FEDERAL COURT OF AUSTRALIA - GENERAL DIVISION

PROPEND FINANCE PTY LTD and OTHERS v COMMISSIONER AUSTRALIAN FEDERAL POLICE and OTHERS

DAVIES J

6 May, 12 August 1994 - Sydney

Davies J This application is brought on behalf of Propend Finance Pty Ltd (Propend), four companies which are its subsidiaries or are associated with it, and four individuals Mr Barney Richard Scheinberg, Mr Albert Scheinberg, Mr Berel Ginges and Mr Michael Dunkel. The applicants have been affected by search warrants issued under s 10 of the Crimes Act 1914 (Cth). The respondents are the Commissioner for the Australian Federal Police, Detective Sergeant Alan Taciak of the Australian Federal Police and Ms Wendy Elder, a Justice of the Peace.

The application seeks orders of review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) and under s 39B of the Judiciary Act 1903 (Cth) with respect to the issue on 2 September 1993 of search warrants by the Justice of the Peace, Ms Elder, and with respect to the conduct of the Australian Federal Police in the execution of these warrants.

The following grounds are relied upon:

1. The second respondent erred in law in failing to disclose material facts to the third respondent which he knew or ought to have known.

2. The second respondent erred in law in failing to make proper inquiries of the Australian Taxation Office prior to seeking the issue of the warrants.

3. Procedures that were required by law to be observed in connection with the making of the decisions were not observed in that the second respondent failed to disclose material facts to the third respondent.

4. The decisions were improper exercises of the power conferred in that the third respondent failed to take account of relevant considerations, being
(a) The volume of material already held by the Australian Taxation Office which fell within the scope of the warrants;

(b) The scope of the warrants, and the oppression which their execution would cause; and

(c) Facts that were known, or ought to have been known, to the second respondent but were not disclosed to the third respondent.

5. That the decisions, and each of them, were not authorised by the enactment in pursuance of which they were purportedly made, being s 10 of the Crimes Act 1914 , in that the warrants are too wide and uncertain.

6. The decision, and each of them, were so unreasonable that no reasonable person could have so exercised the power conferred by s 10 of the Crimes Act 1914.

7. The manner of execution of the search warrants by members of the Australian Federal Police and persons assisting them was unreasonable or oppressive.

8. Documents were seized to which legal professional privilege attaches.

9. Documents were seized which fell outside the terms of the warrants.

The nine search warrants are identical in their terms but for the fourth warrant, a warrant for the search of the premises of Michael Dunkel & Co, Solicitors. This warrant differs in that it has annexed to the main body of the warrant the "General Guidelines between the Australian Federal Police and the Law Council of Australia as to the execution of search warrants on lawyers' premises". The warrants authorised 60 members of the Australian Federal Police to search nine business and residential premises associated with the applicants. I need only set out the terms of the first warrant:

WHEREAS I, Wendy Elder a Justice of the Peace within the meaning of that expression in s 10 of the Crimes Act 1914, being satisfied by information on oath placed before me this 2 of September 1993 that there are reasonable grounds for suspecting that there are in a place, namely:

Suite 5

Level 2

32 A Oxford Street Sydney

Also known as 18-32 Oxford Street

Certain THINGS which satisfy ALL of the three following conditions - that is to say, THINGS which FIRST are any one or more of the following:

FIRST CONDITION

Originals or copies of:
• Balance Sheets

• Financial Statements

• Journals

• Ledgers

• Cash Books

• Cash Payments Books

• Books of accounts

• Correspondence

• Contracts

• Agreements

• Client files

• Telexes

• Diaries

• Microfiche, microfilm and other photographic media

• Hand-written notes

• Facsimiles

• Telegrams or other telegraphic communications

• Notes

• External and Internal memoranda and notes

• Documents

• Bank Statements

• New account cards

• Signature cards

• Mortgage documents

• Cheques

• Cheque butts

• Deposit slips

• Withdrawal slips

• Telegraphic transfer requests

• Documents relating to telegraphic transfers

• Loan documents

• Debenture documents

• Assignments of debts

• Powers of attorney

• Share registers

• Files

• Security documents

and in relation to those premises having computer facilities things being:
• computer records

• magnetic diskettes

• magnetic tapes

• magnetic disk pack

• magnetic cassettes or cartridges

• floppy disks

• computer operation manuals

• computer hardware

• computer software

• computer printouts

• records or documents relating to the use, operation or content of a computer and records contained within the computer

SECOND CONDITION:

AND which SECONDLY relate to any one or more of the following entities:
• Berag Pty Ltd

• Control Research and Development Pty Ltd

• Iterco Technical Research & Development Ltd

• Ginges Holdings Pty Ltd

• Liberum International Ltd

• Midilux SA

(Luxembourg) •

Fidelity Pacific Banking Corporation (Cook Islands)
• Chandhurst Finance Ltd

• Neivlon Investments Pty Ltd

• Propend Finance Pty Ltd

• Richard Scheinberg Holdings Pty Ltd

• Chusan Nominees Pty Ltd

• Mogul Stud Pty Ltd

• Evenstyle Pty Ltd

• Best & Less Partnership

and also the companies which formed part of the partnership known and trading as Best & Less
• Liliestra Pty Ltd

• Best & Less Pty Ltd which has changed its name to Liliestra (No 1) Pty Ltd

• Best & Less (Newtown) Pty Ltd which has changed its name to Liliestra (No 2) Pty Ltd

• Best & Less (Purchases) Pty Ltd which has changed its name to Liliestra (No 3) Pty Ltd

• Best & Less (Fairfield) Pty Ltd which has changed its name to Liliestra (No 4) Pty Ltd

• Best & Less (Bankstown) Pty Ltd which has changed its name to Liliestra (No 5) Pty Ltd

• Best & Less (Tamworth) Pty Ltd which has changed its name to Liliestra (No 6) Pty Ltd

• Best & Less (Wollongong) Pty Ltd which has changed its name to Liliestra (No 7) Pty Ltd

• Best & Less (Penrith) Pty Ltd which has changed its name to Liliestra (No 8) Pty Ltd

• Best & Less (Mascot) Pty Ltd which has changed its name to Liliestra (No 9) Pty Ltd

THIRD CONDITION:

AND which THIRDLY there are reasonable grounds for believing that the same will afford evidence as to the commission of the following offences:
• offence against s 86(1)e of the Crimes Act 1914, in that:

A Barney Richard Albert SCHEINBERG, Berel GINGES and Michael DUNKEL at Sydney, in the State of New South Wales, did between 30 June 1984 and 24 October 1984, conspire to defraud the Commonwealth by the submission of false claims for deductions relating to quality control in income tax returns by or on behalf of Berag Pty Ltd.

• offences against s 86A of the Crimes Act 1914, in that:

A Barney Richard Albert SCHEINBERG, Berel GINGES and Michael DUNKEL at Sydney, in the State of New South Wales, did between 30 June 1987 and 30 June 1990, conspire to defraud the Commonwealth by the submission of false claims for deductions relating to quality control in income tax returns by or on behalf of Berag Pty Ltd.

B Barney Richard Albert SCHEINBERG, Berel GINGES and Michael DUNKEL at Sydney, in the State of New South Wales, did between 30 June 1987 and 30 June 1990, conspire to defraud the Commonwealth by the submission of false claims for deductions relating to quality control in income tax returns by or on behalf of the partnership trading as Best & Less.

• Offences against s 5and s 13 of the Crimes (Taxation Offences) Act 1980, in that:

A Barney Richard Albert SCHEINBERG, Berel GINGES and Michael DUNKEL at Sydney, in the State of New South Wales, did between about 19 July 1991 and about 23 April 1992, enter into an arrangement to dispose of the assets of the partnership of companies known and trading as "Best & Less" which included the purpose of securing generally that Liliestra Pty Ltd would be unable to pay income tax payable by the said company.

…

[para B to J state the same offence in respect of 9 other entities within the Best & Less Partnership]

…

GIVEN under my hand at SYDNEY in the said State on this 2nd day of September in the year 1993.

Wendy Elder

A Justice of the peace,

in and for the State of New South Wales

On the day of their issue, the warrants were executed upon the business and residential premises of the applicants. Many documents were seized. Their description runs to some 153 pages of Federal Police Property Seizure Records and the documents themselves occupy many standard storage boxes.

The validity of the warrants

Section 10(1) of the Crimes Act 1914 (Cth) provides that:-

If a Magistrate or Justice of the Peace is satisfied by information on oath that there is reasonable ground for suspecting that there is in or upon any premises, aircraft, vehicle, vessel or place:
(a) anything with respect to which any offence against any law of the Commonwealth or of a Territory has been, or is suspected on reasonable grounds to have been, committed;

(b) anything as to which there are reasonable grounds for believing that it will afford evidence as to the commission of any such offence; or

(c) anything as to which there is reasonable ground for believing that it is intended to be used for the purpose of committing any such offence;

or that any such thing may, within the next following 72 hours, be brought into or upon the premises, aircraft, vehicle, vessel or place, the Magistrate or Justice of the Peace may grant a search warrant authorising any constable named in the warrant, with such assistance, and by such force, as is necessary and reasonable, to enter at any time the premises, aircraft, vehicle, vessel or place named or described in the warrant, and to seize any such thing which he or she might find there.

The general requirements for a search warrant were enunciated in George v Rockett (1990) 170 CLR 104; 93 ALR 483 and R v Tillett: Ex parte Newton (1960) 14 FLR 101. I need not repeat what was there said. A warrant of the general structure adopted by the subject warrants was considered and upheld in Beneficial Finance Corp v Comr of Australian Federal Police (1991) 31 FCR 523; 22 ATR 636, and more recently in Dunesky v Wendy Elder (unreported, Fed C of A, Whitlam J, 7/4/94).

Mr D H Bloom QC, with whom Mr N J Williams and Mr B J Sullivan of counsel appeared for the applicants, submitted in support of grounds 1, 2, 3 and 4 (a) & (c) that the warrants were invalid in that the applicant for the warrants, Detective Sergeant Taciak, did not make a sufficient disclosure of material facts to the Justice of the Peace. It is not in dispute that Detective Sergeant Taciak was bound to comply with the "strict duty of full disclosure of material facts by the informant seeking a warrant". See Karina Fisheries Pty Ltd v Mitson (1990) 26 FCR 473 at 481; per Sheppard, Foster and Hill JJ at 482; 96 ALR 629, their Honours said:

A fact will be material in the relevant sense if that fact be one that may (not would) have affected the exercise of the discretion on the part of the justice to issue the warrant: R v Curran [1983] 2 VR 133 at 15O-151.

At the time of the issue of the warrants, the Australian Taxation Office held 12 lever arch folders containing originals and copies of documentation regarding the matters into which the Australian Federal Police were inquiring, copies of which documentation had been forwarded by the Taxation Office to the Federal Police. The Australian Federal Police held, at the time of the issue of the warrants, up to 17 lever arch folders containing relevant material.

Mr Bloom submitted that it was oppressive for Detective Sergeant Taciak to seek warrants in comprehensive terms when the Federal Police already held such an amount of material. Mr Bloom submitted that, had the Justice of the Peace been informed of the extent of the documentation held, she would have been unlikely togrant the warrants sought.

Much of Mr Bloom's submission in this respect was rejected in the judgment of Jenkinson, Lee and Hill JJ on 22 June 1994. Their Honours heard an appeal from orders of mine in which I had set aside notices to produce and subpoenae addressed to the Australian Federal Police and to the Taxation Office seeking the production of documents falling within the description given in the warrants and which were held at the time of the issue of the warrants. Their Honours dismissed the appeal and said, in the course of their reasons, inter alia:

The material in the information and its annexures in our opinion sufficiently disclosed the circumstance of which according to Mr Bloom's submission disclosure was required : that documents which satisfied the three conditions were in the custody of the AFP, some documents being annexed to the information, and the probability that there were other such documents being sufficiently indicated by the statements in the information to which I have referred. The number of those other documents is not misrepresented by what is stated in the information nor by what is left unsaid, as we think. If the justice had considered that the relative number or volume of those other documents might be a consideration relevant to the exercise of the discretion, it is to be expected that she would have made enquiry of the informant. The informant's duty is to disclose, not to disclose and to draw to the attention of the justice of the peace the significance which the disclosure may have in determining what documents are to be specified as the subjects of seizure. The significance of what is disclosed is for the justice to determine.

…

The justice would have been well aware that proof of knowledge of, and participation in, material events by the parties named in the information may depend upon inferences to be drawn from evidence of possession or control of documents, revealed by execution of the warrants. It would not follow that delivery or supply of a copy document by one of those parties prior to the execution of the warrant would cause other copies of that document retained by that, or another party, to be of no evidentiary value.

I agree with and apply their Honours' reasoning. The Justice of the Peace was made aware by the sworn information that the Taxation Office and the Federal Police held a considerable amount of information concerning the matters into which the Federal Police were inquiring. The Justice of the Peace would not have wished to Investigate for herself the content of the material which was held by the Taxation Office and the Federal Police. The purpose of a sworn information is to summarise the relevant facts which should be expressed concisely consistent with satisfying the Magistrate or Justice of the Peace that there are reasonable grounds for suspecting the matters alleged. The information on oath provides a synopsis of the material facts and it is on this synopsis that the Magistrate or Justice of the Peace acts: George v Rockett at 114-5.

In my opinion, as in the opinion of Jenkinson, Lee and Hill JJ, the sworn information sufficiently informed the Justice of the Peace of the nature of the material already available to the Federal Police. Grounds 1, 2, 3, 4(a) and (b) must fail.

Mr Bloom next submitted that the first condition of the warrants was so wide as to be oppressive. The first condition listed 48 separate classes of documents and things which may be seized. Mr Bloom contended that the first condition identified the form of things to be sought without attempting to limit the generality of these descriptions.

However, a warrant issued under s 10(1) is not necessarily or even ordinarily limited to the seizure of things which have already been identified. The warrants authorised the officers to search premises and to seize such documents and things as there were reasonable grounds for believing that the same would afford evidence as to the commission of stated offences. The term "evidence" in this context may extend beyond evidence admissible in a court of law and may encompass material implicating persons in the commission of the offences: Baker v Campbell (1983) 153 CLR 52 at 70, 82-3, 92, 107-09, 132 per Gibbs CJ. The description of the documents and things was necessarily extensive for, the relevant crimes being conspiracies to defraud the Commonwealth, it was not known in advance of the search what precise documents and things might provide such evidence.

I see no error in the warrants in the description of documents and things in condition 1. The warrants were comprehensive so as to direct the attention of the searching officers to documents and things which might be relevant to their search. By directing the attention of the officers to particular categories of documents and things, the warrants overcame the problem referred to in cases such as R v Tillett; Ex parte Newton (1969) 14 FLR 101 and Arno v Forsyth (1986) 9 FCR 576; 65 ALR 125, in which warrants were set aside on the ground that they were 50 unspecific as to purport to authorise something akin to a general search and seizure. In Arno v Forsyth at FCR 595, Jackson J expressed the principle in these terms:

A further aspect of the need for particularity, a need brought about by similar considerations, is that the warrant should identify sufficiently specifically what items are authorised to be searched for and seized: R v Tillett; Ex parte Newton (1969) 14 FLR 101 at 113, the Canadian and New Zealand cases there referred to; Australian Broadcasting Corporation v Cloran (1984) 4 FCR 151 at 154; Auckland Medical Aid Trust v Taylor [1975] 1 NZLR 728 at 743; Rosenberg v Jaine [1983] NZLR 1 at 5, 6-7 and Trimboli v Onley (1981) 37 ALR 38 at 46-47.

In Arno v Forsyth at FCR 590-1, Lockhart J discussed the practical application of the principle in these terms:

It is necessary to sound a cautionary note when considering this question. When investigations are proceeding into alleged tax evasion on a large scale it may be impossible to define documents in search warrants other than in rather general terms. If the terms are so general or vague as to suffer from the vice of a general warrant then plainly it is bad; but it must be remembered that at the time the warrant is issued the matter is obviously at an investigatory stage and there will not be sufficient evidence in a form admissible at a criminal trial to prove the alleged offences. The purpose of the search is to obtain such evidence. It is necessary to reconcile the two competing public interests that offences involving tax frauds should be detected and punished on the one hand and the right of the individual to protection of the law from unjustified interference with his privacy and property on the other. It is in the public interest that those who commit offences involving fraud in relation to tax should be brought to justice. It is at least equally in the public interest that individual liberty should be protected by the courts whose function it is to protect individuals from abuse of power by the executive arm of government. The balancing of the claims of the due administration of justice and those of the citizen whose rights must be jealously protected is not determined in a sterile vacuum but with due regard to the legislation involved and criminal activity suspected. The complexity of taxation frauds which often involve numerous persons and entities, and the concomitant difficulties associated with the gathering of documentary evidence to support the laying of charges highlights the dangers of too readily striking down warrants on the ground of generality in cases of this kind: see generally R v IRC; Ex parte Rossminster Ltd [1980] AC 952, especially per Lord Diplock at 1010.

The requirements of a warrant in this respect have since been examined in great depth by Burchett J, with whom Sheppard and Pincus JJ agreed, in Beneficial Finance Corporation v Comr of Australian Federal Police (1991) 31 FCR 523; 22 ATR 636; 103 ALR 167. It is not so important that the ambit of documents and things which may be seized should be limited, as that the object of the search should be particularised so that all persons are aware of the ambit of the search and of the offences in respect of which the Police are seeking evidence. His Honour cited and approved of the approach taken by Lockhart J in Arno v Forsyth. It is of significance that the warrants which were upheld in Beneficial Finance were generally similar to those which are in issue in this present case.

In my opinion, the description of documents and things set out in the first condition was not inappropriate, having regard to the nature of the offences stated. A limit to the ambit of the search was, of course, imposed by reason of the statement of offences including the dates set out therein.

It is to be kept in mind that the power conferred by a warrant must be exercised bona fide and reasonably. As Lockhart J said in Crowley v Murphy (1981) 34 ALR 496; 52 FLR 123 at 155:

The overriding obligation of the searcher is to do no more than is reasonably necessary to satisfy himself by search that in all the circumstances of a particular case he has whatever documents are necessary to answer the terms of the warrant. Plainly this must vary from case to case. What is permissible on one occasion is impermissible on another. Much must be left to the sense of responsibility of the police officer and the person whose premises are to be searched.

At FLR 152-3, Lockhart J suggested a possible distinction between the search of the premises of persons implicated in the alleged offences and the search of premises of those not implicated, indicating that a higher standard in both the grant of the warrant and its execution might be required where innocent third parties were concerned. In the present case, all the premises searched were occupied by persons alleged to be implicated in the offences.

Mr Bloom submitted that the second condition of the warrants was ambiguous. He referred to the words " AND which SECONDLY relate to any one of the following [15] entities … and also the companies which formed part of the partnership known and trading as Best & Less [followed by a list of 10 company names]". Mr Bloom submitted that the ordinary meaning of these words required that the things specified in the first condition may only be seized if they related to one or more of the 15 entities in the first list, as well as to the 10 Liliestra companies. Alternatively, he submitted that the second condition was ambiguous.

I read the words "and also" as merely introducing an additional list of companies which are the subject of the second condition. Had it been the intention of the Justice issuing the warrant to impose the condition that a thing may be lawfully seized only if it related to an entity in the first list as well as an entity in the second list, this intention would have manifested itself in the use of a form such as " AND which THIRDLY relate to the companies which formed part of the partnership known and trading as Best & Less". But no such form was adopted. The words "and also the companies which formed part of the partnership known and trading as Best & Less" make it plain that the documents or thing to be seized may relate to any of the individual companies in the "Best and Less Partnership", as well as to that partnership itself.

This reading of the second condition finds support from the way in which the entities in the second condition make their appearance in the statement of the offences in the third condition of the warrant. The offence under s 86(1)(e) of the Crimes Act is particularised only in respect of an alleged fraud conducted through the submission of false claims for deductions in income tax returns by or on behalf of Berag Pty Ltd (Berag) alone. Berag is one of the 15 entities contained in the first list. The offences under s 86A of the Crimes Act refer to the income tax deductions of both Berag and the Best & Less Partnership. Again, these are entities within the first list. The offences under ss 5and 13 of the Crimes (Taxation Offences) Act 1980 (Cth), however, refer to alleged arrangements designed to create a situation whereby each of the 10 entities within the Partnership was unable to pay tax. To state these offences with sufficient particularity, each entity must be separately identified. This is the function of the 10 separate paragraphs of the third condition labelled "A" to "J". The list of the 10 Liliestra companies in the second condition thus reflects the statement of offences.

In my opinion, the second condition was not ambiguous in the manner contended for by Mr Bloom.

Mr Bloom submitted that the words "relate to" were so wide as to make the warrants oppressive and ambiguous. He referred by way of example to the remarks of Taylor J in Tooheys Ltd v Comr of Stamp Duties (NSW) (1961) 105 CLR 602 at 620 that, "There can be no doubt that the expression 'relating to' is extremely wide but it is also vague and indefinite." However, the term has a well understood meaning and it is used by legislatures. In my opinion, the term is appropriately used in the warrants and is not ambiguous. In the warrants it is the third condition which, within the ambit allowed by the first and second conditions, delimits the object of and authorisation for the search and seizure.

Mr Bloom next referred to the fact that the third condition contained some 13 offences spanning the period from 30 June 1984 to 30 June 1990 and from 19 July 1991 to 23 April 1992. He submitted that the statement of the offences covered too long a period and they were too broadly stated to satisfy the requirement of particularity.

The particularity in the statement of the object of the search under s 10(1)(b) of the Crimes Act was discussed in George v Rockett, a case which concerned the construction of a similar provision under the Criminal Code (Qld). The description of the things to be seized acts as a fulcrum point around which the grounds for belief and the grounds for suspicion are to be balanced so that a proper delimitation of the warrant's scope may be made. The High Court stated in George v Rockett at CLR 118:

The warrant, if issued, authorizes entry to search for the described object and authorizes the seizure of any object which comes within the particular description. In other words, the description of the object of the search is a reference point for delimiting the scope of the warrant. The wider and less specific the description of the object, the wider will be the powers of seizure which the warrant confers. On the other hand the wider and less specific the description of the designated object, the more difficult will be the task of persuading the justice that there are reasonable ground for belief that the object so described will, if found, afford evidence of the commission of the particular offence. Thus, the requirement of "reasonable grounds for believing" in para (b) performs the important function of preventing the authority to search and seize which a warrant confers from being worded in unjustifiably wide terms.

Burchett J described the relationship between the particularity of the offence and the respective subject matters of reasonable ground for belief and reasonable grounds of suspicion in Parker v Churchill (1985) 9 FCR 316 at 319:

The function of the indication of an offence in a search warrant is to "authorise seizure by reference to that offence": see R v Tillett; Ex parte Newton (1969) 14 FLR 101 at 113); Crowley v Murphy (1981) 52 FLR 123 at 143; Australian Broadcasting Corporation v Cloran (1984) 4 FCR 151; Quartermaine v Netto (unreported, Toohey J, 14 December 1984); Rosenberg v Jaine [1983] NZLR 1 at 5. It establishes a nucleus for the search. It enables both the officer executing the warrant and the citizen whose premises are subjected to it to form some judgment whether particular things are relevant or irrelevant, and particular actions authorised or unauthorised. Of necessity the lines cannot be precisely drawn, since the warrant is not concerned with what is known, but with what "there is reasonable ground for suspecting that there is". The warrant is a map, drawn upon "reasonable ground for believing" of a terra incognita. But the outline of that which is so believed must be sufficiently indicated to set the appropriate grounds to the search

His Honour discussed the authorities in more detail in Beneficial Finance at FCR 533-43.

At 533, his Honour said:

The authorities make it clear that the statement of the offence in a search warrant need not be made with the precision of an indictment. That would be impossible, and indeed to attempt it would be irrational, bearing in mind the stage of the investigation at which a search warrant may issue. The purpose of the statement of the offence in the warrant is not to define the issues for trial; but to set bounds to the area of search which the execution of the warrant will involve, as part of an investigation into a suspected crime. The appropriate contrast is not with the sort of error which might vitiate an indictment, but with the failure to focus the statutory suspicion and belief upon any particular crime, with the result that a condition of the issue of the warrant is not fulfilled, and it purports to be a general warrant of the kind the law decisively rejected in the 18th century. There should be no going back on that rejection, which is an essential bulwark of respect for the integrity and liberties of the individual in a free society, but what the rule requires is identification (and so limitation) of an area of search by reference to a suspected offence, not the formulation of a pleading before the offence is capable of prosecution.

In my opinion, the offences were not stated too broadly. Each lettered paragraph within the third condition went beyond a mere citation of the relevant section number of the legislation in order to describe, albeit briefly, the way in which the offence was alleged to have occurred: see the Full Court decision in Parker v Churchill (1986) 9 FCR 334 at FCR 340; 17 ATR 443. For example, there was no bald statement of a conspiracy to defraud without a further particularisation of the entity alleged to have engaged in the fraud and the means by which the fraud was said to have been conducted: cf the facts of Auckland Medical Aid Trust v Taylor [1975] 1 NZLR 728 at 737. The fact that the offences were stated so that they ranged over a period of years is only to be expected when the offences under investigation covered or are suspected of covering a long period.

Once all three conditions of the warrant are read together, an ordinary reader of the warrant is given adequate reference points whereby he or she, having an understanding of the subject matter, may delimit the area of the search. In Beneficial Finance at FCR 543, Burchett J outlined the approach to be adopted by the court:

An approach which eschews technicality, while requiring the full measure of the substance to be observed, is … consistent with the fact that the legislature has entrusted to lay justices of the peace the task of issuing search warrants. If the courts were to insist upon the invalidation of a warrant for a legally incorrect formulation of an offence, although the substance of the offence could plainly be understood, they would not be interpreting the will of the Parliament but subverting it.

…

The matter should be viewed broadly, having regard to the terms of the warrant in the circumstances of each case. The question should not be answered by the bare application of a verbal formula, but in accordance with the principal that the warrant should disclose the nature of the offence so as to indicate the area of search. The precision required in a given case, in any particular aspect, may vary with the nature of the offence, the other circumstances revealed, the particularity achieved in other respects, and what is disclosed by the warrant, read as a whole, and taking account of its recitals. See R v Church of Scientology (No 6) (1987) 31 CCC (3d) 449.

Mr Bloom submitted that the warrants were nevertheless so extensive that they should be set aside on the ground of oppression or on the ground that no reasonable decision-maker could have authorised them. In my opinion, however, the warrants were appropriate for the purpose for which they were issued, namely, to obtain evidence of the commission of the alleged offences. The underlying facts which were considered to constitute those offences were complex and involved many acts and transactions occurring over a substantial period of time. The search for evidence was necessarily a lengthy and complex one.

Mr Bloom submitted that the manner of the execution was excessive. He referred to the fact that the search of the premises of Michael Dunkel & Co commenced at 11:30pm on 2 September 1993 and concluded at 1:40am the following day. However, it has not been shown that the searches as authorised ought to have been completed more speedily or that there was any deliberate prolongation of the search and seizures. There is no evidence before me that the reasonable limits of a search were exceeded.

The general approach which should be taken during a search of a solicitor's premises was explained by Swanwick J in Frank Truman Export Ltd v Metropolitan Police Comr [1977] 1 QB 952 at 965-6. However, in the present case, there were many companies and individuals alleged to be involved in the offences. And the solicitor himself was one of the persons alleged to have committed an offence. Accordingly, an extended and detailed search was appropriate.

There is no evidence that the officers engaged in the task exceeded the authority conferred by the warrants. In Beneficial Finance at 549, Burchett J explained that authority in these terms:

In George v Rocket (at CLR 119-20), it was said of the corresponding Queensland provision:

An object will answer the description in para (b) if there are reasonable grounds for believing that it will assist directly or indirectly in disclosing that an offence, the circumstances in which it was committed, the identity of the person or persons who committed it or any other information material to the investigation of those matters.

Later (at 121) the court referred to things "tending … to establish an element of an offence". This is a wide net. Although evidence which tends to show merely that no offence was committed will not (as the High Court said too at 121) satisfy the paragraph, evidence that a particular person has not committed an offence may well be evidence "as to" whether some other person has done so. Nor need evidence achieve, to be evidence, any high level of effect: see Cheney v Spooner (1929) 41 CLR 532 at 537-538, per Isaacs and Gavan Duffy JJ.

The material before the court does not enable me to say that any particular documents had no relevant evidentiary value. If documents are identified as being irrelevant to the specified offences they should, of course, be returned.

Mr Bloom submitted that I should examine a number of the documents seized to determine whether or not they were evidence of the stated offences. However, that is not my task. The material before the court would not enable me to decide, by merely reading a particular document, whether it answered the description in the warrant. A background knowledge of the nature of the offences charged and of how the particular documents fitted into the picture would be required. Presumably, the officers authorised to execute the warrants had that knowledge. The court has no jurisdiction to interfere with their seizure unless their actions are proved to have been excessive. A mere examination of a particular document would be unlikely to establish that.

However, as I have said, there is, in my opinion, an obligation on the part of the Australian Federal Police to return documents which they are satisfied do not meet the description in the warrants. If this were not so, the seizure of such a vast quantity of documents would be likely to be held excessive.

Grounds 4(b), 5, 6, 7 and 8 therefore fail.

Legal professional privilege

The warrants did not authorise the seizure of documents to which legal professional privilege attached. See Baker v Campbell, in which Murphy, Wilson, Deane and Dawson JJ, Gibbs CJ, Mason and Brennan JJ dissenting, held that the privilege applied to documents within the scope of a search warrant issued under s 10 of the Crimes Act. However, the warrants did not purport to do so. The fourth warrant, which provided for the search and seizure undertaken on the premises of Michael Dunkel & Co, solicitors, annexed the "General Guidelines between the Australian Federal Police and the Law Council of Australia as to the execution of search warrants on lawyers' premises". In accordance with those guidelines, the documents seized to which it is alleged that the privilege attaches, have been identified and, insofar as it is held that the privilege attaches, will be returned to Michael Dunkel & Co.

The execution of the fourth warrant was not invalid insofar as there was a preliminary seizure of documents. When matters of legal professional privilege are in dispute it is ordinarily impracticable to do otherwise than to secure the documents and hold them secure until a ruling on privilege can be made.

