FEDERAL COURT OF AUSTRALIA

Caratti v Commissioner of the Australian Federal Police [2015] FCA 1108

THE COURT ORDERS THAT:

1.    The application to vacate the trial be dismissed.

2.    The applicant to pay the respondents’ costs of the application.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(Delivered ex tempore, revised from transcript)

1    On 5 February 2015, Mr Allen Caratti commenced proceedings for judicial review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) and relief under s 39B of the Judiciary Act 1903 (Cth), in respect of decisions to issue search warrants under s 3E of the Crimes Act 1914 (Cth) (Crimes Act), and the conduct of the Commissioner of the Australian Federal Police (AFP) and officers of the AFP in executing those search warrants. On 26 May 2015, after numerous directions hearings and amendments to the originating application, the matter was set down for hearing for five days commencing on 19 October 2015.

2    Mr Caratti now applies for that hearing date to be vacated and for the matter to be listed for further directions in two months’ time. The sole ground for the application is that the hearing of the matter cannot proceed fairly without Mr Caratti and his legal team having a reasonable time to review the material seized under the search warrants. In support of this ground, Mr Caratti relies on an affidavit sworn by a solicitor in his legal team, Mr Daniel Romano.

3    Mr Romano’s evidence establishes that on 20 February 2015, Mr Caratti, through his solicitors, requested the AFP to provide copies of all the material that was seized under the search warrants. Mr Caratti was entitled to obtain copies of the documents seized pursuant to s 3N of the Crimes Act. Unfortunately, while the AFP agreed to provide copies of the material, the logistics of providing copies turned out to be somewhat complicated and productive of delay. The difficulties seem to have arisen by reason of the quantity of the seized material and the question of who was to be responsible for retaining third party assistance in copying the material. The delay was not Mr Caratti’s fault.

4    Over the months following the initial request, there was a good deal of correspondence between Mr Caratti’s solicitors and the AFP, as well as at least one teleconference at which the arrangements were discussed. It is perhaps not unfair to say that the AFP did not appear to act with any sense of urgency or haste, despite the fact that s 3N of the Crimes Act provides that copies of seized material should be provided as soon as practicable after the seizure.

5    Nonetheless, by 21 May 2015 the parties had agreed on the copying regime. This was shortly before the directions hearing at which the matter was set down for hearing. At the directions hearing on 26 May 2015, senior counsel then appearing for Mr Caratti agreed that the matter could be set down for hearing in late July 2015. To be fair, however, senior counsel did note that this depended on Mr Caratti’s legal team getting copies of the seized documents by mid-June. He indicated that if there were any difficulties, Mr Caratti would exercise his liberty to apply to the Court to have the matter relisted. The documents were not received in mid-June, however Mr Caratti did not, at least at that time, have the matter relisted.

6    On 21 July 2015, Mr Caratti’s solicitors received a USB flash drive containing electronic copies of 25,519 PDF documents, equating to 26 gigabytes of data. Shortly thereafter, Mr Caratti’s solicitors began to catalogue and index the seized material. For reasons not fully explained, as at 18 August 2015 only 1,500 documents had been catalogued. This may have been because the solicitors were giving close attention to the potential relevance of each document.

7    As a result of the delays in obtaining copies of the material, on 28 July 2015 Mr Caratti’s lawyers sought and, in due course obtained, a variation of the timetable which allowed them an extension of time in which to comply with some of the interlocutory steps prior to trial. They also flagged, for the first time, the possibility of applying to vacate the trial.

8    On 10 August 2015, Mr Caratti’s solicitors were provided with two hard disc drives containing a total of 4.5 terabytes of data, being copies of all the digital material seized under the warrants. Needless to say, that is a very large quantity of data. There have also, apparently, been difficulties accessing the data on these disc drives. Mr Caratti’s solicitors have now engaged an information technology firm to assist. Shortly after receiving this material, Mr Caratti’s solicitors advised the AFP’s solicitors that they proposed to apply to have the hearing dates vacated.

9    To fully comprehend Mr Caratti’s submissions in support of his adjournment application, it is necessary for some consideration to be given to the grounds upon which Mr Caratti challenges the decisions to issue the search warrants and the conduct involved in executing them. There would appear to be essentially seven grounds of challenge. In short terms they are as follows.

10    First, Mr Caratti contends that the AFP had an ulterior purpose in applying for the search warrants. In particular, it is alleged that the AFP had the ulterior purpose of assisting the Commissioner of Taxation in relation to the assessment of tax payable by Mr Caratti and entities associated with him.

11    Second, it is alleged that the descriptions of the offences in the search warrants are ambiguous, unintelligible or not offences, and therefore the officers who applied for the warrants could not have formed the requisite statutory suspicions necessary for the issuing of the warrants. This ground essentially rises or falls on the description of the offences on the face of the search warrants.

12    Third, and related to the second ground, it is alleged that the issuing officer could not have formed the necessary reasonable suspicion for the issue of the search warrants. This contention is, again, based essentially on the alleged ambiguous or unintelligible description of the offences in the warrants.

13    Fourth, Mr Caratti contends that no intelligible search perimeter existed. It is alleged that the search warrants did not sufficiently specify the perimeters within which materials were to be searched for and seized, and did not sufficiently inform the occupiers of the premises of the perimeters of the search. This ground is, again, essentially based on the description of the offences in the warrants.

14    Fifth, and perhaps most relevant to the adjournment application, it is alleged that officers searched and seized beyond the scope of the search and seizure authorised by the warrants. Paragraphs 53 to 57A of Mr Caratti’s points of claim contain the essential factual allegations and particulars of this ground. Paragraphs 53 to 57A of the points of claim are as follows:

53.    Searching officers:

53.1.    were in fact confused as to what the Warrants authorised;

53.2.    did not understand enough about the entities listed in the Warrants, their affairs or their functions to know the appropriate scope of the searches that were permitted and which material fell within the terms of the Warrants.

Particulars:

For example

(i)    See affidavit of Mr Kipping sworn on 13 March 2015 at [22], [23], [26], [28].

(ii)    See affidavit of Mr Romano sworn on 13 March 2015 at [6], [8].

(iii)    See affidavit of Mr Caratti sworn on 13 March 2015 at [13], [18], [20], [21].

(iv)    See affidavit of Mr Marzec sworn on 13 March 2015 at [13].

(v)    See affidavit of Ms Bazzo sworn on 13 March 2015 at [11]-[13], [21]-[25], [27], [29]-[32].

(vi)    See affidavit of Mr Schokker sworn on 13 March 2015 at [9].

54.    The searches conducted by officers did not align with the suspicions held by the applicant for the warrants and/or the Issuing Officer, or there was unacceptable risk.

Searches and seizures beyond scope of Warrants

55.    During the course of execution of the Warrants, inquiries were made by the occupiers and their representatives of the Executing Officers or Constables Assisting in execution of the Warrants as to:

55.1.    which offences in the Warrants certain property being seized related to; and

55.2.    which timeframes specified in the Warrants were being applied in refining the process of seizing property apparently relevant to the Warrants.

56.    In response, the Executing Officers or Constables Assisting in execution of the Warrants advised that they had proceeded on the basis that they could seize things at the Premises which might relate to offences not described in the Warrants, without forming a belief (as opposed to a suspicion) on reasonable grounds that the things were evidential material in relation to another offence that is an indictable offence.

57.    Warrants were:

57.1.    executed on the basis that anything, whether or not confined by the perimeters of the Warrant, could be seized, including bank statements of entities not listed in condition 2 of the 3 condition warrants, on the basis that they may relate to an offence or offences not listed in the Warrants, being an offence or offences under s135.1(2) of the Criminal Code Act;

57.2.    executed on the basis that things could be obtained beyond the Date Range of the offences specified in the Warrants, on the assumption but not the belief, that offences similar to those listed therein may have been committed outside the Date Ranges;

57.3.    obtained or executed with the intention of searching for more things than evidential material in relation to an offence to which the Warrants relate.

