Commissioner of the Australian Federal Police v Hart - [2016] QCA 215

SUPREME COURT OF QUEENSLAND

CITATION:

Commissioner of the Australian Federal Police v Hart & Ors; Flying Fighters Pty Ltd v Commonwealth of Australia & Anor; Commonwealth of Australia v Yak 3 Investments Pty Ltd & Ors [2016] QCA 215

PARTIES:

In Appeal No 3885 of 2013:

COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE
(appellant)
v
STEVEN IRVINE HART
(first respondent)
FLYING FIGHTERS PTY LTD
ACN 067 895 005
(second respondent)
MERRELL ASSOCIATES LIMITED HK
(third respondent/not a party to the appeal)
NEMESIS AUSTRALIA PTY LTD
ACN 010 225 537
(fourth respondent)
MERRELL ASSOCIATES (AUSTRALIA) PTY LTD
(fifth respondent/not a party to the appeal)
YAK 3 INVESTMENTS PTY LTD
ACN 010 623 560
(sixth respondent)
BUBBLING SPRINGS OLIVE GROVE PTY LTD
ACN 010 281 866
(seventh respondent)

In Appeal No 3908 of 2013:

FLYING FIGHTERS PTY LTD
ACN 067 895 005
(first appellant)
YAK 3 INVESTMENTS PTY LTD
ACN 010 623 560
(second appellant)
BUBBLING SPRINGS OLIVE GROVE PTY LTD
ACN 010 281 866
(third appellant)
NEMESIS AUSTRALIA PTY LTD
ACN 010 225 537
(fourth appellant)
v
COMMONWEALTH OF AUSTRALIA
(first respondent)
COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE
(second respondent)

In Appeal No 4987 of 2013:

COMMONWEALTH OF AUSTRALIA
(appellant)
v
YAK 3 INVESTMENTS PTY LTD
ACN 010 623 560
(first respondent)
BUBBLING SPRINGS OLIVE GROVE PTY LTD
ACN 010 281 866
(second respondent)
NEMESIS AUSTRALIA PTY LTD
ACN 010 225 537
(third respondent)
FLYING FIGHTERS PTY LTD
ACN 067 895 005
(fourth respondent)
ALFREDTON PTY LTD
ACN 070 015 057
(fifth respondent)

FILE NO/S:

Appeal No 3908 of 2013
Appeal No 3885 of 2013
Appeal No 4987 of 2013
DC No 1416 of 2003
DC No 3068 of 2006

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeals

ORIGINATING COURT:

District Court at Brisbane – [2013] QDC 60

DELIVERED ON:

29 August 2016

DELIVERED AT:

Brisbane

HEARING DATE:

11, 12, 13 March 2015
26 April 2016 – Further Written Submissions

JUDGES:

Morrison JA and Douglas and Peter Lyons JJ
Separate reasons for judgment of each member of the Court, Douglas and Peter Lyons JJ concurring as to the orders made, Morrison JA dissenting

ORDERS:

1.   Appeal number 3885 of 2013 is dismissed.

2.   Appeal number 4987 of 2013 is dismissed.

3.   The appellants in appeal number 3908 of 2013 are granted leave to amend the notice of appeal in accordance with paragraph 23 of their submissions of 26 April 2016.

4.   Within seven days, the parties are to attempt to agree on, and submit to the Court, a form of order to be made in appeal number 3908 of 2013 to give effect to these reasons; and on orders for costs in each of appeals numbered 3885 of 2013, 4987 of 2013, and 3908 of 2013; and to the extent that there is any failure to agree, each party is to submit within 14 days the draft order for which it contends, together with supporting submissions not exceeding two pages in length.

CATCHWORDS:

CRIMINAL LAW – PROCEDURE – CONFISCATION OF PROCEEDS OF CRIME AND RELATED MATTERS – FORFEITURE OR CONFISCATION – SERIOUS CRIME RELATED ACTIVITY OR CONFISCATION OFFENCE – APPLICATION FOR ORDER FOR TRANSFER OF FORFEITED PROPERTY TO PERSONS CLAIMING AN INTEREST IN IT – POWERS OF COURT – where Hart, an accountant, engaged in systematic tax fraud, by running a number of tax avoidance schemes in which he involved his clients – where companies associated with Hart, Flying Fighters Pty Ltd, Nemesis Australia Pty Ltd, Yak 3 Investments Pty Ltd and Bubbling Springs Olive Grove Pty Ltd, acquired various assets – where in May 2003, the Commonwealth was granted a restraining order over property of the companies, Flying Fighters, Nemesis, Yak and Bubbling Springs, under s 17 of the Proceeds of Crime Act 2002 (Cth) (POCA) on the basis that the interest of each company in the property was under Hart’s effective control – where in May 2005 Hart was convicted of nine offences of defrauding the Commonwealth, in contravention of s 29D of the Crimes Act 1914 (Cth) with the restrained property forfeited to the Commonwealth on 18 April 2006, under s 92 POCA – where the Hart companies applied for orders under s 102 POCA directing that their interests in the forfeited property be transferred to them, or that they be paid an amount equal to the value of their interests – whether the Court has power to order transfer of property without declaring its value – whether the Court had power to make the transfer of property conditional on compliance by the applicants with other orders – whether power properly exercised

CRIMINAL LAW – PROCEDURE – CONFISCATION OF PROCEEDS OF CRIME AND RELATED MATTERS – FORFEITURE OR CONFISCATION – SERIOUS CRIME RELATED ACTIVITY OR CONFISCATION OFFENCE – APPLICATION FOR ORDER FOR TRANSFER OF FORFEITED PROPERTY TO PERSONS CLAIMING AN INTEREST IN IT – DERIVATION OF PROPERTY – where Hart, an accountant, engaged in systematic tax fraud, by running a number of tax avoidance schemes in which he involved his clients – where companies associated with Hart, Flying Fighters Pty Ltd, Nemesis Australia Pty Ltd, Yak 3 Investments Pty Ltd and Bubbling Springs Olive Grove Pty Ltd, acquired various assets – where in May 2003, the Commonwealth was granted a restraining order over property of the companies, Flying Fighters, Nemesis, Yak and Bubbling Springs, under s 17 POCA on the basis that the interest of each company in the property was under Hart’s effective control – where in May 2005 Hart was convicted of nine offences of defrauding the Commonwealth, in contravention of s 29D of the Crimes Act 1914 (Cth) with the restrained property forfeited to the Commonwealth on 18 April 2006, under s 92 POCA – where the Hart companies applied for orders under s 102 POCA directing that their interests in the forfeited property be transferred to them, or that they be paid an amount equal to the value of their interests – where conditions for relief include condition that the property was not derived or realised, whether directly or indirectly, from unlawful activity – whether condition not satisfied if some of the purchase monies were the obtained from unlawful activities – whether condition not satisfied if some money borrowed for the purchase of the property was the result of unlawful activity – whether condition not satisfied if some money used to pay for repairs to the property was the result of unlawful activity

CRIMINAL LAW – PROCEDURE – CONFISCATION OF PROCEEDS OF CRIME AND RELATED MATTERS – FORFEITURE OR CONFISCATION – SERIOUS CRIME RELATED ACTIVITY OR CONFISCATION OFFENCE – PECUNIARY PENALTY ORDER – APPLICATION FOR DECLARATION THAT PROPERTY AVAILABLE TO SATISFY PECUNIARY PENALTY ORDER – EFFECTIVE CONTROL – where Hart, an accountant, engaged in systematic tax fraud, by running a number of tax avoidance schemes in which he involved his clients – where companies associated with Hart, Flying Fighters Pty Ltd, Nemesis Australia Pty Ltd, Yak 3 Investments Pty Ltd and Bubbling Springs Olive Grove Pty Ltd, acquired various assets – where in May 2003, the Commonwealth was granted a restraining order over property of the companies, Flying Fighters, Nemesis, Yak and Bubbling Springs, under s 17 POCA on the basis that the interest of each company in the property was under Hart’s effective control – where in May 2005 Hart was convicted of nine offences of defrauding the Commonwealth, in contravention of s 29D of the Crimes Act 1914 (Cth) with the restrained property forfeited to the Commonwealth on 18 April 2006, under s 92 POCA – where the Commonwealth was granted a pecuniary penalty order against Hart, under s 116 POCA with Hart ordered to pay $14,757,287.35 – where the Commonwealth applied for an order under s 141 POCA, declaring that the forfeited property available to satisfy the pecuniary penalty order – where order may be made where the Court is satisfied that the property is under the effective control of the person against whom the pecuniary penalty order was made – time for determining whether the property was under the effective control of that person

Acts Interpretation Act 1901 (Cth), s 33(2A)
Crimes Act 1914 (Cth), s 29D
Criminal Code (Cth), s 400.1, s 400.9(1)
Criminal Code (Qld), s 408C(1)(f)
Proceeds of Crime Act 1987 (Cth), s 4, s 82 (repealed)
Proceeds of Crime Act 2002 (Cth), s 5, s 17, s 18, s 26, s 29, s 33, s 34, s 37, s 38, s 42, s 44, s 45, s 92, s 96, s 102, s 102(1), s 102(2), s 102(3), s 116, s 121, s 123, s 124, s 128, s 130, s 134, s 141, s 142, s 296, s 315B, s 329, s 330, s 336, s 337, s 338
Taxation Administration Act 1953 (Cth), s 8N

Attorney-General v Great Eastern Railway Co (1880) 5 App Cas 473; [1880] UKHL 2, applied
BRK (Bris) Pty Ltd v Federal Commissioner of Taxation (2001) 46 ATR 347; [2001] FCA 164, approved
Carr v Western Australia (2007) 232 CLR 138; [2007] HCA 47, applied
CDPP v Hart & Ors; Yak 3 Investments P/L as t/tee for Yak 3 Discretionary Trust & Ors v Commonwealth of Australia [2013] QDC 60, related
Chalmers v R (2011) 37 VR 464; [2011] VSCA 436, approved
Cook’s Construction Pty Ltd v Brown (2004) 49 ACSR 62; [2004] NSWCA 105, cited
Dickfoss v Director of Public Prosecutions (2012) 31 NTLR 16; (2012) 165 NTR 12; [2012] NTCA 1, cited
Director of Public Prosecutions v Allen [1988] VicSC 661, approved
Director of Public Prosecutions v Diez [2003] NSWSC 238, cited
Director of Public Prosecutions v Lynch, unreported, Commissioner Templeman, Court of Criminal Appeal, WA, No 2531 of 1987, 2 February 1990, approved
Director of Public Prosecutions (Cth) v Corby [2007] 2 Qd R 318; [2007] QCA 58, cited
Director of Public Prosecutions (Cth) v Hart (No 2) [2005] 2 Qd R 246; [2005] QCA 51, applied
Director of Public Prosecutions (Cth) v Jeffery (1992) 58 A Crim R 310, cited
Director of Public Prosecutions (SA) v George (2008) 102 SASR 246; [2008] SASC 330, cited
Director of Public Prosecutions (WA) v White (2010) 41 WAR 249; [2010] WASCA 47, cited
Gray v Official Trustee in Bankruptcy (1991) 29 FCR 166; [1991] FCA 176, approved
Hollington v F Hewthorn and Co Ltd [1943] KB 587, cited
In Re Bank of Credit and Commerce International SA (No 8) [1998] AC 214, cited
Jaimee Pty Ltd v Council of the City of Sydney [2010] NSWLEC 245, applied
Jeffery v Director of Public Prosecutions (Cth) (1995) 79 A Crim R 514, cited
Johns v Australian Securities Commission (1993) 178 CLR 408; [1993] HCA 56, applied
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8, applied
Jones v Sutherland Shire Council [1979] 2 NSWLR 206, cited
Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11, cited
Lee v Director of Public Prosecutions (Cth) (2009) 75 NSWLR 581; [2009] NSWCA 347, cited
Logan Park Investments Pty Ltd & Others v Director of Public Prosecutions (Cth) (1994) 122 FLR 1, distinguished
Markovski v Director of Public Prosecutions (2014) 41 VR 548; [2014] VSCA 35, cited
Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24; [1986] HCA 40, cited
Nilant v Macchia (2000) 104 FCR 238; [2000] FCA 1528, cited
North Sydney Council v Michael Standley & Associates Pty Ltd (1998) 43 NSWLR 468; [1998] NSWSC 163, applied
Re An Application Pursuant to the Drugs Misuse Act 1986 [1988] 2 Qd R 506, cited
Ward v Metropolitan Police Commissioner [2006] 1 AC 23; [2005] EWCA Civ 1072, not followed
White v Director of Public Prosecutions (WA) (2011) 243 CLR 478; [2011] HCA 20, cited

