Commonwealth Director of Public Prosecutions v Hart & Ors [2003] QCA 495 [2004] 2 Qd R 1

SUPREME COURT OF QUEENSLAND CITATION: Cth DPP v Hart & Ors [2003] QCA 495 PARTIES: COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS (applicant/respondent) v STEVEN IRVINE HART (first respondent) FLYING FIGHTERS PTY LTD (ACN 067 895 005) as trustee for FLYING FIGHTERS DISCRETIONARY TRUST (second respondent/first appellant) MERRELL ASSOCIATES LIMITED (third respondent) NEMESIS AUSTRALIA PTY LTD (ACN 010 225 537) as trustee for NEMESIS DISCRETIONARY TRUST (fourth respondent/second appellant) MERRELL ASSOCIATES (AUSTRALIA) PTY LTD (ACN 084 706 329) (fifth respondent) YAK 3 INVESTMENTS PTY LTD (ACN 010 623 560) as trustee for YAK 3 DISCRETIONARY TRUST (sixth respondent/third appellant) BUBBLING SPRINGS OLIVE GROVE PTY LTD (ACN 010 281 866) as trustee for BUBBLING SPRINGS DISCRETIONARY TRUST (seventh respondent/fourth appellant) LAURA ELIZABETH HART (eighth respondent/fifth appellant) FILE NO/S: Appeal No 9390 of 2003 DC No 1416 of 2003 DIVISION: Court of Appeal PROCEEDING: General Civil Appeal ORIGINATING COURT: District Court at Brisbane DELIVERED ON: 11 November 2003 DELIVERED AT: Brisbane HEARING DATE: 23 October 2003 JUDGES: McMurdo P, McPherson JA and Wilson J Separate reasons for judgment of each member of the Court, each concurring as to the orders made -- 1 of 11 -- 2 ORDERS: 1. Leave to appeal granted. 2. Appeal allowed, set aside the order made by the District Court on 20 October 2003 and remit the matter to the District Court to determine whether it is satisfied the property the subject of each application is under the effective control of Mr Hart and, if not, whether the Court should exercise its discretion under s 29 of the Act to exclude property from the restraining order of 8 May 2003. 3. Respondent to pay the appellants' costs of and incidental to this appeal and to the preliminary hearing. CATCHWORDS: APPEAL AND NEW TRIAL – APPEAL – RIGHT OF APPEAL – WHEN APPEAL LIES – FROM INTERLOCUTORY DECISIONS - whether appellants have right of appeal – where leave to appeal determined by s 188 District Court of Queensland Act 1967 (Qld) – leave to appeal granted ACTS OF PARLIAMENT – INTERPRETATION – RULES OF CONSTRUCTION – WHERE MEANING AMBIGUOUS OR UNCERTAIN – OTHER PRESUMPTIONS - where learned primary judge dismissed application under s 31 Proceeds of Crime Act 2002 (Cth) - ("the Act") - where appellants apply to exclude property from restraining order - whether property effectively under the suspect’s control – proper construction of ss 29 to 31 of the Act District Court of Queensland Act 1967 (Qld), s 118 Proceeds of Crime Act 2002 (Cth), s 17, s 29, s 31 Carr v Finance Corp of Australia (No 1) (1981) 47 CLR 246, followed DPP v Logan Park Investments & Anor (1995) 125 FLR 359, followed Murphy v Farmer (1988) 165 CLR 19, followed COUNSEL: W Sofronoff QC with P J Davis for the appellants M J Griffin SC for the respondent SOLICITORS: Hawthorn Cuppaidge & Badgery for the appellants Commonwealth Director of Public Prosecutions for the respondent [1] McMURDO P: Steven Irvine Hart has been charged with five counts of defrauding the Commonwealth under s 29D Crimes Act 1914 (Cth)1 and one count of organised fraud under s 83 Proceeds of Crime Act 1987 (Cth).2 These offences are all indictable offences. On 8 May 2003 a District Court judge ordered that under s 17 1 Now repealed. 2 Now repealed. -- 2 of 11 -- 3 Proceeds of Crime Act 2002 (Cth) ("the Act"), specified property, (including property of each appellant), not be disposed of or otherwise dealt with other than as specified in that order. His Honour in making the order was satisfied under s 17(2)(c) of the Act that there were reasonable grounds, based on authorised Australian Federal Police officer Perry’s affidavit, to suspect that the relevant property was under the effective control of Mr Hart. On 20 October 2003 the appellants applied to have their property excluded from the restraining order of 8 May 2003 under s 31 of the Act on the grounds that their property was not under the effective control of Mr Hart. In brief ex tempore reasons and before considering any evidence as to the control of the property, another District Court judge dismissed the applications because the terms of s 29(4) of the Act prohibited the court from varying the order of 8 May 2003. The appellants appeal from that order. The right of appeal [2] The first question is the right of appeal to this Court. The Act does not specifically provide for an appeal from a restraining order3 or from an order refusing or dismissing an application to exclude property from a restraining order.4 Proceedings on an application for a restraining order are not criminal proceedings.5 The right of appeal is therefore determined by s 118 District Court of Queensland Act 1967 (Qld), which applies to that court exercising Federal jurisdiction by way of s 79 Judiciary Act 1903 (Cth). Both parties agree that the order appealed from was "a final judgment of the District Court" and that the amount of property involved exceeds the Magistrates Courts jurisdictional limit under s 118(2), giving the appellants a right of appeal from the order of 20 October 2003. [3] Despite the agreement of the parties, I am not satisfied that the order of 20 October 2003 is a final judgment. It seems to me to be interlocutory in nature because further applications of a related sort could be made under the Act at a later time to finally determine the rights of the parties:6 Carr v Finance Corp of Australia [No 1]7 and Barnes v Australian Telecommunications Corp.8 It follows that in my view leave to appeal is required under s 118(3). [4] This is an appropriate case in which to grant leave to appeal: it involves a novel and important legal question for determination and concerns the interpretation of a newly enacted Commonwealth statute which gives the Commonwealth power to interfere with the traditional property rights of others; in addition, the value of the property concerned in each appeal is considerable. I would grant leave to appeal. The appeal [5] Section 29 of the Act relevantly provides: "(1) The court to which an application for a restraining order under section 17 … was made may, when the order is made or at a later time, exclude specified property from the order if: … 3 Part 2-1 Division 1, ss 16-24A (of the Act). 4 Part 2-1 Division 3, ss 29-32 of the Act. 5 s 315 of the Act 6 See, for example ss 102 and 141 of the Act. 7 (1981) 147 CLR 246. 8 [1996] 2 QdR 1. -- 3 of 11 -- 4 (b) the court is satisfied that the relevant reason under subsection (2) or (3) for excluding the property from the order exists. (2) The reasons for excluding specified property from a restraining order are: (a) for a restraining order under section 17 if the offence, or any of the offences, to which the order relates is a serious offence9 - the property is neither proceeds nor an instrument of unlawful activity; … … (4) However, the court must not exclude property from a restraining order under section 17 or 18 unless it is also satisfied that neither a pecuniary penalty order10 nor a literary proceeds order could be made against: (a) the person who owns the property; or (b) if the property is not owned by the suspect but is under his or her effective control - the suspect." [6] In dismissing the appellant’s application under s 31 of the Act the learned primary judge held that the appellants could not argue whether the restrained property is under the effective control of Mr Hart at this stage of the proceedings; the express terms of s 29(4) of the Act prohibited any such application because a pecuniary penalty order could be made against Mr Hart, the suspect. [7] The respondent supports his Honour’s interpretation of s 29 of the Act. I apprehend that the respondent’s contentions, which are not entirely easy to grasp, are that s 29(4) of the Act is not part of the scheme providing for restraining orders but is merely a statement to the court that the court cannot exclude the appellants' property from the restraining order on an application under s 29 because, first, a pecuniary penalty order could be made against the suspect, Mr Hart, and, second, because the granting of the restraining order on 8 May 2003 means that the court was satisfied that the authorised officer held a suspicion on reasonable grounds that the specified property belonging to the appellants is subject to the effective control of Mr Hart.11 The respondent submits that its contention is supported by the scheme of the Act, which allows for the issue as to whether Mr Hart is in effective control of the property to be considered after any conviction, in the context of forfeiture or pecuniary penalty orders: see s 102(2) and s 141 of the Act. [8] The respondent’s last submission is not supported by the the inclusion in the Act of Part 2-1, Division 3, ss 29-32 and the clear and ordinary meaning of the words used in these sections. Under s 30 of the Act a person whose property would be covered by a restraining order may apply to the court to exclude property from the restraining order within 14 days of notification of the application for the order. Under s 31 of the Act a person may apply to the court to exclude specified property from the restraining order at any time after being notified of the order. Those 9 The offences with which Mr Hart is charged are “serious offences” as defined in s 338 of the Act. 10 As defined in s 338 of the Act and s 116; the DPP (Cth) may apply for such an order, inter alia, if the person has committed a serious offence; as noted in fn 9, the offences with which Mr Hart has been charged are serious offences. 