The Commissioner of the Australian Federal Police v Cranston and 65 Ors (No 8)

1. [1]

   HER HONOUR: Adam Michael Cranston, Jason Cornell Onley, Simon Anquetil and Dev Menon are the first to fourth defendants in civil proceedings brought by the Commissioner of the Australian Federal Police under the Proceeds of Crime Act 2002 (Cth) (“the POC Act”) against 66 defendants of whom 23 are natural persons (“the POC Act proceedings”).

2. [2]

   The substantive relief sought in the POC Act proceedings includes orders that the property itemised in each of Schedules 1-100 and 102-111 to the summons be forfeited to the Commonwealth pursuant to ss 47 and 49 of the POC Act. It also includes orders that eight of the 66 defendants (including the four defendants) pay a pecuniary penalty to the Commonwealth pursuant to s 116 in an amount to be determined by the Court under Division 2 of Part 2-4, referable to what the Commissioner alleges is the value of the benefits they each derived from their involvement in a conspiracy to defraud the Australian Taxation Office (“the ATO”) with the intention of dishonestly causing a loss to the Commonwealth in the amount of $83,735,535.28 contrary to s 135.4 of the Criminal Code Act 1995 (Cth) (“the taxation fraud conspiracy”).

3. [3]

   By notices of motion filed between 26 June 2017 and 11 September 2017 (as amended and as further amended), they each seek various forms of relief from a number of ex parte orders made consequent upon the return of the summons in the POC Act proceedings which was filed instanter on 16 May 2017 pursuant to rule 6.15 of the Uniform Civil Procedure Rules 2005 (NSW) (see Commissioner of the Australian Federal Police v Cranston & Ors (No 1) [2017] NSWSC 624).

4. [4]

   Although the relief the defendants seek is not exclusively referable to the power to stay proceedings under s 319 of the POC Act, the operation and scope of that provision was the principle focus of the competing submissions of the parties. For that reason, I propose to refer to the proceedings by motion as “the stay applications”.

The ex parte hearing on 16 May 2017

1. [5]

   The ex parte orders made on 16 May 2017 include the following:

   1. (1)

      Orders made under ss 18 and 19 of the POC Act restraining each of the four defendants (and other named individuals and entitles) from dealing with property itemised in the schedules to the summons and any other property held by them, including property not already specified in the schedules acquired by each of them after the date of the orders (“the restraining orders”). (Section 26(4) of the Act obliges the Court to consider an application for restraining orders without notice having been given to any person if the Commissioner requests the Court do so.)

   2. (2)

      Orders made under s 38 of the POC Act for the Official Trustee in Bankruptcy, the Australian Financial Security Authority (“AFSA”), to take custody and control of the property the subject of restraint. (In an updated interim report of the Official Trustee dated 14 November 2017, the net value of the property under its custody and control is valued at $39,510,780.19. The value of restrained property not held by the Official Trustee at that date, being funds in specified superannuation funds and term deposits, is valued at $1,878,071.79. The total of both amounts is $41,388,851.98.)

   3. (3)

      Orders made under s 180 of the POC Act that each of the defendants be examined in relation to their own affairs (broadly defined in the Dictionary to the Act) and in relation to the affairs of each other and six other defendants to the POC proceedings (“the Examination Orders”). (Section 182 obliges the Court to consider an application for an examination order without notice having been given to any person if the Commonwealth requests the Court to do so.)

   4. (4)

      Orders made under s 39(1)(ca) of the POC Act that each of the defendants provide of a sworn asset statement, in the form of schedule 101 to the summons, setting out their interests in property valued at AUD5,000 or more and all liabilities valued at AUD5,000 or more (“the Sworn Asset Statements”).

2. [6]

   The relief sought in the stay proceedings concern the Examination Orders in (3) and the orders for the provision of Sworn Asset Statements in (4) above.

3. [7]

   By s 18(1)(a) of the POC Act the Court was obliged to make the restraining orders if certain conditions were met. Those conditions included, relevantly so far as the four defendants were concerned, that the Court was satisfied that there were reasonable grounds to suspect that they had each committed a serious offence or offences (as defined in the Dictionary to the Act) and that there was evidence that an authorised officer (also as defined in the Dictionary) suspects that they each committed that offence and that the suspicion is held on reasonable grounds.

4. [8]

   In support of the application for the issue of the restraining orders (and for the making of Examination Orders under s 180 and orders for the provision of Sworn Asset Statements under s 39), the Commissioner relied upon the affidavit of Federal Agent Burtenshaw sworn 15 May 2017. Federal Agent Burtenshaw is an authorised officer under the Act. The affidavit comprised 790 paragraphs to which he exhibited materials in six lever arch folders (“the first Burtenshaw affidavit”). Significant parts of that affidavit were also read by the Commissioner as respondent to the stay proceedings.

5. [9]

   In the first Burtenshaw affidavit, Federal Agent Burtenshaw deposed to holding the reasonable suspicion that each of the four defendants (and the fifth, sixth and seventh defendants) have committed the following serious offences (as defined):

6. [10]

   None of the four defendants has been charged with offences (ii) to (v). There was no evidence adduced on the stay applications that criminal proceedings in respect of those offences are under consideration by prosecuting authorities at this time. Each of the four defendants were, however, charged with the taxation fraud conspiracy in the days following the making of the ex parte orders in the civil proceedings.

7. [11]

   Each of the offences in (i) to (v) above are relevant to the forfeiture orders the Commissioner seeks under ss 47 and 49 of the POC Act.

8. [12]

   In summary, s 47 of the POC Act obliges the Court to make a forfeiture order in respect of property restrained under s 18 where the restraining order has been in place for six months and the Court is satisfied that a person whose conduct formed the basis of the restraining orders engaged in conduct constituting one or more serious offences.

9. [13]

   “Serious offence” is defined in s 338 of the POC Act to include:

10. [14]

    Subsections 47(2) and (3) make it clear that in considering whether forfeiture orders should be made, the Court need not find that a person committed a particular offence. It is sufficient if the Court is satisfied that “some serious offence or other was committed”. Each of the offences in [9] above is a serious offence. A doubt as to whether a person engaged in conduct constituting a serious offence will not justify the Court refusing to make a forfeiture order.

11. [15]

    Similar provisions apply in respect of a forfeiture order under s 49 of the POC Act. That section obliges the Court to make a forfeiture order in respect of the defendants’ property restrained under s 19 where the Court is satisfied that the property is the proceeds of one or more indictable offences (as defined). Each of the offences in [9] is an indictable offence.

12. [16]

    Section 329 of the POC Act provides that property is the proceeds of an offence if it is wholly or partly derived or realised, directly or indirectly, from the commission of the offence. Section 329 further provides that property can be the proceeds of an offence even if no person has been convicted of the offence.

13. [17]

    After considering Federal Agent Burtenshaw’s affidavit and the material exhibited to it, I was satisfied that the statutory preconditions for the issue of the restraining orders under ss 18 and 19 were met (see Cranston (No 1) at [14])

Examinations Orders

1. [18]

   Under s 180 of the POC Act, on the making of a restraining order the Court may, at that time or at some later time, make an examination order in respect of a person who is a suspect in relation to the restraining order.

2. [19]

   Section 180 provides as follows:

3. [20]

   The “affairs” of a person as defined is a term of broad import:

4. [21]

   “Property” is defined as:

Sworn Asset Statements

1. [22]

   Section 39(1)(ca) provides:

2. [23]

   Again, after considering the first Burtenshaw affidavit and the material exhibited to it, I was satisfied that each of the four defendants (and each of the fifth to ninth defendants) should be examined in relation to their own affairs and in relation to the affairs of each other. I was also satisfied that each of the four defendants should provide a Sworn Asset Statement particularising their respective interests in property (as defined) and their liabilities to facilitate the ongoing investigation into their net asset positions.

3. [24]

   In coming to that view, I read and accepted the concerns expressed by Federal Agent Burtenshaw in paragraphs 785-789 of his affidavit that the examination orders should be made and the examinations conducted before the finalisation of any pending criminal proceedings, having regard to the likely delay in the finalisation of those proceedings impeding the Commissioner’s legitimate interest in both progressing the POC Act proceedings (including the seeking of forfeiture orders of restrained property under ss 47 and 49 of the POC Act and pecuniary penalty orders under s 116 of the Act) and impeding the Commissioner’s legitimate interests, consistent with the statutory objects in s 5 of the Act, in seeking to identify and locate property that might be the subject of applications for the issue of additional restraining orders with a view to securing the payment of any pecuniary penalty. Section 142 of the Act is facilitative of that approach. It provides as follows:

4. [25]

   In making the examination orders, I accepted Federal Agent Burtenshaw’s expressed concern that the four defendants (and other defendants identified and unidentified interested parties) may take steps to dissipate property which the Commissioner had not, as at 16 May 2017, identified (including bank accounts, both within and beyond the jurisdiction); a risk which Federal Agent Burtenshaw considered was exacerbated by the large number of bank accounts he suspected had been utilised in furtherance of the taxation fraud conspiracy and as to which he suspected the defendants and their associates have continued access both directly and indirectly through entities they control.

The issue of the examination notices

1. [26]

   On 5 and 6 June 2017 examination notices under s 183 of the Act were served on each of the persons the subject of the examination orders made on 16 May 2017 (including the first to the fourth defendants) under the hand of either Deputy President the Hon DA Cowdroy OAM QC or Deputy President S E Frost. By that time the criminal proceedings in which each of the four defendants were charged with the taxation fraud conspiracy had commenced by the filing of CAN notices in the Local Court.

2. [27]

   Section 183 provides:

3. [28]

   The examination notice served on the second defendant was exhibited to the affidavit of his solicitor of 29 June 2017 and read without objection in the proceedings. Save for the name of the approved examiner, examination notices in identical terms were served on each of the other three defendants. The Notices are in the following terms:

4. [29]

   A schedule identifying the documents in each of fourteen listed categories for the period 1 July 2013 to the date of the examination that the examinee was required to produce was attached to the notice. The schedule reads as follows:

5. [30]

   In the correspondence that attached the examination notices, the defendants were advised, inter alia, that pursuant to s 188 of the POC Act, their examination was to take place in private and that answers given and documents produced at the examination will be confidential pursuant to directions that will be given by the approved examiner. The defendants were also advised of their right to be legally represented at the examination.

6. [31]

   By ss 195 and 196 of the POC Act, the failure to attend for examination as required by the service of an examination notice under s 183 of the Act, and/or a refusal or failure to make an affirmation or answer questions required by the examiner, are criminal offences. While the privilege against self-incrimination is expressly abrogated for the purposes of the examination, s 198 provides that an answer given or a document produced in the examination is not admissible in evidence in criminal proceedings against the person except in certain identified circumstances, none of which are presently relevant.

The scheduling of the examinations

1. [32]

   The examination of the first defendant was scheduled for 21 June 2017 with the examination of the second defendant scheduled to proceed on 22 June 2017. The examination of the third defendant was scheduled for 19 June 2017 and the examination of the fourth defendant on 27 June 2017.

2. [33]

   The order in which the examinations were to have been conducted was doubtless with a view to the Commissioner gathering information to investigate and trace the proceeds of crime (including the proceeds of the taxation fraud conspiracy and the reinvestment of the proceeds of that offence) in what he considered was a timely, efficient and structured way commensurate with the powers provided for in the POC Act and its statutory objects, and consistent with the overriding purpose of the Civil Procedure Act 2005 (NSW).

3. [34]

   The statutory objectives in s 5 of the POC Act, relevant for present purposes include:

4. [35]

   On 15 June 2017 I vacated the examination of the third defendant scheduled for 19 June 2017 in order to permit consideration of what his counsel foreshadowed at that time as an application to stay the POC Act proceedings in their entirety pending the finalisation of the criminal proceedings. That application was listed before me for hearing on 21 June 2017.

5. [36]

   On that date, the hearing of the stay application was vacated upon the third defendant filing an amended notice of motion (with leave) in which, in the alternative to a stay of the POC Act proceedings, a number of other orders were sought, including an order revoking the order for his examination or setting it aside, or, in the alternative, an order that the examination notice be stayed pending finalisation of the criminal proceedings, or, further in the alternative, that the examination be limited in scope and be otherwise conducted in accordance with a number of stipulated procedures.

6. [37]

   The third defendant’s notice of motion also sought orders restraining the Commissioner’s use of the Sworn Asset Statement that had been served by him in accordance with the orders made on 16 May 2017; any material obtained derivatively from that material and an order prohibiting disclosure of that material under s 266A(2) of the POC Act pending finalisation of the criminal proceedings.

7. [38]

   In light of the application by the third defendant for the range of relief sought by the amended notice of motion of 21 June 2017, and the stated intention of each of the first, second and fourth defendants to make applications for relief of the same or a similar kind, the Commissioner undertook to defer the examinations of all four defendants until seven days after the determination of any stay applications. (The specific relief sought by each of the four defendants in the notices of motion upon which they ultimately moved in the stay proceedings is set out at paragraphs 185 and following.)

Service of the Sworn Asset Statements

1. [39]

   In compliance with the orders made ex parte on 16 May 2017, Sworn Asset Statements have been served by all four defendants. Section 39A(1) provides that the privilege against self-incrimination is expressly abrogated in respect of the giving of a sworn statement. Additionally, a Sworn Asset Statement is not admissible in civil or criminal proceeding against the person making it, except in a limited class of proceedings including proceedings against the person for giving false or misleading information or in proceedings for relief under the Act or enforcement of a confiscation order.

2. [40]

   The Sworn Asset Statements are currently in the sole and exclusive custody of the Criminal Assets Confiscation Taskforce (“CACT”), the Criminal Assets Litigation team (“CAL”) and counsel briefed by CAL. CACT is subject to internal governance by the procedures that obtain within the ambit of the Organised Crime and Cyber portfolio of the AFP (“the OCC”). CACT, under the current command of A/Commissioner Neil Gaughan, has a separate reporting structure to that of the investigative and prosecutorial arm of the Australian Federal Police (“AFP”). The members of CACT and CAL are also subject to a Standard Operating Procedure (“SOP”) which has issued as part of the Commissioner’s governance framework. The SOP is designed to protect and safeguard the risk of leakage of compulsorily acquired material to the criminal investigative branch of the AFP or to the prosecution.

3. [41]

   A/Commissioner Gaughan gave evidence in the stay proceedings that the Sworn Asset Statements have not been, and will not be, disclosed to anyone involved in the criminal investigation or prosecution of the defendants. The extent to which the SOP operates to address the risk of the inadvertent disclosure of the content of the Sworn Asset Statements, and the inadvertent disclosure of the product of any compulsory examination of each of the defendants under s 180 of the POC Act (this material being collectively referred to in this judgment as Coercive Material interchangeably with compulsorily acquired information), was the subject of considerable contention in the proceedings and the subject of submissions by the parties to which I will later refer.

The orders under s 266A of the POC Act

1. [42]

   On 21 June 2017 I made an order under s 266A(2)(b), by consent, in the following terms:

2. [43]

   On 17 July 2017 I made a further order that:

3. [44]

   The extent to which the orders under s 266A(2)(b) (collectively referred to in this judgment as “the non-disclosure orders”) also operate to address the risk of the disclosure of Coercive Material, and the authorities that have considered that question to date, was also the subject of competing submissions.

4. [45]

   Section 266A(2) was introduced by the passage of the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Act 2016 (Cth). It commenced on 1 March 2016. It confers on the Court an express power to prohibit the disclosure of compulsorily acquired information during the pendency of criminal proceedings by providing that a person may disclose compulsorily acquired information to an authority described in the following table and for a purpose described in that table, but only if:

The commencement of criminal proceedings

1. [46]

   On 17 May 2017 (the day after the POC Act proceedings commenced and ex parte orders were made) the first, second and fourth defendants were arrested and charged that between June 2016 and May 2017 they conspired with each other and with four other named people (being the third, fifth, sixth and the seventh defendants to the POC Act proceedings) to dishonestly cause a loss to the ATO contrary to s 135.4(3) of the Criminal Code. On 18 May 2017 the third defendant was arrested and charged with the same offence.

2. [47]

   Upon their arrest the defendants were granted bail on condition, inter alia, that they not communicate with each other or with a number of individuals, each of whom were criminally charged with the taxation fraud conspiracy and with other offences. Those individuals are also defendants in the civil proceedings.

3. [48]

   Specifically, they include the seventh and ninth defendants to the POC Act proceedings who had been charged with demanding money with menaces contrary to s 249K(1)(a) of the Crimes Act 1900 (NSW), an offence allegedly committed between 25 January and 17 May 2017 during the currency of the taxation fraud conspiracy (“the blackmail offence”), and the eighth defendant who had been charged with dealing with property reasonably suspected of being the proceeds of crime contrary to s 400.9(1A) of the Criminal Code.

4. [49]

   The father of the first defendant, Michael Cranston, was charged with two counts of abuse of public office contrary to s 142(2)(1) of the Criminal Code. He is not a party to the POC Act proceedings.

5. [50]

   The criminal proceedings as they involve the first to the fourth defendants are currently being processed in the Local Court in accordance with relevant parts of the Criminal Procedure Act 1986 (NSW) as a strictly indictable offence. The Commonwealth Director of Public Prosecutions (“the CDPP”) has the conduct of the criminal proceedings.

The facts underpinning the taxation fraud conspiracy and the blackmail offence

1. [51]

   A number of Statements of Facts have been served by the CDPP in the course of the criminal proceedings to date. They include documents referred to in the evidence before me as “the Conspiracy Statement of Facts”, and “the Blackmail Statement of Facts”. Neither of the documents was tendered in its entirety. Parts of each were, however, extracted in Ms Musgrave’s affidavit of 29 August 2017 and Ms Perry’s affidavit of 12 September 2017 (respectively the solicitors for the first and second defendants) as a source of some of the essential facts upon which both the taxation fraud conspiracy and the blackmail charges are said to be based. Both affidavits were read without objection in support of the first and second defendant’s notice of motion and relied upon in support of the relief sought by the other two defendants.

2. [52]

   Relevant parts of Federal Agent Burtenshaw’s affidavit detailing the facts and circumstances giving rise to his suspicion that both offences were committed was also read by the Commissioner without objection.

