Kirk, W.B. & Ors. v Commissioner of the Australian Federal Police

Re: WILLIAM BRUCE KIRK (also known as WILLIAM ALBERT JENKINS); RICHARD SHIERK
LEETH (also known as JAMES ROBERT DELANEY); DALE STEWART KIRK (also known as
DONALD PATERSON); MICHAEL ALAN BOCKOFF; DONNA JANE SCHLINKERT (also known as
DONNA JANE PATERSON); VALERIE ELIZABETH SCOTT; PAUL JOSEPH DONOVAN; TERRE
REBBECA TUCKER and CAROL ANN POWELL
AND: COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE
No. QLD G7 of 1988
Customs - Equity

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Fox(1), Davies(2) and Beaumont(3) JJ.

CATCHWORDS

Customs - Customs Act 1901 - recovery of pecuniary penalty with respect to narcotics dealings - order directing Official Trustee to take control of property - whether chose in action and shares under control of Official Trustee or subject to lien/charge for solicitors' costs.

Whether statement identifying property infringes privilege against self-incrimination - discretion.

Equity - Whether retainer agreement between solicitors and clients transferred beneficial ownership of property - whether purpose trust created.

Customs Act 1901 - ss.243B, 243E, 243F, 243J

HEARING

BRISBANE

#DATE 8:7:1988

Counsel for the 1st, 3rd, 5th and 6th Appellants: Mr R.V. Hanson QC with Mr A.J. Glynn

Solicitors for the 1st, 3rd, 5th and 6th Appellants: Robertson O'Gorman

Counsel for the 2nd, 4th, 8th and 10th Appellants: Mr C.E.K. Hampson QC with Mr A.J.H. Morris

Solicitors for the 2nd, 4th, 8th and 10th Appellants: Messrs Bailey & Bailey

Counsel for the Respondents: Miss S.M. Kieffel QC with Mr P.D.T. Applegarth

Solicitor for the Respondents: Director of Public Prosecutions Brisbane

ORDER

The appeal is allowed to the extent that the orders made by the Honourable Mr Justice Pincus on 24 December 1987 be varied as follows:-

(i) Before Orders 4 and 5, the words "AND IT IS DECLARED" should be deleted and in lieu thereof the words "AND IT IS DIRECTED" should be substituted;

(ii) In Order 4, by omitting the words "relate to the property of Resorts Pacific Limited, Development Industries Limited and Willesden Development Limited and that such property includes" and by substituting therefore the words "relates to property including";

(iii) In Order 4(b), by substituting the word "the" for the word "any" and by adding after "Melanesia International Trust Company Limited", where the same secondly appears, the words "being the sum of $1,095,411.36 on 29 December 1987 transferred into account no. G17587050191 at the Commonwealth Trading Bank, George Street, Brisbane, in the name of the Official Trustee in Bankruptcy."

(iii) By adding the following order:-

"3A That leave be reserved to the appellants and each of them to apply for an order in the discretion of the court for dispensation from Orders 1 and 3 or for variation of Order 2 on the ground that the effect of such orders would be likely to prejudice the fair trial of criminal proceedings brought against the appellants or any of them."

That the appellants pay one-half of the respondent's costs of the appeal.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

These are appeals from orders and declarations made by Pincus J. on notices of motion which were heard together, the parties to each being the same. They were made in the one application No. Qld. G175 of 1988, the primary object of which was the imposition against the present appellants of pecuniary penalties under s.243B of the Customs Act 1901 ("the Act"). Incidental and auxiliary orders were sought under s.243E of the Act that the Official Trustee take control of property of the appellants, and under s.243F that they make statements as to the extent of their property, and be examined with regard to that matter. At the time of the hearing before Pincus J. committal proceedings for crimes relating to the matter for which penalties were sought were about to commence. The orders and declarations made were interlocutory in nature, but after the appeal had proceeded some distance, leave to appeal (Order 52 r.10) was sought and was granted. Some of the evidence was produced as a file, with notes, and would not normally have been admissible at a final hearing. The penalty proceedings are still pending. If orders are not made in these proceedings for penalties questions as to the nature or extent of the property of the appellants will be academic. However, those and another question do presently arise and have been fully argued, and I will deal with them.

The appeals relate chiefly to the operation of orders made earlier by Sheppard J. An order for examination was made by Pincus J. on 1 December 1987 but that order has not formally been made the subject of this appeal. Sheppard J. made a series of orders, on different days, some being wholly or in part by way of directions. He first made an ex parte order on 25 September 1987 which in part was as follows:

"THE COURT ORDERS pursuant to s.243E of the 'Customs Act 1901' that the Official Trustee in Bankruptcy take control of all the property in which the Respondents have a beneficial interest situate in the Commonwealth of Australia."

On 28 September 1985 he made a further ex parte order which added the words "or elsewhere" to the order just set out. This addition, the full effect of which is not challenged on appeal because of a concession previously made, purported to bring within the Official Trustee's control property which was situated in Vanuatu. The question which arises is whether, because of circumstances other than location, it came within the control of the Official Trustee under the Act.

Melitco Funds

There is much material in the appeal papers which gives colour to the basic facts, and could lead to inferences which Pincus J. did not draw and which we are not invited to draw. The critical matter, viewed the way his Honour saw it, is in short compass.
The Melanesia International Trust Company Limited (called "Melitco") operated a trust and corporate affairs business in Vanuatu. Its repute is not challenged in any way. At the request of the second and tenth appellants (Mr Leeth, also referred to as Mr Delaney, and Ms Powell respectively) Melitco arranged the incorporation in Vanuatu of Resort Pacific Limited, and received from the appellants mentioned an amount of $990,200 by way of cheque or drafts with instructions to place the sum in Australian Government Securities for the company's credit. The shareholders of Resort Pacific Limited were two other companies which held shares in trust for the two appellants mentioned. Interest accrued to the funds thus deposited.
Bailey and Bailey are a firm of Brisbane solicitors. In September 1987 they received instructions to act for the second, fourth, eighth, ninth and tenth appellants in connection with criminal proceedings in Australia which had been commenced against two of them, and might be (as they later were) commenced against the others. They later received instructions to act in the penalty proceedings, under the Act, which were commenced on 28 September 1987. The offences charged related to the importation of narcotic drugs, or a conspiracy to import them, and are the criminal proceedings to which I have referred earlier. On 23 September, Mr Anthony Bailey appeared briefly for the respondents in the magistrate's court at Brisbane. On 23 and 24 September he spoke to them, or some of them, with regard to his firm's fees for the proceedings and any appeals. There is a lack of clarity about just what was said, but I think it accords with the evidence, and his Honour's view of it, to say that an agreement was reached on that day to put the Bailey's in funds, to use my terms. According to a note, Mr J. Bailey, another partner in the firm, mentioned an amount of "approx. $1,000,000" for transfer "as soon as possible". His Honour said:

"I did not find Mr Anthony Bailey's evidence impressive. Having had ample time to consider the central point, the alleged oral agreement made on 23 or 24 September 1987, an agreement whose importance must have been obvious to him at an early date, he gave before me no coherent or consistent account of it. Precisely what was said on the subject is a matter about which I feel no confidence, but my impression is that something was said on 23 or 24 September about paying or assembling money as quickly as possible to meet the expenses of the criminal proceedings. I could not find that there was an agreement on 23 or 24 September to do all the criminal work for $1.2 million or any other certain sum; I am quite satisfied that the contrary is so."

In his analysis, he said:

"The choice appears to be between finding that on the transfer's being made, the beneficial ownership was in Bailey and Bailey and finding that it remained where it had been - in the second and tenth defendants."

The "transfer" was one to Vanguard Limited, which I will mention again soon. His Honour rejected the first of the two possibilities he mentioned. It was probably a submission made in argument (where the emphasis was on showing that the "transfer" had taken effect) but had no real support in the evidence. Messrs. Bailey and Bailey are not party to the proceedings. His Honour found that the beneficial owners were the second and tenth defendants. The evidence does support a third or supplemental view, which was pressed in argument before us and which I think was in substance accepted by his Honour, namely that the amount to be transferred was a security or advance for the costs (and expenses) which might be incurred. I shall return to discuss this. Where later in part of his reasons (p.13) his Honour referred to "advance payment" he was referring to a beneficial payment, argued as becoming the property of Bailey and Bailey, as for costs. This is the submission he rejected.

On 24 September a direction to Melitco was signed by the second and tenth appellants, directing the transfer to Vanguard Limited, a company incorporated in Vanuatu, of the fund of money (as it then was, or soon became) held for Resort Pacific Limited. Melitco "managed" both these companies. I set out the document:

"We the undersigned hereby authorise and request you to transfer forthwith all funds held in Account No. held in our names to Vanguard Account No. 63006-14 and the receipt of this authority shall be a full and sufficient discharge to you for that purpose. We accept that a penalty may attach to funds transferred prior to maturity and authorise you to deduct such penalty."

Messrs. Bailey and Bailey prepared this authority and they have been treated as having knowledge of its communication at or very soon after the time it was sent or given. On 24 or 25 September 1987 credit for the fund was transferred from the account of Resorts Pacific Limited with Melitco to the account of Vanguard with Melitco. A credit for a money sum was given to Vanguard in Melitco's books. On 25 September Melitco confirmed that the transfer had been effected.

In relation to the control or ownership of Vanguard, his Honour said:

"Although Mr John Bailey was but one of three beneficial owners of Vanguard Ltd., I am satisfied that he had, in a practical sense, control of the company and used it as a convenient receptacle for the funds. I find that the money remained, after the transfer, the property, beneficially, of the second and tenth defendants, although it was understood that part or all of it would be used for payment of fees."

His Honour is here describing the nature of a common charge.

Mr John Bailey is a partner in the firm of Bailey and Bailey. Although the document of 24 September which I have set out has been accepted as an assignment it is in form more a direction by beneficiaries to a trustee. I do not doubt however that in the circumstances it should be given the effect of an assignment. The case has been conducted on the footing that the law of Vanuatu is the same as that of Queensland. There seems no doubt that Mr John Bailey was in a position lawfully to effect the transfer of the funds to the partnership. Vanguard was a bare agent for the firm. A document was executed by the second and tenth respondents, and on behalf of Bailey and Bailey on 8 October which, apart from recitals and formal parts, I set out:

"1. The Clients shall forthwith pay to the Solicitors the sum of One Million Two Hundred Thousand Dollars

($1,200,000).

2. The Solicitors agree to act for the Clients in the proceedings on the basis of all necessary preparation of Trial and subsequent Appeals to the Court of Criminal Appeal and High Court including payment for Counsel."

