The Director of Public Prosecutions for Western Australia v Mansfield
[2005] WASC 237
THE DIRECTOR OF PUBLIC PROSECUTIONS FOR WESTERN AUSTRALIA -v- MANSFIELD & ORS [2005] WASC 237
| Link to Appeal : | [2007] WASCA 39 |
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2005] WASC 237 | |
| Case No: | CIV:1977/2002 | 13 JULY 2005 | |
| Coram: | BLAXELL J | 3/11/05 | |
| 15 | Judgment Part: | 1 of 1 | |
| Result: | Allowance for reasonable living and business expenses to continue without any variation in respect of mortgage payments - Release of joint interests in real property not to be subject to payment of mortgage arrears - Other orders made to effect variations | ||
| B | |||
| PDF Version |
| Parties: | THE DIRECTOR OF PUBLIC PROSECUTIONS FOR WESTERN AUSTRALIA NIGEL CUNNINGHAM MANSFIELD ROSALIND JANE MANSFIELD |
Catchwords: | Criminal law Confiscation of property Freezing order Competing applications to vary quantum of reasonable living and business expenses Whether quantum should be reduced to prevent dissipation of frozen funds Whether reasonable living and business expenses include mortgage payments due in respect of frozen real property Criminal law Confiscation of property Freezing order Application to vary freezing order to release objector's joint interest with respondent in real property Whether joint interest can be released Whether DPP obliged to meet arrears of mortgage payments |
Legislation: | Criminal Property Confiscation Act 2000 (WA) s 6, s 9, s 10, s 17, s 25, s 26, s 27, s 28, s 45, s 52, s 84, s 85, s 87, s 89 |
Case References: | Cliff Robe River Iron Associates v Dravo (1988) WAR 322 Clissold v Perry (1904) 1 CLR 363 Greenpark Pty Ltd v Odin Inns Pty Ltd (1989) WAR 322 Permanent Trustee Co Ltd v Western Australia (2002) WASC 22 Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Applicant
AND
NIGEL CUNNINGHAM MANSFIELD
Respondent
NIGEL CUNNINGHAM MANSFIELD
First-Named First Objector
ROSALIND JANE MANSFIELD
Second-Named First Objector
Catchwords:
Criminal law - Confiscation of property - Freezing order - Competing applications to vary quantum of reasonable living and business expenses - Whether quantum should be reduced to prevent dissipation of frozen funds -
(Page 2)
Whether reasonable living and business expenses include mortgage payments due in respect of frozen real property
Criminal law - Confiscation of property - Freezing order - Application to vary freezing order to release objector's joint interest with respondent in real property - Whether joint interest can be released - Whether DPP obliged to meet arrears of mortgage payments
Legislation:
Criminal Property Confiscation Act 2000 (WA) s 6, s 9, s 10, s 17, s 25, s 26, s 27, s 28, s 45, s 52, s 84, s 85, s 87, s 89
Result:
Allowance for reasonable living and business expenses to continue without any variation in respect of mortgage payments - Release of joint interests in real property not to be subject to payment of mortgage arrears - Other orders made to effect variations
Category: B
Representation:
Counsel:
Applicant : Mr T A Staples
Respondent : Mr M L Bennett & Mr S K Shepherd
First-Named First Objector : Mr M L Bennett & Mr S K Shepherd
Second-Named First Objector : Mr C E Chenu
Solicitors:
Applicant : State Director of Public Prosecutions
Respondent : Bennett & Co
First-Named First Objector : Bennett & Co
Second-Named First Objector : Durack & Zilko
Case(s) referred to in judgment(s):
Cliffs Robe River Iron Associates v Dravo Pty Ltd [1988] WAR 322
(Page 3)
Clissold v Perry (Minister for Public Instruction) (1904) 1 CLR 363
Greenpark Pty Ltd v Odin Inns Pty Ltd [1989] WAR 322
Permanent Trustee Co Ltd v Western Australia [2002] WASC 22
Case(s) also cited:
Nil
(Page 4)
1 BLAXELL J: This matter came before me on 13 July 2005 for the hearing and determination of the following three applications.
(1) Application dated 17 May 2005 by the applicant ("the DPP") to set aside an order made by the Hon Justice Roberts-Smith on 18 February 2004 providing for the reasonable living and business expenses of the respondent and his wife ("the first application").
(2) Application dated 16 September 2004 by the respondent (Mr Mansfield) to vary the freezing order made on 12 July 2002 so as to authorise the release of $47,688.07 to Citibank Pty Ltd ("the second application").
(3) Application dated 10 December 2004 by the second-named first objector ("Mrs Mansfield"):
1. to set aside the freezing order made on 12 July 2002 insofar as it relates to (inter alia) the following property of Mrs Mansfield:
1.1 the interest of Mrs Mansfield in a Challenge Bank cash account in the name of Mr Mansfield;
1.3 the interest of Mrs Mansfield as joint registered proprietor with Mr Mansfield of the land at 18 Addison Street, South Perth;
1.4 the interest of Mrs Mansfield as joint registered proprietor with Mr Mansfield of the land at unit 3, 28 Eric Street, Como;
1.8 the interests of Mrs Mansfield in all household furniture and effects located at 18 Addison Street, South Perth or elsewhere.
2. Further and in the alternative, to vary the freezing order to make further provision for the reasonable living and business expenses of Mrs Mansfield and/or Mr and Mrs Mansfield including mortgage and loan repayments.
("the third application").
(Page 5)
2 My decisions in respect of the first and second applications were made on 13 and 29 July 2005 respectively. In each instance, I indicated that full reasons for decision would be delivered at a later date, and those reasons appear below. My decision in respect of the third application and my reasons for the same also appear below.
Reasons for refusing the first application
3 These proceedings commenced with an ex parte order made by Justice McKechnie on 12 July 2002, freezing the property of Mr and Mrs Mansfield. S 45 of the Criminal Property Confiscation Act 2000 ("the Act") allows the Court to make provision in a freezing order "for meeting the reasonable living and business expenses of the owner of the property".
4 In the present instance, the freezing order was varied by Justice Roberts-Smith on 18 February 2004 to provide for such expenses of Mr and Mrs Mansfield. By consent, the quantum of the allowance for the Mansfields' reasonable living and business expenses was the sum of $2500 per fortnight. Since then, payments at this rate have been regularly made from an account that was expressly frozen by the freezing order and which is known as "the Glentown account". As at 1 June 2005 the balance of that account was $246,921.03.
5 The first application seeks to set aside the order made by Justice Roberts-Smith on 18 February 2004, with the necessary result that Mr and Mrs Mansfield would no longer receive any payments in respect of their living and business expenses. The grounds of this application are twofold, namely:
• An indefinite continuation of the payments of $2500 per fortnight will ultimately exhaust the Glentown account and deprive the DPP of the benefit of that asset in the event that it is confiscated.
• Mr and Mrs Mansfield have each failed to obtain employment or Centrelink benefits which would provide them with an alternative means of meeting their reasonable living and business expenses.
6 A preliminary question has been raised as to whether or not I have a discretion to set aside an order that was made by consent. Mr Mansfield contends that the consent order on 18 February 2004 was the result of a contractually binding compromise between the parties reached after negotiations as to the appropriate quantum of living expenses. To my mind the evidence does not establish that the consent order had a contractual origin, and I consider that the words "by consent" at that time
(Page 6)
- simply meant "the parties hereto not objecting" (as per Kennedy J in Cliffs Robe River Iron Associates v Dravo Pty Ltd [1988] WAR 322, 328 and 330). Furthermore, as Brinsden J said in Greenpark Pty Ltd v Odin Inns Pty Ltd [1989] WAR 322, 324:
" … there is a long line of authority which supports the view that an interlocutory consent order may be varied for mistake and, indeed, if there has been a change in circumstances." (See also the authorities there referred to.)
8 In this regard, Mr Mansfield was originally charged (on 14 August 2002) with three offences alleging fraud against the Commonwealth, conspiracy to defraud the Commonwealth, and money laundering. On 14 February 2003 these three Commonwealth charges were withdrawn and Mr Mansfield was then charged with two State offences of obtaining a financial advantage by deception (contrary to s 134 of the Criminal Code). Mr Mansfield pleaded guilty to these charges and I understand that he has been appropriately dealt with in respect of those matters.
