FEDERAL COURT OF AUSTRALIA Caratti v Commissioner of the Australian Federal Police (No 3) [2016] FCA 1407 File number: NSD 86 of 2015 Judge: WIGNEY J Date of judgment: 23 November 2016 Catchwords: CRIMINAL LAW – practice and procedure – search warrants – where Court has determined that unlawfully seized electronic devices should be returned but Commissioner should be allowed to determine whether data on devices falls within the scope of the search warrants – Crimes Act 1914 (Cth), ss 3ZQU and 3ZQX – whether the Commissioner should be required to return the data if it is no longer required for any prosecution, or whether he should be permitted to retain it for any of the purposes in s 3ZQU – whether s 3ZQU can apply to material unlawfully seized where the Court has exercised its discretion to allow the material to be retained PRACTICE AND PROCEDURE – pleading – whether it is appropriate to order that both the originating application be "otherwise dismissed" in circumstances where points of claim raised allegations not the subject of the originating application Legislation: Crimes Act 1914 (Cth), ss 3L(1)(A), 3ZQU, 3ZQX Cases cited: Caratti v Commissioner of the Australian Federal Police (No 2) [2016] FCA 1132 Puglisi v Australian Fisheries Management [1997] FCA 846 Date of hearing: Determined on the papers Date of last submissions: 27 October 2016 Registry: New South Wales Division: General Division National Practice Area: Administrative and Constitutional Law and Human Rights Category: Catchwords Number of paragraphs: 17 Counsel for the Applicant: Mr P K Bruckner with Mr W R Johnson Solicitor for the Applicant: Zafra Legal Counsel for the First and Third Respondents: Ms K Stern SC with Mr D Hume Solicitor for the First and Third Respondents: Australian Government Solicitor Counsel for the Second Respondent: The second respondent filed a submitting appearance, save as to costs. ORDERS NSD 86 of 2015 BETWEEN: ALLEN CARATTI Applicant AND: COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE First Respondent KEVIN TAVENER Second Respondent FEDERAL COMMISSIONER OF TAXATION Third Respondent JUDGE: WIGNEY J DATE OF ORDER: 23 NOVEMBER 2016 In these orders, "warrants" means the search warrants issued under section 3E of the Crimes Act 1914 (Cth) (on 27 January 2015, save where otherwise stated) in respect of the following premises. A 44-48 Wickham Street, East Perth, Western Australia 6004 being the registered business address of Gucce Holdings Pty Ltd; B 3/14-16 Irwin Street, Perth, Western Australia 6000, being the registered business address of Birman and Ride Pty Ltd; C 2 Duncraig Road, Applecross, Western Australia 6153; D 7 Cornish Turn, Baldivis, Western Australia 6171; E 5 Wright Road, Harrisdale, Western Australia 6112 (issued on 4 March 2015); F Unit 4B/176 Main Street, Osborne Park, Western Australia 6017 (issued on 28 January 2015), being the registered business address of Joseph Catenacci Pty Ltd; G Western Australian registered vehicle 1 BTB824, being a silver Mercedes convertible; and H Western Australian registered vehicle 1 BT J426, being a white Toyota Landcruiser utility. THE COURT DECLARES THAT: 1. The words which appear immediately after the third condition of the warrants which read "Together with any storage medium or storage device which contains any of the above things and any manual, instruction, password or other thing which is needed to gain access to or interpret or decode any of the above things" (the storage medium paragraph) are invalid. 2. The storage medium paragraph is severable from the balance of the warrants. 3. The electronic devices listed in Annexure A to these orders (the electronic devices) were not lawfully seized pursuant to either s 3F or s 3L of the Crimes Act 1914 (Cth) (the Act) on the execution of the warrants. THE COURT ORDERS THAT: 1. The first respondent (or an officer or officers authorised to do so on his behalf) may inspect the copies made, subsequent to the execution of the warrants, of the data contained on the respective electronic devices identified in paragraphs 1-4 of Annexure A to these orders and, if he or she suspects on reasonable grounds that any data within any of the respective copies satisfies the three conditions of the warrants, retain the copied data from the respective electronic device. 2. The further inspection of the data pursuant to order 1 above should (unless otherwise ordered) occur within 28 days of the date of these orders (unless another period is agreed between the parties) and in the presence of the applicant or his or her authorised representative (if the applicant so requests). For this purpose, the first respondent (or an officer authorised to do so on his behalf) shall liaise with the applicant to determine a mutually convenient time (or times) within the period of 28 days from the date of these orders. 