uv CATCHWORDS POLICE - (1) search warrants - solicitors' office - claim of legal professional privilege - client company dissolved - claim by persons interested in company failed. (2) search warrants - solicitors' office - claim of legal professional privilege - fraud alleged - sales tax scheme - whether prima facie case of fraud essential - test of waiver of privilege. SALES TAX - alleged avoidance scheme - defective execution of scheme - whether case of fraud shown. BILLS OF SALE - purported charge of chattel - charges having no interest in chattel - void. Sales Tax Assessment Act (No. 3) 1930 Richard Edward Baker & Ors. v. Clyde Evans & Ors. Qld G136 of 1986 PINCUS J. BRISBANE 26 MAY 1987 ol IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) GENERAL DIVISION JUDGE MAKING ORDER: DATE BETWEEN: AND: OF ORDER: WHERE MADE: RICHARD EDWARD BAKER PETER ANTHONY HUGHES KEVIN ALLAN MONTGOMERY QLD G136 of 1986 First Applicants JOHN COSTELLO KENNETH GORDON RONALD HOPKINS Second Applicants CLYDE EVANS First Respondent CHRISTOPHER ALEXANDER BUTTNER Second Respondent STANLEY THOMAS WOODS Third Respondent MINUTES OF ORDER PINCUS J. 26 MAY 1987 BRISBANE THE COURT ORDERS THAT: NOTE: The application be dismissed. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G136 of 1986 GENERAL DIVISION ) BETWEEN: RICHARD EDWARD BAKER PETER ANTHONY HUGHES KEVIN ALLAN MONTGOMERY First Applicants AND: JOHN COSTELLO KENNETH GORDON RONALD HOPKINS Second Applicants AND: CLYDE EVANS First Respondent AND: CHRISTOPHER ALEXANDER BUTTNER Second Respondent AND: STANLEY THOMAS WOODS Third Respondent PINCUS J. 26 MAY 1987 REASONS FOR JUDGMENT This is an application for orders of review under the Administrative Decisions (Judicial Review) Act 1977 and also for relief under s.39B of the Judiciary Act 1904. There are two sets of applicants, whose cases will be considered separately. The application concerns police searches of a lawyers' office, a Bt procedure which was once unheard of but now appears not to be uncommon. 1. First Applicants The first applicants seek relief in respect of the issue and execution of a search warrant, in circumstances more particularly set out below. The ground on which the applicants based their case is that of legal professional privilege. On 22 September 1986 the first respondent issued to the second respondent a search warrant which authorised the second respondent to enter the offices of a firm of Brisbane solicitors and seize certain documents described in the warrant. It is unnecessary to set out the description in full and enough to say that the documents to be seized were an opinion or advice said to have been provided by one counsel, together with instructions relating to that advice and also instructions relating to advices of another counsel. The warrant was executed and, in consequence of certain arrangements set out in it, the documents are presently held in the Court registry, not having been inspected by the _ second respondent. The first applicants, through their counsel, informed me that they did not desire to pursue their application with respect to all the documents seized under the warrant, but desired to do so only as to instructions and the like connected with two advices of counsel dated 24 July 1978 and 31 July 1978, which advices were annexed to the written information on which the warrant was obtained; that is, the first applicants have otherwise abandoned their claim to relief. Counsel for the second and third respondents, whom I shall call simply "the respondents", raised what might be described as a preliminary objection, namely that the two advices dated 24 July 1978 and 31 July 1978 were neither sought by nor rendered to any of the first applicants. Therefore, counsel argued, the instructions and other documents accumulated by the solicitors for the purpose of those advices could not be the subject of a claim of privilege by any of the first applicants, nor could the first applicants have any standing to challenge their seizure. I did not understand counsel for the first applicants to contest the factual proposition that the relevant advices were not rendered to the first applicant, but it 1s desirable to set out the material relating to the point. The advices of counsel in question are headed "Municipal & General Securities Corporation Pty. Limited". A company called "Municipal and General Securities Corporation Pty. Ltd." is described in the information as being "under the sole control of the promoters", they being the first applicants. The information says that a memorandum of fees and disbursements from the solicitors confirming counsel's advices was "rendered originally to the promoters" but that the memorandum was paid by a cheque drawn on "Municipal and General Securities Corporation Pty. Ltd.". One of the first applicants has made an affidavit referring to the opinions in question as having been "retained exclusively by each of us the First