Commissioner of the Australian Federal Police v Dickson

1. [1]

   HIS HONOUR: Before the Court are two interlocutory applications brought in respect of a second further amended summons and cross-summons filed by the Commissioner of the Australian Federal Police (“the plaintiff”) and Anthony Dickson (“the first defendant”) on 23 June 2014 and 16 March 2021 respectively.

2. [2]

   The first in time is an application by notice of motion filed by the first defendant on 18 September 2020 seeking a stay or dismissal of par 29 of the plaintiff’s second further amended summons (“par 29”), by which the plaintiff seeks a pecuniary penalty order (“a PPO”) against the first defendant pursuant to s 116 of the Proceeds of Crime Act 2002 (Cth) (“the Act”).

3. [3]

   The second is an application by notice of motion, filed by the plaintiff on 23 April 2021, seeking a dismissal of the first defendant’s cross-summons, by which the first defendant seeks to challenge the constitutional validity of ss 18, 92, 95, 102, 104, 116-126 and 130 of the Act, pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) (“the UCPR”).

Background

1. [4]

   On 5 April 2012, the plaintiff commenced proceedings by summons under the Act against 13 defendants, including the first defendant, Michael Issakidis (“the second defendant”) and corporate entities, seeking orders with respect to property suspected of being the proceeds of crime. Following an application that was heard ex parte on the same date, orders, including restraining orders pursuant to s 18 of the Act and examination orders, were made. The second further amended summons named 17 defendants and sought, in addition, forfeiture orders.

2. [5]

   Paragraph 29 of the second further amended summons, which reproduced par 26 of the summons, sought a PPO against the first defendant:

3. [6]

   On 21 August 2014, criminal proceedings were commenced against the first defendant. Following X7 v Australian Crime Commission (2013) 248 CLR 92; 2013 HCA 29, the plaintiff determined that the civil proceedings should be paused until the criminal charges were resolved. The plaintiff submitted that the application was periodically mentioned thereafter, which the first defendant denied at the hearing. I will return to that factual dispute later in this judgment.

4. [7]

   On 22 December 2014, the first defendant was found guilty by a jury of conspiring with the second defendant to dishonestly cause a loss or risk of loss to the Commonwealth, contrary to s 135.4(5) of the Criminal Code (Cth), and of conspiring with the second defendant to deal with property of a value of $1 million or more, believing it to be the proceeds of crime, contrary to ss 11.5(1) and 400.3(1) of the Criminal Code. Both offences are “serious offences” within the meaning of s 338 of the Proceeds of Crime Act.

5. [8]

   On 20 March 2015, the first defendant received an aggregate sentence of 11 years imprisonment with a non-parole period of 7 years: R v Dickson (No 18) [2015] NSWSC 268. In that sentence judgment, at [76] and [99], the extent of the loss or risk of loss that was intended by the first defendant to be caused to the Commonwealth was calculated at approximately $135 million.

6. [9]

   On 10 June 2016, the Court of Criminal Appeal dismissed an appeal against conviction by the first defendant and allowed the Crown’s appeal on sentence, resentencing him to 14 years imprisonment with a non-parole period of 9 years and 3 months: Dickson v R [2016] NSWCCA 105. On 16 December 2016, the High Court refused an application by the first defendant for special leave to appeal the decision of the Court of Criminal Appeal: Dickson v The Queen [2016] HCATrans 307. He is eligible for release to parole on 21 March 2024.

7. [10]

   The revival of the application for a PPO was the subject of notice by the plaintiff in a letter to the first defendant dated 17 August 2020, in which the plaintiff stated that it intended to seek a timetable for the service of its evidence in respect of par 29 at the next directions hearing, which was on 19 August 2020. As noted, the first defendant’s notice of motion was filed a month later.

8. [11]

   Property was eventually forfeited to the Commonwealth pursuant to the second further amended summons following the convictions and unsuccessful criminal appeals of the first and second defendant. Accordingly, the various other orders applied for in the second further amended summons are spent, and what remains, relevantly in respect of the first defendant, is par 29.

