Hadjigeorgiou v New South Wales Crime Commission
[2007] NSWCA 197
•29 August 2007
NEW SOUTH WALES COURT OF APPEAL
CITATION: Hadjigeorgiou v New South Wales Crimes Commission [2007] NSWCA 197
FILE NUMBER(S):
40272/07
HEARING DATE(S): 1 August 2007
JUDGMENT DATE: 29 August 2007
PARTIES:
Keith Hadjigeorgeiou (aka Keith Hatsis, Keith Hatzis, Keith Andreou and Kleanthis Andreou) - Appellant
New South Wales Crime Commission - Respondent
JUDGMENT OF: Giles JA Santow JA Basten JA
LOWER COURT JURISDICTION: Supreme Court
LOWER COURT FILE NUMBER(S): SC 14603/06
LOWER COURT JUDICIAL OFFICER: Sully J
LOWER COURT DATE OF DECISION: 15 September 2006
COUNSEL:
M Buscombe - Appellant
I Temby SC - Respondent
SOLICITORS:
Gadens Lawyers - Appellant
John M Giorgiutti - Respondent
CATCHWORDS:
Criminal Assets Recovery Act - restraining order - affidavit of reasonable suspicion of engaging in serious crime related activity and stating grounds on which suspicion is based - order made if judge satisfied are reasonable grounds for suspicion - three offences identified - assertion of suspicion - matters stated in affidavit not specifically related to offences - whether vitiating imprecision - whether were reasonable grounds for suspicion.
LEGISLATION CITED:
Criminal Assets Recovery Act 1990, s 10
CASES CITED:
Balog v Independent Commission against Corruption (1990) 169 CLR 625;
Beneficial Finance Corporation v Commissioner of Australian Federal Police (1991) 31 FCR 523;
Briginshaw v Briginshaw (1938) 60 CLR 336;
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194;
Fardon v Attorney-General (Qld) (2004) 223 CLR 575;
George v Rockett (1990) 170 CLR 104;
Gifford v Strang Patrick Stevedoring Pty Ltd (2003) 214 CLR 269;
Hilton v Wells (1985) 157 CLR 57;
Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378;
Love v Attorney-General (NSW) (1990) 169 CLR 307;
Malinka Hodings Pty Ltd v Stretton (2001) 204 CLR 290;
New South Wales Crimes Commission v Ollis (2006) 65 NSWLR 478;
Ousley v The Queen (1997) 192 CLR 69;
Potter v Minahan (1908) 7 CLR 277;
Public Service Board (NSW) v Osmond (1986) 159 CLR 656;
Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266;
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247;
State of New South Wales v Corbett [2007] HCA 32.
R v Ho and Szeto (1989) A Crim R 145;
DECISION:
(By majority) (1) Extend time in which to apply for leave to appeal up to and including 3 May 2007; (2) Grant leave to appeal and direct the filing of the notice of appeal within seven days; (3) Dismiss the appeal with costs.
JUDGMENT:
IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL
CA 40272/07
SC 14603/06GILES JA
SANTOW JA
BASTEN JAWednesday 29 August 2007
HADJIGEORGIOU v NEW SOUTH WALES CRIME COMMISSION
Judgment
GILES JA: On 15 September 2006 Sully J made a restraining order under s 10 of the Criminal Assets Recovery Act 1990 (“the Act”) in respect of any interest in property of the claimant, together with ancillary orders pursuant to s 12(1) of the Act. By a summons filed on 3 May 2007 the claimant applied for leave to appeal from the orders and an extension of time in which to apply. The application was heard on full submissions as if an appeal.
Extension of time
The delay in filing the summons was attributed, in an affidavit sworn by the claimant’s solicitor, to initial difficulty in the claimant’s solicitors obtaining instructions; from mid-October 2006 to meetings with the opponent with a view to settlement; from late March 2007 to consideration of the prospects of an appeal; and to a misconceived application to set aside the orders filed on 10 April 2007 in the Common Law Division. For part of this period the claimant was unable to give instructions because overseas.
The opponent opposed an extension of time, but put no submissions against it.
I do not think that the failure to make a timely application for leave to appeal was satisfactorily explained. Settlement discussions do not obviate the need to comply with the Rules prescribing the time within which an application for leave to appeal must be made. It appears that the claimant preferred absence overseas to attention to his interests in the proceedings, and there was at best leisurely attention to setting aside the orders prior to April 2007. However, the opponent did not assert prejudice, and the orders are a significant interference with the claimant’s rights. In the circumstances, I do not think he should be shut out from his application and am prepared to extend time.
The proposed appeal
Under s 10(3) of the Act, Sully J was obliged to make the restraining order if the application before him was supported by an affidavit of an authorised officer stating that the officer suspected that the claimant had engaged in a serious crime related activity and stating the grounds on which that suspicion was based, and his Honour considered that “having regard to the matters contained in [the] affidavit there are reasonable grounds for any such suspicion”.
The application for the restraining order was supported by an affidavit of Jonathan Lee Spark sworn 13 September 2006. It was not disputed that he was an authorised officer. Mr Spark stated that he suspected that the claimant had engaged in a serious crime-related activity or serious crime related activities, and that he held the suspicion having had regard to the contents of para 4 of his affidavit. He identified the offences of obtaining money by deception contrary to s 178BA of the Crimes Act 1900, obtaining money by false or misleading statements contrary to s 178BB of the Crimes Act, and using false instruments contrary to s 300 of the Crimes Act. It was not disputed that commission of any of these offences would, by the operation of the definitions in s 6(1) and s 6(2)(d) of the Act, amount to a serious crime-related activity.
The issue on the proposed appeal was thus the reasonable grounds for the suspicion. The proposed ground of appeal was that -
“The Court below erred in determining that there were reasonable grounds to suspect that the Appellant had engaged in a serious crime related activity or activities as defined in Section 6 of the Criminal Assets Recovery Act 1990.”
As is apparently the practice, the judge did not give reasons for making the restraining order. The order recited, “Considering that, having regard to the affidavit of Jonathan Lee Spark sworn 13 September 2006, there are reasonable grounds for the suspicion therein … “. This made express, as was implicit in making the order, that the judge was satisfied that there were reasonable grounds for the suspicion stated by Mr Spark. But it did not reveal why.
His Honour was obliged to make the order if he had the requisite satisfaction. Often there will be little or no room for anything more than an exercise of judgment upon the matters in the affidavit, with satisfaction expressed by the making of the restraining order.
In the present case, however, three offences were identified, and the affidavit did not relate matters in the affidavit to ingredients of one or other, or any one, of the offences. The recital did not reveal the serious crime related activity or activities accepted as reasonably suspected. It was not submitted that there was failure to state in the affidavit the grounds on which Mr Spark’s suspicion was based. But there can be difficulty in considering error on the part of a judge when it is not known with reasonable clarity what serious crime related activity or activities the judge accepted as reasonably suspected, and by regard to what matters in the affidavit.
For reasons which will appear, I do not think such a difficulty is realised in the present case. The proposed appeal can comprehend the offences and the materials in the affidavit and, if the judge could not have had the requisite satisfaction, it can be so held. What I have said may, however, be noted for the preparation of affidavits in other applications.
Paragraph 4 of the affidavit
As I have indicated, Mr Spark stated that he held the suspicion having regard to the contents of para 4 of his affidavit.
Paragraph 4 gave reasons for Mr Spark’s belief that a number of names, which were given, were “aliases” used by the claimant. This was not contentious. The names included Keith Hatsis.
Relevantly to the proposed appeal, in para 4 Mr Spark then said that he had regard to -
(a)(i) an application for finance in the name of Keith Hatsis dated 30 May 2002 made to Interstar Wholesale Finance Pty Ltd (“Interstar”), which was described (“the first finance application”);
(ii)a number of documents lodged in support of the first finance application, which were described; and
(iii)approval on 14 June 2002 of the first finance application and advance of the finance on 12 July 2002; and
(b)(i) an application for finance in the name of Keith Hatsis dated 25 November 2002, which was described (“the second finance application”);
(ii)a number of documents lodged in support of the first finance application, which were described; and
(iii)approval on 28 November 2003 [sic: 2002] of the second finance application and advance of the finance on 20 January 2003; and
(c)information provided by the Australian Taxation Office (“the ATO”), which was described.
The second finance application was not said to have been made to Interstar, but the finance was said to have been advanced by it and it was not contended that application to Interstar was insufficiently stated. The description of the documents in (a)(i) and (ii) and (b)(i) and (ii), and of the information provided by the ATO, briefly gave the contents of the documents and the oral and documentary information.
Although the exercise was not spelled out in the affidavit, the grounds on which Mr Spark’s suspicion was based involved comparison between the contents of the applications for finance and the supporting documents as described, and the information provided by the ATO. An ingredient of the offences identified by Mr Spark could be made out by falsity in one of the applications for finance or in the supporting documents, or in the application and its supporting documents taken as a whole (deception in s 178BA, a false or misleading statement in s 178BB, a false instrument in s 300). Advance of the finance (obtaining in s 178BA) or intent that the finance be advanced (intent to obtain in s 178BB, intent to induce in s 300), and any necessary knowledge of or recklessness as to falsity, made out the other ingredients. The comparison was to provide suspected falsity, and the nature of the transactions and the information was to provide suspected mental elements of the offences.
The essence of the alleged falsity was that the applications for finance and the supporting documents put forward that income earned by the claimant in employment by Cresville Pty Ltd (“Cresville”), in fact a company of which his wife was the director, was $52,000 per annum, when it was not. I will come to the detail of the documents and information when outlining and considering the claimant’s submissions.
The claimant’s submissions
In George v Rockett (1990) 170 CLR 104 a search warrant could be issued if it appeared to the justice that there were “reasonable grounds for suspecting” that there was in a place, amongst other things, anything as to which there were “reasonable grounds for believing” that it would afford evidence as to the commission of any offence. The Court (Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ) said, at 115, that it was necessary to bear in mind that suspicion and belief were different states of mind. Their Honours continued, at 115-6 -
“Suspicion, as Lord Devlin said in Hussien v Chong Fook Kam [1970] AC 942, at 948, ‘in its ordinary meaning is a state of conjecture or surmise where proof is lacking: “I suspect but I cannot prove”.' The facts which can reasonably ground a suspicion may be quite insufficient reasonably to ground a belief, yet some factual basis for the suspicion must be shown. In Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266, a question was raised as to whether a payee had reason to suspect that the payer, a debtor, ‘was unable to pay [its] debts as they became due’ as that phrase was used in s95(4) of the Bankruptcy Act 1924 (Cth). Kitto J said (at 303):
‘A suspicion that something exists is more than a mere idle wondering whether it exists or not; it is a positive feeling of actual apprehension or mistrust, amounting to “a slight opinion, but without sufficient evidence”, as Chambers's Dictionary expresses it. Consequently, a reason to suspect that a fact exists is more than a reason to consider or look into the possibility of its existence. The notion which 'reason to suspect' expresses in subs(4) is, I think, of something which in all the circumstances would create in the mind of a reasonable person in the position of the payee an actual apprehension or fear that the situation of the payer is in actual fact that which the subsection describes - a mistrust of the payer's ability to pay his debts as they become due and of the effect which acceptance of the payment would have as between the payee and the other creditors.’
The objective circumstances sufficient to show a reason to believe something need to point more clearly to the subject matter of the belief, … “.
The claimant accepted that their Honours’ observations applied to reasonable grounds for suspicion in s 10(3) of the Act, and his submissions were made on that basis.
The claimant submitted that in the consideration required by s 10(3) it was necessary that the Court be particularly vigilant that in both form and content the matters contained in the affidavit provided reasonable grounds for the suspicion stated by the authorised officer, because of the severity of a restraining order’s intrusion into rights and the facts that the opponent could apply for it ex parte (s 10(2)) and that the making of the restraining order could not at first instance be reviewed or made the subject of a further hearing with additional evidence (New South Wales Crimes Commission v Ollis (2006) 65 NSWLR 478). In substance, the submission was that the court had to come to its satisfaction in the manner spoken of by Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336 at 362 in relation to the nature and consequence of the fact or facts to be proved; see now Evidence Act 1995, s 145(2).
The claimant then submitted that the matters in the affidavit of Mr Spark, so approached or even if not so approached, did not suffice for reasonable grounds for the suspicion stated by Mr Spark. In his submission, the deficiency arose from or lay in three matters. First, Mr Spark described the contents of documents rather than annexing copies, leaving ambiguity in what was put forward as the claimant’s income. Secondly, the ATO information did not provide a comparison giving reasonable grounds to suspect the alleged falsity. Thirdly, the matters in the affidavit did not give reasonable grounds to suspect that any deception caused Interstar to make the advances, as was required at least for the offence under s 178BA (R v Ho and Szeto (1989) 39 A Crim R 145).
Consideration
The claimant said that, in describing the contents of the applications for finance and the supporting documents rather than annexing copies, Mr Spark left room for unclarity or ambiguity. He particularly said that describing the applications for finance as stating “he had been employed by Cresville Pty Ltd for the previous 4 years and that he earned a gross income of $52,000 per annum” left it unclear whether he had put forward a gross income of $52,000 per annum for all four years, or only as at the dates of the applications.
The authorised officer must state the grounds on which the authorised officer’s suspicion is based, and the Court must be satisfied that there are reasonable grounds for the suspicion. Statement of grounds is less than proof of facts. In my view it permits the course taken by Mr Spark, and a court can reach the requisite satisfaction upon matters contained in the affidavit when they are sworn to in that way. If there be unclarity or ambiguity, that goes to whether there are reasonable grounds for the suspicion.
The grounds must be looked at as a whole. In the present case the documents lodged in support of the first finance application, as described by Mr Spark, conveyed a rate of pay to, payment to, or income of the claimant of $52,000 (in one case $52,018) per annum for the 2000 and 2001 financial years and as at dates in 2002. The documents lodged in support of the second finance application, as described by Mr Spark, conveyed a rate of pay to or payment to the claimant of $52,000 (in one case $52,018) per annum for the 2001 and 2002 financial years and as at dates later in 2002. Looked at as a whole, it was put forward to Interstar that the claimant earned a gross income of $52,000 per annum for the four years, not just as at the dates of the applications for finance.
In my opinion the ATO information provided a comparison supporting Mr Spark’s suspicion so far as falsity was concerned.
First, the documents lodged in support of each of the first finance application and the second finance application included a document purporting to be a copy of an individual tax return for the year ending 30 June 2001 in the name of Keith Hatsis in which was declared a taxable income of $52,018. The information provided by the ATO included that income tax returns for the years ended 30 June 2000 to 30 June 2006 inclusive had not been lodged (meaning with the ATO) under any of the “aliases” of the claimant. It could be concluded that the copy tax return was not genuine. It may be accepted that, as was submitted by the claimant, an income tax return could be prepared but not lodged. Reasonable suspicion nonetheless arises in relation to such a document which is provided in mid and late 2002 in support of a finance application but is never lodged with the ATO.
Secondly, the information provided by the ATO included that Cresville lodged an income tax return for the year ended 30 June 2000 in which it declared its total salary and wage expense for that year at $16,000. There was inconsistency between the claimant earning a gross income of $52,000 per annum, which from the documents lodged in support of the applications was to be understood as income from Cresville for the four years prior to dates in 2002, and Cresville’s declared salary and wage expense for the year ended 30 June 2000. The explanation for the inconsistency may have been that Cresville’s tax return was incorrect. Under-declaration of expenses would not be particularly likely. In my view the inconsistency gave rise, adopting phrases from the passage from the judgment of Kitto J cited in George v Rockett at 115-6, to more than “a mere idle wondering” whether the claimant had overstated his earnings to Interstar, and to “a positive feeling of actual apprehension or mistrust” that he had done so.
The information provided by the ATO included that Cresville provided time and wage records for the period 1 April 2003 to 30 June 2003 showing that the claimant worked a total of 520 hours at the rate of $10 per hour. The rate of $10 per hour contrasted with the rate of $25 per hour (which calculates to $52,000 per annum as a forty hour week) for periods in 2002 in Mr Spark’s description of pay slips lodged in support of each of the applications for finance. Standing alone, this would not have been entitled to great weight. It can be taken into account for a degree of doubt it cast on earnings of $52,000 per annum in 2002 and preceding years, and to a small extent supports the falsity which could arise in accordance with the two preceding paragraphs.
The matters in the affidavit did not directly support causation; there was no account, for example, of information from Interstar that it would not have made the advances if different information as to the claimant’s earnings had been provided. The claimant submitted that Interstar could have advanced the finance without troubling to look at the represented earnings in the applications and supporting documents, or regardless of the represented earnings. Although he did not specifically advert to it, the second finance application, as described by Mr Spark, also stated that the claimant received rental income of $91,000 per year. Disregard of the information as to earnings is not particularly likely. At least as to the first finance application, so far as causation was necessary to make out the offences, it was open to infer it.
Conclusion
In my opinion, satisfaction that the matters in Mr Spark’s affidavit provided reasonable grounds for suspicion that offences under ss 178BA, 178BB and 300 of the Crimes Act had been committed was open to the judge, and error has not been shown in his Honour’s determination.
The validity of the restraining order, with its comprehensive effect on the claimant’s ability to deal with his property, is of considerable `importance to him, and review at first instance is not available. Although I have not upheld them, the challenges to the judge’s satisfaction were proper for consideration. Leave to appeal should be granted.
I propose the orders -
(1)Extend the time in which to apply for leave to appeal up to and including 3 May 2007.
(2)Grant leave to appeal and direct the filing of the notice of appeal within seven days.
(3)Dismiss the appeal with costs.
SANTOW JA: I have had the advantage of reading the judgments of Giles JA and Basten JA in draft. I agree with the reasons of Giles JA dismissing the appeal and the orders his Honour proposes.
With deference to the comprehensive reasons of Basten JA to the contrary, I should indicate briefly why I so conclude.
Basten JA concluded that the restraining order made by Sully J in pursuance of s10 of the Criminal Assets Recovery Act 1990 (NSW) (“the Act”) should be set aside, essentially for what is said to be inadequacy of the affidavit of the authorised officer to provide
“the relevant foundation for a restraining order under s10, because the deponents suspicions were not stated with adequate precision to allow a view to be formed as to what those suspicions were, which was a necessary preliminary to consideration of whether there were, in the material contained in the affidavit, reasonable grounds for such suspicion”.
Earlier, Basten JA refers to “the need for that suspicion to be stated with adequate particularity for the court to assess whether it is supported by reasonable grounds, based on the material set out in the affidavit …”.
While issuance of a search warrant, though under judicial supervision, partakes of an administrative rather than judicial proceeding, I consider that the reasoning in George v Rockett (1990) 170 CLR 104 is directly in point. The judgment was a joint judgment of the High Court and concerned s679(b) of the Criminal Code (Q). That provision employed the expressions “reasonable grounds for suspecting” and “reasonable grounds for believing”, in relation to related requirements for the search warrant in that case. Reasonable grounds for suspecting related to the location of a particular thing the subject of the search warrant. Reasonable grounds for believing related to whether that particular thing was “intended to be used for the purpose of committing any … offence”.
That distinction is not involved in s10 of the Act. Rather, relevantly to s10(3)(a) of the Act, the Supreme Court “must” make the relevant order applied for provided two conditions are satisfied:
(a)“The application is supported by an affidavit of an authorised officer stating that … the authorised officer suspects that the person has engaged in a serious crime related activity or serious crime related activities and stating the ground on which that suspicion is based”; and
(b)“the court considers that having regard to the matters contained in any such affidavit there are reasonable grounds for any such suspicion”.
The order referred to is a restraining order under the Act. Its scope is potentially very wide and far-reaching. Indeed it is in this case. Nonetheless the Act evinces a clear intention for such an order to be made where those two conditions are satisfied. I do not accept that the supporting affidavit calls for any greater precision than the plain words of the Act require, just because of that wide reach. The legislature clearly intended such an intrusion into personal and property rights where there are reasonable grounds for any such suspicion as is described.
The High Court in George v Rockett was required to deal with the gradation between reasonable grounds for suspicion on the one hand and reasonable grounds for belief on the other. The judgment (at 16) observes that “the objective circumstances sufficient to show a reason to believe something need to point more clearly to the subject matter of the belief, but that is not to say that the objective circumstances must establish on the balance of probabilities that the subject matter in fact occurred or exists; the assent or belief is given on more slender evidence than proof”. Moreover “… the grounds which can reasonably induce an inclination of mind may, depending on the circumstances, leave something to surmise or conjecture”.
The judgment then discusses what is entailed by reasonable grounds for believing that a thing exists; in particular where the object the subject of search warrant is identified by a description that is broader and less specific. That reasoning as to belief provides no basis for requiring as high a degree of precision in the supporting affidavit when it comes to considering what is entailed by the lesser “reasonable grounds to suspect”. The judgment concludes, even as to reasonable grounds for belief, that “in the absence of information in the sworn complaint which might have satisfied the Magistrate as to the existence of reasonable grounds for Rockett’s belief, the Magistrate has no power to issue the warrant” (at 122) [emphasis added]. That formulation directs attention to that which “might” satisfy the standard. That modest requirement suggests an even less demanding threshold when it came to reasonable grounds to suspect.
In George v Rockett, there was earlier discussion of the sufficiency of the sworn complaint to show reasonable grounds for suspicion. The High Court accepted that “the facts which can reasonably ground the suspicion may be quite insufficient reasonably to ground a belief”. Suspicion requires only that “some factual basis for the suspicion must be shown” (at 115) [emphasis added]. Citing Kitto J in Queensland Bacon Ltd v Rees (1966) 115 CLR 266 at 303 this must be more than a “mere idle wondering”; rather it must rise to ”a positive feeling of actual apprehension or mistrust”, though not a positive belief.
The Court under s10(3)(b), in determining whether it “considers that having regard to the matters contained in any such affidavit there are reasonable grounds for any such suspicion” must be mindful that the inquiry is as to reasonable grounds for suspicion on the part of the authorised officer. It is not for the Court to go beyond asking whether there is sufficient to induce that state of mind “in a reasonable person” (George v Rockett at 112). The Court is in that sense evaluating the exercise of that discretionary determination by another, not exercising the discretion for itself or afresh.
To introduce requirements of precision beyond that modest level is to my mind unjustifiably to raise the threshold to a level which might more plausibly apply to reasonable grounds for belief than suspicion. When, s10(3) requires the authorised officer to have a suspicion “that the person has engaged in a serious crime related activity” and to state the ground on which that suspicion is based, that does not require choosing which precisely applies of three similar though not identical “serious crime related activity” offences so long as at least one does. Nor does it call for a close consideration of each element of those offences to be matched against specific evidence so long as there is sufficient to take the relevant officer to a positive feeling of actual apprehension or mistrust, based on the standard of “a reasonable person”.
The Court’s consideration under s10(3)(b) would otherwise be raised beyond a consideration of whether there were “reasonable grounds for any such suspicion” [emphasis added]. The word “any” is to my mind significant here in militating against the necessity for greater precision. It points to the Court’s evaluative task as being by reference to the standard of a reasonable person having to have no more than an apprehension or mistrust here as to engagement in a serious crime-related activity. The degree of precision called for in the affidavit should be judged accordingly.
Conclusion
Accepting as Giles JA does, that the affidavit material is not without ambiguity or lack of clarity, nonetheless the grounds for suspicion must be looked at as a whole and cumulatively. So regarded, I agree with Giles JA that it was open to the judge to reach the consideration his Honour did, that there were reasonable grounds for the relevant suspicion.
BASTEN JA: This is an application for leave to appeal from an order of Sully J made on 15 September 2006 pursuant to s 10 of the Criminal Assets Recovery Act 1990 (NSW). Subject to the comments set out below in relation to the availability of an appeal, I agree with Giles JA that the claimant should have an extension of time within which to commence the application for leave and that leave to appeal should be granted. Further, on the assumption (not contested by the Commission) that an appeal is available, I would uphold the appeal and set aside the orders made by Sully J, on the basis that the statutory power was not engaged.
Nature of proceedings
Although there was no contest that the claimant was entitled to bring an appeal to this Court from the order of the primary judge, it is necessary to consider the basis of that right in order to understand the scope of the challenges which can be mounted in this Court to the order made.
In particular, the question is whether the primary judge was exercising a judicial or an administrative power. One indicium of the nature of the function may be the existence or otherwise of an obligation to give reasons. In this case, as in other similar cases, the order was made without the delivery of reasons; the fact that judges of the Court have consistently made restraining orders under s 10 of the Criminal Assets Recovery Act without giving reasons raises a question as to whether their Honours thought that their decisions were administrative rather than judicial and not subject to appeal. Of course, judicial determinations are made without reasons by juries. However, the jury is assumed to act on the basis of directions as to law given by the trial judge and challenges can be brought to a verdict on the basis of misdirection. It is also true that interlocutory rulings may be made without giving reasons and without breaching the general principle that the exercise of judicial power engages an obligation to provide reasons for judgment: see Public Service Board (NSW) v Osmond (1986) 159 CLR 656 at 666-667 and Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 385-386 (Mahoney JA). In Osmond, after referring to Tatmar Pastoral, and noting that the obligation to give reasons was a normal, but not a universal incident of the judicial process, Gibbs CJ noted that such an obligation in relation to judicial process did not demonstrate that a similar obligation existed in relation to an administrative decision.
Nevertheless, as stated by McHugh JA in Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 280G:
“Thus more elaborate reasons are required where legislation gives a right of appeal against a decision than where no appeal lies. In the first class of case, unless the basis of the decision is properly articulated, the losing party may be effectively deprived of his right of appeal.”
The question whether the primary judge was exercising judicial or administrative power in making a restraining order can be viewed from one of two perspectives. The first perspective, which tends to support the view that the power is administrative, looks by way of analogy to the issue of warrants for entry onto premises or interception of telecommunications. The second approach, which suggests that the power is judicial, sees the making of a restraining order as an interlocutory step in a proceeding pursuant to which final relief is obtained affecting the rights and interests of the parties.
In relation to search warrants, it is convenient to start with the decision of the High Court in Hilton v Wells (1985) 157 CLR 57. There the Court considered a challenge to a power conferred on a judge of the Federal Court to issue a warrant authorising the interception of communications pursuant to s 20 of the Telecommunications (Interception) Act 1979 (Cth). The basis of the challenge was that it was not permissible under the Constitution for the Parliament to confer a non-judicial power on a court established under Chapter III of the Constitution unless the power conferred was merely ancillary to, or incidental to, the exercise of judicial power: p 67 (Gibbs CJ, Wilson and Dawson JJ). The majority held that there was no conferral of judicial power on the Court, because the conferral was upon a judge of the Court as a designated person. Relevantly for present purposes, their Honours noted a distinction between the conferral of power on a judge, as opposed to a court, stating at p 72:
“It clearly appears from these authorities that where a power, judicial or non-judicial, is conferred by statute upon a court or a judge, it is not necessarily conferred on the court or the judge as such – the question is one of construction. Where the power is conferred on a court, there will ordinarily be a strong presumption that the court as such is intended. Where the power is conferred on a judge, rather than on a court, it will be a question whether the distinction was deliberate, and whether the reference to ‘judge’ rather than to ‘court’ indicates that the power was intended to be invested in the judge as an individual who, because he is a judge, possesses the necessary qualifications to exercise it.”
Their Honours held that the issue of a warrant was an administrative act. The nature of the power was not explicitly judicial as opposed to administrative and the effect of an exercise of the power did not attract consequences under the Federal Court of Australia Act 1976 (Cth) because the effect depended entirely upon the Telecommunications (Interception) Act: p 73.
Love v Attorney-General (NSW) (1990) 169 CLR 307 involved the issue of a warrant under s 5 of the Listening Devices Act 1984 (NSW). Under s 16, a judge of the Supreme Court who consented in writing to be nominated by the Attorney-General as an “eligible judge” was empowered to issue a warrant authorising the use of a listening device. That power was a discretionary power and certain mandatory considerations, identified in sub-s 16(2), were required to be taken into account. The High Court noted that the case had proceeded in this Court on the basis that “the acts of the judges who issued the warrants were judicial rather than administrative acts”: p 315. Their Honours further noted at p 316:
“In this Court the appellants contended that the warrants were judicial orders affected by fundamental defects so that persons prejudiced were entitled ex debito justitiae to have them set aside.”
However, their Honours concluded that the issue of a warrant was not a judicial order (at p 319):
“In one sense – a loose sense – the warrant is a judicial act; it is an instrument issued by a judge of the Supreme Court. But the fact that it is an instrument issued by a judge of the Supreme Court does not stamp it with the character of a judicial order unless the warrant issues as a result of a determination made by the judge in his or her judicial capacity.”
After considering various factors, the Court concluded that the issue of the warrant under s 16 was “a step in the administrative process and is thus an administrative function”. Their Honours continued (pp 322-3):
“Once it is accepted that the warrant is not a judicial order, it becomes an instrument made pursuant to a circumscribed statutory authority.”
A challenge to an issue of two warrants pursuant to the Listening Devices Act 1969 (Vic) came before the Court in Ousley v The Queen (1997) 192 CLR 69. Gaudron J (at p 87) held that the nature of the power could not be distinguished from that in Love and accordingly the warrant was not a judicial order “but an instrument made in the discharge of an administrative function”. Similar conclusions were reached by McHugh J (p 100), Gummow J (pp 121 and 130) and Kirby J (p 146). The critical issue in that case was the nature of the restricted review available on that basis.
The alternative view is that the power to make a restraining order is an incident of the jurisdiction conferred on the Court pursuant to the Act, which will ultimately result in determination of an application for an “assets forfeiture order” or an application for a “proceeds assessment order”. Otherwise, there must be an unsatisfied “proceeds assessment order” in force or such an order must have been sought but not made: see ss 10(9), 20, 22 and 27. A restraining order will only remain in force for two working days if those requirements of s 10(9) are not satisfied. Accordingly a restraining order may be seen as ancillary or incidental to the power of the Court to make an assets forfeiture order under s 22 in relation to fraudulently or illegally acquired property, or a proceeds assessment order under s 27 in relation to the value of proceeds derived by the person from an illegal activity.
In addition, each of ss 10 (restraining orders), 22 (assets forfeiture orders) and 27 (proceeds assessments orders) are expressed to be applications which may be made by the Commission “to the Supreme Court”: there is no attempt to confer power on a judge of the Court as a designated person. Furthermore, the Act envisages that a person who contravenes a restraining order may be dealt with for contempt of the Supreme Court: s 16(2).
One factor which may be thought to militate against the possibility that the Court is exercising judicial power is the limited nature of the discretion conferred on the Court. Thus, under s 10(3), the Court is required to make the order applied for if the application is supported by an affidavit of an authorised officer and makes one of two appropriate statements as to the suspicion of the authorised officer and the Court considers “that having regard to the matters contained in any such affidavit there are reasonable grounds for any suspicion”. That language is reminiscent of statutory formulae by which power is conferred on judges to grant warrants of various kinds, in that it does not require the judge to form any belief as to the circumstances of the case except that there be reasonable grounds for the belief (suspicion) affirmed on oath by the authorised officer. Even the legislative provisions with respect to warrants generally confer a power to issue a warrant, rather than an obligation to do so. There may come a stage where a law which requires the Court to act in accordance with the suspicions on reasonable grounds of an executive officer and confers no discretion in that regard is seen to impose on the Court a function “which substantially impairs its institutional integrity, and which is therefore incompatible with its role as a repository of federal jurisdiction”: see Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at [15] (Gleeson CJ). In that sense, such a law might be seen to confer on the Court an obligation which was not consistent with the exercise of judicial power. One way to avoid constitutional invalidity might be to construe such a power as not intended to confer judicial power, although such a construction might be thought disingenuous.
In accordance with the principles established in Ousley, the conferral on a judge of an administrative function would limit significantly the grounds upon which the exercise of power could be challenged. As the Commission does not seek to adopt such a construction and as there are clearly factors which would warrant a conclusion that the power conferred is a judicial power, I am content to accept that the primary judge was exercising judicial power and, as a result, his decision engaged rights of appeal (subject to leave) under s 101(1) of the Supreme Court Act 1970 (NSW). On the same assumption, leave is required as the order would be an interlocutory order in proceedings in the Court for the purposes of s 101(2)(e).
The next question concerns the nature of this Court’s power with respect to the appeal. According to s 75A(1) of the Supreme Court Act, that section applies to an appeal to the Court where the exceptions contained in sub-s (2) and (3) do not arise, as they do not in the present case. Section 75A also has effect subject to any Act, but there is nothing in the Criminal Assets Recovery Act, which appears to affect the nature of the appeal. According to sub-s (5), where the decision or other matter under appeal “has been given after a hearing, the appeal shall be way of re-hearing”. In that event, the Court may make any order “which ought to have been … made or which the nature of the case requires”: s 75A(10).
The proceedings in this Court have, understandably, been conducted with parties on either side. However, as noted in NSW Crime Commission v Ollis (2006) 65 NSWLR 478; (2006) 161 A Crim R 97, there is no requirement in s 10 of the Criminal Assets Recovery Act that, although an application may be made ex parte, that a hearing be conducted ex parte. There is, as Ollis demonstrates, a constraint on the ability of the Court to consider any material other than the supporting affidavit of the authorised officer. That constraint should be understood to apply to the appeal proceeding as well as the primary hearing. Accordingly, it may be assumed, in the absence of any suggestion to the contrary, that the power of this Court to receive further evidence, pursuant to sub-ss 75A(7)-(9) is not applicable.
One difficulty remains in the way of the claimant: that is the requirement that the powers of a court conducting an appeal by way of re-hearing should be understood as requiring the identification of error on the part of the court below: see Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at [14] (Gleeson CJ, Gaudron and Hayne JJ). In many cases, in the absence of reasons, that will impose a severe constraint on the availability of relief to a person with an interest in property subject to a restraining order. Whether, in accordance with the principles considered above, that would suggest an obligation on the primary judge to give reasons for making such an order need not be considered, as it was not raised by the parties in the present proceedings. Further, for the reasons set out below, it is the inadequacy of the material placed before the primary judge which, in my view, failed to engage the statutory power.
Basis of application to primary judge
The application was made by summons and supporting affidavit, seeking restraining orders in relation to identified property owned by the claimant. The application invoked s 10 of the Criminal Assets Recovery Act and it is convenient to set out the relevant parts of that provision.
“10 Restraining orders
(1)A restraining order is an order that no person is to dispose of or attempt to dispose of, or to otherwise deal with or attempt to otherwise deal with, an interest in property to which the order applies except in such manner or in such circumstances (if any) as are specified in the order.
(2)The Commission may apply to the Supreme Court, ex parte, for a restraining order in respect of:
(a)specified interests, a specified class of interests or all the interests, in property of a person suspected of having engaged in a serious crime related activity or serious crime related activities, including interests acquired after the making of the order and before the making of an assets forfeiture order affecting the interests that are subject to the restraining order, or
(b)specified interests, or a specified class of interests, in property that are interests of any other person, or
(c)interests referred to in both paragraph (a) and paragraph (b).
(2AA)The Commission may apply to the Supreme Court, ex parte, for a restraining order in respect of specified interests, or a specified class of interests, in property that are held in a false name.
(2A)A restraining order does not apply to an interest acquired after the order is made unless the other expressly provides that it does so apply.
(3)The Supreme Court must make the order applied for under subsection (2) if the application is supported by an affidavit of an authorised officer stating that:
(a)in the case of an application in respect of an interest referred to in subsection (2)(a)—the authorised officer suspects that the person has engaged in a serious crime related activity or serious crime related activities and stating the grounds on which that suspicion is based, and
(b)in the case of an application in respect of any other interest—the authorised officer suspects that the interest is serious crime derived property because of a serious crime related activity or serious crime related activities of a person and stating the grounds on which that suspicion is based,
and the Court considers that having regard to the matters contained in any such affidavit there are reasonable grounds for any such suspicion.
(3A)The Supreme Court must make the order applied for under subsection (2AA) if:
(a)the application is supported by an affidavit of an authorised officer stating that the authorised officer suspects that the interest is fraudulently acquired property that is illegally acquired property and stating the grounds on which that suspicion is based, and
(b) the Court considers that having regard to the matters contained in any such affidavit there are reasonable grounds for any such suspicion.
…
(9)After the first 2 working days of its operation, a restraining order remains in force in respect of an interest in property only while:
(a)there is an application for an assets forfeiture order pending before the Supreme Court in respect of the interest, or
(b)there is an unsatisfied proceeds assessment order in force against the person whose suspected serious crime related activities formed the basis of the restraining order, or
(c)there is an application for such a proceeds assessment order pending before the Supreme Court, or
(d)it is the subject of an order of the Supreme Court under section 20 (Effect on restraining order of refusal to make confiscation order).”
The operation of these provisions may be narrowed for present purposes. Thus, it will be seen that sub-s (2) distinguishes between interests in property of a person suspected of having engaged in a serious crime related activity in par (a) and interests of any other person in par (b). This case is concerned only with the interests identified in par (a). It therefore follows that only par (a) of sub-s (3) is in issue and that par (b) may be disregarded in each subsection.
Secondly, as the case was put in this Court, no reliance was placed on sub-s (2AA). Accordingly, sub-s (3A) was also irrelevant. However, it should be noted that par (a) of sub-s (3A) uses different terminology to sub-s (2) and in particular refers to “fraudulently acquired property” that is “illegally acquired property”. An interest in property is fraudulently acquired if it is “held in a false name” and a false instrument, such as a birth certificate, was knowingly used for the purposes of acquiring that property. Further, the term “illegally acquired property” is defined to mean property which is all or part of the proceeds of “illegal activity”: s 9(1) and (4). The term “illegal activity” may include any act or omission that constitutes an offence against either the laws of the New South Wales or of the Commonwealth: s 4(1), illegal activity.
The affidavit in support of the orders sought from the Supreme Court was sworn by Mr Spark, the Assistant Director, Financial Investigations, with the Commission, who was an authorised officer for the purposes of s 4(1) of the Criminal Assets Recovery Act. At paragraph 3 he identified four aliases used by the claimant. The basis for his belief was set out in paragraph 4, to which attention will need to be given shortly. It is sufficient presently to note that no issue was raised as to this aspect of the matter and that a commonly used alias was “Keith Hatsis”. Paragraph 5 of the affidavit stated:
“5.I suspect that Hadjigeorgiou has engaged in a serious crime related activity or serious crime related activities (within the meaning of ‘serious crime related activity’ as defined in section 6 of the Act) including:
(a)obtaining money etc by deception contrary to section 178BA of the Crimes Act 1900;
(b)obtaining money etc by false or misleading statements contrary to section 178BB of the Crimes Act 1900; and
(c)using false instruments contrary to section 300 of the Crimes Act 1900;
being offences punishable by imprisonment for 5 years or more, involving fraud and thereby falling within the terms of the definition of ‘serious-crime-related offence’ in section 6(2)(b) of the Act.”
It is convenient to note a number of aspects of this statement at this stage. First, it seeks, inappropriately, to follow the form of the statute. Thus, the suspicion is said to be that the claimant engaged in a serious crime related activity or activities, without specifying whether the deponent believed there was more than one such activity. Secondly, he identified the activities as “including” certain matters, implying that he had other suspicions which he did not seek to identify. Thirdly, in the case of paragraphs (a) and (b), the activity is identified by reference to the heading of the particular offence in the identified section of the Crimes Act. Each of these provisions contains a number of elements, in the alternative, as is reflected in the use of the abbreviation “etc” in the title. Thus, each of ss 178BA and 178BB refers to obtaining “any money or valuable thing or any financial advantage of any kind whatsoever”. The concept of deception in s 178BA would usually involve deception of a party from whom the advantage is received. In relation to making a false or misleading statement, it would be necessary to identify a particular statement which was known to be false or misleading “in a material particular”. No attempt was made in the affidavit to specify what precise suspicion was aroused.
In relation to paragraph (c), some element of definition has been achieved by omitting the use of the words “making or” in the title, so that there has been a restriction to “using false instruments” which is a reference to sub-s 300(2). However, that section requires that the instrument be used with the intention of inducing “another person” to do or not to do some act to that person’s prejudice. There is no attempt to identify an instrument, another person, or any element of prejudice.
Paragraph 5 of the affidavit is vague as to the nature of the suspicion held by the authorised officer at the time of swearing the affidavit. It will be necessary to consider in due course whether such a lack of precision nevertheless allows a judge of the Court to identify a suspicion with sufficient precision to satisfy the requirements of the Criminal Assets Recovery Act.
Before turning to those requirements, it is convenient to set out the further elements of the affidavit. At paragraphs 7 and 8, the authorised officer expressed a belief that the claimant had “an interest in property”, for the purposes of s 7 of the Criminal Assets Recovery Act and identified both the property and the basis for his belief. As, perhaps curiously, the Court is not required to be supplied with such information, that material can be put to one side.
There is further apparently extraneous material in paragraphs 9 and 10. Paragraph 9 read:
“9.I suspect that Hadjigeorgiou has derived proceeds from an illegal activity, or illegal activities (within the meaning of ‘illegal activity’ as defined in section 4 of the Act) of Hadjigeorgiou that took place not more than 6 years before the making of the application of which this affidavit is in support.”
In paragraph 10, the authorised officer indicated that the suspicion referred to in paragraph 9 was held on four grounds. One was information that the claimant had been discharged from bankruptcy on 6 July 1997. The second matter relied upon was information that 90% of the claimant’s business income came from the sale of pornographic DVDs which were unclassified which it was thus illegal to sell in New South Wales. A third matter was that there were five properties registered in the name of Keith Hatsis, acquired between 11 May 2000 and 31 March 2004, together with certain information contained in paragraph 4 of the affidavit, to which further reference will be made below. The fourth matter relied upon was that the properties were free of mortgages, except for two mortgages to Interstar Wholesale Finance Pty Ltd (“Interstar”), from which two loans had been obtained, the first on 12 July 2002 in an amount of $280,000, the second on 20 January 2003 in an amount of $372,000. The two loans totalled $652,000, whereas the total value of the property purchased was a fraction over $2 million.
In order to understand the significance of this material, it is necessary to turn to the terms of the Criminal Assets Recovery Act and in particular the relevant parts of s 10. A careful distinction is drawn in s 10 (set out above at [63] above) between the circumstances in which a restraining order can be made, based on serious crime related activity, as opposed to illegal activity. Although the concept of illegal activity is far more broadly defined, a restraining order can only be made where the property interests are held in a false name. It may be inferred from paragraphs 9 and 10 of the affidavit that the officer intended to assert a suspicion which would justify an order under sub-s (2AA). However no suspicion was stated as to particular documents being used to acquire property which were “false instruments” for the purposes of s 9A, nor was there a statement of suspicion that property was held in a false name. Nevertheless, the material in paragraphs 8, 9 and 10 suggested that the claimant was a man of considerable means, having been able to purchase property, after his discharge from bankruptcy, and in a period of some seven years, to a value in excess of $2 million, with equity in excess of $1.3 million.
Putting these aspects to one side, the effect of s 10(3)(a) was that the Court was obliged to make a restraining order in relation to identified property if the affidavit of the authorised officer stated that he suspected that the person “has engaged in a serious crime related activity” or activities and stated the grounds on which the suspicion was based. The role of the Court was, if that element were satisfied, limited to assessing whether the grounds for such suspicion were reasonable, having regard to the matters contained in the affidavit.
Paragraph 4 of the affidavit set out matters relating to the identification of the claimant by his aliases and to the grounds of suspicion that he had engaged in serous crime related activity or activities. Paragraph 4 was extensive, and included subparagraphs (a)-(g). One purpose of the material was to support the assertion that the claimant used a number of names. The authorised officer expressed the belief in paragraph 3 that the names “Keith Hatsis, Keith Hatzis, Keith Andreou and Kleanthis Andreou are aliases by Keith Hadjigeorgiou”. Without purporting to set out the detail, it may be noted that the claimant held a current Australian passport in the name Keith Hadjigeorgiou and first entered Australia on 23 November 1986. There were three motor vehicles registered in the name Kleanthis Andreou and there was a current driver’s licence in that name, first issued on 1 April 1996. He also had a learner’s driver’s licence in the name Keith Hatsis and made two applications for finance to Interstar in that name. Documents described as having been “lodged in support of” the two finance applications were, consistently, documents in the name of Keith Hatsis. The paragraph identified some fifteen documents, or groups of similar documents.
If there were deception involved in the use of the name Hatsis, the learner driver’s licence issued on 1 February 1993 which remained “active” until it expired on 17 May 2001, may have been false and misleading in a material particular. So may the driver’s licence in the name of Kleanthis Andreou if the passport in the name Hadjigeorgiou was taken as the only valid use of a name. Similar complaints might have been made in relation to the documents which were no doubt lodged on transfer of title in relation to the five properties identified in schedules 1 and 2 of the affidavit and the use of the name Andreou to register the three motor vehicles identified in schedule 4. On the other hand, the affidavit recorded that the Roads and Traffic Authority records included a notation that Keith Hatsis was previously known as Keith Hadjigeorgiou. It might be inferred that the RTA had been supplied with some apparently appropriate evidence of a change of name.
It may also be noted that, somewhat curiously given the purposes of paragraph 4, the authorised officer annexed material supplied to him by Constable McNeice in relation to a number of offences with which the claimant had been charged and brought before Sutherland Local Court in September 2006. The offences related to the sale and exhibition of unclassified films, in contravention of provisions of the Classification (Publications, Films and Computer Games) Enforcement Act 1995 (NSW) and display of a water-pipe in a shop, contrary to the Drug Misuse and Trafficking Act 1985 (NSW). The “fact sheet” prepared by the New South Wales Police, was in the name Kleanthis Keith Andreou. His occupation was described as self-employed – adult shops. Under the heading “Antecedent” the following appeared:
“The accused person is self employed under the company name of Condhook Pty Ltd. He owns 3 adult stores in Sydney and has 2 investment properties. He is married with no dependants. His self pay income is approximately $700 per week and he pays $1,800 per week in mortgage.”
Paragraph 4(f) of the affidavit set out a number of details in relation to two loans, based on documents produced to the Commission by Interstar. The first document identified was a photocopy of the learner driver’s licence in the name of Keith Hatsis, which, as had earlier been noted, expired on 17 May 2001. The other material relating to the first loan was an application for finance dated 30 May 2002 and five documents lodged in support thereof. The application was said to have been approved on 14 June 2002 and the amount provided on 12 July 2002.
Both the application and the relevant documents in support were, as already noted, stated to be in the name of Keith Hatsis. Despite that, and for reasons which remain obscure, a document dated 13 June 2002 was apparently supplied to Interstar advising that the name of the borrower had changed from Keith Hatzis to Keith Hatsis. Even more curiously, the amount of $280,000 was apparently provided to “Keith Hatzis”: affidavit, pars 4(f)(iii) and (v). No copy of any of the material described was annexed and the picture provided would seem to be incomplete.
The application for finance was described as including the following statements:
“A. his employer was Cresville Pty Ltd;
B.he had been employed by Cresville Pty Ltd for the previous 4 years and that he earned a gross income of $52,000 per annum;
C.the finance was to be secured over the property described in Item 2 of Schedule One hereto.”
There was no suggestion that he was not employed by Cresville Pty Ltd, nor that he had not been so employed for the previous four years, as at 30 May 2002, nor that the security would not be as promised in the application. The Police fact sheet suggested he worked for Condhook Pty Ltd, but his relationship with neither company was explored in the affidavit. The doubt appears to have related to the gross annual income stated of $52,000 per annum, which may, on the statement, have been current or may have been more broadly related to the previous four years. (That ambiguity may or may not have been present in the loan application.)
Five documents were apparently supplied to Interstar in support of the application including three documents which appear to have emanated from Cresville Pty Ltd indicating a gross income of $52,000. A fourth document described as “purporting to be an Australian Taxation Office payment summary” indicated a similar annual income for the year ending 30 June 2001. Whether this was a record created by the employer or by the ATO did not appear from the affidavit, to which no original documents, other than the NSW Police fact sheet for the irrelevant offences, was annexed.
A fifth document described as one “purporting to be a copy of an individual tax return for the year ending 30 June 2001 in the name Keith Hatsis” disclosed a similar taxable income. However, at paragraph 4(g), the authorised officer stated that information from the ATO provided on 4 August 2006 revealed that although Cresville Pty Ltd had lodged an income tax return for the year ended 30 June 2000, no income tax returns had been lodged under any of the names used by the claimant for the years ended 30 June 2000 to 30 June 2006. That information would indicate that the document had not been lodged, but there was no indication as to when it was prepared, and the implication that it was not intended to be lodged may have been available, but weakly, when it was provided to Interstar with the application dated 30 May 2002.
It could also be inferred that the statements from Cresville Pty Ltd may have overstated the claimant’s income because Cresville’s income tax return for the year ended 30 June 2000 declared a total salary and wage expense of $16,000. This, again, could give rise only to speculation as to the company’s wage bill for the following year. The ATO was said to have “conducted a limited review” of the taxation affairs of Cresville Pty Ltd at a date which must have been later than 30 June 2003, because the company apparently provided time and wage records for the period of 1 April to 30 June 2003 indicating that the claimant had worked during those 13 weeks for 40 hours per week at the rate of $10 per hour, that period being approximately 12 months after the first finance application.
On the basis of this material, it must be a matter of speculation as to what particular suspicion the authorised officer held in relation to the first finance application (if any, because none was identified), by reference to the material referred to in the affidavit (though not annexed) and the sections of the Crimes Act identified in paragraph 5 thereof, but without particularizing any specific offence.
The second finance application was dated 25 November 2002. The references to his employer and to his gross income were the same as in the former application, but in addition it was stated that “he received rental income of $91,000 per year”. Again there were three payslips from Cresville, indicating that in October and November 2002 he was receiving hourly pay at the rate of $25 per hour and annual pay of $52,000. The same individual tax return was attached and a document purporting to be an ATO “payment summary for the year ending 30 June 2002”, with identical figures to the one for the year ending 30 June 2001, which was attached to the first application.
In short, there were Cresville records consistent with the loan applications and Cresville records which, at least by implication, seemed to reveal a different picture. Which records the authorised officer suspected of being false or misleading was not stated.
The affidavit further noted that the second finance application appeared to have been approved “on 28 November 2003”, although that must have been a mistake for 28 November 2002 and that the amount of $372,000 was provided on 20 January 2003, to assist with the property purchase on 4 February 2003, on which a mortgage was registered in favour of Interstar.
It might more broadly have been suspected that the claimant overstated his income on the finance applications: see above at [27]. However, that suggestion is implausible. Annexed to the affidavit was the New South Wales Police fact sheet, which, it will be recalled, indicated that his income, in September 2006 was “approximately $700 per week and he pays $1,800 per week in mortgage”. Stating his income in that form suggests that the mortgage payments were treated as a business expense. Nevertheless, it is apparent that he had funds available to him in September 1996 which the police were prepared to treat as income for the purposes of explaining his financial position to a court, in the order of $130,000 per year.
It should also be noted that the second finance application revealed “rental income” received of $91,000 per year which was not referred to in the first application, produced six months earlier. There is nothing in the affidavit to suggest that that claim was false. Such an income flow would approximate to $1,750 a week, which is a little under the figure indicated by the New South Wales Police fact sheet as his mortgage payments. Finally, it should be noted that there is no suggestion in the affidavit that, four years after taking out the two loans, he had been unable to meet the repayments.
A different suspicion of falsity may have arisen from the implication that although he was employed by Cresville and, although he had income at least of the same order as that stated in the loan applications, the loan application was false in two subsidiary respects. The first was that he did not receive the stated amount of money by way of salary from Cresville Pty Ltd; the second is that while he purported to have declared such an income to the ATO, or at least to have intended to do so, there were grounds for thinking that he had not done so and did not intend to do so.
In relation to the Cresville records, those he supplied with the loan applications were consistent with the statements contained in the loan applications. The inconsistency arose from two documents, the first being the company’s tax return for the year ending 30 June 2000 in which the company declared it had total salary and wage expenses of $16,000. Whether or not that was inconsistent with the loan applications depended upon whether the summary in the affidavit indicated that the claimant had been employed by Cresville for four years with a current income of $52,000 or had been employed for four years with a gross income in each year of $52,000 per annum. The affidavit was clearly ambiguous in this respect and the loan applications were not annexed. If that element of falsity had been relied upon by the authorised officer, one would have expected him to make the element of falsity unambiguously clear as a ground of his suspicion. If an inconsistency were established, the authorised officer should have indicated which he suspected of being false or misleading.
The second set of records provided by Cresville and relied upon by the authorised officer were time and wage records for a period in April-June 2003 in name of Keith Hadjigeorgiou indicating that he worked 40 hours per week at the rate of $10 per hour. However, this was for a period some months after the second of the two loan applications and nothing is known about the business or profitability of Cresville. If the inference were drawn by the authorised officer that this information indicated that the statements as to earlier income sourced to Cresville were false or misleading, one would have expected him to say so.
Finally, there is the possible reliance on the tax return which was not filed. That return is not annexed to the affidavit and the authorised officer did not rely upon its date. If it had been prepared contemporaneously with the first loan application, it might be difficult to infer that there was no intention to lodge it. If it had not been lodged six months later, in November 2002, the inference that it was not intended to be lodged would be stronger. However, it is not suggested that there was any statement in the loan applications that the document had been lodged and an alternative inference from the affidavit was that it accompanied the loan application as a means of showing assessable income and deductible expenses in a standardised form. There is no indication as to what other income may have been disclosed, nor what expenses may have been claimed. If the instrument was thought to be a “false instrument” because it purported to be something which it was not, it might have been expected that that would be stated. If the instrument contained a statement which was false or misleading in a material particular, that also might have been expected to be stated.
Proper approach for Court on application
In determining the correct approach to the function of the Court under s 10 of the Criminal Assets Recovery Act, the claimant placed emphasis upon two related factors. The first was the potential prejudice which could be caused by a restraining order, made ex parte, on the rights of a property holder, who had not been convicted, or even charged with any crime. Secondly, those circumstances, it was said, engaged the principles in relation to statutory construction articulated in the search warrant cases, such as George v Rockett (1990) 170 CLR 104.
It used to be an unchallenged approach to statutory construction that legislation does not “overthrow fundamental principles, infringe rights, or depart from the general system of law, without expressing its intention with irresistible clearness”: see Potter v Minahan (1908) 7 CLR 277 at 304 (O’Conner J). However, as noted by McHugh J in Malika Holdings Pty Ltd v Stretton (2001) 204 CLR 290 at [28]-[30], that principle may be overstated in modern terms. It has its strongest application in what may be described as “fundamental principles” and in particular fundamental human rights: any general presumption against interference with common law rights is relatively far weaker: see also Gifford v Strang Patrick Stevedoring Pty Ltd (2003) 214 CLR 269 at [36] (McHugh J). Furthermore, as McHugh J noted in Malika at [28], “care needs to be taken in declaring a principle to be fundamental”. Different considerations may arise where the intrusion on general law protections appears to come about incidentally to the main purpose of the legislation: Balog v Independent Commission Against Corruption (1990) 169 CLR 625, 635-6.
The second step in the claimant’s argument relied upon the passage in George v Rockett set out above at [18]. In particular, counsel adopted the passage in the judgment of Kitto J in Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266, set out in the joint judgment in George at 115-116. Thus Kitto J said at p 303:
“A suspicion that something exists is more than a mere idle wondering whether it exists or not; it is a positive feeling of actual apprehension or mistrust, amounting to ‘a slight opinion, but without sufficient evidence’, as Chambers’s Dictionary expresses it. Consequently, a reason to suspect that a fact exists is more than a reason to consider or look into the possibility of its existence.”
There are three points to be made in relation to these submissions. The first is that the Criminal Assets Recovery Act is, in its operative provisions, and relevantly for present purposes, expressed with a degree of clarity which leaves little doubt that the legislation effects a major intrusion on the property rights of those affected. It must be given effect according to its terms.
Secondly, the remarks of Kitto J in Queensland Bacon were concerned with reason to suspect a particular state of facts, namely whether a particular debtor “was unable to pay his debts as they became due”, as provided in s 95(4) of the Bankruptcy Act 1924-1960 (Cth). The test may need to be expressed in slightly different terms in relation to more complex states of affairs, which include both questions of fact and questions of law. That was true also in the case of the power to issue a search warrant conferred by s 679 of The Criminal Code (Qld), the terms of which were in issue in George v Rockett. Importantly, the grounds which need to be identified in the supporting documentation must relate not only to the existence of relevant facts, but also to the commission of a particular offence.
Thirdly, in many provisions allowing for the issue of a search warrant, of which s 679 of the Criminal Code considered in George v Rockett is an example, the reasonable suspicion required for the exercise of power is that of the justice or other officer issuing the warrant. The importance of this last point should not be underestimated: it is the suspicion of the authorised officer which not only engages the power but also mandates that the order be made. The Court is required to act on a stated suspicion subject to the Court considering that the matters contained in the affidavit provide reasonable grounds for any such suspicion.
The critical question in the present case is the degree of precision with which a suspicion must be stated. As noted by Burchett J in Beneficial Finance Corporation v Commissioner of Australian Federal Police (1991) 31 FCR 523 at 533, a case dealing with a search warrant, in a passage cited with approval by Callinan and Crennan JJ in State of New South Wales v Corbett [2007] HCA 32 at [99]:
“The authorities make it clear that the statement of the offence in a search warrant need not be made with the precision of an indictment. … The appropriate contrast is not with the sort of error which might vitiate an indictment, but with the failure to focus the statutory suspicion and belief upon any particular crime, with the result that a condition of the issue of the warrant is not fulfilled, and it purports to be a general warrant of the kind the law decisively rejected in the 18th century.”
In George v Rockett, the sworn complaint put before the magistrate identified with precision the material for which search was to be made, the reasons for thinking the material was on the identified premises and the date and place of the commission of a specified offence, in that case perjury, including reference to the material particular of the evidence which was said to be false. The affidavit in the present case provided no such specificity in relation to the suspicion held by the authorised officer.
The purpose for setting out above the details of the affidavit is not to demonstrate that there could have been no reasonable grounds for suspecting that the claimant had committed any offence, but rather to demonstrate that there were a number of documents which might, in various ways, have been suspected of being false or misleading in a material particular, for the purposes of s 178BB of the Crimes Act. The same can be said in relation to the possibility that one or more documents may have been suspected of being an instrument known to be false for the purposes of s 300(2). Similarly, there were various respects in which a suspicion might have arisen that the claimant had been involved in “deception” for the purposes of s 178BA. Because it was not the function of the judge to formulate a state of satisfaction in regard to a particular matter of suspicion, the affidavit needed to set out, in reasonably precise and unambiguous terms, the offence or offences the subject of suspicion on the part of the authorised officer and the particular grounds relevant to each suspected offence. It is not suggested that any particular element of imprecision would, taken alone, lead to invalidity: rather, it is the cumulative effect of the uncertainties and ambiguities which prevent identification of the actual suspicion entertained by the authorised officer.
As appears from the discussion in relation to paragraphs 9 and 10 of the affidavit, the authorised officer may have had a suspicion that interests in property were held in a false name, for the purpose of sub-s (2AA), although that provision was not specifically invoked, because otherwise those paragraphs of the affidavit might have been thought to be irrelevant. There is nothing in the order made by the primary judge which demonstrates whether his Honour relied upon paragraphs 9 and 10, or paragraphs 5 and 6, and if the latter which aspects of paragraph 4 he considered to be reasonable grounds for what particular suspicion.
One further aspect of the application should be noted. Pursuant to s 10(9) a restraining order will cease to have effect unless within two days of the commencement of its operation an application is made, relevantly, for a “proceeds assessment order”. Such an order was sought in the summons seeking the restraining order, in the following terms:
“6.An order pursuant to section 27 of the Criminal Assets Recovery Act 1990 that Keith Hadjigeorgiou (also known as Keith Hatsis, Keith Hatzis, Keith Andreou and Kleanthis Andreou) pay to the Treasurer an amount assessed by the Court as the value of the proceeds derived from the illegal activities of Keith Hadjigeorgiou … that took place not more than six (6) years before the making of this application.”
It may be that paragraphs 9 and 10 of the affidavit were intended to support an order in those terms. However, that hypothesis is not entirely plausible, because the basis of such an order is the Court’s assessment of the value of proceeds “derived by the person from an illegal activity, or illegal activities”: s 27(1). Section 27(1), (2) and (3), provide:
“27 Making of proceeds assessment order
(1)The Commission may apply to the Supreme Court for a proceeds assessment order requiring a person to pay to the Treasurer an amount assessed by the Court as the value of the proceeds derived by the person from an illegal activity, or illegal activities, of the person or another person that took place not more than 6 years before the making of the application for the order, whether or not any such activity is an activity on which the application is based as required by subsection (2) or (2A).
(2)The Supreme Court must make a proceeds assessment order if the Court finds it to be more probable than not that the person against whom the order is sought was, at any time not more than 6 years before the making of the application for the order, engaged in:
(a)a serious crime related activity involving an indictable quantity, or
(b)a serious crime related activity involving an offence punishable by imprisonment for 5 years or more.
…
(3)A finding of the Court for the purposes of subsection (2) or (2A) need not be based on a finding as to the commission of a particular offence or a finding as to any particular quantity involved, and can be based:
(a)on a finding that some offence or other constituting a serious crime related activity and punishable by imprisonment for 5 years or more was committed, or
(b)on a finding that some offence or other constituting a serious crime related activity was committed involving some quantity or other than was an indictable quantity.”
The relevance of this material for present purposes is that, on the contention as to jurisdiction accepted above, the restraining order was to be treated as an interlocutory order for the purpose of proceedings which sought the making of a proceeds assessment order. The application under s 27 was not dealt with at the time that the restraining order was made, but it gives further weight to the importance of the authorised officer identifying the serious crime related activity on which he sought to rely.
The failure to put before the Court full information as to the material placed before Interstar in relation to each of the loan applications makes it difficult to know whether the authorised officer suspected the claimant of obtaining a secured loan, dishonestly, by some form of deception, for the purposes of s 178BA of the Crimes Act. Similarly, it is unclear whether he held a suspicion that the claimant had sought to obtain a loan secured over real property, by some statement which was false or misleading in a material particular. Indeed, to know whether such a suspicion could arise, one might wish to know the full extent of the material placed before Interstar and whether the company thought that it had provided the loan as a result of deception or a false or misleading statement. There would be a certain irony in the Commission obtaining an order that a person pay to the Treasurer an amount equal to the value of property purchased with finance provided by a lender who relied upon the property as security for the loan: c.f. s 25 in respect of an assets forfeiture order. There is a further irony where the Commission seeks a restraining order preventing the borrower from making payments to the lender from his or her bank accounts, as occurred in the present case.
These matters do not cast doubt on the fact that the Parliament has authorised such orders to be made: rather, when combined with the absence of discretion in the Court to determine whether a restraining order should be made or not and, indeed, whether a “proceeds assessment order” under s 27(2) should be made or not, the importance accorded to the suspicion of the authorised officer is accentuated. The need for that suspicion to be stated with adequate particularity for the Court to assess whether it is supported by reasonable grounds, based on the material set out in the affidavit, is reinforced.
Conclusions
In these circumstances, the affidavit of the authorised officer was inadequate to provide the relevant foundation for a restraining order under s 10, because the deponent’s suspicions were not stated with adequate precision to allow a view to be formed as to what those suspicions were, which was a necessary preliminary to consideration of whether there were, in the material contained in the affidavit, reasonable grounds for any such suspicion. The restraining order should thus not have been made, the power (and obligation) to make such an order not having been engaged, because the affidavit in support of the application did not satisfy the requirements of s 10 of the Criminal Assets Recovery Act. Order 1 should be set aside.
The draft notice of appeal challenged not only the restraining order made on 15 September 2006, but also orders 2-6 made pursuant to s 12(1) of the Criminal Assets Recovery Act. Those orders are described in s 12(1) as “ancillary orders”, which may be made by the Court “when it makes a restraining order or at any later time”. Once the restraining order is set aside, it follows that the power to make orders under s 12(1) was not engaged and those orders should also be set aside.
The primary judge ordered that the costs of obtaining orders 1-6 be “costs in the cause”: see order 7. Because the orders were made ex parte, the relevant costs will only be those of the Commission. The orders having been set aside, there is no reason why the costs order should not also be set aside.
Order 8 was directed only to the date on which the orders were to take effect and accordingly must fall if orders 1-7 are set aside. The result of a successful challenge to the restraining order must therefore be that all of orders 1-8 made by the primary judge on 15 September 2006 should be set aside.
Accordingly, I would propose the following orders:
(1)Extend the time for filing an ordinary summons for leave to appeal against the decision of Sully J in the Common Law Division until 4 May 2007.
(2) Grant leave to appeal.
(3)Direct that the draft notice of appeal lodged in support of the application be filed and served within seven days.
(4)Set aside orders 1-8 made by the Supreme Court on 15 September 2006.
(5) Order that the Opponent pay the Claimant’s costs in this Court.
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LAST UPDATED: 29 August 2007
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