Applicants as officers of the Company, Municipal and General Securities Corporation Pty. Limited on whose behalf the Opinion was obtained, and by our Solicitors ..." Thus, apart from the statement in the information as to rendering of the memorandum to the promoters in respect of the advices of counsel, the documents so far mentioned suggest that 1t was the company, not the promoters, which obtained the advices. Most importantly, there is the direct statement by one of the applicants that the advice was obtained on behalf of the company. The only other document relevant to the subject is the title of the solicitor's file, which, according to an annexure to the second respondent's affidavit, is "1982:78 Baker Hughes & Montgomery - Municipal General Securities". That 1s equivocal and could signify that the first applicants sought the advices as agents for the company or, I suppose, jointly with 1t. As I understood the argument of counsel for the applicant on the point, it was that the Court should not be concerned with the question of the precise identity of the solicitor's client. It appears from the evidence that there is a practical difficulty in having anyone claim privilege on behalf of the company. Exhibit 3, which was tendered without objection, shows that on 24 April 1985 a notice was sent to the company from the Corporate Affairs Office, Melbourne in pursuance of sub-s.459(1) of the Companies (Victoria) Code, informing its secretary that there was reasonable cause to believe that the company was not carrying on business or was not in operation and informing him that "unless an answer to this letter showing cause to the contrary is received within one month of the date hereof, a notice will be published in the Gazette with a view to cancelling the registration of the company". According to the same document, the company was dissolved on 17 September 1985. Counsel for the first applicants argued that the dissolution of the company did not put an end to the privilege. Accepting that, 1t is not established that by any means' the privilege was transmitted to the first applicants: cf. Minet v. Morgan £18731 L.R. 8 Ch.App. 361. There, ina property dispute, correspondence between predecessors in title and his' solicitors was held privileged. Since, as I find, the now defunct company was the client, I can see no basis for upholding a claim of privilege, at the instance of persons who were once interested in the company. The privilege is that of the client. In Schneider v. Lee C1955] 2 Q.B. 195, a doctor gave a medical report to solicitors for the purposes of litigation. He was sued for defamation and the question arose whether he could claim legal professional privilege in respect of the report. Hodson L.J. said in effect at pp.202 and 203 that the "privilege is the privilege of the litigant" but "subject to the qualification that the privilege enures for the benefit of successors in title to the party to an action, at any rate, where ae the relevant interest subsists". Romer L.J. said at p.205 and 206 that "The protection of privilege in relation to discovery extends only to a litigant and his successors ..." These statements must be taken to refer only to instances in which the basis of the claim of privilege is that the document was prepared for the purposes of litigation. In R. v. Davies (1921) 21 S.R. (N.S.W.) 311, a witness was asked during cross-examination about a conversation between himself and his solicitor. The question was disallowed although the witness had not objected to giving evidence. It was held by Cullen C.J., Pring and Wade JJ. concurring, that the evidence should have been admitted, quoting Grove J. in Req v. Cox and Railton (1884) 14 Q.B.D. 153 at p.159: "The privilege is the client's, as has often been said, not the solicitor's, so it would seem reasonable to say the criminal motive or purpose in the client would destroy it." Davies' case was referred to with approval in Baker v. Campbell (1983) 153 C.L.R. 52 at p.85 in support of the view that legal professional privilege is the client's privilege. See also Attorney-General (N.T.) v. Kearney (1985) 158 C.L.R. 500 at pp.509, 510, 531, 532. It should be mentioned that counsel for the first applicants, although not objecting to evidence as to the present status of the company, appeared to suggest that that evidence took them rather by surprise. However, they asked for no adjournment and the respondents' point would be good whatever the present status of the company. Those who claim the privilege in respect ot of documents furnished to solicitors for the purpose of obtaining counsel's advice are not shown to have engaged the solicitors. It follows that the first applicants' claim must, insofar as not abandoned in the course of the hearing, fail and it will be dismissed. 2. Second Applicants The first respondent issued a search warrant, which 1s attacked by the second applicants, on 22 September 1986 and on 23 September the third respondent and others went to the office of solicitors in Brisbane to execute it. They obtained certain documents but ascertained that others were in storage at a suburban address, in the firm's archives. Accordingly, the third respondent obtained a further warrant from the first respondent authorising a search of those archives and obtained some other documents. The solicitors asserted a claim to legal professional privilege in respect of all the documents. In substance, the issues raised by the second applicants are all based upon legal professional privilege except one: 1t is said that two of the solicitors' files seized are not covered by the warrants. As to one of those, the dispute was resolved during the course of the hearing, and the relevant file was returned to the second applicants. I examined the other disputed file, by consent of the parties, but was unable to determine in that way whether it was within any of the descriptions of documents od mentioned in the warrants. Since the onus lies upon the applicants, and they have been unable to satisfy me that the relevant file (being that numbered 2 in annexure "F" to the third respondent's affidavit dated 9 February 1987) is outside the warrant, its fate also must depend on the privilege point. The first warrant attacked by the second applicants was obtained on the basis of a long and detailed information which is in evidence. The second such warrant was obtained on a supplementary information which incorporated the first and added nothing of present significance. It is therefore enough to consider the terms of the first information. In doing so, I have been much assisted by the provision, by the solicitors for the applicants, of a bound copy in which each annexure is conveniently tabbed. Counsel for the respondents argued three specific points: they said that the material seized was not privileged because it came into existence, at best for the applicants, only partly for a privileged purpose; secondly, they argued that the material came into existence in the course of devising and implementing a fraudulent scheme to evade sales tax; thirdly, they argued that if the privilege ever existed it had been waived. More generally, counsel for the respondents argued that the applicants cannot succeed in their application to review the issue of the warrants by the first respondent simply by demonstrating that the first respondent's factual conclusion was incorrect, that the applicants are confined to the materials placed before the first respondent by the third respondent to obtain the warrants and that this Court has no jurisdiction to conduct a full hearing de novo by way of reviewing the issue of the warrants. The principal information begins with a statement that there are reasonable grounds for suspecting that in the solicitor's premises are things as to which there are reasonable grounds for believing that they will afford evidence as to the commission of an offence; that wording is based upon s.10(b) of the Crimes Act 1914. The offence specified is as follows: "An offence against Section 86(1)(e) of the Crimes Act 1914, being the offence of conspiring with another person to defraud the Commonwealth in that the persons referred to in Section 'C' of this information entered into an unlawful agreement whereby the value of certain goods was fraudulently stated to be less than the true value for imposition of Sales Tax and whereby less than the properly assessable amount of Sales Tax was paid to the Commonwealth." Counsel for the applicants argued that the first respondent could not have been satisfied that there was any evidence of dishonesty, but his principal contention was not that the matter fell outside s.10(b) of the Crimes Act, but (as mentioned above) that the documents in question are privileged. The information goes on to identify persons said to be suspected of having committed the alleged offence; they include the second applicants. It then sets out the things sought to seized, the description of which, in summary, is as _ follows: documents relating to the affairs of the suspected persons, and certain companies said to be connected with them, relating to a scheme to minimise sales tax liability by the creation of a charge wea! Ae 10. over goods, conducted between 1 July 1978 and 30 October 1982; opinions and advices provided by certain named counsel relating to the scheme; instructions and the like in connection with such counsel's advices; other opinions in relation to the scheme. The information says that from August 1978, the second applicants and other persons (described as "the promoters") were involved in the scheme mentioned, costing the Commissioner of Taxation about §25 million. It alleges that the solicitors in relation to whose premises the warrant was sought obtained legal opinions about the scheme and that is not disputed. The information also says that the scheme was