Dickson v Commissioner, Australian Federal Police

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Judgment

1. THE COURT: The applicant, Anthony James Dickson, seeks leave to appeal from a judgment of Wright J in the Common Law Division. [1] The judgment summarily dismissed the applicant's proceedings commenced by statement of claim filed on 11 September 2018.
2. The applicant is presently in custody serving sentences for two offences of conspiracy contrary to two provisions of the Criminal Code Act 1995 (Cth). The sentence, which commenced on 22 December 2014, is to run for 14 years. There is a non-parole period of 9 years 3 months which will expire on 21 March 2024. Count 1 related to what was described by the Court of Criminal Appeal as "a complex 'tax fraud' with net losses to the Commonwealth in excess of $100 million"; [2] count 6 involved dealing with $1 million or more believing it to be the proceeds of crime ('money laundering'). [3]
3. Prior to the applicant's trial the Commissioner of the Australian Federal Police ("the Commissioner") had obtained orders under the Proceeds of Crime Act 2002 (Cth) with respect to property suspected of being the proceeds of the offences (restraining orders). Orders were made by McCallum J on 11 April 2012 and by Beech-Jones J on 26 April 2012. The present proceedings, commenced more than six years later in the Common Law Division, sought declarations that those orders were "vitiated by the fraud" of the Commissioner and involved "fundamental abuses of process and are void ab initio." The proceedings also sought an order for exemplary damages to be paid by the Commissioner.
4. Wright J had before him three applications, namely: 1. an application by the applicant filed on 10 October 2018 seeking leave to institute the proceedings under s 4 of the Felons (Civil Proceedings) Act 1981 (NSW); 2. a motion by the Commissioner pursuant to r 14.28(1) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) for an order striking out the statement of claim and for an order pursuant to r 13.4(1) dismissing the proceedings; and 3. a motion by the applicant dated 28 January 2019 seeking summary judgment, pursuant to UCPR r 13.1(1) and (2).
5. On 26 September 2019 Wright J made the following orders: "(1) The plaintiff's application for leave to institute the proceedings under s 4 of the Felons (Civil Proceedings) Act 1981 (NSW) is refused. (2) To the extent necessary, the proceedings are dismissed under r 13.4(1) of the Uniform Civil Procedure Rules 2005 (NSW). (3) The plaintiff's notice of motion filed on 28 January 2019 is dismissed. (4) The plaintiff is to pay the defendant's costs of the proceedings, as agreed or assessed."

Issues

1. The Commissioner noted that the following issues arose in respect of the application for leave to appeal, namely: 1. whether to extend time within which to seek leave to appeal; 2. whether the parties should be granted leave to appear under the Felons (Civil Proceedings) Act, and 3. whether leave should be granted (i) under s 6 of the Felons (Civil Proceedings) Act in respect of the refusal of leave to institute the proceedings, or (ii) under s 101 of the Supreme Court Act 1970 (NSW) in respect of the summary dismissal of the proceedings.

Extension of time

1. The Commissioner took no position on the question of an extension of time to file the summons. The judgment under challenge was delivered on 26 September 2019, and the applicant filed and served a notice of intention to appeal within 28 days. He therefore had until the business day following 26 December 2019 to file the summons. He stated, without contradiction, that he posted the summons and summary of grounds of appeal on Wednesday, 19 December 2019 from Cooma Correctional Centre. The summons was apparently received by the Court and filed on 31 December 2019.
2. On the one hand, the applicant acknowledged that there could be postal delays with respect to mail despatched from a correctional centre. To that extent, by failing to allow sufficient time for the documents to be received, he failed to take timely steps to commence the proceedings. On the other hand, the delay was brief, no prejudice was caused, the extension of time was not opposed and, subject to a possible question as to whether the proceedings have any merit, there is no sound reason for refusing an extension. The extension should be granted so that the merits of the matter can be addressed.

