New South Wales Crime Commission v John Bazi

Supreme Court of NSW|2008-10-23|Before: Hislop J, Studdert J

Background 1 The plaintiff, by summons filed in this court on 17 January 2006, sought, inter alia, the following orders against the defendant: "1. An order pursuant to section 10 of the Criminal Assets Recovery Act, 1990 ["the Act"] that no person is to dispose of, or attempt to dispose of, or otherwise deal with or attempt to otherwise deal with any interest in property (within the meaning of 'interest in property' as defined in section 7 of the Criminal Assets Recovery Act 1990) of Johnson Bazi, including the interest in property in the property described in Schedule One hereto… 5. An order pursuant to s 10(4) of the Criminal Assets Recovery Act, 1990 that the Public Trustee take control of all the interest of Johnson Bazi in the property described in Schedule One hereto... 7. An order pursuant to section 27 of the Criminal Assets Recovery Act 1990 that Johnson Bazi pay to the Treasurer an amount assessed by the Court as the value of the proceeds derived from the illegal activities of Johnson Bazi that took place not more than six (6) years before the making of this application… Schedule One 1. Cash in the amount of approximately $365,000 produced to the New South Wales Crime Commission on 24 June 2005 pursuant to section 17 of the New South Wales Crime Commission Act 1985 by Travelex Limited. 2. Cash in the amount of approximately $54,000 produced to the New South Wales Crime Commission on 24 June 2005 pursuant to section 17 of the New South Wales Crime Commission Act 1985 by Travelex Limited." 2 On 17 January 2006 the orders sought in paras 1 and 5 of the summons were made. No order was made at that time in respect of the order sought in para 7 of the summons. The orders were made upon evidence the defendant was suspected of being engaged in serious crime related activity as defined in s 6 of the Act. The serious crime related activity involved offences of making and using false instruments with intent, for which offences he was convicted on 30 January 2006. 3 On 28 May 2007, upon application by the plaintiff, this court (Studdert J) made orders in the following terms: "1. I grant leave to the plaintiff to amend the summons to seek an order pursuant to s 22 of the Criminal Assets Recovery Act forfeiting to and vesting in the Crown the interests in property of Johnson Bazi in the property described in the schedule to these orders.

There is to be judgment for the plaintiff on its claim for an assets forfeiture order in respect of the interests of the defendant in the property specified in the schedule to these orders.

Leave is granted to the defendant to apply for orders under s 25 and/or s 26 of the statute within six months after the assets forfeiture order takes effect.

The assets forfeiture order is stayed for a period of six months and thereafter if orders under s 25 or s 26 or both are sought until the disposition of the application for those orders.

Judgment is to be granted to the plaintiff on its claim for a proceeds assessment order against the defendant for an amount to be assessed.

The defendant is to pay the plaintiff's costs of these proceedings. The schedule for the purposes of these orders I identify as follows: Cash in the amount of $430,000 plus interest earned thereon produced to the New South Wales Crime Commission on 24 June 2005 pursuant to s 17 of the New South Wales Crime Commission Act 1985 by Travelex Limited." 4 By notice of motion filed on 22 November 2007 the defendant sought: "1. A declaration that it is more probable than not that the whole of the value of the defendant's interest in property being cash in the amount of $430,000 plus interest earned thereon produced to the New South Wales Crime Commission on 24 June 2005 pursuant to s 17 of the New South Wales Crime Commission Act 1985 by Travelex Limited that has been forfeited under an assets forfeiture order made on 28 May 2007 is not attributable to the proceeds of an illegal activity. 2. An order that the defendant is entitled to be paid the whole of the proceeds of sale of the defendant's interest in such property."

The present application 5 On 3 October 2008 the defendant filed a notice of motion in which various orders were sought. It is that notice of motion which is presently before the Court. The orders sought relate to:

(a) the making of provision for reasonable legal expenses pursuant to s 10(5) of the Act;

(b) alternatively, provision for reasonable legal expenses pursuant to the ancillary provisions in s 23(4) of the Act;

(d) the amendment of the notice of motion filed on 22 November 2007 in respect of the application pursuant to s 25;

(e) the fixing of a hearing date for the quantification of the proceeds assessment order. 6 The application for orders relating to the amendment of the notice of motion filed on 22 November 2007 in relation to s 25 of the Act (paragraph 5(d) above) was not pressed in the light of a concession by senior counsel for the plaintiff. The application for orders relating to the hearing of the plaintiff's proceeds assessment order (paragraph 5(e) above) was also not pressed.

Application for provision of reasonable legal expenses pursuant to s 10(5) of the Act 7 The defendant sought an order: "that the restraining order in this matter be varied to allow for the reasonable legal expenses of the applicant in defending these proceedings pursuant to s10(5) of the Criminal Assets Recovery Act 1990 to be paid from $430,000 cash restrained."

8 The defendant also sought a declaration that the reasonable legal expenses of the applicant include solicitor's costs in defending the proceedings, including those costs to retain an expert accountant, and counsel costs in defending these proceedings, including costs for senior and junior counsel. 9 The plaintiff opposed the order sought by the defendant. The plaintiff's submissions were directed solely to the question of whether the court had power to make the order sought. The defendant and his solicitor were not required for cross-examination on their affidavits and no submissions were made that if there was power to make the order sought the order and declarations should not be made. In particular it was not submitted the application should be refused on the basis of any of the restrictions in s 16A. 10 The Act provides: Section 10(5): "A restraining order may, at the time it is made or at a later time, make provision for meeting out of the property, or a specified part of the property, to which the order applies all or any of the following: (a) [reasonable living expenses] (b) subject to section 16A, the reasonable legal expenses of any person whose interests in property are subject to the restraining order, being expenses incurred in connection with the application for the restraining order or an application for a confiscation order, or incurred in defending a criminal charge." Section 16A of the Act imposes restrictions upon the making of an order for costs under s 10(5). It is unnecessary to detail those restrictions here.

A "confiscation order" is defined in s 4 of the Act as "means an assets forfeiture order or a proceeds assessment order." 11 As is apparent from its terms, s 10(5), for present purposes, is enlivened only where:

(b) the provision for reasonable legal expenses can be made out of the property to which the restraining order applies;

(d) there is evidence to justify the exercise of the discretion in favour of the defendant. 12 The plaintiff submitted s 10(5) was not enlivened as:

(b) the relevant interest in property was subject to a forfeiture order under s 22, there was no property to which the restraining order applied and out of which provision could be made for legal expenses. 13 The defendant submitted that as the forfeiture order had been stayed when made it had not taken effect, the property remained subject to the restraining order and an order could be made pursuant to s10(5). 14 There are thus two issues for determination namely:

(b) was the defendant's interest in property subject to the restraining order.

Was there a restraining order 15 "Restraining order" is defined in s 4 of the Act as "means an order made under section 10 and in force". 16 Section 10(9) of the Act provides: "After the first 2 working days of its operation, a restraining order remains in force in respect of an interest in property only while: (a) there is an application for an assets forfeiture order pending before the Supreme Court in respect of the interest; or (b) there is an unsatisfied proceeds assessment order in force against the person whose suspected serious crime related activities formed the basis of the restraining order; or (c) there is an application for such a proceeds assessment order pending before the Supreme Court; or (d) it is the subject of an order of the Supreme Court under section 20 (Effect on restraining order of refusal to make confiscation order)." 17 The plaintiff submitted, in essence:

(a) As the first two working days of the operation of the restraining order had passed the restraining order would be in force only if one or more of the matters in subsection 10(9)(a) - (d) was applicable.

(b) None of the matters referred to in subsection 10 (9) (a) - (d) was applicable.

(c) Subsection 10(9)(a) had no application as the application for an assets forfeiture order have been dealt with and the appropriate order made on the 28 May 2007.

(d) Subsection 10(9)(c) had no application as the application for a proceeds assessment order had been dealt with by the court and a proceeds assessment order for an amount to be assessed was made on 28 May 2007.

(e) Subsection 10(9)(b) had no application. The reasons were not articulated in submissions.

(f) Subsection 10(9)(d) had no application as no order had been made by the Supreme Court under s 20.

(g) There being no restraining order in force at the present time no order could be made under subsection 10(5). 18 Defendant's counsel initially accepted that none of the matters in subsection 10(9)(a)-(d) had application. Subsequently in his submissions the following exchange occurred: "Do you accept what Mr Temby has said in relation to 9(c) that an application for the proceeds assessment order is not pending even though it is yet to be quantified. Clarke: "I would say it would need to be quantified."

19 A proceeds assessment order is defined in s 4 as "means an order made under s 27 and in force". Section 27(1) provides: "The Commission may apply to the Supreme Court for a proceeds assessment order requiring a person to pay to the Treasurer an amount assessed by the Court as the value of the proceeds derived by the person from an illegal activity, or illegal activities, of the person or another person that took place not more than 6 years before the making of the application for the order, whether or not any such activity is an activity on which the application is based as required by subsection (2) or (2A)." 20 In this case the relevant order made on 28 May 2007 was that: "Judgment is to be granted to the plaintiff on its claim for proceeds assessment order against the defendant for an amount to be assessed". No amount has been assessed. 21 In order to be a proceeds assessment order as defined in ss 4 and 27(1) the order must, in my opinion, require a person to pay an amount assessed by the court. Until such amount is assessed the application for such a proceeds assessment order, in my opinion, remains pending before the court and subsection 10(9)(c) has application. 22 If I am wrong in that conclusion then the assessment order made by Studdert J on 28 May 2007 is unsatisfied and subsection 10(9)(b) has application.

Was the defendant's interest in property subject to the restraining order 23 The Act provides:

Section 10(4): When the Supreme Court makes a restraining order, the Court may, if it considers that the circumstances so require, order the Public Trustee to take control of some or all of the interests in property that are interests to which the restraining order relates". 24 The order made pursuant to s 10(4) of the Act on the 17 January 2006 resulted in the Public Trustee taking control of the defendant's interests in property pursuant to the restraining order see generally sections 21 and 12(1)9(d). 25 The defendant's submissions, in essence were:

(a) Section 23 of the Act provides: (1) "On an assets forfeiture order taking effect in relation to an interest in property: (a) the interest is forfeited to the Crown and vests in the Public Trustee on behalf of the Crown; and (b) if the person forfeiting the interest was in possession, or was entitled to possession, of the property, the Public Trustee may take possession of the property on behalf of the Crown." (2) An interest forfeited under subsection (1) is to be disposed of by the Public Trustee in accordance with the directions of the Treasurer and the proceeds are to be paid to the Treasurer and credited to the Proceeds Account." …

(b) The assets forfeiture order was made on 28 May 2007. It was stayed for a period of six months and if orders under s 25 or s 26 were made the stay was to continue until the disposition of the application for those orders. The application for an order under s 25 was made and has not yet been disposed of, the stay remains in force.

(c) The plaintiff conceded that the moneys had not been transferred to consolidated revenue and in that sense no forfeiture had occurred pursuant to the forfeiture order. Senior Counsel for the plaintiff stated "… a restraining order was made on 17 January 2006 and I mention that in that restraining order it was ordered that the Public Trustee take control of the interests of Mr Bazi and that property and that is where the money sits."

(d) As the forfeiture order had been stayed the moneys continued to be held pursuant to the restraining order made on 17 January 2006. Thus the court has power to make the orders and it would be appropriate to do so. 26 In NSW Crime Commission v Ibrahim [2002] NSWSC 791 Sperling J said at ([16]): "The orders made on 9 April 2001 included orders staying execution of the assets forfeiture orders for six months from the date on which they were entered. An order takes effect as of the date the orders were made: Pt 4 r 30 [sic SCR pt 40 r 3]. The orders staying execution served to prevent the Public Trustee from taking possession of and disposing of the property before 18 October 2001. The stay orders did not prevent the forfeiture orders from taking effect." 27 Rule 36.4(1)(a) of the Uniform Civil Procedure Rules 2005 is to similar effect to part 40 r 3 of the Supreme Court Rules in that it provides:

(a) as of the date on which it is given or made." 28 Thus, whilst the forfeiture order had effect by reason of the operation of the rules such effect was limited to e.g. providing a time for the operation of ss 25(4) and 26(4). The stay orders, whilst they continued in force, prevented the execution of the forfeiture order.

29 The concessions made by senior counsel for the plaintiff (see paragraph 25(c)) above confirm the defendant's interest in property continues to be held pursuant to the restraining order made on 17 January 2006.

30 In my opinion the court has power to make an order pursuant to s10(5) of the Act in the circumstances of this case and it is appropriate to make such an order.

Application for provision of legal expenses pursuant to the ancillary provisions in s 23 31 The defendant sought: "An order that the forfeiture order in this matter, as currently stayed, be varied to allow for the reasonable legal expenses of the applicant in defending these proceedings pursuant to s23(4) of the Criminal Assets Recovery Act 1990 to be paid from $430,000 cash proposed to be forfeited." 32 Section 23(4) of the Act states: "The Supreme Court may, when it makes an assets forfeiture order or at any later time, make any ancillary orders that the Court considers appropriate. For example, the Court may make ancillary orders for and with respect to facilitating the transfer to the Crown of interests in property forfeited to the Crown under such an order." 33 In Koala Motels Pty. Limited v. Chief Licensing Inspector (1977) 18 ALR 12 at 14 Muirhead J said: "Generally speaking, "ancillary" orders of their nature are supplementary or incidental to the main relief or principal relief granted." 34 The defendant submitted "legal expenses incurred in excluding from restraint are, in the circumstances of stayed forfeiture orders, ancillary to forfeiture." 35 The plaintiff submitted that to make a legal expenses order would be inconsistent with the forfeiture order which had been made and would not be ancillary thereto. The example contained in s 23(4) is clearly an ancillary order as it facilitates the forfeiture order. It would be inapposite to so describe costs orders. 36 In my opinion it is doubtful that the costs orders sought could be made under the ancillary order power in s 23(4). I agree with senior counsel for the plaintiff that the example contained in s 23(4) illustrates that the type of ancillary order contemplated by the legislature was one which facilitated the forfeiture order and that it would appear inapposite to so describe a costs order. Furthermore the restrictions in s 16A would have no application if the costs order was not part of the restraining order. The scheme of the Act is such that it is probable that power to make provision for legal expenses is limited to the power conferred expressly by s 10(5) of the Act. However it is unnecessary for me to express a concluded opinion on this question having regard to my conclusion that the defendant is entitled to the orders sought pursuant to s 10(5).

The grant of leave to make application pursuant to s 26 of the Act 37 The defendant sought leave to amend the notice of motion filed on 22 November 2007 to include an application pursuant to s 26 of the Act. 38 Section 26(1) of the Act provides: "If it is proved that it is more probable than not that a specified proportion of the value of an interest in property that has been forfeited under an assets forfeiture order is not attributable to the proceeds of an illegal activity, the Supreme Court may: (a) make a declaration to that effect, and (b) order that the person who has forfeited the interest is entitled to be paid the proportion of the proceeds of sale of the interest that is specified in the declaration." 39 Section 26(4) of the Act provides: "(4) After an assets forfeiture order has been made, an application for an order under this section may not be made by a person: (a) if the person was given notice of the proceedings that led to the assets forfeiture order - unless it is made within 6 months after the assets forfeiture order took effect and leave to apply has been granted by the Supreme Court, or (b) in any other case - unless it is made within 6 months after the assets forfeiture order took effect or the Supreme Court has granted leave to apply after that time." 40 It was common ground for the purpose of this aspect of the application that an assets forfeiture order was made on 28 May 2007; the defendant was given notice of the proceedings that led to the assets forfeiture order; and that leave to apply under s 26 was granted by this court on 28 May 2007 in the following terms: "Leave is granted to the defendant to apply for orders under s 25 and/or s 26 of the statute within six months after the assets forfeiture order takes effect."

and that no express application pursuant to s 26 was made pursuant to such leave. 41 The plaintiff submitted that the forfeiture order took effect on 28 May 2007 and accordingly the defendant would be out of time to bring an application under s 26 and leave to amend the application under s 25 to include an application under s 26 should be refused as it would be futile. 42 The defendant submitted that, by reason of the stay, the forfeiture order had yet to take effect, the application to amend was competent and should be allowed as there was no prejudice to the plaintiff. Alternatively the defendant submitted that as the application under s 25 was brought within time that application should be extended to include an application under s 26. 43 I do not accept the submission that the forfeiture order has not taken effect for the purpose of establishing the commencement of the period specified in ss 25(4) and 26(4). 44 However the defendant, within time, has brought an application under s 25 of the Act in respect of the whole of his interest in the property. It may be that such an application would permit the court to make an order in respect of a lesser interest if the evidence fell short of establishing an entitlement to the whole sum. I consider the issue arguable and accordingly will permit the defendant to amend the application under s 25 to include an application under s 26.

Orders 45 (1) The restraining order in this matter be varied to allow for the reasonable legal expenses of the defendant / applicant in defending these proceedings pursuant to s 10(5) of the Criminal Assets Recovery Act to be paid from $430,000.00 cash restrained. Such costs to include solicitors costs, the reasonable costs of retaining an expert accountant and counsel's fees including fees for senior and junior counsel.

(2) I grant leave to amend the notice of motion filed 22 November 2007 so as to seek the following prayers: (a) Leave, if necessary, be granted to the defendant/applicant to make application pursuant to s 26 of the Criminal Assets Recovery Act 1990. (b) A declaration that pursuant to s 26(1)(a) of the Criminal Assets Recovery Act 1990 it is more probable than not that a specified proportion (as determined by the Court) of the $430,000 seized from Tavelex Ltd is not attributable to the proceeds of an illegal activity. (c) An order that pursuant to s 26(1)(b) of the Criminal Assets Recovery Act 1990 that the proportion specified and declared by the Court at (b), above be paid to the defendant/applicant. (d) An order that any interest accumulated on that proportion specified in (b) above be paid to the defendant/applicant.

(3) The plaintiff is to pay the defendant's costs of this application.

(4) The proceedings will be listed before the Registrar on 6 March 2009 for directions.

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.

CITATION : New South Wales Crime Commission v John Bazi [2009] NSWSC 88

CASES CITED : Koala Motels Pty. Limited v. Chief Licensing Inspector (1977) 18 ALR 12 NSW Crime Commission v Ibrahim [2002] NSWSC 791

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