3. [53]

   From this evidence, the essential features of both offences may be summarised as follows:

   1. (1)

      Federal Agent Burtenshaw describes three levels of companies involved in the taxation fraud conspiracy including Plutus Payroll Australia Pty Ltd (“Plutus”), a company which provided a payroll administration service to a large number of corporate entities (“Client Companies”).

   2. (2)

      In excess of two hundred Client Companies engaged Plutus to provide payroll management services for their employees and/or contractors including:

   3. (3)

      This payroll management function necessitated transferring Client Companies’ funds to Plutus. These funds represented the gross value of the companies’ employees and/or contractors’ salaries, including superannuation and PAYGW liabilities due to the ATO.

   4. (4)

      The regular transfers of funds from Client Companies to Plutus were made on the understanding that, after payment of wages and salaries, Plutus would withhold and remit to the ATO the required PAYGW contributions.

   5. (5)

      Plutus did not charge fees for providing those services. It claimed on its website that it was able to put in place a “zero-sum structure” because it provided other industry-based financial services.

   6. (6)

      It is not alleged by the prosecution that the Client Companies benefited from the taxation fraud conspiracy. Neither does Federal Agent Burtenshaw suspect they are in any way implicated in the taxation fraud conspiracy, or that they benefited from the criminal conduct of the four defendants among the eight defendants who were named as co-conspirators.

   7. (7)

      The co-conspirators incorporated several other companies as part of the scheme (referred to interchangeably as “Second Tier Companies” or “Bot Companies”). The co-conspirators also recruited third parties to become directors and shareholders of these companies (“the Straw Directors”). The Straw Directors were company directors in name only. The co-conspirators maintained full control over the Second Tier Companies and their operations.

   8. (8)

      One of the co-conspirators was assigned the role of recruiting and managing the Straw Directors to ensure they had no unsupervised involvement in the companies for which they were ostensibly and legally responsible.

   9. (9)

      Upon receipt of the payroll funds into Plutus’ bank accounts or accounts associated with that company, a portion of the payments received was transferred into accounts operated by the Second Tier or Bot Companies. The amount transferred was generally sufficient for that company to meet the employees’ or contractors’ salary and superannuation entitlements of the Client Companies but not sufficient to meet the PAYGW obligation arising from that payment. The portion of Client Company funds retained by Plutus (representing the monies required to be paid to the ATO in accordance with the relevant PAYGW obligations of the Client Companies) was then transferred to another company (or direct in to bank accounts operated by the conspirators) for the ultimate benefit of them and their associates.

   10. (10)

       Paragraph 17 of the Conspiracy Statement of Facts alleges that “the conspiracy resulted in a loss to the Commonwealth of AU$89,487,489.00.

   11. (11)

       There is a body of primary and secondary evidence identifying bank accounts allegedly used for the inter-company bank transfers undertaken in the course of the conspiracy, examples of which include a number of Commonwealth Bank accounts opened in the names of the Second Tier or Bot Companies. Excel spreadsheets detailing their use were seized during the execution of search warrants. Intercept material also revealed the use of internet banking tokens associated with those accounts, in particular by the fifth and sixth defendants to the POC Act proceedings and named conspirators.

   12. (12)

       Upon the ATO becoming aware of what was suspected to be a large-scale taxation fraud, an investigation was launched and tax assessments raised against the second tier Bot Companies, and their directors. Garnishee Notices were issued to the companies and Director Penalty Notices issued to the Straw Directors.

   13. (13)

       In response to the issue of the Garnishee Orders to the Second Tier Companies Plutus commenced to pay the Client Companies’ employees their entitlements directly from its bank account at the direction of the co-conspirators. This attracted the issue of a Garnishee Notice to Plutus in relation to outstanding liabilities of $46,632.355 including PAYGW liabilities, after which Plutus ceased operating.

   14. (14)

       The blackmail offence is said to be constituted by the seventh and ninth defendants demanding that they be paid a large quotient of the misappropriated PAYGW payments from the fraudulent scheme over the period 1 February 2017 until June 2017 into the trust account of Lands Legal, the forty-seventh defendant.

   15. (15)

       The prosecution allege, and Federal Agent Burtenshaw suspects, that in response to that blackmail demand Plutus made all employee/contractor wage and salary payments that would otherwise have been liable to be paid by the Bot Companies and, between 1 February 2017 and 20 April 2017, remitted all the funds that were due to the ATO in accordance with the obligations imposed by the PAYGW system to the trust account of Lands Legal in the amount of $24,244,740.80.

   16. (16)

       The fourth defendant, a solicitor employed by another firm of solicitors, prepared a deed designed to encompass the terms of the blackmail demand and the payment of funds demanded. He also prepared affidavits for the directors of the Second Tier Bot Companies in which they deposed to their preparedness to assume liability for the payment of the ATO tax debt with the intention of shielding the co-conspirators from any liability or action

The current status of the criminal proceedings involving the first to the fourth defendants

1. [54]

   On 8 August 2017 a brief of evidence was served electronically on each of the four defendants in accordance with the orders made in the Local Court pursuant to the procedures provided for in s 183 of the Criminal Procedure Act. The electronic brief was further supplemented by service of a hard copy. The briefed material is voluminous comprising, inter alia, a significant amount of financial data including financial and banking records, together with many hours of electronic surveillance evidence and a large number of witness and police statements. As at 8 August 2017 the brief comprised the equivalent of 99 lever arch folders or 22,000 folio pages.

2. [55]

   By letter dated 23 August 2017 the solicitor for the CDPP with carriage of the criminal proceedings advised each of the solicitors for the four defendants that at the scheduled mention date in the Local Court on 29 August 2017 an application would be made for an extension of three months for the service of the remainder of the brief of evidence. That evidence comprised what was described as a significant quantity of digital items and other property seized during search warrants executed following the arrest of the defendants in May 2017; additional police statements, 40 further witness statements and what was described as “detailed evidence from the Australian Taxation Office” for the successive financial years between 2014 and 2017 with a corresponding financial analysis of that evidence.

3. [56]

   At the mention on 29 August 2017, orders were made in accordance with that timetable with the matter next listed for replies to the brief of evidence on 19 December 2017. An order was also made for the prosecution to serve on each of the defendants a document distinguishing the evidence and disclosable material for each of them on or before 12 December 2017.

4. [57]

   On the reasonable assumption that the CDPP intends to present a joint indictment against each of the seven alleged conspirators in the taxation fraud conspiracy (including the four defendants), and after taking account of the length and complexity of the police investigation that preceded the defendants’ arrest on that charge and the nature of the evidence that it is intended to adduce in proof of it, in my view, a trial is unlikely to be convened before early 2020 at the earliest.

The statutory scheme under the POC Act

1. [58]

   Before turning to the evidence and the competing submissions of the parties as to whether the interests of justice dictate that their examinations be stayed under s 319 of the POC Act (and whether they are entitled to relief from other orders made ex parte on 16 May 2017), it needs to be recognised that the legislature has expressly provided in various parts of the POC Act for the co-existence of civil proceedings under the POC Act (including, in this case, the compulsory examination of the defendants) and criminal proceedings involving the same or similar subject matter.

2. [59]

   By way of example, s 183(3) provides that an approved examiner may issue an examination notice despite the fact that criminal proceedings have been instituted or commenced, while s 186(4) provides that the institution or commencement of criminal proceeding does not prevent the examination of a person upon whom a notice has been served.

3. [60]

   To similar effect, s 319 both as it is currently in force following the passage of the 2016 amending Act and before it was amended, provides (and provided) that the mere pendency of criminal proceedings will not attract the power to stay proceedings under the Act.

4. [61]

   As noted by Basten JA in Commissioner of Australian Federal Police v Elzein [2017] NSWCA 142 at [131], it is hardly surprising that s 319 is expressed in that way since it would be incoherent to confer the power to make an examination order under s 180, and to allow for an examination order to issue where criminal proceedings have been commenced, and then to order a stay of that order under s 319 merely on the basis that the power has been exercised.

5. [62]

   It remains useful, however, to review the authorities that have considered the basis upon which the power to stay might be executed (both before and after s 319 was amended), in particular those authorities that have considered the situation where, as is the case here, the same or similar subject matter integral to a particular criminal charge (or the evidence that has been served by the prosecution in support of it) is likely to be traversed in POC Act proceedings, including in examination proceedings. A review of the authorities will elucidate the principles that have emerged as to scope and operation of the statutory discretion in s 319(1), which is to be exercised in the context of s 317 which provides that the onus to satisfy the Court that the interests of justice dictate that proceedings under the Act be stayed is on the defendants.

6. [63]

   Prior to the passage of the amending Act in 2016, s 319 read as follows:

7. [64]

   Section 319 currently provides as follows:

8. [65]

   The significance of the amendments to s 319, and their impact on the applications for relief in this case, was also the subject of competing submissions to which I will later refer. There was, however, some common ground on how s 319 should be construed.

9. [66]

   In common with the submitted position of the Commissioner, the final submissions of the first, second and fourth defendant proceeded on the basis that “POC Act proceedings”, as that term is used in s 319(1), includes examination proceedings authorised under s 180. That is, those parties were agreed that s 319 is the source of statutory power in the POC Act to both stay the examination orders until the conclusion of the criminal proceedings (the application of the second and fourth defendants) or to stay the proceedings temporarily referable to some other time frame (the application of the first defendant). It may also be a source of power to limit the scope of the examination proceedings by an appropriately framed order. At the conclusion of the hearing that question was reserved pending the Court’s determination of the stay applications in respect of the examinations generally, the examination proceedings and the Sworn Asset Statements.

10. [67]

    Treating an examination ordered under the POC Act as a “POC Act proceeding” is consistent with Elzein where, at [49], Basten JA noted that in the absence of any submission which addressed that specific question from the parties to those proceedings, it should be accepted that s 319 operates with respect to proceedings for examination orders under s 180 and to the conduct of examinations, as it does to the ancillary orders requiring the furnishing of Sworn Asset Statements. Mr Ahmad, counsel for the third defendant, made no reference to his Honour’s approach when he questioned whether s 319 had any application to the relief he sought on behalf of the third defendant. In circumstances where Mr Ahmad’s submission was not developed, I propose to take the same approach as taken by Basten JA in Elzein (neither Beazley P or Simpson JA considered the question).

11. [68]

    It was also accepted by the first, second and fourth defendants (cf the third defendant to whom I will separately refer) that they bear the evidential and persuasive onus of establishing, on the balance of probabilities, that a stay of the examination orders (and ancillary orders) is in the interests of justice (see ss 317(1) and (2) of the POC Act). They also accepted (with some qualification in the case of the first defendant) that to attract the power to stay the examinations, or to qualify the obligation of the defendants to otherwise submit to a compulsory process of questioning by limiting the scope of the examinations, they were obliged to demonstrate a real, as opposed to a speculative or theoretical, risk of prejudice to the conduct of their defences to the taxation fraud conspiracy. They also accepted that the prejudice needed to be for reasons other than the mere pendency of the criminal trial and the bare fact of a coincidence or similarity in the circumstances pertaining to each proceedings, or a substantial similarity in the subject matter of both proceedings (see generally Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103 at [59]; Elzein; and Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46; [2015] HCA 5 and Zhao v The Commissioner of the Australian Federal Police [2014] VSCA 137).

12. [69]

    In recognition of settled authority in this Court, other intermediate State courts and the High Court, it was also common ground between the parties that the statutory power to stay the examinations in the interests of justice is to be determined in the context of the POC Act manifesting a clear legislative intention that proceedings under the Act, whether they are proceedings in which one or more of the substantive remedies under the confiscation scheme in Chapter 2 of the Act are at issue, or an examination conducted pursuant to an examination order made under s 180(1) may, and often will, proceed concurrently with pending criminal proceedings in respect of the same or related conduct.

The authorities

1. [70]

   Relevant provisions of the POC Act (although neither s 319 nor s 266A as currently in force) were most recently examined by the High Court in Zhao.

2. [71]

   The issue in Zhao was whether forfeiture proceedings due to be heard in the Supreme Court of Victoria should be stayed until the completion of pending criminal proceedings. The defendant complained that he would be prejudiced by disclosures that might need be made by him as a defendant in the forfeiture proceedings becoming available to the prosecution in his criminal proceedings, in circumstances where the offence specified as the basis for the forfeiture proceedings (namely, dealing with the proceeds of crime contrary to s 400.4(1) of the Criminal Code) raised identical issues to those in the pending criminal proceedings (namely, aiding and abetting another to deal with property that was the proceeds of crime).

3. [72]

   The Court of Appeal of Victoria stayed the forfeiture proceedings until the hearing and determination of the criminal proceedings. They did so primarily on the basis that were the proceedings not stayed in advance of the defendant’s criminal trial, the prosecutor would be informed of his likely defence because the defendant could not realistically defend the forfeiture proceedings without telegraphing that defence. They were also satisfied the Commissioner would suffer no prejudice were the hearing of the forfeiture proceedings delayed.

4. [73]

   The Commissioner appealed to the High Court. The High Court found there was no error in the approach of the Supreme Court. The plurality considered that the risk of prejudice to the defendant if the stay were not granted was real ([47]); the interest of justice were not served by requiring him to defend the forfeiture proceedings before the criminal proceedings were finalised; and the Commissioner would suffer no relevant prejudice from a delay in the continuation of the forfeiture proceedings ([50]).

5. [74]

   The Court also held at [42] that it was unnecessary on the application for the stay for the defendant to say more than he did in identifying the risk of prejudice since “… the circumstances relevant to both proceedings [were] substantially identical”, and to have required the defendant to provide a more specific account of prejudice would be to make the risk of prejudice a reality ([43]).

6. [75]

   On the issue of delay the Court said at [39]:

7. [76]

   In considering the operation of s 319 as it then operated (that is, prior to the 2016 amendment) the Court said:

8. [77]

   As noted above, upon the passage of the 2016 amending Act s 319 has been significantly recast. It now provides specifically for the fact that the Court must not stay the POC Act proceedings on the ground that the circumstances pertaining to those proceedings are the “same as or substantially similar to the circumstances pertaining to the criminal proceedings”, factors which in Zhao the High Court considered warranted a stay and, further, that an assessment of whether the interests of justice require a stay involves a discretionary assessment informed by the matters set out in s 319(6), including in s 319(6)(e) whether such prejudice as might attract consideration of a stay can be addressed by other means.

9. [78]

   The High Court also observed in Zhao at [46] that the effect of s 266A (as it was in force at that time) meant that evidence given by the respondent in the forfeiture proceedings may have been provided to the prosecuting authorities, even if it were inadmissible in those proceedings. Despite the assurances of counsel for the Commissioner that it was not intended that there would be disclosure, the Court was of the view that because s 266A (as it then stood) would not render the provision of the respondent’s evidence to the prosecution unlawful, and were his evidence to be in the possession of the prosecution this might affect the conduct of the defence to the criminal proceedings, the Court of Appeal's view that protective orders under s 266A would not suffice to remove the risk of prejudice to the respondent’s defence was correct.

10. [79]

    Section 266A as it stood prior to the amending Act provided:

11. [80]

    As Adamson J noted in Commissioner of the Australian Federal Police v W (No 1) [2016] NSWSC 683 at [36], s 319(1) (as amended) clarifies that the Court may grant a stay of civil proceedings under the POC Act if the Court considers that it is in the interests of justice to do so, with the addition of subsections 319(2)-(5) prohibiting a court from staying proceedings on the grounds specified and mandating that the matters prescribed in s 319(6) must be considered. Her Honour also observed at [45] that the prohibited grounds listed in ss 319(2)-(5) are the very matters which the High Court in Zhao considered germane (although not determinative) as to whether the interests of justice warranted a stay.

12. [81]

    In Elzein, Basten JA went on to say at [69]:

13. [82]

    It was this passage of the judgment in Elzein upon which the first defendant relied when responding to the Commissioner’s complaint that the generality of prejudice that it is said will result from his examinations at this time fails to address with appropriate specificity how the risk of prejudice to the conduct of their defence real and acute as distinct from being merely theoretical.

14. [83]

    The Commissioner submitted that the preponderant weight of authority (including a number of cases to which I will presently refer) establish that no relevant prejudice lies in the abstract circumstance that a defendant’s answers under examination may influence, or even restrain the defence he or she intends to advance at his criminal trial. In the Commissioner's submission, it was necessary for the defendants in the stay proceedings to concretely identify a legitimate forensic choice in the conduct of their defence to the taxation fraud conspiracy which will be lost by the course of compulsory examination into their examinable affairs, accepting, as the Commissioner did, that the focus of the examinations is likely to include their conduct in deriving funds to acquire property (including the current location of any property not already identified) in addition to the way that the funds generated by the conspiracy were dealt with or dissipated whilst under their custody and control. In the Commissioner’s submission, none of the defendants has pointed to any relevant prejudice and that the generalised concern they express (or a concern expressed on their behalf by their solicitors) that they may feel constrained in the conduct of their defence to the criminal proceedings is not enough.

15. [84]

    Each of the defendants referred to and expressly relied upon the observations of Adamson J in W (No 1) at [59] that whatever orders the Court might make under s 266A, there remains a risk that there will be disclosure of what occurs in the civil proceedings, through misunderstanding, inadvertence or mishap, to those involved in the prosecution.

16. [85]

    Mr McLure SC, Counsel for the Commissioner, submitted that the approach taken by Adamson J departs from the approach mandated in McGlone, and McGlone is to be followed.

17. [86]

    In dealing with the operation of s 319 (as amended), in Elzein, Basten JA also said:

18. [87]

    In dealing with the amendment to s 266A in 2016 by the addition of subs 2(b), Basten JA accepted in Elzein at [76] that it was self-evident that the purpose of the amendment was to provide a mechanism whereby the disclosure of compulsorily acquired information obtained by the Commissioner under the POC Act to a prosecuting authority was prohibited where criminal proceedings are pending (see also Gleeson JA in Commissioner of the Australian Federal Police v Cacu [2017] NSWCA 5 at [87]).

