Commissioner of Australian Federal Police v Dickson and Ors

On 5 April 2012, on the application of the plaintiff, orders were made by McCallum J pursuant to the Proceeds of Crime Act 2002 (Cth) (“the Act”) against a number of persons. Those orders included:

Before the court are notices of motion filed on behalf of each of the first, second, fourth and ninth defendants. Although each motion sets out a number of prayers for relief, the orders sought at the present time are confined to the following:

The first and fourth defendants are husband and wife respectively, as are the second and ninth defendants. Pursuant to a summons filed on 5 April 2012, a number of orders (including those which are the subject of the present applications) were made ex parte in favour of the plaintiff by McCallum J. The evidence which was before her Honour included an affidavit from an authorised officer who deposed to a suspicion that each of the first and second defendants had committed serious offences within the meaning of the Act.

Following the making of the orders, each of the first and second defendants was charged by the plaintiff with offences pursuant to the Criminal Code (Cth) (“the Code”) alleging that:

The plaintiff’s allegations in respect of those charges may be summarised as follows.

During the financial years from 2007 to 2009 each of the first and second defendants was a director of a company called Neumedix Health Australasia Pty Limited (“Neumedix”). In taxation returns lodged with the Australian Taxation Office for each of the financial years within that period, Neumedix fraudulently claimed losses in excess of $275 million in respect of the depreciation of intellectual property rights. Such rights had allegedly been previously purchased by Neumedix from various offshore companies.

Through a complex trust arrangement, Neumedix subsequently donated those depreciation losses to other entities, and in return received what have been described as “incentive payments” in excess of $63 million. Such monies were then channelled through a series of offshore bank accounts back to Australia, where they were used for the acquisition of assets for the benefit of the first and second defendants. Importantly for present purposes, it is alleged that some of the assets so acquired are owned nominally by the fourth and ninth defendants, but are subject to the effective control of the first and second defendants respectively.

The estimated value of the assets restrained to date is approximately $53 million and the estimated value of the funds which have been traced is approximately $34 million. There is, therefore, a substantial shortfall between the sum of $63 million allegedly obtained by the first and second defendants by reason of the commission of the tax fraud offence, and the estimated value of the assets which are presently restrained.

The first and fourth defendants relied upon an affidavit of Mark Geoffrey O’Brien sworn 18 May 2012 which was admitted without objection. Annexed to that affidavit was a copy of a statement of facts prepared on behalf of the plaintiff outlining the allegations giving rise to the charges which have now been laid.

The second and ninth defendants relied upon the affidavit of Peter Joseph Shields sworn 8 May 2012. Objection was taken by Mr Sullivan QC to paragraphs (16) and (17) of that affidavit, and those paragraphs were not pressed.

The plaintiff relied upon affidavits of Adam Thomas Sandon sworn 4 April 2012, and Rosanna Celona sworn 7 June 2012. The affidavit of Mr Sandon contained the evidence upon which the plaintiff originally relied before McCallum J in support of the making of the orders.

Ms Celona is a forensic accountant and a special member of the Australian Federal Police. Since early 2007 she has been a member of the Criminal Assets Confiscation Task Force, a division which is involved in identifying, restraining and confiscating property pursuant to the Act. In that capacity, she has been directly involved in the investigation of the alleged activities of the first and second defendants.

Ms Celona was cross-examined by Mr Wigney SC who appeared for the first and fourth defendants. The following passages from that cross examination are relevant in light of Mr Wigney’s submissions:

There are a number of provisions of the Act to which I was referred in submissions, and which bear upon the matters I am required to determine.

The principal objects of the Act are set out in s. 5 as follows:

The general structure of the Act is set out in s. 6:

Section 7 makes specific provision for the confiscation scheme:

Section 18 makes provision for the making of restraining orders against persons, such as the first and second defendants, who are suspected of committing serious offences:

Section 39 of the Act provides (inter alia) as follows:

In the present case, the orders against the first and second defendants were made pursuant to s. 39(1)(ca) and the orders were made against the fourth and ninth defendants pursuant to s. 39(1)(d).

