FEDERAL COURT OF AUSTRALIA

 

Different Solutions Pty Limited v Commissioner, Australian Federal Police (No 2) [2008] FCA 1686

CRIMINAL LAW – Search warrants – Judicial review of issue of – Construction of warrants – Whether a broad approach should be taken toward the requirement that a warrant contain a sufficient indication of the offence by reference to which it authorises seizure of particular things – What matters a warrant should disclose – Whether a search warrant should be ‘read fairly, and not perversely’

PRACTICE AND PROCEDURE – Court’s discretion to refuse declaratory and injunctive relief in respect of the use of material said to fall outside the reach of a valid search warrant

  

Crimes Act 1914 (Cth) ss 3, 3C, 3E, s 3L(1), 3L(1A), 3L(2), 3F(1) and 3Q

Criminal Code Act 1995 (Cth) ss 4, 11.5(1), 134.2, 400.1(1), 400.2 and 400.4(1)

Cybercrime Act 2001 (Cth)

Taxation Administration Act 1953 (Cth) ss 250-10 and 255-5

Income Tax Assessment Act 1936 (Cth) ss 166 and 204

Income Tax Rates Act 1986 (Cth) s 23(2)

Evidence Act 1995 (Cth) s 138

Kennedy v Baker (2004) 135 FCR 520

Hart v Commissioner of Australian Federal Police (2002) 124 FCR 384

Trimboli v Onley (No. 3) (1981) 56 FLR 321

Williams v Keelty (2001) 111 FCR 175

Parker v Churchill (1986) 9 FCR 334

The Queen v Tillett; Ex parte Newton (1969) 14 FLR 101

Crowley v Murphy (1981) 34 ALR 496

Brewer v Castles (1984) 1 FCR 55

Australian Broadcasting Corporation v Cloran (1984) 4 FCR 151

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

Harts Australia Ltd v Commissioner, Australian Federal Police (1997) 75 FCR 145

George v Rockett (1990) 170 CLR 104

State of New South Wales v Corbett (2007) 230 CLR 606

Chong v Shultz (2000) 112 A Crim R 59

Adler v Gardiner (2002) 43 ACSR 24

Gedeon v Commissioner of the New South Wales Crime Commission (2008) 249 ALR 371

Wright v Queensland Police Service [2002] QSC 46

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

DIFFERENT SOLUTIONS PTY LIMITED, CLARISSA MATTINGLY and ANDREW MATTINGLY v COMMISSIONER, AUSTRALIAN FEDERAL POLICE and J KARAM

NSD 1866 of 2007

 

GRAHAM J

14 NOVEMBER 2008

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1866 of 2007

 

BETWEEN:	DIFFERENT SOLUTIONS PTY LIMITED First Applicant   CLARISSA MATTINGLY Second Applicant   ANDREW MATTINGLY Third Applicant
AND:	COMMISSIONER, AUSTRALIAN FEDERAL POLICE First Respondent   J KARAM Second Respondent

 

JUDGE:	GRAHAM J
DATE OF ORDER:	14 NOVEMBER 2008
WHERE MADE:	SYDNEY

 

THE COURT ORDERS THAT:

 

1.                  The Further Amended Application filed 29 August 2008 be dismissed.

2.                  The applicants pay the first respondent’s costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1866 of 2007

BETWEEN:	DIFFERENT SOLUTIONS PTY LIMITED First Applicant   CLARISSA MATTINGLY Second Applicant   ANDREW MATTINGLY Third Applicant
AND:	COMMISSIONER, AUSTRALIAN FEDERAL POLICE First Respondent   J KARAM Second Respondent

 

JUDGE:	GRAHAM J
DATE:	14 NOVEMBER 2008
PLACE:	SYDNEY

REASONS FOR JUDGMENT

Background

1                     The hearing of this matter commenced on the first court-sitting day after the first anniversary of the filing of the applicants’ original Application on 13 September 2007, although it may be noted that the second respondent was only added as a party to the proceedings on 29 August 2008.

2                     In paragraph 1 of the Application filed 13 September 2007 a declaration was sought as follows:

‘1.        A declaration that the documents and other materials seized by Australian Federal Police agents at the premises of the Applicants pursuant to two search warrants each issued under section 3E of the Crimes Act 1914 (Cth) by J Karam and dated 30 July 2007 contain:

 

(a)        communications the subject of legal professional privilege; and

 

(b)        documents and other materials outside the scope of the warrant.’

3                     Most of the ensuing twelve months was devoted to the identification of communications which were the subject of legal professional privilege claims, the basis on which privilege was claimed and the first respondent’s responses to those claims.  As it transpires all of the claims of privilege were resolved between the parties without the necessity for the Court’s intervention.

4                     Once those issues were resolved, the only substantive matter which remained related to documents and other materials which had been seized and which were said to fall outside the scope of the warrants.

5                     On the first return date the first respondent gave an undertaking to the Court that he would not undertake any forensic examination of the images taken from the hard disks that had been seized on 31 July 2007.  That undertaking was progressively extended up to and including 15 September 2008 or further order.  It has now been extended up to and including judgment on the Further Amended Application filed 29 August 2008, which is presently before the Court, or further order.

6                     The character of the matter has changed quite significantly in recent times.  On 27 May 2008 an Amended Application was filed and on 29 August 2008 a Further Amended Application was filed.  In the Further Amended Application J Karam was named as the second respondent, he being the Justice in and for the State of New South Wales located at The Downing Centre Local Court who issued the two search warrants on 30 July 2007 which were executed on 31 July 2007.

7                     The search warrants were issued under s 3E of the Crimes Act 1914 (Cth) (‘the Crimes Act’).  That section made provision for the issue of warrants in relation to premises and warrants in relation to persons.  This case concerns two warrants in relation to premises.  Relevantly, s 3E provided as follows:

‘3E(1)       …

…

       (5)       If an issuing officer issues a warrant, the officer is to state in the warrant:

 

(a)              the offence to which the warrant relates; and

 

(b)              a description of the premises to which the warrant relates …;  and

 

(c)              the kinds of evidential material that are to be searched for under the warrant; and

 

(d)              the name of the constable who, unless he or she inserts the name of another constable in the warrant, is to be responsible for executing the warrant; and

 

(e)              the time at which the warrant expires (see subsection (5A)); and

 

(f)               whether the warrant may be executed at any time or only during particular hours.

 

(5A)     The time stated in the warrant under paragraph 3E(5)(e) as the time at which the warrant expires must be a time that is not later than the end of the seventh day after the day on which the warrant is issued.

 

(6)       The issuing officer is also to state, in a warrant in relation to premises:

 

(a)       that the warrant authorises the seizure of a thing (other than evidential material of the kind referred to in paragraph (5)(c)) found at the premises in the course of the search that the executing officer or a constable assisting believes on reasonable grounds to be:

 

(i)        evidential material in relation to an offence to which the warrant relates; or

 

(ii)       a thing relevant to another offence that is an indictable offence; or

 

(iii)      evidential material (within the meaning of the Proceeds of Crime Act 2002) or tainted property (within the meaning of that Act);

 

if the executing officer or a constable assisting believes on reasonable grounds that seizure of the thing is necessary to prevent its concealment, loss or destruction or its use in committing an offence; and

 

(b)       whether the warrant authorises an ordinary search or a frisk search of a person who is at or near the premises when the warrant is executed if the executing officer or a constable assisting suspects on reasonable grounds that the person has any evidential material or seizable items in his or her possession.

…’

The search warrants

8                     The search warrants which were issued by the second respondent on 30 July 2007 were expressed in substantially the same terms.  The primary difference related to the identification of the premises at which the searches were to be undertaken.  In one case the search warrant related to the home of the second and third applicants at 2 Silex Road, Mosman, NSW (‘Mosman’).  In the other case the relevant premises were those of the first applicant at 119/26-32 Pirrama Road, Pyrmont NSW (‘Pyrmont’).  The other difference was, perhaps as a result of an inadvertent oversight, that in the Pyrmont warrant the names ‘• Linda DANIEL’ and ‘• PKF Vanuatu’ were included (twice), after the name ‘• Lynda MEEK’, under the heading ‘SECOND CONDITION’, whereas in the Mosman warrant these two names did not appear at all.  One suspects that the two pages bearing the number ‘3’ in the search warrants became transposed at some stage.  There is no issue in these proceeding as to whether the transposition, if there was one, occurred before or after the warrants were issued.

9                     It is common ground that, at all material times, the second applicant, who is the wife of the third applicant, was the sole director and shareholder of the first applicant, although the first respondent has reserved the right to argue that the third applicant was in fact a shadow director of the first applicant.

10                  The search warrant for Mosman was as follows:

“COMMONWEALTH OF AUSTRALIA

CRIMES ACT 1914: Section 3E

SEARCH WARRANT FOR PREMISES

TO:      Rebecca Lauren MILLER

a constable within the meaning of the Crimes Act 1914, who is the executing officer in relation to this warrant;

AND TO any other constable whose name may be written on this warrant in accordance with section 3C(1) of the Crimes Act 1914, in which event that constable shall be the executing officer in relation to this warrant:

WHEREAS I J Karam[inserted in manuscript], an issuing officer within the meaning of the Crimes Act 1914, am satisfied by information on oath that there are reasonable grounds for suspecting that there is at premises located at:

2 Silex Rd, Mosman, NSW 2088
(being premises owned and occupied by Clarissa Elizabeth MATTINLGY (sic) and Andrew David MATTINGLY)

Including all rooms, safes, storerooms, storage areas and parking spaces, to which access is controlled by the occupants, including garbage containers, and garage areas attached for the use of the said premises.

evidential material, as defined in the Crimes Act 1914, which satisfies ALL of the following THREE conditions, namely:

FIRST CONDITION

Things which are:

originals or copies of any one or more of the following including any of them which are stored on a computer, or on a computer storage device, or on any other type of storage medium or storage device:

 

·         Travel documents

·         Australian or foreign passports

·         Photographs

·         Address and phone number record

·         Banking records and account opening authorities

·         Bank statements

·         Cheque records, including statements, butts and reconciliations

·         Correspondence, letters, facsimiles, telegrams

·         Deposit and Withdrawal records for bank accounts

·         Diary entries

·         EFTPOS records and reports

·         Employment records

·         Handwritten notes

·         Motor vehicle ownership/registration records

·         Motor vessel ownership/registration records

·         Invoices

·         Receipts/tax invoices

·         Signatory records and authorisations

·         Statements and records relating to bank account/s

·         Company Taxation Return records

·         Company Taxation Return working papers

·         Individual Taxation Return working papers

·         Individual Taxation Return records

·         Telephone records, including email, landline and mobile phone services

·         Export records including freight documents

·         Import records

·         Activity Statement forms

·         Activity Statement working papers

·         Accounting documents and working papers

·         Contracts and Agreements

·         ASIC documents – Registration documents and correspondence

·         Company documents– Articles and Memorandum of Association

·         Financial Institution Loan correspondence – loans and lines of credit

·         Non Financial Institution loan documentation

·         Non Financial Institution correspondence

·         Telegraphic transfer documents

·         Sales records – local and foreign

·         Proof of identity documents

·         Drivers license, credit cards, bank cards

·         Business Consultant and Agent correspondence

 

SECOND CONDITION

 

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

 

·         Owen T Daniel & Co Chartered Accountants

·         Owen T Daniel & Co

·         Owen Trevor DANIEL

·         Deborah Judith JANDAGI

·         Kevin ZERAFA

·         Carol ABIBADRA

·         Lynda MEEK

·         Billbury Limited

·         Uniton Limited

·         Security Life Nominees Limited

·         Biltmore Insurance Co Limited

·         International Finance Trust Company

·         Edgecumbe Finance Limited

·         Ashmore Finance & Investment Pty Limited (New Zealand company)

·         Astolabe Limited (Vanuatu company)

·         Centurion Technology & Marketing Incorporated (United States of America company)

·         International Finance Trust Company Limited (IFTCO)(Vanuatu company)

·         Different Solutions Pty Limited

·         Andrew D MATTINGLY

·         Andrew David MATTINGLY

·         Clarissa Elizabeth MATTINGLY

·         Andrew Karl DAVIS

·         ANZ

·         Westpac Bank

·         Goose’s Bridal Limited (Vanuatu company)

·         Hercar Pty Limited

 

THIRD CONDITION

 

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

 

That between about 5 May 2004 and 30 July 2007, Clarissa Elizabeth MATTINLGY (sic) and Andrew David MATTINGLY at Sydney, in the State of New South Wales and elsewhere through an entity trading as Different Solutions Pty Ltd, did dishonestly and by deception obtain a financial advantage from a Commonwealth entity, to wit, the Australian Taxation Office, by submitting false Tax Returns for the financial years ending 30 June 2003 to 30 June 2006 inclusive for Australian companies and individuals by claiming false deductions for management fees and loans, thereby reducing their taxable income, contrary to Section 134.2 of the Criminal Code Act 1995.

