The Commissioner of the Australian Federal Police v W
[2016] NSWSC 683
•1 June 2016
|
New South Wales |
Case Name: | The Commissioner of the Australian Federal Police v W |
Medium Neutral Citation: | [2016] NSWSC 683 |
Hearing Date(s): | 24 May 2016; 27 May 2016 |
Decision Date: | 1 June 2016 |
Jurisdiction: | Common Law |
Before: | Adamson J |
Decision: | (1) Stay these proceedings until the earlier of the following: |
Catchwords: | PROCEEDS OF CRIME – application for adjournment of defendants’ applications for exclusion orders and for stay of forfeiture proceedings pending criminal trial – whether defendants’ evidence in proceeds of crime proceedings would prejudice defence case in criminal trial – whether potential prejudice could be overcome by means other than a stay – consideration of amendments to Proceeds of Crime Act 2002 (Cth) after decision in Commissioner of the Australian Federal Police v Zhao [2015] HCA 5; 225 CLR 46 – consideration of factors in s 319 of Proceeds of Crime Act – whether it is in interests of justice to order a stay – stay granted |
Legislation Cited: | Civil Procedure Act 2005 (NSW), ss 56, 57, 58 |
Cases Cited: | Commissioner of the Australian Federal Police v Cacu [2015] NSWSC 1232 |
Category: | Principal judgment |
Parties: | The Commissioner of the Australian Federal Police (Plaintiff) |
Representation: | Counsel: |
File Number(s): | 2014/123758 |
Judgment
Introduction
By notice of motion filed in Court on 23 May 2016, Mr W (the first defendant) and Ms B (the second defendant) (collectively, the defendants) applied for a stay of proceedings brought by the Commissioner of the Australian Federal Police (the plaintiff) for orders under the Proceeds of Crime Act 2002 (Cth) until the determination of the criminal trial of the defendants.
As the application was made without prior notice to the Commissioner, I adjourned the application to 27 May 2016 to enable to Commissioner to consider his attitude to the application. I also adjourned the defendants’ applications for exclusion orders which had been listed for hearing on 23 and 24 May 2016 since they could not proceed until the stay application was determined.
The Commissioner opposed the stay application.
The relevant facts
On 23 December 2013 the first defendant was arrested and charged with offences contrary to s 400.9 of Sch 1 of the Criminal Code Act 1995 (Cth) (the Criminal Code) and s 254(b)(ii) of the Crimes Act 1900 (NSW).
The charge of using a false document to influence the exercise of a public duty under s 254(b)(ii) of the Crimes Act relates to the provision of a document associated with the registration of a Mercedes 2013 G63 motor vehicle. The document appeared to be signed by the two directors of the company that was registered as the owner of the document. However, it is alleged that the two directors did not sign the document and that the first defendant used the document, which was false, to register the vehicle in the name of the company.
The charge of dealing with proceeds of crime under s 400.9 of the Criminal Code relates both to payments which were made by the defendants in reduction of the mortgage over the home where they live in Holgate, but which is not registered in their names; and payments made by them to improve the property. The Crown case is that the monies used for these purposes were proceeds of crime.
On 24 April 2014 the plaintiff commenced these proceedings by filing a summons in this Court against seven defendants, including Mr W (who was named as the first defendant) and Ms B (who was named as the second defendant). The orders sought included restraining orders under ss 18 and 19 of the Proceeds of Crime Act; orders for examination of various persons, including the defendants, under s 180 of the Proceeds of Crime Act; and orders that the assets identified in the schedules to the summons be forfeited to the Commonwealth pursuant to s 47 of the Proceeds of Crime Act. On 24 April 2014 Campbell J made orders ex parte, including restraining orders and orders for examination of the defendants. The defendants were subsequently served with the summons and the orders.
On 1 October 2014 the second defendant was charged with an offence contrary to s 400.9 of the Criminal Code. The Court Attendance Notice provided the following details of the offence:
| Details of Offence | Sequence Number 1 |
| Description of Offence | Possess suspected proceeds of crime, money/property $100,000 or more |
| Time and date of Offence | between 10:00pm on 13/08/2013 and 10:30am on 23/12/2013 |
| Place of Offence | Holgate, NSW 2020 |
| Short Particulars | did possess suspected proceeds of crime to wit, a Ferrari motor vehicle valued at $526,000, $10,000 deposited for an Audi TT motor vehicle, $344,000 in cash mortgage payments, $239,000 in cash mortgage payments, $308,418 paid to complete purchase of a residential premises, $90,000 deposited for a Mercedes Benz SL350 motor vehicle, and $11,395 paid to Energy Australia. Total value of $1,528,813. |
| Statutory Provision Describing Offence | Criminal Code Act 1995, Section 400.9(1) |
| Law Part Code | 71320 |
On 6 November 2014 the first defendant filed a notice of motion seeking an exclusion order pursuant to s 31 of the Proceeds of Crime Act in respect of the property set out in Sch 7 to the summons, which comprised four men’s watches, $2,000 cash and a pendant with a silver-coloured skull. The first defendant filed two affidavits in support of his notice of motion: one sworn by him on 5 November 2015; and another sworn by Harry Mavrolefterou (the first defendant’s accountant) on 5 November 2015.
Pursuant to orders made under s 180 of the Proceeds of Crime Act by Campbell J on 24 April 2014, the second defendant was examined on 19 February 2015 and the first defendant was examined on 20 February 2015.