COUNSEL:

In Appeal No 3885 of 2013:
A R Moses SC, with G J Del Villar, for the appellants
The first respondent appeared on his own behalf
P J Roney QC, with A J Greinke and G C Dempsey, for the second respondent

In Appeal No 3908 of 2013:
P J Roney QC, with A J Greinke and G C Dempsey, for the appellant
A R Moses SC, with G J Del Villar, for the respondents

In Appeal No 4987 of 2013:

A R Moses SC, with G J Del Villar, for the appellant
P J Roney QC, with A J Greinke and G C Dempsey, for the respondents

SOLICITORS:
In Appeal No 3885 of 2013:

The Commissioner of the Australian Federal Police for the appellants
The first respondent appeared on his own behalf
No appearance for the second respondent

In Appeal No 3908 of 2013:
No appearance for the appellants
The Commissioner of the Australian Federal Police for the respondents

In Appeal No 4987 of 2013:

The Commissioner of the Australian Federal Police for the appellant
No appearance for the respondents

Table of Contents

MORRISON JA:.................................................................................................................... 10

Overview

Summary of the outcome of the appeals

General issues
Individual assets
The s 141 application

Construction of s 102(3)(a) POCA

The statutory context
Legislative Purpose and Context
Historical context
Construction of s 102 POCA; grounds 1 and 2 in the notice of contention in 3908/13; grounds 4 and 5 in 4987/13
Does authority compel a contrary view?
Conclusion as to s 102(3)(a)

Construction of s 102(3)(b)

What degree of use or derivation is required for s 102(3)(a) to be satisfied?

Derived

Examination of an alternative test for “derived”

Tracing into a property “derived”

Construction of s 102(1)(c); declaration of value; ground 1 in 4987/13

Construction of s 102(1)(c) – declaring nature, extent and value

Conditional declaration as to transfer? Ground 3 in 4987/13

Imposition of the condition to pay $1.6m; ground 2 in 3908/13

Was the court functus officio? Ground 2 in 4987/13

The date of effective control under s 141; grounds 1-3 in the notice of contention in 3885/13

Section 141

Effective control, restraining orders and forfeiture

Scope of s 141

Was Mr Hart in “effective control” at the time of the restraining order?

Relevance of Mr Hart’s effective control; discretion under s 102; ground 6 in 4987/13; ground 6 of the notice of contention in 3908/13

Effective control at the date of the orders

The evidence as to value; grounds 1 and 15 (part) in 3908/13; ground 2 of the notice of contention in 4987/13

Use of the Goodey affidavit

Leave to the Commonwealth to amend on 26 October 2010; refusal of adjournment on 23 November 2010; grounds 20 and 20A in 3908/13

Assessment of evidence by reference to the capacity of the Commonwealth to adduce it; ground 22 in 3908/13

Perpetual Nominees Limited offences; indemnities; inducement and reliance; grounds 6-18 of the notice of contention in 4987/13

Hendon Arrangement; grounds 13 and 14 in 4987/13; ground 18 of the notice of contention in 4987/13

The Hart Companies’ challenge – ground 18
The Commonwealth’s challenge based on the Hendon Arrangement – grounds 13 and 14

Akrotech CAP 232 aircraft; grounds 16 and 17(b) in 4987/13

The $50,000 payment by Tinkadale
The $30,000 payment
Conclusion
The US$14,590 payment

Northbourne Arrangement; ground 15 in 4987/13

Grounds of appeal concerning individual assets

L39C Albatross aircraft, VH-SIC; ground 17(a) in 4987/13

Sea Fury aircraft VH-SHF; Mercedes Benz car; grounds 10-12, 23 and 24 in 3908/13; ground 13 in 3908/13

Sea Fury VH-SHF
Mercedes Benz car

North American T-28 aircraft VH-SHT; ground 5 in 3908/13

North American Trojan aircraft, VH-AVC; ground 17(c) in 4987/13

Hangar 400, Merriwa Street and Doonan’s Road; ground 10(c) and 11 of 4987/13

Hangar 400 and Doonan’s Road.
Merriwa Street

Samara Street; ground 25 in 3908/13

Hangar 101; grounds 2 and 16 in 3908/13; grounds 4 and 5 in the notice of contention in 3908/13

Failure to call Mr Hart; Jones v Dunkel inference; ground 12 in 4987/13

Miscarriage of the discretion under s 141; refusal of s 141 relief unreasonable; ground 1 in 3885/13

Miscarriage of the discretion
Refusal of relief unreasonable

Derivative grounds of appeal; grounds 16 and 21 in 3908/13; grounds 4, 5, 7 and 8 in the notice of contention in 3908/13; grounds 7 and 8 in 4987/13; grounds 1 and 3 in the notice of contention in 4987/13

Grounds of appeal not pressed or abandoned

Proposed orders

DOUGLAS J

PETER LYONS J

Background

Conditions in s 102(3)(a) of the POCA

The power to make orders under s 102(1) of the POCA

Onus of proof

The Hendon arrangement

The Northbourne arrangement

Perpetual Offences

North American T-28 VH-SHT

Sea Fury VH-SHF

Aerovod L-39C

Akrotech CAP 232

North American Trojan T-28 VH-AVC

Hangar 101

Hangar 400

Proceeds from sale of 6 Merriwa Street, Sunnybank Hills

Proceeds from sale of 27 Samara Street, Sunnybank Hills

Proceeds from sale of Doonan’s Road, Grandchester

1983 Mercedes Benz 380 SL

Mr Hart’s effective control of assets and the discretion under s 102 of the POCA

Order for payment to the Commonwealth of $1.6 million............................................... 260

Outcome of application under s 102................................................................................... 264

Date for effective control for s 141 of the POCA............................................................... 264

Conclusion............................................................................................................................. 269

Overview

MORRISON JA: Mr Hart, an accountant, engaged in systematic tax fraud, by running a number of tax avoidance schemes in which he involved his clients. As a result Mr Hart and his companies, Flying Fighters Pty Ltd, Nemesis Australia Pty Ltd, Yak 3 Investments Pty Ltd and Bubbling Springs Olive Grove Pty Ltd[1] made a lot of money. They acquired various assets with the proceeds.
[1]In these reasons called Flying Fighters, Nemesis, Yak and Bubbling Springs respectively.
On 8 May 2003 the Commonwealth[2] was granted a restraining order over property owned or leased by Mr Hart or his companies, Flying Fighters, Nemesis, Yak and Bubbling Springs, under s 17 of the Proceeds of Crime Act 2002 (Cth) (POCA).
[2]Even though the Commonwealth parties are: in the s 102 application and appeals therefrom, the Commonwealth of Australia, and in the s 141 application and appeals therefrom, the Commonwealth Director of Public Prosecutions, the parties made no distinction between them in argument. For convenience they shall be referred to as the Commonwealth in these reasons, unless some relevant distinction needs be made.
On 26 May 2005 Mr Hart was convicted of nine offences of defrauding the Commonwealth, in contravention of s 29D of the Crimes Act 1914 (Cth). He was sentenced to seven years’ imprisonment for each offence, to be served concurrently.
Mr Hart challenged the convictions, first by appealing to this court[3] and then by seeking special leave to appeal to the High Court.[4] Neither was successful.
[3]Re Hart; ex parte Commonwealth Director of Public Prosecutions [2006] QCA 39.
[4]Hart v The Queen [2006] HCA Trans 345 (21 June 2006).
Because he had been convicted the restrained property was forfeited to the Commonwealth on 18 April 2006, under s 92 POCA.
The Commonwealth was granted a pecuniary penalty order against Mr Hart, under s 116 POCA.[5] Mr Hart was ordered to pay $14,757,287.35. That sum reflected the net value of benefits derived by Mr Hart from the offences of which he was convicted on 26 May 2005, and from the unlawful activity of a company called Overseas Credit Ltd (UOCL).
[5]Commonwealth Director of Public Prosecutions v Hart [2010] QDC 457.
Mr Hart challenged the pecuniary penalty order, first by appealing to this Court[6] and then by seeking special leave to appeal to the High Court.[7] Neither was successful.
[6]Hart v Commonwealth Director of Public Prosecutions [2011] QCA 351.
[7]Hart v Commonwealth Director of Public Prosecutions; Hart v Commonwealth of Australia [2012] HCA Trans 140 (8 June 2012).
The Commonwealth applied for an order under s 141 POCA, that the forfeited property be applied to reduce the pecuniary penalty order. Subsequently Flying Fighters, Nemesis, Yak 3 and Bubbling Springs[8] applied for orders under s 102 POCA directing that their interests in the forfeited property be transferred to them, or that they be paid an amount equal to the value of their interests. The Commonwealth then sought orders that if any of the Hart Companies did recover an interest in any of the forfeited property, that it be applied to reduce the pecuniary penalty order.
[8]They shall be collectively referred to as the Hart Companies unless their individual circumstances require them to be specifically identified.

