The Commissioner of the Australian Federal Police v Dong Hua International Pty Ltd and Anor (No.3)
[2016] VSC 56
•23 February 2016 (revised 24 February 2016)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2013 04149
| THE COMMISISONER OF THE AUSTRALIAN FEDERAL POLICE | Applicant |
| v | |
| DONG HUA INTERNATIONAL INVESTMENTS PTY LTD (ACN 129 088 348) | First Respondent |
| and | |
| YUHONG ZHOU | Second Respondent |
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JUDGE: | JOHN DIXON J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 23 February 2016 |
DATE OF RULING: | 23 February 2016 (revised 24 February 2016) |
CASE MAY BE CITED AS: | The Commissioner of the Australian Federal Police v Dong Hua International Pty Ltd & Anor (No.3) |
MEDIUM NEUTRAL CITATION: | [2016] VSC 56 |
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PRACTICE AND PROCEDURE – Application to adjourn trial – Fourth occasion of adjournment of trial and second application to adjourn current date for trial – First adjournment application of current trial date refused and leave to appeal the refusal also refused – Applicant seeking opportunity to further investigate by examinations pursuant to s 180 Proceeds of Crime Act 2002 (Cth) – Applicant unable to properly present his case without conducting such examinations – Relevant considerations discussed – Waste or inefficient use of judicial resources – Significant part of delay attributable to the Applicant’s failure to conduct timely investigations – Non-compliance with earlier case management directions – Explanation for delay unsatisfactory – Application to adjourn the trial refused.
PROCEEDS OF CRIME – Application for forfeiture orders – Applications for exclusion from restraining order – Proceeds of Crime Act 2002 (Cth), ss 5, 49, and 180.
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| APPEARANCES: | Counsel | Solicitors |
| For the Commissioner of the Australian Federal Police | Mr T Gyorffy QC | Australian Federal Police |
| For the Respondents | Mr T P Mitchell | Lincolns Lawyers & Consultants |
HIS HONOUR:
On 12 August 2013, the Commissioner applied, under s 25 of the Proceeds of Crime Act2002 (Cth), for a restraining order. On 14 August 2013, Williams J restrained dealings in respect of two properties, situated at 2A Highland Avenue, Oakleigh East and Unit 3215/220 Spencer Street, Melbourne.
On 20 August 2013, the Commissioner applied under s 59 of the Act for a forfeiture order. On 12 September 2013, Ms Yuhong Zhou applied for an exclusion order in respect of the Spencer Street property and on the same day Dong Hua International Trading Pty Ltd applied for an exclusion order in respect of the Oakleigh East property. Those applications were amended in December 2013.
It is those applications that have come before the court for trial.
The Commissioner applies to adjourn the trial of the proceeding, essentially on two grounds. First, the Commissioner has not had the opportunity to complete the examination application of Ms Zhou, conducted on Wednesday 17 February, 2016, or to further investigate the material that has been, or will be, revealed following that examination. Secondly, the Commissioner has not had the opportunity to build the proper evidentiary foundation for the key evidence on the application, which is found in the principal affidavits of Dean Barnes and Colin Hicks.
It is necessary to refer briefly to the history of the proceeding. After the various applications were filed, on 27 May 2014, Daly AsJ fixed the trial of the proceeding for 30 September 2014. At that time the affidavits of Ms Zhou and Mr Yijiang Shen had been filed and served on the Commissioner. On 25 July 2014, an affidavit in opposition by Mr Barnes was filed.
At this stage, the Commissioner was in possession of the basic facts supporting the applications for exclusion. The matter was proceeding on the basis that those applications were being primarily dealt with, with the affidavits on behalf of the Commissioner being referred to as affidavits in opposition. The Commissioner now submits that this is a matter of some significance, for reasons I will later explain. I note that the order made in 27 May 2014 anticipated the need for the Commissioner to seek documents from China which would involve applications under a mutual assistance treaty, matters that, as the Commissioner would be well aware, can take some time. In case management terms, the prospect of that cause for delay was recognised approximately four months out from the first trial date.
On 12 September 2014, there was a joint application by the parties to vacate the trial date, which was refixed for 11 February 2015. Further affidavits were filed, and witnesses were required to attend for cross-examination. However, on 10 February 2015, that second trial date was vacated and the proceeding was re-fixed for trial on 4 August 2015. On 20 July 2015, the Commissioner filed a summons seeking to adjourn the third trial date. On 22 July 2015, the trial date was vacated and directions were given for the exchange of experts reports. The trial was refixed for 23 February 2016.
Around this time an application in a related matter was heard by T Forrest J. His Honour’s ruling on 4 August 2015[1] caused the Commissioner to rethink the approach that it was adopting in the applications to the issues of proof, a matter that I will come back to below.
[1]Commissioner of Australia and Federal Police v Zhang & Anor [2015] VSC 390.
On 16 October 2015, the Commissioner applied for examination orders under s 180 of the Act in respect of Ms Zhou and Mr Shen and four other persons who had been referred to in the affidavits. The Commissioner also applied to vacate the trial date on the basis that it was impractical to complete the examinations and consequential investigations in the available time. The application was later amended to include other related sections. T Forrest J heard that application on 16 November 2015 and delivered his ruling on 18 December 2015. His Honour ordered the examination of Ms Zhou but otherwise refused the Commissioner’s application for examination orders and refused his application for an adjournment.
The background and history of this matter was set out by T Forrest J in his ruling[2] at paragraphs 7 to 12 which I incorporate into these reasons without verbatim recitation. The Commissioner was aggrieved by the refusal of the adjournment and sought leave to appeal that decision. That application was argued on 18 February 2016 and judgment was delivered on 19 February 2016.[3]
[2]Ibid, [7]–[12].
[3]The Commissioner of the Australian Federal Police v Dong Hua International Pty Ltd & Anor [2016] VSCA 15.
In paragraphs 6 to 16 of its reasons, the Court of Appeal recites the relevant background facts, which I now set out.
In early 2013, the Commissioner commenced an investigation into the activities of a number of people who appeared to be involved in the unexplained movement of large sums of money from China into Australia. A comparison of the amounts of money deposited into casino and bank accounts controlled by certain individuals, relative to their declared incomes, apparently revealed significant discrepancies.
On 12 August 2013, the Commissioner applied, ex parte, for a restraining order under s 19 of the Act in respect of a property in Oakleigh (‘the Oakleigh property’) and a property in Spencer Street, Melbourne (‘the Spencer Street property’). The registered proprietor of the Oakleigh property was the first respondent, and the registered proprietor of the Spencer Street property was the second respondent. The restraining order was sought on the basis that the properties were suspected of being proceeds and/or instruments, as defined by the Act, of offences under ss 135.4 and/or 400.9(1) of the Criminal Code (Cth) (those offences being the causing loss of tax revenue to the Commonwealth, and the dealing with property suspected of being the proceeds of crime).
On 14 August 2013, Williams J made a restraining order (‘the restraining order’) in respect of both properties. On 20 August 2013, the Commissioner applied for forfeiture orders under s 49 of the Act in respect of the restrained properties. On 12 September 2013, the respondents applied for orders, under s 31 and s 39 of the Act, to exclude the properties from restraint. On 19 December 2013, the respondents amended their applications so as to also seek orders under s 74 of the Act excluding the properties from forfeiture, and orders under s 78 of the Act for compensation.
On 27 May 2014, orders were made establishing a timetable for evidence and setting the matter down for hearing on the first trial date (30 September 2014). Subsequently, the respondents sought and obtained the Commissioner’s consent to vacate the first trial date, on the basis that the respondents required additional time to prepare their evidence. On 23 September 2014, orders were made by consent vacating the first trial date and fixing the second trial date (11 February 2015).
On 18 December 2014, the respondents sought the Commissioner’s consent to a further vacation of the hearing date — on the basis that the respondents’ counsel was no longer available on 11 February 2015. The Commissioner consented to the vacation of the second trial date, on the condition that the respondents consented to the Commissioner being permitted to file further affidavit material in response to affidavits that had been filed by the respondents. The Commissioner subsequently advised the respondents that he had engaged a forensic accountant to prepare a report on the respondents’ financial affairs, and that the Commissioner would therefore not be in a position to file his further affidavit material until April 2015. On 10 February 2015, orders were made by consent vacating the second trial date and fixing the third trial date (4 August 2015).
