Commissioner of the Australian Federal Police v Duggan

Background facts

1. The background facts are within narrow compass. I will deal with them across four parts: first, the criminal proceedings in the United States of America; secondly, the proceedings in this Court under the Act; thirdly, the inaccuracies in the evidence adduced on the application for the registration of the amended restraining order; and, fourthly, the restrained property. What follows reflects my findings.

The criminal proceedings

1. On 12 September 2017, the first defendant was indicted in the United States of America in relation to three offences: (a) one count of conspiracy to violate the Arms Export Control Act and conspiracy to defraud the United States; (b) two counts of violation of the Arms Export Control Act; and (c) one count of conspiracy to launder money.
2. The defendants submitted that the indictment records that between around 2011 and 2012, the first defendant received $116,350 or $166,350 for his role in the conspiracy. Nothing turns on this difference and it is unnecessary, for the purposes of the present application, to make any finding about the extent to which the first defendant may have obtained a financial benefit from that which is alleged in the indictment.
3. On 5 October 2023, the Honourable Judge Sullivan of the United States District Court for the District of Columbia made a restraining order ('the amended restraining order') in relation to a property in Saddleback Mountain 2533 NSW Australia. (On 19 September 2023 a restraining order was also made; the amended restraining order corrected the address of the property. Nothing turns on this).
4. Relevantly, the amended restraining order provides: … that the Subject Property, defined below, is subject to restraint and forfeiture as property which constitutes or is derived from proceeds traceable to violations of the Arms Export Control Act, the International Traffic in Arms Regulations and a conspiracy to commit the same, and is property involved in a money laundering conspiracy … … The property and other interests hereby restrained include, but are not limited to, the following - XXXX XXXX XXXX Saddleback Mountain 2533 New South Wales, Australia (the "Subject Property"). …

The proceedings under the Act

1. The United States of America, through the US Department of Justice, made a request of the Australian Attorney-General's Department for the registration of the restraining order: Moore affidavit affirmed 30 October 2023, par 4; Moore affidavit affirmed 31 October 2023, par 5 and annexure A.
2. On 12 October 2023 the Australian Attorney-General (by an authorised delegate) authorised the Commissioner, pursuant to s 34(3) of the Act, to apply for the registration of the restraining order: Moore affidavit affirmed 30 October 2023, par 6 and annexure B.
3. On 31 October 2023 the Commissioner sought, and the Court made, an order pursuant to s 34A of the Act for registration of the restraining order. The registration order was in the following terms: 3. Pursuant to s 34A of the Mutual Assistance in Criminal Matters Act 1987 (Cth), the Amended Restraining Order made by the Honourable Emmett G Sullivan, United States District Judge, District of Columbia on 5 October 2023, including in respect of the property set out in schedule one, be registered in the Supreme Court of New South Wales.

The inaccuracies in the evidence adduced to support the making of the registration order

1. On 15 November 2023 the solicitors for the defendants wrote to the Commissioner advising that there were two factual inaccuracies in the affidavit of Simon Moore affirmed 30 October 2023. The letter from the solicitors for the defendants suggested that these inaccuracies were "two serious misrepresentations".
2. The first is that, in the affidavit, it was stated that the registered proprietor "of the Saddleback Mountain Property is Power Art Trading Pty Ltd": Moore affidavit affirmed 30 October 2023, par 11(b). The description of Power Art Trading was erroneous: the correct legal description for that entity is Power Art Trading Ltd. In my respectful view, this error was no more than an insignificant misdescription.
3. The second is that, in the affidavit, it was stated that the first defendant was "a director of Power Art Trading": Moore affidavit affirmed 30 October 2023, par 12(b). That statement was erroneous: the first defendant is not, and was never, a director of that entity.
4. The sole director of Power Art Trading is, and was, Saffrine Nydegger. Ms Nydegger is described as the first defendant's "partner", and they have three children together: Zappavigna affidavit affirmed 23 November 2023, pars 3 and 8.
5. By way of letter dated 15 November 2023 the Commissioner acknowledged that there was an inaccuracy in the affidavit relating to the first defendant not being a director of Power Art Trading: Moore affidavit affirmed 27 November 2023, annexure D.
6. The Commissioner also, by way of communication dated 15 November 2023, advised the Court of this inaccuracy: Moore affidavit affirmed 27 November 2023, annexure E. A relisting was also sought in order to correct the record.
7. The affidavit of Simon Moore affirmed 27 November 2023 explains the background to how these errors were made - not only by Federal Agent Moore but by those involved in the preparation of the evidence. In particular, in his affidavit, Federal Agent Moore explained that he "assumed or inferred incorrectly that [the first defendant] was the director of PAT [being, Power Art Trading]. I was not informed by anyone that [the first defendant] is or was a director of PAT. This assumption or inference that I made was in error and I regret that it occurred": par 14.
8. There was a contest about what findings should be made about the evidence of Federal Agent Moore, and the explanation more generally provided by the Commissioner in connection with those involved in the preparation of his affidavit affirmed 30 October 2023.
9. Mr Jones, who appeared for the defendants, cross-examined Federal Agent Moore. I will briefly explain the nature of the evidence, and the thrust of what was put during that cross-examination.
10. The cross-examination of Federal Agent Moore was essentially directed to establishing that he was an experienced officer (which, I accept, he is); that it was good policing practice, in line with proper policing protocols, to be familiar with matters the subject of investigation, and to keep up-to-date with material that becomes available (which, I accept, it is - although, to the extent the cross-examination sought to suggest that the preparation of the affidavit was akin to a "proceeds of crime" investigation, or something like that, I consider that analogy to be somewhat inapt: the task was rather more confined, and essentially directed to establishing the pre-conditions to the making of a registration order under s 34A of the Act); that the company search that he obtained on 1 November 2023 demonstrated that the first defendant was not a director of Power Art Trading (which, I accept, it does - and Federal Agent Moore accepted as much); that paragraph 12(b) of his affidavit affirmed 30 October 2023 was "false in fact" (which, I accept and Federal Agent Moore accepted, it is - to the extent that it stated that the first defendant was a director of Power Art Trading); that Federal Agent Moore, more or less deliberately, made the directorship misstatement in paragraph 12(b) in order to "connect" the first defendant to Power Art Trading (which Federal Agent Moore firmly rejected - and whose evidence I accept, for reasons addressed in [22]ff, below); that, having received that company search, he immediately realised - and was "more than aware" - that he had erroneously stated in his affidavit affirmed 30 October 2023 that the first defendant was a director of Power Art Trading (which Federal Agent Moore firmly rejected - his evidence, which I accept, is that he did not make that connection until the middle of November 2023 when the issue was brought to his attention following the letter from the solicitors for the defendants dated 15 November 2023).
11. Following on from this cross-examination, the defendants submitted that there were unsatisfactory features about it. I respectfully disagree. In my view, it is important to note the following matters in connection with the explanation proffered by Federal Agent Moore.
12. First, it should be emphasised that Federal Agent Moore's explanation was that he erroneously assumed, or inferred, that the first defendant was a director of Power Art Trading. Although the evidence was slightly inconsistent as to what Federal Agent Moore relied upon as the basis for the inference or assumption in relation to the directorship misrepresentation, ultimately I accept, in line with his evidence (including the evidence that he gave in pars 6 and 7 of his "confidential" affidavit affirmed 27 November 2023 - Exhibit 4), that it was the content of Exhibit 5. In my view, Exhibit 5 contains some material that objectively tends to support that possibility: it records, for example, that the first defendant "structured his assets and payments … in an attempt to hide the source and ownership of the funds … done in part setting up companies, including Power Art Trading"; and, by way of further example, records that the first defendant "set up Power Art Trading" and that he established bank "accounts … for Power Art Trading". Thus, it is certainly not a situation where there is a complete absence of material that otherwise might form the basis for the drawing of an inference or the making of an assumption and, in consequence, cast some doubt upon the explanation proffered. On the contrary, I consider that, as I have said, there is a basis that might lead a person to infer or assume, albeit erroneously, that the first defendant was a director of Power Art Trading.
13. Secondly, having drawn the inference and made the assumption, Federal Agent Moore did not then, having received the company search, check the company search to determine the true position. That is consistent with the earlier error made: it was assumed, erroneously, that the first defendant was a director and having made that assumption Federal Agent Moore did not revisit that matter once the company search was received or, indeed, any time thereafter. That was his evidence, and I accept it. To be clear, I do not accept the submission made by the defendants that, following receipt of the company search, Federal Agent Moore knew that he had made an error and, thereafter, consciously and deliberately took no step to correct the position. It is of course true that Federal Agent Moore had opportunities to correct the position but, being unaware of the error that he had made, he did not do so. But that does not, in my respectful view, transform what I consider to be an innocent and inadvertent error caused by inattention into something more sinister.
14. Thirdly, in my view it is important to assess this matter (and what was contained in paragraph 12(b)) in the statutory context in which the affidavit was prepared. The defendants accept that what was contained in that paragraph was not relevant to a determination of whether the order should be registered. I consider this matter to be significant. That is, the fact that the error did not touch upon or concern any matter that was directly relevant to the statutory preconditions for registration also helps to explain, in my view, why the matter was not the subject of careful attention and consideration in the preparation of the affidavit, or in the events that occurred subsequently.
15. To sum up: I accept the evidence of Federal Agent Moore and the explanation more generally proffered by the Commissioner for how the error had arisen - viz., that it was the product of innocent inadvertence and inattention to detail. I do not accept that it should be characterised as something more sinister, as the defendants submitted. Further, to be clear, I do not accept that the events that occurred following the registration order being secured, warrant a different characterisation.
16. Once these inaccuracies were drawn to the attention of the Commissioner on 15 November 2023, they were very promptly and properly drawn to the attention of the Court.
17. There is a further matter. The defendants were also critical of the fact that the solicitors who had some role in the matter did not give direct evidence about their involvement (the evidence was given on information and belief in the evidence of Federal Agent Moore in his affidavit affirmed 27 November 2023). I do not accept that submission. In a given case, evidence in that form may raise issues about its acceptability. But that is not this case: what was explained by the solicitors in the evidence given (evidence which I accept) aligns with the explanation given by Federal Agent Moore - viz., that the directorship misstatement was the product of innocent inadvertence and inattention to detail, and that also accounts for why no steps were taken to correct that error once the company search was received.
18. It is necessary to say something about the restrained property.
19. There is some evidence that the "owner" of the Saddleback Mountain property is, and was, Power Art Trading. Given what is argued, it is necessary, however, to be a little more precise. There is no title search in evidence. Rather the evidence is as follows: 1. A Corelogic RP Data search for the property records "ownership" as "Power Art Trading Ltd": Moore affidavit affirmed 30 October 2023, par 16 and annexure E. 2. The statement that Ms Nydegger "confirmed that Power Art Trading Limited has always been the sole owner of the property": Zappavigna affidavit affirmed 23 November 2023, pars 5 and 11(a). 3. The statement that the property "is the sole asset of [the first defendant's] six children and their mother": letter from the solicitor for the first defendant dated 15 November 2023, par 10.
20. The company search that is in evidence (Moore affidavit affirmed 27 November 2023, par 18 and annexure B) records that Power Art Trading was currently registered, and a private company limited by shares (one share has been issued at a nominal value).
21. In relation to the "ownership" of the property, there is no evidence from the first defendant nor any direct evidence from Ms Nydegger. (The statement attributed to Ms Nydegger is, of course, hearsay, although evidence of that kind was accepted by both parties to be admissible in the current application, by reason of s 75 of the Evidence Act 1995 (NSW) or s 75 of the Evidence Act 1995 (Cth)). The defendants did not, consistent with the way in which they argued the current application, invite any finding to be made about ownership of the property, or who might have an interest in it. The Commissioner drew attention to a range of matters which, it was submitted, supported a finding that, at a minimum, the first defendant had an "interest" in the property.
22. I am not prepared to make any specific finding about ownership of the property, nor am I prepared to make any finding about whether the first defendant had any interest in it. Shortly stated, I am simply not placed, on the slender materials before me, to make any firm findings about this. That is particularly given there is no evidence from the first defendant; the evidence from Ms Nydegger was hearsay, and I am not prepared to act on that evidence about Power Art Trading being the "sole owner" because the basis for the statement was neither explained nor demonstrated by other evidence, and the evidence in any event is somewhat inconsistent with the evidence referred to in 30, above.

The statutory provisions for registration of the amended restraining order

1. The provisions that permit the registration of foreign orders are contained in ss 34 and 34A of the Act. They provide: 34 Requests for enforcement of foreign orders (1) If: (a) a foreign country requests the Attorney‑General to make arrangements for the enforcement of: (i) a foreign forfeiture order, made in respect of a foreign serious offence, against property that is reasonably suspected of being located in Australia; or (ii) a foreign pecuniary penalty order, made in respect of a foreign serious offence, where some or all of the property available to satisfy the order is reasonably suspected of being located in Australia; and (b) the Attorney‑General is satisfied that: (i) a person has been convicted of the offence; and (ii) the conviction and the order are not subject to further appeal in the foreign country; the Attorney‑General may authorise a proceeds of crime authority, in writing, to apply for the registration of the order. (2) If a foreign country requests the Attorney‑General to make arrangements for the enforcement of: (a) a foreign forfeiture order that: (i) has the effect of forfeiting a person's property on the basis that the property is, or is alleged to be, the proceeds or an instrument of a foreign serious offence (whether or not a person has been convicted of that offence); and (ii) is made against property that is reasonably suspected of being located in Australia; or (b) a foreign pecuniary penalty order in respect of which both of the following apply: (i) the order has the effect of requiring a person to pay an amount of money on the basis that the money is, or is alleged to be, the benefit derived from a foreign serious offence (whether or not the person has been convicted of that offence); (ii) some or all of the property available to satisfy the order is reasonably suspected of being located in Australia; the Attorney‑General may authorise a proceeds of crime authority, in writing, to apply for the registration of the order. (3) If a foreign country requests the Attorney‑General to make arrangements for the enforcement of a foreign restraining order, against property that is reasonably suspected of being located in Australia, that is: (a) made in respect of a foreign serious offence for which a person has been convicted or charged; or (b) made in respect of the alleged commission of a foreign serious offence (whether or not the identity of the person who committed the offence is known); the Attorney‑General may authorise a proceeds of crime authority, in writing, to apply for the registration of the order. 34A Registration of foreign orders (1A) An application to a court for registration of a foreign order in accordance with an authorisation under this Subdivision must be to a court with proceeds jurisdiction. (1) If a proceeds of crime authority applies to a court with proceeds jurisdiction for registration of a foreign order in accordance with an authorisation under this Subdivision, the court must register the order accordingly, unless the court is satisfied that it would be contrary to the interests of justice to do so. (2) The proceeds of crime authority must give notice of the application: (a) to specified persons the authority has reason to suspect may have an interest in the property; and (b) to such other persons as the court directs. (3) However, the court may consider the application without notice having been given if the proceeds of crime authority requests the court to do so. (4) If a foreign pecuniary penalty order or a foreign restraining order is registered in a court under this Subdivision: (a) a copy of any amendments made to the order (whether before or after registration) may be registered in the same way as the order; and (b) the amendments do not, for the purposes of this Act and the Proceeds of Crime Act, have effect until they are registered. (5) An order or an amendment of an order is to be registered in a court by the registration, in accordance with the rules of the court, of: (a) a copy of the appropriate order or amendment sealed by the court or other authority making that order or amendment; or (b) a copy of that order or amendment duly authenticated in accordance with subsection 43(2).

The preconditions: an overview

1. The defendants accepted that the relevant preconditions to making an order under s 34A(1) of the Act - subject to an issue about the "interests of justice" - had been met. I will, nevertheless, make some brief remarks in order to assist with the later assessment of the materiality of the two inaccuracies in the evidence adduced on the application to register the amended restraining order.
2. The Act requires a number of matters to be established before an order registering a foreign order (relevantly here, a foreign restraining order) is made. They are as follows.
3. First, the applicant must be an appropriate authority to make the application: the applicant must be a "proceeds of crime authority": s 34(3).
4. Secondly, it is necessary for there to be a foreign country request to the Attorney-General to make arrangements for the enforcement of a foreign restraining order "against property that is reasonably suspected of being located in Australia that is … made in respect of a foreign serious offence for which a person has been convicted or charged …", following which the Attorney-General may authorise a proceeds of crime authority, in writing, to apply for registration of the order: s 34(3)(a).
5. Thirdly, the application to a court for registration of a foreign order must be to a court will with proceeds jurisdiction: s 34A(1A).
6. Fourthly, the court must "register the order accordingly, unless the court is satisfied that it would be contrary to the interests of justice to do so": s 34A(1). Thus, the Court is not vested with a discretion, but required to register the foreign order unless it would be contrary to the interests of justice to make that order.

The power to set aside the order

1. The defendants rely upon r 36.16(2)(b) of the Uniform Civil Procedure Rules 2005 (NSW) ('the UCPR'), identifying that that rule provides a "right to be heard" (defendants' submissions at [15]). Rule 36.16(2)(b) relevantly provides: (2) The court may set aside or vary a judgment or order after it has been entered if: …. (b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order …
2. The proceedings under the Act were an exercise of federal jurisdiction - and accepted to be so by both parties. The defendants argued that the UCPR was engaged by reason of s 79 of the Judiciary Act 1903 (Cth). Alternatively, the defendants relied upon common law powers and principles to make the order sought: the defendants submitted, and the Commissioner accepted, that the power to make the orders existed in one or both ways, and that the test under the rule or applying common law principles was relevantly the same. I have proceeded on this basis.

Setting aside orders made ex parte: background principles

1. There was no dispute about the relevant principles. They are both well established, and well-known. Given the confined nature of the arguments, it is appropriate to emphasise four of them.
2. First, the obligation "to make proper disclosure when seeking relief from a court without notice to the opposite party" applies not merely to applications for equitable relief, but to a wide range of circumstances: International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319; [2009] HCA 49 at [132] ('International Finance Trust'); Aristocrat Technologies Australia Pty Ltd v Allam (2016) 90 ALJR 370; [2016] HCA 3 at [15] ('Allam'). The obligation has been variously described, including as "full and fair disclosure" (Allam at [15]) or as a duty or "high standard of candour and responsibility" (Garrard v Email Furniture Pty Ltd (1993) 32 NSWLR 662, 676 ('Garrard')), but, irrespective of the descriptive variations, the rationale underpinning each of them is the same: it is to ensure that orders made ex parte will only be made in circumstances where the court making the order has been informed of all facts which the absent party "could be expected to have sought to place before the court had the application for the order being contested": Allam at [15]; Town & Country Sport Resorts (Holdings) Pty Ltd v Partnership Pacific Ltd (1988) 20 FCR 540, 543; [1988] FCA 557.
3. The importance of accurate information being provided to a court in an application of this kind is underscored by the consequences of what occurs following demonstration of the matters in ss 34 and 34A: the court, subject to a consideration of the interests of justice, must register the foreign order.
4. Secondly, where an application is made ex parte, the applicant - here, the Commissioner - has an obligation to "disclose all material facts, that is, facts material to the decision": Savcor Pty Ltd v Cathodic Protection International APS (2005) 12 VR 639; [2005] VSCA 213 at [27] ('Savcor'); Garrard at 676-677. In this context, "facts material to the decision" extend not only to the matters that bear upon whether a party is entitled to the relief that is sought, but necessarily to matters that might afford a defendant, had they appeared, a defence to the application.
5. Thirdly, it is necessary to carefully consider the nature of the material facts "which are required to be disclosed. What is material will depend upon the nature of the proceeding and the nature of the right affected": Fitz Jersey Pty Ltd v Atlas Construction Group Pty Ltd (2017) 94 NSWLR 606; [2017] NSWCA 53 at [75]-[76]; [109]. To be material, the fact must be a "matter which is relevant to the court's determination" and a "matter of substance in the decision-making process": Savcor at [35].
6. Fourthly, even if a court finds that there has been a material non-disclosure, a discretion is retained as to whether the orders should be set aside: Savcor at [28], [33].

Introduction

1. The argument for the defendants was directed to two overlapping matters: 1. first, it was argued that the two factual inaccuracies, earlier identified, inappropriately deflected attention from the Court considering whether the registration order should be made having regard to the interests of justice within s 34A(1); and, 2. secondly, it was argued that these factual inaccuracies were of such order that they, and in light of what transpired up to 15 November 2023, justify the very severe sanction of discharging the orders when considering the "interests of justice" more generally.
2. It is common ground (and, once the errors were drawn to the attention of the Commissioner, has always been common ground) that the Moore affidavit affirmed 30 October 2023 contains two errors.
3. In relation to the erroneous legal description of Power Art Trading, although raised in the correspondence between the parties and in the defendants' outline of submissions dated 23 November 2023, at the hearing the defendants eschewed any reliance upon that matter. In my view that was entirely appropriate: this error was no more than an insignificant misdescription. It may be put to one side.
4. The defendants' key submission, in connection with the error relating to whether the first defendant was a director of Power Art Trading (for convenience, hereafter described as the "directorship misstatement"), was that the error was "false in fact" and, further, the Commissioner must have considered the matter was not only relevant, but "seminal to their case as creating a factual link between [the first defendant] and the property of a corporate entity" (defendants' submissions at [17]-[18]). The defendants' submission in fact went a little further: it was argued that it could - and should - also be inferred that "the same information in [paragraph 12(b)] was also before Judge Sullivan on the ex parte application before him" (defendants' submissions at [21]).
5. I will deal with this last submission now. In my view there is no basis to draw any inference about what was before Judge Sullivan on the ex parte application. The only material that is in evidence on the current application relevant to that question are the indictment and the restraining orders (the initial restraining order and the amended one) themselves. These documents say nothing about the nature of the material that underlay the making of the restraining order (aside from the broad description contained in paragraph 1 of the amended restraining order). In any event, there is a large question about the permissibility of embarking upon a task of the kind suggested by the defendants having regard to the terms of s 33A(2). Given that I have not drawn the inference of the kind suggested by the defendants, and the fact that no submissions were directed to the statutory impediment in s 33A(2) to undertaking an investigation into the grounds for making of the order, it is unnecessary to say anything more about this argument.
6. Returning now to what was argued. The defendants, building upon the directorship misstatement and the submission that this fact was "seminal" to the Commissioner's application for registration of the restraining order, submitted that once the proper factual position was considered all that was "left is a foreign country seeking to restrain real property of a corporate entity that has committed no crime" (defendants' submissions at [20]). The result, the defendants argued, was that it "follows that the interests of justice" require the vacation of the orders made on 31 October 2023 (defendants' submissions at [23]).

The inappropriate deflection from the interests of justice: s 34A(1)

1. It is, in my respectful view, important to identify the statutory framework - and how the defendants position the "directorship misstatement" within that framework - and to identify the assumptions within the submission.
2. I will start with the statutory framework.

The statutory framework: identifying materiality

1. As the authorities to which reference has been made make clear (see [46]-[47], above), the obligations in relation to disclosure concern material facts. In order to assess whether a particular fact is of that kind, it is necessary to have regard to the statutory provisions which governed the Commissioner's application for registration of a foreign order. It is only when that task is undertaken is it possible to assess whether the particular fact - here the directorship misstatement - is relevant to, and a matter of substance in, that determination.
2. What, then, is the relevance of whether the first defendant was - or was not - a director of Power Art Trading?
3. It is, I consider, important to note that the Act does not require, in order for a foreign restraining order to be registered under s 34A, that there be a demonstrated nexus between the property that is the subject of the restraining order and the person who has been convicted or charged with a foreign serious offence. Undoubtedly - no submissions were directed towards identifying the relevant statutory provisions that permitted Judge Sullivan to make the amended restraining order - that is a requirement of, and under, the law of the United States of America. What is required, in this respect, is a request, within the terms of s 34(3)(a), for the enforcement of a foreign restraining order "against property that is reasonably suspected of being located in Australia that is … made in respect of a foreign serious offence for which a person has been convicted or charged …" etc: see [38], above.
4. The identification of that issue - or, perhaps more accurately, identification of what was not a statutory precondition to the foreign order being registered - bears emphasis for a number of reasons.
5. First, because it negates any suggestion that it is, or is an intermediate fact relevant to, a statutory precondition to the registration of the restraining order. Indeed, the defendants did not suggest to the contrary. In this respect I accept, as Mr O'Mahoney essentially submitted, that whether the first defendant was - or was not - a director of Power Art Trading has no bearing on whether the preconditions under the Act for the registration of the amended restraining order were met. Secondly, it denies not only materiality, but legal relevance. As to this, the defendants argued that the evidence served a more confined purpose: it was said to demonstrate a "link" between the first defendant and Power Art Trading, and was deployed as such in the evidence. The argument also involved the corollary, slightly refined: absent that "fact" (viz., the directorship misrepresentation), there was no link between the first defendant and the property. This, then, fed into the ultimate submission that was put - namely, that what remained was "a foreign country seeking to restrain real property of a corporate entity that has committed no crime" (defendants' submissions at [20]).
6. I do not accept the defendants' submissions. If the matter has no direct legal (or evidential) relevance to the statutory preconditions to the registration of the restraining order, then it is no response to suggest that the fact is nevertheless material because it is raised in evidence by the Commissioner or argued to be "seminal". In my respectful view materiality in the present case is determined by the statutory framework, in the way discussed. Separately, the submission assumes that the holding of a directorship is somehow relevant to ownership of the property (or holding an interest in it) and that the absence of it thereby negates such ownership (or the holding of an interest). In my respectful view, on its own, it is not. Whether the first defendant was - or was not - a director of Power Art Trading said nothing about ownership of the property, nor did it say anything about whether the first defendant had an "interest" in it. It may be accepted, as the defendants argue, that Power Art Trading "has committed no crime". But that, in my respectful view, is not to the point. The allegation, as contained in the amended restraining order, is that the first defendant has and the property "constitutes or is derived from proceeds traceable" to the commission of the offences.
7. To sum up: whether the first defendant was a director (or not) of Power Art Trading is - at most - of peripheral evidential relevance in the statutory enquiry. It is, in my respectful view, not open to characterise that matter as material in any sense.
8. To the extent that the defendants argued that the directorship misstatement was relevant to the ultimate consideration of whether the Court should decline to register the foreign order having regard to the "interests of justice", it is necessary to identify why that conclusion should be reached.
9. The submission advanced appeared to be that as the first defendant was not a director of Power Art Trading, the correct position would have been relevant to a consideration of the interests of justice within s 34A(1). (This submission may implicitly be the upshot of the submission that was put - namely that, in the circumstances, there is no "connection, tenuous or otherwise" between the first defendant and Power Art Trading: defendants' submissions at [23]). I do not accept this submission.
10. In order to explain why that is so, it is necessary to first say something about the meaning of the phrase, and then to examine why the fact that the first defendant was not a director of Power Art Trading does not materially (or, on the facts of this case, relevantly) bear upon a consideration of the interests of justice.
11. Although the submissions of the defendants did not extend to construing the meaning of the phrase "interests of justice" in s 34A(1), the defendants did argue that it necessarily extended to the "conduct" of the Commissioner in seeking the ex parte order. In that respect the defendants pointed out that the requirement for the Court to separately consider the "interests of justice" was a consequence of amendments to the Act following the decision in International Finance Trust. (The background to those amendments were helpfully reviewed by Adamson J in Commissioner of the Australian Federal Police v Ortmann (2021) 360 FLR 123; [2021] NSWSC 451 at [10]-[12]).
12. The requirement, in specific circumstances, to consider the "interests of justice" in proceedings under the Proceeds of Crime Act 2002 (Cth) ('the POCA') is, as the defendants submitted, a consequence of the decision in International Finance Trust and amendments made to that Act that followed that decision.
13. To draw upon an analogue in line with what the defendants submitted, s 42(5) of the POCA provides for the circumstances in which a person may apply for a restraining order made over property be revoked. In particular, s 42(5)(b) provides: (5) The court may revoke the restraining order if satisfied that: … (b) it is otherwise in the interests of justice to do so.
14. In Director of Public Prosecutions (Cth) v Kamal (2011) 248 FLR 64; [2011] WASCA 55, Martin CJ noted at [44] that s 42(5)(b) would "empower a court to revoke a restraining order because of the DPP's failure to comply with the obligation of full disclosure". Similarly, in Saad v Commissioner of the Australian Federal Police (2021) 361 FLR 261; [2021] VSCA 246, Walker JA found that s 42(5)(b) would "permit revocation in circumstances where, for example, there had not been full disclosure on the ex parte s 18 application …" (at [146]). Walker JA also identified that s 42(5)(b) may be successfully relied upon where the restraining order was obtained by fraud, or if the evidence relied upon in the s 18 application was inadmissible for some reason because if the section was confined to circumstances of material non-disclosure it would have been expressed so (at [148]).
15. Nevertheless, there is a temporal limitation here that possibly precludes the immediate and general transposition of these principles: the use of that phrase, in the context of applications to revoke restraining orders made under the POCA, determine whether those restraining orders - commonly made ex parte - should be revoked. That is, they involve consideration, after the making of the order, the conduct of the party in seeking it. The use of the phrase "the interests of justice" in s 43A(1) focuses upon the interests of justice at the time of the making of the registration order.
16. The parties were unable to identify any authority that had construed the phrase in the context of the Act and, as it happens, neither side proffered any construction. In part, as I would apprehend it, that was driven by the respective positions taken by them: for the defendants, it was argued that the phrase necessarily included them; for the Commissioner, it was argued that none of the matters raised by the defendants were relevant to any of the statutory criteria for the making of the registration order. Absent detailed argument, it is undesirable (and, in the result, unnecessary) to offer anything other than limited observations about the meaning of this phrase as it appears in s 34A(1) in order to place the defendants' argument.
17. In my view, the "interests of justice" include not only the interests of the parties, but extends to larger questions of legal principle, public interest and policy considerations: see, for example, Landsman v The Queen (2014) 88 NSWLR 534; [2014] NSWCCA 328 at [69]. In determining where the interests of justice lie regard must be had to these matters by reference to the facts and circumstances under consideration. In relation to the interests of the parties (specifically, Power Art Trading), I consider there to be clear textual support in the language of s 34A that an assessment of the interests of justice includes a consideration of a person who may have an interest in the property. That is evident from s 34A(2): the provisions of s 34A(2) (which are subject to s 34A(3)) relevantly provide for the giving of notice of the application to a person who the proceeds of crime authority "has reason to suspect may have an interest in the property": s 34A(2)(a).
18. However, as I have earlier noted, the defendants did not argue the matter on the basis that the evidence demonstrated, in an appropriate way, that the first defendant was neither an owner of the property, nor had an interest in it. The submission, as I have earlier noted, was that Power Art Trading "has committed no crime". It is not difficult to envisage a situation where the evidence may be such that, given the interest of another, it would be contrary to the "interests of justice" to register the foreign order. But that is not this case. That is so not only because the matter was not argued in this way, but because, as I have earlier found, the evidence necessary to make a finding of that broad kind is missing.

The interests of justice: broader considerations

1. The defendants further argued that the registration order should be discharged in consequence of the non-disclosure and the events that occurred up to and including 15 November 2023. The defendants submitted that the "cumulative effect" of the various acts and omissions of the Commissioner justified what was argued to be the very serious sanction of discharging the registration order.
2. It was accepted that if the circumstances were such that in an ex parte application there was deliberate and intentional non-disclosure, or deliberate and intentional disclosure of misleading information, then generally speaking that would provide a proper basis for discharging the orders made: Savcor at [31] and [33].
3. But that is not this case, as I have earlier explained. I am quite satisfied that the directorship misstatement was not open to be categorised in either of these ways. My finding was that it was the product of innocent inadvertence and inattention to detail: see [26], above. I have also found that the directorship misstatement was not legally material to a consideration of whether or not to register the foreign order: see [58]-[63], above. Given these findings, I do not accept that the directorship misstatement, and the events that occurred subsequent to it leading up to the letter dated 15 November 2023 from the solicitor for the defendants, provide a basis for the Court to dissolve the orders made on 31 October 2023.

Costs

1. In my view the appropriate order for costs should be that there is no order as to costs for the following reasons: (a) the defendants identified errors in the evidence that was before the Court at the time of making the registration order - and those errors were accepted by both parties to require the Court's record to be corrected, and an explanation to be provided for how those errors were made: put simply the need for the substantive relisting very much derives from these matters; (b) the defendants were entitled to press and explore the evidence adduced by the Commissioner that went to explaining the circumstances for those errors; and (c) although the matters so far identified provides some support for an order that the Commissioner pay the defendants' costs of the application, against that position, I have concluded that the registration order was properly made and that neither of the factual errors were material given the statutory and forensic context.
2. In those circumstances I consider that the appropriate - and importantly fair - order, given the responsibility of each party for incurring the costs, is to make no order as to costs.

Orders

1. For the above reasons, I make the following orders: 1. Order that the defendants' notice of motion filed 21 November 2023 be dismissed. 2. Make no order as to costs such that each party is to bear their own costs of and incidental to the notice of motion filed 21 November 2023.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 December 2023