9 However, at all material times the DPP has also alleged that Mr Mansfield committed additional offences which resulted him acquiring criminal benefits totalling $3,356,520.50. In this regard, the further amended statement of claim (in the present proceedings) asserts that Mr Mansfield engaged in a series of share trading transactions between 9 June and 3 August 2000 contrary to s 1002G(2) and s 1311 of the Corporations Law (WA) which were "confiscation offences" as defined in s 141 of the Act. In July 2004 the Australian Crime Commission laid a total of 306 charges against Mr Mansfield but in January 2005 these were reduced to two counts of conspiracy, one count of destroying books, nine counts of money laundering, and 55 other charges under the Corporations Law. The evidence before me does not show how far those proceedings have progressed or when they are likely to be determined.
10 Relevant to ground 1 of the first application, the only change in circumstances since the consent order on 14 February 2004 is the extended delay in prosecuting Mr Mansfield and in pursuing the present
(Page 7)
- application for a criminal benefits declaration. If these delays continue indefinitely without any variation in the present payments to Mr and Mrs Mansfield, a further period of at least six years will elapse before the Glentown account becomes exhausted.
11 Quite clearly, the means to prevent this ever happening are entirely within the control of the DPP and those responsible for the conduct of the prosecution. This being so, it would obviously be unjust to treat the delay in prosecution as a change in circumstance which justifies revocation of the consent order. Furthermore, I consider that in these particular circumstances the delay cannot affect the merits of whether or not reasonable living and business expenses should be paid. For these reasons I have no hesitation in rejecting the first ground relied upon.
12 Turning now to the second ground, it is my view that the failure of Mr and Mrs Mansfield to obtain employment or to seek Centrelink benefits is simply not a change in circumstances. It is relevant in this regard that the consent order for payment of living expenses came some 19 months after the freezing order was first made on 12 July 2002. The Mansfields had been unemployed and without Centrelink benefits throughout the whole of that period and the issues as to their future sources of income were as relevant then as they are now. In my view, the fact that the Mansfields have continued to be unemployed and without benefits since 18 February 2004 is not a changed circumstance.
13 For these reasons I refused the first application at the hearing on 13 July 2005.
Reasons for partially allowing the second application
14 By his application dated 16 September 2004 Mr Mansfield seeks to vary the freezing order of 12 July 2002 to enable payment of $47,688 to Citibank Pty Ltd. This sum represents Mr Mansfield's total liability in respect of various debts incurred by him on a credit card held with Citibank. Some of the credit card transactions were entered into prior to the freezing order being made but the greater proportion of the relevant debts were incurred subsequently.
15 In essence and by reason of the freezing order applying to all assets and moneys owned or under the effective control of Mr Mansfield, he used the credit card to maintain his liquidity over the following five months. Needless to say, the freezing order has prevented Mr Mansfield from meeting his obligations to Citibank and consequently the latter has petitioned for his bankruptcy. I understand that a refusal of
(Page 8)
- the present application will probably result in him being declared bankrupt.
16 For the purpose of determining the application, I was provided with schedules detailing Mr Mansfield's explanations and the DPP's comments on some 83 separate items of expenditure. In broad terms, the expenditure falls into the following three categories: firstly, payment of debts incurred prior to the freezing order totalling approximately $8000; secondly, regular monthly payments due to creditors under contracts entered into by Mr and Mrs Mansfield prior to the freezing order (for example, home loan mortgage payments and monthly payments due to Foxtel) and, thirdly, payments said to be for other living expenses incurred following the freezing order.
17 I think it is common ground that I can only order the release of these moneys to Citibank if they constitute "reasonable living and business expenses" within the meaning of s 45(e) of the Act. In my view, this provision should be construed so as to allow such expenses to be met retrospectively in appropriate circumstances. It follows that in respect of each item of expenditure, it is necessary to firstly determine whether or not the same was a living or business expense and, if so, to then decide whether it was incurred reasonably.
