Commonwealth Director of Public Prosecutions v Hart (No 3) [2007] QCA 184 [2008] 2 Qd R 106

SUPREME COURT OF QUEENSLAND CITATION: Cth DPP v Hart & Ors [2007] QCA 184 PARTIES: COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS (applicant/appellant) v STEVEN IRVINE HART (first respondent) FLYING FIGHTERS PTY LTD ACN 067 895 005 as trustee for FLYING FIGHTERS DISCRETIONARY TRUST (second respondent/not party to appeal) MERRELL ASSOCIATES LIMITED (third respondent/not party to appeal) NEMESIS AUSTRALIA PTY LTD ACN 010 225 537 as trustee for NEMESIS DISCRETIONARY TRUST (fourth respondent/not party to appeal) MERRELL ASSOCIATES (AUST) PTY LTD ACN 084 706 329 (fifth respondent/not party to appeal) YAK 3 INVESTMENTS PTY LTD ACN 010 623 560 as trustee for YAK 3 DISCRETIONARY TRUST (sixth respondent/not party to appeal) BUBBLING SPRINGS OLIVE GROVE PTY LTD ACN 010 281 866 as trustee for BUBBLING SPRINGS DISCRETIONARY TRUST (seventh respondent/not party to appeal) LAURA ELIZABETH HART (eighth respondent/not party to appeal) FILE NO/S: Appeal No 1952 of 2007 DC No 1416 of 2003 DIVISION: Court of Appeal PROCEEDING: Application for Leave s 118 DCA (Civil) ORIGINATING COURT: District Court at Brisbane DELIVERED ON: 1 June 2007 DELIVERED AT: Brisbane HEARING DATE: 4 May 2007 JUDGES: Williams and Keane JJA and Philippides J Separate reasons for judgment of each member of the Court, each concurring as to the orders made -- 1 of 10 -- 2 ORDER: 1. Leave to appeal granted 2. Appeal allowed 3. Orders made by learned primary judge set aside 4. First respondent to pay appellant's costs of the application at first instance and of the application for leave to appeal and of the appeal CATCHWORDS: STATUTES – ACTS OF PARLIAMENT – INTERPRETATION – PARTICULAR WORDS AND PHRASES – SPECIFIC INTERPRETATIONS – interpretation Proceeds of Crime Act 2002 (Cth) s 121(4)(a)(i) – meaning of "covered" – distinction between "covered" and "specified" Acts Interpretation Act 1901 (Cth), s 15AB(1), s 15AB(2)(a) Proceeds of Crime Act 2002 (Cth), s 5, s 17, s 116, s 121, s 338 Cth DPP v Hart & Ors [2005] QCA 51; Appeal No 5073 of 2004, 4 March 2005, cited COUNSEL: P J Flanagan SC, with J S Brien, for the appellant P J Davis SC for the respondent SOLICITORS: Commonwealth Director of Public Prosecutions for the appellant Ryan & Bosscher for the respondent [1] WILLIAMS JA: I have had the advantage of reading the reasons for judgment of Keane JA and I agree with all that is said therein. [2] As pointed out by Keane JA the argument for the appellant essentially requires the Court to give the same meaning to the words "specified" (for example as used in s 17(2) of the Proceeds of Crime Act 2002 (Cth)) and "covered" (for example as used in s 121(4)(a) of that Act). In my opinion that cannot be so. The legislature has clearly chosen to use different words because a different meaning was intended. Section 30(1) of the Act, quoted by Keane JA, clearly establishes that. [3] The Act clearly has the consequence that if property is specified in a restraining order the interests of all persons in that specified property are covered by that order. It was conceded for purposes of the application that Hart had an interest in each item of property specified in the restraining order, and in consequence property of Hart was covered by that order. [4] The point of law raised by the applicant was a narrow one and, if valid, could have provided a basis for striking out part of the claim for a pecuniary penalty order. But in a case such as this the applicant for such an order would ordinarily be entitled to lead evidence with respect to the property specified in the restraining order in order to establish what interests in property were covered by that order. Here the restraining order referred to a series of discretionary trusts and ordinarily it would be necessary to have regard to the terms of those trusts, and receive evidence as to steps taken consequent thereon, in order to ascertain whose property, and what interests in the property, were covered by the restraining order. But in the circumstances it is not necessary to consider that aspect further. -- 2 of 10 -- 3 [5] For the reasons given by Keane JA the orders should be as indicated by him. [6] KEANE JA: One of the principal objects of the Proceeds of Crime Act 2002 (Cth) ("the Act") is "to deprive persons of … benefits derived from offences against the laws of the Commonwealth …".1 As a means to that end, the Act provides for the making of a pecuniary penalty order ("PPO") by a court with proceeds jurisdiction2 on the application of the Commonwealth Director of Public Prosecutions ("CDPP") if the court is satisfied, inter alia, that the person against whom the PPO is sought has committed a serious offence as defined by the Act "within the 6 