9. [12]

   To the extent that the first defendant’s filings and oral submissions at times are not perfectly expressed, I note that he is self-represented and is not a legal practitioner, although he does have the benefit of undergraduate and postgraduate degrees in law.

10. [13]

    In Seidler v Carroll & O’Dea [2013] NSWSC 338, McCallum J (as her Honour then was) referred to the specific considerations which must be balanced in a case involving a self-represented litigant:

The first defendant’s notice of motion

1. [14]

   The first defendant’s notice of motion filed on 18 September 2020 seeks a permanent stay of par 29 of the plaintiff’s second further amended summons pursuant to s 67 of the Civil Procedure Act 2005 (NSW) or, alternatively, that par 29 be dismissed pursuant to r 13.4 of the UCPR.

2. [15]

   Section 67 of the Civil Procedure Act is in the following terms:

3. [16]

   Rule 13.4 of the UCPR provides:

4. [17]

   An order for a temporary or permanent stay of proceedings pursuant to s 67 of the Civil Procedure Act may be informed by many diverse considerations. In written submissions, the first defendant identified four bases for summary dismissal and in a separate paragraph, possibly being a reference to staying the proceedings, stated:

5. [18]

   I note that an alleged abuse of process is an available basis for both remedies. Leaving aside the question of whether the proposition correctly states the ratio decidendi of Williams v Spautz, I presume that the basis upon which the first defendant seeks a stay of the proceedings is that it is an abuse of process, because it has been brought by the plaintiff for a purpose “ulterior to” that of obtaining a PPO.

6. [19]

   In any event, the first defendant’s submissions as to the relevant legal principles suggests that r 13.4(1)(b) is the main thrust of his objection to the proceeding. The test to be applied to determine whether no reasonable cause of action is disclosed, which is well known, is derived from the principles set out by Barwick CJ in General Steel Industries v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69 at 128-130 (“General Steel Industries”). The Court is to consider whether “the case of the plaintiff is so clearly untenable that it cannot possibly succeed”: see at 130.

7. [20]

   In General Steel Industries, Barwick CJ, at 128-129, emphasised the need for a court to be clearly satisfied that there is no reasonable cause of action disclosed.

8. [21]

   Rule 13.4(1)(b) of the UCPR was considered by the Court of Appeal in Ugur v Attorney General for New South Wales [2019] NSWCA 86. White JA, at [70], considered the purposes of the power in r 13.4 of the UCPR:

9. [22]

   In Leerdam v Noori (2009) 227 FLR 210; [2009] NSWCA 90, Macfarlan JA observed that the General Steel Industries principles may more frequently be satisfied where questions of law are in issue. His Honour, at [75], stated that:

10. [23]

    Some of the first defendant’s grounds for the orders sought in his notice of motion raised the same constitutional issues which are the basis of his cross-summons. Thus, the evidence relied upon by both parties and their written submissions overlaps with the material relied upon in respect of the plaintiff’s notice of motion.

11. [24]

    The first defendant read three affidavits affirmed by him on 13 September 2020, 15 February 2021 and 23 June 2021 respectively. He tendered three volumes of material and relied upon three sets of written submissions, dated 28 May 2021, 23 August 2021 and 27 September 2021. The plaintiff read an affidavit of James Michael Paterson affirmed 18 December 2020 (“the Paterson affidavit”). Mr Paterson is a financial investigator attached to the Criminal Assets Confiscation Taskforce of the Australian Federal Police (“AFP”). The plaintiff sought to tender six volumes of exhibits to that affidavit. They were admitted into evidence over the objection of the first defendant, except for two transcripts of the examination of two persons that were not pressed. The plaintiff relied upon written submissions dated 9 August 2021 and submissions in reply dated 20 September 2021.

The grounds of the notice of motion

1. [25]

   The first defendant seeks a permanent stay or dismissal of par 29 on seven bases, that I will refer to as grounds, and which I summarise as follows.

2. [26]

   Part 2-4 of Ch 2 of the Act is comprised of ss 115 to 150 and is titled “Pecuniary penalty orders”. The first defendant’s first basis asserts that par 29 cannot be deemed an application for a PPO because it does not comply with the requirements under Div 3 of Pt 2-4 of the Act, which is comprised of ss 134 to 139.

3. [27]

   A proceeds of crime authority may apply for a PPO pursuant to s 134 of the Act, which relevantly provides:

4. [28]

   The application must be accompanied by a written notice pursuant to s 136, which provides:

5. [29]

   The process of making a PPO is addressed in s 116 of the Act, which relevantly provides:

6. [30]

   The method of determining a penalty amount is set out in Div 2 of Pt 2-4 of the Act, which is made up of ss 121 to 133 and titled “Penalty amounts”. Section 121 relevantly provides:

7. [31]

   Section 122 of the Act, titled “Evidence the court is to consider”, sets out the evidence that the court is to have regard to in determining the value of benefits that a person has derived from the commission of an offence or offences. Sections 124 to 129 set out the process by which the court determines the value of benefits derived by the person from the commission of the illegal activity.

8. [32]

   In a section of his written submissions titled “Contents of a full and proper PPO application”, the first defendant submitted that the commencement of proceedings for a PPO requires the service of three documents upon a defendant:

9. [33]

   The first defendant submitted that the application for a PPO must:

10. [34]

    The first defendant submitted that, as well, “a detailed Submissions document … covering arguments supporting the PPO application” should have been served upon him with the application.

11. [35]

    The first defendant submitted that par 29 of the second further amended summons does not constitute an “application” for a PPO because it did not conform with these requirements.

12. [36]

    In relation to requirement “i”, concerning “elements and issues”, the first defendant listed 16 “elements” that should have been addressed in the application. These included such matters as the identification of the relevant “serious offences” pursuant to s 116(1)(a) of the Act, the identification of the relevant “benefits”, their value and how they were alleged to have been generated from the commission of the offence or offences (referring to ss 121, 122 and 123 of the Act), or matters which may reduce the extent of the penalty to be imposed such as the value of property already forfeited to the Commonwealth (referring to s 130 of the Act) or the tax already paid on the benefits derived (referring to s 131 of the Act).

13. [37]

    In oral submissions, the first defendant submitted that, because the plaintiff had not made an application as required by s 136 of the Act, he was unaware of the nature of the plaintiff’s case, stating:

14. [38]

    Secondly, insofar as the second further amended summons purports to be an “application” for a PPO, the first defendant submitted that it was not accompanied by a written notice or an affidavit in support of the application, in accordance with ss 136(1) and (3).

15. [39]

    Since the application was not properly made, the first defendant submitted that the plaintiff is out of time to make an application unless leave to apply outside the statutory period is granted pursuant to s 134(6) of the Act, the time for filing the application having expired on 31 August 2016 in accordance with s 134(2)(b).

16. [40]

    The plaintiff submitted that the application for a PPO was in accordance with the relevant provisions of the Act. The plaintiff noted that the term “application” is not defined in the Act, and that it should be construed as meaning no more than a formal request to the Court that identifies the relief sought, made by summons or notice of motion, rather than a concept that involves the pleading of material facts. The plaintiff submits that in this case, it was made by the initial summons filed in 2012.

17. [41]

    The plaintiff further submitted that the term “written notice” in s 136(1) of the Act means any written document which puts the person on notice of the application. There is no reason for it not to be the document serving the application itself or, as in this case, the notice and the application may be one and the same document. By way of analogy, the plaintiff referred to a notice of motion as a document that places a defendant on notice and at the same time constitutes the application for the orders that are sought. Accordingly, the plaintiff submitted that, in this case, the summons constituted a “written notice” for the purposes of s 136(1).

18. [42]

    The plaintiff submitted that, in due course, the Paterson affidavit may or may not be relied on by it in the hearing. If it is relied upon, it may be supplemented by additional affidavit material. Regardless, the affidavit only needs to be provided within a reasonable time before the PPO hearing.

19. [43]

    In written submissions in response, the first defendant stated:

20. [44]

    As noted, at the hearing the first defendant disputed that the second further amended summons had been the subject of regular listings in this Court between August 2014, when criminal proceedings were commenced against the first defendant, and August 2020, when the plaintiff sought to progress the matter by seeking orders as to a timetable for the service of material. The plaintiff was permitted to forward a schedule of the alleged listings within a set timetable and the first defendant was permitted time to respond with an alternative schedule if he wished, in order to enable the Court to determine if, as the plaintiff contends, the matter had been paused during that period rather than abandoned.

21. [45]

    The plaintiff forwarded a schedule of listings of the second further amended summons. The plaintiff’s further amended summons matter was listed on 19 June 2014 before Bellew J for case management. His Honour granted the plaintiff leave to file a second further amended summons. Thereafter, between (and including) 18 December 2014 and 8 July 2020, the second further amended summons was before the Court on 16 occasions for “order listing management”. On nine of those occasions, the matter was expressly stood over for further directions.

22. [46]

    In response, the first defendant stated that, with one exception, he had not been notified of those hearings. The exception was a directions hearing which took place on 22 October 2015. According to the plaintiff’s schedule, on that occasion two future hearing dates were vacated “by consent”. The first defendant stated:

23. [47]

    There are multiple references in Pt 2-4 of the Act to an “application” and “notice” of an application. Both terms are also used elsewhere in the Act. I note that in Pt 2-1, Div 1, titled “Restraining orders”, the Act specifies that an application for certain restraining orders must be supported by an affidavit of an authorised officer that states certain matters: ss 18(3), 20(3) and 20A(3) and in Pt 2-1, Div 2, s 26(2) of the Act. Division 2 also has notice provisions in terms that are structurally similar to s 136 of the Act and which also refer to the notice of the application, including “any affidavit”, which therefore has particular relevance in that Division.

24. [48]

    In Attorney General for New South Wales v XX (2018) 98 NSWLR 1012; [2018] NSWCCA 198, the Court said:

25. [49]

    As neither term is defined in the Act, in accordance with the principles of statutory interpretation in the authorities cited in this extracted passage from AG(NSW) v XX, the appropriate starting point for an understanding of their meaning is their natural and ordinary meaning in their context in Ch 2, Pt 2-4, Div 3 of the Act, cognisant of the manner in which those terms are used elsewhere in the Act.

26. [50]

    The first defendant has not referred to a statutory or regulatory provision that supports his submission as to what, at a minimum, constitutes an application for a PPO or notice of an application, pursuant to the provisions to the Act. Nor has he advanced authority for those propositions. In my view, the provisions in Pt 2-1 of the Act that expressly state that in certain circumstances an affidavit is to be included with an application for a restraining order is consistent with it not being necessary for an application for a PPO as referred to in Pt 2-4 of the Act to include or be accompanied by any documentation.

27. [51]

    There is no apparent impediment to a document commencing legal proceedings, in this case a summons, being the vehicle of the application and, by its service upon the first defendant, also being notice of that application for the purposes of s 136 of the Act. Although s 136(2) refers to a “a copy of the application” accompanying the notice, I do not accept that it prohibits the application consisting of orders sought in a summons or notice of motion that is duly served on a defendant.

28. [52]

    The third of the first defendant’s claimed three documents to accompany a notice pursuant to s 136(3) of the Act is “A copy of a supporting affidavit”. This misinterprets the provision in two respects. Section 136(3) does not oblige the responsible authority to serve an affidavit at the same time as the notice or at all, but if one is to be relied upon in support of the application, the responsible authority must serve it upon the defendant “within a reasonable time before the hearing of the application”.

29. [53]

    In those circumstances, in the interests of procedural fairness, one would expect a defendant to be informed of the evidentiary basis of the application and for it to be accompanied or closely followed by written submissions to advance argument in favour of the application. To conclude, I accept the plaintiff’s submission that the purpose of the application is to identify the relief sought, not to plead material facts or identify the evidence upon which the application is based.

