New South Wales Crime Commission v Tran

Consent Orders

1. The proposed consent order is signed by Mr Tran, his solicitor and the legal representatives of the Commission. The form runs to 7 pages, but the principal relief agreed upon is contained, so far as has been the subject of argument before me, in the following proposed orders: 13. Leave is granted to the Plaintiff to amend its summons to seek an order pursuant to section 22 of the Act forfeiting to, and vesting in, the Crown the interests and property of the First Defendant in property specified in Schedule One and Schedule Four hereto. 14. Pursuant to section 22 of the Act the interest in property of the First Defendant in the property in Schedule One hereto and Schedule Four hereto be forfeited to, and vest in, the Crown. 15. The application for a proceeds assessment order is dismissed.
2. Recitals which the Commission and Mr Tran ask me to "note", record that Mr Tran asserts no interest in the property specified in Schedule 4, whilst the Commission asserts that he does. Schedule 4 mainly lists property registered or held in the name of other family members, including Mrs Tran (see [6] above). No order is sought in respect of Mr Tran's interest in real property described in Schedule 3 of which he is a registered proprietor as joint tenant with one of his sisters. Nor is any order sought in respect of 13 items of property described in Schedule 2 including, what I will refer to as, the former family home. Mr Bhalla of Counsel, who appeared for the Commission, explained that "the Schedule 2 property … was carved out for the sole purpose of providing for the first defendant's dependants … that property will be available in due course to be dealt with" in the federal jurisdiction (6.15 - .25T). No mention was made of the Schedule 3 property. Perhaps there are practical difficulties in giving effect to s 23 of the Act in respect of an interest as a joint tenant in real property located interstate. On the other hand, it may be that the Commission is satisfied Mr Tran's interest in that property is not caught by the Act.
3. Mr Boulten SC appeared for Mr Tran to support the Commission's position. Understandably, Mr Tran is desirous of achieving finality in these proceedings, to avoid further legal costs.

Legal basis for consent orders

1. In asking the Court to make the orders the Commission and Mr Tran rely upon s 62 of the Act which is in the following terms: Orders made by consent (1) The Supreme Court may, on the application of the Commission and with the consent of all persons whose interest in property will be subject to an order under this Act, make that order by an order under this section (a consent order) that gives effect to the terms of an agreement negotiated between the Commission and any one or more persons whose interest in property will be subject to the order under this Act. (2) A consent order may be made by the Supreme Court without consideration of the matters that the Supreme Court would otherwise consider before making the order. (3) In particular, and without limiting subsection (2), the Supreme Court is not required to consider the matters set out in section 16A in making a restraining order by consent order that makes provision of the kind referred to in section 10B (3) (b). (4) A confiscation order may only be made by consent order if the Commissioner for the Commission certifies that any guidelines with respect to the negotiation of the terms of agreements with respect to the making of consent orders given under section 57 (Directions and guidelines to Commission) of the Crime Commission Act 2012 have been fully complied with. I record that the Commissioner has provided the Certificate required by s 62(4).

The contentions of the parties

1. The Commission argues that Mrs Tran has no standing to be heard in relation to the application for the making of the consent orders because, given the form of the orders sought, she is not a person "whose interests in property will be subject" to the order.
2. Mr Bates of Counsel, who appears for Mrs Tran, objects to forfeiture orders being made which affect 10 items of property contained in Schedules 1 and 4. He has provided the following table summarising the matters in dispute. From the references to Mr Youssef's affidavit, I understand that Mrs Tran "seeks an exclusion order under ss 25 and 26, or hardship relief under s 24 of the Act".
3. Mr Bates argues that the interest of his client in property referred to in the Schedules does not depend upon any exercise of her statutory right to have the Federal Circuit Court alter general law property rights under s 79 FLA. Rather, Mrs Tran assets "traditional caveatable interests" (5.10T) and circumstances creating an equitable interest by way of proprietary estoppel (5.15T) or perhaps a constructive trust.
4. The Commission argues that Mrs Tran has no standing to seek an exclusion order and that hardship orders under s 24 of the Act can be made after the forfeiture order has taken effect: New South Wales Crime Commission v Kelly [2003] NSWCA 245; 58 NSWLR 71 at 76 [24] by Sheller JA; Santow and Tobias JJA agreeing.

Consideration

1. Section 62 (in its present form) was inserted on the enactment of the Crime Commission Act 2012 (NSW) (Schedule 5.2 [13]), the key phrase "all persons whose interests in property will be subject to an order" employs language broadly similar to s 25(1)(a): "a persons whose interests in property might be subject to the order if made" (s 25 deals with exclusion orders). This phrase and the expression "a person whose interest in property was forfeited by the order" in s 25(1)(b) have been given a surprisingly narrow meaning by a series of cases in the Common Law Division, all decided before the significant amendments made by the Criminal Assets Recovery Amendment Act 2009. The various decisions were examined by Hall J in New South Wales Crime Commission v Keen [2005] NSWSC 1151; 64 NSWLR 515, discussed by Basten JA in New South Wales Crime Commission v Ollis [2006] NSWCA 76; 65 NSWLR 478 at 467 [26]; 497 [80] and 499 [88] (the other members of the Court Mason P and Giles JA did not refer to the issue). The issue is a significant one, for as Basten JA said in Liu v New South Wales Crime Commission [2007] NSWCA 347; 179 A Crime R 58 (in a judgment with which Mason P and Tobias JA agreed), (at [15]): Whether there is any scope for the innocent owner to recover his or her property absent an application under s 25 … was the subject of consideration in [Ollis], which rejected the availability of such a process: at [35] (Giles JA, Mason P agreeing). When Ollis was decided, the power to make an assets forfeiture order under s 22 of the Act was limited to "interest in property that is, or proposed to be, subject to a restraining order". Section 22 was freed from that constraint by the 2009 amendments: s 22(1B).
2. Returning to Justice Hall's decision in Keen, the issue was whether a person, I will usual neutral language, not being a person against whom a forfeiture order had been made, had standing to bring and maintain an application for an exclusion order, in this case after the forfeiture order had been made i.e. under s 25(1)(b), as it then stood. Hall J made the following observations which remain apposite to the legislation in its current form (520 [27] - 521 [29]): [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. (original emphasis.) His Honour's observation at [28] was also made by Basten JA in Liu at [8]. It was necessary for the plaintiff in Keen to show that he was "a person whose interest in property was forfeited" by the forfeiture order. In deciding the point against him, Hall J commenced his analysis by reference to the decision of Badgery-Parker J in New South Wales Crime Commission v Young (10th August 1992, unreported), that case was concerned with s 25(1)(a). Badgery-Parker J pointed out that the forfeiture order was proposed to be made only in respect of the interest in property of a named person who was not the applicant for the exclusion order. His Honour said: 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.
3. By parity of reasoning, Hall J decided that words "a person whose interest in property is forfeited" were not the equivalent of "a person whose interest in property has been affected": 523[36]. His Honour pointed out that the same approach had been followed in Black Uhlans Inc v State of New South Wales (McInerney J, 5th December 1996, unreported) and New South Wales Crime Commission v Greer [2000] NSWSC 363; 112 A Crim R 461 by Simpson J. Although not referred to Badgery-Parker J's decision by counsel, her Honour adopted the same approach at 464 [13].
4. In Ollis at 496 [77] Basten JA said: As Hall J noted at [27], an assets forfeiture order may only be made "so as to apply to specified interests in property": s 22(4). It is at least doubtful that an order could validly be made which identified a piece of land or an item of personal property and specified that which was the subject of forfeiture (or indeed a restraining order) as "the defendant's interest in" such land or other property. The difficulty said to attend Mr Masri's application was that, for the purposes of s 25, the only person who could seek an exclusion order was "a person whose interest in property was forfeited by the order". Because the order in terms only forfeited Mr Keen's interest, Mr Masri had no standing. (It may be noted by way of comparison that the equivalent provision in the Proceeds of Crime Act (Cth), considered in Woodcroft, allowed any person "having an interest in the property" to apply to the Court "for a variation of the order to exclude the person's interest from the order": s 48(3)(c).) And at 497 [80] his Honour said: The problem identified in Keen highlights the need for the Commission to identify with precision the interests in property with respect to which it seeks a restraining order and an assets forfeiture order. If it asserts that only the identified defendant has an interest in the property, it should seek an order in relation to "all interests" in the identified property. In every other case, the interest must be described with sufficient precision for it to be a "specified interest". Where the interest is identified as the interest of a named person in a piece of land of which the named person is the sole registered proprietor, it may perhaps be inferred that the interest sought to be identified is the freehold estate.
5. Ollis was decided before the 2009 amendments, when there was a necessary connection between a restraining order and a forfeiture order. Basten JA dissented from the majority in Ollis by holding that redress would be available under s 12. However at 499 [88] his Honour said: There is a separate question which arises in relation to the availability of relief to someone who is not a party to proceedings under the Act, but who asserts an interest in property which appears to have been identified as an interest of a defendant. As appears from Keen, assets forfeiture orders are sometimes made by consent. It is not hard to imagine cases in which a defendant will be willing to consent to, or at least not challenge, an order sought by the Commission, even though he or she knows that a third party might well seek to assert an interest in the property if given an opportunity. However, the availability of relief to a third party does not arise in the present case as each of the applicants for relief is a defendant in the proceedings and is subject to a restraining order. (Emphasis added.)
6. I understand the concluding sentence of that passage to relate to his Honour's view that s 12 may be called in aid of a party to the proceedings against whom a restraining order has been made. With respect, that seems to have been the gravamen of his Honour's dissent and that avenue is foreclosed by the majority decision. But as will be seen that Mrs Tran is a party to these proceedings is matter of particular significance.

Decision on standing to challenge the Consent Orders

1. Section 62 was enacted to make clear the Court's power to pronounce orders by consent. It might be said that there was really little doubt: see International Finance Trust Company v New South Wales Crime Commission (No 2) [2010] NSWCA 46 at [64] - [65]; compare Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at [63].
2. The question about the validity of forfeiture orders raised by Basten JA in Ollis (at 497[80]) did not arise in International Finance Trust (No 2); that case concerned a proceeds assessment order in a specified sum. The language of s 62(1) "All persons whose interests in property is subject to an order" may also be contrasted with the requirements of s 29(3) relating to certain enforcement orders. This provision refers to: (a) the person against whose interest in property the order is sought; (b) any other person who the Commission has reason to believe may also have an interest in the property; and (c) any other person who claims an interest in the property.
3. Given the line of cases commencing with Young, I am constrained to the view that the expression "all persons whose interest in property will be subject" to a proposed consent order does not mean "all persons whose interest in property may be affected" by a proposed consent order. The legislature may be taken to have been aware of the Young line of cases; it may be said that it deliberately adopted like language to achieve a like result. The provisions of s 29(3) also demonstrate that the legislature was aware that persons whose interests are not subject to the order may claim an interest that could be adversely affected by the making the order. Yet no specific provision was made in s 62 to allow them to be heard before consent orders are made. Only those whose interests will be subject to the order are entitled to be heard about the making of a consent order. I will return to the question of whether her claimed interest is subject to the form of consent orders proposed.

Is there a general law right to be heard?

