Zheng & Anor v Commissioner of Australian Federal Police & Anor;Commissioner of Australian Federal Police v Zheng & Anor

[2019] SASCFC 157

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court)

ZHENG & ANOR v COMMISSIONER OF AUSTRALIAN FEDERAL POLICE & ANOR;COMMISSIONER OF AUSTRALIAN FEDERAL POLICE v ZHENG & ANOR

[2019] SASCFC 157

Judgment of The Full Court

(The Honourable Chief Justice Kourakis, The Honourable Justice Kelly and The Honourable Justice Parker)

19 December 2019

CRIMINAL LAW - PROCEDURE - CONFISCATION OF PROCEEDS OF CRIME AND RELATED MATTERS - RESTRAINING OR FREEZING ORDER

LIMITATION OF ACTIONS - EXTENSION OR POSTPONEMENT OF LIMITATION PERIODS

CONSTITUTIONAL LAW - OPERATION AND EFFECT OF THE COMMONWEALTH CONSTITUTION - EXTERNAL AFFAIRS (CONSTITUTION, S 51(XXIX)) - IMPLEMENTATION OF TREATIES AND CONVENTIONS - PARTICULAR CASES

CONSTITUTIONAL LAW - OPERATION AND EFFECT OF THE COMMONWEALTH CONSTITUTION - BANKING (CONSTITUTION, S 51(XIII))

On 3 March 2017, the Commissioner of the Australian Federal Police (the Commissioner) filed an application in the District Court pursuant to s 19 of the Proceeds of Crime Act 2002 (Cth) (the Proceeds Act) seeking a restraining order over certain property of Yunjung Zheng and Shengqi Zheng (the plaintiffs). That application was heard ex parte and without notice to the plaintiffs in accordance with ss 26(4) and 182 of the Proceeds Act. On the same date, a Judge of the District Court made the restraining orders sought by the Commissioner on the basis that there were reasonable grounds to suspect that the plaintiffs had committed an offence pursuant to s 400.9(1) of the Schedule to the Criminal Code Act 1995 (Cth) (Criminal Code).

On 8 November 2017, the plaintiffs filed an application in the District Court seeking a revocation of the restraining orders. That application was transferred to the Supreme Court.

On 27 March 2018, the plaintiffs filed an application in the Supreme Court seeking a declaration that s 400.9(1) of the Criminal Code is invalid in its entirety or, in the alternative, that s 400.9(1) is invalid in so far as it would apply to any money or property derived or realised from the commission of an offence against s 139 of the Criminal Law Consolidation Act 1935 (SA). The plaintiffs also seek an order for judicial review setting aside or quashing the restraining orders made by the District Court.

The transferred application for revocation and the application for a declaration and judicial review were referred to the Full Court. These reasons concern both of those proceedings.

The plaintiffs contend that:

1. Section 400.9(1) of the Criminal Code is invalid on the basis that it is not supported by any head of Commonwealth legislative power; and

2. Section 42(1A) of the Proceeds Act is constitutionally invalid, in whole or in part, because the absence of an effective provision enabling a person to apply for the setting aside of a restraining order requires a court to act in a manner that is incompatible with its nature as a court.

The Commissioner contends that:

1. Section 400.9 of the Criminal Code has been validly enacted pursuant to the power conferred on the Commonwealth Parliament by s 51(xxix) of the Constitution to make laws with respect to external affairs;

2. In the alternative, s 400.9 has been validity enacted pursuant to the power conferred on the Commonwealth Parliament by s 51(xiii) of the Constitution to make laws with respect to banking other than State banking; and

3. The Proceeds Act is not constitutionally invalid. The Act enables a person whose property has been restrained to avoid forfeiture of property that is not the proceeds of crime, even if revocation of the restraining cannot be sought, because of the operation of the time limits in s 42(1A).

The Attorney-General of South Australia intervened on the question of the validity of s 42(1A) of the Proceeds Act. The Attorney-General contends that:

1. The restrictive time limits contained in the Proceeds Act do not and cannot immunise a decision to issue a restraining order from judicial review; and

2.  Time limits are not a restriction to a sufficient degree to amount to repugnancy to the judicial process thereby resulting in constitutional validity.

Held, by Parker J (Kourakis CJ and Kelly J agreeing), dismissing the applications:

As to the validity of s 400.9(1) of the Criminal Code -

1. Section 400.9(1) of the Criminal Code is reasonably capable of being considered as appropriate and adapted to give effect to the obligations imposed on Australia by articles 6(1)(a) and 6(3) of the Convention on Laundering, Search, Seizure and Confiscation of Proceeds from Crime (Laundering Convention). Section 400.9(1) of the Criminal Code is supported by s 51 (xxix) of the Constitution and is not invalid.

2. To the extent that an impugned transaction is a banking transaction relating to money or other property it will be within the scope of the definition of “deals with money or other property” in s 400.2(d) of the Criminal Code. The definition expressly encompasses banking transactions. When read in conjunction with the associated definitional provisions, s 400.9(1) may apply to persons who engage in banking transactions involving money or property that may reasonably be suspected of being a proceed of crime. Section 400.9(1) is supported by s 51(xiii) of the Constitution and is not invalid.

3. Section 400.9(1) of the Criminal Code can be validly applied to the transactions engaged in by the plaintiffs in relation to the property subject of the application.

4.  Application dismissed.

As to the validity of s 42(1A) of the Proceeds Act -

5. The finding by the Full Court in Ruzehaji v Commissioner of Australian Federal Police (2015) 124 SASR 355 that the time limit in s 42(1A) could be extended under s 48 of the Limitation of Actions Act 1936 (SA) (the Limitation Act) was not correct. The time limit imposed by s 42(1A) of the Proceeds Act cannot be extended under s 48 of the Limitation Act.

6. Section 26(4) of the Proceeds Act does not compel the court to decide an application on an ex parte basis without notice. The court, rather than the executive retains the power to determine whether such an application is to be decided ex parte. In deciding whether to proceed ex parte, the court must act judicially.

7.  A restraining order is interlocutory.  It does not finally determine the rights of the parties in relation to property that is subject to the order.

8. There is nothing in the Proceeds Act to preclude an application for judicial review of a decision by the District Court to grant a restraining order.

9. The time limit imposed by s 42(1A) of the Proceeds Act does not severely truncate the right to seek review as to be incompatible with the judicial process.

10.  Application dismissed.

Acts Interpretation Act 1901 (Cth); Constitution 1901 (Cth); Criminal Assets Recovery Act 1990 (NSW); Criminal Code Act 1995 (Cth) ss 307.11, 400.1, 400.2, 400.9; Criminal Law Consolidation Act 1935 (SA) s 139; Judiciary Act 1903 (Cth); Limitation of Actions Act 1936 (SA); Proceeds of Crime Act 2002 (Cth) ss 19, 26, 42, 42(1A); Convention on Laundering, Search and Seizure and Confiscation of the Proceeds of Crime  [1997] ATS 21 ; United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances [1993] ATS 4; Vienna Convention on the Law of Treaties [1974] ATS 2, referred to.
International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319, distinguished.
Ruzehaji v Commissioner of Australian Federal Police (2015) 124 SASR 355, not followed.
Bodruddaza v Minister for Immigration and Multicultural Affairs (2007) 228 CLR 651; Director of Public Prosecutions (Cth) v Kamal (2011) 206 A Crim R 397; Strickland v Rocla Concrete Pipes Ltd (1971) 124 CLR 468; SZAJB v Minister for Immigration and Citizenship (2008) 168 FCR 410; Timeny v British Airways Plc (1991) 56 SASR 287; Victoria v Commonwealth (1996) 187 CLR 416, discussed.
AD v Commissioner of Australian Federal Police (2018) 97 NSWLR 588; Burton v Honan (1952) 86 CLR 169; Commonwealth v Tasmania (1983) 158 CLR 1; CSR Ltd v Eddy (2005) 226 CLR 1; David Grant & Co Pty Ltd v Westpac Banking Corp (1995) 184 CLR 265; George v Rockett (1990) 170 CLR 104; Grant Samuel Corporate Finance Pty Ltd v Fletcher (2015) 254 CLR 477; Kable v Director of Public Prosecutions (1996) 189 CLR 51; Knight v Victoria (2017) 91 ALJR 824; New South Wales v Commonwealth (Work Choices Case) (2006) 229 CLR 1; Nicholas v The Queen (1998) 193 CLR 173; Pidoto v Victoria (1943) 68 CLR 87; R v Burgess, Ex parte Henry (1936) 55 CLR 608; R v Hughes (2000) 202 CLR 535; Re Australian Education Union; Ex parte Victoria (1995) 184 CLR 188; Re F; Ex parte F (1986) 161 CLR 376; Richardson v Forestry Commission (1988) 164 CLR 261; Samson Maritime Pty Ltd v Aucote (2014) 229 FCR 125; Singh v The Queen (2016) 260 A Crim R 216; SZICV v Minister for Immigration and Citizenship (2007) 158 FCR 260; Tajjour v New South Wales (2014) 254 CLR 508 , considered.

ZHENG & ANOR v COMMISSIONER OF AUSTRALIAN FEDERAL POLICE & ANOR;COMMISSIONER OF AUSTRALIAN FEDERAL POLICE v ZHENG & ANOR
[2019] SASCFC 157

Full Court:      Kourakis CJ, Kelly & Parker JJ

1. KOURAKIS CJ:    I would dismiss the applications for the reasons given by Parker J.

2. I add the following brief observations on the challenge to the validity of s 400.9 of the Schedule to the Criminal Code Act 1995 (Cth). First, grammatically the words ‘such property’ in article 6(1)(c) of the Convention on Laundering, Search, Seizure and Confiscation of Proceeds from Crime[1] (the Convention) refer to the property first mentioned in that subparagraph, and not only to property which a person has dealt with for the purposes proscribed by subparagraphs (a) and (b). Secondly, the proscription of any dealing with the proceeds of crime is a proportionate ancillary measure, reasonably necessary to effectuate the purposes of the Convention. Thirdly, the application of s 400.9 to property reasonably suspected to be proceeds of crime is supported by article 6(2)(c) of the Convention and would, in any event, fall within the legislative judgment allowed by the external affairs power.[2] 

   [1]    [1997] ATS 21.

   [2]    Australian Constitution s 51(xxix).

3. Finally, I mention that no constitutional question as to the power of the Commonwealth to deny the States the rights of forfeiture long extracted from those who offend against their criminal laws arose on the appeal.

4. KELLY J:             I would dismiss the applications for the reasons given by both the Chief Justice and Parker J. 

5. PARKER J:          These reasons concern two separate proceedings. The first action is an application made by the plaintiffs to the District Court seeking the revocation of restraining orders made by that Court under the Proceeds of Crime Act 2002 (Cth) (the Proceeds Act).

6. In the second action, the plaintiffs have applied to this Court for a declaration that s 400.9(1) of the Schedule to the Criminal Code Act 1995 (Cth) (the Criminal Code) is invalid in its entirety. In the alternative, the plaintiffs contend that s 400.9(1) is invalid in so far as it would apply to any money or property derived or realised from the commission of an offence against s 139 of the Criminal Law Consolidation Act 1935 (SA) (the CLCA). The plaintiffs also seek an order for judicial review setting aside or quashing the restraining orders made by the District Court.

7. I made orders transferring the application for revocation to this Court from the District Court. I also ordered that both the transferred application for revocation and the application for a declaration and judicial review be heard and determined by the Full Court. 

8. The Attorney-General for South Australia intervened in the second action following the issue of a notice under s 78B of the Judiciary Act 1903 (Cth). The submissions on behalf of the Attorney‑General were confined to the validity of s 42(1A) of the Proceeds Act.

   The agreed facts

9. The parties have agreed the following facts for the purposes of these proceedings:

   1. On 3 March 2017, the Commissioner of the Australian Federal Police (Commissioner) made an application to the District Court of South Australia pursuant to s 19 of [the Proceeds Act] seeking restraining orders in respect of:

   1.1real property located at 2 Ash Grove Magill South Australia (Magill property) of which Yunjuan Zheng is the registered proprietor; and

   1.2funds standing to the credit an account with the National Australia Bank in the joint names of Yuajuan Zheng and Shengqi Zheng (the Zhengs) (NAB Bank Account).

   2. The Commissioner’s application was made without notice to the Zhengs. The District Court of South Australia (Judge Schammer) decided that it was appropriate to hear and determine the application without notice pursuant to s 26(4) and s 182 of the Proceeds Act.

   3. The Commissioner relied on an affidavit of Ms Mieke Whitford affirmed on 2 March 2017 (Whitford affidavit). Ms Whitford was the relevant authorised officer for the purpose of the s 19 application.

   4. In respect of the Magill property the Commissioner relied on the reasonable suspicion held by Ms Whitford that dealing with the Magill property was an offence against s 400.9(1) of the Schedule to the [Criminal Code], on the basis that it was reasonable to suspect that the Magill property was the proceeds of crime, and [its value was $100,000] or more.

   5. For the purposes of s 400.9(1)(b) of the Criminal Code, Ms Whitford reasonably suspected that the Magill property was the proceeds of crime on the basis that she reasonably suspected that:

   5.1the loans used to purchase, and later re-finance, that property were obtained as a result of false declarations made by the Zhengs to Westpac Bank and the National Australia Bank in circumstances that constituted offences under s 139 of [the Criminal Law Consolidation Act 1935]; and

   5.2the payments made in respect of the mortgage held over that property were greatly out of proportion to Yunjuan Zheng’s income and expenditure from the date of purchase.

   6. With respect to the NAB Bank account, Ms Whitford reasonably suspected that the funds in that account were proceeds of an offence under s 400.9(1), but that suspicion was based on certain high value transactions into and out of that account, rather than on suspected offences under s 139 of the CLCA.

   7. On 3 March 2017, the District Court of South Australia (Judge Schammer) made the restraining orders sought by the Commissioner under s 19 of the Proceeds Act (March 2017 Orders).

   8.   At the time the March 2017 Orders were made, the Zhengs were in China.

   9.   On 10 March 2017, the Commissioner served, by email to the last known email address of Yunjuan Zheng, a letter attaching a copy of the March 2017 Orders and the Whitford affidavit (10 March letter).

   10.   On or about 24 April 2017, a member of the AFP attended the Magill Property and attempted to hand deliver documents including the 10 March letter, but no-one was present at the address.

   11.   On 1 May 2017, the Zhengs returned to Australia.

   12.   By no later than 2 May 2017, the Zhengs became aware that the NAB Bank Account was frozen.

   13.   On 11 May 2017, the Zhengs met with a solicitor to seek advice about the March 2017 Orders.

   14.   By no later than 11 May 2017, the Zhengs were aware of the 10 March letter and had been notified of the March 2017 Orders.

   15.   On or about 12 May 2017, the Zhengs returned to China.

   16.   On 18 May 2017, a solicitor employed by the Australian Federal Police provided a number of documents to the Zhengs’ solicitor, including the 10 March letter.  He did so notwithstanding that, on 17 May 2017, the Zhengs’ solicitor had confirmed that his clients had received the 10 March letter.

   17.   On 8 November 2017, the Zhengs filed and served an Interlocutory Application in the District Court of South Australia seeking, inter alia, an order revoking the March 2017 Orders.

   The reasons of the District Court Judge

10. The information upon which the Judge relied when making the restraining orders was more detailed than that in the agreed facts.  The additional information was contained in the first affidavit of Ms Mieke Whitford.[3] The Judge noted that the Magill property had been purchased on 20 March 2009 for a sum of $703,000.  The purchase was in part funded by a loan from the Westpac Bank that was secured by mortgage.  Mr and Ms Zheng had completed a Westpac loan application on 3 November 2008. Ms Zheng declared in the application that her net monthly income was $18,412 This statement was supported by an undated letter from a Chinese company that declared she had been employed full-time from 1 October 2005 as its Finance and Marketing Director at a salary of $218,340 per annum. She also stated that she had $480,000 in accounts with other financial institutions and assets of $45,000. On that basis Westpac approved the loan application and soon after the sum of $548,340 was drawn down from the loan account and applied to the purchase of the Magill property.

    [3]    Ms Whitford deposed that she is an officer of the Australian Border Force who was seconded to work with the Australian Federal Police in the Criminal Assets Confiscation Taskforce.

11. Between 24 December 2012 and 23 June 2015 repayments were made to Westpac against the loan. According to Ms Whitford’s affidavit, the repayments were grossly disproportionate to the declared income and expenditure of Ms Zheng.

12. On 3 June 2015 Ms Zheng applied to the National Australia Bank (NAB) for a loan to refinance the Magill property. She provided a letter in support of that application which stated that she had been employed as the General Manager of a hotel in China and her net annual income was $114,497. The NAB approved the loan on 2 July 2015 which was then drawn down by $560,000.

13. In February 2013, the Australian Customs Service (as it was then known) intercepted numerous international mail consignments containing large quantities of pseudoephedrine and ephedrine.  That resulted in the arrest, prosecution and conviction of three Chinese nationals and one Australian citizen, Mr Jiancong Zhao.  There were messages on Mr Zhao’s mobile telephone that were associated with an Australian mobile phone number.

14. While the matter was before the Judge, an investigation was being conducted concerning 50 international mail consignments intercepted between January 2016 and January 2017. These consignments contained large quantities of ephedrine, methamphetamine and a substance described as MDPV.  The consignments were addressed to various residences in Sydney and had been tracked by numerous individuals.  Those persons are suspected of being part of a syndicate involved in the importation of border controlled precursors from China into Australia and related money laundering.  They are suspected to include Ms Longquin Chen, whose IP address was used to track 16 of the intercepted consignments, and her de facto partner Mr Yunhui Xue.  Ms Chen had contacted the mobile phone registered in the name of Xiaoyan Zheng on 23 occasions during 2016, while Ms Zheng’s mobile number had been used to contact the number registered to Ms Chen on 21 occasions during 2016.

15. Ms Chen’s mobile number had been used to contact a number registered to a Mr Baocheng twice in 2016.  Mr Baocheng is the husband of Ms Xiaoyan Zheng.

16. Mr Xue’s mobile phone number had been used to contact the same Australian number as that contacted by Mr Zhao, and they both contacted that number on the same day.

17. Xiaoyan Zheng is the daughter of Yunjuan Zheng.

18. Austrac records relating to Mr Xue show the transfer of large sums of cash from Australia to China during the period from 2013 to 2016.  Austrac records relating to Ms Chen show the transfer of $15,515 during the period from 2015 to 2016.  Bank statements held by Ms Chen show the transfer of large sums of money to a Ms Chen Wang.  It is alleged by Ms Whitford that these transfers are seemingly inconsistent with Ms Chen’s reported occupation as either unemployed or a housewife. 

1. Ms Whitford affirmed that she suspected that the value of the Magill property and the payments made by Ms Yunjuan Zheng in repayment of the bank loan were grossly disproportionate to her declared income and expenditure.  Ms Whitford based that suspicion on an analysis of declarations made by Ms Zheng to various authorities about her income and its source, and an analysis of similar documents relating to her husband, Shengqi Zheng, and documents relating to a company, Australia Yongli Trade Pty Ltd, of which Mr Zheng is a director.  Based on the apparently unexplained source of the deposits in the NAB account and the loan repayments, combined with the apparent connection between Yunjuan Zheng and persons in regular contact with Ms Chen and Mr Xue, caused her to suspect that these monies were the proceeds of an offence against s 307.11 of the Schedule to the Criminal Code.  That provision relates to the importation of border controlled precursors.

2. The Judge also noted that Ms Whitford had stated in her affidavit that she suspects that in various loan applications, including those relating to the Magill property, Yunjuan Zheng and Shengqi Zheng had made false declarations, with the result that funds made available through those loans are the proceeds of or an instrument of an offence contrary to s 400.1(1) of the Criminal Code, by virtue of the fact that the loan monies were obtained by deception contrary to s 139 of the CLCA.

3. Ms Whitford further attested that bank statements for the NAB account for the period from 2 June 2015 to 16 December 2016 showed that the credit balance of that account increased from $83,274.46 to $564,241.40.  This increase resulted from frequent and substantial deposits, which were seemingly inconsistent with the financial declarations made by Yunjuan and Shengqi Zheng. 

4. In view of the facts set out in the affidavit of Ms Whitford, the Judge was satisfied that the suspicion held by Ms Whitford, that the Magill property and the monies in the NAB account were the proceeds of an indictable offence and/or an instrument of a serious offence within the meaning of the Criminal Code, was held by her on reasonable grounds.

5. The Judge also stated that she was satisfied that the giving of notice to the Zhengs about the Commissioner’s application may have compromised the integrity of an ongoing investigation being conducted by the Criminal Assets Confiscation Taskforce to identify and remove profits derived from the alleged criminal activities of the syndicate. Her Honour also noted that time was of the essence to prevent the possible dissipation of the monies held in the NAB account. For these reasons, the Judge was satisfied that the circumstances of the case were such that it was appropriate to hear and determine the application without notice pursuant to s 26(4) and s 182 of the Proceeds Act. Her Honour noted that the orders were interlocutory and therefore may be set aside or revoked under s 42 of the Proceeds Act. In that context, her Honour referred to the decision of this Court in Ruzehaji v Commissioner of Australian Federal Police.[4]

   [4] (2015) 124 SASR 355 at [65] to [69] (Gray J, with Peek and Nicholson JJ agreeing).

6. The Judge also noted that the Commissioner had given an undertaking on behalf of the Commonwealth to abide any order that the Court may make as to the payment of damages with respect to the making and operation of the restraining orders.  Her Honour also made examination orders in the terms sought by the Commissioner.  It is unnecessary to refer to those orders as they are not the subject of the present proceedings.

   Relevant legislation

   The Proceeds of Crime Act 2002 (Cth)

7. The relevant provisions of the Proceeds Act are as follows:

   19  Restraining orders—property suspected of being proceeds of indictable offences etc.

   When a restraining order must be made

   (1)A court with proceeds jurisdiction must order that:

   (a)     property must not be disposed of or otherwise dealt with by any person; or

   (b)     property must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in the order;

   if:

   (c)     a proceeds of crime authority applies for the order; and

   (d)     there are reasonable grounds to suspect that the property is:

   (i)the proceeds of a terrorism offence or any other indictable offence, a foreign indictable offence or an indictable offence of Commonwealth concern (whether or not the identity of the person who committed the offence is known); or

   (ii)an instrument of a serious offence; and

   (e)     the application for the order is supported by an affidavit of an authorised officer stating that the authorised officer suspects that:

   (i)in any case—the property is proceeds of the offence; or

   (ii)if the offence to which the order relates is a serious offence—the property is an instrument of the offence;

   and including the grounds on which the authorised officer holds the suspicion; and

   (f)    the court is satisfied that the authorised officer who made the affidavit holds the suspicion stated in the affidavit on reasonable grounds.

   Property that a restraining order may cover

   (2)The order must specify, as property that must not be disposed of or otherwise dealt with, the property specified in the application for the order, to the extent that the court is satisfied that there are reasonable grounds to suspect that that property is:

   (a)     in any case— proceeds of the offence; or

   (b)     if the offence to which the order relates is a serious offence—an instrument of the offence.

   Refusal to make a restraining order

   (3)Despite subsection (1), the court may refuse to make a restraining order in relation to an indictable offence that is not a serious offence if the court is satisfied that it is not in the public interest to make the order.

   Note: A court can also refuse to make a restraining order if the Commonwealth refuses to give an undertaking: see section 21.

   Restraining order need not be based on commission of a particular offence

   (4)The reasonable grounds referred to in paragraph (1)(d) need not be based on a finding as to the commission of a particular offence.

   Risk of property being disposed of etc.

   (5)The court must make a restraining order even if there is no risk of the property being disposed of or otherwise dealt with.

   …

   26  Notice of application

   (1)Subject to subsection (4), the responsible authority must:

   (a)     give written notice of an application for a restraining order covering property to the owner of the property (if the owner is known); and

   (b)     include with the notice a copy of the application and any affidavit supporting the application.

   (2)Subject to subsection (4), the responsible authority must also:

   (a)     give written notice of an application for a restraining order covering property to any other person the authority reasonably believes may have an interest in the property; and

   (b)     include with the notice:

   (i)a copy of the application; and

   (ii)a further notice that the person may request that the authority give the person a copy of any affidavit supporting the application.

   The authority must comply with any such request as soon as practicable.

   (3)The court must not (unless subsection (4) applies) hear the application unless it is satisfied that the owner of the property to which the application relates has received reasonable notice of the application.

   (4)The court must consider the application without notice having been given if the responsible authority requests the court to do so.

   (5)The court may, at any time before finally determining the application, direct the responsible authority to give or publish notice of the application to a specified person or class of persons.  The court may also 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.

8. A person whose property is subject to a restraining order made ex parte may apply to the Court under s 42 for revocation of the order. The making of such an application is subject to time limits. The terms of s 42 are:

   42  Application to revoke a restraining order

   (1)A person who was not notified of the application for a restraining order may apply to the court to revoke the order.

   (1A)The application must be made:

   (a)     within 28 days after the person is notified of the order; or

   (b)     if the person applies to the court, within that period of 28 days, for an extension of the time for applying for revocation—within such longer period, not exceeding 3 months, as the court allows.

   (2)The applicant must give written notice to the responsible authority and the Official Trustee of both the application and the grounds on which the revocation is sought.

   (3)However, the restraining order remains in force until the court revokes the order.

   (4)The responsible authority may adduce additional material to the courtrelating to the application to revoke the restraining order.

   (5)The court may revoke the restraining order if satisfied that:

   (a)     there are no grounds on which to make the order at the time of considering the application to revoke the order; or

   (b)     it is otherwise in the interests of justice to do so.

9. The effect of the definitions of “proceeds of crime authority” and “responsible authority” in s 338 of the Proceeds Act is that the Commissioner is the responsible authority within the meaning of s 26(4). Section 335 of the Proceeds Act operates so that the District Court is a “court with proceeds jurisdiction” for the purposes of s 19.

10. I refer at paragraphs [191] to [199] below to various procedural safeguards that appear in the Proceeds Act.

    The Criminal Code

11. Section 307.11 of the Schedule to the Criminal Code provides that it is an offence to import a commercial quantity of a border controlled precursor. That offence is punishable by imprisonment for 25 years or 5,000 penalty units or both. It has not been disputed that at least some of the substances referred to in the affidavit of Ms Whitford are border controlled precursors.

12. The term “proceeds of crime” is defined in s 400.1 of the Criminal Code, thus:

    proceeds of crime means any money or other property that is wholly or partly derived or realised, directly or indirectly, by any person from the commission of an offence against a law of the Commonwealth, a State, a Territory or a foreign country that may be dealt with as an indictable offence (even if it may, in some circumstances, be dealt with as a summary offence).

13. The phrase “deals with money or other property” is defined in s 400.2 in the following terms:

    A person deals with money or other property if the person does any of the following:

    (a)     receives, possesses, conceals or disposes of money or other property;

    (b)     imports money or other property into Australia;

    (c)     exports money or other property from Australia;

    (d)     engages in a banking transaction relating to money or other property.

14. In turn, the expression “banking transaction” is also defined in s 400.1 as follows:

    banking transaction includes:

    (a)     any transaction made at an ADI; and

    (b)     any transaction involving a money order.

15. The acronym “ADI” is defined by s 400.1 in the following terms:

    ADI (authorised deposit-taking institution) means:

    (a)a body corporate that is an ADI for the purposes of the Banking Act 1959; or

    (b) the Reserve Bank of Australia; or

    (c)a person who carries on State banking within the meaning of paragraph 51(xiii) of the Constitution.

16. Section 400.9 of the Criminal Code creates offences in relation to dealing with proceeds of crime as follows:

    400.9  Dealing with property reasonably suspected of being proceeds of crime etc.

    (1)     A person commits an offence if:

    (a)     the person deals with money or other property; and

    (b)     it is reasonable to suspect that the money or property is proceeds of crime; and

    (c)     at the time of the dealing, the value of the money and other property is $100,000 or more.

    Penalty:  Imprisonment for 3 years, or 180 penalty units, or both.

    (1A)   A person commits an offence if:

    (a)     the person deals with money or other property; and

    (b)     it is reasonable to suspect that the money or property is proceeds of crime; and

    (c)     at the time of the dealing, the value of the money and other property is less than $100,000.

    Penalty:  Imprisonment for 2 years, or 120 penalty units, or both.

    (2)Without limiting paragraph (1)(b) or (1A)(b), that paragraph is taken to be satisfied if:

    (a)     the conduct referred to in paragraph (1)(a) involves a number of transactions that are structured or arranged to avoid the reporting requirements of the Financial Transaction Reports Act 1988 that would otherwise apply to the transactions; or

    (aa)   the conduct involves a number of transactions that are structured or arranged to avoid the reporting requirements of the Anti‑Money Laundering and Counter‑Terrorism Financing Act 2006 that would otherwise apply to the transactions; or

    (b)     the conduct involves using one or more accounts held with ADIs in false names; or

    (ba) the conduct amounts to an offence against section 139, 140 or 141 of the Anti‑Money Laundering and Counter‑Terrorism Financing Act 2006; or

    (c)     the value of the money and property involved in the conduct is, in the opinion of the trier of fact, grossly out of proportion to the defendant’s income and expenditure over a reasonable period within which the conduct occurs; or

    (d)     the conduct involves a significant cash transaction within the meaning of the Financial Transaction Reports Act 1988, and the defendant:

    (i)has contravened his or her obligations under that Act relating to reporting the transaction; or

    (ii)has given false or misleading information in purported compliance with those obligations; or

    (da)   the conduct involves a threshold transaction (within the meaning of the Anti‑Money Laundering and Counter‑Terrorism Financing Act 2006) and the defendant:

    (i)has contravened the defendant’s obligations under that Act relating to reporting the transaction; or

    (ii)has given false or misleading information in purported compliance with those obligations; or

    (e)     the defendant:

    (i)has stated that the conduct was engaged in on behalf of or at the request of another person; and

    (ii)has not provided information enabling the other person to be identified and located.

    (4)Absolute liability applies to paragraphs (1)(b) and (c) and (1A)(b) and (c).

    (5)This section does not apply if the defendant proves that he or she had no reasonable grounds for suspecting that the money or property was derived or realised, directly or indirectly, from some form of unlawful activity.

    Note:  A defendant bears a legal burden in relation to the matter in subsection (5) (see section 13.4).

17. Section 139 of the CLCA is as follows:

    139 – Deception

    A person who deceives another and, by doing so—

    (a) dishonestly benefits him/herself or a third person; or

    (b) dishonestly causes a detriment to the person subjected to the deception or a third person,

    is guilty of an offence.

    Maximum penalty:

    (a) for a basic offence—imprisonment for 10 years;

    (b) for an aggravated offence—imprisonment for 15 years.

    International obligations

18. Prior to the hearing of these matters the Commissioner identified the following treaties as relevant to the scope of Commonwealth legislative power under s 51(xxix) of the Constitution:

    ·United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances [1993] ATS 4, Arts 3(1) and 3(3);

    ·Convention on Laundering, Search and Seizure and Confiscation of Proceeds from Crime [1997] ATS 21 (Laundering Convention), Art 6;

    ·United Nations Convention Against Corruption [2006] ATS 2, Art 23; and

    ·United Nations Convention Against Transnational Organised Crime [2004] ATS 12, Art 6.

19. Subsequently, the Commisisoner only relied upon the Laundering Convention as providing the constitutional foundation for the enactment of s 400.9(1).

    The Laundering Convention

20. The Preamble to the Laundering Convention is in the following terms:

    The member States of the Council of Europe and the other States signatory hereto,

    Considering that the aim of the Council of Europe is to achieve a greater unity between its members;

    Convinced of the need to pursue a common criminal policy aimed at the protection of society;

    Considering that the fight against serious crime, which has become an increasingly international problem, calls for the use of modern and effective methods on an international scale;

    Considering that for the attainment of the same a well-functioning system of international cooperation also must be established,

    Have agreed as follows;

21. Article 1 of the Laundering Convention defines certain relevant terms used in the Convention as follows:

    For the purposes of this Convention:

    a.     “proceeds” means any economic advantage from criminal offences.  It may consist of any property as defined in sub-paragraph b of this article;

    b.     “property” includes property of any description, whether corporeal or incorporeal, movable or immovable, and legal documents or instruments evidencing title to, or interest in such property;

    c.     “instrumentalities” means any property used or intended to be used in any matter, wholly or in part, to commit a criminal offence or criminal offences;

    d.     “confiscation” means a penalty or a measure, ordered by a court following proceedings in relation to a criminal offence or criminal offences resulting in the final deprivation of property;

    e.     “predicate offence” means any criminal offence as a result of which proceeds were generated that may become the subject of an offence as defined by Article 6 of this Convention.

22. Article 6 of the Laundering Convention is entitled “Laundering Offences” and relevantly provides as follows:

    1. Each Party shall adopt such legislative and other measures as may be necessary to establish as offences under its domestic law, when committed intentionally:

    a. the conversion or transfer of property, knowing that such property is proceeds, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of the predicate offence to evade the legal consequences of his actions;

    b. the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of, property, knowing that such property is proceeds;

    and, subject to its constitutional principles and the basic concepts of its legal system:

    c. the acquisition, possession or use of property, knowing, at the time of receipt, that such property was proceeds;

    d. participation in, association or conspiracy to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of any of the offences established in accordance with this Article.

    2. For the purposes of implementing or applying paragraph 1 of this Article:

    a. it shall not matter whether the predicate offence was subject to the criminal jurisdiction of the Party;

    b. it may be provided that the offences set forth in that paragraph do not apply to the persons who committed the predicate offence;

    c. knowledge, intent or purpose required as an element of an offence set forth in that paragraph may be inferred from objective, factual circumstances.

    3. Each Party may adopt such measures as it considers necessary to establish also as offences under its domestic law all or some of the acts referred to in paragraph 1 of this Article, in any or all of the following cases where the offender:

    a. ought to have assumed that the property was proceeds;

    b. acted for the purpose of making profit;

    c. acted for the purpose of promoting the carrying on of further criminal activity.

    4.     …

    The plaintiffs’ contentions

1. The plaintiffs contend that s 400.9(1) of the Criminal Code in invalid in its application to the plaintiffs on the basis that it is not supported by any head of Commonwealth legislative power. They also contend that s 42(1A) of the Proceeds Act is constitutionally invalid, in whole or in part, because its effect is to so significantly curtail or limit the right or ability of the plaintiffs to seek relief that it engages the District Court in an activity that is repugnant to a fundamental degree to the judicial process as understood and conducted throughout Australia. In other words, the plaintiffs submit that s 42(1A) is invalid on the grounds identified by the High Court in Kable v Director of Public Prosecutions (NSW)[5] as applied in International Finance Trust Co Ltd v New South Wales Crime Commission (IFTC).[6]

   [5] (1996) 189 CLR 51.

   [6] (2009) 240 CLR 319.

   Section 400.9(1) not supported by s 51(xxix) of the Constitution

2. The plaintiffs contend that s 400.9(1) is not supported by the power to make laws with respect to external affairs conferred upon the Commonwealth Parliament by s 51(xxix) of the Constitution. The plaintiffs submit that the decision of the High Court in Victoria v Commonwealth (the Industrial Relations Act Case) establishes that for a law to be supported by the external affairs power, the law must prescribe a regime that the treaty has defined with a sufficient degree of specificity so as to direct the general course to be taken by the signatory States.[7] Furthermore, the law must validly implement the terms of the treaty at least to a substantial degree so as not to be substantially inconsistent with the treaty.

   [7] (1996) 187 CLR 416 at 488.

3. Thus, the plaintiffs submit that for a law to be supported by s 51(xxix) it must be “reasonably capable of being considered appropriate and adapted to implementing [a] treaty”.[8]  Although it is not necessary that a law comply with or implement all of the obligations under a particular treaty for it to be valid under the external affairs power, a law cannot be considered as appropriate and adapted to the implementation of a treaty if it does not correspond to the obligations imposed by the treaty.

   [8] Ibid.

4. The plaintiffs further submit that where Commonwealth legislation seeks to deal with conduct of a particular description that is also the subject of a treaty, it is necessary to consider the definition of that conduct as it is used in the treaty, and also the definition of the conduct as dealt with by the legislation.  If the legislation adopts a narrower definition, it may be that it has partially implemented the treaty, provided that the legislation is not inconsistent with the purpose of the treaty.  However, if the legislation has adopted a broader definition, it cannot be characterised as an implementation of the treaty.  The plaintiffs also observe that the existence of a treaty on a particular subject matter does not convert that subject matter into a general subject matter of Commonwealth legislative power.[9]

   [9]    R v Burgess, Ex parte Henry (1936) 55 CLR 608 at 674-675.

