McDermott, A.L.J. v The Director of Public Prosecutions

[1990] FCA 215

Re: ANDREW LAURENCE JAMES McDERMOTT
And: THE DIRECTOR OF PUBLIC PROSECUTIONS
No. ACT G16 of 1990
FED No. 215
Criminal Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
Neaves J.(1)

CATCHWORDS

Criminal Law - Proceeds of crime - Order against convicted person for payment of pecuniary penalty in respect of benefits derived from the commission of an offence - Order enforceable as an order for the recovery of a civil debt - Appeals pending against conviction and sentence and against making of pecuniary penalty order - Execution proposed against real property in which convicted person has an interest with others - Application for stay of proceedings by way of execution of pecuniary penalty order - Whether special circumstances shown - Conditions upon the grant of a stay order.

Proceeds of Crime Act 1987 (Cth), ss.4(3), 14(1), 15(2), 26(1), 100(2)

Federal Court of Australia Act 1976 (Cth), s.29

Federal Court Rules, Order 52, rule 17

HEARING

CANBERRA

#DATE 10:5:1990

Counsel for the appellant: Mr B.J. Salmon, QC and Mr B. Hull

Solicitors for the appellant: Allan R. Nelson and Co.

Counsel for the respondent: Mr S.G. Madden

ORDER

1. Conditionally upon the appellant undertaking to the Court in writing he will prosecute with all reasonable expedition the appeals pending in this Court in matters numbered ACT G 14 of 1990 and ACT G 16 of 1990 and further undertaking to the Court in writing that, pending the hearing and determination of those appeals, he will not, without leave of the Court, take any action, or authorise any other person to take any action, to sell, dispose of, encumber or otherwise deal with the property known as 24 Clarke Avenue, Battery Point in the State of Tasmania or his interest in that property, further proceedings by way of execution under the pecuniary penalty order made by the Supreme Court of the Australian Capital Territory on 9 March 1990 be stayed until the hearing and determination of the appeals against the appellant's conviction and sentence in respect of the offences for which he was snetenced on 9 March 1990 (Appeal numbered ACT G 14 of 1990) and against the pecuni8ary penalty order made on that date (Appeal numbered ACT G 16 of 1990) or until further order of this Court.

2. The costs of the motion, notice of which was given on 30 April 1990, be costs in the appeal numbered ACT G 16 of 1990.

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

JUDGE1

The appellant, Andrew Laurence James McDermott, has applied, by motion on notice, pursuant to s.29 of the Federal Court of Australia Act 1976 (Cth) and Order 52, rule 17 of the Federal Court Rules for an order that the execution of an order made by the Supreme Court of the Australian Capital Territory (Miles C.J.) on 9 March 1990 be stayed until further order of this Court.

1. The order of the Supreme Court was made upon an application by the respondent, the Director of Public Prosecutions, against the appellant under s.26(1) of the Proceeds of Crime Act 1987 (Cth). By that order the appellant is required to pay to the Commonwealth of Australia a pecuniary penalty in the sum of $22,330.19. The Supreme Court made that order immediately after passing sentence upon the appellant in respect of the following offences of which the appellant had been found guilty by a jury on 23 February 1990 -
   

(a) An offence against s.72 of the Crimes Act 1914 (Cth) that, being a Commonwealth officer in the Australian Fisheries Service within the Department of Primary Industry, he fraudulently and in breach of his duty made a false entry in a computer database, being the South East Trawl Boat Unit Register;

(b) An offence against s.73 of the Crimes Act 1914 (Cth) that, being a Commonwealth officer, he agreed to receive a certain sum of money for himself on an understanding that the exercise by him of his duty as a Commonwealth officer would be influenced; and

(c) Four offences against s.4(1) of the Secret Commissions Act 1905 (Cth) that, being an agent of the Crown, without the full knowledge and consent of the Crown as principal, indirectly obtained for himself a consideration as a reward for acts done in relation to the affairs of the Crown.

The appellant has appealed to this Court against his conviction and sentence in respect of those offences. The appellant has also appealed to this Court, pursuant to s.100(2) of the Proceeds of Crime Act, from the order made under that Act.

1. The Proceeds of Crime Act ("the Act") came into operation on 5 June 1987. Section 14(1) provides that where a person is convicted of an indictable offence, the DPP (that is to say, the Director of Public Prosecutions) may, subject to certain provisions to which it is unnecessary to refer, apply to an appropriate court for one or both of the following orders:
   

(a) a forfeiture order against property that is tainted property in respect of the offence;

(b) a pecuniary penalty order against the person in respect of benefits derived by the person from the commission of the offence.

Where a person is convicted of an offence before the Supreme Court of a Territory, that Supreme Court is the appropriate court in relation to the conviction (s.10(1)). In the present case the DPP applied for a pecuniary penalty order. A reference in the Act to a benefit derived by a person includes a reference to a benefit derived, directly or indirectly, by the person and a benefit derived, directly or indirectly, by another person at the request or direction of the first person (s.4(3)).

