CDPP v. IN THE MATTER OF SPECIFIED PROPERTY OF UNIVERSAL LIONSHARE PTY.... [2005] NSWSC 91 | Case summary

JUDGMENT 1 HIS HONOUR: This is an application for costs and for those costs to be on an indemnity basis by Mrs. Teresita Tan, who has succeeded in obtaining an order in her favour from Shaw, J. revoking, to a limited extent, a restraining order made by him on 2 July 2003 under the Proceeds of Crime Act 2002 (Cth) which order affected certain property said to be of Mr. Dante Tan, her husband, or certain companies in which he had an interest. 2 The order made by Shaw, J. limited that revocation to relate only to certain jewellery specified in Annexure A to the affidavit of the applicant sworn 11 September 2003. His Honour reserved the costs of those proceedings. Subsequently, his Honour retired from the bench and it has fallen to me to determine the question of costs and, more particularly, the matter, which has been the subject of particular dispute between the parties, whether an order for indemnity costs should be made. 3 The revocation order was made in the context that a more general revocation had been sought by an application under s.42 of the Act. That application was unsuccessful, his Honour concluding that he was not prepared to rule that there was an absence of reasonable grounds for the necessary suspicion to found a restraining order. Shaw, J. ordered that the costs of those proceedings be reserved. 4 This application, as I understand it, however, does not relate to the costs of those proceedings but only to the costs of the later application in which his Honour noted that the facts were not substantially in contest before him. 5 On that later application, at paragraph four of his judgment his Honour said:- "The application currently before the court is one for a revocation of the restraining order in respect to some jewellery that was captured by the restraining order issued in July 2003. The applicant, the wife of Mr. Dante Tan, is not a defendant in the substantive proceedings, and moves upon a notice of motion seeking to revoke the restraining order and also seeks certain consequential orders for damages and costs, however, the only issue before the court presently is the partial revocation with respect to jewellery which is said to have been lawfully acquired by Mrs. Tan. It is not a revisiting of the general application for revocation but a highly qualified, specified deletion from the otherwise general order which would continue to have force and effect if the present application were granted." 6 Further, at paragraph six, his Honour said:- "Once Mrs. Tan's evidence was put before the court, it became clear that she had a formidable case that the jewellery, if lawfully acquired by her, should not be the subject of some global confiscation order. I accept the applicant, Mrs. Tan, as a witness of credibility and I note that no criminality is alleged against her or attributed to her. Accordingly, there seems to be great weight in the submissions of the applicant to the effect that it is really uncontested that the jewellery was lawfully acquired by her, was obtained by her as a third party for value and is not the proceeds of crime (at least to the best of her knowledge and belief)." 7 At paragraph seven he said:- "The question of revocation is a discretionary remedy vested in the court. However, there is an onus upon the applicant to persuade the court on the balance of probabilities that the discretion should be exercised in favour of the applicant …" 8 Thus, his Honour held that the applicant needed to demonstrate a negative, in the sense that there were no grounds for the existence of a restraining order. 9 At paragraph 14 his Honour held that the applicant had satisfied the onus of proof. He said:- "In these circumstances, I accept the proposition that the jewellery was acquired by the applicant prior to the alleged offences, was acquired outside of Australia and that the applicant believes that it was not bought from the proceeds of crime. The value of the jewellery in question is said to be $509,700. In these circumstances, it seems to me that the applicant has discharged the onus of proof which lies upon her and that there are no grounds upon which to continue the restraining order in respect of the jewellery as at the time of hearing of this application." 10 It was for those reasons that his Honour made the revocation order. 11 On 31 March 2004, the solicitors for the applicant wrote to the Commonwealth Director of Public Prosecutions a letter, the relevant parts of which are as follows:- "WITHOUT PREJUDICE SAVE AS TO COSTS Dear Madam RE: UNIVERSAL LIONSHARE PTY LTD AND DANTE TAN v. COMMONWEALTH DPP; TERESITA TAN v. COMMONWEALTH DPP CALDERBANK OFFER TO SETTLE PROCEEDINGS NO. 11461 OF 2003 We are instructed to offer to settle the above proceedings upon the following basis:- 1. The Defendant Corporation is to pay the DPP from restrained funds the sum of $50,000.00 cash. 2. Otherwise all proceedings and motions are dismissed. 