The Director of Public Prosecutions v Condo - [2019] SADC 20

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Interlocutory Application)
THE DIRECTOR OF PUBLIC PROSECUTIONS v CONDO
[2019] SADC 20
Reasons for Decision of Her Honour Judge Schammer
28 February 2019
CRIMINAL LAW - PROCEDURE - CONFISCATION OF PROCEEDS OF CRIME AND RELATED MATTERS - FORFEITURE OR CONFISCATION
REAL PROPERTY - TORRENS TITLE - BRINGING LAND UNDER THE ACT - WHAT ESTATES AND INTERESTS
On 15 January 2016 a judge of this Court made a restraining order pursuant to s 24 of the Criminal Assets Confiscation Act 2005 (SA) (the Act) covering property which included the defendant’s interest in a property at Sheidow Park. The property was subject to a registered mortgage in favour of Suncorp-Metway Limited. A caveat was noted on the Certificate of Title, whereby CEG Direct Securities Limited (CEG) claimed a beneficial entitlement to an estate and interest in the property pursuant to the terms of a loan agreement entered into between it and the defendant prior to the making of the restraining order, which loan was secured by an equitable mortgage.
The property was sold by mortgagee sale in October 2017 and the residual funds from that sale were deposited into the Supreme Court Suitors Fund.
Application made by the Director of Public Prosecutions seeking a declaration pursuant to s 77 of the Criminal Assets Confiscation Act 2005 (SA) that property, including the residual funds, has been forfeited to the Crown pursuant to s 74 of that Act.
Application made by CEG seeking leave to intervene in the action and an order for payment to it of the residual funds.
Held:
1. A declaration is made pursuant to s 77 of the Act that the following property has been forfeited to the Crown pursuant to s 74 of the Act on a date not later than 7 January 2018, namely-
(a) The sum of $38,707.14 standing in Court to the credit of this action in the Supreme Court Suitors Fund in Action Number SCCIV-16-1032, together with interest accrued; and
(b) The sum of $700.00 seized by police and held as Exhibit PPMS 16/B92759 items 1 to 5.
2. As to FDN 14:
(a) CEG has leave to intervene in the action.
(b) I have no power to make and decline to make the order sought in para 3.2.
Criminal Assets Confiscation Act 2005 (SA) ss 3, 26, 40, 47, 74, 77, 78, 80; District Court Civil Rules 2006 (SA) r 89; Supreme Court Act 1935 (SA) s 119; Supreme Court Civil Rules 2006 (SA) r 190; Real Property Act 1886 (SA) ss 67, 191, referred to.
Bendigo & Adelaide Bank Ltd v Dean and Anor Unreported, Judgment of Judge Cuthbertson, DCCIV-16-395, undated; Roadshow Films Pty Ltd and Others v iiNet Ltd (2011) 284 ALR 222; Hall v Director of Public Prosecutions [2015] SASCFC 19, considered.

THE DIRECTOR OF PUBLIC PROSECUTIONS v CONDO
[2019] SADC 20
Introduction

This is an action by the Director of Public Prosecutions (the plaintiff) pursuant to ss 26 and 40 of the Criminal Assets Confiscation Act 2005 (the CACA). The action was commenced by Summons dated 7 December 2015.
Background
At all material times prior to 6 October 2017, Tania Lee Condo (the defendant) was the registered proprietor of a property situated at 49 Westall Way, Sheidow Park, in the State of South Australia, being the whole of the land comprised and described in Certificate of Title Volume 5180, Folio 980 (the Sheidow Park property). The property was the subject of a registered mortgage in favour of Suncorp-Metway Limited.
On 16 December 2014, the defendant entered into a Loan Agreement with CEG Direct Securities Pty Ltd (CEG) whereby CEG agreed to advance the defendant the principal sum of $12,889.30 inclusive of all fees and charges on certain terms and conditions, including interest (the CEG loan).
The CEG loan was secured by a mortgage dated 16 December 2014 granted over the Sheidow Park property which was not registered (the equitable mortgage). On 16 December 2014 CEG lodged a caveat with respect to the Sheidow Park property claiming to be beneficially entitled to an estate and interest in the property pursuant to the CEG loan and the equitable mortgage. The caveat was noted on the Certificate of Title for the Sheidow Park property.
The defendant was charged on Information for offending allegedly committed in April 2015 and July 2015. The offences charged included three counts of trafficking in a controlled drug for offending on 24 April 2015 in breach of s 32(3) of the Controlled Substances Act 1984 being ‘serious offences’ within the meaning of the CACA (the serious offences).
On 15 January 2016, Judge Chivell made a Restraining Order pursuant to the CACA (the Restraining Order), wherein, he ordered, inter alia, that the defendant’s interest in the Sheidow Park property and a sum of $21,700 seized by police,[1] not be disposed of or otherwise be dealt with, subject to the rights of Suncorp-Metway Limited pursuant to its registered mortgage.
[1] Held by police as Exhibit PPMS 15/B71498 item 7 and Exhibit PPMS 16/B92759 items 1 to 5.
On 6 April 2017, the defendant pleaded guilty to the serious offences and other offences. On 6 July 2017[2] she was sentenced for the offending by his Honour Judge Muscat, at which time his Honour ordered that a sum of $21,000 in cash seized from the defendant’s home by police be forfeited pursuant to s 47 of the CACA.
[2] As per Certificate of Record in DCCRM–16–718, noting Judge Muscat’s Sentencing Remarks bear a later date, namely 16 August 2017.
The Sheidow Park property was sold by mortgagee sale in about October 2017. After payment of all sums owed to Suncorp-Metway Limited, there were residual funds from the sale of that property totalling $38,707.15. On 13 December 2017 those funds were deposited into the Supreme Court Suitors Fund in Action Number SCCIV–16–1032 and are accruing interest (the residual funds).
There is a dispute as to whether the residual funds are covered by the Restraining Order.
The Applications
By application dated 22 February 2018 (FDN 8), the plaintiff seeks, inter alia, a declaration pursuant to s 77 of the CACA that on 7 January 2018 the following property was forfeited to the Crown pursuant to s 74 of the CACA:–
(a)the sum of $38,707.14, together with any interest accrued, being the funds in the Supreme Court Suitors Fund in Action Number SCCIV–16–1032; and
(b)the sum of $700.00 seized by police held as Exhibit PPMS 16/B92759 items 1 to 5.
In support of FDN 8, the plaintiff relies on the affidavit of Angela Merlino sworn on 22 February 2018, the affidavit of Rita Salzgeber sworn on 5 July 2018 and the affidavit of the defendant affirmed on 25 May 2018.
By application dated 31 January 2019 (FDN 14), CEG seek orders including:
1.that it be granted permission to join the action as an interested party; and
2.that the residual funds be paid out of the Supreme Court Suitors Funds to it, pursuant to the terms and conditions of the CEG loan and its equitable mortgage over the Sheidow Park property, secured by the caveat.
In support of FDN 14 (and, effectively, in opposition to FDN 8), CEG relies on two affidavits sworn by Vincent Ventrice, the sole director of CEG, on 3 September 2018 and 30 January 2019.
In addition, I have received and considered a Summary of Argument and List of Authorities filed by CEG.
I heard oral argument on 4 February 2019. At the conclusion of the hearing I gave each party the opportunity to submit any further authorities upon which they sought to rely and stated I did not require further written submissions. I reserved my decision.
The plaintiff subsequently provided written submissions entitled ‘Plaintiff’s Additional Note’. CEG objects to me considering this material, given no order was made as to the provision of further written submissions. Having regard to the orders made by me on 4 February 2019, I have considered the material included in the ‘Plaintiff’s Additional Note’ only insofar as it refers to authorities not otherwise raised during oral submissions and in that respect I have confined my consideration only to those aspects of the note which identify the ‘pinpoints’ in such authorities, being consistent with my orders. I have also considered the further authority provided by CEG.[3]
[3] Bendigo & Adelaide Bank Ltd v Dean and Anor (Unreported, Judgment of Judge Cuthbertson, DCCIV-16-395, undated).
These are my reasons for decision.
FDN 14
Intervention
Pursuant to Rule 89 of the District Court Civil Rules 2006, this Court may, on application by a person who seeks to intervene in an action, permit intervention on conditions determined by the court. Such an order is generally only made when the person’s legal interests are likely to be substantially affected by the outcome of the action, such that all interested parties are able to properly participate in the resolution of the controversy.
Although Rule 89 is in different terms to former Rule 33.01 of the Supreme Court Rules 1987, the same considerations apply.