 

That between about 30 January 2003 and 30 July 2007, Clarissa Elizabeth MATTINLGY (sic) and Andrew David MATTINGLY with others at Sydney, in the State of New South Wales and elsewhere through an entity trading as Different Solutions, did conspire to deal with money, worth $100,000 or more, contrary to Sections 400.4(1) and 11.5(1) of the Criminal Code Act 1995.

 

If things, including any storage medium or storage device which contains any of the above things and any manual, instruction, password or other thing which is needed to gain access to or interpret or decode any of the above things, satisfy the three conditions set out above, this warrant also gives authority to seize those things on the basis that the things satisfy the above three conditions.

 

I HEREBY issue this warrant which authorises you to enter and search the premises described above.

 

AND by virtue of section 3F(1) of the Crimes Act 1914 this warrant authorises the executing officer or a constable assisting to do all of the following;

 

·         enter the premises described above;

 

·         search for and record fingerprints found at the premises and to take samples of things found at the premises for forensic purposes;

 

·         search the premises for any evidential material that satisfies ALL of the THREE conditions specified above and seize any such evidential material that may be found;

 

·         seize any other things found at the premises in the course of the search that the executing officer or the constable assisting believes on reasonable grounds to be:

 

i)          evidential material in relation to an offence to which the warrant relates;

(ii)        evidential material in relation to another offence that is an indictable offence; or

(iii)       evidential material (within the meaning of the Proceeds of Crime Act 2002) or tainted property (within the meaning of that Act).

 

if the executing officer or the constable assisting believes on reasonable grounds that seizure of the thing is necessary to prevent its concealment, loss or destruction or its use in committing an offence; and

 

·         seize any other thing found at the premises in the course of the search that the executing officer or the constable assisting believes on reasonable grounds to be a seizable item, in that it is a thing that would present a danger to a person or that could be used to assist a person to escape from lawful custody.

 

AND THIS WARRANT AUTHORISES the executing officer or a constable assisting to conduct an ordinary search of any person who is at or near the premises when this warrant is executed if the executing officer or the constable suspects on reasonable grounds that the person has in his or her possession evidential material or any seizable item, in that it is a thing that would present a danger to a person or that could be used to assist a person to escape from lawful custody, and to seize any such evidential material or other thing that may be found;

 

Note that, by virtue of section 3ZR of the Crimes Act 1914, an ordinary search or a frisk search of a person under this warrant must, if practicable, be conducted by a person of the same sex as the person being searched.

 

AND, by virtue of section 3G of the Crimes Act 1914, in executing this warrant:

 

·         the executing officer may obtain such assistance as is necessary and reasonable in the circumstances;

 

·         the executing officer, and any constable assisting in the execution of this warrant who is a police officer, may use such force against persons or things as is necessary and reasonable in the circumstances; and

 

·         any person who has been authorised by the executing officer to assist in the execution of this warrant, but who is not a police officer, may use such force against things as is necessary and reasonable in the circumstances;

 

AND the executing officer or a constable assisting may exercise such other of the powers available under Division 2 of Part 1AA of that Act as are appropriate in the circumstances of the case;

 

AND if you exercise the power under section 3L(4) of the Crimes Act 1914 to secure electronic equipment on the premises, and if you then leave the premises, this warrant authorises a further entry to the premises to allow an expert to operate the equipment, provided that the further entry is made within 24 hours or that period is extended under section 3L(7) of that Act.

 

The offences to which this warrant relates are those specified above in the third condition.

 

NOTE:            This warrant is issued in recognition that a claim for legal professional privilege may be made in respect of documents covered by this warrant and on the understanding that, if that occurs, the executing officer will, as far as is reasonably practicable, follow the course of action set out in the document entitled “Claims for Legal Professional Privilege:  Premises other than those of a Lawyer, Law Society or Like Institution” a copy of which is attached to this warrant.

 

A statement of the rights of the occupier of premises is attached to this warrant.

 

THIS WARRANT MAY BE EXECUTED BETWEEN THE HOURS OF 6.00 am AND 9.00pm;

 

·         THE TIME AT WHICH THIS WARRANT EXPIRES IS MIDNIGHT AT THE END OF THE SEVENTH DAY AFTER THE DAY ON WHICH THE WARRANT IS ISSUED.

 

 

GIVEN under my hand at Sydney

In the State of New South Wales this

30^th [manuscript] day of July 2007

 

[signed] J Karam

………………………………….

A Magistrate/ Justice in and for the State of New South Wales”

 

11                  Whilst Rebecca Lauren Miller was named as the executing officer in the Mosman and Pyrmont search warrants, it would appear that at about 4:35pm on 30 July 2007 she effected a substitution of Miguel Luis Serrano for herself as executing officer in the Pyrmont warrant by inserting his name in lieu of her own, initialling and dating it and recording the time ‘1635hrs’, whereupon Mr Serrano would appear to have recorded his initials against his name and inserted the same date and time.

The offences to which the search warrants related

12                  The offences to which each of the warrants related were expressed to be those specified in the ‘third condition’. 

13                  Section 134.2 of the Criminal Code Act 1995 (Cth) (‘the Criminal Code’), to which reference was made in the search warrants provided as follows:

‘134.2(1)         A person is guilty of an offence if:

 

(a)        the person, by a deception, dishonestly obtains a financial advantage from another person; and

 

(b)        the other person is a Commonwealth entity.

 

Penalty:  Imprisonment for 10 years.

 

(2)          Absolute liability applies to the paragraph (1)(b) element of the offence.’

14                  Section 400.4(1) of the Criminal Code, to which reference was also made, relevantly provided as follows:

‘400.4(1)         A person is guilty of an offence if:

 

(a)        the person deals with money or other property; and

 

(b)        either:

 

(i)         the money or property is, and the person believes it to be, proceeds of crime; or

 

(ii)        the person intends that the money or property will become an instrument of crime; and

 

(c)        at the time of the dealing, the value of the money and other property is $100,000 or more.

 

Penalty:   Imprisonment for 20 years, or 1200 penalty units, or both.’

Section 11.5(1) of the Criminal Code, which was referred to in the search warrants, provided in relation to conspiracy:

‘11.5(1)           A person who conspires with another person to commit an offence punishable by imprisonment for more than 12 months, or by a fine of 200 penalty units or more, is guilty of the offence of conspiracy to commit that offence and is punishable as if the offence to which the conspiracy relates had been committed.’

15                  Section 400.4 of the Criminal Code fell within Part 10.2 which bore the heading ‘Money laundering’ (see ss400.1 - 400.16).

16                  In s 400.1(1) the expression ‘deals with money or other property’, which appears in s 400.4(1)(a), was defined to have ‘the meaning given by section 400.2’. 

Relevantly, for present purposes s 400.2 of the Criminal Code provided:

‘400.2(1)         For the purposes of this Division, a person deals with money or other property if:

 

(a)       the person does any of the following:

 

(i)        receives, possesses, conceals or disposes of money or other property;

 

(ii)       imports money or other property into, or exports money or other property from, Australia;

 

(iii)      engages in a banking transaction relating to money or other property; and

 

(b)       the money or other property is proceeds of crime, or could become an instrument of crime, in relation to an offence that is:

 

(i)        a Commonwealth indictable offence; or

 

(ii)       a foreign indictable offence; or

 

(iii)      a State indictable offence; or

 

(iv)      an Australian Capital Territory indictable offence; or

 

(v)       a Northern Territory indictable offence.’

17                  In s 400.1(1) of the Criminal Code ‘proceeds of crime’ was defined to mean:

‘… any money or other property that is derived or realised, directly or indirectly, by any person from the commission of an offence that may be dealt with as an indictable offence (even if it may, in some circumstances, be dealt with as a summary offence)’

In the same subsection ‘instrument of crime’ was defined as follows:

‘… money or other property is an instrument of crime if it is used in the commission of, or used to facilitate the commission of, an offence that may be dealt with as an indictable offence (even if it may, in some circumstances, be dealt with as a summary offence)’

The Further Amended Application

18                  The substantive relief sought by the applicants in the Further Amended Application filed 29 August 2008 was as follows:

‘1.        A declaration that the two search warrants purportedly issued under section 3E of the Crimes Act 1914 (Cth) (“the Crimes Act”) by the Second Respondent and dated 30 July 2007 (‘the search warrants”) were invalid for the reason that the Third Condition of the warrants failed to specify the alleged offence or offences with sufficient particularity, specified an offence or offences not known to the law, or failed to disclose the nature of the offence or offences so as to indicate the area of the search or set the bounds to the area of the search.

 

2.         A declaration that the documents and other materials seized by Australian Federal Police agents at the premises of the Applicants pursuant to the search warrants each issued under section 3E of the Crimes Act 1914 (Cth) by J Karam and dated 30 July 2007 (‘the search warrants’)  contain:

 

(a)       communications the subject of legal professional privilege; and

 

(b)       documents and other material outside the scope of the warrant.

 

 

3.         A declaration that the seizure and/or retention of some or all of the electronic materials, or some or all of the images of the electronic materials from materials seized by Australian Federal Police agents at the premises of the Applicants pursuant to two search warrants each issued under section 3E of the Crimes Act 1914 (Cth) by J Karam and dated 30 July 2007 under the search warrants was unlawful, on the basis that materials allegedly satisfying the three conditions of the search warrants did not do so, for the reason that the Third Condition of the search warrants was void and, alternatively, was not authorised by the search warrants, or at all.

 

4.         A declaration that the First Respondent, his officers, employees, servants and agents, are not, and each of them is not, entitled to use the communications and documents and other materials referred to in paragraphs 2(a) and 2(b) and 3 above.

 

5.         An order that the First Respondent by himself, his officers, employees, servants and agents be restrained from using the communications and documents and other materials referred to in paragraphs 2(a) and 2(b) and 3 above.

 

6.         An order that the First Respondent, his officers, employees, servants and agents return to the Applicants the communications and documents and other materials referred to in paragraphs 2(a) and 2(b) and 3 above.

