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: