International Finance Trust Company Limited & Anor v New South Wales Crime Commission & Ors
[2009] HCATrans 107
[2009] HCATrans 107
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 TUESDAY, 26 MAY 2009, AT 10.15 AM
Copyright in the High Court of Australia
__________________
MR T.E.F. HUGHES, QC: May it please the Court, I appear with my learned friends, MR G.J. JONES and MR G.A.F. CONNOLLY for the appellant company. (instructed by Atanaskovic Hartnell)
MR I.D. TEMBY, QC: May it please the Court, I appear for the first respondent and my learned friend, MR P.F. SINGLETON, appears with me. (instructed by New South Wales Crime Commission)
FRENCH CJ: I note there is no appearance for the second and third respondents and that an affidavit has been filed.
MR S.J. GAGELER, SC, Solicitor‑General of the Commonwealth of Australia: If the Court pleases, I appear with MS K.M. RICHARDSON for the Attorney‑General of the Commonwealth intervening in the interests of the first respondent. (instructed by Australian Government Solicitor)
MR R.J. MEADOWS, QC, Solicitor‑General for the State of Western Australia: May it please the Court, I appear with MS C.L. CONLEY on behalf of the Attorney‑General for the State of Western Australia intervening in support of the first respondent. (instructed by State Solicitor for Western Australia)
MR M.G. SEXTON, SC, Solicitor‑General for the State of New South Wales: If the Court pleases, I appear with my learned friend, MR J.G. RENWICK, for the Attorney‑General for the State of New South Wales who intervenes in the proceedings. (instructed by Crown Solicitor (NSW))
MS P.M. TATE, SC, Solicitor‑General for the State of Victoria: May it please the Court, I appear with my learned friend, MS K.L. WALKER, for the Attorney‑General for the State of Victoria intervening. (instructed by Victorian Government Solicitor)
MR W. SOFRONOFF, QC, Solicitor‑General of the State of Queensland): May it please the Court, I appear with my learned friend, MR G.J.D. del VILLAR, for the Attorney‑General of the State of Queensland intervening in support of the first respondent. (instructed by Crown Law)
MR M.G. HINTON, QC, Solicitor‑General for the State of South Australia: If the Court pleases, I appear with my learned friend, MR S.T. O’FLAHERTY for the Attorney‑General for the State of South Australia intervening in support of the first respondent. (instructed by Crown Solicitor’s Office (SA))
FRENCH CJ: Thank you. Yes, Mr Hughes.
MR HUGHES: May it please your Honours. We have taken the Court – I hope your Honours will not find it too oppressive in terms of paper – of endeavouring to distil the essence of our argument into the form of written speaking notes which I gather are available to your Honours. They have, of course, been distributed to my learned friends. At the outset, it may be convenient to refer but spare your Honours the tedium of reading paragraphs (9) to (17) of our filed written submissions dated 8 May 2009 upon which we rely.
Your Honours, the question whether particular legislation substantially impairs a court’s institutional integrity ought, in our respectful submission, to be considered by reference to the essential characteristics that serve to identify an institution as a court exercising the judicial power of the Commonwealth under the Constitution. Legislation, we say, that confers on such a court functions substantially repugnant to those characteristics will run afoul of the Kable principle.
The content of the judicial oath may be a guide to the identification of those essential characteristics. As a condition of taking office anyone appointed as a judge must swear or solemnly declare and affirm to do right to all manner of people without fear or favour, affection or ill‑will. This part of the oath is a legally binding prescription governing the conduct of a judge and therefore the conduct of the institution of which he or she is a member in the execution of the judicial office.
The concept, your Honours, of doing right without favour imports a duty to be even handed in judgment. Necessarily implicit, we submit, in the idea of judicial conduct being even handed, is an obligation that no judge shall give judgment restraining the exercise of a person’s proprietary rights without giving that person an opportunity to resist the claim except in cases where the judge is reasonably satisfied that urgent circumstances exist that justify ex parte relief operative for a limited time until the defendant is given an opportunity to oppose a continuance of the relevant restraint in proceedings inter partes.
FRENCH CJ: Mr Hughes, is it critical to your argument that section 10(3) does not allow the court hearing an application for a restraining order to do other than hear it ex parte?
MR HUGHES: It is, your Honour, and we rely on the conclusions expressed in the Court of Appeal on that very point. I venture to mention that there is no attempt to cross‑appeal by the respondents against that conclusion. So that is the position established by the Court of Appeal conclusively for the purposes of this litigation. Some of the interveners, namely New South Wales and Victoria, have sought in their written submissions to canvass that conclusion, but it is a position that is, we submit, hardly open to them in the light of the acceptance by the respondents of the Court of Appeal’s conclusion on that legal question.
We would go on to say, your Honours, that necessarily implicit in the concept of even‑handed justice is an obligation on a judge not to impose such a restraint on the basis of a suspicion formed by an official of the State even if found by the judge to be a reasonable suspicion on the part of that officer that the defendant has engaged in criminal conduct.
A suspicion is a state of mind relating to the possible existence of a fact without sufficient evidence to justify a finding that the fact exists, and in that connection we refer to Queensland Bacon v Rees 115 CLR per Sir Frank Kitto at page 303, and to George v Rockett (1990) 170 CLR 104 per the Court at pages 115 and 116. I doubt whether it is necessary for me to read those passages, they are there for your Honours to see and your Honours are probably familiar with them.
That state of affairs, your Honours, we submit, is to be compared with the requirements for a grant of interlocutory injunctive relief propounded by Sir Anthony Mason in Castlemaine Tooheys v South Australia in this Court, 161 CLR 148 at page 153. Again, I doubt whether I should take up your Honours’ time by reading the passage. It will be familiar on a quick reading of it to your Honours. The requirements are, putting it very briefly, that the plaintiff – incumbent on the plaintiff to establish a prima facie case or a serious question to be tried.
CRENNAN J: Well, often that test has been sufficient for an asset preservation order applied for ex parte. In other words, that jurisdiction for asset preservation has existed for a very long time.
MR HUGHES: In the form of a freezing order, your Honour.
CRENNAN J: Yes.
MR HUGHES: Yes, yes. But of course, the essentially different circumstance where an asset preservation order or freezing order is sought is that the defendant, although not before the court when ex parte relief was granted, has an opportunity to come before the court at first instance and oppose the continuation of the order. That is an essential difference.
CRENNAN J: Well, here I think the forfeiture order has to be applied for within a short period of time and that is done on notice, so that that is, I suppose, the opportunity – the analogous opportunity for a defendant to make a case to resist the previous order.
MR HUGHES: But, your Honour, provisions relating to an asset forfeiture order, section 22 to which I will come, do not confer on the clients such as mine the opportunity to seek revocation of the restraining order before the primary judge. The only right that is exercisable – and again it is a matter for leave of the Court of Appeal – is to seek to appeal from the initial restraining order and that is what we did in this case.
Our next proposition is in paragraph (8) of our speaking notes. Legislation we say is invalid, is offensive to the concept of judicial power if it purports to confer on a Chapter III court a jurisdiction to restrain any disposition by a person of his or her property otherwise, except in urgent circumstances, than by reference to a finding in proceedings inter partes that the person concerned has either infringed a legal right or contravened a law or has raised against him or her in interlocutory proceedings an arguable case that such an infringement or contravention has occurred.
Your Honours, as stated by Justice McClellan at paragraph 68, page 173 of the appeal book, a restraining order made pursuant to section 10 of the Criminal Assets Recovery Act – which for brevity I will call CARA – is an ancillary component of a statutory scheme in which an order for the confiscation of a person’s property under section 22 is a principal object. In that connection we refer to section 3 of the Act. I hope your Honours have a print of that size. If your Honours would be good enough to go to section 3 on page 2 of the print, the principal objects of the Act are set out with great clarity.
(a)to provide for the confiscation, without requiring a conviction, of property of a person if the Supreme Court finds it to be more probable than not that the person has engaged in serious crime related activities, and
(b)to enable the proceeds of serious crime related activities to be recovered as a debt due to the Crown, and
(b1)to provide for the confiscation, without requiring a conviction, of property of a person that is illegally acquired property held in a false name or is not declared in confiscation proceedings, and
(c)to enable law enforcement authorities effectively to identify and recover property.
The salient object, your Honours, relevant to this case is that set out in (a):
to provide for the confiscation, without requiring a conviction, of property of a person if the Supreme Court finds it to be more probable than not that the person has engaged in serious crime related activities –
FRENCH CJ: You are moving here, are you not, from an attack on section 10 based upon what it requires the court to do to an attack on section 10 based on the terms and invalidity, as you would put it, of section 22.
MR HUGHES: Yes, your Honour.
FRENCH CJ: Section 10 is ancillary. So have you said everything you wanted to say about section 10 as a stand‑alone argument before moving to section 22?
MR HUGHES: No, your Honour, with respect. I will develop it in the speaking notes.
FRENCH CJ: I just wanted to make sure I knew where we were going.
MR HUGHES: Yes. Section 6 of CARA is very relevant. It says on page 7 of the print:
In this Act, a reference to a serious crime related activity of a person is a reference to anything done by the person that was at the time a serious criminal offence, whether or not the person has been charged with the offence or, if charged:
(a) has been tried, or
(b) has been tried and acquitted, or
(c)has been convicted (even if the conviction has been quashed or set aside).
We referred to that provision in paragraph (10) of our speaking note.
FRENCH CJ: The important point there is that the serious crime‑related activity does not require a conviction in order to make it out.
MR HUGHES: No. If I can forecast briefly the trend of the argument. The effect of section 6 is to impose, if a forfeiture order is made, a punishment of forfeiture without a criminal conviction or even in the face of an acquittal. Those consequences are, on any view, far reaching and, we would say, repugnant to criminal process in the case of a Chapter III court.
Your Honours, if I may interrupt myself for a moment, the constitutional objections that we submit infect section 10 are quite fully developed in our printed argument. By not referring to them in detail I am not seeking to deprecate their possible importance but I am conscious of the need to save time and not reiterate tediously what we have said in writing.
Going to section 22, I will invite your Honours to the detailed text of the section in a moment but summarise its principal effect before doing so. Section 22 imposes forfeiture of property in circumstances where the person who suffers it has not had the antecedent protection of a criminal trial with the advantage in his or her favour of the traditional requirement that the prosecution must prove the guilt of an accused person beyond reasonable doubt.
May I go back briefly to the great case of Woolmington v The Director of Public Prosecutions in England which has been applied in Australia in this Court. In the House of Lords, Viscount Sankey, Lord Chancellor, described the requirement of proof beyond reasonable doubt as one golden thread always to be seen throughout the web of the English criminal law. We say it is an inseverable thread. We say that any legislative attempt to sever it is a usurpation of the judicial power vested in a Chapter III court. It is repugnant to the proper exercise of such power, or a permissible exercise of such power.
We also refer your Honours, without going to it, to section 141 of the Evidence Act 1995 (NSW) which the statutory embodiment of the burden of proof to be discharged as a precondition to the imposition of criminal punishment. We say that such a usurpation is a substantial impairment of the institutional integrity of a Chapter III court for the maintenance of its institutional integrity depends upon its appearance of fundamental legal principle governing the administration of the criminal law.
FRENCH CJ: What do you say about section 5? It says:
For the purposes of this Act, proceedings on an application for a restraining order or a confiscation order are not criminal proceedings.
MR HUGHES: That does not affect the position, in our respectful submission, that if punishment is imposed by a forfeiture order, that is, a criminal form of punishment which cannot be constitutionally imposed without a criminal trial. I want to go if I may to Polyukhovich v The Commonwealth 172 CLR 501, particularly at page 607, where we seek to rely on a passage in the reasons for judgment of Sir William Deane. I should start reading at page 606, your Honours. His Honour said:
The Constitution is structured upon the doctrine of the separation of judicial from legislative and executive powers. Chapter III gives effect to that doctrine in so far as the vesting and exercise of judicial power are concerned. Its provisions constitute “an exhaustive statement of the manner in which the judicial power of the Commonwealth is or may be vested” . . . The specific grants of legislative powers contained in s. 51 are expressly made subject to the Constitution and it is settled law that those grants of legislative power are subject to the provisions of Ch. III identifying the permissible repositories, and controlling the manner of exercise, of Commonwealth judicial power.
The main objective of the sometimes inconvenient separation of judicial from executive and legislative powers had long been recognized at the time of the federation. It is to ensure that “the life, liberty, and property of the subject [is not] in the hands of arbitrary judges, whose decisions [are] then regulated only by their own opinions, and not by any fundamental principles of law” ‑ ‑ ‑
FRENCH CJ: But what you seek to do here is – given that there is no separation of powers doctrine under the State Constitution -is to show that the functions conferred upon the Supreme Court by these provisions of the Criminal Assets Recovery Act so distort its institutional integrity for the purposes of being a repository of federal jurisdiction as to render it invalid on the Kable doctrine. So it is not really a separation of powers issue as one might be dealing with with a Federal Court.
MR HUGHES: No, quite. Your Honour, with respect, has precisely identified the point. Then his Honour went on to say:
The main objective of the sometimes inconvenient separation of judicial from executive and legislative powers had long been recognized at the time of the federation. It is to ensure that “the life, liberty, and property of the subject [is not] in the hands of arbitrary judges, whose decisions [are] then regulated only by their own opinions, and not by any fundamental principles of law” -
and his Honour cited Blackstone and Story –
That objective will, of course, be achieved only by the Constitution’s requirement that judicial power be vested exclusively in the courts which it designates if the judicial power so vested is exercised by those courts in accordance with the essential attributes of the curial process (CF Re Tracey; Ex parte Ryan). Indeed, to construe Ch III of the Constitution as being concerned only with labels and as requiring no more than that the repository of judicial power be called a court would be to convert it into a mockery, rather than a reflection, of the doctrine of separation of powers. Common sense –
and this is a key passage, your Honours –
and the provisions of Ch III, based as they are on the assumption of traditional judicial procedures, remedies and methodology (see below), compel the conclusion that, in insisting that the judicial power of the Commonwealth be vested only in the courts designated by Ch III, the Constitution’s intent and meaning were that that judicial power would be exercised by those courts acting as courts with all that that notion essentially requires. Accordingly, the Parliament cannot, consistently with Ch III of the Constitution, usurp the judicial power of the Commonwealth by itself purporting to exercise judicial power in the form of legislation.
FRENCH CJ: Mr Hughes, you are talking here about the passages dealing with the constraints upon the Commonwealth Parliament.
MR HUGHES: Yes.
FRENCH CJ: We are talking about an Act of the State Parliament of New South Wales and speaking for myself I cannot see how this assists you in going to the question whether the function conferred upon the State court, which is not constrained by the separation of powers doctrine, by the State Parliament, so distorts its institutional integrity as to bring it within the Kable doctrine.
