Council of the City of Sydney v Blue Chips Franchise Pty Ltd

Ground 1: legal onus as to reasonable excuse

1. The Council submitted, as it had before the Magistrate, that, on a proper construction of s 119M(1) of the EPA Act, the legal onus of proving the existence of a reasonable excuse for failing to comply with the requirement rested on the defendant. The existence or absence of a reasonable excuse is not an element of the offence under s 119M(1) of the EPA Act. The offence is confined to the failure to comply with the requirement made of the defendant by an investigation officer in accordance with Division 1C. The existence of a reasonable excuse for that failure is a ground by which criminal liability may be avoided. It is the existence of the reasonable excuse which prevents the failure from becoming an offence. The Council relied on, amongst other authorities, Chugg v Pacific Dunlop Ltd (1990) 170 CLR 249 at 257; Vines v Djordjevitch (1955) 91 CLR 512 at 519-520; Ganke v Corporate Affairs Commission (1990) 19 NSWLR 449 at 455-456; and R v Debono [2013] VSC 408 at [28]-[30].
2. The Council noted that the Magistrate appeared to have accepted the Council's submission that the defendant bore the legal onus of proving, on the balance of probabilities, the existence of a reasonable excuse for failing to comply with the requirement. The Magistrate noted that Hunt J in Ganke v Corporate Affairs Commission, which considered a provision similar to s 119M(1) of the EPA Act, held that the onus of establishing the existence of a reasonable excuse rested on the person charged. The Magistrate said: "In my view Hunt J's comments in Ganke are applicable to this provision given the similarity between the two provisions." The Magistrate then went on to say: Therefore, I am satisfied that the defence bears the onus of proving, on the balance of probability, that there was a reasonable excuse for the failure to not [sic] comply with it and then, thereafter, the prosecution has to negative it to the criminal standard.
3. The Council noted that the first part of this conclusion was consistent with the Magistrate applying the decision of Hunt J in Ganke and accepting the Council's argument that the legal onus of proving the existence of a reasonable excuse for the failure to comply with a requirement rested on the defendant. The standard of proof for the defendant is the balance of probabilities: s 141(2) of the Evidence Act 1995.
4. However, the Council submitted, the Magistrate followed this correct, first part of her conclusion with the incorrect, second part: "and then, thereafter, the prosecution has to negative it to the criminal standard". The "criminal standard" for the prosecution is proof beyond reasonable doubt: s 141(1) of the Evidence Act 1995.
5. The Council submitted that, in this second part of the conclusion, the Magistrate appeared to be holding that the defence bears an evidentiary onus to raise the defence of reasonable excuse on the evidence, but once raised, the prosecution bears the legal onus to negative the defence beyond reasonable doubt. The Council submitted that, in so holding, the Magistrate erred on a question of law.
6. The Council submitted that the conclusion that the Magistrate so erred in law is supported by the Magistrate's findings on the facts. The Magistrate said: "The defence has raised the defence that RnJ had a reasonable excuse for not complying with a requirement" (emphasis added). This was consistent with the Magistrate having held that the defence only had an evidentiary onus to raise the defence of reasonable excuse. The Magistrate concluded by saying: For the above reasons I find that the council has failed to prove beyond reasonable doubt that Blue Chips did, without reasonable excuse, fail to comply with a requirement made of the person by an investigation officer in accordance with Div 1C Pt 6 of the Act (emphasis added).
7. This is consistent with the Magistrate having found that, once the defence of reasonable excuse had been raised, the prosecution bore the legal onus to negative the defence beyond reasonable doubt.
8. The Council submitted, therefore, that the Magistrate erred on a question of law. The Magistrate's decision should be set aside and the matter remitted to the Local Court to be decided in accordance with law.
9. Blue Chips submitted that, on a fair reading of the Magistrate's reasons, the Magistrate accepted the Council's submission that the defendant bore the legal onus of proving, on the balance of probabilities, that it had a reasonable excuse for the failure to comply with the requirement. The Magistrate did not, therefore, err on a question of law about the legal onus of proving the existence or absence of a reasonable excuse.
