Onley v Commissioner of the Australian Federal Police; Menon v Commissioner of the Australian Federal Police; Anquetil v Commissioner of the Australian Federal Police
[2019] NSWCA 101
Court of Appeal (NSW)|2018-10-31|Before: Bathurst CJ, Basten JA, Meagher JA
The examination orders were made on an ex parte application by the respondent seeking orders that property identified in the summons be forfeited to the Commonwealth pursuant to ss 47 and 49 of the POC Act and orders that 8 of the 66 defendants, including the appellants, pay a pecuniary penalty to the Commonwealth pursuant to s 116 of the POC Act, referable to what the respondent alleged was the value of the benefits that they each derived from their involvement in a conspiracy to defraud the Australian Taxation Office (the ATO) with the intention of dishonestly causing a loss to the Commonwealth in the amount of $83,735,535.28 contrary to s 135.4 of the Criminal Code Act 1995 (Cth) (the taxation fraud conspiracy).
On 16 May 2017 the primary judge made ex parte orders under ss 18 and 19 of the POC Act restraining the appellants and other individual entities from dealing with property itemised in the Schedule, including property not already specified in the Schedule acquired by each of them after the date of the orders. She also ordered, under s 38 of the POC Act, that the Official Trustee in Bankruptcy take custody and control of the property that is the subject of the restraint. The net value of the property under the custody and control of the Official Trustee was valued at $39,510,780.19 and, in addition, other property had been identified falling within the terms of the summons valued at $1,878,071.79. The total amount so identified was $41,388,851.98.
In addition, examination orders, the subject of the proceedings were made under s 180 of the POC Act and the appellants were also directed to supply Sworn Asset Statements pursuant to s 39(1)(ca) of that Act.
On 15 June 2017 the appellant, Simon Paul Anquetil (Mr Anquetil), by notice of motion sought orders staying the proceedings pending the finalisation of criminal proceedings commenced against him or, alternatively, staying the examination summons pending finalisation of those proceedings.
On 16 June 2017 the appellants, Jason Cornell Onley (Mr Onley) and Dev Menon (Mr Menon), filed a notice of motion seeking broadly similar relief to Mr Anquetil.
By orders on 22 March 2018 the primary judge dismissed the notices of motion. The appeals are brought from this decision.
[2]
The relevant legislation
To understand the reasoning of the primary judge and the submissions of the parties it is necessary to have regard to the following provisions of the POC Act.
Section 5 of the POC Act sets out its principal objects. Relevantly, it provides as follows:
"5 Principal objects
The principal objects of this Act are:
(a) to deprive persons of the *proceeds of offences, the *instruments of offences, and *benefits derived from offences, against the laws of the Commonwealth or the *non‑governing Territories; and
…
(c) to punish and deter persons from breaching laws of the Commonwealth or the non‑governing Territories; and
…
(da) to undermine the profitability of criminal enterprises; and
(e) to enable law enforcement authorities effectively to trace proceeds, instruments, benefits, literary proceeds and unexplained wealth amounts; and
(g) to provide for confiscation orders and restraining orders made in respect of offences against the laws of the States or the *self‑governing Territories to be enforced in the other Territories."
Section 17 confers on the Court what is described as "proceeds jurisdiction" to make restraining orders against people convicted of or charged with indictable offences, while s 18 empowers the making of the same orders against persons suspected of committing serious offences. Section 18 is in the following terms:
"18 Restraining orders - people suspected of committing serious offences
When a restraining order must be made
(1) A court with *proceeds jurisdiction must order that:
(a) property must not be disposed of or otherwise dealt with by any person; or
(b) property must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in the order;
if:
(c) a *proceeds of crime authority applies for the order; and
(d) there are reasonable grounds to suspect that a person has committed a *serious offence; and
(e) any affidavit requirements in subsection (3) for the application have been met; and
(f) the court is satisfied that the *authorised officer who made the affidavit holds the suspicion or suspicions stated in the affidavit on reasonable grounds.
Note: A court can refuse to make a restraining order if the Commonwealth refuses to give an undertaking: see section 21.
Property that a restraining order may cover
(2) The order must specify, as property that must not be disposed of or otherwise dealt with, the property specified in the application for the order, to the extent that the court is satisfied that there are reasonable grounds to suspect that that property is any one or more of the following:
(a) all or specified property of the *suspect;
(aa) all or specified *bankruptcy property of the suspect;
(b) all property of the suspect other than specified property;
(ba) all bankruptcy property of the suspect other than specified bankruptcy property;
(c) specified property of another person (whether or not that other person's identity is known) that is subject to the *effective control of the suspect;
(d) specified property of another person (whether or not that other person's identity is known) that is:
(i) in any case - *proceeds of the offence; or
(ii) if the offence to which the order relates is a *serious offence - an *instrument of the offence.
Affidavit requirements
(3) The application for the order must be supported by an affidavit of an *authorised officer stating:
(a) that the authorised officer suspects that the *suspect committed the offence; and
(b) if the application is to restrain property of a person other than the suspect but not to restrain *bankruptcy property of the suspect - that the authorised officer suspects that:
(i) the property is subject to the *effective control of the suspect; or
(ii) in any case - the property is *proceeds of the offence; or
(iii) if the offence to which the order relates is a *serious offence - the property is an *instrument of the offence.
The affidavit must include the grounds on which the *authorised officer holds those suspicions.
Restraining order need not be based on commission of a particular offence
(4) The reasonable grounds referred to in paragraph (1)(d) need not be based on a finding as to the commission of a particular *serious offence.
Risk of property being disposed of etc.
(5) The court must make a *restraining order even if there is no risk of the property being disposed of or otherwise dealt with.
Later acquisitions of property
(6) The court may specify that a *restraining order covers property that is acquired by the *suspect after the court makes the order. Otherwise, no property that is acquired after a court makes a restraining order is covered by the order."
There is no issue in the present case that the Court had proceeds jurisdiction (s 18(1)) or that the respondent was a proceeds of crime authority (s 18(1)(c)).
Section 19 empowers the court with proceeds jurisdiction to make restraining orders restraining the disposal of property suspected to be the proceeds of a terrorism offence or any other indictable offence. It is not necessary to set out the section in full.
It will be seen that the making of a restraining order is the lynchpin for the exercise of other powers granted to both the Court and the respondent under the Act.
Section 25 empowers a proceeds of crime authority to apply for a restraining order. Section 26 deals with the giving of notice of the application. It is in the following terms:
"26 Notice of application
(1) Subject to subsection (4), the *responsible authority must:
(a) give written notice of an application for a *restraining order covering property to the owner of the property (if the owner is known); and
(b) include with the notice a copy of the application and any affidavit supporting the application.
(2) Subject to subsection (4), the *responsible authority must also:
(a) give written notice of an application for a *restraining order covering property to any other person the authority reasonably believes may have an *interest in the property; and
(b) include with the notice:
(i) a copy of the application; and
(ii) a further notice that the person may request that the authority give the person a copy of any affidavit supporting the application.
The authority must comply with any such request as soon as practicable.
(3) The court must not (unless subsection (4) applies) hear the application unless it is satisfied that the owner of the property to which the application relates has received reasonable notice of the application.
(4) The court must consider the application without notice having been given if the *responsible authority requests the court to do so.
(5) The court may, at any time before finally determining the application, direct the *responsible authority to give or publish notice of the application to a specified person or class of persons. The court may also specify the time and manner in which the notice is to be given or published.
(6) A person who claims an *interest in property may appear and adduce evidence at the hearing of the application."
It can be seen that s 26(4) requires the court to consider the application without notice if the responsible authority (which for the purpose of this application is a proceeds of crime authority) requests it. However, the court is not obliged to make an order ex parte. That is made clear by s 26(5). The section was amended to its present form following the decision of the High Court in International Finance Trust Company Ltd v New South Wales Crime Commission (2009) 240 CLR 319; [2009] HCA 49, which held that the then s 10 of the Criminal Assets Recovery Act 1990 (NSW) was invalid because it required the Court to grant an ex parte injunction without providing for any facility to entertain an application to dissolve it.
Section 39 empowers the court to make what are described as ancillary orders. It is that section which empowers the court to order sworn statements. For relevant purposes it provides as follows:
"39 Ancillary orders
(1) The court that made a *restraining order, or any other court that could have made the restraining order, may make any ancillary orders that the court considers appropriate and, without limiting the generality of this, the court may make any one or more of the following orders:
…
(ca) an order directing the *suspect in relation to the restraining order to give a sworn statement to a specified person, within a specified period, setting out all of his or her *interests in property, and his or her liabilities.
...
(3A) Despite subsection (3), the court must consider an application for an ancillary order without notice having been given under that subsection if:
(a) the *responsible authority requests the court to do so; and
(b) the *restraining order to which the application relates was considered, in accordance with subsection 26(4), without notice having been given."
Section 39B provides for an application to revoke an ancillary order. It is in the following terms:
"39B Application to revoke ancillary order
(1) A person may apply to the court that made an ancillary order under section 39 to revoke the order if:
(a) the person is affected by the order; and
(b) the application for the ancillary order was heard without notice having been given under subsection 39(3) following a request under subsection 39(3A).
(2) The application must be made within 14 days after the person was notified of the ancillary order.
(3) The applicant must give written notice of the application, and the grounds on which the revocation is sought, to any person who was entitled to make the application for the ancillary order (see subsection 39(2)).
(4) The effect of the ancillary order is stayed until the court determines the application.
(5) The court may revoke the ancillary order on application under subsection (1) if it considers it appropriate to do so.
(6) The court may have regard to any matter it considers appropriate in determining the application.
(7) If:
(a) the ancillary order directed a person to do a thing within a particular period; and
(b) an application is made to revoke the order under this section;
the court may, if it considers it appropriate to do so, vary the order to extend that period by a specified period."
Section 42 provides for an application to revoke a restraining order. It provides as follows:
"42 Application to revoke a restraining order
(1) A person who was not notified of the application for a *restraining order may apply to the court to revoke the order.
(1A) The application must be made:
(a) within 28 days after the person is notified of the order; or
(b) if the person applies to the court, within that period of 28 days, for an extension of the time for applying for revocation - within such longer period, not exceeding 3 months, as the court allows.
(2) The applicant must give written notice to the *responsible authority and the *Official Trustee of both the application and the grounds on which the revocation is sought.
(3) However, the *restraining order remains in force until the court revokes the order.
