Pellew v The State of Western Australia

[2010] WASCA 103

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT :   THE COURT OF APPEAL (WA)

CITATION:   PELLEW -v- THE STATE OF WESTERN AUSTRALIA [2010] WASCA 103

CORAM:   PULLIN JA

HEARD:   7 MAY 2010

DELIVERED          :   7 MAY 2010

FILE NO/S:   CACV 24 of 2010

BETWEEN:   JOANNE PELLEW

Appellant

AND

THE STATE OF WESTERN AUSTRALIA
Respondent

ON APPEAL FROM:

Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA

Coram  :KENNETH MARTIN J

File No  :CPCA 15 of 2009

Catchwords:

Application for stay or suspension of order - Criminal Property Confiscation Act 2004 (WA) - Turns on own facts

Legislation:

Nil

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Appellant:     In person

Respondent:     Mr M Seaman

Solicitors:

Appellant:     In person

Respondent:     Director of Public Prosecutions (WA)

Case(s) referred to in judgment(s):

Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308

Heyes v The State of Western Australia [2008] WASCA 124; (2008) 185 A Crim R 390

Palfrey v MacPhail [2004] WASCA 257; (2004) 149 A Crim R 542

1. PULLIN JA:  This is an urgent application for a stay or suspension of an order of the Supreme Court pending the hearing of this appeal.  The application made by the appellant asks for 'an order restraining the sale of 23 Barker Street, Broome pending determination of the appeal'. 

2. That might be possible as a consequential order under s 15(5)(e) of the Civil Judgments Enforcement Act 2004 (WA) if the enforcement of the judgment appealed against is suspended. The judgment which is the subject of the appeal and that would have to be suspended if that order was to be made is the judgment of Kenneth Martin J of 28 January 2010 in which he declared that the property was confiscated.

3. To understand this application it is necessary to explain the background.  On 28 October 2004, the appellant and H were registered as proprietors of 23 Barker Street, Broome (Certificate of title vol 1557 folio 158).  On 23 December 2004, the appellant was convicted of a serious drug offence in the District Court.  The serious drug offence was possession of cannabis with intent to sell or supply.  On 15 March 2005, another conviction against the appellant was recorded, this time in the Broome Court of Petty Sessions, and it was possession of cannabis with intent to sell or supply and a fine was imposed.

4. On 27 August 2006, a mortgage was granted by the appellant and H in favour of Permanent Custodians Ltd (PCL) and it was registered against the property to secure repayment of moneys advanced to the appellant and H.  I infer that the appellant and H defaulted in payment of moneys due under the mortgage or that there was some other default which entitled PCL to commence proceedings for recovery of possession of the property.  On 29 April 2008, in a Supreme Court action, CIV 1035 of 2008, PCL obtained judgment pursuant to O 62A that the appellant and H:

   (a)deliver up vacant possession of 23 Barker Street, Broome; and

   (b)pay $502,145.50, being the principal and interest due under the mortgage.

5. On 16 October 2008, freezing notices WAPFN 080222/23 issued and on 20 October 2008 memorials were registered on the title, I assume relating to those freezing notices.  That had the effect that the property was frozen pursuant to the Criminal Property Confiscation Act 2000 (WA).

6. Pursuant to s 50 of the Criminal Property Confiscation Act, PCL was prohibited from dealing with the property.  Objections were lodged to the freezing notices by the appellant.

7. On 19 November 2008 in the District Court, the appellant was convicted of conspiring to sell or supply a prohibited drug and on that same day there was a declaration that the appellant was a drug trafficker. Section 32A of the Misuse of Drugs Act 1981 (WA) provides relevantly that if a person is convicted of a serious drug offence and has, during the period of 10 years ending on the day, or on the first of the days, as the case requires, on which the serious drug offence was committed, been convicted of two or more serious drug offences, the court convicting the person of the serious drug offence first referred to shall, on the application of the director of public prosecutions, declare the person to be a drug trafficker. As I have said, a declaration was made in those terms under that section on 19 November 2008.