On 2 April 2013 the learned trial judge:[9]
·refused the orders sought by the Hart Companies, but permitted them relief on an alternate basis; that was to the effect that if they paid $1.6m to the Commonwealth then specific assets would be transferred to them; those orders were made on 6 May 2013;[10]
·dismissed the Commonwealth’s application under s 141 POCA; notwithstanding that his Honour found that all elements under s 141 had been established, and that the assets were under the effective control of Mr Hart at the date of the restraining order, relief was refused on discretionary grounds; the discretion turned on the fact that the assets were encumbered by charges to Merrell Associates Limited (Merrell), a company alleged by the Commonwealth to be under the effective control of Mr Hart; and
·held that the date of effective control for the purposes of s 141(1)(c) is the date on which a restraining order was made.
[9]Commonwealth Director of Public Prosecutions v Hart & Ors [2013] QDC 60.
[10]The actual sum was lower, being $1.6m less the net proceeds of a property. For convenience I will continue to refer to the $1.6m figure.
There are three appeals, two by the Commonwealth and one by Mr Hart and the Hart Companies. Each have notices of contention. There are over 60 grounds in contention, some with sub-grounds. Whilst there is a degree of overlap on some grounds, between them the parties have managed to challenge a considerable number of the learned trial judge’s findings. That means the task of dealing with the various contentions is a substantial one.
However there are some central issues which affect all three appeals and do not depend upon findings as to individual assets. Some of those issues involve questions of the proper construction of the POCA. Others depend on the resolution of those questions. The common issues can be stated in this way:
(1)should s 102(3)(a) be construed as if it read that “the applicant substantially acquired the property lawfully”;
(2)does s 102(1)(d)(i) authorise an order transferring assets without determining the monetary value of the interest in them, and without making an order declaring the “nature, extent and value” of that interest;
(3)does s 102 authorise the making of conditional orders;
(4)for the purposes of s 141(1)(c) is the date of effective control the date on which a restraining order was made;
(5)if the court cannot declare the monetary value of the interest in assets, should the court have made orders for the transfer of assets;
(6)what was the correct approach to the evidentiary burden, and the application of the onus of proof, in relation to the assets accumulated by the Hart Companies; and
(7)should the court have granted an adjournment to the Hart Companies, and not permitted the Commonwealth to amend its pleadings.
A synopsis of the main grounds of the appeals is set out below. Given the number of grounds and the breadth of the challenges, they will be more fully articulated and dealt with in the appropriate section of these reasons.
In Appeal No 3885 of 2013:
·the Commonwealth challenges the refusal of relief under s 141 POCA; and
·Mr Hart and the Hart Companies contend that the finding as to the relevant date of effective control was in error, and maintain that the application ought to have been dismissed; for this contention the issue is whether the date of effective control for the purposes of s 141(1)(c) is the date on which a restraining order was made, or the date of hearing of the application;
Further issues raised by Appeal No 3885 of 2013 are whether:
·the exercise of the discretion conferred by s 141 POCA miscarried; and
·the refusal of relief was unreasonable.
In Appeal No 3908 of 2013:
·the Hart Companies challenge a number of findings in respect of: whether particular assets were derived from unlawful activity; the value of assets; the state of charges over the assets; and the $1.6m to be paid in order to receive a transfer of untainted assets; and
·the Commonwealth challenges the learned trial judge’s finding that s 102(3)(a) should be construed as if it read that “the applicant substantially acquired the property lawfully”, and say his Honour:
oshould have held that he could not have been satisfied that assets were not used in or in connection with, or directly or indirectly derived from, unlawful activity;
oeven if assets were lawfully acquired, should not have exercised any discretion in favour of Mr Hart or the Hart Companies because Mr Hart was in effective control of the assets at the date of the restraining order, and the pecuniary penalty order had been made;
oshould have held that an asset would be derived or realised from unlawful activity even if the unlawful funds did not constitute a substantial part of the funds used; and
oshould have held that an asset was unlawfully acquired by a Hart company, if the funds were obtained from another company which, itself, obtained the funds unlawfully.
In Appeal No 4987 of 2013 the main points raised are:
·the Commonwealth contends that the learned trial judge erred in making orders for the transfer of assets because:
os 102(1)(d)(i) did not authorise an order transferring assets without determining the monetary value of the interest in them, and making an order as to the “nature, extent and value” of that interest;
oas the learned trial judge held that he could not declare the monetary value, he should not have made orders for the transfer of assets, and, in any event, not conditional orders;
ohis Honour held that if particular assets were not derived or realised from the unlawful activity identified in the Commonwealth’s pleading, then Mr Hart and the Hart Companies had discharged their onus of showing that the assets were not derived or realised from unlawful activity; and
oparticular assets or payments were found to have not been directly or indirectly derived from, or used in, or in connection with, unlawful activity;
·Mr Hart and the Hart Companies contend that the learned trial judge erred because:
oif it was necessary to declare the monetary value of assets, there was evidence from which that could be done;
oincorrect rulings or findings were made about parts of the evidence; and
oincorrect findings were made about whether particular assets and loans were derived from unlawful activity.
Summary of the outcome of the appeals
For the reasons set out below:
(a)the appeal in Appeal No 3885 of 2013 ought to be dismissed;
(b)the appeal in Appeal No 3908 of 2013 ought to be dismissed;
(c)the appeal in Appeal 4987 of 2013 ought to be allowed; and
(d)the consequence of allowing the appeal in Appeal No 4987 of 2013 is that the orders made below on 6 May 2013 ought to be set aside, and in lieu thereof it should be ordered that the application for s 102 relief brought by the Hart Companies is dismissed.
By way of a summary of the outcomes of issues, the following is a general guide only, and is not to be read as qualifying or replacing the more detailed treatment of each issue below.
General issues
The Commonwealth has succeeded in respect of:
(a)whether s 102(3) should be read as if the word “substantially” was included;
(b)whether “effective control” affects the exercise of the discretion under s 102;
(c)the lawfulness and impact of the tax avoidance scheme known as the Hendon Arrangement;
(d)the lawfulness and impact of the tax avoidance scheme known as the Northbourne Arrangement; and
(e)whether it should have been concluded that Mr Hart was still in effective control at the date of the trial or orders, and whether that would have affected the exercise of the discretion under s 102.
The Commonwealth has failed in respect of:
(a)whether the court was functus officio when it made the orders on 2 April 2013; and
(b)whether a Jones v Dunkel inference should have been drawn in respect of the failure to call Mr Hart.
The Hart Companies have succeeded in respect of:
(a)whether there is power to make conditional orders under s 102;
(b)whether under s 102(1)(c) the court must declare all of the “nature extent and value” of the interest, or could it declare just the nature and extent; and
(c)whether an order can be made under s 102(1)(d)(i) without determining and declaring the monetary value of the interest.
The Hart Companies have failed in respect of:
(a)their challenge to the lawfulness and impact of the offences concerning Perpetual Nominees Limited, and the related questions of indemnities, inducement and reliance;
(b)whether there was evidence of value, and the evidentiary status of the affidavit of Ms Goodey;
(c)whether leave to amend should have been granted to the Commonwealth, and whether an adjournment should have been granted;
(d)whether the principles in Director of Public Prosecutions v Brauer[11] were or should have been applied to an assessment of the evidence, and whether it would have made a difference;
(e)whether the value of the Hart Companies’ interests were diminished by the value of the Merrell charge;
(f)whether the Merrell charge ceased to exist on the forfeiture of the property; and
(g)at what point of time must “effective control” exist under s 141(1)(c).
[11][1991] 2 Qd R 261. (Brauer).
Individual assets
The Commonwealth has succeeded on its appeals in respect of:
(a)Aerovod L-39C Albatross aircraft, VH-SIC;
(b)North American Trojan aircraft, VH-AVC;
(c)Hangar 400 (Archerfield Airport lease 703146442 sub-lease 70447517);
(d)6 Merriwa Street, Sunnybank Hills; and
(e)Doonan’s Road, Grandchester.
The Commonwealth has failed in respect of the Akrotech CAP 232 aircraft and Hangar 101.
The Hart Companies have failed in their appeals in respect of:
(a)27 Samara Street, Sunnybank;
(b)1983 Mercedes Benz 380SL;
(c)Sea Fury aircraft, VH-SHF; and
(d)North American T-28 aircraft, VH-SHT.
The s 141 application
The Commonwealth has succeeded in its challenge to the exercise of the discretion under s 141, but because of the outcomes in respect of the appeals concerning individual assets, the Commonwealth has failed in its challenge to the dismissal of the s 141 application.
Construction of s 102(3)(a) POCA
As always the task of construction of a statute must begin and end with the text, but that must be considered in its context, which includes the legislative history and extrinsic materials.[12] Where possible, meaning must be given to the words used.[13]
[12]Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69]-[71] (Project Blue Sky); Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at [47]; Commissioner of Taxation of the Commonwealth of Australia v Consolidated Media Holdings Ltd (2012) 250 CLR 503, at [39].
[13]Alphapharm Pty Ltd v H Lundbeck A/S [2014] HCA 42; Lacey v Attorney-General for the State of Queensland (2011) 242 CLR 573, at [43]; Project Blue Sky at [69]-[71].
The parties were agreed that the relevant edition of POCA was that as at July 2006. That is the edition to which these reasons refer.[14] That approach is correct when one has regard to the fact that in this case the parties’ rights to seek relief under s 102 and s 141 had accrued by 2006:
(a)the restraining orders were made in 2003;
(b)the Commonwealth’s application for relief under s 141 was filed in 2003;
(c)the Hart Companies’ application under s 102 was filed in 2006; and
(d)the forfeitures under s 92 occurred in 2006.
[14]POCA refers to many defined terms by the use of an asterisk before the particular term or phrase. For ease of reference in these reasons I have omitted the asterisks unless they are relevant in some way.
The delay since then is partly explained by the lengthy appeal processes followed by Mr Hart and the Hart Companies. For example the pecuniary penalty order was made in 2010, and appeals against that order took until 2012 to resolve.
The statutory context
The long title of POCA is “An Act to provide for confiscation of the proceeds of crime, and for other purposes”.
The principal objects of POCA are set out in s 5. Relevantly they include:
(a)depriving persons of the proceeds of, and benefits derived from, offences against the laws of the Commonwealth;
(b)depriving persons of unexplained wealth amounts that the person cannot satisfy a court were not derived from certain offences;
(c)providing for confiscation orders and restraining orders;
(d)preventing the reinvestment of proceeds, benefits and unexplained wealth amounts in further criminal activities; and
(e)giving effect to Australia's obligations under the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime, and other international agreements relating to proceeds of crime.
The way in which POCA sets out to achieve those objects is by setting up a scheme to confiscate the proceeds of crime,[15] including by providing the processes by which confiscation can occur,[16] and the ways in which Commonwealth law enforcement agencies can obtain information relevant to these processes.[17]
[15]Section 6.
[16]Ch 2.
[17]Ch 3.
Chapter 2 contains comprehensive provisions relating to confiscation, including the use of:
·freezing orders;
·restraining orders prohibiting disposal of, or dealing with, property;
·forfeiture orders under which property is forfeited to the Commonwealth;
·forfeiture of property to the Commonwealth on conviction of a serious offence; and
·pecuniary penalty orders requiring payment of amounts based on benefits derived from committing offences.
Confiscation orders and restraining orders are defined in s 338 as the “principal orders” in POCA.
Chapter 3 sets out the ways in which the Commonwealth can obtain information. They include:
·examining any person about the affairs of people covered by examination orders;
·requiring people, under production orders, to produce property-tracking documents or make them available for inspection;
·requiring financial institutions to provide information and documents relating to accounts and transactions;
·requiring financial institutions, under monitoring orders, to provide information about transactions over particular periods; and
·searching for and seizing tainted property or evidential material, either under search warrants or in relation to conveyances.
Under Part 2-1A, s 15B, a freezing order can be made against an account with a financial institution if there are reasonable grounds to suspect the account balance reflects proceeds or an instrument of certain offences, and the court is satisfied that unless the order is made, there is a risk that the balance of the account will be reduced so that a person will not be deprived of all or some of the proceeds or instrument. For that purpose the balance of the account may be proceeds of an offence even though the balance is only partly derived from the offence: see s 329.
Part 2-1 POCA provides for restraining orders. Essentially restraining orders can be made against property, in relation to certain offences, on grounds that relate to possible forfeiture or confiscation orders relating to those offences. There is not always a requirement that a person has been convicted of such an offence.
Under s 17(1), a restraining order is required to be granted if the Director of Public Prosecutions (DPP) applies for one, and[18] the relevant person has been convicted of, or has been charged with, an indictable offence, or it is proposed that they be charged with an indictable offence.[19] Such an order can apply to property which is not owned by, but is subject to the effective control of, the suspect: s 17(3)(b)(i). Under s 29 a person covered by a restraining order can apply to have property excluded from the order. However, an interest in property cannot be excluded unless the court is satisfied that a pecuniary penalty order could be made against the person who owns the interest or who has effective control of it: s 29(4).
[18]Putting to one side requirements for an affidavit and satisfaction that the authorised officer who made the affidavit holds the suspicions on reasonable grounds.
[19]Section 17(1)(d).
The breadth of the power to make a restraining order is shown by s 18, which compels an order to be made where there are reasonable grounds to suspect that a person has committed a serious offence:
“(1)A court with proceeds jurisdiction must order that:
(a)property must not be disposed of or otherwise dealt with by any person; or
(b)property must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in the order;
if:
(c)the DPP applies for the order; and
(d)there are reasonable grounds to suspect that
(i) a person has committed a serious offence; and
(ii) if the offence is not a terrorism offence—the offence was committed within the 6 years preceding the application, or since the application was made; and
(e)any affidavit requirements in subsection (3) for the application have been met; and
(f)the court is satisfied that the authorised officer who made the affidavit holds the suspicion or suspicions stated in the affidavit on reasonable grounds.”
The reasonable grounds referred to in s 18(1)(d) need not be based on a finding as to the commission of a particular serious offence,[20] and court must make a restraining order even if there is no risk of the property being disposed of or otherwise dealt with.[21]
[20]Section 18(4).
[21]Section 18(5).
A person commits an offence if they contravene a restraining order: s 37. The wide ambit of the powers given to the court to enforce restraining orders is seen from s 39(1)(d), under which an order may be made directing the suspect in relation to the restraining order to give a sworn statement, within a specified period, setting out all their interests in property.
Part 2-2 sets out various provisions under which a forfeiture order can be made: ss 47 and 49. Similar to other Parts of POCA, orders can be made forfeiting property to the Commonwealth if certain offences have been committed. It is not always a requirement that a person has been convicted of such an offence. Once again the powers given are very broad. That can be demonstrated by s 54, and in particular s 54(c), which provides:
“If:
(a)the DPP applies for:
(i)a forfeiture order under section 47 or 49 against particular property in relation to a person’s commission of a terrorism offence; or
(ii)a forfeiture order under section 48 against particular property in relation to a person’s conviction of an indictable offence; and
(b)evidence is given, at the hearing of the application, that the property was in the person’s possession at the time of, or immediately after, the person committed the offence;
then:
(c)if no evidence is given that tends to show that the property was not used in, or in connection with, the commission of the offence – the court must presume that the property was used in, or in connection with, the commission of the offence; or
(d)in any other case – the court must not make a forfeiture order against the property unless it is satisfied that the property was used or intended to be used in, or in connection with, the commission of the offence.”