On 29 September 2015 Registrar Kenna, by consent, set down the first defendant’s application for an exclusion order for hearing on 23 and 24 May 2016.
On 23 October 2015 the criminal trial of the defendants for the charges referred to above was listed for hearing before a jury, on 8 August 2016, with an estimated hearing time of two weeks.
On 29 April 2016 Registrar Bradford made orders by consent in the civil proceedings, granting leave to the first defendant to file an amended notice of motion, which added the second defendant as an applicant and which enlarged the property in respect of which an exclusion order was sought to include the property specified in Sch 1 of the summons (2008 Audi motor vehicle), Sch 4 of the summons (2013 Mercedes motor vehicle) and Sch 6 of the summons (funds in certain specified accounts). Notwithstanding the amendment, the defendants did not seek to rely on any evidence beyond that which the first defendant had filed in support of the original notice of motion. The matter was stood over for directions on 5 May 2016 for the purpose of giving the plaintiff the opportunity to determine, in light of the amended notice of motion, whether the hearing date of 23 May 2016 could be maintained.
On 5 May 2016 consent orders were made by Registrar Bradford, directing the first defendant to file and serve, by 9 May 2016, written submissions in support of the orders sought in the amended notice of motion and directing the plaintiff to file and serve written submissions in response by 20 May 2016. These directions were complied with by both parties.
On 12 May 2016, William Staples, the plaintiff’s solicitor, sent an email to Lauren McDougall, the solicitor for the defendants, attaching a proposed index for the joint court book to be filed on 20 May 2016. At 9.15am on 20 May 2016, a Friday, Ms McDougall rang Mr Staples, who confirmed that the plaintiff had prepared the joint court book in accordance with the index. There were also discussions about when Mr Mavrolefterou would need to be available for cross-examination. At 3.40pm on 20 May 2016, Ms McDougall sent an email to Mr Staples requesting that the joint court book be delivered to the chambers of Mr Bennett, counsel for the defendants.
On Monday 23 May 2016, when the matter was called on for the hearing of the defendants’ notice of motion, Mr Windsor SC, who appeared with Mr Bennett on behalf of the defendants, sought leave to file the stay application in Court together with affidavits in support by each defendant. No prior notice of this application had been given.
The evidence on the stay application
The defendants relied on paragraphs 1-10 and 12-72 of the affidavit of James Paterson (a Special Member of the Australian Federal Police) dated 23 April 2014 and paragraphs 1-6 and 9-12 of the affidavit of James Paterson dated 23 September 2015 (which were filed by the plaintiff in support of the summons and in opposition to the application for an exclusion order). These paragraphs establish the overlap (which the plaintiff conceded) between the matters the subject of the criminal trial and the matters the subject of the defendants’ application for an exclusion order and the plaintiff’s application for the forfeiture order. These matters are summarised in the narrative of facts set out above with respect to the criminal charges.
The first defendant’s evidence in support of the stay application was, relevantly, as follows:
“8. I am concerned that if I have to rely on a detailed affidavit or be cross-examined regarding the purchase of the Property and source of any relevant funds that there is a real risk that any such evidence will prejudice my criminal case.
9. In properly presenting my case for the Civil Proceedings I would be necessarily required to address these matters in any affidavit read and relied on. However, to do so would require me to give evidence as to the purchase of the Property or ownership of any bank accounts I hold and the source of any funds into these accounts. These matters are directly relevant to the charges I face in the Criminal Proceedings. If I am to rely on an affidavit deposing to these matters in the Civil Proceedings I will, in effect be waiving my right to silence. I do not wish to do so. I refer to this as my right to silence concern.
10. I note that the charges in the Criminal Proceedings relate to the period 1 January 2009 to 23 December 2013. If the Civil Proceedings are not stayed I am also concerned that I will be cross-examined about other matters such as the origin of particular funds and assets outside this period and there is a real risk that this will prejudice my rights and that it may open up further investigation against me or others. I refer to this as my additional material concern.
11. If the Civil Proceedings are not stayed I am also concerned that I will be relying on matters, and be cross-examined about matters, such that my defence in the Criminal Proceedings will be restricted, or otherwise affected, by the evidence adduced in the Civil Proceedings. I refer to this as my restriction of my defence concern.
12. If the Civil Proceedings are not stayed I am also concerned that the prosecution in the Criminal Proceedings would be informed, in advance of my trial, of my defence. I could not realistically defend the Civil Proceedings without telegraphing my likely defence to the Criminal Proceedings. I refer to this as my advance notice to the prosecution concern.
13. As a result of each of, and the accumulative effect of, my:
(a) right to silence concern;
(b) additional material concern;
(c) restriction of my defence concern; and
(d) advance notice to the prosecution concern.
I am very concerned that I will be gravely prejudiced in my rights if the Civil Proceedings are not stayed pending the hearing of the Criminal Proceedings.
14. Further, [if] the Civil Proceedings are not stayed I will have to make a decision as to whether to waive my privilege and my right to silence. This would be at the expense of the Civil Proceedings.”
The second defendant’s evidence was, relevantly, as follows:
“4. I am the applicant in the Supreme Court, in these proceedings, seeking the release of property from a restraining order dated 24 April 2014 (the Supreme Court Proceedings). I have not prepared an affidavit in support my application in these proceedings because of my concerns set out below.
5. The charges in the Criminal Trial is the basis of the restraining order in the Supreme Court Proceedings. The property in schedules 1, 4, 6 and 7 to 24 April 2014 restraining order (the Property) was restrained.
6. I am concerned about:
(a) my right to silence. If I have to rely on an affidavit regarding, or be cross-examined regarding, the purchase of the Property and source of any relevant funds [then] there is a real risk that any such evidence will prejudice my criminal case. In properly presenting my case for the Supreme Court Proceedings I would be necessarily required to address these matters in any affidavit read and relied on. However, to do so would require me to give evidence as to the purchase of the Property or ownership of any bank accounts I hold and the source of any funds into these accounts. These matters are directly relevant to the charges I face in the Criminal Trial. If I am [to] refer to these matters in an affidavit relied on in the Supreme Court Proceedings I will, in effect be waiving my right to silence. I do not wish to do so. I refer to this as my silence concern.
(b) the scope of my exposure. I note that the charges in the Criminal Trial relate to the period 1 January 2009 to 23 December 2013. If the Supreme Court Proceedings are not stayed I am also concerned that I will be cross-examined about other matters such as the origin of particular funds and assets outside this period and there is a real risk that this will prejudice my rights and that it may open up further investigation against me or others. I refer to this as my additional material concern.
(c) the effect these proceedings have on my Criminal Trial. If the Supreme Court Proceedings are not stayed I am also concerned that I will be deposing to matters, and be cross-examined about matters, such that my defence in the Criminal Trial will be restricted, or otherwise affected, by the evidence adduced in the Supreme Court Proceedings. I refer to this as my restriction of my defence concern.
(d) the effect these proceedings will have on the prosecution’s case in my Criminal Trial. If the Supreme Court Proceedings are not stayed I am also concerned that the prosecution in the Criminal Trial would be informed, in advance of my trial, of my defence. I could not realistically defend the Supreme Court Proceedings without telegraphing my likely defence to the Criminal Trial. I refer to this as my advance notice to the prosecution concern.
7. As a result of each of, and the accumulative effect of, my:
(a) silence concern;
(b) additional material concern;
(c) restriction of my defence concern; and
(d) advance notice to the prosecution concern.
I am very concerned that I will be gravely prejudiced in my rights if the Supreme Court Proceedings are not stayed pending the hearing of the Criminal Trial.
8. Further, [if] the Supreme Court Proceedings are not stayed I will have to make a decision as to whether to waive my privilege and my right to silence. This would be at the expense of the Supreme Court Proceedings.”
The plaintiff relied on the affidavit of William Staples, his solicitor, sworn 27 May 2016, which establishes the procedural matters referred to above and the recent communications between the parties’ legal representatives.
The parties’ submissions
The applicant/ defendants’ submissions
Mr Windsor submitted that it was in the interests of justice that a stay be granted. He relied on Commissioner of the Australian Federal Police v Zhao [2015] HCA 5; 255 CLR 46 and contended that the principles articulated by the High Court in that decision were still relevant to the exercise of my discretion notwithstanding the changes effected by the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Act 2016, Sch 1 (the Amending Act). He contended that the defendants’ evidence was sufficient to establish a risk that their rights to silence would be impugned if the stay were refused. Mr Windsor also argued that there was much to be lost and little to be gained if the civil proceedings were not stayed, since any unauthorised disclosure would jeopardise the criminal trial. He contended that the plaintiff had not identified any substantial prejudice that would be occasioned by a stay for a limited period.
Mr Windsor accepted that, although the criminal trial had a hearing date, it would be appropriate to grant a stay until late August 2016 so that the Court could review the terms of the stay if, for some reason, the criminal trial did not go ahead on the allocated date.
Mr Windsor relied on Commissioner of the Australian Federal Police v Cacu [2015] NSWSC 1232 in which Adams J considered an application for a stay of proceedings under the Proceeds of Crime Act, as it applied prior to the commencement of the Amending Act.
The plaintiff/ respondent’s submissions
Mr Moses SC, who appeared with Mr O’Mahoney on behalf of the plaintiff, submitted that there was no basis on which the Court could order a stay. He summarised the ratio decidendi of Commissioner of the Australian Federal Police v Zhao as follows. Where the matters covered by the forfeiture and exclusion proceedings on the one hand, and the criminal proceedings on the other, are substantially identical, it is not necessary for a person to do more than: first, establish the overlap; secondly, assert that he or she may be cross‑examined on matters that may open up further investigation; and, finally, assert that if the civil matters are not stayed he or she will have to make a decision whether to waive their privilege against self‑incrimination and right to silence. These matters are sufficient to establish that there is real risk of prejudice. And if the risk of prejudice is real, the interests of justice will not be served by requiring a person to defend the forfeiture proceedings, or pursue the exclusion proceedings, before the criminal proceedings are finalised.
Mr Moses submitted that, in so far as the defendants relied on Commissioner of Australian Federal Police v Zhao, the law articulated in that decision had been substantially changed by the Amending Act, and in particular, the amendments to s 319 and the addition of s 319A.
Mr Moses also relied on Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103, in which the Court of Appeal (Beazley P, Ward and Gleeson JJA agreeing) considered and applied Commissioner of the Australian Federal Police v Zhao. The Court of Appeal held that the principles applied just as much to the question whether an examination under the Proceeds of Crime Act ought be ordered as they did to whether a stay ought be granted of an application for an exclusion order (by the accused) or a forfeiture order (by the proceeds of crime authority, such as the Commissioner).