…’

19                  It may be observed that until the filing of the Further Amended Application on 29 August 2008 there was no challenge to the lawfulness of the two search warrants as issued by the second respondent on 30 July 2007 (see the deletions from prayers for relief numbered 2 and 3, which were previously numbered 1 and 2, and the newly inserted prayer for relief 1 which included, for the first time, the expression ‘purportedly issued under section 3E’).

Execution of the search warrants

20                  Officers of the Australian Federal Police entered and searched the Mosman and Pyrmont premises on Tuesday 31 July 2007. 

21                  At about 7:35am a team headed by Federal Agent Serrano of the Australian Federal Police, as the relevant executing officer, arrived at Pyrmont from which premises the members of the team departed at about 1:06pm.  Another team led by Federal Agent Rebecca Miller, as the executing officer, arrived at Mosman at about 7:48am and departed therefrom at about 3:10pm.

22                  Federal Agent Serrano’s team included Federal Agents Phun, Randall and Wolkowski.  They were assisted by, amongst others, an Australian Federal Police Computer Forensic Technician known as ‘George’ Bruce.  Whilst Federal Agent Serrano was the executing officer named in the Pyrmont warrant, Federal Agent Phun was in fact the senior officer of the Australian Federal Police within the Pyrmont team.

23                  Federal Agent Rebecca Miller’s team included Federal Agents Fox, Scott Miller, Sperling and Gordon.  Notwithstanding that Federal Agent Miller was the executing officer named in the Mosman warrant, the senior officer of the Australian Federal Police within the Mosman team was Federal Agent Fox.  Another member of the Mosman team was a member of the Australian Federal Police’s computer forensic team, Michael Banach.

24                  The search warrants contemplated action being taken by the relevant executing officer and also by ‘constables assisting’.  Under s 3C of the Crimes Act ‘constable assisting’ was defined, in relation to a warrant, to mean:

‘(a)      a person who is a constable and who is assisting in executing the warrant; or

 

(b)       a person who is not a constable and who has been authorised by the relevant executing officer to assist in executing the warrant.’

 

25                  Under section 3 of the Crimes Act ‘constable’ was defined to mean:

‘… a member or special member of the Australian Federal Police or a member of the police force or police service of a State or Territory’

The Mosman premises

26                  The property seized at Mosman on 31 July 2007 was detailed on a number of ‘PROPERTY SEIZURE RECORD’ forms bearing serial nos. A094427, A094428, A094429, A094431, A094432 and A094433.

27                  The property apparently included originals or copies of letters, invoices, bank statements, financial accounts, tax records, corporate records, mobile telephone account records, credit cards and other documents along with two IBM Thinkpad laptop computers and a ‘Seagate 250gb hard drive S/N SNDOT954’ taken from the inside of a Dell Mini Tower P/C located on a desk in an upstairs office at Mosman.

28                  The documents included some in which Edgecumbe Finance Ltd, Centurian Technology & Marketing Inc, International Finance Trust Company Ltd and/or Owen T Daniel & Co were mentioned, along with the first applicant and/or the second applicant and/or the third applicant.

29                  At or about 9.07am on 31 July 2007 Federal Agents Sperling and Rebecca Miller spoke with the second applicant.  In the course of that conversation, the following exchange took place:

Sperling:                    ‘… what we’re looking for is anything that’s listed in the first and second condition but also provides evidence to the third condition which are the offences.’

Clarissa Mattingly:     ‘… So you’re taking these things with you today …’

Sperling:                    ‘Is there anywhere in particular where – like do you have an office in the house or – or a room where – where the majority of these items would be located, things for the business?’

Clarissa Mattingly:     ‘Um, I think um, they would be upstairs in um, I call it the – the um, the study with the computer equipment.’

Miller:                        ‘Sure’

Clarissa Mattingly:     ‘So they should be all there. ….’

30                  When cross-examined about her involvement in the execution of the Mosman warrant Federal Agent Rebecca Miller gave the following evidence which referred to her conversation with Clarissa Mattingly to which reference has been made:

Robertson SC:           ‘… What I want to put to you is that when you were involved in executing the warrant at the Mosman premises on 31 July 2007 the only part of the third condition of the warrant that you took into account was the periods of time in the third condition?’

Miller:                        ‘In relation to things seized on the day that relate to the third condition, I took into consideration the contents of the material would relate to the offences specified, being tax evasion and money laundering, with consideration to the dates of the alleged offences being committed during that time.’

Robertson SC:           ‘But, Ms Miller, without a keyword search of the computer equipment at the Mosman premises, what I suggest to you is that you had no basis for thinking that there was any such material on that computer equipment.  Do you agree with that?’

Miller:                        ‘Based on a number of elements that form my belief, part of those, or one of those elements, was that Ms Mattingly said that things would be found in relation to the warrant, upstairs in the study with the computers.’

31                  The property in issue in these proceedings, which came from Mosman, consists of:

(a)        the Seagate hard drive to which reference has been made, and

(b)        a TALON copy made by Mr Banach at Mosman on 31 July 2007 of a Western Digital hard drive (a second hard drive) which was located inside the same Dell Mini Tower P/C at Mosman.

32                  The Seagate hard drive was removed from Mosman and taken to the first respondent’s office in Sydney where it was imaged.  Following the imaging of the Seagate hard drive, the Seagate hard drive was itself returned to Mosman.

33                  The first respondent is presently in possession of the image of the Seagate hard drive made at Police Headquarters in Sydney from the Seagate hard drive and also the TALON copy of the Western Digital hard drive made by Mr Banach.  The Western Digital hard drive was not itself removed from Mosman.

34                  A distinction is to be drawn between ‘imaging’ and ‘copying’.  What has been described as the TALON ‘copy’ of the Western Digital hard drive is more accurately described as an image of that hard drive.  An image of a hard drive is a ‘bit-stream’ copy of the whole hard drive.  A bit-stream copy or image will take data from every part of a drive.

35                  ‘Imaging’ amounts to forensic copying.  It captures current data, data which has been deleted and spare disk space.

‘Copying’ is the word commonly used to describe the making of a copy of a file or a folder which you might see within a software program such as ‘Windows Explorer’. 

36                  When he was at Mosman on 31 July 2007, Mr Fox gave an instruction to Mr Banach to image the Dell PC i.e. the Seagate hard drive (item (a)) and the Western Digital hard drive referred to in item (b).  This instruction was given before Mr Banach operated the Dell PC. 

37                  At no time on 31 July 2007 did Mr Banach perform a key word search on the Seagate hard drive (item (a)) or the Western Digital hard drive referred to in item (b). 

A key word search involves the use of a software program such as ‘Microsoft Find’ which would locate any file or folder in the relevant hard drive containing the key word that had been entered.  Relevantly for this case, a key word search might involve entering one of the names stated in the ‘SECOND CONDITION’ in the search warrant.

38                  Before attempting to image the Seagate hard drive (item (a)) and the Western Digital hard drive referred to in item (b) Mr Banach ‘looked at the Dell computer and noticed that it was powered on’.  By clicking on ‘My Computer’ he was able to identify which hard disk drives were in the computer.

39                  Between 11:03am and 12:02pm on 31 July 2007 Mr Banach effected the image capture of the Western Digital hard drive referred to in item (b) thereby creating the TALON copy (item (b)).

40                  Mr Banach proceeded to set the TALON device to image the Seagate hard drive (item (a)).  At 12:10pm he commenced the imaging process in respect of that hard drive.  At 2:36pm Mr Banach noted that the TALON screen showed ‘jumbled and abnormal output’ which caused him to believe that the image was corrupted and that there must have been an error in the operation of the equipment used for the copying.  Conversation ensued between Federal Agent Rebecca Miller and Mr Banach as follows:

Banach:            ‘The copy of the 250GB hard drive may be corrupted.’

Miller:              ‘You’ll have to take another copy.  How long will that take?’

Banach:            ‘It will take another couple of hours because this one had already been going for two or two and a half hours.’

Miller:              ‘Mrs Mattingly says she needs to pick her kids up from school.  She won’t want to wait another two or so hours while that’s going.’

Thereupon Mr Banach seized the Seagate hard drive, handed it to Federal Agent Gordon and proceeded to return to the Sydney headquarters of the Australian Federal Police.

41                  During the course of the execution of the Mosman warrant on 31 July 2007 Federal Agent Rebecca Miller had a conversation with Mr Banach the detail of which she cannot now recall.  She did, however, form the belief that the computers which had been identified by the second applicant as being in the upstairs study might contain evidentiary material.  She had previously seen emails and other electronically created documents which had been seized following the execution of a search warrant conducted on the premises of Owen T Daniel & Co which:

‘42.1.1   were apparently to and received from Mrs Mattingly

 

42.1.2    referred to an ‘Andrew’, who I believed to be Mr Mattingly [the third applicant].

 

42.1.3    used the subject line of ‘Centurion’, which is one of the target bank accounts used in the round robin scheme of Operation Starlifter and is listed as an entity in the second condition of the warrant;

 

42.1.4    included Profit and Loss statements which had apparently been produced using a computer;

 

42.1.5    itemised memoranda of Professional service fees from companies such as Edgecumbe and PKF or other entities listed in the second condition of the warrant which appeared to charge fees for the transmission of emails;’

 

42                  Federal Agent Miller’s evidence also included the following:

‘48.      During the search I had been shown documents apparently found in the upstairs study which purported to be invoices for “consultancy fees”, which itemised “emails” as part of their services;

 

49.       During the search I had been shown documents apparently found in the upstairs study which purported to be methods of payment forms listing entities from the second condition of the warrant which appeared to be created using a computer; and

 

50.       During the search I had been shown documents apparently found in the upstairs study which purported to be tax returns which appeared to be created using a computer.’

43                  Mr Banach deposed to a conversation with Federal Agent Fox in which Federal Agent Fox said:

‘There is relevant evidence on the Dell PC.  Can you please make an image of it?’

44                  After having the conversation with Federal Agent Fox in which those words were spoken Mr Banach had the belief that the Dell PC (i.e. the Seagate hard drive (item (a))) and the Western Digital hard drive referred to in item (b) would contain relevant evidence which fitted the three conditions of the Mosman search warrant.

45                  On 30 July 2007 Federal Agent Fox had attended an operational briefing conducted by Federal Agents Miller and Phun.  Information was provided to those present which suggested that the applicants were involved in a round-robin transaction scheme which was being investigated as part of ‘Operation Starlifter’ which itself involved an investigation into the chartered accounting firm known as Owen T Daniel & Co and 19 of that firm’s clients.

46                  Federal Agent Fox instructed Mr Banach to image the relevant hard drives as he held the belief that evidential material would be contained on the drives of the computers.  His reasons for holding such a belief were stated as follows:

‘20.1    By reason of my previous involvement in the execution of the Operation Starlifter search warrants, I was aware that it was a common modus operandi for the participants of the scheme, namely promoters and clients, to communicate with clients by way of email; and

 

20.2     Through my discussions with Federal Agent Rebecca Miller in the period leading up to the execution of the search warrant, I was aware of the following:

 

(a)       that email correspondence between OTD [Owen T Daniel & Co] and Clarissa Mattingly [the second applicant], of Different Solutions [the first applicant], had been seized in hardcopy form during the search warrant executed on the premises of OTD; and

 

(b)       that the email correspondence between OTD and Clarissa Mattingly seized during the search warrant executed on the premises of OTD included communications regarding the transactions and entities being investigated as part of Operation Starlifter.’

The Pyrmont premises

47                  The property seized at Pyrmont on 31 July 2007 was detailed on a number of ‘PROPERTY SEIZURE RECORD’ forms bearing serial nos. A133572, A133573, A133574, A133575 and A133576.

