DOWE & ANOR v. COMMISSIONER OF THE NEW SOUTH WALES CRIME COMMISSION & ANOR [2007] NSWSC 166

Supreme Court of NSW|2006-12-20|Before: Hall J, Wallwork J

CITATION : DOWE & ANOR v. COMMISSIONER OF THE NEW SOUTH WALES CRIME COMMISSION & ANOR [2007] NSWSC 166 This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S) : 20 December 2006; 8 and 9 February 2007

DECISION : The authorities to conduct controlled operations did not contravene the prohibition in s.7(1)(b) of the Act and were not such that the reporting requirements under s.6(3)(d) of the Law Enforcement (Controlled Operations) Act 1997 (NSW) could not be fulfilled and were not made unreasonably. The authorities were lawfully granted. The plaintiffs' summonses should be dismissed. The question of costs reserved.

CATCHWORDS : Authorities to conduct controlled operations granted under Law Enforcement (Controlled Operations) Act 1997 (NSW) - operations involving sale and supply of prohibited drug (cocaine) - whether decisions of Commissioner of New South Wales Crime Commission to grant authorities contravened provisions of s.7(1)(b) of the Act - prohibition on grant of authorities involving participants engaging in conduct likely to seriously endanger health and safety of specified persons - and therefore invalid - objective test to be applied in determining whether authority under the Act will involve conduct by a participant that is likely to seriously endanger the health or safety of specified persons - prohibition involves requisite causal nexus being established - authorities lawfully granted - Wednesbury unreasonableness not made out - reporting requirements under s.6(3)(d) of the Act - content of the obligation - whether obligation capable fo being fulfilled when prohibited drugs used in controlled operation not likely to be recovered.

Law Enforcement (Controlled Operations) Act 1997 (NSW) LEGISLATION CITED : Drug Misuse and Trafficking Act 1985 (NSW) Law Enforcement (Controlled Operations) Regulation 1998 (NSW)

Dowe & Ors v. Commissioner of the NSW Crime Commission & Anor [2006] NSWSC 1312 Attorney General for Northern Territory v. Minister for Aboriginal Affairs (1989) 23 FCR 536 McCormack v. Commissioner of Taxation (2001) 114 FCR 547 Australian Retailers Association v. Reserve Bank of Australia (2005) 148 FCR 446 Minister for Immigration & Multicultural Affairs v. Eshetu (1999) 197 CLR 611 Regina v. Connell; ex parte Hetton Bellbird Collieries Limited (1944) 69 CLR 407 Foley v. Padley (1984) 154 CLR 349 CASES CITED : Stuart v. The Queen (1974) 134 CLR 426 Regina v. Fitzgerald (1999) BC 9901392, Queensland Court of Appeal (per McPherson, JA) Regina v. Beech (1912) 7 Cr. App. R. 197 Regina v. Roberts (1971) 56 Cr. App. R. 95 DPP v. Daley (1980) AC 237 Aqua Vital Australia Limited v. Swan Television (1995) WASC (Wallwork J) BC 9503674 at 5 March v. Stramere (1990-1991) 171 CLR 506 Modbury Triangle Shopping Centre Pty. Limited v. Anzil (2000) 205 CLR 254

PARTIES : DAVID DARLEY DOWE & ANOR v. COMMISSIONER OF THE NEW SOUTH WALES CRIME COMMISSION & ANOR

FILE NUMBER(S) : SC No. 30048 of 2006; No. 30052 of 2006

Dowe: J. Stratton, SC./M.A. Robinson COUNSEL : Gedeon: M.A. Robinson Crime Commission: I. Temby, QC./Dr. J. Renwick

SOLICITORS : Dowe/Gedeon: Legal Aid Commission Crime Commission: New South Wales Crime Commission

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST

DAVID DARLEY DOWE v. COMMISSIONER OF THE NEW SOUTH WALES CRIME COMMISSION & ANOR

GILBERT GEDEON v. COMMISSIONER OF THE NEW SOUTH WALES CRIME COMMISSION & ANOR

1 HIS HONOUR: On 12 December 2006, I delivered judgment in respect of separate questions posed for determination in notices of motion filed on behalf of the second defendant on 22 August 2006 and 21 November 2006: Dowe & Ors v. Commissioner of the New South Wales Crime Commission & Anor [2006] NSWSC 1312. 2 On 8 and 9 February 2007, the proceedings were listed for further hearing when Mr. M.A. Robinson of counsel, who appeared on behalf of the plaintiffs Dowe and Gedeon, indicated that his clients wished to challenge the validity of three authorities purportedly issued pursuant to the provisions of the Law Enforcement (Controlled Operations) Act 1997 (NSW) (the Act) on two grounds as set out in the Second Further Amended Summonses. 3 The plaintiffs claimed relief in the form of declarations and consequential orders in respect of the following authorities:-

(a) Authority to Conduct a Controlled Operation No. 05/00556 granted on 8 February 2005.

(b) Authority to Conduct a Controlled Operation No. 05/01038 granted on 22 February 2005.

(c) Authority to Conduct a Controlled Operation No. 05/01792 granted on 17 March 2005. 4 The plaintiffs each face a hearing of criminal charges and each trial has been set down for hearing this year. The hearing of the proceedings involving the plaintiff Dowe is scheduled to commence on 16 April 2007. The plaintiffs each face charges on indictment, inter alia, pursuant to s.25(1) and/or s.25(2) of the Drug Misuse and Trafficking Act 1985 (NSW) (supply of prohibited drugs). 5 In the written submissions on behalf of the plaintiff dated 23 January 2007, it is stated:- "33. The evidence that will be tendered by the Crown in the District Court trials, and the evidence received into evidence before the Magistrate who conducted the committal proceedings will comprise evidence obtained by the defendants pursuant to the implementation by the second defendant of the operational plans above and which was obtained purportedly undertaken pursuant to the LECO Act."

Grounds 6 The two grounds relied upon and argued were those set out in paragraphs 2(a) and 2(d) of the Second Further Amended Summonses which, in each proceedings, were in identical terms. 7 The two grounds respectively asserted that the abovementioned authorities were affected by jurisdictional error or, alternatively, made without or in excess of power in that:- "2(a) They were issued in breach of the prohibition contained in s.7(1)(b) of the … Act in that the proposed operations involved a civilian participant in the operation engaging in conduct that was likely to seriously endanger the health or safety of another person or persons, namely, members of the public that were to purchase or were to be given the subject cocaine for personal use or consumption. … (d) The first defendant could not have been reasonably and/or lawfully satisfied that s.6(3)(d) … had been or would have been capable of being complied with or fulfilled in that the proposed controlled operations were not capable of being accounted for in sufficient detail or respects to enable the reporting requirements of the … Act to be fully complied with by reason of the nature of the then proposed controlled operation." 8 The grounds in paragraphs 2(e), (f) and (g) of the Second Further Amended Summonses were not pressed. 9 In Mr. Robinson's written submissions dated 23 January 2007, the grounds of judicial review relied upon were identified as:-

(a) ground 2(a) that the authorities are invalid under s.7(1)(b) based on a "reasonableness" argument; and

(b) ground 2(d) that the authorities were invalid under s.6(3) based on "reasonableness" and procedural ultra vires arguments. 10 Mr. Robinson additionally relied upon written supplementary submissions dated 7 February 2007. 11 These were supplemented by oral submissions. Mr. I. D. Temby, QC., who appeared with Dr. J. Renwick of counsel, for the defendants relied upon written submissions dated February 2007 and upon their oral submissions.

Evidence 12 The plaintiffs tendered a number of documents. These may be classified into two categories. The first comprises the primary records relating to the making of the application, the matters considered by the relevant decision making authority (Mr. Bradley, the Commissioner of the New South Wales Crime Commission, that body being referred to in this judgment as "the Crime Commission") and the authorities themselves as having purportedly been granted pursuant to the Act. 13 Secondly, certain transcript evidence from the committal proceedings, in particular, extracts of evidence given by Mr. Standen, an Assistant Director, Investigations at the Crime Commission, and by Mr. Bradley together with documents principally in the nature of memoranda and emails. 14 The following are the documents relevant to each decision made by the first defendant in relation to the issue of the authorities in question and falling within the first of the abovementioned categories:-

(a) An application for an Authority to conduct a controlled operation from Mark William Standen, a law enforcement officer for the New South Wales Crime Commission, to the defendants referring to each operation by operation number and name.

(b) A proposed operation plan annexed to and forming part of each application.

(c) The authority on each application granted by the first defendant to conduct a controlled operation bearing a date and time.

(d) A document constituting a record of the reasons for the grant of each authority to conduct a controlled operation pursuant to s.6(5) of the Act.

(e) The s.27 evidentiary certificate issued by the first defendant in respect of each decision. 15 On behalf of the Crime Commission, copies of briefing notes on the relevant investigation, termed Operation Mocha, were tendered upon the basis that they were made available for relevant purposes to the decision maker, Mr. Bradley, the Commissioner for the Commission, who granted the authorities. 16 On the basis of the ruling made on 8 February 2007, whereby the plaintiffs were permitted to re-argue the issue under s.7(1)(b), they were permitted to adduce evidence and make submissions on the question as to whether or not the prohibition in s.7(1)(b) had been contravened. That ruling, however, did not render admissible all of the extracts of transcript evidence of Mr. Standen and of Mr. Bradley tendered on this application. In general terms, the only evidence admitted related to the events and circumstances leading to or associated with the decision to grant the authorities. Mr. Temby, with respect, correctly submitted that "… self-evidently, evidence which touches and concerns the decision making process is admissible. Evidence which relates to the statutory operation, bearing in mind the distinction I am seeking to draw, may be relevant, depending upon considerations I will mention in a moment, but it cannot be a significant justification for admissibility to say, 'here is evidence that relates to the operation viewed more broadly, the mid-December to June operation'." Mr. Temby went on to state his apprehension that I had adopted the latter approach, not the former (transcript, 8 February 2007, p.82). 17 The question of the admissibility of evidence on an application for judicial review of an administrative decision has been a matter of consideration in a number of decisions in the Federal Court of Australia: Attorney General for Northern Territory v. Minister for Aboriginal Affairs (1989) 23 FCR 536 per Lockhart, J. at 539-540; McCormack v. Commissioner of Taxation (2001) 114 FCR 547, 587 and most recently in Australian Retailers Association v. Reserve Bank of Australia (2005) 148 FCR 446, 564-566 per Weinberg, J. 18 In general terms, those authorities establish, amongst other propositions, that the admissibility of evidence on an application for judicial review of an administrative decision will often depend on the ground of review and the circumstances of the case. In many, if not most, circumstances it will only be the material that was before the decision-maker at the time that the decision is made that is relevant and admissible. However, there may be exceptions depending upon the grounds of review relied upon and the circumstances of the case. Where the ground of challenge relied upon is Wednesbury reasonableness, evidence beyond that which was before the decision-maker may, in some cases, be admissible (see, in particular, Australian Retailers Association (supra) per Weinberg, J. at 566. 19 The material sought to be tendered by Mr. Robinson of counsel on behalf of the plaintiffs and to which I have earlier referred included numerous extracts from the transcript of committal proceedings in relation to the evidence of Mr. Standen (6, 14 and 15 March 2006) and of Mr. Bradley (31 March 2006). Objection was taken principally upon the basis that the material was not admissible as it did not relate to or constitute material before Mr. Bradley, the decision-maker, at the times that he made the decisions to grant the disputed authorities. 20 Rulings were made during the course of the hearing which resulted in a good deal of the material being excluded principally upon the basis of relevance and on the ground that the material did not relate to the decision-making process. Mr. Temby, QC. submitted that certain of the material that was admitted went beyond that process and related to the broader question of the investigation which commenced in December 2004. 21 It is important to make clear that in relation to the material tendered by the plaintiffs within the second of the two categories of documents and admitted in these proceedings, there are, in my opinion, only two matters to which such documents relate that are relevant to the facts in issue arising in respect of the impugned decisions. The first matter is that at the dates the particular decisions were made Mr. Bradley's understanding was that the supply of up to seven kilograms of cocaine would take place during the controlled operations in circumstances in which it was unlikely that the cocaine would be recovered by law enforcement officers. That fact has never been seriously disputed in these proceedings and, indeed, it was accepted for the purposes of the Agreed Statement of Facts on the Separate Questions (paragraph 7). It has not been put in issue in relation to the remaining two issues that I am called upon to decide in the present part of the proceedings. 22 The second matter was whether or not the first defendant (the Commissioner) as the decision-maker specifically considered the potentially deleterious or harmful effects from the ingestion of cocaine (upon the assumption that he was by law required to do so). I considered that evidence as to whether or not Mr. Bradley did or did not have regard to the health and safety aspect and information relevant thereto in determining the applications for the grant of controlled operations authorities was potentially relevant to the issue arising under s.7(1)(b), in the event that, upon the proper construction of that provision, he was required to do so. 23 By reason of the conclusion at which I have arrived, however, I do not consider that it has been established on the evidence that there was a relevant failure by the first defendant to consider that matter. Whilst he was required to consider whether the conduct to be authorised was likely to seriously endanger the health and safety of persons that issue could not, in relation to the subject authorities and for reasons explained below, have resulted in an affirmative answer.

Factual matters 24 The background and relevant factual matters concerning the controlled operations and the events associated with them have been referred to in the judgment of 12 December 2006 at paragraphs [23] to [40]. 25 There is frequent reference in the documentary evidence to an informer and civilian participant in the relevant controlled operation known as "Tom". The background may be summarised as follows. Tom approached the Commission on 14 December 2004 and provided Mr. Standen with information as to his own involvement in the supply of cocaine in June and December 2004 in partnership with another. He informed Mr. Standen of the 8 October 2004 importation of prohibited drugs, and of a further importation to take place in February 2005. Thereafter, Mr. Standen is said by the plaintiffs to have "cultivated" Tom with a view to using him as an informant in gathering evidence in relation to the importation scheduled to take place in February 2005. Mr. Standen reported on events and developments to Mr. Bradley. A joint taskforce of New South Wales Police, Australian Federal Police and New South Wales Crime Commission officers, which was already in existence prior to Tom's approach to the Commission, was utilised to investigate the matter. 26 On 2 February 2005, at a meeting at which Mr. Bradley and Mr. Standen were present, reference was made to a proposal that cocaine be sold through to end use as part of an investigation. The cocaine sold would only be recovered if circumstances would permit, in particular, if it would not prejudice Tom's position as an informant, his capacity to make further sales and the ability to keep him in place for the purpose of gaining evidence in relation to the proposed importation in February 2005. There is reference at the meeting to the prospect of adverse publicity involving police being complicit in the sale of seven kilograms of cocaine in circumstances in which the prohibited substance would go to street level. The plaintiffs contend that the operation was approved upon the basis of an expectation that the seven kilograms of cocaine would, in all likelihood, not be recovered. Mr. Bradley's evidence (transcript 31 March 2006, p.24, lines one to 23). Mr. Bradley gave evidence at the committal hearing that he attended the meeting "to discuss with Mr. Moroney whether he would be prepared to go along with such an operation involving his police". 27 In an email written by Mr. Finch to the Special Crime Unit, it is stated that Mr. Finch had met with Mr. Bradley and Mr. Standen and the Deputy Commissioner on 2 February 2005 and "… the go ahead has been given for the initial part of the Mocha Operation (7 kgh) in a way that probably exceeds our expectations". 28 The facsimile later states:- "Bear in mind the considerable organisational risk that the Commissioner has accepted in allowing us to participate in what may end up with an amount of negative publicity (police complicit in seven kg of cocaine reaching the street). Don't forget - we share that risk." 29 The evidence of Mr. Standen was admitted on the limited basis earlier indicated. Mr. Standen worked closely with Mr. Bradley both prior to and subsequent to the decisions made in relation to the controlled operations authorised by Mr. Bradley on Mr. Standen's written applications. 30 Specific reference was made to Mr. Standen's evidence on 15 March 2006 at transcript p.53, lines 15 to 25 as follows:- "Q. That is, that you understood that - I'll go back a step. It was at least probable, and quite likely, that the kilo of cocaine which was the subject of 1038, this application, the one I'm discussing, to be transacted at Newtown, would not be recovered by police. Correct? A. More probable than not, that's correct. Q. And in that regard, more probable than not that ultimately it would be disseminated to street level, correct? A. Correct." 31 On the same page the transcript records him being asked:- "Q. You consider that the supply of a kilo of cocaine could seriously endanger health or safety of persons who might be expected to use it? A. This kilo are you saying? Q. A kilo of cocaine? A. Could." 32 Later on the same page, he was asked:- "Q. Nowhere in either the plan or the application is it made clear that it is more likely than not that the kilo of cocaine to be transacted would indeed proceed through to end use, you agree with me on that? A. That's correct. Q. Did you think it relevant to include that fact? A. As I said before, not particularly so." 33 At the meeting held on 2 February 2005, it was said that there was an "agreed position" on three matters:-

