The Commissioner of the Australian Federal Police v Cranston (No 3)
[2017] NSWSC 674
•29 May 2017
Supreme Court
New South Wales
Medium Neutral Citation: The Commissioner of the Australian Federal Police v Cranston and Ors (No 3) [2017] NSWSC 674 Hearing dates: 24 May 2017 Date of orders: 24 May 2017 Decision date: 29 May 2017 Jurisdiction: Common Law Before: Fullerton J Decision: Orders made
Catchwords: Application for orders under the Proceeds of Crime Act 2002 (Cth) Legislation Cited: Civil Procedure Act 2005 (NSW)
Court Suppression and Non-Publication Orders Act 2010 (NSW)
Proceeds of Crime Act 2002 (Cth)Cases Cited: The Commissioner of the Australian Federal Police v Cranston and Ors [2017] NSWSC 624 Category: Principal judgment Parties: The Commissioner of the Australian Federal Police (Plaintiff)
Adam Michael Cranston and Ors (Defendants 1-58)Representation: Counsel:
Solicitors:
D McLure SC / G O’Mahoney / D Habashy (Plaintiff)
Ex parte
Criminal Assets Litigation, Australian Federal Police (Plaintiff)
Ex parte
File Number(s): 2017/146280
Judgment
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HER HONOUR: On 16 May 2017 I heard an ex parte application by the Commissioner of the Australian Federal Police (“the Commissioner”) for orders under the Proceeds of Crime Act 2002 (Cth) (“the POCA”) in respect of the suspected involvement of a large number of people in an organised taxation fraud.
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The orders sought in the Summons included orders restraining a number of individuals and entities from dealing with the property itemised in the Schedules to the Summons. A number of ancillary orders under the POCA were also sought, as were a number of procedural orders under the Civil Procedure Act 2005 (NSW) and the Court Suppression and Non-Publication Orders Act 2010 (NSW).
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The orders sought were granted and ordered to be entered forthwith (The Commissioner of the Australian Federal Police v Cranston and Ors [2017] NSWSC 624).
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By notice of motion filed instanter on 24 May 2017 pursuant to Rule 6.5 of the Uniform Civil Procedure Rules 2005 (NSW), the Commissioner sought restraining orders under ss 18 and 19 of the POCA and custody and control orders under s 38 of the Act against each of the four respondents to the notice of motion, being respectively, Goldcarz Pty Ltd (ACN 617738271), Double Bay Law Pty Ltd (ACN 120065170), Jay Sasha Kendrick and Advisero Pty Ltd (ACN 616252736). The 1st, 4th, 9th, 14th and 46th defendants to the summons were nominated in the notice of motion as persons (or entities) affected by the orders sought.
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It was the Commissioner’s case on the motion that the property identified in the Schedules is either (i) the proceeds or instrument of an indictable or serious offence (as defined in s 19 of the Act) committed by one or more of the defendants – the property in Schedules 1 and 2; and/or (ii) property under the effective control of the 1st and 4th defendants within the meaning of s 18(2)(c) of the Act – the property in Schedules 1, 3 and 4; and/or (iii) the property of the 4th and 9th defendants within the meaning of s 18(2)(a) of the Act – the property in Schedules 1 and 4.
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Procedural orders were also sought under ss 71(a) and (b) of the Civil Procedure Act and ss 26(4) and 39(3A) of the POCA.
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An affidavit of Scott James Murphy sworn on 24 May 2017 was read in support of the notice of motion. A folder of documents was exhibited to the affidavit. Mr Murphy is a member of the Australian Federal Police (“the AFP”) performing duties in the Criminal Assets Confiscation Taskforce. He is also an authorised officer within the meaning of s 338 of the POCA.
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In his affidavit, Mr Murphy referred to and adopted the first of three supporting affidavits sworn by Darren James Burtenshaw on 15 May 2017. Mr Burtenshaw’s affidavit was read in support of the orders I made on 16 May 2017. Mr Burtenshaw is also a member of the AFP performing duties in the Criminal Assets Confiscation Taskforce and an authorised officer within the meaning of s 338 of the POCA.
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On 24 May 2017, the orders sought in the notice of motion were made in accordance with short minutes of order signed and dated by me. What follows are my reasons for making those orders.
