Ad v Commissioner of the Australian Federal Police

[2018] NSWCA 89

Court of Appeal

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:

AD v Commissioner of the Australian Federal Police [2018] NSWCA 89

Hearing dates:

1 August 2017

Decision date:

30 April 2018

Before:

Beazley P at [1];
Meagher JA at [118];
Gleeson JA at [119]

Decision:

(1) To the extent that it is required, grant leave to the appellant to appeal pursuant to the Supreme Court Act 1970 (NSW), s 101(2).

 

(2)   Appeal dismissed.

 

(3)   Dismiss each of the appellant’s notices of motion filed on 6 March 2017 (stay application) and 6 March 2017 (leave to adduce further evidence).

 

(4)   Set aside the appellant’s notice to produce filed on 27 March 2017.

 (5)   The appellant pay the Commissioner’s costs of the application for summary judgment, the costs of the appellant’s motions and all other costs associated with the appeal.

Catchwords:

CRIME – proceeds of crime – whether exclusion order can be made in respect of property restrained under the Proceeds of Crime Act 2002 (Cth) that has already been forfeited – whether appellant should be allowed to argue that restraining orders against appellant’s property were obtained by fraud

 

STATUTORY INTERPRETATION – meaning of “conviction day” under Proceeds of Crime Act 2002 (Cth)

CONSTITUTIONAL LAW – whether Proceeds of Crime Act 2002 (Cth), ss 18, 26(4), 92, 95 and 338(a)(ii), (a)(iv) and (g) of the definition of “serious offence” are constitutionally valid

Legislation Cited:

Crimes (Appeal and Review) Act 2001 (NSW), s 108
Criminal Appeal Act 1912 (NSW), ss, 6, 7
Criminal Code (Cth), ss 11.5, 135.4, 400.3
Proceeds of Crime Act 2002 (Cth), ss, 18, 26, 92, 93, 94, 95, 96, 97, 107, 116, 117, 180A, 331, 333, 338
Supreme Court Act 1970 (NSW), s 75A, 101

Cases Cited:

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 41
Attorney-General (NT) v Emmerson (2014) 253 CLR 393; [2014] HCA 13
Certain Lloyd’s Underwriters v Cross (2012) 248 CLR 378; [2012] HCA 56
Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33
Dickson v Commissioner of the Australian Federal Police [2018] HCASL 5
Director of Public Prosecutions (Cth) v Chan (2001) 52 NSWLR 56; [2001] NSWCA 249
Director of Public Prosecutions (Cth) v Kamal (2011) 248 FLR 64; [2011] WASCA 55
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69
Gould v Deputy Commissioner of Taxation (2017) 343 ALR 275; [2017] FCAFC 1
Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532; [2008] HCA 4
Halac v Commissioner of the Australian Federal Police [2016] NSWCA 146
International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319; [2009] HCA 49
Jackamarra v Krakouer (1998) 195 CLR 516; [1998] HCA 27
Matthews v Chicory Marketing Board (Vic) (1938) 60 CLR 263; [1938] HCA 38
Roy Morgan Research Pty Ltd v Commissioner of Taxation (2011) 244 CLR 97; [2011] HCA 35
Studman v Director of Public Prosecutions (Cth) (2007) 177 A Crim R 34; [2007] NSWCA 285
SZTAL v Minister for Immigration and Border Protection (2017) 347 ALR 405; [2017] HCA 34
Woodcroft v Director of Public Prosecutions (2000) 174 ALR 60; [2000] NSWCA 128

Category:

Principal judgment

Parties:

AD (Appellant)
Commissioner of the Australian Federal Police (Respondent)

Representation:

Counsel:
In person (Appellant)
E A Cheeseman SC; J C Conde (Respondent)
G Jones (amicus curiae)

  Solicitors:
In person (Appellant)
Australian Federal Police (Respondent)

File Number(s):

2016/147755

 Decision under appeal 

Court or tribunal:

Supreme Court

Citation:

Commissioner of the Australian Federal Police v Dickson (No 3) [2016] NSWSC 564

Date of Decision:

6 May 2016

Before:

Adamson J

File Number(s):

2012/108692

Headnote

[This headnote is not to be read as part of the judgment]

On 20 March 2015, the appellant was convicted of and sentenced to a term of imprisonment for two offences: conspiring to dishonestly cause a loss or risk of loss to a Commonwealth entity, knowing or believing that the loss will occur or that there is a substantial risk of the loss occurring, contrary to the Criminal Code (Cth), s 135.4(5); and conspiring to deal with money or other property worth $1 million or more, believing it to be proceeds of crime, contrary to the Criminal Code, ss 11.5(1) and 400.3(1). Both offences are “serious offences” within the meaning of the Proceeds of Crime Act 2002 (Cth). Subsequently, the Crown appealed on sentence and, on 10 June 2016, the appellant was resentenced.

Restraining orders were made in respect of various items of the appellant’s property in April 2012 pursuant to the Proceeds of Crime Act. Under the Act, if a person is convicted of a serious offence, any restrained property is forfeited to the Commonwealth, unless it is excluded from forfeiture, at the end of either a six month period starting on the conviction day or an extended period fixed by the court, which must end no later than 15 months from the start of the conviction day. In the present case, the initial forfeiture date was extended to 19 May 2016.

On 1 December 2015, the appellant sought an exclusion order in respect of certain items of restrained property. The primary judge dismissed his application on 6 May 2016 and, on 4 August 2016, the property was declared to have forfeited to the Commonwealth at midnight on 19 May 2016.

The appellant filed a notice of appeal against the primary judge’s refusal to grant an exclusion order, in response to which the respondent filed a notice of motion for summary dismissal of the appeal.

The principal issues raised by the appellant’s notice of appeal were:

1.   Whether an exclusion order can be made in respect of property that has already been forfeited;

2.   Whether the Proceeds of Crime Act, ss 18, 26(4), 92, 95 and 338(a)(ii), (a)(iv) and (g) of the definition of “serious offence” are constitutionally valid; and

3.   Whether the appellant should be allowed to argue that the restraining orders against the appellant’s property were obtained by fraud.

Beazley P (Meagher and Gleeson JJA agreeing) held, upholding the respondent’s notice of motion to strike out the appeal and dismissing the appeal:

(i) There was no power for the Court to make an exclusion order in respect of the appellant’s property the subject of the restraining orders, as the property had already been forfeited. Nor was there power for the Court to make an order extending the time in which an exclusion order could be made: [45]–[73].

Director of Public Prosecutions (Cth) v Chan (2001) 52 NSWLR 56; [2001] NSWCA 249; Studman v Director of Public Prosecutions (Cth) (2007) 177 A Crim R 34; [2007] NSWCA 285; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 41; Halac v Commissioner of the Australian Federal Police [2016] NSWCA 146 considered.

Certain Lloyd’s Underwriters v Cross (2012) 248 CLR 378; [2012] HCA 56; SZTAL v Minister for Immigration and Border Protection (2017) 347 ALR 405; [2017] HCA 34 referred to.

(ii)   A person’s “conviction day” under the Proceeds of Crime Act is the day on which the person is first sentenced for an offence of which the person has been convicted, whether summarily or on indictment: [74]–[79].

(iii)   The provisions of the Proceeds of Crime Act concerning the forfeiture of property do not compromise the court’s institutional integrity. Nor is the Proceeds of Crime Act a law with respect to tax. Accordingly, ss 18, 26(4), 92, 95 and 338(a)(ii), (a)(iv) and (g) of the definition of “serious offence” are constitutionally valid: [90]–[106], [109]–[112].

Matthews v Chicory Marketing Board (Vic) (1938) 60 CLR 263; [1938] HCA 38; Attorney-General (NT) v Emmerson (2014) 253 CLR 393; [2014] HCA 13; Director of Public Prosecutions (Cth) v Kamal (2011) 248 FLR 64; [2011] WASCA 55; Roy Morgan Research Pty Ltd v Commissioner of Taxation (2011) 244 CLR 97; [2011] HCA 35 considered.

Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532; [2008] HCA 4 referred to.

(iv) The appellant should not be allowed to raise the argument that the restraining orders against his property were obtained by fraud, as the argument had not been raised before the primary judge: [113]–[114].

Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33 referred to.

Judgment

1. BEAZLEY P: The appellant has appealed from a decision of Adamson J of 6 May 2016: Commissioner of the Australian Federal Police v Dickson (No 3) [2016] NSWSC 564. His notice of appeal was filed on 28 July 2016. An amended notice of appeal was filed on 27 February 2017 and for convenience is referred to as the notice of appeal. By a notice of motion filed in the appeal on 6 March 2017, the appellant sought a stay of the judgment of Adamson J, leave to adduce further evidence and leave to serve a notice to produce.

2. On 2 November 2016, the respondent, the Commissioner of the Australian Federal Police (the Commissioner), filed a notice of motion for summary dismissal of the appeal. By a third amended notice of motion filed on 28 June 2017, the Commissioner seeks summary dismissal of all of the grounds of appeal. This is the motion presently before the Court and it is convenient to refer to this as the Commissioner’s notice of motion. If the Commissioner is successful, it is submitted that the appeal and the appellant’s motion of 6 March 2017 should be dismissed. In circumstances where the appellant was self-represented, an amicus curiae was appointed to assist the Court.

Procedural background

3. The procedural background leading to the appeal and motion to strike it out which is presently before the Court for determination is as follows. On 22 December 2014, a jury found the appellant guilty of two offences: first, an offence of conspiring with another person to dishonestly cause a loss or risk of loss to a Commonwealth entity, knowing or believing that the loss will occur or that there is a substantial risk of the loss occurring, contrary to the Criminal Code (Cth), s 135.4(5); and second, an offence of conspiring with another person to deal with money or other property worth $1 million or more, believing it to be proceeds of crime, contrary to the Criminal Code, ss 11.5(1) and 400.3(1). Both offences are “serious offences” within the meaning of the Proceeds of Crime Act 2002 (Cth), s 338.

4. On 20 March 2015, Beech-Jones J made an order for conviction and sentenced the appellant to an aggregate period of 11 years imprisonment with a non-parole period of 7 years. On 10 June 2016, the New South Wales Court of Criminal Appeal dismissed the appellant’s appeal against conviction and allowed the Crown’s appeal on sentence, resentencing the appellant to 14 years imprisonment with a non-parole period of 9 years, 3 months. On 16 December 2016, the High Court refused the appellant’s application for special leave to appeal from the orders of the Court of Criminal Appeal made on the Crown appeal.

5. Restraining orders were made in respect of various items of the appellant’s property on 5 April 2012 by McCallum J and 26 April 2012 by Beech-Jones J pursuant to the Proceeds of Crime Act, s 18. Pursuant to s 92 of that Act, if a person is convicted of a serious offence, property that is the subject of a restraining order is forfeited to the Commonwealth unless the property is excluded from forfeiture. The date of forfeiture for the purposes of s 92 is the end of either the six month period starting on the conviction day or an extended period fixed by the court pursuant to s 93, which must end no later than 15 months from the start of the conviction day.

6. In the present case, the order for conviction having been made on 20 March 2015, the forfeiture date, subject to any extension, for the items of property restrained was 19 September 2015. On 25 August 2015, pursuant to a consent order, this date was extended to 20 December 2015 by McCallum J.

7. On 1 December 2015, the appellant filed a substitute notice of motion seeking an exclusion order in respect of 10 items of restrained property pursuant to the Proceeds of Crime Act, s 94. On 8 December 2015, Schmidt J made an order extending the forfeiture date to 19 May 2016. Her Honour also ordered that the appellant be examined pursuant to the Proceeds of Crime Act, s 180A.

8. On 2 and 3 May 2016, Adamson J heard the appellant’s exclusion order application. Her Honour dismissed that application on 6 May 2016. On 4 August 2016, on the application of the Commissioner pursuant to the Proceeds of Crime Act, s 95, Bellew J declared that the property had forfeited to the Commonwealth at midnight on 19 May 2016.

Grounds of appeal

9. The notice of appeal contains 17 grounds, each with a number of sub-grounds. For present purposes, those grounds of appeal can be grouped into three categories: first, grounds challenging her Honour’s findings that the appellant had not established the integers of s 94 necessary to entitle him to an exclusion order (grounds 1-17A); secondly, grounds challenging the constitutional validity of a number of provisions of the Proceeds of Crime Act, namely, ss 18, 26(4), 92, 95 and 338(a)(ii), (a)(iv) and (g) of the definition of “serious offence” (grounds 17B-17C); and thirdly, the ground in which the appellant contends that in obtaining restraining orders against his property pursuant to the Proceeds of Crime Act, s 18, counsel appearing on behalf of the Commissioner, committed a fraud on the court (ground 17D).

The Commissioner’s summary judgment application

10. The Commissioner accepted that his notice of motion was to be determined in accordance with the test in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69. In Jackamarra v Krakouer (1998) 195 CLR 516; [1998] HCA 27, Brennan CJ and McHugh J discussed the application of that test in the context of an appeal as follows:

“[32]   Reference was made to the cases dealing with summary determination of actions before trial. In General Steel Industries Inc v Commissioner for Railways (NSW) Barwick CJ set out, in an appendix to his reasons, a list of cases dealing with the test to be applied in determining whether to terminate an action summarily before trial. As Barwick CJ pointed out:

‘The test to be applied has been variously expressed; ‘so obviously untenable that it cannot possibly succeed’; ‘manifestly groundless’; ‘so manifestly faulty that it does not admit of argument’; ‘discloses a case which the Court is satisfied cannot succeed’; ‘under no possibility can there be a good cause of action’; ‘be manifest that to allow them’ (the pleadings) ‘to stand would involve useless expense’. At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or ‘so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument’; ‘so to speak apparent at a glance’.’

Although various expressions have been employed in this context, all of them may be seen as different ways of saying that a court should not exercise its powers of summary determination of a proceeding except in clear cases. The statements referred to in General Steel Industries Inc were all made about the summary determination of a proceeding without trial. The present matter arises in a different context. Here there has been a trial of the appellant’s claim and the question is not whether she should be denied access to a determination of her claim in the ordinary way but whether she should now be denied access to a review of that decision.

…

[34]   We do not think it useful to fasten upon one verbal formula in preference to all others as a description of the necessary degree of satisfaction. What must be shown is that it is clear that the appeal will fail and in that sense is not ‘arguable’ or not ‘fairly arguable’. Each of the formulae mentioned by Barwick CJ in the passage we have quoted from General Steel Industries Inc intends to convey that meaning. But, of course, if formulae of the kind set out in General Steel Industries Inc are applied in the case of an appeal, it is important to recall that the context is different. The boundaries of the field for debate between the parties on appeal have been set at trial. Before a proceeding has been tried there may well be considerable uncertainty about what evidence will be given and how that will affect the final identification of issues to be decided. Those uncertainties should have been largely resolved at trial and the material and the issues for consideration on appeal will ordinarily be readily identifiable. Is it clear, then, that those issues will be resolved against the appellant?” (citations omitted)

11. The Commissioner’s principal argument was that the appeal should be dismissed because it was futile in circumstances where the property had forfeited to the Commonwealth on 19 May 2016, as declared by Bellew J on 4 August 2016. The Commissioner also submitted that there was no substance in the grounds of appeal that challenge the constitutional validity of the Proceeds of Crime Act, ss 18, 26(4), 92, 95 and 338(a)(ii), (a)(iv) and (g) of the definition of “serious offence”. Finally it was submitted that there is no substance in the ground of appeal alleging that the forfeiture orders were obtained by fraud.

12. On 7 February 2018, the High Court dismissed with costs the appellant’s application for removal to the High Court the issues concerning the constitutional validity of the Proceeds of Crimes Act: see Dickson v Commissioner of the Australian Federal Police [2018] HCASL 5.

13. In order to deal with these arguments, it is necessary to refer briefly to the primary judge’s reasons. Before doing so, it is convenient to set out the legislation, as is relevant to the application before the Court.

Relevant legislation

14. The Proceeds of Crime Act, s 92 provides as follows:

“92   Forfeiting restrained property without a forfeiture order if a person has been convicted of a serious offence

(1)   Property is forfeited to the Commonwealth at the end of the period applying under subsection (3) if:

(a)   a person is convicted of a serious offence; and

(b)   either:

(i)   at the end of that period, the property is covered by a restraining order under section 17 or 18 against the person that relates to the offence; or

(ii)   the property was covered by such a restraining order against the person, but the order was revoked under section 44 or the property was excluded from the order under that section; and

(c) the property is not subject to an order under section 94 excluding the property from forfeiture under this Part.

(2)   It does not matter whether:

(a)   the restraining order was made before or after the person’s conviction of the serious offence; or

(b)   immediately before forfeiture, the property is the person’s property or another person’s property.

(3)   The period at the end of which the property is forfeited is:

(a)   the 6 month period starting on the conviction day; or

(b)   if an extension order is in force at the end of that period—the extended period relating to that extension order …”

15. Section 93 allows a court to extend the period before the property is forfeited (extension order). Section 93(1) provides as follows:

“(1)   The court that made the restraining order referred to in paragraph 92(1)(b) may make an order (an extension order) specifying an extended period for the purposes of subsection 92(3) if:

(a)   an application for the order is made within 6 months after the start of the conviction day for the relevant conviction; and

(b)   the applicant has also applied to the court under:

(i)   section 30 or 31 to exclude property from the restraining order; or

(ii) section 94 to exclude the property that is covered by the restraining order from forfeiture under this Part; and

(c)   the court is satisfied that the applicant made the application under section 30, 31 or 94 without undue delay, and has since diligently followed up that application.

The extended period specified must end no later than 15 months from the start of the conviction day for the relevant conviction …” (emphasis added)

16. Subsections (2), (3) and (4) of s 93 govern the position where an application for exclusion is finally determined during the extended period. Those subsections provide as follows:

“(2)   The extension order stops being in force if the application under section 30, 31 or 94 is finally determined before the end of the 6 month period starting on the conviction day for the relevant conviction.