(a) That Operation Mocha should be considered as comprised of two separate phases relating to two separate but related issues: Phase 1 involving illicit drugs previously imported into New South Wales and Phase 2 involving the future importation of illicit drugs into Australia.

(b) That the controlled operations would be under the authorisation of the New South Wales Crime Commission and Phase 2 of the operation would also require a controlled operation under the authorisation of the Australian Federal Police.

(c) New South Wales Police would assist with resources to address both human and logistical requirements to ensure the most positive outcome for the operation. 34 These three areas of agreement were set out in a facsimile from Mr. McWhirter, Commander, Professional Standards Command dated 20 March 2006 (Exhibit N). 35 On 6 March 2006, Mr. Standen was asked:- "Q. Just by way of background, it never was part of the plan, as it were, in relation to each of those transactions that the taskforce or police officers would arrest the person to whom the cocaine was sold and thereby retrieve the kilo of cocaine? A. Yes and no, it was factored into the plan that if the circumstances allowed at some stage of the process for a person to be arrested and the drugs recovered, that would occur. If the situation was such that wouldn't jeopardise the investigation overall, that was always going to be difficult rather in relation to the actual first purchaser. As you're probably aware there was some arrest or arrests further down the track and some drugs recovered." 36 In relation to the question arising under s.7(1)(b), Mr. Standen was asked:- "Q. Let me put this to you, Mr. Standen, what, if anything did your application or plan have in it to address any concerns that the kilo of cocaine which was being transacted by Tom on 23 February 2003 might ultimately end up on the street and be likely to seriously endanger the health of people? A. We did some research into the health information relating to cocaine use. There are some health issues in relation to its continued use. There are no recorded deaths from cocaine use which is one of the things we researched. Q. And did you canvass those issues in the application and plan, or is that general research you're talking about? A. It was general. It wouldn't be in the plan. It may have been a reference to the absence of deaths in the application, but I'm not sure, I recall the research." 37 In later evidence, Mr. Standen stated that only one kilogram of the seven kilograms was recovered and that that was not an unexpected outcome. 38 In terms of quantity of the cocaine involved in the controlled operations, Mr. Standen was asked:- "Q. So the estimation in terms of the seven kilos would be that there would be some roughly 10,000 discrete dosage units in that? A. I have to say my maths is pretty hopeless, your Honour, but that's probably right. It depends on what people -- … Q. That's right, 70,000 plus the outcome meaning 100,000 if one takes into account the dilution? A. Depending on how much it's diluted, correct." 39 In later evidence, on 15 March 2006, Mr. Standen conceded that he knew very well before the particular authorities were applied for that there was a likelihood that a quantity of the drugs would end up on the streets.

The controlled operations authorities 40 On the present hearing, it was central to the plaintiffs' arguments that:-

(a) The Crime Commission recruited or "cultivated" "Tom" as a participant in the controlled operations.

(b) Thereafter, the Commission acquiesced in him selling and supplying certain quantities of cocaine (in all, approximately six kilograms), pursuant to the controlled operation arrangements.

(c) That the sale and supply would occur in circumstances in which it was anticipated that it was unlikely that the cocaine would be retrieved or recovered by the Crime Commission at their conclusion. 41 Mr. Robinson emphasised that, in the above circumstances, the Commission authorised the sale and distribution by "Tom" of the cocaine in circumstances that would see the prohibited drug run to street level. The authorised controlled activities, it was argued, necessarily required the participants to engage in conduct that was likely to seriously endanger the health or safety of unspecified persons, being persons who, in due course, would utilise the cocaine. On that basis, it was submitted the authorities were granted in breach of the prohibition in s.7(1)(b) of the Act. 42 It was further observed by Mr. Robinson that none of the applications made by Mr. Standen for the granting of the controlled operation authorities contained any reference to the fact that the subject cocaine was not proposed to be recovered and, in all probability would reach street level. 43 Accordingly, it was submitted on behalf of the plaintiff that the authorities granted were invalid either on the ground that the first defendant in making his decisions to grant each of the authorities for the controlled operations, failed to consider the provisions of s.7(1)(b) or alternatively the authorities were issued in contravention of them. 44 It was further submitted in circumstances in which the cocaine, once supplied, could not be traced, controlled or retrieved, the Commissioner could not have been satisfied in terms of s.6(3)(d) that the proposed controlled activities would be capable of being accounted for in sufficient detail to ensure compliance with the reporting requirements of the Act.