Felons (Civil Proceedings) Act

1. Both parties appear to have assumed, until the hearing of the leave application, that the applicant required leave under the Felons (Civil Proceedings) Act to commence proceedings against the Commissioner in respect of orders made in federal jurisdiction and in circumstances where the offences which gave rise to the requirement for leave were federal offences.
2. Sections 4 and 5 of the Felons (Civil Proceedings) Act provide: 4 Leave to sue required for persons convicted of serious indictable offences A person who is in custody as a result of having been convicted of, or found to have committed, a serious indictable offence may not institute any civil proceedings in any court except by the leave of that court granted on application. 5 Grant of leave A court shall not, under section 4, grant leave to a person to institute proceedings unless the court is satisfied that the proceedings are not an abuse of process and that there is prima facie ground for the proceedings.
3. The requirement for leave to institute the present proceedings pursuant to s 4 also engages ss 6 and 7, which provide: 6 Refusal of leave - appeal (1) Subject to subsection (2), a person to whom leave referred to in section 4 has been refused may appeal against the refusal as if the decision to refuse the leave were a decision on a point of law. (2) An appeal shall not lie to the Court of Appeal (within the meaning of the Supreme Court Act 1970) from an order refusing leave referred to in section 4 except by the leave of the Court of Appeal. 7 Right of appearance At the hearing or determination of an application or appeal under this Act, except by the leave of the court to which the application or appeal is made: (a) the applicant or appellant, as the case may be, is not entitled to appear in person, and (b) the person who would, if the proceedings to the institution of which the application or appeal relates were instituted, be the defendant in those proceedings, is not entitled to appear or be represented.
4. It may be seen that the legislative scheme turns on whether the person is in custody, having been convicted of "a serious indictable offence". That phrase is not defined in the Felons (Civil Proceedings) Act, but is defined in s 21(1) of the Interpretation Act 1987 (NSW) to mean "an indictable offence that is punishable by imprisonment for life or for a term of five years or more." The term "indictable offence" is defined to mean "an offence for which proceedings may be taken on indictment, whether or not proceedings for the offence may also be taken otherwise than on indictment."
5. Section 12 of the Interpretation Act provides that in any Act or instrument "a reference to a locality, jurisdiction or other matter or thing is a reference to such a locality, jurisdiction or other matter or thing in and of New South Wales": s 12(1)(b). Unless that presumption is displaced, it follows that the reference in the Felons (Civil Proceedings) Act to a serious indictable offence is a reference to an offence created under New South Wales law. The offences for which the applicant was convicted arose under laws of the Commonwealth. Accordingly, the Felons (Civil Proceedings) Act would not apply, at least if operating of its own force.
6. The orders the subject of the proposed proceedings in the Common Law Division were made under the Proceeds of Crime Act, a Commonwealth law. The Court was therefore exercising federal jurisdiction in making those orders. The subject matter of the present proceeding thus arose under a Commonwealth law, with the result that this Court is also exercising federal jurisdiction. [4] Whether the Felons (Civil Proceedings) Act is picked up and applied in federal jurisdiction pursuant to s 79 (or s 80) of the Judiciary Act 1903 (Cth) depends upon the application of the principles explained in Rizeq v Western Australia: [5] "[103] Within the limits of State legislative capacity, State laws apply in federal jurisdiction as valid State laws unless and to the extent that they are rendered invalid by reason of inconsistency with Commonwealth laws. What State laws relevantly cannot do within the limits of State legislative capacity is govern the exercise by a court of federal jurisdiction. A State law can determine neither the powers that a court has in the exercise of federal jurisdiction nor how or in what circumstances those powers are to be exercised. A State law cannot in that sense 'bind' a court in the exercise of federal jurisdiction, and that is the sense in which that word is used in s 79 of the Judiciary Act. The operation of s 79 is limited to making the text of the State laws of that nature apply as Commonwealth law to bind a court in the exercise of federal jurisdiction."
7. In Rizeq, the plurality approved the statement of Kitto J in Pedersen v Young [6] that s 79 "does not purport to do more than pick up State laws with their meaning unchanged". [7] In Masson v Parsons, [8] the High Court held that a State law [9] providing an irrebuttable presumption that a man who provided semen for an artificial conception procedure was not a parent of the child, did not apply in proceedings in the Family Court for allocation of parental responsibility for the child. Applying Rizeq, the plurality held: "[39] … the "irrebuttable presumption" laid down in ss 14(2) and 14(4) is not in its nature a law relating to evidence or otherwise regulating the exercise of jurisdiction. It is a conditional rule of law determinative of the parental status of the persons to whom it applies which operates independently of anything done by a court or other tribunal. As such, ss 14(2) and 14(4) are not provisions to which s 79(1) of the Judiciary Act is capable of applying."
8. Arguably, to the extent that s 4 of the Felons (Civil Proceedings) Act creates a status resulting from conviction of an offence under State law, it does not apply to an offence under federal law, and it is not picked up and applied with a changed operation pursuant to s 79(1) of the Judiciary Act. Sections 5, 6 and 7 confer powers on courts and direct how they are to be applied; they are laws of a kind which may be picked up by s 79(1), but they will only be engaged where the incapacity imposed by s 4 operates.
9. The application of the test adopted in Rizeq and applied in Masson is not without its complexities. One such complexity is the possible existence of a common law incapacity applicable to those convicted of federal offences. [10] These issues were not addressed either before the primary judge, or in submissions in this Court. Accordingly, it would not be appropriate to grant leave to appeal to resolve that question. Because, for reasons explained below, there is insufficient doubt attending the determination of the substantive issues sought to be raised by the applicant, it is not necessary to determine the operation of the Felons (Civil Proceedings) Act with respect to persons in custody in this state serving a sentence of imprisonment imposed following conviction of a federal offence. Rather, to the extent leave is required under ss 4, 6 and 7, it should be granted.

Summary dismissal

1. As the primary judge noted, although the primary relief sought was in the form of declarations, the availability of such relief turned on the power of the court to set aside its own entered orders for fraud or abuse of process. [11] The claim for damages turned on success in that claim. The primary judge's rulings therefore addressed the merit of the proposed proceedings.
2. The trial judge addressed the circumstances by reference to the question whether leave to institute the proceedings under the Felons (Civil Proceedings) Act should be refused. [12] He concluded that it should be refused for five reasons. Further he considered that the application for exemplary damages contravened the principle of finality in relation to steps taken by parties and advocates in the course of proceedings, as confirmed by the High Court in D'Orta-Ekenaike v Victoria Legal Aid. [13]
3. With respect to the claim to set aside the restraining orders, the judge relied upon the following reasoning. First, he held that even if the restraining orders had been obtained by fraud, they were nevertheless orders of a superior court of record (the Supreme Court) and were not void and of no effect until they were set aside: State of New South Wales v Kable. [14]
4. Secondly, he held that the restraining orders had no present effect because the property subject to the orders had been forfeit under s 92 of the Proceeds of Crime Act following upon the applicant's convictions, which occurred on 20 March 2015.
5. The forfeiture was also the subject of an order, in the form of a declaration, made by a judge of the Court (Bellew J) on 4 August 2016. That order has not been challenged.
6. Thirdly, [15] the judge held that although the applicant had asserted that there were difficulties in taking steps to challenge the restraining order prior to his convictions, the right to do so being provided by s 42 of the Proceeds of Crime Act, there was a further opportunity for him to do so after his convictions. In fact the applicant had sought, under s 94 of the Proceeds of Crime Act, to have the restrained property excluded from statutory forfeiture. That would have provided an opportunity to have the restraining orders set aside on the ground of fraud, but he did not seek that relief. [16]
7. Fourthly, the judge held that in order to set aside a judgment which had been entered, actual fraud must be pleaded and established, in accordance with the principles explained in Clone Pty Ltd v Players Pty Ltd (In liq) (Receivers and Managers Appointed). [17] The judge said that omitting to inform the court of certain information and prosecuting a case on a false premise were insufficient to engage the power to set aside a perfected (or entered) judgment. [18] The statement of claim was addressed by the judge in some detail in this respect at [125]-[140]. The judge concluded there was no basis pleaded or particularised sufficient to demonstrate actual fraud. To the extent that the challenge was directed to the suspicions held by the relevant federal officers, pre-trial, the Commissioner was entitled to rely upon the subsequent convictions to support the reasonableness of those opinions. [19]
8. Fifthly, the judge noted the outcome of the 2016 application to exclude property which had been the subject of the restraining orders, which application was summarily dismissed by Adamson J on 6 May 2016. [20] A challenge was brought from that judgment to this Court. The appeal was dismissed on 30 April 2018. [21]
9. As Beazley P observed in that case, the notice of appeal contained 17 grounds each with a number of sub-grounds; she characterised the grounds as, (i) challenges to findings by the trial judge as to the elements of s 94; (ii) challenges to the constitutional validity of provisions of the Proceeds of Crime Act, and (iii) assertions that the restraining orders had been obtained by fraud. The allegations of fraud were disposed of in the following passages: "[113] The substance of the appellant's complaint that the orders made by the primary judge were obtained by fraud was that counsel and the solicitors for the Commissioner intentionally and dishonestly read affidavit evidence that they knew to be wrong. The relevant affidavit evidence explained the suspicions of an authorised officer for the Commissioner, in accordance with the requirements of the Proceeds of Crime Act, s 18(1)(d)-(e) and (3). The appellant sought, by way of relief, a declaration that the restraining orders be declared void ab initio on the basis of fraud. This argument was not raised in the court below, nor had it previously been raised by the appellant. [114] I would not allow the appellant to raise this ground of appeal: see Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33. Not only was it raised some five years after the restraining orders were granted, it was not, as I have indicated, raised before the primary judge and there has been no opportunity for the Commissioner to respond. Further, it is a most serious allegation and the appellant has not advanced any cogent material in support of the allegation."
10. The appeal was summarily dismissed.
11. Although the merits of the claims of fraud in obtaining the restraining orders were not disposed of the earlier decision of this Court, the fact that they were raised on that appeal involved a recognition that they might have been relied upon before the primary judge in those proceedings, but were not.

Application for leave to appeal

1. The Court will grant leave to appeal in respect of interlocutory matters depending upon identification of (i) a decision involving an element of finality; (ii) an issue of public importance; (iii) a claim of more than arguable error on the part of the primary judge, and (iv) demonstration otherwise of a miscarriage of justice.
2. It may be accepted that the order of the primary judge effectively disposed of the present proceedings. Although it was in law interlocutory, there being no hearing on the merits of the claim, it involved an element of practical finality.
3. That however is not sufficient. The claims with respect to Commonwealth officers, if they had substance, could be said to raise an issue of public importance; however, there is no basis to think they have substance.
4. The issues taken by the applicant with respect to the affidavit of Mr Sandon, an AFP officer, are indicative of the allegations of fraud made by him against the AFP officers and counsel involved in the original applications under Proceeds of Crime Act, s 18. They were summarised by the primary judge at [128], but it is useful again to set out the evidence of Mr Sandon as to the essential elements of the offending conduct of the applicant, along with the criticisms made of that evidence by the applicant in his statement of claim: [22] 1. Neumedix [23] "'entered into three trust arrangements' with the ANZ Bank". (As the applicant observed, "actually there were 4 ANZ trust inertia funding arrangements", each of which involved a particular unit trust used in a sale and leaseback transaction between ANZ and a third party, the income units of which were held by Neumedix.) 2. Neumedix had "sustained [tax] 'losses in the form of alleged depreciation in the value of Intellectual Property Rights totalling in excess of AUD 275 million'". (The applicant objects that Mr Sandon "[did] not specify how these deductions relate to specific financial/tax years", with the result that his statement was "meaningless".) 3. Under the trust arrangements, Neumedix "effectively donated [those] losses... to an entity in the trust structure". (The applicant objects to this explanation because "Federal income tax legislation does not permit tax deductions or tax losses to be transferred from a company to a trust". Rather, the income of the trusts became assessable income of Neumedix, to be set off against Neumedix's alleged losses.) 4. However, Neumedix's alleged losses were wholly or partly inflated, because either "[n]o funds were paid to purchase the patents" or "the values of the patents were 'falsely inflated'". (The applicant says that Mr Sandon did not "provide any analysis [by reference to alternative, true values or federal tax legislation] supporting the Commissioner's allegation that patent depreciation deductions claimed by the NeuMedix company should not be allowable deductions".)
5. The applicant notes further that (i) Neumedix's allegedly problematic tax assessments had not, at the time the applications under s 18 were made, been amended; (ii) neither the Commissioner nor their counsel provided any expert opinion concerning the proper application of tax legislation, and (iii) the courts have no power to amend tax assessments.
6. The chief difficulty with the applicant's objections is that he was ultimately convicted of offences constituted by conduct which was, in its essential aspects, the conduct described in the affidavit of Mr Sandon and the other documents with which he takes issue. Indeed, the applicant conceded in argument that he could (and did) take issue only with the sufficiency of the evidence, and the details it included, to establish the offences it purported to describe. Save to the extent that Mr Sandon failed accurately to explain the operation of tax legislation, the applicant does not maintain that the evidence given as to his conduct was actually false (as opposed to fraudulent by reason of deliberate omissions).
7. The allegations made in Mr Sandon's affidavit, summarised above, closely resemble the facts found by Beech-Jones J in the course of sentencing the applicant for those offences: [24] "[13] The offender is a highly experienced tax and finance professional. During the course of 2005 and 2006 he pursued negotiations with the ANZ to pursue a financing transaction that had the following essential features. One of the ANZ's clients sold an asset to a partnership consisting of the trustee of a unit trust, namely ANZ Investment Holdings Ltd, and the client. The ANZ provided debt financing to fund the purchase. The asset was leased back for use in the client's business. The trust generated assessable income from the lease payments although most of that income was used to pay debt, interest and fees. NHA [25] acquired 100% of the units in the unit trust. Under the relevant taxation legislation all of the net income of the trust was to be treated as taxable income of NHA although it did not receive a distribution of those amounts as they were used to pay down the ANZ's debt. Instead NHA received a cash distribution from the trust of 9% of the taxable income of the trust. [14] The result of each such transaction was that ANZ's clients received an injection of cash from selling their asset. The client paid rent to use the asset, however those payments were tax deductible. The rental cost was lower than it otherwise would have been because NHA was effectively contributing part of its tax losses to make the transaction more commercially attractive. ANZ received interest on its loan to the trustee which was paid by the lease payments and fees for facilitating the transaction. [15] As noted, it was agreed that, in return for it acquiring the obligation to declare the entirety of the taxable profit of the trust in its tax return, NHA received cash payments representing 9% of each trust's taxable profit. In order for its participation in these transactions to make any commercial sense for NHA it had to have available to it very large amounts of tax losses to offset the taxable income it was required to declare. The offender repeatedly assured the ANZ that those deductions had been, or would be, generated by NHA assuming obligations to pay very large amounts to acquire certain medical technologies. ANZ was assured that NHA was in effect selling tax losses arising from large depreciation expenses on medical technology to acquire funding. As I will explain, the true position was that no such obligations were intended to be incurred and none were incurred. Instead the offender and his co-conspirator agreed to use the bulk of the cash distributions for their own purposes."
8. The issues raised by the applicant go to the understanding of Mr Sandon of federal tax legislation, and to whether and to what extent the scheme so described in fact resulted in the Commonwealth being defrauded, assessed by reference to the correct application of federal tax legislation. But they do not go to whether there were reasonable grounds to suspect him of having engaged in a conspiracy to defraud the Commonwealth by claiming fraudulently inflated tax losses arising from the alleged depreciation of intellectual property assets. That is so regardless of whether the applicant was eventually convicted in part on the basis of evidence of actual underpayment.
9. There is no error shown in the reasoning of the primary judge in addressing the factual allegations raised in the pleadings.
10. More broadly, the applicant has failed to demonstrate that the approach of the primary judge was more than arguably wrong, with the exception of the need for leave under the Felons (Civil Proceedings) Act which was an error (if it were an error) favourable to the applicant.
11. The Court is not persuaded that there is otherwise any miscarriage of justice in the dismissal of the proceedings.
12. Accordingly, the Court makes the following orders: 1. To the extent necessary, grant the applicant leave to seek leave to appeal. 2. Dismiss the application for leave to appeal. 3. Order the applicant to pay the respondent's costs in this Court.

Endnotes

1. Dickson v Commissioner of Australian Federal Police [2019] NSWSC 1293 ("Primary judgment").
2. Dickson v R [2016] NSWCCA 105 at [4] (Schmidt and Wilson JJ).
3. Counts 2-5 were alternative offences to count 1.
4. LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575; [1983] HCA 31.
5. (2017) 262 CLR 1; [2017] HCA 23.
6. (1964) 110 CLR 162 at 165; [1964] HCA 28.
7. Rizeq at [81].
8. [2019] HCA 21; (2019) 368 ALR 583 at [42].
9. Status of Children Act 1996 (NSW), s 14(2) and (4).
10. Jason Donnelly, "The convicted felon's right to judicial review and the common law doctrine of attainder in Australia", (2013) 2 Journal of Civil Litigation and Practice 32, fn 36.
11. Dickson at [16].
12. Dickson at [108].
13. (2005) 223 CLR 1; [2005] HCA 12; Dickson at [179]-[180].
14. (2013) 252 CLR 118; [2013] HCA 26 at [32], [56]; Dickson at [111].
15. The judge described the two findings set out above as one matter, and described this matter as the second matter: Dickson at [117].
16. Dickson at [152].
17. (2018) 264 CLR 165; [2018] HCA 12 at [2], [55], [62].
18. Dickson at [123].
19. Dickson at [148].
20. Commissioner of the Australian Federal Police v Dickson (No 3) [2016] NSWSC 564.
21. AD v Commissioner of the Australian Federal Police (2018) 97 NSWLR 588; [2018] NSWCA 89 (Beazley P, Meagher and Gleeson JJA).
22. Statement of Claim at par 44ff.
23. Neumedix Health Australasia Pty Ltd.
24. R v Anthony James Dickson (No 18) [2015] NSWSC 268 (emphasis in text added).
25. Neumedix Health Australasia Pty Ltd. 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: 29 June 2020