Commissioner of the Australian Federal Police v Kogan (No.3)

1. [1]

   Before me are two Notices of Motion in this proceeding, both filed by the defendants (the “Motions”).

2. [2]

   It is appropriate to commence with the background to the proceedings and the events which have culminated in the filing of the Motions.

Background

1. [3]

   On 17 December 2019, the Commissioner for the Australian Federal Police (the “AFP”) as plaintiff filed a Summons, pursuant to the Proceeds of Crime Act 2002 (Cth) (the “Act”), seeking restraining orders over various items of property owned by the four defendants, Vladislav Kogan, Sarit Kogan, Dealtex Capital Pty Ltd, and Digitec Trading Pty Ltd (collectively, the “defendants”). At that time, the plaintiff relied on evidence from one of its officers which deposed to a suspicion that each of the defendants had committed one or more offences contrary to provisions of various statutes, such as the Criminal Code (Cth), the Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth) and the Corporations Act 2001 (Cth).

2. [4]

   That same day, Beech-Jones J (as his Honour then was) after an ex parte hearing made restraining orders over the property of the defendants, and other related orders: see Commissioner of the Australian Federal Police v Kogan [2019] NSWSC 1866.

3. [5]

   On 18 March 2020, the defendants filed a Notice of Motion (“2020 Motion”) seeking relief which included the revocation of the restraining orders pursuant to s 42 of the Act or alternatively the exclusion of some of the restrained property from the restraining orders, which had been made pursuant to s 31 of the Act.

4. [6]

   The defendants then agreed to withdraw the 2020 Motion. On 21 July 2020, the Common Law Registrar made a consent order which recorded that the 2020 Motion was withdrawn and dismissed. The order also noted an undertaking by the defendants that they would not make any further application pursuant to s 31 seeking the exclusion of any of the restrained property described in the Summons.

5. [7]

   On 27 October 2020, Bellew J, pursuant to s 180 of the Act, ordered that the first and second defendants each be examined about the affairs of themselves and the affairs of the third and fourth defendants.

6. [8]

   The two Motions before me for determination were filed on 11 May 2021 and 23 March 2022 respectively. The first Motion (the “Reinstatement Motion”) seeks orders pursuant to the inherent powers of the Court that the consent orders relating to the 2020 Motion be set aside, or alternatively, that the defendants be released from the undertaking noted in those consent orders. That Motion also seeks consequential orders, including for costs.

7. [9]

   The second Motion (the “s 266A Motion”) seeks orders to prohibit certain disclosure of any coercive material or information given or produced by Mr Kogan (the “first defendant”) at his examination which is yet to occur. It likewise seeks consequential orders, including for costs.

8. [10]

   Finally, I observe that I made some suppression and non-publication orders on the first day of the hearing before me: see Commissioner of the Australian Federal Police v Kogan (No.2) [2022] NSWSC 1424. They remain in effect.

Course of Hearing

1. [11]

   These proceedings were initially heard over a two-day period in August 2022. At the request of the parties, the Court allowed further written submissions to be filed to deal with the question of whether the Court had the power, pursuant to s 86 of the Civil Procedure Act 2005, to impose a condition upon a disclosure prohibition order made under s 266A of the Act otherwise than in accordance with the terms of the Act, or else in addition to the conditions provided for in the Act.

2. [12]

   During the course of the provision of those written submissions, the plaintiff raised with the Court the possibility that such an issue gave rise to a Constitutional matter of a kind which required notices to be given to the Attorneys-General of the Commonwealth and the States (and the Northern Territory and the ACT) pursuant to s 78B of the Judiciary Act 1903 (Cth) (“s 78B Notices”).

3. [13]

   Accordingly, the Court gave directions for s 78B Notices to be served. Pending this service, the Court did not proceed to determine the proceedings. Notices were duly given, no Attorney-General sought to intervene, and having been satisfied that the relevant procedures had been followed, the Court reserved its decision on 6 October 2022.

Proceeds of Crime Act 2002

1. [14]

   It is appropriate that I first make some general observations about the Act and reproduce some of its provisions, which are relevant to the Motions. Where I reproduce the verbatim text of a provision below, I note that any asterisks appearing in the text refer to a footnote which refers the reader to the Dictionary in Chapter 6 of the Act.

2. [15]

   The Act establishes a scheme to confiscate the proceeds of crime. The “principal” objects of the Act are found in s 5. They relevantly are:

3. [16]

   The Supreme Court of New South Wales is a court with “proceeds jurisdiction”: s 335 of the Act.

4. [17]

   Chapter 2 of the Act provides for the processes by which confiscation can occur. Relevant to the present proceedings, these include restraining orders prohibiting disposal of or dealing with property, and forfeiture orders under which property is forfeited to the Commonwealth. Chapter 2 also provides for a scheme by which a person whose property is subject, or may be subject, to a restraining or forfeiture order, may apply to exclude certain property from the relevant order.

