Director of Public Prosecutions v CRD

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
DIRECTOR OF PUBLIC PROSECUTIONS v CRD & ORS
[2022] SASC 36
Judgment of the Honourable Justice Parker
CRIMINAL LAW - PROCEDURE - CONFISCATION OF PROCEEDS OF CRIME AND RELATED MATTERS - RESTRAINING OR FREEZING ORDER - VARIATION GENERALLY
CRIMINAL LAW - PROCEDURE - CONFISCATION OF PROCEEDS OF CRIME AND RELATED MATTERS - FORFEITURE OR CONFISCATION - DISCRETION TO MAKE ORDER - GENERALLY
Claim of a third party for a certain sum under an equitable charge held over a property, which was subject to a restraining order made under section 24 of the Criminal Assets Confiscation Act 2005 (SA) (‘Assets Act’).
The first respondent is a registered proprietor of a property in Toorak Gardens. He entered into a Deed of Agreement (‘Deed’) with the second interested party. As a result of that agreement, for a sum of money, the interested party registered a permissive caveat on the title of the Toorak Gardens property.
An attempt to sell the property failed due to the grant of a restraining order sought by the applicant against the property by the Court under the Assets Act. That restraining order was sought, and granted, ex parte on the Court being satisfied that the first respondent was to be charged with a serious offence. The effect of the restraining order is that if the first respondent is convicted of that serious offence, s 56A of the Assets Act will operate and all property, other than excluded property, will be forfeited to the Crown.
While the restraining order provides that the restraining order was subject to the rights of Westpac Banking Corporation as registered mortgagee, it was not expressly made subject to the rights claimed by the second interested party as caveator. She contends that there should have been a further order that made the restraining order subject to her rights under the Deed and caveat.
The issues for determination are whether:
•the power which authorised the Court to make the Order could affect the rights held by the interested party under the Deed;
•the interested party was entitled to the amount asserted or some lesser amount from the sale of the property by the Crown; and
•the doctrine of privity would operate to preclude the applicant from challenging the quantum of the interested party’s interest.

Held
1.The Deed granted the interested party an equitable charge over the property, and thereby conferred a proprietary interest. The interested party held an ‘interest’ in the ‘property’ as defined in s 3(1) of the Assets Act. The restraining order did not, and could not, apply to the interests in the property held by the interested party pursuant to the Deed, as her interest was not within the combined scope of s 24(1)(a) and 24(5)(a) of the Assets Act.
2.The Crown has a ‘fiscal’ or ‘governmental’ interest to ensure that the net value of the property that passes to it is correctly established. The task of ascertaining the value of the rights presently held by the interested party is not contrary to the doctrine of privity of contract.
3.As the sum claimed by the interested party is being held in trust subject to further order of the Court, the interested party’s interests are protected. The matter should be listed for further hearing to determine the quantum and disposition of those funds.

Criminal Assets Confiscation Act 2005 (SA) ss 3(1), 6, 6A, 6A(3), 11, 24, 24(1), 24(1)(a), 24(2), 24(4), 24(5), 24(5)(a), 24(5)(a)(i), 24(5a), 25(4), 26, 30, 32, 34, 34(1)(b)(ii), 35, 36, 38, 38(b), 40, 46, 46(6), 47(3)(a), 53, 56A, 56A(1), 56A(2), 56A(3), 61, 210, 213, 218, 220(1); Controlled Substances Act 1984 (SA) s 32(1); Real Property Act 1886 (SA) s 191(1); Law of Property Act 1936 (SA), referred to.
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107; Andrews and Ultima Enterprises Pty Ltd v South Australian Superannuation Fund Investment Trust (1985) 124 LSJS 153; Rasch Nominees v Bartholomaeus (2013) 115 SASR 473; Briginshaw v Briginshaw (1938) 60 CLR 336; Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150; Director of Public Prosecutions v Vitale [2020] SADC 55; Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407; Coles KMA Ltd v Sword Nominees Pty Ltd (1996) 44 SASR 120; Re Ling; ex parte Enrobook Pty Ltd (1996) 142 ALR 87; Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1985) 1 NSWLR 545; Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161; Sonenco (No. 77) Pty Ltd v Silvia (1989) 24 FCR 105; Clarence City Council v Commonwealth of Australia (2020) FCR 265; Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584; Avco Financial Services Ltd v White [1977] VR 561; Avco Financial Services Ltd v Commonwealth Bank of Australia (1989) 17 NSWLR 679; Re Cosslett (Contractors) Ltd [1998] WLR 131; Wilson v Darling Island Stevedoring & Lighterage Co Ltd (1956) 95 CLR 43; Coulls v Bagot's Executor & Trustee Co Ltd (1967) 119 CLR 460; Kowalski v Mitsubishi Motors Australia Staff Superannuation Fund Pty Ltd [2018] SASCFC 44; Hobart International Airport Pty Ltd v Clarence City Council; Australian Pacific Airports (Launceston) Pty Ltd v Northern Midlands Council (2022) 96 ALJR 234, considered.

DIRECTOR OF PUBLIC PROSECUTIONS v CRD & ORS
[2022] SASC 36
Supreme Court: Civil

Parker J: This judgment considers the jurisdiction and powers of the Court under the Criminal Assets Confiscation Act 2005 (SA) (“the Assets Act”) in circumstances where a third party claims the sum of $350,000 under an equitable charge held over property that was subject to a restraining order and subsequently sold. Before considering these issues, it is necessary to set out the relevant provisions of the Assets Act and the history of the matter.
The Assets Act
Section 24 of the Assets Act is the provision of principal relevance to this matter. It provides as follows:
24(1) A court must, on application by the DPP, make an order (a restraining order) that specified property must not be disposed of or otherwise dealt with by any person (except in the manner and circumstances, if any, specified in the order) if satisfied that—
(a)a person has been convicted of, or has been charged with, a serious offence, or it is proposed that the person be charged with a serious offence; or
(b)a person is suspected on reasonable grounds of having committed a serious offence; or
(c)there are reasonable grounds to suspect that the property is the proceeds of, or is an instrument of, a serious offence (whether or not the identity of the person who committed the offence is known); or
(d)there are reasonable grounds to suspect that a person has committed a serious offence and has derived literary proceeds in relation to the offence.
(2)An application for an order under this section must specify the property to which the application relates.
(3)The DPP may submit evidence in support of the application in the form of an affidavit.
(4)Subject to subsections (5) and (5a) and Division 3, the court must specify in the restraining order all property specified in the application for the order.
(5)The court may only specify property in a restraining order made under subsection (1)(a),(b) or (d) if satisfied that there are reasonable grounds to suspect that the property is—
(a)in the case of a restraining order made under subsection (1)(a) or (b)—
(i)property of the suspect; or
(ii)property of another person (whether or not that other person's identity is known) that—
(A)is subject to the effective control of the suspect; or
(B)is proceeds of, or is an instrument of, the serious offence; or
(b)in the case of a restraining order made under subsection (1)(d)—
(i)property of the suspect; or
(ii)property of another person (whether or not that other person's identity is known) that is subject to the effective control of the suspect.
