AI-generated summaries. Not legal advice. Always verify against the official judgment on NSW Caselaw.
← All decisions
Court of Criminal Appeal 23 February 2005

REGINA v FRAWLEY

[2005] NSWCCA 66

Fraud & dishonesty
CONSTITUTIONAL LAW CRIMINAL LAW JURISDICTION, PRACTICE AND PROCEDURE PERSONS ENTITLED TO CONDUCT PROSECUTION THE COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS

Citation: Regina v Frawley [2005] NSWCCA 66
Court: NSW Court of Criminal Appeal
Date: 23 February 2005
Judge(s): Spigelman CJ, Mason P, Santow JA

Background

The applicant faced an indictment presented by the Commonwealth Director of Public Prosecutions (CDPP) alleging 21 counts of insider trading involving the purchase of shares in a telecommunications company between May and July 1998. Each count alleged an offence against ss 1311(1)(a) and 1002G(2) of the Corporations Act 2001 (Cth). The difficulty was that the alleged conduct pre-dated that Act, which commenced on 15 July 2001.

At the time of the alleged offences, the operative law was the Corporations Law enacted under the Corporations (New South Wales) Act 1990, a State law adopting Commonwealth legislation as a law of New South Wales. The CDPP relied on transitional provisions in the Corporations Act 2001, in particular s 1400, to bring the prosecution under the later Commonwealth statute.

The applicant challenged both the CDPP's standing to prosecute and the validity of the indictment, arguing that it disclosed no offence known to law. Grove J rejected those arguments at first instance, and the applicant sought leave to appeal from that interlocutory judgment.

  • Whether the CDPP had standing to present the indictment for conduct that occurred before the Corporations Act 2001 commenced
  • Whether s 1400 of the Corporations Act 2001 validly converted pre-commencement criminal liability under State law into a liability under the new Commonwealth Act
  • Whether the word "equivalent" in s 1400(2) imported a requirement that the pre-commencement and substituted rights or liabilities be identical in all respects, including as to the applicable penalties
  • Whether the Commonwealth Parliament had constitutional power to enact s 1400(2), including whether that power derived from a State reference of legislative power or, alternatively, from s 51(xx) of the Commonwealth Constitution (the corporations power)
  • Whether the terms of the reference of power under the Corporations (Commonwealth Powers) Act 2001 limited the Commonwealth to legislating only for conduct occurring after the commencement date

Decision

Spigelman CJ (with Mason P and Santow JA agreeing) refused leave to appeal. The Court held that s 1400(2) operated to substitute a right or liability under the Corporations Act 2001 for the pre-existing criminal liability under the Corporations Law, enabling the CDPP to prosecute conduct from 1998 under the new Act.

On the standing question, the Court found that the CDPP was entitled to present the indictment. The prosecution was properly brought under the Corporations Act 2001 by virtue of the transitional mechanism in s 1400, which expressly provided that procedures and proceedings in respect of substituted liabilities could be instituted after commencement under the new legislation.

The Court rejected the applicant's argument that "equivalent" in s 1400(2) required mathematical or precise identity between the old and new liabilities. Spigelman CJ construed the term as meaning the substituted liability should broadly correspond to the pre-commencement liability, a reading consistent with the object stated in s 1370: to place individuals in the same position as if the old legislation had always been valid Commonwealth law and the new legislation were a continuation of it.

On the constitutional question, the Court held that what the States referred under the Corporations (Commonwealth Powers) Act 2001 was legislative power, not a particular body of legislation. Section 4(5) of that Act identified the period during which the Commonwealth could exercise the referred power, but placed no limitation on the period for which it could legislate. The Court also noted, without deciding the point, that ss 1002G, 1311 and 1400(2) could independently be supported under the corporations power in s 51(xx) of the Constitution, making reliance on the referral of power arguably unnecessary in any event.

Orders Made

  • Leave to appeal refused.

Key Takeaways

  • Section 1400(2) of the Corporations Act 2001 operates as a transitional mechanism that substitutes a new Commonwealth criminal liability for pre-existing liability under the old Corporations Law, enabling prosecution of pre-commencement conduct under the new Act.
  • The word "equivalent" in s 1400(2) does not require that the old and new liabilities be identical in every detail; it requires only broad correspondence, interpreted consistently with the transitional purpose stated in s 1370.
  • Where States refer legislative power to the Commonwealth, the reference confers power to legislate; the period specified for exercise of that power does not define the subject matter for which the Commonwealth may legislate, including conduct that pre-dates commencement.
  • The Court of Criminal Appeal indicated, without deciding, that insider trading in corporate securities could independently attract the Commonwealth's corporations power under s 51(xx) of the Constitution, separate from any State reference.
  • Refusing leave to appeal, the Court affirmed that the CDPP had standing to present an indictment for pre-commencement insider trading conduct once the transitional provisions of the Corporations Act 2001 were properly engaged.

Legislation and Cases Referenced

Legislation:
- Corporations Act 2001 (Cth), ss 1002G, 1311, 1370, 1400, 1401, Pt 10.1
- Corporations (Commonwealth Powers) Act 2001, s 4
- Corporations (New South Wales) Act 1990
- Corporations Act 1989 (Cth)
- Corporations Law
- Commonwealth Constitution, s 51(xx)
- Criminal Appeal Act 1912 (NSW), s 5F
- Federal Courts (State Jurisdiction) Act 1999

Cases:
- Parker v Commonwealth Director of Public Prosecutions (High Court of Australia, 25 June 2003)
- R v Commonwealth Conciliation and Arbitration Commission; Ex parte Professional Engineers' Association Australia (1959) 107 CLR 208
- R v Corbett [2004] 1 Qd R 146
- R v Humby; Ex parte Rooney (1973) 129 CLR 231
- Re Macks; Ex parte Saint (2000) 204 CLR 158
- Re Wakim; Ex parte McNally (1999) 198 CLR 511