(3)   The extended period ends if the application under section 30, 31 or 94 is finally determined before the end of that period.

(4)   If the court makes the extension order, the responsible authority must take reasonable steps to give any person who has or claims, or whom the authority reasonably believes may have, an interest in the property to which the order relates a written notice stating:

(a)   the date on which the property will be forfeited under this Part, in accordance with the extension order, unless it is excluded from forfeiture; and

(b)   the effect of subsections (2) and (3).”

17. Section 94 allows the court to make an order excluding certain property the subject of a restraining order from forfeiture (exclusion order). It provides as follows:

“94   Excluding property from forfeiture under this Part

(1)   The court that made a restraining order referred to in paragraph 92(1)(b) must make an order excluding particular property from forfeiture under this Part if:

(a)   a person (the applicant) has applied for an order under this section; and

(b)   the court is satisfied that the applicant has an interest in property covered by the restraining order; and

(d)   a person has been convicted of a serious offence to which the restraining order relates; and

(e)   the court is satisfied that the applicant’s interest in the property is neither proceeds of unlawful activity nor an instrument of unlawful activity; and

(f)   the court is satisfied that the applicant’s interest in the property was lawfully acquired.

(2)   To avoid doubt, an order under this section cannot be made in relation to property if the property has already been forfeited under this Part …”

18. Section 95 provides as follows:

“95   Court may declare that property has been forfeited under this Part

The court that made the restraining order referred to in paragraph 92(1)(b) may declare that particular property has been forfeited under this Part if:

(a)   the responsible authority applies to the court for the declaration; and

(b)   the court is satisfied that that property is forfeited under this Part.”

19. Section 96 provides as follows:

“96   When is property forfeited—general rule

Property forfeited under section 92 vests absolutely in the Commonwealth at the time of the forfeiture.”

20. Section 97 provides as follows:

“97   First exception—registrable property

(1) Despite section 96, if property forfeited under section 92 is registrable property:

(a)   that property vests in equity in the Commonwealth but does not vest in the Commonwealth at law until the applicable registration requirements have been complied with; and

(b)   the responsible authority for the restraining order referred to in paragraph 92(1)(b) has power, on behalf of the Commonwealth, to do anything necessary or convenient to give notice of, or otherwise protect, the Commonwealth’s equitable interest in that property; and

(c)   the Commonwealth is entitled to be registered as the owner of that property; and

(d)   the Official Trustee has power, on behalf of the Commonwealth, to do, or authorise the doing of, anything necessary or convenient to obtain the registration of the Commonwealth as the owner.

(2)   Any action by the responsible authority under paragraph (1)(b) is not a dealing for the purposes of subsection 99(1).

(3)   The Official Trustee’s powers under paragraph (1)(d) include executing any instrument required to be executed by a person transferring an interest in property of that kind.”

21. Sections 116 and 117 provide as follows:

“116   Making pecuniary penalty orders

(1)   A court with proceeds jurisdiction must make an order requiring a person to pay an amount to the Commonwealth if:

(a)   a proceeds of crime authority applies for the order; and

(b)   the court is satisfied of either or both of the following:

(i)   the person has been convicted of an indictable offence, and has derived benefits from the commission of the offence;

(ii)   the person has committed a serious offence.

(3)   In determining whether a person has derived a benefit, the court may treat as property of the person any property that, in the court’s opinion, is subject to the person’s effective control.

(4)   The court’s power to make a pecuniary penalty order in relation to an offence is not affected by the existence of another confiscation order in relation to that offence.

117   Pecuniary penalty orders made in relation to serious offence convictions

(1)   A court must not make a pecuniary penalty order in relation to a person’s conviction of a serious offence until after the end of the period of 6 months commencing on the conviction day.

(2)   However, if the court before which the person was convicted has proceeds jurisdiction, the court may make a pecuniary penalty order in relation to the person’s conviction when it passes sentence on the person.

(3)   Subsection (1) does not apply if the person is taken to have been convicted of the serious offence because of paragraph 331(1)(d).”

22. Sections 331(1)(a) and 333(1)(a) are also relevant. They provide as follows:

“331   Meaning of convicted of an offence

(1)   For the purposes of this Act, a person is taken to be convicted of an offence if:

(a)   the person is convicted, whether summarily or on indictment, of the offence …

…

333   Meaning of conviction day

(1)   For the purposes of this Act, the conviction day, in relation to a person’s conviction of an indictable offence, is:

(a)   if the person is taken to have been convicted of the offence because of paragraph 331(1)(a)—the day on which a court passes sentence for the offence …”

Primary judge’s reasons

23. The primary judge noted, at [13], that it was common ground that the appellant had established that he had applied for an order excluding specified property from forfeiture under the Proceeds of Crime Act, s 94(1): see para (a); and that he had been convicted of a serious offence to which the restraining orders related: see para (d). To be entitled to an exclusion order in respect of any of the property itemised in the appellant’s notice of motion, it remained for him to prove on the balance of probabilities that: he had an interest in the property: s 94(1)(b); his interest in the property was neither the proceeds of unlawful activity, nor an instrument of unlawful activity: s 94(1)(e); and his interest in the property was lawfully acquired: s 94(1)(f).

24. The primary judge concluded, at [104], that the appellant failed to make out his claim for an exclusion order in respect of any of the property itemised in his notice of motion. In reaching this conclusion, her Honour made adverse credit findings in respect of his evidence. Her Honour observed that he had provided no documentary support for his evidence, which she described as self-serving and inconsistent with evidence that he had given at the examination conducted pursuant to the Proceeds of Crime Act, s 180A. Her Honour also rejected the appellant’s excuse for his claimed lack of recollection of various matters as being due to the conditions of his incarceration. Her Honour considered that his apparent lack of recollection was tactical, rather than real.

Preliminary matters

25. The appellant raised three preliminary matters that are appropriate to consider at the outset.

26. First, the appellant submitted that the Court should be constituted by a bench of five judges, as he seeks to challenge this Court’s decisions in Studman v Director of Public Prosecutions (Cth) (2007) 177 A Crim R 34; [2007] NSWCA 285 and Halac v Commissioner of the Australian Federal Police [2016] NSWCA 146 as being inconsistent with the Court’s decision in Director of Public Prosecutions (Cth) v Chan (2001) 52 NSWLR 56; [2001] NSWCA 249. These decisions are dealt with below. Whether the Court is constituted by a bench of five judges is a listing matter only. It should be noted that the appellant did not raise this matter in his oral argument.

27. The appellant also raised the question of the meaning and effect of s 96. This also formed part of his argument on the Commissioner’s notice of motion and is dealt with below.

28. Finally, the appellant argued that the s 135.4(5) offence is not a “serious offence” as defined by the Proceeds of Crime Act, s 338. There are a number of answers to this submission. First, there was no error in the approach of Adamson J because, as her Honour observed at [13], it was common ground below that the s 135.4(5) offence was a “serious offence” within s 338. So much is clear from the appellant’s outline of submissions in the court below, where counsel for the appellant submitted that the appellant was convicted of two serious offences on 20 March 2015 by Beech-Jones J.

29. Secondly, whether or not the s 135.4(5) offence is a “serious offence” within the meaning of s 338, the appellant acknowledged that the ss 11.5(1) and 400.3(1) offence is a “serious offence” within the meaning of s 338. Since the pre-condition to excluding property under s 94, that the conviction of a person of a serious offence to which the restraining order relates has been satisfied, the appellant’s contention in relation to the s 135.4(5) offence has no present relevance.

30. Thirdly, contrary to the appellant’s submissions on appeal, the s 135.4(5) offence is a “serious offence” within s 338(a)(iv), being unlawful conduct by a person that causes, or is intended to cause, a loss to the Commonwealth or another person of at least $10,000.

31. That the s 135.4(5) offence involves a conspiracy does not mean that the offence does not answer the description of “unlawful conduct by a person”. In the present case, the unlawful conduct by the appellant was conspiring with his co-accused to dishonestly cause a loss, or risk of loss, to the Commonwealth, knowing or believing that there was a substantial risk of the loss occurring, being count 1 of the indictment in respect of which the jury returned a verdict of guilty on 22 December 2014.

First issue: can an exclusion order be made in respect of forfeited property?

Submissions of the parties

32. The arguments of the parties on this issue focussed on three decisions: Chan, upon which the appellant relied, and Studman and Halac, upon which the Commissioner relied. These decisions are considered below.

