Commissioner of the Australian Federal Police v Mazzco Investments Pty Ltd & Ors.

Background

1. On 23 May 2018 the Late Dimitrios (Jim) Mavris was arrested by Australian Federal Police ('AFP') officers, and on 24 May 2018 he was charged with an offence contrary to s 307.1 of the Criminal Code 1995 (Cth), being import a commercial quantity of a border controlled drug. Following being taken into custody, on 25 May 2018, Mr Mavris was found dead in his cell from an apparent suicide.
2. On 30 May 2018, the charges against Mr Mavris were withdrawn.
3. As at 20 July 2018, Mazzco Investments Pty Ltd was the registered proprietor of six properties in Pyrmont ('the Pyrmont Properties'). Mr Mavris was the sole director and shareholder of Mazzco Investments Pty Ltd. The fourth defendant is the registered proprietor of two properties in Woolloomooloo ('the Woolloomooloo Properties').
4. There are currently three proceedings in this Court between the parties arising out of orders made under the POCA in connection with the eight properties. They are: the summons filed by the Commissioner on 19 July 2018; the revocation and exclusion motion filed by the fourth defendant on 17 August 2018; and the further amended cross summons filed by the fourth defendant on 18 August 2022. I will next set out, albeit briefly, the nature of those proceedings and, having done so, refer to some other matters of background - namely, the use of the powers, by the Commissioner, under s 202 of the POCA following the filing of the summons on 19 July 2018.

The summons filed by the Commissioner on 19 July 2018

1. By that summons, the Commissioner sought a number of restraining, custody and control, and forfeiture orders under the POCA over properties which were owned by Mr Mavris and/or the fourth defendant.
2. On 19 July 2018, Schmidt J made nineteen orders pursuant to the Commissioner's summons, including restraining orders under ss 18 and 19 of the POCA in connection with the Pyrmont Properties and the Woolloomooloo Properties. Relevantly here, the orders restrained the fourth defendant from selling or otherwise disposing of the Woolloomooloo Properties - it being alleged that the Woolloomooloo Properties were the property of the fourth defendant "that was subject to the effective control of the Late Dimitrios (Jim) Mavris" (orders 3 and 6).
3. The orders made by Schmidt J on 19 July 2018 dealt with most, but not all, of the relief sought in the Commissioner's summons: the Commissioner also sought pecuniary penalty orders, pursuant to s 116(1) of the POCA, albeit not against the fourth defendant (summons, par 17) and also forfeiture orders pursuant to ss 47 and 49 of the POCA.

The revocation and exclusion motion filed by the fourth defendant on 17 August 2018

1. A revocation and exclusion motion was filed by the fourth defendant on 17 August 2018.
2. The basis for that motion was that the Pyrmont Properties and the Woolloomooloo Properties were neither the property of Mr Mavris, nor were they under his effective control. The motion thus sought an order, pursuant to s 42(5) of the POCA, that orders 3 - 7 made on 19 July 2018 be revoked (order 1); alternatively, an order pursuant to ss 29 and 31 of the POCA, that the property listed in schedule 1 and 2 of the orders made on 19 July 2018 be excluded (order 2); and that the remaining orders made on 19 July 2018 be "set aside" (order 3).

The Further Amended Cross Summons filed by the fourth defendant on 18 August 2022

1. A further amended cross summons was filed by the fourth defendant on 18 August 2022. By that further amended cross summons, the fourth defendant seeks: 1. Declaratory and injunctive relief on the basis that the use by the Commissioner of the information gathering powers under the POCA after the commencement of the proceedings "for the sole or dominant purpose of adducing evidence in the proceedings was not authorised by the Act", or in the alternate if it was authorised, that it nevertheless constituted an excess of power and was unlawful or an abuse of process, where it had a "real risk of, or involves a tendency to interfere with, the administration of justice and the exercise of judicial power in federal jurisdiction by conferring an advantage on the Plaintiff not available under the Court's processes" such that the plaintiff's conduct was "in excess of power and unlawful, or an abuse of process, and null and void" (further amended cross summons, relief claimed, par 1); 2. A declaration that production orders issued to third parties pursuant to Part 3-2 of the POCA are "invalid, null and void" (further amended cross summons, relief claimed, par 1A); 3. An "order setting aside as invalid, null and void the production orders issued" pursuant to Part 3-2 of the POCA (further amended cross summons, relief claimed, par 1B); 4. An order restraining the plaintiff/respondent from "in any way using, or relying on, as evidence or otherwise" any documents obtained by the Commissioner by the issue of the production orders (further amended cross summons, relief claimed, par 2); and 5. An order that the plaintiff/respondent is required to "identify, deliver up, and then destroy" such documents (further amended cross summons, relief claimed, par 3).
2. The parties accepted that it would be necessary for the Court to hear and determine the revocation and exclusion motion before the Court would be called upon to deal with the balance of the Commissioner's summons (that seek forfeiture and penalty orders). I will next refer to the production orders made, and the timing of them.

