Regina v Ronen & Ors [2004] NSWSC 1291 | Case summary

1 HIS HONOUR: This is an application to set aside a subpoena addressed to Mr Stephen Lowy. Mr Stephen Lowy is an elderly gentleman who has been subpoenaed to give evidence in these proceedings. At this stage the Court is still hearing preliminary matters, however, empanelment of the jury is likely to take place next week, on Monday 19 April 2004. 2 On 14 April 2004 Mr Neil QC announced an appearance on behalf of Mr Lowy. Mr Neil was granted leave to file a notice of motion returnable instanter. The motion sought an order that the subpoena issued to Mr Lowy be set aside. In preliminary submissions, Senior Counsel for Mr Lowy indicated that the principal relief sought was in fact the setting aside of the subpoena. This was sought on the assertion that the subpoena process was being used by the prosecution for a collateral purpose and, in that sense, amounted to an abuse of process. Secondly, it was put that the subpoena process was being used by the Director of Public Prosecutions to have the Court carry out, in effect, an executive function of the Commonwealth, rather than the normal judicial process related to the issue of the subpoena. 3 At that time Mr Neil indicated, in addition, that there would be other matters he would want to argue if the application to set aside the subpoena were unsuccessful. These related to whether Mr Lowy, in any event, should be required to give evidence having regard to the provisions of s 128 of the Evidence Act and to other pertinent matters, particularly related to his health and age. 4 Mr Richter of Queen's Counsel who appears for Mrs Ida Ronen reiterated his submission that the Crown's use of the subpoena process was an abuse of the Court's jurisdiction. This submission was one that Mr Richter had raised earlier in these pre-trial proceedings in relation to the calling of other witnesses. Those arguments, at least in the case of the other witnesses, had not found favour with the Court. 5 I indicated to the Crown that I would require argument to satisfy me that the present procedure was an appropriate one. I adjourned the argument of the motion to set aside the subpoena until this morning at 9.30, that is Friday 16 April 2004, and I directed that Mr Neil file a brief outline of submissions prior to the hearing. The Crown has also provided me with an outline of submissions in response, and I have listened to oral argument this morning, in addition to reading those outlines. I am now in a position to state my determination and give my reasons for it. 6 Before so doing, however, I want to briefly mention that the affidavit of Mr Stephen Moss sworn 13 April 2004 contains within it Mr Moss's best recollection of conversations he had with Miss Penny Musgrave of the Commonwealth Director of Public Prosecutions on 6 and 13 April 2004. Mr Moss is the solicitor for Mr Lowy. There is an affidavit as well from Penelope Mary Musgrave, and this is sworn 16 April 2004, and she gives her best recollection of the conversations that she had with Mr Moss. 7 It is fair to say that there is some difference in the recollection of each of the solicitors as to the contents of their conversations. As I indicated in my preliminary remarks to counsel, I do not think the issues in this case can be resolved by, as it were, an exercise in determining which of the two solicitors had the better recollection of those conversations; or indeed what the precise text of those conversations were. I have, however, taken the contents of each of those affidavits into account, and I will do my best to bring them to bear on the principal issues that I see involved here. 8 There is also an affidavit from Mr Moulds of the Australian Crime Commission. This was sworn 14 April 2004. Mr Moulds says that on Tuesday 13 April 2004 he attended Mr Lowy's residence at unit 13/29 Mona Vale Road, Darling Point, and met there were Mr Lowy and Mr Moss his solicitor. Mr Moss's assistant, Michelle Ly, was also there, as was Georgina Wade. It appears that Mr Moss requested that he be provided with a general outline of the inquiry involving his client so he might obtain further instructions. Mr Moulds told Mr Moss, in the presence of Mr Lowy and others, that he wished to ask Mr Lowy about his knowledge of or involvement in handling large amounts of cash on behalf of the accused in this matter, or other persons, during the period between October 1991 and February 2001. Mr Moulds indicated that he would like to take a witness statement from Mr Lowy to use in the proceedings. 9 Mr Moulds said that Mr Moss and Mr Lowy then left the room. When they returned a short while later, Mr Moss informed Mr Moulds that his client was unwilling to answer questions and would not provide a witness statement. Thereupon, Mr Moulds and Miss Wade left the premises at Mona Vale Road, Darling Point. Those then are the matters contained in the affidavits that are relevant to my determination. 