Commissioner of the Australian Federal Police v Lee

1. [1]

   This matter was referred to me when I was sitting as Common Law Duty Judge to resolve a dispute between the parties about the future conduct of the proceedings. As deceptively simple, and apparently easy of resolution as the issue so stated appears, the arguments of the parties generated 30 pages of written submissions and in excess of two hours of hearing time in which further oral argument was addressed.

2. [2]

   The proceedings, arising under Proceeds of Crime Act 2002 (Cth), were commenced by summons dated 7th May 2015. The plaintiff sought 13 forfeiture orders under s 49 of the Act in respect of certain property, consisting of funds held variously by the defendants in 13 separate bank accounts. Upon the return of the summons before Harrison J on the same day, as also sought in the summons, his Honour, proceeding ex parte as required by the Act, made a restraining order in respect of each bank account under s 19(1)(b) of the Act. Other ancillary relief was also granted.

3. [3]

   By Notice of Motion filed on 5th June 2015, the defendants seek:

4. [4]

   The plaintiff contends that the defendants’ motion should proceed separately from and prior to his application for principal relief. Essentially, the plaintiff argues that the defendants have made a forensic decision to bring their applications forward, and evidence has been exchanged between the parties on the footing that the defendant’s applications are interlocutory applications. The plaintiff argues that the defendant should be held to that forensic decision not least because that decision better advances the overriding purpose of civil litigation in accordance with “the dictates of s 56 of the Civil Procedure Act 2005 (NSW)”.

5. [5]

   The defendants argue, by reference to the decision in Commissioner of the Australian Federal Police v Zhang (Ruling No 1) [2015] VCS 390; 298 FLR 128, that I should order that the Commissioner’s application for principal relief should be set down for hearing with directions as to the exchange of evidence by the parties in that matter. The defendants submit that their application could be conveniently listed at the same date, leaving the order in which matters actually proceed to the discretion of the Trial Judge.

Summary of argument

1. [6]

   The plaintiff argued that requiring him to proceed with his forfeiture application in advance of the defendants’ motion would relevantly prejudice him. It was said he would be at a forensic disadvantage. It was argued the defendants’ application was for interlocutory relief and could be met with the benefit of s 75A Evidence Act 1995 (NSW) including the ready admissibility of hearsay evidence which would be inadmissible on the final hearing. Moreover, it had incurred costs in preparing to resist the defendants’ application.

2. [7]

   The defendants argued that an important matter of principle was involved. In Zhang (Ruling No 1) T Forrest J, by application of the legality principle, favoured requiring the plaintiff to prove his case first. His Honour said at [39]:

Context of legal dispute

1. [8]

   Both parties invoked matters of high principle. In the end, however, I am of the view that on each side of the record a degree of manoeuvring was going on, rather like yachts before the start of the race, in an attempt to obtain what might be a critical tactical advantage.

2. [9]

   The genesis of that tactical advantage is to be found in the provisions of s 49 of the Act which is the section invoked by the plaintiff to found its entitlement to final relief in the form of a forfeiture order. I will set out that provision in full:

3. [10]

   S 49(3) is the key to understanding the tactical manoeuvres of the parties. Absent an application under s 29, or in the event that such an application has been withdrawn, the Commissioner need prove nothing more than that a restraining order has been made under s 19 covering the subject property which has been in force for at least 6 months to be entitled to a forfeiture order. In that circumstance the plaintiff is not required to prove that the subject property is in any sense the proceeds of crime.

Caselaw

1. [11]

   Prior to the enactment of s 315A(2) of the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Act 2015 there was no express requirement in the legislation that a s 29 application for exclusion from the restraining order must be dealt with by the Court prior to consideration of an application for a forfeiture order. The parties agree that this amendment took legal effect on 1st March 2016, but does not operate “retrospectively”.