19. [88]

    In Elzein (decided after W (No 1)), Basten JA accepted that the terms of the Minister’s Second Reading Speech made it clear that the passage of the 2016 amending Act was to overcome the perceived effect of the judgment in Zhao. At [68] his Honour extracted relevant parts of the Explanatory Memorandum as they related to the amendments to s 319:

20. [89]

    His Honour also commented at [79] that the form and effectiveness of an order under s 266A(2)(b) prohibiting disclosure by the Commissioner as the authority under the Commonwealth who has the function of investigating and prosecuting offences against the law of the Commonwealth to himself was “by no means obvious”. That passage, together with his Honour’s additional concern expressed at [78] that the prejudice occasioned by lawful disclosure to the prosecuting authorities may still arise, was also relied upon by the defendants as supporting their applications for a stay of the examination proceedings.

21. [90]

    In the Commissioner’s submission, both of the passages in Elzein upon which the defendants relied were obiter dicta and neither should carry any weight as factors under s 319(6)(e) on the question whether it is in the interest of justice to stay the examination proceedings in this case. In that connection the Commissioner emphasised the binding terms of the non-disclosure order under s 266A(2)(b) made in these proceedings on 21 June 2017 as it relates to the information which has been acquired by him as a direct result of the examinations conducted to date and those that are pending (including each of the four defendants) and the provision of Sworn Asset Statements by those defendants that are the subjects of that order (including each of the four defendants) and the importance of A/Commissioner Gaughan’s evidence which addressed, in comprehensive terms, the framework that is currently in place to quarantine compulsorily acquired information from the prosecuting arm of the AFP. I will return to consider A/Commissioner Gaughan’s evidence and the submissions concerning it later.

22. [91]

    Before turning to other authorities to which the parties referred and the principles the parties submitted should guide the exercise of the discretion to stay the examination proceedings in this case, mention should be made of the statutory regime in Part 3 Division 3 of the POC Act, which the Commissioner points to as further supporting his submission that the interests of justice in this case do not warrant a stay of the examination orders.

23. [92]

    In combination with s 188, which provides that the examination is to take place in private and that the approved examiner may give directions about who may be present during the examination or part of it, s 193 makes specific provision for directions to be given at the discretion of an approved examiner (including on the application of the examinee's lawyer) to accommodate the potential for questions asked and information provided under compulsion to put at risk an examinee’s right to procedural fairness in the conduct of the POC Act proceedings and an examinee’s fundamental right to fair trial at risk, including, it must be assumed, any risk to the right of an examinee to mount a defence to a criminal charge.

24. [93]

    Section 193 provides:

25. [94]

    The approved examiner may also, under s 192, refer any question of law arising at the examination to this Court for determination, including at the request of the examinee.

26. [95]

    In the Commissioner’s submission, these provisions are part of the machinery in the Act which allow for the realisation of his legitimate interests in achieving the statutory objectives in s 5 of the Act whilst preserving the accusatorial nature of the process of criminal justice, and the various rights and freedoms inherent in that process which have not been modified or abolished by the legislative scheme in the POC Act, either expressly or by necessary intendment

27. [96]

    Together with Elzein, relevant provisions of the POC Act were also recently considered by this Court in McGlone, decided before Elzein (which as already discussed considered the impacts of the amendments to ss 319 and 266A), and Cacu, a case which, although decided after the passage of the 2016 Act, concerned a decision of Button J made in accordance with ss 319 and 266A before amendment. Since the Court of Appeal in Cacu did not find error in the primary judge's decision to stay the examination proceedings, the Court did not need to re-exercise the discretion under the newly formulated s 319 of the Act and did not discuss at length how the amended s 266A(2)(b) might apply when the Court turns to consider the mandatory factors in s 319(6)(d) of the Act.

28. [97]

    Critically for the outcome in Cacu (as Basten JA observed at [95] in Elzein) the Court accepted that at the time of the primary judge’s decision, the power of an approved examiner to prevent or restrict disclosure of the information revealed on examination did not extend to prohibiting disclosure which was permitted under s 266A(2) and, that being the case, the risk of derivative use of the information arising from a compulsory examination by the prosecution was at large.

29. [98]

    The position that obtains after the 2016 amendment to s 266A, and therefore the position that obtains in this case, is that a non-disclosure order has been made by the Court which by its terms provides an absolute prohibition on disclosure of confidential material, inclusive of the product of the proposed examinations of the defendants.

30. [99]

    In Commissioner of the Australian Federal Police v Kaur [2016] VSC 423 Forrest J considered the potential prejudice to defendants by their examination prior to pending criminal proceedings, and at [68] said:

31. [100]

    In McGlone the Court of Appeal dismissed the Commissioner's appeal from a decision of Button J declining to order examinations of Messrs McGlone and McKell. At [90], the Court identified the relevant question as whether there were circumstances, other than the mere pendency of the criminal proceedings, which created a real risk of prejudice to the conduct of the then pending criminal proceedings involving both respondents if their examination occurred before trial, such that it was open to the primary judge to have declined to make an order for their examination in the interests of justice.

32. [101]

    The Court concluded that there was a real risk of prejudice of that kind on the basis of the following circumstances:

    1. (1)

       The offences with which Messrs McGlone and McKell were charged (which included dealing with property reasonably suspected of being the proceeds of crime contrary to s 400.9 of the Criminal Code) imposed upon them the onus of proof in relation to aspects of their defence as to which Mr McKell deposed in his affidavit ([115]). Beazley JA added at [121] that despite Mr McGlone not filing any affidavit evidence, the risk to the conduct of his defence was obvious given that the charge he faced was the same as that faced by Mr McKell and similarly there was the possibility that the prosecutor might, by the operation of s 266A (as it then stood), access his evidence.

    2. (2)

       Were the examination to proceed the respondents would be required to answer questions under compulsion about the very matters upon which they would be required to adduce evidence in the pending criminal trial ([117]-[119]).

    3. (3)

       To be vexed with a compulsory examination at a time when their criminal trial was imminent would also inevitably give rise to prejudice. (I note the criminal trial was scheduled for mid-June 2016, the appeal was heard in March 2016 and the Court delivered judgment in May 2016.)

    4. (4)

       There was no practical prejudice to the Commissioner in the examinations being temporarily stayed ([108]).

    5. (5)

       The Commissioner had failed to seek the examination order with any alacrity after the respondents were charged.

33. [102]

    Of these considerations, the Court of Appeal placed particular significance upon the first two.

34. [103]

    In dealing with one of the questions raised on the appeal, namely whether the principles in Zhao continued to apply and were correctly applied by the primary judge (a contention for which the second defendant contends in the stay proceedings). Beazley JA said:

35. [104]

    In W (No 1) Adamson J stayed the hearing of the respondent's application for an exclusion order under s 29 of the POC Act until after the conclusion of pending criminal proceedings. Unlike McGlone, the amendments to ss 266A and 319 were in force at the time of her Honour’s decision. Relevantly, her Honour was satisfied that:

    1. (1)

       The criminal trial of the respondent was imminent. The stay application was heard on 24 and 27 May 2016 with the trial scheduled to commence on 8 August 2016. The imminence of the trial was considered to be an important factor (at [71]).

    2. (2)

       No prejudice had been identified by the Commissioner (at [52]).

    3. (3)

       Even were the application for the exclusion order conducted in closed court and made the subject of a suppression order, there remained a slight risk of disclosure to those involved in the prosecution (at [59]-[60]).

    4. (4)

       In any event, conducting the proceedings in closed court was not an appropriate measure to prevent disclosure to the prosecution, as it would be contrary to the principle of open justice.

36. [105]

    In Commissioner of the Australian Federal Police v W (No 3) [2016] NSWSC 1200 Adamson J set aside the stay order made in W (No 1). In contrast to the observations her Honour made in W (No 1) at [59]-[64], her Honour was satisfied that there were mechanisms available to be used and directions given to protect the defendants' right to silence, for example, a disclosure prohibition order under s 266A(2)(b).

The notice of motion of each of the four defendants in the stay proceedings

1. [106]

   The precise nature of the relief sought by the defendants differs. For example the first defendant seeks a temporary stay of the examination order under s 319 of the POC Act while the third defendant seeks an order that the examination summons (sic) be revoked or set aside under rule 36.16(2)(b) of the UCPR. That said, there remains considerable overlap in the underlying nature of the relief sought by each of the defendants and in the application of the principles to be applied in determining whether the stay should be granted and, if so, upon what terms.

2. [107]

   However, because of the potential range of final orders that may be made in favour of one or more of the defendants (both in respect of the Examination Notice and the provision of the Sworn Assets Statement), the applications will need to be considered separately to an extent. Additionally, although I directed that the evidence in one application was to be evidence in each application, some of the evidence adduced at the hearing is, by its nature, relevant only to an individual defendant. For example, the second defendant asserts a personal prejudice he will suffer were he compulsorily examined at this time, while the first defendant relied upon the evidence of his solicitor as to the difficulties she has encountered obtaining instructions from him for the purpose of both the POC proceedings and the criminal proceedings due to a combination of circumstances, including a present inability to speak to his co-directors and other advisers concerning his legal and business affairs and those of his companies because of his bail conditions.

3. [108]

   Further, although in final submissions counsel for the defendants relied extensively on the submissions advanced by the counsel that preceded him in address (the first defendant addressed first, followed by the second defendant, the third defendant and the fourth defendant), because the extensive written submissions of the first, second and fourth defendants were filed before the hearing, and because senior counsel for the first and second defendants, each of whom prepared the written submissions and cross-examined some of the Commissioner's witnesses, did not appear to address their submissions orally, separate treatment of the final submitted position of each of the defendants in support of the particular relief will also be necessary to some extent.

4. [109]

   Finally, although as respondent to the notices of motion the Commissioner relied upon the same evidence and advanced the same submissions as to why the relief sought by each of the four defendants should be refused, the defendants have taken a different approach to some of the Commissioner’s evidence and to the submissions put against them. They have also given different emphasis to some of the factors intrinsic to the discretionary exercise mandated by the power to stay proceedings in s 319 of the POC Act in contrast to other factors, as they have done to factors they contend are extrinsic to the statutory stay power.

5. [110]

   I propose to address the individual cases of the defendants in the order in which final submissions were delivered. Mr Bruckner, for the fourth defendant, addressed last with each of the first, second and third defendants signalling, in advance, their adoption of his submissions. Because Mr Bruckner dealt in detail with what emerged as two discrete aspects of the evidence adduced by the Commissioner in resisting the relief the defendants seek, I propose to summarise the Commissioner’s evidence before outlining the submissions of the defendants concerning it and the evidence upon which they rely. Although the two discrete aspects of the Commissioner’s evidence which Mr Bruckner addressed in detail may not be determinative of the stay proceedings, all counsel recognised that the Court’s assessment of that evidence will have a direct bearing on whether it is in the interests of justice that the proceedings be stayed, and of particular relevance in relation to the mandatory considerations in s 319(a) and (c).

6. [111]

   In broad outline, the first discrete issue to which Mr Bruckner directed lengthy submissions concerned the evidence of A/Commissioner Gaughan. Mr Bruckner submitted that despite the design and implementation of the SOP as the regime currently in place for the quarantining of Coercive Material obtained under the POC Act, there remains a continuing risk of leakage of that material to the investigative and prosecutorial arms of the AFP (and from there to the CDPP as prosecutor) which is productive of a real risk of prejudice to the defendants in the conduct of their criminal proceedings.

7. [112]

   The second issue concerned the evidence of Mr Ramsden. Mr Ramsden is an officer of the ATO who headed the Financial Crime Audit Team’s investigation into the operation of the corporate entities that were implicated in what the ATO suspected was a structured taxation fraud following an investigation launched by the ATO in February 2016 and which has since been charged criminally as the taxation fraud conspiracy.

8. [113]

   Again in broad outline, Mr Bruckner submitted that after his cross-examination of Mr Ramsden I would be satisfied that there is no utility in the Commissioner examining the defendants at this time, or at all, whether to identify property held by the defendants that is not presently restrained, or on any other basis. He submitted that conclusion follows from the fact that the value of the assets already restrained by the Commissioner exceeds the value of the benefits derived from the taxation fraud.

Assistant Commissioner Gaughan’s evidence

1. [114]

   The Commissioner adduced evidence from A/Commissioner Gaughan to address what each of the defendants submitted were the risks (both advertent and inadvertent) of the leakage of Coercive Material from within CACT and CAL, both being divisions of the AFP, to the criminal investigative branch of the AFP and from there to the CDPP. (This issue, although not A/Commissioner Gaughan’s evidence, has already been the subject of consideration at another interlocutory stage of the proceedings when the fourth defendant sought production of various materials for the purposes of the stay application (see Commissioner of the Australian Federal Police v Cranston and Ors (No 5) [2017] NSWSC 1850.

2. [115]

   A/Commissioner Gaughan’s affidavits of 22 August 2017 and 8 September 2017 were read. He was cross-examined by Mr Game SC for the first defendant and Mr Bruckner for the fourth defendant.

3. [116]

   In addition to his rank as A/Commissioner of the AFP, since March 2017 A/Commissioner Gaughan has also held the position of National Manager of the Organised Crime and Cyber portfolio of the AFP (“the OCC”). The OCC’s stated purpose is to disrupt and dismantle organised criminal activity that is perceived to threaten the interests of the Commonwealth. The OCC comprises three branches: Organised Crime; Criminal Assets, Fraud and Anti-Corruption; and Cybercrime Operations. A/Commissioner Gaughan has the responsibility for all OCC operations and investigations.

The formation of CACT

1. [117]

   In 2009 the Parliamentary Joint Committee on the Australian Crime Commission (“the Joint Committee”) recommended that the Commonwealth consider instituting a more integrated approach to asset recovery in which the investigation and prosecution of organised criminal activity would be undertaken by one agency. This agency became the Criminal Asset Confiscation Taskforce (CACT).

2. [118]

   In January 2011 an interim CACT commenced operations. Its membership included representatives from the AFP, the Australian Crime Intelligence Commission (“ACIC” - formerly known as the Australian Crime Commission), the ATO and the CDPP.

3. [119]

   In December 2011 the POC Act was amended by the Crimes Legislation Amendment Bill (No 2) 2011 (Cth) to allow the Commissioner of the AFP to conduct POC Act proceedings on behalf of the interim CACT. The amendments which commenced on 1 January 2012 provide for POC Act proceedings to be conducted by a "proceeds of crime authority” which is defined in the Act as the Commissioner or the CDPP. Prior to the amendment investigations were undertaken by the AFP with the CDPP the sole authority for conducting litigation under the POC Act.

4. [120]

   On 1 January 2012, a permanent CACT commenced operations. The CDPP ceased to be a member of the task force as at that date, thereafter retaining mainly a liaison role with other agencies.

The role of CAL

1. [121]

   The litigation function of CACT was assigned to the Proceeds of Crime Litigation Division (CAL), a division which forms part of CACT. The CACT is led by the AFP and located within AFP premises. Its members comprise CAL, sworn police investigators, unsworn financial investigators, and forensic accountants.

2. [122]

   The CAL function of the CACT is an operational legal function. It is tasked with undertaking litigation, representing the Commissioner and providing advice to him in relation to the conduct of litigation for Commonwealth proceeds of crime matters. In addition to the ATO, the AFP and the ACIC, the Australian Border Force became a member of the CACT in May 2016. From time to time, these organisations second employees to CACT.

3. [123]

   While the CDPP also remains an authority which, together with the Commissioner, can institute proceedings under the POC Act as a “proceeds of crime authority”, a Memorandum of Understanding between the AFP and CDPP notes the distinct responsibilities of the two authorities. In current practice, the Commissioner has the primary responsibility for bringing proceedings under the POC Act, while the CDPP has the responsibility to apply for pecuniary penalty orders or forfeiture orders incidental to or arising from a criminal conviction.

4. [124]

   Commensurate with the separation of the Commissioner’s role in initiating proceedings under POC Act and his role in the investigation and prosecution of federal offenders, CACT investigators and the CAL team not only perform different functions from officers involved in the investigation and prosecution of criminal matters, they have a separate reporting structure within the AFP, being through the Commander of Criminal Assets, Fraud and Anti-Corruption through to A/Commissioner Gaughan of the OCC and then to the Deputy Commissioner of Operations.

5. [125]

   Additionally, the Commissioner adduced extensive evidence from A/Commissioner Gaughan to establish not only that CAL and CACT are geographically separate from the criminal investigation team of the AFP, but that the systems that are in place to prevent unauthorized disclosure of Coercive Material include the fact that CAL maintains a separate document management system known as “Worksite”, accessible only by members of CAL and which can only be opened by appointees of CAL and information communication technology staff. Further, some files are marked so that they are only accessible to persons who have been granted specific access. Documents within these additional files do not register when searches are conducted on the Worksite system.

The issue of the joint directive

1. [126]

   Mr Stefan Jerga is the Manager and General Counsel of the Criminal Assets Litigation team (“MCAL”), and Commander Peter Crozier is the Manager of Criminal Assets, Fraud and Anti-Corruption (“MCAFAC”). A/Commissioner Gaughan gave evidence that Mr Jerga holds and exercises the powers, functions and duties of the Commissioner in his capacity as a “proceeds of crime authority” as defined in the POC Act, pursuant to an instrument of delegation. Commander Crozier is the manager responsible for CACT.

2. [127]

   On 22 June 2017 Mr Jerga and Commander Crozier issued a joint directive providing for the management of compulsorily acquired information received by the AFP under ss 39 and 180 of the POC Act in Operation Elbrus (the operation name given to the investigation into the criminal and civil liability of the four defendants and others implicated in the taxation fraud). Compulsorily acquired information is defined in the joint directive as including information derived from information received compulsorily under both s 39 and s 180. That information became re-defined in the SOP as "Coercive Material”. The joint direction also provided that, inter alia, subject to the express written authority of Mr Jerga, no person other than a member of CACT or CAL could receive compulsorily acquired information and, further, that access to electronic versions of the information was “password protected” and restricted to members of CACT and CAL.

3. [128]

   The joint directive further provided that subject to an express written authority from MCAL any person who has received compulsorily acquired information must not have any role in related criminal investigation and prosecution.

4. [129]

   On 27 June 2017 the joint direction was updated to provide that Commander Crozier could also authorise a person who had received Coercive Material to have a role in a related criminal investigation or prosecution.

5. [130]

   The joint directive also provided the process by which a disclosure prohibition order made by a court under s 266A(2) of the POC Act would be dealt with internally. It provided that if the Court makes a disclosure prohibition order, the CAL lawyer with day-to-day carriage of the matter in which the order is made is to ensure that a copy of it is provided to the following:

6. [131]

   All members of CAL and CACT were required to comply with the joint directive. A/Commissioner Gaughan gave evidence that it was signed by every team member then performing duties in CAL or CACT in the Sydney office, and that to his knowledge there has been no breach of the direction in respect of the compulsorily acquired information obtained in these proceedings from the time of its issue. This was not the subject of any challenge by the defendants.

7. [132]

   A/Commissioner Gaughan gave evidence that he was informed on or about 30 June 2017 that the electronic versions of a number of Sworn Asset Statements provided by various defendants to the POC Act proceedings (including each of the four defendants) had been saved in the CACT Drive of the AFP IT system, and that the CACT Drive was capable of being accessed by personnel not involved in Operation Elbrus. 108 people were identified as having access rights to that Drive. A/Commissioner Gaughan was also informed that upon the identification of the potential risk of unauthorised disclosure of that material by that means it was deleted from the CACT Drive.

8. [133]

   A/Commissioner Gaughan then issued a direction pursuant to s 40 of the Australian Federal Police Act 1979 (Cth) to each of the 108 personnel who had access rights to the CACT Drive during the potential access period, requiring them to make a declaration as to whether they had accessed that material. Of that number, 99 personnel responded by way of a signed declaration, 97 of whom indicated they did not view the information. Nine people did not respond to the direction, four of whom had resigned before the potential access period commenced, with the remaining five members on extended leave at that time. An audit of the access by those five members revealed that none had accessed any AFP systems during the potential access period. The only two appointees who did view the information were Federal Agents Murphy and Burtenshaw of CACT who were entitled to receive the information in any event.

9. [134]

   A/Commissioner Gaughan gave evidence that having considered the issues that were likely to arise in the stay proceedings by the nature of the relief that was sought, and after reviewing the directions that were in place under the joint direction which issued on 22 June 2017 and that was later updated on 27 June 2017, Mr Jerga determined that in order to protect and safeguard the Coercive Material that had been received, or which may be received in the future in Operation Elbrus, a new governance framework should be implemented.

The issue of the SOP

1. [135]

   On 16 August 2017, a new SOP was issued to all AFP staff. It is an instrument carrying statutory force by virtue of ss 38 and 40RC of the Australian Federal Police Act and by virtue of the Commissioner's Orders previously issued. Compliance with the SOP by all AFP personnel (including AFP appointees and contractors) is mandated by s 39 of the Australian Federal Police Act, with breaches engaging the disciplinary procedures in Part V of that Act. The obligation to comply with the SOP continues after the appointee leaves CACT. Depending on the nature of the breach, the available sanctions include termination of an AFP member's employment or appointment.

2. [136]

   Paragraph 4 of the SOP provides that it supersedes all previous directions, including the joint directions referred to above. The SOP was developed and implemented by Mr Jerga as Manager of CAL and by Commander Crozier as Manager of Criminal Assets, Fraud and Anti-Corruption in response to the error in the handling of the electronic versions of the Sworn Asset Statements.

3. [137]

   A/Commissioner Gaughan described the purpose of the new framework of governance as:

4. [138]

   The current version of the SOP was annexed to A/Commissioner Gaughan’s affidavit. It provides the procedures for the storage and printing of Coercive Material; stipulates the requirements for disclosure of such material and other POC Act information; the process by which an application might be made for permission to make a disclosure; the factors relevant to granting an application for disclosure and the procedures to be followed if the application is granted. Auditing and training is also mandated.

5. [139]

   The following aspects of the SOP warrant emphasis:

6. [140]

   Mr Gaughan gave evidence that:

The submissions of the parties concerning the adequacy of the means to limit the risk of disclosure of Coercive Material

1. [141]

   The Commissioner submitted that the SOP represents a comprehensive and robust regime designed to protect against improper disclosure, or the accessing of, compulsorily obtained information – a regime which applies with statutory force and enforcement mechanisms. In the Commissioner’s submission, the SOP extends beyond a mere statement of intent or an ambit list of proscriptions. Instead it includes concrete procedures specifically tailored to ensure practical compliance with protocols and procedures which are designed to preserve the integrity of the curial criminal process, including the conditions under which disclosure of compulsorily acquired information will be supervised.

2. [142]

   Mr Bruckner identified eight propositions which he submitted highlighted the real and continuing risk of the leakage of Coercive Material to the prosecution despite the framework and governing principles inherent in the SOP which, he accepted, are intended to manage that risk. He submitted that such is the residual risk of unauthorised leakage (or unauthorised disclosure of the Coercive Material) that the integrity of the criminal process as it affects the defendants in these proceedings will be inevitably undermined and, that being the case, it is in the interests of justice that the examinations be stayed.

3. [143]

   The first point Mr Bruckner made is that in designing the procedures in the SOP according to which the AFP are to manage compulsorily acquired information, the Commissioner has elected to allow for the disclosure of information, provided that it does not include Coercive Material, as that term is defined in the SOP. In Mr Bruckner's submission, having made that decision the Commissioner must accept that since the decision as to whether information should be disclosed or not hinges on an assessment as to whether or not it is Coercive Material (and since the identification of derivatively acquired information from that material is by its very nature difficult if not impossible to accurately identify) there can never be absolute protection against the risk of information derivatively acquired from Coercive Material being disclosed. Mr Bruckner submitted that the Commissioner had the option of putting in place a completely impermeable barrier between members of CACT on one hand and members of the AFP investigation or prosecution team on the other and, in allowing for information to be disclosed (subject only to it not being Coercive Material), the Commissioner has created the very risk he set out to eradicate.

4. [144]

   Mr Bruckner’s second point is that there is explicit provision under the Memorandum of Understanding between the various agencies exhibited to A/Commissioner Gaughan’s affidavit, for a secondee from the ATO to work as a member of CACT, with that officer’s role to include considering referrals to the ATO. Mr Bruckner submitted that would inevitably involve a consideration of the tax liability of one or more of the corporate entities associated with the taxation fraud conspiracy. Mr Bruckner submitted that whether a referral to the ATO resulted from an audit undertaken within CACT directed to raising a fresh assessment (thereby activating the machinery under the Taxation Administration Act 1953 (Cth) for objections to assessments, reviews of assessments or appeals from an assessment where the taxpayer bears an onus) or as a result of the ATO undertaking an assessment of his client’s potential criminal liability for some presently uncharged tax offence, the capacity for a secondee to disclose Coercive Material to the ATO demonstrates the flaw in the SOP for its intended purpose.

5. [145]

   The third point, indirectly allied with the second point, concerned what Mr Bruckner submitted was the fact that the practices, procedures and protocols incorporated in the SOP for the management of Coercive Material did not sufficiently address how compulsory notices issued by the ATO to the Commissioner of the AFP under s 353-10 of the Taxation Administration Act are to be dealt with.

6. [146]

   Fourthly, Mr Bruckner submitted there is no provision in the SOP for a defendant to be notified of the fact that it is proposed that Coercive Material be disseminated to prosecutors such as might allow a defendant the opportunity to make representations of a relevant kind against that proposal.

7. [147]

   Fifthly, there is no limitation upon a legal practitioner engaged by the Commissioner as part of the examination process acting in other proceedings, whether they be taxation proceedings or criminal proceedings under the Criminal Code.

8. [148]

   The sixth point said by Mr Bruckner to undermine what the Commissioner contends is the effective impermeability of the framework designed to quarantine Coercive Material, is that there is no process according to which information derived from Coercive Material is tracked or audited to ensure it does not shed its character as Coercive Material in the process.

9. [149]

   The seventh point is what Mr Bruckner referred to as the real and unquantifiable risk of the disclosure of Coercive Material by human error. He submitted that despite what the Court might be satisfied will be the genuine efforts by all AFP officers and secondees to comply with the SOP, an unacceptable risk of unauthorised disclosure remains, in part because of the complicated regime inherent in the SOP itself and the risks of its being misunderstood or misapplied. Finally, he submitted that the training of those who will inevitably come into contact with compulsorily acquired information by providing for a scheduled training session every six months is inadequate.

10. [150]

    Mr McLure responded to the oral submissions advanced by Mr Bruckner (and adopted by each of the defendants) with the primary submission that to contend that because the Commissioner has failed to provide a completely impenetrable barrier between CACT and other functions of the AFP (and other agencies involved in the investigation and prosecution of offenders) that a fair trial of the defendants will be inevitably prejudiced, is to ignore altogether the terms of the current disclosure prohibition order under s 226A(2)(b). As Mr McLure emphasised, the effect of that order prohibits disclosure to any person involved with the investigation or prosecution of the defendants. In that way, it reinforces the regime under the SOP according to which disclosure of Coercive Material is to be overseen and strictly controlled.

11. [151]

    Mr McLure submitted that the current disclosure prohibition order also serves to answer Mr Bruckner’s further criticism that there is inadequate provision in the SOP for dealing with the possibility of the ATO serving an information production notice. He submitted that it is clear beyond question that were the AFP (through CACT) to comply with a production notice issued by the ATO they would be in breach of this Court's non-disclosure order. Mr McLure invited the Court to proceed on the basis that the AFP would not act in flagrant disregard of a Court order of any kind. However, in the unlikely event that an information production notice was served by the ATO, I would be satisfied that the AFP would move the Court to either have the order varied or to have the notice withdrawn or set aside, whether on an ex parte application or after notice to the defendants to ensure that they had a right to be heard.

12. [152]

    Further, in Mr McLure’s submission, the Court should proceed on the basis that with the high index of concern shared by all agencies and stakeholders around the risk of inadvertent disclosure of Coercive Material, the utmost care will be taken to ensure compliance with the SOP consistently with the obligations of members of the AFP, and consistently with the overriding concern of the Commissioner that there be strict compliance with his own governing framework, and with the orders of the Court, in order to ensure the integrity of trial process is preserved. The Commissioner submitted that the Court should also proceed on the basis that since the CACT and CAL are staffed by sworn Federal agents, including financial investigators, accountants and secondees from other agencies and admitted legal practitioners, all of whom are “AFP appointees” within the meaning of s 4 of the Australian Federal Police Act, they are not only bound by the SOP but because of the seniority and their status within the organization, they will make genuine and concerted efforts to comply with those procedures.

13. [153]

    Finally, Mr Bruckner’s reference to the Memorandum of Understanding between the AFP and other Commonwealth agencies, which provides in paragraph 7.8 for an ATO secondee to make referrals to the ATO where a “tax remedy may be the preferred treatment option” as a further avenue through which Coercive Material would be liable to be disclosed, also fails to take into account that the SOP itself (at paras 4 and 5) provides that, to the extent of any inconsistency between the Memorandum of Understanding and the SOP, the SOP prevails.

14. [154]

    In addressing Mr Bruckner's submission that there are inadequate means of differentiating between the direct disclosure of Coercive Material and the disclosure of derivative information, Mr McLure emphasised that the authorities (for example McGlone at [92] and Ruzehaji at [78], [79] and [94]) recognise that by operation of s 266A of the POC Act express provision is made for the lawful disclosure of derivative information to prosecutorial bodies, in fact it is clearly contemplated that this may occur.

15. [155]

    In summary, in the Commissioner's submission, there are four mechanisms established by the evidence according to which it is open to the Court to assess the realistic risk of the leakage of Coercive Material to the prosecuting or investigating authorities. In the Commissioner’s submission, each of these mechanisms individually, and all of which in combination, will allow the Court to conclude that the risk of unintended or accidental disclosure has been mitigated to such an extent that, while it is not neutralised in absolute terms (and neither, realistically, could it be), there remains no real or demonstrable risk of unauthorised disclosure of Coercive Material to the prosecuting or investigating arm of the AFP of a kind which would satisfy the Court that the interests of justice require a stay of the examination proceedings, or that any of the related relief sought by the defendant’s notice of motion should be granted.

16. [156]

    The first of the four mechanisms is the disclosure prohibition order made on 21 June 2017, already discussed above. Secondly, evidence of the rigorous system that has been implemented under the Commissioner’s initiative to prevent, manage and detect the disclosure of Coercive Material that is in the possession of the Commissioner, the ongoing management of which is supervised by A/Commissioner Gaughan as his delegate. Thirdly, even were an unauthorised disclosure to occur, the Court would not immediately conclude it would be unlawful, or that it would result in unfair prejudice to a criminal trial, in circumstances where derivative use of Coercive Material is expressly permitted by the POC Act. Fourthly, even were unauthorised disclosure to occur, given the rigours of the SOP that disclosure is likely to be detected either within CACT or in the process of the AFP discharging its investigative and prosecutorial functions as the criminal proceedings are processed through the courts and, in that way, brought to the attention of the CDPP as the prosecutor and, ultimately, if necessary, to the attention of the trial Court. Mr McLure submitted that the Prosecutor's ongoing duty of disclosure is one of a raft of protective measures that are available to address any prejudice that may result from unauthorised disclosure should it occur.

17. [157]

    The Commissioner acknowledged that despite the rigour inherent in those four interconnected mechanisms, there is no absolute guarantee that there will not be the disclosure of derivative information which has been so subtly interwoven with the authorised disclosure of Coercive Material as to be practically undetectable. He submitted, however, that the defendants’ failure to give a tangible example of how that might occur in this case and, equally as critically, to demonstrate in a practical and informed way how, were that to occur, that it would be to the disadvantage or prejudice of these particular defendants in the conduct of their defence to the criminal proceedings, allows for a finding, consistent with the settled authorities, that it is not a risk of a kind which would warrant a stay of the examination proceedings in the interests of justice or the making of orders of a similar kind with respect to the information in the Sworn Asset Statements.

Mr Ramsden’s Evidence and the “Crocodile Report”

1. [158]

   The Commissioner also read three affidavits from Federal Agent Burtenshaw.

2. [159]

   One of the documents Federal Agent Burtenshaw referred to in his first affidavit when formulating the basis upon which he deposed to the reasonable suspicion that each of the four defendants (and others) had committed the taxation fraud conspiracy was a report prepared by the Financial Crime Audit Team within the Australian Taxation Office.

3. [160]

   That report became known in the proceedings as “the Crocodile Report”.

4. [161]

   Initially objection was taken by all four defendants to the use of the report in the stay proceedings other than for the limited purpose of it forming part of the material supporting the Commissioner’s application for the issue of the restraining orders on 16 May 2017 and, by necessary extension, the Commissioner’s application for the issue of examination orders at that time.

5. [162]

   In particular, objection was initially taken to the admissibility of the report for the additional purpose for which the Commissioner tendered it in the stay proceedings, being to prove the quantum of the estimated tax liability of the corporations implicated in the tax fraud as one of the primary facts upon which the Commissioner sought to defend the necessity for compulsory examinations being pursued expeditiously.

6. [163]

   It was initially submitted by all defendants that the conclusions expressed in the Crocodile Report were based upon the hearsay assertions of unidentified members of the audit team, whose unstated assumptions and unidentified methodologies offended s 76 of the Evidence Act 1995 (NSW) and that s 75, which operates as an exception to the hearsay rule in interlocutory proceedings (the stay applications being an interlocutory hearing in the civil proceedings) was not available to the Commissioner where the source documents upon which the opinions and conclusions were based were not reasonably discernible.

7. [164]

   After the proceedings were adjourned part heard the Commissioner served an affidavit of Andrew Ramsden. The affidavit was read without objection on the resumed hearing, at which time the earlier objection to the Crocodile Report was withdrawn.

8. [165]

   At the time of the proceedings Mr Ramsden was the manager responsible for the Audit Team tasked with carrying out an audit into the taxation affairs of a number of companies in what he described as “the Plutus Group”.

9. [166]

   Mr Ramsden gave evidence that the Audit Team is tasked with undertaking reviews and audits within the ATO to determine whether tax payers have complied with their taxation obligations, with a particular focus on tax evasion and tax payers with high unexplained wealth who are suspected to have engaged in unlawful activities or who have otherwise disengaged from the tax system. As part of the audit process, the ATO obtains information from a variety of external sources including bank statements and transaction tracing data from various financial institutions, together with information accessible through the Australian Securities and Investment Commission.

10. [167]

    The audit of the entities within the Plutus Group, and companies associated with that group and their taxation affairs, was covert in order to deflect the risk of any of the persons associated with the corporate taxpayers taking action to frustrate the ability of the Commissioner of the ATO to assess and recover tax liabilities that he determines are owing.

11. [168]

    During the audit, the Audit Team assessed the tax related liabilities payable by each of the entities in, or associated with the Plutus group using an established audit methodology which is reported upon in the Crocodile Report. A summary of those methods is as follows:

    1. (1)

       Pursuant to relevant provisions in the Taxation Administration Act an entity is obliged to withhold an amount from wages paid to an individual as an employee (PAYGW). That amount must then be remitted to the Commissioner of Taxation according to which the Commissioner may then make an estimate of any unpaid and overdue PAYGW. At the end of each financial year, employers are obliged to report the gross amount of wages paid and amount withheld on account of PAYGW for each of their employees. This enables the Commissioner to audit taxpayer/employee PAYGW obligations and in this case to determine the PAYGW liability for each of the entities in the Plutus Group. This method is referred to as the “Annual Payment Summary Statement”.

    2. (2)

       An additional methodology employed by the Audit Team is to interrogate an employee’s lodged return to determine, inter alia, the amount of PAYGW which has been withheld from gross wages according to the taxpayers ABN. Those records are then compared with what is reported on an individual’s BAS statement, again with a view to determining whether any additional PAYGW is payable. That method was also used in the preparation of the Crocodile Report to determine the tax liability of a number of corporate entities believed to be implicated in the taxation fraud.

    3. (3)

       A third audit methodology undertaken by the Audit Team when neither Annual Payment Summary Statements nor Employee Income Tax documents were available, was to utilise a software program which permits interaction with the Commonwealth Bank of Australia, via a platform which facilitates the electronic exchange of information between financial institutions, and the ATO. Information gathering notices were also issued to a number of banking organisations. Spreadsheets are then prepared which are transferred into a bank consolidation template which are in turn utilised by the Audit Team to classify every deposit and withdrawal through those banking institutions to identify, for the period under audit, net wages to which is applied what was described as Mr Ramsden “an Applicable Withholding Rate”. With respect to entities in the Plutus group, that rate was determined using an average withholding rate based on prior lodgements and by reference to industry averages. By utilising that methodology, PAYGW amounts which had been withheld by entities in the Plutus Group and not remitted were utilised to determine the PAYGW liability of the entity concerned.

    4. (4)

       In determining the appropriate amount of GST payable, a Bank Statement Analysis Methodology was used to determine, referable to the bank consolidation spreadsheets, the quantum of taxable supplies that various entities had made. This also involved the Audit Team analysing bank deposits for each of the corporate entities in the Plutus group and making an assessment of which deposits represented proceeds from taxable supplies. The deposits were classified using a combination of a number of methods, including the nominated descriptor of the transaction from the bank statement and reviewing the bank statements of other entities and then undertaking a comparative and matching exercise. The total GST, as assessed, was then compared with the amount reported with the differences that resulted from that exercise used to determine the additional GST payable.

12. [169]

    The Crocodile Report is a consolidated document produced after the application of these various audit methodologies and the interrogation of information held by or obtained from the ATO.

13. [170]

    Since the preparation of the Crocodile Report, the Audit Team has issued assessment notices to various of the entities in the Plutus Group representing, in each case, an additional amount of PAYGW due to the ATO over successive tax periods from 1 July 2015 to 30 April 2017, together with an additional tax liability, inclusive of GST.

14. [171]

    Since the preparation of the Crocodile Report, and save for a number of discrete computational errors which were identified in his evidence, Mr Ramsden was not aware of any additional information which would have had the effect of changing the tax liability positions of any of the entities the Audit Team reported upon.

15. [172]

    In the result, the total outstanding tax liabilities of each of the entities the subject of the audit (after applying payments received) amounted to $159,759,306.93.

16. [173]

    Mr Bruckner cross-examined Mr Ramsden on behalf of all defendants.

The submissions of the parties concerning Mr Ramsden’s evidence and the impact of his evidence on the issue of prejudice to the Commissioner if the examinations were stayed (s 319(6)(c))

1. [174]

   In final submissions Mr Bruckner maintained the position (which other counsel adopted) that the Crocodile Report and Mr Ramsden’s evidence as to the approach taken to its preparation, including the methodology adopted by the ATO in the assessment of the estimated tax liability of the entities alleged to be implicated in the taxation fraud, should carry no weight on the questions raised by the stay applications. In particular, he submitted it should carry no weight under s 319(6)(c) of the POC Act as a source of any practical prejudice the Commissioner may suffer by reason of the examinations being delayed until the conclusion of the criminal proceedings (or in the case of the first defendant at some earlier point in the progress of the matter to trial) such as might offset what is asserted to be the risk of prejudice to the defendants were they to be examined at this time.

2. [175]

   Despite a lengthy and at times arcane cross examination of Mr Ramsden as to the competing bases upon which the unpaid tax liability of entities within the Plutus Group was assessed by the ATO (including whether the contractual arrangements of entities in the group structure meant that administrative services were provided without fee such that the GST across the group of $67,197,364.20 would reduce to zero or, in the alternative, whether input tax credits legally claimable by any of the entities would substantially reduce the unpaid GST component), the ultimate submission advanced by Mr Bruckner was that the Crocodile Report simply does not serve the evidential purpose to which the Commissioner sought to put it in the stay proceedings. That is, the Report did not in any meaningful way represent a measure of the tax knowingly and deliberately unpaid and diverted to the defendants as the product of the fraudulent taxation scheme they devised. Mr Bruckner maintained that submission despite acknowledging that the power to restrain property under the POC Act is not limited to property that is directly sourced from the fraudulent scheme, but extends to all property derived from it, in whole or in part and whether directly or indirectly.

3. [176]

   In a detailed note which in turn attracted a detailed written response from the Commissioner and a further detailed note in reply, Mr Bruckner summarised the potential for differing treatments of the assessment of GST and the potential for applying a different percentage of the rate by which “net wages would be grossed up” (the gross up rate), which, he submitted, operated to reduce the quantum of unpaid tax to such an extent that it does not far exceed the gross value of the assets under restraint.

4. [177]

   Mr Bruckner was also critical of the approach of the Audit Team in relying upon bank statements as representing payments of monies of a taxable kind in the process of undertaking an assessment of the character and quantum of transactions through various banking and financial institutions. Mr Bruckner further submitted that the Commissioner has made no attempt to identify, much less quantify, any differential between the quantum of funds deposited into the various bank accounts allegedly utilised by the conspirators in furtherance of the conspiracy, and the funds withdrawn from those accounts by his client, or ultimately received by his client or for his client’s benefit.

5. [178]

   Mr Bruckner submitted that in substitution for what ought to have been a straightforward forensic exercise by the Commissioner with a view to adducing evidential support for the submission that he suffers a prejudice by a stay of the examination by frustrating the potential for an examination to yield additional information which would be material to achieving the statutory objectives under the POC Act, the Commissioner has chosen to rely upon the quantum of what is said to be the unpaid tax liability of various entities (as calculated by the Audit Team in the ATO and as reflected in the Crocodile Report) as a measure of the benefits derived from the alleged offending. Mr Bruckner submitted that approach is fundamentally flawed. He submitted on a proper analysis of the approach of the audit team and Mr Ramsden’s evidence concerning it, the tax liability of the various corporate entities said to be implicated in the taxation fraud has been assessed from the perspective of the Commissioner of Taxation on an approach that is the most adverse to the taxpayer.

6. [179]

   Mr Bruckner utilised the treatment of GST, as explained by Mr Ramsden in his evidence, as exemplifying the ATO’s approach. He emphasised that while that approach was open and reasonable in the exercise of the ATO’s taxation powers, it bore no rational relationship to an assessment of the benefits derived from the alleged criminal conduct of the defendants, the approach the Court will be obliged to take in considering whether the various substantive orders the Commissioner seeks in the civil proceedings will be made. This was then said to be a submission made out by the fact that no part of the illegal activity the defendants are suspected of engaging in involves GST dishonestly withheld by the co-conspirators, or that the non-payment of GST was one of the objectives to which the fraudulent taxation scheme was directed.

7. [180]

   In short, Mr Bruckner submitted that the Audit Team were not charged with the responsibility of attempting to fairly or accurately identify the amount of missing funds due to the ATO as PAYGW per se, even less the amount generated by the alleged taxation fraud, to the extent that those two amounts are different. Rather, the Audit Team were charged with a completely different statutory objective - the assessment of the tax liability of various corporate entities implicated in or integral to the Audit Team’s investigation into a tax fraud, by utilising assessment tools that are deployed in a way that is most adverse to a taxpayer. That being the case, Mr Bruckner submitted it was simply not open to the Commissioner to assert a prejudice were the examinations to be stayed based on the quantum of unpaid tax, since that amount does not meaningfully equate with what the Commissioner suspects are the proceeds of the taxation fraud conspiracy that are currently unaccounted for, or any prejudice he might suffer were he unable to pursue an examination of the defendants into that state of affairs at this time.

8. [181]

   Mr McLure conceded that it would be relevant to the question of prejudice to the Commissioner under s 319(6)(c) were the defendants able to demonstrate that what had been restrained to date "overwhelmingly exceeded" what could reasonably be expected to be ordered in the civil proceedings by way of forfeiture and/or a pecuniary penalty order, but other than the bare assertion that is the position, that exercise has not been done in this case. Mr McLure submitted that without that exercise having been undertaken by the defendants in any meaningful way (and an attack upon the methodology adopted by the Audit Team was not a meaningful exercise), the Commissioner continues to have an unqualified entitlement under the POC Act to seek, by an examination into the affairs of each of the defendants (as defined), to identify other property which could fall within an all property restraining order under s 18 and which might meet the definition of the proceeds of an offence as defined in s 329 of the POC Act. He emphasised that the “affairs” of a person as defined in the Act includes, but is not limited to:

9. [182]

   Mr McLure further submitted that the defendants’ contention, supported by the tender by each of them of an “Assets Value Schedule” prepared by them to seek to establish that that value of their property restrained by the Commissioner to date equals the amount of their offending, is a proposition that is, in any event, wrong in law, since the operation of the POC Act is in part based upon a non-conviction based forfeiture scheme and in part upon a conviction based forfeiture scheme but where the “proceeds of an offence is not, in either event, limited to the amount of the alleged offending. Section 329 provides:

10. [183]

    Mr McLure further submitted that because Mr Bruckner expressly and repeatedly conceded in the cross-examination of Mr Ramsden that the estimated tax liabilities of each of the relevant companies were assessed by the Audit Team on the basis of “reasonable assumptions”, it is not open to the defendants to challenge the basis upon which GST was estimated for audit purposes as wrong or unreasonable simply because, if one were to assume that at every level of the process GST was payable on the relevant invoice, then it would follow that the impost would be GST neutral in the hands of the taxpayer companies. Mr McLure submitted where there is no documentation of any kind to support that proposition, and where, in any event, it was Mr Ramsden’s evidence that the objection to the notices of assessment of the GST net amount have been rejected by the ATO, Mr Bruckner’s submission is without weight. This submission was is in addition to what the Commissioner submitted was a Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 inference that should be drawn adverse to the defendants on this issue since no documentation of any relevant kind was produced in support of any of the alternate bases suggested to Mr Ramsden upon which an assessment of unpaid taxation might be made.

11. [184]

    Finally, Mr McLure submitted that since the Crocodile Report and the suspicions that Federal Agent Burtenshaw holds referable to it also allows for a prima facie finding that each of the defendants has been involved in criminal enterprise to defeat the tax legislation, this Court can hardly be invited to proceed on the basis that in the operation of the businesses the corporate entities were purporting to conduct, they otherwise complied with relevant tax law. As the Commissioner submitted, the very character of the scheme investigated by the ATO and charged as the taxation fraud conspiracy was to deprive the Commissioner of Taxation of tax based revenue, not to pay it.

The relief sought by first defendant

1. [185]

   In an amended notice of motion filed on 26 June 2017 the first defendant seeks the following relief:

   1. (1)

      The examination order made ex parte and without notice be temporarily stayed until further order.

   2. (2)

      In the alternative, that the examination order be temporarily stayed until further order in so far as that order relates to an examination of the first defendant in relation to “any activities of [the first defendant] that are, or may be, relevant to whether or not the [first defendant] has engaged in unlawful activity of a kind relevant to the making of an order under this Act” as per the definition of “affairs” in s 338 of the Proceeds of Crime Act 2002 (Cth), but not otherwise.

   3. (3)

      Subject to order 2, any examination notice issued under the examination order be restricted to an examination of the “affairs” of the first defendant in the period from 1 June 2016 until the date of the examination.

2. [186]

   No orders are sought in respect of the first defendant’s Sworn Asset Statement.

3. [187]

   The first defendant read three affidavits from his solicitor, Ms Penny Musgrave variously dated 7 June 2017, 16 June 2017 and 29 August 2017.

4. [188]

   Ms Musgrave was not required for cross-examination.

5. [189]

   An Asset Position Schedule was tendered in the amount of $7,045,586.68.

6. [190]

   Mr Game SC, who appeared on hearing of the motion between 12 and 14 September 2017 with Ms Palaniappan, did not appear on the resumed hearing between 15 and 17 November 2017. On that occasion Mr Hassall of counsel appeared. He adopted Mr Game’s written submissions filed in advance of the hearing. He also addressed his filed submissions and addressed first.

7. [191]

   In summary, it was submitted on behalf of the first defendant that in considering the exercise of the statutory power to stay the examination order, I would be satisfied that because the focus of the examination will inevitably encroach upon matters that are intrinsic to proof of the first defendant’s alleged complicity in the taxation fraud conspiracy and his defence to that charge, it is in the interests of justice that there be a temporary stay of the examination order. It was submitted that the degree of overlap between the facts underpinning the application for the restraining orders and the facts giving rise to the taxation fraud conspiracy is patent and that, of itself, provides a sufficient evidential basis to make good the submission that there is an inherent risk of prejudice in the conduct of the first defendant's defence to the conspiracy charge were the examination to proceed at this time. This was a submission ultimately embraced by all defendants.

8. [192]

   Counsel submitted that it was not open to the Commissioner to complain about the generality of the nature of the prejudice that is asserted, or to require the first defendant to provide any more specific details of it, not only because to do so would be inconsistent with what the High Court observed in Zhao at [43], namely that requiring a defendant to reveal information about his defence is to make “the risk of prejudice a reality”, which an order for a stay seeks to avoid, but also because the particular prejudice of which the first defendant complains is exacerbated both because the criminal proceedings are at a preliminary stage and because the conspiracy charge that has been laid is devoid of any meaningful particularity. Counsel submitted that Zhao remains good authority for a statement of fundamental principles which are not undermined by the amendments to the POC Act which were responsive to that decision.

9. [193]

   Counsel submitted that there is a further risk of inherent prejudice to the first defendant’s defence to the criminal charge were the examination to trigger further investigations into either the alleged taxation fraud itself or other criminal offending of the kind that the Court was referred to in the first Burtenshaw affidavit including offences alleging a dealing with the proceeds of crime. Counsel submitted that were that to occur, there would inevitably be a fundamental alteration to the accusatorial character of judicial process and the principle of legality, with both principles operating to ensure that a person’s fundamental rights to a fair trial are not abrogated (Lee v The Queen (2014) 253 CLR 455; [2014] HCA 20 see also X7 v Australian Crime Commission (2013) 248 CLR 92; [2013] HCA 29 at [86]-[87].

10. [194]

    Counsel also submitted that unlike the situation that obtained when the ex parte orders were sought in May 2017, there is little utility now in the Commissioner undertaking an examination of the first defendant in relation to his affairs or the affairs of his co-conspirators, given that the Commissioner now has within his possession, custody and control all the information necessary to determine what further amounts, if any, the first defendant has obtained by the alleged fraudulent taxation scheme. Counsel also emphasised that it is the prosecution case that the entire process by which the fraud was perpetrated was by monies being paid in and out of various identified bank accounts and through traceable bank transfers and, further, that the Commissioner has already restrained in excess of $6 million of the first defendant's assets (as evidenced by the Asset Value Schedule) which counsel submitted was more than sufficient to satisfy any assessment of benefits derived by him from his alleged role in that fraudulent scheme. This was also a submission advanced by each of the four defendants on the tender by each of them of an “asset schedule” prepared in the same basic format and dealt with at length in Mr Bruckner’s submissions to which I have already referred.

11. [195]

    Additionally, the first defendant (as with each of the second, third and fourth defendants) relied upon Federal Agent Burtenshaw’s concession in cross-examination that he had no reason to suspect that the AUD$24,000,000 that was deposited into the trust account of LandsLegal solicitors in response to the alleged blackmail (the current whereabouts of which is unknown) reverted to any of them, or that it is represented by money or monies worth otherwise under their effective control. This is also an issue which attracted the submitted response of the Commissioner to which I have already referred.

12. [196]

    In Mr Game’s written submissions he expressly adopted the submission contained in Ms Bashir’s written submissions prepared on behalf of the second defendant (to which I presently refer) that it was not open to the Commissioner to utilise the examination proceedings for the purposes of satisfying any future pecuniary penalty. Mr Game went further and submitted that it would be an improper use of the examination power for the Commissioner to obtain evidence compulsorily for the purposes of satisfying a forfeiture or pecuniary penalty order. I will deal with that submission, and the Commissioner's response to it, when considering the submissions advanced on behalf of the second defendant.

13. [197]

    Insofar as the amendments to s 266A responsive to the decision in Zhao (as already discussed) and the non-disclosure order under s 226A(2)(b) that has been made in these proceedings are relied upon by the Commissioner in opposing the orders sought by all defendants, Mr Game submitted that for a number of reasons the form and effectiveness of such an order should not be overemphasised. Having said that, he acknowledged that Basten JA in Elzein (at [100]) accepted that an appropriate order under s 266A (as amended) would at least greatly reduce the prejudice identified in Zhao (see also Gleeson JA in Cacu at [87]). Mr Game also referred to his Honour’s further observation (with which Beazley ACJ agreed) at [79] that:

14. [198]

    His Honour noted at [76]:

15. [199]

    Further, at [78], his Honour noted:

16. [200]

    Thus, so it was submitted, even where a non-disclosure order is made in terms that are seemingly precise, this Court could not be satisfied that all potential prejudice occasioned by the inadvertent disclosure of Coercive Material would necessarily be cured, particularly where the ambit of the non-disclosure order fails to address what was described by Mr Game as “the universe of possibilities” that may result in leakage of Coercive Material. Mr Game also averted to the further investigations which an examination may trigger in circumstances where, he submitted, it is reasonable to infer that the investigation into the taxation fraud is ongoing and where there is likely to be an overlap in the investigative authorities engaged in the conduct of the examination proceedings.

17. [201]

    Mr Game’s written submissions were prepared in advance of the hearing. Accordingly, he did not address A/Commissioner Gaughan’s evidence or the intended reach and operation of the SOP designed to obviate the risk of leakage. As I have noted, Mr Bruckner, counsel for the fourth defendant, addressed that evidence at length, submissions upon which Mr Hassall relied when he assumed carriage of the proceedings on behalf of the first defendant. I have already set out at length the Commissioner’s submissions in response to Mr Bruckner’s attack on the sufficiency of the SOP and the emphasis he sought to give to the comprehensive terms in which the non-disclosure order is expressed.

18. [202]

    In final submissions Mr Hassall contended that even were I to find that the effect of the current non-disclosure order, coupled with strict adherence to the dictates of the SOP, results in the Coercive Material obtained from the first defendant being effectively quarantined from the prosecution thereby reducing the risk of disclosure to only a hypothetical risk (cf a real risk of prejudice), there remains an inherent prejudice in the first defendant being required to answer questions about the subject matter of the taxation fraud conspiracy. Mr Hassall submitted, as did Mr Game, that was of itself a sufficient basis for a temporary stay of the examinations. He submitted that should be the result even if the questions are asked in the context of the POC Act and limited to the purposes of that Act.

19. [203]

    Reliance for that proposition was placed squarely on the frequently cited passage of Hayne and Bell JJ in X7 at [124]:

20. [204]

    This passage, and the principles enunciated within it, were said by Mr Game, in his written submissions, to continue to be good law, a position adopted by the second and third defendants in their written submissions. It was further submitted that the inherent risk of prejudice to which Hayne and Bell JJ referred in X7 in the above extract was not doubted by the Victorian Court of Appeal in Zhao v Commissioner of the AFP at [207]-[208] or by the unanimous High Court judgment in Zhao at [46]. In that same connection Mr Game referred to the observation of Adamson J in W (No 1) at [58] where her Honour said of the passage from X7 extracted above:

21. [205]

    Finally, Mr Game referred to R v Independent Broad-based Anti-corruption Commissioner (2016) 256 CLR 459; [2016] HCA 8 (per French CJ, Kiefel, Bell, Keane, Nettle and Gordon JJ) at [40]-[47], where the Court collected the relevant authorities in confirming that the "companion principle" (namely, that "an accused person cannot be required to testify to the commission of the offence charged") remains a relevant and applicable principle, the rationale of which is "the protection of the forensic balance between prosecution and accused in the judicial process" (at [48]). Although, as Mr Game acknowledged in his written submissions, because the appellants in that case had not been charged and there was no prosecution pending, the principle had no application, its application was referred to generally, and at [44], their Honours cited with approval the extract from X7 at [124] set out above.

22. [206]

    The Commissioner submitted that on a proper analysis of the authorities said to support the submission that there is inherent prejudice in the mere fact of compulsory questioning prior to trial (including subsequent decisions of the High Court where X7 was cited) the observations of Hayne and Bell JJ in X7 have not found majority support and, further, that in any event, their Honours’ observations did not form part of the ratio in X7.

23. [207]

    By way of example, the Commissioner referred to Lee v New South Wales Crime Commission (2013) 251 CLR 196; [2013] HCA 39 where it was held that the Criminal Assets Recovery Act 1990 (NSW) authorised compulsory examinations even where the subject matter of those examinations overlapped with the subject matter of criminal charges already laid against the examinees. Only French CJ at [54] and Kiefel J at [163] (with whom Bell J agreed) referred to the view expressed by Hayne and Bell JJ in X7 with apparent approval.

24. [208]

    In contrast, Crennan J referred at [141] to the power to restrict disclosure of the contents of examinations as one amongst a number of other procedural measures in exercise of the inherent power in the Court to safeguard the fairness of an examinee’s trial, including at [143] the “undoubted power to stay criminal proceedings which will result in an unfair trial”. While at [340] Gageler and Keane JJ observed that the examiner's power, inter alia, to limit the dissemination or use of the contents of examinations, prevented a real risk of interfering with the administration of justice. At [323]-[324] their Honours rejected the proposition that a "practical restraint" on a defendant raising a case contradicting the version of facts given by the defendant under examination would amount to "the deprivation of a legitimate forensic choice" such as to prejudice the fair trial of the defendant:

25. [209]

    At [79] Hayne J observed that although s 13A(2) of the legislation under consideration precluded direct use at the accused’s trial answers given under examination, s 13A(1) did not preclude indirect use being made of answers given under examinations in a subsequent criminal trial, despite it being submitted in the course of argument that such indirect use may give the prosecution an advantage it should not have, or it may in other ways interfere with the due administration of criminal justice.

26. [210]

    Mr McLure contended that it was in the context of reference to that line of argument that Hayne J re-stated the proposition (albeit without any reference to what he and Bell J had observed in X7 by footnote or otherwise) that the mere asking of questions about a pending trial under compulsion works a fundamental alteration to the accusatorial process of criminal justice because it deprives the accused of forensic choices in testing the prosecution case that would otherwise be legitimately open at trial. Viewed in this way, Mr McLure submitted that his Honour’s remarks do not relate to the form of inherent prejudice addressed in X7 at [124], being prejudice arising even where an examination is “conducted in secret” and the product of the examination is effectively quarantined. For this reason, he submitted that for Adamson J to suggest in W (No 1) at [58], that in Lee (No 2) Hayne J “restated the principle” (in X7), was incorrect.

27. [211]

    On an analysis of the following case law, Mr McLure contended that the remarks of Hayne and Bell JJ in X7 at [124] have not been followed in any decision by an intermediate appellate court:

28. [212]

    The Commissioner submitted that the reference in the submissions of the first and second defendants to subsequent High Court authority where, it is said, approval for the views advanced by Hayne and Bell JJ in X7 can be gleaned, do not avail the defendants.

29. [213]

    In R v Independent Broad-based Anti-Corruption Commissioner [2016] HCA 8 at [44], a majority of the High Court included a reference to various paragraphs of the judgment in X7, including [124], in a footnote, albeit with apparent approval. The Commissioner submitted, however, that the context in which that reference was made makes it clear that the footnoted reference to X7 was to support the proposition that "it is for the prosecution to prove the guilt of an accused person as an aspect of the accusatorial nature of a criminal trial in our system of criminal justice". That proposition, he submitted, is not engaged where there is no risk of information (whether direct or derivative) being disclosed to prosecuting authorities or, more precisely, no real or rationale risk of that occurring. Accordingly, what the Commissioner suggested was a passing reference to X7 in the footnote should not be understood as the High Court’s approval of the proposition that the mere giving of answers at a compulsory examination amounts to inherent prejudice of a kind which would to justify a stay of a Court-ordered examination.

30. [214]

    It was submitted by all defendants, albeit with differing degrees of emphasis, the approach of the High Court in Zhao in recognising the real risk of prejudice to a defendant where there is an overlap of the issues in the civil proceedings under the POC Act and criminal proceedings, should not be lightly disregarded, despite the passage of the 2016 amending Act which was intended to address the issues with which the Court was concerned.

31. [215]

    As has already been noted in the review of the authorities above, in Zhao, the High Court dealt with s 266A in its previous form and it was in that context that the Court observed at [46] that even if information or evidence given in POC Act proceedings could not be admitted into evidence against a defendant at a criminal trial, its possession by the prosecution might affect his defence and that protective orders under the section as it then stood would not suffice to remove the risk of prejudice that would inevitable result.

32. [216]

    The Commissioner submitted that contrary to the submissions of the first and seconds defendants, the passage at [46] in Zhao is not an implicit endorsement of the views of Bell and Hayne JJ in X7. Furthermore, it is of limited application where, as here, an order has been made under s 266A(2)(b), prohibiting the disclosure of such information to the prosecuting authorities and where the risks of inadvertent disclosure by those in CACT or CAL with access to Coercive Material has been the subject of intensive review by the Commissioner and a comprehensive framework designed and implemented to address it.

33. [217]

    In summary, the Commissioner submitted that the weight of authority establishes that no relevant inherent prejudice lies in the abstract circumstance that a defendant's answers under examination may influence or even restrain the case they may elect to advance at their criminal trial. Rather, a defendant is obliged to concretely identify a "legitimate forensic choice" in the conduct of their defence that will be lost by their examination.

34. [218]

    In my view, that submission, which proceeds from a sound analysis of the collected authorities I have referred to above, is sound. The Commissioner submitted the defendants have consistently eschewed that exercise in the stay proceedings in which they are the moving parties and in which they bear the onus of satisfying the Court that the interests of justice require the examinations to be stayed.

The second defendant

1. [219]

   By a second further amended notice of motion filed 11 September 2017 the second defendant seeks the following relief:

2. [220]

   The second defendant read four affidavits from his solicitor, Ms Christine Perry, variously dated 16 June 2017, 29 June 2017, 5 September 2017 and 12 September 2017. Ms Perry was not required for cross-examination.

3. [221]

   An Asset Position Schedule was tendered in the amount of $10,321,054.22.

4. [222]

   Ms Bashir SC appeared on hearing of the motion between 12 and 14 September 2017 with Mr Johnson. She did not appear at the resumed hearing in November 2017. Mr Johnson relied upon the written submissions filed in advance of the hearing, save for those that were directed to the relief sought in paragraph 1 of the notice of motion which he no longer pressed. He also adopted the submissions of Mr Bruckner, counsel for the fourth defendant.

5. [223]

   Mr Johnson relied upon aspects of Ms Perry's various affidavits to establish an evidential basis for the submission that the substantial overlap or intersection between the factual matrix which underpins the criminal proceedings and that which underpins the civil proceedings is such that to require the second defendant to be examined whilst his criminal proceedings are pending will be productive of real prejudice in the conduct of those proceedings and, that being the case, it is in the interests of justice that the examination proceedings be stayed.

6. [224]

   In her affidavit of 12 September 2017 at paragraph 9 Ms Perry states that:

7. [225]

   In her affidavit of 16 June 2017 Ms Perry identifies a number of “concerns” the second defendant has expressed to her at being compulsorily examined at this time. Ms Perry has formulated those concerns as follows:

8. [226]

   In Ms Bashir’s filed submissions, there is an extensive analysis of what is said to be a coincidence in the issues arising in the criminal and civil proceedings, including what is said to be the assets, liabilities and interests held by the corporate entities allegedly under the second defendant’s control, including the way those assets were acquired and the entities that were utilised in the process.

9. [227]

   The coincidence of the “subject matter” or the “matters at issue” in both proceedings is in addition to what was said to be the coincidence of the “circumstances pertaining to” the civil proceedings and the criminal proceedings, for example, a coincidence in the timing of the commencement of the POC Act proceedings on 16 May 2017 and the commencement of the criminal proceedings the following day. I will return to consider the question whether there is any material distinction between “the circumstances pertaining to” the civil and criminal proceedings in s 319(3) and the subject matter of s 319(4) as the second defendant contends.

10. [228]

    Examples of what are said to be the identity of subject matter in issue in the two sets of proceedings – that is between the allegation of conspiracy to commit the taxation fraud and the suspicions held by Federal Agent Burtenshaw that in participating in a scheme to defraud the ATO the defendants committed a number of serious offences, were set out in counsel’s filed submissions in detail at [64]-[90] under the following subject headings:

11. [229]

    It is not necessary to do more than note these various subheadings. The Commissioner accepts that there is a coincidence of the subject matter likely to be canvassed in an examination of the affairs of each of the defendants and the factual ambit of the taxation fraud conspiracy, and that is also likely there will be some overlap of the issues that will arise in both proceedings. Mr McLure submitted that is hardly surprising given that the structure of the fraudulent scheme detailed in Federal Agent Burtenshaw’s affidavit was both the mechanism through which the objects of taxation fraud conspiracy were furthered and the conduct grounding the Commissioner's application for confiscation and forfeiture orders in the substantive civil proceedings. Furthermore, as he pointed out, it is that same conduct which informs the Commissioner’s current and continuing interest in identifying all of the assets that are, or might be, under the effective control of the defendants, in light of what was submitted to be the real possibility of the existence of additional assets not disclosed in the Sworn Asset Statements of the defendants, a possibility that is heightened by the extent of the dishonesty inherent in what the Commissioner alleges is their joint perpetration of the taxation fraud.

12. [230]

    The Commissioner submitted, however, that he has a legitimate, current and continuing interest in examining the defendants about their examinable affairs, as defined, to ensure, inter alia, that any pecuniary penalty order that may be made in the substantive proceedings can be met at the time that final orders in those proceedings are made. He submitted that were the information obtained under examination to result in the restraint of further property, by operation of s 142 a charge on that property, would facilitate the making of pecuniary penalty orders in the substantive proceedings.

13. [231]

    The question whether the focus of an examination into an examinee’s examinable affairs can legitimately extend to securing access to property to satisfy a future pecuniary penalty order, was raised in Ms Bashir’s written submissions, and expressly adopted in Mr Game’s written submissions. It was not a submission which either Mr Johnson or Mr Hassall addressed orally. It is to that submission that I now turn.

14. [232]

    In contrast to the power for examination orders to be made in connection with applications for exclusion from forfeiture or applications for confiscation in ss 180A-182 and the power in s 180 to examine a person against whom a restraining order has been made, Ms Bashir submitted that there is no express power in the POC Act for an examination order to be made in connection with an application for a pecuniary penalty order.

15. [233]

    In addressing Ms Bashir’s submission that the examination power under s 180 of the Act is not available to be deployed for that purpose and Mr Game’s submissions that it would be an improper use of the examination orders that have been made were they to be used in that way, the Commissioner relied upon the operation of s 142 of the POC Act. The Commissioner further submitted that s 142 and its intended operation as part of the machinery in the POC Act designed to achieve the statutory objectives in s 5 of the Act, also disposes of Mr Game’s allied submission that for the Court to sanction the Commissioner’s proposed use of the examination power to secure a charge over restrained property under s 142 in order to satisfy a future pecuniary penalty order is a consideration favouring a stay of the examinations in “the interests of justice”. With neither Mr Game nor Ms Bashir appearing in the second phase of the stay proceedings, and neither Mr Johnson nor Mr Hassall grappling with the argument put against them, I accept the Commissioner’s submission and analysis. I can see no impropriety in the Commissioner’s approach.

16. [234]

    In support of that submission, the Commissioner referred to Lam v Commissioner of the Australian Federal Police [2017] VSCA 9 where at [38] the following was said:

17. [235]

    Ms Bashir also submitted that the legislature’s resolve to distinguish between where criminal proceedings are, or may be brought against a defendant in POC Act proceedings (s 319(2)(a)), and where criminal proceedings are or may be charged “against another person in respect of matters relating to the subject matter of those proceedings (s 319(2)(b)), is important and since it was not the subject of consideration in Elzein, Cacu or McGlone it needs to be considered on this application.

18. [236]

    Under s 319(2) the Court is prohibited from staying POC Act proceedings because of pending or proposed criminal proceedings where those proceedings concern “another person” (the language of s 319(2)(b)), with that prohibition applying even if the subject matter of the POC proceedings is the same as or substantially similar to the matter at issue in the criminal proceedings (the language of s 319(4)). On the other hand, if the criminal proceedings concern the person the subject of the POC proceedings (the language of s 319(2)(a) and the case here), the prohibition will apply even if the circumstances pertaining to the examination are, or may be the same as, or substantially similar to the circumstances pertaining to the criminal proceedings (the language of s 319(3)).

19. [237]

    In Ms Bashir’s written submissions the distinction in language between the “subject matter” of both proceedings and “the circumstances pertaining” to both proceedings was significant. She submitted that the legislature must be taken to have intended not to foreclose on the grant of a stay on the ground that an accused person is to be examined where the subject matter of the examination is the same or substantially similar as the matter at issue to the criminal proceedings, but only where the circumstances pertaining to the examination may be the same or substantially similar to the criminal proceedings. She submitted, that being the case, that the degree of coincidence or overlap in the subject matter of the two proceedings, as revealed by the evidence on the stay application and conceded by the Commissioner, is a consideration worthy of weight in the discretionary exercise.

20. [238]

    As with the submissions advanced on behalf of the first and fourth defendants, Ms Bashir also submitted that it is the particular intersection of the facts and issues in the pending criminal proceedings and the examination proceedings, with the focus of the examination being into the affairs of the nominated examinee and the affairs of the other alleged co-conspirator/defendants in the fraudulent scheme which was allegedly deployed in furtherance of the conspiracy, which is productive of a real risk of prejudice in the conduct of their defence were the examination to proceed this time.

21. [239]

    Ms Bashir also submitted that, in the present context, the "circumstances pertaining to" both proceedings are distinct from "the subject matter of" or "the matter at issue in” the proceedings in any event, thereby leaving it open for this Court to consider not only the timing of the examination relative to the criminal proceedings as a "circumstance pertaining" to each, and to the fact that the investigation, at least to the point of charge, was by a joint team of AFP officers that has only recently split into investigative and POC Act teams, but also the nature and extent of the overlap of the coincidence in “the subject matter” of the examination proceedings and the criminal proceedings. She submitted that construction accords with McGlone at [90] and Elzein at [10], [59]-[60], [69], [99], [162].

22. [240]

    The Commissioner submitted there is no material distinction between the language of s 319(3) and s 319(4) since the “circumstances pertaining to” both proceedings (the language of s 319(3), in turn referable to s 319(2)(a)) logically includes a similarity “in subject matter” as one such “circumstance” (the language of s 319(4)). Furthermore, ss 319(2)(a) and (3) expressly provide that the institution of, or the potential for the commencement of criminal proceedings against the person the subject to the POC Act proceedings (each of the defendants to the stay proceedings) is excluded as a ground for a stay of the examinations (the relevant POC Act proceedings), despite the circumstances pertaining to the proceedings being the same or substantially similar to the circumstances pertaining to the criminal proceedings.

23. [241]

    In final submissions on behalf of the second defendant Mr Johnson adoped Mr Bruckner’s submission that whilst the Commissioner has a legitimate interest in fulfilling the statutory objects of the POC Act, including realising those objectives without delay, such prejudice as he will suffer from delaying the examination proceedings is outweighed by what was said to be the "real and demonstrable risk of prejudice" to the second defendant were a stay of the examination refused. This is particularly so, Mr Johnson submitted, because the value of his client’s assets as currently restrained far exceeds any order that may be made in the substantive proceedings based upon an assessment of the benefits derived from the second defendant’s (alleged) offending. Mr Johnson submitted that being the case, it must be fairly assumed that the Commissioner’s dominant purpose, or at least a substantial purpose, in undertaking an examination at this time is to seek to restrain further assets with a view to satisfying a Pecuniary Penalty Order. He adopted the submissions of the first defendant to the effect that to utilise the examination order for that purpose, is also relevant as a discretionary consideration under s 319(6)(e), it not being open to the Commissioner to utilise the examination power for that purpose. That consideration carries no weight since I have found it is open to the Commissioner to utilise the legislative machinery in the POC Act, including in this instance s 142, to fulfil the statutory objectives in s 5 of the Act and to deploy the examination power for the purpose.

24. [242]

    Mr Johnson emphasised that a stay of the examination will not have the effect of staying the entirety of the civil proceedings as they involve his client, since the Commissioner’s powers to fully investigate his client’s asset position (and that of the other defendants) by traditional methods will continue unaffected. As I see it, that submission is not to the point. The question rather is whether the defendants have discharged the onus of satisfying the Court that the Commissioner should not be permitted to utilise the statutory power in s 180 of the POC Act, and in considering that question, whether the Commissioner can point to any prejudice were he to be deprived of access to that source of power for an extended period of years.

25. [243]

    Mr Johnson submitted that even were the Court satisfied that the risk of disclosure to the prosecution of the compulsorily acquired material has been comprehensively addressed by the Commissioner in the evidence of A/Commissioner Gaughan, the risk of inadvertent leakage to the investigative and prosecutorial arms of the AFP remains real and patent. In that respect he adopted Mr Bruckner’s detailed oral submissions concerning the structure and scope of the SOP. In addition, he submitted that because the SOP allows for the disclosure of compulsorily acquired information provided certain conditions are satisfied, principal among them a regime which calls for the exercise of a judgment of a person as to whether information is or contains Coercive Material, the possibility of human error is amplified.

The third defendant

1. [244]

   By an amended notice of motion filed on 26 June 2017 and by way of final submissions the third defendant seeks the following relief in respect of the examination summons (which I assume is a reference to the examination notice) and the Sworn Asset Statement. In the notice of motion as filed the third defendant sought a stay of the POC Act proceedings until the finalisation of the criminal proceedings. That relief was not pressed. I also note that the relief sought in paragraphs 6, 7 and 8 were not the subject of submissions, doubtless having regard to the non-disclosure order made in the proceedings on 21 June 2017.

2. [245]

   The third defendant read two affidavits from his solicitor Mr Ronald Heinrich dated 26 June 2107 and 29 August 2019. Mr Heinrich was not required for cross examination. The third defendant also tendered an Asset Value Schedule where the total value of property under restraint was $14,132,363.13.

3. [246]

   Mr Ahmad of counsel appeared on the hearing of the motion. He adopted Mr Bruckner’s submissions which addressed the risk of leakage or unauthorised disclosure of Coercive Material to the prosecution and the adequacy of the SOP to address that risk. He also adopted Mr Bruckner’s submissions that the Commissioner had failed to establish any risk of prejudice were the examination of his client stayed permanently in circumstances where the value of his restrained assets were more than adequate to meet any confiscation or forfeiture order in the substantive POC proceedings. Mr Ahmad addressed his filed submissions.

4. [247]

   In summary, he submitted that whether the relief sought in paragraphs 2 or 5 of the notice of motion with respect to the examination notice was decided pursuant to s 319 of the POC Act, or the Court’s inherent power to control proceedings under s 23 of the Supreme Court Act 1970 (NSW), the Court would be engaged in balancing competing considerations. Mr Ahmad also submitted that s 67 of the Civil Procedure Act was an additional source of power to stay the execution of the examination order. This submission was neither fully argued nor pressed with any rigour and was not, I suspect, for that reason addressed by Mr McLure. For my part, I have some doubt as to whether the “examination proceedings” (the proceedings sought to be stayed under s 319 of the POC Act) are “proceedings before the court” such as to be susceptible to an order for a stay under s 67 of the Civil Procedure Act or, for that matter, whether s 67 is a relevant source of power for any of the relief the third defendant seeks.

5. [248]

   Mr Ahmad submitted that, even were the Court of the view that s 319 was the appropriate source of power to stay the examination as a POC proceeding (and the appropriate source of power to proscribe or limit the use of to which the information in the Sworn Asset Statement might be put), the mandatory considerations which inform the exercise of the discretion in s 319(6) do not confine the discretionary exercise, since the overriding question is whether it is necessary in the interests of justice that the order be made. He emphasised that the prohibited grounds in s 319(2)(a) and s 319(3) (as they concern the third defendant) are not prohibited considerations. Mr Ahmad relied upon Basten JA’s observations in Elzein at [59].

6. [249]

   In Mr Ahmad’s submission, as with the submissions advanced orally by Mr Hassall on behalf of the first defendant, the amendments to s 319 have done no more that to recognise what was well settled in the authorities in any event, namely, that the mere pendency of criminal proceedings will not justify a stay of an examination under the POC Act. While I accept that the mere pendency of criminal proceedings has long been recognised as an inadequate basis to attract the power to stay allied proceedings, including compulsory questioning under Proceeds of Crime statutes, the amendments to s 319 do oblige a Court when considering whether “POCA proceedings” are to be stayed in the interests of justice to take the matters in s 319(6) into account and to refuse a stay merely on the basis of criminal proceedings and POC Act proceedings sharing common features.

7. [250]

   Mr Ahmad was the only counsel who sought a revocation of the Examination Order.

8. [251]

   Ms Bashir, who as I have noted appeared for the second defendant in the first phase of the stay proceedings at a time when the notice of motion upon which she moved also sought an order that the examination orders made ex parte be set aside (a position later abandoned by Mr Johnson), submitted that because the examination orders were made ex parte, and because the order was interlocutory in nature, the onus was on the Commissioner to justify a continuation of the order. Ms Bashir relied upon a number of authorities to support that proposition principal among them being Ruzehaji v Commissioner of Australian Federal Police (2015) 124 SASR 355; [2015] SASCFC 182 and Lakis v Lardis [2016] NSWSC 1459.

9. [252]

   Mr Ahmad did not appear in the first phase of the proceedings but sought to rely upon Ms Bashir’s submissions in final submissions without engaging with the argument put against Ms Bashir by Mr McLure when it was first raised. That is because the applications brought by motion were proceedings under the POC Act, s 317 governed the question of onus (imposing it relevantly upon the defendant), a conclusion which Mr McLure submitted is made the more explicit when the power under r 36.17 of the UCPR to set aside the order is silent on the question of onus. Neither did Mr Ahmad address the preliminary ruling on the question of onus I made at that time in the Commissioner’s favour nor seek to persuade me that it should be revisited.

10. [253]

    Issues of onus aside, because Mr Ahmad sought revocation of the examination order (or more precisely an order setting aside the order under the UCPR) it is necessary to deal with that basis upon which that relief is sought.

11. [254]

    Insofar as r 36.16(2)(b) is concerned in his written submissions Mr Ahmad cited Cameron v Cole (1944) 68 CLR 571, where Rich J said [at 589]:

12. [255]

    Beyond citing that authority, no submission orally or in writing was advanced as to why I would revoke or set aside the ex parte examination order made on 16 May 2017. That is, no submission was directed to any suggested inadequacy in the grounds upon which the Commissioner relied for the issue of the examination order, or any inadequacy in the evidence in support of the making of the order, or any error in the approach I took the Commissioner's application for the issue of an examination order and the principles I applied in granting the application.

13. [256]

    I was then and remain satisfied now that the application by the Commissioner to examine the third defendant was justified. Having regard to the purpose and structure of the statutory scheme in the POC Act and the various matters conditioning the exercise of the discretion to grant the application, I was satisfied that the order should be made. The matters I took into consideration then and, to the extent necessary, the matters that I take into consideration now include, without being exhaustive, the identity of the third defendant as a person suspected of complicity in the taxation fraud as the proposed examinee and the subject matter of the proposed examination into his affairs including the circumstances in which the restraining orders were made and the nature and basis of the suspicions that founded the Commissioner’s application for the restraining orders. I also take into account the fact that both in May 2017 and currently there are legitimate questions as to the source and ownership of the property the subject of restraint, as there is in relation to other property over which the third defendant might exercise effective control, whether on his own behalf or on behalf of named others. These matters, in combination, are material features of the third defendant’s examinable affairs into which I am satisfied the Commissioner has a legitimate right to enquire for the purposes of the POC Act proceedings.

The fourth defendant

1. [257]

   By a further amended notice of motion dated 27 June 2017, the fourth defendant seeks the following relief:

2. [258]

   In respect of the Sworn Asset Statement the following relief is sought:

3. [259]

   The fourth defendant read an affidavit from his solicitor, Paul Harden, of 26 June 2017. Mr Hardin was not required for cross examination.

4. [260]

   Mr Hardin deposed to the fact of his client’s arrest and the searches of his home and the office of Clamenz Lawyers (of which he is a principal) and the property seized from both places. Mr Hardin also referred to what he described as “the extensive overlap between the subject matter in the criminal and civil proceedings”, in particular Federal Agent Burtenshaw’s reasonable suspicion that his client had committed a range of criminal offences, including in the role of a co-conspirator in the taxation fraud conspiracy, the role attributed to him by the prosecution in the statement of facts served in the criminal proceedings.

5. [261]

   Mr Hardin adopted Ms Perry’s nomination of the various concerns held by his client were his examination to proceed at this time. Mr Hardin expressed an additional concern, which he nominated as an “examination concern”, based upon the fact that the examination will not be convened before a judicial officer, but before an authorised examiner as defined in s 188 of the POC Act and that the non-judicial character of the examination proceedings exposed the administration of criminal justice to risk. He cited the observations French CJ at [40]-[41] in Lee v New South Wales Crime Commission (No 1) (2013) 251 CLR 196; [2013] HCA 39 as exemplifying his concern. This was further developed in Mr Bruckner’s submissions, and was expressly relied upon and developed in the written submissions of the second defendant.

6. [262]

   It is appropriate now to deal with that submission. In Commissioner of the Australian Federal Police v Cacu [2017] NSWCA 5 Meagher J, at [70], recognised differences between the examination power in s 180 of the POC Act and the examination power under the legislation which was considered by the High Court in Lee (2013).

7. [263]

   In Lee v New South Wales Crime Commission (2013) 302 ALR 363 French CJ held at [40] that: "it is an important feature of the CAR Act … that the examination for which s 31D provides, is a judicial process to be carried out pursuant to an order of the Supreme Court 'before the Court, or before an officer of the Court prescribed by rules of court' [40]. His Honour went on to observe at [41] that:

8. [264]

   Gageler and Keane JJ at [340] also described the significance of the court's ability to supervise and control the conduct of the examination, and the disclosure and use of information obtained under examination in circumstances where the subject matter of the proposed examination overlapped with that of the pending criminal proceedings.

9. [265]

   The first, second and fourth defendants sought to emphasise, that unlike the operation of s 180 in the POC Act, under the legislation considered by the High Court in Lee, the examination was itself a judicial process and, accordingly, the exercise of judicial power (a power that could not be delegated to an examiner as an agent of the executive) was available during the course of the examination to ensure the examination was conducted consistent with fundamental features of an accusatorial criminal process.

10. [266]

    It was submitted that the non-judicial character of the examination under s180 exposes each of them, as examinees, to the risk that their rights to a trial held in accordance with those principles will be jeopardised, the more so when the subject matter of the examination will inevitably traverse the matters at issue in the criminal proceedings. This analysis mirrors much of the reasoning of the primary judge in Cacu (see the extract quoted at [46] in the judgment of Meagher J).

11. [267]

    What the defendants in the stay proceedings could not call in aid however, was, as Meagher J pointed out at [47] that under the amended form of s266A which was current at the time of the hearing of the appeal the Court could make a non-disclosure order (whether as a condition of the making of an examination order or, as here, after it was made but before the examination was conducted), while an examiner could not.

12. [268]

    While the second defendant acknowledged that there is now a power under s 266A(2)(b) for the Court to make a non-disclosure order, what was said to persist as a relevant source of prejudice is the fact that there is no equivalent power in an examiner to supervise and control the examination proceedings.

13. [269]

    In summary, the executive nature of the examinations that the Commissioner proposes taking is relied upon by the defendants as a relevant consideration supporting the stay of the examination orders in the interests of justice. What were described in the submissions of the second defendant as the “only recently implemented procedures to safeguard the compelled evidence obtained” under compulsion (presumably a reference to the non-disclosure order on 21 June 2017) is also said to suffer from there being no register of parties to be present at the examination. Complaint was also made in the written submissions that there has been no disclosure of persons with access to the compelled evidence or prohibition orders to safeguard against the use of such evidence (or summaries of such evidence) to facilitate or influence the ongoing course of the criminal investigation and for those additional reasons there is a real risk of prejudice were the examinations to be permitted to proceed at this time. After the evidence of Assistant Commissioner Gaughan this submission could not be pressed with the same sense of absolutism and was not further developed beyond Mr Bruckner’s submissions with which I have already dealt.

14. [270]

    The Commissioner accepted the examination will be conducted by an officer of the executive, albeit an approved examiner under the Act drawn from a class which includes members of the Administrative Appeals Tribunal and legal practitioners with five years seniority, including former judges and magistrates. Mr McLure submitted, however, that no legitimate complaint concerning the non-judicial conduct of examination proceedings of the kind mounted by the defendants can be maintained given the powers that are given to an examiner to conduct and control examination proceedings and that the submission should carry no weight at all in the discretionary exercise in which the Court is engaged under s 319(1).

15. [271]

    Although counsel did not refer the Court to McGlone at [58]-[64] where Beazley JA gave consideration to whether the primary judge in that case erred by differentiating between the characteristics of an approved examiner and a judicial officer in determining to grant a stay, (including her Honour’s consideration of what Basten JA said in Lee v Director of Public Prosecutions at [69] and NSWCC v Lee HC at [81] about the potential for the non-judicial character of an examination to be productive of prejudice of a relevant kind) I consider, as did her Honour, that there is merit in the Commissioner's reliance on the powers of an approved examiner under the POC Act to control the conduct of an examination being not unlike the supervision exercised by a judicial officer, albeit not a mirror of it.

16. [272]

    Neither, in my view, is there any legitimate concern that the examination might, as the defendants contend, undermine or interfere with the accusatorial process inherent in a criminal trial because the examination is conducted in “real time” and because the examiner has the power to compel an examinee to answer a question when, under s 192 of the Act, the examiner may refer questions of law to this Court including on the application of the examinee. It is at least arguable, as the Commissioner submitted, that if an examiner is satisfied that a particular course of questioning about the examinee’s affairs directly concerns his complicity in the taxation fraud conspiracy, including his defence to that charge, and which might, for that reason, be productive of a real and not theoretical risk of unfair prejudice to the conduct of his pending criminal proceedings, that might be a question of law justifying referral to this Court. In the Commissioner’s submission, that the legislature has expressly provided for a power to refer a question of law to this Court in the discretion of the examiner, tends against what is said by some of the defendants to be a pervasive and real risk to the administration of justice by the executive nature of the examination. I accept that submission.

17. [273]

    Mr Bruckner appeared for the fourth defendant with Ms Bishop. Extensive oral and written submissions were advanced in support of the relief sought most of which have already been referred to at length.

18. [274]

    In oral submissions, Mr Bruckner accepted that McGlone is authority for the proposition that to attract the exercise of the statutory discretion to stay the examination of the fourth defendant in s 319 of the POC Act (and for the orders sought in respect of the Sworn Asset Statement to be made) it is not sufficient that there is a “theoretical or speculative risk” to the administration of criminal justice were his client to be examined about matters and circumstances that are the same or similar to the factual complex underpinning the taxation fraud conspiracy. Mr Bruckner accepted that he was obliged to demonstrate a “real” and “demonstrable” risk of prejudice in the conduct of his client’s defence to those proceedings such that the Court would conclude, consistently with the power to stay the examinations in s 319 of the Act, that the interest of justice require that the examination proceedings be stayed.

19. [275]

    He submitted that he had discharged that onus on two bases. The first, a submission which is closely allied with the submissions advanced by the first defendant and second defendant, concerns the current status of the criminal proceedings. Mr Bruckner submitted that his client is subject to the practical prejudice that, in the event that he elects to give evidence in his defence (a decision that can only be meaningfully made after he has had the opportunity to fairly consider all of the evidence that is to be adduced against him in proof of that charge) he may be restricted in the evidence he might wish to give in his defence were he compulsorily examined at this time with the examination likely to traverse his involvement with the criminal scheme alleged to underpin the perpetration of that fraud and the role he is alleged to have played as a co-conspirator in furtherance of it.

20. [276]

    A separate source of what was said to be the practical prejudice that would result from his client’s compulsory examination at this time is said to emerge from Federal Agent Burtenshaw’s first affidavit to the effect that he holds the reasonable suspicion that, in addition to the fourth defendant’s complicity in the taxation fraud conspiracy, he has also committed a proceeds of crime offence or offences. Mr Bruckner submitted that simply because his client has not been charged with an offence of that kind at this time is not to the point. He submitted that I would be satisfied that there is a real risk that as the criminal proceedings are processed in the Local Court, and as the investigation continues into the conduct of various people already the subject or focus of the conspiracy charge, his client may be charged with a proceeds of crime offence in the future. Mr Bruckner submitted that were that to occur, and were the fourth defendant examined now about conduct which may underpin the laying of such a charge in the future, there is an inherent and demonstrable risk of prejudice if his answers, given under compulsion, might restrict any instructions he may later give in response to the actual laying of such a charge. Mr Bruckner submitted that his client’s position was indistinguishable from the position of Mrs McGlone where, as was noted in McGlone, she would have an evidential onus to discharge were she charged with a proceeds of crime offence under the Criminal Code. The difficulty with that submission is that, as Beazley JA noted in McGlone at [125], in R v Independent Broad-based Anti-corruption Commissioner [2016] HCA 8 the High Court expressly rejected the suggestion that the “companion rule” in Lee (No 2) at [33] also applied to a person who had not been charged. In light of that authority, counsel for Mrs McGlone properly conceded that she could not rely on the possibility of her being charged as a basis for staying her examination. For that reason, I do not consider it is an argument that Mr Bruckner ought be permitted to advance in these proceedings.

21. [277]

    In considering whether a stay of the POCA proceedings is in the interests of justice, the court must have regard to:

22. [278]

    Mr McLure submitted that the Commissioner would suffer substantial prejudice were the examinations stayed. He submitted that will be the result irrespective of whether the examinations are stayed until the commencement of the trial by the presentation of an indictment in either the District Court or in this Court (the application of the first defendant) or at the conclusion of the trial (the application of the remaining defendants) since in either case that will involve a delay of some years. Mr McLure submitted that prejudice will also result were the Commissioner required to destroy the Sworn Asset Statements as it would were he restrained from using them for the purposes of the POC Act proceedings until some later date.

23. [279]

    Mr McLure referred to paragraph 788 of the affidavit of Federal Agent Burtenshaw where he expressed the following concerns were the orders for the examination of the defendants and orders for them to provide Sworn Asset Statements not made expeditiously. Mr McLure submitted those concerns are no less valid now where orders are sought staying the effect of those orders.

24. [280]

    A/Commissioner Gaughan gave evidence to similar effect. He was concerned that if the examinations were stayed the Commissioner would be limited in his capacity to identify other assets held either in the name of the defendants or subject to their control, and limited in his capacity to prevent the defendants and others into whose affairs the examinations will be focused, taking steps aimed at dissipating or otherwise placing beyond the reach of the Commissioner such assets that have not been identified. He was concerned that this will further limit the Commissioner’s capacity to determine whether any other benefits have been derived through the alleged criminal offending of the defendants.

