Director of Public Prosecutions v Kobelt, Searle, Searle, Butler & Beare (No. 2) - [2007] SADC 69

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
DIRECTOR OF PUBLIC PROSECUTIONS v KOBELT, SEARLE, SEARLE, BUTLER & BEARE (NO. 2)
[2007] SADC 69
Reasons for Ruling of His Honour Judge Tilmouth
19 June 2007
CRIMINAL LAW
Procedure - Judgments and orders - amending, varying and setting aside - general orders.
Held: As the Court had previously misapprehended certain material facts and had not entered orders, it was plainly open to the court to recall its earlier reasons in order to correct the facts.
Judgment and punishment - orders for compensation, reparation, restitution, forfeiture and other matters relating to disposal of property - forfeiture - serious drug offence. Application for excluding particular property for forfeiture.
Held 1: (Obiter), the right to seek exclusion under s76 of the Criminal Assets and Confiscation Act 2005 does not require an extension order or to be in place, once the application is filed within six months of conviction.
Procedure - Courts and Judges generally - Courts - Rules of Court
Held 2: As the Director relied on material provided to the applicants in breach of s76(4) and of the Court Rules relating to expert reports, there should be an order under DCR38.02(1)(b) that such reports should not be relied upon.
Bailey v Marinoff (1971) 125 CLR 520, applied.
Autodesk Inc v Dyason (No. 2) (1993) 176 CLR 300 at 1; Del v Director-General NSW Department of Community Services (No. 2) (1997) 190 CLR 207 at 215; Commonwealth Director of Public Prosecutions v Chan (2001) 183 ALR 575; (2001) 160 FLR 230, considered.

DIRECTOR OF PUBLIC PROSECUTIONS v KOBELT, SEARLE, SEARLE, BUTLER & BEARE (NO. 2)
[2007] SADC 69
Previous Proceedings

The Court delivered reasons in these matters holding all applications for exemptions from the restraining order of 18 May 2004, fell to be determined pursuant to the Criminal Assets Confiscation Act (SA) 2005 (“the 2005 Act”).[1] Applications were held to be out of time insofar as they were made more than six months following conviction, that is after 10 October 2006.
[1] Director of Public Prosecution v Kobelt [2007] SADC 57; 17 May 2007.
At that time the Adelaide Magistrates Court file was brought into Court in the circumstances referred to in reasons when the file was carefully searched. No applications filed before 10 October 2006 were located. However the Court refrained from entering any formal or final orders.[2]
[2] At para [64].
Misapprehension of the Facts
As it transpires, on 6 October 2006 the first defendant Shane Kobelt filed an application in the Port Lincoln Magistrates Court seeking exemptions from the restraining order as well as an extension order, both under ss74 and 75 of the 2005 Act. It was administratively transferred to the Adelaide Magistrates Court on 12 October 2006 and listed for hearing on the 20^th. This was the occasion referred to in the earlier reasons of the Court when Mr Zollo appeared.[3]
[3] At para [9].
On the same date the solicitor Mr Proud, filed an application on behalf of the first defendant’s father, Lindsay Kobelt for similar exclusions. It did not expressly invoke either Act, although the affidavit in support concluded by seeking an order pursuant to s76 of the 2005 Act. The language employed in the application is also that of the 2005 Act – previously the corresponding terminology was for “exception”: s15 Criminal Assets Confiscation Act 1996 (SA) (“the repealed Act”). The second defendant Leonie Searle filed an identical application in the Berri Summary Court also on 6 October 2006, seeking exemption and extension orders under ss74 and 75 respectively.
It further transpires that on 5 October 2006 the third and fourth defendants (Adrian Searle and Nicola Butler) lodged applications in the Adelaide Magistrates Court seeking s76 exclusion orders in the case of the former and under s36 in the case of the latter. Finally Mr Beare filed an application on 6 October 2006 seeking to vary the restraining order. As he is not convicted of any offence, that is of no further consequence to these proceedings. As Ms Butler was not charged with a “serious offence”, the restraining order relating to her ceased to remain in operation after 28 days of that order being made: ss46(2) and 46(6) of the 2005 Act.
For some unaccountable reason, these applications were not to be found in the Magistrates Court file brought into this Court. They were later located in one of several large files kept by this Court, after the reasons of 17 May 2007 were delivered. In the result they were missed when the file was checked in order to account for all applications then on foot, for the purpose of completing those reasons.
