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Local Court 22 March 2011

Commonwealth Director of Public Prosecutions v Zhang Xian

[2011] NSWLC 4

Fraud & dishonesty
COSTS WITHDRAWAL OF CHARGES CRIMINAL PROCEDURE ACT 1986 (NSW)

Citation: Commonwealth Director of Public Prosecutions v Zhang Xian [2011] NSWLC 4
Court: Local Court of NSW
Date: 22 March 2011
Judge(s): Magistrate Tsavdaridis

Background

The accused was a trainee assistant employed at a licensed Australia Post outlet for approximately six months between May and December 2008. Her employers, the licensees of two post offices, were alleged to have systematically defrauded the Commonwealth of over $750,000 across roughly eight years by accepting postage payments from customers while failing to affix correct or any postage to packages. On the day of her arrest in December 2008, the accused was charged alongside her employers.

The accused faced seven counts of obtaining a financial advantage by deception under s 134.2(1) of the Criminal Code Act 1995 (Cth). The prosecution alleged conduct occurring between 1 January 2004 and 17 December 2008, with the underlying deceptions alleged to have taken place from as early as 1 January 2000. The matter came before the Local Court on approximately 15 occasions before all charges were withdrawn by the Crown on 15 June 2010, after an election to proceed on indictment but before any committal hearing.

Following the withdrawal and dismissal of the charges, the accused applied for costs under ss 116 and 117 of the Criminal Procedure Act 1986 (NSW). The Crown strenuously opposed the application.

  • Whether the NSW Criminal Procedure Act 1986 costs provisions applied to the withdrawal of Commonwealth offences prosecuted in the Local Court (via s 79 of the Judiciary Act 1903 (Cth))
  • Whether the proceedings were initiated without reasonable cause under s 117(1)(b) of the Criminal Procedure Act 1986 (NSW)
  • Whether, on the evidence available at the time the proceedings were instituted, there was a substantial prospect of success in proving the elements of the offence against the accused, including the mental fault elements of intention, knowledge or recklessness

Decision

Magistrate Tsavdaridis accepted, without objection from either party, that the NSW Criminal Procedure Act 1986 costs provisions applied to this prosecution for Commonwealth offences by operation of s 79 of the Judiciary Act 1903 (Cth), which makes state procedural laws binding on courts exercising federal jurisdiction.

The central question under s 117(1)(b) was whether the proceedings were initiated without reasonable cause. The court applied the test in Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257, asking whether, assessed at the time proceedings were instituted, there was a substantial prospect of success.

The magistrate found that the Court Attendance Notices alleged conduct covering a period from 2000 to 2008, yet the accused's own facts sheet confirmed she had only commenced employment at the post office in May 2008. There was no evidence placing her at the post office, or elsewhere in the scheme, before that date. On that basis, the court found it was not possible to impute to the accused the necessary mental fault elements of intention, knowledge or recklessness required for the offence. The magistrate noted this conclusion might not apply equally to the employers, but that question was not before the court.

Accordingly, the court was satisfied that, assessed from the point of view at the time the proceedings were instituted, there was no substantial prospect of success. The proceedings were initiated without reasonable cause, and a costs order was made in favour of the accused.

Orders Made

  • The Crown is to pay the accused's costs.
  • The accused to file and serve written submissions on quantum of costs by 29 March 2011.
  • The Crown to file and serve written submissions in reply on quantum by 5 April 2011.
  • Liberty to restore the matter to the list on seven days' notice.
  • Matter adjourned to 27 April 2011 for a decision as to quantum.

Key Takeaways

  • Under s 117(1)(b) of the Criminal Procedure Act 1986 (NSW), a magistrate may order costs against a prosecutor where proceedings were initiated without reasonable cause, assessed at the time they were commenced rather than at the time of withdrawal.
  • The test applied was whether there was a substantial prospect of success at the time of institution; a prosecution founded on allegations spanning a period for which there was no evidence connecting the accused fell below that threshold.
  • Where Court Attendance Notices alleged conduct predating an accused's employment by several years, and the facts sheet itself confirmed the shorter period of employment, the mental fault elements of the offence could not be readily imputed to that accused.
  • Section 79 of the Judiciary Act 1903 (Cth) operated to make the NSW Criminal Procedure Act 1986 costs provisions applicable to proceedings for Commonwealth offences heard in the NSW Local Court, a point accepted by both parties without objection.
  • A costs order following withdrawal does not require the court to conclude guilt or innocence; the focus is on whether the decision to prosecute was reasonably based on the evidence available at the outset.

Legislation and Cases Referenced

Legislation
- Criminal Code Act 1995 (Cth), ss 5.4, 130.1, 130.3, 133.1, 134.2(1)
- Criminal Procedure Act 1986 (NSW), ss 116, 117, 208
- Judiciary Act 1903 (Cth), s 79

Cases
- Kanan v Australia Postal and Telecommunications Union (1992) 43 IR 257
- Grassby v R (1989) 168 CLR 1
- Fosse v DPP [1999] NSWSC 367
- Halpin v Department of Gaming and Racing [2007] NSWSC 81
- Moss v Brown (1979) 1 NSWLR 114
- R v Manley [2000] NSWCCA 196
- Regina v Moore; ex parte Federated Miscellaneous Workers' Union of Australia [1978] HCA 51; (1978) 40 CLR 470
- Bostik (Australia) Pty Limited v Gorgevski (No 2) (1992) 36 FCR 439
- Canceri v Taylor (1994) 123 ALR 667
- Nilsen v Loyal Orange Trust (1997) 67 IR 180
- Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Nestle Australia Limited (2005) 146 IR 379
- Spotless Services Australia Limited v Marsh SDP [2004] FCAFC 155
- Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relation Commission (2006) 156 FCR 275; [2006] FCAFC 199