It is accepted that this was a formalisation (and confirmation) of the previous agreement. It is apparent from what his Honour said, that payment of the sum mentioned is not to be understood as involving an absolute transfer, as constituting a fee.
The money or fund was not transferred to Bailey and Bailey. The reason for this was in the first place delay on the part of Melitco in responding to directions to transfer which were sent to it. In November, Bailey and Bailey directed Melitco to send the amount direct to them. Proceedings were instituted in the Vanuatu Supreme Court by the Official Trustee, in which injunctions were obtained ex parte in November 1987. An arrangement was arrived at between the two respondents and the applicant leading to the order of Pincus J. of 1 December whereby the amount was to be transferred pending the resolution of the present questions, to the Official Trustee, but with access thereto to meet reasonable liabilities for costs, as they arose, and when payment was requested. The amount paid into the account of the Official Trustee, on 29 December 1987 was A$1,095,411.36 (the original amount of A$990,200 and interest).
As is apparent from what I have said, it is not suggested that any of the transactions which I have been discussing are a sham, or part of any illegal activity, although it is claimed by the respondent, in correspondence, that the original $990,200 represented or may have represented, proceeds from illegal drug trading.
The question is whether the appellants (or some of them) had moneys of which, at the relevant time, the Official Trustee could "take charge". I take the relevant date to be 28 September 1987. I do not think that the exact nature of "the fund" at that time is now particularly material, but it was originally to have comprised government bonds, in Australian dollars, to be held in the name of Resort Pacific Limited.
The phrase "beneficial interest" appears in the order of Sheppard J which I have set out but is not the language of s.243E of the Act, which refers simply to "property" (see, however, definition in s.243A(1) and s.243A(4)). The difference would at first appear slight, and of no practical consequence, but it may well be the source of the dispute in the present appeal. It is one thing to order seizure of all property in which a person has a beneficial interest (which is the form of his Honour's order) and another to order seizure (if it is possible) of his beneficial interest. The latter would not be ordered in the way expressed, but would be the effect of applying the definitions to which I have referred if "property" were referred to. The appellants' argument does not dispute that they had a beneficial interest of some unascertained and unascertainable extent, or indeed, on a different analysis, that they held the whole beneficial interest, subject to a charge. The amount of the charge was, and remains, unqualified. The order of his Honour is to be construed in the light of the legislation which he was purporting to apply. More particularly, the order to seize had to give effect to prior charges as required by s.243J and the whole seizure had to have regard to that section. His Honour's order (which he was invited to make and was made ex parte) was not expressed to be subject to s.243J but nevertheless that section applied.
There seems no doubt that on 24 September action had been taken towards getting the Melitco moneys (or bonds) under the control of Messrs Bailey & Bailey. The construction which has been given to this activity, is that the moneys related to costs for the defence of the appellants. A mental problem associated naturally with this view of the facts is of course the extent of the amount, but to arrive at a different conclusion, particularly, in the absence of appropriate submissions, or a relevant ground of appeal, would amount to wrongly reversing the learned judge. I do not think we can do this.
Mr Bailey says that he was unaware of any court application of the respondent Commissioner (or the Director of Public Prosecutions) and any orders made, until 7 October (when he heard indirectly of "a possible application") and it was not until 12 October that he received documents from the Director of Public Prosecutions. If this evidence is correct, the situation would seem to have been a very unsatisfactory one. Mr A. Bailey had already on 23 September appeared briefly for some or most of the appellants.
Accepting as I do that the amount was to provide for legal costs and expenses, it is clear enough that the whole of it was to be available to be used for that purpose, as required. It perhaps offers some explanation of the size of the amount to say that the estimates on both sides were that the committal proceedings would last 3 or 4 months. The trial (if there were one), and incidental procedures might be expected to occupy a similar time, and then there were possible appeals (as far as the High Court; see the document of 8 October). His Honour, in the passage from his reasons I have set out was paying especial attention to the question whether the appellants, or some of them, had a "beneficial interest" in the moneys. The phrase is apt to refer to an interest which equity will recognise, but these are many and various, and the relief available to protect them is as varied. I do not subscribe to the view that because some interest exists, present or future, vested or otherwise or whether or not subject to charges or conditions, and no matter how partial, the total property is something of which the Official Trustee can, under the section, take control (see Commissioner of Australian Federal Police v. Cox (1986) 70 ALR 509 at 516). In the present case, at the time of the order of 28 September, the property was held by Melitco for Vanguard as agent for Bailey and Bailey. Under the agreement that firm was to retain the property and it had, as a matter of contract a charge on the whole for the purpose of meeting costs and expenses.
The making of the order of 28 September 1987 by Sheppard J. created a statutory charge on the property of the respondents (s.243J(1)) but did not give any title (s.243K). The charge was subject to existing charges (s.243J(3)(a)); I do not think it was also displaced by a transfer to a bona fide purchaser for value without notice of the charge (s.243J(2)(f)). It was in effect an equitable statutory charge. Vanguard (on behalf of the Baileys) might have been in the position of a bona fide purchaser for value although because of the matters mentioned and the arrangements made, no moneys or fund reached it, but it was not to acquire the beneficial interest, which is that with which s.243J(2)(f) deals.
The arrangements, by way of interim compromise, to which I have referred do not make it clear on what basis the competing claims of the Commissioner and the solicitors are to be determined. Two of the orders of Pincus J. of 1 December stated:

"Pursuant to Section 243F of 'The Customs Act 1901'. . .

7. The Official Trustee in Bankruptcy open a bank account in his name for the purpose of receiving the sum of approximately $1,000,000 which funds are presently held by the Melanesia International Trust Company Limited on account of Vanguard Limited pending the determination by this Honourable Court of the relief sought in paragraphs 3A(a) and (b) of the Notice of Motion filed on 26 November 1987 as amended."

The relief sought in paras. 3A(a) and (b) of the amended Notice of Motion was as follows):

"3A. Pursuant to Section 243F of 'The Customs Act 1901' declaring that the property referred to in the orders of this Court made on 25 September, 28 September and 19 October 1987 includes:

(a) any sum standing to the account of Resorts Pacific Limited with the Melanesia International Trust Company Limited;

(b) any sum transferred on or about 25 September 1987 from the account of Resorts Pacific Limited with the Melanesia International Trust Company Limited to the account of Vanguard Limited with the Melanesia International Trust Company Limited;"

. . .

And, in para 8:

"8. The Official Trustee in Bankruptcy be authorised and required to pay forthwith from the said funds to Messrs Bailey and Bailey the reasonable legal expenses and disbursements of the Second, Fourth, Eighth, Ninth and Tenth respondents of and incidental to the charges against them of being knowingly concerned in the importation of narcotics and conspiracy to import narcotics."

The respective rights to the fund are to be ascertained as if the position were the same as it was at the time of its transfer to the Official Trustee. Counsel agree that the transfer was "without prejudice". At that time there were the oral agreement, the direction to Melitco signed by the second and tenth respondents, the book entry in compliance therewith, and the confirmatory agreement of 8 October. I leave aside, as presently irrelevant, the later direction by Bailey and Bailey to Melitco and the court orders in Vanuatu. There had not been any transfer of money to Vanguard or to Messrs. Bailey and Bailey. It is to be observed, however, that as matters progressed the fund became security for the costs of other respondents as well as the two I have mentioned.

It would be wrong to conclude that the fund or any part of it was the unencumbered property of the appellants. They had agreed that it be held by Bailey and Bailey as security, that is, security for costs and expenses, or, if it be different, as an advance for those purposes. They could not have recovered it by action, without, if it were possible, terminating the retainer, and subject then to costs being agreed or a bill of costs being taxed. They had not taken any such action. It seems to me that the correct view of events at this time was that, while the respondents had a beneficial interest to an unascertained and unascertainable extent, the fund itself was subject to a charge in favour of Bailey and Bailey, who had a right to retain it for satisfaction of their charges.
A question has been raised whether, when an amount is paid to a solicitor by way of security for costs, or as an advance for costs, or with or as a retainer, the resultant charge in favour of the solicitor at any one time thereafter is for costs and expenses incurred to that point of time only. An illustration would be payment of an amount of $10,000 as security, or advance, where a month after receipt little by way of costs or expenses had been incurred, but much more was about to be incurred for the agreed task. A brief may have been delivered to counsel. The proposition is that the sum is at that time repayable on request by the client, whether or not the retainer is terminated. Because the client can make the request, and thereupon have a right to receive the sum, he is said to have throughout the beneficial interest in the whole. The charge or his lien is instantly terminable at will. In trust terms, the client is said to have at all times the full beneficial interest in the whole, free of the charge, at will. I do not accept this argument; it is entirely contrary both to law and practice.
If what the solicitor has is properly described as a charge, the beneficial interest will normally remain in the client. The point is, however, that in consideration of the solicitor acting for him, he has agreed, in virtue of his beneficial interest, that the money can remain with the solicitor to meet costs and expenses as they accrue. If the situation were to be seen in trust terms, the trust property would be held in the first instance, for payment of costs and expenses. It would be contrary to the intentions of the parties that the moneys should be repayable at any time, at the wish of the client, subject only to payment thereout of costs and expenses incurred to that time. It would mean that the solicitor could not plan ahead or incur future liabilities, such as a responsibility for the fees of counsel. Even termination of the retainer would not have this rather drastic consequence.
It is helpful in this analysis to refer to cases which established the common law position.
In Rowson v. Earle (1829) 1 Moody & Malkin's Reports 538 Lord Tenterden C.J. said, as the whole of his reasons:

"It is not to be expected that any attorney will carry on a cause of an indefinite length unless he is furnished with funds so to do. Now he does not insist on his lien on the papers, which he might have done; and he had a right undoubtedly to say he would not go on unless he was furnished with the means so to do; and no injury appears to have been sustained: but even if there had been any injury, I should have been bound to tell you, that having given notice he would not go on, the plaintiff was perfectly justified in refusing to do so, unless the funds were supplied."

In Vansandau v. Browne (1832) 9 Bing 402, Gaselee J. said, by way of explanation for his concurrence in that case:

"Since the days of Siderfin there has been a great increase in the expense of conducting a cause, and it would be hard to compel an attorney to go on where he is not furnished with the necessary funds."

Wadsworth v. Marshall (1832) 2 CJ 665; 149 ER 279 carries the headnote:

"An attorney who has undertaken a cause, is not bound to proceed without adequate advances from time to time by his client, for expenses out of pocket; and, therefore, the Court will not compel an attorney, even after notice of trial, to carry the cause into Court, unless the client supply him with sufficient funds to pay the expenses out of pocket thereby incurred."

At 149 ER 280 Bayley B. is reported as saying:

"According to the ordinary way of looking at the retainer of an attorney, I do not believe that there is any rule which requires the attorney to advance all the money necessary to carry on the cause out of his own pocket. If such a rule were understood to exist, its operation, in point of practice, would be to induce attornies - at least in all causes of probable length or expense - to insist on having the necessary funds put into their hands, before they undertook to conduct the case. This would be a great injury to clients, and in many instances an impediment to justice. My notion of the rule is, that an attorney has a right to call upon the client, from time to time, on reasonable notice, to make advances, and, for the purpose of taking the cause on trial, to supply him with adequate funds, not to pay his costs, but the expenses out of pocket. There are many cases at the Assizes, in which these expenses, on carrying the cause into Court, are very considerable, which would fall heavily on the attorney, if he had not a right to require an advance from his client."

In Lawrence v. Potts (1834) 6 CAR & P 428; 172 ER 1306, Tindal C.J. said at ER 1307:

"If the plaintiff had undertaken the cause on an agreement to advance all the funds, he could not turn round afterwards, and refuse to go on unless money were furnished. But there is not any proof of such an understanding between the parties. Still, however, an attorney has no right just at a pinch to say, I will not carry your cause any further without an advance of money. But here, there was sufficient notice from April to October. The early part of the cause is not in dispute. All goes on regularly till the time for carrying it into Court. It is well known that keeping witnesses and delivering briefs are heavy expenses. An attorney has a right to say, I will not be your banker for all expenses. He has a right to refuse to go on without funds, provided he does not do it in a hurried manner, and take his client by surprise, when he has no time to make provision."

A solicitor is not free, and, seemingly cannot be required, to tax a bill of costs at any stage of litigation, or of the performance of other work. In Romer v. Haslam (1893) 2 QB 286, the headnote reads, in part:

"Where a solicitor is retained to conduct litigation, other than an ordinary action at common law, which may extend over a considerable period of time, and in which breaks may occur of such a kind as to be equivalent to the conclusion of a definite and distinct part of the proceedings, he may deliver to his client a bill of costs for business done up to the occurrence of any such breaks in the litigation, and demand payment."

In Underwood, Son & Piper v. Lewis (1894) 2 QB 306, Lord Esher M.R. said at 311:

"A solicitor cannot reasonably be expected to disburse out of his own pocket money which he may be unable to get back from his client or the other side, or which at any rate he may be kept out of for a long time. Therefore the Courts have held, because every person of ordinary sense would come to the same conclusion, that the solicitor is entitled, if he thinks right, to ask his client to find money for necessary disbursements;"

In Gamlen Chemical Ltd. v. Rochem Ltd. (1980) 1 WLR 614, Templeman L.J. made some observations (at p 624) which are pertinent.

"A solicitor who accepts a retainer to act for a client in the prosecution or defence of an action engages that he will continue to act until the action is ended, subject however to his costs being paid. . . .

The solicitor himself may determine his retainer during an action for reasonable cause, such as the failure of the client to keep the solicitor in funds to meet his costs and disbursements;"

In the present case, the retainer (in the sense of instructions to act) has not been terminated, and there has not been any request for the return of the moneys. A power in the Official Trustee to take control does not place him in the shoes of the client, for any purpose. The retainer remains current notwithstanding the order under s.243E of the Act. The Queensland legislation affecting solicitors' accounts and charges was not referred to by his Honour, was not originally relied upon by any party (although it may have been mentioned), and does not have application.
Termination of a retainer by a solicitor is further dealt with by the Court of Appeal (Eng.) in Warmingtons v. McMurray (1937) 1 All ER 562. In Johnson v. Toronto (1963) 1 OR 627, the Ontario High Court, per Senior Master Marriott dealt with the requirement of an amount on account of fees, and the right of a solicitor to determinate the retainer if it was not furnished. His decision was in line with those of the cases to which I have referred which deal with the matter.
Reliance has been placed by the respondent Commissioner on the decision of Andrews S.P.J. (as the Chief Judge of that State then was) in Gilshenan and Luton v. Federal Commissioner of Taxation (1983) 83 ATC 4758. The facts of the case have some resemblance to the present. Andrews S.P.J. refers to relevant parts of the Queensland Acts, and also cites passages from the judgment of Hope J.A. in Johns v. Law Society of N.S.W. (1982) 2 NSWLR 1 at 18, 19. Gilshenan and Luton was a case in which the Commissioner for Taxation had issued a garnishee notice under s.218 of the Income Tax Assessment Act 1936. The question was whether trust account moneys marked in the books as being "in respect of security for costs" and in fact provided for that purpose were protected. His Honour declined to make a declaration that they were not affected by the notice. The reasoning was that until taxation, or agreement, moneys in a trust account could not be paid out to the solicitor. Until "(payment) to the general account the money remains Huston's subject to the lien". (Taxation in relation to criminal proceedings is in a position different from that for civil proceedings). See also Loescher v. Dean (1950) 1 Ch 491 which has been followed in England but distinguished in its application to the N.S.W. legislation. All that one needs to say in relation to the present case is that the charge existed and continued.
Unlike s.218 of the Income Tax Assessment Act, s.243J of the Customs Act imposes a charge. Moreover, the latter is simply security for payment of any penalty that may be ordered and possibly for calculation of the penalty (s.243G(3), and note s.243H(3)). The charge is over the whole property, as is that of the solicitors in this case, but takes effect subject to the latter (s.243J(3)).
Johns was a disciplinary case concerning a solicitor. Hope J.A. expressed views about the proper keeping of a trust account in relation to costs. He said:

"When a solicitor holds money for a client in his trust account, his entitlement to a general lien for his costs does not mean that the money is not beneficially the money of the client."

Whether the present case is analogous, having in mind the early stage at which it was arrested need not be decided. The question, as I have said, is whether the Commissioner has an overriding interest, which enables him at any time to overcome the lien or charge of the solicitor, by "taking control" of the property, that is to say, the whole property. In my view he does not.

It is a small, additional, matter, but goes to the present proposition, that in Cachin v. Isaccs (1985) 3 NSWLR 366 at 377 Hope J.A. suggested that a retainer may not always be terminable at will by the client.
The practical point at issue in relation to this part of the case is indeed a fairly narrow one - whether the solicitors or the Official Trustee should have custody of the moneys pending the outcome of the litigation. Both are subject to the supervisory jurisdiction of the Court. In my view, the former have the right, in the interests of their clients as well as themselves.
I therefore regretfully reach a different conclusion from his Honour on this part of the case.
Shares
The second category of property is shares, or the proceeds of their sale. The sales notes of the shares, which were on Australian registers, are in evidence, and the total amount received was $29,997.30. They were sold on 28 and 29 September on account of "Mr J. Delaney", who is named on the record as Mr Leeth, and is the second respondent. He was a signatory (as Delaney) of the document dated 24 September, directed to Melitco. The shares were sold on 28 and 29 September (without notice of his Honour's orders), and the proceeds were banked in the general bank account of Bailey & Bailey as part of the security for costs to which I have referred. The oral agreement as to security was, as I have mentioned, on 24 September, or possibly a day earlier.
Sheppard J. made the order relevant to this part of the case on 25 September 1987. The vital factor is that the shares were sold after this order was made and, so far as appears had not at the time of the order been appropriated to performance of the agreement of 23/24 September. There was debate in the course of argument as to whether the addition of "or elsewhere" on 28 September meant that the earlier order was vacated, but this would be a highly technical approach not according with intention, and I do not accept it. In a letter to the Official Trustee of 24 November Messrs. Bailey and Bailey said that the shares had been handed to them for sale (date not specified) with instructions that the proceeds were to be the property of the firm, to be applied in part satisfaction of their clients obligations in respect of the "lump sum fees", - the "fees" apparently related to the costs of the criminal proceedings. They relied on s.243J(2)(f). So far as I can see, there is no evidence to support what is said in the letter, and, in particular no proof of when the shares were deposited (assuming this is what happened). Being prospective chargees, or lienees, Messrs. Bailey and Bailey were not purchasers for value within s.243J(2)(f).
The order of Sheppard J. did not have to be served to be effective. It therefore seems to me that the shares were the subject of the order. They were sold before the Official Trustee assumed control, but there can be no doubt that he is entitled to take control of the proceeds of sale. In this I agree in their conclusions with his Honour, and with Davies J. The fact that the shares or their proceeds were intended by the owners to be used as part of the security for costs is not to the point, unless they had in a meaningful way been appropriated to that end, and of this there is no evidence.
Information
The remaining matter concerns orders made by Sheppard J. and by Pincus J. on an application under s.243F(1)(d) and (e) of the Act. These paragraphs are as follows:

"Where the Court makes, or has made, an order (in this section referred to as the 'original order') under sub-section 243E(1) directing the Official Trustee to take control of specified property, or all of the property, of a person (in this section referred to as the 'defendant'), the Court may, at the time it makes the original order or at any subsequent time, make such orders in relation to that property as the Court considers just, and without limiting the power so conferred on the Court, the Court may, at any time or from time to time, make an order - . . .

(d) directing the defendant to furnish to the Official Trustee, within a time specified in the order, a statement, verified by the oath or affirmation of the defendant, setting out such particulars of the property of the defendant as the Court deems proper;

(e) for the examination of the defendant or another person before the Court or the Registry of the Court concerning the nature and location of the property of the defendant; or . . ."

The orders made by Pincus J. were as follows:

"1. Upon the filing of an undertaking by or on behalf of the Director of Public Prosecutions not to tender the same in whole or in part in the criminal proceedings pending against the defendants in relation to alleged narcotics offences, each defendant furnish to the Official Trustee within 28 days of the filing of the said undertaking, a statement verified by the Oath or affirmation of the defendant, identifying all of his/her property whether real or personal, wheresoever situated, and giving, in relation to each item of property, the following particulars:

(a) The location of the property;

(b) In whose custody the property is;

(c) The identity of the person or other entity in whose name the property is held;

(d) The nature of the interest which each defendant has in such property; and

(e) If the interest of such defendant in any property is held jointly or in common with any other person, the name of such other person or persons.

2. Warren Douglas Howell of "The Seament", Cairns Harbour, Cairns be examined before the Registrar of the Court on a date to be fixed by the Registrar concerning the nature and location of the property of each of the defendants.

3. Each of the defendants be examined before the Registrar of the Court, on a date to be fixed by the Registrar, not being a date earlier than the completion of the committal proceedings in the Magistrates Court at Brisbane pending against the defendants in relation to narcotics offences, concerning the nature and location of the property of each of the defendants."

A pecuniary penalty can be sought under s.243B notwithstanding that criminal proceedings are current at the time, or are anticipated, referable to the conduct in question (s.243B(3)). This placed a special onus on an applicant, as a prosecuting authority, not to use provisions under Division 3, such as sections 243E and 243F to the prejudice of an accused in the criminal proceedings, or so as to obtain an advantage not allowed, or not available, in the conduct of those criminal proceedings. A statement of property owned can readily come within this category. If criminal proceedings are pending, they may become aborted if a prejudicial course has been followed.
In relation to examinations, s.243F(3) gives protection as follows:

"(3) Where the defendant or another person is examined before the Court or the Registrar of the Court in pursuance of an order under sub-section (1), a statement or disclosure made by him in answer to a question put to him in the course of the examination is not admissible against him in any civil or criminal proceedings except -

(a) in a proceeding for giving false testimony in the course of the examination; or

(b) in a proceeding for the recovery of a pecuniary penalty for the purpose only of facilitating the assessment of the amount of the pecuniary penalty."

