Onley v Commissioner of the Australian Federal Police

Case •

[2019] NSWCA 101

•

10 May 2019

No judgment structure available for this case.

Court of Appeal


Supreme Court


New South Wales

  • Summary available
Medium Neutral Citation: Onley v Commissioner of the Australian Federal Police; Menon v Commissioner of the Australian Federal Police; Anquetil v Commissioner of the Australian Federal Police [2019] NSWCA 101
Hearing dates: 29 – 31 October 2018
Date of orders: 10 May 2019
Decision date: 10 May 2019
Before: Bathurst CJ at [1]; Basten JA at [259]; Meagher JA at [418]
Decision:

(1)   Grant leave to appeal to each applicant.

 (2)   Dismiss the appeals with costs.
Catchwords:

CRIME – Proceeds of Crime Act 2002 (Cth), ss 180, 266A and 319 – where appellants suspected of involvement in conspiracy to defraud the Australian Taxation Office – stay of examination orders made pursuant to s 180 – application of s 319 – prejudice due to extant criminal proceedings – risk of disclosure of information that would prejudice the appellants in criminal proceedings – effect of protocol put in place by the Australian Federal Police to protect against disclosure – prejudice to appellants to be balanced against potential prejudice to Commissioner

 

CONSTITUTIONAL LAW – application of state laws to Commonwealth statutory scheme – whether state law was a law governing the exercise of federal jurisdiction – application to set aside orders made ex parte under the Proceeds of Crime Act 2002 (Cth) – whether orders may be set aside under Uniform Civil Procedure Rules 2005 (NSW), r 36.16

CRIME – Proceeds of Crime Act 2002 (Cth), s 39 –orders made for appellants to provide sworn statements in relation to interests in property – whether orders could extend to include interests of companies of which the appellants were directors – whether orders should be set aside
Legislation Cited: Australian Federal Police Act 1979 (Cth), Pt V
Australian Crime Commission Act 2012 (Cth), s 25A
Civil Procedure Act 2005 (NSW), s 67
Constitution, ss 75, 109
Corporations Act 2001 (Cth), s 588FF
Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Act 2016 (Cth)
Criminal Assets Recovery Act 1990 (NSW)
Criminal Code Act 1995 (Cth), ss 11.5, 135.4, 400.3
Judiciary Act 1903 (Cth), ss 78B, 79, 80
Proceeds of Crime Act 2002 (Cth), ss 5, 7, 14A, 15, 17, 18, 19, 25, 26, 29A, 32, 38, 39, 39B, 41, 42, 45, 47, 48, 49, 51, 116, 142, 180, 182, 183, 185, 186, 188, 189, 191, 192, 193, 194, 195, 196, 197, 198, 206, 266A, 314, 315, 317, 319, 319A, 338
Supreme Court Act 1970 (NSW), s 23
Unexplained Wealth Legislation Amendment Act 2018 (Cth). Sch 1, s 2
Uniform Civil Procedure Rules 2005 (NSW), rr 36.16, 36.17
Cases Cited: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27; [2009] HCA 41
Ansett Transport Industries (Operations) Pty Ltd v Wardley (1980) 142 CLR 237; [1980] HCA 8
Australian Crime Commission Act 2012 (Cth)
Banerjee v Commissioner of Police [2018] NSWCA 283
Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9; [2006] NSWCA 238
BP Australia Ltd v Brown (2003) 58 NSWLR 322; [2003] NSWCA 216
Brewster v BMW Australia Ltd [2019] NSWCA 35
Butler v Attorney-General (Vic) (1961) 106 CLR 268; [1961] HCA 32
Cameron v Cole (1944) 68 CLR 571; [1944] HCA 5
Certain Lloyd’s Underwriters Pty Ltd v Cross (2012) 248 CLR 378; [2012] HCA 56
Commissioner of the Australian Federal Police v Cacu (2017) 264 A Crim R 427; [2017] NSWCA 5;
Commissioner of the Australian Federal Police v Elzein (2017) 94 NSWLR 700; [2017] NSWCA 142
Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103
Commissioner of the Australian Federal Police v W [2016] NSWSC 683
Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46; [2015] HCA 5
Commonwealth v Mewett (1997) 191 CLR 471; [1997] HCA 29
David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265; [1995] HCA 43
Director of Public Prosecutions (Cth) v Galloway [2017] VSCA 120
Gordon v Tolcher (2006) 231 CLR 334; [2006] HCA 62
Grant Samuel Corporate Finance Pty Ltd v Fletcher (2015) 254 CLR 477; [2015] HCA 8
In the matter of Plutus Payroll Australia Pty Ltd [2017] NSWSC 1854
International Finance Trust Company Ltd v New South Wales Crime Commission (2009) 240 CLR 319; [2009] HCA 49
Jago v The District Court of New South Wales (1989) 168 CLR 23; [1989] HCA 46
Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2011) 244 CLR 508; [2011] HCA 33
John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19
L Joseph Pty Ltd v Gray (1939) 56 WN (NSW) 190
Lee v New South Wales Crime Commission (2013) 251 CLR 196; [2013] HCA 39
Lee v The Queen (2014) 253 CLR 455; [2014] HCA 20
Minister for Local Government v Blue Mountains City Council [2018] NSWCA 133
Northern Territory of Australia v GPAO (1999) 196 CLR 553; [1999] HCA 8
NSW Crime Commission v Lee (2012) 84 NSWLR 1; [2012] NSWCA 276
Owners of SS Kalibia v Wilson (1910) 11 CLR 689; [1910] HCA 77
R v Independent Broad-based Anti-corruption Commissioner (2016) 256 CLR 459; [2016] HCA 8
R v Schmidt [2018] QCA 59
R v Seller; R v McCarthy (2013) 273 FLR 155; [2013] NSWCCA 42
R v Seller; R v McCarthy (2015) 89 NSWLR 155; [2015] NSWCCA 76
Ransley v Commissioner of Taxation [2016] FCA 778
Resort Hotels Management Pty Ltd v Resort Hotels of Australia Pty Ltd (1991) 22 NSWLR 730
Rizeq v Western Australia (2017) 262 CLR 1; [2017] HCA 23
Ross v Internet Wines Pty Ltd (2004) 60 NSWLR 436; [2004] NSWCA 195
Ruzehaji v Commissioner of the Australian Federal Police (2015) 124 SASR 355; [2015] SASCFC 182
Seller v Commissioner of Taxation (2013) 308 ALR 376; [2017] FCA 1373
Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 93 ALJR 1; [2018] HCA 53
Tan v Director of Public Prosecutions (Cth) [2004] NSWSC 952
The Commissioner of the Australian Federal Police v Cranston and 65 Ors (No 8) [2018] NSWSC 365
The Commissioner of the Australian Federal Police v Cranston and 65 Ors (No 10) [2018] NSWSC 542
Thomas A Edison Ltd v Bullock (1912) 15 CLR 679; [1912] HCA 72
University of Wollongong v Metwally (1984) 158 CLR 447; [1984] HCA 74
X7 v Australian Crime Commission (2013) 248 CLR 92; [2013] HCA 29
X7 v The Queen (2014) 246 A Crim R 402; [2014] NSWCCA 273
Zhao v The Commissioner of the Australian Federal Police (2014) 43 VR 187; [2014] VSCA 137
Texts Cited: G Lindell, Cowen and Zines’s Federal Jurisdiction in Australia (4th ed, 2016, The Federation Press)
M Leeming, Resolving Conflicts of Laws (2011, The Federation Press)
Category:Principal judgment
Parties: Jason Cornell Onley (first applicant)
Dev Menon (second applicant)
Simon Paul Anquetil (third applicant)
The Commissioner of the Australian Federal Police (respondent)
Representation:

Counsel:
R Johnson (first applicant)
P Bruckner with E Bishop (second applicant)
P Lange with A Ahmad (third applicant)
D McLure SC with G O’Mahoney and K Anderson (respondent)

  Solicitors:
Pure Legal (first applicant)
Hardinlaw (second applicant)
Hanna Legal (third applicant)
Proceeds of Crime Unit, Australian Federal Police (respondent)
File Number(s): 2018/1236942018/1236992018/1243632018/2300172018/2346582018/251007
Publication restriction: Nil
 Decision under appeal 
Court or tribunal:
Supreme Court of NSW
Jurisdiction:
Common Law
Citation:
[2018] NSWSC 365
Date of Decision:
22 March 2018
Before:
Fullerton J
File Number(s):
2017/146280

HEADNOTE

[This headnote is not to be read as part of the judgment]

The appellants sought leave to appeal from a decision of a judge of the Common Law Division refusing to set aside or stay examination orders made under s 180 of the Proceeds of Crime Act 2002 (Cth) (POC Act) and orders to supply sworn statements of assets.

In May 2017, the Commissioner of the Australian Federal Police commenced proceedings under the POC Act against 66 defendants of whom 23 were natural persons. Three of the defendants were the three appellants, Messrs Onley, Menon and Anquetil. The Commissioner alleged that the appellants were involved in a conspiracy to defraud the Australian Taxation Office (the ATO) with the intention of dishonestly causing a loss to the Commonwealth in the amount of over $83m contrary to s 135.4 of the Criminal Code Act 1995 (Cth) (Criminal Code) (the taxation fraud conspiracy).

The Commissioner sought orders that property identified in the summons be forfeited to the Commonwealth pursuant to ss 47 and 49 of the POC Act and orders that 8 of the 66 defendants, including the appellants, pay a pecuniary penalty to the Commonwealth, pursuant to s 116 of the POC Act. The pecuniary penalty sought against the appellants was referable to what the Commissioner alleged was the value of the benefits derived from their involvement in the taxation fraud conspiracy. The examination orders were made on an ex parte application by the Commissioner.

On 16 May 2017, the primary judge made ex parte orders restraining the appellants from dealing with itemised property and directed that the Official Trustee in Bankruptcy take custody and control of the property. The net value of the property under the custody and control of the Official Trustee was over $39.5m and, in addition, other property falling within the terms of the summons valued at a little under $2m. In addition, the ex parte orders included examination orders under s 180 and directions to supply sworn asset statements pursuant to s 39(1)(ca) of the POC Act.

On 17 May 2017, various persons, including Mr Onley and Mr Menon were arrested and charged with the taxation fraud conspiracy. Mr Anquetil was arrested and charged on 18 May 2017. On 5 and 6 June 2017, examination notices were issued under s 183 of the POC Act, requiring the appellants to attend for examination on 19 June (Mr Anquetil), 22 June (Mr Onley) and 27 June (Mr Menon).

On 15 June 2017, Mr Anquetil filed a notice of motion seeking orders staying the proceedings pending the finalisation of criminal proceedings commenced against him, or alternatively, staying the examination summons pending the finalisation of these proceedings. On 16 June 2017, Mr Onley and Mr Menon filed a notice of motion seeking relief broadly similar to that sought by Mr Anquetil.

On 22 March 2018, Fullerton J dismissed the notices of motion filed by the appellants.

There were five main issues on appeal:

1. Whether the primary judge erred in concluding that Mr Anquetil bore the onus of showing that the restraining order should be revoked?

2. Whether the primary judge erred in concluding that Mr Anquetil bore the onus of showing that the examination order should be stayed?

3. Whether the primary judge erred in concluding that Mr Anquetil bore the onus of showing that the examination order should be revoked?

4. Whether the primary judge erred in the exercise of her discretion in declining to stay the proceedings under s 319 :

a. by requiring the appellants to demonstrate the loss of a legitimate forensic choice as a result of them being examined?

b. by failing to properly consider the risk of disclosure of information provided by the appellants in the course of compulsory examinations?

c. in taking into account prejudice to the Commissioner if the examinations were stayed?

d. in failing to take into account material prejudice concerning future charges?

5. Did the order requiring sworn statements as to assets and liabilities exceed the power conferred in s 39(1)(ca) of the POC Act?

The Court (Bathurst CJ, Basten JA and Meagher JA) held, granting leave to appeal to each applicant but dismissing the appeals with costs:

1. Onus of showing that the restraining order should be revoked

(i) There is an express provision dealing with the revocation of a restraining order pursuant to s 42 of the POC Act: [210] (Bathurst CJ); [299] (Basten JA); [418] (Meagher JA).

David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265; [1995] HCA 43 referred to.

(ii) Proceedings invoking the power under s 42 of the POC Act to revoke a restraining order are proceedings under the POC Act: [210] (Bathurst CJ).

(iii) The applicant in proceedings to revoke a restraining order bears the onus of proving the matters necessary to establish the grounds for making the order by virtue of s 317 of the POC Act: [210] (Bathurst CJ).

(iv) It is unclear where the onus of proof lies in proceedings to revoke a restraining order under s 42 of the POC Act: [300] (Basten JA); [418] (Meagher JA).

2. Onus of showing that the examination order should be stayed

(i) The power of the Court to stay the proceedings under the POC Act is conferred by s 319 of the Act and must be exercised subject to the conditions imposed by that provision: [216]-[217] (Bathurst CJ); [348] (Basten JA); [418] (Meagher JA).

Rizeq v The State of Western Australia (2017) 262 CLR 1; [2017] HCA 23 considered.

(ii) Section 317 of the POC Act would apply to impose upon the applicants for the stay the onus of establishing that the stay was justified: [213] (Bathurst CJ).

Jago v The District Court of New South Wales (1989) 168 CLR 23; [1989] HCA 46 referred to.

3. Onus of showing that the examination order should be revoked

(i) There is no express power within the POC Act to revoke an examination order: [212] (Bathurst CJ).

(ii) There is no power within the POC Act to revoke an examination order: [309]-[312] (Basten JA); [418] (Meagher JA).

(iii) It may be inferred that the Commonwealth Parliament intended that the procedural scheme of the POC Act operate coherently without alteration or addition by the adoption of State laws allowing for the discharge or setting aside of examination orders when made ex parte, except to the extent that the standards and criteria to be applied by a court exercising discretionary powers will be informed by general law principles: [312] (Basten JA); [418] (Meagher JA).

Tan v Director of Public Prosecutions (Cth) [2004] NSWSC 952; Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9; [2006] NSWCA 238; Banerjee v Commissioner of Police [2018] NSWCA 283 referred to.

International Finance Trust Company Ltd v New South Wales Crime Commission (2009) 240 CLR 319; [2009] HCA 49; Rizeq v The State of Western Australia (2017) 262 CLR 1; [2017] HCA 23; Resort Hotels Management Pty Ltd v Resort Hotels of Australia Pty Ltd (1991) 22 NSWLR 730; Ruzehaji v Commissioner of the Australian Federal Police (2015) 124 SASR 355; [2015] SASCFC 182 considered.

(iv) Section 317 of the POC Act should not be read as having the effect of placing an onus on the respondent to an application for an examination order to demonstrate why it should be discharged, if made ex parte, but leaving the onus to establish a justification for the order on the Commissioner, if sought in the course of an inter partes hearing: [292] (Basten JA); [418] (Meagher JA).

(v) The primary judge did not determine the application for revocation on the basis that the appellants had failed to discharge any onus cast on them but rather expressed a positive satisfaction on the issue: [207] (Bathurst CJ).

(vi) To the extent that there is power to seek a revocation of an examination order, the onus of establishing whether the order should be revoked is borne by the applicant for such an order: contra [216] (Bathurst CJ).

Cameron v Cole (1944) 68 CLR 571; [1944] HCA 5; John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19; BP Australia Ltd v Brown (2003) 58 NSWLR 322; [2003] NSWCA 216 referred to.

Rizeq v Western Australia (2017) 262 CLR 1; [2017] HCA 23 applied.

4. Did the primary judge err in the exercise of her discretion in declining to stay the proceedings under s 319:

a. by requiring the appellants to demonstrate the loss of a legitimate forensic choice as a result of them being examined?

(i) The primary judge did not err by requiring the appellants to demonstrate the loss of a legitimate forensic choice as a result of them being examined. Section 319 of the POC Act makes it clear that prejudice arising from the fact of the examination that alters the accusatorial judicial process, even if kept secret (“systemic prejudice”) is not sufficient of itself to warrant the grant of stay. The primary judge was correct in concluding that something more was required to justify a stay than just that the examination was to take place while criminal proceedings were pending: [220]-[236] (Bathurst CJ); [369]-[372] (Basten JA); [418] (Meagher JA).

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27; [2009] HCA 41; X7 v Australian Crime Commission (2013) 248 CLR 92; [2013] HCA 29; Zhao v The Commissioner of the Australian Federal Police (2014) 43 VR 187; [2014] VSCA 137; Certain Lloyd’s Underwriters Pty Ltd v Cross (2012) 248 CLR 378; [2012] HCA 56; Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 93 ALJR 1; [2018] HCA 53; Commissioner of the Australian Federal Police v Elzein (2017) 94 NSWLR 700; [2017] NSWCA 142; Lee v New South Wales Crime Commission (2013) 251 CLR 196; [2013] HCA 39; X7 v The Queen (2014) 246 A Crim R 402; [2014] NSWCCA 273 referred to.

b. by failing to properly consider the risk of disclosure of information provided by the appellants in the course of compulsory examinations?

(i) The primary judge did not err in declining to grant a stay based on the risk of disclosure of information provided by the appellants in the course of compulsory examinations to an authority investigating or prosecuting criminal charges (“disclosure prejudice”). The primary judge properly considered the strength of the protection mechanisms and the residual risk of leakage in determining whether or not to grant a stay. The measures taken by the Commissioner to protect against the risk of leakage of specific information were “significant” and provided “ample justification for the conclusion by the primary judge that the protection was adequate” and there was no error in discretion in her so finding: [237]-[240] (Bathurst CJ); [373]-[378], [389]-[393] (Basten JA); [418] (Meagher JA).

Lee v The Queen (2014) 253 CLR 455; [2014] HCA 20; Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 93 ALJR 1; [2018] HCA 53 referred to.

c. in taking into account prejudice to the Commissioner if the examinations were stayed?

(i) The primary judge did not err in considering the risk of prejudice to the Commissioner if the examinations are stayed: [244]-[249] (Bathurst CJ).

(ii) The primary judge did not take into account what was said to be an improper purpose of the examination, that is the use of the power to ascertain if funds were available to satisfy a future pecuniary penalty order, nor was that purpose in any event improper: [244]-[249] (Bathurst CJ).

Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103 referred to.

(iii) The primary judge did not err in concluding that there would be a level of prejudice to the Commissioner if the proposed stay was granted: [406] (Basten JA); [418] (Meagher JA).

Zhao v The Commissioner of the Australian Federal Police (2014) 43 VR 187; [2014] VSCA 137; Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103 considered

(iv) The primary judge did not err in balancing competing interests in declining to stay the proceedings: [407]-[412] (Basten JA); [418] (Meagher JA).

d. in failing to take into account material prejudice concerning future charges?

(i) There was no error of discretion in the manner in which the primary judge dealt with future charges. Section 319(2)(a) of the POC Act extends to criminal proceedings as proceedings that might be instituted and provides that possibility is not a ground for a stay: Bathurst CJ [241]-[243]; Basten JA [371]; Meagher JA [418].

R v Independent Broad-based Anti-corruption Commissioner (2016) 256 CLR 459; [2016] HCA 8; Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 93 ALJR 1; [2018] HCA 53; Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103; Commissioner of the Australian Federal Police v Elzein (2017) 94 NSWLR 700; [2017] NSWCA 142; X7 v Australian Crime Commission (2013) 248 CLR 92; [2013] HCA 29 referred to.

5. Did the order requiring sworn statements as to assets and liabilities exceed the power conferred in s 39(1)(ca) of the POC Act?

(i) The sworn asset statement order did not exceed the power conferred on the Court by s 39(1)(ca) of the POC Act; s 39(1)(ca) of the POC Act extends to property held by a company of which the person is a director: Bathurst CJ [250]-[257]; Basten JA [324]-[331]; Meagher JA [418].

Commissioner of the Australian Federal Police v Cacu [2017] NSWCA 5; 264 A Crim R 427 considered.

Judgment

  1. BATHURST CJ: This is an application for leave to appeal from a decision of a judge of the Common Law Division of the Court (the primary judge) refusing to set aside or stay examination orders made under s 180 of the Proceeds of Crime Act 2002 (Cth) (POC Act) requiring each of the appellants to be examined pursuant to the provisions of that Act.

Background facts

  1. The examination orders were made on an ex parte application by the respondent seeking orders that property identified in the summons be forfeited to the Commonwealth pursuant to ss 47 and 49 of the POC Act and orders that 8 of the 66 defendants, including the appellants, pay a pecuniary penalty to the Commonwealth pursuant to s 116 of the POC Act, referable to what the respondent alleged was the value of the benefits that they each derived from their involvement in a conspiracy to defraud the Australian Taxation Office (the ATO) with the intention of dishonestly causing a loss to the Commonwealth in the amount of $83,735,535.28 contrary to s 135.4 of the Criminal Code Act 1995 (Cth) (the taxation fraud conspiracy).

  2. On 16 May 2017 the primary judge made ex parte orders under ss 18 and 19 of the POC Act restraining the appellants and other individual entities from dealing with property itemised in the Schedule, including property not already specified in the Schedule acquired by each of them after the date of the orders. She also ordered, under s 38 of the POC Act, that the Official Trustee in Bankruptcy take custody and control of the property that is the subject of the restraint. The net value of the property under the custody and control of the Official Trustee was valued at $39,510,780.19 and, in addition, other property had been identified falling within the terms of the summons valued at $1,878,071.79. The total amount so identified was $41,388,851.98.

