Attorney-General for the State of South Australia v George Stamatelopoulos and Official Trustee in Bankruptcy (Intervener) No. 4186 Judgment No. SCGRG 91/3028 Number of Pages 3 Bankruptcy

[1993] SASC 4186

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA PERRY J

CWDS
Bankruptcy - vesting of property in official trustee - Order made under the Crimes (Confiscation of Profits) Act 1986 (South Australia) restraining the disposal of $58,200 cash seized from the premises of a person charged with drug offences, with a direction that the moneys be held in specie by the Police Property Department, so as to be available as an exhibit at the trial - before trial, the defendant was declared bankrupt - subsequent application by the defendant for an order for payment out from the moneys of an amount to meet reasonable costs of his defence - held that the application should be refused, as any payment out of part of the moneys would have a tendency to prejudice the position of the creditors in bankruptcy - however, matter adjourned to enable the creditors to consider whether they might agree to an advance from the moneys, as the provision of legal assistance might help to avoid conviction and possible forfeiture to the Crown in the right of the State - question whether forfeiture following conviction would operate notwithstanding the bankruptcy not decided. Crimes (Confiscation of Profits) Act 1986 s.6. Bankruptcy Act (Commonwealth) s.58(1)

HRNG ADELAIDE, 17 September 1993 #DATE 17:9:1993
Counsel for appellant:     Mr M. Hinton
Solicitors for appellant:    Director of Public
   Prosecutions
Counsel for respondent:     Mr S. Ey
Solicitors for respondent: Mangan Ey and
   Associates
Counsel for intervener:     Mr G Gretsas
Solicitor for intervener:    Australian Government
   Solicitor

ORDER
Application stood over.

JUDGE1 PERRY J In this matter, Prior J made an order in chambers on 20 December 1991 pursuant to s.6 of the Crimes (Confiscation of Profits) Act 1986 that the defendant be prohibited until further order from dealing with a sum of $58,200 cash seized from his premises on 30 April 1991. 2. As part of that order, he directed that the administrator be authorised to take possession of the moneys and pay the sum of $58,200 into this Court, to be held by this Court until further order. 3. It subsequently became apparent that the moneys might be required as an exhibit in the pending criminal proceedings against the defendant. In consequence of that, by order of Duggan J made on 5 June 1992, the order of Prior J was varied so as to provide that the sum of $58,200 cash be retained in specie by the South Australian Police Department property section, until further order. 4. It appears that the money has remained in the hands of the Police Department property section ever since, the defendant not yet having been brought to trial. 5. In the meantime, there have been two relevant supervening events. 6. On 18 June 1993 the defendant, Mr Stamatelopoulos, was declared bankrupt by order of the Federal Court. The Official Trustee in Bankruptcy is trustee of his estate. 7. Separately, an application has been brought by notice of application dated 10 August 1993 (Court File Document No 9) by the defendant through his solicitors, for a further variation of the restraint order to enable payment out of such funds as may be necessary in order adequately to instruct counsel in his defence in respect of the criminal charges currently before the Central District Criminal Court. I assume that those criminal charges are those which were either in existence or foreshadowed at the time the restraint order was made, and were charges relating to the criminal conduct said to provide a foundation for the restraint order. 8. On the hearing of the defendant's application, I gave leave to the Official Trustee in Bankruptcy to intervene in the proceedings. Mr Gretsas of counsel appeared on his behalf. 9. Were it not for the fact that the bankruptcy order has been made, I would have considered favourably, subject to argument from counsel for the Attorney General, the application to pay out or secure moneys from the funds held by the police towards legal expenses. Unassisted by argument as to that aspect of the matter, I would have thought that such a payment might properly be authorised in the exercise of the Court's discretion pursuant to s.6(3)(c) of the Crimes (Confiscation of Profits) Act. 10. However, Mr Gretsas advanced arguments which drew attention to the legal effect of the bankruptcy order and, in particular, to the vesting of the property of the bankrupt in the Official Trustee which takes effect pursuant to s.58(1)(a) of the Bankruptcy Act. 11. It is true, of course, that the trustee in bankruptcy takes subject to equities, and nice questions arise as to the tension which might exist between the Bankruptcy Act, on the one hand, and the various powers to order restraint and for forfeiture of tainted property pursuant to the Crimes (Confiscation of Profits) Act of South Australia. I do not think that it would be right to endeavour to resolve all of the questions at this stage, particularly the question whether, in the event of a conviction of the defendant, there would be a forfeiture of the property in question pursuant to the State Act, in favour of the Crown in the right of the State, or whether the property would remain vested in the Official Trustee pursuant to the Commonwealth Bankruptcy Act. Resolution of that question will have to wait until another day. It will not arise for consideration in this case unless and until the defendant is convicted. 12. In the meantime it appears to me that, notwithstanding my predilection to order payment of reasonable legal expenses, if that was a course open to me, such a course would, to the extent of any authorised payment, prejudge the question of title to the money and, in particular, the title of the Official Trustee, and would be apt to prejudice the position of the creditors in the estate of the defendant. 13. I did suggest in arguendo that the creditors might be well advised to secure adequate representation for the defendant, as the Official Trustee's rights to the money might well be enhanced if the defendant is acquitted as, in that case, forfeiture would not arise and there would then appear to be no impediment, at least as to any balance of the moneys then remaining, to their application within the defendant's bankruptcy. If the creditors were minded perhaps to approach the matter in that way, it may nonetheless still be possible that, by consent, an amount could be paid out which could be applied towards the expenses of the defence of the defendant. 14. However, in the absence of any indication by the creditors that they would be prepared to sanction such a course, I do not think that it would be right to disturb the integrity of the fund and to authorise payment out of any part of it, notwithstanding the strength of the claim by the defendant to be put in funds to secure proper legal representation. 15. In the result then, I would not be prepared to accede to the defendant's application dated 10 August 1993. However, rather than dismiss it at this stage, I am of the view that it should be stood over in case the creditors might see their way clear to authorise payment out of some part of the moneys towards the costs of the defendant's defence. 16. I therefore decline to make an order in favour of the defendant at this stage with respect to the application, but it is adjourned over to a date to be fixed for the reasons which I have mentioned. 17. The question of the costs of the application, including any costs of the intervener, is reserved.