10 As a preliminary matter, however, I should briefly recount the overall circumstances which have led to the present applications. On 2 February 2004 an indictment was presented against each of the accused and each was arraigned on that occasion. The nature of the charge is set out in detail in my earlier decision given on 3 February 2004, as is a relatively detailed examination of the case proposed to be presented by the Crown against each accused. In essence, the case involves an allegation of conspiracy to defraud the Commonwealth of income tax between 1991 and February 2001 involving income generated by four retail outlets associated with the accused. 11 In one way or another, each of the accused was or are directors and shareholders of a number of companies involved in the retail and wholesale clothing industry. "Dolina Australia" was involved in the manufacture and sale of garments retailing through such outlets as Coles Myer, David Jones and Rockmans. These sales in the main did not involve cash transactions. 12 However, in addition to the sales through these major outlets, Nitzan and Izhar Ronen, through their companies, supplied garments to four smaller outlets. These were managed by their mother. These businesses retailed garments to the public generally. Three of the businesses returned their income for income tax purposes through On Fovo Pty Ltd. The income of the fourth business was returned in the tax return of Mrs Ida Ronen. 13 The thrust of the Crown case, if I may briefly describe it, is that Mrs Ronen, on behalf of herself and her sons skimmed from the takings of these businesses most, if not all, of the cash and diverted it to other purposes. For example, it is alleged that at the time that the skim of cash takings was brought to a halt in February 2001 only ten percent was being banked, the remaining ninety percent being distributed directly to or for the benefit of the Ronens. The Crown case is that the skimming took place in Mrs Ronen's apartment at Thornton Street, Darling Point, and records were kept in her apartment showing the actual takings of each retail outlet. The reduced amount together with cheques would be deposited at the bank through employees of the Dolina Group. The amounts returned by On Fovo Pty Ltd and Mrs Ida Ronen represent only the moneys banked and not the larger amount of cash skimmed and kept by or on behalf of each of the accused. 14 On 3 February 2004 I ordered that a preliminary hearing be held prior to the commencement of trial for the taking of evidence of two witnesses; namely, Jennifer Lawler and Ian Geller. Miss Lawler is and was the payroll clerk employed by the Dolina Group. Mr Geller is an accountant with Krochmalik & Hurwitz, whose business is conducted at 30 Carrington Street, Sydney. He provided accounting services to the accused both during the period of the alleged conspiracy and up to the present time. Each of those two witnesses had provided statements to the ACC in 2001. For reasons discussed in my decision of 3 February 2004, each witness had declined to confer with the Crown prior to trial. 15 Mr Richter of Queen's Counsel, who appears as I have said for Mrs Ida Ronen, presented detailed and forceful argument before the Court prior to the decision of 3 February 2004. These arguments urged the Court not to order the preliminary hearing in relation to the taking of evidence of the witnesses Jennifer Lawler and Ian Geller. There is no need for me to set out in this decision the full ambit of Mr Richter's argument as they are detailed in the earlier decision. 16 In short, however, his essential argument, which was endorsed by counsel for the other accused, was that the real purpose and effect of the application then before the Court was to transform the Court into an instrument of gathering evidence for the prosecution. It was my view, in the unusual circumstances revealed in relation to both Ms Lawler and Mr Geller, that it was in the interest of justice that the procedure suggested by the Crown be adopted. It was my view that, in those particular circumstances, the pre-trial taking of evidence from the two witnesses was warranted; and indeed was necessary to ensure that an efficient and fair trial be had. 17 The aspect of fairness was a particularly important matter in my view, particularly so far as each of the accused was concerned. It was and is important, indeed fundamentally so, that the defence know exactly the case it has to meet. Mr Richter at that time fairly and candidly admitted, however, that no specific prejudice would flow to any of the accused if the orders sought were made. It was my ultimate view that the Court had a power in appropriate circumstances to allow a preliminary hearing by way of voir dire when it was able to perceive that the interests of justice would be best met by adopting that particular course. For the reasons given in that decision on 3 February 2004, I was satisfied that that was the case in relation to the evidence of both Ms Lawler and Mr Geller. 