The Director of Public Prosecutions v Vitale - [2020] SADC 55

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
THE DIRECTOR OF PUBLIC PROSECUTIONS v VITALE
[2020] SADC 55
Judgment of His Honour Judge Dart
15 May 2020
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - HEARING OF APPEAL
Restraining order made by Judge pursuant to the provisions of the Criminal Assets Confiscation Act 2005 (SA) in relation to land of the defendant - CEG is an interested party - it is equitable mortgagee of the defendant's land - it made an application to a Master to have its mortgages excluded from the operation of the restraining order - Master made the order sought - order made pursuant to s 40 of the Act - DPP has appealed the order - DPP says the Master should have considered the application pursuant to s 34 of the Act - antecedent question arises - did the order made by the Judge apply to the CEG mortgages - order on its terms did not apply to CEG - no need for it to apply to vary the order.
Held: Appeal dismissed.
Bankruptcy Act 1966 (Cth) s 58; Criminal Assets Confiscation Act 2005 (SA) s 11, s 24(1), s 25(1), s 34, s 40, s 218; Law of Property Act 1936 (SA) s 43, s 44; Real Property Act 1886 (SA) s 191, Part 17; Trustee Act 1936 (SA) s 47, referred to.
Al-Kateb v Godwin (2004) 219 CLR 562; Coles KMA Ltd v Sword Nominees Pty Ltd & Ors (1986) 44 SASR 120; Goodwin v Phillips (1908) 7 CLR 1; Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd [1985] 1 NSWLR 545; Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161; Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407; R & R Fazzolari Pty Ltd v Parramatta City Council (2009) 237 CLR 603; Re Ling; Ex parte Enrobook Pty Ltd (1996) 142 ALR 87; Sonenco (No 77) Pty Ltd v Silvia (1989) 89 ALR 437; The Commonwealth v Hazeldell Limited (1918) 25 CLR 552; Victoria Teachers Credit Union v KPMG (a firm) [2000] 1 VR 654, considered.

THE DIRECTOR OF PUBLIC PROSECUTIONS v VITALE
[2020] SADC 55
JUDGE DART:

This is an appeal from a decision made by a Master. On 12 June 2018, a Judge, relying on the provisions of the Criminal Assets Confiscation Act 2005 (SA) (“the Act”) made a restraining order against the defendant. CEG Direct Securities Pty Ltd (“CEG”) is an equitable mortgagee of some of the defendant’s real property. It made application on 24 May 2019 to vary the restraining order so as to expressly exclude its mortgages from the operation of the order. The application was opposed by the Director of Public Prosecutions (“DPP”). The Master made the order sought by CEG. The DPP appeals from that order. The appeal should be dismissed.
Background
The Act permits the DPP to apply for either a freezing order or restraining order in respect of the property of a person charged with a relevant offence. In relation to real property, the order is a restraining order. If a conviction is obtained, the DPP may apply for a forfeiture order.
The defendant is the registered proprietor of real property at Henley Beach, Glenelg North and Normanville. For the purpose of this appeal, it is only the Henley Beach and Glenelg North properties (“the land”) that are relevant. On 9 May 2018 the defendant was arrested and charged in respect of alleged drug offences. There is no dispute that the alleged offending is of the type that permits the DPP to apply for orders under the Act. At the time of the appeal, the criminal proceedings had not been allocated a trial date.
CEG had a long history of dealings with the defendant before he was charged. On or about 27 November 2013 it entered into a loan contract with the defendant to provide a line of credit in the amount of $100,000. The defendant provided security by a mortgage of the Henley Beach property. A Memorandum of Mortgage was executed by the defendant, but not registered on the title. Over the next few years CEG and the defendant varied the terms of the loan from time to time. Between early 2017 and 4 May 2018 there were seven variation agreements. The effect of the variation agreements was that the line of credit was increased to an amount of $300,000.
Over the course of the dealings between CEG and the defendant the Glenelg North property was also mortgaged. In 2017 and early 2018 caveats were lodged on the Henley Beach and Glenelg North properties respectively notifying CEG’s claim as mortgagee of the land. It is an equitable mortgage of the defendant’s legal estate in the land. The land was also subject to registered mortgages. Each of the caveats was permissive. The caveats were on the titles prior to the arrest and charging of the defendant.
The defendant gave a further mortgage in registrable form to CEG in respect of both properties on 8 June 2018. That was after he was arrested. CEG has sought to register the mortgage. The Registrar-General has not permitted registration of the document. That mortgage is not relevant for present purposes.
The DPP commenced these proceedings on 24 May 2018 and sought orders pursuant to s 24(1) of the Act restraining dealing in the defendant’s three properties. The application was expressly made subject to the rights of the registered mortgagees. It was supported by an affidavit of a police officer which exhibited an Information from the Magistrate's Court setting out the offences with which the defendant was charged. They are serious offences as defined by the Act. The affidavit of the police officer referred to the two caveats lodged by CEG. He stated that the claims in the caveats were not relevant to the application. The caveats were not exhibited to the affidavit. The respective Certificates of Title were exhibited and each recorded the registration of the CEG caveat.
On 1 June 2018 the DPP filed an interlocutory application to obtain a court hearing date. The matter came on before a Judge on 12 June 2018 and the orders were made.
There is one initial matter to note. The Act contains, in s 25(1), a mandatory requirement that the DPP to give written notice of an application for a restraining order to any person the DPP reasonably believes may have an interest in the property. A mortgagee clearly has an interest in the property. The DPP was aware of that interest. No notice was given to CEG. There has been no explanation for the failure of the DPP to comply with the Act. That matter is discussed later in these reasons.
