NSW Crime Commission v The Beneficial Owners of Various Bank and Share Trading Accounts

LEGISLATION CITED : Criminal Assets Recovery Act 1990

Bailey v Marinoff (1971) 125 CLR 529 Fletcher Construction Australia Limited v Lines Macfarlane and Marshall Pty Limited (2001) 4 VR 28 CASES CITED : International Finance Trust Company Ltd and Anor v NSW Crime Commission [2008] NSWCA 291 King Investment Solutions Pty Limited v hussain (2005) 64 NSWLR 441 Sirius Shipping Corporation v The Ship "Sunrise" [2007] NSWSC 766

New South Wales Crime Commission (Plaintiff) PARTIES : International Finance Trust Company Limited (Third Defendant) IFTC Broking Services Limited (Fourth Defendant)

COUNSEL : P Singleton (Plaintiff) T.E.F Hughes AO QC/G.A.F Connolly (Third and Fourth Defendants)

SOLICITORS : New South Wales Crime Commission (Plaintiff) Atanaskovic Hartnell (Third and Fourth Defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

12212/08 NSW Crime Commission v The Beneficial Owners of Various Bank and Share Trading Accounts

JUDGMENT 1 HIS HONOUR: Section 10(2) of the Criminal Assets Recovery Act 1990 ("the Act") provides that the New South Wales Crime Commission may apply to the Supreme Court, ex parte, for a restraining order (as defined in s10(1) of the Act) in respect of:

(a) specified interests, a specified class of interests or all the interests, in property of a person suspected of having engaged in a serious crime related activity or serious crime related activities, …

(b) specified interests, or a specified class of interests, in property that are interests of any other person, or

(c) interests referred to in both paragraph (a) and (b). 2 Section 10(3) of the Act provides that the Supreme Court must make the order applied for under subsection (2) if the application is supported by an affidavit of an authorised officer stating that:

(a) in the case of an application in respect of an interest referred to in subsection 2(a) - the authorised officer suspects that the person has engaged in a serious crime related activity or serious crime related activities and stating the grounds on which that suspicion is based, and

(b) in the case of an application in respect of any other interest - the authorised officer suspects that the interest is serious crime derived property because of a serious crime related activity or serious crime related activities of a person and stating the grounds on which that suspicion is based. 3 On the afternoon of Saturday 25 October 2008 the plaintiff made application for, inter alia, restraining orders pursuant to s 10 of the Act in respect of interests in property of the third and fourth defendants (International Finance Trust Company Limited and IFTC Broking Services Limited). The application was made to me, ex parte, as common law duty judge.

4 The application for the restraining orders was supported by an affidavit of the plaintiff's authorised officer, Mr Jonathan Lee Spark sworn on 25 October 2008. Exhibited to that affidavit and marked "JLS 1" was a report of Lou Novakovic and Noel Stewart, forensic accountants, dated 25 October 2008 ("the report"). 5 Mr Spark, in his affidavit, stated that he suspected that Messrs Bonaccorso and Grimaldi had each engaged in serious crime related activity or activities, namely, dishonestly obtaining a financial advantage by deception contrary to s 178BA of the Crimes Act 1900, that he suspected that RLB Investments Limited had engaged in a serious crime related activity or activities namely aiding and abetting the Bonaccorso offence, that he suspected Iron Investments Limited, Iron International Limited and Ore Investments (Pte) Limited had engaged in serious crime related activity or activities namely aiding and abetting the Grimaldi offence and that he suspected the third and fourth defendants had each engaged in a serious crime related activity or activities namely aiding and abetting the offences of Bonaccorso and Grimaldi.

6 Mr Spark stated in his affidavit that these suspicions were held by him having had regard to the contents of the report. 7 Mr Spark, in his affidavit, stated that he believed the third defendant had an interest in property within the meaning of interest in property as defined in s 7 of the Act that property being identified in his affidavit. He also stated in his affidavit that he suspected the interest in property of the third defendant described in part 1 of schedule 1 of the affidavit and the funds held in the bank accounts referred to in the schedule to the affidavit for or on behalf of Bonaccorso and RLB Investments Limited is serious crime derived property because of the serious crime related activity or activities of Bonaccorso. He stated these beliefs and suspicions were held by him having had regard to the report. 8 Mr Spark, in his affidavit, stated that he suspected the interest in property of the third defendant and funds held in the bank accounts for and on behalf of Grimaldi, Iron Investments Limited, Iron International Limited and Ore Investments (Pte) Limited is serious crime derived property because of the serious crime related activity or activities of Grimaldi. He stated those suspicions were held by him having had regard to the report. 9 Mr Spark, in his affidavit, stated that he believed the fourth defendant had an interest in property as defined in s 7 of the Act and as described in his affidavit. He also stated in his affidavit that he suspected the interest in property of the fourth defendant described in his affidavit is serious crime derived property because of the serious crime related activity or activities of Bonaccorso. He stated these beliefs and suspicions were held by him having had regard to the report. 10 Mr Spark, in his affidavit, stated that he suspected the interest in property of the fourth defendant described in parts 1, 2 and 3 of schedule 2 to his affidavit is serious crime derived property because of the serious crime related activity or activities of Grimaldi. He stated that that suspicion was held by him having had regard to the report. 11 The report, based on investigations and other inquiries, in essence, disclosed the existence of an overseas money laundering scheme promoted by a Vanuatu based Australian accountant, the use of the scheme by Australian residents Bonaccorso and Grimaldi to evade Australian income tax in the course of which they made false and misleading statements to the ATO for that purpose, the utilisation for the purposes of the scheme of Vanuatu incorporated guarantee companies RLB Investments Limited on the part of Bonaccorso, Iron Investments Limited and Iron International Limited on the part of Grimaldi who also utilised a company incorporated in Singapore (Ore Investments (Pte) Ltd) and the use of the third and fourth defendants for advice, assistance and the administration of funds and assets for Bonaccorso and Grimaldi and/or their companies in furtherance of the purposes of the scheme. It was also stated in the report that the third and fourth defendants are incorporated in Vanuatu, the third defendant is a licensed trust company owned and managed by the promoter's accountancy firm and funds held by the fourth defendant were sourced to the third defendant. 12 I read the affidavit of Mr Spark (including the report). I considered that, having regard to the matters contained in the affidavit (including the report), there were reasonable grounds for the suspicions and beliefs held by Mr Spark and referred to above. Accordingly I made the restraining orders, as sought, in respect of the interests in property of the third and fourth defendants. 13 In accordance with the practice of the Common Law Division at the time no transcript was taken of the proceedings and the reasons for making the orders were stated in the preamble to the orders in the following terms: "Considering that, having had regard to the matters contained in the affidavit of Jonathan Lee Spark sworn 25 October 2008, there are reasonable grounds for the suspicions therein." 14 At the time the application was being considered I was informed by counsel for the plaintiff that there were proceedings in the Court of Appeal (International Finance Trust Company Ltd and Anor v NSW Crime Commission [2008] NSWCA 291) which, among other issues, raised an issue as to whether reasons were required for a decision to grant or refuse an application for a restraining order under s 10. It was not known at the time of the subject application when the judgment of the Court of Appeal would be delivered.