3. Upon completion of the steps set out in orders 1 - 2 above: 3.1 the electronic devices referred to in paragraphs 1-3 of Annexure A be returned to the occupier of the premises from which the electronic devices were seized; and 3.2 unless the first respondent is entitled to retain the copied data as set out in order 1 above, the copied data shall be removed from any device in the control of the Australian Federal Police and destroyed as soon as practicable. 4. If the first respondent is satisfied that the data retained as provided in order 1 above is not required (or is no longer required) for a purpose mentioned in section 3ZQU of the Act or for other judicial or administrative review proceedings, the first respondent must arrange for: 4.1 the removal of the data from any device in the control of the Australian Federal Police; and 4.2 the destruction of any other reproduction of the data in the control of the Australian Federal Police. 5. Leave is granted to the parties to have the matter relisted on 24 hours' notice if any dispute arises in relation to the matters provided for in orders 1-4 above. 6. The applicant's Second Further Amended Originating Application and the claims in the Applicant's Further Amended Points of Claim are otherwise dismissed. 7. The applicant pay 75% of the first respondent's costs as agreed or assessed on an ordinary basis. 8. The applicant pay the third respondent's costs as agreed or assessed on an ordinary basis. THE COURT NOTES THAT: 1. With the agreement of the applicant, the data contained on the electronic devices identified in paragraphs 1-3 of Annexure A was copied by the first respondent (but not accessed or inspected) for the purposes of facilitating a review of this material by the applicant to finalise a claim for legal professional privilege. This review was postponed pending the outcome of this hearing. 2. With the agreement of the occupier of 7 Cornish Turn, Baldivis, Western Australia, the data contained on the electronic devices identified in paragraph 4 of Annexure A was copied by the first respondent (but not accessed or inspected) and the electronic devices have been returned to the occupier of the premises. 3. The first respondent undertakes to not inspect any of the materials seized during execution of the warrants or copied or imaged in accordance with these orders until 4:00pm on the second day following final determination of any appeal filed within 7 days after the making of these orders, on condition that the applicant prosecutes any such appeal with due expedition. If no such appeal is filed the first respondent is free to inspect the seized materials. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. ANNEXURE A 1. The My Passport external hard drive with serial number WXJ1 A9101270 seized at 44-48 Wickham Street, East Perth, Western Australia. 2. The Seagate FreeAgent GoFlex hard drive with serial number NA0CLB6V and the Imation 8GB USB storage device labelled "Starbrake Trust" seized at 44-48 Wickham Street, East Perth, Western Australia. 3. The Strontium and TDK USB storage devices seized at 2 Duncraig Road, Applecross, Western Australia. 4. The Compaq Presario Laptop Computer with serial number CND815OWPQ and the Toshiba Laptop Computer with serial number 4E012700Q seized at 7 Cornish Turn. Baldivis, Western Australia. REASONS FOR JUDGMENT WIGNEY J: 1 On 15 September 2016, the Court handed down a judgment which resolved a dispute between Mr Allen Caratti and the Commissioner of the Australian Federal Police concerning the issue and execution of various search warrants under the Crimes Act 1914 (Cth): see Caratti v Commissioner of the Australian Federal Police (No 2) [2016] FCA 1132. The parties were directed to prepare short minutes of order to give effect to the relevant findings and conclusions in the judgment. The parties were able to reach an agreement in respect of most of the orders, including an appropriate order concerning costs. Two relatively minor issues remain to be resolved. 2 The first issue concerns the terms upon which the Commissioner is able to retain and use copies of certain data that was stored on the electronic devices that were found to have been unlawfully seized. Mr Caratti had sought an order requiring the Commissioner to return the unlawfully seized devices. The Court found that the devices should be returned, but not before the Commissioner had an opportunity to interrogate the devices to ascertain whether any data on them satisfied the three conditions in the warrant. If data which satisfied the three conditions in the warrant was located on the devices, the Commissioner would be entitled to take an image or copy the data on the device in accordance with s 3L(1A) of the Crimes Act 1914 (Cth): see Judgment at [474] and [475]. 