On 13 February 2019 CEG’s solicitors wrote to the DPP requesting that the restraining order be withdrawn from the two relevant titles, so as to permit the mortgage given on 8 June 2018 to CEG to be registered. The DPP declined to do so. That led to the application by CEG the subject of this appeal.
The Master dealt with the application pursuant to s 40 of the Act. The section permits the Court to make ancillary orders that it may consider appropriate, including an order varying the property covered by the restraining order. The provision was relied upon by the Master to vary the original order so as to expressly exclude CEG’s equitable mortgages from its operation.
The DPP submissions on appeal
The grounds of appeal are as follows:[1]
3.1The learned Master erred in law by applying s 40 of the Criminal Assets Confiscation Act 2005 (‘CAC Act’) to vary the restraining order by in effect excluding specific property from that order (see Decision at [134] and [136]-[137]). In particular:
3.1.1 The power under s 40 of the CAC Act was not enlivened in circumstances where s 34 of the CAC Act operates as the exclusive power in respect of excluding specified property from a restraining order.
3.1.2 In the alternative, the exercise of the power under s 40 of the CAC Act was subject to the Court being satisfied of the conditions mandated by s 34 of the CAC Act in respect of excluding specified property from a restraining order, which conditions were not considered by the learned Master.
3.2The learned Master erred in law by relying upon s 36 of the CAC Act to exclude specified property from the restraining order without considering, and being satisfied of, the conditions mandated by s 34 of the CAC Act (see Decision at [132]-[133]).
[1] FDN17, filed 30 September 2019.
The grounds of appeal are limited to a consideration of the operation of the Act. The broad submission of the DPP is that the general provisions of s 40 of the Act, which permits the making of ancillary orders, should not be used in a way which defeats the operation of a more specific provision. Section 34 provides an express power to exclude property from a restraining order. The submission is that the Master erred in not considering the application pursuant to that section.
The DPP regards restraining orders made pursuant to the Act to have wide‑ranging effect. A number of matters are implicit in the DPP’s position. The first is that CEG is bound by the terms of the restraining order. Secondly, it is not entitled, while the order remains in place, to exercise its powers as mortgagee. Thirdly, it must simply await the outcome of the criminal proceedings. If the defendant is acquitted, the restraining order will fall away and CEG’s rights as mortgagee will be restored. If the defendant is convicted, the position of the DPP is that the two properties will be forfeited to the Crown, free of the CEG mortgages.[2]
[2] Transcript page 11, line 8.
The effect of the DPP’s position is that its rights in respect of the land are superior to those of the defendant as registered proprietor. The defendant would not be able to delay or defeat the rights of CEG as mortgagee. It would be surprising if the position of the DPP is correct.
The short answer
I do not accept that the Act operates in the way submitted by the DPP. However, before dealing with the appeal grounds, there is an antecedent question that needs to be dealt with. It is a jurisdictional question which can be expressed in a number of ways. Put simply, does the Act permit or anticipate the making of orders defeating or delaying the property rights of third parties?
CEG notified its claims as equitable mortgagee by caveat on the land. That is the usual and appropriate course to adopt. It is common practice. The question becomes whether its entitlements as mortgagee have been affected by reason of the borrower committing a relevant criminal offence after the security was provided.
The common law has always jealously guarded property rights. The answer to the jurisdictional question, which is no, is to be found in considering the relevant sections of the Act. First, it is necessary to have regard to s 218:
218—Certain proceedings to be civil
(1)Proceedings on an application for a freezing order, a restraining order or a confiscation order are civil proceedings.
(2)Except in relation to an offence under this Act—
(a)the rules of construction applicable only in relation to the criminal law do not apply in the interpretation of this Act; and
(b)the rules of evidence applicable in civil proceedings apply to proceedings under this Act.
Thus, the Act is to be interpreted as a normal piece of civil legislation. The usual aids and considerations in respect to statutory interpretation are applicable. In light of the position of the DPP that the restraining order defeats the property rights of CEG, a careful consideration of the Act is required.
The word “property” in the Act has the meaning given by the Act. It defines “property” to mean real or personal property, including a chose in action or an interest in property. The interpretation section describes an interest in property to include an equitable estate or interest in the property. CEG has an equitable interest in the land. That is, an interest in the land for the definition of property. In relation to the land, therefore, there are multiple property rights. There are the rights of the defendant as a registered proprietor. There are the rights of the registered mortgagees and there are the rights of CEG as equitable mortgagee. Each of those rights is separately “property” for the purpose of the Act.
The common law courts have long protected basic rights. One of the ways the courts do so is by adopting the principle of legality when interpreting statutes. Its operation was explained in Al-Kateb v Godwin where Gleeson CJ said: [3]
Where what is involved is the interpretation of legislation said to confer upon the Executive a power of administrative detention that is indefinite in duration, and that may be permanent, there comes into play a principle of legality, which governs both Parliament and the courts. In exercising their judicial function, courts seek to give effect to the will of Parliament by declaring the meaning of what Parliament has enacted. Courts do not impute to the legislature an intention to abrogate or curtail certain human rights or freedoms (of which personal liberty is the most basic) unless such an intention is clearly manifested by unambiguous language, which indicates that the legislature has directed its attention to the rights or freedoms in question, and has consciously decided upon abrogation or curtailment. That principle has been re-affirmed by this Court in recent cases.[4] It is not new. In 1908, in this Court, O'Connor J referred to a passage from the fourth edition of Maxwell on Statutes which stated that “[i]t is in the last degree improbable that the legislature would overthrow fundamental principles, infringe rights, or depart from the general system of law, without expressing its intention with irresistible clearness”.[5]
[3] (2004) 219 CLR 562 at [19].