marketed by the promoters on the basis that the participants would pay a fee of 25% of the sales tax. The information describes the scheme as a "collapsible loan scheme based on a concept that goods sold subject to a charge are reduced in value (for tax purposes) to the extent of the charge, notwithstanding that the loan is _ collapsible". The result of application of the scheme, according to the information, was that sales tax was paid on 0.4% of the wholesale value of the goods only, instead of being paid on 100% of that value. It is important to note that the indication of fraud relied on in the information and by counsel for the respondents before me was that the scheme, which is described below, was not really carried out, although documents were executed purporting to show that it was; backdating is alleged. The case is not one in which the scheme is said to have been fraudulent in that (for ll. example) its promoters knew that even if it were put into effect, it could not achieve the desired end of legally escaping the impact of the sales tax sought to be avoided. That makes it unnecessary to consider whether, if implemented, the scheme would have had the desired tax-saving effect or could possibly have been thought by the promoters to do so. I was told by counsel for the applicants that the scheme was the one considered by the Full High Court in Brayson Motors Pty. Ltd. v. Federal Commissioner of Taxation (1985) 156 C.L.R. 651 and it was suggested that the Court's reasons may contain something helpful to the applicants; that does not appear to be so. The mode of operation of the scheme was illustrated, in the information placed before the first respondent, by analysing documents relating to the sales of two motor vehicles. One of those was a Mazda 626 which, had there been no scheme, would have been sold (a) by the distributor to a finance company, (b) by that company to the "participant retailer" and (c) then to a member of the public. The purpose of the scheme was to reduce the price at which the retailer bought the vehicle, by interposition of other transactions between the finance company's sale (a) and the retailer's purchase (b). The idea was that the vehicle would he sold by the finance company to a company which I will simply call X. Then X would take a loan from the retailer for 99% of the wholesale price of the vehicle, giving an equitable charge over the vehicle, the theory being that X would then have only a 1% interest in the vehicle. 12. Having reduced the value of its interest in the vehicle, X would then sell it, subject to the charge, to a company I shall call Y, which would sell it to the retailer (still subject to the charge) at a very small price. The loan would be brought to an end ("collapsed") by a provision in the loan agreement extinguishing the charge in the event that the retailer should acquire ownership of the goods, which under the scheme 1t would routinely do. It appeared that the second applicants' answer, made in the course of argument, to the assertion of fraud was that any wrongly dated documents merely recorded and did not effect transactions which had occurred earlier. It is necessary to set out the facts relating to the Mazda 626 vehicle, which are put forward as being typical. The distributor sold that vehicle to the finance company on 7 December 1981, and 1t was delivered to the retailer on 11 December 1981. On 6 January 1982 it was registered in the name of the end purchaser, being invoiced to the end purchaser on the same day. The respondents point, however, to a number of documents executed nine days after registration in the name of the end purchaser, purporting to evidence transactions which "should have" taken place before the end purchaser got title. Those documents include: 1. A cheque dated 15 January 1982 drawn on the account of X and payable to the finance company; the date of that does mot appear to assist the respondents' case, as I am not 13. prepared to assume that in the ordinary course of business the finance company would not be paid at that time. 2. A cheque dated 14 January 1982 for 99% of the wholesale price of the Mazda and two other vehicles drawn on the retailer's account, payable to X. Such a payment was supposed to have been made by way of loan, to achieve the result that there was a charge on the vehicle, reducing the value of the interest X had in the vehicle. However, if the loan was made at a time when X had no interest in the vehicle, a purported grant of security over it would be meaningless. That would be so even if the documents relating to the scheme were so drawn as to create a charge without execution of any further document, immediately on the making of the loan. 3. An order form from Y to X for the Mazda, dated 15 January 1982; there could be no point in ordering from the wholesaler a vehicle which had already been sold to the public. 4. An invoice from X to Y for the Mazda dated 15 January 1982. 