18 However, special considerations arise in respect of the items of expenditure which were housing loan mortgage repayments. In this regard, s 52 of the Act specifically provides that:
"If mortgaged property is frozen, nothing in this Act —
(a) prevents the mortgagor from making payments to the mortgagee in accordance with the mortgage if the payments are made with money that has not been seized or frozen; or
(b) prevent the mortgagee from accepting payments from the mortgagor in accordance with the mortgage."
19 The necessary implication from this section is that frozen funds cannot be used to make payments under a mortgage on property that is also frozen. This is consistent with s 9 which contains the rather startling provision that in the event that frozen real property is confiscated, that property vests in the State free from nearly all registered interests including mortgages. There is a long established rule of statutory construction that legislative provisions should not be construed as
(Page 9)
- interfering with vested interests unless that intention is manifest (Clissold v Perry (Minister for Public Instruction) (1904) 1 CLR 363, 373.) However, reference to the Hansard record of the relevant Parliamentary debate confirms that the present provisions really do mean what they say and therefore it is not surprising that the then Attorney described the legislation as "draconian". (Hansard, 23 November 2000, p 3638).
20 It is clear from Hansard that when passing the Act, Parliament deliberately set aside some longstanding principles of criminal justice and property law that were previously thought to be sacrosanct. In that regard I respectfully agree with the observations on the nature of the legislation as expressed by McKechnie J in Permanent Trustee Co Ltd v Western Australia [2002] WASC 22.
21 Mr Mansfield's counsel has made well-reasoned submissions to the effect that s 25 and s 26(2) of the Act should be construed as allowing confiscation of the value (only) of a respondent's saleable interest in real property and not the real property itself. In my view, this is not the effect of these provisions when read in conjunction with s 9. It seems to me that the scheme of the Act is that upon confiscation, a mortgage interest is lost, along with the mortgaged property, but that an innocent third party mortgagee can then apply under s 85 for the payment of an amount equal to the value of the lost interest pursuant to s 87(2)(c). (I will have more to say about these aspects of the legislation in my reasons for decision on the third application.)
22 For present purposes, all that matters is that s 52 effectively prohibits frozen funds from being used to make mortgage payments in respect of real property that is also frozen. As Mr Mansfield does not have any unfrozen funds, he is not in a position to make any mortgage payments at all. It follows that in circumstances such as the present where the mortgage payments have been met by way of a credit card, it is simply not possible to reimburse the credit provider out of the frozen account. This is so notwithstanding that the mortgage payments might otherwise be regarded as reasonable living expenses.
23 I now return to the question of whether each of the remaining items claimed fall within the ambit of reasonable living and business expenses. In my view, this question is to be answered regardless of whether a particular item was incurred prior to or subsequent to the freezing order, and regardless of whether it resulted from a prior contract. It is the purpose for which the particular payment was used that determines the answer to the question.
(Page 10)
24 For convenience and in order to facilitate the swift decision that was requested, I provided counsel with copies of the schedules which are Exh AHH1 and Exh AHH2 to the affidavit of Annabelle Helen Hughes sworn on 22 June 2005. On those copy schedules I placed a tick against each item which I have found to be a reasonable living or business expense.
25 In general terms I consider that in the modern world monthly Internet access is reasonable. Similarly life insurance premiums and utility payments should be allowed. I have allowed the car hire payments because I understand that at the material time Mr and Mrs Mansfield's vehicles were frozen and could not be used. A number of payments such as Foxtel and restaurant expenditure have not been allowed because I do not consider them to be reasonable living expenses in the context of the restrictive regime imposed by the Act.
26 I recognise that my failure to allow the bulk of the items probably means that Mr Mansfield will now be made bankrupt. I also recognise that in the event that the State is ultimately unsuccessful in obtaining confiscation of the respondent's property, there is no adequate remedy for the injustice that will then have occurred. However, that is a consequence that Parliament clearly intended and I am obliged to give effect to the Act.
27 The total of the items allowed is $6574.06 and on 29 July 2005 I ordered that this sum be released to Citibank Pty Ltd.
The issues the subject of the third application
28 I understand that Mrs Mansfield's application for release of household furniture and effects (as referred to in par 1.8 of the third application) is likely to be the subject of a minute of agreed orders. Accordingly, I will not address that part of the application and there will be liberty to apply in respect of the same.
29 Paragraphs 1.2, 1.5, 1.6, 1.7 and 2.1 of the third application have also been disposed of, either by consent or by decisions of other Judges on previous occasions. The substantive matters the subject of the application which remain to be determined are the following:
• (Paragraph 1.1) Whether one half of the sum of $250,000 (plus accumulated interest) paid into a bank account in the name of Mr Mansfield some nine days prior to the freezing order should be released. These moneys were drawn down from a joint loan account (in the name of Mr and Mrs Mansfield) with the Challenge Bank.
(Page 11)
- Mrs Mansfield claims that Mr Mansfield was her fiduciary in respect of these moneys, and/or that there is a constructive trust in respect of the sum of $125,000.
- • (Paragraphs 1.3 and 1.4) Whether the release (with the consent of the DPP) of Mrs Mansfield's joint interest in two pieces of real estate, should be conditional upon the DPP making good mortgage payments which have fallen substantially into arrears during the period that the property has been frozen.
• (Paragraph 2.2) Whether the fortnightly payment to Mrs Mansfield of her "reasonable living and business expenses" should be increased in accordance with the schedule that she has submitted, which schedule includes the mortgage payments that are in arrears. (These mortgage payments are claimed in the alternative to the orders sought in paras 1.3 and 1.4 above).
Whether the moneys the subject of the equitable claim should be released
30 Mrs Mansfield claims one half of the sum of $250,000 (plus accumulated interest) which sum was paid into Challenge Bank cash management account number 036-001-17-7726 some nine-days prior to the freezing order of 12 July 2002.
31 That sum was drawn down by Mr Mansfield from a loan account in the name of Mr and Mrs Mansfield jointly and she claims to be beneficially entitled to one half of the money. However, the DPP contends (on the basis of affidavits by Robert MacGregor Philp sworn 14 May 2003, 18 May 2005 and 7 June 2005) that there was an intermingling of funds within the Challenge Bank cash management account and that it contains proceeds of crime.
32 Assuming, for present purposes, that Mrs Mansfield's claims are correct, and that she does have a valid equitable claim to the sum of $125,000 (plus accumulated interest), the simple fact remains that at all material times the Challenge Bank cash management account was in Mr Mansfield's name alone. Accordingly, the whole of the $250,000 was within Mr Mansfield's "effective control" (as defined in s 156 of the Act). Because it was under his effective control, it was also a "constituent of his wealth" within the meaning of s 143.
33 The general scheme of the Act (so far as it is relevant to the present matter) is that the Court may make a freezing order under s 43(3) when the DPP has made, or is about to make, an application for a criminal benefits declaration. The freezing order may be made in respect of "all or
(Page 12)
- any property that is owned or effectively controlled … " by the person. Once a freezing order is made it remains in force until (inter alia) the application for a criminal benefits declaration is determined (s 48 and 49). Pending that determination (and subject to specified exceptions), a person must not deal with frozen property in any way (s 50).
34 A person may apply to set aside a freezing order in respect of particular property, and the Court may grant that application in limited circumstances. Relevant to the present matter, those circumstances are that:
" … the Court finds it is more likely than not that … the respondent to the … criminal benefits declaration … does not own or effectively control the property …" (s 84(1)).
35 In the particular circumstances of the present matter, s 87 of the Act provides the Court with wider powers to release the frozen property once it is confiscated. The reasons why this should be so are not clear to me. However, an "innocent party" who was "one of two or more owners of the property" can only obtain such release if each of the other owners was also an "innocent party".
36 Be that as it may, it is clear that at the present time I do not have any discretion to order the release of the $125,000 because the money was at all material times "effectively controlled" by Mr Mansfield. This is so even if Mrs Mansfield does have a valid equitable claim.
Whether the release of a joint interest in real property can be made subject to payment of mortgage arrears
37 There is an obvious conceptual difficulty in the "release" of a joint interest in real estate because the interests of the joint tenants are in all respects indistinguishable (there being unities of possession, interest, title and time). Although an order for release will therefore not allow Mrs Mansfield to separately deal with each of her joint interests, such a release is probably necessary before she can pursue an action for partition. I assume that the order is sought for this purpose.