3. Each party to pay their own costs. 4. This offer is open for acceptance on or before 5pm 14 April 2004." 12 That letter is submitted to support one of the grounds on which it is asserted indemnity costs should be ordered. The nature of the offer being made in it is not clear to me but it appears to have been accepted on the costs argument as offering a settlement of no less value to the plaintiff than Shaw, J.'s final orders. Consideration of the effect of the letter requires a summary of the history of the litigation. 13 The hearings leading to the order of Shaw, J. to which I have referred had commenced on 5 February 2004. That day the matter had been adjourned part heard to 8 September 2004. Prior to 31 March 2004, Teresita Tan had been examined under the compulsory examination procedures under the Proceeds of Crime Act. At that examination, as I understand it, an undertaking was given and abided by not to question her concerning the subject matter of her application for revocation, that is to say, on the topic of the ownership of the jewellery and her innocence of any involvement in her husband's mis-deeds. Although there seems to be some difference of views between counsel as to precisely what occurred at that time, it does not seem to me that that difference will in any way materially bear upon the decision I must make. In any event, I am not prepared to conclude that the examination was attended by any circumstances by way of breach of undertaking or otherwise which, of itself, would mind the court to make an order for indemnity costs. 14 The letter was written on 31 March 2004, the hearing resumed on 8 September, written submissions were provided on 13 September, judgment was handed down on 15 October 2004 and costs were reserved. The order reserving costs was confirmed by Bell, J. pending a decision of the Court of Appeal. 15 On 9 December 2004, the Court of Appeal handed down its decision in Diez v. Commonwealth Director of Public Prosecutions [2004] NSWCA 452 concerning s.101 of the Proceeds of Crime Act 1987. That section is identical to s.323 of the 2002 Act. In upholding an appeal by an applicant who had succeeded below but had been denied costs, the court held that section did not provide an exclusive code dealing with costs in proceeds matters, indeed, that costs should be dealt with by the court under its general costs powers and discretions in such situations. It is conceded on behalf of the Director of Public Prosecutions that a direct analogy applies to s.323 of 2002 Act. It was held that the Act provided for "simply a non-exclusive delineation of a set of circumstances in which the court has a discretion to order all, some or no costs against the Commonwealth" (Diez (supra) at paragraph 47). 16 The judgment in that case continued, at paragraph 48:- "However, that would still leave the court free in an appropriate case, exceptional as it may be, to exercise a discretion to order costs against the Commonwealth. This is so, even if the applicant had been involved 'in any way in the commission of the offence in respect of which the forfeiture order or restraining order were sought or made'. The breadth of the expression 'involved in any way' militates against the court being denied the discretion it could otherwise exercise to award party and party costs to the successful party against the unsuccessful party, as for example where the successful applicant's involvement was wholly peripheral. This would, as with indemnity costs, reflect the wholly conventional position in civil litigation, here reflected in Part 52A r11 of the Supreme Court Rules. It provides that 'if the court makes any order as to costs, the court shall, subject to this Part, order that the costs follow the event, except where it appears to the court that some other order should be made as to the whole or any part of the costs'." 17 Here the Commonwealth makes no submission that Mrs. Tan as a successful party should not have in her favour the "normal order for costs" but opposes those costs being awarded on an indemnity basis, but does draw my attention to certain features of the legislation. 18 Section 323 provides as follows:- "1. If:- (a) a person brings, or appears at, proceedings under this Act before a court in order:- (i) to prevent a forfeiture order or restraining order from being made against property of the person; or (ii) to have property of the person excluded from forfeiture order or restraining order; and (b) the person is successful in those proceedings; and (c) the court is satisfied that the person was not involved in any way in the commission of the offence in respect of which the forfeiture order or restraining order was sought or made; the court may order the Commonwealth to pay all costs incurred by the person in connection with the proceedings or such part of those costs as is determined by the court. 