The production orders

1. Notwithstanding that the Commissioner commenced the substantive proceedings (the summons filed on 19 July 2018), the Commissioner secured seventeen production orders in the period October 2018 to July 2019 by Local Court magistrates pursuant to s 202 of the POCA.
2. The Commissioner accepts - what is next recorded is contained in open correspondence - that at least a purpose of the AFP in obtaining the production orders was to "gather evidence" through that procedure for use in the current proceedings: letter from the AFP to the solicitor for the fourth defendant dated 30 September 2021.

Separate determination: the power and principles

1. The power to order a separate determination of a question in proceedings is contained in r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) ('the UCPR'), which provides: The court may make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings.
2. In Part 28, 'question' "includes any question or issue in any proceedings, whether of fact or law or partly of fact and partly of law, and whether raised by pleadings, agreement of parties or otherwise": r 28.1 of the UCPR.
3. The relevant principles relating to the power to order separate determinations have been summarised in a number of cases, including Allandale Blue Metal Pty Ltd v Roads and Maritime Services (2013) 195 LGERA 182; [2013] NSWCA 103 at [87]-[97]. They have also been helpfully summarised in Crawley v Vero Insurance Ltd [2012] NSWSC 593 at [15]-[20] and in Cruden v Sae-Ung [2021] NSWSC 1070 at [41]-[42]. The submissions of the parties rely upon a number of these principles, and they will be identified in the course of addressing the submissions each raised.
4. Nevertheless, drawing upon those authorities, some important principles should, however, be noted - as follows. First, the general practice is that there should be a trial of all issues, not one or some: Tepko Pty Ltd v Water Board (2001) 206 CLR 1; [2001] HCA 19 at [168]. Secondly, the Court retains the discretion to order a separate determination of any question, albeit that the exercise of the discretion should be approached with a degree of care and caution. Thirdly, particularly given the terms of ss 56-58 of the Civil Procedure Act 2005 (NSW) ('the CPA'), the Court can "take a more interventionist role in identifying and separating important issues which can resolve significant parts of the litigation expeditiously": Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd [2006] NSWSC 1464 at [6]. Fourthly, here it is for the Commissioner to demonstrate to the Court that a separate determination of the question proposed (essentially the statutory construction questions) is appropriate.

Discussion and consideration

1. The fourth defendant opposes any separate determination, advancing a number of, partly overlapping, reasons that are argued to stand against the Court making an order that there be a separate determination of the proposed question - or any question relating to the proper construction of s 202 of the POCA. Broadly, those reasons may be grouped (and dealt with) as follows: first, there is no suitable separate question; secondly, any separate determination "will increase the costs of the litigation and not decrease them"; and, thirdly, a separate determination is likely to be productive of delay and fragmentation.

No suitable separate question

1. The fourth defendant argued that there is no "appropriate question which is suitable for separate determination" and that, irrespective of the outcome of the proposed question (or a variant to it), the question of "purpose" would need to be litigated (fourth defendant's submissions at [6]-[8]). That is because if the Commissioner is successful or, indeed, if the fourth defendant was successful, the question of purpose would still arise in the context of the fourth defendant's other argument. That argument, drawing upon the alternative basis for relief in the further amended cross summons (par 1), is that even if the use of the power under s 202 following commencement of proceedings was permissible, the Commissioner should be restrained from doing so because it would confer an unfair advantage on the Commissioner not available under the Court's processes such that the Commissioner's "conduct was in excess of power and unlawful, or an abuse of process, and null and void". Accordingly, it was submitted that resolving the proposed question would neither be dispositive of the litigation altogether, nor would it "substantially narrow the field of controversy": CBS Productions v O'Neill (1985) 1 NSWLR 601, 606.
2. Given the submissions of the fourth defendant, it is necessary to briefly describe the argument that was said to demonstrate the unsuitability of the course proposed by the Commissioner. In this respect the basic facts are as follows.
3. Subsequent to the commencement of the proceedings in this Court, the Commissioner continued to use the powers under s 202 of the POCA to obtain production orders - each of which were made upon the application of an authorised officer of the AFP. As I have earlier noted, the AFP has accepted, in open correspondence, that "a purpose of the AFP of obtaining the production orders … was to obtain documents through that separate procedure" for use in the current proceedings.
4. The fourth defendant accepts that at least one of the arguments that she wishes to advance is that there is an implied limitation on the power in s 202: namely, that s 202 does not authorise the seeking of a production order, following the commencement of proceedings, for the sole or dominant purpose of adducing evidence in the proceedings.
5. In a decision which bears close similarity to the arguments sought to be advanced in the present case (and also involved, in effect, a separate determination of those issues), Austin J in ASIC v Elm Financial Services [2004] NSWSC 859 at [44] ('Elm'), identified two questions for resolution: It seems to me, in light of these authorities, that I must consider two questions in this case: first, whether, as a matter of statutory construction, ASIC's power to employ ss 19 and 32A was extinguished once the proceeding (which is, in part, a civil penalty proceeding) was commenced, so that it would be a contempt of court for it to attempt to achieve advantages by using or threatening to use powers that are not available; and secondly, if ASIC has the power to proceed with the notices, it should be restrained from doing so because its purpose is to use its powers to obtain information for use in a proceeding to which it is a party, in a manner that will give it an advantage beyond what is permitted to a litigant by the rules of court, and therefore in contempt of court, or there is a real risk that the continuing use its powers will have that affect.
6. It should be noted that the relief claimed in the further amended cross summons closely mirrors the identification of issues by Austin J in Elm.
7. The fourth defendant argued that it was not appropriate to embark upon determining the first question divorced from the facts. I do not accept this submission. The first question posed by Austin J (and broadly adopted by the Commissioner as its first question) is not framed by reference to any question of fact - at least none that are in issue or in any way controversial.
8. The second question, as explained during submissions by the Commissioner, sought to do two things: first, it sought to accommodate the specific case that the fourth defendant advances - namely, that the implied limitation on the power in s 202 precludes its use following the commencement of proceedings for the sole or dominant purpose of adducing evidence in the proceedings; and, secondly, to identify a related question of statutory construction - essentially, to the effect that if there is a limitation upon the use of the power in s 202, then what is that limitation. (I add: consistent with authority - essentially, the proper construction is a question for the Court: Klein v Minister for Education (2007) 81 ALJR 582; [2007] HCA 2 at [38]) - the question would not be constrained to the way in which one or other party seek to construe the provision.
9. The Commissioner submitted that this further question was also one that did not involve any fact that was in issue or controversial. The fourth defendant, on the other hand, argued that the question still involved contested issues about purpose and that demonstrated the inappropriateness of what was proposed by the Commissioner.
10. It is necessary to address further the submission of the fourth defendant relating to what was argued to be the inappropriateness of the separate questions given the contested factual position. In the course of addressing that matter it is also necessary to refer to some matters of background.
11. The fourth defendant argued that there were "many disputed issues of fact, and complex questions of law, which overlap" with her other claims. That is, the fourth defendant argued that the proposed separate questions would interact with "unresolved facts in dispute", and the questions proposed cannot be "divorced from the underlying facts in dispute" (fourth defendant's submissions at [10]).
12. The Commissioner squarely takes issue with this submission, pointing out that the fourth defendant did not identify, in its written submissions, any factual overlap or the need to embark upon an examination of contested issues of fact. I am unpersuaded that, on either question framed by the Commissioner (and, in relation to the second question, as explained during submissions), there are contested issues of fact that would render separate determination of the questions inappropriate. It is difficult to see what these are, and certainly none were identified, at least in concrete terms, in submissions. Nor do I accept that there is any significant overlap between the evidence on the hearing of the separate questions and any evidence to be adduced at trial.
13. During the course of argument, the fourth defendant also submitted that the issues of fact were far more extensive than the confined ones which the Commissioner argued were all that were necessary in order for the statutory construction questions to be answered. As I earlier noted, the fourth defendant submitted that the Commissioner should, as a matter of fairness, set out those facts which it considered were of that kind, and have the opportunity to provide a response.
14. The Commissioner, in its submissions filed 10 July 2023, identified 9 key facts which were submitted to be all that were necessary to determine the proposed separate questions. On the other hand, the fourth defendant identified, in a schedule attached to its submissions dated 4 August 2023, 159 key "facts" - which were argued to be necessary in order to determine the proposed separate question.
15. I do not accept the fourth defendant's submission that those facts contained in its schedule accurately represent those facts which would be necessary to consider and make findings on. For example, that schedule includes the following: 1. When the fourth defendant began to experience symptoms of poor health: key fact number 6 and 32. 2. When the fourth defendant was served with evidence, or when the fourth defendant served evidence in the substantive proceedings: key facts number 66, 80-82. 3. When the fourth defendant foreshadowed an application for discovery, and later enclosed a draft notice of motion, and affidavit in support, seeking orders for discovery; and when that notice of motion was in fact listed for hearing: key facts number 91-92 and 102. 4. When the fourth defendant served a confidential offer upon the Commissioner: key fact 92. 5. When a number of parties filed submitting appearances: key facts 154-155.
16. In my assessment, the Commissioner's schedule of key facts more accurately represents those necessary to decide the proposed question. I also consider that all those facts are themselves uncontroversial: a comparison of each of those key facts identified by the Commissioner are accepted by the fourth defendant - in order, they are numbered in the fourth defendant's schedule as key facts 42, 45, 47, 52, 59, 68, 75, 76, 78 and 79.
17. In my view, the second question, as explained during submissions, as argued by the Commissioner, is also one of statutory construction and I do not consider that its resolution involves facts other than those which are admitted or uncontroversial.
18. In relation to the fourth defendant's argument about the need to litigate "purpose" irrespective of the outcome, then that remains a qualified possibility. The qualification is for the following reasons. First, if the Commissioner's argument is correct, and s 202 can be employed in the way and manner it was, then no question of purpose would arise in connection with the principal argument of the fourth defendant reflected in par 1 of the further amended cross summons. Secondly, if the argument of the fourth defendant is accepted then the Commissioner may not contest the (factual) issue of purpose. Thirdly, although the fourth defendant argued that its secondary argument reflected in par 1 of the further amended cross summons involved a question of purpose, I do not consider that to be axiomatic; that fact is not, at least expressly, pleaded and in any event the alternate basis for relief accepts the use of the information gathering powers was authorised in the circumstances.
19. I am satisfied that the proposed separate questions are a significant issue in the proceedings (indeed, the predominant one), and in my view its resolution will substantially narrow the field of controversy.