Section 39A is in the following terms:

Section 39B is in the following terms:

The present applications for revocation of the orders are made pursuant to s. 39A(5). Alternatively, they are made pursuant to the inherent jurisdiction of the court. However, counsel made it clear that although the application was made on these alternative bases, reliance was placed upon the same submissions. Moreover, it was not suggested that there was any difference in the relevant principles to be applied.

Section 266A of the Act is in the following terms:

Finally, s. 319 of the Act is in the following terms:

The Act was amended by the Crimes Legislation Amendment (Serious and Organized Crime) Act 2010 (“the first amending Act”) and the Crimes Legislation Amendment (Serious and Organized Crime) Act (No. 2) 2010 (“the second amending Act”). In particular:

Mr Wigney SC, who appeared for the first defendant, relied upon a number of fundamental principles which he summarised as follows:

By reference to these principles, Mr Wigney submitted that if the right of a person accused of committing a criminal offence was sought to be interfered with by seeking to compel the person, under threat of criminal penalty, to give up his right to silence, such an attempt would prejudice that person’s defence to the criminal charges and would amount to an improper interference with the due administration of justice in the criminal proceedings. In support of that submission he relied upon the decision in Hammond v Commonwealth (1982) 152 CLR 188 at 198 where Gibbs CJ observed:

Mr Wigney submitted that the principles articulated by Gibbs CJ were not restricted to the giving of evidence, but extended to the provision of a written statement which could be used derivatively by someone else (see Reid v Howard (1995) 184 CLR at 6 –7 per Deane J).

Mr Wigney further submitted that the orders against the first defendant gave rise to a real risk of interference with both the administration of justice, and the right of the first defendant to a fair trial. Whilst he accepted that any statement provided pursuant to the order made against the first defendant could not be directly used against him in any prosecution, he cited the potential derivative use of the statement as the source of the risk to which he referred. He submitted that in light of the plaintiff’s allegations, the disclosure by the first defendant of interests in property could result in particulars of those interests being included in the particulars of the money laundering charge. He argued that in these circumstances, the present order had the effect of compelling the first defendant to give up his right to silence by requiring him to provide a statement which included information relevant, or potentially relevant, to the charges. This, he submitted, amounted to an improper interference with the due administration of justice. He also submitted that the provision of any such statement would require the first defendant to address the central allegations made in respect of the money laundering offence or, more specifically, the allegations in relation to the interest held by the first defendant in property allegedly acquired with monies derived from the tax fraud offence. This, he submitted, would be directly relevant to the charges laid against him.

Mr Wigney accepted that the terms of the order do not require the first defendant to deal with, or disclose, the circumstances of his acquisition of any interest in property. However he submitted that inevitably, and particularly in light of the evidence of Ms Celona, the derivative use of any statement provided pursuant to the order would necessarily set those inquiries in train.

Mr Wigney acknowledged that the statutory scheme created by the Act was directed to the public interest in restraining property suspected of being the proceeds of crime. He also acknowledged that I was required to have regard to that scheme in the exercise of any discretion. However, he submitted that neither the statutory scheme, nor its underlying intent, should be interpreted as excusing, justifying or permitting an interference with the criminal justice system of the kind to which he had referred.

Ms Bashir who appeared for the second defendant adopted the submissions of Mr Wigney. In addition, she took me to the decision in Environmental Protection Authority v Caltex Refining Co. Pty Limited (1992) 178 CLR 477 in support of the proposition that it any abrogation of the privilege against self incrimination would require clear language on the part of the Parliament.

Mr Sullivan QC, who appeared with Ms Cheeseman for the plaintiff, took no issue with the general principles cited by Mr Wigney. However, he submitted that it was clearly open to the Parliament to modify or abrogate common law rights, and that in the present case the Parliament had seen fit to do so by the enactment of s. 39A of the Act. He submitted that the real question for determination in the present case was whether the orders against the first and second defendant gave rise to a real risk, as opposed to a theoretical possibility, of interference of the kind asserted beyond the extent to which the Parliament had intended the balance be struck. He submitted that no real risk had been demonstrated.

