CRIMINAL LAW - proceeds of crime - intersection between inquisitorial and accusatorial proceedings - whether examination orders should be made pursuant to s 180 of the Proceeds of Crime Act 2002 (Cth) - whether examination hearings should be postponed until after criminal trial is completed - whether Commissioner of the Australian Federal Police v Mulder - [2015] NSWSC 888 - NSWSC 2015 case summary

Judgment (4 paragraphs)

[1]

Solicitors: Australian Federal Police (Plaintiff) Matouk Joyner Lawyers (First and Second Respondents) Elie Rahme & Associated (Third Respondent) File Number(s): 2014/278074

[2]

Judgment Introduction

On 22 September 2014, the Commissioner of the Australian Federal Police (the plaintiff) filed a summons in this Court. It was brought pursuant to the Proceeds of Crime Act 2002 (Cth) (the Act). The summons sought a large number of orders, only two of which were pressed before me. Each of those two orders was in turn only partly pressed.
The first was proposed order five, which was pressed as follows: Pursuant to section 180 of the Proceeds of Crime Act 2002 (Cth), the following persons are ordered to be examined about Richard McGlone's affairs: (a) Richard McGlone; (b) Jason McKell; (c) Jodie Louise McGlone. …

The police have retained custody of all of the items that they seized from all of the searches ever since.
At 1:53 AM on 21 May 2013, Mr McKell was charged with importing a commercial quantity of a border controlled precursor, pursuant to s 307.11(1) of the Criminal Code Act 1995 (Cth) (the Code). That offence carries a maximum penalty on indictment of imprisonment for 25 years.
At the same time, Mr McKell was charged with an offence against s 400.9(1) of the Code of dealing with property more than $100,000 reasonably suspected of being the proceeds of crime; namely, the $400,150 cash. That offence carries a maximum penalty of imprisonment for 3 years.
At 2:02 AM on 21 May 2013, Mr McGlone was also charged with importing a commercial quantity of a border controlled precursor, pursuant to s 307.11(1) of the Code.
At the same time, Mr McGlone was charged with an offence against s 400.9(1A) of the Code of dealing with property less than $100,000 reasonably suspected of being the proceeds of crime; namely, the $42,550 cash. That offence carries a maximum penalty of imprisonment for 2 years.
As I have said, on 22 September 2014 the plaintiff filed a summons in this Court seeking a variety of orders pursuant to the Act. They included orders restraining any person from disposing of or otherwise dealing with some of the property seized by police; namely, the cash amounts of $400,150 and $42,550 respectively. As well as that, the plaintiff sought orders requiring the Official Trustee to take custody and control of the seized property.
On 4 November 2014, the plaintiff obtained the restraining and control orders sought in the summons of 22 September 2014.
Mrs McGlone has not been charged with an offence arising from these events.
At the hearing before me, Mr McKell filed an affidavit expressing concerns about being compelled to give evidence at an examination, the subject matter of which would include the subject matter of a pending criminal trial. He was not cross-examined upon that affidavit.
Mr McGlone and Mrs McGlone tendered no evidence.
Each party provided me with detailed written and oral submissions. The submissions of Mr McKell included the undisputed assertion that a joint trial is listed to commence in November 2015, with an estimate of three weeks. Submissions of the plaintiff
These may be summarised as follows.
First, all of the recent decisions of the High Court in this area can be characterised as orthodox exercises in statutory construction. Each of them deals with the question of whether the State or Commonwealth Parliament has spoken with sufficient clarity for a court to determine that the legislation in question abrogates long-held assumptions about the nature of accusatorial proceedings by way of criminal trial. It is not correct to say that "the tide has turned" with regard to the intersection of inquisitorial proceedings and accusatorial proceedings. The fact that the result in Lee 2013 can, at a superficial level, be contrasted with the result in X7 and Lee 2014 is merely a reflection of the different facts that pertained in each case, and the different results of construction of different statutes.
Second, it is true that, in Zhao, the High Court unanimously affirmed the decision of the Victorian Court of Appeal in Qing Zhao and Xing Jin v Commissioner of the Australian Federal Police [2014] VSCA 137 that a County Court judge was wrong not to postpone proceedings when their subject matter was similar if not identical to the subject matter of a pending criminal trial. And it was also accepted that the decision of Zhao was about the Act that founds the application before me. But the decision in Zhao was about Pt 2.2 of the Act, which deals with the process of applications for forfeiture by the plaintiff, and concomitant applications for exclusion orders by respondents (for convenience, I shall refer to that process as "forfeiture and exclusion hearings"). In contrast, examinations, whilst they are a part of the general process of forfeiture created by the Act as a whole, are created and conducted pursuant to Pt 3.1 of the Act.
Counsel for the plaintiff submitted that there are a number of important differences between the system of examinations under Pt 3.1 and the system of forfeiture and exclusion hearings under Pt 2.2 of the Act.
The first difference was said to be that, with respect to examinations, the right to silence and the privilege against self‑incrimination have been expressly abrogated by ss 197(2)(a) and (b) of the Act. Yet there is no equivalent provision with respect to forfeiture proceedings.
The second difference was said to be that examinations are required to be conducted in private, by way of s 188 of the Act. In contrast, forfeiture and exclusion hearings would, in the normal course, be conducted in open court, in light of the absence of any specific provision providing an exception to the general rule to that effect.
The third difference was said to be that ss 198 and 266A of the Act make it clear that, although direct use immunity is provided to respondents at examinations, there is no derivative use immunity with regard to things they may say under compulsion. The Act says nothing to that effect about forfeiture and exclusion proceedings (the only exception is with regard to compelled statements of assets and liabilities, pursuant to s 39A of the Act).
The fourth difference was said to be that examinations give explicit effect to one of the purposes of the Act; namely, the purpose contained in s 5(e) "to enable law enforcement authorities effectively to trace proceeds, instruments, benefits, literary proceeds and unexplained wealth amounts". And it can be seen that the subject matter of any examination will be broader than any forfeiture and exclusion hearing, consonant with that principal object.
Returning to the third submission of counsel, it was said that, of the many statutes that have been the subject of analysis in this area, the closest analogue to the Act is the Criminal Assets Recovery Act 1990 (NSW) (the CAR Act). The analogue of s 197(2) of the Act is s 13A(1) of the CAR Act; the analogue of s 198 of the Act is s 13A(2) of the CAR Act; and the analogue of s 319 of the Act is s 63 of the CAR Act. And it is significant that Lee 2013, which was founded upon the CAR Act, was determined adversely to the respondent in that case.
Fourth, caution should be adopted with regard to reliance upon cases such as X7 and R v Seller; R v McCarthy. That is because they are founded upon the Australian Crime Commission Act 2002 (Cth) (the ACC Act), which is not as explicit as the Act in its provisions abrogating the rights of respondents.
Fifth, in Zhao, the subject of the forfeiture and exclusion hearing and the pending criminal trial was identical; namely, a sum of money said to be the proceeds of crime. But that is not the case here: pursuant to s 180(1) of the Act, the questioning at the examinations will go well beyond the sums of cash found during the searches. That distinction detracts from the binding or persuasive force of the decision in Zhao.
Sixth, it could be premature for me to deal with the matter at this stage; at the least, I would not order anything in the nature of a temporary stay of the examinations.
Seventh, the paucity of the material in the affidavit of Mr McKell with regard to the detriment he would suffer if the examination preceded the criminal trial, and the complete absence of any such material from Mr and Mrs McGlone, argues against any postponement. It was said that one can see from the judgment in Zhao that the content of the affidavit deposed to by Mr Jin had played a significant role in the analysis of the High Court.
Eighth, even if I were against the plaintiff with regard to Mr McKell and Mr McGlone, there is no reason why an examination should not be conducted of Mrs McGlone. She has not been charged with any offence and I could not infer that she will be, especially in light of the many months that have passed since the charging of her husband. And whilst it is true that, in Zhao, the High Court took into account the desirability of avoidance of a multiplicity of proceedings, that is not the only factor. Determination Mr McKell and Mr McGlone
I consider that I should exercise my discretion to postpone the making of an examination order with regard to Mr McKell and Mr McGlone until the first day of term next year, when their criminal trial will have concluded. That is so for the following reasons. I shall state them in generally descending order of significance.
First, it is true that, pursuant to s 180(1) and the definition of "affairs" in s 338 of the Act, the subject matter of the examinations can range more widely than the two sums of cash that were allegedly found in the home of each of the respondents. Nevertheless, I consider that it is inevitable that questioning about those sums will be a significant part of the examinations, if not the primary part.
Separately, I think it quite likely that, in the criminal trial, the Crown will tender evidence of the finding of the two large sums of cash as circumstantial evidence in support of the counts averring the importations.
In other words, I approach this matter on the basis that a significant portion of the questioning of the respondents at the examinations will be about the precise subject matter of the two counts alleging offences committed by the respondents to do with the proceeds of crime.
As well as that, I approach this matter on the basis that the questioning at the examinations will include questions about sums of cash that could very well be relied upon as circumstantial evidence by the Crown in support of the importation counts. All of that will occur in the context of the respondents enjoying no derivative use immunity with regard to any answers that they are compelled to give.
Separately, it is true, as was said on behalf of the plaintiff, that examinations under s 180 will not be required to be sharply focused on the subject matter of the seized cash. And it is true that that is in contrast to any forfeiture and exclusion hearings that could be conducted with regard to that cash. That is a point of distinction with the facts in Zhao. But the wide-ranging nature of an examination, to my mind, "cuts both ways": the fact that Mr McGlone or Mr McKell could be subject to a compulsory analysis of the entirety of their financial affairs shortly before a criminal trial with regard to an allegation of an extremely serious importation, in circumstances where they possess no derivative use immunity, argues for postponement until after the conclusion of that trial.
Second, I accept that various provisions of the Act have, in the context of examinations, abolished the privilege against self-incrimination; explicitly provided direct use immunity to respondents but no derivative use immunity; and, pursuant to ss 186(4) and 319, made it clear that the mere fact that criminal proceedings are pending does not automatically lead to a stay of proceedings under the Act, including examinations. I also accept that the discretion reposed in me pursuant to s 180 of the Act must be exercised judicially, and in accordance with the purposes and structure of the Act as a whole.
But I do not interpret those provisions of the Act, either separately or in combination, as inherently foreclosing an exercise of discretion to postpone an examination for a matter of months until serious criminal allegations are resolved by way of a trial by jury.
In others words, the fact that the sections relied upon by the plaintiff abrogate the right to silence and the privilege against self-incrimination and compel answers to questions when no derivative use immunity is conferred does not mean that, by force of those sections, I am precluded from exercising my discretion to postpone the examination in the circumstances of this case.
Third, there will be no practical prejudice occasioned to the plaintiff if I postpone the examinations. That is because the cash that founds the forfeiture applications is securely in the possession of the plaintiff.
It is also because, even if one were to accept that there could be any dishonest or illegal dealing undertaken by Mr McKell or Mr McGlone with regard to their financial affairs generally, that would certainly have taken place in the period between 20 May 2013 (the date of arrest, search and seizure) and today.
When invited to identify a practical prejudice that would accrue to the plaintiff if the examinations were postponed for a matter of months, counsel for the plaintiff pointed to the fact that the objects of the Act will be thwarted during that time. So much may be accepted; but that is not a matter of practical prejudice.
Fourth, as I said in R v Seller; R v McCarthy (No 3) [2014] NSWSC 1290 at [52], it is true that, on one level, all of the decisions with regard to the question of the intersection of inquisitorial and accusatorial proceedings are nothing more than exercises in statutory interpretation.
Nevertheless, I also maintain the opinion that I expressed at [53] of that judgment that the more recent decisions of the High Court have emphasised deeper principles. They are to do with retention of the traditionally understood characteristics of a criminal trial within the English and Australian systems of criminal justice, unless a Parliament has made it sufficiently clear that they are not to be retained.
I do not interpret the provisions of the Act to which I was taken as prohibiting me from exercising my discretion to ensure, to the extent that I am able, that the pending criminal trial in this case retains those characteristics.
Fifth, the decision of the High Court in Zhao is to the effect that a judge at first instance was in error in declining to postpone a forfeiture and exclusion hearing pursuant to Pt 2.2 of the Act until after a criminal trial that had an identical subject matter had been resolved. In such proceedings, a defendant is not, of course, compelled to give evidence, though it is true that, as a matter of practical reality, in seeking exclusion from a forfeiture order a respondent will almost always have to go into evidence in some way.
Contrary to the submission of the plaintiff that Zhao has no application to the separate regime of examinations pursuant to Pt 3.1 of the Act, I consider that the decision in Zhao applies with more force here. That is because what is under consideration in this case is a compelled examination of a respondent about the subject matter of criminal offences, as opposed to a choice by a respondent about whether or not to give evidence about that subject matter in forfeiture and exclusion proceedings.
Sixth, I reject the submission of the plaintiff that I should draw a distinction between examinations (as here) and forfeiture and exclusion hearings (as in Zhao), based upon the fact that the Act explicitly abrogates certain rights with regard to the former but not the latter. Whilst that is indeed a characteristic of the Act, I consider that that is merely a necessary structural aspect of the legislation, and not an expression of legislative intent that I would rely upon to discriminate between the two regimes.
In other words, because of the compelled nature of an examination, it was necessary for Parliament to make clear that the privilege against self-incrimination had been abolished. There was no such necessity with regard to forfeiture and exclusion proceedings, with regard to which a defendant is not required to give evidence under pain of imprisonment.
In short, I consider that the explicit provisions attaching to examinations are a result of the compelled nature of such examinations. I do not consider that I should rely upon them to depart from the approach of the Victorian Court of Appeal, unanimously endorsed by the High Court in Zhao, and refuse to postpone proceedings, brought pursuant to the Act and which have the same subject matter as criminal proceedings, until after those criminal proceedings are resolved at first instance.
Indeed, it would be a highly counterintuitive result if, the High Court having unanimously endorsed the postponement of forfeiture and exclusion proceedings until after the conclusion of a criminal trial with the same subject matter, I were to refuse to postpone examinations, which are a compelled ancillary step towards forfeiture and exclusion hearings.
Seventh, I think there is force in the proposition of counsel for Mr and Mrs McGlone that Lee 2013 was focused upon the question of whether there was a power (pursuant to ss 12 and 31D(1)(a) of the CAR Act, the analogues of s 180 of the Act) to grant a stay or postponement. Within the majority, it can be seen that Gageler and Keane JJ were of the opinion that not only was there a power to conduct an examination with regard to the same subject matter as pending criminal charges, but also that there was no power to refuse to do so: at [268], [269], and [336]-[343]. But at [49] French CJ said the following: …Judicial sensitivity to the impact of an examination on the accusatorial character of pending criminal proceedings can be expected to inform whether an order should be made in the particular circumstances of the case and, if an order be made, the way in which any subsequent examination is conducted. Its judicial character will attract the inherent and express powers of the Supreme Court to protect against misuse of its process and against unfair prejudice to an examinee.
And at [55], the Chief Justice said: I observe that the grounds of appeal for which special leave was granted do not raise any question whether the Court of Appeal's discretion miscarried when it made the orders it did. The question is one of power.
At [141] Crennan J said: The grant of powers to the Supreme Court to make restraining orders and confiscation orders, and examination orders ancillary to either, confers on the Supreme Court powers to be exercised judicially, in accordance with legal principle, and so as to diminish the possibility of oppression and injustice in any examination. [footnotes omitted]
In short, it is true that the majority in Lee 2013 was of the opinion that there is a power, in analogous circumstances, to order an examination under the CAR Act. But the majority did not speak with one voice to say that the analogous discretion was precluded from being exercised in favour of a respondent in those circumstances.
Eighth, an important part of the reasoning of the majority in Lee 2013 was the fact that the examination was to be conducted before a Registrar of the Supreme Court of New South Wales, who would be able to exercise the powers of the court to limit the examination as appropriate. But that is not the case here: the examinations will take place before an "approved examiner". The definition of such a person in s 183(4) of the Act and cl 12 of the Proceeds of Crime Regulations 2002 (Cth) is not limited to officers of superior courts, or to judicial officers generally.
Ninth, it is noteworthy that, within the structure of a statute that is rigorous and in many respects abolishes discretions and evaluative judgments, nevertheless Parliament has reposed in me, by way of s 180 of the Act, a discretion as to whether or not to order an examination, and if so, when.
Tenth, it can be seen that, due to its generality, s 319 of the Act applies to both forfeiture and exclusion hearings and examinations. And yet both the Victorian Court of Appeal and the High Court approached that section as not foreclosing an adjournment of the former; that suggests that it should not foreclose an adjournment of the latter. And the fact that s 186(4) of the Act applies to examinations only does not change my view; it is merely a repetition of s 319 of the Act and arguably superfluous.
Eleventh, contrary to the submission of the plaintiff, I do not accept that the paucity of material in the affidavit deposed to by Mr McKell, and the absence of affidavits from Mr and Mrs McGlone, is significant. Nor do I consider that the expressions of opinions and feelings given by way of affidavit by Mr Jin extracted at [9] in Zhao were important to the decision of the High Court. To my mind, the perfectly obvious adverse effects of compelled examinations about the subject matter of a criminal offence with regard to which a trial is pending, when there is no derivative use immunity attaching to the compelled evidence, does not require, as an evidential pre-condition to postponement, the formality of affidavit evidence from a respondent who is also an accused.
Twelfth, it can be seen that the two counts averring the proceeds of crime offences cast an onus of proof on the respondents, if certain matters are made out in the prosecution case (see generally ss 400.9(1)(b), 400.9(1A)(b), and 400.9(5)). In other words, it is quite possible that, in contrast to the vast majority of criminal trials in which the Crown bears the onus of proof with regard to all elements, in this trial each respondent will bear an onus of proof with regard to one of the counts that he faces. I think that that characteristic of those two offences of itself argues to some degree in favour of postponement.
Thirteenth, and contrary to the submission of the plaintiff, I do not accept that it could be premature for me to deal with this question on the merits now. I consider that it is logistically unattractive to suggest that I should decline to grapple with the substantive question at this stage, thereby forcing the respondents to make their applications for postponement to the examiner and, if unsuccessful before him or her, thereafter to return to a judge of this Court. I consider that this question of postponement should be decided now.
Fourteenth, the application was heard by me in late June 2015. The trial is listed to commence in November 2015. As a matter of logistics, if an examination were to be conducted between now and the commencement of the trial, it surely would take place quite close to the commencement of criminal proceedings that could lead to Mr McKell and Mr McGlone spending many years in prison. I consider that, as a matter of practical reality, it could be unduly onerous to permit examinations to proceed now in those circumstances. It can be seen that, in Lee 2013, Gageler and Keane JJ, although coming to the position that, in the circumstances of that case, the discretion could not be exercised to stay the examination, nevertheless at [337] allowed that: …the timing of an application may be such as to prejudice the fair trial of a criminal charge because of the likely disruption of the preparation for, or conduct of, a trial which is imminent.
Fifteenth, again focusing on matters of logistics and chronology, it is not the case that the plaintiff has, in the past, moved the Court with urgency with regard to any of these matters. It will be recalled that the arrests, searches, and seizures occurred in May 2013; the summons was filed in September 2014; and the matter came before me on 29 June 2015. That lack of great urgency in the past argues against me determining that the examinations must be conducted urgently now.
In short, for a multiplicity of reasons, I propose to exercise my discretion to postpone the making of any examination order against Mr McKell and Mr McGlone until a date some weeks after the expected conclusion of their criminal trial. To do otherwise would, to my mind, not be consonant, in general, with what the High Court has said since its decision in X7. It would also not be consonant, in particular, with what the High Court has said in Zhao. Mrs McGlone
I accept the concession given by counsel for Mrs McGlone that she is in a very different position from Mr McGlone and Mr McKell. That is because, of course, she has not been charged with any criminal offence. Accordingly, the principles with regard to the intersection between inquisitorial and accusatorial proceedings do not apply with as much force to her as they do to the other two respondents. Indeed, because there is no certainty that she will be involved in accusatorial proceedings, it is questionable whether those principles apply to her at all.
Nevertheless, I think there is force in the two bases upon which her counsel submitted that an examination order should not be made against her at this stage as well. Neither consideration is determinative on its own; rather, it is the combined force of them that leads me to my conclusion. They are as follows.
First, on the evidence placed before me, I consider that there is some possibility that she will be charged with a criminal offence, at the least with regard to the bundle of cash said to have been held together by a rubber band and sitting openly on a shelf in the wardrobe of the "main bedroom" of the premises in which she was residing with her husband. I am of the same view with regard to the powder said to have been found in "deal bags" in a box containing female accoutrement and on the side of the wardrobe that contained items that one would associate with a woman. It is true that she has not been charged for many months; that is relevant to, but not determinative of, the possibility of her being charged in the future. And I repeat that it is important to bear in mind that Mrs McGlone has no derivative use immunity with regard to anything she may be compelled to say at an examination.
Second, it can be seen that, in Qing Zhao and Xing Jin v Commissioner of the Australian Federal Police, the Victorian Court of Appeal was content to postpone the examination of Ms Zhao, even though she had not been charged with any offence. The basis for that was simply to avoid multiplicity of proceedings, because the examination of Mr Jin with regard to the identical subject matter had been postponed. At [67], the Court of Appeal said: Finally, having determined that this is the appropriate course to take with respect to Jin's matters, in the interests of avoiding a multiplicity of proceedings, we propose to make the same orders in respect of Zhao's matters and, although Jaks is not a party, also in Jaks' matters.
The High Court endorsed that approach at [48] in Zhao: So far as concerns the first respondent, the Court of Appeal was correct to identify as relevant that to permit the forfeiture proceedings to proceed against her would produce two sets of proceedings, rather than one. The principle of the common law that seeks to prevent a multiplicity of actions has a long history and cannot be ignored. … [footnotes omitted]
Whilst there is force in the submission of the plaintiff that avoidance of multiplicity of proceedings is not determinative, I consider that it remains an important factor. And combined with the possibility that Mrs McGlone could herself be charged with a criminal offence directly relating to the most significant portion of the subject matter of an examination, and with regard to which she will not possess a derivative use immunity, I consider that the better course is to postpone her attendance at such an examination as well. Conclusion with regard to all respondents
For all of the foregoing reasons, despite the very able submissions of counsel for the plaintiff, I am not prepared to order that any of the respondents be subject to an examination at this stage. Status of my judgment in Mulder
I delivered my judgment in Mulder on 29 May 2013. The High Court delivered its judgment in X7 on 26 June 2013; in Lee 2013 on 9 October 2013; in Lee 2014 on 21 May 2014; and in Zhao on 12 February 2015. In others words, at the time of my judgment, I did not have the benefit of the subsequent elucidation of principle that has now been provided by the High Court of Australia.
I had a chance to reflect on my judgment in Mulder during the development of that jurisprudence over many months. It can be seen that, in my resolution of this matter, I have not regarded that judgment of mine as being determinative. To the contrary, I have come to consider that my judgment in Mulder must be approached with great caution (subject of course to it being approved by a Court sitting above me in the judicial hierarchy).
If in truth it is impossible as a matter of logic for this judgment to stand with my earlier judgment, then I would characterise my judgment in Mulder as clearly wrong, on the basis that it is not consistent with subsequent authority of the High Court of Australia. Costs
No party submitted that the usual approach of costs following the event should not be followed.
And it should be noted that, at the commencement of the hearing, I informed counsel for the plaintiff that I had come seriously to doubt the correctness of my judgment in Mulder, and he had an opportunity to obtain instructions. Orders
I make the following orders: 1. I decline to make proposed orders five and six contained in the summons of the plaintiff of 22 September 2014 as pressed before me. 2. Proposed orders five and six are listed before the Common Law Registrar at 9 AM on Monday 1 February 2016. 3. The plaintiff must pay the costs of Mr McKell, Mr McGlone, and Mrs McGlone of the proceedings before me.

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