Unnecessarily increase the costs of the litigation

1. The fourth defendant further argued that resolution of the proposed question would increase, rather than decrease, the costs of litigation particularly where, so it was argued, the question of "purpose" would still need to be litigated (fourth defendant's submissions at [9]). Accordingly, it was submitted that the Court would not be satisfied that there would be any saving of time and expense. I am unpersuaded by this submission. In relation to "purpose" I have already addressed why I do not accept the inevitability of that issue being litigated; rather, I consider it to be only a qualified possibility.
2. In relation to the submission that costs would increase, rather than decrease, the extent to which this was argued to arise was not quantified. Given that the issue is one of statutory construction; the background facts are uncontroversial and in any event limited; and the essential legal argument has been identified and developed in submissions already filed (on 10 September 2021 the fourth defendant filed 36 pages of written submissions in support of par 1 of the amended cross summons, and contains the very argument that the fourth defendant advances), it is difficult to accept that there would be any significant increase in costs as a consequence of having the issue identified by the Commissioner separately determined. A hearing of the separate question would be conducted within a day.
3. In my view, it is also a realistic possibility, given the outcome, that it may appreciably reduce the issues, and thus the costs involved.

The prospect of an appeal and delay

1. The fourth defendant also argued that there was a "real likelihood" that the unsuccessful party would appeal any decision creating "a multiplicity of proceedings, interruption to the court and undesirable fragmentation of the proceedings" (fourth defendant's submissions at [11]).
2. It is difficult, in my respectful view, to accept the proposition that there would be any significant interruption in the progress of these proceedings given the delay that I have referred to and the fact that no steps have been taken by the fourth defendant to have the proceedings dealt with and disposed of by the Court. The simple fact is that, on its current trajectory, and even assuming the parties were ready to take a date forthwith, the matter would be quite unlikely to proceed to final hearing until sometime in the second half of 2024. Here, the proposal is to have a question separately determined and a range of dates in October are available for this to occur. In those circumstances, given that no meaningful step has been taken to have the matters decided by the Court to date, and that the proceedings were commenced over 5 years ago, I am unable to accept that there would be any material interruption. Indeed, in my view, it would enhance the progress of the matter by acceding to the order sought by the Commissioner.
3. Whilst I do not doubt that there is a potential for the dissatisfied party to appeal any answer to any separate question determined, I am unpersuaded that this issue tells against making the order: specifically, I am unpersuaded that there will be any significant interruption and fragmentation of the proceedings if there was an appeal. Further, in connection with any appeal that may follow from the separate determination, it should be noted that, presently, hearing dates are available in the Court of Appeal from September, October and November 2023. It is also well-known that there is no significant delay in securing a prompt hearing of an appeal. So, again, there is no reason to suppose that there would or might be any material delay (or 'interruption') in having any appeal listed, if that were to eventuate. Furthermore, I accept, as the Commissioner pointed out, the fact of an appeal is almost always present in litigation.
4. Finally, the fourth defendant argued that the just, quick and cheap disposition of the litigation requires discovery, rather than the separate question which would not obviate the need for it (fourth defendant's submissions at [12]). I do not accept this submission, for the following reasons. 1. First, a premise of the submission appears to be that discovery would simply involve a confined number of documents, requiring little to no effort to collate and produce. I am not prepared to draw that inference. In my view it is a fair inference to draw, particularly given the submissions by the Commissioner, that there is likely to be an issue about public interest immunity and such matters and given the orders for discovery that were made on an earlier occasion generated considerable dispute and delay, that any order for discovery in connection with the "purpose" issue is likely to play out in the same way. 2. Secondly, a further premise of the submission is that the resolution of the separate question would still require discovery on the "purpose" issue because the issue of "purpose" would still be in play. As I have earlier noted, this is a qualified possibility only. 3. Thirdly, the just, quick and cheap disposition of the litigation involves considerations well beyond what has been submitted by the fourth defendant. For example, in relation to "purpose" and it being left as a trial issue, the just, quick and cheap disposition of the litigation requires a consideration of the issue in the conduct of the trial proceedings. That will require the parties to prepare evidence, and will presumably occupy some not inconsiderable portion of the time that is ultimately allocated for hearing. An outcome, of course, is that none of this evidence will be necessary (or should it prove necessary, be significantly constrained), and that inevitably will save the parties time, effort and cost. Mr Moses SC argued that a reality was that the judge allocated to hear the trial of the action would most likely adopt the course that the Commissioner now advocates. This was encapsulated in my earlier judgment ([2023] NSWSC 425]) at [70], as follows: As the AFP submitted, the essential question raised by ground 1 of the amended cross summons is a question of statutory construction. That characterisation remains notwithstanding the applicant's "implied limitation" argument. As Mr Moses SC essentially put during argument, the determination of the legal question raised by the amended cross summons is critical in a number of ways: if the AFP is correct, then none of the discovered material would be relevant and it was only if the Court reached a contrary view could be it then be so. Mr Moses SC also submitted that, in practical terms, the determination of that issue was critical because the parties would be obliged to prepare potentially quite significant amounts of evidence to deal with an issue that simply may not arise, and in doing so occupy, unnecessarily, court time and involve great expense for both parties. Also, it may be necessary for, depending upon the outcome, one or other party seeking to prove issues in their case by reference to material that was not sourced to the production orders.
5. I am satisfied that having the statutory construction question separately determined, and in advance of the other issues in proceedings, is consistent with - and will facilitate - the just, quick and cheap resolution of the proceedings (s 56 of the CPA).

Orders

1. For the above reasons I make the following orders: 1. List the separate questions for hearing on 23 or 24 October 2023. 2. List the matter for directions at 9am on 24 August 2023. 3. Direct that the parties confer, with a view to agreeing upon, proposed timetabling orders with such orders to be sent to the Chambers of Chen J by 23 August 2023, 4pm. 4. If no agreement is reached in connection with timetabling orders, each party is to file and serve proposed orders together with a one-page outline for why those orders are sought by 23 August 2023, 4pm. 5. Costs of the notice of motion filed 17 May 2023 are reserved.

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: 17 August 2023