MR HUGHES: Well, your Honour, this is State legislation ‑ ‑ ‑
FRENCH CJ: Yes, that is the point.
MR HUGHES: - - - which requires a court at the option of a statutory body, namely, the Crime Commission, to hear an application for a restraining order ex parte if the statutory agency, statutory body, so elects. We say that the conferment of that irrefragable entitlement upon a State agency is repugnant to the exercise of judicial power by a Chapter III court, albeit it be a court invested with federal jurisdiction under section 77.
FRENCH CJ: Capable of being invested with such jurisdiction.
MR HUGHES: Yes, and in fact invested.
FRENCH CJ: We are focusing here for a moment on section 10. So far as section 10 is concerned, as I understand the centre of the complaint, it is first of all there is no option but to deal with the matter ex parte as a matter of construction.
MR HUGHES: Yes, if the State agency elects.
FRENCH CJ: Secondly, am I right in inferring from your submissions that you see the State court as confined, as it were, by the document that is put before it – that is, the affidavit by the authorised officer seeking the order?
MR HUGHES: Yes.
FRENCH CJ: And simply confined to an examination of its internal logic?
MR HUGHES: Yes. In other words – your Honour has put it very succinctly – the only evidence that the State court can consider in a case where the Crime Commission exercises the statutory right conferred upon it of proceeding ex parte is the affidavit of the authorised officer. The phrase in section 10 is “having regard to the affidavit”. Your Honour will recall that.
FRENCH CJ: Yes, the matters in the affidavit, I think.
MR HUGHES: Yes, “having regard to the matters contained in the affidavit”. So there are two fundamental objections. There are others, which we develop in these speaking notes. For example, in a case mounted by the Crime Commission for a restraining order, the court, having regard to the restriction on the scope of the evidence available to it, is not entitled to consider matters of sufficient disclosure, whether there has been a suitable disclosure of relevant facts of the kind that is imposed upon the litigant seeking ex parte relief. We develop that in our speaking notes.
FRENCH CJ: That is really the gravamen of it when it comes to section 10.
MR HUGHES: Yes.
FRENCH CJ: That is all to do with, as I put to you earlier, the Kable point, and the second Kable point has to do with section 22 and you seek to attack section 10 because of its dependence and parasitic relationship with section 22.
MR HUGHES: Dependency on section 22, yes, that is the –
FRENCH CJ: The problem with section 22, as you are seeing it, is that it requires a forfeiture order to be made without any conviction for a crime and without applying the criminal standard of proof or criminal process.
MR HUGHES: Yes, and any attempt – to come back to something your Honour the Chief Justice mentioned a few minutes ago – by the State legislature to dress up an application for forfeiture, confiscation of property, as a civil proceeding is repugnant to essential judicial process.
FRENCH CJ: That involves a collateral swipe at section 5, does it not?
MR HUGHES: Yes, which I am encouraged to do.
FRENCH CJ: I do not want to encourage any – I just want to make sure I understand the ‑ ‑ ‑
MR HUGHES: Your Honour has raised the point and we do not disavow it.
GUMMOW J: There has been no order under section 22, has there?
MR HUGHES: No, your Honour, but there are two prayers in the fourth amended summons, page 66 of the appeal book, for asset forfeiture order pursuant to section 22 of the Act. I am reading prayer 15 at the bottom of page 66:
forfeiting to, and vesting in, the Crown the interest in property of International Finance Trust Company Ltd in the property specified in Part One of Schedule –
and that property consists of moneys in New Zealand bank accounts, the names of the account holders being itemised on pages 67 and 68 and over to page 70 of the appeal book. Then prayer 16 in the fourth further amended summons seeks:
An order pursuant to section 22 of the Criminal Assets Recovery Act 1990 forfeiting to, and vesting in, the Crown the interest in property of IFTC Broking Services Ltd in the property specified in Part One of Schedule Five hereto and Parts One, Two and Three of Schedule Six hereto.
When one gets to Schedule Six, your Honours will see a large number of shares in public companies. I do not think I need to go through the detail of it. That would be tedious. Part Three of the Schedule includes real estate. The money in the New Zealand bank account was in the order of $A14 million and some small amount of American currency.
Your Honour, I was reading from Polyukhovich and I rely on that whole passage set out at page 3 and over on page 4 of our speaking notes. Sir William Deane returned to that topic at pages 614 and 615 of his reasons without qualifying anything said in the quoted passage. We venture to submit to your Honours that it is a passage of far‑reaching significance. There is nothing to the contrary of the principles expounded by his Honour in the other judgments in that case and we say that it provides a key that unlocks the door to the invalidity of both section 10 and section 22.
We make that submission on the basis of reasons that we endeavour to develop in paragraph (16) and following in our speaking notes. A confiscatory legislative prescription such as section 22 of this Act, based on the commission of an offence, is a species of punishment for crime. I should go now to section 22 in a little more detail. It is at page 25 of the print, your Honours. Section 22:
(1)The Commission may apply to the Supreme Court for an order forfeiting to, and vesting in, the Crown all or any of the interests in property that are, or are proposed to be, subject to a restraining order when the assets forfeiture order takes effect.
(1A)An application may be made under subsection (1) before or after or at the same time as an application for the relevant restraining order but may not be determined before the restraining order is granted.
From that one reaches the point that the statute makes the making of a restraining order a precondition for making of an assets forfeiture order under section 22. Subsection (2) prescribes that:
The Supreme Court must make an assets forfeiture order if the Court finds it to be more probable than not that the person whose suspected serious crime related activity, or serious crime related activities, formed the basis of the restraining order was, at any time not more than 6 years before the making of the application for the assets forfeiture order, engaged in:
(a)a serious crime related activity involving an indictable quantity, or
(b)a serious crime related activity involving an offence punishable by imprisonment for 5 years or more.
I shall now go back momentarily to the definition in section 6(2) on page 7 of the print:
In this section, a reference to a serious criminal offence is a reference to –
Many offences indeed. I will not read them all out, but somewhere there is a reference or an inclusion in the definition of any offence punishable by imprisonment ‑ ‑ ‑
FRENCH CJ: That is paragraph (d), I think, is it not?
MR HUGHES: Yes:
for 5 years or more and involves theft, fraud, obtaining financial benefit from the crime of another ‑
and so on. It is a very wide catalogue of serious crime‑related activity. The confiscatory regime created by the combined operation of section 6 and section 22 is a species of punishment for crime. In that connection, we would refer the Court to Re Director of Public Prosecutions; Ex Parte Lawler and Another 179 CLR 270 per Sir Gerard Brennan at page 279 and Sir Daryl Dawson at page 289. It was a case, your Honours, the essence of which is distilled in the headnote:
Section 100 of the Fisheries Management Act 1991 (Cth) made it an offence for a person to use a foreign boat for commercial fishing in the Australian Fishing Zone unless a licence was in force authorizing that use. Section 106(1)(a) empowered the court convicting a person of an offence against s. 100 to order the forfeiture of the boat.
Held, that s. 106(1)(a) was not a law with respect to the acquisition of property within s. 51(xxxi) of the Constitution because it imposed a penalty, by way of forfeiture, for an unlawful activity.
We have cited Sir Gerard Brennan at page 279, where his Honour said on the second half of that page:
The forfeiture of things by which offences are committed goes back to the law of deodands, but modern statutes which provide for the forfeiture of property owned by an innocent person are justified on the footing that the liability to forfeiture enlists the owner’s participation in ensuring the observance of the law and precludes future use of the thing forfeited in the commission of crime.
I do not think I need read any further. Sir Daryl Dawson at page 289 said - the second half of the page, your Honours:
Be that as it may, in my view the forfeiture of the “Jay Angela” –
the name of the boat –
ordered by the magistrate pursuant to s. 106(1) was by way of penalty, even though the applicants were not involved in the crime.
FRENCH CJ: And yet, as Justice McHugh notes at 294 in Cheatley, the Court held that a vessel could be forfeited even though it was not the property of the person committing the offence.
MR HUGHES: Yes.
FRENCH CJ: So it does not suggest that the conviction of the person whose property it is a necessary condition of a power to forfeit.
MR HUGHES: No, but where the forfeiture of the owner’s interest in the boat is dependent on conviction, forfeiture is a punishment for the crime that the owner has committed. It wears a punitive criminal element. We have made some references to Blackstone’s Commentaries on the Laws of England. I think these have been distributed to your Honour. First of all, volume I – the work is published in four volumes. In volume I, page 289, Chapter 8, item XVI.:
The next branch of the king’s ordinary revenue conſiſts in forfeitures of lands and goods for offences ; bona conƒiƒcata, as they are called by the civilians, becauſe they belonged to the fiƒcus or imperial treaſury ; or, as our lawyers term them, forisfacta, that is, ſuch whereof the property is gone away or departed from the owner.
And also in Book II at page 420 Blackstone said:
I PROCEED now to a third method, whereby a title to goods and chattels may be acquired and loſt, viz by forfeiture; as a puniſhment for ſome crime or miſdemeſnor in the party forfeiting, and as a compenſation for the offence and injury committed againſt him to whom they are forfeited.
It seems that the legal theory underlying forfeiture was that every citizen or every subject of the realm owed his ownership and possession of property to the sovereign. So that if a crime was committed against the peace of the sovereign, goods were forfeited as a punishment.
FRENCH CJ: So does it boil down to this? That forfeiture of property other than upon conviction for an offence by the owner of the property, confers upon the Supreme Court a function which falls within the Kable doctrine.
MR HUGHES: Yes, your Honour.
FRENCH CJ: And that is because you are reading into it these common law propositions from Blackstone and so forth.
MR HUGHES: Blackstone’s treatment of the subject is historically useful as definitive of the essential nature in the common law as being a punishment for crime. This theme was developed in a case in the New South Wales Court of Appeal, Director of Public Prosecutions v Toro‑Martinez (1993) 33 NSWLR 82 at pages 85 and 86 in the reasons for judgment of Justice Kirby as president of that court. At page 85 under the heading, “Historical background: attainder and corruption of blood:” his Honour said:
The common law originally provided for a complex system of forfeiture of property of a person accused of crime, once convicted: see Gollan v Nugent (1988) 166 CLR 18 at 25.
I do not think I need read on but it may be useful for your Honours to have that passage in mind. So, section 22 prescribes forfeiture as a penalty for the commission of a crime, namely, one or more of the serious crimes specified in section 6 of the Act as serious crime-related activity. We go on to say that because ‑ ‑ ‑
FRENCH CJ: The serious crime‑related activity which has to be established on the balance of probabilities in subsection (2) is not necessarily the same serious crime‑related activity that grounds the restraining order. Is that right?
MR HUGHES: No, that is so, which is an additional objectionable feature. One of the effects, your Honours, of section 22 is that it empowers, or purports to empower the confiscation of all the person’s property because that person has engaged in serious crime‑related activity, as defined, so long as within six years of the application for forfeiture being made, irrespective of whether the person concerned acquired that property by means of the serious crime‑related activity relied upon.
FRENCH CJ: But the person can then apply for exclusion of what you might call innocent property under 25 and 26. Is that right?
MR HUGHES: Yes, true, your Honour, but of course a scheme which subjects the subject to confiscation by reference to the civil onus of proof is not saved, we would say, because the subject is given an opportunity of establishing - he carrying the onus - that the property in question was innocently acquired. That is setting ordinary criminal law principles – turning them on their head.
HAYNE J: Can I understand a little better than I do the particular application that it is that the legislation is said to have in this case? Do I understand the serious crime‑related activity relied on to be that identified at page 168 of the appeal book in paragraph 17 of the affidavit, namely, contravention of “sections 176, 176A and 178BA of the Crimes Act 1900 (NSW)” is that right?
MR HUGHES: Yes, your Honour.
HAYNE J: Those are the offences of director or officer publishing fraudulent statements, directors cheating or defrauding or obtaining money or other property by deception. Is that right?
MR HUGHES: Yes, that is right. That is the essence of it.
HAYNE J: And to understand the way in which, if the case got to this point, section 26 would be engaged if there were a forfeiture, it would be necessary, would it, to understand the way in which section 9 is engaged in its operation in relation to illegally acquired property?
MR HUGHES: Yes, your Honour.
HAYNE J: Yes, thank you.
MR HUGHES: In the interests of saving the use of time unnecessarily, I have concentrated in the written argument on the impact of section 22 because that is the section under which, according to the fourth amended summons, the Crime Commission seeks the confiscation of my client’s property. In paragraph 17 we say that because section 10 is ancillary to the operation of section 22, it would follow that if section 22 is invalid, section 10 is also invalid.
As a matter of construction, one would be hesitant to impute to the legislature an intention that section 10 should have a continuing life of its own independent of the operation of section 22. The structure and content of section 10(9)(a) are such that its operation is, at least prima facie, spent upon the making of an assets confiscation order. Perhaps I should go to section 10(9)(a). It says this:
After the first 2 working days of its operation, a restraining order remains in force in respect of an interest in property only while:
a)there is an application for an assets forfeiture order pending before the Supreme Court in respect of the interest –
I should say, however, that section 20 headed “Effect on restraining order of refusal to make confiscation order”, subsection (1) says:
If, while a restraining order is in force, the Supreme Court does not make an assets forfeiture order in respect of interests in property to which the restraining order relates or a proceeds assessment order in respect of any person whose interests in property are affected by the restraining order, the Court may:
(a)if it considers it appropriate, make an order in relation to the period for which the restraining order is to remain in force, and
(b)make such other order or orders as it considers appropriate in relation to the operation of the restraining order.
So much is implicit in 22(1), we say. Section 22(1A), we submit, demonstrates the mutual interdependence of the two types of order - section 16 and section 22 - or to put the matter perhaps another way, your Honours, the subservience of section 10 to section 22. Section 20 of CARA could at most empower the court – subject to validity – in a case where it refuses to make a confiscation order, to extend the appendant restraining order only to the extent of precluding a disposition of the restrained property pending an appeal against the refusal.
In paragraph 18 of our speaking notes I cover ground that perhaps has been covered already, if not completely. We say, your Honours, that a particular invalidating result of the combined operation of section 6 and section 22 is that the Supreme Court is required to make a punitive confiscation order even against a person who has been acquitted of a serious offence constituting a serious crime‑related activity, and even against a person who has never been charged with such an offence.
Thus a protection that has always been regarded as fundamentally inherent in the exercise of judicial power in the criminal sphere is abolished. In this context it is important to bear in mind that as interpreted in Kable, we submit, Chapter III effects a limitation upon State legislative power. It precludes any legislative attempt to alter the character of the Supreme Court invested with federal jurisdiction by giving it any function that substantially impairs the due exercise as described by Sir William Deane in the passage in Polyukhovich set out in paragraph (13) of our speaking notes.