(4) The *responsible authority may adduce additional material to the court relating to the application to revoke the *restraining order.
(5) The court may revoke the *restraining order if satisfied that:
(a) there are no grounds on which to make the order at the time of considering the application to revoke the order; or
(b) it is otherwise in the interests of justice to do so."
Section 45 provides for the cessation of restraining orders in certain circumstances.
Part 2-2 of the POC Act deals with forfeiture orders. Section 47 is in the following terms:
"47 Forfeiture orders - conduct constituting serious offences
(1) A court with *proceeds jurisdiction must make an order that property specified in the order is forfeited to the Commonwealth if:
(a) the *responsible authority for a *restraining order under section 18 that covers the property applies for an order under this subsection; and
(b) the restraining order has been in force for at least 6 months; and
(c) the court is satisfied that a person whose conduct or suspected conduct formed the basis of the restraining order engaged in conduct constituting one or more *serious offences.
Note: The order can be made before the end of the period of 6 months referred to in paragraph (1)(b) if it is made as a consent order: see section 316.
(2) A finding of the court for the purposes of paragraph (1)(c) need not be based on a finding as to the commission of a particular offence, and can be based on a finding that some *serious offence or other was committed.
(3) The raising of a doubt as to whether a person engaged in conduct constituting a *serious offence is not of itself sufficient to avoid a finding by the court under paragraph (1)(c).
Refusal to make a forfeiture order
(4) Despite subsection (1), the court may refuse to make an order under that subsection relating to property that the court is satisfied:
(a) is an *instrument of a *serious offence other than a *terrorism offence; and
(b) is not *proceeds of an offence;
if the court is satisfied that it is not in the public interest to make the order."
Section 48 provides for forfeiture orders on conviction for indictable offences in circumstances where the court is satisfied that the property to be specified in the order is an instrument of one or more of the offences for which the person has been convicted. Unlike s 47 it is not a necessary precondition for a restraining order to be in force.
Section 49 deals with forfeiture orders in respect to property suspected of being proceeds of indictable offences. It is unnecessary to set it out, but like s 47 it is a precondition that a restraining order be in force.
Section 51 provides that acquittals do not affect the court's power to make a forfeiture order under s 47 or s 49 in relation to the offence.
Part 2-4 of the POC Act deals with what is described as "pecuniary penalty orders". Section 116 of the Act is in the following terms:
"116 Making pecuniary penalty orders
(1) A court with *proceeds jurisdiction must make an order requiring a person to pay an amount to the Commonwealth if:
(a) a *proceeds of crime authority applies for the order; and
(b) the court is satisfied of either or both of the following:
(i) the person has been convicted of an *indictable offence, and has derived *benefits from the commission of the offence;
(ii) the person has committed a *serious offence.
Note: The conviction for, or reasonable grounds for suspecting commission of, an indictable offence could be used as grounds for a restraining order under Part 2‑1 covering all or some of the person's property.
(3) In determining whether a person has derived a *benefit, the court may treat as property of the person any property that, in the court's opinion, is subject to the person's *effective control.
(4) The court's power to make a *pecuniary penalty order in relation to an offence is not affected by the existence of another *confiscation order in relation to that offence.
Note: There are restrictions on applications pecuniary penalty orders if previous applications for pecuniary penalty orders have already been made: see section 135."
Section 142 of the Act provides that where such an order is made, a charge on property the subject of a restraining order to secure the payment of the penalty amount is created by force of the section.
Section 180 of the Act empowers the court to make examination orders. It provides as follows:
"180 Examination orders relating to restraining orders
(1) If a *restraining order is in force, the court that made the restraining order, or any other court that could have made the restraining order, may make an order (an examination order) for the *examination of any person, including:
(a) a person whose property is, or a person who has or claims an *interest in property that is, the subject of the restraining order; or
(b) a person who is a *suspect in relation to the restraining order; or
(c) the spouse or *de facto partner of a person referred to in paragraph (a) or (b);
about the *affairs of a person referred to in paragraph (a), (b) or (c).
(2) The *examination order ceases to have effect if the *restraining order to which it relates ceases to have effect."
Section 182 provides for the circumstances in which an order can be made. It is in the following terms:
"182 Applications for examination orders
(1) An *examination order can only be made on application by the *responsible authority for the *principal order, or the application for a principal order, in relation to which the examination order is sought.
(2) The court must consider an application for an *examination order without notice having been given to any person if the *responsible authority requests the court to do so."
Section 183 provides for the issue of examination notices by persons who are defined in that section to be approved examiners. The section provides as follows:
"183 Examination notices
(1) An *approved examiner may, on application by the *responsible authority, give to a person who is the subject of an *examination order a written notice (an examination notice) for the *examination of the person.
(2) However, the *approved examiner must not give the *examination notice if:
(a) an application has been made under section 42 for the *restraining order to which the notice relates to be revoked; and
(b) the court to which the application is made orders that *examinations are not to proceed.
(3) The fact that criminal proceedings have been instituted or have commenced (whether or not under this Act) does not prevent the *approved examiner giving the *examination notice.
Approved examiners
(4) An approved examiner is a person who holds an appointment under this section.
(5) The Minister may appoint as an *approved examiner:
(a) a person who holds an office, or is included in a class of people, specified in the regulations; or
(b) a person who:
(i) is enrolled as a legal practitioner of the High Court, of another federal court or of the Supreme Court of a State or Territory; and
(ii) has been so enrolled for at least 5 years; and
(iii) has indicated to the Minister that the person is willing to be appointed.
(6) An *approved examiner may resign his or her appointment by giving the Minister a written resignation. The resignation takes effect on the day it is received by the Minister or, if a later day is specified in the resignation, on that later day.
(7) The Minister may revoke an appointment of an *approved examiner."
Section 185 provides for the form and content of examination notices requiring that such a notice must require the person to attend the examination and specify the time and place of the examination.
Section 186(4) states that "[t]he fact that criminal proceedings have been instituted or have commenced (whether or not under this Act) does not prevent the examination of a person".
Section 188 of the Act provides that an examination is to take place in private, while s 189 provides that the lawyer of a person being examined may address the approved examiner and examine the person about matters about which the approved examiner or the responsible authority has examined the person.
Section 195 of the Act provides that a person commits an offence for failing to attend the examination, while s 196 provides that it is an offence to refuse or fail to be sworn or make an affirmation, or refuse to answer a question or produce a document. Section 196(1) is in the following terms:
"196 Offences relating to appearance at an examination
(1) A person attending an *examination to answer questions or produce documents must not:
(a) refuse or fail to be sworn or to make an affirmation; or
(b) refuse or fail to answer a question that the *approved examiner requires the person to answer; or
(c) refuse or fail to produce at the examination a document specified in the *examination notice that required the person's attendance; or
(d) leave the examination before being excused by the approved examiner.
Penalty: Imprisonment for 2 years or 120 penalty units, or both".
Section 197 deals with privileged information. It is in the following terms:
"197 Privileged information
(1) Paragraph 196(1)(b) or (c) does not apply if, under:
(a) a law of the Commonwealth; or
(b) a law of the State or Territory in which the *examination takes place;
the person could not, in proceedings before a court, be compelled to answer the question or produce the document.
Note: A defendant bears an evidential burden in relation to the matter in subsection (1): see subsection 13.3(3) of the Criminal Code.
(2) However, paragraph 196(1)(b) or (c) applies if the only reason or reasons why the person could not be so compelled are one or more of the following:
(a) answering the question or producing the document would tend to incriminate the person or to expose the person to a penalty;
(b) the answer would be privileged from being disclosed, or the document would be privileged from being produced, in legal proceedings on the ground of *legal professional privilege;
(ba) the answer would be privileged from being disclosed, or the document would be privileged from being produced, in legal proceedings on the ground of *professional confidential relationship privilege;
(c) the answer or document would, under a law of the Commonwealth, a State or a Territory relating to the law of evidence, be inadmissible in legal proceedings for a reason other than because:
(i) the answer would be privileged from being disclosed; or
(ii) the document would be privileged from being produced.
(3) To avoid doubt, the following are not reasons why a person cannot, in proceedings before a court, be compelled to answer a question or produce a document:
(a) the person is contractually obliged not to disclose information, and answering the question or producing the document would disclose that information;
(b) the person is obliged under a law of a foreign country not to disclose information, and answering the question or producing the document would disclose that information."
The effect of the section and in particular reference to the application of s 196(1)(b) or (c) (refusal or failure to answer a question, or refusal or failure to produce documents) means that the privilege against self-incrimination and legal professional privilege are effectively abrogated. However, s 198 gives what might be described as direct use immunity in respect of answers given or documents produced in examination. The section is in the following terms:
"198 Admissibility of answers and documents
An answer given or document produced in an *examination is not admissible in evidence in civil or criminal proceedings against the person who gave the answer or produced the document except:
(a) in criminal proceedings for giving false or misleading information; or
(b) in proceedings on an application under this Act; or
(c) in proceedings ancillary to an application under this Act; or
(d) in proceedings for enforcement of a *confiscation order; or
(e) in the case of a document - in civil proceedings for or in respect of a right or liability it confers or imposes."
Section 266A is in the following terms, excluding the table in the section:
"266A Disclosure
(1) This section applies if a person obtains information:
(a) as a direct result of:
(i) the person being given a sworn statement under an order made under paragraph 39(1)(ca), (d) or (da); or
(ii) the exercise of a power (by the person or someone else), or performance (by the person) of a function, under Part 3‑1, 3‑2, 3‑3, 3‑4 or 3‑5; or
(b) as a result of a disclosure, or a series of disclosures, under this section or clause 18 of Schedule 1.
(2) The person may disclose the information to an authority described in an item of the following table for a purpose described in that item if:
(a) the person believes on reasonable grounds that the disclosure will serve that purpose; and
(b) a court has not made an order prohibiting the disclosure of the information to the authority for that purpose.
…
Limits on use of information disclosed
(3) In civil or *criminal proceedings against a person who gave an answer or produced a document in an *examination, none of the following that is disclosed under this section is admissible in evidence against the person:
(a) the answer or document;
(b) information contained in the answer or document.
(4) Subsection (3) does not apply in:
(a) *criminal proceedings for giving false or misleading information; or
(b) proceedings on an application under this Act; or
(c) proceedings ancillary to an application under this Act; or
(d) proceedings for enforcement of a *confiscation order; or
(e) civil proceedings for or in respect of a right or liability the document confers or imposes.
Note: Subsections (3) and (4) reflect section 198.
(5) In a *criminal proceeding against a person who produced or made available a document under a *production order, none of the following that is disclosed under this section is admissible in evidence against the person:
(a) the document;
(b) information contained in the document.
(6) Subsection (5) does not apply in a proceeding under, or arising out of, section 137.1 or 137.2 of the Criminal Code (false or misleading information or documents) in relation to producing the document or making it available.
Note: Subsections (5) and (6) reflect subsection 206(2).
(7) To avoid doubt, this section does not affect the admissibility in evidence of any information, document or thing obtained as an indirect consequence of a disclosure under this section.
Relationship with subsection 228(2)
(8) To avoid doubt:
(a) this section does not limit subsection 228(2) (about a *search warrant authorising the *executing officer to make things seized under the warrant available to officers of other *enforcement agencies); and
(b) subsection 228(2) does not limit this section."
Section 266A(2) in its current form was introduced into the POC Act by the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Act 2016 (Cth) (the 2016 Act). The Explanatory Memorandum to the Bill which introduced the Act made the following comments in relation to its introduction:
"167. Sub-Item (1) provides that the amendments to subsection 266A(2) of the POC Act apply in relation to the disclosure of information after the commencement of this Item, whether the information was obtained before or after that commencement. The amendments to subsection 266A(2) clarify that information may not be disclosed, where the disclosure to an authority for a purpose has been prohibited by a court order. This sub-Item ensures that this protection applies regardless of whether the information subject to the court's non-disclosure order was obtained before, during or after the commencement. While the amendments may apply retrospectively to cover information obtained before commencement, this retrospective operation does not impose new liabilities or extinguish existing rights. Rather, the application of the amendment in this way extends a further protection to a person who may be concerned that the disclosure of information creates a risk to the person's rights in a concurrent or anticipated criminal trial."
Section 315 of the Act provides that proceedings on an application for a restraining order or confiscation order are not criminal proceedings and that the rules of evidence that are applicable in civil proceedings apply. Section 317 deals with onus and standard of proof. It is in the following terms:
"317 Onus and standard of proof
(1) The applicant in any proceedings under this Act bears the onus of proving the matters necessary to establish the grounds for making the order applied for.
(2) Subject to sections 52 and 118, any question of fact to be decided by a court on an application under this Act is to be decided on the balance of probabilities."
Sections 319 and 319A were introduced into the Act by the 2016 Act. They are in the following terms:
"319 Stay of proceedings
(1) A court may stay proceedings (the POCA proceedings) under this Act that are not criminal proceedings if the court considers that it is in the interests of justice to do so.
(2) The court must not stay the POCA proceedings on any or all of the following grounds:
(a) on the ground that criminal proceedings have been, are proposed to be or may be instituted or commenced (whether or not under this Act) against the person subject to the POCA proceedings;
(b) on the ground that criminal proceedings have been, are proposed to be or may be instituted or commenced (whether or not under this Act) against another person in respect of matters relating to the subject matter of the POCA proceedings;
(c) on the ground that:
(i) a person may consider it necessary to give evidence, or to call evidence from another person, in the POCA proceedings; and
(ii) the evidence is or may be relevant (to whatever extent) to a matter that is, or may be, at issue in criminal proceedings that have been, are proposed to be or may be instituted or commenced (whether or not under this Act) against the person or any other person;
(d) on the ground that POCA proceedings in relation to another person have been, are to be or may be stayed.
(3) Paragraph (2)(a) applies even if the circumstances pertaining to the POCA proceedings are or may be the same as, or substantially similar to, the circumstances pertaining to the criminal proceedings.
(4) Paragraph (2)(b) applies even if the subject matter of the POCA proceedings is the same as, or substantially similar to, the matter at issue in the criminal proceedings.
(5) Paragraph (2)(d) applies even if the staying of the POCA proceedings would avoid a multiplicity of POCA proceedings.
(6) In considering whether a stay of the POCA proceedings is in the interests of justice, the court must have regard to the following matters:
(a) that the POCA proceedings, and any criminal proceedings of a kind referred to in paragraph (2)(a) or (b), should proceed as expeditiously as possible;
(b) the cost and inconvenience to the Commonwealth of retaining property to which the POCA proceeding relates and being unable to expeditiously realise its proceeds;
(c) the risk of a *proceeds of crime authority suffering any prejudice (whether general or specific) in relation to the conduct of the POCA proceedings if the proceedings were stayed;
(d) whether any prejudice that a person (other than a proceeds of crime authority) would suffer if the POCA proceedings were not stayed may be addressed by the court by means other than a stay of the proceedings;
(e) any orders (other than an order for the stay of the POCA proceedings) that the court could make to address any prejudice that a person (other than a proceeds of crime authority) would suffer if the proceedings were not stayed.
Note: Examples of orders the court could make to address any prejudice that a person (other than a proceeds of crime authority) would suffer if the POCA proceedings were not stayed include an order under section 319A (closed court) or an order prohibiting the disclosure of information.
319A Closed court
A court may order that proceedings under this Act (other than criminal proceedings) be heard, in whole or in part, in closed court if the court considers that the order is necessary to prevent interference with the administration of criminal justice."
Sections 319 and 319A were introduced into the POC Act following the decision of the High Court in Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46; [2015] HCA 5 (Zhao). At the time of that decision, s 319 was in the following terms:
"The fact that criminal proceedings have been instituted or have commenced (whether or not under this Act) is not a ground on which a court may stay proceedings under this Act that are not criminal proceedings."
In Zhao the Court concluded at [36] that "section 319 is not expressed to refer specifically to a circumstance where the issues in the forfeiture proceedings and the criminal proceedings are substantially identical":
The Court also noted that where a person is faced with an application for forfeiture brought under s 47 or s 49 of the Act, that person is presented with the choice of whether to defend the proceedings or not. However, the Court stated at [37] that "it does not follow that the POC Act may be taken to imply that every person in that position must proceed to make their choice, regardless of the risk of prejudice to their defence in the criminal trial". The Court stated at [37] that "[w]hether the forfeiture proceedings continue is a matter for the court to consider in the interests of justice". The Court stated at [42] that where the offences and the circumstances of the forfeiture proceedings were identical, the risk of prejudice is "plain". In those circumstances, the Court upheld the decision to grant a stay.
The Explanatory Memorandum to the 2016 Act made the following comments concerning the introduction of the new s 319 and s 319A:
"48. Firstly, new subsection 319(1) clarifies that the court may grant a stay of civil proceedings under the POC Act if the court considers that it is in the interests of justice to do so.
49. Secondly, new subsections 319(2)-(5) clarify where a court must not grant a stay. These principles are designed to clarify the intention that concurrent civil and criminal proceedings are possible, and require specific consideration of the individual circumstances and associated risks of prejudice. The amendments clarify that proceedings under the Act may only be stayed where the granting of a stay is the only means of addressing the circumstances (ie. the prejudice that may result to a concurrent or subsequent criminal trial). The proposed amendments are primarily designed to ensure that the court will consider the individual circumstances of the proceedings, including the nature of the overlap between the civil and criminal proceedings, and prevent the risk that a person need only claim a risk of prejudice but not provide evidence explaining the nature of that risk.
…
152. New section 319 is designed to clarify the process for granting a stay of civil proceedings under the POC Act, following the High Court's decision in Zhao and Jin.
153. In particular, it clarifies the principles to be taken into account by a court when considering an application for a stay of proceedings under the POC Act, and the grounds on which a stay is not to be granted.
154. New subsection 319(1) provides that a court may stay proceedings under the POC Act that are not criminal proceedings if the court considers that it is in the interests of justice to do so. This subsection replicates current section 319 of the POC Act to ensure that the court's existing discretion to grant a stay of proceedings in appropriate circumstances is maintained.
155. New subsection 319(2) builds on current section 319 and sets out grounds on which it would not be appropriate to grant a stay. …
156. A successful stay application will enable a person to delay the determination of the forfeiture proceedings until their criminal trial is complete. Such a delay would have flow on effects on the availability of evidence, would impede the operation of the non-conviction based scheme and would frustrate the objects of the POC Act. The grounds on which a stay is not to be granted are designed to prevent a respondent from claiming merely a generalised 'risk' of prejudice to support a stay of proceedings. New subparagraphs 319(2)(a) to (d) are designed to ensure that the court will consider the individual circumstances of the proceedings, including the nature of the overlap between the civil and criminal proceedings, and the specific nature of the risk of prejudice being claimed.
157. New subsection 319(3) relates to the operation of the new subparagraph 319(2)(a). This subsection is intended to make it clear that a stay is not to be granted under the POC Act on the basis of a concurrent criminal proceeding against the person described in subparagraph 319(2)(a) even if the circumstances pertaining to the proceedings are or may be the same as, or substantially similar to, the circumstances pertaining to the criminal proceedings.
158. New subsection 319(4) relates to the operation of new subparagraph 319(2)(b). This subsection is intended to make it clear that a stay is not to be granted under the POC Act on the basis of a concurrent criminal proceeding against the person described in subparagraph 319(2)(b) even if the circumstances pertaining to those proceedings are or may be the same as, or substantially similar to, the circumstances pertaining to the criminal proceeding.
159. New subsection 319(5) relates to subparagraph 319(2)(d). Subparagraph 319(2)(d) provides that a stay must not be granted on the ground that POC Act proceedings in relation to another person have been, are to be or may be stayed. New subsection 319(5) provides that subparagraph 319(2)(d) applies even if the staying of the POC Act proceedings would avoid a multiplicity of POC Act proceedings.
…
161. New subsection 319(6) relates to new subsection 319(1) and provides for factors that a court must have regard to in considering whether to grant a stay of proceedings. This list is not a closed list, and does not prevent the court from considering other issues in its determination of the interests of justice under new subsection 319(1).
