Confiscations Act 1997 Applications (Ruling No. 3 – Costs)

[2021] VCC 2068

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMON LAW DIVISION

Revised
Not Restricted
Suitable for Publication

CONFISCATION LIST

Case No. CI-20-02901
CI-21-03479

IN THE MATTER of the Confiscation Act 1997

and

IN THE MATTER of property of a person who a police officer suspects
on reasonable grounds has engaged in serious criminal activity

and

IN THE MATTER of an Application by THE DIRECTOR OF PUBLIC PROSECUTIONS
FOR VICTORIA  
  Applicant

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JUDGE:	HIS HONOUR JUDGE DYER
WHERE HELD:	Melbourne
DATE OF HEARING:
DATE OF RULING:	16 December 2021
CASE MAY BE CITED AS:	Confiscations Act 1997 Applications (Ruling No. 3 – Costs)
MEDIUM NEUTRAL CITATION:	[2021] VCC 2068

RULING NO. 3
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Subject:Proceeds of crime

Catchwords:          Costs

Legislation Cited:         Confiscation Act 1997 s 133A

Cases Cited:

Ruling:  

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Appearances:

Dr P. Vout QC with Mr D. Mence of Counsel appeared on behalf of the Director of Public Prosecutions

Mr T. Mitchell of Counsel appeared on behalf of Seasons Ranch Organic Pty Ltd ACN 633 144 788, Australian Organic Eggs Pty Ltd ACN 633 278 903, Seasons Kerang Pty Ltd ACN 633 279 473 and Seasons Ranch Pty Ltd ACN 633 078 538

Ms K. Phair of Counsel appeared on behalf of Hong Liu and Wonder Agriculture Pty Ltd ACN 633 078 538

Mr S. Cromb of Counsel appeared on behalf of the National Australia Bank Limited

Mr Gavin Song, solicitor, appeared on behalf of Hanyin Zhang, Yining Tao, Capital Wins Pty Ltd ACN 613 674 481 as trustee for the Solomon Capital Trust, Bin Zhang, Guifei Miao, Purple International Trading Pty Ltd ACN 166 085 329 and All Projects Engagement Solution Pty Ltd ACN 616 044 949

HIS HONOUR:

1This ruling concerns three separate costs applications.  The first application, on behalf of the Director of Public Prosecutions for Victoria (‘the Director”), relates to costs incurred in relation to an unexplained wealth restraining order (“UWRO”) which was made on 22 October 2021 in proceeding number CI‑21‑03479.

2The Director seeks costs against Hong Liu and Wonder Agriculture Pty Ltd ACN 633 078 538 (“the investors”).  That application is opposed.

3The costs sought by the Director are limited and quantified in an amount of $11,320.90. The basis for the claim is set out in written submissions dated 25 October 2021. In essence the argument in support of costs focuses on the actions of the investors following the granting of an interim UWRO made under s 40F(1) of the Confiscation Act 1997 (“the Act”) on 19 August 2021.

4On 21 September 2021, on return of the interim UWRO, the investors sought and were granted an adjournment on the basis that there was intended to be filed an application under s 175 of the Corporations Act 2001 (Cth) (“the CA”). Such an application was to have been commenced in the Supreme Court of Victoria and related to the share registers concerning four companies, Seasons Ranch Pty Ltd ACN 616 496 541, Australian Organic Eggs Pty Ltd ACN 633 278 903, Seasons Kerang Pty Ltd ACN 633 279 473, and Seasons Ranch Organic Pty Ltd ACN 633 144 788.

5Subsequent to that adjournment being granted on 21 September 2021, the Director filed further submission on 8 September 2021 essentially responding to the issues raised by the investors at the 21 September hearing.  The Director also submits that the investors filed grounds of opposition to the making of the UWRO on 11 October 2021, which were “put on a different basis to that ventilated at the hearing on 21 September 2021.”[1]

[1]Director’s supplementary submissions on costs dated 25 October 2021

6The investors filed written submissions in relation to costs on 24 October 2021.  Those submissions concede that the Director is not precluded from seeking costs in responding to the grounds of opposition in submissions put on behalf of the investors.  Notwithstanding that concession, reference was made by Ms Phair, who appeared on behalf of the investors, to the usual practice in such applications that any order for costs on an interlocutory application should in effect be stayed until the final determination of the proceeding unless the court otherwise orders.

7Reference was also made to Dale v Clayton Utz (No. 3)[2] which provides guidance as to the circumstances where a departure from such a general principle can be justified.  In essence the court should not depart from the ordinary rule absent some unreasonable or reprehensible conduct effectively causing the successful party to incur unnecessary costs.  Parties need to have acted with “competence and diligence” triggering the increased costs incurred by the successful party.

[2][2013] VSC 593

8The Act provides for costs to be awarded in circumstances set out in s 133A. That section makes specific provision for costs to be awarded in circumstances described in sections 133A(2), 133A(3) and 133A(3A). The authorities to which I was referred, both by Ms Phair on behalf of the investors and Mr Mence on behalf of the Director, require an interpretation of the statutory power to award costs as being one which does not exclude the general power to award costs.[3] 

[3]DPP v Le (No 2) [2007] VSCA 57; DPP v Ali (No 2) [2009] VSCA 242; Bow Ye Investments Pty Ltd (in Liq) v DPP (No 2) [2009] VSCA 278

9Such an approach was adopted more recently in Trajkovski v DPP[4] where an unsuccessful applicant for an exclusion order was ordered to pay the Director’s costs on the basis that the usual rule as to costs in civil proceedings was to be applied.

