Opal Storm Pty Ltd v AFP
[2017] VCC 210
•14 March 2017
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE | Revised Not Restricted Suitable for Publication |
Case No. CI-16-02340
IN THE MATTER OF the Proceeds of Crime Act 2002 (Cth)
And
IN THE MATTER OF AN APPLICATION BY
| OPAL STORM PTY LTD, Thilini Maheshika EKANAYAKE, ACN 128564312 PTY LTD and Nayanaka Arjuna SAMARAKOON | Applicants |
| AND | |
| COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE | Respondent |
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JUDGE: | HER HONOUR JUDGE COHEN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 23 and 24 February 2017 | |
DATE OF RULING: | 14 March 2017 | |
CASE MAY BE CITED AS: | Opal Storm Pty Ltd and Ors v AFP | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 210 | |
REASONS FOR DECISION
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Subject: CONFISCATIONS;
Catchwords: Ex parte orders; constitutional validity of ss 26(4); whether power to declare another judge’s order invalid; whether residual implied power to order rehearing of ex parte application for restraining order despite s 42.
Legislation Cited: Proceeds of Crime Act 2002 (Cth) ss 18, 26, 42,182
Cases Cited:International Finance Trust Company Ltd & Anor v NSW Crime Commission & Ors [2009] HCA 47; Director of Public Prosecutions (Cth) v Kamal (2011) 248 FLR 64; Ex Parte Application by the Commissioner of the AFP [2014] NSWSC 130
Decision: For the respondent
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APPEARANCES: | Counsel | Solicitors |
| For the Applicants | Mr T Gyorffy QC with Ms E Ruddle | Halperin & Co Pty Ltd |
| For the Respondent | Ms K Walker QC with Ms C Hollingworth | Criminal Assets Litigation, AFP |
HER HONOUR:
1 On 3 June 2016, His Honour Judge Lacava made orders under the Proceeds of Crime Act 2002 (Cth) (“the Act”), restraining certain property, and directing the examination of a suspect[1], Mr Samarakoon. This application seeks to challenge the validity of those orders, or alternatively seeks a rehearing of them.
[1]A definition of “suspect” is contained in the dictionary s 338 of the Act. Mr Samarakoon has been charged with two counts of obtaining financial advantage by deception.
2 The application seeks declarations as to the constitutional validity of sub-sections 26(4) and 182(2) of the Act, under which the orders were respectively sought, and alternatively as to whether there remains implied power in the court to allow a rehearing of ex parte applications for the restraining orders and the examination order made in this case.
3 The respondent resists the declarations sought. It also argues that there is a threshold jurisdictional issue, namely that this court does not have jurisdiction to make the declarations sought. Towards the end of the hearing, the respondent’s counsel sought a preliminary ruling on this question before determination of the constitutional question[2], notwithstanding that the latter had been extensively argued both in written submissions and oral hearing. The applicants argue that what is raised as the threshold jurisdictional question in this case is actually the substantive constitutional question, so should proceed. Alternatively, they urge me to decide all issues raised, as they were all thoroughly and seriously argued by both sides, and under the principles of the Civil Procedure Act 2010 (Vic), it would be more expeditious and efficient use of the time and resources of both the parties and the court to decide the substantive issues as well as any threshold jurisdictional one at this stage.
[2]T 134, l 20-27; T136, l10-19
4 For reasons that shall be explained, I have prepared my reasons on both the jurisdictional question and substantive issues.
The Orders and this Application
5 On 3 June 2016, Judge Lacava made orders restraining three properties, deposits in respect of sales of two of those properties, and a bank account. The first-named applicant, Opal Storm Pty Ltd, is the registered proprietor of one of the properties and is the named holder of the bank account. The second-named respondent, Ms Ekanayake, who is the wife of Mr Samarakoon, is the registered proprietor of one of the properties. The third-named respondent, the company ACN 128564312 Pty Ltd, is registered proprietor of the third property. Judge Lacava further made an order for the examination of Mr Samarakoon, the fourth-named applicant.
6 Judge Lacava’s orders were all made “ex parte”, and that is the crux of the present application. The respondent had utilised section 26(4) of the Act in respect of the restraining orders, and section 182(2) for the examination order, seeking that the applications for those orders be considered by the court without notice to interested persons.
7 The first three applicants seek declarations:
(i) that s26(4) of the Act is constitutionally invalid on the basis it directs Victorian courts as to the manner of the exercise of their jurisdiction, contrary to Chapter III of the Constitution; or
(ii) that the applicants are entitled to a rehearing of the respondent’s application for a restraining order pursuant to the inherent jurisdiction of the court that made the order relying on s26(4) of the Act.