33. In essence, the Commissioner’s contention was that no exclusion order can be made in relation to property that has already been forfeited. The Commissioner submitted that following Adamson J’s dismissal of the appellant’s application for an exclusion order on 6 May 2016, the appellant’s property, other than registrable property, was forfeited to the Commonwealth on 19 May 2016, being the date to which Schmidt J, pursuant to s 93, had extended the period at the end of which property would be forfeited. It followed, on the Commissioner’s submission, that on that date, the appellant’s property that was the subject of the restraining orders vested “absolutely” in the Commonwealth pursuant to the Proceeds of Crime Act, s 96. The Commissioner further argued that, as the property had been forfeited, there was no power under the Proceeds of Crime Act, s 93 for the court to extend the period for bringing an application for an exclusion order. Nor was there power to make such an exclusion order in respect of property that had already been forfeited.

34. The appellant submitted that the Commonwealth had not complied with any applicable registration requirements in relation to real estate the subject of the restraining orders, and thus legal title had not vested in the Commonwealth. This submission related to two pieces of real estate, one at Northbridge and one at Ipswich. That property was registrable property within the meaning of the Proceeds of Crime Act, s 97: see the definition of “registrable property” in s 338. Pursuant to s 97, the equitable title in the property vested in the Commonwealth as at the time it was forfeited pursuant to s 92, but its legal title did not vest until the applicable registration requirements had been complied with. There was no evidence or material before the Court as to whether legal title had vested in the Commonwealth. However, the Commissioner submitted that that was not relevant, as the critical date is the date of forfeiture and not the date of absolute vesting.

35. The appellant further submitted that as he had lodged “a second appeal to the Court of Appeal”, the Commonwealth was not authorised to dispose of or otherwise deal with his property until “the appeal lapses or is finally determined”. The appellant relied upon the Proceeds of Crime Act, s 99 in support of this argument. This submission appeared to be a reference to an appeal against his conviction, rather than an appeal against the judgment of Adamson J.

The decisions in Chan, Studman and Halac

36. The Commissioner submitted that Chan had no application to this case, as it was a decision under the Proceeds of Crime Act 1987 (Cth) (the 1987 Act). The Commissioner pointed out that the 1987 Act did not contain a provision in equivalent terms to the Proceeds of Crime Act, s 94(2), which provides that an exclusion order cannot be made where property has already been forfeited. Studman and Halac, however, were concerned with proceedings brought under the current Proceeds of Crime Act, being the relevant Act for present purposes. The Commissioner submitted that the Court in Studman and Halac correctly dealt with the construction and application of the Act.

37. The Commissioner submitted that, in accordance with the construction given to s 93 in Studman and Halac, there was no power to make an exclusion order in this case, as the property had already been forfeited. If the appellant wished to avoid that consequence, the appropriate course for him to have taken was to appeal against the decision of the primary judge, seek expedition and apply for a further extension to 19 June 2016, being the end of the 15 month period specified in s 93(1). In this respect, the Commissioner accepted that on the proper construction of s 93(1), extension orders could be made up to the expiry of the 15 month “hard backstop”. The Commissioner contended that no order for a further extension could be made after that time.

38. The Commissioner also pointed out that although the relevant legislation in Chan was the 1987 Act, the Court had delivered its judgment within the 15 month period from the conviction date. By contrast, the hearing in Studman occurred after the 15 month period had expired. It was in those circumstances that McClellan CJ at CL found the appeal to be futile. Accordingly, the Commissioner submitted that even if Chan applied and an extension order was made nunc pro tunc, such an order in the present proceedings could not be in terms that permitted an extension beyond 19 June 2016.

39. The Commissioner further submitted that on its proper construction, “conviction day”, as contained in the Proceeds of Crime Act, s 93, means the day on which a person who has been convicted of an offence is sentenced by a court, and not the day of any appellate resentence or order. The Commissioner submitted that this was apparent from the text of s 333, which defines the term, and which refers to a day on which “a” court passes sentence, not the day on which the ultimate court resentences a person. The Commissioner submitted that it would be an “absurd result” if a resentence operated to restart time for the purpose of the forfeiture regime. He contended that this was particularly so in circumstances where the sentence is increased (as the appellant’s was).

40. However, the Commissioner submitted that the length of the sentence imposed is not relevant to the Court’s jurisdiction to make an exclusion order. The Commissioner pointed out that this was consistent with the statutory scheme of the Proceeds of Crime Act, which provides mechanisms to recover forfeited property in certain defined contexts, which do not include resentencing. For example, there are provisions of the Act which deal with the effect on forfeiture where a conviction is quashed, as well as provisions that deal with the recovery of forfeited property.

41. The Commissioner submitted that, having regard to the proper construction of the Proceeds of Crime Act, the appellant’s “conviction day” was 20 March 2015 (the date of Beech-Jones J’s orders), and not 10 June 2016 (the date of the Court of Criminal Appeal’s orders). The Commissioner pointed out, however, that whichever was the correct “conviction day”, it was a “moot point”. Even if the “conviction day” was 10 June 2016, the appellant did not apply for either an exclusion or extension order within six months of that date, as is required by the Proceeds of Crime Act, ss 92 and 93. The Commissioner submitted that, on that approach, a deemed forfeiture date of 10 December 2016 had nonetheless passed, and the appellant cannot apply for a further extension. Further, by 10 June 2016, the property had already forfeited to the Commonwealth, that having occurred on 19 May 2016, as confirmed by the declaration made by Bellew J. In this regard, the Commissioner submitted that s 95 operated as a declaration of an existing state brought about by the operation of s 92. It was not the effective act that caused the forfeiture of property.

42. The appellant submitted that the Proceeds of Crime Act, s 94(2) was not introduced to counter the effect of Chan, so that the presumption was that Chan was the correct position at law.

43. The amicus curiae, in his submissions, referred to the decisions of Chan, Studman and Halac and to the authorities considered in those decisions. In particular, he submitted that this Court in Woodcroft v Director of Public Prosecutions (2000) 174 ALR 60; [2000] NSWCA 128 recognised that where an appeal has been properly lodged, an appellant has a remedy under the Supreme Court Act 1970 (NSW), s 75A(10). Woodcroft was considered in Studman and this consideration was cited with approval in Halac.

44. The amicus curiae acknowledged that this Court in Woodcroft stated, at [54], that s 75A(10), which provides that the Court may make any judgment or order that ought to have been made at first instance, or which the nature of the case requires, “does not give [the Court of Appeal] a free hand to do in the proceedings whatever ought to have been done”. However, he pointed to the observation in Woodcroft, at [55], that if the primary judge was found to have erred:

“[t]his Court could then, pursuant to s 75A(10), make the order on the claimants’ application which [the primary judge] should have made.”

Consideration

45. Whether an exclusion order may be made in relation to property that has already been forfeited depends on the proper construction of various provisions of the Proceeds of Crime Act. The principles of statutory construction are well established. In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 41, the plurality explained, at [47], that:

“[t]his Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.” (citations omitted)

46. This approach to statutory construction was confirmed in Certain Lloyd’s Underwriters v Cross (2012) 248 CLR 378; [2012] HCA 56 and most recently in SZTAL v Minister for Immigration and Border Protection (2017) 347 ALR 405; [2017] HCA 34 at [14] and [36]-[38].

47. The Commissioner’s primary contention was that the property the subject of the restraining orders had been forfeited, so that there was no power to make an exclusion order in respect of the property. He also submitted that, on the proper construction and application of s 93, the time in which an extension order could have been made had passed and that there was no power to make an order now extending the time in which an exclusion order could be made.

48. Part 2-3, Div 1 of the Proceeds of Crime Act, containing ss 92-95, governs the forfeiture of property where a person has been convicted of a serious offence. So far as is relevant to the matter presently before the Court, ss 92-94, upon their proper construction, operate in the following manner.

49. Section 92 provides for the forfeiture of property where a person has been convicted of a serious offence and a restraining order has been made under either ss 17 or 18. Both of those conditions were satisfied in this case. Section 92(3) specifies the period at the end of which the property is forfeited, namely, six months starting on the conviction day or any extended period specified in an extension order. The effect of s 92 is that there is an automatic forfeiture of property the subject of a restraining order provided the conditions specified in the section are satisfied and the time specified for forfeiture has arrived.

50. Section 93 provides for the making of an extension order beyond the period of six months starting on the conviction day. Three conditions must be satisfied before the court may make an extension order: the application for extension must be made within six months after the start of the conviction day; the applicant must have applied for an order to exclude the property from the restraining order under ss 30 or 31 or from forfeiture under s 94; and the court must be satisfied that the application to exclude property was made without undue delay and has been followed up diligently. Importantly, s 93(1) provides for what was described in submissions as a “hard backstop” period, namely, that the extended period must end no later than 15 months from the start of the conviction day.

51. Section 94 provides that a court making a restraining order under s 92(1)(b) must make an order excluding particular property from forfeiture if satisfied of a number of conditions, including, relevantly, that the applicant has an interest in property covered by the restraining order and has been convicted of a serious offence to which the restraining order relates. Of particular importance is s 94(2), which provides that an order under the section cannot be made if the property has already been forfeited under the provisions of Pt 2-3.