The relevant provisions of the Act and Regulation 45 Part 2 of the Act contains the provisions relating to the authorisation of controlled operations. Section 6 is central to the issues arising for determination and accordingly it is reproduce it below:- "(1) After considering an application for authority to conduct a controlled operation, and any additional information furnished under s.5(3), the chief executive officer: (a) may authorise a law enforcement officer for the law enforcement agency concerned to conduct the operation, either unconditionally or subject to conditions, or (b) may refuse the application. (2) An authority to conduct a controlled operation on behalf of a law enforcement agency may not be granted unless a code of conduct is prescribed by the regulations in relation to that agency. (3) An authority to conduct a controlled operation may not be granted unless the chief executive officer is satisfied as to the following matters:- (a) that there are reasonable grounds to suspect that criminal activity or corrupt conduct has been, is being or is about to be conducted in relation to matters within the administrative responsibility of the agency, (b) that the nature and extent of the suspected criminal activity or corrupt conduct are such as to justify the conduct of a controlled operation, (c) that the nature and extent of the proposed controlled activities are appropriate to the suspected criminal activity or corrupt conduct, (d) that the proposed controlled activities will be capable of being accounted for in sufficient detail to enable the reporting requirements of this Act to be fully complied with. (4) In considering the matters referred to in subsection (3), the chief executive officer must have regard to the following: (a) the reliability of any information as to the nature and extent of the suspected criminal activity or corrupt conduct, (b) the likelihood of success of the proposed controlled operation compared with the likelihood of success of any other law enforcement operation that it would be reasonably practicable to conduct for the same purposes, (c) the duration of the proposed controlled operation. (5) The chief executive officer must keep a written record of the reasons for which the chief executive officer is satisfied as to the matters referred to in subsection (3)( a)." 46 Section 7, which is central to the issue that arises in terms of paragraph 2(a) of the summonses (the health and safety issue) sets out two prohibitions, the second of which is relied upon by the plaintiffs in support of their contention. The relevant provisions are in the following terms:- "(1) An authority to conduct a controlled operation must not be granted in relation to a proposed operation that involves any participant in the operation:- (a) inducing or encouraging another person to engage in criminal activity or corrupt conduct of a kind that the other person could not reasonably be expected to engage in unless so induced or encouraged, or (b) engaging in conduct that is likely to seriously endanger the health or safety of that or any other participant, or any other person, or to result in serious loss or damage to property. (2) A person must not be authorised to participate in a controlled operation unless the chief executive officer is satisfied that the person has the appropriate skills to participate in the operation. (3) A civilian participant:- (a) must not be authorised to participate in any aspect of a controlled operation unless the chief executive officer is satisfied that it is wholly impracticable for a law enforcement participant to participate in that aspect of the operation, and (b) must not be authorised to engage in a controlled activity unless it is wholly impracticable for the civilian participant to participate in the aspect of the controlled operation referred to in paragraph (a) without engaging in that activity." 47 In relation to the issue raised in paragraph 2(d) of the summonses (reporting requirements), Part 3 of the Act, Conduct of Controlled Operations, contains s.15, Reports on Controlled Operations. That section is in the following terms:- "(1) Within two months after completing an authorised operation, the principal law enforcement officer for the operation must cause a report on the operation to be given to the chief executive officer. (2) The regulations may make provision for or with respect to the matters to be included in such a report." 48 Part 4 of the Act, Monitoring of Controlled Operations, contains the provisions of s.21 which is in the following terms:- "(1) Within 21 days after:- (a) granting an authority or variation of authority, or (b) receiving a report on the conduct of an authorised operation to which an authority relates, a chief executive officer must cause written notice of that fact to be given to the Ombudsman. (2) The Ombudsman may require the chief executive officer to furnish such information concerning the authority, variation or report as is necessary for the Ombudsman's proper consideration of it." 49 The Law Enforcement (Controlled Operations) Regulation 1998 contains, in clause 6, the matters to be included in a report to be provided under s.15 of the Act. It is in the following terms:- "Cl.6 A report referred to in s.15 of the Act with respect to a controlled operation must include such matters relevant to the operation as the Chief Executive Officer may require."

