Commissioner of the Australian Federal Police v Courtenay Investments Ltd (No 4)
[2015] WASC 101
•27 MARCH 2015
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE -v- COURTENAY INVESTMENTS LTD [No 4] [2015] WASC 101
CORAM: EDELMAN J
HEARD: 2 - 3 DECEMBER 2014 & FINAL WRITTEN SUBMISSIONS ON 10 FEBRUARY 2015
DELIVERED : 27 MARCH 2015
FILE NO/S: CIV 2702 of 2012
BETWEEN: COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE
Applicant
AND
COURTENAY INVESTMENTS LTD
HAPPLE LTD
DAVENRITE LTD
Defendants
Catchwords:
Proceeds of crime - Forfeiture and exclusion applications - Meaning of exclusion 'application' - Validity of exclusion application - Whether shares held by defendant corporations are the instrument of a serious offence - Alleged offence of failing to act honestly in in the discharge of the duties of office and intending to deceive someone - Conduct involving a failure to disclose 'relevant interest' in shares held by the defendant corporations - Reliance by applicant exclusively upon transcript and evidence from criminal trial where conviction quashed on appeal - Whether an intention to deceive is dishonest if there is a subjective belief that it is in the best interests of the company - Whether offence is a 'serious' offence involving conduct that causes or is intended to cause a benefit to the value of at least $10,000 - Whether a thing can be 'used' in the commission of an offence which is an omission - Appropriate orders in circumstances in which defendant companies may not exist - Where defendant companies may have no legal directors - Where shareholding in defendant companies may be bona vacantia - Where the subject matter of the forfeiture application may be bona vacantia
Legislation:
Corporations Law (Cth), ss 31, 32, 34, 35, 232
Proceeds of Crime Act 2002 (Cth)
Result:
Forfeiture application dismissed
Further hearing required concerning consequential orders
Category: A
Representation:
Counsel:
Applicant: Ms W J Abraham QC & Ms C H Thompson
Defendants: Mr H Dhanji SC & Mr C E Chenu
Solicitors:
Applicant: Australian Federal Police - Proceeds of Crime Litigation
Defendants: Bennett & Co
Cases referred to in judgment:
Amaca Pty Ltd v Booth [2011] HCA 53; (2011) 246 CLR 36
Augustus v Permanent Trustee Co (Canberra) Ltd [1971] HCA 25; (1971) 124 CLR 245
Australian Growth Resources Corporation Pty Ltd v Van Reesema (1988) 6 ACLC 529
Australian Securities and Investments Commission v Vines [2005] NSWSC 738; (2005) 55 ACSR 617
Australian Securities Commission v AS Nominees Ltd (1995) 133 ALR 1
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336
Brown v New South Wales Trustee and Guardian [2012] NSWCA 431; (2012) 10 ASTLR 164
Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd [2011] NSWCA 109; (2011) 81 NSWLR 47
Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253
Cannane v J Cannane Pty Ltd (In Liquidation) [1998] HCA 26; 192 CLR 557
Chapman v Brown (1801) 6 Ves Jun 404; 31 ER 1115
Chew v The Queen [1992] HCA 18; (1992) 173 CLR 626
Clark & Forge v R [2004] WASCA 217
Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389
Commissioner of Australian Federal Police v Fysh [2013] NSWSC 81; (2013) 272 FLR 414
Commissioner of Federal Police v Zhao [2014] HCA Trans 274
Commissioner of the Australian Federal Police v Courtenay Investments Ltd [2013] WASC 396
Commissioner of the Australian Federal Police v Courtenay Investments Ltd [No 2] [2014] WASC 55
Commissioner of the Australian Federal Police v Courtenay Investments Ltd [No 3] [2014] WASC 383
Corporate Affairs Commission v Papoulias (1990) 20 NSWLR 503
Cunnack v Edwards [1896] 2 Ch 679
Director of Public Prosecutions for the State of Western Australia v White [2010] WASCA 47; (2010) 41 WAR 249
Dowling v Colonial Mutual Assurance Society [1915] HCA 56; (1915) 20 CLR 509
DPP (Cth) v Jeffery (1992) 58 A Crim R 310
Fitzsimmons v The Queen (1997) 23 ACSR 355
Forge v Australian Securities and Investments Commission [2004] NSWCA 448; (2004) 213 ALR 574
Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
Gedeon v The Queen [2013] NSWCCA 257; (2013) 280 FLR 275
Hardie v Hanson [1960] HCA 8; (1960) 105 CLR 451
Hobart Savings Bank v Launceston Bank for Savings [1930] HCA 11; (1930) 43 CLR 364
Hunter v Western Australia [2014] WASCA 184
Hutton v West Cork Railway Co (1883) 23 Ch D 654
In re Usines de Melle and Firmin Boinot's Patent [1954] HCA 32; (1954) 91 CLR 42
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Kwok v R [2007] NSWCCA 281; (2007) 175 A Crim R 278
Lindsay v Miller [1949] VLR 13
Macleod v The Queen [2003] HCA 24; (2003) 214 CLR 230
Marchesi v Barnes and Keogh [1970] VR 434
Milne v The Queen [2014] HCA 4; (2014) 252 CLR 149
Neilson v Overseas Projects Corporation of Victoria Ltd [2005] HCA 54; (2005) 223 CLR 331
Nelson v Greening & Sykes (Builders) Ltd [2007] EWCA Civ 1358
Nelson v Nelson [1995] HCA 25; (1995) 184 CLR 538
Perpetual Trustees v Burniston [No 2] [2012] WASC 383
Peters v The Queen [1998] HCA 7; (1998) 192 CLR 493
R v NM [2012] QCA 173
Re Birkett (1878) 9 Ch D 576
Re City Equitable Fire Insurance Co Ltd [1925] 1 Ch 407
Re Porter [1925] Ch 746
Re Silverline Technologies Pty Ltd (in liq) [2005] NSWSC 620; (2005) 192 FLR 261
Rees v Dominion Insurance Co of Australia Ltd (in liq) (1981) 6 ACLR 71
RPS v The Queen [2000] HCA 3; (2000) 199 CLR 620
Schellenberg v Tunnel Holdings Pty Ltd [2000] HCA 18; (2000) 200 CLR 121
Smith v The Queen [2008] WASCA 128; (2008) 37 WAR 297
Southern Resources Ltd v Residues Treatment & Trading Co Ltd (1990) 56 SASR 455
Spies v The Queen [2000] HCA 43; (2000) 201 CLR 603
Tan v The Queen [1979] WAR 149
Taylor v Attorney General (SA) (1991) 55 SASR 462
Taylor v Owners - Strata Plan No 11564 [2014] HCA 9; (2014) 306 ALR 547
The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239
The Pilbara Infrastructure Pty Ltd v Brockman [No 2] [2014] WASC 345
Twinsectra Ltd v Yardley [2002] UKHL 12; [2002] 2 AC 164
Vandervell v Inland Revenue Commissioners [1967] 2 AC 291
Walker v Stones [2001] QB 902
White v Director of Public Prosecutions for the State of Western Australia [2011] HCA 20; (2011) 243 CLR 478
Whitlam v Australian Securities & Investment Commission [2003] NSWCA 183; (2003) 57 NSWLR 559
Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509
Texts cited:
Heydon J D, Cross on Evidence (6th Aust ed, 2000)
Heydon J D and Leeming M, Jacobs' Law of Trusts in Australia (7th ed, 2006)
Ramsay I and Langford R 'Directors' duty to act in the interests of the company: subjective or objective?' [2015] (2) Journal of Business Law 173
Table of Contents
1. Introduction
2. The facts which were not in dispute
2.1 Welcome Stranger Mining NL
2.1.1 WSM's name changes
2.1.2 WSM's directors
2.2 The Defendant companies and other entities relevant to them
2.2.1 Davenrite UK
2.2.2 Davenrite
2.2.3 Happle
2.2.4 Courtenay
2.2.5 Abacus
2.2.6 Hallmark Gold NL
2.2.7 BMS Consultants Pty Ltd (and its agreement with WSM)
2.3 Mr Corp's declared interest in WSM
2.4 The General Meeting of WSM on 23 January 1998
3. The process by which ANZ Nominees and National Nominees voted on 23 January 1998: documentary evidence
4. Procedural background to the forfeiture and exclusion applications
5. Preliminary legal issues concerning the applications
5.1 The first preliminary issue: the meaning of an exclusion 'application'
5.2 The second preliminary issue: the validity of the exclusion application
5.3 The third preliminary issue: leave to bring the exclusion application
6. Requirements for forfeiture under s 49
7. The manner of assessing the evidence concerning each issue
7.1 Difficulties in relying upon transcript
7.2 The Jones v Dunkel submission concerning the defendant companies' failure to call witnesses
8. The first issue: was an offence committed?
8.1 The statutory provisions
8.2 The alleged reasons for the breach of s 232
8.3 Sub-issue 1: Did Mr Corp have a relevant interest in the WSM shares held by the defendant companies?
8.4 The three legal routes to Mr Corp having a relevant interest
8.4.1 The first route to Mr Corp having a relevant interest
8.4.2 The second route to Mr Corp having a relevant interest
8.4.3 The third route to Mr Corp having a relevant interest
8.5 The Commissioner's case: the defendant companies were indirectly accustomed to act on Mr Corp's instructions
8.5.1 The nominees and stockbrokers acted on advice from the companies via Abacus
8.5.2 The real issue: was Ms Wickerson accustomed to act on Mr Corp's instructions?
8.5.3 Mr Corp's destruction and backdating of documents
8.5.4 The key documentary evidence relied upon by the Commissioner
8.5.5 The transcript of Ms Wickerson's oral evidence
8.5.6 The transcript of Ms Dodd's oral evidence
8.6 Conclusion on the Commissioner's case as at late 1997
8.7 Whether Mr Corp divested himself of his shares prior to 23 January 1998
8.7.1 The meaning of 'accustomed' in the Corporations Law
8.7.2 Whether Ms Wickerson was no longer 'accustomed' to act in accordance with Mr Corp's directions, instructions or wishes
8.8 Whether Ms Wickerson continued the custom of acting on Mr Corp's instructions
8.9 A collateral issue: Whether the WSM shares or the assets of the defendant companies became bona vacantia
8.9 Sub-issue 2: Was Mr Corp's conduct an offence?
8.9.1 The matters in dispute
8.9.2 The meaning of 'dishonesty' in s 232 of the Corporations Law
8.9.3 Whether Mr Corp's conduct was dishonest
8.10 Sub-issue 3: Was Mr Corp's dishonesty 'in the exercise of his powers and the discharge of the duties of his office' as director
8.11 Conclusion on the first issue
9. The second issue: was the offence a 'serious' offence?
9.1 The Commissioner's first submission: a benefit of at least $10,000 to BMS or Mr Corp
9.2 The Commissioner's second submission: the cost of Mr Corp's scheme
9.3 The Commissioner's third submission: WMS's financial well being
9.4 Conclusion on the second issue
10. The third issue: were the shares an instrument of a serious offence?
10.1 Two relevant authorities
10.2 The necessity to define the facts constituting the commission of an offence
10.3 The facts relied upon by the Commissioner for the allegation of the meaning of 'used in, or in connection with'
10.4 The reason why the WSM shares were used in connection with the commission of the offence
10.5 Conclusion on the third issue
11. Conclusion
12. Rulings on objections to evidence
12.1 Objections to documents that the defendant companies sought to tender
12.1.1 Objections to D3 and D4: minutes of Directors' meetings
12.1.2 Objections to D16 to D19: documents concerning previous court proceedings
12.2 Objections to documents tendered by the Commissioner
Appendix 1: Responses of all shares concerning removal of Mr Smith
Appendix 2: Shares that voted concerning removal of Mr Smith
Appendix 3: Responses of all shares concerning removal of Mr Corp
Appendix 4: Shares that voted concerning removal of Mr Corp
Appendix 5: Share holding costs allegedly incurred by the defendant companies
EDELMAN J:
1. Introduction
These reasons concern two applications under the Proceeds of Crime Act 2002 (Cth). The first is an application for forfeiture brought by the Commissioner of the Australian Federal Police. The second is an application for exclusion by the defendant companies.
The Commissioner is the responsible authority for the restraining order which preceded this action as well as this forfeiture application brought under the Proceeds of Crime Act.[1] The proceedings are civil. They are not criminal.[2] The three defendants (if they exist) are overseas companies: Davenrite (a British Virgin Islands company), Courtenay Investments (also a British Virgin Islands company) and Happle (a Gibraltar company).
[1] Joint statement of facts, issues and contentions, 18 November 2014 [59]; Proceeds of Crime Act 2002 (Cth) s 338.
[2] Proceeds of Crime Act 2002 (Cth) s 315.
The Commissioner seeks forfeiture of $885,003.47 plus interest. The money is the proceeds from the sale of shares that are said by the defendant companies to have been held by nominees for the defendant companies. The shares were in Welcome Stranger Mining Company NL (WSM). The proceeds from their sale is being held by the Official Trustee in Bankruptcy.
The Commissioner submitted that the shares in WSM that were held for the defendant companies were an instrument of a serious offence within s 49(1)(c)(iv) of the Proceeds of Crime Act.
The offence alleged by the Commissioner is that a WSM director, Mr Corp, intentionally deceived WSM and its members, and failed to act honestly in the exercise of his powers and the discharge of his duties of office as a director.
Mr Corp was said to have acted deceitfully and dishonestly by allowing proxy votes to be counted at a general meeting of WSM on 23 January 1998 in circumstances in which he knew that he had not disclosed a relevant interest in WSM shares.
Mr Corp was tried for this offence and convicted. His conviction was quashed on appeal.[3] A retrial was ordered. But the Director of Public Prosecutions for the Commonwealth did not retry Mr Corp.
[3] Smith v The Queen [2008] WASCA 128; (2008) 37 WAR 297.
The second application is by the defendant companies for exclusion orders under s 29 and s 73 of the Proceeds of Crime Act. In a statement of agreed facts and contentions, the parties agreed that the exclusion application raised no separate issues for consideration.[4] Apart from some preliminary matters, the focus of these proceedings was therefore on the forfeiture application.
[4] Joint statement of facts, issues and contentions, 18 November 2014 [5].
The evidence on the forfeiture application followed an unusual pattern. Shortly before trial, the Commissioner elected not to call any witnesses at all. Instead the Commissioner sought to rely upon the transcripts and exhibits from Mr Corp's criminal trial. This course was permissible due to a statutory provision which empowers the court to 'have regard to' the transcript of evidence against Mr Corp.[5] There were thousands of pages of transcript and exhibits from that trial. It ran for eight weeks.
[5] Commissioner of the Australian Federal Police v Courtenay Investments Ltd [No 3] [2014] WASC 383; Proceeds of Crime Act 2002 (Cth) s 64(2).
At the start of this application, the Commissioner tendered hundreds of exhibits and the entirety of the transcript from the criminal trial. I directed that the only exhibits and transcript that would be admitted would be those that were relied upon in written or oral submissions. No submission was made by counsel for either party that any part of the transcript of evidence from Mr Corp's criminal trial should be given no weight, or less weight, because it should have been ruled inadmissible.[6]
[6] See my discussion in Commissioner of the Australian Federal Police v Courtenay Investments Ltd [No 3] [2014] WASC 383 [22], [25].
At the conclusion of the application the parties produced a joint agreed list of exhibits. A new, substantially reduced, bundle of exhibits was compiled based on the exhibits upon which reliance was placed by the parties. Objections to exhibits, some made after the application, are ruled on at the conclusion of these reasons. The parties ultimately relied only upon the evidence of twelve witnesses from the criminal trial and the closing addresses from the criminal trial.[7]
[7] Ms Wickerson, Ms Dodd, Mr Maxfield, Mr Ruane, Mr Rump, Mr Pereira, Mr Wollschlager (witness statement), Mr Norway, Mr Finlay, Ms Papamihail, Ms Soares and Mr Watson.
An applicant's onus on a forfeiture application is to show the elements of an offence. The Commissioner needed to show that Mr Corp had a relevant interest in the WSM shares at the time of the general meeting on 23 January 1998. In this respect, there were curiosities about the manner in which this application was argued.
The defendant companies' primary submission was that the Commissioner had not established that Mr Corp had any interest in the defendant companies. Yet the defendant companies did not dispute that Mr Corp (who sat behind the solicitors during the application) was providing the instructions on behalf of the companies in which his counsel submitted that he had no interest.
Another curiosity about this application was that at Mr Corp's criminal trial the prosecuting authorities had alleged that Mr Corp had given away his beneficial ownership in the defendant companies (worth hundreds of thousands of dollars) to three men, Mr Pereira, Mr Rump and Mr Wollschlager. In contrast, Mr Corp's case at his criminal trial was that he had no interest in the defendant companies and it 'was most unlikely he would simply "give away" companies with such significant assets'.[8]
[8] See also the summary of the transcript evidence in Smith v The Queen [2008] WASCA 128; (2008) 37 WAR 297, 311 [39] (Buss JA).
On this application, the positions were reversed. The Commissioner argued that Mr Corp had not given away his beneficial ownership in the companies. The defendant companies argued, as an alternative submission, that Mr Corp had given away his beneficial ownership.
As I explain in these reasons, Mr Corp had a relevant interest in the defendant companies prior to the 23 January 1998 general meeting of WSM. The shares in the defendant companies were effectively intended to be held on trust for him. The instructions for dealing in those shares were given through a chain of people. The start of that chain was Mr Corp, who gave instructions to an accountant, Ms Wickerson.
I accept the alternative submission of the defendant companies that Mr Corp 'disposed' of any interest he had in the shares in the defendant companies through instructions to Ms Wickerson. However, Ms Wickerson remained accustomed to taking his instructions in relation to the voting of those shares. Mr Corp knew this to be the case and he knew that it meant that he was required to disclose his interest in the WSM shares. His failure to do so at the WSM general meeting on 23 January 1998 was dishonesty in the exercise of his powers and the discharge of his duties of office as a director, and was an intentional deception of WSM and its members.
Although I am satisfied on the balance of probabilities that Mr Corp committed an offence, my conclusion is that the Commissioner's application fails because the Commissioner has not proved that a 'serious offence' was committed.
The only basis upon which the Commissioner submitted that Mr Corp's offence was a 'serious' offence within the particular meaning of s 338 of the Proceeds of Crime Act was because the offence was said to be '(a) an indictable offence punishable by imprisonment for 3 or more years, involving ... (iii) unlawful conduct by a person that causes, or is intended to cause, a benefit [including a service or advantage] to the value of at least $10,000 for that person or another person'.[9]
[9] ts 306 - 307 (2 December 2014).
The facts relied upon by the Commissioner for this allegation of a 'serious' offence were set out in a statement of agreed facts and contentions which were treated as a pleading.[10] None of the facts relied upon by the Commissioner (individually or collectively) is sufficient to establish that the unlawful conduct by Mr Corp caused, or was intended to cause, a benefit for him or another person to the value of at least $10,000.
[10] ts 196 (27 August 2014).
There are likely to be consequential issues arising from this application as a consequence of my findings of fact. In particular, the consequential issues may concern whether any orders should, or could, be made to release funds to the defendant companies. They may also concern costs to be paid to the defendant companies.
The difficulty for the consequential issues is that there is serious doubt about the existence or status of the defendant companies and their assets. The evidence is that the defendant companies were once shareholder companies with limited liability. But the companies may have ceased to exist, may have been deregistered, or may need to be deregistered.
The shares in the defendant companies were held by nominee companies. A nominee is not a legal concept. In this case, the legal concept involved where rights are held by a company as a nominee is a trust. There are two possibilities consistent with my findings of fact:
(i)One possibility is that the nominee companies purported to hold the shares in the defendant companies on trust for an unknown and undeclared beneficiary. If so, any putative trust would likely have failed. In those circumstances there is a real possibility that the shares in the defendant companies became bona vacantia.
(ii)Another possibility is that the nominee company shareholders held their shares in the defendant companies on trust for Ms Wickerson (who provided instructions to the nominee companies and who appeared to be the only person who could be the beneficial owner of the shares from the perspective of the nominee companies). It may be that Ms Wickerson held the shares on sub-trust initially for Mr Corp, and later for Messrs Perreira, Rump and Wollschlager. If so, it may be that these three men (or their estates) disclaimed their interest potentially causing the trust to fail. Alternatively, both the trusts and sub-trusts might have failed if either of them was created for illegal purposes or if enforcement of either would be against public policy. Again, there is a real possibility that the failure of the sub-trusts (and therefore the trusts) would mean that the shares in the defendant companies would be bona vacantia.
The questionable nature of the existence of the defendant companies is enhanced by a submission from counsel for the defendant companies at a strategic conference in these proceedings. Counsel said that some or all of the defendant companies have no directors. Mr Corp was said to be acting as a de facto director for British Virgin Islands companies that otherwise have no directors.[11] There was no explanation of how Mr Corp had assumed the status as a de facto director of companies that have no de jure directors and may have no beneficial shareholders (pending a determination of the status of the shares as bona vacantia).
[11] ts 71 (22 May 2013).
Even apart from my doubt concerning the existence of the companies and the status of their shares, there is also doubt concerning whether the defendant companies had title to the WSM shares before they were sold. This means that there is doubt about the person to whom payment should be made of the proceeds from the share sale.
It appears that the WSM shares were held by nominees (ANZ Nominees and National Nominees) on trust for the defendant companies. If the purpose of that trust was illegal or if enforcement of it were against public policy then the trust would fail and the WSM shares may be bona vacantia. Alternatively, if the trust was valid but the proper characterisation of the conduct of the corporate directors of the defendant companies is that they were holding the WSM shares on sub-trust for the benefit of another, then the failure of the defendant companies (through their corporate directors) to know, and therefore declare, the identity of the beneficiaries could cause the trust to fail and, potentially, the WSM shares to become bona vacantia. The same consequence could follow if the WSM shares were held on sub-trust for Ms Wickerson who held them on sub-sub-trust in circumstances where the trust, the sub-trust, or the sub‑sub-trust might have been created for illegal purposes or if enforcement of it would have been against public policy.
For these reasons, although I dismiss the forfeiture application, further submissions and, potentially, evidence may need to be led concerning whether any of the funds held should be released, or whether any costs orders made are capable of enforcement, in favour of the defendant companies. Those questions may need to be the subject of a separate application and potentially separate proceedings. Issues involving questions of conflict of laws, validity of trusts, and particularly bona vacantia (an issue which has been the subject of lively debate since the dispute about abandonment two millennia ago between the Sabinians and the Proculians)[12] cannot be finally determined in these reasons.
[12] By analogy to this case: D 41.7.3 (Modestinus).
2. The facts which were not in dispute
The facts which were not in dispute are as follows.[13]
2.1 Welcome Stranger Mining NL
2.1.1 WSM's name changes
[13] Joint statement of facts, issues and contentions, 18 November 2014.
On 26 June 1967, WSM was registered in South Australia. On 12 November 1999, WSM changed its name to WSM Limited. It changed its name again on 20 April 2000 to Commsecure Limited.
2.1.2 WSM's directors
From 5 September 1986 until 27 May 1998, Mr Corp was a director of WSM. Mr Corp was also the company secretary from 22 January 1988 to 28 October 1996.
From 1 May 1981 to 27 May 1998, Mr Smith was a director.
From 25 January 1994 to 28 October 1996, and from 25 March 1997 to 5 May 1999, Mr Ruane was a director.
From 25 March 1997 to 24 January 2000, Mr Bevan was a director.
From 23 December 1997 to 27 May 1998, Mr Porter was a director.
At the time of the critical general meeting on 23 January 1998, the directors were Mr Corp, Mr Smith, Mr Ruane, Mr Bevan, and Mr Porter.
Mr Corp and Mr Smith both resigned as directors with effect from 27 May 1998.
