Director of Public Prosecutions (SA) v Tregenza

DPP v TREGENZA
[2002] SASC 414
Magistrates Appeal

GRAY J This is an appeal against a magistrate’s decision to discharge ex parte restraining orders made under the Criminal Assets Confiscation Act 1996 (SA).
Background
On 11 January 2001 police stopped a vehicle on Norman Road Aldinga Beach. Kym Ronald Tregenza and Michael Lee were the only occupants. The vehicle was owned by Andrea Elizabeth Garth, Mr Tregenza’s partner and was being driven by their friend Mr Lee.
The police searched the vehicle. On the back seat they found a cardboard box and two small plastic bags inside a larger plastic bag. The bags contained 457 grams and 262 grams of female cannabis material. The police also located $3,590 in cash in Mr Tregenza’s pockets. Mr Tregenza admitted that the cannabis was his property and he was arrested.
On the same day police attended at Mr Tregenza’s home address at 53-57 Mentone Road Victor Harbor (“the property”). The property consisted of a residence and a studio. Ms Garth was informed of Mr Tregenza’s arrest. She produced two small bags of cannabis from a shelf in the dining room. She unlocked a padlock on an internal studio door. Police found six cannabis cuttings growing in rockwool under a light.
The police then returned to the residence where Ms Garth indicated the presence of two boxes in a wardrobe. Nine plastic bags of cannabis weighing a total of 4.9 kilograms were found.
Mr Tregenza and Ms Garth were charged with possessing cannabis for sale and producing cannabis.[1]
[1] In early May 2002 Ms Garth’s matters went to trial. As a result of a no case submission the jury was instructed to acquit Ms Garth. Mr Tregenza’s trial was inconclusive and a retrial was ordered.
Mr Tregenza and Ms Garth purchased the property on 25 November 1999 and were the registered owners. As at 1 January 2001 the capital value was $162,000. On 1 May 2001 a mortgage held by the National Australia Bank securing $26,000 was registered over the titles.
Proceedings Before the Magistrates Court
On 14 August 2001 the director of public prosecutions issued proceedings in the Magistrate’s Court civil division against Mr Tregenza and Ms Garth. The director sought restraining orders with respect to the property. The following circumstances were alleged:
“-[Mr Tregenza] is charged with Possessing Cannabis for Sale.
-[Mr Tregenza and Ms Garth] are charged with the following offences:-
Possessing Cannabis for Sale;
Producing Cannabis
-These offences are serious drug offences pursuant to the Act and therefore forfeiture offences.
-The [director] alleges for the reasons set out in the supporting affidavit of David Leslie Sheldon deposed to on 9th August 2001, that the property is liable to forfeiture.
-If the restraining order is granted and the defendant is convicted, the restraining order will automatically be converted into a forfeiture order pursuant to section 15(5) of the Act.”
At the same time the director made an ex parte application pursuant to section 15 of the Criminal Assets Confiscation Act. The application was supported by two affidavits. David Leslie Sheldon a police officer deposed to the circumstances of the alleged offending. His affidavit allowed the conclusion that there were reasonable grounds to suspect that the property may be liable to forfeiture.
Gina Margaret Giorgini deposed to circumstances said to justify the application proceeding ex parte:
“-I am a Law Clerk employed by the office of the Director of Public Prosecutions and am cognisant of the facts in this matter;
-I make this affidavit in support of the application to have the claim for the restraining order heard ex parte;
-I say that proper cause exists for this Honourable Court to hear the matter ex parte for the following reasons:-
-       I am informed by the South Australian Police and believe it to be true that the defendant has been charged with a serious criminal offence;
-       A Restraining Order is sought to protect the statutory interest of the [director] in the property referred to in the claim;
-       If the defendant receives notice of the claim for the Restraining Order prior to the order being made mischief may be caused to the plaintiff in that the defendant may dispose of the property prior to the Restraining Order being granted;
-       Further, a requirement of service upon the defendant may cause undue delay in having the claim determined and present a further opportunity for the defendant to dispose of the property;
- Should the Restraining Order be made ex parte Section 15 of the Criminal Assets Confiscation Act, 1996, provides the owner of the property referred to in the Restraining Order with an opportunity to challenge the order.
-I know the facts deposed herein of my own knowledge except insofar as I rely on information received by me in the course of my employment as a law clerk, which information I verily believe to be true.”
This material was less than satisfactory. The affidavit only specified one defendant and did not identify that person. No explanation was offered for the seven month delay between the arrest and the making of the ex parte application. Although the affidavit referred to the director’s fear that the property may be disposed of no basis for his fear was disclosed. No particulars were proffered.
An applicant for an ex parte order has a duty of full disclosure. That duty includes the disclosure of all relevant factors that may affect a magistrate’s decision including matters that support the other party’s position. There needs to be a clear factual basis established for the need to proceed ex parte. The basis of the director’s fear or apprehension should be disclosed and particularised.
