Commissioner of the Australian Federal Police v Dickson

Commissioner of the Australian Federal Police v Dickson - [2022] NSWSC 799 - NSWSC 2021 case summary — Zoe

[3]

Background

On 5 April 2012, the plaintiff commenced proceedings by summons under the Act against 13 defendants, including the first defendant, Michael Issakidis ("the second defendant") and corporate entities, seeking orders with respect to property suspected of being the proceeds of crime. Following an application that was heard ex parte on the same date, orders, including restraining orders pursuant to s 18 of the Act and examination orders, were made. The second further amended summons named 17 defendants and sought, in addition, forfeiture orders.
Paragraph 29 of the second further amended summons, which reproduced par 26 of the summons, sought a PPO against the first defendant: "29. Pursuant to section 116 of [the Act] the First Defendant pay to the Commonwealth an amount to be calculated by the court in accordance with Division 2 of Part 2-4 of [the Act]." A PPO was sought against the second defendant in par 30 of the second further amended summons, which is in identical terms to par 29. The first defendant does not contest that he was served with the summons in 2012.
On 21 August 2014, criminal proceedings were commenced against the first defendant. Following X7 v Australian Crime Commission (2013) 248 CLR 92; 2013 HCA 29, the plaintiff determined that the civil proceedings should be paused until the criminal charges were resolved. The plaintiff submitted that the application was periodically mentioned thereafter, which the first defendant denied at the hearing. I will return to that factual dispute later in this judgment.
On 22 December 2014, the first defendant was found guilty by a jury of conspiring with the second defendant to dishonestly cause a loss or risk of loss to the Commonwealth, contrary to s 135.4(5) of the Criminal Code (Cth), and of conspiring with the second defendant to deal with property of a value of $1 million or more, believing it to be the proceeds of crime, contrary to ss 11.5(1) and 400.3(1) of the Criminal Code. Both offences are "serious offences" within the meaning of s 338 of the Proceeds of Crime Act.
On 20 March 2015, the first defendant received an aggregate sentence of 11 years imprisonment with a non-parole period of 7 years: R v Dickson (No 18) [2015] NSWSC 268. In that sentence judgment, at [76] and [99], the extent of the loss or risk of loss that was intended by the first defendant to be caused to the Commonwealth was calculated at approximately $135 million.
On 10 June 2016, the Court of Criminal Appeal dismissed an appeal against conviction by the first defendant and allowed the Crown's appeal on sentence, resentencing him to 14 years imprisonment with a non-parole period of 9 years and 3 months: Dickson v R [2016] NSWCCA 105. On 16 December 2016, the High Court refused an application by the first defendant for special leave to appeal the decision of the Court of Criminal Appeal: Dickson v The Queen [2016] HCATrans 307. He is eligible for release to parole on 21 March 2024.
The revival of the application for a PPO was the subject of notice by the plaintiff in a letter to the first defendant dated 17 August 2020, in which the plaintiff stated that it intended to seek a timetable for the service of its evidence in respect of par 29 at the next directions hearing, which was on 19 August 2020. As noted, the first defendant's notice of motion was filed a month later.
Property was eventually forfeited to the Commonwealth pursuant to the second further amended summons following the convictions and unsuccessful criminal appeals of the first and second defendant. Accordingly, the various other orders applied for in the second further amended summons are spent, and what remains, relevantly in respect of the first defendant, is par 29.

[4]

The first defendant is self-represented

To the extent that the first defendant's filings and oral submissions at times are not perfectly expressed, I note that he is self-represented and is not a legal practitioner, although he does have the benefit of undergraduate and postgraduate degrees in law.
In Seidler v Carroll & O'Dea [2013] NSWSC 338, McCallum J (as her Honour then was) referred to the specific considerations which must be balanced in a case involving a self-represented litigant: "8 Since Ms Seidler represents herself in the proceedings, it may be assumed that she has had to draft the proposed amended pleading either without any, or any substantial, assistance from a lawyer. Views may differ as to the extent to which that is a relevant consideration in determining whether a pleading should be allowed to stand. Access to justice is a fundamental aspect of the administration of justice. The court should be vigilant to guard against the rigid application of principle at the expense of facilitating the just resolution of matters properly brought forward for judicial determination. To that end, a degree of flexibility and even indulgence might appropriately be afforded to a self-represented litigant in a proper case. So much is recognised in the remarks of Kirby J in Attorney-General, Re; Ex parte Skyring [1996] HCA 4; (1996) 135 ALR 29, where his Honour referred to the need for 'vigilance, and not impatience' in the case of an applicant who is not legally represented. 9 The fundamental importance of facilitating equal access to justice warrants the giving of close consideration to the terms of a pleading in order to discern, with an open mind, whether there is a reasonable cause of action nestling within obscure or difficult language used by a self-represented litigant. 10 Conversely, however, a misconceived or poorly-pleaded claim imposes considerable stress on the due administration of justice and ought equally to be guarded against. The same vigilance must accordingly be exercised not to suffer the court to become a forum for the agitation of grievances which lack any juridical foundation."