5. [18]

   The distinct terms “serious offence” and “indictable offence” are defined in the Act. Their meanings and differences are important to the present circumstances. Section 338 defines both terms. The definition of “serious offence” in s 338 gives a list of offences that are serious offences, whereas an “indictable offence” is defined as “an offence against a law of the Commonwealth, or a *non‑governing Territory, that may be dealt with as an indictable offence (even if it may also be dealt with as a summary offence in some circumstances)”.

6. [19]

   Section 18 provides that property may be restrained where the appropriate officer of the AFP holds the reasonable suspicion that a person has committed a serious offence.

7. [20]

   Section 19 provides that property may be restrained where the appropriate officer of the AFP holds a reasonable suspicion that the property is the proceeds of a foreign indictable offence, a terrorist offence or “indictable offences of the Commonwealth” or else is the instrument of a serious offence.

8. [21]

   Sections 29 and 29A set out reasons why property can be excluded from restrained property. In substance, these reasons require (or permit) exclusion where it is shown that the reasonable belief or suspicion upon which the order was obtained, cannot be made out. Satisfaction of a number of other matters is also required.

9. [22]

   An application for exclusion can be made under ss 30 and 31. Section 31 deals with excluding property from restraining orders after a restraining order has been made, a feature of the 2020 Motion. It provides:

10. [23]

    Section 42 deals with an application to revoke a restraining order, another feature of the 2020 Motion. It provides:

11. [24]

    Section 49 deals with forfeiture orders of property suspected of being proceeds of indictable offences. It provides:

12. [25]

    Section 73 of the Act is in the following terms:

13. [26]

    Where property has been restrained, s 180 of the Act provides that a Court may make an examination order for the examination of a person whose property is restrained, or else a person who has an interest in the property.

14. [27]

    Part 3 of the Act makes provision for the obtaining of evidence and documents by compulsory processes of various kinds. Those provisions are contained in Parts 3-1, 3-2, 3-3 and 3-4. Part 3-5 only contains s 266A of the Act which is in the following terms. I omit the lengthy Table which is imported into the section:

Reinstatement Motion

1. [28]

   The Reinstatement Motion relates to the circumstances leading up to the defendants’ entry into the consent orders with respect to the 2020 Motion. The central basis for the Reinstatement Motion is that the defendants were given incompetent legal advice by King’s Counsel, which led to them agreeing to the consent orders disposing of the 2020 Motion, and to them making the related undertaking. The defendants have waived legal professional privilege over the relevant legal advice.

2. [29]

   For the sake of clarity, whilst the advice was provided directly to the first defendant, it was made available, at least in substance, to the other defendants who acted upon it.

3. [30]

   The legal advice in question is summarised in an affidavit by the defendants’ solicitor dated 21 April 2021:

4. [31]

   According to the affidavit, King’s Counsel did not at the relevant time “provide advice on the effect of [s] 49(3)(b) of the [Act] where an exclusion application is withdrawn”.

5. [32]

   After the plaintiff requested that the defendant give the relevant undertaking, King’s Counsel likewise advised the defendants that it was appropriate to give the undertaking that the plaintiff had requested.

6. [33]

   The relevant King’s Counsel, who no longer acts for the defendants, has affirmed an affidavit which confirms this chronology and the substance of the advice. He accepts that at the relevant time, he was unaware of the terms or effect of s 49(3) of the Act (see [24] above), and it was due to this ignorance that he gave the erroneous legal advice.

7. [34]

   The defendants contend that on the basis of this erroneous legal advice, they instructed their solicitors to withdraw the 2020 Motion and reach the consent position, including the undertaking, which is recorded in the orders of the Common Law Registrar on 21 July 2020.

8. [35]

   After becoming aware of the existence of s 49(3)(b) of the Act, King’s Counsel advised the defendants that the apparent effect of their withdrawal of the 2020 Motion was that the AFP may be able to obtain a forfeiture order without the need to provide evidence of any illegal activity. King’s Counsel told the defendants that they should seek advice from alternative counsel. He ceased to have any further involvement.

9. [36]

   The defendants submit that the Court has an inherent power to set aside an interlocutory order of the kind made in these proceedings by consent on 21 July 2020, relying on Taylor v Taylor (1979) 143 CLR 1. They likewise submit that the 21 July 2020 consent orders were interlocutory orders, citing Commissioner of the AFP v Kalimuthu (No 2) (2018) 340 FLR 1 at [313] (Buss P). They also submit that the 2020 Motion was itself an interlocutory application, citing Commissioner of the Australian Federal Police v Lee (No 2) [2016] NSWSC 1131 at [19] (Campbell J).

10. [37]

    In relation to the alternative relief sought (to release the defendants from their undertaking not to bring another exclusion application), the defendants submit that the Court has inherent power to release them from the undertaking, relying on Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177-178 (Gibbs CJ, Aickin, Wilson and Brennan JJ).