The operation of section 22, your Honours, read in the light of the words of section 6(1), is such that apart from the extreme applications we have just referred to, forfeiture of the entirety of a person’s property can be ordered without any finding by the Supreme Court according to the criminal onus that the defendant has committed a crime within the ambit of a serious crime‑related activity as defined. We venture to submit, your Honours, that it is a cardinal principle of the criminal law that no person shall suffer “punishment”, a word that includes forfeiture of property for crime, without the protection of a criminal trial according to law.
HAYNE J: If that proposition is right, Mr Hughes, how do provisions of Corporations Acts and the like providing for civil penalties stand?
MR HUGHES: Because they provide that the proceedings are civil.
HEYDON J: Hence the provision in this legislation that the proceedings under this Act are civil, not criminal. Now, if the proposition is as broad as you put it in that first sentence in paragraph 20 of your speaking notes, it seems to be a proposition that would deny the possibility of provisions for penalty.
MR HUGHES: It will always be a matter of how the provisions are enacted, but we do not shrink from the breadth of the proposition. One goes back always to the question whether the particular legislation – properly construed – effects a substantial impairment of the institutional integrity of the Supreme Court, and fastening upon the salient features of this legislation, the impairments of the due exercise of the judicial process as understood – not only by Sir William Deane, and I will go to Kable in a moment – are substantial impairments.
HAYNE J: Just apropos of the questions of penalties and forfeitures in that connection, it may be important to recall what is said in Rich v ASIC 220 CLR 129, particularly from pages 141 through to about 146 of the plurality reasons. I do not suggest we stay to examine them now.
MR HUGHES: I will certainly turn my mind to that as soon as I can, your Honour.
HAYNE J: Of course.
MR HUGHES: We say a fundamental derogation from the institutional integrity of the Supreme Court arises here because forfeiture is available upon proof, according to the civil onus, of a mere suspicion held by a State officer, so long as it is found by the court to be reasonable that the defendant has engaged in some serious crime‑related activity, that is a serious crime as defined in section 6(2); second, upon proof, again according to the civil onus, that the defendant committed some such activity as so defined, even if not an offence by means of which the defendant acquired the restrained property. This result flows from the operation of section 22(3), particularly (3)(b) ‑ ‑ ‑
FRENCH CJ: The assets forfeiture order is to be made on the basis of a finding by the court that it is more probable than not that the person engaged in a serious crime‑related activity, so it is not based on suspicion at that point, is it?
MR HUGHES: No, not at that point. But of course the key to the section 22 door is suspicion in the first instance.
FRENCH CJ: In section 10.
MR HUGHES: Yes. I will not retrace my steps. I think I am right – I hope I am right in saying that I submitted earlier that a legislative prescription that enables a State authority to obtain from a court an order restraining the exercise by a person of his or her proprietary rights is fundamentally obnoxious to the judicial process envisaged in relation to a Chapter III court.
GUMMOW J: One looks at 22(2A) - “more probable than not”. That would be perfectly valid in a federal statute dealing with a Chapter III court, would it not? Nicholas v The Queen 193 CLR 173 permits even reversal of proof, reversal of onus. This is much less than that, this is just a weaker onus.
MR HUGHES: But, your Honour, each statute has to be considered by itself and the reversal of onus was not treated there as a substantial impairment.
GUMMOW J: No, that was a Chapter III case, Nicholas was a Chapter III case.
MR HUGHES: It was a Chapter III case.
GUMMOW J: It would be an odd result if Kable had a wider reach of an invalidating kind than Chapter III did with respect to federal legislation.
MR HUGHES: Your Honour, I want to go to some ‑ ‑ ‑
GUMMOW J: This is a serious matter because there is confiscatory legislation in the Commonwealth sphere, I think.
MR HUGHES: Yes, your Honour, and very different from the confiscatory scheme propounded here.
FRENCH CJ: In the Fisheries Management Act, section 106A you have confiscation by operation of law.
MR HUGHES: I beg your Honour’s pardon?
FRENCH CJ: You have confiscation by operation of law, the Fisheries Management Act, section 106A. You drive a boat through the Australian fishing zone with your nets unstowed and you have lost it, you do not have to have a conviction for anything. That actually went to the Full Court of the Federal Court in a case called Olbers two or three years ago on a constitutional challenge.
MR HUGHES: But there are species of forfeiture that depend upon their validity as being of a prophylactic effect. Disciplinary proceedings against a professional person, impairment of liberty on quarantine grounds or mental health grounds, all these are exceptions countenanced in a case like Chu Kheng Lim to which I will come. We say in paragraph (20) of our speaking notes – I may have made this point before and I will be quick about it – forfeiture can be made to depend upon a finding that the defendant committed an offence unrelated to the suspected offence for which the antecedent restraining order was based.
Such a result is subversive of the process that should regulate a Chapter III court in the exercise of judicial power. The vice in sections 10 and 22, conjointly and separately, is their contrariety to the main objective of the sometimes inconvenient separation of judicial power from executive and legislative powers long recognised at the time of federation, namely ‑ ‑ ‑
FRENCH CJ: We are getting back to what we got to before, I think, in Polyukhovich territory and the difficulty with this is it is a very indirect argument because we are really in Kable territory here.
MR HUGHES: We are in Kable territory.
FRENCH CJ: As I see it, looking at your paragraph (20), the four key points going to what you would characterise as the insult to the institutional integrity of the Supreme Court are A, B, C and D.
MR HUGHES: A, B, C and D, yes. I doubt whether ‑ ‑ ‑
FRENCH CJ: I think you have taken us to each of them actually, Mr Hughes, with respect.
MR HUGHES: Yes, well, I do not want to be repetitive. I simply ask your Honours to consider that concatenation of objections. We say in paragraph (21) that each of those characteristics involves a substantial usurpation of the judicial process by removing basic protections available at the time of enactment of the Constitution to a person charged with crime.
To deprive a Chapter III Court with the power to control its own process by a total abrogation of the audi alteram partem rule in section 10 proceedings, to do so by excluding otherwise admissible evidence in such proceedings and by abolishing the need for proof beyond reasonable doubt of any criminal offence alleged in such proceedings is a substantial impairment of the institutional integrity and independence of the Supreme Court as a Chapter III Court.
FRENCH CJ: By a Chapter III Court do you mean a court in which federal jurisdiction may be invested?
MR HUGHES: Yes, your Honour. Now, in Polyukhovich – I go on to develop briefly the argument that in substance the impugned provisions of CARA are a bill of pains and penalties. Justice Toohey defined that concept in Polyukhovich as:
legislative acts imposing punishment on a specified person or persons or a class of persons without the safeguards of a judicial trial –
By that one means judicial punishment – of safeguards provided by a criminal trial. His Honour said at page 686 of Polyukhovich:
Legislative acts of this character contravene Ch. III of the Constitution because they amount to an exercise of judicial power by the legislature.
The vice lies in the intrusion of the legislature into the judicial sphere, but consistently, your Honours, with what Sir Daryl Dawson said in Polyukhovich at pages 649 and 650:
the real question is not whether the –
impugned sections of CARA –
amounts to a bill of –
pains and penalties –
but whether it exhibits that characteristic of a bill of [pains and penalties] which is said to represent a legislative intrusion upon judicial power.
This real question, we say, should be answered yes for the reasons articulated – we have endeavoured to articulate it. CARA is in substance, or very like a bill of pains and penalties within Justice Toohey’s definition because of the intrusive characteristic to which his Honour referred and it is legislation, your Honours, directed to a specified class of persons, namely, those persons against whom a restraining order under section 10 has been made.
GUMMOW J: Mr Hughes, could you look at the appeal book page 171, paragraphs 64 and 65 of Justice McClellan’s reasons. I am trying to get a precise understanding of the nature of the proceedings below.
MR HUGHES: Yes, your Honour.
GUMMOW J: It was 10(2)(b) was it?
MR HUGHES: It was 10 ‑ ‑ ‑
GUMMOW J: His Honour points out at paragraph 65, section 7(3) applied.
MR HUGHES: Yes.
GUMMOW J: Is that an accurate statement or do you quarrel with that statement in 64 and 65? It seems to be borne out by the orders in the pleadings.
MR HUGHES: Your Honour is referring to paragraph 67?
GUMMOW J: No, 64 and 65.
MR HUGHES: Yes, your Honour, we cannot cavil with that description.
GUMMOW J: Yes, thank you. Then could you look at paragraphs 3 and 4 of Victoria’s submissions under the heading “Introduction and summary of argument”.
MR HUGHES: Yes, paragraph 3 I have read.
GUMMOW J: Yes, and paragraph 4 deals with the section 22 point. Then I read what is said there in paragraph 3 against your paragraph (20) in your notes of oral argument and I see A, B, C and D. Now A, B and D correspond, I think, to what Victoria is joining issue with, C, however, has a little more in it I think.
MR HUGHES: Yes, your Honour. Our C?
GUMMOW J: Yes, your C. I think you were saying that even if there is not in the technical sense a bill of pains and penalties, nevertheless, 22 in conjunction with 11 is a ground that is to be added to A, B and D because of the notion of punishment without ‑ ‑ ‑
MR HUGHES: Without trial.
GUMMOW J: Yes. Is that right?
MR HUGHES: Yes.
GUMMOW J: So I think the State interveners have to take on board, if they are following what is laid out there, as I think they are and I can understand why, in paragraph 3, really you rely on 22 not just as a pains and penalties argument in the technical historical sense, but as an addition to the offensive grounds for Kable doctrine was at the moment tripartite but they are quadripartite.
MR HUGHES: Yes, your Honour.
GUMMOW J: Thank you.
MR HUGHES: Technically this is no bill of pains and penalties because the legislature does not itself impose the punishment, it authorises somebody else to do so.
GUMMOW J: Yes, I understand. Why I am taking it up with you is, your opponents say, well, that is the end of it and you say, no, it is not because you get it in on this other ground, or seek to.
MR HUGHES: Yes. It is hauntingly like a bill of pains and penalties as described by Justice Toohey in that brief passage in Polyukhovich. But, of course, as Sir Daryl Dawson said, that is not the real question. Is this Act one that impermissibly intrudes upon the exercise of judicial power by the Supreme Court of New South Wales. One goes back to Chief Justice Gleeson’s formulation of the essence of the Kable principle in the case that we have cited, Fardon 223 CLR 575 at page 591. I hope I have answered your Honour’s question.
GUMMOW J: Yes, thank you.
MR HUGHES: In Chu Kheng Lim there is a passage in the judgment of Justice McHugh which we have set out from page 70 of the report which begins in 176 CLR 1. His Honour said this:
No express prohibition against the enactment of Bills of Attainder or Bills of Pains and Penalties is to be found in the Constitution. However, it is a necessary implication of the adoption of the doctrine of the separation of powers in the Constitution that the Parliament of the Commonwealth cannot enact such Bills. An Act of the Parliament which sought to punish individuals or a particular group of individuals for their past conduct without the benefit of a judicial trial or the procedural safeguards essential to such a trial would be an exercise of judicial power of the Commonwealth and impliedly prohibited by the doctrine of the separation of powers. Such an Act would infringe the separation of judicial and legislative power by substituting a legislative judgment of guilt for the judgment of the courts exercising federal judicial power.
We say by a parity of reasoning an Act of a State Parliament, for example CARA, which establishes a process for the punishment of individuals or a group of individuals identified sufficiently for their past conduct without the benefit to them of a judicial trial and the procedural safeguards attendant on such a trial, meaning a criminal trial, would be invalid as an impermissible usurpation of the judicial power vested in a Chapter III court under section 39 of the Judiciary Act.
FRENCH CJ: Well it could not be an exercise of federal judicial power. It would be State Parliament doing something, so it has nothing to do with section 39, has it?
MR HUGHES: No, quite. We accept this, your Honour, that section 16 and section 22, one or both, singly or together, can give rise to a federal constitutional point as was the case in Kable. I will come to that in a moment.
FRENCH CJ: We are not talking about a State Parliament purporting itself to exercise judicial power through legislative process. It is rather the functions that it is conferring upon the State Supreme Court that we are focused on, it is not?
MR HUGHES: Exactly. We say that if CARA is an Act which seeks to punish an identifiable class of persons for past criminal conduct without the benefit of a judicial trial, and the procedural safeguards essential to such a trial – meaning a criminal trial – then the status of the Supreme Court of New South Wales as a Chapter III court is impaired.
One notable feature is to be found, your Honours, in the submissions of those parties who assert that section 22 of CARA has no punitive character. One can read the submissions made by the Commonwealth intervening, and the submissions of the New South Wales Crime Commission in vain to find any attempt to define what character – other than the denied punitive character – this Act has. They say it is non‑punitive, but they do not endeavour to define the object in terms of a non‑punitive element.
GUMMOW J: Mr Hughes, when you are looking at New South Wales, could you look at the New South Wales submissions, 2.4? One issue is whether section 10 – you see that statement there? Do you support that construction of the Attorney?
MR HUGHES: No, your Honour, and we say that it is a construction that is not open to an intervener, given a factor in this case to which I alluded earlier this morning. The Court of Appeal has found in favour of our argument that a court exercising its jurisdiction under section 10 is bound to hear the proceeding ex parte if the Crime Commission elects for that mode of operation and it is not open to the Crime Commission as a party to make the assertion in 2.4 ‑ ‑ ‑
FRENCH CJ: That is not the Crime Commission. The Crime Commission is holding to the more draconian construction. The Attorney‑General for New South Wales seeks to soften it.
MR HUGHES: Yes.
FRENCH CJ: You seek to uphold the more draconian construction, too?
MR HUGHES: Yes, I do, your Honour, and I invoke the circumstance that that it is the way the Court of Appeal dealt with the matter and there has been no attempt to canvass that conclusion by seeking special leave. That serves to mark out the boundaries of this case. Neither New South Wales nor any other ‑ ‑ ‑
GUMMOW J: You say that on a question of validity on this Court’s deciding a question of validity, it is not open to an intervener to put a point of construction ‑ and questions of construction have to be dealt with first – a question of construction not accepted by the immediate contestants to the litigation in this Court?
MR HUGHES: I do.
GUMMOW J: You may be right, but there has been some straying in the past, I think.
MR HUGHES: Intervention is, in its nature, likely to be a straying operation if a proper hold is not kept on the scope of submissions. It would seem, in our respectful submission, quite incongruous to permit an intervenor to break free.
HAYNE J: We looked at this in K-Generation 83 ALJR 327. At 353, paragraph [155], we touched on the subject. The ground is not wholly unbroken, Mr Hughes.
MR HUGHES: No.
FRENCH CJ: It might be said of course that it would be an incongruous thing if the construction of a public statute should depend upon the way in which construction points are argued at the intermediate appellate level.
MR HUGHES: May I say this. I can see, with respect, there is force in what your Honour puts, but surely the right path for an intervener in this circumstance is to persuade the party with which it is allying itself to raise the point as an issue in the litigation, rather than dropping it in by way of intervention.