[6]

The legislative provisions and relevant principles

Section 67 of the Civil Procedure Act is in the following terms: "Subject to rules of court, the court may at any time and from time to time, by order, stay any proceedings before it, either permanently or until a specified day."
Rule 13.4 of the UCPR provides: "13.4 Frivolous and vexatious proceedings (1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings - (a) the proceedings are frivolous or vexatious, or (b) no reasonable cause of action is disclosed, or (c) the proceedings are an abuse of the process of the court, the court may order that the proceedings be dismissed generally or in relation to that claim. (2) The court may receive evidence on the hearing of an application for an order under subrule (1)."
An order for a temporary or permanent stay of proceedings pursuant to s 67 of the Civil Procedure Act may be informed by many diverse considerations. In written submissions, the first defendant identified four bases for summary dismissal and in a separate paragraph, possibly being a reference to staying the proceedings, stated: "Proceedings brought for the predominant purpose of achieving objects ulterior to the purpose of a cause of action are an abuse of process: Williams v [Spautz] (1992) 174 CLR 509."
I note that an alleged abuse of process is an available basis for both remedies. Leaving aside the question of whether the proposition correctly states the ratio decidendi of Williams v Spautz, I presume that the basis upon which the first defendant seeks a stay of the proceedings is that it is an abuse of process, because it has been brought by the plaintiff for a purpose "ulterior to" that of obtaining a PPO.
In any event, the first defendant's submissions as to the relevant legal principles suggests that r 13.4(1)(b) is the main thrust of his objection to the proceeding. The test to be applied to determine whether no reasonable cause of action is disclosed, which is well known, is derived from the principles set out by Barwick CJ in General Steel Industries v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69 at 128-130 ("General Steel Industries"). The Court is to consider whether "the case of the plaintiff is so clearly untenable that it cannot possibly succeed": see at 130.
In General Steel Industries, Barwick CJ, at 128-129, emphasised the need for a court to be clearly satisfied that there is no reasonable cause of action disclosed. "The plaintiff rightly points out that the jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion … the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated."
Rule 13.4(1)(b) of the UCPR was considered by the Court of Appeal in Ugur v Attorney General for New South Wales [2019] NSWCA 86. White JA, at [70], considered the purposes of the power in r 13.4 of the UCPR: "One of the purposes of the power in r 13.4 of the UCPR to dismiss a proceeding summarily as frivolous or vexatious or as disclosing no reasonable cause of action or as being an abuse of the process of the court, is to save the defendant from the cost, delay and vexation in having to defend clearly untenable proceedings which raise no real question of fact or law. Another purpose is the protection of the interests of the public in not having scarce judicial resources wasted in dealing with frivolous applications."
In Leerdam v Noori (2009) 227 FLR 210; [2009] NSWCA 90, Macfarlan JA observed that the General Steel Industries principles may more frequently be satisfied where questions of law are in issue. His Honour, at [75], stated that: "Such a course should only be taken in a clear case. Descriptions of the test to be applied have included such phrases as 'so obviously untenable that it cannot possibly succeed' and 'manifestly groundless' (General Steel Industries … at 129). Particular caution is required where factual questions are involved as it is difficult to predict in advance of a final hearing the precise manner in which the evidence will unfold. Whilst caution is also required where, as here, the application turns on questions of law and there is no reasonable prospect that deficiencies in what is pleaded will be able to be cured by amendment, opportunities to summarily dismiss or strike out claims will arise more frequently."

[9]

Ground 1. The plaintiff has not made a PPO and is out of time to do so, unless leave to apply outside the statutory period is granted: s 134 of the Act

Part 2-4 of Ch 2 of the Act is comprised of ss 115 to 150 and is titled "Pecuniary penalty orders". The first defendant's first basis asserts that par 29 cannot be deemed an application for a PPO because it does not comply with the requirements under Div 3 of Pt 2-4 of the Act, which is comprised of ss 134 to 139.
A proceeds of crime authority may apply for a PPO pursuant to s 134 of the Act, which relevantly provides: "134 Proceeds of crime authority may apply for a pecuniary penalty order (1) A proceeds of crime authority may apply for a pecuniary penalty order. (2) If the application relates to a person's conviction of a serious offence, the application must be made before: (a) the end of the period of 9 months after the conviction day; or (b) if an extension order is in force at the end of that period - the end of the period of 3 months after the end of the extended period relating to that extension order. (3) If the application relates to a person's conviction of an indictable offence that is not a serious offence, the application must be made before the end of the period of 6 months after the conviction day. (4) An application may be made in relation to one or more offences. (5) An application may be made for a pecuniary penalty order in relation to an offence even if: (a) a forfeiture order in relation to the offence, or an application for such a forfeiture order, has been made; or (b) Part 2‑3 (forfeiture on conviction of a serious offence) applies to the offence. (6) Despite subsections (2) and (3), the court hearing the application may give leave for the application to be made after the time before which an application would otherwise need to be made under those subsections if it is satisfied that it would be in the interests of justice to allow the application."
The application must be accompanied by a written notice pursuant to s 136, which provides: "136 Notice of application (1) The responsible authority must give written notice of the application to a person who would be subject to the pecuniary penalty order if it were made. (2) The responsible authority must include a copy of the application with the notice. (3) The responsible authority must give a copy of any affidavit supporting the application to a person who would be subject to the pecuniary penalty order (if it were made) within a reasonable time before the hearing of the application."
The process of making a PPO is addressed in s 116 of the Act, which relevantly provides: "116 Making pecuniary penalty orders (1) A court with *proceeds jurisdiction must make an order requiring a person to pay an amount to the Commonwealth if: (a) a *proceeds of crime authority applies for the order; and (b) the court is satisfied of either or both of the following: (i) the person has been convicted of an *indictable offence, and has derived *benefits from the commission of the offence; (ii) the person has committed a *serious offence. Note: The conviction for, or reasonable grounds for suspecting commission of, an indictable offence could be used as grounds for a restraining order under Part 2 1 covering all or some of the person's property. …"
The method of determining a penalty amount is set out in Div 2 of Pt 2-4 of the Act, which is made up of ss 121 to 133 and titled "Penalty amounts". Section 121 relevantly provides: "Subdivision A - General 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. (2) If the offence to which the order relates is not a *serious offence, the *penalty amount is determined by: (a) assessing under Subdivision B the value of the *benefits the person derived from the commission of the offence; and (b) subtracting from that value the sum of all the reductions (if any) in the penalty amount under Subdivision C. (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 (b) subtracting from that value the sum of all the reductions (if any) in the penalty amount under Subdivision C. Note: Pecuniary penalty orders can be varied under Subdivision D to increase penalty amounts in some cases. (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, or property suspected of being subject to the *effective control of the person, 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."
Section 122 of the Act, titled "Evidence the court is to consider", sets out the evidence that the court is to have regard to in determining the value of benefits that a person has derived from the commission of an offence or offences. Sections 124 to 129 set out the process by which the court determines the value of benefits derived by the person from the commission of the illegal activity.
In a section of his written submissions titled "Contents of a full and proper PPO application", the first defendant submitted that the commencement of proceedings for a PPO requires the service of three documents upon a defendant: "1. A written notice of the application: s 136(1) 2. A copy of the PPO application: s 136(2) 3. A copy of a supporting affidavit: s 136(3)"
The first defendant submitted that the application for a PPO must: "i. Identify the elements and issues which need to be established to support the application ii. Detail all the material facts to establish each element iii. Detail the evidence which supports the material facts"
The first defendant submitted that, as well, "a detailed Submissions document … covering arguments supporting the PPO application" should have been served upon him with the application.
The first defendant submitted that par 29 of the second further amended summons does not constitute an "application" for a PPO because it did not conform with these requirements.
In relation to requirement "i", concerning "elements and issues", the first defendant listed 16 "elements" that should have been addressed in the application. These included such matters as the identification of the relevant "serious offences" pursuant to s 116(1)(a) of the Act, the identification of the relevant "benefits", their value and how they were alleged to have been generated from the commission of the offence or offences (referring to ss 121, 122 and 123 of the Act), or matters which may reduce the extent of the penalty to be imposed such as the value of property already forfeited to the Commonwealth (referring to s 130 of the Act) or the tax already paid on the benefits derived (referring to s 131 of the Act).
In oral submissions, the first defendant submitted that, because the plaintiff had not made an application as required by s 136 of the Act, he was unaware of the nature of the plaintiff's case, stating: "I have no idea what the elements are, what the issues are that they are seeking to prove. We can't determine the relevance or the admissibility of a single page there because we don't know what their case is."
Secondly, insofar as the second further amended summons purports to be an "application" for a PPO, the first defendant submitted that it was not accompanied by a written notice or an affidavit in support of the application, in accordance with ss 136(1) and (3).
Since the application was not properly made, the first defendant submitted that the plaintiff is out of time to make an application unless leave to apply outside the statutory period is granted pursuant to s 134(6) of the Act, the time for filing the application having expired on 31 August 2016 in accordance with s 134(2)(b).
The plaintiff submitted that the application for a PPO was in accordance with the relevant provisions of the Act. The plaintiff noted that the term "application" is not defined in the Act, and that it should be construed as meaning no more than a formal request to the Court that identifies the relief sought, made by summons or notice of motion, rather than a concept that involves the pleading of material facts. The plaintiff submits that in this case, it was made by the initial summons filed in 2012.
The plaintiff further submitted that the term "written notice" in s 136(1) of the Act means any written document which puts the person on notice of the application. There is no reason for it not to be the document serving the application itself or, as in this case, the notice and the application may be one and the same document. By way of analogy, the plaintiff referred to a notice of motion as a document that places a defendant on notice and at the same time constitutes the application for the orders that are sought. Accordingly, the plaintiff submitted that, in this case, the summons constituted a "written notice" for the purposes of s 136(1).
The plaintiff submitted that, in due course, the Paterson affidavit may or may not be relied on by it in the hearing. If it is relied upon, it may be supplemented by additional affidavit material. Regardless, the affidavit only needs to be provided within a reasonable time before the PPO hearing.
In written submissions in response, the first defendant stated: "The plaintiff now claims for the first time that the affidavit of the Australian Federal Police office[r], Mr Paterson dated 18 December 2020 was filed to comply with s 136(3). This is disingenuous."

[11]

Consideration

There are multiple references in Pt 2-4 of the Act to an "application" and "notice" of an application. Both terms are also used elsewhere in the Act. I note that in Pt 2-1, Div 1, titled "Restraining orders", the Act specifies that an application for certain restraining orders must be supported by an affidavit of an authorised officer that states certain matters: ss 18(3), 20(3) and 20A(3) and in Pt 2-1, Div 2, s 26(2) of the Act. Division 2 also has notice provisions in terms that are structurally similar to s 136 of the Act and which also refer to the notice of the application, including "any affidavit", which therefore has particular relevance in that Division.
In Attorney General for New South Wales v XX (2018) 98 NSWLR 1012; [2018] NSWCCA 198, the Court said: "134 The relevant principles of statutory construction are well-established. As was said by McHugh, Gummow, Kirby and Hayne JJ in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 at [69] (Project Blue Sky), the 'primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute', with the meaning of the provision to be 'determined by reference to the language of the instrument viewed as a whole'. Their Honours also referred to the statement of Dixon CJ in Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397; [1955] HCA 27 that 'the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed'. They also emphasised at [71] that a court must strive to give meaning to every word of a provision. 135 In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27; [2009] HCA 41 at [47], the majority emphasised that the 'language which has actually been employed in the text of legislation is the surest guide to legislative intention', but that the 'meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy': see also Thiess v Collector of Customs (2014) 250 CLR 664; [2014] HCA 12 at [22]; Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503; [2012] HCA 55 at [39]. In Lacey v Attorney-General (Qld) (2011) 242 CLR 573; [2011] HCA 10 at [44], the majority emphasised that the 'purpose of a statute is not something which exists outside the statute. It resides in its text and structure, albeit it may be identified by reference to common law and statutory rules of construction'. 136 However, as was emphasised in SZTAL v Minister for Immigration and Border Protection (2017) 91 ALJR 936; [2017] HCA 34 (SZTAL), the text cannot be considered without regard to its context and purpose. The majority stated the principle in the following terms at [14]: '[14] The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.' See also Gageler J at [35]-[39]; Interpretation Act 1987 (NSW) s 33."
As neither term is defined in the Act, in accordance with the principles of statutory interpretation in the authorities cited in this extracted passage from AG(NSW) v XX, the appropriate starting point for an understanding of their meaning is their natural and ordinary meaning in their context in Ch 2, Pt 2-4, Div 3 of the Act, cognisant of the manner in which those terms are used elsewhere in the Act.
The first defendant has not referred to a statutory or regulatory provision that supports his submission as to what, at a minimum, constitutes an application for a PPO or notice of an application, pursuant to the provisions to the Act. Nor has he advanced authority for those propositions. In my view, the provisions in Pt 2-1 of the Act that expressly state that in certain circumstances an affidavit is to be included with an application for a restraining order is consistent with it not being necessary for an application for a PPO as referred to in Pt 2-4 of the Act to include or be accompanied by any documentation.
There is no apparent impediment to a document commencing legal proceedings, in this case a summons, being the vehicle of the application and, by its service upon the first defendant, also being notice of that application for the purposes of s 136 of the Act. Although s 136(2) refers to a "a copy of the application" accompanying the notice, I do not accept that it prohibits the application consisting of orders sought in a summons or notice of motion that is duly served on a defendant.
The third of the first defendant's claimed three documents to accompany a notice pursuant to s 136(3) of the Act is "A copy of a supporting affidavit". This misinterprets the provision in two respects. Section 136(3) does not oblige the responsible authority to serve an affidavit at the same time as the notice or at all, but if one is to be relied upon in support of the application, the responsible authority must serve it upon the defendant "within a reasonable time before the hearing of the application".
In those circumstances, in the interests of procedural fairness, one would expect a defendant to be informed of the evidentiary basis of the application and for it to be accompanied or closely followed by written submissions to advance argument in favour of the application. To conclude, I accept the plaintiff's submission that the purpose of the application is to identify the relief sought, not to plead material facts or identify the evidence upon which the application is based.
For the sake of completeness, I find that the first defendant's written submission in response, which is noted at [43] above, misunderstands the plaintiff's submission that the Paterson affidavit may be relied upon in due course pursuant to s 136(3) of the Act.
Accordingly, I am not satisfied that the first defendant's first ground in support of this notice of motion is made out.

[13]

Ground 3. The proceedings are an abuse of process of the court

The first defendant submitted that the proceedings are an abuse of process for seven reasons. The first two reasons are that since the original summons seeking a PPO was filed in 2012, the plaintiff could have prosecuted the application at the time the defendant was sentenced or in combination with the plaintiff's other applications to the court. Accordingly, the first defendant submitted that it would be oppressive for the plaintiff to prosecute the PPO so long after the original summons.
The plaintiff responded that it was obliged to wait until the criminal proceedings and appeals had "run their course", and that the PPO has always been part of the proceedings.
The third reason, as advanced in the first defendant's written submissions, is that the plaintiff had "concealed and suppressed 'thousands and thousands of pages' of seized documents". The first defendant submitted that he was disadvantaged in resisting the plaintiff's application by not having access to those documents, which had been seized by the AFP when executing search warrants on various properties. He said that he had attempted to recover copies of the documents by applications made pursuant to freedom of information legislation, but without success. He said, in oral submissions: "I don't see how I can defend this case while the AFP have got the advantage of every document seized, and have only given me copies of some documents from my home. … in my submission, and more particularly my affidavit, I specify the property searched and the types of documents seized. One of the purposes of tendering my affidavits … is to show those documents which were seized by the AFP, from various premises, which I had to try to dig up from other sources, which I tendered in my trial. So, there are some 1,000 pages that I have been able to locate, or was forced to locate, that were seized from my home and the office premises of NeuMedix. The Commissioner has dug in, and is refusing to give me copies of documents. Now, I'm going to need to subpoena all the officers involved in the searches. See whether they video-taped these searches. … I don't see how I can be expected to defend this application while the AFP has the advantage of having all my company documents. Every document that they have seized from these fifteen various premises, they are refusing to give them to me. I have asked them for them in writing, I have written to the Commissioner, I have gone into the Commissioner's premises and looked at the documents seized. They only showed me documents seized from my home. I have asked them many times."
The reference to "NeuMedix" is to "Neumedix Health Australasia Pty Ltd" ("Neumedix"), a company of which the first and second defendants were directors and which was central to the conspiracy alleged (and proved) against them in the criminal proceedings: R v Dickson (No 18) at [8]-[11].
The plaintiff relied upon Mr Paterson's affidavit evidence to the effect that the first defendant has made two freedom of information requests to the AFP and that both had been duly processed and responded to. Mr Paterson concluded, in his affidavit: "60 I am informed by the Principal FOI Officer/Team Leader, Freedom of Information team of the AFP, and believe, that: a. the AFP's Freedom of Information team does not hold information about other applications made by the First Defendant to the AFP under the FOI Act, apart from the First FOI Application and the Second FOI Application; b. so far as the Principal FOI Officer is aware, the First Defendant has not sought a review by the Information Commissioner in respect of either the First FOI Application or the Second FOI Application; c. had the First Defendant sought a review in respect of the two FOI Applications, that is a matter which would have come to the attention of the Principal FOI Officer; and d. the Principal FOI Officer has made searches of the relevant records and has not located any notifications of any such review applications."
The fourth reason advanced by the first defendant in support of the abuse of process ground rested on the proposition that the PPO was in fact an attempt to recover "an unsecured debt", by "circumvent[ing] the normal legal process of dealing with a company's creditors". The fifth reason, closely related to the fourth, characterised the application as: "… a thinly veiled attempt by the Australian Federal Police to collect income tax outside the proper income tax legislation and to retain those funds itself: pursuant to an application made under Part 4-3 Confiscated Assets of the [Proceeds of Crime Act ('POC Act')] where the Commissioner of the Australian Federal Police will claim these monies as compensation for its law enforcement activities."
In response to the first defendant's fourth reason, the plaintiff submitted that any PPO ordered against the first defendant would be against him personally, meaning that corporate insolvency laws are irrelevant. In response to his fifth reason, the plaintiff submitted that the application for a PPO does not involve a determination of the first defendant's civil liability to pay income tax.
The sixth reason is that the first defendant is disadvantaged by the failure of the plaintiff to provide an "application" and "notice". This reason is, in essence, a reformulation of the first ground and therefore I disregard it.
The seventh reason is that it is submitted that "a considerable amount" of the evidence to be relied upon by the plaintiff at the hearing in support of its application will be the product of search warrants that were issued in the course of a criminal investigation and therefore would be inadmissible on a PPO application, which is a civil matter.
The plaintiff noted that the first defendant has not identified what particular evidence he objects to and, in any event, he will have an opportunity to object to the admissibility of evidence at the hearing of the application, so that it is not an issue relevant to this application.

[14]

Consideration

In relation to the first two reasons, I am satisfied that the plaintiff did not unreasonably prolong the prosecution of its claim. As noted at [6] above, had the plaintiff pressed its application prior to the conclusion of the criminal proceedings, it would have been open to sanction for doing so, consequent to the judgment of X7 v Australian Crime Commission.
In relation to the third reason, the plaintiff has not yet served upon the first defendant the evidence it will rely upon for its application and its submissions as to why a PPO should be made. Section 136(3) of the Act obliges the plaintiff to serve its affidavit evidence "within a reasonable time before the hearing of the application". That evidence will provide necessary context to any application that the first defendant may then bring as to why the alleged retention of documentary material by the plaintiff is procedurally unfair to the first defendant in resisting the application. For those reasons, and also in light of the first defendant not having exhausted his options to obtain documentation that was seized by the AFP at this preliminary stage, I regard the submission as premature and therefore it is not made out.
The fourth and fifth reasons both contend that an application for a PPO in the circumstances of the case is an attempt by the plaintiff to recover unpaid income tax from the first defendant by circumventing appropriate channels. As submitted by the plaintiff, in respect of the fourth reason, corporate insolvency laws are irrelevant to an application for a PPO against the first defendant personally.
In relation to both the fourth and fifth reasons, I conclude that the first defendant's repeated characterisation of the application for a PPO as a form of, or equivalent to, the collection of outstanding tax, is incorrect. The principal objects of the Act are set out at s 5 of the Act. Section 116(1)(a) of the Act states that an application for a PPO may only be made by a "proceeds of crime authority", which is defined in s 338, the Dictionary to the Act, to mean either the Commissioner of the Australian Federal Police or the Commonwealth Director of Public Prosecutions. The plaintiff to this application is not, and could not be, the Commissioner of Taxation.
Part 2-4 Div 2 of the Act sets out the process for determining the amount of the PPO. In the context of this case, this involves the determination of the value of the benefits that the person has derived from the commission of the serious offence or of the commission of any other offence that constitutes unlawful activity, less certain reductions: s 121(3) of the Act. In due course, the plaintiff may tender evidence as to how it arrives at what it submits to be the relevant quantum of the PPO. If that evidence involves a calculation of tax that was not paid by the first defendant, it does not transform the exercise into one of supplanting the role of the Commissioner of Taxation.
Accordingly, I am satisfied that these two bases are not made out.
The seventh reason rests upon a submission by the first defendant concerning the admissibility of evidence when it is not yet known with certainty what evidence the plaintiff will rely upon. Accordingly, it is also premature and misplaced as a basis for establishing an abuse of process.

[17]

Ground 5. A reduction in income tax liability is conceptually the only possible benefit derived from the commission of the s 135.4(5) offence and dealt with pursuant to the s 400.3(1) offence and not money actually legally received by the Neumedix company

The context for this ground requires some understanding of the nature of the conspiracy and how the alleged benefit was obtained. In the course of his remarks on sentence in R v Dickson (No 18), Beech-Jones J summarised the nature of the criminal conspiracy: "9 The essence of the Crown case on count 1, as accepted by the jury, was that the offender and his co-conspirator agreed to cause [Neumedix] to make false depreciation claims in its tax returns of many hundreds of millions of dollars. The depreciation claims were in respect of the alleged cost of acquisition by [Neumedix] of certain medical technologies, even though it was agreed that no such cost was to be incurred. The offender and his co-conspirator agreed to this so as to enable [Neumedix] to avoid incurring tax liabilities on income it was deemed to have received as the owner of units in a number of trusts. These trusts generated very large taxable profits from their participation in certain financing transactions that were arranged between the offender, the ANZ Banking Group Ltd ('ANZ') and some of its clients. 10 The essence of the Crown case on count 6, as accepted by the jury, was that the offender and his co-conspirator agreed to deal with the 'proceeds of crime' being the amounts standing in various bank accounts that represented the cash distributions from the trusts to NHA. The jury accepted the Crown's contention that these funds were the 'proceeds of crime' because they were derived from the conspiracy the subject of count 1. This was so because, to the knowledge of the offender and his co-conspirator, the funds would not be required to meet [Neumedix's] tax liabilities as they would be eliminated by false depreciation deductions and the funds would not be required to make payments on the agreements the subject of the claims for depreciation as no genuine obligation to make those payments would be incurred (see R v Dickson (No 16) [2014] NSWSC 1862 at [19]). The offender and his co-conspirator agreed to cause the funds to be distributed offshore to various accounts controlled by entities associated with the offender and then repatriated to Australia, largely for their own enrichment."
In support of this ground, the first defendant made submissions as follows: "The only possible benefit derived from the commission of an offence, in the circumstances of the two convictions, is a reduced income tax liability of the Neumedix company. This is problematic for the plaintiff because the defendant did not deal with an income tax liability of the Neumedix company. All money dealt with by the company was tax free money [sic] distributions received by the company from ANZ Bank trusts. These tax free trust distribution amounts of money were not benefits derived from the commission of the two offences. These tax free trust distribution monies were received and dealt with by the defendant on behalf of the Neumedix company irrespective of whether the directors of the Neumedix company intended that the Neumedix company underpaid its income tax or not."
The first defendant's submission, on its face, is an attempted dissociation by him from his criminal liability arising from the jury's verdicts in the context of the relevant findings of fact for sentence, as found by the sentencing judge. I find that the ground has no merit.

[21]

The first defendant's cross-claim

On 16 March 2021, the first defendant filed a cross-summons seeking the following declaration: "… that sections 18 (granting of a 'restraining order'), 92 (automatic forfeiture on conviction), 95 (declaration of forfeiture), 102 and 104 (recovery of forfeited property) and 116 to 126 and 130 (pecuniary penalty orders) of the Proceeds of Crime Act 2002 (Cth), in the context of 'serious offences' requiring proof of underpaid and uncollectable federal income tax causing a loss to the Commonwealth, are inconsistent with and repugnant to the Australian Constitution."
In support of the cross-summons, the first defendant relied upon written submissions dated 1 June 2021, in which he narrowed his cross-claim to four sections of the Act, being ss 18, 94, 102 and 116. I note, however, that s 94 was not one of the sections identified in the cross-summons as under challenge. In addition, I note that three of those identified four sections are not related to PPOs: s 18 is within Pt 2-1 of the Act, titled "Restraining orders", and ss 94 and 102 are within Pt 2-3 of the Act, titled "Forfeiture on conviction of a serious offence". Nevertheless, I proceed on the basis that the challenge is to the functions of the Court when considering an application for a PPO pursuant to Pt 2-4 of the Act, since that is the only proceeding still on foot. The remainder of the orders sought in the second further amended summons are spent.
The first defendant submitted that, in order for the plaintiff to succeed on its application for a PPO, proof will be required that tax is owed: "The four identified [POC Act] application provisions are impugned by constitutional invalidity in the context of underlying offences requiring proof of underpaid and uncollectable federal income tax. All four impugned applications in this context contain elements thar require proof that federal income tax is underpaid and is uncollectable. Focussing on the actual operation of the impugned application provisions involved with the forfeiture of [the first defendant's] interest in property: … Fourth application: s 116 to s 150 pecuniary penalty orders (Part 2-4 of the POC Act) Section 116 of the POC Act requires the Supreme Court to make an order requiring the person to pay the pecuniary penalty to the Commonwealth where the person has been convicted of a serious offence(s). The amount of the penalty is determined by s 121 to s 132 of the POC Act. In determining the penalty amount the Supreme Court must calculate the value of money 'derived from the commission of the offence': s 121(3). The money derived is the underpaid income tax for specific financial years which was uncollectable by the ATO. This requires the Supreme Court to apply all federal income tax legislation, all relevant case law authority and all ATO administrative policy to the identified taxpayer's transactions to decide that federal income tax was underpaid and is uncollectable (not merely uncollected - to be a loss to the Commonwealth the tax must be uncollectable)."
The first defendant's submission is that only the Commissioner of Taxation can determine a liability for income tax, which is a process that includes: "… the full operation of the review and appeal procedures of Part IVC of [the Taxation Administration Act 1953 (Cth)]." Since the Act requires proof of "underpaid and uncollectable federal income tax", the Court is obliged to, in the first defendant's submission: "… redo [Neumedix's] assessments and determine amended assessments for the 2007 to 2010 financial years by applying all federal income tax legislation and ATO administrative policies and practices."
The first defendant submitted that an "insurmountable obstacle" to that process is that a taxpayer may object to an assessment issued by the Commissioner of Taxation which results in a reconsideration of the assessment, taking into account the taxpayer's objections. From that reconsideration, an appeal lies to the Administrative Appeals Tribunal and then to the Federal Court on a question of law. Accordingly, the Court would be obliged: "… to apply the complete methodology specified in the complete federal income tax legislation to make that decision … If the Supreme Court was required to make that decision it needs to make many assumptions and anticipate the content and outcome of the review and/or appeal of all amended assessment decision[s]."
The first defendant submitted that: "A liability to federal income tax can only be determined by the [Commissioner of Taxation], as authorised by the Chapter II 'executive power'."
As well as the insurmountable difficulties confronting the Court when engaging in this exercise, the first defendant submitted that: "… decisions of the Supreme Court where an element of proving the [Proceeds of Crime Act] applications is a loss to the Commonwealth caused by underpaid and uncollectable federal income tax, is outside and repugnant to the 'judicial power' of Chapter III of the Constitution."

[24]

Consideration

In AD v Commissioner of the Australian Federal Police, the first defendant, as the applicant in those proceedings, advanced two grounds as to why parts of the Act were constitutionally invalid. The second of those grounds concerned certain aspects of the statutory definition of "serious offence" which is set out in the Dictionary of the Act, at s 338. The challenged parts of the definition were (a)(ii), (a)(iv) and (g): "serious offence means: (a) an *indictable offence punishable by imprisonment for 3 or more years, involving: … (ii) unlawful conduct constituted by or relating to a breach of section 81 of the Proceeds of Crime Act 1987 or Part 10.2 of the Criminal Code (money laundering); or … (iv) unlawful conduct by a person that causes, or is intended to cause, a loss to the Commonwealth or another person of at least $10,000; or … (g) an offence against section 11.1, 11.2, 11.2A, 11.4 or 11.5 of the Criminal Code or former section 5, 7, 7A or 86 of the Crimes Act 1914 (extensions of criminal responsibility) in relation to an offence referred to in this definition; or …"
Beazley P formulated this aspect of the first defendant's constitutional challenge in the following terms: "82 The appellant made two arguments as to the constitutional validity of a number of provisions of the Proceeds of Crime Act … Secondly, it was submitted that ss 338(a)(ii), (a)(iv) and (g) of the definition of 'serious offence' are invalid because they require the Supreme Court, in the exercise of federal jurisdiction, to engage in administrative processes peculiar to the Federal Commissioner of Taxation. … 107 The appellant argued that the Supreme Court, in applying the provisions of the Proceeds of Crime Act, 'effectively predetermines the amount of income tax liability owing under Part IVC of the [Taxation Administration Act 1953 (Cth)]'. The appellant also submitted that the Proceeds of Crime Act, in those provisions relating to the payment or forfeiture of money or property being the proceeds of an income tax fraud offence, is a law 'with respect to tax' and that such a law is invalid unless there is recourse to the judicial branch to contest its merits: see Gould v Deputy Commissioner of Taxation (2017) 343 ALR 275; [2017] FCAFC 1. 108 The Commissioner understood this aspect of the appellant's constitutional challenge to be that in making a restraining order under the Proceeds of Crime Act, s 18, the Supreme Court is collecting and enforcing a tax where the serious offence is an offence that is based on depriving the Commonwealth of tax revenue. The Commissioner submitted that that was not an available construction of these provisions. The Commissioner further submitted that the Proceeds of Crime Act is not a law with respect to tax (or, at least, it is not only such a law). Rather, he submitted that it is a law that exacts or imposes a penalty or sanction for breach of certain rules of conduct. The Commissioner submitted that, even if the Proceeds of Crime Act was a law with respect to tax, it provided for recourse to the courts."
The President concluded: "109 The traditional definition of a tax was stated by Latham CJ in Matthews v Chicory Marketing Board (Vic) (1938) 60 CLR 263; [1938] HCA 38 where his Honour, at 276, stated that a tax is: '… a compulsory exaction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered.' 110 In Roy Morgan Research Pty Ltd v Commissioner of Taxation (2011) 244 CLR 97; [2011] HCA 35, the plurality observed, at [40], as follows: 'The notion of 'compulsory exaction' has received some refinement in the decided cases. The nature of a particular exaction or the end to which revenues raised might be put may be such as to take the exaction outside the constitutional conception of 'taxation'. As s 53 of the Constitution itself recognises, a law does not impose taxation by reason only that it contains provisions for the imposition or the appropriation of fines or other pecuniary penalties, or for the demand or payment of fees for licenses, or fees for services.' 111 In my opinion, the scheme for the forfeiture of property does not constitute a tax. As the High Court observed in Roy Morgan Research v Commissioner of Taxation, there are laws that impose fines or pecuniary penalties which, by these features alone, do not impose a tax. The same may be said of a law that requires the forfeiture of property. Nor could such a law be said to be a 'compulsory exaction of money for public purposes'. Property is forfeited under the Proceeds of Crime Act as part of a legislative regime to deprive persons engaged in criminal activity of the proceeds of crime. That this is the purpose of the forfeiture provisions of the Act is demonstrated by the inclusion in the Act of s 107, which provides that the forfeiture ceases to have effect if the person's conviction is quashed and the forfeiture does not also relate to the person's conviction of other offences that have not been quashed. A compulsory exaction of money for public purposes does not have this characteristic. 112 Accordingly, this aspect of the appellant's constitutional argument is also untenable."
The first defendant's formulation of the issue in his submissions in support of his cross-summons and his submissions in reply to the plaintiff's submissions in support of its notice of motion is in slightly different terms to his submission before the Court of Appeal. The first defendant's submission before the Court of Appeal also related, in the main, to parts of the Act other than Pt 2-4. Nonetheless, its essence is the same, namely, that the Court's function in determining a PPO involves an assessment of "underpaid and uncollectable" tax, which is an exercise that replicates the functions of the Commissioner of Taxation without the protections to the taxpayer that are mandated by federal taxation legislation. This submission misunderstands the nature and purpose of Pt 2-4 of the Act which, as I noted earlier, is not a collection of unpaid tax.

[26]

The second and sixth grounds of the first defendant's notice of motion

As noted earlier in this judgment, the first defendant's second and sixth grounds of his notice of motion raise essentially the same issue that he relied upon in his submission in support of his cross-summons.
The second ground of his notice of motion was expressed as follows: "The Supreme Court's requisite calculation of actual underpaid and uncollectable federal income tax causing a loss to the Commonwealth being derived or realised from conspiracy offences will be abstract and hypothetical."
In his written submissions, the first defendant contended that the Court: "… needs to apply all federal income tax legislation and all ATO administrative practices and policies to all of the Neumedix company's transactions in the 2007 to 2010 financial years …"
In oral submissions, the first defendant submitted that this Court does not have jurisdiction to make a PPO where the "serious offence" underlying the order is one involving federal tax fraud. This is because, in calculating the amount to be paid pursuant to such an order, this Court would be exercising federal jurisdiction by engaging in an administrative process reserved for the Commissioner of Taxation in their exercise of executive power pursuant to Ch II of the Constitution. The Supreme Court is a Ch III Court, whereas the administrator of the federal income tax legislation (the Commissioner of Taxation) is the only person who can determine if tax is underpaid.
The sixth ground of the first defendant's notice of motion was expressed as follows: "The pecuniary penalty order application is inconsistent with, and repugnant to, the Australian Constitution."
In support of that ground, the first defendant submitted that: "In order for the Supreme Court to grant the pecuniary penalty order it must decide that a specific taxpayer actually underpaid an exact amount of income tax in a specific financial year. Such a decision by the Supreme Court is outside the 'judicial power' of Chapter III of the Australian Constitution. Only the federal Commissioner of taxation pursuant to Chapter II of the Australian Constitution can decide whether a taxpayer has underpaid income tax."
He continued: "If the Supreme Court grants the pecuniary penalty order application in the circumstances before the court it will do nothing more than 'rubber stamp' the self-serving guess/'opinion' of an Australian Federal … police officer and/or an ATO officer that income tax was somehow underpaid and uncollectable on an unspecified vague basis (without respecting the necessary application of all federal income tax legislation)."
The plaintiff submitted that the first defendant made the same arguments when opposing the forfeiture of certain assets, ultimately before the Court of Appeal in AD v Commissioner of the Australian Federal Police. It is apparent from the passages extracted from the first defendant's submissions in support of his cross-summons and Beazley P's judgment extracted at [96] and [97] above, that it is the same argument and, for the same reasons, it is not made out.

[27]

Determination of the first defendant's notice of motion

Since none of the grounds are made out, I dismiss the first defendant's notice of motion.
For the sake of completeness, I note the following: (i) At the outset of the hearing of the matter, the first defendant said: "I will also be making an application today for a UCPR 12.7 dismissal of proceedings for lack of progress which ties into the application". There had been no prior notice of that intention and it was not pursued by the first defendant. (ii) In the course of his written submissions in reply to the plaintiff's notice of motion, the first defendant submitted that the Paterson affidavit and exhibit did not establish that Neumedix "had underpaid income tax", so that the application for a PPO has no reasonable prospects of success. I note my observations at [68] above to the effect that a complaint as to the sufficiency of evidence to be relied upon by the plaintiff in support of its application for a PPO is premature. (iii) I note that the plaintiff submitted in the alternative that if the Court found favour with the first defendant's notice of motion and determined that the plaintiff's application for a PPO was not made in time or that it had not given notice in accordance with s 136 of the Act, then it would be in the interests of justice for it to be granted leave in accordance with s 136(6) of the Act to make an application for a PPO. (iv) The first defendant opposed this alternative submission, providing detailed submissions as to why it was not in the interests of justice for leave to apply outside the statutory period to be granted and why the lateness of the alleged application was oppressive. In view of the failure of the first defendant's application to permanently stay or dismiss the plaintiff's application, it is unnecessary to consider the plaintiff's alternative submission. (v) By a letter dated 19 November 2021 that was addressed to the Registrar and copied to a legal representative for the AFP, the first defendant requested an opportunity to file further submissions. The request followed the judgment of Pratten v R [2021] NSWCCA 251, that was handed down on 25 October 2021. In the letter, the first defendant stated: "This decision is authority for the principle that in the proof of whether income tax is underpaid the [ATO's] assessments have absolutely no probative value: [198], [233] and [246]." I note that the case concerned an application for leave to appeal against seven convictions for dishonestly obtaining a financial advantage by deception, contrary to s 134.2(1) of the Criminal Code (Cth). It is apparent from the judgment, in particular the cited three paragraphs, that there was not a statement of "principle" as expressed in the first defendant's letter, and that those paragraphs have no possible relevance to the issues in the instant case.

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