The Ex Parte Restraining Order
On 17 August 2001 the court granted ex parte restraining orders against Mr Tregenza and Ms Garth restraining their dealings with the property. Those orders included:
“That subject to any right title or prior interest of a mortgagee under a mortgage lodged for registration in the Lands Titles Office prior to the date of this order [Mr Tregenza and Ms Garth] be prohibited whether by themselves, their servants, agents, workers or otherwise until further order from dealing or attempting to deal in anyway howsoever with their respective interest in the property situate at 53-57 Menonte Road, Victor Harbor in the State of South Australia, being the whole of the land comprised and described in the following Certificates of Title:
(a)Certificate of Title Volume 5395 Folio 600;
(b)Certificate [of] Title Volume 5395 Folio 601.
That the Registrar General is hereby directed to enter a memorial of this order upon the following Certificates of Title, pursuant to section 564 of the Real Property Act 1886 notwithstanding that the relevant duplicate certificate of title be not produced to him:-
(a)Certificate of Title Volume 5395 Folio 600;
(b)Certificate [of] Title Volume 5395 Folio 601.
...
That [Mr Tregenza and Ms Garth] or any other person affected by this order shall be at liberty to apply or discharge this order upon 48 hours notice being given to the plaintiff.
...
That this order be listed for further consideration on the 20 Sept. 2000 at 9.30 am at which time [Mr Tregenza and Ms Garth] will be heard on the question of whether this restraining order should remain in force.”
No reasons were provided.
On 2 November 2001 an application was made to have the ex parte restraining orders set aside. The application was heard before a different learned magistrate. Counsel for Mr Tregenza’s primary contention to the magistrate was that there was no risk of disposal of the property and that restraining orders under section 15 were inappropriate. Mr Tregenza offered an undertaking not to dispose of the property.
On 5 March 2002 the magistrate foreshadowed the discharge of the ex parte restraining orders. His reason’s included:
“It follows from the above discussion that the granting of a restraining order in relation to a tainted property relevant to a serious drug offence has draconian consequences. Those consequences are to remove from the Court any discretion not to forfeit the property. If a restraining order is not made, then the Court retains a discretion under s10 to the extent that the properties not obtained from profits of criminal activity. The fact that the granting of a restraining order has such a substantial consequence and that the granting of a restraining order is discretionary, must place on the Court a high threshold before such a restraining order is granted.
The practice of this Court has been to routinely grant restraining orders on an ex parte basis and to leave them in place once they are served. It is my finding that that practice is clearly wrong and particularly is wrong in relation to serious drug offences. This Court should not grant a restraining order, ex parte or not, in relation to tainted property relevant to a serious drug offence unless it is satisfied on stringent criteria that it is appropriate to do so. I say this because granting the restraining order determines the fact that the property will be forfeited upon guilt being established. The Court should be cautious before depriving a defendant of the rights generally granted to defendants under section 10 to argue whether the property should be forfeited. This caution should be exercised in relation to the granting of ex parte orders and apply generally to restraining orders.
...
The court should be very cautious before it grants a restraining order under s.15 of the Act. This is because the consequence of granting such an order is to deprive the defendant of substantive rights. It is not my function in this case to set out all the circumstances where the court should or should not grant a restraining order. It is sufficient for me to say that before the Court makes a restraining order it should be satisfied that there are real risks of the property being dissipated beyond the DPP’s reach if no restraining order is made. Generally in relation to real estate, given the difficulties of selling it and the protections in the Act, one would think that an ex parte order would not be necessary and an order making the application specially returnable and shortening the time for service would suffice. Then the defendant can be heard and the Court can decide if there are satisfactory ways of protecting the DPP from the dissipation of the property without a restraining order.
In relation to this case, if I am satisfied that [Mr Tregenza] can either give sufficient undertakings, or that an order that I can make under s.26 of the Magistrates Court Act restraining [Mr Tregenza] from dealing with the real estate is sufficient to protect the DPP, then in my finding that is a better course than leaving the restraining order in place. It is a better course because it leaves [Mr Tregenza’s] substantive rights under section 10 in place. S.15 should only be used in the most urgent and severe circumstances. Simply in this case the affidavit material provided by he DPP did not provide sufficient or appropriate circumstances to justify the granting of a restraining order under s.15 on an ex parte basis or at all. Accordingly I shall order that that restraining order is discharged if I can put in place appropriate orders to protect the DPP from the real estate being dissipated.”
The magistrate emphasised the importance of the director being protected against the disposal of property which would frustrate any subsequent forfeiture order. The magistrate was satisfied that the nature of the property together with the undertaking from Mr Tregenza would adequately protect the director. He also observed that if the undertaking was not adequate a restraining order could be made under section 26 of the Magistrates Court Act 1991 (SA)[2].
[2] “(1) A Court may make an order (a "restraining order") preventing or restricting dealing with property of a defendant to an action if—
(a)     the action appears to have been brought on reasonable grounds;
(b)     the property may be required to satisfy a judgment that has been, or may be, given in the action; and
(c)     there is a substantial risk that the defendant will dispose of the property before judgment is given, or before it can be enforced.
(2) A restraining order must be served as directed by the Court.
(3) A person who deals with property subject to a restraining order except as permitted by the order commits a contempt of Court.