2.2 The Defendant companies and other entities relevant to them
2.2.1 Davenrite UK
On 25 November 1986, Davenrite Ltd (Davenrite UK) was incorporated in England and Wales.[14]
[14] Exhibit 1/P00154804.
Some time after incorporation of Davenrite UK,
(i)the two nominee shareholders in Davenrite UK became Denich Limited (Denich) and Monicent Limited (Monicent);
(ii)Ciaga Investments Limited (Ciaga Investments) and Perivale Holdings Limited (Perivale Holdings) were the directors of Davenrite UK; and
(iii)the company secretary became Cardew Secretaries Limited (Cardew Secretaries).
Davenrite UK was dissolved on 10 May 1994.
2.2.2 Davenrite
On 11 June 1993 Bush Garden Properties Inc was incorporated in the British Virgin Islands.
On 16 August 1993, Bush Garden Properties Inc changed its name to Davenrite Limited (Davenrite).
The following information about Davenrite was not in dispute:
(i)Davenrite is a company able to issue bearer shares. Loftus Nominees Limited in Jersey was the registered holder of one share in Davenrite;
(ii)the registered office and agent of Davenrite was in the British Virgin Islands;
(iii)Ciaga Investments and Perivale Holdings were the corporate directors of Davenrite, and Cardew Securities Ltd was the company secretary, from Davenrite's formation until 14 June 1999;
(iv)from 14 June 1999, the directors were Mr Norway, Mr Cornwall and Mr Harman. They were also the directors of Atticus Trust Ltd; and
(v)from 14 June 1999, Atticus Trust Company Limited became the company secretary of Davenrite.
2.2.3 Happle
On 8 July 1991, Happle Limited (Happle) was incorporated in Gibraltar as a private company limited by shares.[15]
[15] Exhibit 1/P00132762.
The following facts relevant to Happle were not in dispute:
(i)the registered office of Happle was in Gibraltar;
(ii)the two nominee shareholders of Happle were Ciaga Investments and Perivale Holdings;
(iii)Ciaga Investments and Valdir Managers Limited were the corporate directors;
(iv)On 4 February 2002, Messrs Norway, Cornwall and Harman were appointed as directors of Happle;
(v)Finsbury Secretaries Limited of Suites 7B and 8B 50 Town Range, Gibraltar was at all material times the company secretary of Happle; and
(vi)Cardew Secretaries was assistant company secretary of Happle from its formation until 14 June 1999, when Atticus Trust Company Limited was appointed as assistant company secretary.
2.2.4 Courtenay
Courtenay Investments Ltd (Courtenay) was incorporated in British Virgin Islands on 2 February 1995.
The following facts about Courtenay were not in dispute:
(i)the registered office and agent of Courtenay was in the British Virgin Islands;
(ii)from the formation of Courtenay until 14 June 1999, Ciaga Investments was the director of Courtenay and Cardew Secretaries was the company secretary;
(iii)from 14 June 1999, Atticus Trust Company Limited became the company secretary and Messrs Norway, Cornwall and Harman became directors; and
(iv)Ciaga Investments was the sole registered shareholder of Courtenay from its formation up until 2 August 2001 when Loftus Nominees Limited in Liberia became the registered shareholder of Courtenay.
2.2.5 Abacus
On 29 June 1987, Abacus London Limited (Abacus) was incorporated in England and Wales. It operated an accountancy practice.
The registered office of Abacus was in London from 1991 until 1998.
At all times, Ms Susan Joan Wickerson has been the sole director of Abacus.
At all times, Ms Dawn Dodd was a company secretary of Abacus.
Abacus caused the incorporation of the defendant companies (Davenrite, Courtenay, and Happle) and provided them with accountancy and other services.
2.2.6 Hallmark Gold NL
As at January 1998, Hallmark Gold NL (HLM) was a shareholder of WSM. Mr Corp and Mr Smith were directors of HLM. As such HLM was a related party of Mr Corp and a related party of Mr Smith.
The Defendant companies say these matters are not relevant to the issues in the proceedings.
2.2.7 BMS Consultants Pty Ltd (and its agreement with WSM)
BMS Consultants Pty Ltd (BMS) was incorporated in Western Australia on 30 May 1985 and deregistered on 15 December 1999.
The share structure of BMS was 20 fully paid ordinary shares. Mr Corp held 9 shares. Mr Smith and his wife held the balance of the shares.
Mr Corp was a director of BMS for the period 19 August 1985 to 15 December 1999. Mr Corp was the company secretary of BMS for the period 22 January 1988 to 15 December 1999. Mr Smith was a director of BMS for the period 24 June 1985 to 15 December 1999.
From 1987 to 1998, WSM retained BMS to provide management and office administration services to WSM.
On 1 September 1991, WSM and BMS signed a Management Agreement for 4 years. The Management Agreement required BMS to provide management and office administration services to WSM. This Agreement was extended to expire on 1 September 1999.
In the year to 31 May 1996 under the Management Agreement WSM paid to BMS (i) $90,000 for management fees, and (ii) $93,531 for office administration fees. Similar, albeit in some cases slightly lower amounts, were paid by WSM to BMS under the Management Agreement for the same purposes in the years 1991 to 1998.
As at the date of the general meeting of WSM on 23 January 1998, BMS was contracted by WSM until 1 September 1999.
Around 27 May 1998, when Mr Corp and Mr Smith resigned as directors of WSM, WSM terminated the Management Agreement, and paid BMS the sum of $225,000, in satisfaction of the amount BMS was entitled to receive, and would have received, under the Management Agreement in the period from the date of termination to 1 September 1999, had WSM not terminated the Management Agreement prior to that date.
2.3 Mr Corp's declared interest in WSM
On 23 December 1997, Mr Corp gave a signed Notice (Form 603) under the Corporations Law,[16] to the Manager of the Australian Stock Exchange Limited. In the notice Mr Corp declared a substantial shareholding in WSM of
(i)2,424,722 shares held in the name of Ecrofete Pty Ltd, and
(ii)200,000 shares held in the name of Claw Pty Ltd.
[16] Corporations Law s 709(3).
No other shareholding was declared.
2.4 The General Meeting of WSM on 23 January 1998
On or about 2 January 1998 a 'Notice of General Meeting & Proxy Form' was distributed by WSM to its shareholders. The notice of general meeting was signed by Mr Corp as managing director of WSM. It was dated 2 January 1998.[17]
[17] Joint statement of facts, issues and contentions, 18 November 2014 [27].
As I have explained, the directors of WSM at that time were Mr Corp, Mr Smith, Mr Ruane, Mr Bevan, and Mr Porter.
The 2 January 1998 notice of General Meeting said, in part: [18]
[18] Joint statement of facts, issues and contentions, 18 November 2014 [28].
Notice is hereby given that a General Meeting of the Shareholders of Welcome Stranger Mining Company NL will be held at Unit 2, 1050 Hay Street, West Perth, Western Australia, on Friday 23 January 1998, at 10.00am.
BUSINESS
[...]
RESOLUTION 2- REMOVAL OF DIRECTOR
To consider and, if thought fit, to pass the following as an ordinary resolution:
That pursuant to and in accordance with the Company's Articles of Association, Brian Millwood Smith be and is hereby removed from office as a director of the Company.
RESOLUTION 3- REMOVAL OF DIRECTOR
To consider and, if thought fit, to pass the following as an ordinary resolution:
That pursuant to and in accordance with the Company's Articles of Association, Stuart Adrian Corp be and is hereby removed from office as a director of the Company.
[...]
Around 9 January 1998, Mr Smith arranged to send documentation relating to WSM's 23 January 1998 general meeting to all significant shareholders of WSM. Mr Smith asked for 'support in respect of the resolutions and voting against the removal as a director of B M Smith and A S Corp'. Mr Smith also noted that 'proxies need to be lodged in Perth by 21 January 1998'.[19]
[19] Joint statement of facts, issues and contentions, 18 November 2014 [31].
At the WSM general meeting on 23 January 1998 there were 23,351,570 votes cast for resolutions 2 and 3. There were 23,489,738 votes cast against resolutions 2 and 3. Hence, the resolutions were defeated and Mr Corp and Mr Smith remained directors of WSM after the meeting.
At the time of the general meeting on 23 January 1998, the defendant companies (Davenrite, Happle and Courtenay) 'held shares' (or, more accurately, had an equitable interest in shares) in WSM through Australian nominee companies National Nominees Limited and ANZ Nominees Limited.
At the general meeting:
(i)National Nominees Limited voted against resolutions 2 and 3 in respect of 4,166,250 shares held for Davenrite and 600,000 shares held on behalf of Courtenay; and
(ii)ANZ Nominees Limited voted against resolutions 2 and 3 in respect of 2,195,000 shares held on behalf of Happle.
The outcomes of the resolutions are summarised in Appendices 1 to 4 which follow these reasons. As those Appendices show, the votes of National Nominees and ANZ Nominees on behalf of Davenrite, Courtenay, and Happle, were essential for the defeat of the resolutions in relation to Mr Corp and Mr Smith.
As I explain at [81], on 4 June 1998 a freezing order was executed against the shares in WSM 'beneficially held' by the defendant companies, which had been voted by National Nominees and ANZ Nominees at the 23 January 1998 meeting. The shares were subsequently sold and the proceeds (including interest) held by the Official Trustee was $1,007,593.04 as at 1 May 2013.
3. The process by which ANZ Nominees and National Nominees voted on 23 January 1998: documentary evidence
In this section, I describe the documentary evidence concerning the chain of instructions for the voting of the WSM shares by National Nominees and ANZ Nominees.
In summary, National Nominees and ANZ Nominees voted the defendant companies' shareholdings in WSM by lodging proxies with the chairman, Mr Smith. National Nominees and ANZ Nominees received their instructions from stockbrokers. The stockbrokers received their instructions from Ciaga Investments (the corporate director of the defendant companies) by its director, Mr Norway. Ciaga Investments received its instructions from Ms Wickerson. As I explain later in these reasons, the focus of argument at this application was whether Ms Wickerson was accustomed to receive directions or instructions from Mr Corp.
National Nominees (for Davenrite and Courtenay)[20] and ANZ Nominees (for Happle)[21] lodged their proxies (which included, but were not limited to, the shares held by the defendant companies) against the removal of Mr Corp and Mr Smith with the chairman of the meeting. The chairman was Mr Smith.[22]
[20] Exhibit 1/P00117257; Exhibit 1/P00117259.
[21] Exhibit 1/P00117255; Exhibit 1/P00117256.
[22] Exhibit D9; Exhibit 1/P00154908.
It appears from the documentary exhibits that the 23 January 1998 votes of National Nominees and ANZ Nominees were conveyed to WSM through stockbrokers, Kas[23] (for the 4,166,250 shares held by Davenrite and the 600,000 shares held by Courtenay), and Carr Sheppards[24] (for the 2,195,000 shares held by Happle).
[23] Exhibit 1/P00188307.
[24] Exhibit 1/P00151697.
In turn, Kas[25] and Carr Sheppards,[26] had received their completed proxies from Ciaga Investments (the corporate director of each defendant company). For instance, a 9 January 1998 letter from Ciaga Investments, apparently signed by Mr Norway, was sent to Mr Rowe at Carr Sheppards attaching a proxy form for the WSM Annual General Meeting.[27]
[25] Exhibit 1/P00109544 (Davenrite, 9 January 1998).
[26] Exhibit 1/P00188393 (Happle, 9 January 1998).
[27] Exhibit 1/P00109045.
In turn, Ciaga Investments (and Mr Norway as its director) had received its instructions from Ms Wickerson.
A 9 January 1998 facsimile from Ms Wickerson at Abacus to Mr Norway at Atticus had attached letters and proxy forms in relation to Davenrite and Happle to sign and fax to Adams & Neville and Carr Sheppards respectively.[28]
[28] Exhibit 1/P00132957.
4. Procedural background to the forfeiture and exclusion applications
This section of my reasons sets out the procedural background to these proceedings before I discuss in detail the events leading up to, and including, the general meeting of WSM on 23 January 1998 which gave rise to the alleged offence which underlies these proceedings.
On 4 June 1998, the Australian Securities Commission (ASC) executed freezing orders under s 73 of the Australian Securities Commission Act 1989 (Cth) over the following shares in WSM:
(i)4,766,250 shares held by National Nominees Ltd, 4,166,250 of which were held on behalf of Davenrite Ltd and 600,000 of which were held on behalf of Courtenay Investments Ltd; and
(ii)2,195,000 shares held by ANZ Nominees Ltd on behalf of Happle Ltd.
In May to June 1999, the freezing orders were varied to allow the shares to be sold and the proceeds to be deposited into an ASIC trust account.
On 5 January 2004, a restraining order was made by the District Court of Western Australia under s 17 of the Proceeds of Crime Act. The restraining order was based on charges to be laid against Mr Corp.
On 6 January 2004, Mr Corp was charged with a number of offences including count 32A which broadly concerned a failure to act honestly in the exercise of his powers and the discharge of his duties of office.[29]
[29] Joint statement of facts, issues and contentions, 18 November 2014 [66], [67].
In 2007, Mr Corp and Mr Smith stood trial on various counts, including count 32A, before His Honour Judge Fenbury and a jury in the District Court of Western Australia in IND 1421of 2004.
On 4 October 2007, Mr Corp was convicted of offences including count 32A.
On 5 October 2007, a conviction based forfeiture application was made in the criminal proceedings, relying on s 48(2) of the Proceeds of Crime Act. Because Mr Corp had commenced an appeal against conviction the forfeiture application was not progressed.
On 17 June 2008, the Court of Appeal delivered a decision quashing Mr Corp's conviction on all counts, and ordering a retrial on various counts including count 32A.[30]
[30] Smith v The Queen [2008] WASCA 128; (2008) 37 WAR 297.
On 22 August 2008, the Commonwealth Director of Public Prosecutions discontinued the indictment against Mr Corp in respect of all counts including count 32A.
On 19 February 2010, amendments to the Proceeds of Crime Act came into effect. The amendments permitted forfeiture of property where no conviction had been recorded.
On 23 April 2010, this forfeiture action was commenced by originating summons filed on behalf of the Commonwealth Director of Public Prosecutions in the District Court of Western Australia.
On 24 May 2010, orders made by Judge Sweeney requiring the funds which had been frozen to be paid to the defendant companies were stayed until further order.
On 10 June 2010, the Acting Chief Judge of the District Court of Western Australia made an order against the defendant companies under s 19 of the Proceeds of Crime Act restraining the property (the money held by the Official Trustee).
On 10 December 2010, the defendant companies brought an application for exclusion in the District Court of Western Australia. In their application they sought an order that the money held by the Official Trustee be excluded from the forfeiture order.
On 30 March 2012, by notice filed under s 315B of the Proceeds of Crime Act the Commissioner advised that responsibility for the action had been transferred to him. The Commissioner subsequently replaced the Commonwealth Director of Public Prosecutions as the applicant.
On 4 September 2012, Master Sanderson ordered that the proceeding be remitted to this Court.
On 5 November 2012, this matter was admitted to my CMC list.
On 7 November 2013, Mr Corp was removed as a party from the proceeding following a contested application.[31]
[31] Commissioner of the Australian Federal Police v Courtenay Investments Ltd [2013] WASC 396.
On 25 February 2014, I heard submissions concerning a preliminary issue which was the meaning of the words 'the person' in s 64(2) of the Proceeds of Crime Act. I accepted the submissions of the Commissioner that 'the person' is the person who is alleged to have committed the underlying offence. This meant that on the forfeiture application the court had the power to 'have regard to the transcript of any proceeding against [Mr Corp] for an offence that constitutes unlawful activity; and the evidence given in any such proceeding'.[32]
[32] Commissioner of the Australian Federal Police v Courtenay Investments Ltd [No 2] [2014] WASC 55 [2].
On 23 October 2014, I heard submissions concerning a preliminary issue about whether s 64(2) of the Proceeds of Crime Act means that the defendant companies could not object, other than on relevance grounds, to parts of transcript or evidence from Mr Corp's criminal proceeding being received into evidence in relation to forfeiture proceedings. I accepted the submissions of the Commissioner that s 64(2) has that effect.[33]
[33] Commissioner of the Australian Federal Police v Courtenay Investments Ltd [No 3] [2014] WASC 383.
On 2 and 3 December 2014, these forfeiture and exclusion applications were heard. The Commissioner called no witnesses and provided no affidavit evidence. The Commissioner chose to rely only upon the evidence and transcript from Mr Corp's criminal trial. The defendant companies did likewise.
5. Preliminary legal issues concerning the applications
There are three preliminary issues that arise in relation to the applications:
(i)the meaning of an exclusion 'application';
(ii)the validity of the exclusion application; and
(iii)leave to bring the exclusion application.
5.1 The first preliminary issue: the meaning of an exclusion 'application'
Section 317 of the Proceeds of Crime Act requires the Commissioner to prove, on the balance of probabilities, the matters necessary to establish the grounds for making a forfeiture order.
The relevant parts of s 49(1) provide that
(1)A court with proceeds jurisdiction must make an order that property specified in the order is forfeited to the Commonwealth if:
(a)the responsible authority for a restraining order under section 19 that covers the property applies for an order under this subsection; and
(b)the restraining order has been in force for at least 6 months; and
(c)the court is satisfied that one or more of the following applies:
(i)the property is proceeds of one or more indictable offences;
(ii)the property is proceeds of one or more foreign indictable offences;
(iii)the property is proceeds of one or more indictable offences of Commonwealth concern;
(iv)the property is an instrument of one or more serious offences
(e)the court is satisfied that the authority has taken reasonable steps to identify and notify persons with an interest in the property.
In the statement of agreed facts, issues, and contentions, the parties agreed that the matters which the Commissioner must prove to establish grounds for making a forfeiture order were the following (which corresponded to matters required by definitions of the elements in s 49(1)(c)(iv) above):[34]
(i)that Mr Corp committed the alleged offence;
(ii)that the alleged offence was a serious offence within the meaning of s 338 of the Proceeds of Crime Act; and
(iii)that if the offence were committed by Mr Corp, and if the offence were a serious offence, that the shares in Davenrite, Courtenay, and Happle were an 'instrument of an offence' within the meaning of s 329 of the Proceeds of Crime Act.
[34] Joint statement of facts, issues and contentions, 18 November 2014 [64].
The position changed in the Commissioner's written submissions shortly before the application.
In written submissions, the Commissioner submitted that he was not required to prove any of (i), (ii), or (iii) in par [105] above. The Commissioner relied upon s 49(3) which provides that s 49(1)(c) does not apply if the court is satisfied that:
(a)no application has been made under Division 3 of Part 2-1 for the property to be excluded from the restraining order; or
(b)any such application that has been made has been withdrawn.
The Commissioner submitted that there was an issue concerning 'what constitutes an "application" [for exclusion] under s 49(3)'.[35] That issue was said to be whether[36]
any person (including a non-party to the proceedings) can merely file an exclusion application, even one without merit or based on any reasonable grounds, and without any intent of actually pursuing that application, to trigger s 49(3) (which places an additional onus on the responsible authority at the time of forfeiture).
[35] Submissions of the Commissioner, 18 November 2014 [12].
[36] Submissions of the Commissioner, 18 November 2014 [65].
I do not accept either that this issue arises, or that it should be determined in favour of the Commissioner, for seven reasons.
First, the exclusion application was brought on 10 December 2010. But it appears that the first time that this issue was raised was nearly four years later, on 18 November 2014, in the Commissioner's written submissions. Even then, on the same day, the parties had filed a joint statement of facts and issues (which was agreed would be the equivalent of pleadings)[37] where the parties agreed that the exclusion application raised no separate issues for consideration from those raised by the forfeiture application.[38]
[37] ts 196 (27 August 2014).
[38] Joint statement of facts, issues and contentions, 18 November 2014 [5].
It was too late for the Commissioner to allege, on 18 November 2014, very shortly before the application, that the defendant companies had no intention of actually pursuing their exclusion application or that it had no merit or reasonable grounds to support it. The introduction of this point after more than 4 years, and very close to the hearing of the application, deprived the defendant companies of a proper prospect of formulating grounds and adducing evidence to address the submission.
The defendant companies' evidence was required to have been filed by 7 May 2014.[39] Forensic decisions concerning the conduct of the case, such as which witnesses would give evidence, would have been made at least seven months before the Commissioner raised this allegation.
[39] Order 1, 30 April 2014.
Secondly, the Commissioner's submission on the meaning of 'application' in s 49(3) was based on a false premise. That premise was that unless 'application' is given more content than 'a mere initiating process' then a person could make an exclusion application, without any merit, and put the Commissioner to proof of the elements of s 49(3).
This premise is flawed. If the Commissioner had formed the view at any time in the previous four years that the exclusion application had no merit, or was not based on any reasonable grounds, or was brought without any intent of actually being pursued, then the obvious course would have been to apply to the Court for the exclusion application to be heard before the forfeiture application.
Section 73(1) of the Proceeds of Crime Act contemplates the possibility of an exclusion application being heard before a forfeiture application in respect of the same property. The defendant companies, as applicants for exclusion, would then bear the onus of proving that the property can be excluded (s 317).
If there were a real prospect that the exclusion application had no merit, or was based on no reasonable grounds, or was not intended to be pursued, then it is likely that the court would have allowed the Commissioner's application for the exclusion application to be heard before the forfeiture application.
If the exclusion application were dismissed then it is arguable that the Commissioner would not then have been required to prove the elements in s 49(1)(c) of the Proceeds of Crime Act. Whether the Commissioner would be required to prove those elements would depend upon whether the dismissal of an exclusion application is a circumstance within s 49(3)(a) ('... the court is satisfied that no application has been made ...').
There is a good argument that a dismissed exclusion application would fall within s 49(3)(a). This argument would require the words 'no application has been made' to be construed to mean that no extant application has been made. The Explanatory Memorandum that accompanied the Proceeds of Crime Bill 2002 (Cth) described the concern of cl 49 as involving circumstances which include where 'no application for exclusion from restraint has been made or is on foot'.[40] However, in the absence of any considered submissions on this point I do not need to decide it, and I do not decide it.
[40] Proceeds of Crime Bill 2002 (Cth) Explanatory Memorandum (House of Representatives), page 24. Compare Proceeds of Crime Bill 2002 (Cth) Revised Explanatory Memorandum (Senate), pages 31 - 32.
Thirdly, there is a difficulty with the Commissioner's submission that the defendant companies had no intention of pursuing their exclusion application because they led no evidence concerning their interest in the property.
In order to succeed on an application for exclusion under s 29(2)(d), the defendant companies would need to prove that:
(i)the property was not proceeds of an indictable offence (s 29(2)(d)(i)),
(ii)the property was not an instrument of any serious offence (s 29(2)(d)(ii)), and
(iii)there is a specified interest in the property which the applicant claims (s 31(1)).
Senior counsel for the Commissioner accepted that in the exclusion application the defendant companies might rely on the same legal arguments in relation to (i) and (ii) as they made on the forfeiture application.[41] Those legal arguments, if correct, would negate the basis upon which the Commissioner said, in discharge of an evidentiary onus,[42] that the shares were the instrument of a serious offence. But senior counsel for the Commissioner submitted that there was no evidence that the defendant companies could lead to establish point (iii).
[41] ts 263 - 264 (2 December 2014).
[42] DPP (Cth) v Jeffery (1992) 58 A Crim R 310, 314 (Hunt CJ at CL).
In other words, senior counsel for the Commissioner was submitting that the defendant companies could never establish that they had an interest in the property. She asserted that this would have required the defendant companies to call oral evidence, presumably through Mr Corp.[43]
[43] ts 264 (2 December 2014).
Senior counsel's assumption seemed to be that it would not be sufficient for the defendant companies to establish that they had an interest in the WSM shares (and, therefore, the proceeds of sale) because the WSM shares were held by nominees for the defendant companies. The assumption seemed to be that it would be necessary for the defendant companies to establish that they had the ultimate beneficial interest. I have serious doubt about this assumption. If a person is a trustee, or sub‑trustee, of valuable rights then the interest that the person has as trustee or sub-trustee is a real and substantial interest. Nor does a sub‑trustee 'drop out' merely because the sub-trustee holds rights for the benefit of another (as, for instance, where ANZ Nominees and National Nominees hold WSM shares for the defendant companies, who hold them for another party).[44]
[44] Nelson v Greening & Sykes (Builders) Ltd [2007] EWCA Civ 1358 [54] - [57] (Collins LJ; Wall & Ward LJJ agreeing).
Another difficulty with the Commissioner's submission is the assumption that the defendant companies (as applicants for exclusion) are required to prove that they have a specified interest in property and not merely that they claim a specified interest.
It is not necessary to determine the nature of what the applicants for exclusion were required to prove in relation to (iii), save to say that the absence of submissions on this point illustrates the difficulty in maintaining a late submission that the applicants for exclusion had no intention of pursuing the exclusion application.
Fourthly, I do not accept the oral submission by senior counsel for the Commissioner that the defendant companies had no intention of pursuing their application because no evidence was led by the defendant companies from Mr Corp.
Senior counsel for the Commissioner submitted that[45]
the fact ... that no evidence has been put on here that could possibly satisfy an exclusion, and in the context of this matter, it was obvious there could never be any evidence that could satisfy it.
[45] ts 259 (2 December 2014).
The failure by the defendant companies to lead evidence that could establish each of (i), (ii), and (iii) in par [120] above does not mean that there could never have been evidence led to satisfy those matters.
The exclusion applications were brought on the basis that they need not be determined if the Commissioner succeeded on the forfeiture application. As I have explained, it was an agreed fact that the exclusion application raised no separate issue for consideration.[46] It is pure conjecture to attempt to surmise how the defendant companies might have run their case if the applications had not proceeded in this way. This is particularly so because the defendant companies were required to provide their evidence before the Commissioner had suggested that the exclusion application might raise new issues.
[46] Joint statement of facts, issues and contentions, 18 November 2014 [5].
As I explain later in these reasons, it may be that at the relevant times the WSM shares were bona vacantia. No submissions were made on this issue and no evidence was led on it. Before such a conclusion could be reached there are a number of issues that would need to be explored in submissions and evidence. The lack of submissions and evidence sufficient to reach a confident conclusion that the WSM shares are bona vacantia also militates against a conclusion that the failure by the defendant companies to call Mr Corp evinced an intention not to pursue the exclusion applications.
Fifthly, there is a further obstacle to the Commissioner's submission that the application for exclusion should be treated as having been brought without an intention of being pursued because the applicants provided no evidence to support the assertion of an interest in the property. The defendant companies did provide evidence in support of their alleged interest.
Exhibit D19 was a declaration made in the District Court of Western Australia under s 39(1)(e)(ii) of the Proceeds of Crime Act that each defendant had a specified interest in the property. That section empowers the court to make 'an order determining any question relating to the property, including a question relating to the liabilities of the owner ...'.
Senior counsel for the Commissioner submitted that the order of the District Court of Western Australia was not a sufficient interest for the purposes of the Proceeds of Crime Act because it had not been determined on the merits. She submitted that it was necessary for the defendant companies to go behind that order to establish their interest.[47]
[47] ts 268 (2 December 2014).
It is not necessary to determine in this case whether it is necessary to go behind the court order to determine whether the applicants have a specified interest in property which they claim. It suffices to say that it is sufficiently arguable that an 'interest in property' should not be read narrowly to exclude that (possibly defeasible) interest arising from a court declaration of right. The arguability of this point is fatal for the Commissioner's submission that the applicants had no intention of pursuing their exclusion application.
The reason why it is sufficiently arguable that an interest in property should not be read narrowly is because s 338 defines an 'interest' in property as (a) a legal or equitable estate or interest in the property or thing; or (b) a right, power or privilege in connection with the property or thing; whether present or future and whether vested or contingent. The defendant companies' interest arising from the District Court order might not have been subject to a hearing on the merits, and it might be a contingent or defeasible interest, but it is, at the very least, sufficient to establish an arguable case for a sufficient interest under s 29.
Sixthly, to the extent that the Commissioner's submission concerned the meaning of 'application' beyond the filing of an initiating process, then the Commissioner failed to identify what the precise content of 'application' should be. Should it be an application 'with some merit'? Should it be an application 'based on reasonable grounds'? Should it be an application made with an 'intent of actually pursuing that application'? Should it be all of the above?
In The Pilbara Infrastructure Pty Ltd v Brockman,[48] I considered similar problems of statutory construction in relation to a submission that a reference to 'proposal' in the Railways (Access) Code 2000 (WA) meant a 'genuine' proposal. In addition to the difficulty in determining the content of 'genuine',[49] the issue of construction raises the question of whether the alleged additional requirements were to be found as a matter of implication and, if so, whether this is permissible on the established approach to implication of terms into a statutory provision.[50]
[48] The Pilbara Infrastructure Pty Ltd v Brockman [No 2] [2014] WASC 345 [137] - [146], [212] - [216].
[49] See also the comments of Hayne J in Commissioner of Federal Police v Zhao [2014] HCA Trans 274, 22 ‑ 24.
[50] Taylor v Owners - Strata Plan No 11564 [2014] HCA 9; (2014) 306 ALR 547, 557 [37] - [38] (French CJ, Crennan & Bell JJ).
Seventhly, to the extent that the Commissioner's submission that the Proceeds of Crime Act does not permit a person to trigger s 49(3) merely by filing an exclusion application was something more than a submission about the meaning of the word 'application', then the submission resembled one of abuse of process. In Williams v Spautz,[51] Mason CJ, Dawson, Toohey and McHugh JJ described an abuse of process in this way:
when the purpose of bringing the proceedings is not to prosecute them to a conclusion but to use them as a means of obtaining some advantage for which they are not designed or some collateral advantage beyond what the law offers. So, in Dowling [v Colonial Mutual Assurance Society],[52] Isaacs J pointed out that 'if, for instance, it had been shown that the Society had simply threatened Dowling that unless he did what they had no right to demand from him, namely, give up certain names, they would proceed to sequestration, and they had proceeded accordingly, there would have been in law an abuse of the process'.
[51] Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509, 526 - 527.
[52] Dowling v Colonial Mutual Assurance Society [1915] HCA 56; (1915) 20 CLR 509, 524.
The decision in Dowling concerned bankruptcy proceedings brought by the Society against Dowling in order to ascertain by an examination the identity of the person behind Dowling's publication of defamatory material.
Although the Commissioner's submission resembled one of abuse of process, this was never raised directly. If it had been, it may have been necessary for evidence to be led, and submissions to be made, concerning the collateral advantage allegedly sought by the applicants for exclusion and the reason why that collateral advantage was beyond the scope of the legislation.
For these seven reasons, the Commissioner's submissions on the first preliminary issue should not be accepted.
5.2 The second preliminary issue: the validity of the exclusion application
At the conclusion of the hearing, senior counsel for the Commissioner raised the possibility that the exclusion application was invalid because it did not comply with s 31(4) of the Proceeds of Crime Act.
Section 31(4) of the Proceeds of Crime Act provides that an applicant for exclusion 'must give written notice to the responsible authority of both the application and the grounds on which the exclusion is sought'.
In oral submissions in reply, senior counsel for the Commissioner submitted that the defendant companies had not provided any grounds for their application for exclusion. She said that this meant that there was no extant exclusion application for the purposes of s 49(3) of the Proceeds of Crime Act.
Ultimately this point was not pressed by the Commissioner. Senior counsel for the Commissioner accepted that this was not a point upon which the Commissioner relied for the resolution of this case.[53] That was an appropriate concession to make for three reasons.
[53] ts 429 (3 December 2014).
First, s 31(6) provides that the Commissioner (as the responsible authority here) must give the applicant for exclusion 'notice of any grounds on which it proposes to contest the application'. There may be a question whether the defendant companies were given notice that the application would be contested on the ground that it failed to comply with s 31(4). It is difficult to see that a submission in reply at the conclusion of the hearing is notice.
Although, in written submissions, the Commissioner had relied upon s 31(4) and the asserted absence of 'grounds', this was in the context of submissions concerning a different point upon which the Commissioner contested the application, namely the first preliminary issue (the meaning of 'application').[54]
[54] Submissions of the Commissioner, 18 November 2014 [64], [68].
Secondly, if this point had been pressed then it might have been necessary for evidence to be provided concerning whether grounds had been sought by the Commissioner either informally from the defendant companies or formally from the Court.
Thirdly, if this point had been pressed then it might have been necessary to hear legal submissions concerning whether the meaning of 'application' in s 31(4) is independent of the meaning of 'grounds'. On one view, a loose comparison might be made between (i) the application and the grounds referred to in s 31(4), and (ii) a writ or originating process and a pleading of supporting facts. The failure to provide a pleading would not invalidate the originating process.
Subsequent to the hearing, the solicitors for the defendant companies sent to the Court, and to the Commissioner, a copy of the transcript of the proceedings in the High Court of Australia in Commissioner of Federal Police v Zhao.[55] One of the issues agitated in that hearing was whether an 'application' under the Proceeds of Crime Act requires grounds to be provided. In oral argument, several judges identified difficulties with that submission which the Commissioner would have needed to address.[56]
5.3 The third preliminary issue: leave to bring the exclusion application
[55] Commissioner of Federal Police v Zhao [2014] HCA Trans 274.
[56] Commissioner of Federal Police v Zhao [2014] HCA Trans 274, 21 - 25.
The Commissioner submitted that leave was required for the exclusion application to be brought by the defendant companies.
Section 31(2) of the Proceeds of Crime Act provides that
... unless the court gives leave, the person cannot apply [for an exclusion order] if he or she:
(a)was notified of the application for the restraining order, but did not appear at the hearing of that application; or
(b)appeared at the hearing of that application.
No substantial submission was made about any of the criteria for leave. In circumstances in which the issue of leave had not been raised by either party for several years, the Commissioner did not oppose leave being granted for the defendant companies to bring the exclusion application.[57] The defendant companies did not concede that leave was required.
[57] ts 253 (2 December 2014).
If leave is required I would grant it under s 31(3)(c) on the basis that I am satisfied that the delay of four years before this issue was raised is 'other special grounds for granting the leave'.
6. Requirements for forfeiture under s 49
The relevant terms of s 49 of the Proceeds of Crime Act are set out above at [104].
It is an agreed fact that s 49(1)(a) and s 49(1)(b) are satisfied.[58] It is also common ground that amendments to the Proceeds of Crime Act that removed the 6‑year time limit for commencement of the action and introduced the confiscation of instruments of serious offences, are applicable to the forfeiture application.[59]
[58] Joint statement of facts, issues and contentions, 18 November 2014 [60].
[59] Joint statement of facts, issues and contentions, 18 November 2014 [57].
The Commissioner was required to 'take reasonable steps to identify and notify persons with an interest in the property'.[60] It was not alleged that the Commissioner had failed to do so. In particular,[61] the predecessor applicant to the Commissioner gave notice of the application to the parties listed on the face of the originating summons (Mr Corp, Davenrite, Mr Alec Pereira, Happle, Mr John Rump, and Ms Susan Wickerson) and although it had no means of contacting Courtenay, one of the notified parties contacted Courtenay which was also joined as a party. Further, the defendant companies claim to be the owners of the property and they all took active part in the application, instructed by Mr Corp.[62] They did not suggest that any other party had an interest in the property.
[60] Proceeds of Crime Act 2002 (Cth) s 49(1)(e).
[61] Joint statement of facts, issues and contentions, 18 November 2014 [71].
[62] Joint statement of facts, issues and contentions, 18 November 2014 [54A], [71A].
The sub-section of s 49(1)(c) upon which the Commissioner relied is s 49(1)(c)(iv). That subsection requires that 'the property is an instrument of one or more serious offences'. Therefore, it is common ground in this case that this requires the Commissioner to prove[63] that:[64]
(i)an offence was committed (which the Commissioner alleges was an offence committed by Mr Corp);
(ii)the offence was a 'serious offence' within the meaning of s 338 of the Proceeds of Crime Act; and
(iii)the shares in WSM that were held by Davenrite, Courtenay and Happle were an instrument of the serious offence.
[63] Joint statement of facts, issues and contentions, 18 November 2014 [62]; Proceeds of Crime Act 2002 (Cth) s 317.
[64] Joint statement of facts, issues and contentions, 18 November 2014 [64].
7. The manner of assessing the evidence concerning each issue
7.1 Difficulties in relying upon transcript
As I have explained, following a preliminary hearing the Commissioner elected not to call any witnesses. The whole of the Commissioner's case relied upon transcript and evidence from the criminal trial of Mr Corp.[65]
[65] Commissioner of the Australian Federal Police v Courtenay Investments Ltd [No 2] [2014] WASC 55.
As I explained in a judgment following a preliminary hearing,[66] s 64 of the Proceeds of Crime Act requires the court to consider relevant transcript and evidence from the underlying criminal proceedings where that transcript and evidence is relied upon by the parties. But the court is not required to give any weight to that transcript or evidence, particularly if it involves matters of inadmissible evidence.[67]
[66] Commissioner of the Australian Federal Police v Courtenay Investments Ltd [No 3] [2014] WASC 383 [13] ‑ [17].
[67] Commissioner of the Australian Federal Police v Courtenay Investments Ltd [No 3] [2014] WASC 383 [18].
One serious difficulty arises in this application concerning the weight to be given to transcript and evidence. The difficulty is for the court to assess the weight that can be placed on the assessment of credibility of the key witness relied upon by the Commissioner, Ms Wickerson.
At the criminal trial of Mr Corp, the trial judge had instructed the jury that without Ms Wickerson the prosecution had no case against Mr Corp.[68] Unlike in the criminal trial, in this application Ms Wickerson was neither seen nor heard by the court.
[68] Trial ts 3339.
When this point was raised with senior counsel for the Commissioner, her response was that the evidence of Ms Wickerson from the criminal trial had been recorded.[69] Even assuming that the foreign recording of her evidence was a tendered exhibit at the District Court trial and is admissible under s 64 of the Proceeds of Crime Act, I explained to senior counsel that if the Commissioner wished to support its case by reference to the demeanour of Ms Wickerson then the Commissioner needed to identify those parts of the lengthy recording upon which it sought to rely and needed to permit the defendant companies to make any submissions about demeanour.[70] No tender of the recording was made.
[69] ts 289 - 290 (2 December 2014).
[70] ts 291 (2 December 2014).
As Gleeson CJ, Gummow and Kirby JJ held in Fox v Percy,[71] there are 'natural limitations' in the case of any proceeding which is wholly or substantially on the record. These limitations include the disadvantages in respect of the evaluation of witnesses' credibility. They include the absence of a 'feeling' of a case which the observer of the evidence may more fully experience. And, in an application such as this, where the court is not taken to all of the voluminous evidence from the trial, there is a limitation in the absence of an ability to measure the credibility of a witness in light of the full record as a whole.
[71] Fox v Percy [2003] HCA 22; (2003) 214 CLR 118, 125 - 126 [23].
The absence of seeing and hearing Ms Wickerson give evidence places an extremely significant constraint upon this Court in drawing conclusions, based upon her evidence, about the alleged dishonesty of Mr Corp. Not only was Ms Wickerson a person who was central to the proof of the offence against Mr Corp but her credibility was central to the trial. Ms Wickerson was a person who had admitted to preparing false documents and destroying and backdating documents which she said was on Mr Corp's instructions. She had also refused to provide information to the ASC until she had received a letter from the ASC informing her that she was not a target of its investigation.
For these reasons, I have approached the transcript of Ms Wickerson's evidence with extreme circumspection.
7.2 The Jones v Dunkel submission concerning the defendant companies' failure to call witnesses
The Commissioner relied upon the 'rule' in Jones v Dunkel[72] in relation to the failure of the defendant companies to call any witnesses, particularly Mr Corp. The rule does not apply in every case when a potential witness is not called. Instead, it applies only[73]
where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, [so that] the circumstance that the [party] disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference.
[72] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298.
[73] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, 312 (Menzies J); RPS v The Queen [2000] HCA 3; (2000) 199 CLR 620, 632 [26] (Gaudron ACJ, Gummow, Kirby & Hayne JJ).
Essentially, the submission on behalf of the Commissioner was that the failure of the defendant companies to call any witnesses was that 'the most natural inference is that the [defendant companies] feared to do so'.[74]
[74] The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239 [1022] (Owen J); Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389, 418 - 419 (Handley JA).
The rule only applies where a party is required to explain or contradict something. Evidence must be given of facts requiring an answer. However, matters that a party is required to explain or contradict depend on the issues in the case as thrown up in the pleadings and by the course of evidence in the case.[75] As four judges of the High Court explained in RPS v The Queen,[76]
in a civil trial there will very often be a reasonable expectation that a party would give or call relevant evidence. It will, therefore, be open in such a case to conclude that the failure of a party (or someone in that party's camp) to give evidence leads rationally to an inference that the evidence of that party or witness would not help the party's case.
[75] Schellenberg v Tunnel Holdings Pty Ltd [2000] HCA 18; (2000) 200 CLR 121, 143 [51] (Gleeson CJ & McHugh J) quoting Heydon JD, Cross on Evidence (6th Aust ed, 2000) [1215]. See also Heydon JD, Cross on Evidence (10th Aust ed, 2015) 40 - 41 [1215].
[76] RPS v The Queen [2000] HCA 3; (2000) 199 CLR 620, 632 [26] (Gaudron ACJ, Gummow, Kirby & Hayne JJ).
The rule does not apply to the failure by the defendant companies to call evidence in this case for three reasons.
First, the course of evidence in this application involved neither party calling any evidence other than the transcript and exhibits from Mr Corp's criminal trial. The Commissioner did not call any witnesses to give evidence of 'facts requiring an answer'. The only answers that were required were to any conclusions that might otherwise be drawn from the transcript and documentary evidence from Mr Corp's criminal trial.
Even on the assumption that the rule in Jones v Dunkel could be extended to an application such as this (where any inferences are drawn indirectly from the evidence from other proceedings), the conclusion that the opposing party would reasonably be expected to call a witness in response partly to the tender of transcript where no direct assessment of credibility can be made will not be as readily reached as cases where the evidence relied upon is direct.
Secondly, the decision not to call Mr Corp as a witness (although a witness statement of his evidence had been filed) may have been made quite late and in response to the Commissioner's decision not to call any witnesses. The decision by the Commissioner not to call any witnesses was made more than four years after this application was brought, and only a few months before trial. As late as 27 August 2014, the Commissioner had undertaken to call witnesses and to make them available to the defendant companies to be cross-examined.[77] Prior to that time, the Commissioner's position had been that[78]
We have made it very clear at all times ... that of course as a matter of fairness and natural justice, we concede the [defendant companies] who have never had an opportunity to challenge the Crown's witnesses ought to have such an opportunity.
[77] ts 187 - 188 (27 August 2014).
[78] ts 6 (21 February 2013).
The failure of the defendant companies to call Mr Corp as a witness must be assessed in light of the fact that not only did the Commissioner's stance mean that the defendant companies had no opportunity to cross‑examine Mr Corp's accusers, but that this opportunity had been withdrawn at a relatively late stage.
Thirdly, apart from legal submissions made by the defendant companies, the manner in which the defendant companies ran their case concerning the underlying facts was to focus heavily on an alternative submission that Mr Corp had divested himself of any interest in the WSM shares by the time of the 23 January 1998 general meeting. In that context, the underlying facts did not require an answer. The underlying facts provided some support for the defendant companies although ultimately I conclude below that Mr Corp nevertheless had a relevant interest in the WSM shares.
8. The first issue: was an offence committed?
8.1 The statutory provisions
The offence upon which the Commissioner relied was count 32A in the criminal trial of Mr Corp.[79]
[79] Joint statement of facts, issues and contentions, 18 November 2014 [67].
Count 32A provided as follows:[80]
On or about 23 January 1998 at Perth in the State of Western Australia, Stuart Adrian CORP did commit an offence against subsection 1317FA of the Corporations Law (as taken to be included in the Corporations Act 2001 (Cth) by section 1401 of that Act), in that being an officer of Welcome Stranger Mining Company NL, he knowingly contravened subsection 232(2) of the Corporations Law (as taken to be included in the Corporations Act 2001 (Cth) by section 1401 of that Act), in that he intentionally deceived Welcome Stranger Mining Company NL and its members, thereby failing to act honestly in the exercise of his powers and the discharge of his duties of office.
[80] Joint statement of facts, issues and contentions, 18 November 2014 [66], [67].
Section 232 of the Corporations Law, as at 23 January 1998, is set out below. That section is taken to be included in the Corporations Act 2001 (Cth) by the provision in s 1401 of the Corporations Act.
232. Duty and liability of officer of corporation
(1)In this section:
'officer', in relation to a corporation, means:
(a)a director, secretary or executive officer of the corporation;
(b)a receiver, or receiver and manager, of property of the corporation, or any other authorised person who enters into possession or assumes control of property of the corporation for the purpose of enforcing any charge;
(c)an administrator of the corporation;
(ca)an administrator of a deed of company arrangement executed by the corporation;
(d)a liquidator of the corporation; and
(e)a trustee or other person administering a compromise or arrangement made between the corporation and another person or other persons.
(2)An officer of a corporation shall at all times act honestly in the exercise of his or her powers and the discharge of the duties of his or her office.
...
(4A)A reference in subsection (2) or (4) to the exercise of powers, or the discharge of duties, of an officer of a corporation is a reference to the exercise of those powers, or the discharge of those duties:
(a)in any case--in this jurisdiction; or
(b)if the body is a local corporation--outside this jurisdiction; or
(c)otherwise--outside this jurisdiction but in connection with:
(i)the corporation carrying on business in this jurisdiction; or
(ii)an act that the corporation does, or proposes to do, in this jurisdiction; or
(iii)a decision by the corporation whether or not to do, or to refrain from doing, an act in this jurisdiction.
...
(6B)Subsections (2), (4), (5) and (6) are civil penalty provisions as defined by section 1317DA, so Part 9.4B provides for civil and criminal consequences of contravening any of them, or of being involved in a contravention of any of them.
(11)This section has effect in addition to, and not in derogation of, any rule of law relating to the duty or liability of a person by reason of the person's office or employment in relation to a corporation and does not prevent the institution of any civil proceedings in respect of a breach of such a duty or in respect of such a liability.
The issue in dispute is whether the WSM shares were 'used in, or in connection with, the commission of an offence'.
10.1 Two relevant authorities
Substantial and careful submissions were presented by all parties concerning the meaning of this expression in s 329(2) of the Proceeds of Crime Act. The parties provided close analyses of the authorities concerning similar provisions in similar legislation. But care must be taken before applying to the Proceeds of Crime Act the discussion of the meaning of similar expressions in different legislation even where the different legislation has similar purposes. Limited assistance can be gleaned from the meanings given to different expressions in different contexts.
Nevertheless, two cases, although concerned with different legislation, shed some light on the meaning of the phrase in s 329(2): 'property is used in, or in connection with, the commission of an offence'.
In Milne v The Queen,[300] Mr Milne was convicted under s 400.3(1) of the Criminal Code (Cth) of dealing with shares of more than $1 million in value in circumstances in which he intended that the shares 'will become an instrument of crime'. An 'instrument of crime' was defined in s 400.1(1) as arising 'if it is used in the commission of, or used to facilitate the commission of, an indictable offence'.
[300] Milne v The Queen [2014] HCA 4; (2014) 252 CLR 149.
A company of which Mr Milne was the sole director and shareholder exchanged a parcel of shares that the company held in Admerex Ltd for shares in a Swiss company which were held by offshore nominees. Mr Milne's intention was not to disclose the capital gain realised by the share exchange. This was an indictable offence. The question considered by the High Court of Australia was whether the Admerex shares upon which the capital gain was made could have been intended to be or become 'an instrument of crime'.