His Honour deferred any examination before the Court under s.243F(1)(e) until after conclusion of the committal proceedings, so no question arises on this aspect. He also made the orders under s.243(1)(d) which I have set out, but upon an undertaking being given by or on behalf of the Director of Public Prosecutions in the terms quoted.
A submission now made relative to para.(d) is that to require the respondents mentioned to make or furnish statements concerning the matters mentioned would possibly be to require them to incriminate themselves. This it is submitted, they should not be required to do, whatever use is made or intended to be made of their statements.
It is submitted that as a matter of law, the making of statements under para.(d) should not be ordered if there is a risk of self-incrimination. His Honour held that the power to require the furnishing of a statement under para.(d) is not subject to the rule protecting against self-incrimination. Burchett J. took a like view in Commissioner of Australian Federal Police v. McMillan (1987) 70 ALR 203, after a thorough examination of the relevant authorities. The particular matter before him related to an examination under para.(e) but he held that the position was the same with regard to both paragraphs. I agree with this view.
The giving of an answer in an examination under para.(e) is protected to the extent referred to in s.243F(3). It does not follow that protection to a similar extent should be regarded as unavailable in relation to a statement made under para.(d). What is important, as it seems to me, is the manner of exercise of the Court's discretions. The giving of an answer, under either paragraph, can be used against the maker in a number of ways, not simply related to the tender of the answer. The knowledge of it in the hands, or minds, of the prosecution can be used to the vital detriment of an accused. In the present case there is quite likely a highly incriminating result from what is already known.
My only criticism of his Honour's order respecting the undertaking is that it does not go far enough. It is again important, I believe, to bear in mind the limited purpose of the statement (as well as the examination). At this stage the legitimate purpose of the Official Trustee, or the respondent Commissioner, turning to paras.(d) and (e), is to find out upon what property the charge has settled. The paragraphs are not intended to be in aid of criminal proceedings.
The Act, in s.243B, gives the Commissioner of Police power to bring proceedings for a penalty. There is a question whether he should do so when criminal proceedings are on foot. The Commissioner would seem to be put in a legally embarrassing situation when criminal proceedings are proceeding concurrently with the penalty claim, (or worse, perhaps, if the latter is first). When it comes to information obtained under s.243F, it seems to me that it should normally be sufficient, in the case of concurrent proceedings, if it is supplied only to the Official Trustee, on an undertaking not to disclose it, except perhaps to the Comptroller, who under s.243B is one of the alternative applicants. I would vary the undertaking to this effect, but would first receive written submissions of counsel on the matter, if they wish to submit them. Fourteen days should be adequate for this purpose.
The order under (d) should in my view in any event be limited to property the disclosure of the existence of which will not tend to incriminate. There should be liberty to apply on this matter, and generally. All this is not to say that at a later stage the requirements might not be adjusted one way or the other. In this connection, the declarations should indicate their interim nature, by perhaps the interposition of a phrase such as "until further order".
My view is therefore that the declarations ordered should be varied by omitting para.4(b). For greater completeness, there should be a declaration in converse terms. There should be a variation of the order for delivery of a statement, undertakings as I have mentioned with regard thereto, and liberty to apply, as mentioned. Otherwise the appeal should be dismissed with costs.
There has been a division of labour on the hearing of the appeal between Mr Hampson QC who appeared with Mr A.J.Morris of counsel for the 2nd, 4th, 8th, 9th and 10th appellants, and Mr Hanson QC who appeared with Mr Glynn of counsel for the 1st, 2nd, 5th and 6th appellants, whereby the latter dealt with the matter under s.243F just discussed, and Mr Hampson argued the other questions. The first-mentioned clients or one or more of them had an interest in all questions, but the second group did not have an interest in the property questions with which we have dealt. In my view the first group have been successful on the first question, which occupied most of the time. The other appellants have had some measure of success. I do not know what the position as to time was before Pincus J. I would propose that counsel should have an opportunity of putting in written submission as to costs, but if within a limited time, say 14 days, they do not do so, I would propose that there be no order as to costs of the appeal or of the hearing at first instance.

JUDGE2

This is an appeal from orders made by a single judge of this Court under ss.243E and 243F of the Customs Act 1901 (Cth)("the Act"). Division 3 of Part XIII of the Act provides for the recovery by civil proceedings of pecuniary penalties for certain dealings in narcotic goods. Section 243A defines "property" in these terms:-

"'property' means real or personal property of every description, whether situated in Australia or elsewhere, and includes any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property."

Section 243B provides for an application for a pecuniary penalty and reads, inter alia:-

"243B. (1) Subject to sub-section (7), the Minister, the Commissioner of Police or the Comptroller may institute a proceeding in the Court, on behalf of the Commonwealth, for an order that a person pay a pecuniary penalty to the Commonwealth in respect of -

(a) a particular prescribed narcotics dealing engaged in by him; or

(b) prescribed narcotics dealings engaged in by him during a particular period.

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

(a) has engaged in a particular prescribed narcotics dealing; or

(b) has, during a particular period, engaged in prescribed narcotics dealings, the Court shall assess, in accordance with section 243C, the value of the benefits derived by the person by reason of his having engaged in that dealing, or in prescribed narcotics dealings during that period, as the case may be, and order the person to pay to the Commonwealth a pecuniary penalty equal to the value as so assessed.

(3) The Court may order a person to pay a pecuniary penalty under sub-section (2) in relation to a particular prescribed narcotics dealing, or prescribed narcotics dealings during a particular period, whether or not the person has been convicted of an offence, or proceedings have been, or proceedings have been instituted in respect of any offence committed in relation to that dealing or any of those dealings and whether or not any moneys or other goods have been seized under s.229A in relation to that dealing or any of those dealings."

Section 243E provides for an interlocutory order by way of receivership and reads, inter alia:-

"243E. (1) Where the Minister, the Commissioner of Police or the Comptroller has instituted a proceeding under section 243B for an order that a person (in this section referred to as the 'defendant') pay a pecuniary penalty in relation to a particular prescribed narcotics dealing, or in relation to prescribed narcotics dealings during a particular period, the Minister, the Commissioner of Police or the Comptroller may make application to the Court, ex parte, for an order directing the Official Trustee to take control of property specified in the application or of all the property of the defendant.

(2) Where -

(a) an application under sub-section (1) is supported by -

(i) an affidavit of a member of the Australian Federal Police or an officer of Customs stating that he believes that -

(A) the defendant has engaged in the prescribed narcotics dealing to which the proceedings under section 243B relates, or in prescribed narcotics dealings during the period to which that proceeding relates; and

(B) benefits were derived by the defendant's having engaged in that prescribed narcotics dealing, or in prescribed narcotics dealings during that period, as the case may be, and setting out the grounds on which he holds those beliefs; and

(ii) if the application seeks an order directing the Official Trustee to take control of specified property - an affidavit of a member of the Australian Federal Police or an officer of Customs stating that he believes that the property is the property of the defendant and setting out the grounds on which he holds that belief; and

(b) the Court considers that, having regard to the matters contained in that affidavit or those affidavits, there are reasonable grounds for holding those beliefs,

the Court -

(c) shall make an order directing the Official Trustee to take control -

(i) if the application seeks an order with respect to specified property - of all that property or such part of that property as the Court thinks fit; or

(ii) in any other case - of all the property of the defendant; and

(d) may, subject to sub-section (3), include in the order such provision (if any) in relation to the operation of the order as the Court thinks fit. . . .

(4) Without limiting the power of the Court under paragraph (2)(d), an order directing the Official Trustee to take control of property -

(a) may set out conditions subject to which the order is to apply to all of that property, or to a specified part of that property;

(b) may make provision for a review of the operation of the order by the Court; and

(c) may make provision for meeting the reasonable living and business expenses of the defendant out of that property, or out of a specified part of that property."

Section 243F provides for certain interlocutory and ancillary orders and reads, inter alia:-

"243F. (1) Where the Court makes, or has made, an order (in this section referred to as the 'original order') under sub-section 243E (1) directing the Official Trustee to take control of specified property, or all of the property, of a person (in this section referred to as the 'defendant'), the Court may, at the time it makes the original order or at any subsequent time, make such orders in relation to that property as the Court considers just and, without limiting the power so conferred on the Court, the Court may, at any time or from time to time, make an order - . . .

(d) directing the defendant to furnish to the Official Trustee, within a time specified in the order, a statement, verified by the oath or affirmation of the defendant, setting out such particulars of the property of the defendant as the Court deems proper;

(e) for the examination of the defendant or another person before the Court or the Registry of the Court concerning the nature and location of the property of the defendant; . . ."

Section 243J provides for a charge on property the subject of an order under s.243E and reads, inter alia:-

"(1) Where the Court makes, in relation to a proceeding (in this section referred to as the 'relevant proceeding') for the recovery of a pecuniary penalty from a person, an order under section 243E directing the Official Trustee to take control of specified property, or of all of the property, of the person, upon the making of the order, there is created, by force of this section, a charge, on all the property to which the order relates, to secure the payment to the Commonwealth of any pecuniary penalty that the person may be ordered to pay in the relevant proceeding.

(2) Where a charge is created by sub-section (1) on any property of a person upon the making of an order under section 243E, the charge ceases to have effect in respect of the property - . . .

(f) upon the sale of the property to a bona fide purchaser for value who, at the time of purchase, has no notice of the charge, . . ."

