Mansfield v Director of Public Prosecutions (WA)

[2006] HCATrans 162

[2006] HCATrans 162

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P53 of 2005

B e t w e e n -

NIGEL CUNNINGHAM MANSFIELD

Appellant

and

THE DIRECTOR OF PUBLIC PROSECUTIONS FOR WESTERN AUSTRALIA

Respondent

GLEESON CJ
GUMMOW J
KIRBY J
HAYNE J
HEYDON J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 6 APRIL 2006, AT 10.22 AM

Copyright in the High Court of Australia

MR M.L. BENNETT:   If it please your Honours, with my friend, MR S.K. SHEPHERD, I appear for the appellant.  (instructed by Lavan Legal)

MR D.R. WILLIAMS, QC:   May it please the Court, I appear for the respondent with my learned friend, MR T.A. STAPLES.  (instructed by Director of Public Prosecutions for Western Australia)

GLEESON CJ:   Yes, Mr Bennett.

MR BENNETT:   From the outset, can I take your Honours to a comment that arises from the respondent’s submissions in paragraph 68 where the respondent contends that the whole of the property that was derived from the share trading by the appellant was proceeds of crime although this is not an application under the Act by the Director for crime‑derived property but, alternatively, it is an application for criminal benefits. 

Your Honours would have seen from the third version of the statement of claim that is contained, and commences at page 6 of the papers, that the case that is put against the appellant by the Director involves an assertion that in a period between June and August of 2000 the appellant traded in shares in a listed company called My Casino Ltd and your Honours will have seen that the assertion is that at the relevant date, if one takes the June date, that Mr Mansfield was the holder of some 4,579,000-odd shares in My Casino and 1.931 million options.

If one assessed the value of those shares and options on a market-to-market basis from the date of the first trades alleged in the statement of claim, assuming those facts to be relevant, those shares and options would have had a collective value as at the commencement of the trading period, alleged by the Director, of some $2.82 million.

It is contended by the Director that Mansfield, a consultant to My Casino Ltd, came possessed of what is colloquially referred to as inside information which was then an alleged contravention of section 1002G of the Corporations Law, and now 1043A of the Corporations Act.  The inside information was of a variety but essentially all negative information, firstly, that there was a delay in My Casino processing its credit card applications through its issuing bank which at that stage was Barclays; secondly, that its charge‑back rates for a relevant period of a short time, about a week, have reached 16 per cent.

Your Honours may be familiar with the concept of a charge back by an issuing bank but one of the difficulties Internet providers have is where unscrupulous cardholders deny the validity of the transaction charged to them and deny liability to pay the bank.  The bank therefore charges back to the company the value of those transactions and 16 per cent was the first figure.  The second piece of information was that the charge‑back rates hit 20 per cent.  That led to a consequence said to be material information of a price sensitive nature held by Mansfield that Barclays suspended processing the credit card transactions for My Casino Ltd and as a result in a five‑day period in June turnover for My Casino fell, but it is not alleged by what percentage or in what dollar amount or in what material sum.

That information, collectively, was said by the Director and it is alleged in the statement of claim, to constitute inside information possessed of which Mansfield traded his shares, realising in the period through to August proceeds of some $3.356 million being a differential over the starting market value of some $532,000.  The points that can be made from that immediately ‑ ‑ ‑

KIRBY J:   Do you understand that there is any dispute about the matters you have laid out now or is that common ground?

MR BENNETT:   There is enormous dispute on them, your Honour, but for the purpose of this interlocutory matter I am simply reciting the third version of the statement of claim that you find commencing at page 6.  There is an application pending, first return day just before the Supreme Court of Western Australia today, on the part of the Director to amend the statement of claim to comply with the requirements of Justice Blaxall, but that is more to take account of the fact that the charges that were laid have been withdrawn and reissued.

The initial charges laid against Mansfield ‑ and these appear in the appellant’s submissions were three charges of breaching the Criminal Act ‑ they were withdrawn and some 67 charges were then laid against Mansfield:  eight of insider trading, 36 of procuring another to insider trade, 11 was communicating inside information, nine was money laundering, two were conspiring with another to inside trade, and one was procuring another to destroy books.  They were withdrawn and it has gone now to 13 insider‑trading charges, nine money laundering, one procuring to destroy against Mansfield alone, and joint indictments against another person for 37 insider‑trading charges and three of conspiracy.

So the charges have been withdrawn and relaid and that necessitates ‑ and that was in 2004 and has necessitated since 2004 ‑ that the Director amend the statement of claim to bring the civil proceedings into line with what is being prosecuted in the criminal courts in Western Australia and the District Court of Western Australia.  It is common cause that that the facts that I recite them from the statement of claim ‑ ‑ ‑

CRENNAN J:   Has there been any change in relation to the sum of the criminal benefits?

MR BENNETT:   No.  There is foreshadowed an application to reduce it by a small amount.  That will be heard today but that takes it from 3.3‑odd million down to 3.2.  Nothing material.  For the 3.35 million ‑ ‑ ‑

GUMMOW J:   I do not quite understand the relationship, if any, between the federal and State charges at the time of the order made by Justice McKechnie on 12 July 2002.

MR BENNETT:   The State Act contemplates that a confiscable offence can be an offence under State or federal law of any State in Australia.  So the Western Australian statute purports to apply even when the offence that is asserted against Mansfield is a federal offence.

GUMMOW J:   Does that follow from section 141?

MR BENNETT:   Yes, specifically 141(1)(a).

GUMMOW J:   What then was the situation on 12 July 2002?

MR BENNETT:   Mansfield had been charged with three offences under the Criminal Act of the Commonwealth at that stage.  They have been withdrawn subsequently and in the first substitution of charges ‑ ‑ ‑

GUMMOW J:   What I am trying to understand is, at the time of the order made by Justice McKechnie, were the only charges federal charges?

MR BENNETT:   In fact, he had not been charged.  It was very shortly after the order before Justice McKechnie that he was charged with those three offences.

GUMMOW J:   But the apprehended charges at that stage were these federal charges?

MR BENNETT:   Yes.

GUMMOW J:   There is now substituted other federal charges?

MR BENNETT:   Yes, being prosecuted by ‑ ‑ ‑

GUMMOW J:   Any State charges?

MR BENNETT:   No, and the prosecution was being run by the Director of Public Prosecutions for the Commonwealth in Western Australia rather than the State Director.

GUMMOW J:   Well, he is not the respondent.

MR BENNETT:   No.

GUMMOW J:   Well, what is going on?

MR BENNETT:   The State Director has carriage of prosecuting civil proceedings under the Criminal Property Confiscation Act and brings those in respect of the confiscable offences being prosecuted by the Commonwealth Director.  Now, were we under the Commonwealth Act, we would not be here because we could get legal costs paid under the Commonwealth Act.

GUMMOW J:   Under the federal Act there would be a requirement to – or at least a clear situation as to an undertaking.

MR BENNETT:   Yes, your Honour.

GUMMOW J:   What section is that, under the Proceeds of Crime Act 2002?

MR BENNETT:   I do not have that Act before me, your Honour.

GUMMOW J:   Well, we need to know these things.

MR BENNETT:   It is section 20(11) my friend Mr Williams tells me.

GUMMOW J:   Section 21:

(1)      The court may refuse to make a restraining order if the Commonwealth refuses or fails to give the court an appropriate undertaking –

but there is no such provision in the State Act for some reason.

MR BENNETT:   That is right, which is why we are here.

CRENNAN J:   There was once but now is not, is that the position?

MR BENNETT:   There was in the preceding conviction‑based legislation, your Honour, but there is not now, and that is at the gravamen and the heart of this appeal.  But can I just go back to the original proposition that is put by the respondent in their submissions?

GUMMOW J:   Wait a minute.  Assume there is a confiscation under the State Act.  Where do the funds go?  They go to this account under section 130 of the State Act, do they?

MR BENNETT:   Yes, they get spent in Western Australia, by the State of Western Australia.

GUMMOW J:   So the State gets proceeds of the federal crime?

MR BENNETT:   Yes.

CRENNAN J:   What if there were restitution orders made in the prosecution?

MR BENNETT:   They would be irrelevant to these because it is conceivable that the civil proceedings could be completed ahead of any prosecution.  For the assertion to be correct in paragraph 68 of the respondent’s written submissions that the whole of the proceeds of the share trading are proceeds of crime, you would have to hypothesise that the significance of the material information held by Mansfield was such that the shares and the options of My Casino Ltd at the date of trade were, in fact, worthless. 

HEYDON J:   Are you sure it is paragraph 68?

MR BENNETT:   It is one of the many paragraphs in which that is put, but in paragraph 68, your Honour, the respondent asserts that:

The ALRC has concluded that, where frozen property constitutes the direct proceeds of crime, as the respondent contends in this appeal and will contend at trial –

That is the passage I had in mind, your Honour.  So they contend that the proceeds of the share trading are the proceeds of crime.  That would have to have the significance that the shares were worthless and that the inside information, the benefit that was conveyed or held by Mansfield, not held by the market, was to sell at any price shares and options that are worthless.  It is a fantastical proposition, in our respectful submission, but it goes to show that the nature of the case put against Mansfield is to try and attach not the differential between the value of the market properly informed and the market not properly informed, but the entire proceeds of share trading and for that purpose to freeze his entire assets as they stood at 2002 and any after acquired property of he and the five companies.

GLEESON CJ:   Did you tell us a moment ago that under the Commonwealth Act you can get money to cover your legal expenses out of confiscated or frozen property?

MR BENNETT:   You can make an application for frozen property, yes.

GLEESON CJ:   What is the provision of the Commonwealth Act that permits that?

MR BENNETT:   I will find that for you, your Honour.

GLEESON CJ:   Come back to it whenever it is convenient.

MR BENNETT:   I handed up some supplementary extracts from the State legislation, the Criminal Property Confiscation Act. 

GUMMOW J:   We have the whole Act.

MR BENNETT:   If your Honours look at section 4(b), you will see a synopsis definition of “criminal benefits” to mean:

certain property, services, advantages or benefits obtained by a person who has been involved in the commission of a confiscation offence –

That throws you forward to section 145:

a person has acquired a criminal benefit if –

(a)any property, service, advantage or benefit that is a constituent of the person’s wealth was directly or indirectly acquired as a result of the person’s involvement in the commission of a confiscation offence, whether or not the property, service, advantage or benefit was lawfully acquired;

So that looks to whether any part of the share trading that is a constituent alleged of Mansfield’s wealth was directly acquired as a result of the commission.  The valuation of the criminal benefit as defined in section 19 – and it is difficult where the benefit here is possession of information not in the market in circumstances where it must be implicit the benefit is the avoidance of loss that would otherwise be occasioned were that information held by the market because, inferentially, the contention of the Director must be that the market would trade down as a result of price‑sensitive information being released and, therefore, the trading value of the shares and options sold by Mansfield would be less.  That, in section 19, sits uncomfortably with the value of assessing and in subsection (1) it says that the assessment of the value of the criminal benefit is:

The value of any property, service, advantage or benefit that has been given away, used, consumed or discarded ‑

none of that seems relevant, but focuses on the next words:

or that is for any other reason no longer available –

It is the value of the advantage, being inside information no longer available because it has now been released to the market, and the value that is assessed pursuant to the Act is the greater of its value at the time it was acquired or the value at the time it was given away or stopped being available, which is impossible, at this stage, for your Honours to see how that would be assessed in the market, but plainly it would not be the entire proceeds of the sale.

Your Honour the Chief Justice, the way in which one under the federal Act obtains the benefit of funds for defence is pursuant to the legal assistance provisions in section 292.

GLEESON CJ:   Thank you.

MR BENNETT:   Which then creates a debt out of the frozen property of the Legal Aid Commission of those sums.  Now, in relation to the ‑ ‑ ‑

GLEESON CJ:   Because section 24, on the face of it, appears to say that you cannot get legal expenses.

MR BENNETT:   No, but you get legal assistance because it becomes relevant and then legal assistance can recover from the frozen property the amount of the funds that are advanced for the assistance of the accused.  Now, in respect of Mansfield it is also said against him by the respondent in answer to a point we made that after the institution of the application for leave to appeal the Director applied to revoke and vary the order of his Honour Justice Robert-Smith that was made by consent in 2004 giving a living allowance, to revoke that so that no living allowance was payable to Mansfield.

That was done out of an apprehension that Mansfield had not gone and got a job or otherwise got gainful employment, the relevance of which entirely escapes the appellant, given that the order of his Honour Justice McKechnie froze all after‑acquired property.  So were Mansfield to have gainful employment any of the proceeds of that employment would be immediately frozen and, therefore, the subject of sanction were he to try to apply them either in living expenses or for the ‑ ‑ ‑

GUMMOW J:   On the face of it, this order of Justice McKechnie, which is the starting point, is it not, at page 30, it is a final order?

MR BENNETT:   Yes.

GUMMOW J:   It does not say “until further order”.

MR BENNETT:   No.

GUMMOW J:   I do not know how you do these things in Western Australia but it looks odd.

MR BENNETT:   In this case it was done ex parte and in camera supported by evidence that was not disclosed to Mansfield because by combining it with an examination order there was an invocation by the Director of section 70 of the Act, which are the secrecy provisions, so the affidavit material was not disclosed to Mansfield.  The making of the order was not disclosed to him and it had effect from the date it was made, not the date it was served or notified, although it was a defence if he had no reasonable basis for knowing that it had been made.

GUMMOW J:   That is said to follow from the framework of the Act, is it not?

MR BENNETT:   Expressly provided in the Act that it has effect from the date it is made.

GUMMOW J:   Is there any provision in the Act for service upon the individual concerned?

MR BENNETT:   Yes, section 46, your Honour.  There is a requirement:

As soon as practicable after a freezing order is made –

to have it served.

GUMMOW J:   Is there anything in the structure of Division 3 as to the duration of the order?

MR BENNETT:   Yes, your Honour.  The duration has specifically provided in section 48 for real property and 49 for other property and essentially it continues in force until every ground upon which it was granted has been dealt with and exhausted.  Setting aside a freezing order on one ground has no effect unless it is set aside on all grounds.

GUMMOW J:   Where do we see that?  You are very familiar with these provisions but I am not.

MR BENNETT:   If you look at 49(2), your Honour, you will see that initially and then at 49(6) you will see that:

if the freezing order was made on 2 or more grounds, but the order has not stopped being in force under subsection (2), (3), (4) or (5) in relation to each of those grounds, the freezing order continues in force as if it had been made on each remaining ground.

GUMMOW J:   I am not saying it is this case, but suppose the Court became satisfied that the order by Justice McKechnie had been made on insufficient disclosure by the applicant, what does the Court then do?  What does the Act contemplate the Court can then do?

MR BENNETT:   My friend puts in his submission that the only power to vary a freezing order was found correctly by the primary judge ‑ ‑ ‑

GUMMOW J:   This would be to rescind it having deceived the court.  Now, is there any facility for that?

MR BENNETT:   Well, there is an express power to revisit a freezing order under section 133 that encompasses the power to vary and revoke.  The fact that a freezing notice has been ‑ ‑ ‑

GUMMOW J:   What section?

MR BENNETT:   Section 133, your Honour.

GUMMOW J:   Is that right?

MR BENNETT:   The fact that an order has been made in relation to any property does not prevent another order being made in relation to the property.  It plainly was not put in for that effect.  It plainly was put in by the legislature in case they forgot something.

GUMMOW J:   It was put in to get some more, was it not?

MR BENNETT:   I am sorry?

GUMMOW J:   It was put in to get – to augment.

MR BENNETT:   Well, that may have been the glint in the eye of the legislature, but it also works the other way, to take out.  It does not limit the order to be an order that augments, your Honour.

GUMMOW J:   It does not provide for rescission, does it?

MR BENNETT:   Well, you can make another order.  In other words, you can defrost the property that has been frozen by an earlier order.

GLEESON CJ:   Is there something in your Interpretation Act that says that a power to make an order includes a power to rescind it?

MR BENNETT:   Not that I am aware of, your Honour.

GLEESON CJ:   You might just check that.

MR BENNETT:   Yes, your Honour.  The point that was put by my friends in their submissions, that is in the respondent’s submissions at paragraph 41, was that the court below was precluded from varying an order because there was no express power to vary, the only express power to vary found by the primary judge being section 45.  That is said to come from the primary judge’s judgment in paragraphs 52 and 53 that do not support that proposition.  His Honour was there dealing with an application by the Director himself to vary the freezing order because the Director sought the release of the Jaguar S class sedan and the Mazda MX5 coupé so they could be repossessed by a finance company. 

So the very application that brought the matter before the primary judge was an application by the Director for variation of an order.  This point that there was a lacking of power on the part of the court to vary an order is first taken in this Court by the Director.  It was not taken below.  Paragraphs 52 and 53, the primary judge simply comments that a power to vary must be governed, in his Honour’s view, by the same criteria that are set out in section 45.  He did not find that section 45, which on its terms is not an express power to vary, gives a power to vary, but it was not argued before him that he had no power to vary nor could it be when the applicant for variation was the Director.

KIRBY J:   Mr Bennett, I think I should say to you that you have a much greater knowledge of this Act than I have and of the detailed facts of the case than I have and I think you should not assume that I or perhaps other Justices have quite the knowledge of the detail of the statute or of the facts, so at some stage I would be grateful if you would say what is going to be the structure of your argument, briefly, and then take us through it in some way that you have indicated.

MR BENNETT:   I am happy to deal with that now, your Honour, and I apologise if ‑ ‑ ‑

KIRBY J:   I do realise the bipolar nature of the case, but ‑ ‑ ‑

MR BENNETT:   Yes.  Central to this case is the construction of the Act.  We say that the majority in the Court of Appeal in Western Australia fell into error because they looked at the Act and they looked for express words that would enable the court to break out of a corset of implied limitation on the discretion conveyed by section 43.  So that oblivious to the line of authority of the “Shin Kobe Maru” line of authority they took the legislative history, and even worse, they took subsequent statutes enacted in other States in Australia - only three States in Australia:  Victoria, New South Wales and Tasmania preceding Western Australia’s Act – they took the nature of the legislation in other States and the legislative history in Western Australia to confine what is otherwise the general discretion in section 43 and then held that the absence of express words enabling the court to insist upon an undertaking as to damages or to carve out property that could be available to meet legal expenses was fatal to an application.

So they started from a confined view of the court’s discretion and looked for express words.  We say with respect to the Court of Appeal that that was an entirely wrong focus.  The correct focus was to look at the words in section 43 as importing to the court an unconfined discretion to act judicially and fairly in the circumstances.  There is no ambiguity and there are no express words limiting the exercise of the discretion, so the absence of express words works the reverse, in our respectful submission.  The discretion that was given to the court by section 43 entitles the court to say, if you want a restraining order then we ask for an undertaking as to damages.

HAYNE J:   One, who would give the undertaking; two, pursuant to what power would that undertaking be given; three, by what right would that ultimately sound against the consolidated revenue fund of WA?  Those three questions lie behind the argument you advance.

MR BENNETT:   Entirely.  The undertaking would be given.  The learned President was correct, we would say, by the State of Western Australia rather than by the Director.

GUMMOW J:   Where does the President say that?

MR BENNETT:   He say that – if your Honours look in the judgment as reproduced in the appeal book, paragraph 35 on page 250, your Honour.

GUMMOW J:   Thank you.

HAYNE J:   Who would give such an undertaking on behalf of the State in right of Western Australia?

MR BENNETT:   Either the Attorney-General or the Solicitor‑General.  It would be no different from the position at common law in circumstances where an undertaking was required from the Crown.

HAYNE J:   Would then the Crown Suits Act be engaged in a way that would lead to satisfaction of the amount found to be due on an inquiry as to damages conducted in consequence of the grant – in consequence of the giving of the undertaking?

MR BENNETT:   It is an issue as to whether or not it would engage the Crown Suits Act or whether it would need to engage the Crown Suits Act.