2. The costs referred to in subsection (1) are not limited to costs of a kind that are normally recoverable by the successful party to civil proceedings" 19 The reference to the court having power to order the Commonwealth to pay "all costs incurred by the person in connection with the proceedings or such part of those costs as is determined by the court" it seems to me plainly envisages full costs on an indemnity basis. The plaintiff submitted, however, that a revocation application did not fall within the categories of application to which s.323(1)(a)(i) or (ii) applies notwithstanding that any such application is defined by its object rather than its nature. The plaintiff asserts that the application made by Mrs. Tan was a "revocation" application, not an application under ss.29 to 31 or s.73 of the Act, which relate to excluding property from restraining orders. Hence, it is argued this case falls outside the section. But s.323(1)(a)(i) does not refer to applications to exclude property from restraining orders. That is referred to by s.323(1)(a)(ii). Section 323(1)(a)(i) is much wider and relates to applications having as their objective the prevention of a forfeiture order being made against the property. In this regard, it is in accord with the principles referred to by the Court of Appeal in Diez (supra) not to read the Act technically so as to defeat the normal rights and entitlements relating to property and entitlement to such things as costs orders which a party might legitimately expect to be maintained. Such would accord with the normal presumptions and canons of construction. I regard the section as applicable to Mrs. Tan's application but I accept that it should be read as conferring a power to order up to all or full costs on an indemnity basis in discretion. 20 Alternatively, the plaintiff submits that in the event that the court is of the view that it does have power under s.323 to order costs, it has only a limited discretion which would rarely be exercised against the Commonwealth when litigating in the public interest. It submits that if I have formed a view adverse to its first submission on s.323, I should apply the principles which govern the exercise of the discretion as expressed in Part 52A of the Supreme Court Rules and the case law thereon, but giving particular weight to the Commonwealth's public interest function. 21 I accept the plaintiff's further submissions that I should give no weight to the contentions of the applicant that the bringing of the ex parte application for the restraining order, as far as the jewellery was concerned, was in some way attended with some such impropriety as might merit of itself the award of indemnity costs. The plaintiff moved under the statutory regime as provided for in the legislation and in circumstances where there plainly was an adequate basis for suspicion as was required by the legislation. Shaw, J. held so much. On the general application for revocation, he upheld the proposition that there remained grounds for the order. 22 I therefore turn to consider the conduct of the parties on this particular piece of litigation in the light of Shaw, J.'s findings as expressed in his judgment. 23 It is now, and was at the hearing, conceded by the plaintiff that it was never contended by the plaintiff that the applicant was ever involved in any offending. Further, Shaw, J. held that there were, at the time he was considering the matter, no grounds for the restraining order. That finding is to be considered in the light of the Act's provisions on restraining orders that such an order must be made even if there were only reasonable grounds to support a suspicion or belief the property was, even indirectly, illegally obtained. 24 It was in that context that the plaintiff made the offer contained in the letter to which I have referred. That offer, as far as I can discern, would seem to be that Mrs. Teresita should receive the return of her jewellery, the company should pay $50,000 and each party should pay his, her or its own costs. Whatever the detail of the offer, I accept it is not an offer which solely and directly related to the matter upon which the applicant succeeded before Shaw, J. 25 Nonetheless, that part of the offer seeking the return of the jewellery and that each party should pay their own costs, did directly relate to her application. There was no attempt to settle in response, even limited to those two matters. Essentially, It seems to me, the plaintiff took the view, notwithstanding the letter, it would make her prove her case. 26 In considering the general principles on costs, as I have said, I accept the submission made by the plaintiff that the public purpose of litigation is a consideration in costs issues. See Oshlack v. Richmond River Council (1998) 193 CLR 72. The Director of Public Prosecutions has invested in him a statutory power and duty in respect of proceedings under the Proceeds of Crime Act 2002, particularly to combat crime by depriving persons reasonably suspected of criminal behaviour or of benefiting there from of the fruits of criminal activity and to divert such ill-gotten gains into the public revenue. It does not, however, have the function of forcing the innocent to justify their retention of their own property which there are no grounds to suspect was illegally obtained. 