18 On 5 February 2004, Ms Lawler gave evidence at the preliminary hearing. During the evidence she revealed, for the first time, that over a considerable period she had been instructed by Mrs Ronen to pay a number of employees cash for overtime and further instructed that the payments were not to be recorded in the payroll. This led to the issue of five subpoenae, four of which were addressed to corporate entities in the Dolina Group. The payroll reports of those corporate entities for the periods October 1991 to February 2001 were requested to be produced. 19 Counsel for the accused sought to set aside the subpoenas, as did counsel for the corporate entities. On 26 February 2004 I declined to set aside the subpoenae and I gave detailed reasons for that decision. One of the matters I noted in providing those reasons was the fact that Ms Lawler had during the course of her evidence identified for the first time the unusual situation of the payment of cash to employees for overtime and the specific directions by Mrs Ronen that those payments not be included in the payroll report. This evidence had led naturally and logically to a request for the production of the payroll records. 20 The disputants brought an appeal from my decision declining to set aside the decision. This appeal was heard by the New South Wales Court of Criminal Appeal on 11 March 2004. On 22 March 2004 the appeal was dismissed (see R v Ronen & Ors [2004] NSWCCA 67). An application for special leave to appeal to the High Court of Australia is currently listed for hearing on 5 May 2004. 21 The next relevant matter related to the ordering of a further preliminary hearing involving a specific witness. That witness is, as a result of an interim pseudonym order I made, now known as "AB". However, there was a need in the case of the witness AB to determine whether he should be required to give evidence under s 128(5) of the Evidence Act 1995. Mr Odgers SC, had appeared for the witness AB and had argued that the interest of justice did not require that he give evidence in the proceedings. 22 For present purposes, it is sufficient to note that one aspect of the Crown case is that during the period of telephone surveillance, between April and December 2000, about $600,000 cash was moved overseas to Israel; and that it was the witness AB who acted as the conduit in receiving these moneys from Mrs Ronen, and so it was alleged in one instance from Mr George Segal, the de facto partner of Mrs Ronen. It was not suggested that the witness AB himself sent the money directly overseas but that he did so by way of a third party or third parties. At this stage the Crown wishes to rely on evidence that will suggest that money was moved overseas for or on behalf of the Ronens in furtherance of the conspiracy. 23 On 15 March 2004 I determined that the interests of justice required that the witness AB give evidence, and I indicated that I would provide him with a certificate under sub-s (6) of s 128 so as to provide the protection identified in sub-s (7). I gave detailed reasons in relation to the conclusion I had reached. 24 Senior counsel on behalf of the accused had joined in the objection to AB being required to give evidence. One of the matters argued was, in effect, the repetition of the arguments that had been advanced in relation to the orders made affecting Ms Lawler and Mr Geller. I ruled however that I remained satisfied that the procedures which the Crown sought to adopt by calling the witness AB in the pre-hearing did not involve any abuse of process. I acknowledged that the situation of the witness AB was somewhat different from that of Ms Lawler and Mr Geller. 25 It was my view, however, that the Crown was entitled, at least on a preliminary basis, to call AB as a witness in this case, if it chose to do so. In those circumstances, the fact that AB had not been cross-examined at committal and had not provided any statement highlighted the fact that it was both appropriate and fair that the defence should have the opportunity in the preliminary hearing to hear what his evidence would be. 26 The final chapter of events leading to the present application emerged from the evidence given by the witness AB on Friday 2 April 2004. The witness was told of the nature of the protection to be afforded to him by virtue of the issue of a certificate under s 128. Further, the interim order, to which I had made earlier reference, was imposed. The witness was then taken through evidence-in-chief by Mr Game SC representing the Crown. The bulk of the questioning related to the witness' involvement in the receipt of the cash monies from the accused or on their behalf and his dealings with those monies. 