The Commissioner subsequently sought and obtained the respondents’ consent to vacate the third hearing date — on the basis of delays he was experiencing in obtaining bank documents, and in the preparation of the forensic accountant’s report. On 22 July 2015, orders were made by consent vacating the third trial date and fixing the fourth trial date (23 February 2016).
On 4 August 2015, in proceedings under the Act between the Commissioner (as applicant), and Zhang and Yijiang Shen (in which the respondents sought exclusion from restraining orders and any order for forfeiture), the trial judge delivered judgment in the decision referred to in ground 3(e) of the Commissioner’s proposed grounds of appeal. The Commissioner has sought leave to appeal against that decision. Amongst the reasons set out in the application why leave should be granted are contentions that the trial judge erroneously stated the manner in which exclusion and forfeiture applications should be conducted and thereby departed from the way such applications have been typically prepared for hearing. The appeal is listed for hearing on 21 June 2016, a date well beyond the trial date for the present proceedings.
On 16 October 2015, the Commissioner filed the first version of his application for the examination of the six proposed examinees and the vacation of the fourth trial date ‘so as to allow the proposed examinations to be conducted’. The proposed examinees are:
(a) the second respondent;
(b)Yijiang Shen, the husband of the second respondent, a director and shareholder of the first respondent, and the deponent of two affidavits filed by the respondents in the proceedings;
(c)Zhang, a former director and shareholder of the first respondent, and a signatory on loan documentation relating to a loan from the Commonwealth Bank secured against the Oakleigh property;
(d)Zhiheng Zhou, a niece of the second respondent who was identified in an affidavit sworn by Yijiang Shen as having been involved in the transfer of funds used to partly finance the acquisition of the Oakleigh property;
(e)Xiao Wei Shen, a niece of Yijiang Shen, who was identified in an affidavit sworn by the second respondent as having been involved in the transfer of funds used to finance (in part) the acquisition of the Oakleigh property; and
(f)Ren Yan Ping, a friend of the second respondent who was identified in affidavits of the second respondent as having repaid a loan to the second respondent, funding a bank account used to finance in part the acquisition of the Spencer Street property.
As originally filed, the Commissioner’s application was returnable in the Practice Court on 5 November 2015. However, on 4 November 2015, the parties filed minutes of consent orders adjourning the Commissioner’s application until 16 November 2015.
All of the proposed examinees, other than the second respondent (in respect of whom, as we have said, the judge ultimately made an examination order), are residents in China.
On 11 November 2015, the Commissioner filed an amended application for examination orders against the six proposed examinees. The return date specified in this amended application was the date upon which the hearing of the original application had been adjourned to (16 November 2015). In the original application, the Commissioner applied for examination orders only under s 180 of the Act. In his amended application, the Commissioner expanded his application so as to seek orders under ss 180A, 180B and 180E as well.
What this procedural history shows is that from August 2015, the Commissioner was seeking examination orders to permit his investigation of suspected transactions before the court dealt with the substantive applications that were before it. The reason why the Commissioner sought from October 2015, to adopt this approach, was explained by the Court of Appeal and it is relevant to the application before me today.
In support of the Commissioner’s application for the examination of orders and the consequential vacating of the fourth trial date, the Commissioner filed an affidavit sworn by a member of the Australian Federal Police, Mr Dean Barnes. In the October 2015 affidavit, Mr Barnes deposed to the making of the first Zhang ruling and its consequences. In addition, Mr Barnes deposed to the making of a second ruling in the Zhang matter on 6 August 2015. The second Zhang ruling dealt with evidentiary objections taken by the respondents in the Zhang proceedings to portions of affidavits filed on behalf of the Commissioner.
