Edwards, Francis John v Von Einem, Ian & Anor Grant, Ian v Von Einem, Ian & Anor Collie, Ian David Stafford v Von Einem, Ian & Anor [1984] FCA 152

Federal Court of Australia|1984-06-08|Before: Smithers J

Administeative law - application for review of decision of

Magistrate made in the course of a committal oroceeding -

discretionary remedy - speciai circumstenmces - applicants

, Administrative Decisions (Judicial Peview}] 2ct 19377 ss.7 and

' Magistrates (Summary Proceedincs) Act 1975 ss.56(1}(b) and t 59(7). Crimes Act 1914 (Cwth.) ss.86(1)(b) and B86Cie).

JOHN STPANCTS EDWAPDS v. IAN VON EINEM and ROBERT RICHARD

McDONALD (VG No. 66 of 1983) ' IAN GRANT v. TAN VON EINEM and ROBERT RICHART McDONALD (VG Mo.

TAN DAVID STAFFORD COLLIE -7. TAN VON EINEM and ROPEPT RICHARD

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Soee

Each of the applicants' applications 'be dismissed.

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-Bettzeen: - IAN GRANT

(Applicant) And: IAN VON EINEM and

Before the Court are proceedings brought separately by

.John Francis Edwards (Edwards), Tan Grant (Grant), and Ian David Staffora Collie (Collie) (aiternativeiy referred to as

the applicants) against the respondents pursuant to the

provisions of s.7 of the Administrative Fecisions (Judicial

In each of the applications of Edwards and Grant relief is sought under s.i6 of .the ADJR Act, inter alia, by way of an order quashing ocr setting aside the decisions that there was sutficient evidence to put the applicants om trial, and that there was a strong or probable wpresumpticn of quilt on the part of the applicants and that the arriicants should he

cautioned pursuant to s.56(1)(b) of the Mearistrates (Summary

Proceedinas)} Act 1975 ° (the Act) in respect of the

charges brought against them. In the appiication of Collie

the relief ultimately sought was a declaraction as to the law

The relief sought is discretionary. Although a Magistrate's decision to cautidn an accused person under $.56(1) of the Act is a decision subject t5 review under the ADJR Act. it is 'to be recognized that such a review is an

aunterference with the administration of the criminal law.

This is an important consideration in th exercise of the

Court's discretion. It was said in Lamb w. Moss and Another

(1983) 49 ALR 533 at p. 564 that the power to make an order of review under the Act in respect of cammittal proceedings shouid be exercised only in most exceptiona&= cases, especially in respect of a decisicn in the course a= the proceedings. Additional considerations might intrude at the final stage,

for example in respect of committal for trial or commitment to

considerations.- The first is the allegatiom of the applicants

that the first respondent (the Magistrate being concerned ta consider whether the conduct alleged against the applicants

Magistrate. properly directing himself, the opinion either that there was sufficient evidence to put the applicants on triai or that there was a strong or probable Presumption of quilt of the applicants. The third is that this case, having taken eight weeks before the Magistrate, is expected to occupy between three and six months and perhaps

It appeared to me that if the first or particularly the second of these allegations were made out a case for the exercise of the Court's discretion might arise. I entertained

this application for review having in mind that the magnitude

of the proceedings and the interests of both the Crown and the

accused justify consideration of submissions which if valid

On 4 October, 1982 an Information For An Offence was

laid and sworn by the second respondent Saainst Edwards in

(a) that the said John Francis Edwards a= Melbourne, Perth,

Sydney and other places, Between IL July 1979 and 18 R

March 1982 did conspire with Steven Jonn Baker, William

"ring about 4 state of aifairs 1 which "Rebin Hacad would be no robber" (See R. v. Greenstein). This objection misunderstands the nature of the sudjective test. It is no defence for aman to sav, "Zi knew that what i was coing is generally regarded as dishonest; but I do not regard it as dishonest myselz. Therefore I am not quilty." What he is, however, entitled to sav is, "I did not know that anvbody would vegard what I was doing as dishonest." He may not be believeé:; just as he May not be believed 1f he sets up "a claim of right" under s.2(1) of the 1968 Act, or asserts that he believe in the truth of a Misreprasentation under 5.15 of the 21968 Act. But if he is believed, or raises a reai doubt about the matter, the jury cannot be sure that he was dishcnest.

