5.4 Making available to ASIC things allegedly not "seized"
214 The defendants submitted that the executing officers for the search warrants were not authorised by s 3F(5) to make available to ASIC officers any of the copied materials, including the I:drive directories and images of the personal computers. That would be a surprising and highly inconvenient outcome, in a case where the warrants were issued at the instigation of ASIC, and ASIC is the principal investigating agency for matters arising under the Corporations Act under its administrative arrangements with the Director of Public Prosecutions. This is particularly so when one notes that the copying of material is, in effect, preferred to seizure, under s 3L(3). Depriving other agencies of the benefit of copied electronic material for the investigation and prosecution of crime (and other permissible investigations and proceedings) is, to my mind, an undesirable outcome.
215 The defendants sought to persuade me that their construction of the legislation is supportable as a matter of legislative policy. Their argument was that the police should keep electronic information to themselves and not be authorised to provide it to officers of other agencies, because electronic information, in contrast with physical things, can be readily manipulated or corrupted. I do not accept this submission. I can find nothing in the explanatory memorandum for the Crimes (Search Warrants and Powers of Arrest) Amendment Bill 1994, which introduced Part 1AA, or the Gibbs Report which preceded it, to support the idea that electronic things are to be treated differently from physical things because they are more readily corruptible. There was some evidence before me in the present case that safeguards are available to prevent the corruption of electronic material.
216 I have decided that the defendants' submissions on this point are incorrect in law, although the law is in a confused and unsettled state, which (I note, incidentally) has not been ameliorated by the amendments to Part 1AA enacted in the Cybercrime Act 2001.
217 Section 3F(5), which authorises the executing officer to make things available to officers of another agency, only applies to the "things … seized under [the] warrant". The question is whether, during the process of making electronic copies to PwC equipment of directories in the One.Tel I:drive and images of personal computers, and the process of making a copy of the Lotus Notes cashflow database to a CD, there were "things seized", so that s 3F(5) authorised the Australian Federal Police to make those "things" available to ASIC officers. The answer depends on the meaning of the words "things" and "seized".
218 The meaning of the word "things" is connected to one of the central concepts in Part 1AA, namely the concept of "evidential material". "Evidential material" is defined in s 3C(1) to mean a thing relevant to an indictable offence or a thing relevant to a summary offence, including such a thing in electronic form. A "thing relevant to an indictable offence" and a "thing relevant to a summary offence" are defined in s 3 in very broad terms, in each case introduced by the word "anything". Thus, the concept of "evidential material" extends to information stored in a computer in electronic form. I infer that the original information that was copied from computers during the execution of the search warrants in the present case, and the copies so made, were both information "in electronic form" for the purposes of these provisions.
219 "Evidential material" (and therefore the concept of an "electronic thing") is an important ingredient in the definition of search warrant powers, in various ways. For example:
· an issuing officer may issue a warrant to search premises if the officer is satisfied by information on oath that there are reasonable grounds for suspecting that there is evidential material at the premises (s 3E(1));
· the issuing officer is required by s 3E(5)(c) to state in the warrant the kinds of evidential material that are to be searched for under the warrant (in this case, the warrant identified "things that are originals or copies or drafts" of any of certain specified kinds of documents, "including any of them which are stored in electronic or magnetic form");
· the executing officer or a constable assisting is authorised by s 3L(1) to operate electronic equipment to see whether evidential material is accessible.
220 The concept of seizure is also of fundamental importance, because seizure of things is the principal outcome of execution of a search warrant. The term "seizure" is not defined in the Crimes Act, and has its ordinary meaning, which is "confiscation or forcible taking possession (of land or goods)", or an act which, if not done with the court's authority, would amount to a trespass to goods: Hart v Commissioner, Australian Federal Police, at [81]. According to the Full Federal Court in that case, whether or not there has been a seizure of goods is a question of fact.
221 These definitions of seizure do not fully cater for the electronic world. The copying of electronic information to a storage device which is then removed might not involve any forcible taking of possession of goods or trespass to goods, but Part 1AA extends to seizure of electronic things. In the case of seizure of electronic things, the legislation protects the executing officer against claims of breach of confidence or infringement of intellectual property rights, rather than trespass to goods. It is arguable, purely as a matter of analysis, that an electronic thing is seized when the storage device containing it is taken, even if the person entitled to complain of seizure of the electronic thing is not entitled to complain of seizure of the storage device (because, for example, the storage device does not belong to him or her). It might even be arguable (though I shall not develop this point in the present judgment) that the process of copying to a storage device is itself a form of "seizure" of the original material, as it would involve an infringement of the rights of the owner of the information unless it is authorised.
222 Section 3L talks about operating electronic equipment to see whether evidential material is accessible, and if it is, seizing the equipment or carrying out certain operations with the equipment or with facilities at the premises. One of those operations, if the material can be put in documentary form, is to produce documents (s 3L(2)(b)); another operation, where the material can be transferred to a storage device, is to "operate the equipment or other facilities to copy the material to the storage device and take the storage device from the premises": s 3L(2)(c).