25. [281]

    A/Commissioner Gaughan also gave evidence that in the course of the investigations that ultimately resulted in the commencement of the civil proceedings, information was obtained which suggested that some of the defendants, and those whose affairs might also be the subject of examination, had taken steps (or contemplated taking steps) aimed at frustrating the efforts of law enforcement authorities. Ultimately, he expressed his concern that any further delay in the conduct of examinations enhances the potential that the examination process will be seriously compromised, including by some of the defendants communicating amongst themselves in relation to the answers already given by others under examination, despite prohibitions against that conduct occurring and despite the bail conditions which prohibit contact between them.

26. [282]

    The defendants’ submission concerning the $24 million paid into the Lands Legal trust account pursuant to the Blackmail Offence, inclusive of the evidence of Federal Agent Burtenshaw given under cross-examination that he had no reason to suspect that any of the four defendants had access to or control over that money, and the submission advanced by Mr Ahmad that the Commissioner had failed to demonstrate that the defendants were capable of saying anything useful about the proceeds of their suspected offending beyond what was declared in their Sworn Asset Statements were, in Mr McLure’s submission, to misunderstand the Commissioner's position. Simply because Federal Agent Burtenshaw, on the information currently available to him, does not have any basis to suspect that any of the four defendants know anything about the provenance of that money, does not foreclose on the Commissioner's entitlement to examine each of them about their knowledge of the source of those funds as part of the examination of each of them into their “examinable affairs”. Mr McLure also invited me to take the approach that the Commissioner does not accept that it would be futile to ask any of the defendants further questions about the contents of their Sworn Asset Statements in circumstances where the reasonable suspicion expressed by Federal Agent Burtenshaw in his first affidavit, a suspicion upon which the Court relied in making the ex parte orders on 16 May 2017, hinges on the large-scale dishonest conduct in which each of the defendants is alleged to have engaged as evidenced by their participation in a scheme which had as its objective the concealment of funds from the ATO and the redirection of those funds to them personally or to entities they controlled.

27. [283]

    Insofar as it was submitted that there was no evidence of the Commissioner holding any legitimate concern that there may be "still assets out there", I was reminded of the evidence of Mr Gaughan given in cross-examination by Mr Game:

28. [284]

    The concerns expressed by both witnesses that the Commissioner’s legitimate interests in achieving the statutory objectives in s 5 of the Act will be prejudiced, are said by Mr McLure to be of particular significance given that the value of the assets presently restrained is less than the pecuniary penalty orders the Commissioner reasonably expects will be made in the substantive hearing.

29. [285]

    Mr McLure acknowledged that the statement of facts prepared for the purposes of the committal proceedings, as with the particulars of the taxation fraud with which the defendants are charged, appoint the loss to the Commonwealth of something in the vicinity of $89 million. He submitted however that the total value of all benefits derived by the defendants as a result of their alleged offending (a sum that is neither derived from nor equal to that figure) is yet to be definitively determined for the purposes of the POC Act proceedings. That assessment is also likely to be the subject of further evidence, including expert evidence from a forensic accountant, when the POC Act proceedings are heard and determined. This, he submitted, is in contrast, to what is the total net value of property under current restraint at $41,833,851.98.

30. [286]

    Mr Bruckner for the fourth defendant and Mr Ahmad for the third defendant contended that the Commissioner had failed to demonstrate any real likelihood of further property being identified and restrained as a result of questions asked of their clients under examination at this time (or, so it would seem from that submission, under examination at any time). Each of the defendants submitted that the Commissioner had failed to demonstrate that the value of the property currently restrained under the “all property” restraining orders made on 16 May 2017 is insufficient to meet any forfeiture or pecuniary penalty order that might be made against them in the civil proceedings.

31. [287]

    I am prepared to accept that the defendant’s submission, developed at length by Mr Bruckner on their behalf, that the tax liability of the various corporations implicated in the taxation fraud does not represent the value of the benefits the defendants derived from what is alleged as their criminal involvement in the fraud. However, it does not follow that the examinations into their affairs would be inutile. I am also of the view that the fact that the defendants have provided Sworn Asset Statements in no way forecloses on what must be regarded as a possibility that there is further property yet to be identified by the Commissioner. Nor does the fact because certain electronic payments have been identified by the Commissioner as the mechanisms through which the fraud was perpetrated (and via which the monies due to the ATO were dissipated) foreclose on the possibility that the Commissioner’s information is incomplete. Equally it does not follow that because criminal proceedings have been initiated, that the investigation into the affairs of those charged with that offence are at an end for the purposes of the POC proceedings where they are each named as defendants. While I am able to confidently proceed on the assumption that the taxation fraud conspiracy charge was regularly and properly brought on the basis of evidence that was available to the Commissioner in May 2017, that is not inconsistent with POC Act investigations, continuing after that date in relation to other property that may reasonably be suspected to be proceeds of crime. It is uncontroversial that one of the objects of the Act that is capable of being realized by the examination regime in Part 3.1 of the Act is precisely to assist in such investigations.

Consideration of Relevant Matters under s 319(6)(e)

1. [288]

   The submissions which follow are interlinked with what each of the defendants claim in different ways and with differing emphasis is a real and demonstrable risk of prejudice to the conduct of their defence to the criminal proceedings generally were they to be compulsorily examined at this time given the extent of the overlap in the subject matter of both proceedings and the intersection of issues. In final submissions, this was the central basis upon which they contended that a stay of the examination orders under s 319 of the POC Act is required in the interests of justice.

2. [289]

   Each of the defendants submitted that the risk of the examination proceedings impinging upon the matters which will inevitably arise as issues of proof in the criminal proceedings (and to a substantial extent) is a risk that cannot be meaningfully ameliorated by the non-disclosure order made by the Court on 3 June 2017, or for that matter any other orders that may be made by the examiner during the course of the examination. It was submitted that the weight of that fact alone necessitates a finding that they have discharged the onus of satisfying the Court that it is in the interests of justice that a stay be granted.

3. [290]

   Despite the terms of the non-disclosure order which the defendants ultimately accepted does address the risk of disclosure to the prosecution, it was submitted that the incursions into the accusatorial process which are the inevitable result of the process of examination the Commissioner proposes to undertake ought attract greater weight in the discretionary assessment of whether a stay should be granted in the interests of justice than the emphasis the Commissioner gives to the non-disclosure order.

4. [291]

   In addition to the submissions the Commissioner advanced concerning the scope of the non-disclosure order already in place, in final submissions the Commissioner consented to a further order expressly prohibiting disclosure within the AFP to any person involved in the criminal investigation or prosecution of the defendants (if such further order be thought necessary to clarify the application of the existing order to the AFP). It is clear that the capacity to make non-disclosure orders (and by necessary implication, the fact that they have already been made in these proceedings and their legal effect) is a matter to which the Court must have regard when considering whether a stay of these proceedings is in the interests of justice.

5. [292]

   The Commissioner’s response to the reliance by each of the defendants on what the Commissioner accepts is a substantial overlap between the “subject matter” of the civil proceedings under the POC Act (relevantly here the examination proceedings) and the concurrent criminal proceedings (the language of s 319(4)) and the substantial similarity in “the circumstances pertaining” to both proceedings (being the language of s 319(3)), is twofold.

6. [293]

   The Commissioner has separately addressed what I am satisfied is the considerable weight that should be attributed to the terms of the non-disclosure order already made in the proceedings and the regime in place to manage Coercive Material. In my view the combined effect of this evidence ameliorates to a very significant degree the risk of the disclosure of information that may adversely impact on the defendant’s right to a fair trial conducted in accordance with adversarial principles.

7. [294]

   The Commissioner further submitted that the prosecutor's duty of disclosure, which is binding through all phases, allows this Court to be satisfied that any inadvertent disclosure by CACT or CAL of the information obtained from the compulsory examination of the defendants would, in all likelihood, come to the attention of the prosecuting authorities as the preparations for trial continue. The Commissioner submitted that being the case, any inadvertent disclosure of Coercive Material would be susceptible to orders of the committing court or the trial court to protect against the risk of the trial being rendered unfair (see R v Seller; R v McCarthy [2012] NSWSC 934). The Commissioner submitted that because the current non-disclosure order under s 266A(2)(b) will remain in place until further order, and because the risk of any unauthorised disclosure of Coercive Material to the prosecution is already rationally reduced by the measures put in place by the Commissioner to quarantine that information, any risk of prejudice to the defendant’s conduct of the criminal proceedings in their ongoing preparations for trial, however theoretical, is so significantly minimised that the Court would find the defendants have failed to discharge the evidentiary and persuasive onus of demonstrating that the interests of justice necessitate staying their examinations.

8. [295]

   The defendants contend that because the efficacy of both the non-disclosure orders and the regime for protecting the disclosure of Coercive Material (of which the SOP is the latest articulation) is unknown and untested the risk to the conduct of their criminal proceedings is global. It is in that connection that each of the first, second and third defendants adopted the fourth defendant’s submissions identifying what were said to be flaws in the SOP, flaws which Mr Bruckner submitted are already patent because of the difficulty that is inherent in accurately differentiating between Coercive Material which is not to be disclosed unless it is authorised, and information that is derived from the Coercive Material for which the SOP provides no limitation on disclosure or publication.

9. [296]

   Whilst it is true that the SOP is a new initiative and to that extent untested, I am well satisfied that the Commissioner has comprehensively addressed the risks associated with the management of Coercive Material and the risks associated with the leakage of that material by the rigour of the procedures specifically designed to protect against that risk. I am also well satisfied that the systems that are currently in place to militate against the risk of the leakage of Coercive Material already in the Commissioner’s possession and the information that is likely to come into his possession are both rational and enforceable.

10. [297]

    I was invited by counsel for the defendants to infer from the nature of the fraudulent scheme the subject of the taxation fraud conspiracy that the particulars of that charge may change over time, whether as the result of particulars of overt acts being served as the proceedings progress through the committal process in Local Court, or the service of further particulars before or even after arraignment in the District Court or in this Court.

11. [298]

    From that presumed state of affairs, and for the purpose of the relief sought in these proceedings, it was submitted that because the criminal proceedings are at a “preliminary stage” each of the defendants will suffer a real and demonstrable prejudice were they compulsorily examined at a time when the prosecution case they are to meet has not been fully disclosed and where they have not been in a position to give detailed instructions to their legal representatives about the conduct of their defence. They submitted without a full appreciation of what will be put against them in their criminal trials, they should not be placed in a position where, by the answers given under compulsory questioning, they unwittingly prejudice any future defence they might mount to the criminal charges.

12. [299]

    The defendants also invited me to find that it is reasonably possible that additional criminal charges might be laid against them as the criminal investigation continues and/or broadens and that is an additional source of a risk of prejudice to them given the terms of the examination notice and the scope of the examination. The potential for the laying of additional charges was said to resonate from suspicions held by Federal Agent Burtenshaw as expressed in his first affidavit being the offences set out in paragraph 9 above.

13. [300]

    In responding to the submission that prejudice results from the fact that the examinations are to be undertaken at a time when the criminal proceedings are in the throes of what may prove to be a lengthy committal process in the Local Court and what might prove to be a further delay before a trial date is secured in either the District Court or this Court, Mr McLure submitted that was a factor which actually weighed against the stay of the examinations.

14. [301]

    He submitted that the fact the criminal trial of the defendants are unlikely to be convened for some years is in direct contrast to the situation that obtained when the Commissioner sought to proceed with examinations of Mr McGlone and Mr Cacu. In both cases criminal trials were imminent and in each the persons to be examined had the onus of establishing aspects of their defence to the criminal charge on the balance of probabilities. In both cases the Court of Appeal was satisfied that requiring them to answer questions under examination about the vary matters upon which they may elect ultimately to defend criminal charges in imminent criminal proceedings was productive of a risk of prejudice to the conduct of those proceedings that was both real and acute, and a risk against which there were no, or no sufficient, protections.

15. [302]

    The same can be said for the circumstances underlying the cases of W and Zhao. Although unlike McGlone and Cacu which concerned examinations the Commissioner sought to undertake, in W and Zhao the Court was satisfied that participation as defendants to civil proceedings under the POC Act would necessarily disclose or forecast their defence to a proceeds of crime offence and for that reason the interests of justice justified a stay of the civil proceedings. The same cannot be said to obtain here. Not only is any criminal trial of the defendant literally years from now, but even the broadest outline of any defence to the criminal conspiracy has not been the subject of submissions from any of the defendants other than, perhaps, Mr Bruckner’s approach to the cross-examination of Mr Ramsden and the implicit suggestion that the Plutus Group had no tax liability and, that being the case, such arrangements as were devised by the defendants in the management of Plutus’ affairs were not criminal.

16. [303]

    I do not regard the timing of the prospective criminal trial on the taxation fraud conspiracy per se as a critical factor in determining whether the defendants have discharged the onus of demonstrating that it is in the interests of justice to stay the examination proceedings at this time.

17. [304]

    Viewed from the Commissioner’s perspective, with the criminal prosecution still at a relatively preliminary stage, I accept that it could not be reasonably suggested that pressures of the kind referred to by Beazley JA in McGlone at [116] present. While it might be accepted that preparing for an examination where a criminal trial with penal consequences is imminent could be productive of a personal strain on the defendants or their resources in the sense considered relevant in McGlone, that is not this case.

18. [305]

    It is clear that subject to the express limitation on the statutory power to grant a stay in ss 319(2)(a) and (3) on the sole basis of a similarity in the circumstances pertaining to the two proceedings, that a stay will be granted where it is in the interests of justice to do so and that the mandatory considerations in s 319(6)(a) – (e) inform that question. I also accept that the extent or degree of overlap in the circumstances pertaining to the two proceedings (including the coincidence of subject matter) is also a matter to be considered in the ultimate exercise of the statutory discretion, however, the question that remains is whether, in this case, as the defendants submitted, that it is enough to warrant a stay in the interests of justice or whether, as the Commissioner submitted, they need to demonstrate how their rights and interests in defending the criminal case will be prejudiced by an examination into their affairs for the purposes of the POC Act, even if the process of compulsory questioning will entail a traversing of the facts underlying their alleged participation in the taxation fraud conspiracy.

19. [306]

    The Commissioner submitted that even accepting that there is an overlap or coincidence of the subject matter in each proceeding in this case, none of the defendants has identified, with sufficient particularity, any real prejudice to them in the conduct of their defence to the taxation fraud conspiracy were they are examined about their own affairs and about the affairs of their co-defendants for the purposes of the substantive POC Act proceedings and, that being the case, none of them has discharged the onus of satisfying the Court that it is in the interests of justice that their examination be stayed. In my view there is considerable force in that submission.

20. [307]

    To the extent that each of the defendants complain about the potential for real prejudice in the conduct of their criminal trial were they to be examined at a time when they have not given full instructions to their legal representatives in the criminal proceedings (or their legal representatives have not sought instructions from them), the Commissioner submitted that is a consideration which is irrelevant to the question whether the interests of justice require a stay of the examination proceedings. The Commissioner submitted that is the case irrespective of whether instructions have not been sought or provided because the brief is not fully served, or for some other reason.

21. [308]

    Mr McLure submitted that where there is a disclosure prohibition order under s 266A(2)(b) in place, the only way evidence given at an examination could affect the forensic decisions of a defendant in a later criminal trial is that if he/she wanted to give evidence different to the evidence given at the examination. In that situation the risk of prosecution for perjury or for giving false evidence at the examination would arise. In this connection I regard the observations of Gageler and Keane JJ in Lee No 1 at [323]-[324] as instructive. In their Honours’ views the risk that a defendant might be required under adherence to their oath or affirmation to give a consistent (even if incriminating) account. This cannot be regarded as the loss of a “legitimate forensic choice” prejudicing a fair trial. The law cannot be concerned with preventing “prejudice” generated by a defendant’s own unlawful behaviour directed at perverting the course of justice. To conclude otherwise would be to transmute a privilege against self-incrimination into a privilege to give false evidence in one’s defence. Applying the same analysis, there is no force in the defendants’ submission that, in effect, it is too early for them to be examined or that they want the opportunity to consider the evidence to be adduced against them in proof of the allegation of their criminal guilt before they are asked questions about “their affairs” and “the affairs of each other” as their affairs relate to matters relevant to the POC Act proceedings.

22. [309]

    Mr McLure submitted that an examinee’s right to be represented in an examination, and for his legal representative to take objection to a particular question or line of questioning, for example, because questions are said to be improperly formulated or directed to a matter outside the scope of the examination - that is to say outside of the legitimate reach of questions concerning a defendant's examinable affairs does not depend upon the ambit of the prosecution brief of evidence, or a legal representative’s awareness of its contents. Neither does it depend upon having a comprehensive set of instructions responsive to that brief of evidence or to the prosecution case. Rather, it is necessary for the defendants in these proceedings to identify a legitimate forensic choice that they are at the least likely to make in the conduct of his defence to the criminal proceedings that is at risk of being lost, or in some demonstrable way negatively impacted upon, were he required to submit to compulsory examination whilst his criminal proceedings are in the process of passing through to arraignment and from there to trial. The Commissioner submitted that the evidence upon which the defendants relied in the stay proceedings did not go to the risk of prejudice formulated in that way, and no attempt has been made in submissions to address it with any particularity. I accept that submission.

23. [310]

    In the result, I am not persuaded that the interests of justice warrant a stay of the examination proceedings or the making of any orders limiting the use to which the Commissioner may legitimately put the Sworn Asset Statements of the defendants in his possession.

24. [311]

    Accordingly, I make the following orders:

    1. (1)

       The application by each of the defendants for a stay of the examination proceedings is refused.

    2. (2)

       The application by the third defendant for a revocation of the examination order is refused.

    3. (3)

       The applications by the second, third and fourth defendants for orders in respect of the Sworn Asset Statements already provided by them are refused.

    4. (4)

       I formally reserve consideration of the balance of the relief sought by each of the defendants in their notices of motion as variously amended dated June and September 2017.

    5. (5)

       I also reserve the question of costs.

    6. (6)

       As to (4) and (5) above, see judgment dated 27 April 2018.