  3. In addition, examination orders, the subject of the proceedings were made under s 180 of the POC Act and the appellants were also directed to supply Sworn Asset Statements pursuant to s 39(1)(ca) of that Act.

  4. On 15 June 2017 the appellant, Simon Paul Anquetil (Mr Anquetil), by notice of motion sought orders staying the proceedings pending the finalisation of criminal proceedings commenced against him or, alternatively, staying the examination summons pending finalisation of those proceedings.

  5. On 16 June 2017 the appellants, Jason Cornell Onley (Mr Onley) and Dev Menon (Mr Menon), filed a notice of motion seeking broadly similar relief to Mr Anquetil.

  6. By orders on 22 March 2018 the primary judge dismissed the notices of motion. The appeals are brought from this decision.

The relevant legislation

  1. To understand the reasoning of the primary judge and the submissions of the parties it is necessary to have regard to the following provisions of the POC Act.

  2. Section 5 of the POC Act sets out its principal objects. Relevantly, it provides as follows:

“5   Principal objects

The principal objects of this Act are:

(a)   to deprive persons of the *proceeds of offences, the *instruments of offences, and *benefits derived from offences, against the laws of the Commonwealth or the *non‑governing Territories; and

…

(c)   to punish and deter persons from breaching laws of the Commonwealth or the non‑governing Territories; and

…

(da)   to undermine the profitability of criminal enterprises; and

(e)   to enable law enforcement authorities effectively to trace proceeds, instruments, benefits, literary proceeds and unexplained wealth amounts; and

(g)   to provide for confiscation orders and restraining orders made in respect of offences against the laws of the States or the *self‑governing Territories to be enforced in the other Territories.”

  1. Section 17 confers on the Court what is described as “proceeds jurisdiction” to make restraining orders against people convicted of or charged with indictable offences, while s 18 empowers the making of the same orders against persons suspected of committing serious offences. Section 18 is in the following terms:

“18   Restraining orders—people suspected of committing serious offences

When a restraining order must be made

(1)   A court with *proceeds jurisdiction must order that:

(a)   property must not be disposed of or otherwise dealt with by any person; or

(b)   property must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in the order;

if:

(c)   a *proceeds of crime authority applies for the order; and

(d)   there are reasonable grounds to suspect that a person has committed a *serious offence; and

(e)   any affidavit requirements in subsection (3) for the application have been met; and

(f)   the court is satisfied that the *authorised officer who made the affidavit holds the suspicion or suspicions stated in the affidavit on reasonable grounds.

Note:   A court can refuse to make a restraining order if the Commonwealth refuses to give an undertaking: see section 21.

Property that a restraining order may cover

(2)   The order must specify, as property that must not be disposed of or otherwise dealt with, the property specified in the application for the order, to the extent that the court is satisfied that there are reasonable grounds to suspect that that property is any one or more of the following:

(a)   all or specified property of the *suspect;

(aa)   all or specified *bankruptcy property of the suspect;

(b)   all property of the suspect other than specified property;

(ba)   all bankruptcy property of the suspect other than specified bankruptcy property;

(c)   specified property of another person (whether or not that other person’s identity is known) that is subject to the *effective control of the suspect;

(d)   specified property of another person (whether or not that other person’s identity is known) that is:

(i)   in any case—*proceeds of the offence; or

(ii)   if the offence to which the order relates is a *serious offence—an *instrument of the offence.

Affidavit requirements

(3)   The application for the order must be supported by an affidavit of an *authorised officer stating:

(a)   that the authorised officer suspects that the *suspect committed the offence; and

(b)   if the application is to restrain property of a person other than the suspect but not to restrain *bankruptcy property of the suspect—that the authorised officer suspects that:

(i)   the property is subject to the *effective control of the suspect; or

(ii)   in any case—the property is *proceeds of the offence; or

(iii)   if the offence to which the order relates is a *serious offence—the property is an *instrument of the offence.

The affidavit must include the grounds on which the *authorised officer holds those suspicions.

Restraining order need not be based on commission of a particular offence

(4)   The reasonable grounds referred to in paragraph (1)(d) need not be based on a finding as to the commission of a particular *serious offence.

Risk of property being disposed of etc.

(5)   The court must make a *restraining order even if there is no risk of the property being disposed of or otherwise dealt with.

Later acquisitions of property

(6)   The court may specify that a *restraining order covers property that is acquired by the *suspect after the court makes the order. Otherwise, no property that is acquired after a court makes a restraining order is covered by the order.”

  1. There is no issue in the present case that the Court had proceeds jurisdiction (s 18(1)) or that the respondent was a proceeds of crime authority (s 18(1)(c)).

  2. Section 19 empowers the court with proceeds jurisdiction to make restraining orders restraining the disposal of property suspected to be the proceeds of a terrorism offence or any other indictable offence. It is not necessary to set out the section in full.

  3. It will be seen that the making of a restraining order is the lynchpin for the exercise of other powers granted to both the Court and the respondent under the Act.

  4. Section 25 empowers a proceeds of crime authority to apply for a restraining order. Section 26 deals with the giving of notice of the application. It is in the following terms:

“26   Notice of application

(1)   Subject to subsection (4), the *responsible authority must:

(a)   give written notice of an application for a *restraining order covering property to the owner of the property (if the owner is known); and

(b)   include with the notice a copy of the application and any affidavit supporting the application.

(2)   Subject to subsection (4), the *responsible authority must also:

(a)   give written notice of an application for a *restraining order covering property to any other person the authority reasonably believes may have an *interest in the property; and

(b)   include with the notice:

(i)   a copy of the application; and

(ii)   a further notice that the person may request that the authority give the person a copy of any affidavit supporting the application.

The authority must comply with any such request as soon as practicable.

(3)   The court must not (unless subsection (4) applies) hear the application unless it is satisfied that the owner of the property to which the application relates has received reasonable notice of the application.

(4)   The court must consider the application without notice having been given if the *responsible authority requests the court to do so.

(5)   The court may, at any time before finally determining the application, direct the *responsible authority to give or publish notice of the application to a specified person or class of persons. The court may also specify the time and manner in which the notice is to be given or published.

(6)   A person who claims an *interest in property may appear and adduce evidence at the hearing of the application.”

  1. It can be seen that s 26(4) requires the court to consider the application without notice if the responsible authority (which for the purpose of this application is a proceeds of crime authority) requests it. However, the court is not obliged to make an order ex parte. That is made clear by s 26(5). The section was amended to its present form following the decision of the High Court in International Finance Trust Company Ltd v New South Wales Crime Commission (2009) 240 CLR 319; [2009] HCA 49, which held that the then s 10 of the Criminal Assets Recovery Act 1990 (NSW) was invalid because it required the Court to grant an ex parte injunction without providing for any facility to entertain an application to dissolve it.

  2. Section 39 empowers the court to make what are described as ancillary orders. It is that section which empowers the court to order sworn statements. For relevant purposes it provides as follows:

“39   Ancillary orders

(1)   The court that made a *restraining order, or any other court that could have made the restraining order, may make any ancillary orders that the court considers appropriate and, without limiting the generality of this, the court may make any one or more of the following orders:

…

(ca)   an order directing the *suspect in relation to the restraining order to give a sworn statement to a specified person, within a specified period, setting out all of his or her *interests in property, and his or her liabilities.

...

(3A)   Despite subsection (3), the court must consider an application for an ancillary order without notice having been given under that subsection if:

(a)   the *responsible authority requests the court to do so; and

(b)   the *restraining order to which the application relates was considered, in accordance with subsection 26(4), without notice having been given.”

  1. Section 39B provides for an application to revoke an ancillary order. It is in the following terms:

“39B   Application to revoke ancillary order

(1) A person may apply to the court that made an ancillary order under section 39 to revoke the order if:

(a)   the person is affected by the order; and

(b)   the application for the ancillary order was heard without notice having been given under subsection 39(3) following a request under subsection 39(3A).

(2)   The application must be made within 14 days after the person was notified of the ancillary order.

(3)   The applicant must give written notice of the application, and the grounds on which the revocation is sought, to any person who was entitled to make the application for the ancillary order (see subsection 39(2)).

(4)   The effect of the ancillary order is stayed until the court determines the application.

(5)   The court may revoke the ancillary order on application under subsection (1) if it considers it appropriate to do so.

(6)   The court may have regard to any matter it considers appropriate in determining the application.

(7)   If:

(a)   the ancillary order directed a person to do a thing within a particular period; and

(b)   an application is made to revoke the order under this section;

the court may, if it considers it appropriate to do so, vary the order to extend that period by a specified period.”

  1. Section 42 provides for an application to revoke a restraining order. It provides as follows:

“42   Application to revoke a restraining order

(1)   A person who was not notified of the application for a *restraining order may apply to the court to revoke the order.

(1A)   The application must be made:

(a)   within 28 days after the person is notified of the order; or

(b)   if the person applies to the court, within that period of 28 days, for an extension of the time for applying for revocation—within such longer period, not exceeding 3 months, as the court allows.

(2)   The applicant must give written notice to the *responsible authority and the *Official Trustee of both the application and the grounds on which the revocation is sought.

(3)   However, the *restraining order remains in force until the court revokes the order.

(4)   The *responsible authority may adduce additional material to the court relating to the application to revoke the *restraining order.

(5)   The court may revoke the *restraining order if satisfied that:

(a)   there are no grounds on which to make the order at the time of considering the application to revoke the order; or

(b)   it is otherwise in the interests of justice to do so.”

  1. Section 45 provides for the cessation of restraining orders in certain circumstances.

  2. Part 2-2 of the POC Act deals with forfeiture orders. Section 47 is in the following terms:

“47   Forfeiture orders—conduct constituting serious offences

(1)   A court with *proceeds jurisdiction must make an order that property specified in the order is forfeited to the Commonwealth if:

(a) the *responsible authority for a *restraining order under section 18 that covers the property applies for an order under this subsection; and

(b)   the restraining order has been in force for at least 6 months; and

(c)   the court is satisfied that a person whose conduct or suspected conduct formed the basis of the restraining order engaged in conduct constituting one or more *serious offences.

Note:   The order can be made before the end of the period of 6 months referred to in paragraph (1)(b) if it is made as a consent order: see section 316.

(2)   A finding of the court for the purposes of paragraph (1)(c) need not be based on a finding as to the commission of a particular offence, and can be based on a finding that some *serious offence or other was committed.

(3)   The raising of a doubt as to whether a person engaged in conduct constituting a *serious offence is not of itself sufficient to avoid a finding by the court under paragraph (1)(c).

Refusal to make a forfeiture order

(4)   Despite subsection (1), the court may refuse to make an order under that subsection relating to property that the court is satisfied:

(a)   is an *instrument of a *serious offence other than a *terrorism offence; and

(b)   is not *proceeds of an offence;

if the court is satisfied that it is not in the public interest to make the order.”

  1. Section 48 provides for forfeiture orders on conviction for indictable offences in circumstances where the court is satisfied that the property to be specified in the order is an instrument of one or more of the offences for which the person has been convicted. Unlike s 47 it is not a necessary precondition for a restraining order to be in force.

  2. Section 49 deals with forfeiture orders in respect to property suspected of being proceeds of indictable offences. It is unnecessary to set it out, but like s 47 it is a precondition that a restraining order be in force.

  3. Section 51 provides that acquittals do not affect the court’s power to make a forfeiture order under s 47 or s 49 in relation to the offence.

  4. Part 2-4 of the POC Act deals with what is described as “pecuniary penalty orders”. Section 116 of the Act is in the following terms:

“116   Making pecuniary penalty orders

(1)   A court with *proceeds jurisdiction must make an order requiring a person to pay an amount to the Commonwealth if:

(a)   a *proceeds of crime authority applies for the order; and

(b)   the court is satisfied of either or both of the following:

(i)   the person has been convicted of an *indictable offence, and has derived *benefits from the commission of the offence;

(ii)   the person has committed a *serious offence.

Note:   The conviction for, or reasonable grounds for suspecting commission of, an indictable offence could be used as grounds for a restraining order under Part 2‑1 covering all or some of the person’s property.

(3)   In determining whether a person has derived a *benefit, the court may treat as property of the person any property that, in the court’s opinion, is subject to the person’s *effective control.

(4)   The court’s power to make a *pecuniary penalty order in relation to an offence is not affected by the existence of another *confiscation order in relation to that offence.

Note:   There are restrictions on applications pecuniary penalty orders if previous applications for pecuniary penalty orders have already been made: see section 135.”

  1. Section 142 of the Act provides that where such an order is made, a charge on property the subject of a restraining order to secure the payment of the penalty amount is created by force of the section.

  2. Section 180 of the Act empowers the court to make examination orders. It provides as follows:

“180   Examination orders relating to restraining orders

(1)   If a *restraining order is in force, the court that made the restraining order, or any other court that could have made the restraining order, may make an order (an examination order) for the *examination of any person, including:

(a)   a person whose property is, or a person who has or claims an *interest in property that is, the subject of the restraining order; or

(b)   a person who is a *suspect in relation to the restraining order; or

(c)   the spouse or *de facto partner of a person referred to in paragraph (a) or (b);

about the *affairs of a person referred to in paragraph (a), (b) or (c).

(2)   The *examination order ceases to have effect if the *restraining order to which it relates ceases to have effect.”

  1. Section 182 provides for the circumstances in which an order can be made. It is in the following terms:

“182   Applications for examination orders

(1)   An *examination order can only be made on application by the *responsible authority for the *principal order, or the application for a principal order, in relation to which the examination order is sought.

(2)   The court must consider an application for an *examination order without notice having been given to any person if the *responsible authority requests the court to do so.”

  1. Section 183 provides for the issue of examination notices by persons who are defined in that section to be approved examiners. The section provides as follows:

“183   Examination notices

(1)   An *approved examiner may, on application by the *responsible authority, give to a person who is the subject of an *examination order a written notice (an examination notice) for the *examination of the person.

(2)   However, the *approved examiner must not give the *examination notice if:

(a) an application has been made under section 42 for the *restraining order to which the notice relates to be revoked; and

(b)   the court to which the application is made orders that *examinations are not to proceed.

(3)   The fact that criminal proceedings have been instituted or have commenced (whether or not under this Act) does not prevent the *approved examiner giving the *examination notice.

Approved examiners

(4)   An approved examiner is a person who holds an appointment under this section.

(5) The Minister may appoint as an *approved examiner:

(a)   a person who holds an office, or is included in a class of people, specified in the regulations; or

(b)   a person who:

(i)   is enrolled as a legal practitioner of the High Court, of another federal court or of the Supreme Court of a State or Territory; and

(ii)   has been so enrolled for at least 5 years; and

(iii)   has indicated to the Minister that the person is willing to be appointed.

(6)   An *approved examiner may resign his or her appointment by giving the Minister a written resignation. The resignation takes effect on the day it is received by the Minister or, if a later day is specified in the resignation, on that later day.

(7) The Minister may revoke an appointment of an *approved examiner.”

  1. Section 185 provides for the form and content of examination notices requiring that such a notice must require the person to attend the examination and specify the time and place of the examination.

  2. Section 186(4) states that “[t]he fact that criminal proceedings have been instituted or have commenced (whether or not under this Act) does not prevent the examination of a person”.

  3. Section 188 of the Act provides that an examination is to take place in private, while s 189 provides that the lawyer of a person being examined may address the approved examiner and examine the person about matters about which the approved examiner or the responsible authority has examined the person.

  4. Section 195 of the Act provides that a person commits an offence for failing to attend the examination, while s 196 provides that it is an offence to refuse or fail to be sworn or make an affirmation, or refuse to answer a question or produce a document. Section 196(1) is in the following terms:

“196   Offences relating to appearance at an examination

(1)   A person attending an *examination to answer questions or produce documents must not:

(a)   refuse or fail to be sworn or to make an affirmation; or

(b)   refuse or fail to answer a question that the *approved examiner requires the person to answer; or

(c)   refuse or fail to produce at the examination a document specified in the *examination notice that required the person’s attendance; or

(d)   leave the examination before being excused by the approved examiner.

Penalty:  Imprisonment for 2 years or 120 penalty units, or both”.

  1. Section 197 deals with privileged information. It is in the following terms:

“197   Privileged information

(1)   Paragraph 196(1)(b) or (c) does not apply if, under:

(a)   a law of the Commonwealth; or

(b)   a law of the State or Territory in which the *examination takes place;

the person could not, in proceedings before a court, be compelled to answer the question or produce the document.

Note: A defendant bears an evidential burden in relation to the matter in subsection (1): see subsection 13.3(3) of the Criminal Code.

(2)   However, paragraph 196(1)(b) or (c) applies if the only reason or reasons why the person could not be so compelled are one or more of the following:

(a)   answering the question or producing the document would tend to incriminate the person or to expose the person to a penalty;

(b)   the answer would be privileged from being disclosed, or the document would be privileged from being produced, in legal proceedings on the ground of *legal professional privilege;

(ba)   the answer would be privileged from being disclosed, or the document would be privileged from being produced, in legal proceedings on the ground of *professional confidential relationship privilege;

(c)   the answer or document would, under a law of the Commonwealth, a State or a Territory relating to the law of evidence, be inadmissible in legal proceedings for a reason other than because:

(i)   the answer would be privileged from being disclosed; or

(ii)   the document would be privileged from being produced.

(3)   To avoid doubt, the following are not reasons why a person cannot, in proceedings before a court, be compelled to answer a question or produce a document:

(a)   the person is contractually obliged not to disclose information, and answering the question or producing the document would disclose that information;

(b)   the person is obliged under a law of a foreign country not to disclose information, and answering the question or producing the document would disclose that information.”

  1. The effect of the section and in particular reference to the application of s 196(1)(b) or (c) (refusal or failure to answer a question, or refusal or failure to produce documents) means that the privilege against self-incrimination and legal professional privilege are effectively abrogated. However, s 198 gives what might be described as direct use immunity in respect of answers given or documents produced in examination. The section is in the following terms:

“198   Admissibility of answers and documents

An answer given or document produced in an *examination is not admissible in evidence in civil or criminal proceedings against the person who gave the answer or produced the document except:

(a)   in criminal proceedings for giving false or misleading information; or

(b)   in proceedings on an application under this Act; or

(c)   in proceedings ancillary to an application under this Act; or

(d)   in proceedings for enforcement of a *confiscation order; or

(e)   in the case of a document—in civil proceedings for or in respect of a right or liability it confers or imposes.”

  1. Section 266A is in the following terms, excluding the table in the section:

“266A   Disclosure

(1)   This section applies if a person obtains information:

(a)   as a direct result of:

(i)   the person being given a sworn statement under an order made under paragraph 39(1)(ca), (d) or (da); or

(ii)   the exercise of a power (by the person or someone else), or performance (by the person) of a function, under Part 3‑1, 3‑2, 3‑3, 3‑4 or 3‑5; or

(b) as a result of a disclosure, or a series of disclosures, under this section or clause 18 of Schedule 1.

(2)   The person may disclose the information to an authority described in an item of the following table for a purpose described in that item if:

(a)   the person believes on reasonable grounds that the disclosure will serve that purpose; and

(b)   a court has not made an order prohibiting the disclosure of the information to the authority for that purpose.

…

Limits on use of information disclosed

(3)   In civil or *criminal proceedings against a person who gave an answer or produced a document in an *examination, none of the following that is disclosed under this section is admissible in evidence against the person:

(a)   the answer or document;

(b)   information contained in the answer or document.

(4)   Subsection (3) does not apply in:

(a)   *criminal proceedings for giving false or misleading information; or

(b)   proceedings on an application under this Act; or

(c)   proceedings ancillary to an application under this Act; or

(d)   proceedings for enforcement of a *confiscation order; or

(e)   civil proceedings for or in respect of a right or liability the document confers or imposes.

Note: Subsections (3) and (4) reflect section 198.

(5)   In a *criminal proceeding against a person who produced or made available a document under a *production order, none of the following that is disclosed under this section is admissible in evidence against the person:

(a)   the document;

(b)   information contained in the document.

(6) Subsection (5) does not apply in a proceeding under, or arising out of, section 137.1 or 137.2 of the Criminal Code (false or misleading information or documents) in relation to producing the document or making it available.

Note:   Subsections (5) and (6) reflect subsection 206(2).

(7)   To avoid doubt, this section does not affect the admissibility in evidence of any information, document or thing obtained as an indirect consequence of a disclosure under this section.

Relationship with subsection 228(2)

(8)   To avoid doubt:

(a)   this section does not limit subsection 228(2) (about a *search warrant authorising the *executing officer to make things seized under the warrant available to officers of other *enforcement agencies); and

(b)   subsection 228(2) does not limit this section.”

  1. Section 266A(2) in its current form was introduced into the POC Act by the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Act 2016 (Cth) (the 2016 Act). The Explanatory Memorandum to the Bill which introduced the Act made the following comments in relation to its introduction:

“167.   Sub-Item (1) provides that the amendments to subsection 266A(2) of the POC Act apply in relation to the disclosure of information after the commencement of this Item, whether the information was obtained before or after that commencement. The amendments to subsection 266A(2) clarify that information may not be disclosed, where the disclosure to an authority for a purpose has been prohibited by a court order. This sub-Item ensures that this protection applies regardless of whether the information subject to the court’s non-disclosure order was obtained before, during or after the commencement. While the amendments may apply retrospectively to cover information obtained before commencement, this retrospective operation does not impose new liabilities or extinguish existing rights. Rather, the application of the amendment in this way extends a further protection to a person who may be concerned that the disclosure of information creates a risk to the person’s rights in a concurrent or anticipated criminal trial.”

  1. Section 315 of the Act provides that proceedings on an application for a restraining order or confiscation order are not criminal proceedings and that the rules of evidence that are applicable in civil proceedings apply. Section 317 deals with onus and standard of proof. It is in the following terms:

“317   Onus and standard of proof

(1)   The applicant in any proceedings under this Act bears the onus of proving the matters necessary to establish the grounds for making the order applied for.

(2)   Subject to sections 52 and 118, any question of fact to be decided by a court on an application under this Act is to be decided on the balance of probabilities.”

  1. Sections 319 and 319A were introduced into the Act by the 2016 Act. They are in the following terms:

“319   Stay of proceedings

(1)   A court may stay proceedings (the POCA proceedings) under this Act that are not criminal proceedings if the court considers that it is in the interests of justice to do so.

(2) The court must not stay the POCA proceedings on any or all of the following grounds:

(a) on the ground that criminal proceedings have been, are proposed to be or may be instituted or commenced (whether or not under this Act) against the person subject to the POCA proceedings;

(b) on the ground that criminal proceedings have been, are proposed to be or may be instituted or commenced (whether or not under this Act) against another person in respect of matters relating to the subject matter of the POCA proceedings;

(c)   on the ground that:

(i) a person may consider it necessary to give evidence, or to call evidence from another person, in the POCA proceedings; and

(ii)   the evidence is or may be relevant (to whatever extent) to a matter that is, or may be, at issue in criminal proceedings that have been, are proposed to be or may be instituted or commenced (whether or not under this Act) against the person or any other person;

(d) on the ground that POCA proceedings in relation to another person have been, are to be or may be stayed.

(3) Paragraph (2)(a) applies even if the circumstances pertaining to the POCA proceedings are or may be the same as, or substantially similar to, the circumstances pertaining to the criminal proceedings.

(4) Paragraph (2)(b) applies even if the subject matter of the POCA proceedings is the same as, or substantially similar to, the matter at issue in the criminal proceedings.

(5) Paragraph (2)(d) applies even if the staying of the POCA proceedings would avoid a multiplicity of POCA proceedings.

(6) In considering whether a stay of the POCA proceedings is in the interests of justice, the court must have regard to the following matters:

(a) that the POCA proceedings, and any criminal proceedings of a kind referred to in paragraph (2)(a) or (b), should proceed as expeditiously as possible;

(b) the cost and inconvenience to the Commonwealth of retaining property to which the POCA proceeding relates and being unable to expeditiously realise its proceeds;

(c) the risk of a *proceeds of crime authority suffering any prejudice (whether general or specific) in relation to the conduct of the POCA proceedings if the proceedings were stayed;

(d) whether any prejudice that a person (other than a proceeds of crime authority) would suffer if the POCA proceedings were not stayed may be addressed by the court by means other than a stay of the proceedings;

(e) any orders (other than an order for the stay of the POCA proceedings) that the court could make to address any prejudice that a person (other than a proceeds of crime authority) would suffer if the proceedings were not stayed.

Note: Examples of orders the court could make to address any prejudice that a person (other than a proceeds of crime authority) would suffer if the POCA proceedings were not stayed include an order under section 319A (closed court) or an order prohibiting the disclosure of information.

319A   Closed court

A court may order that proceedings under this Act (other than criminal proceedings) be heard, in whole or in part, in closed court if the court considers that the order is necessary to prevent interference with the administration of criminal justice.”

  1. Sections 319 and 319A were introduced into the POC Act following the decision of the High Court in Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46; [2015] HCA 5 (Zhao). At the time of that decision, s 319 was in the following terms:

“The fact that criminal proceedings have been instituted or have commenced (whether or not under this Act) is not a ground on which a court may stay proceedings under this Act that are not criminal proceedings.”

  1. In Zhao the Court concluded at [36] that “section 319 is not expressed to refer specifically to a circumstance where the issues in the forfeiture proceedings and the criminal proceedings are substantially identical”:

  2. The Court also noted that where a person is faced with an application for forfeiture brought under s 47 or s 49 of the Act, that person is presented with the choice of whether to defend the proceedings or not. However, the Court stated at [37] that “it does not follow that the POC Act may be taken to imply that every person in that position must proceed to make their choice, regardless of the risk of prejudice to their defence in the criminal trial”. The Court stated at [37] that “[w]hether the forfeiture proceedings continue is a matter for the court to consider in the interests of justice”. The Court stated at [42] that where the offences and the circumstances of the forfeiture proceedings were identical, the risk of prejudice is “plain”. In those circumstances, the Court upheld the decision to grant a stay.

  3. The Explanatory Memorandum to the 2016 Act made the following comments concerning the introduction of the new s 319 and s 319A:

“48.   Firstly, new subsection 319(1) clarifies that the court may grant a stay of civil proceedings under the POC Act if the court considers that it is in the interests of justice to do so.

49.   Secondly, new subsections 319(2)-(5) clarify where a court must not grant a stay. These principles are designed to clarify the intention that concurrent civil and criminal proceedings are possible, and require specific consideration of the individual circumstances and associated risks of prejudice. The amendments clarify that proceedings under the Act may only be stayed where the granting of a stay is the only means of addressing the circumstances (ie. the prejudice that may result to a concurrent or subsequent criminal trial). The proposed amendments are primarily designed to ensure that the court will consider the individual circumstances of the proceedings, including the nature of the overlap between the civil and criminal proceedings, and prevent the risk that a person need only claim a risk of prejudice but not provide evidence explaining the nature of that risk.

…

152. New section 319 is designed to clarify the process for granting a stay of civil proceedings under the POC Act, following the High Court’s decision in Zhao and Jin.

153.   In particular, it clarifies the principles to be taken into account by a court when considering an application for a stay of proceedings under the POC Act, and the grounds on which a stay is not to be granted.

154. New subsection 319(1) provides that a court may stay proceedings under the POC Act that are not criminal proceedings if the court considers that it is in the interests of justice to do so. This subsection replicates current section 319 of the POC Act to ensure that the court’s existing discretion to grant a stay of proceedings in appropriate circumstances is maintained.

155. New subsection 319(2) builds on current section 319 and sets out grounds on which it would not be appropriate to grant a stay. …

156.   A successful stay application will enable a person to delay the determination of the forfeiture proceedings until their criminal trial is complete. Such a delay would have flow on effects on the availability of evidence, would impede the operation of the non-conviction based scheme and would frustrate the objects of the POC Act. The grounds on which a stay is not to be granted are designed to prevent a respondent from claiming merely a generalised ‘risk’ of prejudice to support a stay of proceedings. New subparagraphs 319(2)(a) to (d) are designed to ensure that the court will consider the individual circumstances of the proceedings, including the nature of the overlap between the civil and criminal proceedings, and the specific nature of the risk of prejudice being claimed.

157.   New subsection 319(3) relates to the operation of the new subparagraph 319(2)(a). This subsection is intended to make it clear that a stay is not to be granted under the POC Act on the basis of a concurrent criminal proceeding against the person described in subparagraph 319(2)(a) even if the circumstances pertaining to the proceedings are or may be the same as, or substantially similar to, the circumstances pertaining to the criminal proceedings.

158.   New subsection 319(4) relates to the operation of new subparagraph 319(2)(b). This subsection is intended to make it clear that a stay is not to be granted under the POC Act on the basis of a concurrent criminal proceeding against the person described in subparagraph 319(2)(b) even if the circumstances pertaining to those proceedings are or may be the same as, or substantially similar to, the circumstances pertaining to the criminal proceeding.

159.   New subsection 319(5) relates to subparagraph 319(2)(d). Subparagraph 319(2)(d) provides that a stay must not be granted on the ground that POC Act proceedings in relation to another person have been, are to be or may be stayed. New subsection 319(5) provides that subparagraph 319(2)(d) applies even if the staying of the POC Act proceedings would avoid a multiplicity of POC Act proceedings.

…

161.   New subsection 319(6) relates to new subsection 319(1) and provides for factors that a court must have regard to in considering whether to grant a stay of proceedings. This list is not a closed list, and does not prevent the court from considering other issues in its determination of the interests of justice under new subsection 319(1).

162.   New subparagraphs 319(6)(a) to (e) state that in considering whether to grant a stay of the proceedings, the court must have regard to the following matters:

· that the POC Act proceedings, and any criminal proceedings of a kind referred to in paragraph (2)(a) or (b), should proceed as expeditiously as possible (new subparagraph 319(6)(a))

· the cost and inconvenience to the Commonwealth of retaining property to which the POC Act proceeding relates and being unable to expeditiously realise its proceeds (new subparagraph 319(6)(b))

· the risk of a proceeds of crime authority suffering any prejudice (whether general or specific) in relation to the conduct of the POC Act proceedings if the proceedings were stayed (new subparagraph 319(6)(c))

· whether any prejudice that a person, other than a proceeds of crime authority, would suffer if the POC Act proceedings were not stayed may be addressed by the court by means other than a stay of the proceedings, and (new subparagraph 319(6)(d))

· any orders, other than an order for the stay of the POCA proceedings, that the court could make to address any prejudice that a person, other than a proceeds of crime authority, would suffer if the proceedings were not stayed. (new subparagraph 319(6)(e))

163. These subparagraphs ensure that the court considers other options instead of a stay which may be available to prevent prejudice. A court hearing POC Act proceedings will have access to a range of alternative tools and powers to prevent prejudice to the respondent. These could include requiring evidence to be served, rather than filed, in the first instance, or making orders restricting the disclosure of material prejudicial to a defence of criminal proceedings that would be generated in the course of proceedings under the POC Act. A note is inserted after new subsection 319(6) to give examples of orders the court could make to address any prejudice that a person would suffer if a proceeding under the POC Act were not stayed. This note provides examples of orders that the court could make to address any prejudice that a person (other than a proceeds of crime authority) would suffer if the POCA proceedings were not stayed, to include an order under new section 319A (closed court) or an order prohibiting the disclosure of information.

164. New section 319A, which provides that a court may order that proceedings, other than criminal proceedings, under the POC Act be heard, in whole or in part, in closed court if the court considers that the order is necessary to prevent interference with the administration of criminal justice.”

  1. In dealing with paragraph 49 of the Explanatory Memorandum, Basten JA in Commissioner of Australian Federal Police v Elzein (2017) 94 NSWLR 700; [2017] NSWCA 142 (Elzein) made the following comments at [69]-[70]:

“[69] This statement of purpose failed to address the difficulty identified by the High Court in Zhao, namely that to require an applicant for a stay to explain how his or her answers to questions, or the provision of a written statement as to the source of funds to purchase property, would cause a risk of prejudice to his or her defence, would be to create the prejudice which the stay seeks to avoid. The present form of s 319(2)-(5) does not advance the situation greatly in favour of refusal of a stay. Even in the old form, the High Court stated that the terms of the section “suggest that a person charged with an offence which is relevant to forfeiture or other civil proceedings brought under the POC Act must do more than point to the existence of criminal proceedings in order to obtain a stay of the civil proceedings.

[70] Further, even if the evidence given at a compulsory examination could not be used against the accused, ‘its possession by the prosecution might affect his defence’. That form of prejudice arose because s 266A (as it then stood) did not render unlawful the provision of the evidence of the accused to the prosecution.”

  1. Nevertheless, his Honour reached the following conclusion at [101]:

“[101] Accordingly, the provisions should be understood in their terms as allowing an examination order obtained ex parte to stand after criminal charges have been laid, even though the examination may go to the conduct alleged to constitute the offences and, if appropriate protective orders have been made under s 266A(2), the examination may, absent some other countervailing consideration, be allowed to proceed.”

Internal protection of material received or information gathered as a result of the exercise of powers under the POC Act

  1. A significant issue in the proceedings was whether information gathered by those responsible for administering the POC Act could be “leaked” to those responsible for the investigation and prosecution of criminal proceedings against the persons who were required to give information under the compulsory powers contained in the legislation.

  2. The summary below is based primarily on the evidence of Assistant Commissioner Gaughan, an Assistant Commissioner of the Australian Federal Police (AFP) holding and performing the duties of the position of National Manager of the Organised Crime and Cyber portfolio. His description of the steps taken to secure the information was not disputed on the appeal, although its effectiveness was in issue.

  3. Assistant Commissioner Gaughan gave evidence that on 1 January 2012 the permanent Criminal Assets Confiscation Taskforce (CACT) formally commenced. He stated that its litigation function was transformed to the newly formed Proceeds of Crime Litigation division (the CAL division) as part of CACT. He stated it was that Department that conducts litigation under the POC Act.

  4. Assistant Commissioner Gaughan gave evidence that the CACT is led by the respondent and located within the premises of the AFP. He described the CAL function of the CACT as “an operational legal function tasked with undertaking litigation, representing, and providing advice to the Commissioner in relation to the conduct of litigation for Commonwealth proceeds of crimes matters”.

  5. Assistant Commissioner Gaughan gave evidence that all CAL lawyers are subject to the Charter of Independence and Ethical Responsibilities issued by the Commissioner. The Charter acknowledges that the lawyers will provide professional independent legal advice and maintain integrity, objectivity and confidentiality.

  6. Assistant Commissioner Gaughan stated that “CAL utilise a document management system, known as ‘Worksite’ on which CAL documents are stored and which can only be accessed by CAL team members”.

  7. Assistant Commissioner Gaughan stated that the CAL function of the CACT is overseen by the Manager and General Counsel of Criminal Assets Litigation (MCAL). He stated that position is held by a Mr Stefan Jerga who “holds and exercises the powers, functions and duties of the Commissioner in his capacity as a ‘proceeds of crime authority’ as defined in the POC Act”. He stated that “Mr Jerga is the only individual within the AFP who holds the delegated authority to institute and conduct proceeds of crime litigation” and that “[n]o person other than the Commissioner, can direct Mr Jerga” in the performance of his functions.

  8. Assistant Commissioner Gaughan stated that “[o]n 22 June 2017, Mr Jerga and Commander Peter Crozier issued a joint direction setting conditions as to the management of compulsory disclosed information received by the AFP pursuant to sections 39 and 180 of the POC Act”. He stated that on 27 June 2017 an update to the joint direction was issued. Subparagraph 10(e) of the joint direction as updated was to the following effect:

“Subject to an expressed written authority from MCAL or MCAFAC (as applicable), any person who has received compulsory disclosed information must not have any role in a related criminal investigation or prosecution.”

  1. Assistant Commissioner Gaughan stated that Mr Jerga, having considered the matters arising in these proceedings and the directions currently in place, determined that new governance procedure should be prepared and implemented to protect and safeguard the Coercive Material received in the proceedings. He stated that the purpose of the new governance procedure was to ensure that the conduct of proceedings and discharge of the Commissioner’s functions under the POC Act did not interfere with the integrity of any criminal proceedings and to ensure clarity and consistency in the handling of Coercive Material. Consequently on 16 August 2017, Mr Jerga issued what was described as a “functional governance instrument titled Standard Operating Procedure on the management and disclosure of Proceeds of Crime Act 2002 (Cth) Information” (SOP).

The SOP

  1. As I indicated the SOP was initially issued on 16 August 2017. Clause 5 provided that if there was any inconsistency between the SOP and any other governance instrument, direction or agreement with any other agency, the SOP takes precedence.

  2. The SOP defined ‘Coercive Material’ and ‘POC Act Information’. Those definitions were in the following terms:

“Coercive Material

Any of the following information obtained under the Proceeds of Crime Act 2002 (Cth), including information derived from that information:

a. a sworn statement provided by a person pursuant to an order under s 39;

b.   information obtained during an examination conducted under Part 3-1 of the POC Act, defined for the purposes of this document to mean the following:

i.   any audio / visual recording of the examination;

ii.   a transcript of the examination;

iii.   any notes made by a person attending any such examination;

iv. any information given or documents produced by an examinee at any such examination pursuant to s 185(2) of the POC Act.”

“POC Act Information

Information obtained as a result of:

a. an order under s 39(1)(ca), (d) or (da) of the POC Act, which permit the court to make an order directing a person to provide a sworn statement in respect of assets, liabilities and/or property;

b.   the exercise of a power or performance of a function under Parts 301, 3-2, 3-3, 3-4 or 3-5 of the POC Act. For example, information obtained through these means includes:

i.   information obtained by examining a person (including through the production of documents by that person at an examination conducted under the POC Act);

ii   information obtained through the issuing of a production order, a notice to a financial institution or a monitoring order under the POC Act; and

iii   information obtained under POC Act search warrants.”

  1. Clauses 15, 16 and 17 of the SOP deal with disclosure of POC Act Information and Coercive Material. Those provisions are in the following terms:

“Prohibition against receipt and disclosure of POC Act Information and Coercive Material

15.   POC Act Information and Coercive Material must not be disclosed to, or received by, any person outside CACT, expect where:

a.   It is being disclosed to Australian legal practitioners engaged by CAL in relation to proceedings under the POC Act;

b.   It is being disclosed to a court which made the order pursuant to which the information was acquired;

c.   it is being disclosed in relation to an application made under the POC Act;

d.   disclosure is ordered by a court;

e.   written authority for the disclosure is obtained in accordance with this Standard Operating Procedure; or

f.   as otherwise required by law.

How to apply for permission to make disclosure

16.   Any application for authority to disclose POC Act Information or Coercive Material outside CACT must:

a.   be made to:

i.   MCAL, through the relevant CAL regional coordinator, if the POC Act Information is Coercive Material;

ii.   a CAL regional coordinator or MCAL, if the POC Act Information is non-Coercive Material;

b.   be made in writing;

c.   set out the reason or reasons for which permission to disclose the material is sought;

d. identify any applicable item number in the table in s 266A(2) of the POC Act that permits the proposed disclosure;

e.   identify the person or persons to whom the proposed disclosure is to be made;

f.   provide details of the material proposed to be disclosed; and

g. set out any court orders in place (whether under s 266A or otherwise), and any other factors such as the sensitivity of the material, that are relevant to the proposed disclosure.

Applications for disclosure that must be refused

17.   Any information requesting permission to disclose POC Act Information or Coercive Material outside CACT must be refused if any of the following circumstances applies:

a. a court has made an order prohibiting the disclosure of such material, such as by an order made under s 266A(2) of the POC Act;

b.   an authorised officer, an AFP Appointee, or the Commissioner has given an undertaking to a court, to an examiner or an examinee that the disclosure will not be made either at all or without notice having been given.”

  1. Clauses 20 and 21 of the SOP make provision for maintenance of a register recording disclosure of POC Act information and Coercive Material. They provide as follows:

“Register recording disclosure of POC Act Information and Coercive Material

20.   CAL must maintain:

a.   a register of POC Act Information and Coercive Material disclosed outside CACT, in the form annexed at Attachment ‘C’. The register must be kept in each region by the CAL regional coordinator. On the first Monday of each month a copy of any new entries added to the regional register in the preceding month must be forwarded to the Coordinator Canberra CAL;

b.   a record of each person who has been granted access to a particular item of Coercive Material, in the form of attachment ‘D’.

21. A full record must be kept of decisions to disclose POC Act Information and Coercive Material because disclosure decisions under s 266A of the POC Act are not exempt from review under the Administrative Decisions (Judicial Review) Act 1977 and information disclosed pursuant to s 266A may also be subject to challenges on admissibility grounds.”

  1. The SOP set out requirements for the storage and printing of Coercive Material. These provisions were in the following terms:

“23.   All Coercive Material must be:

a.   if in electronic form:

i.   stored such that access to the information is limited to members of CACT and IT services personnel supporting members of CACT via password protected computers or devices. Without limiting the generality of this requirement, POC Act Information must not be place on PROMIS, shared drives, or any other location accessible by AFP Appointees who are not part of CACT or who are otherwise part of the criminal investigation team; and

ii.   capable of being audited for access: that is, it must be possible to identify details of any access to such material, including by whom the material was access, and the time at which it was accessed; and

b.   if in physical form:

i.   stored in a location to which access is limited to members of the CACT;

ii.   wherever possible, stored in folders or containers that are clearly marked as follows:

‘THIS [FOLDER/CONTAINER] CONTAINS COERCIVE MATERIAL. ACCESS IS RESTRICTED TO CACT PERSONNEL WITH APPROVAL TO ACCESS.’

24.   In respect of paragraph 23.b immediately above:

a.   printing or photocopying of Coercive Material by members of CACT must only occur where strictly necessary;

b.   upon making any hard copy of an item of Coercive Material (whether by printing or photocopying), the person who made the copy must immediately inform the CAL Lawyer with the day-to-day carriage of the matter of the following:

i.   the fact that they have made the copy;

ii.   the date and time the copy was made; and

iii.   whether the copy has been given to another person, and if so, to whom and for what purpose.

25.   Where Coercive Material is to be printed, it must be printed to a printer to which only AFP Appointees within CACT have access.

26.   In the event that a hard copy is destroyed, this must be done securely, and the person who destroys the hard copy must inform the CAL Lawyer with day-to-day carriage of the matter of such destruction immediately.

27.   CAL must maintain a record, for each matter, of each person who is permitted to access a particular item of Coercive Material, along with details of the particulars set out at paragraphs 24.b and 26 above, in the form of attachment ‘D’.”

  1. Clauses 28 to 32 of the SOP deal with receipt, custody and use of Coercive Material and dissemination of disclosure prohibition orders under s 266A. They provide as follows:

“28. Generally, in the ordinary course of a POC matter, Coercive Material is received through a member of CAL in the first instance. In the event that a CACT member not within CAL received Coercive Material in the first instance (e.g. if a s 39 statement is given to a CACT member not within CAL), this must be handled securely by the CACT member and provided to CAL as soon as possible.

29.   The custody and control of Coercive Material in accordance with this Standard Operating Procedure, must remain at all times with CAL, except as follows:

a.   Coercive Material provided by CAL to another member of CACT;

b.   Coercive Material that has been disclosed outside CACT (e.g. to another investigative authority or to an AFP investigation team) in accordance with this Standard Operating Procedure.

30.   Sometimes, CACT investigators and CACT forensic accountants refer to Coercive Material in order to undertake further information gathering enquiries. The further enquiries undertaken and the results of those enquiries cannot be recorded on PROMIS, shared drives or open access ICT systems where it directly cites Coercive Material. Nothing that CACT investigators and/or CACT forensic accountants acquires by way of such further enquiries can be disseminated outside of CACT without going through the procedure set out at paragraphs 15 to 19 above.

31.   Where any documents, including affidavits, directly cite Coercive Material, these need to be securely stored in accordance with the procedures set out in this Standard Operating Procedure that apply to Coercive Material (this includes, for example, that these documents cannot be stored on PROMIS, shared drives or open access ICT systems, as per paragraph 23 above).

32.   If a court makes an order prohibiting disclosure of POC Act Information, or it an authorised officer, an AFP Appointee, or the Commissioner has given an undertaking to a court, an examiner or an examinee that a disclosure of POC Act Information or Coercive Material will not be made either at all or without notice having been given, the CAL Lawyer with the day-to-day carriage of the matter must ensure that a copy of the order or notification of the undertaking is provided to:

a.   MCAL;

b.   the CAL Coordinator in the State or Territory in which the order was made or the undertaking given;

c.   the Superintendent with oversight of CACT in the State or Territory in which the order was made or the undertaking given;

d.   National Coordinator CACT;

e.   all members of CACT in the State or Territory in which the order was made or the undertaking given and any other CACT members who are otherwise involved in the matter; and

f.   the Superintendent with oversight of any related criminal investigation.”

  1. After summarising the submissions of the parties, the judge noted the following explanation, given by the Commissioner, as to the operation of the scheme:

“[155]   In summary, in the Commissioner's submission, there are four mechanisms established by the evidence according to which it is open to the Court to assess the realistic risk of the leakage of Coercive Material to the prosecuting or investigating authorities. In the Commissioner’s submission, each of these mechanisms individually, and all of which in combination, will allow the Court to conclude that the risk of unintended or accidental disclosure has been mitigated to such an extent that, while it is not neutralised in absolute terms (and neither, realistically, could it be), there remains no real or demonstrable risk of unauthorised disclosure of Coercive Material to the prosecuting or investigating arm of the AFP of a kind which would satisfy the Court that the interests of justice require a stay of the examination proceedings, or that any of the related relief sought by the defendant’s notice of motion should be granted.

[156]   The first of the four mechanisms is the disclosure prohibition order made on 21 June 2017, already discussed above. Secondly, evidence of the rigorous system that has been implemented under the Commissioner’s initiative to prevent, manage and detect the disclosure of Coercive Material that is in the possession of the Commissioner, the ongoing management of which is supervised by A/Commissioner Gaughan as his delegate. Thirdly, even were an unauthorised disclosure to occur, the Court would not immediately conclude it would be unlawful, or that it would result in unfair prejudice to a criminal trial, in circumstances where derivative use of Coercive Material is expressly permitted by the POC Act. Fourthly, even were unauthorised disclosure to occur, given the rigours of the SOP that disclosure is likely to be detected either within CACT or in the process of the AFP discharging its investigative and prosecutorial functions as the criminal proceedings are processed through the courts and, in that way, brought to the attention of the CDPP as the prosecutor and, ultimately, if necessary, to the attention of the trial Court. Mr McLure submitted that the Prosecutor's ongoing duty of disclosure is one of a raft of protective measures that are available to address any prejudice that may result from unauthorised disclosure should it occur.

[157]   The Commissioner acknowledged that despite the rigour inherent in those four interconnected mechanisms, there is no absolute guarantee that there will not be the disclosure of derivative information which has been so subtly interwoven with the authorised disclosure of Coercive Material as to be practically undetectable. He submitted, however, that the defendants’ failure to give a tangible example of how that might occur in this case and, equally as critically, to demonstrate in a practical and informed way how, were that to occur, that it would be to the disadvantage or prejudice of these particular defendants in the conduct of their defence to the criminal proceedings, allows for a finding, consistent with the settled authorities, that it is not a risk of a kind which would warrant a stay of the examination proceedings in the interests of justice or the making of orders of a similar kind with respect to the information in the Sworn Asset Statements.”

  1. The judge further noted, in addressing any orders that the Court could make with respect to prejudice, pursuant to s 319(6)(e):

[291]   In addition to the submissions the Commissioner advanced concerning the scope of the non-disclosure order already in place, in final submissions the Commissioner consented to a further order expressly prohibiting disclosure within the AFP to any person involved in the criminal investigation or prosecution of the defendants (if such further order be thought necessary to clarify the application of the existing order to the AFP).”

  1. The judge’s conclusions as to the effectiveness of the arrangements undertaken and proposed by the Commissioner were expressed in the following terms:

“[293]   The Commissioner has separately addressed what I am satisfied is the considerable weight that should be attributed to the terms of the non-disclosure order already made in the proceedings and the regime in place to manage Coercive Material. In my view the combined effect of this evidence ameliorates to a very significant degree the risk of the disclosure of information that may adversely impact on the defendant’s right to a fair trial conducted in accordance with adversarial principles.

[294]   The Commissioner further submitted that the prosecutor's duty of disclosure, which is binding through all phases, allows this Court to be satisfied that any inadvertent disclosure by CACT or CAL of the information obtained from the compulsory examination of the defendants would, in all likelihood, come to the attention of the prosecuting authorities as the preparations for trial continue. …

…

[296]   Whilst it is true that the SOP is a new initiative and to that extent untested, I am well satisfied that the Commissioner has comprehensively addressed the risks associated with the management of Coercive Material and the risks associated with the leakage of that material by the rigour of the procedures specifically designed to protect against that risk. I am also well satisfied that the systems that are currently in place to militate against the risk of the leakage of Coercive Material already in the Commissioner’s possession and the information that is likely to come into his possession are both rational and enforceable.”

(iv)   risk of disclosure – challenge on appeal

  1. The challenge to these findings in the notices of appeal was expressed in somewhat broad terms under the heading “Leakage and use”. Grounds 4 and 5 were expressed as follows:

“4   Leakage and use. The Primary Judge, having found, as was common ground, that risks of dissemination and use by prosecutors were reduced by:

a. an order under s 266A of POCA;

b.   a procedure ("Standard Operating Procedure”) designed to address the risk of dissemination to prosecutors of the content of an examination and material obtained derivatively therefrom, insofar as information is identified as derivative;

erred by failing to make findings on the submissions made as to the risks that remained, and in failing to assess the risks that remained, of compulsorily acquired information assisting a prosecution.

5 The Primary Judge should have found that, despite the s 266A order and the Standard Operating Procedure and prosecutor duties where prosecutors identify what they receive as derivative material, there remained a relevant risk of disclosure and use in a prosecution of derivative material, heightened where ‘the subject matter’ of the [two] proceedings is the same or substantially similar...”

  1. The written submissions did little more in this respect than note that the judge’s findings were careful not to suggest a guarantee of non-disclosure, with the consequence that an acknowledged risk of disclosure remained.

  2. In oral submissions, counsel conceded that there were a number of protections in place, but submitted that one mechanism which was absent was the ability of the examiner to “curtail questions”. [74] That contention, did not, however, go to the question of leakage or inadvertent disclosure. Counsel dealt separately with the complaint that his submissions at trial had not been addressed by the primary judge. However, the judge summarised the submissions of both parties and, evidently taking them into account, accepted that there was no guarantee of non-disclosure and that a risk, albeit much diminished, remained. If the submission were pressed, it should be rejected. However, it appeared to be recast in the course of discussion to a complaint that the level of risk, however described, was not fed into the balancing exercise. [75]

    74.    Tcpt, 29/10/18, p 6(15).

    75.    Tcpt, p 25(45).

  3. The substantive complaint about the mechanisms put in place was expressed as follows: [76]

“…[U]nless staff within the proceeds of crime area identify material as derivative there is no basis upon which they would ask to even make an application for disclosure to prosecutors. All of this policy is premised upon persons within the proceeds of crime section identifying material as derivative, effectively an impossible task. What could have occurred, but didn't, is putting a complete barrier between the proceeds of crime people and prosecutors.”

76.    Tcpt, p 27(30).

  1. Counsel accepted however that sufficient protection would be accorded if there were “a complete barrier between the proceeds of crime section of the AFP and prosecutors.” It was said to be supported by the reasoning of the majority in Strickland. This submission will be addressed in considering the balancing exercise; there was no error in the judge’s assessment of the strength of the protocol and the residual risks of leakage.

(g)   prejudice to Commissioner if stay granted

  1. It is clear that the Court is required to have regard to the risk of the Commissioner suffering prejudice if the proceedings are not stayed: s 319(6)(c). This led to a dispute before the primary judge as to whether there was utility in the conduct of an examination at the present time, rather than after the criminal proceedings had been concluded.

  2. For this purpose, the Commissioner relied upon two propositions in favour of a demonstrable utility in conducting the examinations, namely, first, that the property which had been located and was the subject of restraining orders amounted to some $42 million, whereas the amount identified as the subject of the conspiracy charge was in the order of $89 million. [77] Secondly, Mr Menon alleged a failure on the part of the primary judge to reject the Commissioner’s submission that an examination might permit the identification of further property from which a pecuniary penalty order might be met. It was said to be an “improper use of the examination power” to seek such information “merely for the purposes of a putative [pecuniary penalty order].” [78]

    77. Primary judgment at [285].

    78.    Written submissions (Menon and Onley) 7 October 2018, par 93.

  3. In addition, some little time was spent at the hearing before the primary judge dealing with evidence called by the Commissioner of an audit by the Australian Taxation Office of the outstanding tax liabilities of companies involved in the alleged conspiracy, which identified an amount of $160 million as the total outstanding tax liabilities. [79] The primary judge accepted Mr Menon’s submission that “the tax liability of the various corporations implicated in the taxation fraud does not represent the value of the benefits the defendants derived from what is alleged [to be] their criminal involvement in the fraud.”[80]

    79. Primary judgment at [172].

    80. Primary judgment at [287].

  4. Unsurprisingly, the applicants did not complain about that finding; they did, however, challenge the consequential finding that “it does not follow that the examinations into their affairs would be inutile.” [81] The criticism of the finding was that it did not address the correct test, which was that the Commissioner had to establish material or significant prejudice resulting from delay in examining the applications “for purposes of locating and restraining additional assets which have not already been restrained.” [82]

    81.    Written submissions (Menon and Onley), 7 October 2018, par 96.

    82.    Ibid.

  5. In assessing the applicants’ submissions, it is necessary to distinguish two considerations. The first is whether there was any reason to suppose that examinations of the applicants would not provide the Commissioner with information which would allow the identification and restraint of property for the purposes of the Act. The second consideration is whether, assuming the possibility of additional information is accepted, the Commissioner might suffer prejudice if the examination were to be delayed until after completion of the criminal proceedings.

  6. These questions raise different issues, which will affect the way in which questions of utility and prejudice are to be addressed. For this purpose, it was not the applicants’ case that the examination orders could not, or should not have been made. Indeed, examinations have been carried out, albeit on a limited basis, the Commissioner agreeing not to pursue questions with respect to issues which would or might arise in the course of the criminal proceedings. To avoid, or set aside, examination orders, otherwise pursued within the structure and for the purposes of the Act, there may have been an onus on the applicants to demonstrate inutility. There was no evidence called or relied upon by the applicants in the present case in pursuit of that object.

  7. So far as the question of delay was concerned, and on the assumption that information might be obtained pursuant to a further examination of the applicants, which might in turn lead to the location of property in which they had some interest or over which they had some control, it may be inferred that the risk of dissipation or removal of property from the jurisdiction will continue unless and until a restraining order is in place. The difference between the value of the property restrained and the amount allegedly obtained through the fraudulent scheme demonstrates that a large proportion of the proceeds of the alleged fraud have not been identified. Whether the balance has been entirely dissipated and is beyond recovery is not known. An examination into the “affairs” of a person may include, but will not be limited to, “the nature and location of property of the person or property in which the person has an interest” and “any activities of the person that are, or may be, relevant to whether or not the person has engaged in unlawful activity of a kind relevant to the making of an order under this Act.”[83]

    83. Proceeds of Crime Act, s 338, Dictionary, affairs.

  8. There may be practical difficulties in a person the subject of an examination order demonstrating to a court that there is no utility in conducting an examination. Equally, it would not be easy for the Commissioner to establish that an examination will provide relevant information, in circumstances where that information is unknown. Nevertheless, it would undermine the purpose of the information gathering process provided by s 180 if the court were to act on the assumption that, absent specific evidence of prejudice to the Commissioner, the conduct of the proposed examinations should be stayed.

  9. The applicants referred to the fact that in Zhao [84] the High Court, in concluding that a stay had properly been granted, noted that the person sought to be examined could point to a risk of prejudice, while the Commissioner could not. [85] However, the stay in Zhao was directed to the continuation of proceedings for the forfeiture of property until relevant criminal proceedings had been completed. The case was not concerned with the preliminary steps of information gathering for the purposes of obtaining restraining orders.

    84.    See fn 71 above.

    85. Zhao at [47].

  10. The applicants also called in aid a finding by this Court in McGlone, [86] approving a factual finding “that there was no practical prejudice of any significance to [the Commissioner] if the examinations were delayed.” That finding was based on the fact that cash suspected of being the proceeds of drug dealing, which had been found at the premises of the two accused, had been seized and was in the Commissioner’s possession. [87] Thus, while forfeiture might be delayed, the primary judge found that “that was not practical prejudice.”

    86.    See fn 71 above.

    87.    McGlone at [38(3)].

  11. The language used in particular cases will often reflect the circumstances specific to that case. Caution may be required before inferring that particular terms were intended to encapsulate a legal principle. It is by no means clear that in McGlone the reference to “practical prejudice of any significance” was intended to exclude, as immaterial, the possibility that information might be obtained with respect to, for example, moneys which were believed to have been fraudulently misappropriated and which had not been located.

  12. So far as delay was concerned, it was not anticipated at the time of the hearing before the primary judge that a trial would be listed to take place within one year. At the time of the hearing of the appeal, the criminal proceedings remained in the Local Court pending completion of a committal hearing. It is still not anticipated that the criminal trial will commence within 12 months. Although there has been further delay caused by the appeal process, that is not a delay for which the Commissioner is responsible.

  13. In the circumstances set out above, the primary judge was correct to conclude that there would be a level of prejudice to the Commissioner if the proposed stay were granted.

(h)    balancing exercise – interests of justice

  1. The final challenge by the applicants was error by the primary judge in failing to conduct a “balancing exercise” between the risks of prejudice to the respective parties.

  2. Section 319 does not suggest that a balancing exercise is required. Rather, it requires that the Court determine whether it is “in the interests of justice” that a stay be granted. To speak of a balancing exercise suggests that there is a criterion of comparison, such as the degree of disadvantage to the respective interests. However, that is only partly true. The interests themselves are not of a kind. It is likely that the Court will be less solicitous of a significant risk to the Commissioner’s ability to recover proceeds of crime if there is some risk of prejudice to the conduct of a criminal trial. What is required is an evaluative judgment which will depend upon the circumstances of the case.

  3. The standard to be applied, namely the interests of justice, is informed by both general law principles and the statutory context. The primary consideration to be taken into account is the protection of the forthcoming trial (or trials) with respect to the criminal charges involving the applicants. While the expeditious pursuit of the forfeiture of assets under the Proceeds of Crime Act is an important consideration, careful attention should be given, consistently with the terms of s 319, to the avoidance of orders under the Act which might render a later criminal trial unfair. On the basis that the existence of systemic prejudice would be insufficient to warrant a stay, the applicants contended that a complete barrier to non-disclosure was required. This was because of the significant difficulties in determining what steps may have been taken by the prosecution team, even inadvertently, on the basis of information obtained through compulsory disclosures if there were to be any communication between the two teams.

  4. The judge accepted the detailed evidence given on behalf of the Commissioner as to the practical limits on establishing a “complete barrier”, while noting the very considerable efforts which were being taken to avoid leakage of compelled disclosures and derivative information.

  5. On the appeal, the applicants did not demonstrate that the approach of the trial judge was erroneous in any specific respect, nor that, on the evidence, any other conclusion should have been reached in exercise of a discretionary power, even in the absence of identifiable error.

  6. It would have been a legitimate complaint if the judge had failed to take into account the mandatory considerations identified in s 319(6), or had failed to give appropriate weight, for example, to the interests of the applicants and the community in a fair trial. Undoubtedly there were competing interests; but none was ignored or given inappropriate weight in reaching the conclusion that neither a stay of the examinations, nor an order limiting the use to which the sworn assets statements might be put, should be made.

Conclusions

  1. In the result, no material error has been demonstrated in the reasoning of the primary judge. No alternative form of relief need be addressed, but one further matter may be noted.

  2. To the extent that it might become necessary for the Court to consider the form of an additional non-communication order under s 266A, the applicants proffered a draft order in the following terms:

“Draft order in respect of a barrier

1.   Until further order, and subject to any order of a court with jurisdiction under the Proceeds of Crime Act 2002 (Cth) (POCA court), any person who, at any time after the date of commencement of any examination of Mr Onley, Mr Anquetil or Mr Menon, is within the Criminal Assets Confiscation Taskforce (including secondees) or who is present at such examination (CACT Personnel) is prohibited from communicating with any person who is not a CACT Personnel (other persons) in connection with the subject matter of Operation Elbrus, except on an application under the Proceeds of Crime Act 2002 (Cth) provided that the CACT Personnel first brings this order to such court’s attention for consideration as to the making of suitable orders as to confidentiality or otherwise.

2.   For clarity:

a.   Other Persons includes any person connected with the prosecution of either Mr Onley, Mr Anquetil or Mr Menon, liquidators of entities connected with Operation Elbrus and any member of any other state, commonwealth or foreign agency.

b.   CACT Personnel who are secondees from the Australian Taxation Office are prohibited from being involved in audits or taxation assessments in connection with the subject matter of Operation Elbrus.”

  1. Both the structure and language of this draft order could be improved and some amendments were made in the course of submissions; the broad purpose is reasonably clear. That purpose is to quarantine information obtained in the course of an examination of each and all of the applicants so that it is used only for purposes relating to the confiscation of assets and is unavailable to any person associated with the prosecution of the criminal proceedings. There was discussion of similar proposals in the court below; the primary judge rejected them as impractical, unnecessary, or both.

  2. Because no error has been identified in the conclusion reached by the primary judge, it is not necessary or appropriate to address these proposed orders. However, they illustrate the point of departure between the parties on the primary matter in dispute on the appeal.

  3. There should be a grant to each applicant of leave to appeal, but the appeals should be dismissed. The applicants must pay the respondent Commissioner’s costs in this Court.

  4. MEAGHER JA: I agree with the orders proposed by Basten JA and, subject to one matter, with his reasons for the making of those orders. What follows adopts the abbreviations used by his Honour. That matter concerns the issue raised by ground 18 of Onley and Menon’s proposed amended notice of appeal and its reliance on what I wrote in Commissioner of the Australian Federal Police v Cacu [2017] NSWCA 5 at [31]-[35]; 264 A Crim R 427. Those tentative observations were dicta, made without the benefit of any argument on the relevant question, and in circumstances where the Commissioner’s application for leave to appeal was made in the absence of a contradictor. They were also directed to a particular understanding as to the form of the statement to be sworn, based on an interpretation of the schedule attached to the orders. That schedule was in the same terms as schedule 101 in the present case.

  5. Ground 18 is directed to orders 174, 175 and 176 made by the primary judge on 16 May 2017. In terms that ground is broad enough to raise the three issues to which I referred in Cacu at [34]. However in argument before this Court, the scope of the challenge to the validity of those orders was restricted to the first of those issues, namely whether an order under s 39(1)(ca) could require not only the provision of particulars in relation to property owned by the person but also property owned by any company of which he or she was a director. No challenge was directed to the second and third of the matters to which I referred.

  6. In those circumstances I agree with the Chief Justice that notwithstanding the breadth of this ground as formulated, it is to be addressed only by reference to the matter identified in argument. For the reasons given by the Chief Justice at [253]-[256] and by Basten JA at [325]-[326] that argument should be rejected. My observations in Cacu did not have regard to the extended definition of “interest, in relation to property” in s 338 of the Act which is sufficient to extend the potential application of s 39(1)(ca) to property of a company of which the relevant person is a director. Where the remaining matters to which I made reference in Cacu are not pressed and those matters have not been the subject of any argument or analysis by either party to the appeal, I do not propose to join in Basten JA’s observations about them.

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Endnotes

Decision last updated: 10 May 2019

Most Recent Citation
Cases Cited

62

Statutory Material Cited

13

David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43
David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43
David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43
Cited Sections