11 Section 17(1)(f) of the Act. -- 4 of 11 -- 5 sections require the DPP to be given written notice of the applications and allow for the DPP to appear and adduce evidence at the hearing. Under s 32 of the Act the DPP must have a reasonable opportunity to conduct an examination of the applicant before hearing an application.12 These provisions do not suggest that an application to exclude property from a restraining order can only be made at the conclusion of the suspect’s trial. As Wilson J points out, the use of the word "suspect" in s 29 contemplates that these applications will be determined before any determination of guilt. Sections 29 to 31 of the Act plainly allow for applications to be made by a person whose property could be covered by a restraining order and for a court to exclude specified property from the restraining order before any conviction and consequential forfeiture or pecuniary penalty orders. [9] The right to make an application under s 31 is not diminished by the fact that a person not notified of the application for a restraining order may apply to have the order revoked under s 42 of the Act, ordinarily within 28 days of being notified of the order. Unsurprisingly, Shaw J in DPP (Cth) v Tan13 accepted without argument that the court had power under Part 2-1 Division 6, s 42 of the Act to revoke a restraining order prior to any conviction and consideration of forfeiture or pecuniary penalty orders. There is no reason to think the position differs for applications like these under Part 2-1 Division 3 of the Act. [10] The respondent's primary contention turns on the words of s 29 of the Act. It is common ground that, for the purposes of s 29(2)(a) of the Act, the offences to which the order relates are serious offences and the property sought to be excluded from the restraining order is neither proceeds nor an instrument of unlawful activity and that, for the purposes of s 29(4)(a) of the Act, no literary proceeds order could be made against any party and no pecuniary penalty order could be made against the appellants who owned the property but a pecuniary penalty order could be made against Mr Hart. According to the ordinary meaning of the words contained in s 29, there is then a relevant reason under s 29(2)(a) to exclude the specified property of each appellant from the restraining order and the court may under s 29(1) exclude the property from the order but, because of s 29(4), cannot do so if a pecuniary penalty order could be made against the suspect, Mr Hart, and if the property, though not owned by Mr Hart, is under his effective control. It follows that s 29 has the effect that the court may exclude the specified property the subject of the appellants’ applications from the restraining order if satisfied that a pecuniary penalty order could be made against Mr Hart and that he effectively controlled the specified property. To reach the conclusion preferred by the primary judge, it would be necessary to render meaningless or to expunge the words in s 29(4)(b): " if the property is not owned by the suspect but is under his or her effective control …". [11] This interpretation of s 29 of the Act accords with the ordinary meaning of the words used in that section. It is completely consistent with the scheme (to confiscate the proceeds of crime14) established by the Act. The principal objects of the Act15 will not be furthered by restraining property which does not either belong to or is under the effective control of a person subject to a pecuniary penalty order under the Act. There is nothing in the Act to suggest that the Commonwealth 12 Section 338 and ss 180-183 of the Act. 13 [2003] NSWSC 717. 14 Section 6 of the Act. 15 Section 5 of the Act. -- 5 of 11 -- 6 Parliament intended the unlikely construction of s 29 contended for by the respondent. Every indication is to the contrary; ss 29 to 31 of the Act recognise the reality that sometimes, despite the best efforts of Commonwealth officers, property may be wrongly included in a restraining order, especially when orders are made ex parte. In enacting ss 29 to 31 of the Act, the legislature intended to provide a way of quickly remedying such errors and without waiting for the conclusion of the sometimes lengthy prosecution process, which generally involves committal proceedings and a trial or sentence, a process which will almost certainly take months and may take years. This interpretation is not inconsistent with the comparable provision of the Act’s predecessor16 or with the explanatory memorandum for Division 3 of the Act. [12] Whilst I am confident the clear words of the Act warrant this interpretation, I am given added comfort by the well established principle of statutory interpretation that any ambiguity in legislation of this type, which radically restricts property rights, must be strictly construed in favour of the property-owner appellants: DPP v Logan Park Investments & Anor17 and Murphy v Farmer.18 [13] As to the respondent's second contention, the appellants' right to apply under s 31 of the Act for an order under s 29 of the Act in October 2003 is not affected by the court’s determination under s 17 of the Act that on the material before it in May 2003 there were reasonable grounds to suspect the property was under the effective control of Mr Hart. There is nothing in the Act to support that contention and it is trite to point out that the court determining an application under s 31 of the Act must consider that application on the relevant and admissible material then before it. [14] I would grant leave to appeal, allow the appeal, set aside the order made by the District Court on 20 October 2003 and remit the matter to the District Court to determine whether it is satisfied the property the subject of each application is under the effective control of Mr Hart and, if not, whether the court should exercise its discretion under s 29 of the Act to exclude property from the restraining order of 8 May 2003. The respondent should pay the appellants’ costs of and incidental to this appeal and to the preliminary hearing. [15] McPHERSON JA: I have read the reasons for judgment of the President and agree with them and with the orders she proposes. [16] WILSON J: This matter came before this Court as an appeal against a decision of a District Court Judge dismissing applications under s 31 of the Proceeds of Crime Act 2002 (Cth) (“the Act of 2002”) on a preliminary point of law. I agree with the President that leave to appeal is required, and that leave should be granted. Background [17] Steven Irvine Hart (“Hart”) has been charged with indictable offences against Commonwealth law; namely, five counts of defrauding the Commonwealth (Crimes Act 1914 s 29D) and one count of engaging in organised fraud (Proceeds of Crime Act 1987 s 83). On 8 May 2003 a judge of the District Court made an order under s 17 of the Act of 2002 against Hart and seven other parties (six of them corporate entities and the other Hart’s wife) restraining the disposition of certain property of 16 Section 48 Proceeds of Crime Act 1987 (Cth) (repealed). 17 (1995) 125 FLR 359, 366-369. 18 (1988) 165 CLR 19, 28. -- 6 of 11 -- 7 each of those other parties that was under the effective control of Hart except as specified in the order. The order was made ex parte, and notice of it was subsequently given to Hart and the other parties. Subsequently Hart, one of those other parties and five other natural persons were examined under chapter 3 of the Act of 2002 about the affairs of Hart, the property specified in the order and the property of the last of those parties (Hart’s wife). The subject matter of the appeal [18] On 23 June 2003 five of those other parties filed applications under s 31 of the Act of 2002 in the District Court, in each case seeking to have all the party’s property that was the subject of the order excluded from it. Those applications came before another District Court judge on 20 October 2003. Counsel for the Commonwealth Director of Public Prosecutions (the respondent to the present appeal) submitted that the application was premature. The learned judge did not accept the argument about prematurity, but dismissed the application because, as he interpreted s 29(4) of the Act of 2002, he was prohibited from varying the order of 8 May 2003 as Hart (“the suspect”) was vulnerable to a pecuniary penalty order if convicted. That is the ruling against which this appeal has been brought. The scheme of the Act [19] One of the principal objects of the Act of 2002 is to deprive persons of the proceeds of offences, the instruments of offences and benefits of offences against the laws of the Commonwealth. It sets out five processes in relation to the confiscation of the proceeds of crime – (a) restraining orders prohibiting disposal of or dealing with property; (b) forfeiture orders under which property is forfeited to the Commonwealth; (c) forfeiture of property to the Commonwealth on conviction of “a serious offence”; (d) pecuniary penalty orders requiring payment of amounts based on benefits derived from committing offences; and (e) literary proceeds orders requiring payment of amounts based on literary proceeds relating to offences (s 7). Restraining order [20] The restraining order was made pursuant to s 17 which provides - “17 Restraining orders—people convicted of or charged with indictable offences When a restraining order must be made (1) A court with proceeds jurisdiction must order that: (a) property must not be disposed of or otherwise dealt with by any person; or (b) property must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in the order; if: -- 7 of 11 -- 8 (c) the DPP applies for the order; and (d) a person has been convicted of, or has been charged with, an indictable offence, or it is proposed that he or she be charged with an indictable offence; and (e) any affidavit requirements in subsection (3) for the application have been met; and (f) (unless there are no such requirements) the court is satisfied that the authorised officer who made the affidavit holds the suspicion or suspicions stated in the affidavit on reasonable grounds. Property that a restraining order may cover (2) The order 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 any one or more of the following: (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; (d) specified property of another person (whether or not that other person’s identity is known) that is proceeds of the offence or an instrument of the offence. Affidavit requirements (3) The application for the order must be supported by an affidavit of an authorised officer stating: (a) if the suspect has not been convicted of an indictable offence—that the authorised officer suspects that the suspect committed the offence; and (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; or (ii) the property is proceeds of the offence or an instrument of the offence. The affidavit must include the grounds on which the authorised officer holds those suspicions. Refusal to make a restraining order -- 8 of 11 -- 9 (4) Despite subsection (1), the court may refuse to make a restraining order in relation to an indictable offence that is not a serious offence if the court is satisfied that it is not in the public interest to make the order. Risk of property being disposed of etc. (5) The court must make a restraining order even if there is no risk of the property being disposed of or otherwise dealt with. Later acquisitions of property (6) The court may specify that a restraining order covers property that is acquired by the suspect after the court makes the order. Otherwise, no property that is acquired after a court makes a restraining order is covered by the order.” So, the making of a restraining order depends on the court’s being satisfied that an authorised officer entertains certain suspicions, and that there are reasonable grounds for those suspicions. If it is so satisfied, the Court must make a restraining order (subject to a limited discretion under subsection (4) and subject to a discretion under s 21 to refuse to do so in the absence of an undertaking as to damages, neither of which is presently relevant). The order may be obtained ex parte: s 26; indeed the court is obliged to consider the application on that basis if requested by the DPP, although it may direct that notice be given before finally determining the application. Revocation of restraining order [21] Under s 42 a Court may revoke a restraining order - “if satisfied that there are no grounds on which to make the order at the time of considering the application to revoke the order” (subsection (5)). In other words, the court revisits the questions of suspicion and reasonable grounds for suspicion, but as at the time the revocation application is heard rather than as at the time of the original application for the restraining order. Excluding property from restraining order [22] Under s 29 a court may exclude property from a restraining order if (relevantly) an application is made under s 31 (after notice of the order) and if it is satisfied (relevantly) that - “the property is neither proceeds nor an instrument of unlawful activity” (subsections (1) and (2)(a)). The respondent (the DPP) conceded that these requirements were satisfied. [23] Subsection (4) of s 29 provides - -- 9 of 11 -- 10 “(4) However, the court must not exclude property from a restraining order under section 17 ... unless it is also satisfied that neither a pecuniary penalty order nor a literary proceeds order could be made against: (a) the person who owns the property; or (b) if the property is not owned by the suspect but is under his or her effective control - the suspect.” It was common ground – (a) that none of the property was owned by Hart; (b) that neither a pecuniary penalty order nor a literary proceeds order could be made against any of the owners; and (c) that if Hart were convicted, a pecuniary penalty order could be made against him. The learned primary judge thought that the third of the factors (Hart’s vulnerability to a pecuniary penalty order) was sufficient to preclude him from making an order excluding property from the restraining order. Counsel for the appellant submitted that he erred in so thinking. He submitted that Hart’s vulnerability to a pecuniary penalty order would not prevent the judge making an order excluding property from the restraining order unless he were satisfied, objectively, that the property was under Hart’s effective control. [24] As senior counsel for the appellants submitted, s 29, unlike s 17, addresses itself to objective facts. Section 317 provides - “317 Onus and standard of proof (1) The applicant in any proceedings under this Act bears the onus of proving the matters necessary to establish the grounds for making the order applied for. (2) Subject to sections 52 and 118, any question of fact to be decided by a court on an application under this Act is to be decided on the balance of probabilities.” An applicant for an exclusion order must establish positively, on the balance of probabilities, that the property is neither the proceeds nor an instrument of unlawful activity; that a pecuniary penalty order could not be made against the owner; and if the suspect is in effective control of the property, that a pecuniary penalty order could not be made against him. The parties to the appeal foreshadowed an argument about who bears the onus of satisfying the condition in subsection (4)(b), but that does not arise for present determination. [25] Pursuant to s 92, restrained property is forfeited to the Commonwealth at the end of six months after conviction, but the court may make an order for recovery of forfeited property under s 102 where (inter alia) the property is not subject to the effective control of the convicted person and it is not the proceeds or an instrument of the offence. Pursuant to s 116, a pecuniary penalty order may be made against a -- 10 of 11 -- 11 convicted person, and under s 141, if the court is satisfied particular property is subject to the effective control of that person, it may declare that it is available to satisfy the pecuniary penalty order. [26] Counsel for the respondent submitted that the question whether the property was under Hart’s effective control could not be determined on an application under s 31; rather it had to be determined post conviction on an application under s 102(2) or s 141. He submitted that s 17 operates to preserve property the subject of a restraining order until either (pursuant to s 29(2)) it is demonstrated to be neither proceeds nor an instrument of unlawful activity or after conviction, when the question of effective control may be agitated pursuant to s 102(2) or s 141, depending upon the nature of the indictable offence. [27] It is obvious that the question whether property is under the effective control of a convicted person must be determined on applications under ss 102 and 141. However, it does not follow that they are the only occasions on which such a question may arise. There is nothing express in s 29 to indicate that where the question arises under s 29(4) its determination must await conviction and an application under s 102 or s 141, and I can see no reason why there should be an implication to that effect. Given that an application to exclude property from a restraining order may be made within 14 days of notice of the application for the order (s 30) or at any time after notice of the order (s 31), it is most unlikely that the legislature intended that the determination of the application for exclusion should await conviction. Indeed the use of the word “suspect” in s 29(4) is an indication that the question is to be determined before conviction. I reject the submission of counsel for the respondent. [28] In my view the learned primary judge was wrong to dismiss the application on the basis he did. I agree with the orders proposed by the President. -- 11 of 11 --