NEW SOUTH WALES CRIME COMMISSION v. KEEN [2005] NSWSC 1151

NEW SOUTH WALES CRIME COMMISSION v. KEEN [2005] NSWSC 1151 - NSWSC 2005 case summary — Zoe

[12]

1 HIS HONOUR: The applicant, Sam Masri, has brought proceedings seeking orders excluding an interest which he claims in a 60 foot Ramsey motor cruiser registration number MD9890 from the operation of a forfeiture order made pursuant to s.22 of the Criminal Assets Recovery Act 1990 (NSW). It is claimed that his interest in the motor cruiser is to the value of $64,000. 2 The applicant initially proceeded by way of notice of motion filed on 17 August 2005 which was supported by an affidavit by Mr. Masri sworn on 16 August 2005. An amended notice of motion was filed on 12 September 2005 in which, inter alia, an order was sought that:- "The applicant be granted leave to apply for an order pursuant to ss.12, 25 and 26 of the Criminal Assets Recovery Act 1990." 3 The New South Wales Crime Commission, named as first respondent to the amended notice of motion, opposes the relief sought by Mr. Masri in the proceedings. On 6 September 2005, the Commission filed a notice of motion, the purpose of which was to raise, as a separate question, the threshold issue as to whether or not Mr. Masri has standing to bring and competently proceed with his application under the Criminal Assets Recovery Act. The separate question raised in the Commission's notice of motion was refined in a document entitled "separate question for decision" which is in the following terms:- "The court decide pursuant to UCPR r.282.2, separately from and prior to all other questions, whether in the circumstances of the case the court can grant the applicant relief under:- (a) s.12 of the Criminal Assets Recovery Act 1990; (b) ss.25 and 26 of the Act; and (c) UCPR r.36.16 and accordingly whether the applicant has standing to and can competently bring an application seeking the relief sought in the amended notice of motion." 4 The Commission's notice of motion is supported by the affidavit of Jonathan Lee Spark, certified practising accountant, and who is employed by the Commission sworn 6 September 2005. 5 Before dealing with the circumstances that led to the making of a restraining order pursuant to s.10(1) of the Act and the forfeiture order in question, I set out below relevant provisions of the statutory scheme established by the Act.

[13]

Relevant statutory provisions of the Criminal Assets Recovery Act 6 The preamble to the Act records the purposes of the Act as including the following:- "An Act to provide for the confiscation of interests in property that are interests of a person engaged in serious crime related activities; to enable proceeds of serious crime related activities to be recovered as a debt due to the Crown; and for other purposes." 7 The Act contains six parts, Parts 1, 2, 3, 4, 4A and 5. In considering the issues raised by the Commission's application, the relevant provisions of the Act are those examined below and which are to be found in Parts 1 - Preliminary, Part 2 - Restraining Orders and Part 3 - Confiscation (in particular, Division 1 - Assets Forfeiture Orders). 8 Section 3 of the Act sets out its principal objects. These include:- "(a) to provide for the confiscation, without requiring a conviction, of property of a person if the Supreme Court finds it to be more probable than not that the person has engaged in serious crime related activities; and (b) to enable the proceeds of serious crime related activities to be recovered as a debt due to the Crown; …" 9 Section 7 is a key provision in the Act. It specifies the meaning of the statutory phrase "interest in property". That expression is employed in provisions of the Act that are central to the issues here to be determined. 10 In the present matter, as discussed in greater detail below, both a restraining order and a forfeiture order was made. On the Commission giving the usual undertaking as to damages and having regard to the matters contained in the affidavit of Mr. Spark sworn 13 January 2005, the court made the requisite finding and on that basis orders pursuant to s.10. The latter operated with respect to property identified in a schedule to the orders which included the motor cruiser in question. The relevant order in that respect provided:- "1. Pursuant to s.10 of the Criminal Assets Recovery Act 1990, that no person (other than any registered mortgagee dealing with its right to do so under the registered mortgage) 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 s.7 of the Criminal Assets Recovery Act 1990 of Lloyd Norman Keen, including the interests in property and the property described in Part One of the Schedule hereto." 11 On 13 May 2005, consent orders were made pursuant to s.22 of the Act between the Commission and Lloyd Norman Keen. The orders contained a schedule, Part 2 of which identified the Ramsey motor cruiser. They record the making of the restraining order on 13 January 2005 and, in paragraph 2, noted:- "The defendant warrants to the plaintiff that the defendant's only interest in property as at the date of the signing of these orders are the defendant's interest in the property specified in the Schedule hereto." 12 The consent orders then record, by consent and without admissions, particular orders including order 7, which was in the following terms:- "7. Pursuant to s.22 of the Act, the interest in property of the defendant in the property specified in Part One and Part Two of the Schedule hereto be forfeited to, and vest in the Crown ('the assets forfeiture order')."

[14]

Separate determination of questions 13 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: Uniform Civil Procedure Rules 2005, Part 28, rule 4. 14 By Part 28, rule 4, where a decision of a question under Division 2, Separation of Questions, disposes of the proceedings or of the whole of the proceedings or renders unnecessary any trial or further trial in the proceedings, the court may, as the nature of the case requires, dismiss the proceedings or give any judgment or make any other order: Part 28 Rule 4(1) and (2). 15 I am of the opinion that the question as to Mr. Masri's standing to seek an exclusion order under s.25 of the Act or, alternatively, relief under s.12(1) of the Act is one that may be appropriately determined pursuant to the Uniform Civil Procedure Rules abovementioned and should in fact be separately determined from the other issues raised in Mr. Masri's amended notice of motion. 16 On the application, the Commission relied upon the affidavit of Mr. Spark sworn 6 September 2005 and Mr. Masri's affidavit sworn 16 August 2005 was also read on the application. Mr. Masri's affidavit was admitted on a limited basis, namely, for the purpose, as explained by Mr. I.D. Temby, QC., who appeared on behalf of the Commission, "… in order to provide the court with knowledge as to that which would be urged on the other side if a substantive hearing went ahead" (t.1, 15 September 2005). Accordingly, it was agreed that the affidavit evidence of Mr. Masri, would be used simply for defining what the argument would be if there was a substantive hearing of the application, Mr. Temby observing that, if the matter proceeded to a final hearing, there would be certain matters raised in the affidavit which would be strongly in dispute. 17 Mr. Masri's affidavit attaches as Annexure A the consent orders made on 13 May 2005 to which I have already referred. In paragraph 3 of his affidavit, Mr. Masri states that in 2003 and 2004 he lent the second respondent, Lloyd Norman Keen, various sums of money between 20 June 2003 and 22 November 2004, particulars of which are set out in the affidavit totalling in all $64,000. Mr. Masri also attaches copies of ANZ Bank statements which he claims record the amounts lent by him to Mr. Keen. 18 Mr. Masri states in his affidavit (paragraph 4) that on 3 December 2004 he entered into an agreement with Mr. Keen "… in consideration of the monies loaned by me, the said Lloyd Norman Keen agreed to sell his motor cruiser to me in full payment of the debt owed to me". 19 Mr. Masri annexed (Annexure C) to his affidavit a copy of what he says is the Deed of Sale between him and Mr. Keen. The Deed is in the following terms:- "This agreement is between parties as detailed below:- 1. Mr. Lloyd Norman Keen 2. Mr. Sam Masri In consideration of monies lent by Mr. Sam Masri to Mr. Lloyd Keen over an extended period of time, namely the past four years. It is agreed as follows:- Mr. Lloyd Keen agrees to sell his boat registration number __________ to Mr. Sam Masri as full payment of debts accrued by Mr. Lloyd Keen from Mr. Sam Masri." 20 The document contains the names of Mr. Keen and Mr. Masri and handwritten signatures appear above each name. 21 The reference in the Deed of Sale to the lending of monies over the past four years does not correlate with Mr. Masri's statement in paragraph 3 of his affidavit as to the specific dates in 2003 and 2004 in which he said such monies were advanced by loan to Mr. Keen. However, this is not a matter which is relevant to the separate question determination.

