Australian Federal Police, Com. of v Cornwell, B.R.

[1988] FCA 221

IN THt FED- COURT O? AUSTRALIA

1

UlRl 8 W T E m 6 8 DISTRICT REGISTRY ) No. G.489 of 1986

1

DIVISION	GENERAL	1
BElWEEN :

COMHISSIONER OF AUSTRALIAN

m R A L POLICE

Applicant

- AND :

BRUCE RICHARD CORNWELL

Rerpondent

EX-TMPORB REASONS FOR JUDGUENT

BURCBBTT J.

Thir ir an application for an order under s.243P of the

Curtou Act 1901 in rolation to property of which, by a previous order of the Court, the Official Trurtee was directed to take control. The ordor rought, if granted, would authorize the Official TrUrteO to roll cortain of the property, consisting of a

rare known ar Singing our Song and certain progeny of that mare.

Section 243F taker ita place ar part of the series of

provirionr dealing with the recovery of pecuniary penalties for

dealing. in narcotic goodr. Undor those provisions, which

COPO~CO with r.243A, pecuniary penalties may	be recovered in
rerpoct of benefits derived by	a person by reason of his having
engaged in a particular proscribed narcotics dealing, or	engaged
during a particular period in prorcribed narcotics dealings.	By
r.243Br where the Court is satisfied that the person in	relation
to who.	tho order ir Bought has ro engaged in a narcotics dealing

or narcotic. dealingr, tho Court rhall aaress the value of the benofits derivod by the perron by reason of his having done so,

and order the perron to pay to the Commonwealth a pecuniary

ponalty equal to that value.	Provirion ir made, in 6.243C, for
the arrerrment, and particularly	in relation to the evidence upon
which the Court makor the	arrerraent.

An iaportant provision for present purposes is s.243E,

undor which, whero a proceeding has been instituted for a pecuniary ponalty, an application may be made to the Court, ex

parte, for an order directing the Official Trustee to take

control of proporty 8pocifi.d	in the application, or of all the
property of the dofondant.	It is provided by subsection (2) of
that roction that, where ruch an application is supported by	an

affidavit of an appropriate perron rpecified in the subsection

rtating that he bolievea certain mattera and setting out the

grounds on which . h holdr thoro beliefa, and where the Court

Conriderr that, having regard to the matters contained	in the
affidavit or affidavitr, there are reasonable grounds	for holding

thoro beliefs, the Court rhall make ruch an order. It is to be

empharired that r.243E(2) ir expeerred imperatively, that is to

ray, in languago which appear. to leave no discretion, provided

the Court is ratirfiod on the mattorr I have mentioned.

The section goes on to provide for other matters which

may be included in the order. I note that, among them, it is

provided that the Court may make provision	for	meeting the
reasonable living and business expenses of the defendant	out	of

the property. Some protection is afforded a defendant, insofar

as there is also specific provision relating to the giving of

undertakings with respect to the payment of damages or costs	in
relation to the making and operation of the	order.

By s.2431, which is the rection under which the present

application is made, it is provided that, where the Court has made an order under s.243E directing the Official Trustee to take

control of property, the Court may at the time it makes the

otder, or at any subsequent time, make such orders in relation	to
that property as the Court considers jurt.	without limiting the

power so conferred on the Court, it is provided that the Court

may at the time or at any subsequent time make an order - and

then there are rot	out a number of matters, including paragraph
(b), an order:

"regulating the manner in which the Official

Trustee may exercise itr powers or perform

its duties under the original order."

By force under r.243B in relation s.243GI it is provided that where an order is in

to a person who has been ordered

to pay a pecuniary penalty to the Commonwealth, the Court may

M k e an order directing payment	out of the property of the person
controlled by the Official Trustee; and exprers provision	is made
that, for the purpose of enabling the Official Trustee	to comply
with the direction, the Court may direct him to sell or	dispose
of such of the property as is	specified.

Provirion is alro made by s.243J that, where an order is

made under s.243E. there is created by force of this section a

charge on all property to which the order relates to secure the payment to the Commonwealth of any pecuniary penalty that the

person u y be ordered to pay in the relevant proceeding. There

is then provision for that charge to cease to have effect in a

number of eventr. The respondent Cornwell points out, in

argument, that thoro events do not include a sale pursuant to a

direction under r .243r, but do exprerrly include a Bale or other disposition in purruance of an order under s.243G, or by the owner of the property with the consent of the Court or of the Official Trustee.

There is alro a general provision in paragraph (f) for

the charge to cease to have effect upon the sale	of the property
to a bona fide purcharer for value who,	at the time of purchase,
has no notice of the charge.

By #.243M(4), provision is made in rerpect of a case

where the Official Trustee has been directed by an order under

a.243g to take control of a burinesr - and, as might be expected,

this provision clearly contemplates that the Official Trustee

might have to rake payments of outgoing6 in order to carry on the

burinesr over which he har taken control. To that extent at

least, it ir certainly clear that he does not simply take over

arsetr which have been frozen, but is able to deal with them.

By 8.2436, jurirdiction is conferred on the Court to

hear 8nd dotermin. 8pplic8tions under these provisions.

It roe18 to me that the term8 of 6.243P do involve a
bro8d dlrcretion. They aro quite ririlar to the terms of 6 . 5 0 of

tho Bankruptcy Act 1966, which empowers the Court, in an

8ppropri8te ~880, to direct a trustee to take control of the

property of a dobtor, 8nd empowers the Court to make such orders

in rolation to that property as the Court considers just.	These,
it will be notod, are procirely the	words of 6.243~.

In Ro llorriron; Ex parte Shoreline Currencies

(Austr8lia) Pty Limitod (in liquid8tion), unreported, 19 December

1986, I held th8t 8.50 enabled the Court, in the special

circuutancer which were there in evidence, to direct a receiver th8t he might procoed to complote a contract for the sale of land of the dobtor, the debtor having previously signed the contract. The dobtor w 8 8 not aV8il8ble to give inrtructions as to its completion; and, of courro, the land was under the control of the trurtoo by virtu. of an order, made under 6.50 subsequently to

the d8to of the contract. I raid:

"The Court i 8 empowered b 8.50 to 'make such

ordorr in rolation to t 1	a t property as the
Court	conriderr jurt.' That ir extremely
genor.1	l8ngu8ge. The wordr 'in relation to'

havo boon 8uthoritativelv aiven a very lonu re8ch in nogina v. H U K ~ ~ I Y -(l9851 61 -A.L.R:

139 at 145.	In 8.50, thir extremely aeneral
l8n	8go is intended. in my opinion, to
con	r or rid. poworr to en8ble the objects of
the roction to be effoctu8lly carried out	in

the multiplicity of variour rituationr which

may b. orpocted to arise. This language

should not be restrictively construed."

I alro raid:

"The word.	of 6.50 'to take control of the
property of the debtor' import in	themselves
conridorable powers:	cf. Australian Industry

Development Corporation v. Co-operative

Farmerr and GKaZiOKr bi rcct Heat Supply

illted (m 3 A.C.L.R. 543 , erpecially at

-554. "

H O W ~ V ~ K ,	I addod:
"(W)hilo the power conferred by 0.50 should be accopted as ortenrive, it8 exercise must be

KeltKainOd by considerable caution. The

section ir concerned with cases where a

soquestration order har not yet been made,

and it may never be made."

That conuont is applicable to the rituation in cases, such as the

present, where an Order asresring a pecuniary penalty also has not been made, and may never be made; or, if made, may not extend to a rum ruch ar to produce any inevitable effect upon the assets

the rubject of the application.

It seems to me that the intention of the legislature in

adopting thir language, SO rimilar to the language contained in

r . 5 0 of tho Bankruptcy Act, is to provide for a control by the

Official Trustee rufficient to ensure that he is not impotent to

deal with reriour problem; and that thoro assets which are of an

inevitably wasting or perishable nature, or which otherwise requiro to be dirpored of, may be capable of being disposed of. I have been KOfOKKOd to the decirion in Re Wells v. Croft; Ex

parte the Official ReCeiVOK (1895) 72 L.T. 359. That decision, I

think, ir not contrary to my own decision in Re Horrison.

i

l .

For those reasons, I think there is power to make an

order of the kind sought, but ms.243G and 2435 clearly suggest

that a male of property is not contemplated as a normal incident

of control - only as an incident of the situations to which the

provisions in those sections directly refer. This comment

relates to a sale of capital amsets, and not to the sort of sales

which are inevitably incidental to the conduct of a business.

There is the provision already referred to which shows that

control of a businems is certainly within these sections.

The next question is whether, in this case, the orders

sought mhould, a8 a utter of discretion, be made. The original

order waa mad0 in Augumt 1986, and this motion comes before me in

March 1988, having been rocently taken out.	The evidence shows,
and I accept, that there clearly are difficulties	for the trustee

in dealing with t h e m horsem. He has the problem of ensuring

that they are looked after, and of meeting the outgoings

involved. A8 againmt that, the assets appear to be ample to

provide wh8t is necesmary for that purpome. There is (I peculiar

difficulty in respect of insurance, which appears to arise out of

the porception which insurers have of the activities undertaken

in the past by the reapondent himself.	There is also the problem
that, of their nature, horror age over time, and this may	affect

their value. nowever, the time that would be involved in that

having a sovere effoct might well be a time within which the

problems of this particular came may be resolved.

The fact is that no order has been made assessing

pecuniary penalties. At the prement time, the property belongs

to the rerpondent. lie has been convicted of an offence in

relation to narcotics dealings, and sentenced to a long term of

imprironmont, but at the prorent time the application for the

arrerrmont of a pecuniary penalty has not been brought on for

hearing. Am I have raid, it murt be taken at the present time

that it is porrible that no penalty may be assessed. A penalty

doer not automatically follow bocaure of a conviction in respect

of a narcotics doaling. At the present time, the property

bolongr to tho rerpondont. It roemr to me that the Court should

be	rlow to dirpore of	a person's	property against his will,
unlerr it	is	clearly shown both	that the circumstances have

ariren which ompower the Court to make such an	order, and	that
such an order ir in fact necerrary.

The provirionr with which we are concerned here are

extremoly revere. The reirure of property occurs before proof of

anything more than that there are reasonable grounds	for	the
roquirite beliof.	The spirit of the provisions is clearly	that

the problemr of drug trafficking, and the enormous profits which
it MY accurulato, do demand revere measures. Nothing that I

have raid, or will ray, can be taken to evince a view other than

one of accoptance of the policy of the provisions.

But tho fact is, in this care, it has not as yet been

r h o m that tho respondent is a perron who should pay a pecuniary

ponalty, and whore property rhould be made available for that

purporo. Tho proporty has been dealt with under provisions which

are rather by way of creating a statutory charge to ensure that,

-	if such a pnalty evor ir arrersed, it will be able to be
enforced. In all the circumstances, I am not persuaded that it
ir a care in which I should make an order having the effect of
disporing of the rerpondent's property at this time. I hold that
there ir power, under there provirions, to make an order in an appropriate care, but it rhould be exercised aparingly, and only where it ir really necerrary. In this case, it has not proved necesrary over what is now quite a lengthy period, and there is
nothing to stop an early hearing of the claim for a pecuniary
penalty. M y decision doer not prevent a further application, i f
the circurstancer in relation to the matter, or these horses in
particular, rhould change, or if it becomes possible to show clearly that there ir a real need for some further order to be made. For those reasons, I dismiss the application. Is there anything further, gentlemen?
m. CULLW: I make an application for costs.
m. ALLATT:  I submit that they rhould be paid out of the estate
eventually.  Thir in a matter where the Official Trustee has
brought an  application in the belief that it was a proper
application to bring.

EIS EOWOUR:  Provision is made for an undertaking as to damages

and Costs.	You told me	such an undertaking was given	in this
case.

HR. ALLATT:  There ir an undertaking given on behalf of the

Australian rederal Police.

HIS Eowoull:  It would not be appropriate that damages be paid

prior to it being ascertained whether there is a penalty. The

appropriate order might be to make an order for costs to be paid

out of the estate, but to reserve any question of whether the

estate should be recouped under the undertaking given	at the time
the order under s.243E was made.	Would that seem appropriate?
HR. ALLAT?:	Yes.

HR. CULLEN: Yes.

EIS BONOUR:  I do not think you should automatically be recouped

in that way, although that right ultimately be the case. At this

stage I think I	should reserve that.	I make an order that the
costs of the respondent Bruce Richard Cornwell	be paid at	this

stage out of the estate under the control of the Official

Trustee, but l reserve his right to seek to have that recouped pursuant to the undertaking which was given at the time the order under s.243E was made.

.

I certify that this and the

preceding nine (9) pages are a
true copy of the Reasons for

Judgment herein of his Honour

Hr. Justice Durchett.

Associate

Dated: 30 narch, 1988 -

1. *.

   11.

Solicitor for the Applicant:  H. Vir6 (Director of

Public Prosecutions)

Solicitor for the Respondent:	J.J. Cullen of
J.J. Cullen & Associates
Solicitor for the	Official Trustee: M. Allatt (Australian

Government Solicitor)

Dato of hearing:  30 March 1988