DISTRICT COURT OF QUEENSLAND

1. [1]
   Mr Edwards has pleaded not guilty to on one count of “structuring”, an offence created by section 31(1) of the Financial Transaction Reports Act 1988 (Cth). That section is directed towards those who structure cash transactions so as to avoid the requirement for significant cash transactions ($10,000 or more) to be reported.

2. [2]
   On the face of the section there are two elements to the offence created by s 31(1):

1. (a)
   The person is a party to two or more non-reportable cash transactions (s 31(1)(a)); and

2. (b)
   It would be reasonable to conclude that the person conducted those transactions in that manner or form for the sole or dominant purpose of avoiding the reporting requirement (s 31(1)(b)).

3. [3]
   At the commencement of the trial, counsel for Mr Edwards, Mr Davis SC, asked me to rule inadmissible any evidence not probative of either: the manner and form of the transactions the subject of the charge; or any explanation made by Mr Edwards as to the manner and form in which those transactions were conducted. As Mr Edwards was not interviewed and has, as yet, given no explanation, the effect of the ruling sought was to confine the scope of the Crown case to evidence probative of the manner and form of the transactions the subject of the charge.

4. [4]
   It is regrettable that this matter was first raised on the first of what was to be a five day trial. It is evident that this was an issue that both parties did or should have anticipated after the committal hearing, yet neither raised it at the trial review held ten days before the trial was set to commence, nor, apparently, did either seek the determination of this issue at a s 590AA hearing. Had either done so, there would have been obvious benefits for the court in the management of its criminal case load at this busy time of year.

5. [5]
   After hearing argument on 6 December 2006, I ruled in the terms requested, stated my reasons in short compass and said I would publish my reasons in due course. The next day the Crown asked me to adjourn the trial pending delivery of written reasons for the ruling. These are my reasons.

6. [6]
   Initially Mr Edwards was charged with two counts, the structuring charge now before the court, and one count of defrauding the Commonwealth. Another man, Mr Ngo, also faced one count of defrauding the Commonwealth. Neither was committed to stand trial on the fraud charge.

7. [7]
   The other evidence the Crown sought to adduce at Mr Edward’s trial on the structuring charge formed part of the committal brief for both charges Mr Edwards then faced. The Crown alleged that, through Mr Ngo, Mr Edwards bought cigarettes that had been diverted from duty free operations, and upon which duty had not been paid, and then on sold them to tobacco retailers at a discounted price.

8. [8]
   Mr Ryan, for the Commonwealth Director of Public Prosecutions, argued the evidence was relevant to Mr Edward’s purpose because it established his motive for structuring the transactions so as to avoid attracting the attention of law enforcement agencies.

9. [9]
   Mr Davis SC argued the evidence could not be led because section 31(1)(b) limited the factors that could be considered in determining the purpose of a person charged with structuring. Mr Ryan submitted the section did not have that effect. The categories of evidence to which Mr Davis SC took objection are set out in the schedule at the end of these reasons.

10. [10]
    The structuring offence is an offence against a law of the Commonwealth to which the criminal responsibility provisions of the Criminal Code (Cth) apply (Code s 2.3, FTRA s 6A). Each offence has physical and fault elements (Code s 3.1).  Unless the law creating the offence either specifies the fault element (Code s 5.6) or provides that there is no fault element (Code s 3.1(2)), s 5.6 provides what is the fault element for each physical element.

11. [11]
    If the fault element is specified by s 31(1)(b), then evidence probative of Mr Edward’s purpose will be constrained by any restrictions imposed by s 31(1)(b). If it is not, and the fault element is provided by operation of s 5.6 of the Code, then the Crown will not be so constrained.  Therefore, before considering what restrictions s 31(1)(b) might impose, it is convenient to first consider whether it or s 5.6 provides the fault element of this offence.  The issues are:

1. (a)
   Does s 31(1)(b) specify the fault element of the offence?

2. (b)
   If so, what restrictions does it impose in relation to evidence of purpose?

Does s 31(1)(b) provide the fault element of the offence?

12. [12]
    Section 31(1)(b) provides:

“(1)A person commits an offence against this section if:…

1. (b)
   having regard to:

1. (i)
   the manner and form in which the transactions were conducted, including, without limiting the generality of this, all or any of the following:

(matters listed as (A) to (E) there appear) …; and

1. (ii)
   any explanation made by the person as to the manner or form in which the transactions were conducted;

it would be reasonable to conclude that the person conducted the transactions in that manner or form for the sole or dominant purpose of ensuring, or attempting to ensure, that the currency involved in the transactions was transferred in a manner and form that:

1. (iii)
   would not give rise to a significant cash transaction; or

1. (iv)
   would give rise to exempt cash transactions.”

13. [13]
    It was not contentious that s 31(1)(b) has been interpreted in the following way^[1]:

1. (a)
   It does not create an offence of strict liability.

2. (b)
   What is relevant is whether the person actually did have the prescribed sole or dominant purpose.

3. (c)
   The words “reasonable to conclude” lower the standard of proof for determining whether the person had that purpose.

14. [14]
    In Hannes v Dircetor of Public Prosecutions (Cth)(No2) (at para 708), Justices Barr and Hall of the New South Wales Court of Appeal identified what they referred to as the third and fourth elements of the offence:

1. (a)
   knowledge of the facts which establish the transactions as non-reportable;

1. I.
   that they involved the physical transfer of currency from one to another;

1. II.
   facts that established the other party was a cash dealer; and

1. III.
   that the transactions involved currency of less than $10,000.

And

2. (b)
   knowledge that cash transactions of $10,000 or more must by law be reported to a government agency but that cash transactions of less than $10,000 need not be reported.

15. [15]
    I do not consider knowledge of those facts and that legal obligation are separate elements in the sense that they elements that stand apart from the operation of s 31(1)(b). Rather, knowledge of those matters is required in order to establish purpose pursuant to s 31(1)(b). Mr Ryan appeared to concede as much.

16. [16]
    This is consistent with the reasoning of Dawson J in R v Leask (at 597).  It is also consistent with the reasoning of Chief Justice Doyle of the South Australian Supreme Court in Question of Law Reserved (No 2 of 1988).  He expressly stated that it was s 31(1)(b) that imposed the requirement of knowledge of those matters that, in Hannes, Justices Barr and Hall subsequently described as the third and fourth elements of the offence. 

17. [17]
    Chief Justice Doyle stated: “Although I have separated the elements of knowledge and purpose, it seems to me that an element of knowledge is necessarily implicit in proof of the identified purpose.” (at p510) There is obiter that indicates the Queensland Court of Appeal accepts that knowledge is an aspect of the purpose specified in s 31(1)(b)  (R v Taib, Pincus J at 652 and Ambrose J at 660 – 661).

18. [18]
    If s 31(1)(b) specifies the fault element, the interpretation of that provision is critical to the outcome of the application. Accordingly, it is appropriate for me to be explicit about what I consider to be the physical and fault elements of the offence.

19. [19]
    In my view there is only one physical element of this offence and that is one of conduct (Code s 4.1(1)(a)).  The conduct is that the person is a party to 2 or more non-reportable cash transactions (s 31(1)(a)). I do not accept the submission made by Mr Davis SC that the result of avoiding the reporting requirement is a physical element of this offence. The result does not have to be established^[2].  Rather, what must be established is that the defendant had the purpose of achieving (or attempting to achieve) that result. It is evident that to have a purpose, is to have an intention. That is the fault element specified by s 31(1)(b)^[3]. 

What restrictions does s 31(1)(b) impose in relation to evidence of purpose?

20. [20]
    In essence the dispute as to the interpretation of s 31(1)(b) comes down to the meaning of the words “having regard to” in the introduction to that subsection.

21. [21]
    Mr Davis SC says its effect is to curtail the evidence that may be led in relation to determining purpose. Mr Ryan says that it draws the jury’s attention to matters that are of relevance but that the matters referred to are not an exhaustive or exclusive list.

22. [22]
    In R v Leask, the decision of the New South Wales Court of Appeal, Justice Hulme considered the point^[4].  Save for the possibility of allowing evidence to demonstrate that any explanation offered by the defendant is false, His Honour came to the conclusion that the matters set out in the subsection (the manner and form of the transaction and any explanation given by the defendant) are definitive of the evidence which may be considered to determine whether the defendant had the proscribed purpose.  In summary, his reasoning was:

1. (a)
   The terms of the subsection themselves indicate that the judgement on whether it would be reasonable to conclude the defendant had the proscribed purpose is to be made by reference only to the matters specified in s 31(1)(b).

2. (b)
   Section 31(1)(b)(i) includes a list of matters ((A) to (E)) in relation to the manner and form of the transactions.  The introductory words to that subclause (“including, but without limiting the generality of this”) make it clear that the list in that subclause is not exhaustive.  This stands in contrast to the introductory words of s 31(1)(b) which do not include a similar statement.  This distinction in language should be given significance.

3. (c)
   The matters referred to in s 31(1)(b) are so obviously relevant that it is difficult to regard their specific mention as directed either to widening the field of enquiry that otherwise might be expected or to ensure they are not overlooked.

4. (d)
   If the matters referred to are a non-exhaustive statement and regard can also be had to any other matter relevant to the issue of purpose, then specifying the matters in s 31(1)(b) is entirely otiose. 

5. (e)
   Parliament has chosen a criteria of guilt (reasonable to conclude) that is different from those traditionally used in the criminal law (beyond reasonable doubt and, less commonly, on the balance of probabilities). In that context, the section should be construed strictly.

23. [23]
    Mr Ryan argued Parliament could have put the question beyond doubt by inserting “only” into the introductory words: hence “having regard only to”. That argument was considered and, when balanced against the considerations set out above, rejected by Justice Hulme in R v Leask.

24. [24]
    In Hannes v Dircetor of Public Prosecutions (Cth)(No2), the New South Wales  Court of Criminal Appeal rejected an appeal against conviction based, in part, on a complaint that evidence in relation to a separate count of insider trading had been left to the jury in relation to two counts of structuring.  The Court decided the jury was entitled to take into account evidence relating to the insider trading offence as tending to rebut an explanation as to the manner or form in which the transactions were conducted. No other basis for admissibility was referred to by the Court.  That decision is not inconsistent with the reasoning of Justice Hulme in R v Leask.

25. [25]
    I was, properly, referred by Mr Davis SC to a decision of the District Court of New South Wales, R v Lee, in which evidence of matters other than those specified in s 31(1)(b) was admitted as probative of the mens rea element on a trial for an offence of structuring.  Mr Ryan relies on that case to support his submission that the section should not be interpreted in the restrictive way the defence contends.  Mr Davis SC argues it was wrongly decided.

26. [26]
    His Honour Judge Shadbolt decided s 31(1)(b) does not provide the fault element of the offence and that, by operation of s 5.6 of the Code, the fault element is intention. With respect to His Honour, I have reached a different conclusion on that issue and do not need to revisit that.

27. [27]
    However, given His Honour’s conclusion on that point, it is not surprising that he did not consider whether s 31(1)(b) limited the evidence that could be led as to intention or purpose. Evidence of previous transactions and information and advice the defendant was given about reporting requirements at that time, was admitted as relevant to the element of intention. The argument centred on the defendant’s objection that the evidence was led to establish she had a tendency to commit the offence. His Honour did not consider whether s 31(1)(b) rendered the evidence, in any case, inadmissible. I respectfully decline to follow His Honour’s decision in R v Lee.

28. [28]
    I accept Mr Davis’ submission that, on first principles, the meaning he contends for is correct. The ordinary meaning of the words “having regard to” supports that interpretation. The context does not suggest a different interpretation than the ordinary meaning should be placed on them. Rather, when reference is made to the different wording used in s 31(1)(b)(i) (“including, without limiting the generality of this”) the presumption that the words should be interpreted according to their ordinary meaning is reinforced. Further, because the subsection applies a different and lower standard of proof of a criminal offence than that which normally applies, it should be construed strictly.

29. [29]
    The Crown sought to lead the categories of evidence objected to in order to establish Mr Edward’s motive for structuring the cash transactions. I am led to believe that evidence does not relate to the manner and form of the transactions in question. It is possible that some of that evidence may become relevant if Mr Edwards elects to give evidence and puts forward an explanation that the transactions were structured in that manner or form for an innocent purpose. Then some or all of the contentious evidence may be relevant as tending to negate such an explanation. However, as yet, no such explanation has been proffered by Mr Edwards.

30. [30]
    Mr Ryan argues that the Crown’s obligation to lead all its evidence before the Defendant is called upon to make his election, requires it to lead evidence which tends to negate a potential explanation, even when one has not been proffered. Otherwise, he says, the principle affirmed in R v Soma will apply and the Crown will face an objection that it has split its case, if it later seeks to lead rebuttal evidence^[5].

31. [31]
    This argument has obvious force if the Crown fails to lead admissible evidence. However, in my view, the evidence in contention is not now admissible. Unless it is, there can be no issue of the Crown splitting its case.

32. [32]
    The Queensland Court of Appeal recently considered whether decisions by a trial judge to allow cross-examination of the defendant on a prior inconsistent statement made to police and to admit the statement into evidence, offended the principle in R v Soma, because the statement had not been led in the Crown case (R v Nahirni, Zmire & Zmire). The Court of Appeal found the trial judge had not erred.  The statement was inadmissible as part of the Crown case, until the defendant opened himself up to cross-examination on it.

33. [33]
    The principle that the prosecution must offer all its proof before the accused is called on to make his or her defence is a rule of practice and is based on fairness (R v Chin at 686).  It cannot, however, render admissible that which is inadmissible.  In my view, in the absence of an explanation by Mr Edwards, evidence that may negate a potential or anticipated explanation is inadmissible.  The Crown, in this case, is confined to leading evidence that is probative of the manner and form of the subject transactions.

34. [34]
    My ruling is:

Evidence which is not probative of either:

5. (iii)
   the manner and form of the transactions; or

5. (iv)
   any explanation made by the defendant as to the manner and form in which they were conducted; is not admissible.

is not admissible.

Schedule

Categories of evidence objected to

(extracted from the written submissions of Mr Davis SC)

5. 1.
   Evidence of persons who purchased tobacco products from Mr Edwards. This evidence does not relate, in any way, the “the manner and form” in which “the transactions” were conducted. These are the wrong “transactions”. The relevant “transactions” for the purposes of ss 31(1)(a) and (b) are the cash withdrawals from the bank. Objection is taken to the first category of evidence.

5. 2.
   Surveillance Evidence. This can be broken up into the following sub-categories:

1. a.
   Deliveries by Mr Edwards of tobacco products to his customers;

1. b.
   Mr Ngo delivering tobacco products to Mr Edwards;

1. c.
   Mr Ngo collecting tobacco products from the duty free stores;

None of this is evidence of the “manner and form” in which the relevant transactions (the cash withdrawals from the Bank) were conducted and is objected to.

1. d.
   Mr Edwards cashing cheques. This is relevant and not objected to.

5. 3 .
   Searches at Mr Edwards’ home. The search reveals:

1. a.
   Invoices bearing “888”. These are the invoices relating to the transactions between Ngo and Mr Edwards. They have no evidentiary value in determining the “manner and form” in which the relevant transactions were conducted. The transactions are not the transactions between Ngo and Mr Edwards but rather are transactions between Mr Edwards and the Bank. The evidence is objected to.

1. b.
   Cartons with the words “duty free” were found at Mr Edwards’ house. Again, this has no bearing on the “manner and form” of the relevant transactions and the evidence is objected to.

5. 4 .
   Some tobacco products were marked with ultraviolet markings in the premises of the bond store at Lynfox and those cigarettes were found at Mr Ngo’s premises. That evidence is not relevant to the “manner and form” of the relevant transactions and objection is taken.

5. 5 .
   The banking records of Mr Edwards. They relate to the manner and form of the relevant transactions and are admissible.

5. 6 .
   Witnesses which the Crown Prosecutor says relates to relatively ‘formal matters’. Those witnesses are:

1. a.
   Hines – This relates only to customs and excise rates and is objected to;

1. b.
   O'Reilly-Nugent – This relates to tobacco deliveries and is objected to;

1. c.
   Smith – This relates to the tobacco market and is objected to;

1. d.
   Wiggins – This relates to procedures concerning duty free tobacco and is objected to;

1. e.
   Ambrose – This relates to customs and is objected to;

1. f.
   Amies – This relates to duty free shops and is objected to;

1. g.
   Radhardshin – This relates to duty free shops and is objected to;

1. h.
   Tancoo – The defence has no statement;

1. i.
   Kennedy – This relates to the ABN of “888” and is objected to;

1. j.
   Bamford – This relates to the corporate status of “888 Pty Ltd” and is objected to;

1. k.
   Williams – No objection; and

1. l.
   Nutt – No objection.