Under s 51 the fact that a person has been acquitted of an offence with which the person has been charged does not affect the court’s power to make a forfeiture order under sections 47 or 49 in relation to the offence. Property specified in a forfeiture order vests absolutely in the Commonwealth at the time the order is made: s 66.
A person who was not notified of a restraining order may effectively resist a forfeiture order made under s 47 or s 49 (each of which involve property the subject of a restraining order) by obtaining an order revoking the restraining order: s 42. Application may also be made under s 73 to exclude a specified interest in property from a forfeiture order. The applicant will effectively be compelled to put on some evidence, at least where the DPP’s evidence is sufficient for the making of the order sought, as s 73(1) requires, for an order for the exclusion of property to be made, that the court be satisfied that the property is neither the proceeds of unlawful activity nor an instrument of a terrorism offence on which the forfeiture order was, or would be, based.
The far reaching effect that POCA was intended to have can be seen from s 80, which provides that forfeiture orders under s 47 or s 49 are not affected even if the person charged with an offence is acquitted, or if a conviction is quashed. Even a forfeiture order under s 48 can be maintained after a conviction is quashed, if the DPP successfully applies to confirm the order: see s 81 and s 84.
Part 2-3, in which s 102 is found, deals with forfeiture, and in essence provides that if a person is convicted of a serious offence, property that is subject to a restraining order relating to the offence is forfeited to the Commonwealth, unless the property is excluded from forfeiture. By virtue of s 96, property forfeited under s 92 vests absolutely in the Commonwealth at the time of the forfeiture.[22]
[22]There are some irrelevant exceptions in s 97 and s 98.
A “serious offence” is defined in s 338 and relevantly includes an indictable offence punishable by imprisonment for three or more years, involving unlawful conduct by a person that causes, or is intended to cause, a benefit to the value of at least $10,000 for that person or another person.
Under s 116 the court must make a pecuniary penalty order if the DPP applies for one and the court is satisfied that the relevant person has committed a serious offence, or that the person has been convicted of an indictable offence, and has derived benefits from the commission of the offence.
Legislative Purpose and Context
The legislative purpose of POCA was concisely stated in Lee v Director of Public Prosecutions (Cth):[23]
“[20] The next step is to identify the broad purpose of the legislation. The Proceeds of Crime Act (Cth) manifests a plain and clear intention to effect the confiscation of property in the circumstances which it prescribes, regardless of the interests of any person in the property. As a law of the Commonwealth, it constitutes an accepted exception to the requirement that any law of the Parliament providing for the compulsory acquisition of property from a person must provide for compensation on just terms: Commonwealth Constitution, s 51(xxxi); Burton v Honan at 180–181 per Dixon CJ; Re Director of Public Prosecutions; Ex parte Lawler (1994) 179 CLR 270; Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 187–188 (Deane J and Gaudron J). There was no argument put to the contrary.
[21]Thus, the confiscation of property is not achieved by words of general implication, nor is it an intrusion on general law protections which has come about incidentally to the main purpose of the legislation: see Balog v Independent Commission Against Corruption (1990) 169 CLR 625 at 635–636 (Mason CJ, Deane J, Dawson J, Toohey J and Gaudron J); Hadjigeorgiou v New South Wales Crime Commission [2007] NSWCA 197; (2007) 174 A Crim R 124 at 146 [95]. The taking of the property in the prescribed circumstance is the primary purpose of the legislation: Proceeds of Crime Act (Cth), s 5. The interests of a person in property the subject of a valid restraining order are deliberately and expressly at risk of confiscation, absent affirmative steps to exclude property on the application of the interested person. There is thus a clear and manifest intention to interfere with property rights.”
[23](2009) 75 NSWLR 581, at [20]-[21]. (Lee)
In Markovski v Director of Public Prosecutions[24] Santamaria JA[25] referred to the context of POCA, saying:[26]
“So, those engaged in crimes from which large profits are derived have to contend with more than being charged with and convicted of specific offences. They subject themselves to the prospect of having their property confiscated. That confiscation is not confined to whatever implements they used in, or to whatever profits they derived from, their criminal activity. On the contrary, the Act permits a restraining order to be made in respect of all that person’s property. The (unstated) presumption in the Act is that such a person has not come by his or her interest in property lawfully, and, for that reason, the property should be confiscated. The draconian nature of the Act is mitigated either (a) by those provisions which, by their own force, limit the duration of a restraining order or cause it to cease to be in force or (b) by the jurisdiction to make exclusion orders. The Act provides that the presumption of unlawful acquisition may be overcome by proof of lawful acquisition.”
[24][2014] VSCA 35; (2014) 41 VR 548; (2014) 239 A Crim R 253. (Markovski)
[25]With whom Redlich JA concurred.
[26]Markovski at [113].
Historical context
Lee also set out the historical context in which the POCA was enacted:[27]
[27]Lee at [14]-[16].
“[14] As noted by McPherson JA in Director of Public Prosecutions (Cth) v Hart (No 2) [2005] 2 Qd R 246 at [16], in relation to the Proceeds of Crime Act (Cth):
[16]‘There is a lengthy history of the use of legislative provisions like these as adjuncts to enforcing customs and excise duties, trade and navigation laws, anti-slave trading measures, and other activities prohibited by Parliament. Courts of Admiralty and Exchequer developed special procedures in rem against forfeited goods to give effect to such legislation, which in modern times have been held to be still available to common law courts in the United States: see discussion in CJ Hendry Co v Moore (1943) 318 US 133 and cf Willey v Synan (1935) 54 CLR 175, 185–186.’
[15]In Burton v Honan (1952) 86 CLR 169 an issue was raised as to the constitutional validity of such provisions in the Customs Act 1901 (Cth). Noting that reliance had been placed on the incidental power, Dixon CJ (at 178) acknowledged the potential for injustice to innocent individuals if their property were forfeit. His Honour continued (at 178):
‘On the other side it is pointed out that in the history of English and Australian Customs legislation forfeiture provisions are common, drastic and far reaching, and that they have been considered a necessary measure to vindicate the right of the Crown and to ensure the strict and complete observance of the Customs laws, which are notoriously difficult of complete enforcement in the absence of strong provisions supporting their administration.’
[16]Modern legislation permitting the confiscation by the state of proceeds of crime has a history of some two decades in this country: see Proceeds of Crime Act 1987 (Cth), Confiscation of Proceeds of Crime Act 1989 and Drug Trafficking (Civil Proceedings) Act 1990. In Director of Public Prosecutions (Cth) v Saxon (1990) 28 NSWLR 263 at 264, Kirby P noted that there was similar legislation in the United Kingdom, namely the Drug Trafficking Offences Act 1986 (UK) and that a common progenitor appeared to be the forfeiture statute enacted in the USA in 1982. The present Act identifies as one of its principal objects giving effect to Australia’s obligations under the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (Strasbourg, 1990) to which Australia is a signatory: Proceeds of Crime Act (Cth), s 5(f).”
Construction of s 102 POCA; grounds 1 and 2 in the notice of contention in 3908/13; grounds 4 and 5 in 4987/13
This analysis of the POCA is sufficient to demonstrate the context in which s 102 is found. In short, it provides for the transfer of an interest in forfeited property from the Commonwealth to someone who had an interest in the property before it was forfeited, provided that interest is not the proceeds of unlawful activity, and was acquired lawfully.
At material times s 102 provided:
“(1)If property is forfeited to the Commonwealth under section 92, the court that made the restraining order referred to in paragraph 92(1)(b) may, if:
(a)a person who claims an interest in the property applies under section 104 for an order under this section; and
(b)the court is satisfied that the grounds set out in subsection (2) or (3) exist;
make an order:
(c)declaring the nature, extent and value of the applicant’s interest in the property; and
(d)either:
(i) if the interest is still vested in the Commonwealth—directing the Commonwealth to transfer the interest to the applicant; or
(ii) declaring that there is payable by the Commonwealth to the applicant an amount equal to the value declared under paragraph (c).
(2)An order under this section may be made if:
(a)the applicant was not, in any way, involved in the commission of the offence to which the forfeiture relates; and
(b)the applicant’s interest in the property is not subject to the effective control of the person whose conviction caused the forfeiture; and
(c)the applicant’s interest in the property is not proceeds of the offence or an instrument of the offence.
(3)An order under this section may also be made if:
(a)the property was not used in, or in connection with, any unlawful activity and was not derived or realised, directly or indirectly, by any person from any unlawful activity; and
(b)the applicant acquired the property lawfully; and
(c)the applicant is not the person convicted of the offence to which the forfeiture relates.”
The learned trial judge considered this issue at paragraphs [96]-[136] of the reasons below (Reasons). His Honour concluded that the word “substantially” had to be read into s 102(3)(a) so that it read:
“… the property was not substantially used in, or in connection with, any unlawful activity and was not substantially derived or realised, directly or indirectly, by any person from any unlawful activity”.
The reason given for reading the word into the section was that the POCA was a penal statute.[28] Thus his Honour held the word should be read in even though the ordinary and natural meaning of the words “in connection with any unlawful activity” did not comprehend the meaning which derived from adding “substantially”.[29]
[28]Reasons at [117], [118] and [135].
[29]Reasons at [117].
The power to grant relief under s 102 arises when property has been forfeited under s 92. In turn s 92 applies where:
“(a)a person has been convicted of a serious offence; and
(b)either:
(i)at the end of that period, the property is covered by a restraining order against the person that relates to the offence; or
(ii)the property was covered by such a restraining order against the person, but the order was revoked under section 44 or the property was excluded from the order under that section; and
(c)the property is not subject to an order under section 94 excluding the property from forfeiture under this Part.”
One of the requirements for excluding property under s 94 is that the court be satisfied that the property is not “proceeds of unlawful activity”: s 94(1)(e). Section 338 defines “unlawful activity” as the acts or omissions that constitute an offence.
The terms “proceeds” and “instrument” bear the meanings given to them by s 329 and applied in s 330.
Section 329 defines a property to be “proceeds of an offence” if it is wholly or partly derived or realised, whether directly or indirectly, from the commission of the offence. The full text of that definition is significant:
“(1)Property is proceeds of an offence if:
(a)it is wholly derived or realised, whether directly or indirectly, from the commission of the offence; or
(b)it is partly derived or realised, whether directly or indirectly, from the commission of the offence;
whether the property is situated within or outside Australia.
(2)Property is an instrument of an offence if:
(a)the property is used in, or in connection with, the commission of an offence; or
(b)the property is intended to be used in, or in connection with, the commission of an offence;
whether the property is situated within or outside Australia.
(3)Property can be proceeds of an offence or an instrument of an offence even if no person has been convicted of the offence.
(4)Proceeds or an instrument of an unlawful activity means proceeds or an instrument of the offence constituted by the act or omission that constitutes the unlawful activity.”[30]
[30]Emphasis in original text.
Four things are evident from that text. First, the section defines “proceeds of an offence” by reference to whether it is wholly or partly derived or realised from an offence. Secondly, the legislature chose the word “partly” to indicate something less than the whole, without using the word “substantially”. Thirdly, the same section defines “instrument of an offence” and its relationship to the offence, using the same words as s 102(3)(a) when it describes the relationship between the property and unlawful activity, namely property “used in, or in connection with” the commission of an offence or the unlawful activity. Fourthly, the definition section itself does not include the word “substantially” as a qualification to the phrase “used in, or in connection with”.
Section 330 provides that property becomes proceeds of an unlawful activity if the property becomes proceeds of the offence. The text is significant:
“(1)Property becomes proceeds of an offence if it is:
(a)wholly or partly derived or realised from a disposal or other dealing with proceeds of the offence; or
(b)wholly or partly acquired using proceeds of the offence;
including because of a previous application of this section.
(2)Property becomes an instrument of an offence if it is:
(a)wholly or partly derived or realised from the disposal or other dealing with an instrument of the offence; or
(b)wholly or partly acquired using an instrument of the offence;
including because of a previous application of this section.
…
(6)Property becomes, remains or ceases to be proceeds of an unlawful activity, or an instrument of an unlawful activity, if the property becomes, remains or ceases to be proceeds of the offence, or an instrument of the offence, constituted by the act or omission that constitutes the unlawful activity.”
Once again the phrase “wholly or partly” is used in the definition and the word “substantially” is not.
Restraining orders can be made against property under sections 17,[31] 18,[32] or 20.[33] In all the basis for obtaining an order is similar, in that the supporting affidavit must show that the property is subject to the effective control of a suspect,[34] or the proceeds of an offence.
[31]Where a person has been convicted of or charged with an indictable offence.
[32]Where a person is suspected of committing a serious offence.
[33]Where a person is suspected of deriving literary proceeds from an indictable offence.
[34]“Suspect” in relation to a restraining order is defined to mean someone who has been convicted of, or charged with, or it is proposed to charge them with, or is suspected of committing, the offence to which the order relates: s 338.
No part of the definition of “effective control”[35] uses a form of words that suggests the property must be substantially under the control of the person. As noted above, a property is proceeds of an offence if it is wholly or partly derived or realised, whether directly or indirectly, from the commission of the offence.
[35]In s 337 POCA.
Thus it can be seen that the legislature included, in the sections dealing with obtaining a restraining order, a form of words that dealt with divisions less than the whole of a property, i.e. “wholly or partly” in the case of sections 17, 18, 19 and 20.
Further, that form of words was included in s 94(1)(e), as a basis for excluding property from a restraining order, by reason of the definition of “proceeds of unlawful activity” in s 329.
Section 102(2) provides for one occasion when an order relating to transferring forfeited property may be made, namely when:
·the applicant was not at all involved in the relevant offence; and
·the applicant’s interest is not under the effective control of the convicted person; and
·the applicant’s interest is not “proceeds of the offence” or an “instrument of the offence”.
The applicant under s 102(2) cannot be the convicted person, nor involved in any way in the offence. It thus contemplates an applicant who had nothing whatever to do with the offence that led to the forfeiture. Further the subsection also focusses on the “interest” claimed by the applicant, rather than on the property itself.[36] The interest cannot be under the effective control of the convicted person. Finally, the interest cannot be one that was wholly or partly derived (directly or indirectly) from the offence,[37] nor can it have been used in or in connection with the commission of the offence.[38]
[36]“Property” is defined to include an interest in any such real or personal property: s 338. The definition of “interest” means a legal or equitable estate or interest, or a right, power or privilege in connection with the property, in each case whether present or future and whether vested or contingent.
[37]It cannot be “proceeds of an offence” which is defined that way: s 330.
[38]The phrase “instrument of the offence” is defined that way: s 329.
As seen above the legislature used wording in the definition of “proceeds of an offence” that contemplated divisions of the whole property, and therefore an “interest” less than the entirety, but did not embrace the word “substantially”. Similarly the very definition of “instrument of an offence” in s 329 refers to the use of the property “in, or in connection with the commission of the offence”, but does not introduce the word “substantially” to qualify that phrase. In my view, they are compelling reasons why the word “substantially” should not be read into s 102(2).
Section 102(3) provides an additional basis upon which an order may be made, transferring forfeited property. It applies when:
·the property was not used in, or in connection with, any unlawful activity; and
·the property was not derived or realised, directly or indirectly, by any person, from any unlawful activity; and
·the applicant for the order acquired the property lawfully; and
·the applicant is not the person convicted of the offence to which the forfeiture relates.
There are contrasts between s 102(2) and s 102(3). First, the applicant under s 102(3) can have been involved, even intimately, with the commission of the relevant offence. The only person barred from applying for an order under this subsection is the convicted person. Secondly, the text of the subsection uses the word “property” rather than “interest in the property”. Whilst “property” includes an “interest” in it, it seems the subsection has a wider aim. So, an applicant may be unable to come within s 102(3) because the property was used in or in connection with unlawful activity, but still come within s 102(2) because their interest in the property is not caught by the definitions in s 329.

Thirdly, under s 102(3) the applicant must show that they have acquired the property, or interest, lawfully. That is not a condition applying to s 102(2), where the requirement is simply that the interest be unconnected with the particular offence to which the forfeiture relates. Fourthly, s 102(3) requires that the property or interest: (i) not to have been used in or in connection with “any unlawful activity”;[39] and (ii) that it has not been directly or indirectly derived[40] or realised “by any person from any unlawful activity”. The requirement that the property’s use be unconnected with “any unlawful activity” is not confined to the particular offence that led to the forfeiture, and on its face casts the obligation to show the property or interest is “innocent” very wide indeed. That is even more so with the requirement to show that the property or interest has not been derived or realised “by any person from any unlawful activity”.
[39]“Unlawful activity” is defined to mean an act or omission that constitutes an offence: s 338.
[40]This is defined in s 336 to include the person, or another person at the request or direction of the first person, deriving the proceeds directly or indirectly.
The fact that the applicant under s 102(3) can be a person connected with or involved in the offence that led to the forfeiture, as long as it is not the convicted person, suggests that the legislature would hardly have intended that such an applicant would face lower barriers to relief, than is the case for a totally innocent applicant under s 102(2).
The legislature can be taken to have been well aware of the meaning of the word “substantially”, and its utility, as it is used a number of times in the POCA: s 230(3)(a), referring to an order or warrant “in terms substantially corresponding to those given by the magistrate”; s 122(1)(c), “similar orsubstantially similar act or thing”; s 338, defining to related offences where the “physical elements of the 2 offences are substantially the same acts or omissions”.
These textural considerations lend support to the view that the absence of the qualifying word “substantially” in s 102(3) was a deliberate omission.
There is nothing in the context and the purpose of the POCA – see paragraphs [30] to [51] above – that compels a different view. The POCA has deliberately wide powers for the purpose of ensuring that those who commit offences do not profit from them, and the benefits cannot be enjoyed unless very stringent hurdles are overcome. There is no warrant to lower those hurdles when the legislature has not seen fit to do so.
Does authority compel a contrary view?
In Director of Public Prosecutions (DPP) v George[41] the court considered the words in the definition of an “instrument of an offence”, namely “used in, or in connection with, the commission of an offence” in the Criminal Assets Confiscation Act 2005 (SA). That Act had a similar purpose to the POCA, and many similarities in terms of the way the sections were constructed. Doyle CJ[42] referred to the fact that the purpose of the Act and the nature of its sections suggested a wide meaning would be given to the term “instrument”. He went on to make two relevant points:[43]
“[62] There is one thing which I consider to be clear. It is that there is no basis for qualifying the statutory definition by requiring that any connection be a ‘substantial connection’. To take that approach is to introduce an expression which the draftsman has not used. In that respect I agree with Millhouse J and with Debelle J in Taylor v Attorney-General (SA) at 466 and at 472 respectively, and with the majority of the Court of Criminal Appeal of Western Australia in R v Rintel (1991) 3 WAR 527 at 530–531 ,Malcolm CJ, and at 542, Pidgeon J.
[63]I also approach the issue of interpretation on the basis that the statutory definition should not be read as referring to or requiring a causal link between the property and the offence. Something less than that may suffice. Nor is it necessary that the property be something that is essential or necessary for the commission of the offence, or something that makes a unique contribution to the commission of the offence. Nor is it appropriate, when the instrument is land, to assign to the land a single or dominant use. There is no reason why land cannot be used in, or in connection with, the commission of an offence when it is also used for other purposes, and when on the objective circumstances it would be described as being used in another manner. Thus, the use of Mr George’s land might be described as residential, but it could nevertheless fall within the statutory definition of ‘instrument’.”
[41](2008) 102 SASR 246. (George)
[42]With whom White J agreed.
[43]George at [62]-[63].
The third member of the court, Vanstone J, referred to a number of the authorities including Director of Public Prosecutions v Jeffrey,[44] Re Application Pursuant to the Drugs Misuse Act 1986,[45] Ward, Marles & Graham v R,[46] and R v Hadad,[47] and initially came to the conclusion that the words required a substantial connection between the activity and the use of the property. Her Honour expressed it this way:[48]
“Having regard to the fact that the Act is penal in its operation and that consequences out of all proportion to the gravity of the crime could flow from a wide interpretation of the word “instrument”, for this and other serious offences (as defined), I would be prepared, if necessary, to find that a substantial connection is required between the property and the commission of the crime under consideration before it is found to be an instrument of that crime. I would require that the property was put to use in a positive sense; that it was a means through which the crime was effected; that the property was used as a tool in the commission of the crime, or in connection with its commission. I would be content to approach the matter in much the same way as did Hunt CJ in Jeffery, remembering always that the expression being construed there was “tainted property” rather than “instrument”. Such an interpretation would largely conform with the aims of the CAC Act as expressed in the legislation itself and as outlined by the Attorney-General in the Second Reading Speech referred to earlier. Absent any curial discretion in s 95, a more wide-ranging interpretation of instrument would result in manifest injustice in imposing a penalty bearing no relationship to the crime committed, not just in the present case, but also in cases of the nature described in the earlier part of these reasons. I do not consider that Parliament could have intended such a result.”
[44](1992) 58 A Crim R 310. (Jeffrey No. 1). This is the decision of Hunt CJ at CL at first instance. The decision on appeal is Jeffrey v Director of Public Prosecutions (Cth) (1995) 79 A Crim R 514. (Jeffrey No. 2).
[45][1988] 2 Qd R 506. (Drugs Misuse)
[46][1989] 1 Qd R 194. (Ward)
[47](1989) 16 NSWLR 476. (Hadad)
[48]George at [167].
However Vanstone J agreed with White J that the section dealing with pecuniary penalty orders, s 95, gave a discretionary power to the court rather than a mandatory one. As a consequence Vanstone J said:[49]
“[170] However, since writing a draft of these reasons, I have had the benefit of reading the reasons of White J. I am persuaded that the interpretation he has given to s 95 of the CAC — that s 95 confers a discretionary power — is not only available, but also leads to a result that does no violence to the scheme of the Act. In particular, his Honour’s approach allows for an expansive interpretation of the term “instrument” to be, in effect, ameliorated or balanced, where appropriate, by an exercise of the court’s discretion, including under s 95. That remedy to the otherwise harsh results identified herein is preferable to narrowing the interpretation of instrument. I gratefully concur in the reasons of White J on the interpretation of s 95.”
[49]George at [170].
George was applied in Dickfoss v Director of Public Prosecutions & Anor,[50] where the Northern Territory Court of Appeal considered the Criminal Property Forfeiture Act 2002 (NT). The particular phrase in issue was whether property was “crime-used”, which meant “is or was used, or intended for use, directly or indirectly, in or in connection with the commission of a forfeiture offence”.[51] Riley CJ[52] agreed with the trial judge that the connection between the offence and the use did not have to be substantial,[53] expressly adopting the comments of Doyle CJ at [62] in George. His Honour also said:
“[17]I acknowledge that it is necessary to bear in mind that the Northern Territory legislation does not provide the court with a discretion when dealing with an application under s 96 of the Act to forfeit crime-used property, and also that there is no requirement for proportionality between the relevant forfeiture offence and the value of the property to be forfeited. In this regard the operation of the Act has been described as draconian. Nevertheless, in my view, it is not appropriate to read into the section a necessity to find a connection which is direct and immediate. The words used are capable of wide application and the nature of the Act suggests an intention on the part of the legislature that they be given a wide application. The expression “in connection with” is of wide effect and, as Doyle CJ observed in relation to similar words used in the South Australian Act (at [57]):
[57]The composite expression involves practical considerations and matters of degree. There is no point in trying to define the statutory expression, as each case will turn on its own facts.”[54]
[50](2012) 31 NTLR 16. (Dickfoss)
[51]Dickfoss at [9], s 11(1) of the Act.
[52]With whom Southwood and Kelly JJ agreed.
[53]Dickfoss at [17].
[54]Dickfoss at [17]; internal citations omitted.
Such Queensland authority as there is does not assist.
In Drugs Misuse, Carter J considered the phrase “used in connexion with the commission of” in the context of an application for relief akin to an interlocutory restraining order pursuant to s 41 of the Drugs Misuse Act 1986 (Qld). The order was sought in relation to the offender’s house (where drugs had been found) and his truck (in which he had driven drugs to his house). The question was not approached as a question of statutory construction, but merely whether the particular connection was sufficient. His Honour expressly declined to finally determine if the truck and house were “used in connexion with” the offence, saying: “That question can best be addressed by the trial judge who is asked to make the order and who will be in possession of the whole of the material facts relied upon by the Crown at the respondent’s trial.”[55] He went on to say that because the Act had only been in force for a very short time, and restraining orders had been made in other cases in the magistrate’s court, “it may be of assistance if I say something about” the sections.[56]
[55]Drugs Misuse at p 510.
[56]Drugs Misuse at 510-511.
His Honour referred to Murdoch v Simmonds[57] and said:
“One must look, as Adam J. suggests, for a substantial connection between the use of the property and the commission of the offence — not a mere accidental or incidental connection with the commission of that offence. There must therefore be in a very real sense a substantial connection between the use of the property and the actual commission of the offence in the sense that the commission of the offence is related to or is dependent upon or could not have been committed without or resulted directly from the use of the property.”[58]
[57][1971] VR 887, per Adam J at 889. (Murdoch)
[58]Drugs Misuse at 512.
The legislation in Murdoch was far removed from that in question here, or, for that matter, in Drugs Misuse. Carter J’s views were obiter dicta, and constrained by the limitations of the issues and the hearing itself. Indeed his Honour went on to say:[59]
“As I have said, I do not think that it is necessary for me to express a concluded view on the question whether, if nothing more is proved at the trial than what is in the typewritten record, the property will become liable to forfeiture. I have only limited research and library facilities at this circuit and I would have preferred more detailed argument.”
[59]Drugs Misuse at 512.
Subsequently, the Full Court in Ward had to consider a question concerning the forfeiture of vehicles under s 34 of the Drugs Misuse Act 1986 (Qld) which used the words “in connection with the commission of” an offence. The question, however, was not one of the construction of the section, but whether the sentencing discretion miscarried because the forfeiture order was made. Carter J[60] referred to his earlier decision in Drugs Misuse, which involved the same section, acknowledging that it had been “without the benefit of full argument”.[61] Having quoted from what was said in that decision, Carter J acknowledged that the Full Court “did not have the benefit of detailed argument on the point nor as appears from a perusal of the transcript did the learned sentencing judge”.[62]
[60]With whom Kneipp and Demack JJ agreed.
[61]Ward at p 199.
[62]Ward at p 200.
Authority in New South Wales and Victoria take an approach inconsistent with the imposition of the term “substantially”.
In Hadad the New South Wales Court of Criminal Appeal had to consider whether, for property to come within the definition of “tainted property” in the Crimes (Confiscation of Profits) Act 1985 (NSW), proof was required of a substantial connection between the use of the property and the commission of the offence. A car had been made the subject of a restraining order because it had been used by a drug offender while he sold drugs which were carried in the car. As part of the sentence the Crown sought an order forfeiting the car, as “tainted property”, a term defined under s 3(1) to mean property that was “used in, or in connection with, the commission of a serious offence”.
McInerney J[63] distinguished cases which turned on different legislation. Ward was also distinguished, largely on the basis that the rationale for the decision was that if the words were given their ordinary grammatical meaning there would be many cases where hardship would be considerable where innocent parties who owned property were caught by the provisions of the Act. McInerney J considered that the legislature had reposed in the courts a very wide discretion on the question of whether or not forfeiture orders should be made in respect to tainted property in order to enable the courts to overcome the type of problem envisaged by Carter J. Significantly, however, it was not the hardship that flowed from the provisions of the Act that was important to his conclusion that the section should not be read down, but hardship otherwise flowing from a forfeiture:
“It must be pointed out, of course, there would always be hardship stemming from the provisions of the Act itself, but, in my view, that is not the hardship about which the Act speaks and to which a court is entitled to have regard. It is this very wide discretion reposed in the court on this question of hardship that convinces me that the legislature intended the section to have its ordinary grammatical meaning.”[64]
[63]With whom Enderby and Allen JJ agreed.
[64]Hadad at p 482.
McInerney J refused to adopt an interpretation that would effectively import the word substantially into the definition:
“I am of the opinion, having regard to the ambit of the legislation and the discretion reposed in the Court on the question of whether or not an order should be made, the intention of the legislature is that a wide scope be given to the concept of tainted property. I do not accept that the legislature intended the courts to construe the section by requiring a substantial connection between the commission of the crime and the alleged tainted property.”[65]
[65]Hadad at p 482.
As to the approach taken in Hadad, namely that the ability to avoid hardship was instructive as to the correct construction in Jeffrey No. 1, Hunt CJ referred to Hadad, and said:[66]
“That decision is, of course, binding upon me, but I am not concerned here with the same statute. Section 48(4) of the Proceeds of Crime Act does not itself permit hardship to be taken into account in determining whether relief should be granted to have property disregarded for the purposes of the automatic forfeiture provisions of s 30. It was argued by the Director that, because a person convicted of any offence may seek pursuant to s 48(3) to have his interest excluded from any restraining order upon his property, and because in relation to that particular application his financial hardship may be taken into account, the approach adopted in Hadad should similarly be adopted in relation to s 48(4).
I am not persuaded that the relevance of hardship to an application that property be excluded from a restraining order, but which hardship is irrelevant to an application for a declaration that that property should be disregarded for the purposes of the automatic forfeiture of that property, should require such an approach to be adopted to the proper interpretation of the statutory provisions relating to the latter. The property with which s 48(4) deals includes property in which innocent parties may well also have an interest – even a significant interest. Accordingly, in my view, the distinction made in Hadad does not apply to the meaning of the phrase as used in s 48(4).”
[66]Jeffrey No. 1 at page 316.
Support for that conclusion is also offered by the decision in Director of Public Prosecution v Diez.[67] Greg James J considered whether a requirement that the court take into account the public interest had any impact on hardship, saying:
“[56]When considering the applicability of s 48(3)(g), I accept the applicant's submissions:-
"17.'Public interest' invokes considerations of hardship to the defendant and others (Blake (supra at 262).[68]
18.'The inevitable and intended consequence of the operation of the Act is that it will have a punitive consequence. However, the Act must operate and have its deterrent effect according to its terms. Those terms give relief if the sentencing judge considers that, in all the circumstances, hardship would be occasioned by on order under the Act. Therefore the fact that allowing hardship will, to that extent, reduce the deterrent impact of the Act, is simply part and parcel of the ordinary operation of the Act, according to the language which Parliament has used. [It] is not a frustration of that operation, but a fulfilment, as Parliament intended' (Christopher David Lake (1989) 44 A Crim R 63 at 69)."”
[67][2003] NSWSC 238. (Diez)
[68]The reference to Blake was to Director of Public Prosecutions v Blake (1992) 60 A Crim R 257.
In any event, I pause to note that the POCA contains provisions that ameliorate hardship from forfeiture orders.
Part 2-2 contains Div 5, directed to reducing the effect of forfeiture orders. Section 72 provides that a dependant of a person whose property is subject to a forfeiture order[69] can obtain relief if the forfeiture would cause them hardship. Section 73 enables a court to exclude an interest in property from a forfeiture order if the person’s interest in the property is not proceeds of unlawful activity or the offence, nor an instrument of it. Section 77 enables compensation orders to be made in favour of a person, where that person can show that a proportion of the value of their interest in property subject to a forfeiture order is not acquired using proceeds of any offence.
[69]Other than an order under s 48 POCA.

Save in respects dealt with earlier, it has not been submitted that, if conclusions were reached which differed from those of the learned primary Judge as to whether s 102(3) of the POCA had been satisfied, there were discretionary grounds for refusing relief. I would therefore order that, where I have concluded that the relevant company has established that the conditions in issue have been satisfied, the property or proceeds of sale should be transferred to it.
Date for effective control for s 141 of the POCA
Section 141 provides as follows,
“141   Property subject to a person’s effective control
(1)If:
(a)     a person is subject to a *pecuniary penalty order; and
(b)     the *DPP applies to the court for an order under this section; and
(c)     the court is satisfied that particular property is subject to the    *effective control of the person;
the court may make an order declaring that the whole, or a specified part, of that property is available to satisfy the pecuniary penalty order.
(2)The order under subsection (1) may be enforced against the property as if the property were the *person’s property.
(3)A *restraining order may be made in respect of the property as if:
(a)     the property were the *person’s property; and
(b)     the person had committed a *serious offence.
(4)If the *DPP applies for an order under subsection (1) relating to particular property, the DPP must give written notice of the application to:
(a)     the person who is subject to the *pecuniary penalty order; and
(b)     any person whom the DPP has reason to believe may have an *interest in the property.
(5)The person who is subject to the *pecuniary penalty order, and any person who claims an *interest in the property, may appear and adduce evidence at the hearing of the application.”
The CDPP made an application under this section for a declaration that any property “recovered from forfeiture” by the Hart companies pursuant to their application under s 102 of the POCA is available to satisfy any PPO made against Mr Hart[1411]^. The applicant sought that relief as a result of its amendment on 12 April 2010. On 19 November 2010, a PPO was made against Mr Hart in an amount of $14,757,287.35.
[1411]See AD 22.
Having indicated his willingness to make orders for the return of some of the assets the subject of the s 102 application, the learned primary Judge dealt with the application by the CDPP under s 141. His Honour held that the conditions set out in s 141(1)(a), (b), and (c) had been satisfied. In doing so, his Honour proceeded on the basis that the relevant date for determining whether the property is subject to the effective control of the person who is subject to the PPO, is the date of the restraining order, on the concession of Mr Hart[1412]. Nevertheless, his Honour declined to make the declaration on discretionary grounds.
[1412]RJ [861]-[866].
The FPC (for convenience, I will henceforth continue to refer to the Commonwealth parties, rather than this appellant or the CDPP) appealed against the refusal of this application. By a Notice of Contention, the Hart companies have raised an issue as to the correct date for determining effective control under s 141, contending it to be the date of the hearing and determination of the application under that section. They then contended that the application should have been dismissed on the ground that the applicant had not demonstrated that Mr Hart had effective control of the assets on that day[1413]. This question is logically anterior to the question whether the learned primary Judge erred in the way he exercised the discretion.
[1413]See AD 41.
The Hart companies submitted that it was important that s 141 does not presuppose that property has been at any time restrained or forfeited. Because the application may be made in respect of such property, the condition that it be found to be subject to the effective control of the person subject to the PPO must relate to the time at which the application is determined[1414].
[1414]See Appeal 3885/2013, ROA paras 20-25.
The Commonwealth parties referred to the concession made by the Hart companies at the hearing, but nevertheless identified authorities supporting the course taken by the learned primary Judge. They are Logan Park; Commonwealth v McArthur[1415] (McArthur) and Hart No. 2[1416].
[1415]Unreported; 15 July 2004.
[1416]At 253-254.
Beyond that, the ultimate position of the Commonwealth parties on this question is not entirely clear. At one point, Senior Counsel for those parties disclaimed (albeit in the context of the exercise of the discretion under s 102) reliance upon what might happen after transfer of property to the Hart companies, saying that the last available evidence as to the control of the assets was related to the PPO; and that what might happen in the future was “speculation against speculation”[1417].
[1417]See AT 2-35/35; and more generally AT 2-34/10 to AT 2-36/5.
More recently, all parties have submitted that an application can be validly made and determined in respect of property which has been forfeited, and, as a result, is vested in the Commonwealth under s 96 of the POCA[1418]. The Hart companies repeated their submission that the relevant time for determining whether the property was under the effective control of the person subject to the PPO was when the application under s 141 was determined. The Commonwealth parties repeated their submission that, in such a case, the Court must be satisfied that the property was subject to the effective control of the person who is subject to the PPO, at an earlier time, being when a restraining order was made against the property. Reference was made to earlier provisions of the POCA relating to property which was subject to the effective control of a person other than the owner. Neither party submitted that the present application was to be determined on a hypothetical basis, namely, that the property was vested in one of the Hart companies.
[1418]FSCP p 3; and see T 2-49 to 50; FSHC pp 2-3.
The concession about the date for determining the effective control question was a concession about a matter of law. It was made by parties who did not have legal representation. It was made in final address. There has been no suggestion that the Commonwealth parties might have led evidence to address the position for which the Hart parties now contend[1419]; indeed, given the effect of s 96 of the POCA, it is quite unlikely that such evidence exists. In those circumstances, the Hart companies should be permitted to contend that the relevant date is the date when the application was determined.
[1419]See Pilbara Infrastructure Pty Ltd v Australian Competition Tribunal (2012) 246 CLR 379 at [31]; O’Brien vKomesaroff (1982) 150 CLR 310, 319, and cases there cited.
I have previously discussed Logan Park. The Court there considered that s 48 of the 1987 Act could only be given effect if, in the expression “is subject to the effective control” of the person, the word “is” was read to mean “was at the date of the restraining order”. The decision was not concerned with a provision like s 141. As previously indicated, there is no necessity to adopt the same course, in order to give practical effect to s 141.
Hart No. 2, also discussed earlier in these reasons, was similarly concerned with an application for the exclusion of property from a restraining order under s 28 of the POCA. In the introductory part of his reasons, McPherson JA referred to the power to make a restraining order under s 17 of the POCA extending to property of another person “that is subject to the effective control of the suspect”. His Honour observed that for the purposes of s 17, the question whether the property was subject to the effective control of the subject “falls to be determined at the time the restraining order is made”, referring to Logan Park[1420].It is evident, however, that his Honour proceeded on the basis that the relevant date for the application for exclusion from a restraining order was the date when that order was made[1421], though there may be some ambiguity in his Honour’s expression[1422]; and it would seem that there was no issue as to the relevant date.
[1420]Hart No. 2 at [2].
[1421]Hart No. 2 at [9].
[1422]Hart No. 2 at [10].
In McArthur, Judge Dodd of the District Court of New South Wales held that for the purpose of an application under s 28(3) of the 1987 Act the date for determining effective control was the date when a restraining order was made. The application was for (relevantly) a declaration that certain property was available to satisfy a PPO. That property had been subject to a restraining order. His Honour applied Logan Park to the provisions of s 28(3), on the basis that “there is nothing that could be used to distinguish the Court’s approach in that case”[1423]. He considered that, read otherwise, the legislation would be unworkable and too easily defeated[1424]. It will be apparent that, with respect, I do not agree with his Honour’s reasoning. Section 141 will achieve its intended purpose in a case where there is no restraining order in existence at the time when the application is determined, without adopting the approach taken in Logan Park. Where there is a restraining order in force in respect of property, in the ordinary course that property would be sold and the proceeds would reach the same destination as the proceeds of a PPO, without recourse to s 141. It cannot be said, therefore, that it is necessary to follow the approach taken in Logan Park, in order to make s 141 effective.
[1423]Transcript p 23.
[1424]Transcript p 23.
The provisions relied upon by the Commonwealth parties were s 29(4), s 38 and s 116 of the POCA.
It was submitted that, because s 29(4) prevented the Court from excluding property from a restraining order if satisfied that a PPO could be made against a suspect and the property was under the suspect’s effective control, this demonstrated that such property was intended to be available to satisfy a PPO.
Section 29(4) specifies a criterion for determining whether property might be excluded from a restraining order made under either s 17 or s 18 of the POCA. Property which is the subject of a restraining order under either of those sections (and not excluded from the order by virtue of s 29(4)) will, as a consequence of a relevant conviction of the suspect, ordinarily be forfeited by operation of s 92, though in the case of property the subject of a restraining order made under s 18, a Court might order its forfeiture under s 47, if satisfied that a relevant person committed a serious offence, with the property then vesting in the Commonwealth under s 66. In either case, the property is to be sold, and the proceeds applied in accordance with other provisions of the POCA. Section 29(4) is not directed to preserving property so that it might be available to satisfy a PPO.
Under s 116 of the POCA, one of the matters of which the Court is to be satisfied before it can make a PPO is that a person has derived benefits from the commission of an indictable offence. In identifying whether a person has derived such a benefit, the Court may treat as property of the person, any property which is subject to that person’s effective control. For the Commonwealth parties, it was submitted that absurdity would result if s 116 were given its literal meaning, so that the question were determined by reference to the time when the application was being decided. That is because a restraining order may have been made previously, and as a result of s 38 property not owned by the relevant person, but under that person’s effective control, had been transferred to the Official Trustee.
There may be a mismatch in the tenses used in s 116. (A similar question arises under s 128.) On the one hand, the section requires the Court to consider whether a person “has derived” benefits; but the section permits the Court, when determining that question, to treat as property of the person, property which “is” subject to the person’s effective control. There is a real question whether the Court could treat as property of the person, property which was, but no longer is, subject to the person’s effective control. The likely intent of the section is to allow the Court to take into account property which was subject to the effective control of the person at the time when the person is alleged to have derived benefits from the commission of the offence; or at any time which would be relevant to the allegation that the person then derived such benefits. The submission for the Commonwealth parties that the relevant time for determining effective control is the date of the application is unlikely to be correct. Since the effect of s 116 is not directly in issue in the present case, it is undesirable to rule on its construction. It is sufficient to say that it seems unlikely that it would provide support for the submission of the Commonwealth parties about the construction of s 141.
In any event, there are difficulties in reasoning from the construction of s 116 to the construction of s 141. The sections are directed to different questions, though the questions are not entirely unrelated. The relevant question under s 116 is whether the person “has derived benefits” from the commission of an offence, in order to determine whether a PPO should be made against a person. The question under s 141 is whether the Court should declare property to be available to satisfy a PPO. Because the questions are different, the meaning of an expression used in one section is of little assistance in determining the meaning of a similar expression used in the other.
It was also submitted that the construction of s 141 for which the Hart parties contend would mean that property which has come into the custody and control of the Official Trustee, by virtue of an order under s 38, would not be available to satisfy the PPO. While the contention may be correct, there is no absurdity in the result. That is because an order may be made under s 38 only in respect of property which is the subject of a restraining order; and as has already been indicated, where the person is convicted or other relevant provisions of the POCA take effect, the property will be forfeited and sold, with the net proceeds being paid to the CAA; and thus not intended to be available to satisfy a PPO.
The difficulty about the correct approach to s 141 arises in the present case from the circumstances in which the application was made. Those circumstances require some attention. At that time, and at the time of the hearing, any property to which the application might relate had been forfeited, and accordingly had vested absolutely in the Commonwealth[1425]. As a result, the restraining order had been discharged on 18 April 2006[1426]. When property is forfeited, it is to be sold, and the ultimate proceeds paid into the CAA[1427], which is also the ultimate destination of monies paid pursuant to a PPO[1428]. The present case would appear to be very different from the usual circumstances in which s 141 was intended to operate.
[1425]See ss 92, 96 of the POCA.
[1426]See s 45(4) of the POCA; the reference in the subsection to vesting absolutely in the Commonwealth under Division 1 of Part 2-3 can only be understood by reference to ss 92 and 96.
[1427]See s 100 of the POCA.
[1428]See s 296(1)(a) and (3)(e); s 140(1) of the POCA.
In my view, the natural reading of s 141 is that it permits a declaration to be made in respect of property which, at the time when the application is determined, is under the effective control of the person who is subject to the PPO. When the declaration is made, a restraining order may then be made in respect of the property[1429]; with the result that the property becomes subject to a charge[1430]. Section 141 is not directed to property which has been the subject of a restraining order under earlier provisions of the POCA, such as s 17, which would ordinarily mature into forfeiture, resulting in sale and the payment of the net proceeds to the CAA. Moreover, it seems to me to be well beyond the objects of the Act to make property of another person available to satisfy a PPO where the property once was, but no longer is, subject to the effective control of the person subject to the PPO; yet that would appear to be the effect of the Commonwealth’s submissions. In those circumstances, it seems to me that the question of effective control is to be determined at the date of the determination of the application under s 141.
[1429]Under s 141(3) of the POCA.
[1430]Under s 142(1) of the POCA.
In White HC, as mentioned earlier, the majority pointed out the need to have regard to the context and purpose of the provision in question when considering which meaning of the expression “property” was relevant. That approach, in my respectful opinion is orthodox; and is apt when seeking to determine the meaning of the provision relating to effective control in s 141. There seem to me to be good reasons for not following the decisions relied upon by the Commonwealth, relating to provisions which are significantly different to s 141, when determining this question.
The Commonwealth parties contended that the learned primary Judge erred in the exercise of the discretion. On the view to which I have come, there was no discretion to exercise, there being no suggestion that any of the forfeited property was subject to the effective control of Mr Hart when the application was being determined.
Accordingly, I would dismiss the appeal of the Commonwealth parties against the refusal of the application made under s 141.
Conclusion
It follows that I would dismiss the appeals by the Commonwealth parties.
In Appeal 3908 of 2013, I would grant the appellants leave to amend their Notice of Appeal as indicated earlier; and I would set aside the orders of the learned primary Judge. I would not grant relief in relation to property where no submissions were advanced on behalf of the Hart companies. Otherwise I would make declarations as to the interests of the relevant appellant in the forfeited property, immediately prior to forfeiture, in accordance with these reasons; and in each case would order the transfer of the property, or retained proceeds from the sale of the property, to the relevant appellant. I would invite the parties to agree on the form of an order, and failing agreement, to provide submissions as to a form of order, within times to be specified. In each case the declaration should record, where relevant, that the property was encumbered by the charge to Merrell.
Absent some special circumstances, the costs of the appeals should be paid by the Commonwealth parties to the Hart companies. I would give directions, however, permitting any party to make submissions for some other order for costs; and in the absence of such submissions would make the order for costs which I have identified.
I note no submissions have been made about the order for costs at first instance.