27 According to the witness, the bulk of his dealings after receipt of the monies, were with a Mr David Ainsworth, who on a number of occasions collected monies from AB's office. The cash monies were in each case accompanied by instructions from the accused as to the destination overseas of those monies. The witness AB, however, was asked whether there was any person apart from Mr Ainsworth to whom he had delivered money which had been in his possession as a result of arrangements with the Ronens. The witness then identified a Mr Stephen Lowy as such a person. He said that this had happened on one occasion only. 28 It is fair to say that the evidence given by AB does not make it entirely clear as to what happened to this parcel of money once it came into the possession of Mr Stephen Lowy. At the end of the hearing on 5 April 2004, the Crown then sought an order for short service of two subpoenae. The first related to Mr David Ainsworth; the second related to Mr Stephen Lowy. As I understand it, the present application to set aside the subpoena relates in fact to both the requirement to produce documents and the requirement to give evidence. I should add that Mr Neil QC indicated there were no documents in his client's possession which answered the description in the subpoena. 29 Finally, it is necessary to mention, as I have by reference to Mr Moulds' affidavit, that there was an interview between the Federal Agent Moulds and Mr Lowy and his solicitor when Mr Lowy, after receiving advice, declined to provide answers to questions and declined to provide a statement. It was against that background that the subpoenas came before the Court on 14 April. 30 The first submission contained in the outline of submissions that has been filed on behalf of Mr Lowy relates to Court's jurisdiction. It has been submitted that there is no jurisdiction to examine Mr Lowy and therefore the subpoena has been issued without jurisdiction. The platform from which this argument is mounted is Kable v The Director of Public Prosecutions (1995) 189 CLR 51. 31 Mr Neil has submitted that the role of the New South Wales courts in the light of the constitution cannot extend to the investigation of whether or not there is a state of facts requiring presentation to a Court for declaration of the legal rights and duties of persons in respect of the alleged state of facts. (See McHugh J in Kable at page 110). It follows, according to this argument, that the Parliament of New South Wales could not legislate to provide the Court with power to conduct an executive or investigatory function. 32 The corollary to this proposition is that if the proposed investigatory power cannot be conferred by Parliament, it cannot be assumed by the Court. As I understand these submissions, they come down to a single proposition, namely, that the Court cannot take upon itself the exercise of an investigatory or executive power. 33 In my view, this argument can be best dealt with when there is an appreciation of the outcome of Mr Neil's second argument, namely, that which asserts that the subpoena has been issued for a collateral purpose. For that reason, I will deal with the jurisdictional argument as the second point to be determined. 34 In the meantime, I will return to the collateral purpose argument and deal with that as the first point. This argument may be stated briefly. Mr Neil has submitted that the procedure involved in a Basha inquiry was never intended to extend so as to allow the Crown to issue subpoenas pre-trial to potential witnesses to bring them to Court in order to ask questions to see if they could provide evidence against the accused. Thus, he argues, that the subpoenas in this case have been issued for a collateral purpose and they should be set aside. 35 The legal principles in relation to such an application may be briefly stated:

See Regina v Apostilides (1984) 154 CLR 563, Whitehorn v Regina (1983) 152 CLR 657 and Regina v Kneebone (1999) 47 NSWLR 450. There are, of course, exceptions to the extent of this duty, including a situation where the witness appears in the view of the prosecutor to be unreliable. But those exceptions aside, there exists the duty I have described. It is a fundamental duty and is based on the prosecutor's obligation to assist the Court fairly in its task of arriving at the truth. 44 Against the background of these considerations, it is plain, in my view, that the proper procedure to be adopted in these circumstances is the issue of a subpoena requiring the witness to attend Court and give evidence at trial. That, of course, is precisely what the Crown has done, albeit that it has been done in the context of a pre-trial hearing. 