Commissioner of the Australian Federal Police v Cranston (No. 19)

[2022] NSWSC 1051

Supreme Court

New South Wales

Medium Neutral Citation:

Commissioner of the Australian Federal Police v Cranston & Ors (No. 19) [2022] NSWSC 1051

Hearing dates:

22 June 2022

Date of orders:

4 August 2022

Decision date:

04 August 2022

Jurisdiction:

Common Law

Before:

Cavanagh J

Decision:

The 57th defendant to pay forthwith the costs of the plaintiff in respect of the application filed by the 57th defendant on 20 September 2021 seeking an order under s 93 of the Proceeds of Crime Act 2002 (Cth).

Catchwords:

COSTS — party/party — costs orders in earlier proceedings — extension application — withdrawal of substantive application before hearing — costs payable forthwith

Legislation Cited:

Proceeds of Crime Act 2002 (Cth)

Uniform Civil Procedure Rules NSW (2005)

Category:

Costs

Parties:

The Commissioner of the Australian Federal Police (Plaintiff)
Tepcorp Holdings Pty Ltd (57th Defendant)

Representation:

Counsel:
D McLure SC with G O’Mahoney (Plaintiff)
S Buchen SC with S Spinak (57th Defendant)

Solicitors:
Criminal Assets Litigation, Australian Federal Police (Plaintiff)
Murphy’s Lawyers Inc (57th Defendant)

File Number(s):

2017/146280

Publication restriction:

None

Judgment

1. This is the judgment in respect of costs regarding an application filed by the 57^th defendant, Tepcorp Holdings Pty Ltd (Tepcorp), seeking an order under s 93 of the Proceeds of Crime Act 2002 (Cth) (the Act) extending the time before which restrained property was forfeited under s 92 of the Act.

2. I am determining this costs issue (on the papers) because:

1. The costs of the application for an extension before Rothman J were reserved; and

2. Having obtained an extension, Tepcorp pursued an application seeking various forms of relief relating to property which had been restrained, including exclusion from restraint and exclusion from forfeiture (the substantive motion); and

3. The hearing of the substantive motion was listed before me on 22 June 2022; but

4. On that day, I made orders by consent dismissing the substantive motion (which had been filed on 17 September 2021) and ordered that Tepcorp pay the costs of the plaintiff of and in relation to the substantive motion forthwith.

3. During the discussion about the orders that should be made on 22 June 2022, the plaintiff (the Commissioner) raised the fact that costs had been reserved in respect of the extension application and that the Commissioner now sought costs and that the costs be payable forthwith. Tepcorp opposed such orders.

4. Whilst I did not end up hearing the substantive motion and nor did I hear the extension application, it seemed appropriate that the earlier question of costs which had been reserved be determined at this stage.

The Commissioner’s position

5. On 16 May 2017, this Court made a restraining order under s 18 of the Act, prohibiting any disposal of or dealing with the property that became the subject of Tepcorp’s substantive motion.

6. On 23 April 2021, the Commissioner served on Tepcorp a notice stating the date on which the restrained property would be forfeited (being 1 October 2021) in accordance with s 92A of the Act.

7. Despite that impending date, it was not until 17 September 2021 that Tepcorp filed the substantive motion. On 20 September 2021, it then filed the extension application. The extension application was heard by Rothman J, who extended the period before which the restrained property would be forfeited “to no later than immediately before the start of 1 July 2022”.

8. Having obtained orders for the extension (with the result that the Commissioner incurred costs in respect of that application), Tepcorp then did not proceed with the substantive motion on 22 June 2022, albeit it only determined not to proceed with the motion immediately before the hearing.

9. The Commissioner submits that the sole purpose of Tepcorp’s extension application under s 93 was to enable it to pursue its substantive motion before a statutory forfeiture occurred under s 92.

10. The Commissioner also submits that the substantive motion was always doomed to fail.

11. In the submissions filed prior to the dismissal of the substantive motion, the Commissioner identified reasons which were said to preclude the making of the orders sought by Tepcorp in its substantive motion, including that:

1. Tepcorp had no interest in the restrained property;

2. Any interest of Tepcorp (if there was any contrary to the first point) was not shown to be untainted; and

3. The source of funds to repay the loan was not shown to be untainted.

12. The Commissioner’s primary position is that the substantive motion was bound to fail because Tepcorp could not satisfy a statutory precondition to the form of the relief it sought, being that it had the required interest in the restrained property.

13. The Commissioner submits that the only reason that Tepcorp sought the extension was so it could pursue its substantive motion. Having pursued an application which was hopeless and doomed to fail, Tepcorp should also pay the costs of the extension application which was necessary to allow it to pursue its substantive motion.

Tepcorp’s position

14. Tepcorp says that the proposition that its substantive motion was doomed to fail is merely conjecture. There has been no determination of the merits of that application and the Court should not now engage in any process of attempting to determine the relative merits of the parties’ position in respect of that application. The Court should not draw an inference from Tepcorp’s agreement to the dismissal of the application that there was no merit in the application.