CITATION:	Commissioner of the Australian Federal Police v Hart & Ors; Flying Fighters Pty Ltd v Commonwealth of Australia & Anor; Commonwealth of Australia v Yak 3 Investments Pty Ltd & Ors [2016] QCA 215
PARTIES:	In Appeal No 3885 of 2013: COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE (appellant) v STEVEN IRVINE HART (first respondent) FLYING FIGHTERS PTY LTD ACN 067 895 005 (second respondent) MERRELL ASSOCIATES LIMITED HK (third respondent/not a party to the appeal) NEMESIS AUSTRALIA PTY LTD ACN 010 225 537 (fourth respondent) MERRELL ASSOCIATES (AUSTRALIA) PTY LTD (fifth respondent/not a party to the appeal) YAK 3 INVESTMENTS PTY LTD ACN 010 623 560 (sixth respondent) BUBBLING SPRINGS OLIVE GROVE PTY LTD ACN 010 281 866 (seventh respondent) In Appeal No 3908 of 2013: FLYING FIGHTERS PTY LTD ACN 067 895 005 (first appellant) YAK 3 INVESTMENTS PTY LTD ACN 010 623 560 (second appellant) BUBBLING SPRINGS OLIVE GROVE PTY LTD ACN 010 281 866 (third appellant) NEMESIS AUSTRALIA PTY LTD ACN 010 225 537 (fourth appellant) v COMMONWEALTH OF AUSTRALIA (first respondent) COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE (second respondent) In Appeal No 4987 of 2013: COMMONWEALTH OF AUSTRALIA (appellant) v YAK 3 INVESTMENTS PTY LTD ACN 010 623 560 (first respondent) BUBBLING SPRINGS OLIVE GROVE PTY LTD ACN 010 281 866 (second respondent) NEMESIS AUSTRALIA PTY LTD ACN 010 225 537 (third respondent) FLYING FIGHTERS PTY LTD ACN 067 895 005 (fourth respondent) ALFREDTON PTY LTD ACN 070 015 057 (fifth respondent)
FILE NO/S:	Appeal No 3908 of 2013 Appeal No 3885 of 2013 Appeal No 4987 of 2013 DC No 1416 of 2003 DC No 3068 of 2006
DIVISION:	Court of Appeal
PROCEEDING:	General Civil Appeals
ORIGINATING COURT:	District Court at Brisbane – [2013] QDC 60
DELIVERED ON:	29 August 2016
DELIVERED AT:	Brisbane
HEARING DATE:	11, 12, 13 March 2015 26 April 2016 – Further Written Submissions
JUDGES:	Morrison JA and Douglas and Peter Lyons JJ Separate reasons for judgment of each member of the Court, Douglas and Peter Lyons JJ concurring as to the orders made, Morrison JA dissenting
ORDERS:	1. Appeal number 3885 of 2013 is dismissed. 2. Appeal number 4987 of 2013 is dismissed. 3. The appellants in appeal number 3908 of 2013 are granted leave to amend the notice of appeal in accordance with paragraph 23 of their submissions of 26 April 2016. 4. Within seven days, the parties are to attempt to agree on, and submit to the Court, a form of order to be made in appeal number 3908 of 2013 to give effect to these reasons; and on orders for costs in each of appeals numbered 3885 of 2013, 4987 of 2013, and 3908 of 2013; and to the extent that there is any failure to agree, each party is to submit within 14 days the draft order for which it contends, together with supporting submissions not exceeding two pages in length.
CATCHWORDS:	CRIMINAL LAW – PROCEDURE – CONFISCATION OF PROCEEDS OF CRIME AND RELATED MATTERS – FORFEITURE OR CONFISCATION – SERIOUS CRIME RELATED ACTIVITY OR CONFISCATION OFFENCE – APPLICATION FOR ORDER FOR TRANSFER OF FORFEITED PROPERTY TO PERSONS CLAIMING AN INTEREST IN IT – POWERS OF COURT – where Hart, an accountant, engaged in systematic tax fraud, by running a number of tax avoidance schemes in which he involved his clients – where companies associated with Hart, Flying Fighters Pty Ltd, Nemesis Australia Pty Ltd, Yak 3 Investments Pty Ltd and Bubbling Springs Olive Grove Pty Ltd, acquired various assets – where in May 2003, the Commonwealth was granted a restraining order over property of the companies, Flying Fighters, Nemesis, Yak and Bubbling Springs, under s 17 of the Proceeds of Crime Act 2002 (Cth) (POCA) on the basis that the interest of each company in the property was under Hart’s effective control – where in May 2005 Hart was convicted of nine offences of defrauding the Commonwealth, in contravention of s 29D of the Crimes Act 1914 (Cth) with the restrained property forfeited to the Commonwealth on 18 April 2006, under s 92 POCA – where the Hart companies applied for orders under s 102 POCA directing that their interests in the forfeited property be transferred to them, or that they be paid an amount equal to the value of their interests – whether the Court has power to order transfer of property without declaring its value – whether the Court had power to make the transfer of property conditional on compliance by the applicants with other orders – whether power properly exercised CRIMINAL LAW – PROCEDURE – CONFISCATION OF PROCEEDS OF CRIME AND RELATED MATTERS – FORFEITURE OR CONFISCATION – SERIOUS CRIME RELATED ACTIVITY OR CONFISCATION OFFENCE – APPLICATION FOR ORDER FOR TRANSFER OF FORFEITED PROPERTY TO PERSONS CLAIMING AN INTEREST IN IT – DERIVATION OF PROPERTY – where Hart, an accountant, engaged in systematic tax fraud, by running a number of tax avoidance schemes in which he involved his clients – where companies associated with Hart, Flying Fighters Pty Ltd, Nemesis Australia Pty Ltd, Yak 3 Investments Pty Ltd and Bubbling Springs Olive Grove Pty Ltd, acquired various assets – where in May 2003, the Commonwealth was granted a restraining order over property of the companies, Flying Fighters, Nemesis, Yak and Bubbling Springs, under s 17 POCA on the basis that the interest of each company in the property was under Hart’s effective control – where in May 2005 Hart was convicted of nine offences of defrauding the Commonwealth, in contravention of s 29D of the Crimes Act 1914 (Cth) with the restrained property forfeited to the Commonwealth on 18 April 2006, under s 92 POCA – where the Hart companies applied for orders under s 102 POCA directing that their interests in the forfeited property be transferred to them, or that they be paid an amount equal to the value of their interests – where conditions for relief include condition that the property was not derived or realised, whether directly or indirectly, from unlawful activity – whether condition not satisfied if some of the purchase monies were the obtained from unlawful activities – whether condition not satisfied if some money borrowed for the purchase of the property was the result of unlawful activity – whether condition not satisfied if some money used to pay for repairs to the property was the result of unlawful activity CRIMINAL LAW – PROCEDURE – CONFISCATION OF PROCEEDS OF CRIME AND RELATED MATTERS – FORFEITURE OR CONFISCATION – SERIOUS CRIME RELATED ACTIVITY OR CONFISCATION OFFENCE – PECUNIARY PENALTY ORDER – APPLICATION FOR DECLARATION THAT PROPERTY AVAILABLE TO SATISFY PECUNIARY PENALTY ORDER – EFFECTIVE CONTROL – where Hart, an accountant, engaged in systematic tax fraud, by running a number of tax avoidance schemes in which he involved his clients – where companies associated with Hart, Flying Fighters Pty Ltd, Nemesis Australia Pty Ltd, Yak 3 Investments Pty Ltd and Bubbling Springs Olive Grove Pty Ltd, acquired various assets – where in May 2003, the Commonwealth was granted a restraining order over property of the companies, Flying Fighters, Nemesis, Yak and Bubbling Springs, under s 17 POCA on the basis that the interest of each company in the property was under Hart’s effective control – where in May 2005 Hart was convicted of nine offences of defrauding the Commonwealth, in contravention of s 29D of the Crimes Act 1914 (Cth) with the restrained property forfeited to the Commonwealth on 18 April 2006, under s 92 POCA – where the Commonwealth was granted a pecuniary penalty order against Hart, under s 116 POCA with Hart ordered to pay $14,757,287.35 – where the Commonwealth applied for an order under s 141 POCA, declaring that the forfeited property available to satisfy the pecuniary penalty order – where order may be made where the Court is satisfied that the property is under the effective control of the person against whom the pecuniary penalty order was made – time for determining whether the property was under the effective control of that person Acts Interpretation Act 1901 (Cth), s 33(2A) Crimes Act 1914 (Cth), s 29D Criminal Code (Cth), s 400.1, s 400.9(1) Criminal Code (Qld), s 408C(1)(f) Proceeds of Crime Act 1987 (Cth), s 4, s 82 (repealed) Proceeds of Crime Act 2002 (Cth), s 5, s 17, s 18, s 26, s 29, s 33, s 34, s 37, s 38, s 42, s 44, s 45, s 92, s 96, s 102, s 102(1), s 102(2), s 102(3), s 116, s 121, s 123, s 124, s 128, s 130, s 134, s 141, s 142, s 296, s 315B, s 329, s 330, s 336, s 337, s 338 Taxation Administration Act 1953 (Cth), s 8N Attorney-General v Great Eastern Railway Co (1880) 5 App Cas 473; [1880] UKHL 2, applied BRK (Bris) Pty Ltd v Federal Commissioner of Taxation (2001) 46 ATR 347; [2001] FCA 164, approved Carr v Western Australia (2007) 232 CLR 138; [2007] HCA 47, applied CDPP v Hart & Ors; Yak 3 Investments P/L as t/tee for Yak 3 Discretionary Trust & Ors v Commonwealth of Australia [2013] QDC 60, related Chalmers v R (2011) 37 VR 464; [2011] VSCA 436, approved Cook’s Construction Pty Ltd v Brown (2004) 49 ACSR 62; [2004] NSWCA 105, cited Dickfoss v Director of Public Prosecutions (2012) 31 NTLR 16; (2012) 165 NTR 12; [2012] NTCA 1, cited Director of Public Prosecutions v Allen [1988] VicSC 661, approved Director of Public Prosecutions v Diez [2003] NSWSC 238, cited Director of Public Prosecutions v Lynch, unreported, Commissioner Templeman, Court of Criminal Appeal, WA, No 2531 of 1987, 2 February 1990, approved Director of Public Prosecutions (Cth) v Corby [2007] 2 Qd R 318; [2007] QCA 58, cited Director of Public Prosecutions (Cth) v Hart (No 2) [2005] 2 Qd R 246; [2005] QCA 51, applied Director of Public Prosecutions (Cth) v Jeffery (1992) 58 A Crim R 310, cited Director of Public Prosecutions (SA) v George (2008) 102 SASR 246; [2008] SASC 330, cited Director of Public Prosecutions (WA) v White (2010) 41 WAR 249; [2010] WASCA 47, cited Gray v Official Trustee in Bankruptcy (1991) 29 FCR 166; [1991] FCA 176, approved Hollington v F Hewthorn and Co Ltd [1943] KB 587, cited In Re Bank of Credit and Commerce International SA (No 8) [1998] AC 214, cited Jaimee Pty Ltd v Council of the City of Sydney [2010] NSWLEC 245, applied Jeffery v Director of Public Prosecutions (Cth) (1995) 79 A Crim R 514, cited Johns v Australian Securities Commission (1993) 178 CLR 408; [1993] HCA 56, applied Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8, applied Jones v Sutherland Shire Council [1979] 2 NSWLR 206, cited Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11, cited Lee v Director of Public Prosecutions (Cth) (2009) 75 NSWLR 581; [2009] NSWCA 347, cited Logan Park Investments Pty Ltd & Others v Director of Public Prosecutions (Cth) (1994) 122 FLR 1, distinguished Markovski v Director of Public Prosecutions (2014) 41 VR 548; [2014] VSCA 35, cited Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24; [1986] HCA 40, cited Nilant v Macchia (2000) 104 FCR 238; [2000] FCA 1528, cited North Sydney Council v Michael Standley & Associates Pty Ltd (1998) 43 NSWLR 468; [1998] NSWSC 163, applied Re An Application Pursuant to the Drugs Misuse Act 1986 [1988] 2 Qd R 506, cited Ward v Metropolitan Police Commissioner [2006] 1 AC 23; [2005] EWCA Civ 1072, not followed White v Director of Public Prosecutions (WA) (2011) 243 CLR 478; [2011] HCA 20, cited
COUNSEL:	In Appeal No 3885 of 2013: A R Moses SC, with G J Del Villar, for the appellants The first respondent appeared on his own behalf P J Roney QC, with A J Greinke and G C Dempsey, for the second respondent In Appeal No 3908 of 2013: P J Roney QC, with A J Greinke and G C Dempsey, for the appellant A R Moses SC, with G J Del Villar, for the respondents In Appeal No 4987 of 2013: A R Moses SC, with G J Del Villar, for the appellant P J Roney QC, with A J Greinke and G C Dempsey, for the respondents
SOLICITORS:	In Appeal No 3885 of 2013: The Commissioner of the Australian Federal Police for the appellants The first respondent appeared on his own behalf No appearance for the second respondent In Appeal No 3908 of 2013: No appearance for the appellants The Commissioner of the Australian Federal Police for the respondents In Appeal No 4987 of 2013: The Commissioner of the Australian Federal Police for the appellant No appearance for the respondents