The plaintiffs' submissions 50 It was contended for the plaintiffs (written submissions, paragraph 40) that the first defendant's exercise of his functions under the Act manifestly miscarried on the basis that the various conclusions arrived at by him in his decisions to issue the authorities were not ones reasonably formed on the material then before him. 51 Particular reliance was placed upon dicta of Gummow, J. in Minister for Immigration and Multicultural Affairs v. Eshetu (1999) 197 CLR 611 at 652 to 653. There, his Honour extracted from the judgment of Latham, CJ. in Regina v. Connell; ex parte Hetton Bellbird Collieries Limited (1944) 69 CLR 407 at 432. There the Chief Justice observed:- "It should be emphasised that the application of the principle now under discussion does not mean that the court substitutes its opinion for the opinion of the person or authority in question. What the court does is to enquire whether the opinion required by the relevant legislative provision has really been formed. If the opinion which was in fact formed was reached by taking into account irrelevant considerations or by otherwise misconstruing the terms of the relevant legislation, then it must be held that the opinion required has not been formed. In that event, the basis for the exercise of power is absent, just as if it were shown that the opinion was arbitrary, capricious, irrational, or not bona fide." 52 Gummow, J. also referred to the observations of Brennan, J. in Foley v. Padley (1984) 154 CLR 349 at 370 wherein the point was again emphasised that the question for the court is not whether it would have formed the opinion in question but whether the repository of the power could have formed the opinion reasonably and that an allegation of unreasonableness in the formation of that opinion may often prove to be no more than an impermissible attack upon the merits of the decision then made in purported exercise of the power (at p.653). 53 In the present case, in relation to each of the subject authorities, the first defendant formally determined as stated in paragraph 5(b) of each of the authorities that he was "satisfied" that "no participant will engage in conduct that is likely to seriously endanger the health or safety of that or any other participant, or any other person, or to result in serious loss or damage to property". 54 Mr. Robinson observed that the primary documentation in the first category of the documents to which I have earlier referred did not include "any understanding of the issue or any reasons for this component of the application of the determination". It was contended that evidence given by Mr. Standen in relation to the investigation, failed to demonstrate that the question arising under s.7(1)(b) was seriously considered either by himself or by the decision-maker, Mr. Bradley, with whom he closely worked on the matter. Further, it was observed that there did not exist a contemporaneous statement of relevant reasons on the issue of the authorities on the question beyond the statement set out to in the preceding paragraph. Evidence given by Mr. Bradley was referred to as supporting the proposition that no objective assessment or formal "disciplined scientific assessment" was made by the first defendant of the health and safety aspects of the proposed controlled operations to be carried out pursuant to the authorities. 55 It was acknowledged in the written submissions for the plaintiffs (paragraph [48]) that the success of the arguments in this respect, in part, depended upon the Court's finding as to the meaning and scope of s.7(1)(b) of the Act. It was acknowledged that, to an extent, I had, on an interlocutory basis, dealt with the construction of s.7(1)(b) of the earlier judgment (paragraphs [250], [256] and [258]). That construction was unfavourable to the plaintiff's arguments to which the plaintiffs rely upon at this stage of the proceedings. 56 Mr. Robinson respectfully submitted that the construction or interpretation of s.7(1)(b) in the judgment delivered on 12 December 2006 was wrong and, in this respect, reliance was placed upon earlier submissions made in relation to what was said to be the proper interpretation of the scope of the section (plaintiffs' Written Submissions on the Jurisdictional Fact Question and other matters dated 24 October 2006, 30 October 2006 and 17 November 2006). 57 One of the grounds taken in Mr. Temby's objection to the tender of the documentation to which I have earlier referred (paragraphs [12] to [23]), inter alia, was that the plaintiffs were precluded from doing so as they were bound by the judgment on the "third separate question" posed for determination and dealt with in the earlier judgment. It is unnecessary here to say more than that in rejecting this argument, I determined that, in the unusual circumstances in which I have been required to deal again with the same point as arose concerning the "third separate question", I considered that it was open to the plaintiffs to further argue the point on the basis that the third separate question determination essentially involved only a ruling on evidence and did not in any relevant sense finally determine the rights of the parties. Accordingly, Mr. Temby's objection on that basis was rejected and the plaintiffs were permitted to tender the evidence and to re-argue the construction of s.7(1)(b) for which they contended. 58 Mr. Robinson submitted that the Court was able to take judicial notice of the fact that cocaine was a prohibited substance and that it was capable of having deleterious effects on the health of those who consumed it. In this respect, he referred to submissions made in the "Plaintiff's Summary Submissions on the Third Question", paragraphs [17] and [18], wherein it was stated that the Court can take notice of the fact that the drug is a prohibited drug throughout Australia and that mere possession or conveyance of it is attended with prison sentences of up to 25 years and further that the Court can take notice of the international conventions and treaties to which Australia is a signatory or which have been enacted into our domestic law, in particular, the Single Convention on Narcotic Goods Act 1961 (enacted in the Narcotics Drug Act 1967 (Cth)), cocaine being specifically provided for therein and styled "cocaine - methyl ester of benzoylecgonine". 59 In his written submissions (paragraph [20]), Mr. Robinson also contended that the controlled operations did not cease with the supply of cocaine but ceased only on the expiry of the authorities so that there was the opportunity in that period of time in which the intended or actual alleged recipients of the cocaine or others could have ingested the cocaine or passed it to other persons, perhaps many others. It was also submitted that s.7(1)(b) had no relevant temporal element in it and it does not limit the time in which the harm might flow from authorised activities undertaken during an operation.

The construction of s.7(1)(b), Law Reform (Controlled Operations) Act 1997 (NSW) 60 In the construction and operation of this provision, I am of the opinion that the following are relevant matters:-

(a) The provision is expressed in negative terms ( "… must not be granted …." ) in relation to specified activities or conduct set out in s.7(1)(a) and (b). It is, accordingly, a statutory prohibition to be construed in a way which gives effect to the evident legislative purpose behind its enactment.

(b) In ascertaining the meaning and intended operation of s.7(1)(b) (the phrase "engaging in conduct that is likely to seriously endanger the health or safety …" ), it is important to observe that "conduct" (which includes any act or omission: s.3, Definitions) refers to conduct or activities that can be said to be causative in the sense indicated by the particular words in the section.

(c) The initial step, accordingly, is to identify what are the various acts (or in some cases the omissions or both) that constituted the "conduct" in a particular case for the purposes of s.7(1)(b).

