ACT Director of Public Prosecutions v King

[2017] ACTSC 241

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

ACT Director of Public Prosecutions v King

Citation:

[2017] ACTSC 241

DecisionDate:

24 May 2017

Before:

Mossop J

Decision:

Consent orders declined, see [10].

Catchwords:

CRIMINAL LAW – CONFISCATION OF CRIMINAL PROCEEDS – restraint and sale of an interest in a Crown Lease – whether a mortgagee of lessee’s interest in a Crown lease an interested party under s 252 of the Confiscation of Criminal Assets Act 2003 (ACT)

Legislation Cited:

Confiscation of Criminal Assets Act 2003 (ACT), ss 31(2), 252

Land Titles Act 1925 (ACT) s 93, 94

Cases Cited:

ACT Director of Public Prosecutions v King [2016] ACTSC 35

Director of Public Prosecutions v Tomas [2015] ACTSC 233

Parties:

ACT Director of Public Prosecutions (Plaintiff)

Gregory King (First Defendant)

Kim Maree King (Second Defendant)

Commonwealth Bank of Australia (Third Defendant)

Representation:

Counsel

Mr A Williamson (Plaintiff)

Mr P Edmonds (First and Second Defendants)

Solicitors

ACT Director of Public Prosecutions (Plaintiff)

Paul Edmonds & Associates (First and Second Defendants)

File Number:

SC 76 of 2016

MOSSOP J:

1. In these proceedings the ACT Director of Public Prosecutions, the first defendant, Gregory William King, and the second defendant, Kim Maree King, have sought consent orders under s 252 of the Confiscation of Criminal Assets Act 2003 (ACT) (‘COCA Act’). Relevantly for the purposes of these reasons are the orders sought in relation to a Crown lease of residential property.

1. Those orders are as follows:

3.The First Defendant’s interest in the Crown lease over the land described as [Block and section description] recorded in [volume and Folio description] of the register kept by the Registrar General of the ACT also known as [address] ACT 2905 (‘the Chisholm Property‘) be forfeited to the Australian Capital Territory.

4.The Chisholm Property is to be publicly auctioned by the ACT Public Trustee and Guardian, with the proceeds of any sale to be distributed as follows.

a. The ACT Public Trustee and Guardian to pay to itself its reasonable costs and expenses related to the auction and the administration of the property whilst it was under restraint;

b.The ACT Public Trustee is to pay the Commonwealth Bank of Australia any interest to which it is entitled;

c.The ACT Public Trustee is to pay the Second Defendant $30,000.00.

5.After the Second Defendant has been paid in accordance with paragraph 4(c), any remaining interest that the Second Defendant has in the Chisholm Property or the proceeds of its sale are forfeited to the Australian Capital Territory.

1. Section 252 of the COCA Act provides:

252 Confiscation proceedings—consent orders

(1) A relevant court may make an order in a confiscation proceeding with the consent of the applicant in the proceeding and everyone whom it has reason to believe has an interest in the property, benefits, transaction, document or information that is the subject of the proceeding.

(2) An order may be made with consent under subsection (1) without consideration of the matters which the court would otherwise consider in the proceeding.

1. The parties have provided to the Court a consent order signed by counsel for the plaintiff and the first and second defendant.  There is presently no consent from the Commonwealth Bank of Australia (‘the Bank’) which is identified in the Amended Originating Application and in the consent order as the “First Interested Party”.  As to the title given to the Commonwealth Bank, in his reasons given on 23 March 2016 for making restraining orders on 23 February 2016, Refshauge J indicated that he would direct that the title of the proceedings be amended to describe the Bank as the third defendant: ACT Director of Public Prosecutions v King [2016] ACTSC 35 at [47]. It appears that this direction was not picked up by the formal orders made and since that the parties have been inconsistent in the title given to the Bank. The Bank has not entered a notice of intention to respond and has not appeared at any of the hearings for the purposes of the proceedings.

1. The order made by Refshauge J on 23 February 2016 restrained, pursuant to s 31(2) of the COCA Act, “the First and Second Defendant’s interest in the Crown lease over the land described as …”. The identification of the property which was restrained in this manner appears to be responsive to the concerns that I have expressed in Director of Public Prosecutions v Tomas [2015] ACTSC 233 which were picked up by Refshauge J in his reasons in this case: see ACT Director of Public Prosecutions v King at [68]–[71].

1. Both parties have submitted that the orders do not affect the interest of the Bank.  The Director has submitted that “[t]he property that was restrained and now subject to forfeiture is the First and Second Defendant’s interest in the Crown lease over the property, not the property per se.  As such we have not sought to effect [sic] the Commonwealth Banks interest in the property”.

1. I am not presently satisfied that the position adopted by the plaintiff and first and second defendants is correct.  In terms of the statute I have “reason to believe” that the Bank “has an interest in the property ... that is the subject of the proceedings.” 

1. If the property the subject of the proceedings is the interest of the first and second defendants in a Crown lease then does the Bank have an interest in that property?  Given the nature of a Torrens mortgage the first and second defendants have an interest in the property which is then encumbered by the interest of the Bank.  That is a security interest: Land Titles Act 1925 (ACT) s 93, which gives an entitlement to sell, in certain circumstances, “all the interest of the mortgagor or encumbrancer in the land so mortgaged or encumbered”: s 94. In other words, whatever interest the first and second defendants have is subject to the security interest of the Bank which carries with it an entitlement to sell it in particular circumstances. In those circumstances the forfeiture of the interest of the mortgagor appears to have the effect of denying to the mortgagee the capacity to exercise its rights under the mortgage.

1. The consent order proposed, which involves the public auction of the property by the ACT Public Trustee and Guardian and the payment of the Public Trustee and Guardian followed by the Bank, the second defendant and the Australian Capital Territory, affects the Bank’s interest because it compels the destruction of the Bank’s security interest and prevents the Bank from determining who is to effect the sale of the property.  It may be that the Bank is content with the arrangement proposed by the other parties as it appears to be intended to accommodate its interest in recovering the amount owing to it (even if the language of the proposed order 4(b) is unclear).  However that is a different issue from whether consent orders may be made in the form presently proposed without the consent of the Bank. 

1. For those reasons I am of the view that the consent of the third defendant to the proposed orders is necessary and decline to make the consent orders.

I certify that the preceding ten [10] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop.

Associate:

Date: 25 August 2017