LEASK v COMMONWEALTH OF AUSTRALIA

Judges: Brennan CJ
Dawson J
Toohey J
Gaudron J
McHugh J
Gummow J

Kirby J

Court:
Full High Court

Judgment date: 5 November 1996

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Kirby J

By order of McHugh J, there was reserved for consideration of the Full Court the question whether s 31(1) of the Financial Transaction Reports Act 1988 (Cth) (``the Act'') (formerly the Cash Transaction Reports Act 1988 (Cth)) is a valid law of the Commonwealth.

The point in issue

On 18 February 1993 Mr Stephen Leask was committed for trial in Sydney on 54 counts alleging offences against s 31(1) of the Act.

Before his committal, but after being charged, Mr Leask filed a statement of claim in the original jurisdiction of this Court seeking a declaration that the sub-section was not a valid law of the Commonwealth. His pleading referred to various provisions of the Act, including s 31(1), and to the fact that charges had been brought against him. It contended that neither s 51(ii) (taxation), nor any other provision of the Constitution (including s 51(xii) (currency)), empowered the Parliament to legislate in terms of s 31(1) of the Act.

The Commonwealth contended that the proper interpretation of s 31(1) was that there was no offence if the person did not, in fact, conduct the transactions for the sole or dominant purpose referred to in s 31(1)(b) and that the sub-section was, in any case, a valid law. In support of its contentions before this Court, the Commonwealth called in aid a number of inquiry reports, reports of the Senate Standing Committee on Legal and Constitutional Affairs, the Ministerial Second

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Reading Speech introducing the Bill which became the Act and other documents. Such material was placed before the Court without objection.

The statutory provisions relevant to the disposal of the point in issue are set out in the opinions of the other members of the Court. I will not repeat them.

Arguments of the parties

In support of his contention that s 31(1) of the Act was constitutionally invalid, Mr Leask relied, in his written submissions, upon a number of arguments. Although these were formally adopted in the oral submissions of counsel, they were not further referred to. Argument was confined to the comparatively narrow point that s 31(1)(b) of the Act creates an offence of strict liability, without the need for the prosecutor to prove mens rea on the part of the accused. It was contended that a law, so expressed, went beyond any of the enumerated powers of the Parliament, conferred by the Constitution. It was also outside the express and implied incidental power and beyond the powers inherent in the express grants of power. Specifically, it was submitted that the sub- section could not properly be characterised as a law with respect to taxation (s 51(ii)), currency, coinage and legal tender (s 51(xii)) or banking (s 51(xiii)), nor one with respect to financial corporations formed within the limits of the Commonwealth (s 51(xx)) or any combination of the above read in conjunction with the express and implied incidental powers.

If, contrary to this principal submission, it was held that the sub-section could, on its face, be characterised as being with respect to any of the foregoing powers, it was then submitted that the terms of the sub-section deprived it of the requisite proportionality ^[162] Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 29. between the constitutionally valid subject-matters of the Act and the means selected by the Parliament for legislating on those subject-matters. ^[163] Re Director of Public Prosecutions; Ex parte Lawler (1994) 179 CLR 270 at 295. The purported enactment of a law in such terms could not reasonably be classified as appropriate and adapted to the achievement of any object or purpose within power. ^[164] See Cunliffe v The Commonwealth (1994) 182 CLR 272 at 297. Nor was it reasonably proportionate to the attainment of such an object or purpose. ^[165] Re Director of Public Prosecutions; Ex parte Lawler (1994) 179 CLR 270 at 286; cf Minister for Resources v Dover Fisheries (1993) 43 FCR 565 at 575 per Gummow J.

For the Commonwealth, it was argued that, to make good a charge under s 31(1)(b) of the Act, the prosecutor would be obliged to establish mens rea on the part of the accused. But whether this was so or not, the Commonwealth supported the validity of the challenged paragraph. It did so by reference to the enumerated heads of power and the incidental powers. Various other heads of power were also suggested. But, principally, the Commonwealth relied upon the currency power which, it asserted, was sufficient to sustain the whole Act and the sub-section within it.

Background to the Act

The legislative history of the Act throws some light upon its subject-matter and that of s 31(1). It is convenient to start by looking at this.

