JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : DIRECTOR OF PUBLIC PROSECUTIONS (CTH) -v- KAMAL [2010] WADC 67 CORAM : EATON DCJ HEARD : 30 MARCH 2010 DELIVERED : 7 MAY 2010 FILE NO/S : POC 4 of 2009
MATTER : IN THE MATTER of an application pursuant to section 42 of the Proceeds of Crime Act 2002 BETWEEN : DIRECTOR OF PUBLIC PROSECUTIONS (CTH) Applicant
AND
NASHWAN KAMAL
Respondent
Catchwords: Constitutional law (Cth) - Judicial power of the Commonwealth - Proceeds of Crime Act 2002 Legislation: Acts Interpretation Act 1901 (Cth)
Proceeds of Crime Act 2002 (Cth)
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Result: Declaration that s 26(4) of the Proceeds of Crime Act 2002 is invalid
Restraining order made on 16 October 2009 vacated Representation: Counsel:
Applicant : Mr E W L Greaves
Respondent : Mr R E Lindsay
Solicitors:
Applicant : Office of the Director of Public Prosecutions (Cth)
Respondent : S C Nigam & Co
Case(s) referred to in judgment(s):
International Finance Trust Co Ltd v New South Wales Crime Commission [2009] HCA 49
Kable v Director of Public Prosecutions of New South Wales (1996) 189 CLR 51
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1 EATON DCJ: On 15 October 2009 the applicant, by originating motion, applied to this Court for an order that a sum of $30,000 cash seized from the respondent on 24 September 2009 in the course of the execution of a search warrant and the funds standing to the credit of ANZ bank account number 9025-88472 held in the name of Amedi Investments Pty Ltd be not disposed of or otherwise dealt with by the respondent or any other person. The application was intended to be dealt with ex parte, the second order sought being that the applicant, as soon as is reasonably practical, serve the respondent with copies of the order, the originating motion, all documents filed in support of that motion except for a particular affidavit, the applicant's written submissions and copies of s 24 and s 42 of the Proceeds of Crime Act 2002 (Cth) ("the Act").
2 The application came before her Honour Chief Judge Kennedy on 16 October 2009. Having heard counsel for the applicant her Honour made an order in the following terms: "UPON THE APPLICATION of the applicant by originating motion dated 15 October 2009 and UPON HEARING Mr E W L Greaves of counsel for the applicant AND UPON the applicant, on behalf of the Commonwealth of Australia, undertaking to the court that the Commonwealth will pay to any party restrained or affected by the restraints imposed by this restraining order, such damages as the court may in its discretion consider in the circumstances to be just, such damages to be assessed by the court or in accordance with such directions as the court may make and to be paid in such manner the court may direct AND UPON the applicant further undertaking to the Court that it will retain the original sworn affidavit of federal agent Gregory Clifford sworn 15 October 2009 and the applicant's original written submissions in support of the restraining order until such time as it is ordered by this Court to produce the said affidavit and submissions to the Court file, IT IS ORDERED that: 1. Pursuant to: a) section 18(2)(a) of the Proceeds of Crime Act 2002 ('Act') the following specified property of the respondent's, namely $30,000 cash seized from the respondent on 24 September 2009 at 3/74 Cooper St, Mandurah under a search warrant (Page 4)
pursuant to section 3E of the Crimes Act 1914 dated 23 September 2009; and b) section 18(2)(c) of the Act the following property that is subject to the effective control of the respondent, namely the funds standing to the credit of ANZ Bank account number 9025-88472 held in the name of Amedi Investments Pty Ltd. must not be disposed of or otherwise dealt with by the respondent or any other person. 2. As soon as is reasonably practicable the applicant is to serve the respondent with copies of: a) this order; b) the originating motion; c) all documents filed in support of the originating motion; save for the affidavit of Gregory Clifford sworn 15 October 2009 and save for the applicant's written submissions in support of the restraining order; d) section 24 of the Act; so as to make the respondent aware of his rights to apply for reasonable living and business expenses to be met out of the restrained property; and e) section 42 of the Act; so as to make the respondent aware of his rights to apply for revocation of the restraining order. 3. the respondent have liberty to make any application/s pursuant to section 24 and/or section 42 of the Act on 24 hours notice to the applicant. 4. The applicant have liberty to uplift the affidavit of Gregory Mark Clifford sworn 15 October 2009 ('affidavit') and the submissions filed in support of the restraining order application from the court file. (Page 5)
