International Finance Trust Company Limited & Anor v New South Wales Crime Commission & Ors

[2009] HCATrans 108

[2009] HCATrans 108

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S72 of 2009

B e t w e e n -

INTERNATIONAL FINANCE TRUST COMPANY LIMITED

First Applicant

IFTC BROKING SERVICES LIMITED

Second Applicant

and

NEW SOUTH WALES CRIME COMMISSION

First Respondent

THE BENEFICIAL OWNERS OF VARIOUS BANK AND SHARE TRADING ACCOUNTS

Second Respondent

THE BENEFICIAL OWNERS OF ANZ NATIONAL BANK LIMITED ACCOUNT NUMBER 201980-AUD-01 IN THE NAME OF CETERIS PARIBUS

Third Respondent

FRENCH CJ
GUMMOW J
HAYNE J
HEYDON J
CRENNAN J
KIEFEL J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 27 MAY 2009, AT 10.15 AM

(Continued from 26/5/09)

Copyright in the High Court of Australia

__________________

FRENCH CJ:   Yes, Mr Sexton.

MR SEXTON:   If the Court pleases, by way of conclusion in relation to the question of the construction of section 10 of the legislation, can I take your Honours to the way in which that matter was considered by the judges of the Court of Appeal?  It is page 147 of the appeal book.  Your Honours will see there in paragraph 2 that the President, with whom Justice Beazley agreed, says that he agrees with the Chief Judge at Common Law’s comments about the Commission’s entitlement to have an ex parte hearing should it choose to move in that manner, and then just towards the end of that paragraph he speaks of the Commission’s ability to apply to the court ex parte and implicitly to have the application dealt with on the basis of the application as made.  As we noted yesterday, normally following the line of authority ‑ ‑ ‑

GUMMOW J:   This use of the word “entitlement” may misconstrue the section.  What the section is doing is creating a new jurisdiction and it is conferring standing upon a particular person.  The jurisdiction is of a particular character.  That is the primary question of construction, as we see it.

MR SEXTON:   Yes, your Honour.. When his Honour uses the word “implicitly” we would say that in a sense that is contrary to the line of authority that includes Tanos and subsequent cases because what they say is that one would normally need to expressly exclude the rules of procedural fairness and that our point is, of course, that that has not been done in this case which is why it is still open to the court to invite the other party in some circumstances, unlikely as they might be, to be present.  Your Honours, the same point was dealt with by Justice McClellan at page 185 of the appeal book. 

GUMMOW J:   Can anybody else apply to the Supreme Court?  No.

MR SEXTON:   No, your Honour.  I am told the Police Integrity Commission.

GUMMOW J:   Where does that come about?

MR SEXTON:   It is in the Police Integrity Commission legislation.

GUMMOW J:   Well, we better know about this. 

MR SEXTON:   We will just find out the relevant provision, your Honour.  In paragraph 103, his Honour Justice McClellan notes the submission that we made and then in 104 he says:

I do not accept this submission.  It seems to me that if the Commission elects to proceed ex parte the Court must hear that application and determine it in accordance with s 10(3).  Because the Court is required to determine the application once made there is no opportunity for it to require affected persons to be notified or heard before an order is made.

The important words in that second sentence are “once made”.  It is true, of course, we would say, that ultimately the court is required to determine the application in accordance with section 10, but not, we would say, immediately in the sense of being precluded from inviting the other party, the person affected, to be present if the court thinks that that is appropriate in the circumstances.  So the words “once made” there, we would say, really make an assumption that is not warranted from the section itself.  So that was the treatment of that issue in the court below, your Honours.

Now, I was just going to move briefly to the Queensland case, but perhaps because it is also slightly on that subject, Justice Hayne raised yesterday the provision of the English rules in terms of furnishing copies of the affidavits on which the application had been granted. The answer is that there is no equivalent provision in the New South Wales rules, although rule 10 of the Uniform Civil Procedure Rules 2005 provides that:

Unless the court orders otherwise, a party that files a document must as soon as practicable serve copies of the document on each other active party.

It does not really perhaps deal specifically with the ex parte situation.  My learned friend, Mr Temby, has prepared a note which refers to that provision and also to rule 36.15 which deals with a judgment of the court being set aside if it was made irregularly, illegally or against good faith.  I think that note has been provided to your Honours.

Now, to move to the Queensland Court of Appeal, your Honours were taken to that decision which is [2004] 1 Qd R 40 by Mr Gageler so I wanted to deal with it very briefly. As your Honours will be aware, we say that this decision has really been overtaken by later decisions of this Court in terms of the application of the Kable principle.  If I could just ask your Honours to note these paragraphs of the decision.  Paragraph [32], Justice Williams, with whom the other two members of the court agreed said that:

The question for the court is whether s 30, by commanding the court to hear the application for a restraining order in the absence of any interested party when the State elects to proceed without notice, so interferes with the essential character of the exercise of judicial power as to make the provision invalid.

Then in the following paragraph, [33], he refers to Hamilton in the House of Lords, but your Honours will see that that quote begins with a reference to the principles of natural justice.  What we would say is that one of the themes that runs through the judgment of Justice Williams is that this is a denial of natural justice of procedural fairness and that is the real problem about this piece of legislation, whereas, we would say that the decisions of this Court in relation to the application of the Kable principle take a different approach.

In paragraph [39] there is another reference to the denial of procedural fairness as being the particular problem, and then on the second‑last page of the judgment, paragraphs [56], [57] and [58], his Honour reaches his conclusions.  In [56] there is a reference to Liyanage v The Queen, we would say a slightly different principle - a direct interference with the judicial process, whereas Kable is about the conferring of a function on a court, so that that perhaps is an associated but a different proposition.  Then at the very end of [57] in a sentence that my learned friend, Mr Gageler, took your Honours to, he says that:

the provision directs the court to hear the matter in a manner which ensures the outcome will be adverse to the citizen and deprives the court of the capacity to act impartially.

That of course we would say is inconsistent with section 31 of the then Queensland legislation, which said that the order was to be made if the court was satisfied that there were “reasonable grounds for the suspicion on which the application” was based, and that the order was not to be made if it

was satisfied that it was not “in the public interest”.  In paragraph [58] there is, in a sense, the final conclusion where his Honour says that it is:

an interference with the exercise of the judicial process as to be repugnant to or incompatible with the exercise of the judicial power of the Commonwealth.

Again we would say that is not the test of recent decisions in this Court in relation to the application of the Kable principle because those decisions posit a test of a substantial impairment of the institutional integrity of the Court in question, usually the Supreme Court of the State.  In our submission, for a range of reasons, that decision is not one that would carry weight now with this Court. 

Finally, in relation to Justice Gummow’s question, as we understand it, the Police Integrity Commission Act deems the Police Integrity Commission to have the same rights to make applications under this legislation as the Crime Commission.  We are getting a copy of the relevant provision and we will provide it to your Honours.  Unless there is any other matters your Honours, those are our submissions.

FRENCH CJ:   Thank you, Mr Solicitor.  Solicitor‑General from Victoria. 

MS TATE:   May it please the Court.  We seek to address your Honours on three issues.  The first, the claim that section 22 of the Act exposes a person to punishment for a criminal offence without the protection of a criminal trial according to law.  This constitutes what is now relied upon by the appellants as a fourth ground to support their challenge based on the Kable doctrine and constitutes ground C of paragraph (20) of the appellant’s speaking notes. 

The second issue we will seek to address briefly is the scope of the statutory right of intervention under section 78A of the Judiciary Act.  The third issue is the issue of the construction of the Act.  In addressing this third issue, we will seek to respond to the question of the Chief Justice as to whether the task for the court under section 10(3) is confined to ascertaining whether there is a rational connection between the matters deposed to in the affidavit of the authorised officer and the officer’s suspicion. 

Might I turn then to the fourth ground for the Kable challenge.  This rests on the key proposition that it is not constitutionally permissible for forfeiture to be imposed by a court on a person by reason of that person’s criminal activity without that person first receiving the procedural safeguards of a criminal trial.  The objection to section 22 seems to be twofold.  First, that forfeiture is imposed by reason of a finding that the person has engaged in criminal activity and, second, that forfeiture is a form of punishment.  We contest both aspects of the objection and, in particular, we contend that forfeiture is not a form of punishment. 

It is our submission that the propositions for which the appellants contend are far reaching in their implications and are contrary to the authority of this Court.  We submit first that the implications are far reaching because the appellants’ submissions would ultimately lead to the proposition that neither the Commonwealth nor the State Parliaments can validly enact legislation providing for a civil forfeiture regime that is not based on the conviction of a defendant and in relation to which proceedings are brought which are civil in nature.  That is a regime that depends only upon proof to a civil standard and employs the rules of evidence applicable to civil proceedings and the rules of statutory interpretation applicable to civil proceedings.

GUMMOW J:   And does not involve a jury trial.

MS TATE:   Yes, your Honour, and does not involve a jury trial.  In particular, in relation to the New South Wales Act, if the appellants were successful on this ground, this would lead to much more than section 10(3) and section 22 being struck down.  As the Chief Justice queried yesterday, it would require the striking down first of all of section 5(1) which is the provision that provides:

For the purposes of this Act, proceedings on an application for a restraining order or a confiscation order are not criminal proceedings.

It would also, in our submission, require the striking down of section 5(2)(a), which is a section that provides:

the rules of construction applicable only in relation to the criminal law –

that is, where these provisions are to be strictly construed –

do not apply in the interpretation of the provisions of this Act –

Thirdly, it would require the striking down of section 5(2)(b), namely, that:

the rules of evidence applicable . . . criminal proceedings do not apply, to proceedings under this Act. 

It would also require, of course, the striking down of the operation of all the other sections of the Act that depend upon those definitions and those provisions.  Further, even with respect to the objects of the Act under section 3, there would be doubt as to whether section 3(a) which is:

to provide for the confiscation, without requiring a conviction –

and section 3(b1) which provides again:

confiscation, without requiring a conviction –

restraining orders, of course, being the first step in the process of obtaining a conviction order, whether these are improper objects of the Act.  We would say further that in relation to section 27(2), which is the section that provides for proceeds assessment orders rather than assets forfeiture orders, that section 27(2) would be said to be vulnerable to the same complaint as the complaint made in relation to section 22(2), namely, that it depends upon a finding only on the civil standard of criminal activity by a person.

We submit, moreover, that not only would there be far‑reaching implications with respect to the New South Wales Act itself, but it may be that there would be implications for the validity of the civil penalties regimes in other Acts and, indeed, from memory, Justice Hayne commented yesterday that there may be a query ‑ ‑ ‑

HAYNE J:   But are not the civil penalty regimes of other Acts buttressed about by provisions dealing expressly with the intersection between the civil and the criminal law in the sense that are there not provisions that if you are dealt with under the civil penalty regime, you are not thereafter to be dealt with by the criminal process for the same offence?  Or am I misremembering these matters?

MS TATE:   The civil penalty provisions vary, your Honour, and some of them, of course, do have express, for instance, use immunity provisions with respect to any information that is provided or any evidence that is provided.

HAYNE J:   But you begin by pointing to what you say is the breadth of consequence that follows.

MS TATE:   Yes, your Honour.

HAYNE J:   Be it so.  Let it be assumed that the consequence is as broad as you identify.  Why does that affect the validity or invalidity of the principle which is engaged?  That principle at root, if it is relevant, if it is right, is a principle about the intersection between civil and criminal law.

MS TATE:   Yes, your Honour.

HAYNE J:   In particular, an intersection reflected in abuse of process doctrines and the like. 

MS TATE:   Yes, your Honour.  It is simply our primary and not our principal submission but our submission, as it were, at first that it must be recognised that there would be far-reaching implications if it were to be the case that the appellant was successful.  That is not in itself a ground for saying that the appellant’s challenge is wrong, and indeed, your Honour, I will now proceed to make submissions as to why we consider and why we submit that indeed the appellant is wrong. 

We submit that the argument of the appellant on this fourth ground is indeed contradicted by the authority of this Court.  We contend that it is the purpose for which a finding is made that a person has engaged in criminal activity that determines whether the finding need be made in accordance with the criminal standard and criminal process.  In particular, we contend that whether the criminal standard applies depends upon the kind of orders which the proceedings seek, and in particular, whether the proceedings seek the conviction of the defendant for an offence. 

We submit that there are many permissible purposes for which a finding of criminal activity can be made on the civil standard and that forfeiture of the property of a person, where the property is derived from the commission of an offence, is such a permissible purpose.  As to permissible purposes, this Court in Helton v Allen (1940) 63 CLR 691 explicitly rejected the proposition that the criminal standard ‑ ‑ ‑

GUMMOW J:   What is the citation of Helton again?

MS TATE:   I am sorry, your Honour. It was 63 CLR 691. There the Court explicitly rejected the proposition that the criminal standard of proof is applicable whenever a court is determining whether a person has engaged in criminal activity.

GUMMOW J:   What was the issue in Helton v Allen?

MS TATE:   In that case, your Honour, the issue was a challenge to the appointment of the executor of a will and a question was stated for the Court and the question was in these terms, whether the defendant had unlawfully killed the testatrix.  It was found there, and it is made plain in the judgment of Justices Dixon, Evatt and McTiernan, and perhaps I could just give the reference at 709, 710 and 714, that the determination of that question was to be made on the civil standard the balance of probabilities. 

KIEFEL J:   Is that an order to determine whether they could benefit from the estate, the In re Crippen approach?

MS TATE:   Yes, your Honour.  It was for the purpose of determining whether the rule could be applied, the rule whereby somebody who has engaged in wrongdoing, whether or not they ought to be precluded from benefiting from any action which has involved that wrongdoing.  It was said that Mr Helton ought not to have been appointed as executor and ought not to have received any benefits under the will because he had been responsible for the unlawful killing of the testatrix.

GUMMOW J:   A similar sort of problem arises where the beneficiary has murdered the testator.

HAYNE J:   Run a murder trial on the affidavits, yes.

GUMMOW J:   The question is whether the beneficiary then holds the gift on some trust.

MS TATE:   Yes, your Honour.  It is a similar context.

GUMMOW J:   Back to the estate, yes.

MS TATE:   Of course, Helton v Allen has been followed in this Court and in particular in Rejfek v McElroy (1965) 112 CLR 517. In the unanimous judgment of Chief Justice Barwick, Justices Kitto, Taylor, Menzies and Windeyer – the Court there held that proof of facts amounting to the commission of fraud needed to be proved only upon the balance of probabilities where the fraudulent representations were relied upon in a civil proceeding for breach of contract seeking damages.

FRENCH CJ:   At a much more mundane level, if somebody assaults you and is acquitted you could sue them for assault.

MS TATE:   Yes, your Honour, there can be tortious actions brought arising from exactly the same facts and there will be determined ‑ ‑ ‑

FRENCH CJ:   That is how they got O.J. Simpson, was it not?

MS TATE:   Yes, your Honour, but they will be determined on the civil standard.  The Court made it clear in the Rejfek Case that in the absence of any statutory provision to the contrary then proof in civil proceedings of facts amounting to the commission of a crime is only to be made on the balance of probabilities.

Further, your Honours, if I could take your Honours to R v Smithers; Ex parte McMillan 152 CLR 447, which was one of the cases which your Honours invited us to consider in the letter from the Registrar, there the Court held that the Commonwealth Parliament could validly confer a power to determine on a civil standard that a person had engaged in a particular prescribed narcotics dealing before determining by way of assessment the benefits that were to be derived therefrom.

If I could take your Honours to page 482 where the terms of – this is a Customs Act contravention – it is the terms of section 243B(2)(a) and (b) are set out.  I think Justice Gummow remarked yesterday on the similarity of those provisions to the terms of the New South Wales Act but your Honours will see there that section (2) provided that:

If, in a proceeding instituted under sub‑section (1), the Court is satisfied that the person in relation to whom the order is sought –

(a)      has engaged in a particular prescribed narcotics dealing –

then the Court shall go on to assess the value of the benefits.  In subsection (3) it is made clear there that the provision in (2) was to be applied whether or not the person had been convicted of the offence.  The offences are spelt out under 243A(3) and your Honours will see there they include selling or agreeing to sell or dealing in narcotic goods and so on.

At page 485 point 4 their Honours were responding to the submission by the prosecutor, which is recorded at the bottom of page 484, the submission that 243B was not supported by the trade and commerce, nor by external affairs.  They say at about point 4 of page 485:

We do not agree.  It would be a legitimate exercise of the power – and this is conceded - to make it an offence to engage in dealing in narcotic goods, being prohibited imports, that have been imported in contravention of the Act and to impose severe penalties in respect of that offence.  Similarly it would be a legitimate exercise of the power to make that conduct the occasion for liability to a civil action for penalties of the traditional kind.  Section 243B, in providing for the imposition of pecuniary penalties of the class provided for in Div. 3, stands in no different position.  It penalizes dealings in narcotic goods that have been imported in contravention of the Act.  In so doing it constitutes a deterrent to importation in breach of the statutory provisions and provides a further sanction with a view to ensuring compliance with the statutory provisions governing importation.

HEYDON J:   In other words, that is the language of punishment.

MS TATE:  It is the language, your Honour, that is language which reflects a punitive character.  I will say something further about whether a sensible distinction can be drawn between punitive and non‑punitive, or whether that is a distinction which has a degree of instability about it, your Honour.  But what is acknowledged there is that there certainly can be a deterrent quality to the sanctions that are imposed and yet they can be imposed by way of liability to a civil action.

HAYNE J:   In that connection I should correct what I said earlier about the intersection between civil penalty procedures and criminal procedures.  So, for example, under the Corporations Act 1317P provides that:

criminal proceedings may be started against a person for conduct that is substantially the same as conduct constituting a contravention of a civil penalty provision regardless of whether . . . 

(b)      a pecuniary penalty order has been made against the person -

So the impression I had was, yet again, completely wrong.

MS TATE:   They are rather subject to amendment fairly frequently those things, your Honour.  But we submit then that there are permissible purposes that this Court has acknowledged as purposes for which a finding of criminal activity can be made on the civil standard.  We also say that forfeiture is such a permissible purpose.  It is a purpose for which there can be findings of criminal activity made on the civil standard.

We submit that forfeiture is a permissible purpose for three reasons.  First, the finding that a person has engaged in a serious crime‑related activity under the New South Wales Act does not amount to a conviction.  It does not amount to a determination that the person is guilty of a criminal offence.  So too the finding that a person had engaged in particular prescribed narcotics activity under the Customs Act was held implicitly not to amount to a conviction in Smithers.

Second, it is our submission that the criminal process and the criminal standard of proof need not be attracted unless the finding of criminal activity is made for the purpose of determining guilt constituting a conviction; that it is only when a conviction is sought that the criminal process and criminal standard is engaged.  In support of that view, might I take your Honours to the judgment of Justice Hayne in Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited (2003) 216 CLR 161 at paragraph 135 which is at page 205. Your Honour starts with a question about what the common law requires. It was a question involving whether section 4 of the Crimes Act or whether the common law applied:

What does the common law require?  Where what is sought is conviction of the defendant for an offence against a law of the Commonwealth, it must be strongly arguable that nothing short of proof beyond reasonable doubt will do.  If no conviction is sought, but other relief is (as, for example, a declaration that the defendant contravened identified provisions of the relevant Act coupled with orders for payment of monetary penalties), it must strongly arguable that, in proceedings conducted according to civil procedures, proof to the civil standard will suffice.  No doubt, in accordance with well‑established principle, if the civil standard were to be applied, “the nature of the issue [would] necessarily [affect] the process by which reasonable satisfaction is attained” and “exactness of proof [would be] expected”.

Those tentative conclusions do not depend upon attributing a description of “civil” or “criminal” to the proceedings as a whole or seeking to identify some “essential character” of the proceedings.  (By what process of distillation the “essential character” of proceedings could be revealed is not apparent.)  Rather, the conclusions proposed focus upon, and attach significance to, the kinds of orders which the proceedings seek.  In particular, proceedings are distinguished according to whether or not they seek the conviction of the defendant for an offence.

Then at paragraph 139 your Honour says:

Other criteria which might be used to distinguish between cases in which proof beyond reasonable doubt is necessary, and those in which it is not, are unhelpful.  Apart from attempting to classify proceedings as “civil” or “criminal”, the only other possible criterion advanced for consideration focused upon the penal consequences of Customs and Excise prosecutions.  But penal consequences (in the form of punitive damages) can follow from proceedings which, in all other respects, would ordinarily be referred to as civil proceedings and it has not hitherto been suggested that proof beyond reasonable doubt is necessary before that kind of relief is ordered.  Further, both federal and State companies legislation has provided for recovery of what are described as “civil penalties” on proof of the requisite matter to the civil standard of proof but the operation of those provisions did not, and does not, extend to proceedings for an offence.  Characterising particular forms of relief sought in proceedings as “penal” offers little or no assistance in deciding what standard of proof should be applied.

We rely on those passages, your Honours, to support the proposition that characterising a consequence of a proceeding as penal or punitive will not in itself be sufficient to determine what the appropriate standard of proof should be.

Indeed, your Honours, the notion that one can classify proceedings in a mutually exclusive way as either civil or criminal was considered to give rise to inherent difficulties in the case of Rich v ASIC (2004) 220 CLR 129 to which your Honour Justice Hayne drew attention yesterday. If I could refer your Honours to the plurality judgment at paragraph 32 which appears at 145. This is a judgment of Chief Justice Gleeson, Justices Gummow, Hayne, Callinan and Heydon. At paragraph 32 your Honour said:

the supposed distinction between “punitive” and “protective” proceedings or orders suffers the same difficulties as attempting to classify all proceedings as either civil or criminal.  At best, the distinction between “punitive” and “protective” is elusive.  That point is readily illustrated when it is recalled that, as McColl JA pointed out, account must be taken in sentencing a criminal offender of the need to protect society, deter both the offender and others, to exact retribution and to promote reform.

Then at paragraph 35 your Honour said:

That it may be possible to characterise proceedings as having a purpose of protecting the public is not determinative.  And to begin the inquiry from an a priori classification of proceedings as either protective or penal invites error.  It invites error primarily because the classification adopted assumes mutual exclusivity of the categories chosen when they are not, and because the classification is itself unstable.

Your Honours go on to say that to assume mutual exclusivity would be the same as to fall into the error of considering that a law can be characterised in only one way.  I apologise if there were not copies of those provided to all your Honours. 

HEYDON J:   I just observe, none of these cases are Kable cases.  The last one, for example, involves a distinction which we are not invited to analyse.  There is no problem here about a distinction between penal and protective things.  Thirdly, the submission I think began with a proposition that forfeiture is not a punishment and it seems to be turning into a submission that it is simply an intellectual mistake to try and analyse forfeitures as punishments or something else.  It is misleading.

MS TATE:   Your Honour, we make direct submissions on the question on whether forfeiture is a form of punishment and I will proceed to make those submissions now, your Honour, but we make those submissions as our third ground for arguing that it is a permissible purpose for which a finding of criminal activity can be made on the civil standard because forfeiture is not a form of punishment.  I accept, your Honour, that there is a need to make good that proposition.

FRENCH CJ:   When you say permissible, within what frame of reference are you assessing permissibility?  This is all tied back to the question whether these laws, these provisions so insult the institutional integrity of the Supreme Court that it comes within the Kable doctrine.

MS TATE:   Yes, your Honour.  The argument that is put against us is that because obtaining a restraining order depends upon a finding of criminal activity, there is a need for that finding to be made in accordance with the criminal process and in accordance with the criminal standard, and because that is not provided for under section 10, the regime undermines or compromises or is repugnant to the institutional integrity of the Supreme Court.  Our response to that is to say that that is not so.  It does not compromise the institutional integrity of the court because there is a recognition that a finding of criminal activity can be made on the civil standard.

FRENCH CJ:   That is because it has always been done.  It is an historical ‑ ‑ ‑

MS TATE:   In part historical, your Honour, but also because of the reasoning in those judgments that it is acknowledged that there can be permissible purposes for which the civil standard will apply.  It is our submission that it will all depend upon the orders that are sought in the proceeding, and if the proceeding seeks a conviction of the defendant, then the criminal process and the criminal standard will be attracted.  But if it falls short of that, then, in our submission, the civil standard can properly apply, in particular if forfeiture is not conceived as a form of punishment and I will address that proposition now.

HEYDON J:   These are very formal distinctions.  What is the difference between being convicted of serious crimes and a finding of the court on the balance of probabilities that you did those crimes and the suffering of heavy monetary consequences?  The world will think as badly of you in one case as the other.  Your chances of being a company director or conducting a profession are as low in one case as the other.

MS TATE:   Well, your Honour, the determination that a defendant is guilty of a criminal offence has been held to be the defining characteristic of what it is to amount to a conviction.  There are cases that consider whether somebody’s plea of guilty is tantamount to a conviction or whether it requires an acceptance by the court of that plea, and Justice Hayne considers some of those cases in the Labrador Liquor Case.  R v Tonks is one of the ones that deals with that general area of debate. 

But it would seem that ultimately what is certain is that if there is a determination by the court that a person is guilty of an offence, which, of course, then renders them liable to all the ordinary sentencing process, then that constitutes a conviction, and we rely upon that discussion by Justice Hayne.  If I could turn to the proposition that forfeiture is not a form of punishment and if I could take your Honours again to the Labrador Liquor Case 216 CLR 161, and in the judgment of Justice Gummow at paragraph 31 there is a reference to the question of when is a matter a penalty. At paragraph 31, his Honour says:

There is a long history in this field of distinction between forfeitures and penalties and it is reflected in these provisions of Pt XIV of the Customs Act.  The same is true of Pt X of the Excise Act, which, like Pt XIII of the Customs Act, is headed “PENAL PROVISIONS” and deals distinctly with forfeitures and penalties. One outcome of that history in the United States has been that in some decisions civil penalties such as fines have been distinguished from forfeitures so that the latter do not constitute punishments under the double jeopardy clause of the Constitution

Your Honour then refers to United States v Ursery at footnote 38.  In the Ursery Case, the Supreme Court concluded that forfeiture proceedings are in rem proceedings where it is, in effect, the property that is proceeded against and the property that is, in effect, held guilty and condemned, by contrast with a criminal prosecution in which the wrongdoer is proceeded against, convicted and punishment.  The forfeiture is held to be no part of the punishment for the criminal offence.  This is consistent with the decision relied upon by South Australia in its submissions of the United States Supreme Court in Calero-Toledo et al v Pearson Yacht Leasing Co (1974) 416 US 663.

More recently, the Canadian Supreme Court has adopted the same reasoning as is illustrated in Ursery and it has done so most recently in April of this year in the case of Chatterjee v Attorney General of Ontario 2009 SCC 19. It is not yet reported, your Honours. If I could hand to you copies of that case. There it was reaffirmed that statutory forfeiture is not punitive, and I will take your Honours to the passages, but we rely on it for the proposition that forfeiture occurs in rem, so that the criminal guilt or innocence of the person who has an interest in the property is irrelevant.

Perhaps if I could first explain the context in which this matter arose.  The question concerned whether a civil forfeiture Act of the Ontario Parliament was invalid as encroaching on the exclusive legislative power of the federal Parliament.

HEYDON J:   In matters of crime.

MS TATE:   In matters of crime, yes, your Honour.  The list of separate legislative powers is to be found just before paragraph [9] in the report.  It is headed “Constitution Act, 1867”, and at section 91 is set out:

[T]he exclusive Legislative Authority of the Parliament of Canada –

At subsection 27 it includes:

The Criminal Law, except the Constitution of Courts of Criminal Jurisdiction, but including the Procedure in Criminal Matters.

Then section 92 sets out the list of exclusive legislative powers of the Province, including, at section 13:

Property and Civil Rights in the Province.

GUMMOW J:   This was designed to make sure that Quebec had to come within a federal criminal law regime.  It is a very important provision in Canada.

MS TATE:   Yes, your Honour.

GUMMOW J:   So the Quebec institutions were preserved for civil law but they had to knuckle under for criminal law.

MS TATE:   Yes, your Honour.  The answer to the question that is posed as to validity is, yes, and that is to be found at paragraph [1] where the question is stated:

The question raised on this appeal is whether the Ontario Remedies for Organized Crime and Other Unlawful Activities Act, 2001, S.O. 2001, c.29 (otherwise known as the Civil Remedies Act, 2001 or CRA), which authorizes the forfeiture of proceeds of unlawful activity, is ultra vires Ontario because it encroaches on the federal criminal law power.  In my view –

and this is the judgment of Justice Binnie delivered on behalf of the court –

the CRA is valid provincial legislation.

Now, the background to this was that a man had his car stopped by police for having no front licence plate.  It was then discovered that:

he was in breach of his recognizance, which required him to reside in Ottawa –

so he was arrested, the car was searched, money was found and other items that “smelled of marijuana”, but there was no marijuana itself found.  He was never charged but the Attorney‑General brought proceedings under the forfeiture Act for a preservation order and ultimately forfeiture.  The terms of the Act are to be found at paragraph [8].  Unfortunately, this does not have page numbers, your Honour, but paragraph [8] is several pages in.  It is headed “Relevant Statutory Provisions”.  First of all, it gives the purpose – the purposes of the Act, and then there is a definition under section 2 of the “proceeds of unlawful activity”.  That is:

property acquired, directly or indirectly, in whole or in part, as a result of unlawful activity –

a fairly standard definition and then “unlawful activity” is defined to mean:

an act or omission that,

(a)      is an offence under an Act of Canada, Ontario or another province –

So, a broad definition.  Then, the “Forfeiture order” provisions, section 3 provides that:

In a proceeding commenced by the Attorney General, the Superior Court of Justice shall, subject to subsection (3) and except where it would clearly not be in the interests of justice, make an order forfeiting property that is in Ontario to the Crown in right of Ontario ‑ ‑ ‑

GUMMOW J:   Just go back to the definition of “unlawful activity”.  It is wider than you are suggesting, is it not?  Paragraph (b).

MS TATE:   Yes, it also includes outside of the jurisdiction.

GUMMOW J:   Outside the country.

MS TATE:   Yes, outside of the country.  Perhaps, as I think the Commonwealth Solicitor‑General said yesterday, their Proceeds of Crime Act extends “unlawful activity” to acts that are unlawful in foreign countries but there may be a qualification on that, I am not sure.  But, the forfeiture order is to be made if the court finds that the property is proceeds of unlawful activity.  This is to be distinguished from the federal Criminal Code which is to be found, first of all, at the bottom of the next page where it is dependent upon conviction.  These statutory provisions are set out without any sort of description of their force or effect from one section to another.

At paragraph [14], the terms of the question are stated for the court, namely is the provision ultra vires, and I might note there at paragraph [11] there is a description of the reasoning of the Court of Appeal and in particular at the end of that paragraph there is a mention of the fact that emphasis has been placed on the fact that:

the CRA does not define or create any offence.  It is not tied to the identification, charging, prosecution, conviction or punishment of an offender.  It does not seek to impose a penalty, fine, or other punishment, and does not provide for imprisonment.

Then at paragraph [18] ‑ ‑ ‑

GUMMOW J:   Paragraph [14] is important, is it not?

MS TATE:   Yes, sorry, at [14], your Honour, is the specific terms of the question.

GUMMOW J:   They are applying this “pith and substance” characterisation theory. 

MS TATE:   Yes, and then there is an analysis by reference to the test for characterisation in Canada which is a test of “pith and substance” defined in effect the dominant character of the law and, of course, that contrasts considerably with Australian law.  Your Honours, then at paragraph [18] there is a discussion of what forfeiture is intended to do and it says that it is:

to recover from the proceeds of crime found in Ontario the costs to victims and to the public of criminality that would otherwise fall on the provincial treasury.

So they obviously have compensation legislation.  It says:

Forfeiture is the transfer of property from the owner to the Crown.  Forfeiture does not result in the conviction of anybody for any offence.  On its face, therefore, the CRA targets property rights.

Then at paragraph [21], there is a reference back to the definition of “proceeds of crime”.  It then says:

The forfeiture proceedings are initiated by an application or action under the ordinary civil rules of the province.  Proceedings are taken in rem against the property itself and can be initiated without joining the owners or possessors as defendants –

and again as here. 

The Attorney General as applicant is not required to prove any particular offence against any particular offender. 

Now, your Honour, that is a relevant difference and we alert your Honours to that, that the legislation there does not require a finding that a particular offender has committed or engaged in criminal activity, but we note here under section 22 there is that same degree of lack of requirement to specify that some particular offence had been committed and we say that that is relevantly analogous. 

So under section 22(3) the finding about the criminal activity can be based on a finding that some offence or other was committed, and it need not be based on a finding as to the commission of a particular offence or in relation to a particular quantity, so obviously quite in contrast to a criminal charge.  Then, your Honours, at paragraph [23] the court says that:

In essence, therefore, the CRA creates a property-based authority to seize money and other things shown on a balance of probabilities to be tainted by crime and thereafter to allocate the proceeds to compensating victims -.

At [25], the Court goes on to say:

As stated, the CRA fits neatly into the provincial competence in relation to Property and Civil Rights in the Province -

and the Attorney-General relies on the earlier case of Martineau for the proposition that civil mechanisms include the seizure as forfeit of goods and conveyances. 

Then there is a further elaboration of those reasons and there is a description at paragraph [31] of the argument that had been put by the appellant, and it is an argument which is similar to the argument that is put by the appellants here, namely, in the second sentence that the forfeiture Act:

imposes an additional penal regime in relation to federal offences that supplements, and may on occasion, conflict -

That first argument was argued to lead to the conclusion that the Act was ultra vires.  Then at paragraph [38] their Honours consider some previous authority and at the bottom of the page, [38] and [39], they say that there is nothing in those previous judgments:

to deny that a forfeiture measure which is independent of the sentencing process would be squarely within the provincial competence.

That is to say, squarely within the competence of the provincial legislature as a law with respect to property.  Now, your Honours, we alert your Honours to that recent judgment of the Canadian Supreme Court.  Although not entirely analogous, in our submission, it is sufficiently relevantly analogous to be of some utility to this Court in considering whether or not forfeiture is a form of punishment.

KIEFEL J:   Would you mind pointing out to me how it is useful here because it seems to me to rather point up a distinction rather than suggesting that the legislation that we are concerned with is directed towards property, which is seen as proceeds of crime?

MS TATE:   Your Honour, we submit that it is relevant because it is a similar form of legislation to the legislation in New South Wales.  There is the relevant difference that the finding that is made is not a finding with respect to a particular individual, but we say that that constitutes the only relevant difference that ‑ ‑ ‑

KIEFEL J:   Is there not a difference in relation to the property that is the subject of process under the Canadian legislation.  I mean, as you say it was an in rem proceeding because that was seen to be tainted by criminal activity, the connection was direct and the property is seen to be proceeds of crime.  Here, it is a person’s conduct in criminal activities within a particular period which then mushrooms out to encompass all of their property.  I have some difficulty seeing how it is useful at all.

MS TATE:   Your Honour, we would say that considering the New South Wales Act as a whole, there are provisions for exclusion applications and there are provisions whereby the person will return to the court to demonstrate what they call the innocence of the property, and we would say that that supports the view that it is the property which is, in a sense being attached.

If an applicant can show that that property is not property which is connected with the criminal activity, then they can have a declaration made to that effect and that can be removed from the scope of the order.

KIEFEL J:   Are you saying it converts into a property related process if the person takes that step?  But until that point it is not, is it?

MS TATE:   We would say, your Honour, it needs to be conceived of as a scheme.  One might have thought that in the D’Agostino Case to which the Court was taken yesterday where the young woman had stolen jumpers from David Jones, but the property that was restrained was a Mercedes Benz and a tenant in common interest in her house, that the moment there was an application made for exclusion of that property as innocent property, then that person would have been in a much better position. 