52. Contextual support for this construction of s 94 is found in s 93(4), which provides that if an extension order is made, the responsible authority must take reasonable steps to give notice to any person who has or claims to have an interest in the property on the date on which the forfeiture is to take place in accordance with the extension order, unless it is excluded from forfeiture, and the effect of ss 93(2) and (3). Section 93(2) provides that the extension order stops being in force if the application for exclusion is finally determined before the end of the six month period starting on the conviction day. Section 93(3) provides that the extended period ends if the application for exclusion is finally determined before the end of the extended period.

53. Section 99, which governs when the Commonwealth can dispose of, or otherwise deal with, forfeited property, is also relevant. Section 99(1) provides that the Commonwealth can dispose of, or otherwise deal with, property forfeited under s 92 in relation to a person’s conviction of a “serious offence” if and only if:

“(a)   the period applying under subsection (3) has come to an end; and

(b)   the conviction has not been quashed by that time.”

54. Section 99(3) then provides, relevantly, that the period at the end of which the Commonwealth can dispose of, or otherwise deal with, the property is:

“(i)   if the period provided for lodging an appeal against the conviction has ended without such an appeal having been lodged—at the end of that period; or

(ii)   if an appeal against the conviction has been lodged—when the appeal lapses or is finally determined …”

55. Importantly, any apparent injustice to a person whose property has been forfeited is ameliorated by Divs 3 and 4 of Pt 2-3, which provide for the recovery of forfeited property. In particular, pursuant to s 107, the forfeiture of property under s 92 ceases to have effect if the person’s conviction is subsequently quashed and the forfeiture does not also relate to the person’s conviction of other offences that have not been quashed.

56. The scheme of the Act is therefore clear. Section 93(1), on its express terms, provides that the “extended period” that the court may order “must end no later than 15 months from the start of the conviction day for the relevant conviction”. The extended period for which s 93 makes provision is the period at the end of which property is forfeited pursuant to s 92. The terms of s 93 are mandatory. Further, an exclusion order cannot be made if the property has already been forfeited: s 94(2). That, as I have said, occurs at the end of either a period of six months starting from the conviction day or any extended period being not more than 15 months from the conviction day.

57. Notwithstanding that forfeited property vests absolutely in the Commonwealth at the time of forfeiture, pursuant to s 96, there are restrictions on when the Commonwealth can deal with forfeited property so as to enable any appeal against conviction to proceed. The Commonwealth may then only deal with the forfeited property if the conviction is not quashed: s 99(1)(b). If the conviction is quashed, the position of a person whose property has been forfeited is protected by s 107 if forfeiture does not also relate to other offences that have not been quashed.

58. It follows therefore that, regardless of whether an application for an exclusion order was made within the six month period starting from the conviction day or any extension of that period, unless an exclusion order has been made before the expiry of either of those periods, as may be relevant, the property is forfeited.

59. This construction of ss 92-94 was the construction given to those sections in Studman and Halac.

60. In Studman, the primary judge had dismissed an application for an exclusion order under s 31. For that reason, the primary judge found it unnecessary to consider the appellant’s application for an extension order under s 93(1). The appellant appealed against the primary judge’s refusal to grant an exclusion order. However, so far as is relevant, the appellant did not appeal against the primary judge’s failure to deal with the application for an extension of time.

61. On appeal, McClellan CJ at CL (Spigelman CJ and Handley AJA agreeing) noted, at [17], that the effect of ss 91 and 92(3) was that the relevant property had been forfeited to the Commonwealth and, pursuant to s 96, had vested absolutely. Consequently, the proceedings were devoid of utility, as there was no order that could be made that would have any practical effect.

62. McClellan CJ at CL reiterated, at [19], that there was no effective order that the Court could make, as any period of extension ordered pursuant to s 93 must end no later than 15 months from the date of conviction. His Honour added, by reference to s 94(2), that no order could be made excluding property from forfeiture when the property had already been forfeited. In making these observations, his Honour referred to the observation in Woodcroft that the Supreme Court Act, s 75A(10) does not give the Court a “free hand”.

63. His Honour continued, at [20]:

“The appropriate course for the appellant to have taken upon receiving the [primary judgment] was to appeal to this Court and seek an expedited hearing. If so persuaded, this Court could have made an extension order and provided for the appeal to be heard and determined within an appropriate period. However, as that course was not taken the situation is now irretrievable.”

64. In Halac, the applicant, on 21 February 2014, was sentenced to a period of imprisonment of 18 years following a plea of guilty in respect of an offence contrary to the Criminal Code, s 302.2(1). His appeal against sentence was dismissed on 1 June 2015. It was not in dispute that the “conviction day” was 21 February 2014, being the date of his sentence in the District Court. Accordingly, the six month period referred to in s 92(3) concluded on 20 August 2014. On that date, being the last day of that six month period, the applicant filed for an extension order pursuant to s 93. The primary judge held that as no extension order had been made during the six month period, there was no power for an extension order to be made. This was so notwithstanding that an application for an extension order had been made within the six month period.

65. On appeal, this Court, in dismissing the applicant’s application for leave to appeal, concluded, at [14]:

“… this application for leave is futile. As was held in Studman, there is no power now, almost two and a half years after the imposition of Mr Halac’s sentence, to make an order excluding property from the forfeiture effected by the Act. As in Studman, it was necessary for Mr Halac to seek expedition of his hearing in this Court if he were to avoid that result.”

66. A submission was made in Halac that it was distinguishable from Studman, on the basis that the appellant in Studman had not made an application for an extension order within the six month period. By contrast, the applicant in Halac had made an application for an extension order within the six month period, although the application had not been determined within that period: see s 92(3). The Court in Halac noted, at [10], that that difference “may be acknowledged” but added that it was irrelevant. Rather, as the Court observed:

“… the point which was decisive in Studman … was the inability on the part of the Court to make any orders after the expiration of the 15 month period from the conviction day.” (original emphasis)

67. The decision in Chan, upon which the appellant relied, related to the provisions of the 1987 Act. The applicant in that case filed an application for exclusion and extension orders within the six month period specified in the 1987 Act. This period elapsed before the hearing date. The primary judge determined that the Court was within power to make an extension order nunc pro tunc so as to extend the “waiting period” for a period of nine months beyond the end of the expired “waiting period”.

68. On appeal, Meagher JA (Powell and Heydon JJA agreeing), held that as a matter of the proper construction of the statute, the primary judge was correct. As his Honour explained, pursuant to the 1987 Act, s 30, if a restraining order was still in place six months after the date of conviction, the restrained property would be forfeited to the Crown. Section 30A of the 1987 Act provided that a person may apply to the court for an order extending that six month “waiting period”. The application was required to be made before the end of the waiting period: s 30A(3).

69. Meagher JA observed, at [6], that absent a provision such as s 30A, there would be no power to extend the six month period in any circumstances. His Honour, at [7], then identified the question in issue in the matter before the Court, namely:

“[H]ow does the Act apply when one has an application, such as that made by [the applicant], during the course of the six month period on 15 September 2000 but which did not come on for hearing ultimately until 13 March 2001 before [the primary judge] at a time when the six month period had expired?”

70. His Honour resolved this question as a matter of statutory construction, accepting the construction for which the applicant contended as follows:

“… when an application pursuant to s 30A of [the 1987 Act] is filed in the Supreme Court without undue delay, within six months of conviction and is then diligently prosecuted pursuant to s 30A(5) but the court has not determined that application, the property should not be forfeited automatically by operation of the statute and a power to extend the period must still subsist.”

His Honour said, at [13], that “reasonableness” required such a construction of the provision. As his Honour said, “Parliament cannot … reasonably have meant to sanction the tree but not the fruit”.

71. Finally, reference should be made to Woodcroft and, in particular, the passage at [55] to which the amicus curiae drew the Court’s attention. Woodcroft was also concerned with the 1987 Act. However, the Court’s reference to its powers under the Supreme Court Act, s 75A(10) did not relate to the proper construction and application of the 1987 Act. Rather, the Court’s discussion, at [55], related to various procedural issues, including whether the matter had properly been brought in the Court of Appeal. This issue arose in the context of the decision of the primary judge in that case, Hidden J, in which his Honour held that the claimants had erroneously sought to set aside orders made by another primary judge and that the only course open to the claimants was by way of appeal. The Court in Woodcroft observed that Hidden J’s decision was itself susceptible to appeal and, if found to be wrong, the Court could, pursuant to s 75A(10), make the order on the claimants’ application that his Honour ought to have made. This observation related to alleged procedural irregularities and not the operation of the Proceeds of Crime Act. I have not found the reference to Woodcroft to be of assistance.

72. The court cannot, under ss 92-94, extend the period at the end of which property is forfeited beyond a period of 15 months from the start of the conviction day. Nor can an exclusion order be made at a time after the property has been forfeited. As neither an extension order could have been made in this matter, nor could an exclusion order have been made as the property had been forfeited, there was no basis for the Court to make an order under the Supreme Court Act, s 75(10). This is apparent from the terms of the sections themselves and is confirmed in the decisions of Studman and Halac. The decision of this Court in Chan is of no assistance to the appellant. As I have explained, that decision related to the 1987 Act, which was in relevantly different terms to the provisions of the Proceeds of Crime Act that are presently under consideration.

73. The appellant’s argument that s 94(2) was not introduced to counter the effect of Chan is not to the point and, with respect, is not correct. The terms of s 94(2) are clear and, in any event, were introduced for the avoidance of doubt. As was stated in the explanatory memorandum to the Proceeds of Crime Act:

“[s]ubclause 94(2) provides additional clarification of the exclusion provisions. An order to exclude property under clause 94 cannot be made if that property has already been forfeited under Part 2-3.”

74. As indicated above, there may be an argument as to what constitutes the “conviction day” for the purposes of Pt 2-3. “Conviction day” is defined in s 333, the terms of which are set out above. That section refers back to s 331(1)(a), which is also set out above. In my opinion, the effect of the interaction of those two sections is that the conviction day is the day on which a person is first sentenced for an offence of which the person has been convicted, whether summarily or on indictment. I consider that this is so even if a person is resentenced on appeal, as the “conviction day” is linked inextricably to the conviction itself.

75. Except in circumstances where the Court may make an order for a substituted verdict under the Criminal Appeal Act 1912 (NSW), s 7(2), there are no provisions in the legislation governing criminal appeals which provide for an appellate court to convict a person. Rather, that Act, which governed the appellant’s criminal trial, provides that, in ordinary cases, the Court may determine the appeal by allowing or dismissing it: see the Criminal Appeal Act, s 6(1).

76. Section 6(2) provides, relevantly, that if the Court allows an appeal against conviction, it shall quash the conviction and direct a judgment and verdict of acquittal to be entered. Section 7(1) provides that where the appellant has not been properly convicted on some count or part of the indictment, but has been properly convicted on some other count or part of the indictment, the Court may either affirm the sentence passed or pass some other sentence. Section 8 provides that the Court may order a new trial if it considers that a miscarriage of justice has occurred.

77. Further, the Crimes (Appeal and Review) Act 2001 (NSW), s 108(2) provides that where a person has been acquitted, the Attorney-General or Director of Public Prosecutions may submit any question of law arising at or in connection with the person’s trial for determination by the Court of Criminal Appeal. The Court’s determination does not, however, affect or invalidate the acquittal.

78. As I have indicated, s 7(2) provides the only circumstance in which the Court may enter a conviction. Pursuant to that provision, an appellate court may enter a conviction where an appellant has been convicted of an offence, and the jury could on the indictment have found the appellant guilty of some other offence, and on the finding of the jury it appears that the jury must have been satisfied of facts which proved the appellant guilty of that other offence: see Criminal Appeal Act, s 7(2).

79. Had the legislature intended that a person’s “conviction day” under the Proceeds of Crime Act be the day the person was sentenced either by a sentencing judge or on appeal, it could have said so by language that made that apparent.

80. Even if, contrary to the view I have taken, the conviction day is the date a person is resentenced on appeal, that does not assist the appellant, for the reasons submitted by the Commissioner at [41] above. In brief, the appellant did not apply for either an exclusion or extension order within six months of that date. In my opinion, it follows that on the proper construction and application of the legislation, the property has been forfeited.

81. Accordingly, subject to the constitutional question, the appellant’s appeal is futile and the relief sought by the Commissioner in his notice of motion should be granted.

Second issue: are the Proceeds of Crime Act, ss 18, 26(4), 92, 95 and 338(a)(ii), (a)(iv) and (g) of the definition of “serious offence” constitutionally invalid?

82. The appellant made two arguments as to the constitutional validity of a number of provisions of the Proceeds of Crime Act. First it was submitted that the Proceeds of Crime Act, ss 18, 26(4), 92 and 95 are incompatible with the Constitution, because the provisions involve Parliament fundamentally changing the character, functions and powers of the Supreme Court by requiring the Supreme Court to give effect to decisions of the Commissioner. The appellant contended that this is demonstrated by the “lack of power” and “lack of concomitant duties” conferred on the Supreme Court by these provisions. Secondly, it was submitted that ss 338(a)(ii), (a)(iv) and (g) of the definition of “serious offence” are invalid because they require the Supreme Court, in the exercise of federal jurisdiction, to engage in administrative processes peculiar to the Federal Commissioner of Taxation.

Validity of ss 18, 26(4), 92 and 95

Submissions of the parties

83. Sections 92 and 95 are set out at [14] and [18] above. Sections 18 and 26 provide, relevantly, as follows:

“18   Restraining orders—people suspected of committing serious offences

When a restraining order must be made

(1)   A court with proceeds jurisdiction must order that:

(a)   property must not be disposed of or otherwise dealt with by any person; or

(b)   property must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in the order;

if:

(c)   a proceeds of crime authority applies for the order; and

(d)   there are reasonable grounds to suspect that a person has committed a serious offence; and

(e)   any affidavit requirements in subsection (3) for the application have been met; and

(f)   the court is satisfied that the authorised officer who made the affidavit holds the suspicion or suspicions stated in the affidavit on reasonable grounds.

…

Affidavit requirements

(3)   The application for the order must be supported by an affidavit of an authorised officer stating:

(a)   that the authorised officer suspects that the suspect committed the offence; and

(b)   if the application is to restrain property of a person other than the suspect but not to restrain bankruptcy property of the suspect—that the authorised officer suspects that:

(i)   the property is subject to the effective control of the suspect; or

(ii)   in any case—the property is proceeds of the offence; or

(iii)   if the offence to which the order relates is a serious offence—the property is an instrument of the offence.

The affidavit must include the grounds on which the authorised officer holds those suspicions.

…

26   Notice of application

(1)   Subject to subsection (4), the responsible authority must:

(a)   give written notice of an application for a restraining order covering property to the owner of the property (if the owner is known); and

(b)   include with the notice a copy of the application and any affidavit supporting the application.

(2)   Subject to subsection (4), the responsible authority must also:

(a)   give written notice of an application for a restraining order covering property to any other person the authority reasonably believes may have an interest in the property; and

(b)   include with the notice:

(i)   a copy of the application; and

(ii)   a further notice that the person may request that the authority give the person a copy of any affidavit supporting the application.

The authority must comply with any such request as soon as practicable.

(3)   The court must not (unless subsection (4) applies) hear the application unless it is satisfied that the owner of the property to which the application relates has received reasonable notice of the application.

(4)   The court must consider the application without notice having been given if the responsible authority requests the court to do so.

(5)   The court may, at any time before finally determining the application, direct the responsible authority to give or publish notice of the application to a specified person or class of persons. The court may also specify the time and manner in which the notice is to be given or published.

(6)   A person who claims an interest in property may appear and adduce evidence at the hearing of the application.”

84. The appellant contended that s 18 requires the court to grant an ex parte restraining order where the statutory conditions are met, even in circumstances where an ex parte order would not otherwise be granted. The appellant further submitted that s 18 does not impose adequate curial supervision on the Executive to disclose all material facts to the suspect, and that there is no effective and fair right of review attached to s 18. By requiring the application to be considered ex parte, the appellant argued that the court becomes a “pawn of the executive”, with the effect that public confidence in the impartiality and independence of the Supreme Court is “significantly harm[ed]”.

85. The appellant further submitted that any orders made under ss 18, 26(4), 92 and 95 are “nothing more than a ‘rubber stamp’ for the fact finding and adjudication of those facts by the Commissioner”. He pointed to the use of the word “must” in ss 18, 94 and 95, which, he argued, meant that the sections do “not involve any discretion of the Court whatsoever”.

86. The Commissioner submitted that ss 18, 26(4), 92 and 95 are constitutionally valid: see Attorney-General (NT) v Emmerson (2014) 253 CLR 393; [2014] HCA 13; Director of Public Prosecutions (Cth) v Kamal (2011) 248 FLR 64; [2011] WASCA 55. The Commissioner pointed out that ss 18, 26(4) and 42 were held to be constitutionally valid by the Western Australian Court of Appeal in Kamal and that that decision should not be departed from by this Court. In that case, the Court distinguished these provisions of the Proceeds of Crime Act from the Criminal Assets Recovery Act 1990 (NSW), s 10, which the High Court found to be invalid in International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319; [2009] HCA 49. The Commissioner submitted that the Criminal Assets Recovery Act contained no effective curial enforcement of the duty of full disclosure on ex parte applications, which was not the case with the notification regime under the Proceeds of Crime Act.

87. The Commissioner relied on the decision of Attorney-General (NT) v Emmerson, in which the High Court had regard to the following matters in determining the constitutional validity of Northern Territory legislation for the restraint and forfeiture of property of persons declared to be drug traffickers: that the Supreme Court can only make a declaration on receipt of evidence sufficient to satisfy the civil standard of proof in respect of a person’s requisite number of past convictions; that the Supreme Court’s determination is made in open court where parties have a right to be heard, and may be represented; that the restraining order regime requires the Supreme Court to exercise discretion and make a judgment; that the application is subject to reconsideration by objection procedures and usual rights of appeal; and that the Supreme Court is obliged to engage in “orthodox adjudicative processes” involving the hearing of evidence.

88. The Commissioner submitted that, subject to one matter, each of these considerations applies in respect of the Proceeds of Crime Act. The Commissioner accepted that under the Proceeds of Crime Act, restraining orders can initially be made ex parte. However, the Commissioner pointed to two general safeguards in the legislation against the arbitrary exercise of judicial power. First, s 26(4) only requires the Supreme Court to “consider” the application ex parte – it does not require the Supreme Court to determine the matter ex parte. Section 26(5) specifically empowers the Court to direct the Commissioner to give or publish notice of the application, as well as the time and manner in which the notice is to be given or published. Secondly, once property is restrained, notice of that restraint must be given to the owner of that property pursuant to s 33.

89. The Commissioner also submitted that the owner of property has a “raft of measures available” in response to an order being made, including applying to the Court for revocation of the order pursuant to s 42, and seeking an exclusion order. The Commissioner submitted that s 26(4), which requires the Court to “consider the application without notice having been given if the responsible authority requests the court to do so”, must be understood in light of these safeguards.

Consideration

90. In Attorney-General (NT) v Emmerson, the High Court observed that Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532; [2008] HCA 4 established that:

“… legislation which purports to direct the courts as to the manner and outcome of any exercise of jurisdiction is apt to impair, impermissibly, the character of courts as independent and impartial tribunals.” (citation omitted)

91. The Court continued:

“[57]   … It is well established that Australian legislatures can empower courts to make specified orders if certain conditions are satisfied, even if satisfaction of such conditions depends on a decision, or application, made by a member of the Executive. A statement of McHugh J in Fardon is apt:

‘The exercise of judicial power often involves the making of orders upon determining that a particular fact or status exists. It does so, for example, in the cases of matrimonial causes, bankruptcy, probate and the winding up of companies.’

[58]   Such provisions are not, for that reason alone, taken to trespass on the judicial function or to be impermissibly determinative of the outcome of an exercise of jurisdiction. In selecting the Supreme Court as the repository of a power to determine a particular fact or status, in the absence of any express or implicit contrary legislative intention, it can be inferred that Parliament accepts that the power will be exercised in accordance with standards characterising ordinary judicial processes.

[59]   In Silbert v Director of Public Prosecutions (WA), a statutory provision empowering a court to make forfeiture or pecuniary penalty orders, in circumstances where a person was ‘to be taken to have been convicted’, was upheld by this Court as valid. Faced with the similarity between the operation of the relevant provisions in Silbert and the operation of s 36A, senior counsel for the first respondent acknowledged that the attack on the validity of s 36A was occasioned, in large part, by the circumstance that not all offences encompassed by the statutory criteria would be commonly understood to be drug trafficking offences.

[60] That attack is based on a misconception of the Supreme Court’s powers and duties under the statutory scheme. The Supreme Court is authorised to determine whether the statutory criteria set out are satisfied and, if they are, the Court must make the declaration sought. The Forfeiture Act provides the consequences which follow from the Supreme Court's declaration. Together, these steps are an unremarkable example of conferring jurisdiction on a court to determine a controversy between parties which, when determined, will engage stated statutory consequences.” (citations omitted)

92. The Proceeds of Crime Act, s 18 is contained in Pt 2-1, Div 1, “Making restraining orders”. Section 26 is in Pt 2-1, Div 2, “How restraining orders are obtained”. Sections 92 and 95 are in Pt 2-3, Div 1, “Forfeiture on conviction of a serious offence”.

93. Section 18, on its express terms, provides that a court with proceeds jurisdiction must make a restraining order on the application of a proceeds of crime authority but only if certain conditions are satisfied. Those conditions are that: there are reasonable grounds to suspect that a person has committed a serious offence: para (d); the affidavit requirements of subs (3) have been met: para (e); and the court is satisfied that the authorised officer who made the affidavit holds the suspicion or suspicions stated in the affidavit on reasonable grounds: para (f). The affidavit required by subs (3) requires the authorised officer to specify the grounds on which any such reasonable suspicions are held.

94. Accordingly, the first part of the appellant’s complaint is not made out. The court is not merely “a rubber stamp for the fact finding and adjudication of those facts by the Commissioner”. The court’s jurisdiction is only engaged if certain conditions are satisfied. Those conditions require both that the evidence before the court exposes the basis upon which the authorised officer “suspects that the suspect [has] committed” a serious offence and that the court be satisfied that the authorised officer holds the suspicion stated in the affidavit on reasonable grounds. The section thus requires the court to engage in an evaluation of the evidence in accordance with the usual judicial method in circumstances where usual court processes have been utilised, including that the evidence be by way of affidavit. If the court is not satisfied that the authorised officer holds the suspicion stated on reasonable grounds, as required by s 18(1)(f), the jurisdiction of the court is not engaged.

95. That the court’s institutional integrity is not compromised in the making of a restraining order is reinforced by s 26. Section 26(1) requires notice of an application to be given to the owner of the relevant property and that a copy of the application and any supporting affidavit be included with the notice. The court must not hear the application unless satisfied of compliance with the notice provisions of subs (1): see subs (3). Section 26(6) provides that a person who claims an interest in the property may appear and adduce evidence at the hearing of the application.

96. Sections 26(1) and (3) are, however, subject to subs (4), which is the subject of the appellant’s constitutional challenge. Subsection (4) provides that the court must consider the application without notice having been given if the responsible authority requests the court to do so. One effect of this subsection is that at the point at which the court is asked to consider the application under subs (4), a person who claims an interest in the property will not know of the application and therefore will not, at that stage, have the opportunity to challenge the evidence upon which the Commissioner relies or adduce evidence. However, notwithstanding the prescriptive words of s 26(4), there are a number of safeguards against any purported arbitrary control over a person’s property at the instance or dictation of the Commissioner, in addition to that for which s 18 provides.

97. First, pursuant to s 26(5), the court may at any time “before finally determining the application” require that notice of the application be given to such persons as the court directs. Section 26(5) is not subject to subs (4). The relationship between these two provisions was considered in Kamal, in which Martin CJ made the following observations. Having noted the difference in language in s 26(3): “must not … hear”; s 26(4): “consider”; and s 26(5): “before finally determining”, his Honour stated that:

“[71] Applying the basic object of statutory construction, there is nothing in the Act to suggest that the Parliament intended that the words used in s 26 should not bear their natural and ordinary meaning. In those meanings, there is no inconsistency between s 26(4) and (5). Rather, the natural and ordinary meanings of the words used gives the section a logical and coherent structure. Further, in those meanings, the section does not adversely affect traditional common law rights and freedoms to any significant extent, nor would those meanings take the section beyond the legislative power of the Commonwealth. Further, in those meanings the only constraints upon the jurisdiction or powers conferred upon the court are those to be found within the express words of the section. All relevant principles of statutory construction support the conclusion that s 26(4) and (5) should not be construed as inconsistent with each other.

[72] Given the lexicon which the Parliament has engaged in s 26, if it had been the intention of Parliament to require the court to determine an application for a restraining order without notice to persons who might be adversely affected by such an order upon the request of the DPP, one would expect the Parliament to have used the word ‘determine’ in s 26(4), as it did in s 26(5). It has not done so, and there is nothing in the language or structure of the section, or the meanings to be derived from the language used in the section, which would suggest that s 26(4) should be read as requiring the court to ‘consider and determine’ the application.

[73] This conclusion is reinforced by another guide to the construction of s 26. Significantly, each of s 26(1)-(3) is made subject to s 26(4). However, no similar constraint is placed upon the operation of s 26(5). If it had been the intention of Parliament to subjugate the broad power conferred upon the court by s 26(5), so that the court would be denied the power to direct the service of notice of the application when the DPP made a request under s 26(4), no doubt it would have done so by express words of constraint of the kind used in s 26(1)-(3).

[74] Finally, the expression ‘at any time before finally determining’, which is used to condition the time at which the power conferred by s 26(5) can be exercised, is clear and unequivocal, and entirely inconsistent with any implied limitation to be derived from s 26(4).

[75] This view of the construction of s 26 of the Act is supported by a number of observations in previous cases, although their force is diminished by the fact that they were made obiter and apparently without the matter being the subject of contentious argument. Nevertheless, in Director of Public Prosecutions (Cth) v Hart [2003] QCA 495; [2004] 2 Qd R 1 [20] (Wilson J); International Finance [34] (French CJ); and Ex parte Commonwealth Director of Public Prosecutions [2010] WASC 277 [2] (Allanson J) observations were made to the effect that s 26(5) empowers a court to direct the DPP to give notice of the application even in cases in which the DPP has exercised the power conferred by s 26(4) to request the court to consider the application ex parte.”

