Hu v Director of Public Prosecutions - [2017] SASC 46

SUPREME COURT OF SOUTH AUSTRALIA
(Appeals to a Single Judge: Permission to Appeal)
HU v DIRECTOR OF PUBLIC PROSECUTIONS
[2017] SASC 46
Judgment of The Honourable Justice Bampton
30 March 2017
CRIMINAL LAW - PROCEDURE - CONFISCATION OF PROCEEDS OF CRIME AND RELATED MATTERS - RESTRAINING OR FREEZING ORDER - WHAT PROPERTY
Mr and Ms Hu owned property at Toorak Gardens as joint tenants. Mrs Hu transferred her interest to Mr Hu in October 2015, for consideration expressed to be “Nil. Love and affection”. Mrs Hu is alleged to have committed serious drug offending in December 2015. On the application of the Director of Public Prosecutions, the Chief Judge made a restraining order pursuant to s 24 of the Criminal Assets Confiscation Act 2005 (SA) (the Act) ordering that Mr and Mrs Hu’s interests in the property and a Honda sedan must not be disposed of or otherwise dealt with by any person.
Mr Hu sought permission to appeal the Chief Judge’s order – whether the Court had the power to make the restraining order – whether the property was subject to the effective control of Mrs Hu pursuant to s 24(5)(a)(ii)(A) of the Act – whether Mr Hu’s interest should be excluded from the restraining order.
HELD:
1. Permission to appeal granted.
2. The Court was empowered to make the restraining order as the interest transferred to Mr Hu was still subject to the effective control of Mrs Hu pursuant to s 6(1)(d) of the Act.
3. Appeal allowed for the purposes of varying the order of the Chief Judge pursuant to s 40 of the Act to exclude Mr Hu’s interest in the property from the restraining order.
Criminal Assets Confiscation Act 2005 (SA) s 3, s 6, s 24, s 26, s 34, s 76, s 78; Supreme Court Civil Rules 2006 (SA) r 288(1)(a)(ii); Controlled Substances Act 1984 (SA) s 32(3), referred to.
DPP v Le (2007) 15 VR 352; DPP (Vic) v Le (2007) 232 CLR 562, applied.

HU v DIRECTOR OF PUBLIC PROSECUTIONS
[2017] SASC 46
Appeal to a single Judge

BAMPTON J: Dada Hu’s wife, Gian Hue Hu, is charged on a Magistrates Court Information dated 3 February 2016 with five counts of trafficking contrary to s 32(3) of the Controlled Substances Act 1984 (SA). Counts 1 and 2 are alleged to have been committed at Kilkenny on 10 December 2015 and counts 3, 4 and 5 are alleged to have been committed at Norwood on 11 December 2015.
The Hus married on 8 September 1990. On 30 September 1997, Mr and Mrs Hu purchased land described as the whole of the land comprised in Certificate of Title Register Book Volume 1189 Folio 27 (“the property”). By reference to the memorandum of transfer registered on 30 September 1997, Mr and Mrs Hu are recorded as the transferees holding the property as joint tenants.
On 22 October 2015, Mrs Hu transferred her interest in the property to Mr Hu with the consideration for the transfer expressed as “Nil. For love and affection”.[1] Upon registration of the transfer, Mr Hu became the sole registered proprietor of the property.[2]
[1] Memorandum of Transfer dated 22 October 2015.
[2] Affidavit Michael Wilson sworn 10 August 2015.
By application dated 22 August 2016 (“the application”), the Director of Public Prosecutions (“the Director”) sought a restraining order pursuant to s 24 of the Criminal Assets Confiscation Act 2005 (SA) (“the Act”) over the property and a black Honda sedan S835AND (“the vehicle”) registered in Mr Hu’s name.
On 30 September 2016, the Chief Judge of the District Court, upon the Director giving an undertaking as to damages as required by s 26 of the Act, made a restraining order ordering that Mr and Mrs Hu’s interest in the property and the vehicle must not be disposed of or otherwise dealt with by any person (“the restraining order”).
Mr Hu, who is not charged with any offence nor suspected of having committed any offence, sought permission to appeal against the restraining order. On 16 December 2016, noting the Director neither consented to nor opposed the granting of permission to appeal, pursuant to r 288(1)(a)(ii) of the Supreme Court Civil Rules 2006 (SA), I gave permission to Mr Hu to appeal. Permission to appeal is required as the order made by the Chief Judge is an interlocutory order.
Background
In the affidavit of Detective Brevet Sergeant Michael Wilson sworn on 10 August 2016 and filed in support of the application, Mr Wilson deposes to the summary of evidence against Mrs Hu that he obtained from Senior Constable Trnovsky and the Police Incident Management System.[3]
[3] Mr Wilson deposes to Mrs Hu being apprehended on 12 December 2015 whereas the Magistrates Court Information records that the offending is alleged to have been committed on 10 and 11 December 2015.
The case against Mrs Hu is that she was allegedly observed dealing in heroin on two occasions at Kilkenny and three occasions in a car park at Norwood. The vehicle driven by Mrs Hu was searched and police allegedly found 30 small balloons suspected of containing heroin, two crystalline rocks wrapped in cellophane suspected of being heroin, eight resealable bags containing a crystalline substance suspected to be methamphetamine, $500 in cash, and three mobile phones. A search of the property was also conducted and police allegedly seized a large bag of coloured water balloons, similar to those suspected to contain heroin seized from the vehicle.
It is to be noted that the Information records Mrs Hu’s address as that of the property.
At a directions hearing prior to the hearing of the application, Mrs Hu’s counsel informed the Chief Judge that Mrs Hu did not wish to be heard on the application.
At the hearing of the application, counsel for Mr Hu submitted that the restraining order that should be made was an order that the interest that Mr Hu obtained when Mrs Hu’s interest was transferred to him on 22 October 2015 must not be disposed of or otherwise dealt by any person. It was submitted that s 24 of the Act does not permit the restraint to be made in the terms sought by the Director.
The terms of the restraining order made by the Chief Judge was in the terms sought by the Director as follows:
Pursuant to the Criminal Assets Confiscation Act 2005 there be an order (hereinafter referred to as “the Restraining Order”) that the defendants’ interest in the following property must not be disposed of or otherwise dealt with by any person except as specified in paragraph 3:
(a) the property situated at 128 Kensington Road, Toorak Gardens, in the State of South Australia, being the whole of the land comprised and described in Certificate of Title Volume 5447 Folio 642;
(b)the black 2012 Honda sedan - Registration Number S835AND - VIN # JHMFB2650CS204520.
Submissions on appeal
In his notice of appeal, Mr Hu seeks that the appeal be allowed and that the restraining order be quashed insofar as it concerns his interest in the property.
Mr Hu cites three grounds of appeal. Firstly, that the restraining order, insofar as it purports to apply to his entire interest in the property, is ultra vires. Secondly, that the Chief Judge erred by not identifying what part of his interest in the property was capable of being subject to a restraining order before he made the order, and erred by not restraining only dealings with that interest. The final ground of appeal is that the making of the restraining order was not supported by the evidence.
Prior to the hearing of the appeal, Mr Hu conceded that the part of his interest in the property that comprised Mrs Hu’s former interest as joint tenant could be subject to a restraining order. However, at the hearing of the appeal Mr Hu submitted that the property as specified in the terms of the application could not be subject to a restraining order at all.
The question for determination in this appeal concerns the proper meaning of the word “property” within the context of s 24(5)(a)(ii)(A) of the Act, which provides that the Court may only specify property in a restraining order if satisfied there are reasonable grounds to suspect that the property is subject to the effective control of the suspect.
Section 24(1) of the Act provides that:
(1)A court must, on application by the DPP, make an order (a restraining order) that specified property must not be disposed of or otherwise dealt with by any person (except in the manner and circumstances, if any, specified in the order) if satisfied that—
(a) a person has been convicted of, or has been charged with, a serious offence, …
There is no dispute that Ms Hu has been charged with serious offending.
Mr Hu submits that it is then necessary to consider s 24(4), which provides that where the Court makes an order that specified property not be disposed of, subject to subsection (5) and Division 3, the Court must specify in the restraining order all property specified in the application for the order. The Court’s specification of property in a restraining order is thus dependent on the manner in which the Director has identified or specified the property. Mr Hu contends that the application did not specify the property as being the physical land. Rather, it specified the property as being the “defendant’s interest in the following property”.
Mr Hu argues that the Court was limited to making an order with respect to the interest in the land, not the land itself.
Definition of “property”
Section 3(1) of Act defines property as follows:
property means real or personal property (tangible or intangible) including—
(a)     a chose in action; and
(b)     an interest in property;
An interest in property is then further defined in s 3(1):
interest, in relation to property or a thing, means—
(a)     a legal or equitable estate or interest in the property or thing; or
(b)     a right, power or privilege in connection with the property or thing,
whether present or future and whether vested or contingent;
Mr Hu submits that his interest in the property now encapsulates his own interest in the property that had never been subject to the effective control of Mrs Hu, as well as the interest he received in October 2015. The two interests now held by him are not the same interest as that which was held by Mrs Hu and which was transferred to him. This means the specified property cannot be subject to a restraining order because it is not under the effective control of Mrs Hu.
Effective control
The circumstances in which a restraining order can be made over property or interests in property are limited by s 24(5) of the Act, the relevant passages of which state:
(5)The court may only specify property in a restraining order made under subsection (1)(a) ... if satisfied that there are reasonable grounds to suspect that the property is —
(a) in the case of a restraining order made under subsection (1)(a) … —
…
(ii)property of another person (whether or not that other person’s identity is known) that —
(A)is subject to the effective control of the suspect; …
Section 24(5) relevantly provides that the Court may only specify property in a restraining order if satisfied that the property is property of another person that is subject to the effective control of the suspect. The meaning of “effective control” for the purposes of the Act is proscribed in s 6 in the following terms:
(1)For the purposes of this Act, the following principles apply when determining whether property is subject to the effective control of a person:
(a)     property may be subject to the effective control of a person whether or not the person has an interest in the property;
…
(d)     if property is initially owned by a person and, within 6 years (whether before or after) of an application for a restraining order or a confiscation order being made, is disposed of to another person without sufficient consideration, then the property is taken still to be subject to the effective control of the first person;
(e)     property may be subject to the effective control of a person even if one or more other persons have joint control of the property.
(2)In determining whether or not property is subject to the effective control of a person, regard may be had to—
(a)     shareholdings in, debentures over or directorships of a company that has an interest (whether direct or indirect) in the property; and
(b)     a trust that has a relationship to the property; and
(c)     family, domestic and business relationships between persons having an interest in the property, or in companies of the kind referred to in paragraph (a) or trusts of the kind referred to in paragraph (b), and other persons.
Section 3 of the Act defines sufficient consideration as follows:
sufficient consideration, in relation to an acquisition or disposal of property, means consideration that is sufficient and that reflects the value of the property, having regard solely to commercial considerations;
Mr Hu concedes that, in accordance with s 6(1)(d), Mrs Hu could be deemed to have effective control over the property as she initially owned the property and the property was disposed of to him for the insufficient consideration of “love and affection” within six years of the application being made.
Mr Hu contends that an application:
·relying on the deemed effective control of a suspect over property pursuant to s (6)(1)(d) of the Act, and
·identifying the specified property to be restrained as his interest in the land,
could only be successful if the interest which he held at the time the application was made was the same interest that had been held by Mrs Hu before the transfer.
Mr Hu explains that if Mrs Hu had owned the land as sole proprietor and then transferred it to him as sole proprietor, an order could have been made that his interest not be disposed of or otherwise dealt with, because his interest was the same as the interest which was transferred. In this matter, he argues that, as he and Mrs Hu had been joint tenants, what was transferred to him was in effect only a part interest in the property.
Mr Hu submits that the Director specified the property in the application as Mr Hu’s interest as a sole proprietor gained after the transfer. He argues this is an interest which is not and never has been subject to the effective control of Mrs Hu, who only ever possessed an interest in the land as a joint tenant and never had ownership as a sole proprietor of the estate in fee simple.
Mr Hu contends that the Court could not therefore be satisfied that there were “reasonable grounds” under s 24(5)(a)(ii)(A) of the Act to suspect that the specified property, being Mr Hu’s interest as a sole proprietor, was subject to Mrs Hu’s effective control. The effective control of Mrs Hu under s (6)(1)(d) of the Act is required to enliven the Court’s power to specify property and make a restraining order. Without reasonable grounds to suspect Mrs Hu’s effective control over Mr Hu’s interest in the property, a restraining order could not be made. At best, Mr Hu asserts, the deeming provision in s 6(1)(d) can deem Mrs Hu to have effective control over her previous interest as a joint tenant, but no more than that.
Mr Hu argues that the Chief Judge was incorrect in finding that he did not need to determine if the whole of the defendant’s interest was capable of being restrained. The Chief Judge needed to be satisfied that the whole of the interest could be restrained before he could make an order in those terms, but, on Mr Hu’s argument, he could not be satisfied of that because Mrs Hu did not have effective control of the property.
The specified property
Mr Hu concedes that pursuant to the definition in s 3, “property” can mean both land and an interest in land for the purposes of s 24(1), s 24(2) and s 6(1)(d). He says, however, that whether it refers to the land itself or the interest in a restraining order depends on how it is defined in the application. The Director’s choice to identify the specified property in the application as an interest in the land means it must also be so defined in the context of s 6(1)(d). Mr Hu suggests that had the application specified the property as being the land itself as opposed to Mr Hu’s interest in the land, it is possible an order could have been sought effectively. However, by specifying the property as the defendants’ interest in the application, the order sought could not be validly made.
The consequences of the order
Mr Hu submits that the consequences of the order to him are serious. The terms of the restraining order wrongly prevent him from disposing of his entire interest in the property. Further, due to the operation of s 74 of the Act, which provides for the forfeiture of property subject to a restraining order to the Crown, his entire interest in the property is at risk of automatic forfeiture if Mrs Hu is convicted of any of the alleged offences. If that were to occur, the onus would be on him to make an application pursuant to s 76 of the Act to exclude his interest in the property from the forfeiture. The effect of the specification of the property in the restraining order is thereby said to place an unfair burden on him and to unlawfully prejudice his financial interests on a continuing basis.
Finally, he argues that as he is not suspected of committing any offence, his property rights should not be interfered with.
The Director’s submissions
The Director says that the application applies to the entirety of the property because the word “property” in the context of s 24(5)(a)(ii)(A) refers to both the physical property itself (i.e. 128 Kensington Road, Toorak Gardens) and the interest in that property (e.g., a joint tenancy). The meaning of the word “property” is not to be limited to the legal or equitable interests in the property. It extends to the physical property itself. The land at Toorak Gardens was thus subject to the effective control of Mrs Hu by the operation of the deeming provision of s (6)(1)(d) of the Act because she initially owned the physical land as joint proprietor.
The Director relies on the reasoning of the majority in DPP (Vic) v Le (“Le”),[4] where the High Court considered the meaning of “property” within the Confiscation Act 1997 (Vic) (“the Victorian Act”), a broadly analogous scheme to that established by the Act. Le concerned the question of whether an exclusion order could be made so as to exclude only the wife’s interest on a joint tenancy from automatic forfeiture where the relevant restraining order was directed at the physical property itself, an apartment registered in the joint names of a husband and wife. The majority of the High Court (Kirby and Crennan JJ, with whom Gleeson CJ relevantly agreed) found that:[5]
Far from distinguishing “property” as signifying only a thing or an object (eg, Blackacre) from “property” as signifying a “legal relationship with a thing” (eg, a joint tenancy), the definitions in s 3(1) indicate that the statutory meaning of property comprehends “property” in both manifestations.
The majority concluded that because the statutory meaning of “property” in the Victorian Act comprehends property in terms of physical property and legal or equitable interests in property, the Court is empowered to make orders in respect of both manifestations.
[4] (2007) 232 CLR 562.
[5] DPP (Vic) v Le (2007) 232 CLR 562, 585 at [81].
It is submitted that the interpretation of “property” in Le, encapsulating both the physical property itself (i.e. 128 Kensington Road, Toorak Gardens) and the interest in that property (e.g., a joint tenancy), is applicable to the analogous statutory definition of property found in s 3(1) of the Act. Applying this definition to s 24(5)(a)(ii)(A) of the Act in the context of s 6(1)(d), the Court is empowered to make orders in respect of both the physical property and the former joint proprietorship in that land, including Mrs Hu’s interest. While the factual scenario in Le is the inverse of the situation at hand,[6] the Director submits that this is of no consequence to the application of the principle that “property” is to be construed broadly.
