Commissioner of the Australian Federal Police v Lee (No 2)

I am dealing with an application to re-open a decision I made on 1 July 2016.

The proceedings are brought by the Commissioner of the Australian Federal Police under the Proceeds of Crime Act 2002 (Cth) seeking, by way of principal relief, forfeiture orders under s 49 of that Act.

My previous decision has the median neutral citation [2016] NSWSC 915. I will not re-ventilate the issues traversed and dealt with in that judgment. I re-iterate for the purpose of this judgment, however, that on 7 May 2015, Harrison J made restraining orders under s 19 of the Act in respect of thirteen separate bank accounts in which the defendants had an interest. In accordance with the usual procedures under the Act, those orders were made in the absence of other interested parties, including the defendants.

It is necessary also to re-iterate that by notice of motion filed on 5 June 2015, those parties sought, inter alia, the following:

The issue that I was called upon to determine in my prior decision related to the management of the case: simply, in which order should the parties file evidence relating to the various competing applications.

At the time my decision was made, the decision of T Forrest J in Commissioner for Australian Federal Police v Zhang (Ruling No 1) [2015] VSC 390; 298 FLR 128 was strongly to the effect that, relying on what I regarded as an exemplification of the legality principle, the proper interpretation of the Act was that the application of the Commissioner for forfeiture should be determined in advance of other applications. It is notable that that ruling was made at a hearing where all applications were listed for hearing, rather than a directions hearing dealing with pre-trial preparation. As it transpired, I did not adopt the approach propounded by his Honour. See [19]-[21] of my decision.

However, I did say the following(at [18]):

I then decided, for reasons I expressed at [28] – [30], that the Commissioner should file the evidence relied upon for principle relief in advance of any further evidence by the defendants. In making that decision, I was influenced by a number of factors, which I will not rehearse, but including the consideration that the resolution or determination, after a contest, of a s 31 application will not necessarily resolve the whole proceedings.

I directed that the parties bring in short minutes of order giving effect to my reasons in seven days, granting liberty to apply if agreement could not be reached. From the affidavit of the defendant’s solicitor, Ms Danijela Luzaic, sworn 8 August 2016, I am satisfied that unsuccessful efforts were made by the parties to arrive at an agreement.

In what might be regarded as an example of legal and forensic serendipity, in the meantime, the Victorian Court of Appeal handed down its unanimous decision on appeal from a decision of T Forrest J (Commissioner for Australian Federal Police v Zhang [2016] VSCA 171). Their Honours were, with respect, firmly of the view that on its proper construction, considering the scheme of the Act as a whole, a s 31 application was required to be dealt with prior to, and separately from, forfeiture applications by the Commissioner. At [80] – [82], their Honours said the following:

It is quite clear that the passage I have quoted constitutes the ratio decidendi of what is a unanimous decision of the Victorian Court of Appeal. It is a well‑established principle of the modern law of judicial precedent that:

In this case it is of interest that a clear statement of the Victorian Court of Appeal might be seen to be different from an observation made by the New South Wales Court of Appeal in Lee v Director of Public Prosecutions (Cth) [2009] NSWCA 347; 75 NSWLR 581 where a court, constituted by Basten JA, Macfarlan JA and Sackville AJA, said at [54] :

However that may be, I acknowledge that it is not for me to say whether a decision of the Court of Appeal is per incuriam, with respect. However, one possible difficulty is which statement I am bound to follow. As the statement of the New South Wales Court of Appeal was obiter and the passages I have quoted from the Victorian Court of Appeal's more recent decision is ratio, then I am bound to follow the Victorian Court of Appeal decision notwithstanding the consideration that I am a judge in the same judicial hierarchy directly below the New South Wales Court of Appeal.

Having regard to that analysis, I am of the view that I misapprehended the relevant law when I made my previous decision. In Autodesk Inc v Dyason (No 2) [1993] HCA 6; 176 CLR 301 at 303, Mason CJ dealt with the power of a court to reopen previous decisions. That case concerned the situation where orders had been pronounced but not entered. His Honour said:

As Ms Clemmett of counsel, who appears for the plaintiff, has pointed out, the principle stated by Mason CJ, in his dissenting judgment, was accepted and applied by a unanimous High Court of Australia in Elliott v R [2007] HCA 51; 234 CLR 38 at [31]-[32]. I am satisfied that in a material way, in stating my previous reasons which I intended to be given effect to by orders agreed upon by the parties, I misapprehended the law and that it is appropriate for me to reopen my decision in the light of the new authority provided by the Victorian Court of Appeal.

Mr Juebner of counsel argues that in any event my decision should be no different. He argues that Zhang concerns the order in which applications must be dealt with; it does not concern or have anything to say about what case management orders ought to be made in a given case for the exchange of evidence in a case like this where principal relief and interlocutory relief of a competing nature is sought by the parties to the dispute. With respect, there is force in that argument. As I explained in my previous reasons, the considerations informing the proper decision as to case management were evenly poised.

On the other hand, Ms Clemmett has argued persuasively, given the Zhang decision and in particular the statement at [91], which I have not so far referred to, that substantial injustice would be occasioned to the Commissioner by the defendants being permitted to leave on foot the s 31 exclusion applications in circumstances where those applications can serve no purpose other than to deprive s 49(3) of the Act of operation, and that I should be persuaded that the interested persons should be put in a position, as the Act contemplates, where they must make a decision whether to proceed or not with the s 31 applications. Indeed, looking at it at a more prosaic level, given that s 31 applications must be determined in advance of s 49 applications, it would put the Commissioner at a disadvantage and involve the incurring of wasted costs if I did not make directions which required the s 31 application to be brought on for hearing before the Commissioner was required to put on the evidence which he ultimately relies upon.

I observe that requiring the defendants to proceed, if they decide to, with the s 31 applications and providing the Commissioner with an opportunity to derive evidence from that process by way of cross-examination or otherwise, seems to be a factor within the intended operation of the Act, according to the Victorian Court of Appeal's analysis. Whereas I remain concerned about the fragmentation of the proceedings that will result from that approach, it seems to me that this now the only correct approach, having regard to the decision of the Victorian Court of Appeal.

It should be borne in mind that the s 31 applications are interlocutory in nature. Now that I am better informed by the decision of the Victorian Court of Appeal it seems to me that permitting a s 31 application to hang in the air, as it were, has about it at least a hint of an abuse of process if it is not to be proceeded with and its only purpose is to deprive the Commissioner of the procedural advances of s 49(3) and, as it were, to tease out from him evidence he may have available to him justifying forfeiture.

For these reasons, I think the proper order is one which requires the defendants to not only file their evidence in relation to the s 31 application but also to bring it forward for hearing as soon as they practicably can. Directions for the filing of evidence in the principal proceedings should abide the outcome of that application. It will be necessary, however, to bring the whole matter back before the Registrar for directions lest the defendants decide not to proceed under s 31.

For completeness, I should make reference to the passage in Zhang at [57] to [61], drawn to my attention by Mr Juebner, to the effect that dismissal of a s 31 application after a contest does not engage s 49(3). Those passages were largely based upon concessions made at the hearing of the appeal, and it may be that this question remains open. However, their Honours did record at [61]:

I order:

I have heard counsel further on the question of costs. It is perhaps a little unfortunate that the parties have had to argue this point twice given that when it came before me on 31 May 2016 it was known that the leave application and appeal from T Forrest J's decision was to be heard concurrently by the Victorian Court of Appeal on 21 June 2016. The matter was obviously one of some importance, and it could have been predicted that the Victorian Court of Appeal would deal with it with expeditiously, as the event has demonstrated.

I am informed that an application was made that this matter be adjourned until the Court of Appeal's determination was handed down but that that application was refused. Proverbially, it is always easy to be wise after the event, and I will make no further comment. However, the decision I made on 1 July did not depend upon the reasons of T Forrest J in Zhang. Rather I followed the obiter dictum in the New South Wales Court of Appeal decision in DPP v Lee and applied to the case my understanding of the usual case management principles which govern in civil litigation in New South Wales. Although my impression at the time was the case called for an application of the “indulgence rule” in relation to costs, I granted leave to the parties to revisit the costs question if so advised. Mr Juebner would have taken up that application and, indeed, caused written submissions to be sent to my chambers within the time allowed by me. Events have rather overtaken the parties and, as I said during the course of argument, I think it appropriate now to deal with the matter compendiously.

It is true, as Ms Clemmett argues, that the event favours the Commissioner and that the general rule that costs follow the event would dictate that the Commissioner have his costs of the whole of the proceedings before me.

Having considered the whole of the argument carefully and given what that event depends upon is, I think, properly described as a development in the law in terms of the interpretation of the Act, which is contrary to the dictum in Lee upon which I originally acted, I am persuaded that the proper order is that the costs of the parties be costs in the cause.

In coming to this conclusion, I bear in mind that these are quintessentially interlocutory applications. The significance of them for the future conduct of the litigation will not be known until the case is finally decided. The order I have made, of course, will mean that the ultimately successful party will recover the costs of these hearings before me. Neither party took a stance or an attitude that was unreasonable; neither party took a stance or an attitude that was not available on the law as it was understood at the time of each hearing before me.

I make the following additional orders: