(No 2) [1991] HCA 2; 171 CLR 592
Hammond v The Commonwealth of Australia [1982] HCA 42; 152 CLR 188
Lee v New South Wales Crime Commission [2013] HCA 39; 251 CLR 196
Lee v R [2014] HCA 20; 88 ALJR 65
Mann v Carnell [1999] HCA 66; 201 CLR 1
Nix v Williams 467 US 431 (1984)
Osland v Secretary Department of Justice [2008] HCA 37; 234 CLR 275
R v Cheikho [2008] NSWCCA 191; 75 NSWLR 323
R v Edelsten (1989) 18 NSWLR 213
R v Seller; R v McCarthy [2013] NSWCCA 42
R v Seller; R v McCarthy (No 3) [2014] NSWSC 1290
R v Seller; R v McCarthy (No 4) [2014] NSWSC 1369
R v Steffan (1993) 30 NSWLR 633
Spincode Pty Ltd v Look Software Pty Ltd [2001] VSCA 248; 4 VR 501
Standard Chartered Bank of Australia Ltd v Antico (1993) 36 NSWLR 87
Wentworth v Lloyd (1864) 10 HLC 589
Whitehorn v The Queen [1983] HCA 42; 152 CLR 657
X7 v Australian Crime Commission [2013] HCA 29; 248 CLR 92
X7 v R [2014] NSWCCA 273
Category: Principal judgment
Parties: Regina (Applicant)
Ross Edward Seller (First Respondent)
Patrick David McCarthy (Second Respondent)
Representation: Counsel:
D J Fagan SC / P R McGuire (Applicant)
D K L Raphael (First Respondent)
P Strickland SC / P Bruckner (Second Respondent)
[2]
Solicitors:
Commonwealth Director of Public Prosecutions (Applicant)
Gibson Lawyers (First Respondent)
Hardin Lawyers (Second Respondent)
File Number(s): 2009/00237509; 2009/00237556
Decision under appeal Court or tribunal: Supreme Court
Jurisdiction: Common Law
Citation: [2014] NSWSC 1290; [2014] NSWSC 1369
Date of Decision: 22 August 2014
Before: Button J
File Number(s): 2009/237556; 2009/237509
[3]
[This headnote is not to be read as part of the judgment]
Following an audit by the Australian Taxation Office (ATO), the Australian Crime Commission (ACC) commenced an investigation into certain tax minimisation schemes promoted by the respondents, Mr Ross Edward Seller and Mr Patrick David McCarthy, from 1999-2003. During the course of the investigation, between May and September 2007, the ACC conducted compulsory examinations of each of the respondents on matters relevant to the offences for which they were ultimately charged, pursuant to the Australian Crime Commission Act 2002 (Cth) (the Act).
Mr Quincy Tang, an officer of the ATO who had been seconded to the ACC, was one of the principal investigators of the schemes. His role was to provide financial analysis for the ACC in respect of the investigation into the respondents. He was present on some occasions during the examinations of Mr Seller and Mr McCarthy.
At the outset of their examinations, both respondents claimed privilege against self-incrimination pursuant to s 30(4) of the Act. At the conclusion of Mr McCarthy's examinations, directions were made, pursuant to s 25A of the Act, restricting distribution of the transcript to prosecution authorities. At the conclusion of Mr Seller's examinations, directions were made permitting publication of the transcript to prosecution authorities on the condition that it not be stored electronically. Contrary to these directions, on 18 December 2007, the examination transcripts were disseminated to the Commonwealth Director of Public Prosecutions (CDPP) and stored electronically. Subsequently, the respondents were charged with conspiracy to dishonestly influence the Commissioner of Taxation. The CDPP sought to allow Mr Tang to give evidence in the proceedings against the respondents.
At trial, both respondents sought orders: prohibiting Mr Tang from giving evidence; prohibiting any person who had read the compulsorily acquired material from giving evidence or being engaged by the CDPP; requiring the CDPP to identify all persons who had access to the compulsorily acquired material who it proposed to call as witnesses or who had assisted the CDPP. The respondents sought a temporary stay pending the appointment of a fresh prosecution team, arguing that Mr Tang may have played a role in the formulation of the charges against the respondents and the prosecution team may have unknowingly been provided with material derived from the examinations. The respondents also sought a permanent stay on grounds that the purpose of the examinations, to lock the respondents into a story, was unlawful and the accusatorial process had been fundamentally altered by the dissemination.
The CDPP argued that Mr Tang's evidence would do no more than summarise accounts and other transactional documents obtained independently of the examination. Further, it argued that as the current prosecution team had expressly refrained from reading the compulsorily acquired material and had provided an assurance that they had not been provided with the material, they should not be prohibited from engagement in the proceedings.
The primary judge held that the fundamental right of the respondents to a fair trial called for the exclusion of Mr Tang's evidence, the current prosecution team should not be removed and a permanent stay should not be granted.
The issues on appeal were: first, whether the Crown was competent to bring an appeal; second, whether the primary judge erred in prohibiting Mr Tang from giving evidence at trial; third, whether the primary judge erred in evaluating the evidence and failing to require the Crown to produce certain material; fourth, whether the primary judge erred in upholding the Crown's claim for legal professional privilege in respect of certain documents; fifth, whether the primary judge erred in failing to grant a temporary or permanent stay.
The Court held (Bathurst CJ, Bellew J agreeing, Fullerton J writing separately), dismissing the appeal:
Issue 1: Competency
Section 5F(2) of the Criminal Appeal Act 1912 (NSW) permits the CDPP to appeal against an interlocutory order, subject to the limitation in s 5F(3A) that an appeal can only be brought against a decision on the admissibility of evidence if the decision eliminates or substantially weakens the prosecution's case. Whether an order falls within this limitation is a question of substance not form: [78], [82] (Bathurst CJ); [228] (Fullerton J); [243] (Bellew J).
R v Cheikho [2008] NSWCCA 191; 75 NSWLR 323 applied.
As a matter of substance, an order prohibiting a person from giving evidence goes beyond a ruling on admissibility. Thus, the order prohibiting Mr Tang from giving evidence was an interlocutory order and was not a ruling or decision on the admissibility of evidence. In these circumstances, the appeal was competent: [81]-[84] (Bathurst CJ); [228] (Fullerton J); [243] (Bellew J).
R v Cheikho [2008] NSWCCA 191; 75 NSWLR 323 applied.
Issue 2: The prohibition of Mr Tang from giving evidence
The fundamental tenet of a fair trial is that it is for the prosecution to prove the guilt of an accused. Any risk of upsetting the balance between the power of the State and the accused, by the dissemination of compulsorily acquired material, is open to be remedied by discretionary orders prohibiting a witness who has had access to the compulsorily acquired material of an accused from giving evidence at the accused's trial: [226] (Bathurst CJ); [230] (Fullerton J); [243] (Bellew J).
Lee v R [2014] HCA 20; 88 ALJR 65 applied.
The fact that a proposed witness for the prosecution was present during the compulsory examination of an accused or had read the transcript of such an examination may not, in all cases, alter the trial in a fundamental respect. The question of whether such a witness must be excluded from giving evidence in the trial of the accused depends on the material the witness has been exposed to and the evidence the witness proposes to give, in the context of the issues in dispute at trial in an adversarial setting where the Crown has the obligation of proving the guilt of an accused. If in fact the evidence proposed to be given would alter the trial process in the fundamental sense described in X7 and Lee (2014), that witness may be prohibited from giving evidence at trial: [109]-[110] (Bathurst CJ); [229] (Fullerton J); [243] (Bellew J).
X7 v Australian Crime Commission [2013] HCA 29; 248 CLR 92; Lee v R [2014] HCA 20; 88 ALJR 65 considered.
If Mr Tang were to adduce the evidence that he proposed to give, where he was privy to the examinations and compulsorily acquired material of the respondents, this would alter the accusatorial process inherent in a criminal trial in the fundamental sense described in X7 and Lee (2014). This conclusion was based on the findings that: Mr Tang's evidence would be the vehicle through which a good deal of the prosecution's documentary case would be led; he was assisted in his task by having access to the compulsorily acquired material; and the respondents entitlement to present or develop their defence through cross-examination of any Crown witness may have been hindered by the cross-examiner being forced to exercise constraint so that his or her questions did not trespass on compulsorily acquired information or risk the exposure of that material. This conclusion was reached notwithstanding that Mr Tang's proposed evidence did not depend on, and was not substantially derived from, the compulsorily acquired material or that the CDPP was unaware of the material to which Mr Tang had access: [115]-[120], [122]-[123] (Bathurst CJ); [232]-[234] (Fullerton J); [243] (Bellew J).
X7 v Australian Crime Commission [2013] HCA 29; 248 CLR 92; Lee v R [2014] HCA 20; 88 ALJR 65 considered.
Issue 3: The evaluation of evidence and production of documents
[4]
Judgment
BATHURST CJ: Each of Ross Edward Seller (Mr Seller) and Patrick David McCarthy (Mr McCarthy) (the respondents) were charged on indictment that between about 24 May 2001 and about 30 December 2002 they conspired with each other and various other persons with the intention of dishonestly influencing a Commonwealth public official, the Commissioner of Taxation, in the exercise of his duties as a public official contrary to s 135.4(7) of the Criminal Code Act 1995 (Cth). The indictment was presented on 14 March 2012, although the charges were initially brought on 22 September 2009.
The conspiracy was said to arise in respect of an audit by the Australian Taxation Office (ATO) of certain tax minimisation schemes promoted by the respondents from 1999-2003. In the outline of the Crown case, contained in its submissions in response to the temporary stay application, the conspiracy has been summarised in the following terms:
"2. Ross Edward Seller and Patrick David McCarthy together with Phillip Egglishaw and Philip de Figueiredo entered into an agreement to make false representations to officers of the ATO with the intention of dishonestly influencing them to approve and accept deductions claimed in the 1999, 2000 and 2001 income tax returns of taxpayers who had participated in whisky schemes in these years. The representations were to convey false and misleading information regarding:
(i) the association of the accused with and the relationship between the entities involved in the schemes;
(ii) Chambers Finance Limited and
(iii) Grant McKenzie Hong Kong Limited."
Following the audit, the Australian Crime Commission (the ACC) conducted an investigation into certain aspects of the schemes and the participation by the respondents in them. The examinations were conducted pursuant to Div 2 of Pt II of the Australian Crime Commission Act 2002 (Cth) (the Act).
Mr McCarthy was examined by the ACC for four days from 14 May 2007 to 17 May 2007, on 30 July 2007 and on 12 and 13 September 2007. Mr Seller was summoned to be examined on 31 July 2007. The examination was adjourned without any questions being asked until 13 and 14 September 2007, when he was examined. The summons served on each of them required them to give evidence on matters relevant to the offences for which they were ultimately charged.
In 2005, Mr Quincy Tang (Mr Tang), an officer of the Australian Tax Office (ATO), was seconded to the ACC. He was present on some occasions during the examinations of Mr McCarthy and Mr Seller and on other occasions observed the examinations from a separate room. His role was to provide financial analysis for the ACC in respect of the investigation into Mr McCarthy and Mr Seller. Mr Tang left the ACC and returned to the ATO in 2009.
At the outset of his examination, Mr McCarthy claimed privilege against self-incrimination in the manner provided for in s 30(4) of the Act. At the conclusion of his examination, on 17 May 2007, the examiner gave a direction pursuant to s 25A(9) of the Act. That direction restricted distribution of the transcript of Mr McCarthy's evidence and certain documents produced by him to a number of persons and bodies, including prosecution authorities. However, on the concluding day of his examination, 13 September 2007, a further direction was made permitting distribution only to certain members of staff of the ACC and to the ATO for the purpose of their functions arising from the investigation. In these circumstances, there was, at least from that time to 22 August 2008, no authority to distribute the transcript of Mr McCarthy's evidence to the Commonwealth Director of Public Prosecutions (CDPP).
There had been no distribution of any part of the evidence given by Mr McCarthy prior to the direction given by the examiner at the conclusion of the examination on 13 September 2007. However, on 18 December 2007, material was provided by the ACC to the CDPP by way of a CD which included transcripts of the examinations of Mr McCarthy and Mr Seller. The distribution of Mr McCarthy's evidence was contrary to the direction made by the examiner at the conclusion of the examination on 13 September 2007.
On 22 August 2008, a delegate of the Chief Executive Officer of the ACC (CEO) varied the direction made by the examiner in relation to the evidence of Mr McCarthy. The variation permitted the distribution of the evidence given by him in May 2007 to, amongst others, prosecution authorities. The variation was made under the power conferred in s 25A(10) of the Act. The variation did not cover the evidence given by Mr McCarthy in July or September 2007.
On 7 December 2009, the transcripts of the examinations of Mr McCarthy and Mr Seller were made available to the CDPP in MS Word form.
On 6 March 2012, another delegate of the CEO made the final variation to the previous directions. This variation occurred after the arraignment of Mr McCarthy and, as stated above, after the information had been supplied to the CDPP. The varied direction allowed distribution to, amongst others, the prosecuting authorities and their lawyers for use in any criminal proceedings brought against Mr McCarthy. The varied direction stated that the restriction on the admissibility of the material in court proceedings contained in s 30(5) of the Act applied, but otherwise did not limit its use.
Although the examination of Mr Seller was scheduled to commence on 31 July 2007, no evidence in fact was taken from him until 13 September 2007. Mr Seller claimed privilege against self-incrimination in the manner prescribed by s 30(4) of the Act. At the conclusion of the examination on 14 September 2007, the examiner made a direction under s 25A(9) of the Act that the evidence of Mr Seller and the documents produced by him not be distributed except to the CEO and staff of the examination. The direction provided that it may be varied by the CEO, but that such variation must not prejudice the safety or reputation of a person or the fair trial of a person who has been, or may be, charged with an offence. The direction was varied on 7 December 2007, to permit publication to:
" ... any prosecution authority, the staff of such an authority, and counsel appointed by such an authority, to provide advice and in relation to the prosecution of offences for which they are responsible against Ross Seller, Patrick McCarthy, or Phillip Egglishaw."
The power relied on to make the variation on 7 December 2007 was a power conferred on the CEO by s 25A(10) of the Act. The authorisation to disseminate was on condition that the disseminated material be securely stored, not uploaded to any electronic storage system and not further published. Contrary to this direction, the CDPP stored the transcripts electronically on a computer drive within its system.
As I indicated, the transcript of Mr Seller's evidence was provided to the CDPP on 18 December 2007. The decision to supply the information to the CDPP was made relying on the powers conferred on the CEO by s 59(7) of the Act. The record of the decision created by the ACC, and signed by the delegate of the CEO, stated that the delegate was satisfied that the information was relevant to the activities of the CDPP.
On 17 August 2012, Garling J permanently stayed the proceedings on the indictment on the basis that the dissemination by the ACC to prosecutorial authorities of the transcripts of evidence given by the respondents at their compulsory examinations compromised their right to a fair trial.
On 1 March 2013, this Court allowed an appeal from the order granting a permanent stay: R v Seller; R v McCarthy [2013] NSWCCA 42 (first appeal). The High Court refused special leave to appeal.
It should be noted that, notwithstanding its conclusion that a stay should not be granted, the Court agreed with Garling J that as dissemination of material might prejudice a fair trial, the dissemination should not have taken place, particularly having regard to the provisions of s 25A(9) of the Act: first appeal at [108].
The proceedings were assigned to Button J (the primary judge) who, as part of the pre-trial procedures, heard motions brought by the respondents. The motion filed on behalf of Mr Seller sought the following orders:
"(1) An order that Quincy Tang be prohibited from giving evidence in these proceedings in accordance with his three statements dated 3 November 2009 and his statement dated 30 June 2010.
(2) An order that all persons (including legal practitioners) who have read or listened to the Accusatorial Process Material or Indirect Accusatorial Process Material be prohibited from (a) giving evidence in these proceedings; (b) assisting the Commonwealth DPP in the preparation and conduct of these proceedings; (c) being retained or engaged by the Commonwealth DPP in the conduct of these proceedings.
(3) The CDPP identify:
(a) the name of all persons who have had access to the Accusatorial Process Material or Indirect Accusatorial Process Material whom the Crown proposes to call as witnesses or who have assisted;
(b) in the preparation and conduct of these proceedings [sic];
(c) what Accusatorial Process Material or Indirect Accusatorial Process Material those person(s) have had access to;
(d) when those person(s) have had access to the Accusatorial Process Material or Indirect Accusatorial Process Material.
(4) An Order that the ACC Accusatorial Process Material and Indirect Accusatorial Process Material be returned to the Australian Crime Commission.
…
(6) An order temporarily staying these proceedings pending:
(a) The CDPP's compliance with paragraph 3 of this Notice of Motion;
(b) The engagement of other counsel and CDPP personnel who have not read or listened to the Accusatorial Process Material or Indirect Accusatorial Process Material; and
(c) The filing and serving of a Crown case statement (howsoever called) and particulars of the charge which have not been derived from Accusatorial Process Material or Indirect Accusatorial Process Material.
(7) Such other orders as the Court deems fit.
(8) Any proceedings on the indictment presented on 14 March 2012 against Ross Seller be stayed."
Mr McCarthy filed a motion in the same terms.
The expressions "Accusatorial Process Material" and "Indirect Accusatorial Process Material" were defined in the motions in the following terms:
"'Accusatorial Process Material' means transcripts, recordings or notes of any officer of the Commonwealth Director of Public Prosecutions (CDPP), Australian Crime Commission (ACC) in respect of compulsory examinations of either accused at the ACC and documents and other materials compulsorily produced by either accused to the ACC.
'Indirect Accusatorial Process Material' means Material obtained indirectly by the ACC or the CDPP from use of the Accusatorial Process Material."
The primary judge made an order in terms of par 1 of the motions, but declined to make the other orders sought. The CDPP appealed against the order made by the primary judge pursuant to s 5F(2) of the Criminal Appeal Act 1912 (NSW). The respondents sought leave to appeal pursuant to s 5F(3) of that Act against the refusal by the primary judge to make the orders sought in pars 2, 3, 4, 6 and 8 in the notices of motion.
[5]
The relevant legislation
To understand the judgment of the primary judge, the issues raised on the appeal and the submissions of the parties, it is necessary to have regard to those provisions of the Act which empower the ACC to conduct examinations and confer certain protections on examinees.
Section 7A of the Act sets out the functions of the ACC. Of particular relevance for present purposes are s 7A(a), (b) and (c), which provide that the ACC has the following functions:
"7A(a) to collect, correlate, analyse and disseminate criminal information and intelligence and to maintain a national database of that information and intelligence;
(b) to undertake, when authorised by the Board, intelligence operations;
(c) to investigate, when authorised by the Board, matters relating to federally relevant criminal activity."
Division 1A of Pt II of the Act deals with the performance of functions and exercise of powers by the ACC. Section 12(1) provides as follows:
"12(1) Where the ACC, in carrying out an ACC operation/investigation, obtains evidence of an offence against a law of the Commonwealth or of a State or Territory, being evidence that would be admissible in a prosecution for the offence, the CEO must assemble the evidence and give it to:
(a) the Attorney-General of the Commonwealth or the State, as the case requires; or
(b) the relevant law enforcement agency; or
(c) any person or authority (other than a law enforcement agency) who is authorised by or under a law of the Commonwealth or of the State or Territory to prosecute the offence."
Section 25A of the Act deals with the conduct of examination. Of particular relevance are s 25A(3), (9)-(11) which provide as follows:
"25A(3) An examination before an examiner must be held in private and the examiner may give directions as to the persons who may be present during the examination or a part of the examination.
...
(9) An examiner may direct that:
(a) any evidence given before the examiner; or
(b) the contents of any document, or a description of any thing, produced to the examiner; or
(c) any information that might enable a person who has given evidence before the examiner to be identified; or
(d) the fact that any person has given or may be about to give evidence at an examination;
must not be published, or must not be published except in such manner, and to such persons, as the examiner specifies. The examiner must give such a direction if the failure to do so might prejudice the safety or reputation of a person or prejudice the fair trial of a person who has been, or may be, charged with an offence.
(10) Subject to subsection (11), the CEO may, in writing, vary or revoke a direction under subsection (9).
(11) The CEO must not vary or revoke a direction if to do so might prejudice the safety or reputation of a person or prejudice the fair trial of a person who has been or may be charged with an offence."
Section 30 of the Act deals with the obligation to answer questions asked by an examiner. So far as relevant, it provides as follows:
"30(2) A person appearing as a witness at an examination before an examiner shall not:
(a) when required pursuant to section 28 either to take an oath or make an affirmation - refuse or fail to comply with the requirement;
(b) refuse or fail to answer a question that he or she is required to answer by the examiner; or
(c) refuse or fail to produce a document or thing that he or she was required to produce by a summons under this Act served on him or her as prescribed.
...
(4) Subsection (5) limits the use that can be made of any answers given at an examination before an examiner, or documents or things produced at an examination before an examiner. That subsection only applies if:
(a) a person appearing as a witness at an examination before an examiner:
(i) answers a question that he or she is required to answer by the examiner; or
(ii) produces a document or thing that he or she was required to produce by a summons under this Act served on him or her as prescribed; and
(b) in the case of the production of a document that is, or forms part of, a record of an existing or past business - the document sets out details of earnings received by the person in respect of his or her employment and does not set out any other information; and
(c) before answering the question or producing the document or thing, the person claims that the answer, or the production of the document or thing, might tend to incriminate the person or make the person liable to a penalty.
(5) The answer, or the document or thing, is not admissible in evidence against the person in:
(a) a criminal proceeding; or
(b) a proceeding for the imposition of a penalty;
other than:
(c) confiscation proceedings; or
(d) a proceeding in respect of:
(i) in the case of an answer - the falsity of the answer; or
(ii) in the case of the production of a document - the falsity of any statement contained in the document."
The effect of this section is that unlike its predecessor, s 30 of the National Crime Authority Act 1984 (Cth), it does not protect against derivative use of material obtained at the compulsory examination: first appeal at [14]-[17].
[6]
Factual background
Each of the parties called in aid the background leading up to the examinations and certain of the events that occurred subsequently. The CDPP did so in order to show that the evidence to be called from Mr Tang at trial would do no more than summarise accounts and other transactional documents obtained independently of the examination, in circumstances where it would not otherwise be possible to conveniently examine the evidence (Evidence Act 1995 (NSW) s 50). The respondents did so to demonstrate why the orders sought in pars 2, 3, 4 and 6 of the motions were necessary in the administration of justice and to ensure a fair trial and why, notwithstanding the earlier decision of this Court, a permanent stay was justified.
The tax minimisation schemes which formed the background of the conspiracy (the whisky schemes) may be summarised briefly. The whisky schemes involved investors entering into agreements by which whisky would be produced and sold on their behalf. The schemes involved the payment by investors of an upfront cash amount of 25% of their total investment, with the remaining 75% being financed by a corporation associated with the promoters of the schemes. The minimum total investment was $500,000, involving a minimum upfront cash payment of $125,000. Further investments in amounts of $500,000 could be made.
To give effect to the schemes, the investors entered into a management agreement with the company Australian Spirit Management Pty Ltd (Australian Spirit). By that agreement, the investors agreed to pay Australian Spirit, the manager, what was described in the agreement as the "initial cost", in consideration of Australian Spirit managing the project. The initial cost was defined as the total amount agreed to be invested by the investor concerned. In consideration of the initial cost, Australian Spirit agreed to pay for the cost of raw materials and to procure the distiller, Speyside Distiller Company Ltd (Speyside), to manage the distilled spirits and arrange for their storage and maintenance.
The agreement provided for the distilled spirit (which when matured for three years became whisky) to be pooled and sold with the whisky produced for other investors. The proceeds were to be distributed to the investors in proportion to their investment.
The initial cost was said to be payable on the date of execution of the agreement. The agreement provided that the investor would be deemed to have paid the initial cost if 25% of the initial cost (at least $125,000) was paid into a bank account nominated by Australian Spirit and a promissory note in respect of the balance, duly executed by the corporation Chambers Finance Ltd (Chambers), was provided by the investor to Australian Spirit.
The Crown case to be brought at trial is in part based on the fact that Chambers, contrary to representations made by the respondents to officers of the ATO, was not a bona fide finance company and no monies were applied by it to the cost of the production of whisky.
Australian Spirit entered into an agreement, described as a contractor agreement, with a British Virgin Islands company, Grant McKenzie Hong Kong Ltd (Grant McKenzie). Under the agreement, Grant McKenzie agreed to assume the obligations of Australian Spirit as manager under the management agreements and to enter into what was described as a co-venture agreement with Speyside. Australian Spirit agreed to pay the value of the initial cost payments, payable pursuant to each management agreement, to Grant McKenzie.
The co-venture agreement between Grant McKenzie and Speyside was entered into. By that agreement, Speyside agreed to manufacture a nominated amount of the product on behalf of Australian Spirit and keep that product separate from other products manufactured by it. Grant McKenzie agreed to pay an amount described as the co-venture money, as well as money to be applied in manufacture of the product, its storage and insurance, into a bank account held by a firm Brechin Tindil Oatts in trust for the parties to the agreement.
The loans made by Chambers to the investors were made pursuant to a letter agreement and a promissory note. The loans were to be secured by a mortgage granted by Australian Spirit or its delegate over the whisky produced by Speyside on behalf of the investors. The agreement provided that if Chambers elected to enforce its rights under the mortgage and sell the product, it would not be entitled to take personal action against the mortgagor, Australian Spirit.
The lender, Chambers, issued a promissory note in favour of Grant McKenzie, promising to pay the portion of the initial cost to be borrowed by investors under the management agreements to Grant McKenzie on the 12th anniversary of the date of the note.
The respondents referred to a number of matters which took place prior to the examination. They stated that the evidence established that in March 2005 the ACC commenced its investigation with the co-operation of the CDPP.
Mr Tang was an officer of the ATO who was seconded to the investigation in June or July 2005. It was an agreed fact before the primary judge that Mr Tang was one of the principal investigators of the whisky schemes and that his role included investigating the conduct of the respondents. It was also agreed that he was largely responsible for the compilation of the financial material which underlay an understanding of the whisky schemes.
In the period from 14 August 2006 to 17 November 2006, the ACC examined 11 witnesses in connection with the investigation into the whisky schemes. The purpose of the investigation programme appears to have been to conduct interviews with persons described in a case note of the ACC as "the outer circle", before moving to what was described as "the inner circle". The officer in charge of the investigation indicated in a case note of 23 November 2006 that she would prepare a briefing paper on the investigation and seek comment from the CDPP as to evidence that they require and draft charges that they would consider.
Thereafter, from 19 December 2006 to 23 April 2007, a further 11 witnesses were examined.
On 16 January 2007, Mr Tang prepared a document which, according to the respondents' submissions, "recorded a sequence of events to assist in establishing a dishonest course of conduct by the accused". The document set out a chronology of events and stated that this chronology assisted to establish a dishonest course of conduct by the respondents. It stated that the respondents knew that Chambers was not a bona fide arm's length finance corporation and that they undertook to draft a series of documents to present to the ATO to show that it was. Its conclusion was in the following terms:
"14 The 4 July 2004 letter itself was provided by SELLER to the ATO as evidence that Chambers was a genuine arms length finance company, operating out of a London address. The very fact that SELLER and MCCARTHY drafted the letter and its contents assists in proving the opposite, that Chambers is NOT arms length and is NOT a bona fide finance institution."
[Emphasis in original]
Senior counsel for the respondents suggested, somewhat faintly, in submissions at the hearing, that the document may have been amended subsequent to the examination of Mr Seller and Mr McCarthy. That was not put to Mr Tang in evidence and there is no evidence to suggest that it was the case.
Subsequently, on 13 April 2007, Mr Tang created a document referring to particular charges. It is not necessary to set these charges out, but it should be noted that the respondents submitted that when Mr Tang created the document, he was contemplating that the respondents could be charged with serious offences arising out of the whisky schemes. They submitted that part of his task in preparing the document was to consider various elements of the charges that it was necessary for the prosecutor to prove.
Shortly prior to the examination of Mr McCarthy, Mr Tang prepared a series of what were described in the respondents' submissions as cross-examination documents. Significantly, one document stated that Mr McCarthy and Mr Seller had fabricated five alternate versions of the whisky schemes and had been attempting to mislead and deceive the ATO. The document stated that each version could be shown to be a fabrication by documents held by the ACC. It also stated that the relevant facts showed that the 75% financing was a sham.
Following the examination of Mr McCarthy in May 2007, Ms Elizabeth Simpkin (Ms Simpkin), the case officer of the ACC in charge of the investigation at that time, prepared a briefing paper which referred to the contents of Mr McCarthy's examination and the matters on which he was to be further examined. The paper also suggested certain charges which could be laid. At the hearing, Mr Tang admitted that he "might have perused it".
The briefing paper was handed to Ms Julie Shouldice (Ms Shouldice), a lawyer employed by the DPP, at a meeting on 25 May 2007. The primary judge upheld a claim for privilege over the attendance note of Ms Shouldice.
Mr Tang uplifted a CD containing a video or oral recording of Mr McCarthy's compulsory examinations on 31 July 2007 and returned this on 7 August 2007. Mr Tang also prepared questions for the examination of Mr Seller. The questions that he prepared proposed putting documents to Mr Seller which were suggested to be inconsistent with his version of the schemes.
A meeting was held between Ms Simpkin and Ms Shouldice on 22 August 2007. At the meeting, Ms Shouldice was informed of the status of the investigation and that a brief of evidence would be prepared. Privilege was claimed over the portion of Ms Shouldice's notes that referred to the respondents and the whisky schemes.
On 4 September 2007, Mr Tang uplifted a compact disc containing MYOB files, which Mr McCarthy had produced under s 28 of the Act. In a case note prepared on that day, Mr Tang stated that key documents had been identified and placed into the chronology spreadsheet that he had prepared. At the hearing, Mr Tang admitted that access to the MYOB files enabled him to track financial transactions far more efficiently and completely than by looking at the individual bank statements of a particular company.
Mr Tang prepared cross-examination questions for the examinations of Mr McCarthy on 11 and 12 September 2007. Mr Tang attended at least part of these examinations and the compulsory examinations of Mr Seller.
After reviewing the material, Mr Tang prepared a chronology, which he stated in his evidence he used to prepare his statement in the proceedings. He also stated that he may have provided it to the CDPP, but didn't recall having done so.
On 18 December 2007, the compulsory examination transcripts of the respondents were disseminated to the CDPP, marked for the attention of Ms Shouldice.
It is unnecessary to deal in detail with the events which took place between then and January 2009, except to note that the CDPP personnel who were involved in that period were Ms Shouldice, Mr Berdj Tchakerian and, from August 2008, Mr Martin Corkery (Mr Corkery). Further, from time to time, Mr Tang accessed the transcripts and other compulsorily acquired material.
On 5 February 2009, a meeting took place between Mr Tang, Ms Simpkin, the former case officers from the CDPP and the then current case officer, Mr Corkery. At the meeting, Mr Corkery requested certain additional work be undertaken.
In the course of further preparation of the prosecution, meetings and discussions were held between ACC officers, particularly Ms Simpkin, and CDPP officers, including Mr Corkery and junior counsel which had by then been retained for the CDPP, Mr Paul McGuire (Mr McGuire). Mr McGuire continues to be retained as junior counsel for the CDPP. Also present at a number of the meetings was Ms Katrina Curry (Ms Curry) of the CDPP, who remains part of the prosecution team.
The respondents placed particular reliance on three passages in the cross-examination of Mr Tang. These passages relate to material he accessed for the purpose of preparing his draft statements and the assistance he obtained from access to the transcripts of the examination. The first related to a service agreement produced by Mr McCarthy under s 28 of the Act, which Mr Tang indicated he regarded as a critical document. The cross-examination was as follows:
"Q. Well, when you were asked to draft your statements or perform the task you were asked on 17 March 2009, you did not have any belief, did you, whether it was appropriate or not to disclose to the Commonwealth DPP officers the content of what Mr McCarthy and Mr Seller said in their compulsory examinations, correct?
A. That is correct.
Q. Nor did you have any view whether it was appropriate or not to discuss the contents of documents produced under summons by Mr McCarthy and Mr Seller, correct?
A. Correct.
Q. You knew that this agreement that I have been asking about purported to formalise any arrangement between the parties, I put it that way, that existed since July 1999, correct?
A. Yes.
Q. And you knew that if it were true, and accepting that if that were true, that would be a relevant matter in your investigation concerning the flow of funds to Eon, correct?
A. Yes.
Q. Well in those circumstances I would suggest that it would be, given the significance of that document which you admit, it is likely that you would have discussed its contents with Mr Corkery?
A. I do not ever recall discussing any of those matters with Mr Corkery.
Q. Accepting that we are now talking 2014, I am asking you to try and remember details of your discussions with a Commonwealth officer some five years earlier. Accepting that, what I am suggesting is you cannot rule out, can you, the reasonable possibility that you discussed this service agreement with Mr Corkery?
A. Yes, I would agree with that."
The second and third passages of the cross-examination related to the assistance he obtained from the transcript in preparing his draft statement:
"Q. … assuming that Mr McCarthy's position were correct …?
A. (Witness nods).
Q. Would it be the case that the loans, in effect, would need to be actually repaid?
...
Q. That being so, if that were the case, that would undermine an allegation that the promissory notes were bogus or sham, wouldn't they?
A. Yes.
Q. And, therefore, clearly his evidence about these promissory notes was highly relevant to your investigation?
A. Yes."
"Q. Yes. That service agreement and what he has said about payment to Eon in the compulsory examination has informed you about what Mr McCarthy could say at the trial about those payments?
A. Yes.
Q. I want to suggest to you that it's a reasonable possibility that the section 28 summons material, including the service agreement, including the MYOB files and the evidence that Mr McCarthy and Mr Seller gave in the compulsory examination, has assisted you in your knowledge of Mr McCarthy and Mr Seller's involvement in the whisky schemes?
A. Yes.
Q. That material - I won't repeat it all - but that material has assisted you in knowing about their explanation of how the schemes work?
A. Yes.
Q. That material has assisted you in particular knowing their explanation about the role promissory notes had to pay in the schemes?
A. Yes.
Q. That material assisted you in knowing their explanation of the status of various entities, including Grant McKenzie Hong Kong and Chambers Finance?
A. Yes.
Q. That material assisted you in knowing their explanation of their relationship between those various entities?
A. Yes.
Q. That material has assisted you in knowing the role of those entities in the whisky schemes ventures?
A. Yes.
Q. And that material has assisted you in knowing Mr McCarthy's explanation of the reason why Eon received payments from Grant McKenzie Hong Kong?
A. Yes."
It is important to note that, as the primary judge stated, no members of the current Crown legal team received or otherwise had direct access to the compulsory acquisition material. Further, no person that had access to that material had, in conference, informed any of those lawyers of the contents in any explicit sense.
[7]
The reasoning of the primary judge
The primary judge appeared to accept that particular aspects of the compulsorily acquired material did not specifically inform the statements of Mr Tang, noting that efforts to establish this "were not crowned with great success": see R v Seller; R v McCarthy (No 3) [2014] NSWSC 1290 (primary judgment) at [31]. He also accepted that most of the evidence which was proposed to be given by Mr Tang was "mechanistic and not analytical": primary judgment at [32].
Despite these findings, the primary judge came to the conclusion that "Mr Tang's understanding of the whisky schemes underpinning his proposed evidence was informed to a not insubstantial degree by his access to the compulsorily acquired material": primary judgment at [34]. He stated that Mr Tang acknowledged as much. In that context, he relied on the cross-examination to which I have referred at [56] above, whilst noting that in re-examination, Mr Tang said that he did not depend on the material.
The primary judge noted that although the whisky schemes were not the focus of the Crown case, they were an important part of it. He noted that Mr Tang was present during much of the compulsory examinations, which the primary judge described as lengthy, probing and detailed. He also noted that Mr Tang had repeatedly accessed the compulsorily acquired materials. He stated that he was satisfied that a substantial portion of that access was to analyse the whisky schemes and the respondents' role in them. He stated that Mr Tang's work extended to collating and analysing the compulsorily acquired material.
The primary judge also concluded that the compulsorily acquired MYOB files played a role in enhancing Mr Tang's understanding of the whisky schemes (that went beyond the negligible).
The primary judge ultimately concluded that although Mr Tang had a very good understanding of the schemes separate from the compulsorily acquired material, his understanding of them had been substantially enhanced by that material. He accepted that in those circumstances, it would be difficult to cross-examine Mr Tang about his analysis without the jury being made aware of that material.
The primary judge stated that the principle which underlay cases such as X7 v Australian Crime Commission [2013] HCA 29; 248 CLR 92 (X7), Lee v New South Wales Crime Commission [2013] HCA 39; 251 CLR 196 (Lee (2013)) and Lee v R [2014] HCA 20; 88 ALJR 65 (Lee (2014)), was that a criminal trial was accusatorial and the Crown bears the onus of proving its case beyond reasonable doubt without compelled assistance from the accused.
The primary judge noted that the respondents had not been charged at the time they were compelled to give evidence and produce documents. However, referring to Lee (2014) at [2] and [6], he pointed out that issues to do with whether compulsory processes have infected, or could infect, the fairness of a criminal trial are not to be determined by reference to a bright line test of whether, at the time of the compulsory process, the accused had or had not been charged with an offence.
The primary judge also rejected the proposition that there was a simple bright line between the provision of such material to prosecuting lawyers and provision to important prosecution witnesses. He referred in particular to what I said in my judgment in the first appeal at [115].
The primary judge concluded that, in these circumstances, the fundamental right of the respondents to a fair trial according to law, in which it was incumbent on the Crown to prove its case unassisted by compelled evidence of the accused, called for the exclusion of the evidence of Mr Tang. He said that if Mr Tang was called, he would regard that as creating an unfair trial that should be stayed. Alternatively, if a stay was not available as a remedy, he stated that he would exercise his discretion to exclude the evidence under s 138 of the Evidence Act.
In regard to the second order sought in the accused's notices of motion, the primary judge accepted that there were circumstances where persons would be prevented from prosecuting a case where they had access to compulsorily acquired material. However, he stated that it was another matter to assert that lawyers who have expressly refrained from reading that material and whose assurance that they have not been provided with the material in conference or otherwise has been accepted, must nevertheless be prohibited from further engagement in the matter.
The primary judge said that even accepting that the current prosecuting team may have been "unknowingly, unconsciously, indirectly and amorphously provided with some opinion or analysis ultimately derived from the compulsorily acquired material", neither Lee (2014), nor any other decision, required a finding that it was necessary to engage a prosecution team who have not had contact with any witness who may have seen the material. The primary judge made the following remarks:
"[72] On that basis, it was said that a fresh prosecution solicitor must be instructed and fresh counsel briefed, and that all of the functions already performed, such as formulation of an indictment, the identification of particulars of the counts, and preparation and provision of a Crown case statement, must be set at nought and begun afresh.
[73] I respectfully reject that proposition of the two accused. It is one thing to say that there is a direct use immunity in the ACC Act; that, although there is no explicit derivative use immunity in that statute, there will be circumstances (such as I have found to exist here) where evidence that is derived from compulsorily acquired material must not be part of the prosecution case; that prosecuting legal teams must not have access to compulsorily acquired material with the express intention and result of informing themselves about possible defences and other forensically highly useful matters (as occurred in Lee v The Queen [2014]: see [15]); and that, if the latter occurs, then those lawyers should not prosecute the matter further. But it is quite another matter to assert that lawyers who have expressly refrained from reading the compulsorily acquired material, and whose assurance that they have not been provided with that material in conference or otherwise has been accepted, must nevertheless be prohibited from appearing further in the matter.
[74] The contention of the two accused is that the current prosecution team may have been unknowingly, unconsciously, indirectly and amorphously provided with some opinion or analysis ultimately derived from the compulsorily acquired material. …
[75] Even accepting, for the sake of argument only, the proposition that that may have occurred, I do not consider that the judgment in Lee v The Queen [2014], or any other judgment to which I was invited, calls for the relief sought. To my mind, that would constitute a very large extension of the principles discussed in Lee v The Queen [2014], including at [44]. And I consider persuasive the submission of the Crown that, if this contention of the two accused were correct, then the High Court in Lee v The Queen [2014] would have spoken not only of the necessity of a new team of prosecuting lawyers, but also of the necessity of a new team that was to have nothing to do with any witness, or investigator, or other person who may have read the compulsorily acquired material, or some report or analysis based upon it."
The primary judge rejected the submission that the fact that Mr Tang and Ms Simpkin may have played some role in the formulation of the charge in the Local Court meant that a fresh prosecution team was required. In doing so, the primary judge pointed out that after committal proceedings, the Crown Prosecutor exercises an independent judgment with respect to the filing of a bill of indictment and its particularisation.
In these circumstances, the primary judge did not deal with the orders sought in pars 3, 4 and 6 in the notices of motion.
So far as the application for a permanent stay was concerned, the primary judge noted that the application was based on the proposition that Ms Simpkin had stated in August 2007 that the investigation stage had ended and that the purpose of the further examinations was to lock the respondents into a story and that, in those circumstances, the examination was unlawful.
His Honour rejected that submission. He stated that it was not significant that an officer of the ACC at one stage expressed the opinion that the investigating stage had ended. He pointed out that as a matter of fact it had not, noting that subsequent to that date Ms Simpkin travelled to Hong Kong as part of the investigation. He also stated that because of the operation of the Act, none of the answers given by Mr McCarthy in the compulsory examination would be available at trial, nor, having regard to his conclusion on the order sought in par 1, would the evidence of Mr Tang.
The primary judge also rejected the submission that a stay should be granted by reason of the fact that the accusatorial process had been fundamentally altered by the mere giving of answers to questions at the compulsory hearing. He pointed out that in Lee (2014), the High Court did not grant a permanent stay but ordered a new trial. He also stated that in X7, the order made was a prohibition on the continuation of the compulsory examination, not a permanent stay. The latter statement is incorrect. The Court in X7 was tasked with answering a question in a stated case, namely, whether Div 2 of Pt II of the Act authorised the compulsory examination of a person charged with an offence about matters the subject of the charged offence. The question was answered in the negative.
[8]
The Crown appeal
As I indicated, the Crown appealed against the order made by the primary judge that Mr Tang be prohibited from giving evidence at the trial. It is convenient to deal with that matter first, although the submissions to some extent overlap with the submissions on the respondents' appeal. In this context, a preliminary issue arose as to whether the appeal could be brought under s 5F(2) of the Criminal Appeal Act (the competency issue).
[9]
The parties' submissions on the competency issue
The Crown submitted that the appeal was one which could be brought under s 5F(2) of the Criminal Appeal Act. It was submitted that the order made by the primary judge was not merely a ruling on the admissibility of evidence but rather an order relating to the status of a witness. The Crown pointed out that the order would not impede another person who had examined the business records referred to by Mr Tang in his statement from giving identical evidence. The Crown pointed out that the orders made by the primary judge involved the determination of what was required to ensure a fair trial.
The Crown pointed out that unlike mere rulings on evidence, the order was not capable of reversal at the trial and, unlike rulings on evidence, was capable of being entered in the records of the court. Referring to R v Cheikho [2008] NSWCCA 191; 75 NSWLR 323 (Cheikho), it was submitted that an interlocutory decision on a question of law regarding whether evidence should be admitted may constitute an interlocutory judgment for the purpose of s 5F(2) of the Criminal Appeal Act. The respondents submitted that the appeal was not competent as it involved a ruling on the admissibility of evidence, which is not an interlocutory judgment or order within the meaning of s 5F(2).
Senior counsel for the respondents submitted that Cheikho could be distinguished as it was concerned with a constitutional question, namely, the validity of s 18(2) of the Telecommunications (Interception and Access) Act 1979 (Cth). He submitted that in the present case, the order in form and in substance was that Mr Tang's evidence, in totality, could not be admitted and that was a ruling on the admissibility of evidence.
[10]
Consideration
Relevantly, s 5F(2) of the Criminal Appeal Act permits the Director of Public Prosecutions (DPP) to appeal against an interlocutory order in proceedings to which the section applies. It was not disputed that the section extends to the CDPP. The DPP's ability to appeal is subject to the limitation contained in s 5F(3A) of that Act, that the Crown or DPP may only appeal against a decision or ruling on the admissibility of evidence if the decision eliminates or substantially weakens the prosecution's case. The Crown did not contend that if the decision was a ruling on the admissibility of evidence, it could rely on s 5F(3A) to ground the appeal.
The order sought to be appealed from in the present case is in the following terms:
"Quincy Tang is prohibited from giving evidence in the trial in accordance with his three statements dated 3 November 2009 and his statement dated 30 June 2010."
As expressed, the order is not a ruling or decision on the admissibility of evidence. Rather, it prohibits Mr Tang from giving evidence on the subject of his statements altogether, whether or not it would be admissible or otherwise. It should be noted that there was no contention that the primary judge lacked the power to make such an order and could only have dealt with the matter by excluding the evidence under s 138 of the Evidence Act.
Further, on its face, the order is an interlocutory order. It was not contended that it was one which could not be entered on the Court's records.
This is not to dispute the well-established principle set out in cases such as R v Edelsten (1989) 18 NSWLR 213 and R v Steffan (1993) 30 NSWLR 633 (Steffan), that a ruling on the admissibility of evidence, whether or not made in advance of the trial, is not an interlocutory judgment or order for the purpose of s 5F of the Criminal Appeal Act. However, as Spigelman CJ pointed out in Cheikho at [25], whether or not an order falls within this prohibition is a question of substance not form. As a matter of substance, an order prohibiting a person from giving evidence goes beyond a ruling on admissibility.
Further, the rationale in Steffan for the decision that a ruling on the admissibility of evidence is not an interlocutory order for the purpose of s 5F, namely, that such a ruling cannot be entered on the Court's record and does not command that anything be done or not done (at 639), has no application in the present case. It was not contested that the order could be entered on the Court's record or that the prohibition of Mr Tang giving evidence was a command that something not be done.
In these circumstances, in my opinion, the appeal is competent.
[11]
The grounds of appeal
The Crown relied on the following grounds of appeal:
"1. The learned trial judge erred in finding that Mr Tang's understanding of the whisky schemes, underpinning the evidence of funds flows which the Crown proposes to lead from him, was:
1.1 informed to a not insubstantial degree by his access to compulsorily acquired material [34], [49], [63] and
1.2 enhanced to more than a negligible extent by consideration of compulsorily acquired MYOB files [46].
2. The learned trial judge erred in finding that Mr Tang's evidence was:
2.1 relevantly more than an analysis of financial records [48] and
2.2 expert opinion evidence that had been substantially derived from compelled self-incrimination [63].
3. His Honour ought to have found that:
3.1 an understanding of the commercial and financial relationships which constituted each of the whisky schemes was readily available to Mr Tang (and was in fact acquired by him) prior to any process of compulsory examination or production of documents, from the terms of contracts which formed elements in the schemes, from information memoranda about the schemes and like material provided to him by Australian Taxation Office personnel;
3.2 the evidence proposed to be led by the Crown from Mr Tang was in substance no more than the collation and summation of numerous individual funds transfers evidenced in business records identified by the witness;
3.3 the said business records identified by Mr Tang as the primary materials from which he has derived the individual funds transfers the subject of his collation and summation do not include any documents compulsorily acquired from the Accused;
3.4 in the above circumstances, the evidence proposed to be led from Mr Tang is in substance evidence as to the accuracy of his summations, relative to the identified business records from which his figures have been derived, and that evidence is incapable of having been significantly contributed to by any answers given by the Accused under compulsory examination (which are not nominated as source data for the funds transfers summarised), or by documents compulsorily obtained (which also are not nominated by Mr Tang as sources).
4. The learned Trial Judge erred in finding that:
4.1 it would be extremely difficult for the Accused's counsel to cross-examine Mr Tang about his financial analysis without the jury becoming aware of inadmissible compulsorily acquired material [23], [24], [49] and
4.2 it will be impossible to disentangle the bases of Mr Tang's understanding and analysis of the whisky schemes [49].
5. His Honour ought to have held that:
5.1 Mr Tang's understanding of the whisky schemes (as opposed to the facts of the schemes in the sense of the commercial and financial relationships and transactions which actually constituted them) would be an irrelevant subject at the trial;
5.2 the bases of Mr Tang's understanding of the whisky schemes would equally be an irrelevant subject at the trial;
5.2 the analysis of the funds flows which occurred pursuant to the said commercial and financial relationships, as proposed to be adduced by the Crown from Mr Tang, will be expressly based upon the business records of individual transactions which he had collated and added and no question of disentangling will arise and
5.3 it will be within the control of counsel to formulate questions in cross-examination in such a manner as not to call for answers which would disclose compulsorily acquired and inadmissible material.
6. His Honour erred in holding that principles stated in Lee v The Queen [2014] HCA 20 required that, on the basis Mr Tang had become privy to information compulsorily acquired from the Accused by the Australian Crime Commission, he should be excluded from giving evidence notwithstanding that such evidence as the Crown would adduce from him would not disclose the compulsorily acquired information [55].
7. His Honour ought to have held that:
7.1 the evidence proposed to be led from Mr Tang had not relevantly been informed by and was not derived from compulsorily acquired information but would be evidence of the character referred to in Ground 3 and
7.2 even if Mr Tang's proposed evidence was in some manner derived from compulsorily acquired information to which he had become privy, that would not render the evidence inadmissible or improperly obtained in circumstances where the evidence to be given would not disclose or include the compulsorily acquired information.
8. His Honour erred in concluding that Mr Tang's evidence was improperly obtained [62]."
Because of the overlapping nature of the submissions on these grounds, it is convenient to deal with them together.
[12]
A The Crown
The Crown pointed out that what it was seeking to establish at the trial was first, what contractual, commercial and financial arrangements constituted the whisky schemes, and second, the flow of funds between parties to the schemes and the purpose of the flow of funds.
The Crown submitted that the identities of the relevant parties and the commercial and financial arrangements between them could be readily ascertained. It was pointed out that Mr Tang's evidence was that he had ascertained the relevant relationships by April 2005.
The Crown submitted that the evidence to be given by Mr Tang was evidence that he had examined a large number of primary business records of individual fund movements in various accounts and evidence identifying the total amounts which he had calculated as having passed between particular parties to the schemes. It was submitted that this was no more than evidence of a summary in accordance with s 50 of the Evidence Act.
The Crown pointed to the analysis carried out by Mr Tang, to which I have referred at [40] above, and the fact that he prepared notes for the cross-examination of the respondents, as demonstrating that he well understood the commercial and financial relationships in each of the schemes prior to the compulsory examination.
In these circumstances, the Crown submitted that the primary judge was in error in concluding that Mr Tang's understanding of the whisky schemes was informed to a not insubstantial degree by his access to the compulsorily acquired material. It was submitted that, in any event, the schemes would be proved through the scheme documents and that the flow of funds analysis conducted by Mr Tang was no more than a mathematical calculation which was either correct or incorrect.
The Crown submitted that, having regard to the nature of the evidence given by Mr Tang, there would be no need for defence counsel to ask him anything concerning the compulsory examinations. It was submitted that the position was no different from that of defence counsel examining police officers where a record of interview has been excluded.
The Crown submitted that the exclusion Mr Tang's evidence was a significant extension of the principle in Lee (2014). It was submitted that witnesses were in an entirely different position to prosecutors and it could not be said that a mere witness having knowledge of compulsorily acquired material would give the Crown any advantage whatsoever.
Senior counsel for the Crown submitted that the draft statements of Mr Tang showed that his analysis was based on material other than that compulsorily acquired. It was submitted that notwithstanding what was said by Mr Tang in his statement of 3 November 2009 that he followed generally accepted accounting principles, his statements did not involve the application of accounting expertise.
Senior counsel for the Crown stressed in particular that prosecutors are in a different position to witnesses as witnesses are not called upon to decide how charges are to be particularised, what evidence to gather and what cross-examination is to take place.
So far as the respondents relied upon Mr Tang's access to the service agreement produced by Mr McCarthy under s 28 of the Act to support their submissions, the Crown pointed out that what was relevant was the flow of funds to Eon 2000 Pty Ltd and Sinadu Pty Ltd. It was submitted that that could be proved from the bank statements and that ASIC searches showed that these companies were associated with the respondents.
Senior counsel for the Crown emphasised that it was no part of the Crown case to have Mr Tang give evidence that the transactions were bogus or shams, nor was it relevant to establish whether or not the promissory notes would ever have been called upon. He emphasised that the relevant question was whether the answers given by the respondents to the two auditors were correct. He stated that in any event, questions relating to the future drawing on the promissory notes, described as back end transactions, could be asked of other persons to be called including Mr Walsh the auditor and Mr Moloney, an Assistant Commissioner involved in the audit.
[13]
B The respondents
The respondents submitted that it was open to the primary judge to find that Mr Tang's understanding of the schemes was substantially enhanced by the compulsorily acquired material. They submitted that it would be difficult to cross-examine Mr Tang without the jury becoming aware of that material, as it would be impossible to disentangle the bases of his understanding.
The respondents submitted that Mr Tang's statements were not mere mathematical exercises. Rather, his evidence involved addressing particular issues and giving opinions concerning classification of records, matching and filling in gaps, such as counterparties and the purpose of transactions. They pointed to the focus by Mr Tang on the service agreement and the promissory notes and the fact that he had drawn conclusions regarding the role of the promissory notes, which was the subject of the compulsory examination.
The respondents referred particularly to the service agreement (which they acknowledged trial counsel for the Crown had not seen) which Mr Tang said he regarded as a critical document and his evidence that there was a reasonable probability that he had discussed it with Mr Corkery of the CDPP and a reasonable possibility that it assisted him in the drafting of his statement. They referred to Mr Tang's statement that he regarded the agreement as significant because it related to secret fees and commissions.
The respondents also referred to what was said by Mr Tang in his statement of 3 November 2009, at [202], that the promissory notes did not reconcile with the source documents and that the promissory note funds were not used for the purchase or manufacture of whisky. The respondents referred to the evidence of Mr Tang that the scheme could have operated without the promissory notes, which the respondents noted was consistent with Mr Tang's opinion of them as bogus or a sham. The respondents stated that these matters were the subject of the compulsory examination.
The respondents also referred to the affidavit of Mr Tang in these proceedings in which he stated that the examination of Mr McCarthy provided additional knowledge of transactions in the whisky schemes which were contemplated and yet to take place. Mr Tang did state however that these back end transactions were not relevant to the investigation.
The respondents submitted that it was immaterial that Mr Tang had significant knowledge of the schemes prior to the compulsory examination, stating that it was unfair that his understanding was improved or assisted by the compulsorily acquired material.
Senior counsel for Mr McCarthy (whose submissions were adopted without elaboration by counsel for Mr Seller) submitted that it was not necessary to demonstrate prejudice. Rather, all that needed to be demonstrated was that Mr Tang was aware of the compulsorily acquired material.
Senior counsel for Mr McCarthy submitted that it would be almost impossible for the Court to anticipate all possible scenarios that might eventuate were Mr Tang to give evidence. He submitted, by way of example, that if Mr Tang was cross-examined on his opinion that the payments to Eon 2000 Pty Ltd and Sinadu Pty Ltd were payment of fees to the respondents, he would be drawing on his knowledge of the service agreement, which he described as a highly relevant matter. He acknowledged that that may not be a matter on which Mr Tang would be questioned by the Crown.
[14]
Consideration
As I indicated, it was not contended that the primary judge had no power to make the order the subject of the appeal. Rather, it was contended that he erred as a matter of discretion in doing so.
The Crown appeal deals with a situation where a witness to proceedings was privy to the compulsory examination of a person subsequently charged, or had received and read the transcript of his compulsorily acquired evidence. The question which arises is whether such a witness should be prohibited from giving evidence because the availability of the compulsorily acquired evidence to the witness deprives the accused of a trial according to law. This question will be answered by reference to the fundamental elements of a trial according to law: see X7 at [89]-[93]; Lee (2014) at [31]-[32], [40]-[41]. Lee (2014) concluded that that was the effect of supplying such compulsorily acquired material to prosecuting authorities. It did not deal with the supply of such material to witnesses.
It should be noted that unlike X7, the examination in the present case was not illegal. Further, the dissemination of the material to Mr Tang did not contravene the direction given under s 25A(9) of the Act at the conclusion of the examinations, as at the relevant time, Mr Tang was an officer of the ACC.
However, these matters are not conclusive. If in fact the giving of evidence by Mr Tang would alter the trial process in a fundamental respect, in the sense described in X7 and Lee (2014), then the primary judge was correct in ordering that Mr Tang be prohibited from giving evidence at trial. The following remarks of the Court in Lee (2014) at [46] are apposite:
"[46] In X7, it was held that the compulsory examination of a person with respect to an offence with which the person stands charged would be a departure, in a fundamental respect, from that principle. X7 was ultimately concerned with questions of statutory construction. Nevertheless, the point it makes about what may amount to a fundamental departure from a criminal trial as it is comprehended by our system of criminal justice is relevant to this case. It is a breach of the principle of the common law, and a departure in a fundamental respect from a criminal trial which the system of criminal justice requires an accused person to have, for the prosecution to be armed with the evidence of an accused person obtained under compulsion concerning matters the subject of the charges. It cannot be said that the appellants had a trial for which our system of criminal justice provides and which s 13(9) of the NSWCC Act sought to protect. Rather, their trial was one where the balance of power shifted to the prosecution."
[Internal citations omitted]
See also the emphasis by French CJ and Crennan J in X7 (in dissent on the question of construction) on the importance of the protective provisions in s 25A(9) of the Act: at [25]-[27].
I do not think that the fact that any potential witness was present during the compulsory examination of a person subsequently charged or who had read the transcript of evidence given at the compulsory examination, in all cases, would alter a trial in a fundamental respect in the sense described in X7 and Lee (2014). However, it is unnecessary to decide that point.
I have reviewed the statements of evidence that it is proposed that Mr Tang lead at the trial. That review confirms the position I expressed in the first appeal (at [115]) that his evidence is an analysis by an accountant of the financial consequences of certain transactions outlined in documents considered by him. However, that is not to say that it does not involve the application of accounting expertise. Further, the statements do draw conclusions from the examination of the documents.
Thus, in his first statement, Mr Tang concluded that funds drawn down from Chambers were not paid to Scottish Distillers for the manufacture of whiskey (first statement at [14], [202]). He stated that in carrying out his reconciliation, he adopted a matching principle indicating that where it was reasonable to do so he matched expenses with debits or credits (first statement at [17]).
In his second statement, he concluded that the proceeds of the Chambers' promissory notes were not paid for the purchase or manufacture of whiskey (second statement at [14], [269]). He also concluded that Chambers' invoices were not bona fide source documents (second statement at [155]). He stated that in carrying out his work, he applied the accounting principle of materiality (second statement at [19]).
In his third statement, he concluded that an amount of $628,000, paid to Sinadu Pty Ltd, was paid to an entity associated with Mr Sellers and was not evidenced by source documents (third statement at [142]).
Importantly, Mr Tang's statements indicate that his evidence will be the vehicle through which a good deal of the prosecution's documentary case will be led and explained. If it was open to the primary judge to conclude that he was assisted in this task by having the examination transcripts and the compulsorily acquired material in his possession, then it was in my opinion open to the judge to conclude that his giving evidence would alter the accusatorial process in the sense described in X7 and Lee (2014).
Mr Tang acknowledged that Mr McCarthy's evidence about the promissory notes was highly relevant to his investigation and the material produced by the respondents under summons issued pursuant to s 128 of the Act, particularly the MYOB files, had assisted him in ascertaining how the whiskey schemes operated and the role of the promissory notes in them (see [56] above).
In these circumstances, it does not seem to me that the primary judge erred in concluding that Mr Tang's understanding of the schemes was informed "to a not insubstantial degree" by his access to compulsorily acquired material or that his understanding was enhanced, to more than a negligible degree, by consideration of the compulsorily acquired MYOB files.
Further, having regard to the conclusions reached by Mr Tang in his statements to which I have referred above, it does not seem to me that the primary judge erred in concluding that Mr Tang's evidence was more than merely an analysis of financial records.
I accept, as Mr Tang pointed out in re-examination, that the evidence he proposes to give does not depend on the transcripts or the compulsorily acquired material.
Further, it is apparent from the document prepared by Mr Tang on 16 January 2007 and the work done by him leading up to the examination of Mr McCarthy that he had a significant knowledge of the whiskey schemes prior to the examination. While on the material available I would not agree with the primary judge that his evidence was substantially derived from compulsorily acquired material, the fact remains, as Mr Tang acknowledged, that he was assisted in his investigation by it. It follows, in my opinion, that the material assisted him in the preparation of his statement.
I acknowledge, as the Crown pointed out, that the charges do not relate to the whiskey schemes themselves, nor to any tax avoidance which resulted from them. However, as the primary judge said, the conspiracy the subject of the indictment is to defraud the Commonwealth by misleading it about salient aspects of the schemes by making misrepresentations to officers of the ATO. The outline of the Crown case states that the representations were to convey false and misleading information concerning first, the association of the respondents with, and the relationship of entities involved in, the schemes and second, Chambers and Grant McKenzie. In these circumstances, the schemes themselves and the flow of funds which occurred provide the background against which the jury will assess the truth or falsity of the representations.
Further, it cannot be stated with any certainty that the respondents will not be hindered in challenging any aspect of the Crown case in cross-examination of Mr Tang. Although it is correct that the evidence of Mr Tang is largely a review and reconciliation of documentary records, it does not follow that the cross-examination will necessarily be limited to challenging Mr Tang's calculations and reconciliation. The course of cross-examination cannot be predicted with certainty. In these circumstances, the possibility that the respondents will be limited or hindered in their cross-examination of Mr Tang by the evidence given at the compulsory examinations cannot be excluded. The possibility that such questions may be asked of other witnesses, as the Crown suggested, does not seem to me to be an answer to this difficulty.
In these circumstances, if Mr Tang were to adduce the evidence which he proposed to give, in circumstances where he was present at the compulsory examination and reviewed the transcript and other compulsorily acquired material, this would alter the accusatorial process inherent in a criminal trial in the fundamental sense described in X7 and Lee (2014).
Thus, the Crown appeal should be dismissed.
[15]
The respondents' appeal
The respondents relied on the following grounds of appeal. For ease of reference, I have inserted under each relevant ground the particular paragraphs of the respondents' notices of motion to which the ground relates:
"Paragraphs 2, 3, and 6 of the notice of motion.
1. His Honour erred in that he failed to find that the Crown (a) bore a duty as prosecutor and/or (b) bore an evidential onus, to satisfy the court that material compulsorily acquired from the accused (and material obtained indirectly therefrom) has not assisted the prosecution in a material way.
2. His Honour erred in failing to make orders in accordance with paragraph 3 of the notice of motion.
Paragraph 3 of the motions sought:
'3. The CDPP identify:
(a) the name of all persons who have had access to the Accusatorial Process Material or Indirect Accusatorial Process Material whom the Crown proposed to call as witnesses or who have assisted;
(b) in the preparation and conduct of these proceedings;
(c) what Accusatorial Process Material or Indirect Accusatorial Process Material those person(s) have had access to;
(d) when those person(s) have had access to the Accusatorial Process Material or Indirect Accusatorial Process Material.'
3. His Honour erred in upholding the claims to client legal privilege by the Crown Prosecutor and the Australian Crime Commission regarding communications between persons who had accessed and analysed compulsorily acquired material, on the one hand and, on the other, former or current prosecutors.
4. His Honour erred in refusing to make an order in accordance with paragraph 6 of the notice of motion until (a) client legal privilege is waived and (b) the Court is satisfied and (c) the accused has an opportunity to test that material compulsorily acquired from the accused (and material obtained indirectly therefrom) has not assisted the prosecution in a material way.
Paragraph 6 of the motions sought:
'6. An order temporarily staying these proceedings pending:
(a) The CDPP's compliance with paragraph 3 of this Notice of Motion;
(b) The engagement of other counsel and CDPP personnel who have not read or listened to the Accusatorial Process Material or Indirect Accusatorial Process Material; and
(c) The filing and serving of a Crown case statement (howsoever called) and particulars of the charge which have not been derived from Accusatorial Process Material or Indirect Accusatorial Process Material.'
5. His Honour erred in finding that relief in paragraphs 2, 3 and/or 6 of the notice of motion could not be warranted where prosecutors have received opinion or analysis derived from compulsory acquired material but which was not identified as being so derived.
Paragraph 2 of the motions sought:
"2. An order that all persons (including legal practitioners) who have read or listened to the Accusatorial Process Material or Indirect Accusatorial Process Material be prohibited from (a) giving evidence in these proceedings; (b) assisting the Commonwealth DPP in the preparation and conduct of these proceedings; (c) being retained or engaged by the Commonwealth DPP in the conduct of these proceedings."
Paragraphs 3 and 6 of the motions are set out above.
6. His Honour erred in holding that it was unnecessary to determine for the purposes of granting relief in paragraphs 2 and 6 of the notice of motion whether Mr Tang or Ms Simpkin played a role in formulating or determining the charge as particularised.
Paragraphs 2 and 6 of the motions are set out above.
7. His Honour erred in failing to find that compulsorily acquired material had assisted, or there was a real risk it had assisted, the prosecution in a material way.
Paragraph 8 of the notice of motion
8. His Honour erred in failing to find that the compulsory examinations were impermissible because (a) the ACC's investigation of the accused had ended or substantially ended (b) the decision to carry out the examinations was for, or took into account, an improper purpose (being to lock the accused into a story and to lock the accused in to inconsistencies to assist the prosecution) and (c) that improper purpose was carried into effect.
9. His Honour erred in refusing to grant a permanent stay."
These grounds can be conveniently divided into two categories. The first, the subject of grounds 1-4, relates to the primary judge's alleged error in his evaluation of evidence or failure to require the Crown to produce certain material.
The second, the subject of grounds 5-9, relates to the refusal by the primary judge to grant a temporary or permanent stay. Grounds 5-7 relate to the refusal to grant a temporary stay until a new prosecution team is appointed. By contrast, grounds 8 and 9, relate to the refusal to grant a permanent stay.
The question of whether a temporary stay should be imposed arises if the Court is of the view that it is inappropriate to grant a permanent stay but, notwithstanding, some relief is necessary to ensure a fair trial.
In these circumstances, it is convenient to deal first with grounds 1-4, then with the refusal to grant a permanent stay and then with whether a temporary stay should be granted, pending fulfilment of the requirements set out in pars 2(b), 2(c) and 6 of the notices of motion. It should be noted that the only potential witness who was said to have been privy to the examination transcripts and the compulsorily acquired material, Mr Tang, has been prohibited from giving evidence, so relief under par 2(a) of the notices of motion is unnecessary.
[16]
A The respondents' submissions on grounds 1-4
In relation to ground 1 of the notice of appeal, the respondents contended that the Crown bore an evidential onus to satisfy the Court that the material wrongfully disseminated has not assisted the prosecution in a material way. The respondents submitted that the primary judge erred as he made no finding on that issue.
The respondents submitted that the High Court in Lee (2014) explicitly referred to the responsibilities of the Crown. They submitted that as the Crown did not proffer material necessary to test derivative use, the Court should require disclosure of such material to ensure that the trial is fair. The respondents submitted that an analogy could be drawn from the line of authority where courts have restrained solicitors from appearing in cases against their former clients where they are in possession of confidential information obtained from that client. They referred to the well-known statements of Brooking JA in Spincode Pty Ltd v Look Software Pty Ltd [2001] VSCA 248; 4 VR 501 to the effect that the onus lay on a solicitor to show that he or she was not acting in breach of fiduciary obligations or misusing confidential information in acting for a former client. They also referred to the approach taken in the United States to the admission of evidence obtained illegally. In the United States, this evidence is inadmissible unless the prosecution shows that the evidence would have inevitably been obtained, so that the prosecutor was in the same position as if the illegality had not occurred: Nix v Williams 467 US 431 (1984) at 442-443.
Senior counsel for Mr McCarthy accepted that the evidentiary onus and legal responsibility of the prosecutor for which his clients contended is not engaged when the risk is merely speculative but only where, as he described it, there was a real risk of some infection. He referred again to the knowledge acquired by Mr Tang and Ms Simpkin from the material and its dissemination to the CDPP. He submitted that Mr Tang and Ms Simpkin should have been quarantined from the prosecution, in particular, from the present counsel for the Crown and the senior counsel's predecessor, Mr Hastings QC. He submitted that, by contrast, they were involved in the preparation of the case for a lengthy period of time.
In relation to ground 2, it was contended that the purpose of the order sought in par 3 of the notices of motion was first, to aid the enforcement of the requirement that the trial be fair and second, to know the extent of derivative use, with a view to quarantining such material if found. The respondents likened it to an action in aid of a Mareva injunction.
So far as ground 3 was concerned, the respondents contended that there had been an implied or imputed waiver of legal professional privilege in respect of material to which privilege was claimed at the hearing before the primary judge. The respondents submitted that "inconsistency is grounded in either the duty of the prosecutor or the need for the court to ensure fairness …". Alternatively, they submitted that as the Crown asserted that it had not benefited from the material in the way the case is now being propounded, it was incumbent to waive privilege on communications "in which it was on the cards that compulsorily acquired material was disclosed or where it is on the cards that the communication to the Crown were aided by compulsorily acquired material, inexplicitly [sic]".
Senior counsel for Mr McCarthy submitted that the critical error made was that the primary judge did not consider or recognise the inconsistency between the maintenance of the privilege and the position taken by the Crown on the notices of motion. He submitted that it was inconsistent with the maintenance of the privilege to state that Mr Tang and Ms Simpkin provided no assistance to the CDPP. He submitted that this meant that the respondents were not permitted to cross-examine them on whether there was a real risk that the compulsorily acquired material had assisted the prosecutors.
Alternatively, the respondents relied on ground 4, submitting that without elaboration, if a court cannot compel a waiver of privilege, it should protect its processes by granting a temporary stay until the privilege is waived.
[17]
B The Crown's submissions on grounds 1-4
In relation to ground 1, the Crown submitted that the obligations of prosecuting counsel do not carry with them the burden of disproving that the Crown was assisted in a material way by a compulsory examination. It submitted that the position established by the authorities was that the answers given in a compulsory examination cannot be tendered and that prosecuting counsel and their instructing solicitors are not permitted to have heard or read the answers given under compulsion. It was submitted that there was no further constraint which the Crown must show it has complied with to satisfy its responsibility to assist in affording a fair trial. It submitted that the Crown's position was in no way comparable to the position of a solicitor who has obligations of confidence to his or her former client.
So far as ground 2 was concerned, the Crown submitted that the substantive requirement of the order sought in par 3 of the notices of motion had been complied with in a letter the CDPP sent to the respondents' solicitors on 26 June 2014. It was submitted that the latter part of the definition of "accusatorial process material" and "indirect accusatorial process material", namely, material "obtained indirectly by the ACC or the CDPP from the use of" compulsorily acquired material, was uncertain and impractically wide. It was submitted that it would require the Crown to identify all such material, some of which may be irrelevant, and to establish who might have had access to it.
The Crown pointed out that the letter of 26 June 2014 annexed a two page schedule identifying those officers of the CDPP who had access to the transcript and the briefing papers which referred to the examinations. Documents produced under subpoena recorded the names of officers who were given access to the accusatorial process material and when this access occurred.
The Crown pointed out that there was no attempt to tender the letter and that the order sought in par 3 of the notices of motion was not actively pressed at the hearing before the primary judge.
In relation to the claim for privilege the subject of ground 3 of the notice of appeal, the Crown pointed out the claim was dealt with by the primary judge in a separate judgment: R v Seller; R v McCarthy (No 4) [2014] NSWSC 1369 (privilege judgment). The Crown pointed out by reference to that judgment that the claim that the privilege was wrongly maintained was first put on the basis that the ACC was acting unlawfully and therefore, the privilege claimed could not be maintained: privilege judgment at [12]. The Crown noted that this argument was not pursued in the appeal.