223 Where documents are produced from the equipment or facilities, the section authorises that the documents be "seized". The use of that concept is appropriate, because the newly created documents are derived from material at the premises rather than what is brought to the premises, and their removal from the premises would constitute a trespass unless authorised by the warrant or by the occupier.
224 Where material is copied to a storage device, the section contemplates that the storage device might either be at the premises or brought to the premises. In the former case, the process of copying to the storage device and removing it from the premises will not involve "seizure" of the storage device, where (as the section requires) the occupier has agreed to its use, for removal of the storage device with the occupier's consent would not amount to trespass: Hart's case, at [69]. In the latter case the word "seize" would not be appropriate for the removal of the storage device, because it has been brought to the premises by the executing officer or constable assisting and its subsequent removal by them would not constitute a trespass: Hart's case, at [87]. Since the concept of seizure is not appropriate in either case, the section authorises the executing officer to "take" the storage device from the premises rather than to "seize" it: see Hart's case, at [6], [69].
225 The reasoning in the last paragraph focuses attention on the removal of a physical thing, the storage device, from the premises. But, as noted above, evidential material extends to things in electronic form, and so one needs to inquire whether the process of downloading or copying electronic information onto a storage device and then removing that device could be said to involve seizure of an electronic thing, as opposed to the physical thing which stores it. The electronic thing might be the information stored in electronic form before copying, or the copy of that information held in the storage device.
226 The issue of seizure of an electronic thing was addressed in Hart's case. There, one of the principal questions related to s 3K(2), which permits things to be moved to another place for examination or processing, to determine whether they are things that may be seized under the warrant. The Full Federal Court held that this provision did not authorise the AFP to copy computer files to storage devices brought by them to the premises and then to move the storage devices to another place.
227 Much of the court's reasoning concentrated on the question whether the process of downloading electronic information to a storage device brought to the premises and subsequently removed involves, for the purposes of s 3K, "moving" a thing to another place. Their Honours held that it did not do so. That is not the same question as whether such a process involves a seizure of electronic information, but their Honours had some observations about the latter question.
228 The court noted that s 3K contemplates seizure of the thing moved as the endpoint of the execution process: at [90]. The storage device could not be seized because it had been supplied by the executing officer. As to whether the process of downloading and removing the storage device involves any seizure of electronic information, their Honours held that the word "seizure" is inapplicable to the copying of information in electronic form (at [91]). They accepted (at [92]) that the legislation, by virtue of the extension of the definition of "evidential material" to material in electronic form, contemplates that electronic information may be "seized", but they said the legislation does not identify the manner by which seizure may be effected.
229 With respect, the Full Court's reasoning is not compelling. At crucial points, the broader question about seizure of electronic information is reduced in the reasoning to the narrower question about moving such information. The judgment does not explain when and how electronic information may be seized (an outcome recognised as possible by the legislation and the court), if not by a process of downloading. The judgment reflects the view that electronic information stored in a computer before any copying is not subsequently "seized" by virtue of copying to a storage device and removal of that device, but it does not seem to address the question whether the copy of the information contained in the storage device is "seized" when the storage device is taken away. Further, the court's discussion of s 3N seems incomplete. This last point needs elaboration.
230 Section 3N obliges a constable who seizes certain enumerated things that can be readily copied (including a computer file) to provide a copy to the occupier. It was submitted in Hart that the express reference to a "computer file" implies that a computer file can be seized, and it can only be seized by downloading or copying it. Rather than answering the submission directly, their Honours pointed out (cryptically, with respect) that s 3N cannot be read as assuming or implying that material stored in electronic form can be "moved", even though the section seems to acknowledge that some electronic information may be "seized": at [94]ff. Unfortunately, their Honours did not refer to s 3N(2)(a), which expressly contemplates that a thing may be "seized" under s 3L(2)(c). Since s 3L(2)(c) refers to a process of downloading or copying to a storage device either brought to the premises or used with the agreement in writing of the owner, the legislature has treated the concept of seizure as being applicable to that copying and removal process.
231 I regard the wording of s 3N(2)(a) as very significant. If the concept of seizure is applicable to the copying and removal process for the purposes of that provision, s 3F(5) must be open to an equivalent construction. It is impossible to read the word "seized" in s 3N (2)(a) in the narrow sense which distinguishes "seizing" from "taking after copying". That being so, there is no compelling reason to adopt the narrow sense in s 3F(5), just because the narrow sense is used in s 3L.
232 The observations of the Full Federal Court in Hart's case, especially at [87], [91] and [96], are an obstacle to the conclusion that the process of copying to a storage device and then removing can involve seizure of electronic things. But the case is distinguishable because it did not consider the correct construction of s 3F(5), and therefore is not an applicable authority of the Full Federal Court, to which a judge sitting at first instance in this Court must give very great weight. I have come to the conclusion that the court's reasoning in Hart's case on the application of the concept of seizure to electronic goods is not applicable to the construction of the word "seized" in s 3F(5); it is inconsistent with the language of s 3N(2)(a) and unconvincing in other respects noted above; and so it should not be applied in the present context.