(5a)The court may not specify property in a restraining order that is protected property of a person unless subsection (1)(c) applies to the property.
(6)The court must make a restraining order even if there is no risk of the property being disposed of or otherwise dealt with.
(7)The court may specify that a restraining order covers property that is acquired by the suspect after the court makes the order.
(8)A restraining order may be made subject to conditions.
The definitions of “property” and “interest” in s 3(1) are also relevant. They provide that:
interest, in relation to property or a thing, means—
(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;
property means real or personal property (tangible or intangible) including—
(a)a chose in action; and
(b)an interest in property;
Section 34 empowers the Court to exclude specified property from a restraining order following an application under ss 35 or 36 and upon the Court being satisfied of certain matters. Section 40 authorises the Court to make orders that are ancillary to a restraining order. An ancillary order may, amongst other things, vary the property covered by an order and vary the conditions to which an order is subject.
Section 56A(1) provides that, immediately upon a person becoming a “prescribed drug offender”, a “deemed forfeiture order” will be taken to have been made by the convicting court. The term “prescribed drug offender” is defined in s 6A. In the present case, the relevant element of that definition is the reference to a person convicted of a “commercial drug offence” as defined in s 6A(3).
Subject to certain limited exceptions which are not presently relevant, s 56A(2) provides that a deemed forfeiture order applies to all property owned by, or subject to the effective control of, a prescribed drug offender on the conviction day. Section 56A(3) provides that, subject to certain limited exceptions, which again are not relevant, the Act applies to a deemed forfeiture order as if it were a forfeiture order made under s 47(3)(a). Such an order provides for property be forfeited to the Crown.
The relevant point for present purposes is that upon a person being convicted of a commercial drug offence, s 56A will operate so that all of that person’s property, subject to limited exclusions, will be immediately forfeited to the Crown.
Section 11 provides that the “Act is in addition to, and does not limit or derogate from, the provisions of any other Act”.
Section 30 provides for restraining orders to be registered by registration authorities, e.g. the Registrar-General.
History
During 2019 the first respondent, CD, became the registered proprietor of a property located at Toorak Gardens. In November 2019 CD entered a Deed of Agreement (“the Deed”) with the second interested party, Olivia Chignola, relating to what was described as the investment of money by her with him.
On 8 November 2019, Ms Chignola registered a permissive caveat on the title of the Toorak Gardens property. The claim made by Ms Chignola as the caveator was as follows:
An estate or interest as chargee pursuant to an agreement in writing made between the caveator and the caveatee wherein the caveatee agreed to charge their estate and interest in favour of the caveatee dated 1 November 2019.
The Court has been informed that Ms Chignola has also registered a caveat on the title of another property in Teringie.
On 2 May 2021, CD entered an unconditional contract for the sale and purchase of the Toorak Gardens property with the eighth interested party, Ms Hayley Bjeshka. The contract provided that settlement was due on 9 July 2021. However, settlement failed due to the grant of a restraining order by the Court under the Assets Act on 5 June 2021.
The restraining order was made by the Court on an ex parte basis, without a hearing and also without notice following a request by the Director of Public Prosecutions (“the Director”) under s 25(4) of the Assets Act. That request, and the application for a restraining order, was supported by a comprehensive affidavit made by Detective Brevet Sergeant Kym Wall of South Australia Police. Brevet Sergeant Wall set out the basis upon which the police proposed to charge CD, and others, with serious offences, namely trafficking in and manufacturing large commercial quantities of controlled drugs. He also stated that the police were concerned that, if notice were to be given of the application, CD may dispose of property before a restraining order could be made. Brevet Sergeant Wall further stated that the police intended to arrest CD and others commencing from 7 June 2021 as part of a State, national and international coordinated effort to disrupt serious and organised crime.
In light of the matters deposed to by Brevet Sergeant Wall, I was satisfied that it was appropriate to proceed without notice under s 25(4) of the Assets Act. I was also satisfied that the police proposed to charge CD with a serious offence, thereby enlivening the powers conferred upon the Court by s 24(1)(a). The relevant provisions of the order made by the Court on 5 June 2021 were as follows:
1.Pursuant to section 24(1)(a) of the Criminal Assets Confiscation Act 2005 (“the Act”) the following property must not be disposed of or otherwise dealt with by any person (hereinafter referred to as “the Restraining Order”) except as specified in paragraph 2:
(a) The first respondent’s interest in the property situated at [the Teringie address] being the whole of the land comprised and described in Certificate of Title Volume VVV Folio ZZZ pursuant to section 24(1)(a) of the Act.
(b)The first respondent’s interest in the property situated at [the Toorak Gardens address] being the whole of the land comprised and described in Certificate of Title Volume XXX Folio YYY pursuant to section 24(1)(a) of the Act.
(c)to (k) [listed nine vehicles, comprising cars and motorcycles owned by, or believed to be under the effective control of, CD]
(together, “the Property”).
2.The Restraining Order is made subject to the rights of the mortgagee as follows:
…
(l) in relation to the property referred to in paragraph 1(a) above, registered mortgage number WWW to Westpac Banking Corporation;
(m) in relation to the property referred to in paragraph 1(b) above, registered mortgage number QQQ to Westpac Banking Corporation;
3. Any transaction that has the direct or indirect effect of reducing the value of the first respondent’s interest in the Property, including the use of a redraw loan facility and/or line of credit, is prohibited.
It is to be noted that although orders 2(l) and 2(m) expressly provided that the restraining order was subject to the rights of the Westpac Banking Corporation as registered mortgagee of the real property at Teringie and Toorak Gardens, it was not expressly made subject to the rights claimed by Ms Chignola as caveator in respect of those properties. She contends that there should have been a further order 2(n) that made the restraining order subject to her rights under the Deed and caveat.
The Court made further restraining orders on 9 July 2021 and 8 October 2021 in relation to other property owned by, or under the effective control of, CD. However, that other property is not relevant to the present issue. Importantly however, an affidavit filed in support of the application for the restraining order made on 9 July 2021 established that on 8 June 2021, CD was charged with two counts of trafficking in a large commercial quantity of a controlled drug contrary to s 32(1) of the Controlled Substances Act 1984 (SA). If CD is convicted of either of those offences, s 56A will operate so that all of his property, other than property that is subject to an exclusion, will be immediately forfeited to the Crown.
Ms Chignola seeks payment of the sum of $350,000 said to be owing to her pursuant to the Deed. On 24 September 2021 her solicitor gave notice to CD’s solicitor that she exercised her right to terminate their agreement and required payment of the sum of $350,000 either immediately or within 90 days. She contends that she is entitled to have that sum paid to her from the proceeds of sale of the Toorak Gardens property. She has now applied to have the order made on 5 June 2021 varied so as to permit that payment to be made to her. That is opposed by the Director for the reasons that appear below.
Ms Chignola’s solicitor has deposed in an affidavit that on 27 September 2021 he received an email from CD’s solicitor in the following terms:
My client accepts that the sum of $350,000 is due to be paid your client in respect of this matter.
In an email dated 29 September 2021, CD’s solicitor advised the Director and other parties that CD was prepared to waive the 90-day notice period provided for in the Deed for early termination of his agreement with Ms Chignola.
Ms Chignola consented to the discharge of the caveat so as to facilitate settlement of the sale and purchase of the Toorak Gardens property. After hearing submissions from the parties, and as there was no suggestion that Ms Bjeshka was not a bona fide purchaser for value, on 26 October 2021 the Court ordered that the restraining order be varied to permit settlement to occur. The Court also ordered that the sum of $350,000 claimed by Ms Chignola be paid into her solicitor’s trust account to be held until further order of the Court. The balance of the proceeds of sale, after discharge of the mortgage in favour of Westpac and payment of all reasonable costs associated with the sale and transfer, was ordered to be paid into the Supreme Court Suitors Fund.
Ms Chignola contends that the Court has no jurisdiction under s 24 of the Assets Act, or otherwise, to defeat or delay her entitlement to receive the sum of $350,000 said to be due to her under the Deed of Agreement.
The Deed of Agreement
While the date of the Deed is typed as “November 2019”, and the space for the date to be inserted in handwriting has been left blank, the caveat was lodged on 1 November 2019.[1] This suggests that the Deed was probably executed on 1 November 2019.
[1] Several copies located by police searches appear to be identical.
Recital A to the Deed records that it relates to an agreement reached between Ms Chignola who is described as the “investor and lender” and CD who is defined to be the “investment manager and borrower”.
Recital B to the Deed records that Ms Chignola has advanced monies in the sum of $274,000 to CD in consideration of him providing her with a financial return of $76,000.
Recital C to the Deed records that Ms Chignola “has entered into a loan facility” with CD for him “to invest the monies advanced by” Ms Chignola.
Recital D lists a series of payments that have been made by Ms Chignola to CD “pursuant to the terms and conditions of this Deed of Agreement”. Those payments were as follows:
i.$85,000 by bank cheque on or about 13 January 2017;
ii.$9,000 cash withdrawal on or about 14 February 2017;
iii.$5,000 EFT on or about 15 August 2018;
iv.$55,000 cash withdrawal on or about 16 August 2018;
v.$20,000 cash withdrawal on or about 21 December 2018; and
vi.$100,000 cash withdrawal on or about 16 April 2019.

Subparagraph (vii) of Recital D records that the total monies advanced “by way of the investment” is the sum of $274,000 with an anticipated return on the investment of $350,000.
Recital E states that CD would provide Ms Chignola with the financial return of $350,000 “at the termination of the settling of the Investment Manager’s loan facility with the investor”.
Recital F states that CD had an absolute discretion as to the investment of the monies advanced by Ms Chignola without prejudice to his right to the invested principal for the term of the investment.
Recital G records that Ms Chignola was to hold a registered charge by way of a “permissible” (sic) caveat over the properties granted as security to secure all monies advanced by her.
Under Recital H, Ms Chignola was “granted an equitable estate and interest in the property(s) held by the Investment Manager to secure the investment moneys advanced pursuant to this Deed of Agreement and loan facility”.
Recital I records that the properties offered as security are those at Toorak Gardens and Teringie owned by CD.
Recital J states that CD will pay Ms Chignola the sum of $350,000 “without any prejudice to the Investor’s rights to the financial return in the event that the Investment Manager fails to obtain a financial return on the principal sum invested”.
Recital K states that the term of the arrangement is for 24 months with a right to roll over the investment for a further period “not exceeding twelve (24) [sic] months … at the absolute discretion and without prejudice to the investor’s right to terminate the investment facility at any time”. That provision is followed by Recital L which provides that if Ms Chignola “wishes to withdraw from the Investment facility she MUST give notice to the Investment Manager of not less than 90 days seeking the investment principal and the agreed return”.
The remaining provisions of the Deed are common form provisions confirming the accuracy of the Recitals, granting an indemnity from CD to Ms Chignola and dealing with costs, assignment and waiver. There is nothing exceptional about these provisions.
The Deed has some odd features. In particular, all of the payments referred to in the Deed, and that are stated to have been made “pursuant to the terms and conditions of this Deed of Agreement”, had been made well prior to its execution. The first payment was made some two years and nine months prior to entry into the Deed and the last payment over six months before that occurred. There is also no explanation as to how CD, had invested, or intended to invest, the monies previously provided to him by Ms Chignola so as to gain the substantial return of $76,000 that he promised to her. The fixed return of $76,000 over and above the sum “invested” also applied regardless of whether the 24-month term of the Deed was extended or terminated early.
I also note that the security granted by CD over the Toorak Gardens and Teringie properties arguably only relates to the sum of $274,000 advanced by Ms Chignola and not the $350,000 that CD promised to repay to her.[2]
[2] See [107] below.
Records of payments
A letter sent by Ms Chignola’s solicitor to the Director stated that the monies referred to in the Deed were derived by her from insurance payments totalling $540,737 received following the destruction of her home and contents as a result of arson. Provided with that letter were copies of correspondence from her insurer. Also provided were bank statements that record deposits from her insurer into her account and later withdrawals that were consistent with the dates and amounts of the payments listed in Recital D of the Deed.
Brevet Sergeant Wall has deposed in an affidavit dated 13 October 2021 that a partial examination of Ms Chignola’s banking records has revealed that in the period from 4 December 2019 to 18 April 2020, CD made four payments to her with a total value of $240,000. Copies of the banking records were annexed to the affidavit of Brevet Sergeant Wall. He attested that the examination of CD’s banking records by police is continuing.
In an affidavit dated 13 October 2021 and filed on 19 October 2021, Detective Sergeant Brian Smith deposed that CD had made four payments to Ms Chignola with a total value of $240,000 in the period from 28 November 2018 to 27 May 2020. Detective Sergeant Smith did not annex any supporting documents to his affidavit. For that reason, and as Brevet Sergeant Wall did annex source documents to his affidavit that were consistent with the alleged payments, it appears that Sergeant Smith is mistaken. That matter can be resolved later if his affidavit is tendered and he gives oral evidence.
The Director contends that the payments identified by Brevet Sergeant Wall suggest that the monies advanced to CD by Ms Chignola have, in part, been repaid. Ms Chignola’s counsel contends that this is mere speculation that lacks an evidentiary foundation and the payments made to her by CD may have other explanations. Furthermore, the parties to the Deed have agreed that the sum of $350,000 remains due and payable to Ms Chignola and the notice requirement has been waived by CD. The doctrine of privity of contract prevents the Director from challenging the terms of the contract between CD and Ms Chignola.[3] Moreover, the onus of proof lies on the Director[4] and must be discharged in accordance with the Briginshaw principle. [5]
[3]    Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 at 142-143 (Deane J).
[4]    Andrews and Ultima Enterprises Pty Ltd v South Australian Superannuation Fund Investment Trust (1985) 124 LSJS 153 (Olsson J); Rasch Nominees v Bartholomaeus (2013) 115 SASR 473 at [17] –[20] (Gray J, Sulan and Stanley JJ agreeing).
[5]    Briginshaw v Briginshaw (1938) 60 CLR 336.
The Director’s Submissions
The Director submits that the questions that arise in this case are not matters going to jurisdiction but concern the extent of the powers conferred upon the Court under the Assets Act. At its simplest, the jurisdiction of the Court may be regarded as the ability to hear and determine a particular kind of matter according to law.[6] The relevant provisions of the Assets Act, when correctly understood, empower the Court to hear and determine applications for restraining orders in situations falling within the boundaries drawn by the Act. Restraining orders that fall within those boundaries will be within jurisdiction. The question of whether there is a power to make a specific order in a given case, while it may assist in informing the question of jurisdiction, is not itself a question of jurisdiction.
[6] Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 161-162 (Gibbs CJ, Stephen, Mason and Wilson JJ).
It is not correct that the jurisdiction of the Court to grant restraining orders is limited because certain powers are expressed as being subject to satisfaction of certain evidentiary matters. Such matters relate to the exercise of the power to grant a restraining order and the sufficiency of evidence. These are not jurisdictional questions.
The Director submits that the Court has jurisdiction in relation to the present matter because the orders in question relate to, that is they are connected in some way with, property which may be liable to forfeiture under the Assets Act.
The Director submits that the contention that the Assets Act does not confer jurisdiction on the Court to make restraining orders restraining the secured property interests of third parties cannot be sustained as a blanket proposition. That is apparent from s 24(5). Section 24(1) does not limit a restraining order to dealings by the suspect but provides that it may extend so that “specified property must not be disposed of or otherwise dealt with by any person”. Section 24(5) also expressly permits the restraint of property that is “property of another person” provided that there are reasonable grounds to suspect that the property is either “subject to the effective control of the suspect” or “proceeds of, or … an instrument of, the serious offence”. However, the Director does not suggest that the Court is empowered to restrain secured property interests no matter the circumstances. The jurisdiction requires that there must be a connection in some way with an alleged criminality, but the connection may be more or less proximate to the alleged criminal activity.
The Director refers to the wide scope of the definition of “effective control” in s 6 of the Assets Act. In that respect he notes that it is the Court that determines whether property is subject to the effective control of a person. That may be the case even if a person does not have any interest in the relevant property and effective control may be something less than exclusive control. Property previously owned by a suspect that has been disposed of to another person without sufficient consideration within six years prior to an application for a restraining order, a confiscation order or a person becoming a prescribed drug offender, will still be taken to be subject to the effective control of the suspect. The Court may also have regard to family, domestic and business relationships between persons having an interest in property and other persons when determining where effective control lies.
The Director refers also to numerous other provisions of the Assets Act that, in his submission, demonstrate that the Court has jurisdiction and power to make restraining orders that may potentially restrain the property interests of third parties, whether secured or otherwise. By way of example, the Director referred to the provisions of ss 34 and 38 that empower the Court to exclude property from a restraining order where the owner lawfully acquired the property or is not the suspect (s 34(1)(b)(ii) and s 38(b)). Another example referred to by the Director is in s 46. Section 46(6) provides for a restraining order which covers property of a person who is not a suspect and which is an instrument of, but not proceeds of, a serious offence to lapse if it is not subject to the effective control of another person who is a suspect if the suspect has not been charged with the serious offence or a related offence within 28 days after the restraining order is made. A further example referred to by the Director was s 53 which, in the Director’s submission, empowers the Court to make an ancillary order consequent upon the making of a forfeiture order to combine interests for the purposes of disposition in certain circumstances and then to award compensation to a person whose interest is affected by that order.
The Director notes that Ms Chignola has conceded, correctly in his view, that the Assets Act contemplates that there may be multiple interests in property that may be affected by a restraining order. These may include the interests of the registered proprietor of land, a registered mortgagee and an equitable mortgagee. However, in the Director’s submission, the question asked by Ms Chignola as to how the Assets Act treats or otherwise accommodates these interests proceeds on the premise that there is jurisdiction.
The Director submits that it does not follow from the terms of s 24(1)(a) of the Assets Act, when read in conjunction with s 24(5)(a)(i), that the only order that could lawfully be made was an order that restrained CD’s interest in the property as contended by Ms Chignola. However, it is the case that that was the only relevant order that was made by the Court and the interest of Ms Chignola was not restrained per se. Nevertheless, the restraint placed on the legal interest of CD in his capacity as registered proprietor may necessarily affect the interests held by others.
The Director states that he does not advance the arguments that were relied upon before Judge Dart in Director of Public Prosecutions v Vitale.[7]In that case, the Director contended that the equitable mortgagee was bound by the terms of the restraining order and was not entitled to exercise its powers as mortgagee while the order remained in force. It was further contended that the mortgagee must await the outcome of the criminal proceedings. If the defendant was acquitted, the restraining order would fall away and the rights of the mortgagee would be restored. However, if the defendant was convicted the Director’s position was that the property would be forfeited to the Crown free of mortgage.
[7] [2020] SADC 55.
In this case the Director does not contend that the property rights of a third party can be forfeited by operation of the Assets Act with no right to compensation. To the contrary, s 61 specifically provides for compensation and s 26 empowers the Court to refuse a restraining order if the Crown refuses or fails to give an appropriate undertaking with respect to the payment of damages or costs in relation to the making and operation of the order. The Director does not contend that the interest of any person in the land is defeated merely by the making of a restraining order. He accepts that the registration on the title of the restraining order does not defeat the interest of an equitable interest holder notified by way of a caveat. That position is expressly provided for in s 213 of the Assets Act. However, the Director submits that it must be recognised that a caveat merely represents a claim to an interest in the land.[8] In the same way as registration of a transfer is subject to the rights claimed in a caveat, the registration of an interest in a property where there is a caveat neither defeats the interest claimed by the caveator, nor validates the interest or estate claimed. It simply assumes that the caveat is valid and enforceable with the question of whether the interest that is being claimed is in fact valid and enforceable being left to be resolved after registration. That situation is analogous to the present position.
[8] Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407.
The Director does not contend that an equitable interest holder must simply await the outcome of criminal proceedings in a case such as this. To the contrary, the Director submits that the need to assess the interest claimed by Ms Chignola at this point has arisen because the Director has not opposed the sale of the property. That required the overlapping or competing interests to be disentangled and assessed as the Director only seeks to restrain the interest held by CD to the extent that his interest can be identified and separated from other preserved interests.
The Director also submits that the submission on behalf of Ms Chignola that a restraining order must be made subject to the property interests of a third party is not correct. Such orders are not limited to the property of a suspect nor are they necessarily subject to the property interests of third parties. That is apparent from the terms of s 24(1)(a) read in conjunction with s 24(5). While third party interests are preserved by s 11, they may be affected, or interfered with, by an order made under the Assets Act. The manner in which those interests are accommodated under the Assets Act depends upon the circumstances of the case and the applications made by interested parties.
The Director acknowledges that s 11 preserves the operation of other legislation such as the Real Property Act 1886 (SA) and the Law of Property Act 1936 (SA). That is expressly recognised by ss 210 to 213 of the Assets Act which deals with statutory charges and the priority of charges. In that sense the Director acknowledges that it might be said that restraining orders are “subject to pre-existing rights”. However, he contends that the concept of “subject to” is ambiguous and potentially misleading. It is more accurate to say that third party rights are not defeated or to say that they are preserved, rather than to say that restraining orders are “subject to pre-existing rights”. Such rights may nevertheless be directly or indirectly affected, in that their exercise may be delayed, by the issue of a restraining order. That proposition is consistent with s 11.
For these reasons, the Director submits that the Court has jurisdiction and power to make the restraining order that was made in this case and the subsequent variation order. The Court also has jurisdiction to examine, assess and determine the validity and value of a claimed third party proprietary interest, at least to the extent that that may be necessary to determine the qualitative and quantitative aspect of a suspect’s or offender’s interest for the purpose of a restraining order, or for that matter in relation to either a forfeiture order or an ancillary order.
The Director submits, that if on the basis of admissible evidence, Ms Chignola is found to have an equitable interest in the property, which is separable from the interest held by CD, and not under his effective control, the restrained interest (or in the case of forfeiture, the interest forfeited), will be reduced accordingly. That is a question for evidence.
The Director reserves the right to respond to the alternative case advanced by Ms Chignola and the relief that she seeks as these matters are beyond the scope of written submissions that the Court has invited the parties to make in relation to the issue of jurisdiction. The Director simply notes that although he bears the onus of proving the matters necessary to establish the grounds for making the orders applied for in accordance with s 220(1), the rules of evidence applicable in civil proceedings apply to proceedings under the Assets Act in accordance with s 218. There exists an evidential basis to challenge the asserted equitable interest, at least in terms of quantum. There exists no evidential basis for the Court to accept that the restrained interest, being that of CD, is to be reduced by $350,000 by virtue of the existence of the Deed, there being only hearsay evidence before the Court and the statements made by CD and Ms Chignola to their legal representatives that are relied upon for their truth. There has been no admissible evidence adduced by either Ms Chignola or CD.
Ms Chignola’s submissions
Senior Counsel for Ms Chignola submits that upon the question of jurisdiction being raised, the Court must determine whether it has jurisdiction to make orders or grant relief. That question has been raised in the context of Ms Chignola’s application to have the restraining order made by the Court on 5 June 2021 varied so that the order does not affect her rights as caveator.
While that application has been made under s 40 of the Assets Act, the correct position is that s 24(1)(a), read in conjunction with s 24(5)(a)(i), does not empower the Court to interfere with the property rights of Ms Chignola. Any interference with third party property interests needs to be the subject of clear and unmistakably clear language. To put the matter another way, the Assets Act must be construed in light of the presumption that legislation is not intended to interfere with vested property interests in the absence of clear and unambiguous language. Such language is not present in this case. Furthermore, there was no evidential basis provided in the application for the restraining order that permitted differential treatment between the equitable interest that is the subject of Ms Chignola’s permissive caveat and the mortgage held by Westpac.
Section 24(1)(a) of the Assets Act authorised the Court to make a restraining order that specified property of a person who has been charged with a serious offence must not be disposed of or otherwise dealt with by any person. When that provision is read in conjunction with s 24(5)(a)(i), the only order that could lawfully be made was an order that restrained the interest of the suspect in the property, i.e., CD. Such an order would have to made subject to the interests of other third parties.

While order 2 correctly recognises that the restraint was only to apply to the interests of CD in the property, the order is incomplete in that it fails to recognise the equitable interest held by Ms Chignola. As Ms Chignola is not a person who falls within the terms of s 24(1)(a), there is no lawful basis to interfere with her vested property rights.
Senior Counsel also submits that it is not open to construe the Assets Act as impliedly repealing or effecting some negation or reading down of the protection afforded to a permissive caveat under the Real Property Act. Section 11 of the Assets Act prevents such a construction. The purpose of s 11 is to ensure the opposite result so that, subject to any express provisions to the contrary such as those found in s 53 of the Assets Act, the Assets Act operates subject to other statutory rights such as those under the Real Property Act or the Law of Property Act. The effect of a permissive caveat is that any subsequent dealing in the land is subject to the caveat.[9]
[9] Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407 at 420-421 (Mason CJ, Dawson and McHugh JJ); Andrews v South Australian Superannuation Fund Investment Trust (1985) 124 LSJS 153 at 163 (Olsson J) and Coles KMA Ltd v Sword Nominees Pty Ltd (1996) 44 SASR 120 at 127 (Bollen J).
In this light, Senior Counsel submits that it is clear that there is no textual, contextual or purposive construction of s 24(1)(a) of the Assets Act that confers a jurisdiction on the Court to restrain or otherwise interfere with the vested property rights of third parties who are not themselves the subject of a separate order under the Act.
Senior Counsel also submits that it is no answer to the absence of a statutory authority authorising the interference of third party property rights that the relevant property might be excluded from the order under s 36 or a variation might be effected under s 40. That answer assumes the validity of the original order. However, the order made on 5 June 2021 is invalid to the extent that it seeks to validly prohibit a transaction that would recognise the interests of Ms Chignola in the Toorak Gardens property.
Regardless of whether the issue is characterised as a question of subject matter jurisdiction or as jurisdictional error, s 24(1)(a) does not support an order that fails to recognise the rights held by an equitable mortgagee that are protected by a caveat under the Real Property Act. On either analysis, the result is that the order made by the Court exceeds the powers that it holds under the Assets Act. However, because the order has been made by a superior court, it remains valid until such time as it is set aside.
Senior Counsel further submits that to construe the Assets Act as authorising the Court to impose a restraint that does not apply to freezing orders,[10] to the rights of mortgagees[11] or the existing equities in property vested in a trustee in bankruptcy[12] has no textual, contextual or purposive basis. Accordingly, such a construction is not open.
[10] Re Ling; ex parte Enrobook Pty Ltd (1996) 142 ALR 87 at 93 (Lehane J); Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1985) 1 NSWLR 545 at 558-559 (Young J).
[11] Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 at 168-169 (Barwick CJ).
[12] Sonenco (No. 77) Pty Ltd v Silvia (1989) 24 FCR 105 at 112-113 (Beaumont J).
In the alternative to the preceding submissions, if, and only if, the Court finds that the restraining order validly interfered with the vested property rights of Ms Chignola, and that a variation of the order may be made by the making of an ancillary order under s 40, then such a variation should be made. The basis for that contention is that neither the validity of the Deed, nor the fact that the sums payable to Ms Chignola under the Deed are duly payable, has been contested by way of evidence or application.
The Director has not put forward any evidence, or any proper legal basis, to support the assertion that the agreement between Ms Chignola and CD is a sham or is somehow not binding. That assertion has been made in circumstances where the Director carries the onus of proof.[13] Because no evidence has been adduced, if the submission is not withdrawn, it should be rejected.
[13] Rasch Nominees v Bartholomaeus (2013) 115 SASR 473.
The questioning by the Director of the debt due under the Deed is based on a misconception as to the operation of the doctrine of privity. The Director is a stranger to the Deed and has no legal right to question or enter upon the rights and obligations of the parties to the Deed in the absence of express statutory power.[14] Leaving aside the potential of a third party seeking a declaration as to the status of the obligation under the contract which is not in issue in these proceedings (and is a matter currently reserved before the High Court),[15] there is no statutory or other basis under the Assets Act which entitles the Director to dispute what the parties to the Deed have accepted to be their binding obligations. Ms Chignola has not been charged, nor is there any suggestion in the evidence that she is to be charged with any offences. While the Director might potentially exercise other powers against Ms Chignola under the Assets Act on further application, that possibility does not permit her property to be restrained pursuant to the order made under s 24(1)(a).
[14] Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 at 142-143 (Deane J).
[15] Clarence City Council v Commonwealth of Australia (2020) FCR 265 – this decision has been appealed to the High Court and judgment was reserved when submissions were made in this matter.
For these reasons, Ms Chignola submits that the order made on 5 June 2021 is invalid to the extent that it purports to restrain her property rights and should be set aside to that extent. The remedy is to amend the order to make it subject to the rights of Ms Chignola. An order permitting the payment to Ms Chignola of the amount held in the trust account of her solicitor would be consequential to such an order.
Consideration
The initial question is the nature of the interest conferred upon Ms Chignola under the Deed. Recital H, in conjunction with Recital I, grants Ms Chignola an equitable estate and interest in the Toorak Gardens property as security for monies advanced by her to by CD. As Ms Chignola was not granted a right of foreclosure in the event of default by CD, the security interest granted under the Deed constitutes an equitable charge rather than an equitable mortgage.[16] While the holder of an equitable charge is not entitled to enter into possession of the property, they can enforce the charge by obtaining an order for sale from the Court.[17] Because that remedy is available, the holder of an equitable charge has a proprietary interest in the charged land.[18] An equitable charge gives rise to an interest that is sufficient to support the lodgement of a caveat.[19]
[16] Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584 at 594-595 (Buckley LJ).
[17] Avco Financial Services Ltd v White [1977] VR 561 at 563-564 (Gillard J); Avco Financial Services Ltd v Commonwealth Bank of Australia (1989) 17 NSWLR 679 at 681 (Young J).
[18] Re Cosslett (Contractors) Ltd [1998] 2 WLR 131 at 141 (Millett LJ).
[19] Avco Financial Services Ltd v White [1977] VR 561 at 563-564 (Gillard J);
The caveat lodged by Ms Chignola was a permissive caveat. Thus, in accordance with s 191(1) of the Real Property Act, it permitted the registration of subsequent instruments provided that they were subject to her claim. The operation of that provision was preserved by s 11 of the Assets Act. Thus, the registration of the restraining order under s 30 of the Assets Act could not, of itself, defeat the rights claimed by Ms Chignola that provided the basis for registration of the caveat. To that extent, I agree with the decision of Judge Dart in Director of Public Prosecutions v Vitale.[20]
[20] [2020] SADC 55.
I turn to the questions of jurisdiction and power under the Assets Act. There can be no doubt that the Assets Act confers jurisdiction upon the Court over the subject matter of confiscation of criminal assets. In the exercise of that jurisdiction, the Court has power to make restraining orders. The question before the Court is whether that power authorised the restraining order made on 5 June 2021 insofar as it affected the rights held by Ms Chignola under the Deed.
Section 24(1)(a) of the Assets Act empowered the Court to make a restraining order that specified property must not be disposed of or otherwise dealt with by any person (except in the manner and circumstances, if any, specified in the order) if the Court was satisfied that it was proposed that the person be charged with a serious offence. As I have previously indicated, the evidence contained in the police affidavit satisfied me that it was proposed that CD be charged with a serious offence.
The relevant property specified in the application for an order in accordance with s 24(2) was the Toorak Gardens property. As the evidence in the supporting affidavit established that the Toorak Gardens property was the property of CD, and as it was clearly not protected property in terms of s 24(5a), the Court was required by s 24(4) to specify the Toorak Gardens property in the restraining order. The application noted that the Toorak Gardens property was held subject to a mortgage registered by Westpac. It also referred to the caveat lodged by Ms Chignola but supplied no details of the interest claimed under the caveat.
It is quite clear from the text of s 24(1)(a) when read in combination with s 24(5)(a) that, in the circumstances alleged by the Director and which were the subject of the evidence contained in the affidavit of Brevet Sergeant Wall, the restraining order could only apply to specified property of CD or property owned by another person that was subject to his effective control. The application that led to the order made on 5 June 2021 did not allege that CD had effective control of property owned by Ms Chignola or any other person.
While there was some suggestion at an early stage in these proceedings by counsel then appearing for the Director that the Deed may be a sham, no evidence has been produced to support that suggestion. While, as I have noted, there are some odd features about the Deed, in particular the fact that it was entered some considerable time after the payments were made by Ms Chignola to CD, of itself, that is not a sufficient basis to impugn the validity of the arrangement recorded in the Deed.
The position may be different if the Director was to provide clear and persuasive evidence that the agreement recorded in the Deed was a sham that was concocted to escape the proper operation of the Assets Act. However, as I have previously observed, there is no such evidence before the Court. I therefore proceed on the basis that the agreement recorded in the Deed is valid and enforceable as between CD and Ms Chignola.
As the Deed granted Ms Chignola an equitable charge over the Toorak Gardens property, and thereby conferred a proprietary interest, she held an “interest” in “property” as defined in s 3(1) of the Assets Act. I find that the order made on 5 June 2021 did not, and could not, apply to the interest in property held by Ms Chignola pursuant to the Deed as her interest was not within the combined scope of s 24(1)(a) and s 24(5)(a). The order should have reflected that fact.
That brings me to the fundamental question at the centre of this dispute. The question is whether Ms Chignola is entitled, as she asserts, to payment of the sum of $350,000 or some lesser amount. Ms Chignola contends that the doctrine of privity of contract prevents the Director from challenging her entitlement to receive the sum agreed between her and CD pursuant to the Deed. She also contends that while she has adduced admissible evidence to establish that CD acknowledges that this sum is due and immediately payable to her, the Director has failed to produce any admissible contrary evidence.
In Wilson v Darling Island Stevedoring & Lighterage Co Ltd, Kitto J stated that it is an “elementary general rule that the only persons entitled to the benefits or bound by the obligations of a contract are the parties to it”.[21] In the same case Fullagar J, with Dixon CJ agreeing, held that a person who is not a party to a contract “can neither sue nor be sued on that contract”.[22] In Coulls v Bagot's Executor & Trustee Co Ltd, Barwick CJ stated that "according to our law, a person not a party to a contract may not himself sue upon it so as directly to enforce its obligations”.[23]
[21] (1956) 95 CLR 43 at 80.
[22] Ibid at 67.
[23] (1967) 119 CLR 460 at 478.
In Kowalski v Mitsubishi Motors Australia Staff Superannuation Fund Pty Ltd, Nicholson J (with Kourakis CJ and Hinton J agreeing) summarised the operation of the doctrine of privity of contract in the following terms:[24]
The doctrine of privity of contract operates to prevent a non-party to the contract from either being bound by its terms or being able to enforce its terms. There are said to be two distinct common law rules. The first is that a non-party cannot sue upon a contract and the second is that a stranger to the consideration (that is, a person from whom the consideration does not move) cannot maintain an action at law upon that contract.
(Citations omitted.)
[24] [2018] SASCFC 44 at [62].
The Director is not seeking to enforce the terms of the contract between Ms Chignola and CD. However, if the Director sought to deny that the contract expressed in the Deed is not valid and enforceable so that Ms Chignola and CD are not bound by its terms, the doctrine of privity of contract will operate to preclude that argument. The position may be different if persuasive evidence was provided to establish that the Deed was a sham but there is presently no such evidence.
If CD is ultimately convicted of an offence that results in him becoming a prescribed drug offender, the value of his interest in the proceeds of sale of the Toorak Gardens property will be forfeited to the Crown pursuant to a deemed forfeiture order under s 56A. The value of that interest would be reduced by the quantum of the proprietary interest held by Ms Chignola.
The key question is whether the doctrine of privity of contract precludes the Director from challenging the quantum of Ms Chignola’s interest, as distinct from its existence.
Whether or not the doctrine of privity operates to prevent a person who is not party to a contract from seeking a declaration as to the operation of a term of that contract was considered by the High Court in Hobart International Airport Pty Ltd v Clarence City Council; Australian Pacific Airports (Launceston) Pty Ltd v Northern Midlands Council (“the Airports case”).[25]
[25] (2022) 96 ALJR 234.
The issue before the High Court in the Airports case was whether the dispute between the parties involved a “matter” for the purposes of Chapter III of the Constitution. In considering that issue the Court examined the application of the doctrine of privity to the question whether a third party to a contract could seek a declaration about the meaning and operation of the contract.
The facts were that the Hobart International Airport and the Launceston Airport were both located on land that constituted a Commonwealth place. The airports were leased from the Commonwealth. The lessees were therefore immune by virtue of s 52 of the Constitution from payment of taxation, including local government rates, imposed under State law. In accordance with the competitive neutrality principles, the Commonwealth had included a clause in each lease that required the lessees to pay to the councils an amount equivalent to the rates that they would otherwise pay if they were not constitutionally exempt. The councils were concerned that the clause was not being correctly applied and sought a declaration as to its operation and application. The Commonwealth and the airport lessees each considered that the clause was being correctly applied and additional rate payments were not due to the councils.
Kiefel CJ, Keane and Gordon JJ held that the general principle is clear in relation to the grant of declaratory relief in respect of private rights. An applicant will have a “sufficient” or “real” interest in obtaining relief where it relates to declaring the existence of a legally enforceable right or liability, including a statutory right.[26] However, the Councils did not assert either a contractual or a statutory right. Their Honours went on to observe:[27]
Although lack of privity is a factor relevant to standing and a reason for a court approaching the question of the standing of an outsider with considerable caution, an outsider to a contract may, “for other reasons” – what might be described as “exceptional circumstances” – have a “sufficient” or “real” interest to seek declaratory relief as to the meaning and effect of a contract between contracting parties. As the Full Court put it below, “there is reason to be concerned as to the potential for what might be described as unfounded intermeddling by a third party to a contract. But, in the context of declaratory relief, the solution to that concern is not the doctrine of privity of contract”.
(Citations omitted.)
[26] Ibid at [34].
[27] Ibid at [35].
Kiefel CJ, Keane and Gordon JJ held that the Councils had a “sufficient” or “real” interest in seeking relief declaratory relief as the operation of the relevant clause in the leases.[28] They had a real commercial interest in this question which had direct and far-reaching ramifications for their financial position.[29] However, their Honours cautioned that their reasons should not be read as suggesting that a mere commercial interest in obtaining declaratory relief about the meaning and effect of contract to which an applicant was not a party would, on its own, give rise to a “sufficient” or “real” interest. This case was exceptional because of the combination of circumstances.[30]
[28] Ibid at [38].
[29] Ibid at [39].
[30] Ibid at [41].
Gageler and Gleeson JJ held that:[31]
The doctrines of privity and consideration will ordinarily prevent a person who is not a party to a contract being able to establish standing to seek a declaration about the content of a contractual obligation on the basis of a legal interest. There will be cases in which a person who is not a party to a contract will be able to establish standing on the basis of an equitable interest, one category of which will be where the contractual obligation can be established to be held on trust. But neither a legal interest nor an equitable interest exhausts the category of interests capable of amounting to a sufficient interest to seek a declaration about the content of a contractual obligation.
[31] Ibid at [71].
Gageler and Gleeson JJ observed that the interest of the Councils in obtaining a declaration about the operation of the lease might be described more as “governmental” rather than “practical” and more “fiscal” than “commercial”.[32] Their Honours held that this “fiscal” or “governmental” interest was a sufficient interest to seek a declaration.[33]
[32] Ibid at [74].
[33] Ibid at [76].
Edelman and Steward JJ dissented on the basis that the Councils lacked standing to seek the proposed declarations as none of the exceptions to the doctrine of privity were applicable.[34] Their Honours also held that the relevant contractual clause did not create public rights that could be enforced by the Councils.[35] The proposed declarations may also be inutile.[36]
[34] Ibid at [119] to [123].
[35] Ibid at [130] to [137].
[36] Ibid at [142].
