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Supreme Court 5 August 2020

R v Kinghorn (No 6)

[2020] NSWSC 1028

Fraud & dishonesty

Citation: R v Kinghorn (No 6) [2020] NSWSC 1028
Court: Supreme Court of New South Wales
Date: 5 August 2020
Judge(s): Adamson J

Background

The accused faced prosecution for offences under s 135.1(7) of the Commonwealth Criminal Code, relating to alleged false or misleading conduct. A central issue in the proceedings concerned whether material obtained from the accused compulsorily by the Australian Taxation Office (ATO) under s 264 of the Income Tax Assessment Act 1936 (Cth) could lawfully be used in the investigation and prosecution of those criminal charges.

Earlier in the proceedings, the NSW Court of Criminal Appeal delivered judgment in Director of Public Prosecutions (Cth) v Kinghorn; Kinghorn v Director of Public Prosecutions (Cth) [2020] NSWCCA 48. That court recommended resolving the so-called "Leach point" as soon as possible, noting it could break the impasse between the prosecution and the accused over access to relevant documents.

Following that recommendation, Adamson J conducted directions hearings to formulate an appropriate separate question for determination. The accused initially preferred to await the outcome of a special leave application to the High Court before formulating the question, but the Court decided to proceed with formulation while leaving open the possibility of deferring formal determination if special leave were granted.

  • What form should the separate question take in order to properly capture the legal issue arising from R v Leach [2019] 1 Qd R 459?
  • Whether the words "other than the ATO" should be inserted into the separate question, as the Crown proposed, to restrict its scope to investigative authorities other than the Australian Taxation Office.

Decision

The core dispute over the question's form was narrow. Both parties agreed on substantially the same formulation, but the Crown sought to insert the words "other than the ATO" to limit the question to investigative authorities other than the ATO. The accused opposed this addition, arguing it would deprive the question of any utility, given that the ATO was the investigative authority in both Leach and in the present case.

Adamson J accepted the accused's position. Requiring determination of the position for investigative authorities other than the ATO would be an "arid exercise" on the facts of this case. The question in the form proposed by the accused was sufficient to accommodate the arguments of both parties and was squarely suited to the circumstances before the Court.

The Crown's underlying argument, that Leach did not extend to offences involving false information provided to tax officers and applied only to offences like obtaining money by deception, remained open to be argued. The exclusion of the parenthetical words did not prevent the Crown from contending that Leach was distinguishable on those grounds.

Adamson J deferred making the formal order for separate determination pending the outcome of the accused's special leave application to the High Court, listed for hearing on 11 September 2020. Orders for the conduct of the separate question hearing were made in anticipation that the formal order would ultimately follow.

Orders Made

  • The form of the separate question was determined in accordance with the accused's draft (marked MFI 1), without the words "other than the ATO."
  • The formal order for separate determination of the question was reserved pending the outcome of the accused's special leave application listed for hearing on 11 September 2020.
  • On or before 23 September 2020: the accused to file and serve written submissions on the Leach separate question, submissions on the substratum of facts, and a tender bundle.
  • On or before 7 October 2020: the Crown to file and serve written submissions in answer.
  • On or before 14 October 2020: the accused to file and serve reply submissions.
  • Liberty to apply on three days' notice to the Associate to Adamson J.

Key Takeaways

  • The Supreme Court determined that the separate question concerning the Leach principle should be framed without restricting its scope to investigative authorities other than the ATO, because the ATO was the relevant investigative authority in the present case and in Leach itself.
  • Requiring a court to determine the position of non-ATO investigative authorities on these facts would be an unnecessary and abstract exercise, adding nothing of practical value to the question.
  • Excluding the Crown's proposed additional words did not foreclose any substantive Crown argument: the Crown retained the ability to argue that Leach was distinguishable and did not apply to offences involving false information made to tax officers.
  • The Leach principle, as articulated by the Queensland Court of Appeal, concerns whether material compulsorily obtained from an accused under taxation legislation can be disseminated and used in criminal investigations and prosecutions, particularly those unrelated to making false statements in the examination itself.
  • Procedural steps toward separate determination were set in place conditionally, with the formal order deferred pending the High Court's consideration of a special leave application.

Legislation and Cases Referenced

Legislation:
- Income Tax Assessment Act 1936 (Cth), s 264
- Commonwealth Criminal Code, s 135.1(7)

Cases:
- Director of Public Prosecutions (Cth) v Kinghorn; Kinghorn v Director of Public Prosecutions (Cth) [2020] NSWCCA 48
- R v Leach [2019] 1 Qd R 459; [2018] QCA 131