[4] Coco v The Queen (1994) 179 CLR 427; Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 492 [30].
[5] Potter v Minahan (1908) 7 CLR 277 at 304. See also R v Secretary of State for the Home Department; Ex parte Pierson [1998] AC 539 at 587-589 per Lord Steyn; R v Secretary of State for the Home Department; Ex parte Simms [2000] 2 AC 115 at 131 per Lord Hoffmann.
Under the broad principle of legality, there are a number of legal assumptions which are applied when considering the meaning of a statute. There are two which may assist in the resolution of this appeal. The first relates to the alienation of property rights. In The Commonwealth v Hazeldell Limited Griffith CJ and Richard J said: [6]
If this is the law, persons in the position of the respondents may be suddenly and arbitrarily and without compensation dispossessed of valuable rights of property. It is a settled rule of construction that such an intention cannot be imputed to the Legislature unless expressed in unequivocal terms incapable of any other meaning.
[6] (1918) 25 CLR 552 at 563.
A right as an equitable mortgagee is a property right. The DPP says it can be forfeited by operation of the Act, with no right to compensation. The wording of the Act would need to express that intention with great clarity for that to be the position.
The second assumption is that legislation should be assumed not to interfere with vested property interests. The mortgages of CEG are vested property interests.
In R & R Fazzolari Pty Ltd v Parramatta City Council French CJ said: [7]
The terminology of "presumption" is linked to that of "legislative intention". As a practical matter it means that, where a statute is capable of more than one construction, that construction will be chosen which interferes least with private property rights. That approach resembles and may even be seen as an aspect of the general principle that statutes are construed, where constructional choices are open, so that they do not encroach upon fundamental rights and freedoms at common law. It operates in the United Kingdom as a manifestation of a "principle of legality" and has been described in Australia as an aspect of the rule of law[8].
In its application to property rights this long-standing interpretive principle is consistent with international developments in the recognition of human rights since World War II. Although not specifically protected by the International Covenant on Civil and Political Rights, or the International Covenant on Economic, Social and Cultural Rights, the right to property was recognised in the Universal Declaration of Human Rights and in various other international instruments[9]. Discrimination, based on race, in relation to the enjoyment of property rights is prohibited by Art 5 of the International Convention on the Elimination of all Forms of Racial Discrimination 1965[10].
[7] (2009) 237 CLR 603 at [43]-[44].
[8] K-Generation Pty Limited v Liquor Licensing Court (2009) 83 ALJR 327 at 338 [47]; 252 ALR 471 at 481; [2009] HCA 4.
[9] Universal Declaration of Human Rights 1948, Art 17; American Declaration of the Rights and Duties of Man 1948, Art 23; European Convention for the Protection of Human Rights and Fundamental Freedoms 1950, Protocol 1, Art 1; American Convention on Human Rights 1969, Art 21; African Charter on Human and Peoples' Rights 1981, Art 14.
[10] See also Arts 15 and 16 of the Convention on the Elimination of All Forms of Discrimination Against Women 1979. And generally: Jayawickrama, The Judicial Application of Human Rights Law, (2002) at 908-920; and Martin et al, International Human Rights and Humanitarian Law: Treaties, Cases and Analysis, (2006) at 911-936; Sieghart, The International Law of Human Rights (1983) at 252-258.
The approach of the DPP involves, at the very least, an interference with the property rights of CEG. The language of the Act needs to be considered, to see whether it is expressed in a way to justify that interpretation. If there is ambiguity, the Act should be interpreted as not operating to interfere with CEG’s rights as mortgagee.
The operative provisions are ss 24 and 25 of the Act, which provide as follows:
24—Restraining orders
(1)A court must, on application by the DPP, make an order (a restraining order) that specified property must not be disposed of or otherwise dealt with by any person (except in the manner and circumstances, if any, specified in the order) if satisfied that—
(a)a person has been convicted of, or has been charged with, a serious offence, or it is proposed that the person be charged with a serious offence; or
(b)a person is suspected on reasonable grounds of having committed a serious offence; or
(c)there are reasonable grounds to suspect that the property is the proceeds of, or is an instrument of, a serious offence (whether or not the identity of the person who committed the offence is known); or
(d)there are reasonable grounds to suspect that a person has committed a serious offence and has derived literary proceeds in relation to the offence.
(2)An application for an order under this section must specify the property to which the application relates.
(3)The DPP may submit evidence in support of the application in the form of an affidavit.
(4)Subject to subsections (5) and (5a) and Division 3, the court must specify in the restraining order all property specified in the application for the order.
(5)The court may only specify property in a restraining order made under subsection (1)(a),(b) or (d) if satisfied that there are reasonable grounds to suspect that the property is—
(a)in the case of a restraining order made under subsection (1)(a) or (b)—
(i)property of the suspect; or
(ii)property of another person (whether or not that other person's identity is known) that—
(A)is subject to the effective control of the suspect; or
(B)is proceeds of, or is an instrument of, the serious offence; or
(b)in the case of a restraining order made under subsection (1)(d)—
(i)property of the suspect; or
(ii)property of another person (whether or not that other person's identity is known) that is subject to the effective control of the suspect.
(5a)The court may not specify property in a restraining order that is protected property of a person unless subsection (1)(c) applies to the property.
(6)The court must make a restraining order even if there is no risk of the property being disposed of or otherwise dealt with.
(7)The court may specify that a restraining order covers property that is acquired by the suspect after the court makes the order.