years preceding the application (or, if some or all of the person's property is already covered by a restraining order, preceding the application for the restraining order)".3 [7] Under s 121(3) of the Act, in a case where the offence to which a PPO relates is a serious offence as defined by the Act, the amount of the penalty imposed by the PPO is to be determined by a process which includes the assessment of the value of the benefits derived from "the commission of any other offence that constitutes unlawful activity". Section 121(3) is subject to s 121(4) of the Act. [8] By virtue of s 121(4)(a), the process of assessment in respect of offences of the kind presently in issue does not include benefits derived from the commission of an offence: "unless the offence was committed: (a) within: (i) if some or all of the person's property is covered by a restraining order - the period of 6 years preceding the application for the restraining order; or (ii) otherwise - the period of 6 years preceding the application for the pecuniary penalty order; …" The present proceedings [9] On 17 July 2006, the CDPP filed an application seeking a PPO against Mr Hart. At issue in the present case is whether the quantum of any PPO which might be made against Mr Hart should reflect benefits derived by Mr Hart from unlawful activity within the period of six years preceding 8 May 2003, that being the date when an application for a restraining order under the Act was made by the CDPP. [10] Mr Hart applied to the learned primary judge to have struck out that part of the CDPP's claim which included benefits alleged to have been derived by Mr Hart more than six years before 17 July 2006. In response to Mr Hart's application, the CDPP argued that some or all of Mr Hart's property was "covered by" the restraining order of 8 May 2003 within the meaning of s 121(4)(a)(i) of the Act so as to permit the CDPP to quantify the PPO which was sought by reference to benefits derived by Mr Hart during the six years prior to 8 May 2003. [11] The CDPP's argument was rejected by the learned primary judge, and, as a result, parts of the CDPP's claim against Mr Hart were struck out. The learned primary judge concluded that, because no property of Mr Hart was specified in the 1 Proceeds of Crime Act 2002 (Cth), s 5(a). 2 Proceeds of Crime Act 2002 (Cth), s 116. 3 Proceeds of Crime Act 2002 (Cth), s 116(2)(a). -- 3 of 10 -- 4 restraining order, no property of Mr Hart could be said to have been covered by that order.4 [12] The CDPP seeks leave to appeal to this Court from that decision contending that the learned primary judge erred in his interpretation of the Act. Leave to appeal is required by s 118(3) of the District Court of Queensland Act 1967 (Qld). The issue as to the interpretation of the Act is important, both to the parties and in terms of the public interest. The grant of leave was not opposed by Mr Hart. In my respectful opinion, leave to appeal should be granted because the CDPP's contention that the learned primary judge erred in his interpretation of the Act is manifestly correct. My reasons for this conclusion may be stated in relatively brief terms. Section 17 of the Act [13] The restraining order of 8 May 2003 was made pursuant to s 17 of the Act. In that order, the property restrained was described as property of one of seven respondents other than Mr Hart who was also a respondent to that application. Each item of property described in the order was said to be "subject to the effective control of Mr Hart". [14] It was conceded by Mr Davis of Senior Counsel who appeared for Mr Hart that, for the purposes of the present proceedings, Mr Hart had an interest in each item of property which was referred to in the restraining order. Mr Davis argued that Mr Hart's interest in each item of property had not been "specified" in the restraining order, and, for that reason, was not "covered by" the restraining order for the purposes of s 121(4)(a)(i) of the Act. Accordingly, so it was submitted, only benefits derived by Mr Hart in the period of six years preceding 17 July 2006 could be taken into account in the quantification of the PPO sought by the CDPP. [15] Section 17(1) of the Act provides relevantly that, if certain requirements are met, a court must order that "property must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in the order". [16] Section 17(2) of the Act is directed to the court which makes a restraining order. It provides that the order of the court: "must specify, as property that must not be disposed of or otherwise dealt with, the property specified in the application for the order, to the extent that the court is satisfied that there are reasonable grounds to suspect that that property is [inter alia]: (a) all or specified property of the suspect; … (b) all