The alternative basis on which it was claimed privilege was lost at the hearing of the motions was that there was a real question as to what was described as "'infection' of the lawyers by way of things that they may well have been told by Mr Tang and Ms Simpkin": privilege judgment at [13]. The claim for privilege prevented that matter from being explored. The primary judge summarised this claim as "the Director had, by maintaining the prosecution in those particular circumstances, 'acted in a way that is inconsistent with the claim for privilege": privilege judgment at [14]. It was this argument which was pressed upon appeal.
The Crown submitted that what was said in Lee (2014), to the effect that the Crown must ensure its case is presented in such a way as to ensure a fair trial, did not place an onus on the Crown to satisfy the Court that compulsorily acquired material had been quarantined. The Crown submitted that the only relevant stipulation was that prosecuting counsel and solicitors should not have access or knowledge of compulsorily acquired answers. It was submitted that such access had not occurred in the present case.
The Crown submitted that the prosecutor's duty of disclosure did not override legal professional privilege.
The Crown also submitted that if its submissions on this ground were upheld, ground 4 must fail.
[18]
Ground 1
It was first contended that the duty imposed on the prosecutor extended to satisfying the Court that the compulsorily acquired material and material obtained indirectly from it had not assisted the prosecution in a material way.
In Lee (2014), the Crown prosecutor had possession of the compulsorily acquired material and, although he thought that was unusual, he took no steps to draw it to the attention of the Court. It was in that context that the Court remarked that it is the prosecution's responsibility to ensure that a case is presented properly and with fairness to the accused and, in fulfilment of that duty, the prosecution should have inquired as to the circumstances in which the material came into its possession and alerted the trial judge to the situation: Lee (2014) at [44].
Such an obligation is consistent with the general obligations imposed upon Crown prosecutors to act fairly in discharging the functions they perform at a criminal trial, in order to assist the attainment of justice between the Crown and the accused: Whitehorn v The Queen [1983] HCA 42; 152 CLR 657 at 664-665, 675; Australian Securities and Investment Commission v Hellicar [2012] HCA 17; 247 CLR 345 at 353-354; Attorney-General (NT) v Emmerson [2014] HCA 13; 88 ALJR 522 at [63].
In the present case, the fact that the material was available to the prosecuting authorities was disclosed. The matters to which I have referred at [36]-[54] above were drawn to the attention of the respondents and the primary judge.
Further, during the hearing of the motions, the following exchange occurred between senior counsel for Mr McCarthy and the primary judge:
"HIS HONOUR: Just to be completely clear, Mr Strickland, you accept that no one in the current prosecution team has read the CEs or the section 28 material?
STRICKLAND: Yes.
HIS HONOUR: You accept Mr Fagan's proposition from the Bar Table that it goes without saying that if Mr Tang had made an explicit reference to something like that at a conference, that would have been brought to your attention?
STRICKLAND: Yes. My explicit reference, by saying to Mr Fagan, 'Mr McCarthy said at his compulsory examination X, Y, Z'; correct.
HIS HONOUR: So we're speaking of implicit references whereby, as we have discussed today, Mr Tang's mental processes and levelled understanding has been informed by the compulsory material and he has conveyed that to the lawyers involved?
STRICKLAND: It could have been Mr Tang says, 'In my belief the defence will be X, Y and Z' and X, Y and Z is an explicit reference. The words 'explicit reference, X, Y and Z' is in fact sourced directly from the compulsory examinations but it's not explicitly referred to as that.
HIS HONOUR: No lawyer would know that.
STRICKLAND: No lawyer would know that. In other words, I accept the assurances from my learned friend, of course I do, that neither he, nor Mr McGuire, know directly that they have been passed some unlawful material because I accept that if they had done so, they would have told us. But this is not a matter about those personal assurances, which I accept, it goes beyond that."
It seems to me that in circumstances where the dissemination of material was disclosed, an assurance was accepted that no one in the prosecution team had read the compulsory examination transcript or the s 28 material and if there had been explicit reference to that material, it would have been drawn to the Court's attention, any prosecutorial duty was satisfied. Whether this was sufficient to enable the prosecution to proceed or whether the proceedings should be stayed is dealt with later in this judgment.
In relation to the evidential onus referred to in this ground, for the trial to proceed, the Court must be satisfied that it would not result in the trial being unfair such that there is nothing the trial judge can do to relieve against the unfairness: X7 v R [2014] NSWCCA 273 at [82] ff (X7 (No 2)). This is also the subject of the appeal against the refusal to grant a stay.
However, contrary to the submission of the respondents, I do not think that any assistance can be gained from the approach taken by the Courts in circumstances where a solicitor seeks to act against the interests of his or her former clients. Whether the restriction on so acting in particular (but not all) cases is put on the basis of the possible misuse of confidential information, a breach of a fiduciary duty, or simply as a matter of fairness and justice (see above the discussion in Spincode by Brooking JA and the cases cited therein), it has no relevance to this field of discourse.
It follows that ground 1 does not provide any separate basis for relief. There is no obligation in the circumstances of the present case for the prosecutor to produce any further material. It is necessary for the Court to decide, on the material available to it, whether a permanent or temporary stay should be granted.
[19]
Ground 2
The order sought in par 3 of the notices of motion, in effect, sought that the CDPP identify the names of all persons who had access to the accusatorial process material and indirect accusatorial process material who were to be called as witnesses or who participated in the preparation and conduct of the proceedings.
As I indicated, the Crown submitted that an order in terms of par 3 of the notices of motion was not actively pursued at the hearing before the primary judge. That proposition was not disputed at the hearing and no such argument was addressed in ground 2 of the notice of appeal. Rather, ground 1 was said to be relied on as ancillary to grounds 3-9. Thus, senior counsel for Mr McCarthy stated "Part 1 [of the notice of appeal], all the grounds with the probable exception of ground 2 in our submissions are linked and need to be seen together". The submissions then focused on documents relating to the conversations between past and present counsel representing the Crown and officers of the CDPP and the ACC in respect of which privilege was claimed. This was the subject of ground 3 of the notice of appeal.
Further, both in written submissions and orally, the Crown stated that a letter dated 26 June 2014 from the CDPP to the solicitors acting for the respondents provided the information sought in par 3 of the notices of motion, to the extent that it related to persons who in fact had access to the transcript and compulsorily acquired material. This was not disputed by the respondents.
In these circumstances, it is not appropriate that leave be granted to make the order sought in ground 2 of the notice of appeal.
[20]
Ground 3
The primary judge upheld the claim for legal professional privilege in respect of the following documents:
Date Description
22.02.06 File note of meeting attended by Steve Economou, Patrick English, Quincy Tang, Paul Fox, Susan McKay, Elizabeth Simpkin, Brad Rawe and Julie Shouldice
23.02.06 Email chain between Quincy Tang and Julie Shouldice
07.03.08 File note of conference attended by Peter Hastings QC, Julie Shouldice, Elizabeth Simpkin, Quincy Tang and Glen Prichard
15.08.08 File note of meeting with ACC and CDPP attended by Liz Ryan, Berdj Tchakerian, Elizabeth Simpkin, Quincy Tang and Martin Corkery
05.02.09 File note of meeting with ACC attended by Quincy Tang, Elizabeth Simpkin, Martin Corkery, Katrina Curry and Esther Phang
20.03.09 File Note of meeting attended by Quincy Tang, Elizabeth Simpkin and Martin Corkery
20.07.09 File Note of meeting attended by Quincy Tang, Elizabeth Simpkin, Martin Corkery and Katrina Curry
23.07.09 File note of meeting attended by Peter Hastings QC, Paul McGuire, Liz Simpkin, Glen Prichard, Quincy Tang, Chris Murphy, Martin Corkery, Katrina Curry, Esther Phang, Berdj Tchakerian and Chris Bonnici
23.07.09 Document entitled: "Seller and McCarthy - The Crown Case" (Attached to email produced pursuant to subpoena - from Martin Corkery to Paul McGuire, Berdj Tchakerian, Chris Murphy, Glen Prichard, Elizabeth Simpkin and Quincy Tang (CC: Katrina Curry and Esther Phang) dated 23.07.09 (10:24 a.m.)
[21]
As noted above, the claim for legal professional privilege was upheld in a separate judgment. In the privilege judgment, the primary judge's conclusion on the question of waiver was as follows:
"[29] I also accepted without difficulty the proposition that there are certain cases in which a claim for privilege can be inconsistent with the maintenance of the proceedings themselves, and as a result the claim should not be upheld: see generally DSE (Holdings) v Intertain Inc [2003] FCA 384, 127 FCR 499 (the submission that merely by joining issue on the pleadings with an allegation made by one's opponent that one had a certain state of mind led to waiver of privilege with regard to legal advice connected to that state of mind was rejected); Telstra Corporation Ltd and Another v BT Australasia Pty Ltd v Another (1998) 85 FCR 152, (by majority, privilege found to have been waived with regard to legal advice relevant to reliance by inconsistency in pleading an action founded upon reliance on the representations of the defendant). Perhaps the paradigm would be civil proceedings in which a client sues his or her legal adviser for having given negligent advice, and the client relies upon evidence as to what passed between the client and the lawyer. If the lawyer sought in response to provide his or her alternative version as to what had been said between the two of them, it is inconceivable that the client would be permitted to claim privilege, thereby prohibiting the lawyer from placing his or her version of the crucial conversations before the court for determination.
[30] But that paradigm, in which a successful claim of privilege would really make a forensic response of the opponent to the cause of action impossible, is very far from the circumstances of this case. The evidential foundation of the criminal cause of action brought by the Director against the two accused is, in a nutshell, the untruthful things they allegedly said and wrote many years ago. It is true that the access by Mr Tang and Ms Simpkin to the compulsorily acquired material, and the use they may have made of it subsequently, were important issues on the motion. However, when it comes to assessing true inconsistency between, on the one hand, claiming client legal privilege with regard to a number of legal conferences in which they engaged and, on the other hand, with the maintenance of a prosecution founded on events years beforehand, I assess the conduct of the Director as being by no means inconsistent, in the sense described in the cases to which I was invited."
There is force in the proposition that the primary judge did not consider the actual basis upon which waiver was said to have occurred, namely, that the maintenance of the privilege was inconsistent with the assertion that the transcripts of examination and compulsorily acquired material provided no benefit to the prosecution. His Honour's reasoning, which I have set out above, instead focused on the inconsistency between the maintenance of the privilege and what he described as the maintenance of the prosecution. Rather, he should have focused on whether maintenance of the privilege was inconsistent with the Crown's contention on the hearing of the notices of motion that the distribution of the transcripts and compulsorily acquired material did not give any forensic advantage to the Crown which deprived the respondents of a trial according to law.
However, in determining if there was such an inconsistency, it is important to consider the manner in which the Crown put its case. First, it asserted that the evidence it would seek to adduce at the trial was not in any way dependent on the evidence adduced at the examinations or on the compulsorily acquired material. Second, it emphasised that no present member of the prosecution team had seen that material. The respondents, while accepting the latter proposition, stated that it was not enough, as there may have been what senior counsel for Mr McCarthy described in the Court below as unknowing, unconscious or indirect receipt of such material. They cited as an example the possibility that such disclosures occurred between Mr Tang and Ms Simpkin and the prosecution team during the course of the discussion of possible defences.
That possibility is relevant in considering whether the trial should be stayed. The Crown, in both its written and oral submissions, described this possibility as fanciful, pointing to the fact that neither the documents to be tendered nor the evidence to be led made any reference or placed any reliance on the compulsorily acquired material.
An imputed waiver of the nature raised in the present case will arise when conduct is inconsistent with the maintenance of the confidentiality the privilege is intended to protect. What brings about the waiver is the inconsistency which the Courts, informed by considerations of fairness, perceive between the conduct of the client and maintenance of the confidentiality, not some overriding principle of fairness operating at large: Mann v Carnell [1999] HCA 66; 201 CLR 1 at [29]; Osland v Secretary Department of Justice [2008] HCA 37; 234 CLR 275 at [45]. As the plurality observed in the latter case (at [49]), this is a question of fact and degree.
Applying these principles, it does not seem to me that the assertion of indirect disclosure by the respondents and its rejection by the Crown, in the manner to which I have referred, compels the conclusion that privilege in the documents has been waived. A denial of such indirect communications is not inconsistent with the maintenance of privilege. Nor, having regard to the manner in which the case was conducted by the Crown, is there any unfairness in the maintenance of the privilege.
It follows that this ground of appeal has not been made out.
[22]
Ground 4
It would be inappropriate in my opinion for a judge to stay proceedings until legal profession privilege properly claimed is waived.
It is correct that in Lee (2014), the Court stated (at [44]) that one of the purposes of alerting the trial judge to the disclosure of compulsorily acquired material was so that steps could be taken to ensure the trial was not affected. However, this would not seem to me to extend to effectively compelling waiver of privilege to enable the accused to embark on an inquiry as to whether there had been inadvertent disclosure of material or whether it had been distributed to the prosecution team without the prosecution team being informed of its source. In this context, it is important to remember, as the High Court pointed out in Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; 213 CLR 543 at [11], that legal professional privilege is not merely a matter of substantive law, but an important common law right or immunity. Courts should not compel waiver of that right or immunity where it is legitimately claimed.
In these circumstances, any application for a stay will fall to be considered by reference to the evidence before the Court. It should be emphasised, contrary to what was suggested at one stage by senior counsel for Mr McCarthy, that no inference can be drawn against the Crown from the maintenance of the claim for privilege: Wentworth v Lloyd (1864) 10 HLC 589 at 590-592; Giannarelli v Wraith (No 2) [1991] HCA 2; 171 CLR 592 at 605.
It follows that this ground of appeal is not made out.
[23]
Should a permanent or temporary stay have been granted
[24]
The respondents' submissions
The respondents sought a permanent stay on two grounds. First, applying the principles in X7 and Lee (2014), the disclosure of the information gave rise to a departure from the accusatorial mode of the criminal justice system in a fundamental respect: X7 at [93], [124], [136]; Lee (2014) at [31], [32], [41]. Second, on the basis that the examination was conducted for an improper purpose.
The respondents submitted that the factual material to which I have referred above demonstrated that Mr Tang and Ms Simpkin knew what the accused's defences would be to particular allegations if made. They pointed out that the examination proceeded as cross-examination designed to lock the accused into a story.
The respondents referred to the fact that Mr Tang and Ms Simpkin prepared extensive briefing papers, provided them to the CDPP and attended conferences with lawyers, counsel and case managers engaged and retained by the CDPP, the purpose of which included consideration of charges and particulars and what evidence to present.
The respondents pointed out that the transcripts of the examination were distributed to the former prosecution team. They submitted that there was a real and sensible possibility or risk that during meetings attended by one or more members of the current prosecution team, junior counsel Mr McGuire and Ms Curry, proposed charges, likely defences and explanations by the accused were discussed.
The respondents submitted that X7 recognised that the accusatorial process is fundamental and a critical factor is that the prosecution must prove the guilt of the accused without his or her assistance. The respondents submitted that that case demonstrated that that principle could not be compromised.
The respondents submitted that if there is material prejudice, the trial would be unfair and not a trial according to law. They submitted that toleration of the risk of actual prejudice is no different in principle. The respondents submitted that these propositions extended not just to the trial but to the whole course of the criminal process.
The respondents submitted that the illegal dissemination of material may constitute a fundamental departure from the right to a fair trial. They submitted that such dissemination involved departure, in a fundamental respect, from a criminal trial which the system of justice requires, namely, the prosecutor being armed with compulsorily acquired evidence.
The respondents submitted that the quarantine process outlined in Lee (2014) (at [44]) should apply to material obtained indirectly from compulsorily acquired material. They submitted that given that the Act does not permit derivative use of the applicants' examination transcript, it cannot be consistent with a fair trial where such transcripts have been disseminated unlawfully and to an unknown extent. It was submitted that in those circumstances, the onus to demonstrate that the trial was fair shifts to the prosecution.
So far as grounds 5 and 7 were concerned, the respondents submitted that the primary judge erred in concluding that the relief sought in pars 2, 3 and 6 of the notices of motion constituted a large extension of the principles to be found in Lee (2014).
Senior counsel for Mr McCarthy, in describing grounds 5 and 7 as one ground with separate aspects, said that these grounds are based on an error by the primary judge at [73]-[75] of his judgment, which I have set out at [68] above.
The respondents submitted that the fact that the current prosecutors had not been provided with compulsorily acquired material is not the end of the matter. It was submitted that the primary judge failed to consider that there was a real risk that the material had been provided to the prosecutors without them being told it was compulsorily acquired material. They pointed to the fact that the evidence disclosed that from February 2006, the CDPP had advised the ACC, including Mr Tang, that they should focus on dishonesty and lies. They repeated the submission that Mr Tang and Ms Simpkin had read the compulsory examination transcript looking for lies by the accused and the plan to lock the respondents into a version of events which could be used for cross-examination. They also repeated the submission that Mr Tang and Ms Simpkin had attended meetings to discuss substantive charges.
The respondents pointed out that Mr Tang did not consider it improper or illegal to disseminate the information to the prosecutors. They also pointed out that he regarded what the accused had said as important to a charge based on alleged lies.
In this context, senior counsel for Mr McCarthy pointed out that the Crown case statement in December 2009 was similar in many respects to the current Crown case statement and that Ms Simpkin and Mr Tang were involved in the formulation of the charges.
Senior counsel for the respondents accepted that it may be true that evidence acquired derivatively from answers given under compulsion is sometimes admissible, but stated there were occasions when such evidence would not be admitted at trial. He referred to what I said in the first appeal at [102]-[106], in particular at [104]. He submitted that these statements were consistent with what was said by French CJ and Crennan J in X7 at [58].
So far as ground 6 was concerned, the respondents submitted that the primary judge paid undue regard to the finding that an independent judgment was exercised with regard to the filing of the bill of indictment. They submitted that quarantining should have required that particulars of the indictment be prepared without access or regard to the material that should be quarantined. They submitted that the Crown case remained in a substantially similar form since the commencement of the proceedings in late 2009. They submitted that the lies now alleged were a subset of what was proposed in 2009.
In respect of grounds 8 and 9, the respondents submitted that a stay was justified having regard to the circumstances in which the examinations occurred. They said that the original plan was to lock the respondents into a story and then question them on inconsistencies. They submitted that this occurred at a time when the relevant case officer believed that the investigative phase had concluded, although they accepted in their submissions that the examination subsequently resumed. They submitted that the examination was conducted as a cross-examination and that the final examination addressed inconsistencies in the manner planned.
The respondents submitted that the primary judge erred in concluding that Ms Simpkin's purposes were hardly significant. They also submitted that he erred in stating that if a permanent stay was appropriate, it would have been granted in X7 or Lee (2014), as in those cases such an order was not sought.
The respondents submitted that the primary judge should have found that the examinations were conducted for an improper purpose, to assist the prosecution by locking them into a story. Further, they submitted that there was no proper purpose by September 2007 because Ms Simpkin considered the investigative phase as complete. They relied on what was said by Hayne and Bell JJ in X7 at [153].
[25]
The Crown's submissions
The Crown submitted that there was no basis for the proposition that when an investigative agency has obtained information under compulsion from a person subsequently accused, a trial cannot proceed unless the Crown satisfies the court that neither the compulsorily acquired material nor any material obtained from it has assisted the prosecution in any way. However, as I understand it, the respondents' submission in the present case was based on the fact that the material had been illegally supplied to the CDPP.
In the present case, the Crown pointed out that the information was acquired compulsorily pursuant to the powers of the ACC contained in the Act. It was submitted that the test propounded by the respondents would require that in every case where a trial was preceded by an investigation involving a compulsory process, the Crown should present for scrutiny the entire history of the compilation of its brief, the prosecutor's review and consideration of that brief and any other aspect of preparation and development of the case.
The Crown, referring to the first appeal at [80]-[81], submitted that evidence acquired derivatively from answers given under compulsion is admissible on the trial of the examinee.
In relation to grounds 5 and 7, the Crown described the proposition that compulsorily acquired material could have been provided to the prosecutors without their being aware of it as fanciful. It submitted that the respondents had been provided with all documents to be tendered and statements of oral evidence to be given, none of which included or contained any reference to the material acquired from the compulsory examinations.
The Crown also submitted that the other matters referred to at [181] above were entirely irrelevant to the fairness of the prospective trial.
So far as ground 6 was concerned, the Crown described the concept of investigators as having played a role in formulating or determining the charge as particularised as unrealistic. The Crown submitted that any views Mr Tang or Ms Simpkin may hold or might have communicated to counsel or previous prosecutors regarding the sustainability of the charges and their drafting could not be of assistance to the Crown.
The Crown pointed out that responsibility to independently determine what charges and particulars are appropriate rests on counsel who will conduct the case for the Crown at trial. In these circumstances, it was submitted that there was no scope for investigators such as Ms Simpkin or Mr Tang to effect the formulation and presentation of the Crown case.
In regard to grounds 8 and 9, the Crown submitted that the purpose of the compulsory examination was irrelevant, in that the Crown did not propose to tender any evidence which had been obtained by their conduct.
The Crown also submitted that even if the primary judge should have found that the investigators acted improperly, that was irrelevant to the question of a stay as the story into which the respondents were said to have been locked into had never been disclosed to the prosecutors, will not be tendered and thus cannot have any bearing on the trial.
[26]
Consideration
In X7 (No 2), I reviewed X7 and the subsequent authorities and the circumstances in which Courts will grant a permanent stay of proceedings. I do not propose to repeat what I have said in that case but there are a number of propositions which are relevant to the present case.
First, the majority in X7, in holding that the Act did not authorise compulsory examination of a person relating to the subject matter of offences for which he or she has been charged, emphasised that such an examination would radically alter the process of criminal justice to a marked degree. This was so whether or not the answers were admissible or kept secret from those investigating or prosecuting the charge. This, it was said, would radically alter what was otherwise a wholly accusatorial process: X7 at [70], [71], [85], [87], [118] per Hayne and Bell JJ, [159], [160] per Keifel J; X7 (No 2) at [20], [21].
Second, this conclusion did not depend on classifying the trial as an unfair trial. The relevant question was whether the accused had a trial according to law: X7 at [89]; X7 (No 2) at [25].
Third, the principles in X7 were affirmed in Lee (2014): Lee (2014) at [31], [32], [41], [46]; X7 (No 2) at [54]-[57]; see also Commissioner of Australian Federal Police v Zhao [2015] HCA 5 at [18].
Fourth, as was pointed out in Lee (2014), the prosecutor has an obligation to alert the trial judge to any relevant disclosure of compulsorily acquired material so that steps can be taken to ensure the trial is not affected: Lee (2014) at [44].
Fifth, neither X7 nor Lee (2014) compel the conclusion that the fact of an unauthorised examination on its own requires a permanent stay of proceedings. To grant a permanent stay in these circumstances would be to do so without regard to the nature and extent of unfairness which results and would fail to take into account the interests of the community in the prosecution of serious criminal offences.
Sixth, the authorities dealing with the question of the grant of a permanent stay emphasise three matters. First, the power is one that will rarely be exercised. This is unsurprising having regard to the interests of the community and the victims of crime in the enforcement of the criminal law: X7 (No 2) at [91]. Second, a stay will only be ordered where there is a fundamental defect of such a nature that there is nothing a judge can do in the context of a trial to relieve against its unfair consequences: X7 (No 2) at [92]. Third, irrespective of whether or not unfairness is demonstrated, a stay may be granted if the proceedings in question are an abuse of process, in the sense that the use of the court proceedings brings the administration of justice into disrepute: X7 (No 2) at [93].
In the present case, the circumstances are different to X7. The examination occurred before any charges were laid and was not illegal, nor did it amount to contempt of court: cf Hammond v The Commonwealth of Australia [1982] HCA 42; 152 CLR 188.
Notwithstanding these differences, in my opinion the disclosure had the same effect as that referred to in X7. In X7, French CJ and Crennan J emphasised the importance of a direction under s 25A(9) of the Act, stating that such a direction must be made if the failure to do so would prejudice a fair trial: at [26].
Similarly, in Lee (2014), the Court observed the importance of s 13(9) of the New South Wales Crime Commission Act 1985 (NSW) (the equivalent of s 25A(9) of the Act) in protecting the right of an accused person to a fair trial: at [20]-[34].
As in Lee (2014), it was not in issue in the present case that the dissemination should not have occurred. However, unlike Lee (2014), a prosecution team which was not privy to the compulsory examination transcripts or the compulsorily acquired material has been appointed. Further, the only potential witness privy to that material, Mr Tang, has been excluded from giving evidence.
In these circumstances, it does not seem to me that the mere fact of dissemination warrants a permanent stay. On its face, it does not seem to me that dissemination to persons not involved in the conduct of the trial would make the trial unfair or alter the accusatorial process of a criminal trial to such an extent as to warrant a permanent stay.
It remains to be considered whether the particular matters the subject of grounds 5-7 of the notice of appeal warrant either the grant of a permanent stay or the relief sought in either pars 2 or 6 of the notices of motion.
In that context, it should be noted that, to the extent the order sought in par 2 of the notices of motion sought orders that persons who had read or listened to the accusatorial process material be prohibited from giving evidence, the only person who fell into that category was Mr Tang, who has been prohibited from doing so.
Grounds 5 and 7 of the notice of appeal focus primarily on the proposition that the content of the examinations and the compulsorily acquired material have been disclosed to the current prosecuting team without their knowledge. I have dealt with this submission to some extent in my consideration of ground 3. At risk of repetition, in circumstances where the Crown case does not depend on any of that material and where the assurance on behalf of the current team that they have not read the transcripts or such material has been accepted, this possibility is, at most, speculative.
In dealing with these grounds, senior counsel for Mr McCarthy stated that they were based on what he described as an error at [73]-[75] of the primary judgment, which I have set out at [68] above. He submitted that if the current prosecution team had been provided with such material then it would follow that the position was the same as that in Lee (2014).
I have set out the factual material on which the respondents rely in support of the proposition that there was "a real risk" that the compulsorily acquired material had assisted the prosecution. That material establishes that Mr Tang and Ms Simpkin were assisted in their work on behalf of the ACC by the transcripts of the compulsorily acquired material. However, it does not lead to the conclusion that such material was in fact disclosed to the prosecution team or that it has assisted them in any way in the preparation of the case against the respondents.
I am prepared to assume that there is a possibility that at some stage Mr Tang, for example, may have said something to the prosecutors based on what he had read in the transcripts or the compulsorily acquired material. The primary judge was also prepared to assume that possibility.
However, I do not believe that this possibility warrants either a permanent stay or orders in the nature of pars 2 and 6 of the notices of motion. There was no direct disclosure. Further, the legislation does not prohibit any communication between persons who attended the examination or were privy to the confidential material and prosecutors. It only prohibits disclosure of material the subject of the s 25A(9) direction. The possibility that something was said which may have related back to the examination cannot, in my view, lead to the prohibition of a prosecutor, who may not know that he or she has been appraised of that material, from continuing to act.
Further, the ACC is required by s 12 of the Act to make available to the relevant law enforcement authority evidence that will be admissible in the prosecution of an offence. In considering whether an offence was committed for the purpose of compliance with this section, the legislation does not prevent an officer of the ACC drawing upon information received as a result of the examination. That indeed seems to be one of the purposes of such an examination. What the officer of the ACC cannot do is disclose such material to law enforcement authorities if relevant directions under s 25A(9) have been made.
In these circumstances, I do not consider that the possibility of an unsourced disclosure in the present case is such as to warrant either a permanent stay or orders in the nature of those sought in pars 2 and 6 of the notices of motion. The primary judge, in the exercise of his discretion, was not in error in reaching a similar conclusion. The position may well have been different if it was established that such an unauthorised disclosure, even if unsourced, was made.
It was also contended in ground 6 that the primary judge erred in the exercise of his discretion in not dealing with the roles of Ms Simpkin and Mr Tang in the formulation of the charge. It was not in dispute that the current prosecuting team, after reviewing admissible evidence, determined that the charge was appropriate. In those circumstances, it is difficult to see why fairness or a trial according to law requires a further exercise of that nature. The primary judge, accepting the possibility that Mr Tang and Ms Simpkin may have been party to the formulation of the charges against the respondents, considered that this did not warrant the order sought in par 6. He was not in error in doing so.
The alternate ground upon which a stay was sought was that the examination was conducted for an improper purpose. The purpose was apparently to lock the respondents into a story and then cross-examine them on any inconsistencies between their version of events and the documents available to the ACC. It was said that this occurred at a time that Ms Simpkin believed the investigation had been completed.
Section 24A of the Act provides that "An examiner may conduct an examination for the purpose of a special ACC operation/investigation." A "special ACC operation/investigation" is relevantly defined as "an investigation into matters relating to federally relevant criminal activity that the ACC is conducting and that the Board has determined to be a special investigation."
There was no dispute that the investigation into the whiskey schemes fell within that definition.
If the examination of the respondents was carried out for another purpose other than an investigation into those schemes it would amount to an abuse of power. However, even if the purpose was to lock the respondents into a story and test inconsistency, it does not seem to me that that was necessarily inconsistent with investigating the schemes and the respondents' role in them. One aspect of the investigation would be to obtain the respondents' explanation of their activities and test its veracity. That would seem to me to be a legitimate purpose, even if all other aspects of the investigation were taken to have been concluded.
Further, even if the examination was conducted in excess of, or was an abuse of, the power conferred by s 24A of the Act, it would not follow that a stay should be granted. Such an abuse or excess would not make the proceedings against the respondents an abuse of process, as the proceedings do not depend on the contents of the examination. Further, the transcripts of the examination are not admissible in evidence and, as previously stated, are not available to the prosecution team. In these circumstances, even if the examinations were in excess or abuse of power, it would not result in a permanent or temporary stay of the proceedings.
[27]
Conclusion
In these circumstances, leave should be granted to the respondents to appeal from the decision of the primary judge on the grounds contained in pars 1, 3-9 inclusive of the further amended notice of application for leave to appeal, but the appeal should be dismissed.
Since writing the above judgment, I have read the draft judgment of Fullerton J. I agree with her Honour's reasons.
[28]
Orders
The following orders should be made:
1. Dismiss the appeal brought by the Crown.
2. Grant each of Patrick David McCarthy and Ross Edward Seller leave to appeal on grounds 1, 3-9 inclusive of the further amended notice of application for leave to appeal filed by each of them on 3 October 2014, but dismiss the appeal.
FULLERTON J: I have read the judgment of the Chief Justice and agree with the order his Honour proposes in dismissing the Crown appeal. I am grateful for his Honour's comprehensive summary of the Crown case and the evidence the Crown proposes to adduce from Mr Tang in proof of its case, together with his Honour's summary of the arguments of the parties.
I would wish only to add my own view as to whether Lee v The Queen is authority for the proposition for which the respondents contend, namely that a witness who has been privy to compulsorily acquired information must be excluded from giving evidence in the trial of an accused. I agree with the Chief Justice that it is not necessary on this appeal to decide whether any witness that the Crown might call at trial who has been exposed to compulsorily acquired information must be excluded. I would, however, venture the view that in a particular case that question will depend on the material the witness has been exposed to, and the evidence the witness is to give at trial in proof of the charge or charges, in the context of the issues in dispute at trial in an adversarial setting where the Crown has the obligation of proving the guilt of an accused.
Lee v The Queen is, however, authority for the proposition for which it was cited by the respondents on the appeal, namely that the fundamental and underlying tenet of a fair trial at common law is that it is for the prosecution to prove the guilt of an accused person, and that any risk of upsetting the balance between the power of the State to prosecute and the position of an individual who stands accused, by the dissemination of compulsorily acquired material is open to be remedied by discretionary orders of the trial judge of the kind made by the primary judge in this case.
On the hearing of the appeal, the Crown submitted that the principles for which Lee v The Queen is authority do not dictate the exclusion of Mr Tang as a witness at the respondents' trial, the Crown having not been put in a position of unfair advantage relative to the respondents either by reason of Mr Tang having had foreknowledge of the respondents' answers given under compulsion, or because he has had access to other material produced under compulsion, in circumstances where the senior counsel who is to lead his evidence at trial has been quarantined from that information.
As the Chief Justice has emphasised, it is not necessary that the respondents establish, as a matter of fact, that Mr Tang derived some form of improper forensic advantage in the preparation of his witness statement or the preparation of the summaries of the flow of funds from access to the compulsorily acquired information. It is sufficient that the fundamental entitlement the respondents have to a fair trial is not jeopardised by reason of that access. The trial judge's assessment of the measure of that risk was discretionary and, for my part, an assessment with which I could not reasonably disagree.
Further, again as noted by the Chief Justice, it is not determinative of the question whether a fair trial is jeopardised that the Crown prosecutor is unaware of the compulsorily acquired information to which Mr Tang has had access, even if that would serve to negate the risk of unfairness to the respondents in the evidence to be adduced from Mr Tang or the tender through him of the collation and summation of a large number of individual financial transactions in proof of the structure of the whiskey scheme and the flow of funds between the parties to it. Rather, what is determinative is the respondents' entitlement to present or develop their defence through cross-examination of any Crown witness, including, in this case, Mr Tang, and the question whether that is at risk of being jeopardised were the cross-examiner to be forced to exercise constraint so that his questions do not trespass on the compulsorily acquired information or risk the exposure of that material.
In this case, the risk that the respondents' counsel will, or might, be limited or hindered in the structure and content of the cross-examination of Mr Tang cannot be excluded. It is for that reason, and in order to ensure that the trial is conducted in accordance with the primary tenet of fairness, that the discretionary judgment of the primary judge should not be disturbed.
I also agree with the Chief Justice's disposition of the respondents' appeal and his Honour's reasons for doing so. I would only wish to make my own observations as to an aspect of the argument advanced by the respondents in support of grounds 3 and 4.
As the Chief Justice observed, those grounds are linked in that what was said to be error in the primary judge's upholding of the Crown's claim of legal client privilege has had the consequence that neither Mr Tang nor Ms Simpkin were able to be cross-examined in the pre-trial hearing to explore with them how they were able to quarantine any reference to the compulsorily acquired information in their various conferences with the CDPP.
In support of the third ground of appeal, the respondents submitted that his Honour was in error in failing to find that there was an implied or imputed waiver of the privilege resulting from what was said to be inconsistency in the Crown's assertion that neither Mr Tang nor Ms Simpkin provided any assistance to the CDPP in the conferences they attended on 20 and 23 July 2009 referable to the compulsorily acquired information, and the maintenance of the privilege over the conference notes and/or over any documents provided by Mr Tang and Ms Simpkin in those conferences.
The respondents also submitted that the inconsistency was manifest by what his Honour should have accepted was the risk that the prosecution team was indirectly exposed to the compulsorily acquired information by Mr Tang and Ms Simpkin's participation in conferences attended by prosecuting counsel. They submitted that, were there discussion in conference with the CDPP about the particular defences the respondents may assert at trial and/or the fact and detail of what the Crown relies upon as lies the respondents told officers of the ATO and how those lies might be proved to be lies at trial, there was the strong likelihood that both Mr Tang and Ms Simpkin might, consciously or unconsciously, draw on what they had learnt from the compulsory examinations in contributing to that discussion, even if the source of their views was not disclosed to the CDPP. For that reason, it was submitted that the trial should be stayed until that issue is fully explored in cross-examination.
In addition to what the Chief Justice identified in the authorities cited at [164] as the limited circumstances in which waiver of privilege might be imputed to a party, and the even more limited circumstances where an inference can be drawn adverse to the party claiming the privilege at [169] (as to which, see also Standard Chartered Bank of Australia Ltd v Antico (1993) 36 NSWLR 87 per Hodgson J at [94] approved most recently in Cooper v Hobbs [2013] NSWCA 70), the respondents' submission proceeds on the assumption that, within the privileged material, there would be a basis upon which it could be demonstrated that there had been dissemination to the CDPP of the compulsorily acquired material, including via conversations or communications in conference that were not recorded, or a reasonable possibility or a real risk that that had occurred. Despite attempts by senior counsel for the respondents in oral argument to establish that proposition by inference, I am not persuaded that it was elevated beyond a bare assertion.
It seems to me that it does not follow that, because Mr Tang and Ms Simpkin attended what were described as "key meetings" in March 2008 and June 2009, and because they had an extensive knowledge of the history of the investigation leading up to the ultimate laying of the conspiracy charge, that their exposure to the compulsorily acquired information would, or even might, be disseminated by them in the course of conferences with prosecuting counsel and solicitors, or that within the privileged material there was any legitimate basis for raising that inference. As Mr Fagan SC submitted, and as the Chief Justice emphasised in his Honour's analysis of the question, if the documents protected by the privilege revealed, whether patently or by necessary inference, that there had been communication of the content of the compulsory examinations or to the material compulsorily acquired from the respondents to anybody in the Crown prosecution team, including independent counsel retained by the CDPP, then that material would have to have been disclosed in discharge of prosecuting counsel's overriding duty of disclosure. The respondents do not submit that Mr Fagan SC was in breach of this duty. To the contrary.
In addition, I consider that there is some force in the Crown submission that the arguments advanced by the respondents' counsel in support of ground 3, and its association with ground 4, have overlooked the independent role of prosecuting counsel. It was not in issue that it was Crown counsel, properly instructed, not the investigators, including Mr Tang and Ms Simpkin, who had the ultimate responsibility in this case to frame the charges to be prosecuted at trial and to settle the Crown case statement in elaboration of the charges. It was also not in serious contention that that was done referable to the evidence considered to be available and admissible at trial exclusive of the information which was wrongly disseminated.
In my view, the respondents' submission in support of the fourth ground of appeal also suffers from the same lack of scrutiny of the role of prosecuting counsel. If there were a plausible connection, or a real and not speculative possibility, that the wrongly disseminated compulsorily acquired information was either within the privilege material or, by necessary inference, based upon it, that information would have to be revealed, irrespective of its privilege status, in discharge of the prosecutor's duty of disclosure.
BELLEW J: I agree with Bathurst CJ. I also agree with the additional observation of Fullerton J.
[29]
Amendments
04 May 2015 - corrected paragraph numbering in headnote and judgment
04 May 2015 - Changed 'Giannerelli v Wraith' to 'Giannarelli v Wraith' in coversheet, headnote and paragraph [169].
Changed 'tenant' to 'tenet' in headnote.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 04 May 2015
For a trial to proceed, the Court must be satisfied that any dissemination of compulsorily acquired material to the prosecution would not result in the trial being unfair such that there is nothing the Court could to do relieve against the unfairness: [152] (Bathurst CJ); [235] (Fullerton J); [243] (Bellew J).
X7 v R [2014] NSWCCA 273 applied.
In circumstances where the dissemination of compulsorily acquired material to prosecution authorities was disclosed, an assurance was accepted that no member of the current prosecution team had read the material and if there had been explicit reference to the material, it would have been disclosed, any prosecutorial duty to ensure that a case was presented properly and with fairness to the accused was satisfied. The prosecution was not obliged to produce any further material, it was necessary for the Court to decide whether a stay should be granted on the material available to it: [147], [151], [153]-[154] (Bathurst CJ); [235], [242] (Fullerton J); [243] (Bellew J).
Lee v R [2014] HCA 20; 88 ALJR 65 considered.
Spincode Pty Ltd v Look Software Pty Ltd [2001] VSCA 248; 4 VR 501 distinguished.
Issue 4: Legal professional privilege
An imputed waiver of legal professional privilege will occur when conduct is inconsistent with the maintenance of the confidentiality the privilege is intended to protect. What brings about the waiver is the inconsistency, not some overriding principle of fairness operating at large. This is a question of fact and degree: [164] (Bathurst CJ); [239] (Fullerton J); [243] (Bellew J).
Mann v Carnell [1999] HCA 66; 201 CLR 1; Osland v Secretary Department of Justice [2008] HCA 37; 234 CLR 275 applied.
No inference could be drawn against the Crown from the maintenance of the claim for privilege: [169] (Bathurst CJ); [239] (Fullerton J); [243] (Bellew J).
Wentworth v Lloyd (1864) 10 HLC 589; Giannarelli v Wraith (No 2) [1991] HCA 2; 171 CLR 592; Standard Chartered Bank of Australia Ltd v Antico (1993) 36 NSWLR 87 applied.
In determining whether privilege had been waived, the Court should have focused on whether the maintenance of privilege was inconsistent with the Crown's contention that the compulsorily acquired material did not give it any forensic advantage which deprived the respondents of a fair trial. However, having regard to the manner the Crown put its case, there was no unfairness in its maintenance of the privilege. The Crown's denial of indirect disclosure to the prosecution team was not inconsistent with the maintenance of privilege: [161]-[162], [165] (Bathurst CJ); [235], [240] (Fullerton J); [243] (Bellew J).
It would be inappropriate for a Court to stay proceedings until legal professional privilege properly claimed was waived. The principle in Lee (2014) did not extend to compelling waiver of privilege to enable the accused to embark on an inquiry as to whether there had been inadvertent disclosure of material. Legal professional privilege is an important common law right or immunity and Courts should not compel its waiver where it is legitimately claimed: [167]-[168] (Bathurst CJ); [235] (Fullerton J); [243] (Bellew J).
Lee v R [2014] HCA 20; 88 ALJR 65 considered.
Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; 213 CLR 543 applied.
Issue 5: The grant of a permanent or temporary stay of proceedings
Three matters should be considered when considering whether to grant a permanent stay. First, the power to grant a stay will rarely be exercised. Second, a stay will only be ordered where there is a fundamental defect of such a nature that there is nothing a judge can do to relieve against its unfair consequences. Third, irrespective of whether unfairness is demonstrated, a stay may be granted if the proceedings are an abuse of process, in the sense that the use of the proceedings brings the administration of justice into disrepute: [204] (Bathurst CJ); [235] (Fullerton J); [243] (Bellew J).
X7 v R [2014] NSWCCA 273 applied.
The fact of an unauthorised examination or unlawful dissemination, on its own, does not necessitate a permanent stay. In this case, while the unlawful dissemination had the effect of prejudicing a fair trial, as a new prosecution team had been appointed and the only potential witness privy to the material had been excluded from giving evidence, the mere fact of dissemination to persons not involved in the trial did not alter the accusatorial process to such an extent as to warrant a stay: [203], [208]-[209] (Bathurst CJ); [235] (Fullerton J); [243] (Bellew J).
X7 v Australian Crime Commission [2013] HCA 29; 248 CLR 92; Lee v R [2014] HCA 20; 88 ALJR 65 considered.
The fact that persons present during the compulsory examinations may have been party to the formulation of charges against the respondents did not warrant a stay. While there was a possibility that Mr Tang may have disclosed something based on the compulsorily acquired material, this possibility did not warrant a permanent or temporary stay or the prohibition of a prosecutor from continuing to act. This was particularly so given that the ACC Act did not prohibit communication between examiners and prosecutors: [215]-[219] (Bathurst CJ); [235] (Fullerton J); [243] (Bellew J).
In this case, the ACC investigation was conducted for a proper purpose. Further, even if it was conducted in excess of, or was an abuse of, power, it would not follow that a stay should be granted as the proceedings did not depend on the contents of the examination and the compulsorily acquired material was not admissible in evidence or available to the prosecution team: [223]-[224] (Bathurst CJ); [235] (Fullerton J); [243] (Bellew J).