8 The fourth applicant seeks declarations:
(i) that s182(2) of the Act is constitutionally invalid on the basis it directs Victorian courts as to the manner of the exercise of their jurisdiction contrary to Chapter III of the Constitution; or
(ii) that the applicant is entitled to a rehearing of the respondent’s application for an examination order pursuant to the inherent jurisdiction of the court that made the order relying on s182(2) of the Act.
9 In its written submissions, the respondent conceded that the court retains power to rehear the original application under s 182. In light of that concession, the declarations sought by Mr Samarakoon were no longer pursued.
10 The hearing of the application proceeded in respect of the relief sought in relation to the restraining orders and the meaning and validity of sub-section 26(4). The issues to be decided[3] therefore are:
[3]Each side framed the issues differently, disagreed with the other’s, and I have framed them differently from both sides’ versions
(i) Whether this court has power to grant the declaratory relief sought by the first three applicants.
(ii) Whether ss 26(4) of the Act under which Judge Lacava made the restraining orders is constitutionally invalid;
(iii) Whether the court retains an implied power to allow rehearing of ex parte applications for restraining orders or whether s 42 has wholly replaced that power.
(iv) If this court has the power to order a rehearing of the application for restraining orders, should it order a rehearing to each of the first three applicants?
Does this court have power to make the declarations sought?
11 The respondent submitted that there was no jurisdiction for this court to grant the declarations sought.
12 The Commissioner’s submission is that this court lacks jurisdiction to make the first declaration sought – that s 26(4) under which the restraining order was made is constitutionally invalid – because although this court has power generally to grant declaratory relief, this declaration would give no substantive relief and what is in fact sought here is a collateral challenge to the orders, tantamount to an appeal, or review in the nature of a prerogative writ.
13 The applicants concede that both an appeal or judicial review are outside this court’s powers, but argue that that is not what is sought here as there is no attempt to review the merits of Judge Lacava’s decision. They argue that a recognised exception to the preclusion of a court from revisiting its own orders is where those orders were obtained ex parte[4]. They argue that what they are seeking is a declaration as to whether this court can proceed to act on the restraining orders which it could not if they were invalid[5]. They say that if made, the declaration sought that s26(4) is constitutionally invalid would be followed by consequential orders disposing of the other applications in the proceeding that are contingent on there being restraining orders in place.[6] They argue that the applicants should not be put to the expense and effort of an appeal or application for judicial review to the Supreme Court, where this court has the power to deal with the issues.
[4]International Finance Trust Company Ltd & Anor v NSW Crime Commission & Ors [2009] HCA 47 at [130]
[5]T 142, l 20 -29.
[6]T 143, l143, l 8 - 23
14 The comparison was made with the power of this court to vacate or set aside orders previously made, including orders made by other Judges. That power is exercised frequently in relation to procedural orders, such as vacating trial dates, or extending or dispensing with previously imposed time limits, or in the exercise of a further function of the court such as where circumstances have changed or the purpose of the order has been expended. Indeed, it is not uncommon for a restraining order to be varied to enable a sale by a mortgagee in possession, or the substitution of the value of an asset for the asset itself, or where a claim for exclusion has been resolved, or where the purpose for restraint of a property no longer exists or has been fully expended. What is sought in the current situation is different. The first declaration seeks to have declared invalid another judge’s substantive order, and in my view that is the equivalent of judicial review of the order.
15 Even though the proceeding is not finally determined, as a restraining order is only a step to hold and preserve assets of a suspect, until potential forfeiture is determined, I consider that the declaration as to the validity of the section on which the order was based is to review its substantive validity.
16 Finally, the first declaration sought is not the same as the seeking of a rehearing of the application for those orders due to their having been heard and determined ex parte. I do not consider that that exception to the preclusion of courts revisiting their orders can be used to achieve a declaration that the earlier order is invalid or based on an invalid statutory provision. The avenue to a rehearing “inter partes” is the subject of the alternative, second declaration sought.
17 For the above reasons I am satisfied that I do no have the jurisdictional power to make the first declaration sought.
18 However, that does not dispose of the threshold issue for the entire application, and I am not prepared to leave the matter as a preliminary ruling at this stage. That is because there is a second, alternative, declaration sought which is of a different nature to the first.
19 The second declaration sought is as to whether there is a residual implied power to allow a rehearing of the application for restraining orders. In my view that is not capable of a preliminary ruling, because it requires consideration of the substantive issue as to whether it should be granted. As already noted, there is a recognised exception to the preclusion of courts revisiting orders where the orders were made ex parte, and the respondent has conceded in this case that in relation to s 182 of the Act there remains power to allow a rehearing of an application for an examination order.
20 As I must consider the substantive issue for the second declaration sought, and as it overlaps with the substantive issue behind the first declaration, and as all issues were thoroughly argued, I propose to give a decision on both.
Is s 26(4) constitutionally invalid?
21 The applicants base their argument on the High Court decision in International Finance Trust Company Ltd & Anor v NSW Crime Commission & Ors [7], in which a similar but not identical provision of another statute relating to confiscation of assets was declared invalid.
[7][2009] HCA 47
22 The applicants rely heavily on the reasons of French CJ who considered that the provision on its proper construction impermissibly restricted the state court in the application of procedural fairness, by requiring the state court to hear and determine an application for restraining orders ex parte. French CJ held it was not to the point that other provisions of the Act enabled the orders to be varied by exclusion orders.
23 The respondent points out that other judges in that case did consider that other provisions in the subject Act that enabled variation or setting aside were relevant to the issue of whether the provisions were constitutionally invalid.
24 Further, the respondent relies on a decision of the Western Australian Court of Appeal in Director of Public Prosecutions (Cth) v Kamal[8] in which the constitutional validity of s26(4) was considered and upheld. Further, in upholding the validity of the secition that court dealt at length with all of the issues raised by the applicants in the present case.
[8](2011) 248 FLR 64
25 There is no dispute that this Court ought follow decisions from other states’ intermediate appellate courts unless this Court considers them to be “plainly wrong”[9], and that principle is squarely enlivened in this case. Although not strictly binding therefore on this Court, that decision ought to be followed unless I consider it to be plainly wrong. The applicants urge me to find it “plainly wrong”, for a number of reasons but cumulatively because they argue it dealt with section 26 in isolation from sections 18 and 19.
[9]Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [135]
26 For the purposes of considering whether s 26 (4) suffers the constitutional invalidity as in International Finance, its meaning must first be considered. There is no dispute about the relevant principles of statutory construction summarised in paragraph 13 of the respondent’s Outline of Submissions or the authorities from which they are extracted. The only area of divergence between the parties is that where the respondent emphasises the principle that a court construing a statutory provision must “strive” to give meaning to every word of the provision, the applicants emphasise that “strive” does not mean “strain”.
27 The construction of ss26(4) must therefore first be approached on its actual text, in the context of the Act as a whole and with due consideration of the legislative purpose derived from the legislation.
28 Sections 18 was the basis of the restraining orders in the present case, relating to property of a person suspected of committing serious offences. It mandates that a court make a restraining order if certain grounds are met.
29 Under a divisional heading “How restraining orders are obtained”, section 25 provides that a proceeds of crime authority may apply for a restraining order, and then 26 of the Act provides as follows:
“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.”
30 In sub-section 26(4) what is mandated is that the court “consider” the application without notice to interested persons. In my view the plain meaning of the word “consider” does not necessarily include “decide” or “determine”, so does not necessitate a conclusion being reached at that stage. That interpretation is supported by the contrast of use in the following sub-section of the word “determine”. In Kamal’s case that contrast was also drawn with the word “hearing”.
31 Turning to the context of the whole of s26, sub-sections 26 (1), (2) and (3) are all specifically subject to ss(4). They involve the obligation on the responsible authority to give notice of such an application to owners and other people who may have an interest in the property, and the court hearing the application to be satisfied that the owner of the property has received reasonable notice of the application. Sub-section(4) mandates consideration without notice if the responsible authority requests the court to do so.
32 In my view, a natural and practical meaning and application of what subsection (4) requires is that the court to which such application and request is made must not refuse to entertain the application because notice has not been given. Even though notice has not been given, in such circumstances, the court must consider the application - hear submissions, read affidavit material and give thought to the merits of the application. In my view, that does not necessitate the court concluding its consideration or proceeding to a decision on the application at that stage. In my view such consideration can include whether the matter ought proceed to a determination without notice having been given to the owner or other interested parties.
33 Next, sub-section 26(5) enables the court to direct the responsible authority to give or publish notice of the application to a specified person or class of persons. The applicants argue that that only applies to persons not already specifically entitled to notice under ss (1) and (2). I see no reason to construe ss (5) so narrowly, and coming as it does immediately after the provision for consideration of an application without notice, it falls naturally to be utilized following consideration under ss(4) if a court is not satisfied that it should proceed to finally determine the application without notice to any interested persons. The respondent produced a NSW Supreme Court decision in which that approach was taken and Button J directed that notice be given under ss 26(5) where consideration had commenced ex parte under ss 26(4) [10].
[10]Ex P Application by the Commissioner of the AFP [2014] NSWSC 130. An analogous approach was taken by Riordan J under s 182 in Re Application by the Commissioner of the AFP [2015] VSC 774, although that section does not contain the equivalent of ss26(5).
34 I have taken into account that s 18 mandates that the court make a restraining order where the grounds are made out, and that as those grounds are of a nature that if not tested may well provide a low threshold[11]. However, I do not consider that that changes the meaning of the terms of s 26(4), and consider that it would strain them to read “consider” as necessarily including determination, and sub-section (5) as excluding the persons for whom notice is provided specifically under sub-sections (1) and (2).
[11]In particular – that there are reasonable grounds to suspect that a person has committed a serious offence; and that an authorised officer deposes to holding the suspicions stated on affidavit on reasonable grounds.
35 In light of my construction of ss 26(4), as not infringing the ability of this court to enable notice to be given before determining an application for a restraining order, it is not necessary to consider the role of s 42 and provisions for applications for exclusion as they relate to the constitutional validity of ss 26(4). In any event, I am of the view that the decision in Kamal on these issues should be followed.
36 For these reasons, I do not consider that ss 26(4) on its proper construction mandates this state court to exclude the proper exercise of its discretion to enable an interested party to be given notice and heard on an application for a restraining order if the court considers that urgency or risk of dispersal of assets do not justify proceeding to decision ex parte. It follows that I do not consider that the decision in Kamal was “plainly wrong”, so even if I had not reached the positive view I have of the meaning of ss 26(4), I should find it valid by following the decision in Kamal.
Does the court have power to allow rehearing of ex parte applications for restraining orders?
37 As already stated, it is not disputed that the inherent or implied powers of courts[12] include the power to rehear matters that were decided ex parte.
[12]The parties agreed that nothing in this case turns on the terminology and distinction between inherent powers and implied powers in this case.
38 The respondent concedes that that power exists in this case in relation to the examination order made in respect of Mr Samarakoon. That is because there is no alternative ability for an order made ex parte under s 182(2) to be revisited once the subject of the order is notified of it[13].
[13]There is no equivalent of s 42 relating to examination orders.
39 However, it argues that for restraining orders, made ex parte pursuant to s 26(4), the implied power has been replaced by section 42 which enables a person who was not notified of the application for a restraining order to apply for the order to be revoked. The respondent argues that s 42 embodies a complete revocation procedure, and there is no residual implied or inherent general power to conduct a rehearing of the making of a restraining order which has been made ex parte except through s42.
40 The applicants dispute that the implied power to allow a rehearing has been displaced or subsumed into s 42. They argue that an application under s 42 requires a much higher input of material, and reverses the onus of proof, and should not be regarded as covering the field for persons seeking to have set aside restraining orders made ex parte.
41 The respondent concedes that the onus of proof is altered, being on the applicant for revocation under s 42, rather than the Commissioner under an application for a restraining order if that were in a plain rehearing. An applicant may need to produce materials to persuade a court that there are no grounds on which to make the order. However, the respondent argues that that does not make so great a difference in this context, as to justify a finding that there remains a power to order a rehearing other than an application under s 42. It is submitted that if given notice of an application for a restraining order, or on a rehearing, that person might need to produce material to undermine the AFP’s grounds, and argument as to why there are no grounds to make the order would be similar even though on revocation these are directed to grounds existing at the time the application to revoke is considered.
42 In the present case, an application for revocation was filed by Opal Storm Pty Ltd, but not by the second or third applicants, and they are both now well out of time for doing so. The respondent submits that that places them in a different position on the seeking of the second declaration, as they seek by that declaration to avoid the consequences of not having applied for revocation under s 42, and should not be allowed to do so.
43 In my view, and while acknowledging that an application for revocation under s 42 places a higher burden on a person seeking to set aside a restraining order than would a rehearing under the court’s implied jurisdiction, indeed reverses the onus of proof, there would be little if any purpose for s 42 if there were a residual implied power to allow a rehearing. Without time limits (apart from satisfying a court as to the reasons for delay if any) and without bearing the onus of satisfying the court that the grounds are not made out, it is hard to see why any person would make application under s 42. That section must be construed as having a purpose. I am therefore satisfied that in the context of the Act, s 42 is intended to be the sole avenue for application to revoke a restraining order that was made ex parte, and displaces and replaces the inherent or implied power of a court to rehear restraining orders granted ex parte.
44 As the court’s jurisdiction to make the second declaration was inseparable from the substantive issue, I do not regard this as a threshold issue. However, even if I were of the view that there is a residual power to rehear restraining orders made ex parte, that would be a discretionary power to be exercised by the court in the interests of justice. In this case I would have required an explanation for why the second and third applicants did not make applications for revocation under s 42, as this application for declaratory relief appears to be a mechanism to overcome the time limits in s 42.
45 For the above reasons, I dismiss the application for declarations by the first to third applicants.
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