Centurion Trust Company Ltd v Director of Public Prosecutions (WA)
[2008] WASCA 6
•18 JANUARY 2008
CENTURION TRUST COMPANY LTD -v- DIRECTOR OF PUBLIC PROSECUTIONS (WA) [2008] WASCA 6
| (2008) 35 WAR 463 | |||
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2008] WASCA 6 | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | FUL:137/2004 | 28 JUNE 2007 | |
| Coram: | MARTIN CJ McLURE JA BUSS JA | 17/01/08 | |
| 36 | Judgment Part: | 1 of 1 | |
| Result: | Appeal dismissed | ||
| A | |||
| PDF Version |
| Parties: | CENTURION TRUST COMPANY LTD DIRECTOR OF PUBLIC PROSECUTIONS (WA) BRIAN MILLWOOD SMITH ATTORNEY GENERAL FOR WESTERN AUSTRALIA |
Catchwords: | Appeal Criminal Property Confiscation Act 2000 (WA) Whether property is confiscable Whether the grant of the freezing order is valid when leave was not obtained pursuant to the Rules of Court to serve an order on the appellant overseas Whether the court is exercising jurisdiction in personam or in rem when making a freezing order Whether the court has jurisdiction to make a criminal benefits declaration or crime-used property substitution declaration absent a finding that the property to be frozen is confiscable property pursuant to the Criminal Property Confiscation Act Whether the freezing order complied with s 44 of the Criminal Property Confiscation Act Whether DPP lacks standing to apply for a freezing order when proceedings fall within the federal jurisdiction of the Supreme Court |
Legislation: | Australian Securities Commission Act 1989 (Cth), s 73 Constitution of Australia Act 1901 (Cth), s 75, s 76, s 109 Corporations Act 2001 (Cth), s 1400, s 1401 Corporations Law 1989 (WA), s 232, s 243ZF, s 1311, s 1317FA Criminal Property Confiscation Act 2000 (WA), s 4, s 5, s 7, s 12, s 16, s 17, s 20, s 21, s 22, s 24, s 30, s 41, s 43, s 44, s 46, s 47, s 48, s 49, s 58, s 79, s 80, s 81, s 82, s 83, s 84, s 102, s 141, s 142(b), s 144, s 145, s 146, s 147, s 148, s 150, s 159 Judiciary Act 1903 (Cth), s 39, s 78B, s 79 Rules of the Supreme Court 1971 (WA), O 1 r 3, O 10, O 58 r 23 Supreme Court Act 1935 (WA), s 60(1)(f) |
Case References: | ANZ Grindlays Bank Plc v Fattah (1991) 4 WAR 296 Bell Group NV (in liq) v Aspinall (1998) 19 WAR 561 Bennett & Co (a Firm) v Director of Public Prosecutions (WA) [2005] WASCA 141; (2005) 31 WAR 212 Castrique v Imrie (1870) LR 4 HL 414 Director of Public Prosecutions (WA) v Hafner [2004] WASC 32; (2004) 28 WAR 486 Director of Public Prosecutions (WA) v Mansfield [2008] WASCA 5 Ex Parte Bucknell (1936) 56 CLR 221 Forge v ASIC [2006] HCA 44; (2006) 228 CLR 45 John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503 Laurie v Carroll (1958) 98 CLR 310 Mansfield v Director of Public Prosecutions (WA) [2005] WASCA 79; (2005) 153 A Crim R 41; (2005) 31 WAR 97 Mansfield v Director of Public Prosecutions (WA) [2006] HCA 38; (2006) 226 CLR 486 McGovern v State of Victoria [1984] VR 570 P E Bakers Pty Ltd v Yehuda (1988) 15 NSWLR 437 Re Centurion Trust Co Ltd v Australian Securities and Investments Commission [2003] AATA 1146; (2003) 48 ACSR 532 Re Smith; Ex parte Director of Public Prosecutions (WA) (No 1) [2004] WASC 145; (2004) 146 A Crim R 40 Re Smith; Ex parte Director of Public Prosecutions (WA) (No 2) [2004] WASC 147 Re Smith; Ex parte Director of Public Prosecutions (WA) (No 3) [2004] WASC 157 The State of Western Australia v Bond Corporation Holding Ltd (1991) 5 WAR 40 The Wik Peoples v The State of Queensland (1994) 49 FCR 1 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : CENTURION TRUST COMPANY LTD -v- DIRECTOR OF PUBLIC PROSECUTIONS (WA) [2008] WASCA 6 CORAM : MARTIN CJ
- McLURE JA
BUSS JA
- Appellant
AND
DIRECTOR OF PUBLIC PROSECUTIONS (WA)
First Respondent
BRIAN MILLWOOD SMITH
Second Respondent
ATTORNEY GENERAL FOR WESTERN AUSTRALIA
Intervener
(Page 2)
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : ROBERTS-SMITH J
Citation : RE SMITH; EX PARTE DIRECTOR OF PUBLIC PROSECUTIONS FOR WESTERN AUSTRALIA (NO 2) [2004] WASC 147
File No : CIV 2382 of 2003
Catchwords:
Appeal - Criminal Property Confiscation Act 2000 (WA) - Whether property is confiscable - Whether the grant of the freezing order is valid when leave was not obtained pursuant to the Rules of Court to serve an order on the appellant overseas - Whether the court is exercising jurisdiction in personam or in rem when making a freezing order - Whether the court has jurisdiction to make a criminal benefits declaration or crime-used property substitution declaration absent a finding that the property to be frozen is confiscable property pursuant to the Criminal Property Confiscation Act - Whether the freezing order complied with s 44 of the Criminal Property Confiscation Act - Whether DPP lacks standing to apply for a freezing order when proceedings fall within the federal jurisdiction of the Supreme Court
Legislation:
Australian Securities Commission Act 1989 (Cth), s 73
Constitution of Australia Act 1901 (Cth), s 75, s 76, s 109
Corporations Act 2001 (Cth), s 1400, s 1401
Corporations Law 1989 (WA), s 232, s 243ZF, s 1311, s 1317FA
Criminal Property Confiscation Act 2000 (WA), s 4, s 5, s 7, s 12, s 16, s 17, s 20, s 21, s 22, s 24, s 30, s 41, s 43, s 44, s 46, s 47, s 48, s 49, s 58, s 79, s 80, s 81, s 82, s 83, s 84, s 102, s 141, s 142(b), s 144, s 145, s 146, s 147, s 148, s 150, s 159
Judiciary Act 1903 (Cth), s 39, s 78B, s 79
Rules of the Supreme Court 1971 (WA), O 1 r 3, O 10, O 58 r 23
Supreme Court Act 1935 (WA), s 60(1)(f)
Result:
Appeal dismissed
(Page 3)
Category: A
Representation:
Counsel:
Appellant : Mr M L Bennett
First Respondent : Mr N J Mullany
Second Respondent : No appearance
Intervener : Mr R M Mitchell
Solicitors:
Appellant : Lavan Legal
First Respondent : Director of Public Prosecutions (WA)
Second Respondent : No appearance
Intervener : State Solicitor for Western Australia
Case(s) referred to in judgment(s):
ANZ Grindlays Bank Plc v Fattah (1991) 4 WAR 296
Bell Group NV (in liq) v Aspinall (1998) 19 WAR 561
Bennett & Co (a Firm) v Director of Public Prosecutions (WA) [2005] WASCA 141; (2005) 31 WAR 212
Castrique v Imrie (1870) LR 4 HL 414
Director of Public Prosecutions (WA) v Hafner [2004] WASC 32; (2004) 28 WAR 486
Director of Public Prosecutions (WA) v Mansfield [2008] WASCA 5
Ex Parte Bucknell (1936) 56 CLR 221
Forge v ASIC [2006] HCA 44; (2006) 228 CLR 45
John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503
Laurie v Carroll (1958) 98 CLR 310
Mansfield v Director of Public Prosecutions (WA) [2005] WASCA 79; (2005) 153 A Crim R 41; (2005) 31 WAR 97
Mansfield v Director of Public Prosecutions (WA) [2006] HCA 38; (2006) 226 CLR 486
McGovern v State of Victoria [1984] VR 570
P E Bakers Pty Ltd v Yehuda (1988) 15 NSWLR 437
Re Centurion Trust Co Ltd v Australian Securities and Investments Commission [2003] AATA 1146; (2003) 48 ACSR 532
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Re Smith; Ex parte Director of Public Prosecutions (WA) (No 1) [2004] WASC 145; (2004) 146 A Crim R 40
Re Smith; Ex parte Director of Public Prosecutions (WA) (No 2) [2004] WASC 147
Re Smith; Ex parte Director of Public Prosecutions (WA) (No 3) [2004] WASC 157
The State of Western Australia v Bond Corporation Holding Ltd (1991) 5 WAR 40
The Wik Peoples v The State of Queensland (1994) 49 FCR 1
(Page 5)
1 MARTIN CJ: Centurion Trust Company Ltd (Centurion) applies for leave to appeal from a decision of Roberts-Smith J made on 30 June 2004, in which he dismissed Centurion's application to set aside a freezing order made ex parte by Scott J on 14 November 2003.
Summary
2 The substantive issue which Centurion wishes to assert on appeal is that it cannot be argued that the property the subject of the freezing order was confiscable pursuant to the provisions of the Criminal Property Confiscation Act 2000 (WA). Centurion also wishes to advance technical arguments in support of the proposition that the freezing order was invalid. Those arguments relate to the question of service of the order, the enunciation of the grounds upon which the order was made in the order itself, and the proposition that the Director of Public Prosecutions for Western Australia lacked standing to apply for the freezing order because the proceedings were an exercise of federal jurisdiction. Centurion also wishes to argue that Roberts-Smith J erred in the approach which he took to the application to review the order made ex parte by Scott J.
3 For the reasons which follow, although I would grant Centurion leave to appeal, in my opinion, none of the contentions which it advances can be made out, and I would dismiss the appeal.
4 In order to set the scene for a consideration of the issues which Centurion seeks to raise in an appeal, it is necessary to set out the somewhat tortuous history of these proceedings.
Background
5 On 23 January 1998, the Australian Securities Commission (now known as the Australian Securities & Investments Commission) (ASIC) determined to investigate a complaint in relation to the holdings of shares in Welcome Stranger Mining Company NL (Welcome Stranger). On 18 June 1998, ASIC determined to investigate matters relating to the holdings of shares in Hallmark Gold NL (Hallmark).
6 Centurion is a company registered and domiciled in Jersey, and is the trustee of a trust called 'the Gold Coast Trust'.
7 On 4 June 1998, ASIC made orders pursuant to s 73 of the Australian Securities Commission Act 1989 (Cth) restraining, amongst others, Centurion, from voting in respect of selling, dealing or otherwise disposing of its interest in 6,610,914 shares in Welcome Stranger.
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8 Those shares were made up as follows:
(a) 3,123,000 shares registered in the name of National Nominees Ltd and held on behalf of Centurion as trustee for the Gold Coast Trust;
(b) 1,735,000 shares registered in the name of Centurion as trustee for the Gold Coast Trust; and
(c) 1,752,914 shares registered in the name of Dayco Nominees Pty Ltd and held on behalf of Centurion as trustee for the Gold Coast Trust.
9 The 6,610,914 shares in Welcome Stranger, the subject of the order made by ASIC, represented 12.91% of the issued share capital of the company at the time the orders were made.
10 The orders made by ASIC preventing Centurion from selling or otherwise disposing of its interest in those shares were subsequently varied in order to permit the sale of those shares on condition that the proceeds of sale were deposited in an interest-bearing ASIC trust account.
11 On 17 September 2001, Centurion applied to ASIC for revocation of the orders and for payment of the funds held on trust by ASIC. That application was refused. On 8 February 2002, Centurion applied to the Administrative Appeals Tribunal (AAT) seeking a review of ASIC's decision to refuse to release the funds.
12 That application was heard by the AAT over a number of days. It gave notice of intention to deliver its decision at 2 pm on 14 November 2003.
13 Against the possibility that the AAT would set aside ASIC's decision and order the release of the funds held in trust (which the AAT in fact did - see Re Centurion Trust Co Ltd v Australian Securities and Investments Commission [2003] AATA 1146; (2003) 48 ACSR 532), on 13 November 2003, the Director of Public Prosecutions for Western Australia (DPP) lodged notice of an ex parte motion seeking orders that:
(a) examination orders be made pursuant to s 58 of the Criminal Property Confiscation Act 2000 (WA) (CPCA) in respect of:
(i) Kevin Ernest Judge;
(ii) David James Porter;
(iii) Brian Millwood Smith (Smith); and
- (iv) Danny Watson
- (b) a freezing order be made pursuant to s 43 of the CPCA freezing monies standing to the credit of ASIC in the trust account holding the proceeds of sale of the Welcome Stranger shares.
14 The freezing order was sought on the grounds that:
A. The DPP has applied for an examination order in relation to the property;
B. The DPP is likely to apply against Smith for:
(a) a crime-used property substitution declaration; and
(b) a criminal benefits declaration;
within 21 days after the freezing order is made.
16 The second affidavit filed in support of the motion was an affidavit of Ms K L Papamihail. Ms Papamihail was an officer of ASIC. The text of her affidavit occupies more than 130 pages. There are more than 200 annexures to her affidavit. The affidavit, and its annexures, concern the investigations which had been conducted by ASIC into the affairs of Welcome Stranger and Hallmark.
17 Ms Papamihail deposes that the Gold Coast Trust is a discretionary trust, in which the named beneficiaries are two charities, being the British Heart Foundation Appeal and the Imperial Cancer Research Fund. However, by reason of evidence which is summarised in her affidavit, she deposes to her suspicion that Smith was at all material times beneficially entitled to the shares in Welcome Stranger and Hallmark registered to, or held on behalf of Centurion in its capacity as trustee for the Gold Coast Trust. Further, on the basis of evidence which is also summarised in her affidavit, she deposes that ASIC allege that the Gold Coast Trust was a vehicle set up for the benefit of Smith for the purpose of warehousing shares offshore, so as to assist him to entrench his control as a director of
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- Hallmark and Welcome Stranger. She deposes that ASIC would allege that Smith directed the Gold Coast Trust in every manner relating to those shares, including the way in which they were to be voted at general meetings of Welcome Stranger.
18 Having regard to the evidence which is summarised in her affidavit, Ms Papamihail deposes to her suspicion that Smith had committed offences against s 232(2), s 1317FA(1) and s 243ZF of the Corporations Law 1989 (WA). She further deposes that it would be alleged that the shares held by Centurion in Welcome Stranger were used in connection with the commission of those offences.
19 The general nature of those offences was described by her in the following terms:
37. Typically, the alleged offences relate to shareholders receiving notice of resolutions at general meetings of Welcome Stranger or Hallmark Gold which would provide Smith with a financial benefit. The notice of resolution indicated that Smith would abstain from voting in relation to the resolution. At the general meeting, Smith's private disclosed companies abstained from voting in relation to the resolution, however his undisclosed shares held by the Gold Coast Trust were voted upon on his behalf. It is alleged that Smith acted unfairly and dishonestly in that he lied to shareholders of the company by claiming that he would not vote in relation to a resolution, when in fact he did so, and pursued a course of conduct designed by him to advance his own interests.
38. Smith not only failed to fully inform shareholders of all the facts relating to voting in relation to the resolution, but he deceived the company and its shareholders by asserting that he was going to abstain from voting in relation to the resolution that would provide him with a financial benefit.
20 In tables set out in her affidavit, Ms Papamihail identifies the particular shares which were voted at particular meetings of the company and which she asserts were therefore used in order to commit the offences to which she referred.
21 Ms Papamihail deposes that in addition to the allegation that Smith had used the shares in order to commit the relevant offences, with the result that the shares were crime-used property, it would also be alleged that the commission of the offences enabled Smith to acquire benefits which were derived from the commission of those offences. The general tenor of Ms Papamihail's affidavit was therefore to provide the basis upon which the DPP had applied for the examination orders the subject of the
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- ex parte motion, and intended to apply for crime-used property substitution declarations and a criminal benefits declaration against Smith pursuant to the CPCA .
22 The DPP's motion was heard ex parte by Scott J at 10.30 am on 14 November 2003. He made the orders sought. The order that was extracted provided that the freezing order relating to the funds standing to the credit of ASIC in the trust account were frozen:
On the grounds that:
A. The DPP has applied for an examination order in relation to the Property (s.43(1)(b));
B. The DPP is likely to apply against Smith for:
(a) a crime-used property substitution declaration; and
(b) a criminal benefits declaration;
- within 21 days after the Freezing Order is made (s.43(3)(b), (c)).
23 As I have mentioned, later that day, the AAT upheld Centurion's application for review and set aside ASIC's decision to refuse to release the funds in the trust account. However, by that time the funds were the subject of the freezing order to which I have referred. As at 31 October 2003, the funds in the ASIC trust account totalled $3,607,904.40, which included interest which had accrued on those funds since the sale of the shares.
24 On 14 November 2003, the DPP faxed a letter to Messrs Bennett & Co, Barristers & Solicitors, who had been acting on behalf of Centurion in relation to related matters, including the proceedings before the AAT. A copy of the freezing order was attached to that letter, together with a notice issued pursuant to s 46(6) of the CPCA, summarising the effect of the order and advising that the property described in the order may be confiscated automatically under the CPCA unless an objection to confiscation was filed in court within 28 days after the date of service of the notice.
25 By letter dated 18 November 2003, Bennett & Co advised the DPP that they had instructions to act for Centurion in relation to the freezing order. In the letter they advised that they were considering whether or not the freezing order had been properly made under the CPCA. On 4 December 2003, the DPP filed an application for a crime-used property
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- substitution declaration and a criminal benefits declaration against Smith. These applications were made within 21 days of the grant of the freezing order.
26 On 15 December 2003, Centurion applied for an order setting aside the ex parte freezing order.
27 The application was made on the following grounds:
1. The Order was outside the jurisdiction of this Honourable Court.
2. Leave to serve the freezing order on Centurion Trust Company Ltd outside Australia was not sought or obtained by the Director of Public Prosecutions for Western Australia.
3. The property is not crime used property as defined in the [CPCA] and cannot be the subject of an examination order pursuant to section 43(1)(b).
4. The property is not owned by Smith nor is it in the effective control of Smith and cannot be the subject of a crime used property substitution declaration pursuant to section 22 of the [CPCA].
5. The property is not crime derived property or unlawfully acquired property as defined in the CPCA and cannot be the subject of a criminal benefits declaration pursuant to section 16 or section 17 of the [CPCA].
28 This is the application which was dismissed by Roberts-Smith J, and is the subject of Centurion's application for leave to appeal.
29 However, before that application was heard, other things occurred which Centurion asserts are relevant. On 9 January 2004, Heenan J granted the DPP leave to serve a copy of the freezing order and a notice pursuant to s 46(6) of the CPCA on any person in the United Kingdom who is, or might be, an interested party within the meaning of the CPCA, including Centurion. It appears that the DPP applied for such an order in the mistaken belief that Jersey was within the United Kingdom. At the same time, Heenan J ordered that the period of 28 days prescribed by s 79 of the CPCA within which an objection to the freezing order may be made, be extended to 60 days from the date of service.
30 On 13 January 2004, Heenan J made directions in respect of the hearing of Centurion's motion to set aside the freezing order. Amongst those directions was an order that Centurion enter a conditional appearance. Accordingly, a conditional appearance was filed on Centurion's behalf on 14 January 2004.
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31 On 23 January 2004 the Viscount's Department in Jersey effected service of the freezing order on Centurion.
32 The solicitors for Centurion then wrote to the DPP pointing out that Jersey was not within the United Kingdom, and therefore not within the scope of the order made by Heenan J on 9 January 2004. In light of that advice, the DPP applied to vary the order. That application was heard by Roberts-Smith J on 19 February 2004. Roberts-Smith J varied Heenan J's earlier order so as to authorise service in the Channel Islands.
33 On 16 March 2004, Centurion was again served with a copy of the freezing order. However, on this occasion, the notice served on Centurion pursuant to s 46(6) of the CPCA erroneously specified that objection had to be filed within 28 days of service. That notice did not therefore accord with the terms of the leave granted by Heenan J, as amended by Roberts-Smith J.
34 As a result of events which need not be detailed, the DPP applied for an order relating to the confidentiality of the affidavit material that had been filed at court. That application was heard on 23 March 2004 by Roberts-Smith J. In the course of argument, issues were raised in relation to the adequacy of the freezing order made by Scott J, and in particular whether the order complied with the requirements of s 44(b) of the CPCA, which requires the court to:
set out in the order each ground that the court finds is a ground on which the order may be made.
35 Roberts-Smith J reserved his decision in relation to that application. Centurion's application to set aside the freezing order was heard by Roberts-Smith J on 29 April 2004. His decision dismissing that application was delivered on 30 June 2004 (Re Smith; Ex parte Director of Public Prosecutions (WA) (No 2) [2004] WASC 147.) On the same day he delivered his decision in relation to the DPP's application for a confidentiality order (Re Smith; Ex parte Director of Public Prosecutions (WA) (No 1) [2004] WASC 145; (2004) 146 A Crim R 40).
36 On 2 July 2004, the DPP moved ex parte for a declaration pursuant to s 30 of the CPCA to the effect that the funds the subject of the freezing order had been confiscated pursuant to s 7(1) of the CPCA.
37 On that application, after reciting the history of service of the freezing order, Roberts-Smith J concluded that the service effected on 28 January 2004 had been effective, and that in any event, Centurion was
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- well aware of the freezing order from on or about 14 November 2003 when its solicitors received a copy of the order attached to the facsimile from the DPP. Accordingly, his Honour was satisfied that the statutory pre-conditions for confiscation, including service, had been met, and he made the declarations sought by the DPP (see Re Smith; Ex parte Director of Public Prosecutions (WA) (No 3) [2004] WASC 157).
38 On 21 July 2004, Centurion sought leave to appeal from both decisions delivered by Roberts-Smith J on 30 June 2004. The applications for leave to appeal came before Master Sanderson for directions on 24 August 2004. Directions were made requiring the appeals to be entered for hearing within seven days. For reasons which have been adequately explained in an affidavit provided by the solicitor then acting for Centurion, the applications for leave to appeal were not entered within the time specified. Accordingly, on 14 September 2004, Centurion applied again for leave to appeal from the decision of Roberts-Smith J dismissing its application to set aside the freezing order, and also applied for an extension of time within which to make such an application. The Attorney General for Western Australia has intervened in these proceedings pursuant to s 78B of the Judiciary Act 1903 (Cth).
The grant of leave
39 Centurion requires an extension of time within which to apply for leave to appeal from the decision under challenge, together with the grant of leave. As I have observed, in my opinion, the affidavit which has been provided by the solicitor acting on behalf of Centurion adequately explains the oversight by Centurion's solicitors in failing to enter its original application for leave within time. Accordingly, in my opinion, leave should be granted to extend time for the bringing of Centurion's application for leave to appeal.
40 Leave to appeal is required because the decision of Roberts-Smith J was an interlocutory decision (Supreme Court Act 1935 (WA), s 60(1)(f)). Ordinarily before leave to appeal from an interlocutory decision will be granted, the court must be satisfied that the decision below is 'attended with sufficient doubt to justify the grant of leave and that, in addition, substantial injustice would be done by leaving the decision unreversed'. (The State of Western Australia v Bond Corporation Holding Ltd (1991) 5 WAR 40, 57 per Malcolm CJ).
41 However, it is also established that in cases in which the interlocutory decision has the substance and effect of a final determination of the proceedings, the stringency of those requirements are relaxed and
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- the court is ordinarily more sympathetic to the grant of leave (Ex Parte Bucknell (1936) 56 CLR 221, 225 - 226). In this case, if Centurion is successful in its attempts to set aside the freezing order, the confiscation of funds in the trust account effected by the operation of the CPCA would also have to be set aside, resulting in the need to commence further proceedings in relation to that property, which would in turn give Centurion a further opportunity to lodge a notice of objection to confiscation. Accordingly, although the decision of Roberts-Smith J was interlocutory, there are aspects of that decision which, if unreversed, have a degree of finality.
42 Further, as will be seen, although I am not satisfied that any of the grounds of appeal asserted by Centurion are made out, some of them are plainly arguable. Accordingly, for these reasons, I would grant Centurion leave to appeal from the decision of Roberts-Smith J.
Freezing orders
43 Before dealing with the specific grounds of appeal, it is desirable to record some general observations which arise from previous decisions relating to the nature of an application for a freezing order, and the effect of such an order.
44 In Bennett & Co (a Firm) v Director of Public Prosecutions (WA) [2005] WASCA 141; (2005) 31 WAR 212 (which is another in the string of decisions arising from this litigation), the Court of Appeal considered whether the jurisdiction to make a freezing order conferred upon the court by s 43 of the CPCA was one which had to be exercised if the relevant preconditions were established (as had been suggested by Pullin JA in Mansfield v Director of Public Prosecutions (WA) [2005] WASCA 79; (2005) 153 A Crim R 41; (2005) 31 WAR 97 at [66]), or whether there was a discretion to decline to make such an order. In that regard, the Court of Appeal (per Malcolm CJ, Wheeler and McLure JJ) held at [50]:
Importantly, however, it seems to us that, as a matter of principle, the Court must have a discretion. The freezing order is draconian in its scope. It may prohibit a person from dealing with all of that person's property. Once properly made, it comes to an end only under the relatively limited circumstances described in s 49, or if set aside pursuant to a successful objection (with the objection provisions being limited in scope and casting the onus onto the objector). It seems unlikely therefore that it was intended, for example, that the Court would be required to make such an order merely because the DPP had advised the Court that an application for an examination order was likely to be made, even if there was no material before the Court which suggested the grounds upon which such
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- an examination order might be sought, so as to enable the Court to consider whether any such application would be bona fide or would be made on reasonable grounds having any arguable prospect of success.
45 That view of the nature of the powers conferred upon the court when considering an application for a freezing order was endorsed and accepted by the High Court in Mansfield v Director of Public Prosecutions (WA) [2006] HCA 38; (2006) 226 CLR 486; (2006) 228 ALR 214, at [24]. There is nothing in the language of s 44 of CPCA, or the decision of the Court of Appeal in Bennett & Co (a Firm) which would suggest that the applicant for a freezing order has to make out a prima facie case of success in relation to the substantive proceedings upon which the freezing order is dependent - such as, in this case, the applications for the examination orders, or the foreshadowed applications for criminal property substitution declarations or criminal benefits declarations. What has been decided, authoritatively, is that a court considering an application for a freezing order has a discretion to refuse that order which could properly be exercised, for example, on the ground that the application was not bona fide, or that the substantive applications which were said to ground the freezing order had no arguable prospect of success.
46 Accordingly, in my view, there is nothing in the language of the statute or the authorities which would support the proposition that an applicant for a freezing order must satisfy the court that he has a prima facie case for the grant of another order of the CPCA, the application for which is a ground upon which a freezing order may be granted.
47 That conclusion is reinforced by the observation that the legislative scheme plainly envisages freezing orders being put in place while investigations are continuing. One of the grounds upon which such an order can be granted is that an application for an examination order has been made in relation to the property in question. It would be contrary to the evident legislative scheme to require the DPP to make out a prima facie case for substantive relief under the CPCA at the time of applying for a freezing order on the ground that an examination order is also being sought. Rather, the evident scheme of the CPCA is that a freezing order can be used to protect and preserve property while investigations in relation to that property continue. That scheme would be thwarted if the Act were to be construed as requiring an applicant for a freezing order to make out a prima facie case for substantive relief under the Act.
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48 The nature of a freezing order was also considered by the Court of Appeal in Bennett & Co (a Firm). In that case, their Honours observed (at [52]):
When one examines the provisions dealing with freezing orders, it is to be noted that the orders are made in relation to property, rather than in relation to persons. While examination orders specifically name persons, they, too, appear to be principally concerned with property, in that the orders for which s 58 provides are orders that a person submit to an examination in relation to property (being either property which is frozen, or property which is comprised in the description of the 'wealth, liabilities, income and expenditure' of a nominated person).
49 The nature of the jurisdiction exercised by the court when granting a freezing order was considered by the High Court in Mansfield v Director of Public Prosecutions (WA). In that respect, Gleeson CJ, Gummow, Kirby, Hayne and Crennan JJ observed (at [46]):
The present litigation does not concern the general jurisdiction of the Supreme Court under the Supreme Court Act to award injunctive relief. However, the jurisdiction under the Act to make freezing orders does involve the protection of the prospective or contingent (it is unnecessary to choose between these terms) property rights of the State. It is more difficult to categorise the freezing order procedure purely as 'a law enforcement action' in the sense used in the House of Lords. The statutory regime is sui generis.
50 Accordingly, these decisions establish that a freezing order operates in respect of property, not persons, and that the statutory regime which empowers the court to issue those orders is not to be equated with the court's general injunctive jurisdiction, but is one of its kind (sui generis).
51 The scope and operation of the CPCA was also considered by the High Court in Mansfield v Director of Public Prosecutions (WA). In the joint judgment in that case, their Honours observed (at [13]):
The [CPCA] applies to 'criminal benefits' whether the relevant 'confiscation offence' was committed in Western Australia or elsewhere and, significantly, whether or not anyone has been charged or convicted of that offence (s 5(2)). The 'property' may, but need not be, situated in Western Australia (s 5(3)), and includes both real and personal property of any description, and legal or equitable interest in such property (Glossary). The 'property', as so defined, which is confiscable pursuant to s 142(b) includes that which is:
'owned or effectively controlled, or [which] has at any time been given away, by a person who has acquired a criminal benefit.'
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52 Those observations are consistent with a conclusion, evident from the terms of s 5 of the CPCA, that the legislature intended that the CPCA have extra-territorial operation, to the maximum extent possible under the legislative powers conferred on the Western Australian Parliament. The passage from Mansfield v Director of Public Prosecutions (WA) also records the breadth of meaning given to the term 'property' by the Glossary to the CPCA.
The grounds of appeal
53 Ground 1.1 asserts that:
The grant of the freezing order was beyond the jurisdiction of the Court because no leave was obtained to serve the appellant in Jersey when the order was made.
54 This ground is misconceived. The application under appeal is an application to set aside the ex parte order of Scott J. Until that order was made, obviously there was nothing to serve under the CPCA. It follows that questions of service can only have arisen subsequent to the making of the freezing order, and cannot have affected its validity at the time it was made.
55 There are other reasons why this ground is misconceived. The first is that a freezing order operates in respect of property, rather than persons. The property in question was situated in Western Australia. It follows that the validity and effectiveness of the order is not dependent upon its service outside the jurisdiction.
56 Much of Centurion's argument focused upon the proposition that the DPP required the leave of the court pursuant to O 10 of the Rules of the Supreme Court 1971 (WA) in order to serve the freezing order outside Western Australia. That proposition must be rejected for a number of reasons. The first is that service of the freezing order is required by s 46 of the CPCA which is one of its kind (sui generis). Rules of Court made pursuant to the Supreme Court could not constrain or inhibit the statutory obligation imposed by s 46 of the CPCA. All that the statutory scheme requires is personal service on each of the persons identified within s 46. That is what occurred when the Viscount's Department of Jersey served Centurion in January 2004. Accordingly, the statutory requirements were met and no question of compliance with the Rules of Court arises.
57 Centurion's argument also relied heavily upon the decision of Anderson J in ANZ Grindlays Bank PLC v Fattah (1991) 4 WAR 296. However, that case is plainly distinguishable from the present case. That
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- case involved the exercise of the court's jurisdiction to grant injunctive relief against persons, being, in that case, persons who were outside the jurisdiction. As Anderson J expressly observed, no relief was sought in that case against the holder of the relevant property within Western Australia, being a bank holding funds to credit in one of its accounts.
58 It follows that the circumstances of that case were very different to the present circumstances. In those circumstances, Anderson J set out the applicable principles in the following terms (at [299]):
A foreign defendant is, prima facie, not subject to the jurisdiction of this Court. He may be made amenable to jurisdiction if service of process can be effected on him within the territorial jurisdiction of the court, that is, Western Australia, of if he agrees to submit to the jurisdiction, or if the court assumes jurisdiction by authorising service of its process under O 10. Where the defendant is not within the jurisdiction and has not agreed to submit to the jurisdiction, he is not amenable to jurisdiction until the requirements of O 10 have been met.
59 So, in that case, the jurisdiction of the court depended upon service being effected upon the persons whose actions it was sought to restrain by the injunctive relief which had been granted by the court. That is very different to the present circumstances, in which the freezing order operated upon property within Western Australia. No question as to the territorial jurisdiction of the court arises in relation to such an order, as Anderson J observed in ANZ Grindlays Bank PLC. Accordingly, this is another reason why the provisions of O 10 are irrelevant to the validity of the freezing order made by Scott J.
60 This analysis is not affected by the fact that service of a freezing order upon a person coming within the scope of s 46 has legal consequences, including the creation of an obligation to provide a statutory declaration to the DPP (pursuant to s 47 of the CPCA), and the commencement of the running of time for the purposes of the automatic confiscation of property pursuant to s 7 of the CPCA. Those are the consequences of the specific statutory regime created by the CPCA itself, not because of any coercive jurisdiction exercised by the court in respect of persons beyond its territorial jurisdiction.
61 Put another way, by the express provisions of the CPCA, and general principle, the court plainly has jurisdiction to make freezing orders in respect of property situated in Western Australia. The fact that such orders may, when served upon persons outside the jurisdiction, have statutory consequences under the specific regime created by the Parliament in respect of property associated with criminal conduct does
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- not, and cannot, enliven the need to comply with Rules of Court made pursuant to the Supreme Court Act 1935 (WA). Any coercive consequences for persons flow from the CPCA, not from the freezing order.
Grounds 1.2 and 1.3
62 These grounds advanced essentially the same point and can be considered together. They are:
1.2 The grant of the freezing order was beyond the jurisdiction of the Court because the property frozen by the order was not confiscable pursuant to the provisions of the Criminal Property Confiscation Act;
1.3 The Court's discretion to grant a freezing order under s 43 of the Criminal Property Confiscation Act was not validly exercised because there was insufficient evidence before the Court that the property was confiscable.
63 The first reason these grounds must be rejected is that they proceed upon a false assumption as to the nature of the function performed by the court at the time a freezing order is issued. The grounds upon which such an order may be made are specified and include the making of an application for an examination order, or advice to the court of an intention to an application for, amongst other things, a criminal benefits declaration or a crime-used property substitution declaration. Neither the court's jurisdiction, nor the discretion of the court to make such an order, depend upon it being established that the property to be frozen is confiscable property pursuant to the CPCA. That proposition could only be accepted if, contrary to the view I have expressed above, the applicant for a freezing order must make out a prima facie case for an entitlement to property pursuant to the CPCA. A requirement to make out a prima facie case to the effect that property is confiscable prior to the grant of a freezing order is fundamentally different in character to the existence of a discretion to refuse relief of the kind recognised in Bennett & Co (a Firm) and Mansfield v Director of Public Prosecutions (WA) [2005] WASCA 79; (2005) 153 A Crim R 41; (2005) 31 WAR 97. As the court observed in those cases, the discretion might be exercised on grounds such as bad faith or the lack of any reasonably arguable case under the CPCA.
64 In an attempt to bring itself within the scope of the principle recognised in the cases to which I have referred, during the course of oral argument, Centurion asserted that there was no reasonably arguable case
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- to the effect that the property comprised in the trust fund was confiscable property. Centurion contended that there was no reasonably arguable case to the effect that the funds in the trust account could ever be confiscable property because a crime-used property substitution declaration can only be made in respect of property used by the owner of that property to commit a crime. Centurion argued that as there had been no suggestion that it had committed a crime, its interest in the funds held on trust by ASIC could not be the subject of a crime-used property substitution declaration, and could not therefore ever become confiscable property.
65 However, this argument overlooks the breadth of definition given to the expression 'property', and the evidence provided in the affidavit of Ms Papamihail to the effect that Smith was beneficially entitled to the shares in Welcome Stranger registered or held on behalf of Centurion, being the shares allegedly used to perpetrate the criminal offences which had been identified.
66 The expression 'property' embraces interests both legal and equitable (see the Glossary to the CPCA). If, as Ms Papamihail deposed, Smith had an equitable interest in the shares which were used in the perpetration of the alleged offences, and that equitable interest had been converted into an equitable interest in the cash standing to the credit of the ASIC trust fund, Smith's equitable interest in that fund could be the subject of a crime-used property substitution declaration made pursuant to s 22 of the CPCA. That prospect is quite sufficient to sustain the grant of the freezing order.
67 For these reasons, Centurion's suggestion that the freezing order exceeded the jurisdiction of the court, or was not a valid exercise of the discretion of the court because the funds the subject of the order were not confiscable property under the CPCA, must be rejected.
Ground 1.4
68 This ground asserts:
1.4 the freezing order failed to comply with section 44 of the Criminal Property Confiscation Act 2000 (WA).
69 I have set out above the grounds that were specified in the extracted order made by Scott J. Those grounds refer specifically to the grounds upon which the application was made, and the grounds upon which freezing orders may be made pursuant to s 43 of the CPCA.
70 Centurion's argument is essentially to the effect that much more had to be provided in the order - along the lines of a summary of the evidence
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- relied upon to make the order and the reasoning processes of the court at the time of making the order. This obligation is said to be supported by the fact that the court has a discretion to refuse to make a freezing order. It is argued therefore, that the grounds upon which the discretion has been exercised must be set out in the order itself.
71 As I have observed, precisely the same argument was presented to Roberts-Smith J in the course of the application by the DPP for a confidentiality order, which was the subject of the decision of Roberts-Smith J delivered on 30 June 2004 (the same day as the decision under appeal), being Re Smith, Ex parte Director of Public Prosecutions (WA) (No 1) [2004] WASC 145.
72 For the reasons set out by Roberts-Smith J at [77] - [91], his Honour rejected the submission and concluded that the word 'ground' when used in s 44, meant only the statutory foundation which enabled the court to make a freezing order under s 43. I respectfully agree entirely with that conclusion, for the reasons given by his Honour.
73 As the statutory foundations which were relied upon for the making of the freezing order were set out in the order which was extracted and served, ground 1.4 must be rejected.
Ground 1.5
74 This ground asserts that:
1.5 a determination that the property was confiscable (and the grant of the freezing order) was an exercise of Federal jurisdiction by the Supreme Court of Western Australia and the respondent lacked authority to apply to the Court in a Federal matter.
75 The argument advanced in support of this ground is identical to the argument advanced in the case of Director of Public Prosecutions (WA) v Mansfield [2008] WASCA 5, which was heard immediately prior to the hearing of this appeal. There is, however, a significant distinction between the circumstances of that case and this, because in this case Centurion does not rely upon s 109 of the Constitution of Australia Act 1901 (Cth) (Australian Constitution) to contend that the CPCA is invalid. Accordingly, the basis for the concession made by the DPP and the Attorney General for Western Australia as Intervener in the Director of Public Prosecutions (WA) v Mansfield [2008] WASCA 5 case, to the effect that the advancement of the constitutional argument had the consequence that the entire proceedings were within federal jurisdiction is not present in this case.
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76 In this case, the DPP and the Attorney General argue that the proceedings are not within federal jurisdiction because the offences allegedly committed by Smith and which grounded the freezing order were offences against State law. For the reasons I have given in my decision in Director of Public Prosecutions (WA) v Mansfield [2008] WASCA 5, I think that proposition is correct. However, because, for the reasons I have set out in my decision in Director of Public Prosecutions (WA) v Mansfield [2008] WASCA 5, a conclusion that these proceedings are within federal jurisdiction would have no consequences in terms of the power or authority of the DPP to prosecute them, in my opinion, it is unnecessary, in this case, to finally determine whether these proceedings are within federal jurisdiction. That is because of my view that, even if they were, the DPP would still have ample power and authority to prosecute them by reason of s 39 and s 79 of the Judiciary Act 1903 (Cth).
Ground 2
77 This ground asserts that:
The Honourable Justice Roberts-Smith erred in law in finding that no application would lie to set aside the ex parte freezing order dated 14 November 2003 other than an objection taken pursuant to the provisions of the Criminal Property Confiscation Act 2000 (WA).
78 The argument advanced in support of this ground was essentially to the effect that Roberts-Smith J erred by failing to consider whether Scott J had properly exercised the discretion recognised by the decisions in Bennett & Co (a Firm) v Director of Public Prosecutions and Mansfield v Director of Public Prosecutions (WA)[2006] HCA 38; (2006) 226 CLR 486. There are two fundamental obstacles in the path of acceptance of this ground. The first is that the application to Roberts-Smith J to set aside the order of Scott J was not advanced on the basis of Scott J's improper exercise of the discretion conferred upon him by s 43 of the CPCA. I have set out the grounds of the application made to Roberts-Smith J above (at [27]). They are all directed to issues of jurisdiction. None are directed to the issue of discretion. Centurion can hardly complain that Roberts-Smith J failed to review the exercise of discretion by Scott J when it did not advance that as a reason why the freezing order made by Scott J should be set aside.
79 The second fundamental obstacle in the path of this ground is that even if Roberts-Smith J had erroneously failed to review the discretion exercised by Scott J, Centurion's appeal would only be upheld if the Court
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- of Appeal is satisfied that there is some basis for the assertion that the exercise of discretion by Scott J miscarried.
80 I am quite unable to see any basis for such an assertion. There was abundant evidence before Scott J as to the grounds upon which the DPP suspected that a confiscation offence had been committed by Smith. There was also ample evidence to sustain an arguable case to the effect that Smith's equitable interest in the funds held in the ASIC trust account was, or could become, confiscable property by virtue of the operation of the CPCA. Nor is there any basis whatever for any suggestion that the application for the freezing order was not made bona fide. Accordingly, I am unable to see any basis for any assertion to the effect that the exercise of the discretion in respect of the issue of a freezing order by Scott J miscarried. It follows that ground 2 must be dismissed.
Summary
81 For these reasons:
(a) time should be extended to enable Centurion to apply for leave to appeal against the decision of Roberts-Smith J;
(b) leave to appeal against that decision should be granted;
(c) the appeal should be dismissed.
82 McLURE JA: This is an application for an extension of time for leave to appeal from the order of Roberts-Smith J made on 30 June 2004 dismissing the application of Centurion Trust Company Ltd (Centurion) to set aside a freezing order made by Scott J on 14 November 2003 under the Criminal Property Confiscation Act 2000 (WA) (the Act). I agree with the orders proposed by the Chief Justice. The background, facts and grounds of appeal are set out in his reasons and not repeated here unless required for an understanding of these reasons.
The scheme of the Act
83 The purpose of the Act is to provide for the confiscation of property acquired as a result of criminal activity and property used for criminal activity.
84 Part 3 of the Act deals with the identification and recovery of confiscable property. Confiscable property includes unexplained wealth, criminal benefits, crime-used property, crime-derived property and property owned by a person who is declared to be a drug trafficker (s 4, s 144, s 145, s 146, s 148 and s 159). On the application of the Director of Public Prosecutions (DPP) a court may make an unexplained wealth
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- declaration (s 12), a criminal benefits declaration in relation to crime-derived property or unlawfully acquired property (s 16, s 17) or a crime-used property substitution declaration (s 21).
85 Part 5 of the Act contains the source of the powers of investigation and search for confiscable property. It empowers the court, on the application of the DPP, to make an examination order, a monitoring order or a suspension order.
86 The freezing order the subject of this application was made under Div 3 of Pt 4 of the Act. The DPP may apply to the court for a freezing order for property and the application may be made ex parte (s 41). Section 43 deals with the making of freezing orders. It relevantly provides:
(1) The court may make a freezing order for property if -
(a) an examination order, a monitoring order or a suspension order is in force in relation to the property; or
(b) the DPP advises the court that an application for an examination order, a monitoring order or a suspension order has been made in relation to the property, or is likely to be made in relation to the property within 21 days after the freezing order is made.
(2) The court may make a freezing order under subsection (1) whether or not the person against whom the examination order, monitoring order or suspension order is made, or is to be sought, owns or effectively controls the property.
(3) The court may make a freezing order for all or any property that is owned or effectively controlled by the person or that the person has at any time given away if -
(a) a production order has been made against the person;
(b) an application has been made against the person for an unexplained wealth declaration, criminal benefits declaration, crime-used property substitution declaration or production order; or
(c) the DPP advises the court that such an application is likely to be made within 21 days after the freezing order is made.
…
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- (5) The court may make a freezing order for all or any property that is owned or effectively controlled by a person, or that the person has at any time given away if -
(a) the person has been charged with an offence, or the DPP advises the court that a person is likely to be charged with an offence within 21 days after the day on which the freezing order is made; and
(b) the person could be declared to be a drug trafficker under section 32A(1) of the Misuse of Drugs Act 1981 if he or she is convicted of the offence.
(6) A freezing order may be made under subsection (3) or (5) for all property owned or effectively controlled by the person, whether or not any of the property is described or identified in the application.
…
(8) The court may make a freezing order for property if there are reasonable grounds for suspecting that the property is crime-used or crime-derived.
87 Section 44, s 46 and s 47 also relevantly provide:
44. Grounds specified in freezing orders
When considering an application for a freezing order, the court must -
(a) consider each matter that is alleged by the applicant, either in the application or in the course of the proceedings, as a ground for making the order; and
(b) set out in the order each ground that the court finds is a ground on which the order may be made.
46. Service of freezing orders
(1) As soon as practicable after a freezing order is made, the applicant for the order must arrange for a copy of the order and a notice that complies with subsection (6) to be served personally on each of the following persons -
(a) if the frozen property was taken from a person, or is in the custody of a person - that person;
(b) if, at the time that the freezing order is made, the applicant is aware of any other person who is, or may be, or claims to be, an interested party - that person.
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- …
(6) The notice must -
(a) summarise the effect of the order;
(b) advise the recipient to the effect that the property described in the order may be confiscated automatically under this Act unless an objection to the confiscation of the property is filed in the court specified in the notice within 28 days after the date of service of the notice;
(c) tell the recipient that he or she may be eligible to file an objection to the confiscation of the property; and
(d) give details of the recipient's obligations under section 47.
(1) A person who is served under section 46 with a copy of a freezing order and a notice must give a statutory declaration to the DPP.
(2) The statutory declaration must be given within 7 days after the day on which the notice was served on the person.
(3) In the statutory declaration, the declarant must -
(a) state the name and, if known, the address of any other person whom the declarant is aware is or may be, or claims to be, an interested party; or
(b) if the declarant is not aware of any other person who is or may be, or claims to be, an interested party - make a statement to that effect.
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89 Part 6 of the Act deals with objections to the confiscation of frozen property and applications for the release of confiscated property. A person may file an objection to the confiscation of frozen property within the time prescribed (s 79). The State is a party to proceedings on an objection (s 80). Frozen property will be released if the objector establishes on the balance of probabilities the matters specified in s 82, s 83 or s 84 of the Act (s 81).
90 Frozen property is automatically confiscated if an objection to the confiscation of the property is not filed on or before the 28th day after the service cut off date for the property (s 7(1)). The service cut off date for property frozen under a freezing order is the date of the last day on which a copy of the freezing order was served on anyone under s 46(4) (s 150). Otherwise, property is confiscated when it is given or taken in satisfaction of a person's personal liability under s 14, s 20 or s 24 to pay the amount specified in an unexplained wealth declaration, a criminal benefits declaration or a crime-used property substitution declaration (s 6).
91 The Act applies to property in Western Australia and, to the fullest extent of the capacity of the parliament to make laws with respect to property outside the State, to property outside Western Australia (s 5(3)). The extra-territorial effect of the Act was upheld in Director of Public Prosecutions (WA) v Hafner [2004] WASC 32; (2004) 28 WAR 486.
92 Section 102 of the Act relevantly provides:
(1) Proceedings on an application under this Act are taken to be civil proceedings for all purposes.
93 Subject to exceptions not relevant here, the Rules of the Supreme Court 1971 (WA) (the Rules) have effect in relation to all civil proceedings in the Supreme Court (O 1 r 3(1)).
Ground 1.1
94 Centurion contends that the grant of the freezing order for the moneys held in trust by ASIC was beyond the jurisdiction of the court because, when the order was made, leave was not obtained under O 10 r 7 of the Rules to serve the order on the appellant in Jersey. The respondent contends that a freezing order is a judgment in rem to which O 10 has no application.
95 Order 10 r 1 of the Rules provides that service of a writ or notice of a writ out of the jurisdiction is permissible with the leave of the court in the circumstances specified in pars (a) to (l). Unless service is to be effected
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- within Australia, leave is for service out of the jurisdiction of notice of the writ and not the writ itself (O 10 r 3). An application for leave must be supported by an affidavit stating the grounds on which the application is made and that, in the deponent's belief, the plaintiff has a good cause of action; no leave shall be granted unless it shall be made sufficiently to appear to the court that the case is a proper one for service out of the jurisdiction (O 10 r 4).
96 Centurion in this case relies on O 10 r 7 which provides:
The Court may allow service outside the jurisdiction of any originating process other than a writ, or of any summons, order, or notice in any proceedings duly instituted, whether by writ of summons or otherwise, and the provisions of Rules 3, 4, 5, and 6 of this Order shall apply, mutatis mutandis, to such service.
97 Order 10 r 8 is also relevant. It provides:
Nothing contained in this Order shall prejudice or affect any practice or power of the Court under which, when lands, funds, choses in action, rights or property within the jurisdiction are sought to be dealt with or affected, the Court may, without purporting to exercise jurisdiction over any person out of the jurisdiction, cause such person to be informed of the nature or existence of the proceedings, with a view to such person having an opportunity of claiming, opposing, or otherwise intervening.
98 The frozen property in this case was a chose in action, being moneys standing to the credit of ASIC in the Westpac trust account being the proceeds of sale of the Welcome Stranger shares.
99 A court's in personam jurisdiction over a defendant in civil proceedings derives from the fact of service of originating process on the defendant in the jurisdiction or by the invocation of the long arm provisions in O 10 of the Rules: John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 [25]; Laurie v Carroll (1958) 98 CLR 310, 322. Thus, in an action in personam the rules as to the legal service of a writ or other originating proceedings define the limits of the court's jurisdiction: Laurie v Carroll (323).
100 An action in personam is to be distinguished from an action in rem. Jurisdiction in rem depends solely on the control of the res (object or thing) by the sovereign exercising jurisdiction: Castrique v Imrie (1870) LR 4 HL 414. The typical example of jurisdiction in rem is the jurisdiction of the Court of Admiralty over any vessel within territorial waters.
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101 Order 10 deals with the court's jurisdiction over persons. It is only intended to apply to actions in personam not actions in rem. Service also satisfies the natural justice notice requirement but that does not go to the court's jurisdiction (authority) to decide the matter. Moreover, a judgment or order may operate in rem: The Wik Peoples v The State of Queensland (1994) 49 FCR 1; Turner v Official Trustee in Bankruptcy (1999) 97 FCR 241 [13] - [17]; P E Bakers Pty Ltd v Yehuda (1988) 15 NSWLR 437, 442 - 445; McGovern v State of Victoria [1984] VR 570, 575 - 576. Drummond J in Wik Peoples identified four characteristics that a judgment must possess if it is to operate in rem in relation to the thing in question. They are:
(1) First, the location of the thing the subject of the judgment must be within the control of the State under whose authority the court sits …
(2) Secondly, the judgment must be a decision as to the status or disposition of the thing. What this involves is explained in Halsbury's Laws of England (4th ed), Vol 16 where it is said, in par 969, that, to be a judgment in rem in relation to a thing, the judgment: 'must affect the "res" in the way of condemnation, forfeiture, declaration of status or title, or order for sale or transfer'. In McGovern v Victoria … it was said at 576:
… A judicial decision which creates title to or affects property in a thing in possession is a decision that determines the status of that thing and, to that extent, is conclusive in rem.
(3) Thirdly, the judgment must purport to be given in the exercise of a jurisdiction to determine the status or disposition of the property in question conferred on the Court by the authority of the State. Typically, this element will be found to exist in the fact that a statute confers jurisdiction on a court or tribunal for the specific purpose of determining the status or disposition of property of the kind in question in the proceedings …
(4) Fourthly, the Court must have acted within that jurisdiction in giving the judgment (4 - 5).
102 Centurion relied on the decision of Anderson J in ANZ Grindlays Bank Plc v Fattah (1991) 4 WAR 296 in support of its claim that the order made by Scott J, alternatively service of that order on it, was invalid. The plaintiff in that case commenced an action by writ of summons against the defendants seeking a declaration that funds standing to the credit of the defendants in a Western Australian bank account were the plaintiff's property. The defendants were foreign defendants who had
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- never been in Western Australia. The plaintiffs applied on an ex parte basis for leave to serve notice of the writ out of the jurisdiction and for an interlocutory injunction restraining the defendants from dealing with the bank account. The court granted leave to serve notice of the writ and the interlocutory injunction. Having regard to the terms of the injunction the court was exercising in personam jurisdiction. It also ordered that the injunction and all supporting affidavits and exhibits be served out of the jurisdiction with notice of the writ.
103 Anderson J observed that it was doubtful whether the court had power to grant an interlocutory injunction against a defendant beyond the territorial limits of its jurisdiction until jurisdiction over that person had been properly obtained (by, for example, leave to serve notice of the writ having been obtained and the notice served). Anderson J also considered whether it was necessary to obtain leave under O 10 r 7 to serve the order for the interlocutory injunction on the defendants. He said:
It depends upon the purpose of service. If all that is desired to be achieved is to inform the foreign defendant of the progress of the matter, there is, of course, no requirement for leave … But if the object of service is to bind the person out of the jurisdiction in some way - is an exercise of jurisdiction over that person - service must be effected in accordance with O 10 of the rules … Any order or notice purporting to have any coercive effect or which may provide the foundation for the exercise of jurisdiction over the defendant in some way in the future is comprehended by the provisions of O 10, r 7. In the absence of that rule there would be no power to give leave to serve such documents abroad (301- 302).
104 As applications under the Act are civil proceedings, the Rules prima facie apply to any applications made to this court. That must be so unless a rule is expressly or impliedly inconsistent with the Act.
105 The starting point for determining whether the court's jurisdiction and/or freezing orders are in rem or in personam is the terms of the Act. The court's power under s 43 of the Act is confined to declaring the status of the specified property to be frozen for the purposes of the Act. A freezing order is not in terms coercive and does not by its own force or effect purport to bind particular persons. It is the Act not the order that is the direct source of the consequential personal obligations on individuals. It is the Act that prohibits all persons from dealing with frozen property in any way, the breach of which constitutes an offence. It is the Act that requires service of the freezing order and entitles persons to make an application to the court to seek the release of confiscable or confiscated property. It is the Act that imposes an obligation on persons served with a freezing order to give a statutory declaration advising whether or not the
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- declarant is aware of any other person who is or may be an interested party.
106 Insofar as the Act applies to property within the territorial limits of Western Australia, the four characteristics of a judgment in rem are satisfied. As the court's power under s 43 is confined to making freezing orders I conclude the court's jurisdiction to make freezing orders in relation to property within the State is in rem. Accordingly, the court's jurisdiction to make a freezing order in relation to property within the jurisdiction is not dependent on service of the originating process or freezing order on the owner of, or persons interested in, the property.
107 However, the Act is intended to operate extra-territorially. It extends to property outside Western Australia. To that extent, the court's jurisdiction and any order made thereunder cannot be in rem and must therefore be in personam. If it is in personam, the court's jurisdiction is prima facie dependent on personal service of the defendant in the territory or service out of the jurisdiction under O 10 of the Rules. If O 10 r 7 applies to a freezing order, the failure to obtain leave to serve the order may not invalidate the order but it would (if jurisdiction over the defendant had not already been secured) invalidate the purported service thereof. The remaining questions are whether the freezing order is of such a nature as to require leave to serve it out of the jurisdiction under O 10 r 7 or whether O 10 r 8 applies and, if O 10 r 8 does not apply, whether s 46 overrides the requirement in O 10 r 7 for leave thereby in effect extending the court's jurisdiction over persons outside the State. Where the relevant property and people are outside the State, questions may arise as to whether the Act applies at all. As the property in this case was in Western Australia it is unnecessary to determine these matters. I would dismiss ground 1.1.
Ground 1.2
108 This ground is predicated on the assumption that O 10 of the Rules applies. It is to the effect that the freezing order was beyond jurisdiction because O 10 required that the evidence before Scott J establish that the property was confiscable. I have concluded that O 10 has no application. Even if it did, the DPP did not have to establish under O 10 or otherwise that the property was confiscable or prima facie confiscable for the reasons given in relation to ground 1.3. I would dismiss this ground.
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Ground 1.3
109 Centurion contended that the court's jurisdiction to grant a freezing order was not validly exercised because there was insufficient evidence that the property was confiscable. Centurion claimed the DPP had to establish a prima facie case to that effect.
110 The first matter for consideration is the grounds of permissible challenge to an ex parte discretionary decision to impose a freezing order. A discretionary decision can only be successfully challenged on appeal if the claimant demonstrates that the decision-maker made a material error of fact or law. However, an application under O 58 r 23 is not an appeal from the first order and different principles apply: Bell Group NV (in liq) v Aspinall (1998) 19 WAR 561. The court said:
Counsel for the appellant submitted that before the jurisdiction to reconsider an ex parte order can be enlivened, it is necessary for a party seeking such relief to adduce additional material evidence or to establish that there was material non-disclosure by the party who obtained the order. We think this is correct. A subsequent hearing, either by the judge who made the original order or by another judge with co-ordinate powers, is not an 'appeal' against the first order. Nor is it an application merely to reconsider the correctness of the original decision on the materials then placed before the judge. The application rests in every case on the production of further materials not before the judge who heard the ex parte application and which throw a new and different light on the situation of the parties involved … If the order is made without jurisdiction, the requirement for further evidence does not apply (569).
111 The correctness of Bell Group is not challenged in these proceedings. There being no claim of material non-disclosure, new material or change of circumstance, the only basis on which the decision of Scott J could be challenged before Roberts-Smith J was lack of jurisdiction.
112 The matters listed in subsections (1), (3), (5) and (8) of s 43 of the Act enliven the court's discretion to make a freezing order: Bennett & Co (a firm) v Director of Public Prosecutions (WA) (2001) 31 WAR 212 [50]. The grounds on which Scott J made the freezing order in this case were that the DPP:
(1) had applied for an examination order in relation to the property;
(2) was likely to apply against Smith for a crime-used property substitution declaration and a criminal benefits declaration within 21 days after the freezing order was made.
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113 The evidence before Scott J established each of those matters which had the effect of enlivening the jurisdiction to grant a freezing order. There is no foundation in the language or purpose of the Act for Centurion's contention that the evidence must establish a prima facie case for the grant of an examination order, crime-used property substitution declaration or criminal benefits declaration. The purpose of a freezing order is to maintain the status quo in relation to property pending the investigation and (if appropriate) prosecution of claims that a nominated respondent has confiscable property. Accepting, without deciding, that the merits of the substantive applications (for an examination order, and the foreshadowed applications for a crime-used property substitution declaration and a criminal benefits declaration) is a (mandatory) relevant consideration in the exercise of the discretion, there is no proper basis for concluding that Scott J had failed to take those matters into account. The evidence before Scott J addressed those issues. The evidence disclosed that there were reasonable grounds for the DPP to suspect that the Welcome Stranger shares were beneficially owned and effectively controlled by Smith who used them in connection with the commission of a confiscation offence. If the shares were beneficially owned by Smith he would have a beneficial interest in the funds in the trust account. I would dismiss ground 1.3.
Ground 1.4
114 Centurion contends the freezing order did not comply with s 44 because it failed to set out each ground on which the order was made. Centurion's submission was in essence that a judge granting a freezing order is obliged to give reasons for his or her decision comprising a summary of the evidence and reasoning process. That submission should be rejected generally for the reasons given by Roberts-Smith J in Re Smith; Ex parte Director of Public Prosecutions (WA) (No 1) (2004) 146 A Crim R 40 [77] - [88]. If the legislature intended the decision-maker to provide reasons for decision it would have used that terminology. The word 'ground' in s 44(b) means the statutory ground or grounds that enliven the discretion to grant the freezing order, that information being essential for the purpose of determining if the freezing order has stopped being in force pursuant to s 49 of the Act. I would dismiss ground 1.4.
Ground 1.5
115 Centurion claimed that a determination that the property was confiscable and the grant of a freezing order involved the exercise of federal jurisdiction by the Supreme Court and the respondent lacked
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- authority to apply to the court in a federal matter. The same issues were raised in Director of Public Prosecutions (WA) v Mansfield [2008] WASCA 5. There being no issue of inconsistency under s 109 of the Commonwealth Constitution, the only basis for a claim that the court was exercising federal jurisdiction was that the matter arose under a Commonwealth law.
116 The conduct alleged by the DPP to be the confiscation offences occurred between 1993 and 1998 in relation to the use of shares in Welcome Stranger Gold Mine NL and Hallmark Gold NL which involved the second respondent (Smith) knowingly failing to act honestly in breach of s 232(2) and s 1317FA(1) of the Corporations Law (WA) and in voting on certain transactions in breach of s 243ZF and s 1311 of the Corporations Law (WA). The maximum penalty for the offences was 5 years and 3 years respectively.
117 I have concluded in Mansfield at [80], [104] and [108] that: (1) the Act does not apply to offences under the Corporations Law (WA); (2) there is substituted liability under corresponding provisions of the Corporations Act 2001 (Cth) (Corporations Act) in respect of that conduct pursuant to s 1400 of the Corporations Act; and (3) the Act applies to such substituted liability under the corresponding provisions of the Corporations Act.
118 Section 1400 of the Corporations Act applies to the former liability under s 232(2) and s 1317FA of the Corporations Law (WA). Section 1401 applies to the former liability under s 243ZF and s 1311 of the Corporations Law (WA). Section 1401 has the same material effect as s 1400: Forge v ASIC (2006) 228 CLR 45. My reasoning and conclusions in Mansfield apply equally in this case. In particular, I accept that the relevant confiscation offences are offences under the Corporations Act.
119 As I said in Mansfield, federal jurisdiction is the authority to adjudicate derived from s 75 of the Commonwealth Constitution and laws made under s 76 of the Constitution in relation to the matters specified therein. Section 76 of the Constitution relevantly refers to any matter 'arising under any laws made by the Parliament'. The term 'matter' in s 76 refers to the subject matter for determination in a legal proceeding and not the legal proceeding itself. For there to be a matter, there must be a justiciable controversy for the determination of the court. The matter in this case is the disputed entitlement of the DPP to orders under the Act which would result in the confiscation of the property the subject of the
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- freezing order. One aspect of the matter is whether the DPP was entitled to a freezing order under s 43 of the Act which, when made, would have the result provided for in s 7 of the Act. Other aspects include whether the DPP was entitled to a criminal benefits declaration or a crime-used property substitution declaration under the Act.
120 The DPP's entitlement to a freezing order under s 43 of the Act does not depend upon whether any particular offence has, or may have been committed. The likelihood that a person had, on the balance of probabilities, been involved in the commission of a confiscation offence can only be relevant to the manner in which the court might exercise its discretion under s 43.
121 However, in determining whether to make a criminal benefits declaration it is necessary for the court to determine whether it is more likely than not that the second respondent (Smith) was involved in the commission of a confiscation offence (s 16). A confiscation offence is defined in s 141(1)(a) to mean an offence against a law in force anywhere in Australia that is punishable by imprisonment for 2 years or more. Thus, a confiscation offence may include an offence against a law of the Commonwealth or another State or Territory.
122 A crime-used property substitution declaration must be made if crime-used property is not available for confiscation and it is more likely than not that Smith made criminal use of the crime-used property (s 22, s 146, s 147). Under s 102(2)(d) a question of fact to be decided in proceedings under the Act is to be decided on the balance of probabilities.
123 I concluded in Mansfield at [115] that even if the confiscation offence is an offence under a law of the Commonwealth, that does not result in the matter arising under Commonwealth law. I did so on the basis that the DPP does not have to prove that the relevant respondent committed an offence against the Corporations Act. That would require each element of the offence to be established beyond reasonable doubt. The DPP has to establish the same elements of the offence against the Corporations Act but to the civil standard. In circumstances where there is no reliance on the operative effect of a law of the Commonwealth, it cannot be said that the existence of a right or duty depends on federal law. The right or duty is based on conduct identified by reference to Commonwealth law and involving its interpretation, but that is not sufficient to make it a matter arising under Commonwealth law. Nor are federal rights and duties the subject matter of the right to be vindicated in the matter the subject of the proceedings brought by the DPP under that
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- Act. Accordingly, there was no exercise of federal jurisdiction. I would dismiss ground 1.5.
Ground 2
124 Centurion claimed before Roberts-Smith J that the funds in the trust account could not be frozen because the property was not crime-used property and so could not be the subject of an examination order; was not owned by, or in the effective control of, Smith in which event it could not be the subject of a crime-used property substitution declaration; and was not crime-derived property or unlawfully acquired property which could be the subject of a criminal benefits declaration. Roberts-Smith J held that those arguments could not be advanced on an application under O 58 r 23 but had to be litigated in objection proceedings under Pt 6 of the Act where the onus was on the objector to establish that the property was not confiscable. He said that to allow Centurion to challenge these matters in an application to set aside the ex parte freezing order would circumvent the statutory scheme [71]. The Full Court in Bennett v DPP assumed without deciding that Roberts-Smith J was correct [63].
125 In substance, this claim is essentially to the same effect as ground 1.3, namely that the DPP had the onus of establishing a prima facie case for substantive relief in the application for an examination order and the foreshadowed applications for a crime-used property substitution declaration and criminal benefits declaration. For the reasons given in relation to ground 1.3, the claim is without foundation.
126 As already noted, an application can be made in a proper case to a single judge to set aside an ex parte freezing order under O 58 r 23 on the ground of material non-disclosure, the availability of new material which reveals that the full facts and circumstances had not been appreciated or absence of jurisdiction. None of the matters asserted by Centurion go to the jurisdiction to grant a freezing order or the other grounds for setting aside an ex parte order. I would dismiss ground 2.
Conclusion
127 It was accepted by the parties that the decision of Roberts-Smith J was interlocutory and leave to appeal was required. The need for an extension of time within which to apply for leave was properly and fully explained. The application for an extension was unopposed and should be granted.
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128 In general, leave will only be granted if the court is satisfied that the decision below is wrong or attended with sufficient doubt to justify the grant of leave and that a substantial injustice would be done if it remains unreversed. Ground 1.1 raised an important and reasonably arguable ground. Further, the second limb is satisfied because if the decision below is unreversed, Centurion will have lost the ability to object to the confiscation of the property. Therefore, I would grant leave to appeal on ground 1.1 but dismiss the appeal.
129 BUSS JA: I agree with McLure JA.
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