HAYNE J:   How else is money to be paid out of the consolidated fund of Western Australia, save on appropriation, in satisfaction of the obligation which you hypothesise must be undertaken by the Crown in right of Western Australia?  Now, all of those questions, it seems to me, are questions that need to be considered in relation to the fundamental proposition you make that the price of an order should ordinarily be the exacting of an undertaking, and then it would be necessary to consider what, if any, significance is to be attached to the former Act’s provision – that is the Crimes (Confiscation of Profits) Act 1988 (WA) in section 20(11) that:

The Supreme Court may refuse to make a restraining order if the Crown, or the applicant on behalf of the Crown, refuses or fails to give to the Court such undertakings as the Court thinks appropriate concerning the payment of damages or costs –

So in the 1988 Act there is an express consideration of power to give the undertaking.  It is not reproduced in the current Act.

MR BENNETT:   Yes, we accept that.

HAYNE J:   Now, what is the power to give the undertaking in a way that will lead to satisfaction following an inquiry as to damages?

MR BENNETT:   Your Honour is probably right to raise the question of whether it engages the Crown Suits Act.  Your Honour is right that the preceding Act did contain express provision.  That is a feature of legislative history that significantly influenced the majority in the Court of Appeal and the primary judgment of Justice Roberts‑Smith.  We would say you do not get to the legislative history.  The words of the Act are unambiguous in terms of the grant of discretion and there is no necessity then to have recourse to the legislative history for the purpose of construing the extent of the general discretion.

KIRBY J:   I thought that this Court has said – Project Blue Sky I think – that you do not have to have ambiguity in order to have regard to the extrinsic material, and one might say especially in this case, given that there is on the face of the statute book a change in the legislation and therefore if you are interested and think it relevant to look to why that change was introduced, it is relevant to go to the Hansard, and when you go to the Hansard you get the statement by the Minister.

MR BENNETT: The statement by the Minister goes particularly to the issue of costs. If one goes to the new legislation, then you have to weigh the other changes that are made between the 1988 Act and this Act, in particular the introduction of section 102, which was not present in the preceding Act, that deems this to be a civil proceedings for all purposes and therefore imports – as his Honour Appeal Justice Pullin explains in the dissentient judgment in the court below, you bring in the full force of the Supreme Court Act and the Supreme Court Rules which would mandate for undertakings.  So one looks at that change as importing civil procedure into these proceedings.

KIRBY J:   That has to be the centre of your argument.  You say that once the Crown comes into a court in the Australian judicature it comes as an equal litigant and it has to conform to the Rules of the court and is subject to the benefits and burdens that those Rules or the court practice or the statute impose.

MR BENNETT:   We have a higher argument than that, with respect, your Honour, though I do not resile from putting the argument your Honour enunciated.  Our higher argument is that the investiture of the court with the general discretion under section 43 was done at a time when the legislature was well aware of the decisions in this Court such as “Shin Kobe Maru”.  If the legislature had intended to confine the exercise of the general discretion by the court, then it was open to the legislature to put in express words saying that the court, in the exercise of the discretion under section 43, shall not require an undertaking as to damages.

GLEESON CJ:   Subject to the issue raised by Justice Hayne about the capacity of somebody to give an undertaking, I take it that the argument against you is based on a negative implication.

MR BENNETT:   That is right.

GLEESON CJ:   Nobody is suggesting that a judge has to require an undertaking as to damages.  The question is whether a judge may say, “In this particular case, or generally, before I am willing to make a freezing order I want an undertaking as to damages”.  There may be a question as to who could comply with such a requirement, but I understand your argument to be that there is no suggestion that judges make people give undertakings as to damages; judges just say, “Unless you give me an undertaking of damages, I’m not going to do anything”.

MR BENNETT:   Entirely.  It is put by the respondent that we are contending that a giving of an undertaking is a precondition.  We do not assert that at all and your Honour is quite right.  We say it is a relevant matter that a judge exercising his discretion can raise.  “Unless you proffer an undertaking, I am not persuaded to make a freezing order.”

GLEESON CJ:   So the argument against you must be that there is a negative implication that deprives a judge of the discretionary capacity to withhold a freezing order unless an undertaking for damages is given.

MR BENNETT:   That is right, and it is said by those against us and by the Court of Appeal in the majority below the negative implication arises from the legislative history.

GUMMOW J:   In relation to that, can you explain to me how the definition of “confiscation offence” in section 141, which you have explained to us in this case is exclusively offences against laws of the Commonwealth, how that definition of “confiscation offence” finds its way into the processes of sections 41 and 42 and 43?  I am sure they are linked but I cannot quite find it out at the moment.

MR BENNETT:   You start with the concept that confiscation can only occur in respect of a person who is ‑ ‑ ‑

GUMMOW J:   You have to take us to the sections, Mr Bennett.  It is no good talking at large.

MR BENNETT:   By all means, your Honour.  If one starts with section 5, the Act applies to confiscable property.  “Confiscable property” is defined in the various definitions from 144 to 148.  If one goes to 145, being the relevant section on the facts of this appeal ‑ ‑ ‑

GUMMOW J:   Wait a minute.  Section 5 says, “This Act applies to a person’s unexplained wealth”.

MR BENNETT:  

(2)This Act applies to criminal benefits, crime‑used property and crime‑derived property –

(a)whether the relevant confiscation offence was committed in Western Australia or elsewhere;

(b)whether the relevant confiscation offence was committed before or after the commencement of this Act;

(c)whether or not anyone has been charged with, or convicted of, the relevant confiscation offence; and

(d)if someone has been convicted of the relevant confiscation offence – whether the conviction took place before or after the commencement of this Act.

(3)This Act applies –

(a)to property in Western Australia; and

(b)to the fullest extent of the capacity of the Parliament to make laws with respect to property outside the State ‑ ‑ ‑

GLEESON CJ:   Did you tell us earlier that the benefit in the present case is the benefit of not suffering a later fall in the value of your shares?

MR BENNETT:   It appears that is what is asserted in the statement of claim.  The benefit is having the capacity to trade shares within inside information which, being negative information, would suggest it is the avoidance of a loss.  It is pleaded imprecisely.  The pleading pleads the series of transactions, the receipt of funds and then says in the premises – it then pleads that it is a confiscation offence and then pleads in the premises the benefit is $3,352,000.

GLEESON CJ:   I thought I understood you to say that the offensive conduct involved using inside information that the value of the shares was about to go down and selling the shares before they went down in order to avoid a later reduction in the value of your property?

MR BENNETT:   Yes.  It is the avoidance of loss therefore.

GLEESON CJ:   That is what I understood.

MR BENNETT:   Yes.  That does not come through clearly but the nature of the information that is pleaded as being the material information is only negative information, so one infers that is the case that is put against us.

HAYNE J:   What is the Director’s plea about property acquired as a result of the defendant’s involvement in the commission of an offence?

MR BENNETT:   You find that at page 17 of the appeal book.  The Director pleads:

13.By reason of the net proceeds of the sales pleaded in paragraph 7 above being paid to, or at the direction of, the respondent Mansfield, as pleaded in paragraph 12 above, each of those sums is a constituent of the respondent Mansfield’s wealth.

14.Each of the sums pleaded in paragraph 12 above was wholly derived or realised as a result of the respondent Mansfield’s involvement in the commission of the confiscation offences as pleaded above.

. . . 

15.In the premises pleaded above, the respondent Mansfield has acquired criminal benefits in the sum of $3,356,520.50.

He does not grapple with that issue directly, your Honour Justice Hayne.

HAYNE J:   I have diverted you from taking us through the chain of legislation.  You had taken us to section 5(2).

MR BENNETT:   Section 5(2) throws you forward to 145(1)(a), which defines:

a person has acquired a criminal benefit if –

(a)any property . . . was directly or indirectly acquired as a result of the person’s involvement in the commission of a confiscation offence ‑

So you cannot have a criminal benefit unless you have been involved in the commission of a confiscation offence, and that is where it links in to the confiscable property.

GUMMOW J:   Wait a minute.  So 145, “involvement in the commission of a confiscation offence”, then how do we get back from that into Division 3, section 41?

MR BENNETT:   You go back then in relation to criminal benefits into section 15:

(1)The DPP may apply to the court for a criminal benefits declaration.

(2)An application may be made in conjunction with an application for a freezing order, in proceedings for the hearing of an objection to confiscation, or at any other time.

Then 16(1) mandates that:

the court must declare that the respondent has acquired a criminal benefit if it is more likely that not that –

(a)the property, service, advantage or benefit described in the application is a constituent of the respondent’s wealth ‑ ‑ ‑

GLEESON CJ:   Does this mean that if X holds shares in BHP and gets inside information that indicates the value of those shares is likely to go down and sells all his shares in BHP and applies the proceeds to buy shares in Westpac, you can confiscate the Westpac shares?

MR BENNETT:   Yes.  Worst still, the Director would contend you can confiscate the entirety of the Westpac shares, not just that incremental amount by which you avoided loss, whether or not you are charged, because this is not conviction‑based legislation.  This is civil legislation that is not conviction based, reflecting the movement in Australia as a result of the Australia Law Reform Commission away from conviction‑based confiscation.

HAYNE J:   Maybe, but the example given to you by the Chief Justice turns on 16(1)(c), does it not, “the property . . . wholly or partly derived or realised, directly or indirectly, as a result of”?

MR BENNETT:   Yes.  Well, that has to be the property that is referred to in 145(1)(a), which is itself a question of whether the involvement taints the whole of the property or just the increment of advantage that one got, and that throws you back into the assessment of the value of the benefits in section 19, which does not comfortably deal with the concept of avoidance of a loss as a benefit.

GUMMOW J:   This is all in Part 3, which is “Identifying and recovering confiscable property”, and then Part 4, which starts at 33, is “Preventing dealings in confiscable property”.

MR BENNETT:   Before I leave Part 3, if I can take your Honours to sections 25, 26 and 28.  Section 25 says the amount of the confiscation is a civil debt and it is payable within a month or such further time as allowed ‑ ‑ ‑

GUMMOW J:   Where do we see that, Mr Bennett?

MR BENNETT:   Section 25(1) and (2), your Honour, and subsection (3) makes it plain, if the amount of the confiscation order is not paid within the time allowed, it is recoverable as a debt due to the State.

HAYNE J:   But the creation of the debt is section 20, is it not, relevantly, “Criminal benefits payable to State?

MR BENNETT:   Yes, but then the frozen property can be applied against the debt, and section 26 enables you to do that, but it still remains a debt.  Now, section 27 entitles the Director to “apply to the court for a confiscable property declaration” which can be made “in the course of proceedings for . . . a criminal benefits declaration” and:

the court may declare that property that is not owned by the respondent is available to satisfy the respondent’s liability –

and then it deals with the reach of the Act to effective control.  So a trustee could have the beneficiary’s property confiscated under this section because he effectively controlled a beneficiary’s property.

GLEESON CJ:   I am just trying to work out the context in which an application for undertaking as to damages might be of practical significance.  Does this contemplate the possibility that property could be confiscated pursuant to an application and ultimately the amount of the liability that is to be satisfied by the property could be a lot less than the value of the property?

MR BENNETT:   Yes.

GLEESON CJ:   Then the balance of the property, a long time later, then returned to the original owner?

MR BENNETT:   Entirely.

GLEESON CJ:   So that is an example of the kind of damage that might be suffered as a result of complying with the order?

MR BENNETT:   Yes, but not of the freezing order.  The reason you get that is that under Part 7 of the Act, which starts at section 88, management of frozen property is invested in others effectively as if it were a receiver.  So the Director can take management for some and the public trustee can manage.  In this case two of the cars, the jewellery and the houses were given back to the Mansfields to manage ultimately in 2004.

GUMMOW J:   This word “property” is a bit slippery.  Suppose there was a security over it.  What happens to the rights of the secured holder while this management is going on?  Is the security being managed as well?

MR BENNETT:   No, effectively, we would say.  AGC held hire purchase contracts over the Jaguar and the Mazda.  The property was frozen so the Mansfields could not pay to make the hire purchase amounts in relation to the two vehicles.  His Honour Justice Roberts‑Smith recites at the commencement of his judgment that there developed a circumstance of “negative equity” on the vehicles and AGC wanted to repossess them and the Director wanted that to be done and said the Mansfields should have returned the cars straightaway if they could not pay.  So the original freezing order by Justice McKechnie was varied to release the two vehicles so that AGC could repossess them, leaving a residual debt for which they then prosecute the Mansfields.

GUMMOW J:   But the secured property rights of AGC in one of these situations, are they restrained by this system?

MR BENNETT:   How that works is that once you get a freezing order – and I will show your Honour the sections – you must give notice –we must serve the freezing order under section 46 and then under section 47, within seven days of being served with a copy of the freezing order the recipient of the served order is obliged to give a statutory declaration declaring who is an interested party.  You see that in section 47(3).  Then the person such as AGC can bring objection proceedings to the Act and carry the onus of showing their title to the property.

Now, there is some express recognition of security interests in the provisions that restrict dealing in frozen property.  If Your Honours look at section 50, you will see that the consequence of dealing in frozen property is a penalty of:

$100,000 or the value of the property, whichever is the greater, or imprisonment for 5 years, or both –

or alternatively contempt proceedings, but not both contempt and the penalty.  Your Honours see that section 52 permits dealings in mortgaged property.  Nothing:

prevents the mortgagor from making payments to the mortgagee . . . or

(b)      prevent the mortgagee from accepting payments.

The only difficulty for the Mansfields is that their entire assets present and forever in the future were frozen.

GUMMOW J:   I am looking to the god‑fearing finance provider at the moment.

MR BENNETT:   Well, he is safe ‑ ‑ ‑

GUMMOW J:   What happens to their power of sale?

MR BENNETT:   They have to apply in the objection proceedings.

GUMMOW J:   Where do we see that?

MR BENNETT:   If one sees section 79:

A person may file an objection to the confiscation of frozen property.

Then section 81(1) says on the hearing they “may set aside the freezing notice or freezing order”, but not if it was frozen on two or more grounds.  Then you see the release of other frozen property which is relevant for this purpose is in section 84.  You see in section 84(1):

The court may set aside a freezing order for property that was frozen under section 43(3) if the court finds that it is more likely than not that the person who is or will be the respondent to the unexplained wealth declaration, criminal benefits declaration or crime‑used property substitution declaration does not own or effectively control the property, and has not at any time given it away.

So the god‑fearing financier has to prosecute an objection proceeding, satisfy the court by that process.  The difficulty with a security holder over real property is that the person who is the respondent to the criminal benefits declaration does in fact own the property; he has just mortgaged it.  But in practice the security holder would say, “I’ve got an interest in the property as a security holder”.

GUMMOW J:   Yes, I took you away from Part 3.

MR BENNETT:   Not at all.

GUMMOW J:   Then that brings us to Part 4, does it not?

MR BENNETT:   I should not skip over 18(2) and (3) which require the court when making a criminal benefits declaration to:

(a)assess the value of the criminal benefit acquired by the respondent in accordance with section 19; and

(b)specify the assessed value of the criminal benefit in the declaration.

That is necessary in the structure of the Act because it constitutes a debt recoverable by the State that goes beyond the frozen property.  Then section 20 is the answer to the issue raised earlier by the Court that for a federal offence the State gets the money.

GUMMOW J:   Then it goes into this fund, does it not, under 130?

MR BENNETT:   Yes.  Before going to Part 4, can I take you back to Part 7 which I skipped over very briefly, which is the essential receivership‑type provisions dealing with frozen property.  There are two sorts of frozen property.  You can freeze property by a notice or you can freeze property by an order.  Section 88 deals with the property frozen by a notice, and the Commissioner of Police has responsibility for that.  Pursuant to an order, such as in this case, “unless the court otherwise orders under section 45(c) or 91(2)” the management is vested in the Director and he has responsibility for control and management and the duties which are relevant – shall I continue, your Honours or wait for his Honour the Chief Justice to return?

GUMMOW J:   Yes, go on.

MR BENNETT:  

A person who has responsibility for the control or management of property . . . must take reasonable steps to ensure that the property is appropriately stored or appropriately managed . . . until one of the following happens . . . :

(a)      the property is returned . . . 

(b)      another person becomes responsible . . . 

(c)      the property is sold or destroyed; or

(d)      the property is otherwise disposed of.

Then, under section 94, you can sell “deteriorating property” or appoint the Trustee to manage it and the Trustee, under section 99, can charge fees for managing frozen property.  It is not plain whether shares in an Internet‑listed company would be regarded as “deteriorating property” for the purposes of this Act or whether the Director would then be in the position of share trading them.

Effectively, there is no duty in relation to the holder of the frozen property to take steps, such as in this case – and your Honours will recall the ground upon which the appellant was successful in the Court of Appeal was remission to a primary judge at first instance of an application for release out of funds of sufficient money to pay Citibank to stave off bankruptcy proceedings, Citibank being a creditor who sought to recover on a credit card some $40,000-odd, all of the Mansfield’s property being frozen.  They had no funds with which to meet that debt or the institution of bankruptcy proceedings in New South Wales. 

CRENNAN J:   How does it work if the matrimonial home, for argument’s sake, was acquired long before the confiscation offence?  Is that something to be pursued under an objection proceeding?

MR BENNETT:   That is why Mrs Mansfield was an objector to the proceedings because the matrimonial home, in those circumstances, was frozen.  The property that was frozen was all of the property of Mr and Mrs Mansfield, but yes, the matrimonial home becomes the subject of an objection on the part of the wife, or the husband, depending on who is the recipient of the order.

KIRBY J:   No criminal proceedings have been brought against Mrs Mansfield?

MR BENNETT:   No, she remains simply an objector to the proceedings.  If I can then take you to Part 4, which is, we say, the vesting in the court of a general unfettered discretion ‑ ‑ ‑

GUMMOW J:   I am not sure at the moment - this is what I have been trying to work out - why it is not federal jurisdiction.

MR BENNETT:   It could equally have been federal jurisdiction but the ‑ ‑ ‑

GUMMOW J:   No, no, because the right in question within the well‑known formulation of Chief Justice Latham in Barrett 70 CLR 154 owes its existence to federal law. In other words, you have to have a confiscation offence. No confiscation offence and this train of steps does not follow, or an apprehended confiscation offence and in this case they are federal and 141 indicates that. I do not know quite at the moment what would follow from all of that.

KIRBY J:   I thought Mr Williams actually conceded in the special leaving hearing that – he said, “It is a very interesting question.”  I am looking page 15 of the special leave hearing.

GUMMOW J:   One thing that would follow would be the application of section 64 of the Judiciary Act which might help you on the question of undertakings, who was to give it and how it was to be enforced and so on.

KIRBY J:   Mr Williams said:

one can, I think, see an argument that it might be a matter arising under federal law.

MR BENNETT:   It becomes even more difficult. Your Honour Justice Gummow will recollect this point being discussed at the special leave application because the relevant offence was said to occur between June 2000 and August 2000 at a time when section 1002G and 13(11) of the Corporations Law were part of the laws of Western Australia and were not federal.

GUMMOW J:   Yes, but there is retroactive legislation we had before us in Forge, is there not?

MR BENNETT:   Yes, the Corporations (Ancillary Provisions) Act deals with that, now casting it as being a breach of section 1400 and 1401 of the Corporations Act.  It is a liability equivalent to a pre‑commencement liability under the Corporations Law.  It is the new liability that Mansfield is charged with.  That is, of course, not the destruction of books or the conspiring charges.  I will look, your Honours, at section 64 of the Judiciary Act.

GUMMOW J:   That may at least be – I do not know – a factor which would incline one to be very careful in saying that a court exercising federal jurisdiction in this sort of regime was denied a power to require an undertaking.

MR BENNETT:   It would be put against us that the court is not exercising federal jurisdiction.  It is exercising State jurisdiction, derivatively, of a federal offence and that is ‑ ‑ ‑

GUMMOW J:   I have just put to you the contrary so I may be wrong, I may be right.

MR BENNETT:   Yes.  Otherwise, we would adopt what your Honour said.

KIRBY J:   Why would it not be in federal jurisdiction?  Its jurisdiction is directly or indirectly derived from the federal offence.

MR BENNETT:   It is a neat question because it is applying a State Act which is not derived from a federal offence.  It is simply a part of the definition of “confiscable”.  Offence recognises or attempts to recognise ‑ ‑ ‑

GUMMOW J:   If the federal offence was repealed you would not be here.

MR BENNETT:   No, that is right.

GUMMOW J:   It suggests that the right asserted against you has an essential integer with federal offence, to be brutally practical about it.

MR BENNETT:   Yes, I accept that.  Yes, I do not think it is likely insider trading will be repealed in the near future but hypothetically that is right, yes, your Honour.  I accept that entirely.  There is some, I think some destruction of books, is itself a corporation - all of the offences are now corporations offences that are put against Mansfield and the co‑accused in the joint indictment.

GUMMOW J:   Anyhow, at the moment, though, the issue before us is to construe section 43, is it not?

MR BENNETT:   Yes.  We come to that now.  The starting point is section 41.  I have skipped over freezing notices that were of no real substance.

GLEESON CJ:   The question of construction is whether section 43 contains a negative implication.

MR BENNETT:   That is right.  A separate matter, which is the argument we advanced that found favour with Appeal Justice Pullin in the dissent that it is open in the exercise of the discretion under section 43 to freeze part only of property and leave unfrozen a part of the property on the basis that that part of the property be used for the payment of legal expenses, to condition an order that does not freeze the entirety of a person’s property.

KIRBY J:   But the negative implication comes from the fact that there is no point complaining that this is draconian or severe legislation.  We have seen in other cases that it is and apparently is intended to be.  So that if you take that view and you add to it the detail of this Act and the suggestion that is a code of the relevant provisions, then you add to that the legislative history, then it is not difficult to infer that Parliament said what it said, being severe, and had it intended to provide for the relief that you say can be given under other general legislation, it would have said so, as other legislation in this area has done.

MR BENNETT:   We think that the suggestion that the Act is a code is ‑ ‑ ‑

KIRBY J:   It is certainly a very detailed scheme, a legislative scheme.

MR BENNETT:   We would accept that.  We think the suggestion that it is a code is persuasively debunked ‑ ‑ ‑

KIRBY J:   I know you Western Australians.

MR BENNETT: ‑ ‑ ‑ by Appeal Justice Pullin because you cannot incorporate all the civil procedure and then call it a code, so the suggestion it is a code, it leaves aside section 102.

KIRBY J:   I think that is a play on the word “code”.  It certainly is a very detailed legislative scheme.  Other models that were available have specific provisions of the kind you say can be granted elsewhere and yet that was not included in this and that is relevant because of the legislative history.

MR BENNETT:   That is right, but the other models that were available were the Victorian model, the New South Wales model and the Tasmanian model.  Queensland, South Australia and Northern Territory had not introduced legislation at that stage.

GUMMOW J:   And the preceding Western Australian model that Justice Hayne mentioned to you.

MR BENNETT:   I took his Honour Justice Kirby’s reference to be the non‑conviction based models that were available.  All the preceding models in Australia were conviction based.

GUMMOW J:   I realise that.  But the preceding WA model had a specific provision in it and the Commonwealth’s provision has a specific ‑ ‑ ‑

MR BENNETT: But the preceding Western Australian model did not have a section 102 importation of the Supreme Court Act and its discretion and its powers to make reasonable orders as between the parties.

GUMMOW J:   Could this application have been made under the federal Act?

MR BENNETT:   Our application, your Honour?

GUMMOW J:   The application against you, yes, could that have been ‑ ‑ ‑

MR BENNETT:   There could have been an application for freezing orders made under the federal Act, yes.

KIRBY J:   Is it suggested that the reversion ‑ ‑ ‑

MR BENNETT:   Or perhaps not.  I am sorry, your Honour.  Yes, it could have at the time it was made in 2002 by Justice McKechnie, it is post‑Re Wakim.  It had gone then to a federal based system and, yes, it could have been.  It had the transitional provisions.  Sorry, your Honour.

KIRBY J:   Is there any suggestion that the switch to offences in the State jurisdiction was done in order to avoid obligations under the federal Act?

MR BENNETT:   It can only be an argument we put.  There is nothing in the papers that would suggest a deliberate intention on that part.  The Director applied in 2002 in camera ex parte before Justice McKechnie at a time when the offences then contemplated were the three charges under the Criminal Act, a Commonwealth Act, and why the State Director sought to do it, equally the Commonwealth Director could have applied, we do not know.

KIRBY J:   Is there any other inference that is available as to the reason?  I mean, I gather that there has been a restructuring of the charges and some matters have been dropped.

MR BENNETT:   All the original charges have been dropped.  They were substituted by 67 corporations charges, now down to 64.

KIRBY J:   I realise that.  As I understand it, comparing the new charges with the old charges, that some have been not taken into the State charges, is that correct?

MR BENNETT:   Yes.  The other inference available might have been the desire on the part of the State to augment its revenues in respect of this fund as opposed to the Commonwealth.  There are only two inferences available as to why the State Director sought to deal with this matter.  One is to avoid obligations that the Commonwealth Director of Public Prosecutions may have faced to provide undertakings or to provide a structure where effectively Mr Mansfield could get legal aid to represent himself in the criminal proceedings, or the alternative that this was simply an augmentation of the State fund process and it is first in, best dressed.

GUMMOW J:   Is the federal Act expressed with a regime of so‑called freezing orders?  It is not, is it?

MR BENNETT:   Restraining orders.

GUMMOW J:   They are called restraining orders, are they?

MR BENNETT:   Yes.  They have the same affect.

GUMMOW J:   That seems to be Part 2.  Then section 15 of the federal Act says its intention is to operate concurrently with the State Act.

MR BENNETT:   Yes.  Perhaps suggest the “first in, best dressed” argument.  If the State Director gets to the Supreme Court ex parte in camera and freezes everything forever then he is the one that can confiscate it.

HAYNE J:   The assumption in what you have just said is that the application either has to be, or ordinarily will be, for freezing of all property.

MR BENNETT:   No.  It was in this case ‑ ‑ ‑

HAYNE J:   That is not so, is it?

MR BENNETT:   No, it is not so.  You could freeze a part only of property as section 43 makes plain.

HAYNE J:   But before you come to that the Director of Public Prosecutions may apply for a limited order, may he not, under 41?

MR BENNETT:   Yes.

HAYNE J:   There is no obligation to apply for an order that encompasses everything.

MR BENNETT:   Not only everything but everything in the future too, yes.  You could imagine that where there is a specified fund or an identifiable small loss or benefit that that could be the subject of a restricted application for freezing.

HAYNE J:   But that then brings you up against the consequence to be given to 43(4).

MR BENNETT:   Yes.

HAYNE J:   Perhaps if you take your course through this division.

MR BENNETT:   There are a lot of provisions. Like your Honour Justice Gummow observed about section 133 being there to augment rather than to diminish, 43(4) seems to try and head off at the pass an argument that may be put up by a respondent to a freezing order that you have frozen more than you need to.  That does not derogate from the fundamental point that your Honour Justice Hayne makes that you can freeze part only of a property but the Director might apply to freeze some property and nothing in 41 requires him to freeze all of the property.

Section 42 entitles the court on the making of a freezing order to deal with it in camera.  Section 43 of the grounds – there were two grounds in this for the freezing order that were made by Justice McKechnie, one of which was hopelessly defective and was ultimately struck out by Justice Blaxell on a belated application to amend but there was an application. 

The two grounds were that an examination order was being sought though the nature of the application that was put to Justice McKechnie recited in the form of the order and I will show your Honours that.  It refers to the incorrect section, that is section 43(3)(c), which was not a section that authorised the making of that order.  Your Honours, the court is obliged to recite in the order the grounds upon which it was made.  Your Honours will see that at page 4 of the papers the grounds that were specified by Justice McKechnie as:

A.An application for an order for examination has been made in relation to the Property (s43(3)(b));

B.An application against Mansfield for a criminal benefits declaration is likely to be made within 21 days in relation to the Property (s43(3)(c)) -

Now, the reference to section 43(3)(b) is an error which has nothing to do with an examination order so it ought to have been 43(1)(b). The application to try and amend that that was rejected by Justice Blaxell in the Supreme Court of Western Australia, the decision of which is reported at 153 A Crim R 1 where his Honour refused to exercise the discretion to apply the slip rule on the ground that there had been two years and nine months delay in making the application to amend, so this freezing order goes forward only on one ground alone.

GLEESON CJ:   Would the discretionary power given by section 43(3) extend to a judge saying, “I’ll make an order in respect of Blackacre, but I won’t make an order in respect of Whiteacre because I think they’re going to need to sell Whiteacre to pay their legal expenses”.

MR BENNETT:   We would say yes.  We would say entirely.  We would say that the Court exercising the discretion could look to the likely valuation of the criminal benefit assessed in accordance with section 19, and say, “It’s not likely to be more than a million dollars, and you’re freezing $10 million.  You don’t need $10 million.  Notwithstanding subsection (4), I will let you freeze $2 million or $3 million to give yourself some room for error, but you don’t need to freeze all of it and I’ll leave property intact”, so that this person (a) can live and (b) can defend himself against the wealth of the State prosecuting him on an offence.

HAYNE J:   I can understand the sense of what you put, but how do you deal with 43(4)?  What reading do you give to it to achieve that result?

MR BENNETT:   You start with 43(3), which says that a:

court may make a freezing order for all or any property –

So the express words of 43(3) do not require a freezing of all the property, but entitle the court to freeze any property, and in that context, reading the provision as a whole, your Honour, subsection (4) merely avoids an argument being put up of a nitpicking nature that says you froze too much and the order is defective because you froze more than the benefit.  That is not a basis that can be put up to attack a freezing order, but it does not derogate from the first primary exercise of discretion to decide what you are going to freeze, all or any, and, if any, what.

Mr Shepherd suggests to me, your Honour Justice Hayne, that one of the benefits of subsection (4) is, if for example the respondent who took a freezing order owned a very valuable house, you could freeze one asset, a valuable house, to deal with a benefit that is conceivably much less than the value of the house, but you freeze a specific asset, notwithstanding that its value exceeds the likely value of the benefit that would be the subject of a declaration.

HAYNE J:   Read (4) distributively as referring to items of property rather than whether or not to make an order at all.

MR BENNETT:   Yes.  Now, the Court can make the freezing order for all or any, which imports the first exercise of discretion by the word “may”.  “All or any” is the second exercise of the discretion.  It is owned or effectively controlled, which requires a judgment in relation to effective control or the person has given away.  Subsection (3)(c) is relied upon:

the DPP advises the court that such an application –

namely an application for criminal benefits declaration –

is likely to be made within 21 days after the freezing order is made.

That is the only ground that you advise – that is expressly stated.  Plainly there would have to be more to satisfy a court that it ought to make a freezing order.  Subsection (6) is the next relevant section for the facts of this case:

A freezing order may be made under subsection (3) or (5) for all property owned or effectively controlled by the person, whether or not any of the property is described or identified in the application.

Then (7) gives the power make an order in relation to after‑acquired property.  If one goes back to the order that was made in this case ‑ ‑ ‑

GUMMOW J:   Do we not have to look at the definition of “property”, as Justice Hayne reminds me, on page 105?  We are not talking about tables and chairs, we are not talking about objects.  It is all very well to talk about freezing Blackacre but, in fact, there may just be an equity of redemption in Blackacre and what you would be freezing would be (b) of the definition of property.

MR BENNETT:   You could do it that way.

GUMMOW J:   I do not know but is that the way this Act works?

MR BENNETT:   It is the way it could work but it is not the way it works in practice.

GUMMOW J:   No, that is the difficulty.

MR BENNETT:   The way it works in practice is just to throw a large blanket over all of the assets and let carve-outs take place under the objection procedures.

GUMMOW J:   Exactly.

HAYNE J:   That may proceed from an assumption about the operation of section 41, as well as section 43, that may require a little closer examination than hitherto has been given it.

MR BENNETT:   Yes.  It is no doubt a convenient practice if the Director freezes everything and then lets bits get unfrozen later rather than tries to be selective in what is frozen.

HAYNE J:   If they can freeze Westpac’s mortgage over Blackacre and have the benefit of that that might be of advantage to them.  You might have to look rather carefully at the Act though. 

GUMMOW J:   You have to work out what is owned or effectively controlled.

MR BENNETT:   That is where examination orders come in because ‑ ‑ ‑

GUMMOW J:   No, I am looking at 43(3).

MR BENNETT:   Yes, entirely, the examination order that can ‑ ‑ ‑

GUMMOW J:   I do not control Westpac, I am afraid.

MR BENNETT:   The Act is structured so that where there is a suspicion of – somebody has not yet been charged but the Director has formed a view it is likely that they will be charged with a confiscable offence, likely that there will be an application for a criminal benefits declaration, the Director can apply for a freezing order without being able to identify all of the property precisely or specifically and that is made plain by section 43(6).  The nature of an examination order, if your Honours look at section 58 ‑ ‑ ‑

GUMMOW J:   It still has to be owned or effectively controlled.

MR BENNETT:   Yes, but what the court has the capacity to do is to say, “I freeze everything you own, even though I don’t know what you own”, and then there will be service ‑ ‑ ‑

HAYNE J:   Let us come to taws about this.  This order, page 2, paragraph 1(b), “the following real property”, namely, land at, described in.  Is that truly the subject of the order if – and I do not know what the circumstances are in this case – the land thus described is subject to a series of encumbrances?  Is that the proper subject of a freezing order?  It is not instantly apparent to me that it is.  You might be able to freeze Mr Mansfield’s interest in but do you freeze Mrs Mansfield’s interest in it, do you freeze the land regardless of the fact that it is encumbered?

MR BENNETT:   There is much force in what your Honour says.

GUMMOW J:   If this were a federal law, that would run immediately into 51(xxxi) so far as Mrs Mansfield was concerned.

MR BENNETT:   Yes.

GLEESON CJ:   Where do we find a description of the operation of this concept of freezing?  What does it mean to freeze property?

MR BENNETT:   You see that in the consequences of dealing with frozen property in section 50, your Honour.  It is a prohibition against dealing in any way other than paying your mortgage.

GUMMOW J:   “A person” too, not just the person who ‑ ‑ ‑

MR BENNETT:   Who is the recipient of the order.

HAYNE J:   It looks to be an order in rem.

MR BENNETT:   Except it does not create an interest in rem because all that is left is a debt to the state of which the frozen property can be taken in satisfaction but your Honour is right, it is like an order in rem insofar as it affects anyone who deals with the property because the order can be made against property that the subject of the order does not legally own but effectively controls or has given away.  There was no doubt on the part of the Director when he applied, before Justice McKechnie, as to what property Mr Mansfield owned because he had it down to the registration details of the four cars.

GLEESON CJ:   Section 52 is in aid of the financier, I think.

MR BENNETT:   Yes.  I was going to take your Honours to section 58 because you see in one of the grounds, although there was this slip order, it was going to be an examination order sought against Mansfield and the examination order entitles:

The court may order a person to submit to an examination about any or all of the following –

(a)      the nature, location and source of frozen property;

(b)the nature, location and source of property that is not frozen, but is suspected on reasonable grounds of being confiscable:

(c)      the wealth, liabilities, income –

et cetera.  Now, although one of the grounds upon which the Director sought and obtained the order before Justice McKechnie was that an examination order would be sought against Mansfield, they had never sought an examination against Mansfield in the four years since the order was obtained.

GLEESON CJ:   Presumably some orders are made at a time when the people seeking the order and the judge making the order do not know what the property is that is the subject of the order.

MR BENNETT:   That is right.  Conceivably, that is the case, your Honour.  In Mansfield’s case it is open to perhaps a more sinister interpretation.  There was never a genuine intention to examine Mansfield because they have not done it in four years.  Why would they put in an examination order because they invoke the secrecy provisions under section 70 and by invoking the secrecy provisions, Mansfield has denied access to the founding affidavits because blended within the freezing order ‑ ‑ ‑

GUMMOW J:   Wait a minute, section 70 is not in my mind at the moment.

MR BENNETT:   Section 70 is one of those:

A person must not make a disclosure to anyone . . . 

(e)the fact that the person or anyone else is or has been subject to a production order, an examination order . . . 

(2)      Without limiting subsection (1), a person makes a disclosure . . . if the person –

(a)discloses information to a person from which the person could reasonably be expected to infer –

something.

(e)discloses information to a person from which the person could reasonably be expected to infer anything about the existence or operation of an examination order ‑ ‑ ‑

GLEESON CJ:   But presumably, subject to any light that is shed by examinations, at least some of these freezing orders are made, as it were, in the dark.

MR BENNETT:   Yes.  When there is a genuine need to examine a person served with a freezing order to find out the precise nature of the property, yes, your Honour, and you would need to do that for the management purposes of it for the Act.

HAYNE J:   That may mean that an order framed as freezing all of the property owned or effectively controlled by X, cast in terms that would ordinarily be subject to great criticism, might be defensible.

MR BENNETT:   Yes.

HAYNE J:   But you would hinge it about owned or effective control.

MR BENNETT:   But it might be defensible in the first place, but upon detailed information it might be the subject of a revision or a variation that gives then specificity to the order.  That is where you would get section 133 operating to substitute a new order for the old order when you knew a lot more about the property.

HAYNE J:   But where conversely the order condescends to the specification of particular items of property, does it follow that the court making the order ought to be satisfied to some degree that that is property owned or effectively controlled by the person?

MR BENNETT:   Yes.

HAYNE J:   Or if not so satisfied, does the court phrase its order in a way that makes plain that all that is frozen is X’s interest in the property?

MR BENNETT:   The Court would have to be satisfied because under 43(3) it only has jurisdiction to make a freezing order in respect of property that is owned or effectively controlled.  It cannot make a freezing order in respect of property that it thinks might be owned or effectively controlled.  It has to be satisfied on the material before it that it is more likely or not.  The only qualification on that is in subsection (6), the giving away, the property that is given away – (5).

HAYNE J:   But if these are difficulties, they are not difficulties that at least are directly raised in your appeal to this Court.

MR BENNETT:   No, but they go to the interpretation of the section and they show that there has to be a discretion on the part of the Court under 43(3).  The next relevant section – I have shown your Honours section 44 which requires each ground that the Court finds is made out needs to be specified in the order, and that was done by Justice McKechnie in the order that I have shown you.  The next section is section 45, which is where the Director - your Honour Justice Kirby does say there is a code invoked by the legislation of the limits on the part of what the court may do when making a freezing order.  The first four powers are ancillary to the management of the property.  You can direct that, for example, an income‑earning property, that the income be treated as part of the property, rental properties.  You can direct ‑ ‑ ‑

GUMMOW J:   Yes, but 45 assumes an order is made.

MR BENNETT:   Yes, that you have gone past the discretion part.  That is why Appeal Justice Pullin’s dissent that if you choose not to freeze property so as to leave Whiteacre available for legal fees, then you are not in any way in conflict with a reading of section 45(e) as not referring to legal expenses, because it is not frozen property that is left outside for legal expenses.  The only discretion that seems to be working in favour of the person who is the recipient of the ex parte in camera order is subparagraph(e):

provide for meeting the reasonable living and business expenses of the owner of the property.

Then the construction of reasonable living and business expenses was an issue that we raised in the court below as to whether or not that involved Kirk’s Case in the Federal Court, the issue of whether living expenses involve the concept of paying for the defence of oneself against criminal prosecution.

GUMMOW J:   What is the answer?

MR BENNETT:   We would say yes, and what is found against us was no.  Kirk’s Case suggests that the answer was yes.  It is reasonable as part of a living expense to defend yourself in criminal proceedings.  It goes beyond ‑ ‑ ‑

GUMMOW J:   What is the citation of Kirk?

MR BENNETT:   It is in our submissions and our list of authorities we refer to it.

HEYDON J:   (1988) 19 FCR 530, Kirk v Commissioner of Australian Federal Police.

