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Supreme Court 10 May 2019

R v Kinghorn

[2019] NSWSC 553

Fraud & dishonesty
CRIME PURPOSE TO OBTAIN EVIDENCE TO PROVE NON COMPLIANCE OR ILLEGALITY

Citation: R v Kinghorn [2019] NSWSC 553
Court: Supreme Court of New South Wales
Date: 10 May 2019
Judge(s): Adamson J

Background

The accused faces three charges on indictment relating to alleged false representations made to the Commissioner of Taxation about his control of unlisted overseas companies. The conduct spans two periods: 1997 (one count) and 2004 to 2007 (two counts). As part of earlier tax enforcement activity, the accused was examined over five days in 2005 under a statutory notice issued pursuant to section 264 of the Income Tax Assessment Act 1936 (Cth), and transcripts of those examinations were later disclosed to the Commonwealth Director of Public Prosecutions (CDPP) and others.

The accused's legal team raised concerns that the various disclosures of those examination transcripts, including a 2007 disclosure from the Australian Taxation Office (ATO) to the CDPP and a 2015 disclosure from the Australian Federal Police (AFP), may not have complied with the statutory framework governing the sharing of taxpayer information. The prosecution provided some disclosure of related documents but declined to go further.

In response, the accused caused subpoenas to be issued to the Commissioner of Taxation, the Commissioner of the AFP, and the CDPP, seeking documents relating to those disclosures. The three recipients each moved to set aside the subpoenas on the basis that they lacked a legitimate forensic purpose.

Legal Issues

  • Whether the subpoenas had a legitimate forensic purpose, or amounted to an impermissible "fishing expedition"
  • Whether the 2007 Disclosure showed apparent non-compliance with the statutory requirements under section 3E of the Taxation Administration Act 1953 (Cth)
  • Whether documents showing the extent of dissemination of the accused's taxation information were relevant to the relief the accused sought, including a temporary or permanent stay of proceedings
  • Whether the word "refer" in the subpoena schedules was objectionable as insufficiently precise

Decision

Issue 1: Legitimate Forensic Purpose (Non-Compliance Ground)

The court rejected the characterisation of the subpoenas as a fishing expedition. Section 3E of the Taxation Administration Act 1953 (Cth), as it stood at the time of the 2007 Disclosure, required specific conditions to be satisfied before taxation information could be disclosed, including that the disclosing officer be an "authorised law enforcement agency officer" and that the Commissioner be satisfied the information was relevant to a serious offence. The documents already disclosed did not establish whether those conditions had been met, and there appeared to be irregularity or illegality on the face of the 2007 Disclosure itself (at [22]-[23]). The court found that using subpoenas to obtain evidence capable of proving or disproving compliance with those statutory requirements constituted a legitimate forensic purpose (at [23]).

Issue 2: Legitimate Forensic Purpose (Leach Ground)

The court accepted a second legitimate forensic purpose: ascertaining the breadth and intensity of dissemination of the accused's examination transcripts. That information is directly relevant to whether it would be possible to quarantine exposed personnel and allow the prosecution to proceed, or whether a permanent stay of proceedings would be necessary (at [24]). The court was satisfied that there was a reasonable possibility the subpoenaed documents would materially assist the accused's defence on either ground (at [29]).

Issue 3: Real or Apparent Injustice from Refusal

The court observed that refusing disclosure could create real or apparent injustice and leave the accused with a legitimate sense of grievance, given that the subpoenas are the only mechanism by which he can test the legality and extent of the disclosures (at [30]). The recipients adduced no evidence of oppression or any substantive response to the accused's forensic purposes as articulated in oral argument (at [25]).

Issue 4: Use of the Word "Refer" in the Schedules

The court found the word "refer" unobjectionable. Unlike the phrase "relating to," which requires a judgment about the connection between documents and the relevant subject matter, "refer" carries no such difficulty (at [25]). As no evidence of oppression from complying with the subpoenas was adduced, this ground also failed.

Orders Made

  • The notices of motion filed on behalf of the Commissioners of Taxation and the Australian Federal Police, and on behalf of the Commonwealth Director of Public Prosecutions, to set aside the subpoenas issued at the request of the accused are dismissed.
  • The question of costs is reserved.

Key Takeaways

  • An accused person is entitled to issue subpoenas against prosecuting authorities and investigating agencies where the Crown's own disclosure is insufficient to enable the accused to ascertain whether laws governing the use of their private information have been complied with. Subpoenas are a recognised mechanism for enforcing, indirectly, the prosecutor's duty of disclosure (at [17], [23]).

  • Where documents already disclosed contain apparent irregularity or illegality on their face regarding statutory authorisation requirements, a subpoena directed at obtaining further evidence of compliance or non-compliance is not a fishing expedition. It serves a legitimate forensic purpose (at [22]-[23]).

  • The test for legitimate forensic purpose in criminal proceedings is whether there is a reasonable possibility that the documents will materially assist the accused's defence. The court applied that standard, drawing on the reasoning in Attorney-General (NSW) v Chidgey and Ragg v Magistrates Court of Victoria (at [28]-[29]).

  • Determining the full extent of dissemination of compulsorily obtained examination transcripts is directly relevant to questions about appropriate relief, including whether a temporary stay and reconstituted prosecution team would suffice or whether a permanent stay is warranted (at [24]).

  • Parties moving to set aside subpoenas on grounds of width or oppression must adduce evidence in support. The court noted that none of the recipients here produced any evidence of difficulty in locating documents or the time required to comply, which weighed against setting aside the subpoenas (at [13], [25]).

Legislation and Cases Referenced

Legislation
- Income Tax Assessment Act 1936 (Cth), s 264
- Taxation Administration Act 1953 (Cth), ss 2, 3E

Cases
- Attorney-General (NSW) v Chidgey [2008] NSWCCA 65; (2008) 182 A Crim R 536
- Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334; [1999] HCA 9
- Blatch v Archer (1774) 1 Cowp 63
- Commissioner for Railways v Small (1938) 38 SR (NSW) 564
- Gould v Director of Public Prosecutions (Cth) [2018] NSWCCA 109; (2018) 333 FLR 352
- Ragg v Magistrates Court of Victoria (2008) 18 VR 300
- R v Leach [2018] QCA 131; (2018) FLR 224
- R v Reardon (No 2) (2004) 60 NSWLR 454; [2004] NSWCCA 197
- Strickland v Director of Public Prosecutions (Cth) (2018) 93 ALJR 1; [2018] HCA 53
- X7 v R [2014] NSWCCA 273; (2014) 292 FLR 57