162. New subparagraphs 319(6)(a) to (e) state that in considering whether to grant a stay of the proceedings, the court must have regard to the following matters:
· that the POC Act proceedings, and any criminal proceedings of a kind referred to in paragraph (2)(a) or (b), should proceed as expeditiously as possible (new subparagraph 319(6)(a))
· the cost and inconvenience to the Commonwealth of retaining property to which the POC Act proceeding relates and being unable to expeditiously realise its proceeds (new subparagraph 319(6)(b))
· the risk of a proceeds of crime authority suffering any prejudice (whether general or specific) in relation to the conduct of the POC Act proceedings if the proceedings were stayed (new subparagraph 319(6)(c))
· whether any prejudice that a person, other than a proceeds of crime authority, would suffer if the POC Act proceedings were not stayed may be addressed by the court by means other than a stay of the proceedings, and (new subparagraph 319(6)(d))
· any orders, other than an order for the stay of the POCA proceedings, that the court could make to address any prejudice that a person, other than a proceeds of crime authority, would suffer if the proceedings were not stayed. (new subparagraph 319(6)(e))
163. These subparagraphs ensure that the court considers other options instead of a stay which may be available to prevent prejudice. A court hearing POC Act proceedings will have access to a range of alternative tools and powers to prevent prejudice to the respondent. These could include requiring evidence to be served, rather than filed, in the first instance, or making orders restricting the disclosure of material prejudicial to a defence of criminal proceedings that would be generated in the course of proceedings under the POC Act. A note is inserted after new subsection 319(6) to give examples of orders the court could make to address any prejudice that a person would suffer if a proceeding under the POC Act were not stayed. This note provides examples of orders that the court could make to address any prejudice that a person (other than a proceeds of crime authority) would suffer if the POCA proceedings were not stayed, to include an order under new section 319A (closed court) or an order prohibiting the disclosure of information.
164. New section 319A, which provides that a court may order that proceedings, other than criminal proceedings, under the POC Act be heard, in whole or in part, in closed court if the court considers that the order is necessary to prevent interference with the administration of criminal justice."
In dealing with paragraph 49 of the Explanatory Memorandum, Basten JA in Commissioner of Australian Federal Police v Elzein (2017) 94 NSWLR 700; [2017] NSWCA 142 (Elzein) made the following comments at [69]-[70]:
"[69] This statement of purpose failed to address the difficulty identified by the High Court in Zhao, namely that to require an applicant for a stay to explain how his or her answers to questions, or the provision of a written statement as to the source of funds to purchase property, would cause a risk of prejudice to his or her defence, would be to create the prejudice which the stay seeks to avoid. The present form of s 319(2)-(5) does not advance the situation greatly in favour of refusal of a stay. Even in the old form, the High Court stated that the terms of the section "suggest that a person charged with an offence which is relevant to forfeiture or other civil proceedings brought under the POC Act must do more than point to the existence of criminal proceedings in order to obtain a stay of the civil proceedings.
[70] Further, even if the evidence given at a compulsory examination could not be used against the accused, 'its possession by the prosecution might affect his defence'. That form of prejudice arose because s 266A (as it then stood) did not render unlawful the provision of the evidence of the accused to the prosecution."
Nevertheless, his Honour reached the following conclusion at [101]:
"[101] Accordingly, the provisions should be understood in their terms as allowing an examination order obtained ex parte to stand after criminal charges have been laid, even though the examination may go to the conduct alleged to constitute the offences and, if appropriate protective orders have been made under s 266A(2), the examination may, absent some other countervailing consideration, be allowed to proceed."
[3]
Internal protection of material received or information gathered as a result of the exercise of powers under the POC Act
A significant issue in the proceedings was whether information gathered by those responsible for administering the POC Act could be "leaked" to those responsible for the investigation and prosecution of criminal proceedings against the persons who were required to give information under the compulsory powers contained in the legislation.
The summary below is based primarily on the evidence of Assistant Commissioner Gaughan, an Assistant Commissioner of the Australian Federal Police (AFP) holding and performing the duties of the position of National Manager of the Organised Crime and Cyber portfolio. His description of the steps taken to secure the information was not disputed on the appeal, although its effectiveness was in issue.
Assistant Commissioner Gaughan gave evidence that on 1 January 2012 the permanent Criminal Assets Confiscation Taskforce (CACT) formally commenced. He stated that its litigation function was transformed to the newly formed Proceeds of Crime Litigation division (the CAL division) as part of CACT. He stated it was that Department that conducts litigation under the POC Act.
Assistant Commissioner Gaughan gave evidence that the CACT is led by the respondent and located within the premises of the AFP. He described the CAL function of the CACT as "an operational legal function tasked with undertaking litigation, representing, and providing advice to the Commissioner in relation to the conduct of litigation for Commonwealth proceeds of crimes matters".
Assistant Commissioner Gaughan gave evidence that all CAL lawyers are subject to the Charter of Independence and Ethical Responsibilities issued by the Commissioner. The Charter acknowledges that the lawyers will provide professional independent legal advice and maintain integrity, objectivity and confidentiality.
Assistant Commissioner Gaughan stated that "CAL utilise a document management system, known as 'Worksite' on which CAL documents are stored and which can only be accessed by CAL team members".
Assistant Commissioner Gaughan stated that the CAL function of the CACT is overseen by the Manager and General Counsel of Criminal Assets Litigation (MCAL). He stated that position is held by a Mr Stefan Jerga who "holds and exercises the powers, functions and duties of the Commissioner in his capacity as a 'proceeds of crime authority' as defined in the POC Act". He stated that "Mr Jerga is the only individual within the AFP who holds the delegated authority to institute and conduct proceeds of crime litigation" and that "[n]o person other than the Commissioner, can direct Mr Jerga" in the performance of his functions.
Assistant Commissioner Gaughan stated that "[o]n 22 June 2017, Mr Jerga and Commander Peter Crozier issued a joint direction setting conditions as to the management of compulsory disclosed information received by the AFP pursuant to sections 39 and 180 of the POC Act". He stated that on 27 June 2017 an update to the joint direction was issued. Subparagraph 10(e) of the joint direction as updated was to the following effect:
"Subject to an expressed written authority from MCAL or MCAFAC (as applicable), any person who has received compulsory disclosed information must not have any role in a related criminal investigation or prosecution."
Assistant Commissioner Gaughan stated that Mr Jerga, having considered the matters arising in these proceedings and the directions currently in place, determined that new governance procedure should be prepared and implemented to protect and safeguard the Coercive Material received in the proceedings. He stated that the purpose of the new governance procedure was to ensure that the conduct of proceedings and discharge of the Commissioner's functions under the POC Act did not interfere with the integrity of any criminal proceedings and to ensure clarity and consistency in the handling of Coercive Material. Consequently on 16 August 2017, Mr Jerga issued what was described as a "functional governance instrument titled Standard Operating Procedure on the management and disclosure of Proceeds of Crime Act 2002 (Cth) Information" (SOP).
[4]
The SOP
As I indicated the SOP was initially issued on 16 August 2017. Clause 5 provided that if there was any inconsistency between the SOP and any other governance instrument, direction or agreement with any other agency, the SOP takes precedence.
The SOP defined 'Coercive Material' and 'POC Act Information'. Those definitions were in the following terms:
"Coercive Material
Any of the following information obtained under the Proceeds of Crime Act 2002 (Cth), including information derived from that information:
a. a sworn statement provided by a person pursuant to an order under s 39;
b. information obtained during an examination conducted under Part 3-1 of the POC Act, defined for the purposes of this document to mean the following:
i. any audio / visual recording of the examination;
ii. a transcript of the examination;
iii. any notes made by a person attending any such examination;
iv. any information given or documents produced by an examinee at any such examination pursuant to s 185(2) of the POC Act."
"POC Act Information
Information obtained as a result of:
a. an order under s 39(1)(ca), (d) or (da) of the POC Act, which permit the court to make an order directing a person to provide a sworn statement in respect of assets, liabilities and/or property;
b. the exercise of a power or performance of a function under Parts 301, 3-2, 3-3, 3-4 or 3-5 of the POC Act. For example, information obtained through these means includes:
i. information obtained by examining a person (including through the production of documents by that person at an examination conducted under the POC Act);
ii information obtained through the issuing of a production order, a notice to a financial institution or a monitoring order under the POC Act; and
iii information obtained under POC Act search warrants."
Clauses 15, 16 and 17 of the SOP deal with disclosure of POC Act Information and Coercive Material. Those provisions are in the following terms:
"Prohibition against receipt and disclosure of POC Act Information and Coercive Material
15. POC Act Information and Coercive Material must not be disclosed to, or received by, any person outside CACT, expect where:
a. It is being disclosed to Australian legal practitioners engaged by CAL in relation to proceedings under the POC Act;
b. It is being disclosed to a court which made the order pursuant to which the information was acquired;
c. it is being disclosed in relation to an application made under the POC Act;
d. disclosure is ordered by a court;
e. written authority for the disclosure is obtained in accordance with this Standard Operating Procedure; or
f. as otherwise required by law.
How to apply for permission to make disclosure
16. Any application for authority to disclose POC Act Information or Coercive Material outside CACT must:
a. be made to:
i. MCAL, through the relevant CAL regional coordinator, if the POC Act Information is Coercive Material;
ii. a CAL regional coordinator or MCAL, if the POC Act Information is non-Coercive Material;
b. be made in writing;
c. set out the reason or reasons for which permission to disclose the material is sought;
d. identify any applicable item number in the table in s 266A(2) of the POC Act that permits the proposed disclosure;
e. identify the person or persons to whom the proposed disclosure is to be made;
f. provide details of the material proposed to be disclosed; and
g. set out any court orders in place (whether under s 266A or otherwise), and any other factors such as the sensitivity of the material, that are relevant to the proposed disclosure.
Applications for disclosure that must be refused
17. Any information requesting permission to disclose POC Act Information or Coercive Material outside CACT must be refused if any of the following circumstances applies:
a. a court has made an order prohibiting the disclosure of such material, such as by an order made under s 266A(2) of the POC Act;
b. an authorised officer, an AFP Appointee, or the Commissioner has given an undertaking to a court, to an examiner or an examinee that the disclosure will not be made either at all or without notice having been given."
Clauses 20 and 21 of the SOP make provision for maintenance of a register recording disclosure of POC Act information and Coercive Material. They provide as follows:
"Register recording disclosure of POC Act Information and Coercive Material
20. CAL must maintain:
a. a register of POC Act Information and Coercive Material disclosed outside CACT, in the form annexed at Attachment 'C'. The register must be kept in each region by the CAL regional coordinator. On the first Monday of each month a copy of any new entries added to the regional register in the preceding month must be forwarded to the Coordinator Canberra CAL;
b. a record of each person who has been granted access to a particular item of Coercive Material, in the form of attachment 'D'.