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Dealing first with the procedural orders: I was satisfied that the application for the orders sought under ss 18, 19 and 38 of the POCA should be heard and determined without notice to any of the respondents to the notice of motion (or to any of the 1st, 4th, 9th, 14th and 46th defendants to the summons) pursuant to ss 26(4) and 39(3A) of the POCA and in the absence of the public pursuant to s 71 of the Civil Procedure Act. In light of the serious offences each of the 1st, 4th and 9th defendants is suspected of having committed, and that the property identified in the Schedules to the notice of motion is reasonably suspected by Mr Murphy to be under the effective control of each of those three defendants and susceptible to restraint either for that reason under s 18(3)(b)(i) of the POCA, and/or as the proceeds of one or more of the offences (see s 18(3)(b)(ii)), or both, I was satisfied that the statutory objects in s 5 of the POCA would be potentially frustrated were those individuals notified of the proceedings and the orders sought in advance of the notice of motion being heard. I am also satisfied that the public interest in the Commissioner pursuing the various outcomes provided for in the POCA as part of the civil forfeiture scheme embodied in the Act outweighed the public interest in the otherwise abiding principle of open justice.
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Dealing with the substantive orders sought, what follows is a brief summary of the information relied upon by Mr Murphy as grounding the reasonable suspicions he deposes to in his affidavit, namely that each of the 1st, 4th and 9th defendants has committed a serious offence; that the property in Schedules 1 and 2 is wholly or partly the proceeds of an indictable and/or serious offence or an instrument in the commission of those offences or the property of one or other of the three defendants or under their effective control.
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Dealing with the property identified in each of the four Schedules in turn.
The “Goldcarz” account – the property identified in the first schedule
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On 13 and 20 April 2017, funds totalling $200,000 were deposited into the Goldcarz account from an account in the name of Plutus Pty Ltd. The Plutus account was the main account into which funds deposited by legitimate employer companies, and from which funds that should have been paid to the Commissioner of Taxation as PAYGW were misappropriated, ultimately to the benefit of one or more of the suspected offenders. The signatory over the Goldcarz account is the same person who is nominated as the sole director and beneficial shareholder of the company Goldcarz Pty Ltd. I was informed by counsel in the course of hearing the application that it is not known at this time whether that person is a real or fictitious person. Information provided to the AFP by an employee of the first defendant included documents he had been given by the first defendant relating to Goldcarz Pty Ltd, together with information to the effect that money transferred to that account on 16 May 2017 would be used as a source of funds for building renovations undertaken at one of the properties owned by him.
Legal Law Trust account – the property identified in the second schedule
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As a result of what was an alleged blackmail perpetrated by some of the suspected offenders on other suspected offenders (a state of affairs the subject of a detailed analysis by Mr Burtenshaw in his affidavit of 15 May 2017 upon which Mr Murphy relied, in part, in coming to an independent view that he had suspicions of the relevant kind for the purposes of the Act) between 1 February 2017 and 26 April 2017, funds in excess of $24 million were received into the trust account of Lands Legal solicitors (“the trust account”). These funds were transferred from the Plutus account referred to in [13] above.
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On 5 April 2017, $200,000 was transferred from the trust account into an account in the name of Cedars Capital Pty Ltd operated by the 9th defendant and another suspected offender. On 12 April 2017, $200,000 was withdrawn in the form of a bank cheque from the Cedars Capital bank account and on 2 May 2017 received into the trust account and nominated “on account of proposed gift". The client identified in the trust account ledger is the 9th defendant.
Funds held to the benefit of Sutherland Shire property 2 Pty Ltd – the account nominated in the third schedule
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The 1st and 4th defendants utilised the trust account operated by Clamenz Lawyers to move funds ultimately to the benefit of the first defendant. Sutherland Shire property 2 Pty was also used as a vehicle for holding property to the ultimate benefit of the 1st defendant. It is the Commissioner’s case that the company is reasonably suspected to be under the effective control of the 1st defendant despite Jay Kendrick being identified on company documents as the sole director. The nominated bank account in the third Schedule received $2,745,000 from a company reasonably suspected as being under the control of the suspected offenders and one of the companies into which misappropriated funds were (or were to be) transferred.
Advisero Account - the account nominated in the fourth schedule
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The funds standing to the credit of Advisero Pty Ltd is a company registered on 2 December 2016 with the 4th defendant as the sole director and with beneficial shareholdings held by that person and another company associated with the suspected offenders. The funds standing to the credit of the account are suspected to be property under the effective control of the 4th defendant.
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I am well satisfied that the Commissioner has discharged the onus of establishing, on the balance of probabilities, that the restraining orders should be granted over the property specified in each of the Schedules to the Summons and that custody and control orders should be granted in respect of the property restrained.
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Decision last updated: 19 June 2017
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