10. Blue Chips submitted that the following aspects of the Magistrate's reasons support the inference that the Magistrate found that the legal onus rested on the defendant to prove the existence of a reasonable excuse: 1. The express statement that the defendant bore the legal onus to establish the existence of a reasonable excuse on the balance of probabilities: "I am satisfied that the defence bears the onus of proving, on the balance of probability, that there was a reasonable excuse for the failure to not [sic] comply with it". Although the Magistrate did not insert the adjective "legal" before the noun "onus", the Magistrate clearly was referring to the legal onus and not to an evidentiary onus. The Magistrate used the word "proving", which is appropriate when referring to a legal onus but not to an evidentiary onus which requires only the raising of a defence, and used the standard of proof of "on the balance of probability", which is only applicable to a legal onus and not to an evidentiary onus; 2. Blue Chips conceded that the Magistrate's addition of the words "and then, thereafter, the prosecution had to negative it to the criminal standard" confused the Magistrate's reasoning. Blue Chips submitted, however, that these words were superfluous and did not express what the Magistrate actually held. The Magistrate's earlier finding that the defendant bore the legal onus to prove that there was a reasonable excuse was, in fact, what the Magistrate held. This is borne out by other statements in the Magistrate's reasons and the findings of fact made by the Magistrate; 3. The express acceptance of Hunt J's decision in Ganke that the legal onus of establishing a reasonable excuse rested on the defendant: The prosecution referred me to the decision of Ganke v Corporate Affairs Commission (1990) 19 NSWLR 449 in which the New South Wales Court of Criminal Appeal considered a provision that was similar to the present provision, namely, "a person who, without reasonable excuse, fails to comply with a provision of this section, other than subs (7), is guilty of an offence." Hunt J said a p 456 that he was satisfied that the onus of establishing the existence of the reasonable [excuse] in subs (9) was intended by the legislature to be placed on the person charged. In my view, Hunt J's comments in Ganke are applicable to this provision given the similarity between the two provisions. 1. The express non-acceptance of aspects of Blue Chips' submissions that the prosecution bore the legal onus of proving beyond reasonable doubt that there was no reasonable excuse for not complying with the requirement: see T3 lines 31-42; 2. The factual findings made by the Magistrate were consistent with the Magistrate having held that the defendant bore the onus of proving that there was a reasonable excuse for the failure to comply with the requirement. The Magistrate noted that Blue Chips had "raised the defence that [it] had a reasonable excuse for not complying with a requirement." After making findings of fact about the circumstances surrounding the requirement to produce and the production of documents, the Magistrate concluded: "…I find that there was a reasonable excuse for Blue Chips to not comply…" The manner in which these findings are phrased is consistent with the Magistrate having applied the legal onus to the defendant to prove the existence of a reasonable excuse for the failure to comply and not with having applied the legal onus to the prosecution to prove the absence of a reasonable excuse for the failure to comply; and 3. The final statement in the reasons was simply the Magistrate summing up the ultimate conclusion, namely, that the Council had not discharged its onus of proving beyond reasonable doubt that Blue Chips had committed the offence as charged. This is reinforced by the Magistrate's use of the words of the offence in s 119M(1) in expressing her conclusion and by the prefatory words "for the above reasons".
11. Blue Chips, therefore, submitted that, having regard to the Magistrate's reasons as a whole, the Magistrate did not err on a question of law. The Magistrate accepted and made findings of fact on the basis that the defendant bore the legal onus to prove, on the balance of probabilities, that it had a reasonable excuse for its failure to comply with the requirement to produce the documents.
12. In the alternative, Blue Chips submitted that if the Court were to find that the Magistrate did err in applying the legal onus to establish the existence or absence of a reasonable excuse, remitting the matter to the Magistrate "could not possibly" produce a different result. As such, this court should not remit the matter: Stead v State Government Insurance Commission (1986) 161 CLR 141 at 147. The Council accepted that it is only necessary for the defendant to prove, on the balance of probabilities, that it had a reasonable excuse. In the Council's case, this was the sum total of what was required to be proved before the Magistrate. The Magistrate found this to have been proved on the evidence before her. Blue Chips submitted that this finding was correct. There was abundant evidence to support such a finding. Put another way, even if the Court were to hold that the Magistrate erred in referring to the Council negativing the reasonable excuse once established, it had no effect on the decision and could not have affected the outcome given (a) that the Council accepts that all that is required is for Blue Chips to establish a reasonable excuse on the balance of probabilities; and (b) the available evidence before the Magistrate to support the existence of a reasonable excuse.
