The Commissioner of the Australian Federal Police v Cranston and Ors (No 1) [2017] NSWSC 624

Supreme Court New South Wales

Medium Neutral Citation: The Commissioner of the Australian Federal Police v Cranston and Ors (No 1) [2017] NSWSC 624 Hearing dates: 16 May 2017 Date of orders: 16 May 2017 Decision date: 18 May 2017 Jurisdiction: Common Law Before: Fullerton J Decision: Orders made Catchwords: Application for orders under the Proceeds of Crime Act 2002 (Cth) Legislation Cited: Civil Procedure Act 2005 (NSW) Court Suppression and Non-Publication Orders Act 2010 (NSW) Crimes Act 1900 (NSW) Crimes (Taxation Offences) Act 1980 (Cth) Criminal Code Act 1995 (Cth) Proceeds of Crime Act 2002 (Cth) Taxation Administration Act 1953 (Cth) Category: Principal judgment Parties: The Commissioner of the Australian Federal Police (Plaintiff) Adam Michael Cranston and Ors (Defendants 1-58) Representation: Counsel: D McLure SC / G O'Mahoney / D Habashy (Plaintiff) Ex parte

Solicitors: Criminal Assets Litigation, Australian Federal Police (Plaintiff) Ex parte File Number(s): 2017/146280