1. Where the DPP applies for a pecuniary penalty order against a person, written notice of the application is to be given to the person who may appear and adduce evidence at the hearing of the application (s.15(2)).

2. Section 26(1) of the Act provides:
   

"(1) Where:

(a) an application is made to a court for an order under this section in respect of benefits derived by a person from the commission of an offence; and

(b) the court is satisfied that the person derived benefits from the commission of the offence;

the court may, if it considers it appropriate:

(c) assess, in accordance with section 27, the value of the benefits so derived; and

(d) order the person to pay to the Commonwealth a pecuniary penalty equal to the penalty amount."

Elaborate provisions are made in ss.26 and 27 for the assessment of the pecuniary penalty payable but it is unnecessary for present purposes to refer in detail to those provisions. Sub-sections (8) and (9) of s.26 provide:

"(8) An amount payable by a person to the Commonwealth in accordance with a pecuniary penalty order is a civil debt due by the person to the Commonwealth.

(9) A pecuniary penalty order against a person may be enforced as if it were an order made in civil proceedings instituted by the Commonwealth against the person to recover a debt due by the person to the Commonwealth and the debt arising from the order shall be taken to be a judgment debt."

Section 100(2) provides:

"(2) A person against whom a pecuniary penalty order is made may appeal against that order in the same manner as if it were, or were part of, a sentence imposed on the person in respect of the offence in reliance on which the order was made."

1. The basic facts relating to the application by the DPP for a pecuniary penalty order against the appellant are summarised in the reasons for judgment of the learned primary judge as follows:
   

"In the latter half of 1986 the defendant, an officer in the Australian Fisheries Service, corruptly agreed with one Timothy Alan Roberts to carry on consultancy work for a company, Rigil Kent Limited (Rigil Kent). The consultancy work related in particular to development of fishing in the South East Trawl, an area managed by the Australian Fisheries Service. For the purpose of the agreement, the defendant was party to the incorporation in Tasmania of a company, Marintech Nominees Pty Ltd (Marintech), which carried on business as Marintech Fisheries Consultants. The defendant became a director of Marintech on 20 January

1987. In accordance with the agreement, the defendant performed consultancy services and rendered invoices or statements for such services in the name of Marintech to Rigil Kent. Rigil Kent paid the amounts claimed on the invoices on or about the dates alleged in the 5th, 6th, 7th and 8th counts on the indictment. All such payments were by cheque and were credited to the bank account of Marintech in Hobart. On 14 September 1987 in pursuance of the agreement the defendant fraudulently made a false entry in a computer data base of the Australian Fisheries Service by creating a file in the name of T. Roberts and purporting to transfer to that file a number of boat units to which Roberts was not entitled. The payment for the invoices rendered on behalf of Marintech for services performed in March, April, May and June was not made until 25 September 1987."

The references to the defendant are, of course, references to the appellant. The references to the 5th, 6th, 7th and 8th counts on the indictment are references to the four offences referred to above against s.4(1) of the Secret Commissions Act. The amount, namely $22,330.19, that the appellant is required to pay to the Commonwealth under the pecuniary penalty order is the sum of the amounts of $2,617.50, $4,865.55, $5,380.14 and $9,467.00 respectively alleged in those counts of the indictment as the consideration indirectly obtained by the appellant as a reward for acts done in relation to the affairs of the Crown.

1. The motion at present before the Court is supported by the affidavit of Allan Reginald Nelson sworn on 30 April 1990. Mr Nelson is the solicitor for the appellant. The affidavit is quite short. It refers to the notices of appeal filed on behalf of the appellant in relation to his conviction and sentence and in relation to the pecuniary penalty order, refers to a letter dated 30 March 1990 addressed to the deponent by the DPP and received on 2 April 1990 and states that the deponent's instructions are to make the present application. The letter dated 30 March 1990, which is annexed to the affidavit, reads as follows:
   

"Thank you for your letter dated 12 March 1990. I have noted your comments concerning a proposed appeal to the Federal Court of Australia against the Proceeds of Crime Act judgment. I enclose herewith by way of service a sealed copy of the Order made on Friday 9 March 1990 in the above proceedings by the Chief Justice, Mr Justice J. Miles. I also enclose a sealed copy of the Certificate of Judgment issued by the Supreme Court Registrar which I now propose to register in the Supreme Court of Tasmania with a view to the enforcement of the judgment. The filing of a Notice of Appeal does not operate as a stay of execution under the judgment appealed from (see Section 29 of the Federal Court Act and Order 52 Rule 17(1)(a) of the Federal Court Rules). Unless stay proceedings are commenced within 28 days of the date of this correspondence in the Supreme Court of the Australian Capital Territory or the Federal Court of Australia, I propose to enforce the judgement."

It may be noted that the present application was not made within the period of 28 days referred to in that letter.

1. In support of the motion, counsel for the appellant emphasised that the making of the pecuniary penalty order against the appellant was conditional upon his having been convicted of an indictable offence (see s.14(1) of the Act) and that, if the determination of the pending appeal against conviction were to result in the conviction for each of the offences against the Secret Commissions Act being quashed, the substratum for the pecuniary penalty order would be removed. It is to be noted in this regard that there is no provision in the Act in relation to a pecuniary penalty order similar to that made by s.22(1) in relation to a forfeiture order. Section 22(1) provides that where a court makes a forfeiture order against property in reliance on a person's conviction of an offence and the conviction is subsequently quashed, the quashing of the conviction discharges the order. As the appellant has lodged an appeal under s.100(2) of the Act against the making of the pecuniary penalty order, it is unnecessary to consider what effect the quashing of the conviction would have upon a pecuniary penalty order in a case where no such appeal has been lodged. It is clear in the present case that, if the appeal against conviction and sentence for the offences of which the appellant has been found guilty results in the conviction for one or more of the offences against s.4(1) of the Secret Commissions Act being quashed, the appeal under s.100(2) must succeed at least in part.

2. Counsel for the appellant submitted that, if a stay of further proceedings by way of execution of the pecuniary penalty order were not granted, the effect of the appeal would be seriously reduced if not made nugatory. The case was, it was submitted, to be distinguished from a case where the judgment appealed from is a judgment for a sum of money representing an antecedent debt found to be due and owing by the person seeking the stay.

3. It is well established that the discretion which is conferred on a court by provisions similar to s.29 of the Federal Court of Australia Act and Order 52, rule 17 of the Federal Court Rules to order a stay of proceedings pending the hearing and determination of an appeal is only to be exercised where special circumstances exist which justify a departure from the ordinary rule that a successful litigant is entitled to the fruits of his litigation notwithstanding the pending appeal: see Federal Commissioner of Taxation v. The Myer Emporium Ltd (No.1) (1986) 160 CLR 220 at pp 222-3.

4. Counsel for the respondent opposed the granting of a stay primarily on the ground that the affidavit in support of the motion fell far short of establishing such special circumstances.

5. There is, I think, much force in the point taken by counsel for the respondent. However, during the course of the hearing of the present motion and the motion for the grant of bail to the appellant pending the hearing and determination of his appeal against his conviction and sentence in respect of the offences referred to earlier in these reasons, it appeared that some inquiry had been made by the Supreme Court of the Australian Capital Territory into the appellant's means and this had resulted in Miles C.J. including in his remarks on sentencing the following statement:
   

"In the present case, it seems to me that because of the offender's lack of means, the pecuniary penalty order can be enforced by execution against the only asset of which there is evidence, namely, a one fifth share as tenant in common in McDermott's parents' home in Hobart. Whether the Commonwealth will choose to execute against that asset I do not know, and any hardship that it may cause will, of course, be more directly felt by the parents than by the offender himself, although I should expect that it would be a matter of some concern to him."

It appears that the property referred to is known as 24 Clarke Avenue, Battery Point in the State of Tasmania.

1. Counsel for the respondent agreed that the enforcement action contemplated in the letter dated 30 March 1990, the text of which is set out above, was enforcement action against the property referred to by Miles C.J. though he was unable to say what action the respondent proposed to take once the Certificate of Judgment referred to in the letter had been registered in the Supreme Court of Tasmania or when any proposed action would be taken.

2. It must be accepted that, if enforcement action is taken against the property situate at Battery Point, the interests in that property of persons other than the appellant will be affected and affected in such a way that, in the event that the appeal against the pecuniary penalty order is successful, the detriment to them cannot be adequately redressed.

3. In my opinion, the particular circumstances of this case amount to special circumstances warranting the exercise by the Court of its discretion to stay, until the hearing and determination of the appeals against the appellant's conviction and sentence in respect of the offences for which he was sentenced on 9 March 1990 (Appeal numbered ACT G 14 of 1990) and against the pecuniary penalty order made on that date (Appeal numbered ACT G 16 of 1990) or until further order of this Court, further proceedings by way of execution under the pecuniary penalty order made by the Supreme Court on that date. I am further of opinion that it is appropriate to make the stay order conditionally upon the appellant undertaking to the Court in writing that he will prosecute with all reasonable expedition the appeals pending in this Court in matters numbered ACT G14 of 1990 and ACT G 16 of 1990 and further undertaking to the Court in writing that, pending the hearing and determination of those appeals, he will not, without leave of the Court, take any action, or authorise any other person to take any action, to sell, dispose of, encumber or otherwise deal with the property known as 24 Clarke Avenue, Battery Point in the State of Tasmania or his interest in that property. I so order. I further order that the costs of the motion be costs in the appeal numbered ACT G 16 of 1990.