In respect of the first Zhang ruling, Mr Barnes deposed:
On 4 August 2015 the Honourable Justice T Forrest made a preliminary ruling that had a major impact on how the rest of the trial was to be conducted and the net effect of it was that the Commissioner must proceed first with his forfeiture application prior to the hearing of any exclusion application.
With respect to the second Zhang ruling Mr Barnes deposed:
On 6 August 2015 the Honourable Justice T Forrest made a further ruling in regards to Zhang and Shen’s evidentiary objections. This ruling related to the form of evidence required for forfeiture applications by the Commissioner. This form is at odds with the way in which these applications have generally been prepared by the Commissioner and the way the Commissioner has prepared for this specific trial.
Next, Mr Barnes deposes to the Commissioner having ‘appealed the decision in Commissioner of the AFP v Zhang & Anor’. In fact, the Commissioner has sought leave to appeal from the orders made in the first Zhang ruling.
Mr Barnes’s affidavit then goes on:
The impact of the rulings referred to ... is that both the Commissioner and the applicants (scil, respondents) will need to change how their cases are currently structured and further evidence will be required. The gist of the difficulty for the Commissioner is that until these rulings, the Commissioner ran these applications by cross-examining the exclusion applicants on their affidavit material, then relying on a deeming provision to achieve forfeiture if the exclusion applications are dismissed. Unless any appeals are successful, the Commissioner will now need to file much more detailed evidence in support of an affirmative case.
The Commissioner also wants to now avail himself of the examination procedure under s 180 of the Act.
In light of the above, we request an examination order be made so as to allow the Commissioner a fair trial in light of the new rulings. In the alternative that this matter proceed to hearing without examinations, the Commissioner will need to mount arguments which risk creating inconsistent verdicts at the Trial Division level.
Before me today, counsel for the Commissioner, referred to the objects and purposes of the Act, in particular to s 5. I have taken into account the objects and purposes of the Act, and I understand the significance of the applications that remain now to be determined by the court.
The critical question for the court is whether it is in the interests of justice to permit the further adjournment of the proceedings.
The Court of Appeal refused to interfere with the primary judge’s exercise of discretion when he refused the previous application for an adjournment. It said:[4]
There is no basis for interfering with the trial judge’s exercise of his discretion to refuse to vacate the trial date or make an order for examination. Beyond the bare assertion in the affidavit in support of the application for examination orders and vacation of the trial date, that an examination was required if the applicant was to obtain a fair trial, the applicant did not attempt to establish during the hearing that he would suffer a substantial injustice if the order for examination was not made. On the other hand the respondents were unable to demonstrate that they in fact would suffer real prejudice if the trial date were vacated. In that setting, the trial judge was entitled to weigh in the balance the fact that the court has had allocated three previous trial dates with multiple days of court time, which had previously been set aside. If the application was acceded to the further trial date would be vacated with potential for a further wasting of scarce public resources. For the reasons given above we are not satisfied that the Commissioner’s proposed appeal has any real prospect of success.
[4]Ibid, [52].
The first question for me is whether there has been any material change in circumstances since that ruling, albeit that although it was given last Friday, it is the review of T Forrest J’s decision delivered on 18 December 2015 following a hearing on 16 November 2015.
The Commissioner submitted its circumstances had changed because the court permitted the examination of Ms Zhou and it had commenced but not completed that examination. The Commissioner submits that the examination has opened up questions about the relevance of further documents, production of which has been sought from Ms Zhou but not yet received. The Commissioner desires to continue his investigations, in particular in respect of three matters: first, the financial position and tax reporting by Luyang Dumpling House; secondly, the existence of relevant tax and financial records in China to be accessed through diplomatic channels under a mutual assistance treaty; thirdly, access to documents that have been disclosed to immigration authorities.
The examination of Ms Zhou was scheduled as quickly as could be achieved in the circumstances but was not commenced until 17 February 2016. The examination has been adjourned pending those further investigations, and the Commissioner submits that he cannot now properly present his case in respect of the applications coming on for trial without completing those further investigations. I understand the Commissioner to be submitting that without completing these further enquiries he is not in a position to discharge the onus of proof that he bears when seeking a forfeiture order.