45 This is not a case, however, where the Crown does not know what the evidence is likely to be. It possesses reliable information that it has received as a result of witness AB's evidence. The information informs the prosecution and, for that matter, the accused, of the details of the nature of the evidence. Of course, the Crown does not know in fact what the witness will say. The witness might, hypothetically, be so physically infirm or intellectually disabled as to be unable to recall the events in question. He might, to take another hypothetical illustration, be quite untruthful even though he has complete recall of the particular event. 46 It is true the Crown does not know whether one or other of these hypothetical situations or, for that matter some other situation, is likely to occur. But these considerations are, to my mind, beside the point. 47 The issue of a subpoena in the present circumstances is not for a collateral purpose at all. It has been issued for the purpose of placing relevant evidence before the Court. It has been issued where there is every reason to suppose that the witness Mr Lowy will be able to provide that relevant evidence. It has been issued for the purposes of a pending trial and, indeed, in circumstances where there may well be a duty on the prosecutor to place the evidence before a jury. 48 This leads me to the allied argument which suggested that the requirement that Mr Lowy give evidence in a pre-trial hearing is in some way prohibited by the existence and presence of the committal hearing procedures in the Criminal Procedure Act 1986. As I understand the submission, which I might add was not supported by any authority, it was to the effect that a Basha inquiry could not be used to enable the Crown to embark on a de facto investigatory procedure under colour of a preliminary hearing. 49 Accepting however, for the purposes of the argument, that this is a correct statement of the legal position, the proposition in the present circumstances begs the question: Here we have a witness who was not called or available at committal. His very existence, and the nature of his likely evidence, has only recently come to light. This has occurred in circumstances where the identity of the witness, so far as I can see, could not have been known to the Crown at an earlier time. His evidence may properly be assessed as relevant and material. The accused, it is to be assumed, do not know what the witness will say before the jury. The evidence seems to suggest that none of the accused has had any connection whatsoever with the witness, at least in any direct manner. 50 Is it not then the situation as was expressed by Finlay J, (with whom Gleeson CJ and Carruthers JA agreed) in Palmer, (an unreported decision of the New South Wales Court of Criminal Appeal delivered on 4 September 1992)? In that case his Honour said: "The hearing of voir dire examinations by a Judge in the absence of the jury is usually to settle a question raised by a party concerning any fact which has to be assumed for the purpose of the trial proper. However, on occasions Judges as a matter of discretion have allowed such an examination by way of voir dire when they have thought the interests of justice were best met by so doing." 51 To my mind, it is plainly in the interests of justice that, if this witness is to give evidence, that evidence should be called in a preliminary hearing in the absence of the jury. This procedure will enable the defence to know precisely what he has to say and they will then have the opportunity to cross-examine the witness if they wish to do so. 52 Again, to my mind, it would be quite contrary to the interests of justice, and indeed unfair to the accused, to come to any other conclusion. I shall not repeat the detailed principles relevant to this particular point but they are set out more fully in my earlier judgment of 3 February 2004 and may be scrutinised in that decision. 53 I return then to what I have described as the second point. This is the jurisdictional point relied upon by Mr Neil. This, in my view, can be simply answered by reference to the remarks of Spigelman CJ in Regina v Ronen & Ors at paras 85 to 89. In the present situation, the facts relevant to Mr Lowy's involvement and the transfer of cash overseas (or whatever equivalent arrangement was involved) came to light for the first time in the evidence of the witness AB. 54 The issue of the subpoena to require the presence of a witness to give evidence is, in those circumstances, plainly an exercise of judicial power or an aspect of the exercise of judicial power. I agree entirely that the Court must take considerable care to ensure that its powers and functions are not abused or used inappropriately. I am satisfied, however, that situation has not occurred in relation to the present subpoena issued to Mr Lowy. I do not consider, for the reasons I have given in relation to the collateral purpose argument, that this subpoena has been issued to enable the Crown to carry out an investigatory process at all. That conclusion, it seems to me, is a complete answer to the jurisdictional argument. 