Director of Public Prosecutions (WA) v Centurion Trust Company Ltd [2011] HCATrans 88

[2011] HCATrans 88

[2011] HCATrans 088

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P33 of 2010

B e t w e e n -

DIRECTOR OF PUBLIC PROSECUTIONS (WA)

Applicant

and

CENTURION TRUST COMPANY LTD

Respondent

Application for special leave to appeal

HAYNE J
BELL J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO PERTH

ON FRIDAY, 8 APRIL 2011, AT 11.38 AM

Copyright in the High Court of Australia

MR C.G. COLVIN, SC:   May it please, your Honours, with my learned friend, MR I.S. JONES, I appear for the applicant.  (instructed by Director of Public Prosecutions for Western Australia)

MR C.E. CHENU:   May it please the Court, I appear for the respondent.  (instructed by Bennett + Co)

HAYNE J:   Yes, Mr Colvin.

MR COLVIN:   May it please the Court, we propose to deal first with special leave question 2 in our outline and that is to the effect that the decision below means that if there is a freezing order under this legislation then in most cases people with an interest in the frozen property will not receive notice of the existence of the order.  In our submission, that has substantive consequences for parties generally and they are consequences that were not addressed by the majority below.

HAYNE J:   Were they argued below?

MR COLVIN:   Yes.  They were addressed by her Honour the President in her reasons.  The reason the issue arises is because if a freezing order is obtained under the Act then notice must be given personally to any person who claims to be an interested party.  The relevant provision is at page 50 of the application book in the judgment of Appeal Justice Buss at paragraph 114 section 46.  So when a freezing order is obtained it must be served personally (a) on the person from whom the property was taken and (b) on any interested party.  One can see at (6) going down the page on page 51 what the notice must contain.

Then on page 52 at paragraph 116 his Honour refers to what the definition is of an interested party.  The definition is in terms that it relates to someone who would be able to “succeed on an objection” so the consequence is that an interested party is a person who has an interest that would enable them to succeed on an objection.  The result is that only people who can object are entitled to notice. 

The majority below found that the objection provisions only apply where property has been frozen on the basis that it is crime used or crime derived.  As a result, automatic confiscation provisions only apply in those cases.  But there are many other grounds on which property can be frozen.  That is set out at section 43 on page 49.  There is a list of the various circumstances in section 43 which is quoted at paragraph 113 of the circumstances in which a freezing order may be made.

HAYNE J:   I am sorry, Mr Colvin, I am going to have to ask you to go back a stage because this legislation I do not find easy.  I think I join the company of many judges in that respect. 

MR COLVIN:   Yes, indeed, and counsel, your Honour.

HAYNE J:   Your proposition was, as I understood it, that if the Court of Appeal’s judgment stands that necessarily limits the definition of “interested party” and that, in turn, limits those who can object to confiscation.  Is that right?

MR COLVIN:   Those who will receive notice of the confiscation.  It also narrows the parties who can object, but significantly it will mean that in respect of a number of categories of freezing order, the order will be made but parties will not receive notice of that freezing order and that is because of the way the Act works in terms of saying, well, the only people who get notice are those who can object.  Now, the significance of that is because the court has found in other cases that there are jurisdictional types of grounds that may be advanced by parties when a freezing order is made.  Those authorities are indeed referred to in this decision by the court.  They are not unsurprising.

BELL J:   Before you go to those authorities, can I just clarify this.  The majority in the Court of Appeal favoured a construction which would not result in automatic forfeiture in the event of a failure to lodge an objection in time.  Is that right?

MR COLVIN:   It favoured a construction which meant that the parties who could object were confined to those where a freezing order had been obtained on a crime used or crime derived basis.  Therefore, if your property had not been frozen on that basis then you had no right to object and, therefore, the automatic confiscation provisions did not apply.  The party in this instance, that is the respondent in this application, was the property in which that party has an interest, was not frozen on crime used or crime derived grounds.  Therefore, that party had no right to object.  Therefore, that party’s failure to object did not enliven the automatic confiscation provisions. 

The difficulty with that approach is that it has the consequence that for parties interested when freezing orders are obtained on grounds other than being crime used or crime derived they will not receive notice of the fact that a freezing order has been obtained.  The process under the Act will proceed with the applicant, the Director of Public Prosecutions, having the conduct of matters under the legislation. 

The Act at various points identifies when a freezing order may stop being in force and the Court has separately held that interested parties have rights to challenge the circumstances in which an order was obtained, if it was not obtained with adequate jurisdiction or circumstances have changed so that the circumstances that allowed the grant of the freezing order no longer apply.

So a party who is interested in property the subject of a freezing order that was not granted on crime used or crime derived grounds would have those rights, the jurisdictional rights, the rights to determine whether the freezing order had stopped being in force and to agitate, if they were given notice of the freezing order, those types of grounds.

BELL J:   They retain the right.  Your point is they do not receive notice of the order?

MR COLVIN:   Indeed.

BELL J:   A consequence of that is they may not come to learn that a freezing order was placed on the property and subsequently the freezing order has been dissolved.  Is that part of your argument?

MR COLVIN:   Acted upon, in the sense that the property is then confiscated and sold and the assets are appropriated to the State.  That could all occur without notice being given under the legislation.  That consequence of the decision below, that is a consequence for parties generally, is the consequence which we advance as one having sufficient public interest to grant special leave. 

There is a related point and that is that the notice procedure as her Honour the President identified is a mechanism by which, in effect, discovery is obtained of interested parties.  There is a curious aspect of the way the legislation operates and that is there are, in effect, rolling notifications.  When a notice is given and a party receives that notice there is an obligation to provide a statutory declaration identifying any other known party who has an interest. 

The notice procedure is, therefore, the only mechanism in the Act by which there is, in effect, discovery of all of the parties who may want to have something to say about whether there should be confiscation.  If that procedure only applies to freezing orders obtained under crime used and crime derived basis then that discovery process is never enlivened in respect of all other types of freezing orders.

HAYNE J:   If, apart from the construction of section 46 and identification of those to whom notice must be given, if somehow someone having an interest in the property came to learn of the freezing order, their entitlement to succeed on an objection to the confiscation of the property would not depend upon them having had prior notice in accordance with section 46, would it?

MR COLVIN:   No, I think strictly speaking in accordance with the decision below they would not be able to object, but they could advance the jurisdictional grounds or they could rely upon the provisions that say when the freezing order stops being enforced.  None of those rights would be compromised by the failure to receive the formal notice under the legislation, we accept that.  The difficulty is that the scheme of the Act as referred to by the learned President is one in which there is this process for giving notice to all parties so that they can be aware of what is happening in relation to the freezing of property which is a means by which the process can move to confiscation.

HAYNE J:   Now, that is a question about the construction of 46.  Why would 46(1) not be construed as obliging, giving of notice according to awareness of the applicant to any person who has an interest that if they objected would entitle them to succeed on an objection to confiscation?

MR COLVIN:   It might be so construed.  That was not advanced below.

HAYNE J:   Did they majority rule against that construction?

MR COLVIN:   Not in terms, no.  The issue ‑ ‑ ‑

HAYNE J:   What I am putting to you, Mr Colvin, in your argument on this aspect is proceeding from a premise not established by the judgment which you seek to challenge.

MR COLVIN:   The premise that the notice procedure generally does not apply is established, in our submission, that is to say the requirement for giving notice and the enlivenment of the discovery process does not arise because the court below has necessarily confined the objections.  That process is not required to be undertaken and that is a necessary incident of the reasoning process that has been followed by the court. 

HAYNE J:   Where do I see that most conveniently?

MR COLVIN:   Can I deal with it – it is not addressed in those terms by express statement in the judgment.  The submission I am making is that it is a consequence of the court’s finding that the automatic confiscation provisions are confined to the circumstances in which an objection can be raised.  I appreciate that what I have just said does not answer your Honour’s question.

I think what I can advance is that her Honour the President in identifying the consequence of the decision that was being made by the court, having explained the construction dilemma, then identified reasons why this construction should be advanced and at paragraph 55 identifying the consequence for the service and notice provisions has a consequence of the reasoning process that is being adopted by the majority and being a reason why a different view should be taken. 

But I accept that in terms the judgment of his Honour Justice Buss does not say in terms that section 46 should not be construed to require the service of a freezing order even though a party has no right to object.  My learned junior is helpfully rescuing me by pointing out paragraph 238 dealing with section 46(4) states that:

It is of some significance that s 46(6) merely requires, relevantly, that the notice advise the recipient to the effect that the relevant property ‘may be confiscated -

This is because there was an argument that the requirement to give notice meant that, in these terms, it applied to all freezing orders, the procedure, and his Honour finds:

It does not follow that a person on whom a copy of the freezing order must be served will necessarily be entitled to file an objection.

I think that rather leaves open the point, your Honour.  Can I address briefly, the second question and that is that there is a general issue of statutory construction in this matter and that relates to the interaction between the focus upon textual construction in recent authorities of the Court and the extent to which regard to the Act as a whole ought to be an approach which guides the Court over regard for the text of the provision so that where it is evident from having regard to the overall structure of the legislation, although recent authorities say it is the text of the provision in issue and the provisions with which it interacts, that is to be the primary focus. 

The submission advanced is that it is necessary to consider older authorities where regard is to be had to the Act as a whole.  To support an approach to construction that where regard to the Act as a whole and its overall structure indicates an overall purpose, that purpose should be used to guide the approach to the individual text.  It is a submission to the effect that it is a requirement, in effect, that where the regard to the Act as a whole reveals a purpose, then that purpose is to be given effect when there is the focus upon the text of the provision and the provisions with which it interacts. 

It is said that this is an appropriate vehicle because his Honour Justice Buss focused upon the text of the provision and the provisions with which it interacts and did not, in our submission, have regard to the purpose of the Act as a whole whereas the learned President did do so.  So the contrast in approaches is what produced the different result in this case.  Therefore, this is an appropriate vehicle in which to consider that issue.
Those are our submissions.

HAYNE J:   Thank you, Mr Colvin.  Yes, Mr Chenu.

MR CHENU:   May it please the Court.  The issue raised by my friend in relation to section 46 is one that is readily resolved.  Section 46 directs in mandatory terms the service of freezing orders on persons who are interested parties.  It does not restrict the service of freezing orders on persons who may not be within the definition of an interested party in the Act and one would expect that a court, making a freezing order which carries with it the consequences of criminal prosecution if the order is breached, would make directions that any person who is liable to be affected by the freezing order or who, by using, moving, living in frozen property may be committing an offence by continuing to do so, ought to be served.

BELL J:   As a practical matter, is that how the making of freezing orders is approached?

MR CHENU:   It is not, your Honour.  We would say that 46 is one of those provisions referred to in Project Blue Sky as being subordinate to the purpose of the legislation.  The starting point on any construction of this Act, we would say, is section 4 which sets out a synopsis of the kinds of property that are confiscable.  I note that that is the approach which the Court took in Mansfield when the Court considered the scheme of the Act in Mansfield, which has been provided by friend at paragraph 12:

The scheme of the Act

The term “confiscable property” is of central importance. 

We start with section 4 which identifies certain types of confiscable property and importantly, your Honours, there is not a category to be found there which is property which is being frozen but in relation to which an objection was not made within 28 days.

Your Honours, the overall framework of the Act was properly identified by Justice Buss in the majority decision, we say.  The starting point, after identifying what is confiscable is to look at the purpose for which different types of freezing orders or freezing notices are made.  He identified the purpose for freezing orders that are made because an application for a declaration under sections 14, 20 or 24 had been made.  That is an application for a crime used property substitution declaration, a criminal benefits declaration or an unexplained wealth declaration to be the preservation of the property to secure a potential liability.  The Court found similarly in Mansfield at paragraph 43.  His Honour Justice Buss found that at paragraph 191 of his judgment at application book 73. 

In the case of an examination order, the purpose of a freezing order that is made on the basis that an examination order has been applied for or obtained is the preservation of property pending a process of inquiry which may or may not result in some substantive action being taken in relation to the property.  Following investigation it may then afford a more substantive basis for freezing.  That is at paragraph 214 of his judgment, application book 77.

