Citation: R v Kinghorn (No 2) [2019] NSWSC 989
Court: Supreme Court of New South Wales
Date: 1 August 2019
Judge: Adamson J
Background
The accused faced three fraud-related charges concerning alleged false representations made to the Commissioner of Taxation about his control of overseas companies. Central to the prosecution was a series of compulsory examinations conducted by the Australian Taxation Office (ATO) under s 264 of the Income Tax Assessment Act 1936 (Cth) in May and June 2005. The transcripts of those examinations were subsequently disclosed by the ATO to the Australian Federal Police (AFP) in 2007, and by the AFP to the Commonwealth Director of Public Prosecutions (CDPP) in 2015.
The accused challenged whether those disclosures were lawfully authorised, given that the taxation legislation contains strict prohibitions on the disclosure of taxation information, subject to defined exceptions. He sought documents from the Crown to establish the basis for the claimed lawful authority, but the CDPP maintained that no such disclosure obligation existed.
On the second day of hearing privilege motions brought by the CDPP, the AFP Commissioner, and the Commissioner of Taxation, the CDPP sought an adjournment. The CDPP had identified fresh legal sources of power said to authorise the disclosures, different from those identified in earlier correspondence, and wished to adduce evidence to support them.
Legal Issues
- Whether the adjournment should be granted to allow the Crown to adduce evidence establishing the lawful basis for disclosing the compulsory examination transcripts
- Whether the Crown's prior errors in identifying the statutory sources of power in correspondence, and its conduct of the proceedings, were sufficient reason to refuse the adjournment
- Whether findings about the legality of the disclosures could affect the privilege claims, including the question of implied waiver under the principles in Mann v Carnell
Decision
Adamson J granted the adjournment. The central reason was that the legality of the disclosures of the compulsory examination transcripts was a key issue in the proceedings, and it was important that any factual findings made on that issue be soundly based. Granting the adjournment would allow the Crown to put on evidence in support of the statutory authorisations it now relied upon, rather than having findings made on an incomplete evidentiary record.
Her Honour acknowledged that the CDPP's conduct of the proceedings to that point, including the errors in correspondence about the correct statutory provisions, weighed against granting the adjournment. However, those matters were not a sufficient reason to refuse it. The Supreme Court noted that the Crown represents the community, citing Strickland v Director of Public Prosecutions (Cth), and the potential consequences of an ill-founded finding on the privilege motions were significant.
Adamson J also flagged, without determining, that the legality findings might not ultimately be decisive on the privilege issue. It remained open that the so-called "Leach ground" might independently establish implied waiver of privilege under Mann v Carnell, regardless of findings about the lawfulness of the disclosures. Her Honour noted it was not appropriate to say more, as that question remained to be decided on the motions.
On costs, the CDPP offered to pay the accused's wasted costs arising from the adjournment. Adamson J noted that the Supreme Court's power does not extend to ordering a party to pay costs thrown away directly; rather, the Court's power is limited to staying proceedings until such costs are paid, following R v Mosely (1992) 28 NSWLR 735. As no stay application had been made, and given the forthcoming hearing of the stay motion listed for October 2019, costs of the adjournment were reserved.
Orders Made
- The notices of motion filed by the Commissioner of Taxation (16 July 2019), the CDPP (22 July 2019), and the Commissioner of the AFP (30 July 2019) were adjourned to 6 September 2019.
- Costs of the adjournment were reserved.
Key Takeaways
- Adamson J emphasised that where the legality of disclosures of compulsory examination material is a central issue, factual findings on that question must be soundly based, providing a strong reason to permit additional evidence before determination.
- Errors and missteps by the Crown in identifying the correct statutory source of power in correspondence will weigh against an adjournment, but they do not automatically defeat one, particularly where the interests of the broader community represented by the Crown are engaged.
- Under R v Mosely, the Supreme Court's costs power in criminal proceedings does not extend to a direct order for payment of costs thrown away; the available remedy is a stay of proceedings pending payment, which requires a specific application.
- A finding that disclosures of compulsory examination transcripts were unlawful may affect privilege claims, but the court flagged that implied waiver under Mann v Carnell principles might arise independently through the "Leach ground," irrespective of the legality question.
- The decision is procedural and confined to the adjournment application; no findings were made about the lawfulness of the ATO or AFP disclosures, or about the privilege claims themselves.
Legislation and Cases Referenced
Legislation
- Criminal Procedure Act 1986 (NSW), s 29
- Income Tax Assessment Act 1936 (Cth), s 264
- Taxation Administration Act 1953 (Cth), ss 3E, 3G, 16, 355-70, 355-175
Cases
- Brown v West (1990) 169 CLR 195; [1990] HCA 7
- Commissioner Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501; [1997] HCA 3
- Lee v The Queen (2014) 253 CLR 455; [2014] HCA 20
- Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66
- R v Bunting (2002) 84 SASR 378
- R v Kinghorn [2019] NSWSC 553
- R v Leach [2018] QCA 131; (2018) 334 FLR 224
- R v Mosely (1992) 28 NSWLR 735
- R v Seller; R v McCarthy (2015) 89 NSWLR 155; [2015] NSWCCA 76
- Strickland v Director of Public Prosecutions (Cth) [2018] HCA 53; (2018) 93 ALJR 1