Westpac Banking Corporation v Director of Public Prosecutions (Cth)

[2006] HCATrans 262

[2006] HCATrans 262

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S453 of 2005

B e t w e e n -

WESTPAC BANKING CORPORATION

Plaintiff

and

DIRECTOR OF PUBLIC PROSECUTIONS (COMMONWEALTH)

Defendant

Summons

GLEESON CJ

TRANSCRIPT OF PROCEEDINGS

FROM MELBOURNE BY VIDEO LINK TO SYDNEY

ON TUESDAY, 23 MAY 2006, AT 2.15 PM

(Continued from 16/3/06)

Copyright in the High Court of Australia

MR B.W. WALKER, SC:   May it please the Court, I appear with MR P.J. DOWDY for the plaintiff.  (instructed by Henry Davis York)

MS M.M. GORDON, SC:   May it please the Court, I appear with my learned friend, MR D.W. BENNETT, for the Commonwealth Director of Public Prosecutions.  (instructed by Director of Public Prosecutions (Commonwealth))

MR D.M.J. BENNETT, QC, Solicitor‑General for the Commonwealth of Australia:   I appear for the Attorney-General of the Commonwealth intervening.  (instructed by Australian Government Solicitor)

HIS HONOUR:   Ms Gordon, you are the moving party in this application?

MS GORDON:   I am, your Honour.  It was commenced by way of summons with a supporting affidavit, your Honour.

HIS HONOUR:   The summons is filed on 19 May.

MS GORDON:   Correct, your Honour.

HIS HONOUR:   The supporting affidavit is that of Anna Solovjev of 19 May.

MS GORDON:   Yes, your Honour, and consistent with the directions made by the Court we have filed a short outline of submissions at the close of business yesterday which I hope has made their way to your Honour.

HIS HONOUR:   They are headed “Defendant’s Submissions for Removal of Proceeding from the List”?

MS GORDON:   That is correct, your Honour.

HIS HONOUR:   Yes, I have those.  Is there any objection to the affidavit, Mr Walker?

MR WALKER:   No, your Honour.

HIS HONOUR:   All right.  I have read that affidavit.

MS GORDON:   If your Honour pleases.

HIS HONOUR:   I notice that in your summons you propose that the proceedings be removed from the list of matters for hearing by the Full Court.  What do you propose would happen to them then?

MS GORDON:   It was drafted in that way, your Honour, to see what the reaction was from Westpac.  Our present view is that it probably should be remitted to the Federal Court to enable the disputed questions of fact to be resolved.  I understand from discussions with my learned friend, Mr Walker, that he would like some time to see whether he could reformulate the case.  Our present position is though that on my instructions the matter should be remitted.

HIS HONOUR:   All right.  Yes, Ms Gordon.

MS GORDON:   If your Honour pleases.  As your Honour will see, the Commonwealth Director seeks an order that this proceeding be removed from the matters listed for hearing by the Full Court and it does so on three bases.  The first is that Westpac has reformulated its challenge to the Proceeds of Crime Act; secondly, that the reformulated challenge now relies upon facts which are neither agreed and are disputed and, more importantly, are yet to be determined in the proceedings in the Federal Court; and thirdly, that as a result Westpac now seeks answers to questions which may never arise.

Can I deal with each of those bases in turn, please, your Honour?  The reformulation arises in this way.  On 16 September last year Westpac filed an application for an order to show cause and that is exhibit AS‑1 to Ms Solodjev’s affidavit.  The grounds of that challenge were set out on page 4 of that exhibit and in response to that the Commonwealth Director filed submissions which at that time suggested that we oppose the application because there were potential for disputes of fact.  Those submissions are exhibit 2 to that affidavit and, in particular, the position then adopted by the Commonwealth Director was that the matter should be remitted to enable those disputed questions to be resolved.

The fallback position was – and if your Honour goes to page 4 of the application to show cause, which is exhibit AS‑1, your Honour may recall that there were, in effect, seven grounds that were relied upon by Westpac as the basis for the challenge to the validity of the legislation.  What we said to Westpac at that time and to this Court was that if No (7) which seemed to deal with these disputed questions of fact was put to one side and a special case was able to be formulated which dealt with grounds (1) to (6), then the Commonwealth Director would be willing for the matter to stay in the High Court and stay in the High Court for two reasons.  First, because it would ensure that if Westpac was successful the proceedings below would become unnecessary and, secondly, because of the nature of the challenge which was ultimately to be made at that time, it affected the Commonwealth Director’s overall and ongoing management of the Proceeds of Crime Act in relation to the ‑ ‑ ‑

HIS HONOUR:   Is it the element of paragraph (7) which asserts that the property in question is property of the Bank that is the cause of these factual disputes?

MS GORDON:   That is one of the problems, your Honour.

HIS HONOUR:   And is it the case that issues (1) to (6) were issues that it was thought could have been argued regardless of whose property it was or that they were issues that could have been regarded assuming it was Mr Chia’s property.

MS GORDON:   No, regardless of whose property, because at that time the challenge made was that the Supreme Court had no power to make the restraining order in respect of a foreign indictable offence.  In other words, the Commonwealth Parliament lacked the necessary power to pass legislation giving the Court that power to make the restraining order in respect of foreign indictable offences.

HIS HONOUR:   To me it looked as though it was going to be an argument about the external affairs power.

MS GORDON:   That is correct, your Honour.  Your Honour will recall at the previous mentions commencing in November of last year there was much debate and discussion about the fact to ensure that there were no disputed questions of fact and your Honour will see from the way in which the questions were reserved – and they appear at page 19 of the special case book – that they read as follows:

Is section 19 of the POCA invalid insofar and to the extent that it permits or requires a restraining order to be made in respect of the proceeds of, or proceeds suspected to be the proceeds of, a foreign indictable offence?

In other words, it was a challenge to the power of the Commonwealth Parliament to pass a law dealing with that issue.  What happened was when we received Westpac’s submissions last Wednesday two things have changed.  No longer does it appear that Westpac challenges the power of the Commonwealth Parliament to pass the law in that general sense.  They now seek to limit the answers to the questions reserved to people whose property might be affected in limited circumstances.  Secondly, as your Honour will have seen from the submissions – and I will take your Honour through them in a moment – it proceeds upon a number of assumptions and accepts on its face that there are disputes about the facts upon which it relies and as a result it now seeks answers to future questions which may never arise.

HIS HONOUR:   What is the difference between the plaintiff’s – I seem to have two lots of submissions – I see, one is the original and one is a copy – called “Plaintiff’s Amended Submissions”.

MS GORDON:   I think the position was that they had omitted to include the entire legislative provisions upon which they relied and the Court required them to file amended submissions.  They are substantively in the same form.

HIS HONOUR:   Thank you.  Yes.

MS GORDON:   Can I then deal and provide your Honour with some examples of the difficulties that we face, having regard to the way in which the case has now been reformulated.  First, your Honour points out we actually do not know what it is that is Westpac’s property which they refer to throughout their submissions.  It is made clear if one looks at the statement in paragraph 1 in their submissions that they have filed. 

They talk about the property belonging to the Bank.  That is nowhere identified and has been the subject of much dispute and debate in the Federal Court in which proceedings are now stayed pending the outcome of these proceedings.  Secondly, if one goes to the proposed answers to the stated questions in paragraph 42, one sees that we are again talking about property of persons not involved in the commission of the offence. 

As your Honour is well aware, under the Proceeds of Crime Act it is essential that the relevant property that is being talked about be identified.  In particular, in this case we would have thought it would be necessary for Westpac to identify how it is said it is adversely affected.  The difficulty about that is that in the Federal Court proceedings they have lodged applications for exclusion of what they describe as their potential interest in the property.  Those proceedings have yet to be determined and Westpac are yet to file their material in support of those applications. 

The other thing to note is that in paragraphs 8 and 32 of its submissions it talks about Westpac being the innocent party.  That in itself involves factual questions to determine what innocence they are talking about and to the extent that that is relevant.  Those questions would also arise on an exclusion application and not surprisingly are neither admitted nor agreed. 

The next step to take is that even if the property was identified with precision, Westpac can make no complaint about the operations of section 19 and 49, being the restraint order power and the forfeiture order power under the Proceeds of Crime Act, unless it is his property which has been affected.  So the identification of Westpac’s property is relevant in the application and determination of the exclusion application itself.

Finally, it seems as though Westpac’s submissions then depend in a number of paragraphs by what it describes as Westpac’s contractual right.  We do not precisely know what that means.  That appears in paragraphs 4, 24 and 40.  It seems to us when we have looked at the submissions as a whole that raised at least five issues.  First of all, if they are talking about the contractual right between Mr Chia and Westpac, and we do not know what the terms of that contract are.  Secondly, if they are talking about the contractual right vis-à-vis the cheques, then your Honour may recall there were two cheques in issue and there was at least a dispute in the Federal Court about whether one of those cheques was ever delivered to Westpac, which led to the need for DHL to be joined as a party to those proceedings.

Thirdly, there is a question about whether Mr Chia countermanded the cheques. Your Honour may recall that would involve considerations of not only section 90 of the Cheques Act but together with the question about the way in which that worked on the operation of the account. Fourthly, there is some suggestion that section 67 of the Cheques Act which imposes an obligation on banks to honour or dishonour cheques promptly would arise.  Again, that raises the whole question of the circumstances in which the Bank dealt with those cheques and dealt with Mr Chia and in this case the holder of the cheques, Aspinalls, together with other matters.  Finally, there are the legal consequences flowing from Aspinalls having sued both Westpac and Mr Chia and got judgment against Mr Chia on at least one of the cheques.

All of those issues, it is submitted, need to be addressed and identified as a matter of fact between the DPP and Westpac in order for the separate question about the operation of POCA would even arise.  For those reasons it is submitted that Westpac’s reformulation of its case is hypothetical.  The best example of that as a matter of admission by Westpac is found in paragraph 24 of its own submissions where it talks about one very possible outcome, the alleged liability due to Aspinalls while the remaining obligation, if this be the position at law, in respect of its obligation to pay Aspinalls on the cheques.

In those circumstances, and having regard to the way in which this matter has proceeded, it is submitted that the High Court, consistent with authority and most recently its statements in the Bass decision, should not proceed to hear this matter until those disputed questions are resolved in order to determine whether or not the constitutional question ever arises.  To put it bluntly, if Westpac are successful on the exclusion application,

they would suffer no loss and there would be no question of the kind that is now proposed to be put.  They are the submissions ‑ ‑ ‑

HIS HONOUR:   Thank you, Ms Gordon.  Mr Solicitor, what is your attitude towards this?

MR BENNETT:   We support the Director, if your Honour pleases.  There is a major problem which I must say we have in working out what the relevant property is.  The property, as we understand it, is a debt owed by Westpac to Mr Chia.  I have some difficulty seeing how that becomes in any way Westpac’s property.  Assuming that the effect of the presentation of the cheques and the absence of action in relation to them gives rise to an obligation on Westpac to pay money to Aspinalls, one needs to know in order to examine Westpac’s constitutional argument under section 51(xxxi) exactly what rights, if any, Westpac would have, presumably by way of set‑off, against the funds in the account.

That depends on a number of factual issues and a number of questions of law and some of mixed fact and law and some, perhaps, of discretion in relation to applications under some provisions of the Banking Act.  As I understand it, from what my learned friend, Mr Walker, tells me, it is now clear that the countermand came after the time when Westpac had failed to act within a reasonable time on the cheques.  I do not know if that is right or not.  I do not know if Mr Chia accepts that or not.  But if that is so and that can be demonstrated, that answers one of the questions, but it needs to be demonstrated and to be clear for the constitutional issues to arise.

One also needs to look at what the standard terms no doubt of the banking arrangement between Westpac and Mr Chia were in order to know in what circumstances Westpac has rights against the account where it has failed to deal with the cheques within a reasonable time, become liable to Aspinalls and either there has been an earlier or later countermand or an earlier or later seizure attachment of the funds.  All those matters, it just seems to us, need to be clarified so the constitutional issue can be exposed clearly for the Court to deal with and we are not satisfied that that has been done, your Honour.  For those reasons, we support the Director.

HIS HONOUR:   Thank you, Mr Solicitor.  Yes, Mr Walker.

MR WALKER:   May it please your Honour.  Your Honour, our overall position may be stated in summary as follows.  First, we would seek the opportunity of a short period, measured in only a small number of days, to see whether the concerns that have been expressed both today and in the days preceding today on behalf of the Director can be met.  It would be wrong for me to give your Honour the impression that we are on the verge of solving the problems, but at least in a number of respects to which I will come in a moment there is a real prospect that there can be change of a kind which ought to meet some, if not all, of the concerns of the Director.