The operation of these provisions was briefly discussed by Pincus J. in Commissioner of Australian Federal Police v. Cox (1986) 70 ALR 509 at pp 511-512. The provisions permit the bringing of an application for the recovery of a pecuniary penalty with respect to prescribed narcotic dealings. Such a dealing is a dealing with respect to narcotic goods imported into or exported from Australia in contravention of the Customs Act. See s.243A(3) of the Act. Such a dealing would not necessarily be an offence under the Act but it may be assumed that, in practice, proceedings would not be commenced unless the dealing constituted an offence under the Act or under State law. Nevertheless, a proceeding for the recovery of a pecuniary penalty is a civil proceeding not dependent upon a conviction for or proof of the commission of a crime.
Section 243B(3) specifically provides that an order that a person pay a pecuniary penalty may be made whether or not the person has been convicted of an offence or proceedings have been instituted in respect of an offence. I pause to note that Miss S.M. Kiefel, QC, with whom Mr P.D.T. Applegarth appeared for the respondent, sought to draw from this provision an inference that the civil proceedings should ignore any concurrent proceedings with respect to a criminal offence in relation to narcotic dealings. I do not draw that inference. Section 243B(3) does no more than make it abundantly clear that the award of a pecuniary penalty is not dependent upon the existence of a conviction and that the principle of the common law, now somewhat diminished, that a civil action dependent upon proof of a felony ought not to be brought until the crime has been prosecuted, has no application.
The pecuniary penalty is to be assessed by reference to the value of the benefits which the person has derived from the prescribed narcotics dealing. See s.243C of the Act.
Section 243E provides, inter alia, that application may be made for an order either that the Official Trustee take control of property specified in the application for the interlocutory order or that he take control of all the property of the defendant. In this, the Court has no discretion but is bound to make an order on the application seeking the interlocutory order, if the application is supported by an affidavit of a member of the Australian Federal Police or an officer of Customs stating his belief of the relevant matters and if the Court considers that the affidavit shows reasonable grounds for that belief.
However, the Court has a wide discretion under s.243E(4) to specify conditions subject to which the order is to apply. By para 243E(4)(c), the Court is empowered to make provision for meeting the reasonable living and business expenses of the person against whom the order is made. This provision should be read widely so as to encompass all expenses, including expenses such as legal costs, which the person reasonably has and should meet while his property is controlled by the Official Trustee.
Section 243F provides for ancillary orders. Under paras 243F(1)(d) and (f) the defendant may be required to furnish a statement of and respecting his property and may be required to attend for examination concerning the nature and location of the property.
In the present case, application was made on behalf of the respondent for orders for the payment of pecuniary penalties by each of the appellants. On an application being made for an order under s.243E of the Act, Sheppard J., on 25 September 1987, ordered that the Official Trustee in Bankruptcy take control of all the property in which the appellants had a beneficial interest situate in the Commonwealth of Australia. That order was made ex parte, as was a further order of Sheppard J. on 28 September 1987 directing the Official Trustee in Bankruptcy to take control of all the property in which the appellants had a beneficial interest whether situate in the Commonwealth of Australia or elsewhere. On 15 October 1987, on the application of the appellants, Sheppard J. made the following order with respect to the legal costs of the appellants in this Court and also with respect to the criminal proceedings against them pending in the Magistrates Court at Brisbane.

"1. Until further order the Official Trustee in Bankruptcy be authorized to release to the solicitors of each of the defendants such of his or her respective funds or other property under the control of the Official Trustee in Bankruptcy for the purpose of paying legal costs and disbursements (such legal costs and disbursements to be paid by the Official Trustee in Bankruptcy out of such funds or property under his control upon presentation of a short form bill of costs without narrative by Messrs. Robertson O'Gorman or Messrs. Bailey & Bailey); that is to say, costs:-

(a) incurred to date by Messrs. Robertson O'Gorman and Messrs. Bailey & Bailey on their behalf in these proceedings;

(b) of and incidental to the hearing before the Honourable Mr. Justice Sheppard on Monday, 19 October 1987;

(c) of any application to vary or set aside or any appeal from the orders made herein to date or any order which may be made herein on 19 October 1987; and

(d) relating to the criminal charges presently pending against the defendants in the Magistrate's Court at Brisbane."

On 19 October 1987, Sheppard J. consolidated a number of the orders previously made and ordered as follows:-

"1. Pursuant to Section 243E of the Customs Act 1901 the Official Trustee in Bankruptcy is directed to take control of all of the property, of each of the Defendants, whether situate in the Commonwealth of Australia or elsewhere.

2. The Official Trustee in Bankruptcy open a bank account in his name for the purpose of receiving into his control the property referred to in paragraph 1 hereof.

3. The Official Trustee in Bankruptcy be authorised to release:

. . .

(b) to the solicitors for each of the Defendants such of his or her respective funds or other property under the control of the Official Trustee in Bankruptcy for the purpose of paying their reasonable legal costs and disbursements (such legal costs and disbursements to be paid by the Official Trustee in Bankruptcy out of such funds or property under his control upon presentation of a short form Bill of Costs without narrative by Messrs Robertson O'Gorman, Messrs Bailey & Bailey, or Messrs Watkins Stokes) that is to say costs and disbursements:

(i) incurred to day by Messrs Robertson O'Gorman, Messrs Bailey & Bailey, and Messrs Watkins Stokes on their behalf in these proceedings;

(ii) of any application to vary or set aside or any appeal from the orders made herein to date;

(iii) relating to the criminal charges presently pending against the Defendants in the Magistrates Court at Brisbane; and

(iv) relating to the first day of the hearing of any application by the Applicant pursuant to Section 243F(1) of the Customs Act, 1901."

On 1 December 1987, there came before Pincus J. a notice of motion on behalf of the respondent which sought orders under s.243F and declarations, inter alia:-

"3A. Pursuant to Section 243F of 'The Customs Act 1901' declaring that the property referred to in the orders of this Court made on 25 September, 28 September and 19 October 1987 includes:

(a) any sum standing to the account of Resorts Pacific Limited with the Melanesia International Trust Company Limited;

(b) any sum transferred on or about 25 September 1987 from the account of Resorts Pacific Limited with the Melanesia International Trust Company Limited to the account of Vanguard Limited with the Melanesia International Trust Company Limited; .....

(e) the shares referred to in paragraph 9(b) of the affidavit of ANTHONY HAROLD HYDE BAILEY filed herein on 27 November 1987;

(f) the proceeds of the sale of the said shares."

On 1 December 1987, Pincus J. made the following interlocutory order, inter alia:-

"7. The Official Trustee in Bankruptcy open a bank account in his name for the purpose of receiving the sum of approximately $1,000,000 which funds are presently held by the Melanesia International Trust Company Limited on account of Vanguard Limited pending the determination by this Honourable Court of the relief sought in paragraphs 3A(a) and (b) of the Notice of Motion filed on 26 November 1987 as amended."

On 24 December 1987, Pincus J. made the following orders under s.243F:-

"1. Upon the filing of an undertaking by or on behalf of the Director of Public Prosecutions not to tender the same in whole or in part in the criminal proceedings pending against the defendants in relation to alleged narcotics offences, each defendant furnish to the Official Trustee within 28 days of the filing of the said undertaking, a statement verified by the Oath or affirmation of the defendant, identifying all of his/her property whether real or personal, wheresoever situated, and giving, in relation to each item of property, the following particulars:

(a) The location of the property;

(b) In whose custody the property is;

(c) The identity of the person or other entity in whose name the property is held;

(d) The nature of the interest which each defendant has in such property; and

(e) If the interest of such defendant in any property is held jointly or in common with any other person, the name of such other person or persons. . . .

3. Each of the defendants be examined before the Registrar of the Court, on a date to be fixed by the Registrar, not being a date earlier than the completion of the committal proceedings in the Magistrates Court at Brisbane pending against the defendants in relation to narcotics offences, concerning the nature and location of the property of each of the defendants."

Pincus J. made the following declarations, inter alia:-

"4. That the orders of the Honourable Mr Justice Sheppard of 28 September 1987 and 19 October 1987 relate to the property of Resorts Pacific Limited, Development Industries Limited and Willesden Development Limited and that such property includes:

(a) any sum standing to the account of Resorts Pacific Limited with the Melanesia International Trust Company Limited as at 30 September 1987;

(b) any sum transferred on or about 25 September 1987 from the account of Resorts Pacific Limited with the Melanesia International Trust Company Limited to the account of Vanguard Limited with the Melanesia International Trust Company Limited;"

It is agreed by counsel for all parties in the appeal that this order should be varied so that the opening words read as follows:-

"That the orders of the Honourable Mr Justice Sheppard of 28 September 1987 and 19 October 1987 relate to property including:"

It is also agreed by counsel that the sum referred to in paragraph 4(b) of the order amounted to $1,095,411.36, which in accordance with the arrangements of the parties and the interlocutory order of his Honour of 1 December 1987, was transferred from Vanuatu to Account No. G17587050191 at the Commonwealth Trading Bank, George Street, Brisbane opened in the name of the Official Trustee in Bankruptcy. The sum was received into the account on 29 December 1987. His Honour's order should now be varied to add the present identity of the fund.

The appeal is brought from the orders made by Pincus J. on 24 December 1987, operating as they did in amplification of the orders made by Sheppard J. on 28 September 1987 and 19 October 1987.
I turn first to consider whether the appellants or any of them had a beneficial interest in the funds which subsequently came to Australia on 29 December 1987. In September 1987, the Melanesia International Trust Co. ("Melitco") apparently a private banker or funds manager, held a credit for Resorts Pacific Limited ("Resorts Pacific"). That was a company of which the second and tenth appellants were the beneficial owners.
On or about 22 September 1987, in Brisbane, the 2nd, 4th, 8th, 9th and 10th appellants instructed Messrs Bailey & Bailey, Brisbane solicitors, to act for them in criminal proceedings which had been commenced or were to be commenced against them in the Magistrates Court, Brisbane in relation to narcotics offences. Mr Anthony Bailey and some of the appellants discussed the question of fees and came to an arrangement that Bailey and Bailey would be paid forthwith a substantial sum which was not then quantified. The payment was to be made in part through the sale of certain shares, a matter which I shall later discuss, and in part from a credit of approximately A$1.1 million which Resorts Pacific had with Melitco. Pincus J. summarised Mr Bailey's evidence as to the oral agreement he had with his clients as to fees, in these terms:-

"In his oral evidence, Mr Anthony Bailey was given a number of opportunities to explain precisely what the oral agreement was. It has to be said that his oral account nowhere included the assertion that he had agreed to do the whole of the work for a fee of $1,200,000, such agreement having been made in September 1987. Indeed, Mr. Bailey distinctly denied that there was then any agreement fixing the costs in a set or specific sum. In response to a question whether he had a discussion 'with respect to obtaining some funds on account of those costs', he replied in the affirmative. When asked by Miss Kiefel whether he was concerned with the particular sum 'or simply to ascertain the property generally available to the defendants which might be used to meet your costs as they became due from time to time?' Mr. Anthony Bailey answered: 'Well I was - I was concerned to ensure that while I was working, the matter of fees was being addressed.' When asked again whether he discussed a particular amount to be made available to his firm, he spoke of a 'figure', in a ballpark sense of, as I was instructed by him, slightly short of a million dollars'. That is not inconsistent, as I understand it, with the earlier answer that the agreement did not set costs at a specific sum and is consistent with the notion that a sum, the amount of which was not precisely defined, would be paid on account of costs."

His Honour also said:-

"Mr. Bailey's evidence did not seem to me to fix on any very precise version of the conversation. Being unclear as to what the case put forward was, I asked him to tell me the conversation about the fees, in substance, and the answer included the following: '. . . I explained to them that in order for me to be secured, in relation to fees, they had to pay in advance. I had previously explained to Leeth that I would not accept any fees into the trust account . . . On the basis of that I explained that I would require a retainer before I would act for them. They agreed that they would inject their available capital into the retainer. I did not know, nor did they, exactly how much funds were available. There was, then, an agreement reduced to writing that I would act in relation to the matter for the fee of $1,200,000, and that the moneys were the property of Bailey and Bailey.'"

Mr Bailey asked that the funds held by Resorts Pacific with Melitco be forthwith transferred to Vanguard Limited ("Vanguard"), a trustee or nominee company incorporated in Vanuatu which was owned or controlled by Mr Anthony Bailey's brother, Mr John Bailey.
On 24 September 1987, the 2nd and 10th appellants gave instructions to Melitco for this transaction to take place. The authority for the transfer of the funds read:-

"We the undersigned hereby authorise and request you to transfer forthwith all funds held in Account No. held in our names to Vanguard Account No. 63006-14 and the receipt of this authority shall be a full and sufficient discharge to you for that purpose. We accept that a penalty may attach to funds transferred prior to maturity and authorise you to deduct such penalty."

On 24 or 25 September 1987 the credit of Resorts Pacific, the A$1.1m approx., became the credit of Vanguard with Melitco. This transaction was subsequently recorded in the books of Resorts Pacific as a loan from Resorts Pacific to the 2nd and 10th appellants but it does not appear that any instruction was given for the transaction to be so recorded.

The above transaction took place without knowledge of but perhaps in anticipation of the orders made by Sheppard J. on 25 and 28 September 1987.
On 8 October 1987, the following written retainer to Bailey & Bailey was signed by the 2nd, 4th, 8th, 9th and 10th appellants:-

"A. The clients have requested the Solicitors to act for them in relation to certain Magistrates Court and Supreme Court proceedings which are to commence on a date to be fixed after the Thirtieth day of October, 1987 and on any subsequent Appeal to the Court of Criminal Appeal or High Court (hereinafter called 'the proceedings').

B. The Solicitors have requested a retainer from the Clients for their services. IT IS AGREED AS FOLLOWS:-

1. The Clients shall forthwith pay to the Solicitors the sum of ONE MILLION, TWO HUNDRED THOUSAND DOLLARS ($1,200,000.00)

2. The Solicitors agree to act for the Clients in the proceedings on the basis of all necessary preparation for Trial and for any subsequent Appeals to the Court of Criminal Appeal and High Court including payment for Counsel."

Bailey & Bailey thereafter claimed that the funds which had been credited to Vanguard were the property of Bailey & Bailey and not funds in which the applicants had a beneficial interest. On 24 November 1987, Bailey & Bailey wrote to the Official Trustee in Bankruptcy:-

"In relation to the second paragraph of your letter, we believe that we do not hold any funds or other property on behalf of the defendants, and there has been no trust transactions carried out on behalf of the defendants save and except for $1,000.00 released by you from ANZ Spit Junction Account to pay rent for T.R. Tucker and C.A. Powell.

In order that there can be no suggestion that the observations in the preceding paragraph do not state the position correctly, we would add the following:-

(a) Prior to making of His Honour's Order of 28th September, 1987 (the first Order which applied to ex-Australian property) there was received overseas, on behalf of our firm a sum of money paid in part satisfaction of a lump-sum Agreement between our firm and its five clients in respect of their costs of the criminal proceedings. Whether the clients had a beneficial interest in those monies prior to that payment is something we do not know. If they did, they had ceased to have any such interest before any relevant Order was made. On 28th and 29th September, 1987, certain Shares in Public Companies held in the name of our client James Delaney, were sold through Pembroke Josephson Wright Ltd., Stock and Sharebrokers, on the Stock Exchange. The shares had been handed to our firm for sale with the instruction that the proceeds were to be the property of our firm and to be applied in part satisfaction of the clients obligations to us in respect of the lump sum fee to which we have referred. Copies of the brokers sale notes are attached, and the net proceeds were $29,997.30 which was paid to our general account.

We would assume that the shares were the subject of the Orders then made under Section 243E and, if we had then been aware of such Orders, we would not have been participated in the sale of them. We did not become aware of the making of the Orders until 14th October, 1987." (the emphasis is mine).

That that was the view of Mr Anthony Bailey appears from his affidavit sworn 27 November 1987 in which the following passages appear:-

"6. On the dates referred to in paragraph 5 hereof, I had entered into an agreement with Leeth and Bockhoff on their behalf, and on behalf of Powell Donovan and Tucker, to act for them only on the basis of a retainer i.e. that I would act in the matter for a certain fee which would be paid forthwith, and become the property of my firm. It was agreed that arrangements would be made forthwith for funds to be paid to my firm, or to its benefit pursuant to that agreement.

7. To formalise the agreement which had been entered into, a written retainer was prepared and executed. Now produced and shown to me and exhibited hereto and marked with the letter 'A' is a true copy of the retainer agreement.

. . .

9. The following things occurred pursuant to the retainer:-

(a) On the 24 September, 1987 an authority prepared by my firm and executed by my clients was delivered to the Melanesian International Trust Company authorising and directing the transfer of funds held in Resorts Pacific Limited to be paid to Vanguard Limited, a company controlled by my partner and others so as to give effect to the oral agreement entered into, in part satisfaction of a lump sum payment. Vanguard Limited had been established in August, 1986 and funds were transferred to that company for convenience pending the return of the funds to the General Account of my firm. Now produced and shown to me and exhibited hereto and marked with the letter 'B' is a true copy of the authority directed to Melanesian International Trust Company to transfer funds from Resorts Pacific Pty. Ltd. to Vanguard Pty. Ltd. On the 25 September, 1987 the Melanesian International Trust Company confirmed that the transfer had been effected.

(b) On the 28th and 29th September, 1987 certain shares were sold on the stock market and the proceeds of those sales were banked to Bailey & Bailey's General Account. Now produced and shown to me and exhibited hereto and marked with the letters 'C', 'D', 'E' and 'F' are true copies respectively of payment advice notices in relation (sic) to those shares. The original payment advice notices have been delivered to the Official Trustee in Bankruptcy. . . .

26. I assert, as a result of legal advice, that:-

(i) the funds referred to in paragraph 9(a) are the property of my firm and are not properly the subject of any of the Orders of Mr. Justice Sheppard;

(ii)the funds referred to in paragraph 9(b) may be the property of my firm;"

Mr Hampson submitted that the orders of Sheppard J. took effect only with respect to property which was an asset of the appellants at the date of the making of the order and did not apply to the funds which came into existence after the making of the orders when the shares were sold on 28 and 29 September. He submitted that the charge which s.243J created upon the shares by virtue of the orders of Sheppard J. ceased pursuant to the provisions of s.243J(2)(f) when the shares were sold to a bona fide purchaser for value without notice.
However, the principles as to the interpretation of the charging provisions of deeds, contracts and other instruments are not apposite to the interpretation of the provisions of ss.243E and 243J which have a very different operation and which take their language and their content from that of the law respecting writs of fieri facias. The history and law with respect to such writs and their operation is discussed in Archbold's Practice of the Court of Queen's Bench, 8th Ed., Chapter XXVI, in the notes to Order 47 in the White Book and in Halsbury's Laws of England, 4th Ed., Vol.17, paras 462 to 499.
Thus, whereas in In re Kelcey, Tyson v. Kelcey (1899) 2 ChD 530, an instrument of charge was read as directed to properties existing at the date of the charge only, an order made under s.243E, like a writ of fi.fa., authorises the seizure of all the property of the person named. With respect to a writ of fi.fa., Archbold states at p.576:-

"The sheriff may seize and sell all the personal goods and chattels belonging to the defendant that he can find (3 Co.12), and which can be sold (Com. Dig., 'Execution,'(C),4. See Legge v. Evans, 6 M & W 36), with the exception of wearing apparel actually in use (Hardistey v. Barney, Comb.356; Sunbolf v. Alford, 3 M. & W.254), and perhaps, goods in the personal possession of the defendant (See per Parke, B., Ib.)."

The Sheriff to whom the writ was directed was bound to make the seizure within a reasonable time, but if the writ was in the ordinary form and if the seizure first effected proved inadequate to extinguish the judgment debt, the Sheriff was authorised by the writ to make further seizure until the writ had been completely executed. See Jordan v. Binckes (1849) 13 QB 757 and The Queen v. The Sheriff of Essex (1839) 8 Dowl Prac Cas 5. A writ of fi.fa., like the order made under s.243E, authorised the seizure of property owned and controlled by the person named and could operate over a lengthy period. It was no concern of the procedure to impound only property owned and controlled by the debtor as at a particular date.