Those persons entitled to intervene in an action include a non-party whose interests would be directly affected by a decision in the proceeding and are bound by the decision, including, for example, a non-party whose legal interest in other pending litigation is likely to be substantially affected by the outcome of the action. Similarly, if it can be shown that a non-party is in a position to make submissions which the court should have to assist it to reach a correct determination, leave may be granted, on conditions, for that non-party to intervene.[4]
[4] Roadshow Films Pty Ltd and Others v iiNet Ltd (2011) 284 ALR 222 at [2] and [3].
By way of summary, CEG contends that at the time the Restraining Order was made, the defendant was in arrears with respect to the CEG loan and remains in arrears, with the sum owed, inclusive of interest, being over $450,000.[5] It submits that once its caveat was noted on the Certificate of Title with respect to the Sheidow Park property, its equitable interest in the property was recognised under the Real Property Act 1886 (RPA), being an interest in the property which has priority over any subsequent claim by the plaintiff.
[5] Affidavit of Vincent Ventrice sworn 30 January 2019 at [9].
CEG contends that given the nature and extent of its interest in the property, the defendant effectively has no real interest in the residual funds, such that the residual funds are not covered by the Restraining Order and therefore cannot be subject to forfeiture.
I am satisfied on the affidavit evidence it is arguable that CEG has an interest in the residual funds, being the subject matter of this action. I am also satisfied that CEG’s interests, including its interests in SCCIV–16–1032 will be directly affected by my decision in FDN 8.
As such I give permission for CEG to be joined to the action as an interested party.
Payment out of Supreme Court Suitors Fund
Pursuant to s 119 of the Supreme Court Act 1935 (SCA):
All suitors’ funds shall be vested in the registrar on behalf of the court and shall be dealt with by him in accordance with this Act and the rules of court, and any order of the court or a judge.
‘Court’ is defined in the SCA to mean the Supreme Court of South Australia.
‘Judge’ is defined in the SCA to include ‘the Chief Justice and any puisne judge of the court’.
Further, Rule 190 of the Supreme Court Civil Rules 2006 states:
190—Payment of money into and out of Suitors Fund
(1)All money paid into the Court is to be paid into the Suitors Fund.
(2)Money is to be paid out of the Suitors Fund—
(a)by order of the Court; or
(b)by direction of the Registrar; or
(c)if the money was paid into the Court as security for costs of an appeal to the High Court—by order of the High Court or by direction of the Registrar of the High Court.
This Court has no power to make the order as sought by CEG for the residual funds held in the Supreme Court Suitors Fund to be paid out of that Fund and to it. Any such payment must be made pursuant to an order of a judge of the Supreme Court or by direction of the Registrar.
I decline to make the order as sought in para 3.2 of FDN 14.
FDN 8
Section 74 of the CACA states:
74—Forfeiting restrained property without forfeiture order if person convicted of serious offence
(1)Property is forfeited to the Crown at the end of the relevant period if—
(a)a person is convicted of a serious offence; and
(b)either—
(i)at the end of the relevant period, the property is covered by a restraining order that relates to the offence; or
(ii)the property was covered by a restraining order that relates to the offence, but the property was excluded, or the order revoked, under section 38 or section 44; and
(c)the property is not subject to an order under section 76 excluding the property from forfeiture under this Division.
(2)For the purposes of this section, it does not matter whether—
(a)the restraining order was made before or after the person's conviction of the serious offence; or
(b)immediately before forfeiture, the property is the person's property or another person's property.
(3)However, this section does not apply if the person is taken to have been convicted under section 5(1)(d).
(4)A restraining order in relation to a related offence with which the person has been charged, or is proposed to be charged, is taken, for the purposes of this section, to be a restraining order in relation to the serious offence of which the person was convicted.
(5)If—
(a)particular property is excluded from a restraining order under section 38, or a restraining order that covered particular property is revoked under section 44; and
(b)the security referred to in section 38(a)(iii) or section 44(a)(iii) (as the case requires) in connection with the exclusion or revocation is still in force,
the security is taken, for the purposes of this section and section 75, to be the property referred to in subsection (1).
(6)In this section—
relevant period means—
(a)the 6 month period starting on the day of the conviction; or
(b)if, at the end of the 6 month period starting on the day of the conviction, an extended period applies in accordance with section 75—that extended period.
Further, s 77 of the CACA states:
77—Court may declare that property has been forfeited under this Division
The court that made the restraining order referred to in section 74(1)(b) may declare that particular property has been forfeited under this Division if—
(a)the DPP applies to the court for the declaration; and
(b)the court is satisfied that the property is forfeited under this Division.
The defendant has been convicted of more than one serious offence, namely three counts of trafficking in a controlled drug. In accordance with the reasoning of Gray J in Hall v Director of Public Prosecutions,[6] I find that the defendant was ‘convicted of’ the serious offences on the date she pleaded guilty to those offences, namely 6 April 2017.[7] As such the ‘end of the relevant period’ for the purposes of s 74(1) is 7 October 2017.[8]
[6] [2015] SASCFC 19 at [25]–[28].
[7] Noting that if I am wrong about that, the defendant was sentenced for the offending on 6 July 2017.
[8] If the defendant was only convicted of the serious offences on the date she was sentenced, 6 July 2017, the end of the relevant period is 7 January 2018.
There has been no application made by the defendant or any other person under either s 38 of the CACA seeking to exclude from forfeiture any of the property covered by the Restraining Order.
There has been no application made by the defendant or any other person under s 44 of the CACA seeking to revoke the Restraining Order.
The restrained property is not the subject of an order under s 76 of the CACA excluding the property from forfeiture under Division 1 of Part 4 of the CACA.
As such, if the residual funds are ‘property covered by the Restraining Order’, the residual funds were forfeited to the Crown, by operation of s 74(1) of the CACA, on 7 October 2017.[9]
[9] Or, in any event, at the latest on 7 January 2018.
‘Property’ is defined in s 3 of the CACA to mean:
... real or personal property (tangible or intangible) including —
(a) a chose in action; and
(b) an interest in property.
Counsel for the plaintiff submitted that although not expressly stated, the CACA contemplated that ‘real property’ included both the property itself and the proceeds of sale of any such property. In this respect, reference was made to the decision in Hall v Director of Public Prosecutions[10] wherein Gray J (with whom Stanley J and Parker J agreed) proceeded on the basis that following the mortgagee sale of real property which was otherwise the subject of a restraining order the proceeds of such sale, which in that case were deposited in the District Court Suitors Fund, remained property covered by that restraining order.
[10] [2015] SASCFC 19 at [29].
Adopting that same reasoning, having regard to the terms of the Restraining Order, if the defendant has an interest in the residual funds, then the residual funds are ‘property covered by the Restraining Order’.
The defendant was the registered proprietor of the Sheidow Park property and had a proprietary interest in the property at the time of its sale. As such she had an interest in the proceeds of sale of the property, subject to the interests of Suncorp-Metway Limited as registered mortgagee.
The caveat noted on the Certificate of Title for the Sheidow Park property has the effect of restraining the Registrar-General from dealing with that title.[11]
[11] As per s 191 of the Real Property Act 1886.
Pursuant to s 67 of the RPA:
67—Instruments not effectual until registration
No instrument registrable under this Act shall be effectual to pass any land or to render any land liable as security for the payment of money, but upon the registration of any instrument in manner herein prescribed, the estate or interest specified in such instrument shall pass, or, as the case may be, the land shall become liable as security in manner and subject to the covenants, conditions, and contingencies set forth and specified in such instrument or by this Act declared to be implied in instruments of a like nature.
CEG’s mortgage was not registered. As such s 67 of the RPA is not enlivened so as to effect the passing of the defendant’s interest in the Sheidow Park property (and therefore the residual funds) to the extent of such mortgage, to CEG.
The fact the caveat was noted on the Certificate of Title does not otherwise change the fact that the defendant had a proprietary interest in the property at the time of its sale and therefore has an interest in the proceeds of sale of the property.
As such, I am satisfied the residual funds are property covered by the Restraining Order. I am also satisfied that the sum of $700.00 seized by police held as Exhibit PPMS 16/B92759 items 1 to 5 is property covered by the Restraining Order.
As such, the residual funds and the sum of $700.00 seized by police held as Exhibit PPMS 16/B92759 items 1 to 5 were forfeited to the Crown on a date no later than 7 January 2018, pursuant to s 74(1) of the CACA.
As such it is appropriate to make the declaration as sought in FDN 8.
CEG’s interest in the residual funds
The submissions made by CEG primarily deal with the issue as to whether CEG’s equitable interest in the residual funds is such that it takes priority over any interest in those funds as vested in the Crown by virtue of any order made under the CACA (and/or the defendant’s interest in the property).

The nature, extent and value of any interest CEG has in the residual funds remains a matter in dispute.
There is no dispute that the defendant paid CEG three sums pursuant to the terms of the CEG loan; being a sum of $5000 on 14 July 2015, a sum of $5000 on 15 July 2015 and a sum of $4718.12 on 17 July 2015, being a total of $14,718.12.[12] However, there remains a dispute as to whether these sums were accepted by CEG in full and final satisfaction of the defendant’s obligations under the CEG loan, as claimed by the defendant,[13] or whether a sum remains outstanding pursuant to the CEG loan, as claimed by CEG.[14]
[12] Affidavit of Rita Salzbeger sworn 5 July 2008 at [8] and ‘RS2’, affidavit of Vincent Ventrice sworn 3 September 2018 at [14] and ‘VV–1’ and affidavit of Vincent Ventrice sworn 30 January 2019 at [7] and ‘VV–4’.
[13] Affidavit of Tania Lee Condo affirmed 25 May 2018 at [11] and [14].
[14] Affidavit of Vincent Ventrice sworn 3 September 2018 at [12]–[20] and ‘VV–1’, affidavit of Vincent Ventrice sworn 30 January 2019 at [7]–[9] and ‘VV–1’.
Further, as is apparent from the exhibits both marked ‘VV–1’ to each of the affidavits of Vincent Ventrice, any sum owed by the defendant to CEG pursuant to the CEG loan comprises interest only, the principal sum (and fees and charges) having been repaid. There remains a dispute as to whether the default interest charged pursuant to the CEG loan is in fact a penalty.
The CACA foreshadows that there may be persons who claim an interest in property forfeited to the Crown under s 74(1) and provides a mechanism for such persons to make application to the court to have the nature, extent and value of that interest determined, and to seek an order to effect the transfer of such interest to them by the Crown or payment to them by the Crown of a sum representing the value of such interest.
Section 78 of the CACA states:
78—Court may make orders relating to transfer of forfeited property etc
If property is forfeited to the Crown under section 74, the court that made the restraining order referred to in section 74(1)(b) may, if—
(a)   a person who claims an interest in the property applies under section 80 for an order under this section; and
(b)   the court is satisfied that—
(i)    the person was not involved in the commission of the serious offence to which the forfeiture relates; and
(ii)     the person's interest in the property—
(A)   is not subject to the effective control of the person whose conviction caused the forfeiture; and
(B)   is not proceeds of the serious offence or an instrument of the offence; and
(c)   the court is satisfied that—
(i)    the property was not used in, or in connection with, an unlawful activity and was not derived or realised, directly or indirectly, by any person from an unlawful activity; and
(ii)    the applicant acquired the property lawfully; and
(iii)     the applicant is not the person convicted of the serious offence to which the forfeiture relates,
by order—
(d)   declare the nature, extent and value of the applicant's interest in the property; and
(e)   —
(i)    if the interest is still vested in the Crown—direct the Crown to transfer the interest to the applicant; or
(ii)     declare that there is payable by the Crown to the applicant an amount equal to the value declared under paragraph (d).
Pursuant to s 80 of the CACA, any such application must be made before the end of the period of six months commencing on the day on which the property to which the application relates is forfeited to the Crown, albeit the court may give a person permission to make such application out of time in certain circumstances.
CEG has not brought any application pursuant to either s 78 or s 80 of the CACA. As such, this Court’s jurisdiction to make any orders as to the nature, extent and value of CEG’s interest in the residual funds and any ancillary orders arising therefrom, is yet to be invoked.
Orders
1.As to FDN 8, a declaration is granted pursuant to s 77 of the CACA that the following property has been forfeited to the Crown pursuant to s 74 of the CACA on a date no later than 7 January 2018:
(a)     the sum of $38,707.14, together with any interest accrued, being the funds in the Supreme Court Suitors Fund in Action Number SCCIV-16-1032; and
(b)    the sum of $700.00 seized by police held as Exhibit PPMS 16/B92759 items 1 to 5.
2.As to FDN 14:
(a)     CEG has leave to intervene in the action;
(b)    I have no power to make and decline to make the order sought in para 3.2.
I will hear the plaintiff and CEG as to the question of costs.