30. [54]

    For the sake of completeness, I find that the first defendant’s written submission in response, which is noted at [43] above, misunderstands the plaintiff’s submission that the Paterson affidavit may be relied upon in due course pursuant to s 136(3) of the Act.

31. [55]

    Accordingly, I am not satisfied that the first defendant’s first ground in support of this notice of motion is made out.

32. [56]

    The second ground raises the same argument that the first defendant advances in support of his cross-summons. I will return to it later in this judgment.

33. [57]

    The first defendant submitted that the proceedings are an abuse of process for seven reasons. The first two reasons are that since the original summons seeking a PPO was filed in 2012, the plaintiff could have prosecuted the application at the time the defendant was sentenced or in combination with the plaintiff’s other applications to the court. Accordingly, the first defendant submitted that it would be oppressive for the plaintiff to prosecute the PPO so long after the original summons.

34. [58]

    The plaintiff responded that it was obliged to wait until the criminal proceedings and appeals had “run their course”, and that the PPO has always been part of the proceedings.

35. [59]

    The third reason, as advanced in the first defendant’s written submissions, is that the plaintiff had “concealed and suppressed ‘thousands and thousands of pages’ of seized documents”. The first defendant submitted that he was disadvantaged in resisting the plaintiff’s application by not having access to those documents, which had been seized by the AFP when executing search warrants on various properties. He said that he had attempted to recover copies of the documents by applications made pursuant to freedom of information legislation, but without success. He said, in oral submissions:

36. [60]

    The reference to “NeuMedix” is to “Neumedix Health Australasia Pty Ltd” (“Neumedix”), a company of which the first and second defendants were directors and which was central to the conspiracy alleged (and proved) against them in the criminal proceedings: R v Dickson (No 18) at [8]-[11].

37. [61]

    The plaintiff relied upon Mr Paterson’s affidavit evidence to the effect that the first defendant has made two freedom of information requests to the AFP and that both had been duly processed and responded to. Mr Paterson concluded, in his affidavit:

38. [62]

    The fourth reason advanced by the first defendant in support of the abuse of process ground rested on the proposition that the PPO was in fact an attempt to recover “an unsecured debt”, by “circumvent[ing] the normal legal process of dealing with a company’s creditors”. The fifth reason, closely related to the fourth, characterised the application as:

39. [63]

    In response to the first defendant’s fourth reason, the plaintiff submitted that any PPO ordered against the first defendant would be against him personally, meaning that corporate insolvency laws are irrelevant. In response to his fifth reason, the plaintiff submitted that the application for a PPO does not involve a determination of the first defendant’s civil liability to pay income tax.

40. [64]

    The sixth reason is that the first defendant is disadvantaged by the failure of the plaintiff to provide an “application” and “notice”. This reason is, in essence, a reformulation of the first ground and therefore I disregard it.

41. [65]

    The seventh reason is that it is submitted that “a considerable amount” of the evidence to be relied upon by the plaintiff at the hearing in support of its application will be the product of search warrants that were issued in the course of a criminal investigation and therefore would be inadmissible on a PPO application, which is a civil matter.

42. [66]

    The plaintiff noted that the first defendant has not identified what particular evidence he objects to and, in any event, he will have an opportunity to object to the admissibility of evidence at the hearing of the application, so that it is not an issue relevant to this application.

43. [67]

    In relation to the first two reasons, I am satisfied that the plaintiff did not unreasonably prolong the prosecution of its claim. As noted at [6] above, had the plaintiff pressed its application prior to the conclusion of the criminal proceedings, it would have been open to sanction for doing so, consequent to the judgment of X7 v Australian Crime Commission.

44. [68]

    In relation to the third reason, the plaintiff has not yet served upon the first defendant the evidence it will rely upon for its application and its submissions as to why a PPO should be made. Section 136(3) of the Act obliges the plaintiff to serve its affidavit evidence “within a reasonable time before the hearing of the application”. That evidence will provide necessary context to any application that the first defendant may then bring as to why the alleged retention of documentary material by the plaintiff is procedurally unfair to the first defendant in resisting the application. For those reasons, and also in light of the first defendant not having exhausted his options to obtain documentation that was seized by the AFP at this preliminary stage, I regard the submission as premature and therefore it is not made out.