21. A full record must be kept of decisions to disclose POC Act Information and Coercive Material because disclosure decisions under s 266A of the POC Act are not exempt from review under the Administrative Decisions (Judicial Review) Act 1977 and information disclosed pursuant to s 266A may also be subject to challenges on admissibility grounds."
The SOP set out requirements for the storage and printing of Coercive Material. These provisions were in the following terms:
"23. All Coercive Material must be:
a. if in electronic form:
i. stored such that access to the information is limited to members of CACT and IT services personnel supporting members of CACT via password protected computers or devices. Without limiting the generality of this requirement, POC Act Information must not be place on PROMIS, shared drives, or any other location accessible by AFP Appointees who are not part of CACT or who are otherwise part of the criminal investigation team; and
ii. capable of being audited for access: that is, it must be possible to identify details of any access to such material, including by whom the material was access, and the time at which it was accessed; and
b. if in physical form:
i. stored in a location to which access is limited to members of the CACT;
ii. wherever possible, stored in folders or containers that are clearly marked as follows:
'THIS [FOLDER/CONTAINER] CONTAINS COERCIVE MATERIAL. ACCESS IS RESTRICTED TO CACT PERSONNEL WITH APPROVAL TO ACCESS.'
24. In respect of paragraph 23.b immediately above:
a. printing or photocopying of Coercive Material by members of CACT must only occur where strictly necessary;
b. upon making any hard copy of an item of Coercive Material (whether by printing or photocopying), the person who made the copy must immediately inform the CAL Lawyer with the day-to-day carriage of the matter of the following:
i. the fact that they have made the copy;
ii. the date and time the copy was made; and
iii. whether the copy has been given to another person, and if so, to whom and for what purpose.
25. Where Coercive Material is to be printed, it must be printed to a printer to which only AFP Appointees within CACT have access.
26. In the event that a hard copy is destroyed, this must be done securely, and the person who destroys the hard copy must inform the CAL Lawyer with day-to-day carriage of the matter of such destruction immediately.
27. CAL must maintain a record, for each matter, of each person who is permitted to access a particular item of Coercive Material, along with details of the particulars set out at paragraphs 24.b and 26 above, in the form of attachment 'D'."
Clauses 28 to 32 of the SOP deal with receipt, custody and use of Coercive Material and dissemination of disclosure prohibition orders under s 266A. They provide as follows:
"28. Generally, in the ordinary course of a POC matter, Coercive Material is received through a member of CAL in the first instance. In the event that a CACT member not within CAL received Coercive Material in the first instance (e.g. if a s 39 statement is given to a CACT member not within CAL), this must be handled securely by the CACT member and provided to CAL as soon as possible.
29. The custody and control of Coercive Material in accordance with this Standard Operating Procedure, must remain at all times with CAL, except as follows:
a. Coercive Material provided by CAL to another member of CACT;
b. Coercive Material that has been disclosed outside CACT (e.g. to another investigative authority or to an AFP investigation team) in accordance with this Standard Operating Procedure.
30. Sometimes, CACT investigators and CACT forensic accountants refer to Coercive Material in order to undertake further information gathering enquiries. The further enquiries undertaken and the results of those enquiries cannot be recorded on PROMIS, shared drives or open access ICT systems where it directly cites Coercive Material. Nothing that CACT investigators and/or CACT forensic accountants acquires by way of such further enquiries can be disseminated outside of CACT without going through the procedure set out at paragraphs 15 to 19 above.
31. Where any documents, including affidavits, directly cite Coercive Material, these need to be securely stored in accordance with the procedures set out in this Standard Operating Procedure that apply to Coercive Material (this includes, for example, that these documents cannot be stored on PROMIS, shared drives or open access ICT systems, as per paragraph 23 above).
32. If a court makes an order prohibiting disclosure of POC Act Information, or it an authorised officer, an AFP Appointee, or the Commissioner has given an undertaking to a court, an examiner or an examinee that a disclosure of POC Act Information or Coercive Material will not be made either at all or without notice having been given, the CAL Lawyer with the day-to-day carriage of the matter must ensure that a copy of the order or notification of the undertaking is provided to:
a. MCAL;
b. the CAL Coordinator in the State or Territory in which the order was made or the undertaking given;
c. the Superintendent with oversight of CACT in the State or Territory in which the order was made or the undertaking given;
d. National Coordinator CACT;
e. all members of CACT in the State or Territory in which the order was made or the undertaking given and any other CACT members who are otherwise involved in the matter; and
f. the Superintendent with oversight of any related criminal investigation."
Clauses 33 and 36 deal with what are described in the SOP as "Training and other matters relating to staff". They are in the following terms:
"33. All CACT AFP Appointees must receive training on their obligations under this Standard Operating Procedure annually. The training should cover current developments in the law on POC Act information and the AFP's governance framework."
"36. Where Coercive Material has been obtained in POC Act proceedings, any request to obtain further information using the information gathering powers in Chapter 3 of the POC Act in those POC Act proceedings must not be referred to any AFP Appointee who has command or management of any AFP Appointee involved in any related criminal investigation or prosecution."
Clause 37 provides for audits to determine whether there has been effective compliance with the SOP at least once every six months. It provides that the result of the audit must be kept in a confidential WorkSite file called "CACT audit results".
Assistant Commissioner Gaughan also gave evidence that the Sydney CACT and CAL teams are located in office premises physically separate from the majority of the respondent's Sydney staff.
So far as the training requirement in the SOP was concerned, Assistant Commissioner Gaughan gave evidence that on 17 August 2017 a training session was conducted at the Sydney office of CACT, attended by all members of CACT and CAL who were present in the office that day, which constituted the vast majority of the staff. He stated that "the subject of the training was the content and practical application of the new SOP". He further stated that further training was conducted on 21 August 2017 for those persons who were not present at the initial training session. He said that all current CAL members and CACT members, with the exception of one team member, had been trained and the remaining team member would be trained as soon as possible.
Assistant Commissioner Gaughan stated that as a mandatory compliance document, the SOP is part of the respondent's professional standards framework. He stated that the failure by an AFP appointee to adhere to and comply with the SOP may constitute a breach of the respondent's professional standards which has consequences and serious sanctions under Part V of the Australian Federal Police Act 1979 (Cth). He stated that he had been informed that the SOP has been implemented in the Sydney office of CAL and CACT and is capable of ongoing implementation. He stated that he had also been informed the SOP is being rolled out to each of the CAL and CACT offices and is capable of ongoing implementation.
[5]
The primary judgment
The primary judge referred to the ex parte orders made by her on 16 May 2017, to which I have referred at [3] above. She referred to the fact that Federal Agent Burtenshaw, in an affidavit sworn on 15 February 2017, deposed to holding a reasonable suspicion that each of the respondents had committed the following serious offences:
(i) The taxation fraud conspiracy;
(ii) Dealing in money or property worth $100,000 or more which is reasonably suspected of being proceeds of crime;
(iii) Entering into (or aiding and abetting another person to enter) an arrangement or transaction with the knowledge, belief or intention of securing the inability of a company to pay income tax and goods and services tax;
(iv) Dishonestly causing a loss to a Commonwealth entity, contrary to s 135.1(3) of the Criminal Code; and
(v) Obtaining a financial benefit from a Commonwealth entity through deception.
The primary judge pointed out that none of the respondents had been charged with offences (ii) to (v) above. The primary judge noted that the appellants were charged with a taxation fraud conspiracy in the days following the making of the order.
The primary judge stated that after considering the first affidavit sworn by Agent Burtenshaw and the material exhibited to it, she was satisfied that each of the appellants should be examined in relation to their own affairs and in relation to the affairs of each other. She stated that in coming to that view, she accepted the concerns expressed by Federal Agent Burtenshaw that the examination orders should be made and the examinations conducted before the finalisation of any pending criminal proceedings, having regard to the likely delay in the finalisation of those proceedings which he stated, would impede the respondent's legitimate interest in both progressing the POC Act proceedings and in seeking to identify and locate property that might be the subject of applications for the issue of additional restraining orders. She stated that in making the orders, she accepted Federal Agent Burtenshaw's concern that the appellants may take steps to dissipate property which the respondent had not identified as at the date she made the orders.
Her Honour referred to the fact that examination notices had been issued on 5 and 6 June 2017, by which time the appellants had been charged with a taxation fraud conspiracy. She noted that pursuant to s 188 of the POC Act, the appellants were advised the examination was to take place in private and of their right to be legally represented at the examination.
Her Honour noted that in compliance with the orders of 16 May 2017, Sworn Asset Statements have been served by the appellants. She stated that they were currently in the sole and exclusive custody of CACT, CAL and counsel briefed by CAL. She referred to the internal governance procedures which I have summarised at [47]-[61] above and to the evidence of Assistant Commissioner Gaughan. She also noted the evidence given by Assistant Commissioner Gaughan in the proceedings that the Sworn Asset Statements have not been and will not be disclosed to anyone involved in the criminal investigation or prosecution of the appellants, whilst noting that there was considerable contention as to whether the procedures address the risk of inadvertent disclosure.
Her Honour referred to the orders made by her under s 266A(2)(b) on 21 June 2017 and 17 July 2017. These orders were in the following terms:
"Until further order, the plaintiff is prohibited from disclosing to the ATO, any foreign authority or to any State or Commonwealth agency with power to investigate or prosecute offences, information obtained directly or derivatively from Defendants 1, 2, 3, 4 or from Daniel Clarke pursuant to orders made on 16 May 2017 pursuant to ss 39 and 180 of the Proceeds of Crime Act 2002."
"In respect of the amended notice of motion filed 29 June 2017 by the 2nd defendant, noting that the 1st defendant joins in seeking the relief in paragraph 12, the Court orders, by consent:
1. Until further order, there is to be no publication or other disclosure of information that comprises evidence that has been obtained from the First and/or Second Defendant pursuant to orders made on 16 May 2017 under s 39 and s 180 of the Proceeds of Crime Act 2002 (Cth)."
Her Honour summarised in detail essential features of the alleged offences as described in the affidavit of Agent Burtenshaw. For present purposes it is sufficient to refer to the following matters described more fully in [53] of her Honour's judgment:
"(1) Federal Agent Burtenshaw describes three levels of companies involved in the taxation fraud conspiracy including Plutus Payroll Australia Pty Ltd ('Plutus'), a company which provided a payroll administration service to a large number of corporate entities ('Client Companies').