The circumstances that have arisen in this case are somewhat unusual because of the sale. For that reason, I will first consider the position if the sale had not occurred. If the Toorak Gardens property had not been sold by CD, and if he were convicted of the offences with which he has been charged and became a prescribed drug offender, that property would then have been forfeited to the Crown by force of s 56A. That provision would operate upon conviction without the need for any order by the Court under the Assets Act. That would also be the situation with the Teringie property, which has not been sold by CD and which apparently still remains subject to a caveat lodged by Ms Chignola.

If the Toorak Gardens property had not been sold, upon that property being forfeited to the Crown there would be a need to establish the extent of the financial interest held by Westpac and by Ms Chignola. That is because the monies owed by CD to Westpac and to Ms Chignola will reduce the ultimate benefit received by the Crown. To adopt the language used by Gageler and Gleeson JJ in the Airports case, the Crown has a “fiscal” or “governmental” interest in ensuring that the net value of the property that passes to it is correctly established.
I do not consider that inquiries about these issues would be contrary to the doctrine of privity of contract. The Director would not be challenging the validity of the agreements between CD and Ms Chignola and CD and Westpac respectively. The Director would simply be seeking evidence as to the quantum of the interests held by Westpac and Ms Chignola in circumstances where the value of those interests directly reduces the value of the interest that will have passed to the Crown under s 56A upon conviction. It can be anticipated that, in the case of Westpac, this is likely to be a routine task supported by business records.
In these circumstances, I do not consider that the task of ascertaining the value of a proprietary interest held by a third party in respect of land that is subject to forfeiture to the Crown, whether that third party be a financial institution or a private creditor, infringes the doctrine of privity of contract. That is because the Director is not purporting to sue on the contract contained in the Deed nor he is seeking to derive a benefit under that contract in the sense referred to in the Darling Island Stevedoring and Kowalski cases.
In this situation the Director is simply seeking to verify properly the respective values of the interest that has been forfeited to the Crown by operation of s 56A and necessarily also the value of the countervailing interests retained by Westpac and Ms Chignola, pursuant to their mortgage and equitable charge respectively. That is not to impugn or otherwise call into question the existence or validity of their rights. It is simply an exercise in the valuation of the respective interests.
Here the Director is not seeking that the Court ascertain and make a declaration about the operation of an agreement to which he is a stranger, but is instead seeking relief based upon determining the value of rights conferred upon the Crown by s 56A upon conviction.
The facts are materially different from those which were the subject of the High Court judgment in the Airports case. The basis of distinction is that here the Crown would “stand in the shoes” of CD as the holder of the fee simple interest in the Toorak Gardens property upon a deemed forfeiture order coming into operation. His right to the net value of the Toorak Gardens property would have passed to the Crown by force of law. Thus, the Crown would have a direct interest in correctly establishing the quantum outstanding under the agreement between CD and Ms Chignola. That is quite different to the (at best) indirect interest in the operation of the lease between the airport lessees and the Commonwealth that was the subject of the proposed declarations in the Airports case.
The preceding discussion is hypothetical in that it refers to the situation that would prevail if CD had not sold the Toorak Gardens property and is ultimately convicted, and thereby becomes a prescribed drug offender for the purposes of s 56A. However, I do not consider that hypothetical situation has any different legal consequences to the present situation where CD has sold the relevant property. In this instance, the Director’s position is founded on a restraining order rather than a deemed forfeiture order. Nevertheless, the purpose of the restraining order is to ensure that the assets of a person who falls within the criteria set out in s 24(1) are not put out of reach of the Court until the relevant criminal proceedings are resolved. Thus, in substance, the issues are the same as those I have previously discussed. However, the need to determine the value of the equitable charge held by Ms Chignola over the property restrained by the Crown has been crystalised by the sale of the Toorak Gardens property. For the reasons already discussed, I do not consider that the task of ascertaining the value of the rights presently held by Ms Chignola is contrary to the doctrine of privity of contract.
The further issue is the contention advanced on behalf of Ms Chignola that the Director has not advanced any admissible evidence which entitles him to call into question the evidence of CD and Ms Chignola that the sum of $350,000 is outstanding and immediately payable to her.
I have no reason to think that the relationship between Westpac and CD is anything other than a conventional arms-length relationship between a financial institution and a property owner. I fully expect that, if called upon, Westpac would readily be able to produce business records to establish the quantum owed to it and secured by the registered first mortgage.
Whether or not CD and Ms Chignola were in a personal relationship at the time they entered the Deed is unknown to the Court. However, while the Deed was prepared by a solicitor, and the security interest it granted was protected by the permissive caveat, the unusual features to which I have referred at [37] suggest that it was not an orthodox commercial arrangement. Far more importantly, I consider that the fact that banking records obtained by the police establish that $240,000 was paid by CD to Ms Chignola over a period of four months that commenced a little over one month following entry into the Deed, provides a proper basis for the Director to insist upon production of reliable evidence to substantiate the sum that is now due to her from CD.
I have no reason to doubt that CD’s solicitor has accurately passed on to Ms Chignola’s solicitor the instructions that she received from CD that he accepts that he owes $350,000 to Ms Chignola. I also have no reason to doubt that she correctly reported his instructions that the 90-day notice period was to be waived (although that is by now academic). Nevertheless, the affidavit sworn by Ms Chignola’s solicitor, Mr Travis Moran, dated 7 October 2021 (FDN 29) simply deposes that he had received emails in the terms I have indicated from CD’s solicitor. While Mr Moran’s affidavit was tendered without objection, it only establishes that he received the emails from CD’s solicitor. What CD is reported as having said to his solicitor is hearsay.
I also note that the Director referred during submissions to a question as to whether the sum secured by the equitable charge is, in accordance with Recitals G and H of the Deed, $274,000 (being the sum advanced by Ms Chignola) rather than the $350,000 promised by CD in repayment. This question was not further canvassed as the focus of the proceedings was on other issues.
Conclusion
I am not satisfied on the basis of the evidence currently before the Court that an order should be made requiring that the sum of $350,000 currently held in Ms Chignola’s solicitor’s trust account should be paid to her forthwith.
I have considered whether the order made on 5 June 2021 should now be amended nunc pro tunc so as to include an additional order 2(n) recognising the caveat registered on the title of the Toorak Gardens property. However, because that caveat has been discharged with the consent of Ms Chignola so as to permit settlement to occur on the contract of sale for that property, I do not consider that this would serve any useful purpose.
I would be prepared to amend the order made on 5 June 2021 nunc pro tunc so as to include an additional order recognising the caveat registered on the title to the Teringie property. However, if all moneys found to be properly due to Ms Chignola are to be paid to her from the funds held in her solicitor’s trust account, that would appear to be a pointless exercise. I will hear the parties on that question.
Ms Chignola’s interests are protected by the holding of the sum of $350,000 in her solicitor’s trust account, subject to further order of the Court. The matter should be listed for further hearing to decide the disposition of those funds. As I have retired, the matter will need to be listed before another judge.

[2022] SASC 36

14 April 2022