(d) The relevant acts or omissions, having been identified, it then becomes necessary to determine whether the "conduct" is of a nature, kind or quality that is "… likely to seriously endanger the health or safety" of the specified person or persons (where the issue is one of health or safety as distinct from damage to property). (e) This last-mentioned aspect is not concerned with mere risk arising from "conduct". It is directed to whether or not the relevant authorised "conduct" is "likely to" produce the stated harmful consequence. In this respect, it is clear that "the conduct" must be assessed objectively in order to determine whether it has the requisite causative character. 61 Such an approach is not unlike that which has been adopted and applied with similar statutory concepts. Hence, for example, the code definition of murder in s.302(2) of the Criminal Code (Q) is expressed to include an unlawful killing within the specified circumstances stipulated in s.302(2) of the Code, namely:- "(2) If death is caused by means of an act done in the prosecution of an unlawful purpose, which Act is of such a nature as to be likely to endanger human life ;" (emphasis added) 62 In Stuart v. The Queen (1974) 134 CLR 426 at 438 per Gibbs, J. observed that, whether or not the act falls within the provision, is to be determined by a test that is "purely objective". See also Regina v. Fitzgerald (1999) BC 9901392, Queensland Court of Appeal (per McPherson, JA.). 63 In determining the question whether the conduct authorised by the authorities that are in question in these proceedings could be said objectively to be conduct that is "likely to seriously endanger the health or safety" of specified persons, the answer depends upon whether the sale and the supply of the cocaine (being the relevant authorised "conduct") constituted acts or activities that, in themselves, were likely to produce the stated consequence. Arriving at the answer to this question in a particular case may be aided by applying one or both of two tests well known to the criminal law, the natural consequence test and the reasonable foresight of consequence test. 64 The first has been applied in circumstances where the action of the victim which resulted in death was the natural consequence of the particular conduct of the accused and therefore it could be said that the accused's actions caused the death: Regina v. Beech (1912) 7 Cr. App. R. 197. The second test has been applied in circumstances where the action of the victim leading to death can be said to have been a reasonably foreseeable consequence of what the accused said and did. In those circumstances, the accused can be said to have caused the death: Regina v. Roberts (1971) 56 Cr. App. R. 95; DPP v. Daley (1980) AC 237. 65 The authorities to conduct the controlled operations in question in these proceedings, identified the "conduct" by specifying the "controlled activities of the nature specified opposite". This is a reference to the activities in Column 2 of the Table to the authorities which identified the particular acts as including the possession and the supply of cocaine to Tom as informer and to other specified persons who, upon the basis of information contained in the applications for the authorities were identified as targets of the proposed controlled operations. 66 The authorities specifically stated (paragraph 5(b)) "no participant will engage in conduct that is likely to seriously endanger the health or safety of that or any other participant, or any other person, or to result in serious loss or damage to property". 67 The applications also stated (paragraph 3(d)) that "the controlled operations will be capable of being accounted for in sufficient detail to enable the reporting requirements of the Act to be fully complied with". 68 Whether one applies what has been referred to above as the natural consequence test or whether one simply applies an objective test to the phrase "likely to seriously endanger the health or safety of specified persons" the prohibition in s.7(1)(b) will only apply where it can be said that the authorised activities themselves are likely to result in or produce the deleterious consequences referred to in that provision. If harm to health and safety is dependent upon and will only arise through the separate voluntary act or acts on the part of a third person as by ingesting cocaine in quantities that can produce that result, then it cannot, in my opinion, be said the authorised activities of selling and supplying cocaine in themselves contravened s.7(1)(b). 69 "Likely to endanger" is not to be equated with or embrace mere risk or even material risk. See, for example, Aqua Vital Australia Limited v. Swan Television (1995) WASC (Wallwork, J.) BC 9503674 at 5. That phrase does not have the same meaning as "a risk to". In its statutory context, "endanger" carries the dictionary meaning "cause the danger of, make probable, (something untoward)": Shorter Oxford English Dictionary, Volume 1, p.823. The phrase involves the notion of direct causation. The law in many areas has distinguished between events or circumstances that are conducive to or that facilitate an event from circumstances that can be said to be the cause of them. One person's act may not be the cause of an event even though it was an essential condition of it: March v. Stramere (1990-1991) 171 CLR 506, 517 per Mason, CJ. 70 Controlled operations may, depending upon circumstances, involve a risk to the health and safety of specified persons. But s.7(1)(b) is not, as I have indicated, directed to risk per se. The information provided in an application made under s.5 of the Act, including, in particular, that in the plan of the proposed operation, and any other relevant information known to the chief executive officer must be examined as so as to ensure that the particular conduct (the acts and/or omissions) proposed for a controlled operation will not, inter alia, be likely to seriously endanger the health or safety of the specified persons. 71 The issue of the causative consequence with which s.7(1)(b) is concerned has some parallel in the area of tortious liability in circumstances in which the victim sues an occupier of allegedly unsafe premises, having been injured by the voluntary criminal act of a third party. In Modbury Triangle Shopping Centre Pty. Limited v. Anzil (2000) 205 CLR 254, Gleeson, CJ. at 269 drew a distinction between the occupier's omission which might be said to have facilitated the crime but not to have caused the victim's injuries. Leaving to one side the fact that a positive act and an omission may be capable of producing different consequences, the circumstances postulated in the plaintiff's submissions, namely, the later ingestion of cocaine by unspecified persons, would involve intervening voluntary criminal acts of a third party or parties (the lawful nature of the acts arise by virtue of s.12 of the Drug Misuse and Trafficking Act 1985 (NSW) - self-administration of prohibited drugs). Such acts of third parties constitute the necessary intervening circumstances before any harm or safety issue could possibly arise. 72 I am accordingly of the opinion that upon the proper construction of s.7(1)(b) of the Act, the "conduct", the controlled activities authorised, did not amount to or constitute conduct that was in itself capable or likely to give rise to serious danger to the health or safety of the persons referred to in the section. Whether cocaine, a prohibited substance can, in fact, produce, in a particular situation, deleterious consequences to health and safety (and I am prepared to assume that, at least in some circumstances, the ingestion of the drug is capable of providing such harmful effects) will no doubt depend upon the facts concerning the particular consumption including the nature, extent and frequency of such consumption. The provisions of s.7(1)(b) have, in my opinion, been drafted in such a way as to require a direct causal relationship between the conduct in question and the stated consequence to health and safety. 73 Accordingly, upon the proper construction of s.7(1)(b), I do not consider that the authorities were issued in contravention of that section. In particular:-

(a) The provisions of s.7(1)(b) only operate with respect to conduct that is likely to cause the adverse consequences therein specified.

(b) The acts authorised by the authorities in question were not capable of causing the consequences referred to in those provisions. 74 The discretionary power to grant an authority under the regulatory scheme established by the Act is a significant power, as is reflected in the fact that it is one vested in the chief executive officer as defined in s.3 of the Act - in the present case, the Commissioner for the Crime Commission. No doubt, the responsible use of the power will involve the evaluation of possible risks posed by an application made under s.5 of the Act. The conclusion which I have expressed in relation to s.7(1)(b) does not, of course, diminish the importance of appropriate risk evaluation or assessment as the circumstances of a particular case may require.

The issue under s.7(3)(d) - accountability and reporting requirements of the Act 75 Section 6(3)(d) provides by way of prohibition that:- "6(3) An authority to conduct a controlled operation may not be granted unless the chief executive officer is satisfied as to the following matters:- (a) (not reproduced) (b) (not reproduced) (c) (not reproduced) (d) that the proposed controlled activities will be capable of being accounted for in sufficient detail to enable the reporting requirements of this Act to be fully complied with." 76 The key expressions in this provision are "the proposed controlled activities" and "the reporting requirements of this Act". 77 Section 3 of the Act simply defines "controlled activity" as meaning an activity that, but for s.16, would be unlawful. 78 Under s.15 of the Act, Reports on Controlled Operations, the Act provides:- "(1) Within two months after completing an authorised operation, the principal law enforcement officer for the operation must cause a report on the operation to be given to the chief executive officer. (2) The regulations may make provision for or with respect to the matters to be included in such a report." 79 The Law Enforcement (Controlled Operations) Regulation 1998 provides, in clause 7 as follows:- "7. Matters to be included in report: s.15 A report referred to in s.15 of the Act with respect to a controlled operation must include such matters relevant to the operation as the chief executive officer may require." (emphasis added) 80 It can be immediately seen that clause 7 is not prescriptive of the matters that must be reported upon. Rather, it has been left to the judgment and decision of the chief executive officer of the law enforcement agency in question as to the matters relevant to an operation that he or she requires be the subject of a report. 81 The question then becomes, as Mr. Temby correctly observed:- "Was the authority to possess and supply cocaine and to handle money received in exchange for it capable of being reported upon?" 82 The Crime Commission's submission was that, the question must be answered in the affirmative and I agree. 83 In the present matters, the question is whether or not the reporting obligation imposed by s.15 "on the operation" was capable of being observed in the circumstances in which the cocaine employed in the controlled operations may not or could not be recovered at their conclusion. 84 The evident purpose of the reporting requirement is to ensure accountability in terms of the conduct, in particular, the activities engaged in by the participants in the course of or for the purposes of an authorised operation. Accountability in this sense is directed towards ensuring that there exists a basis upon which compliance with an authority granted under the Act can be verified. The accountability in this regard is ultimately to be determined by the "principal law enforcement officer for the operation". In the context of the present proceedings, the fact that the cocaine could very well reach and be disseminated at street level is not a fact or matter that in itself hinders or impairs the accountability requirements to report on the activities that constitute "the operation". The reporting obligation does not require that there be, as it were, the capacity for a final auditing of the movement of the prohibited substances from the time a sale/supply is effected. Moreover, the plaintiffs have not, in these proceedings, demonstrated any particular aspect of the reporting requirement arising under s.15 that can be said to have been negated or breached such as to create invalidity in the authorities. 85 I am of the opinion that the decisions to grant the authorities having been lawfully made under and in accordance with the Act, no basis has been established for the contention that the relevant conclusions made or formed by the first defendant under s.6 of the Act were formed unreasonably on the material before him. That material entitled him to be satisfied of the matters arising under that provision including, in particular, the capacity for the reporting obligations under s.6(3)(d) of the Act to be fulfilled and further that the prohibition under s.7(1)(b) would not be contravened by the activities authorised. 86 Accordingly, for reasons stated above the plaintiffs have not established any ground of invalidity arising in terms of s.7(1)(b) or s.7(3)(d) of the Act or otherwise in relation to the decisions made by the first defendant with respect to the authorities identified in paragraph [3] or the authorities themselves. The plaintiffs' summons should, accordingly, be dismissed and I so order. 87 I will hear the parties with respect to any application concerning costs of the proceedings.

13/03/2007 - Amendment to paragraph 3 - Paragraph(s) 3

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Law Enforcement (Controlled Operations) Regulation 1998(NSW)

Narcotics Drug Act 1967(Cth)

Law Reform (Controlled Operations) Act 1997(NSW)

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