MR BENNETT:   Thank you very much.  It is in footnote 52 on page 13 of our primary submissions.  It dealt with the Customs Act in a similar provision.  We would think that the argument or the dicta from Appeal Justice Pullin’s dissenting judgment provides a safer mechanism than - certainly a stronger prospect of success for the appellant to argue before your Honours that the correct way in which the court could deal with the issue of legal expenses is to condition a carve‑out on the frozen property so that if it were intended to freeze, as was the application here, everything now and forever in the future, carve out of property that is not frozen, even if that carve‑out be conditional upon the fact that it is unfrozen solely for the purpose of paying legal expenses.

HAYNE J:   The provision to which you draw attention in the federal scheme is one which assumes legal aid, does it not?

MR BENNETT:   Yes.

HAYNE J:   In particular, it does not assume retainer of private counsel.

MR BENNETT:   That is right, your Honour.

HAYNE J:   What is the section?

MR BENNETT:   Section 124, I think, from memory.  Section 292, I am told, Part 4.2:

The Official Trustee must pay to a legal aid commission, out of property of a suspect that is covered by a restraining order:

(a)      the commission’s legal costs for representing the suspect –

It is the reimbursement of legal aid out of frozen property.

HAYNE J:   Is that the only specific treatment in the federal scheme of defence costs?

MR BENNETT:   Yes.  The New South Wales model provides a procedure where property can be excluded, and the respondent draws attention to that model in its submissions showing some of the authorities that the court has to be satisfied that it is not the proceeds of crime.  The two drug dealing cases where the money in the bank that was sought to be released for legal fees was held by the court to be strongly arguable the proceeds of the sale of drugs and therefore was not released for the purpose of meeting legal expenses.  It is the OB decision.

KIRBY J:   What is the basis for that?

MR BENNETT:   The legislative requirements in the New South Wales Act that place stringent conditions on the court releasing property for the purpose of payment of legal fees, the public policy consideration being that, as opposed to here where there is criminal benefits, the proceeds of crime themselves should not be used to defend the criminal.

HAYNE J:   But Dietrich is engaged and satisfied by a provision of legal aid and the public purse is relived through the mechanism of the kind found in 292 of the federal Act.

MR BENNETT:   Yes, whereas the Western Australian provision does not contain anything.  The position of the Legal Aid Commission of Western Australia is in dispute between the Director and the appellant in this matter.  The Director refers to correspondence that is not in the materials before you, or was not in the materials before the Court of Appeal, suggesting a general policy on the part of the Legal Aid Commission.  That differs from the nature of the specific answer and the specific position of the Director in relation to Mr Mansfield’s two applications that is in evidence before you.

KIRBY J:   In evidence.  Was it part of the record below?

MR BENNETT:   Yes.  It is the affidavit of Annabel Helen Hughes, a letter from the Director of Legal Aid Commission saying that in respect of the two applications one was allowed and then withdrawn and held pending the appeal and the other is not determined and held pending this appeal, and that aid has not been granted for Mansfield in the defence of these matters.  I am corrected by Mr Shepherd and I apologise to your Honours.  It was not in evidence in the court below.  It is in evidence in the primary proceedings.

KIRBY J:   It is part of the record?

MR BENNETT:   Yes.  Copies of that affidavit are available if your Honours – they are referred to in our reply submissions and they are available if your Honours would be assisted by reference to that affidavit.

KIRBY J:   If it was before the primary judge and if it is relevant to your submissions and it is not in the appeal book, we had better get it.

MR BENNETT:   We can hand it up.  It was not before the primary judge at the time.  It involved a subsequent application before his Honour Justice Blaxell in the same way that the letter that is referred to by the Director in the Director’s reply submissions was not before the primary judge in this application.

KIRBY J:   It was not in the Court of Appeal, it was not before the primary judge in these proceedings and therefore it is not part of the record and therefore we cannot look at it.

MR BENNETT:   Yes.  Then equally that pertains to the matter – we put it on in part of our reply because we disagreed with the assertion made in the respondent’s submissions as to the position of the Legal Aid Commission as not being part of any record and being contrary to the matters that the appellant is aware of.  Can I complete showing you the structure because the freezing order results if there is no objection in an automatic confiscation, so it is not just an interim restraint, it is a self-executing interim restraint unless something intervenes, and that is an important aspect of a freezing order. 

Your Honours, I showed you section 46 which is the service of the freezing order and then 47 which required the recipient of the service of the freezing order to sign and complete a statutory declaration or suffer a penalty of $5,000.  The duration of the freezing order I showed your Honours for registrable real property is under section 48 and under section 49.  Your Honours see in section 49(1):

A freezing order for property (except registrable real property) comes into force when the freezing order is made.

So not when it was served; it comes into force when made.

If a freezing order for property (except registrable real property) was made under section 43(1) on the basis that an application for another order has been or is likely to be made, the freezing order stops being in force as soon as one of the following happens –

(a)if the freezing order was made on the basis of advice given to the court under 43(1)(b) – an application for the other order is not made within 21 days after the date of the order;

(b)the application for the other order is withdrawn –

or the application is unsuccessful or –

(d)the freezing order is set aside at the request of the applicant for the freezing order or in proceedings on an objection;

(e)if the property is confiscated under section 6, 7 or 8 –

which I have not yet taken you to.  If I go back to 7 which you now see:

Frozen property is confiscated if an objection to the confiscation of the property is not ‑ ‑ ‑

GUMMOW J:   Sorry, what section are you reading from?

MR BENNETT:   Section 7(1).  It is automatically confiscated if:

an objection to the confiscation of the property is not filed on or before the 28^th day after the service cut off date for the property.

Service cut off date is when you serve everyone who has an interest in the property – “service cut off date” is defined in section 150:

for property frozen under a freezing notice – the date of the last day on which a copy of the freezing notice was served on anyone under section 46(4) –

and 46(4) provides:

If, as result of information in a statutory declaration given, in accordance with section 47, by a person who was served with a copy of the freezing order under subsection (1), the applicant becomes aware that any other person is or may be or claims to be an interested party, then the applicant must arrange for a copy of the freezing order and a notice that complies with subsection (6) to be served on the person personally, as soon as practicable.

So automatic confiscation occurs if the freezing order is served and no statutory declaration identifies another person with an interest; 28 days later the property is automatically confiscated, irrespective of whether or not a confiscation declaration has been applied for or granted by the court.  If a statutory declaration identifies another person as having an interest in the property, or may have an interest, the 28 days runs from the date of last service of the last person so interested and then it is automatically confiscated with or without a confiscation declaration.

GUMMOW J:   And the objection spoken of in 7 is under what section?

MR BENNETT:   It is under 79 of the Act and that provides in 79(2)(a) that the objection must be filed:

within 28 days after the day on which the copy of the notice or order was served on the objector –

Interestingly, 79(2)(b) entitles it to be served within such further time as the court may allow, but the property is already confiscated then, but the objection proceeding runs on.

HEYDON J:   What happens if the statement of claim is dismissed?  You have been submitting that the confiscation order is, as it were, final, there is nothing interim about it, after 28 days it is immutable, but what happens if the statement of claim is dismissed, if your client wins?

MR BENNETT:   It would come within section 49(2)(c) of the Act and that would affect the duration of the freezing order.  So it would be a statement of claim seeking an order for a criminal benefits declaration and the court dismisses the statement of claim and does not make that order and it then ‑ ‑ ‑

HEYDON J:   That automatically terminates the freezing order.

MR BENNETT:   Yes, if it is on that ground only.  If there is another ground, it keeps going in force until all grounds are dealt with.

HEYDON J:   What happens if either the whole of the sum claimed or some part of the sum claimed is ordered to be paid but it is less than the totality of the property confiscated?

MR BENNETT:   Your Honour will recall that the earlier provision in the Act says that it is a debt due and payable from the person the subject of the order and you get, under 25(1), a month to pay the amount of the criminal benefit declaration or such further time allowed by the court.  If you do not pay it, it is a debt, and under 26(1) the frozen property can be taken with the respondent’s consent as part-payment and it:

is available for the purpose of satisfying the respondent’s liability as if the property had been taken from the respondent’s possession under a writ, warrant or other process of execution.

Does your Honour see that in 26(2)?

HEYDON J:   Yes, I see that.  How does the balance get back to Mr Mansfield, assuming there is a surplus?

MR BENNETT:   That is not abundantly plain but ‑ ‑ ‑

HAYNE J:   Section 6, I think, provides the key in that it identifies when property is confiscated:  “when it is given or taken in satisfaction of a person’s liability”.  Presumably, you cannot take it in satisfaction of liability once the liability is satisfied.  Perhaps you might actually get to the conclusion then that the balance has to go back.

MR BENNETT:   Yes.  It does not, on its face, leap out of section 49 though that the freezing order ceases to have effect in relation to those properties because it does not provide, for example, that a criminal benefits declaration or another declaration is satisfied.  So it suggests that there is a duration that comes or, alternatively, insofar as – it does not even, indeed, contemplate that it is part of the property that is confiscated.  It contemplates all of the property is confiscated.

GUMMOW J:   What flows from all of this, I think, is that the traditional language which expresses an undertaking as to damages looks to the outcome at a final hearing.

MR BENNETT:   Yes.

GUMMOW J:   That traditional language will not work here.  So at any stage have you proffered a particular form of undertaking which you say should have been given?

MR BENNETT:   No, the precise form of the undertaking would be a matter that we would put if – if your Honour’s find that there is a discretion on the part of the court to seek an undertaking, you would remit it to a single judge and we would put the wording of the undertaking to the judge.

GLEESON CJ:   What would be the essence of the nature of the undertaking?

MR BENNETT:   Pay to a party affected by the freezing order such damage as the court considers just.  The traditional formulation that looks to tortious causation issues for assessment of damage flowing from the consequence of having one’s property frozen.

GUMMOW J:   The Court looked at this in the Ansett Case, you remember, years ago.

MR BENNETT:   Yes, Justice Aickins’ judgment.

GUMMOW J:   It could be quite difficult even in that setting.  How it would work here I do not know at the moment.

MR BENNETT:   Our original notice of appeal your Honour Justice Gummow described in the special leave application as ambitious because we sought that your Honours formulate the form of the undertakings – were reformulated in the part of the notice of appeal simply to seek a declaration of power and a remittal to a single judge.  But the form of the order would have to follow the traditional formulation that the Court uses and developed by Lord Justice Knight‑Bruce in the mid‑19th century as being the consequence flowing from the interim order.

GLEESON CJ:   The damage to which an undertaking as to damages is ordinarily directed is the damage you suffered as a result of complying with the order, is it not?

MR BENNETT:   That is right and, hence, that is reasonably foreseeable.  The courts add a criteria of reasonable foreseeability to that loss and damage.

HAYNE J:   These things are considered in Air Express v Ansett 146 CLR 249.

MR BENNETT:   That traces the history of the development of the requirement at common law for a cross‑undertaking as to damages as a precondition for the exercise of injunctive relief back to Lord Justice Knight‑Bruce in Novello’s Case.  Your Honour Justice Gummow’s initial proposition that the traditional undertaking would not sit with this is not quite right.  I mean, this is a matter where you can see from ‑ ‑ ‑

GUMMOW J:   This on one way of looking at it is a final order actually, which is defeasible in certain circumstances if certain objections are taken, but otherwise there is a confiscation.

MR BENNETT:   Well, it is in itself not a confiscation.  It leads automatically to a confiscation.

GUMMOW J:   Yes.

MR BENNETT:   Your Honour is right, but here where there are objection proceedings by the recipient, by Mr Mansfield.  They are now pleaded out and the Director must establish that there was a confiscable offence, must establish ownership and control and must establish the value of the criminal benefit.  They are plainly going to be matters significantly in contest in these proceedings, how you would assess under section 19 the value of this benefit.  As I have said, the Director takes the overly ambitious or optimistic approach of saying it is the full amount of the share‑trading proceeds net of broker’s commission. 

The traditional formulation would still have it that way because under the provisions of section 49 at the end of that contest, if the court refuses to make a criminal benefits declaration, then the freezing notice ceases to have duration under section 49(2)(c) and the property comes back to us and we then say it should not have been frozen in the first place, or we have an argument then as to the assessment of damage on an undertaking.

CRENNAN J:   The undertaking you are seeking I take it is not limited to the conclusion of the objection proceedings?  You are not treating the objection proceedings as stopping the momentum, like an interlocutory injunction in relation to the confiscation?

MR BENNETT:   We probably are, your Honour, because the end of the objection proceedings, if we lose and a declaration is a made, then the property can be confiscated or we have a debt declared against us and the frozen property can be applied as against it.  If we win, then the freezing order ceases to have effect and we say, “Well, we haven’t got a Mazda or a Jaguar any more, but give us back the shares and the money and our houses and our jewellery, our stocks and bonds and anything else we had”.

KIRBY J:   Perhaps the Volkswagen.

MR BENNETT:   We got to keep the two Volkswagens.  One was the daughter’s car to go to university, and that has subsequently been released for the daughter I think on an application by Mrs Mansfield.

KIRBY J:   Do not try to touch our hearts.

MR BENNETT:   So I think it probably is, your Honour, and we see it as potentially a self‑executing confiscating interim interlocutory order, or interlocutory order made until the conclusion of the objection proceedings.  The interesting part is that if it is confiscated automatically, then there is no debt that is then due to the State; it is just confiscated.

HAYNE J:   What do you meant by that?  What do you mean there is no debt due, if the confiscation occurs, as section 6 says, when it is taken in satisfaction of the liability?

MR BENNETT:   But section 7 says it is taken automatically if there is no objection filed to the freezing order within 28 days of the cut‑off date for service.  Let us assume, your Honour, that the freezing order is made on the basis of advice given by the Director that within 21 days he will apply for a criminal benefits declaration.  He serves the order the next day and eight days after service he applies for a criminal benefits declaration.  No order is made on that application for criminal benefits declaration at that point in time, but if no objection is filed, it is automatically confiscated before the determination or the declaration of a criminal benefit by the Court.  It is just confiscated and you do not have then the creation of the debt in section 25(1) at that point in time.

GUMMOW J:   I am not sure what the significance is, but in section 6 it says property is confiscated and then 7(1) says frozen property is confiscated.

MR BENNETT:   You do not have to seek a freezing order.  You could, for example, seek a declaration for criminal benefits, obtain it and if property is given in satisfaction of that liability, it is then confiscated under section 6.  It sits uncomfortably with the provision that says it is a debt ‑ ‑ ‑

GUMMOW J:   Yes, I see.

MR BENNETT:   ‑ ‑ ‑ and uncomfortably with section 20 which makes it a liability to pay the State an amount equal to the amount.  That seems to be how it is structured.  My junior is arguing with me now, so perhaps I should in fairness, in answer to your Honour Justice Hayne, give you my junior’s argument and that is, if one looks at section 7(2)(c), there is an interesting perhaps argument that if – I was dealing with the hypothesis that no objection was filed, but if an objection is filed, the property is confiscated if the freezing order is not set aside, whereas if one looks then at section 49, and this is Justice Heydon’s – the answer to your Honour’s point, if you make an order other than the order sought for, you do not necessarily make an order setting aside the freezing order, you just make – the application for the other order is finally determined and the court does not make the other order.  So the freezing order is not set aside, but it ceases to have duration, but the automatic confiscation requires that you actually set it aside.  So the sections sit uncomfortably with one another.

GUMMOW J:   Yes, but how does 49(2) operate with real property?

MR BENNETT:   Section 49(2) does not operate with real property.

GUMMOW J:   Is there any equivalent for real property for 49(2)(c)?

MR BENNETT:   No.  Real property is dealt with in section 48.

HEYDON J:   Is it not 48(4)(c)?

MR BENNETT:   Yes.

GUMMOW J:   Yes, thank you.

MR BENNETT:   I have taken your Honours to the sections in the Act which we say are material.  Perhaps if I can go back to your Honour Justice Kirby’s statement and perhaps explain the facts of this matter just a little as to how they run in relation to the application.  Mansfield was the subject of this ex parte in camera order that froze all of his property everywhere and five other companies simultaneously, for then and any after‑acquired property.  It was not until two years after that that by consent his Honour Justice Roberts‑Smith made an order that varied the original order providing a living allowance for Mansfield.  For the interim period, 2002 to 2004 a lump sum was calculated being the weekly rate multiplied by the period.  How Mansfield lived in that year is not on the papers but everything was frozen at that point in time so he could not deal at all with frozen property without contravening section 50.

In the interim he was charged and within the 21 days the application for criminal benefits was launched.  That went on pleadings.  We are on the third statement of claim and an application to be heard today consequent upon programming orders made by his Honour Justice Blaxell a fourth statement will come in today, four years later.  A defence has been filed to the 2003 statement of claim but it has been apparent since 2004 with the reformulation of the charges that the Director needed to replead and the Director has not repleaded until ordered to do so by Justice Blaxell.

We said in our submissions that that application was not made within time.  It in fact was.  We were in error.  It had been made but it had not been served on us.  It has now been served on us.  The matter is still, four years down the track, in the civil proceedings in a pleading stage.  The criminal proceedings are at least a year off trial.  They have been reformulated and fresh indictments laid.

KIRBY J:   Could I just ask, on the scheme of the Act that you have been taking us through, could that lead to the fact that the civil proceedings could come on before the criminal proceedings?  That seems plainly possible.

MR BENNETT:   Yes, entirely.

KIRBY J:   Could the prosecution and answering of the civil proceedings involve your client being forced or required to go into evidence that could later cause embarrassment in the criminal proceedings?  In short, is it an undermining not only of his capacity to fight his case with the counsel that he wishes but an undermining of the general accusatorial procedures of the criminal trial?

MR BENNETT:   Yes.  Moreover, that is anticipated.  If one looks at 104 of the Act you will see that:

The fact that criminal proceedings under this Act or any other enactment have been instituted or have commenced is not a ground on which the court may stay proceedings under this Act that are not criminal proceedings.

The fact that it may undermine your position in relation to the criminal proceedings cannot be used as a ground to seek a stay for the civil proceedings.

KIRBY J:   So the State now prosecutes you criminally, freezes your assets, prevents you from having any immediate assets to live on unless a long time later there is an order excising a part that allows you to do so, prevents you getting the counsel of your choice and potentially undermines your answering the criminal charges in the normal accusatory way?

MR BENNETT:   That is right.

KIRBY J:   Yes.  I am beginning to think of Chapter III.  Others may not.

MR BENNETT:   Going back to the facts of this matter, so four years down the track the civil proceedings have become bogged down.  An application was made by the Director to stay these proceedings, the civil proceedings, pending the outcome of the criminal proceedings.  His Honour Justice Blaxell is reserved on that.  He had a period of leave and is now back from that leave.  Though section 104 was drawn to his Honour’s attention it appears the Director may be hoist on the legislative petard if that was put in to prevent ‑ ‑ ‑

GUMMOW J:   Sorry.  What is the Director seeking to do?

MR BENNETT:   Stay the civil proceedings until the expiration of the criminal prosecution.  So the Mansfields, four years down the track, have no prospect of a civil trial in an early phase and no prospect of a criminal trial at an early phase.  That is where we are factually.  The application that was made to vary the consent order for living allowance was fundamentally on the basis that the frozen funds are becoming dissipated by the weekly living allowance because of the passage of time and that was the nature of it.  What is put against us in reply is they wanted to force Mr Mansfield to go and get a job but that does nothing because anything he earns is frozen automatically but the State may wish him to go and get a job and top up the fund, as it were, on a weekly basis, if he is able to get a job.

KIRBY J:   These complaints, and the matter being a State Act, cannot really be relevant to our role unless there is some other issue before the Court.  It just really cries against the unfairness of the Act but on the other hand the Act has been propounded and such statutes have been enacted everywhere in Australia – no, in most jurisdictions of Australia – and that has been done, presumably, to ensure that those who are engaged in crime find it very unprofitable.

MR BENNETT:   There is nothing wrong with the proposition.  We do not argue against the proposition that those engaged in crime should find it unprofitable.  It is the unfairness of the way in which this Act was administered when the court has interpreted section 43 in a manner that strips it of the discretion to balance fairness in the process.

KIRBY J:   Yes, but if you had got your undertaking that you are seeking in the first part of your case that would not have been available to until the very end of the litigation.  Its proceeds, the proceeds of undertaking, would not have been available until the very end.

MR BENNETT:   Yes, but watching the dissipation of the value of your assets over four years would be less hurtful if you knew you were protected by an undertaking as to damages.  Where there is no undertaking as to damages and the Director prosecutes this matter with glacial speed then the absence of the undertaking becomes painful.

KIRBY J:   We are not here to save you from hurt or pain but from injustice perhaps.

MR BENNETT:   It is the injustice of the matter.  Your Honour is right.  The palliative of the undertaking as to damages is administered at the end of the proceedings and not throughout, but the palliative remains that you are protected during the process or at least the dissipation of the value of your assets and the damage flowing from that is protected during the process. 

The legal costs is an entirely different matter.  That way you survive the process hopefully at the end of the day but if you fight the State with no recourse to your – if you can apply 23(4), lock up all the assets irrespective of the fact they vastly exceed the value of the criminal benefit declaration that is being sought so that you are deprived of your own assets to defend yourself legally, then that is an uncomfortable situation the Court should not readily accept, notwithstanding the second reading speech by the relevant Minister.

GLEESON CJ:   Is it the case that it was held that the source of the negative implication against you in relation to the undertaking as to damages is the historical fact that the previous legislation contained a provision for such an undertaking and this legislation does not?

MR BENNETT:   Yes, the short answer to your Honour’s question. 

GLEESON CJ:   That is the point that you have to address, is it not?

MR BENNETT:   Yes. The majority’s judgment was delivered by his Honour the President, Justice Steytler. Your Honour will find it in 153 A Crim R 41 and the relevant passage is in paragraph 26 at page 47. His Honour says, in paragraph 27:

Assuming (without deciding) that the DPP has authority . . . to give an undertaking as to damages, I am not persuaded that the Court has the power to require an undertaking of that kind as a condition of the grant or continuation of a freezing order.

We were not putting to the Court that it was a condition:

28       Counsel for the applicant referred us to a good deal of authority underlining the importance . . . 

29       There is no doubt that undertakings are important in cases of infringement . . . However, these orders are creatures of statute and it seems to me to be plain, from the legislative history of the Act, that the legislature, in framing the Act, deliberately chose not to give to the Court the power to impose, as a condition, the giving of an undertaking as to damages.

That is the central tenet of his Honour’s reasons with which her Honour Justice Wheeler concurred.  His Honour looks at the predecessor to the 1988 Act and says, in paragraph 31:

Given the existence in the repealed Act of an express power to require an undertaking . . . it is difficult to imagine that the omission in the current Act was other than deliberate.  Moreover, s 137 of the current Act provides that a person on whom the Act confers a function . . . “is not personally liable . . . If the DPP is not to be personally liable in civil proceedings, and if neither the State nor the DPP is to be civilly liable for anything done (which, it seems, would include the making of an application for a freezing order) or any default made in good faith . . . it is difficult to see what purpose might be served by requiring an undertaking as to damages as a condition of the grant of a freezing order other, perhaps, than in a case in which bad faith is alleged.  However, if the legislature had intended that there should be power . . . then, given the legislative history, it seems very probable that it would have said so.

Again, his Honour refers in paragraph 31 back to the legislative history as a foundation for his interpretation and construction of section 43 as being devoid of a power to indicate to an applicant for a freezing order that unless an undertaking were voluntarily proffered, no freezing order would be made.  If that be described as conditioning the making of an order on the giving of an undertaking, which is not strictly the conditioning, then that is how you would describe it, but we would say it is quite different.  The court does not order an undertaking.  It simply refuses to make an order and says in the exercise of discretion, the proffering of an undertaking is a discretionary factor a court would take into consideration.

We then ran the argument that section 102 of the Act which imports civil procedure necessarily imported the Supreme Court Act and the Rules of the Supreme Court which require on the giving - the application for an injunction the proffering of an undertaking as to damages and consistent with the majority decision in McCleary v Commonwealth Director of Public Prosecutions, a primary judgment of Justice Ipp – it is in our authorities - we said that a freezing order was in the nature of an asset preservation order and, therefore, analogous to an injunction.

His Honour the learned President in paragraph 33 dismisses that argument saying that he does not accept that section 102 of the Act has that effect:

If the legislature had intended to empower the Court to require the giving of an undertaking as to damages, it would, in my opinion, have done so by way of an express provision, as it did in the repealed Act.

So yet again rejects the argument that the construction of section 102 importing the Supreme Court Act is to be analysed on the basis of the legislative history and a restrictive construction of section 102 is to be given as a result of the legislative history. The repealed Act was express, this one does not have one, therefore, they did not want one and you construe it entirely by implication.

KIRBY J:   This is a not uncommon problem – indeed, it is a very frequent problem – where you have the intersection of what one might call a general statute and a particular statute dealing with a particular issue.  We just have to see how the two work together.  In favour of the Supreme Court retaining its general jurisdiction is the myriad of cases that come to it and that it is a superior court of record and you do not normally read those powers down.  Perhaps you especially do not read them down where you have softened us up with the very severe consequences that otherwise fall on people like your client.

MR BENNETT:   But it is consistent with the respectable line of authorities from this Court like “Shin Kobe Maru” that ‑ ‑ ‑

KIRBY J:   That is not true.  We had a case from South Australia relating to police officers – Fernandez – recently and that shows that in such cases there are almost always or very commonly dissents in this Court, as there were in Fernandez.

MR BENNETT:   That was the application of the industrial relations legislation to police officers or whether the Police Act provided a Code. I accept that. The final passage that I need to refer your Honour the Chief Justice to is in paragraph 34 on page 49 of the report which again emphasises that the learned President’s reasoning was derived entirely from the legislative history. He deals again with the section 102 argument and says:

the construction advanced on behalf of the applicant appears to me to be inconsistent with the terms of s 137 of the Act, to which I have earlier referred.  While that section might be read as being consistent with the need for an undertaking as to damages in order to cover the possibility of bad faith, its existence, taken together with the comparison between the provisions of the Act and those of the repealed Act, leads me to the conclusion, earlier expressed, that the Court was not intended to be empowered –

So there are four separate references in the learned President’s analysis to the repealed Act as being the driving force in his restrictive interpretation of the discretion that vested in the court by section 43(3).

HAYNE J:   Let it be assumed for the purpose of debate that the President is wrong to construe the Act as denying power to the court to refuse to make an order unless an undertaking is given.  Let that be assumed in your favour.  May the DPP proffer such an undertaking?

MR BENNETT:   The Act entitles the Director to do all things convenient.  The Director of Public Prosecutions Act 1991 (WA) gives in section 20(1):

The Director has power to do all things that are necessary or convenient to be done for the purpose of performing the functions of the Director.

KIRBY J:   You would say that if the price of the matter going ahead is the giving of the undertaking, it becomes necessary?

MR BENNETT:   Yes, or convenient.

HAYNE J:   And on whose behalf is the undertaking proffered?  Obviously not the Director personally, I assume?

MR BENNETT:   No.

HAYNE J:   So on whose behalf is the undertaking proffered?

MR BENNETT:   That is why we thought the learned President’s comment in paragraph 35 was right that it would not be by the Director, it would be by the State.

GUMMOW J:   Section 103 may help you in that respect.  The Attorney‑General would presumably have to appear.

MR BENNETT:   Yes.

GLEESON CJ:   Who did it under the previous legislation?

MR BENNETT:   The State, I think, under the previous legislation.  The relevant section which was in section 20(11) is in terms:

The Supreme Court may refuse to make a restraining order if the Crown, or the applicant on behalf of the Crown, refuses or fails to give to the Court such undertakings as the Court thinks appropriate concerning the payment of damages or costs, or both, in relation to the making and operation of the order.

HEYDON J:   If your argument is correct, that was not necessary.  I mean, if your general argument is correct, section 20(11) of the earlier Act was simply otiose.

MR BENNETT:   Yes.

GLEESON CJ:   Except that if you look at the decision of the House of Lords in Hoffman‑La Roche and trace the history of the position of the Crown in relation to undertakings as to damages in interlocutory injunctions, the explanation for that provision might be that they wanted to deal specifically with that problem which was a longstanding and well‑known problem.

MR BENNETT:   And give force to the famous dissent from Hoffman‑La Roche, yes. But the other point – perhaps I answered a moment too quickly, your Honour Justice Heydon. The other point is you do not have a section 102 equivalent in the old Act.

GUMMOW J:   I was going to ask about that.  There does not seem to be an equivalent of 101 and 102, does there, in the old Act?

MR BENNETT:   No, not at all.  The legal costs argument by the majority in the court below was dealt with in terms at paragraph 39 by the learned President.  Perhaps 38, the preceding one:

I have said that s45 of the Act, quoted above, lists a number of directions or orders which the Court may make, including an order making provision for meeting the reasonable living and business expenses of the owner of frozen property.  That section makes no provision for an order enabling the meeting of any legal costs other, perhaps, than those which might be described as “business expenses”, and I very much doubt that legal expenses incurred in the course of objecting to the confiscation of frozen property could be said to fall within that phrase for the purposes of s45.  Nor, in my opinion, could they be categorised as “living expenses” for the purposes of the section.

Given that the legislature has seen fit expressly to provide for the reasonable living and business expenses of the owner of the property, it seems to me that the omission to refer to legal costs was deliberate.  That this is so is supported by the legislative history.  The repealed Act, by s29(9) . . . legislature consequently there distinguished between “living and business expenses”, on the one hand, and “reasonable costs and expenses”, on the other.

That the omission of any reference, in the current Act, to legal costs or expenses was deliberate is, as the primary Judge said, also supported by the reference to the second reading speech ‑ ‑ ‑

GLEESON CJ:   At any stage in these proceedings, Mr Bennett, has it been put against you that quite apart from the negative implication from history argument it is inappropriate to require an undertaking as to damages in a matter of this nature because of the same kind of reasoning as led the House of Lords in Hoffmann‑La Roche to say it was inappropriate to require an undertaking as to damages there?

MR BENNETT:   No.  There was perhaps an argument initially advanced that it may deter – that part of the argument in Hoffmann‑La Roche is more dealing with the issues of the local authorities, Kirklees‑type cases, the apprehended pusillanimity of local authorities if they had to give an undertaking they would not bring their applications because they would be frightened as to the consequence and exposure as to liability.  That was put in part against me, but that is the closest it has come.

KIRBY J:   As you point out there was a strong dissent by Lord Wilberforce – Justice Pullin mentions this and adheres to the dissenting view.  Has there been any development in England on that general question?

MR BENNETT:   There has been a restriction and a contraction so the local authorities do not enjoy the benefit of that, and essentially it is not a point I would trouble myself to look at more closely.

GUMMOW J:   What is the position in Western Australia – forget this legislation – where an undertaking as to damages is sought and given by the State?  What legislative basis is there for it, if any, do you know?  It does not seem to spring out of the Crown Suits Act.

MR BENNETT:   No, I am not familiar with any basis.  McCleary’s Case dealt with the old legislation and there was an argument put before the Western Australian Supreme Court in that case that the Crown should not give an undertaking as to damages in confiscation proceedings.  It was rejected by Justice Ipp for the majority on the basis that this is not public interest legislation; this is debtor/creditor asset preservation orders.  McCleary (1998) 20 WAR 288 was a joint judgment of Chief Justice Malcolm, Justices Franklyn and Ipp, but the majority judgment given by Justice Ipp.

GUMMOW J:   Is there any consideration of the matters the Chief Justice was referring to arising from Hoffman-La Roche?

MR BENNETT:   No.  You find a reference to it in Justice Ipp at page 305 of the report to Hoffman-La Roche.

GUMMOW J:   This is federal jurisdiction, this case, is it not?

MR BENNETT:   Yes.

GLEESON CJ:   According to the headnote, it says Hoffman-La Roche considered.

MR BENNETT:   Yes, but in the primary judgment of Justice Ipp you will see Chief Justice Malcolm’s reasons for decision.  He otherwise adopted what Justice Ipp said in that regard.  If you see at page 307, commencing between A and B, counsel for the Commonwealth, who was then Mr Ian Heenan, QC, now his Honour Justice Heenan:

drew attention to the body of authority to the effect that, in ordinary civil litigation, the Crown is not required to provide undertakings as to damages –

reference Hoffman-La Roche.

He submitted that this meant that the rules applicable to undertakings in ordinary civil litigation were of limited value. In my view, however, the peculiar position of the Crown in regard to undertakings when attempting to enforce the law of the land is irrelevant to the present issue. Under s 44(10) of the Proceeds of Crime Act the Commonwealth is afforded a discretion whether or not to give an undertaking . . . This is to be distinguished from the position where the Commonwealth, in circumstances referred to in Commonwealth v John Fairfax & Sons Ltd, does not have to provide ‑ ‑ ‑

GUMMOW J:   What did Sir Anthony Mason say about this in Fairfax 147 CLR 39? The Commonwealth obtained an interlocutory injunction there on the copyright claim.

MR BENNETT:   I will look at that, your Honour.  Can I take you across to page 309 where his Honour reviewed the Canadian case of Vieweger Construction v Tompkins which had been referred to by Justice Mason in the Air Express Case.  There is a passage between D and E that I refer your Honours to which I will not read.  Then the submission was made that:

the position of the Commonwealth, in obtaining a restraining order, was that of a public body who was acting in the public interest to hold the situation in status quo until the rights were determined . . . He derived support for this proposition from remarks by Williams J in Cannon v Director of Public Prosecutions . . . 

Whatever the position may be in Canada, the position laid down in F Hoffmann‑La Roche & Co AG v Secretary of State for Trade and Industry is that where the Crown commences proceedings to enforce the law, and in the course of doing so seeks interlocutory relief, an undertaking as to damages may not be required at all . . . In Kirklees Metropolitan BC v Wickes Building Supplies Ltd [1933] AC 227 the House of Lords held that the Crown was not exempt from giving an undertaking as to damages, but the court had a discretion (extended to other public authorities) not to require the undertaking. This was applied, for example, in Securities & Investments Board v Lloyd‑Wright [1993] 4 All ER 21, where interim Mareva injunctions were granted without the applicant . . .

According to these authorities if, in proceedings to enforce the law, the Crown wishes to protect itself against the usual liability flowing from an undertaking as to damages, it should attempt to ensure that it is not required to give such an undertaking at all.  If, however, in the exercise of its discretion, the court does require the Crown to provide an undertaking (or the Crown, of its own volition, provides an undertaking), the Crown will not be excused from liability thereunder merely because it acted reasonably . . . 

Furthermore, I do not think that the position of the Commonwealth in this case is comparable with the public body referred to in Vieweger Construction Co Ltd v Rush & Tompkins Construction Ltd.  The Commonwealth, in obtaining the restraining order, was of course acting in the public interest, but its conduct in doing so and in proffering an undertaking as to damages was not equivalent to a public authority maintaining the status quo.  Such a public authority seeks to preserve the status quo pending the determination of the main action.  If the public body succeeds in the main action, the status quo will be maintained indefinitely.  The Commonwealth on the other hand, sought to restrain property, including property of third parties, so that upon conviction the property would be forfeited – thereby altering the status quo irrevocably.

Accordingly, in my view the position of the public body referred to in Vieweger Construction Co Ltd v Rush & Tompkins Construction Ltd is of no real assistance in the present inquiry.

His Honour analyses Air Express and Griffith v Blake and extracts certain propositions and we do not quibble with any of those.

GUMMOW J:   The critical passage in Fairfax is at page 59.  Justice Mason said:

the Crown in right of the Commonwealth is not immune from suit or liability in damages.

He referred to sections 56 and 54 of the Judiciary Act, which I mentioned early, and to Maguire v Simpson 139 CLR 362. He said:

there is no reason why a distinction should be drawn between the Commonwealth, at least when it seeks an interim injunction to protect a proprietary or private right, and a private citizen . . . The court should in each case require an undertaking –

but that is not this case.

MR BENNETT:   It perhaps is.  The respondent’s submission is that the Director ‑ ‑ ‑

GUMMOW J:   There it was the Commonwealth’s copyright.

MR BENNETT:   Yes.  Here they claim that the Director seeks the relief as a contingent creditor.  That is how the respondent characterises the Director’s position.  So he is not seeking to enforce a public duty as in Vieweger and Justice Ipp, with respect, was right to distinguish the preservation of status quo from irrevocably altering the status quo by holding frozen assets for forfeiture to meet a civil debt. 

Unless there is any other matter with which I can assist your Honours, those are our submissions on behalf of the appellant.

GLEESON CJ:   Thank you, Mr Bennett.  Yes, Mr Williams.

MR WILLIAMS:   Your Honours, we submit the appeal should be dismissed.  We see it simply as a case of the construction of the Western Australian statute.  We rely on our written submissions, whether we address them in entirety or not, and we submit that it is really unnecessary for the Court to be going in great detail into the background of the circumstances by which these two issues come to the Court.  The issues are very confined, in our submission, namely, does the Supreme Court have power to require an undertaking as to damages as a condition of the grant of a freezing order and, secondly, does the Supreme Court have power to vary the freezing order to provide from frozen property funds for the payment of legal costs?

GLEESON CJ:   Is that a convenient time, Mr Williams?

MR WILLIAMS:   Yes, your Honour.

GLEESON CJ:   We will adjourn until 2.15 pm.

AT 12.45 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.17 PM:

GLEESON CJ:   Yes, Mr Williams.

MR WILLIAMS:   Thank you, your Honour.  Could I just make some brief comments on the issue raised by Justice Gummow of the nature of the jurisdiction being exercised.  In the statement of claim at page 13, paragraph 9 it is pleaded that:

By section 1311 of the Corporations Law (WA) each of the acts pleaded in paragraph 7 above was an offence pursuant to the Corporations Law (WA). 

Then in paragraph 9J on the following page:

By virtue of the matters pleaded in paragraph 9E and 9I above, each of the acts pleaded in paragraph 7 above is an offence pursuant to sections 1002G and 1311 of the Corporations Act 2001 (Cth) as they were at the commencement of that Act.

GUMMOW J:   Then 9L.

MR WILLIAMS:   Paragraph 9L:

By virtue of the matters pleaded in paragraph 9K above and by virtue of subsections 1400(2) and (3) of the Corporations Act 2001 (Cth), Mansfield on 11 March 2002 incurred a substituted liability under sections 1043A and 1311 of the Corporations Act 2001 (Cth), which sections created offences.

Paragraph 10:

Each of the offences pleaded in paragraph 9 above and, or alternatively, in paragraph 9J above is a “confiscation offence” within the meaning of section 141 of the Act.

It is common ground that what is alleged against the appellant is he is charged with confiscation offences.  What we have here is a situation where the relevant alleged events occurred at a time when State law applied and, subsequently, in both cases prior to the making of the freezing order, there was a substitution of a Commonwealth liability for a State liability.  So, having regard to the Barrett Case to which Justice Gummow referred, the question is, is the matter one arising under a federal law or if the right or duty in question in the matter owes its existence to federal law, it depends upon federal law for its enforcement, whether or not the determination of the controversy involves the interpretation or validity of the law, is it such a matter. 

When we look at the base of these proceedings, there has to be a confiscation offence and that occurs under section 6.  The confiscation is effectively under section 6 of the State Act and it does it by an identifiable offence under section 141.  The corporations legislation movements have been analysed in three intermediate court cases, the first in Queensland, then in New South Wales and then in the Federal Court.

The first case, the Queensland one, is R v Corbett [2004] 1 Qd R 146. At paragraph 2 in the headnote it says:

2) That the effect of the referral in terms of s. 1401 was to refer to the Commonwealth power to make laws in respect of what were, at the time of referral, existing liabilities for offences against State legislation, and to do so by deeming those liabilities to be for equivalent offences against Commonwealth legislation.