By reference to the various provisions of the Act which I have outlined, Mr Sullivan submitted that the scheme of asset confiscation created by the Act was both unique and rigorous, and was reflective of a deliberate legislative intention to ensure that wrong doers would be deprived of the fruits of their wrong doing. He submitted that the scheme was a matter to which, in the exercise of my discretion, I should have pre-eminent regard.

In circumstances where the additional provisions which came into force by virtue of the first and second amending Acts have thus far not been the subject of any judicial consideration, Mr Sullivan took me to extrinsic materials, including relevant Explanatory Memoranda, in support of his submissions as to the underlying legislative intention. He submitted that s. 39A of the Act abrogated the right to silence by the clearest of language and thus removed any right to rely upon self incrimination in order to be excused from providing a sworn statement under s. 39(1)(ca), (d) or (da). He also submitted that the Parliament, having considered the issue, specifically excluded, by the introduction of s. 266A, any derivative use immunity in respect of such a statement.

Mr Sullivan also relied upon the terms of the orders themselves in support of his submission that no real risk of interference had been demonstrated. He pointed out that the period of time specified in the orders did not correspond directly with the periods in which offences had allegedly been committed. He also pointed out that the terms of the orders were limited and, in particular, did not extend to imposing a requirement that either the first or the second defendant provide any information at all about (inter alia) the circumstances of the acquisition of any interest in property.

On 6 September 2012, during the period in which I had reserved judgment, the Court of Appeal handed down its decision in New South Wales Crime Commission v Jason Lee [2012] NSWCA 276. Those proceedings involved an appeal against a refusal to make orders, pursuant to s. 31D of the Criminal Assets Recovery Act 1990 (NSW) (“the NSW Act”), for the examination of the respondents (along with a third person) concerning their affairs, at a time when the trial of one of the respondents in respect of money laundering charges was outstanding, and when both respondents had appeals pending against their convictions in respect of drug supply charges. In the course of submissions in the present matter Counsel had referred to the fact that the hearing of the appeal in Lee was to be considered by a five member bench of the Court of Appeal and that it involved issues which were not dissimilar to those in the present case. In these circumstances, I invited the parties to make such further submissions if they wished to do so in the light of the Court of Appeal’s decision.

On behalf of the first and second defendants, it was submitted that the decision in Lee was neither binding nor determinative in relation to the applications in the present proceedings, because it involved the consideration of a different statutory regime. Accordingly, it was submitted that the decision did not compel me to refuse to exercise my discretion in favour of the revocation of the orders. It was submitted, in particular, that it remained open to me to exercise the discretion contained in s. 39B(5) in favour of the first and second defendants in circumstances where the statements which would be provided pursuant to the orders might impinge on future criminal proceedings, or where the degree of the potential interference in the system of justice was unacceptably or unreasonably high. It was submitted that nothing said by the court in Lee was to the contrary.

Counsel further submitted that unlike the position in Lee, the interference with the proceedings currently pending against the defendants was not speculative because of the overlap between the matters to be addressed in the statements which were ordered to be provided, and the allegations made by the plaintiff.

On behalf of the plaintiff it was conceded that the decision in Lee was not directly binding upon me because it concerned the provisions of the NSW Act. However, counsel submitted that the decision was nevertheless highly relevant to the determination of the present applications. In particular, it was submitted that the decision confirmed the general approach that should be taken in exercising a discretion such as that contained in s. 39B(5), in circumstances where the legislature had weighed competing public interests and had seen fit to abrogate established common law rights.

It was further submitted on behalf of the plaintiff that although the manner in which the issue had arisen in Lee was different in terms of procedure, there was no relevant difference in terms of the principles which should be applied, and that the Court in Lee had made it clear that when exercising a discretion of a kind contained in s. 39B I should have pre-eminent regard to the statutory expression of public purpose, and to the express interference, by the Parliament, with common law rights.