2. [12]

   There is an argument that a dismissed exclusion application would fall within s 49(3)(a). This involves interpreting the expression “[n]o application has been made” as meaning “that no extant application has been made”: Commissioner of the Australian Federal Police v Courtney Investments Ltd (No 4) [2015] WASC 101 (Edelman J) at [118]. The argument was there noted, but not decided. However, this construction did not appear obvious to the Victorian Court of Appeal: Commissioner of the Australian Federal Police v Dong Hua International Investments Pty Ltd [2016] VSCA 15 at [39] – [40].

3. [13]

   In the somewhat different case of Commissioner of the Australian Federal Police v Vo [2015] NSWSC 1523, Schmidt J decided that a s 29 application which was dismissed after a hearing when the applicant offered no evidence was covered by the word “withdrawn” in s 49(3)(b). With respect, this must be correct. Those circumstances amounted to a constructive withdrawal.

4. [14]

   In Lee v Director of Public Prosecutions (Cth) [2009] NSWCA 347; 75 NSWLR 581 at [54] Basten JA, Macfarlan JA and Sackville AJA said:

Statutory requirements

1. [15]

   Paragraph [54] from Lee appears to be a considered dictum of the court which I am bound to apply (see also Zhang (Ruling No 1) at [29] – [31]). Moreover, the consideration that the Commonwealth Parliament has subsequently amended the Act by enacting s 315A(2) supports such a construction of the Act in its previous form. I acknowledge that a grammatical approach to the construction of the section would seem to have the effect that an unsuccessful application for exclusion from restraint would not relieve the plaintiff from the obligation to comply with s 49(1)(c). This seems preferable to giving s 49(3) a strained construction. Parliament may be taken to know and to appreciate the difference between an application that has been withdrawn, and one that has been dismissed.

2. [16]

   Nor in my opinion is this interpretation inconsistent with the observation in Lee at [21] that:

3. [17]

   It may be for this reason that the plaintiff emphasised considerations relevant to the case management of civil proceedings as requiring the defendants to prosecute their motion separately from and prior to the hearing of the plaintiff’s forfeiture application.

4. [18]

   I am not satisfied that the consideration that the scheme of the Act requires that generally a person asserting an innocent interest in restrained property will need to take affirmative steps to vindicate that interest, in all cases requires that an exclusion application (or compensation application) ought always be determined first and in advance of the forfeiture application.

5. [19]

   At the same time, nor am I persuaded that the approach adopted by T Forrest J in Zhang (Ruling No 1) of determining the forfeiture application first will always be correct. As a consideration of his reasons at [31] shows, his Honour is much influenced in his reasoning by the principle of legality. At [31] his Honour said:

6. [20]

   With great respect, the difficulty with this approach as the analysis of the Court of Appeal in Lee makes clear is that, notwithstanding that rights of personal property are regarded as fundamental rights valued by the common law, forfeiture provisions have a long history in the general law. Their Honour’s referred to Burton v Honan [1952] HCA 30; 86 CLR 169 where (at 178) Dixon CJ pointed out “that in the history of English and Australian Customs legislation forfeiture provisions are common, drastic and far reaching …”.

7. [21]

   Having referred to Coco v The Queen [1994] HCA 15; 179 CLR 427 the Court of Appeal in Lee at 586 [20], said that the Act:

Case management considerations

1. [22]

   I am of the view that the issue between the parties is to be resolved by the application of the usual principles governing practice and procedure, or case management, in the court’s civil jurisdiction in accordance with the principles discussed in Berowra Holdings Pty Ltd v Gordon [2006] HCA 32; 225 CLR 364. Regrettably it is necessary to quote some lengthy passages at 370 [13] - 371 [15]:

2. [23]

   The application of these principles make it clear that it is at best not helpful in this area of discourse to speak of a party having elected to proceed down a certain path from which he or she may not be permitted to depart. As Dawson J pointed out in The Commonwealth v Verwayen [1990] HCA 39; 170 CLR 394 at 456, speaking of a failure to plead a statute of limitation:

3. [24]

   It follows from these principles that the question of whether a party may change procedural tack depends upon the application of the applicable adjectival law, principally to be found in the Civil Procedure Act 2005 (NSW) and the Uniform Civil Procedure Rules 2005 (NSW).