Similarly, with a freezing order that is made on the basis that a person has been charged with an offence and if convicted could be declared a drug trafficker.  The freezing of all of the property owned, effectively controlled, or at any time given away by that person, has as its purpose the preservation of that property pending the determination of that person’s trial and if convicted the determination of whether or not the person should be declared a drug trafficker. 

A freezing notice or freezing order that is made on the basis that property is reasonably suspected of being crime used or crime derived also has that purpose of preservation of property but it also serves another fundamental function and that is to make - for the Court or a justice of the peace, as the case may be - a determination that particular items of property are reasonably suspected of being crime used or crime derived.

So, unlike all the other types of freezing orders this freezing order on the basis of crime used or crime derived opens the gateway for confiscation.  The gateway for confiscation is via section 7 of the Act which provides for frozen property to be confiscated automatically if an objection is not made; if an objection is made for it to be confiscated when the objection is finally determined and the freezing order or freezing notice is not set aside.

Property that is frozen on the basis that it is reasonably suspected of being crime used or crime derived is only confiscable under section 7.  It is not confiscable under section 6 or section 8.  Property can only be confiscated under one or other of those provisions.  The construction of the majority which limits the ambit of automatic confiscation to property that is frozen on the basis that it was crime used or crime derived is entirely harmonious, we say, with the purpose for which freezing orders and freezing notices are made and the structure of the confiscation provisions in Part 2 and the freezing provisions in Part 6.

Your Honours, it is apparent from the diversity of views which have been expressed in relation to the structure of this legislation and in the appeal from which special leave is sought and in the earlier Centurion appeal that the proper construction of this Act is a matter of considerable doubt.  His Honour Justice Owen referred to the legislation as perplexing and difficult to construe and his Honour ‑ ‑ ‑

HAYNE J:   Everybody seems agreed that the Act lacks coherence and it is, for that reason, drafted unsatisfactorily.

MR CHENU:   That is right, your Honour, and, in our submission, there are so many anomalies and so many unsatisfactory features to this legislation that an appeal dealing with a specific issue to this Court is not an appropriate mechanism to resolve what are some very fundamental problems within the legislation.  Your Honours, it is worth noting that despite her dissenting judgment in the court below, in the earlier Centurion appeal the President expressed a view which supports the conclusion reached by the majority.

BELL J:   I think her Honour pointed out it was the reasons in that earlier appeal that, in essence, prompted the present proceeding.  Is that right?

MR CHENU:   That is right, your Honour.  Her Honour said at paragraph 44 at the earlier Centurion appeal which is [2009] WASCA 97 paragraph 44:

In summary, the objection regime provides for relief in only a limited number of situations.  It is difficult to identify a logical or rational explanation for concluding that s 7(1) applies to those persons whose property (or interest in the property) is affected by a freezing order but who cannot obtain relief under the objection provisions.

As your Honour correctly notes, it was those obiter comments which triggered the further appeal.  Her Honour the President in her dissenting judgment reconciled that illogicality by taking the view that not only persons who were entitled to relief under the objection provisions of the Act were entitled to object, but also persons who, although they could not get any relief on filing an objection, were, nevertheless, obliged to do so or entitled to do so and therefore obliged to do so to prevent their property being automatically confiscated because the freezing order may ultimately come to an end under one of the provisions which provides for freezing orders to come to an end and they are essentially in relation to property that is frozen because some other declaration has been made under the Act when those matters come to an end and the property is not confiscated.

We would say that the President in her obiter comments in the earlier appeal had it entirely right.  There is no purpose in requiring a person who cannot obtain any relief to come to court and file proceedings which serve no purpose other than to give notice to the confiscating authority that that person objects to the confiscation of their property.  The Court should not be required to entertain proceedings on an objection in relation to which it can do nothing other than sit and wait until some other event occurs which allows the freezing order or notice to come to an end.

In summary, your Honours, we say special leave should be refused for three reasons.  We say that having regard to settled authority there is no matter of general importance for the Court to examine the role of an analysis of the overall framework of an Act in construing the legal meaning of particular provisions.  Even if it is assumed that there is that need, an analysis of the Criminal Property Confiscation Act generally, and this matter in particular, is an inappropriate vehicle for such an inquiry.

Secondly, your Honours, we say that interests of justice do not require a determination by this Court of whether, contrary to the view of the majority, the serious consequences of automatic confiscation should apply to all persons whose property interests are frozen rather than a limited class of such persons either in this case or generally.  Thirdly, we say that the decision is not tended by sufficient doubt to warrant a grant of leave.

Your Honours, in respect of this matter, in particular, it was said by both the President in her dissenting judgment and by Justice Buss that the applications against Brian Smith, which triggered the freezing in the first place, that is the application for a crime used property substitution declaration and a criminal benefits declaration had been discontinued.  It is common ground, your Honours, that that was not the case, although that was not a matter of which Centurion was aware, given that it was not a party to those matters.

Those applications were by consent between Mr Smith and the DPP adjourned sine die.  As a consequence of the court below’s decision in overturning the declaration of automatic confiscation, the event which caused the freezing order to stop being in force was dissolved.  The freezing order remains in force, so the property remains subject to freezing and the applications for substantive relief by way of a declaration of crime used property substitution declaration or a criminal benefit’s declaration remain to be determined in the court at first instance. 

In a sense, the overturning of the automatic confiscation was an interlocutory determination and the question of confiscation remains to be determined on the merits in the court below.  If there is a finding of a criminal benefit, the property is preserved and available to be used to satisfy any liability on such a declaration.  Your Honours, those are my submissions.

HAYNE J:   Yes, thank you, Mr Chenu.  Yes, Mr Colvin.

MR COLVIN:   If it please the Court.  Your Honour, in our submission the court below has finally determined who can object under this Act.  Because of the definition of “interested party” it has, therefore, finally determined who is a party who is to receive notice.  The issue that was raised by your Honour Justice Hayne as to whether section 46 can be construed in a manner that would, nevertheless, allow the serving of notice ‑ ‑ ‑

HAYNE J:   No, require it, not allow it.

MR COLVIN:   You are quite right, your Honour - can construed as requiring such a notice, in our submission, is not open because of the terms of paragraph 46(1)(b) and I am looking at page 50 of the application book which is where section 46 is set out which requires:

(1)As soon as practicable after a freezing order -

notice being served and then over the page at (b) the person upon whom it is to be served is defined as “an interested party”.  Therefore, in our submission, a valid notice could not be served on a person who was not an interested party as defined.  The significance of that is that if you go to paragraph 115 of the judgment:

Section 47(1) requires a person who is served with a copy of a freezing order and a notice under s 46 to give a statutory declaration –

because the notice itself would not have been served on an interested party, the mechanism for discovery, as we have described it in submission would not be enlivened because a party would not have a notice of the type described in section 46 because it would not be a notice that is served on a interested party, that is a party who can object and, therefore, it would not enliven the requirement to serve the statutory declaration.

So although the decision does not in terms deal with the point that your Honour Justice Hayne identified, in our submission, it necessarily answers it because of the determination finally as to who can object and

makes that a very narrow category, in our submission.  Those are our submissions.

HAYNE J:   Yes, thank you.  The Court will adjourn for a time to consider the course it will take in this matter.

AT 12.16 PM SHORT ADJOURNMENT

UPON RESUMING AT 12.19 PM:

HAYNE J:   Both parties to the present application, and all of the judges who have considered its construction, appear to agree that the Criminal Property Confiscation Act 2000 (WA) is an Act that lacks coherence and, for that reason, is drafted unsatisfactorily. These are powerful reasons to conclude that the disputed question of construction of section 7 of the Act should be resolved by preferring the construction adopted by the majority in the Court of Appeal in this matter that limits the cases in which there is automatic confiscation of property. Whether, as the applicant submitted, a necessary consequence of the Court of Appeal’s decision is that the class of persons to whom notice of a freezing order must be given is limited, is a question that was not decided by the Court of Appeal and would not conveniently fall for consideration if leave to appeal to this Court were to be granted. An appeal to this Court would enjoy insufficient prospects of success to warrant a grant of special leave to appeal. Special leave is refused.

MR CHENU:   May it please the Court, I seek costs.

HAYNE J:   Mr Colvin, can you resist costs?

MR COLVIN:   No, your Honour.

HAYNE J:   With costs.

AT 12.21 PM THE MATTER WAS CONCLUDED