38 In the present instance, Mrs Mansfield applies for the release of her joint interest in each of the properties at 18 Addison Street, South Perth, and 28 Eric Street, Como. Although the DPP consents to such release, Mrs Mansfield will only accept the same subject to an order that the DPP also make good the whole (or alternatively one half) of the mortgage arrears on each property.
(Page 13)
39 In that regard, the evidence shows that the DPP has not kept up mortgage payments during the period of three or more years since the properties were frozen, and consequently there are very substantial arrears. But for s 50 of the Act (which prevents any dealing in the properties), there can be little doubt that these arrears would have resulted in the mortgagees foreclosing well before now.
40 Mrs Mansfield mounts the following two arguments as to why the DPP is obliged to make payment of the mortgage arrears:
(1) The arrears form part of the reasonable joint living and business expenses of Mr and Mrs Mansfield.
(2) The DPP has responsibility for the control and management of the frozen property pursuant to Pt 7 of the Act, which responsibility includes payment of the amounts due under the mortgages on the properties.
41 Unfortunately for Mrs Mansfield, both of these arguments face the insurmountable hurdle of the specific provisions in the Act relating to mortgages. As I have previously observed in connection with the second application, s 9(2) provides that in the event of confiscation, the properties will vest in the State free from all mortgage interests. In the meantime, and while the properties remain frozen, s 52 has the effect that only unfrozen funds can be used to make mortgage payments. Notwithstanding that living and business expenses are being released to Mr and Mrs Mansfield, these funds are nevertheless "frozen" property as defined in the glossary to the Act. This is because they are "subject" to the freezing order in that they are provided for within the freezing order itself.
42 The above provisions obviously prevent any construction of s 45(e) which might otherwise include mortgage payments in "reasonable living and business expenses". For the same reasons, the responsibility of the DPP under s 89(1) for the control and management of frozen property cannot include any obligation to make good mortgage arrears. Such a construction would be contrary to the general scheme of the Act as reflected in s 9, s 50 and s 52.
43 Accordingly, Mrs Mansfield may if she wish obtain an order for release of her joint interest in each of the two properties, but she is not entitled to any concurrent order for payment or reimbursement by the DPP of the mortgage arrears.
(Page 14)
The residual claim for increased living and business expenses
44 The question of mortgage arrears aside, there is a residual claim by Mrs Mansfield for an increase in the allowance for her reasonable living and business expenses. For this purpose she has submitted a schedule (annexed to her affidavit sworn 4 February 2005) itemising her claimed expenses, and the DPP has responded with appropriate comments. In my view, by reason of Mrs Mansfield's separation from her husband there are changed circumstances which justify a review of the quantum of expenses allowed by the consent order of 18 February.
45 The parties agree that it is appropriate that such a review be conducted by a Registrar, but there is no provision in the Rules for such a proceeding. The present matter is nevertheless a "civil proceeding for all purposes" (s 102 of the Act) and there is no reason why I should not order a mediation pursuant to O 29A. To the extent that such mediation fails to resolve or narrow the relevant issues between the parties, the matter can then be referred back to me for final determination.
46 Although Mr Mansfield has not appeared on his wife's application to vary the quantum of living and business expenses, the granting of that application would obviously have some impact on him. Accordingly, he should have liberty to attend on the mediation and to appear in any subsequent proceedings. Subject to any further submissions from the parties, the directions that I propose to make are as follows:
1. The parties submit the dispute arising from par 2 of Mrs Mansfield's application dated 10 December 2004 to mediation to be conducted by a Mediation Registrar on a confidential basis in accordance with Part VI of the Supreme Court Act 1935.
2(a) The other parties advise the second-named first objector within seven days of the dates on which the advising parties are available for mediation.
(b) The second-named first objector within 14 days lodge a request for appointment in the approved form completed to show one list of all parties' available dates.
(c) The fee prescribed for the lodging of the request for an appointment for mediation be waived.
(Page 15)
- 3. Each party shall attend the mediation or if the party is not a natural person, a representative of that party familiar with the substance of the litigation and with authority to compromise it, together with the solicitor or counsel, if any, representing each party.
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