3 It would appear that after seizing the relevant devices the Commissioner made images or copies of all the data stored on them. When the proceedings were commenced, however, the Commissioner gave an undertaking not to inspect the copied data until the proceedings were resolved. Consistent with the Court's findings, the parties have agreed on orders which enable the inspection and, if appropriate, retention of the copied data. The issue between the parties concerns the purposes for which the retained items may be used and retained going forward. 4 The Commissioner contends that the copied data should be able to be retained and used for any of the purposes referred to in s 3ZQU of the Crimes Act. The Commissioner has proposed an order which provides that, if and when he is satisfied that the data is not required, or is no longer required, for any of the purposes mentioned in s 3ZQU, or for any other judicial or administrative review proceedings, he must destroy the data or any reproductions of it. 5 Section 3ZQU provides as follows: 3ZQU Purposes for which things and documents may be used and shared Use and sharing of thing or document by constable or Commonwealth officer (1) A constable or Commonwealth officer may use, or make available to another constable or Commonwealth officer to use, a thing seized under this Part, or the original or a copy of a document produced under Division 4B, for the purpose of any or all of the following if it is necessary to do so for that purpose: (a) preventing, investigating or prosecuting an offence; (b) proceedings under the Proceeds of Crime Act 1987 or the Proceeds of Crime Act 2002; (c) proceedings under a corresponding law (within the meaning of either of the Acts mentioned in paragraph (b)) that relate to a State offence that has a federal aspect; (d) proceedings for the forfeiture of the thing under a law of the Commonwealth; (e) the performance of a function or duty, or the exercise of a power, by a person, court or other body under, or in relation to a matter arising under, Division 104 or 105 of the Criminal Code; (f) investigating or resolving a complaint or an allegation of misconduct relating to an exercise of a power or the performance of a function or duty under this Part; (g) investigating or resolving an AFP conduct or practices issue (within the meaning of the Australian Federal Police Act 1979) under Part V of that Act; (h) investigating or resolving a complaint under the Ombudsman Act 1976 or the Privacy Act 1988; (i) investigating or inquiring into a corruption issue under the Law Enforcement Integrity Commissioner Act 2006; (j) proceedings in relation to a complaint, allegation or issue mentioned in paragraph (f), (g), (h) or (i); (k) deciding whether to institute proceedings, to make an application or request, or to take any other action, mentioned in any of the preceding paragraphs of this subsection; (l) the performance of the functions of the Australian Federal Police under section 8 of the Australian Federal Police Act 1979. (2) A constable or Commonwealth officer may use a thing seized under this Part, or the original or a copy of a document produced under Division 4B, for any other use that is required or authorised by or under a law of a State or a Territory. (3) A constable or Commonwealth officer may make available to another constable or Commonwealth officer to use a thing seized under this Part, or the original or a copy of a document produced under Division 4B, for any purpose for which the making available of the thing or document is required or authorised by a law of a State or Territory. (4) To avoid doubt, this section does not limit any other law of the Commonwealth that: (a) requires or authorises the use of a document or other thing; or (b) requires or authorises the making available (however described) of a document or other thing. Sharing thing or document for use by State, Territory or foreign agency (5) A constable or Commonwealth officer may make a thing seized under this Part, or the original or a copy of a document produced under Division 4B, available to: (a) a State or Territory law enforcement agency; or (b) an agency that has responsibility for: (i) law enforcement in a foreign country; or (ii) intelligence gathering for a foreign country; or (iii) the security of a foreign country; to be used by that agency for a purpose mentioned in subsection (1), (2) or (3) and the purpose of any or all of the following (but not for any other purpose): (c) preventing, investigating or prosecuting an offence against a law of a State or