As previously noted, reliance was placed by counsel for the first and second defendants on the decision of the High Court in Hammond v Commonwealth of Australia. That decision was referred to in a subsequent judgment of the High Court in Hamilton v Oades (1989) 166 CLR 486, a judgment to which I was not referred in the course of argument. In that case, the respondent had been charged with various offences arising out of his dealings with a particular company and an order was made pursuant to s. 541 of the Companies (NSW) Code requiring him to attend for examination by a Registrar of the Supreme Court of NSW. Section 541 provided (inter alia) that a person was not excused from answering a question put to him at such examination on the ground that the answer might tend to incriminate him. However, the section further provided that where privilege was claimed before answering the question, the answer would not be admissible in any criminal proceedings brought against the examinee, other than in respect of the falsity of the answer. Mason CJ relevantly observed (at 494):

His Honour went on to observe (at 496):

His Honour also referred to the judgment of Windeyer J in Rees v Kratzmann (1965) 114 CLR 63 at 80:

In Hamilton v Oades Dawson J, having referred to both Rees v Kratzmann and Mortimer v Brown and Beames (1970) 122 CLR 493, made specific reference to the passage in Hammond to which I was taken in the course of argument (at [28] above) and observed (at 509):

In New South Wales Crime Commission v Hung Sun Choi [2012] NSWSC 658 (a decision handed down only a matter of days before I heard argument in the present matter) McCallum J considered an application, pursuant to the provisions of s. 31D of the NSW Act, for an order that the defendant be examined and that he provide a verified statement of property. Her Honour declined to follow the primary Judge in Lee and, having considered the decisions in Hamilton v Oades, Rees v Kratzmann and Mortimer v Brown and Beames observed (at [47]):

Her Honour also observed (at [51] – [53]):

Her Honour went on to observe (at [54] – [55]):

Her Honour concluded (at [57]):

The proceedings in Lee similarly involved an application pursuant to s. 31D of the NSW Act for an order that the respondents be examined. Basten JA (at [24]) identified the principle that under the general law, a court will grant an injunction to restrain an inquiry undertaken in the exercise of executive power if it carries with it a real risk that the conduct of the inquiry will interfere with the administration of justice in criminal proceedings. He observed that such interference would constitute contempt of court and, accordingly, an injunction may lie to prevent a threatened contempt. His Honour went on to observe (at [34]):

His Honour then proceeded to consider the provisions of s. 13A of the NSW Act, which applied to any examination so ordered, and which provided that:

Having set out the provisions in full, his Honour observed (at [43] and [44]):

His Honour then concluded (at [49]):

In the same case Meaghar JA (at [94]) said:

His Honour went on to say (at [99]):

Finally his Honour observed (at [101]):

For the same reasons as those outlined by Basten JA in Lee (at [34]) the present matter necessarily involves a question of statutory construction. In Australian Crime Commission v OK (2010) 185 FCR 258 Emmett and Jacobsen JJ (at [102]) observed (by reference to the decision of the High Court in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69] –[ 71]:

The present orders were made against the first and second defendants, and the applications for their revocation are brought, in the context of a legislative scheme directed towards the confiscation and forfeiture of proceeds of crime. The strict nature of that scheme has been observed on more than one occasion (see for example Lee v Director of Public Prosecutions (Cth) (2009) 70 NSWLR 581 at [16], [17] and [21]). One of its primary objects is to deprive those who offend against the laws of the Commonwealth of the proceeds of their offending. In pursuit of that object, the Parliament has specifically authorised the making of the present orders.

The enactment of additional provisions by the first and second amending Acts has had the effect of further strengthening what was an already rigid scheme. In particular, s. 39A expresses what is, in my view, a clear and unequivocal abrogation by the Parliament of the privilege against self incrimination in respect of orders made pursuant to s. 39(1)(ca), (d) and (da). It is trite to observe that the privilege against self incrimination is a well entrenched principle of the criminal law. However what is also clear, is that such privilege can be abrogated by statute (see Environmental Protection Authority v Caltex Refining Co Ltd (supra) at 503). In my view, the abrogation of the privilege as it applies to a statement ordered to be provided under s. 39(1)(ca), was made clear by the enactment of s. 39A.

Similarly, the introduction of s. 266A(7) is, in my view, a clear reflection of the fact that the Parliament specifically considered the question of the disclosure of statements provided pursuant to ss. 39(1)(ca), (d) or (da). The Parliament concluded (inter alia) that information obtained as a direct result of being given such a statement could be disclosed in certain circumstances and that further, the admissibility of any such information obtained as an indirect consequence of such disclosure would not affect its admissibility in evidence.