The applicants claim legal professional privilege in respect of approximately 292 documents from a schedule listing 798 documents which were seized from premises occupied by Michael Dunkel & Co. Mr Michael Dunkel, who is one of the persons named in the offences stated in the warrants, was the principal of that firm until 3 April 1994, when the firm changed its name to "Denes Ebner". Mr Dunkel, together with Ms Karen Garner, who was a solicitor employed by the firm, acted inter alia for Propend and for other companies within what has been referred to as the Scheinberg group, companies in the Best & Less Partnership and companies in the Ginges Group. Legal professional privilege is claimed on behalf of those companies and on behalf of Evenstyle Pty Ltd, Mr Peter Agoston and a number of other companies including Fidelity Pacific Banking Corporation, for which Mr Dunkel has acted.

It was established, in the course of oral evidence given by Mr Dunkel and Ms Garner, that all of the documents in respect of which legal professional privilege is claimed were seized either from the premises of Michael Dunkel & Co (suite 4 of 32 A Oxford Street, Sydney) or from a room within suite 5 of the same building, a room which was utilised by Michael Dunkel & Co. Suite 5 of the building was otherwise occupied by the offices of Mr Richard Scheinberg and was itself the site of the execution of a separate warrant.

Legal professional privilege attaches to documents which are brought into existence for the sole purpose of obtaining or giving advice by legal advisers, or for use in legal proceedings. In Grant v Downs (1976) 135 CLR 674 at 688; 11 ALR 577 , Stephen, Mason and Murphy JJ said:

… unless the law confines legal professional privilege to those documents which are brought into existence for the sole purpose of submission to legal advisers for advice or for use in legal proceedings the privilege will travel beyond the underlying rationale to which it is intended to give expression and will confer an advantage and immunity on a corporation which is not enjoyed by the ordinary individual. It is not right that the privilege can attach to documents which, quite apart from the purpose of submission to a solicitor, would have been brought into existence for other purposes in any event, and then without attracting any attendant privilege.

There have been differences of opinion as to the ambit of the word "advice". On the one hand, some judges have regarded the privilege as very wide. See Carpmael v Powis 1 Ph 677; 41 ER 794, at ER 796 per Lord Lyndhurst LC, in Minter v Priest (1930) AC 558 at 568, per Lord Buckmaster and in Great Atlantic Insurance Co v Home Insurance Co (1981) 1 WLR 529 at 535-6 per Templeman LJ.

However, other decisions in the United Kingdom and in this country have pointed out that it is not sufficient that the communication be between a solicitor acting as such and the client made in the course of the solicitor/client relationship. The communication must be for the purpose of obtaining or giving advice. See Smith-Bird v Blower [1939] 2 All ER 406 and Conion v Conlons Ltd [1952] 2 All ER 462. In Tickell v Trifleska (1990) 24 NSWLR 548, Rogers CJ of Comm D held that instructions given by a client to a solicitor for the preparation of a will did not contain an implied request for advice and that the communication was not privileged. Allen Allen & Hemsley v DCT (NSW) (1988) 19 ATR 1462; 81 ALR 617, affirmed on appeal (1989) 20 FCR 576; 20 ATR 321, also points to the need for the document to be brought into existence in the course of the process of seeking and obtaining legal advice.

These two streams of authority were examined in considerable detail in Balabel v Air India [1988] 1 Ch 317. Lord Donaldson and Parker LJ concurred with the judgment of Taylor LJ who expressed his conclusion at 330:

Although originally confined to advice regarding litigation, the privilege was extended to non-litigious business. Nevertheless, despite that extension, the purpose and scope of the privilege is still to enable legal advice to be sought and given in confidence. In my judgment, therefore, the test is whether the communication or other document was made confidentially for the purposes of legal advice. Those purposes have to be construed broadly. Privilege obviously attaches to a document conveying legal advice from solicitor to client and to a specific request from the client for such advice. But it does not follow that all other communications between them lack privilege. In most solicitor and client relationships, especially where a transaction involves protracted dealings, advice may be required or appropriate on matters great or small at various stages. There will be a continuum of communication and meetings between the solicitor and client. The negotiations for a lease such as occurred in the present case are only one example. Where information is passed by the solicitor or client to the other as part of the continuum aimed at keeping both informed so that advice may be sought and given as required, privilege will attach. A letter from the client containing information may end with such words as "please advise me what I should do." But, even if it does not, there will usually be implied in the relationship an overall expectation that the solicitor will at each stage, whether asked specifically or not, tender appropriate advice. Moreover, legal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant legal context.

I am content to accept his Lordship's exposition of the issue.

The companies which are mentioned in the warrants and other organisations were the subject of an audit by the Australian Taxation Office which commenced in or about 1988, covering the period from and including the year end 30 June 1976. The audit was completed in early 1991. From August 1991 assessments and amended assessments began to issue. More than 200 assessments or amended assessments issued to companies in the Ginges group and in the Scheinberg group, including companies in the Best & Less Partnership. The total tax assessed was in excess of $100,000,000. Notices of objection were lodged. Objections were disallowed by the Commissioner of Taxation on 28 February 1992. The companies requested that the decisions on the objections be remitted to this court by way of appeal. I have been informed by counsel that that request has not yet been complied with.

In November 1991, in proceedings NG 3140/91 in this court, the Commissioner of Taxation sought the appointment of a provisional liquidator to companies in the Best & Less Partnership and other companies in the Ginges group. However, the applications were successfully opposed on the ground that the assessments and amended assessments were the subject of objections made on substantial grounds. Since 1991, aspects of the affairs of the companies in the Best & Less Partnership have been before the courts and other aspects have been likely to result in legal proceedings.

Affidavits claiming legal professional privilege were sworn by Mr Dunkel and Karen Garner. In affidavits sworn 3 May 1994, some of the claims of privilege were made on the basis that the documents were obtained for use in "apprehended tax litigation". In an affidavit sworn 5 May 1994, Mr Dunkel deposed:

14. On 22 February 1989 an interview was conducted of Don Orrock, Al Heman and David Scheinberg by officers of the ATO. Karen Garner was in attendance at that meeting. Following the meeting I had discussions with Karen Garner and those interviewed. At the discussions I was told by Karen Garner of the questions that had been put to the officers and her assessment of the issues likely to arise in the tax audit. She told me that she believed the outcome of the audit would be litigation between the companies and the Commissioner of Taxation unless the clients were prepared to accept any assessments that may be issued. In my view, having regard to the magnitude of the audit in terms of years and the transactions the subject of investigation, it was likely that the quantum of any assessments issued would be substantial and that in the circumstances it was virtually inevitable that the assessed taxpayers would challenge the assessments or amended assessments. …

17. By the time a number of the interviews had taken place early in 1989 I formed the view that there was a high probability that the companies in the Ginges Group and Scheinberg Group would be involved in litigation arising out of the tax audit. My view was particularly influenced by information given to me by Karen Garner and those interviewed that their perception was that explanations given in the course of the interviews were not being accepted nor were the answers given in the course of those interviews believed by the officers of the ATO. I informed Ginges and each of Albert and Richard Scheinberg of my view and they each asked me to continue to look after their interests and to advise them in regard to the matters arising and likely to arise as a result of the tax audit.

18. I told each of Ginges and the Scheinbergs that it would be necessary to start gathering evidence for the purpose of that expected litigation and they asked me to take whatever steps I thought necessary for that purpose. This conversation took place in the first quarter of 1989 and from then on Karen Garner and I began to take steps to collect and obtain information we considered relevant to the issues which had been the subject of inquiry by the ATO.

Other aspects of possible litigation with respect to clients' income tax and stamp duty involving clients of Michael Dunkel & Co were referred to and relied upon.