[6] An apartment was registered in Mr Le’s name only. After being charged with drug offending, Mr Le conveyed to his wife a half-share interest in the apartment. Mr and Mrs Le became joint proprietors of the property. The consideration was stated in the transfer instrument to be “natural love and affection”.

Mr Hu submits in reply that caution should be exercised in relying too heavily on Le’s case because that case concerned an exclusion orders under the Victorian Act, whereas this matter concerns a restraining order and a very different factual situation.
The Director contends that the above construction of the word “property” in s 24(5)(a)(ii)(A) of the Act is supported by the fact that s 24(5)(a)(ii)(B) refers to property that is “an instrument of” the serious offence, with s 7(1)(b)(i) of the Act relevantly defining “instrument” to be property that is “used in, or in connection with, the commission of an offence”. As it is ordinarily physical property, rather than an interest in the property, that is used in the commission of offences, the Director asserts that the legislation evinces an intention for the word “property” in s 24 of the Act to extend to physical property.
The physical land may be deemed subject to the effective control of Mrs Hu because the property was initially owned by Mrs Hu as a joint proprietor of the land itself (and within the language of s 24(5)(a)(i), the physical land itself was at that time properly described as “property of the suspect”), it was disposed of to Mr Hu within the timeframe prescribed by s 6(1)(d) and without sufficient consideration.
The Director suggests that the construction of “property” he contends for is further supported by the fact that other provisions of the Act which expressly provide for circumstances where other persons have an interest in restrained property would be rendered otiose if “property” was not construed to include physical property. In particular, the Director points to s 34 of the Act, which empowers the Court to exclude specified property from the restraining order if satisfied of certain conditions, s 76, which empowers the Court to exclude particular property from automatic forfeiture if satisfied of certain conditions, and s 78, which empowers the Court to make certain orders in favour of Mr Hu if satisfied of certain conditions.
The Director submits that the function of the word “specified” in the legislation is to clearly identify and distinguish the property concerned. It does not operate, as counsel for Mr Hu submits, to distinguish it between the physical land and the interest in that land. The requirement that the property was clearly identified was achieved in the application by the reference to the property’s Certificate of Title. The form of the application, referring to Mr and Mrs Hu’s interests, does not, in the Director’s submission, control the substantive meaning of the term “property” as it otherwise appears in s 24 of the Act for the purposes of determining the application. As there were no other interests registered in the land (other than that of the mortgagee expressly excluded in paragraph 2 of the restraining order) the reference to Mr Hu and Mrs Hu’s interests in the application does not mean that the order is not, in substance, an order over the whole land.
The Director submits that the Chief Judge was not, as Mr Hu asserts, required to identify what part, if any, of his interest in the land could be restrained under s 24 of the Act because, notwithstanding the terms of the application, “property” in s 24 was not limited to the interests in the land and could extend to the whole of the physical land itself.
Analysis
Mrs Hu has been charged with serious drug offending. The Chief Judge was therefore mandated by s 24, subject to s 24(4), on the Director’s application to make an order that property specified in the application must not be disposed of or otherwise dealt with by any person.
Section 24(4) required the Chief Judge, subject to subsection (5) and Division 3, to specify in the restraining order all property specified in the application. Section 24(5)(a)(ii)(A) prescribed that the Chief Judge could only specify property in the restraining order made under subsection (1)(a), if satisfied that there were reasonable grounds to suspect that the property was the property of Mrs Hu or property of another person subject to her effective control. Division 3 provides for application to be made under s 35 or s 36 to exclude property from a restraining order. There is no evidence before me indicating any such application has been made.
Mr and Mrs Hu became the joint proprietors of the property in 1997. As joint tenants, Mr and Mrs Hu each held a moiety in the property.