233 My conclusion derives some support from observations by Branson J in Kennedy v Baker (2004) 207 ALR 247, at [108]. The observations were acknowledged by her Honour to be obiter dicta (at [107]). She referred to the statement in Hart's case (at [90]) that a storage device brought to the premises by the executing officer cannot be "seized", because s 3L distinguishes between seizing things found at the premises and "tak[ing]" from the premises storage devices containing downloaded information. She continued:
"[108] However, the distinction upon which the Full Court relied in Hart v Cmr, Australian Federal Police has now been blurred, particularly by s 3N(2)(a) which assumed its present form upon the coming into operation of the Cybercrime Act. Section 3N(2)(a) now refers expressly to a thing 'seized' under s 3L(1A). I conclude that the better view now is probably that the taking of the imaged hard drive from the premises did constitute a "seizure' of the copy data on it within the meaning of Part 1AA of the Crimes Act."
234 Her Honour's remarks are not directly applicable in the present case. The basis of her distinguishing Hart's case was that Hart's case was decided under Part 1AA as it stood before the Cybercrime amendments. Like the Full Court but unlike Branson J, I have to consider the provisions as they stood before the Cybercrime amendments.
235 Moreover, Branson J's observations address statements of the Full Court which were directed to the question whether a storage device brought to the premises can be "seized", rather than the question whether the electronic information stored on the device can be "seized". The Full Court addressed the latter question at [87], [91] and [96], but Branson J did not expressly consider those passages.
236 I should note that the reasoning by which her Honour concluded that the Cybercrime amendments to s 3N(2)(a) had blurred the distinction made by the Full Court is not apparent to me. The Cybercrime amendments to s 3N(2)(a) merely replaced a reference to the previous provision on copying to a storage device (old s 3L(2)(c), as discussed above) with a reference to the post-Cybercrime copying provision (s 3L(1A)). Both before and after that amendment, s 3N(2)(a) expressly referred to things "seized" under the copying provision. It seems to me that the Full Court's distinction was just as blurred by s 3N(2)(a) before the Cybercrime amendments as after them.
237 Nevertheless, it is of assistance that Branson J was prepared to regard a process of copying under s 3L(2)(c) as a case of "seizure" for the purposes of the (amended) Part 1AA.
238 Approaching the question in the absence of binding authority, my conclusion is that in the case of evidential material which is an electronic thing, there is seizure of the electronic copy of the electronic thing through removal of the storage device after the downloading or copying is completed, regardless of whether the storage device is brought to the premises or found there, and regardless of whether it is used with or without the occupier's consent. Section 3F(5) authorises the executing officer to make the copy of the electronic information available to officers of another agency if the information has been copied in accordance with the procedure laid down in s 3L(2)(c), for that process involves "seizure" of the copy of the electronic information under the warrant, while not involving seizure of the storage device.
6. Alleged illegalities in ASIC's use of seized material for civil investigation and civil proceeding
239 The defendants submitted that the powers given by warrant under Part 1AA to enter premises and seize things, and take copies of electronic things stored at the premises, are powers given solely for the purpose of obtaining "evidential material" for use in the investigation or prosecution by the AFP of an indictable or summary offence. They contended that, although s 3F(5) authorises the executing officer to make the seized things available to officers of another agency, the effect of the statutory provisions considered as a whole is that the officers of the other agency are not permitted to use the seized things for any purpose outside the purposes comprehended by the warrant.
240 A search warrant is available only if there are reasonable grounds for suspecting that "evidential material" is or will be at the premises: s 3E(1). The search warrant must state "the offence to which the warrant relates" (s 3E(5)(a)), and the kinds of evidential material that are to be searched for under the warrant (s 3E(5)(c)), and must state that the warrant authorises seizure, on certain conditions, of other things believed on reasonable grounds to be relevant to another offence that is an indictable offence (s 3E(6)). Once issued, the warrant authorises the executing officer to enter the warrant premises and search the premises for the kinds of evidential material specified in the warrant, and seize things of that kind found at the premises: s 3F(1)(c). It authorises him or her to seize other things believed on reasonable grounds to be evidential material in relation to an offence to which the warrant relates, or (in certain circumstances) in relation to another offence that is an indictable offence: s 3F(1)(d).
241 Manifestly, the requirements for issue of a warrant, and the scope of the authority conferred by it, are tied to the concept of "evidential material", defined in s 3C(1) to mean a thing relevant to an indictable offence or a thing relevant to a summary offence, including such a thing in electronic form. The definition of "thing relevant to an indictable offence", found in s 3(1), is:
"(a) anything with respect to which an indictable offence against any law of the Commonwealth or a Territory has been committed or is suspected, on reasonable grounds, to have been committed; or
(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."
242 It is not necessary to set out the definition of "thing relevant to a summary offence", which is, mutatis mutandis, in corresponding terms. The importance of the two definitions is that they explain the linkage between the validity and scope of the warrant and the requirement of reasonable grounds for suspicion of an offence.
