188).  Notwithstanding pars 12(a) and 13(a) of her affidavits of 23 July 2001 she denied that the meeting of 6 June 2001 is accurately described as a meeting relating to the application for the search warrants (T 193).  She said (T 193) that the meeting was in the nature of a preliminary meeting to discuss the matter prior to a meeting with the DPP later that day to discuss a possible criminal prosecution (T 193).  She denied that it was her idea to consider applying for the search warrants as early as 6 June.  She also denied that she was now trying to put some gloss or spin on these events, so as to distance herself from the process of applying for the search warrants.

17                  In my view, there is an inconsistency between Ms Redfern’s statements in par 12(a) and 13(a) of her affidavits of 23 July 2001 and her later evidence that the meeting of 6 June 2001 was not a meeting relating to the issue of the warrants.  Mr Beach QC launched a direct attack on Ms Redfern’s credit.  The inconsistency to which I have referred is but one of the planks on which that attack is based.  I will defer an assessment of Ms Redfern’s credibility until all of the grounds upon which it was attacked have been considered.

18                  On 19 June 2001 Simon Temple, a senior investigator with ASIC, notified Glen Unicomb and others within ASIC that they were needed to assist the HIH investigation on 26 June 2001 as “operational team leaders”.  They were also notified that they would be required for a briefing on the afternoon of 25 June from 2 pm (LZ 44).

Australian Federal Police (“AFP”) become involved

19                  On 21 June 2001 Simon Temple, by email to Detective Sergeant Hobart of AFP requested that two AFP officers from the ACT act as warrant holder and corroborator in relation to one of the search warrants proposed to be issued (LZ 44).  Apparently AFP in Sydney had agreed to act in relation to nine of the warrants, but due to a shortage of personnel they could not handle the tenth.  On 22 June 2001 copies of the draft application for a search warrant and a tactical plan, were sent to AFP (LZ 44).

20                  AFP publishes guidelines to provide a practical framework within which requests by agencies for assistance from the AFP in the execution of search warrants, particularly in relation to fraud and general crime related matters, can be properly assessed, and where appropriate, actioned.  According to the guidelines, one of the factors which AFP takes into account as part of the assessment process is:

“•        whether the Department/Agency has used all other methods reasonably available to it, without success, in an effort to obtain the evidence.”

(LZ 87)

21                  The guidelines also provide for written requests to be made for AFP assistance.  Attachment I to the guidelines is a sample request.  It indicates, as does Part C Cl 4, that requests for assistance in connection with the execution of a search warrant will need to state that seizure of the evidential material “is wholly for the purposes of a criminal prosecution” and not for the purposes of other kinds of proceedings, including civil proceedings.

22                  There is no evidence before me that any written application of the type referred to in the guidelines was made to AFP.  Nor is there any evidence as to how or in what way the assistance of AFP Sydney was sought or secured.  There was evidence from Federal Agent Brown that in practice requests made by agencies to AFP are not normally in writing.  It is not the usual procedure that AFP requires a request in accordance with the guidelines before it moves (T 338-339).

The application for the search warrants

23                  A number of drafts of the search warrant applications were prepared in the period 12 June 2001 to 24 June 2001 by ASIC investigators “in consultation with Jennifer Balding”.  Ms Balding provided legal advice on the terms of the warrants (ASIC letter of 19 July 2001 to Arnold Bloch Leibler, LZ 80).  At least one such draft included in the list of entities in the second condition:

Pacific Mentor Pty Ltd (“Pacific Mentor”)

Business Thinking Systems Pty Ltd (“BTS”)

The third condition in the draft included a section headed “Payments to Business Thinking Systems Pty Ltd”.  The significance of these facts will later emerge.

24                  On the morning of 25 June 2001 Glendon Michael Unicomb made an application for warrants to search premises under s 3E of the Crimes Act 1914 (Cth) (“Crimes Act”) for search warrants Nos 431 to 442 of 2001.  The application was with respect to a “three condition warrant” of the type described in Dunesky & Bay Wool Pty Ltd v Elder (1994) 54 FCR 540 and in Ozzy Tyre & Tube Pty Ltd v Chief Executive Officer of Customs [2000] FCA 891.

25                  It is sufficient for present purposes to note the following, the significance of which will later appear:

-                     the second condition did not include either Pacific Mentor Pty Ltd or Business Thinking Systems Pty Ltd.  The reference to Business Thinking Systems Pty Ltd which appeared in the third condition in an earlier draft was not included in the application as presented.

-                     The second condition included HIH and “its subsidiaries as detailed in Attachment A”.

-                     Attachment A was physically attached to the application.  It listed companies which were said to comprise the HIH group of companies.  The list comprised almost four pages.

-                     The third condition listed a series of suspected offences against specified sections of the Corporations Law.

-                     Whilst there were occasional and elliptical references in the application to the Supreme Court proceedings, the application did not disclose that ASIC was seeking civil penalties in those proceedings with respect to many of the suspected offences listed in condition 3 of the warrants.

The issue of the warrants

26                  On 25 June 2001 Paul Gerard Gardiner, a Justice of the Peace, issued (inter alia) the following search warrants which are the subject of challenge in these proceedings:

-                     No 434 of 2001: a warrant in respect of Mr Williams’ house at 4 Burran Avenue, Mosman (LZ 18).  The warrant was issued to Federal Agent Marjorie Brown.  She altered the name of the warrant holder to Federal Agent Benjamin Ross Moses (see Crimes Act s 3E(5)(d)), but said in evidence in these proceedings that she maintained responsibility for the co-ordination of all warrants issued to her on 25 June 2001.

-                     No 436 of 2001: a warrant in respect of premises located at Level 6, 64 Castlereagh Street, Sydney (LZ 20).  Those premises are occupied by Mr Williams’ accountant, Peter Hunt & Associates.  This warrant was issued to Federal Agent Marjorie Brown, who altered the name of the warrant holder to Dawn Alderman.

-                     No 431 of 2001: a warrant in respect of premises located at Level 34, 264-278 George Street, Sydney.  These  premises are occupied by Adler Corporation Pty Limited.  The warrant was issued to Federal Agent Marjorie Brown, and she did not alter the name of the warrant holder (Ex H4 p 1).

-                     No 433 of 2001: a warrant in respect of the premises located at 5 Sheldon Place, Bellevue Hill, being Mr Adler’s place of residence (Ex H4 p 10).  This warrant was also issued to Federal Agent Marjorie Brown, who altered the name of the warrant holder to Federal Agent Heidi Quinn.

27                  The warrants (other than the warrant in respect of the accountant’s premises) follow basically the same form, although condition 2 in the Adler warrants comprises a wider range of entities than the corresponding condition in the Williams warrant.  There are also some differences in the specification of the suspected offences in condition 3 between the Adler warrants and the Williams warrant. 

28                  Taking the Williams warrant by way of example, the first condition covers things which are original copies or drafts of sixteen specified types of things relating to the period 1 July 1997 to 15 March 2001.  The second condition covers things which relate to any one or more of about thirty-six people or companies.  Neither Pacific Mentor Pty Ltd, nor Business Thinking Systems are listed in the second condition.  The third condition lists fourteen suspected offences.  If one works out the mathematical combinations, there are 8,064 (16 x 36 x 14) potentially different categories of “things” in the Williams search warrant, before factoring in the vagueness associated with the words “relating to” in the first and second conditions.

29                  The form of the warrants issued differs from the applications in two respects.  First, the offences were described in the warrants as being offences against “the laws of the Commonwealth”, whereas in the application the suspected offences were described as being “against the Corporations Law”.  Second, the first company listed in condition 2 is HIH and “its subsidiaries as detailed in Attachment A”.  There is no document attached to the warrants which satisfies that description, whereas such a document was attached to the applications.

30                  Three defects are alleged to exist in relation to the form of the warrants.  They are illustrated by the following examples:

(i)         suspected offence (a) in the case of both Williams and Adler warrants is:

(a)                an offence against s 184(1), namely that between 15 June 2000 and 30 June 2000 Adler, being a director of PEE was reckless and failed to exercise his powers and discharge his duties in good faith in the best interests of the corporation or for a proper purpose in that he caused PEE to acquire 3,924,545 shares in HIH.

The omission of the reference which appeared in the draft to the offences being offences against the Corporations Law means that in the warrant the offence is described as being an offence against s 184 of some unspecified Commonwealth law.

(ii)        Suspected offence (k) in the case of the Williams warrant is:

(k)               an offence against s 232(6) and 1317FA, namely that between 19 January 1999 and 21 September 1999 Williams, being a director of HIH, knowingly and dishonestly, used his position to gain an advantage for himself, in that he caused bank accounts operated by HIH and its subsidiaries to be used for his own private purposes.

As there is no Attachment A, the subsidiaries are not specified.

(iii)       Suspected offence (m) in the Williams warrant (equivalent to (k) in the Adler warrants) is:

(m)       an offence against s 232(2) and 1317FA, namely that between 19 August 1999 and 7 September 1999 Williams, and other directors of HIH knowingly and dishonestly and intending to gain an advantage for HIH failed to act honestly in the discharge of their duties of their office in that they improperly accounted for a reinsurance agreement with Hannover Re, namely recognising an increase in profits of $60 million.

There is no identification of the “other directors” who are alleged to have participated in the commission of this offence.

31                  The warrant issued in relation to the accountant’s premises was somewhat more confined in its scope than the other warrants.  In condition 2 reference was made to the HIH subsidiaries detailed in Attachment A, but there is no such attachment.  The offences are described as being against the laws of the Commonwealth, with a section number, but not the name of the Act, given.  Only two offences are specified in condition 3, each of which involves as one of its elements the operation of bank accounts by “HIH and its subsidiaries”.  The absence of an Attachment A is said to produce the result that there is no identification of the subsidiaries.

The tactical briefing

32                  At about 2 pm on 25 June 2001, after the issue of the warrants, Mr Unicomb gave a tactical briefing to team leaders in relation to the execution of the warrants.  A “Powerpoint” presentation was given by Mr Unicomb to the persons attending the briefing.

33                  The slides for the “Powerpoint” presentation (LZ 70) gave some information of a highly generalised kind as to the properties to be searched, and the transactions in which those suspected of the commission of offences were allegedly involved.  In relation to Mr Williams’ accountant, the slide is as follows:

“APPLICATION FOR SEARCH WARRANTS

Person	Properties	Transactions
Peter Hunt	A business office located at Level 6, 64 Castlereagh Street, Sydney, NSW 2000	Transactions involving use of Williams’ private bank accounts Flow of funds linked to Williams HIH generally”

There is no statement that the generality of the search is constrained by condition 3 and by the time period specified in condition 1.

34                  A document styled “Tactical Plan, HIH Insurance, Search Warrant Executions” was tabled at the meeting (LZ 68).  It is not clear how widely the document was disseminated.  Mr Dunlop said he did not receive a copy at the briefing (T 248), nor did Mr Buchhorn (T 319).  Federal Agent Brown received a copy at the briefing, but she did not give copies to members of her search team (T 337).  The tactical plan states that the types of documents to be searched for are listed in Annexure 3.  Annexure 3 is simply a listing of relevant entities and documents.  The list of entities include Pacific Mentor Pty Ltd and Business Thinking Systems Pty Ltd, although those companies were not included in the warrant.  There is no statement that the types of documents to be searched for is also constrained by condition 3, (although Annexure 1 is a list of suspected Corporations Law offences, but not in the same terms as condition 3).  Nor is there any reference to the time constraints in condition 1.

35                  The tactical plan includes the following statement:

“Legal advice

Most search teams include an ASIC lawyer.  If legal issues arise that cannot be resolved at the scene, advice can also be sought from the following:

            ASIC    Jan Redfern     9911 2191       0411 119 210.”

36                  Ms Redfern says that she did not see a copy of the tactical plan until after the institution of these proceedings (T 195).  She says that she did not know at the time that she had been nominated as the person responsible for giving legal advice if it was needed in the field during the execution of the warrants (T 196).  It was not the usual practice for her name and telephone number to be included in such a document without her prior knowledge and consent, but she does not know how this came about (T 245).  However, Ms Redfern’s telephone numbers are available from the ASIC directory (T 195).

37                  There is a dispute as to whether Ms Redfern was present at the tactical briefing.  She says she was not (T 234).  Mr Buchhorn could not recall her being there, nor could he recall whether Ms Balding was present (T 327).  Federal Agent Brown had difficulty putting names and faces together.  She thought that “Jennifer Redfern” was present at the tactical briefing.  She said she met Jennifer Balding on that day, but she did not know whether she spoke to Jan Redfern.  Mr Dunlop, who attended the meeting, was not asked whether Ms Redfern was present.  I would not be prepared to reject Ms Redfern’s denial that she was present, supported as it is by the evidence of Mr Buchhorn, purely on the testimony of Federal Agent Brown, who, apart from other problems with her testimony, was a long way from being sure as to the position.

38                  Mr Alan Turton (T 223) had compiled a list of team members who would be involved in the execution of the warrants which was amongst the documents circulated at the briefing (LZ 87).  Mr Turton knew the civil proceedings were on foot (T 224).  The team included Mr Unicomb, Jennifer Balding, Jeremy Herman and Peter Edwards (T 225) who were already involved in the civil proceedings.

39                  At this meeting no instruction was given, or limitations imposed on the use to which seized material might be put once seizure was effected.  No one told Mr Buchhorn, for example, that information or documents obtained was not for use in the civil proceedings (T 329).

40                  Ms Redfern gave the following evidence in cross-examination (T 223):

“Now, were you alive to the fact at the time the search warrants were executed that it would have been impermissible for ASIC to be searching for documents for use in civil proceedings? --- For use in the civil proceedings?

Yes? --- Yes.

Were you sensitive to that issue at the time?  Was it something ---? --- Sensitive to it, what do you mean?

Well, was it something that crossed your mind, was it something that you didn’t know about at the time? --- No, it was something I was concerned to ensure didn’t happen.

Well, if you were so concerned, why would you have Jennifer Balding as the principal solicitor in the civil proceedings being the person who also executed the search warrant? --- I didn’t actually know that she was executing the search warrant.

Who took that decision? --- I don’t know.  I actually thought that she was back at the office, that was the issue I was referring to earlier.

When did you find that out? --- When I was telephoned at about a quarter past two on the afternoon by Glen Unicomb who told me that he was with Jennifer and they were having a dispute in relation to the execution of the warrant.

...

Have you got any explanation to offer as to how it came about that the principal solicitor on the civil proceedings was present and acting as an assistant constable in the execution of the search warrant? --- No.”

The execution of the warrants

41                  Mr Williams and Mr Adler contend that documents were seized pursuant to the warrants which do not fall within the terms of the warrants and/or are the subject of legal professional privilege.  Harts Australia Ltd v Australian Federal Police (2001) 46 ATR 338; [2001] FCA 175 (“Harts v AFP (2001)”) establishes that unless the parties can agree on some more sensible regime, the Court may be required to immerse itself in questions as to the seizure of a mass of individual documents.

42                  It was impractical for this task to be undertaken in the time which I had available within which to conduct a final hearing of these proceedings, hence the parties agreed that this issue should be the subject of a separate question, to be determined, if necessary, later in the proceedings.

The standstill agreement

43                  On 26 June 2001 there were conversations between Mr Zwier and Ms Redfern in which Mr Zwier asserted that the warrants were invalid because, amongst other things, they were an illegitimate attempt to get discovery in civil penalty proceedings.  Ms Redfern denied that this was ASIC’s intention.  She said the warrants were being executed in connection with the criminal investigation not the civil proceedings.  Agreement was reached as to the boxing and sealing of seized documents pending the institution of these proceedings.  A similar arrangement was reached in relation to Mr Adler, the terms of which are recorded in Gilbert & Tobin’s letter of 27 June 2001.

44                  Notwithstanding the separation of issues to which I earlier referred, some events which occurred in the course of execution of the warrants are relied upon by the applicants in support of other aspects of their claim and it will be necessary to turn to them.

Mr Williams – Mosman premises

45                  Mr Buchhorn is an ASIC Investigator.  He attended the tactical briefing on 26 June 2001, but did not have any prior association with the HIH investigation.  He attended the Mosman premises and participated in the execution of the search warrant.  In a walk-in-robe adjacent to a large bedroom he found some documents including a Westpac bank statement for an account of Mr and Mrs Williams.  He formed the view that the bank statement fell outside the scope of the warrant (as it was outside the time period stipulated in the warrant), but he nonetheless decided to make notes of its contents.  He told Mr Turton of the notes he had made, who said that he should “put it in a memo to Glen” (Unicomb) (T 307).  Mr Turton did not suggest that Mr Buchhorn was guilty of any impropriety in making notes as to the contents of documents which fell outside the warrant, or in communicating information gathered in the course of execution of the warrants to ASIC officers, having regard to its apparent relevance to the Supreme Court proceedings and the Mareva injunction which ASIC had obtained on those proceedings.

46                  Mr Buchhorn said that he made the notes because the documents were potentially evidence (T 312) in respect of the criminal investigation.  Mr Buchhorn denied that he went to the premises for the specific purpose of gathering information that would be useful to ASIC’s civil case (T 314).

47                  Mr Buchhorn also made some notes about entries on a document relating to Aria Park, a company not referred to in the second condition to the warrant, and asked Mr Williams some questions about the document (T 321).

48                  On 27 June 2001 Mr Buchhorn sent a memo to Glen Unicomb regarding Ray Williams’ overdraft.  The memo included the following:

“Yesterday while conducting the search on Ray Williams [sic] house, I came across various bank statements.

Some of these indicate that Ray Williams is running an overdraft account which has been drawn down dramatically over the last months and now stands at ... debit.  I understand we have freezing orders over certain of William’s[sic] assets.  It is possible that some of these assets may be security for the overdraft account and the ASIC caveat is being undermined.”

Details of Key Account balances on the account for dates between 16 May 2001 and 15 June 2001 were then given.  ASIC contended that the information in the memo was not confidential, a submission which I rejected.  Accordingly, I have not reproduced the precise figures referred to in the memo.  This memo relates to the Mareva injunction in the civil proceedings.  Neither this nor any other memo adverts to the significance of the notes which Mr Buchhorn made in relation to any criminal proceedings.

Mr Williams – the accountant’s premises

49                  The accountant’s premises were computerised.  Some information relevant to the warrant was found on a computer, but there was a large amount of information recorded on the computers which was totally unrelated to the warrant.  There was a discussion between Ms Alderman, Mr Higginbotham (the solicitor for the accountants) and Mr Hunter (a forensic technician assisting AFP) as to how this problem should be managed.  Ms Alderman said that she intended to have a copy done of all information on all computers which would be sealed in an envelope.  Arrangements would be made for a representative of the accountants to be present when the computerised information was later reviewed so that only information covered by the warrant would be printed out.  Although Mr Higginbotham participated in these discussions he did not consent to the course proposed.

50                  There is an issue as to whether taking a copy of the relevant files at the premises was a practical option.  Mr Hunter’s evidence was that it would take a week to copy only relevant files.  Further, he said:

“There are so many other factors which surround that file or surround the information inside that file which can play a part in how it got there, who created it.  There’s many facets to computer-based evidence.  Copying a single file is probably the worst way of treating evidence from a computer.”

(T 270)

51                  In par 8 of Mr Hunter’s affidavit, Mr Hunter put the matter in this way:

“Taking a copy of just the relevant files was not a practical option as such an exercise would have taken, in my estimate, at least a week as in addition to the time taken in identifying those files, it would be necessary to show the context in which the files were stored.  Furthermore it may be necessary to hold a copy of the actual database and operating system in which those files are stored to get an actual replication of the information on the file.”

No countervailing evidence was called by the applicants.

52                  The applicants contend that this evidence was an ex post facto reconstruction on the part of Mr Hunter.  Mr Higginbotham says that Mr Hunter said at the time:

“It is possible to access and separate the information we need for the Search Warrant from the general information on the computer however that will take much longer than simply copying the whole computer data and it may take until midnight tonight to do it that way.  The only information which couldn’t be separated in this matter would be deleted files.”

Mr Hunter denies that conversation.

53                  The applicants do not accept that it was “not practicable” within the meaning of s 3L(3) of the Crimes Act to do other than take everything on the computer at the accountant’s premises.  They appear to accept that it may have taken until midnight to take relevant material only, but complain that the chosen course was adopted as a matter of convenience, simply because it was regarded as the quickest option.

Mr Adler – Bellevue Hill premises

54                  Mr Dunlop, a principal investigator with ASIC attended these premises.  A white ring-back folder which contained six to eight documents was found and shown to him.  He looked at the first two or three documents and formed the opinion that they appeared to come within the conditions of the warrant.  He told Federal Agent Quinn that this was his view.  Ms Platford of Gilbert & Tobin disagreed and Ms Redfern was consulted.  Ms Redfern was of the view that the documents should not be taken; Mr Dunlop disagreed and expressed that disagreement to Federal Agent Quinn.  Ultimately two documents were taken, CAP1 and CAP2.  They were not taken by Mr Dunlop who had left the premises beforehand.  CAP1 and CAP2 had noted against them the claims for privilege and the claim that the documents fell outside the terms of the warrant.  Those claims fell to be dealt with under the agreed procedure set out in Gilbert & Tobin’s letter of 27 June 2001.

55                  Mr Dunlop denied that the exercise in which he was involved was the deliberate seizure of documents which he knew to be outside the warrant (T 255) and denied (T 254) that he was “a bare faced liar”.

56                  Ms Platford says (affidavit 17 July 2001 at par 5) that Mr Dunlop told her during the discussion at the premises in which Ms Platford protested about the seizure of these documents:

“As far as we are concerned, under the warrant we intend to and have been told to take any document that mentions Pacific Eagle Equities or Adler Corporation.”

Mr Dunlop denied in his affidavit (par 22) that he made this statement.  He repeated that denial in cross-examination (T 293).  Ms Platford did not make contemporaneous notes of her conversations with Mr Dunlop, and the conversations were somewhat heated (T 171).  Given the circumstances of this conversation and the dispute as to what was said, I am not prepared to find Mr Dunlop admitted that both his instructions and his intention were to seize documents which mentioned PEE or Adler Corporation irrespective of whether the other conditions were met.

57                  Mr Dunlop favoured seizure of CAP1 because it was a document issued by Adler Corporation Pty Limited which referred to Adler Corporations assets, and he believed that Adler Corporation’s assets had been enhanced by certain of the transactions referred to in condition 3 (T 283).  He agreed that there was no basis for seizure of CAP2, and certain other documents which he was shown (for example, pp 185 and 186 of Ex H4) but said that he could not recall seeing them before, and did not recall whether those documents were in the white folder.

58                  Counsel for Mr Adler submitted that I should find that Mr Dunlop acted, and had been told to act, in complete disregard for the date restrictions and the third condition of the warrant.  Mr Dunlop denied that this was so and I am not persuaded that I should reject his sworn testimony to that effect.  It is clear that Mr Dunlop was aware of the terms of the warrants.  In the discussions which he had with Ms Platford, the relevance of the third condition was accepted.   The dispute was as to its application in the context of particular documents.  I do not think that this was a mere charade designed to cover up an underlying reality that Mr Dunlop intended to seize documents which he knew to be outside the terms of the warrant, and to do so in the full view of Mr Adler’s lawyers.  Mr Dunlop may well have had an overly expansive view of the reach of the warrant.  The fact that Ms Redfern was against seizure of documents whose seizure Mr Dunlop recommended suggests that this is so.  So does his explanation for recommending seizure of CAP1.  At times in his cross-examination Mr Dunlop was somewhat defensive when asked to explain why particular documents fell within the scope of the warrant.  But the fact that Mr Dunlop may have had an overly expansive view of what the warrant authorised provides an insufficient foundation for the conclusion for which Mr Hammerschlag SC contends.  I decline to draw that conclusion.

Adler Corporation Pty Limited premises

59                  Mr Glass, a partner in Gilbert & Tobin, was present at the premises between about 8.00 am and about 4.30 pm to observe the execution of the warrant.  In his affidavit of 4 July 2001 (par 19) Mr Glass said that he observed (inter alia) Jan Redfern removing documents from the Adler Corporation filing systems, reading and tagging those documents.  So far as Jan Redfern is concerned, he resiled from that evidence in cross-examination (T 182).

60                  Federal Agent Brown was involved in the execution of this warrant.  From time to time Mr Glass spoke to her and to ASIC representatives, asserting that particular documents, which were tagged as being intended to be seized, did not fall within the scope of the warrant.  In the course of one such discussion, Federal Agent Brown indicated that the decision whether or not to seize a document was hers, but all she needed to have was a reasonable belief that a document fell within the warrant:

“I am taking instructions from these two people [motioning to Ms Balding and Mr Unicomb].  I am satisfied that there is reason to believe that this document falls within the warrant.”

61                  Mr Unicomb spoke to Ms Redfern at about 2.15 pm on that day, in which he said he was having heated discussions with Mr Glass as to whether particular documents did, or did not, fall within the terms of the warrant.  Ms Redfern went to the premises and spoke to Mr Glass.  Mr Glass voiced his objections as to the manner in which the warrant was being executed by, amongst others, Federal Agent Brown.

62                  There was a discussion between Mr Glass and Ms Redfern as to how best to proceed, which Ms Redfern describes as follows:

“I said:

‘It’s no use in proceeding in that way.  Why can’t we strike an arrangement to preserve your right so we will execute the warrant but put the documents in sealed boxes and allow you a short period of time to challenge the warrant.’

Steven Glass said:

‘That’s a good idea.  It will progress the matter that way.  If we do that there is no point with me staying any longer.’

I said:

‘Well that’s fine so let’s progress that way.’

Steven Glass and Colleen Platford then left the room.”

That arrangement was recorded in Gilbert & Tobin’s letter of 27 June 2001 to which I have earlier referred.

63                  Examples of documents which were seized from these premises appear in Ex H4 at pp 251 et seq.  They include a receipt given to Mrs Adler for attention to her swimming pool (p 251), and a tax invoice for $70 given to Mrs Adler for mowing the lawns and the like (p 256).  Receipts for donations to recognised charities were also seized.

64                  The memorandum and articles of association of Pacific Mentor Pty Ltd were seized (Ex H4 p 336) and documents in relation to Business Thinking Systems Pty Ltd were searched for (T 347-349; Ex H4 p 60) and seized (Ex H5 p 171).  Federal Agent Brown gave evidence in the proceedings.  She accepted that she went out and seized documents relating to entities that were not in the warrant (T 341).

65                  Federal Agent Brown’s explanation as to the seizure of documents relating to companies not referred to in the warrant is that the names of those companies were included on a board at the front of the premises under the name of Adler Corporation Pty Limited (T 348).  The reference in condition 2 to Adler Corporation Pty Limited justified the seizure of the documents (T 349).  She claims that Glen Unicomb and Jennifer Balding gave her that advice (T 349) as well as other officers who were with her (T 350).

66                  Taking the swimming pool receipt at Ex H4 p 251 as an example, Federal Agent Brown justified its seizure on the basis that Adler was one of the names in the conditions, 5 Sheldon Avenue was one of the addresses at which the warrants were executed, and the document could relate to all or any of the offences in condition 3, because the document is a receipt for money, and the offences are financial offences (T 357-358).  Further, Federal Agent Brown did not know “the context” in which the document was seized, which might affect its character.  When asked to explain this she said that “upkeep of assets” would be a context justifying seizure (T 358).  Similar explanations were given in relation to the receipt for mowing lawns (T 358-359).

67                  Federal Agent Brown said that she did not read all of the documents which were seized.  She took advice from her seizing officers although she did spot checks from time to time.  Thus she “probably didn’t read” the documents which were receipts for donations to charities at the time of seizure (T 361).  Seizure of a receipt for a donation to the Children’s Hospital was justified, on the basis, at least ex post facto: “Where did the money come from that was being given away by Adler Corporation” (T 365).

68                  I did not find Federal Agent Brown to be a reliable witness.  I do not accept that she honestly believed that the seizure of the documents to which I have referred could be justified by reference to the reasons which she gave.  She was attempting to justify the actions of herself or her team in relation to the documents put to her, which she knew could not be justified in terms of the warrant.

The involvement of Ms Redfern in the execution of the warrants

69                  Ms Redfern was at her son’s school in the morning of 26 June 2001.  Her mobile phone was turned off for a large part of the time she was there (T 196),  She did not attend any of the premises at which warrants were being executed until about 4.30 pm in the afternoon.  The following is an abbreviated time line of her involvement:

-           9 am:                telephoned by Officer Quinn on her mobile phone, and spoke to Colleen Platford.  Switched off mobile phone shortly afterwards (T 243);

-           12-12.30 pm:   at an ASIC meeting when told to contact Leon Zwier urgently, which she does (Redfern affidavit [Williams proceedings] 18 July 2001 par 11);

-           2.15 pm           Glen Unicomb telephones and asks Jan Redfern to come to Adler Corporation;

-           early pm:          contacted by Ms Platford who complains that ASIC lawyers are threatening to seize Mrs Adler’s documents (Platford affidavit 17 July 2001 par 7);

-           after 4 pm:        at Adler Corporation premises (T 196);

-           about 10 pm:    in the ASIC office with Turton (T 197);

-           11 pm:              at Hunt’s premises (T 197).

70                  I do not accept that the extent of Ms Redfern’s involvement on 26 June 2001 indicates or requires a conclusion that her involvement must have been planned and known to her prior to that date.  It is at least equally possible that she was merely reacting to events as they occurred on that day, without any prior arrangement that she would be available for that purpose.  It is not likely that she would have spent much of the morning at her son’s school, with her mobile phone switched off, if she knew that she was expected to discharge the role assigned to her in the tactical plan.  It is true that there is no reference in Ms Redfern’s affidavits to her attendance at Hunt’s premises at 11 pm.  There is no sinister significance in this omission.  In the context, there was no particular reason why she should have referred to it.

Discussion re s 33 notice

71                  On 26 June 2001 at about 11.45 pm Federal Agent Brown was served with a notice under s 33 of ASIC Act requiring production to Mr Unicomb forthwith of the documents seized from (inter alia) Mr Williams’ home and his accountant’s office (LZ 47).  Ms Brown was not the executing officer under either of those warrants.  She took no action in consequence of the receipt of the notice.  The decision to issue this notice is the “third other decision” challenged by Mr Williams in these proceedings.  It will be necessary to return to that decision later in these reasons.

72                  What is or may be important for present purposes is that Mr Zwier, in par 38 of his first affidavit, said:

“On the evening of 26 June 2001, Jan Redfern telephoned me.  She told me that she would resolve the issues with Ms Alderman in accordance with the Status Quo agreement.  Jan Redfern also told me that the documents being seized by the AFP from the Accountant’s Premises would be the subject of a notice issued by ASIC requiring the AFP to deliver up all the seized documents to ASIC.”

73                  Ms Redfern did not take issue with this statement in any of her affidavits.  However, in cross-examination she denied that she was aware of a s 33 notice issued by ASIC to AFP to produce the documents seized under the search warrant.  At T 205 in her cross-examination, the following appears:

“Q.      You told Leon Zwier, did you not, on the evening of 26 June that documents seized by AFP from the accountant’s premises would be the subject of a notice issued by ASIC requiring the AFP to deliver up all the seized documents to ASIC --- I don’t believe so.  I don’t believe I told him that.”

74                  This conversation allegedly took place prior to the issue of the notice.  It is unlikely that Mr Zwier would have the information about the intention to issue the notice unless it was given to him by someone from ASIC with whom he was dealing.  There is no reason for Mr Zwier to attribute the information to Ms Redfern if it was given to him by someone else, if in fact he was talking to others from ASIC at this time.  Mr Zwier was not cross-examined on this aspect of his affidavit.  I accept Mr Zwier’s evidence.  I accept that on 26 June 2001 Ms Redfern knew of ASIC’s intention to issue a s 33 notice in relation to the seized material, and told Mr Zwier that this would occur.

75                  Mr Beach QC submitted that Ms Redfern was deliberately not telling the truth on this matter, and was again seeking to distance herself from the search warrants, because if she admitted knowledge of the s 33 notice, that would be indicative of greater involvement in the search warrant process on her part.  I will return to that submission when dealing with Ms Redfern’s credibility.

The s 30 notice

76                  On 25 June 2001 Peter Edwards on behalf of ASIC made a decision to issue a notice under s 30 of the ASIC Act addressed to Peter H Hunt & Associates (LZ 20).  This is the “section 30 decision” referred to in Section E of the Second Amended Statement of Claim in the Williams proceedings.  Peter Edwards was then involved in the conduct of the Supreme Court proceedings.  No documents were produced in relation to the decision making process, nor was Mr Edwards called to give evidence.

77                  The notice was served on Peter Hunt & Associates on 26 June 2001 during the course of execution of the search warrants.  It is contended that ASIC staff only gained access to the accountant’s premises at that time as “constables assisting” the executing officer in relation to the search warrants directed to the firm, and that ASIC staff used the occasion of such access and entry for an improper collateral purpose, namely service of the s 30 notice.  At the time of service of the notice, Mr Edwards is recorded as having said:

“This notice here requires production of any records that you may have in storage or offsite, so obviously the warrant can’t cover that because we don’t know where they are.”

There is nothing in the terms of the notice which confines its operation to the production of records in storage or offsite.

Events subsequent to execution – admissions

78                  Ms Platford says that she had a telephone conversation with Ms Redfern at about 6 pm on 28 June 2001.  She dictated a file note of that conversation immediately thereafter (Ex H1).  The file note records that there was discussion about the institution of proceedings to challenge the validity of the search warrant.  There was also discussion about the Supreme Court proceedings which were listed for directions on 2 July 2001.  Ms Redfern said:

“I also wanted to talk to you about next Monday’s directions hearing.  We would like a 4 week adjournment because ASIC wants to go through the material that was seized and also make a final determination about whether each proposes to institute criminal proceedings.  Obviously if it instituted criminal proceedings then the civil proceedings would be automatically stayed.”

79                  Ms Redfern’s account of that conversation is as follows:

We would like to have a four week adjournment because we haven’t yet decided whether to proceed with a criminal prosecution.  If there is a prosecution the civil proceedings will be stayed.  To make that decision we will need to go through the documents and that will be delayed because of your proceedings about the warrants.  What is your position on this?”

80                  Ms Platford accepted (T 168) that the reference in the file note to “each” was an error (presumably it should have been “ASIC”) but she would not accept that the reference to “also” was an error, or that the reference to “also” did not really make sense.

81                  Mr Glass says (affidavit 23 July 2001 par 5) that when the Supreme Court proceedings were listed for directions on 2 July 2001 he had discussions with Ms Redfern.  The context was either about the date for filing a statement of claim in the Supreme Court proceedings or the date by which ASIC was to give discovery in those proceedings, but he could not recall which.  Ms Redfern said:

“We won’t even have had enough time to finish reading the documents obtained under the search warrants by then.”

Ms Redfern denies that she said words to that effect.  It was put to Mr Glass that what Ms Redfern had said was that before deciding whether or not to commence the criminal proceedings, ASIC would need to look at the documents which had been seized on the execution of the search warrants.  He did not recall her saying that (T 184).

82                  At the time of each of these conversations, the parties were well and truly at issue as to whether or not the search warrants had been obtained by ASIC to seize documents for use in connection with the civil proceedings.  Ms Redfern had denied that this was so.  It is improbable that whilst voicing her denial that this was so in conversations with the applicants’ legal representatives, she would in conversations with these same people at about the same time, make admissions that she intended to read the documents seized for the purpose of progressing the civil proceedings.  As the versions of the conversation between Ms Platford and Ms Redfern recounted above indicate, comparatively slight variations in language may give rise to significant differences in meaning.

83                  I do not intend to reflect adversely on the honesty of any of those involved when I say that, for the reasons given in the previous paragraph, I am not satisfied that Ms Redfern made any of the admissions imputed to her in the conversations referred to above.

Events subsequent to execution – discovery in the Supreme Court

84                  On 2 July 2001 Santow J made orders which included the following:

“3.       The parties to serve requests for discovery by way of specified categories by 10 August 2001.

...

5.                  The parties to give discovery by 31 August 2001.”

(LZ 51)

85                  Mr Williams contends that these orders ought not to have been made, as discovery ought not to be awarded in proceedings which are quasi criminal in nature.  His failure to object to the making of the orders was due to a mistake, explained by the fact that he was represented by a junior solicitor, who attended the directions hearing in the expectation that, by agreement, the proceedings would be adjourned for four weeks.  I accept the evidence to this effect.  On 6 July 2001 ASIC was asked to consent to the vacation of the orders against Mr Williams.  Whether or in what form ASIC responded to that request does not appear from the evidence.

86                  The evidence does not disclose any communicated objection on the part of Mr Adler to the discovery orders made against him.

Events subsequent to execution – Ms Balding

87                  There was no “Chinese wall” in place at the time of execution of the warrants (T 203).  Ms Redfern says that the involvement of Ms Balding in the execution of the warrants was “unwise” (T 224) having regard to her role in the Supreme Court proceedings and that when she found out about it she advised Alan Turton that “we would have to make some changes with the resourcing” (T 224).  Within a couple of days a decision was taken that Ms Balding would remain the principal lawyer on the investigation, but would not be involved in the Supreme Court proceedings (T 224).

88                  On 24 July 2001 Jennifer Balding signed a letter enclosing copies of the Statement of Claim which had been filed in the civil proceedings (T 226).  Ms Redfern said that she asked Ms Balding to sign this letter, but maintained: “at the end of the day she is not involved in the civil proceedings” (T 227).

The release of the documents to ASIC

89                  I have already referred to the fact that on 26 June 2001 Federal Agent Brown was served with a notice under s 33 of ASIC Act (LZ 47) [par 71 above].  The notice related to books seized pursuant to the warrants to search premises issued on 25 June 2001, including the warrants the subject of these proceedings.

90                  Federal Agent Brown did not tell Federal Agent Alderman (the warrant holder for the accountant’s premises) or Federal Agent Quinn (the warrant holder for Mr Adler’s residence) or Federal Agent Moses (the warrant holder for the Mosman premises) that she had received the notice because she “did not regard it as important” as the executing officer has the power “to hand documents seized over to an investigating agency” pursuant to 3F(5) of the Crimes Act.

91                  Federal Agent Brown made the decision to hand over to ASIC the documents seized from Adler Corporation, except for privileged documents, which were originally lodged with the Downing Centre Local Court and later transferred to ASIC.  She obtained a receipt from ASIC for documents described, for example, as “Box 26”, having a specified ASIC barcode.

92                  In her affidavit in the Adler proceedings Federal Agent Brown said:

“Notwithstanding the Notice [under s 33] served on me, my decision to hand over the documents was made pursuant to s 3F(5) of the Crimes Act knowing the high standard of exhibit handling and security ASIC has in place and because I am aware that ASIC required the documents for the purpose of investigating the offences set out in the warrants.”

93                  In Federal Agent Brown’s view (T 373) the section authorised her to hand the documents over to ASIC rather than merely affording access to the documents to ASIC officers.  There is no evidence that any decision was made by any executing officer (other than Federal Agent Brown) to hand the material to ASIC.  The applicants submit that the strategy envisaged by the tactical plan was simply to pass the material on to ASIC, and the s 33 notice was designed to overcome any inhibitions which AFP might otherwise have in relation to the delivery of the documents to ASIC, having regard to the fact that s 3F(5) only authorises the executing officer to “make the things available” to officers of other agencies if it is necessary to do so for the purpose of investigating or prosecuting an offence to which the things relate.

Lack of power to issue the warrants

94                  The application for the issue of warrants was made by Mr Unicomb, a staff member of ASIC.  The warrants were issued by a Justice of the Peace in and for the State of NSW and were addressed to a member of AFP as executing officer.

95                  The applicants contend that there was no power in the issuing officer to issue warrants under the Crimes Act in relation to suspected state offences, or for members of the AFP to act as executing officers in relation to such warrants. 

96                  When account is taken of various definitions in ss 3 and 3C of the Crimes Act, it is clear that Part 1AA of that Act, operating of its own force, only authorises the issue of search warrants in relation to suspected offences against a law of the Commonwealth, or of a Territory other than the Australian Capital Territory.

97                  Whether the warrants sufficiently state the offences to which the warrants relate (as required by s 3E(5)(a) of the Crimes Act) is considered elsewhere in these reasons.  However, it appears from the application for the warrants that the suspected offences are against “the Corporations Law”.  There is no single law which answers or exactly corresponds with that description.  As a result of s 5 of the Corporations Act 1989 (Cth) a law, which may be referred to as the Corporations Law of the Capital Territory, applies as a law for the government of the Capital Territory.  The “Capital Territory” means the Australian Capital Territory and the Jervis Bay Territory.  It was not submitted by any party that the distinction between the “Capital Territory” and the “Australian Capital Territory” was of any relevance in the present case.  As a result of s 7 of the Corporation (Name of State) Acts of each of the States and of the Northern Territory, the Corporations Law of (name of State) applies as a law of that State or the Northern Territory, and in so applying may be referred to as the Corporations Law of (name of State).

98                  There is nothing in the application, or in the evidence generally, which suggests any nexus between the suspected offences and the Capital Territory.  That being so, the suspected offences are against the laws of a State or States, and are prima facie outside the purview of the Crimes Act (Cth).

99                  In order to overcome that prima facie position, either:

-                     a Commonwealth law would need to provide that for the purposes of Commonwealth laws, or at least for the purposes of the Crimes Act, the relevant State offences are to be taken to be offences against the laws of the Commonwealth; or

-                     State law would need to pick up and apply the Crimes Act as a law of the State in relation to State offences.  Insofar as the Act as thus applied purports to confer a function on a Commonwealth authority or official, federal law authorisation for the conferral is required; and

-                     the federal laws in question would need to be constitutionally valid.

No question was raised in the present case as to constitutional validity.

Deemed offences under Commonwealth law

100               ASIC’s outline of submissions filed prior to the commencement of the hearing included the following:

“... section 45 of the Corporations Act and section 29 of the Corporations (NSW) Act deem an offence against the Corporations Law to be an offence against the laws of the Commonwealth.”

The outline did not include any elaboration upon, or argument in support of that contention.

101               Section 45(1) of the Corporations Act 1989 (Cth) provides that for the purposes of a law of the Commonwealth or a law of the Capital Territory, an offence against a provision of the Corporations Law of a jurisdiction other than the Capital Territory is taken to be an offence against the laws of the Commonwealth in the same way as if those provisions were laws of the Commonwealth.  Section 29(2) of the Corporations (NSW) Act provides that for the purposes of the law of NSW, an offence against a provision of the Corporations Law of NSW is taken to be an offence against the laws of the Commonwealth, in the same way as if those provisions were laws of the Commonwealth.  Both s 45(1) and s 29(2) provide that the offence is taken not to be an offence against the laws of NSW.

102               Section 45 of the Corporations Act 1989 (Cth) appears in Division 2 of Part 8 of the Act.  Section 40 provides that the object of Division 2 is to further the object of Part 8 by providing for an offence against an applicable provision of another jurisdiction to be treated in the Capital Territory as if it were an offence against the law of the Commonwealth.

103               In their opening submissions, the applicants contended that s 45 of the Corporations Act 1989 (Cth) is irrelevant to the circumstances of the present case, because nobody is purporting to exercise relevant powers in the Capital Territory.  The search warrants were applied for in NSW, and issued in NSW.  Reliance was placed by the applicants on the decision of the High Court in R v Hughes (2000) 171 ALR 155; [2000] HCA 22.  In that case there was a challenge to the propriety of the Commonwealth DPP conducting a prosecution in Western Australia for breach of the prescribed interest provisions of the Corporations Law of Western Australia.  The DPP’s statutory function was to institute and carry on prosecutions for offences against the laws of the Commonwealth.  The Court held that the effect of s 29 and s 31 of the Corporations (WA) Act was that the DPP Act was rendered applicable as a law of Western Australia in relation to the offences against the Corporations Law of Western Australia which were the subject of the indictment.  Section 47 of the Corporations Act 1989 (Cth) and Reg 3(1)(d) of the Corporations (Commonwealth Authorities and Officers) Regulations operated, as a matter of Commonwealth law, to stipulate that the DPP had the functions and powers expressed to be conferred on him by the Corporations (WA) Act.

104               The members of the Court (other than Kirby J) disposed of the relevance of s 45 of the Corporations Act 1989 (Cth) to the circumstances of that case in a footnote.  Their Honours observed that s 45 appeared in Division 2 of Part 8, the stated object of which is to provide for the treatment in the Capital Territory of laws such as the Corporations Law of Western Australia (s 40(1)).  Accordingly, s 45 had no application to the prosecution the subject of those proceedings and might be put to one side.  At [83] Kirby J also concluded that s 45 had no application to the case before the Court as it applies only in the Australian Capital Territory, and the case before the Court had to be determined by reference to the law applicable in Western Australia.

105               ASIC did not offer any response to the applicants’ contention that the decision of the High Court in R v Hughes led to the conclusion that s 45 was of no relevance in the circumstances of the present case.  Thereafter ASIC’s submissions concentrated on the provisions of s 29 and s 31 of the Corporations (NSW) Act, and no further reliance was placed on s 45 of the Corporations Act 1989 (Cth).

Deemed offences under State law

106               Section 29 of the Corporations (NSW) Act, in its operation in the circumstances of the present case, can be restated as follows:

(1)               The Crimes Act and/or the Australian Federal Police Act 1979 (Cth) (“AFP Act”) applies as a law of NSW in relation to an offence against the provisions of the Corporations Law of NSW as if those provisions were laws of the Commonwealth and were not laws of NSW.

(2)               For the purposes of a law of NSW, an offence against the provisions of the Corporations Law of NSW:

(a)                is taken to be an offence against the laws of the Commonwealth, in the same way as if those provisions were laws of the Commonwealth; and

(b)               is taken not to be an offence against the laws of NSW.

107               Section 31 of the Corporations (NSW) Act, in its operation of the circumstances of the present case, can be restated as follows:

-                     if the Crimes Act and/or the AFP Act confers on an officer or authority of the Commonwealth a function or power in relation to an offence against the Corporations Law of the Capital Territory, then the same function or power is conferred on that officer or authority in relation to an offence against the corresponding provision of the Corporations Law of NSW.

108               ASIC submits that the circle is completed by s 47 of the Corporations Act (Cth) and, in relation to AFP, by Reg 3(1)(b) of the Corporations (Commonwealth Authority and Officers) Regulations. Section 47 authorises the making of regulations whereby Commonwealth Authorities and officers may have the functions and powers that are expressed to be conferred on them by or under (inter alia) the Corporations (NSW) Act.  Reg 3(1)(b) provides that members of the AFP have the functions and powers that are expressly conferred on them by or under (inter alia) the Corporations (NSW) Act.  Regulation 3(1)(h) could, if necessary, apply to ASIC but s 11(7) of the Australian Securities and Investment Commission Act (1989) (Cth) provides that the Commission has any functions and powers that are expressed to be conferred on it by a national scheme law of another jurisdiction. 

109               In this way, the Crimes Act is, in relation to an offence against the Corporations Law of NSW, applied by force of law of NSW as a law of that State.  The Crimes Act as so applied, is to be adapted such that a search warrant might be issued in relation to a suspected offence against the Corporations Law of NSW: see R v Hughes (supra) at [28] and [103].

Potential problems with s 31

110               A potential problem arises because s 31 of the Corporations (NSW) Act only confers powers and functions on Commonwealth officers that those officers have in relation to an offence against the Corporations Law of the Capital Territory.  The power to issue search warrants is to be found in Part 1AA of the Crimes Act.  Part 1AA includes s 3D.  Section 3D(3) provides as follows:

“(3)     This part does not apply to offences against the laws of the Australian Capital Territory.”

The issue is whether an offence against the Corporations Law of the Capital Territory falls within that exclusion.

111               Part 1AA was introduced into the Crimes Act by the Crimes (Search Warrants and Powers of Arrest) Amendment Act 1994 (Cth) which commenced on 30 November 1994.  Prior to that amendment the power to issue a search warrant was contained in s 10 of the Crimes Act which applied in relation to suspected offences against any law of the Commonwealth or of a Territory.  According to the Explanatory Memorandum issued in relation to the 1994 Amendment Act:

“[Part 1AA] does not apply to offences against the laws of the Australian Capital Territory.  It is understood that the ACT will be enacting its own legislation.”

112               The Corporations Law of the Capital Territory is a law of the Commonwealth.  That is because it is an Act of the Commonwealth Parliament, whatever the constitutional source of power: Spratt v Hermes (1965) 114 CLR 226, 247, 270, 276.  In any event, s 8(1) of the Corporations Act 1989 (Cth) provides that, subject to immaterial exceptions, the Corporations Law of the Capital Territory is to be taken for all purposes to be an Act (cf 38(1) of the Acts Interpretation Act 1901 (“Acts Interpretation Act”): “an Act passed by the Commonwealth”).

113               It therefore follows, that, s 3D apart, suspected offences against the Corporations Law of the Capital Territory would be within Part 1AA of the Crimes Act because offence for the purposes of Part 1AA is defined as meaning (s 3C):

“(a)     an offence against a law of the Commonwealth (other than the Defence Force Discipline Act 1982); or

(b)       an offence against a law of a Territory other than the Australian Capital Territory.”

114               The Corporations Law of the Capital Territory, albeit a law of the Commonwealth, is a law for the government of the Capital Territory, because s 3(1) and s 5(a) of the Corporations Act 1989 (Cth) so provide.  The issue is not whether the Corporations Law of the Capital Territory is a Commonwealth law, but whether an offence against the Corporations Law of the Capital Territory is an offence against “the laws of the Australian Capital Territory”  within the meaning of s 3D(3) of the Crimes Act.

115               ASIC contends that s 3(3) of the Corporations Act 1989 (Cth) is indicative of a legislative intention that the Corporations Law of the Capital Territory is a law of the Commonwealth “and therefore” not a law of the ACT.  Section 3(3) of the Corporations Act 1989 (Cth) provides:

“Despite subsection 1 of this section and subsection 8(1) of this Act, neither this Act nor the Corporations Law of the Australian Capital Territory is, for the purposes of subsection 22(3) of the Acts Interpretation Act 1901, an Act providing for the administration or government of a Territory.”

116               Section 22(3) of the Acts Interpretation Act provides:

“(3)     In any Act, unless the contrary intention appears, a reference to the law of the Commonwealth or to a law of the Commonwealth does not include, and shall be deemed never to have included, a reference to a law in force in a Territory insofar as the law is enforced by virtue of an Act providing for the acceptance, administration or government of that Territory.”

In Australian Securities Commission v Burns (1993) 41 FCR 407, Neaves J held that what is excluded by s 22(3) from the notion of a law of the Commonwealth is not a Commonwealth Act as it applies in the Australian Capital Territory, but rather subordinate legislation promulgated under or pursuant to an Act that provides for the acceptance, administration or government of the Territory.  Thus, notwithstanding s 22(3) of the Acts Interpretation Act, the Corporations Law of the Capital Territory is within the expression “law of the Commonwealth”, where used in an Act.  The effect of s 3(3) of the Corporations Act 1989 (Cth) is that subordinate legislation passed under that Act is not excluded from the notion of a Commonwealth law.  Section 3(3) is thus of no assistance in the resolution of the present problem.  Certainly, it does not support ASIC’s submission that the Corporations Law of the Capital Territory is not an Act providing for the administration or government of the Territory.  ASIC’s submission is inconsistent with the provisions of s 5(a) of the Commonwealth Act, which expressly so provides.

117               In any event s 22(3) of the Acts Interpretation Act only provides for the denotation of the expression “law of the Commonwealth”, where it appears in an Act.  That is not the expression used in s 3D(3) of the Crimes Act.  Section 22(3) says nothing about the meaning of the expression “laws of the Australian Capital Territory” in s 3D(3).

118               There is no definition of “laws of the Australian Capital Territory” in any of the relevant statutes, hence the meaning of the expression falls to be determined in accordance with ordinary principles of construction.  The real issue is whether an offence under a Commonwealth law “for the government of the Capital Territory” is an offence against the “laws of the Australian Capital Territory” within the meaning of the Crimes Act.

119               The definition of “offence” for the purposes of Part 1AA of the Crimes Act is set forth in par [113] above.  An offence against a law of the Commonwealth falls within the definition.  So too do offences against a law of a Territory other than the Australian Capital Territory.  If no more appeared, Part 1AA would apply to an offence against the Corporations Law of the Capital Territory because it is a law of the Commonwealth, albeit for the government of the Capital Territory.

120               The question, then, is what is the effect of s 3D(3).  The applicants submit that the expression “offence against the laws of the Australian Capital Territory” when used in the Crimes Act encompasses:

-                     an offence under a Territory Ordinance or some other instrument created under the Australian Capital Territory (Self-Government) Act 1988;

-                     an offence under a Commonwealth law for the government of the Territory, such as the Corporations Law of the Capital Territory;

but this assumes the matter which has to be decided.

121               In the applicants’ submission, to say that an offence arises under a Commonwealth law does not mean that it is not also an offence under a law of the Australian Capital Territory.  If there was such a bright line or mutual exclusivity, there would be no need for s 3D(3).  The definition of “offence” in s 3C(1) would be sufficient for the purpose.  Section 3D(3) can only have work to do because par (a) of the definition of offence includes an offence under a Commonwealth law for the government of the Australian Capital Territory.  Section 3D(3) operates to carve out such offences.

122               The argument assumes that s 3D(3) is intended to operate as a qualification in par (a) of the definition of offence, rather than as a general reinforcement for the purposes of Part 1AA of the notion flowing from the definition of offence in s 3C that “offences” include offences against a law of the Commonwealth and offences under a law of a Territory other than the Australian Capital Territory.

123               The assumption is not well founded.  A “law of the Australian Capital Territory” in par (b) of the definition of “offence” clearly does not include an offence against a law of the Commonwealth albeit for the government of the Australian Capital Territory.  One would ordinarily expect that a “law of the Australian Capital Territory” would have a similar signification in s 3D(3).

124               Section 3D(3) is not intended as a further qualification on the notion of an “offence”; rather its intended effect is as a qualification on other expressions used in Part 1AA which, unless so qualified, might be inconsistent with the notion that Part 1AA is confined to offences against a law of the Commonwealth, augmented by offences against a law of a Territory other than the Australian Capital Territory.  Thus “evidential material” is defined in s 3C as meaning (inter alia) a thing relevant to an indictable offence.  “Thing relevant to an indictable offence” is defined in s 3 (which is in Part 1, rather than Part 1AA) as meaning anything with respect to which an indictable offence against any law of the Commonwealth or of a Territory has been committed or is suspected, on reasonable grounds, to have been committed.  Section 3D(3) operates for the purposes of Part 1AA, to confine the reference to an offence against a law of a Territory, to an offence against a law of a Territory other than the Australian Capital Territory.

125               The conclusion that s 3D(3) was not intended to operate in relation to an offence against a Commonwealth law for the government of the Territory, such as the Corporations Law of the Capital Territory, is reinforced by the provisions of the explanatory memorandum earlier referred to (see [111] above).  That suggests that the reason for the exclusion is an understanding that the Australian Capital Territory will be enacting its own legislation.  That in turn suggests that the “laws of the Australian Capital Territory” are those whose operation derives from the Australian Capital Territory (Self-Government) Act 1988.  Under s 23(1)(h)(i) of that Act the Assembly has no power to make laws with respect to the matters that are the subject of the laws in force in the Territory relating to companies.

126               ASIC submits that there is a distinction between laws in force in the Australian Capital Territory, on the one hand, and laws of the Australian Capital Territory on the other.  One of the primary meanings of “of”, according to the Macquarie Dictionary is “derivation, origin or source”, but as Merkel J explained in Esso Australia Ltd v Federal Commissioner of Taxation (1998) 157 ALR 652 at 657 “of” is not a word of precision and is generally apt to embrace a connection or relationship which may fall short of a proprietorial relationship or one involving ownership.

127               In many contexts it may be apt to describe an offence against the Corporations Law of the Capital Territory as an offence against the laws of the Australian Capital Territory.  But where, as here, the context involves distinguishing between laws of the Commonwealth, on the one hand, and laws of the Australian Capital Territory, on the other, that is not an apt description.

128               The Crimes Act does not contain any express provision with respect to who may apply for a warrant, although provisions such as s 3E(3) contemplate that there will be a “person” applying for the warrant.  It is clear from s 3E(4) that the person applying for the warrant will not necessarily be a member of AFP.  In fact, the person who applied for the issue of the warrants was an ASIC officer.  ASIC has the general administration of the Corporations Law of NSW.  Section 58 of the Corporations (NSW) Act applies the ASIC Act, other than excluded provisions which are of no current relevance, as a law of NSW.  Section 13 of the ASIC Act gives to ASIC general powers of investigation in relation to suspected contraventions of (inter alia) the Corporations Law of NSW.  ASIC was thus empowered to apply for the issue of the warrants in question independently of the operation of s 31 of the Corporations (NSW) Act.

129               The “issuing officer” was a Justice of the Peace in and for the State of NSW.  The “issuing officer” was not, and was not required to be an officer or authority of the Commonwealth.  Part 1AA of the Crimes Act, applying as a law of NSW, authorises a Magistrate or Justice of the Peace in and for the State of NSW to issue warrants in relation to suspected offences against the Corporations Law of NSW.  State power is conferred on a State official.  The conferral of that power is effective without the need to call in aid the provisions of s 31 of the Corporations (NSW) Act.

130               An executing officer, in relation to a warrant issued under the Crimes Act is required to be a “constable” who may be either a member of the AFP, or a member of the police force of a State or Territory.  In fact a member of the AFP was named as executing officer in relation to the warrants in question.

131               It was not suggested that members of the AFP could not act as executing officers in relation to search warrants issued in relation to suspected offences against the Corporations Law of the Capital Territory.  Accordingly, by force of s 31 of the Corporations (NSW) Act they may act as executing officers in relation to suspected offences against the Corporations Law of NSW.

132               Accordingly, the challenge to the validity of the warrants based on lack of power fails.

Corporations Law 2001

133               In the light of that conclusion, it is not necessary for me to consider whether the provisions of the Corporations Law 2001, particularly s 1400, would have had any validating effect if the issue of the search warrants was beyond power.

Whether the warrants are bad on their face

134               The applicants contend that there are fundamental deficiencies in the search warrants which cannot be remedied.  The alleged deficiencies are that the warrants:

-                     do not identify the statute under which the offences in the third condition of the warrants are said to have been created;

-                     do not include Attachment A, being the intended list of subsidiary companies;

-                     contain excessive width, unclarity and ambiguity in integral parts of the conditions in the search warrants.

Identification of the offence

135               Section 3E(5)(a) of the Crimes Act provides that the issuing officer is to state in the warrant “the offence to which the warrant relates”.

136               A warrant must comply strictly with the statutory conditions of its issue (George v Rockett (1990) 170 CLR 104 at 111), but the warrant should be read fairly and not perversely (Beneficial Finance Corporation Ltd v Commissioner of Australian Federal Police (1991) 31 FCR 523 at 546 (“Beneficial Finance”)).

137               A warrant is required to disclose the offence in question so as to indicate the area of the search: Harts Australia Ltd & Harts Pty Ltd v Commissioner Australian Federal Police (1997) 75 FCR 145 at 152 (“Harts v AFP (1997)”).  The description of the offence sets the bounds of the area of the search which the execution of the warrant would involve.

138               The statement of the offence in a warrant need not be made with the precision of an indictment: Beneficial Finance.  An error which might vitiate an indictment will not necessarily invalidate a search warrant, and a legally incorrect formulation of the offence will not invalidate the warrant if the substance of the offence appears so as to indicate the area of the search: Beneficial Finance at 543.  In Beneficial Finance at 539 Burchett J quoted with approval the observations of Toohey J in Coward v Allen (1984) 52 ALR 320 that what is required is that:

“There is sufficient precision to enable the officer executing the warrant to know what he is required to look for and for those in whose premises documents are found to make some assessment of what is required of them.”

139               In Parker v Churchill (1985) 9 FCR 316 at 320 Burchett J held that the wrong citation of a section by reference to which an offence is described does not invalidate a warrant which otherwise clearly sets out in terms the substance of the offence alleged.  That decision was approved on appeal (Parker v Churchill (1986) 9 FCR 334, 335, 340).  In Chong v Schultz (2000) 112 ACrimR 59; [2000] FCA 582 Heerey J reviewed the authorities and concluded that a misdescription of the statute under which an offence is charged does not invalidate a warrant.  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 matter.

140               ASIC submits, taking par (a) of the third condition by way of example, that “an offence against s 184(1)” is to be understood by inference as a reference to an offence against s 184 of the Corporations Law.  The statutory requirement is that the offence to which the warrant relates be stated in the warrant.  That requirement is not satisfied by the provision of information falling short of such a statement, but which might enable a person reading the warrant to deduce or infer what offence is intended.  The statement “an offence against s 184(1)” is simply meaningless.  But if the warrant clearly sets out in terms the substance of the offence to which the warrant relates then s 3E(5)(a) will have been complied with even if the name of the Act and the section number by which the offence is created is not disclosed in the warrant.  That conclusion flows from the rationale for the disclosure requirement, namely to set bounds to the area of the search which execution of the warrant will involve.  Accordingly, provided the descriptions of the various offences contained in the third condition (apart from the section number) sufficiently describe the substance of the offences to which the warrant relates, then the provisions of s 3E(5)(a) will have been satisfied.

141               The applicants contend that the description of the various offences contained in the third condition of the warrant are deficient, such that they do not constitute a sufficient description of the offences to which the warrants relate.  I am indebted to Mr Hammerschlag SC for the following table which extracts the elements of the Corporations Law offences, and compares them with the description of the offences as set out in the warrants issued with respect to his clients.

Elements of Legislative Provisions	“Corresponding” elements as set out in Warrants
Section 184(1) Good Faith – directors and other officers   A director or other officer of a corporation commits an offence if they: ·        are reckless; or ·        are intentionally dishonest; and ·        fail to exercise their powers and discharge their duties; ·        in good faith in the best interests of the corporation; or ·        for a proper purpose.	An offence against s 184(1), namely that Adler, being a director of PEE/HIH was   ·        Reckless; ·        and failed to exercise his powers and discharge his duties; ·        in good faith in the best interests of the corporation, or ·        for a proper purpose.
Section 999 – False or Misleading Statement in Relation to Securities   A person must not make a statement, or disseminate information, that is false in a material particular or materially misleading and; ·        is likely to induce other people to subscribe for securities; or ·        is likely to induce the sale or purchase of securities by other persons; or ·        is likely to have the effect of increasing, reducing, maintaining or stabilising the market price of securities; if, when the person makes the statement or disseminates the information; ·        the person does not care whether the statement or information is true or false; or ·        the person knows or ought reasonably to have known that the statement or information is false in a material particular or materially misleading.	An offence against s 999 namely that Adler made a statement, namely that he was buying HIH shares, that was materially misleading which: ·        was likely to induce the purchase of shares in HIH by other persons; ·        when he knew that the statement was materially misleading in that he was not personally purchasing the shares.
Section 184(2) Use of Position – directors, other officers and employees   A director, other officer or employee of a corporation commits an offence if they use their position dishonestly: ·        with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the corporation; or ·        recklessly as to whether the use may result in themselves, or someone else directly or indirectly gaining an advantage, or in causing detriment to the corporation.	An offence against s 184(2) namely that Adler, being a director of PEE, used his position dishonestly and ·        recklessly as to whether the use may result in himself, Morehuman or Salman Ghassan Bayni obtaining an advantage; ·        in that he caused PEE to lend $160,000 to Morehuman.
Section 1317FA(1) (1999) A person is guilty of an offence if the person contravenes a civil penalty provision: ·        knowingly, intentionally or recklessly; and ·        either dishonestly and intending to gain, whether directly or indirectly, an advantage for that or any other person; or ·        intending to deceive or defraud someone	(Paragraphs in the warrants concerning offences against s 1317FA combine allegations relating to s 1317FA and s 588G or s 232(2) as follows: An offence against 588G and 1317FA, namely that Williams and the other directors of HIH/Adler and other directors of FAI ·        recklessly and ·        dishonestly and intending to gain an advantage for HIH ·        failed to prevent HIH incurring debts when at the time such debts were incurred HIH was insolvent and Williams and the other directors of HIH suspected that HIH was insolvent or would become insolvent as a result of incurring those debts; or An offence against sections 232(2) and 1317FA, namely that Williams and other directors of HIH: ·        knowingly and ·        dishonestly and intending to gain an advantage for HIH ·        failed to act honestly in the discharge of their duties of their office in that they improperly accounted for a reinsurance agreement with Hannover Re, namely recognising increased profits of $60 million.
Section 588G Director’s Duty to Prevent Insolvent Trading by Company   This section applies if: ·        a person is a director of a company at the time when the company incurs a debt; and ·        the company is insolvent at that time, or becomes insolvent by incurring that debt, or by incurring at that time debt including that debt; and ·        at that time, there are reasonable grounds for suspecting that the company is insolvent, or would so become insolvent, as the case may be; and ·         that time is at or after the commencement of this Part	An offence against 588G, namely that between Williams and the other directors of HIH: ·        dishonestly ·        failed to prevent HIH incurring debts when at the time such debts were incurred HIH was insolvent and Williams and the other directors of HIH suspected that HIH was insolvent or would become insolvent as a result of incurring those debts
Section 232(2) Officer to Act Honestly   An officer of a corporation shall at all times act honestly in the exercise of his or her powers and the discharge of the duties of his or her office.	(Paragraphs in the warrants concerning offences against s 1317FA combine allegations relating to s 1317FA and s 588G or s 232(2) as follows: An offence against sections 232(2) and 1317FA, namely that between 19/08/99 and 09/09/99 Williams and other directors of HIH: ·        knowingly and ·        dishonestly and intending to gain an advantage for HIH ·        failed to act honestly in the discharge of their duties of their office in that they improperly accounted for a reinsurance agreement with Hannover Re, namely recognising increased profits of $60 million

142               The table demonstrates that in some cases the specification of the offence in the warrant is narrower than the expression of the offence in the Corporations Law, as some only of available alternatives have been selected in the specification of the offence in the warrant.  That does not result in a misdescription of the offence to which the warrant relates.  Nor is there any room for a notion that if separate offences are rolled up in a warrant, the warrant is in some way invalidated on grounds analogous to duplicity.

143               Having undertaken the comparison which the table invites, in my view the warrants sufficiently specify the substance of the offences in question so as to comply with s 3E(5)(a) of the Crimes Act.

144               The warrants assert that the offences itemised in the third condition are offences “against the laws of the Commonwealth”.  The analysis earlier undertaken indicates that the offences are State offences albeit the Corporations Law of the Capital Territory contains corresponding provisions.  This is an immaterial error which could have no impact upon the boundaries of the search and is not such as would invalidate the warrants.

Non-attachment of Attachment A

145               The SECOND CONDITION commenced as follows:

“Things which relate to any one or more of the following:

(a)               HIH Insurance Ltd (“HIH”) and its subsidiaries as detailed in Attachment A (“the HIH Insurance Group”), including HIH Casualty and General Insurance Ltd (“HIHC”), FAI Insurances Ltd (“FAI”);”

The document referred to in the second condition as Attachment A was not in fact attached to the warrants.  ASIC submits that this omission does not bear upon the validity of the warrants.  The only consequence is that any of the documents seized which relate only to the subsidiaries listed in Attachment A fall outside the terms of the warrants and the reference to “Attachment A” in the warrants themselves could, if necessary, be severed.

146               The document intended as Attachment A is clearly material to the operation of the second condition.  The applicants also submit that it is material to the operation of the third condition as (k) and (l) of the warrant in relation to Mr Williams’ premises refer to bank accounts operated by “HIH and its subsidiaries”.  Further, the warrant in relation to the accountant’s premises contains similar references in the third condition of that warrant. 

147               The references in the third condition to “HIH and its subsidiaries” do not necessarily pick up Attachment A.  The reference in the third condition to HIH and its subsidiaries is not a reference to “the HIH Insurance Group” which is the designation given to HIH and its subsidiaries as detailed in Attachment A.  Accordingly, the absence of Attachment A does not bear upon the operation of the third condition.  It does, however, have a real bearing on the second condition.

148               Section 3E(5)(c) of the Crimes Act requires the issuing officer to state in the warrant the kinds of evidential material that are to be searched for under the warrant.  In the present warrants the issuing officer states that the warrant authorises the executing officer (inter alia) to search the premises for any evidential material that satisfies all of the three conditions earlier specified in the warrant.  Thus, the second condition is an integral part of the specification of the kinds of evidential material that are to be searched for under the warrant.  Without Attachment A the specification is uncertain as it is incomplete, unless by some process of construction or severance the uncertainties arising from the failure to attach to the warrant the intended attachment can be overcome.

149               I do not think that by any legitimate process of construction par (a) of the second condition can simply be read as if the words “as detailed in Attachment A” were omitted from it, if only because it is at least possible that not all subsidiaries were detailed in that attachment.  It does not appear whether the subsidiaries detailed in Attachment A were all, or some only, of the subsidiaries of HIH Insurance Ltd.

150               Still less can one by any legitimate process of construction read par (a) as if it were confined to HIH Insurance Ltd or perhaps to HIH Insurance Ltd, HIHC and FAI.

151               There is power in the Court to sever invalid portions of a warrant: Parker v Churchill (supra at 321-322) (on appeal (1986) 9 FCR 334 at 350) and Beneficial Finance at 545 so decide.  See also Malubel Pty Ltd v Elder (1998) 88 FCR 242; Malubel Pty Ltd v Elder (No 2) (1999) 73 ALJR 269.  However, severance will not be possible if “the good and bad parts of the warrants may be so interlinked that one cannot stand without the other” (Parker v Churchill (1986) at 350) or if a document has or is likely to have been seized in reliance on the bad portion (Beneficial Finance at 545).  In Love & Peters v Attorney General (NSW) (1988) 84 ALR 319 at 41 McHugh J said:

“However, it is not possible to sever a warrant where the invalid provision forms part of an inseparable context or would operate differently or produce a different result from that which was intended.”

152               It is clear that the issuing officer intended to issue a warrant which incorporated Attachment A.  The failure to physically attach that document to the warrant means that his intention has miscarried.  This is not the usual case in which the warrant is in the form intended by the issuing officer but, as a matter of law, the warrant is good in part and defective in part, such that the defective part is severed from the warrant.  Nonetheless, severance principles are applicable because the warrant is partially defective.  It does not matter that the defect arises from failure to attach a document, rather than from some misconception of the extent of the relevant power.

153               The second condition stipulates that evidential material must be “things which relate to any one or more of a list of persons and companies”.  One or more of those included in that list may be severed from the warrant if there are deficiencies in their description which would otherwise result in invalidity.

154               It is not sufficient merely to delete Attachment A, as it is not established whether or not the companies itemised in that attachment comprised all of HIH subsidiaries.  The words: “its subsidiaries as detailed in Attachment A (‘the HIH Insurance Group, including’)” should be severed from the warrant.  There is no evidence that if the warrants are treated as being severed in this way, the outcome of the search would have been any different.

Lack of clarity

155               A warrant framed as a “three condition warrant” is not, for that reason alone, invalid: Dunesky v Elder (supra); Grollo v MacAuley (Commissioner of the Australian Federal Police (1995) 56 FCR 533; Harts Australia Ltd v AFP (1997) (supra).

156               Section 3E does not require a warrant to provide a list of specific documents that are to be searched: Harts v AFP (1997) (supra) at 153.  Subject to compliance with statutory conditions as explained in George v Rockett (supra), it is not impermissible to describe the object of the search in a broad or non-specific fashion: Dunesky v Elder (supra)at 445.  However, if the warrant is so vaguely worded that a person affected by it cannot know the object of the search then the warrant is bad: Ousley v R (1997) 192 CLR 69 at 107.

157               The question is one of initial validity, hence it necessarily falls to be determined as at the point of issue of the warrant.  Acts or omissions of the executing officer cannot bear on the initial validity of the warrant, hence complaints on the part of the applicants as to the manner in which the warrants were in fact executed cannot bear upon the question of initial validity.

158               The first condition includes:

“Things which are originals or copies or drafts of any of the following including any of them which are stored in electronic or magnetic form:

            all things referred to in (a) to (p) below relating to the period 1^st July 1997 to 15th March 2001, whether or not created during that period.”

Paragraphs (a) to (p) describe a very wide variety of documents.  The only limitation is that a document within (a) to (p) must relate to the period 1^st July 1997 to 15^th March 2001 even if not created in that period, and, it would seem, whether or not the document specifically refers to that period.  The words “relating to” are words of the widest ambit.  Of the phrase “relating to”, Taylor J said, in Tooheys Ltd v Commissioner of Stamp Duties (NSW) (1961) 105 CLR 602 at 620:

“... the expression ... is extremely wide but it is also vague and indefinite.  Clearly enough it predicates the existence of some kind of relationship but it leaves unspecified the plane upon which the relationship is to be sought and identified.  That being so, all that a Court can do is to endeavour to seek some precision in the context in which the expression used.”

In Joye v Beach Petroleum NL & S Cortaus Ltd (in liq) (1996) 67 FCR 275 at 285 Beaumont and Lehane JJ referred to the decision of Taylor J in Tooheys and continued:

“Other decisions of the High Court have acknowledged that, ordinarily, ‘relates to’ is a wide term, and that it will depend upon context whether it is necessary that the relationship will be direct or substantial, or whether an indirect or less than substantial connection will suffice.”

(citations omitted)

159               Other complaints are made by the applicants.  In particular, it is submitted that no endeavour has been properly made to relate the period referred to in the first condition to the offences in the third condition.  The first condition refers to all documents relating to the period 1^st July 1997 to 15^th March 2001 yet the offences referred to in the third condition are said to have been committed mostly in 2000, but at the earliest on 1^st July 1998, and then only for one of those offences.  Similarly, no endeavour is made to link in any way the entities and individuals in the second condition with the suspected offences referred to in the third condition, or the period referred to in the first condition.  Ultimately, it is submitted that as multiple possibilities are given for each of the conditions, the three condition warrant becomes almost meaningless to the executing officer.