11. [38]

    The defendants’ submissions then turned to the test to be applied by the Court in setting aside interlocutory orders, or alternatively, releasing a party from an undertaking. In relation to the former, the defendants relied on Schutz DSL (Aust) Pty Ltd v VIP Plastic Packaging Pty Ltd (No 5) [2010] FCA 1105 at [16] (McKerracher J):

12. [39]

    In relation to the “… justice of the matter …”, the defendants relied on Commonwealth Bank of Australia v Law Debenture Trust Corp PLC (No. 4) [2018] WASC 165 at [98] (Pritchard J):

13. [40]

    The defendants then submitted that the evidence confirms that when the defendants reached the consent position, including in relation to giving the undertaking, they were acting on the advice of their lawyers. Where such advice is clearly erroneous, they submit that it would be unjust to hold them to the order to which they consented, and to the proffered undertaking.

14. [41]

    The defendants submitted that the withdrawal and dismissal of the 2020 Motion, coupled with the proffering of the undertaking, place them at a very real and significant disadvantage in the proceedings. The disadvantage is that once an active exclusion application is withdrawn, s 49(3)(b) has the effect that the matters specified in s 49(1)(c) do not have to be established by the relevant authority for the forfeiture order to be granted: Commissioner of the Australian Federal Police v Vo (2015) 302 FLR 209 (Schmidt J) (“Vo”). The application for forfeiture is therefore reduced to a mere “formality”.

15. [42]

    The defendants submit that their application for exclusion (which the Reinstatement Motion seeks to reinstate) has merit, is genuinely advanced, and gives rise to a triable issue. That is to say, the defendants are not making that application “as an entirely artificial device”, to use the words of Schmidt J in Vo (at [61]).

16. [43]

    The defendants finally submit that there has been no delay in bringing and prosecuting the Reinstatement Motion.

17. [44]

    The defendants submitted that, because of the wording of some of the correspondence exchanged with the plaintiff at the time the consent orders were being agreed, it must have been apparent to the plaintiff that the defendants were not aware of the operation of s 49(3)(b) of the Act at the time and ought not to have participated in the making of the consent orders in accordance with its model litigant obligations. However, in oral submissions, the defendants went to some lengths to emphasise that they accept that the mistaken advice was a mistake “on [their] side”, and that the relevant correspondence is not something the Court should take into account in determining the Reinstatement Motion, except perhaps with respect to costs.

18. [45]

    The plaintiff accepts that the consent orders here are interlocutory, and that the Court has an inherent power to set aside an interlocutory order. The giving and acceptance of the erroneous advice by King’s Counsel is not challenged. Likewise, it is not challenged that the erroneous advice was relied upon by the defendants to enter into the Court orders.

19. [46]

    The plaintiff disputes the defendants’ submission that an application for forfeiture is reduced to a mere “formality” if s 49(3)(b) of the Act is engaged. The plaintiff points to the interoperation between ss 18, 19, 47 and 49 of the Act. In these proceedings, the plaintiff notes that all of the subject property was restrained pursuant to s 18 of the Act, with some also restrained pursuant to s 19 of the Act. In relation to the property that is restrained solely under s 18, the plaintiff observes that the corresponding provision for forfeiture orders is s 47, not s 49, and that s 47 has no equivalent to s 49(3)(b). Therefore, for that property, the fact that the defendants withdrew the 2020 Motion has no effect, because the plaintiff cannot rely on s 49(3)(b) and would still need to prove the factors in s 47(1) of the Act.

20. [47]

    The plaintiff also points to s 73 of the Act. The plaintiff submits that, relying upon s 73, the defendants can still pursue an exclusion order at the time the plaintiff makes an application for forfeiture. The application for exclusion from forfeiture under s 73 can be heard at the same time as the application for forfeiture: s 73(1) of the Act. The plaintiff submits that the existence and effect of this provision casts doubt on the assertion that an application for forfeiture is reduced to a mere “formality” if s 49(3)(b) is engaged.

21. [48]

    The plaintiff submits that even if the Reinstatement Motion was successful, and the orders sought in the 2020 Motion were reagitated, the defendants would have insufficient prospects of success in obtaining such orders. This submission is concerned with the interoperation between ss 29 and 31. Section 31 permits a person to apply for an order under s 29 if a restraining order that covers the relevant property has been made. The plaintiff submits that the defendants would be unable to satisfy the requirements of s 29(3)(a). This is plain, the plaintiff contends, from the evidence. The plaintiff notes that this s 29(3)(a) problem was acknowledged by King’s Counsel in the advice which has now been disclosed.

22. [49]

    In dealing with the issue of whether the defendants have some prospect of success, the plaintiff notes that a pecuniary penalty order (“PPO”) is sought against both the first and second defendants under s 116 of the Act. Section 29(4)(a) of the Act provides that a Court must not exclude a specified interest in property from a restraining order under s 18 unless the Court is also satisfied that a PPO could not be made against the person who has that interest in property. The plaintiff submits that if the orders sought in the 2020 Motion were reagitated, s 29(4)(a) would require the defendants to satisfy the Court that a PPO could not be made against the first and second defendant. That is, they would have to establish that they had not committed any serious offence: s 116(1)(b)(ii).

23. [50]

    The plaintiff submits that if the Court granted the relief sought in the Reinstatement Motion, that would only serve to further fragment and delay the proceedings. Instead, the plaintiff contends, the parties and the Court should move to a final hearing for forfeiture and exclusion from forfeiture, at the earliest available time. Therefore, the plaintiff contends that there are case management benefits in refusing the relief sought.

24. [51]

    The evidence of the King’s Counsel, upon whose advice the defendants acted, was not challenged. That evidence contains a clear admission of error in the advice provided to the defendants on two occasions. King’s Counsel could not have been more frank that the error arose because of ignorance of the relevant provision on his part. In that respect, he said that at the relevant times “I was utterly unaware of the terms or effect of s 49(3) of the Act”.

25. [52]

    The evidence of the solicitor for the first and second defendant, Ms Alfan, which was also not challenged, was clear in that the defendants instructed her to act upon the advice received from King’s Counsel by writing to the AFP to offer to withdraw the 2020 Motion. The letter which she wrote on 28 May 2020 corroborates her evidence about her instructions. Ms Alfan’s correspondence with the AFP is also clear evidence that the defendants, in acting as they did to withdraw the 2020 Motion, and in agreeing to give the undertaking sought by the AFP, were not making any concession with respect to any entitlement of the AFP to obtain a forfeiture order.

26. [53]

    Ordinarily, the interests of justice in the context of such an error affecting an interlocutory order of the Court would suggest, in the absence of any demonstrated prejudice to the opponent, that the Court would remedy the consequences of the error and make the orders sought by the defendants. This is particularly so where there is not suggested to be any conduct at all on the part of the defendant which contributed to the error.

27. [54]

    The AFP do not adduce any evidence which seeks to establish that any prejudice would exist if the orders sought in the Reinstatement Motion were made. No additional costs were identified as being incurred by the AFP.

28. [55]

    However, the effect of the AFP’s submissions in opposition to the orders sought is that the defendants are not, in fact, disadvantaged by the dismissal of the 2020 Motion and the undertaking which was given because equivalent relief may be available at a later stage of the proceedings.

29. [56]

    The plaintiff draws attention to the provisions of s 73 of the Act, which provides that when a person has applied for an order excluding a specified interest in property from forfeiture, a Court hearing a forfeiture application may exclude such property either before a forfeiture order is made, or else in certain limited circumstances, after it has been made.

30. [57]

    The AFP submits that the only relevant restriction in the undertaking given by the defendants is upon the making of “… any further exclusion from restriction application …”. They point out that an application made under s 73 would not be in breach of the undertaking.

31. [58]

    I accept that the defendants could seek an exclusion order under s 73 of the Act, and that the submissions of the plaintiff here would prevent any later contention by it that the defendants were constrained in making such an application by the terms of their undertaking.

32. [59]

    However, I do not accept that the provisions under the Act for making exclusion applications, either under s 29 or else under s 73, are to the same substantive effect, with the result that there is no material disadvantage to the defendants if the orders in the Reinstatement Motion are not granted.

33. [60]

    As the oral submissions in reply of counsel for the defendants demonstrated, there is an observable difference in the two different types of applications when dealing with property restrained pursuant to s 19 of the Act. Where an exclusion order is sought under s 29 of the Act, if the property has been restrained under s 19, it must be shown that the interest in the property claimed was not the proceeds of an indictable offence of Commonwealth concern, or an indictable offence against a law of a State (or Territory) or against a foreign law: s 29(2)(d)(i), nor was the property (or an interest in it) an instrument of any serious offence: s 29(2)(d)(ii).

34. [61]

    Where the application for exclusion orders is made pursuant to s 73, at the time the Court is dealing with forfeiture orders pursuant to ss 47 and 49, then to successfully obtain an exclusion order, the defendants would need to show that the relevant interest in property is neither the proceeds of unlawful activity: s 73(1)(c)(i), or else an instrument of any serious offence: s 73(1)(c)(ii).

35. [62]

    Proof that the property (or an interest in it) is not the proceeds of unlawful activity, a concept which is at large – and would include any act or omission that constitutes an offence, whether indictable or not, against a law of the Commonwealth, a State or Territory, or any foreign country (see s 338) – is considerably harder than proof of the kind required with an application under s 29. An application under s 29 relates to indictable offences of the Commonwealth and does not include offences against a law of a State (or Territory) except as earlier explained if the proceeds are dealt with contrary to a law of the Commonwealth. It also does not include offences against a law of a foreign country.

36. [63]

    In my view, these different proof requirements are sufficient to amount a material disadvantage to the defendants if the orders sought in the Reinstatement Motion are not granted, and if they are required to seek relief at the time the Court is asked to make forfeiture orders. On this basis, I conclude that it would be appropriate to exercise the discretion to grant the order sought.

37. [64]

    In any event, even if this conclusion is incorrect, I nevertheless would exercise my discretion to make the order. In the circumstances of this case, the erroneous advice upon which the defendants reasonably acted has deprived the defendants of a statutory entitlement, namely, to seek an exclusion order under s 29, a path upon which they had embarked by filing the 2020 Motion. That statutory entitlement is one standing alone which is of value to the defendants whose property has been restrained. It is not in the interests of justice that through no fault of their own, and having acted reasonably, the defendants ought to be deprived of that statutory right whatever its real worth is to them.

38. [65]

    This conclusion means that it is unnecessary and inappropriate to engage in the exercise for which the plaintiff contended, namely, in the course of this interlocutory hearing and in the absence of evidence, to come to a view that any application for an exclusion order made by the defendants under s 29 is bound to fail and, accordingly, to make the orders sought in the Reinstatement Motion would be futile. In a case such as this, where no fault can be attributed to the defendants for their conduct, such an exercise would not be in the interests of justice. It would have the effect of imposing a threshold test which they would be obliged to satisfy before exercising their statutory rights. No such test is required by the Act, and it ought not be imposed, indirectly, in the circumstances here.

39. [66]

    I am satisfied that the discretionary power of the Court ought be exercised in favour of the defendants and that the following orders on the Reinstatement Motion are appropriate, even though they were expressed in the alternative:

    1. (1)

       The orders of the Court made by consent on 21 July 2020 be, and hereby are, set aside.

    2. (2)

       The defendants, and each of them, be and hereby are, released from the undertaking given respectively by each of them to the Court, as recorded in Order 3 of the orders of the Court dated 21 July 2020.

Section 266A Motion

1. [67]

   The s 266A Motion relates to the orders for compulsory examination of the first defendant made by Bellew J on 27 October 2020. After those orders were made, the first defendant became concerned that documents produced by him for the examination and answers given by him to questions at the examination, might be disclosed by the plaintiff to law enforcement authorities in foreign countries who are investigating criminal activity and not necessarily proceeds of crime activity.

2. [68]

   This concern appears to be based upon correspondence from the plaintiff (albeit a branch of the plaintiff separate from the branch associated with these particular proceedings) to the first defendant advising him that he is “the suspect of an investigation in Austria in relation to aggravated fraud offences” and that:

3. [69]

   That correspondence was dated about three weeks after the commencement of these proceedings in December 2019. The first defendant says that he has not heard from that other branch of the plaintiff since, and does not know the status of the investigation in Austria. He has not heard directly from any Austrian authority.

4. [70]

   After the orders for examination were made, and as a result of his concerns, the first defendant indicated in correspondence to the plaintiff that he would apply to the court for an order under s 266A(2)(b) of the Act to prohibit disclosure of compulsorily obtained material to law enforcement authorities in foreign countries.

5. [71]

   The plaintiff subsequently gave an interim undertaking that no such disclosure would occur so as to allow for the resolution of any s 266A application filed by the first defendant. The plaintiff subsequently extended the currency of that undertaking on a number of occasions, including on the day of the hearing. At present, the currency of the undertaking continues until seven days after the delivery of this judgment.

6. [72]

   After the plaintiff first provided the interim undertaking, the first defendant produced a trove of documents to the approved examiner. On 17 March 2022, before any substantive examination occurred, the approved examiner adjourned the first defendant’s examination hearing to allow for the resolution of any s 266A application filed by the first defendant.

7. [73]

   On 23 March 2022, the first defendant filed the s 266A Motion in this Court. The first defendant amended its terms slightly in written submissions before the hearing. The primary order sought, as amended, is as follows:

8. [74]

   The s 266A Motion also seeks other related and consequential orders, including for costs.

9. [75]

   The wording “otherwise than in accordance with Items 1, 2, 2B, 2D, 3 and 6 of the Table …” has the effect that the first defendant does not seek to prevent the disclosure of examination material for the purposes of the Act, for the purposes of State and Commonwealth criminal law, or for the purposes of State confiscation proceedings. The first defendant’s concern is only in relation to disclosure to foreign law enforcement authorities or their associated entities.

10. [76]

    The first defendant submits that s 266A(2)(b), read together with s 314(1), confers jurisdiction on the Supreme Court to make an order prohibiting the disclosure of the information to the authority for a specified purpose, relying on Onley v Commissioner of the AFP (2019) 345 FLR 241 at [272] (Basten JA with Meagher JA agreeing at [418]). Section 314(1) provides that jurisdiction “is vested in the several courts of the States and Territories with respect to matters arising under [the] Act”.

11. [77]

    The first defendant accepts that he has the onus of proof to persuade the Court to make such an order.

12. [78]

    The first defendant accepts that he has to demonstrate that he would suffer prejudice by the answers he gives in the examination and by any documents which he produces, and that a s 266A(2)(b) non-disclosure order is the most appropriate way to address that prejudice. He relies on the note to s 319(6)(e) of the Act, which expressly lists “an order prohibiting the disclosure of information” as being an order of the type that the court might make (instead of a stay) to “address any prejudice” that an examinee “would suffer if the proceedings were not stayed”.