(4) The Court may vary or revoke a restraining order at any time.
(5) If it appears to the Court that grounds for making a restraining order exist but the Court requires further evidence to identify property in relation to which the order could be effectively made, the Court may summons the defendant, or issue a warrant to have the defendant arrested and brought before the Court, for examination on that subject.”
On 6 December 2002 the magistrate made the following order:
“The order of 17 August 2001 is varied by making an order under s. 26 of the Magistrates Court Act 1991 restraining the defendants from transferring, mortgaging, encumbering or otherwise howsoever dealing with their estate and interest in the land situated at 53/57 Mentone Road Victor Harbor in the State of South Australia being the whole of the land comprised and described in Certificate of Title Register Books Volume 5395 Folio 600, and Volume 5395 Folio 601 in substitution of the restraining order of 17 August 2001 made under the Criminal Assets Confiscation Act 1996 which is discharged. I give liberty to apply.”
The director appealed to this court but did not seek any order against Ms Garth.
Issues Arising
The director challenged the magistrate’s conclusion that the court should be “very cautious” before granting restraining orders because of the automatic forfeiture that may follow under the Criminal Assets Confiscation Act. This challenge raises for consideration the implications of the automatic forfeiture provisions of the Act. A second question that arises is the extent to which a party subject to an ex parte restraining order is to be accorded procedural fairness.
The director also contended that the magistrate’s observations about the exercise of the discretion to grant a restraining order were in error. They were said to raise extraneous considerations. Complaint was made about the magistrate’s use of the expression “draconian”. It was said that the magistrate had placed a gloss on the requirements of section 15.
The Statutory Scheme
In 1986 legislation was introduced in South Australia as part of a national trend to confiscate the proceeds of crime in certain circumstances. The government recognised that substantial sums of money could be gained through involvement in drug offending and corporate dishonesty. It was also apparent that these sums were difficult to trace. There was seen to be a case for requiring convicted persons to prove that certain property was legitimately obtained if a serious drug offence was involved. This created a need to balance the State’s power to fight crime with the rights of individuals to enjoy their property and the presumption of innocence the cornerstone of the criminal justice system.
The Criminal Assets Confiscation Act made provision for the confiscation of criminal assets, repealed the Crimes Confiscation of Profits Act 1986 (SA) and amended the Criminal Law Consolidation Act 1935 (SA) and Lottery and Gaming Act 1936 (SA). Its primary purpose was to prevent persons involved in serious criminal activities from benefiting from their criminal pursuits. This purpose was referred to in Fisse, Fraser and Coss The Money Trail: Confiscation of Proceeds of Crime, Money Laundering and Cash Transaction [3]:
“The distinctive method of control under this regime is to attack the money trail by confiscating the proceeds of crime, usually by proceedings in personam.
…
Incarcerating ringleaders of large scale narcotics operations while leaving intact their illegally obtained empires allows illicit enterprises to continue in operation. Criminal forfeiture affords law enforcement officials the opportunity to attack drug traffickers where they are most vulnerable – in their pocketbooks. Incarcerated individuals can be replaced, but without financial support the well insulated criminal empire cannot continue as a viable enterprise. In addition, seizure and forfeiture statutes that strike at the economic base of organised crime have the potential to provide funding for further narcotics investigations.”
[3] McCleary v Director of Public Prosecutions (1998) 157 ALR 301 at 311
The Criminal Assets Confiscation Act is intended to apply widely and has extra-territorial application. It empowers the court to place restraints on persons to prevent them from dealing with property and to order that property be forfeited to the Crown.
The Criminal Assets Confiscation Act is divided into six parts. Part 1 provides an extensive definitions section. Part 2 provides the means by which the director can apply to have property made the subject of a forfeiture order when the property is deemed “tainted” or if there are reasonable grounds to suspect that a forfeiture offence has been committed and there a reasonable grounds to suppose that the property may be required to satisfy a present or future forfeiture order. It also allows the court to order the forfeiture of property to the value of the benefit obtained from the commission of a criminal offence.
The court is provided with a wide discretion to order forfeiture if satisfied that such an order is necessary to prevent a person from retaining the profits of criminal activity. Applications for forfeiture are civil orders. Questions of fact are to be decided on the balance of probabilities however where an application is not based on the conviction of an offender the commission of an offence must be established beyond reasonable doubt.
Part 3 empowers the court upon application by the director to make a restraining order prohibiting any dealing with property if satisfied that there are reasonable grounds for suspecting that the property may be liable to forfeiture. A restraining order may be varied or revoked. Restraining orders may be made either inter partes or ex parte. A safeguard is built into the Act to ensure that the owner of property has a reasonable opportunity to be heard on the question of whether an order should be made or if made ex parte whether the order should continue. If the court is not satisfied that there is good reason for an ex parte order to continue the order must be revoked.
Special provisions apply where the forfeiture offence or the suspected forfeiture offence is a serious drug offence. In this case the restraining order is automatically converted into a forfeiture order six months after the order is made or six months after all appeal rights are exhausted. To avoid this consequence the owner must satisfy the court that the property was acquired more than six years before the commission of the relevant forfeiture offence and that the property is not tainted. The onus of proof is reversed. The restraining order is not a trigger for forfeiture. It is the conviction for a serious drug offence combined with the existence of a restraining order that leads to an automatic forfeiture order. An offence of contravening a restraining order is also created. That offence has a maximum penalty of a fine of $10,000 or two years imprisonment.
Part 4 deals with the administration of property and more particularly division one deals with forfeited property. The effect of a forfeiture order is that the title to the property vests in an Administrator (a person nominated by the Attorney General). That property can then be sold or converted into money. That money must then be applied towards the cost of administering the Act. Any balance is to be paid into the Criminal Injuries Compensation Fund. That fund can be used for the purposes specified. These purposes include the support of programs directed towards the treatment and rehabilitation of drug-dependent persons and payments to the Commonwealth, State or Territory equitable sharing program which deals with the proceeds of forfeiture orders.

Division 3 of Part 4 provides for auxiliary orders and governs the administrator’s role and responsibilities in dealing with the forfeited property. Additional offences are created. Division 4 is entitled immunity from liability and provides that neither the administrator nor the Crown is liable for loss or damage to property whilst in the possession or control of the administrator. However the Crown is liable for loss or damage that may arise through negligence if property in the administrator’s control is required to be returned to its owner.
Part 5 provides for powers of investigation and seizure. Division 1 gives the police power to seize property if authorised by a warrant or the officer suspects on reasonable grounds that the property is liable to forfeiture. The circumstances in which seized property must be returned are specified. Division 2 deals with warrants for seizure of property. The situations in which a magistrate can order a warrant are described as are the means by which applications can be made. The powers conferred by a warrant are listed and an offence of hindering the execution of a warrant is created.
Division 3 of Part 5 is entitled orders for obtaining information. The court is empowered upon application by the director to require persons to give evidence on questions relevant to identifying, tracing or quantifying property liable to forfeiture. An order requiring a person to produce to the court documents or other materials to fulfil that purpose can be made. The court also has the power to make a monitoring order requiring a financial institution to report promptly on transactions affecting a particular account. The requirements necessary to effect such an order are provided.
Part 6 allows for orders under corresponding interstate laws to be registered and includes an enforcement of judgments section and a regulation making power.
In Hepworth v Director of Public Prosecutions[4] Debelle J remarked:
[4] (2001) 79 SASR 480 at [10], [12-15]
“It is apparent from s 10 that, subject to the obligation to make an order in the circumstances provided in sub-section (1), the court has an unqualified discretion whether to order forfeiture. The court cannot, however, make an order for forfeiture unless the person whose property is liable to forfeiture has been convicted of a forfeiture offence as defined by the Act: s 12. The Act repealed the Crimes (Confiscation of Profits) Act 1986. Under the repealed legislation, the court had an unqualified discretion: Attorney-General v Meyer (1989) 51 SASR 234; Taylor v Attorney-General (SA) (1991) 55 SASR 462. Section 10 does not circumscribe that discretion except to the extent provided in s 10(1). However, as will be seen, the discretion is circumscribed by s 15(5) of the Act.
…
It is apparent, both from the terms of s 15 and from the structure of the Act, that restraining orders are but interim orders to preserve the status quo pending the trial of an accused person. The manifest purpose is to prevent any dealing in the property which might frustrate the making of a forfeiture order. Thus, a restraining order will lapse if the proceedings for a forfeiture offence result in an acquittal or should any of the other events listed in s 15(4) occur. Similarly, restraining orders may be varied or revoked: s 15(3). It is also clear that restraining orders do not effect forfeiture of property. Generally speaking, orders for forfeiture may only be made pursuant to either s 8 or s 9 of the Act.
Section 15(5), however, provides a number of exceptions to the general provisions in s 15. These exceptions operate where the forfeiture offence or suspected forfeiture offence is a serious drug offence as defined by the Act. I repeat that it is common ground that the appellant was charged with and convicted of a serious drug offence. The issues in this appeal turn on the meaning of s 15(5) and, in particular, s 15(5)(d).
Paragraph (d) invests restraining orders made in the course of a serious drug offence or suspected serious drug offence with the capacity to be automatically converted into a forfeiture order where the offender is convicted and the conviction stands after all rights of appeal have been exhausted. As par (d) provides that the conversion to a forfeiture order is automatic and the prescribed conditions are satisfied, there is no room for the operation of any discretion under s 10 of the Act. Thus, notwithstanding that, as a general rule, restraining orders are interim orders only so that a subsequent forfeiture order must be made if property is to be forfeited, restraining orders in the case of serious drug offences stand in a special class and are automatically converted to forfeiture orders in the circumstances specified in par (d).
It will be noted that the operation of pars (b) and (c) of sub-section (5), when contrasted with sub-sections (3) and (4) of s 15, reinforce the fact that special provision is being made in the case of a restraining order made in respect of a serious drug offence or suspected serious drug offence. Paragraph (b) is of particular relevance because it prohibits an order to vary or revoke a restraining order made in respect of a serious drug offence or suspected serious drug offence unless the owner satisfies the court that he falls within one of the specified exceptions.”
This analysis was approved by the Court of Criminal Appeal in R v Carpentieri[5]. However neither decision addressed the issues raised on this appeal.
The Statute
[5] (2001) 81 SASR 164
The Criminal Assets Confiscation Act provides:
“Section 3 ‘forfeiture’ offence means a local forfeiture offence or an interstate forfeiture offence;
‘forfeiture order’ means—
(a)an order for forfeiture of specified property or a specified sum of money under section 8 or 9; or
(b)an order for the forfeiture of property, or a pecuniary penalty order, under the law of the Commonwealth or a reciprocating State;
‘local forfeiture offence’ means—
(a)     an indictable offence under the law of the State; or
                  (b)     a serious drug offence against the law of the State; or
                  ...
‘local forfeiture order’ means an order for forfeiture of specified property or a specified sum of money under this Act or under some other law of the State providing for forfeiture of assets on conviction for an offence;
...
Section 4(1)      Property is tainted property if the property—
(a)is acquired for the purpose of committing a forfeiture offence; or
(b)is used in, or in connection with, the commission of a forfeiture offence; or
(c)     is the proceeds of a forfeiture offence.
...
(3)    All property of a party to the commission of a serious drug offence is presumed to be tainted.
(4)    However—
(a)property is excluded from the ambit of the presumption if it is established, on the balance of probabilities, that it was acquired by the party more than 6 years before the commission of the offence on which the proceedings under this Act are based; and
(b)the presumption may be rebutted, insofar as it relates to a particular item of property, by establishing, on the balance of probabilities, that the property is not tainted.
…
Section 5Property is to be regarded as liable to forfeiture—
(a)     if the property is tainted property; or
(b)     if—
(i)a forfeiture offence has been committed or there are reasonable grounds to suspect the commission of a forfeiture offence; and
(ii)there are reasonable grounds to suppose that the property may be required to satisfy a present or future forfeiture order.
...
Section 8 A court may, on application by the Director of Public Prosecutions, order the forfeiture of tainted property.
...
Section9 (1)    If a person benefits from the commission of a forfeiture offence, a court may, on application by the Director of Public Prosecutions, order the forfeiture of property to the value of the benefit.
...
Section 10(1)    A court must make an appropriate forfeiture order under this Part if the court is satisfied that forfeiture is necessary to prevent the defendant from retaining the profits of criminal activity.
(2)The court’s power to order forfeiture of property beyond what is required under subsection (1) is discretionary.
(3)In deciding whether to impose a discretionary forfeiture and, if so, the extent of the forfeiture, the court may take into account any penalty imposed on the defendant for the forfeiture offence and, conversely, the court may take a discretionary forfeiture into account in fixing penalty for the relevant forfeiture offence.
...
Section 15 (1) If a court is satisfied, on application by the Director of Public Prosecutions, that there are reasonable grounds to suspect that property may be liable to forfeiture, the court may make a restraining order prohibiting, subject to the exceptions (if any) stated in the order, any dealing with the property.
(2) An application for a restraining order may be made ex parte but, if the court makes a restraining order on an ex parte application, the court must allow the owner of the property a reasonable opportunity to be heard on the question whether the order should continue in force and, if after hearing the owner, the court is not satisfied there is good reason for the order to continue in force, the order must be revoked.
(3) A restraining order may be varied or revoked at any time.
(4) A restraining order lapses if—
(a)     an interval of inactivity follow the making of the order; or
(b)proceedings for the forfeiture offence in relation to which the restraining order was made result in an acquittal; or
(c)an application for a forfeiture order is decided.
(5) However, the following special provisions apply where the forfeiture offence or the suspected forfeiture offence in relation to which the restraining order is made is a serious drug offence:
(a)the Director of Public Prosecutions must take reasonable care to ensure that the offender (or alleged offender) and all persons who may have an interest in the property are given notice of the order and of the implications of this subsection;
(b)the order cannot (subject to the following exceptions) be revoked or varied so that it ceases to apply to property within its ambit;
(c)the order does not lapse because of an interval of inactivity following the conviction of the offender for a serious drug offence;
(d)if the offender is convicted of the serious drug offence, then 6 months after all rights of appeal are exhausted or expire or 6 months after the order is made (whichever is the later) the order is automatically converted into a forfeiture order for the forfeiture of all the property to which it then applies.
Exceptions—
1The court may authorise the application of property towards the payment of legal costs in accordance with this Act.
2The court may revoke or vary the order so that it ceases to apply to property if the owner of the property satisfies the court, on an application made before the conversion of the order into a forfeiture order, that the owner acquired the property lawfully or at least 6 years before the commission of the relevant forfeiture offence and the property is not tainted.
3The court may revoke or vary the order to protect the interests of a person who satisfies the court, on an application made before the conversion of the order into a forfeiture order, that the person has acquired an interest in the property to which the order relates in good faith and for valuable consideration.
4The court may order the payment of compensation out of the Criminal Injuries Compensation Fund (not exceeding the value of the forfeited property) in favour of a person who satisfied the court, on an application made after the conversion of the order into a forfeiture order, that the person had acquired an interest in the forfeited property in good faith and for valuable consideration but did not receive notice of the order before the forfeiture took effect or not in time to apply for protection of the relevant interest before the forfeiture took effect.
(6) In this section—
interval of inactivity means one month or a longer period, not exceeding 2 months, determined, on application by the Director of Public Prosecutions, by the court during the whole of which there are no relevant proceedings before a court.
relevant proceedings means—
(a) proceedings in which a person is charged with the relevant forfeiture offence or appellate proceedings arising out of such proceedings; or
(b)    proceedings for a forfeiture order.”
The Nature of the Discretion to Make a Restraining Order
Section 15(1) empowers the court to grant restraining orders. The statutory discretion is enlivened when the court is satisfied that there are reasonable grounds to suspect that property may be liable to forfeiture.
In George v Rocket[6] the High Court considered the ambit of the expressions “reasonable grounds” and “suspicion”:
“ ‘When a statute prescribes that there must be ‘reasonable grounds’ for a state of mind- including suspicion and belief - it requires the existence of facts which are sufficient to induce that state of mind in a reasonable person.
...
‘Suspicion, as Lord Devlin said in Hussien v Chong Fook Kam [1970] AC 942 at 948, ‘in its ordinary meaning is a state of conjecture or surmise where proof is lacking: ‘I suspect but I cannot prove’. The facts which can reasonably ground a suspicion may be quite insufficient reasonably to ground a belief, yet some factual basis for the suspicion must be shown. In Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266, ... Kitto J said (at 303):
‘A suspicion that something exists is more than a mere idle wondering whether it exists or not; it is a positive feeling of actual apprehension or mistrust, amounting to ‘a slight opinion, but without sufficient evidence’ as Chamber’s Dictionary expresses it. Consequently, a reason to suspect that a fact exists is more than a reason to consider or look into the possibility of its existence. The notion which ‘reason to suspect’ expresses in subs (4) is, I think, of something which in all the circumstances would create in the mind of a reasonable person in the position of the payee an actual apprehension or fear that the situation of the payer is in actual fact that which the subsection describes - a mistrust of the payer’s ability to pay his debts as they become due and of the effect which acceptance of the payment would have as between the payee and the other creditors.’
The objective circumstances sufficient to show a reason to believe something need to point more clearly to the subject matter of the belief, but that is not to say that the objective circumstances must establish on the balance of probabilities that the subject matter in fact occurred or exists: the assent of belief is given on more slender evidence than proof. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition and the grounds which can reasonably induce that inclination of the mind may, depending on the circumstances, leave something to surmise or conjecture.”
[6] (1990) 170 CLR 104 at 112 and 115-116 see also R v Zotti [2002] SASC 164
In Police v Beck[7] Martin J considered the making of an order for the carrying out of a forensic procedure pursuant to section 26 of the Criminal Law (Forensic Procedures) Act 1998 (SA). That section provided the statutory criterion of “reasonable grounds to suspect that the respondent has committed a criminal offence”. The issue was whether facts existed to give rise to the necessary state of mind. A distinction was drawn between section 26 and a section which creates an offence. As no criminal offence was created by section 26 it was not necessary for the underlying facts to be established beyond reasonable doubt. This reasoning is apposite. Section 15(1) does not create a criminal offence.
[7] (2001) 79 SASR 98
A similar approach has been taken in other jurisdictions. In Walsh v Loughnan[8] Vincent J said:
“The questions to be determined by the learned magistrate were not to be resolved by reference to the rules of evidence or by the application of a test related to the balance of probabilities. In the process of investigation it is by no means uncommon for information to be obtained which would not be admissible in a court of law, or for well-founded suspicions and beliefs to be developed on the basis of a variety of pieces and types of information, including evidence of consistency or inconsistency of conduct, which could not be advanced as proof of the facts outlined or suspected to exist.”
[8] [1991] 2 VR 351 at 357
When exercising its powers under section 15(1) the court must determine whether the statutory conditions for making a restraining order have been satisfied.[9] In making that determination regard will necessarily be had to the factual material placed before the court. Section 15(1) uses the criterion “reasonable grounds to suspect”. The reasonable grounds criterion requires the existence of facts which are sufficient to induce the identified state of mind in a reasonable person. To “suspect” connotes something less than proof. It suggests a state of conjecture or surmise. There must be reasonable grounds to give rise to the relevant conjecture or surmise before the discretion to grant a restraining order is enlivened.
[9] DPP v Toro-Martinez (1999) ALR 517
Serious and drastic consequences may flow from the making of a restraining order. A restraining order is one of the preconditions for the operation of automatic forfeiture. However automatic forfeiture also depends on a defendant’s conviction of a serious drug offence. The statutory scheme is directed towards ensuring that offenders do not benefit from their crimes. The automatic forfeiture provision is designed to assist in that endeavour. The magistrate described the legislation as draconian. Comparable legislation has been described as drastic. This may be so but parliament clearly considered that firm measurers were needed to address the problems associated with the wrongful retention of the proceeds of crime.
Section 15 envisages that an application for a restraining order may be made either inter partes or ex parte. In the event of an inter partes application the party against whom an order is sought is given an opportunity to be heard. That party may dispute the allegations, put material before the court and make submissions. In the event of an ex parte hearing an order may be made in a party’s absence. If that occurs then section 15(2) provides that the court must allow the owner of the property a reasonable opportunity to be heard on the question of whether the order should continue in force.
Once a magistrate’s discretion to grant a restraining order has been enlivened section 15(1) provides that the court “may” make a restraining order. This discretion is unfettered. The court must weigh all of the relevant competing factors when considering the exercise of its discretion. Obvious matters for consideration are the risk of the disposal of the property and the need for restraint having regard to the evaluation of that risk. Other factors include the strength of the Crown case, the nature and quantity of the drugs allegedly involved, the relationship between the drugs, the property and the party, the direct and indirect consequences of an order on the party and third parties. No doubt there will be other factors.
The magistrate took the view that:
“...the granting of a restraining order in relation to a tainted property relevant to a serious drug offence has draconian consequences. Those consequences are to remove from the court any discretion not to forfeit the property.”
This is not correct. The court retains a discretion under section 15(3) to vary or revoke a restraining order at any time.[10] In the case of a serious drug offence the court’s discretion is fettered by section 15(5)(d). This section requires the party seeking to revoke the restraining order to establish one of the specified grounds.
[10] Hepworth v Director of Public Prosecutions (2001) 79 SASR 480 at [12].

The magistrate’s suggestion that the court should be “very cautious” before making a restraining order does not accord with the terms of the statute. Once the discretion has been enlivened the section does not restrict or limit the exercise of the discretion. The magistrate’s suggested approach would fetter the statutory discretion. However it does not follow that the order discharging the ex parte restraining orders was inappropriate.
Reconsideration of An Ex Parte Restraining Order
The magistrate observed:
“The power to grant a restraining order under s.15 is discretionary. The terms of s.15 re that the court may make a restraining order. If the restraining order is made ex parte subsection 2 allows that order to be revisited. It is my interpretation that the revisiting of an ex parte restraining order is an independent exercise and is not affected by the restrictions in subsection5 ofs.15.”
Counsel for the director accepted that a party subjected to an ex parte restraining order had a right to be heard when the court was determining whether the order should continue in force. However it was said that in the case of a forfeiture offence or a suspected forfeiture offence in relation to a serious drug offence a party had to establish the existence of one of the exceptions specified in section 15(5)(d) before an ex parte restraining order could be revoked. This was said to arise because of the use of the words “restraining order” and “revoked” in section 15(5). Counsel for the director submitted that the magistrate erred in his interpretation of section 15(2). He was wrong to conclude that his powers were independent of and not restricted by the exceptions in section 15(5). It was said that sections 15(2) and 15(5) should be read together. The operation of section 15(2) was conditional upon the terms of section 15(5). It was submitted that the Criminal Assets Confiscation Act intended orders to be made with substantial and drastic consequences. It was said that no circumstances had been established that brought Mr Tregenza within any of the section 15(5) exceptions. There was no basis established to revoke the ex parte restraining orders.
Counsel for Mr Tregenza submitted that the director’s position caused inconsistency and unfairness. Such a position could only be justified by the clearest statutory provisions. The director’s construction would continue to lead to a misuse of ex parte procedures. It was said that when analysed the language of the Criminal Assets Confiscation Act did not permit such an interpretation. Counsel supported the magistrate’s reasoning. It was said that the revoking of the ex parte restraining orders did not leave the director without a remedy. The director was able to protect himself by making an application for forfeiture under Part 2 of the Act. Counsel emphasised that the Act had severe effects on proprietary interests and should be strictly construed. It was submitted that section 15(2) should be interpreted in the context of the Act in its entirety. Part 3 of the Act including section 15 was directed towards the granting of restraining orders where property may be forfeited at a later time. Part 2 provided the primary source of power with respect to forfeiture orders. It was said that a party against whom a forfeiture order may ultimately be made had an entitlement to be heard.
Counsel for Mr Tregenza submitted that the provisions of the Criminal Assets Confiscation Act that automatically changed a restraining order to a forfeiture order assumed that the property owner had the opportunity to be heard prior to forfeiture occurring. It was submitted that this could occur at an initial inter partes hearing or alternatively on a section 15(2) consideration of whether the ex parte restraining order should continue in force.
The evident purpose of section 15(2) is to allow for ex parte restraining orders to be made in appropriate circumstances and to ensure that a party is to be in no worse position than if the proceedings had been heard inter partes. This purpose accords with the general concept of fair treatment.
Section 15(2) provides that following the making of an ex parte restraining order the owner of property must be afforded a right to be heard. Then there must be a consideration of whether the court is satisfied that the order should continue. A magistrate has the advantage of hearing both parties. When considering whether the order should continue regard must be had to the same considerations as are relevant in determining an inter partes application.
Upon a hearing to determine whether a restraining order made ex parte should continue if the court is not satisfied that there is good reason for the order to continue in force the order must be revoked. This is a different test to that contemplated by the terms of section 15(5). The terms of section 15(2) do not suggest that a court when considering whether “good reason exists” is limited or restricted to the exceptions specified in section 15(5). The director has the onus of satisfying the court that the ex parte restraining order should continue. Section 15(2) should be contrasted with section 15(3) which provides that a restraining order may be varied or revoked at any time. Section 15(3) attracts the limitations of 15(5)(d).
The director’s submission that Mr Tregenza must bring himself within an exception specified in section 15(5) before an order can be made to revoke the ex parte restraining order is rejected. Section 15(2) is designed to protect the party affected by an ex parte restraining order and to afford that party the same right to be heard as would have been afforded on an inter partes hearing.
The object of a restraining order is to prevent anticipatory disposal of property. In these circumstances it is necessary to allow for ex parte applications. However on a consideration of whether the order should continue it is relevant for a party to demonstrate that any risk of dissipation of property can be safeguarded by means other than a restraining order. If alternative effective means of restraint exist then the director may be adequately protected against dissipation and an application for forfeiture can be pursued at an appropriate time.
On the hearing of the appeal it was accepted that in the past the director applied as a matter of practice for ex parte restraining orders. Inter partes applications were rare. This may be the result of the perceived procedural advantages associated with the prospect of automatic forfeiture. Such an approach may unfairly disadvantage defendants. The magistrate observed:
“The practice of this Court has been to routinely grant restraining orders on an ex parte basis and to leave them in place once they are served. It is my finding that that practice is clearly wrong and particularly is wrong in relation to serious drug offences.”
The practice of routinely seeking ex parte orders is inappropriate. An ex parte order affecting rights with respect to property should only be made in accordance with the terms of the Criminal Assets Confiscation Act. The director must establish the necessary factors to enliven the court’s discretion. The director must also establish a real risk of disposal of property if the party against whom the order is sought has knowledge of the application. A mere assertion is not sufficient. A basis for the apprehension must be established.
Conclusion
The magistrate erred in placing a fetter on the exercise of his discretion. His order must be reconsidered.
The affidavit of Ms Giorgini in support of the ex parte restraining orders and relied on in regard to the continuation of these orders is materially deficient. No explanation for the delay of almost seven months in applying for the ex parte orders has been advanced. No adequate basis has been proffered to support the feared risk of dissipation. A restraining order pursuant to the Magistrates Courts Act has been made. The director is adequately protected.
The magistrate’s order of 6 December 2002 operates to restrain Ms Garth from dealing with the property. The director does not seek to maintain any order against Ms Garth. The appeal is allowed for the purpose of discharging the magistrate’s order in that respect. Otherwise the appeal is dismissed.
LIST OF CITATIONS AS THEY APPEAR IN THE JUDGMENT
1 In early May 2002 Ms Garth’s matters went to trial. As a result of a no case submission the jury was instructed to acquit Ms Garth. Mr Tregenza’s trial was inconclusive and a retrial was ordered.
2 “(1) A Court may make an order (a "restraining order") preventing or restricting dealing with property of a defendant to an action if—
(a)     the action appears to have been brought on reasonable grounds; and
(b)     the property may be required to satisfy a judgment that has been, or may be, given in the action; and
(c)     there is a substantial risk that the defendant will dispose of the property before judgment is given, or before it can be enforced.
(2) A restraining order must be served as directed by the Court.
(3) A person who deals with property subject to a restraining order except as permitted by the order commits a contempt of Court.
(4) The Court may vary or revoke a restraining order at any time.
(5) If it appears to the Court that grounds for making a restraining order exist but the Court requires further evidence to identify property in relation to which the order could be effectively made, the Court may summons the defendant, or issue a warrant to have the defendant arrested and brought before the Court, for examination on that subject.”
3      McCleary v Director of Public Prosecutions (1998) 157 ALR 301 at 311
Fisse, Fraser and Coss The Money Trail: Confiscation of Proceeds of Crime, Money Laundering and Cash Transaction Law Book Co Sydney 1992 at 74
Pianin “Criminal Forfeiture: Attacking the Economic Dimension of Organised Narcotics Trafficking” (1982) 32 Am U L Rev at 254-5
4 (2001) 79 SASR 480 at [10], [12-15]
5 (2001) 81 SASR 164
6(1990) 170 CLR 104 at 112 and 115-116 see also R v Zotti [2002] SASC 164
7 (2001) 79 SASR 98
8 [1991] 2 VR 351 at 357
9      DPP v Toro-Martinez (1999) ALR 517
10Hepworth v Director of Public Prosecutions (2001) 79 SASR 480 at [12].

Fisse, Fraser and Coss The Money Trail: Confiscation of Proceeds of Crime, Money Laundering and Cash Transaction Law Book Co Sydney 1992 at 74
Pianin “Criminal Forfeiture: Attacking the Economic Dimension of Organised Narcotics Trafficking” (1982) 32 Am U L Rev at 254-5

[2002] SASC 414

12 December 2002