(8)A restraining order may be made subject to conditions.
25—Notice of application
(1)Subject to subsection (4), the DPP must—
(a)give written notice of an application for a restraining order covering property to—
(i)the owner of the property (if the owner is known); and
(ii)any other person the DPP reasonably believes may have an interest in the property; and
(b)include with the notice a copy of the application and—
(i)in the case of the owner—any affidavit supporting the application; or
(ii)in any other case—a notice that the person may request the DPP give the person a copy of any affidavit supporting the application.
(2)The DPP must comply with a request referred to in subsection (1)(b)(ii) as soon as practicable.
(3)Subject to subsection (4), a court must not hear an application unless it is satisfied that the owner of the property to which the application relates has received reasonable notice of the application.
(4)A court may, if the DPP requests, consider the application without notice having been given under subsection (1).
(5)A court may, at any time before finally determining the application—
(a)direct the DPP to give or publish notice of the application to a specified person or class of persons; and
(b)specify the time and manner in which the notice is to be given or published.
(6)A person who claims an interest in property may appear and adduce evidence at the hearing of the application.
(7)A witness who is giving evidence relating to an application for a restraining order is not required to answer a question or produce a document if the court is satisfied that the answer or document may prejudice the investigation of, or the prosecution of a person for, an offence.

A starting point is to have regard to the form of the order made by the Judge. Paragraph 1 of the order is in the following terms:[11]
1. Pursuant to the Criminal Assets Confiscation Act 2005 there be an order (hereinafter referred to as “the Restraining Order”) that the defendant’s interest in the following property must not be disposed of or otherwise dealt with by any person except as specified in paragraph 2.
[11] Order of Judge Millsteed, 12 June 2018.
The order makes clear that all that is being restrained is the defendant’s interest in the land. The order does not, in its terms, direct itself to any other interests in the land. It may be that the form of the order is sufficient to defeat the contention of the DPP and decide the appeal. It does go on to specify in order 2 that the rights of the registered mortgagees are not affected by the restraining order.
The term “deal with” is defined in the Act. Relevant for present purposes is the following definition:
(d)if the property is covered by a restraining order—engaging in a transaction that has the direct or indirect effect of reducing the value of the person’s interest in the property;
The application made by the DPP, both in the Summons and in the interlocutory application which brought the matter before the Court, sought orders pursuant to both s 24(1)(a) and (c) of the Act. The latter of those two provisions deals with reasonable grounds to suspect the land is the proceeds of or an instrument of a serious offence. A review of the two affidavits filed by the DPP shows that there was no evidence before the Court to suggest there were reasonable grounds to suspect the property was the proceeds of, or instrument of, a serious offence.
The material contained in the principal affidavit sets out details of the charging of the defendant and exhibits a copy of the Information filed in the Magistrate's Court. The evidence before the Court was only directed to s 24(1)(a). That was, of course, sufficient to obtain a restraining order. There was no evidence to justify an order under s 24(1)(c). I proceed on the basis that the order was made pursuant to s 24(1)(a).
In determining the Court’s jurisdiction to make the orders, it is necessary to have regard to s 24(5)(a). That sub-section provides that a restraining order under s 24(1)(a) may only be made against the property of the suspect, or the property of another person where that property is subject to the effective control of the suspect or is an instrument of the serious offence. There was no evidence of the latter proposition. The Court was only dealing with s 24(5)(a)(i), property of the defendant in the land. The definition of property means that the s 24(5)(a)(i) reference to the property of the suspect is to read as the suspect’s interest in property.
The Court does not have the jurisdiction under s 24(1)(a) to make an order against the property interest of another person in the land, other than in circumstances where s 24(5)(a)(ii) is satisfied. That was not the case here. The property interest of CEG in the land was not within the jurisdiction of the Court because it is not property referred to in s 24(5)(a)(i). That is the position arising from the wording of the Act and the definition of “property”. The Act, on a plain reading of its provisions, does not operate in the way submitted by the DPP.
Even if it be assumed that the meaning of s 24 creates ambiguity, that would not assist the DPP once the principle of legality is considered. There needs to be clear and express language demonstrating that Parliament intended to defeat or delay the property rights of third parties. There are no such expressions in the Act. It follows that it is to be assumed that Parliament had no such intention when passing the legislation.
The appeal is resolved on the basis that the original order made did not and could not apply to CEG’s interest in the land. It would follow that CEG did not need to apply to be excluded from the operation of the order.
A broader consideration of where the Act sits
The position of the DPP in relation to the operation of the Act is that it provides broad and extensive power to interfere with third party property rights. As set out above, I do not accept the interpretation of the operation of the Act advanced by the DPP.
There are, in addition to considerations arising from the Act, other matters which point to the Act having a more limited function. There are many statutes dealing with property rights in various contexts. It is necessary to have regard to other legislation to properly understand how the Act co-exists with those other statutes. The Act itself gives some guidance. Section 11 is in the following terms:
This Act is in addition to, and does not limit or derogate from, the provisions of any other Act.
Section 11 is a relatively uncommon provision. The second reading speech provides no assistance as to its intended purpose. The section suggests that Parliament was being very careful not to inadvertently interfere with third party property rights. I would suggest that the section is intended to avoid a repeal of the provisions in other property-related statutes by implication. In Goodwin v Phillips Griffith CJ said: [12]
That proposition is only an instance of a more general rule, that is, that where the provisions of a particular Act of Parliament dealing with a particular subject matter are wholly inconsistent with the provisions of an earlier Act dealing with the same subject matter, then the earlier Act is repealed by implication.
[12] (1908) 7 CLR 1 at 7.
In the circumstances, any suggestion that the Act impliedly repeals provisions in statutes such as the Real Property Act 1886 or the Law of Property Act 1936 cannot arise. That means when, as here, we are dealing with real property, both of those Acts continue to have full force and effect.
A starting point is the Real Property Act 1886. CEG lodged caveats on the land. Caveats are authorised by s 191 of that Act, which provides as follows:
191—Caveats
(1)Any settlor of land or beneficiary claiming under a will or settlement, or any person claiming to be interested at law or in equity, whether under an agreement, or under an unregistered instrument, or otherwise howsoever in any land, may lodge a caveat in the Lands Titles Registration Office:
(a)Purpose of caveat
a caveat may—
(i)prohibit absolutely the registration or recording of any instrument dealing with the land; or
(ii)provide that the registration or recording of an instrument dealing with the land may only occur subject to the claim of the caveator, and provided that, if any conditions are expressed in the caveat, the instrument complies with those conditions;
(ab)Instrument subject to claim of caveator
if a caveator lodges a caveat providing that the registration or recording of an instrument dealing with land will be subject to the claim of the caveator, any instrument dealing with that land registered or recorded after the lodgement of the caveat will be taken to be registered or recorded subject to that claim;
(ac)Form of caveat
a caveat must—
(i)be in the appropriate form; and
(ii)be executed by the caveator or his or her agent; and
(iii)contain an address within South Australia to which notices may be sent or at which proceedings may be served; and
(iv)contain information (if any) prescribed by the regulations for the purposes of this paragraph;
(b)Registrar-General to make memorandum of receipt
upon the receipt of a caveat the Registrar-General shall make a memorandum thereon of the date and hour of the receipt thereof, and shall enter a memorandum thereof in the Register Book, and shall forthwith send a notice of such caveat through the post office to the person against whose title such caveat shall have been lodged, directed to his or her address appearing in the Register Book;
(c)Not to register or record instruments contrary to caveat
so long as a caveat remains in force, the Registrar‑General must not, contrary to the requirements of the caveat, register or record an instrument affecting the land in respect of which the caveat has been lodged; except that despite the receipt of a caveat, the Registrar‑General must, subject to the other provisions of this Act, proceed with and complete the registration or recording of any instrument affecting the land produced for registration or recording before the lodgement of the caveat in the Lands Titles Registration Office;
(d)Persons interested may summon caveator
the registered proprietor or any other person claiming estate or interest in the land may, by summons, call on any caveator, including the Registrar-General, to attend before the Court to show cause why the caveat should not be removed; and the Court may, after allowing the parties a reasonable opportunity to be heard, make such order as appears just in the circumstances; (if the caveator does not appear in response to the summons, the Court may, if satisfied that the summons was duly served, proceed to hear and determine the application in the caveator's absence);
(e)Caveatee may apply to have caveat removed
the caveatee may, except when the caveat is lodged by a settlor, or by a beneficiary under a will or settlement, or by the Registrar-General under Part 19 of this Act, make application in writing to the Registrar-General to remove the caveat, and shall in such application give an address in South Australia to which notices or proceedings relating to the caveat may be sent, and the Registrar-General shall thereupon give twenty-one days' notice in writing to the caveator, requiring that the caveat be withdrawn;
(f)Mode of removing or discharging caveat
the Registrar-General shall, after the lapse of twenty-one days from the posting of such notice to the address mentioned in the caveat, or of such extended time as may be ordered by the Court, remove the caveat from the Register Book by entering therein a memorandum that the same is discharged;
(fa)Action to establish validity of claim
a caveator may bring an action in the Court to establish the validity of the claim on which the caveat is based;
(g)Caveator may apply to Court for order to extend time
the Court may, on the caveator's application, extend the period of 21 days until an action under paragraph (fa) is determined or for any other period;
(h)May withdraw caveat: But Court may order payment of costs
any caveator may, by notice in writing to the Registrar-General, withdraw his or her caveat at any time; but the Court may, notwithstanding such withdrawal, order payment by the caveator to the caveatee or other person interested of any costs incurred by the caveatee prior to the receipt by him or her of notice in writing of the withdrawal of the caveat;
(i)Entry to be made
an entry shall be made by the Registrar-General in the Register Book of any order made by the Court relating to any caveat, or of the withdrawal, lapse, or removal of any caveat;
(j)Caveator, except Registrar-General, liable to make compensation
any caveator other than the Registrar-General who shall have lodged or refused or neglected to withdraw any caveat wrongfully and without reasonable cause, shall be liable to make compensation to any person who may have sustained damage thereby, and such compensation may be recovered by action: Provided that, if proceedings shall have been taken in the Court by the caveatee or other person interested, the amount of such compensation may be assessed by the Court acting in the same proceedings; or the Court may direct an action to be brought to ascertain and recover such amount;
(k)Not to lodge further caveat without permission
it shall not be lawful for any caveator other than the Registrar-General, or for anyone acting on behalf of such caveator, to lodge a further caveat relating to the same matter without the permission of the Court;
(l)Court may order costs if caveat by Registrar-General is removed by Court
where any caveat lodged by the Registrar-General shall be removed by the Court, such Court may order the costs sustained by the person at whose instance such caveat was removed to be paid out of the estate on behalf of which such caveat was entered.
(2)Despite subsection (1), the Registrar‑General may, after a caveat has been lodged in accordance with this section, register or record in respect of the land to which the caveat applies—
(a)another caveat or instrument that has the effect of a caveat; or
(b)another instrument of a kind prescribed by the regulations, unless the registration or recording of that instrument is specifically prohibited by the lodged caveat.