It follows that when the Court concluded as it did that there was a failure to “bring applications within 6 months of conviction”,[4] the facts there stated were erroneous to the extent referred to.
[4] Para [62].
Time limitations under the 2005 Act revisited
It is also to be recalled that the 2005 Act came into effect on 2 April 2006. The relevant convictions were entered on 10 April 2006. It follows that as of 6 October 2006 neither the six months from the date of conviction or “after all rights of appeal are exhausted” within the meaning of s15(5)(d) of the repealed Act had expired.
Returning to the transitional provisions, the 2005 Act preserved “an order in force under the” repealed Act as if made “under this Act”. It requires, as noted in the earlier reasons, that applications for exclusion had to be made within six months “after the start of the day of the relevant conviction”, which is the case in respect of the applications now under consideration.
However pursuant to s74, statutory forfeiture occurs “at the end of the relevant period”, as defined in s74(6), as:
(a) The six month period starting on the day of conviction; or
(b)If an extension order is in force at the end of that period – the extended period in relation to the extension order.
No such extension order was made in respect of any of these applications. It should also be noted any extension order “must end not later than 15 months” from the date of conviction: s75(2) of the 2005 Act.
The previous decision of the Court
In the reasons of 17 May 2007 the Court drew a number of fundamental conclusions of principle, as they applied to these cases. These were:-
·persons entitled to claim exception or exclusion from restraining order retain no less rights than those contained in the 2005 Act (para [56]);
·the extinguishment of such rights as were afforded by the repealed Act occurred only by express and unambiguous language (para [56]);
·as the relevant convictions were entered when the 2005 Act was in force, the substantive rights to secure an exclusion order stood to be determined according to that Act: (para [61]).
Those reasons also noted the applications filed before 10 October 2006, (at paras [41] and [47]) but they did not proceed to make any determination with respect to them.
The Court did however conclude the failure of the defendants to seek an extension order or to bring their applications within six months of conviction “has therefore proved fatal”.[5] More significantly perhaps, the Court did not enter final orders and obviously none were drawn up or entered. Indeed it determined no more than to “proceed to hear the parties as to the precise term of the orders it should make; consistent with those reasons”.[6]
[5] Para. [62].
[6] Para [64].
Correcting the earlier reasons.
Given the history of the applications as they are now known the conclusion just quoted was plainly based on an erroneous factual premise. Applications were in fact made within six months of conviction, as to which the Court made no finding and reached no legal conclusion.
That being so, the defendants sought orders recalling the judgment, so that submissions could be made in light of the corrected facts. Accordingly an interim order was made recalling the reasons of 17 May 2007, pending further submissions regarding those applications in light of the facts as now known.
The power of recall
Until a judgment or order has been sealed or entered, the Court may clearly reconsider the decision: Bailey v Marinoff.[7] Although the principle of finality is arguably of first importance, the broad considerations of justice allow recall in order to do justice to the parties, particularly if those orders are defective, or based on an erroneous view of significant facts: Autodesk Inc v Dyason (No. 2),[8] Del v Director-General NSW Department of Community Services (No. 2).[9] It must follow that the order recalling the judgment was well within the power of the Court to make in the circumstances described above.
[7](1971) 125 CLR 520 at 530, 532, 535-536, 539-540.
[8] (1993) 176 CLR 300 at 1,
[9] (1997) 190 CLR 207 at 215.
Unresolved issues following from the initial reasons
That being the case, the question at large distilled to this: do the rights to seek exclusion survive the expiry of the 6 month period, so long as the application is filed in time? This question was acute in these matters as the applications, as has been seen, were made within 6 months of conviction, but no extension order was in force thereafter.
The defendants relied on the decision of James J in Commonwealth Director of Public Prosecutions v Chan,[10] a decision not cited or known to the parties at the time of the first hearing. At issue was the proper construction of the Proceeds of Crime Act 1987 (Cth). Its provisions, at least in their net effect, are not unlike the 2005 Act, in as much as they provided for property the subject of a restraining order to be forfeited to the Commonwealth six months after conviction (s30). Forfeiture was likewise subject to exception under s48(4). By s30A(3), applications had to be made before the end of the six months period concerned. Furthermore, s30A(4) provided the Court could extend the waiting period of six months for no longer than nine months: as noted in the case of the 2005 Act it is 15 months: s75(2).
[10] (2001) 183 ALR 575; (2001) 160 FLR 230.
James J considered the omission of express mention of the necessity to make an extension order to be of ‘substantial significance’ (at [44]). The Second Reading Speech provides little assistance in this matter as it failed to do in that. His Honour concluded (at [67-68]):-
In my view the language of s30(1)(d) does not unequivocally, unambiguously exclude the prospect that an order might be made outside the operation of the original waiting period. Nor, in my view, does that of s30A. The purpose of the amending legislation was to permit of an extension to the period being granted so that the pressure on court lists might be alleviated and so that an application might properly be brought. It was not, in my view, to pose an additional hurdle.
In accordance with the accepted presumptions and in the light of the inconvenience of the automatic forfeiture effect that had been referred to in the case law prior to the amendment, which was the mischief the amendment sought to cure, I find it difficult to accept that the legislation had as its purpose automatic forfeiture when a court, for whatever reason, had been unable to deal with an application made well within time. That would be inconsistent with the presumptions concerning the effect of statutes operating to confiscate, without compensation, property. If it were necessary to supply some deficiency to resolve an ambiguity or obscurity, it is perfectly clear on the authorities that in order to accord with the purpose, as I understand it, of the legislation, I should do so. Even where the language was clearer than here, McHugh J in Regina v Saraswati (1991) 100 ALR 193 said that it was open to a judge where the literal or grammatical meaning of a provision did not conform to the legislative purpose as ascertained from the statute to give effect to the purpose by addition to, omission from, or clarification of a particular provision.
Notwithstanding what is submitted by the Director, I am of the view that s30(1)(d)(ii) does not by its express language exclude, nor should it be considered by implication, in context, to exclude the making of an order after the expiration of the initial six month period when construed in accordance with the purpose, as I have determined it to be, of the amendments and having regard to the purpose of the principal Act. I hold that the provision should be construed so as to permit the application for extension to be granted notwithstanding the expiry of the original waiting period.
His Honour then made an order ‘for extension of time made, notwithstanding expiry of original waiting period’.
Two further matters may be noted at this point. In Della Patrona v Director of Public Prosecution (Cth)[11] the Court of Appeal proceeded on the assumption in the context of the Commonwealth legislation, that if applications were made before forfeiture, the Court retained the power to declare property exempted.
[11] (No. 2) (1995) 38 NSWLR 57; 132 ALR 307.
Secondly s75 of the 2005 Act does not expressly require an extension order to be in place within 6 months of conviction. Section 75 merely requires the application for exclusion be made:
·within 6 months of conviction: s75(1)(a) and (b);
·“without undue delay, and has since [been] … diligently followed up …”: ss75(1)(c).
The last of these prerequisites is strongly supportive of a construction that no order for extension is otherwise necessary to preserve the statutory right of exclusion. However, as Mr Hinton QC eventually consented to these applications being dealt with on their merits, a concession fairly made in the circumstances, the issue of construction need not be pursued any further.
Statutory requirements for exclusion
Pursuant to s76 of the 2005 Act that class of persons defined under s74(1)(a) may apply for exclusion. There is no issue as to standing in any of these applications at this stage. The applicant must satisfy the Court on balance, of three cumulative conditions, namely that:-
·the property is not the proceeds of unlawful activity: ss76(1)(c)(i);
the applicants’ interest in it were lawfully acquired: ss76(1)(c)(ii); and
it would not be contrary to the public interest for the property to be excluded from such forfeiture: ss76(1)(c)(iii).
With these in mind, the Director filed an “expert” accounting report with respect to the first and second defendants. These examined their probable income by reference to known spending transactions, confined to the period commencing on 1 July 1999 and concluding on 30 June 2004. A further report by the same accountant was also submitted with regard to the third and fourth defendants, Adrian Searle and Nicola Butler, for the period between 30 June 2000 and 13 April 2004 employing the same methodology.
Those reports annexed a series of documents in a lever-arch folder, but did not purport in any way to describe the source of those documents or attest their provenance. These appear to comprise various banking and other financial documents connected to the defendants in one way or another.
Section 76(4) of the 2005 Act requires the Director of Public Prosecutions (SA) to give notice to the parties of the grounds on which it proposes to contest the application for exclusion. Mr Gupta for the Director accepts this requirement must be read as “requiring reasonable notice” in order to give it efficacy. He also accepts that the only notice for relevant purposes was the report and the annexure documents produced by the accountant, on all accounts served sometime on Wednesday 13 June 2007, bearing in mind the trial of these exclusion applications was set to start on Monday 18 June 2007. Given the opinions expressed therein and the number of documents tendered, this was hardly reasonable notice as contemplated by s76(4).
During the course of preliminary argument, it became apparent that the Director’s office had possession of a draft report and the material annexed by late 2006 or early 2007. When pressed, Mr Gupta was unable to articulate how this material went to the three criteria for the exclusion laid out in s76(1)(c).
When seeking to tender this material the Director at first purported to rely on the District Court Rules 2006. He pointed to Rule 310 which exempts from the operation of the Rules those relating to “Pre-Trial Disclosure of Documents” in the case of applications under the 2005 Act. That may be accepted. However those rules cannot conflict in their operation with s76(4), nor do they exempt the Rules pertaining to expert evidence. Rule 216(1)(c) requires a party calling an expert evidence to furnish the “required notice”. There was non-compliance with this requirement.
In any case, as is now conceded by the Director, reliance on the 2006 Rules was misconceived. Those Rules commenced on 4 September 2006. Rule 8, the transitional provision, contains the general principle that the 1987 Rules apply to “a primary action commenced before the commencement date”. The primary action in these proceedings was the application for the restraining order made in 2004, so the 2006 Rules were plainly never applicable to these proceedings.
The Director was then driven back the 1987 Rules. These required proceedings under the repealed Act to be supported by affidavit, “setting out the matters relied upon” (Rule 113.04). However, there is nothing to suggest the Rules in respect of expert witnesses did not continue to apply, subject in this instance to the obligation to furnish reasonable notice. Rule 38.06 provides any report containing or including the opinion of any expert, cannot be adduced in evidence other than with leave of the Court, unless the expert was provided with the guidelines for expert witnesses, and the report includes an acknowledgement of that fact: Rule 38.01(7)(iii) details the particulars to be provided in the expert report so delivered.
Given substantial non-compliance with either set of Rules, that there was insufficient notice under s76(4), and that the deadline for determining these proceedings fell on 10 July 2007, the Court made an order pursuant to Rule 38.02(1)(b) directing that the expert reports could not be relied on. In the circumstances no other option would be an effective remedy for these defaults – an adjournment for the time necessary for the defendants to seek their own reports would have seen the proceedings run over the fifteen months “sunset” provision.
The Director maintained an alternative submission that the material and documents annexed to the reports, fell outside the ambit of the Rules relating to expert evidence and were admissible simply because they were produced by the expert.
The premise may be true enough, but the consequence is not. Although the documents on their face appear to be banking and other financial records of the various defendants, provenance is not shown and the source of the documents are not revealed. Such documents might well be admissible as business records or under other statutory provisions, but these modes of proof were not invoked. They were also amenable to proof by other means, for example by way of lawful seizure, or bankers warrants and the like. The Court ruled this material could not be proved in this “shorthand way”.
The Director then applied for an adjournment so a proper expert report or affidavit duly accounting for the documents in an admissible way could be prepared. Given that pursuant to s76(2) an extension period “must end not later than 15 months” that is by 10 July 2007, this was neither a realistic option nor a practical solution in the circumstances. Although the Director was prepared to undertake not to take the point, the applicants were not willing to accept such assurances.

It is not difficult to see why they took that view. The Court lacks the jurisdiction to make any orders beyond 10 July 2007, even if made with consent: Farquharson v Morgan.[12]Even though the Director may not have himself been intent on pursuing the matter, the fact remains that further orders would necessarily have been nullities. The undertaking would have been insufficient to protect for all time, the rights and interests of the applicants. Accordingly the Court refused the application for an adjournment.
[12] [1894] 1 QB 552 at 556, 559 & 560.
After a further short adjournment, the Director then indicated his consent to all the applications for exclusion as sought, but would nonetheless pursue the alternative remedy of a pecuniary penalty order under s95 of the 2005 Act. As this was sought in his original application, the Court will proceed to make orders for the hearing of that later in the year and to enter orders consistent with these and its earlier reasons.