AFP v Opal Storm Pty Ltd (Costs Ruling)
[2018] VCC 1823
•21 February 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE | Revised Not Restricted Suitable for Publication |
Case No. CI-16-02340
IN THE MATTER OF the Proceeds of Crime Act 2002 (Cth)
And
IN THE MATTER OF AN APPLICATION BY
| COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE | Applicant |
| AND | |
| OPAL STORM PTY LTD, Thilini Maheshika EKANAYAKE, ACN 128564312 PTY LTD and Nayanaka Arjuna SAMARAKOON | Respondents |
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JUDGE: | HER HONOUR JUDGE COHEN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 5 February 2018 | |
DATE OF RULING: | 21 February 2018 | |
CASE MAY BE CITED AS: | AFP v Opal Storm Pty Ltd and Ors (Costs Ruling) | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 1823 | |
RULING ON COSTS
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Subject: COSTS; CONFISCATIONS APPLICATION;
Catchwords: Victorian Court exercising federal jurisdiction; Whether County Court has power to order costs other than under s323 Proceeds of Crime Act 2002 (Cth); whether costs of Commissioner should be ordered
Legislation Cited: Proceeds of Crime Act 2002 (Cth) s323; Judiciary Act (Cth) s 79; County Court Act 1958 s78A; County Court Rules Chapter I Rule 1.05; Chapter II Order 10.
Cases Cited:Diez v DPP (2004) 62 NSWLR 1
Decision:Court has power to order costs in favour of the Applicant Commissioner; no order for costs made in the circumstances.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr C Horan QC with Mr A Yuile | Criminal Assets Litigation, AFP |
| For the Respondents | Mr M Gumbleton | Halperin & Co Pty Ltd |
Her HONOUR:
1 On 14 March 2017, I dismissed an application seeking to overturn restraining orders which had been made ex parte by another Judge of this Court, or seeking rehearing of them. That application had been flagged as a case to test constitutional validity of certain provisions of the Proceeds of Crime Act 2002 (Cth) (“POCA”). It was set down for a two-day hearing, and both sides pre-filed written submissions and were represented by Senior and Junior Counsel. In the event the decision was not appealed.
2 The Commissioner, as successful respondent in that application, has sought an order that its costs be paid by the unsuccessful parties, being the respondents on this application.
3 The respondents oppose an order for costs being made against them. Their principal argument is that there is no power for such costs to be ordered. Alternatively they argue that a costs order should not be made in this situation. This issue was set down for a further half-day hearing, which it fully occupied, after written submissions provided by each side.
Whether there is power for the County Court to order costs in favour of the Commissioner
4 The respondents argue that as this Court was exercising federal jurisdiction in dealing with the substantive application (see s 335(2) POCA), and the only provision for ordering costs under the POCA does not cover costs orders in favour of the Commissioner, this court has no power to order the costs sought in these circumstances. The only way a state court can exercise powers conferred by its state’s laws when exercising federal jurisdiction is when those powers are “picked up” pursuant to s79 of the Judiciary Act 1903 (Cth). It is argued that no state-conferred powers as to costs are picked up in this situation, because s323 POCA “otherwise provides” for the purposes of s79.
5 Section 79 of the Judiciary Act 1903 (Cth) (“the Judiciary Act”) provides:
“(1) The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.”
6 Section 323 of the POCA provides that a Court may order the Commonwealth to pay all costs incurred by a person in connection with a proceeding-
“If –
(a) a person brings, or appears at, proceedings under the Act before a court in order:
(i) to prevent a forfeiture order or restraining order from being made against property of the person; or
(ii) to have property of the person excluded from a forfeiture order or restraining order;
(b) the person is successful in those proceedings; and
(c) the court is satisfied that the person was not involved in any way in the commission of the offence in respect of which the forfeiture rder or restraining order was sought or made.”
It is not disputed that the applications which I dismissed would not fall within those types of proceedings, but in any event s323 deals only with costs ordered to be paid by the Commonwealth in favour of the person who has made such successful application, and does not cover situations where the Commonwealth (or Commissioner) seeks its costs from another person.
7 The respondents argue that s323 covers the field of availability of costs orders on confiscation matters under the POCA, and amounts to the POCA having “otherwise provided” for the purposes of s79 of the Judiciary Act.
8 The Commissioner does not accept that the nature of the application brought was really one under the POCA, but rather at least in part a challenge to the constitutional validity of some sections of that Act. In any event, the Commissioner argues that s 323 is not an exhaustive provision of when costs can be awarded in proceedings under the POCA, so does not exclude the operation of s 79 of the Judiciary Act to pick up the court’s state conferred general powers to make costs orders. In particular, s 78A of the County Court Act 1958 (“CCA”) confers a general discretionary power as to costs in any proceeding.
9 Section 78A of the County Court Act 1958 (Vic) (“CCA”) provides:
“The costs of and incidental to all proceedings are in the discretion of the Court and the Court may determine by whom and to what extent the costs are to be paid.”
Section 3 of the CCA defines “Proceeding” as meaning “any matter in the court”.
10 The Commissioner also relies on s 64 of the Judiciary Act, which provides that
“In any suit to which the Commonwealth or a State is a party, the rights of parties shall as nearly as possible be the same, and judgement may be given and costs awarded on either side, as in a suit between subject and subject.”
11 The Commissioner relies on the decision by the New South Wales Court of Appeal in Diez v DPP[1] which dealt with the predecessor section to s323 - s101 Proceeds of Crime Act 1987 (Cth) (“the 1987 Act”). It is not in issue that s 101 of the 1987 Act was in essentially the same terms as the current s 323. It is also not in issue that this court ought follow decisions from other States’ intermediate appellate courts unless this court considers them to be “plainly wrong”[2]. The respondents argue that Diez’s case is not directly on point for this purpose.
[1](2004) 62 NSWLR 1
[2]Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [135]. Indeed I followed this principle in deciding the substantive applications – [2017] VCC 210 at [25]
12 In Diez, the NSW Court of Appeal dealt with an application for costs against the commonwealth by a convicted person who successfully obtained a variation of a restraining order. The Court found that s 101 of the 1987 Act (predecessor to s 323 POCA) was not an exhaustive provision as to when an order for costs could be made in favour of a successful applicant against the Commonwealth. It found that s101 provided a “non-exclusive delineation of a set of circumstances in which the court has a discretion to order all, some, or no costs against the Commonwealth”. It held that the court could exercise its general powers to order costs in other circumstances. It followed that a person “will not be precluded from seeking a favourable exercise of discretion under the court’s general power to order costs” even if s101 was not satisfied.[3]
[3]At [61]
13 The Commissioner submits that I could not find that decision to be “plainly wrong”, which would require something “far more potent than mere disagreement” and in any event the conclusions in Diez are submitted to be correct, if one takes s78A CCA as conferring comparable general powers as to costs as the New South Wales Supreme Court found it had.
14 The Commissioner submits that s78A is precisely the kind of power that s79 of the Judiciary Act is intended to pick up, and that to construe s79 otherwise would be contrary to the recent explanation in Rizeq v Western Australia (2017) 344 ALR 421 that s79 of the Judiciary Act “serves to ensure the exercise of federal jurisdiction is effective” by filling “a gap in the law governing the actual exercise of federal jurisdiction which exists by reason of the absence of State legislative power”[4].
[4]Rizeq at [63]
15 On behalf of the respondents, it is argued that on close analysis, Diez did not decide the same issue as falls to be decided here because the situation in Diez is distinguishable when one considers the powers of the County Court compared with those of the NSW Supreme Court. It is submitted that federal jurisdiction is exercised differently in each State, and in Victoria s323 of the POCA is capable of being interpreted differently than in NSW as to whether it “otherwise provides” so as to exclude the picking up of Victorian law through s 79 of the Judiciary Act, that is, to the picking up of s78A CCA. The respondents submit that the Commonwealth is never entitled to costs in confiscations proceedings in Victoria, or at least not in the County Court, and no applicant other than one who falls within (a), (b) and (c) of s323(1) could obtain an order for costs.
16 In arguing that Diez is distinguishable, the respondents point to the attention paid to NSW Supreme Court Rules dealing with costs, which at least at that time did cover the case. It is submitted that in contrast, the County Court has excluded confiscations proceedings from the application of Chapter I of its Civil Procedure Rules[5] which contain the general rules as to orders for costs, and as the Court has seen fit to make Rules for Confiscations matters which are contained in the County Court Rules Chapter II, called Miscellaneous Rules, and as those Rules are silent on all issues of costs, it should be inferred that the Judges of the County Court saw fit to make Rules which would exclude any orders for costs in confiscation proceedings (unless they come within s323). It is submitted on behalf of the respondents that unlike in Diez, the County Court Rules do not make available the usual costs orders, and that that was an important stepping stone in the reasoning in Diez’s case[6] so that there is no need to consider whether the decision in Diez was plainly wrong. It is submitted that policy considerations could justify the result that no costs orders are available in favour of the Commissioner given the nature of that Commonwealth agency’s role in proceedings under the POCA.
[5]Ch1, Rule 1.05
[6]Paragraph [48]
17 In response, it was submitted on behalf of the Commissioner, that the interpretation of s323 of the POCA cannot vary from State to State, depending on each state court’s powers and rules as to costs, as the question is whether s323 “otherwise provides” to exclude the picking up of state conferred powers and procedures through s 79 of the Judiciary Act. It is submitted that it was the legislative power and not the Rules which were the clear basis for the decision, and Rules cannot diverge from the statute. The Chapter II Rules simply do not deal with any issue of costs, and that should not be taken to mean that there is intended to be no ability to order costs. Further, the Victorian Court of Appeal in decisions under the Confiscations Act 1997 (Vic), has found in a number of cases that there is power to order costs for or against the DPP, which stands in the same position as the Commissioner under the POCA, and equivalent Confiscations Rules apply to those proceedings as to proceedings under the Commonwealth Act.
18 In my view, the NSW Court of Appeal decision in Diez finding that the predecessor to s323 is not an exclusive delineation of all circumstances in which costs orders may be available against the Commonwealth in proceedings arising under the POCA, was based on interpretation of s 323, and the operation of sections 64 and 79 of the Judiciary Act, and is not dependent on procedural rules or even different powers derived from legislation in different states. Any such differences may lead to different results in application of state conferred powers to order costs, but on the interpretation of s 101 and the availability of state powers as to costs, I do not[7] find it “plainly wrong” – on the contrary - and therefore I should follow it on that issue.
[7] [Omitted in revision of reasons through error]
19 There remain however some further considerations before I could make the order for costs that is sought.
20 First, the case of Diez dealt, as does s 323, with orders for costs against the Commonwealth. There was no issue raised in the present case that the Commissioner should not be regarded as standing in the shoes of the Commonwealth in these types of applications. Once it is accepted that s 323 of the POCA does not delineate the exclusive scope for the making of[8] costs orders against the Commonwealth for proceedings under the POCA, and that s79 of the Judiciary Act may enable state powers as to costs to be utilised in commonwealth confiscations proceedings, there is no logical reason for such powers to exclude costs orders being made under such powers in favour of the Commonwealth. While there are long-standing considerations that might militate against a costs order being sought or made in favour of the Commonwealth, there can also be sound public policy in the having available the sanction of such a costs power, such as to discourage wholly frivolous or ill-intentioned applications.
[8] [Omitted in revision of reasons through error]
21 The next question is whether there is a power in the County Court under Victorian law which is picked up by s79 of the Judiciary Act for the exercise of federal jurisdiction in this proceeding. In my view, s78A CCA is clearly such a power. It is differently worded from the equivalent New South Wales power discussed in Diez’s case, in that it does not specifically provide for costs following the event (which might well lead to a different result on individual costs applications), but in that context allows an even wider discretion in the court as to when costs may be ordered. Further, it applies to any proceeding in the court, not exclusive to civil proceedings nor to any categories of civil proceedings.
22 It is the County Court Act which confers power on the court to order costs, and only if there is such power conferred can the court make rules under s 78 as to the implementation of that power. The making or failure to make Rules does not detract from the legislatively conferred power.
23 The County Court has made Rules specifically relating to confiscations proceedings, under both the Victorian Confiscations Act 1997 and the POCA, and placed them in its Chapter II Miscellaneous Rules, and they are silent as to any orders for costs of any party. These mirror a set of Confiscations Rules made by the Supreme Court of Victoria, although the Supreme Court’s Confiscations Rules are part of its Criminal Procedure Rules (Order 6).
24 Rule 1.05 of the County Court Rules Chapter I, provides that those Rules do not apply to a civil proceeding to which Chapter II applies[9] except as that Chapter provides. The purpose of that separation is clearly to provide for procedures specific to confiscations proceedings, and in particular to the manner of making applications – with various forms prescribed. In this way, confiscations proceedings are not required to be commenced by Writ or Originating Motion, no Appearance or pleadings are required, and the various other interlocutory steps prescribed under Chapter 1 Rules do not apply. However, having dealt mainly with the form of applications and notice of them, Order 10 (the Confiscations Rules) is silent not only on the availability of costs orders, but also on several other implicit requirements, such as the manner of service required of documents, and the form of affidavits, both of which are frequently used. In my view it is implicit that Chapter I Rules on those steps fill that silence. Further, apart from the power to give directions for the hearing of an application (R10.09(3)), there is silence about the types of procedures that might be followed, and in my view that silence can be filled where needed by reference to the types of interlocutory steps that may occur under Chapter I rules, such as directions for production of documents, or subpoenas.
[9] [Omitted in revision of reasons through error]
25 Counsel for the respondents points out that the Victorian Supreme Court has seen fit to place its Confiscations Rules in its Criminal Procedure Rules. That difference seems to me to support the submission of the Commissioner that as the Victorian Court of Appeal has made costs orders for or against the DPP in some state confiscations applications, which are covered by those Confiscations Rules, there must be power to make orders for costs in favour of the government authority pursuing forfeiture, notwithstanding the absence of any specific rule of court empowering that in the Confiscations Rules.
26 I find that the silence in the County Court’s Confiscations Rules should not be taken as an intentional exclusion of all power to order costs in confiscations proceedings except as provided in s 323 of the POCA. In my view the general power to order costs conferred by s 78A of the CCA is sufficient.
27 For these reasons, I find that the powers under s 78A of the CCA are “picked up” by s 79 of the Judiciary Act to enable a costs order to be made in favour of the Commissioner in an application under or relating to the POCA.
Should Costs be ordered and if so on what basis or to what extent?
28 The Commissioner sought costs on the basis that he was the successful litigant in the applications which I decided last year. Although not included in the statutory power as it was in the New South Wales Supreme Court provision under scrutiny in Diaz, there is in civil proceedings in this State a general principle that costs will ordinarily follow the event. However, in my view that is not an appropriate approach to take as the starting point in proceedings under the POCA.
29 Although I consider that policy considerations militate against the total absence or exclusion of an ability for the court to order costs in favour of the Commonwealth agency which administers the POCA, I regard that role as placing the Commissioner in an quite different position when it comes to costs than an ordinary civil litigant, even an institutional one. Section 64 of the Judiciary Act refers to the Commonwealth or a State as being as nearly as possible in the same position as a party in a suit. In litigation under the POCA, the Commissioner is not merely a party in a suit. There is a statutory role to bring and litigate proceedings as provided under the Act. Those proceedings often involve first the restraint and ultimately the forfeiture of property of persons in connection with the commission of certain types of criminal offences. While the Commissioner can, and often does, reach a resolution of various claims in proceedings under the Act, it is not in my view in the role of an ordinary civil litigant, taking merely commercial decisions in relation to the applications it brings or defends, and that role inevitably involves cost. Further, there are policy reasons why persons whose property is affected should not feel constrained to forego the full airing of their claims under the Act out of fear of the sanction of a costs order being made against them if unsuccessful. In my view these considerations should lead to costs orders in favour of the Commissioner being only made sparingly.
30 In the present case the applications brought by the respondents were in my view somewhat ambitious, especially having regard to there being a decision in another state’s Court of Appeal directly on point and against several of their contentions. I also take into account that as the respondents signalled that the applications were likely to become a test case and important enough from their point of view to require senior counsel, written submissions and a two-day hearing, the Commissioner probably incurred higher legal costs in defending those applications than would be anticipated on a more conventional interlocutory application in this court.
31 I also take into account that when originally brought, the substantive application sought to invalidate or achieve a rehearing on an order for examination of Mr Samarakoon, obtained ex parte on the same hearing as the restraining orders. A rehearing was conceded by the Commissioner to be available, so the issue of invalidity was not pursued. To this extent there was partial success in the application although by no means on the main thrust of what was sought.
32 Weighing up all of these considerations, although it is a situation where I find that the Commissioner was put to further legal expense in an application that was ambitious and ultimately unsuccessful, I have decided that those costs are nevertheless of a nature that ought to be borne by the commonwealth agency administering the POCA as part of that function. I have decided that no costs order should be made.
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