5. Publication of each of the affidavit and the submissions, by anyone other than the applicant, outside of the courtroom is prohibited until further order. 6. Any person to whom the applicant discloses the affidavit and/or submissions may only further disclose the affidavit and/or submissions, and/or their contents, to a legal practitioner for the purposes of seeking legal advice. 7. Pursuant to section 33(3)(b) of the Act the applicant may delay providing a copy of the affidavit and the submissions to the respondent until 16 December 2009. 8. The applicant's originating motion be hereby adjourned to Thursday the 22nd day of October 2009 at 10.00 am. 9. There be liberty to apply for further or other orders." 3 It appears that service was affected because the respondent instructed solicitors who filed a notice of acting on 22 October 2009. On 3 November 2009, he applied by chamber summons for an order that the restraining order imposed over his property be revoked pursuant to s 42 of the Act or, in the alternative, that he be granted reasonable business and living expenses to be met from property belonging to him, the subject of the restraining order, pursuant to s 24 of the Act. 4 That application came before his Honour Judge Wisbey in this Court on 5 November 2009. The parties reached agreement. In consequence, an order was made that, pursuant to s 39(1)(a) of the Act, the restraining order made on 16 October 2009 be varied in that the property specified in par 1(b) of that order, namely the fund standing to the credit of ANZ Bank account number 9025-88472 held in the name of Amedi Investments Pty Ltd, be released from restraint. The matter was otherwise adjourned to 19 November 2009 for further hearing. On that day the matter was adjourned sine die by his Honour Judge Sleight. 5 On the application of the applicant by chamber summons filed 11 December 2009 her Honour the Chief Judge extended orders 5, 6 and 7 made by her on 16 October 2009 to 13 February 2010. Those orders have since been further extended to 15 May 2010. 6 On 22 December 2009 the respondent applied by chamber summons for an order pursuant to s 42 of the Act revoking the restraining order imposed over the respondent's property. That application was recently (Page 6)
amended by the filing of an amended chamber summons, the substance of the amendment being that the applicant now seeks a declaration that s 18 of the Act is invalid being in violation of Ch III of the Commonwealth Constitution and an order that the applicant pay the respondent's costs. The constitutional issue is before me for judgment. I am informed by counsel that appropriate notice has been given to all Attorneys-General pursuant to s 78B of the Judiciary Act 1903 (Cth). None chose to intervene. 7 Section 18 of the Act provides: "When a restraining order must be made (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 a person has committed a *serious offence; 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. Note: A court can refuse to make a restraining order if the Commonwealth refuses to give an undertaking: see section 21. Property that a restraining order may cover (2) The order must specify, as property that must not be disposed of or otherwise dealt with, the property specified in the application for the order, to the extent that the court (Page 7)
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(iii) if the offence to which the order relates is a *serious offence – the property is an *instrument of the offence. The affidavit must include the grounds on which the *authorised officer holds those suspicions. Restraining order need not be based on commission of a particular offence (4) The reasonable grounds referred to in paragraph (1)(d) need not be based on a finding as to the commission of a particular *serious offence. Risk of property being disposed of etc. (5) The court must make a *restraining order even if there is no risk of the property being disposed of or otherwise dealt with. Later acquisitions of property (6) The court may specify that a *restraining order covers property that is acquired by the *suspect after the court makes the order. Otherwise, no property that is acquired after a court makes a restraining order is covered by the order." 8 The respondent's contention as to invalidity is based in part upon the judgment of the High Court in International Finance Trust Co Ltd v New South Wales Crime Commission [2009] HCA 49, a decision handed down on 12 November 2009. That decision concerned the Criminal Assets Recovery Act 1990 (NSW) ("the CAR Act") which empowered the New South Wales Crime Commission to apply to the Supreme Court of New South Wales for a restraining order in respect of some or all of the property of a person suspected of having committed a serious offence. The basis of the challenge to the legislation was that it imposed upon the Supreme Court functions which so distorted its institutional integrity as to be inconsistent with its status as a repository of federal jurisdiction conferred pursuant to Ch III of the Commonwealth Constitution. The challenge relied upon the decision of the High Court (inter alia) in Kable v Director of Public Prosecutions of New South Wales (1996) 189 CLR 51. (Page 9)
9 Section 10 of the CAR Act provided that the Commission might apply to the Supreme Court, ex parte, for a restraining order. What followed was in mandatory terms, requiring the Supreme Court, in the event of an application by the Commission, to make a restraining order if the application was supported by an affidavit of an authorised officer deposing to his or her suspicion that the person concerned had engaged in a serious crime related activity or serious crime related activities and stating the grounds on which the suspicion was based and if the Court considered that, having regard to the matters contained in any such affidavit, there were reasonable grounds for any such suspicion. The Court could refuse to make a restraining order if the Commission failed to provide such undertakings as the Court considered appropriate with respect to payment of damages or costs in relation to the making and operation of the order. 10 The court held in International Finance Trust Co Ltd v New South Wales Crime Commission (supra) that, on its proper construction, s 10 of the CAR Act required the Supreme Court to hear and determine, without notice to persons affected, applications for restraining orders made ex parte by the commission. For that reason the section impermissibly directed the court as to the manner of the exercise of its jurisdiction and restricted the application of procedural fairness, conditioning its full application upon a discretion exercised by the executive branch of the Government of New South Wales. French CJ, in summarising the position, said it was not to the point that the restriction was temporary, nor that the scope of the order might subsequently be varied by an exclusion order, which could only be made if the party affected showed, on the balance of probabilities, that the affected property was not illegally acquired. In his opinion the relevant section was invalid. 11 Section 18 of the Act is mandatory in its terms if certain conditions are met. A court with proceeds jurisdiction must make a restraining order if the Commonwealth Director of Public Prosecutions ("the Director") applies for the order, there are reasonable grounds to suspect that a person has committed a serious offence and the court is satisfied that the person who deposes to having the suspicion or suspicions stated in the affidavit holds those suspicions or suspicion on reasonable grounds. 12 Section 26(4) of the Act provides: "The court must consider the application without notice having been given if the DPP requests the court to do so". (Page 10)
13 Sub-sections (1), (2) and (3) of s 26 are subject to sub-section (4). It follows that, by reason of the combination of s 26(4) and s 18 of the Act, if the DPP requests the Court to do so, it must consider the application for a restraining order without notice having been given and if there are reasonable grounds to suspect that a person has committed a serious offence and the Court is satisfied that the authorised officer who made the affidavit in support of the application holds the suspicion or suspicions stated in the affidavit on reasonable grounds, the Court must make the order ex parte. 14 Counsel for the Director urged upon me that the requirement imposed upon the Court by s 26(4) of the Act was to consider the application without notice not, necessarily, to make a restraining order without notice, but the combination of s 18 and s 26(4) confines "consideration" in that the Court must make the order applied for, ex parte, if the requirements in s 18(1) of the Act are met. Counsel for the Director urged upon me that the use of the word "consider" in s 26(4) of the Act means, in effect, "consider but not necessarily determine". Section 18, though, does require that the Court determine the application if, in its consideration of it and the supporting documents, the requirements in s 18(1) are met. There is, in my view, having regard to the two sections in combination, no remit for the proposition that a judge dealing with an application in circumstances where a request has been under s 26(4) of the Act might consider the materials before him or her and then adjourn the application requiring the Director to give notice to the owner pursuant to s 26(5). 15 It follows from the foregoing that the combination of s 26 and s 18 of the Act are, in substance, of the same effect as s 10 of the CAR Act. 16 Referring to that section French CJ at [55] said: "To require a court, as s 10 does, not only to receive an ex parte application, but also to hear and determine it ex parte, if the executive so desires, is to direct the court as to the manner in which it exercises its jurisdiction and in so doing to deprives the court of an important characteristic of judicial power. That is the power to ensure, so far as practicable, fairness between the parties. … In my opinion the power conferred on the Commission to choose, in effect, whether to require the Supreme Court of New South Wales to hear and determine an application for a restraining order without notice to the party affected is incompatible with the judicial function of that court. (Page 11)
It deprives the court of the power to determine whether procedural fairness, judged by reference to practical considerations of the kind usually relevant to applications for interlocutory freezing orders, requires that notice be given to the party affected before an order is made. It deprives the court of an essential incident of the judicial function. In that way, directing the court as to the manner of the exercise of its jurisdiction, it distorts the institutional integrity of the court and affects its capacity as a repository of federal jurisdiction." 