5. An invoice from Y to the retailer for the Mazda showing a cost of $25.89 (the "scheme" cost) dated 15 January 1982. It is a reasonable inference from this material that the documents necessary to evidence the role of X and Y in the chain of title did not come into existence until nine days after the vehicle had gone out to the end purchaser. Let it be assumed in favour of the applicants that the Mazda vehicle was dealt with 14. under documents so drawn as to have an "automatic" operation, triggered by sale of the vehicle to the finance company (which was not a party to the scheme); it was legally impossible to reduce the sale value of the property, for the purposes of its sale by X to Y¥, by means of execution of the charge, unless a loan had actually been made. Assuming in favour of the applicants that at the time when the vehicle came into the retailer's stock, it should be taken, by reason of the agreements executed, to have been sold from X to Y to the retailer, still there is no possibility of treating the sale by X to ¥Y and that from Y to the retailer as having been made at atime when the vehicle was encumbered to the extent of 99% of its wholesale value. At that time there was, at best for the applicants, a potential charge. When the loan was made, it could not achieve the result of encumbering the goods for two reasons: firstly, the borrower then had no interest in the goods, and secondly, the event stipulated as "collapsing" the loan - making it not repayable - had already occurred. Although the Mazda transaction just dealt with is said in the information to have been a typical transaction, it is desirable to mention the effect of the documents relating to a Volvo 245 GL station wagon, copies of which are also in the information. The history of the Volvo begins with an order by the end purchaser dated 22 July 1982; the end purchaser got the vehicle on 4 August 1982 and paid for it on the same day. Three interposed 15. entities were used rather than the two (called X and Y) used in dealing with the Mazda, but again the loan was made after the vehicle had gone. The retailer paid the amount of the loan on 11 August 1982, and it was deposited in the recipient's account on the same day. Although the transaction was more complicated, it had the same deficiency as that with respect to the Mazda: the loan having been made at a time when none of the participants in the scheme had any interest in the vehicle, its making could not reduce the value of the vehicle by the desired or, indeed, any sum. The information would in my view have justified the first respondent in treating the third respondent as having solid evidence that, in its implementation, the scheme failed because the transactions on the basis of which sales tax was paid did not occur, At the time they were, as 1t was put, "documented" - 1.e. carried out - the vehicles a security interest in which was intended to be created were ordinarily neither in the possession nor in the ownership of any participant in the scheme. Nevertheless, sales tax was paid on the basis that such interests had been created. That there may have been some apprehension about the proper execution of the scheme appears from a letter dated 2 November 1981 written by the solicitors to one of the second applicants. It refers to the "Bailment Plan documentation" and the possibility that such documentation had "in effect" been treated as a "dead letter" by the parties, at least from the point at which a retail sale was imminent. The letter went on: 16. "That is, to analyse the matter further one must examine what is happening invoice wise and cash flow wise as a matter of practice. This should he ascertained as a matter of some urgency." Documents such as that letter might turn out to be of some help in reaching a conclusion whether, as the information suggests may be the case, the second applicants were aware that what was being done doing had no possibility of reducing sales tax liability. The case suggested by the information is that the purported execution of the scheme was a mere pretence, at least in large part, and that the second applicants could not in truth have had an "understanding that the arrangements were both lawful and effective" - as alleged in paragraph 15 of a letter from the solicitors to the Australian Federal Police dated 1 March 1985. That letter contains a concession that "Broadly speaking the key element in the arrangements 1s the creation of a charge over the relevant goods which 1s effective to reduce the selling price of the goods when the relevant taxable transaction occurs". I did not understand that proposition to have been disputed by counsel for the second applicants and one might, without further analysis, deduce that, absent that key element, the scheme could not work or be thought to work. But it 1s desirable to set out, at least in outline, the legal effect of failure of that element. Until 20 September 1978, when there came into effect s.4(4) of the Sales Tax Assessment Act (No. 3), inserted by Act No. 199 of 1978, the primary question to be answered in determining the amount on which sales tax should be exacted in the relevant circumstances was the amount for which the goods were in 17. fact sold: s.4(1). But, by virtue of the amendment I have mentioned, from 20 September 1978 the "sale value" of goods of the kind here in question could be a sum other than that for which they were sold. In summary, the effect of s.4(4) of the Sales Tax Assessment (No. 3) Act 1930, so far as relevant, is that if the Commissioner of Taxation is satisfied that the vendor to a retailer was not dealing with the purchaser at arm's length and that the goods were sold for less than an arm's length price, the Commissioner may treat the latter price as the sale value. Sales tax would then be payable on the latter price. The security discussed above could provide a means of escape from this provision, because even i1f the Commissioner were empowered to treat the arm's length prices as the sale value, that might not assist him, if the goods were encumbered with a security 1n an amount almost equal to their value; but, absent the security, the Commissioner could have no difficulty in concluding that the sale at a tiny fraction of true value is not at arm's length or in concluding that the arm's length price was the full value of the goods. Section 4(4) of the Sales Tax Assessment Act (No. 3) 1930 may be found in the 1978 volume of the Acts of Parliament at pp.1771 and 1772. It does not appear that the first respondent would have been entitled to deal with the matter on the basis that documents were backdated. The specific examples placed before him should, rather, have led him towards the prima facie conclusion that it was perhaps thought to be impractical to carry out the scheme transactions at the same time as the transactions which would have occurred had there been no scheme, and for that reason documents 18. were ordinarily drawn up purporting to record the carrying out of the scheme transactions about the time the finance company (not a participant in the scheme) was paid out, presumably once a month. One can see possible answers to the allegation of fraud based upon such facts. For example, it might appear that the promoters thought that execution of the documents purporting to bring about the creation of security interests in goods was effective to do so, although they had by that time been sold to the public and no one connected with the scheme then had any property interest in them. But it appears undesirable to speculate too far with respect to matters of that sort, in view of the nature of these proceedings, which are not a trial, or even a committal or a review of a committal. In this sort of case, the issue is whether there is "something to give colour to" the charge of fraud. In Attorney-General (N.T.) v. Kearney (1985) 158 C.L.R. 500, a claim of legal professional privilege in respect of certain documents was successfully resisted on the ground that a case had been raised that they came into existence as part of a scheme to abuse a statutory power; the litigation concerned aboriginal land claims. An important issue in the case was whether proof of such a purpose is. sufficient to defeat legal professional privilege; that problem does not arise here, but the case is important as containing guidance as to the extent to which the party challenging privilege must go in showing illegality. 19. Gibbs C.J. at p.509 said that it had been held by Kearney J., the judge who heard the matter at first instance, that there was a "prima facie case that the communications came into being as part of a scheme to defeat the land claims". At p.515 his Honour said: "It would shake public confidence in the law if there was reasonable ground for believing that a regulation had been enacted for an unauthorised Purpose and with the intent of frustrating legitimate claims, and yet the law protected from disclosure the communications made to seek and give advice in carrying out that purpose." At p.516 1t was pointed out in the same judgment that a "mere charge of crime or fraud" is not enough and that "there must be something to give colour to the charge". Gibbs C.J. quoted with approval the following statement from O'Rourke v. Derbyshire C1920] A.C. 581 at p.604: "The statement must be made in clear and definite terms, and there must further be some prima facie evidence that it has some foundation in fact .. The Court will exercise its discretion, not merely as to the terms on which the allegation 1s made, but also as to the surrounding circumstances, for the purpose of seeing whether the charge 1s made honestly and with sufficient probability of its truth to make it right to disallow the privilege of professional communications." Mason and Brennan J.J. agreed with the reasons of Gibbs C.J., subject to certain observations which do not appear to detract from his Honour's views on the point presently under discussion; nor is there anything to be found inthe separate judgments of Wilson J. and of Dawson J. which is inconsistent with those views. 