Second, in summary, it is the case that were the Full Court to entertain a special case without the position between the Bank and Aspinalls being clear rather than merely the subject of un‑adjudicated allegations, some of the aspects of the matter submitted to be unsatisfactory by my learned friend, Ms Gordon, would be as she describes. Following upon that position being the position of the Bank, namely, that it is unsatisfactory that the position between Aspinalls and it remain the subject of un‑adjudicated allegations, the Bank has today reached the position where in favour of Aspinalls and not for the purposes merely of argument but for all relevant purposes the expiry of a reasonable time for both cheques upon which Aspinalls sue Westpac within the meaning of section 67 and before any of the dealings which could arguably amount to a countermand had occurred is admitted.

Now, that, at the moment, is the relevantly only unadmitted issue between the Bank and Aspinalls in the cheque proceedings.  The other matters to which my learned friend, Ms Gordon, refers are not un‑adjudicated matters.  They were, historically, difficulties raised which have been overtaken by the events.  For example, if I could take you in the special case, your Honour, to one of the appended documents, namely, the correspondence that you will find at page 67 and 68.  You will see there about line 32 in paragraph 2 the Bank’s solicitors maintain, in effect, that the Bank has no record of receiving the second cheque.  It is called the NWB cheque.  It is the second of the cheques.

That is not maintained in the present state of the pleadings between Aspinalls and Westpac in the Federal Court.  That is not an issue.  Then in paragraph 4 at line 40 on page 67 there is the assertion by the Bank’s solicitors that Mr Chia has recently countermanded payment of the cheques.  Then over the page, page 68, there is a recitation of the request by the AFP, item 6, line 15 for the Bank to refrain from paying of both cheques.  Then your Honour sees the limited time given, which in fact then resulted in an application for a restraining order.

In the cheque proceedings there is no reliance in answer to Aspinalls’ claim against the Bank on allegations by Westpac that Mr Chia countermanded payment. One would think that one could put to one side positions between the Bank and Mr Chia as to which the Bank can bear the risk without rendering anything hypothetical in this Court. As between us and Aspinalls, however, we accept, particularly in the way the case is put, to which I am about to come, in our submissions, it is crucial that we, the Bank, maintain an obligation under section 67 of the Cheques Act to pay Aspinalls and maintain that the effect of the Proceeds of Crime Act is that we are at the same time restrained from debiting the account held with us by Mr Chia with the commensurate debit to reflect the expense of paying those cheques.

HIS HONOUR:   Mr Walker, in the answers that you seek to the questions in the stated case you seek, in effect, a finding of invalidity of the legislation insofar as it purports to apply to the property of persons not involved in the commission of the offence.

MR WALKER:   Yes, your Honour.

HIS HONOUR:   What does that expression mean “not involved in the commission of the offence”?

MR WALKER:   That neither a principal nor an aider nor abettor, that is no criminal involvement in the offence.

HIS HONOUR:   So to relate that to the position of the Bank in the present case ‑ ‑ ‑

MR WALKER:   It picks up that which is in the special case at page 18, paragraph 12, second sentence, which is in fact far more general.

HIS HONOUR:   It has two elements.  One is if the Bank – that refers to any criminal offence in Australia and it says the Bank has not infringed a law of the Commonwealth.

MR WALKER:   That is correct.

HIS HONOUR:   So is the criminal offence referred to in the answers to the questions in the draft stated case an offence against the law of the Commonwealth?

MR WALKER:   They may amount to that because there may be criminal offences arising from involvement in the cheating and fraud offences that one sees in paragraph 11 of the special case which might be committed in Australia.

HIS HONOUR:   It also includes as an element that it is the property of the Bank.

MR WALKER:   Now, yes, but the antecedent of it is right at the heart of the problem.  May I take your Honour to the Act simply to put this in the correct statutory context.  The provisions will be found in the amended form of our submissions.  Could I take your Honour to section 330(3) of the Act, page 17 of the submission:

Property remains proceeds of an offence –

and “proceeds of an offence” is the pivotal concept to render property amenable to restraint and eventually forfeiture, or at least is the first alternative form –

even if:

(a)      it is credited to an account ‑ ‑ ‑

HIS HONOUR:   And that is a defined term.