160               I have already referred to the fact that if one works out the mathematical combinations, there are 8,064 potentially different categories of “things” in the Williams search warrant without factoring in the additional vagueness associated with the words “relating to” in each of the first and second conditions.  The reach of these warrants is very wide indeed.  However, the mere fact that a warrant authorises a very wide range of search does not of itself result in invalidity.

161               I agree with the submission that the introduction into the first condition of a stipulation that the document should relate to a particular period, whether or not it was created in that period, and whether or not it specifically refers to that period, would introduce an unacceptable level of uncertainty if the imposition of some time period in relation to the first condition was critical to the validity of the warrants.

162               However, it is not essential that the first condition should be limited by reference to some time frame if the warrants are to be valid.  It is the third condition which indirectly provides a time frame for the search, as there must be reasonable ground for suspecting that the things to be searched for will afford evidence as to the commission of offences which are alleged to have been committed on a particular day or within a specified period.

163               The warrants are not bad on their face by reason of any of the three matters relied upon by the applicants as producing that result.

Reasonable grounds to suspect the commission of offences

164               Section 3E of the Crimes Act empowers an issuing officer to issue a warrant to search premises if the officer is satisfied by information on oath that there are reasonable grounds for suspecting that there is, or there will be within the next seventy-two hours, any evidential material at the premises.  When account is taken of the various definitions the issuing officer must be satisfied that there are reasonable grounds for suspecting:

-                     the commission of an offence against the Corporations Law;

-                     that there are or will be at the premises to be searched things which will afford evidence as to the commission of such an offence.

165               Suspicion is a “state of conjecture or surmise” or a “slight opinion but without sufficient evidence”: George v Rockett (supra) at 115.  However, some factual basis for the suspicion must be shown (George v Rockett (supra) at 115); it must be something which in all the circumstances “would create in the mind of a reasonable person an actual apprehension” of the relevant fact (Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266 at 303).  The Privy Council has described the requirement of “reasonable grounds for suspicion of guilt” as a very limited requirement: Shaaban Bin Hussien v Chong Fook Cam [1970] AC 942 at 949.

166               It is the issuing officer who is required to be satisfied that there are reasonable grounds for suspecting the relevant matters.  The notion of reasonable grounds for a suspicion imports an objective test, but “reasonable” involves a value or normative judgment (Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125 at 167), and there may well be legitimate differences of opinion as to what falls within the term, particularly when it is used in relation to a nebulous expression such as “suspicion”.  A Court is not entitled to substitute its own opinion on that question for the opinion of the issuing officer.  That does not mean that the issuing officer has an unexaminable discretion; it does mean, however, that the issuing officer’s decision is only impeachable if the decision was one which the officer could not lawfully reach on the materials before him: Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 275-276.

167               In George v Rockett (supra) at 111, the High Court said that it was implicit in the precursor to s 3E, which was under consideration in that case, that the applicant for the search warrant should entertain the suspicion to which the section refers.  The issuing officer must be satisfied that there are reasonable grounds for entertaining the relevant suspicion, without any requirement that the issuing officer must also entertain the relevant suspicion.  However, it must appear to the issuing officer, not merely to the person seeking the search warrant, that reasonable grounds for the relevant suspicion exist: George v Rockett at 112.

168               The application by Mr Unicomb for the search warrant was sworn to by him.  Paragraph 5 of the application states:

“By reason of the matters set out below an issuing officer may properly be satisfied that there are reasonable grounds for suspecting that there are at the premises ... evidential material that satisfies [the first, second and third conditions of the warrant].”

Thereafter a number of “facts” are stated and, under the heading “grounds for suspicion”, the foundational material relied upon to support the requisite suspicion is specified, often accompanied by an observation on the part of Mr Unicomb that based on the information referred to in identified paragraphs he has reason to suspect that one or more of the applicants has breached a specified provision of the Corporations Law.

169               The applicants submit that the information on oath did not disclose reason to suspect the commission of the identified offences, and that the repeated incantation by Mr Unicomb of the formula “I have reason to suspect” throughout pars 45-84 of the application distracted the issuing officer away from the real task of identifying whether there were reasonable grounds for suspecting the commission of the alleged offences.  In order to assess this submission, it is necessary to deal with each offence in relation to which this complaint is made in turn.  But first I should observe that the statement by Mr Unicomb that he has reason to suspect that one or more of the applicants has breached a specific provision of the Corporations Law is not an irrelevant distraction in the light of the High Court’s observations that it is implicit in the precursor to s 3E that the applicant for the warrant should entertain the suspicion to which the section refers.

170               Paragraph 8(a) of the third condition of the Williams warrant alleges an offence against s 184(1) of the Corporations Law, namely that between 15 June 2000 and 30 June 2000, Adler, being a director of PEE, was reckless and failed to exercise his powers and discharge his duties in good faith in the best interests of the corporation or for a proper purpose in that he caused PEE to acquire 3,924,545 shares in HIH.

171               The foundational facts relied upon with respect to this offence are:

-                     Adler was the sole director of PEE;

-                     Adler was a director of HIH;

-                     on 15 June 2000 an HIH subsidiary drew a cheque for $10 million in favour of PEE, which Adler acknowledged;

-                     PEE applied about $3.992 million of the funds received in acquiring HIH shares which it sold about three months later at a loss of $2.121 million;

-                     at about this time there was a report in The Australian Financial Review of statements allegedly made by Adler that:

“People think I sold out and I’ve got my money and gone and that’s not true ...  I want people to know that I’m a committed insurance person.

I’m making a number of statements by buying these shares.  It shows I believe in the company and I’m putting my money up which shows I believe in the industry.”

172               The applicants contend that these “facts” do not disclose that there was anything untoward about the acquisition by PEE of the shares in HIH, let alone a reckless failure on the part of Mr Adler to exercise his powers and discharge his duties in good faith in the best interests of PEE.  I agree that proof of the foundational facts would not make out the offence alleged in par 8(a).  The facts alleged fall well short of making out a prima facie case of the commission of that offence.  But the statutory test is one of reasonable grounds for suspicion, and it is the satisfaction of the issuing officer as to the existence of those grounds which is relevant.  An issuing officer could properly form the view that there are reasonable grounds to suspect the commission of an offence on the basis of materials falling well short of a prima facie case: Hussien v Cam (supra) at 948; Grollo v MacAuley (supra) at 542.  It is only if the issuing officer could not lawfully be satisfied that there are reasonable grounds for suspecting the matters earlier referred to that the warrant would be invalid and would thus be set aside: Puglisi v Australian Fisheries Management Authority (1997) 148 ALR 393 per Hill J.  At 398 his Honour said:

“... the requirement is that the sworn complaint should contain sufficient facts to show that there are reasonable grounds for the suspicion to which s 3E of the Crimes Act refers.  As George v Rockett makes clear, there is a distinction between suspicion and belief.  The former is ‘a state of conjecture or surmise where proof is lacking’.  As is said at 115 of the CLR report ‘the facts which can reasonably ground a suspicion may be quite insufficient reasonably to ground a belief, yet some factual basis for the suspicion must be shown’.”

173               Given the “facts” that funds were obtained by PEE from HIH which were used by PEE to acquire shares in HIH which substantially decreased in value within a short space of time, it cannot be said that it was not open to the issuing officer to form the opinion which he did.

174               Paragraph 8(b) of the third condition of the Williams warrant alleges an offence against s 999 of the Corporations Law, namely that between 19 June 2000 and 21 June 2000 Adler made a statement, namely that he was buying HIH shares, that was materially misleading which was likely to induce the purchase of shares in HIH by other persons when he knew that the statement was materially misleading in that he was not personally purchasing the shares.

175               The foundational facts relied upon with respect to this offence are:

-                     between 19 June and 21 June Adler did not himself purchase any shares in HIH.  The only shares in HIH acquired during that period in which Adler had a relevant interest were the shares acquired by PEE;

-                     the report in The Australian Financial Review earlier referred to.

176               Suspicion can take into account matters that could not be put in evidence at all: Hussien v Cam (supra) at 949.  The applicants submit that the allegation concerning s 999 “appears to be based on a newspaper article!  There is no basis for suspecting the alleged offences.”

177               It was open to the issuing officer to accept the contents of the newspaper article as apparently truthful.  It was open to the issuing officer to form the opinion which he did upon the basis of the facts alleged in the application.

178               Paragraph 8(c) of the third condition of the Williams warrant alleges an offence against s 184(1) of the Corporations Law, namely that on 26 September 2000 Adler, being a director of PEE was reckless and failed to exercise his powers and discharge his duties in good faith in the best interests of the corporation or for a proper purpose in that he caused PEE to acquire from Adler Corporation shares in Nomad.

179               The foundational facts relied upon with respect to this offence are:

-                     Adler was at relevant times a director of Adler Corporation and sole director of PEE;

-                     The Nomad shares were sold by Adler Corporation to PEE on 26 September 2000 at the same price as Adler Corporation paid to acquire those shares on 2 August 1999;

-                     there was a negative cash balance of about $6 million in Nomad as at 31 May 2000 with a forecast of a further deterioration in the cash balance position by 30 June 2000;

-                     an initial public offering was proposed to raise further capital was cancelled on 20 July 2000 because of the “continuing negativity of the stockbroking and investment community”;

-                     in January 2000 Nomad was placed into insolvency administration.

180               The applicants complain that the only information provided to the issuing officer is the fact of the investment and that its value may have declined.  There is no probative information or factual basis for the suspicion of the offences.  Further, Mr Hammerschlag submitted that the conduct referred to in the application for the warrant is that of Adler Corporation Pty Ltd; no act or omission on the part of Mr Adler is alleged.

181               Mr Adler was the sole director of PEE.  It was open to the issuing officer to conclude that there were reasonable grounds to suspect that Mr Adler had himself been involved in the transaction.  The material in the application is capable of supporting a reasonable suspicion that between the date of acquisition of the shares in Nomad by Adler Corporation, and the date of the acquisition of those shares by PEE, the financial position of Nomad had substantially deteriorated to the knowledge of Mr Adler thus founding an inference that Mr Adler had committed an offence against s 184(1).

182               Paragraph 8(d) and (f) of the third condition of the Williams warrant allege further contraventions of s 184(1) in relation to the acquisition by PEE from Adler Corporation of shares in dstore and Planet Soccer.  The applicant submits that the only information given is the fact of the investment and that its value may have declined.  The point is also taken that the conduct referred to is not that of Mr Adler, rather it is that of Adler Corporation.  The applicants’ claims in this respect fail for similar reasons to those given in relation to the acquisition of shares in Nomad.  In addition, it was open to the issuing officer to take into account a pattern of conduct, if he perceived one, under which Adler Corporation disposed of shares in three companies to PEE at cost even though the material suggested a substantial deterioration in the financial position of the company to the knowledge of Mr Adler in the meantime.

183               Paragraph 8(e) of the third condition alleges an offence against s 184(2) of the Corporations Law, namely that on 25 July 2000 Adler, being a director of PEE, used his position, dishonestly and recklessly as to whether the use may result in himself, Morehuman or Salman Ghassan Bayni obtaining an advantage in that he caused PEE to lend $160,000 to Morehuman.

184               The foundational facts relied upon with respect to this offence are:

-                     on 25 July 2000 PEE advanced the sum of $160,000 to Morehuman for three weeks for short term working capital requirements;

-                     repayment of the loan was guaranteed by Ghassan Bayni but was otherwise unsecured;

-                     Mr Adler and Mr Bayni were directors of Morehuman;

-                     the loan has not been repaid despite a request for repayment on 24 August 2000.

185               The foundational facts in relation to this offence are thin.  However, particularly as a pattern of conduct is relied upon as the basis for drawing the relevant inferences, it cannot be said that it was not open to the issuing officer to form the opinion which he did in relation to these events.

186               Paragraph 8(g) of the third condition of the Williams warrant alleges an offence against ss 588G and 1317FA of the Corporations Law, namely that between 1 July 1998 and 12 March 2000 Williams and the other directors of HIH recklessly and dishonestly and intending to gain an advantage for HIH failed to prevent HIH incurring debts when at the time such debts were incurred HIH was insolvent and Williams and the other directors of HIH suspected that HIH was insolvent or would become insolvent as a result of incurring those debts.  Paragraph 8(h) of the third condition alleges similar offences, taking into account legislative amendments, but in relation to the periods 13 March 2000 to 15 December 2000, and 13 March 2000 to 15 March 2001.

187               The foundational facts relied upon in relation to this offence are:

-                     an internal memorandum by the auditors of the HIH Insurance Group to the effect that underwriting losses for the group were sustained in each of the years ended 31 December 1995 up to and including 31 December 1998, rising from $7.4 million in 1995 to $73.4 million in 1998.  The underwriting loss for the 18 months ended 30 June 1999 was $173.7 million;

-                     the memorandum reported negative cash flow from operations of $48.6 million for the period ended 31 December 1998 and $341 million for the 18 month period ended 30 June 1999;

-                     the provisional liquidator of HIH has given an early estimate of the total deficiency for HIH and seventeen of its subsidiaries in the range of $2.7 billion to $4 billion;

-                     the auditor’s memorandum records that HIH had positive operating cash flows for the years ended 31 December 1995, 1996 and 1997 and that HIH had produced a total insurance profit for the 18 month period ending 30 June 1999.  Whether the reference to HIH is a reference to the parent company alone, or to the group, is perhaps unclear.

188               The applicants contend that the figures given were group figures; the only other information is that after the event an “early estimate” of the total deficiency for the entire group as at 15 June 2001 is given; none of the elements of s 588G of the Corporations Law are addressed for HIH, yet the suspected offences are with respect to HIH.

189               Again, proof of the foundational facts would be insufficient to establish the offence alleged, and it is pellucidly clear that it is the insolvency of HIH which has to be established, rather than that of some “group” of which it forms part.  The position of the group could, however, be relevant to, although not necessarily determinative of, the solvency of HIH itself.

190               Proof of the following matters is required in order to secure a conviction for this offence:

-                     that HIH was insolvent in the relevant period;

-                     that Adler and Williams suspected this was so;

-                     that they nonetheless acquiesced in HIH incurring debts in the relevant period;

-                     recklessly and dishonestly and intending to gain an advantage for HIH.

191               It would be open to the issuing officer to infer that Messrs Adler and Williams were aware of the matters in the auditor’s memorandum.  The continuing and escalating underwriting losses sustained by the group and the escalation in the negative cash flows experienced by the group could provide a reason to suspect that HIH was itself insolvent during the relevant period.  It is obvious that HIH continued to incur debts in that period and that the Board at least acquiesced in HIH’s continued trading.  Those matters could provide reason to suspect that the HIH Board acted dishonestly and intending to gain an advantage for HIH in allowing it to continue to trade whilst insolvent.

192               It may be that the suspicions held by the applicant for the warrant in relation to this or other suspected offences will turn out not to have been well founded.  Documents seized pursuant to the search warrants might themselves establish this to be so.  But the requirement is only that the issuing officer be satisfied that there be reasonable grounds for suspecting - a requirement which may be satisfied even though it may later emerge that the suspicions were not well founded.

193               Paragraph 8(i) of the third condition of the Williams warrant alleges an offence against s 184(1) of the Corporations Law, namely that on 15 June 2000 Williams and Adler, being directors of HIH, were reckless and failed to exercise their powers and discharge their duties in good faith in the best interests of the corporation or for a proper purpose in that they caused HIH Casualty & General Insurance Ltd (“HIHC”) to pay to PEE $10 million.

194               The foundational facts relied upon in relation to this offence are:

-                     Williams and Adler were directors of HIH at relevant times;

-                     Williams was a director of HIHC;

-                     Adler was the sole director of PEE;

-                     on 15 June 2000 HIHC paid $10 million to PEE, apparently as an unsecured loan;

-                     by a subsequent trust deed HIH acquired units in the Australian Equities Unit Trust;

-                     $3.992 million of the funds acquired by HIHC were applied by PEE in the acquisition of HIH shares which substantially decreased in value shortly thereafter;

-                     HIH’s investment guidelines required ratification of this transaction by the investment committee, of which Adler was a member;

-                     the payment was not approved by the investment committee in accordance with the investment guidelines.

195               Again, proof of the foundational facts would not of itself establish a prima facie case of a contravention of s 184(1) in the respect alleged.  But they do provide some factual basis for a suspicion, hence it cannot be said that it was not open to the issuing officer to form the opinion which he did.

196               Paragraph 8(j) of the third condition of the Williams warrant alleges a further offence against s 184(1) of the Corporations Law by Williams and Adler in relation to the acquisition by HIH from HSI of a 49 per cent interest in Ness Security for $17.5 million effective between 1 September 2000 and 31 December 2000.

197               The foundational facts relied upon with respect to this offence include:

-                     HIH paid $17.5 million to acquire the 49 per cent interest;

-                     a deal summary sheet signed by Williams and Adler recorded that the NTA (Net Tangible Assets) of 49 per cent of the assets of Ness at the time of purchase was $6.2 million (recorded in the books at a cost of $8.892 million);

-                     HSI used part of the purchase price to pay off debts of $13 million to HIH;

-                     this was one of three transactions involving Brad Cooper which caused HIH’s internal auditor “some substantial concerns”.

198               It is true that the foundational material included a newspaper article, but the submission put on behalf of Mr Williams that: “one has information as to the fact of the purchase and then no other probative information”, is an understatement of the position.  The foundational material provided reason to suspect that HIH had acquired an investment in Ness Security from HSI at an overvalue, in order to put HSI in funds to discharge liabilities which it owed to HIH.  It cannot be said that it was not open to the issuing officer to form the opinion which he did.

199               Paragraph 8(k) and (l) of the third condition of the Williams warrant allege the commission of various offences on the part of Mr Williams in that he dishonestly caused bank accounts of HIH and its subsidiaries to be used for his own private purposes.

200               The foundational facts relied upon in support of these offences consist of a report on the part of HIH’s internal auditor which identified transactions in HIH’s bank accounts as credits and payments made on behalf of Mr Williams as part of some form of tax planning undertaken by Peter Hunt & Associates who charged HIH $97,654 for professional services being “extensive advice to senior executives”.

201               The fact that HIH’s internal auditor had raised concerns as to the use of the company’s bank accounts for Mr William’s private purposes is capable of sustaining a suspicion that Mr Williams was dishonestly using his position as a director to gain an advantage for himself through the use of HIH’s accounts for his own private tax planning, and through the payment by HIH of fees to Hunt & Associates in respect of that private tax planning work done on Mr Williams’ behalf.  I reject the submission put on behalf of Mr Williams that the only information is that money went in and went out when there was some form of tax planning involved, which discloses no factual foundation for a suspicion of contravention of the sections identified.

202               Paragraph 8(m) of the third condition of the Williams warrant alleges an offence against ss 232(2)and 137FA, namely that between 19 August 1999 and 9 September 1999 Williams and other directors of HIH knowingly and dishonestly and intending to gain an advantage for HIH failed to act honestly in the discharge of their duties of their office in that they improperly accounted for a reinsurance agreement with Hannover Re, namely recognising an increase in profits of $60 million.

203               The foundational facts relied upon in support of this offence include:

-                     on 19 August 1999 HIH entered into a contract with Hannover Re which had the effect of allowing HIH to record a $60 million profit in its accounts for the financial period ended 30 June 1999, those accounts being signed by the directors on 9 September 1999;

-                     without this transaction HIH would have recorded an operating loss of $2.5 million for the period;

-                     an auditor from Arthur Anderson, the auditors of the HIH Group, stated during the course of an examination that the Hannover Re contract did not make commercial sense because Hannover Re was entering into a contract where a level of losses was already determined.

204               The question which the issuing officer had to confront was whether, on those facts, there were reasonable grounds for suspecting that HIH directors failed to act honestly by improperly accounting for the reinsurance agreement.  There is some force in Mr Beach’s submission that there is nothing showing that the contract was not valid and binding, nor are any facts alleged which would enable a conclusion that the transaction did not result in a profit.  But the issuing officer had before him information that a post balance date agreement, which did not make commercial sense, was said by the directors to have the effect, apparently retrospectively, of converting what would otherwise have been a loss for the period into a $60 million profit.  That material was capable of providing reasonable grounds for a suspicion that the directors had improperly accounted for the reinsurance agreement with Hannover Re, and were dishonest in so doing.

205               Paragraph 8(n) of the third condition of the Williams warrant alleges a similar offence in relation to the improper accounting for a reinsurance agreement entered into with Swiss Re on 21 January 2000.

206               The foundational facts with respect to this allegation include the following:

-                     on 21 January 2000 HIH entered into a reinsurance contract with Swiss Re under which the premiums payable and recoveries receivable were dependent upon subsequent events;

-                     a reinsurance recovery of approximately $220 million and a reinsurance premium of $105 million were recognised in HIH accounts.  This resulted in the recording of a $115 million profit for the year ended 30 June 2000;

-                     without this transaction HIH would have recorded an operating loss of $42.2 million;

-                     the form, nature, and effect of the transaction was similar to the Hannover Re agreement.

207               Particularly having regard to the last matter, it was open to the issuing officer to form the opinion which he did in relation to this transaction.

208               Paragraph 8(m) of the third condition of the Adler warrant alleges an offence against ss 588G and 1317FA of the Corporations Law, namely that between 1 July 1997 and 30 June 1998 Adler and the other directors of FAI recklessly and dishonestly and intending to gain an advantage for FAI failed to prevent FAI incurring debts when at the time such debts were incurred FAI was insolvent and Adler and the other directors of FAI suspected that FAI was insolvent or would become insolvent as a result of incurring those debts.

209               The foundational facts relied upon in relation to this offence are:

-                     statements by an HIH executive that evidence gathered to date suggests that FAI may well have been insolvent on 30 June 1998;

-                     HIH paid $300 million to acquire the FAI group, mainly on the basis of the 30 June 1998 accounts.  It subsequently emerged that provisions were under-reported to the extent of $55-95 million and that officers of FAI, perhaps including Mr Adler, knew of this;

-                     At 30 June 2000 HIH recognised a $240 million deterioration in the financial position of FAI, largely in respect of the period prior to acquisition.

210               Mr Hammerschlag SC submits that there is no direct reference to insolvent trading by FAI per se, and no reference to FAI being insolvent before a time immediately before its purchase by HSI, let alone as early as 1997.  In Mr Hammerschlag’s submission, the only basis for taking this information as applying earlier in time is Mr Unicomb’s suspicion.

211               I do not think this is right.  The submission overlooks the problem identified with the understatement of the reserves in the FAI financial accounts for the year ended 30 June 1998.  In my view, it was open to the issuing officer to form the opinion which he did upon the basis of the facts alleged in the application.  That opinion, of course, is only that there are reasonable grounds to suspect, which as I have already indicated, is a low threshold requirement.

Did the issuing officer take into account irrelevant considerations?

212               The applicants contend that the scope and purpose of s 3E(1) of the Crimes Act impliedly excludes the suspicion of the applicant for a search warrant as a factor to which the issuing officer may legitimately have regard in deciding whether or not to issue that warrant.  It is clear from s 3E(1) that it is the issuing officer who must be satisfied that there are reasonable grounds for the relevant suspicion, and the point being made in George v Rockett (supra) at 112, in the context of a relevantly similar provision, was that it must appear to the issuing justice, not merely to the person seeking the search warrant, that reasonable grounds for the relevant suspicion and belief exist.

213               In the present case whilst Mr Unicomb asserts from time to time that he has reason to suspect contraventions of the Corporations Law, in each case he sets out the basis for that suspicion.

214               George v Rockett (supra) was a decision on s 679 of the Queensland Criminal Code, which relevantly provided:

“If it appears to a justice ... that there are reasonable grounds for suspecting ...”

At 111 in George v Rockett the Court said:

“Although it is implicit in s 679 that the applicant for the search warrant should entertain the suspicion ... to which the section refers, it must ‘appear’ to the issuing justice that there are reasonable grounds for entertaining the relevant suspicion ...”

Those observations are equally applicable to s 3E of the Crimes Act.  Thus it is not irrelevant for the applicant for the warrant to state that he entertains the suspicion to which the section refers, but it remains for the issuing officer to be satisfied that there are reasonable grounds for that suspicion.  As in the present case, Mr Unicomb sets out the information by reference to which he claims to have reason to suspect relevant matters, his statement of suspicion is neither irrelevant, nor a diversion of the issuing officer from the task which the Crimes Act commits to him.  There is no evidentiary foundation for a conclusion that the issuing officer surrendered his statutory function of determining whether there are reasonable grounds to suspect in favour of Mr Unicomb’s statement of his subjective suspicion.

Suspicion that evidential material is at the premises to be searched

215               The issuing officer was required to be satisfied, by information on oath, that there were:

-                     objectively reasonable grounds for suspecting that there were in existence things which would afford evidence of the commission of the offences for which the warrants were sought;

-                     objectively reasonable grounds for suspecting that those things would be at the premises named in the search warrants.

216               The applicants contend that the information on oath did not establish that there were reasonable grounds for suspecting that the things identified were at the premises to be searched.

217               However, a considerable body of information was put before the issuing officer as to searches or enquiries undertaken by ASIC officers with a view to establishing the places at which the warrants were to be executed were houses or business offices of the persons or corporation listed in condition 2 of the warrant.  Attachment B to the application was a summary of the result of searches or enquiries with respect to particular premises.  In the proceedings before me, the applicants did not conduct any detailed examination of that information.  In the absence of any detailed criticism of the matters there recorded, I conclude that it was open to the issuing officer to be satisfied that there were reasonable grounds for suspecting that evidential material, as defined, was at each of the premises which the warrants authorised to be searched.

Acting mechanically or under dictation

218               In Parker v Churchill (1985) (supra) at 322 Burchett J said:

”The duty, which the justice of the peace must perform in respect of an information, is not some quaint ritual of the law, requiring a perfunctory scanning of the right of formal phrases, perceived but not considered, and followed by simply an inevitable signature.  What is required by law is that the justice of the peace should stand between the police and the citizen, to give real attention to the question whether the information proffered by the police does justify the intrusion they desire to make into the privacy of the citizen and the inviolate security of his personal and business affairs."

219               The applicants contend that the numerous deficiencies in the application for the search warrants, and also in the form in which they were issued, coupled with the absence of any evidence of any enquiry made by the issuing officer of ASIC as to the information, or as to the form of the search warrants, leads to the conclusion that the issuing officer did not in truth discharge the duty which s 3E(1) imposes upon him.

220               The form of warrant was defective inasmuch as it referred to sections without identifying the Act of which they form part, and inasmuch as it refers to companies listed on an Attachment A, without there being any such attachment.  Those deficiencies raise a question as to the level of care which was exercised in connection with the issue of the warrant, although it will be recalled that these deficiencies were not present in the form of application for the warrant.  I have concluded that the information given to the issuing officer was such that an issuing officer could be satisfied, on the basis of that information, that there were reasonable grounds for the relevant suspicion although in the case of at least some of the offences, it was by no means self-evident that an issuing officer would necessarily be so satisfied on the basis of the information presented.  However, these considerations provide an insufficient foundation for a conclusion that the issuing officer only colourably discharged the function which s 3E(1) imposes upon him.

Improper purpose and contempt

Improper purpose – some principles

221               The applicants contend that the search warrants were obtained for an improper purpose.  The improper purposes relied upon either by Mr Williams or by Mr Adler or by both are:

-                     to obtain material that could be used in the related Supreme Court proceeding in circumstances where ASIC could not obtain discovery from the applicants in that proceeding;

-                     obtaining documents that were not pertinent to any contemplated criminal offence or any specified offence, but rather to obtain information in general;

-                     generating publicity for ASIC.

222               The factual substratum relied upon to support the first of the improper purposes referred to above is also the foundation for the allegation of contempt.

223               The Supreme Court proceedings were instituted on 22 May 2001.  In those proceedings ASIC seeks declarations of contravention of various provisions of the Corporations Law in relation to particular transactions, orders disqualifying Mr Adler and Mr Williams from managing corporations and pecuniary penalties.  There is an overlap between the transactions which are the subject of the Supreme Court proceedings and the documents to be searched for and seized under the warrants.  The suspected offences referred to in pars (a),(c), (d), (f) and (i) at least of the third condition of the Williams warrant are also the subject of the Supreme Court proceedings.

224               Australian Competition & Consumer Commission v J McPhee & Son (Aust) Pty Ltd (No 2) (1997) 148 ALR 601 applied a line of cases beginning with the decision of Deane J in Refrigerated Express Lines Australasia Pty Ltd v Australian Meat & Livestock Corp (1979) 42 FLR 204 to the effect that discovery should not be awarded against personal respondents in proceedings which are solely for the recovery of a pecuniary penalty.

225               The Supreme Court proceedings are not solely for the recovery of a pecuniary penalty, but it was not submitted by ASIC that the fact that other relief was sought as well took the Supreme Court proceedings outside the principles applied in Australian Competition & Consumer Commission v McPhee.  Nor did ASIC submit that the provisions of s 1317L of the Corporations Law, which now obliges the Court to apply “the rules of evidence and procedure for civil matters” when hearing proceedings for a declaration of contravention, or a pecuniary penalty order, have any impact upon the principles otherwise flowing from the general law as to the non-availability of discovery against a personal defendant in any such proceedings.

226               Before the 1999 amendments to the Corporations Law, an application for a civil penalty order prevented the commencement of criminal proceedings: s 1317FB.  Section 1317P now provides that criminal proceedings may be commenced against a person for conduct substantially the same as conduct constituting contravention of a civil penalty provision, regardless of whether a declaration of contravention, a pecuniary penalty order, a disqualification order or a compensation order has been made.  Section 1317N deals with the effect of institution of criminal proceedings whilst civil proceedings are pending.  Section 1317N(1) provides:

“Proceedings for a declaration of contravention or pecuniary penalty order against a person are stayed if:

(a)               criminal proceedings are started or have already been started against the person for an offence;

(b)               the offence is constituted by conduct that is substantially the same as the conduct alleged to constitute the contravention.”

227               The degree of overlap between the subject matter of the civil proceedings and the documents to be searched for under the warrants makes it likely that in executing the warrants AFP and ASIC officers would inspect and seize documents relevant to the Supreme Court proceedings as documents also falling within the scope of the warrants.

228               If an application for a warrant is not a bona fide application for a warrant on the grounds stated, but is made for the ulterior purpose of obtaining information to be used in legal proceedings other than the criminal proceedings contemplated by the application, the warrant will be invalid, not because it authorises interference with the administration of justice in pending legal proceedings, but because the warrant was issued for an improper purpose: Grollo v MacAuley (supra) at 551.

229               But what if the warrant is not issued for an improper purpose?  In Grollo v MacAuley at 551 Northrop and Ryan JJ said:

“In many instances, in the course of executing search warrants, the persons making the search may discover information that could be used in pending legal proceedings.  That fact, of itself, could not make the search warrants invalid.  The remedy lies in action against a person making improper use of that information. … the fact that there is a possibility that information might be discovered that could be used in pending legal proceedings cannot, by itself, invalidate a search warrant which otherwise complies with the law.”

230               It is well established that documents compulsorily discovered between parties to litigation cannot be used for collateral purposes, but the basis of the discovery rule is the existence of an implied undertaking on the part of the parties not to use the documents for a collateral purpose.

231               In Welfare v Birdon Sands Pty Ltd (1997) 79 FCR 220 von Doussa J held that the principle underlying the discovery rule that a document furnished for one purpose may not be legitimately used for another, applies with equal force to documents produced to the Court pursuant to a subpoena.  Although the discovery rule is grounded in an implied undertaking of the parties, his Honour considered (at 233) that an obligation was imposed on a party obtaining a document by means of a subpoena not to use the document for any ulterior or collateral purpose.  The content of the obligation is the same whether it be described as one arising from an implied undertaking on the part of the party seeking leave to inspect the documents, or as a condition imposed by law on which the permission to inspect is granted.

232               In Donnelly v Amalgamated Television Services Pty Ltd (1998) 45 NSWLR 570 Hodgson CJ said that the discovery analogy does not really apply in the context of warrants, because in the latter “it is by no means clear that there is any implied undertaking to any court by police, using their powers under a warrant and/or of arrest, that they will not use material obtained thereby otherwise than for the purpose [of] the relevant investigation or prosecution”.  His Honour suggested that “where what is obtained by the exercise of such powers is a person’s property, then dealing with that property otherwise than for the purpose of the powers could be conversion or detinue: see Gollan v Nugent (1988) 166 CLR 18, and also referred to three cases which “show how concerned the courts are to ensure that the coercive powers of the police under a search warrant and/or arrest are not abused”, and said “I believe that the Supreme Court does have a general jurisdiction to restrain threatened abuses of the processes of criminal justice”.

233               If entry is gained to premises by means of the compelling nature of a search warrant, and documents are seized, in my view it would be consistent with general principle to hold that it would be improper for documents seized pursuant to the warrant to be used for any purposes outside those comprehended by the warrant.  That view is consistent with the terms of Part 1AA of the Crimes Act.  Section 3F(5) is a limited legislative permission to make the things seized available to officers of other agencies and s 3ZV(1) obliges the return of things seized, subject to a contrary order of a Court, if the reason for seizure no longer exists, or if it is decided that the things seized are not to be used in evidence.

Multiple purposes

234               If ASIC were actuated by more than one purpose in applying for a warrant, one within power and another not, then the application for the warrant would only be invalidated where the “initiating and abiding” purpose is a foreign or ulterior one: Flanagan v Federal Commissioner of Taxation (1996) 60 FCR 149, 203.  If statutory power is exercised for more than one purpose, where one of the purposes is improper, the exercise of the power will be vitiated if the improper purpose was a substantial purpose in the sense that the decision would not have been made but for the ulterior purpose: Kazar v Deuus (1998) 88 FCR 218 (Merkel J); Warringah Shire Council v Pittwater Provisional Council (1992) 26 NSWLR 491 at 509.

Onus of proof

235               The applicants contend that the onus of proving that the warrants were lawfully issued falls upon ASIC.  Reliance was placed upon the decision of Heerey J in Challenge Plastics Pty Ltd v Collector of Customs (No 2) (1994) 49 FCR 541.  At 543, Heerey J said:

“Generally speaking, administrative acts are presumed to be valid and the onus is on the party seeking to challenge them: … However, here we have a rather special situation of an entry on premises and removal of documents without the consent of the owner of the premises and documents.  Without lawful justification, such conduct would constitute a trespass.  In substance, this proceeding has been concerned with the legal justification advanced by the respondent for that action.  Where the exercise of executive discretion interferes with liberty or property rights, once the person affected has shown a prima facie case the burden of justifying the legality of the decision is on the executive: R v Secretary of State for the Home Department; ex parte Khawaja [1984] AC 74 at 112 per Lord Scarman.”

236               I agree that once the applicants show an invasion of their premises or property by ASIC, the onus is upon ASIC to adduce evidence, and to persuade the trier of fact that its invasion of what would otherwise be the applicants’ rights was undertaken with lawful justification.  But ASIC discharges that onus by the production of the search warrants, and by demonstrating that its actions were within the scope of the authority conferred by the warrants.  If the applicants wish to challenge the issue of the warrants on administrative law grounds, then the onus is on them to make good that challenge.  This result is consistent with the decision of the Full Court in Malubel v Elder (supra) at 249 where the Court held that the issue of a warrant is an administrative act, and steps taken pursuant to it may be presumed to be valid unless and until the warrant is set aside.  The observations of Gummow J in Ousley v R (supra) at 130-131 are to like effect.

A duty of disclosure?

237               The applicants assert that the warrants are invalid by reason of the non-disclosure to the issuing officer of the Supreme Court proceedings and of the overlap between the documents to be searched for pursuant to the warrant and the transactions the subject of those proceedings.  I have already found that whilst there are some elliptical references in the application for the warrants to the proceedings in the Supreme Court, there is no disclosure to the issuing officer that the Supreme Court proceedings are proceedings in which a civil penalty was sought, nor is there any disclosure to the issuing officer of the overlap between the warrants and the transactions the subject of the Supreme Court proceedings.

238               Lego Australia Pty Ltd v Paraggio (1994) 52 FCR 542 was a case which arose in the context of the former s 10 of the Crimes Act.  The Court there held that whether there is a duty of disclosure is a question of statutory construction, and there is no analogy with the principles applied by Courts of Equity in relation to the granting of ex parte relief.  The Full Court held that there was no general, in the sense of abstract, duty of disclosure.  That is not to say that a warrant should not be set aside for fraud or misrepresentation.  For this purpose a statement which is a half truth, and thus misleading, would be treated as a misrepresentation.

239               It follows from the decision in Lego v Paraggio and from Carmody v MacKellar (1997) 76 FCR 115, 146-149 that there was no duty on ASIC to disclose to the issuing officer the pendency of the Supreme Court proceedings or the nature of those proceedings or that the proceedings involved transactions which overlapped with the extent of the search authorised by the warrants.

240               Mr Beach QC, counsel for Mr Williams, relied upon the decision in Karina Fisheries Pty Ltd v Mitson (1990) 96 ALR 629 at 636-639 in support of his contention.  He frankly accepted, however, that there is more recent Full Court authority against the existence of such a duty of disclosure per se; see Puglisi v Fisheries Authority (supra) (which refers to the Full Court authorities).  Nevertheless the applicant maintained the point in order to preserve its position on appeal.  Further, Mr Beach relied upon s 3ZT of the Crimes Act in support of his submission.  Section 3ZT provides:

“A person must not make, in an application for a warrant, a statement that the person knows to be false or misleading in a material particular.”

Section 3ZT is not a secure foundation upon which to import a duty of disclosure of the Supreme Court proceedings, as the non-disclosure of those proceedings did not result in any relevant misrepresentation.

Contempt of Court

241               In Commissioner of Taxation v De Vonk (1995) 61 FCR 564 at 569 Foster J said that the doctrine of contempt of court focuses upon a court’s right and, indeed, its obligation to protect the integrity of its operations and to prevent interference with the administration of justice.  The contempt which is relied upon here is a contempt of the Supreme Court rather than of the Federal Court, which gives rise to a threshold concern as to whether this Court has power to deal with a contempt of the Supreme Court, or if it does, the appropriateness of exercising that power.  The issue of punishment of contempt of the Supreme Court is a matter solely within the purview of that Court.  The applicants do not seek to punish ASIC for contempt of the Supreme Court.  Rather, they rely upon that contempt as the basis for injunctive relief in a context in which the same factual substratum is relied upon in support of the contention that the warrants were sought for an improper purpose.  No authority was cited which either establishes or denies the applicants’ entitlement to invoke principles as to contempt of the Supreme Court in the way they seek.

242               In Federal Commissioner of Taxation v De Vonk (supra) at 569 Foster J said:

“It is clear from Victoria v Australian Building Construction Employees & Builders Labourers’ Federation (1982) 152 CLR 25 that even in the absence of an intention to interfere with the course of justice, the establishment or continuation of an administrative enquiry will be a contempt if there is an actual interference with the administration of justice or ‘a real risk, as opposed to a remote possibility’ of such an interference (see per Gibbs CJ at 56).”

In Brambles Holdings Ltd v Trade Practices Commission (No 2) (1980) 32 ALR 328 a notice under s 155 of the Trade Practices Act 1974 (Cth) was served upon Brambles for the very purpose of obtaining information from Brambles that could not be obtained by discovery and interrogatories in the pending proceedings, as those proceedings were for the recovery of a penalty.  It was held by the Federal Court that the issue of the notice was a contempt of the Federal Court because it was a clear attempt to procure an advantage by threatening a party with a criminal proceedings if it did not do something which the law did not require it to do.  It was not necessary for an intention to interfere with the course of justice to be established.  The question is whether the conduct in question was calculated so to interfere.  It is the inherent nature of the act, not the state of mind of those who caused the act, which is relevant.

243               Hammond v The Commonwealth (1982) 152 CLR 188 shows that the mere fact that proceedings are pending in a Court does not mean that any parallel or related administrative enquiry, conducted for proper administrative purposes, constitutes an interference with the due administration of justice in that Court: per Deane J at 206.  Later on that page his Honour said:

“For example, the existence of civil proceedings, in respect of certain alleged actions, will not ordinarily preclude proper administrative enquiries as to whether penal proceedings should be instituted in respect of those alleged actions.  Thus, neither police enquiries nor committal proceedings constitute, in themselves, an improper interference with the proceedings of a court hearing a civil claim based on the subject matter of such enquiries.”

The present case is clearer, as the relevant provisions of the Corporations Law contemplate that civil penalty proceedings, and the investigation of criminal offences, may proceed concurrently, subject to the stay of the civil penalty proceedings if criminal proceedings are started in relation to substantially the same conduct: s 1317N(1) (supra).

244               The present case differs from Brambles v Trade Practices Commission (supra) in as much as Messrs Williams and Adler are not required by the search warrants to do anything other than suffer an invasion of their premises and the taking of their property.  If AFP or ASIC sought to use the documents seized for a purpose other than the purposes contemplated by the warrant, such as, for example, as evidence in the civil proceedings, then that would be an abuse of power on their part, which, consistently with Grollo v MacAuley (supra) and Donnelly v Amalgamated TV, could be restrained by injunction.  Accordingly, the applicants have not established that there is a real risk in the circumstances of the present case that any trial in the Supreme Court will be prejudiced by the execution of the warrants, if only because ASIC and AFP could not lawfully use documents seized for a purpose foreign to the purpose for which seizure was authorised.  The matter of contempt is put beyond doubt by an undertaking proffered to the Court by ASIC.  In submissions lodged on 31 July 2001 counsel for ASIC, Mr Robertson SC stated:

“Consistently with ASIC’s purpose to obtain the material for the purposes of investigating and prosecuting criminal proceedings however ASIC indicates that it will proffer an undertaking not to use the documents seized under the warrants or the information in those documents for the purposes of the civil proceedings ASIC v Adler No 2753/01 pending in the Supreme Court of NSW.”

I will require an undertaking to that effect to be formally given to the Court.

245               People working on the civil case were involved in the execution of the warrants.  In executing the warrants they may have read documents which are relevant to the civil proceedings.  The applicants assert that this is sufficient to establish that there is a real risk that any trial in the Supreme Court would be prejudiced for that reason.  But there is no showing of how or why this would be so.  On the evidence, the risk is theoretical, rather than real.  In coming to that conclusion, I have not overlooked the Buchhorn memorandum.  That is a discrete matter.  In any event it is not apparent how the communication of the information contained in that document could create a real risk that a trial in the Supreme Court would be prejudiced as a result.  There is no “real and definite tendency to prejudice or embarrass pending proceedings”: Puglisi v Australian Fisheries Management Authority (supra) at 400 (Hill J).

Were the warrants issued to obtain documents for the Supreme Court proceedings?

246               Mr Beach QC submitted that the Court should infer that ASIC had the relevant improper purpose from any one or more of the following nine pieces of evidence:

(i)                  the fact that the subject matter of the search warrants overlaps significantly with the subject matter of the civil proceedings;

(ii)                the sequence of events.  Consideration of the issue of the warrants began about a fortnight after the institution of the civil proceedings.  ASIC’s documents suggest that at least on and from 12 June 2001 application for the search warrants was under active consideration;

(iii)               at the tactical meeting held on 25 June 2001 no limitation was discussed or imposed on the purposes for which seized material could be used;

(iv)              the very substantial overlap in search warrant teams and the ASIC personnel working on the pecuniary penalty case;

(v)                information has been used for the pecuniary penalty case being the information referred to in Mr Buchhorn’s memorandum of 27 June 2001.  Generally, all the information seized was available to ASIC’s pecuniary penalty civil team due to the absence of any Chinese wall;

(vi)              the failure by ASIC, which should be a model litigant, to call evidence from the persons who made the decision to apply for the warrants and from the ASIC personnel working on the civil penalty case who were involved in the execution of the warrants, and in particular Jennifer Balding;

(vii)             the failure by ASIC to follow the AFP guidelines;

(viii)           the failure by ASIC to produce any decision-making document or recording of the reasons and purposes of the decisions the subject of challenge in these proceedings;

(ix)              the unreliability of the evidence of Jan Redfern which is reflective of her consciousness of inappropriate behaviour on behalf of ASIC.

247               Mr Hammerschlag SC formulated the factual support for abuse of power in these respects in different terms, but in substance it covered the same field.  In addition, Mr Hammerschlag relied upon the “admissions by Ms Redfern to Mr Glass and Miss Platford” earlier referred to [at pars 78-82] and the continuing involvement of Ms Balding in the civil proceedings as late as 24 July 2001.

248               It is clear that impropriety of purpose can be established by inference.  Thus in Federal Commissioner of Taxation v De Vonk (supra) at 578 the Court held that a notice under s 264 of the Income Tax Act issued shortly after the laying of a tax-related criminal charge, might found an inference that the purpose of the notice was to assist the Commissioner in obtaining further evidence in support of the criminal charge.  But whether it is appropriate to draw such an inference will depend on all the circumstances.

249               ASIC conducted one investigation with respect to HIH.  It is not as if there were discrete investigations into civil proceedings on the one hand, and in relation to proposed criminal proceedings on the other.  Mr Turton and/or Mr Unicomb were the investigators heading the investigation, and it was one or other or both of them who decided that application should be made for the issue of the warrants.  I accept Ms Redfern’s evidence that she was not involved in the decision to apply for the warrants, although at some stage before 25 June 2001 she became aware that the warrants were to be executed.

250               I do not have any direct evidence from Mr Turton and/or Mr Unicomb as to the purpose for which the warrants were sought.  There is, however, some evidence that criminal proceedings were in contemplation at the relevant time.  That evidence consists of the terms of the application for the warrants itself; the evidence as to a meeting with officers of the DPP on 6 June 2001 to discuss possible criminal proceedings; some admittedly self-serving evidence, namely the statements by Ms Redfern at about the time of the search that ASIC was executing the warrants in respect of a criminal investigation; and the adjournment of the Supreme Court proceedings for a period to enable a decision to be made as to the future of those proceedings having regard to the possible intervention of criminal proceedings.  I am satisfied that possible criminal proceedings were in contemplation by ASIC at the time of application for the warrants.

251               That criminal proceedings were in contemplation at the time of application for the warrants robs many of the coincidences on which the applicants rely, as to timing, personnel and subject matter, of what might otherwise be their force.  So too does the statutory context, which contemplates at least the possibility that civil penalty proceedings and criminal proceedings may be embarked upon concurrently.  It should also be recalled that at the point of issue of the warrants no obstacle had arisen in the civil proceedings in relation to discovery, nor is there any evidence of any pressing need for documents to be obtained from the applicants in order to enable ASIC to pursue the civil proceedings. Ms Redfern’s evidence (T 238) was that on the basis of documents obtained by ASIC prior to the execution of the warrants, she felt that ASIC had a strong case in the civil penalty proceedings.

252               There is no evidence which would enable a conclusion to be drawn that prior to the execution of the warrants, ASIC perceived any need to keep separate the criminal investigation from the civil proceedings.  The fact that there was but one investigation, and that solicitors engaged in the civil proceedings were enlisted to assist with the execution of the warrants, indicates that ASIC did not perceive any need to take any steps to ensure that the results of the execution of the warrants were not available for the purposes of the civil proceedings.  The first indicator of any concern within ASIC in that respect was when Ms Redfern became aware of complaints on the part of the solicitors for Mr Adler and Mr Williams that the warrants were being executed for an improper purpose. 

253               I am not satisfied that the warrants were issued for the purpose of the Supreme Court proceedings in the sense that the “initiating and abiding” purpose underlying the issue of the warrants was the pendency of those proceedings.  I am not satisfied that the warrants were issued for any purpose foreign to that asserted in the application, namely that the warrants were sought because Mr Unicomb suspected, and asserted that there were reasonable grounds for suspecting, that there were on the premises to be searched evidential material satisfying the three conditions of the warrant.  Ms Redfern was not involved in the application for the warrants, hence she cannot give direct evidence as to the purpose for which their issue was sought.  It may well be, and it probably is the case, that Mr Unicomb and others would not have seen any problem in using the search warrant material for the civil case, assuming they gave any consideration to that question.  But even if that were so, it does not lead to the conclusion that a substantial purpose behind the issue of the warrants was to obtain documents for the civil proceedings and I am not otherwise satisfied that this was an operative purpose.  Once the issue was raised with Ms Redfern, she at least perceived a problem, and set about assembling a different team to progress the civil matter.

254               Points (i), (ii) and (iv) made by Mr Beach are blunted by the fact, which I accept, that a criminal investigation and the civil proceedings were proceeding concurrently.  The purpose of the tactical meeting referred to in point (iii) was to instruct those to be involved in the execution of the warrant.  I accept that ASIC did not perceive any need to compartmentalise the civil proceedings from the criminal investigation, but for the reasons already given, this provides an insufficient foundation for a conclusion that the warrants were sought for an improper purpose.

255               The events surrounding the preparation and dispatch of Mr Buchhorn’s memorandum of 27 June 2001 lead to the conclusion that, in that respect, he acted outside the scope of the authority of the warrant.  He abused his position as an entrant on the premises to record and convey financial information to his superiors which he knew was not within the scope of the warrant, and which he must have known to have been confidential in nature.  Mr Buchhorn’s conduct in this respect was wrongful, as was Mr Turton’s condonation of it.  But I am not satisfied that this incident, even when taken in conjunction with the other matters relied upon, provides a sufficient foundation for an inference that the decision to apply for the warrants would not have been made but for the desire to use documents seized for the purposes of the Supreme Court proceedings.  Mr Buchhorn was acting on his own initiative by way of reaction to what he regarded as interesting material; his conduct, whilst reprehensible, provides an insufficient foundation for the applicants’ thesis.

256               Point (vi) is circular.  A prima facie case cannot be made out on the basis of failure to call certain witnesses.  Nor am I satisfied that there is any sinister significance associated with any failure to follow AFP guidelines as indicated in point (vii).  There was some evidence that it is not the usual procedure that before AFP moves they have to have a piece of paper called a “request” in accordance with the guidelines, and there was evidence that the guidelines are not ordinarily adhered to.

257               The fact that there are no documents produced in relation to the decision to issue the warrant (point (viii)) supports an inference that no such documents (other than the series of draft applications for a warrant) were created.  But this does not lead anywhere.  I cannot conclude from the absence of decision-making documents that the application was attended by any impropriety of purpose.

258               The attack on Ms Redfern’s credit (point (ix)) fails for reasons which I will shortly explain. 

259               I have already dealt with the matter of alleged admissions by Ms Redfern.  Ms Balding’s continuing involvement in the civil proceedings as at 24 July 2001 is not shown to rise above signing a letter enclosing a document at the request of Ms Redfern.  It does not carry the matter any further.  The applicants have failed to establish their case that the search warrants were sought for the purpose of obtaining material for use in the Supreme Court proceedings.

Ms Redfern’s credit

260               I accept Ms Redfern’s evidence that the meeting of 6 June 2001 was in the nature of a preliminary meeting to discuss the matter prior to a meeting later that day with the DPP to discuss a possible criminal prosecution.  I also accept her denial that the matter of search warrants was raised at that meeting.  I have already found that there is an inconsistency in Ms Redfern’s evidence in this respect [at par 17].  But in my view, it is no more than that.  The inconsistency does not reflect adversely on Ms Redfern’s honesty as a witness, or on the general reliability of her evidence.

261               I have accepted Ms Redfern’s evidence that she was not present at the tactical briefing, and I accept her explanation that her name and telephone numbers were included in the tactical briefing document without her prior knowledge or consent.  I have accepted that the extent of Ms Redfern’s involvement on 26 June 2001 does not indicate or require a conclusion that her involvement must have been preplanned, and I accept what she had to say about this matter.

262               I have already found that I prefer Mr Zwier’s evidence to that of Ms Redfern as to the conversation in relation to the s 33 notice on 26 June 2001 [at par 74], but again, I am not persuaded that Ms Redfern was deliberately not telling the truth about this matter, or that the fact that she is in error in her recollection of that conversation is indicative of a more general unreliability.  The cross-examination on this topic was more in the nature of a memory test.  There was no reason for Ms Redfern to lie.  My impression of Ms Redfern as a witness was that she was truthful and generally reliable.  That impression was reinforced by the fact that Ms Redfern denied in her affidavit the assertion by Mr Glass (the solicitor for Mr Adler) that he saw Ms Redfern removing documents from the Adler Corporation’s filing systems, reading and tagging those documents – an assertion which Mr Glass withdrew in cross-examination (T 182/1).

263               Nor do I accept that Ms Redfern’s approach to the execution of the warrants was to seize all documents, and then sorting out questions of relevance in Court later.  Ms Redfern’s proposal was simply that it should be agreed that if a dispute arose as to whether or not particular documents fall within the terms of the warrant, the documents should be taken and identified, with a view to later resolution of the dispute.

Were the warrants sought to obtain information in general, rather than documents that were pertinent to the offences specified in the third condition?

264               The applicants relied upon a variety of factual matters in support of this contention which are set out in the written submissions.  The principal matters relied upon are:

-                     disconformity between the application, the warrants and the tactical briefing documents;

-                     the omission from the second condition in the final application for the warrants of references to Business Thinking Systems and Pacific Mentor, entities which were included in the draft.  These companies were referred to in the tactical plan, and documents relating to them were seized;

-                     numerous other documents manifestly outside the terms of the warrant were seized;

-                     a statement by Mr Unicomb to Mr Glass (affidavit of S D Glass of 4 July 2001 at par 21) that the warrant entitled him to seize anything that might relate to any offence, irrespective of whether it was in the third condition;

-                     Federal Agent Brown’s approach to the execution of the warrants, allegedly on the advice of ASIC officers;

-                     the brevity of the briefing session;

-                     the tactical plan handed to team leaders at the briefing session does not refer to date restrictions in the warrants, or to the third condition.

265               Counsel for Mr Adler was explicit in his submission that this was not merely a case of incompetent, or unduly zealous or enthusiastic execution of a warrant.  It is a case where ASIC at all times had the purpose of using the warrants to perform a general trawl of the documents relating to any possible offence without regard to the limitations imposed by the second or third conditions of the warrants.

266               This is a serious charge to levy against a regulator such as ASIC.  That does not mean that if the charge is made good by the evidence, I should shrink from finding that it has been established.  But it does mean that Briginshaw principles are applicable, and that I should not find that such a charge is made out on the basis of uncertain inferences or equivocal considerations.

267               The case which the applicants seek to make attributes to the tactical plan a significance which is not borne out by the evidence.  The case which the applicants seek to make is that executing officers were instructed by the tactical plan to act in disregard in terms of the warrants.  The tactical plan may have inadequately or insufficiently reflected the terms of the warrants, but the evidence does not establish that its intended role was as an override of or a substitute for the warrants.  Ms Redfern, Mr Buchhorn, Mr Dunlop (a team leader) did not receive a copy of the tactical plan; Federal Agent Brown saw a copy at the briefing session, but she did not copy it to the members of her search team.

268               Listing Pacific Mentor and Business Thinking Systems in the tactical plan when they had been omitted from the final version of the warrants is possibly explicable on the grounds of error, and nothing is shown about either of these companies which would explain why it would be material to search for their documents, notwithstanding their omission from the companies listed in the second condition of the warrant.  There are illustrations of documents being seized which are outside the terms of the warrants, and I have already expressed my lack of satisfaction with the evidence which Federal Agent Brown gave upon this topic [at par 68].  The discussion between Mr Unicomb and Mr Glass as to the scope of the powers conferred by s 3F(1)(d) of the Crimes Act is inconsequential, and shows nothing as to the purpose for which the warrant was obtained.

269               In my view, the matters on which the applicants rely do not rise above inept or inadequate briefing of those who were to be involved in the execution of the warrants or, in some cases, unduly zealous or overly enthusiastic execution of the warrants.  They do not persuade me that ASIC applied for the warrants for the purpose of conducting a general trawl of the applicants’ documents under colour of warrants containing limitations on the scope of the search which limitations ASIC intended to ignore.

Were the warrants applied for for the purpose of generating publicity for ASIC?

270               Matters relied upon by the applicants in support of this contention are:

-                     no basis for ex parte relief;

-                     no basis for seeking Adler’s passport;

-                     failure to check where Adler was, his family ties, etc before seeking ex parte relief or the seizure of his passport;

-                     no s 33 notice was ever given to Adler to provide documents;

-                     Adler publicly announced on radio his preparedness to provide documents;

-                     Adler attended s 19 examination with no complaints by ASIC about his compliance or his evidence;

-                     Adler readily agreed to give undertakings in the civil proceedings;

-                     s 33 notices were given to Adler’s advisers;

-                     the HIH matter was receiving daily press at the time;

-                     the Chairman of ASIC had made statements about the desirability of publicity;

-                     Ms Redfern conceded that there was intense pressure on ASIC to be seen to be doing something about HIH;

-                     Ms Redfern gave interviews to the press in relation to the civil proceedings.

271               Mr Hammerschlag submitted that there was no rational explanation for the search warrants other than a desire for publicity, given the history and Adler’s co-operation in supplying information to ASIC.

272               In Smiles v Commissioner of Taxation (1992) 35 FCR 405 Davies J, at first instance, held that whilst it would be inappropriate for a prosecution to be instituted merely for the purpose of the publicity which might be gained, it is not wrong to take into account the publicity likely to arise from, and the deterrent effect of, a prosecution when considering whether or not a prosecution for a taxation offence should be instituted.  There is no element of abuse of power in that consideration, rather good administration.

273               It is at least implicit in the applicants’ submissions that the search warrant power is a power of last resort which should only be resorted to if the alternative means available by which the applicant for a search warrant might obtain access to documents the subject of the proposed warrant, with less invasion of privacy, have failed or are shown to be inappropriate.  In Lord (Liquidator of Dallhold Investments Pty Ltd (in liq)) v Commissioner of Australian Federal Police (1997) 74 FCR 61 84-85, Lindgren J rejected the submission that the search warrants power is a power of last resort. 

274               Although the submissions assert that there was “no basis” on which ASIC could properly seek ex parte relief in the civil proceedings, or the surrender of Adler’s passport, this is not established as a matter of fact.  Ms Redfern denied any impropriety on the part of ASIC in this respect and there is nothing apart from bald assertion to contradict what she said in that respect.  Mr Adler did not give evidence in the proceedings, and his public announcement was admitted into evidence on the specific basis that it did not establish the truth of the matters announced.

275               There was a lot of publicity generated by the collapse of HIH, and Ms Redfern did concede that there was intense pressure on ASIC to be seen to be doing something about HIH.  Mr Knott did make a press statement to the effect that ASIC cannot be fully effective unless the market knows that it is regulating, and that effect can best be achieved by publicity.

276               However, the matters relied upon do not come anywhere near establishing that publicity was the sole or a predominant factor influencing the decision to seek the search warrants.  There is no evidence that Ms Redfern, or for that matter, anybody else took any steps to create any media interest, although Ms Redfern readily conceded that she knew that there would be media interest.

277               This claim fails.

Release of the documents to ASIC

278               On 26 June 2001 Federal Agent Brown was served with a notice under s 33 of ASIC Act.  The notice related (inter alia) to books seized pursuant to the warrants the subject of these proceedings.  Federal Agent Brown’s evidence was that she did not act on the notice (T 372): “because the documents are handed over under Crimes Act 3F(5)”.  Ultimately the respondents did not rely upon the s 33 notice as the authority for the transmission of the documents seized pursuant to the warrants from AFP to ASIC, hence it is not necessary to pursue further questions as to the validity of that notice.

279               The applicant for the search warrants was an ASIC officer, and ASIC officers assisted AFP in the execution of the warrants.  ASIC is charged with the administration of the Corporations Law in relation to which the offences referred to in the third condition of the warrants allegedly arose.  It is clear that it was always intended that documents seized by AFP pursuant to the warrants would be made available to ASIC, as the “mission” described in the tactical plan includes as the final step: “transfer custody of the seized books from the AFP to ASIC”.

280               Federal Agent Moses told Mr Zwier that AFP executed the search warrants at the request of ASIC, and AFP did not wish to become embroiled in a legal dispute.  It was AFP’s intention to deliver up the documents seized uncopied to ASIC.

281               Section 3F(5) of the Crimes Act provides as follows:

“(5)     If things are seized under a warrant, the warrant authorises the executing officer to make the things available to officers of other agencies if it is necessary to do so for the purpose of investigating or prosecuting an offence to which the things relate.”

Section 3ZV imposes an obligation upon a constable who seizes a thing under Part 1AA of the Crimes Act to return that thing in specified circumstances.

282               Although the executing officers were not called to give evidence (apart from Federal Agent Brown) I infer from the surrounding circumstances referred to in par [279] above that it was conceived to be necessary to make documents seized pursuant to the warrants available to ASIC for the purpose of investigating or prosecuting the offences to which the documents seized relate.  There is no evidence from which I could draw a contrary inference.  The evidence of Federal Agent Brown supports that inference.

283               Even so, the applicants submit that s 3F(5) only authorises AFP to “make the things available” to ASIC; it does not authorise relinquishing custody of those things, nor surrendering care, custody and control of them.

284               There is no direct evidence of any agreement between AFP and ASIC as to the terms on which the documents seized were made available to ASIC, except that Federal Agent Brown gave some evidence that “the process of receipts being handed over and returned” was the basis on which movement of documents from AFP to ASIC and in the opposite direction takes place. 

285               It would not be open to AFP to deal with the documents seized in such a way as would make it impossible for the s 3ZV obligation to be performed.  But there is no evidence on which I could infer that AFP has behaved in that way, and such evidence as there is on the topic (transfer of documents between agencies by receipt) suggests that it has not.

286               “Make available” is a non-technical expression which would give a range of choices to the person empowered to make a thing available to officers of other agencies.  For example, allowing inspection of a document by an officer of another agency might constitute making that document “available” to the officer of that agency, but there is no reason for restricting the expression to that illustration, when clearly, it is capable of a wider signification.  As a matter of ordinary English a document might be made available to a person by putting the document into the possession of that person.  The applicants submit that a power to make something “available” does not authorise its surrender.  If all that is meant by this submission is that AFP cannot disable itself and its officers from their ability to discharge the s 3ZV obligation, then the submission is unexceptionable, but, as I have said, there is no evidence that AFP has so acted as to make the s 3ZV obligation incapable of performance.  But if the submission is meant to convey that giving possession or custody of a document to a person is sufficient of itself to establish that something beyond making the document available to that person has occurred, then I do not agree. 

287               All that emerges is that AFP has given the documents seized to ASIC for the purpose referred to in s 3F(5).  As a matter of ordinary English, it seems to me that AFP has thus made the documents seized available to ASIC for that purpose.  The applicants have therefore failed to make out their claim that the giving of the documents by AFP to ASIC was beyond power.

288               The applicants also submitted that natural justice required that they be given notice before the documents were passed on to ASIC: Johns v Australian Securities Commission (1992) 178 CLR 408.  Johns concerned the exercise of a statutory power in private, and then a dissemination outside the statutory scheme to a Royal Commission without preservation of confidentiality.  In the circumstances of the present case, s 3F(5) confers statutory authority for AFP to make things available to ASIC.  There is no room for an implication that the authority thus conferred is subject to the applicants being given prior notice of AFP’s intention to exercise the statutory power given to it by s 3F(5) in that respect.

289               I should add, although this was not the subject of submission on the part of the respondents that the “status quo agreement” embodied in the letter of 26 June 2001 from Arnold Bloch Leibler to ASIC, and in the letter of 27 June 2001 from Gilbert & Tobin to ASIC proceeded upon the basis that it was ASIC which had possession of the documents and which gave the undertakings designed to preserve the status quo.  In particular, the Gilbert & Tobin letter recorded an agreement that documents seized would be placed in sealed boxes and sent to AFP officers on the basis that they would not be inspected by AFP.  ASIC was to promptly serve a notice on AFP to secure the release of the documents into the custody of ASIC which in turn gave certain undertakings as to what would happen to the documents thereafter.  At least so far as Mr Adler is concerned, his solicitors appear to have entered into an agreement with ASIC, one of the terms of which was that documents seized by AFP would be passed over to ASIC.  In view of the conclusion which I have reached it is not necessary to pursue this matter further.  However, if I had come to a different conclusion, a question would have arisen as to whether Mr Adler was disentitled to any relief in relation to the handing over of the documents by AFP to ASIC, as his solicitors appear to have assented to that occurring.

Copying the computer records

290               After operating electronic equipment at the accountant’s premises pursuant to s 3L(1), it was found that evidential material was accessible by use of that equipment.  However, the computer databases included more than evidential material.  Information in relation to hundreds of clients of the accountant’s firm, as well as in relation to the accountant’s business was also stored in the databases forming part of the computer system.

291               There were at least three ways of dealing with this problem.  One was to conduct a keyword search of the material on the accountant’s computers, and to copy only those files which contained information satisfying the three conditions of the warrant.  As indicated in pars 49-53 above, Mr Hunter did not consider this to be a practical option because it would take a week to copy only relevant files, and in any event copying a single file is not a satisfactory way of treating evidence in a computer.  I accept Mr Hunter’s evidence in this respect.

292               A second way would be to transfer the hard disk from the accountant’s computer, and to replicate it on Mr Hunter’s equipment.  A keyword search could be conducted on that equipment much more quickly than on the accountant’s equipment.  If a keyword search did not bring up relevant matches, then the image taken could be deleted from Mr Hunter’s equipment.  This process would have taken until about midnight as there were thirteen computers which needed to be processed in this way.  The warrant was authorised to be executed between the hours of 6 am and 10 pm.

293               A third choice, and the one which was adopted, was to take a “forensic image” of the contents of the databases thereby capturing material that was within the scope of the warrants, as well as material that was outside it.  Mr Hunter conducted a keyword search on each of the thirteen computers which were on the premises and:

“As soon as a match was discovered the computer was turned off and the hard disk imaged.  That was the process that took place.”

 (T 271).

294               By this process a complete snapshot was taken of all the information on the hard disk stored in the computer, including information which had been deleted.

295               Section 3L(2) and (3) of the Crimes Act provide as follows:

“(2)     If the executing officer or a constable assisting, after operating the equipment, finds that evidential material is accessible by doing so, he or she may:

(a)               seize the equipment and any disk, tape or other associated device; or

(b)               if the material can, by using facilities at the premises, be put in documentary form – operate the facilities to put the material in that form and seize the documents so produced;

                        or

(c)                if the material can be transferred to a disk, tape or other storage device that:

(i)                 is brought to the premises; or

(ii)               is at the premises and the use of which for the purpose has been agreed to in writing by the occupier of the premises;

                        operate the equipment or other facilities to copy the material to the storage device and take the storage device from the premises.

(3)               A constable may seize equipment under paragraph (2)(a) only if:

(a)               it is not practicable to put the material in documentary form as mentioned in paragraph (2)(b) or to copy the material as mentioned in paragraph (2)(c); or

(b)               possession by the occupier of the equipment could constitute an offence.”

296               Thus, subject to s 3L(3) the executing officer was authorised to seize the computer equipment or the hard disk or other associated device on which evidential material was to be found.

297               I accept Mr Hunter’s evidence that it was not practicable to deal with the matter in terms of s 3L(2)(b).  The question which then arises is whether s 3L(2)(c) authorises copying of the material which is on the disk, tape or device by the operation of which evidential material may be accessed, or whether it merely authorises the copying of the evidential material contained on the disk, tape or device.

298               The Explanatory Memorandum in relation to proposed s 3L includes the following:

“Subsection 3L(3) is intended to encourage the seizure of printouts or duplicate disks wherever possible.  It provides that a constable may seize equipment under subsection (2) only if it is not practicable to put the material into documentary form or copy them to a storage device or if possession by the occupier of the equipment could constitute an offence.  Where original material is seized s 3N requires the police to provide a copy of the thing or information to the occupier unless its possession constitutes an offence.”

299               The “material” which can be transferred to a storage disk pursuant to s 3L(2)(c) is the material contained on the disk, tape or other associated device which, but for the ability to produce a duplicate disk could have been seized pursuant to the warrant.  When the draftsman of the statute intends to refer to “evidential material” as defined, he is careful to use that term.  The storage device is intended as a surrogate for the original disk, tape or other associated device, and the Explanatory Memorandum confirms that a duplicate disk was intended.

300               Accordingly, in my view, the production of a duplicate disk containing all of the material on the original disk, tape or other associated device was authorised by s 3L once it was ascertained that evidential material was to be found on the original.  That, as I understand the evidence, particularly that referred to in par [293] above, is what occurred.  If and insofar as what I have described as the “second way” of solving the problem differed in its practical effect from the solution adopted, that has no bearing upon the lawfulness of the solution which was in fact adopted.

Section 30 notice to Peter H Hunt & Associates

301               On 25 June 2001 ASIC issued a notice under s 30 of the ASIC Act directed to Peter H Hunt & Associates.  The notice required the production forthwith of specified types of records for the period 1 July 1997 to 15 March 2001, whether or not created in that period, which relate to any of twelve specified entities and persons, one of which was the companies in the HIH group.  Attachment A was physically attached to this notice. 

302               Mr Williams seeks to set aside this notice upon the grounds that it was issued for an improper purpose and has a tendency to interfere with the administration of justice in the same respects as alleged in relation to the warrants.  This claim fails for the same reasons as the equivalent claim in relation to the warrants fails.

303               In addition, Mr Williams asserts that service of the notice on Peter H Hunt & Associates on 26 June 2001 was unlawful in that the notice was actually served by Mr Peter Edwards, an ASIC employee, on Mr Hunt at the time of the execution of the search warrants.  In Mr William’s contention Mr Edwards only obtained access to the premises by reason of his being a constable assisting in relation to the search warrant, yet he used the occasion to do something which had nothing to do with the search warrant, namely to serve the s 30 notice.

304               It is not clear to me how Mr Williams has locus to challenge the service of a s 30 notice on Peter H Hunt & Associates, although this is not a point which was taken by ASIC in its submissions.  The transcript taken at the point where service of the notice is recorded does not indicate any protest on the part of Mr Hunt about the notice being served in the way it was.  For all I know, Mr Hunt may have consented to this occurring.  There is no evidentiary foundation for a conclusion that Mr Edwards’ service of the notice on Mr Hunt was against his will as the occupier of the premises in question.

305               ASIC’s only response to this point was: “the ‘trespass’ point is bad: a power to issue a statutory demand carries with it an implied power to go on premises to serve the notice”.  No authority was cited in support of that proposition.  Nor, for that matter, did the applicants cite any authority for the contrary proposition.

306               The decision of the High Court in Plenty v Dillon (1991) 171 CLR 635 was concerned with service of a summons and in that respect, may be distinguishable from the present case.  The Court there held that a police officer charged with the duty of serving a summons was not authorised by the common law to enter on private property without the consent of the person in possession and without any implied leave or licence.  An interesting Case Note on this decision is to be found at (1993) 1 Torts Law Journal 1.

307               The concurring judgment of Gaudron and McHugh JJ (at 647) states:

“The policy of the law is to protect the possession of property and the privacy and security of its occupier ...”

308               It is undesirable that questions which are potentially of general application should be decided without the benefit of full argument unless this is unavoidable.  Whether or not there is an implied power of the type contended for by ASIC, in the light of the discussion in Plenty v Dillon, is one on which there might be room for legitimate differences of opinion.

309               Section 63(1) of the ASIC Act makes it an offence to fail to comply, without reasonable excuse, with a requirement under s 30.  It would be open to Mr Hunt to contend, if he wished, that the circumstances in which the notice was served upon him provided a reasonable excuse for non-compliance with it.

310               However, it would not be appropriate as a matter of discretion for this Court, in these proceedings to make any declaration about the matter, still less to grant an injunction, particularly when the facts have not been established by direct evidence and when an available inference is that Mr Hunt had no objection to being served with a s 30 notice on the occasion of the execution of the search warrant.

Conclusion

311               Subject to the matter mentioned below; neither Mr Williams nor Mr Adler has established any entitlement to relief in relation to the questions which have been the subject of separate determination.

312               In written submissions, counsel for Mr Williams indicated that the following relief is sought in relation to Mr Buchhorn’s conduct:

(i)         a declaration that the obtaining by Buchhorn and the recording by Buchhorn of the information contained in his notes and the dissemination thereof to other ASIC personnel (Annexures “A” and “B” to his affidavit sworn 25 July 2001) breached an equitable duty of confidence that ASIC and/or Buchhorn owed to the applicant;

(ii)        an injunction restraining ASIC, its servants and agents (including Buchhorn) from using or disseminating further the information in paragraph (i) and an order that the notes or any document recording the same or any copy thereof be delivered up to the applicant.

ASIC contended that this information was not confidential, a submission which I have rejected.  ASIC did not otherwise respond to that claim for relief. 

313               Subject to one qualification, I would be disposed to make orders in the Williams proceedings in the following terms:

(i)                  that ASIC be restrained by itself, its servants or agents from using or disseminating further the information contained in Annexures A and B to the affidavit of Michael Buchhorn sworn on 25 July 2001;

(ii)                that ASIC deliver up the documents referred to in par (i) hereof, or any copies thereof to the applicant.

The qualification to which I refer is that I would need to be satisfied that the terms of the Second Amended Application and Statement of Claim encompass this claim, or are amended so as to do so.

314               The parties should bring in short minutes of order to give effect to this decision, and to provide for the further conduct of the proceedings and costs.  If there is disagreement on the costs question, I will hear argument on a convenient date.

I certify that the preceding three hundred and fourteen (314) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely.

Associate:

Dated:              13 September 2001

Counsel for the Applicant in Williams:	Mr J Beach QC, Mr D Star
Counsel for the Applicant in Adler	Mr D Hammerschlag SC, Mr R Bromwich
Solicitor for the Applicant in Williams:	Arnold Bloch Leibler
Solicitor for the Applicant in Adler	Gilbert & Tobin
Counsel for the Respondent:	Mr A Robertson SC, Ms P McDonald
Solicitor for the Respondent:
Date of Hearing:	23, 24, 25, 26, 27 July 2001
Last submission lodged:	15 August 2001
Date of Judgment:	13 September 2001