Section 39B(5) of the Act gives the court power to revoke orders made under s. 39(1)(ca) if it considers it appropriate to do so. Section 39B(6) further provides that in determining any such application, the court may have regard to any matter it considers appropriate. The discretion is therefore a wide one. However, having regard to the various authorities to which I have referred, it is one which must be exercised having regard to the objects of the Act, and the scheme of asset confiscation which it creates.

It is not enough for the first and second defendants, in support of the revocation of the orders made against them, to rely upon the fact that criminal proceedings are pending against them. To permit such reliance would fail to have regard to the provisions of s. 319. This was acknowledged by counsel for each of the first and second defendants.

Further, the fact that derivative use can be made of a statement provided pursuant to the orders does not, of itself, justify the exercise of the discretion in favour of revocation. Such use is expressly authorised by the Act. If an applicant for revocation needed only to point to that fact in order to justify a basis for revocation of an order made under s. 39(1)(ca), one of the purposes of the Act would be frustrated and rendered largely unworkable.

In my view, the critical question in the present case is whether, in circumstances where the Parliament has expressly authorised the making of orders which impinge upon common law rights, and has enacted particular provisions governing the disclosure of information which is provided, it has been demonstrated that if the orders are not revoked there is a real risk, as opposed to a theoretical possibility, of interference with the system of criminal justice and the rights of the first and second defendants.

In circumstances where the Parliament, in conferring power to make the present orders, has specifically legislated to abrogate the privilege against self incrimination in a particular and relevant respect, I do not accept the submission advanced on behalf of the first and second defendants that any attempt to interfere with the rights of an accused person by seeking to compel that person to give up his or her right of silence will amount to an improper interference in the administration of justice in the criminal proceedings. That submission adopts, in a general sense, the language used in Hammond. Quite apart from the fact that there has been, as I have outlined, subsequent consideration of the decision in Hammond, the present case must be considered in the context of statutory provisions which were not applicable in Hammond, and which:

Further, I do not accept the submission that orders against the first and second defendants give rise to a real risk that by providing the statements they would be required to address the central allegations made against either of them. The terms of the orders do not extend beyond requiring each of the first and second defendants to provide a statement setting out their interests in property, and their liabilities. In particular, the orders do not require either defendant to disclose matters such as:

It is, of course, the case that derivative use will be made of the statements in the manner alluded to by Ms Celona in the course of her evidence, which will set further enquiries in train. However, that issue was specifically considered by the Parliament, and s. 266A was enacted permitting that course.

Further, I do not accept that there is a real risk of interference with the rights of the first and second defendants on the basis that material contained in the statements to be provided pursuant to the orders would be directly relevant to the charges, and would therefore be able to be used against them in a way which was prejudicial. The nature and extent of what might be disclosed is similarly not known.

For all of these reasons, it is my view that the orders against the first and second defendants should not be revoked.

The principal submission made by Mr Wigney on behalf of the fourth defendant was that in light of the limited evidence concerning any dealings by her with the relevant property, the public interest in not compelling her to make a sworn statement which may be used to incriminate her spouse (the first defendant) outweighed any demonstrated reason for the order against her to remain operative. In developing that submission, Mr Wigney referred me, in particular, to the judgment of Heydon J in Australian Crime Commission v Stoddart (2012) 282 ALR 620 especially at [154]-[164].

In that case, the spouse of a suspect had attended before an examiner of the Australian Crime Commission in response to a summons. In the course of answering questions put to her about her husband’s business activities, she claimed to be entitled to the “privilege of spousal incrimination”, which, she argued, amounted to a right not to give evidence that might incriminate her husband. The relevant legislation made no provision for any such privilege.

Heydon J concluded (at [152]) that the common law has, for some time, recognised that a person has a privilege not to answer questions where such answers may tend to incriminate his or her spouse. However, his Honour was in dissent. French CJ and Gummow J (at [41]) concluded that it could not be said that the common law in Australia recognised the privilege which had been asserted. Crennan, Kiefel and Bell JJ concluded (at [233]) that the spouse was a competent witness to be examined under the legislation, was compelled by its provisions to do so, and that no privilege of the kind claimed could be raised in answer to that obligation.