48                  On 31 July 2007 Federal Agent Rebecca Miller purported to appoint a number of persons, who were not constables, as constables assisting.  One such person was Josephine Balen, a Compliance Officer in the Australian Taxation Office.

49                  When engaged in the search and seizure of material at Pyrmont, Ms Balen identified a CD in a drawer which was labelled ‘Payment Summary Report 1/7/04-30/6/05’ (‘the CD’) which was seized on 31 July 2007 and placed in an Australian Federal Police evidence bag.

50                  The property seized apparently included originals or copies of accounting records, tax records, cheque butts, invoices, bank statements, handwritten notes, wages records, cash flow records, company minutes, correspondence and other documents along with the CD seized by Ms Balen, another CD, a Lacie external hard drive marked 00140706180600C353U253, another Seagate external hard drive, two Hewlett Packard PC hard drives serial numbers TW01901007 and TW02508427 and a Dell Power Edge Server 4VVRFIS.

51                  The documents included some in which Owen T Daniel was mentioned, along with the first applicant and/or the second applicant and/or the third applicant.

52                  The property in issue in these proceedings, which came from Pyrmont, consists of:

(c)        the Dell Power Edge Server to which reference has been made and which has been referred to in the proceedings as ‘REX’,

(d)        a 500GB Lacie external hard drive device said to have been connected to REX and which I presume to be the Lacie external hard drive to which reference has been made,

(e)        two Hewlett Packard E-Vectras, which I assume to be the two Hewlett Packard hard drives to which reference has been made, and

(f)         the CD.

53                  Each of the Dell server, the Lacie external hard drive device and the two Hewlett Packard E-Vectras were removed from Pyrmont and taken to the first respondent’s office in Sydney where they were imaged.  Following the imaging, they were returned to Pyrmont.

54                  The CD remains in the possession of the first respondent.

55                  Shortly before 9:09am on 31 July 2007 Mr Bruce accessed the Dell server (item (c)) to determine how many drives or other sources of data were connected or associated with it.  He observed that it was physically connected to the Lacie hard drive (item (d)) and also a Seagate hard drive (not to be confused with item (a)).

56                  At about 9:09am Mr Bruce commenced a key word search of ‘computer disk volume labelled as ‘Archive’ connected to the server named ‘Rex’’.  He electronically located files for the search term ‘Owen T Daniel’ on an external drive.  Because of the complicated cabling connected to the server, Mr Bruce couldn’t discern which external drive – the Lacie (item (d)) or the Seagate hard drive – was the one which was identified as ‘Archive’ electronically.

57                  Mr Bruce conducted a superficial search.  He considered that any hits which fell within the three conditions of the Pyrmont search warrant would indicate the likelihood of evidentiary material being stored on the server and its attached drivers.

58                  The way the server was set up led Mr Bruce to form the belief that it would not be practicable to copy the server and the drives attached to it other than at the Australian Federal Police’s Sydney headquarters.

59                  Mr Bruce had assisted in the execution of five search warrants as part of Operation Starlifter prior to 31 July 2007 and was aware of the nature of the Operation Starlifter investigation.  He had also been provided with a copy of the Standard Tactical Plan for Operation Starlifter.  In this context, he formed the opinion that the data contained within the ‘Archive’ drive fell within the three conditions of the warrant. 

60                  Mr Bruce proceeded to say to Federal Agent Serrano words to the effect ‘I have found files matching the keywords that I’d searched for.’  He identified the key words as being ‘Owen T Daniel’.

61                  At about midday Mr Bruce became aware that two Hewlett Packard E-Vectras had been discovered at Pyrmont in a box behind the staircase.  He formed the view that they had previously been part of the network connected via the Dell server but had since been ‘retired’.

62                  On the basis that computer equipment is generally ‘retired’ every three years, Mr Bruce formed the belief that the two Hewlett Packard E-Vectras (item (e)) would have been part of the office network associated with the Dell server in the time period covered by the third condition of the Pyrmont search warrant.  He considered that it would not be practicable to copy the two Hewlett Packard E-Vectras at the Pyrmont premises because they were likely to contain old and deleted data, the search and recovery of which, for the purposes of copying, was considered to be a complicated and slow process.

63                  Mr Bruce’s involvement in Operation Starlifter was such that he had an understanding that it was targeting Owen T Daniel & Co Chartered Accountants and 19 of that firm’s clients in relation to tax fraud.

64                  Federal Agent Serrano had a similar understanding in respect of Operation Starlifter.  He attended a briefing on 30 July 2007 in relation to the first applicant’s apparent involvement.

65                  During the course of the morning on 31 July 2007 Federal Agent Serrano conducted an interview with Michelle Forrester, the first applicant’s Financial Services Officer. During the course of the interview Ms Forrester was shown a number of handwritten notes which had been found in the ‘disposal bin’.  Ms Forrester described the notes as being ‘from a board meeting that I have typed up’.  When asked where she typed up the notes her response was:

‘I would’ve typed them I think it’s into my Outlook or into an email.  So it’s in Outlook regardless.’

Later an A4 sized spiral detached page containing handwriting was shown to Ms Forrester.  She identified the handwriting as being ‘my notes from my meeting with Kevin [referring to the first applicant’s accountant, Kevin Zerafa] and other internal events’.

Ms Forrester confirmed that she had typed up notes in her Outlook in respect of the manuscript notes which had been shown to her.

66                  Mr Serrano gave evidence that Ms Forrester’s responses confirmed his belief that the electronic equipment identified at Pyrmont contained material which fell within the three conditions of the Pyrmont search warrant.  In relation to the hard drives which were seized at Pyrmont, Federal Agent Serrano’s evidence was that at the time when they were seized he had formed a belief that they contained information which fell within the conditions of the Pyrmont search warrant and information which was no longer available on the server.  He gave evidence that his belief was founded upon the following:

‘39.1    I had been informed during the briefing by Federal Agent Miller that emails and other electronically created documents which related to Different Solutions Pty Ltd and/or the Mattinglys had been seized during the execution of the warrant at the premises of OTD.

 

39.2     The conversation referred to in paragraph 36 above [see [65] above], which made it clear that the company stored minutes of meetings, and probably other relevant documents, electronically and not in hard copy format;

 

39.3.    The Different Solutions IT person had informed me that the hard drives ‘backed-up’ the server in case it crashed;

 

39.4.    As the server was ‘backed up’ on external hard drives correspondence, meeting notes and other files of evidentiary value, that may have since removed (sic) from the server, may have still been stored on the external hard drives;

 

39.5.    The fact that we had formed a belief that the server may have been tampered with by somebody externally earlier that morning with the intention of trying to destroy evidence added value to the external hard drives as they may have contained evidence unable to be retrieved from the server.

 

39.6     My knowledge of the nature of the Different Solutions Pty Ltd business, being web design, which strongly suggested that the company would use electronic means to create and store documents; and

 

39.7     During the search I had been shown copies of documents which appeared to be electronically created, such as computer generated financial records and balance sheets for Different Solutions Pty Ltd.’

67                  It should be noted that I have attempted to reconcile the Property Seizure Records with the table of items which is set out in paragraph 11 of the applicants’ written submissions filed 2 September 2008 which is said to record the items which remain in issue.  Insofar as I may have misread serial numbers it should be understood that I have endeavoured to identify the relevant items of property listed in the Property Seizure Records which have been referred to in the relevant table, with the applicants’ description thereof.  Hereafter I will endeavour to refer to the items in issue as the items identified by me above as (a), (b), (c), (d), (e) and (f).

The subsequent charges

68                  Shortly before the Application was amended and then further amended, two Court Attendance Notices were served upon the second applicant on 30 April 2008 calling for her attendance at the Downing Centre Local Court in Sydney on 3 June 2008.  The first Court Attendance Notice related to an alleged offence between 3 February 2003 and 10 October 2006 under s 400.4(1) of the Criminal Code.  The offence was described as ‘Deal in Proceeds of Crime – Money or Property worth $100,000 or more’, the short particulars of which were described as ‘Clarissa Elizabeth Mattingly, through an entity trading as Different Solutions, did deal with money worth $100,000 or more and that money was an instrument of a crime’.

69                  The second Court Attendance Notice served upon the second applicant alleged four separate offences of ‘Obtaining Financial Advantage by Deception’ under s 134.2(1) of the Criminal Code.  The first such offence was alleged to have been committed between about 1 July 2002 and 11 May 2004, the second between about 1 July 2003 and 27 May 2005, the third between about 1 July 2004 and 18 July 2006 and the fourth between about 1 July 2005 and 26 July 2007.  The four offences alleged were said to relate to income tax returns for the financial years ended 30 June 2003, 30 June 2004, 30 June 2005 and 30 June 2006.  The ‘Short Particulars’ in each case were to the same effect.  In respect of the 30 June 2003 year the ‘Short Particulars’ were as follows:

‘Clarissa Elizabeth Mattingly, through an entity trading as Different Solutions, did by a deception dishonestly obtain a financial advantage from another person, namely the Commissioner of Taxation, which is a Commonwealth entity.

 

Particulars of the deception

Submitted an income tax return for the financial year ended 30 June 2003 which contained false company expenses.

Particulars of the financial advantage

Did not pay any tax on income that would normally be taxable.’

 

70                  The Court Attendance Notices referrable to the second applicant were stamped by the Downing Centre Local Court as received on 2 May 2008.

71                  In relation to the third applicant two Court Attendance Notices were also served upon him on 30 April 2008 alleging in the first case an offence under s 400.4(1) of the Criminal Code and in the second case four separate offences under s 134.2(1) of the Criminal Code.  The several offences particularised mirrored those referred to in the two Court Attendance Notices served upon the second applicant.

72                  The Court Attendance Notices directed to the third applicant were also endorsed by the Downing Centre Local Court as having been received on 2 May 2008.

The Standard Tactical Plan for Operation Starlifter

73                  In respect of Operation Starlifter the Australian Federal Police’s ‘Standard Tactical Plan’, which had been drafted by Federal Agent Phun with the collaboration of Federal Agent Rebecca Miller, included the following:

‘1.1      General Outline

 

This matter relates to an investigation into tax evasion and money laundering of over $100 million dollars by Australian companies and Overseas Promoter based in Vanuatu.

 

1.2       Background

 

The Australian Taxation Office has been looking into scheme activity involving Australian residents and foreign tax havens.  A primary focus has been the country of Vanuatu.  It is a low tax jurisdiction and Australia does not have a double tax agreement with this country.

 

The ATO identified what appeared to be ‘round robin’ transactions involving 19 taxpayers who were all clients of the one tax agent, Owen T Daniel & Co, located at 30 Burwood Road, Burwood NSW.  Audits have been conducted on three taxpayers who were clients of Owen T Daniel & Co.

 

It was identified that all of the foreign companies involved in the round robin were owned or controlled by Robert Francis AGIUS.  He is an ex-pat Australian now resident in Vanuatu.  He is a partner of the accounting firm PKF Vanuatu.  AGIUS has been identified as the promoter of these arrangements and frequently travels to Australia to meet with clients.

 

1.3       Outline of Scheme

 

The scheme is basically a round robin, where funds are transferred out of the bank accounts of Australian resident companies to a bank account in New Zealand.  The form of the payment is usually for “consulting fees” but can also include “insurance premiums” and “interest”.  These payments are claimed as tax deductions in the tax returns of resident Australian companies.  A few days after the initial fund transfer to New Zealand the funds are invariably transferred back to the Australian taxpayer from a separate New Zealand bank account as “loans”.  This amount is deposited into the Australian bank accounts of either the original company or to the owner and controller of that company.  The New Zealand bank accounts are all controlled by the partners of PKF Vanuatu.  The accounts are in the name of companies incorporated in non tax haven companies (sic) such as the UK, USA and Ireland.  These companies are also controlled by the partners of PKF Vanuatu.

 

The primary reason for the arrangement is to reduce the tax payable by the Australian resident company.  Some arrangements also have the secondary benefit of getting the company profits to the directors in a tax free manner.

…’

The relevant statutory provisions in the Crimes Act

74                  At [7] certain passages from s 3E of the Crimes Act, under which the search warrants were issued, were set out. For the purpose of addressing the issues in relation to the Seagate hard drive (item (a)) it is also necessary to focus upon the provisions of s 3L(2) and s 3F(1)(c) of the Crimes Act.

75                  In relation to the TALON copy of the Western Digital hard drive (item (b)) it is necessary to focus upon s 3L(1A) of the Crimes Act. 

76                  In relation to the Dell server (item (c)) and the 500GB Lacie external hard drive (item (d)) it is necessary to focus upon s 3L(2) of the Crimes Act and also s 3F(1)(c) and (d).

77                  In relation to the two Hewlett Packard E-Vectra hard drives (item (e)) it is necessary to focus upon s 3L(2) of the Crimes Act and also s 3F(1)(c). 

78                  Finally, in relation to the CD it is necessary to focus upon s 3F(1)(c).

79                  Section 3F of the Crimes Act relevantly provides:

‘3F(1)  A warrant that is in force in relation to premises authorises the executing officer or a constable assisting:

 

(a)        to enter the warrant premises …; and

 

(b)        to search for and record fingerprints found at the premises and to take samples of things found at the premises for forensic purposes; and

 

(c)        to search the premises for the kinds of evidential material specified in the warrant, and to seize things of that kind found at the premises; and

 

(d)        to seize other things found at the premises in the course of the search that the executing officer or a constable assisting believes on reasonable grounds to be:

 

(i)         evidential material in relation to an offence to which the warrant relates; or

 

(ii)        evidential material in relation to another offence that is an indictable offence; or

 

(iii)       …

 

if the executing officer or a constable assisting believes on reasonable grounds that seizure of the things is necessary to prevent their concealment, loss or destruction or their use in committing an offence; and

…

 

    (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.’

80                  Section 3L of the Crimes Act was amended by the Cybercrime Act 2001 (Cth) (Act number 161 of 2001) which commenced on 21 December 2001.  The amendments included amendments to s 3L(1) and the insertion of s 3L(1A).

81                  Section 3L of the Crimes Act as amended relevantly provided:

‘3L(1)  The executing officer or a constable assisting may operate electronic equipment at the warrant premises to access data (including data not held at the premises) if he or she believes on reasonable grounds that:

 

(a)        the data might constitute evidential material; and

 

(b)        the equipment can be operated without damaging it.

 

(1A)If the executing officer or constable assisting believes on reasonable grounds that any data accessed by operating the electronic equipment might constitute evidential material, he or she may:

 

(a)       copy the data to a disk, tape or other associated device brought to the premises; or

 

(b)        if the occupier of the premises agrees in writing—copy the data to a disk, tape or other associated device at the premises;

 

and take the device from the premises.

…

 

(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.

 

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

 

(a)        it is not practicable to copy the data as mentioned in subsection (1A) or to put the material in documentary form as mentioned in paragraph (2)(b); or

 

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

…’

82                  It may be assumed that computers are the kind of electronic equipment to which s 3L is primarily directed (per Branson J in Kennedy v Baker (2004) 135 FCR 520 (‘Kennedy v Baker’) at [56]).

83                  In s 3C of the Crimes Act a series of expressions and words are defined for the purposes of Part IAA of the Act which includes ss 3C – 3ZX.

84                  Relevantly for present purposes, the following expressions and words were defined in s 3C(1):

‘3C(1)In this Part, unless the contrary intention appears:

…

data includes:

(a)        information in any form; or

(b)        any program (or part of a program).

 

data held in a computer includes:

(a)       data held in any removable data storage device for the time being held in a computer; or

(b)       data held in a data storage device on a computer network of which the computer forms a part.

 

data storage device means a thing containing, or designed to contain, data for use by a computer.

 

evidential material means a thing relevant to an indictable offence or a thing relevant to a summary offence, including such a thing in electronic form.

…’

85                  The term ‘data’ is used as a singular collective noun in the sense of a mass or body of characters or symbols constituting information capable of being processed into accessible form by electronic equipment.  A computer file is a subset of a larger body of data (per Branson J in Kennedy v Baker at [56] and [62]).

86                  In s 3(1) of the Crimes Act other words and expressions were defined including ‘thing relevant to an indictable offence’ and ‘thing relevant to a summary offence’.  In respect of the former, s 3(1) relevantly provided:

‘3(1)    In this Act, unless the contrary intention appears:

…

 

thing relevant to an indictable offence means:

 

(a)        either of the following:

 

(i)         anything with respect to which an indictable offence against any law of the Commonwealth … has been committed or is suspected, on reasonable grounds to have been committed;

…

 

(b)        anything as to which there are reasonable grounds for suspecting that it will afford evidence as to the commission of any such offence; or

 

(c)        anything as to which there are reasonable grounds for suspecting that it is intended to be used for the purpose of committing any such offence.’

87                  It may be observed that s 3L(1A) and s 3L(2) draw a distinction between copying and taking data by means of a device brought to the premises by the executing officer or constable assisting, on the one hand, and seizure of equipment containing data, on the other.  As French J (as his Honour then was), Sackville and R D Nicholson JJ said in Hart v Commissioner of Australian Federal Police (2002) 124 FCR 384 at [87]:

‘… The statute draws a distinction between the seizure of a thing from the premises and the taking away of a thing brought on to the premises.  The corollary of this distinction is that information in electronic form downloaded onto a device brought on[to] the premises is not treated as itself the subject of “seizure”.’

88                  In relation to things seized under a warrant, s 3Q of the Crimes Act relevantly provided:

‘3Q(1)If a thing is seized under a warrant … the executing officer or a constable assisting must provide a receipt for the thing.

 

(2)   If 2 or more things are seized or moved, they may be covered in the one receipt.’

89                  The Revised Explanatory Memorandum circulated by authority of the Minister for Justice and Customs in respect of the Cybercrime Bill 2001 included in respect of the proposed amendments to s 3L of the Crimes Act the following under the heading ‘Item 8’: 

‘This Item amends subsection 3L(1) of the Crimes Act and inserts new subsections 3L(1A) and 3L(1B).

 

Proposed subsection 3L(1) would clarify that the existing power to operate electronic equipment on premises to find evidential material includes material physically located away from the premises. …

 

As most business computers are networked to other desktop computers and to central storage computers, files physically held on one computer are often accessible from another computer.  In some cases these computer networks can extend across different office locations.  Accordingly, it is critical that law enforcement officers executing a search warrant are able to search not only material on computers located on the search premises but also material accessible from those computers but located elsewhere.

 

Proposed subsection 3L(1A) would enable law enforcement officers executing a search warrant to copy data held on any electronic equipment or associated devices at search premises to a storage device where there are reasonable grounds for suspecting that the data contains evidential material.  This will permit officers to copy all data held on a computer hard drive or data storage device if some of the data contains evidential material or if there are reasonable grounds to suspect the data contains evidential material.

 

The existing provision [see s 3L(2)(c)] only allows evidential material to be copied … .  Electronic equipment, such as a computer hard drive, can hold large amounts of data.  It is often not practicable for officers to search all the data for evidential material while at the search premises and to then copy only the evidential material which is found.  The proposed provision would allow officers to copy all the data on a piece of electronic equipment (by imaging a computer hard drive for example) in situations where an initial search of the data uncovers some evidential material or where the officer believes on reasonable grounds that the equipment might contain evidential material.

 

…’

 

(Emphasis added)

90                  The reference to ‘reasonable grounds’ in the penultimate paragraph quoted above is consistent with the reference to ‘reasonable grounds’ in what is now s 3L(1A).  It may be noted that the form of clause 3L(1A) as contained in the Cybercrime Bill 2001 was the same as it was in the subsection as enacted.

91                  The ordinary meaning conveyed by s 3L(1A)(a) is that if the executing officer or constable assisting believes on reasonable grounds that data from a particular source accessed by operating a computer might constitute evidential material, he or she may copy the data from that source to a disk, tape or other associated device brought to the premises.  Furthermore, a computer hard drive is a single source of data within the meaning of that paragraph (per Branson J in Kennedy v Baker at [66] and [70]).

92                  When s 3L(1A) was inserted into the Crimes Act by the Cybercrime Act 2001 (Cth), s 3L(2)(c) was repealed at the same time.  Section 3L(2)(c) had provided:

‘(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:

…

 

(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.’

 

 

93                  It will be appreciated that s 3L(1A) does not require the relevant electronic equipment to be operated nor does it require that evidential material be found which is accessible by operating the equipment before data may be copied to a disk, tape or other associated device brought to the premises by the executing officer or constable assisting.  All that is required is that the executing officer or constable assisting ‘believes’ on reasonable grounds ‘that any data accessed by operating the electronic equipment might constitute evidential material’.  This of course, does not preclude an executing officer or constable assisting from operating the relevant electronic equipment if he or she holds the requisite belief under s 3L(1) on reasonable grounds.

94                  In Trimboli v Onley (No. 3) (1981) 56 FLR 321 (‘Trimboli’), a case under the former s 10 of the Crimes Act (see below), Holland J asked himself the rhetorical question – at what time must the required belief be held for a seizure and subsequent detention to be lawful?  His Honour’s response, at 335, was as follows:

‘In my opinion, the only possible answer is that the belief must exist at every point at which lawfulness is claimed under the warrant for taking and keeping another’s property. …’

95                  Commenting on s 3L(2)(c), Hely J said in Williams v Keelty (2001) 111 FCR 175 at [299]:

‘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.’

96                  In relation to the stricter requirement for which s 3L(2)(c) provided before there could be any copying, Hely J continued at [300] by saying:

‘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. …’

97                  It may be observed that Hely J took a broader view of the right to ‘copy and take’ than the author of the Revised Explanatory Memorandum referred to above, and, in particular, the last paragraph as quoted.

Sufficiency of the description of the offences in a search warrant

98                  Prior to the introduction into the Act of Part IAA the relevant power to ‘grant a search warrant’ in respect of premises was to be found in s 10 of the Crimes Act which mirrored the provisions of s 3E(1) and (2) when taken with the definitions of ‘evidential material’ and ‘thing relevant to an indictable offence’ et cetera to which reference has been made above.  In that context, a Full Court comprising Bowen CJ, Lockhart and Jackson JJ in Parker v Churchill (1986) 9 FCR 334 made declarations that certain search warrants were outside the powers conferred by s 10 of the Crimes Act insofar as they contained a paragraph (d) and so much of paragraph (b) as referred to the possible offence by Parker and Carson of falsely representing that they were registered persons for the purposes of the Sales Tax Assessment Act (No 1) 1930 (Cth).  The Court held that the warrants in that case were otherwise valid (see at 336 and 352). 

The offences to which the warrants related were identified in the search warrants as follows:

‘… offences against provisions of the legislation named above, being described as:–

 

(a)       Taxation Administration Act 1953, sub-section 8C(d) together with sub-section 11(1) of Sales Tax Assessment Act (No. 1) 1930, in that Ralph Edward Parker and Therese Isobel Carson did at various times from the twenty-sixth day of October 1984 until the present time, fail to register for sales tax purposes as manufacturers and/or wholesale merchants;

(b)       Section 15 of Sales Tax Assessment Act (No. 1) 1930, in that Ralph Edward Parker and Therese Isobel Carson did, at various times from the twenty-sixth day of October 1984 until the present time, falsely represent they are registered persons or falsely quoted a certificate;

(c)        Section 29D of the Crimes Act 1914, in that Ralph Edward Parker and Therese Isobel Carson did, at various times from the twenty-sixth day of October 1984 until the present time, defraud the Commonwealth in relation to the purchase of raw materials free of sales tax and by failing to account for sales tax;

(d)       Section 231 of the Income Tax Assessment Act in that Ralph Edward Parker and Therese Isobel Carson did at various times since 30 June 1978 until the present time evade payment of income tax.’

The leading judgment was that of Jackson J with whose judgment Bowen CJ and Lockhart J expressed their general agreement, subject to a refinement which was reflected in the declarations as made. 

99                  Jackson J was of the opinion that a search warrant should state the description of the offence in question with a particularity sufficient to enable the person whose premises are being searched to know the exact object of the search (see Parker v Churchill at 348; see also The Queen v Tillett; Ex parte Newton (1969) 14 FLR 101 (‘Tillett’) at 113; Crowley v Murphy (1981) 34 ALR 496 (‘Crowley v Murphy’); Brewer v Castles (1984) 1 FCR 55 and Australian Broadcasting Corporation v Cloran (1984) 4 FCR 151 (‘Cloran’) at 153).  As Fox J said in Tillett ‘the search must have a purpose and what may be searched as relevant to one purpose may, or may not, be as extensive as that which has to be searched as relevant to another purpose’.

In Parker v Churchill at 349 Jackson J had described paragraph (d) as set out above as:

‘… entirely bereft of any particularity.  It simply alleges in the broadest terms that “at various times” over a period of more than six years Parker and Carson had evaded payment of income tax and it is impossible in these circumstances, in my view, to regard par (d) as stating with sufficient particularity the offences. …’

100               In Beneficial Finance Corporation v Commissioner of Australian Federal Police (1991) 31 FCR 523 (‘Beneficial Finance’) Burchett J, in his leading judgment, favoured a ‘broad practical approach, rather than a narrow rule requiring the identification of an ‘exact object’’ (see at p538 and 543).  At 543 his Honour continued:

‘An approach which eschews overzealous technicality, while requiring the full measure of the substance to be observed, is also consistent with the fact that the legislature has entrusted to lay justices of the peace the task of issuing search warrants.  If the courts were to insist upon the invalidation of a warrant for a legally incorrect formulation of an offence, although the substance of the offence could plainly be understood, they would not be interpreting the will of the Parliament but subverting it.  For the Parliament cannot have intended lay justices to be held to such a standard, when it entrusted the task of issuing warrants to them. …

 

… In my opinion, the conclusion emerges clearly that there is no justification for an “exact object” test.  The matter should be viewed broadly, having regard to the terms of the warrant in the circumstances of each case.  The question should not be answered by the bare application of a verbal formula, but in accordance with the principle that the warrant should disclose the nature of the offence so as to indicate the area of search.  The precision required in a given case, in any particular respect, may vary with the nature of the offence, the other circumstances revealed, the particularity achieved in other respects, and what is disclosed by the warrant, read as a whole, and taking account of its recitals. …’

Sheppard J agreed with the reasons for judgment of Burchett J and Pincus J generally agreed with the observations of Burchett J to which reference has been made.

101               In Harts Australia Ltd v Commissioner, Australian Federal Police (1997) 75 FCR 145 (‘Harts’) at 152 a Full Court comprising Hill, Cooper and Whitlam JJ also rejected the ‘exact object of the search’ test as formulated by Jackson J saying:

‘… What was required under s 10 was not the degree of particularity necessary to frame an indictment, nor was it necessary that the description of the offence be such as to permit the persons to whom the warrants were addressed to know “the exact object of the search” … Rather, a broad approach was directed.  What is significant, however, is that the warrant disclose the nature of the offence in question so as to indicate the area of search. …’

102               It is not essential to the validity of a search warrant that it contain the name of the alleged offender (per Jackson J in Parker v Churchill at 346; see also R v Tillett; ex parte Newton at 114).

103               There is no room for a notion that if separate offences are rolled up in a search warrant, the warrant is in some way invalidated on grounds analogous to duplicity (per Hely J in Williams v Keelty (2001) 111 FCR 175 at [142]).

104               A reference in a search warrant to an incorrect section will not of itself invalidate a search warrant (per Jackson J in Parker v Churchill at 340).  If a reference to an incorrect section has the result that the warrant does not specify any offence, or makes the warrant ambiguous so that it is not possible to tell what offence is referred to, it may invalidate the warrant.  To avoid invalidity, a search warrant must disclose the nature of the offence/s sufficiently to indicate the permissible area of search in relation to which s 3E of the Crimes Act is capable of operating, in otherwise intelligible terms (see generally per Jackson J in Parker v Churchill at 340; see also Burchett J in Beneficial Finance at 543 and Harts at 152).

105               The administration of the criminal law requires that search warrants be issued for the purpose of obtaining evidence for legitimate use in criminal proceedings (per Lockhart J in Cloran at 154).  But that consideration must be weighed against the interference with privacy that is the inevitable consequence of the execution of a search warrant. 

106               It must be remembered that the entry, search and seizure authorised by the Crimes Act is not confined to the premises of a person suspected of committing a crime.  The owner or occupier of the premises may be quite unconnected with the commission of any crime.  This illustrates the necessity for search warrants, which are intrusions into the sanctity of a person’s domain and concomitantly an interference with his privacy, to define with reasonable particularity all relevant matters:  the premises, the things liable to be seized and the offences which were committed or suspected to have been committed (per Lockhart J in Cloran at 154).

107               As crime corrupts our society and undermines the very liberties we value so highly, some judgments rightly attach great importance to the prevention, detection and punishment of crime.  That is a dirty, difficult, often dangerous and, more often, thankless task which we are very ready to dump upon the shoulders of our police force.  It has to be remembered that the war against crime is a war to protect and preserve our liberties.  The search warrant is a valuable and frequently essential weapon in that fight.  Obviously, like all weapons, it can be a danger to society if misused; but there can be no valid objection in the name of liberty to the proper use of a search warrant.  It is said in the cases that the courts must be vigilant and have a duty to see that our liberties are not invaded by an abuse of the power to issue and execute search warrants.  As it has to be recognized that the use of search warrants can serve the public good it is said that the task of the court is to find a satisfactory and workable compromise of the conflicting public interests that are involved.  As cases and circumstances vary infinitely, that is easier said than done.  However, it is important in approaching problems in relation to search warrants not to overlook or underrate the value to the welfare of society of the use of the search warrant as an instrument against crime (per Holland J in Trimboli at 332-333).

108               Although a warrant must comply strictly with the statutory conditions for its issue (see George v Rockett (1990) 170 CLR 104 at 110-111 and State of New South Wales v Corbett (2007) 230 CLR 606 at [1], [3], [18]-[19], [87] and [95]-[100]), it should, like other documents, be read fairly and not perversely.  The language used need not be elegant (see per Burchett in Beneficial Finance at 544 and 546; see also per Hely J in Williams v Keelty at [135]-[139]).

109               In Brewer v Castles (1984) 1 FCR 55 Beaumont J gave consideration to a search warrant which, after referring to numerous classes of documents and names of individuals, firms and companies, referred to certain offences, at 56-7, in the following terms:

‘As to which there are reasonable grounds for believing that the same will afford evidence as to the commission of any offence against a law of the Commonwealth namely:

i.          Section 86(1) of the Crimes Act 1914 (Cth) to wit, conspiracy to commit an offence against a law of the Commonwealth, to wit, s. 49 of the Sales Tax Assessment Act No. 1, 1930.

 

ii.         Section 86(1)(e) of the Crimes Act 1914 (Cth), to wit, conspiracy to defraud the Commonwealth.

 

iii.        Section 49 of the Sales Tax Assessment Act No. 1, 1930, to wit, by any wilful act, default or neglect, or by any fraud, art of contrivance whatsoever, avoids or attempts to avoid taxation.

By the aforesaid [Leonard Noel] Briot, and the aforesaid named persons in any combination and with any other person or persons unknown.’

110               Beaumont J refused declaratory relief sought by the applicant that the search warrant was bad for lack of specificity.  His Honour said at 62:

‘… In the present case, three offences are nominated, notwithstanding that the description of the second offence is necessarily general in terms. But, in my opinion, the description of the apprehended offences in the subject warrant is sufficiently definite to indicate the nature of the documents, if any, to be seized.

 

In my view, the proper construction of the warrant calls for a consideration of the instrument as a whole. … in my opinion, it is appropriate to employ language in the operative portion of the warrant which incorporates by reference material in the recitals, provided the process gives a result which is reasonably clear to the ordinary reader and is sufficiently specific in terms of identifying a particular offence…

 

In my opinion, the present warrant is reasonably clear in its operation and it does achieve the degree of specificity thus required. …’

 

(Emphasis added)

111               The statement of an offence in a search warrant need not be made with the precision required for an indictment.  That would be impossible, and indeed to attempt it would be irrational, bearing in mind the stage of the investigation at which a search warrant may issue.  The purpose of the statement of the offence in a search warrant is not to define issues for trial, but to set bounds to the area of search which the execution of the warrant will involve, as part of an investigation into a suspected crime.  The appropriate contrast is not with the sort of error which might vitiate an indictment, but with the failure to focus the statutory suspicion and belief upon any particular crime, with the result that a condition of the issue of the warrants is not fulfilled (per Burchett J in Beneficial Finance at 533 which was cited with approval by Heerey J in Chong v Shultz (2000) 112 A Crim R 59 (‘Chong v Shultz’) at [7]).

112               What the rule requires is identification (and so limitation) of an area of search by reference to a suspected offence, not the formulation of a pleading before the offence is capable of prosecution (per Burchett J in Beneficial Finance at 533-534).

113               In Chong v Shultz the offences referred to in the search warrant were expressed as follows:

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

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

114               At [6] Heerey J noted the submission of senior counsel for the applicants that:

‘neither [i] nor [ii] disclose any offence.  As to [i], he submitted that there is no such offence as “redirecting income tax” derived by a person.  As to [ii] he pointed out … that there is no s 276A in the Bankruptcy Act 1966 (Cth).’

 

His Honour then added:

‘… However, there is a s 267A which makes it an offence for a bankrupt to give a statement to a trustee under s 139U that is false or misleading in a material particular.  The penalty provided is imprisonment for 12 months.’

115               At [9] Heerey J found that an offence had, relevantly, been stated in paragraph (i), namely the offence of defrauding the Commonwealth contrary to s 29B of the Crimes Act.  His Honour said:

‘… I think a reasonable reading of the paragraph in question would indicate that the word “tax” where secondly appearing has been inserted in error.  Such a reading is confirmed by looking, as one is entitled to do, at the context of the warrant as a whole, including the nature of the documents sought in the first condition and the persons identified in the second condition.  All this suggests to the reader that the subject of the warrant is a particular kind of category of the offence of defrauding the Commonwealth, namely defrauding in relation to income tax.’

