The NSW Court of Criminal Appeal has held that prosecuting authorities were able to use information obtained 12 years earlier, in an examination of an individual under s264 of the ITAA 1936, in the course of prosecuting the taxpayer for various dishonesty related offences. The s264 examination arose in the course of the Commissioner’s ‘Project Wickenby’ investigations.
The facts were these.
- In 2006 or 2007, the appellant (Mr Kinghorn) was examined by counsel for the ATO under former s 264 of the ITAA 1936 as part of Project Wickenby (s 264 gave the Commissioner the power to compel verbal evidence or documents be delivered, and is now re-enacted as s 353-10 of Sch 1 to the TAA).
- During the course of the examination, Mr Kinghorn denied that he controlled two companies incorporated in Jersey.
- Some 12 years later, Mr Kinghorn was charged with 2 offences of dishonestly representing to a public official that he did not control the 2 Jersey companies, contrary to s 135.1(7) of the Criminal Code Act (Cth).
The Court of Appeal allowed the Crown’s appeal – overturning the first instance decision that the investigative authorities and prosecuting authorities should not have disseminated and/or should not have had access to and/or should not have used the content of Mr Kinghorn’s examination under s 264.
According to the Court, neither the accusatorial principle (that the onus of proof rests at all times on the prosecution) nor the companion rule (that the prosecution cannot compel an accused to assist it) operated to limit the power of taxation officers to disclose information to Project Wickenby (s 3G of the TAA, as in force when Mr K was examined under s 264, and now in ss 355-70 (disclosure for law enforcement purposes) and 355-175 (further disclosures for the original purpose) of Sch 1 to the TAA) or for the purpose of criminal, civil or administrative proceedings related to a taxation law (s 355-50 of Sch 1 to the TAA).
[After skimming the judgement, it appears that Kinghorn was accused of dishonesty wider than, but including, his answers in the s264 investigation – but it’s difficult to tell. The considerations were not just core fairness issues, but the extent to which statute allowed the compelled information to be shared, together with the assertion of an implied constitutional right to a fair trial (which failed). There is a long headnote in AustLii reasons, which I’ve reproduced below, for those wanting to look into this a bit more.]
(R v Kinghorn [2021] NSWCCA 313, NSW Court of Criminal Appeal, Bathurst CJ, Payne JA, Bell P, Ward CJ in Eq and Bellew J, 21 December 2021.) [LTN 8, 14/1/22]
[Tax Month – January 2022 – Previous 2021] 14.1.22
HEADNOTE
[This headnote is not to be read as part of the judgment]
On 6 October 2017 the respondent, John Alan Kinghorn, was charged with three offences, two of which were that, contrary to s 135.1(7) of the Criminal Code (Cth), he dishonestly represented to a public official that he did not control Kalomo Corporation Ltd and Kalomo Pacific Leasing Ltd (collectively called Kalomo). The indictment relating to the third charge was later discontinued.
Some twelve years prior to the laying of the charges, the respondent was examined by counsel engaged by the Australian Taxation Office (ATO), pursuant to what was then s 264 of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936). Particulars of the charges against the respondent include that he made false representations during the s 264 examination about his involvement with Kalomo. The Crown proposes to tender portions of the transcript of the s 264 examination at the trial, solely for the purpose of proving that the representations were in fact made.
Prior to the laying of charges, the transcript of the s 264 examination and related material was disclosed to the Australian Federal Police (AFP) and the Commonwealth Director of Public Prosecutions (CDPP) on a number of different occasions. A critical issue in the proceedings was whether the ATO was empowered to make those disclosures. With some adjudication by the primary judge, the parties formulated three separate questions aimed at addressing that issue. Although the respondent reserved his right to later challenge the lawfulness of the s 264 examination, the questions proceeded on the basis that the s 264 examination was lawfully conducted. The questions and her Honour’s answers were as follows:
“The Leach question
Question: Does the law as applied in R v Leach [2019] 1 Qd R 459, concerning the accusatorial principle, the companion rule and the application of those principles to answers compelled under taxation legislation, have the effect that investigative authorities and prosecuting authorities should not have disseminated and/or should not have had access to and/or should not have used the content of the accused’s compulsory examination under s 264 of the Income Tax Assessment Act 1936 (Cth), where the prosecution of the accused for offences contrary to s 135.1(7) of the Commonwealth Criminal Code may possibly occur or will occur and where the offences allegedly involve a course of conduct that included false or misleading statements made during the s 264 examination?
Answer: The answer to each part of the question is yes.
The evidence questions
Question: In respect of use by the prosecutor, is the content of the s 264 examination admissible in the trial of the accused?
Answer: No.
Question: If so, what are the limits on its use?
Answer: This question does not arise, having regard to the previous answer.”
The Crown appealed against the primary judge’s answers to the separate questions. The Crown’s position was that the accusatorial principle and companion rule have no application pre-charge, but even if they did, the disclosures were authorised by statute. The respondent’s argument had two strands. The first was that the principle of legality required the generally expressed statutory provisions to be interpreted in such a way that the pre-charge dissemination of material to investigating or prosecuting authorities would be unlawful at the time of the dissemination. The second strand (the crystallisation argument) accepted that pre-charge dissemination was lawful but said that no use could be made of the material once charges were laid.
When the appeal was initially called on for hearing, there was a dispute between the parties about the concessions made in the Court below in relation to R v Leach [2019] 1 Qd R 459 (Leach). Senior counsel for the respondent sought an adjournment and then argued that if the legislation pursuant to which the transcripts were supplied to the CDPP and the AFP authorised the disclosure and the use to which the transcript was put, the legislation to that extent was constitutionally invalid. The raising of that issue necessitated the giving of notice of the constitutional issue to the various Attorneys General for the Commonwealth, the States and Territories pursuant to the Judiciary Act 1903 (Cth). The Attorneys General for the Commonwealth and New South Wales intervened in the appeal in support of the Crown.
Held (Bathurst CJ and Payne JA, Bell P, Ward CJ in Eq and Bellew J agreeing), allowing the appeal and substituting the answers to the separate questions:
As to the application and abrogation of the accusatorial principle and companion rule and as to whether Leach should be followed:
1. Section 135.1(7) would not be sufficient to abrogate the accusatorial principle and the companion rule to the extent those principles were relevant to the power to disseminate compulsorily acquired material. The more relevant question was whether the exceptions to the secrecy provisions in the ITAA 1936 and the Taxation Administration Act 1953 (Cth) (TAA) permitted such disclosure at least prior to charge: [68] (Bathurst CJ and Payne JA); [152] (Bell P); [153] (Ward CJ in Eq); [154] (Bellew J).
2. The decision in Leach is inconsistent with Yates v R (1991) 102 ALR 673 at 677-678, Director of Public Prosecutions (Cth) v Kinghorn; Kinghorn v Director of Public Prosecutions (Cth) (2020) 102 NSWLR 72; [2020] NSWCCA 48 at [98] and the decisions of the Western Australian Court of Appeal in A v Maughan (2016) 50 WAR 263;[2016] WASCA 128 and Zanon v Western Australia (2016) 50 WAR 1; [2016] WASCA 91. Where there are differing decisions on the issue by various intermediate appellate courts, the Court is not constrained by the principles laid down in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 and Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485; [1993] HCA 15 to follow Leach unless convinced it is plainly wrong: [113] (Bathurst CJ and Payne JA); [152] (Bell P); [153] (Ward CJ in Eq); [154] (Bellew J).
3. Section 3G, s 355-70 and s 355-175 of Sch 1 to the TAA compel a different answer to that reached by Sofronoff P in Leach at [37]-[38]. Assuming the examination is for a proper purpose and the dissemination is permitted by statute, his Honour’s conclusion at [102] that it cannot matter whether an accused’s assistance is demanded by the prosecution after charges have been laid, or whether it becomes available fortuitously because an accused had earlier been compelled to give incriminating answers for some other purpose, is inconsistent with R v Independent Broad-based Anti-corruption Commissioner (2016) 256 CLR 459; [2016] HCA 8: [119]-[121], [130]-[131] (Bathurst CJ and Payne JA); [152] (Bell P); [153] (Ward CJ in Eq); [154] (Bellew J).
R v Leach [2019] 1 Qd R 459, not followed.
R v Independent Broad-based Anti-corruption Commissioner (2016) 256 CLR 459; [2016] HCA 8, followed.
4. The companion rule has no application prior to charges being laid: [123]-[124] (Bathurst CJ and Payne JA); [152] (Bell P); [153] (Ward CJ in Eq); [154] (Bellew J).
R v Independent Broad-based Anti-corruption Commissioner (2016) 256 CLR 459; [2016] HCA 8 at [48]– [51], applied.
Strickland (a pseudonym) v Commonwealth Director of Public Prosecutions (2018) 266 CLR 325; [2018] HCA 53, distinguished.
5. Neither the accusatorial principle nor the companion rule operated to limit the power of disclosure conferred by s 3G or ss 355-70 and 355-175 of Sch 1 to the TAA. Even if the accusatorial principle and the companion rule had any application pre-charge, ss 3G, 355-50 and 355-175 exhibited a necessary intention to permit disclosure and use of compulsorily acquired material notwithstanding those principles. The legislature has power to abrogate those common law principles: [137]-[138] (Bathurst CJ and Payne JA); [152] (Bell P); [153] (Ward CJ in Eq); [154] (Bellew J).
X7 v Australian Crime Commission (2013) 248 CLR 92; [2013] HCA 29 at [86]– [94], [124]-[125], [160]; Lee v New South Wales Crime Commission (2013) 251 CLR 196; [2013] HCA 39 at [3], [29]-[30], [126], [176], [313]-[314]; Do Young Lee v The Queen (2014) 253 CLR 455; [2014] HCA 20 at [31], [46], applied.
As to the crystallisation argument:
6. There is nothing in the legislation which suggests that there is a legislative constraint on the use to be made of a lawful disclosure post-charge. If the crystallisation argument were correct, the purpose of the statutory information-gathering powers would be undermined. The argument is inconsistent with the established role of coercive powers in facilitating investigations of criminal charges to protect the revenue: [140]-[143] (Bathurst CJ and Payne JA); [152] (Bell P); [153] (Ward CJ in Eq); [154] (Bellew J).
Taxation Administration Act 1953 (Cth) s 3G(5), s 355-70 Sch 1, considered.
Melbourne Steamship Co Ltd v Moorehead (1912) 15 CLR 333; [1912] HCA 69; Huddart Parker & Co Pty Ltd v Moorehead (1908) 8 CLR 330; [1909] HCA 36, Caltex at [325], applied.
Yates v R (1991) 102 ALR 673 at 677-6789, referred to.
7. The crystallisation argument is inconsistent with persuasive intermediate appellate authority: [144]-[145] (Bathurst CJ and Payne JA); [152] (Bell P); [153] (Ward CJ in Eq); [154] (Bellew J).
Zanon v Western Australia [2016] WASCA 91; (2016) 50 WAR 1 at [44]; R v Independent Broad-based Anti-corruption Commissioner (2016) 256 CLR 459; [2016] HCA 8 at [76]– [77], considered.
As to the constitutional argument:
8. On the assumption that the accusatorial principle and the companion rule were engaged, neither was constitutionally entrenched so as to invalidate any legislative provision said to be in breach of either the principle or the rule: [146] (Bathurst CJ and Payne JA); [152] (Bell P); [153] (Ward CJ in Eq); [154] (Bellew J).
X7 v Australian Crime Commission (2013) 248 CLR 92; [2013] HCA 29 at [123]– [125]; Lee v New South Wales Crime Commission (2013) 251 CLR 196; [2013] HCA 39 at [3], [126], [313]; Do Young Lee v The Queen (2014) 253 CLR 455; [2014] HCA 20 at [32], [51]; R v Independent Broad-based Anti-corruption Commissioner (2016) 256 CLR 459; [2016] HCA 8 at [28], [48]; Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2015) 256 CLR 375; [2015] HCA 21 at [36]; Commonwealth v Helicopter Resources Pty Ltd [2020] HCA 16; (2020) 94 ALJR 466 at[22], applied.
9. Acceptance of the proposition that fair trial values are constitutionally entrenched, as necessary features of the exercise of judicial power under Ch III and of a fair trial under s 80 of the Constitution, would erect a constitutional rule in an area that has been accepted as appropriate for legislative judgment. It would be quite inappropriate for an intermediate Court of Appeal to hold that these principles are constitutionally entrenched: [148] (Bathurst CJ and Payne JA); [152] (Bell P); [153] (Ward CJ in Eq); [154] (Bellew J).
Hammond v The Commonwealth (1982) 152 CLR 188; [1982] HCA 42; Sorby v The Commonwealth (1983) 152 CLR 281; [1983] HCA 10, considered.
10. Section 80 of the Constitution does not invalidate the impugned provisions. The function of the jury as the tribunal of fact, and the structural role of s 80 in mandating trial by jury, are unaffected by any of the impugned provisions: [149] (Bathurst CJ and Payne JA); [152] (Bell P); [153] (Ward CJ in Eq); [154] (Bellew J).
As to the appropriate answers to the separate questions:
11. The answers to the separate questions should be as follows:
The Leach question
Question: Does the law as applied in R v Leach [2019] 1 Qd R 459, concerning the accusatorial principle, the companion rule and the application of those principles to answers compelled under taxation legislation, have the effect that investigative authorities and prosecuting authorities should not have disseminated and/or should not have had access to and/or should not have used the content of the accused’s compulsory examination under s 264 of the Income Tax Assessment Act 1936 (Cth), where the prosecution of the accused for offences contrary to s 135.1(7) of the Commonwealth Criminal Code may possibly occur or will occur and where the offences allegedly involve a course of conduct that included false or misleading statements made during the s 264 examination?
Answer: The accusatorial principle, the companion rule and the application of those principles to answers compelled under taxation legislation, do not have the effect that investigative authorities and prosecuting authorities should not have disseminated and/or should not have had access to and/or should not have used the content of the accused’s compulsory examination under s 264 of the Income Tax Assessment Act 1936 (Cth), where the prosecution of the accused for offences contrary to s 135.1(7) of the Commonwealth Criminal Code may possibly occur or will occur and where the offences allegedly involve a course of conduct that included false or misleading statements made during the s 264 examination.
The evidence questions
Question: In respect of use by the prosecutor, is the content of the s 264 examination admissible in the trial of the accused?
Answer: Yes.
Question: If so, what are the limits on its use?
Answer: To prove the fact that the representations particularised as made during the examination pursuant to s 264 of the Income Tax Assessment Act 1936 (Cth) were made by the accused (and the terms of those representations).
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