17 Gummow and Bell JJ said at [97] and [98]: "The Supreme Court is conscripted for a process which requires in substance the mandatory ex parte sequestration of property upon suspicion of wrong doing, for an indeterminate period, with no effective curial enforcement of the duty of full disclosure on ex parte applications. In addition the possibility of release from that sequestration is conditioned upon proof of a negative proposition of considerable legal and factual complexity. Section 10 engages the Supreme Court in activity which is repugnant in a fundamental degree to the judicial process as understood and conducted throughout Australia." 18 So far as the Act is concerned counsel for the Director pointed to s 26(5) which provides: "The court may, at any time before finally determining the application, direct the DPP to give or publish notice of the application to a specified person or class of persons. The court may also specify the time and manner in which the notice is to be given or published." 19 He argued that the provision allows a Court, on a hearing of an application ex parte, at the request of the DPP, to, before finally determining the application, direct the DPP to give notice of the application to the owner of the property. Counsel submitted, in effect, that the Court, by reason of s 26(5) of the Act, has the power to direct the DPP to give notice of the application to the owner. Such an interpretation seems to be inconsistent with the requirement of the Court to consider the application without notice having been given if the DPP so requests. Further, s 26 obliges the DPP, subject to sub-section (4), to give notice of an application for a restraining order to the owner of the property and also, again subject to sub-section (4), to give notice of the application to (Page 12)
any other person that the DPP reasonably believes may have an interest in the property. Counsel for the Director refers also to sub-section (6) which provides: "A person who claims an interest in the property may appear and adduce evidence at the hearing of the application." 20 He notes that the term "interest" is defined by the Act broadly to mean in relation to property or a thing: "(a) a legal or equitable estate or interest in the property or thing; or (b) a right, power or privilege in connection with the property or thing; whether present or future and whether vested or contingent." 21 Counsel submits that, having regard to the definition of "interest" the owner of the property would be a person having an interest so defined and, pursuant to s 26(6), is a person who may appear and adduce evidence at the hearing of the application. If, however, the DPP requests the Court to consider the application without notice then the Court is obliged to consider the application ex parte. It follows that, although the owner may be a person claiming an interest in the property and, by sub-section (6), may appear and adduce evidence at the hearing of the application, he or she may never, if a request is made under sub-section (4), be given notice of the hearing of the application. 22 As to the proposition that the Court may, before finally determining the application, give notice to the owner pursuant to sub-section (5) I must consider whether, as submitted by counsel for the Director, such a course is authorised or contemplated by that sub-section. The section contemplates that notice might be given to, firstly, the owner, secondly, a person having an interest in the property and thirdly, a specified person or class of persons. On the face of it, the section would appear to make a distinction between the owner, persons having interest in the property and persons or a class of persons contemplated by sub-section (5). 23 By s 15AB(1) of the Acts Interpretation Act 1901 (Cth)in the interpretation of a provision of an Act, if any material not forming part of the Act is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material: (Page 13)
24 By sub-section (2) the material that may be considered in accordance with sub-section (1) in the interpretation of a provision of an Act includes the second reading speech in relation to the Bill and any explanatory memorandum relating to it. 25 The second reading speech with respect to the Act was made by the Federal Attorney General at the time, the Honourable Daryl Williams MP on 13 March 2002 during which he said: "The Proceeds of CrimeBill will, if enacted, eventually replace the Proceeds of Crime Act 1987, which will continue to apply to proceedings commenced under that Act. For this reason, this Bill not only deals with a new civil forfeiture regime broadly similar to that which has been operating in New South Wales since 1997 but includes improved provisions for conviction based confiscation." 26 The Proceeds of CrimeBill 2002 was accompanied by an explanatory memorandum which explains that cl 26 provides for the notice provisions for the obtaining of a restraining order enabling the DPP to apply for a restraining order either on notice to the owner of the property or ex parte. The memorandum then explains the notice provisions as follows: "If the DPP gives the owner notice of the application, a copy of the application and any affidavit must be provided to that person. Where the DPP believes that other people may have an interest in the property, the DPP must also give them notice of the application and a copy of the application." (Page 14)