27 When Shaw, J. held that the applicant, Mrs. Tan, was innocent of any wrong doing, was the owner of the jewellery and the jewellery was not reasonably suspected of having been obtained through her husband's mis-deeds that was in the context of the plaintiff never asserting she was party to his, or indeed any, criminality and failing to show any basis for challenging her assertion she was the owner. 28 On my reading of Shaw, J.'s judgment, it was not reasonable for the DPP to continue to oppose her application, at least after the first day, even having regard to her evidentiary problems, particularly since any innocent person who had acquired jewellery some time in their past would appear to have exactly the same problems as she had unless they were record keepers of an extraordinary degree of conscientiousness. 29 The hearing went ahead for over two days, notwithstanding that at best, at the outset, in the absence of his evidence, the Director might have had a suspicion, until the nature of her evidence was known, that the jewellery might in some way have been obtained illegally or in circumstances which might lead to the making of a forfeiture application or automatic forfeiture. The applicant's case to the contrary was formidable. She was found by Shaw, J. to be entirely credible and he held that the end of the proceedings it had been really uncontested that the jewellery was lawfully acquired by her, was obtained by her as a third party for value and was not the proceeds of crime. 30 Although the Act has been said to be draconic or draconian in the effect it might have upon the rights of persons whose property falls within restraining orders, I do not see that that is a consideration which should mind one, one way or the other on the costs question. The Act is as it is. It is not to disapproval of the Act one should turn, but to the conduct under it. Such great powers as the Act confers call for great care and responsibility on the Director's part as the Act enables him to move on suspicion, compelling defendants and others to apply to courts to avoid forfeiture of their property, to show they are innocent of misdoing, to carry the onus to provide information, to submit to examination. The Act enables the Director to obtain orders for such things and gives him the power to put people to proof of how they obtained their property so they can get it back. 31 Where, as here, a third party has been compelled to come to court to assert their innocence and to prove that property which clearly was theirs should not be forfeit and has succeeded, I do not see that any asserted public interest function should displace the ordinary rule for ordering costs in favour of a successful party. Particularly is this so where the Director has been put on notice by a Calderbank letter. Otherwise the impediment to such persons coming to court to assert their property rights would be so high as to require them after full hearings to pay the financial penalty of the Director failing properly to evaluate the evidentiary basis for suspicion in an individual case. Even having regard to a principle that costs would rarely be ordered against the Commonwealth acting her in the public interest, I consider the Director should pay the applicant's costs. 32 Further, I accept that this case should not have been persevered with after the offer to settle on the second day of the hearing, not because the Calderbank letter specifically relates to the subject matter of the dispute, but because it should, at least, have put the Director of Public Prosecutions on notice that he should carefully consider whether Mrs. Tan might be almost certain to succeed in recovery of the jewellery. The merits of the matter at that point should have been investigated and there should have been, in the light of Shaw, J.'s findings, an early extra-curial disposition, either by settlement as sought in the Calderbank letter or in terms of an agreement to permit the return of the jewellery to Mrs. Tan thus avoiding any forfeiture or forfeiture order. 33 In that sense, I would regard the persevering with the matter after the provision of the letter after the first day's hearing as conduct which falls within the test set out in Baillieu Knight Frank (NSW) Pty. Limited v. Ted Many Real Estate Pty. Limited (1992) 30 NSWLR 359. 34 For these reasons I consider that the appropriate order is that the Director of Public Prosecutions should pay the costs of Mrs. Tan's application up to and including the costs occasioned by her until 31 March 2004 on a party/party basis and thereafter on an indemnity basis. I order accordingly. **********

CDPP v. IN THE MATTER OF SPECIFIED PROPERTY OF UNIVERSAL LIONSHARE PTY. LIMITED & ANOR [2005] NSWSC 91

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