Particulars:

For example

(i)    See affidavit of Mr Kipping sworn 13 March 2015 at [24], [29]-[31]

(ii)    See affidavit of Ms Bazzo sworn 13 March 2015 at [11]-[14], [21]-[22], [25], [26]-[30], [32].

(iii)    See affidavit of Mr Marzec sworn 13 March 2015 at [13].

(iv)    See affidavit of Mr Schokker sworn 13 March 2015 at [9], [10]-[15].

(v)    See affidavit of Mr Romano sworn 13 March 2015 at [6]-[8].

(vi)    See affidavit of Mr Caratti sworn 13 March 2015 at [8]-[9], [13], [20]-[22].

(vii)    Searching officers did not understand enough about the entities listed in the Warrants, their affairs or their functions to know the appropriate scope of the searches that were permitted and which material fell within the terms of the Warrants.

57A.    The warrant executed on Unit 4B / 176 Main Street, Osborne Park in the State of Western Australia, was executed on the basis that anything, whether or not confined by the perimeters of the Warrant, could be seized, including material relating to entities not listed in condition 2 and / or not relevant to condition 3 of the 3 condition warrant.

Particulars:

(i)    The Property Seizure Records numbered 342330 to 342334.

(ii)    Material was seized in respect to the following entities which are not listed in either condition 2 or 3 of the 3 condition warrant:

a.    Gucce Holdings Trust

b.    Starbrake Holdings Trust

c.    Goldfortune Pty Ltd

d.    Goldtune Investments Pty Ltd

e.    Bellstar Investments Pty Ltd

f.    Jade Asset Pty Ltd

15    Ground six of Mr Caratti’s challenge relates to an alleged failure to comply with specific provisions of the Crimes Act relating to procedures to be followed in relation to search and seizure of computers and hard disks. Ground seven relates to the presence of sniffer dogs. Neither of those grounds are particularly relevant to the adjournment application.

16    In support of his adjournment application, Mr Caratti submitted that he needed more time to fully consider all the seized material. That was essentially because he will be asking the Court to draw inferences from the sheer volume of seized material that is unrelated to the offences listed in the search warrants, that the executing officers did not understand the search perimeters or acted without proper regard to them, or acted for the alleged ulterior purpose. That submission is, of course, entirely speculative at this stage. Given that Mr Caratti’s lawyers have only examined and catalogued a small proportion of the documents to date, they do not know that there will, in fact, be a large quantity of seized material outside the terms of the warrants.

17    It is also unclear how Mr Caratti proposes to put evidence before the Court of the “sheer volume” of allegedly irrelevant seized material. It appeared, at least initially, to have been suggested that all the seized material would be tendered and the Court would be invited to find that most of it was outside the terms of the search warrants. In oral submissions in support of the adjournment application, however, Mr Caratti’s senior counsel indicated that he would not tender all of the documents. Rather, he would cross-examine seizing officers, perhaps at length, about the basis upon which they seized certain documents.

18    It cannot be doubted that Mr Caratti is able to challenge the lawfulness of the execution of the warrants. Executing officers are required to act reasonably in all the circumstances of the case and the search warrants must be executed in accordance with their terms: Dunesky v Commonwealth of Australia (1996) 89 A Crim R 372 at 384; 33 ATR 491 at 501; Crowley v Murphy (1981) 34 ALR 496 at 523-526; 52 FLR 123 at 152-155; Bartlett v Weir (1994) 72 A Crim R 511 at 518; Dunesky v Elder (1994) 54 FCR 540 at 556. That said, it is unlikely that Mr Caratti will achieve much if he tenders all or some of the seized documents. Even if that course is permitted, it will not necessarily allow the Court to form a view as to whether the documents fall within the terms of the warrants. In Propend Finance Pty Ltd v Commissioner, Australian Federal Police (No 2) (1994) 35 ALD 25; 29 ATR 87, Davies J said the following in relation to an invitation to examine the seized documents (35 ALD 25 at 36; 29 ATR 87 at 100):

Mr Bloom submitted that I should examine a number of the documents seized to determine whether or not they were evidence of the stated offences. However, that is not my task. The material before the court would not enable me to decide, by merely reading a particular document, whether it answered the description in the warrant. A background knowledge of the nature of the offences charged and of how the particular documents fitted into the picture would be required. Presumably, the officers authorised to execute the warrants had that knowledge. The court has no jurisdiction to interfere with their seizure unless their actions are proved to have been excessive. A mere examination of a particular document would be unlikely to establish that.

19    Even if it is somehow able to be demonstrated that a proportion, perhaps even a large proportion, of the seized documents may be outside the terms of the search warrants, it may not necessarily follow that the seizing officers acted outside the terms of the warrants. For example, seizing officers may be entitled to seize an entire folder of documents on the basis that one or two documents within the folder are within the scope of the warrant. That is because it may be important to preserve the integrity of the entire seized folder because the provenance of the relevant documents within it may be important. Likewise, in relation to computers and electronic documents, the presence of some relevant data or documents on a computer or hard drive may justify seizure of the entire computer or hard drive. It follows that an analysis based on the proportion of individual documents that may be outside the scope of the search warrants may not be particularly fruitful.

20    There may also be complexities in cross-examining executing officers about the basis upon which they seized particular documents. In Adler v Gardiner (2002) 43 ACSR 24, Hely J said the following in the context of challenges to seizure decisions (at [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; 136 ALR 481 at 493.

21    The respondents have filed a large number of affidavits from officers of the AFP and the Australian Taxation Office (ATO) in relation to the search and seizure that took place at the premises covered by the search warrants. It is unnecessary and probably undesirable at this stage to address in any detail the evidence that the respondents propose to rely on at the trial. It covers evidence of briefings given in relation to the search warrants prior to their execution, discussions that are said to have occurred in the course of search and seizure, and steps taken by the various officers in relation to the search and seizure. There is no doubt that Mr Caratti is able to cross-examine the AFP and ATO witnesses if their affidavits are read at the trial. That cross-examination may include cross-examination in relation to seizure decisions that were made. To that end, the officers can be cross-examined about particular documents seized by them. There are, however, likely to be some limits, both legal and practical, to the scope of that cross-examination.

22    I should emphasise that I have formed no view one way or the other concerning Mr Caratti’s challenge to the execution of the search warrants based on the seized documents and the contention that some of them (perhaps even a large proportion of them) may be outside the scope of the warrants. Still less have I formed any view as to the merits of any such challenge. The point in referring to the principles and authorities dealing with such a challenge is to highlight that a challenge based on a consideration of the seized documents may not be as straightforward as Mr Caratti’s submissions tend to suggest.

23    Whilst it may be accepted that Mr Caratti should be given a fair opportunity to review the seized material before the hearing, I am not persuaded that the interests of justice favour the vacation of the hearing date. That is so for a number of reasons.

24    First, I am not persuaded that Mr Caratti will not have a fair opportunity to review the seized material before trial. He has had copies of the hardcopy documents for just over one month. He has had copies of the digital material for over two weeks. There is almost two months before the matter is to be heard. That, in my view, provides sufficient time to review the material for the purposes of ascertaining what use may be made of the material at the hearing. Whilst Mr Caratti’s legal team have apparently only catalogued and indexed a small proportion of the material to date, that may be a result of resourcing issues. It may also have something to do with what Mr Caratti’s legal team thinks is desirable in terms of cataloguing and indexing the documents. Mr Caratti is entitled to a reasonable period to review the documents to ascertain how many of them might be outside the scope of the search warrants. It does not, however, follow that Mr Caratti is entitled to an unlimited time to fully catalogue and index all of the documents.

25    Second, these proceedings have already been on foot for almost six months. As a result of undertakings given by the AFP, the AFP has not been able to inspect the documents. This, no doubt, has frustrated the AFP’s investigation into the alleged offences. This Court has made it clear, in a number of different contexts, that undue interference in the criminal process is a significant consideration in administrative law challenges to steps taken in a criminal investigation or prosecution: see, for example, Jarrett v Seymour (1993) 46 FCR 521; on appeal Jarrett v Seymour (1993) 46 FCR 557. There is a strong public interest in allowing ordinary criminal processes to take their course. It should be noted here that the alleged offences identified in the search warrants are said to have been committed in 2008.