4. [25]

   I do not accept that all of the relief sought in the defendants’ notice of motion is interlocutory in nature. That may be true of the application for exclusion from the restraint. But it seems unlikely to be so in respect of the applications for exclusion from forfeiture and compensation which have about them the flavour of applications for final orders.

Determination

1. [26]

   Given the efficiency requirements of ss 56 to 60 of the Civil Procedure Act 2005, there is much to be said for requiring the defendants to proceed with their application for exclusion from restraint separately from and prior to the determination of the plaintiff’s forfeiture application and the balance of the defendants’ extant applications. This application has been case managed and evidence has been filed on behalf of the defendants and on behalf of the plaintiff. It seems consistent and logical with the overall scheme of the Proceeds of Crime Act and with the overriding purpose that given the choices the parties have made in relation to the defendants’ motion it should be brought forward for determination in interests of efficiency and the avoidance of wasted costs, even if such an outcome is not mandated by the provisions of Proceeds of Crime Act.

2. [27]

   As against this, it may be said that the interests of timely and efficient disposal of the whole proceedings would be better served by listing the whole matter for determination following a single hearing during which all issues can be determined at the one time and according to a single body of evidence. The public interest in the finality of litigation, in my view, favours this approach. This is especially so given my view that the Proceeds of Crime Act, in its applicable form, does not require a s 29 application to be determined in advance the final hearing of the forfeiture application, even if state procedural law picked up and applying, pursuant s 79 Judiciary Act 1903 (Cth) might in some circumstances favour that approach.

3. [28]

   These competing considerations are, in the context of the present case, fairly evenly poised: cf Application by the Commissioner of the Australian Federal Police (No 2) [2015] NSWSC 1447 [42] – [45]. But as I am of the view that a determination of their s 29 application adverse to the defendants’ interest would not relieve the plaintiff from proof of a s 49(1)(c) matter (see [16] above), I have decided that the defendants should be permitted to change tack and that all matters should be listed for hearing together.

4. [29]

   This approach will promote the timely resolution of all of the issues in the case, and avoid the fragmentation of the proceedings. As I have said, determination of the s 29 application will not effectively resolve the whole proceedings. Such an approach does not undermine the purpose of s 29, which, I accept, should not be given an artificial operation as discussed by Schmidt J in Vo. There may be many cases where it will be important for a s 29 application to be brought, heard and determined promptly and in advance of all other applications arising in the proceedings. In all future cases s 315A(2) will require s 29 applications to be determined in advance of the final hearing of the forfeiture application and any applications for exclusion from forfeiture.

5. [30]

   For these reasons I am of the view that all existing applications should be set down for hearing together. The question of the order in which matters will be heard ought to properly be a matter for decision by the trial judge. In my view, as the moving party, the plaintiff ought to file his evidence on his s 49 application first. Once evidence has been exchanged the matter should be listed before the Common Law Case Management Registrar for the purpose of fixing a hearing date.

6. [31]

   As the effect of my decision is that the defendants are being permitted to change tack by delaying the determination of their motion, which may involve wasted costs on the part of the plaintiff, I think it appropriate that they pay the costs of the hearing before me by application of the so-called “indulgence rule”, notwithstanding that they won the argument on the day.

7. [32]

   My orders are:

   1. (1)

      Direct the parties to bring in short minutes of order giving effect to these reasons within 7 days;

   2. (2)

      In default of agreement, liberty to apply by email to my associate;

   3. (3)

      The defendants are to pay the plaintiff’s costs of the proceedings before me;

   4. (4)

      Any application to vary order (3) may be made by written submissions not exceeding 3 pages in length lodged with my chambers within 14 days. Submissions in response not exceeding 3 pages may be lodge within a further 7 days.