I noted there that the judge had before him an application that the exclusion application come on immediately and he said he would not accede to that request but, rather, would make the restraining order first and then, I think, expedite the application for exclusion.  But we would say that it is not a matter of the scheme being conceived of as in personam and then once an exclusion application is made the orders take on the character of an in rem order.  It is rather that the Act has to be seen as a regime as a whole.  Of course, those exclusion application provisions are to be found in sections 25 and 26.  So, your Honour, to that extent we would say there is a relevant analogy to be drawn with the Canadian Supreme Court case. 

So, your Honours, if I might move then from our submissions in relation to the fourth ground relied on by the appellants for the Kable challenge and rather turn to, very briefly, the question of the scope of intervention under section 78A of the Judiciary Act.  First, might I say, we adopt the submissions of the Solicitor‑General of the Commonwealth in relation to the scope of that right of intervention, but we say further that on questions of construction the Court cannot be bound by the submissions that are proffered or agreed to by the parties. 

This is because the first task of this Court, when constitutional invalidity is charged, is to construe the provision, to understand what it says and what it does not say and in that respect we rely on the judgment of Justices Hayne and Gummow in Coleman v Power (2004) 220 CLR 1 at paragraph 158, page 68 to the effect that the investigation into construction ought precede the investigation into validity. It is our submission that the determination of what a section says or what it does, how it operates, what its meaning is, is not something which can be confined by the parties. It is after all the ascertainment ‑ ‑ ‑

HEYDON J:   That may be true, but does it follow that Attorneys‑General of States have a right, as it were, to advocate whatever construction they want?  The Court is not bound by what the parties want to agree about, but is there a right in others to seek to challenge that convention?

MS TATE:   Your Honour, we would say if the Court is not bound by a construction that has been agreed between the parties – and we say it could not be bound ‑ ‑ ‑

HEYDON J:   Yes, I accept that.

MS TATE:   ‑ ‑ ‑ then interveners must, we say, have the right to make submissions that one would hope would be of assistance to the Court in determining what is the appropriate construction of the legislation.

GUMMOW J:   You say you have to be able to do that because otherwise you cannot put your cases to validity.

MS TATE:   Yes, your Honour.

HEYDON J:   If you are wrong about the construction, you pay some costs presumably, do you?

MS TATE:   Yes, your Honour.  Of course, any intervention is subject to the court rules, but if construction is the ascertainment of the objective legislative intention of the Parliament, then that cannot be something that can simply be agreed to between the parties in a manner that would bind the court.

HEYDON J:   You said that three times and I entirely agree with you.

MS TATE:   I am sorry for repeating that, your Honour, but it would seem anomalous if those who are here to represent their Attorneys‑General under a statutory right of intervention in the knowledge that the Court will not be bound by an agreed construction between the parties are precluded from making submissions as to what the correct construction ought be to reflect that objective legislative intention of the Parliament.  But, of course, your Honour, we accept that intervention is a privilege that has to be exercised responsibly and that is exercised in accordance with the rules of court.

We also note that the New South Wales Crimes Commission, which is an original party, accepts at paragraph 32 of its submissions that if it is necessary for section 10(3) of the Act to be read down for the purpose of preserving validity, then they are content for section 10(3) to be so construed.  So, accordingly, we make our submissions on construction to be considered either at the first or at the last stage of the Court’s analysis of validity if that last stage be reached.  Of course, we contend that even on the construction agreed to between the parties, that last stage ought never be reached for all the reasons developed by the Commission and the other interveners. 

If I might turn then to our submissions on construction in support of the proposition that section 10(3) ought be construed to allow for an inter partes hearing of an application for a restraining order made by the Commission ex parte.  On this construction it matters not whether the Commission is bound to apply ex parte, as Justice Gummow indicated might be a proper reading of section 10(2), or whether it can simply ‑ ‑ ‑

GUMMOW J:   It think we have to construe section 10.

MS TATE:   The whole of section 10, yes, your Honour.

GUMMOW J:   Yes, there is a regime creating new legal norms.  Part of the creation of legal norms is conferring a particular standard on somebody to seek a particular remedy and a particular course of a particular nature.

MS TATE:   Yes, your Honour.

GUMMOW J:   The question is what life it has outside section 10 or to what extent section 10 is nourished.

MS TATE:   Is nourished by other sections. 

GUMMOW J:   Yes.  And by general notions of what happens when one invests a court with jurisdiction.

MS TATE:   Yes, your Honour.  Perhaps precisely on that point as to how section 10 is nourished by other sections I could refer your Honours to section 12(1) which is the power of the Court to make ancillary orders.  Could I first draw your Honours’ attention to the fact that the terms of section 12(1) are very broad.  They are in these terms:

The Supreme Court may, when it makes a restraining order or at any later time, make any ancillary orders . . . that the Court ‑ ‑ ‑

GUMMOW J:   What is the force of the word “ancillary”?

MS TATE:   I am sorry, your Honour?

GUMMOW J:   Why is the word “ancillary” there, other than as a word of limitation?

MS TATE:   Your Honour, it is not our submission that it is a wholly unqualified power.  It is an ancillary order which would suggest that it is an order that is to be made at the time of other orders or in support of or in negation of other orders.

FRENCH CJ:   Liberty to apply would come in under that.

MS TATE:   Liberty to apply would come under as an ancillary order, your Honour.  But it is to make any ancillary order that the court considers appropriate, and then without limiting the generality of this, it is set out there all the sorts of orders that can be made, including orders for examination on oath, which of course were made here, or with respect to carrying out of undertakings and the manner in which the public trustee can control a property and so on.

Also under subsection (2), if I could draw your Honours’ attention to that provision which permits applications for ancillary orders to be made either by the Commission or the owner of the property or if the restraining order had directed the public trustee to take control, then the public trustee, or with the leave of the Supreme Court, any other person.  The applicant for an ancillary order must give notice of that order to those other persons referred to in the paragraphs depending upon the type of order that they are seeking. 

I draw your Honours’ attention to section 12(1) in order to alert your Honours to a judgment of Justice Nettle in the Victorian Court of Appeal, Justice Nettle delivering judgment on behalf of the court in the case of Director of Public Prosecutions (Vic) v Vu (2006) 14 VR 249. In that case Justice Nettle construed section 26 of the Confiscation Act 1997 (Vic) as expressly contemplating that a defendant or other interested person might be heard in opposition to an application for a restraining order. If I could hand those to your Honours. That is section 26.

The judgment sets out many of the other relevant sections, and I will take your Honours just briefly to them, but it does not set out the full terms of section 26. The statutory context, of course, is, as always, important and there are relevant differences and it is our submission that those relevant differences nevertheless do not defeat the force of the ultimate conclusion of the Court.

At paragraph 15, which is to be found on page 253, the judgment sets out section 16 of the Act which is the section which provides for applications to be made for restraining orders.  Under section 16(1)(a), the application can be made without notice to any court and, similarly under section 16(2).  Then under 17, and of course this is a difference, there is the power of the court expressly to give notice or to direct an applicant to give notice of the application for the restraining order to any person who they believe has an interest in the property that is the subject of the application. 

Then section 18 provides for how the application for a restraining order is to be determined and it sets out, firstly, all of the matters of which the court must be satisfied, including here whether the person is going to be charged with a relevant offence and so on. Again there is a relevant difference. Under section 18(1)(c) the court can consider matters contained in the affidavit supporting the application and other sworn evidence before it. Of course that does not appear in the New South Wales Act.

The argument that was put here by the Director of Public Prosecutions was that the prior notice ought not ordinarily be given to a person whose property may be affected by an application, and your Honours can see that at paragraph 20. That argument was put on the basis that there would be no purpose to be achieved by the giving of that prior notice. Your Honours will see that at the tail of paragraph 44 on page 265 where the director had argued that there was no point in hearing the person affected in opposition to the application for a restraining order and therefore at no point in requiring that notice be given under section 17.

So the court had to consider whether the power under section 17 had any utility, could there be any purpose in holding an inter partes hearing given that the court was obliged to make an order on the satisfaction of certain criteria. Justice Nettle for the court first of all deals with section 18, and that is to be found at paragraph 47, and notes that the court must make a restraining order if it were satisfied that there were reasonable grounds. Then he says:

That means that before making an order in relation to property the court must be satisfied that –

and then he sets out a list of all the things the court needed to be satisfied of, and while they are not identical to the list that Mr Temby mentioned yesterday at the start of his submissions at the transcript pages 36 to 37, nevertheless there is a good deal of commonality.  Then his Honour says at the end of 47:

It follows that there is a considerable amount of which a court needs to be satisfied before it will make a restraining order and so a considerable amount upon which a defendant or other interested person might usefully adduce evidence and make submissions in opposition to the making of the order.

He then says at paragraph 49 in relation to section 26 this:

s 26(1) expressly contemplates the possibility that a defendant or other interested person may be heard in opposition to an application for restraining order and s 26(2) and (3) expressly contemplate that a defendant or other interested person may be heard at the time of the application for a restraining order on all of the matters referred to in s 26(5).

He then says at paragraph 49 that in relation to section 26:

In the second place, s 26(1) expressly contemplates the possibility that a defendant or other interested person may be heard in opposition to an application for restraining order and s 26(2) and (3) expressly contemplate that a defendant or other interested person may be heard at the time of the application for a restraining order on all of the matters referred to in s 26(5).

If I could just take your Honours to the terms of section 26 and compare it with the terms of section 12. Section 26 - the extract that has been provided to the Court is from the current reprint, but nevertheless this has not been amended since the time Justice Nettle delivered this judgment, save for the definition of “property” which is to be found as a note to section 26, which was inserted in 2007.

But, your Honours, firstly the terms of section 26(1) are similar to those of section 12(1), except the reference is made to what orders are to be considered “just” as opposed to “appropriate”. Then under subsection (2) there is set out who it is that can apply for these orders and that includes “any other person who obtains the leave of the court” and that is similar to section 12(2). Then under subsection (5) there are the matters upon which an interested person might make submissions or give evidence and that includes orders to vary the property and that obviously is similar to 12(1)(a). Then the order “varying any condition” which is in 26(5)(b) does not seem to have an equivalent; (c) is provision for “reasonable living expenses” and that is already in the New South Wales Act taken account of in the restraining order. Then under (d) the order for the “carrying out of any undertaking” and that is to be found at section 12(1)(c).

Then under (e) there is “order for examination” and we have already seen those under 12(1)(b).  Under 26(5)(f) there are orders for the giving of particulars in relation to the property, and that is to be found in the New South Wales Act at 12(1)(c1).  Then orders under (h) for the manner in which the public trustee may perform certain duties and that is to be found at section 12(1)(d).

Now, your Honours, the judgment of Justice Nettle goes on to say that in those circumstances there is a proper basis upon which a hearing can be held in relation to a restraining order and therefore there is utility in the section 17 power.

FRENCH CJ:   When he says that 26(2) and (3) expressly contemplate that a defendant – or rather it may be heard at the time of the application for a restraining order, subsection (3) is dealing with the right to appear at the hearing of an application for the ancillary orders contemplated by 26.

MS TATE:   For the ancillary order itself, yes, your Honour.

FRENCH CJ:   That of itself does not necessarily tell us that there is a right to be heard at the time of the application for the restraining order, does it?

MS TATE:   No, your Honour. But your Honour relies on section 26(3).

FRENCH CJ:   I am just wondering whether that is the source of the statement that seemed to be in the judgment.

MS TATE:   A source of a mistake, your Honour?

FRENCH CJ:   No, of the statement by Justice Nettle in the judgment.

MS TATE:   Your Honour sees that his Honour says that section 26:

(3) expressly contemplate that a defendant or other interested person may be heard at the time of the application for a restraining order ‑ ‑ ‑

FRENCH CJ:   Yes.

MS TATE:   Yet 26(3) is, as it were, referring to the hearing under section 26 itself.

FRENCH CJ:   Yes, that is the point I was making.  It does not get you into a hearing on the restraining order application itself, does it?

MS TATE:   We would say, your Honour, that Justice Nettle saw that it could.

GUMMOW J: You get there from section 17, do you not? Is it not section 17, page 254?

MS TATE:   The question that the court was considering was really what was the utility of section 17. It was put by the Director that ‑ ‑ ‑

GUMMOW J:   The actual dispute appears at paragraphs 3 and 5 on page 250.

MS TATE:   Yes.  It came against the background of the Navarolli Case and whether Navarolli was wrongly decided and whether there ought to be notices given in the ordinary course of events or whether it required exceptional circumstances.

GUMMOW J:   The Director was submitting:  proceed ex parte without notice, unless the judge is persuaded that there is good reason for notice to be given.

MS TATE:   Yes. Effectively, the Director was arguing for a strict exceptional circumstances construction and Justice Nettle and the court said that that was not the correct construction; rather, that there was considerable utility to be had in the giving of a notice under section 17 because it would allow for an interested person to appear before the court and make submissions not only on whether the criteria in section 18 was satisfied, namely, whether there had been a charge with a relevant offence and so on, but also for the purpose of either seeking any of these ancillary orders or making submissions or calling evidence in relation to any of those matters.

Your Honours, we accept that it is clearly not wholly analogous but we nevertheless say that there is a relevance to be placed on that judgment and we make these submissions for the purpose of the proposition that section 10 and the Act as a whole contemplates that there may be an inter partes hearing for a restraining order and we make this argument in addition to the submission we made in our written submission to the effect that, as the Act is silent as to whether the hearing of the application for a restraining order should be ex parte or not, the Court ought construe it against the background of all the general law from Mansfield, Electric Light Corporation and Knight v FP Special Assets Ltd to which your Honours have already been taken, to the effect that the legislator must have presumed that the Court would operate with all its ordinary incidents, including all its ordinary powers ‑ ‑ ‑

GUMMOW J:   So you accept or take up what Justice Heydon mentioned yesterday; it is one thing to apply ex parte, it is another to proceed thereafter ex parte?

MS TATE:   Yes.  I think the distinction Justice Heydon drew was between an ex parte application and an ex parte participation and that second question is a question on which section 10 is wholly silent.

FRENCH CJ:   An ex parte application meaning simply an application without notice.

MS TATE:   An application without notice, yes, your Honour.  They are the submissions for Victoria, your Honours.

FRENCH CJ:   Thank you.  Solicitor‑General for Queensland.

MR SOFRONOFF:   May it please the Court.  I want to make some submissions in relation to what has been called the Queensland case, the decision of the Court of Appeal in Re Criminal Proceeds Confiscation Act 2002.  We respectfully submit that the decision of the Court of Appeal that section 30 of the Queensland statute was invalid was wrong for two reasons. 

First, as a matter of substantive law the court failed to distinguish between federal judicial power and State judicial power or to appreciate the true principle for which Kable is authority and it therefore applied the wrong test.  Secondly, as a matter of construction the decision proceeded upon the footing that once the application is made ex parte it had to proceed ex parte to a final result. 

GUMMOW J:   Why should we set about overruling that case?

MR SOFRONOFF:   Because it is relied upon by the appellant and my submissions are made only because it is relied upon by the appellant as authority for some of the propositions that they advance here today.  Could I go to the constitutional point, your Honours.  If your Honours would go to the decision in Re Criminal Proceeds Confiscation Act 2002 (Qld) [2004] 1 Qd R 40. If your Honours would go to page 50, at paragraph [40] Justice Williams said that the starting point for determining the answer to the question, as he put it, was section 71 of the Constitution.

GUMMOW J:   Is there any legislative sequel to that Court of Appeal decision?

MR SOFRONOFF:   Yes, the Act was amended, but the reasoning in that decision stands as good reasoning, and it has been relied upon in argument in cases before this one, and is relied upon, in our submission, heavily by the appellant in this case.  The legislative consequence was that the Act was amended to provide that an application can be made ex parte, but in certain circumstances a judge can require that the application proceed on notice. 

Your Honours will see then that after paragraph [40] on page 51, his Honour then went on to consider the judicial power of the Commonwealth, and he did that by reference to the decision of the High Court in Huddart, Parker & Co v Moorehead, which was a case that was concerned with contrasting the power of the Comptroller of Customs to make compulsory inquiry into some facts with the judicial power of the Commonwealth.  His Honour then referred to Fencott v Muller – a case with which, no doubt, your Honours are familiar – and Nicholas.  Having done that, his Honour then, in paragraph [42] in the last sentence equated State judicial power with Commonwealth judicial power.  His Honour said:

When making a judgment or order in the exercise of that jurisdiction –

That is State jurisdiction under the State Constitution –

the Supreme Court of Queensland is exercising judicial power. In using that expression in a purely State context, the expression must have the same meaning as it does for purposes of s. 71 of the Constitution.

That case, of course, was decided before Fardon.  It was decided in June 2003.  Fardon was decided in October 2004, and your Honours will recall that in Fardon 223 CLR 575, Justice McHugh at page 598, paragraph 36 said:

It is a serious constitutional mistake to think that either Kable or the Constitution assimilates State courts or their judges and officers with federal courts and their judges and officers.

At paragraph 41 at the foot of page 600, his Honour observed:

The bare fact that particular State legislation invests a State court with powers that are or jurisdiction that is repugnant to the traditional judicial process will seldom, if ever, compromise the institutional integrity of that court to the extent that it affects that court’s capacity to exercise federal jurisdiction impartially and according to federal law.

In the second half of paragraph 42 his Honour said:

State legislation that requires State courts to act in ways inconsistent with the traditional judicial process will be invalid only when it leads to the conclusion that reasonable persons might think that the legislation compromises the capacity of State courts to administer invested federal jurisdiction impartially according to federal law.

His Honour Justice Williams in the Court of Appeal did not, we respectfully submit, have regard to that crucial consideration.  We can see this because when one goes on at page 51 of the decision, paragraph [43], his Honour made reference to a number of cases.  The first of them was The Commonwealth v Queensland.  His Honour referred to a dictum of Justice Gibbs, as his Honour then was.  His Honour said:

Gibbs J. recognised that legislation would be invalid if it was “contrary to the inhibitions which, if not express, are clearly implicit in Ch. III”.

That is an uncontroversial proposition, of course, but it does not take a consideration of the Kable doctrine in its application to a particular statute very far because of its generality.  The Commonwealth v Queensland was a case that was concerned with an entirely different situation.  A Queensland statute would have permitted constitutional questions as well as others to be appealed from the State Supreme Court directly to the Privy Council and it was held that that was invalid because it was contrary to the inhibitions in Chapter III which reserves those questions for the High Court unless the High Court gives leave itself.  So it is of, in our respectful submission, no utility in the question which his Honour had to consider. 

His Honour then considered Chu Kheng Lim v Minister for Immigration.  That, your Honours will recall was a case where a Commonwealth statute prohibited the Court from releasing a person who had the status of designated person.  The Court held that it was clear from the statute that such a person might be unlawfully detained and it was held that that prohibition amounted to an impermissible legislative dictation as to the manner and outcome of the judicial process, that is to say, it required the Court not to release a person notwithstanding that the decision to continue the person’s detention was ultra vires.  It is another case dealing with Commonwealth judicial power, not State judicial power and is in relation to the matters considered by the High Court there, beside the point, in our submission. 

His Honour then over the page at page 52 considered Kable and cited some dicta from Kable and gave some references to dicta in that case.  Of course, those dicta were relevant to the task that his Honour had to perform.  But when his Honour stated the principle that he derived from the majority judgment in Kable his Honour put it in paragraph [44] in this form:

a State Supreme Court as one of the judicial institutions invested with federal jurisdiction may not act in a manner inconsistent with the requirements of Ch III of the Constitution.

That, in our submission, is uncontroversially right but it is just a starting point. One needs to go on to identify what are the requirements of Chapter III of the Constitution that are spoken of and how is it said that a particular State statute in its application to a State Supreme Court, how is that statute inconsistent with the requirements so identified of Chapter III?

His Honour then, after citing some passages from Kable, at page 53 went on to consider another decision of this Court in HA Bachrach Pty Ltd v State of Queensland.  That was indeed a case relating to State judicial power.  It concerned a case where somebody had brought an appeal to the Local Government Court relating to a dispute about whether land could be used for a particular purpose, given its zoning.  While the case was pending, the State Parliament passed an Act which expressly authorised that particular land to be used for the disputed purpose and it was held that that legislation was valid.

The case is of no assistance in dealing with the question of the application of the audi alteram partem rule or how that might compromise the integrity of a State Court.  But would your Honours notice in paragraph [48] his Honour cited a phrase from Bachrach just above the quote, just above line 25 his Honour said:

After analysing the legislation the Court concluded that the parliament was not acting beyond power in passing the Act or “interfering in any relevant sense with the exercise of judicial power”.

His Honour then, in our submission, took that phrase and proceeded to use it as a touchstone or test for invalidity because we see the question put using that language, “interfering with the exercise of judicial power”, in a number of places.  One sees at page 48, for example, at paragraph [30] his Honour identifies the issue for his determination in the second sentence:

Rather the issue now before the court is whether the legislature can validly interfere with the judicial process by directing the court to hear and determine the application –

ex parte.  Then on page 49 at paragraph [31], the last sentence, his Honour observed:

That is why, as noted above, if the application pursuant to s. 28 of the Act was made on notice it could not be suggested that there was any legislative interference with the exercise of judicial power.

[32]     The question for the court is whether s. 30, by commanding the court . . . so interferes with the essential character of the exercise of judicial power as to make the provision invalid.

On page 50, at paragraph [39], the last sentence uses the same language:

interference with the exercise of judicial power –

and ultimately his Honour applies it as a test at page 55, paragraph [58].  In his conclusion, the second line:

I have come to the conclusion that the direction or command to the judge hearing the application to proceed in the absence of any party affected by the order to be made is such an interference with the exercise of the judicial process as to be repugnant –

That, in our respectful submission, is not the test and it is efficient to observe that in Kable itself your Honour Justice Gummow put the crucial question in this way, that the task that the Supreme Court or other State court must perform must not only be non‑judicial in nature but repugnant to judicial process in a fundamental degree – that is at page 132.  In Fardon ‑ ‑ ‑

HEYDON J:   Just pausing there.  Hearing one side and not the other is rather repugnant to the judicial process.

MR SOFRONOFF:   It is repugnant to the traditional judicial process, but the question is wider than that, in our submission.  Is it repugnant to the judicial process in a fundamental degree, given the statute as a whole and what the statute as a scheme, if there is a scheme, requires?  So it would be wrong, as his Honour did, we submit, to concentrate upon one provision which undoubtedly contradicts one traditional aspect of judicial process without looking at the question why it does so and how that intrusion is ameliorated, if it is, by other provisions of the statute.

So I would respectfully accept that the exclusion of a right to be heard at some stage of the judicial process would generally be regarded as an exclusion of a traditional and fundamental part of the judicial process, but whether it is repugnant to the judicial process in a fundamental degree requires more work to be done than just looking at the provision.

GUMMOW J:   I think in Thomas v Mowbray Justice Crennan and I instanced the situation whereby the selection of the judge to hear a matter was not part of the ordinary court internal arrangements.

MR SOFRONOFF:   Yes, and your Honour has also observed that, while it might be accepted that to require a court exercising federal jurisdiction, or that might exercise federal jurisdiction, to depart to a significant degree from the methods and standards which characterise the judicial method in the past, may be repugnant to Chapter III, the analysis in your Honour’s reasons then go on to observe that ex parte applications are not novel and it all depends upon why the proceeding is ex parte. 

We would submit that the true touchstone of any particular judicial method must be in aid of the administration of justice, and the methods are not the aims themselves.  The administration of justice is the aim, and it may be that in some particular case as, for example, where there is a risk of somebody on notice frustrating a court order, it would be contrary to the administration of justice to give notice before the order was made and that is why at common law ex parte applications are heard where the matter is urgent or where there is a risk that an order made on notice would be frustrated before it was made. 

GUMMOW J:   But the order does not become a permanent order under this system, under the New South Wales Act it is permanent unless it is displaced.