13. [79]

    He also relies on the Explanatory Memorandum to the amending legislation which introduced s 266A, which states that the provision was introduced as part of a package to “strengthen the protection of sensitive information”.

14. [80]

    The first defendant describes the prejudice to him, if the orders sought in the s 266A Motion are not made, in this way:

15. [81]

    The first defendant’s submissions then turned to the so-called companion principle, which is the principle that, in criminal proceedings, the accused person cannot be compelled to assist the prosecution to make its case (see Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2015) 256 CLR 375; [2015] HCA 1, at [37] (French CJ, Kiefel, Bell, Gageler and Keane JJ)). The first defendant submits that such principle is applicable here.

16. [82]

    The first defendant accepts that in R v Independent Broad-based Anti‑corruption Commissioner (2016) 256 CLR 459; [2016] HCA 8 (“IBAC”), the High Court of Australia (French CJ, Kiefel, Bell, Keane, Nettle and Gordon JJ) refused to extend the companion principle to a case in which the relevant persons had not been charged and where there was no prosecution pending: at [48]-[51].

17. [83]

    The first defendant submits that the circumstances here can be distinguished from IBAC, because it is uncertain as to whether or not he has been charged in Austria. In addition, IBAC concerned whether an examination power was exercisable, not any prohibition on the disclosure of information for a purpose which is extraneous to the purpose for which the examination will be conducted. Finally, he submits that IBAC concerned a different statute, and was not concerned with disclosure to foreign law enforcement authorities which did not fall within the scope of that statute.

18. [84]

    The first defendant points to the recent decision of Commissioner of the AFP v Li [2022] VCC 868 to make the submission that s 266A involves “a balancing exercise [which] must weigh the negative impact of a quarantining order on the Commissioner’s ultimate pursuit of a forfeiture application as against” other matters such as legitimate “personal concerns”: at [49]-[50]. The first defendant contends that there is no real negative impact to the plaintiff of a quarantining order in this case, and so the balancing exercise weighs in his favour. He submits that the orders he seeks do not impinge on the plaintiff’s ability to conduct the examination, nor its ability to lawfully use the examination material for the plaintiff’s domestic purposes, thereby satisfying the principal objects of the Act.

19. [85]

    The first defendant submits that on the material before the Court, the AFP is likely to make a disclosure to Austrian authorities, legitimising his concerns. First, he contends that – although the branch of the plaintiff which advised him of the fact of the investigation in Austria and the Mutual Assistance Request (“MAR”) is distinct from the branch concerned with these proceedings – for all intents and purposes, the AFP is one entity, and the different branches cooperate and overlap. He points to certain written evidence in the proceedings and some of the plaintiff’s policy documents such as Standard Operating Procedures. Secondly, he submits that the examination to which he is subject is broad and may well canvass matters which may be relevant to Austrian authorities.

20. [86]

    Having regard to the above matters, the first defendant submits that the making of the orders sought in the s 266A Motion are proportionate, and entirely appropriate.

21. [87]

    The plaintiff submits that the s 266A Motion is premised on impermissible speculation about the content of any Austrian investigation and the application of Austrian law and procedures, with respect to the investigation. The plaintiff says that there is no evidence establishing any of those matters. Even applying a presumption that Austria follows the same conventions in criminal prosecutions as Australia, the plaintiff submits that there is no justification for the making of the orders given that there is no evidence that the first defendant has been charged with an offence in Austria, or in any other jurisdiction. The plaintiff emphasises that the companion principle does not apply to circumstances in which the relevant person has not been charged, which is clearly applicable to the present proceedings. Here, there is no evidence that the first defendant has been charged with the commission of any offence in Austria or anywhere else, including Australia.

22. [88]

    The plaintiff submits that the prejudice alleged by the first defendant is likewise founded only on speculation, surmise and conjecture. There is no evidence to suggest an overlap or common background between any proceedings in Austria and the present proceedings.

23. [89]

    The plaintiff submits that the making of the orders sought would have the potential to interfere with the exercise of the plaintiff’s functions under the Act. The orders would be likely to prevent the plaintiff from giving effect to, or safeguarding, the existing worldwide restraining orders against the first and second defendants. In addition, they might prevent any disclosure of matters to any international authorities with whom the plaintiff must be free to communicate in order to achieve the objects of the Act. The plaintiff points to the fact that the first defendant had business dealings in a number of foreign countries.

24. [90]

    In particular, the plaintiff submits that s 5(f) of the Act provides that one of the principal objects of the Act is to give effect to Australia’s obligations under the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (the “Europe Convention”), and other international agreements relating to proceeds of crime. The plaintiff submits that at the heart of the Europe Convention is an intention for the party states to cooperate with each other and share relevant information.

25. [91]

    The plaintiff submits that the refusal of the s 266A Motion would not prevent the first defendant from approaching the Court at a later time when there is a proper evidentiary basis for an application directed to preventing a specific apprehended disclosure. The plaintiff submits that the first defendant can seek orders from the Court when the true prejudicial effects can be identified and established.