Territory; (d) proceedings under a corresponding law (within the meaning of the Proceeds of Crime Act 1987 or the Proceeds of Crime Act 2002); (e) proceedings for the forfeiture of the thing under a law of a State or Territory; (f) deciding whether to institute proceedings or to take any other action mentioned in any of paragraphs (1)(a) to (l) (inclusive), subsection (2) or (3) or paragraph (c), (d) or (e) of this subsection. Ministerial arrangements for sharing (6) This Division does not prevent the Minister from making an arrangement with a Minister of a State or Territory for: (a) the making available to a State or Territory law enforcement agency of that State or Territory, for purposes mentioned in subsections (1), (3) and (5), of things seized under this Part and originals and copies of documents produced under Division 4B; and (b) the disposal by the agency of such things, originals and copies when they are no longer of use to that agency for those purposes. Note: This subsection does not empower the Minister to make such an arrangement. Definition (7) In this section: State or Territory law enforcement agency means: (a) the police force or police service of a State or Territory; or (b) the New South Wales Crime Commission; or (c) the Independent Commission Against Corruption of New South Wales; or (d) the Police Integrity Commission of New South Wales; or (e) the Independent Broad‑based Anti‑corruption Commission of Victoria; or (f) the Crime and Corruption Commission of Queensland; or (g) the Corruption and Crime Commission of Western Australia; or (h) the Independent Commissioner Against Corruption of South Australia. 6 It is necessary to also have regard to ss 3ZQX(1) and (2) of the Crimes Act which provide as follows: 3ZQX When things seized or documents produced under Division 2, 4 or 4B must be returned When things seized under Division 2 or 4 must be returned (1) If the Commissioner is satisfied that a thing seized under Division 2 or 4 is not required (or is no longer required) for a purpose mentioned in section 3ZQU or for other judicial or administrative review proceedings, the Commissioner must take reasonable steps to return the thing to the person from whom it was seized or to the owner if that person is not entitled to possess it. (2) However, the Commissioner does not have to take those steps if: (aa) either: (i) the thing may be retained because of an order under subsection 3ZQZB(3), or any other order under that subsection has been made in relation to the thing; or (ii) the Commissioner has applied for such an order and the application has not been determined; or (a) the thing may otherwise be retained, destroyed or disposed of under a law, or an order of a court or tribunal, of the Commonwealth or of a State or a Territory; or (b) the thing is forfeited or forfeitable to the Commonwealth or is the subject of a dispute as to ownership. 7 Mr Caratti submits that the Commissioner should not be permitted to retain and use the copied data for purposes as broad as those specified in s 3ZQU. Mr Caratti contends that s 3ZQU only applies in respect of things lawfully seized under the Crimes Act and therefore does not apply to data copied pursuant to an order made by the Court. In Mr Caratti's submission, the Commissioner is only in possession of the copied data because the Court exercised its discretion to permit him to retain the copied data for the purposes of investigating or prosecuting the offences to which the warrants related. In those circumstances, Mr Caratti submits that s 3ZQU does not apply and the Commissioner should be ordered to destroy the copied data if and when it is no longer required for that specific purpose. The Commissioner should not be able to retain or use it for any other purpose. 8 There is some merit in Mr Caratti's submission. Section 3ZQU does not strictly apply to data copied from the unlawfully seized devices pursuant to the regime established by the Court's orders. It is also correct to say that the basis upon which the Commissioner was permitted to inspect and copy the data stored on the unlawfully seized devices was the exercise of the Court's discretion not to order the return of unlawfully seized items. 