8. This worked an automatic confiscation of the property at Broome by reason of s 8 of the Criminal Property Confiscation Act.  However, if I can misquote a passage in the Bible, use some obsolete verb endings and employ what might qualify as a snowclone, the immediate effect of the declaration that a person is a drug trafficker is that the Criminal Property Confiscation Act taketh away title from the drug trafficker but not giveth to the State.

9. The vesting of the property in the State takes place pursuant to s 9 of the Criminal Property Confiscation Act. Section 9(1) reads that:

   Registrable real property that is confiscated under s 8 vests absolutely in the State when (a) the Court declares under s 30 that the property has been confiscated, and (b) a memorial of the making of the declaration is registered under s 113(1).

10. Section 9(2) provides that:

    When registrable real property vests in the State under subsection (1) the property vests free from all interests, whether registered or not, including trust mortgages, charges, obligations and estates, and the title in the property passes to the State. 

11. By some method of interpretation the State in fact does not treat this section as terminating a mortgagee's interests in property but, as in this case, allows the mortgagee's interests to continue to be recognised and paid out if there is eventually a sale of the property by the State.

12. On 28 January 2010, Kenneth Martin J declared under s 30 that the Barker Street property had been confiscated and I am informed by counsel for the respondent that the memorial referred to in s 9(1) was registered under s 113(1) on 22 February 2010.

13. In early February, as a result of the declaration by Kenneth Martin J and the registration of the memorial, the State was then the holder of title in the Barker Street property.  The State requested that PCL effect a sale.  Evidence of this is in a letter from the director of public prosecutions dated 11 February 2010 to Gadens Lawyers (lawyers for PCL) which said:

    As discussed, the State will provide authorisation to your client to sell these properties on behalf of the State so long as the State is advised and informed throughout the sale process ... and the State receives any surplus from the sale of each property.  If your client does undertake the sale the State will appoint the Public Trustee to sign any documents on behalf of the State's behalf.

14. I understand that arrangements have subsequently been made for that sale to take place by auction and the auction is listed for tomorrow morning, hence the urgency of this application.

15. It is necessary to now mention that relevantly there are three appeals which have been commenced.  One of them is CACR 41 of 2010, which challenges the drug trafficker declaration that was made on 19 November 2008.  This appeal challenges the declaration of confiscation made by Kenneth Martin J on 28 January 2010.  A third appeal, CACV 22 of 2010, challenges another declaration of confiscation made on 4 March 2010 (this third appeal is not presently relevant).

16. The overall argument which the appellant wishes to advance on the appeal is this: the declaration of confiscation under s 30 of the Criminal Property Confiscation Act was dependent on the validity of the appellant having been declared a drug trafficker under s 32A(1) of the Misuse of Drugs Act.  The validity of that declaration depended in its turn on proof that the appellant had been convicted of relevantly two or more serious drug offences within 10 years before 19 November 2008.  The court then was satisfied that this was so and made the drug trafficker declaration.  The appellant contends that one of the two offences relied upon as serious drug offences was not in fact a serious drug offence, that being the conviction in the Broome Court of Petty Sessions on 15 March 2005.  The respondent, on the other hand, argues that this was a serious drug offence, even though it was a conviction in the Broome Court of Petty Sessions.  The State relies on the Court of Appeal case of Heyes v The State of Western Australia [2008] WASCA 124; (2008) 185 A Crim R 390.

17. The appellant in turn argues that Heyes' case should not be followed by adopting reasons which are set out in detail in the text Weldon I, Annotated Criminal Legislation Western Australia (2009) par 20,156.20.  In effect, the argument that the appellant advances is that this court should not follow Heyes and should instead apply an earlier decision of the Court of Criminal Appeal, the decision of Palfrey v MacPhail [2004] WASCA 257; (2004) 149 A Crim R 542.

18. I have mentioned that the reason why this application is urgent is that the property is to be auctioned tomorrow.  PCL is going to do so, not because it is the mortgagee but because the State has appointed PCL as the State's agent.  If the sale proceeds, the arrangement between the State and PCL is that the proceeds, if there are proceeds, assuming that the auction is successful, will first be applied to discharge moneys due under the mortgage held by PCL, with the balance to be paid to the Public Trustee pending further order of this court as a result of an undertaking which was proffered this morning by Mr Seaman on behalf of the respondent.

19. If the appeal succeeded, then the likely order would be that the money would then be paid to the appellant; that is, the balance after payment of the mortgage.  If the appeal fails, then the balance would be paid to the State. 

20. The principles governing an application for a stay are well known: see Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308. They are that the successful litigant at first instance will ordinarily be entitled to enforce the judgment pending the determination of any appeals. Secondly, it is for the applicant for a stay to move the court to a favourable exercise of its discretion. Thirdly, the court will not grant a stay unless special circumstances are shown justifying the departure from the ordinary rule. A central issue is whether the stay is perceived to be necessary to preserve the subject matter or integrity of the litigation or, whether refusal of a stay could create practical difficulties in respect of the relief which may be granted on appeal; that is, without the grant of a stay, the right of appeal will be rendered nugatory. If that can be demonstrated, the stay will generally still be refused unless it can be established that the appeal has ultimately reasonable prospects of success. The stay may still be refused where it appears that the balance of convenience does not lie in favour of the applicant.

21. I am prepared to assume that the argument which is advanced by the appellant has reasonable prospects of success.  It has support by a textbook writer, and all that is necessary under the low-grade test is to recognise that there is some reasonable prospect of success, and I am satisfied that that is so in this case.  If the appeal succeeds, then no orders should have been made under the Criminal Property Confiscation Act but if that is so; that is, if the appeal succeeds, then PCL would be free to exercise its rights and sell and it would be then PCL rather than the State, which would or should have been effecting the sale via auction and it would be PCL rather than the State providing the balance to the appellant and H.

22. It seems that there is a question about exactly what will be raised by the sale at auction if the auction succeeds.  If there is no excess, then in a sense the argument is all academic but if there is an excess, the money is to be paid into the Public Trustee's trust account and held, in effect, pending the outcome of the appeal or until a further order of the court.  The State, as I have mentioned, agrees that PCL may keep an amount from the proceeds of sale equal to the debt, interest and other entitlements under the mortgage. 

23. The position is in summary that the appellant's appeal has reasonable prospects of success.  However, in my view, the appeal will not be rendered nugatory because either PCL or the State have the right to sell and the only interest that the appellant has is in any surplus and that will be held by the Public Trustee awaiting the outcome and will therefore not be lost to the appellant, so that the appeal is not thereby rendered nugatory.

24. The appellant has argued that she should be given further time to raise moneys but it has been indicated to me by counsel for the respondent that there have been discussions during an adjournment that took place during this hearing which indicate that if there was to be any delay to the auction it would have to be on the basis of an immediate payment of $200,000 by the appellant to PCL.  The appellant is not able to say that she can pay that amount immediately and is only able to suggest that she may be able to raise that sum by discussing the matter with unspecified people.

25. So far as the balance of convenience is concerned, in a case like this where there is an affected third party, one has to take into account the third party's interest, and the third party who is interested in this case is PCL.  Clearly the balance of convenience favours the third party, given the circumstances and the fact that the debt secured by the mortgage is increasing as interest accumulates from day to day.

26. If there is a stay, then PCL will be denied the right to its money for a continuing period of time and the debt will continue to mount up, putting full recovery at risk.  I also take into account the undertaking of the State which is highly relevant to the exercise of my discretion and that favours the dismissal of the application.  For all of those reasons I dismiss the application for a stay.