(3)To avoid doubt, a registered proprietor of land may lodge a caveat under this section in respect of land for which he or she is the registered proprietor.
(4)In this section—
record means make a record in the Register Book.
CEG has an interest in equity in the land. The caveats lodged by CEG were lodged pursuant to s 191(1)(a)(ii). They were permissive caveats. In the case of Coles KMA Ltd v Sword Nominees Pty Ltd & Ors Bollen J considered the effect of a permissive caveat: [13]
However, I think that the effect of the caveat is more substantial. I have said that the defendants knew of the existence of the indenture of lease. They knew that the plaintiff was in possession. The memorandum of transfer from T & G to the defendants records, in the space set aside for “encumbrances”, that there are two encumbrances on the title in favour of the housing trust and then says “and subject to estate and interest claimed by caveator in caveat numbered 5144869”. That is the caveat lodged by the plaintiff. It records a claim to an estate or interest by virtue of the indenture of lease. The “effective part” of the Memorandum of Transfer says: “The transferor acknowledging receipt of the above consideration hereby transfers to the transferee the estate and interest herein specified in the land above described subject to the above encumbrances.” And the parties have included the indenture of lease in the expression “encumbrances”. The defendants accepted that memorandum of transfer. Therefore, in my opinion, the defendants have purchased subject to the rights of the caveator. They wish now not to recognise those rights. Equity will not tolerate that stand.
[13] (1986) 44 SASR 120 at 127.
The approach of Bollen J is consistent with s 191(1)(ab) of the Real Property Act. The registration on the title of the restraining order obtained by the DPP was registered subject to the interest of CEG notified in its caveats. That means the interest of CEG in the land was not defeated simply by the making of the restraining order.
In the High Court decision of Leros Pty Ltd v Terara Pty Ltd in a joint judgment Mason CJ, Dawson and McHugh JJ considered the operation of a permissive caveat: [14]
This brings us to a consideration of the effect of Terara's caveat as a "subject to claims" caveat and the fact that the caveat was noted as an encumbrance in the instrument of transfer from Western to Leros. As appears from s.137 of the Act, a caveator may lodge a "subject to claims" caveat, or "permissive" caveat as it is known in South Australia, instead of a caveat forbidding the registration of dealings. If, in conformity with such a caveat, an instrument of transfer, expressed to be subject to the caveat, is registered, the title of the transferee is subject to the rights of the caveator. In South Australia, that view has been taken by Olsson J. in Andrews v. South Australian Superannuation Fund Investment Trust,[15] where his Honour, referring to the effect of registration of a transfer expressed to be subject to "an existing valid caveat", stated that "the effect is to preserve the rights of the caveator".[16] In Coles KMA Ltd. v. Sword Nominees Pty. Ltd.,[17] Bollen J. (with whose judgment Jacobs J. expressed his substantial agreement) cited those remarks with approval.[18]
However, the effect of the registration of such a transfer is not to validate the estate or interest claimed by the caveat. All that registration in that form, in conformity with the caveat, achieves is to prevent the registration from destroying or defeating the prior unregistered interest claimed by the caveator, assuming it to be valid and enforceable. Whether the interest so claimed is valid and enforceable remains a matter for resolution after registration. The "subject to claims" caveat and registration is a procedure which enables resolution of that question to occur after, if not before, registration. The registered proprietor takes, under such a transfer, subject to the caveat, that is, subject to the claim made by the caveator; the proprietor does not take subject to the interest claimed by the caveator. The form of the registration in the present case illustrates the point. It is the caveat that is noted in the memorandum of encumbrances. And a caveat is not a defect in title or an encumbrance[19].
[14] (1992) 174 CLR 407 at [23]-[24].
[15] (1985) 124 LSJS 153.
[16] Andrews v. South Australian Superannuation Fund Investment Trust (1985) 124 LSJS 153 at p 163.
[17] (1986) 44 SASR 120.
[18] (1986) 44 SASR 120 at p 128
[19] Godfrey Constructions Pty. Ltd. (1972) 128 CLR per Barwick C.J. at p 537; Forster v. Finance Corporation of Australia Ltd. [1980] VicRp 8; (1980) VR 63, per Crockett J. at p 65.
Therefore, if the land of the defendant were to be forfeited to the Crown, it would still be subject to the claim in the CEG caveats. The Act does not enhance the position of the Crown. In respect of the validity or otherwise of the equitable mortgages, it would stand in the shoes of the defendant. If as between CEG and the defendant, the loans and security given by the defendant were valid and enforceable CEG’s mortgage would take precedence over the interest forfeited to the Crown.
The definition of “deal with” set out above refers to a transaction which has the effect of reducing the value of a suspect interest in property. A dealing by a mortgagee does not do that. The interest of the DPP will be protected if any of the mortgagees exercise their rights.
CEG is an equitable rather than legal mortgagee. It cannot have recourse to the provisions of Part 17 of the Real Property Act, which provides for the enforcement of registered mortgages. An equitable mortgagee must rely on the provisions of the Law of Property Act. Relevantly, s 44 provides:
44—Sale of mortgaged property in action for redemption or foreclosure
(1)Any person entitled to redeem mortgaged property may have a judgment or order for sale instead of for redemption in an action brought by him either for redemption alone, or for sale alone, or for sale or redemption in the alternative.
(2)In any action, whether for foreclosure, or for redemption, or for sale, or for the raising and payment in any manner of mortgage money, the court, on the request of the mortgagee, or of any person interested either in the mortgage money or in the right of redemption, and, notwithstanding that—
(a)any other person dissents; or
(b)the mortgagee or any person so interested does not appear in the action,
and without allowing any time for redemption or for payment of any mortgage money, may, if it thinks fit, direct a sale of the mortgaged property, on such terms as it thinks fit, including the deposit in court of a reasonable sum fixed by the court to meet the expenses of sale and to secure performance of the terms.
(3)But, in an action brought by a person interested in the right of redemption and seeking a sale, the court may, on the application of any defendant, direct the plaintiff to give such security for costs as the court thinks fit, and may give the conduct of the sale to any defendant, and may give such directions as it thinks fit respecting the costs of the defendants or any of them.

Also relevant, where the Supreme Court orders a sale, is s 43, which is as follows:
43—Realisation of equitable charges by the court
Where an order for sale is made by the court in reference to an equitable mortgage on land the court may, in favour of a purchaser, make a vesting order conveying the land or may appoint a person to convey the land, or may create and vest in the mortgagee a legal estate in the land to enable him to carry out the sale as the case requires, in like manner as if the mortgage had been made by way of legal mortgage, but without prejudice to any incumbrance having priority to the equitable mortgage unless the incumbrancer consents to the sale.
Section 44 permits the Supreme Court to make an order for sale, subject to conditions. Such a condition would usually involve the making of orders to deal with any surplus monies from the sale of the mortgaged property. The position of the DPP would be protected by the Court imposing appropriate conditions on the order for sale directing how surplus monies are to be held.
The DPP excluded the registered mortgagees from the operation of the order. There appears to be no logical basis to distinguish between a legal and equitable mortgagees. Presumably the DPP regards the registered mortgagees as able to exercise their powers. The circumstances where a mortgagee has surplus money in their control after realising a security is quite common. Relevant in that situation is s 47 of the Trustee Act 1936. The section provides for a mortgagee to pay the surplus monies into the Supreme Court Suitors Fund. It is a provision regularly used by registered mortgagees where any issue as to entitlement to the surplus arises. It would provide protection for the DPP if the registered mortgagees sold the land.
Separately from the legislation, there are also matters that, by analogy, provide guidance. There are three matters I propose to refer to.
The first relates to the operation of freezing orders. The restraining order made under the Act is conceptually similar to a freezing order made pursuant to R247. Such orders are commonly made and prevent a potential or actual judgment debtor dealing with his or her property. There is ample case law dealing with the nature and effect of a freezing order. Such orders were formerly known as Mareva injunctions.
In Re Ling; Ex parte Enrobook Pty Ltd[20] Lehane J was dealing with an argument that a Mareva injunction had the effect of preventing a mortgagee exercising its powers. His Honour said:[21]
Thus it would be an odd conclusion that the existence of a Mareva injunction of the kind now under consideration prevented a mortgagee or chargee of property, the mortgagor of which is restrained from dealing with it, from taking possession of the property, selling it and using the proceeds to discharge the secured debt. I know of no authority suggesting such a conclusion and cannot see how it could be supported in principle. By contrast, although the authorities are sparse and ancient, it seems to be clear that unless the order appointing a receiver expressly preserves the rights of mortgagees, a mortgagee of property in the possession of a receiver appointed by the court may not, without leave, take possession of the property or sell it: see, eg, Underhay v Read (1887) 20 QBD 209 at 218, 219 per Fry LJ.
More importantly, however, the purpose of a Mareva injunction is to prevent a defendant from dissipating assets, or putting them beyond the reach of creditors, in circumstances where there is a real fear that, unless restrained, the defendant will do so. Its purpose is not to prevent creditors from exercising their rights. And the way in which such an injunction is commonly framed—the way in which Lockhart J’s order is framed—reflects the limited purpose: all it does in terms is restrain, in this case, Mr Ling from dealing with assets. There appears to be no good reason why the exercise or enforcement of a creditor’s rights, including by execution, where no dealing by Mr Ling is required to effect it, should be regarded as contrary to the order.
[20] (1996) 142 ALR 87.
[21] (1996) 142 ALR 87 at 93
The effect of a freezing order was also considered in Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd where Young J said: [22]
These authorities lead me to the view that even if a Mareva injunction were granted, the plaintiff would be in no better position because its priority vis-à-vis other debts of the defendant Energy Australia, would not be affected in any way and the effect of the order would not be to give it some sort of charge or security on the fund, the subject of the injunction which would take priority in respect of those other creditors.
[22] [1985] 1 NSWLR 545 at 558-559.
A freezing order does not prevent a secured creditor exercising rights. It does not enhance the priority status of a person who obtains the order. I would suggest the Act operates in the same way.
The second matter that requires consideration is the approach of equity to the grant of an injunction against a mortgagee. The DPP’s position is that the order obtained restrains CEG from exercising its powers as mortgagee. Equity has long frowned upon the idea that a mortgagee can easily be restrained from exercising its powers as mortgagee. The leading authority on the topic remains Inglis v Commonwealth Trading Bank of Australia.[23] Walsh J said:[24]
In my opinion, the authorities which I have been able to examine establish that for the purposes of the application of the general rule to which I have referred, nothing short of actual payment is regarded as sufficient to extinguish a mortgage debt. If the debt has not been actually paid, the Court will not, at any rate as a general rule, interfere to deprive the mortgagee of the benefit of his security, except upon terms that an equivalent safeguard is provided to him, by means of the plaintiff bringing in an amount sufficient to meet what is claimed by the mortgagee to be due. (at p165)
The benefit of having a security for a debt would be greatly diminished if the fact that a debtor has raised claims for damages against the mortgagee were allowed to prevent any enforcement of the security until after the litigation of those claims had been completed. (at p165)
In my opinion the fact that such claims have been brought provides no valid reason for the granting of an injunction to restrain, until they have been determined, the exercise by a mortgagee of the remedies given to him by the mortgage. (at p165)
[23] (1972) 126 CLR 161.