[17]

(b) Asset forfeiture orders 24 By s.22(1), the Commission is permitted to apply to the Supreme Court "… for an order forfeiting to and vesting in, the Crown all or any of the interests in property that are, or are proposed to be, subject to a restraining order when the assets forfeiture order takes effect". (emphasis added) 25 Section 22(2) provides that the Supreme Court must make an assets forfeiture order if the court makes a finding in terms of s.22(2), namely that:- "It is more probable than not that the person whose suspected serious crime related activity, or serious crime related activities, formed the basis of the restraining order and was, at any time, not more than six years before the making of the application for the assets forfeiture order engaged in:- (a) a serious crime related activity involving an indictable quantity, or (b) a serious crime related activity involving an offence punishable by imprisonment for five years or more." 26 See also s.22(2A) - interests in property that are fraudulently acquired property - that is, also illegally acquired property. 27 Importantly, s.22(4) provides that when an assets forfeiture order is made, "it must be made so as to apply to specified interests in property". 28 It is important in this respect to observe that an assets forfeiture order is not made in respect of identified property. Rather it is made in respect of interests in property which, as earlier observed, takes its meaning from the provisions of s.7(1) and (2) of the Act. 29 Section 23(1) provides, inter alia, that on an assets forfeiture order taking effect in relation to an interest in property, that the interest is forfeited to the Crown and vests in the Public Trustee on behalf of the Crown. 30 As Badgery-Parker, J. observed in New South Wales Crime Commission v. Young (unreported 10 August 1992), at p.6, the apparently draconian nature of the provisions governing the making of restraining orders (and the same would apply to the making of forfeiture orders), is somewhat ameliorated by the provisions of ss.24 and 25 relating to exclusion orders. Accordingly, under s.24, where a person who is a dependent as defined in the section, satisfies the Supreme Court that an assets forfeiture order will operate to cause hardship to any dependent of the person who will forfeit an interest in property under the order, the court may make an order that the dependent is entitled to be paid a specified amount out of the proceeds of sale of the interest as well as making ancillary orders as specified in the section. 31 Section 25 specifically authorises the making of exclusion orders and is of particular relevance to Mr. Masri's application. Section 25 is accordingly reproduced in full below:- "25(1) If an assets forfeiture order:- (a) has been applied for but not made - a person whose interest in property might be subject to the order if made, or (b) has been made - a person whose interest in property was forfeited by the order, may apply to the Supreme Court for an order (in this section called an exclusion order ) excluding the interest from the operation of the assets forfeiture order or any relevant restraining order. (2) The Supreme Court must not make the exclusion order applied for unless it is proved that it is more probable than not that:- (a) in the case of an order relating to fraudulently acquired property - the interest in property to which the application relates is not fraudulently acquired property or is not illegally acquired property, or (b) in any other case - the interest in property to which the application relates is not illegally acquired property. (3) An exclusion order must declare the nature and extent of the interest in property to which it relates and:- (a) if the interest has been forfeited to the Crown, but not disposed of - must require the Crown to vest the interest in the claimant, or (b) if the interest has been disposed of - must require payment by the Crown to the claimant of an amount declared by the Supreme Court to be the value, as at the date of the order, of the former interest of the claimant. (4) After an assets forfeiture order has been made, an application for an exclusion order may not be made by a person:- (a) if the person was given notice of the proceedings that led to the relevant restraining order or assets forfeiture order - unless it is made within six 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 six months after the assets forfeiture order took effect or the Supreme Court has granted leave to apply after that time. (5) Notice of an application for an exclusion order is to be given to the Commission and any other person required by the regulations to be given notice and a person entitled to be given notice may appear, and adduce evidence, at the hearing of the application. (6) The applicant for an exclusion order must give the Commission notice of the grounds on which the exclusion order is sought. (7) If the Commission proposes to contest an application for an exclusion order, it must give the applicant notice of the grounds on which the application is to be contested. In such a case, the Commission is not required to give the applicant notice of those grounds, and the application must not be heard, until the Commission has had a reasonable opportunity to conduct an examination of the applicant under s.12." 32 Mr. Masri's application is to be considered in terms of s.25(1)(b), an assets forfeiture order having been made. It is accordingly necessary for him to demonstrate that he is, in terms of that provision a person whose interest in property was forfeited by the order …". 33 In Young (supra), the application with which Badgery-Parker, J. was concerned was an application pursuant to s.25(1)(a), but that distinction is not a relevant one in the present matter which, as I have stated, falls under the provisions of s.25(1)(b). The observations of Badgery-Parker, J. on the operation of the provisions of s.25 are directly relevant to the point in issue. 34 In the present matter, a forfeiture order having been made, it is incumbent upon Mr. Masri to demonstrate that he is within the class of persons designated by the provisions of s.25(1)(b). It is appropriate at this point to record the observations of Badgery-Parker, J. in Young (supra) at p.8 as follows:- "It is at this point, I think that the applicants' argument must fail. An assets forfeiture order may only be made in relation to 'all or any of the interests in property that are subject to the restraining order'. Therefore, no interest in property can be subject to the assets forfeiture order except such interests in property as are subject to the restraining order. The restraining order in this case is made in respect of interests in property of Young, not interests in property of White or Otten. It is not a case where the restraining order was made in respect of their interests in property pursuant to s.10(3)(b). The submission of the applicants seems rather to equate the words in s.25(1)(a), 'might be subject to the order if made' as meaning, 'might be affected by the making of the order if made'. In my view the words of the section are quite clear and are not capable of carrying the meaning contended for. There may well be, as the applicants' submissions point out, good reason why the legislature should have seen fit to include in s.25 provision for an application to be made by persons who have interest in the same property as a person in respect of whose interests in property a restraining order has been made; but the legislature has not attempted to do that." 35 In that case, Badgery-Parker, J. held that the applicants were not persons upon whose application an exclusion order s.25 might be made. 36 I have carefully considered the argument that has been ably put on behalf of Mr. Masri by Mr. S.M. Kettle of counsel, who sought to distinguish the approach taken in Young (supra). However, having done so, I am of the view that the contention made on behalf of Mr. Masri seeks, in effect, to treat the words in s.25(1)(b) "a person whose interest in property was forfeited by the order" as being equivalent to "a person whose interest in property has been affected by the order". For the same reasons advanced by Badgery-Parker, J., that is not a permissible construction, given the clear and intractable terms in which the provisions of s.25(1)(b) are expressed. 37 I have had my attention drawn to the later decisions of this court in Black Uhlans Incorporated v. State of New South Wales & Anor (McInerney, J., unreported 5 December 1996) and New South Wales Crime Commission v. Greer [2000] NSWSC 363 (Simpson, J.). It is unnecessary here to refer to each of those decisions as the essential point in each case proceeded upon the same basis enunciated by Badgery-Parker, J. (see in this respect Black Uhlans at p.7 and Greer at [13]). 38 On this basis, it is, in my opinion, plain that as a matter of statutory construction Mr. Masri does not have authority or standing to proceed under s.25 of the Act for an exclusion order, excluding the interest he claims from the operation of the assets forfeiture order made on 13 May 2005. On the same basis and reasoning, Mr. Masri does not have standing under s.26 of the Act.

[18]

The ancillary order provisions in s.12, Criminal Assets Recovery Act 39 Mr. Kettle on behalf of Mr. Masri has also sought to argue that the relief his client seeks is available by reason of the ancillary order provisions contained in s.12 of the Act. In his written submissions on behalf of Mr. Masri (14 September 2005, paragraph 10), it is contended that Mr. Masri has standing under s.12 "… as it permits the Supreme Court to make orders that it considers appropriate at any time after it has made a restraining order. A restraining order was made on 13 January 2005". 40 In support of the submission that s.12 is available to Mr. Masri for the purposes of the relief he seeks, reliance was placed upon the judgment of Adams, J. in New South Wales Crime Commission v. Gardner [1999] NSWSC 1210. 41 It is to be observed, firstly, that s.12 falls within the provisions of Part 2 - restraining orders. As noted earlier, assets forfeiture orders are the subject of a different part of the legislation, namely, Part 3 - Confiscation, in particular, Division 1 - assets forfeiture orders. As also noted in the discussion of s.22 above, s.22(1) authorises the commission to seek an order forfeiting interests in property "that are, or are proposed to be subject to a restraining order when the assets forfeiture order takes effect". 42 Mr. Temby, QC., on behalf of the Commission, contended that by s.12, orders ancillary to restraining orders may be made, including orders varying the interest in property to which the restraining order relates, but that that can only be done when a restraining order is in force and not, as in the present case, after an assets forfeiture order has been made. 43 Reliance was placed in argument upon the provisions of s.23(4). It is to be observed that that provision empowers the Supreme Court, when it makes an assets forfeiture order, or at any later time, to make any ancillary orders that the court considers appropriate. The Commission's submission was that that provision cannot include orders that declare that forfeited interests in property are, wholly or partly, not illegally acquired property. The only provision in that respect is made by ss.25 and 26 and such orders can only be sought by the person whose interest in property has been forfeited. 44 In Gardner (supra), Adams, J. stated:- "I do not consider that the 'ancillary orders' to which s.12(1) refers means ancillary only to the restraining order. This is made clear by the language concerning both the time ('at any later time') and the character of the order, which must be ancillary but may affect a person whose interests are subject to restraint. Rather, I consider they are ancillary to proceedings undertaken pursuant to the Act and accordingly ancillary to proceedings under s.22 where an application for forfeiture is made and also to proceeding under s.25. Since the continuing existence of the restraining order is a necessary pre-condition to the application for a forfeiture order under s.22 of the Act, I consider that whether it should continue is ancillary to proceedings under s.22 and, if it were necessary for me to so decide, ancillary to the order made under s.10." 45 I, with very great respect, am of the opinion that the ancillary order provisions in s.12(1) do not operate to vest either jurisdiction or power in the court to vary or alter the effect of a forfeiture order. I so conclude, having regard to both the provisions of s.12 itself and contextually to the restricted provisions contained in Part 3 of the Act governing the making of exclusion orders to assets forfeiture orders. I briefly state the basis for the conclusion I have expressed:-

[26]

Power to set aside or vary judgment 47 It was submitted on behalf of Mr. Masri that the court's power to set aside or vary a judgment or order conferred by the provisions of Part 36 Rule 16 of the Uniform Civil Procedure Rules 2005 is available in respect of the assets forfeiture order made by the court. Specifically the submission was put that as Mr. Masri was not a party when the forfeiture order was made, he seeks to be made a party and seeks a variation of the orders on what was stated to be the fundamental principle that he was likely to be and has been adversely affected by the orders and has a right to be heard. 48 The submission on behalf of Mr. Masri in this respect (written submissions 14 September 2005, paragraph [27]) was not developed by argument. I do not consider that the general power of the court contained in Part 36 Rule 16 is available to seek orders in the nature of exclusion orders when the same are not authorised or provided for in the Criminal Assets Recovery Act 1990. 49 The forfeiture orders in the present matter, as earlier noted, were consent orders made between the Commission and Mr. Keen and they were made under and in accordance with the provisions of s.22 of the Criminal Assets Recovery Act. The statutory scheme in question, which includes those provisions, are directed specifically to specified interests in property and forfeiture orders may be made in respect of them without any requirement for the parties to the orders to discover or disclose whether or not other interests in property are held by third parties. In those circumstances, the general power contained in Part 36 Rule 16 is not, in my opinion, available to override or negate the specific provisions of Part 3 of the Act which effectively operate in the manner of a code for the confiscation of property used in or in connection with the commission of offences against laws of the State. 50 I accordingly turn to answer the separate question for decision pursuant to Part 28, Rule 4 of the Uniform Civil Procedure Rules 2005. 51 In formal answer to the question as to whether, in the circumstances of the case the court can grant the applicant (Mr. Masri) relief under:-

At a glance

Court

Decision date

Before

Source

Judgment (29 paragraphs)

Legislation Cited (2)

Cases Cited (5)

Cited By (3)