I can see, with respect, what your Honour Justice Hayne has said about the fact that the point was touched on at, I think, paragraph [155] of K‑Generation - I will come to K‑Generation later. But, your Honour, it is very difficult, we respectfully submit, for one to be able to find a way through the legislation which permits the Supreme Court - in the face of the very strong words of section 10 - to disregard the wording of subsection (3):
The Supreme Court must make the order applied for under subsection (2) –
and that refers to an ex parte order.
GUMMOW J: “Must” is an unhappy legislative choice of word, but before we got into the new brutalism it would say the Supreme Court “shall”, and what is offensive about that? Not all jurisdiction which is created by statute has an ultimate discretion involved in it. If the statute specifies certain criteria which have to be satisfied and then says if those criteria are satisfied the court shall make an order, what is unusual about that?
MR HUGHES: Nothing, if the provision stands only at that level, your Honour, but this section confines the court to the content of the affidavit, the last two lines of section 10(3)(b) or below (b) and the ‑ ‑ ‑
GUMMOW J: But the Court has to consider something as being a state of affairs, namely that there are reasonable grounds, and if all that the applicant can do is to put forward the affidavit, that may turn around and bite the applicant.
MR HUGHES: Of course, in this case, all the relevant parts of the affidavit were rejected.
FRENCH CJ: The term “ex parte” used in subsection (2) qualifies the nature of the application which the Commissioner may make. In other words, that is to say the Commissioner “may make” an application without notice, not obliged to, but that says that such an application may be made without notice. Why does it follow that it must be heard and determined without notice?
MR HUGHES: Because of the word “must” in subsection (3):
The Supreme Court must make the order applied for under subsection (2) if the application is supported by an affidavit of an authorised officer stating –
certain things - I will not read them. It is difficult, having regard to that explicit language, to find fault with the construction placed on the provision by the Court of Appeal.
FRENCH CJ: You might, for example, adopt a construction which says that the court cannot go outside the framework of the affidavit – I am not saying that is necessarily the right construction – in determining whether it is under an obligation to make the order. That does not require it to exclude the possibility that the person affected by the order can be heard on whether the affidavit is sufficient.
MR HUGHES: It all depends on the relationship between the opening words of subsection (2), including the words “ex parte”, and the opening words and the last two lines of subsection (3). The reality on the ground, as it were, in this case, your Honours, is that the Crime Commission has always relied on its apparent statutory entitlement to proceed ex parte. The way in which this Act was administered until the Court of Appeal said otherwise was that orders were made without reasons. The Court of Appeal corrected that by saying some sort of reasons must be given, but we would submit –
GUMMOW J: But you do not challenge that, do you?
MR HUGHES: No.
GUMMOW J: That construction, I mean, as to reasons?
MR HUGHES: No, we do not challenge the treatment of this case by the Court of Appeal, except on the constitutional point. Travelling forward in my speaking notes, I come to paragraph (26). If, your Honour, as we have submitted, CARA is an Act which seeks to punish an identifiable class of persons for past criminal conduct without the benefit of a judicial trial and the procedural safeguards essential to such a trial, it is like a bill of pains and penalties.
We rely on what was said by his Honour Justice Callinan and your Honour Justice Heydon in Fardon at page 655 of 223 CLR. At that page, part of paragraph 218, your Honours said, and I quote:
No express prohibition against the enactment of Bills of Attainder or Bills of Pains and Penalties is to be found in the Constitution. However, it is a necessary implication of the adoption of the doctrine of separation of powers in the Constitution that the Parliament of the Commonwealth cannot enact such Bills. An Act of Parliament which sought to punish individuals or a particular group of individuals for their past conduct without the benefit of a judicial trial or the procedural safeguards essential to such a trial would be an exercise of judicial power of the Commonwealth and impliedly prohibited by the doctrine of the separation of powers.
FRENCH CJ: This is, I think, a quote from Lim, is it not? They are quoting Lim here, I think.
MR HUGHES: Yes.
FRENCH CJ: Justice McHugh in Lim.
MR HUGHES: Yes.
FRENCH CJ: Because we have already seen that, I think.
MR HUGHES: Yes. Now, over on the next page, your Honour Justice Heydon with Justice Callinan said:
Not everything by way of decision‑making denied to a federal judge is denied to a judge of a State. So long as the State court, in applying legislation, is not called upon to act and decide, effectively as the alter ego of the legislature or the executive, so long as it is to undertake a genuine adjudicative process and so long as its integrity and independence as a court are not compromised, then the legislation in question will not infringe Ch III of the Constitution.
In our main filed submissions we dealt with that passage in Fardon.
FRENCH CJ: I think it is at page 9.
MR HUGHES: Yes, at page 9 we have said this. In citing from the joint reasons of Justice Callinan and your Honour Justice Heydon in Fardon the Court of Appeal has disregarded the imposition in the Fardon reasons of the triple condition necessary to sustain validity in a case where State legislation is challenged for non‑conformity with Chapter III. One, the court is not made the alter ego of the legislature or the executive. That restriction is infringed because of the conferment of authority upon the Crime Commission to determine that the proceeding be ex parte. There must be a genuine adjudicative process. There cannot be a genuine adjudicative process in the relevant sense if the person affected by a threatened restraint of his property is not given a chance to be heard. As to the third restriction, that restriction is observed only colourably.
We say the essence of section 10 is that it is secures an ancillary restraint on property intended by the Crime Commission to be the subject of an application for confiscation and to do so by a process involving a breach of elementary principles of natural justice. The essence of section 22 is to subject a person to liability for confiscation of his or her property by a statutory process erected in defiance of judicial protections available under the criminal law to a person charged with the contravention of the criminal law.
I will not go to Liyanage but it is a case that your Honours may find interesting, the decision of the Privy Council in a case from Ceylon which we say the reasoning in which we say supports the appellant’s attack on validity. Now, there is an interesting – or your Honours may think – decision of a primary judge in the Supreme Court of New South Wales in a case, New South Wales Crime Commission v D’Agostino (1998) 103 A Crim R at page 113. We have distributed copies, your Honours.
This case provides a stark illustration of the oppressive reach of section 22. The case demonstrates that the structure of sections 10 and 22 lacks the element of judicial discretionary controlled described by Justice Kirby in Silbert at paragraph 48 as one of the necessary hallmarks of judicial power.
Justice Sperling, your Honours, was constrained by the intractable provisions of the legislation – the Criminal Assets Recovery Act – to order the confiscation of valuable property, the acquisition of which was quite unconnected with relatively minor offences satisfying the definition of “serious crime related activity” in section 6.
I will not read from it because time is marching on, but I would invite your Honours’ consideration of it because what happened in that case was that Justice Sperling was constrained to order full confiscation in circumstances where the serious crime‑related activity relied upon by the Commission as the basis for the confiscation order was engagement in the larceny by the person subject to forfeiture in the theft of six sweaters from David Jones within a period of six years before the confiscation application was made.
We would also submit that section 22 read with the definitions of “serious crime related activity” and “serious offence” in section 6 and the prescription contained in subsection (1) contradict another important principle of a criminal law established in a New South Wales case, R v Clift 52 SR(NSW) 213 adopting the reasons expressed by Lord MacDermott and the Judicial Committee in an appeal from Malaya of Sambasivam v The Public Prosecutor, the Federation of Malaya. The principle is that a verdict of acquittal of an accused person on a criminal charge precludes the Crown from making a later assertion to the contrary of the verdict.
Section 6(1) does just that, your Honours. State legislation cannot exempt, we say, a Chapter III court from the operation of this principle. Section 6(1) of CARA purports to do so. In paragraph (32) of our speaking notes we submit that section 10(3) is invalid on each of three separate but interrelated grounds. First, it directs the court as to the manner in which it must exercise its jurisdiction. Second, it directs the court as to the outcome of the exercise of its jurisdiction, doing so by confining the admissible evidence to that which will necessitate the making of a restraining order if the court is satisfied that the authorised officer’s professed submission had a reasonable basis.
The third ground is that it is ancillary in an inseverable way to the operation of section 22 which is also invalid because it imposes forfeiture as a form of punishment for criminal guilt established according to the civil onus of proof. Your Honours, the most recent case in this Court in the Kable line of authority is K-Generation decided as recently as 2 February. The judgment of your Honour the Chief Justice is important in the context of this appeal because your Honour noted several features, the absence of which from the legislation there under scrutiny served to negate invalidity.
The first missing feature was the lack in section 28(5) of the challenged South Australian Liquor Act of any subjection of the Licensing Court or the Supreme Court of South Australia to the direction of the Executive or an administrative authority. By contrast, we say CARA section 10 does subject the Supreme Court to the direction of the Crime Commission in that the court must make the order applied for.
FRENCH CJ: That is a direction of the legislature, is it not?
MR HUGHES: Yes, to the Supreme Court. Yes, your Honour.
FRENCH CJ: Yes. But it is not subjecting the court to the direction of the Executive.
MR HUGHES: It is, with respect, your Honour, because it permits an officer of the Crime Commission to select the form of procedure. I have been over that ground before. That is the point.
FRENCH CJ: Yes, all right.
MR HUGHES: According to a significant criterion of invalidity adopted by your Honour the Chief Justice in K‑Generation, section 10(3) of CARA would be invalid. The proposition enunciated, a very important proposition enunciated by Chief Justice Gleeson in Fardon – see our filed submissions, your Honours, at paragraph (9) – requires for its effective application an assessment by this Court of the degree of any impairment of the institutional integrity of a Chapter III court with a view to determining whether or not it is a substantial impairment.
It is submitted in this case that the degree of relevant impairment is clearly substantial for the reasons I have articulated earlier in our speaking notes and in our filed written submissions. In Silbert 217 CLR 181 at page 217 Justice Kirby compiled a list of defects in State legislation that would lead to its invalidity on grounds expounded in the majority judgments in Kable. The list included the following: (a) invalidity would result if such legislation obliged a State Supreme Court to act in relation to a litigant “in a manner which is inconsistent with traditional judicial process”. That was Justice Toohey at page 98 of Kable. One would add to that Sir William Deane in Polyukhovich which I cited this morning.
Second, or (b) invalidity would result if proceedings under such legislation can be characterised as “proceedings [not] otherwise known to the law”; Justice Gaudron at page 106. Invalidity would result if the effect of the impugned stated legislation is to “compromise the institutional impartiality of the Supreme Court”; per Justice McHugh at page 121. The invalidity would result if legal proceedings under the impugned legislation would be “repugnant to judicial process”. That is per your Honour Justice Gummow at page 134. We would also cite Thomas v Mowbray 233 CLR 307 at 355 per your Honours Justices Gummow and Crennan.
FRENCH CJ: Incidentally, the points that you are taking out of Justice Kirby’s judgment in Silbert I think appear at page 197.
MR HUGHES: I am so sorry. Thank you, your Honour. At paragraph 111 of Thomas v Mowbray your Honours, Justices Gummow and Crennan said:
The plaintiff sought to extract from remarks of Gaudron J in Nicholas v The Queen support for something like a “due process” requirement from the text and structure of Ch III. The decisions of the Court have not gone so far. But it may be accepted for present purposes that legislation which requires a court exercising federal jurisdiction to depart to a significant degree from the methods and standards which have characterised judicial activities in the past may be repugnant to Ch III. Do the provisions of the Code concerning interim control orders oblige issuing courts to act in a manner inconsistent with the essential character of a court or with the nature of judicial power? It then becomes necessary in the present case to consider the complaints which the plaintiff makes respecting the processes and outcome of applications for interim control orders.
As to that list - with the addition of the extract from the joint judgment of your Honours Justices Gummow and Crennan in Thomas v Mowbray - we would say that section 10 and section 22 of this Act, CARA, fail on each of the above grounds. We have dealt with the points of failure. Your Honours, we say that a further basis for asserting the invalidity of section 10(3) of CARA is that the mandated ex parte hearing will preclude a litigant from invoking federal jurisdiction under section 39 of the ‑ ‑ ‑
FRENCH CJ: What does that mean? Does that mean that if you are not there you cannot raise a constitutional challenge?
MR HUGHES: Precisely, your Honour, and in Kable, Justice Toohey at page 94 and Justice McHugh at page 114 respectively observed that the Chapter III point was engaged at the primary hearing before Justice Levine, because that was not an ex parte hearing and the constitutional point was raised. The ex parte nature of the proceedings precludes the constitutional issue from being raised at what can be regarded as the only appropriate time, or an appropriate time.
GUMMOW J: But the party has to be served, do they not, with the order once it is made?
MR HUGHES: Yes, that is true, your Honour. But it is objectionable, we would say, to the judicial process that a person affected is denied an opportunity at a primary hearing of raising a constitutional point. I will not read or reiterate what we said in paragraph 39, because I have said it before.
FRENCH CJ: Incidentally, was there any liberty to apply in the orders that were made in this case?
MR HUGHES: In the original primary orders?
FRENCH CJ: Yes.
MR HUGHES: No, your Honour.
FRENCH CJ: Sorry, I am looking at page 13, paragraph 4.
MR HUGHES: Page 13 of?
FRENCH CJ: Of the appeal book which, I think, if I am correct, was the order made on 13 May and paragraph 4:
Liberty to the Plaintiff and defendant to apply on three (3) days notice.
MR HUGHES: I am sorry, it is there, yes.
GUMMOW J: But immediately upon receipt of the notice under 11(2), the person in question could approach this Court, could they not, seeking an injunction on the grounds of invalidity of the statute?
MR HUGHES: Yes, we took another course available to it ‑ ‑ ‑
GUMMOW J: I realise that.
MR HUGHES: There are some passages in Kable 189 CLR 1 to which I would briefly refer. At page 94, Justice Toohey pointed out that federal jurisdiction in that case was invoked at the primary hearing before Justice Levine, and I think Justice McHugh said the same thing, in effect, at page 114. At page 103, her Honour Justice Gaudron said, in the second paragraph on the page:
Two other matters of significance emerge from a consideration of the provisions of Ch III. The first is that State courts are neither less worthy recipients of federal jurisdiction than federal courts nor “substitute tribunals”, as they have sometimes been called. To put the matter plainly, there is nothing anywhere in the Constitution to suggest that it permits of different grades or qualities of justice, depending on whether judicial power is exercised by State courts or federal courts created by the Parliament.
His Honour Justice McHugh at pages 114 and 115 said this:
Under the Constitution, therefore, the State courts have a status and a role that extends beyond their status and role as part of the State judicial systems. They are part of an integrated system of State and federal courts and organs for the exercise of federal judicial power as well as State judicial power. Moreover, the Constitution contemplates no distinction between the status of State courts invested with federal jurisdiction and those created as federal courts. There are not two grades of federal judicial power. The terms of s 71 of the Constitution equate the vesting of judicial power in the federal courts . . . And s 77(iii) permits the Parliament of the Commonwealth to invest any court of a State with federal jurisdiction in respect of all matters that are or can be vested in the original jurisdiction of this Court or the federal courts.
To uphold the validity of this Act would run the risk of creating two grades of judicial power and it is a risk which, in our respectful submission, is to be avoided. Lastly, page 132 of this case, dealing with Kable, your Honour said this, just below the top of the page:
I have referred to the striking features of this legislation. They must be considered together. But the most significant of them is that, whilst imprisonment pursuant to Supreme Court order is punitive in nature, it is not consequent upon any adjudgment by the Court of criminal guilt. Plainly, in my view, such an authority could not be conferred by a law of the Commonwealth upon this Court, any other federal court, or a State court exercising federal jurisdiction. Moreover, not only is such an authority non‑judicial in nature, it is repugnant to the judicial process in a fundamental degree.
These sections of CARA run contrary to that principle, your Honours. The pages of the Commonwealth Law Reports since the landmark decision in Kable contain reports of numerous cases in which litigants have failed to invoke its principle with any success. So far Kable is unique as the only success story. This history is reminiscent, perhaps, of attempts to force a camel through the eye of a needle, but we say that because of manifest deficiencies in CARA, to which we have adverted, the eye of the needle here is large and it is a small camel. As your Honour Justice Gummow observed in Fardon at paragraph 104:
That a particular constitutional doctrine requires close attention to the detail of impugned legislation and that its invalidating effect may be demonstrated infrequently does not, as the history of the application of Melbourne Corporation over fifty years shows, warrant its description at any one time as a dead letter.
Those are the submissions we would make, except for a brief reference to the Queensland case. Your Honours, I will finish by quarter to one.
FRENCH CJ: I thought you were going to finish earlier for a moment, Mr Hughes.
MR HUGHES: My junior prompted me to refer particularly, because I have not read them, to attempt to deal with, and rely upon, the decision of the Court of Appeal in Queensland in Re Criminal Proceeds Confiscation Act 2002 [2004] 1 Qd R 40.
FRENCH CJ: You have dealt with it in your written submissions, of course.
MR HUGHES: Yes. I merely wanted to emphasise that we do support the decision of the Queensland Court of Appeal on the grounds that we have outlined, or more than outlined, in our written submissions. It is good law and of acute application to CARA. It is perhaps one of the little ironies of history that Queensland comes here, never having sought special leave to appeal from the Court of Appeal in the case in which my learned friend the Solicitor, Mr Sofronoff, appeared, and five years later they seek to disown it, having, your Honours, extensively amended their own Act to make it compliant with the principles enunciated in that case with that long, rather awkward title in the Queensland Court of Appeal. It is an irony.
Of course, Attorneys from other States here are seeking to support CARA, despite the fact – I am not going to go into it – that their legislation, the legislation of those States, avoids the pitfalls we have sought to find in CARA. Their legislation is very different from CARA which is, of course, a pre‑Kable piece of legislation – 1990 is the year of enactment of CARA. For all those reasons, we submit this appeal should be allowed. I am sorry I have taken so long, but I have kept within the morning.
FRENCH CJ: Thank you, Mr Hughes. We will adjourn in a moment. I presume there will be some agreement between the interveners as to the order, in order to avoid overlap, but we will leave that until after lunch. We will adjourn to 2.15.
AT 12.44 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.16 PM:
FRENCH CJ: Yes, Mr Temby.
MR TEMBY: In the exercise of jurisdiction under section 10(3)…..is required to do at least four things: firstly, determine whether certain statutory criteria have been met, they being that there is an affidavit which is sworn by an authorised officer which deposes to a belief as to suspected criminality and states the ground for that suspicion; secondly, the court must decide whether the stated grounds for suspicion are reasonable, and that appears from the concluding words of section 10(3); thirdly, the court must decide whether to call for an undertaking as to damages and costs, which it can do under section 10(6), and, if so, the terms of it. If an undertaking is proffered the court still has a function in deciding whether the terms proffered are adequate and, if not, it need not grant relief.
Fourthly, the Court must decide what ancillary orders should be made under section 12, including whether the property is to be taken from the owner and held or otherwise controlled by the public trustee or left where it is subject to the requirement that no person can deal with it. Now, because this is a challenge to constitutional validity, it is of no more than passing interest but it as least of passing interest to note, if one looks at the order in the appeal book at pages 12 and 13, that each of those things was done. It appears on the face of the order an undertaking was received. There is a recitation at page 12, line 50, as to reasonable grounds. The court did clearly determine that the statutory criteria had been met and it did make ancillary orders with respect to control of property being vested in the public trustee and the way in which that property would be handled by the public trustee.
So there are those four matters which require determination and there may be a fifth matter depending upon whether the construction urged by certain of the interveners is adopted, namely, to decide whether the matter should proceed ex parte, as sought by the Commission, or on an inter partes basis. Now, whatever the decision might be as to the last point, it is clear that in doing these things the court is acting as a court and not as a mere rubber stamp of executive decision which is the key submission urged for the appellants.
As to each of these matters there is a determination to be made and it is the court that makes that determination not the Crime Commission or any other part of the Executive. The range of action which is available to the court on the hearing of a restraining order or an immediate consequence of the grant of a restraining order is not tightly constrained. So, for example, it could and typically does, and in this case did, grant liberty to apply on short notice.
That means that persons affected by the order can be heard not as to whether circumstances have changed, because the key question is whether the grounds stated in the affidavit do give rise to a reasonable suspicion, but certainly as to whether material facts have been withheld in which the ordinary consequences flow or whether the order was obtained by fraud, similarly, or whether further ancillary orders should be made because the section 12 power can be granted when the restraining order is issued or subsequently.
FRENCH CJ: The liberty to apply in this case was on three days notice.
MR TEMBY: Yes.
FRENCH CJ: The order itself would self‑destruct under section 10(9) unless an application for an assets forfeiture or one of the other conditions of that subsection was satisfied?
MR TEMBY: That is correct, your Honour, and in this case the summons was, in fact, filed I think the day after the restraining order was obtained and it may be a fair assumption that that was before the court when the restraining order was granted because ‑ ‑ ‑
GUMMOW J: It was filed on the same day I think, Mr Temby.
MR TEMBY: Well, if it was the same day, then ‑ ‑ ‑
GUMMOW J: You can tell by the date stamp on page 2 and on page 12.
MR TEMBY: Then it is very likely indeed that it was before the judge that granted the restraining order, which is what typically happens.
HAYNE J: Is there any procedure or practice whereby the party or the person affected by the order is to be served with process or the material upon which the ex parte order was obtained?
MR TEMBY: Yes, your Honour. The Act talks in terms of notice being given. The invariable practice is to give that notice by the service of the papers in the ordinary way, which is to say, restraining order, affidavit and summons.
HAYNE J: 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: Certainly.
HAYNE J: 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.
MR TEMBY: Certainly.
HAYNE J: That is Edison v Bullock 15 CLR 679.
MR TEMBY: Yes. With respect, there can be no doubt, in our submission, as to that. Furthermore, as again this case happens to demonstrate, the ordinary rights of appeal exist with respect to restraining orders and in this case were exercised and were exercised successfully. The court can vary the interest in property to which the restraining order relates, section 12(1)(a) says so in terms, and if moved and subject to compliance with section 25, can, in effect, discharge the restraining order in its entirety, that is to say, if the section 25 criteria are met, then the restrained property will be freed from restraint completely.
HAYNE J: Now, those section 25 criteria hinge, do they not, about the concept of illegally acquired property?
MR TEMBY: They do.
HAYNE J: Which requires application of section 9.
MR TEMBY: Yes.
HAYNE J: And illegally acquired property refers to or encompasses illegal conduct wider than and different from the conduct which is alleged to found the restraint.
MR TEMBY: That is correct, your Honour.
HAYNE J: In particular, it extends to conduct contrary to the law of New South Wales or the Commonwealth and conduct that, if it were committed within New South Wales, would be contrary to the law of New South Wales, I think. Is that right?
MR TEMBY: That is right.
HAYNE J: Any contravention that constitutes an offence is a form of illegal activity. Is that right?
MR TEMBY: That is correct. It must be conduct which constitutes an offence against a law of New South Wales or the Commonwealth or a law of some other place which would be such a contravention. The next point to be made is that the ordinary features of court process, including the rules of evidence and rights of appeal, are left untouched by the legislation which is here in question. As again this case happens to demonstrate, the rules of evidence must be complied with and, as I have said, rights of appeal exist. Further, reasons must be given, as the Court of Appeal decided, and there is no provision in the legislation for closed court procedures. In all of these respects the court is recognisably acting as such.
FRENCH CJ: Can I just take you back for a moment to section 10(3) and working on the assumption that the application made ex parte must be heard ex parte. I am just wondering what the court’s function is in its consideration of the affidavit of the authorised officer. The condition of its obligation to make the order is that the application is supported by an affidavit which answers certain criteria, namely, that there is a statement of suspicion of the relevant content and, secondly, a statement of the grounds on which that suspicion is based. That tells us the nature of the content of the affidavit and then the judgment the court has to make (a) is that it answers that content and (b):
that having regard to the matters contained in any such affidavit there are reasonable grounds for any such suspicion.
That must mean at the very least there is a rational relationship or connection between the stated grounds and the asserted suspicion. What else does it mean? What else can the court look at in this ex parte exercise where it is basically dealing with an affidavit?
MR TEMBY: 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 and, as was suggested from the Bench this morning I think by Justice Gummow, the fact that the court is confined as to reasons for suspicion to the contents of the affidavit cuts both ways, that is to say, that limits what the Commission can rely upon just as it largely limits that to which the court can give consideration.
If there was content in the affidavit that raised doubt as to whether the application was of a genuine nature or whether there was material that might perhaps be being withheld, then the court could no doubt question the deponent. We would suggest that that would be an ordinary incident of judicial functioning and in circumstances where the legislation does not exclude those ordinary incidents, that is no doubt something that could be done.
The Court might find it helpful in considering this aspect of the argument to think in terms of functions on the one hand and procedures on the other. The function which the court is exercising under section 10(3) is to hold safe assets that may end up being forfeited and that is an unremarkable court‑like function. So far as procedures are concerned they are in some respects prescribed and in other respects left uncontrolled so that they remain those that the court ordinarily enjoys as part of its inherent jurisdiction or under the UCPR, for example, so far as evidentiary requirements are concerned.
We say that a State Parliament can so prescribe procedures so long as what remains is recognisably a court, which is to say an independent and impartial body, judging the case before it rationally and not merely doing the bidding of the legislature or the Executive, and our submission is that the Supreme Court of New South Wales is such a court when acting under this Act and in particular when acting under section 10(3).
It needs to be remembered, in our submission, that a restraining order is merely a first step in a staged statutory process which is emphasised by the fact that such an order lapses unless proceedings for a confiscation order under section 22 or section 27 have been commenced within two days. At the end of the day the question will be whether such a confiscation order should be made and as the Court knows, that can only be done upon actual proof of serious crime‑related activity.
Further, no restraining order is final in its terms or effect. Ancillary orders can be made under section 12 at any time, so can exclusion orders and in these circumstances it is hardly surprising that in the nearly 20 years since the Act was enacted no instance is known of a judge propounding the proposition that he or she was being required, when a restraining order was sought, to act in an extra‑judicial manner. Often enough judicial statements have been made as to the strength of the legislation and it is sometimes in the reported cases categorised as Draconian in nature, but one does not find anywhere the suggestion that the court is being used as mere cover for executive action.
We accept that the Kable doctrine applies to the Act as it impacts upon the Supreme Court. The operative principle, as explained in Fardon v Attorney-General, has been referred to already and I think need not be repeated by me. Our submission is that the Act does not impact significantly or in any relevant respect upon the court‑like functioning or, if you wish, the functioning of the court, as such, of the Supreme Court, that the Act does not impact upon the institutional integrity of the court and that is surely emphasised by the fact that, although there is some prescribing of procedures, so much of what remains is entirely unaffected and is in all respects consistent with the ordinary discharge of functions by the Supreme Court as such.
A whole series of distinctions can be drawn between this legislation and the legislation under consideration in Kable. Firstly, the function to be exercised is recognisably judicial not executive and very like that which the Court does with some frequency when granting Mareva or Anton Piller injunctions.
Secondly, it is not ad hominem legislation. To the extent my learned friend, Mr Hughes, submitted that it was legislation which related to a class, that is not a submission that should be accepted because the class, as he put it, was all persons whose interests might be affected by orders of this sort, and immediately one sees that this is legislation of a general, not a specific nature. Next, section 10 provides for interlocutory orders only affecting interests in property, not final orders affecting liberty, as in Kable, or indeed property rights.
FRENCH CJ: I notice that in section 12(1)(a) that – and this is really just incidental – that the court can make an order varying interests in the property. What is the application of that? This is while there is a restraining order pending and before any forfeitures have been ordered.
MR TEMBY: Yes. That remains underdetermined by any authoritative decision. In Ollis, the New South Wales Court of Appeal said that application could not be made to negate or discharge a restraining order entirely except under section 25 or, we would say, on the traditional grounds of lack of material disclosure or fraud. The application under section 12, we are told by the section itself, can be made by the Commission or by another ‑ ‑ ‑
FRENCH CJ: It can be made in the course of the ex parte hearing, can it not?
MR TEMBY: It could be made, no doubt, in the course of the ex parte hearing and a case in which such application would doubtless be made would be if it was discovered that some mistake had been made which required rectification. That is to say, that is a circumstance in which the Commission could, and doubtless would, apply for variation and ‑ ‑ ‑
FRENCH CJ: I am sorry, perhaps I was misreading it and making it more dramatic than it is. It is really about varying the application of the order, is it not, rather than the interests in property? In other words, it is really talking about varying the scope of the order.
MR TEMBY: It is varying the scope of the order, puts it correctly. If you want to empty the order of all content, then that has to be done under section 25 which, as we know, can be done at any time either before or after a confiscation order is made. I am continuing to deal with differences between this legislation and the legislation under consideration in Kable.
The next point is that this legislation operates with respect to conduct that has occurred, not estimates of future conduct. Next, there is no modification of the rules of evidence as there was in Kable. Next, this Act does not proleptically apply the criminal law. Next, we submit it is a carefully calculated legislative response to a general and genuine social problem which the Act in Kable was held not to be. This Act does not tend to make the Supreme Court the agent of political policy and it does not tend to press the Court to reach a particular decision in a particular case.
Each of those characteristics was to be found in Kable. None of them is to be found in the present legislation. With respect, that in and of itself does not dictate outcome because if in some other and sufficient respects, this legislation was sufficiently offensive not to traditional procedures, but rather because it involved the legislature dictating a judicial outcome or enable the Executive to dictate the outcome of a case or, in other ways which have not necessarily been fully developed, there may be occasion for the conclusion to be reached that the legislation is offensive.
I have pointed to a whole number of ways in which this legislation accords with normal precepts, a whole number of ways in which the Act leaves the court to behave as courts have always done and the respects in which in the final analysis it could be said that this is detracted from by the legislation, is practically limited to the provision for ex parte hearings which even put at their highest, consistent with the Court of Appeal approach and the submission we urge upon this Court, is a mere slight and perfectly permissible departure from the ordinary judicial processes with which not just lawyers but citizens are well accustomed.
In Palling v Corfield (1970) 123 CLR 52 it was decided that a court can be properly required by a party to do something. In that case – it was one of the National Service cases back in the days of conscription – what the court could be required to do by a prosecutor was to ask a convicted person whether he would enter into a bond to attend a medical examination. In this case what the court can be required to do is to proceed ex parte. We say that if, as in Palling v Corfield, a court could be required by a prosecutor to do something, so in this case the court can be required by a party to the litigation to do something.
Of importance there and here is that the court otherwise acted as such, which is to say on evidence, in open, making a decision in a rational manner, deciding something susceptible of a positive or a negative conclusion with the decision being subject to appeal. Similarly, in R v Smithers; Ex parte McMillan (1982) 152 CLR 477 a constitutional challenge to section 243B of the Customs Act was rejected. It provided for a proceeds assessment order on grounds strikingly similar to those to be found in sections 27 and 28 of the Criminal Assets Recovery Act. In that case the validity of section 243E was accepted, it providing for a restraining order in circumstances for present purposes materially indistinguishable from the impugned section 10(3).
HEYDON J: Was anything in the nature of a Kable argument put in these cases?
MR TEMBY: No, your Honour.
HEYDON J: They may have some significance but it is fairly limited then.
MR TEMBY: Yes, I accept that.
I mention also Thomas v Mowbray (2007) 233 CLR 307, a recent case in which interim control orders with respect to those who may pose terrorist threats were able to be granted by a court exercising federal jurisdiction, notwithstanding that such orders were by the legislation able to be obtained on an ex parte basis. The Court considered it to be significant that a later hearing by way of confirmation was provided for as it is in effect, we say, under the Criminal Assets Recovery Act and also that all the ordinary incidents of the court’s powers and functions remain unimpaired. It is urged upon the Court that section 22 is a bill of pains and penalties and, accordingly, invalid and that section 10 falls with it.
FRENCH CJ: It is not really put that way, is it, in Mr Hughes’ oral argument? It has some of those characteristics and then that segues into the Kable point, I think.
MR TEMBY: I think what your Honour says is right enough. We say that, firstly, even if the major premise is correct, that is to say, even if section 22 is invalid whether as a bill of pains and penalties or otherwise, it does not follow that section 10 falls, because section 10 does work other than in relation to section 22. A section 10 restraining order will remain so long as a confiscation order under either section 22 which is forfeiture of property, or section 27 which is a proceeds assessment order, is applied for and, accordingly, even if section 22 was invalid, section 10 would continue to have legitimate work to do by reason of its linkage with section 27.
FRENCH CJ: Yes. But is there any material distinction, for the purposes of Mr Hughes’s argument, between sections 22 and 27, given the criteria?
MR TEMBY: Your Honour, to the extent there are material distinctions, they run against the argument of the appellants. After all, section 22 provides for a hearing on notice and for proof of actual as opposed to merely suspected serious crime‑related activity.
What my learned friend is then left with is that civil forfeiture or, if you like, civil penalties are unavailable because they are inconsistent with common law notions, and he goes back to Blackstone. That ignores the fact that we are here dealing with a piece of legislation passed by a State Parliament and a State Parliament is unconstrained as to the powers it can confer upon the State Supreme Court, subject only to such constraints as arise under either the Commonwealth Constitution or the State Constitution.
With respect, there can be no doubt, we submit, as to the competence of the State Parliament to provide for forfeiture in civil proceedings upon actual proof of some stated statutory criteria, in this case, actual serious crime‑related activity and it is not to the point to inquire whether this is consistent with the law as to forfeiture as it operated in the days of Charles II. This legislation is, as I have urged, of general application. It is not of course referable to a known person as in Kable or to a class of persons as in Liyanage v The Queen [1967] AC 259 to which Mr Hughes referred the Court.
In any event, as to this point, the decision of this Court in Silbert v Director of Public Prosecutions (2003) 217 CLR 181 is fatal to the contention of the appellants. In that case, a person could in stated circumstances be “taken to have been convicted of a serious offence” with forfeiture following. The Western Australian legislation in question was held to be valid. We say that the Criminal Assets Recovery Act gets less close to conceivable invalidity. It does not talk about anybody being deemed to have been convicted. It does not talk in terms of guilt or conviction at all. It rather says that if serious crime‑related activity as defined is proved to the criminal standard, then certain consequences flow subject to ameliorating possibilities by reason of hardship, which is section 24, or exclusion or partial exclusion orders, which are sections 25 and 26.
Further, as the Court noted in Silbert, forfeiture provisions, even extending to the interests in property of innocent third parties, are to be found in the Customs Act, have long been found there and have been held to be invalid.
Could I conclude by making two or three relatively small points, largely in response to certain things Mr Hughes said, or which arose in discussion. Firstly, your Honour Justice Gummow was right in saying that in this case it was section 10(3)(b) jurisdiction that was being invoked and the order that was made was an order with respect to defined interests in property, it was not an all interests order, and our submissions at paragraph 28 referred incorrectly to this being an all interests order. It was an order with respect to defined interests in property made under section 10(3)(b). I say that to clear that up. It does not, of course, go to the question of constitutional validity.
GUMMOW J: What paragraph was that in your submission?
MR TEMBY: Paragraph 28, your Honour. I have made the point, I think, already that my learned friend – and this appears in paragraph (24) of the speaking notes – in saying that the legislation referred to a specified class of persons was, with respect to him, speaking very loosely. This is clearly
legislation having general application. I also point out that under section 12, it is provided that orders for examination may be made, and such an order has been made, not when the original restraining order was made but subsequently, and you will find that examination order at page 50 of the appeal book.
Your Honours will appreciate that under section 3(c) of the Criminal Assets Recovery Act, one of the principal objects is “to enable law enforcement authorities effectively to identify and recover property”. An examination order is calculated to assist in the identification of property and a restraining order is calculated to assist in the recovery of property.
HAYNE J: Mr Temby, one matter that you may have to take on notice, earlier forms of Rules of Court provided expressly for making available of affidavit material used on ex parte applications for injunction or for a writ ne exeat. The early form of rule seems to be Order 66, rule 7J of the 1883 English forms of rules. I would be glad to know eventually whether the applicable Rules of Court in New South Wales make any specific provision equivalent to that, or any specific provision which either requires or permits the provision of the affidavit material that was used on an ex parte application in favour of the person against whom the order was made, but as I say, you may have to take that on notice.
MR TEMBY: I will have to. I know what is customarily and, I believe, invariably done, but I do not know whether the Rules of the Court require it to be done.
HAYNE J: It is rules based or practice based, yes.
MR TEMBY: Yes. They are the submissions for the first respondent.
FRENCH CJ: Thank you, Mr Temby. Yes, Mr Solicitor.
MR GAGELER: Your Honours, I hope to be fairly brief. I want to say something very shortly in defence of the capacity of an intervener to raise a new point of construction. I want to say something about the validity of section 10 and then something about the validity of section 22.
As to the capacity of an intervener to raise a new point in the appeal, I am being slightly repetitive of what I said in K‑Generation but what I want to say is this. The court clearly is not bound by the construction of a statute that is advanced by the parties, or any of them. An intervener under section 78A of the Judiciary Act has the status and with it the privileges and, we accept, the responsibilities of a party and as a party an intervener has the capacity of a party, certainly no less than any other party, to raise a new point in an appeal. That, of course, is subject to any directions of the court foreshadowed in K‑Generation and subject to any applicable rules of court. There are no applicable rules of court.
So far as a cross‑appeal is concerned, the applicable rule is Order 42.08.1. It has no application because nobody raising the point of construction is contending for a different order from that which was made below. Arguably, a notice of contention might be required by Order 42.08.5 but only if the point is raised by a respondent and applying the definition in Order 40.01, an intervener does not fall within the category of respondent.
So, the only question is one of really procedural fairness, is there adequate notice and the only point raised in this appeal of which it might be said there is inadequate notice is the new argument that has emerged in relation to section 22. We will deal with that as best we can in the course of the argument.
Your Honours, in relation to section 10, as to its construction, we line up behind the first respondent. We accept that section 10(2) confers on the Commission the power to elect to proceed ex parte, that is, when it says:
The Commission may apply to the Supreme Court, ex parte –
It means, one, the Commission may elect to apply to the Supreme Court and, two, the Commission may elect to do so ex parte. We also accept that where the Commission elects to apply under section 10(2) ex parte, the Supreme Court is obliged to proceed under section 10(3) ex parte, that is to say, we accept the holding of the Court of Appeal in this respect at paragraphs 101 to 104 of the judgment under appeal.
What we dispute about the construction of section 10(3) is the construction advanced by the appellants which says that the Supreme Court in every case is confined to considering the affidavit of the authorised officer. When you look at the words in the concluding lines of subsection (3):
having regard to the matters contained in any such affidavit –
they are, in our respectful submission, words of obligation. Even as words of obligation they are qualified by section 5(2)(b) of the Act which makes the rules of evidence applicable but they are words of obligation, they are not, in our submission, words of limitation. That is to say, they do not prevent the Supreme Court having regard to such other matters as may properly be placed before it in accordance with the rules of evidence made applicable by section 5(1)(b) either by the Commission itself, if the Commission elects to proceed ex parte, or by any party if the Commission elects to proceed inter partes.
That construction, in our submission, is the natural construction of the statutory language but it is supported, we would submit, by the general principle of the construction of statutes conferring functions on a court, that general principle being referred to in Knight v FP Special Assets Ltd and applied in a relevant context in Mansfield v Director of Public Prosecutions. I will give your Honours simply the reference, 226 CLR 486 at paragraph 10, applied at paragraph 25.
GUMMOW J: But what other evidence could the Court be having regard to?
MR GAGELER: The question for the Court is whether there are reasonable grounds for the suspicion. For example, if the Commission chose not to proceed ex parte it would be open to the person, or a person who may be affected by the order and who has notice of it to seek to cross‑examine the deponent of the affidavit. It would also be open to that person to lead further evidence which would seek to establish to the satisfaction of the Court that there are not reasonable grounds for that suspicion.
GUMMOW J: Yes, but the other construction is that - if you look at 10(2) it says, “The Commission may apply to the Supreme Court, ex parte”. It is not saying the Commission may apply to the Supreme Court, ex parte or otherwise. In other words ‑ ‑ ‑
MR GAGELER: That is another construction, your Honour, yes.
GUMMOW J: Section 10(2) is creating this authority in the Commission and it is another one of these unfortunate sections that confers jurisdiction all jumbled together – and confers standing. It is really conferring standing on the particular party.
MR GAGELER: It confers a capacity or a power, yes, or a standing, yes. Your Honour, there are a number of competing constructions. All I have said so far is that I have supported the construction or will be content to adopt the construction adopted in the Court of Appeal.
FRENCH CJ: What does the court do? This is the question I put to Mr Temby, I think. What does the court do when confronted on an ex parte application simply with the affidavit in the assessment of whether there are reasonable grounds for suspicion? Does it have more to do than just look at whether there is a rational connection between the stated grounds and the asserted suspicion?
MR GAGELER: The way in which the Court of Appeal analysed the evidence in the present case to say that there was not a sufficient evidentiary basis for reasonable grounds for the suspicion is really demonstratively what the court should do. One, it should apply the rules of evidence to the affidavit. It should reject those parts of the affidavit which do not comply with the applicable rules of evidence. Two, having applied the rules of evidence, it should make a determination, yes, as to whether or not there exists a rational evidentiary basis for the suspicion which has been deposed to. I do not really want to substitute “rational” for “reasonable grounds”. Reasonable grounds is a ‑ ‑ ‑
FRENCH CJ: I am just trying to unbundle them into what they require of the court. I suppose the other related question is, the court is to have regard to the matters contained in any such affidavit, you would not contend that that means have regard only to the matters contained in that affidavit if there are other matters?
MR GAGELER: No. That is a burden of, really, a submission that I was making. It cuts both ‑ ‑ ‑
HAYNE J: But would it permit the court to have regard to what is urged from the Bar table? It is not unknown, after all, to obtain ex parte injunctions with no material, no proceedings, no process yet issued, but for the court to act entirely on what counsel urges from the Bar table, in the truly urgent case and there are lots of consequences that follow about service of material and swearing to what has happened. But in this case, is it to be open to the Commission to ‑ ‑ ‑
MR GAGELER: In our respectful submission, no, because the court is bound to apply the rules of evidence. I could stand to be corrected, I am sometimes corrected in these things, I do not think that the rules of evidence would strictly permit statements from the Bar table to be accepted as evidence, your Honour, even in civil proceedings.
HAYNE J: It is discussed in Seton’s Judgments and Orders at 514 and there is some discussion about how it is done.
MR GAGELER: Yes. In our submission, that would probably be excluded by section 5(1)(b) but, in any event, that practice would be inconsistent with the statutory scheme. That would be our submission on that point.
HEYDON J: If an application was made under subsection (2) ex parte, then subsection (3) meshes into it perfectly satisfactorily, if an application were made inter partes and the defendant sought to read an affidavit, what is the subsection that meshes into that procedure? Subsection (3) seems to act only to the ex parte application.
MR GAGELER: Where you would be there, your Honour, would be with the ordinary application of the Rules of Court and procedures of the Supreme Court to the extent to which they are not specifically overridden or codified in this context by this Act. So the court would be applying section 10(3) in accordance with its terms. It would be considering whether there are reasonable grounds for the suspicion deposed to in the affidavit. And in forming the view as to whether or not there are reasonable grounds for the suspicion deposed to in the affidavit, it would, in accordance with section 10(3), have regard to the matters contained in the affidavit to the extent that they are admissible, but it would also have regard to such other matters as are before it.
GUMMOW J: The trouble is that the opening words at 10(3) link it back to an application under 10(2), which is ex parte.
MR GAGELER: Which can be ex parte. If it is ex parte, then section 10 ‑ ‑ ‑
GUMMOW J: If it is not ex parte there is this gap, I suppose.
MR GAGELER: Your Honour, perhaps we are going over ground that I attempted to skim over fairly lightly ‑ ‑ ‑
GUMMOW J: It is important, Mr Solicitor, because I understand from paragraph 5 of your submissions that you are saying that a structure of this sort could validly be enacted in the federal law.
MR GAGELER: That is right, yes, that is the burden of our argument. In our submission the ‑ ‑ ‑
GUMMOW J: What I am trying to understand is are you saying that a federal statute that was purely ex parte would have a problem with validity?
MR GAGELER: No, I am not. As I understand it to be put against me, a federal statute which gave the Commission an election either to proceed or to proceed inter partes would be off, but would be in greater jeopardy in constitutional terms, and I am trying to take the argument me at its highest and still say in that case, assuming section 10(2) to allow to the Commission that choice – either to proceed ex parte, or inter partes – there is no constitutional problem, and in so doing, in each of the respects that I have made submissions so far about the construction of section 10(2) and the construction of section 10(3), I am accepting the approach of the Court of Appeal, and I am adopting the submissions of the first respondent.
Your Honours, the result of that, in our submission, is that subject, in every case, to the discretion of the Supreme Court under section 10(6), the jurisdiction and duty of the court under section 10(3) is exactly the same. It is to make a restraining order if two conditions are satisfied, the first of those conditions being that an application is made under subsection (2) and is supported by an affidavit of an authorised officer in terms of either paragraphs (a) or (b), and the second condition is that the court, having regard to the matters contained in that affidavit, and having regard to any other matters that are properly placed before it, and applying the rules of evidence in accordance with section 5(1)(b), considers or is satisfied that there are reasonable grounds for the suspicion that is stated in that affidavit.
Your Honours, why I have laboured that slightly is that to that point, 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.
GUMMOW J: I am sorry, section 17?
MR GAGELER: Sections 17, 18, 19 and 20 of the current Proceeds of Crime Act (Cth) which is the 2002 Act. Your Honours were taken this morning – I do not ask you to turn back to it – to the decision of the Court of Appeal in Toro-Martinez 33 NSWLR 82 and that was a decision which upheld the validity of section 44 of the 1987 Act when challenged on constitutional grounds and I would particularly draw your Honours’ attention to President Kirby’s analysis at the top of page 91.
GUMMOW J: What is the citation again?
MR GAGELER: 33 NSWLR 82, particularly at 91. What you have in that model, that is leaving the ex parte nature of the application to one side and just looking at the structure of what is required by sections 10(2) and 10(3) or the equivalent provisions of the Commonwealth legislation, what you have, in our respectful submission, is the classic attributes of an exercise of judicial power. You have the court finding the facts, applying the rules of evidence. You have the court applying to those facts objective legal criteria.
You have the court, if it finds those objective legal criteria met, making an order which has binding legal effect, and it can make no difference to the nature of the power being exercised that if the court finds those objective legal criteria to be met that it has a duty and not a discretion to make an order. There are countless examples of double function legislation which is expressed in terms of the court must, or using the old language, the court shall order if satisfied of certain things. There are even more examples where, using even older language, the statutory requirement was cast in terms of the court “may”, “may” being held to mean “shall” in that context.
GUMMOW J: Mr Solicitor, does the federal Proceeds of Crime Act throw the net as widely as to the nature of the crime as the New South Wales Act does with the definition of “external crime”?
MR GAGELER: Not quite.
GUMMOW J: Is it limited to laws of the Commonwealth?
MR GAGELER: It is, I believe, limited to the laws of the Commonwealth but I will find the precise section, your Honour – and foreign offences, laws of the Commonwealth and some foreign offences.
GUMMOW J: Some foreign offences?
MR GAGELER: Yes. So, your Honours, the real and only question that arises in relation to section 10 ‑ ‑ ‑
GUMMOW J: Any cases on section 51(xxxi) in that situation?
MR GAGELER: In respect of the proceeds of crime legislation.
GUMMOW J: Yes, going beyond Lawler’s case, in other words.
I think, section 51(xxxi) was perhaps tangentially raised in Toro‑Martinez. I have mentioned that to you already. Certainly there was an argument that the provisions were beyond power and it was more squarely raised in a case called Della Patrona 38 NSWLR 257. That was in respect of the 1987 Act.
So, your Honours, turning to the ex parte nature of the application, we cast our submissions, as your Honour Justice Gummow has already observed, at the highest level and it is a level that is really suggested by the reasoning of the Court in Bachrach and also in Silbert, that is to say, that the duty to proceed ex parte in this context even if imposed by Commonwealth legislation on a court exercising federal jurisdiction would be entirely compatible with Chapter III. If that is right at that highest level, then it must follow that the Kable principle cannot be infringed. In support of that proposition can I make three points, and they are these.
The first is that it is wrong to treat a direction to determine an application ex parte as in form or in substance a direction as to the outcome of that determination. That might seem like a pretty obvious proposition but it is a proposition that identifies the error in the reasoning of the Queensland Court of Appeal in the judgment that your Honours have been referred to but not taken to. It is Re Criminal Proceeds Confiscation Act 2002 (2004) 1 Qd R 40. There is just one sentence that I want to take your Honours to. It is at page 55 and it is line 40. It is this sentence which then leads to the conclusion in paragraph 45 that Kable is infringed. It is a sentence that is directed to the requirement of the court to proceed ex parte. It says:
Effectively 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.
In our submission, that intermediate conclusion, critical to the ultimate conclusion stated in the next paragraph, is a matter of impression and it is a matter of wrong impression and it is really falsified, again, if one looks at the outcome in the present case, that is, the reasoning of the Court of Appeal, when the Court of Appeal in the present case looked carefully at the material placed before the court at first instance ex parte and held it not to measure up to allow the court to consider that there were reasonable grounds for the state of suspicion. That is the first point.
The second point is that in our submission it is wrong to treat the obligation of a court to proceed in a particular way if a particular party makes an election as inconsistent with the reality or appearance of institutional integrity or impartiality. Your Honours have already been taken by the first respondent to the decision of this Court in Palling v Corfield 123 CLR 52. It is, as our learned friend acknowledged, a pre‑Kable Case but it is none the worse for that in this context given that if the conferral of a function of this nature would pass muster in respect of a court exercising federal jurisdiction then it would necessarily pass muster in respect of a State court exercising State jurisdiction and needing to conform with the Kable principle.
The argument in Palling v Corfield one can see as a strong Chapter III argument presented or recorded at page 53, as presented by Dr Pannam and it is that strong Chapter III argument that is rejected by all members of the Court, in particular by Chief Justice Barwick at pages 58 to 59, by Justice Menzies at pages 64 to 65 and Justice Walsh at page 69. I do not want to delay the Court by reading from it.
The third point we wish to make is this. It is wrong, in our submission, to treat a direction to determine an application ex parte in a preliminary or interlocutory phase of a proceeding as necessarily so wanting in procedural fairness as to be incompatible with the judicial process. We remind your Honours that there was a requirement in one aspect to proceed ex parte in the legislation considered in Thomas v Mowbray.
That was commented upon in terms which were not adverse in the judgment in 233 CLR 307 at paragraph 112 and again at paragraph 598. In a broader context we should say this, that procedural fairness which of course is inherent in the judicial process must always be considered in the context of the process as a whole. That two‑part proposition one finds very strongly stated by the Full Court in Commissioner of Police v Tanos.
GUMMOW J: There is no news about this. Edison v Bullock 15 CLR 679 which Justice Hayne referred to arose out of an ex parte order made by Justice Barton in a patent action in this Court, did it not?
MR GAGELER: Yes. Your Honour has gone back further than me. Can I go to 98 CLR just to give you the reference to add to that? It is 98 CLR 383 at 395 to 396, so yes, your Honour, it is a well‑worn proposition. Here, of course, the process begins with section 10 and begins ex parte but it ends with section 22 in a contested hearing and 22 being qualified relevantly by sections 25 and 26. So, all you have in section 10 is the making of an order which is inherently preliminary, interlocutory or ancillary and one has the duty conferred by section 10(3) qualified by the discretion in section 10(6), that is to require an undertaking as to damages and also one has in that interim period the ability to make the ancillary orders for which section 12(1) applies.
Your Honours, for those reasons, leaving aside for a moment section 22, there is no difficulty in the requirement under section 10(3) to proceed ex parte. One then comes to the challenge, which has got bigger, to section 22. I should say that section 22 is relevantly indistinguishable in its operation from section 47 of the Proceeds of Crime Act of the Commonwealth and one has to recognise that section 22 is not a stand‑alone provision but it is qualified by section 25 and section 26, that is, the reverse onus of proof provision allowing for the exclusion of property. It is section 22 operating in conjunction with sections 25 and 26 and with the other ancillary provisions of the Act that combine to give effect to the principal objects that one sees stated in section 3, certainly not section 22 alone.
Two things can be immediately put to one side, in our submission. The first is the question of whether or not section 22 is analogous to a bill of pains and penalties. That is relevant under the United States Constitution to whether or not the prohibition against a bill of attainder might be transgressed by either State or federal legislation. It is simply not a relevant question that arises under the Australian Constitution. The second question that can be put to one side, in our submission, is whether or not section 22 can be described as punitive.
We were criticised for not addressing that point in our written submissions. We did not address it because we took on the authority of Rich that classification to be based upon a false and, indeed, constitutionally impossible dichotomy and to be constitutionally irrelevant. That is the way we read what was said in Rich 220 CLR 129 at paragraph 35. Taking up what your Honour Justice Hayne had said in Labrador Liquor 216 CLR 161 at paragraph 136.
Our response to the appellant’s broadest argument in relation to section 22 is this. Even if one applies the principles stated in Nicholas 193 CLR 173, they are principles applicable to the exercise of federal jurisdiction and therefore higher level principles, more onerous principles than are made applicable by the application simply of the Kable principle. There is nothing inconsistent with the nature judicial power or with the separation of judicial power to allow or require a court to order the forfeiture of property on proof to the civil standard that a person engaged in criminal conduct.
If one looks back through the cases one can see an extremely long history of civil forfeiture or pecuniary penalty being played out in the statutory context. The common law, we would accept, probably knew nothing of it. Certainly, Blackstone said the common law knew nothing of it. But legislation, particularly regulatory legislation, has known a lot about it for an awfully long time. Can I just give your Honours references to that in this Court: Burton v Honan 86 CLR 169, particularly at page 178; Cheatley v The Queen 127 CLR 291, particularly at page 310. Your Honours have already been referred to Ex parteMcMillan 152 CLR 477.
But in any event, in an extraordinarily relevant context and simply repeating for emphasis what your Honours have already heard from the first respondent, the case of Silbert 217 CLR 181, although dealing with State legislation, adopted the higher federal jurisdiction test and, applying that test or measure of compatibility with the exercise of judicial power, said that there was nothing inconsistent with Chapter III in doing precisely what section 22 purports to do in the present Act. Your Honours, those are our submissions.
FRENCH CJ: Thank you, Mr Solicitor. Solicitor‑General for Western Australia.
MR MEADOWS: May it please the Court. Needless to say we rely on our written submissions. Can we also say that we adopt the submissions of the first respondent and the interveners in relation to the issue of a Bill of pains and penalties.
In our oral submissions we propose to address just two issues. The first of these is the issue relating to legislation which mandates the making of an order by a court in particular terms consequent upon some exercise of judicial power. In our submission, there is ample authority to the effect that such a provision will not be invalid, in the same way that legislation that mandates a consequence arising from a specified event will not be invalid.
In this connection, can we refer to what we have said in paragraphs 44, 49 to 56 and 68 of our submissions. May I make reference to the judgment in Olbers v The Commonwealth of Australia which the Chief Justice referred to this morning. In that case, the appellant instituted proceedings against the respondents for the alleged unlawful seizure and detention of a vessel by the Commonwealth and the equipment and catch. Section 106A of the Fisheries Management Act provided that the boat, the nets, the traps, the equipment and the catch used in the commission of certain offences were forfeited to the Commonwealth.
A notice was then required to be given to the owner of the vessel requiring it to institute proceedings against the Commonwealth for recovery of those items or a declaration that the vessel had not been forfeited. In this case the appellant submitted, amongst other things, that the forfeiture effected by section 106A was invalid as an exercise by the Parliament of the judicial power of the Commonwealth.
This contention was rejected at first instance by your Honour the Chief Justice in your former life as a judge of the Federal Court and also on appeal. This was because section 106A did not require any judicial determination to give effect to the forfeiture, albeit that a judicial determination may subsequently be made if the occurrence of the forfeiture was contested in later proceedings. As the Full Court said – and this is in (2004) 143 FCR 449, this is at page 459 of the report in paragraph 29:
The legislation provides that if event “x” occurs then the legal consequence is “y”. On the face of it, that is a proper exercise of legislative power. The ultimate determination of whether event “x” has occurred or not, is a determination by a “Chapter III” court, as these proceedings bear witness. Such a law is not inconsistent with the constitutional limitation.
The court referred to Silbert. Similarly, we would say that legislation which prescribes that a particular penalty must be imposed will not infringe any issue arising from the Kable principle. Reference has been made to Palling v Corfield and in answer to a question from Justice Heydon, my learned friend, Mr Temby, suggested that a Kable‑type argument had not been raised in that case.
With respect, I do not think that does justice to Dr Pannam’s argument in that case and, as can be seen from, for example, the judgment of Justice Menzies at page 63 of the report, which is in 123 CLR 52, the argument is summarised in the third paragraph of his Honour’s judgment and it is clear enough that this was an attack based on Chapter III of the Constitution. There are certainly echoes or overtones from the kind of argument that was put in Kable.
If I could just then refer to a number of recent examples where courts in this country have upheld the validity of legislation where certain orders were mandated by the legislature and refer to the Director of Public Prosecutions v George (2008) 102 SASR 246 and, in particular, to what Chief Justice Doyle stated at page 270 in paragraph 112 where he said:
It is not uncommon for legislation to provide that, if in proceedings before a court specified matters are established, a particular consequence will follow or a particular order must be made. This feature of s 95 –
of the legislation there under consideration relating to the imposition of pecuniary penalty orders –
is of no particular significance. The failure to interpose a judicial discretion, or a judicial decision, between the establishment of the criteria and the making of the order is not problematic.
So the removal of the court’s discretion or ability to make an order based on its own judgments once the necessary factual basis for the making of an order is established, will not offend, in our submission, the Kable principle.
It is, I think, also sufficient to refer to the mandatory sentence cases of which Palling v Corfield of course is an example, but also to the case of Wynbyne v Marshall (1997) 117 NTR 11, a Northern Territory Full Court decision. The appellant in that case had been sentenced to 14 days imprisonment because section 78A of the Sentencing Act (NT) required the imposition of a mandatory term of imprisonment of not less than 14 days where the offender had been found guilty of a property offence. The appellant argued that this constituted an interference by the Executive in the discretionary powers of the judiciary. The court rejected that submission, relying on Palling v Corfield. If I could refer to what Chief Justice Martin said at ‑ ‑ ‑
FRENCH CJ: Is there any principle in the case relevant to this?
MR MEADOWS: That the particular provision did not offend the Kable principle, and I might say that an application for special leave in that case which was heard there and we refer to it in footnote 75 of our submissions, in which it was argued that special leave should be granted in that case because the legislation offended against the Kable principle was refused in Wynbyne v Marshall [1998] HCATrans 191.
GUMMOW J: So what?
MR MEADOWS: It just demonstrates that the finding of the Northern Territory Full Court that it did not offend the Kable principle was not sufficient to dissuade the panel that heard that special leave application that it was worthy of special leave. On the theme of the Northern Territory, could I also refer to the case of Burnett v Director of Public Prosecutions (2007) 21 NTLR 39 which is a criminal property forfeiture case and was again a case which dealt with whether or not the provisions of the legislation in question there offended the Kable principle, and it was held that it did not.
The only other matter that I wanted to refer to was that the making of ex parte orders for the preservation of property, pending a final determination, is not alien to the exercise of judicial power. We make this point in our written submissions that there are judge‑made rules relating to the ability to deal ex parte with applications for the preservation of property by way of freezing orders, or restraining orders, or orders which restrain the disposal or removal of property from the jurisdiction.
We do refer in footnote 48 of our submissions to the Uniform Civil Procedure Rules 2005 (NSW) as an example of that and it is interesting to observe, if one looks at Division 2 of those rules relating to freezing orders, it is noted there ‑ ‑ ‑
FRENCH CJ: What is the footnote number that you refer to?
MR MEADOWS: I said paragraph 48, but it is referred to in the footnote there at 63. That the freezing order and search order provisions in the Uniform Civil Procedure Rules were developed under the auspices of the Australian Council of Chief Justices. So, these are judge‑made rules relating to the ability to obtain ex parte orders. I might say that these rules are now replicated in each State and Territory of Australia and we have provided a comparative schedule of the various provisions in those rules.
The short point that we make is that if it is capable of being the subject of judge‑made rules, it is a very difficult argument to sustain that legislation which provides for the making of ex parte orders restraining the disposition of property or the removal of property from the jurisdiction is invalid because it offends against the Kable principle. May it please the Court, they are our submissions.
FRENCH CJ: Thank you, Mr Solicitor. Mr Solicitor‑General for New South Wales.
MR SEXTON: If the Court pleases. There are two matters that I wanted to deal with. One is the construction of section 10 and the other is to say something briefly about the decision of the Queensland Court of Appeal. That means that we will not be making oral submissions about the question of the application of the Kable principle to section 10 on the construction that is contended for by my learned friend, Mr Hughes, nor about the application of the Kable principle to section 22. They have been the subject of detailed written submissions, including ours, and also oral submissions now by Mr Temby, Mr Gageler and Mr Meadows.
Your Honours, if I can go to section 10 and if I can perhaps just add two points to what I will describe as the question of the standing of the interveners that was referred to by Mr Gageler. The first of those points is that, as we understand it, Mr Hughes effectively conceded that the constitutional question does not arise if his construction is not adopted and on that basis we would say that the Court is required to consider that question first. So it is a very different situation from the question that arose in relation to some of the interveners submissions in K‑Generation.
The second point is to refer to a paragraph in this Court’s decision in Gypsy Jokers (2008) 234 CLR 532 which was set out in part in our written submissions but not in whole. Paragraph 11 of the plurality judgment reads:
The first step in the making of that assessment of the validity of any given law is one of statutory construction. So far as different constructions appear to be available, a construction is to be selected which would avoid rather than lead to a conclusion of constitutional invalidity. Further, where, as in this case, no facts are in dispute, it is not only competent but may be expedient in the interests of justice for this Court to entertain an argument as to statutory construction even if it was not previously fully developed in that form.
We, of course, put this argument in the court below and it is dealt with in the judgments of the court below, to which I will take your Honours just on that question shortly. It may be useful, your Honours, to have section 10, which is at page 13 of the annexures to the appellant’s submissions in that booklet with the plastic cover. If one looks at section 10(2), it can be seen that the first line says that
The Commission may apply to the Supreme Court, ex parte, for a restraining order –
Then if one goes to subsection (3), it says:
The Supreme Court must make the order applied for –
in certain circumstances, and there has been some discussion of those. But, in our submission, the section is silent as to the procedure that will be adopted or may be adopted on the hearing of the application for the restraining order and in those circumstances we would ask why one would assume that the normal common law position would not be implied into the statutory provision, particularly in circumstances where, on all the authorities, an exclusion of the rules of natural justice requires an express exclusion, an express provision, and that has not happened in this case.
I will come to section 11(2) which is relevant as well to this question, but it seems to us that to assume that it would not be open to the court to ask the other party to the application to attend and, indeed, to make submissions in some circumstances is an assumption that simply cannot be made on the basis of this provision.
HAYNE J: Is that what the court would do or would it be directing the applicant to serve? The two may not be the same step.
MR SEXTON: That is so, your Honour, but they may be ‑ ‑ ‑
HAYNE J: Which would it do?
MR SEXTON: It depends in a sense on what the other party perhaps knows about the proceedings, but it ‑ ‑ ‑
HAYNE J: It is prompted by the contrast that is to be drawn between the New South Wales provision and section 26(4) and (5) of the federal Act, the Proceeds of Crime Act 2002, section 26(4) reading:
(4)The court must consider the application without notice having been given if the DPP requests the court to do so.
(5)The court may, at any time before finally determining the application, direct the DPP to give or publish notice of the application to a specified person or class of persons.
What is the construction of section 10 for which you contend, a construction that would permit the court to require service or a construction that would permit the court of its own motion to do something else?
MR SEXTON: In a practical sense, it would, if the other side had no knowledge of the hearings; perhaps this depends. One can imagine a situation, for example, where a matter is being heard in open court. I think it does not happen with these applications. If it were an open court, it is possible for the other party to walk into the court, as it were, and then be present and it is a question of whether they are able to stay and to make submissions. Otherwise, of course, it is a question of whether notice is given to them on the orders of the court. In that respect, can I hand up perhaps some copies of one of the provisions of the Civil Procedure Act (NSW)? In section 61 your Honours will see that it says:
(1)The court may, by order, give such directions as it thinks fit (whether or not inconsistent with rules of court) for the speedy determination of the real issues between the parties to the proceedings.
And then in particular, in subsection (2):
(c)it may give such other directions with respect to the conduct of proceedings as it considers appropriate.
These are general provisions which, of course, are not directed particularly to the legislation that is under consideration but we would say that they underline the powers that the court would have in these circumstances to, in effect, invite the affected party to these proceedings to be present and perhaps to make submissions.
We accept that as a matter of normal practicality in the context of the orders for the confiscation of assets applications for those orders that these orders may be unlikely, but the point we would make is that they are available to the court ‑ ‑ ‑
FRENCH CJ: The criteria for their application in the exercise of the Court’s discretion to require notice to be given to an affected party would import the need at the threshold, would it not, to consider questions (a) of urgency and (b) of apprehended dissipation?
MR SEXTON: Yes, absolutely, your Honour, and as I say as a matter of practicality, it may be that it would be an unusual circumstance where some sort of notice was given to the affected party, but ‑ ‑ ‑
FRENCH CJ: You really would not necessarily need to have the words “ex parte” there, I suppose. That could simply be an application and be made ex parte on ordinary principles.
MR SEXTON: Yes.
FRENCH CJ: What does it do?
MR SEXTON: It is a good question, your Honour, but that is why we say if one imports the normal principles in relation to ex parte proceedings, it is always open to the court in those situations to, in effect, say that the application will only be heard in the presence of the other affected party and it is a question of then what submissions they might make and what evidence they might lead. It is only to say that those options are left open we would say by a provision that is essentially silent as to how the hearing is to be conducted and in circumstances where the authorities suggested a denial of procedural fairness would need to be excluded by express words.
FRENCH CJ: It is not so much an exclusion of it, is it, as a question of, if there be a constructional choice, you take that choice which minimises the incursion of the provision upon procedural fairness?
MR SEXTON: Yes. I am not sure the authorities are not stronger than that, your Honour, but certainly in this case where the provision is silent on the question as to the form of the hearing we would say that, yes, if there is two choices, the preferred choice would be that which leaves that option open to the court and section 61 of the Civil Procedure Act would seem to certainly provide – if there was not already a basis, but we would say there is, but that would certainly provide a basis as well for moulding the process to take account of those considerations. I am told that, in fact, the section 10 applications do take place in open court.
BELL J: I think the position, Mr Solicitor, is that your submission was correct up until the date the Court of Appeal gave judgment in this matter and the practice has changed in consequence of that judgment. But looking then at the submission that you are presently developing, in a case in which the Commission elects to proceed ex parte and appears before the court with an affidavit which on its face provides reasonable grounds for the suspicion, your submission is, nonetheless, it is open to the judge to make orders directing that the application be the subject of notice to the other party rather than proceeding to make the order which, on one view of it, subsection (3) would require him or her to do?
MR SEXTON: Yes, your Honour. We would say subsection (3) does not, in a sense, require the order to be made, as it were, immediately or in reliance on the affidavit in support. The provision does not need to be read in that way. Your Honours, can I refer as well to section 11(2)(b) which is on page 16 of that booklet. It simply provides that if:
the person was not notified of the application for the making of the restraining order,
notice of the making or variation of the order is to be given by the Commission to that person.
It simply seems to assume that in some circumstances there may be notice given to the person who is affected. I will come to the Court of Appeal’s reasoning in a moment. There is an earlier decision of the Court of Appeal, New South Wales Crime Commission v Ollis (2006) 65 NSWLR 478.
The argument there as to the legislation is not otherwise relevant to this case, but if your Honours look at paragraph 32 in the judgment of Justice Giles, with whom the President Justice Mason agreed, you will see there that he refers to section 10 and then he says:
Even if the order is made on an inter partes application, however, s 10(3) applies –
and it goes on to talk about that. So there seems to be an assumption in that paragraph that on some occasions there may be the affected party present and perhaps making a contribution.
FRENCH CJ: That may be referring to nothing more than the Commission’s choice to proceed in that way.
MR SEXTON: Yes, it is possible.
FRENCH CJ: Rather than the court’s initiative.
MR SEXTON: Yes, that is true. But if I take your Honour as well to paragraph 46, where Justice Basten, who was in dissent, but not on this occasion, just in the middle of that paragraph says:
the Act does not require or assume that such orders will be made ex parte appears from s 11(2)(b) –
As your Honour says, that can perhaps depend on the course that is taken by the Commission, but I simply refer to those paragraphs.
HEYDON J: The expression “ex parte” is ambiguous. It can mean without notice to the other side or it can mean without the participation of the other side. Section 10(2), when it speaks of “apply ex parte” seems to be dealing with the totality of the application.
MR SEXTON: Well, it talks about an application, but the question is then what is left in the discretion of the court, your Honour.
HEYDON J: It cannot be very much. It cannot be possible to call evidence because subsection (3) commands attention only to the matters contained in the affidavit so there cannot be any cross-examination either. I suppose there could be argument that the material does not raise reasonable grounds but that is all.
MR SEXTON: It is certainly a limited process and, as your Honour appreciates, we say that even if one adopts the construction that Mr Hughes contends for that there is not a contravention of the Kable principle, but we do say that this construction is arguable and that, in a sense, it is the preferred construction here because it would avoid the constitutional issue.
KIEFEL J: There might be questions about the interests in the property, given that section 12(1) does not seem to oblige the court to make an order consistent with the interests claimed by the Commission because it has power to vary the interests at the time when it makes the restraining order. I am not sure how often that would ever arise but there is the possibility I suppose.
MR SEXTON: That is right, your Honour. It is certainly possible that if Justice Heydon says that the affected party may not be able to call evidence but it may be a question of clarifying factual circumstances, for example, which is what your Honour raises.
GUMMOW J: Is not the purpose of giving the notice under section 11 to trigger an exclusion application?
MR SEXTON: I am sorry, your Honour?
GUMMOW J: The purpose of giving the notice is that the recipient of the notice then has enlivened the need for an exclusion order. If you just go to section 25 for a moment. The chapeau of 25 talks about exclusion from restraining order and assets forfeiture order. When you go to the text, it seems to talk simply about forfeiture orders, it does not seem to speak of the earlier time.
HAYNE J: Section 25(1) at the end “or any relevant restraining order”. So if the restraining orders has been made but the forfeiture orders are not yet made I think it may engage.
GUMMOW J: The real problem with the ex parte system is that an order is made which is not interim and one of the quid pro quo for the ex parte procedure is that it produces interim relief. One would expect this scheme to have some analogy to that and the analogy is in 25, is it, but you get the notice under 11 and then you can move, in effect, to dissolve in part or whole.
KIEFEL J: Or coupled with the fact there is a lapse if after two days no forfeiture order has been applied.
HAYNE J: Yes.
MR SEXTON: That is right, that has to be instituted as well.
FRENCH CJ: What governs the discretion to make orders under 12(1)(a) because on one view that might look a bit like an exclusion order, might it not, so far as it applies to restraining orders? It would have a flow on then to the actual asset confiscation order, or forfeiture order.
MR SEXTON: I do not think I can answer that question at the moment, your Honour.
HAYNE J: Would not 12(1)(a) permit the variation of an order which was cast in terms of a restraining order with respect to Blackacre to restrain the interest of A as tenant in common in Blackacre, thus varying the interest in the property to which the restraining order relates? I would have thought that a common case with which this legislation must deal is the case where there is a dispute about whose property is being restrained. Level one of the answer to an application, I suspect, is often “It is not mine, is it X’s. If it is mine, I need it for my living and legal expenses” - see 10(5) - “If it is mine, I did not acquire it unlawfully” - section 25, and you then have those variants on the particular relief that is sought. Is that not the set of circumstances with which the Act must cope?
MR SEXTON: All those are subsequent in a sense, though, to section 10, your Honour. There are a range of ways of dealing with the original restraining order.
FRENCH CJ: The odd thing is at 12(1)(a), the order can be made at the time that the restraining order is made. It does not quite mesh.
MR SEXTON: I do no pretend that every section in this Act meshes with every other section, your Honour.
FRENCH CJ: No, the search for coherence is ‑ ‑ ‑
MR SEXTON: I certainly cannot make that submission.
KIEFEL J: It probably only measures if you read the reference to which the restraining order relates as the restraining order sought by the Commission, as referred to in subsection (3). Otherwise you have to split up the various subparagraphs in section 12 as relating to a restraining order as made or as not made.
MR SEXTON: Your Honours, I see the time. I will perhaps be another 10 minutes, your Honours.
FRENCH CJ: Yes, thank you, Mr Solicitor. The Court will adjourn until 10.15 am tomorrow on this matter and 9.30 for pronouncement of orders otherwise.
AT 4.17 PM THE MATTER WAS ADJOURNED
UNTIL WEDNESDAY, 27 MAY 2009
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