The law with respect to writs of fi.fa., like the provisions of s.243J, imposes a charge upon the property of the named person, which charge is extinguished by the sale of property to a bona fide purchaser for value without notice. Such a charge does not limit the authority to seize the property of the named person, but rather gives an entitlement to seize additional property of which that person has disposed after the creation of the charge otherwise than to a person bona fide for value without notice.
There are aspects of s.243E which support a like construction of the subject provisions. An order under s.243E may be directed either to specific property or to all the property of the defendant and "property" is defined in wide terms to include real and personal property of every description including present, future, vested or contingent interests. The section is directed not to the passing of property but solely to seizure for the purposes of security pending an order for sale. The charge created by s.243J is not of primary significance but is in aid of other provisions. Section 243E(4)(c) enables the Court to make provision for meeting the reasonable living and business expenses of the defendant out of the property and it is clear from s.243N(4) that an order made under s.243E empowers a Trustee to carry on a business. Finally, nothing in the sections concerns itself with or should be concerned with property as at a particular date. There is no distinction drawn between property owned at the date of an order and property after-acquired. No provision of Division 3 of Part XIII depends upon or requires the drawing of such a distinction. The distinction drawn by the Act is that specified in s.243E, namely, the distinction between specific property, which must be identified by the order of the Court, and all the property of the defendant which does not require identification by the Court but only the practical step of the Official Receiver's taking it under control.
There was nothing in the orders of Sheppard J. which inferred that what was to be taken control of was property which was in existence and therefore in a certain form as at the date of his Honour's order. Rather the direction given by his Honour was a direction to the Official Trustee to take control of all the property of the defendant. Such an order ought to be read literally. Having located the moneys which were the proceeds of the sale of the shares, the Official Receiver was authorised and directed to take control of them.
Insofar as the proceeds of the sale of the shares were to meet the legal costs of Bailey & Bailey, the reasons I have already given with respect to the Vanguard moneys sufficiently deal with that issue.
The next issue arises out of the orders of Pincus J. that, upon the Director of Public Prosecutions undertaking not to tender the same in whole or in part in the criminal proceedings, each of the appellants should, within 28 days, file a statement verified by oath or affirmation identifying all of his or her property and giving particulars in relation thereto and, further, that on a date to be fixed by the Registrar, not being a date earlier than the completion of the committal proceedings, each of the appellants be examined by the Registrar concerning the nature and location of the property.
The argument on these points was put for the appellants principally by Mr R.V. Hanson QC, with whom Mr A.J. Glynn appeared for the 1st, 3rd, 5th and 6th appellants. Much of the argument was directed to the issue whether paragraphs 243F(d) and (e) of the Act abrogated the privilege against self-incrimination. It was submitted on behalf of the appellants that, as the allegations against them were wide reaching and as the prosecution was at an early stage, the disclosure of the particulars of all their property could have a tendency to incriminate them or at least might lead to avenues of inquiry or evidence which would assist the prosecution. Pincus J. held that the power to require the furnishing of a statement under para 243F(1)(d) and the power to hold an examination under para 243F(1)(e) were not subject to the common law rule protecting against self-incrimination.
Plainly, as a matter of theory, the effect contended for by Mr Hanson might occur. To put a purely hypothetical example, if any of the appellants held a trafficable quantity of heroin, the disclosure of that fact would have a tendency to incriminate.
There was considerable discussion before this Court as to the effect of the reasoning in Pyneboard Pty Limited v. Trade Practices Commission and Anor. (1983) 152 CLR 328, Sorby v. The Commonwealth of Australia (1983) 152 CLR 281, Mortimer and Anor. v. Brown and Anor. (1970) 122 CLR 493, Controlled Consultants Pty Ltd v. Commissioner for Corporate Affairs (1985) 156 CLR 385, Commissioner of Australian Federal Police v. McMillan (1987) 70 ALR 203 and Commissioner of Australian Federal Police v. Cox (1986) 70 ALR 509. Mr Hanson referred particularly to Sorby v. Commonwealth, cited above, and to the remarks therein of Gibbs C.J. at 288-90 and of Mason, Wilson and Dawson JJ. at 309-310.
I accept the view expounded by Pincus J. that the Act abrogated the privilege against self-incrimination and find it unnecessary to discuss the authorities in detail. His Honour's view followed that of Burchett J. in Commissioner of Australian Federal Police v. McMillan and Anor. (1987) 70 ALR 203. Both decisions are well supported by the decisions in Pyneboard Pty Ltd v. Trade Practices Commission and Anor., Mortimer and Anor. v. Brown and Anor., and Controlled Consultants Pty Ltd v. Commissioner for Corporate Affairs, cited above. The context in which the subject provisions appear shows that the legislature intended these powers to aid the identification and recovery of a pecuniary penalty equal to the profits resulting from prescribed narcotics dealings, including unlawful narcotics dealings. Necessarily, information and answers given as required may have a tendency to incriminate.
I note, moreover, that the mere allegation made in Mr Bailey's affidavit that the disclosure of the appellants' property would tend to incriminate them or prejudice their defence would not have been a sufficient basis for the refusal of the orders. See Gibbs C.J. in Sorby's case, cited above, at p.289.
Mr Hanson also relied upon the principle that, in proceedings for the recovery of a penalty, discovery against the person from whom the penalty is sought will not be ordered. See, eg, Pyneboard Pty Ltd v. Trade Practices Commission and Anor., cited above, at pp 335-6. However, the context may show that this principle has no application. In the present case the principle has been abrogated, for s.243F specifically provides for the making of the orders which are under appeal in this regard.
On the other hand, I reject the submission of Miss Kiefel that, as the Act expressly or by implication abrogated the privilege against self-incrimination and the right of silence where a penalty is claimed, the Act necessarily intended that information as to a defendant's property should be obtained whenever required and whatever the consequences.
In my opinion, a matter for present consideration is that of the appellants' right to silence during the pendency of the criminal prosecutions. The principle to be applied was stated by Megan L.J. in Jefferson Limited v. Bhetcha (1979) 1 WLR 898 at 905:-

"I should be prepared to accept that the court which is competent to control the proceedings in the civil action, whether it be a master, a judge, or this court, would have a discretion, under section 41 of the Supreme Court of Judicature (Consolidation) Act 1925, to stay the proceedings, if it appeared to the court that justice - the balancing of justice between the parties - so required, having regard to the concurrent criminal proceedings, and taking into account the principle, which applies in the criminal proceeding itself, of what is sometimes referred to as the 'right of silence' and the reason why that right, under the law as it stands, is a right of a defendant in criminal proceedings. But in the civil court it would be a matter of discretion, and not of right. There is, I say again, in my judgment, no principle of law that a plaintiff in a civil action is to be debarred from pursuing that action in accordance with the normal rules for the conduct of civil actions merely because so to do would, or might, result in the defendant, if he wished to defend the action, having to disclose, by an affidavit under Order 14, or in the pleading of his defence, or by way of discovery or otherwise, what his defence is or may be, in whole or in part, with the result that he might be giving an indication of what his defence was likely to be in the contemporaneous criminal proceedings. The protection which is at present given to one facing a criminal charge - the so-called 'right of silence' - does not extend to give the defendant as a matter of right the same protection in contemporaneous civil proceedings."

Some of the cases which have considered the application of this principle are Cameron's Unit Services Pty Limited v. Whelpton and Associates Pty Limited (1984) 59 ALR 754, McMahon v. Gould (1982) 7 ACLR 202 and Federal Commissioner of Taxation v. Ahern 17 ATR 535. The principle applies in the present case notwithstanding that the Act overrides the privilege against self-incrimination. The Act does not expressly or by necessary implication abrogate the Court's discretion to hold its hand in civil proceedings while criminal proceedings are on foot.

In the present case, it must be kept in mind that the appellants did not initiate the prosecution proceedings or the proceedings in this Court and that the interlocutory steps ordered were not made necessary because of their defence of the proceedings in this Court. Moreover, in these proceedings, the respondent has an advantage which the prosecution would not have been able to obtain in the criminal proceedings.
I agree with Mr Hanson that the appellants' right of silence in the criminal proceedings ought not lightly to be overborne and that the undertaking given by the Director of Public Prosecutions that he will not tender the statement as evidence in prosecution proceedings provides only partial relief. In Pyneboard Pty Ltd v. Trade Practices Commissioner and Anor., cited above, at p 340, Mason A.C.J., Wilson and Dawson JJ. described the rule nemo tenetur se ipsum accusare as a "fundamental . . . bulwark of liberty". It is not one that a civil court ought to override unless, having regard to all the circumstances of the case, justice so requires. See, eg., the remarks of Burchett J. in Commissioner of Australia Federal Police v. McMillan and Anor., cited above, at p 213:-

"The final point raised on behalf of the defendants was whether I have a discretion to adjourn the examination of a particular witness pending the forthcoming trial. I am clearly of the opinion that the court does have such a discretion, and that in the exercise of it the court should be careful to ensure that the examination, in the particular circumstances in which it is held, is not oppressive to a defendant facing serious criminal charges."

In my opinion, the issue is not one which can be considered in globo and, in this respect, I differ from the view taken by Pincus J. and think that his orders were in error. The disclosure by the appellants of lawful assets, the holding of which is unrelated to the matters the subject of the prosecution proceedings will not prejudice or embarrass the defence of those proceedings. But other disclosure may do so. The material before Pincus J. was too general and inadequate to enable his Honour to withhold an order on this ground. Nevertheless, it is easy to see that disclosure of some material may embarrass the defence of the prosecution.
In my opinion, therefore, the orders made by Pincus J. under s.243F were correct save that I would add thereto a reservation of leave to the appellants or any of them to apply with respect to any property the disclosure of which would be likely to prejudice the defence of the prosecution proceedings. If there are any assets the disclosure of which would be prejudicial, an objection to disclosure may then be taken in general terms in the statement and application can be made for variation of the order of the trial judge so as to exclude such properties from the statement. No doubt the judge dealing with any such application may wish to have particulars of the property sought to be excluded and may wish to consider such details in confidential session. Without such details he could well be unable to determine where the balance of justice lay as between the criminal proceedings and the civil proceedings in this Court. As to whether the property should now be disclosed and, if so, on what terms and to whom, will be a matter for the judge's discretion.
No specific order need be made with respect to the order empowering the Registrar to examine the applicants on a date to be fixed by him after the conclusion of the committal proceedings. In fixing a date, the Registrar should have in mind the principles I have mentioned and should also have in mind the fact that he ought not to do anything that may constitute a contempt of any court in which criminal proceedings are current. A proceeding of an administrative character may constitute a contempt of court. See Australian Builders' Construction Employees and Builders Labourers' Federation v. Commonwealth of Australia (1981) 37 ALR 470 and State of Victoria v. Australian Builders' Construction Employees and Builders Labourers' Federation (1982) 41 ALR 71. Whether the proceedings before the Registrar would or might be a contempt of the court in which criminal prosecutions were being heard or were pending is not a matter on which I proffer any view. Moreover, presumably not all questions which the Registrar would seek to put would tend to prejudice the conduct of the defence of any criminal proceedings then on foot.
The matter will be one for the Registrar, subject to any specific directions that may be given to him by a judge of this Court. He will be entitled, if he is in doubt, to seek further directions from the Court at an appropriate time.
In my opinion the appellants, who have succeeded only partially, should pay one-half of the respondent's costs of the appeal.
For these reasons therefore, I would propose the following orders:-

1. That the orders made by the Honourable Mr Justice Pincus on 24 December 1987 be varied as follows:-

(i) Before Orders 4 and 5, the words "AND IT IS DECLARED" should be deleted and in lieu thereof the words "AND IT IS DIRECTED" should be substituted;

(ii) In Order 4, by omitting the words "relate to the property of Resorts Pacific Limited, Development Industries Limited and Willesden Development Limited and that such property includes" and by substituting therefore the words "relates to property including";

(iii) In Order 4(b), by substituting the word "the" for the word "any" and by adding after "Melanesia International Trust Company Limited", where the same secondly appears, the words "being the sum of $1,095,411.36 on 29 December 1987 transferred into account no. G17587050191 at the Commonwealth Trading Bank, George Street, Brisbane, in the name of the Official Trustee in Bankruptcy."

(iii) By adding the following order:- "3A That leave be reserved to the appellants and each of them to apply for an order in the discretion of the court for dispensation from Orders 1 and 3 or for variation of Order 2 on the ground that the effect of such orders would be likely to prejudice the fair trial of criminal proceedings brought against the appellants or any of them."

2. That the appellants pay one-half of the respondent's costs of the appeal.

JUDGE3

The general background to the appeal has been explained in the reasons of the other members of the Court.

The Vanuatu property

It is common ground that the order made by Sheppard J. on 25 September 1987 could not affect these assets. The question is whether the order made on 28 September 1987 or on 19 October 1987 did so. The order made on 28 September directed the Official Trustee to "take control of all of the property in which the Defendants have a beneficial interest whether situate in the Commonwealth of Australia or elsewhere". The order made on 19 October was similar, referring to "the property, of each of the Defendants, whether situate in the Commonwealth of Australia or elsewhere". Nothing appears to turn on the differences in the terms of the orders. It is common ground that the orders will operate on any property owned beneficially by any of the appellants, including property situate offshore.
Some reference to the history of the events which occurred in Vanuatu is necessary at this stage. In June 1986, acting on the instructions of the second appellant, Melitco caused to be incorporated Resorts Pacific Limited ("Resorts"). In April 1987, the second appellant sent cheques in the amount of $A990,200.00 to Melitco "for deposit to the account of Resorts . . ." Upon inquiry from Melitco as to the source of the funds, the second appellant stated that they were "personal investments from U.S. citizens in our Pacific resorts projects".

Resorts' balance sheet as at 30 June 1987 showed, as a current asset, cash on deposit of $1,041,300.00, being funds lent to Melitco at interest. It also showed, as a current liability, a loan account of $1,038,185.00. It would seem that this amount represented the funds advanced by the second appellant in April.
On 22 September, the second, fourth, eighth, ninth and tenth appellants instructed Bailey and Bailey in Brisbane to act for them in the criminal proceedings. On 23 and 24 September Mr. A.H.H. Bailey and some of the appellants discussed fees in a general way. It was arranged that the solicitors be paid a substantial amount, in the order of one million dollars, on account of their costs.
On 24 September, Mr. J.A.H. Bailey telephoned Melitco's office and spoke to Mr. P.J. Ivamy, an officer of Melitco, and explained that his clients, the beneficial owners of the money held with Melitco to the account of Resorts, wished Melitco to transfer all funds in the Resorts account to the account of Vanguard Limited ("Vanguard"), a Vanuatu company controlled by Bailey and Bailey. Mr. Ivamy agreed to do this upon receipt of an authority. Mr. Bailey then sent an authority by fax in these terms:

"AUTHORITY

DIRECTED TO MELITCO 24 September, RE: RESORTS PACIFIC

We the undersigned hereby authorise and request you to transfer forthwith all funds held in Account No. held in our names to Vanguard Account No. 63006-14 and the receipt of this authority shall be a full and sufficient discharge to you for that purpose. We accept that a penalty may attach to funds transferred prior to maturity and authorise you to deduct such penalty.

(SGD.) JAMES ROBERT DELANEY

(SGD.) CAROL ANN POWELL"

On 25 September, Mr. Bailey telephoned Mr. Ivamy and was informed that the transfer had been executed and that it was in the sum of $A1,080,944.43. Although it was apparently contemplated that these funds would then be brought to Bailey and Bailey in Australia, it was not until 29 December 1987 that the monies arrived on shore. They were then paid into a special account of the Official Trustee, but this was done pursuant to a "without prejudice" arrangement arrived at between the solicitors for the parties to these proceedings.
The terms of the authority dated 24 September assume that the funds advanced by the second appellant to Melitco in April were to be treated as the property of the second and tenth appellants. It is true that Resorts was involved in the transaction in some way but the authority speaks of the funds as if Melitco had treated the second and tenth appellants as their beneficial owners. It is accepted by the appellants that the second and tenth appellants should be regarded as the owners of the funds as at 24 September. Although those appellants controlled Resorts, it would not follow under the law of this country that they should be treated as beneficially entitled to that company's assets (see Sharrment Pty. Limited v. The Official Trustee in Bankruptcy, Lockhart, Beaumont and Foster JJ., unreported, 3 June 1988). It is not necessary to pursue the point under the law of Vanuatu because, as has been said, it is accepted that the second and tenth appellants should be treated as beneficially entitled to the debt owed by Melitco.
On behalf of the appellants, it is first submitted that the authority given on 24 September constituted a valid assignment to Vanguard, on behalf of Bailey and Bailey, of the debt owed by Melitco. For the purposes of the argument, I am prepared to assume that this conclusion, which would appear to depend upon the law of Vanuatu, is correct.
It is then contended on behalf of the appellants that the chose in action thus assigned to Vanguard, as nominee or agent of Bailey and Bailey, was held upon a trust for a specific purpose, namely, to be applied by the solicitors for the purpose of paying the costs incurred in conducting the defence of the appellants in the criminal proceedings. According to the argument, so long as their retainer as solicitors is on foot, Bailey and Bailey are bound to apply the chose in action and its proceeds for the purpose of defending the appellants. It is said that, if the retainer were to be terminated for any reason or if the proceeds of the debt (now $1,095,411.36) is more than is required for the specific purpose contemplated, that is to say, if the primary trust fails, the balance remaining will then be held upon a secondary trust for the second and tenth appellants. Reliance is placed on the reasoning in Barclays Bank Ltd. v. Quistclose Investments Ltd. (1970) AC 567 and Carreras Rothmans Ltd. v. Freeman Mathews Treasure Ltd. (1985) Ch 207. In this way, it is submitted for the appellants that although Bailey and Bailey may not have been beneficially entitled to the chose in action on 28 September, neither was any appellant. Instead, it is contended, the beneficial interest in the chose in action was, as it were, suspended. Because the chose in action was held upon a "purpose" trust it was not the property of the appellants at any material time and was not the subject of the orders made on 28 September or 19 October.
It is difficult to accept this analysis.
It may be accepted that it is possible, in accordance with the reasoning in Quistclose, to vest an asset in another party for a specific purpose with the consequence that the asset does not become the beneficial property of the other party (see also Australasian Conference Association Limited v. Mainline Constructions Proprietary Limited (In Liquidation) (1978) 141 CLR 335, per Gibbs ACJ. at p 353; Carreras, supra, at p 220; J.D. Heydon, W.M.C. Gummow and R.P. Austin, Cases and Materials on Equity and Trusts, 2nd ed., 1982, at pp 356-357; R.P. Meagher and W.M.C. Gummow, Jacobs' Law of Trusts in Australia, 5th ed., 1986, at pp 16-18; R.P. Austin and R. Vann, (eds.) The Law of Public Company Finance, 1986, at pp. 376-387; Mr. Justice Priestley, "The Romalpa Clause and the Quistclose Trust", in P.D. Finn (ed.) Equity and Commercial Relationships, 1987, at p 229-238; D.J. Hayton (ed.) Underhill and Hayton's Law Relating to Trusts and Trustees, 14th ed., 1987, at pp 8-9, 73-74 and 280-281). But no purpose or Quistclose type of trust was constituted by the discussions in September between the solicitors and their clients. In those discussions, an "open" contract of retainer to defend the criminal proceedings was negotiated at a fee to be agreed later. It was then arranged that the solicitors would be put in funds in the sum of approximately one million dollars, and it was an implied, if not express, term of their retainer that the amount to be provided to the solicitors should be held by them unless and until otherwise directed by the second and tenth appellants. There is nothing in such an arrangement which resembles a purpose or Quistclose trust. In Quistclose and in Carreras, supra, monies were paid to another party for the specific purpose of paying a third party. In the present arrangement, there is no third party contemplated as the recipient of the funds. Rather, it is a case of a pre-payment to solicitors of monies which might become owing, in whole or in part, at a future date if and when professional services were rendered. It is true that it was intended that the solicitors could have resort to these funds to satisfy any liability for fees. Nevertheless, once the liability for any fees were satisfied, the solicitors would then be bound to account to the clients for the balance:

"When a solicitor receives from a client money in respect of costs and disbursements which may be earned or incurred in the future, according to what might be called a traditional view, that money is the client's until it is appropriated for costs when earned or applied in reimbursement of disbursements paid on the client's behalf. In keeping with that view, the money should be deposited to the client's credit in the solicitor's trust account and only withdrawn, with the client's authority, after disbursements are paid and costs earned are rendered in a bill to the client."

(see F. Riley, New South Wales Solicitors Manual, at pp 1232-3).

In the present case, looking at the position as at 28 September 1987, fees in the sum of approximately $7,000.00 were claimed by the solicitors but were paid shortly thereafter pursuant to an order made by Pincus J. It must follow that, as at that date, the solicitors were bound to account to the clients for any asset held in respect of possible future costs and disbursements. It has been said that funds held by a solicitor on behalf of a client are "in a sense" trust money (see Loescher v. Dean (1950) 1 Ch 491 at p 494; Halsbury's Laws of England, 4th ed., Vol. 44, at p 243; cf. Douglas v. Douglas (1907) 7 SR (N.S.W.) 466 at pp 470-1; G.J. Graham-Green, Cordery's Law relating to Solicitors, 7th ed., 1981, at p 106; Re Wright; Ex parte Clout (1984) 1 FCR 51 at p 53; Stewart v. Strevens (1976) 2 NSWLR 321; Johns v. Law Society of N.S.W. (1982) 2 NSWLR 1; Re A Barrister and Solicitor (1979) 40 FLR 26 at p 39; Gilshenan & Luton v. Commissioner of Taxation (1983) 1 QdR 199). Even if the asset held by the solicitors on 28 September was not trust property in the strict sense, the solicitors were at least bound to account to the clients for that asset. A debt was then created in favour of the clients and the Official Trustee was entitled to take control of the property being that chose in action and its proceeds.
It may be added that no question of any general lien could arise here because, although such a lien is enforceable against persons, including the Official Trustee, who have no higher right than the client (see E.I. Sykes, The Law of Securities, 4th ed., 1986, at p 663), the lien is available only in respect of legal taxable costs incurred on the client's instructions (see Sykes, ibid.). As at 28 September, there were apparently no such costs unpaid. The appellants did not, in any event, seek to rely upon any such lien.
It follows that the debt owed by Melitco to the second and tenth appellants was the property of those appellants for the purposes of s.243E(1) and (2) of the Customs Act 1901: even if the direction dated 24 September was effective to assign that debt to the solicitors, Vanguard and the solicitors held that asset upon trust for the second and tenth appellants; alternatively, Vanguard and the solicitors were bound to account to those appellants for the funds representing that chose in action. On either approach, the proceeds should be treated as property of these appellants at the material dates. It must also follow that this aspect of the appeal fails. The proceeds of sale of the shares
I agree with Fox J. that these proceeds were picked up by the order made on 25 September. I also agree with Davies J. that the order made on 28 September operated in respect of any property into which property originally owned by the appellants could be traced (cf. J.O'Donovan, Company Receivers and Managers, 1981, pp 29-30). Information
I agree with Davies J. (and see also Refrigerated Express Lines (A/Asia) Pty. Ltd. v. Australian Meat and Live-Stock Corporation (1979) 42 FLR 204).
Orders
I agree with the orders proposed by Davies J. In the special circumstances of the case, it is preferable that directions be given rather than that declaratory orders be made (see O'Donovan, supra, at p 30).

[1988] FCA 335

08 JULY 1988