26    Mr Caratti has now offered to release the AFP from the undertakings which have prevented officers from inspecting the documents, other than in respect of documents that might be covered by legal professional privilege. That offer does not significantly ameliorate the delay and interruption to the AFP’s investigation. Under the proposal put forward by Mr Caratti, the AFP will still not be able to inspect the material until the documents have been reviewed for legal professional privilege. It is unclear precisely when Mr Caratti suggests that the review for privileged documents will be concluded. It is noted, however, that the review for legal professional privilege was apparently occurring “in tandem” with the inspection and cataloguing of the material in preparation for the trial.

27    Third, any further delays in these proceedings may operate to the prejudice of the respondents. Mr Caratti’s case in relation to the challenge to the execution of the search warrants relies, to a considerable extent, on conversations that are said to have occurred with seizing officers during the execution of the warrants. Those conversations are disputed and will be the subject of contested evidence. Further, as earlier indicated, Mr Caratti intends to cross-examine seizing officers in relation to their decisions to seize certain documents. If the proceedings are delayed further, the memories of the seizing officers about such decisions, and their recollection of specific events that occurred during the execution of the warrants, is naturally likely to fade.

28    Fourth, Mr Caratti’s adjournment application is essentially open-ended. The orders that he seeks include an order vacating the trial and an order listing the matter for further directions in two months’ time. It is unclear when he says that the cataloguing process is likely to be completed. Even if it is nearing completion by the time of the proposed directions hearing in two months’ time, and the matter is accordingly able to be listed for trial, it is unlikely that the matter would be able to be heard until sometime in mid-2016. Such a delay is unacceptable for all the reasons given earlier.

29    The relevant principles to be applied in considering an adjournment application are not in dispute. In Luck v Chief Executive Officer of Centrelink [2015] FCAFC 75, the Full Court said as follows (at [42]):

In considering an application for an adjournment, issues particular to the parties and the circumstances of the case must be considered. The Court must also determine how the grant or refusal of an adjournment will promote the overarching purpose of the civil practice and procedure provisions governing the exercise of its jurisdiction, here its appellate jurisdiction, including the objectives in s 37M(2) of the FCA Act …

30    Subsection 37M(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) provides that the overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes according to law, and as quickly, inexpensively and efficiently as possible.

31    Subsection 37M(2) of the FCA Act provides that the overarching purpose includes the following objectives:

(a)    the just determination of all proceedings before the Court;

(b)    the efficient use of the judicial and administrative resources available for the purposes of the Court;

(c)    the efficient disposal of the Court’s overall caseload;

(d)    the disposal of all proceedings in a timely manner;

(e)    the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.

32    As the High Court made clear in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175, the types of matters that should be considered in the context of an adjournment application include the explanation for the adjournment, the detriment to other parties, the detriment to the court and other litigants, and the choices made by the parties as to the claims to be made and how they are to be framed. That, of course, is not an exhaustive list.

33    Any adjournment application involves the weighing up of competing considerations. Here, an important consideration is ensuring that Mr Caratti has a reasonable time in which to prepare his case. But that does not involve giving him an unlimited time. All the more so when the proceedings necessarily result in an interruption to a criminal investigation and potential prejudice to the respondents.

34    Consideration has been given to the fact that there were delays in the AFP providing copies of the seized documents to Mr Caratti’s legal team. Those delays were not the fault of Mr Caratti and seem to have been the product of the quantity of the material seized, the need to retain a third party to copy the material, and an apparent lack of any sense of real urgency on the part of the AFP. Regard has also been had to the need to ensure that Mr Caratti has a reasonable time to inspect the documents. Nevertheless, weighing up all the relevant considerations and the specific matters to which reference has been made, the interests of justice in this matter favour the refusal of the application to vacate the trial.

35    Mr Caratti’s application to vacate the trial is accordingly dismissed. In the circumstances, it is also appropriate to order Mr Caratti to pay the respondents’ costs of the application.

Associate:

Dated:    19 October 2015