MR WALKER:   It is and “account” is defined as a term which will include the account kept by Mr Chia with the Bank.  Your Honour will see there that the expression very similar to what your Honour asked me is used:  “it is credited to an account”.  Well, what is credited to an account?  It is ultimately the funds which, as we have accepted in our argument, in the hands of Mr Chia before he deposited anything with my client we accept are the proceeds of a foreign indictable offence.

HIS HONOUR:   Funds deposited with a bank giving rise to a consequent debt by the bank to the depositor.

MR WALKER:   And as a matter of law, as opposed to fiction, those funds, once deposited and once giving rise to that debt, are of course the Bank’s.  Section 330(3) imposes on that law a definitional fiction which begins the problem of the Bank’s property being affected in the way we have argued in our submissions by the restraining order and by any eventual forfeiture order in the following fashion.  Both my friends have professed uncertainty as to what the Bank’s property is about which complaint is made with constitutional ramifications as we submit.

May I take your Honour in our written submissions to page 5, first of all, paragraph 23.  It is very clear from the first sentence there that, as is, we think, common ground at the Bar table and as must be clearly correct, the chose in action held by Mr Chia against my client is of course his property and not something that, as the argument is now put, a matter where I need to acknowledge what Ms Gordon has pointed out – as the matter is now put we are not, as it were, on behalf of Mr Chia protesting the unconstitutionality of the laws which give the Commonwealth authorities the whip hand in relation to his property but the ‑ ‑ ‑

HIS HONOUR:   What, if any, relevance to your argument has the fact or the assertions relating to countermanding?

MR WALKER: For our argument, nothing, given what we say is the state of affairs between us and Aspinalls, namely, that section 67 reasonable period had plainly expired. It is around between 22 August and not many days after that the time starts to tick.

HIS HONOUR:   It is put against you that depending upon the resolution of some factual questions the constitutional issue may not arise.

MR WALKER: The constitutional issue, as we put it, would not arise if we do not have to pay Aspinalls, but that depends upon matters that where it is stretching credulity to understand how the DPP would ever be in a position to contest Aspinalls’ entitlement to be paid under section 67 of the Cheques Act.  Leave aside parties and the constitution of the suit, what fact is the DPP going to point to to show that the Bank had not taken more than a reasonable time to pay or dishonour?

HIS HONOUR:   Do you mean that if you have to pay Aspinalls ‑ ‑ ‑

MR WALKER:   It will be from our money and we will not have a commensurate debit.

HIS HONOUR:   There will be no property for the Act to bite on?

MR WALKER:   There will be.  There is $7 million necessary to pay Aspinalls.  There was more than $7 million in the account.  If we pay Aspinalls – perhaps I should say when we pay Aspinalls – it will be, of course, from our funds.  We submit that it is obvious that in the ordinary course the Bank would have been entitled to debit the account of its customer for the expense of paying the customer’s cheques. 

Now, it would appear from what you have been told this afternoon that the DPP’s position is that, as it were, it puts us to the proof of that, though one can scarcely imagine either Mr Chia or any other person involved in the cheques action having the slightest doubt about the proposition that a bank is entitled to debit a customer’s account with the expense of paying a cheque.

Clearly, the countermanding is a matter which is relevant to that, but if the countermanding comes under the section 67 reasonable period has expired, it is not a factual but rather a legal question as to whether or not section 90 of the Cheques Act works the absurd outcome that notwithstanding the express reference in section 67(3) to preserving the rights or being without prejudice to the rights of a bank to debit the account of a customer one can have two things occur at the same time. In sequence, first, the expiry of the section 67 reasonable period you have to pay the cheques. Next, the customer, countermanding, leaving the Bank to pay out of its own property the cheques without a right to bill the client.

Now, no one, in our submission, has hitherto suggested that could possibly be the effect of the Cheques Act. Certainly, it is not the position that the Bank takes. Aspinalls would have no possible interest in arguing such a thing. Mr Chia has not evinced the slightest interest in arguing such a thing and it is difficult to see how or why the DPP would mount such an argument. That is why the countermand factual matters, to which my learned friend has properly drawn attention, have been, as we say, overtaken by the events both of the issues joined in the cheque proceeding and more significantly what has happened only today, our concession in favour of Aspinalls of the section 67 reasonable period had well and truly expired before any of the dealings which could be argued to be a countermand.

So the countermand fades.  It will not be affected.  There is nothing hypothetical based upon what might or might not be the determination of the countermand because it cannot affect our obligation to pay.  Our obligation to pay gives rise then to the only remaining question of so‑called factual uncertainty, namely, whether we would be entitled to debit the account but for the restraining order. 

Now, but for the restraining order, as we say, it defies credulity that it is really suggested on behalf of the DPP that there is some factual doubt about whether Westpac’s terms of trade with Mr Chia entitled Westpac to debit his account with the expense of paying his cheques or, to put it another way, if that is the only problem, that is something for which we would seek a very short time from today so as to see whether we cannot satisfy the DPP that there is no factual issue of that kind at all.  That then brings us back to the question:  how is the issued raised, as it is at the moment for the Full Court’s consideration, concerning the Bank’s property? 

As I say, in paragraph 23 of our submission, we start by acknowledging that the amended form, corrected in the Court of Appeal by consent, of the restraining order focuses on the chose in action of Mr Chia.  As your Honour will probably recall, originally it had focused on something called funds in an account which did raise the Foley v Hill problem to which I referred in opening, but because the legal effect of the restraining order prevents any dealings with that chose in action we have proceeded and continue to argue, no doubt with the wholehearted approval of the DPP, that that prevents any debiting of the account.  Its value cannot be diminished by anything we do so as to reflect, for example, the expense of paying the cheques to Aspinalls.

Now, it is by that means that our property, our money out of which we have to pay Aspinalls, is affected by the inability to debit the account.  In paragraph 25 of our submission, the way in which we put it is that if these statutory provisions are valid, particularly the restraining order but the forfeiture will make it permanent, that legally and practically under their operation we will be deprived of our contractual right, which is of course a species of property, to debit Mr Chia’s account and our property is, as a matter of practical effect and consequence, a matter relevant to constitutional argument, taken in the sense that we are bound to pay Aspinalls from our property and we are prevented from debiting the account which records the value of the chose in action which of course we concede in favour of Mr Chia.

Now, that is what we then call in paragraph 26 the legislative dealing with the plaintiff’s own property.  If these provisions have the effect for which we contend and which we understand the DPP to accept, we are not able, and no bank in our position would ever be able, to ensure that, as it were, the last cheques drawn by the criminal can be met out of the criminal chose in action rather than out of the bank’s own property, its funds.  So in that sense it is the Bank’s property which was being affected by these provisions. 

Now, your Honour, it is not suggested there is anything constitutionally invalid about section 67 of the Cheques Act, but it is part of the milieu in which any statute such as the Proceeds of Crime Act which focuses on property so‑called in an account, it is obviously part of the milieu in which that operates.  The legal operation and practical consequences of POCA in relation to bank accounts is something which, in our submission, can therefore be seen to throw up a real, not hypothetical, issue.  It will only be hypothetical if we do not have to pay Aspinalls. 

Now, it would equally cease to be hypothetical if by some means there could be, say, from within POCA’s own provisions recognition given to our right to a debit.  That is where my learned friend Ms Gordon’s reference to the exclusion application might be thought to arise but, in our submission, a moment’s consideration of section 29 would render that provision quite inapt to permit the recognition of any such right of debit.  However, we have in the amended submissions included section 24 as well of the Act lest that be thought something of relevance to this aspect of the matter. 

If POCA could deal with our complaint about the denied debit to meet the Aspinalls’ cheques, then the constitutional point would not arise, one would imagine.  Proportionality or reasonable adaptation would be achieved.  But under the perhaps misleading or excessively terse heading “Allowance for Expenses” your Honour sees that there are the words in paragraph 24(1)(d) which might, and I stress might, stretch, bearing in mind the oddity of section 330(3) having proceeds go into the account, keep their identity in account, which might just stretch to the idea of a debit in favour of a banker to meet the payment of cheques. 

Unfortunately, what might be given by one hand is snatched away by the next because in section 24(2)(d), as we read that, it is quite clear that because Westpac has fortunately much more than $7 million of its own property, it is not eligible for any consideration under section 24. So that the terms of POCA itself, particularly section 29 and section 24, rather suggests that in this musical chairs idea that cheques are coming into a bank, are being considered for payment or dishonour, once a restraining order intervenes on the effect which we understand to be, understandably, the DPP’s argument for the effect of the law, one in which we very largely join them as to the interpretation of the law, the Bank will have to meet from its own resources, without a commensurate debit from the customer’s account, anything which at that point had exceeded a section 67 reasonable time.

Now, that being the way we put the argument, it does, with great respect, to us seem clear that the only thing which is outstanding from the special cases presently stated of a factual kind throwing up that constitutional issue of whether that displays a sufficiently good connection so as to be a law with respect to external affairs is the surely unremarkable and incontestable proposition that vis-à-vis Mr Chia we were entitled to the debit, and that is what I am hoping can be done in a very short time and vouched, as it were, out of Court, or proved if necessary, and second, that we are liable to Aspinalls.  Now, that is a critical one, that is an important one and it is a new one.

The last thing I would say is this, that although the argument focuses perhaps more specifically now than it had at the earlier stages to which my learned friend drew attention in just the way my learned friend pointed out, issue or item (7) always contained, of course, the propositions which we are now putting.  In relation to questions of countermand, non‑receipt of cheque, et cetera, to which my learned friend has raised, they have been around from the beginning and they have already referred to in the special case.  For the reasons I have put, they are no longer of any moment and they will not render anything the Full Court is presently to consider, they will not render anything hypothetical. 

Now, your Honour, the other thing is that the cheque proceeding was never going to be a proceeding that an answer to a constitutional question was ever going to solve.  So it is not the case that the constitutional argument was ever going to deal with the cheque case.

HIS HONOUR:   That is the one that is pending, as it were, in the Federal Court?

MR WALKER:   There are three cases pending.  There are two exclusions applications and there is a cheque case.  It is the cheque case that is the one in which we make the admission of, in effect, the sole issue that is presently subsisting on the pleadings between us and Aspinalls.

HIS HONOUR:   Mr Walker, if I should accede to the application that Ms Gordon has made, is there any reason why this matter (a) cannot and (b) should not be remitted to the Federal Court in addition to the reasons you have already mentioned?

MR WALKER:   The reasons I have already mentioned are reasons why the matter can be dealt with in this Court with a minimally demanding forensic exercise.  If it is something to which the DPP is the only contradictor – and it would appear to be that is the case, Aspinalls is not going to contradict that it is due to be paid this money – then it is, in our submission, impossible to imagine that there will be much of a trial, if any trial, of the issue concerning reasonable time and the right to debit.  Those are the only issues remaining:  reasonable time under 67, which we say is dealt with by our concession to Aspinalls, and the right to debit.  There is nothing else that actually appears as requiring of factual determination.  That is why, in our submission, the case should not be remitted so as to permit of its presentation, in our submission, by way of a special case with but two amendments to enable the Full Court to deal with it.

HIS HONOUR:   Thank you, Mr Walker.  Yes, Ms Gordon.

MS GORDON:   If your Honour pleases, may I make four short points in reply.  The first is, contrary to my learned friend Mr Walker’s submissions and despite the fact that he may have now reached today, after I do not know how many months these proceedings have been on foot, agreement with Aspinalls, the DPP remains in the position in which it does not know the facts I outlined to your Honour before, but secondly, there are pleading issues between us, that is, between the DPP and Westpac, in which Westpac itself has pleaded against us that the cheques were not countermanded.  So if he has made a concession vis-à-vis himself between himself and Aspinalls on that issue, he still has it as a live issue as against us in its pleadings in the Federal Court in relation to applications both under the AD(JR) Act and otherwise.

Now, the third thing is that although my learned friend says the exclusion application does not help him, he has an exclusion application on foot in the Federal Court against us in which he asserts an interest in the

property consistent with the Proceeds of Crime Act provisions.  If your Honour pleases.

HIS HONOUR:   Thank you.

This is an application made by the plaintiff, and supported by the Attorney-General for the Commonwealth who has intervened in the proceedings, for removal from the list of a matter that is listed for hearing by the Full Court of this Court on the first day of the June sittings of the Court and for consequential orders.

The background to this application is that these proceedings were commenced in this Court last year at a time when there were pending proceedings in the Federal Court relating to various aspects of the matters in dispute between the parties and others.  When the proceedings were commenced in this Court they took the form of a challenge to the validity of certain provisions of the Proceeds of Crime Act 2002 (Cth). There were seven grounds on which that challenge was said to be based. The seventh was in the following terms:

[The statute] can have, in circumstances such as those of the Bank under the Restraining Order, as originally made or as amended, the operation of forfeiting the property of an innocent third party, such as the Bank, to the Commonwealth on the basis merely that a person, called an authorized officer, has a state of mind about whether such property is the proceeds of a foreign penal law.

I think the concluding phrase should have read “proceeds of a contravention of a foreign penal law”.

From the outset, the Director of Public Prosecutions made clear a problem about the ground of challenge expressed above.  Its reference to “circumstances such as those of the Bank” and “the property of an innocent third party” appeared to raise, in the light of the history of the matter, including the proceedings in the Federal Court, issues of fact which remain unresolved.  An attempt was made to overcome this difficulty by the parties formulating a special case for a consideration by the Full Court in a manner that eliminated any potential issues of fact.  In that special case two substantive questions were raised for the opinion of the Full Court.  They were as follows:

1.Is section 19 of the POCA invalid insofar as and to the extent that it permits or requires a restraining order to be made in respect of the proceeds of, or proceeds suspected to be the proceeds of, a foreign indictable offence?

2.Is section 49 of the POCA invalid insofar as and to the extent that it permits or requires a forfeiture order to be made in respect of the proceeds of, or proceeds suspected to be the proceeds of, a foreign indictable offence?

In the written submissions that have been filed on behalf of the plaintiff the proposed answers to those questions are as follows:

1.        Yes, insofar as it purports to apply to the property of persons not involved in the commission of the offence.

2.        Yes, insofar as it purports to apply to the property of persons not involved in the commission of the offence.

The reference to “the property of persons not involved in the commission of the offence” appears to give rise to the kinds of factual consideration that earlier caused difficulties in relation to the progress of this matter.  They involve considerations of some aspects of the detail of the relationship between the Bank and Mr Chia and the Bank and Aspinalls.  Furthermore, it appears that, depending upon the ultimate resolution of the facts, the constitutional question raised for consideration of the Full Court may not arise.

I have endeavoured to make it clear from the very beginning that I would not be willing to present for the consideration of the Full Court either a hypothetical constitutional question or a question which may be complicated by unresolved issues of fact.  No doubt what the Bank wants to test is the constitutional validity of the legislation in its application to the facts and circumstances of the present case or in its application to the Bank in the facts and circumstances of the present case.  It appears, however, that those facts and circumstances are not yet settled.  It has been submitted on behalf of the Director of Public Prosecutions that Westpac has reformulated its challenge to the legislation, that at least some of the relevant facts now relied upon, or possibly to be relied upon, by Westpac are in dispute and yet to be determined, and that Westpac now seeks answers to future questions which may never arise.  It has been suggested on the part of the Bank that it would take only a short further time for potential resolution of any outstanding factual questions. 

Having regard to the history of the matter, I am not persuaded that the matter can be put in order between now and 13 June for consideration by a Full Court.  Further, I am of the view that, in the light of the history of the matter, the Court has already devoted more than sufficient time to this matter in its present state. 

Accordingly, I think that the matter should be taken out of the list on 13 June – fortunately, there is another matter that can take its place – and that the proceedings should be removed to the Federal Court where, if the Federal Court thinks it appropriate, they can be dealt with along with the other matters that are pending in the Federal Court or, alternatively, they can take their turn in the list of the Federal Court.  It will be a matter for the judge of the Federal Court who is managing the litigation to make a decision about that.

I make orders in terms of paragraphs 1, 2, 3, 4 and 5 of the summons filed on 19 May 2006.  Additionally, I order that the proceedings be wholly removed to the Federal Court. 

MS GORDON:   I am sorry, your Honour, we also seek costs in relation to today’s application.

HIS HONOUR:   I have made that order, I think.  That is order 4, is it not?

MS GORDON:   I am sorry, your Honour.  I apologise, your Honour.

HIS HONOUR:   The matter will be removed from the list on 13 June 2006 and in its place will be listed the matter of Canute v Comcare.

AT 3.15 PM THE MATTER WAS CONCLUDED