Mr Moses also contended that any prejudice to which the defendants might be exposed could be addressed and ameliorated by an order in similar terms to order (7) in Commissioner of the Australian Federal Police v McGlone, namely that no one involved in the prosecution of the defendants be present at the civil proceedings; and that the transcript of the proceedings or any evidence adduced in the civil proceedings not be disclosed to any person involved in the prosecution of the defendants.
Mr Moses also submitted that there was no basis for any reasonable apprehension of inadvertent or unauthorised disclosure of evidence obtained in the proceedings under the Proceeds of Crime Act since no assumption could be made that orders made by the Court would not be complied with.
Mr Moses argued that the defendants’ evidence was too general to permit the conclusion to be drawn that their right to silence would be compromised by the hearing of the civil proceedings in advance of the trial.
Relevant legislation
Proceeds of Crime Act and its legislative history
The effect of the Amending Act
Until the Amending Act commenced, s 319 of the Proceeds of Crime Act provided:
The fact that criminal proceedings have been instituted or have commenced (whether or not under this Act) is not a ground on which a court may stay proceedings under this Act that are not criminal proceedings.
As referred to above, this provision was considered by the High Court in Commissioner of the Australian Federal Police v Zhao. In that case the respondent was charged with aiding and abetting another to deal with money or property that was the proceeds of crime. On the same day, the appellant obtained an order to restrain the disposition of certain items of his property. The appellant subsequently applied for a forfeiture order in respect of the restrained property against the respondent and his wife. The respondent applied for a stay of the forfeiture proceedings until completion of the criminal proceedings on the ground that there would be a real risk of prejudice to the respondent's defence in the criminal proceedings by giving the evidence required to properly present his case in the forfeiture proceedings. The stay was refused at first instance and granted on appeal. The High Court dismissed the appeal against the stay.
The High Court accepted that the commencement of criminal proceedings was not an impediment per se to the continuation of forfeiture proceedings. The Court said at [35]-[36]:
To warrant a stay of the forfeiture proceedings, it must be apparent that the person whose property is in question is at risk of prejudice in the conduct of his or her defence in the criminal trial.
Section 319 impliedly acknowledges what is in any case true: that the courts have the power to control their proceedings and to order a stay in an appropriate case. It will be appropriate to do so where the interests of justice require such an order. Section 319 is not expressed to refer specifically to a circumstance where the issues in the forfeiture proceedings and the criminal proceedings are substantially identical. The POC [Proceeds of Crime] Act does not presume to say what a court should do in such a circumstance.
The High Court considered that the risk of prejudice was plain and that it was not necessary for the respondents to say more than was said on the stay application to identify the risk, given that the circumstances relevant to the criminal and civil proceedings were “substantially identical”: [43].
The High Court concluded:
47. The prospect that civil proceedings may prejudice a criminal trial and that such prejudice may require a stay of the civil proceedings is hardly novel. In some jurisdictions, procedures are provided for making an application for a stay in such circumstances. The risk of prejudice in a case such as this is real. The second respondent can point to a risk of prejudice; the Commissioner cannot.
. . .
Conclusion and orders
49. It may be accepted that criminal proceedings are not an impediment to civil proceedings under the POC Act, but it does not follow that it is intended that forfeiture proceedings brought under the POC Act will continue where to do so would put a respondent at risk of prejudice in his or her criminal trial.
50. The interests of justice are not served by requiring the second respondent to defend the forfeiture proceedings or pursue the exclusion proceedings before his criminal proceedings are finalised, especially since the Commissioner will suffer no relevant prejudice from a delay in the continuation of the forfeiture proceedings.
[Footnotes omitted.]
The recent amendments to the Proceeds of Crime Act
The Bill that became the Amending Act was accompanied by an Explanatory Memorandum. The Explanatory Memorandum, at [2], explained that the Bill contained a range of measures to “improve and clarify Commonwealth criminal justice arrangements”, including, of present relevance, “amending the . . . Act to clarify the operation of the non-conviction based proceeds of crime regime in response to recent court decisions”. The effect of Sch 1 was explained as follows:
4. Schedule 1 will amend the POC Act to clarify the operation of the non-conviction based confiscation regime provided under that Act.
5. The non-conviction based forfeiture scheme is an essential tool under the POC Act, which is designed to target those who distance themselves from commission of offences, but profit as a result of illegal activity. Under the POC Act, a proceeds of crime authority (the Commissioner of the Australian Federal Police or the Commonwealth Director of Public Prosecutions) may apply to restrain property reasonably suspected of being the proceeds of crime, without requiring any person to be charged. The restrained property may later be forfeited if the court is satisfied on the balance of probabilities that the property is proceeds of crime.
6. The non-conviction based scheme operates in addition to the conviction-based forfeiture scheme. Section 319 of the POC Act provides that the fact that criminal proceedings have been instituted or have commenced (whether or not under the POC Act) is not a ground on which a court may stay proceedings under this Act that are not criminal proceedings. This reflects the Parliament's intention that the non-conviction based scheme could operate even where criminal proceedings are on foot.
7. The measures in Schedule 1 of the Bill address issues relating to the non-conviction based forfeiture scheme raised in two court decisions - Commissioner of the Australian Federal Police v Zhao [2015] HCA 5 ('Zhao and Jin') and In the matter of an application by the Commissioner of the Australian Federal Police [2015] VSC 390 ('Zhang').