Hence section 1401 did not purport to enable the Commonwealth to prosecute a State offence. Relevant passages in the judgment appear at paragraphs 24, 25, 26, 27 and 31. That was followed by R v Frawley (2005) 52 ACSR 461. The leading judgment was given by Chief Justice Spigelman. He referred to the Corbett Case and in general terms approved that although in paragraph [26] he said he would not himself use the terminology of deeming, the language in the statute is substituted.  In paragraph [22] Chief Justice Spigelman says:

Section 1400(2) operates in the same way.

Referring to another case:

It creates a criminal liability under Commonwealth law, relevantly s 1002G and 1311(1)(a) of the Commonwealth Act, (referred to in s 1400(2) as the “substituted right or liability”). It does so by reference to the liability existing under the pre‑existing State law (referred to as the “pre‑commencement right or liability” in s 1400(1) and (2)).

The third case, and I will just mention it also followed Corbett, is in the Federal Court, Kennedy v ASIC (2005) 52 ACSR 301. What I think that leads to is that the ultimate source of the matter that is the concern of the criminal benefits legislation is the offence against the State law. It may go back to the ultimate source through two Commonwealth avenues but it ends up, we say, in State law. Now, that gives rise to the question, well if these offences had been committed somewhat later, what would the situation be? In this context, our submission is that the source of the matter ‑ ‑ ‑

GUMMOW J:   But the ultimate source is gone.

MR WILLIAMS:   It is the ultimate source, but what is the ‑ ‑ ‑

GUMMOW J:   It does not exist any more.

MR WILLIAMS:   That is right, but what is the source?

GUMMOW J:   Well, the Commonwealth law.

MR WILLIAMS:   We have a State Act which creates a right or duty; namely, a right to a confiscation order, but it does so simply by reference to something that occurred in breach of Commonwealth law.  In our submission, that is a matter arising under State law.

GUMMOW J:   Well, I think you would have to consider cases like LNC v BMW.  There was a private dispute in contract and trust, I think, over Customs licences.

MR WILLIAMS:   In this case what is ‑ ‑ ‑

GUMMOW J:   The source of the rights in one way of looking at it was the law of contract and the law of trust, but this Court did not accept that as the sufficient description.

MR WILLIAMS:   In this case, what is sought is the confiscation of property which is derived from criminal conduct.  It is done by the DPP as agent for the State in a public interest.  It is not private litigation.  An explanation for the alternatives in the statement of claim is that it is not all together clear as between the Corporations Act and the Financial Services Reform Act how section 8 of the Acts Interpretation Act operates.  There is a provision that in general terms maintains an existing liability when an Act repeals another Act.

GUMMOW J:   The reference is in LNC 151 CLR 575 at 581 in the joint judgment of six members of the Court.

MR WILLIAMS:   I am not in a position to comment on that at this time.  The other consequence is that each time the offence or offences relates to a non‑Western Australian territory then it would be said it is arising under Tasmanian law or Australian Capital Territory law.  It does not have the same consequences but it seems odd that what is occurring in the State of Western Australia could be regarded as matter arising under the law of other States, other places, other jurisdictions.

Can I come to our general submissions.  In general terms what I propose to do is to make some comments on the nature of a freezing order and the power to vary it, some brief comments on injunctions and then to deal separately with the undertaking and the costs issues.

GUMMOW J:   Section 5(3) applies the Act to property in Western Australia and property elsewhere, does it not?

MR WILLIAMS:   Yes, to the extent of the Constitutional capacity.  It is perhaps relevant to mention it but I will not take your Honours to the sections, but there are mutual recognition provisions in this Act.  It is, one would assume, designed to operate in a network fashion across the country in due course. 

HAYNE J:   In particular, if you are going to freeze property like shares, when situs presumably is the location of the registry.

MR WILLIAMS:   Or intellectual property which has an even more inscrutable situs.  In general terms, our submission is that the trial judge, the primary judge, Justice Roberts-Smith made the right decision and generally for the right reasons.  Similarly, our submission is that the majority of the Court of Appeal made the right decisions on these two issues, again generally, for the right reasons and we submit the reasoning of Justice Pullin is flawed in several respects. 

Your Honours have looked at sections 41 and 43 on a number of occasions – I do not propose to take your Honours through the provisions – but what I think can be highlighted in section 43(3) and (5) in contrast to subsection (1) is that it is all or any property that is owned or effectively controlled by the relevant person or given away by him or her in respect of which an order can be made. 

HAYNE J:   Let it be assumed, for the purposes of argument, that the maximum benefit obtained by an insider trader who realises stock sooner than might otherwise have been the case is the total amount received on sale.  That assumes that the maximum amount of the benefit is recovering what you did on sale compared with the shares being worthless when the true facts came out.  On what basis would a court make an order under 43 freezing property of value greater than the outer limit thus identified of the benefit obtained from the wrongdoing?

MR WILLIAMS:   The most obvious example of when they might do that is when they do not know the value of the property being frozen and that is going to be a situation that will commonly arise.

HAYNE J:   When, however, the DPP is applying for orders not cast in general terms but directed to specific items of property, is it any part of the inquiry that might be made, perhaps ought to be made on ex parte application by someone in the position of the DPP to have some estimate of value of the property thus sought to be restrained rather than simply saying we will have the lot, whatever it is and wherever it is?

MR WILLIAMS:   Ideally, yes.

HAYNE J:   Ideally, yes.

MR WILLIAMS:   In practical terms it may not be easily done if the thing in question is a boat that is heading out to sea.

HAYNE J:   Well understand that, Mr Williams, but at least some of the difficulties in this case stem from the way in which the original order is framed, as for example, freezing property at least in the name of the wife, freezing property in the name of companies not all of which is limited in any respect in the order to such interest as the present appellant may have in it, whether actually or by reason of his control.  Now, much of the debate that we have as, for example, about undertakings as to damages may stem from the fact that the order is cast with this absolute generality in circumstances where, I would have thought, it was open to set an outer limit to the order that might ultimately be supported. 

Now, given that your submissions accept that section 43 gives a discretion to the Court - I have in mind paragraph 37 of your submissions - it is important, I would have thought, to understand the proper basis on which that discretion might be exercised which may require some challenge, or at least inquiry about the basis on which this particular order was framed in this case.

Now, understanding the necessity for undertakings as to damages takes on a different complexion perhaps, perhaps not, if the power given under 43(3) is to be interpreted according to considerations of the kind I have described, recognising, of course, there are cases where the evidence is difficult.

MR WILLIAMS:   Well, the intention of the legislature seems to be to enable difficulties to be overcome in particular cases while at the same time ensuring that there are protections within the Act to ensure that anybody with another interest is both served with the order and has the opportunity of making an objection and having it heard.

GLEESON CJ:   Mr Williams, do you accept Mr Bennett’s contention that the discretion would extend to a power to say “I will make an order in respect of that property, but not in respect of the boat because he might need to sell the boat to raise money for legal fees”?

MR WILLIAMS:   We accept that there is a discretion to grant a freezing order over some property rather than all, although the intention seems to be encourage blanket orders.  When it comes to making a carve‑out, as my learned friend referred to it, for a particular purpose, the problem we say he has is that there is no power to make an order in those terms.  There is a discretion to make a freezing order, but not to make any order that relates to the use of any other property for purposes other than living or business expenses.

GLEESON CJ:   I did not contemplate that this would be part of the order.  I just contemplated that the judge would say in his reasons, “The reason I am not making an order in respect of the boat is that the boat is worth $100,000 and he is going to need $100,000 to pay his lawyers”.

MR WILLIAMS:   One consideration that would need to be taken into account there is that we say that the policy behind the legislation is that property to which an alleged criminal has ownership or effective control or is in a position to give away does not belong to him or her; it belongs to the State, and leaving the States money for the payment of legal costs means that the policy of the Act is being frustrated.

It would be a different matter if an order was sought over all property, but it was evident that the property exceeded that required for what was known of potential criminal benefits at the time and there was other property which was lawfully acquired or apparently lawfully acquired.  It is not an easy discretion to be exercised.  I do not think there is any doubt that the making of the original freezing order, whether it is ex parte or on notice, is a difficult judicial task.

GUMMOW J:   What did you say belonged to the State?

MR WILLIAMS:   I am sorry, your Honour?

GUMMOW J:   You said some property belonged to the State.

MR WILLIAMS:   Yes.  Well, the policy of the legislation is that property that is the result of criminal activity as a benefit to the respondent should belong to the State.  That is the object, to have it confiscated.

GUMMOW J:   But the question is how and when is that decided?

MR WILLIAMS:   Well, under the legislation it can be decided ex parte and I am sure in many cases it will be where there is a risk that the assets will be dissipated or disappear if notice is given.  Now, that is not the end of the matter though.  The practice appears to be that applications for variation are brought under section 45.  Now, 45 on the face of it does not contain a power to vary an existing order, but under the Interpretation Act section 48 it is provided that:

Where a written law confers a power or imposes a duty, the power may be exercised and the duty shall be performed from time to time as occasion requires.

Now, the use of the expression “from time to time” is of significance.  It has been held in a House of Lords case, Lawrie v Lees (1881) 7 App Cas 19 at 29 by Lord Penzance that the expression “from time to time” imports the capacity to make orders renewing, revoking, adding to or subtracting to the existing orders, and that has been followed in a case in the Court of Appeal in New South Wales, Parkes Rural Distributions Pty Ltd v Glasson (1986) 7 NSWLR 332 at 335 to 336 in the judgment of Justice Glass, with whom Justices Samuels and Priestley agreed.

We would say, however, that there are limits on what can be done in a subsequent application for variation. The sort of limits that apply, we say, are those that apply to, for example, an application to review an ex parte order under Rules of the Supreme Court of Western Australia, Order 58 rule 23.

GUMMOW J:   Is there any originating summons in this case?

MR WILLIAMS:   I cannot answer that.  The facts are very complex.  I was not relying on it for that reason.

GUMMOW J:   Order 58 seems to be talking about proceedings by originating summons.

HAYNE J:   At page 2 of the appeal book it is “UPON the application of the Applicant by Ex Parte Notice of Originating Motion”.  We might have to join up the dots a bit more closely to get us into Order 58 rule 23 of the Rules, I think.

MR WILLIAMS:   Yes.  I am not suggesting this application is made – in fact, on the contrary, it was not made under Order 58 rule 23.  I am using Order 58 rule 23 as an example of the limits on the capacity of the court to vary.  You cannot have a rerun of every application every time you want it.  In respect of the capacity to review an ex parte order, the case of Bell Group NV (In liq) v Aspinall, referred to in footnote 35 of our submissions, sets out some of the limits.  There must be material non‑disclosure or there must be new facts or there must be a lack of jurisdiction.  There is reference to that case in the Bennett & Co Case at paragraphs 62 and 64.

Mr Staples has drawn my attention to Order 59 rule 7 which makes Order 58 rules 22 to 28 with any necessary changes apply in relation to an application in chambers under the order in the same way as they apply to an application made by originating summons. 

GUMMOW J:   What was that rule again, Mr Williams?

MR WILLIAMS:   Order 59 rule 7.

GLEESON CJ:   So much can be done ex parte under this procedure.  Presumably the defendant is going to get at least one opportunity to speak to the orders, to seek to have them modified.

MR WILLIAMS:   That is up to the respondent in general terms.  It has not been formally decided by the Supreme Court that Order 58 rule 23 applies, although it has been discussed in both the Bennett & Co judgment and in the Gypsy Jokers’ Case.  Another avenue of possible review is in an appeal.  Again, the Supreme Court has not formally decided that an appeal does lie, but again in the Gypsy Jokers’ Case that was raised as Justice Templeman expressed it as a possibility.

GLEESON CJ:   Suppose a freezing order is made against a particular piece of property ex parte and somebody who is not an alleged criminal wants to say, “Hang on, that’s not his property; that’s my property”.  How is that done?

MR WILLIAMS:   That, I think, is done under the objection procedure.  There may be other methods, such as just issuing a writ.  People who are known to have an interest, the DPP is obliged to serve notice on as to the making of the order and that is the method under the Act whereby they have an opportunity to commence objection proceedings. 

CRENNAN J:   What about section 16(3) of the Act?  Would the respondent take action in respect of that in objection proceedings or otherwise?

MR WILLIAMS:   Section 16 of the Confiscations Act?

CRENNAN J:   Yes.

MR WILLIAMS:   That seems to relate to a criminal benefits declaration hearing, not to a freezing.  If I am reading the right section, it changes the onus of proof at that hearing.

CRENNAN J:   If a respondent has an objection to, say, a disproportion between the amount which is the subject of the application for confiscation and perhaps the upper amount that may be available in respect of the charges, how does the respondent ventilate that concern, having regard to the ex parte nature of the original proceedings?

MR WILLIAMS:   What has happened up to now with a respondent having an issue with an order is that they have applied for a variation.  It has been done two or three times in this case, but there are other, as I mentioned ‑ ‑ ‑

GLEESON CJ:   Applied under section 45.

MR WILLIAMS:   Yes.  Now, I think it was Justice Hayne pointed out and we accepted that paragraph 37 in the submissions that there is a discretion in the making of a freezing order.  I think that arises directly out of the Interpretation Act which says “may” means a discretion and “shall” means an obligation.  In exercising that direction we say that the Court should recognise the proceedings are proceedings in the public interest and on that basis public interest has a relevance that should be taken into account.

GUMMOW J:   Public interest has a number of aspects, one of which is procedural fairness.

MR WILLIAMS:   That is true.

HAYNE J:   Consideration of the kind mentioned by Justice Isaacs in Thomas Edison v Bullock 15 CLR 679, particularly at 682, about the obligations of the party applying ex parte, namely, an obligation:

unless he supplies the place of the absent party to the extent of bringing forward all the material facts which that party would presumably have brought forward in his defence to that application.

MR WILLIAMS:   Yes.  Well, I have already accepted that material non‑disclosure would be a good ground for seeking a variation.

GLEESON CJ:   Mr Williams, we know that in the parliamentary history there was a specific reference to legal expenses.  Was anything said as to why they changed the legislation in relation to undertakings as to damages?

MR WILLIAMS:   Yes.  Could I come to that?  The President expressly referred to the Parliamentary Secretary’s second reading speech in the explanatory notes to the Bill.  As to exactly why, I do not think those references indicate the reasons, but they indicate the intention. 

Now, looking at sections 43 and 45, we would submit that a freezing order and matters dealt with in the five subparagraphs of section 45 are the only sort of orders that could be made.  Sections 48 and 49, which Mr Bennett was taking you to, deal with the duration and the discharge of freezing orders.  Our submission in relation to those is that these are the only circumstances in which a freezing order can be enforced or can be discharged.

On the question of the injunctions, the appellant’s written submissions rely significantly on freezing orders being not in the nature of injunctions but actually injunctions for leading him into provisions of the Supreme Court Act and Rules.  Now, this issue has been considered by Justice Roberts‑Smith at paragraphs 39 to 43 in his judgment.  He says:

The orders made were in the nature of interlocutory injunctions.  That and the other authorities to which I have been referred, all concern the principles and rules which apply to injunctions.  There is no dispute about those.  The question is whether they apply to freezing orders under the statutory regime.

In my opinion they do not, and the argument that they do, is misconceived.

The purpose of the Act is to establish a quite specific and detailed regime for the freezing and subsequent disposition of –

and he says –

unlawfully acquired property.

I think he should be saying something like “crime‑related” because he is talking in general terms and not one specific aspect.

The legislation states it to be an Act to provide (inter alia) for the confiscation of property acquired as a result of, or used for, criminal activity, or the profits of crime and other property.

There are provisions which enable the use of frozen property to meet liabilities (eg s 26 and s 52).  Part 7 of the Act contains provisions relating to the management of seized, frozen and confiscat[ed] property.

It would be entirely inconsistent with the purpose and objects of the Act and the detailed regime established by it, to regard freezing orders as merely a form of statutory injunction and subject to the same rules and principles as ordinarily apply to injunctions.

The President, Justice Steytler, did not deal with the question of a statutory regime directly except where he briefly stated in a part of a sentence at paragraph 29, “However, these orders are creatures of statute”, but what he held in examining the Act we submit is completely consistent with a view similar to that of Justice Roberts‑Smith.  Justice Pullin in the Court of Appeal, on the other hand, equated the freezing order with an interlocutory injunction or a Mareva order.  At page 69 he somewhat elliptically says in the last two sentences:

Just as the courts of equity usually consider it necessary to impose a condition that the plaintiff give an undertaking as to damages as the price of an injunction, likewise, in my opinion, it would usually be necessary if the court is to make a freezing order.  A freezing order is a statutory version of an interlocutory injunction . . . it serves the same purpose as a Mareva order –

Neither of those matters, in our submission, make it an injunction within the meaning of the Supreme Court Act. Before Justice Roberts‑Smith, and here, the appellant relies on section 25(9) of the Supreme Court Act which is one of the rules of law under the Judicature Act relating to injunctions and receivers.  Like all the provisions in sections 24 and 25, they are to be treated as ancillary to other statutes where other statutes are relevant.  In this case we would say that before you can go to look at anything in sections 24 or 25 you must examine the intention in the Confiscation Act.  In some cases it will slip through and in other cases it will not.

Can I turn then to undertakings as to damages.  In general terms the reasons of Justice Steytler in holding that there was no power to require an undertaking involves three propositions.  First he says from the legislative history of the predecessor Act and looking at its counterparts in other jurisdictions where in all but South Australia there is express provision for undertakings, he says that the legislature deliberately chose in framing the Act not to give the Court the power to impose an undertaking.

GUMMOW J:   There is nothing in the Supreme Court Act about a power to require an undertaking, is there, in these general sections in the Supreme Court Act, the judicature sections about injunctions?

MR WILLIAMS:   Well, I think Justice Pullin relies on the fact that he thinks section 24(7) applies.  That is the provision dealing with remedies as to which terms and conditions may be applied.  “Remedies” does not seem to be quite the word to use in respect of a statutory freezing order.  It certainly was not addressed by Justice Pullin in his judgment ‑ ‑ ‑

GLEESON CJ:   But the statutes that provide for the grant of injunctions, for example, in most jurisdictions – and we were looking at the Tasmanian one the other day – simply say an injunction may be granted where it is just and convenient to do so, but that has been held repeatedly to import principles and it is hard to think of a more obvious example than the requirement of an undertaking as to damages in the case of an interlocutory injunction.  That requirement is usually not expressly referred to in the provisions that confer jurisdiction to grant interlocutory injunctions.

MR WILLIAMS:   That is probably a result of history.  According to Justice Pullin’s judgment, Sir George Jessel said that Vice‑Chancellor Knight Bruce was the one who invented them.

GUMMOW J:   As a matter of practice really.

MR WILLIAMS:   So it came up as a matter of practice before it was necessary to invite the legislature to ‑ ‑ ‑

GUMMOW J:   That is right.  The question then is:  what is imported by the use of this word “may” in this particular section 43?  It is not really a question of seeking to find some express conferral of a power.  That is not the way this law has grown up.

GLEESON CJ:   You have to contend, do you not, for a negative implication?  No judge has power to make anybody give an undertaking.  We not uncommonly grant special leave on the basis that particular undertakings as to costs will be given, but we cannot make people give those undertakings.  All we can do is say, “You are not going to get special leave unless you give the undertaking”.

MR WILLIAMS:   That is right.

GLEESON CJ:   So you contend, as I understand it, for the proposition that there is implied in section 43 an exclusion of a power to ask for such an undertaking.

MR WILLIAMS:   Yes, and we do that for the same sort of reasons as Justice Steytler reached that conclusion, the first being the history of the legislation and corresponding legislation.  He deals with that in paragraphs 29 to 33 but the ‑ ‑ ‑

GLEESON CJ:   Where does he deal with this legislative history?

MR WILLIAMS:   Paragraph 30.

GLEESON CJ:   I might have misunderstood you but I thought you said a little earlier that there was something said in Parliament about this.

MR WILLIAMS:   I am sorry, that was in relation to costs.

GLEESON CJ:   So the implication is based upon the previous presence and the present absence?

MR WILLIAMS:   Yes, and the presence in ‑ ‑ ‑

GLEESON CJ:   The past presence and the present absence.

MR WILLIAMS:   Yes.

KIRBY J:   The reference to the costs in paragraph 95 in Justice Pullin’s reasons, I think.

MR WILLIAMS: Yes. Could I come to costs? The second proposition arising out of Justice Douglas dealing with the undertaking arises out of section 137 of the Act. He says it is difficult to see what purpose would be served when the DPP and the State are not liable for anything done in good faith for carrying the Act into effect, and then he deals with that in paragraph 31 starting in the second sentence. Then the third proposition is in response to the present appellant’s, and then appellant’s, submission that section 102(1) imports the operation of the Rules of the Supreme Court and in particular Order 52 rule 9 which requires the court to condition interlocutory injunction in general terms on undertakings.

GLEESON CJ:   I would just like to understand that section 137 point a little better than I do at the moment.  Is the proposition that section 137 would render an undertaking as to damages nugatory? 

MR WILLIAMS:   It uses no purpose, I think, but, yes.

GLEESON CJ:   Or futile?

MR WILLIAMS:   Yes.

GLEESON CJ:   Is his proposition that if you extracted an undertaking as to damages and then the occasion for calling upon that undertaking were to arise the State would simply point to section 137 and say, “Go away”?

MR WILLIAMS:   I think what it does is imply that it should not be given or should not be required.  He refers to the fact that section 137 refers to actions in good faith and said that the implication therefore is that it can only be required in a situation of bad faith, which is a pretty ridiculous situation to be contemplating, making a freezing order in which the DPP is going to be acting in bad faith.  But Justice Pullin dealt with section 137 at paragraph 84.  He said:

It is argued that if the DPP cannot be made liable for anything done or default made in good faith for the purpose of carrying the Act into effect, then it would have no liability under an undertaking as to damages and therefore there is no point in requiring it.  In my opinion, the existence of section 137 is of no assistance to the DPP ‑

which is a pretty unusual proposition –

If the DPP gives an undertaking as to damages and the freezing order is discharged after the objection proceedings, then provided that the appellant was able to prove that he suffered loss, and compensation was assessed by the Court, the DPP could not refuse to pay that compensation.  Such a default would not be a default “in good faith” for the purpose of carrying the Act into effect.

That is somewhat tortured reasoning, in our respectful view, and it gives no weight whatever to the terms of section 137 itself. 

GLEESON CJ:   But a possible point of view is that the kind of liability that would arise under an undertaking as to damages is not liability for something done or liability for some default made within the meaning of section 137.  It is a different kind of liability altogether.

GUMMOW J:   Sections like 137 occur in various statutes.  One of them in the New South Wales water legislation we looked in Puntoriero 199 CLR 575 and, as the Chief Justice indicates, those sections which are protective of local government authorities and public bodies have a rather different focus than disobeying an undertaking to the court, I think. I do not think the local council turns up and says, “We gave the undertaking but we now rely on our local equivalent of that section”, and tell you to clear off.

MR WILLIAMS:   That may be the case in other statutes but in this case it seems to fit.  “A person on whom this Act confers a function”, and the DPP certainly has plenty of functions under the Act.  In fact, in the DPP Act, section 16(3), he has the function expressly conferred on him of, in effect, administering it.

GLEESON CJ:   This may indicate the importance of that earlier discussion that we had with Mr Bennett about who would give the undertaking as to damages. 

MR WILLIAMS:   In this case no person on whom a function is conferred is liable for actions in good faith in carrying the Act into effect and the State is not liable for the same reasons.  If the DPP is immune, even if he has an indemnity and the State is immune, where does that take you?

GUMMOW J:   Why is the State immune?

MR WILLIAMS:   Because section 137 says so.

GUMMOW J:   But if we are in federal jurisdiction, we are in section 64 of the Judiciary Act, are we not, Maguire v Simpson territory and Sir Anthony Mason’s judgment in Fairfax?

MR WILLIAMS:   I am not sure I follow that.

GUMMOW J:   The State would be giving the undertaking and the State, in respect of that undertaking, would be in no more privileged position than a citizen.  That is the idea of section 64.  That is one of the important reasons why you need to know what jurisdiction you are in and Maguire v Simpson holds that section 64 applies to States when they are in federal jurisdiction.  It lifts up a level, as it were. 

GLEESON CJ:   Presumably any judge who was minded to require an undertaking as to damages as a condition of making an order would want to satisfy himself or herself that the person proffering the undertaking could measure up to it.

MR WILLIAMS:   Yes.  In the case of the State that would normally not be necessary.

HAYNE J:   Another aspect of this same area for debate is that there is, at least at first sight, some disconformity between the ordinary terms of an undertaking as to damages which – to undertake to pay the damages that the defendants shall have sustained, if any, by reason of the order which the plaintiff ought to pay, that is damages sustained by reason of the order, and there seems to be a considerable disconformity between that and the way in which 137 is cast, which rather suggests that the two subject matters are not intersecting in any relevant way. 

Section 137 is concerned with the officer who, having seized the property, is later sued by the disgruntled person against whom the order has been made for trespass and, for good measure, that disgruntled person sues not only the officer who seized it, but also the State.  Section 137 may provide an answer to that sort of case, but it is not instantly apparent to me why it provides an answer to the undertaking issue.

MR WILLIAMS:   Well, if the consequence of the freezing order is that because of the conduct of the DPP in seeking it, the DPP and the State would ordinarily be liable in damages, it is our submission that it is default made by the person in good faith.

HAYNE J:   Let it be assumed a freezing order is made in respect of a parcel of shares, let it further be assumed that the freezing order ultimately is dissolved or has no effect for whatever reason.  If there is an undertaking as to damages, may not the person whose shares were thus frozen later assert that had they not been frozen, shares would have been realised either without loss or at a gain or whatever the facts may be?  May that not be damage of a kind which follows from the order that might – it might not – be recoverable under an undertaking as to damages?

MR WILLIAMS: That would be a pretty special case, one would think, unless it was known what the intention was. I will turn to the third proposition arising out of Justice Steytler’s holdings. This relates to section 102. He deals with it in paragraph 32:

Counsel for the applicant urged upon us the proposition (also urged upon the primary Judge) that the omission in the Act of any reference to an undertaking as to damages was brought about only because s 102(1) of the Act provides that proceedings on an application under the Act are taken to be civil proceedings “for all purposes”. He submitted that this provision imports the operation of the Rules of the Supreme Court 1971 (WA), including O 52 r 9 . . . 

I am unable to accept that s 102 has that effect. If the legislature had intended to empower the Court to require the giving of an undertaking as to damages, it would, in my opinion, have done so by way of an express provision, as it did in the repealed Act.

Then he sets out what he sees as the limited purpose of section 102 to make that proceedings to be taken as civil and not criminal. In paragraph 34 Justice Steytler wrapped up all three of the propositions which he in effect relied upon to reach his conclusion and then for good measure in paragraph 35 he added that:

if I am wrong in my construction of the Act, and if it is open to the Court to require an undertaking, that undertaking would, given the terms of s 137, have to be required from the State and not, as ground 1 of the grounds of appeal contends, from the DPP.  Also, the existence of s 137 of the Act would be a “a clear pointer in the exercise of the discretion” in circumstances in which, as in this case, there is no allegation of bad faith –

He is using section 137 there in a completely different role, pointing to, on the basis of his construction of the Act, your Honour, a matter relevant to discretion.

GLEESON CJ:   Do we happen to know one way or the other whether in those jurisdictions, which is most jurisdictions, where the statute empowers a requirement for an undertaking such an undertaking is required as a matter of routine or only in special cases.  Is there any authority on that?

MR WILLIAMS:   No, we do not know the practice in other States.  Justice Roberts‑Smith took similar views to the President on the first and third propositions in his judgments, respectively at paragraphs 44 and 45, but he had a further ground for holding there was no power to require an undertaking and this is the special statutory regime point which I mentioned Justice Steytler was consistent with but did not actually express.

In paragraph 55 of our submissions we cite a passage from Thomson Australian Holdings.  A couple of sentences of that are worth reference.  In the end of the first paragraph:

When a specific statute which invests the Court with jurisdiction in matters of a particular class does so in such a way as to limit the power of the Court to grant relief of a particular kind, there is no basis for transcending that limitation by recourse to the general provisions of the Federal Court of Australia Act…

At the end:

The inference is irresistible –

a very Masonesque expression –

that Parliament looked upon s80 as a complete and comprehensive statement of the circumstances in which injunctions might be granted in respect of relief sought under the Trade Practices Act.”

GLEESON CJ:   Do you have an argument based on that line of country that was considered in Hoffmann‑La Roche about the position of the Crown as an applicant for interlocutory injunctions?

MR WILLIAMS:   I was not going to say very much about it except to highlight the reference to it in Justice Pullin’s judgment, but it has been referred to in two Victorian cases, one of which is cited in Justice Pullin’s judgment and the other which – I do not have the reference immediately to hand but it is a decision of Justice Gummow referred to in McCleary’s Case where he said that the decision of the majority in Hoffman‑La Roche was the law of Australia.

KIRBY J:   But there is a bit of a difficulty here though, is there not, in that you have defined the proceedings by statute as civil and in fact that strikes a blow at the suggestion that this is really to be characterised as pursuing criminal objectives.

MR WILLIAMS:   Well, it may be characterised as civil, but it is also, in our submission, to be characterised as a public interest statute and the pursuit of a confiscation order and a freezing order is done in the public interest.

GLEESON CJ:   But Hoffmann-La Roche was litigation about the price of valium and ministerial orders or directions about that.

MR WILLIAMS:   Well, the complication in that case was the fact that the government was the majority purchaser of the valium.

GLEESON CJ:   Yes, there was a monopoly buyer facing monopoly seller.  I wondered whether one of your arguments was that at the very least the existence of the kind of difficulty that was considered in Hoffmann-La Roche demonstrates that as a matter of public policy there are two views on whether or not it is appropriate to call for undertakings and damages in situations like this with which we are concerned, and that might add to the significance of Parliament’s apparent change of direction when the new legislation was brought in.  It is the sort of thing that you would expect people to think about.

MR WILLIAMS:   Parliamentary Counsel to notice, yes, and governments to notice.  That actually is a logical proposition.  We saw Hoffmann‑La Roche as going more to the exercise of a discretion rather than a power, but ‑ ‑ ‑

GUMMOW J:   I think that is right.

MR WILLIAMS:   What we are concerned with here is the power, and it was on that basis - I was not planning to say a great deal about it, but the point your Honour the Chief Justice makes we would respectfully adopt.  It is similar to the view we take in relation to section 137.

KIRBY J:   On the other hand, if the statute is not entirely clear and if the Court reads into the statute or from other applicable statutes an obligation to give the undertaking, it would have the beneficial effect of making prosecutors (a) move more quickly than appears to have been the case in this case and (b) propose and shape orders that are less likely to get them into trouble on that undertaking at a later stage, because what has happened in this case, at least as I understand the facts at this stage, does not seem to be a model of a proper prosecutorial progression of a case and does seem to impose extremely burdensome obligations on the appellant.

MR WILIAMS:   Yes.

KIRBY J:   And his wife, by the way.

MR WILLIAMS:   I do not think we can argue in general terms with that but whose fault it is is another matter.  The application to adjourn the criminal proceedings was made by the accused.

KIRBY J:   When will he come to trial?  In a year?  Do you agree with that estimate?

MR WILLIAMS:   We cannot take it further than the next status conference for the charges is next June.

GLEESON CJ:   Has he applied for an expedited hearing?

MR WILLIAMS:   In June the Commonwealth will seek a listing.  Could I just make a few brief comments on the judgment of Justice Pullin?  In relation to the history he refers to the previous presence or the present absence and then says:

However, resort to the history is only necessary if there is some ambiguity.

We take issue with that.  I think Justice Kirby from his comment this morning may do so too but the books are littered with cases where courts have construed statutes by reference to statutes in materia, by looking at groups of statutes dealing with the same subject matter and I actually did find a case in which Lord Russell of Killowen said resort to history was only necessary if there is some ambiguity but it was a referencing craze on statute law and it was immediately followed by a raft of cases in which, obviously, that had not been followed.

But it seems logical, given the way Parliamentary Counsel operate, that reference ought to be made to statutes that are appropriately relevant whether they are predecessors and in the submissions we cite three cases where courts have referred to amending Acts as resulting in matters being treated as deliberately present or absent.

KIRBY J:   Yes.  I think Mr Bennett was a bit old fashioned in his attitude to statutory construction.  He is clinging to the old principles.  The world has moved on.

MR WILLIAMS: In relation to section 102, Justice Pullin said this brought in section 24(7) but my learned friend does not now rely on that. He deals with it in paragraph 72 and then goes on to refer to a range of provisions of the Supreme Court Act, some of which, we would not argue with, are relevant but they all had this issue of being subject to other legislation where other legislation is the source of jurisdiction.  Having gone in that direction he adopted the view that Order 52 rule 9 relating to undertakings did not apply, it would seem on the basis that freezing orders are not an injunction.  He took the point in paragraph 75 that:

Under the now repealed Crimes (Confiscation of Profits) Act there had been no provision like s 102(1) of the Act -

and that was the reason why there had to be provision like section 102.

GLEESON CJ:   When, under the previous legislation, the Victorian statute provided expressly for the possibility of undertakings as to damages, was it the practice of Victorian courts to ask for undertakings as to damages?

MR WILLIAMS:   I do not know and Mr Staples does not know either.  I would expect they would be asked for, whether they were granted I cannot tell you. 

HAYNE J:   Again, on this question of undertakings, can I draw attention to the following provisions of the Director of Public Prosecutions Act which bear upon the power of the Director to give an undertaking on behalf of the State.  First, section 10(1)(a) provides that:

The functions of the Director –

(a)      are performed on behalf of the State but may be performed in the name of the office of the Director –

Section 16, particularly section 16(3) gives explicitly the function of taking any proceedings “that arise under the Confiscation Act”, so it is an explicit function of the Director to do so and then section 20(1) gives the Director:

power to do all things that are necessary or convenient to be done for the purpose of performing the functions of the Director –

which, in the light of section 10(1)(a), the functions “are performed on behalf of the State”, might be open to the reading that the Director has power on behalf of the State to offer an undertaking as to damages.  What do you say about that understanding of the Director’s Act?

MR WILLIAMS:   That might become relevant if our argument that they are deliberately excluded is not upheld.  If we are wrong you probably need only go to section 16(3) which confers functions on the “Director to take any proceedings” and presumably anything involved in that.  As to section 24(7), we simply invite attention to the explanation by Justice Gibbs, as he then was, in Adam P Male as to the role of that provision in the judicature legislation.  It is not a jurisdiction in conferring provision.  It confers powers in relation to jurisdiction already existing.  In relation to section 137, Justice Pullin continued with his unusual propositions.  He says it:

is of no assistance to the DPP.  If the DPP gives an undertaking as to damages and the freezing order is discharged after the objection proceedings, then provided that the appellant was able to prove that he suffered loss, and compensation was assessed by the Court, the DPP could not refuse to pay that compensation. 

I have referred to this previously. 

I have mentioned our view of Hoffmann-La Roche.  It is interesting that Justice Pullin rejects the history and says section 137 “is of no assistance”.  He declined to follow the reasoning in the Lloyd-Wright Case.  He rejected the majority in Hoffmann-La Roche and adopted the dissent of Lord Wilberforce.

In relation to legal costs, I think I can be pretty brief on this.  There is really only one proposition in Justice Steytler’s judgment for holding that there is no power to unfreeze funds for legal costs and that is that the legislature did it deliberately.  It removed a power that was previously there.  He supports this on three bases.  At paragraphs 38 to 39 he says living and business expenses are referred to in section 45 and legal costs are not.  In 39 he says the previous Act distinguished living and business expenses from:

reasonable costs and expenses of the person defending any criminal charge.

Then in 40 he refers to the resort to the travaux preparatoire, the second reading speech of the parliamentary secretary who introduced the Bill and the explanatory notes to the Bill.  I am not sure whether your Honours have the explanatory notes to the Bill.  I think you have the ‑ ‑ ‑

GLEESON CJ:   I think I just saw a reference to it in the reasons for judgment.

MR WILLIAMS:   Yes, we can provide copies.

GLEESON CJ:   Thank you.  I take it this does not deal with undertakings of damages at all?

MR WILLIAMS:   I do not think so.

GLEESON CJ:   It used to be a source of great consternation in New South Wales that people charged with criminal offences would use all their assets to spend on their lawyers at committal proceedings and then apply for legal aid at the trial.

MR WILLIAMS:   It was only in New South Wales where that was a concern, yes.  Looking at those explanatory notes, I remember hearing Chief Justice Brennan being very surprised to learn that they were not written by Parliamentary Counsel.

GLEESON CJ:   What page does it deal with the legal costs?

MR WILLIAMS:   Page 28, my learned friend tells – it is at about point 4 on the page, page 28.

GLEESON CJ:   Mr Williams, you or Mr Bennett may already have mentioned this and I might just have forgotten it, but what is the provision in the Act that produces the result that if at the end of all this Mr Bennett’s client is acquitted, he gets his property back?

MR WILLIAMS:   Paragraphs 48 and 49, I think.

KIRBY J:   There is something disquieting though about the State charging a person with serious criminal offences, then taking away the person’s funds to challenge those offences, leaving them to whatever might be done in the field of public legal aid, in which we are told there is a dispute.  It is contrary, or at least arguably contrary to a fundamental right expressed in the international covenant, and though it is true that the parliamentary history and maybe the first reading of the language support your contention, in fact the language is left with words of generality which, on one reading, can embrace this rather important right that people have to use their money to defend themselves.  I remember Chief Justice Barwick saying many times and he said it in judgments that even the animal when cornered is entitled to protect itself and defend itself.

MR WILLIAMS:   Your Honour used the expression “their money”.  In this ‑ ‑ ‑

KIRBY J:   That still has to be determined that it is not their money, by a court of law, at least.

MR WILLIAMS:   Well, it has been determined on the balance of probabilities that there is a criminal benefit.

KIRBY J:   I suppose all I am saying to you is you would not struggle mightily to take a different view of the language that Parliament has left because at least that does preserve what is a fairly fundamental entitlement of people which is to use their property to protect themselves, defend themselves, when they are facing serious criminal charges.  They have a Dietrich right but that is going to be a much lesser entitlement than they otherwise would have.

MR WILLIAMS:   Well, it is not every case in which the DPP is going to seek an order covering all property.

KIRBY J:   Well, I suppose this integrated with the first point of the undertaking because if you encourage undertakings as to damages then that encourages the provision of that part of the fund that allows a person reasonable costs to defend themselves.  It is a less disquieting outcome.  It is a disquieting outcome to charge a person and then take away the fund with which they could defend themselves.  It does have a little bit of a ring of the Kafka situation.

MR WILLIAMS:   It is tough; I accept that.  But if that is what Parliament intended, that is what the law says.

KIRBY J:   Well, that is the question.

MR WILLIAMS:   We mention in the submissions the directions the ALRC report recommended.  Can I ask do you have copies of the Parliamentary Secretary’s second reading speech?  I assume they were - can I hand up copies of those.

GLEESON CJ:   Thank you.

MR WILLIAMS:   The relevant passage is at pages 1811 to 1812.  Can I give your Honours a reference to the two Victorian cases I mentioned that relate to the Hoffmann-La Roche?  The Justice Gobbo one is Soil Conservation Authority v Read [1979] VR 557 at 561 where he held that Hoffmann, and I quote “must be taken as laying down the law in the State of Victoria”.  Then the second one is referred to in Justice Pullin’s judgment, Optus Networks Pty Ltd v City of Boroondara [1997] 2 VR 330 to 334.

GUMMOW J:   You referred us to section 49, Mr Williams, as to the duration of the freezing order.  What connection does 49 have with the outcome of the criminal prosecution, as to the bringing to an end of the freezing order?

MR WILLIAMS:   It is 49(2)(c), I think.

GUMMOW J:   That talks about the other order.  That is the other order that you have to promise to make within 21 days and that takes you back to 15, I think.

GLEESON CJ:   This is still puzzling me, I must say.  If and when in the fullness of time Mr Bennett’s client is triumphantly acquitted and leaves Court without a stain on his character, as they say, when is he going to get his money back?

MR WILLIAMS:   My recollection is straightaway, but I cannot just immediately jump to the ‑ ‑ ‑

HAYNE J:   Section 49(4) deals in part with the problem, perhaps not wholly, to the extent that the order is made “on the basis that a person has been or is likely to be charged”, the order stops being in force, amongst other things, when:

(b)      the charge against the person is disposed of; [or]

(c)the charge is finally determined, but the person is not declared to be a drug trafficker –

I assume (4)(b) might have some operation in this case.

MR WILLIAMS:   I think it is actually (3)(c):

A freezing order for property (except registrable real property) made under section 43(3) on the basis that an application for a declaration or another order has been or is likely to be made stops being in force as soon as one of the following  happens –

. . . 

(c)the application for the declaration or other order is finally determined, but the court does not make the declaration or other order ‑ ‑ ‑

HEYDON J:   Mr Mansfield’s property will return independently of the criminal prosecution if he wins the civil case, is that not so?

MR WILLIAMS:   The property is frozen only under a civil case.

GLEESON CJ:   That is what is puzzling me.  We were talking earlier about the possibility that the civil case would come on for hearing before the criminal case.  What if he loses the civil case and is acquitted in the criminal case?

MR WILLIAMS:   That is not impossible on the basis of one being on the balance of probabilities and the other being on ‑ ‑ ‑

GLEESON CJ:   Differing evidence in different cases.  He might win the criminal case because some witness drops dead or is run over by a bus or forgets something or ‑ ‑ ‑

MR WILLIAMS:   It would not be the first time that someone has either got off on a criminal case or a civil case and been caught on the other.

KIRBY J:   At the rate the case is going, he might die of old age.

GLEESON CJ:   It is not the scheme of this legislation that the property is, as it were, preserved intact awaiting the final outcome of the criminal charges.  Indeed, there may never be any final outcome of the criminal charges.

MR WILLIAMS:   That is right.  There is a range – the circumstances are listed in the subsections in 48 and 49.

GLEESON CJ:   It may be some of the people who have a brush with the law of Victoria have at least enough money for a plane ticket.

HAYNE J:   It perhaps explains the Parliamentary Secretary’s statement on the second reading speech that:

More importantly, it is not relevant whether or not the person has committed any offence.  The clear intention of the Bill is to deprive people of wealth which has been unlawfully acquired.  In this regard, the Bill requires a person to establish that the ultimate source of his or her wealth was lawful.

MR WILLIAMS:   The Commissioner of Taxation has had a power to tax people on that basis for a very long time.

HAYNE J:   Just so.

MR WILLIAMS:   Can I just deal briefly, having looked at Justice Steytler on costs, look at the other judges.  Justice Roberts-Smith referred to section 45 and then in paragraphs 53 to 56 he reached a ‑ ‑ ‑

KIRBY J:   What page is this?

MR WILLIAMS:   Justice Roberts-Smith’s judgment. 

KIRBY J:   Which paragraph are you taking us to?

MR WILLIAMS:   It is paragraphs 53 to 56.  He refers in 52 to section 45 and sets it out and then says:

Given the express authorisation for the variation of freezing orders to enable expenditure to meet the reasonable living and business expenses for the owner of the property, I consider it follows inevitably that the legislature intended that the release of frozen funds be confined to matters of that kind.

He then refers to the second reading speech.  In paragraph 56:

There is simply no power under the Act enabling an order to be made for the release of funds for the purpose sought.

Justice Pullin in his judgment really ducked dealing with the issue of costs directly because he said there was power in making an order under section 5 to exclude enough property to cater for legal costs, but he went further in paragraph 99 by saying:

There is nothing in the Act which suggests a person should not be permitted to have access to funds for legal representation in relation to the objection proceedings or criminal proceedings.

Then immediately before that, in 98 he says:

In exempting some of the property from the freezing order, the Court could provide that it be exempt on condition that it be spent in a particular way, ie, for legal expenses, and that there should be some machinery for ensuring the money is spent only for that purpose.

He only can get to that point if he can bring in the capacity to impose conditions that are not referred to in section 43 or section 45.  We say he cannot get there.  In fact, the real issue in relation to legal costs is not whether something could be done at the time Justice McKechnie had hold of the matter; it is at the time when a variation is sought.

GLEESON CJ:   Once you get in with an objection, can you produce the consequence, if you want to produce the consequence, that the objection will never be finally determined until after the criminal trial?

MR WILLIAMS:   Can you – is there ‑ ‑ ‑

GLEESON CJ:   If you wanted to do that.

MR WILLIAMS:   I do not think there is any provision in the Act, but I think on the contrary there is a provision that says these proceedings can proceed even if criminal proceedings are on foot, but it would be under the control of the judge and the parties.

GLEESON CJ:   Yes, but if Mr Bennett’s client said, “Look, I want to chance my arm on a criminal trial and I want trial by jury.  You have accused me of a criminal offence and I want my guilt or innocence to be determined by a jury.  I have put in an objection to what is going on in relation to my property.  I would just like you to now stand the objection over until after my criminal trial and I would like an expedited hearing of my criminal trial”?

MR WILLIAMS:   Well, he can ask for it, but I do not know that there is power for him to require it.

GLEESON CJ:   Cannot require it, but it might be a reasonable assumption that, other things being equal, a judge would accede to that.

MR WILLIAMS:   I would expect so.

HAYNE J:   Let it be assumed it happens and he is acquitted at his trial, is it still open to the DPP to say, “Still prove to the court on the balance of probabilities that that which you have is lawfully acquired?”  That is can the DPP maintain in the face of the acquittal the civil proceedings which throw the onus on the defendant to prove on balance of probabilities lawfully acquired?

MR WILLIAMS:   Well, that happened to O.J. Simpson, but it has happened in other cases.  In fact, according to Justice Ipp in McCleary, which my learned friend has cited, it is settled law that a verdict of not guilty does not necessarily mean that the accused person was innocent:  see DPP v Shannon [1975] AC 717 at 772.

GLEESON CJ:   What happens in these cases where people miss out on an inheritance under wills on the basis that they have murdered the testator?  They might be acquitted of murder but still lose the probate suit.

HAYNE J:   Try the murder case on affidavits; they are fun.

MR WILLIAMS:   There is a High Court case cited there too:  R v Darby (1982) 148 CLR 668 and then there is Helton v Allen, which means that even if a person was acquitted in criminal proceedings, another person is not prevented from attempting to prove on balance probabilities that they were guilty.

GLEESON CJ:   It would not do you much good then, under this Act, to be able to demonstrate that you obtained all that property as a result of tax evasion and not drug dealing or insider trading?

MR WILLIAMS:   No.  Well,…..recovery of tax are fairly draconian too.  Unless there is anything else your Honours wish me to address, they are our submissions.

GLEESON CJ:   Thank you, Mr Williams.  Yes, Mr Bennett.

MR BENNETT:   In response to your Honour the Chief Justice’s question a moment ago, it appears that the legislature introduced section 104 to stop a person the subject of a freezing order saying, “I would like an expedited criminal trial and could you just stand my objection proceedings over until I have determined my innocence in the criminal proceedings”, because section 104 specifically provides:

The fact that criminal proceedings under this Act or any other enactment have been instituted or have commenced is not a ground on which the court may stay proceedings –

So you are left then with a race between the civil proceedings and the criminal proceedings to ‑ ‑ ‑

GLEESON CJ:   And some interesting tactical decisions to make. 

KIRBY J:   Without much money to make them.

MR BENNETT:   That is right, and delay is cost and we do not have much money to deal with that.  The answer to your Honour Justice Hayne’s question is the fact that you are acquitted means nothing under this form of legislation.  In respect of this particular application for criminal benefits, it can be maintained irrespective of whether or not Mr Mansfield walks out of court without a stain on his reputation, in a criminal sense it would be maintained and the assets would remain frozen until the civil proceedings are dealt with.  Though the criminal proceedings and the outcome of the criminal proceedings are of no relevance for Mr Mansfield’s benefit, they are of relevance and the transcript of the criminal proceedings is admissible in the civil proceedings for the benefit of the Director but not for the benefit of ‑ ‑ ‑

KIRBY J:   But not vice versa?

MR BENNETT:   No.

GLEESON CJ:   Does that same general scheme apply in relation to the federal legislation?

MR BENNETT:   I cannot answer with confidence on that point but I think so in relation to that.  I can just deal with the evidentiary matters ‑ ‑ ‑

HAYNE J:   Just before you part from that, the Commonwealth legislation owes its form, at least in part, does it not, to international obligations which Australia has undertaken?

MR BENNETT:   Yes, which do not deal specifically with either the question of legal costs or undertakings.  The relevant section is section 107 which provides:

In any proceedings under this Act in relation to property, if a person has been convicted of the relevant confiscation offence, the court may have regard to any or all of the following –

If you are acquitted, the court, obviously by inference, cannot.

Can I deal with the fallacy in relation to legal costs in the respondent’s position that arose as an answer to questions from the Bench?  My friend conceded that it was possible for the judge at the first instance hearing on an application under section 43(3) to carve out property, to say out loud, to articulate or even to contemplate to himself, “They’ve bitten off more than they need.  I’ll leave the boat because this person will need money to defend himself”.  Now, if he could do that under section 43(3), then he ought to be able to do that on an application for variation when the facts are presented to him or when the person the subject of the order has the first opportunity to go back and present his answering case to what is otherwise an ex parte in camera order.

Now, my friend says you cannot do that and you should not allow him to do that because the assets do not belong to him.  The fallacy in that is that that is a reversal of the presumption of innocence.  At the point of time in which the freezing orders are contemplated we are not dealing with the question of whether or not the property is confiscated and the asset always belongs to him because the effect of the criminal benefits declaration is merely to create a civil debt enforceable in a court of competent jurisdiction.

KIRBY J:   There is no value in saying this is undermining the presumption of innocence because the presumption of innocence would speak for leaving the property completely in the owner.  So the purpose of this legislation is to, if not undermine, at least to qualify the presumption of innocence, and for a good practical reason, that if you wait – all the time you have been waiting for trial with all that money, it just might slip away.

MR BENNETT:   Entirely, but there is nothing wrong in principle with the concept of the freezing notices, providing the administration of them is done in a manner that is fair.  It is interesting my friend used the word in answer to debate with the Bench that the provisions in this Act are tough.  In using that expression he subconsciously echoed the terms of the Parliamentary Secretary in the second reading speech at page 8614 of the speech.  The Secretary says:

Members, through their study of the Bill and this speech, will appreciate that the Bill has a number of innovative features.  Some of them are tough.  They are all necessary, and they are fair.

So the parliamentary intention was to enact a system that at least was fair, according to the Under Secretary who introduced it.  That is at about line D on that page.

KIRBY J:   You derive the parliamentary “intention” from the words of the statute, not from second reading speeches, ultimately.

MR BENNETT:   Yes.  I am reminded of the cartoon from Mr Geoffrey Pryor that hangs in the Bar Library on the 7th floor of this building about parliamentary intention which I could not copy for the purpose of submitting, but it just shows this Bench of this Court laughing and counsel saying they do not think much of parliamentary intention.  We agree that it is derived from the terms of the Act, but insofar as my friend says you need to construe this having regard to the fact that Parliament intended the provisions be tough, intended that they also should operate fairly, and it may be that if the Parliament intended that once the property is frozen, you cannot apply frozen property for legal costs – there is a statement of intent – then the relevant time in which the consideration should be given to legal costs is whether or not to freeze all or any part of the property and, if you do not freeze part of the property, then you provide for the costs without having to have recourse to the frozen property.

GLEESON CJ:   I suppose all these serious, and perhaps even draconian, consequences of the legislation are in practice reflected in the caution that primary judges exercise when asked to make freezing orders.

MR BENNETT:   I wish that were the case.  The practice was the subject of evidence before his Honour Justice Roberts‑Smith, or its submission by representatives on behalf of the Director.  If your Honours turned up page 182 of the appeal book, you will see that a Ms Low who appeared for the Director told his Honour what the practice was in Western Australia.  She says at lines 34 and 35:

The normal course in matters of this type is that the whole of the assets of a respondent are frozen, if the court grants such an order, and then as it becomes apparent that there are securities or that some third party may have an interest, objections are filed and the normal course is that the lawyers at the director’s office would make an assessment on an informal basis and if they are satisfied, then consent orders are obtained from this court splicing out bits and pieces that don’t form the corpus of the respondent’s assets.

So that is how it is done in Western Australia:  freeze everything and then splice out bits and pieces on the informal assessment of lawyers at the Director’s office, which is different from the practice that your Honour Justice Hayne postulated in the hypothesis that you gave my friend of setting an outer limit.  I am saying that is a requirement of the obligation of counsel applying ex parte for an order, set the maximum amount and then limit the order to that fashion.  That is not done.  As Ms Low submitted to his Honour, you just freeze everything and then leave it to other people to come along and complain. 

Going back to the point which my friend said, the only answer that he could put to your Honours about why a trial judge or a first instance judge on an ex parte application cannot elect to freeze part of the property and not all of the property is the bootstraps argument of saying, “Well, that property that you are allowing him to spend is not his”.  It has always been our primary submission that it always remains the person’s.  He may have a debt to the State, but it is his property and it is not determined at that stage that there is a criminal benefit or that it is ultimately a prospect of success. 

The court can give a freezing order on the basis of advice that an application for a criminal benefits order will be made within 21 days.  That occurred here.  So there was not even an application for a criminal benefit before his Honour Justice McKechnie for him to assess prima facie our case, reasonable question to be tried, relative strength of the case, the extent of the criminal benefit – the charges had not been preferred.  He knew nothing of those matters.

Your Honour the Chief Justice asked my friend whether the party who is the respondent when it is served with an order, surely he must have an opportunity to be heard against that.  My friend did not expressly answer that as a proposition but relied instead on saying that the person, when he came to be heard, would need to be able to show some change of circumstance, new factor.  That is not the case.  We would say that under Order 58 the person who is the subject of an ex parte order has a right to have the matter reargued as an inter parte – opposed application and to test the basis, and that is a necessary aspect of it.

In relation to the concession that my friend made that in order to not require an undertaking it depends upon the implication of a negative limit on the court’s general exercise of power, my friend criticised Appeal Justice Pullin’s regard for section 24(7) of the Supreme Court Act in general terms saying that that was not a jurisdiction‑conveying section.  Section 24(7) does not pretend to confer a jurisdiction.  It provides that:

The Court, in the exercise of the jurisdiction vested in it by this Act –

which would include the jurisdiction to deal with this matter, we would say –

in every cause or matter pending before it, shall have power to grant, and shall grant, either absolutely or on such reasonable terms and conditions as shall seem just, all such remedies whatsoever ‑ ‑ ‑

KIRBY J:   What is that section again?

MR WILLIAMS: Section 24(7) of the Supreme Court Act 1935 (WA). So section 24(7) is not a jurisdiction‑conferring section; it is an empowering section empowering the court in the exercise of jurisdiction vested in it by some other Act or statute to grant remedies “on such reasonable terms and conditions as shall seem just” and a term that an undertaking be proffered, we would say, would be an appropriate term.

My friend supported the arguments of the President, Justice Steytler, in relation to the interpretation of section 137.  Your Honour Justice Gummow raised with my friend Pontoriero’s Case 199 CLR 575. In view of the time, if I can just give your Honours ‑ ‑ ‑

GUMMOW J:   Just by way of example, really.

MR BENNETT:   Yes, entirely, and your Honours Chief Justice Gleeson and Justice Gummow in your joint reasons at paragraphs 13 through to 15 deal with that.  Justice Callinan at a passage that goes from 110 to 113 and, in particular, 113, deals with the issue suggesting that section 137 should be strictly construed.  The sorts of things that section 137 is looking at are the types of matters that are contemplated by section 70 of the Act, where bank officers can be ordered to provide information ‑ ‑ ‑

GUMMOW J:   And these moneys being managed.

MR BENNETT:   Yes, suspension orders can be made as against financial institutions so accounts can be monitored in secrecy at various stages.  Those are matters where immunity from a suit for damage should be conferred on those persons but not where the State proffers, voluntarily, an undertaking.  In that regard, your Honour Justice Hayne pointed out the disconformity in language and we would, with respect, adopt that as a submission to say section 137 is a section directed to an entirely separate form of activity.

GUMMOW J:   Can I just ask you a question about the structure of section 43, which is still puzzling me a bit.  Section 43(8) in a way should be 43(1), should it not:

The court may make a freezing order for property if there are reasonable grounds for suspecting that the property is crime‑used or crime‑derived.

Is that not what had to be made out on this ex parte application?

MR BENNETT:   No, with respect.  If one goes back to section 4 and looks at confiscable property, you have five separate grounds of confiscable property:  unexplained wealth, criminal benefits – and that is where we are, we are in 4(b) – crime‑used property – the getaway car – crime‑derived property – “I took the proceeds of the bank robbery and I bought a place” – and a drug trafficker is everything.

GUMMOW J:   Just slow down a bit.  What are we looking at?

MR BENNETT:   We are looking at section 4 in the synopsis.  Does your Honour see that in the Act it distinguishes different categories?

GUMMOW J:   Yes.

MR BENNETT:   We are in the criminal benefits category at 4(b).  Now, what is deal with in 43(8) is categories 4(c) and (d), crime‑used and crime‑derived.  You…..forward to 146 and 148 to look at the definitions, and they are different matters:

property is crime‑used if –

(a)the property is or was used, or intended for use, directly or indirectly, in . . . the commission of an offence –

It has never been contended since 2002 that there is any claim made against Mansfield in relation to crime‑used property.  In 148, crime‑derived property is:

Property that is wholly or party derived or realised, directly or indirectly, form the commission of a confiscation –

whether or not anyone is charged.  You will see the examples of those without limiting the definition:

(a)      stolen property;

(b)property bought with or exchanged for crime‑derived property ‑ ‑ ‑

GUMMOW J:   I realise that but in a category B case, which you say you are, section 4(b), right, paragraph (b)?

MR BENNETT:   Yes.

GUMMOW J:   Where do we find in 43 any statement of the degree of satisfaction which the judicial officer must reach before making the order?

MR BENNETT:   You do not.  It is dealt with by 43(3) and it is hidden in the word “may” because “may” imports the general discretion.

GUMMOW J:   Is it a Briginshaw v Briginshaw degree of satisfaction or what?

MR BENNETT:   We would say it plainly has to be Briginshaw v Briginshaw, in the circumstances, but that is the only place you can find it.  There is no statement of the standard of satisfaction.  In the structure of 43, 43(1) is the interlocutory power, the monitoring order or the suspension order.  That is before you have found out whether or not you have a case and 43(3) is the benefits, 43(5) is the drug trafficking matter, 43(8) is the crime used and derived.  Unless there are any other matters I can assist, your Honour?

GUMMOW J:   Yes, there is.  You seem to be moving around from your draft notice of appeal.  The orders you seek on page 14 of your submissions do not square, do they, with your draft notice of appeal?  The draft notice of appeal on page 274 seeks, in effect, that your application for an undertaking be referred back for hearing?  Page 274, line 10.

MR BENNETT:   Yes, I have that, your Honour.

GUMMOW J:   On page 14 of your written submissions you want us to order that the freezing order itself will be set aside.

MR BENNETT:   If your Honour looks at page 15 of the submissions, we seek an order that our application that the freezing order be set aside be remitted to a single judge of the Supreme Court for hearing.

GUMMOW J:   Right, okay.

MR BENNETT:   It is poorly punctuated and I apologise for that.  That would have misled your Honour.

GLEESON CJ:   Thank you, Mr Bennett.  We will reserve our decision in this matter and we will adjourn until 10.00 am tomorrow.

AT 4.17 PM THE MATTER WAS ADJOURNED