15 It seemed to me that, having regard to the narrow issue for the Court's determination, the standard reasons were adequate as all of the facts were contained in the affidavit (including the report). Accordingly I dealt with the application in accordance with the established practice.

16 On 28 October 2008 the third and fourth defendants filed a notice of appeal in respect of the restraining orders made by me. One of the grounds of appeal was that reasons were not given. Subsequently an application for leave to appeal was filed by the third and fourth defendants. 17 On 6 November 2008 the Court of Appeal gave judgment. The Court held, by majority, (Allsop P and Beazley JA; McClellan CJ in CL dissenting) that there is an obligation to give reasons when making a restraining order under s10 of the Act. However such reasons need not be elaborate and the extent of any reasons will vary from case to case. 18 Subsequent to the Court of Appeal decision the plaintiff caused this matter to be re-listed before me. It submitted that, in accordance with the Court of Appeal decision, both parties were entitled to reasons for any restraining orders that were made. It sought such reasons. The third and fourth defendants opposed the application. 19 The third and fourth defendants submitted that the Court was functus officio. The proceedings were disposed of when the orders were made. Reliance was placed upon Bailey v Marinoff (1971) 125 CLR 529 particularly at 530 where Barwick CJ said "it would, in my opinion, not promote the due administration of the law, or the promotion of justice, for the Court to have the power to reinstate a proceeding of which it has finally disposed". It was also submitted that it was not appropriate, after the summons for leave to appeal had been filed, for the court to entertain an application to give reasons. 20 The plaintiff submitted that the Court was not functus officio and that the present application should be acceded to as:

a The plaintiff was not seeking the reopening of a question which has already been decided or the reinstatement of proceedings finally disposed of. It was merely asking the Court to take the next step in its function i.e. to give reasons as had now been determined by the Court of Appeal. b The application was interlocutory in character and the proceedings had not been finally disposed of.

c A superior court judge, who is vested with inherent jurisdiction is never fully functus officio , at least with respect to procedural matters - Sirius Shipping Corporation v The Ship "Sunrise" [2007] NSWSC 766 per Palmer J at [41].

d The Court of Appeal has held that the general principle is applicable and, accordingly, it can now be seen that it is part of the requirements of justice that reasons be given for a restraining order. There would be no prejudice to the third and fourth defendants if such reasons were now given. 21 In King Investment Solutions Pty Limited v Hussain (2005) 64 NSWLR 441 at [159] Campbell J (as his Honour then was) respectfully agreed with the comments of Chernov JA in Fletcher Construction Australia Limited v Lines Macfarlane and Marshall Pty Limited (2001) 4 VR 28 at [40] "… although courts recognise the desirability of judges of a superior court delivering reasons for their decisions contemporaneously with pronouncing them, there is no obligation on them to comply strictly with the requirement so that mere failure to do so would constitute error. Where the interests of justice require it, a court may properly pronounce judgment and give reasons for it later." 22 The present case is concerned with interlocutory orders, the proceedings have not been finally disposed of and the plaintiff's application is by way of a request for an expansion of the reasons previously given for the making of the restraining orders or the provision of reasons for the making of the restraining orders if the standard words are to be disregarded. The plaintiff does not seek to alter any order of the court. 23 The third and fourth defendants are sophisticated defendants with ready access to specialised legal advice. They are legally represented in the present proceedings and in my opinion would suffer no material prejudice if the application was acceded to. 24 In my opinion it is appropriate, in all of the circumstances and in the interests of justice, to uphold the plaintiff's application for (expanded) reasons for making the restraining orders against the interests in property of the third and fourth defendants. 25 The reasons for making the restraining orders are those set out in paragraphs 1 to 12 of this judgment.

(2) The costs of this application are to be costs in the appeal.

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