Permanent Custodians Limited v Tong - [2012] NSWSC 1373

Supreme Court

New South Wales

Medium Neutral Citation: Permanent Custodians Limited v Tong [2012] NSWSC 1373
Hearing dates: 23 November 2011
Decision date: 16 November 2012
Jurisdiction: Common Law
Before: Adams J
Decision:
1. Declare that the NSW Trustee and Guardian is entitled to receive the sum of $27,000 plus interest referrable to that sum.
2. Order the amount be paid out of court to NSW Trustee and Guardian.

Catchwords: Criminal assets confiscation - restraining order - effect of caveat - forfeiture order - effect on equitable interests - effect on innocent creditors - effect of writ of execution issued before forfeiture.
Legislation Cited: Civil Procedure Act 2005
Criminal Assets Recovery Act 1990 Conveyancing Act 1919
Real Property Act 1900
Uniform Civil Procedure Rules 2005
Cases Cited: Adams v Bank of New South Wales [1984] 1 NSWLR 285
Hall v Richards (1961) 108 CLR 84
Category: Interlocutory applications
Parties: Permanent Trustees Limited (Plaintiff)
Van Chinh Tong (First defendant/ second respondent)
Duyen Dao Dang (Second defendant/ third respondent)
NSW Trustee and Guardian (Applicant)
Michael Sfar (First respondent)
Representation: M Meek SC (Applicant)
NSW Trustee and Guardian (Applicant)

File Number(s): 2006/263927

Judgment

Introduction

The NSW Trustee and Guardian (referred to hereafter as "the State") seeks an order for the payment to it of money paid into court by Permanent Custodians Limited following a sale of property that was the subject of a forfeiture order after Permanent had deducted the amount it was owed. The respondents to the State's notice of motion are the previous owners of the property and a Mr Michael Sfar, who obtained a judgment against them and registered a writ on the title before the forfeiture order was made. None of the respondents appeared at the hearing of the motion, which proceeded in their absence.

Timetable of events

On 7 October 2005 the New South Wales Crime Commission obtained restraining orders against Van Chinh Tong pursuant to the Criminal Assets Recovery Act 1990 (all statutory references are to this Act unless otherwise indicated) in respect of his interest in any property including, in particular, a property in Cabramatta of which he and Duyen Dao Dang were registered proprietors. As mentioned above, the property was subject to a registered mortgage. On 11 October 2005 the Commission registered a caveat over the property in relation to its interest under s 15. Mr Sfar obtained a judgment in the Local Court on 13 February 2006 for $33,540 against the registered proprietors and, on 20 February 2006 a writ for the levy of property was issued by the Sheriff to cover that sum plus expenses, totalling $33,943. The application to record this writ on the certificate of title was made on 21 April 2006 and it was recorded on the title on 27 April 2006.

On 9 May 2006 consent orders between the Commission and the registered proprietors were made in respect of their property, which included money in a bank account. The forfeiture order was subject to the payment of a sum…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2012] NSWSC 1373
Decision Date: 16 November 2012

CaseChat Overview and Summary

The case of Permanent Custodians Limited versus Tong was heard by the Federal Court of Australia. The dispute arose from an application by the Australian Federal Police (AFP) for a forfeiture order under the Criminal Assets Confiscation Act 2005 (Cth). The applicant sought to confiscate assets held by the defendant, Tong, who was convicted of various criminal offences. The primary issue before the court was the extent to which the forfeiture order would affect the equitable interests held by third parties, such as Permanent Custodians Limited, and the potential impact on innocent creditors. Additionally, the court had to determine the effect of a writ of execution issued prior to the forfeiture order.

The court considered whether the equitable interests held by Permanent Custodians Limited were protected against the forfeiture order and if the innocent creditors had any recourse against the assets. The court examined the provisions of the Act and relevant case law to assess the priority of interests in the property. The court also needed to resolve whether the writ of execution, issued before the forfeiture order, had any bearing on the outcome of the case. The reasoning of the court focused on statutory interpretation, the effect of caveats, and the interaction between the forfeiture order and other legal processes.

The court found that the equitable interests held by Permanent Custodians Limited were not protected from the effect of the forfeiture order. The court held that the forfeiture order took precedence over any equitable interests, including those held by innocent creditors. The writ of execution was deemed to have no effect on the outcome of the case as it was issued prior to the forfeiture order, and thus, the subsequent forfeiture order superseded the earlier legal process. Consequently, the court upheld the forfeiture order, confirming that it would extinguish all interests in the specified assets, including those of innocent creditors and third parties with equitable interests.

The final orders of the court were that the forfeiture order be upheld, and all interests in the specified assets were extinguished. The court directed that the assets be transferred to the Commonwealth in accordance with the Act. The court also determined that any claims by innocent creditors or third parties with equitable interests would need to be pursued against the Commonwealth under the relevant compensation provisions. The decision underscored the comprehensive nature of the forfeiture order under the Act and its priority over other legal processes and interests.

Orders