Director Of Public Prosecutions for Western Australia
[2009] WASC 160
•8 JUNE 2009
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: DIRECTOR OF PUBLIC PROSECUTIONS (WA) -v- CHAPMAN [2009] WASC 160
CORAM: MURPHY J
HEARD: 27 MAY 2009
DELIVERED : 8 JUNE 2009
FILE NO/S: CPCA 168 of 2008
BETWEEN: DIRECTOR OF PUBLIC PROSECUTIONS (WA)
Applicant
AND
ANTONY ROY CHAPMAN
First ObjectorJOY ANNE REBECCA JOHNSTON
Second ObjectorGORDIAN HOLDINGS PTY LTD (ACN 103 799 462)
Third ObjectorMETRA BUSINESS SERVICES PTY LTD (ACN 079 287 193)
Fourth ObjectorMADISON CHAPMAN By Next Friend JOY ANNE REBECCA JOHNSTON
Fifth ObjectorZEN CHAPMAN By Next Friend JOY ANNE REBECCA JOHNSTON
Sixth Objector
Catchwords:
Variation of freezing order - Proper construction of s 43 and s 45 Criminal Property Confiscation Act 2000 (WA) - Whether limitations on power to make provision for legal expenses and living and business expenses - Whether limitations apply to frozen property which may be crimederived
Legislation:
Criminal Property Confiscation Act 2000 (WA)
Result:
Preliminary issues determined in favour of first and second objectors
Category: A
Representation:
Counsel:
Applicant: Ms F A Humphries
First Objector : Mr C P Stokes
Second Objector : Mr A J Papamatheos & Ms C A Kilby
Third Objector : No appearance
Fourth Objector : No appearance
Fifth Objector : No appearance
Sixth Objector : No appearance
Solicitors:
Applicant: Director of Public Prosecutions (WA)
First Objector : Chris Stokes & Associates
Second Objector : Maxim Litigation Consultants
Third Objector : No appearance
Fourth Objector : No appearance
Fifth Objector : No appearance
Sixth Objector : No appearance
Case(s) referred to in judgment(s):
Bennett & Co (a firm) v Director of Public Prosecutions (WA) [2005] WASCA 141; (2005) 31 WAR 212
Cody v JH Nelson Pty Ltd (1947) 74 CLR 629
Dietrich v The Queen (1992) 177 CLR 292
Director of Public Prosecutions (SA) v Vella (1993) 61 SASR 379
Director of Public Prosecutions (WA) v Mansfield [No 9] [2007] WASC 267
Hoddy v Director of Public Prosecutions for Western Australia [2007] WASC 7
Mansfield v Director of Public Prosecutions for Western Australia [2005] WASCA 79; (2005) 31 WAR 97
Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38; (2006) 226 CLR 486
Nominal Defendant v GLG Australia Pty Ltd [2006] HCA 11; (2006) 228 CLR 529
R v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd [1979] HCA 62; (1979) 144 CLR 45
The Director of Public Prosecutions for Western Australia v Mansfield [2006] WASC 255
MURPHY J:
Introduction
By summons dated 14 January 2009 (as amended) the first objector, and by summonses dated 19 February 2009 (as amended) the second to sixth objectors, applied for various orders with respect to, inter alia, the freezing order made by Templeman J on 22 December 2008 (as amended), pursuant to s 43(1)(b) and s 43(3)(b) the Criminal Property Confiscation Act 2000 (WA) (the Act) (the freezing order). The freezing order, so far as it applies to the first and second objectors, applies to 'all property in Western Australia owned or effectively controlled by [the objector] and all property outside Western Australia owned or effectively controlled by [the objector] … including [numerated items of property]'.
Each of the first and second objectors is facing serious criminal proceedings. Part of each of the summonses includes an application that the freezing order be varied so as to provide for the release of legal and 'compliance' fees and/or living expenses on such terms as the court thinks fit. Affidavits were filed in relation to that matter which indicated that, in addition to issues of law, there were extensive issues of fact to be considered and determined. That part of the summons by each of the first and second objectors was listed for hearing on 27 May 2009. At the commencement of the hearing, following the late exchange of written submissions, the first and second objectors, and the applicant for the freezing order (the DPP), in effect, indicated that certain preliminary legal issues as to the proper construction of the Act had been identified, the resolution of which could assist the parties in conferring and seeking to resolve by agreement other issues, particularly eg issues concerning the nature and level of expenses claimed and their reasonableness.
Accordingly, the first and second objectors and the DPP formulated two preliminary issues on which they asked the court to make a ruling.
The preliminary issues
The two preliminary issues which the court was asked to determine were:
(a)Whether on the proper construction of the Act (and in particular s 43, s 45(e) and s 83), or s 48 Interpretation Act 1984 (WA) or pursuant to an implied or inherent power, the court has power to provide for the reasonable business and living expenses of the owner of the property in relation to property that may be crime‑derived within the meaning of s 4(d) and s 148.
(b)Whether on the proper construction of the Act (and in particular s 43 and s 83), or s 48 Interpretation Act or pursuant to an implied or inherent power, the court has power to order that certain property be available for legal expenses where the property may be crime‑derived within the meaning of s 4(d) and s 148.
It is common ground that the court has power to amend a freezing order: Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38; (2006) 226 CLR 486 [7] (Mansfield High Court case).
The parties' contentions
The first and second objectors contend that the court has a broad discretionary power to make provision for living expenses under s 45(e) of the Act and to exempt certain property on the condition that it be used to meet legal expenses, when making an order under s 43(1) or s 43(3) of the Act. It is submitted that these discretionary powers may be exercised in respect of property even if the property may be crime‑derived within the meaning of s 4(d) and s 148 of the Act. It is also contended that, further or alternatively, the court has an inherent power to prevent abuse of its process and that the power would encompass a power to provide for legal expenses to be satisfied from frozen property in order to prevent the abuse of process involved (so it is contended) in allowing a person to be subject to serious criminal proceedings without legal representation. In this regard, the first and second objectors refer to Dietrich v The Queen (1992) 177 CLR 292 and Director of Public Prosecutions (SA) v Vella (1993) 61 SASR 379.
The DPP contends that on the proper construction of the Act, the court has no power to order that property which may be crime‑derived within the meaning of s 4(d) and s 148 of the Act be made available either for living expenses or legal expenses. The DPP contends that, having regard to s 4(d) and s 148 of the Act, and the Explanatory Memorandum in relation to s 148, the policy behind the Act is that people are not entitled to ill‑gotten gains. The Explanatory Memorandum in relation to what is now s 148 of the Act, is in these terms:
Clause 147Crime‑Derived Property
In order to achieve the intention of the Act to deprive people of illgotten gains, property tainted with proceeds from a crime to any extent and through any means must be removed from a person. In order to ensure the wide operation of the Act it is essential that crime‑derived property is defined in the broad terms of Clause 147.
It is said by the DPP that this policy is also apparent from the second reading speech in Hansard (29 June 2000):
As has been previously set out, the Bill provides for automatic confiscation if a person does not file an objection in the court within the relevant time. If a person does object, part 6 of the Bill provides the basis upon which the objection to confiscation of property used, or derived from, a confiscation offence can be successful and the frozen property thereby released. Members could envisage that an item of property could be frozen on more than one basis. For example, property may be frozen on the basis that it was both used in, and derived from, the commission of a confiscation offence. Unless the property is released on all the grounds on which it was frozen, it will be confiscated. A new provision is included in relation to real estate used in, as opposed to being derived from, the commission of a confiscation offence. This is to benefit the dependant and spouse of a person who used his or her property of residence in the commission of a confiscation offence such as hydroponic drug cultivation, or the use of the property for sexual offences against children. If the property would otherwise be confiscated, the spouse or dependant of the owner of the property may successfully apply to have the property released. In order to do so, the spouse or dependent must establish a number of matters, including that they are innocent. In order to avoid undue hardship to them the court can either release the property or confiscate the property and make orders for their benefit; for example, to grant a life tenancy to the spouse. This provision recognises the unjust consequences of confiscating a house used in an offence when it is the residence of the spouse or dependant of the person who used it in the offence. However, if this happens, the court can order the property owner who used the property in the commission of the offence to pay to the Crown an amount being the value of the property.
As noted above, an equivalent provision in favour of spouses and dependants is not included in relation to property derived from a confiscation offence. The intention of the Act is to ensure that no person benefits from crime (8,613).
Freezing orders and frozen property under the Act
It is appropriate to note by way of overview, the operation of the Act's principal provisions with respect to freezing orders and frozen property.
Various provisions of the Act in relation to freezing orders were summarised by Pullin JA in Mansfield v Director of Public Prosecutions for Western Australia [2005] WASCA 79; (2005) 31 WAR 97 in these terms:
The legislation contains some provisions with unusually drastic effect. There is a provision for a freezing order. A freezing order, if made, may have the effect of taking the complete control and management of property out of the hands of the owner of the property. This may happen before a person is convicted of any charged offence. In fact, a freezing order may even be made in circumstances where the DPP merely says that it is likely the owner of the property will be charged. See, eg, s 43(5) of the Act. An order may be made which affects the whole of a person's property. An order may be made so that movable property may not be moved at all. An order may be made which allows the DPP to take over the management of all of the property. A person who deals with property the subject of a freezing order exposes themselves to a $100,000 fine or five years' imprisonment. See s 50. A freezing order may be made without the owner of the property being given notice of the application. The ex parte application can be dealt with in a court which is closed to the public on the basis of evidence which may not be disclosed to the owner of the property. The freezing order is an interim restraint in relation to the property which applies until confiscation occurs or until objection proceedings are resolved in favour of the owner of the property [59].
The DPP may apply for a freezing order under s 41(1) of the Act. By s 41(2) the application may be made ex parte. The court's power to make a freezing order is provided for in s 43 of the Act. As Pullin JA observed, the power is exercisable in a wide range of circumstances. Under s 43(3) and s 43(5), a freezing order may be made for property that is not only 'owned' by a person, but also for property that is 'effectively controlled' by the person or that the person 'has at any time given away'. The glossary of the Act provides that the word 'give'
in relation to property, includes transfer for consideration that is significantly less than the greater of -
(a)the market value of the property at the time of transfer; and
(b)the consideration paid by the transferee.
The glossary also provides that 'owner', in relation to property, 'means a person who has a legal or equitable interest in the property'.
Section 156 contains an extensive definition of the term 'effective control' in relation to property.
'Property' is defined in the glossary of the Act to include a legal or equitable interest in any real or personal property whether tangible or intangible.
By s 48(1) of the Act, a freezing order for registrable real property comes into force when a memorial in relation to the property is registered with the Registrar of Titles.
By s 49(1) of the Act, a freezing order for other property comes into force when the freezing order is made.
Section 50 prohibits dealings with respect to 'frozen property'.
Section 51 of the Act provides:
Despite any other enactment, any dealing with [frozen] property that contravenes section 50 has no effect, whether at law, in equity or otherwise, on the rights of the State under this Act.
The glossary defines 'frozen' with respect to property as, in effect, property subject to a 'freezing notice' or a 'freezing order'.
The Act does not, however, effect a transfer of the legal or beneficial ownership of frozen property before the property is confiscated. Section 10 provides, in effect, that where property, other than registrable real property, is confiscated under s 6, s 7 or s 8, the property vests absolutely in the State when the section takes effect in relation to the property. Section 9 provides, in effect, that registrable real property that is confiscated vests absolutely in the State when the court declares, under s 30, that the property has been confiscated and a memorial is registered under s 113(1).
Provision is made for confiscation by the operation of various provisions including s 6, s 7, s 8, s 14, s 20, s 24, s 25, s 26, s 27, s 28 and s 29 of the Act. Confiscation operates differentially depending on whether the frozen property is 'owned' by the respondent or whether the frozen property is 'effectively controlled' or had been given away by the respondent. Frozen property owned by the respondent is available without further order to satisfy the respondent's liability to the State under s 14, s 20 or s 24 of the Act: s 26(2). On the other hand, frozen property not 'owned' by the respondent is not available to satisfy the respondent's liability under s 14, s 20 or s 24 until the DPP has obtained a confiscable property declaration in accordance with s 27, s 28 and s 29 of the Act.