[4][2012] VSC 121

10In Bow Ye it was stated:

“The combined effect of the restriction created by s 133A(1), with the preconditions detailed in s 133A(2) and (3) is that the section ensures that persons challenging applications for forfeiture orders or restraining orders, if successful are not required to pay their own costs. Such an effect is clearly the policy behind the section.”[5]

[5]Bow Ye Investments Pty Ltd (in Liq) v DPP (No 2) [2009] VSCA 278 at [12]

11The court continued:

“Section 133A does not contemplate costs orders awarded in favour of the Director, it merely deals with the situation where costs are awarded against the Director. If costs are to be awarded against the Director, certain additional factors listed in the three paragraphs of s 133A(2) or (3) must be met for a party challenging an order to be awarded costs.”[6]

[6]Ibid at [16]

12In such circumstances I am satisfied that there are two parallel bases upon which costs orders in these applications may be justified. The first of these is governed by the statutory framework set out in s 133A. The second relies upon the general discretion to award costs to a successful party in civil proceedings. The Director’s application in the present case relies upon that general discretionary power to award costs.

13I find that the limited basis upon which the Director seeks costs relating to the preparation of the supplementary submission filed on 8 October 2021, and in relation to the appearance on 13 October 2021 following the filing of the investors grounds of opposition, justify an order being made in favour of the Director and against the investors in proceeding number CI-21-03479. 

14The quantum of costs sought by the Director is set out in an annexure to the written submissions in the total sum of $11,320.90.  Ms Phair, on behalf of the investors, submitted that only a portion of the costs incurred by the Director should be payable on the basis that the hearing of this matter involved not only the investors, but other parties who were opposing the making of the principle UWRO.  I therefore propose to reserve quantum of costs to be awarded in favour of the Director, and grant liberty to apply in respect of that amount.

15I further propose to stay the execution of the final costs order until the final determination of any outstanding exclusion or compensation applications on behalf of the investors.

16The second application for costs is made by the investors in relation to the first Zhang proceeding (CI-20-02901) following the setting aside of the charge based restraining order in accordance with s 27(9) of the Act. Costs are sought from the Director. That order is also opposed. That restraining order was set aside following the finalisation of criminal proceedings against Ms Zhang. On that date Ms Zhang entered a plea of guilty to an offence of dealing with property suspected of being proceeds of crime contrary to s 195 of the Crimes Act 1958. As a result there no longer remained any basis for the continuance of the original charge based restraining order which had been made on 1 September 2020.

17Notwithstanding the setting aside of the charge based restraining order, there has been no determination of the merits of the investors applications that would entitle the court to be satisfied that “the person was not involved in any way in the commission of the offence in respect of which … the restraining order was sought or made,” such as to engage the wording of s 133A(2)(c).

18Ms Phair, on behalf of the investors, acknowledged that the property presently restrained under the current UWRO is the same property that had been restrained under the charge based restraining order. She submitted that the Director had chosen to pursue the charge based restraining order which necessitated the investors to apply for exclusion or run the risk of forfeiture.  Such an argument may have merit, although it ultimately cannot be determined until the court can make factual findings sufficient to engage the sub-section to which I have referred.

19I therefore propose to reserve the questions of the investors’ costs relating to the charge based restraining order until a final determination of any application for exclusion relating to the investors which may be made in accordance with s 40S of the Act.

20The third costs application is made on behalf of the companies and seeks costs against the Director in relation to the charge based restraining order. That order is also opposed. The written submissions which were spoken to by Mr Mitchell of counsel during the hearing on 26 October 2021, seek costs in accordance with s 133A(2) on the basis that the statutory pathway justifying an order for costs has been satisfied, and in those circumstances the Director should pay all costs incurred by the companies in connection with the first Zhang proceeding, including reserved costs.

21Mr Mitchell submitted that the Director’s further application for the unexplained wealth restraining order should not be considered as a continuation or a replacement of the charge based restraining order.  Conversely the court should now deal with the costs application made by the companies.  The submission succinctly outlined why such an order should be made:

“Once the restraining order (charge based) was made, the companies were obliged to bring an exclusion application to avoid automatic forfeiture, and they did so. 

They have succeeded because no forfeiture order was made as a consequence of the charges.  The fact that they succeeded because the Director was unable to sustain a conviction, does not undermine the companies’ success.

There is no evidence or submission to the effect the companies were in any way involved in the offences, and the court should be satisfied that they were not.”

22I accept Mr Mitchell’s submission in respect of the companies’ application may have considerable force. It is however complicated in already complex litigation by the proposed application under s 175 of the CA on behalf of the investors. That application cannot be determined by this court. In my view it is prudent to defer the determination of the companies’ application for costs until such time as the s 175 application has been heard and determined.

23I therefore propose to reserve the companies’ costs of and incidental to the first Zhang proceeding to a date to be fixed.  I reserve liberty to the parties to apply.

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