However, in the course of the hearing, I observed that some of the claims made under the aegis of apprehended tax litigation were unfounded, for the reason that there was a more immediate purpose in respect of which some of the documents which had come into existence, namely the ongoing discussions with officers of the Taxation Office during the conduct of the audit, and in settlement negotiations which took place and the like.

The privilege in relation to litigation does not apply unless the document came into existence or into the hands of the person on whose behalf the privilege is obtained solely for the purpose of the conduct of or to assist in the conduct of litigation: Grant v Downs. If the document came into being for a dual purpose, even for the dominant purpose of advice or in aid of anticipated legal proceedings, the privilege does not apply.

Mr Bloom sought to overcome this problem by submitting that, although audits were being conducted and there were communications between the applicants and officers of the Taxation Office in connection therewith, nevertheless those communications occurred as part of anticipated taxation litigation, it being reasonably anticipated that large assessments would issue and that they would be opposed in proceedings in the court. However, if documents were obtained for use in ongoing discussions with the Australian Tax Office, their purpose was not the subject of privilege in relation to litigation, notwithstanding that it was anticipated that the ongoing discussions were unlikely to achieve a resolution of the dispute.

I would nevertheless accept, for example, that a claim such as that made for document 44, namely, that it was a statement in the form of a letter prepared by a witness for use in apprehended tax litigation in 1989, would be covered by the privilege if the statement was truly prepared for use in possible litigation and was not prepared for the purpose, inter alia, of assisting the companies in their ongoing dispute with the Taxation Office.

Mr Dunkel and Karen Garner recast their affidavits to place more attention on the ground of "advice". Thus, in his affidavit of 5 May 1994, Mr Dunkel deposed:

11. Constantly from October 1988 I have been approached by Ginges and officers of the companies with the Ginges Group and the Scheinbergs and officers of the companies within the Scheinberg Group for advice on issues arising in the tax audit and I have given advice to them in response to their requests.

Mr Dunkel's affidavit gave further particulars as did Ms Garner's affidavit, of the advice given of the circumstances in which it was requested.

As to the privilege based on the head of "advice", I would, in general, apply the view expressed by Taylor LJ in Balabel v Air India, which I have set out above. I am content to accept that there has been over the period a great deal of material which was conveyed to Michael Dunkel & Co for the purpose of legal advice. That material would not encompass, however, letters written by the Australian Taxation Office to Michael Dunkel & Co or to the companies or their accountants. Nor would it encompass letters, including offers of settlement which may have been sent by Michael Dunkel & Co or their accountants or any of the companies to the Australian Taxation Office. Such documents were not prepared for the purpose of obtaining or giving advice. They form part of the facts comprising the transactions between the companies and the Australian Taxation Office.

The issue of copy documents is difficult. An example is document 51 which was a letter accompanied by a declaration of solvency, minutes of meetings, letters to the Registrar of Companies, a notice of the appointment of a liquidator and so on. Other documents in the schedule, including briefs to counsel, include copy documents.

On this issue, the cases are conflicting and there are many different views. I think that no purpose would be served by my reviewing again the many authorities on the subject. My own view accords with that expressed by Wood J in Nickmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44. At 61-2, his Honour said:

In my view, it is incorrect to state, as a general proposition, that a copy of an unprivileged document becomes privileged so long as it is obtained by a party, or its solicitor, for the sole purpose of advice or use in litigation. I think that the result in any such case depends on the manner in which the copy or extract is made or obtained. If it involves a selective copying or results from research, or the exercise of skill and knowledge on the part of a solicitor, then I consider privilege should apply (Lyell v Kennedy (No 3) (1884) 27 Ch D 1). Otherwise, I see no reason, in principle, why disclosure should be refused of copies of documents which can be obtained elsewhere, and in respect of which no relationship of confidence, or legal professional privilege exists.

A similar view was expressed by Byrne J in Roux v Australian Broadcasting Commission [1992] 2 VR 577. At 598-9, his Honour said:

In circumstances where a third party shows to the solicitor for a party a non-privileged document and the solicitor takes that document into his or her custody for the sole purpose falling within the privilege, authority clearly states that the original document is not protected by any privilege: Pearce v Foster (1885)15 QBD 114 and R v King [1983] 1 All ER 929. It seems to me to be absurd in these circumstances to say that where the solicitor does not retain the original, but makes a verbatim transcript or a photocopy of the document for the relevant sole purpose, that copy document acquires immunity which the original does not have. Where, however, the solicitor makes a note of some aspect of the original document which appears significant, or where the circumstances attending the copying of the document are such that its selection involves matters of legal professional communication, the position would be otherwise, for the disclosure of the copy involves the disclosure of that communication: Chadwick v Bownian (1886) 16 QBD 561, at 562. In the modern context where indiscriminate photocopying is the norm, it may be more difficult than in earlier days of manuscript copying to establish that there has been the interposition of professional skill and judgment in the selection of the materials to be copied so that their production discloses implicitly some confidential privileged information. But, absent evidence leading to that conclusion, a claim to legal professional privilege for copy documents or other materials of the kind here under consideration must fail.

In Roux's case, Byrne J ordered disclosure of copy documents contained in counsel's brief.

Thus, copy agreements, copy letters and the like are, in my opinion, not privileged notwithstanding that the copies were made for the purpose of obtaining legal advice.

There are many bundles of documents in the schedule in respect of which, in my opinion, privilege fails for the reason that the original documents themselves are not shown to be the subject of legal professional privilege. At the present time, the evidence does not show that there was any particular legal expertise used in the selection of the documents.

Similarly, the claims for privilege made in relation to the transcripts of the examinations which were conducted by officers of the Australian Taxation Office of officers of the companies and of Mr Dunkel would appear to fail. In my opinion, these copy transcripts would not be subject to privilege unless there were some notations thereon by Mr Dunkel or Ms Garner made for the purpose of assisting them to give advice, or unless the transcripts be a selection of extracts made by a lawyer for the purpose of giving advice or to assist in litigation.

Privilege is claimed in relation to some communications with lawyers overseas, seeking the advice of those lawyers, or communicating the advice of those lawyers. Such communications are within the privilege. See Ritz Hotel v Charles of the Ritz (No 4) (1987) 14 NSWLR 100.

Mr Paul Roberts, counsel for the respondents, has submitted that the following documents do not fall within the privilege by reason of their description:

5, 6, 40(a), 44, 46, 47(a), 50, 51, 52, 55, 57, 59, 60, 61(s/a), 69, 99, 101(a), 103, 111, 115(a), 119(s/a), 120(s/a), 130, 131(a), 135(a), 137, 145, 181, 192, 198, 201 - 203, 213, 214. 215, 217, 223, 227, 229(a), 232(a), 233, 236(a), 239(a), 240, 241, 247, 248, 249, 252, 259, 269(a), 273-276, 291, 305, 307, 310(a), 311, 312, 313, 320, 323, 324, 328, 330, 331, 332, 334-337, 339, 341, 342, 345, 348, 368-375, 384, 386, 387-389, 393, 394, 404, 415(a), 460, 471, 472, 473, 474, 475, 520(a), 523, 528, 556(a), 573(a), 594, 596, 597, 604, 607(a), 608, 627, 650, 653, 656, 657, 672(a), 673, 674, 675, 676-679, 683, 686, 689, 723, 729, 757, 772, 778.

I am satisfied that some of the documents on their description would appear to fall within the privilege and that some would not. Some of the documents are bundles which include copy documents of the type I have mentioned. There are many documents in respect of which I would not wish to make a ruling without inspecting the documents themselves. In the end, I have concluded that the claims made in the affidavits should not be accepted without there being such an inspection. In the absence of agreement between the parties, a judge, a registrar or an agreed independent person should examine the original documents to determine which of them would fall within the privilege, or would do so but for the matter to which I now turn.

The privilege will not protect communications made in furtherance of an improper purpose, such as a crime or fraud. In Attorney-General (NT) v Kearney (1985) 158 CLR 500; 61 ALR 55, Dawson J, who dissented in the result but not in this aspect of the case, described the ambit of the principle in this way, at CLR 528-9:

It is true that different expressions are to be found in the cases to explain what is meant by crime or fraud in the present context: "any unlawful or wicked act" (Annesley v Angtesea (1743) 17 St Tr 1139, at 1229); "a criminal or unlawful proceeding," "fraudulent contrivance, or … any illegal proceeding", "an improper or an illegal act", "illegality or fraud or trickery" (Bullivant v A-G (Vic) [1901] AC 196 at 201, 203, 205, 206); "crime or civil fraud", "wrong-doing", "illegal object" (Varawa v Howard Smith Co Ltd (1910) 10 CLR 382 at 386, 387, 390; "any illegal or improper purpose", "to frustrate the processes of law", "taint of illegality" (R v Bell; Ex parte Lees (1980) 146 CLR 141 at 145, 156, 162); "crime or fraud or civil offence" (Baker v Campbell (1983) 153 CLR 52 at 86). Despite their apparent breadth, these expressions have, I think, been used more to explain the nature of the exception rather than to restrict the scope of the privilege.

Apposite to the present case are the remarks of Stephen J in R v Bell; Ex parte Lees (1980) 146 CLR 141 at 152:

In Russell v Jackson (1851) 9 Hare, at 392-3 [68 ER, at 560] it was said that an illegal purpose would prevent the privilege from attaching, since it is no part of a solicitor's duty "to advise his client as the means of evading the law". In Follett v Jefferyes (1850) 1 Sim (NS) 3, at 17 [61 ER 1, at p 6] Lord Cranworth spoke of "cases of fraud contrived by the client and solicitor in concert together" as not being exceptions to the rule of privilege but rather as cases never coming within the rule at all, since the contriving of a fraud could form no part of a recognized professional relationship.

See also the extended examination undertaken by Stephen J, who delivered the judgment of the court in R v Cox and Railton (1884) 14 QBD 153.

The information put before the Justice of the Peace provided evidence that there were reasonable grounds for suspecting that breaches of s 86(1)(e) and s 86A of the Crimes Act 1914 (Cth) and offences under ss 5and 13 of the Crimes (Taxation Offences) Act (1980) (Cth) had occurred. It was alleged that Mr Dunkel was personally involved in these offences.

With respect to the offences alleged under ss 86(1)(e)and 86A of the Crimes Act it was alleged in particular that the companies in the Best & Less partnership claimed substantial deductions for "garment-testing" and for control. The allegation made in the sworn information was, in substance, that any significant garment-testing was performed by an overseas organisation, Shenka College of Textile Technology & Fashion (Shenka), which provided the services for a fee which was much less than that paid by and claimed by the companies in the Best & Less partnership. The payments by the companies in the Best & Less partnership did not go directly to Shenka, but to Control Research & Development Pty Ltd and from it to Interco Research & Development Ltd. It was alleged that only a small part of the payments made went to Shenka, that the excess funds were not in reality used to obtain garment testing and like services but found their way to Midilux SA (Luxembourg) and Fidelity Pacific Banking Corporation (Cook Is) and thence to Chandhurst Finance Ltd and other companies which then on-lent money back to Australia, particularly to Propend Finance Pty Ltd, which was a financier to the group. It was alleged that Mr Dunkel, who is married to the daughter of Mr Scheinberg, was a director of a number of the companies involved in what was alleged to be a scheme.

It was alleged that some of the money came back to Australia via the Shanwah Bank in the form of a loan by the bank to Propend Finance Pty Ltd under an agreement executed by Mr Dunkel. It was alleged that the money lent was, however, originally provided to Shanwah Bank by another company in the scheme and that the Shanwah Bank was a mere intermediary.

In Attorney-General (NT) v Kearney, Gibbs CJ said at CLR 516:

The privilege is of course not displaced by making a mere charge of crime or fraud or, as in the present case, a charge that powers have been exercised for an ulterior purpose. This was made clear in Bullivant v A-G (Vic) [1901] AC 196 at 201, 293, 205 and in O'Rourke v Darbishire [1920] AC 581 at 604, 613-4, 622 3, 632-3. As Viscount Finlay said in the latter case [1920] AC at 604, "there must be something to give colour to the charge". His Lordship continued:

The statement must be made in clear and definite terms, and there must further be some prima facie evidence that it has some foundation in fact. The court will exercise its discretion, not merely as to the terms in which the allegation is made, but also as to the surrounding circumstances, for the purpose of seeing whether the charge is made honestly and with sufficient probability of its truth to make it right to disallow the privilege of professional communications.

In Bullivant v A-G (Vic) (1901) AC 196 at 201, the Earl of Halsbury LC said at 201:

The line which the courts have hitherto taken, and I hope will preserve, is this - that in order to displace the prima facie right of silence by a witness who has been put in the relation of professional confidence with his client, before that confidence can be broken you must have some definite charge either by way of allegation or affidavit or what not. I do not at present go into the modes by which that can be made out, but there must be some definite charge of something which displaces the privilege.

More recently, in Buttes Gas & Oil Co v Hammer (No 3) [1981] 1 QB 223, in which an allegation of fraud was made, a more stringent test was expressed. At 246, Lord Denning MR said:

To do away with the privilege - at the discovery stage - there must be strong evidence of fraud …

At 252, Donaldson LJ said:

I … find it unnecessary to express any view on how strong a prima facie case of fraud is necessary to defeat a claim for disclosure based upon legal professional privilege, but something exceptional is called for.

However, that was not a case where crime was alleged or where the proper authorities, in this case the Australian Federal Police, were searching for evidence with respect to crimes which were suspected of having been committed.

The Australian Taxation office has conducted a lengthy audit and has disallowed the deductions claimed. I think I am entitled to accept the assessments or amended assessments as evidence that the deductions claimed were not allowable. The Australian Federal Police suspect that crimes defrauding the Commonwealth have been committed and Detective Sergeant Taciak has sworn an information setting out the factual basis of that belief.

Taking account of and weighing up as best I can the public interest in the identification and prevention of crimes and the competing public interest in maintaining that basic element of client/lawyer confidentiality upon which the attainment of justice in our society depends, it seems to me that there has been a sufficient particularisation of and verification of the allegations of crimes under ss 86(1)(a)and 86A of the Crimes Act to overcome the privilege which would otherwise attach to the documents authorised to be seized.

The sworn information has not been supplemented by additional evidence, but the information has been put before the Court and counsel are content that I should have regard to it. I do not suggest that the evidence before the Justice of the Peace amounted to proof of the commission of any offence, even on the balance of probabilities. It did not. But it seems to me that there is sufficient prima facie evidence in the material before the Justice of the Peace to overcome, in the public interest, the claim of legal professional privilege.

Mr Roberts therefore submitted that, in addition to the documents which I first listed, the following documents should also be exempt from the privilege:

1, 3, 7, 11, 12, 21, 22, 27, 32, 35, 36, 37, 41, 42, 43, 45, 47, 56, 61, 170, 174, 177, 184, 195, 228, 230, 231, 233, 235, 238, 239, 255, 264, 266, 268, 270, 294, 295, 296, 297, 298, 299, 302, 303, 306, 307, 309, 310, 311, 312, 313, 314, 316, 317, 318, 319, 320, 322, 323, 324, 325, 326, 333, 338, 341, 346, 363, 465, 470, 513, 518, 520, 521, 540, 544, 568, 569, 57 [sic], 585, 587, 589, 590-93, 595, 596, 607, 609, 610, 613, 665, 666, 734, 746-761, 767, 775, 776, 777, 793, 794

I am content to accept his analysis.

The allegation as to the breaches of ss 5and 13 of the Crimes (Taxation Offences) Act were in substance as follows. The companies in the Best & Less partnership owed a little more than $20m to the State Bank of New South Wales. There were mortgage securities securing that debt. One of the applicant companies, Mogul Stud Pty Ltd (Mogul Stud), on 8 December 1989, entered into a deed whereby the companies in the Best & Less partnership gave a floating charge over their assets to Mogul Stud in consideration of Mogul Stud executing certain mortgages in favour of the State Bank, which mortgages were substituted for the State Bank's mortgage securities of the companies in the Best & Less partnership. At that stage, Mogul Stud became the first secured creditor. Mr B R Silvia was subsequently appointed receiver and manager.

In 1991, the Commissioner of Taxation applied to this court for the appointment of a liquidator or provisional liquidator to the companies in the Best & Less Partnership. The proceedings moved slowly. Lockhart J. refused to appoint a liquidator while the appeal process in relation to the objections had not been concluded.

Mr Silvia sought to sell the businesses of the companies as ongoing concerns, which he considered to be the best means of disposal of the assets of the companies. Mr Silvia advertised the businesses for tender. The best offer appears to have been that received from Evenstyle Pty Ltd, a company connected with Mr Berel Ginges. The offer was of an amount sufficient to pay out the amounts due to secured creditors and to the employees and was an offer to take over the businesses as going concerns, which included taking over responsibility for the trade creditors, but not the amounts due to the Commissioner of Taxation. Mr Silvia gave notice to the Commissioner of Taxation of the position and sought directions from Lockhart J as to what he should do. Lockhart J declined to give directions as, in his view, the court ought not to give directions on a matter which involved a commercial judgment by the receiver. Mr Silvia then sold the businesses of the companies in the Best & Less Partnership to Evenstyle Pty Ltd.

The result of the series of events was that the secured creditor, the State Bank, was satisfied and the businesses were transferred as going concerns and thus the trade creditors were protected. The employees were also protected. However, the Commissioner of Taxation received no payment in respect of the debts which the assessments raised and was the only substantial creditor not provided for.

Section 5(1) of the Crimes (Taxation Offences) Act provides:

Where a person enters into an arrangement or transaction for the purpose, or for purposes which include the purpose, of securing, either generally or for a limited period, that a company or trustee (whether or not a party to the arrangement or transaction) will be unable, or will be likely to be unable, having regard to other debts of the company or trustee, to pay … tax payable by the company or trustee, the person is guilty of an offence.

I have read the sworn information of Detective Sergeant Taciak but cannot see in it sufficient material to overcome the privilege. The sequence of events appears to have left the Commissioner of Taxation without recourse. But there is no evidence which tends to show that anything that occurred was done other than to keep the businesses in operation, so far as that could be achieved.

Evenstyle Pty Ltd, the company with which Mr Ginges was involved, paid $34m approximately to acquire the businesses. The transcript of a cross-examination of Mr Silvia, which forms part of the sworn information, does not support a contention that Mr Silvia acted otherwise than as a responsible receiver would be expected to do. Indeed he informed the Commissioner of the position and sought directions from this Court. In his cross-examination, Mr Silvia denied that he had acted on the instructions of Mr Scheinberg or of Mr Ginges. Mr Silvia gave this evidence:

And do you have any instructions from Mogul Stud or Mr Scheinberg concerning that matter? Mr Scheinberg has only made one comment to me in respect of the administration. It's been a comment that has been reiterated to me on several occasions and that is that I should properly conduct the receiverships as I should properly conduct them.

Mr Silvia also said that a sale by a receiver of the businesses was the best means of achieving a satisfactory price and was more likely to do so than a sale by a liquidator.

Detective Sergeant Taciak swore that:

106. The informant believes on the basis of the facts stated below that
(a) During 1991 and 1992 Barney Richard Albert Scheinberg, Berel Ginges and Michael Dunkel entered into an agreement with each other, one of the purposes of which was to secure the inability of each of the Best & Less group of companies to pay income tax which was payable.

However, the remainder of the sworn information dealing with this aspect of the matter does disclose material supporting Detective Sergeant Taciak's view. An intent on the part of Mr Scheinberg, Mr Ginges and Mr Dunkel to keep the businesses afloat, which may be implied from the sequence of events, does not of itself imply an intent on their part to render the companies in the Best & Less Partnership unable to pay income tax. It is clear from Baker v Campbell that the mere fact that a Justice of the Peace has accepted a sworn information and has issued a warrant under s 10 of the Crimes Act will not, of itself, sufficient to overcome legal professional privilege. The proof must be sufficient to justify the Court in holding that the privilege does not apply.

I therefore reject Mr Roberts' submission that the documents in the first list I have set out above and the following documents:

15, 16, 40, 41, 82, 117, 118, 119,120, 121, 122, 123, 125, 128, 129,136, 139, 141, 142, 151, 161, 164, 165, 166, 167, 391, 422, 424, 426, 438, 453, 454, 459, 462, 463, 469, 524, 525, 526, 529, 530-532, 535, 572, 573, 574, 475 [sic], 579, 580, 581, 582, 583, 584, 620-24, 626, 634, 635, 685, 689, 690, 732, 734, 735, 739, 740, 744, 751, 752, 753, 765, 766, 767, 772, 779, 792, 795, 796, 798

are exempt from privilege by reason of the allegation of offences under the Crimes (Taxation Offences) Act.

I propose the following orders:

1. Declare that the subject warrants issued 2 September 1993 were validly issued.

2. Declare that the warrants are not invalid by reason of their terms.

3. Declare that the execution of the warrants was not unreasonable or excessive.

4. Direct that, subject to order 5, issues as to whether legal professional privilege attached to the documents seized be determined after the documents in question have been examined.

5. Declare that, by reason of the allegation of offences under s 86(1)(e) and s 86A of the Crimes Act 1914 (Cth) and of the proof given in support thereof, the following documents are not subject to legal professional privilege.

5, 6, 40(a), 44, 46, 47(a), 50, 51, 52, 55, 57, 59, 60, 61(s/a), 69, 99, 101(a), 103, 111, 115(a), 119(s/a), 120(s/a), 130, 131(a), 135(a), 137, 145, 181, 192, 198, 201-203, 213, 214, 215, 217, 223, 227, 229(a), 232(a), 233, 236(a), 239(a), 240, 241, 247, 248, 249, 252, 259, 269(a), 273, 276, 291, 305, 307, 310(a), 311, 312, 313, 320, 323, 324, 328, 330, 331, 332, 334-337, 339, 341, 342, 345, 348, 368-375, 384, 386, 387-389, 393, 394, 404, 415(a), 460, 471, 472, 473, 474, 475, 520(a), 523, 528, 556(a), 573(a), 594, 596, 597, 604, 607(a), 608, 627, 650, 653, 656, 657, 672(a), 673, 674, 675, 676-679, 683, 686, 689, 723, 729, 757, 772, 778.

1, 3, 7, 11, 12, 21, 22, 27, 32, 35, 36, 37, 41, 42, 43, 45, 47, 56, 61,170, 174, 177, 184, 195, 228, 230, 231, 233, 235, 238, 239, 255, 264, 266, 268, 270, 294, 295, 296, 297, 298, 299, 302, 303, 306, 307, 309, 310, 311, 312, 313, 314, 316, 317, 318, 319, 320, 322, 323, 324, 325, 326, 333, 338, 341, 346, 363, 465, 470, 513, 518, 520, 521, 540, 544, 568, 569, 57 [sic], 585, 587, 589, 590-93, 595, 596, 607, 609, 610, 613, 665, 666, 734, 746-761, 767, 775, 776, 777, 793, 794

6. Order that the question of costs be reserved.

However, counsel may address me within 7 days if they propose orders in different terms.