5. The plaintiffs accept that the Conventions relied upon by the Commissioner create an international obligation. Thus, the Conventions are, in principle, capable of supporting Commonwealth legislation under the external affairs power. However, the plaintiffs submit that s 400.9(1), in various ways, extends substantially beyond implementation of any of the obligations imposed by the relevant Conventions.

6. The plaintiffs seek to support their contentions concerning the breadth of s 400.9(1) by noting the following matters:

   ·An offence against s 400.9(1) may be committed regardless of whether the money or other property is actually “proceeds of crime”. The offence applies where the money or property is “reasonably suspected” to be a proceed of crime.

   ·The breadth of the definition of “proceeds of crime” in s 400.1 is such that it extends well beyond what would ordinarily be regarded as a “proceed” of crime. The definition extends to all property “wholly or partly derived or realised, directly or indirectly, by any person from the commission of an offence … that may be dealt with as an indictable offence”. Thus, in the present case it is alleged that s 400.9(1) applies to property purchased with monies advanced by way of a loan granted in reliance upon allegedly false statements. Such property cannot be said to be “proceeds” in the ordinary sense of profits derived from the commission of an offence. The loan is repayable in accordance with its terms and the advance of money to the plaintiffs has been offset by the creation of a liability to repay that money with interest.

   ·Although s 400.9 appears in Division 400 of the Criminal Code, which is entitled “money laundering”, its operation is not limited in any way to transactions that could be regarded as “money laundering” in any normal meaning of that term, that being a transaction done for the purpose of concealing the origins of illegally obtained money. The effect of the way in which the offence created by s 400.9 has been defined is that if a person commits any indictable offence from which they obtain a financial or proprietary benefit, they automatically commit an offence under s 400.9 simply by “dealing” with that money or property in any way whatsoever. Thus, in the present case the plaintiffs are said to have dealt with “the proceeds” of the alleged offence against s 139 of the CLCA merely by applying the loan funds to purchase the Magill property for which those monies were lent.

7. Against that background the plaintiffs submit that the lack of certainty in article 6(3) of the Laundering Convention does not make it clear what should be the terms of the law enacted to give effect to this element of the Convention. Furthermore, due to the lack of precision in article 6(3), it is difficult to see how a particular obligation imposed by domestic law may be reasonably capable of being regarded as appropriate and adapted to the implementation of that article.

8. According to the plaintiffs’ submission, article 6(3) requires that any law based on that provision must relate to property that is actually the proceeds of crime although that fact may not be known by the offender. However, the plaintiffs submit that s 400.9 substantially deviates from the Laundering Convention in that criminalises conduct in circumstances where property is only reasonably suspected of being proceeds of crime. There is a distinction between reasonable grounds for suspecting and reasonable grounds for believing.[10] a person may hold a suspicion that is based on matters which may not give rise to an objective state of belief. The plaintiffs also observe that in Singh v The Queen the Victorian Court of Appeal held that there is no temporal requirement in relation to the reasonable suspicion, i.e. it may be based upon matters that occurred after the dealing.[11]  

   [10]   George v Rockett (1990) 170 CLR 104.

   [11] (2016) 260 A Crim R 216 at [54] (Ashley, Kyrou and Ferguson JJA).

9. For these reasons, the plaintiffs submit that s 400.9(1) does not faithfully implement any of the international obligations relied upon by the Commissioner. They submit that it prohibits and penalises conduct extending substantially beyond any of the relevant international obligations. The plaintiffs also submit that the alleged overreach of s 400.9 is not explicable by reference to the suggested purpose of simultaneous implementation of multiple international obligations. Section 400.9(1) has not been tailored to implement a combination of obligations. It simply prohibits and penalises conduct that is not required to be prohibited and penalised by any of the Conventions relied upon by the Commissioner. Furthermore, s 400.9(1) is not appropriate and adapted to the purpose of implementing any or all of the Conventions. For these reasons, the plaintiffs submit that s 400.9(1) is not a law with respect to external affairs.

   Section 400.9(1) not supported by s 51(xiii) of the Constitution

10. The plaintiffs submit, contrary to the position of the Commissioner, that s 400.9(1) is not supported by the banking power in s 51(xiii) of the Constitution. The plaintiffs stress that the relevant question is not whether the facts of the present case have a sufficient connection with “banking”, but rather whether s 400.9(1) is capable of being characterised as a law with respect to banking, other than State banking.

11. The validity of s 400.9(1) cannot be determined by reference to the fact that the victims of the alleged deception happen to have been banks, or that the alleged deceptions happen to have occurred in the course of banking. For these reasons, the plaintiffs submit that on its face s 400.9 is not a law with respect to banking.

12. The plaintiffs note that s 400.9(1) purports to apply in relation to all proceeds of any offence against a law of the Commonwealth, a State, a Territory or a foreign country that is capable of being dealt with as an indictable offence. That is the position regardless of whether the law creating the relevant offence has any connection with the subject matter of banking other than State banking. Section 400.9(1) also purports to apply irrespective of whether the particular offence, from which the proceeds are said to have been derived, has any connection with banking other than State banking, and also regardless of whether the dealing with the proceeds of the offence has any connection with banking other than State banking. For these reasons, the plaintiffs submit there is nothing in the terms of s 400.9(1) that confines its practical or legal operation in any way by reference to the subject matter of banking.

13. The plaintiffs also submit that s 400.9(1) cannot be read down pursuant to s 15A of the Acts Interpretation Act 1901 (Cth) (the Interpretation Act) so that it only operates in circumstances where it has a sufficient connection with banking other than State banking. That is because of the language used in s 400. Section 400.1 defines a banking transaction to include any transaction made at an authorised deposit taking institution (ADI) or involving a money order. An ADI is defined in s 400.1 to include a person carrying on State banking within the meaning of s 51(xiii) of the Constitution.

14. The plaintiffs advance several grounds in support of their contention that it is not possible to read down or sever s 400.9(1) so that it only operates where it has a sufficient connection with banking other than State banking. The plaintiffs submit that there is nothing in the terms of the provision to suggest that it contemplates any particular operation by reference to the subject matter of banking. It is also not possible to read down a general provision of this type so that it has a series of disconnected, distributive operations with respect to various heads of Commonwealth power. Furthermore, the plaintiffs submit that it is not s 400.9(1) that needs to be read down, but rather the definition of “proceeds of crime”. The difficulty with reading down this definition is that it expressly extends to “any money or other property that is wholly or partly derived or realised, directly or indirectly, by any person from the commission of an offence against a law of the Commonwealth, a State, a Territory or a foreign country that may be dealt with as an indictable offence”. Any reading down must necessarily contradict that express statement of parliamentary intention as to the intended scope of s 400.9.

15. The plaintiffs also submit that because the substantive content of what amounts to “proceeds of crime” is found in the terms of the relevant Commonwealth, State, Territory or foreign laws, any alternative approach to reading down must necessarily involve a reading down or severance within the terms of those laws. Thus, rather than s 400.9(1) itself being read down, it would be necessary to read down the terms of countless different laws that are encapsulated by the definition of “proceeds of crime”. According to the plaintiffs’ submission, that is an impossible task.

16. In addition to those matters, the plaintiffs also submit that the offence under s 139 of the CLCA that is relied upon in the present matter, is not itself a law with respect to banking other than State banking.  They contend that a law of the Commonwealth enacted in the same terms as s 139 could not be supported by the banking power. 

17. The plaintiffs contend that the result of the approach advocated by the Commonwealth is to invite the court to engage in the legislative function of construing the Act so as to save its validity in respect of the transactions at issue in this case. This would require that paragraphs (a), (b) and (c) be read out of the definition of “deals with money or other property” in s 400.1. Such legislative re-drafting would be contrary to the principles expressed by Latham CJ in Pidoto v Victoria and also contrary to the legislative intention.[12]

    [12] (1943) 68 CLR 87 at 108-110. See also Re F; Ex parte F (1986) 161 CLR 376 at 385 (Gibbs CJ) and Industrial Relations Act Case (1996) 187 CLR 416 at 502-503 (Brennan CJ, Toohey, Gaudron, McHugh, and Gummow JJ).

18. The plaintiffs also submit that the reliance that the Commissioner has placed upon R v Hughes is misplaced.[13]  That decision simply involved a reading down of very general words conferring power on a Commonwealth officer and did not purport to overrule or contradict the principle stated by Gibbs CJ in Pidoto and applied by the majority of the High Court in Strickland v Rocla Concrete Pipes Ltd.[14]

    [13] (2002) 202 CLR 535.

    [14] (1971) 124 CLR 468

19. The plaintiffs also submit that it cannot be established from the terms of the Criminal Code what particular kind of connection with banking the Commonwealth Parliament would have adopted, had it sought to enact a version of s 400.9(1) that was supported by the banking power.[15] Thus, such a hypothetical law might have sought to prohibit dealing with the proceeds of crime through the use of the banking system, or it might have sought to prohibit dealing with the proceeds of crime where the crime itself involved the banking system in a particular way.

    [15] The plaintiffs observe that, as originally enacted, s 400.9(3) required that the offending conduct had occurred either in the course of, or for the purposes of, importation into or exportation of goods from Australia, or by means of communication using a postal, telegraphic or telephonic service within the meaning of s 51(xx) of the Constitution or in the course of banking (other than State banking that did not extend beyond the limits of the State concerned). That provision was repealed in 2010 by the Crimes Legislation Amendment (Serious Organised Crime) Act (No. 2) 2010 (Cth).

    The validity of s 42(1A) of the Proceeds of Crime Act 2002

20. The plaintiffs submit that the question of incompatibility or repugnancy with Chapter III of the Constitution arises in two ways. Firstly, a State court exercising proceeds jurisdiction forms part of the integrated judicial system of Australia. Thus, in accordance with the principle identified by the High Court in Kable, a State court cannot have conferred upon it a function that is incompatible with the essential character of a court or the nature of judicial power as recognised under Chapter III of the Constitution. Secondly, because the conferral of jurisdiction under the Proceeds Act is a conferral of authority to exercise the judicial power of the Commonwealth, this power may only be exercised “in accordance with the judicial process”.[16] 

    [16]   Nicholas v The Queen (1998) 193 CLR 173 at [70], [73] (Gaudron J).

21. Section 19(1) of the Proceeds Act requires a court with proceeds jurisdiction to make restraining orders over property where a proceeds of crime authority applies for such an order, there are reasonable grounds to suspect that the relevant property is the proceeds of an indictable offence, and the application is supported by an affidavit. Section 19(3) only authorises the court to refuse to make a restraining order if it is satisfied that it is not in the public interest to make the order.

22. Section 26 requires that the proceeds of crime authority must give notice of the application to the owner and other persons who may have an interest in the property that is the subject of the application. However, the notice requirement is modified by s 26(4), which imposes a duty on the court to consider a restraining order without notice to the owner and interested parties if the responsible authority so requests. Accordingly, the plaintiffs submit that whether or not the owner or other interested persons are given notice and are able to appear at the hearing is within the control of the Executive government, i.e. the proceeds of crime authority.

23. Section 42 of the Proceeds Act entitles a person who is not notified of the application for a restraining order to apply to the court for a revocation of the order. However, s 42(1A) provides that the application for revocation must be made within 28 days after the person is notified of the order or, if the person applies within 28 days for an extension of time, the application may be made within such longer period as the court allows provided that it does not exceed three months.

24. The plaintiffs contend that the decision of the High Court in IFTC supports their submission that s 42(1A) of the Proceeds Act is invalid. I will consider that authority at a later point. For the present, it is sufficient to note that the plaintiffs submit that the reasoning in IFTC demonstrates that, in the absence of an effective provision enabling a person to apply for the setting aside of a restraining order, it must be concluded that s 26(4) of the Proceeds Act requires a court to act in a manner that is incompatible with its nature as a court.

25. The central element of the plaintiffs’ contention as to the invalidity of s 42(1A) is not that orders may be made ex parte at the request of the executive but rather the constraints that the provision places upon the exercise of the right to respond to an order that has been made ex parte.