1. As I have said, it is of particular significance that Mrs Tran is party to the proceedings. In Thomson Australian Holdings Pty Ltd v Trade Practices Commission at [163], (as Basten JA pointed out in International Finance Trust (No 2) at [64]), a plurality of four Justices of the High Court said: "a party to the proceedings is entitled to argue that any order made by the Court should conform to legal principle", at least when their legal position may be affected by the orders.
2. Under the general law a court of record, especially a superior court, has "an overriding power to control its own proceedings and [is] not obliged to act upon [a] request by some of the parties before it that consent orders be entered": James Hardie & Co v Seltsam Pty Ltd [1998] HCA 78; 196 CLR 53 at 62 [17]; RD Werner & Co Inc v Bailey Aluminium Products Pty Ltd (1988) 18 FCR 389 at 392 - 393. In my view s 62 of the Act does not displace this general law rule. Rather, its purpose, in part, is to confirm the conformity of the Court's powers in matters arising under the Act to its general law powers as a superior court of record. Moreover, as s 62(3) makes clear, another purpose was to overcome the specific decision of this Court in NSW Crime Commission v Cook [2011] NSWSC 1348; 82 NSWLR 1 (Hall J) requiring the Court to satisfy itself that the provisions of s 16A were complied with before making an order for the payment of a person's legal expenses by consent.
3. The question of whether a party will be heard in opposition to consent orders agreed to by other parties to the proceedings seems to depend whether the opposing party is "directly interested in the question" resolved by the consent orders: James Hardie at 62 [17]; Walter H Wright Pty Ltd v The Commonwealth [1958] VR 318; ALR 698 at 321; International Finance Trust (No 2) at [68]-[73]. In International Finance Trust (No 2), which as I have said concerned a proceeds assessment order, not a forfeiture order, the appellants did not suffer any practical injustice by not having the opportunity to be heard before the consent order was made. In the circumstances of that case they could not be deprived of their interests in the property until an application under s 29 of the Act had been made and determined (per Basten JA at [69] and [72]).
4. Had the opposing party in James Hardie made its opposition plain, which it did not, it would have been entitled to "seek deferral of the entry of judgment" until determination of the issue in which it was directly interested. The consent judgment would not have been of legal effect until entered. Moreover, had the judgment been entered against the wishes of the opposing party an appeal by it against that judgment would have been competent: James Hardie at 63 [19] - [20]; Walter H Wright at 321; Oceanic Crest Shipping Co v Pilbara Harbour Services Pty Ltd (1986) 160 CLR 626 at 670 - 1.
5. If Mrs Tran is "directly interested" in the question to be resolved by the entry of the consent orders, and she must be at least in respect of Mr Tran's interest, if any, in the property listed to her name in Schedule 4, the immediate effect of the entry of a forfeiture order will be to deprive her of any interest she may have in Schedule 1 property, and to diminish her apparent full beneficial interest in her the Schedule 4 property. This is made clear by the provision of s 23 of the Act which I will set out in full: Effect of asset forfeiture order (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 NSW Trustee and Guardian 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 NSW Trustee and Guardian 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 NSW Trustee and Guardian in accordance with the directions of the Treasurer and the proceeds are to be paid to the Treasurer and credited to the Proceeds Account. (3) The Treasurer may delegate the power to give directions for the purposes of subsection (2). (4) 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.
6. I am conscious of the criticisms of forfeiture orders made in the form sought here made by Basten JA in Ollis. But Ollis was not raised by any party and accordingly, the point that may have been available arising out of paragraphs [77] and [80] of his, dissenting judgment, in Ollis was not taken. In the circumstances, I am prepared to assume that the order proposed in paragraph [14] of the Consent Orders is a valid exercise of this Court's power. In the context of the disputed items in Schedule 1, I understand the "specified interest" of Mr Tran for the purpose of s 22(4) of the Act to be the freehold estate in respect of the real property and the whole beneficial interest in respect of the shares. Looked at this way, the order sought deprives Mrs Tran of any contrary interest in that property which she is able to establish.
7. When one considers the effect of s 23 in this light, "the interest which is forfeited to the Crown" is the whole undiminished beneficial interest in each of the disputed items of property. It follows from this, and from what I have said about the Schedule 4 property in Mrs Tran's name, that, she is "a person whose interest in [the disputed property] might be subject to the [forfeiture] order if made": s 25(1)(a) (emphasis added). And if the whole undiminished beneficial interest in those Schedule 1 items is forfeited to the Crown then whatever lesser interest she may be able to establish will be "forfeited by the order" (s 25(1)(b).
8. Mr Bhalla argued that if Mrs Tran had an interest in Schedule 1 property "ancillary orders" could be made under s 23(4) to protect her position. In Ollis (at 493 [61]) Basten JA considered the term "ancillary", where used in s 12 of the Act, means "consequential upon" rather than "subservient or subordinate to". Giles JA, with whom Mason P agreed, did not find it necessary to fully explore that matter, but did observe, in the context of s 12, that the kind of orders that can be made "do not suggest a narrow notion of what is ancillary" (Ollis at 486 [28]).