116               His Honour then continued by saying at [10]:

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

117               In respect of paragraph (ii) Heerey J followed Parker v Churchill in relation to the misdescription of the section by reference to which the offence had been identified and generally applied what Jackson J said in that case.  His Honour considered the observation of Jackson J at 340 to be applicable to s 3E(5)(a) as it then stood.  He said at [12]:

‘… The offence of giving false information to a trustee in bankruptcy, which is undoubtedly an offence, is clearly stated.’

118               His Honour dismissed the application for declaratory relief to the effect that the relevant search warrants were invalid.

The execution of search warrants generally

119               What should be done when executing a search warrant will vary according to the circumstances of the individual case.  However, the power of enforcing a search warrant must, firstly, be exercised in good faith.  Secondly, it must be exercised for the purpose for which it was conferred.  It must not be used for some ulterior purpose.  Thirdly, it must be exercised fairly, having regard to all the circumstances.  Fourthly, it must be exercised having regard to the rights of those affected by its exercise and, fifthly, the officer executing the warrant must strictly follow the directions contained in it and must not exceed the limits of the authority conferred by it (see generally per Lockhart J in Crowley v Murphy at 521).

120               The overriding obligation of the searcher is to do no more than is reasonably necessary to satisfy himself or herself by search that in all the circumstances of a particular case he or she has whatever documents or things are necessary to answer the terms of the search warrant.  Plainly this will vary from case to case.  What is permissible on one occasion may be impermissible on another.  Much must be left to the sense of responsibility of the police officers executing the warrant and the person whose premises are to be searched (see per Lockhart J in Crowley v Murphy at 525 – 526 (when addressing a search warrant issued under the former section 10)).

121               Speaking in the context of a seizure of documents in 2001 Hely J said in Adler v Gardiner (2002) 43 ACSR 24 at [39]:

‘[39]    The executing officer or constable assisting, has to be satisfied that there are reasonable grounds for suspecting that things seized will afford evidence as to the commission of an offence.  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 executing officer or constable assisting.  That does not mean that the executing officer, or constable assisting, has an unexaminable discretion; it does mean, however, that the officer’s decision is only impeachable if the decision was one which the officer could not lawfully reach on the materials before him or her:  Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 275-6 …’

Application of the principles to the search warrants in question

122               The third condition to the search warrants in question in these proceedings purportedly identified two offences against laws of the Commonwealth said to have been committed by the second and third applicants.

123               In relation to the ‘first offence’ the putative accused were identified, the time period in which the wrongdoing was said to have occurred was clearly stated and the general nature of the offences to which the warrants related, was provided.

124               This case is probably not the proper vehicle in which to address the niceties associated with the determination of the true construction of s 134.2 of the Criminal Code and its application, if any, to financial advantages that may have been derived by a shareholder or shareholders, or a director or directors of a company, from the lodgement of company income tax returns containing false claims for allowable deductions.

125               The description of the ‘Australian Taxation Office’ as a ‘Commonwealth entity’ in the first offence as recorded in the Third Condition of the search warrants would appear to have been misconceived. 

126               Income tax that is due and payable:

(a)        is a debt due to the Commonwealth; and

(b)        is payable to the Commissioner of Taxation.

(See, inter alia, s 255-5 of Schedule 1 to the Taxation Administration Act 1953 (Cth) (‘the Administration Act’), s 166 of the Income Tax Assessment Act 1936 (Cth) (‘the 1936 Act’), s 23(2) of the Income Tax Rates Act 1986 (Cth), s 250-10 of the Administration Act and the Table thereto and s 204 of the 1936 Act).

127               In the dictionary to the Criminal Code (see s 4), ‘Commonwealth entity’ was defined to mean:

‘(a)      the Commonwealth; or

(b)       a Commonwealth authority.’

 

‘Commonwealth authority’ was itself defined to mean:

‘… a body established by or under a law of the Commonwealth, but does not include:

[certain bodies identified in the definition or specified in the regulations]’

128               It seems to me that the ‘Australian Taxation Office’ as referred to in the first offence recorded in the Third Condition of the search warrants was not a ‘body’ so established and thus it was not a ‘Commonwealth Entity’. 

129               Another complication in relation to the first offence as recorded in the third condition of the search warrants is the reference to the second and third applicants obtaining a financial advantage in the form of a reduction in ‘their’ taxable income. 

130               In addition, the first offence charges that the second and third applicants, dishonestly and by deception, obtained a financial advantage in the form of a reduction of their taxable income ‘by submitting false Tax Returns for the financial years ending 30 June 2003 to 30 June 2006 inclusive for [unspecified] Australian companies and individuals by claiming false deductions for management fees and loans’.

The reference to ‘Australian companies and individuals’ is seemingly limitless, but the words ‘thereby reducing their taxable income’ introduced a connection between the activities of the second and third applicants through an entity trading as Different Solutions Pty Ltd and the submission of false tax returns.

131               Reading the warrants fairly and not perversely and putting to one side inelegant language that may have been employed, I consider that, consistent with the authorities referred to above, the search warrants sufficiently state the first offence in accordance with the requirements of s 3E(5)(a) of the Crimes Act.

132               The material recorded in the third condition in respect of the first offence is sufficient to allege that the second applicant, by a deception, dishonestly obtained a financial advantage from the Commonwealth and that the third applicant, by a deception, dishonestly obtained a financial advantage from the Commonwealth, albeit in the somewhat curious manner described in the first offence.

133               In relation to the ‘second offence’, the second and third applicants are clearly identified, ‘with others’, as alleged conspirators and the offence they allegedly conspired to commit was identified, at least by the reference to s 400.4(1) of the Criminal Code.  The time period in respect of which the conspiracy was said to have been committed was also clearly stated.

The reference to money ‘worth $100,000 or more’ is curious unless, perhaps, some sort of foreign currency was involved, but then, s 400.4(1)(c) requires that where there is a dealing with money falling within the subsection, and in this regard see [15]-[17] above, ‘the value’ of the money must be $100,000 or more.

134               No mention was made of whether the conspiracy to deal with money was in relation to money believed to be the proceeds of crime on the one hand, or money intended to become an instrument of crime on the other.  Nor was there any clear identification as to whether the ‘Different Solutions’ referred to was intended to identify a business carried on under that business name or the company identified as Different Solutions Pty Ltd in the statement of the first offence.

135               Again, this case is probably not the proper vehicle in which to address the niceties associated with the determination of the true construction of s 400.4(1) and s 11.5(1) of the Criminal Code, when taken with s 400.1(1) and 400.2(1), and their application, if any, to dealings with money, if any, upon which the alleged conspirators may have agreed.

136               However, reading the search warrants fairly and not perversely and putting to one side the inelegance of the language chosen, part of which can be attributed to the inelegance of the language in which s 400.4(1) of the Criminal Code was itself expressed, I consider that the second offence referred to in the search warrants was sufficiently identified to satisfy the requirements of s 3E(5)(a) of the Crimes Act.

137               I am unable to accept the submission of the applicants that the second respondent erred by issuing search warrants that weren’t sufficiently tight to comply with the requirements of the Crimes Act.

138               Having rejected the submission of the applicants in relation to alleged deficiencies in the statement of the offences to which the search warrants related, it is now necessary to consider the execution of the warrants on 31 July 2007.

Did the execution of the search warrants exceed the relevant powers?

139               It is convenient to deal with items (a) and (b) in relation to Mosman (see [31]) and items (c), (d), (e) and (f) in relation to Pyrmont (see [52]) seriatim.

140               Before doing so I should say that if (say) a search warrant authorised the search for and seizure of cheque butts referable to cheques drawn on a particular bank account with identified serial numbers or made payable to identified payees in relation to (say) a suspected taxation fraud offence, I would consider it quite improper for the executing officer, and/or constable assisting, to dismember any book of cheque butts that may be found so as to permit seizure of a particular butt.  It would be incumbent upon the relevant officer or constable to seize the entire book even though the remaining butts may not answer the description of the search warrant.  Similarly, if (say) a search warrant authorised the search for and seizure of a manuscript ledger account referable to a particular class of income or expenditure or a subset thereof, such as ‘accounts receivable from customer X’, I would again consider it quite improper for the executing officer or constable assisting to dismember a bound book containing ledger accounts by tearing out or otherwise removing the relevant page or pages.  It would, in my opinion, be incumbent upon the relevant officer or constable to seize the entire book, even though the remaining folios may not answer the description of the search warrant.

141               The point that I am endeavouring to make is that if a particular item of stored information, recorded in documentary form, is itself to be found in a medium that contains other information, recorded in documentary form, then the search warrant would, in my opinion, permit seizure of the medium itself.

142               Logically, one would expect that if a particular item of stored information, included in a mass or body of characters or symbols, capable of being processed into accessible form by the operation of electronic equipment, was to be found in a medium that contained other information similarly accessible, the host medium could itself be seized or copied and taken away.

143               However, the power to seize or to copy and take away can only be exercised if the relevant statutory prerequisites are met.

Item (a):  the Seagate hard drive taken from Mosman, imaged and returned

144               As previously indicated, the search warrants were not invalid because of an alleged failure on the part of the second respondent to comply with s 3E(5)(a) of the Crimes Act.  In the circumstances, it becomes necessary to consider the application of s 3L(2) and s 3F(1)(c) to the seizure of item (a).

145               With a measure of frankness, for which he is renowned, senior counsel for the first respondent, without abandoning his case under s 3L(2), acknowledged that it was ‘a bit thin’ and that his primary case in respect of item (a) was under s 3F(1)(c).

146               Whilst Mr Banach noticed that the Dell Mini Tower P/C was ‘powered on’ and clicked ‘My Computer’, to see if he could identify which hard disk drives were in the computer, he did not perform any key word searches to locate files or folders in the hard drives containing any of the relevant key word/s.  In the circumstances, I am unable to find that ‘after operating the equipment’ Mr Banach found that ‘evidential material’, within the meaning of the Crimes Act, was ‘accessible by doing so’.  Accordingly, s 3L(2) did not confer power on Mr Banach or Federal Agents Rebecca Miller or Fox to seize item (a).

147               The question then becomes whether the Mosman warrant authorised seizure of item (a) as an item of evidential material specified in the warrant.  This begs the question ‘what were the kinds of evidential material (things relevant to an indictable offence or things relevant to a summary offence, including such things in electronic form) specified in the warrant?’.

148               It cannot be doubted that item (a) was a ‘computer storage device’ or other type of ‘storage medium or storage device’ within the meaning of the preamble in the first condition of the Mosman warrant.  However, authority for its seizure can only be found in s 3F(1)(c) of the Crimes Act if, in relation to it, all three of the conditions specified in the Mosman warrant were satisfied.

There is no evidence to establish these matters in respect of item (a).  What data the item contains and what information may be accessed through such data being processed by an appropriate piece of electronic equipment is unknown, given the undertaking of the first respondent referred to at [5] above.

In my opinion, s 3F(1)(c) did not authorise the seizure of item (a). 

149               Whether the image from the hard drive that was made at the first respondent’s office in Sydney following the removal of the hard drive from the Mosman premises, should be destroyed or delivered up to the second and third applicants, if that be possible, or may be retained by the first respondent as potential evidence, illegally obtained, in relation to the offences with which the second and third applicants have now been charged, is a matter for later consideration.

Item (b):  the TALON copy of the Western Digital hard drive made at Mosman on 31 July 2007

150               In my opinion s 3L(1A) provided a clear warrant for the making of the TALON ‘copy’ of the Western Digital hard drive at the Mosman premises on 31 July 2007 and the taking of the image so made from the Mosman premises.