Mr Wigney also submitted that in the exercise of my discretion, I should have particular regard to what he described as the “the natural repugnance of the public at the prospect of a wife giving evidence against her husband” (see Hoskyn v Metropolitan Police Commissioner [1979] AC 474, referred to by Heydon J in Stoddart at [159]). He submitted, in particular, that this consideration should be weighed against what he argued was the paucity of the evidence which was available to support the making of the order.

In making these submissions, Mr Wigney acknowledged that the various statements made by Heydon J were made other than in the context of the scheme of the Act. He also accepted that the nature and purpose of the Act would be a relevant factor in the exercise of my discretion.

Ms Bashir, who appeared for the ninth defendant, adopted the submissions of Mr Wigney.

In response, Mr Sullivan firstly pointed out that the proceedings brought by the plaintiff were civil proceedings and that accordingly, a spouse was compellable having regard to s. 12 of the Evidence Act. He argued that although, in light of the provisions of s. 18 of that Act, it was open to a spouse to elect to exercise a right of silence in a criminal proceeding, such an election was not available in civil proceedings.

Mr Sullivan submitted, in particular, that it was important for the plaintiff to be able to identify the net asset position of the first and second defendants in respect of properties which may be controlled by one of them, and to know their worth. He also submitted that when it came to seeking a forfeiture order, the Act required the plaintiff to adduce evidence over and above a reasonable belief or suspicion, and to establish that the first or second defendant effectively had control over the relevant property. He submitted that in order to be able to do that, it was both appropriate and proper that the plaintiff have, in respect of each of the fourth and ninth defendants, some detail of relevant dealings to see whether or not it was possible to make a more effective case so as to convert the reasonable suspicion into evidence of control. In advancing that submission, Mr Sullivan again relied on the scheme of asset confiscation created by the Act.

There are a number of important distinctions between the position of the first and second defendants on the one hand, and that of the fourth and ninth defendants on the other.

Firstly, neither the fourth nor the ninth defendant is accused of committing any offence. As a consequence, the issue of the privilege against self incrimination, being one of the fundamental bases of the applications brought by the first and second defendants, is not applicable.

Secondly, having regard to the views of the majority in Australian Crime Commission v Stoddart there is no common law spousal privilege which is available to be claimed by either the fourth or ninth defendant.

Thirdly, having regard to the provisions of s. 12 of the Evidence Act a spouse is compellable in civil proceedings. That section is in the following terms:

The fact that there may be limited evidence of dealings, by the fourth and/or ninth defendants, with the relevant property during the period in which criminal offences were allegedly committed does not, in my view, outweigh the public interest which underlies the Act. It was not submitted that the making of the orders was not supported by the evidence. Moreover, one of the fundamental purposes of the making of the orders against the fourth and ninth defendants is to assist in determining whether particular items of property are subject to the effective control of a person charged with criminal offences. It is not difficult to envisage a situation in which a dealing with a particular property may be relevant, notwithstanding that it occurred outside the period of alleged criminal activity.

It was accepted by counsel for each of the fourth and ninth defendants that the nature and purpose of the Act were necessarily relevant factors to be taken into account in considering the exercise of the discretion contained in s. 39B(5). I have already made a number of observations regarding the fundamental objects of the Act and the scheme of asset confiscation which it creates. In an effort to achieve those objects, the Parliament has seen fit to enact a number of particular provisions to enable the relevant authorities to investigate whether or not persons suspected of having committed criminal offences have entered into arrangements which have the effect of concealing their ownership of property. These provisions include empowering the court to make orders requiring persons other than the owner of property to provide information. Such provisions exhibit, in my view, a clear legislative intention that enquiries and investigations into the acquisition of property not be limited to enquiries and investigations of the suspects themselves.

In my view, for these reasons, the public interest in achieving the objects of the Act clearly outweighs what was submitted to be the “natural repugnance” at the prospect of a wife giving evidence against her husband. This is particularly so in circumstances where, having regard to s. 12 of the Evidence Act, each of the fourth and ninth defendants would be compellable to give evidence against their respective spouses in any event.

I make the following orders: