ASIC v Rich [2005] NSWSC 62

Reported Decision : 52 ACSR 374

New South Wales Supreme Court

ASIC v Rich [2005] NSWSC 62 CITATION : This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S) : Various dates between 6 September and 7 December 2004, then written submissions, and oral submissions on 4 and 7 February 2005

JUDGMENT DATE : 16 February 2005

JURISDICTION : Equity

JUDGMENT OF : Austin J

DECISION : Documents admissible and not excluded from evidence

CATCHWORDS : SEARCH WARRANTS - Crimes Act 1914 (Cth) Pt 1AA - whether access to seized things by consultant of investigating agency is prohibited by s 3F(5) - whether electronic things copied under s 3L(2)(c) are things "seized" for purposes of s 3F(5) - whether things seized under search warrant may be used in an investigation with civil and criminal elements, and in a subsequent civil proceeding - whether owner of seized things may consent to their use and retention for purposes of civil proceedings

ASIC Law ss 119A, 121, 127 Corporations Act 2001 (Cth) ss 471A, 477 LEGISLATION CITED : Corporations Law ss 180, 181, 182, 184, 999, 1308 Crimes Act 1914 (Cth) ss 3, 3C, 3E, 3F, 3K, 3L, 3ZV

ASIC v Marshall Bell Hawkins Ltd [2003] FCA 833 ASIC v Rich [2004] NSWSC 923 ASIC v Rich [2004] NSWSC 934 ASIC v Rich [2004] NSWSC 951 ASIC v Rich [2004] NSWSC 963 ASIC v Rich [2004] NSWSC 969 ASIC v Rich [2004] NSWSC 970 ASIC v Rich [2004] NSWSC 1062 ASIC v Rich [2004] NSWSC 1089 ASIC v Rich [2004] NSWSC 1090 ASIC v Rich [2004] NSWSC 1104 Austin v The Commonwealth (2003) 215 CLR 185 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 Brooks v Burns Philp Trustee Co Ltd (1969) 121 CLR 432 Brown v United States 411 US 223 (1973) Carroll v Mijovich (1991) 25 NSWLR 441 Coco v R (1993) 179 CLR 47 Deputy Commissioner of Taxation v De Vonk (1995) 61 FCR 564 Donnelly v Amalgamated Television Services Pty Ltd (1998) 45 NSWLR 570 Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575 Entick v Carrington (1765) 19 State Tr 1029, 95 ER 807 George v Rockett (1990) 170 CLR 104 Ghani v Jones [1970] QB 693 Gollan v Nugent (1988) 166 CLR 18 Greer v New South Wales Police [2002] NSWSC 356 Grollo v Macauley (1995) 45 FCR 336 Harman v Secretary of State for the Home Department [1983] 1 AC 280 Hart v Commissioner, Australian Federal Police (2002) 124 FCR 384 CASES CITED : Hunter BNZ Finance Ltd v CG Maloney Pty Ltd (1998) 18 NSWLR 420 Hunter v Southam Inc [1984] 2 SCR 145 Hyman v Hyman [1929] AC 601) Jacobsen v Rogers (1995) 182 CLR 572 Johns v Australian Securities Commission (1993) 178 CLR 408 Johnson v United States 333 US 10 (1948) Jones v Dunkel (1959) 101 CLR 298 Kennedy v Baker (2004) 207 ALR 247 Lieberman v Morris (1944) 69 CLR 69 Mabo v Queensland (No 2) (1992) 175 CLR 1 Malone v Metropolitan Police Commissioner [1980] 1 QB 49 Malubel Pty Ltd v Elder (1998) 88 FCR 242 Marcel v Commissioner of Police of the Metropolis [1992] Ch 225 Maynegrain Pty Ltd v Compafina Bank [1984] 1 NSWLR 258 Minnesota v Carter 525 US 83 (1998) Morison v London County and Westminster Bank Ltd [1914] 3 KB 356 Morris v Director of the Serious Fraud Office [1993] Ch 372 Ousley v The Queen (1997) 192 CLR 69 Polycarpou v Australian Wire Industries Pty Ltd (1995) 36 NSWLR 49 Puglisi v Australian Fisheries Management Authority (1997) 148 ALR 393 R v Ladocki [2004] NSWCCA 336 R v Nicholas (2000) 1 VR 356 Re Morris (1943) 43 SR (NSW) 352 Rakas v Illinois 439 US 128 (1978) Re H and the Adoption Act [2004] NSWSC 1242 S & M Motor Repairs v Caltex Oil (1988) 12 NSWLR 358 United States v Salvucci 448 US 83 (1980) Wade v New South Wales Rutile Mining Company Pty Ltd (1969) 121 CLR 177 Williams v Keelty (2001) 111 FCR 175

Australian Securities and Investments Commission (P) PARTIES : John David Rich (D1) Mark Alan Silbermann (D4)

FILE NUMBER(S) : SC 5934/01

R B S Macfarlan QC with J P A Durack SC, N J Beaumont and J E O'Sullivan (P) COUNSEL : D L Williams SC with M J Steele and S A Goodman (D1, D4)

Jan Redfern, Solicitor for Australian Securities and Investments Commission (P) SOLICITORS : Joanne Kelly, Solicitor (D1, D4)

LOWER COURT JURISDICTION :

INDEX Paragraph 1. The course of the hearing so far [1] 2. The search warrant issues - introduction [9] 3. Facts 3.1 Initiation of investigation [17] 3.2 Issue of search warrants [19] 3.3 Execution of search warrants [27] 3.4 Subsequent use of seized materials by ASIC and PwC [31] 3.5 Extension of investigation to directors' duties [36] 3.6 Mr Wigney's advice [43] 3.7 Commencement of Federal Court proceedings in Williams v Keelty [48] 3.8 The evolving case on directors' duty of care and diligence [53] 3.9 The judgment in Williams v Keelty [64] 3.10 Shift away from the insolvent trading case, and the joint advice of Mr Pembroke SC and Mr Stack [66] 3.11 Preparation of the Consolidation Report [69] 3.12 The fourth joint opinion of Mr Bathurst QC and Mr Payne [73] 3.13 ASIC initiates general view of search warrant procedures [80] 3.14 Mr Pembroke SC's advice in conference on 10 October 2001, and the developing focus on a civil penalty case [87] 3.15 Arrival of Ms Rees [[93] 3.16 Ms Redfern's e-mail of 19 October [95] 3.17 Conference with Mr Pembroke SC on 24 October [98] 3.18 Further instructions to Mr Bathurst QC and Mr Payne [100] 3.19 Mr Pembroke SC's written advice of 31 October, and subsequent events [102] 3.20 ASIC/DPP Workshop, 15 November 2001 [108] 3.21 NECC Meeting on 21 November [111] 3.22 Counsel's further advice of 29 November, and NECC's meeting on 3 December [116] 3.23 The Sixth Joint Opinion of Mr Bathurst QC and Mr Payne [125] 3.24 Advice in conference from the DPP [127] 3.25 The Joint Opinion of Mr Brereton SC and Mr Stack dated 7 December 2001 [130] 3.26 Later events [142] 4. Conclusions as to facts [154] 4.1 Ms Redfern's knowledge of the investigation [156] 4.2 Ms Redfern's knowledge about the search warrants [157] 4.3 The scope of the investigation from June to December [158] 4.4 Ms Redfern's knowledge, understanding and belief about restrictions on the use of search warrant materials for civil purposes [165] 5. Alleged illegalities in execution of search warrants [180] 5.1 The search warrant provisions of the Crimes Act [182] 5.2 Copying of the Lotus Notes cashflow database [189] 5.3 Making seized things available to PwC [204] 5.4 Making available to ASIC things allegedly not "seized" [214] 6. Alleged illegalities in ASIC's use of seized material for civil investigation and civil proceeding [239] 7. Statutory obligation to return seized materials [275] 8. Effect of the liquidators' consent of 7 September 2001 [287] 8.1 Efficacy of liquidators' consent, as regards future use of seized materials in a civil proceeding [292] 8.2 Efficacy of liquidators' consent, as regards the statutory obligation to return seized things [311] 8.3 Effect of the liquidators' consent of 7 December 2001, as a matter of law and construction [313] 9. Effect of Mr Keeling's consent [322] 10. Summary of findings as to lawfulness and proprietary of ASIC's conduct with respect to seized materials [327] 11. Conclusion on search warrant issues [330]

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

AUSTIN J

WEDNESDAY 16 FEBRUARY 2005

5934/01 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION V JOHN DAVID RICH & ORS JUDGMENT (Search Warrant Issues) HIS HONOUR: 1. The course of the hearing so far 1 During the course of the final hearing of this civil penalty proceeding, issues have emerged relating to the admissibility of · most of the documents that ASIC proposes to tender, having regard to the contention that they were first obtained through the execution of search warrants issued in relation to suspected criminal offences; and · the evidence of ASIC's forensic accountant, Paul Carter, a partner at PricewaterhouseCoopers ("PwC"). 2 Most of the evidence and argument that the court has heard, over a period of more than four months, relates to these two sets of issues. In the interests of public accountability of the court's process, rather than because of direct relevance to the issues now before me, I shall briefly set out the course of the hearing to date, before turning to the matters for decision. 3 The hearing commenced on 6 September 2004. Over the ensuing four months the hearing time has been taken up, inter alia, with ASIC's opening of its case, the receiving of evidence about the "provenance" of the documents ASIC wishes to tender, many arguments about aspects of the numerous notices to produce administered by the defendants to ASIC and the subpoenas issued by the defendants to PwC and others (including frequent contests about client legal privilege and waiver of privilege), and an unsuccessful application by the defendants for me to disqualify myself from the further hearing of the case on the ground of apprehended bias. Some of the matters contested since the commencement of the final hearing have led to published judgments by me ([2004] NSWSC 923, [2004] NSWSC 934, [2004] NSWSC 963, [2004] NSWSC 951, [2004] NSWSC 969, [2004] NSWSC 970, [2004] NSWSC 1062, [2004] NSWSC 1089, [2004] NSWSC 1090, [2004] NSWSC 1104), although on many occasions where the issue did not raise any question of principle, I have left the judgments in their transcript form without wider publication. 4 In the course of the hearing of ASIC's provenance evidence, questions were raised by the defendants concerning the lawfulness and propriety of ASIC's use, for civil purposes, of documents initially obtained by the execution of search warrants on specified criminal grounds, and the lawfulness of copying electronic records during the execution of the warrants. ASIC introduced evidence on these matters, which included affidavit evidence by Jan Redfern, a senior officer of ASIC, and she was cross-examined at length. There were contests in which ASIC sought to limit the scope of Ms Redfern's cross-examination, leading to rulings and published judgments which had the effect of limiting the scope of the evidence which the defendants could adduce with respect to matters going to ASIC's state of mind in the period after December 2001. At one stage I was persuaded to formulate and address some questions of law which were intended to resolve the search warrant issues expeditiously, but that proved to be unsuccessful for reasons that have been recorded in judgments. 5 During the course of the hearing and, in particular, during the process of production of documents in response to notices to produce and subpoenas, the defendants have explored issues concerning the history of PwC's involvement with ASIC before the preparation of the Carter Report, leading to the questions about the admissibility of Mr Carter's evidence that are before me now. Those issues were pursued during the lengthy cross-examination of Cassandra Reynolds, now a partner at PwC, who at the relevant times was a senior employee of the firm working with Mr Carter. Later Mr Carter himself gave lengthy evidence. Evidence has so far been taken in the proceeding generally, though largely directed to questions of admissibility, with the exception of the evidence of Mr Carter, which was taken on the voir dire. I ruled, however, in a published judgment ([2004] NSWSC 1062 (10 November 2004)), that his evidence once given was evidence in the proceeding. 6 The parties have taken care to identify, in the mass of evidence so far received, the evidence to which I should have regard for the purpose of determining the questions now before me. This has led, inter alia, to the tender by ASIC of 16 volumes of documents prepared by the defendants. The documents were tendered by ASIC at the defendants' request, so as not to deprive the defendants of any opportunities they may have at the conclusion of ASIC's case, as defendants who have not gone into evidence. 7 At the end of the evidentiary phase directed to these issues, I received very extensive written and oral submissions about them, traversing difficult points of law as well as much contested evidence. The volume and intensity of the submissions are not surprising, given that the matters now put before me for decision are the culmination of an enormous amount of work, on both sides, over the course of the hearing and before it commenced, and given also that my decisions have the potential to affect the future course of the hearing very substantially. The direct consequence, unfortunately, is that my judgments are lengthy. 8 The written submissions and oral argument were presented, pursuant to my directions, in two separate components, addressing respectively the Carter Report and the search warrant issues. After the hearing of argument on both issues was over, I decided it would be prudent to prepare my judgments on both matters concurrently and to preserve the prospect of delivering a single judgment covering both matters. Indeed, that was a course I favoured until very recently. Having at last satisfied myself that the issues can be satisfactorily dealt with by separate judgments, I have now decided that it would be best, in the interests of clarity, to proceed in that fashion. This is my judgment on the search warrant issues. My judgment on the Carter Report will follow. 2. The search warrant issues - introduction 9 To a substantial degree, ASIC's case against the defendants, as outlined in the opening, will rely on documents. ASIC wishes to tender 12 volumes of documents exhibited to Mr Carter's affidavits and reports, and a further six volumes of documents comprising its tender bundle. Many of the documents were first obtained by ASIC as a result of the Australian Federal Police ("AFP") executing a number of search warrants, issued under the Crimes Act 1914 (Cth) at the behest of ASIC, on 1 June 2001, at the premises of One.Tel and at the private residences of certain of the directors. 10 The defendants have submitted that the search warrants executed on 1 June 2001 were issued for specified purposes, namely the investigation of suspected criminal offences by One.Tel, Mr Rich and Mr Silbermann, as stated in the warrants. They have not challenged the lawfulness of the issue of the search warrants, and they have not contended that the warrants were procured by ASIC for improper purposes. But they have argued that in various ways, the process of executing the search warrants and subsequently using the documents obtained under the warrants for a civil investigation and a civil proceeding has been illegal or improper, to the knowledge of ASIC. According to the defendants' submission, ASIC has wrongfully sought to deploy this illegally or improperly obtained evidence by making the documents available to Mr Carter for the purpose of preparation of his reports, and ASIC is now wrongfully seeking to tender bundles of documents that were illegally or improperly obtained. 11 According to the defendants' submission, ASIC has not discharged the onus that it is said to bear with respect to illegally or improperly obtained evidence under s 138 of the Evidence Act 1995 (NSW), of establishing that the desirability of admitting the evidence outweighs the undesirability of doing so. Further, the court should, according to the defendants, exclude the documentary evidence by recourse to its inherent jurisdiction to protect the integrity of its processes, principally on the ground that, by allowing the documents into evidence the court would associate itself with the unlawful and improper use of that material, in a way that would be calculated to bring the administration of justice into disrepute. 12 ASIC has denied that there was any illegal or improper conduct during the course of execution of the search warrants and subsequent use of the documents for the purposes of its investigation and the present litigation. On 7 December 2001 the liquidators of One.Tel purported to consent to ASIC's use of the documents obtained on execution of the search warrant at the premises of One.Tel, for the purpose of commencing the present legal proceeding. The instrument of consent was confirmed by the liquidators executing a deed on 15 October 2004. ASIC has submitted that the liquidators' consent has authorised continued retention and use of the seized materials, and cured any illegality or impropriety that may have occurred. It makes a similar submission with respect to the effect of Mr Keeling's consent on the lawfulness and propriety of its retention and use of a document seized under search warrant from his residence. 13 These matters have been canvassed at great length in the parties' written submissions, comprising over 350 pages. They have been labelled DS 43, 44 and 45, and AS 45, 46 and 47. There are also brief written submissions by both parties, each dated in 11 February 2005, which I shall label DS 46 and AS 48 respectively. There were supplementary oral submissions on 4 and 7 February 2005. 14 The parties have referred to these various issues as "the search warrant issues". To resolve them, it is necessary, first, to make findings as to the historical facts and the state of knowledge and understanding of ASIC at various times (heading 3) and to state expressly some findings on contentious matters (heading 4). It will be appropriate, subsequently, to consider the following issues, in the light of the findings of fact: 5. Was there any illegality in the process of issue and execution of the search warrants and consequent acquisition of the documents by ASIC? 6. Was there any illegality or impropriety on the part of ASIC in its use of the documents, up to 7 December 2001? 7. Has ASIC been, and is it now, under a statutory obligation to return the documents, which it has failed to discharge? 8. What is the effect of the liquidators' instrument of consent of 7 December 2001? 9. What is the effect of Mr Keeling's consent? 15 I shall conclude by summarising my findings as to the lawfulness and propriety of ASIC's conduct with respect to the seized materials (heading 10), and then express my conclusions as to admissibility (heading 11). 16 As will become clear, my conclusions on these matters will make it unnecessary to deal with certain other issues, relating (inter alia) to the scope and application of s 138 and any continuing inherent jurisdiction to exclude illegally obtained evidence. 3. Facts

3.1 Initiation of investigation 17 ASIC commenced an investigation into the affairs of One.Tel after receiving a referral from the Australian Stock Exchange on 25 May 2001. One.Tel was placed into administration by its directors on 29 May 2001, and Steven Sherman and Peter Walker of Ferrier Hodgson were appointed voluntary administrators. 18 On 31 May 2001 Allen Turton, a delegate of ASIC, made a decision under s 13(1) of the ASIC Law (in force at that time) that ASIC should embark on an investigation of potential contraventions of ss 999, 1311(1)(a) and 1307 of the Corporations Law, provisions identifying criminal offences relating to providing false information to the market and falsifying books. At that time the s 13 determination was confined to these criminal matters and did not extend to the duty of care of company directors and officers (s 180). Mr Turton recorded in his file note (Exhibit P27/1.93) that he made the decision after reading the ASX referral, having discussions with other ASIC officers, and having a conversation with James Packer and reviewing financial reports provided by him.

3.2 Issue of search warrants 19 On the same day ASIC took steps to have search warrants issued under Part 1AA of the Crimes Act, and it retained PricewaterhouseCoopers to assist it in the execution of the warrants. Although the decision to seek the issue of the warrants was made by someone else, Ms Redfern gave evidence that she was aware that the application was to be made. 20 The decision to have search warrants issued under the Crimes Act was made despite One.Tel being under the control of administrators in whom ASIC had confidence. So much was recorded in Ms Redfern's e-mail of 25 July 2002, in which she speculated that her colleagues might be "overly enthusiastic" about the issue of search warrants and said that there should be "more quality assurance on the decision", giving the execution of the search warrant at the premises of One.Tel as an example. It appears, however, from Ms Redfern's evidence that search warrants were obtained because there was a concern about preserving evidence, given that Bradley Keeling and perhaps others were still working at the One.Tel premises. 21 The terms of PwC's retainer were set out in a letter from Mr Carter to the Director of Enforcement of the Western Australia Regional Office of ASIC, dated 31 May 2001. The retainer covered "forensic data retrieval and analysis services", including the imaging of computer systems and transfer of those images to compact discs for restoration to other computer systems designated by ASIC. Graham Henley, one of PwC's specialist computer forensic team, gave evidence that the services were to be provided during the execution of the search warrants. 22 On 1 June 2001 ASIC hosted a briefing in preparation for the execution of the search warrants, attended by officers of ASIC, the AFP and PwC. Warrants were to be executed simultaneously later that day at the offices of One.Tel, and at the residences of Mr Rich, Mr Silbermann, Mr Keeling and Kevin Beck. An officer of ASIC and a computer analyst from PwC were allocated to the execution of each of the search warrants. PwC staff were to be declared by the warrant holders to be "constables assisting" for the purpose of execution of the warrants. 23 The six search warrants were issued in similar form. The search warrant relating to the premises of One.Tel was addressed to Scott Sykes, an officer of the AFP, as executing officer. It was issued by a magistrate. He declared himself to be satisfied by information on oath that there were reasonable grounds for suspecting that there was evidential material at the premises which satisfied all of three conditions which were set out. 24 The three conditions were, approximately, that: (1) the things authorised to be seized were books and records for the period 1 January 1999 to 31 May 2001; (2) the things to be seized related to One.Tel, its directors, Publishing and Broadcasting Ltd, Consolidated Press Holdings Ltd, or News Corporation Ltd; (3) there were reasonable grounds for suspecting that the things to be seized would afford evidence as to the commission of offences: (a) under ss 999 and 1311(1)(a) of the Corporations Law, by One.Tel issuing announcements to the ASX and releases to the media concerning the financial position of One.Tel which it knew or ought reasonably to have known to be materially false or misleading; (b) under ss 999 and 1311(1)(a) of the Corporations Law, by Mr Rich issuing announcements to the ASX and releases to the media concerning the financial position of One.Tel which he knew or ought reasonably to have known to be materially false or misleading; (c) under s 1307 of the Corporations Law, by Mr Silbermann, in falsifying books affecting or relating to the affairs of One.Tel. 25 The warrant authorised entry, search and seizure of evidential material, relating to the offences to which the warrant related, and to other Commonwealth indictable offences. It stated that the executing officer was authorised to obtain such assistance as was necessary and reasonable in the circumstances. 26 The warrants were executed on the afternoon and evening of 1 June 2001. Six of the ASIC officers who were involved in the execution of the search warrants went on to be involved in the subsequent investigation.

3.3 Execution of search warrants 27 The warrant for execution at the premises of One.Tel was executed by Mr Sykes, assisted by various officers of ASIC, Mr Henley and another employee of PwC. Those executing the search warrant seized approximately six or seven boxes of hard copy documents. The representatives of PwC took electronic images of three different types of electronic records, namely certain directories in One.Tel's "I:drive", a Lotus Notes cashflow database, and the hard drives of nine desktop computers (including computers alleged by ASIC to have been used by Mr Rich, Mr Silbermann, Mr Keeling and Mr Beck). The hard copy documents and the electronic images were recorded on property seizure records completed for the execution of the search warrant. 28 Mr Henley gave evidence that he spoke to Mr Brotherson and Mr Robson of One.Tel, and read them the three conditions of the search warrant and they assisted him in ways that he specified. I shall return to the detailed evidence of Mr Brotherson and Mr Henley, when I consider the defendant's submission that the Lotus Notes cashflow database was unlawfully copied without the written consent of One.Tel. Suffice it to say here that, with assistance from Mr Brotherson, Mr Henley procured a copy of the finance, administration and corporate counsel directories of the I:drive, a copy to CD of the Lotus Notes cashflow database, and images of the hard drives of the nine computers. 29 Officers of ASIC and staff of PwC were present at the execution of the search warrants at the residences of Mr Rich, Mr Silbermann and Mr Keeling. In each case hard copy documents were seized and images were made on PwC equipment of the hard drives of personal computers. The image of the computer made at Mr Rich's residence was signed over to Mr Hay of PwC. Mr Hunter, who was present at the execution of the warrant at Mr Silbermann's residence, gave evidence that an image of a personal computer was taken onto a PwC hard disk, which he took back with him to One.Tel's premises. Evidence was given by Mr Henley and Mr Cerny (also a technical staff member of PwC) that, during the execution of the search warrant at Mr Keeling's premises, images were taken onto PwC hard drives of a desktop computer and a laptop computer. 30 The images taken from the I:drive and desktop computers at One.Tel's premises, and the images of the home computers at the residences of Mr Rich, Mr Silbermann and Mr Keeling, were taken by PwC to its premises on the night of 1 June 2001 or on the following morning and were placed in PwC's safe, and later made available to ASIC. The CD of the Lotus Notes cashflow database was taken by the Australian Federal Police and was later made available to ASIC. The hard copy documents were taken by ASIC.

3.4 Subsequent use of seized materials by ASIC and PwC 31 As from about 2 June 2001 the officers of ASIC who were involved in the investigation, and staff of PwC (and in particular, Mr Carter and Ms Reynolds from the time of their engagement) had access to the hard copy and image documents that had been seized from One.Tel's premises or copied in the execution of the One.Tel search warrant on 1 June 2001, and that position continued until early December 2001. 32 The evidence indicates that PwC personnel worked from ASIC's premises from late 2001 until about August 2002, and had access to both hard copy and electronic documents during that time. Access to the material seized from residences was restricted after 7 December 2001, when ASIC split the LSS system (its computer system) to restrict access to that material. It appears that the restriction was implemented successfully to exclude the "civil team" from access to the material seized from residences, subject to one occasion when Mr Kwan of PwC erroneously accessed the material in May 2004 and was told that this should not occur again. 33 The defendants have attached a schedule to their written submissions of 17 December 2004 (DS 43, Schedule 2), which summarised the detailed evidence relating to the uses to which the seized materials were put. ASIC's written submission in reply (AS 46) challenged the defendants' account of the evidence on some matters of detail, and supplemented it, but as I understand the submissions, there is no major factual contest between the parties as to the contents of Schedule 2. 34 ASIC does not propose to tender any of the seized material from residences, except for a single voicemail obtained from Mr Keeling's premises, as to which there is evidence that Mr Keeling has consented to ASIC's use and retention of the material. It is not relevant to any question I have to determine for me to make findings about the use of the residential search warrant material during ASIC's investigation - except as to the splitting of the computer system on 7 December 2001, a matter which is relevant to ASIC's understanding of the restrictions on the use of search warrant materials for extraneous purposes. 35 As to the material seized from One.Tel's premises (by "seized" I mean to include electronic information copied in the course of execution of the warrants), I do not understand ASIC to dissent from the proposition in paragraph 1 of Schedule 2 of DS 43, that the search warrant materials were used by the One.Tel investigation team without restriction upon access until at least 7 December 2001 (see also DS 43 at [48], which was not disputed by ASIC in its response in AS 46). It is unnecessary for me to make findings as to how the One.Tel material was copied and accessed by the ASIC team and PwC during that time.

3.5 Extension of investigation to directors' duties 36 ASIC's investigatory team from June to December 2001 included Ms Redfern (who was New South Wales general counsel for ASIC until 1 July 2001, and thereafter became Deputy Executive Director of Enforcement, reporting to the Executive Director of Enforcement, Mr Wood); and various other investigators and lawyers including Mr Turton and Mr Howell, Directors of Enforcement for New South Wales and Western Australia respectively, Mr Hogan, Mr Connor and Ms Rees (who joined the team on 18 October 2001 as a consultant lawyer). 37 Ms Redfern met with Lachlan Murdoch on 3 and 4 June 2001 and later discussed that interview with Mr Turton. 38 On 5 June 2001 Mr Turton executed a file note under s 13(1) of the ASIC Law, as a delegate of ASIC, which had the effect of extending the investigation so that it became an investigation with respect to: · criminal provisions of the Corporations Law: s 999 (false or misleading statements in relation to securities), s 286 (obligation to keep books), s 184 (criminal offences concerning good faith and use of position), s 1308 (false or misleading statements in documents lodged with ASIC) and s 1002G (insider trading); · provisions with only civil consequences unless additional ingredients were established: s 588G (insolvent trading) and s 1001A (continuous disclosure), and · provisions to which only civil consequences were attached: s 180(1) (care and diligence), s 181 (good faith - civil obligations) and s 182 (use of position - civil obligations). 39 The file note (Exhibit P27/1.199) records that he made his decision to extend the investigation after reviewing a list of specified information including board papers, board minutes, market announcements and financial documents, and after receiving verbal advice from Ms Redfern regarding Mr Murdoch's comments during interviews. 40 The decision to expand the investigation having been made, there was a conference with counsel on 6 June at which ss 588G and 180, declarations of contravention and disqualification and compensation orders, and s 1317H were discussed. The evidence does not indicate who participated, apart from Mr Hogan. The defendants say that this note represents "the germination of the present proceedings". That appears to be so, although at that time s 588G (insolvent trading) was also under consideration. 41 On 8 June 2001 this Court made asset preservation orders (referred to in submissions as "freezing orders") with respect to Mr Rich and Mr Silbermann. There was a team meeting on 14 June 2001, attended by Ms Redfern, and one of the investigators, Mr Connor, circulated an investigation plan, to be "signed off" by 19 June. 42 On 15 June 2001 Mr Turton, as delegate of ASIC, signed a further file note under s 13(1), recording his decision to investigate whether there may have been contraventions of s 1309 (making available false information - a criminal provision) by the two defendants and others (Exhibit P27/1.221). This determination was in addition to, and not in substitution for, the determination made on 5 June, and it had the effect of further expanding the investigation. It was made after Mr Turton reviewed various affidavits, including Mr Murdoch's affidavit, and received verbal advice from a number of ASIC officers including Ms Redfern.

3.6 Mr Wigney's advice 43 Mr Wigney of counsel provided written advice to ASIC with respect to the investigation into the HIH group, which was being conducted concurrently with ASIC's investigation into the One.Tel group. His advice, dated 22 June 2001, was read by Ms Redfern when it was received. Mr Wigney was asked to advise whether ASIC was still able to apply for search warrants even though a civil proceeding had commenced. His opinion was that, so long as the ASIC officer who swore the affidavit in support of the application for the warrant acted for a bona fide purpose of investigating specified criminal offences and had reasonable grounds for suspecting the commission of those offences, the existence of a civil proceeding would of itself be no bar to the application for the warrant. 44 He went on to note an issue that, he said, had not been resolved definitively, namely whether documents lawfully seized pursuant to a search warrant can subsequently be used for a purpose different from the purpose for which they were seized (that is, for use as evidential material in relation to the offences specified in the warrant). Specifically, he postulated seizure of documents pursuant to warrant and a later decision that there was insufficient evidence to lay a charge for commission of the offences specified in the warrant, and he asked whether the seized documents could then be used in civil proceedings. After referring to ss 3F(5) and 3ZV, he noted cases that appeared to "establish a principle that documents seized under a compulsory power can only be used for the purposes for which the power was enacted", and that accordingly documents seized to facilitate investigation and prosecution of stated offences could only be used for that purpose. He noted a possibility, arising out of Grollo v Macauley (1995) 45 FCR 336, at 352 (Jenkinson J) that the court might grant leave to permit the seized documents to be retained and used in a civil proceeding. 45 Mr Wigney's observations were directed to use of seized materials in a subsequent civil proceeding, not in an investigation. Although he formulated the principle supported by the cases broadly, his discussion hypothesised a firm decision not to lay charges followed by the initiation of a civil proceeding, rather than use of the seized materials in a single investigation having criminal and civil elements. 46 Ms Redfern agreed in cross-examination that, upon reading that advice, she was aware that documents seized pursuant to search warrants issued under the Commonwealth Crimes Act could only be used "for police purposes", that is for investigating criminal offences (T 1510). She said she understood that the seized documents were to be returned "if you no longer had a criminal investigation on foot" (T 1509). 47 Her evidence that the seized documents could only be used for investigating criminal offences needs to be considered in the context of her evidence as a whole. She was in concern to emphasise, quite frequently, that she regarded the One.Tel investigation as a single investigation having criminal and civil components. I shall return to her evidence on that subject later, but at this stage I make the point that I do not regard her answer to a single question, agreeing that search warrant materials were to be used only to investigate criminal offences, as evidence inconsistent with that general theme.

3.7 Commencement of Federal Court proceedings in Williams v Keelty 48 Ms Redfern gave evidence that in 2001, she was very concerned about ASIC's entitlement or otherwise to use search warrant materials: T 1439. But as I read the evidence, her concern related to the use of seized materials in a civil proceeding. Her answer that she was generally concerned was followed immediately by questions about the Williams v Keelty proceeding and ASIC's undertaking not to use seized materials in that proceeding. I did not understand her evidence to convey that she was "very concerned" as to whether she might be precluded from using seized materials in an investigation just because the investigation was a composite one having civil elements. 49 Ms Redfern was aware, throughout the second half of 2001, that documents obtained by the execution of search warrants were being used in the One.Tel investigation. She gave evidence that she could not recall reading the One.Tel search warrants in 2001: T 2831-2. 50 By 5 July 2001, Raymond Williams and Rodney Adler, who had been directors of HIH, had commenced proceedings in the Federal Court seeking interlocutory injunctions to restrain ASIC from inspecting documents it had seized under search warrants, and (in the case Mr Adler) to restrain Ms Redfern and another ASIC officer from involvement in a civil penalty proceeding that had been initiated. In an e-mail dated 5 July Ms Redfern described Mr Adler's argument as "hopeless". 51 On 6 July 2001 an officer of ASIC wrote to Ms Redfern raising the question whether the application by Mr Williams and Mr Adler had any effect on an ASIC investigation into another company, Harris Scarfe, where ASIC was considering both civil and criminal matters. He asked whether anything should be done in the short term in relation to documents seized pursuant to warrants in the Harris Scarfe matter, especially in relation to handling and use of seized documents. I infer that Ms Redfern received and read that communication, but the evidence does not indicate her response. 52 During July 2001 Ms Redfern was cross-examined at the hearing of the Williams v Keelty, and her credit was attacked. She had been questioned about ASIC's conduct regarding use of seized materials during her cross-examination, and consequently the use of search warrant materials became of particular interest to her: T 1511-2. The cross-examination appears to have related to the use of seized materials for the purpose of a civil proceeding.

3.8 The evolving case on directors' duty of care and diligence 53 Ms Redfern was aware that the One.Tel investigation extended to both civil and criminal matters, as was made plain in a briefing paper dated 7 July 2001 which she received, and an investigation plan dated 12 July 2001, sent her by Mr Connor to reflect their discussions. An updated investigation plan was circulated by Mr Howell to various people including Ms Redfern on 17 July 2001, and in his covering e-mail Mr Howell expressed the hope to be able to convince the court at a directions hearing on 24 September that ASIC was in a position to commence a substantive action. 54 The investigation plan of 17 July 2001 referred to collection of evidence to prove or disprove breaches of various provisions, including s 180 which attracted only civil penalties, and s 588G which attracted only civil consequences unless additional ingredients were shown. The plan noted that search warrants had been issued and that the documents seized under those warrants were under analysis. It was therefore clear to readers of the investigation plan of 17 July that the seized materials were being used for the purposes of an investigation which extended beyond criminal matters. 55 On 24 July 2001 Ms Redfern attended a meeting of the National Enforcement Co-ordination Committee ("NECC"), the group within ASIC which considered and made decisions on, inter alia, the commencement of legal proceedings. The meeting of 24 July 2001 appears to be the first time that the One.Tel investigation was discussed at the NECC. At that time the voluntary administrators had just become liquidators of One.Tel, and the minutes of the NECC meeting referred to arrangements to formulate ASIC's comment (if any) on the appointment of the liquidators. 56 As a member of the NECC, Ms Redfern received regular written progress reports on the One.Tel investigation, about the time of the NECC meetings. In those meetings the NECC would consider whether or not to bring proceedings. NECC meetings at which the One.Tel investigation was considered were held on 24 July, 7 August, 4 September, 18 September, 2 October, (perhaps) 16 October, 21 November and 3 December 2001. Ms Redfern received progress reports in respect of most of those meetings, although there is no evidence of progress reports for the meetings of 24 July and 4 September. 57 The defendants invited the court to infer, from the progress reports and other materials that I shall mention, that Ms Redfern was aware at the time of the progress reports and continuously during the period from July to October 2001 that the materials obtained under search warrant were the subject of analysis in the One.Tel investigation, and that ASIC's investigation included an investigation of possible contraventions of s 180. It is relevant to note that the papers for the 7 August NECC meeting, distributed on 3 August to the NECC members, including Ms Redfern, included a progress report listing various persons of interest, including Mr Rich, Mr Keeling and Mr Silbermann. Shortly after the NECC meeting on 7 August, Ms Redfern and Mr Howell had a discussion in which they resolved that the next briefing concerning One.Tel should deal with strategy and options, and it should occur at the NECC meeting scheduled for 4 September. Having regard to this evidence, I agree with the defendants that such inferences are appropriate. 58 On 28 August 2001 Mr Howell circulated a briefing note to Mr Wood, Ms Redfern and Mr Turton and others. The briefing note "highlighted" major issues that had been identified. Two of the issues related to banking facilities, and the specific matters that led to ASIC subsequently sending a brief to the DPP with a view to criminal charges against Mr Silbermann (which were ultimately not pursued). There were three other matters, relating to One.Tel accounts (upon which the briefing note said that the "main focus" related to possible contraventions of ss 1309 and 1307), false or misleading statements in relation to securities, and continuous disclosure. On the same day Mr Staples sent an e-mail to Mr Connor, attaching a paper which said that "the team is investigating whether Rich has contravened CL s 999 …", and also whether One.Tel's directors and executive officers intentionally, recklessly or negligently failed to give proper notification of ASIC. 59 The documents of 28 August are important because, although other evidence indicates a growing interest on the part of ASIC in a civil s 180 case, the documents of 28 August show that the potential criminal consequences of the matters being investigated were still under consideration. 60 Ms Redfern circulated an e-mail to ASIC officers proposing that before 4 September she and others would meet with the liquidators of One.Tel to have a "meaningful discussion" of the kind necessary before the next court directions hearing on 24 September. A meeting was arranged between Ms Redfern and a liquidator of One.Tel and was held on 29 August. The agenda papers for the NECC meeting of 4 September proposed a verbal recent report on One.Tel, and the minutes of the meeting record that a progress update was given. 61 An Investigation Plan Progress Update dated 5 September 2001 listed as the scope of investigation "to collect evidence to prove or disprove" that a number of listed contraventions occurred, corresponding with the statutory provisions designated in the s 13 file notes. The document contained a list of tasks, principally for examinations and re-examination is under s 19, but at the end of the document the "miscellaneous investigative administration" included "liaise with DPP on a monthly basis". 62 Ms Redfern participated in meetings with counsel on 5, 7 and 12 September. According to Mr Hogan's notes, Ms Redfern attended a meeting with Mr Pembroke SC and Mr Stack of counsel, and other ASIC officers, where potential causes of action were to be identified and it was suggested that ASIC might consider a directors' duties case. According to the notes, there appears to have been some discussion about revealing results of the investigation to date (probably, I infer, to the court on 24 September), and reference appears to have been made to the seized documents. Cross-examined about this matter, Ms Redfern agreed that at least as early as September 2001, a civil penalty proceeding for breach of directors' duties was under consideration. 63 On 7 September 2001 Mr Turton signed a file note under s 13(1), recording reason to suspect contraventions by Mr Silbermann of s 596 of the Corporations Law (using false pretences or fraud to induce a person to give credit to a company): Exhibit P27/1.374. He described his decision as a decision to extend ASIC's investigation into One.Tel and others including the two defendants, and said that he had reviewed a document entitled "One.Tel Ltd Briefing 28 August 2001" and had received verbal advice from a number of ASIC officers (not including Ms Redfern).

3.9 The judgment in Williams v Keelty 64 Hely J delivered his judgment in Williams v Keelty (2001) 111 FCR 175 on 13 September 2001. Ms Redfern agreed in cross-examination that she was very interested in the judgment and read it carefully at that time. She acknowledged (T 1856-7) that she understood that: (a) Part 1AA of the Crimes Act provided a limited legislative permission to make things seized available to officers of other agencies; (b) Part 1AA required the return of the things seized when the reason for seizure no longer existed or if it was decided that the things were not to be used in evidence in criminal proceedings; (c) using the things seized for purposes other than those specified in the warrant (such as, for example, evidence in a civil proceeding) would be an abuse of power; and (d) ASIC could not lawfully use documents seized for a purpose foreign to the purpose for which seizure was authorised. 65 His Honour's decision will be considered in detail later in these reasons for judgment. As will be seen, the relevant parts of the judgment were concerned with whether ASIC could use seized materials as evidence in, or in connection with, an existing civil proceeding. But Hely J expressed the relevant principles in wide language.

3.10 Shift away from the insolvent trading case, and the joint advice by Mr Pembroke SC and Mr Stack 66 Agenda papers for the NECC meeting of 18 September were circulated on 14 September, and Ms Redfern had several meetings with counsel, one attended by representatives of the liquidator, on 17 September. She attended the NECC meeting on 18 September. The minutes of the meeting, which are characteristically brief, recorded that counsel's opinion was to be sought in respect of insolvent trading, and "investigation to focus on directors' duties". 67 Over the next two days there were further conferences with Mr Pembroke SC and Mr Stack, leading to written advice by them on 19 September, which noted that there had been "a logical and informal division of responsibility between the Commission and the Liquidators", and after discussion, concluded that it had become apparent that "an insolvent trading proceeding, if one is available, will be undertaken by the liquidators", and that "the Commission will, if so advised, undertake a civil penalty action for breach of directors' duties", although the Commission was not able to "point to some definable course of action … at this stage of its investigation". Thereafter ASIC did not pursue an insolvent trading claim, and the principal focus of ASIC's investigation was on directors' duties. 68 At a directions hearing on 24 September, the asset preservation proceeding was adjourned for further directions on 10 December. Having regard to counsel's advice, Ms Redfern recognised that it would be necessary to develop a prima facie case by December 2001 if it were to maintain the asset preservation regime that was then in place.

3.11 Preparation of the Consolidation Report 69 Shortly after the directions hearing of 24 September, the idea was developed that ASIC's team members would complete preliminary reports supported by documentation, outlining their findings to date, and Mr Connor and Mr Hogan would then consolidate those findings into a single report by 3 October, for the purpose of obtaining counsel's advice. Ms Redfern stressed in an e-mail the importance of meeting this timetable. In the meantime ASIC sent a brief to advise to the Director of Public Prosecutions with respect to a suspected criminal offence by Mr Silbermann concerning banking facilities (eventually not pursued). 70 There was a further meeting of the NECC on 2 October, at which it was noted that Ms Redfern and Mr Howell would provide a thorough briefing and recommendations on 27 November and would discuss the "Consolidated Report". A progress report circulated for the 2 October meeting listed a number of persons of interest including Mr Rich, Mr Keeling, and Mr Silbermann. It was the last progress report to list a significant number of persons of interest, beyond the defendants in the present proceeding. 71 The consolidated report foreshadowed at the NECC meeting on 2 October was completed on the following day, and has become known during the course of evidence and submissions as "the Consolidation Report", although its actual title was "One.Tel Investigation - Progress Summary". The document, which ran to 31 pages, considered One.Tel's financial reporting tools, information provided to One.Tel's directors, financial information available to the market, One.Tel cashflows, forecasts and global cash position, issues relating to Publishing and Broadcasting Ltd, and issues relating to banking facilities. At various stages in the document the investigators expressed opinions about "concerns", supporting evidence and proposed further action, and occasionally stated some conclusions. 72 The Consolidation Report was not allowed into evidence as proof of the truth of its contents, but it is permissible to regard it as evidence of the matters under consideration at the time it was written. Clearly some of the concerns and conclusions recorded in the document relate to negligence, but there were also concerns expressed about falsification of documents and active deceit, and some of the other matters identified are said to be either deliberate or negligent. Reading the document as a whole, I have concluded that there is a significant element of concerned about criminal offences, although there is an emphasis on duty of care.

3.12 The fourth joint opinion of Mr Bathurst QC and Mr Payne 73 An opinion of Mr Bathurst QC and Mr Payne in relation to the HIH proceeding, entitled "fourth joint opinion", addressed issues concerning the use of materials obtained under a search warrant. The opinion is dated 3 October and refers to arguments raised in Williams v Keelty, but the authors do not appear to have read Hely J's judgment prior to concluding their opinion, for there is no reference in the opinion to Hely J's decision and reasons. Nevertheless counsel's views are generally very similar to the views expressed by Hely J. 74 Counsel advised that if ASIC obtained material seized under a search warrant issued under Part 1AA for the purpose of a criminal investigation, it could not later use any of that material as evidence in a civil proceeding regarding similar facts and issues. The "guiding principle" was that the powers conferred by Part 1AA must only be used for the purposes for which those powers were granted and must be exercised reasonably in all the circumstances - although, they said, it was arguable that materials obtained pursuant to a warrant limited to certain specified offences might be used as evidence in the prosecution of other criminal offences. Counsel disagreed with the suggestion (mentioned in Mr Wigney's advice) by Jenkinson J at first instance in Grollo v Macauley that material seized pursuant to a search warrant could be used in a civil proceeding with the sanction of the court, saying that the suggestion was "implicitly doubted" by the Full Court on appeal, (1995) 56 FCR 533 at 550B, 551D-E. 75 Counsel advised that if the same ASIC officers are involved in the execution of a search warrant and the conduct of a civil proceeding concerning the same or similar facts, there is an increased prospect that a court will find that the procuring of the warrant was for the improper purpose of obtaining evidence for the civil proceeding; and an increased risk of a successful challenge to the use of search warrant materials in the civil proceeding, on the ground of contempt of court. They said that these risks would be minimised by establishing entirely separate criminal and civil investigation and litigation teams. 76 One of the questions addressed by counsel in the fourth joint opinion was this: "Can ASIC seize material under a search warrant for the purposes of a criminal investigation and later derive information from that material and use it to initiate further investigations to be carried out for the purposes of obtaining evidence for civil proceedings involving similar facts and issues?" Counsel's brief answer was that ASIC was not able to use material seized pursuant to a search warrant for the purpose of deriving information for use in civil proceedings. 77 The hypothesis underlying the question was unclear. It seemed to contemplate a criminal investigation and then a subsequent derivation of information from, and use of, the seized material to initiate further investigations for the purposes of a civil proceeding. It is not clear to me from reading the opinion that counsel was invited to focus on a single investigation which has criminal and civil elements. The recommendation for separate teams seems to have emerged out of counsel's answers to questions regarding improper purposes at the point of issue of the warrant and use of the seized materials in a civil proceeding, rather than any risk of impropriety from use of the seized materials in the course of an investigation having criminal and civil elements. 78 Ms Redfern agreed in cross-examination that she read the fourth joint opinion and understood the "guiding principle" to which I have referred. She said she did not disagree with it and accepted that ASIC should act accordingly. 79 On 4 October Ms Redfern sent a memorandum to Mr Wood, copied to others, in which she noted that Mr Bathurst and Mr Payne had considered whether documents obtained on search warrant could subsequently be used in civil proceedings, and she said that "the advice from counsel is that the documents cannot be used because of the narrow terms of the provision of the Crimes Act". Following receipt of the opinion, Ms Redfern sought further advice from Mr Bathurst and Mr Payne. She took leave and was away from ASIC's premises from 5 to 15 October.

3.13 ASIC initiates general review of search warrant procedures 80 On 12 October 2001 Mr Wood initiated a general review of ASIC's search warrant procedures, in response to criticisms made by Hely J made in Williams v Keelty. The review was to be conducted by Associate Professor Susan McNicol of Monash University and Mr Ladlay, ASIC's ACT Regional Commissioner. He wrote to Associate Professor McNicol on that day, and Ms Redfern was aware that he did so. 81 Ms Redfern gave some evidence in cross-examination about her understanding of search warrant law in June and mid-October 2001 (T 1482ff, T 1867ff). She was asked whether she held the view at the time that ASIC was free to use search warrant materials for the purpose of investigating possible contraventions of s 180 of the Corporations Law, a provision with only civil consequences. She said: "My view at the time was that we could use search warrant material in order to investigate the conduct to consider whether there were contraventions either at criminal or civil standard in relation to directors' duties and some of the other provisions that were referred to. That was my view, rightly or wrongly." 82 When pressed further, she said: "… you don't have a separate investigation for either a civil or a criminal matter. You just have one investigation to consider whether you will get to a criminal or only a civil standard." 83 When asked whether she had legal advice to support her view, she said that ASIC had Mr Wigney's advice but she agreed that the view she held as to the propriety of using search warrant materials in an investigation which had a civil aspect was not supported by legal opinion. She said that the issue for her related to what could be done at the end of the investigation process if ASIC formed the view that it would not launch a criminal prosecution - that is, I take it, she was uncertain and needed further advice about the prospect that the search warrant materials (and possibly evidence derived from their use) might be excluded from evidence if the decision at the end of the investigation was to take civil rather than criminal action. She said that by October she had learned more about search warrants and had formed the view that there was no problem (T 1869). 84 Ms Redfern gave evidence (T 1862) that she did not turn her mind to ASIC's entitlements and obligations with respect to use of the One.Tel search warrant materials until about 19 October. She explained that until that time, she had a peripheral involvement in the One.Tel investigation and more heavy involvement in the asset preservation litigation, although she had given consideration to issues about the use of search warrant materials in connection with HIH. 85 This evidence was challenged, but I accept it. The word "peripheral" identifies a question of degree. Ms Redfern said, in effect, that the focus of her attention until mid-October was on the HIH litigation and the asset preservation proceeding. It is nevertheless true that she had a significant involvement in the One.Tel investigation, and I do not take her evidence as meaning to deny that this was so. She participated in the discussions which led to the extensions of the s 13 determinations, she received investigation plans and progress reports, she had a role in the preparation of the strategies and options paper, she met with the liquidators, she participated in the 18 September NECC meeting at which it was decided to focus on directors' duties, and prepared her "plan of attack" e-mail of 25 September, and she was involved in the instigation of the Consolidation Report. Her point about "peripheral" involvement was, I think, intended to explain why she did not give particular attention to the use of the search warrant materials in the One.Tel matter before 19 October. 86 In an e-mail dated 25 July 2002, Ms Redfern referred to the limitations about the use of seized materials and said they needed to be carefully considered at the outset, and the possibility that there may need to be two teams should be addressed. In their context, however, it seems to me reasonably clear that these remarks are directed to difficulties in use of the seized materials in subsequent civil proceedings, rather than in the investigation phase.

3.14 Mr Pembroke SC's advice in conference on 10 October 2001, and the developing focus on a civil penalty case 87 On 10 October, while Ms Redfern was on vacation, others in the One.Tel investigation team met again with Mr Pembroke SC and discussed a potential proceeding under s 180, and the engagement of accounting and corporate governance experts. The evidence indicates that the focus of attention at the conference was s 180 rather than other duties of directors. In particular, there is an e-mail from Mr Hogan to Ms Redfern dated 12 October which attaches a memorandum summarising the 10 October conference with counsel. The memorandum describes two causes of action for breach of s 180, namely a "systems" case (evidently based on failure to have appropriate systems in place to monitor financial performance) and a "statements" case (evidently based on failure to verify the accuracy of statements made to the market). 88 On 13 October Mr Howell sent an e-mail to Ms Redfern, telling her that a lot had happened during her vacation, observing that "Murdoch's interview just confirmed my view that all directors were negligent - Michael Pembroke agrees". 89 On the same day, Mr Howell distributed a progress report for an NECC meeting then scheduled for 16 October. The progress report included the heading "Investigation Focus", under which it was said that "the investigation is focusing on breaches of duty by directors, Rich, Keeling, Silbermann, Beck, Packer, Murdoch, Adler and Greaves between January and May 2001 in neglecting their duties in respect of the financial position of One.Tel and allowing false and misleading statements to be made to the market". According to Ms Redfern's evidence (T 2858) the reference to allowing false and misleading statements to be made to the market indicated that ss 999 and 1308 were still under consideration, and the focus of investigation had not been reduced to s 180. I shall return to this. The "persons of interest" list was revised in the progress report, to remove the names of those who were not directors of One.Tel, and to included One.Tel's non-executive directors, Messrs Packer, Murdoch, Adler and Greaves. No minutes have been produced evidencing that any NECC meeting was actually held on 16 October. 90 On 17 October, having returned from vacation, Ms Redfern reviewed the One.Tel investigation, including the Consolidation Report, Mr Hogan's e-mail of 12 October attaching a memorandum of the conference with counsel, and a transcript of interview with Mr Murdoch. In this way she became aware that Mr Pembroke had described two causes of action against the directors, each based on s 180. 91 In cross-examination, Ms Redfern did not accept that by 10 October the particular directors' duties that were being examined for the purposes of proceedings were under s 180 of the Corporations Law, but she agreed that at some stage ASIC eliminated insolvent trading from the investigation (T 2902-3). It was put to her that by October 2001 she had formed the view that she wanted to take civil penalty proceedings against at least Mr Rich, but she rejected the suggestion that she had made a decision, saying that this was only an available option and she was considering whether to advise the Commission to pursue it (T 2958), though she acknowledged that it was the most likely remedy (T 2959). She agreed that from October 2001 she personally held the view that there was sufficient evidence to bring a civil penalty proceeding against at least Mr Rich: T 2959. She insisted, however, the criminal conduct by the defendants was part of the investigation, and although less likely than a civil proceeding it had not been entirely ruled out (T 2960-1). 92 At some stage Ms Redfern made a handwritten note on Mr Hogan's memorandum summarising the 10 October conference. The note was "What about actual knowledge?" She explained in cross-examination that she regarded the s 180 case as a lower-level case, and thought that if there was actual knowledge, a different approach may have been appropriate. She wrote the note because she felt that an obvious issue was being ignored in the investigation.

3.15 Arrival of Ms Rees 93 Ms Rees became a consultant with ASIC on about 18 October, joining the investigation team as a senior lawyer (T 2896; cf T 2964). Ms Redfern agreed in cross-examination that at that time, there was no intention of taking criminal proceedings against any of the directors for breach of directors' duties, but she added that "it wasn't entirely eliminated", and said that "there were a couple of things that we were actually looking at the time in terms of back-up tapes and things like that". Her evidence that criminal prosecutions had not been entirely eliminated is consistent with the fact that in November and early December there were some fourteen s 19 examinations and interviews (conveniently listed in ASIC's principal submission, AS 45, p 49), so in mid-October the investigation was far from complete. 94 About the same time Mr Carter was engaged by ASIC to act as an investigator in the One.Tel matter. There was a team meeting on 18 October, but is not clear whether Ms Redfern was present. It appears from notes made by Mr Hogan, that there was discussion favouring the "statements" case, presumably the one identified by Mr Pembroke SC in conference on 10 October, and the notes also refer to "Tom Bathurst advice", suggesting that there was some discussion about the use of search warrant materials for civil proceedings.

3.16 Ms Redfern's e-mail of 19 October 95 Ms Redfern sent an e-mail to Mr Howell on 19 October, copied to various other people including Ms Rees, expressing her opinions as a result of the review of the materials on 17 October. She expressed the preliminary view that there was potential for a good civil case against the least Mr Rich, Mr Keeling and possibly Mr Packer, and to a lesser extent Mr Murdoch. She expressed a preference for seeking only banning and compensation orders and not pecuniary penalties, so as to avoid "the quasi criminal arguments". She said she wanted counsel's advice on the use of the material obtained under search warrant, saying: "We have recieved [sic] an advice from Tom Bathurst QC about the limitations of the Crimes Act and since much of the One.Tel material was received from One.Tel I wonder whether we could do anything to unravel the Crimes Act problems. Counsel should be briefed with the Bathurst advice." 96 In her affidavit made on 1 October 2004, Ms Redfern referred her e-mail of 19 October 2001 and said: "At the time that I sent that e-mail my concern was as to whether or not ASIC would be entitled the use in evidence (that is, to tender) documents obtained under search warrant in a civil proceeding relating to the collapse of One.Tel. I did not believe that there was any impediment to ASIC reviewing documents obtained under search warrant during the course of what I considered to be an investigation relating to various issues arising out of the collapse of One.Tel for the purpose of determining whether or not that documentary evidence was of such a kind and rose to such a level of proof as to warrant the commencement by ASIC of criminal proceedings, or whether the material instead warranted the commencement of civil proceedings." 97 In an e-mail sent on 22 October she described a brief to Mr Bathurst and Mr Payne, to address additional questions of interest to ASIC generally, namely "what can we do if we are at the end of the investigation and want to use and what if we are in the middle of both and want to use". Additional questions to counsel concerned the derivative use of materials obtained pursuant to search warrants.

3.17 Conference with Mr Pembroke SC on 24 October 98 On 24 October 2001 Ms Redfern met with Mr Pembroke SC, Mr Carter of PwC, and ASIC officers including Ms Rees. By that time she had formed the view that ASIC had a reasonable case for civil proceedings against some, at least, of the directors, according to her oral evidence. Mr Carter made detailed notes of this meeting. It appears from the notes and Mr Carter's oral evidence that at the meeting there was discussion about bringing civil penalty proceedings against directors, and how the case might be put. Mr Carter's note identified two schools of thought as to the approach and scope of the work. One was an approach based on the knowledge of the defendants ("who knew what and lied about it"), an approach said to have been favoured by Ms Redfern. The other was an approach based on the adequacy of One.Tel's reporting system, said to be favoured by Mr Carter, Mr Pembroke and Ms Rees. 99 Mr Carter noted the work to be undertaken by PwC to assist ASIC in bringing these civil penalty proceedings, but also noted ASIC was "pursuing charges under s 1317". His view after the meeting was that PwC had been engaged to assist ASIC in its deliberations as to whether to initiate a civil penalty proceeding.

3.18 Further instructions to Mr Bathurst QC and Mr Payne 100 In an e-mail to another ASIC officer on 25 October, Mr Stecher, Ms Redfern confirmed that Mr Bathurst had advised that ASIC could not use evidence from search warrants for non-criminal proceedings, and she said the advice had "huge implications", and that there might be things that could be done. She said "we are facing this in One.Tel and are seeking advice as to what action should be taken". The correspondence appears to relate to the implications of the prohibition on using search warrant materials in civil proceedings. On the same day, Ms Redfern sent an e-mail to Ms Rees, confirming that ASIC needed "warrant advice", which she said would be very important. 101 On 30 October an ASIC officer sent a memorandum of further instructions to Mr Bathurst and Mr Payne, in which she summarised their fourth joint opinion and briefed them to answer further questions. The questions were directed to practical issues but did not explore whether ASIC could use search warrant materials in an investigation with criminal and civil components.

3.19 Mr Pembroke SC's written advice of 31 October, and subsequent events 102 On 31 October 2001 Mr Pembroke SC advised in writing that he had two causes of action in mind, both under s 180, namely a failure to ensure that the board was provided with the means to monitor management so as to be satisfied that the company was being properly run, and a failure to ensure that market announcements made on behalf of the company had a reasonable factual basis. This echoes the advice Mr Pembroke gave in conference on 10 October. Ms Redfern's oral evidence was that Mr Pembroke had a particular view of the matter, that was not necessarily her view (T 2853). 103 Mr Pembroke's written advice suggested that the assistance of PwC be sought, with a view to obtaining accounting evidence to explain the lack of practical utility of the information the directors had and the significance of what they did not have, and corporate governance evidence as to the practice of reasonably prudent directors of listed companies in relation to financial information. He also advised that information be obtained from PwC on whether there was a reasonable factual basis for the market announcements that had been made, and whether the directors had knowledge putting them on notice that there was no reasonable factual basis for the announcements. 104 There is other evidence from about this time to indicate that the One.Tel investigation team was looking closely at issues concerning the actual knowledge of the directors (for example, an e-mail of Ms Rees dated 30 October 2001 and an e-mail from Mr Staples stated 31 October setting out some draft questions for Mr Carter). 105 There is a One.Tel team meeting agenda circulated on 7 November which contains a series of headings, mostly on matters of investigation, but there are a few suggesting that possible criminal offences were still under investigation - for example "s 999 Mr Rich". 106 Ms Redfern gave evidence that, by early November 2001, there was considerable discussion within ASIC as to the permissible use of search warrant material, in light of the fourth joint opinion of Mr Bathurst and Mr Payne (T 2943). On 2 November ASIC sent a letter to Mr Pembroke SC, Mr Brereton SC and Mr Stack to advise on various questions including whether ASIC could use evidence obtained under warrant to initiate further investigations in order to obtain evidence for a civil proceeding. 107 On 5 November Mr Pembroke asked Mr Carter to investigate further the "warning bells" available to the non-executive directors in relation to working capital, EBITDA and cash, what happened to debtors, and what demonstrated an obvious connection between the negligence of directors and consequences flowing to the company.

3.20 ASIC/DPP Workshop, 15 November 2001 108 An ASIC/DPP workshop was scheduled for 15 November 2001, and on 9 November Mr Ladlay circulated the agenda to various people. On the same day he wrote to Ms Redfern, saying that Mr Wood had asked him to undertake a review of search warrant procedure in light of the HIH decision, and that he would be meeting with associate Professor McNicol a few days later. He asked for a copy of Mr Bathurst's opinion, and Ms Redfern subsequently provided the fourth joint opinion to him. Ms Redfern attended the workshop on 15 November. The first agenda item was "Related Civil and Criminal Proceedings and Issues Concerning Search Warrants". There was a paper presented on this topic, under the authorship of Paul Shaw of the DPP's office. 109 The paper referred to the ASIC/DPP guidelines and said that application should be made for a civil penalty order until the DPP had indicated to ASIC that a criminal proceeding should not be instituted. Mr Shaw explained that "search warrants are a criminal investigation tool only and cannot be used for civil proceedings." Amongst the practical lessons that might be learned from Williams v Keelty was that: "There may need to be some quarantining of ASIC officers after execution of search warrants, between criminal/civil penalty proceedings. This will reduce potential for allegations of impropriety but will mean a duplication of resources." It appears from the notes of an unnamed attendee that there was a discussion of the quarantining of staff on civil and criminal investigations. This is consistent with the fourth joint opinion. 110 It appears, from some handwritten notes in evidence, that there was a One.Tel investigation team meeting on 16 November. The notes have the heading "Degree of culpability", with subheadings "1 - Dishonesty (actual knowledge), 2 - Negligence (posns as jt mgg dirs), 3 - Systems (place proper systems, alerted bd etc to problems)". I do not regard such brief notes as a reliable indication of the true subject matter of the meeting, but they provide some slight evidence that a dishonesty case against the defendants was still under consideration.

3.21 NECC meeting on 21 November 111 There was a special NECC meeting on 21 November 2001. On that day Ms Redfern sent a memorandum to various ASIC Commissioners, copied to ASIC officers, setting out her views. She said she anticipated seeking approval to commence civil penalty proceedings against Mr Rich and Mr Keeling, and that the One.Tel team would be in a position to commence such proceedings by 10 December. She noted that the team was considering whether to seek pecuniary penalties, given that they would like the opportunity to use transcripts of s 19 examinations in evidence. She said that advice was being sought but her preliminary view was that failure to seek a pecuniary penalty "will not divert regulatory impact if the overall advantage of negating the 'quasi criminal' status of the civil proceedings is achieved". 112 In a memorandum of 21 November Ms Redfern summarised the scope of ASIC's investigation. She said: "our investigations have focused on market disclosures, directors duties, false or misleading accounting and misstatements to both the market and creditors". This suggests that the criminal aspect of the investigation was a significant part of it. 113 According to a note of the NECC meeting of 21 November made on ASIC's SPEAR system, the NECC received a briefing on the status of the investigation, with presentations by Mr Carter and Mr Pembroke SC. The NECC requested further advice from Mr Pembroke on available enforcement options, and it was recorded that there would be a further meeting of the NECC on 3 December at which Mr Pembroke would present further advice. 114 Ms Rees sent an e-mail to various members of the One.Tel investigation team dated 22 November, headed "Commission briefing yesterday", which I take to be a reference to the NECC meeting. She said the Commission had requested that further advice be obtained from counsel as to a number of matters, and suggested a team meeting. She listed the matters for advice as follows: · the nature of each offence available against the executive directors, the likelihood of success and what the remedy would be · what potential actions would be available against the non-executive directors, the likelihood of success and what the remedy would be · the impact of any action against the non-executive directors on the action against the executive directors · what other and more extensive outcomes to banning orders may be available, eg compensation · whether the evidence would support criminal proceedings against any of the directors. 115 Ms Rees' e-mail provides some significant evidence that, although the focus of attention was clearly on civil proceedings, the question of criminal proceedings against any of the directors was still under consideration on 22 November.

3.22 Counsel's further advice of 29 November, and NECC's meeting on 3 December 116 On 29 November 2001 ASIC received written advice from Mr Pembroke SC, Mr Brereton SC and Mr Stack, to the effect that ASIC would be justified in commencing a civil penalty proceeding against Mr Rich, Mr Keeling and Mr Greaves. 117 In paragraph 27 of the advice, counsel addressed the question whether the proof of the matters canvassed in the advice would be so clear as to be "beyond reasonable doubt", saying that while they were satisfied that a single judge sitting in the Corporations List of this Court would find the contraventions proved on the balance of probabilities, they did not believe that a criminal jury, charged with the responsibility deciding beyond reasonable doubt, could be so readily satisfied. They concluded that "the case is strong on the civil standard, but we do not recommend that consideration be given to a criminal prosecution". 118 The fact that, on 29 November 2001, counsel addressed the question whether a criminal prosecution should be brought and, having reviewed the evidence, advised against it, is quite a strong indication that until then, the possibility of criminal prosecution was still alive. The defendants invited me to regard paragraph 27 as merely a "sign off". I can see no basis for treating it as anything other than a simple statement of advice on a matter that at that time, counsel regarded as a matter under consideration. 119 The NECC met again on 3 December, and according to the record of the meeting made on ASIC's SPEAR system, ASIC decided at that meeting to commence and action for damages against Mr Rich, Mr Keeling, Mr Greaves and Mr Silbermann on 10 December, the day when ASIC would next be in court in respect of the asset preservation orders. The statement of claim was to be finalised by Mr Pembroke. 120 Ms Redfern's evidence was that the decision on 3 December was "in-principle approval by the Commission", subject to a number of things (T 1887). The final decision was taken later, after consultation with the DPP, but without referral back to the NECC. That evidence is supported by Ms Redfern's e-mail to the Commissioners dated 7 December 2001 (Exhibit P27/3.312). 121 The defendants attacked Ms Redfern's evidence on this point, on the ground that she asserted several times in her oral evidence (including one occasion when the question was put to her by me) that the decision had been made on 3 (or 4) December to commence the proceedings (T 1486, T 1519, T 1520, T 1840). The statement that the decision on 3 December was merely an in-principle approval and was not the final decision was made later in her evidence (T 1887, T 2907, T 2910). This, submitted the defendants, was an attempt by Ms Redfern to resile from her earlier evidence. 122 I think it would be unfair to Ms Redfern to accept this submission. As I observed when hearing her in the witness box, her evidence about the decision of 3 December being an "in-principle" decision was given when perusal of her e-mail of 7 December jogged her memory. The transcript does not quite record what I saw on the day, but one notes from T 1886 that Ms Redfern's attention was drawn to the 7 December e-mail, and that at T 1887 she says (I think for the first time) that the decision of 3 December was in-principle approval rather than the final decision. What the transcript does not say is that in the meantime, she read the e-mail, which refers to the meeting with officers of the DPP on 7 December. 123 The defendants referred to a letter to the DPP dated 4 December, a file note dated 4 December and two e-mails dated 5 December, as evidence that the decision to commence the proceedings was made on 3 December. I regard these documents as consistent with Ms Redfern's evidence. There is nothing inconsistent between the proposition that the meeting of 3 December decided to initiate proceedings, subject to a number of matters including consultation with the DPP, and the proposition that the final decision occurred when those matters had been attended to. I accept Ms Redfern's evidence on this matter. 124 At the time of ASIC's decision to commence proceedings, Ms Redfern was aware that many of the documents used in the One.Tel investigation which led to the decision to commence proceedings had been initially obtained through the execution of search warrants issued under Part 1AA of the Crimes Act. She was aware of Hely J's decision in Williams v Keelty, the contents of the fourth joint opinion of Mr Bathurst QC and Mr Payne, and the previous advice from Mr Wigney, all of which pointed to the view that documents seized pursuant to warrants issued under Part 1AA of the Crimes Act could not be used as evidence or otherwise in connection with a civil proceedings. She was also aware that her immediate superior, Mr Wood, had initiated a review to be conducted by Mr Ladlay and Associate Professor McNicol into the implications of Williams v Keelty for ASIC. But she believed, according to her evidence, that she was entitled to use a search warrant materials for the purposes of the investigation prior to commencement of the contemplated civil proceeding.

3.23 The sixth joint opinion of Mr Bathurst QC and Mr Payne 125 On 5 December Ms Redfern received the sixth joint opinion of Mr Bathurst QC and Mr Payne, which she read on that day. The opinion reiterated the legal principles stated in their earlier advice. They said that ASIC could not use material seized under a search warrant under Part 1AA as evidence in civil proceedings. Nor could it use seized material "for the purposes of deriving information for use in civil proceedings". After quoting from Hely J's judgment in Williams v Keelty, they said: "This inability of ASIC to use documents seized under a Crimes Act warrant for any purpose other than the purposes for which seizure was authorised - an actual or anticipated criminal proceeding - is the central and defining principle which should guide ASIC. This is a principle which has a greater impact on ASIC than most investigative agencies of the Commonwealth because of the dual criminal/civil focus of ASIC's enforcement powers and duties. … This is not to say that once seized under a Crimes Act warrant a document, no matter what the circumstances, will not be able to be tendered in evidence by ASIC in a civil case. The principle does , however, mean that if in order to tender a document in evidence in a civil case use is necessarily made of a document seized under a Crimes Act warrant, ASIC would be abusing its statutory powers and would be liable to be restrained. The resulting evidence is also likely to be inadmissible in the discretion of the Court in which the evidence is sought to be tendered: s 138(1)(b) Evidence Act (1995)." 126 Mr Bathurst and Mr Payne referred again to the opinion of Jenkinson J in Grollo v Macauley (1995) 45 FCR 336, at 352, to the effect that the civil court before whom the evidence obtained under warrant is sought to be tendered has a discretion to decide whether to permit that evidence to be used. Noting again that the Full Court "implicitly doubted" that view, they acknowledged that Jenkinson J's observations left open the possibility of an application, but said that for the reasons given by Hely J in Williams v Keelty, they regarded it as unlikely that ASIC would succeed in such an application. Of course, counsel did not have the benefit of Merkel J's judgment in the Marshall Bell Hawkins case (discussed below), which appears to proceed on the basis that the restriction can be overcome in the discretion of the court.

3.24 Advice in conference from the DPP 127 The defendants contended that there was no credible evidence that a criminal prosecution of Mr Rich was seriously in contemplation in December 2001. A brief to advise had been given to the DPP on 25 September 2001 with respect to specific matters concerning Mr Silbermann (matters not ultimately pursued), but no brief to the DPP regarding Mr Rich was produced by ASIC in answer to a notice to produce. On 4 December, when ASIC advised the DPP of its intention to commence the present proceeding, no mention was made of ss 181, 182 and 184 of the Corporations Law or the prospect of a case of breach of directors duties at the criminal standard. There was no "investigation closure report" in relation to Mr Rich like the one for the investigation concerning Mr Silbermann. 128 Nevertheless, in cross-examination Ms Redfern gave evidence that criminal proceedings were still in contemplation against Mr Rich in early December 2001. In answer to a question as to whether a brief had been sent to the DPP in relation to Mr Rich, Ms Redfern gave oral evidence (T 2903) that ASIC had sent the DPP a "preliminary advisory brief" around the end of November, comprising advice from counsel and possibly a report from Mr Carter. On the morning of 7 December Mr Wood and Ms Redfern had a conference with two senior officers of the DPP, Mr Joliffe and Ms Ryan, as a result of which (according to Ms Redfern's e-mail of 7 December) "the DPP appeared comfortable with the civil penalty proceedings in that they were comfortable with counsels' advice on the criminal prospects in relation to the other defendants". Ms Redfern's evidence was that until the DPP was consulted, there was a possibility of criminal prosecution. 129 I accept Ms Redfern's evidence on this matter. It is consistent with paragraph 27 of counsel's advice of 29 November 2001. It is plausible that, having received that advice, ASIC would have referred it to the DPP for confirmation. The absence of other contemporaneous records is explained by the fact that by December 2001 ASIC officers including Ms Redfern had formed their own view that the case did not reach the criminal standard, and so the purpose of referring the matter to the DPP was not to seek comprehensive advice with a view to prosecution, but to seek expert confirmation of the opinion that prosecution was not the best option. But, as Ms Redfern's evidence made clear, there was the possibility that the DPP might perceive matters in a different light from ASIC, and so it could not be said that criminal prosecution had been ruled out until the DPP's opinion was obtained.

3.25 The joint opinion of Mr Brereton SC and Mr Stack dated 7 December 2001 130 Neither of the opinions of Mr Bathurst QC and Mr Payne, nor the opinion of Mr Wigney, addressed the question whether the occupier of premises from which materials were seized could, after the execution of the warrant, consent to the use of the seized materials in a civil proceeding and their retention for that purpose. 131 On 5 December Ms Redfern forwarded the sixth joint opinion to Mr Pembroke SC and Mr Stack, although her evidence was that she did not discuss it with Mr Pembroke as he was not briefed on search warrant issues. She also met with a number of team members including Ms Rees and they discussed "search warrant material", according to Ms Redfern's oral evidence. Mr Connor made notes of a team meeting on that day, which was probably the same meeting, and noted a decision to "proceed on Silbermann, Greaves, Rich, Keeling". Mr Ryan, who was also at the meeting, sent an e-mail to Ms Rees and Mr Howell, copied to Ms Redfern, on the same day, planning for a media release, "given that we will initiate a civil action" on the following Monday. 132 On the evening of 5 December Ms Rees sent an e-mail to Mr Stack of counsel, with copies to Mr Pembroke SC and Ms Redfern, confirming that Mr Stack would draft letters to go to the Australian Federal Police and Peter Walker (one of the liquidators) with respect to the warrant documents. Later on the same evening Ms Redfern sent an e-mail to Mr Stack asking for written advice, particularly on the "derivative use issue", saying she understood that Mr Stack and "Paul" (presumably Mr Brereton SC) believed it to be resolved by the liquidators' consent. 133 On 6 December an ASIC lawyer reporting to Mr Wood prepared a memorandum dealing with the uses that could be made of material seized under Crimes Act search warrants, in which he noted that the material could not be used in civil proceedings, however convenient and practical such use might appear to be. On the same day Mr Ryan sent an e-mail to Mr Connor, copied to Ms Redfern and others, on the subject of "return of unwanted search warrant material". Mr Ryan's e-mail set out a procedure to be followed when, as anticipated, the liquidator agreed to the retention of documents. He said that when the procedure had been followed, the "civil team" should be able to access and use the documents retained by ASIC in the civil proceedings. As to documents to be returned, he said: "Civil team members will not access either the images of those documents or the original documents [from] this day forth [pursuant] to the direction issued by Jan last night and soon to be formalised in writing." 134 This is consistent with evidence given by Ms Redfern, to the effect that, as from about 7 December, ASIC's investigation team was divided into two parts, one part (including Mr Connor) working on the limited criminal case against Mr Silbermann on the other part working on the proposed civil proceeding, and that ASIC's LSS computer system was split so as to prevent the civil team from having access to documents seized from private residences under search warrants. 135 Mr Stack wrote a note to Ms Redfern and Ms Rees on 6 December confirming that he and Mr Brereton would issue a joint memorandum of advice confirming their opinion that ASIC would be entitled to use search warrant documents in civil proceedings once the liquidators gave the consents that were contemplated. 136 Mr Brereton SC and Mr Stack provided their written advice to that effect on 7 December 2001. Their written advice confirmed, consistently with the advice from Mr Bathurst and Mr Payne and Mr Wigney, that ASIC was not entitled to use evidence obtained pursuant to a Crimes Act search warrant to initiate further investigations for the purpose of obtaining evidence for civil proceedings, and in civil proceedings evidence so obtained might be excluded by injunction or, if not, excluded under s 138, subject to the court's discretion to admit it. Counsel said that their opinion was not altered by the facts that ASIC's file notes under s 13(1) of the ASIC Act recorded that the investigation was into both civil and criminal matters, that the prospective defendants in the civil proceeding did not include the person from whom the documents were seized, and that the civil proceeding sought civil penalties. 137 The advice also expressed the view that a properly informed owner of documents that had been seized under warrant could consent to that material being used in a civil proceeding, and if the owner did so, the use of the documents would not then be an abuse of power and ASIC could use them in the civil proceeding. 138 In her affidavit made on 1 October 2004, Ms Redfern said she read counsel's advice when she received it, and continued: "As a result of counsels' views, I formed the view that a consent from the liquidators of One.Tel with respect to the use of any documents which ASIC obtained from the liquidators under search warrant should be obtained. [She then identified the liquidators' consent of 7 December 2001, a copy of which she exhibited to her affidavit.] In light of counsels' advice, I took the view that this consent ensured that ASIC was entitled to use the documents in the civil proceedings then under contemplation." 139 The defendants submitted that such evidence as they have been able to obtain about ASIC's attitude since December 2001 to the use of search warrant materials for extraneous purposes indicates that ASIC "gave no credence to the views expressed in that 7 December 2001 advice and did not see it as providing a practice on which it could rely in subsequent investigations". I disagree with that submission. Ms Redfern's evidence indicates that ASIC accepted the 7 December advice and acted on it. The defendants did not suggest to her that she did not accept the advice. The evidence as to ASIC's review of search warrant practices and the development of responses to Williams v Keelty (noted below) is directed towards cases where the consent of the occupier has not been obtained and precautionary measures are therefore needed. 140 The defendants invited me to find that the idea of overcoming search warrant problems by obtaining the liquidators' consent was first proposed quite late, indeed after ASIC received the sixth joint opinion of Mr Bathurst QC and Mr Payne on 5 December. They noted that the question of the effect of consent had not been posed in ASIC's observations to Mr Brereton SC and Mr Stack, saying this indicated that the question was raised subsequently. But the observations, which are in evidence, are not dated, and it is clear that ASIC was seeking to "unravel" the Crimes Act problems from at least mid-October. The evidence does not permit me to make any finding as to when the possibility of overcoming search warrant problems by obtaining the liquidators' consent was first conceived. 141 The liquidators executed an instrument of consent on 7 December 2001. The contents and effect of this document will be considered later. A further, more formal instrument, in the form of the deed, purporting to confirm the consent, was executed by them on 15 October 2004.

3.26 Later events 142 On 7 December Ms Redfern sent an e-mail to the ASIC Commissioners, reporting on recent events. She said that counsel had just advised that there were concerns about the use of search warrant material and had suggested that the liquidators' consent to use and retain the documents for civil proceedings be obtained. Ms Redfern said that the liquidators' written consent had been obtained. She noted that according to counsel's advice search warrants should be used sparingly if ASIC did not want to be subsequently limited in its enforcement remedies. On the same day she sent an e-mail to Ms Rees and other ASIC officers, saying a procedure would be necessary for returning documents not needed for criminal purposes. 143 The e-mail contains some evidence confirming that the possibility of initiating criminal prosecutions against directors, beyond the specific case being explored against Mr Silbermann, was still alive early in December 2001. As noted earlier, the e-mail contains Ms Redfern's report of her conference with the DPP, the outcome of which was that the DPP was comfortable with counsel's advice against criminal prosecutions of the defendants. Later in the e-mail, in summarising the views that had been reached she said, "we have formed the view that apart from Silbermann, we are unlikely to prosecute the other directors". 144 Late in November 2001 there had been some correspondence between Nicole Pyner of ASIC and the Criminal Law Reform Branch of the Commonwealth Attorney-General's Department, about a government response to a report of the Senate Standing Committee for Scrutiny of Bills in the year 2000, entitled Entry and Search Provisions in Commonwealth Legislation. Ms Pyner made contact with Mr Wood, who wrote to her on 8 December 2001 (not 12 August, as ASIC's submissions wrongly say) referring to the problem of use of seized materials in civil proceedings and asking Ms Pyner to "look generally at the problem". 145 On 10 December 2001 Mr Turton wrote to Mr Sykes of the AFP, informing him that ASIC had decided it did not intend to use the vast majority of documents that were seized on 1 June 2001 from the business premises of One.Tel in any criminal proceedings for a summary or indictable offence. However, he said, ASIC wished to retain the documents and had sought and obtained the consent of the liquidators to do so. It appears that Mr Sykes asked for a copy of the liquidators' consent and it was supplied to him on 10 December. Subsequently the documents were retained by ASIC. 146 On 21 December 2001 Mr Hogan wrote an e-mail giving instructions to create another directory for the One.Tel matter, into which he and Mr Connor could put documents relevant to the criminal aspects, as it was necessary to create a Chinese wall between the civil and criminal matter. Mr Hogan said that only Mr Connor and he should have access to the new directory. According to ASIC's letter to the defendants' solicitors dated 3 November 2004, as at that date ASIC had possession of copies of the images of computers made during the execution of the search warrants at the residences of Mr Rich, Mr Silbermann, Mr Keeling and Mr Beck. The letter says that the One.Tel civil team did not have access to the copy documents from the residences of Mr Rich, Mr Silbermann and Mr Beck. 147 There is some evidence as to the further development of ASIC's thinking on the search warrant issues during 2002, though in my opinion it has little bearing on the questions I have to decide. Since, however, the evidence was addressed in submissions, I shall briefly deal with it. 148 Mr Ladlay's work on search warrant issues continued into 2002. Early in January he suggested to Mr Wood that there be a protocol, when obtaining a warrant, for the provision of an undertaking not to use the documents for other than criminal proceedings, and that (where possible and practicable) separate civil and criminal teams be established. Mr Wood's response was that ASIC should develop a paper arguing case for legislative amendment. 149 A paper was prepared by Ms Pyner, dated 9 January 2002, for the purpose of Mr Wood's discussions with the Minister. The paper confirmed that according to the current state of the law, evidence obtained under a Crimes Act warrant could not be used in civil proceedings and would not ordinarily be admissible in such proceedings, and information acquired from documents obtained under a Crimes Act warrant could not be used to initiate further investigations for the purpose of obtaining evidence in civil proceedings. The paper foreshadowed further challenges to ASIC's investigative procedures in matters involving civil and criminal action where a search warrant is executed, leading to delay and the prospect of cross-examination of ASIC officers. It suggested that ASIC may have to establish two investigations, a criminal investigation with the use of search warrant material and a civil investigation without the use of this material, to avoid the inference that evidence obtained under search warrants was procured for use in civil proceedings. Proposals were made for reform, to permit ASIC to apply for a search warrant when investigating a serious contravention, regardless of the remedy that it might ultimately seek. 150 There is correspondence between Mr Wood and Associate Professor McNicol in mid-January, drawing the professor's attention to the practical implications of Williams v Keelty. Dialogue with the Minister had begun by 24 January, and on 1 March Mr Wood and another ASIC officer met with Treasury officials to discuss the issues that had been raised. There was further discussion as to whether it was necessary to have separate civil and criminal teams, and on 21 March an ASIC officer suggested to Mr Ladlay, by e-mail, that teams need not be segregated as long as there was a practical way of stopping the civil team from seeing the search warrant material. That suggestion was received sceptically. On 22 April Associate Professor McNicol made a presentation to ASIC officers, and subsequently Mr Wood asked her to be "a little more expansive" on problems associated with Crimes Act warrants, such as limited use and separate teams. 151 On 13 June 2002 Associate Professor McNicol, in an e-mail to Mr Ladlay, recommended "ultimately and reluctantly" the splitting up of investigation teams into civil and criminal teams, though she conceded that there was an opposing "pragmatic view" that this would be unworkable. It is clear from her recommendations that she regarded the splitting up of the teams as desirable rather than necessary. She maintained this position until the submission, on 2 July, of her revised paper and recommendations. 152 On 25 July 2002 Ms Redfern sent an e-mail to Mr Ladlay and others, setting out her views on Associate Professor McNicol's paper. As earlier mentioned, she speculated that ASIC might be over-enthusiastic about the issue of search warrants. She said: "For instance in the case of One.Tel we executed a search warrant on the company which was at that time under the supervision and control of administrators that we had confidence in. Executing a warrant is resource intensive but leaves residual problems in that a large amount of documents are seized early in the investigation and we need to be disciplined in examining those documents, focusing the investigation and returning what we do not need. … We also need to be mindful of the limitations we have, raised in Keelty about the use of documents. While the only way to really overcome this is law reform, it needs to be carefully considered at the outset and the possibility that there may need to be 2 teams should be addressed." 153 There were further discussions about search warrant issues and law reform proposals, and by 12 March 2003, Mr Ladlay was able to say, in a memorandum to ASIC's Senior Management Team, that he believed that Associate Professor McNicol's recommendation for separate civil and criminal investigation teams had been implemented. 4. Conclusions as to facts 154 Much attention was directed, in submissions, to the knowledge, understanding and belief of Ms Redfern as to the nature and scope of the One.Tel investigation, the issue and execution of the search warrants, and the restrictions that the law imposed upon the use of the seized materials for purposes other than the criminal purposes identified in the warrants. That was a plausible approach. As earlier noted, she is presently the Executive Director of Enforcement at ASIC. She was New South Wales General Counsel of ASIC until 30 June 2001, and was Deputy Executive Director of Enforcement from 1 July 2001 until 16 January 2004. She is the solicitor on the record in this proceeding. Her evidence was put forward by ASIC to answer questions that had been raised during the early part of the hearing as to the propriety and lawfulness of ASIC's use of the search warrant materials. 155 ASIC expressly submitted that Ms Redfern was its directing mind in relation to material obtained under the search warrants and in relation to the present proceeding. The defendants' submissions were critical of Ms Redfern's evidence, and invited me to find on the basis of that evidence that there had been recklessness or impropriety on ASIC's part, and invoked Jones v Dunkel (1959) 101 CLR 298 with respect to ASIC's failure to call other evidence, such as evidence from Ms Rees, as regards ASIC's state of mind after December 2001. On the view I take of the facts and law, it is unnecessary to consider ASIC's state of mind after 7 December 2001, and therefore there is no need for me to consider whether a Jones v Dunkel inference is appropriate on that issue. I shall proceed on the basis that findings about Ms Redfern's state of knowledge, understanding and belief are findings about the state of knowledge, understanding and belief of ASIC during the period from 1 June to 7 December 2001.

4.1 Ms Redfern's knowledge of the investigation 156 It seems to me clear, and not denied by ASIC, that Ms Redfern was aware of the nature and scope of the investigation at all times from its commencement. She read the initial referral from ASX and discussed it with Mr Turton. On 5 June Mr Turton extended the scope of the investigation to encompass, inter alia, statutory directors' duties including s 180, after receiving verbal advice from Ms Redfern. I infer that she knew that this extension occurred, and that she was aware (as a senior ASIC lawyer) that contravention of s 180 had only civil consequences. For a time she was preoccupied by other matters including the HIH investigation and proceeding, so that her involvement in the One.Tel investigation became (as she said) peripheral, and her primary involvement from early June until mid-October 2001 was in the asset preservation proceedings. Nevertheless she was kept informed about the progress of the investigation in the various ways summarised in my account of the facts.

4.2 Ms Redfern's knowledge about the search warrants 157 Ms Redfern was also aware of the general nature of the search warrants, though the evidence was that she did not read them. She new that an application was to be made for the issue of search warrants, before that step was taken. She knew, at least in general terms, that the seized materials were being used in the investigation, at least from the time of the briefing papers that were circulated in the period from 7 to 17 July 2001.

4.3 The scope of the investigation from June to December 158 I am satisfied from the evidence that, during the period from 5 June 2001 to 7 December 2001, ASIC was engaged in a single investigation into matters concerning One.Tel, and various identified directors and executive officers, relating to possible contraventions of the statutory provisions listed in Mr Turton's s 13 file notes dated 5 and 15 June 2001, including at least ss 999, 1308, 1309, 180, 181, 182 and 184 of the Corporations Law. There was also an investigation, generally separate from the main one, into Mr Silbermann's potential criminal liability with respect to specific matters (ultimately not pursued), initiated by a s 13 determination on 7 September. 159 The scope of the investigation was defined principally by the s 13 file notes of 5 and 15 June. But the s 13 determinations, though an important component of the evidence, were not conclusive. Matters could be removed from the investigation by later decisions by ASIC. The evidence provides the basis for an inference, which I draw, that at a time not long after a conference with counsel on 19 September ASIC decided not to pursue the insolvent trading claim, and to leave that matter to the liquidators. The evidence does not point to a particular decision-maker taking that decision, but strong support for the inference that it occurred is found in many later ASIC documents, summarised above, in which the insolvent trading claim is not considered, as well as Ms Redfern's evidence. 160 As my summary of the evidence has shown, during the period from September to December there was an increasing focus on making a directors' duties case against various directors, and by about mid-October the preferred course was to initiate a civil penalty proceeding complaining of breach of s 180 against some directors, although the precise composition of the defendants was still a matter for debate at that stage. The Consolidation Report, Ms Redfern's e-mail of 19 October 2001, other memoranda and conferences with counsel in the period from 3 October to 29 November, were principally directed to the s 180 case. 161 However, there is evidence that the prospect of criminal proceedings against the defendants and other directors remained under consideration as a possible but not a likely outcome. For example, the update of 16 October referred to a breach of duty case against directors for "allowing false and misleading statements to be made to the market", suggesting (according to Ms Redfern's evidence) the possibility of a criminal prosecution. The defendant submitted that the reference to allowing the making of false and misleading statements is a reference to one of the two "negligence causes of action" that had been discussed with counsel on 10 October. But I see no textual necessity in the progress update to construe it in that limited way, and Ms Redfern's construction is consistent with the s 13 file notes, according to which suspected contraventions of ss 999, 1308, 1309, 181, 182 and 184 were matters of investigation. There is a file note by Ms Myers of the team meeting of 11 October in which she seems to treat "accuracy of fin statements to mkt" as a subset of "s 180 - care and diligence", but the meeting took place some days before the progress update was completed and it would be unsafe, in my view, to give significance to the ordering of points on a page of handwritten notes over the direct evidence of a senior officer of the Commission. 162 There was other evidence indicating that criminal proceedings were still under consideration. Ms Redfern gave consistent oral evidence that during October and November criminal proceedings were, in her view, a possibility, and she pointed to her note on Mr Hogan's memorandum of the meeting on 10 October, in which she wrote "What about actual knowledge?" In addition, I referred in my outline of the facts to Ms Redfern's memorandum of 21 November, and to the rather more explicit reference to further advice on criminal matters in Ms Rees' e-mail of 22 November. Counsel in fact advised on the prospects of success in criminal action in their written advice of 29 November. And Ms Redfern referred in her e-mail to the Commissioners dated 7 December to her conference with DPP officers in which they agreed with counsel's opinion, and she gave oral evidence about the conference. This evidence is supported, in my view, by the fact that during November and early December, there was still considerable activity with respect to s 19 examinations and interviews (conveniently summarised in AS 45, at page 48). 163 In my view the increasing concentration on the civil penalty case under s 180 was not raised to the level of a decision to abandon the prospect of criminal prosecutions under any of the sections designated in the s 13(1) notes, until after counsel advised against criminal prosecution for breach of directors' duties on 29 November and officers of the DPP indicated in conference on 7 December that they were comfortable with counsel's advice on that subject. The evidence just summarised is inconsistent with the proposition that ASIC had previously taken a decision not to pursue criminal prosecutions for breach of directors' duties. 164 That is an important conclusion, because it means that a single investigation into matters having criminal and civil aspects continued until 7 December, the date when the liquidators gave their consent, ASIC's firm and unqualified decision to commence the present civil penalty proceeding was taken, and the investigation team was subdivided into criminal and civil components.

4.4 Ms Redfern's knowledge, understanding and belief about restrictions on the use of search warrant materials for civil purposes 165 During 2001 there was a growing concern within ASIC about the limitations to which the Commission might be subject, by virtue of obtaining material through the execution of search warrants for specified criminal purposes and then subsequently wishing to use those materials as evidence or otherwise in connection with a civil proceeding. In mid-2001 the main focus of this concern was the HIH investigation, evidently because a civil proceeding had been commenced quite early in the investigation, in respect of a specific transaction, and search warrants were issued and executed subsequently. 166 One can see the development of ASIC's concern by reading and placing in sequence the opinion of Mr Wigney, and the two relevant opinions of Mr Bathurst QC and Mr Payne, in conjunction with the commencement, hearing and decision in Williams v Keelty. It was clear from the opinions, and clear with some emphasis in the opinions of Mr Bathurst and Mr Payne, that the problem about the use of search warrant material in civil proceedings was a general one for ASIC, not confined to the HIH investigation. 167 Ms Redfern read the opinions and was closely involved in the Williams v Keelty hearing, as a witness whose credit was challenged. I find that she was aware of the contents of the opinions, and of Hely J's judgment, at about the times they were published. Although her evidence was that she was heavily reliant, in 2001, on advice from counsel as to the use that could be made of search warrant material (T 1490), she was an experienced lawyer, qualified as such to form views on matters that she thought were clear and obvious (T 2977). She understood that the matters addressed in the opinions and by Hely J presented a general problem for ASIC proceedings. She realised the potential application of the problem in the One.Tel investigation on about 19 October. There is evidence suggesting that the problem came to be recognised generally within ASIC, at least after the publication of Hely J's judgment. 168 However, care must be taken in the formulation of the problem that had been identified by Ms Redfern and within ASIC. I have found nothing in the materials up to 7 December that has caused me to reject Ms Redfern's evidence of her understanding of the position. She believed, once she realised there was a problem, that it was a problem about using search warrant materials in a civil proceeding, not a problem about using the seized materials in an investigation, as such. That is reinforced by her evidence that she understood Williams v Keelty to address a situation where there were civil proceedings on foot and a search warrant was then issued, rather than the situation in the One.Tel investigation in which no proceedings had been commenced and there was a single investigation (T 1482, T 1850). 169 It must have become evident to her after she read the fourth joint opinion of Mr Bathurst QC and Mr Payne that the restriction on use of seized materials in a civil proceeding had implications for the conduct of the investigation before commencement of the proceeding. She must have realised, from reading that opinion, that if the same ASIC officers were involved in the application for the search warrants and the civil proceeding, there was an increased risk that a court would find that they had applied for the issue of the search warrants for the improper purpose of obtaining evidence for use in the civil proceeding, and also a risk that the court would restrain the use of seized materials in the civil proceeding. But she regarded the investigation, in a case such as the One.Tel case, as a single investigation rather than concurrent criminal and civil investigations, and she did not perceive the principles addressed by Hely J and counsel as applicable to prevent search warrant materials for being used in such a single investigation. 170 She said she held her view "rightly or wrongly". For the reasons I shall explain, I believe that her understanding was correct in law. 171 The defendants submitted that Ms Redfern's evidence of her view was merely a convenient ex post facto rationalisation and was not a view that she genuinely held at that time. They advanced five reasons to support this submission. It seems to me, as a general observation, that the force of their submissions is undermined by my conclusion, for the reasons set out below, that Ms Redfern's view of the law was correct. 172 First, they said there was no contemporary record of Ms Redfern's view. I do not regard that as a basis for disbelieving her evidence. The opinions and, one infers from the evidence, the discussions within ASIC, were directed towards impediments to the use of search warrant materials in civil proceedings. It would not necessarily have occurred to a reader of the opinions or of Hely J's judgment that there was any limitation on the conduct of the investigation itself. Ms Redfern herself said that her view was "just an obvious thing" (T 2977). Her e-mail of 25 July 2002, read as a whole, is concerned about restrictions on using search warrant materials in civil proceedings. 173 Secondly, the defendants submitted that the opinions of counsel and the judgment of Hely J were strongly against the proposition that search warrant documents could be used for anything other than an investigation of purely criminal matters. I disagree. The opinions and judgment were not directed towards use of search warrant materials in the investigatory phase, in the context of a single investigation with criminal and civil elements, but instead they focused on use of the material in civil proceedings. It is true that Hely J's statement of principle can be construed more widely, but I do not think that it should be, for reasons I shall explain later in this judgment. 174 I do not find it a matter for adverse comment or inference that Ms Redfern did not actually read the search warrants. She was aware of their general nature and of the problem that they posed. Nor is it remarkable that she may not have refreshed her recollection as to counsel's advice, as opposed to having others do so, given the seniority of her position. 175 Thirdly, the defendants submitted that Ms Redfern's evidence of her belief was inconsistent with the fact that, from an early stage of the investigation and with the exception of the limited criminal brief in relation to Mr Silbermann, the focus on ASIC's investigation was on a civil penalty proceeding for breach of s 180(1), rather than potential criminal proceedings. I disagree with the defendants' submission, because of my finding of fact that the possibility of criminal proceedings had not been excluded and remained within the scope of the investigation until counsel advised against criminal prosecution on 29 November and officers of the DPP accepted that advice on 7 December. 176 Fourthly, the defendants contended that Ms Redfern's view was not widely held within ASIC. They referred to various e-mails and other documents, noted in my account of the facts, where other ASIC officers had expressed views about the restrictions on use of search warrant material. But I have not been able to see, in any of those documents, evidence of views different from Ms Redfern's view. The opinions of other ASIC staff were directed towards the use of search warrant materials in civil proceedings, and the strategies necessary to avoid the risk that the warrant might be held to have been procured for an improper purpose and that ASIC might be restrained from using the seized material in evidence. In my opinion, that is the correct way to interpret the concerns underlying ASIC's review of search warrant procedures and the retainer of Associate Professor McNicol. 177 Fifthly, the defendants submitted that Ms Redfern's failure to consult the search warrants themselves during 2001 underscored the recklessness of her approach. For reasons I have given, I do not regard this as significant. 178 My conclusion is that I reject the attack on the credibility of Ms Redfern's evidence as to her knowledge, understanding and belief on the search warrant issues during 2001. I accept her evidence on these matters. 179 On my view of the facts, and my view of the law as outlined below, there was no impropriety or unlawfulness in ASIC's use of the search warrant materials in the period from 1 June to 7 December 2001. The liquidators consented on behalf of One.Tel to ASIC's use of the search warrant materials as evidence in, and in connection with, the present civil proceeding, which began on 12 December, after their consent had been given. They consented to the retention of the search warrant materials for the purposes of the proceeding. Their consent was effective, for reasons I shall set out. 5. Alleged illegalities in execution of search warrants 180 The defendants have made no complaint about the procedures followed for the issue of the six warrants, and they have not contended that the warrants were issued or executed for any illegal or improper purposes. They submitted, however, that there were illegalities or improprieties arising out of contraventions of the Crimes Act 1914 (Cth) in the following respects: (a) the copying of the Lotus Notes cashflow database; (b) making seized things available to PwC; (c) making available to ASIC things not "seized". 181 ASIC responded partly by contending that there were no illegalities or improprieties as alleged, partly by saying that if there were any, they should not have the consequence of excluding ASIC's documentary evidence derived from search warrant materials, and partly by submitting that any initial illegality or impropriety was cured by the liquidators' consent to ASIC's use of the documents, given on 7 December 2001 and affirmed by deed on 15 October 2004. It is appropriate to deal with the effect of the liquidators' consents immediately after considering the challenges to the illegality and propriety of the process of executing the search warrants and using the seized material for the investigation.

5.1 The search warrant provisions of the Crimes Act 182 Part 1AA of the Crimes Act 1914 (Cth) was inserted by the Crimes (Search Warrants and Powers of Arrest) Amendment Act 1994 (Cth). The provisions had their origin in the Review of Commonwealth Criminal Law (Fourth Interim Report, November 1990) (Gibbs Report). The Gibbs Report is an essential part of the context relevant to the interpretation of Part 1AA: Hart v Commissioner, Australian Federal Police (2002) 124 FCR 384, at [17] per French, Sackville and RD Nicholson JJ. 183 Amendments made in the Cybercrime Act 2001 (Cth) did not come into effect until 21 December 2001, after the times relevant to this case. For the sake of convenience, I shall use the present tense when describing the statutory provisions applicable to this case, although in fact the statute is now significantly different by virtue of the Cybercrime amendments. 184 Part 1AA contains six divisions. Division 2 relates to search warrants. Other divisions relate to such matters as stopping and searching conveyances, arrest, personal search, taking fingerprints, identification parades, and determining a person's age. The provisions of Part 1AA deal with police powers that permit intrusions upon privacy and the civil liberties of individuals, and these matters are dealt with in a detailed and specific way, which builds in various safeguards to prevent abuse (see, for example, ss 3F-3J, 3ZT). 185 The express provisions of the statute are supplemented by case law which reinforces the strict limits upon which the statutory powers are to be exercised. For example: · s 3E deals with when search warrants can be issued and what must be set out in the warrant, and there is substantial case law explaining the terms upon which the warrant can be issued, including George v Rockett (1990) 170 CLR 104, esp at 111, and Carroll v Mijovich (1991) 25 NSWLR 441; · ss 3F, 3K and 3L set out what may be done in execution of the warrant, matters elaborated in Hart v Commissioner, Australian Federal Police (2002) 124 FCR 384, especially at [98]. 186 As the Full Federal Court remarked in Hart's case, at [65], the purpose of search and seizure provisions is to provide for the gathering of information to determine whether offences have been committed and to facilitate proof of them, and "recognition of that purpose may yield a construction of the legislative words that is not necessarily narrowly defined". On the other hand, when one bears in mind that the search of premises and seizure of goods is illegal unless authorised by law, and the law establishes a very detailed regime for authorisation of seizure under a warrant ("an invasion of interests which the common law has always valued highly": George v Rockett (1990) 170 CLR 104 at 110-11), any ambiguity or doubt as to the meaning of the statutory words will be resolved in favour of the rights and freedoms of the subject: Hart's case, at [65]. 187 That is consistent with the observation of the High Court in Coco v R (1994) 179 CLR 427, at 437, that the court should not impute to the legislature an intention to interfere with fundamental rights, and such an intention must be clearly manifested by unmistakable and unambiguous language. The Full High Court described the reasoning process in George v Rockett (1990) 170 CLR 104, at 110-111: "In prescribing conditions governing the issue of search warrants, the legislature has sought to balance the need for an effective criminal justice system against the need to protect the individual from arbitrary invasions of his privacy and property … the enactment of conditions which must be fulfilled before a search warrant can be lawfully issued and executed is to be seen as a reflection of the legislature's concern to give a measure of protection to those interests. To insist on strict compliance with the statutory conditions governing the issue of search warrants is simply to give effect to the purpose of the legislation." 188 It is, of course, the intermediate step that is often of critical importance, that is, the step of deciding that, taking into account the language used, its context, and the statutory purpose, there is an ambiguity, which is then to be resolved in favour of the rights and freedoms of the subject. The search and seizure provisions of the Crimes Act are not punitive, and there is no justification for exempting them from normal canons of statutory construction. In particular, "there is no requirement that the court approach [the task of construction] armed with a prima facie hostility to the invasion of privacy that is necessarily involved in the exercise of investigative powers", for "privacy is but one of interests to be taken into account": Hart's case, at [67] and [68].

5.2 Copying of the Lotus Notes cashflow database 189 The defendants submitted that the Crimes Act did not authorise the copying of the Lotus Notes cashflow database to CD and the removal of the CD from One.Tel's premises. The submission was based upon the proposition that the CD used for the copying was found at One.Tel's premises and was not supplied by PwC. By comparison, the images of the directories of the I:drive and personal computers were made to PwC storage devices. Where a copy is made to a storage device found on the premises, as opposed to one brought to the premises, the copying can only be made with the written consent of the occupier, under s 3L(2)(c). 190 In my opinion this submission fails on the facts. Mr Brotherson of One.Tel and Mr Henley of PwC both gave affidavit evidence about the circumstances of copying electronic information during the execution of the One.Tel warrant, and Mr Henley was cross-examined. Their evidence is to the same effect, except on one important point, which I shall mention later. 191 When Mr Henley attended the premises of One.Tel late on the afternoon of 1 June 2001 to execute the warrant, he was introduced to One.Tel's information technology manager, David Robson. He told Mr Robson that the Federal Police were executing a search warrant covering electronic data, and said he would like to sit down and discuss how One.Tel's computer system worked. Mr Robson said that would be fine, but suggested he introduce Mr Henley to Matthew Brotherson, who would be able to give a better indication of how things worked. He then went with Mr Robson to another level of the building, where Mr Robson introduced him to Mr Brotherson. 192 Mr Brotherson was employed by One.Tel as a systems administrator. He said he was approached by Mr Henley and a number of Australian Federal Police officers, and Mr Robson introduced him to them. Mr Henley read Mr Brotherson portions of the search warrant relating to the three conditions. Mr Brotherson described the search warrant as one that Mr Henley and the Australian Federal Police "were in the process of executing". 193 Mr Henley and Mr Brotherson had a conversation about the One.Tel computer system, during which Mr Brotherson explained that there was an I:drive broken down into separate directories. He said the relevant material would probably all be in the "finance", "administration" and "corporate counsel" directories of the I:drive. Mr Henley asked Mr Brotherson to "do a screen dump" of the main directories and Mr Brotherson agreed. He then printed the screen and provided a copy of that printout to Mr Henley. Mr Henley then gave him a PwC hard drive and asked him to format it and to make a copy of those three directories. Mr Brotherson initiated the copying process, although he left the premises before the copying was complete. 194 During the course of the evening, Mr Brotherson approached Mr Henley to tell him that there was a Lotus Notes cashflow database on the system, which Mr Henley might be interested in. Mr Henley asked to see it and Mr Brotherson took him to a desktop computer, and logged in to the database. Mr Henley asked Mr Brotherson to copy that database to a CD and make notes, and Mr Brotherson agreed. 195 Mr Henley's evidence was that a short time later, Mr Brotherson handed him "a CD on which was written 'Lotus Notes Cashflow Database'", together with a page of handwritten notes (see also at T 459.27). The defendants' submissions (DS 43, 17 December 2004, at [36] and Schedule 1 at [25]) rely on Mr Henley's evidence for the proposition that the copy was made on a disk found at the premises of One.Tel, and even that it was a "One.Tel CD". But Mr Henley did not say in his affidavit whether the CD was supplied by PwC or found at the premises - just that he asked for a copy to be made and that after Mr Brotherson made the copy he handed over "a CD", leaving open the question whether it was a CD procured by Mr Brotherson or provided by Mr Henley. The matter was not directly covered in cross-examination of Mr Henley, but he gave general evidence that forensic images "were taken onto PwC equipment" (T 446.40; see also T 447.1). 196 On the other hand, Mr Brotherson said in his affidavit (at [11]) that he prepared handwritten notes setting out the process that he adopted "in making a copy of the Lotus Notes cashflow database onto the CD provided to me by Mr Henley" [emphasis supplied]. Although Mr Brotherson did not expressly say that the CD was brought to the premises by Mr Henley, it is appropriate to infer from his statement, in the absence of other evidence, that the CD was provided by Mr Henley from materials brought to the premises, rather than by Mr Henley finding it at the premises and deciding to use it. Mr Brotherson's evidence was not challenged. He was not required for cross-examination. Mr Henley was not invited to contradict the statement in cross-examination. It is possible that Mr Brotherson's statement was overlooked by both parties. 197 I find, therefore, that the Lotus Notes cashflow database was copied to a CD provided by Mr Henley, brought to the premises and not found at the premises. Therefore the process of copying the database and taking away the CD was governed by s 3L(2)(c)(i) rather than subparagraph (ii), and consequently the written consent of the occupier was not needed, assuming that s 3L(2)(c) was otherwise applicable. The defendants' challenge to the copying process on this ground is therefore unsuccessful. This finding is reinforced by cases which say that the steps taken pursuant to a warrant are presumed valid unless the contrary is proven: Malubel Pty Ltd v Elder (1998) 88 FCR 242, at 249 (Full Federal Court); Williams v Keelty (2001) 111 FCR 175, at [236] (Hely J); Ousley v The Queen (1997) 192 CLR 69, at 130-131 (Gummow J). 198 The finding of fact in my last paragraph is contrary to the defendants' submissions, and ASIC's submissions proceeded on the basis that the defendants were correct on the facts. During the course of preparation of these reasons for judgment, my associate informed the parties of the finding I was considering and invited further written submissions, confined to this point. 199 The defendants responded by making two points. First, they said they did not understand from ASIC's submissions that this was a matter of genuine dispute. They drew attention to ASIC's submissions dated 17 December 2004 (AS 45 at [46] and [47]), where ASIC referred to copying the Lotus Notes cashflow database "onto a disk provided by Brotherson", and referred to the use and taking of the disk "which he provided". 200 I do not regard what was said in ASIC's submissions as amounting to an admission of fact, or an invitation to the court to proceed on an agreed fact, or a representation to the defendants as to ASIC's view of the facts upon which the defendants were invited to rely. Rather, ASIC's submissions were simply arguments based on an interpretation of the evidence that had been advanced by the defendants, which ASIC erroneously accepted for the purposes of argument. The defendants did not submit that they had relied on ASIC's earlier statements of position to their detriment (for example, by not requiring Mr Brotherson for cross-examination or by not putting questions to Mr Henley). Such a submission would be unlikely to succeed not only because ASIC's submissions were not representations of the requisite kind, but also because Mr Brotherson's statement was there for all to see, and open to be explored or challenged. They have not contended that there would be any procedural unfairness or unfair prejudice to them by my making the foreshadowed finding of fact after giving them (as I have) the opportunity to make further submissions. 201 The question whether the CD was brought to the premises or found at the premises is made important by the statute, and my duty is to make the findings of fact necessary for the application of the law. In the absence of an admission or an agreed fact or an estoppel, I am required to make my findings on the basis of the evidence presented to me, even where a finding is contrary to the interpretation of the evidence taken by both parties. 202 My finding that the CD was brought to the premises is no longer contrary to ASIC's position. After my associate drew Mr Brotherson's evidence to the attention of the parties and invited submissions, ASIC responded by saying: "ASIC is grateful to his Honour for drawing its attention to the evidence on this issue. ASIC does wish to put a submission in accordance with the point raised in the draft judgment extract. It is unable to add any significant evidentiary references. …" 203 Secondly, the defendants invited me to look at the photocopy of the front cover of the CD used to copy the database, which is annexed to Mr Henley's affidavit made on 25 August 2004. It is a Kodak CD labelled in handwriting, with no other distinctive marking. The defendants invited me to compare that CD with the CDs to which PwC copied the EnCase images of the hard drives (for example, the front covers of CDs annexed to Mr Napiza's affidavit made on 4 August 2004). They are labelled with a printed identification of "PricewaterhouseCoopers Dispute Analysis & Investigation" and a series of phone numbers. The defendants asked me to infer that the CD used to copy the database was not a PwC CD, and therefore that it was found at the premises rather than brought to the premises by Mr Henley. But the PwC-labelled CDs were used to carry out a copying exercise in PwC's own offices, and the exercise took place some days after the execution of the search warrant. In my opinion Mr Brotherson's affidavit evidence is a more compelling basis for inference than the evidence to which the defendants have drawn attention.

5.3 Making seized things available to PwC 204 Section 3F of the Crimes Act is headed "The things that are authorised by a search warrant". Subsection (5) provides: "If things are seized under a warrant, the warrant authorises the executing officer to make the things available to officers of other agencies if it is necessary to do so for the purpose of investigating or prosecuting an offence to which the things relate." 205 This subsection authorised the officer of the AFP to whom the warrants were directed to make available to officers of ASIC things seized in the course of execution of the warrants. But in its terms, the subsection is confined to making things available to "officers of other agencies" [emphasis supplied]. According to the defendants' submission, the AFP were not authorised by s 3F(5) to make available to PwC's partners or employees any of the material obtained under the search warrants, because the PwC personnel were not officers of other agencies. 206 ASIC contended that this point was an entirely new one, belatedly raised by the defendants for the first time in their final submissions. I agree that it is not a point that was raised, in so many words, in cross-examination or submissions at any earlier stage of the hearing. However, the submission emerges "organically" from materials before me, in circumstances where, as far as I can see, it will not be unfairly prejudicial to ASIC for me to permit it to be raised and dealt with. ASIC has had ample opportunity to make submissions in response, and has not identified any specific evidentiary avenue closed to it by the belated airing of the point. 207 ASIC submitted that if the point is considered, it should be rejected, because the documents were made available to PwC pursuant to the firm's retainers from ASIC to provide computer forensic and forensic accounting assistance to ASIC. ASIC submitted that the documents remained under its power and control. 208 In my opinion the defendants' submission on this point is ultimately unsuccessful. PwC was retained by ASIC to assist in the execution of the warrants, and to assist in ASIC's One.Tel investigation. Some staff of PwC were "constables assisting", as defined in s 3C(1), because they had been authorised by the constable who was the executing officer to assist in the execution of the warrant. But neither of those circumstances made PwC an "agency" for the purposes of s 3F or its staff "officers" of an agency. Consequently s 3F(5) did not authorise the AFP to make available to PwC things seized under the search warrants. To that extent the defendants succeed. 209 In my opinion, there is no basis for deriving from s 3F(5) an implied authority for the officers of the agency to whom seized things are made available by the executing officer, to pass those things on to anyone else, even someone retained by the agency to assist it. The wording of the subsection is specific. It permits the executing officer to make the seized things available to officers of other agencies, not to the agencies as entities that might have the implied authority to give access to individuals to whom it chooses to grant access. Unless the person who has access to the seized things is an officer of another agency, the statutory authority conferred by subsection (5) does not apply. 210 However, s 3F(5) is consistent with the idea that the officers of the other agency may use the seized things that have been made available to them by the executing officer, to carry out the functions and exercise the powers that they have in their capacity as officers of that agency. (This proposition is subject to qualification, in the manner discussed below, where the seized things relate to suspicion of criminal offences and they are subsequently used for civil proceedings.) While the executing officer cannot make the seized things available except to officers of another agency, those officers may have authority, incidental to or in connection with their power to use the seized materials for the purposes of their office, to engage consultants and allow them access to the material, while retaining control over it. 211 In the case of ASIC, the members of the Commission have a wide power to delegate their functions and powers to staff (Australian Securities and Investments Commission Act 1989 (Cth), s 119A), though the delegate remains subject to the member's directions. The chairperson of the Commission has authority to engage consultants to assist in performance of ASIC's functions or powers: ASIC Act, s 121. In my opinion, the combined effect of these provisions is to allow officers of ASIC to whom seized things are made available, to give a properly appointed consultant of ASIC access to those materials for the purpose of the consultant assisting the officers in the performance of their functions and exercise in their powers, subject to retaining supervisory control over the materials and discharging their duty of confidentiality under s 127. 212 While, therefore, I accept that s 3F(5) does not authorise the executing officer to provide seized things to a consultant of the other agency, it does not prevent officers of the other agency from relying on whatever powers they may have to grant their consultants access to the seized things made available to them by the executing officer. Here, I infer from the facts, including the fact that the executing officers and ASIC officers attended on the execution of the search warrants, during the course of and subsequent to which PwC obtained access to some seized and copied materials, that · the executing officers and the ASIC officers were aware of that access and consented to it; and · PwC obtained access to the materials either from ASIC or with ASIC's authority. 213 In the absence of other evidence, it follows that the access of PwC partners and employees to search warrant materials was not illegal or unauthorised. That conclusion is reinforced by the principle, noted earlier, that the steps taken pursuant to a warrant are presumed valid unless the contrary is proven.

5.4 Making available to ASIC things allegedly not "seized" 214 The defendants submitted that the executing officers for the search warrants were not authorised by s 3F(5) to make available to ASIC officers any of the copied materials, including the I:drive directories and images of the personal computers. That would be a surprising and highly inconvenient outcome, in a case where the warrants were issued at the instigation of ASIC, and ASIC is the principal investigating agency for matters arising under the Corporations Act under its administrative arrangements with the Director of Public Prosecutions. This is particularly so when one notes that the copying of material is, in effect, preferred to seizure, under s 3L(3). Depriving other agencies of the benefit of copied electronic material for the investigation and prosecution of crime (and other permissible investigations and proceedings) is, to my mind, an undesirable outcome. 215 The defendants sought to persuade me that their construction of the legislation is supportable as a matter of legislative policy. Their argument was that the police should keep electronic information to themselves and not be authorised to provide it to officers of other agencies, because electronic information, in contrast with physical things, can be readily manipulated or corrupted. I do not accept this submission. I can find nothing in the explanatory memorandum for the Crimes (Search Warrants and Powers of Arrest) Amendment Bill 1994, which introduced Part 1AA, or the Gibbs Report which preceded it, to support the idea that electronic things are to be treated differently from physical things because they are more readily corruptible. There was some evidence before me in the present case that safeguards are available to prevent the corruption of electronic material. 216 I have decided that the defendants' submissions on this point are incorrect in law, although the law is in a confused and unsettled state, which (I note, incidentally) has not been ameliorated by the amendments to Part 1AA enacted in the Cybercrime Act 2001. 217 Section 3F(5), which authorises the executing officer to make things available to officers of another agency, only applies to the "things … seized under [the] warrant". The question is whether, during the process of making electronic copies to PwC equipment of directories in the One.Tel I:drive and images of personal computers, and the process of making a copy of the Lotus Notes cashflow database to a CD, there were "things seized", so that s 3F(5) authorised the Australian Federal Police to make those "things" available to ASIC officers. The answer depends on the meaning of the words "things" and "seized". 218 The meaning of the word "things" is connected to one of the central concepts in Part 1AA, namely the concept of "evidential material". "Evidential material" is defined in s 3C(1) to mean a thing relevant to an indictable offence or a thing relevant to a summary offence, including such a thing in electronic form. A "thing relevant to an indictable offence" and a "thing relevant to a summary offence" are defined in s 3 in very broad terms, in each case introduced by the word "anything". Thus, the concept of "evidential material" extends to information stored in a computer in electronic form. I infer that the original information that was copied from computers during the execution of the search warrants in the present case, and the copies so made, were both information "in electronic form" for the purposes of these provisions. 219 "Evidential material" (and therefore the concept of an "electronic thing") is an important ingredient in the definition of search warrant powers, in various ways. For example: · an issuing officer may issue a warrant to search premises if the officer is satisfied by information on oath that there are reasonable grounds for suspecting that there is evidential material at the premises (s 3E(1)); · the issuing officer is required by s 3E(5)(c) to state in the warrant the kinds of evidential material that are to be searched for under the warrant (in this case, the warrant identified "things that are originals or copies or drafts" of any of certain specified kinds of documents, "including any of them which are stored in electronic or magnetic form"); · the executing officer or a constable assisting is authorised by s 3L(1) to operate electronic equipment to see whether evidential material is accessible. 220 The concept of seizure is also of fundamental importance, because seizure of things is the principal outcome of execution of a search warrant. The term "seizure" is not defined in the Crimes Act, and has its ordinary meaning, which is "confiscation or forcible taking possession (of land or goods)", or an act which, if not done with the court's authority, would amount to a trespass to goods: Hart v Commissioner, Australian Federal Police, at [81]. According to the Full Federal Court in that case, whether or not there has been a seizure of goods is a question of fact. 221 These definitions of seizure do not fully cater for the electronic world. The copying of electronic information to a storage device which is then removed might not involve any forcible taking of possession of goods or trespass to goods, but Part 1AA extends to seizure of electronic things. In the case of seizure of electronic things, the legislation protects the executing officer against claims of breach of confidence or infringement of intellectual property rights, rather than trespass to goods. It is arguable, purely as a matter of analysis, that an electronic thing is seized when the storage device containing it is taken, even if the person entitled to complain of seizure of the electronic thing is not entitled to complain of seizure of the storage device (because, for example, the storage device does not belong to him or her). It might even be arguable (though I shall not develop this point in the present judgment) that the process of copying to a storage device is itself a form of "seizure" of the original material, as it would involve an infringement of the rights of the owner of the information unless it is authorised. 222 Section 3L talks about operating electronic equipment to see whether evidential material is accessible, and if it is, seizing the equipment or carrying out certain operations with the equipment or with facilities at the premises. One of those operations, if the material can be put in documentary form, is to produce documents (s 3L(2)(b)); another operation, where the material can be transferred to a storage device, is to "operate the equipment or other facilities to copy the material to the storage device and take the storage device from the premises": s 3L(2)(c). 223 Where documents are produced from the equipment or facilities, the section authorises that the documents be "seized". The use of that concept is appropriate, because the newly created documents are derived from material at the premises rather than what is brought to the premises, and their removal from the premises would constitute a trespass unless authorised by the warrant or by the occupier. 224 Where material is copied to a storage device, the section contemplates that the storage device might either be at the premises or brought to the premises. In the former case, the process of copying to the storage device and removing it from the premises will not involve "seizure" of the storage device, where (as the section requires) the occupier has agreed to its use, for removal of the storage device with the occupier's consent would not amount to trespass: Hart's case, at [69]. In the latter case the word "seize" would not be appropriate for the removal of the storage device, because it has been brought to the premises by the executing officer or constable assisting and its subsequent removal by them would not constitute a trespass: Hart's case, at [87]. Since the concept of seizure is not appropriate in either case, the section authorises the executing officer to "take" the storage device from the premises rather than to "seize" it: see Hart's case, at [6], [69]. 225 The reasoning in the last paragraph focuses attention on the removal of a physical thing, the storage device, from the premises. But, as noted above, evidential material extends to things in electronic form, and so one needs to inquire whether the process of downloading or copying electronic information onto a storage device and then removing that device could be said to involve seizure of an electronic thing, as opposed to the physical thing which stores it. The electronic thing might be the information stored in electronic form before copying, or the copy of that information held in the storage device. 226 The issue of seizure of an electronic thing was addressed in Hart's case. There, one of the principal questions related to s 3K(2), which permits things to be moved to another place for examination or processing, to determine whether they are things that may be seized under the warrant. The Full Federal Court held that this provision did not authorise the AFP to copy computer files to storage devices brought by them to the premises and then to move the storage devices to another place. 227 Much of the court's reasoning concentrated on the question whether the process of downloading electronic information to a storage device brought to the premises and subsequently removed involves, for the purposes of s 3K, "moving" a thing to another place. Their Honours held that it did not do so. That is not the same question as whether such a process involves a seizure of electronic information, but their Honours had some observations about the latter question. 228 The court noted that s 3K contemplates seizure of the thing moved as the endpoint of the execution process: at [90]. The storage device could not be seized because it had been supplied by the executing officer. As to whether the process of downloading and removing the storage device involves any seizure of electronic information, their Honours held that the word "seizure" is inapplicable to the copying of information in electronic form (at [91]). They accepted (at [92]) that the legislation, by virtue of the extension of the definition of "evidential material" to material in electronic form, contemplates that electronic information may be "seized", but they said the legislation does not identify the manner by which seizure may be effected. 229 With respect, the Full Court's reasoning is not compelling. At crucial points, the broader question about seizure of electronic information is reduced in the reasoning to the narrower question about moving such information. The judgment does not explain when and how electronic information may be seized (an outcome recognised as possible by the legislation and the court), if not by a process of downloading. The judgment reflects the view that electronic information stored in a computer before any copying is not subsequently "seized" by virtue of copying to a storage device and removal of that device, but it does not seem to address the question whether the copy of the information contained in the storage device is "seized" when the storage device is taken away. Further, the court's discussion of s 3N seems incomplete. This last point needs elaboration. 230 Section 3N obliges a constable who seizes certain enumerated things that can be readily copied (including a computer file) to provide a copy to the occupier. It was submitted in Hart that the express reference to a "computer file" implies that a computer file can be seized, and it can only be seized by downloading or copying it. Rather than answering the submission directly, their Honours pointed out (cryptically, with respect) that s 3N cannot be read as assuming or implying that material stored in electronic form can be "moved", even though the section seems to acknowledge that some electronic information may be "seized": at [94]ff. Unfortunately, their Honours did not refer to s 3N(2)(a), which expressly contemplates that a thing may be "seized" under s 3L(2)(c). Since s 3L(2)(c) refers to a process of downloading or copying to a storage device either brought to the premises or used with the agreement in writing of the owner, the legislature has treated the concept of seizure as being applicable to that copying and removal process. 231 I regard the wording of s 3N(2)(a) as very significant. If the concept of seizure is applicable to the copying and removal process for the purposes of that provision, s 3F(5) must be open to an equivalent construction. It is impossible to read the word "seized" in s 3N (2)(a) in the narrow sense which distinguishes "seizing" from "taking after copying". That being so, there is no compelling reason to adopt the narrow sense in s 3F(5), just because the narrow sense is used in s 3L. 232 The observations of the Full Federal Court in Hart's case, especially at [87], [91] and [96], are an obstacle to the conclusion that the process of copying to a storage device and then removing can involve seizure of electronic things. But the case is distinguishable because it did not consider the correct construction of s 3F(5), and therefore is not an applicable authority of the Full Federal Court, to which a judge sitting at first instance in this Court must give very great weight. I have come to the conclusion that the court's reasoning in Hart's case on the application of the concept of seizure to electronic goods is not applicable to the construction of the word "seized" in s 3F(5); it is inconsistent with the language of s 3N(2)(a) and unconvincing in other respects noted above; and so it should not be applied in the present context. 233 My conclusion derives some support from observations by Branson J in Kennedy v Baker (2004) 207 ALR 247, at [108]. The observations were acknowledged by her Honour to be obiter dicta (at [107]). She referred to the statement in Hart's case (at [90]) that a storage device brought to the premises by the executing officer cannot be "seized", because s 3L distinguishes between seizing things found at the premises and "tak[ing]" from the premises storage devices containing downloaded information. She continued: "[108] However, the distinction upon which the Full Court relied in Hart v Cmr, Australian Federal Police has now been blurred, particularly by s 3N(2)(a) which assumed its present form upon the coming into operation of the Cybercrime Act. Section 3N(2)(a) now refers expressly to a thing 'seized' under s 3L(1A). I conclude that the better view now is probably that the taking of the imaged hard drive from the premises did constitute a "seizure' of the copy data on it within the meaning of Part 1AA of the Crimes Act." 234 Her Honour's remarks are not directly applicable in the present case. The basis of her distinguishing Hart's case was that Hart's case was decided under Part 1AA as it stood before the Cybercrime amendments. Like the Full Court but unlike Branson J, I have to consider the provisions as they stood before the Cybercrime amendments. 235 Moreover, Branson J's observations address statements of the Full Court which were directed to the question whether a storage device brought to the premises can be "seized", rather than the question whether the electronic information stored on the device can be "seized". The Full Court addressed the latter question at [87], [91] and [96], but Branson J did not expressly consider those passages. 236 I should note that the reasoning by which her Honour concluded that the Cybercrime amendments to s 3N(2)(a) had blurred the distinction made by the Full Court is not apparent to me. The Cybercrime amendments to s 3N(2)(a) merely replaced a reference to the previous provision on copying to a storage device (old s 3L(2)(c), as discussed above) with a reference to the post-Cybercrime copying provision (s 3L(1A)). Both before and after that amendment, s 3N(2)(a) expressly referred to things "seized" under the copying provision. It seems to me that the Full Court's distinction was just as blurred by s 3N(2)(a) before the Cybercrime amendments as after them. 237 Nevertheless, it is of assistance that Branson J was prepared to regard a process of copying under s 3L(2)(c) as a case of "seizure" for the purposes of the (amended) Part 1AA. 238 Approaching the question in the absence of binding authority, my conclusion is that in the case of evidential material which is an electronic thing, there is seizure of the electronic copy of the electronic thing through removal of the storage device after the downloading or copying is completed, regardless of whether the storage device is brought to the premises or found there, and regardless of whether it is used with or without the occupier's consent. Section 3F(5) authorises the executing officer to make the copy of the electronic information available to officers of another agency if the information has been copied in accordance with the procedure laid down in s 3L(2)(c), for that process involves "seizure" of the copy of the electronic information under the warrant, while not involving seizure of the storage device. 6. Alleged illegalities in ASIC's use of seized material for civil investigation and civil proceeding 239 The defendants submitted that the powers given by warrant under Part 1AA to enter premises and seize things, and take copies of electronic things stored at the premises, are powers given solely for the purpose of obtaining "evidential material" for use in the investigation or prosecution by the AFP of an indictable or summary offence. They contended that, although s 3F(5) authorises the executing officer to make the seized things available to officers of another agency, the effect of the statutory provisions considered as a whole is that the officers of the other agency are not permitted to use the seized things for any purpose outside the purposes comprehended by the warrant. 240 A search warrant is available only if there are reasonable grounds for suspecting that "evidential material" is or will be at the premises: s 3E(1). The search warrant must state "the offence to which the warrant relates" (s 3E(5)(a)), and the kinds of evidential material that are to be searched for under the warrant (s 3E(5)(c)), and must state that the warrant authorises seizure, on certain conditions, of other things believed on reasonable grounds to be relevant to another offence that is an indictable offence (s 3E(6)). Once issued, the warrant authorises the executing officer to enter the warrant premises and search the premises for the kinds of evidential material specified in the warrant, and seize things of that kind found at the premises: s 3F(1)(c). It authorises him or her to seize other things believed on reasonable grounds to be evidential material in relation to an offence to which the warrant relates, or (in certain circumstances) in relation to another offence that is an indictable offence: s 3F(1)(d). 241 Manifestly, the requirements for issue of a warrant, and the scope of the authority conferred by it, are tied to the concept of "evidential material", defined in s 3C(1) to mean a thing relevant to an indictable offence or a thing relevant to a summary offence, including such a thing in electronic form. The definition of "thing relevant to an indictable offence", found in s 3(1), is: "(a) anything with respect to which an indictable offence against any law of the Commonwealth or a Territory has been committed or is suspected, on reasonable grounds, to have been committed; or (b) anything as to which there are reasonable grounds for suspecting that it will afford evidence as to the commission of any such offence; or (c) anything as to which there are reasonable grounds for suspecting that it is intended to be used for the purpose of committing any such offence." 242 It is not necessary to set out the definition of "thing relevant to a summary offence", which is, mutatis mutandis, in corresponding terms. The importance of the two definitions is that they explain the linkage between the validity and scope of the warrant and the requirement of reasonable grounds for suspicion of an offence. 243 Part 1AA does not contain express provisions limiting the use to which seized things may be put after the warrant has been executed. But s 3F(5) permits the executing officer to make the things available to officers of another agency, as has been seen. For present purposes, it is to be noted that the executing officer's authority to make things available to officers of another agency is conferred only "if it is necessary to do so for the purpose of investigating or prosecuting an offence to which the things relate". Again, therefore, the statutory provision aligns the authority conferred by the warrant to the offences to which the seized things relate. By s 3ZV(1), subject to any contrary order of the court, the constable who seizes a thing under a search warrant must return it if the reason for its seizure no longer exists or it is decided that the thing is not to be used in evidence. 244 All of this falls well short of an express prohibition on any use of the seized things, by the executing officer or officers of the other agency, for purposes other than the investigation and prosecution of criminal offences to which the seized things relate. Is such a limitation to be implied from the statutory scheme? The defendants submitted that an affirmative answer to that question can be found in the case law. 245 In Johns v Australian Securities Commission (1993) 178 CLR 408, one of the questions before the High Court was whether a person examined by the Commission under s 19 of what is now the ASIC Act could restrain the Commission from providing transcripts of the examination to a Royal Commission. Brennan and Dawson JJ thought it relevant to consider whether information obtained on a s 19 examination could be used for a purpose foreign to the purpose for which the examination was conducted. 246 Brennan J (with whom Dawson J agreed at 435-6) said (at 423): "… when a power to require disclosure of information is conferred for a particular purpose, the extent of dissemination of or use of the information disclosed must itself be limited by the purpose for which the power is conferred. In other words, the purpose for which a power to require disclosure of information is conferred limits the purpose for which the information disclosed can lawfully be disseminated or used [citing Marcel v Commissioner of Police of the Metropolis [1992] Ch 225, at 234 per Browne-Wilkinson V-C, and Morris v Director of the Serious Fraud Office [1993] Ch 372, at 381 per Nicholls V-C]." 247 The same general principle was articulated in Deputy Commissioner of Taxation v De Vonk (1995) 61 FCR 564. The case concerned the use of the Commissioner's power to issue a notice requiring a person to furnish information. Hill and Lindgren JJ noted that the section did not expressly confine the Commissioner's power to a power exercisable only for the purposes of the Act, but they said that, where a coercive power has been conferred, the power may only be exercised bona fide for the purpose for which it was conferred (at 316). Foster J said that such an inquisitorial and investigative power is given only for the purpose of obtaining information for the collection and protection of the revenue, and the use of such a power for the collateral purpose of obtaining evidence to use in a prosecution already launched would be an improper purpose (at 306). 248 This general principle is applicable to Part 1AA, which is a statutory regime conferring power, by the issue and execution of a search warrant, to require disclosure of information. Here, in contrast with the Johns case but like the De Vonk case, there is no statutory text articulating the purpose of conferral of the statutory power. However, the definitions and provisions to which I have referred give rise to an inference that the search warrant power is conferred for the purpose of obtaining evidential material, that is, material relevant to an indictable or summary criminal offence specified in the warrant, or some other indictable offence. To put it another way, "the purpose of search and seizure provisions is to provide for the gathering of information to determine whether offences have been committed and to facilitate proof of them": Hart's case, at [65]. 249 Making provision for the gathering of information to determine whether a civil contravention of the law has occurred, and to facilitate proof of a civil contravention, is no part of the statutory purpose. But today it is common for statutes, such as the Corporations legislation, to attach both criminal and civil consequences to proscribed conduct, or to attach criminal consequences to some aspects of conduct and civil consequences to other overlapping aspects. If, for example, it were the case (as ASIC alleges) that one of the defendants permitted a materially misleading statement to be made to the market about One.Tel's financial position when the defendant knew or ought reasonably to have known that the statement was materially misleading, the evidence could establish contravention of both a criminal provision (formerly, s 999 and now s 1041E, and perhaps also s 184) and a civil provision (s 180 or s 181). 250 Where a regulatory agency such as ASIC wishes to establish whether there has been a contravention of any of the overlapping criminal and civil provisions of such a statutory regime within a single factual matrix, it would seem rational for it to embark on a single investigation into the facts, on the basis of reasonable grounds to suspect contravention of each of the overlapping provisions. If, in the context of such an investigation, search warrants are issued, it will be necessary under Part 1AA for the search warrants to be linked only to those overlapping provisions which create indictable or summary offences. 251 This leads to several related questions: · Must the use of the search warrant materials be confined, artificially, to the part of the investigation that relates to suspected criminal offences? · How can one identify which parts of a single investigation into conduct that may give rise to criminal and civil contraventions are the parts relating to suspected criminal offences as opposed to the parts relating to suspected civil contraventions? · Must the investigation be artificially bifurcated, once search warrants have been executed, into an investigation into suspected criminal offences for which the search warrant materials can be used, and an investigation into suspected civil contraventions for which they cannot be used? · Can the search warrant materials be used to prove civil contraventions in a proceeding commenced as a result of the investigation? 252 Donnelly v Amalgamated Television Services Pty Ltd (1998) 45 NSWLR 570 does not shed light on the questions that arise in a mixed criminal/civil investigation, but it is authority for the proposition that use of material obtained in the execution of a search warrant for purposes other than the purposes of the warrant may be restrained by injunction. 253 In that case the police made a video of their arrest of the plaintiff in his mother's house after they had obtained access by executing a search warrant. The video fell into the hands of a television broadcaster who intended to screen it on a current affairs program. Hodgson CJ in Eq granted an interlocutory injunction to restrain the broadcasting of the video. He said (at 572) that "the use of the video for purposes other than the investigation or prosecution was outside [the powers of the police under the warrant] and would involve abuse of those powers". This appears to be an application of the broader principle stated by Brennan J in Johns, although Johns was not cited. Hodgson CJ in Eq recognised an analogy with the implied undertaking by a party obtaining discovery of a document in the course of litigation, not to use the document otherwise than for the purpose of the proceeding (see Harman v Secretary of State for the Home Department [1983] 1 AC 280), but here the source of the jurisdiction to intervene by injunction was said to be the court's general jurisdiction to restrain threatened abuses of the processes of criminal justice, rather than breach of any implied undertaking (at 575). 254 Subsequently there has been debate as to whether the basis of the relief should be regarded as protection of confidential information or trespass, rather than abuse of process: see Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199, at [53]-[54] per Gleeson CJ, and [104] per Gummow and Hayne JJ (Gaudron J agreeing); note also Meagher, Gummow and Lehane's Equity Doctrines and Remedies (4th edition, 2002), at [41-005]. Hill J has also endorsed the idea that an injunction is the appropriate remedy for improper use of information lawfully obtained by the exercise of a coercive power: Puglisi v Australian Fisheries Management Authority (1997) 148 ALR 393, at 400. 255 In Williams v Keelty (2001) 111 FCR 175, search warrants were issued, on application by an ASIC officer, about a month after ASIC had commenced a civil proceeding. The validity of the warrants was challenged on many grounds, only two of which have any direct relevance. Those two grounds were: · that the warrants had been issued for an improper purpose of obtaining material for use in the existing civil proceeding, or information not pertinent to any contemplated or specified criminal offence; and · that the issue of the warrants was a contempt of the court in which the civil proceeding had been instituted. These grounds were based on the proposition that the execution of the warrants would enable ASIC to obtain material for use in the civil proceeding, which it could not obtain by the discovery process, because the defendants were protected from making discovery by the privilege against exposure to a pecuniary penalty. 256 In the course of dealing with these challenges, Hely J addressed the question whether ASIC would be under any constraint if, search warrants having been issued for proper purposes relating to criminal offences, it wished to use information obtained from the exercise of the warrants in its existing civil proceeding. After considering earlier cases including Donnelly v Amalgamated Television Services and Grollo v Macauley (1995) 56 FCR 533, he said (at [233]): "If entry is gained to premises by means of the compelling nature of a search warrant, and documents are seized, in my view it would be consistent with general principle to hold that it would be improper for documents seized pursuant to the warrant to be used for any purposes outside those comprehended by the warrant. That view is consistent with the terms of Part 1AA of the Crimes Act. Section 3F(5) is a limited legislative permission to make the things seized available to officers of other agencies and s 3ZV(1) obliges the return of things seized, subject to a contrary order of the court, if the reason for seizure no longer exists, or if it is decided that the things seized are not to be used in evidence." 257 He added later (at [244]): "If AFP or ASIC sought to use the documents seized for a purpose other than the purposes contemplated by the warrant, such as, for example, as evidence in the civil proceedings, then that would be an abuse of power on their part, which, consistently with Grollo v Macauley and Donnelly v Amalgamated Television Services , could be restrained by injunction." That led Hely J to reject a submission that the execution of the warrants would involve contempt of court, because ASIC could not lawfully use documents seized for a purpose foreign to the purpose for which seizure was authorised; in any event, ASIC proffered an undertaking not to use the documents seized under the warrants for the purposes of the civil proceeding, and so the matter of contempt was "put beyond doubt". 258 Once again, these statements of principle appear to echo Brennan J's observations in Johns, a case which was cited to Hely J, but apparently not in the present context. Hely J's reasoning implies that use of the seized material as evidence in existing civil litigation will be use for purposes not contemplated by the warrant, and therefore improper and open to be restrained by injunction. But his Honour's reasoning is wider, in the sense that use of the seized material as evidence in existing litigation is only an example of a wider category of improper use. The judgment leaves open the question, not required to be addressed on the facts of that case, whether it is improper to use the search warrant material for the purposes of an investigation which encompasses the provisions identified in the warrant, but also extends to possible contravention of provisions having only civil consequences, before any proceeding is commenced. 259 In ASIC v Marshall Bell Hawkins Ltd [2003] FCA 833, documents seized under search warrants were made available by the AFP to ASIC officers under s 3F(5), and as a result of some consent orders in a civil proceeding for winding up on the just and equitable ground, the seized materials came to be treated as discovered documents. Consequently they were regarded as being subject to an implied undertaking by ASIC not to use them, or information in them, other than for the proper conduct of that proceeding. The question for Merkel J was whether to release ASIC from the implied undertaking so as to permit it to use the seized materials for the purpose of exercising its power to conduct an administrative hearing to determine whether the defendant's dealer's licence should be revoked. Although the grounds for issuing the search warrant are not stated in the judgment, it appears that they were connected to a single investigation by ASIC into the investment advisory activities of the defendant and other entities, encompassing criminal and civil elements and potential revocation of the dealer's licence. 260 Before considering whether to release or modify the implied undertaking, his Honour made the following observation (at [6]): "The problem confronting ASIC is that, because it is only entitled to use the documents and computer records provided by the AFP pursuant to s 3F(5) of the Crimes Act 'for the purpose of investigating or prosecuting an offence to which the things relate' it is under a duty not to use the documents for any other purpose: see Williams v Keelty (2001) 111 FCR 175 at 224 [233] per Hely J and Johns v Australian Securities Commission (1993) 178 CLR 408 at 423 per Brennan J and at 435-436 per Dawson J. ASIC accepts, quite correctly in my view, that use of the documents for the purposes of an inquiry in relation to a revocation of a licence under s 826 of the Corporations Law is not a use of the documents for the purpose of investigating or prosecuting an offence." 261 The purpose of "investigating and prosecuting an offence", referred to in s 3F(5), is the purpose of the executing officer who makes the seized things available, rather than the purpose of the officers of the other agencies who receive those things. It may therefore be, with respect, that Merkel J's statement places too much emphasis on the text of s 3F(5). More importantly for present purposes, his Honour regarded Williams v Keelty and Johns v ASC as authorities for the proposition that the ASIC officers who received search warrant materials were under a duty not to use them for the purposes of an administrative hearing that had not, at the time of receipt, commenced. Apparently the duty existed even though ASIC's investigation was a single investigation with criminal and civil elements. 262 It seems to follow from these cases, especially Williams v Keelty and the Marshall Bell Hawkins case, that ASIC could not use the search warrant materials it obtained in the present case for the purposes of the present civil proceeding, were it not for the liquidators' consent. The fact that, in the present case, the civil proceeding began well after the execution of the search warrants is immaterial, on the reasoning adopted in the cases, because the use of the search warrant materials for a civil proceeding whenever it commences is a use outside the purposes contemplated by the warrants. I see no relevant distinction between the civil proceeding in the present case and administrative hearing for revocation of the licence in the Marshall Bell Hawkins case. It appears from the cases that the search warrant materials cannot be used for a later civil proceeding even if those materials have been used for the purposes of a single investigation with criminal and civil elements, prior to the commencement of the civil proceeding. 263 This entails that if a regulatory agency has used search warrant materials during the course of an investigation, and decides to initiate a civil proceeding, care will need to be taken not to use, for evidentiary purposes or otherwise in connection with in the civil proceeding, any of the search warrant materials - unless, of course, it becomes permissible to do so by the application of some other law. In the present case, ASIC says that the restriction on using the search warrant materials for the present civil proceeding was lifted by the consent of the liquidators, a submission considered later. 264 Just what will constitute "use" of the seized materials in connection with the civil proceeding could be a difficult matter. For example, if the investigators know that a particular document exists because a copy of it was procured in the course of execution of a search warrant, can they use that knowledge to require production of the document in the civil proceeding? The issue, more broadly, is whether search warrant materials can be used derivatively for the purpose of procuring evidence in the civil proceeding. One way of minimising the risk that evidence in the civil proceeding will be excluded because of direct or derivative use of search warrant materials is, as Mr Bathurst QC and Mr Payne said in their fourth joint opinion, to have entirely separate criminal and civil investigation teams, but they do not suggest that this is required. It seems to me that the risk of derivative use of search warrant materials for evidentiary purposes in the present proceeding is reduced or eliminated to the extent that, prior to tender of the relevant documents, an alternative source for them has been identified in the I:drive in the possession of the liquidators. 265 It also follows from the cases, in my opinion, that if a regulatory agency undertakes an investigation solely for the purpose of determining whether a contravention of a civil provision has occurred, and not to ascertain whether there has been any criminal offence, search warrant materials cannot be used in that investigation. That situation seems to me unlikely to occur, because the search warrant procedure is premised on reasonable grounds to suspect an offence, so if there are search warrant materials there will normally be a criminal aspect to the investigation. But the situation might occur if, say, the criminal and civil investigation functions are separated and placed in the hands of different agencies. Although Williams v Keelty and the Marshall Bell Hawkins case both focus on the use of search warrant materials in a civil proceeding, rather than in an investigation, I see those cases as applications of the wider principle stated by Brennan J in the Johns case, and also stated in the other cases I have mentioned. There is nothing in the principle that would exclude it from applying to any improper use of search warrant materials, whether in a proceeding, in an investigation, to seek publicity in the news media, or otherwise. 266 What is unclear from the cases is whether search warrant materials can be used for the purposes of a single investigation with criminal and civil elements, prior to the commencement of any proceeding. Brennan J's statement of principle in Johns makes the question depend on the "particular purpose" for which the power is conferred, leaving open the proper classification of the purpose of such powers as the search warrant power conferred by Part 1AA. Merkel J's statement of principle in Marshall Bell Hawkins is directed to use of the seized materials for a proceeding (the revocation hearing), and does not address the use of the material during the investigatory phase. 267 Hely J's statements of principle in Williams v Keelty would literally imply, if taken out of context, that as soon as the investigation extends beyond the purposes comprehended by the warrant (that is, beyond investigation of the particular offences identified in the warrant) the search warrant materials cannot be used, whether the additional matters under investigation are other criminal offences or purely civil contraventions or both. But his Honour did not appear to have in mind any question about the scope of the restriction on use during a purely investigatory phase, before any proceeding had been commenced. His reasoning was directed to a case where there was an existing civil proceeding prior to the issue or execution of the warrants - a proceeding with respect to which the seized materials would in all probability be relevant and useful. 268 It is hard to see any justification in principle for such a broad view of the restriction as would be implied from literal reading of Hely J's statements. One of the difficulties to which such a view would lead was described in ASIC's written submissions (AS 45, at [18]): "To say that s 3F of the Crimes Act impliedly prevents ASIC from deploying such search warrant documents as evidence in civil proceedings, handing them over to the publisher of a newspaper, or posting their contents onto the Internet, is one thing. But to say that it impliedly prevents any thought process directed to whether the evidence may satisfy a civil standard of proof is another. A central aspect of a review of documents in a criminal investigation must be an assessment of the evidentiary significance of those documents, and in particular whether any evidence contained in them of the unlawful conduct being investigated rises to a criminal level of proof. It stretches language too far to call the mere simultaneous mental consideration of whether evidence rises to a civil level of proof, a separate and foreign 'use' of the documents." 269 I agree, but I would extend those remarks to a single investigation in respect of possible criminal and civil contraventions arising out of a common set of facts. A consequence is that another submission made by ASIC does not seem to me to have any application. ASIC said that if, contrary to their main contention, it was found that ASIC officers were actuated by more than one purpose during the investigation, that is to say a purpose of criminal investigation and a purpose of civil investigation, there would be no improper use of the search warrant materials unless the defendants were able to show that ASIC would not have used the search warrant materials in the way that it did but for the improper purpose of civil investigation (citing many authorities that have applied a "but for" test of causation, in circumstances more or less remote from the present problem, such as in fields of administrative law, company law and abuse of the processes of the court: see ASIC's submissions, AS 45, at [20]-[25]). In a case where there is a single investigation into suspected civil and criminal contraventions, it may not be possible to subdivide the investigatory thought processes into criminal and civil components and then treat them as mixed purposes, so as to apply "but for" test of causation to the conduct of the investigators. 270 Reason and common sense suggest that a single investigation of a set of facts for suspected criminal and civil contraventions will often be the most efficacious way of gathering information to determine whether offences have been committed, while also determining whether civil contraventions have been committed. Therefore it is consistent with the purposes of the search and seizure provisions, as defined in Hart's case at [65], to allow the seized materials to be used in such an investigation. The contrary view would entail splitting up the components of the investigation in a necessarily artificial way, at least in cases where (as here) there are civil and criminal provisions covering much the same subject area. It could lead to the complete separation of the criminal and civil components of the investigation, with inevitable inefficiency, cost and duplication of effort. There is no legal basis for drawing an implication from Part 1AA, or from any general principle of statutory construction, that would lead to such an outcome. 271 I do not say that search warrant materials may be used in an investigation whenever the criminal offences identified by the search warrants fall within the scope of the investigation. One can readily envisage cases where the offences designated in search warrants are tacked onto an investigation which is essentially about other contraventions within another factual matrix. Instead, the kind of case I have in mind is one where there is such an overlapping and interrelationship between the criminal offences designated in the warrants and the other contraventions falling within the scope of the investigation, and the factual matrix to which the suspected criminal and civil contraventions relate, that the task of the investigators is to assess whether the evidence discovered about the whole matter under investigation reaches the criminal or only the civil standard. 272 An example of this might be an investigation into the failure of the company, undertaken in order to ascertain whether proceedings should be taken against directors for insolvent trading, where search warrants are issued because there are reasonable grounds to suspect contravention of s 588G(3) (a criminal provision) by those directors. The investigation would consider the state of solvency or insolvency of the company at the times when debts were incurred, and matters going to whether there were at those times reasonable grounds for suspecting that the company was insolvent. It would also extend to the position of each director at the time the debts were incurred, whether the director suspected that the company was insolvent, whether he or she endeavoured to prevent the debts from being incurred, and whether the failure to do so was dishonest. Some of those matters go to criminal liability, some of them go to civil liability, and most of them go to both. But they are aspects of the same factual matrix, in the sense that information going to the conduct of individual directors is also likely to be relevant to the question whether there were reasonable grounds for suspecting insolvency. The investigators' task will not be to pursue a series of separate issues, some of them with criminal and others with only civil consequences, but rather to assess whether the facts concerning the company's failure, and the role of each director in that failure, rise to the criminal standard of s 588G(3), or only to the civil standard s 588G(1) having regard to the defences to civil liability in s 588H. In that kind of investigation, the use of search warrant materials is not improper because the investigation is directed to assessing whether the criminal or only the civil standard is met, upon an assessment of the entirety of the facts. 273 Contrast that example with a case where there is an investigation into the collapse of a company and contravention of the insolvent trading provisions at the criminal or civil standard, during the course of which search warrants are issued because there are reasonable grounds to suspect that one of the directors, at a time before the company's failure, fraudulently misappropriated property of the company for personal use. There may be some connection (for example, a causal connection) between the event of misappropriation and the subsequent corporate failure, but there is no overlapping of the ingredients of liability or the factual matrices. It seems plausible to argue, on the basis of the authorities discussed above, that the search warrant materials could not properly be used for the purposes of the insolvent trading investigation, just as search warrant materials could not be used in a purely civil investigation. 274 In the present case the search warrants were issued on the basis of reasonable grounds to suspect contravention of specific criminal provisions, namely ss 999, 1311(1)(a) and 1307, the suspicion extending to events over a period of time rather than on a particular occasion. A central aspect of the suspicion was that the conduct of One.Tel and the defendants was thought to relate to false or materially misleading information. Ascertaining whether the information was false or materially misleading required an investigation into the true financial position of One.Tel during the stated period. The ascertainment of that range of facts would inevitably inform the investigators as to whether there was a case of breach of the statutory duty of care and diligence of directors (and probably other directors' duties) in respect of the very same facts. While the overlapping and binding together of the criminal and civil components of the investigation is perhaps not quite as obvious as in the insolvent trading example, it is nevertheless just as real. 7. Statutory obligation to return seized materials 275 Section 3ZV(1) provides (as far as relevant): "Subject to any contrary order of the court, if a constable seizes a thing under this Part, the constable must return it if: (a) the reason for its seizure no longer exists or it is decided that it is not to be used in evidence; … unless the thing… is the subject of a dispute as to ownership." 276 The statutory provision reflects the common law duty of the police, where a prosecution is complete or where no further prosecution is in reasonable contemplation, to return goods seized for the purpose of being produced in evidence to the person entitled to possession of them": Gollan v Nugent (1988) 166 CLR 18, at 22 per Brennan J. Moreover, "the police must not keep the article, or prevent its removal, for any longer than is reasonably necessary to complete their investigations or preserve it for evidence": Ghani v Jones [1970] 1 QB 693, at 709 per Lord Denning MR; see also Greer v New South Wales Police [2002] NSWSC 356, at [17]-[18] per Bell J. 277 The materials seized from One.Tel's premises have not been returned and no order of the court has been obtained to authorise their retention. The defendants accordingly submitted that there was a failure to comply with s 3ZV(1). ASIC's answer was that s 3ZV(1) does not take away the common law rights of the owner of property to consent to its retention by ASIC. It relied on the liquidators' consent, and submitted that until that consent was given on 7 December 2001, the reason for the seizure continued to exist and no decision had been made not to use the seized materials in evidence, because the possibility of a criminal prosecution remained open. 278 My findings of fact as to the course of the investigation support ASIC's submission as to the period up to 7 December. The scope of ASIC's investigation extended to possible criminal prosecution, both formally in terms of the s 13 minutes and in fact on the basis of the evidence. The facts that the investigatory emphasis was being placed on the prospect of a civil proceeding and a civil team had been assembled did not mean, in my opinion, that the reason for the seizure no longer existed. That would occur only if a criminal prosecution for offences contemplated by the warrants had been abandoned or had become impossible, and neither was the case here, until 7 December when the DPP confirmed counsel's advice that a criminal prosecution of the defendants should not be pursued. Therefore, up to the day when the liquidators gave their consent, the statutory obligation to return seized goods under s 3ZV(1) had not been triggered. I shall consider the effect of the liquidators' consent below. 279 During his oral supplementary submissions on 4 February 2005, senior counsel for the defendants contended (T 3350) that ASIC retained copies of the computer images made in the execution of search warrants at the residences of Mr Rich, Mr Silbermann, Mr Keeling and Mr Beck, contrary to the obligation to return seized things set out in s 3ZV. He referred to ASIC's admission that it had copies of these materials, made in its letter of 3 November 2004 (Exhibit P 27/13, page 66). He submitted that ASIC retained possession of copies of the documents knowing that to do so was wrong.

280 He referred to the cross-examination of Ms Redfern (T 1447), when she agreed that it would be quite wrong for ASIC to have retained copies of documents seized from the homes of Messrs Rich, Silbermann, Keeling and Beck under search warrants beyond the date when ASIC formed the view that it would not prosecute them. I note that according to Ms Redfern (T 1447-8), ASIC had formed the view there would be no prosecution of Mr Rich, Mr Keeling and Mr Beck by 12 December 2001, and in respect of Mr Silbermann the view was formed in the first half of 2002.

281 Senior counsel for ASIC responded, in oral supplementary submissions, by saying that the defendants had raised a new issue, which had not been fully addressed. However, he did not seek to persuade me not to deal with the matter in these reasons for judgment, and he was able to refer me to relevant evidence.

282 He referred to Mr Hogan's e-mail of 21 December 2001 giving instructions to create a separate directory for documents relevant to the criminal aspects of the matter, so as to create a Chinese wall between the civil and criminal matters. He also referred to Mr Ryan's e-mail to Mr Connor of 6 December 2001, setting out arrangements for the use and retention of search warrant materials. One of the things Mr Ryan asked Mr Connor to do, when he completed his assessment of the Rich, Keeling, Silbermann and Beck search warrant documents, was to let a person called "Angela" know which documents would be retained. Angela would then prepare return receipts for the remainder, and civil team members would not access the images "from this day forth".

283 Senior counsel for ASIC submitted that there was no reason to think that this was not done. But the letter of 3 November 2004 says that ASIC "has its possession a copy of each of the documents" identified in the letter, and says that images of specified hard drives and back-up tapes were in the possession of PwC at that time. Reading the documents together, I infer that what ASIC and PwC had in their possession, on 3 November 2004, were copies (made subsequently) of the original images that had been made in the course of execution of the search warrants.

284 There is evidence, referred to earlier, to the effect that documents were returned to Mr Keeling and he voluntarily handed them over again to ASIC. I have not been referred to any evidence that would indicate whether the original images made during execution of the search warrants have ever been returned to Messrs Rich, Silbermann and Beck.

285 It seems to me probable that ASIC was obliged to return the images of the home computers made during the execution of the search warrants, by no later than mid-2002. It was probably also obliged, by that time, to return the copies of those images that had subsequently been made. However, in view of the limited and belated submissions on this point, I think it would be unsafe to make a determination on these matters. It will suffice for present purposes to make an assumption, against ASIC, that it has been under an obligation to return the images and copies of the home computers since at least mid-2002. The question is whether that assumed fact has any effect on the admissibility or exclusion of ASIC's documentary evidence.

286 ASIC's retention of copies of computer images without authority since mid-2002 would not, in my view, provide a basis for excluding ASIC's documents from evidence. None of the home computer documents is intended to be tendered in evidence, other than a single voicemail record of Mr Keeling, who has consented to its retention and use. That being so, the retention of the copies does not create any unfair prejudice for the defendants in respect of the documents that ASIC proposes to tender - especially bearing in mind that the home computer hard drives were copied rather than taken away during the execution of the search warrants. It appears, on the evidence before me now, that since December 2001 a system has been in place to deny, to the ASIC officers involved in the civil case and to partners and employees of PwC, access to the copies of home computers held by ASIC. Having regard to my other findings, this is not a case of systematic disregard of the requirements of Part 1AA. In these circumstances, making the assumption adverse to ASIC that I have stated, there is no basis for exercising my discretion under s 135, or any other discretion that might be available to me, to exclude the documents that ASIC wishes to tender, on the ground of unauthorised retention of these copies. 8. Effect of the liquidators' consent of 7 December 2001 287 The position I have reached so far in this judgment is that every one of the challenges made by the defendants to the lawfulness and propriety of the execution of the search warrants, the supply of the seized materials to officers of ASIC and PwC's partners and employees, and the use of those materials up to 7 December 2001, has failed. On 7 December 2001, the only relevant restrictions on use of the seized materials in the circumstances of this case were: · they were not to be used as evidence or otherwise in connection with a civil proceeding such as the present one, unless that restriction was overcome in some valid way; and · they were to be returned when one of the conditions set out in s 3ZV(1) was satisfied (in the case of the images of the home computers of Messrs Rich, Silbermann, Keeling and Beck, the condition was satisfied no later than mid-2002). 288 The present proceeding had not commenced by 7 December. It has not been contended that there was any improper or unlawful use of the search warrant materials in the asset preservation proceeding, which began earlier. Thus, when the liquidators gave their consent with respect to the documents of One.Tel on 7 December, there was nothing to be cured by any retrospective waiver or ratification by them, and so it is unnecessary for me to consider whether the consent given on 7 December had any retrospective effect. 289 The only questions needing to be addressed about the consent of 7 December are: · whether it was capable of authorising ASIC to use the One.Tel seized materials, prospectively, for the purposes of the present civil proceeding; · whether it was capable of removing the obligation of the constable under s 3ZV(1) to return the One.Tel seized materials when, in the future, it would otherwise have become necessary to do so because of the fulfilment of one of the conditions of that provision; and · if the answer to the first two questions is in the affirmative, whether as a matter of law and construction the liquidators' consent of 7 December actually achieved either or both of these things. 290 It is important to emphasise the restricted nature of the inquiry into the effect of the 7 December consent. The issues that needed to be addressed by the liquidators in deciding whether to consent did not include any issues relating to unlawfulness or impropriety of ASIC's prior conduct. The question for them was whether to grant authority for One.Tel's seized documents to be used in a civil proceeding in which ASIC would seek recovery of damages of approximately $92 million for the benefit of One.Tel itself and, indirectly, its creditors and contributories. 291 It strains the imagination to see how that issue could involve any constitutional question about the protection of individual liberties against encroachment by government agencies. It would be surprising if there were any legislative policy preventing the owner of seized documents from co-operating with a regulator by consenting to use of the documents in circumstances where the regulator wishes to take civil recovery proceedings at its risk for the owner's benefit.

8.1 Efficacy of liquidators' consent, as regards future use of seized materials in a civil proceeding 292 The determination of the effect of the liquidators' consent of 7 December is made less than straightforward because the current law of search warrants blends public and private law considerations. The private law component is well established in the case law. For instance, in Jacobsen v Rogers (1995) 182 CLR 572, at 584 Mason CJ, Deane, Dawson, Toohey and Gaudron JJ described the legal effect of a search warrant as follows: "The warrant itself is simply a document, issued by a person with statutory power to do so, authorising the doing of acts which would otherwise be illegal [citing Reg v Inland Revenue Commissioners; Ex parte Rossminster Ltd [1980] AC 952, at 1000]. The acts which it authorises constitute an invasion of premises without the consent of the persons in lawful possession or occupation of them and the seizure of things answering the description contained in the legislation. In other words, what would otherwise be a trespass ceases to be so when done pursuant to a valid warrant." 293 At common law, there was a "prima facie immunity from seizure of papers and possessions", jealously protected by the courts: George v Rockett (1990) 170 CLR 104, at 110 (Full High Court). Indeed, except in the case of a warrant issued to search a place for stolen goods, the common law did not recognise the issue of search warrants and refused to permit a constable to enter private property without the permission of the occupier, because entry without consent was perceived to be an invasion of the right of private property: Entick v Carrington (1765) 19 State Tr 1029; 95 ER 807. 294 It is clear law that the person with a right to immediate possession of chattels may consent to conduct which would otherwise constitute conversion, and so remove the tortious character of the conduct, and the consent may be implied from conduct: Maynegrain Pty Ltd v Compafina Bank [1984] 1 NSWLR 258, at 264-5 (Privy Council). The tortious character of the conduct may also be cured by ratification or waiver, after it has occurred: Morison v London County and Westminster Bank Ltd [1914] 3 KB 356, at 373 per Lord Reading CJ; Hunter BNZ Finance Ltd v CG Maloney Pty Ltd (1998) 18 NSWLR 420, 440-1 per Giles J. If a search warrant is nothing more that an authority to do something which would otherwise be tortious, these authorities must be taken to establish that the person whose private rights have been or will be invaded by entry and seizure, without a warrant or in reliance on a warrant not properly issued, can prospectively or retrospectively remove the legal consequences of the invading conduct. 295 It would also follow that persons other than the owner/occupier would lack standing to intervene or to restrain the owner/occupier from consenting to or ratifying the conduct in question. In Donnelly v Amalgamated Television Services Pty Ltd (1998) 45 NSWLR 570, at 575, Hodson CJ in Eq contemplated that an application to restrain misuse of wrongfully seized documents would be an application by the owner of the documents (see also Greer v New South Wales Police [2002] NSWSC 356, at [19] per Bell J; and, more remotely, Williams v Keelty at [236] per Hely J). 296 Problems may arise, however, where persons other than the owner/occupier have an interest arguably warranting protection, such as an interest in the confidentiality of documents seized without a valid search warrant. The High Court noted in George v Rockett (at 110) that the private law analysis in terms of property rights has been supplemented by another consideration which tends to straddle the public/private division and has been increasingly stressed in modern times, namely the protection of privacy: see, for example, R v Nicholas (2000) 1 VR 356, at [84] (Supreme Court of Victoria Court of Appeal); Hunter v Southam Inc [1984] 2 SCR 145, at 157 (Supreme Court of Canada). 297 Modern search warrants are an essential part of the criminal justice system, upon which the community depends for the effective investigation and prosecution of crime. Therefore legislatures have sought to balance the interests of the community and the individual by authorising the issue and execution of search warrants only on strict terms. The conferral of statutory authority subject to statutory conditions takes the law beyond a merely private law setting. 298 The defendants submitted that statutory search and seizure provisions are "not concerned merely with making lawful what would otherwise be unlawful, but with important safeguards of fundamental constitutional importance on the rights of citizens of Australia to live in a civil society in which the use of police power is constrained and closely regulated by law": (DS 43, at [61]). The statutory conditions imposed on the search warrant procedure, on this analysis, are not merely limits on the permitted use of the material, but rather they create a positive legal obligation not to exceed the constraints that the statute imposes. The obligation exists, according to the defendants, not merely for the protection of the rights of the occupier but to safeguard the public interest in ensuring that material obtained by warrant cannot be used for any purpose other than the prosecution of crime. The defendants said (DS 43, at [62]): "The powers given to the police to prosecute crime - powers such as those of arrest, search and seizure and other forms of compulsion - are drastic powers which are jealously circumscribed by law. They are not to be used by a corporate regulator as a sort of Trojan horse in order to 'kick start' a civil penalty investigation." 299 That last assertion does not accurately reflect my findings of fact. It was not contended that ASIC procured the issue of the search warrants for an improper purpose of civil penalty investigation, and in fact the investigation that took place was an investigation having civil criminal and civil components. 300 In part, the defendants' submissions were directed to the proposition that any consent by the occupier cannot have a retrospective effect, to render lawful the improper conduct of public authorities who have previously failed to comply with search warrant procedures. But that is not the issue for me, in view of my findings. The question is whether the constraints surrounding the search warrant procedure have moved sufficiently far from the private law to the public law sphere that I should hold that the consent of an individual to prospective conduct that would otherwise be prohibited by law cannot be operative. 301 The defendants, in their submissions, took the court to various constitutional pronouncements against arbitrary or on lawful search and seizure, including the Fourth Amendment to the Constitution of the United States of America, s 21 of the New Zealand Bill of Rights Act 1990, s 8 of the Canadian Charter of Human Rights and Freedoms 1982, article 8(1) of the European Convention on Human Rights, and article 17 of the International Covenant on Civil and Political Rights. They asserted that the rights protected by those constitutional instruments are not merely private rights; they are rights that the public as a whole has an interest in seeing respected and observed, which inhere in the nature of our civil society (citing some observations of Kirby J in his dissenting judgment in Austin v The Commonwealth (2003) 215 CLR 185, at [255] to support the latter proposition). They emphasised that the International Covenant on Civil and Political Rights has an important role to play an Australian law by virtue of Australia's accession both to the Covenant itself and (in 1980) to its optional first protocol (citing s 138(3)(f) of the Evidence Act, Mabo v Queensland (No 2) (1992) 175 CLR 1, at 42 per Brennan J, and Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575, at [116] per Kirby J). 302 The defendants also cited judicial and academic observations as to the fundamental importance of the right to protection from the arbitrary use of power, and the duty of courts to vindicate the right both for the individual concerned and for society as a whole: George v Rockett (1990) 170 CLR 104, at 110 (Full High Court); Carroll v Mijovich (1991) 25 NSWLR 441, at 445 (Kirby P); Malone v Metropolitan Police Commissioner [1980] QB 49, at 64 (Roskill LJ); Johnson v United States 333 US 10 (1948), at 13 (US Supreme Court, Robert Jackson J); S & M Motor Repairs v Caltex Oil (1988) 12 NSWLR 358, at 373 (Kirby P); Polycarpou v Australian Wire Industries Pty Ltd (1995) 36 NSWLR 49, at 66 (Kirby P); K Mann, "Punitive Civil Sanctions: The Middleground Between Criminal and Civil Law" (1992) 101 Yale LJ 1795, at 1799. The defendants referred to similar pronouncements by government bodies including the Australian Law Reform Commission. 303 What these various pronouncements establish, with great emphasis, is the law's concern to protect individual citizens from the arbitrary and uncontrolled exercise of power by or on behalf of the State, and the interest of the whole community in ensuring that this protection is effective. They also provide indications that what is at stake in the "strict enforcement" of search warrant provisions is more than just the protection of private rights of property and privacy. In Donnelly v Amalgamated Television Services Pty Ltd (1998) 45 NSWLR 570, Hodgson CJ in Eq took the view (at 575) that the plaintiff's right to restrain improper use of a video taken in the course of execution of a search warrant rested on abuse of power and abuse of process rather than mere civil trespass against the occupier of the premises, although subsequently it has been suggested that the true basis for such relief is either protection of confidential information or trespass: Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199, at [53]-[54] per Gleeson CJ, and [104] per Gummow and Hayne JJ (Gaudron J agreeing). But the concern over protecting the individual against the arbitrary power of the State does not arise where the owner of documents freely consents to their use in litigation conducted by a regulatory agency at its risk and expense, for the potential benefit of the owner. 304 The questions that will have to be decided, sooner or later, are · whether the law of search warrants has developed so far as to become a statutory scheme of duties and obligations which can never be abrogated by the owner/occupier, notwithstanding the private law analysis upon which the law search warrants has traditionally been based; and · whether, if the answer the first question is in the affirmative, public duties may be enforced by third parties to the occupier/executing officer relationship (this second question is a separate question, the answer which is not entailed by the answer to the first: see Brown v United States 411 US 223 (1973), at 230 per Burger CJ, asserting that Fourth Amendment rights are personal rights which may not be vicariously asserted; see also Minnesota v Carter 525 US 83 (1998), at 88; United States v Salvucci 448 US 83 (1980), at 86-87; Rakas v Illinois 439 US 128 (1978), at 133-8). In my opinion, however, it is not necessary to answer these general questions in the present case. 305 The constraint upon use of the seized materials as evidence in a civil proceeding is not itself an express statutory constraint. It is, as I have shown, an implied limitation emerging out of the structure and purposes of the search warrant legislation, combined with the general proposition that if a power is conferred for a particular purpose it is limited by the purpose for which the power is conferred. Williams v Keelty and the Marshall Bell Hawkins case drew from this general proposition the more particular conclusion that seized materials could not be used as evidence in civil litigation. But it was not necessary for the judge in either case to consider whether that proposition was subject to a qualification that would permit the owner of the seized documents freely to consent to their prospective use in proposed civil litigation from which the owner would benefit. 306 I cannot see in the cases any basis for insisting that the restriction on use is absolute and not subject to such a qualification, except a literal reading of Hely J's observations in Williams v Keelty divorced from the context in which he spoke. I have already held that his Honour's observations should not be read in that way. In the Marshall Bell Hawkins case, Merkel J said (in effect) that ASIC could not use seized materials for licence revocation proceedings, having regard to Williams v Keelty and the Johns case, but then he recognised, without expressly qualifying his statement of principle, that it was open to ASIC to seek orders that would, if made, permit it to use the seized materials for that purpose. That is significant because it indicates that the constraint on user in civil litigation is not absolute. It is also relevant, by a reasonably close analogy, that in Johns, 178 CLR at 423, Brennan J treated the statutory provisions protecting the confidentiality of information obtained compulsorily by ASIC as subject to "express waiver by all affected parties". And it is relevant, though the analogy is less strong, that in Morris v Director of the Serious Fraud Office [1993] Ch 372, at 383, Sir Donald Nicholls V-C, citing other authority, said that police should not disclose seized documents "without the consent of the owner" (see also at 385). 307 I have been referred by both parties to cases dealing, in contexts quite distant from the search warrant area, with the question whether statutory provisions create private rights capable of waiver or release, or public rights which cannot be given away by any individual's assent. I do not find cases (other than the Johns and Morris cases) construing other statutes in other circumstances to be helpful here, in any specific way. They only establish, at the general level, that · sometimes a statutory scheme operates to confer authority to override private or common law rights, in circumstances where the owner of the right may extend that authority by consent (see, for example, Wade v New South Wales Rutile Mining Company Pty Ltd (1970) 121 CLR 177, at 185, per Windeyer J; R v Ladocki [2004] NSWCCA 336); · on other occasions, the statute operates to create public rights and obligations rather than merely an authority to override private rights, in such circumstances that it is inconsistent with the public purpose of the statutory scheme to permit an individual to waive or release his or her rights (for example, to bring an application under Family Provision Act - Re Morris (1943) 43 SR (NSW) 352, at 356; Lieberman v Morris (1944) 69 CLR 69; or to seek a maintenance order under the Family Law Act - Brooks v Burns Philp Trustee Co Ltd (1969) 121 CLR 432; Hyman v Hyman [1929] AC 601); · whether the particular statutory scheme falls into one category or the other depends on the purpose of the scheme, the construction of its provisions, and the nature of the rights concerned, and it cannot be assumed that, because one of the rights conferred by the statutory scheme cannot be waived, none of them can be waived. 308 The defendants may be partially right, in that some of the statutory requirements for valid issue and execution of search warrants might create public rights which cannot be waived by any individual. But that does not mean that every right created by or under search warrant legislation is in that category. I do not need to decide the issue on a general basis. For the reasons I have given, and the reasons set out under the next heading, it seems to me that the owner of the seized materials may prospectively release or modify two specific rights, one an implied right and the other an express statutory right, namely the right to prevent the seized materials from being used in civil proceedings and the right to require the return of the materials. 309 In summary: (a) to the extent that the law of search warrants is still governed by private law considerations, the owner of documents seized under a search warrant may consent to the use of those documents in a manner not authorised by the warrant, just as any owner of goods may consent to a use of those goods that would otherwise constitute trespass; (b) the constitutional and public policy considerations superimposed on the law of search and seizure in some other countries, and by international covenants adopted in Australia, do not appear to be attracted when what is at stake is the owner of seized documents consenting to their prospective use in a proposed proceeding for the owner's potential benefit; (c) the cases that have articulated the constraint preventing seized materials from being used as evidence in a civil proceeding do not address the question whether the owner of the seized materials can give prospective consent to such use; (d) while not addressing the consent point, Merkel J in the Marshall Bell Hawkins case proceeded on the basis that the constraint on using seized materials as evidence in a civil proceeding was not absolute, and there is some support in analogous statutory regimes for the view that the owner's consent should be given operative effect ( Johns and Morris ). 310 In my view these considerations lead to the conclusion that the freely formed consent of the owner of seized documents to their prospective use in a proposed civil proceeding for the owner's potential benefit is effective to remove the constraint that would otherwise prevent their use as evidence in the civil proceeding.

8.2 Efficacy of liquidators' consent, as regards the statutory obligation to return seized things 311 Here, there is a statutory obligation in s 3ZV(1), not expressly qualified by reference to the owner's consent. But the application of the statute leads to an entitlement on the part of the owner (or the occupier) to return of the materials, when one of the conditions of s 3ZV(1) is satisfied. Nothing in the statute would prevent the owner from returning the seized materials to the constable, or to officers of the agency to which they had been made available, after the materials had been returned in compliance with the statute. In my view, the law does not insist on the charade of delivery up immediately followed by delivery back, in a case where the common objective is for the seized materials to be retained by the constable or regulatory agency for use in a civil proceeding. That conclusion is supported by the analysis of the nature of search warrants in Jacobsen v Rogers and George v Rockett , and by the dicta in the Johns and Morris cases to which I have referred. 312 It follows that the owner of the documents may prospectively absolve the constable or regulatory agency from the statutory obligation to return the documents, by giving freely informed consent to their retention. I can see no public interest that would stand in the way of such an arrangement. There is nothing in any of the cases or the international covenants to which I have been referred that would be inconsistent with that conclusion. It is unnecessary for me to consider whether the consent can operate retrospectively to remove the legal consequences of a past failure to return the seized things.

8.3 Effect of the liquidators' consent of 7 December 2001, as a matter of law and construction 313 The instrument of consent is dated 7 December 2001 and is signed by Mr Sherman and Mr Walker, who are described in the document as "the Liquidators". It briefly describes, in numbered paragraphs, their appointment as voluntary administrators and later liquidators, the circumstances relating to ASIC's investigations (the investigations designated by minutes under s 13 of the ASIC Act being called "the Investigations"), and the issue and execution of the One.Tel warrant, and states that the seized and copied documents ("the Documents") had been made available to ASIC under s 3F(5). 314 The instrument continues: "1.8 The Liquidators are entitled to possession of the Documents. 1.9 The Liquidators have been informed by the Commission that the Commission does not intend to use the vast majority of the Documents in any criminal proceedings for a summary or indictable offence. 1.10 The Liquidators have been informed of the provisions of section 3ZV of the Crimes Act (1914) (Cth). The Liquidators confirm the acts required to comply with section 3ZV of the Crimes Act (1914) (Cth) are matters for the Commonwealth and/or Federal Agent Scott Sykes to determine for themselves. 1.11 The Liquidators have been informed that the Commission is continuing the Investigations. 2. CONSENT 2.1 The Liquidators consent to the Commission retaining the Documents. 2.2 The Liquidators consent to the Commission copying the Documents and retaining those copies. 2.3 The Liquidators consent to the Commission using (and having used) the Documents for the purposes of and incidental to:- (a) conducting and continuing the Investigations; (b) bringing civil proceedings against any or all of the former directors and officers of One.Tel Ltd; and (c) prosecuting civil proceedings against any or all of the former directors and officers of One.Tel Limited" 315 The instrument of consent is not expressed to be a deed and no valuable consideration is identified for the consent that it contains. As far as I can see, that does not matter. The significance of the document is that it constitutes and records the liquidators' act of consent, and (there being no suggestion that the liquidators have purported or intend to resile) it is not material to inquire whether they are contractually bound to maintain their consent. 316 By clause 2.1 the liquidators consent to the retention of "the Documents". "The Documents" are defined as the documents secured upon execution of the warrant and identified in the Property Seizure Record which is annexed to the instrument of consent. The annexure lists many hardcopy documents, and also identifies the copy of the I:drive, the copy of the Lotus Notes cashflow database on CD, and copies of various computers. Therefore the consent to retainer is comprehensive, extending as a matter of construction to all the documents seized or copied during the execution of the One.Tel search warrant. 317 Paragraph 1.10 is no obstacle to this conclusion. As I construe it, that paragraph is a protection clause for the liquidators, saying (in effect) that it is up to ASIC and the executing officer to satisfy themselves about their obligations under s 3ZV. That does not detract from the scope or efficacy of the liquidators' consent to retention of the Documents. 318 On the analysis I have adopted, it was unnecessary for the liquidators to consent, as they did, to the use of the Documents for the purposes of conducting and continuing the Investigations. However, it was necessary for them to consent, as they did, to ASIC prospectively using the Documents for the purposes of and incidental to bringing and prosecuting the then proposed civil proceeding. The description of "civil proceedings against any or all of the former directors and officers of One.Tel Limited" is apt to describe the present civil proceeding, which was brought against some of the former directors and officers of One.Tel. 319 The Documents seized and copied during the execution of the One.Tel search warrant were on the premises of One.Tel. It appears from the Property Seizure Record that they were business records of the One.Tel group or copies of the contents of computers on One.Tel's premises used by One.Tel officers. I infer that One.Tel was the owner of the Documents and the occupier of the premises. 320 It was not contended that the liquidators lacked capacity or authority to consent on behalf by One.Tel, as they purported to do. It seems to me clear that, as liquidators, they had the power to do so: see Corporations Act, ss 471A and 477(2)(c), (d) and (m). 321 Therefore, as a matter of law and construction, the instrument of consent was effective to give the consent of the liquidators on behalf of One.Tel, the owner of the Documents and occupier of the premises, to their use in the present proceeding and to their retention by ASIC. 9. Effect of Mr Keeling's consent 322 Search warrants were executed on 1 June 2001 at the residences of various directors and officers of One.Tel, including Mr Keeling. ASIC has informed the court that none of the documents in the 12 volumes of exhibits to Mr Carter's reports originates from any material seized from the residential premises under the search warrants. However, ASIC seeks to tender, in its tender bundle, a single document which was originally obtained through the execution of the search warrant at Mr Keeling's residence. It is a transcript of a voicemail message obtained from Mr Keeling's home computer. 323 This document does not appear to have had any significance for Mr Carter. It does not form part of the exhibits to his reports. It is in a supplementary tender bundle exhibited to Mr Carter's affidavit of 14 April 2004, although it is not the subject of any specific comment in that affidavit. 324 There is considerable evidence concerning Mr Keeling's consent to ASIC using documents seized from his residence in connection with the present proceeding. It is unnecessary to set out the evidence in detail. It involved, at one stage, ASIC returning the seized documents to Mr Keeling, and Mr Keeling later voluntarily delivering the documents back to ASIC. That, I take it, removes any problem with respect to s 3ZV(1). Mr Keeling indicated, by e-mail in October 2002, that he would informally discover the material seized from him under search warrant once the location of the material was ascertained, and after further correspondence he eventually confirmed, in an e-mail dated 17 January 2004, that he had no objection to ASIC discovering any material, including computers, seized under search warrant from him in or about May 2001. Eventually, on 18 October 2004 Mr Keeling entered into a formal deed with ASIC in which he confirmed and ratified the giving of his consent and specifically, consented to ASIC and PwC using the documents for the investigation into the affairs of One.Tel and for bringing, conducting and continuing the present proceeding. 325 For the reasons I have given, there was no unlawfulness or impropriety with respect to ASIC obtaining the voicemail record and using it for the purposes of its single investigation, but it would be unable to use the document as evidence in, or in connection with, the present civil proceeding in the absence of an effective consent by Mr Keeling. The question posed is the same as the question posed by the liquidators' consent on behalf by One.Tel, except in one respect. Mr Keeling did not give his consent until after ASIC commenced the present proceeding. Depending upon one's interpretation of the facts, he consented in October 2002 or January 2004 or October 2004. But (on the basis that there is no issue about return of seized materials, for the reason I have explained) the only constraint upon ASIC in respect of Mr Keeling's seized materials relates to using the materials in a civil proceeding. 326 Given that only one document is to be tendered, and that it has not yet been received in evidence, it seems to me that Mr Keeling's consent, whenever precisely it was given, amounts to a prospective consent to a use that has not yet occurred. In my view Mr Keeling has effectively given his consent, in a fashion that enables ASIC to tender the document it wishes to tender, notwithstanding that the source of the document was execution of the search warrant at Mr Keeling's residence. 10. Summary of findings as to lawfulness and propriety of ASIC's conduct with respect to seized materials 327 In summary, I have reached the conclusions that: (a) One.Tel's written consent to the copying to CD of the Lotus Notes cashflow database was not needed, because the CD was brought to the premises rather than found at the premises, and consequently the copying of the database was authorised by s 3L(2)(c)(i) of the Crimes Act and there was no impropriety or unlawfulness in respect of that copying; (b) the search warrant materials were made available to PwC's partners and employees pursuant to consultancy arrangements by virtue of ASIC's powers to delegate and engage consultants under the ASIC Act, consistently with s 3F(5), and therefore not illegally or improperly; (c) the process of copying, to storage devices brought to the premises, information stored in electronic form in the course of execution of the search warrants involved the seizure of electronic things, with the consequence that the executing officer was authorised under s 3F(5) of the Crimes Act to make those electronic things available to officers of ASIC, and there was therefore no impropriety or unlawfulness involved in that process; (d) ASIC's use of the search warrant materials, with the assistance of PwC, during the period from 1 June to 7 December 2001, in a single investigation the scope of which, throughout that period, extended to possible contraventions of the criminal provisions identified by the warrant, other criminal provisions and some civil provisions, was not improper or unlawful; (e) neither of the conditions stipulated in s3ZV(1) had been satisfied by 7 December 2001, and consequently the statutory duty to return the One.Tel seized materials had not arisen; (f) the liquidators' consent of 7 December 2001 was effective to authorise ASIC to use the One.Tel seized materials as evidence in, and for other purposes connected with, the present civil proceeding, and to relieve ASIC of the obligation that would otherwise have arisen at some time after 7 December to return the One.Tel seized materials to One.Tel; (g) Mr Keeling's operative consent (whichever one it was) was effective to authorise ASIC to use the copy voicemail as evidence in the present civil proceeding, and ASIC has no obligation to return that document; (h) assuming that, without authority, ASIC has or had possession of copies of the computer images that were made at the residences of Messrs Rich, Silbermann and Beck, which are not documents ASIC wishes to tender, I would not exclude any of ASIC's evidence on this ground. 328 This makes it unnecessary to consider any of the following matters: · the state of mind ASIC at any time after 7 December 2001, since that question would be relevant only as to the court's discretion to admit the tendered documents under its inherent jurisdiction or s 138 of the Evidence Act, if there were some impropriety or unlawfulness associated with their acquisition or use; · whether, as ASIC submitted, a causal connection between any impropriety or illegality and the obtaining of the evidence need be shown; · the effect of the liquidators' deed of consent of 15 October 2004; · whether either the 2001 consent or the 2004 consent had any retrospective effect; · the application of s 138 of the Evidence Act, and consequently what is meant by the word "obtained" in that section; · whether the onus of proof in respect of s 138 and the inherent jurisdiction (if it exists) would be borne by ASIC or the defendants, and how heavy that onus might be; · whether the court's inherent power to protect the integrity of its processes by excluding evidence or staying a proceeding has survived as a basis for excluding evidence independently of s 138, or has become folded into the statutory discretion; · whether, and if so how, the court would exercise any relevant discretion to exclude the evidence ASIC wishes to tender, for reasons relating to the search warrant issues; · whether ASIC sought to disguise the fact that it was using search warrant material in the proceedings (an allegation going, as I understand it, to the discretionary exclusion of evidence under s 138 or the asserted the inherent jurisdiction). 329 I have received detailed written submissions on the matters that I have identified as matters not now requiring decision. Sometimes it is appropriate for a court to express views on matters that do not strictly need to be decided. Here, however, the issues addressed in submissions were difficult and the parties' approaches were widely divergent. Should it happen that my decision is reversed and some or all of these issues become live again, it will not be difficult for the parties to revise and reissue their written submissions, and at that stage the court will benefit from the thoroughness, clarity and force of the respective arguments. In the meantime, I think this is a case where it is best not to express views on matters that need not be decided. 11. Conclusion on search warrant issues 330 None of the challenges to the general admissibility of the documents ASIC wishes to tender, based on the sourcing of those documents in the search warrant materials, has succeeded.

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18/02/2005 - Paragraph 37, the word "month" replaced with the word "and"Paragraph 196, the words "provided to me by Mr Henley" have been italicisedParagraph 202, second sentence of quoted passage, the word "not" has been deletedParagraph 205, the word "agencies" prior to the words "[emphasis supplied]" has been italicised - Paragraph(s) 37, 196, 202, 205 23/02/2005 - Paragraph 37, the word "month" replaced with the word "and"Paragraph 196, the words "provided to me by Mr Henley" have been italicisedParagraph 202, second sentence of quoted passage, the word "not" has been deletedParagraph 205, the word "agencies" prior to the words "[emphasis supplied]" has been italicised - Paragraph(s) 37, 196, 202, 205

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