property of the suspect other than specified property; … (c) specified property of another person (whether or not that other person's identity is known) that is subject to the effective control of the suspect; …" [17] Section 17(3) of the Act requires that the application for the order must be supported by an affidavit of an authorised officer stating, inter alia: "… 4 Commonwealth DPP v Hart & Ors [2007] QDC 26 [23] – [25]. -- 4 of 10 -- 5 (b) if the application is to restrain property of a person other than the suspect … that the authorised officer suspects that: (i) the property is subject to the effective control of the suspect …" Property [18] In s 338 of the Act the following terms are defined: "person's property: a person's property includes property in respect of which the person has the beneficial interest." "property means real or personal property of every description … and includes an interest in any such real or personal property." "interest, in relation to property or a thing, means: (a) a legal or equitable estate or interest in the property or thing; or (b) a right, power or privilege in connection with the property or thing; whether present or future and whether vested or contingent." [19] In this Court in Cth DPP v Hart & Ors,5 McPherson JA, with whom Williams JA agreed, said in relation to the definition of "property" in s 338 of the Act: "The word 'property' is plainly capable of meaning either or both of the thing owned or ownership of the thing; as when one says of something that 'that property is my property' … Taken together, the statutory meanings of 'property' and 'interest' are perhaps capable of referring to either or both of the object owned and the ownership of or an interest in it. But the primary meaning of 'property' in s 338(1) is the thing itself." [20] One may accept that the word "property" is used in this primary sense in s 17 of the Act. But the issue here is not the meaning of the word "property" in the context of s 17 of the Act. The issue here is concerned with whether an order made under s 17 of the Act covers some or all of Mr Hart's property. The question for present purposes is whether s 121(4)(a)(i) should be understood as if it read, "if some or all of the property of a person is specified in a restraining order …". The arguments of the parties [21] Mr Flanagan of Senior Counsel, who appeared with Ms Brien on behalf of the CDPP, argued that the restraining order affected property of Mr Hart in that, as was conceded by Mr Davis SC, Mr Hart had an interest in each item of the property described in the order. An interest in property is, by definition, property. Mr Hart's interest in each item of property described in the order was affected by the order, in that the order prevented the disposal of the property in which Mr Hart had an interest. Therefore, so it was argued, the restraining order "covered" Mr Hart's property for the purposes of s 121(4)(a)(i) of the Act. [22] Mr Davis' argument was that, whatever the nature of Mr Hart's interest in each item of property described in the restraining order, that interest was not specified in that order; and, therefore, that interest was not covered by the order. It will be seen that 5 [2005] 2 Qd R 246 at 257 [20]. -- 5 of 10 -- 6 Mr Davis' argument depends upon the proposition that "specified" in s 17(2) and "covered" in s 121(4)(a)(i) are essentially interchangeable. In my respectful opinion, that proposition cannot be sustained. Discussion of s 17 and s 121(4) of the Act [23] The argument that, when s 121(4)(a)(i) speaks of "the person's property … covered by a restraining order", it is speaking, as does s 17(2) of the Act, of the item or items of property specified in the restraining order, is confronted by the obvious problem that "specified in" and "covered by" are not synonymous. In ordinary parlance, "to specify" is to identify or describe a thing, while "to cover" is to include or affect a thing. The former is concerned with the description or identification of a thing, whereas the latter is concerned with the effect of something else upon that thing. [24] The Act does not suggest that the legislature has departed from the ordinary meaning of these words so that they are used interchangeably: indeed, the Act expressly observes the difference in meaning between these expressions. In this regard, s 30(1) of the Act provides a clear indication that the legislature has not used the term "covered by" as synonymous with "specified in". It provides: "A person whose property would be covered by a restraining order may apply to the court to exclude specified property from the restraining order within 14 days after being notified of the application for the order." [25] Mr Davis pointed to the heading of s 17(2): "Property that a restraining order may cover". Mr Davis relied upon s 15AB(1) and (2)(a) of the Acts Interpretation Act 1901 (Cth) to support his reliance upon the heading of s 17(2) of the Act as material extrinsic to the Act itself which may assist in its interpretation. But reference to the heading of s 17(2) does not tend to confirm that "specify" and "cover" are interchangeable. The text of s 17(2) is concerned to require the court to identify the categories of items of property which may be covered by a restraining order. It operates by way of a command directed to the court making an order authorised by s 17(1). The court must specify as property that must not be disposed of or otherwise dealt with by any person, an item or items of property in one or more of the categories (a) to (d) set out in s 17(2). These are the categories of things that may be covered by an order. The effect of an order upon one of these categories of things that is specified is provided by s 17(1)(a) not by s 17(2). In summary, s 17(2) is not concerned to state the effect of an order under s 17, but to identify what property may be affected by a restraining order. It does this by requiring that the court describe, by reference to designated categories, the items of property that may be the subject of an order. [26] Section 17(1)(a) contemplates an order the effect of which is to prohibit all dispositions or dealings with property. The prohibition applies to all persons who may have the ability to dispose of or deal with an item of property. Because s 17(1)(a) is directed to any person who might otherwise seek to dispose of or deal with an item of property, it is necessarily speaking of the effect of an order upon the totality of "interests" in an item of property. That this is the purpose of s 17(1)(a) can perhaps be seen more clearly if one recasts the provision in the active voice. Without loss of meaning, it might be rendered: "A court with proceeds jurisdiction must order that: (a) no person may dispose of, or otherwise deal with, property." In summary, s 17(1)(a) authorises an order which prohibits all persons who might otherwise deal with an item of property from dealing with the property. In that way -- 6 of 10 -- 7 the proprietary interest of every person who has an interest in that item of property is covered by the order. [27] In relation to s 121(4)(a)(i), the word "property" is used in the phrase "person's property". That is a phrase with a defined meaning. This defined meaning includes reference to the interest of the owner of a thing in the thing owned. The phrase "person's property" is not the phrase which is used in s 17(2) of the Act. While one may readily accept, in accordance with the observations of McPherson JA in Cth DPP v Hart & Ors cited above, that when s 17(2) speaks of specified property it is speaking of an item of property identified in the order, when s 121(4)(a)(i) speaks of a "person's property … covered by a restraining order" it is speaking not of an identified thing, or not only of an identified thing, but of the interest of the person in the thing identified in the restraining order. That interest is, as a result, affected by the prohibition on dealings authorised by s 17(1)(a). [28] In summary, when s 121(4)(a)(i) of the Act speaks of "the person's property … covered by a restraining order", it is referring to the interest which a person has in any item of property affected by the order. The restraining order affected the interest of Mr Hart in each of the items of property specified in the order. In that way, Mr Hart's property was covered by the order. [29] The language of s 121(4)(a)(i) is, in my respectful opinion, quite clear. There is no need for recourse to the canons of statutory construction to resolve ambiguity or lack of clarity in this legislation. There is nothing in the evident purpose of the legislation which would suggest that to read "covered by" a restraining order as meaning affected by the restraining order would be to fail to adopt the interpretation which best advances the intention of the legislature. [30] In this regard, the provisions of s 121 do not assume the efficacy of the restraining order to preserve items of property to meet a PPO. Rather, the concern of s 121(4)(a) is to limit the relation back period during which benefits derived by a person may be taken into account to determine the quantum of a PPO made against that person. The evident purpose of this limitation is to mark the earliest date by reference to which the quantum of the PPO may be assessed: it thereby serves to ensure that only those benefits derived by a suspect within six years of notice to the suspect that he or she is in jeopardy of the making of a PPO will be included in the assessment of the quantum of the PPO. [31] The purpose of s 121(4)(a) is