(2) In excess of two hundred Client Companies engaged Plutus to provide payroll management services for their employees and/or contractors including:
(a) payment of salary wages and invoices;
(b) payment of superannuation obligations;
(c) managing rostered leave arrangements and timesheets; and
(d) managing salary sacrificing and novated lease payments.
(3) This payroll management function necessitated transferring Client Companies' funds to Plutus. These funds represented the gross value of the companies' employees and/or contractors' salaries, including superannuation and PAYGW liabilities due to the ATO.
(4) The regular transfers of funds from Client Companies to Plutus were made on the understanding that, after payment of wages and salaries, Plutus would withhold and remit to the ATO the required PAYGW contributions.
...
(7) The co-conspirators incorporated several other companies as part of the scheme (referred to interchangeably as "Second Tier Companies" or "Bot Companies"). The co-conspirators also recruited third parties to become directors and shareholders of these companies ('the Straw Directors'). The Straw Directors were company directors in name only. The co-conspirators maintained full control over the Second Tier Companies and their operations.
…
(9) Upon receipt of the payroll funds into Plutus' bank accounts or accounts associated with that company, a portion of the payments received was transferred into accounts operated by the Second Tier or Bot Companies. The amount transferred was generally sufficient for that company to meet the employees' or contractors' salary and superannuation entitlements of the Client Companies but not sufficient to meet the PAYGW obligation arising from that payment. The portion of Client Company funds retained by Plutus (representing the monies required to be paid to the ATO in accordance with the relevant PAYGW obligations of the Client Companies) was then transferred to another company (or direct in to bank accounts operated by the conspirators) for the ultimate benefit of them and their associates.
(10) Paragraph 17 of the Conspiracy Statement of Facts alleges that 'the conspiracy resulted in a loss to the Commonwealth of AU$89,487,489.00'."
In dealing with the current status of the criminal proceedings, her Honour took the view that on the reasonable assumption that the Commonwealth Director of Public Prosecutions intends to present a joint indictment against the alleged conspirators, it was unlikely that a trial would take place before early 2020.
The primary judge noted that the final submissions of Mr Onley and Mr Menon proceeded on the basis that POC Act proceedings, as the term is used in s 319(1), includes examination proceedings authorised under s 180. It should be noted that on appeal, Mr Anquetil, consistent with his position in the Court below, contended that this was not correct. Her Honour stated that treating an examination order under the POC Act as POC Act proceedings, is consistent with what was said by Basten JA in Elzein at [49]. She noted that it was also accepted by Mr Onley and Mr Menon but not Mr Anquetil, that they bore the evidential and persuasive onus of establishing, on the balance of probabilities, that a stay of the examination orders was in the interests of justice. She also stated that the appellants were "obliged to demonstrate a real, as opposed to a speculative or theoretical, risk of prejudice to the conduct of their defences to the taxation fraud conspiracy". On one view, each of them has adopted a somewhat different position in the appeal but no point was taken in relation to this matter.
Her Honour also stated that it was "common ground" that the statutory power to stay the examinations was to be determined in the context of the POC Act, manifesting a clear legislative intention that proceedings under the Act may, and often will, proceed concurrently with pending criminal proceedings in respect of the same or related conduct.
The primary judge at [83] noted the respondent's submission that "the preponderant weight of authority…establish[ed] that no relevant prejudice lies in the abstract circumstance that a defendant's answers under examination may influence, or even restrain the defence he or she intends to advance at his criminal trial", but that it was necessary for the defendants to "concretely identify a legitimate forensic choice in the conduct of their defence to the taxation fraud conspiracy which will be lost by the course of compulsory examination". Her Honour extensively reviewed the authorities and what she described as the "statutory regime in Part 3 Division 3 of the POC Act", which she noted that the respondent pointed to as further supporting the submission that the interests of justice did not warrant a stay of the examination orders.
In dealing with the potential for inadvertent disclosure, her Honour at [132] noted the evidence of Assistant Commissioner Gaughan that electronic versions of a number of Sworn Asset Statements provided by various defendants to the POC Act proceedings had been saved in the CACT drive of the AFP IT system and was capable of being accessed by persons not involved in the POC proceedings. She noted that Assistant Commissioner Gaughan's evidence was that once he was informed of this, the material was deleted from the CACT drive.
Her Honour noted at [133] that a direction was issued to each of the 108 personnel who had access rights to the CACT drive, requiring them to make a declaration as to whether they had accessed that material. Of that number, 99 personnel responded by way of a signed declaration, 97 of whom indicated they did not view the information. The two who had viewed it, Agent Burtenshaw and Agent Murphy, were entitled to do so. The primary judge noted the evidence was that of the nine people who did not respond, four had resigned before the access period commenced and the remaining five were on extended leave at the time. She noted that an audit of the access by those members revealed that none had accessed any AFP systems during the access period. It should be noted that this occurred prior to the issue of the SOP and that there was no evidence to suggest that there had been any inadvertent disclosure following the promulgation of that document.
At [141] and following, the primary judge turned to deal with the adequacy of the means to limit the risk of disclosure of Coercive Material. Her Honour noted at [150] that the effect of the order made by her under s 266A(2)(b) of the POC Act prohibited disclosure to any person involved with the investigation of, or prosecution of the appellants. She stated that in that way it reinforced the regime under the SOP. In dealing with a submission by counsel for the respondent of the possibility of the ATO serving an information production notice, she stated that she was satisfied that the respondent would move the Court to either have the order varied or have the notice withdrawn or set aside.
The primary judge noted the respondent's submission that there were "four mechanisms established by the evidence" by which the Court could "assess the realistic risk of the leakage of Coercive Material to the prosecuting or investigating authorities". She stated that the first of these four mechanisms was the disclosure prohibition order made on 21 June 2017. The second was the evidence of the "rigorous system" implemented to prevent, manage and detect disclosure. Third, even if an unauthorised disclosure was to occur, "the Court would not immediately conclude it would be unlawful, or that it would result in unfair prejudice to a criminal trial in circumstances where derivative use of Coercive Material is expressly permitted by the POC Act". Fourth, given "the rigours of the SOP", an unauthorised disclosure was likely to be detected and brought to the attention of the Commonwealth Director of Prosecutions and, if necessary, the trial court. She noted, however, the acknowledgement by the respondent that there was "no absolute guarantee" that there would "not be the disclosure of derivative information which has "been so subtly interwoven with the authorised disclosure of Coercive Material as to be practically undetectable".
During the course of the hearing before the primary judge, a debate ensued as to the significance of an audit report (the Crocodile Report) and the evidence of the Manager of the Audit Team that produced the report, a Mr Andrew Ramsden. The audit was an audit of the entities within the Plutus Group and companies associated with that group and their taxation affairs. It is unnecessary to set out the audit methodology used at this point in the judgment. The report concluded that the total outstanding tax liabilities of each of the entities the subject of the audit (after applying payments received) amounted to $159,759,306.93.
Counsel for Mr Menon submitted that that report could not be relied on as evidence of practical prejudice for the purpose of s 319(6)(c) or (d) as it did not identify the amount of funds due to the ATO as Pay as You Go instalments, even less the amount generated by the alleged taxation fraud, to the extent that those amounts were different. Rather, he described it as "the assessment of the tax liability of various corporate entities implicated in or integral to the Audit Team's investigation into a tax fraud, by utilising assessment tools that are deployed in a way that is most adverse to a taxpayer". He submitted that it was not appropriate to take that liability, so calculated, into account as prejudice were the examinations to be stayed as the amount did not meaningfully equate with what the Commissioner suspected were the proceeds of the taxation fraud conspiracy currently unaccounted for.
The primary judge after noting submissions made on behalf of the respondent on this issue concluded this section of her judgment in the following terms:
"[184] Finally, Mr McLure submitted that since the Crocodile Report and the suspicions that Federal Agent Burtenshaw holds referable to it also allows for a prima facie finding that each of the defendants has been involved in criminal enterprise to defeat the tax legislation, this Court can hardly be invited to proceed on the basis that in the operation of the businesses the corporate entities were purporting to conduct, they otherwise complied with relevant tax law. As the Commissioner submitted, the very character of the scheme investigated by the ATO and charged as the taxation fraud conspiracy was to deprive the Commissioner of Taxation of tax based revenue, not to pay it."
Subsequently in her judgment, the primary judge stated that she was prepared to accept the submission by counsel for Mr Menon that "the tax liability of the various corporations implicated in the taxation fraud did not represent the value of the benefits the defendants derived from what is alleged as their criminal involvement in the fraud". However, in concluding that it did not follow that the examination into their affairs will be inutile, she made the following remarks:
"[287] . I am also of the view that the fact that the defendants have provided Sworn Asset Statements in no way forecloses on what must be regarded as a possibility that there is further property yet to be identified by the Commissioner. Nor does the fact because certain electronic payments have been identified by the Commissioner as the mechanisms through which the fraud was perpetrated (and via which the monies due to the ATO were dissipated) foreclose on the possibility that the Commissioner's information is incomplete. Equally it does not follow that because criminal proceedings have been initiated, that the investigation into the affairs of those charged with that offence are at an end for the purposes of the POC proceedings where they are each named as defendants. While I am able to confidently proceed on the assumption that the taxation fraud conspiracy charge was regularly and properly brought on the basis of evidence that was available to the Commissioner in May 2017, that is not inconsistent with POC Act investigations, continuing after that date in relation to other property that may reasonably be suspected to be proceeds of crime. It is uncontroversial that one of the objects of the Act that is capable of being realized by the examination regime in Part 3.1 of the Act is precisely to assist in such investigations."
Her Honour also noted the concerns expressed by Agent Burtenshaw if the examination was not allowed to proceed. She summarised these concerns in the following terms (at [279]):
"[279] Mr McLure referred to paragraph 788 of the affidavit of Federal Agent Burtenshaw where he expressed the following concerns were the orders for the examination of the defendants and orders for them to provide Sworn Asset Statements not made expeditiously. Mr McLure submitted those concerns are no less valid now where orders are sought staying the effect of those orders.
'I am concerned that if Examination Orders and Orders for Sworn Statement are not made until the conclusion of the criminal proceedings:
(a) the Commissioner's investigations will be impaired for an extended period of time as examinations and statements of affairs will not be available to him. These are investigative tools which are usually available to the Commissioner in proceedings such as these and are granted to facilitate the principal objects of the Act;
(b) there will be a delay in the proceedings and interested parties to the proceedings and individuals who are sought to be made subject to the Examination Orders or the Orders for Statements may leave the country or become unavailable for the purposes of these orders;
(c) there will be a delay in the proceedings and the Commissioner will not be able to progress the proceedings to realise the value of any restrained property in accordance with the principal objects of the Act. The Commissioner may be prevented from seeking forfeiture orders over any restrained property and will be unable to obtain a pecuniary penalty order (PPO) or to satisfy all of the PPO amount;
(d) the Defendants (and other identified and unidentified interested parties) may take steps to dissipate property which the Commissioner has not identified and will have ample time to do so - in particular, any funds standing to the credit of bank accounts may be easily dissipated;
(e) the risk of dissipation is exacerbated by the large number of bank accounts, entities and associates to which the individuals who are sought to be made subject to the Examination Orders or the Orders for Statements have access and whilst substantial efforts have been made by the AFP to identify, for example, all bank accounts within the jurisdiction, it may be that there are other accounts in Australia or overseas not captured by the orders sought presently which could be used in the aid of the flight of capital. The Suspected Offenders have demonstrated their ability to transfer large sums of money overseas; and
(f) these proceedings will not be determined expeditiously."
The primary judge after reviewing a number of authorities including Zhao, X7 v Australian Crime Commission (2013) 248 CLR 92; [2013] HCA 29 (X7), Lee v New South Wales Crime Commission (2013) 251 CLR 196; [2013] HCA 39 (Lee No 1) and Lee v The Queen (2014) 253 CLR 455; [2014] HCA 20 (Lee No 2) concluded that for there to be prejudice shown by the appellants, it was necessary for them to "concretely identify a 'legitimate forensic choice' in the conduct of their defence that will be lost by their examination". Her Honour's conclusion on this issue was in the following terms (PJ [217]-[218]):
"[217] In summary, the Commissioner submitted that the weight of authority establishes that no relevant inherent prejudice lies in the abstract circumstance that a defendant's answers under examination may influence or even restrain the case they may elect to advance at their criminal trial. Rather, a defendant is obliged to concretely identify a 'legitimate forensic choice' in the conduct of their defence that will be lost by their examination.
[218] In my view, that submission, which proceeds from a sound analysis of the collected authorities I have referred to above, is sound. The Commissioner submitted the defendants have consistently eschewed that exercise in the stay proceedings in which they are the moving parties and in which they bear the onus of satisfying the Court that the interests of justice require the examinations to be stayed."
Her Honour noted at [223] the submissions by counsel for Mr Onley that there was a "substantial overlap or intersection between the factual matrix" which underpinned the criminal proceedings and that which underpinned the proceeds of crime proceedings and was such that, to require Mr Onley to be examined whilst his criminal proceedings were pending would be "productive of real prejudice" in the conduct of the criminal proceedings and, that being the case, it was in the interests of justice that the examination proceedings be stayed. Her Honour noted at [229] that the Commissioner accepted that there was a coincidence of the subject matter likely to be canvassed in an examination of the affairs of each of the appellants and the factual ambit of the taxation fraud conspiracy, and that it was also likely there will be some overlap of the issues which will arise in both proceedings.
The primary judge noted the respondent's submissions that notwithstanding these matters, he had "a legitimate, current and continuing interest" in examining the respondents about their examinable affairs to ensure that any pecuniary penalty order that may be made in the substantive proceedings can be met at the time that the final orders in those proceedings are made.
Her Honour rejected the submission that the examination power under s 180 of the Act is not available to be deployed for that purpose. Her conclusion was in the following terms (PJ [233]):
"[233] In addressing Ms Bashir's submission that the examination power under s 180 of the Act is not available to be deployed for that purpose and Mr Game's submissions that it would be an improper use of the examination orders that have been made were they to be used in that way, the Commissioner relied upon the operation of s 142 of the POC Act. The Commissioner further submitted that s 142 and its intended operation as part of the machinery in the POC Act designed to achieve the statutory objectives in s 5 of the Act, also disposes of Mr Game's allied submission that for the Court to sanction the Commissioner's proposed use of the examination power to secure a charge over restrained property under s 142 in order to satisfy a future pecuniary penalty order is a consideration favouring a stay of the examinations in "the interests of justice". With neither Mr Game nor Ms Bashir appearing in the second phase of the stay proceedings, and neither Mr Johnson nor Mr Hassall grappling with the argument put against them, I accept the Commissioner's submission and analysis. I can see no impropriety in the Commissioner's approach."
Her Honour noted at [236] the different language in s 319(3) and s 319(4) of the POC Act. She also noted at [237] the submission that the distinction in language was significant and that "the legislature must be taken to have intended not to foreclose on the grant of a stay on the ground that an accused person is to be examined where the subject matter of the examination is the same or substantially similar as the matter at issue to the criminal proceedings, but only where the circumstances pertaining to the examination may be the same or substantially similar to the criminal proceedings". She submitted, "that being the case, that the degree of coincidence or overlap in the subject matters of the two proceedings…is a consideration worthy of weight in the discretionary exercise".
Her Honour noted at [240] the submission by the Commissioner that there was no material distinction between the language of s 319(3) and s 319(4) since the "circumstances pertaining to" both proceedings (the language of s 319(3)) logically includes a similarity in "subject matter" as one such circumstance (the language of s 319(4)). She also noted the submission by the Commissioner that s 319(2)(a) and (3) expressly provide that the institution of, or the potential for the commencement of criminal proceedings against the person the subject of the POC Act proceedings is excluded as a ground for a stay of the examinations despite the circumstances pertaining to the proceedings being the same or substantially similar to the criminal proceedings.
I have set out the submissions made to the primary judge on this issue in a little detail as one of the grounds of appeal was that her Honour did not deal with this matter.
In the course of dealing with the submissions made on behalf of Mr Onley at the hearing, the primary judge identified the question before her as whether the appellants had "discharged the onus of satisfying the Court that the Commissioner should not be permitted to utilise the statutory power in s 180 of the POC Act, and in considering that question, whether the Commissioner can point to any prejudice were he to be deprived of access to that source of power for an extended period of years".
In dealing with the submissions made on behalf of Mr Anquetil, her Honour indicated that she had some doubt as to whether the examination proceedings are "proceedings before the court" such as to be susceptible to an order for a stay under s 67 of the Civil Procedure Act 2005 (NSW).
Her Honour noted the submission by counsel for Mr Anquetil that the amendments to s 319 did no more than to recognise what was well settled, namely, that the mere pendency of criminal proceedings would not justify a stay of an examination under the POC Act. She stated at [249] that whilst she accepted that "the mere pendency of criminal proceedings has long been recognised as an inadequate basis to attract the power to stay allied proceedings, including compulsory questioning under Proceeds of Crime statutes, the amendments to s 319 oblige a court when considering whether 'POCA proceedings' are to be stayed in the interests of justice to take the matters in s 319(6) into account and to refuse a stay merely on the basis of criminal proceedings and the POC Act proceedings sharing common features". In reaching that conclusion, her Honour did not seek to distinguish between the position under s 319(3) and s 319(4) and thus implicitly at least, seemed to reject the submissions on the construction of the sections to which I have referred to at [89]-[91] above.
Her Honour noted that counsel for Mr Anquetil adopted a submission put by counsel for Mr Onley but later abandoned by him that because the examination orders were made ex parte the onus was on the Commissioner to justify a continuation of that order. The primary judge stated at [252] that the argument put did not engage with the fact that because the applications were proceedings under the POC Act, s 317 governed the question of onus, something on which r 36.17 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) is silent. She noted at [255] that no oral or written submission was advanced as to why she should revoke or set aside the ex parte examination order made on 16 May 2017. She stated that no submission was directed to any suggested inadequacy in the grounds upon which the Commissioner relied for the issue of the examination order, or any inadequacy in the evidence in support of the making of that order, or any error in the approach she took in making the order. Her conclusion was in the following terms (PJ [256]):
"[256] I was then and remain satisfied now that the application by the Commissioner to examine the third defendant was justified. Having regard to the purpose and structure of the statutory scheme in the POC Act and the various matters conditioning the exercise of the discretion to grant the application, I was satisfied that the order should be made. The matters I took into consideration then and, to the extent necessary, the matters that I take into consideration now include, without being exhaustive, the identity of the third defendant as a person suspected of complicity in the taxation fraud as the proposed examinee and the subject matter of the proposed examination into his affairs including the circumstances in which the restraining orders were made and the nature and basis of the suspicions that founded the Commissioner's application for the restraining orders. I also take into account the fact that both in May 2017 and currently there are legitimate questions as to the source and ownership of the property the subject of restraint, as there is in relation to other property over which the third defendant might exercise effective control, whether on his own behalf or on behalf of named others. These matters, in combination, are material features of the third defendant's examinable affairs into which I am satisfied the Commissioner has a legitimate right to enquire for the purposes of the POC Act proceedings."
In dealing with the submissions made on behalf of Mr Menon, her Honour noted that it was submitted that an additional concern was that the examination would not be convened by a judicial officer. She noted at [265] that this was in contrast to the examination under consideration in Lee No 1 where the examination was itself a judicial process and accordingly, the exercise of judicial power was available during the course of the examination to ensure that the examination was conducted consistent with the fundamental features of an accusatorial criminal process. She noted that it was submitted that the non-judicial character of the examination exposed the examinees to the risk that their rights to a trial held in accordance with these principles would be jeopardised, the more so when the subject matter of the examination would inevitably traverse the matters at issue in the criminal proceedings.
Her Honour whilst noting that this submission mirrored much of the reasoning of the primary judge in Commissioner of Australian Federal Police v Cacu (2017) 264 A Crim R 427; [2017] NSWCA 5 (Cacu), stated at [267] that what the respondents could not call in aid in that case was that under the amended form of s 266A which was current at the time of the hearing of the appeal in Cacu, the Court could make a non-disclosure order, something which had been done in the present case; see Cacu at [47].
Her Honour also stated at [271], referring to what was said by Beazley P in Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103 at [58]-[64] that there was merit in the Commissioner's reliance on the powers of an approved examiner under the POC Act to control the conduct of an examination being not unlike the supervision exercised by a judicial officer. Her Honour stated at [272] that there was not a legitimate concern that the examination might undermine or interfere with the accusatorial process inherent in a criminal trial because the examination was conducted in "real time", the examiner had the power to compel an examinee to answer a question, and under s 192 of the Act the examiner may refer questions of law to this Court, including on the application of the examinee. She stated at [272] that it was at least arguable that if an examiner was satisfied that a particular course of questioning might be productive of a real and not theoretical risk of unfair prejudice to the conduct of the pending criminal proceedings, that might be a question of law justifying referral to the Court.