[24] Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 at [15]-[17].
The decision of Walsh J was at first instance on an interlocutory application for an injunction. An appeal to a full bench of the High Court was dismissed and Barwick CJ said:[25]
I have not heard anything, nor been referred to any authority, which causes me in the least to doubt the correctness of the refusal of Walsh J. to grant the interlocutory injunction sought by the appellant or the reasons which he gave for that refusal. I find no need to discuss the arguments offered, and the authorities referred to, by the appellant. Such of them as were relevant are sufficiently answered in his Honour's reasons. (at p168)
The case falls fairly, in my opinion, within the general rule applicable when it is sought to restrain the exercise by a mortgagee of his rights under the mortgage instrument. Failing payment into court of the amount sworn by the mortgagee as due and owing under the mortgage, no restraint should be placed by order upon the exercise of the respondent mortgagee's rights under the mortgage. (at p169)
[25] Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 at 168 [1]-[2].
There are exceptions to the Inglis rule, but they generally arise where the validity of mortgage itself is in question.[26]
[26] Re Glandore Pty Ltd (Receivers and Managers appointed); David Henry Leitch; Alma Margaret Leitch; and Gary David Leitch v Elders Finance & Investment Co Ltd (1984) 57 ALR 186.
The third matter I wish to mention by analogy is the operation of the law in respect of bankruptcy. In one sense bankruptcy is quite similar, because it involves forfeiture of property. Upon the making of a sequestration order, the property of a bankrupt vests in a trustee. [27] That is, the bankrupt’s property is forfeited.
[27] Section 58 Bankruptcy Act 1966.
The position in relation to bankruptcy has always been clear. The trustee takes property subject to other claims. The position was set out in Sonenco (No 77) Pty Ltd v Silvia:[28]
These provisions should be read against the background of the following established principles: first, that the trustee in bankruptcy takes the property of the bankrupt subject to “equities”; and, secondly, that the trustee’s title to that property is no better than the bankrupt’s: see McDonald, Henry and Meek, Australian Bankruptcy Law and Practice, 5^th ed, Vol 3, pp 328-9; Williams and Muir-Hunter The Law and Practice in Bankruptcy, 19^th ed, Sweet and Maxwell, London, 1979, pp 248-9. In Re Clark; Ex parte Beardmore [1894] 2 QB 393, Davey LJ said at 410:
“The broad and general principle is, that the trustee in a bankruptcy takes only the property of the bankrupt, and takes it subject to all the liabilities and equities which affect it in the bankrupt’s hands… .”
The settled rule that equitable interests of third parties stand outside the bankruptcy was stated by Madden CJ in Whyte v Williams (1903) 29 VLR 69 at 81 as follows:
“If [a third party] had an equitable interest, the law would protect it without an injunction. The property would still pass to the official assignee, because he is the person who takes all the insolvent’s property; but it would be clogged with all the equitable conditions which attached to it.”
[28] (1989) 89 ALR 437 at 444-5.
There is a limit to the usefulness of analogies. Ultimately, it is the wording of the legislation which must be considered to determine its meaning. What the three matters show, however, is that the position of the DPP would involve a significant departure from the position in related areas of the law. On its view, a restraining order under the Act would have much more significant consequences than a freezing order. It would also overcome the reluctance to enjoin mortgagees from exercising their powers. If a forfeiture order was obtained, you would get a completely difference position from that which arises in a bankruptcy. A forfeiture would occur without regard to other property interests, unless they had been expressly excluded from the operation of the order. The fact that the restraining order would operate in what is a fairly radical way is another reason to look closely at the Act to see if that is what Parliament intended.
Other issues
In the Grounds of Appeal the DPP asserted that the Master was wrong to rely on s 40 of the Act to make the exclusion order in favour of CEG. The DPP submits that the specific provisions of s 34 apply to the circumstances. It is not necessary on this appeal to determine that issue. I note that the exclusion provided for in s 34 relates only to orders made pursuant to s 24(1)(a) and (b), which takes us back to the property referred to in s 24(5)(a)(i) and (ii). It goes almost without saying that it is only necessary to exclude property that would otherwise be captured by an order.
Before the Master CEG argued that the failure of the DPP to serve the original application on it was a significant matter. CEG argued that the restraining order should be set aside. The Master did not do so. CEG relied upon cases such as Victoria Teachers Credit Union v KPMG (a firm)[29] for the proposition that a lack of candour on an ex parte application would justify the setting aside of an order.
[29] [2000] 1 VR 654.
There is no doubt that the failure of the DPP to comply with the obligation to serve notice of the application on CEG is a matter of significance. It is also worth noting that the DPP is a model litigant.[30] In the circumstances, however, it is not necessary to come to a view on this issue.
[30] The duties of the Crown as a model litigant are set out in Legal Bulletin No 2, 10 June 2011.
Summary
The Act achieves what it might reasonably be assumed it set out to achieve. It permits a court to restrain an accused person from dealing with his or her property pending a resolution of the criminal proceedings. It does not go beyond that purpose. It does not affect the property rights of third parties, other than those that fall within the provisions of s 24(5)(a)(ii). An order made in the usual form does not prevent a mortgagee, legal or equitable, from exercising its rights. The appeal is dismissed.
In the circumstances, there would appear to be no utility in setting aside the order of the Master. However, I will hear the parties on that and other finalising issues.