45. [69]

    The fourth and fifth reasons both contend that an application for a PPO in the circumstances of the case is an attempt by the plaintiff to recover unpaid income tax from the first defendant by circumventing appropriate channels. As submitted by the plaintiff, in respect of the fourth reason, corporate insolvency laws are irrelevant to an application for a PPO against the first defendant personally.

46. [70]

    In relation to both the fourth and fifth reasons, I conclude that the first defendant’s repeated characterisation of the application for a PPO as a form of, or equivalent to, the collection of outstanding tax, is incorrect. The principal objects of the Act are set out at s 5 of the Act. Section 116(1)(a) of the Act states that an application for a PPO may only be made by a “proceeds of crime authority”, which is defined in s 338, the Dictionary to the Act, to mean either the Commissioner of the Australian Federal Police or the Commonwealth Director of Public Prosecutions. The plaintiff to this application is not, and could not be, the Commissioner of Taxation.

47. [71]

    Part 2-4 Div 2 of the Act sets out the process for determining the amount of the PPO. In the context of this case, this involves the determination of the value of the benefits that the person has derived from the commission of the serious offence or of the commission of any other offence that constitutes unlawful activity, less certain reductions: s 121(3) of the Act. In due course, the plaintiff may tender evidence as to how it arrives at what it submits to be the relevant quantum of the PPO. If that evidence involves a calculation of tax that was not paid by the first defendant, it does not transform the exercise into one of supplanting the role of the Commissioner of Taxation.

48. [72]

    Accordingly, I am satisfied that these two bases are not made out.

49. [73]

    The seventh reason rests upon a submission by the first defendant concerning the admissibility of evidence when it is not yet known with certainty what evidence the plaintiff will rely upon. Accordingly, it is also premature and misplaced as a basis for establishing an abuse of process.

50. [74]

    The first defendant noted that both of his criminal convictions were conspiracy offences, which were therefore:

51. [75]

    The first defendant submitted that it followed that since an actual underpayment of income tax was not an element of either offence, it would not be possible for the plaintiff to prove that there was a “benefit derived by a person from the commission of the offences”: ss 121 and 122 of the Act.

52. [76]

    The plaintiff responded that the Court has already made findings in these civil proceedings that some items of property that have been forfeited were proceeds of unlawful activity. The plaintiff cited Commissioner of the Australian Federal Police v Dickson (No.3) [2016] NSWSC 564, at [68], in which Adamson J noted a “substantial concession” by the first defendant in evidence during cross-examination that his acquisition of certain items of property was funded by payments from “ANZ trusts”, which were found to be part of the illegal activity that led to his convictions: Commissioner of the Australian Federal Police v Dickson (No.3) at [16], [55]; R v Dickson (No 18) at [9] and [10].

53. [77]

    It is apparent from the remarks on sentence by Beech-Jones J (as his Honour then was) in R v Dickson (No 18) that the jury’s verdicts rested on findings of actual loss. As a consequence, the convictions for the conspiracy offences were in the context of the first defendant having obtained a benefit from their commission, thus satisfying s 116(1)(b)(i) of the Act. I am satisfied that this ground is not made out.

54. [78]

    The context for this ground requires some understanding of the nature of the conspiracy and how the alleged benefit was obtained. In the course of his remarks on sentence in R v Dickson (No 18), Beech-Jones J summarised the nature of the criminal conspiracy:

55. [79]

    In support of this ground, the first defendant made submissions as follows:

56. [80]

    The first defendant’s submission, on its face, is an attempted dissociation by him from his criminal liability arising from the jury’s verdicts in the context of the relevant findings of fact for sentence, as found by the sentencing judge. I find that the ground has no merit.