In determining whether the prosecution has proved that the defendant was acting dishaomestly, a jury must first cof all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. Tf it was not dishonest by those standards, that is the end of the matter and the prosecution fails. If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing wes by those standarés dishonest. In most cases where the

' standards, there will be no doubt about it. It will be obvious that the defendant himself knew

for a ordinary people consider to be dishonest, even if

On this basis there is in my view nao fault to be found

Commonwealth under s.86{1)(e) of the Crimes Act 1914,

. The stated reasons of the Magistrate were also attecked

circumstances in which it would be proper Zor him to conclude

or probable presumption of guilt appears to be established by

circumstances are not completely explained or cleared up by

Considerable emphasis was placed on the final adjectival

maqgistrate's view was that the necessary strong or probable

accused, no matter how waveringly, unless the implication of the accused arising therefrom was completely neqatived by evidence of, or called by, the accused. It appears to me,

however, that the Magistrate is to be understood as saying that, where the question whether there is a strong or probable presumption of quilt arises for decision, an affirmative answer may be given where the evidence of the prosecution or the circumstances point to the commission of a crime by the accused unless the implication of the accusad in the crime

arising from such evidence or circumstances is explained away

by evidence of, or called by, the accused. The word

"completely" in the passage under discussion is inaptly inciuded. The uitimate question would not be whether the

evidence for the accused completeiy rebutted the imvlication

of the accused arising from the evidence of the Crow, but

whether it so weakened that implication that it could no , longer be said to be sufficient either to yequire that the accused be put upon his trial or to support the existence of a

! strong of probable presumption of quilt. Reading the reasons

as a whole I am not persuaded that the Magistrate did not so

It is to be observed that it is only where in his opinion the evidence is sufficient to put the accused person upon his trial for the relevant offence or, in his opinion the evidence given for the prosecution raises a strong or probable

presumption of guilt of the accused person, that it is the

duty of the Magistrate under s.56(1)(b) af the Act to caution the accused. And where the question arises under s.59(7), after evidence has been- given by the accused or his witnesses,

if any, whether the accused shall be directed to be tried for

the offence in question, the duty so ta direct arises cniy

where the Magi ate holds the opinion either that the

trial or raises a strong or probable prestmption of guilt.

The word ""presunotion" in these context= may introduce a

perplexity. Wosat is involved is a process of drawing inferences. A -veesumption is something. that does not necessarily proceed by inference or even by legic. However,

an this context a relevant presumption only exists where

In each situation the opinion referrea to is of course

that formed on 'the - whole .of the evidence. From the

observations of Lord Reid in Armah v. The Government of Ghana

£19683 3C 152 at 229, it would appear that hefore the Magistrate would contemplate cautioning or committing an accused by veterence to an opinion that the evidence was sufficient to put the accused on_his trial he would weigh it to see whether in his opinion twelve reascnable men and women could ali progeriy think it sufficiently ccmvincing to satisfy them beyond reasonable doubt of the guilt of the accused or, alternatively. whether a case had been magd= out fit for later

consideration by a jury. The expression "fit for the v ¥ is

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consideration of a jury" would appear to mean fit to be considered by a jury on the question of whether on the evidence it is satisfied beyond reasonable doubt of the guilt of the accused. But it would seem that on this latter test also, the opinion is one to be formed by the Magistrate on the evidence and would normally be an opinion to the effect that the evidence could be thought by a jury to be adequate to

support a conviction. But when one considers action to caution

or commit upon an opinion of the Magistrate that the evidence raises a strong or probable presumption of quilt, what is involved is that the Magistrate, considering and weighing all

the evidence fox himself, should be of the ovinion that there

is.a& stroma o¢ probable presumption cf guiit. In that case,

as Lord Reid savs at p.229 he must "decide whether he, not a

hypothetical fury, thinks it probahle chat the accused committed the offence. and "probable" dces not mean certain or nearly _cerfain, and on the--other hand it does not mean a mere possibility." See also Lord Pearce in the same case at

Thus there is to be a warning at a committal where the

evidence is such that the Magistrate is af the opinion that a

jury could be satisfied of quilt beyond reasonable doubt, or the Magistrates himseif is of the opinion that there is a strong or prokable presumption arising from the evidence that

observations that the Magistrate had to form his opinion on

the evidence and I have to consider whether there was evidence

The statement of the Magistrate that there is a strong

or probable presumption of guiit where the evidence or circumstances "point to" the commission of the offence by the accused was criticised and does raise a question whether the

Magistrate had in mind evidence of implication of the accused

sufficient to support - strong or'probable presumption that the accused was quilty or that the evicence was sufficient to put the accused on trial as exnlained by Lord Reid, or something iess. I think, however, reading his reasons as a whole that

he is to be understcod as referring to evidence sufficient to

support both of the opinions ref ed to. He pointed cut that

the accused should be discharged where mo reasonable jury

could convict on the evidence, and that it was not for him to

determine guilt or innocence but. rather, acting on the principles to which he referred, to decide at the then current tage whether there was sufficient evidence to place the

accused on trial for each of the offences. He then devoted

his attention to the elements of the offences: was there an agreement? Was it for an unlawful purpcese? Did the accused play a part in the relevant agreement? Was there dishonesty? After discussing the tests by reference to which a finding of dishonesty might be made, he stated that he had come to the conclusion that applying any of the tests to which he referred

there was a strong or probable presumption that the element of

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The reasoning of the Magistrate is challenged also on the ground that in discussing the relevance of reliance on legal opinions given by Mr. Forsyth Q.C. and Messrs Stone, dames & Co., solicitors of Perth W.A., he stated, "I am not

exactly sure how this argument is put, or 'how such reliance

would provide a difference.". This is a rather puzzlina

statement because reliance on legai opinions would be relevant

to the existence of dishonesty in the mind of the accused. According to circumstarices a learned opinicn that & cértain course was ilawrul could be significantiy material in an assessment of the credibility of a statement by an accused that he really believed that kis course of action was, according to the tests mentioned above, an honest one.

If the Magistrate is to be understecd to say that in forming his cpinion he considered that the existence of a c@levant legal opinion was of no significance that would be an

error. However, the Magistrate did look et the matter on the basis that the opinions might he taken imto account on the issue of dishonesty. He took the view that on the issue of the accused's belief that his conduct was not dishonest

because of the contents of relevant teqal opinions his

statement to that effect would have to ke examined in the

light of the actual opinion given. - In this respect the

knowledge and experience of the accused in the area of sales

tax liability and business generally, and the likelihood that the person might seek further assurances as to the lawfulness

of the actual conduct to be engaged in tmder the agreement

were relevant considerations. In the light of the foregoing I

am not satisfied that the Magistrate misdirected himself in

The © general situation disclosed sadainst all the applicants is that a Mr. Baker haé conceived a scheme which would operate in a situation where a wholesaler desired to sell qoods by wholesale to a retailar. Under the scheme the ownership of those goods was to be transferssi to the retailer through a series of intermediate transactions. The goods were to be sold wholesale by the wholesaler ta 2 company called company A and dealt with in dealings between company A and two other companies, called Band C, and as between B and C, in such a way that C would ultimately be ensblec to and would sell those qoods to the retailer. It agcsars that in that series of transactions sales tax. was not, according to law, payable by the wholesaler or the retailer. The wholesaler was able to sell to the retailer at a considerasle discount and at the same time enjoy a reduction of his outqcings. For this he

was to remunerate the author and manager of the scheme.

It appears that Baker, the author cf the scheme, was

secretive about the nature of the dealinces between companies A, 8B, or C. The theory was that those brought into the operation of the scheme, the promoters, could rely on the . assertion of Baker that such was the nature of the dealings that the legal result was that sales tax was mot payable by the wholesaler or the retailer and that no iiability for sales tax attached to companies A, B or C, Baker sought and obtained learned leaal advice. This advice was to the effect that under the scheme the wholesaler and the retailer incurred no liability for sales tax. Advice as ta whether A, B or Cc

Might be liable was not | sought oc given. However, the advice by Stone James & Co., did contain a statement "It is our view that none of you A, 2B, C, wholesaler and vetaizter is involved in a fraud."

It is not clear how far Edwards was aware of the nature of the transactions between A, B and C. He did know, however,

that the scheme did involve sales by a wholesaler to A and

dealings between A, B and C and ultimately a sale by wholesals

1 by C to the retailer. As secretary of a company called Lowanna Securities Pty. Ltd. he communicated with potential

Further to our telephone conversations, I enclose a copy of the Proposal.

A een eae a re ee nee en - - . od ee - _ = re ome me op

Implementation of the Proposal involves the position of A, Band C, (referred to in the Qpinion contained in the proposal enclosed), being occupied by three Victorian incorporated companies, ownership and control of which is vested in a person living in Perth, Western

The marketing of the Proposal in-Melbourne is being handled for and on behalf of the Perth interests by Lowanna Securities Ptr. Ltd. of the above address and Corporate Structures Pty. Ltd., or Level 9, City Mutual Building, 459 Collins Street, Melbourne.

We are assured by our principal, (Who will be named provided you decide to procesd with the Proposal), that together the two companies mentioned above are solelv rescoensible for implementing the Proposal in the Fastern States.

You may rest assured that marketang or the Proposai will proceed solely on the hasis of personal references and introductions through

Lowanna Securities Pty. Ltd. and Corporate Structures Pty. Ltd.

That none of the companies A, Bor C are collapsed.

That there is no reduction of price between A, Bore C.

That either our Principal or A, B and C will be responsible for any leqali costs in defending "Wholesaler" or "Retailer" against actions or assessments or collection of sales tax arising from transactions entered into by "Wholesaler", "Retailer", A, B or C.

4, Qur Principal undertakes to "Wholesaler" and "Retailer" to pay any sales tax assessed to A, Bor C provided that the assessment is upheld upon final appeal and previded also that A, B or C do not pay the amount assessed. .

That the invoice from C to "Retailer" will bear the words "Price includes any sales tax

I look forward to discussing the Proposal with you at a later date."

He knew that sales tax was not to be paid by any party

involved in the scheme. It appears also that he had access to

an opinion given by Mr. Forsyth 0.C. in which it was said:-

analyse the dealings betwee A, B and C nor the question of whether any of them is liable to vay sales tax. And indeed I have not reached anv concluded view upon that question. it is enough for present purposes to make the very worst assumption, namely- that A and/or B and/or C does become iiable to pay sales tax, and that the liability is concealed, or at-least withheld, from the sales tax authorities by the failure to make

any return (as required by éach of the Ass ssment Acts, @.9. section 7 of the Sales Tax Assessment Act (No.3)). I must stress that this is merely an

assumption for the purposes of considering the position of Retailer and Wholesaler in the worst possible licht, It is not to say that I know or have reason to suspect that this is what will actually occur. But if that is in fact what does happen, nonetheless in my opin her Retarler nog Whelesaler incurs any ili eee In s9 far as the actions of A, B and C canscitute leqal and honest avoidance, in my opinian it is clear that no possible secondary liability could attach to Wholesaler or Retailer. ... But if one adds, to measures thought to be effective hy exploiting a "loophate" or inconsistency in the Act, or some subtle distinction ort the law, deliberate concealment or non-disclosure (in circumstances in which the law requires disclosure to be made - @.q. by waking sales tax 'returns), the avoidance ceases to be "legal avoidance" amd becomes a criminéi offence if, according to the view of the law that is finally upheid by the Court, a Liability did exist to pay sales tex and/or make the return as the case may be. Where there is concealment or misrepresentation ef that kind, there will 'usually be a criminal cffence. That goes beyond "leqal avoidance", ..."

sales tax would not be paid by wholesaler or retailer or by

companies A, B or C, that C would not register as a wholesaler

peescribed under s. 11 of the Sales Tax Assessment Act (No. 1) . 1930-1973 and would make no returns ef sales by it hy

wholesale to retailers under s. 7. of the Geies Tax Assessment

Bet (No. 3) 1930-1973. Edwards was to be yvemunerated hy way

of commission according to his part in business done in

It is apparent even on these facts thet, if by law sales

tax was payable by C then, by conducting the transactions in a

Manner that they would not come to the notice of the Sales Taz

Department, altnough there was a risk thak they might, sales

"tax would not be paid. In that event the scneme involved the

commission of unlawful conduct to the datriment of the Commonweaith. The justification for conducting the transactions in this wavy was that there was gmenuine acceptance of the assurance of Baker that the nature of the transactions between A, 3 and C and the wholesaler and retailer concerned were such as to absolve them all from liabiitaty for sales tax. Such conduct was therefore intrinsically immocent and would be so regarded by any reasonable man. But the view might well be taken that the "possibility" that there was an avenue of tax immunity in the Act which could be exploited by Baker's secret

formula would be likely to be questioned by any honest man

iallyv an accountant, as Edwards was. Would an honest man

Ng a ye] )) invited to enter into the schema and parcicipate in it for

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profit have wanted to know more about the scheme. What could there be in the nature of the transactions which would absolve

C, who sold by wholesale toa retailer, from liability to pay sales tax on his sales? He might have wanted to know why. while learned opinions were being sought as to the liability of whclesaler and retailer, an opinion was not sought as to the sales tax liability of A, B and C. What could be the "magic" of the nature of the transactions between A, B and C which could have the legal effect alleaqed? How could Baker's

claim to secrecy. even against those joining in the scheme, be

accepted without question? The difficulty is that it ma be thought to be bayond the wit of an ordinary professional man to contemplate a basis upon which the interposition of

intermediaries between the wholesaler and retailer would

exempt all the parties from iiability to saies tax 2 cially as it must have been clear that the transaction between C and

the retailer was pliainly a sale by a wholesalers to a retailer.

In my view it is unnecessary to proceed further to come to a conclusion that in the absence of credible evidence from

Edwards as to his real state of mind the Magistrate could well

form the opinions which he did concerning the case against

The evidence shows that Grant was introduced into the

scheme by Collie. He became the administrative and executive manager of the scheme in Melbourne. He was at the material times secretary of companies occupying the positions in the scheme of A, B and C. He handied the wreceipt from the yetailer of the purchase price for the goods scld to it. He

took out of the sum so received 25%, being Raker's commission,

kept 10% of that for his own fees, and divided the balance

between the promoters.. He controlled the banking flowing fron money transactions arising from the the purchese by C of a one half interest in the ownership of the qoods from A and the

other half interest from B, the purchase by 3 from A of one

B& original wholesaler. That distribution of funmas left A, B and C without money. Gn completion of each distributicn none of them could have said any amount due by any of them for sales tax. The intention of all parties was, to Geant's knowledge, that no sales tax shoulé be paid by anyhoa@;. It is also inherent in the scheme that all the transactions were artificial, in the sense that none of A, B og C entered into the transaction for any commercial reason. 'They were in no sense traders for commercial reward. Ther were mere legal entities interposed between the wholesaler and the retailer to enter into the transactions for the purrecs of avoiding payment of sales tax otherwise payable on che saie by the wholesaler to the retailer on the simple transaction between

them. The relevant documents were created in Perth and

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Unconnected transactions were conceived of and documented as all taking place at the one time. The artificiality of the transactions was inevitably apparent to any person implementing the scheme. It was not intended that A, BorC should be redistered as wholesaiers under the Sales Taz Assessment Acts or that they should submit any returns under those Acts. - It was said that these features were all consistent with honesty and there were na sign posts in the evidence suagesting that Grant did not honestly believe that Sales tax was not payable by the entities participating in the scheme. I think there were sign posts autside the general nature of the scheme. But- for the purposes of the issues before me I de not think it necessary to examine that matter. The current critical issue before me is whether with relation to the charge against Grant under s.86(1){e) of the Act there was evidence ci dishonesty upon which the Magistrate might

form the opinions which he did. I do not doubt that there

Of course, if Grant, or' indeed any of the applicants, give evidence - that they believed their participation in the scheme would be redarded as honest by right minded people and if that evidence is accepted, or if the effect of the evidence

is 'such that on consideration of the whole of it the

Magistrate ceases to hold either of the opinions expressed by

him in his statement of reasons for decision then, no doubt,

In the proceedings before the Magistrate the statement of the reasons of the Magistrate for issuing the caution pursuant to s.56(1)(b) of the Act were stated in the presence of the applicant Collie. Collie then gave lengthy evidence.

No decision has yet been made by the Magistrate as toa whether

this applicant should_ be directed to stand trial or . be

In these circumstances Collie can hardly claim relief in respect of the Magistrate's decision. He has accepted it and entered upon a4 course of action cn the basis that the decision that was made should stand. Thus he has advanced the proceedings before the Magistrate to a stage at which a duty

has arisen in the Maqistrate '%o make a decision under s.59(7)

of the Act. The application of this applicant must therefore

However, no objection was taken to Mr. Cummins on behalf

of Collie making submissions as to the law. Mr. Cummins

contended that it was to be gathered from the Magistrate's statement of reasons that he had asked himself whether there was anagreement between the promoters of the scheme that sales tax be not paid and had answered that question in the

affirmative. He said that the Magistrate had omitted to

observe that the aqreement proved might have been to take steps to bring about a situation in which sales tax would not

be pavable. Pe contended that an agreement of this latter

At a glance

Court

Decision date

Before

Source

Judgment (215 paragraphs)

sales tax would not be paid by wholesaler or retailer or by

Cases Cited (1)

Cited By (1)