243 Part 1AA does not contain express provisions limiting the use to which seized things may be put after the warrant has been executed. But s 3F(5) permits the executing officer to make the things available to officers of another agency, as has been seen. For present purposes, it is to be noted that the executing officer's authority to make things available to officers of another agency is conferred only "if it is necessary to do so for the purpose of investigating or prosecuting an offence to which the things relate". Again, therefore, the statutory provision aligns the authority conferred by the warrant to the offences to which the seized things relate. By s 3ZV(1), subject to any contrary order of the court, the constable who seizes a thing under a search warrant must return it if the reason for its seizure no longer exists or it is decided that the thing is not to be used in evidence.
244 All of this falls well short of an express prohibition on any use of the seized things, by the executing officer or officers of the other agency, for purposes other than the investigation and prosecution of criminal offences to which the seized things relate. Is such a limitation to be implied from the statutory scheme? The defendants submitted that an affirmative answer to that question can be found in the case law.
245 In Johns v Australian Securities Commission (1993) 178 CLR 408, one of the questions before the High Court was whether a person examined by the Commission under s 19 of what is now the ASIC Act could restrain the Commission from providing transcripts of the examination to a Royal Commission. Brennan and Dawson JJ thought it relevant to consider whether information obtained on a s 19 examination could be used for a purpose foreign to the purpose for which the examination was conducted.
246 Brennan J (with whom Dawson J agreed at 435-6) said (at 423):
"… when a power to require disclosure of information is conferred for a particular purpose, the extent of dissemination of or use of the information disclosed must itself be limited by the purpose for which the power is conferred. In other words, the purpose for which a power to require disclosure of information is conferred limits the purpose for which the information disclosed can lawfully be disseminated or used [citing Marcel v Commissioner of Police of the Metropolis [1992] Ch 225, at 234 per Browne-Wilkinson V-C, and Morris v Director of the Serious Fraud Office [1993] Ch 372, at 381 per Nicholls V-C]."
247 The same general principle was articulated in Deputy Commissioner of Taxation v De Vonk (1995) 61 FCR 564. The case concerned the use of the Commissioner's power to issue a notice requiring a person to furnish information. Hill and Lindgren JJ noted that the section did not expressly confine the Commissioner's power to a power exercisable only for the purposes of the Act, but they said that, where a coercive power has been conferred, the power may only be exercised bona fide for the purpose for which it was conferred (at 316). Foster J said that such an inquisitorial and investigative power is given only for the purpose of obtaining information for the collection and protection of the revenue, and the use of such a power for the collateral purpose of obtaining evidence to use in a prosecution already launched would be an improper purpose (at 306).
248 This general principle is applicable to Part 1AA, which is a statutory regime conferring power, by the issue and execution of a search warrant, to require disclosure of information. Here, in contrast with the Johns case but like the De Vonk case, there is no statutory text articulating the purpose of conferral of the statutory power. However, the definitions and provisions to which I have referred give rise to an inference that the search warrant power is conferred for the purpose of obtaining evidential material, that is, material relevant to an indictable or summary criminal offence specified in the warrant, or some other indictable offence. To put it another way, "the purpose of search and seizure provisions is to provide for the gathering of information to determine whether offences have been committed and to facilitate proof of them": Hart's case, at [65].
249 Making provision for the gathering of information to determine whether a civil contravention of the law has occurred, and to facilitate proof of a civil contravention, is no part of the statutory purpose. But today it is common for statutes, such as the Corporations legislation, to attach both criminal and civil consequences to proscribed conduct, or to attach criminal consequences to some aspects of conduct and civil consequences to other overlapping aspects. If, for example, it were the case (as ASIC alleges) that one of the defendants permitted a materially misleading statement to be made to the market about One.Tel's financial position when the defendant knew or ought reasonably to have known that the statement was materially misleading, the evidence could establish contravention of both a criminal provision (formerly, s 999 and now s 1041E, and perhaps also s 184) and a civil provision (s 180 or s 181).
250 Where a regulatory agency such as ASIC wishes to establish whether there has been a contravention of any of the overlapping criminal and civil provisions of such a statutory regime within a single factual matrix, it would seem rational for it to embark on a single investigation into the facts, on the basis of reasonable grounds to suspect contravention of each of the overlapping provisions. If, in the context of such an investigation, search warrants are issued, it will be necessary under Part 1AA for the search warrants to be linked only to those overlapping provisions which create indictable or summary offences.
251 This leads to several related questions:
· Must the use of the search warrant materials be confined, artificially, to the part of the investigation that relates to suspected criminal offences?
· How can one identify which parts of a single investigation into conduct that may give rise to criminal and civil contraventions are the parts relating to suspected criminal offences as opposed to the parts relating to suspected civil contraventions?
· Must the investigation be artificially bifurcated, once search warrants have been executed, into an investigation into suspected criminal offences for which the search warrant materials can be used, and an investigation into suspected civil contraventions for which they cannot be used?
· Can the search warrant materials be used to prove civil contraventions in a proceeding commenced as a result of the investigation?
252 Donnelly v Amalgamated Television Services Pty Ltd (1998) 45 NSWLR 570 does not shed light on the questions that arise in a mixed criminal/civil investigation, but it is authority for the proposition that use of material obtained in the execution of a search warrant for purposes other than the purposes of the warrant may be restrained by injunction.
253 In that case the police made a video of their arrest of the plaintiff in his mother's house after they had obtained access by executing a search warrant. The video fell into the hands of a television broadcaster who intended to screen it on a current affairs program. Hodgson CJ in Eq granted an interlocutory injunction to restrain the broadcasting of the video. He said (at 572) that "the use of the video for purposes other than the investigation or prosecution was outside [the powers of the police under the warrant] and would involve abuse of those powers". This appears to be an application of the broader principle stated by Brennan J in Johns, although Johns was not cited. Hodgson CJ in Eq recognised an analogy with the implied undertaking by a party obtaining discovery of a document in the course of litigation, not to use the document otherwise than for the purpose of the proceeding (see Harman v Secretary of State for the Home Department [1983] 1 AC 280), but here the source of the jurisdiction to intervene by injunction was said to be the court's general jurisdiction to restrain threatened abuses of the processes of criminal justice, rather than breach of any implied undertaking (at 575).
254 Subsequently there has been debate as to whether the basis of the relief should be regarded as protection of confidential information or trespass, rather than abuse of process: see Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199, at [53]-[54] per Gleeson CJ, and [104] per Gummow and Hayne JJ (Gaudron J agreeing); note also Meagher, Gummow and Lehane's Equity Doctrines and Remedies (4th edition, 2002), at [41-005]. Hill J has also endorsed the idea that an injunction is the appropriate remedy for improper use of information lawfully obtained by the exercise of a coercive power: Puglisi v Australian Fisheries Management Authority (1997) 148 ALR 393, at 400.
255 In Williams v Keelty (2001) 111 FCR 175, search warrants were issued, on application by an ASIC officer, about a month after ASIC had commenced a civil proceeding. The validity of the warrants was challenged on many grounds, only two of which have any direct relevance. Those two grounds were:
· that the warrants had been issued for an improper purpose of obtaining material for use in the existing civil proceeding, or information not pertinent to any contemplated or specified criminal offence; and
· that the issue of the warrants was a contempt of the court in which the civil proceeding had been instituted.
These grounds were based on the proposition that the execution of the warrants would enable ASIC to obtain material for use in the civil proceeding, which it could not obtain by the discovery process, because the defendants were protected from making discovery by the privilege against exposure to a pecuniary penalty.
256 In the course of dealing with these challenges, Hely J addressed the question whether ASIC would be under any constraint if, search warrants having been issued for proper purposes relating to criminal offences, it wished to use information obtained from the exercise of the warrants in its existing civil proceeding. After considering earlier cases including Donnelly v Amalgamated Television Services and Grollo v Macauley (1995) 56 FCR 533, he said (at [233]):
"If entry is gained to premises by means of the compelling nature of a search warrant, and documents are seized, in my view it would be consistent with general principle to hold that it would be improper for documents seized pursuant to the warrant to be used for any purposes outside those comprehended by the warrant. That view is consistent with the terms of Part 1AA of the Crimes Act. Section 3F(5) is a limited legislative permission to make the things seized available to officers of other agencies and s 3ZV(1) obliges the return of things seized, subject to a contrary order of the court, if the reason for seizure no longer exists, or if it is decided that the things seized are not to be used in evidence."
257 He added later (at [244]):
"If AFP or ASIC sought to use the documents seized for a purpose other than the purposes contemplated by the warrant, such as, for example, as evidence in the civil proceedings, then that would be an abuse of power on their part, which, consistently with Grollo v Macauley and Donnelly v Amalgamated Television Services , could be restrained by injunction."
That led Hely J to reject a submission that the execution of the warrants would involve contempt of court, because ASIC could not lawfully use documents seized for a purpose foreign to the purpose for which seizure was authorised; in any event, ASIC proffered an undertaking not to use the documents seized under the warrants for the purposes of the civil proceeding, and so the matter of contempt was "put beyond doubt".
258 Once again, these statements of principle appear to echo Brennan J's observations in Johns, a case which was cited to Hely J, but apparently not in the present context. Hely J's reasoning implies that use of the seized material as evidence in existing civil litigation will be use for purposes not contemplated by the warrant, and therefore improper and open to be restrained by injunction. But his Honour's reasoning is wider, in the sense that use of the seized material as evidence in existing litigation is only an example of a wider category of improper use. The judgment leaves open the question, not required to be addressed on the facts of that case, whether it is improper to use the search warrant material for the purposes of an investigation which encompasses the provisions identified in the warrant, but also extends to possible contravention of provisions having only civil consequences, before any proceeding is commenced.
259 In ASIC v Marshall Bell Hawkins Ltd [2003] FCA 833, documents seized under search warrants were made available by the AFP to ASIC officers under s 3F(5), and as a result of some consent orders in a civil proceeding for winding up on the just and equitable ground, the seized materials came to be treated as discovered documents. Consequently they were regarded as being subject to an implied undertaking by ASIC not to use them, or information in them, other than for the proper conduct of that proceeding. The question for Merkel J was whether to release ASIC from the implied undertaking so as to permit it to use the seized materials for the purpose of exercising its power to conduct an administrative hearing to determine whether the defendant's dealer's licence should be revoked. Although the grounds for issuing the search warrant are not stated in the judgment, it appears that they were connected to a single investigation by ASIC into the investment advisory activities of the defendant and other entities, encompassing criminal and civil elements and potential revocation of the dealer's licence.
260 Before considering whether to release or modify the implied undertaking, his Honour made the following observation (at [6]):
"The problem confronting ASIC is that, because it is only entitled to use the documents and computer records provided by the AFP pursuant to s 3F(5) of the Crimes Act 'for the purpose of investigating or prosecuting an offence to which the things relate' it is under a duty not to use the documents for any other purpose: see Williams v Keelty (2001) 111 FCR 175 at 224 [233] per Hely J and Johns v Australian Securities Commission (1993) 178 CLR 408 at 423 per Brennan J and at 435-436 per Dawson J. ASIC accepts, quite correctly in my view, that use of the documents for the purposes of an inquiry in relation to a revocation of a licence under s 826 of the Corporations Law is not a use of the documents for the purpose of investigating or prosecuting an offence."
261 The purpose of "investigating and prosecuting an offence", referred to in s 3F(5), is the purpose of the executing officer who makes the seized things available, rather than the purpose of the officers of the other agencies who receive those things. It may therefore be, with respect, that Merkel J's statement places too much emphasis on the text of s 3F(5). More importantly for present purposes, his Honour regarded Williams v Keelty and Johns v ASC as authorities for the proposition that the ASIC officers who received search warrant materials were under a duty not to use them for the purposes of an administrative hearing that had not, at the time of receipt, commenced. Apparently the duty existed even though ASIC's investigation was a single investigation with criminal and civil elements.
262 It seems to follow from these cases, especially Williams v Keelty and the Marshall Bell Hawkins case, that ASIC could not use the search warrant materials it obtained in the present case for the purposes of the present civil proceeding, were it not for the liquidators' consent. The fact that, in the present case, the civil proceeding began well after the execution of the search warrants is immaterial, on the reasoning adopted in the cases, because the use of the search warrant materials for a civil proceeding whenever it commences is a use outside the purposes contemplated by the warrants. I see no relevant distinction between the civil proceeding in the present case and administrative hearing for revocation of the licence in the Marshall Bell Hawkins case. It appears from the cases that the search warrant materials cannot be used for a later civil proceeding even if those materials have been used for the purposes of a single investigation with criminal and civil elements, prior to the commencement of the civil proceeding.
263 This entails that if a regulatory agency has used search warrant materials during the course of an investigation, and decides to initiate a civil proceeding, care will need to be taken not to use, for evidentiary purposes or otherwise in connection with in the civil proceeding, any of the search warrant materials - unless, of course, it becomes permissible to do so by the application of some other law. In the present case, ASIC says that the restriction on using the search warrant materials for the present civil proceeding was lifted by the consent of the liquidators, a submission considered later.
264 Just what will constitute "use" of the seized materials in connection with the civil proceeding could be a difficult matter. For example, if the investigators know that a particular document exists because a copy of it was procured in the course of execution of a search warrant, can they use that knowledge to require production of the document in the civil proceeding? The issue, more broadly, is whether search warrant materials can be used derivatively for the purpose of procuring evidence in the civil proceeding. One way of minimising the risk that evidence in the civil proceeding will be excluded because of direct or derivative use of search warrant materials is, as Mr Bathurst QC and Mr Payne said in their fourth joint opinion, to have entirely separate criminal and civil investigation teams, but they do not suggest that this is required. It seems to me that the risk of derivative use of search warrant materials for evidentiary purposes in the present proceeding is reduced or eliminated to the extent that, prior to tender of the relevant documents, an alternative source for them has been identified in the I:drive in the possession of the liquidators.
265 It also follows from the cases, in my opinion, that if a regulatory agency undertakes an investigation solely for the purpose of determining whether a contravention of a civil provision has occurred, and not to ascertain whether there has been any criminal offence, search warrant materials cannot be used in that investigation. That situation seems to me unlikely to occur, because the search warrant procedure is premised on reasonable grounds to suspect an offence, so if there are search warrant materials there will normally be a criminal aspect to the investigation. But the situation might occur if, say, the criminal and civil investigation functions are separated and placed in the hands of different agencies. Although Williams v Keelty and the Marshall Bell Hawkins case both focus on the use of search warrant materials in a civil proceeding, rather than in an investigation, I see those cases as applications of the wider principle stated by Brennan J in the Johns case, and also stated in the other cases I have mentioned. There is nothing in the principle that would exclude it from applying to any improper use of search warrant materials, whether in a proceeding, in an investigation, to seek publicity in the news media, or otherwise.
266 What is unclear from the cases is whether search warrant materials can be used for the purposes of a single investigation with criminal and civil elements, prior to the commencement of any proceeding. Brennan J's statement of principle in Johns makes the question depend on the "particular purpose" for which the power is conferred, leaving open the proper classification of the purpose of such powers as the search warrant power conferred by Part 1AA. Merkel J's statement of principle in Marshall Bell Hawkins is directed to use of the seized materials for a proceeding (the revocation hearing), and does not address the use of the material during the investigatory phase.
267 Hely J's statements of principle in Williams v Keelty would literally imply, if taken out of context, that as soon as the investigation extends beyond the purposes comprehended by the warrant (that is, beyond investigation of the particular offences identified in the warrant) the search warrant materials cannot be used, whether the additional matters under investigation are other criminal offences or purely civil contraventions or both. But his Honour did not appear to have in mind any question about the scope of the restriction on use during a purely investigatory phase, before any proceeding had been commenced. His reasoning was directed to a case where there was an existing civil proceeding prior to the issue or execution of the warrants - a proceeding with respect to which the seized materials would in all probability be relevant and useful.
268 It is hard to see any justification in principle for such a broad view of the restriction as would be implied from literal reading of Hely J's statements. One of the difficulties to which such a view would lead was described in ASIC's written submissions (AS 45, at [18]):
"To say that s 3F of the Crimes Act impliedly prevents ASIC from deploying such search warrant documents as evidence in civil proceedings, handing them over to the publisher of a newspaper, or posting their contents onto the Internet, is one thing. But to say that it impliedly prevents any thought process directed to whether the evidence may satisfy a civil standard of proof is another. A central aspect of a review of documents in a criminal investigation must be an assessment of the evidentiary significance of those documents, and in particular whether any evidence contained in them of the unlawful conduct being investigated rises to a criminal level of proof. It stretches language too far to call the mere simultaneous mental consideration of whether evidence rises to a civil level of proof, a separate and foreign 'use' of the documents."
269 I agree, but I would extend those remarks to a single investigation in respect of possible criminal and civil contraventions arising out of a common set of facts. A consequence is that another submission made by ASIC does not seem to me to have any application. ASIC said that if, contrary to their main contention, it was found that ASIC officers were actuated by more than one purpose during the investigation, that is to say a purpose of criminal investigation and a purpose of civil investigation, there would be no improper use of the search warrant materials unless the defendants were able to show that ASIC would not have used the search warrant materials in the way that it did but for the improper purpose of civil investigation (citing many authorities that have applied a "but for" test of causation, in circumstances more or less remote from the present problem, such as in fields of administrative law, company law and abuse of the processes of the court: see ASIC's submissions, AS 45, at [20]-[25]). In a case where there is a single investigation into suspected civil and criminal contraventions, it may not be possible to subdivide the investigatory thought processes into criminal and civil components and then treat them as mixed purposes, so as to apply "but for" test of causation to the conduct of the investigators.
270 Reason and common sense suggest that a single investigation of a set of facts for suspected criminal and civil contraventions will often be the most efficacious way of gathering information to determine whether offences have been committed, while also determining whether civil contraventions have been committed. Therefore it is consistent with the purposes of the search and seizure provisions, as defined in Hart's case at [65], to allow the seized materials to be used in such an investigation. The contrary view would entail splitting up the components of the investigation in a necessarily artificial way, at least in cases where (as here) there are civil and criminal provisions covering much the same subject area. It could lead to the complete separation of the criminal and civil components of the investigation, with inevitable inefficiency, cost and duplication of effort. There is no legal basis for drawing an implication from Part 1AA, or from any general principle of statutory construction, that would lead to such an outcome.
271 I do not say that search warrant materials may be used in an investigation whenever the criminal offences identified by the search warrants fall within the scope of the investigation. One can readily envisage cases where the offences designated in search warrants are tacked onto an investigation which is essentially about other contraventions within another factual matrix. Instead, the kind of case I have in mind is one where there is such an overlapping and interrelationship between the criminal offences designated in the warrants and the other contraventions falling within the scope of the investigation, and the factual matrix to which the suspected criminal and civil contraventions relate, that the task of the investigators is to assess whether the evidence discovered about the whole matter under investigation reaches the criminal or only the civil standard.