57. [81]

    In my view this ground is identical to the basis of the first defendant’s cross-summons, as elaborated upon in his written submissions in support. Accordingly, I will consider it in that context, later in this judgment.

58. [82]

    The first defendant submitted that the plaintiff had perpetrated a “fraud on the court” by having “an absence of honest belief” as to two matters: firstly, that it has disclosed to the Court all relevant documentation seized from premises associated with the first defendant, and secondly:

59. [83]

    This allegation by the first defendant is not unprecedented. In his appeal to the Court of Appeal in AD v Commissioner of the Australian Federal Police (2018) 97 NSWLR 588; [2018] NSWCA 89, a ground of appeal, set out at [9] of that judgment, was that in obtaining restraining orders against the first defendant’s property pursuant to s 18 of the Act, counsel appearing on behalf of the Commissioner had committed a fraud on the Court. I note that the first defendant also appeared in person in the Court of Appeal. Beazley P (Meagher and Gleeson JJA agreeing), did not allow the first defendant to raise that ground, one of the reasons being that:

60. [84]

    This ground in this matter is also bereft of supporting evidence. I reject it for the same reasons.

The plaintiff’s notice of motion

1. [85]

   On 16 March 2021, the first defendant filed a cross-summons seeking the following declaration:

2. [86]

   In support of the cross-summons, the first defendant relied upon written submissions dated 1 June 2021, in which he narrowed his cross-claim to four sections of the Act, being ss 18, 94, 102 and 116. I note, however, that s 94 was not one of the sections identified in the cross-summons as under challenge. In addition, I note that three of those identified four sections are not related to PPOs: s 18 is within Pt 2-1 of the Act, titled “Restraining orders”, and ss 94 and 102 are within Pt 2-3 of the Act, titled “Forfeiture on conviction of a serious offence”. Nevertheless, I proceed on the basis that the challenge is to the functions of the Court when considering an application for a PPO pursuant to Pt 2-4 of the Act, since that is the only proceeding still on foot. The remainder of the orders sought in the second further amended summons are spent.

3. [87]

   The first defendant submitted that, in order for the plaintiff to succeed on its application for a PPO, proof will be required that tax is owed:

4. [88]

   The first defendant’s submission is that only the Commissioner of Taxation can determine a liability for income tax, which is a process that includes:

5. [89]

   The first defendant submitted that an “insurmountable obstacle” to that process is that a taxpayer may object to an assessment issued by the Commissioner of Taxation which results in a reconsideration of the assessment, taking into account the taxpayer’s objections. From that reconsideration, an appeal lies to the Administrative Appeals Tribunal and then to the Federal Court on a question of law. Accordingly, the Court would be obliged:

6. [90]

   The first defendant submitted that:

7. [91]

   As well as the insurmountable difficulties confronting the Court when engaging in this exercise, the first defendant submitted that:

8. [92]

   In its notice of motion, the plaintiff seeks a dismissal of the first defendant’s cross-summons pursuant to r 13.4 of the UCPR. I note the relevant principles of law which apply to such an application, particularly in relation to r 13.4(1)(b), which I identified at [19] to [22] above.

9. [93]

   In written submissions, the plaintiff noted that the first defendant’s contention was that the PPO regime under the Act required this Court to determine whether a taxpayer has underpaid income tax, which is invalid under the Constitution. The plaintiff submitted that this substantive constitutional argument was considered and rejected by the Court of Appeal in AD v Commissioner of the Australian Federal Police, and therefore the cross-summons should be dismissed.