MR SOFRONOFF:   Could I come back to that aspect because I accept it is an important aspect of the legislation.  What I would like to do is to go through his Honour’s reasons in this case and then very briefly deal with the New South Wales Act in the context of his Honour’s reasons in this case and in doing so I will touch upon the matter that your Honour Justice Gummow raised.

Finally, your Honours, in Fardon at page 601, Justice McHugh in paragraph 42, in the paragraph that I have already taken your Honours to for another reason, said at the beginning of that paragraph:

The pejorative phrase – “repugnant to the judicial process” - is not the constitutional criterion.  In this area of constitutional discourse, it is best avoided, for it invites error.  That which judges regards as repugnant ‑ ‑ ‑

GUMMOW J:   That was Justice McHugh’s view.  It is not a view of the Court.  It might suit you.

MR SOFRONOFF:   Well, your Honour, I advance it as a view of the High Court ‑ ‑ ‑

GUMMOW J:   You can cherry pick in Fardon as long as you like.  How cogent the cherry picking is in terms of intellectual stimulation on this side of the Bar table is another question.

MR SOFRONOFF:   Your Honour, I do not wish to cherry pick in any judgment but it is necessary in order to deal with a judgment like Kable or a judgment like Fardon to look at the decision of more than one Justice or more than a plurality insofar as that might assist the Court in making a decision in this case.  I am aware that in ‑ ‑ ‑

GUMMOW J:   There has since been a general statement of principle, has there not, in Bradley?

MR SOFRONOFF:   Quite, your Honour, and indeed your Honour ‑ ‑ ‑

GUMMOW J:   That seems to me, from your point of view, is where you start.  You have five or six or seven judges saying something later than Fardon there has been a coalescence. 

MR SOFRONOFF:   Quite, your Honour, and indeed in ‑ ‑ ‑

GUMMOW J:   Why try and split the atom?

MR SOFRONOFF:   Not at all, your Honour.  Indeed, in Fardon your Honour made the observation that the touchstone was the institutional integrity of the Court and that your Honour said words to the effect that it was not possible, nor desirable, to restrict the statement of principle too far for reasons we all know.  In any event, could I submit briefly then that what his Honour Justice McHugh concluded in paragraph 42 was that invalidity was:

conclusion is likely to be reached only when other provisions of the legislation or the surrounding circumstances as well as the departure from the traditional judicial process indicate that the State court might not be an impartial tribunal that is independent of the legislative and the executive –

His Honour Justice Williams, if I can go back to Re Criminal Proceeds Confiscation, then at paragraph [49] dealt with Nicholas v The Queen.  In Nicholas v The Queen their Honours were concerned with a question whether ‑ ‑ ‑

FRENCH CJ:   Why are we going through all this reasoning?  Your simple proposition is that he has applied the wrong test, is it not?

MR SOFRONOFF:   It is, your Honour.

FRENCH CJ:   What is the right test?

MR SOFRONOFF:   The right test, in our respectful submission, is whether the legislation when looked at as a whole and not merely the provision requires the court to do something which is so repugnant to judicial process as to corrode the institutional integrity of the court, as to render it ‑ ‑ ‑

GUMMOW J:   My question is, you have got this ex parte order that it is of a permanent nature, not an interim nature, unless some step is taken to set it aside under this other section.

MR SOFRONOFF:   Could I move to two things, your Honours.  First, the legislation in the Queensland case briefly, because your Honours would ultimately not need to determine that construction for any reason, but also in an attempt to show that the decision was wrong insofar as it relied upon a construction that his Honour adopted and, secondly, to go to the New South Wales Act to add some things in addition to the matters that have been raised by my learned friends. 

FRENCH CJ:   Do you say the wrong test was applied?

MR SOFRONOFF:   Yes, your Honour.

FRENCH CJ:   I just wonder whether we need to then get into – we end up getting into a question of what is the proper construction of these provisions of the Queensland legislation.  It just seems to get further and further away from the core of what we are about here, which is to do with the Criminal Assets Recovery Act (1990) NSW. 

MR SOFRONOFF:   Yes.

FRENCH CJ:   I just have the feeling we are being taken down into the entrails of this judgment in a way that is not going to help us much.

GUMMOW J:   In a posthumous attempt to reverse a case against which your predecessors never sought special leave to appeal and preferred to move legislatively, I understand that.

MR SOFRONOFF:   No, your Honour.  I do not know why it was not taken further. 

GUMMOW J:   I would suggest you would have to tell us.  You are here as an intervener to deal with this New South Wales legislation.

MR SOFRONOFF:   Very well, your Honours.  I will go to the New South Wales Act, if that is what your Honours wish.  Could I make this preliminary submission about that statute.  As your Honour Justice Hayne pointed out in Nicholas, in that case your Honour was concerned with a common law discretion to exclude evidence and a common law discretion that, as your Honour held, was concerned with the integrity of the court process by excluding, call it, tainted evidence.  Your Honour accepted that that discretion can be validly affected by legislation. 

Nevertheless, as your Honour observed at paragraph 233, the existence of that discretion is rooted in public policy and requires the balancing of competing considerations.  In this case too, in our submission, there is a fundamental common law precept that a party has a right to be heard and that is also a precept that is concerned with the integrity of the process and, of course, it is rooted in public policy.  It is concerned with the integrity of the court process and it must give way, where the public interest requires it, that is to say, for example, where an order on notice might be frustrated or ineffective for some other reason, and consequently that too can be effected by legislation without corroding the integrity of the court process or the actual or apparent impartiality or independence from a legislature or the Executive of the court itself.

On the legislation like the New South Wales Act and like other State legislation and the Commonwealth legislation, there is this problem, in our submission, that is sought to be addressed.  There is a person who is reasonably suspected of having committed offences, that person has property, it is very difficult to prove that.  It is difficult enough to prove that a person has committed an offence.  It might be thought to be even more difficult to be able to prove that any property ‑ ‑ ‑

GUMMOW J:   An offence under the law of some other country, for example.

MR SOFRONOFF:   That too, your Honour, for example – indeed, to prove that any particular property was derived directly from the commission of an offence or indirectly from the proceeds of an offence.  The Act appears to attempt to deal with the policy adopted by the legislature that persons should not enjoy the proceeds of crime by doing two things.  The first step in all such legislation is to permit some official to apply to a court and to seek to establish – the New South Wales Act is now what I am looking at – relevantly one of two things.  One is either that a person has committed an offence of a defined kind within some timeframe and, secondly, that the person has property.  Upon that footing, there is a restraint upon dealings with that property. 

Alternatively, it could be proved that a person of whom it is not said that a crime has been committed owns property in respect of which there is a reasonable suspicion that is the proceeds of crime, to use a broad term to attempt to encompass all the definitions in the Act.  Usually an application to freeze property, either at common law or, one would expect, under a statute, would be made inter partes and if it is not made inter partes, it is made ex parte.  Usually, almost invariably, a judge will ask, why is it ex parte, and would expect an answer which generally would fall into two classes.  The matter is urgent there is no time or we fear that the order will be frustrated before it is made if notice has been given, and there will be some evidence to that effect.

Here, on one construction of the Act that the proceeding must be ex parte, the legislature has made that decision in the circumstances which pertain when the Act is engaged, that is to say when one is dealing either with a suspected criminal or one is dealing with suspected criminal proceeds.

The second step then, after such an order is made ex parte is that affected persons can apply almost immediately to release the property from the restraint.  Your Honour Justice Gummow observed that the order is a permanent order and so it is until a forfeiture order is made.     But could I ask your Honours to go to the Act, section 25.  Such an application is, we respectfully submit, easy to make and easy to win.  An “assets forfeiture order” has been applied for.  That must have happened within two days or the restraining order will go.  A person whose interest in property might be subject to the order or:

a person whose interest in property was forfeited by the order –

We can overlook that for the moment –

may apply to the Supreme Court for an order (in this section called an exclusion order) excluding the interest from the operation of the assets forfeiture order or any relevant restraining order.

All that person has to do is to prove, on the balance of probabilities, one of two things, either if somebody says the property is fraudulently acquired property that it is not fraudulently acquired.  Section 9A defines “fraudulently acquired property”.  Could I ask your Honours to go to that?  That is:

An interest in property is fraudulently acquired property if the interest is held in a false name and any of the following was knowingly used for the purposes of acquiring, or dealing with, that property:

(a)a false instrument –

and so on.  We would submit that in any case where it is said that the property is fraudulently acquired it would be the easiest thing to prove that it is not, if in fact it is not.  Indeed, it would be difficult to controvert such evidence if it was true.  Alternatively, in any other case, that is to say a case where a person who has been accused of criminal conduct based upon reasonable suspicion and the property is not said to be “fraudulently acquired property” then all one has to do is to show that the property is not “illegally acquired property”.  That is defined in section 9.

Section 9 in its terms, sections (1), (2), (2A) and (3) deals with “proceeds of serious crime related activity”, “serious crime derived property”.  Subsection (4) then substitutes another expression “illegally acquired property” where “serious crime derived property” is used in the first three subsections.  “Illegal activity” is defined in section 4 – the definition section – to mean:

(a)      a serious crime related activity, or

(b)an act or omission that constitutes an offence (including a common law offence) against the laws of New South Wales or the Commonwealth, or

(c)an act or omission that occurs outside New South Wales, is an offence against the law of the place where it occurs and is of a kind that, if it had occurred in New South Wales, would have been an offence ‑ ‑ ‑

GUMMOW J:   Is there any definition of the term “property”?

MR SOFRONOFF:   No, your Honour, but there is a definition, I think, of “interest”.  Section 7, your Honour.  Section 7 “interest in property”.  Unlike other statutes of this kind which sometimes refer to property without distinguishing between the thing and an interest in the thing, this Act concentrates upon an interest in property.

GUMMOW J:   You could get into quite complicated tracing exercises, could you not, when you are dealing with intangibles?

MR SOFRONOFF:   I am not sure what your Honour means.

GUMMOW J:   Chasing sums of money from one form into another.

HAYNE J:   See, for example, section 9(9).

MR SOFRONOFF:   Your Honour, I was coming to that.  If your Honours go to 9(5), in short, in order to show that one is an innocent holder of property, that it is not, if I can use the expression, tainted property, then one has to show, to use the language of another statute, that one is a bona fide purchaser for value without notice.

KIEFEL J:   But the problem usually arises, is it not, where because of the definition in section 9(1) that property can be partly acquired with such proceeds and where you have mixed funds, as Justice Gummow is referring to, where you have funds mixed you cannot disentangle them.  Therein lies the problem.

MR SOFRONOFF:   Then one comes to section 26 which provides that:

If it is proved that it is more probable than not that a specified proportion of the value of an interest in property that has been forfeited under an assets forfeiture order is not attributable to the proceeds of an illegal activity, the Supreme Court may:

(a)make a declaration to that effect –

In addition, section 24 provides for relief in case of hardship to dependents.  What the Act impinges upon, what the Act strikes at is, in the first instance, property of a suspected criminal or suspected criminal proceeds.

HAYNE J:   This process must be launched within six months of the assets forfeiture order, must it?

MR SOFRONOFF:   Yes, but it can be launched once the restraining order can be made.

HAYNE J:   Thus would it be common for these processes to be undertaken at a point while any criminal proceedings are still pending?

MR SOFRONOFF:   It can be, your Honour, because when one freezes a piece of land, one might affect the interests of an innocent mortgagee.  When one freezes a piece of property that is jointly owned, one might affect an innocent tenant in common.

HAYNE J:   The task that the applicant undertakes in seeking exclusion is demonstration on the balance of probabilities of innocence of any crime ‑ ‑ ‑

MR SOFRONOFF:   No, not that, your Honour.

HAYNE J:   Exclusion?

MR SOFRONOFF:   No, I am looking at exclusion under 25.

HAYNE J:   Just so.  Innocence of any crime connected with the acquisition of the property.

MR SOFRONOFF:   No, your Honour, only that the property is not the proceeds of a crime.

HAYNE J:   Yes.  But it is not illegally obtained property.

MR SOFRONOFF:   Illegally acquired property, quite.

HAYNE J:   Yes.