In 1970 the Congress of the United States of America enacted the Currency and Foreign Transactions Reporting Act ^[166] Pub L 91-2508, Title II; 84 Stat 1118; 31 USC § 5311-5325. (sometimes called the Bank Secrecy Act ). That Act introduced the concept of cash transaction reporting as an exception to the normal confidentiality and secrecy expected of, and observed by, banks with respect to the banking affairs of their customers. For a time there was no move to copy that Act in Australia.

However, in 1984, the Royal Commission on the Activities of the Federated Ship Painters and Dockers Union (the Costigan Royal Commission) reported its findings and recommendations. ^[167] Royal Commission on the Activities of the Federated Ship Painters and Dockers Union (the Costigan Royal Commission), Final Report (1984). As a means of countering the ``money trail'' of illegal and corrupt transactions, the Royal Commissioner recommended that account holders in various financial institutions, including banks, should be required to verify their identity. He also recommended that financial transactions with overseas agencies should be monitored. <sup>[168]</sup> Costigan Royal Commission, Final Report (1984) vol 1 at par 7.018. See also Royal Commission of Inquiry into Drug Trafficking (Stewart Royal Commission), Report (1983). The Royal Commissioner was alert to the sensitivities involved in the establishment of a substantial computer data base. He suggested that information derived from taxation records should be expressly exempted. He concluded that financial institutions were frequently aware of when accounts held by them were being used to process (``launder'') illicit profits. ^[169] Costigan Royal Commission, Final Report (1984) vol 1 at par 8.036; vol 4 at par 9.026. He found that the staff of financial institutions sometimes engaged in dishonest dealings with corporate criminals and with other customers involved in illegal gambling. He reported that a serious trend of money being ``laundered'' through accounts bearing false names had been uncovered. The focus of the Royal Commission's report was not taxation law as such, still less the currency. It was what might be described as organised crime. To that extent it is misleading to describe the Costigan Royal

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Commission report as the principal inspiration for the Act. ^[170] Hewett and Kalyk, Understanding the Cash Transaction Reports Act , (1990) at 10-11.

Ostensibly in response to the Royal Commission report, the Australia Card Bill was introduced into the Parliament. ^[171] Australia Card Bill 1986 (Cth). The universal identifier proposed by that Bill (to be known as the ``Australia Card'') was justified (amongst other grounds) by its suggested utility as a means of verifying banking and like financial accounts. ^[172] House of Representatives, Parliamentary Debates (Hansard), 4 June 1987 at 3956. However, the Bill failed to pass the Senate. This led to the introduction of the Bill which, under a new title, subsequently became the Act in question in these proceedings. That Bill was presented to the Senate by the Minister for Justice in November 1987.

In December 1987 the Senate resolved to refer the Bill to the Standing Committee on Legal and Constitutional Affairs. The resulting report reflected continuing anxiety about the privacy aspects of the Bill, its effectiveness to reduce the ``unlawful cash economy'' <sup>[173]</sup> Senate Standing Committee on Legal and Constitutional Affairs, Report on the Cash Transaction Reports Bill 1987 , (1988). See also Australian Law Reform Commission, Privacy , ALRC Report No 22 (1983) at 1195. and the need for such a measure, given that no other comparable country had enacted similar legislation, following the United States precedent. A call was made for a review of the Act ``not longer than 3 years, and that the review include the economic, taxation, privacy and law enforcement implications''. ^[174] Senate Standing Committee on Legal and Constitutional Affairs, Report on the Cash Transaction Reports Bill 1987 , (1988) at xi. The Government accepted this recommendation. The Bill then passed through the Parliament. ^[175] Hewett and Kalyk, Understanding the Cash Transaction Reports Act , (1990) at 15. Under its original name the Act first came into effect, in part, in June 1988. Substantially, the Act did not commence to operate until 1990.

In 1993, the Senate Committee produced its follow-up report. ^[176] Senate Standing Committee on Legal and Constitutional Affairs, Checking the Cash — A Report on the Effectiveness of the Financial Transaction Reports Act 1988 , (1993). This recorded the activities of the Australian Transaction Reports and Analysis Centre (AUSTRAC) established by s 35 of the Act. With specific reference to s 31, which is challenged in these proceedings, the Senate Committee reported a number of suggested difficulties which had been brought to its attention. These included one submission calling for s 31 to be amended: ^[177] Senate Standing Committee on Legal and Constitutional Affairs, Checking the Cash — A Report on the Effectiveness of the Financial Transaction Reports Act 1988 , (1993) at par 10.34 (submission of the Victorian Council for Civil Liberties).

``so that it only applies when there is an intention on the part of the alleged offender to evade the provisions of the Act. It is argued that the present formulation creates a strict liability offence and that this represents a departure from currently accepted criminal law principles.''

According to the report, the Attorney-General's Department's submission recommended ``the inclusion of mental elements in all the offences in the... Act where there is presently none specified''. ^[178] Senate Standing Committee on Legal and Constitutional Affairs, Checking the Cash — A Report on the Effectiveness of the Financial Transaction Reports Act 1988 , (1993) at par 10.36. The Senate Committee accepted the foregoing submissions. It concluded: ^[179] Senate Standing Committee on Legal and Constitutional Affairs, Checking the Cash — A Report on the Effectiveness of the Financial Transaction Reports Act 1988 , (1993) at par 10.38.

`` [ A] strict liability offence can infringe unacceptably upon the personal rights and liberties of individuals. The present formulation of section 31 creates a strict liability offence because it is not necessary to prove the guilty mind of the defendant.''

The Senate Committee made a recommendation (number 17) that ``there should not be strict liability under section 31''. It suggested that the section be amended. No such amendment has been enacted.

The history of s 31 of the Act can thus clearly be traced to a provision in the United States Act designed to prevent the structuring of transactions with a ``purpose of evading the reporting requirements...''. <sup>[180]</sup> 31 USC § 5324. In the Supreme Court of the United States in Ratzlaf v United States , <sup>[181]</sup> (1994) 126 L Ed (2d) 615 at 619. Ginsburg J, writing for the majority, explained ``structuring'' as:

`` [ T]o break up a single transaction above the reporting threshold into two or more separate transactions - for the purpose of evading a financial institution's reporting requirement.''

As originally enacted by the Congress, the offence in the United States required proof that the accused was guilty of ``wilfully violating'' the anti-structuring provisions. Only then could a person be convicted of the offence. <sup>[182]</sup> 31 USC § 5322. Various appellate courts had divided on the question whether, under the United States law, a defendant's purpose to circumvent reporting obligations sufficed to sustain a conviction for ``wilfully violating'' the provision. The majority of the Supreme Court (Ginsburg J; with Stevens, Scalia, Kennedy and Souter JJ concurring) held that the prosecution had to prove that the defendant acted with knowledge that his conduct was unlawful. Blackmun J (with whom Rehnquist CJ, O'Connor and Thomas JJ joined) held to the contrary. As a result of the decision in Ratzlaf the United States Congress amended the section to delete the reference to ``wilfulness''. However, the section remains a penal one. It still talks of ``the purpose of evading''. It provides penalties for violations of the section.

Before the Australian Parliament the Minister, on the introduction of the Bill, described the types of conduct to which he asserted the measure was directed: ^[183] Second Reading Speech on the Cash Transaction Reports Bill 1987, Senate, Parliamentary Debates (Hansard), 25 November 1987 at 2413.

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``The Bill represents one of the most significant initiatives to counter the underground cash economy, tax evasion and money laundering. It is notorious that the underground cash economy provides great scope for tax evasion both domestically and internationally. It is clear that traditional investigative techniques have been ineffective in identifying financiers of major crime, because of the ease with which such persons are able to distance themselves from the actual criminal conduct. However, experience both in Australia and overseas has shown that criminal financiers associate more closely with the profits of crime. That experience also shows that cash is an important part of financing criminal activity.

...

The legislation is consistent with calls by a number of royal commissions and other inquiries in recent years for stronger measures to deal with the widespread abuse of the facilities of financial institutions in relation to tax fraud and other criminal activities.''

Commentary on the Act has ranged from the sceptical and hostile ^[184] Bostock, ``Observations on the Cash Transactions Legislation'' (1989) 18 Australian Tax Review 147 at 154. Other critical observations appear in Senate Standing Committee on Legal and Constitutional Affairs, Checking the Cash — A Report on the Effectiveness of the Financial Transaction Reports Act 1988 , (1993). to the laudatory. <sup>[185]</sup> Hewett and Kalyk, Understanding the Cash Transaction Reports Act , (1990) at 49. The authors say that by early 1989 there had been a successful prosecution of an offence against s 24 as a result of an account being opened in a false name: ``Significantly, an amount of approximately $1.7 million of unpaid taxes was recovered as a by-product of the prosecution''. If the Act be within power, this Court is not concerned, as such, with the merits of the legislation, with its wisdom, the need for it or the reasonableness of its provisions. Those questions are for the Parliament. However, debates concerning the merits of a law may sometimes help to cast light upon a suggestion that a provision of the law is outside the scope of the constitutional grant of power or is so disproportional to the achievement of any constitutionally authorised subject-matter as to take it beyond power. These were the bases upon which Mr Leask challenged the validity of s 31(1) of the Act.

Applicable constitutional principles

The constitutional validity of s 31 of the Act has not been the subject of examination by this or any other Court. However, in August 1995, the Court of Criminal Appeal of South Australia upheld the constitutional validity of s 24 of the Act dealing with offences relating to false bank accounts. In Rogers v The Queen ^[186] (1995) 64 SASR 280. that Court held that, although the requirements of the section were sweeping, the constitutionality of s 24 of the Act was established. Doyle CJ said: ^[187] (1995) 64 SASR 280 at 292-293 per Doyle CJ with Prior and Nyland JJ concurring.

``I am conscious of the fact that it is not sufficient to support the law to assert that it will assist in or remove impediments to the collection of Commonwealth taxation. More than that is required. But once one accepts, as I do, that the `cash economy' and the operation of accounts in false names are significant means of evading liability to pay Commonwealth tax, it seems to me that a measure which prevents the operation of accounts in a false name does disclose a sufficient connection to the power to make laws with respect to taxation. I have already explained why it does not seem to me that the law is not reasonably proportionate to the end in view.''

Should a like conclusion be reached by this Court in respect of s 31? The principles which guide the approach of the Court in considering the constitutional validity of such a provision include, relevantly:

1. The primary task is the characterisation of the law in question. That is why it is useful to study the Act as a whole and to seek to understand its history and intended operation. Windeyer J once described the word characterisation as ``uncouth for grammarians and those who care for English undefiled''. ^[188] Worthing v Rowell and Muston Pty Ltd (1970) 123 CLR 89 at 130 . However, it is now too late to extirpate it from this realm of discourse. The fact that a law may have several characters will not deprive it of constitutional validity if the impugned provision can fairly be characterised as a law with respect to one or more of the designated heads of legislative power contained in the Constitution. ^[189] Actors and Announcers Equity Association of Australia & Ors v Fontana Films Pty Ltd (1982) ATPR ¶ 40-285 at 43,571; (1981-1982) 150 CLR 169 at 192; Cunliffe v The Commonwealth (1994) 182 CLR 272 at 295.

2. In determining the characterisation of the law, it should be remembered that the words ``with respect to'' in s 51 of the Constitution are words of very wide connection and deliberately so. ^[190] Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 369. Furthermore, as well as the express incidental power, account must be taken of the implied grant of legislative power inherent in the very fact that the heads of power appear in a constitution. ^[191] Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 26.

3. Whether it is alleged that the impugned law falls within the ``core'' of a grant of power under s 51, or within the incidental scope of the power, there is but a single grant. ^[192] British Medical Association v The Commonwealth (1949) 79 CLR 201 at 274-275 ; Burton v Honan (1952) 86 CLR 169 at 177; Cunliffe v The Commonwealth (1994) 182 CLR 272 at 319; cf Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 86, 93. The basic test for validity is still the same, viz whether a sufficient connection has been shown between the law in question and the subject-matter of the head of power. ^[193] Cunliffe v The Commonwealth (1994) 182 CLR 272 at 319-320, 351, 376; cf Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 27-28, 86, 93.

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4. In order to assess the sufficiency of the connection, the Court may begin by analysing how the impugned law would operate ``by reference to the nature of the rights, duties, powers and privileges which [ the law] changes, regulates or abolishes''. ^[194] Fairfax v FC of T (1965) 14 ATD 135 at 137; (1965) 114 CLR 1 at 7; cf Rogers v The Queen (1995) 64 SASR 280 at 291 . In judging such sufficiency, it is not necessary to demonstrate an express link between impugned law and the power. Nor is it sufficient that the law expressly refers to the head of power or affects it in passing. It is enough that the practical effect of the law is accepted as having sufficient connection and thus the requisite character. ^[195] Cunliffe v The Commonwealth (1994) 182 CLR 272 at 315, 319.

5. The connection between the law and the subject-matter of the power will not be sufficient if it is remote, tenuous, insubstantial, exiguous or fortuitous. ^[196] Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 338, 354. The enactment of the law as a ``peg'' upon which to hang legislation which, properly analysed, is really a law with respect to a different subject-matter, will on that ground fail the test of sufficient connection required to support constitutional validity. ^[197] Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 347.

6. Whilst the title to an Act, its preamble and statement of objects may sometimes be usefully referred to in aid of a task of constitutional characterisation, they may not usurp the function of the courts. ^[198] Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 190. Neither by the title and preamble nor by any statutory statement of an Act's objects can the Parliament cure constitutional invalidity where the Court finds such invalidity to exist. Nor can a Ministerial statement speak the Act into constitutional validity where such validity is missing. The duty of the Court is to scrutinise the purpose of Parliament as expressed in the words enacted, not in the Minister's statement or other documents. ^[199] Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 518. But Ministerial statements may be taken into account as was done in Cunliffe v The Commonwealth (1994) 182 CLR 272 at 358 per Dawson J.

7. In considering the sufficiency of the suggested connection between the law, so characterised, and the constitutional head of power relied on, some recent observations in this Court have remarked that it may be useful to apply a test of ``proportionality'' to the impugned provision. <sup>[200]</sup> The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 260; Richardson v Forestry Commission (1988) 164 CLR 261 at 311-312. cf Marcus Clark & Co Ltd v The Commonwealth (1952) 87 CLR 177 at 226 ; Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 28-29; but compare at 88. This test has not enjoyed universal favour. Behind the expressed doubts lies more than resistance to a legal concept with an origin outside the common law. The risk that assessments of proportionality may take a court into evaluation of policy and judgment on the desirability of the means employed by the law occasions the hesitation to embrace the notion of proportionality as a universal criterion for constitutional validity. Distinctions have been drawn (repeated in this case) between the value of the concept in cases where the constitutional power is conferred in purposive terms, cases where the power is expressed as restricted by a limitation and other cases. <sup>[201]</sup> Cunliffe v The Commonwealth (1994) 182 CLR 272 at 322, 351. Such distinctions find no reflection in the concept of proportionality in the legal systems from which that concept was originally derived. They were not mentioned in the authorities by which the concept originally found its way into the jurisprudence of this Court. They are difficult to reconcile with the essential idea of proportionality. They are not universally accepted by the opinions expressed within the Court. It is difficult, in principle, to embrace the proposition that proportionality might be an appropriate criterion for some paragraphs of s 51 of the Constitution yet impermissible in respect of others. The same basic question is in issue in every case: namely where the boundary of federal constitutional power lies. Whilst there is no settled doctrine on the use of the concept of proportionality in resolving constitutional disputes, recent cases suggest a growing acceptance of the notion as a useful test of general application. <sup>[202]</sup> Re Director of Public Prosecutions; Ex parte Lawler (1994) 179 CLR 270 at 286. In Cunliffe v The Commonwealth (1994) 182 CLR 272 at 296, Mason CJ explained that what was meant was that the law in question was reasonably considered to be appropriate and adapted to the achievement of the purpose or object, as defined. A ``faithful pursuit'' of the purpose or object is a valid application of the express and implied incidental powers. It may provide a means to help the mind of the decision-maker to answer the question whether the impugned law is ``in truth'' one with respect to a designated grant of power, as mandated by Kitto J in Fairfax v FC of T . <sup>[203]</sup> (1965) 14 ATD 135 at 137; (1965) 114 CLR 1 at 7. That question is not readily answered by repeating, as a mantra, the puzzle: ``Does the law have sufficient connection with the constitutional head of power?'' In the words ``sufficient'' and ``connection'' lie much room for differences of opinion. Such well- worn phrases merely state what the judicial task is. They do not really elucidate how it is to be performed. That is why the attempt has been made by some members of the Court to find a subsidiary or additional test which, because of its functional nature, may be useful in the task of characterisation. Proportionality is certainly a concept of growing influence on our law more generally. ^[204] State of NSW v Macquarie Bank Ltd (1992) 30 NSWLR 307 at 321; Reg v Home Secretary; Ex parte Brind [1991] 1 AC 696 at 767 ; Lewis, ``The European Convention, Proportionality and the Broadcasting Ban'' [1991] Cambridge Law Journal at 211; cf Cunliffe v The Commonwealth (1994) 182 CLR 272 at 356-357. I consider that it may sometimes be helpful in the context of constitutional characterisation.

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8. Consistent with the function of this Court, neither the task of characterisation nor the application of the concept of proportionality affords any authority for judging the desirability of the law or the means employed by the lawmaker. Provided the law is within power, the means adopted will not ordinarily be a matter for the Court. In this regard McHugh J's remarks on an analogous problem are appropriate: ^[205] Re Director of Public Prosecutions; Ex parte Lawler (1994) 179 CLR 270 at 296. See also Herald & Weekly Times Ltd v The Commonwealth (1966) 115 CLR 418 at 437 per Kitto J with the concurrence of Taylor, Menzies, Windeyer and Owen JJ; Cunliffe v The Commonwealth (1994) 182 CLR 272 at 318 per Brennan J.

`` [ T]he fact that the Parliament has chosen to make liability to forfeiture independent of the fault of the owner does not make [ the section impugned] unreasonably disproportionate to the purpose which it seeks to achieve. The section is not invalid because, among a range of reasonable measures to combat breaches of the Act, the Parliament has chosen a particularly drastic one.''

Courts may, for good reason, be reluctant to construe legislation, especially criminal legislation, as reversing the onus of proof ^[206] Milicevic v Campbell (1975) 132 CLR 307 at 314, 316, 318-319 . or creating an offence without need to establish a guilty intention. ^[207] Williamson v Ah On (1926) 39 CLR 95 . However, such provisions certainly exist in legislation enacted by the Parliament and undoubtedly within power. Of themselves, these features of a law will not deprive it, if otherwise within power, of constitutional validity. They merely show that the Parliament has chosen a drastic remedy for an attack on the problem which is the subject of the enactment. Of course, a point may eventually be reached where the drastic turns into the invalid. The law, or part of it, may lose the quality of sufficient connection with the constitutional head of power. Put another way, it may be so disproportionate to the legitimate attainment of the subject- matter of the grant of power as to take it outside that grant. When that happens the boundary of constitutional validity will have been passed. This Court is the ultimate guardian of that boundary. ^[208] cf Cunliffe v The Commonwealth (1994) 182 CLR 272 at 338-339 per Deane J. By the Constitution it has been entrusted with the responsibility of identifying where the boundary lies.

Verbal formulae, such as those collected above, are offered in the hope of supporting a principled, consistent and predictable decision in a disputed case of constitutional characterisation. Yet, in the end, such formulae can only go so far. Unavoidably, such decisions involve an exercise of judgment. It is futile to pretend that words and phrases are sufficient, without more, to yield the solution in every case. Were it so, there would be no dissenting opinions in cases of constitutional characterisation. Disagreement exists because different judicial minds see the boundaries of constitutional power differently located. The verbal tests afforded by the Court's past authority are not precise enough to command a single, simple solution. The most that they can offer are techniques by which to test the impugned law. They provide expressions which point the decision-maker in the direction of some of the considerations which, in the past, have been found to be useful for the ultimate judgment which has to be made.

Application to the present case

I turn to the application of these principles to the present case.

The Act does not, in s 31, any more than in s 24, expressly relate its provisions to the purposes of taxation. ^[209] Rogers v The Queen (1995) 64 SASR 280 at 292 per Doyle CJ. However, once it is accepted (as I am willing to do) that, for the enforcement of taxation laws enacted by the Parliament, the problem of the ``cash economy'' is one fairly and reasonably justifying legislative attention, the enactment of a law such as the Act and of a provision such as s 31, are revealed as sufficiently connected with the taxation power. Put another way, a provision such as s 31 of the Act cannot be said to be unreasonably disproportionate to the achievement of the effective administration and enforcement of federal taxation laws. It may not be directed to the ``core'' of the grant of taxation power. But it is certainly within the matters reasonably incidental to the reach of that power.

Without a provision such as s 31, it would be comparatively easy, if sometimes a trifle inconvenient and time-consuming, for a determined cash operator, wishing to escape the operation of the Act, to do so. Such a person would need do no more than Mr Ratzlaf did in the case in the United States Supreme Court already referred to. ^[210] Ratzlaf v United States (1994) 126 L Ed (2d) 615 . As disclosed by the report, he ran up a debt of $160,000 at a casino in Reno, Nevada. He was given a week to pay the debt. He returned with cash of $100,000 in hand. He was told that transactions involving more than $10,000 in cash would have to be reported to State and federal authorities. If he presented bank cheques for less than that

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amount he would not trigger any reporting requirement. The casino ``helpfully'' (to use Ginsburg J's description) placed a limousine at his disposal. It assigned an employee to accompany him to banks in the vicinity so that he could secure cheques for less than $10,000, each from a different bank. Based on this endeavour, when it came to the notice of the authorities, he was charged with ``structuring transactions'' (``smurfing'' <sup>[211]</sup> See Fisse and Fraser, ``Smurfing: Rethinking the Structured Transaction Provisions of the Cash Transaction Reports Act'' in Fisse, Fraser and Coss, The Money Trail. Confiscation of Proceeds of Crime, Money Laundering and Cash Transaction Reporting (1992) at 173. ). Without a provision such as s 31, a determined cash operator in Australia could easily evade the reporting obligations of the Act in the same way. An important means of ensuring that the ``cash economy'', which facilitates and promotes the evasion of liability to taxation, would be lost.

If the Act, looked at as a whole, can fairly be characterised as having a sufficient connection with the administration and enforcement of taxation laws, the provision of the sanction in s 31(1), to prevent evasion, is likewise sufficiently within that connection. Given that questions of degree are always involved and that complete precision is impossible, a practical approach should be taken. Approaching the sub-section in that way it is sufficiently connected to the administration and enforcement of federal taxation laws. The sanction in the sub-section may be seen as reasonably proportionate to the achievement of the object which the Parliament, by the legislation, has validly pursued.

I do not, by the foregoing, mean to suggest that any law which might make the task of tax gathering easier would necessarily fall within the grant of power provided to the Parliament by s 51(ii) of the Constitution, properly understood. Otherwise, a network of informers and draconian provisions for intrusion into personal privacy would be condoned when such was clearly not the purpose of the grant of power nor within its contemplation. It remains in every case of challenge to submit the impugned provision to characterisation by the test of sufficiency of connection. Proportionality may sometimes help in the application of that test. The Act in question here passes both those tests so far as s 31(1) is concerned. It is a valid law of the Commonwealth.

It is not necessary for me to determine the question whether s 31(1) of the Act, properly construed, requires proof of mens rea or not. The Commonwealth accepts that it does. Certainly there are a number of indications to support that conclusion. Conformably with its concession in this case, it may be expected that the prosecutor for the Commonwealth will accept the obligation to establish mens rea in the prosecution of Mr Leask. Certainly, the concession, if it be correct, helps in this case to meet Mr Leask's principal criticism that the removal of a requirement to establish mens rea involved the Act in a wholly disproportionate response to the problem being tackled and one which infringed the values traditionally protected by the common law. ^[212] Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 30. It is not necessary to determine the point of construction in order to decide the challenge to constitutional validity. Either way the law is valid. It may be drastic. But it is not outside the scope of a sufficient connection with the taxation power. Nor is it a disproportionate exercise of that power. It is within the permissible ambit of the Parliament's judgment in giving effect to its valid purpose.

Having reached this opinion, it is also unnecessary for me to decide whether the other heads of power relied on by the Commonwealth, or any of them, support the impugned provision. However, I express some doubts as to whether the power granted by s 51(xii) of the Constitution to make a law with respect to ``currency'', supports s 31(1) of the Act. It is not the currency, as currency, that is the object of the Act or of the sub-section. I am inclined to think that the currency power has quite a different purpose and will not support any law simply because it is expressed to refer to cash, money or other forms of currency or uses the word ``currency'' itself, as s 31 does. ^[213] cf Watson v Lee (1979) 144 CLR 374 at 382, 399-400, 410 . Quick and Garran The Annotated Constitution of the Australian Commonwealth (1976) at 572-576. Were it otherwise any subject referred to by its money value might arguably come within this head of power whose ambit I take to be much narrower. But I do not need finally to resolve this point nor the relevance of other heads of power invoked by the Commonwealth. I will therefore refrain from doing so.

Orders

I agree in the orders proposed by Brennan CJ.

ORDER

1. Answer the question reserved as follows:

Is section 31(1) of the Financial Transaction Reports Act 1988 a valid law of the Parliament of the Commonwealth?

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Answer: Yes.

2. The plaintiff pay the defendant's costs of the question reserved.