15. Tepcorp seeks to explain the circumstances in which it decided to pursue and then consent to the dismissal of the application. It says its decision was brought about by a radical change in the forensic landscape occasioned by the Commissioner’s service of voluminous evidence within weeks of the hearing of the application. It had previously understood that the application would not be evidentiarily expansive and its substance would be limited to legal argument. This was said to be confirmed at a directions hearing before Wright J on 29 March 2022.

16. Despite what was said at that directions hearing, the Commissioner served its evidence four weeks before the hearing of the substantive motion, which comprised some 1,200 pages of evidence and a number of relevant documents previously unseen by Tepcorp’s legal representatives.

17. Further, Tepcorp disputes that the extension application should be treated in a similar way to an interlocutory injunction. Tepcorp submits that an s 93 application is a procedural application properly understood as collateral to the relief sought on the substantive application.

18. Further, Tepcorp submits that the context in which Rothman J reserved costs is relevant. Tepcorp points to the lack of reasonableness on behalf of the Commissioner in opposing the extension application in the face of clear and contrary authority. Tepcorp submits that such conduct is a discretionary factor which ought to weigh against the Commissioner being awarded its costs for the application.

Determination

19. Rule 42.7 of the Uniform Civil Procedure Rules NSW (2005) (UCPR) is in respect of costs of interlocutory applications and reserved costs. It is in the following terms:

42.7 Interlocutory applications and reserved costs

(1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including –

(a) costs that are reserved, and

(b) costs in respect of any such application or step in respect of which no order as to costs is made,

are to be paid and otherwise dealt with in the same way as the general costs of the proceedings.

(2) Unless the court orders otherwise, costs referred to in subrule (1) do not become payable until the conclusion of the proceedings.

20. I accept the Commissioner’s submission that the sole purpose of the extension application must have been to allow Tepcorp to pursue its substantive application before statutory forfeiture occurred under s 92 of the Act. That extension application was dealt with by Rothman J on an urgent basis. There appears to have been no opportunity at the time of the making of the orders for the issue of costs to have been argued and determined.

21. Neither party sought to bring the matter before his Honour again for the purposes of his Honour making orders about the costs of the extension application. Having said that, neither party opposes me now determining the costs of the extension application. Indeed, both parties seek orders that the other party pay the costs of that application forthwith.

22. The primary submission of the Commissioner is that Tepcorp has simply wasted the Court’s time and incurred costs in circumstances in which the substantive motion was always doomed to fail. On the other hand, Tepcorp’s primary point is that no inference can be drawn from its decision to consent to the dismissal of the proceedings. Indeed, it offers an explanation as to why it took that course.

23. Although the “no interest” point raised by the Commissioner might have had merit, it does not seem to me that I must determine that issue (the merits of the substantive application) for the purposes of determining this costs’ question. Plainly, there are arguments available to the Commissioner but it is not my function to now determine whether Tepcorp would or would not have succeeded on its substantive motion if it had pursued it to judgment.

24. I also have difficulty with Tepcorp’s submissions that in some way its decision to abandon its substantive motion was reflective of a change in the forensic landscape and the service of further evidence. This is strongly contested by the Commissioner. Again, I am not in a position to determine the outcome of that dispute, particularly as there has been no hearing and the parties are in dispute as to the matters raised by Tepcorp.

25. Having said that, there are a number of matters which bear upon the question of costs of the extension application, being:

1. Tepcorp appears to have waited until the latest possible time to pursue its extension application.

2. The sole purpose of the extension application was to enable it to pursue the substantive motion.

3. It was not encumbent upon the Commissioner to consent to the extension of time, that is, the extension of the date on which the restrained property would be forfeited.

4. It was encumbent upon the party seeking the extension, Tepcorp, to satisfy the Court that there should be an extension.

5. As noted by Rothman J, the reason for the hearing of the matter before his Honour was that Tepcorp sought orders excluding property from the restraining orders and forfeiture and, in the interim, sought an extension before the forfeiture occurred.

6. Tepcorp must be taken to have abandoned its substantive motion at the last moment. It consented to paying the costs of that motion. I am unable to be satisfied that the reason it abandoned its motion was in some way due to the conduct of the Commissioner. I am satisfied that there might have been difficulties with Tepcorp’s case at the very least.

7. Whist I cannot be certain, I would infer that costs were reserved to be determined on the conclusion of the hearing of the substantive motion. That is one relevant factor in determining costs on the extension application.

26. In all of the circumstances, I favour the Commissioner’s position. Tepcorp abandoned the application which it informed Rothman J it wished to pursue as part of the grounds for the extension application.

Orders

27. I order that the 57^th defendant pay forthwith the costs of the plaintiff in respect of the application filed by the 57^th defendant on 20 September 2021 seeking an order under s 93 of the Proceeds of Crime Act 2002 (Cth).

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Decision last updated: 04 August 2022