Within six years of the date of the application, Mrs Hu disposed of her interest in the property to Mr Hu. The consideration stated in the transfer instrument is “Nil. Love and Affection”. Noting that Mr Wilson deposes in his affidavit that the value of the property is $1.2 million, Mrs Hu’s disposal of her interest in the property was, by virtue of s 6(1)(d), without sufficient consideration. Arguably Mrs Hu now has an equitable interest in the property which upon severance of the joint tenancy, is that of a tenant in common.[7]
[7] Peter Butt, Land Law (Thomson Reuters, 6^th ed, 2010) at [1458].
Adopting the following observation of Neave JA in DPP v Le[8] regarding an analogous definition of property in the Victorian Act, the definitions of “property” and “interest in relation to property” in s 3(1) of the Act, as set out in para [20] above, recognise:[9]
…that property is not a physical “thing” but is a bundle of rights which exists in relation to things – an “interest in property” is itself property. The terms “property” and “interest in property” are synonyms for each other.
[8] (2007) 15 VR 352.
[9] (2007) 15 VR 352 at [66].
Following the reasoning of Neave AJ, referred to with approval by the High Court in Le, when the definitions in s 3 are read into the words of s 24, s 24 reads:
(1)A court must, on application by the DPP, make an order (a restraining order) that specified real or personal property and any interest in such real or personal property must not be disposed of or otherwise dealt with by any person (except in the manner and circumstances, if any, specified in the order) if satisfied that—
…
(5)The court may only specify real or personal property and any interest in such real or personal property in a restraining order made under subsection (1)(a),(b) or (d) if satisfied that there are reasonable grounds to suspect that the property is—
(a) in the case of a restraining order made under subsection (1)(a) or (b)—
(i) property of the suspect; or
(ii) property of another person (whether or not that other person’s identity is known) that—
(A) is subject to the effective control of the suspect;
(Words in bold and emphasis added)
When s 24 is construed in this way and applied to the facts of this matter, the property in question is the property at Toorak Gardens, Mr Hu’s sole proprietorship in the property and Mrs Hu’s equitable interest in the property arguably held on trust by Mr Hu.
Accordingly, as prescribed by s 6(1)(d), the moiety in the property disposed of by Mrs Hu without sufficient consideration “is taken still to be subject to” her effective control. The Court could therefore be satisfied that there was, at the time of making the restraining order, “reasonable grounds to suspect” that the property is property of another person that is subject to the effective control of Mrs Hu. Therefore, the Chief Judge, being satisfied on the Directors application that:
·Mrs Hu has been charged with serious offence pursuant to s 24(1)(a), and
·that the interest in the property transferred to Mr Hu is under the effective control of Mrs Hu pursuant to s 24(5)(a)(ii)(A),
was, pursuant to s 24(5), permitted to specify the property and any interest in the property in the restraining order made under subsection (1)(a).
The final question is whether the restraining order should have excluded Mr Hu’s interest in the property. It is to be noted that the majority said in Le that:[10]
Had the wife’s initial application under s 20, for an exclusion from the restraining order, not been made out of time, there is no doubt the court had the power to confine the restraining order to the husband’s joint interest in the real property, if it took the view that the restraining order was not already so confined. Such an order would have resulted in a severance of the joint tenancy...
[10] (2007) 232 CLR 562 at [92].
As Mr Hu has not been convicted of or charged with a serious offence nor is he suspected of having committed a serious offence, it is my view that Mr Hu’s interest in the property should have been quarantined from the restraining order.
The reasoning of the majority in Le regarding orders excluding property from automatic forfeiture can, in my view, be translated to the application of the Act to the facts in this matter. Applying that reasoning, the Chief Judge was empowered to specify the interest to which the restraining order would apply, and exclude Mr Hu’s interest in the property from the order.
I have concluded that the restraining order should only apply to the interest in the property arguably held on trust for Mrs Hu by Mr Hu by virtue of the operation of s 6(1)(d) of the Act.
Conclusion
I allow the appeal for the purposes of varying the order of the Chief Judge pursuant to s 40 as follows.
I order that the interest of Mr Hu in the property at 128 Kensington Road, Toorak Gardens described in Certificate of Title Register Book Volume 1189 Folio 27 be excluded from the restraining order.
I will hear the parties regarding the need to make a declaration regarding the nature of Mr Hu’s interest.