13. I find that the Council has not established that the Magistrate erred, as alleged in Ground 1, in finding that the prosecution was required to disprove any reasonable excuse raised by the defendant beyond reasonable doubt. On a fair reading of the Magistrate's reasons as a whole, the Magistrate found that the defendant bore the legal onus of proving, on the balance of probabilities, that there was a reasonable excuse for failing to comply with the requirement made to it by the Council investigation officer. I agree with and adopt Blue Chips' submissions analysing the Magistrate's reasons as establishing that the Magistrate found that the defendant and not the prosecution bore the legal onus to establish a reasonable excuse.
14. It is true that there are some inconsistencies in the language used by the Magistrate in her reasons. However, far more of the statements made by the Magistrate, as well as the findings of fact made by her, are consistent with the Magistrate having found that the defendant, and not the prosecution, bore the legal onus to establish a reasonable excuse. These are the statements and findings referred to by Blue Chips in its submissions that I have summarised above. The inconsistent statements are far fewer and less clear.
15. The most significant, potentially inconsistent statement is the additional phrase that the Magistrate added to her otherwise unambiguous statement that "the defence bears the onus of proving, on the balance of probability, that there was a reasonable excuse for the failure to not [sic] comply with it [the requirement]". The added words were "and then, thereafter, the prosecution has to negative it to the criminal standard". These added words clearly are incorrect. There cannot be two legal onuses: if the defence bears the legal onus to prove the existence of a reasonable excuse, the prosecution cannot bear another legal onus to negative the existence of a reasonable excuse.
16. But did the Magistrate really mean to say this? There is no clear indication of why the Magistrate added these words. Perhaps the Magistrate was still thinking about what she had said earlier about other defences that are available under the criminal law where, although the legal onus rests on the prosecution, the defendant bears an evidentiary onus to raise a defence and, once raised, it is for the prosecution to negative the defence beyond reasonable doubt.
17. However, the Magistrate had just earlier found that the provision of s 119M(1) of the EPA Act did not raise a defence of this kind. The Magistrate had rejected the defendant's submissions that the prosecution bore the onus of proving beyond reasonable doubt that the defendant did not have a reasonable excuse and had instead accepted the Council's submission, and applied Hunt J's decision in Ganke that supported the Council's submission, to find that, under s 119M(1) of the EPA Act, the onus of establishing the existence of a reasonable excuse was placed on the defendant, and this was to be established on the balance of probabilities. All of the Magistrate's statements and reasons leading up to her conclusion on the construction of this provision supported the Magistrate's conclusion that the legal onus rested on the defendant to prove, on the balance of probabilities, that there was a reasonable excuse for the failure to comply rather than there being a legal onus on the prosecution to prove that there was not a reasonable excuse for the failure to comply. The added words after the conclusion are inconsistent with the conclusion.
18. I consider a better reading of the Magistrate's reasons would be to discount the added words as not expressing what the Magistrate had really found. Such a reading is supported by what the Magistrate thereafter found as a matter of fact. The Magistrate made findings of fact that there was a reasonable excuse for Blue Chips to not comply with the requirement of the Council investigation officer. As Blue Chips submitted, the manner in which these findings of fact are phrased is consistent with the Magistrate having placed the legal onus on the defendant to establish that it had a reasonable excuse to not comply with the requirement; the phrasing of the findings of fact is not consistent with the Magistrate having placed the legal onus on the prosecution to disprove any reasonable excuse raised by the defendant.
19. I do not read the Magistrate's final statement in the judgment as a finding that the Council had not discharged the legal onus resting on the Council to prove the absence of a reasonable excuse. As Blue Chips submitted, it was an ultimate conclusion to the whole judgment. The statement is prefaced by the words "for the above reasons", referring to all of the reasons in the judgment, and not just to the immediately preceding sentence in which the Magistrate had found that there was a reasonable excuse for Blue Chips to not comply. The Magistrate's statement also paraphrased the whole of the offence provision, not just that part dealing with the existence or absence of a reasonable excuse. By referring to the whole of the offence provision, the Magistrate was intending to convey her conclusion that the prosecution had not proven, beyond reasonable doubt, that the defendant had committed the offence charged. I do not read the statement as conveying that the prosecution had not discharged the legal onus resting on it to prove that the defendant did not have a reasonable excuse.