151               The belief of Mr Banach referred to at [44] above was, in the context of the search and his communications with Federal Agents Fox and Rebecca Miller, sufficient to constitute a belief on reasonable grounds that any data accessed by operating the Dell Mini Tower P/C might constitute evidential material within the meaning of the Crimes Act.

Furthermore, the belief of Federal Agent Fox referred to at [46] above was, in the context of the search and his communications with Federal Agents Rebecca Miller and Phun, the Standard Technical Plan for Operation Starlifter and his prior involvement in the execution of Operation Starlifter search warrants, sufficient to constitute a belief on reasonable grounds that any data accessed by operating the Dell Mini Tower PC might constitute evidential material within the meaning of the Crimes Act.  That belief, coupled with Federal Agent Fox’s instruction to Mr Banach to image the Dell Mini Tower P/C (i.e. relevantly items (a) and (b)) brought the making and taking of the TALON copy of the Western digital hard drive within the power conferred by s 3L(1A) of the Crimes Act.

Items (c) and (d):  the Dell Power Edge Server known as ‘REX’ and the 500GB Lacie external hard drive removed from Pyrmont, imaged and then returned

152               The situation in relation to items (c) and (d) under s 3L(2) of the Crimes Act is not the same as it was for item (a).

153               Unlike Mr Banach at Mosman, Mr Bruce at Pyrmont conducted a key word search of the computer disk volume labelled as ‘Archive’ connected to the server named ‘Rex’.  He electronically located files for the search term ‘Owen T Daniel’ on an external drive but was unable to identify which of the external drives was the one which was identified as ‘Archive’ electronically.

154               The authority conferred by s 3L(2) of the Crimes Act to seize the equipment did not require Mr Bruce to find that ‘evidential material specified in the warrant’ was accessible by operating the equipment.  All that was necessary was that he find, after operating the equipment, that ‘evidential material is accessible by doing so’.  Relevantly that required him to find something as to which there were reasonable grounds for suspecting that it would afford evidence as to the commission of an indictable offence.

155               Given the matters referred to at [56], [57], [59], [60] and [63] above there were reasonable grounds for Mr Bruce suspecting, as I find that he did, that there were things on the hard drives which would afford evidence as to the commission of an indictable offence against a law of the Commonwealth.

156               I am satisfied that it was not practicable to copy the data within items (c) and (d) at the Pyrmont premises and infer that it was not practicable to put the evidential material in documentary form by using facilities at the Pyrmont premises.  Accordingly items (c) and (d) were lawfully seized within the power conferred by s 3L(2) of the Crimes Act.

157               If I were in error in reaching the conclusions which I have in relation to the application of s 3L(2) to items (c) and (d), I would conclude that seizure of the two items was within the power conferred by s 3F(1)(c) or (d), in any event.

158               Items (c) and (d) were undoubtedly computer storage devices or other types of storage media or storage devices within the meaning of the preamble in the first condition of the Pyrmont warrant.  The authority for their seizure under s 3F(1)(c) of the Crimes Act required that in relation to each of the items all three of the conditions specified in the Pyrmont warrant were satisfied.

In my opinion, the evidence of Mr Bruce (and in this regard see, inter alia [56], [59], [60] and [63] above) provided sufficient justification for the seizure of items (c) and (d) under s 3F(1)(c) of the Crimes Act on the basis that the three conditions had been satisfied.

159               Alternatively, if the three conditions were not satisfied, the matters referred to at [65]-[66] above provided a proper basis for the seizure of items of (c) and (d) at Pyrmont in accordance with s 3F(1)(d) of the Crimes Act.  In this context, Federal Agent Serrano’s belief that the Dell Power Edge Server known as ‘Rex’ may have been tampered with by somebody externally earlier in the day on 31 July 2007 with the intention of trying to destroy evidence, is important.  Federal Agent Serrano undoubtedly believed, on what I consider to have been reasonable grounds, that evidential material in relation to one or other or both of the offences to which the Pyrmont warrant related was to be found stored in the items (c) and (d).

Item (e):  the two Hewlett Packard E-Vectras

160               The case for seizure of the two hard drives (item (e)) under s 3L(2) is put on the basis that items (c) and (d) were lawfully seized.  It is said that the two hard drives, together item (e), which were discovered in a box behind the staircase at Pyrmont on 31 July 2007, were covered by the words ‘and any disk, tape or other associated device’ in s 3L(2)(a) of the Crimes Act.

161               The phrase in question clearly provides authority for detached items customarily used in or in relation to computers to be exposed to seizure in the same way as the computers themselves.

162               Given the evidence summarised at [61]-[62] I am of the opinion that the two hard drives covered by item (e) were covered by the expression ‘and any disk, tape or other associated device’ and, as such, properly seized along with items (c) and (d) under s 3L(2) of the Crimes Act.

163               Were I in error in concluding that item (e) was properly seized under s 3L(2) of the Crimes Act, I would conclude that the power contained in s 3F(1)(c) did not authorise seizure of the two hard drives for reasons akin to those recorded in relation to item (a) and the application of s 3F(1)(c) thereto. 

What data the two hard drives comprising item (e) contain and what information may be accessed through such data being processed by an appropriate piece of electronic equipment is unknown, given the undertaking of the first respondent referred to at (5) above.

Item (f):  the CD

164               In my opinion, seizure of the CD (item (f)) cannot be justified under s 3F(1)(c) for the reason that authority for its seizure under that provision could only be found if, in relation to the CD, all three of the conditions specified in the Pyrmont warrant were satisfied.

165               It may be inferred from the label ‘Payment Summary Report 1/7/04-30/6/05’ and the location of the CD in a drawer at the premises of the first applicant at Pyrmont, that the CD includes ‘Accounting documents and working papers’ referable to the first applicant, sufficient to satisfy the first condition and the second condition.  However, there is no evidence to establish that the CD satisfies the third condition.  There was no evidence to establish reasonable grounds for suspecting that information accessible via the CD would afford evidence as to the commission of one or other or both of the offences mentioned in the third condition.

166               In my opinion, s 3F(1)(c) did not authorise the seizure of item (f).

Resolution of the issues arising under the Further Amended Application

167               In the light of the findings made above, I would conclude that the applicants are not entitled to declaratory relief as sought in paragraphs 1 and 3 of the Further Amended Application.

168               Insofar as prayer for relief 2(a) is concerned, there can be no basis for the grant of declaratory relief in circumstances where the issues relating to legal professional privilege were resolved between the parties on terms which were never disclosed to the court.

169               Under prayer for relief 2(b), no issues arose in respect of ‘documents’ that were seized on 31 July 2007.  As to ‘other material’, my findings in relation to the seizure or copying and taking of such material do not warrant the making of any declarations, except perhaps in respect of items (a) and (f).  In relation to those items, there remains the question as to whether the first respondent may use the image of the hard drive (item (a)) and/or the CD (item (f)) which were illegally obtained.

170               Section 138 of the Evidence Act 1995 (Cth) confers a discretion to exclude improperly or illegally obtained evidence.  However, it contemplates that evidence that may be contained in the image of the hard drive (item (a)) or the CD (item (f)) could become evidence in, relevantly, the proceedings instituted against the second and third applicants.

171               In Gedeon v Commissioner of the New South Wales Crime Commission (2008) 249 ALR 371 the High Court addressed what it referred to as ‘fragmentation of the criminal process’.  At [23] a Full Bench of the High Court comprising Gummow, Kirby, Hayne, Heydon, Crennan and Kiefel JJ said:

‘23       With respect to the exercise of the power to make the declaratory orders now sought by the applicants, authority in this Court affirms an important general principle.  This is that power to make declaratory orders should be exercised sparingly where the declaration would touch the conduct of criminal proceedings.  The fragmentation of the criminal process is to be actively discouraged. …’

 

(Footnote omitted)

172               Counsel for the applicants submitted that the cases to which the High Court referred were cases where prosecutions were interrupted not cases instituted at the evidence gathering stage rather than the prosecution stage.  True that may be, but, in the present case the quite significant amendments to the Application were not made until after the relevant Court Attendance Notices had been served whereby the prosecutions of the second and third applicants were commenced and more importantly the applicants did not adduce any evidence to establish that neither the image of the hard drive (item (a)) nor the CD (item (f)) contained any evidence that could be admissible on the prosecution of the charges laid against the second and third applicants.

173               In Wright v Queensland Police Service [2002] QSC 46 Holmes J said at [57] in proceedings in the Queensland Supreme Court:

‘57       The overwhelming weight of persuasive authority … supports the existence of a discretion to be exercised in considering an application for the return of illegally seized items; and moreover points to a refusal to exercise that discretion where criminal proceedings are on foot.  On balance in this case, the greater interest lies in preserving the evidence; the question of admissibility may properly be left to the trial judge.  Accordingly, I would not be prepared to make any order for the return of items seized pursuant to the invalid warrant if they are required for the prosecution of the first applicant ….  There is however, no material presently before me as to the evidentiary value of the seized items.  I would be prepared to receive further material and hear argument, should the parties so wish, as to whether any or all of the material seized does in fact afford evidence of an offence. …’

 

174               Holmes J proceeded to dismiss the application insofar as it sought the grant of an injunction requiring the delivery up of documents that had been seized and copies thereof but he was prepared to adjourn for further consideration the question as to whether an order should be made for the return of the illegally seized items in that case.

175               In Puglisi v Australian Fisheries Management Authority (1997) 148 ALR 393 Hill J addressed the question of whether items seized pursuant to an invalid warrant should be returned to the parties from whom they were seized.  At 403 his Honour expressed the opinion that prima facie the applicants in that case were entitled to an order against the Commissioner of Police directing that the goods seized under the invalid warrant be returned.  His Honour then went on to consider whether or not he should refuse to grant the relief sought.  At 405 his Honour said:

‘… it must be said that the preponderance of view is in favour of refusing to order the return of items, even where those items have been illegally seized, if there are criminal proceedings pending in which the items may be used as evidence.  While the court would not wish to be seen to be rewarding members of the police who obtain possession of material without lawful authority, there is to be weighed against that a public interest in the administration of and non-interference with justice.  Should the court order that material, albeit invalidly obtained, to be used in evidence in a pending prosecution be delivered up to those from whom it was taken the prosecution, which might otherwise succeed, could be frustrated .’

176               Hill J declined to make any order for the return of the items seized pursuant to the invalid warrant in that case ‘at this stage’. 

177               In the exercise of my discretion in this case, I am disinclined to prohibit the use by the first respondent of the stored information accessible by the operation of electronic equipment in relation to the Seagate hard drive (item (a)) and the CD (item (f)).  It is not as if the search warrants were invalid in this case or that the seizure of the items in question concerned a stranger to the persons referred to in the offences identified in the third condition of each of the search warrants.  Were the first respondent to come to the view that there was no evidential material referrable to the offences now charged or any other offences that are indictable offences in items (a) and/or (f), I would expect the image of the hard drive (item (a)) to be destroyed and the CD returned to the first applicant.  However, on the material presently before the Court I would not be disposed to grant any declaratory or injunctive relief as sought.

178               In my opinion the Further Amended Application should be dismissed with costs.

 

I certify that the preceding one hundred and seventy-eight (178) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.

Associate:

Dated:         14 November 2008

Counsel for the Applicants:	A Robertson SC with R L Seiden
Solicitor for the Applicants:	MDA Lawyers
Counsel for the Respondents:	J S Hilton SC with K A Stern
Solicitor for the Respondents:	Australian Government Solicitor

Date of Hearing:	15, 16, 17 and 18 September 2008
Date of Judgment:	14 November 2008