Judgment 1. HER HONOUR: On 16 May 2017 I heard an ex parte application by the Commissioner of the Australian Federal Police ("the Commissioner") for orders under the Proceeds of Crime Act 2002 (Cth) ("the POCA") in respect of the suspected involvement of a large number of people in an organised taxation fraud. The object of the fraud was to evade the payment of Pay As You Go Withholding debts due to be remitted by various corporate or business employers to the Commissioner of Taxation under the Taxation Administration Act 1953 (Cth). 2. The scheme, which involved a large number of individuals and interrelated entities, was structured under the auspices of the provision of a legitimate payroll management service. In operation, however, the scheme was designed to secure control of vast sums of employer funds with a view to retaining the amounts due to be remitted to the Commissioner of Taxation by those who purported to offer the service and their affiliates and to distribute the proceeds. 3. The scheme and its operators were also, to varying degrees, committed to ensuring that the fraud was undetected and sought legal and accounting advice to achieve that result. 4. It is not necessary for present purposes to do other than record my understanding of the steps taken to effect the fraud as detailed in counsel's submissions and in the evidence tendered in support of the application. 5. The orders sought in the Summons (which I ordered be returned instanter pursuant to Rule 6.5 of the Uniform Civil Procedure Rules 2005 (NSW)) included orders restraining a number of individuals and entities, or individuals associated with them from dealing with the property itemised in the Schedules to the Summons. A number of ancillary orders under the POCA were also sought as were a number of procedural orders under the Civil Procedure Act 2005 (NSW) and the Court Suppression and Non-Publication Orders Act 2010 (NSW). 6. The Commissioner read three supporting affidavits by Darren James Burtenshaw variously sworn between 15 and 16 May 2017. Six lever arch folders were exhibited to Mr Burtenshaw's principal affidavit. Salient passages of some of the exhibited documents, in particular the product of various forms of electronic surveillance, were extracted in his affidavit. 7. Mr Burtenshaw is a member of the Australian Federal Police ("the AFP") performing duties in the Criminal Assets Confiscation Taskforce. He is also an authorised officer within the meaning of s 338 of the POCA. 8. What follows are my reasons for granting the orders sought in the Summons as reflected in the Short Minutes of Order which were signed and dated by me on the hearing of the application. 9. Dealing first with the preliminary and procedural orders sought by Summons, I was satisfied that the application for the orders sought by the Commissioner under ss 18, 38 and 180 of the POCA (being respectively orders restraining the dealing in or disposition of specified property; orders vesting custody and control of the restrained property in the Official Trustee; and orders for the examination of various individuals) be heard and determined without notice to any of the 58 defendants to the Summons pursuant to ss 26(4), 39(3A) and 182(2) of the POCA and in the absence of the public pursuant to s 71 of the Civil Procedure Act. 10. In making those orders, I accepted that it was the genuinely held view of the investigative officers of the AFP (as deposed to by Mr Burtenshaw) that the pending synchronised execution of a number of search warrants, and the arrest of a number of the defendants suspected of having committed serious offences under the Criminal Code Act 1995 (Cth), the Crimes Act 1900 (NSW) and the Crimes (Taxation Offences) Act 1980 (Cth) ("the suspected offenders") would be jeopardised and the proper administration of justice potentially compromised were those individuals (or any of the defendants associated with them) notified in advance of proceedings in this Court. I was also satisfied that the public interest in the effective and efficient culmination of the investigation into the suspected criminal activities of these people by their arrest and charge outweighed the public interest in the otherwise abiding principle of open justice. 11. Finally, I was satisfied that the suppression from publication of paragraph 750 of Mr Burtenshaw's principal affidavit was justified under ss 7 and 8 of the Court Suppression and Non Publication Orders Act since the reference in that paragraph to a named person and his dealings with one of the suspected offenders might alert that person to police interest more generally in his affairs in circumstances where he is the subject of a criminal investigation unrelated to this investigation. I was also satisfied pursuant to ss 8(a) and 8(e) of the same Act that nominated pages of documents behind tabs A65 and D92 to the exhibited material be suppressed from publication. I accepted there was a legitimate basis for the Australian Taxation Office ("the ATO") to seek to preserve the identity of and source of some of the information in those documents that may serve to ground the basis for the pending arrest and charge of a senior Taxation officer. 12. Turning next to the substantive orders and ancillary orders made under the aforementioned provisions of the POCA. 13. Relevantly, so far as these proceedings are concerned, s 18 of the POCA provides that the Court must make a restraining order (in qualified or unqualified terms: see ss 18(1)(a) and (b)) if the Commissioner satisfies the Court that there are reasonable grounds to suspect a person has committed a serious offence (s 18(1)(d)); that suspicion is held by an authorised officer on reasonable grounds (s 18(1)(f)); and that the authorised officer's supporting affidavit satisfies the requirements imposed by s 18(3)(a) and (b) as follows: 18(3) The application for the order must be supported by an affidavit of an *authorised officer stating: (a) that the authorised officer suspects that the *suspect committed the offence; and (b) if the application is to restrain property of a person other than the suspect but not to restrain *bankruptcy property of the suspect—that the authorised officer suspects that: (i) the property is subject to the *effective control of the suspect; or (ii) in any case—the property is *proceeds of the offence; or (iii) if the offence to which the order relates is a *serious offence—the property is an *instrument of the offence. The affidavit must include the grounds on which the *authorised officer holds those suspicions. 1. Having given close consideration to Mr Burtenshaw's principal affidavit which I have cross-referenced to various of the exhibited materials, I am well satisfied that the Commissioner has discharged the onus of establishing, on the balance of probabilities, that the restraining orders should be granted over the property specified in each of the Schedules to the Summons, there being reasonable grounds to suspect that property meets the requirements of ss 18(2)(a), (c) and (d) of the POCA. I am further satisfied, again having given close consideration to Mr Burtenshaw's principal affidavit and the exhibited material, that some of the property specified in the Schedules to the Summons, although not held in the name of the offenders suspected of having committed one or more the serious offences nominated in the supporting affidavit, is reasonably suspected by him to be under the effective control of one or more of them and susceptible to restraint for that reason (see s 18(3)(b)(i)), or as the proceeds of one or more of the offences (see s 18(3)(b)(ii)), or both. 2. In light of the range of property identified in the Schedules, and the number of financial institutions and other entities implicated in the orders by the restraint sought over property held by them, I was satisfied that the most efficient and practical means of securing custody and control of the restrained property was to make an order under s 38 of the POCA that the Official Trustee take control of the property specified in Schedules 1-98 and Schedule 100 to the Summons. 3. The orders sought as ancillary to the making of the restraining orders pursuant to s 39, as set out in paragraphs 164-186 of the Short Minutes of Order, I also considered as appropriate to be made ex parte in all the circumstances. 4. Finally, I was satisfied that the orders for examination of the suspected offenders and some of their close associates, as provided for in s 180 of the POCA (including the father of one of the suspects who is identified in the materials as a principal offender and the senior status of that person's father within the ATO), should also be made at this time, and on an ex parte basis, despite the scheduling of the various examinations being unlikely to occur in the short term. I am satisfied that with orders in place for examinations even at this early stage in the proceedings, what I anticipate will be the need for extensive preparations under the Commissioner's instructions in advance of the examinations and the need to give consideration to the order in which they are to take place, can occur without delay. In addition to the examination orders to be made forthwith potentially operating to defer or deflect any of the persons to be examined from the temptation to collaborate or to engage in structured dissembling (something I am satisfied has occurred in the recent past as evidenced by the product of some of the electronic surveillance exhibited before me), making examination orders at this time enhances the prospects of the examinations being effectively employed as part of the regime under the POCA designed as it is to meet the statutory objectives of the preservation and confiscation of the proceeds of crime.