Lee v Director of Public Prosecutions (Cth) (No2)

[2009] NSWSC 174

Reported Decision: 224 FLR 222
194 A Crim R 215
[2009] ALMD 4849
52 MVR 581

New South Wales

Supreme Court

CITATION:	Lee v Director of Public Prosecutions (Cth) (No2) [2009] NSWSC 174 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	28/05/08
JUDGMENT DATE :	20 March 2009
JUDGMENT OF:	Hidden J
DECISION:	Order sought in paragraph 5 of notice of motion (stay of proceedings) refused.
CATCHWORDS:	PROCEEDS OF CRIME - Proceeds of Crime Act (Cth) - Property of applicant restrained under s19 - proceedings for forfeiture under s49, examination of applicant under s180 - applicant not charged with any offence - whether proceedings under the Act should be stayed until it is determined whether he should be prosecuted.
LEGISLATION CITED:	Proceeds of Crime Act 2002 (Cth) Corporations Act 2001 (Cth) Evidence Act 1995 Criminal Proceeds Confiscation Act 2002 (Qld)
CATEGORY:	Principal judgment
CASES CITED:	Sorby v The Commonwealth (1983) 152 CLR 281 Yuill v Spedley Securities Ltd (1992) 8 ACSR 272 ASIC v Lee and Anor (Finkelstein J, unreported, 15 June 2007) Cth DPP v Jo and Ors [2007] QCA 251 Cth DPP v Jo and Ors [2007] QDC 173 McMahon v Gould (1982) 7 ACLR 202 State of Queensland v Shaw [2003] QSC 436 Criminal Proceeds Confiscation Act 2002 (Qld) Fernando v Commissioner of Police (1995) 36 NSWLR 567
PARTIES:	Kee Sien LEE (applicant) Director of Public Prosecutions (Cth) (respondent / plaintiff)
FILE NUMBER(S):	SC 2007/13850
COUNSEL:	J Sackar QC with F Gordon (applicant) I Temby QC with T Muir (respondent)
SOLICITORS:	Baker & McKenzie (applicant) Commonweath Director Public Prosecutions (respondent)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HIDDEN J

Friday 20 March 2009

2007/13850 Kee Sien LEE
applicant v
Director of Public Prosecutions(Cth)
respondent / plaintiff

JUDGMENT

1 HIDDEN J: On 30 July 2007 the respondent to the present application, the Commonwealth Director of Public Prosecutions, obtained a restraining order under s19 of the Proceeds of Crime Act 2002 (Cth) in respect of property of the applicant, Kee Sien Lee. The order was made under s19(1)(d) of the Act, on the basis that there were reasonable grounds to suspect that the property was the proceeds of an indictable offence or a foreign indictable offence. In the summons seeking that order the respondent also sought orders that the applicant be examined about his affairs, pursuant to s180 of the Act, and that the property the subject of the restraining order be forfeited to the Commonwealth, pursuant to s49.

2 I have already dealt with Mr Lee’s application for a declaration that the restraining order ceased to be in force 28 days after it was made and for orders that the respondent’s applications for examination under s180 and forfeiture under s49 be struck out. I declined to make that declaration or either of those orders: Lee v DPP (Cth) [2008] NSWSC 300. Relevant provisions of the Act were considered in the course of that judgment.

3 The restraining order was made ex parte on the basis of an affidavit sworn on 27 July 2007 by Keith Inman, an officer of the Australian Securities and Investment Commission (ASIC). Put shortly, the affidavit disclosed that ASIC had been investigating a fraudulent trading scheme whereby Australian investors were induced into purchasing non-existent commodity options on non-existent foreign commodity exchanges. Such a scheme would be in contravention of s1041E of the Corporations Act 2001(Cth). Mr Inman deposed to his suspicion that some of the money paid by investors under this scheme found its way into bank accounts in the applicant’s name: three accounts with the ANZ Bank and two with the Westpac Bank. Prior to the restraining order being made, ASIC had applied successfully to the Federal Court to freeze these accounts under s1323 of the Corporations Act. Those orders ceased to be in force on 31 July 2007, and shortly thereafter the Federal Court proceedings were terminated by agreement.

4 Mr Inman’s affidavit also outlined an investment scheme which had been under investigation by the Securities Commission of Malaysia. The affidavit summarised material from which it might be inferred that the applicant was involved in that scheme. Mr Inman expressed his suspicion that his involvement contravened provisions of Malaysian legislation requiring that he be licensed as an investment adviser and a fund manager. Corresponding provisions are to be found in Australian law: s911A and s601ED(5) of the Corporations Act.

5 Mr Inman set out material founding his suspicion that money paid by investors in that scheme also found its way into the five bank accounts of the applicant to which I have referred. In addition, he summarised material from which it might be concluded that Mr Lee transferred money from the same source to a Macquarie Bank account held in the name of a property management company. This was for the purpose of purchasing two properties, and some of that money was held in the trust account of solicitors acting for the vendors. In the event, the purchase of those properties did not proceed and those amounts remained in those accounts.

6 Accordingly, the restraining order was made in respect of the balance held in all seven bank accounts, a very substantial sum. At the time Mr Inman swore his affidavit, the applicant was believed to be residing in Malaysia. I was provided with no further information as to his whereabouts at the time that the present application was heard, although it was understood that he was not in Australia. He had not been charged with any offence in this country arising from any of the matters dealt with in Mr Inman’s affidavit. Apart from the tender of some formal documents of a historical nature, he presented no evidence in the application.

The application.

7 The applicant now seeks an order that the respondent’s application for his examination under s180 of the Proceeds of Crime Act and for forfeiture under s49 be stayed. As expressed in written submissions on his behalf, he seeks that the proceedings be stayed until he is informed either:

(a) that he will not be charged with any offence to which the restraining order relates; or
(b) that he will be charged with one or more offences to which the restraining order relates, and is advised of the precise nature of any such charges.

8 The basis of the application is that pursuit of the proceedings might prejudice the applicant’s privilege against self-incrimination. An examination under s180 is directed to the affairs of a person whose property has been restrained. By s183 a person may be required not only to attend for examination but to produce documents. However, s198 provides that, generally, an answer given or a document produced in examination is not admissible in evidence in civil or criminal proceedings. To that there are certain exceptions which are not material for present purposes. Section 196 makes it an offence to refuse or fail to answer questions or produce documents at an examination. However, that provision is subject to s197, which protects from prosecution a person who could, in proceedings before a court, have claimed privilege against answering a question or producing a document, including the privilege against self-incrimination.

9 The applicant has made an application for revocation of the restraining order, pursuant to s42 of the Act. By subs (5), that order may be revoked if the court “is satisfied that there are no grounds on which to make the order at the time of considering the application to revoke the order.” It would also be open to him to seek an order excluding property from forfeiture under s49, and the court would be required to make that order if it were satisfied that the specified property was not “proceeds of unlawful activity”: s73(1)(d)(ii). To these provisions might be added s31, enabling him to apply to the court to exclude specified property from the restraining order on the basis, to be found in s29(2)(d)(i), that the property was not “the proceeds of an indictable offence, a foreign indictable offence or an indictable offence of Commonwealth concern…” In any of those applications he would bear the burden of proof on the balance of probabilities: s317.

10 Mr Sackar QC, who appeared on this occasion with Ms Gordon for the applicant, argued that the applicant’s submission to examination, his opposition to an application for forfeiture, and his own application for relief under the Act could require him to disclose information which he would not be required to disclose in any criminal proceedings against him which might ensue. Further, evidence which he might present could alert the prosecuting authority to material not currently in its possession or might provide it with a foundation for the pursuit of further lines of inquiry. It was submitted that, in the absence of information about the precise nature of any criminal charges that might be brought, the prejudice which he might suffer could not be articulated with any specificity.

11 It was put on behalf of the applicant, correctly, that the privilege against self-incrimination is a fundamental component of our system of criminal justice, and that it protects a person “not only from incriminating himself directly under a compulsory process, but also from making a disclosure which may lead to incrimination or to the discovery of real evidence of an incriminating character”: Sorby v The Commonwealth (1983) 152 CLR 281, per Mason, Wilson and Dawson JJ at 310.

12 Allied to the privilege against self-incrimination, of course, is the right to silence in criminal proceedings. In Yuill v Spedley SecuritiesLtd (1992) 8 ACSR 272, Kirby P at 274 noted the “deep-rooted” inclination of our law “to avoid, directly or indirectly, depriving a person of the right to silence in criminal proceedings.” The case concerned the refusal of a judge of this Court to stay civil proceedings concerning the claimant until criminal proceedings, said to be connected, which had been brought against him were completed. The outcome of the case is not material, but what Kirby P went on to say at 274-5 is important:

Sometimes the prior litigation of the criminal trial may have that effect, either by its interlocutory procedures or by the need of the accused, in the forensic setting of the civil trial, to give evidence or ask questions, thereby disclosing a defence to the outstanding criminal charge…. More than lip service must be paid by courts to the preservation of these enduring features of the criminal process, whether in the interpretation of apparently inconsistent statutes or in the exercise of a discretion to stay civil proceedings until related criminal proceedings are completed….

13 Mr Sackar acknowledged that the restraining order in the present case, under s19 of the Proceeds of Crime Act, did not require the identification of the applicant as a suspect in the commission of any offence and that, similarly, there was no such requirement in the pursuit of a forfeiture order under s49. Nevertheless, he noted Mr Inman’s assertion that, in relation to the investment scheme under investigation in Malaysia, the applicant was suspected of having contravened licensing provisions in that country. He also noted that, in relation to the other fraudulent trading scheme detailed in the affidavit, Mr Inman described the applicant as “person of interest” on the basis of the relevant deposits to his personal bank accounts.

14 In addition, Mr Sackar referred to the judgment of Finkelstein J of 15 June 2007, extending the freezing order on the applicant’s accounts until 31 July of that year, in which his Honour observed that there was "plainly a connection” between the applicant and the scheme, that the applicant had refused to explain how he came by the money, that if it had been received legitimately “all he had to do was come forward and say so”, and that his failure to do so “invites suspicion.” These observations were made in the context of his Honour’s finding, for the purpose of the provision of the Corporations Act with which he was concerned, that the applicant may be liable in debt or damages to an aggrieved person: ASIC v Lee and Anor (Finkelstein J, unreported, 15 June 2007).

15 Particular reliance was placed upon the decision of the Queensland Court of Appeal in Cth DPP v Jo and Ors [2007] QCA 251,in which the decision of a District Court judge to grant a temporary stay of a forfeiture application under the Act was upheld. The respondents were Mr and Mrs Jo and a company controlled by Mr Jo. Restraining orders had been made under s18 of the Act, which provides for a restraining order where there are reasonable grounds to suspect that a person has committed a serious offence. Forfeiture was sought under s47, relating to property restrained under s18 where the court is satisfied that the person whose conduct formed the basis of that restraining order had engaged in conduct constituting a serious offence. Mr Jo had been under investigation by the Australian federal police for his alleged involvement in a tax avoidance scheme. Although the investigation had been lengthy, no charge had been laid.

16 An affidavit by the respondents’ solicitor asserted that they were likely to be prejudiced in relation to any criminal proceedings in defending proceedings under the Act. The prejudice was not particularised, and the primary judge described it as “quite generic and non-specific.” Nevertheless, his Honour concluded that there was “a real risk” that any prosecution case might benefit “incidentally” from evidence adduced by the respondents on an exclusion application under s73 or an examination under s180, and granted the stay: Cth DPP v Jo and Ors [2007] QDC 173, especially at [72] ff.

17 Before his Honour and in the Court of Appeal, reference was made to the decision of Mackenzie J in State of Queensland v Shaw [2003] QSC 436. In that case a stay of forfeiture proceedings under the Criminal Proceeds Confiscation Act 2002 (Qld) had been granted until certain criminal charges had been finally determined. On the facts of the case, his Honour concluded that the issues in the forfeiture proceedings and in the criminal proceedings would be identical. His Honour said at [25]:

The case is one where there is a well defined and real advantage available to a person in criminal proceedings in respect of revealing evidence in advance. Depriving a defendant of such an advantage by requiring him to undergo prior proceedings where the State may, in effect, test-run the same case it proposes to lead in the prosecution proceeding and if necessary improve it if it can prior to that time is in my view sufficiently of the character of a demonstrated reason why the interests of justice would not be served by the forfeiture proceedings being heard in advance of the criminal proceedings. In my view the circumstances in which a stay is justified are established by the particular facts of the case.

18 The leading judgement of the Court of Appeal was delivered by Wilson J. In finding no error in the approach of the primary judge, her Honour said at [20]:

Of course in the present case no charges have yet been laid, despite protracted investigations. Further, on present indications it is only Mr Jo who is likely to be charged. It is true that confiscation and forfeiture proceedings are open where charges have not been brought and even where they are not expected to be brought. That said, Mr and Mrs Jo and Temis Pty Ltd are in an invidious position. They cannot be precise about how their defending forfeiture proceedings including by bringing exclusion applications – which would expose them to the likelihood of examinations in the course of which they would have to answer questions about their affairs – may prejudice his defence of criminal charges (on which the CDPP will most probably bear the onus of proof) when they do not know what those charges will be. By going into evidence in the forfeiture proceedings they may afford the CDPP an advantage in the criminal proceedings of the very type referred to by Mackenzie J in Shaw , and they may both waive their privilege against self-incrimination. On present indications, the risk of waiving the privilege against self-incrimination is particularly acute in Mr Jo’s case. (Footnote omitted)

19 Mr Sackar submitted that that case is directly on point, the stay having been ordered and upheld for the same reasons as those advanced by the present applicant.

20 Mr Temby QC, who again appeared with Mr Muir for the present respondent, referred to ss197 and 198 of the Act, outlined above, affording protection to a person whose privilege against self-incrimination might arise in an examination under s180. He also pointed out that in proceedings under the Act in court the privilege is maintained by its statutory embodiment in s128 of the Evidence Act 1995, which extends by subs(1) to a claim of privilege against incrimination under the law of a foreign country. This led to a submission that the “clear Parliamentary intention” was that these provisions would apply to and govern the examination and court hearing respectively, not that civil proceedings under the Act would be “held in abeyance by reason of a broad asserted risk of self-incriminatory harm…” To the extent that Cth DPP v Jo decided otherwise, it was respectfully submitted that it was wrong.

21 For the purpose of the present case, I do not find it necessary to express a concluded view about that broad submission and, in particular, I would not lightly conclude that a decision of the Queensland Court of Appeal was wrongly decided: cf Fernando v Commissioner of Police (1995) 36 NSWLR 567, per Priestley JA at 575, Clarke JA at 587-591, and Powell JA at 593. However, I am persuaded by Mr Temby’s alternative submission that the two Queensland cases referred to are distinguishable from the present case, and that, in all the circumstances, the applicant has not made out a case for a stay.

22 The State of Queensland v Shaw turned on its own facts and, clearly, is very different from the present case. It involved confiscation proceedings where criminal charges had been laid and where the issues in the two proceedings were seen to be the same. Cth DPP v Jo is more analogous to the present case, in that no criminal proceedings had been commenced and the respondents were unable to articulate the prejudice they might suffer with particularity. Nevertheless, there was evidence that Mr Jo and others were suspected of involvement in a tax avoidance scheme, and restraining orders had been made and forfeiture was being pursued on the basis of the suspicion that he, at least, had committed a serious offence. In the present case, the proceedings are founded upon no more than the suspicion that the applicant has acquired property which is the proceeds of an offence of the relevant kind. As Mr Temby pointed out, no criminal proceedings have been or need to be commenced. Sections 19 and 49 are directed solely at the proceeds of offending, by whomsoever, against a law of the Commonwealth or of a foreign country.

23 The protection afforded to the applicant by ss197 and 198 of the Proceeds of Crime Act and s128 of the Evidence Act is relevant to this issue, although, of course, not determinative of it. I am mindful of Mr Sackar’s submission that, notwithstanding the limited nature of the inquiry under ss19 and 49, the material in Mr Inman’s affidavit and in the Federal Court proceedings could raise a suspicion that the applicant has been involved in criminal activity. However, as Mr Temby also pointed out, such a suspicion is likely to arise in any case in which those provisions are invoked simply from the fact that the person involved has acquired property suspected of being the proceeds of crime.

24 In McMahon v Gould (1982) 7 ACLR 202 at 206, Wootten J proposed guidelines in the exercise of the discretion to grant or refuse a stay of civil proceedings where a defendant was charged with a related criminal offence. It is unnecessary to set them out. It is sufficient to say that his Honour affirmed a plaintiff’s prima facie entitlement to have an action tried and observed that it is “a grave matter to interfere with this entitlement by a stay of proceedings, which requires justification on proper grounds….” After referring to the right to silence, his Honour expressed as one of the factors to be considered by the court “whether there is a real and not merely a notional danger of injustice in the criminal proceedings…” In Yuill v Spedley Securities Kirby P (at 273-4) questioned whether it might be appropriate for the Court of Appeal to reconsider Wootten J’s guidelines. However, the other members of the court, Priestley and Meagher JJA, saw no occasion to do so. While I am mindful of the reservations of Kirby P, I accept them as a useful guide.

25 The passages from the judgments in Sorby v The Commonwealth and Yuill v Spedley Securities quoted earlier raise weighty considerations, and I have given the present application careful thought. However, I am not persuaded that the applicant faces prejudice such that the interests of justice require the stay of proceedings which he seeks. I might add that, in so far that he seeks a stay until he is informed that he would not be charged with any offence to which the restraining order relates, I consider that aspect of his application to be so broad as to be impracticable. There is force in Mr Temby’s argument that one cannot know what circumstances might arise, or what information might be obtained, which might warrant the institution of a prosecution in the future.

26 Accordingly, the application for a stay of proceedings sought in paragraph 5 of the notice of motion is refused. If necessary, I shall hear argument on costs.

**********

24/03/2009	-	Omission Re: number of proceedings. - Paragraph(s) Case title, only.
24/03/2009	-	Omission Re:number of proceedings - Paragraph(s) Case title,only.