8. Schedule 1 of the Bill contains amendments to the POC Act following these decisions to:
i. clarify the principles a court may consider when granting an application for a stay of proceedings under the POC Act, including providing grounds on which a stay is not to be granted
ii. strengthen protections against disclosure and use of material related to the confiscation proceedings in subsequent criminal proceedings
iii. clarify that where an exclusion application has been made pursuant to Division 3 of Part 2-1 (dealing with restraining orders) of the POC Act, this application must be heard and finalised prior to the hearing of a forfeiture application.
The effect of the amendments to s 319 was addressed in the Explanatory Memorandum, relevantly in the following terms:
47. The Bill inserts a new section 319 which does a number of things.
48. Firstly, new subsection 319(1) clarifies that the court may grant a stay of civil proceedings under the POC Act if the court considers that it is in the interests of justice to do so.
49. Secondly, new subsections 319(2) – (5) clarify where a court must not grant a stay. These principles are designed to clarify the intention that concurrent civil and criminal proceedings are possible, and require specific consideration of the individual circumstances and associated risks of prejudice. The amendments clarify that proceedings under the Act may only be stayed where the granting of a stay is the only means of addressing the circumstances (ie. the prejudice that may result to a concurrent or subsequent criminal trial). The proposed amendments are primarily designed to ensure that the court will consider the individual circumstances of the proceedings, including the nature of the overlap between the civil and criminal proceedings, and prevent the risk that a person need only claim a risk of prejudice but not provide evidence explaining the nature of the risk.
[Emphasis added.]
Section 266A of the Proceeds of Crime Act provides for disclosure of information obtained under the Proceeds of Crime Act to certain persons for certain purposes. Clause 1 of Sch 1 of the Amending Act amended s 266A(2) to insert a restriction on disclosure to circumstances where “a court has not made an order prohibiting the disclosure of the information to the authority for that purpose”. According to the extract from the Explanatory Memorandum set out above, the purpose of this provision was to “strengthen protections against disclosure”.
Clause 4 of Sch 1 of the Amending Act repealed s 319 and substituted a new s 319 which relevantly provides:
319 Stay of proceedings
(1) A court may stay proceedings (the POCA proceedings) under this Act that are not criminal proceedings if the court considers that it is in the interests of justice to do so.
(2) The court must not stay the POCA proceedings on any or all of the following grounds:
(a) on the ground that criminal proceedings have been, are proposed to be or may be instituted or commenced (whether or not under this Act) against the person subject to the POCA proceedings;
. . .
(c) on the ground that:
(i) a person may consider it necessary to give evidence, or to call evidence from another person, in the POCA proceedings; and
(ii) the evidence is or may be relevant (to whatever extent) to a matter that is, or may be, at issue in criminal proceedings that have been, are proposed to be or may be instituted or commenced (whether or not under this Act) against the person or any other person;
. . .
(3) Paragraph (2)(a) applies even if the circumstances pertaining to the POCA proceedings are or may be the same as, or substantially similar to, the circumstances pertaining to the criminal proceedings.
(4) Paragraph (2)(b) applies even if the subject matter of the POCA proceedings is the same as, or substantially similar to, the matter at issue in the criminal proceedings.
(5) Paragraph (2)(d) applies even if the staying of the POCA proceedings would avoid a multiplicity of POCA proceedings.
(6) In considering whether a stay of the POCA proceedings is in the interests of justice, the court must have regard to the following matters:
(a) that the POCA proceedings, and any criminal proceedings of a kind referred to in paragraph (2)(a) or (b), should proceed as expeditiously as possible;
(b) the cost and inconvenience to the Commonwealth of retaining property to which the POCA proceeding relates and being unable to expeditiously realise its proceeds;
(c) the risk of a * proceeds of crime authority suffering any prejudice (whether general or specific) in relation to the conduct of the POCA proceedings if the proceedings were stayed;
(d) whether any prejudice that a person (other than a proceeds of crime authority) would suffer if the POCA proceedings were not stayed may be addressed by the court by means other than a stay of the proceedings;
(e) any orders (other than an order for the stay of the POCA proceedings) that the court could make to address any prejudice that a person (other than a proceeds of crime authority) would suffer if the proceedings were not stayed.
Note: Examples of orders the court could make to address any prejudice that a person (other than a proceeds of crime authority) would suffer if the POCA proceedings were not stayed include an order under section 319A (closed court) or an order prohibiting the disclosure of information.
The Amending Act also added s 319A which provides:
A court may order that proceedings under this Act (other than criminal proceedings) be heard, in whole or in part, in closed court if the court considers that the order is necessary to prevent interference with the administration of criminal justice.
Clause 5(3) of the Sch 1 of the Amending Act provides that ss 319 and 319A of the Proceeds of Crime Act, as inserted by Sch 1 apply in relation to proceedings instituted or commenced before or after the commencement of this item. It is common ground that the new provisions apply to the defendants’ application for a stay.
Civil Procedure Act 2005 (NSW)
It is common ground that the proceedings under the Proceeds of Crime Act are civil in nature: see s 315(1) and Commissioner of the Australian Federal Police v Zhao at [20]. It is also common ground that the Civil Procedure Act applies to these proceedings. The overriding purpose of the Civil Procedure Act is to “facilitate the just, quick and cheap resolution of the real issues in the proceedings”. The objects to be taken into account in the management of proceedings are set out in s 57 and include: the just determination of the proceedings and the efficient disposal of the business of the court, as well as the efficient use of available judicial and administrative resources. Section 58 of the Civil Procedure Act relevantly provides that, in deciding whether to make an order granting an adjournment or stay of proceedings, including the terms in which any such order ought be made, the Court must seek to act in accordance with the dictates of justice.
In identifying the dictates of justice in this particular case, I am obliged to have regard to the provisions of ss 56 and 57 and am entitled to have regard to the matters listed in s 58(2)(b), which include: (i) the degree of difficulty or complexity to which the issues in the proceedings give rise; (ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities; (vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction; and (vii) such other matters as the court considers relevant in the circumstances of the case.
It was not suggested that there was any inconsistency between ss 319 and 319A of the Proceeds of Crime Act on the one hand, and Part 6 of the Civil Procedure Act on the other, such as would render inoperative any of the provisions of Part 6 to the question whether the stay and adjournment of these proceedings ought be granted.
I turn to address the relevant matters under the Proceeds of Crime Act before addressing, to the extent relevant, the matters required to be taken into account by the Civil Procedure Act.
Relevant matters under the Proceeds of Crime Act
The construction of s 319(2)
The wording of s 319(2) is somewhat curious since it prohibits the Court, in terms, from staying the civil proceedings “on any or all of the following grounds”. The grounds listed are the very matters which were found to be germane (though not determinative) as to whether the interests of justice warranted a stay in Commissioner of the Australian Federal Police v Zhao.
I note that the Explanatory Memorandum said (in the passage highlighted above from [49]) that:
The amendments clarify that proceedings under the Act may only be stayed where the granting of a stay is the only means of addressing the circumstances (ie. the prejudice that may result to a concurrent or subsequent criminal trial).
The difficulty with this passage in the Explanatory Memorandum is that s 319 does not say that a stay may be granted if, and only if, there is no other means of addressing the prejudice. Nor does s 319 say that the only relevant prejudice is that to a concurrent or subsequent criminal trial (indeed, s 319(6)(d) indicates that a wider concept of prejudice is relevant). Rather, the wording of s 319 appears to leave it to the Court to determine whether a stay ought be granted in the interests of justice, while making it clear that matters such as substantial similarity between the circumstances of criminal proceedings and proceedings (which had hitherto, as in Commissioner of the Australian Federal Police v Zhao, been regarded as warranting, if not requiring, a stay) were no longer sufficient in themselves to warrant a stay. I do not regard the “explanation” in the passage from [49] of the Explanatory Memorandum as according with the express words of the provision. Section 319 (6)(d) provides that whether the prejudice can be addressed by a means other than a stay is one of a number of factors to be considered. This is inconsistent with the passage in the Explanatory Memorandum set out above which suggests that the absence of any other means of addressing the prejudice is a condition precedent to the grant of a stay.
Having regard to the terms and purpose of the Amending Act and the extract from the Explanatory Memorandum to the Bill that became the Amending Act, it appears that Parliament intended that more was required for a stay than the establishment of the matters in s 319(2). In other words, an applicant for a stay of an examination or proceedings under the Proceeds of Crime Act would need to show more than, for example, that criminal proceedings were on foot which related to the same circumstances as the civil proceedings. Further, the Court is obliged to consider the matters set out in s 319(6), as well as to consider whether any prejudice could be overcome by ordering that the Court be closed for the civil proceedings under the Proceeds of Crime Act.
In my view, it is significant that the Explanatory Memorandum to the Amending Act uses the words “clarify” in several places. For example, cl 4 provides that Sch 1 will amend the Act to “clarify” the operation of the non-conviction based confiscation scheme; cl 8 provides that Sch 1 is intended to “clarify” the principles having regard to the issues raised (relevantly) in Commissioner of the Australian Federal Police v Zhao. This is not to say that the amendments are not to be applied in terms. However, it provides some indication that Parliament did not intend to intrude on the Court’s assessment of the “interests of justice” (which involves discretionary considerations) except where specifically indicated by the words of the Amending Act, which make it clear that such matters as were formerly regarded as sufficient to warrant a stay, were no longer to be so regarded.
Consideration of relevant matters under s 319(6)
The desirability of proceedings under the Proceeds of Crime Act and any corresponding criminal proceedings to proceed as expeditiously as possible (s 319(6)(a) of the Proceeds of Crime Act)
The listing dates for the criminal trial are known. As referred to above, the criminal trial of the defendants is listed for hearing on 8 August 2016 with an estimated hearing time of two weeks. If a stay is granted, there will be an inevitable delay in the finalisation of the defendants’ application for exclusion which will probably result in a deferral of the plaintiff’s application for forfeiture and require the preservation of the assets the subject of the restraining order for a further period.
The plaintiff estimates that the hearing of the proceedings in this Court under the Proceeds of Crime Act will take in the order of a day. If the criminal trial proceeds as listed, a verdict could be expected in August 2016. The civil proceedings could be listed shortly thereafter. However, criminal trials do not always proceed according to their listing. Any stay or adjournment could be made until a particular date say, at the end of August, so that if there is any disruption to the criminal trial, the various matters to be taken into account could be revisited.
The cost and inconvenience to the Commonwealth of retaining property to which the proceeding relates and being unable to expeditiously realise its proceeds (s 319(6)(b) of the Proceeds of Crime Act)
No particular prejudice has been identified by the Commonwealth. The property in respect of which an exclusion order is sought comprises an Audi motor vehicle (Sch 1 of the summons); a Mercedes Benz motor vehicle (Sch 4); funds in specified bank accounts (Sch 6) and men’s jewellery (Sch 7). Although it can be expected that the motor vehicles are losing value over time and need to be securely accommodated, I am not persuaded that further delay of a few months would cause substantial prejudice to the Commonwealth.
The risk of the plaintiff suffering any prejudice (whether general or specific) in relation to the conduct of the proceeds proceedings if they were stayed (s 319(6)(c) of the Proceeds of Crime Act)
The plaintiff has identified a prejudice occasioned by the increased costs that are likely to be incurred if the civil proceedings are stayed. This could be met by a costs order against the defendants.
Whether any prejudice that a person (other than the plaintiff) would suffer if the proceeds proceedings were not stayed may be addressed by the court by means other than a stay of the proceedings (s 319(6)(d)) and any orders (other than a stay) that the court could make to address any prejudice that a person (other than the plaintiff) would suffer if the proceedings were not stayed (s 319(6)(e) of the Proceeds of Crime Act)
It is first necessary to identify the persons who might suffer prejudice if the civil proceedings were not stayed. The persons primarily affected are the defendants themselves. Because their approach to the proceeds proceedings has been different, it is necessary to address them in turn.
Prejudice to the defendants
The potential prejudice to the first defendant is that he might feel constrained when giving evidence in support of his application for an exclusion order (in respect of which he bears the onus of proof: s 317 of the Proceeds of Crime Act) as a result of a fear that the evidence could compromise his defence in the criminal proceedings (in respect of which he has the right to silence). The first defendant’s instructions to his counsel to cross-examine any witnesses called by the plaintiff might also be inhibited by the same apprehension.
The plaintiff submitted that any prejudice of that nature could be addressed by the Court by a suppression or non-publication order; a direction to the plaintiff not to disclose the evidence to the Director of Public Prosecutions; and/ or an order closing the Court for the proceeds proceedings. As referred to above, the plaintiff submitted further that, in effect, “the horse has already bolted”, since the first defendant has already been examined under s 180 of the Proceeds of Crime Act and has already complied (without objection) with this Court’s directions that he put on any affidavit evidence on which he proposes to rely in the civil proceedings.
In order to assess whether the prejudice to the first defendant can be addressed by means other than a stay, the nature of the prejudice must be articulated. The impact of giving evidence in the proceeds proceedings, even if I were to take the substantial step of closing the Court, was described in the following terms by Hayne and Bell JJ (when addressing answers given in a secret examination conducted by the Australian Crime Commission) in X7 v Australian Crime Commission [2013] HCA 29; 248 CLR 92 at [124]:
Even if the answers given at a compulsory examination are kept secret, and therefore cannot be used directly or indirectly by those responsible for investigating and prosecuting the matters charged, the requirement to give answers, after being charged, would fundamentally alter the accusatorial judicial process that begins with the laying of a charge and culminates in the accusatorial (and adversarial) trial in the courtroom. No longer could the accused person decide the course which he or she should adopt at trial, in answer to the charge, according only to the strength of the prosecution's case as revealed by the material provided by the prosecution before trial, or to the strength of the evidence led by the prosecution at the trial. The accused person would have to decide the course to be followed in light of that material and in light of any self-incriminatory answers which he or she had been compelled to give at an examination conducted after the charge was laid. That is, the accused person would have to decide what plea to enter, what evidence to challenge and what evidence to give or lead at trial according to what answers he or she had given at the examination. The accused person is thus prejudiced in his or her defence of the charge that has been laid by being required to answer questions about the subject matter of the pending charge.
This passage was approved in Lee v New South Wales Crime Commission [2013] HCA 39; 251 CLR 196 (Lee No. 1) by French CJ at [54] (footnote 173); Kiefel J (Bell J agreeing) at [163] (footnote 341). Although Hayne J did not refer to the passage specifically in Lee No. 1, his Honour restated the principle in similar terms in Lee No. 1 at [79]. To the extent to which the other members of the High Court (Crennan, Gageler and Keane JJ) said, or implied that secrecy provisions were sufficient to address that prejudice (Crennan J at [141] and Gageler and Keane JJ at [340], they were in the minority.
I am not satisfied that the prejudice to the first defendant of being cross-examined in the civil proceedings or being required to give instructions for the cross-examination of the plaintiff’s witnesses could be overcome by means of orders under the Court Suppression and Non-publication Orders Act 2010 (NSW) or an order to close the Court under s 319A of the Proceeds of Crime Act. Moreover, there is a risk that, whatever orders I might make, there will be disclosure of what occurs in the civil proceedings, through misunderstanding, inadvertence or mishap, to those involved in the prosecution. I consider that Mr Moses set the bar too high when he submitted that there was no basis for a “reasonable apprehension” of inadvertent disclosure. I consider it to be relevant to take into account the possibility of inadvertent disclosure, even though the prospects of its occurring may be adjudged to be low.
If there was unauthorised disclosure, there would be a substantial risk that the criminal trial could not proceed in accordance with the listing, since it may be necessary for the prosecutor and other staff to be replaced by persons who were not party to the unauthorised disclosure, as was held to be required in Lee v The Queen [2014] HCA 20; 253 CLR 455, where unauthorised publication to the Director of Public Prosecutions of transcripts of examinations conducted by the Crime Commission took place. Although the risk of unauthorised non-disclosure may be regarded as slight, its potential to affect the criminal trial in a substantial way is also a matter to be taken into account.
The position of the second defendant is different since she has chosen not to adduce evidence in support of her application for an exclusion order. In her affidavit in support of her application for a stay she deposed that she was “concerned” if she had to rely on an affidavit in the civil proceedings. However, she has not filed or served any such affidavit, although directions were made to the effect that such an affidavit had to be filed. Nor did she indicate to the Court on any prior occasion that she wanted to put on any affidavit evidence in support of her exclusion application, or that she would have done so had it not been for the outstanding criminal charges.
Notwithstanding this matter, I do not consider that it would be in the interests of justice for the first defendant’s exclusion application to be heard separately from the second defendant’s. Accordingly, the prejudice to him is a substantial factor in favour of a stay being granted which would also affect her exclusion application.
Prejudice to the public
The word “person” in s 319(6)(d) and (e) includes not only the plural, persons (s 8 of the Interpretation Act 1987 (NSW)), but also “an individual, a corporation and a body corporate or politic” (s 21 of the Interpretation Act). It can therefore include members of the public, the public as a whole and media organisations. The principle of open justice is designed to be of benefit both to the administration of justice itself and to the community. Where a court is closed, the principle of open justice is subordinated. If I were to close the Court to protect the evidence given in the civil proceedings by the first defendant from disclosure to the prosecuting authorities in the criminal trial, either directly, or through reports in the media or by word of mouth, the principle of open justice would be substantially affected. It is an important aspect of open justice that the press is permitted to report on court proceedings. The media become the eyes and ears of the public, who are entitled to be in the court room, which is why fair and accurate reporting of court proceedings is protected: John Fairfax Publications Pty Limited v District Court of NSW [2004] NSWCA 324; 61 NSWLR 344 at [20] per Spigelman CJ.
If I were to grant the stay, the principle of open justice would be advanced and the prejudice to the public and media organisations would be avoided since, once the criminal trial has concluded, there would no longer be any reason to close the court or to restrict publication of what occurs in the civil proceedings.
The dictates of justice (s 58 of the Civil Procedure Act)
The defendants’ application for a stay is based on matters of some complexity. The decision of the High Court in Commissioner of the Australian Federal Police v Zhao was handed down on 12 February 2015. The Amending Act came into effect in February 2016, some time after the criminal proceedings and the civil proceedings were set down.
The defendants have failed to give any explanation as to why the application for a stay was not brought earlier. Subject to the matter referred to below arising from the second defendant’s affidavit evidence, the narrative set out above suggests that it was a last-minute decision, since on the Friday before the hearing on the Monday, there were discussions between solicitors about the delivery of the court book. The application could have been foreshadowed at the first directions date after the service of the summons or, indeed, at any time thereafter. As it happened, the first the plaintiff knew of the application was minutes before the matter was called on for the hearing of the defendants’ exclusion application. This is a factor that weighs against an order for a stay.
There is at least an implication in the second defendant’s affidavit that the reason she did not seek a direction on 29 April 2016 when she was joined as an applicant to the notice of motion for an exclusion order was that she was concerned that she might, by putting on evidence, jeopardise her right to silence in the criminal proceedings (see [4] of her affidavit extracted above). Accordingly, there is some evidence to suggest that she considered the matter almost four weeks before the date for the hearing of the motion for exclusion orders. I infer that she did not give her solicitors any instructions to seek a stay until at least after 3.40pm on Friday 20 May 2016 when Ms McDougall sent an email to Mr Staples regarding the court book. I have taken this matter into account in deciding whether to order a stay. It may also have some relevance to costs.
The degree of injustice that would be occasioned to the respective parties as a consequence of an order for a stay, or the refusal to grant such an order, is a relevant consideration. These matters have largely been addressed above in the context of prejudice to the parties.
Another matter to be taken into account, to the extent to which it has not already been considered (and which I consider to be relevant under s 58(2)(b)(vii)), is the effect of granting or refusing a stay on the administration of justice generally. If a stay is granted, the criminal proceedings could proceed in accordance with the listing. The delay in the hearing of the civil proceedings is not likely to be substantial (a matter of a few months). The civil proceedings could then be conducted in the orthodox way, in open court with no restriction on the publication of evidence. If a stay were refused, the civil proceedings would need to be subject to significant restrictions. It might be necessary to close the Court. Although this is something that needs to be contemplated, because of s 319A, it constitutes a significant departure from the principles of open justice.
Having taken all the matters referred to above into account (including the risk of the criminal trial being jeopardised by unauthorised disclosure; the infringement to the defendants’ right to silence; the disruption to the orthodox course of civil proceedings in open court with no restriction as to publication; the imminence of the criminal trial; and the likely marginal gain in terms of time and cost if a stay is refused), I am persuaded that it is in the interests of justice to grant the stay on terms.
An important factor in my decision that it is in the interests of justice to grant the stay is the imminence of the criminal trial. In these circumstances, the stay will be granted for a limited period which is designed to accommodate the finalisation of the criminal trial, at least at first instance. For this reason I propose to stay the proceedings for a fixed period rather than, as sought by the defendants, pending the outcome of the criminal trial.
Costs
It is common ground that costs ought be reserved pending the making of further submissions.
Orders
I make the following orders:
(1)Stay these proceedings until the earlier of the following:
(a)Further order; or
(b)31 August 2016.
(2)Vacate the directions hearing on 9 June 2016.
(3)Stand the matter over for mention before me at 9.15am on 31 August 2016.
(4)Grant liberty to the parties to restore the matter on three days’ notice, before me.
(5)Costs reserved.
(6)If costs cannot be agreed, each party is to serve and provide to my Associate within seven days hereof written submissions in support of the costs order for which the party contends; and, within four further days, any submissions in response.
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Amendments
15 June 2016 - Parties anonymised
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