26. [92]

    Ultimately, the parties reached a common position with respect to the power which the Court was being asked to exercise in making the orders sought in this Motion. The parties were ad idem that the Court was only entitled to exercise such powers as existed in s 266A of the Act, and that reliance could not be placed on the powers which exist in s 86 of the Civil Procedure Act 2005, or those contained in the Uniform Civil Procedure Rules 2005, to impose conditions on any order made such as to impose a requirement of the giving of notice prior to making a disclosure. It is appropriate to proceed on that basis.

27. [93]

    Chapter 3 of the Act (which includes s 266A) is headed “Information Gathering”. As earlier noted, it provides for a number of different methods by which law enforcement authorities can obtain information through identified compulsory processes. With respect to an examination, which is one of those compulsory processes, a person is compelled to answer questions and produce documents notwithstanding the potential for self-incrimination, or the existence of legal/professional, or other forms of, privilege: s 197(2) of the Act.

28. [94]

    Section 198 provides that an answer given, or a document produced, in an examination is not admissible in any civil or criminal proceedings against that person, subject to stated exceptions – none of which are presently relevant.

29. [95]

    A similar requirement exists with respect to the provision of sworn statements provided pursuant to s 39. That restriction on admissibility is to be found in s 39A of the Act.

30. [96]

    Section 266A(2) has a permissive effect with respect to information obtained by any of the compulsory processes provided for in Chapter 3 of the Act.

31. [97]

    Section 266A(2) in clear terms permits a person who obtains the information, who in this case will be a member of the AFP, to disclose the information to various authorities for various defined purposes. That permission is conditioned in two ways. First, it is necessary that the person intending to disclose the information believes, on reasonable grounds, that the disclosure will serve the identified purpose: s 266A(2)(a), and secondly, a court must not have made an order prohibiting the disclosure of the information to the authority for that purpose: s 266A(2)(b).

32. [98]

    Relevantly for the present application, Item 2A in the Table which forms part of s 266A identifies that an authority to whom information is permitted to be given is the authority of a foreign country that has a function of investigating or prosecuting offences against a law of that country. The identified purpose is as follows:

33. [99]

    It is relevant to note that the Act in various of its provisions differentiates between the use of information for the purposes of criminal investigation and prosecution generally on the one hand, and for dealing with the proceeds of crime on the other. The principal objects of the Act have been set out above at [15].

34. [100]

    Section 6 of the Act notes that the Act establishes “a scheme to confiscate the proceeds of crime”. It notes that this scheme is achieved by the legislation setting out processes by which confiscation can occur (Chapter 2), ways in which the Commonwealth law enforcement agencies can obtain information relevant to these processes (Chapter 3), and related administrative matters (Chapter 4).

35. [101]

    The threat of confiscation of assets is no doubt one of the means by which individuals may be deterred from breaching laws of the Commonwealth or being punished for breaching the laws because they will be deprived of their assets.

36. [102]

    In order to undertake relevant functions under the Act, the AFP, on the unchallenged evidence before me from Commander Stephen Fry of the Criminal Assets Confiscation Task Force, has put into place detailed structures, practices and procedures to ensure that the information obtained by the compulsory processes under the Act, which he accepts is highly sensitive information (or else may include highly sensitive information), should be dealt with in a way which so far as is possible is separate from material used by those officers of the AFP who are engaged in a criminal investigation directed to offences against Commonwealth legislation.

37. [103]

    Commander Fry notes that investigations by the Criminal Assets Confiscation Task Force, and litigation associated with those investigations, are separate functions within the AFP from the investigation and prosecution of criminal matters and are carried out by separate teams. Relevantly, the teams have separate reporting lines which are intended to avoid the risk of any inadvertent disclosure to criminal teams in the AFP of information and evidence obtained during proceedings commenced under the Act.

38. [104]

    It is not necessary to set out that comprehensive detail which was not the subject of any challenge.

39. [105]

    Commander Fry noted that those involved with criminal assets investigation have not had any involvement in any MAR from foreign jurisdictions with respect to the first defendant. He specifically noted that members of the Criminal Assets Investigation teams have not had any involvement with the MAR from Austria.

40. [106]

    Since the MAR is central to the arguments of the first defendant that a prohibition order ought be made, it is relevant to note the terms of it, and the first defendant’s response to it as far as they are revealed by the evidence. Earlier reference has been made at [68]. It can conveniently be repeated here.

41. [107]

    On 10 January 2020, an officer of the AFP wrote to the first defendant’s solicitor, noting the following:

42. [108]

    After taking instructions from her client, the solicitor for the first defendant responded to the officer of the AFP in the following terms:

43. [109]

    The evidence before me as to the Austrian investigation, including its status, the nature of any of the allegations, the involvement of the first defendant, or any of the other defendants, if any, including the role which any of them may have in such an investigation, is entirely unknown. Nothing other than the fact of the request is available to the Court.

44. [110]

    I note in the evidence that the first defendant has instructed his solicitor that he has no connection to Austria, has never had business dealings in Austria and has no understanding of the allegations against him beyond that which is contained in the email from the AFP set out above. However, he has instructed his solicitor that he has had business dealings in the Czech Republic and in the United Arab Emirates. In connection with those jurisdictions, he has had customers of his various businesses make complaints to authorities about transactions “… with third parties where companies associated with [the first defendant] acted as intermediary or facilitator”.

45. [111]

    It is on the basis of the MAR request that the first defendant moves for the disclosure prohibition orders.

46. [112]

    In making the application, the first defendant submits that he would be prejudiced by the risk of information which has been obtained through the compulsory processes of Chapter 3 of the Act being provided to authorities in Austria pursuant to the MAR, or any other overseas authority, so that it could be used, not only for the purposes of dealing with proceeds of crime (either by way of investigation or prosecution) but rather more generally to be used for the purposes of any general criminal investigation and prosecution. He notes that the provisions of ss 39A and 197 would not permit the use of such material in any civil or criminal proceedings in Australia. He submits that the position overseas is contrary to the protections provided in Australia.

47. [113]

    There is a clear legislative provision in s 266A which identifies authorities to whom information obtained under the Act may be provided, and which identifies the purposes for which such disclosure may be made. There is no doubt that the identified authorities and purposes are those which would fit within the objects of the Act to which earlier reference has been made, including that the provision of such information would assist in the deterring of individuals from breaching laws of the Commonwealth, undermining the profitability of criminal enterprises and giving effect to Australia’s international obligations under the Europe Convention earlier described.

48. [114]

    Whilst the legislation also provides this Court with the power to make disclosure prohibition orders, that power would need to be undertaken on the basis of a sure footing, where prejudice is clearly demonstrated.

49. [115]

    For several reasons, I am not persuaded that such a sure footing has been demonstrated on the evidence here. First, the MAR which was made was limited to interviewing the first defendant as a suspect. Pursuant to the MAR, when asked to submit to an interview, Mr Kogan declined, as was his right. So far as can be presently ascertained, there has been no further MAR. The AFP has not been able to provide any assistance to the Austrian authorities. The matter seems at an end. There is no suggestion in the evidence that any criminal proceedings have actually been commenced against the first defendant in Austria.

50. [116]

    Secondly, whilst, of course, the AFP, under s 266A, could provide information to the Austrian authorities notwithstanding the expiration of the MAR, before they did so, the person providing the information would need to form a belief on reasonable grounds that the disclosure would serve the relevant purpose. On the material presently available to this Court, including but not limited to the fact that no charge has been identified, the terms of any investigation by Austrian authorities has not been identified, and the way in which the first defendant is involved in that investigation has not been identified, there is simply no material upon which an officer of the AFP could form a belief on reasonable grounds that any disclosure of material obtained pursuant to the compulsory processes in the Act would satisfy the purpose for which disclosure may be made as set out in the Table to s 266A.

51. [117]

    It is not insignificant for the Court to be asked to make an order prohibiting the disclosure of information to authorities of a foreign country which may be part of a combined effort supported by an international convention by law enforcement authorities in countries around the world to deter crime associated with proceeds of crime or else criminal activities enabled by the receipt and concealment of the proceeds of crime.

52. [118]

    In light of the fact that the legislation has specifically addressed and approved of the fact that information which could be used adversely to an individual in a criminal prosecution may be provided, and in the absence of any proof or soundly-based belief that any information is available falling within the stated purpose to be provided to a foreign country, or that there is any basis for the foreign country to seek such information, I am wholly unpersuaded that a disclosure prohibition order should be made of the kind sought by the first defendant.

53. [119]

    In coming to that conclusion, I recognise the apparent anomaly in the legislation that compulsorily obtained information cannot be admitted as evidence in any civil or criminal proceeding in Australia, but yet it could be used in proceedings overseas for such a purpose. Whilst the legislation permits such a position, it has not occurred by accident or by a lack of careful drafting. On the contrary, as the relevant Explanatory Memorandum shows, the contents of the Table attached to s 266A are a carefully considered and intended decision on the part of the Commonwealth Parliament.

54. [120]

    I am not prepared to make the orders sought in the s 266A Motion.

55. [121]

    Accordingly, the s 266A Motion ought be dismissed.

Costs

1. [122]

   The defendants, who are the applicants on these Motions, have succeeded in respect of the first Motion, but the first defendant has failed in respect of the second Motion.

2. [123]

   In my view, the appropriate order to make in the circumstances is that each party bear its, his and her own costs of the Court’s hearing of the two Motions.

Orders

1. [124]

   Accordingly, I make the following orders.

   1. (1)

      In respect of the Reinstatement Motion:

   2. (2)

      In respect of the Section 266A Motion, order that the Notice of Motion filed 23 March 2022 be dismissed.

   3. (3)

      In respect of costs, order that each party pay its, his or her own costs of both Motions.