MR SOFRONOFF:   Illegally acquired property is defined in terms that provides that if the owner of it, section 9(5)(a), acquired it –

for sufficient consideration without knowing, and in circumstances that would not arouse a reasonable suspicion, that the interest was, at the time of acquisition, serious crime derived property or illegally acquired property, or

or, subsection (b), an inheritance, then one’s interest in the property is excluded.

FRENCH CJ:   The restraining order and the confiscation – or forfeiture orders are based upon the – or the forfeiture order ultimately is based upon the existence of serious crime‑related activity, but to get the exclusion order you have to go a lot wider than that.  Any offence ‑ ‑ ‑

MR SOFRONOFF:   A lot narrower, we submit, in that you do not need to ‑ ‑ ‑

FRENCH CJ:   You need to exclude the possibility, or on the balance of probabilities exclude it as illegally acquired property, do you not?

MR SOFRONOFF:   Yes.  For example, if an application were made under section 10(3A), that is assume that the suspicion is that I have engaged in serious crime‑related activity, then if that succeeds my property can be frozen.  I then look at section 25 and I wish to establish that – assume it is not in contention that it was fraudulently acquired property and that merely that it is illegally acquired property that will be an issue – I do not need to address my suspected criminality unless my suspected criminality is that which led to the acquisition of the property.

FRENCH CJ:   Sorry, do you not have to address a wider range of possible criminality related to the acquisition of the property, being illegal activity, than the range of criminal activity which supported the making of a forfeiture order?

MR SOFRONOFF:   I only have to establish that my acquisition of it was innocent and for sufficient consideration.

KIEFEL J:    Does not the reversal of onus in the way it operates here start from a presumption?  Because the onus is put upon you, is there not a presumption applying about the property?

MR SOFRONOFF:   I would not put it in those terms but it is true ‑ ‑ ‑

KIEFEL J:    That is a starting point, an evidentiary onus.

MR SOFRONOFF:   Quite.  As a starting point, the statute begins with a proposition that either you prove upon reasonable suspicion, and not to the conventional standard of civil standard of proof but just to the level of a person holding a reasonable suspicion, that the owner of the property committed relevant offences or that the property was illegally acquired.  That then creates a position where any applicant for exclusion has an onus to discharge. 

My submission is that one can argue about the difficulty of discharging that onus, and one view which we advocate is that it is not very difficult to establish if one can point to the innocent source of money in a bank account or real estate or indeed anything else, and I would hazard that anybody in this room, if put to that task, could do it within a very short time.

KIEFEL J:    And might not have similar problems.

MR SOFRONOFF:   Well, one might forget how one got it and how one paid for it but one would then need access to some documents which would be obtainable.  Mr Hughes says “One might have Alzheimer’s”.  Subject to practical difficulties of that kind which can be overcome, it is an objective task that can be done, unless indeed you are guilty of offences that led to the acquisition of property or you had grounds to suspect it.  In short, unless you are a person who is rightly targeted by the statute, you will not have any trouble.

KIEFEL J:    Are there some analogies in some legislation where effectively persons are required to disentangle funds with a similar evidentiary onus?  I am thinking of proceeds from copyright or – I know that is a very broad question to put to you.

MR SOFRONOFF:   I do not know the answer to that, your Honour.  The property in this case – if I can ask your Honours to go to the appeal book ‑ ‑ ‑

HAYNE J:   The point can be captured this way, Mr Solicitor, that to get an exclusion order, having regard to the tracing provisions – see section 9(9) – you have to display the whole of your life and demonstrate it was innocent in connection with what ultimately ends up as Blackacre, shares or a motorcar or whatever it is that is seized.  Absent that proof, are you not deficient in proving more probably than not innocently acquired?

MR SOFRONOFF:   Your Honour, even a person who’s conduct supported the making of the restraining order because that conduct was criminal, need not address that conduct if the property was innocently acquired and can remain silent about that subject and if that person were to swear an affidavit as to the innocent acquisition of the property and give reasons for it, it may well be that any cross‑examination of that person in relation to offences that were or were to be the subject of criminal charges might not be allowed unless it were relevant to demonstrate the falsity of the evidence supporting the innocent acquisition.  In short, when one looks at sections 25 and 26, one does not have to address the alleged criminality which form the subject of the original application.

BELL J:   I am not so sure about that, Mr Solicitor.  How does 25(7) work?  If the Commission proposes to contest the application for an exclusion order, it is required to give notice of grounds.  It is not required to give notice and the application for exclusion is not to be heard until the Commission has had a reasonable opportunity to conduct an examination of the applicant under section 12.  That is a compulsory inquisition, is it not, and one claims privilege but then is required to answer.  That is the scheme of it, is it not?

MR SOFRONOFF:   The answers cannot be used in any criminal proceedings except for an offence against the Act.

BELL J:   Indeed, but that is a little different, is it not, to your suggestion?

MR SOFRONOFF:   No, not at all, your Honour.  I do not mean to submit that one tells a story and is not challenged upon it.  What I mean to submit is that if indeed the property is not the proceeds of crime, then one swears to that, one is questioned about that but it ought to be simple to prove.  I do not mean that a lot of documents might not be required, but the fact that ultimately has to be established, innocent acquisition is simple enough.

BELL J:   Coming back to the point that Justice Hayne was taking up with you a few moments ago, an examination under section 12 might be thought to be of the broad‑ranging character that his Honour was referring to.

MR SOFRONOFF:   It might well, in a particular case, seek to falsify the assertion of innocent acquisition by seeking to raise a sufficient doubt about the innocent acquisition of the property by raising a doubt as to the innocence of the applicant for exclusion.  So, to that extent, that would be an issue but it is an issue within the four corners of this statute and is quarantined there and the answers are not permitted to be used in any criminal proceedings.  It is true that if a person has something to hide, one would not make an application under section 25.  One would instead seek to meet the order and have it set aside upon legal grounds, technical grounds, and they might be available.  But, otherwise, on the merits, if a fear is raised that this places innocent persons in jeopardy of having their property forfeited, in our respectful submission, that is not so because of 25 and 26.

Your Honours, in this particular case, to use a concrete example, if your Honours go to the appeal book page 167, these are the reasons of Chief Justice McClellan.  His Honour was quoting from passages of the affidavit read on the application and at paragraph 13, an account was identified at the Commonwealth Bank.  There are three accounts that are referred to in paragraph 13.  In paragraph 12 on the preceding page, accounts were identified in New Zealand and elsewhere.  They were said to be with the ANZ Bank.  At the foot of page 167, paragraph 15, there was approximately $NZ29 million in the NZ accounts and $14.1 million in the CBA accounts.  Mr Hughes points out that this is evidence that the majority held was inadmissible.  Could your Honours go to page ‑ ‑ ‑

HEYDON J:   Should we not stop reading it then?

MR SOFRONOFF:   I will take your Honours to the order and so your Honours can stop reading it.  At page 22 the relevant bank accounts are then set out and they continue over to page 26.  Schedule two is the Commonwealth Bank account, schedule three are two other such accounts.  In short, what one has, evidently, is money in bank accounts in respect of which an exclusion order under section 25 can be applied for and what needs to be shown is that the money was neither the proceeds of a serious crime‑related activity or of other offences.  That would not involve the applicant in showing that the applicant was innocent of all offences unless it were alleged by way of reply that it was the applicant who was guilty of the offences which resulted in that money being in those bank accounts.

In short, your Honours, when one has regard to the ex parte nature of an application under section 10, if your Honours conclude it is necessarily ex parte, then one also has to have regard that upon the making of a restraining order there is equally on the balance of probabilities a mode of proof which would permit a person whose property is innocent of criminal taint to have that property released and that person would not, if there is any allegation of criminal conduct against that person, which there might not be, but even if there were, that person would not have to address that criminal

conduct unless it were related to the property in question.  Those are our submissions, your Honour.

FRENCH CJ:   Thank you, Mr Solicitor.  Solicitor‑General for South Australia. 

MR HINTON:   If the Court pleases, I am content to rely upon our written submissions and to adopt the oral submissions of the first respondent and the interveners.  May I take the opportunity to say something very briefly, and I emphasise very briefly, about the use that may be made of the United States, South African and Canadian case that we cite in our written submissions, without taking the Court to them and can I introduce that very brief submission by – or preface it by noting the principle that we are concerned with today is to be found in Bradley at paragraphs 29 and 30 of the plurality reasons – and I do not pause to take the Court to it.  Repeated in Forge in the judgment of your Honours Justices Gummow, Hayne and Crennan at paragraph 63 in terms of the impugned legislation will offend the Kable principle where:

the body no longer exhibits in some relevant respect those defining characteristics which mark a court apart from other decision‑making bodies.

That being the principle, the test, as your Honour the Chief Justice pointed out in K-Generation at paragraph 90, we are necessarily involved in an evaluative process, I think your Honour Justice Gummow said in APLA.  It was not unknown in constitutional law, and indeed where it comes to the Kable principle that we are looking for a sufficient relation.  When it comes to the international jurisprudence, when we conduct that evaluative process, in my submission, those cases can be used in the same way that the United States authorities were used in the Castlemaine Tooheys Case (1990) 169 CLR 436, in particular at 471. I do not need to take the Court to it but at 471 the plurality noted that whilst those cases:

cannot be treated as an accurate guide to the interpretation of s. 92 -

nevertheless, they were of assistance in identifying -

in a useful way considerations which may be relevant -

That is the use, in my submission, that the international jurisprudence in our written submissions can be put to, namely they identify in a useful way “considerations which may be relevant”.  The three cases that we have chosen all involve the ex parte restraint of the proceeds of crime.  Two of them, in two of the countries – Canada and South Africa - it is conviction‑based confiscation.  In the United States the relevant statute was

not.  As the Solicitor‑General for Victoria pointed out it involved merely the service of a notice.

In all of the cases we were consumed with the ex parte restraint of the item of property and in all of the cases, two concerning constitutional challenge, one a challenge to the legitimacy of the legislation on the basis of the Canadian Charter of Human Rights and Freedom, we were concerned with the adequacy of being able to respond to the ex parte order.  That is something, undoubtedly, that forms part of the evaluative process that this Court must undertake in applying the Kable principle. 

In the Laroche Case, the Canadian case, a subsequent review available was determined to be an effective remedy.  In the United States case, Calero‑Toledo, the opportunity to conduct an inter partes hearing at a meaningful time was held to be sufficient.  In actual fact, in the United States in extraordinary circumstances no subsequent inter partes hearing is required, but we are not concerned with that here.  For the reasons already advanced by the first respondent and the intervenors, the effective remedy, the inter partes hearing at a meaningful time, which may be triggered is present in this case. 

Your Honour Justice Gummow referred to it yesterday afternoon as the quid pro quo.  We find it in sections 12 and 25, the remedy where there is a failure to make full and frank disclosure under the rules that were submitted this morning and, indeed, the right of appeal, those very provisions that the Solicitor‑General for Queensland has just traversed with your Honours, accordingly, in my submission, the international jurisprudence is of some assistance in undertaking the evaluative exercise. 

Adopting the submissions of the first respondent and the intervenors, the defining characteristics of the Supreme Court of New South Wales are not affected by this legislation such that it ceases to answer the description of a Supreme Court within the meaning of Chapter III.  Consequently, section 10(3) is valid.  If the Court pleases, those are our submissions for South Australia.

FRENCH CJ:   Thank you Mr Solicitor.  Mr Hughes.

MR HUGHES:   The first point, your Honours, upon which I wish to engage in reply is to confront head on the submission of the learned Solicitor‑General of the Commonwealth as reported on page 51 of the transcript at lines 2203 to 2210 when he said to your Honours:

leaving aside only the duty of the court to proceed ex parte, it appears to us that the duty and jurisdiction of the Supreme Court under section 10(3) is indistinguishable from the duty and jurisdiction of a court exercising federal jurisdiction to make a restraining order on the application of the Commonwealth Director of Public Prosecutions under section 44 of the Proceeds of Crime Act 1987, or under sections 17, 18, 19 or 20 of the Proceeds of Crime Act 2002.

We have taken steps to see that your Honours are provided with the text of the 1987 Commonwealth Act.  It is an Act in which section 44 cannot sensibly be read in isolation from other sections.  What the 1987 Act does is to set up a system of restraining orders, yes, based on suspicion – rather belief to be exact – but to make adequate provision for a person subjected to such an order to take steps to protect himself or herself.  First of all, under the 1987 Act, the restraining order has a very limited life.

GUMMOW J:   It is a section 45 subsection?

MR HUGHES:   Yes.  It has a provision for a person affected by the order to apply to the court, in effect, for its discharge if it is continued beyond the limited 14 day duration specified in section 45.  Now, the point of my references to the 1987 Act is that it was available as a model at the time when the draftsman of the 1990 Act under challenge undertook his task of drafting the 1990 Act.  It was an Act, the 1987 Act which contained significant protections that are altogether negated in substance in the Act we are challenging.

I know that it may be tedious to trace through these provisions but the salient feature of them is twofold.  One, the audi alteram partem principle was observed.  The difficulty about section 10, your Honours, is, as has been discussed in the course of argument, it seems on a fair reading not to respect the ordinary rules about the grant of interim injunctive relief.

Section 10 goes much further in several ways.  It is of a permanent character in substance.  The restraining orders made in mid‑May 2008 are still in force today and will remain in force, this challenge failing, until the hearing of the assets forfeiture application comes on and is determined.  So this Act does not respect the fundamental judicial concept about the grant of interim relief, it defies it.  Then, of course, it engages in another infraction of fundamental principle relating to the exercise of judicial power by enacting that a person will be deprived of access to his or her property and of the power to dispose of it on the basis of a State official’s reasonable suspicion. 

Now, in our speaking notes, your Honours, we adverted, I suggest, pretty clearly to the proposition that fundamental legal principle depends upon a court being even‑handed.  The statute under challenge prevents the court from being even‑handed and says that his or her property will be restrained on the basis of at least a semi‑permanent ex parte hearing which, according to settled authority, subject always to the contrary view in this Court, in the Court of Appeal is an order, namely, a restraining order, that cannot be brought back to the primary judge who made it, so that the only right of an affected person is to seek the discretionary remedy of leave to appeal to the Court of Appeal.

I just ask your Honours, and I am not going to inflict upon your Honours at this late stage the tedium of reading sections, I ask your Honours to examine the scheme of the 1987 Act that was available as a model to the New South Wales draftsman and see how markedly it differs in principle and effect from the Act under challenge.  If your Honours look at the sections 44, 45, 46 of 1987 Act, your Honours will see that it contains an elaborate and, even we would have to concede, basically, perhaps eminently fair provisions which preserve intact a basic principle that governs the conduct of courts in the exercise of judicial power. 

It is perfectly plain, your Honours, that the Act under challenge confers a particular jurisdiction on the Supreme Court and specifies how the court is to exercise it, namely by ex parte process, ex parte process under which the person affected is denied any access to the court before the restraining order is made, and then only by process of appeal.

That is the effect of the judgment of the Court of Appeal - all their Honours in the Court of Appeal in this case – and it is the effect of a judgment of the Court of Appeal of New South Wales in New South Wales Crime Commission v Ollis 65 NSWLR 478, which has not received much attention in this hearing, but I will have to go to it because in that case in which my learned friend, Mr Temby, appeared for the Crime Commission – the plaintiff - at page 486, paragraph 32 of the judgment, a unanimous court said:

Section 10 of the Act specifically provides for ex parte application for a restraining order, as is understandable given the nature of the order and the basis for making it.  Even if the order is made on an inter partes application, however, s 10(3) applies:  the Supreme Court must make the order applied for if it is supported by an affidavit of an authorised officer stating the suspicion and grounds to which par (a) or par (b) refer and “the Court considers that having regard to the matters contained in any such affidavit there are reasonable grounds for any such suspicion”.  The only material for consideration is the affidavit, and as to the basis for the order the only matter for determination is whether there are reasonable grounds for the suspicion.

If one goes to the judgment of Justice Basten – I was wrong in saying this was unanimous.  That was in a majority judgment.  But we venture to suggest that a passage in the dissenting judgment, that of Justice Basten, at paragraph 63 is significant:

The Commission’s argument is thus that a judge of the Supreme Court is obliged to make the orders sought under s 10(2) if, having regard to the matters contained in the affidavit tendered by the Commission in support of the order, he or she is satisfied that there are reasonable grounds for the identified suspicion.  By implication, the Court cannot look at other material, nor can the authorised officer be cross‑examined on his or her affidavit.  Once the restraining order is made, an interest in property can only be removed by an exclusion order made pursuant to s 25 –

That was where the dissenting justice was summarising my learned friend Mr Temby’s argument, but when he comes to this Court in this appeal, my learned friend does a U‑turn, as occurred, recorded in the transcript at page 38.  Yesterday at page 38, your Honours, your Honour Justice Hayne at line 1621 asked this question of my learned friend, Mr Temby:

Do you accept that it is open to a person affected by an order, whether or not there is an express reservation of liberty to apply, to apply forthwith for dissolution?

Mr Temby is reported as saying:

Certainly.

Then your Honour Justice Hayne said:

Dissolution on grounds – on various grounds but one of them would be, would it, if it was said there was some material withholding of information.

Also on page 40, line 1701, my learned friend, Mr Temby said:

It is, we would suggest, not precluded from having regard to any matters of which it can take judicial notice, whatever those matters might be, which is perhaps a small addition although not a large practical addition to the contents of the affidavit –

There is the U‑turn, your Honour, and is it appropriate, the Court might possibly ask itself, for serious consideration to be given to an argument advanced here on behalf of the Crime Commission that is totally antithetical to the argument that it put in Ollis and, I go on to add, in the Court of Appeal in this very case?  It is, to say the least, employing moderate language, a most unusual course for a statutory body representing the Crown in substance to engage in.

Your Honour, there can be no doubt that this section, section 10, does confer jurisdiction and does mark out the boundaries of its exercise.  To suggest that general provisions such as in the Civil Procedure Act can override what is in section 10 would seem, I suggest, a somewhat adventurous argument, given that it seems to involve, in essence, a proposal that section 10 has been impliedly repealed by some not very precise provision in the Civil Procedure Act.  This is not an argument, in my very respectful submission, which will attract the attention for long of this Court.

FRENCH CJ:   Mr Hughes, how much longer do you expect to be?

MR HUGHES:   I am so sorry, your Honour, I will be a little while.  I got carried away, I am afraid, and I did not notice the time.  I apologise.

FRENCH CJ:   That is all right.  We will adjourn till 2.15.

AT 12.55 PM LUNCHEON ADJOURMENT

UPON RESUMING AT 2.16 PM:

FRENCH CJ:   Yes, Mr Hughes.

MR HUGHES:   First of all, I must correct something that I said this morning, at the request of my learned friend, Mr Temby, with which I readily comply.  I said to your Honours that the original restraining orders of 13 and 16 May were still in force.  That was wrong.  What happened was that that those orders, while the matter was under consideration by the Court of Appeal in these proceedings, were replaced by another set of ex parte orders obtained by the – restraining orders obtained by the Crime Commission and those orders cover, substantially, the same territory as the orders which were made by Justice Hoeben at first instance.  Those orders, I should say, are the subject of an appeal to the Court of Appeal to be heard next week.  Those restraining orders of 13 May ‑ ‑ ‑

FRENCH CJ:   Are set aside by the decision of the Court of Appeal.

MR HUGHES:   Yes.  I hope I have complied with my friend’s request.  The next point I want to raise is a very brief return to what my learned friend, the Solicitor‑General for the Commonwealth, said at page 51.  I referred to the provisions of the 1987 Act as being materially different from section 10(3) in that they impose a right for a person affected to seek a revocation of the order – that was section 47, and also 46 gave a right to appear for a person affected.

If one goes briefly to the Commonwealth Proceeds of Crime Act 2002, the position is that under section 42, the subsection that applied to that Act, it is open to a person affected to apply for revocation of the restraining order which the court may order if satisfied that there are no grounds on which to make the order at the time of considering the application to revoke.  They are materially different regimes from the section 10 regime, in our respectful submission. 

I want to say something next very briefly about Rich.  The position in Rich was, first of all, no Kable point was invoked nor was it invoked in Labrador Liquor.  In Rich there was an application for compensation, your Honours, and an application for disqualification of two directors. That application for disqualification, which was treated by the court as an application for a penalty that made applicable the laws relating to discovery or non‑discovery in proceedings for a penalty, was an application made on the basis not of the commission of a crime, but of the commission of a breach of what was specified to be a civil obligation only. Section 180 of the Corporations Act imposed on:

A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they:

(a)were a director or officer of a corporation in the corporation’s circumstances; and

(b)occupied the office held by, and had the same responsibilities within the corporation as, the director or officer.

The note to the text of the subsection in the print of the Corporations Act says:

This subsection is a civil penalty provision.

The disqualification application was therefore not treated by the court as an application based on the commission of a crime. 

That was an application made on the basis, not of the commission of a crime but of the commission of a breach of what was specified to be a civil obligation only. Section 180 of the Corporations Act imposed:

(1)      A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they:

(a)were a director or officer of a corporation in the corporation’s circumstances; and

(b)occupied the office held by, and had the same responsibilities within the corporation as, the director or officer.

The note to the text of the subsection in the print of the Corporations Act says:

This subsection is a civil penalty provision -

It was not treated - the disqualification application was, therefore, not treated by the court as an application based on the commission of a crime.

Next, I want to say very briefly that no one in the ranks of those who appear to argue the case against us has criticised our reliance on what Sir William Deane said in the passage of his judgment in Polyukhovich, which we have quoted in paragraph (13) of our speaking notes.  When one puts that passage on one side and considers it in the context of the statements by Justice Gaudron and Justice McHugh in Kable, to which we referred yesterday, statements that there are no two grades, different grades, of federal justice as between courts established under federal law as federal courts and courts exercising invested jurisdiction under section 77, the statement by Sir William Deane which we cited has, in our respectful submission, considerable relevance to the problems that arise in this case.

I want to say also that the position as to the reservation of liberty to apply in this case, a matter dealt with at page 13 and page 172 of the appeal book, is that the reservation was to the plaintiff and the defendant in terms but, of course, when Justice Hoeben’s orders were made, there were no identifiable or readily identifiable defendants because the persons joined as defendants were the beneficial owners of the property in numerous bank accounts and other property in the nature of shares in companies. 

My clients had to apply – and this is not a matter of criticism of anyone – had to apply to be joined as defendants.  They did so on the basis that they had effective control of the interests in property, the subject of the

restraints imposed by Justice Hoeben’s orders, and on 13 June the present appellants became defendants, as it were, on their own motion as the result of consent orders.  My learned friend, the Solicitor‑General for Western Australia cited the case of Olbers.  I say no more about that case than that it was a case where forfeiture depended upon and was consequential upon conviction for crime.

FRENCH CJ:   I do not think it was, that was the whole point.  The automatic forfeiture under 106A of the Fisheries Management Act occurred upon certain conduct.  There was an alternative provision 106 where you could get forfeiture following conviction, as I recall it.

MR HUGHES:   Your Honour, I naturally hesitate to endeavour to ‑ ‑ ‑

FRENCH CJ:   I think it was enough if you were going through the Australian fishing zone with your nets and your gear unstowed.

MR HUGHES:   Yes.  I had in mind in making that submission paragraph [6] of the judgment of the Full Federal Court where this was said:

The primary judge did not accept these arguments.  Instead he found that the relevant property had been forfeited during the period 12‑20 January 2002 by reason of the breaches of ss 100 and 101 of the Act.

FRENCH CJ:   There was no conviction.  That did not depend upon a conviction.

MR HUGHES:   I stand corrected.  Anyhow, nothing in terms of principle in Olbers, we venture to suggest, hurts the essential thread of our argument.  Those are the only submissions I want to make in addition to those that I put before lunch and I submit that the appeal should be allowed.

FRENCH CJ:   Thank you, Mr Hughes.  The Court will reserve its decision and will adjourn to 10.00 am tomorrow.

AT 2.29 PM THE MATTER WAS ADJOURNED