272 An example of this might be an investigation into the failure of the company, undertaken in order to ascertain whether proceedings should be taken against directors for insolvent trading, where search warrants are issued because there are reasonable grounds to suspect contravention of s 588G(3) (a criminal provision) by those directors. The investigation would consider the state of solvency or insolvency of the company at the times when debts were incurred, and matters going to whether there were at those times reasonable grounds for suspecting that the company was insolvent. It would also extend to the position of each director at the time the debts were incurred, whether the director suspected that the company was insolvent, whether he or she endeavoured to prevent the debts from being incurred, and whether the failure to do so was dishonest. Some of those matters go to criminal liability, some of them go to civil liability, and most of them go to both. But they are aspects of the same factual matrix, in the sense that information going to the conduct of individual directors is also likely to be relevant to the question whether there were reasonable grounds for suspecting insolvency. The investigators' task will not be to pursue a series of separate issues, some of them with criminal and others with only civil consequences, but rather to assess whether the facts concerning the company's failure, and the role of each director in that failure, rise to the criminal standard of s 588G(3), or only to the civil standard s 588G(1) having regard to the defences to civil liability in s 588H. In that kind of investigation, the use of search warrant materials is not improper because the investigation is directed to assessing whether the criminal or only the civil standard is met, upon an assessment of the entirety of the facts.
273 Contrast that example with a case where there is an investigation into the collapse of a company and contravention of the insolvent trading provisions at the criminal or civil standard, during the course of which search warrants are issued because there are reasonable grounds to suspect that one of the directors, at a time before the company's failure, fraudulently misappropriated property of the company for personal use. There may be some connection (for example, a causal connection) between the event of misappropriation and the subsequent corporate failure, but there is no overlapping of the ingredients of liability or the factual matrices. It seems plausible to argue, on the basis of the authorities discussed above, that the search warrant materials could not properly be used for the purposes of the insolvent trading investigation, just as search warrant materials could not be used in a purely civil investigation.
274 In the present case the search warrants were issued on the basis of reasonable grounds to suspect contravention of specific criminal provisions, namely ss 999, 1311(1)(a) and 1307, the suspicion extending to events over a period of time rather than on a particular occasion. A central aspect of the suspicion was that the conduct of One.Tel and the defendants was thought to relate to false or materially misleading information. Ascertaining whether the information was false or materially misleading required an investigation into the true financial position of One.Tel during the stated period. The ascertainment of that range of facts would inevitably inform the investigators as to whether there was a case of breach of the statutory duty of care and diligence of directors (and probably other directors' duties) in respect of the very same facts. While the overlapping and binding together of the criminal and civil components of the investigation is perhaps not quite as obvious as in the insolvent trading example, it is nevertheless just as real.
7. Statutory obligation to return seized materials
275 Section 3ZV(1) provides (as far as relevant):
"Subject to any contrary order of the court, if a constable seizes a thing under this Part, the constable must return it if:
(a) the reason for its seizure no longer exists or it is decided that it is not to be used in evidence; …
unless the thing… is the subject of a dispute as to ownership."
276 The statutory provision reflects the common law duty of the police, where a prosecution is complete or where no further prosecution is in reasonable contemplation, to return goods seized for the purpose of being produced in evidence to the person entitled to possession of them": Gollan v Nugent (1988) 166 CLR 18, at 22 per Brennan J. Moreover, "the police must not keep the article, or prevent its removal, for any longer than is reasonably necessary to complete their investigations or preserve it for evidence": Ghani v Jones [1970] 1 QB 693, at 709 per Lord Denning MR; see also Greer v New South Wales Police [2002] NSWSC 356, at [17]-[18] per Bell J.
277 The materials seized from One.Tel's premises have not been returned and no order of the court has been obtained to authorise their retention. The defendants accordingly submitted that there was a failure to comply with s 3ZV(1). ASIC's answer was that s 3ZV(1) does not take away the common law rights of the owner of property to consent to its retention by ASIC. It relied on the liquidators' consent, and submitted that until that consent was given on 7 December 2001, the reason for the seizure continued to exist and no decision had been made not to use the seized materials in evidence, because the possibility of a criminal prosecution remained open.
278 My findings of fact as to the course of the investigation support ASIC's submission as to the period up to 7 December. The scope of ASIC's investigation extended to possible criminal prosecution, both formally in terms of the s 13 minutes and in fact on the basis of the evidence. The facts that the investigatory emphasis was being placed on the prospect of a civil proceeding and a civil team had been assembled did not mean, in my opinion, that the reason for the seizure no longer existed. That would occur only if a criminal prosecution for offences contemplated by the warrants had been abandoned or had become impossible, and neither was the case here, until 7 December when the DPP confirmed counsel's advice that a criminal prosecution of the defendants should not be pursued. Therefore, up to the day when the liquidators gave their consent, the statutory obligation to return seized goods under s 3ZV(1) had not been triggered. I shall consider the effect of the liquidators' consent below.
279 During his oral supplementary submissions on 4 February 2005, senior counsel for the defendants contended (T 3350) that ASIC retained copies of the computer images made in the execution of search warrants at the residences of Mr Rich, Mr Silbermann, Mr Keeling and Mr Beck, contrary to the obligation to return seized things set out in s 3ZV. He referred to ASIC's admission that it had copies of these materials, made in its letter of 3 November 2004 (Exhibit P 27/13, page 66). He submitted that ASIC retained possession of copies of the documents knowing that to do so was wrong.