Section 7(1) provides, in effect, for a kind of 'summary' confiscation where no objection to confiscation is filed within the 28 day period therein stipulated. Section 7(2) provides, inter alia, for confiscation where the objection is finally determined and the freezing order is not set aside.
Part 6 of the Act deals with objections to confiscation and applications to set aside freezing orders. Section 79(1) provides that a person may file an objection to the confiscation of frozen property. The objection procedure 'has, at its heart, a concern with the ultimate question of whether certain property should be confiscated, rather than being concerned with the question of whether the property should be or remain frozen': Bennett & Co (a firm) v Director of Public Prosecutions(WA) [2005] WASCA 141 [58]; (2005) 31 WAR 212.
Section 81 provides that the court may set aside a freezing notice or freezing order to the extent permitted under s 82, s 83 or s 84. Section 82, s 83 and s 84 are not concerned with the question of whether the orders were properly made; rather they assume the orders were properly made and prescribe very limited circumstances in which the objector may persuade the court to set aside the orders: Bennett v DPP [59].
Section 82 deals with a freezing notice or a freezing order made on the ground that the property was crime‑used. Section 82(3) permits, inter alia, an objector who is a spouse, de facto partner or dependant of an owner of property, and who is an 'innocent party' or less than 18 years old, to set aside a freezing notice or freezing order in certain circumstances where the frozen property is crime‑used.
Section 83 deals with a freezing notice or freezing order made on the ground that the property was crime‑derived. There is no provision in s 83 which is equivalent to s 82(3) where the frozen property is crime‑derived. There are, however, provisions in s 82 and s 83 which allow a freezing notice or freezing order to be set aside, in certain circumstances, where the objector is the, or an, owner of the frozen property and is an 'innocent person' within the meaning of s 153 of the Act.
Section 84 deals with the release of other frozen property. Under s 84(1) the court may set aside a freezing order for property that was frozen under s 43(3) if it finds that it is more likely than not that the person who is or will be the respondent to the unexplained wealth declaration, criminal benefits declaration or crime‑used property substitution declaration, does not own or effectively control the property and has not at any time given it away. Section 84(2) deals with a freezing notice made under s 34(3) and a freezing order made under s 43(5). Section 84(2) provides relevantly that the court may set aside the freezing notice or freezing order if the court finds that it is more likely than not that a person who is or will be charged with the offence does not own or effectively control the property, and has not at any time given it away.
Apart from the operation of s 82, s 83 and s 84, a freezing order made ex parte may be set aside if it is shown that there was absence of jurisdiction, material non‑disclosure, or that on the basis of new material the full facts and circumstances had not been appreciated: Bennett v DPP [64]; Mansfield High Court case [8].
As noted above, property may become 'frozen property' by the operation of either a freezing notice or a freezing order. Freezing notices are dealt with in s 34, s 35, s 36, s 37, s 38, s 39 and s 40 of the Act. A freezing notice, once effective, has the same consequences for dealing with property as a freezing order: s 50 and s 51.
The differences between a freezing notice and a freezing order for present purposes are four‑fold. First, the application for a freezing notice may be made by the DPP or a police officer (s 34(1)), whereas only the DPP may apply for a freezing order (s 41(1)). Secondly, an application for a freezing notice is made to a justice of the peace (s 34(1)), and not to the court (s 41(1)). Thirdly, a freezing notice may only be issued on two grounds. One is if there are reasonable grounds for suspecting that the property is crime‑used or crime‑derived (s 34(2)) and the other is where the person may be declared a drug trafficker (s 34(3)). On the other hand, a freezing order may be made not only on those grounds (s 43(8) and s 43(5) respectively), but also in the wider variety of circumstances provided for in s 43(1) and s 43(3). Fourthly, there is no express power in the freezing notice provisions to make orders of the kind available under s 45 with respect to freezing orders, such as for the provision of living and business expenses under s 45(e).
Resolution of the preliminary issues
Section 45 of the Act provides:
In a freezing order, the court may do any or all of the following -
(a)direct that any income or other property derived from the property while the order is in force is to be treated as part of the property;
(b)if the property is moveable - direct that the property is not to be moved except in accordance with the order;
(c)appoint the DPP, the Public Trustee or the Commissioner of Police to manage the property while the order is in force;
(d)give any other directions necessary to provide for the security and management of the property while the order is in force;
(e)provide for meeting the reasonable living and business expenses of the owner of the property.
It is to be noticed, at the outset, that s 45(e) refers to the provision of reasonable living and business expenses of the 'owner' of the property the subject of the freezing order. To that extent, the power in s 45(e) is expressly limited in its application, and does not extend to making provision for the reasonable living and business expenses of a person who is not the 'owner' but who effectively controls property the subject of the freezing order, or who has given it away.
The question is whether s 45(e) of the Act is to be construed as subject, in effect, to a further limitation that the court may not provide for the living or business expenses of an owner of the property where the property the subject of the freezing order may be crime‑derived. A number of observations are, I think, pertinent.
First, the opening words of s 45, like the words in s 41(1), are words of generality and should be given their plain and ordinary meaning unless the contrary is shown: Cody v JH Nelson Pty Ltd (1947) 74 CLR 629, 647 ‑ 648. In other words, unless the contrary is shown, the power in s 45 is intended to apply to all freezing orders of property. Secondly, s 45(e) is preceded by s 45(a), s 45(b), s 45(c) and s 45(d), none of the provisions of which evince an intention that they are not to apply to property which may be crime‑derived. Thirdly, the language in s 45(e) itself does not convey an intention that the power cannot be exercised with respect to crime‑derived property.
Fourthly, the passages in the Explanatory Memorandum and second reading speech, to which the DPP referred, do not, in my opinion, purport to state that there is a limitation in s 45(e) of the kind contended for by the DPP in this case. In any event, it is the words of the statute, not the extrinsic materials, which have paramount significance: Nominal Defendant v GLG Australia Pty Ltd [2006] HCA 11; (2006) 228 CLR 529 [22] and [82].
For these reasons, subject to the matter mentioned below, there is, in my view, nothing in the language and context of s 45(e) which contains a limitation that the power may not be exercised where the property may be crime‑derived.
One other matter should, for completeness, be mentioned which might be thought to be relevant to the proper construction of s 45, although it was not raised in argument before me. In the case of a freezing notice under s 34(2) and a freezing order, s 43(8), the basis for freezing the property is the same, namely that there are reasonable grounds for suspecting that the property is crime‑used or crime‑derived. Where property is the subject of a freezing notice on the basis that there are reasonable grounds for suspecting that the property is crime‑used or crime‑derived, there is no express power in the Act to release it for the payment of living or business expenses.
It might be thought to be anomalous that property frozen by a freezing order made under s 43(8) is available for living and business expenses by the operation of s 45(e), but that property frozen on the same basis under s 34(2) is immune from any provision for living and business expenses. (The same point might be made with respect to property frozen by freezing notice under s 34(3) and by freezing order under s 43(5).)
In my opinion, any such perceived anomaly is unlikely to provide a sound basis for implying a limitation in the power of s 45(e). Section 34(2) and s 43(8), whilst applying the same criteria, operate within separate and distinct powers. As noted previously, there is a distinction in the identity of the applicant who may apply for a freezing notice compared with a freezing order, insofar as a police officer may not apply for the latter. The person or institution with the power to grant the application is different in each case. Also, the reach of a freezing notice may be different in that, under s 34(7), any income or other property derived from the property while the freezing notice is in force is 'taken to be' part of the property, whereas such income or other property is only 'treated as' part of the property the subject of a freezing order if the court so directs: s 45(a). Furthermore, s 45(b), s 45(c) and s 45(d) contain various powers concerning the management, movement and security of property for which there is no corresponding provision in relation to the issue of a freezing notice by a justice of the peace. These considerations, and the absence of clear language of qualification or limitation in s 45(e), would indicate to me that s 45(e) is not subject to an implied limitation that it has no application where the freezing order is made on the ground provided for in s 43(8). It is not necessary, however, to reach a final view on that matter in this case, because the grounds relied upon by the DPP for the making of the order, and the bases upon which the freezing order was made, are those provided for in s 43(1)(b) and s 43(3)(b).
As to the second preliminary issue, in my view, the discretions conferred by s 43(1) and s 43(3) of the Act are unconfined except insofar as they are affected by any limitations to be derived from the scope and purpose of the legislation as a whole: R v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd [1979] HCA 62; (1979) 144 CLR 45.
In considering the scope and purpose of the Act, the High Court in Mansfield said:
The Act, as remarked earlier in these reasons, is draconian in its operation and complex in various of its provisions. There is not readily to be implied a denial of the powers of the Supreme Court when making or varying a freezing order to mould its relief to permit the use of funds to obtain legal assistance. Such assistance is for the benefit not only of the individual but for the more effective exercise of the jurisdiction conferred by s 101 of the Act with respect to proceedings under the Act. In that sense, it is also for the benefit of the State and the public [50].
In other words, the provision of legal assistance does not only benefit an accused, but serves a wider public benefit in the administration of justice.
Whilst it is to be noted that the term 'legal expenses' does not appear in s 45(e) of the Act, in Mansfield, the High Court approved the following passage from the judgment of Pullin JA in the Court of Appeal:
In my opinion it is not necessary to force the issue into a question about whether or not legal expenses can be categorised as 'reasonable living and business expenses' in a freezing order. Indeed I will assume without deciding that legal expenses are not 'living' or 'business' expenses.
Section 43(3) states that the Court may make a freezing order for 'all or any' property that is owned or effectively controlled by the person. The Court may make a freezing order over all property owned by a person and in that freezing order make provision for 'meeting the reasonable living and business expenses of the owner of the property'. As I have said I will assume this will not allow the Court to make provision for legal expenses.
However, the Court in the exercise of its discretion may also refuse to make a freezing order over some property. The Court could therefore make a freezing order with respect to certain property, and refuse to make one in relation to sufficient property to allow legal expenses to be paid. In other words the freezing order would not cover property to be used to pay legal expenses. If some property is exempted from the freezing order, then s 45 would not apply to it. In exempting some of the property from the freezing order, the Court could provide that it be exempt on condition that it be spent in a particular way, ie, for legal expenses, and that there should be some machinery for ensuring that the money is spent only for that purpose [53]. (footnotes omitted)
The High Court also said:
The last sentence of the above passage is of great significance. It calls for great care by the parties and the Court in the framing of the condition to ensure, to the maximum practical extent, that exempted funds are not misused, whether by overservicing and overcharging or by other abuse [54].
In my view, it follows from the above observations by the High Court that there is a general power under s 43(3), to permit the use of funds for legal expenses. The existence of such a power has been recognised by this court in The Director of Public Prosecutions for Western Australia v Mansfield [2006] WASC 255; Hoddy v Director of Public Prosecutions for Western Australia [2007] WASC 7; Director of Public Prosecutions (WA) v Mansfield [No 9] [2007] WASC 267. By parity of reasoning, the power also exists under s 43(1).
Having regard to the nature of the power and the important purposes which it serves, and in the absence of any express or necessarily implied limitation confining it to freezing orders other than where the property may be crime‑derived, the general power to permit the use of funds for legal expenses is, as a matter of the proper construction of the Act, in my view, not limited in the way contended for by the DPP.
Conclusion
For these reasons I would answer the preliminary issues in these terms:
(a)On the proper construction of the Act the court has under s 45(e) power to provide for the reasonable business and living expenses of the owner of the property in relation to frozen property, the subject of a freezing order under s 43(1)(b) or s 43(3)(b), that may be crime‑derived within the meaning of s 4(d) and s 148 of the Act.
(b)On the proper construction of the Act the court has power under s 43(1)(b) and s 43(3)(b) to order that certain property be available for legal expenses notwithstanding that the property may be crime‑derived within the meaning of s 4(d) and s 148 of the Act.
In light of this conclusion, it is unnecessary to address and determine the other arguments advanced by the first and second objectors.
Whether either of both of these discretionary powers should be exercised in this particular case, and the factors relevant to the exercise of discretion have not, at this stage, been the subject of debate before me.
0
13
1