NSW CRIME COMMISSION v MACRIS

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Wednesday, 9 January 2002 NEW SOUTH WALES CRIME COMMISSION v John MACRIS Judgment 1 His Honour: On 29 May 2000, a number of orders were made in these proceedings. They included an order:- "Pursuant to section 10 of the Criminal Assets Recovery Act 1990 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 John Macris, including the interest in property in the property described in Part One of the Schedule hereto." 2 Part One of the schedule included reference to 2 parcels of real estate, motor vehicles, funds held in a nominated bank account and some cash. 3 On 19 March 2001, I made orders in accordance with a form of "Consent Orders" signed by the solicitors for the parties. Those orders included:- "5. Pursuant to section 10(5)(b) of the (Criminal Assets Recovery) Act the restraining order make provision for meeting the reasonable legal expenses of the Defendant agreed at $40,000 out of the property specified in Schedule hereto such sum to be paid to Brett Galloway, Solicitor. 6. Subject of order 5, pursuant to section 22 of the Act the interests of the Defendant in the property specified in the Schedule hereto be forfeited to, and vest in, the Crown ('the assets forfeiture order") 8 Execution of the assets forfeiture order be stayed until 21 May 2001. 9 Leave be granted to the Defendant pursuant to sections 25(4) and 26(4) of the Act to make applications pursuant to sections 25 and 26 of the Act in respect of the interests in property of the Defendant specified in the Schedule hereto within six (6) months of the date of this order." 4 The schedule to those orders was in identical terms to the schedule to the orders of 29 May 2000. The orders were entered on 20 March 2001. 5 On 21 September 2001, there was filed on behalf of the Defendant a Notice of Motion which sought, inter alia, an order that the orders made on 19 March be set aside and orders under section 25 of the Criminal Assets Recovery Act and 26 of the Proceeds of Assessment Act (sic) that certain property in a schedule (which was not attached) be excluded from any Assets Forfeiture Order and/or any Proceeds Assessment Order. Amended Notices of Motion were subsequently filed, the latest version seeking, inter alia, that the orders made on 19 March be set aside and, alternatively, a declaration of the date on which forfeiture has been effected. By agreement the parties sought that I deal with these 2 prayers for relief, deferring consideration of other orders also sought. 6 The inspiration for the first of the orders sought is that neither the Defendant nor his solicitor has as yet received the $40,000 referred to in order 5 quoted above. It seemed common ground that there was no reason to think that, without intervention by the Court, it would be received in the near future even though the Defendant has been in the process of incurring legal expenses. Evidence before me shows that the Public Trustee has become registered as the proprietor of one of the parcels of real estate, collected the proceeds of the bank account and the cash but has not registered itself as the proprietor of the other property. 7 A number of provisions of the Criminal Assets Recovery Act are relevant. Under s10, the Commission can apply for, and in circumstances defined, the Supreme Court must make, restraining orders. The terms of the order made on 29 May 2000 reflect this section. By sub-section 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) the 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." 8 Under s12 the Court may make ancillary orders. Under s14 the Court may, in limited circumstances order the sale of property subject to the restraining order. So far as is presently relevant, s16A provides:- "(1) The following restrictions apply to a restraining order making provision for the payment of any legal expenses of a person: (a) no provision is to be made except to the extent (if any) that the Supreme Court is satisfied that the person cannot meet the expenses concerned out of the person's unrestrained property, (b) … (e) any such provision must specify the particular interest in property out of which the expenses concerned may be met." 9 Under s22, while a restraining order is in force, the Commission may apply for an order forfeiting to, and vesting in, the Crown all or any of the interests in property that are subject to the restraining order when the assets forfeiture order takes effect and, in circumstances defined, the Supreme Court must make such an order. So far as is presently relevant ss23 and 25 provide:- "23 (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. (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 any 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. 25 (1) If an assets forfeiture order: (a) … (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 forfeiture order or an relevant restraining order (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 6 months after the assets forfeiture order took effect and leave to apply has been granted by the Supreme Court, or (b) …