26. The plaintiffs acknowledge that s 42 of the Proceeds Act provides a mechanism under which an affected person may apply for the setting aside of an order that has been made ex parte. However, the plaintiffs observe that the right to apply under s 42 for the setting aside of an order is subject to a strict time limitation. Section 42(1A) provides that time cannot be extended unless the person applies, within 28 days of the date upon which they were notified of the order, for either an order setting aside the ex parte order or for an extension of time up to three months within which such an application may be made.  Thus, even if an extension of time is sought, an absolute time limitation of 28 days plus three months is always applicable.  There is no apparent reason why the opportunity to apply for revocation of an order is so limited.  The result is that an applicant who misses the 28-day deadline has no further prospect of having the restraining order set aside, regardless of the merits of their application or whether the grounds for allowing an extension of time are compelling.  The inevitable consequence of this scheme is the creation of injustice in individual cases.

27. The plaintiffs refer to Bodruddaza v Minister for Immigration and Multicultural Affairs in support of their contentions concerning the invalidity of s 42(1A).[17] The legislation considered by the High Court in that case permitted a person to seek judicial review, including proceedings in which mandamus or prohibition was sought against officers of the Commonwealth, up to 35 days from the date of actual notification of the impugned decision. That time limit could be extended up to a maximum of 84 days. The plaintiffs submit the constitutional entrenchment of the particular remedies by s 75(v) of the Constitution played a significant role in the High Court concluding that the time limit was unconstitutional.

    [17] (2007) 228 CLR 651.

1. Although acknowledging that the constitutional entrenchment of judicial review under s 75(v) of the Constitution is not directly applicable in the present case, they contend that the essential character of a court and the exercise of the judicial power of the Commonwealth require that a person affected by an ex parte order must be able to apply to have the order set aside where the interests of justice so require. The plaintiffs submit that s 42(1A) of the Proceeds Act, like the provision of the Migration Act 1958 (Cth) held invalid in Bodruddaza, does not allow for the range of vitiating circumstances that may affect an ex parte order, or the range or circumstances which may entitle a person to have a restraining order set aside. 

2. The plaintiffs refer to circumstances that would ordinarily entitle a person to have an order set aside, such as a failure of the applicant to disclose relevant information unfavourable to the Commissioner, which may only become known to the person affected after the 28-day time limit has expired. Alternatively, or additionally, the application may be made one day out of time due to an error of the applicant’s legal representative.  A further example referred to by the plaintiffs is the fact that relevant information known to the proceeds of crime authority may not have been disclosed to the court at the time of the ex parte application, but that fact may not become known to a person affected by the order until after the 28 days has expired. 

3. The plaintiffs also submit, by way of further example, that although the Court is required by s 42(5) of the Proceeds Act to revoke a restraining order on application if “there are no grounds on which to make the order at the time of considering the application to revoke the order”, it is possible that an affected person may not become aware until after the expiration of the 28-day time limit of facts that conclusively demonstrate that the property is not the proceeds of crime.

4. The plaintiffs submit that the combined operation of the very short time limit of 28 days, together with the requirement that any application for an extension of time must be made within that period, and the prohibition on the court extending time beyond 84 days, in circumstances where an application may be made ex parte has the effect that s 42(1A) of the Proceeds Act is invalid as a whole for the reasons found by the High Court in IFTC. Alternatively, they submit that so much of s 42(1A)(b) as restricts the ability of a court to consider an application for an extension of time outside the 28 day period, or to extend the time beyond the three month period, is invalid.

   The Commissioner’s submissions

5. The Commissioner’s primary position is that s 400.9 of the Criminal Code has been validly enacted in its entirety pursuant to the power conferred on the Commonwealth Parliament by s 51(xxix) to make laws with respect to external affairs. The contention that s 400.9 validly operates in the present circumstances pursuant to the banking power is an alternative submission.

   Section 51(xxix) of the Constitution – the external affairs power

6. Although the Commissioner had earlier indicated that he relied upon several international conventions to support the enactment of s 400.9, he now relies solely upon the Laundering Convention. The Commissioner also submits that it is apparent from the Explanatory Memorandum that the Parliament relied upon the Laundering Convention as the source of its power to enact s 400.9.

7. The Commissioner notes that the plaintiffs have retreated from the position advanced in their written submissions that the treaty implementation aspect of the external affairs power is confined to laws that enact international obligations. In any event, the Commissioner submits that the High Court has rejected that interpretation on several occasions.  That submission was supported by reference to the High Court decisions in Victoria v Commonwealth (the Industrial Relations Act Case)[18] and in Richardson v Forestry Commission.[19]It is clear from the Industrial Relations Act Case that the power to legislate is not confined to the implementation of treaty obligations but extends to the carrying out of recommendations and implementing draft treaties.

   [18] (1996) 187 CLR 416 at 483, 487, 490, 509.

   [19] (1988) 164 CLR 261 at 288-289, 242.

8. The Commissioner also submits that, although the plaintiffs have acknowledged that the test for determining whether a law is supported by the external affairs power is whether it is “reasonably capable of being considered appropriate and adapted to implementing [a] treaty”, the plaintiffs have failed to recognise that the test was formulated in this way to allow room for legislative judgment in the implementation of a treaty.[20] In order to fall outside that test the departure from the terms of the treaty must be so substantial as to deny the law the character of a measure implementing the treaty. The Solicitor-General, as counsel for the Commissioner, acknowledged in the course of oral submissions that it was necessary that a treaty must be expressed in terms that enabled any obligation or recommendation to be identified so that it could be determined whether a law could be considered appropriate and adapted to implementation of that treaty.

   [20] Ibid at 296, 303-304, 311-312, 343; Industrial Relations Case at 487, 522-524.

9. The Commissioner also submits that s 400.9 of the Criminal Code is reasonably capable of being considered appropriate and adapted to implementing article 6(3) of the Laundering Convention. Article 6(3)(a), when read in conjunction with article 6(1), provides that a State may create an offence involving the intentional “acquisition, possession or use of property” including where the offender ought to have assumed at the time of receipt that the property was proceeds of crime. 

10. The Commissioner submits that s 400.9(1) creates just such an offence. In that respect, the Commissioner notes that the definition of “deals with money or other property” provided in s 400.2 is in similar terms to article 6(1)(a) of the Laundering Convention. Pursuant to s 5.6(1) of the Criminal Code the fault element for “deal[ing] with money or other property” is intention. Each of the phrases “ought to have assumed” found in article 6(3)(a) and “reasonable to suspect” as used in s 400.9(1)(b) require an objective evaluation of whether information was available to a person that should have caused them to be aware that property might be proceeds of crime even if they were not aware of that fact.[21]

    [21]   George v Rockett (1990) 170 CLR 104 at 116.

    Interpretation of treaties

11. The Commissioner submits that international law generally requires that international treaties between States are to be interpreted in accordance with the Vienna Convention on the Law of Treaties[22] (VCLT). Moreover, the provisions of the VCLT dealing with treaty interpretation have been accepted by Australian courts as codifying customary international law, and therefore apply even when the VCLT does not have direct application.

    [22]   [1974] ATS 2.

12. The Commissioner draws attention to the fact that article 31(1) of the VCLT requires a “holistic approach” to interpretation of a treaty.  This requires that although primacy is given to the text, it is also necessary to consider the context, object and purpose of a treaty in order to ascertain its true meaning.  Article 32 of the VCLT authorises recourse to supplementary means of interpretation.  The supplementary means include the preparatory work of a treaty.  Article 32 expressly provides that supplementary means of interpretation may be applied in order to confirm the meaning resulting from the application of article 31, and also to determine the meaning when the interpretation reached in accordance with article 31 results in an ambiguous or obscure meaning, or a result which is manifestly absurd or unreasonable. 

13. The Commissioner submits that the effect of articles 31 and 32 of the VCLT is to provide for an approach to the interpretation of treaties that broadly resembles the modern approach to statutory interpretation.  Thus, it is necessary to consider the text, when read in light of its context and purpose, and it is permissible to have regard to extrinsic material where the meaning is ambiguous or obscure or where the ordinary principles of interpretation result in manifest absurdity or unreasonableness.

14. The application of articles 31 and 32 of the VCLT to the term “property” in article 6(1)(c) of the Laundering Convention may lead to the adoption of the broad meaning provided by the definition in article 1(b).  There is nothing in the text or the context of article 6(1)(c), or in the object or purpose of the Laundering Convention generally, that supports the reference to “property” to being restricted to “post­‑laundered property”.  The title of the convention, and also its preamble, indicate that in addition to money laundering the Convention is also concerned with the seizure and confiscation of the proceeds of crime.  The term “proceeds” is defined to mean “any economic advantage from criminal offences”.  The definition also notes that proceeds may consist of “any property”.  It is apparent that the Laundering Convention has used the word “property” in a fashion that is much wider than a simple reference to laundered property.

15. Article 6(1)(a) is not confined to concealed or disguised property.  To the contrary, it expressly extends to the conversion or transfer of property for the purpose of assisting any person who is involved in the commission of the relevant offence to evade the legal consequences of their actions.

16. The Commissioner further submits that, although the original proceeds of crime legislation enacted in the United States was limited to conduct that concealed or disguised property, the trend in international law has been to deliberately move away from such a restriction.  That movement was evident in article 3 of the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (the Narcotics Convention) concluded in 1988.  The steps taken in that provision included the criminalisation of what is described as “integration”.  Integration involves “the acquisition/possession/use of the illicitly derived property knowing of its illicit derivation”.  Article 3 of the Narcotic Convention was the immediate model for article 6(1) of the Laundering Convention.[23]

    [23]   Neil Boister, An Introduction to Transnational Criminal Law (2^nd ed, 2018) at 178.45.

17. A further submission advanced by the Commissioner is that the preparatory works relating to the adoption of the Laundering Convention support the Commissioner’s contention that the word “property” in article 6(1)(c) of the Laundering Convention is not restricted to “post-laundered property”.  The Commissioner submits that the most relevant of the preparatory works relating to the Laundering Convention was the Explanatory Report.  The Explanatory Report identifies one of the main purposes of the Laundering Convention being the adoption of efficient measures to deprive criminals of the “fruits of their illicit activities”.  In identifying that purpose, the Explanatory Report did not make any reference to whether such fruits are, or have been, the subject of concealment.  The Explanatory Report also notes that the definition of “proceeds” was intended to be as broad a possible, because it was considered important to deprive the offender of any economic advantage from their criminal activity.  For that reason, the Explanatory Report did not rule out “the inclusion of property and assets that may have been transferred to third parties”.  The Explanatory Report also noted that, as far as possible, the same terminology and approach as used in the Narcotics Convention had been adopted in the proposed Laundering Convention.

18. Both article 3(1)(c)(i) of the Narcotics Convention and article 6(1)(c) of the Laundering Convention are said by the Commissioner to be immediately apparent.

19. Although the Commissioner has been unable to obtain the full suite of preparatory works relating to the Laundering Convention, he contends that because article 6(1) of the Laundering Convention has apparently been copied from the Narcotic Convention it suggests that the preparatory works that explain the structure of article 6(1) are in fact those that explain the structure of article 3 within the Narcotics Convention.  It is apparent from the latter material that article 3(1)(c)(i) of the Narcotic Convention and the equivalent article 6(1)(c) of the Laundering Convention were intended to create a “more general offence of handling proceeds”.[24]  Article 3(1)(c)(i) of the Narcotics Convention was adopted so as to require the criminalisation of conduct at the “integration” stage in the sense previously referred to.

    [24]   United Nations Conference for the Adoption of a Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, Official Records (vol 2) at [36]-[37].

20. For these reasons, the Commissioner submits that it is not possible to read down article 6(1)(c) of the Laundering Convention so as to limit its coverage to the use of property that involves laundering in the strict sense.  The adoption of such an interpretation would be contrary to “the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose” as required by article 31 of the VCLT, and as confirmed by the supplementary means of interpretation that may be called in aid under article 32 of the VCLT.

    Section 51(xiii) of the Constitution

21. The Commissioner submits that there are two separate bases upon which the banking power in s 51(xiii) of the Constitution supports the validity of s 400.9 of the Criminal Code in its application to the plaintiffs. Their relevant conduct involved banking transactions with respect to the restrained property.

22. The first basis advanced by the Commissioner is that s 400.2(d) includes as one limb of the definition of “deal[ing] with money or other property” the act of “engag[ing] in a banking transaction relating to money or other property”.  That is said by the Commissioner to be an example of a well-established drafting technique, whereby Commonwealth legislation that is expressed in general terms is linked to specific heads of legislative power that support the law in some of its operations.[25]

    [25]   New South Wales v Commonwealth(Work Choices Case) (2006) 229 CLR 1 at [8], [10], [159]_[160]; Samson Maritime Pty Ltd v Aucote (2014) 229 FCR 125 at [11], [44]-[50], [57].

23. The second and alternative basis upon which the Commissioner contends that s 51(xiii) of the Constitution supports the validity of s 400.9 is that s 15A of the Interpretation Act requires that s 400.9 be given a distributive operation so that it applies in circumstances where that application is within Commonwealth power. That approach is supported by the decisions of the High Court in Tajjour v New South Wales[26] and R v Hughes.[27]

    [26] (2014) 254 CLR 508 at [169]-[171].

    [27] (2000) 202 CLR 535 at [41]-[44].

    The validity of s 42(1A) of the Proceeds of Crime Act

24. In Ruzehaji v Commissioner of the Australian Federal Police the Full Court of this Court proceeded on the basis that the Commissioner had conceded that the time limit in s 42(1A) of the Proceeds Act could be extended under s 48 of the Limitation of Actions Act 1936 (SA) (the Limitation Act) as applied by s 79 of the Judiciary Act.  The Solicitor-General for the Commonwealth has informed the Court that such a concession was not made in Ruzehaji. He stated that the Crown was prepared to provide affidavit evidence to that effect. The plaintiffs accept that no such concession was made.

25. The Commissioner also submits that a judgment is not authority for a point that was assumed to be correct rather than decided by the Court.[28]

    [28]   CSR Ltd v Eddy (2005) 226 CLR 1 at [13].

26. The Commissioner submits that the position assumed in Ruzehaji is incorrect for two reasons. First, s 48 of the Limitation Act was not picked up by s 79 of the Judiciary Act because the enactment of s 42(1A) of the Proceeds Act has a result that Commonwealth law has “otherwise provided” in terms of s 79(1).[29]

    [29]   Grant Samuel Corporate Finance Pty Ltd v Fletcher (2015) 254 CLR 477 at [1], [6]-[8], [17], [22]‑[23]; Director of Public Prosecutions (Cth) v Kamal (2011) 206 A Crim R 397 at [131].

27. The second reason advanced by the Commissioner in support of its contention that Ruzehaji was wrongly decided is that s 48 of the Limitation Act does not apply to Commonwealth Acts.[30]

    [30]   Timeny v British Airways PLC (1991) 56 SASR 287 at 288-289 (King CJ).

28. The Commissioner submits that s 26(5) of the Proceeds Act operates differently from the legislation considered by the High Court in IFTC and thus that case is distinguishable. The effect of s 26(5) is that the decision as to whether an application for a restraining order is to be heard ex parte lies in the hands of the court and not the Executive government, as was the case in IFTC.[31]

    [31]   Ruzehaji at [84] (Gray J, with Peek and Nicholson JJ agreeing); AD v Commissioner of Australian Federal Police (2018) 97 NSWLR 588 at [103]; Kamal at [95], [213], [225].

29. The Commissioner also submits that IFTC is also distinguishable on the further basis that s 42(1) of the Proceeds Act provides a mechanism to apply to the Court for a revocation of a restraining order that has been made ex parte.  The imposition of a time limit on the right of a party to apply for revocation of a restraining order is not, of itself, incompatible with the essential character of a court, nor is it a departure in a fundamental respect from the ordinary features of the judicial process.[32]

    [32]   David Grant & Co Pty Ltd v Westpac Banking Corp (1995) 184 CLR 265 at 272, 277-279.

30. The Commissioner submits that the reasoning of the High Court in Bodruddaza is only relevant in relation to jurisdiction that is constitutionally entrenched. That case was concerned with the right under s 75(v) of the Constitution, in which a writ of mandamus or prohibition is sought against an officer of the Commonwealth. The decision is not authority for a wider proposition.[33] 

    [33]   SZAJB v Minister for Immigration and Citizenship (2008) 168 FCR 410 at [31]-[36].

31. A further submission by the plaintiffs to the effect that the function of a court in making a restraining order under the Proceeds Act is incompatible with Chapter III of the Constitution, has been rejected by intermediate appellate courts.[34] Those courts have relied on the adequacy of the revocation regime provided by s 42 of the Proceeds Act. That conclusion is also said by the Commissioner to be supported by ss 29, 31, 45(3) and 49 of the Proceeds Act. Those provisions provide opportunities for a person whose property has been restrained to avoid forfeiture of property that is not the proceeds of crime, even if revocation of a restraining order cannot be sought because of the operation of the time limits in s 42(1A).

    [34]   Kamal at [104]-[105], [111], [138]-[145], [252]; AD at [99]-[100].

    The submissions of the Attorney-General for South Australia

32. The Solicitor-General for South Australia appeared on behalf of the Attorney‑General as intervenor. The submissions made on behalf of the Attorney‑General were limited to the validity of s 42(1A) of the Proceeds Act. The Attorney‑General did not address the question whether s 400.9(1) is supported by a relevant head of Commonwealth legislative power.

33. The Attorney‑General points to the fact that the relevant provisions of the Proceeds Act were amended following the decision of the High Court in IFTC.

34. The Attorney‑General acknowledges that if the applicant for a restraining order makes a request under s 26(4) of the Proceeds Act, the court must, in the first instance, consider that application ex parte.  However, in Director of Public Prosecutions (Cth) v Kamal the majority of the Western Australian Court of Appeal (comprising Martin CJ and Buss JA, with McLure P dissenting) held that such a request does not determine the course of the proceedings. That is because s 26(5), in contrast to s 26(2), is not expressed to be subject to s 26(4). Section 26(5) confers an express power on the court to direct that any particular person, or class or persons, be given notice of the proceedings at any time prior to the determination irrespective of whether the applicant had requested, under s 26(4), that the court hear the application ex parte. 

1. In The Queen v Australian Industrial Court; Ex parte CLM Holdings Pty Ltd[52] the High Court distinguished Strickland v Rocla.  The Trade Practices Act had been amended so as a give a separate but additional operation in relation to each relevant head of Commonwealth legislative power.  The High Court held that the prohibition upon restrictive trade practices could validly apply to conduct engaged in by constitutional corporations, in interstate or overseas trade or commerce, in supplying goods and services to the Commonwealth or Territory or which involved the use of postal, telegraphic or telephonic services or occurred in a radio or television broadcast.  The effect of the drafting was to permit a distributive operation and thereby avoid the need for the Court to engage in the making of legislative choices of the type held by Latham CJ to be invalid in Pidoto. 

   [52] (1977) 136 CLR 235.

2. The High Court also considered the application of the Pidoto principle and s 15A of the Interpretation Act in the Industrial Relations Act Case.[53] Before referring to that analysis it is necessary to refer to the terms of s 15A of the Interpretation Act:

   Every Act shall be read and construed subject to the Constitution, and so as not to exceed the legislative power of the Commonwealth, to the intent that where any enactment thereof would but for this section have been construed as being in excess of that power, it shall nevertheless be a valid enactment to the extent to which it is not in excess of that power.

   [53]   Industrial Relations Act Case (Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ).

3. Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ explained the operation in s 15A in the Industrial Relations Act Case:[54]

   Section 15A of the Interpretation Act may fall for application in two distinct situations. It may fall for application in relation to “particular clauses, provisos and qualifications, separately expressed, which are beyond legislative power”. It may also fall for application in relation to general words or expressions. It is well settled that s 15A cannot be applied to effect a partial validation of a provision which extends beyond power unless “the operation of the remaining parts of the law remains unchanged”. Nor can it be applied to a law expressed in general terms if it appears that “'the law was intended to operate fully and completely according to its terms, or not at all”.

   Where a law is expressed in general terms, it may be more difficult to determine whether Parliament intended that it should, nonetheless, have a partial operation. And there is an additional difficulty if it “can be reduced to validity by adopting anyone or more of a number of several possible limitations”. It has been said that if, in a case of that kind, “no reason based upon the law itself can be stated for selecting one limitation rather than another, the law should be held to be invalid”.

   The limitation by reference to which a law is to be read down may appear from the terms of the law or from its subject matter. Thus, a law which is “clearly made with the intention of exercising the power to make laws with respect to trade and commerce” can be read down “so as to limit its application to inter-State and foreign trade and commerce”. Similarly, where a law is intended to operate in an area where Parliament’s legislative power is subject to a clear limitation, it can be read as subject to that limitation.

   (Footnotes omitted)

   [54] Ibid at 502.

4. In light of those observations the Court found that the validity of s 6 of the Industrial Relations Act was preserved by the application of s 15A of the Interpretation Act.  Section 6 was expressed to bind the States in their capacity as employers without any express exception covering the employment of persons at the higher levels of government, notwithstanding the finding in Re Australian Education Union; Ex parte Victoria that the Commonwealth could not bind the States with respect to the terms and conditions of persons they employed at the higher levels of government.[55]  The Court found that the nature and subject matter of the Industrial Relations Act suggested the limitation by which s 6 may be read down so as to remain within power. That could be achieved by reading s 6 as not operating to prevent the States from determining the number of persons they wish to employ, the term of their appointment, the number and identity of those they wish to dismiss on redundancy grounds and the terms and conditions of those employed at the higher levels of government.[56] Reading down of s 6 in that way would correspondingly limit the operation of the substantive provisions of the Act, but its operation would otherwise be unaffected. For these reasons, s 6 was held to be valid and not contrary to the principle explained by Latham CJ in Pidoto.

   [55] (1995) 184 CLR 188.

   [56]   Industrial Relations Act Case at 503.

5. To the extent that an impugned transaction is a banking transaction relating to money or other property it will be within the scope of paragraph (d) of the definition of “deals with money or other property” in s 400.2 of the Criminal Code. When s 400.9(1) is read in light of the latter definition, it encompasses a banking transaction. The text itself indicates the circumstances in which the provision is to apply. Save for the need to read down the reference to banking so that it does not include State banking that does not extend beyond the limit of a State, there is no need for the Court to read down the provision so as to preserve its validity. There is also no need for the Court to subject the statute to impermissible plastic surgery so as to preserve its validity.[57] The definition in s 400.2 expressly encompasses banking transactions. I find that s 400.9(1) has been validly enacted under s 51(xiii) of the Constitution.

   [57]   Bank of New South Wales v Commonwealth (1948) 76 CLR 1, Dixon J at 372.

6. In view of that conclusion it is not strictly necessary to consider the second proposition advanced by the Commissioner in support of its contention that the relevant provisions of the Criminal Code are supported by the banking power. Nevertheless, I will briefly consider the matters advanced by the Commissioner. The essence of the argument is that s 15A of the Interpretation Act requires s 400.9(1) to be given a distributive operation. That is apparent from the decision of the High Court in R v Hughes.[58]  While the definitions used in the relevant statute did not correspond with the limits of Commonwealth legislative power, the Court held that:[59]

   [Section] 15A of the Interpretation Act may be applied to read down a provision expressed in general terms, including a power to prosecute so as to apply only where the particular prosecution is supported by a head of power. Consistently with the statement of general principle in the joint judgment in the Industrial Relation Act Case, this will be achieved by construing the phrase … “functions and powers that are expressed to be conferred on them by or under corresponding laws” as limited to those functions and powers in respect of matters within the legislative powers of the Parliament of the Commonwealth.

   (Footnotes omitted)

   [58] (2000) 202 CLR 535.

   [59] Ibid at [43] (Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ).

7. To like effect, Gageler J stated in Tajjour v New South Wales that s 15A of the Interpretation Act “creates a statutory presumption the effect of which is that ‘the intention of the legislature is to be taken prima facie to be that the enactment should be divisible and that any parts found constitutionally unobjectionable should be carried into effect independently of those which fail’.”[60]  Gageler J also noted that the operation of s 15A cannot be excluded due to the breadth of the language used by the Parliament.  In order to exclude the operation of s 15A the legislation must contain a positive indication that the Parliament did not intend a particular provision to be given a distributive operation but instead intended that “all to go free unless all were bound.”  Gageler J further noted that “where reading down can occur, the constructional imperative of a severance clause is that reading down must occur”.[61]  The interpretation of s 15A adopted by Gageler J in Tajjour was approved by the High Court in Knight v Victoria.[62]

   [60] (2014) 254 CLR 508 at [169].

   [61] Ibid at [171].

   [62] (2017) 91 ALJR 824 at [35].

8. In light of those authorities I accept the Commissioners’ submission that the effect of s 15A of the Interpretation Act is that s 400.9(1) must be interpreted as validly applying to all “persons, subject matters or circumstances” that fall within its terms. When read in conjunction with the associated definitional provisions, s 400.9(1) may apply to persons who engage in banking transactions involving money or property that may reasonably be suspected of being a proceed of crime. The maxim “all go free unless all are bound” cannot apply to a statute that criminalises dealing with the proceeds of crime.

9. I find that, for both of the reasons advanced by the Commissioner, s 400.9(1) of the Criminal Code can be validly applied to the transactions engaged in by the plaintiffs in relation to the Magill property and the NAB bank account.

   Validity of s 42(1A) of the Proceeds Act

10. Before considering the validity of s 42(1A) of the Proceeds Act it is necessary to consider the decision of the Full Court in Ruzehaji.

    Ruzehaji v Commissioner of Australian Federal Police

11. The plaintiffs accept the correctness of the assurance given to the Court by the Solicitor-General for the Commonwealth that the AFP Commissioner had not conceded in Ruzehaji that the time limit imposed by s 42(1A) of the Proceeds Act could be extended under s 48 of the Limitation Act as applied by s 79 of the Judiciary Act.  I consider that the Court should proceed on the basis that no such concession was made in Ruzehaji. That does not remove the need to consider the correctness of Ruzehaji.

12. Section 79(1) of the Judiciary Act provides that the laws of each State or Territory, including laws relating to procedure, evidence and the competency of witnesses, shall be binding on all courts exercising a Federal jurisdiction in that State or Territory, except as otherwise provided by the Constitution or the laws of the Commonwealth. Section 48 of the Limitation Act empowers a court to extend, as the justice of the case may require, the time prescribed for the institution of an action or the taking of any step in an action.

13. Section 42(1A) of the Proceeds Act entitles a person whose property is subject to a restraining order made without notice to apply to the court for revocation of the order within 28 days after they were notified of the order. Provided that the person applies to the court within the 28-day period, they may seek an extension of time to make their revocation application within a longer period, not exceeding three months, allowed by the court. Section 42(5) provides that the court may revoke the restraining order if it is satisfied that there are no grounds on which to make the order at the time it considers the revocation application, or if the court is satisfied that it is otherwise in the interests of justice to do so.

14. Section 42(1A) of the Proceeds Act differs materially from s 48 of the Limitation Act. Section 48 confers a general power to extend a time limit in the interests of justice and does not impose any time limit upon the making of an application for an extension of time. In contrast, s 42(1A) of the Proceeds Act only applies to ex parte applications made under that Act. Most importantly, s 42(1A) limits the period of any extension granted by the court to a maximum of three months and also requires the application for an extension to have been made within 28 days. Thus, when s 42(1A) of the Proceeds Act is compared with s 48 of the Limitation Act, it clearly constitutes a Commonwealth law that has “otherwise provided” within the meaning of s 79 of the Judiciary Act. 

15. For that reason, the finding by the Full Court in Ruzehaji that the time limit in s 42(1A) could be extended under s 48 of the Limitation Act was not correct. The plaintiffs accept that in this respect the Full Court erred in Ruzehaji.  Furthermore, as the Solicitor-General for the Commonwealth has correctly submitted, because the proposition was assumed by the Court to be correct, the decision in Ruzehaji is not authority that s 48 of the Limitation Act is available to extend the time limits otherwise imposed by s 42(1A).[63]

    [63]   CSR Ltd v Eddy (2005) 226 CLR 1 at [13].

16. The Commissioner submits that there is a second basis upon which Ruzehaji was wrongly decided.  King CJ had previously held in Timeny v British Airways Plc that when s 48 of the Limitation Act is read in light of the definition of an “Act” in s 4 of the Acts Interpretation Act 1915 (SA) it does not confer power to extend a time limit that is imposed directly by Commonwealth law.[64] Unless the contrary intention appears, the definition in s 4 confines an “Act” to a State enactment. King CJ held in the following terms that there was no contrary intention shown:[65]

    It would be rather far-fetched to imply into s 48 an intention, contrary to the meaning attributed to the word “Act” by s 4 of the Acts Interpretation Act, that it should apply to time limits imposed by Commonwealth Acts, in order to enable s 79 of the Judiciary Act to pick up the power and thereby to authorise its use by courts exercising federal jurisdiction in South Australia to extend such time limits.

    [64] (1991) 56 SASR 287 at 288-289.

    [65] Ibid at 289.

17. King CJ also held that, when a court is exercising Federal jurisdiction, a time limit imposed by a State Act may be extended under s 48 of the Limitation Act but only in cases where that provision is applied by s 79 of the Judiciary Act. However, as I have already indicated, s 79 will not apply if a Commonwealth law has “otherwise provided”.

18. Cox and Bollen JJ, the other two members of the Full Court in Timeny, decided the matter on other grounds and did not consider whether s 48 of the Limitation Act could be applied to extend a time limit imposed by a Commonwealth Act.

19. I respectfully consider the analysis by King CJ to be correct. I find that the time limit imposed by s 42(1A) of the Proceeds Act cannot be extended under s 48 of the Limitation Act. Thus, it is necessary to consider the plaintiffs’ contention that s 42(1A) offends the principles identified by the High Court in Kable as they were applied in IFTC.

    International Finance Trust Co Ltd v New South Wales Crime Commission

20. A key element of the plaintiffs’ submissions as to the invalidity of s 42(1A) of the Proceeds Act is based on the contention that the legislative scheme cannot be distinguished from that found to be invalid by the High Court in IFTC. Section 10(2)(b) of the Criminal Assets Recovery Act 1990 (NSW) (the NSW Act) provided that the New South Wales Crime Commission could apply ex parte to the Supreme Court for a restraining order preventing dealing with property. Section 10(3)(b) required the Court to make such an order if the application was supported by an affidavit made by an authorised officer deposing to the basis upon which the officer suspected that the property had been derived from serious crime, if the Court considered that there were reasonable grounds to hold such a suspicion.

21. Section 22 of the NSW Act provided for the making by the Supreme Court of an order for the forfeiture of property that was subject to a restraining order under s 10. A person whose property was subject to forfeiture could make application under s 25 for an order excluding the particular property from the restraining order upon proof it was more probable than not that the property had not been acquired fraudulently or illegally.

22. French CJ held that that the obligation of the Court to afford procedural fairness to the subject of the application could be displaced by a request from the Executive. That was sufficient to invalidate s 10 of the NSW Act. The fact that a restraining order was temporary and might subsequently be varied by an exclusion order made under s 25 was not sufficient to save s 10 from invalidity.[66]

    [66]   IFTC at [56]-[58].

23. Gummow and Bell JJ concluded that, when considered in isolation, the fact that the Court might be required by the Executive to determine an application ex parte did not of itself lead to invalidity. However, the combined effect of the obligation to proceed ex parte, the lack of effective judicial supervision of the duty to disclose all material facts in support of an ex parte application, and the lack of an effective right to review an ex parte order, was to invalidate s 10 of the NSW Act. In reaching that conclusion Gummow and Bell JJ took into account that a review under s 25 placed a heavy burden upon the applicant.[67]  

    [67]  Ibid at [90]-[93].

24. Heydon J held that the obligation to proceed ex parte was not repugnant to the judicial process.[68] His Honour focused upon the lack of an adequate procedure enabling a person whose property was subject to an ex parte order to seek to have it set aside. His Honour characterised the s 25 review process as a “complex, negative inquiry which is likely often to be very time consuming”.[69] The constrained right to seek review had the effect that s 10 operated to compel the Court “to engage in an activity which is repugnant to the judicial process in a fundamental degree”.[70]

    [68] Ibid at [136].

    [69] Ibid at [161].

    [70] Ibid.

    Director of Public Prosecutions (Cth) v Kamal

25. In Kamal the majority of the Western Australia Court of Appeal (Martin CJ and Buss JA) held that a court has power under s 26(5) to determine whether it should proceed ex parte before making a restraining order.[71]  The analysis adopted by Martin CJ and Buss JA was to the same effect as the conclusions I have reached at paragraphs [173] to [176] below.

    [71]   Kamal at [95], [220].

26. Section 42 of the Proceeds Act entitles a person affected by the making of a restraining order to apply to the court for the revocation of the order. The court may revoke the order if it is satisfied that there are no grounds on which to make such an order at the time it considers the revocation application. The court may also revoke an order where it finds that it is otherwise in the interests of justice to do so. The “otherwise in the interests of justice” ground was enacted after the making of the restraint order considered in Kamal, but prior to the appeal being decided by the Court of Appeal.  Although this additional ground for revocation was not relevant to the appeal, Martin CJ suggested that the amendment[72] of s 42 in 2010 so as to empower a court to revoke a restraining order if it was “otherwise in the interests of justice” was intended to address the concerns expressed in IFTC by Gummow and Bell JJ about the lack of any facility to enforce the duty of full disclosure when an application is made ex parte.[73]

    [72]   Crimes Legislation Amendment (Serious and Organised Crime) Act 2010 (Cth).

    [73] Ibid at [44].

27. Martin CJ also held that, even prior to the addition of the “interests of justice” ground for revocation, the terms of s 42 considered in Kamal were fundamentally different from the restrictive provision considered in IFTC. Thus, his Honour found s 42 to be constitutionally valid.[74] McLure P and Buss JA agreed with Martin CJ in relation to that issue. 

    [74] Ibid.

28. I also note that in Kamal the Court of Appeal referred to the time restrictions contained in s 42(1A) but did not suggest that these limits improperly constrained review under s 42 or were otherwise incompatible with the judicial process.[75] 

    [75] Ibid at [246].

    The Proceeds Act is distinguishable from the Act invalidated in IFTC

29. The legislative scheme established by the Proceeds Act is materially different from the provisions of the NSW Act found to be invalid in IFTC.

1. Section 26(1) of the Proceeds Act requires the responsible authority to give written notice of an application for a restraining order to the owner of property to be covered by a proposed order, and to include with the notice a copy of the application and any supporting affidavit. Section 26(2) is in much the same terms but requires notice to be given to any other person whom the authority believes may have an interest in the property. Such a person may request a copy of the supporting affidavit. Section 26(3) provides that the Court must not hear an application unless it is satisfied that the owner of the property has received reasonable notice of the application.

2. Each of s 26(1), 26(2) and 26(3) are expressed to be subject to s 26(4). The latter provides that the Court must consider the application without notice having been given if the responsible authority requests the Court to do so. However, s 26(4) must be read in light of the subsequent provisions of s 26.

3. Section 26(5) of the Proceeds Act empowers the Court, at any time before finally determining the application, to direct the responsible authority to give notice of the application to a specified person or a class of persons. The Court may also specify the time and manner in which notice is to be given. In that event, s 26(6) entitles a person who asserts an interest in property to appear and adduce evidence at the hearing of the application.

4. The difference in operation between the Proceeds Act and the NSW Act was explained by Martin CJ in Kamal.  His Honour’s analysis was adopted by the New South Wales Court of Appeal in AD v Commissioner of the Australian Federal Police.[76]

   [76] (2108) 97 NSWLR 588 at [97]-[98].

5. Martin CJ observed in Kamal that s 26(4) requires the Court to consider an application on an ex parte basis if it has been requested by the responsible authority to do so. However, s 26(4) does not go beyond imposing an obligation to consider the application without notice. Section 26(5) also empowers the Court, at any time before finally determining the application, to direct that notice be given of the application. The words “at any time before” in s 26(5) serve to emphasise further the distinction between considering an application and finally determining the application. When s 26(4) is read in light of ss 26(5) and s 26(6), it clearly does not compel the Court to decide the application without notice. However, the Court may determine that to be appropriate in the particular circumstances of a given case. 

6. The crucial point of distinction from the provisions of the NSW Act found to be invalid in IFTC arises because neither s 26(5) nor s 26(6) is expressed to be subject to s 26(4). In that respect those two sub-sections have a fundamentally different operation to sub-ss 26(1), 26(2) and 26(3), each of which is subject to sub-s 26(4).

7. It is clear from the preceding construction that a court cannot be required by the Executive branch of government to decide an application for a restraining order on an ex parte basis. The court, rather than the Executive, retains the power to determine whether an application is to be decided ex parte. 

8. The result is that a court may be compelled by a request made by the responsible authority under s 26(4) to consider an application on an ex parte basis.  Having first considered the matter ex parte, the court may then decide under s 26(5) that it will not finally determine the application without notice having been given to persons whom the court considers should be given the opportunity to be heard.

9. The Judge did not refer in her reasons to the discretion conferred upon the Court by s 26(4) of the Proceeds Act. Nevertheless, her Honour stated that:[77]

   I am satisfied that the circumstances of this case are such that it is appropriate for me to hear and determine the application without notice pursuant to s 26(4) and s 182 of the Act. In doing so I note the orders sought are interlocutory in nature and therefore may be set aside or revoked pursuant to s 42 of the Act (see Ruzehaji v AFP (2015) 124 SASR 355 at [65]-[69]).

   [77] Reasons for ruling on 3 March 2017 emailed on 10 March 2017 at [39].

10. The clear effect of the Judge’s decision was that she exercised the discretion conferred by s 26(5) without specifically adverting to the existence of that discretion. Of course, when her Honour made the decision to proceed ex parte there was no reason to expect that the plaintiffs would fail to meet the time limits fixed under s 42 should they elect to challenge the order. No doubt for that reason, her Honour’s judgment focussed upon the interlocutory nature of the restraining order. Nevertheless, her Honour did not simply act upon the Commissioner’s request to proceed ex parte but exercised the judicial discretion conferred by s 26(5) after finding that it was appropriate to do so.

    Bodruddaza v Minister for Immigration and Multicultural Affairs

11. The plaintiffs place substantial reliance upon the decision of the High Court in Bodruddaza in support of their contention that the short time limit imposed by s 42(1A) results in its invalidity. They contend that the essential character of a court and the exercise of Commonwealth judicial power necessitate that a person whose interests have been affected by an ex parte restraining order must be able to apply to the court to have the order set aside in circumstances where the interests of justice so require.

12. The issue before the High Court in Bodruddaza was that s 486A of the Migration Act 1958 (Cth) set a time limit of 84 days for the making of an application to the High Court for judicial review in respect of certain classes of migration decision. The application to the High Court by the plaintiff was out of time. Section 486A(2) was expressed to preclude the Court from making an order that permitted the making of an application out of time.

13. The High Court held that s 486A was invalid on the basis that it curtailed or limited the right conferred by s 75(v) of the Constitution to seek relief by way of mandamus, prohibition or injunction against an officer of the Commonwealth. The restriction imposed on the right to seek relief in the High Court was not consistent with the place of s 75(v) in the structure of the Constitution. Section 486A operated by reference to the time of the actual notification and thereby did not allow for the taking into account of a range of vitiating circumstances that may affect administrative decision making nor did the provision recognise that supervening events may have prevented an applicant from proceeding within the statutory time limit.[78] 

    [78]  Bodruddaza at [55]-[60].

    SZAJB v Minister for Immigration and Citizenship

14. In SZAJB v Minister for Immigration and Citizenship the Full Federal Court considered the application of the principles stated by the High Court in Bodruddaza to s 477 of the Migration Act. That provision imposed a time limit upon the right of appeal to the Federal Magistrates Court. French J (as he then was), with Tracey J agreeing, held that the constitutional considerations which led the High Court to find s 486A of the Migration Act to be invalid in Bodrudazza did not apply to s 477.

15. Section 477(1) of the Migration Act provided that an application to the Federal Magistrates Court in relation to a migration decision must be made within 28 days of the actual notification of the decision. Section 477(2) provided that the Federal Magistrates Court may extend the 28-day period by up to 56 days if the application for an extension is made within 84 days of the actual notification of the decision and the Court is satisfied that it is in the interests of the administration of justice to grant an extension. The time limits were similar to those in s486A of the Migration Act which were found to be invalid by the High Court in Bodruddaza. 

16. French J noted that the considerations which underpin the finding of the High Court that s 486A was invalid do not apply to s 477.[79] Nevertheless, the applicant contended that s 486A was part of a legislative scheme that imposed uniform time limits on all courts in which applications for judicial review of ministerial decisions could be commenced. The result of the decision in Budruddaza was that an application commenced in the High Court could be remitted to the Federal Magistrates Court even though it had been commenced outside the time allowed for commencement of proceedings in the latter court. That would also be the position with cases remitted from the High Court to the Federal Court. On that basis, the applicant contended that the dichotomy created by the invalidation of s 486A should result in the invalidity of s 477 or, alternatively, required that it be read down so as to remain within power by removing those elements of s 477 which precluded any extension of time.

    [79]   SZAJB at [32], [134].

17. French J rejected that contention.  His Honour referred to the judgment of Buchanan J, with Besanko J agreeing, in SZICV v Minister for Immigration and Citizenship.[80]Buchanan J held that even though s 476(1) of the Migration Act conferred the same original jurisdiction on the Federal Magistrates Court in relation to migration decisions as the High Court holds under paragraph 75(v) of the Constitution, this was the conferral of statutory rather than constitutional power. As a matter of statutory construction that conferral of power did not prevail over the time limits expressed in s 477. French J expressed the view that the approach adopted by Buchanan J in SZICV was entirely consistent with the approach of the High Court in Bodruddaza.[81] 

    [80] (2007) 158 FCR 260.

    [81] Ibid at [34].

18. French J also went on to state:[82]

    A separate limb of attack on s 477 involved the contention that it was an impermissible intrusion on the judicial power of the Commonwealth. If that proposition were correct then no federal jurisdiction could ever be subject to a non-extendable time limit. That is to say, the Parliament could not define federal jurisdiction by reference to actions commenced within a specific time limit. The argument is unlikely to succeed although it might require more extended consideration than is necessary in this case. That extended consideration is unnecessary because the grant of leave to appeal would, in my opinion, be futile. The learned magistrate was correct in holding that the proceedings were an abuse of the court’s process.

    [82] Ibid at [36].

19. In addition to agreeing with the reasons of French J, Tracey J held that the decision of the High Court in Bodruddaza did not compel a finding that s 477 of the Migration Act was invalid.[83]

    [83] Ibid at [114].

    Incompatibility with the judicial process

20. The plaintiffs contend that the time limit imposed by s 42(1A) of the Proceeds Act so severely truncates the right to seek review as to be incompatible with the judicial process. The plaintiffs seek to support that contention with the observation that the restrictive time limit may have harsh consequences.

21. The decision of the High Court in Bodruddaza does not assist the plaintiffs. That case does not stand for a general proposition that the attachment of a short time limit to the exercise of a right to appeal will result in invalidity on constitutional grounds. The basis for the High Court’s finding of invalidity was that the imposition of a strict time limit upon the making of an application under s 75(v) of the Constitution for judicial review of decision of a Commonwealth officer was not consistent with the important role of that provision in Chapter III of the Constitution.

22. As was also the case with the provision of the Migration Act considered by the Full Federal Court in SZAJB, s 42(1A) of the Proceeds Act does not interfere with the exercise of a right conferred by the Constitution. The right of appeal that is constrained by the time limit imposed by s 42(1A) is itself conferred by the Proceeds Act. A constraint imposed by an Act upon an appeal right conferred by that Act is very different to the curtailment of a right granted by the Constitution. The right to seek judicial review in the High Court under s 75(v) of decisions made by Commonwealth officers is an important constitutional protection that the High Court found in Bodruddaza cannot be constrained by unduly restrictive time limits. In contrast, the time limit under s 42(1A) concerns an appeal against an interlocutory decision made in the context of a statute that provides, at least to some extent, alternative avenues to seek relief.

23. Accordingly, the plaintiffs’ contention that the time limit imposed by s 42(1A) is incompatible with the judicial process must be considered in the context of the legislative scheme established by the Proceeds Act.

24. The suggestion of harshness loses much of its force when it is recognised that the ultimate decision as to whether an application is to be decided ex parte lies with the Court under s 25(5) rather than with the Executive branch of government.  In deciding whether to proceed ex parte, the Court must act judicially.

25. It is also of fundamental importance that a restraining order does not finally determine the rights of the parties in relation to property that is subject to the order. In that sense, a restraining order is interlocutory. That is apparent from the provisions of the Proceeds Act to which I now turn.

26. The present application was made under s 19.[84] This provides for the making of restraining orders by a court with proceeds jurisdiction in circumstances where there are reasonable grounds to suspect that property is the proceeds of an indictable offence. A restraining order prohibits disposal or other dealing with the subject property.[85] As required by s 19(1)(e), the application was supported by an affidavit of an authorised officer, Ms Whitford, stating that she suspected that the property was proceeds of an offence and specifying the grounds on which she held that suspicion. Upon the Court being satisfied that Ms Whitford held her suspicion on reasonable grounds, the Court was required to make a restraining order.

    [84]   Analogous provisions appear in ss 17, 18, 20 and 20A dealing with different categories of offence.

    [85]   A restraining order may also provide that the property may only be disposed of or dealt with in the manner and circumstances specified in the order.

27. Although the reasonable suspicion test is not particularly onerous, the requirement that the Court must be satisfied that the officer’s suspicion was held on reasonable grounds that have been deposed to in an affidavit, serves as an important procedural safeguard. Further protection is provided by the discretionary power of the Court to require under s 25(5) that notice of an application be given and to allow an interested person to make submissions under s25(6).

28. Section 29 of the Proceeds Act empowers a court to exclude a specified interest in property from a restraining order if the court is satisfied that the relevant property is neither proceeds of crime nor an instrument of a relevant offence. Sections 30 and 31 respectively permit an application for the exclusion of property from a restraining order to be made either before or after the making of the order.

29. Section 49 empowers a court with proceeds jurisdiction to order that specified property is forfeited to the Commonwealth if the restraining order has been in force for at least six months and the court is satisfied that the property is proceeds of an indictable offence, a foreign indictable offence or an indicatable offence of Commonwealth concern or an instrument of a serious offence. Before making a forfeiture order the court must also be satisfied that the authority has taken reasonable steps to identify and notify persons with an interest in the property. Section 49(4) provides that the court may refuse to make a forfeiture order if it is satisfied that it is not in the public interest to do so even though the court is satisfied that the property is an instrument of a serious offence other than a terrorism offence and is not proceeds of an offence.

30. It is apparent from the preceding provisions that the effect of the legislative scheme established by the Proceeds Act is that a restraining order operates on an interim basis for at least six months (unless sooner discharged).

31. In contrast to a restraining order, which may be made where the court is satisfied that the authorised officer suspects on reasonable grounds that property is the proceeds of a relevant crime, a forfeiture order can only be made where the court is satisfied that the property is proceeds of one or more relevant offences.  That is a substantially more onerous test than the reasonable suspicion test applied at the restraining order stage.  In addition, before making a forfeiture order, the court must also be satisfied that the authority has taken reasonable steps to identify and notify persons with an interest in the property.  If the authority cannot satisfy the court that the property is proceeds, the restraining order will be discharged.

32. Although the court does not need to be satisfied that the property is proceeds if no application has been made for it to be excluded from the restraining order, the potential for an unjust outcome is mitigated by the requirement that reasonable steps have been taken to notify persons with an interest in the property before a forfeiture order is made. 

33. As the present proceedings indicate, there is nothing in the Proceeds Act to preclude an application for judicial review of a decision by the District Court to grant a restraining order. While appeals against the making of a restraining order are subject to the relatively tight time limit in s 42(1A), s 322 provides that an appeal against a forfeiture order may be made on the same basis as an appeal against sentence for the crime from which the proceeds have been derived. I also note that Division 5 of Part 2.2 of the Proceeds Act includes a series of measures that may be applied by a court to remove or ameliorate the potentially harsh consequences of a forfeiture order in certain circumstances.

34. In view of the interlocutory nature of a restraining order, and the various procedural safeguards that exist before property covered by such an order may become subject to a forfeiture order, I do not consider that the time limit imposed by s 42(1A) of the Proceeds Act so severely truncates the right to seek review as to be incompatible with the judicial process.

    Conclusion

35. For the preceding reasons, I would dismiss the application for a declaration that s 400.9(1) of the Schedule to the Criminal Code Act 1995 (Cth) is invalid.

36. I would also dismiss the plaintiffs’ interlocutory application in which they contend that s 42(1A) of the Proceeds of Crime Act 2002 (Cth) is invalid.

37. I would hear the parties as to costs.