20. In some cases the difference between the finding made by Kearney J. - a prima facie finding of illegality - and that suggested in O'Rourke v. Derbyshire to be enough - "some prima facie evidence that it has some foundation in fact" - may be critical. Here there is, on either test, enough to displace the privilege, although I would have more doubt about the matter were it necessary to find a prima facie case. The sworn information would have conveyed to the first respondent that a scheme had been operated which purported to reduce the value of the property sold at the critical point in the chain of transactions, but which did not in truth reduce it. The failure to achieve a reduction was not a consequence of any esoteric points of property law, but simply of the fact that the transactions which might otherwise have created a security interest were effected when those who Participated in them had ceased to have any interest in the goods. Further, as counsel for the respondents pointed out, the applicants chose to place before the Court some evidence with respect to some of the issues and were not content entirely to rest on the adequacy of the information on which the warrants were issued, but they did not make any evidentiary challenge to the statements in the information leading towards an inference of fraud. It is, on the other hand, important to note that' the Court is not here concerned with the ultimate question of guilt or innocence of the charge mentioned in the information. There may be perfectly good and simple answers to it. It has to be said, however, that none was suggested during argument, and counsel for the second applicants' principal point on this aspect appeared to te 21. be that, if there was evidence of fraud, there was nothing to show that the documents seized would advance the case against them. It is true that there is no evidence that any of the legal advices received by the second applicants contemplated the use of the defective procedure which is outlined above. However, the making of a case of fraud in the scheme is destructive of the privilege and cannot be nullified by guesswork or speculation as to the precise content of the documents seized. The foundation of the respondents' right having been made out, 1t appears to me that the court should be slow to hold, on the ground they will not necessarily assist in further investigation, that documents connected with the alleged fraud cannot be examined. Further, there is force in the argument of counsel for the respondents that the case is one of a sort in which any charge of fraud brought may well be resisted, wholly or in part, by the suggestion that the promoters acted on legal advice. That has already been put forward, in the letter from the solicitors to the Australian Federal Police dated 21 March 1985 mentioned above. The investigators should be allowed to see the documents relating to the scheme which came into possession of the solicitors for whom the opinions were obtained, during the period in which the scheme operated, as these may throw light on the states of mind of the promoters. It should be added that the documents seizure of which was authorised by the warrant included some documents connected directly with the scheme itself, as well as those relating to the 22. obtaining of counsel's advice; my conclusions apply to the former category as well as to the latter. There is a suggestion in the material that the solicitors' office was used as a repository of scheme documents, but it is unnecessary to consider how far that assists the respondents. The solicitors concerned are not' those presently on the record. It follows that no error has been demonstrated in the issue of the warrant and the second applicants' claim must also fail. The case is one in which it is unnecessary to consider the suggestion that, whether or not the first respondent erred on the material before him, an injunction may be granted under s.39B of the Judiciary Act 1904. Not only am I of the view that no legal error is shown on the part of the first respondent; 1n my opinion the first respondent's view as to privilege was, on the material now available, correct. Waiver It seems appropriate, since the point 1s of some difficulty, to deal also with the argument with respect to waiver. Counsel for the respondents contended that it would be unfair to deprive the investigators of the documents on which counsel's opinions were obtained, since the opinions themselves have been disclosed. It is true that some of the opinions have been disclosed in such a way as clearly to amount to a waiver of legal professional privilege with respect to then. We 23. The principal authority