98. For essentially the same reasons, Martin CJ rejected an argument that s 26(4), when read with s 18, requires the court to grant an order without notice if the Commissioner makes a request under s 26(4) and the requirements of s 18 are met. Again, it is convenient to set out his Honour’s reasons in this regard:

“[79] Section 18 specifies the requirements which must be met before a restraining order can be made, and provides that when those requirements are met, a restraining order must be made. Within the lexicon created by s 26, the process upon which the court embarks for the purpose of ascertaining whether the requirements of s 18 have been met, is the process of ‘hearing’ the application, in the sense of receiving evidence and argument. After that process is complete, the court will ‘determine’ the application by adjudicating upon the question of whether or not the requirements of s 18 have been met. If the court determines that those requirements have been met, it will necessarily follow that the order must be granted, because of the mandatory terms of s 18.

[80] There is no reason why a court could not ‘consider’ an application, as required by s 26(4) without either hearing or determining the application, in the senses I have just described. It is entirely consistent with the lexicon used within s 26 for the court to ‘consider’ the application for the purposes of determining, for example, whether the power conferred by s 26(5) should be exercised, or whether other procedural directions should be made prior to the hearing of the application. A construction of s 26(4), read with s 18, which would impliedly exclude the power of the court to adjourn the consideration of the application, or to make procedural directions with respect to the hearing and determination of the application would infringe the specific principle of statutory construction endorsed by the High Court in Shin Kobe Maru. It is also a construction which would adversely impact upon rights of procedural fairness, contrary to the specific principle of construction to which I have referred, and it is not a construction which is consistent with the natural and ordinary meaning of the words used. It should be rejected.”

99. There is a further reason why the appellant’s challenge to the constitutional validity of s 26(4) must fail. The Proceeds of Crime Act, s 42 expressly makes provision for the revocation of a restraining order at the instance of a person who was not notified of the application for the restraining order. Section 42(5) provides that the court may revoke the restraining order if: (a) “there are no grounds on which to make the order at the time of considering the application to revoke the order”; or (b) “it is otherwise in the interests of justice to do so”. In Kamal, the court was concerned with the section before the enactment of para (b). Martin CJ observed, in obiter, that in respect of para (a), that provision was not dissimilar to the right of a party to move to set aside an injunction obtained ex parte.

99. The appellant has not advanced any argument why his Honour’s reasons should not be accepted and applied by this Court. In any event, I consider that his Honour’s reasons are correct, as I explain in the next paragraph. In my opinion, the Proceeds of Crime Act does not require the court to engage in conduct which is “repugnant in a fundamental degree to the judicial function of the court and ordinary judicial processes”:

100. The Proceeds of Crimes Act does not impermissibly impair the court’s exercise of jurisdiction as the appellant contended. That this is so is demonstrated not only by the construction given to s 26(4) by Martin CJ but also by reference back to the features identified by the High Court in Attorney-General (NT) v Emmerson as being relevant to the constitutional validity of the legislation in that case. Here, as has already been demonstrated, the Proceeds of Crime Act satisfies each of those characteristics or features.

101. First, the court may only make an order if satisfied on the civil standard of proof that the evidence established that there are reasonable grounds to suspect that the person committed a “serious offence” within the meaning of the Proceeds of Crime Act.

102. Secondly, although the court may make an order without notice, it is not required to do so upon the Commissioner’s request. Section 26(4) merely requires that an application be considered without notice having been given if the Commissioner requests the Court to do so. Section 26(5), which empowers the Court to direct the Commissioner to give notice before determining the application, is not subject to s 26(4). Nor is s 26(6), which provides that a person who claims an interest in the property may appear and adduce evidence at the hearing of the application.

103. Thirdly, ss 18 and 26 require the court to assess the merits of the application, exercise discretion and make a judgment.

104. Fourthly, the effect of s 42 is that, in addition to the usual rights of appeal, the application is subject to reconsideration by objection procedures.

105. Finally, it follows from the above that in determining whether to make an order, the court is required to engage in usual court processes involving the hearing of evidence and the making of a determination.

Validity of ss 338(a)(ii), (a)(iv) and (g) of the definition of “serious offence”

Submissions of the parties

107. The appellant argued that the Supreme Court, in applying the provisions of the Proceeds of Crime Act, “effectively predetermines the amount of income tax liability owing under Part IVC of the [Taxation Administration Act 1953 (Cth)]”. The appellant also submitted that the Proceeds of Crime Act, in those provisions relating to the payment or forfeiture of money or property being the proceeds of an income tax fraud offence, is a law “with respect to tax” and that such a law is invalid unless there is recourse to the judicial branch to contest its merits: see Gould v Deputy Commissioner of Taxation (2017) 343 ALR 275; [2017] FCAFC 1.

108. The Commissioner understood this aspect of the appellant’s constitutional challenge to be that in making a restraining order under the Proceeds of Crime Act, s 18, the Supreme Court is collecting and enforcing a tax where the serious offence is an offence that is based on depriving the Commonwealth of tax revenue. The Commissioner submitted that that was not an available construction of these provisions. The Commissioner further submitted that the Proceeds of Crime Act is not a law with respect to tax (or, at least, it is not only such a law). Rather, he submitted that it is a law that exacts or imposes a penalty or sanction for breach of certain rules of conduct. The Commissioner submitted that, even if the Proceeds of Crime Act was a law with respect to tax, it provided for recourse to the courts.

Consideration

109. The traditional definition of a tax was stated by Latham CJ in Matthews v Chicory Marketing Board (Vic) (1938) 60 CLR 263; [1938] HCA 38 where his Honour, at 276, stated that a tax is:

“… a compulsory exaction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered.”

110. In Roy Morgan Research Pty Ltd v Commissioner of Taxation (2011) 244 CLR 97; [2011] HCA 35, the plurality observed, at [40], as follows:

“The notion of ‘compulsory exaction’ has received some refinement in the decided cases. The nature of a particular exaction or the end to which revenues raised might be put may be such as to take the exaction outside the constitutional conception of ‘taxation’. As s 53 of the Constitution itself recognises, a law does not impose taxation by reason only that it contains provisions for the imposition or the appropriation of fines or other pecuniary penalties, or for the demand or payment of fees for licenses, or fees for services.”

111. In my opinion, the scheme for the forfeiture of property does not constitute a tax. As the High Court observed in Roy Morgan Research v Commissioner of Taxation, there are laws that impose fines or pecuniary penalties which, by these features alone, do not impose a tax. The same may be said of a law that requires the forfeiture of property. Nor could such a law be said to be a “compulsory exaction of money for public purposes”. Property is forfeited under the Proceeds of Crime Act as part of a legislative regime to deprive persons engaged in criminal activity of the proceeds of crime. That this is the purpose of the forfeiture provisions of the Act is demonstrated by the inclusion in the Act of s 107, which provides that the forfeiture ceases to have effect if the person’s conviction is quashed and the forfeiture does not also relate to the person’s conviction of other offences that have not been quashed. A compulsory exaction of money for public purposes does not have this characteristic.

112. Accordingly, this aspect of the appellant’s constitutional argument is also untenable.

Third issue: was there fraud in obtaining the restraining orders?

113. The substance of the appellant’s complaint that the orders made by the primary judge were obtained by fraud was that counsel and the solicitors for the Commissioner intentionally and dishonestly read affidavit evidence that they knew to be wrong. The relevant affidavit evidence explained the suspicions of an authorised officer for the Commissioner, in accordance with the requirements of the Proceeds of Crime Act, ss 18(1)(d)-(e) and (3). The appellant sought, by way of relief, a declaration that the restraining orders be declared void ab initio on the basis of fraud. This argument was not raised in the court below, nor had it previously been raised by the appellant.

114. I would not allow the appellant to raise this ground of appeal: see Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33. Not only was it raised “some five years” after the restraining orders were granted, it was not, as I have indicated, raised before the primary judge and there has been no opportunity for the Commissioner to respond. Further, it is a most serious allegation and the appellant has not advanced any cogent material in support of the allegation.

Conclusion

115. In my opinion, the Commissioner has established that the challenges raised by the appellant in his notice of appeal are either untenable or, in the case of the claim of fraud, should not be allowed to be advanced.

116. It follows that the Commissioner has been successful on his notice of motion for the summary dismissal of the appeal. Had the appeal proceeded, leave to appeal was required pursuant to the Supreme Court Act, s 101(2). The Commissioner has sought an order for costs. Although no separate submissions have been made in respect of costs, there is no reason why, in the ordinary course, the Commissioner should not have costs. Accordingly, I propose an order for costs in the Commissioner’s favour.

Orders

117. I propose the following orders:

(1)   To the extent that it is required, grant leave to the appellant to appeal pursuant to the Supreme Court Act 1970 (NSW), s 101(2).

(2)   Appeal dismissed.

(3)   Dismiss each of the appellant’s notices of motion filed on 6 March 2017 (stay application) and 6 March 2017 (leave to adduce further evidence).

(4)   Set aside the appellant’s notice to produce filed on 27 March 2017.

(5)   The appellant pay the Commissioner’s costs of the application for summary judgment, the costs of the appellant’s motions and all other costs associated with the appeal.

118. MEAGHER JA: I agree with Beazley P.

119. GLEESON JA: I agree with Beazley P.

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Decision last updated: 30 April 2018