The Commissioner has not attempted to establish that he would suffer a substantial injustice on the basis that he cannot lead relevant and admissible evidence that would be available to him if granted an adjournment. The Commissioner did not submit that there was any basis to expect that the further investigations he seeks to conduct on the basis of these further documents or the completion of the examination of Ms Zhou will assist, and, if so how, to establish relevant issues.
It was submitted, and for present purposes I accept it to be the case, that the question to be decided on each of the applications that are currently before the court is in substance identical, save that in respect of each application the burden of proof is reversed. On an application for forfeiture, the Commissioner must prove that the respondents’ interests in the restrained properties are the proceeds of relevant unlawful activity or an instrument of a serious offence. On an exclusion application, the Commissioner must meet the contrary proposition, on which the respondents bear the onus, that the respondents cannot establish that their interests in the properties are not the proceeds of relevant unlawful activity or instruments of a serious offence.
Properly understood, the prejudice that is claimed by the Commissioner if an application to adjourn the trial is refused is not that it is being denied an opportunity to present its evidence and to have the application determined fairly on the basis of all relevant and admissible evidence, but rather that it is prejudiced by not being permitted a proper opportunity to complete its investigations.
So understood, the importance of delay is a critical and relevant consideration. In that respect, I am not persuaded that there has been any material change in circumstances since the last application for an adjournment and the refusal of leave to appeal against its refusal. The relevant period of delay in failing to prepare a case to prove its entitlement to a forfeiture order is the period between 27 May 2014, when the Commissioner had the respondents’ affidavits and the proceeding was first set down for trial, and 4 August 2015, when the Commissioner had the ruling that had been delivered by T Forrest J in the related proceeding.[5] The explanation that is proffered for the delay lies in the construction of the Act that is preferred by the Commissioner and the impact of that construction on the manner in which it prepares such applications for trial.
[5]Commissioner of the Australian Federal Police v Zhang & Anor (Ruling No.1) [2015] VSC 390.
Again, it is convenient to refer to the reasons for judgment of the Court of Appeal, where the court set out the Commissioner’s explanation.[6]
[6]The Commissioner of the Australian Federal Police v Dong Hua International Pty Ltd & Anor [2016] VSCA 15, [37]–[41].
In support of the application for examination orders and the adjournment, the Commissioner submitted to the judge that the first Zhang ruling had so changed the landscape as to require the Commissioner to gather evidence in support of forfeiture applications before these applications were heard by a court.
Section 49 of the Act provides:
49Forfeiture orders—property suspected of being proceeds of indictable offences etc.
(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 19 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 one or more of the following applies:
(i)the property is proceeds of one or more indictable offences;
(ii)the property is proceeds of one or more foreign indictable offences;
(iii)the property is proceeds of one or more indictable offences of Commonwealth concern;
(iv)the property is an instrument of one or more serious offences; and
(d)the court is satisfied that the authority has taken reasonable steps to identify and notify persons with an interest in the property.
(2) A finding of the court for the purposes of paragraph (1)(c):
(a)need not be based on a finding that a particular person committed any offence; and
(b)need not be based on a finding as to the commission of a particular offence, and can be based on a finding that some offence or other of a kind referred to in paragraph (1)(c) was committed.
(3) Paragraph (1)(c) does not apply if the court is satisfied that:
(a)no application has been made under Division 3 of Part 2-1 for the property to be excluded from the restraining order; or
(b)any such application that has been made has been withdrawn.
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.
In the first Zhang ruling, the Commissioner argued that exclusion applications should be heard and determined before the Commissioner’s forfeiture applications were heard. The course the Commissioner suggested would involve respondents to forfeiture applications giving evidence in support of their exclusion applications and being cross-examined by the Commissioner. If the Commissioner successfully resisted the exclusion order then (so the Commissioner’s argument went) the exclusion order would have been properly considered to have ‘been withdrawn’ pursuant to s 49(3)(b) of the Act. In such circumstances, the Commissioner contended that he would not have to establish any of the matters set out in s 49(1)(c) of the Act. Thus (as the Commissioner’s argument ran) respondents to forfeiture applications should be required to run their exclusion applications first (that is, before the Commissioner’s forfeiture applications were heard and determined) so that the Commissioner might have the chance to defeat these applications (the exclusion applications) — the defeating of which exclusion applications would result in orders being made in favour of the Commissioner on the forfeiture applications without the need for the Commissioner to actually establish that the property forfeited was the proceeds of an indictable offence or an instrument of one or more serious offences within the meaning of s 49(1)(c) of the Act.
In our view, the explanation that the first Zhang ruling explains the delay in seeking an order for examination must be rejected. It is not necessary for us to consider whether the first Zhang ruling is correct. That is the subject of the appeal from the first Zhang ruling. But the Commissioner’s contentions in the first Zhang ruling requires a court to ascribe to s 49(3) the meaning that an exclusion application that has been heard and determined adversely to an applicant for an exclusion order falls within s 49(3) of the Act as either not having been made or as having been withdrawn. The meaning which the Commissioner seeks to attribute to s 49(3), is not the literal meaning of the text and is hardly so obvious a meaning as to justify the Commissioner conducting applications on the basis that no other view could be taken as to its meaning. Significantly, even if the construction which the Commissioner contends for is correct, it is very difficult to see how such a construction supports the further contention that applications for exclusion should be heard before or at the same time as the application for forfeiture. On the Commissioner’s construction, that was a course that was open to a court but it was not one that a court was mandated to follow. That is to say there was no justification for the Commissioner’s asserted confidence that a court would endorse the approach for which he contended in the first Zhang ruling. To institute forfeiture applications and then not fully prepare them on the basis that a court would accede to an argument that was at least attended by doubt was a highly risky strategy for the Commissioner. We are far from persuaded that the explanation based upon the first Zhang ruling was so compelling as to mandate an exercise of the trial judge’s discretion in favour of the Commissioner.
The Commissioner took two and a half months to apply for examination orders following the first Zhang ruling. As the trial judge states at [29] of his reasons for refusing the present application, at no stage did he suggest that the Commissioner’s ‘prehearing evidence gathering process, including through examination orders’ was circumscribed in any way and could have been conducted before the forfeiture hearing. Had the Commissioner applied for examination orders in mid-August 2015 so as to protect the fourth trial date, a different outcome may have resulted.
The Court of Appeal concluded following that analysis:[7]
All in all we see no error in the trial judge’s conclusion that the Commissioner had more than two years to apply for the examination orders that he now sought and that this was more than enough time in the circumstances of the history of this case.
[7]Ibid, [42].
Attempting to demonstrate changed circumstances that ought to cause a different weighting of the relevant considerations in the exercise of my discretion, the Commissioner noted that it must have been contemplated by permitting the examination of Ms Zhou there was a significant risk that the proceeding would not be ready for trial for either or both of two reasons. First, as has happened, the examination could not be completed in time or, second, as has also happened, because significant material in support of the Commissioner’s position arising out of Ms Zhou’s examination would be late served on the respondents resulting either in a refusal to admit that evidence or the prospect of prejudice to the respondents.
I do not accept that there are changed circumstances. T Forrest J plainly had in contemplation that the opportunity being offered to the Commissioner was limited to completing his further investigations in time for the trial of the applications on 23 February 2016:[8]
Yuhong Zhou is in a different category. As I understand it, she currently resides in Melbourne. I have concluded that I ought make an examination order in respect of her. I am unsure whether it is logistically possible to carry out all the steps in the examination process (including transcription) before 23 February 2016, but I am satisfied the Commissioner should have the opportunity to do so. The parties should proceed on the basis that the hearing will commence on 23 February 2016 regardless of whether the Zhou examination has been conducted.
I will make an order for the examination of Yuhong Zhou pursuant to s 180 of the Act. It is unnecessary to make a s 180A order which examination would canvas the same material. A s 180B order is premature. I refuse the applications for examination orders insofar as the other five proposed witnesses are concerned, and I refuse the application to vacate the hearing date.
[8][33]-[34].
The Court of Appeal found no error in his exercise of that discretion. Further the Court of Appeal’s reasons make no reference to these practical considerations that ought to have been apparent to the applicant’s counsel because Ms Zhou’s examination was held on the day prior to the hearing of the application for leave. Yet the argument, as it was developed before me, appears not to have been mentioned at all to the Court of Appeal.
The basis for the prejudice claimed by the Commissioner is overstated. As I said, what is being affected by delay is the Commissioner’s opportunity for investigations, not its opportunity to present relevant and admissible evidence. I am unable to conclude that any relevant and admissible evidence may follow completion of the further examination of Ms Zhou. On the other hand, the Commissioner would have the opportunity, which he has lost through his conduct of this matter, to put the evidence of his key witnesses into admissible form. It was not submitted that it was likely, or even possible, that the substance of the case presented by the Commissioner would be materially affected by any further investigations.
Moreover, as was the case with the last adjournment application, there is no sufficient explanation of the Commissioner’s delay in completing necessary investigations in a timely fashion. The prospect of some delay in making enquiries of Chinese revenue authorities was recognised as early as 27 May 2014. Immigration records were provided to the Commissioner on 26 October 2015 and, although it was much more recent, an affidavit filed in the proceeding demonstrates that the business and tax affairs of the Luyang Dumpling House restaurant were disclosed to the Commissioner on 19 January 2016. All of these disclosures occurred prior to the examination. No explanation has been provided of the Commissioner’s failure to examine relevant issues on the basis of the information available to him when conducting the examination, particularly having regard to T Forrest J’s observations about the need to be ready for trial that are set out above.
Although the Commissioner’s counsel submitted, and I agree, that there can be a material difference between records that are produced from an examinee and records that are produced independently from third party sources and that the Commissioner is ordinarily entitled to conduct independent investigations to test the explanations that are being provided in an examination, in the circumstances it is clear that the three particular areas of investigation that have been identified as relevant were matters about which the Commissioner had sufficient records available to him for the purposes of the examination.
It remains the case that the Commissioner does not advance a satisfactory explanation for a very substantial period of delay in preparing its application for forfeiture orders for trial. When the Commissioner first commenced investigations, prior to and for the purposes of the forfeiture applications, was not made clear to me. But I am satisfied that a significant part of the delay claimed by the Commissioner in respect of investigations is attributable to the failure of officers to conduct relevant investigations in a timely manner. I do not accept that the need to make these enquiries only recently became apparent. As the Court of Appeal observed, the Commissioner adopted a high-risk strategy. In any event, the need to prioritise completion of all investigations has existed since at least August 2015, by reference to the Commissioner’s explanation, and from at least the time when the Commissioner first received the substantive affidavits of Ms Zhou and Mr Shen in May 2014, by reference to a lower risk strategy for trial preparation.
I am satisfied that the prejudice to which the Commissioner points is an inability to complete an investigation that may or may not lead to relevant and admissible evidence in respect of the applications. The reason why the Commissioner finds itself in that position is to be attributed to its own conduct in the preparation of these applications for trial.
Turning to the respondents, they point to prejudice, should an adjournment be granted, in two different respects. First, they have endured the general prejudice of being unable, for a period of more than two and a half years, to resolve extant applications that affect their property interests and make allegations of serious criminality against them. It is well recognised that such a prejudice as a consequence of delay cannot be easily be cured and is not cured by a favourable costs order. There is, however, no evidence before me that there has been any particular stress or concern or particular consequences for the respondents from the restraining orders or the forfeiture application. The respondents appear to have had quite limited presence in the jurisdiction and the general prejudice that the respondents point to does not seem to be substantial.
Secondly, the respondents have incurred significant legal costs. Mostly past costs have been reserved, but in any event in respect of legal expenses as a relevant prejudice as a consequence of delay, such prejudice could be significantly ameliorated by an order for costs.
The respondents also submitted that the Commissioner has the powers, the knowledge and has had the time to have properly prepared this case for trial and has failed to do so for some strategic or tactical reason. That, the respondent says, is primarily explained by the approach that it adopts enabling it to call in aid s 49(3) of the Act to achieve forfeiture of restrained properties without the need to prove that the properties were tainted in the relevant sense. Then, having failed to obtain an adjournment or leave to appeal the refusal of the adjournment, the Commissioner is now engaging in a deliberate attempt to force the court to adjourn the case by the service of a substantial volume of material on the eve of trial, which the respondents cannot answer prior to the commencement of the trial.
I do not accept this characterisation of the motives of the Commissioner. I prefer to regard the Commissioner as seeking to catch up from the consequences of earlier decisions made about the conduct of the applications. It seems clear enough that it is only in very recent times that the Commissioner has engaged his present counsel and it seems clear enough that the Commissioner has received particular advice as to how the applications need to be prepared for trial. In any event, the admissibility of the material that has just been served and the consequences that might follow arguments and rulings about its admissibility, are not issues that I am presently dealing with.
It is well established that this court, when exercising federal jurisdiction under legislation that is excluded from the application of the Civil Procedure Act 2010, is nonetheless required to exercise judicially the discretion to adjourn the trial.
On the one hand, ensuring the just determination of the issues in dispute on the application engages the public interest of a litigant in securing a trial of his action on the basis of the relevant and admissible evidence. This is a factor that, when engaged in the particular circumstances, can strongly support an adjournment of the trial in the interests of justice. For the reasons I have given, this is not a situation where a litigant may be deprived of a trial on the basis of relevant and admissible evidence. The Commissioner must accept responsibility for his failure to have completed his investigations within a reasonable period of time. It matters not precisely which party is responsible for each of the adjournments of the trial, since it is clear enough that on the last two occasions, it is the Commissioner who has sought those adjournments.
The Commissioner referred me to Bass v Permanent Trustee Co Limited[9] in which the High Court stated:
Judicial power involves the application of the relevant law to facts as found in proceedings conducted in accordance with the judicial process. And that requires that the parties be given an opportunity to present their evidence and to challenge the evidence led against them. It is contrary to the judicial process and no part of judicial power to effect a determination of rights by applying the law to facts which are neither agreed nor determined by reference to the evidence in the case
[9][1999] 8 C.A. 9 at [56].
Two observations are pertinent. First, a balance must be struck between case management principles and the interests of justice in any given case. Second, the exercise of a discretion in accordance with the judicial process where the court is required to weigh up competing considerations usually requires an explanation by evidence to demonstrate that the application is brought in good faith and to permit a principled and reasoned process of deliberation by the court. These considerations are clearly recognised by the High Court in Aon Risk Services v Australian National University.[10]
[10][2009] 239 CLR 175, 211 [92]–[93], 213 [98].
The Commissioner submitted that as matters have developed it is clear that this proceeding continues to require case management, in particular to regulate the preparation and exchange of evidence, including expert evidence, that might ultimately be adduced at trial. If the trial is adjourned, the Commissioner is unable to say when the proceeding will be ready to be re-fixed for trial and he proposed that if the trial date is vacated, that the proceeding standover for a directions hearing in two or three weeks to enable further investigations to be made before the trial is refixed.
This submission overlooks several appearances before an associate judge for the purpose of case management that included opportunities for proper directions to be given about the preparation of this case. In fact, directions were given for the filing of affidavits and for the exchange of expert evidence. Had those directions been observed, it is unlikely that the Commissioner would be pressing this further adjournment application.
There has been, in this proceeding, a significant waste of judicial and administrative resources and an interference with the efficient conduct of the business of the court. It cannot be said that a further adjournment will contribute to a timely determination of these applications.
The indulgence sought by the Commissioner is not to have available relevant and admissible evidence; it is to conduct further enquiries to establish whether there is any relevant and admissible evidence that it might lead in support of the application. The Commissioner’s explanation for the delay in having this matter ready for trial, despite the explicit statements made by the court that the trial will proceed today, is not satisfactory.
After weighing up all of the relevant considerations, I conclude, as did T Forrest J, that in the context of the history of this proceeding and the explanations that have been proffered by the parties, the Commissioner’s delay is a decisive factor militating against a grant of an adjournment.
The application is refused.
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