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10 A number of arguments were advanced in support of the prayer that the orders of 20 March be set aside. It was submitted, inter alia, (i) in that the agreed legal expenses have not in practice been excluded from the restraining order, what was consented to did not take effect. (ii) that the consent orders were interlocutory and therefore could be set aside. (iii) that, even if the orders were final, there is a discretion to set them aside, as they were by consent and did not correctly reflect the intention of either of the parties. (iv) that orders 5 and 6 cannot operate within the confines of the Criminal Assets Recovery Act in that paragraph 5 makes provision for payment of legal costs out of unspecified property, contrary to s16A(1)(e) of the Act. (v) that orders 5 and 6 cannot operate within the confines of the Criminal Assets Recovery Act in that they purport to make legal expenses payable out of forfeited property, contrary to the Act. The decision in NSW Crime Commission v Singh (unreported, Hidden J, 4 September 1998) was relied upon. (vi) that as order 6 was made subject to order 5, and order 5 has not been complied with, there has been no forfeiture. 11 I do not find it necessary to deal with most of these arguments for the conclusion at which I have arrived is that the orders of 19 March should be set aside. 12 Order 6, forfeiting to, and vesting in, the Crown the subject property was not unqualified. It was expressed to be "subject to order 5". In terms of its drafting order 5 leaves a lot to be desired. Although in its words "make provision for meeting the reasonable legal expenses" of the Defendant, the order follows the terms of s10(5), the words are not themselves apt as a practical qualification of a restraining order. Rather should there have been, for example, an exception to the order permitting the Defendant to sell one of the parcels of real estate on terms dealing with the proceeds and which permitted an amount for legal expenses to be retained by the Defendant's solicitor. 13 Nevertheless, the terms of order 5 do make it clear that that property referred to in the Schedule was to be a source of $40,000 to be paid to Mr Galloway for legal expenses. Whatever its deficiencies of expression, it could not be thought that the order was directed merely at a variation of the terms of the restraining order, without practical effect. Furthermore, necessarily implicit is the proposition that those funds were to be available within a reasonable time. 14 An affidavit of 13 November 2001 by Davyth Stewart of the Crime Commission discloses that the Defendant had been arrested in March 2000 on a number of charges including the supply of a commercial quantity of ecstasy and an indictable quantity of amphetamine, that committal proceedings were part heard and next before the Court on 29 November 2001. In the face of that evidence, it is clear that a reasonable time had expired by the time the matter came before me on 15 November last. There was no evidence, or indeed, suggestion that the Defendant had caused or contributed to the delay. Rather did counsel appearing for the Crime Commission point to the terms of s23 of the Act and emphasise that the disposition of the property was a matter dependant on the receipt of directions from the Treasurer or some delegate. 15 Thus the condition or terms to which the vesting and forfeiture order was subject have not been complied with. In these circumstances, it seems to me that that order should be set aside. Because it and order 5 were part of the same agreement, it seems to me to follow that order 5 should suffer the same fate, if not as a matter of law, then as a matter of discretion and a term on which the Applicant receives the relief he seeks in relation to order 6. The other orders made that day were consequential on order 6. 16 That the Court has power to set aside the orders even though they have been entered is clear from the remarks of Sheller J in Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13 at 28-30 and the passages from earlier authority which his Honour quoted. That the orders should be set aside follows from the passages quoted from Huddersfield Banking Co Ltd v Henry Lister and Son Pty Ltd (1895) 2 Ch 273 and Harvey v Phillips (1956) 95 CLR 235 and the usual principles as to the consequences of non-compliance with a condition in a contract. 17 I should add that I do not see in the mandatory aspect of s22 anything which precludes the course I favour. It remains open to the Commission to renew or reinstate its application for an order under that section. Of course, it also remains open for the Defendant to make application for provision of his legal costs. 18 There is three further matters to which I should refer. It may well be that on the making of the orders on 19 March, the restraining order made on 29 May 2000 came to an end. The setting aside of the orders made in March may not operate to resuscitate the restraining order. In these circumstances, it is appropriate to stay for a period the operation of the orders to be made today. Having regard to the time of the year, it seems to me that this should be done until some little time after the end of the Court vacation. In the interim, the parties may wish to consider what further applications they wish to make. In case there are problems in any revesting of property which may be necessary, it is also appropriate to grant liberty to apply. Having regard, inter alia, to the fact that I will be on leave, I see no need why any of the applications contemplated in this paragraph or in other prayers in the Notice of Motion, if there remains any point in them, should not be dealt with by some other judge. 19 Against the opposition of the Commission, the Applicant has been successful before me. Costs should follow the event. 20 The orders I make are:- (i) Set aside the orders made herein on 19 May 2001. (ii) Grant liberty to apply on 3 days notice. (iii) Order the Plaintiff to pay the Defendant's costs of and incidental to the proceedings before me . (iv) Stay operation of order 1 up to and including Monday 4 February 2002. **********

NSW CRIME COMMISSION v MACRIS - [2002] NSWSC 3 - NSWSC 2001 case summary — Zoe

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