27 The memorandum refers to "those people" when referring to the owner and to others that may have an interest in the property. It continues: "If the court directs, the DPP must also give or publish notice to any other person or class of persons." That it is clearly a reference to s 26(5) of the Act. 28 By reason of the purpose or object underlying the Act, by the context of s 26 in referring to, in effect, three groups of people (being the owner, persons having an interest and other specified persons or classes of person) assisted by the extrinsic material referred to, I conclude that s 26(5) of the Act should not be construed as empowering the Court to, before finally determining the application, give notice to the owner. Such an interpretation would, in my view, be contrary to what is required of the Court when dealing with an application for a restraining order under s 18 in circumstances where a request has been made pursuant to s 26(4) of the Act. 29 Section 42 of the Act allows a person who was not notified of the application to apply to the Court for revocation of a restraining order. The Court may revoke the order if it is satisfied that there are no grounds on which to make the order at the time of considering the application to revoke the order or it is otherwise in the interests of justice to do so. A person, not having been notified of an application for a restraining order and who applies to revoke the order must do so within 28 days after notification or, within such time as the Court may extend but not exceeding three months, must give written notice to the DPP and the official trustee of both the application and the grounds on which the revocation is sought. The task for an applicant under s 42 is to satisfy the Court that there are no grounds on which to make the order at the time of considering the application to revoke or that it is otherwise in the interests of justice to do so. That, says counsel for Mr Kamal, is the task of "considerable legal and factual complexity" in the words of Gummow and Bell JJ at [98] of their judgment in International Finance Trust Co Ltd v New South Wales Crime Commission. In that case Heydon J at [161] observed in relation to the CAR Act: "For the reasons given by Gummow and Bell JJ the narrow potentiality s 25 affords for bringing the restraining order to an end – through a complex negative enquiry which is likely often to be very time consuming – does not prevent s 10 from operating so as to compel the Supreme Court to engage in an (Page 15)
activity which is repugnant to the judicial process in a fundamental degree. The same is true of s 20, because the power it affords to terminate the restraining order is only triggered once the court decides not to make an assets forfeiture order, and that decision may not be made for a long time." 30 Counsel for the Director submits that s 42 of the Act is not "particularly complex at all, either factually or legally". It is, he said, quite straight forward. By contrast, s 25 of the CAR Act as it was at the time of the hearing of the appeal to the High Court, posed quite a different test. That test, submitted counsel for the Director, was the task of some factual and legal complexity set for an applicant under the CAR Act applying to overturn an order made ex parte. 31 Finally, counsel for the Director submitted that if I do conclude that the Act is flawed because of constitutional invalidity I should do so only with respect to s 26(4). Section 18 can, he submits, clearly operate independently of s 26(4) and should be left to do so. 32 Particularly so far as French CJ and Gummow and Bell JJ were concerned it was, in the case before them, the problem of the executive's intrusion, sanctioned by the legislature, into the judicial function which gave rise to invalidity, the court being deprived of the power to determine whether procedural fairness, judged by reference to practical considerations of the kind that are usually relevant to applications for interlocutory freezing orders required that notice be given to the party effected before an order is made. 33 Under the Act the discretion to be exercised in relation to the giving of notice of an application for a restraining order is that of the Director. He or she, in mounting an application under s 18 and making a request under s 26(4) chooses, in effect, to require this Court to hear and determine an application for a restraining order without notice to the party affected. That, according to International Finance Trust Co Ltd v New South Wales Crime Commission, is incompatible with the judicial function of the court, depriving the court of the power to determine whether procedural fairness would require that notice be given. 34 I am of the view that s 26(4) of the Act must be invalid. I arrive at that conclusion cognisant of the presumption of validity. I do so also having regard to s 15A of the Acts Interpretation Act and hold that the Act is nevertheless a valid enactment to the extent to which it is not in excess of the legislative power of the Commonwealth. Section 26(4) is, on the (Page 16)
authorities, in excess of the legislative power of the Commonwealth and it is that section that I declare to be invalid. Given that, in the matter before me, a request was made to this Court pursuant to that section and the restraining order was made ex parte pursuant to that request, I take the view that, in consequence of my declaration, the order so made should be vacated. I will hear counsel as to further orders if any.
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