55 Mr Neil QC next argued that there had been a denial of natural justice in the issue of the subpoenae because his client had not been given an opportunity to be heard on the question as to whether leave should have been given for the issue of the subpoena. In my view, this submission is misconceived. 56 The power to issue a subpoena is contained in part 37 of the Supreme Court Rules, (see part 37 rules 2 and 6). It is picked up for the purposes of a criminal trial in part 75, rule 2. The Court has an express, and no doubt an inherent power, to grant short service, (see part 37 rule 7(8)). 57 Upon the return of subpoena, the recipient has the right and opportunity to appear and to seek to have it set aside. He has all the other well-known rights and entitlements of a person who is in receipt of a subpoena. He has, in short, a reasonable opportunity to make submissions and, if necessary to give evidence, before any order adverse to his interests is made. 58 In my view, it is clearly the case that the order giving leave to serve short notice and for the issue of the subpoena does not involve, in a relevant sense, a decision adversely affecting the rights, interests and legitimate expectations of the recipient. See Ainsworth v The Criminal Justice Commission (1991) 175 CLR 564. Indeed, the order preserves those rights and focuses the entitlement and opportunity for their exercise to the return date of the subpoena. That is precisely what has happened here. 59 I come then to the argument regarding the aspect of the subpoena requiring the production of documents. I am not satisfied that it is inappropriately expressed or that it is too wide and oppressive as has been submitted. The documents sought to be obtained by virtue of the subpoena are within a specific class and the time period relevant to the documents is within a specific time period. 60 For those reasons, I decline to set the subpoena aside. 61 The final matter to be examined, however, is whether the Court should require the witness to give evidence. This is a question that, in general terms, I have examined on two occasions earlier in the course of pre-trial hearings, one in relation to the witness AB, (see my decision of 15 March 2004), and the other is in relation to the evidence of Mr Segal, (see my decision of 1 April 2004). 62 I shall not set out the text of s 128 in this decision. It is, I think, sufficient to say that the parties accept that I am confronted with a situation where Mr Lowy is taken to have objected to giving evidence of the kind referred to by Mr Moulds in his interview with Mr Lowy and Mr Moss. Mr Neil QC continues that objection on his behalf. I should indicate, first, that I am satisfied that the evidence that is likely to be given by the witness, either if he elects to give the evidence or is required to give the evidence, may tend to prove that he has committed an offence against or arising under an Australian law. 63 Accordingly, I find that there are reasonable grounds for the objection and I would be prepared to give the witness, Mr Lowy, a certificate if he decided that he would, after appropriate warning, give the evidence. The position, however, is that Mr Neil of Queen's Counsel has made it clear that the witness does not wish to give the evidence and he has in fact asked me to make a positive order that the interests of justice do not require that the witness give the evidence, (see sub-s 5 of s 128). 64 Consideration of the matters necessary to be taken into account are set out in general terms in my two earlier decisions to which I have made reference. Here, it can be said that the considerations that are relevant to the exercise of the discretion include, first, that the crimes are serious crimes. That is certainly, I think, a fair conclusion to reach. Secondly, the evidence, however, does not appear to me to be of significant importance to the Crown case. It is a situation where there was but one isolated transaction and it arises in circumstances where there is a copious amount of other evidence that addresses the factual matters relied upon by the Crown for that particular aspect of the conspiracy case. 65 Thirdly, the personal position of the witness Mr Lowy is that he would, of course, be protected by the issue of a certificate; but when regard is had to his age - he is in his early 80's; and to his ill health - he suffers serious heart problems and has had a number of heart attacks in recent times; in my view those considerations of his personal position, coupled with the fact that his evidence is not a significant aspect of the Crown case, or as I see it, necessarily essential to the Crown case, lead me to a view that in the exercise of my discretion, I should make an order that the interests of justice do not require that the witness at this stage give the evidence.

Regina v Ronen & Ors

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Judgment (13 paragraphs)

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Cases Cited (6)