20. For these reasons, I reject Ground 1.

Ground 2: finding that the defendant had a reasonable excuse

1. The Council submitted that there was no evidence on which the Magistrate could have found that there was a reasonable excuse to not comply with the requirement to produce the documents. A finding of fact for which there is no evidence constitutes a question of law alone: Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32 at [91]. The Council focused on the Magistrate's findings that: When I consider the whole of the circumstances and the event of 20 August 2015, including the volume of the material being sought, the short amount of time that was given for Blue Chips to comply with the requests, and the efforts that the company did make to comply with the requirement, I find that there was a reasonable excuse for Blue Chips to not comply, namely, that it was given insufficient time to complete its searches for the information and provide all of it to Mr Stevens.
2. The Council noted that the reason the Magistrate gave for finding that there was a reasonable excuse for Blue Chips to not comply with the requirement to produce all of the documents requested was that Blue Chips "was given insufficient time to complete its searches for the information and provide all of it to Mr Stevens". The Council submitted that there was no proper evidentiary foundation for this finding that Blue Chips was given insufficient time.
3. The Council challenged each of the three matters upon which the Magistrate concluded that there was insufficient time. The first matter was the volume of the material being sought. The Council submitted that the Magistrate had speculated that the volume of material may be large. The Magistrate had earlier said that "there was no evidence before me as to how much documentation was eventually obtained as a result of the execution of the search warrant. However it is possible that a reasonable amount of material may have been in involved". The Council submitted that this was factually incorrect. Mr Stevens had given evidence that the number of documents seized when the search warrant was executed on 24 August 2015 equated to "approximately two filing cabinet drawers' worth of documents". It took just over three hours to execute the search warrant. The time taken may have included additional time to write out the exhibits. The search on that occasion was conducted by one person.
4. The Council submitted, therefore, based on what occurred when the search warrant was executed, the Magistrate erred in finding that there was insufficient time to comply with the requirement made of Blue Chips based on the volume of the material being sought (when the search warrant was executed it was the equivalent to only two filing cabinet drawers), the short amount of time that was given (it took only three hours to gather the documents when the search warrant was executed) and the efforts the company made to comply with the requirement (only one person conducted the search warrant when the search warrant was executed).
5. Blue Chips submitted the Council's argument should be rejected. There was evidence supporting the Magistrate's findings. A finding of fact by a tribunal of fact cannot be disturbed if the facts inferred by the tribunal, upon which the finding is based, are capable of supporting its finding, and there is evidence capable of supporting its inferences: Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126 at 138. Such a finding of fact can be disturbed only (a) if there is no evidence to support its inferences; or (b) if the facts inferred by it and supported by evidence are incapable of justifying the finding of fact based upon those inferences; or (c) if it has misdirected itself in law: Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126 at 138.
6. Blue Chips submitted that the Magistrate's finding that Blue Chips had a reasonable excuse to not comply with the requirement flowed from the Magistrate's finding that Blue Chips was given insufficient time to complete its searches and provide all of the documents to Mr Stevens. There was evidence supporting these findings. The Magistrate found in the judgment, and there was evidence in support of each finding, that: 1. Blue Chips' director (Mr Hartono) said to the Council investigation officer (Mr Stevens) that he had spoken to a Blue Chips' employee (Mr Wirjano) about the requirement to produce documents and said to Mr Stevens that Mr Wirjano "will give you everything"; 2. however, Mr Hartono told Mr Stevens "they [Blue Chips] may just need some time to get some of it together"; 3. Mr Hartono spoke again to Mr Stevens, about 15 minutes later, saying "you could give me a list of the properties. I will look into it."; 4. a short time later again, Mr Hartono spoke to Mr Stevens and said "you can copy [the documents for] unit 42 but I don't have time to do the rest. You give me a list and I'll see what I can do."; 5. the Council's visit on 20 August 2015 was unannounced; 6. Mr Stevens clearly expected Blue Chips' employees to drop everything and immediately produce all of the documentation to him; 7. Blue Chips did produce some documentation in relation to one property (unit 42); 8. Blue Chips' director (Mr Hartono) was not flatly refusing to comply with Mr Stevens' requirement; and 9. instead, Mr Hartono was saying that he could not do it within the time frame required by Mr Stevens, i.e. that day.
7. Blue Chips submitted that these findings provided support for the Magistrate's conclusions that there was insufficient time for Blue Chips to complete its searches and provide all of the documentation to Mr Stevens, and hence that there was a reasonable excuse for Blue Chips to not comply with the requirement made by Mr Stevens.
8. The fact that the Council may disagree with these findings of the Magistrate, or point to other evidence that might support different findings, does not show any error of law. A wrong finding of fact is insufficient to show an error of law: Waterford v Commonwealth (1987) 163 CLR 54 at 77-78. Want of logic is not synonymous with error of law. So long as there is some basis for an inference - in other words, the particular inference is reasonably open - even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for review because no error of law has taken place: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 356 and Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155. Put another way, a finding of fact in a way in which an appellate court would itself have rejected does not produce an error of law: Mahony v Industrial Registrar of New South Wales (1986) 8 NSWLR 1 at 5.
9. Blue Chips accepted that the Magistrate was factually in error in saying that there was no evidence as to how much documentation was eventually obtained as a result of the execution of the search warrant. However, this finding was not material to the Magistrate's conclusion. It certainly was not the only basis for the conclusion. Furthermore, the Magistrate's conclusion that there was insufficient time to complete its searches for the information was based, in part, on "the volume of the material being sought". This is different to "how much documentation was eventually obtained as a result of the execution of the search warrant". Hence, any factual error in saying that there was no evidence as to the latter does not affect a finding as to the former.
10. I find that the Council has not established Ground 2, that there was no evidence for the Magistrate's finding that there was a reasonable excuse for Blue Chips not to comply with the requirement. I agree with the reasons given by Blue Chips in its submissions. There was some evidence for both the conclusion that there was a reasonable excuse for Blue Chips not to comply with the requirement and the reason given for that conclusion that there was insufficient time to complete the searches for the information and provide all of it to Mr Stevens. The Magistrate summarised that evidence in her reasons.
11. It may be that there was other evidence that might have supported making different findings, but that does not show that the findings that the Magistrate did make were made without evidentiary foundation. Much of the Council's argument was, at base, a challenge to the factual soundness and alleged illogicality of the findings made by the Magistrate. But neither a wrong finding of fact nor want of logic in fact finding is an error of law.
12. I reject Ground 2.

Conclusion, costs and orders

1. The Council has not established either ground of appeal that the Magistrate erred on a question of law alone. The appeal should therefore be dismissed.
2. Blue Chips seeks its costs, pursuant to s 49(4) of the Crimes (Appeal and Review) Act 2001. This provides that the Court "may make such order as to the costs to be paid by either party (including the Crown) as it thinks just".
3. Costs are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings: Latoudis v Casey (1990) 170 CLR 534 at 543, 566-567.
4. The Council submitted that it would not be just to order it to pay Blue Chips' costs of the appeal. The Council submitted that the appeal advanced the public interest. The question of who bears the legal onus of establishing the existence or absence of a reasonable excuse under s 119M(1) of the EPA Act had not been authoritatively determined. There was a public interest in the resolution of that question. It would not be "just" to order the Council to pay Blue Chips' costs associated with resolving that question in the appeal.
5. I consider the Council, as the unsuccessful appellant, should be ordered to pay the costs of Blue Chips, as the successful respondent, of the appeal. There is nothing in the nature of the appeal or the particular grounds raised that would make it just not to compensate Blue Chips for its costs incurred in successfully defending the appeal brought by the Council. Ground 1 did not necessitate authoritative determination of the question of the incidence of the legal onus to prove the existence or absence of reasonable excuse under s 119M(1) of the EPA Act. Rather, Ground 1 turned on the construction of the Magistrate's reasons for decision. There was no contest between the parties on the appeal that the legal onus rested on the defendant to prove the existence of a reasonable excuse on the balance of probabilities. The question in the appeal was whether the Magistrate had so found and applied the legal onus to the defendant, or instead had erroneously found and applied the legal onus to the prosecution. There was no broader issue of public interest involved in the resolution of this question on the appeal.
6. The Court orders: 1. The appeal is dismissed. 2. The appellant is to pay the respondent's costs of the appeal.

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