to accord a measure of fairness to a person against whom a PPO is sought by going back in time no more than six years from the time at which he or she was alerted to the CDPP's intention to seek a PPO. This purpose can be fulfilled without the need for a restraining order to describe the particular interest of a suspect in an item of property in respect of which an application is made. To achieve this purpose, the suspect does not need to be informed of the precise nature of the proprietary interest which the CDPP alleges that the suspect enjoys in the property specified in the restraining order. If the suspect has an interest in the thing specified in the restraining order sought by the CDPP, then that person is on formal notice that steps should be put in train to enable the suspect to meet a claim for a PPO in respect of benefits derived in the previous six years. -- 7 of 10 -- 8 Conclusion and orders [32] Leave to appeal should be granted. The appeal should be allowed and the orders made by the learned primary judge set aside. [33] Mr Hart should pay the CDPP's costs of the application at first instance and of the application for leave to appeal and of the appeal. PHILIPPIDES J: Background [34] On 8 May 2003 the Commonwealth Director of Public Prosecutions (“CDPP”) applied for and obtained ex-parte restraining orders pursuant to s 17 of the Proceeds of Crime Act 2002 (Cth) (“PCA”) in respect of certain specified property. The basis on which the orders were obtained was that Mr Steven Hart, the present respondent, had been charged with several counts of income tax fraud, and although not the owner of the specified property had effective control of the specified property. [35] Pursuant to s 17(2) of the PCA, the court is required to specify in the restraining order the property the subject of restraint. Broadly speaking the property restrained may be property of a suspect (defined to include a person suspected of having committed the offence(s) to which the order relates) or property of another effectively controlled by a suspect. The finding that Mr Hart had effective control of the property specified in the restraining order was upheld on appeal (see Cth DPP v Hart & Ors [2005] 2 Qd R 246). [36] On 5 May 2004 Mr Hart was convicted of certain “serious offences” as defined in the PCA (s 338). On 17 July 2006 the CDPP brought an application for a Pecuniary Penalty Order not only in relation to the offences for which he was convicted, but also in relation to offences alleged to have been committed in the six year period preceding the date of the restraining order (ie from 8 May 1997). [37] On 15 December 2006, Mr Hart applied to strike out part of the CDPP’s claim for a Pecuniary Penalty Order. For the purposes of the strike out application it was conceded by Mr Hart that he had a right or interest in the property restrained by each of the orders and that the application for a Pecuniary Penalty Order was properly founded under s 116, given Mr Hart’s convictions. The issue for determination in the strike out application concerned the relation-back period under s 121(4) of the PCA. [38] Section 121 provides: “121 Determining penalty amounts (1) The amount that a person is ordered to pay to the Commonwealth under a pecuniary penalty order (the penalty amount) is the amount the court determines under this Division. … (3) If the offence to which the order relates is a serious offence, the penalty amount is determined by: (a) assessing under Subdivision B the value of the benefits the person derived from: (i) the commission of that offence; and (ii) subject to subsection (4), the commission of any other offence that constitutes unlawful activity; and -- 8 of 10 -- 9 (b) subtracting from that value the sum of all the reductions (if any) in the penalty amount under Subdivision C. ... (4) Subparagraph (3)(a)(ii) does not apply in relation to an offence that is not a terrorism offence unless the offence was committed: (a) within: (i) if some or all of the person’s property is covered by a restraining order—the period of 6 years preceding the application for the restraining order; or (ii) otherwise—the period of 6 years preceding the application for the pecuniary penalty order; or (b) during the period since that application for the restraining order or the pecuniary penalty order was made.” [39] The issue before the primary judge and this Court turns on whether the restraining orders of 8 May 2003 “covered” property of Mr Hart. It was contended on behalf of the CDPP that the restraining orders did, and that pursuant to s 121 the relation-back period was six years from the making of the restraining order on 8 May 2003, rather than six years from the making of the application for a Pecuniary Penalty Order. The submission made on behalf of Mr Hart, which found favour with the learned primary judge, was that, notwithstanding the concession that Mr Hart had an interest in the property the subject of the restraining orders, no property of his was “covered” by the restraining orders because the property specified in the orders was the property of third parties, namely the corporate entities, and his interest was not specified. [40] In essence, the argument that succeeded at first instance was that in order for an interest in property to be “covered” by a restraining order it must be specified in the restraining order. The CDPP now applies for leave to appeal pursuant to s 118(3) of the District Court of Queensland Act 1967 on the basis that important issues of interpretation of a statute of national application are raised. Leave is not opposed and it is clearly appropriate that it be granted. Were Mr Hart’s proprietary interests covered by the restraining orders? [41] The respondent’s argument requires the word “covered” in s 121(4) of the PCA to be equated with the word “specified” in s 17(2). One of the difficulties with that approach is that it is apparent from the textual framework of the PCA that the legislation has sought to use the term “specified” in contradiction to the term “covered” and to reflect different concepts. For example, s 47 provides for a forfeiture order to be made in circumstances where “the property to be specified in the order is covered by a restraining order under section 18” (emphasis added). The use of the two terms in the same provision confirms that they are not used inter-changeably. [42] The use of the broader term “covered” in s 121 rather than the term “specified” in s 17 recognises that the property the subject of a restraining order extends beyond the actual thing restrained to include all the interests in the property. So much is apparent from the fact that the relevant inquiry for the purposes of s 121(4) is whether “some or all of the person’s property is covered by a restraining order”. The statutory definition of “person’s property” provides that “a person’s property includes property in respect of which the person has the beneficial interest” (s 338). The thrust of the definition therefore differs from the definition of “property” in -- 9 of 10 -- 10 s 17. As McPherson JA observed in Cth DPP v Hart & Ors [2005] 2 Qd R 246 at 257 [20], taken together the statutory meanings of “property” and “interest” are capable of referring to either or both the object owned and the ownership of or interest in it and for the purpose of determining the issue of effective control under s 337(1) in the context of s 17 the primary meaning of “property” is the thing itself. [43] That it is not just the thing restrained that is “covered” by a restraining order once it is made but all the interests in the property is borne out by other provisions of the PCA; for example, a notice of an application for a restraining order must be given not only to the owner, but also to those who are believed to have an interest in the property (s 26) and it is an offence to dispose of or deal with property “covered” by a restraining order (s 37). [44] The respondent’s approach to s 17 in confining the scope of a restraining order to the actual proprietary interests specified in the order disregards the statutory definition in s 338 of “property” which extends to real or personal property whether tangible or intangible and includes an interest in such property, and an “interest in relation to property or a thing” is defined to mean a legal or equitable estate or interest in the property or thing or a right, power or privilege in connection with the property or thing, whether present or future and whether vested or contingent. Confining the scope of a restraining order in the manner contended for by the respondent would result in a serious undermining of the purposes of the PCA, which include depriving persons of the proceeds of offences and benefits derived from offences, and which are achieved by the establishment of a “confiscation scheme” of which the process of obtaining a restraining order forms an important part (s 5, s 7). If a restraining order were not to extend to all interests in the property specified in the order, it could be rendered nugatory by the simple expedient of disposing of or otherwise dealing with the equitable interests in the property. [45] Given the concession that Mr Hart had a right or interest in the restrained property the subject of each of the orders, the learned primary judge erred in finding that no property of Mr Hart’s was covered by the restraining orders made under s 17 of the PCA and accordingly erred in making the orders striking out part of the CDPP’s claim. I agree therefore that the orders proposed by Keane JA should be made. -- 10 of 10 --