9. Certainly an order deferring entry of part of the consent forfeiture orders seems comfortably within the ordinary meaning of "ancillary". However, if one considers the example give in s 23(4) of what is ancillary, it may be that the legislative intention is that ancillary orders are orders having the purpose of furthering the effectiveness and efficiency of the forfeiture order rather than delaying its implementation. It is not necessary to finally decide the scope of ancillary orders under s 23 for it seems to me that the Court's ordinary powers would permit a deferral of the entry of orders if that was appropriate in this case.
10. Mr Bhalla also argued that the making of orders, perhaps with a deferral, would enable Mrs Tran to take proceedings in equity to establish whatever interest in the disputed property she claims to have. However, I am not convinced that is the appropriate procedure. That would suggest that anyone could circumvent the "drastic" requirements of s 25 (Ollis 487 [35]). Where s 25 applies it is not enough that a person seeking an exclusion order establishes a competing interest in the property. Section 25(2) requires the applicant to prove, relevantly in the present case, that "the interest in property to which the application relates is not illegally acquired property". The purposes of the Act would be, if not defeated, substantially undermined, if orders made could be challenged on general law principles that avoided rather faced up to the stringent requirements of the Act for excluding interests from the reach of forfeiture orders. In my view the only path available to Mrs Tran is to bring herself, if she can, within the exceptions created by the Act itself.
11. It follows however from what I have said about the construction of the proposed orders, assuming Mrs Tran can establish an interest in property on general law principles, that she is a person whose interest might be subject to the proposed order, applying the Young line of cases. From this it follows that she is also within the class of persons entitled to be heard under s 62 of the Act. If I am wrong in this last proposition, I am of the view that as a party she has a general law right to be heard before the orders are made.
12. I think it appropriate to stand the matter over for a period of 28 days to give Mrs Tran an opportunity to bring an application for an exclusion order by way of cross-claim in these proceedings before the forfeiture orders are "made" within the meaning of s 25. It may be that the mere pronouncement of them, whether they are entered or not, is sufficient to satisfy that expression as used in s 23.
13. Moreover, given what I have said about Mrs Tran's schedule 4 interests, the interests of Kim Christine Tran and Thi Kim Phuong Tran may be similarly affected. Adjourning the matter will enable the Commission to give them notice of the proposed orders so far as it might affect them, if so advised.
14. I appreciate that Mr Tran, as I have already said, is desirous of finalising his involvement in these proceedings. I propose making the consent orders on the adjourned date whether or not Mrs Tran files her cross-claim seeking any available relief under the Act, provided the other parties have notice of the orders.
15. I do not wish to be taken as expressing any view on the strength of any application that Mrs Tran may bring: Cox v Journeaux [No2] [1935] HCA 48; 52 CLR 713 at 720. The matter came up for hearing before me relatively quickly and she has not had the opportunity of filing evidence to demonstrate that she has a fairly arguable case. As I have said, she should be given the opportunity of formulating one and doubtless those advising her will bear in mind the provisions of s 25(3) in formulating any cross-claim she proposes to bring.
16. In dealing with the matter as I have, I have borne in mind the provisions of s 79C FLA. It is clearly the intention of the Commonwealth Parliament that questions arising under the Act should be determined in this Court before the Federal Circuit Court of Australia is called upon to exercise its jurisdiction in relation to property settlements or spousal maintenance. Given that a forfeiture order was not the form of principal relief sought against Mr Tran until the proposed Consent Orders were proffered, Mrs Tran cannot be criticised for failing to earlier bring an application for an exclusion, or hardship, order.
17. I also record that there is no added danger to the revenue in adjourning the matter for 4 weeks. The proceedings have been on foot for some time and there are restraining orders in place in respect of the interests of each of the defendants in the property specified in the four schedules to the Consent Orders. I appreciate that fluctuations can occur in the value of property relatively quickly, especially in the case of shares. But those fluctuations are just as likely to favour the Crown as not. So far as the value of the Haymarket property is concerned Mrs Tran has the benefit of an order for exclusive possession made in the federal jurisdiction. Clearly before the value of Mr Tran's interest in that property could be realised a further application to the Federal Circuit Court would be necessary.
18. Finally, I record that Mrs Tran proffered the usual undertaking as to damages. Given the relatively short delay, and the existence of the restraining orders I do not think it appropriate to require that undertaking as a condition of the adjournment.
19. My orders are: 1. Adjourn the proceedings to Tuesday, 9th June 2015 for the pronouncement of the Consent Orders agreed between the plaintiff and the first defendant; 2. Direct the fourth defendant to file any cross-claim seeking orders under ss 24, 25 or 26 of the Criminal Assets Recovery Act 1990 by Friday, 5th June 2015 in which regard time shall be of the essence. 3. Costs of this application reserved.

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