The essential question in Milne was could the shares be 'used in the commission of' or 'used to facilitate the commission of' an indictable offence? The High Court, in a joint judgment, held that they could not.
An argument made by the Crown in Milne was that the Admerex shares were 'used' by Mr Milne because he took advantage of circumstances created by the share swap in a way that would facilitate concealment of the capital gain. But the High Court held that this taking advantage did not involve an intended use of the Admerex shares.[301]
[301] Milne v The Queen [2014] HCA 4; (2014) 252 CLR 149, 165 [40].
Importantly, the section with which the High Court was concerned in Milne spoke of the use of property in the commission of, or to facilitate the commission of, an indictable offence. It did not speak of a use in connection with an offence. As Debelle J observed in Taylor v Attorney General (SA),[302] the 'expression "used in connection with" is an expression of very wide import. It requires no more than some relationship between the property and the prescribed offence in question'.
[302] Taylor v Attorney General (SA) (1991) 55 SASR 462, 471.
A case which illustrates the breadth of the words 'in connection with' is White v Director of Public Prosecutions for the State of Western Australia.[303]
[303] White v Director of Public Prosecutions for the State of Western Australia [2011] HCA 20; (2011) 243 CLR 478.
In White, Mr White committed murder. The murder was committed immediately outside the boundary of a fenced and gated property which Mr White leased. Mr White shot at the deceased five times while the deceased was inside the property. The deceased climbed over a locked gate to escape, but was fatally shot while on the ground outside the gate. The premises which Mr White leased were not available for confiscation. This meant that if they were 'crime used property' then a 'crime-used property substitution declaration' could be made. The question was whether the requirements of s 146(1)(c) and s 147 of the Criminal Property Confiscation Act 2000 (WA) had been met.
Section 146(1)(c) required that 'any act or omission was done, omitted to be done or facilitated in or on the property in connection with the commission of a confiscation offence'.
Section 147 provided that '... a person makes criminal use of property if the person, alone or with anyone else (who need not be identified) uses or intends to use the property in a way that brings the property within the definition of crime-used property'.
French CJ, Crennan and Bell JJ (with whom Gummow J agreed on this point) said that s 146(1)(c) 'has a broad application'. They continued:[304]
It covers cases in which acts or omissions were done or facilitated in or on the property in connection with the commission of a confiscation offence. On the face of it, the mere doing of an act in or on a property in connection with the commission of a confiscation offence, does not necessarily fit comfortably within the concept of use applied to property. The relevant ordinary meaning of the verb 'use' is to '[m]ake use of (a thing), esp. for a particular end or purpose; utilize, turn to account'. According to that ordinary meaning, 'use' would be a subset of the class of conduct described in s 146(1)(c). However, the relationship which the words 'in connection with' forge between 'act or omission done on the property' and 'the commission of a confiscation offence' suggests that even though it may involve an extension of the verb 'use', the conduct described in s 146(1)(c) can be brought within the meaning 'makes criminal use of property' in s 147, without doing violence to the language of the latter section. In this case, purpose and context favour that interpretation.
[304] White v Director of Public Prosecutions for the State of Western Australia [2011] HCA 20; (2011) 243 CLR 478, 487 ‑ 488 [21].
It is not necessary for the purposes of this application to consider the debate concerning whether the words 'in connection with' require a 'substantial' connection. I proceed on the same basis, enunciated by McLure P (Owen and Buss JJA agreeing) in the Court of Appeal in the context of the Western Australian legislation in White[305] that despite the width of the expression 'in connection with', 'having regard to the consequence of falling within the definition of crime-used, it is not sufficient if the relationship be merely tenuous and remote'.
10.2 The necessity to define the facts constituting the commission of an offence
[305] Director of Public Prosecutions for the State of Western Australia v White [2010] WASCA 47; (2010) 41 WAR 249, 258 [33].
The requirement that property be used 'in' or 'in connection with' the commission of an offence requires clarity in defining the alleged facts involved in the commission of the offence. This permits the relevant conduct to be assessed to determine whether it involves a use of the property 'in' or 'in connection with' the commission of that offence.
In R v NM,[306] Fryberg J, with whom Holmes JA and Martin J agreed, said, in the context of the Criminal Law (Sexual Offences) Act 1978 (Qld), that the phrase 'commission of the offence'[307]
is a composite phrase … [which] is capable of a narrow reading by which it would be limited to the doing of the precise act or the making of the precise omission rendering the doer or maker liable to punishment.
[306] R v NM [2012] QCA 173.
[307] R v NM [2012] QCA 173 [23].
In that case, and in the context of that particular legislation, the narrow reading was rejected as inconsistent with other provisions in that Act.
In contrast, as senior counsel for the defendant companies submitted, the definition in s 329(2) of the Proceeds of Crime Act envisages that the facts constituting the 'commission of an offence' will be those facts which constitute the offence. The definition provides for a broad connector, 'in connection with'. There is no basis to read the 'commission of an offence' as including a reference to facts other than those required for the commission of an offence.
As I have explained, the offence was defined as involving dishonesty which consisted of him 'allowing proxy votes to be counted in circumstances where he knew that his relevant interest in the WSM shares held on behalf of the defendants had not been disclosed'. This was the approach taken at Mr Corp's criminal trial, on his appeal, and initially on this application.
This broad definition of the offence might have provided a good ground for a submission that the WSM shares were used 'in connection with' this conduct. But, as I have explained, in oral submissions senior counsel for the Commissioner accepted that the offence which was alleged was only the act of non-disclosure by Mr Corp on 23 January 1998. The offence was no longer alleged to involve any conduct by Mr Corp in allowing votes to be counted. The Commissioner alleged that Mr Corp had knowingly failed to disclose his relevant interest on 23 January 1998[308] and that he had done so with an intent to deceive the members.[309]
10.3 The facts relied upon by the Commissioner for the allegation of the meaning of 'used in, or in connection with'
[308] ts 293 - 294 (2 December 2014).
[309] ts 304 (2 December 2014).
The Commissioner relied upon the following allegations of fact in support of the submission that the WSM shares were used in or in connection with Mr Corp's offence.[310]
[310] Joint statement of facts, issues and contentions, 18 November 2014 [70] referring to [33] - [40].
33At the 23 January 1998 meeting:
33.1a resolution to appoint Alan Ross Quartermaine as a director was also defeated;
33.2a resolution to ratify the appointment of David James Porter as a director was carried.
34The outcomes of the resolutions referred to at paragraph 32 are reflected in the charts [annexed to these reasons].
35At the WSM general meeting on 23 January 1998:
35.1National Nominees Limited voted against resolutions 1 to 3 in respect of 4,166,250 shares held for Davenrite and 600,000 shares held on behalf of Courtenay; and
35.2ANZ Nominees Limited voted against resolutions 1 to 3 in respect of 2,195,000 shares held on behalf of Happle.
36In 2007, Mr Corp and Mr Smith stood trial on various counts before His Honour Judge Fenbury and a jury in the District Court of Western Australia in IND 1421 of 2004 (the Criminal Trial).
37The Criminal Trial included count 32A of the indictment at the Criminal Trial, in the terms described in paragraph 66 of the JSFIC (Count 32A).
38 At the conclusion of the trial on 4 October 2007, Mr Corp was convicted in respect of Count 32A.
39Mr Corp applied for leave to appeal his conviction in respect Count 32A to the Court of Appeal (WA).
40On 17 June 2008, the Court of Appeal (WA) in Corp v The Queen [2008] WASCA 128 granted Mr Corp leave to appeal and, inter alia, allowed Mr Corp's appeal and quashed Mr Corp's conviction in respect of Count 32A, and ordered that Mr Corp be retried on, inter alia Count 32A.
The Commissioner said that 'by reason of' these facts[311]
the relevant shares were an instrument of the offence by reason that Mr Corp allowed the proxy votes referred to in paragraph 35 above, to be counted in circumstances where he knew that his relevant interest in the relevant shares had not been disclosed. He thereby 'used' the shares in, or in connection with, the commission of the offence, even if only indirectly.
[311] Joint statement of facts, issues and contentions, 18 November 2014 [70].
In oral submissions, senior counsel for the Commissioner submitted that the conduct of Mr Corp upon which reliance was placed was 'the whole circumstances, which do include the elements of the offence'.[312]
[312] ts 457 (3 December 2014).
No particular circumstances were identified other than those described above in the passages from the statement of material facts and contentions (which, as I explained in the introductory remarks to these reasons, functioned as a pleading in this application).
10.4 The reason why the WSM shares were used in connection with the commission of the offence
The starting point is that it is beyond doubt that rights to intangible things are capable of being 'property' which is 'used in, or in connection with, the commission of an offence'. Section 338 of the Proceeds of Crime Act defines 'property' as meaning 'real or personal property of every description, whether situated in Australia or elsewhere and whether tangible or intangible, and includes an interest in any such real or personal property'.
Although Mr Corp denied any beneficial interest, there was no dispute on this application that a beneficial interest in relation to the WSM shares was an interest in the shares for the purposes of s 338.
Another point which should not be controversial is that although neither counsel was able to point to any case where the offence alleged involved an omission, it is possible for property to be used in, or in connection with, the commission of an offence which involves an omission. One example might be where the property is used as part of post-offence conduct which is intended to conceal the unlawful omission. Depending on the circumstances, that could be a use 'in connection with' the commission of the omission.
There is one positive action by Mr Corp which might have presented little difficulty for a conclusion that the WSM shares had been used in connection with the commission of his non-disclosure offence on 23 January 1998. That action was Mr Corp's 'giving away' his interest in relation to the WSM shares. It might not have involved much difficulty to conclude that Mr Corp's acts in disposing of his interest in relation to the shares was a use in connection with his non-disclosure of that interest.
The Commissioner did not rely on this action of disposal by Mr Corp as a connection with the non-disclosure offence. Rather, the Commissioner submitted that 'the unlawful activity could not have been committed without the shares and resulted directly from the use of them'.[313] This essentially embodies two alternative submissions.
[313] Submissions of the Commissioner, 18 November 2014 [58].
The first submission was that the unlawful activity could not have been committed without the shares.[314] This is essentially a submission that a counterfactual connection suffices. In other words, it is sufficient if but for the existence of the shares, the offence could not have been committed.[315]
[314] ts 317 (2 December 2014).
[315] Submissions of the Commissioner, 18 November 2014 [50]. See also ts 319 (2 December 2014).
The second submission focused on the manner in which Mr Corp's interest in the shares was used, as particularly set out in the statement of facts and contentions. The use of Mr Corp's interest in his shares was his actions in causing the shares to be voted.[316]
[316] ts 320 (2 December 2014).
I do not accept the first submission, but I accept the second.
The first submission is akin to the argument that the High Court rejected in Milne that merely taking advantage of circumstances created by the share swap could involve a use of the shares. A mere counterfactual connection with property is insufficient to establish a use either 'in' or 'in connection with' the commission of an offence. This is because an omission to disclose involves no use of the property in any meaningful sense of the verb.
The reason why the second submission should be accepted is twofold.
First, issuing instructions as to how the WSM shares should be voted is almost a paradigm instance of the use of an interest in relation to shares.
Secondly, the breadth of the connector 'in connection with' (discussed in White) encompasses circumstances which connect (i) the voting of the shares with (ii) Mr Corp's intention that his interest in the shares not be disclosed, including at the time the shares are voted.
I conclude that there is a substantial connection on the facts of this case between:
(i) the use of Mr Corp's interest in relation to the WSM shares by the instructions that Mr Corp gave for the manner in which the shares should be voted on 23 January 1998, and
(ii)Mr Corp's non-disclosure of his relevant interest on 23 January 1998.
As I have explained, Mr Corp's non-disclosure was an intentional act designed to facilitate the concealment of his relevant interest including from WSM and its members. That included concealing his control over that interest which would involve receipt of any dividends, voting the shares, and selling the shares.
The voting of the shares held by the defendant companies on 23 January 1998 was a use of Mr Corp's interest in connection with the commission of his continuing offence of non-disclosure.
10.5 Conclusion on the third issue
The Commissioner has established that the WSM shares were used in, or in connection with, the commission of Mr Corp's offence (which I find, on the balance of probabilities to have been established) of knowingly, and intending to deceive WSM and its members, failing to act honestly in the exercise of his powers and the discharge of the duties of his or her office.
The WSM shares were an instrument of crime.
11. Conclusion
Although the Commissioner has established, on the balance of probabilities, two of the three elements for forfeiture that are in dispute, the third element has not been satisfied. The Commissioner established that, within the meaning of the Proceeds of Crime Act, Mr Corp committed an offence and that the WSM shares were an instrument of that offence. But the Commissioner has not proved that it was a 'serious' offence within the Proceeds of Crime Act.
The application for forfeiture must be dismissed.
Since the forfeiture application is dismissed, and in circumstances in which the parties agreed in the statement of material facts and contentions that the exclusion application raises no separate issues,[317] the application for exclusion falls away.
[317] Joint statement of facts, issues and contentions, 18 November 2014 [5].
However, in light of my findings, there may be further issues that arise. For instance, it may be necessary to hear evidence and submissions from the parties concerning any order for payment to the companies of the frozen proceeds from sale of the WSM shares. It may be that such evidence and submissions are appropriately the subject of separate proceedings.
The preliminary concern that I have in relation to any orders for payment of money that is currently frozen is whether, on the evidence before me, the defendant companies, or the WSM shares (and hence their proceeds after sale), are bona vacantia. If so, then there may be doubt concerning the utility or propriety in making orders which might require the Commissioner to pay the frozen funds to companies which have no real existence or which are not ultimately entitled to the funds.
Although it may be appropriate for that question to be resolved in separate proceedings, there is also a question in these proceedings concerning the enforcement of any costs orders in favour of the defendant companies which could potentially have the effect that the Commissioner of Police, as a Commonwealth entity, pays costs to the Commonwealth. It may be that the appropriate course may require consideration of the possibility of orders under s 39(1)(d) or s 180 of the Proceeds of Crime Act.
The convenient course, and my preliminary view subject to any submissions, may be for limited orders to be made dismissing the forfeiture application with costs reserved, and providing for liberty for the parties to apply.
12. Rulings on objections to evidence
12.1 Objections to documents that the defendant companies sought to tender
At the commencement of the application the Commissioner objected to the admissibility of a number of the documents which the defendant companies sought to tender into evidence. The objections were on the ground of irrelevance. Parties agreed that rulings would be made in my reasons for decision after hearing all submissions.
Following a number of objections to documents that the defendant companies proposed to tender, the tender was withdrawn. For instance, the defendant companies initially proposed to tender witness statements of witnesses at the criminal trial despite some of those witness statements not being admitted into evidence[318] and not being read into the transcript of the criminal trial. They were plainly inadmissible. The tender was withdrawn.[319]
[318] Mr Pereira's witness statement was apparently admitted as exhibit P00200950 but was not tendered on this application.
[319] ts 248 - 249 (2 December 2014) where no tender is made of D10, D12-D15 or D23. See also Letter from the defendant companies' solicitors, 27 January 2015 confirming that tender was not made of D12 (Mr Rump) D14 (Ms Wickerson). See also ts 415 (3 December 2014) (withdrawal of the tender of Mr Pereira's witness statement, D13).
After the hearing, the Commissioner also withdrew his objections to the tender of the witness statement of Mr Wollschlager (which was an exhibit at trial as P00117707)[320] and the letter from JW Copp of Ernst & Young to the Chairman of WSM dated 23 January 1998 (which was an exhibit at trial as P00117245).[321]
[320] Email from applicant's solicitors dated 30 January 2015.
[321] Email from applicant's solicitors dated 3 February 2015. Document P00117245 is one of three documents comprising Defendant's Bundle D10.
The remaining objections fall into two categories. The first category is two sets of minutes of different directors' meetings. The second category is four documents, D16-D19, concerning previous court hearings.
12.1.1 Objections to D3 and D4: minutes of Directors' meetings
These two documents were exhibits at the criminal trial of Mr Corp. The court may 'have regard to' those documents, in determining the application, as they were evidence in the criminal proceeding.[322] However, the Commissioner says that no regard should be had to those documents, and that they should not be admitted into evidence, because they are irrelevant.
[322] Proceeds of Crime Act 2002 (Cth) s 64(2).
The first document, D3, is the minutes of a meeting of the directors of BMS held on 19 April 1995.[323] One issue in the application was whether Mr Corp obtained, or intended to obtain, a benefit of more than $10,000 from his offence. The Commissioner relied upon Mr Corp's interest in BMS as the basis for an inference that Mr Corp's non‑disclosure of his relevant interest to the shareholders of WSM was because he intended to use his position as director to obtain benefits of more than $10,000 for BMS.
[323] Exhibit 1/P00048618.
The defendant companies relied on the minutes of this meeting for the record that Mr Corp had abstained from voting on possible share placement by HLM because he had an interest in HLM. This was said to support the inference that Mr Corp would therefore abstain from voting at a meeting of a different company (WSM) in relation to matters in which he had a material personal interest. Mr Corp's abstention from voting at the meeting of a different company, based on his interest in different shares, and involving a different issue, provides no support for the inference that the defendant companies seek to draw. The document (D3) is irrelevant.
The second document, D4, was also an exhibit at Mr Corp's criminal trial.[324] It is the minutes of a meeting of the directors of WSM, which record that Mr Corp declared a 'deemed' interest in a resolution to execute a proxy to vote in favour of HLM acquiring Connaught Mining. The minutes demonstrate that Mr Corp understood that 'deemed' interests needed to be declared and that he needed to abstain from voting on resolutions at WMS on which he had an interest. The document is relevant, and admissible, but the weight is almost non-existent. Mr Corp's background and experience, by itself, is sufficient to draw the conclusion that he knew that he was required to declare an interest and that he should absent himself as a director from voting on resolutions in which he was personally interested.
12.1.2 Objections to D16 to D19: documents concerning previous court proceedings
[324] Exhibit 1/P00154382.
The documents provisionally tendered as D16 to D19 are:
(i)an originating motion in the District Court of Western Australia on 10 July 1998 to restrain the use of the money received from the sale of the WSM shares (D16);
(ii)a chamber summons in the District Court of Western Australia on 18 September 2008 by the Commonwealth Director of Public Prosecutions seeking a declaration that the funds held are the property of the defendant companies and orders that the funds be paid to those companies (D17);
(iii)supplementary submissions (D18) in the District Court of Western Australia on 3 October 2008 by the Commonwealth Director of Public Prosecutions submitting that
(a)the defendant companies are no longer in existence and have been deregistered;
(b)communication has been received from a representative of Messrs Pereira and Rump asserting their interest in the shares and the proceeds from sale of the shares; and
(c)seeking an order that the restrained funds should be paid to Messrs Perreira, Rump, and Wollschlager or to the defendant companies; and
(iv)orders of the District Court of Western Australia on 30 October 2008 declaring the proceeds from the sale of the WSM shares to be the property of the defendant companies, and requiring the funds to be paid to the defendant companies (D19).
The District Court orders on 3 October 2008 (D19) that required the funds to be paid to the defendant companies are admissible on the limited basis which I have described in these reasons. They are relevant and admissible solely as evidence in support of the defendant companies' submission in response to the Commissioner's assertion that the defendant companies provided no evidence to support any claim that they had to an interest in the property. The order is evidence that might have been relied upon in support of submissions, if they had been necessary, that the defendant companies had an intention of pursuing their exclusion application and claiming the proceeds from the sale of the WSM shares. The weight of that evidence is a different matter.
The orders in exhibit D19 were made under s 39(1)(e)(ii) of the Proceeds of Crime Act. That section empowers the court to make 'an order determining any question relating to the property, including a question relating to the liabilities of the owner ...'. The court order in exhibit D19 is evidence which is relevant to the issue raised by the Commissioner that the defendant companies had no intention of pursuing their exclusion application.
However, I would not admit the proposed exhibits D16, D17 and D18. The originating motion, chamber summons, and submissions do not add anything to this conclusion. To the extent that their material goes beyond this point it is inadmissible. For instance, D18 was a set of submissions on behalf of the Commonwealth Director of Public Prosecutions in earlier proceedings concerning the confiscation of the shares in WSM. In those submissions the Director described the interested persons upon whom the notice of the application had been served. In the submissions, the Director described the response of Mr Pereira and Mr Rump (Mr Wollschlager having deceased), through their representative, as being that they supported 'an order declaring their interests in the restrained funds and authorising the Trustee in Bankruptcy to forward the funds' to be provided to them. The Director then said that he has no reason to doubt the assertions that 'Mr Rump was the sole shareholder and beneficiary of Happle Ltd' and 'Mr Pereira the sole shareholder and beneficiary of Davenrite Ltd' and 'Mr Wollschager was the sole shareholder and beneficiary of Courtenay Ltd'. He added that this is not inconsistent with the evidence adduced at Mr Corp's criminal trial.
These submissions were not in the form of an affidavit. They are not evidence. And they are not admissible. It is irrelevant that there may be an inconsistency between the submissions of the Commonwealth Director of Public Prosecutions concerning the beneficial ownership of the WSM shares in 2008 (based on alleged transactions in 1998) and the submissions of the Commissioner (on this application) concerning the beneficial ownership of the WSM shares in 1998. And, to the extent that the submissions are somehow relied upon as evidence of the views of Mr Pereira and Mr Rump then they are hearsay (a statement of the representative of the Director), upon hearsay (based on his instructions from a representative of Messrs Pereira and Rump), upon hearsay (based on alleged statements by Messrs Pereira and Rump).
12.2 Objections to documents tendered by the Commissioner
The defendants objected to three documents that the Commissioner purported to tender.[325]
[325] See Joint List of Exhibits, Part C, dated 27 January 2015. See also a Letter from the solicitors for the defendant companies to the Court dated 30 January 2015 confirming the defendant companies' objections to Exhibit 1/P00048334, Exhibit 1/P00109543, and Exhibit 3.
The Commissioner sought to tender as an exhibit (exhibit 3) a document without any authorship which was headed 'Shareholdings held by Corp associated entities at 23 January 1998'. It was handed up to the Court at the conclusion of the application, apparently as an aide memoire.[326] It does not appear to be, nor was it said to be, an exhibit at Mr Corp's criminal trial. It is not admissible as an exhibit on this application.
[326] ts 458 (3 December 2014).
The Commissioner also sought to tender two other documents which were not exhibits at Mr Corp's criminal trial and therefore were not documents to which regard could be had under s 64 of the Proceeds of Crime Act.
The first of these two documents[327] is dated 30 August 2000. It is a 42‑page document purporting to record issued capital movements of WSM shares. The Commissioner did not make any submission that this was a business record.[328] The document was not authenticated as a record of any business. It is hearsay and inadmissible. In any event, it does not appear to have been referred to in the Commissioner's submissions and I explained to the parties, no document would be admitted without some reference being made to its relevance in written or oral submissions.
[327] Exhibit 1/P00048334.
[328] Evidence Act 1907 (WA) s 79C.
The second of the two documents[329] is a facsimile from John Ellis at Centurion Trust Company Ltd to Alan Oakley at Kas on 12 January 1998. In it, Mr Ellis instructs Mr Oakley to complete a proxy for the 23 January 1998 general meeting. The contents of the facsimile are hearsay. The Commissioner did not submit that the facsimile was a business record. In any event, the facsimile was not tendered at Mr Corp's criminal trial, the Commissioner did not explain its relevance and no reference appears to have been made to it in the Commissioner's submissions. It is not admissible.
[329] Exhibit 1/P00109543.
Appendix 1: Responses of all shares concerning removal of Mr Smith
Appendix 2: Shares that voted concerning removal of Mr Smith
Appendix 3: Responses of all shares concerning removal of Mr Corp
Appendix 4: Shares that voted concerning removal of Mr Corp
Appendix 5: Share holding costs allegedly incurred by the defendant companies
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