9 Nevertheless, the preferable course is to exercise the Court's discretion in such a way as to permit the Commissioner to retain and use the copied data in accordance with the statutory scheme in ss 3ZQU and 3ZQX of the Crimes Act. There is no reason in principle why the permitted use and retention of the copied data should be on different and narrower terms than that which the statutory regime envisages. It is true, as Mr Caratti submits, that the authorities concerning the exercise of the discretion (conveniently summarised in Puglisi v Australian Fisheries Management [1997] FCA 846; (1997) 148 ALR 393 at 404-405) generally speak in terms of permitting the police to retain illegally seized items for the purpose of obtaining advice in respect of, or use in prosecution proceedings relating to, the offences the subject of the search warrant or warrants in question. It is tolerably clear, however, that those cases were decided well before the insertion of ss 3ZQU and 3ZQX into the relevant statutory scheme for search warrants. Those provisions only came into effect on 20 February 2010. 10 It is also correct that the Court's reasons for permitting the Commissioner to interrogate the unlawfully seized devices and copy the data, before returning the devices to Mr Caratti, focused on the public interest in allowing the police to investigate and prosecute serious criminal offences, balanced against the private interest of a citizen not being unlawfully deprived of goods. It was not said, at least directly, that the police should be permitted to use the documents for any other purpose or purposes. That issue was not the subject of any argument at the trial. The Court's reasons make it abundantly clear, however, that the inspection of the devices and the copying of any data should be done in accordance with s 3L(1A) of the Crimes Act. It was said that the police should, in effect, now be permitted to do what they could have done during the execution of the warrants if they had properly turned their minds to the terms of s 3L(3)(a) (or s 3F(1)(d)) of the Crimes Act. It would, in those circumstances, be appropriate to treat the copied data in effect as if it had been copied pursuant to s 3L(1A). A rational corollary of that is that the balance of the statutory scheme, including ss 3ZQU and 3ZQX, should also apply as if the data had been copied pursuant to s 3L(1A). 11 The discretionary considerations that were taken into account in permitting the Commissioner to inspect the devices and copy the data also militate towards allowing the police to retain and use the copied data for any of the purposes referred to in s 3ZQU, not for the limited purposes suggested by Mr Caratti. 12 In all the circumstances, it is appropriate to make the order dealing with the future permitted use and retention of any copied data (order 4) in the form proposed by the Commissioner, as opposed to the order proposed by Mr Caratti. 13 The second issue concerning the orders that needs to be resolved concerns the dismissal of Mr Caratti's case insofar as it extended beyond claims relating to the unlawful seizure of certain items of electronic equipment. Mr Caratti contends that the appropriate order is that his Second Further Amended Originating Application be "otherwise dismissed". The Commissioner contends that Mr Caratti's Further Amended Points of Claim should also be "otherwise dismissed". The Commissioner submits that such an order would be appropriate in circumstances where the claims and allegations pleaded in Mr Caratti's points of claim extended well beyond the claims in the final iteration of his originating application. The dismissal of the final version of Mr Caratti's points of claim would, in the Commissioner's submission, bring greater clarity to those controversies that have been quelled by the proceedings. Mr Caratti, on the other hand, points out that a pleading, including points of claim, does not itself seek relief. It would accordingly not be appropriate to order that a pleading be dismissed. 14 There is some merit in both parties' submissions. If an applicant is unsuccessful, ordinarily it is only the originating application for relief which is dismissed, not the pleading. This was, however, by no means a typical case. Mr Caratti's case evolved considerably over time. The case presented at trial, and the relief ultimately sought, bore little resemblance to the Further Amended Points of Claim. In those circumstances, it is possible to see some merit in ordering that the Amended Points of Claim should be "otherwise dismissed", even though that is somewhat unusual and not strictly necessary. Mr Caratti did not contend that the dismissal of his pleading would have any adverse or unintended effect or cause any prejudice. His point was purely a procedural one. 15 In the circumstances, the form of order 6 as proposed by the Commissioner should be accepted in preference to the form of the order proposed by Mr Caratti. 16 The orders and declarations were otherwise agreed by the parties and are appropriate. 17 Orders will accordingly be made in accordance with the short minute of orders proposed by the Commissioner. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wigney. Associate: Dated: 23 November 2016