10. [94]

    The first defendant submitted that the plaintiff had misconstrued the issue raised by the cross-summons and that it was not the subject of determination in AD v Commissioner of the Australian Federal Police. He reiterated that the issue raised in the cross-summons was whether a determination by this Court that a taxpayer had underpaid income tax as an element of an application for a PPO is:

Consideration

1. [95]

   In AD v Commissioner of the Australian Federal Police, the first defendant, as the applicant in those proceedings, advanced two grounds as to why parts of the Act were constitutionally invalid. The second of those grounds concerned certain aspects of the statutory definition of “serious offence” which is set out in the Dictionary of the Act, at s 338. The challenged parts of the definition were (a)(ii), (a)(iv) and (g):

2. [96]

   Beazley P formulated this aspect of the first defendant’s constitutional challenge in the following terms:

3. [97]

   The President concluded:

4. [98]

   The first defendant’s formulation of the issue in his submissions in support of his cross-summons and his submissions in reply to the plaintiff’s submissions in support of its notice of motion is in slightly different terms to his submission before the Court of Appeal. The first defendant’s submission before the Court of Appeal also related, in the main, to parts of the Act other than Pt 2-4. Nonetheless, its essence is the same, namely, that the Court’s function in determining a PPO involves an assessment of “underpaid and uncollectable” tax, which is an exercise that replicates the functions of the Commissioner of Taxation without the protections to the taxpayer that are mandated by federal taxation legislation. This submission misunderstands the nature and purpose of Pt 2-4 of the Act which, as I noted earlier, is not a collection of unpaid tax.

5. [99]

   The first defendant’s formulation of the constitutional challenge in his submissions in support of his cross-summons is sufficiently close in substance to that which he advanced before the Court of Appeal for its determination of that ground to be apt in the present case. Noting Macfarlan JA’s observations in Leerdam v Noori concerning questions of law in a r 13.4 application for dismissal, I conclude that the first defendant’s claim, as elaborated in his submission that underscores his cross-summons, is futile. Adopting the terms approved by Barwick CJ in General Steel Industries v Commissioner for Railways (NSW) at 130, the first defendant’s case in support of his cross-summons is rendered “so clearly untenable that it cannot possibly succeed”.

The second and sixth grounds of the first defendant’s notice of motion

1. [100]

   As noted earlier in this judgment, the first defendant’s second and sixth grounds of his notice of motion raise essentially the same issue that he relied upon in his submission in support of his cross-summons.

2. [101]

   The second ground of his notice of motion was expressed as follows:

3. [102]

   In his written submissions, the first defendant contended that the Court:

4. [103]

   In oral submissions, the first defendant submitted that this Court does not have jurisdiction to make a PPO where the “serious offence” underlying the order is one involving federal tax fraud. This is because, in calculating the amount to be paid pursuant to such an order, this Court would be exercising federal jurisdiction by engaging in an administrative process reserved for the Commissioner of Taxation in their exercise of executive power pursuant to Ch II of the Constitution. The Supreme Court is a Ch III Court, whereas the administrator of the federal income tax legislation (the Commissioner of Taxation) is the only person who can determine if tax is underpaid.

5. [104]

   The sixth ground of the first defendant’s notice of motion was expressed as follows:

6. [105]

   In support of that ground, the first defendant submitted that:

7. [106]

   He continued:

8. [107]

   The plaintiff submitted that the first defendant made the same arguments when opposing the forfeiture of certain assets, ultimately before the Court of Appeal in AD v Commissioner of the Australian Federal Police. It is apparent from the passages extracted from the first defendant’s submissions in support of his cross-summons and Beazley P’s judgment extracted at [96] and [97] above, that it is the same argument and, for the same reasons, it is not made out.

9. [108]

   Since none of the grounds are made out, I dismiss the first defendant’s notice of motion.

10. [109]

    For the sake of completeness, I note the following:

Costs

1. [110]

   The issue of costs was not the subject of submissions by the first defendant. In my view, there is no reason as to why costs should not follow the result.

Orders

1. [111]

   I make the following orders:

   1. (1)

      The notice of motion filed by the first defendant on 18 September 2020 is dismissed;

   2. (2)

      The first defendant is to pay the costs of the plaintiff on the first defendant’s notice of motion;

   3. (3)

      The notice of motion filed by the plaintiff on 23 April 2021 is granted;

   4. (4)

      The cross-summons filed by the first defendant on 16 March 2021 is dismissed;

   5. (5)

      The first defendant is to pay the costs of the plaintiff on the plaintiff’s notice of motion.