upon which counsel's argument was founded was the decision of the High Court in Attorney-General for the Northern Territory v. Maurice (1986) 61 A.L.J.R. 92. That concerned an application on behalf of aboriginals claiming to be the traditional owners of certain land, who had lodged a "claim book" in support of their case. The question was whether certain documents used in compiling the claim book were the subject of legal professional privilege; it was conceded that they were originally so subject, but the distribution of the claim book was alleged to have been a waiver of the privilege. Gibbs C.J. at p.94 referred to - ",.. the rule that in acase where there is no intentional waiver the question whether a waiver should be implied depends on whether 1t would be unfair or misleading to allow a party to refer to or use material and yet assert that that material, or material associated with 1t, is privileged from production." His Honour went on to hold that there may be waiver of material which is associated with documents which have never been adduced in evidence and said that: "... although the question whether the material that has been disclosed has been used in evidence is relevant, it is not decisive." (ibid.) It appears to me that Mason and Brennan JJ. in their joint judgment took the same view; at p.97 their Honours relied, as an important circumstance in favour of holding that there was no waiver, upon the fact that the claim book had never found its 24. way into evidence. Deane J. thought that the question depended upon fairness as did, with somewhat more doubt, Dawson J. The use of the criterion of fairness in determining questions of waiver is easily comprehensible where, for example, a party to litigation tenders part of a connected series of privileged documents and seeks to withhold the rest; the part produced may create a misleading impression. But it 1s not easy sensibly to apply that doctrine to disclosure by persons suspected of crime. There is, in general, no legal obligation on citizens suspected of crime to assist the police to assemble incriminating evidence. Here, there 1s no claim to privilege on the ground of self-incrimination, but the absence of such a claim does not create a positive obligation, on the part of those suspected, to provide any evidence against themselves. It was argued by counsel for the respondents that 1t would be unfair in an "abstract" sense (to use counsel's word) to withhold from the investigators the instructions upon which the opinions in question were obtained, those opinions having been disclosed to the investigators and others. I cannot see what is unfair about it; the police, having seen the opinions, are no worse off than if they had not' seen them. Until the decision in Baker v. Campbell (1983) 153 C.L.R. 52, it was not clear that legal professional privilege was a ground of resistance to search warrants andthe like; the contrary had been held in QO'Reilly v. The Commissioner of the or 25. State Bank of Victoria (1983) 153 C.L.R. 1. The consequences of the new view established in the Baker case have yet to be worked out. I donot regard the decision in Attorney-General for the Northern Territory v. Maurice (above) as necessarily providing guidance as to the test of waiver of privilege in respect of extra-curial documents, as opposed to cases in which privilege is claimed for documents discovered in the course of litigation. I would therefore have held against the respondents on the question of waiver, but since, as explained above, there appears to be a sufficient case of illegality to destroy the privilege, the second applicants' claim must also fail. The application, except as to the single file referred to above, has therefore failed. As that file has already been returned the convenient course is simply to dismiss the application. I shall hear counsel with respect to any consequential orders and costs. 1 certify that this and the 24 preceding Pages are a true copy of the reasons for judgment herein of His Honour Mr, Justice Pincus Associate Dated 26 Mos 197] Counsel for the Applicants: Mr. B.J. Boulton with Mr. T. Macklin Solicitors for the Applicants: Hempenstall O'Donoghue & Co. Counsel for the Respondents: Mr. L.F. Wyvill 9.C. with Mr. Hastings Solicitors for the Respondents: Director of Public Prosecutions Dates of Hearing: 18, 19 May 1987 IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G136 of 1986 GENERAL DIVISION ) BETWEEN: RICHARD EDWARD BAKER PETER ANTHONY HUGHES KEVIN MONTGOMERY First Applicants AND: JO OSTELLO KENNETH GORDON RONALD HOPKINS Second Applicants AND: CLYDE EVANS First Respondent AND: CHRISTOPHER ALEXANDER _B NER Second Respondent AND: STANLEY THOMAS WOODS Third Respondent CORRIGENDA Amendment to the Reasons for Judgment of Pincus J. delivered 26 May 1987: Page 19, para.3, line 4: "Derbyshire" should read "Darbishire". ot av ey an te : — Anna Booy Associate to Mr. Justice Pincus 26 May 1987