Her Honour noted that counsel for Mr Menon in his oral submissions accepted that he was obliged to demonstrate a "real" and "demonstrable" risk of prejudice in the conduct of his client's defence in the criminal proceedings such that the Court would conclude, consistently with the power to stay the examination, that the interests of justice require that the examination proceedings be stayed. She noted at [275] that counsel for Mr Menon also submitted that his client was subject to the practical prejudice that, in the event that he elects to give evidence in his defence, he may be restricted in the evidence he might wish to give where the compulsory examination would traverse his involvement with the criminal scheme alleged to underpin the perpetration of the fraud.
Her Honour also noted the submission that a separate source of practical prejudice appeared from Agent Burtenshaw's affidavit, to the effect that he held a reasonable suspicion that in addition to Mr Menon's complicity in the taxation fraud conspiracy, he has also committed a proceeds of crime offence or offences. She noted that counsel submitted that simply because Mr Menon had not been charged with this sort of offence, she would be satisfied that there was a real risk that as the matter proceeds he may be charged with such an offence in the future. She noted that it was submitted that in those circumstances, there is an inherent and demonstrable risk of prejudice if his answers, given under compulsion, might restrict any instructions he may later give in response to the actual laying of such a charge.
Her Honour stated at [276] that the difficulty with the latter submission was that in R v Independent Broad-based Anti-corruption Commissioner (2016) 256 CLR 459; [2016] HCA 8 (IBAC), the High Court rejected the suggestion that the companion rule referred to in Lee No 2 at [33] also applied to a person who had not been charged.
In dealing with what her Honour described as a consideration of the relevant matters under s 319(6)(e) of the POC Act, the primary judge stated at [293] that the combined effect of the terms of the non-disclosure order already made in the proceedings and the regime in place to manage the Coercive Material ameliorated to a very significant degree the risk of disclosure of information that may adversely impact on the defendant's right to a fair trial conducted in accordance with adversarial principles. In considering whether the SOP addressed the risk of inadvertent disclosure, her Honour made the following remarks (PJ [296]):
"[296] Whilst it is true that the SOP is a new initiative and to that extent untested, I am well satisfied that the Commissioner has comprehensively addressed the risks associated with the management of Coercive Material and the risks associated with the leakage of that material by the rigour of the procedures specifically designed to protect against that risk. I am also well satisfied that the systems that are currently in place to militate against the risk of the leakage of Coercive Material already in the Commissioner's possession and the information that is likely to come into his possession are both rational and enforceable."
Her Honour stated at [303] that she did not regard the timing of the prospective criminal trial on the taxation fraud conspiracy per se as a critical factor in determining whether the appellants had discharged the onus of demonstrating that it is in the interests of justice to stay the examination proceedings at this time.
Her Honour in those circumstances reached the following conclusions:
"[305] It is clear that subject to the express limitation on the statutory power to grant a stay in ss 319(2)(a) and (3) on the sole basis of a similarity in the circumstances pertaining to the two proceedings, that a stay will be granted where it is in the interests of justice to do so and that the mandatory considerations in s 319(6)(a) - (e) inform that question. I also accept that the extent or degree of overlap in the circumstances pertaining to the two proceedings (including the coincidence of subject matter) is also a matter to be considered in the ultimate exercise of the statutory discretion, however, the question that remains is whether, in this case, as the defendants submitted, that it is enough to warrant a stay in the interests of justice or whether, as the Commissioner submitted, they need to demonstrate how their rights and interests in defending the criminal case will be prejudiced by an examination into their affairs for the purposes of the POC Act, even if the process of compulsory questioning will entail a traversing of the facts underlying their alleged participation in the taxation fraud conspiracy.
…
[308] … I regard the observations of Gageler and Keane JJ in Lee No 1 at [323]-[324] as instructive. In their Honours' views the risk that a defendant might be required under adherence to their oath or affirmation to give a consistent (even if incriminating) account. This cannot be regarded as the loss of a 'legitimate forensic choice' prejudicing a fair trial. The law cannot be concerned with preventing 'prejudice' generated by a defendant's own unlawful behaviour directed at perverting the course of justice. To conclude otherwise would be to transmute a privilege against self-incrimination into a privilege to give false evidence in one's defence. Applying the same analysis, there is no force in the defendants' submission that, in effect, it is too early for them to be examined or that they want the opportunity to consider the evidence to be adduced against them in proof of the allegation of their criminal guilt before they are asked questions about 'their affairs' and 'the affairs of each other' as their affairs relate to matters relevant to the POC Act proceedings.
[309] Mr McLure submitted that an examinee's right to be represented in an examination, and for his legal representative to take objection to a particular question or line of questioning, for example, because questions are said to be improperly formulated or directed to a matter outside the scope of the examination - that is to say outside of the legitimate reach of questions concerning a defendant's examinable affairs does not depend upon the ambit of the prosecution brief of evidence, or a legal representative's awareness of its contents. Neither does it depend upon having a comprehensive set of instructions responsive to that brief of evidence or to the prosecution case. Rather, it is necessary for the defendants in these proceedings to identify a legitimate forensic choice that they are at the least likely to make in the conduct of his defence to the criminal proceedings that is at risk of being lost, or in some demonstrable way negatively impacted upon, were he required to submit to compulsory examination whilst his criminal proceedings are in the process of passing through to arraignment and from there to trial. The Commissioner submitted that the evidence upon which the defendants relied in the stay proceedings did not go to the risk of prejudice formulated in that way, and no attempt has been made in submissions to address it with any particularity. I accept that submission.
[310] In the result, I am not persuaded that the interests of justice warrant a stay of the examination proceedings or the making of any orders limiting the use to which the Commissioner may legitimately put the Sworn Asset Statements of the defendants in his possession."
[6]
The grounds of appeal
Each of Mr Menon and Mr Onley filed an amended Notice of Appeal pursuant to leave granted by the Court on 30 October 2018, the second day of the hearing. The amended Notices of Appeal were in materially identical terms and raised the following grounds:
"Prejudice to examinee
1 The Primary Judge erred by failing to find that material prejudice or risk of prejudice to an accused arises, for the purpose of determining whether to stay an examination or limit its scope, where the subject matter of the proceedings under the Proceeds of Crime Act 2002 (Cth) ('POCA') is the same as, or substantially similar to, the matter at issue in the criminal proceedings that have been commenced:
a. …
b. by reason of risks of the prosecution being assisted;
c. by reason of other risks to the conduct of the defence.
2 Intersection and overlap The Primary Judge erred by failing to find that the POCA draws a material distinction, for purposes of deciding whether to stay an examination or limit its scope, between an examination where:
a. the 'circumstances pertaining to' the POCA proceedings are or may be the same as, or substantially similar to, the 'circumstances pertaining to' the criminal proceedings where the criminal proceedings have been commenced against the examinee: s.319(3); and
b. the 'the subject matter of' the POCA proceedings is the same as, or substantially similar to, 'the matter at issue' in the criminal proceedings where the criminal proceedings have been commenced against a person other than the examinee: s.319(4);
and an examination where criminal proceedings 'may be', 'are proposed to be' or 'have been' instituted or commenced.
3 …
4 Leakage and use The Primary Judge, having found, as was common ground, that risks of dissemination and use by prosecutors were reduced by:
a. an order under s.266A of POCA;
b. a procedure ('Standard Operating Procedure') designed to address the risk of dissemination to prosecutors of the content of an examination and material obtained derivatively therefrom, insofar as information is identified as derivative;
erred by failing to make findings on the submissions made as to the risks that remained, and in failing to assess the risks that remained, of compulsorily acquired information assisting a prosecution.
5 The Primary Judge should have found that, despite the s.266A order, the Standard Operating Procedure and prosecutor duties (where prosecutors identify what they receive as derivative material), there remained a relevant risk of disclosure and use in a prosecution of derivative material, heightened where 'the subject matter of' the POCA proceedings is the same as, or substantially similar to, 'the matter at issue' in the criminal proceedings and where the examination touches and concerns the subject matter of the criminal proceedings.
6 Decisions of accused The Primary Judge should have found that decisions of an accused in respect of criminal proceedings could be affected by risks of disclosure and use in a prosecution of derivative material.
7 The Primary Judge erred in failing to find that material prejudiced to an examinee arises due to the risk that the accused will be charged with a proceeds of crime offence.
8 The Primary Judge erred in failing to delay the examination order until the criminal charges here are finalised.
9 The Primary Judge erred by finding that an applicant for a stay of an examination, who is an accused in criminal proceedings, must concretely identify a legitimate forensic choice that the accused is likely to make in the conduct of their defence to the criminal proceedings as currently charged that is at risk of being lost, or in some demonstrable way negatively impacted upon, were the accused required to submit to compulsory examination as to all their examinable affairs whilst the criminal proceedings against the accused are in the process of passing through to arraignment and from there to trial.
10 The Primary Judge should have found that the accused were not required to point to particular forensic decisions to be made in respect of criminal proceedings or outline their defences, to demonstrate risk of prejudice and why it was in the interests of justice to stay the examination or limit the scope.
11 The Primary Judge erred by conflating an accused's task in an application to stay a POCA examination proceedings pursuant to s.319 of the POC Act with that of a defendant in criminal proceedings seeking a permanent stay, when the question of a stay of a POCA examination arises before a trial.
12 Prejudice generally The Primary Judge erred by finding that no relevant prejudice to an examinee had been pointed to with sufficient particularity, if the examinee were to be examined as to all examinable affairs.
Use to respondent and balancing exercise
13 The Primary Judge erred by failing to distinguish between benefits to the respondent arising by an examination for ordinary purposes of the Act, on the one hand, and 'practical prejudice of any significance' to the respondent if the examination was delayed, within the meaning of those words in AFP v McGlone [2016] NSWCA 103.
14 The Primary Judge erred by failing to find that the respondent had not demonstrated practical prejudice of any significance to the respondent if the examination was delayed.
15 The Primary Judge erred by failing to address or find that the examination could not be used for and focussed upon satisfying a forfeiture or pecuniary penalty order that might be made.
16 The Primary Judge erred by failing to conduct a balancing exercise between identified risk of prejudice to the accused, on the one hand and, on the other, material prejudice of any significance to the respondent if the examination was delayed or limited.
Stay power
16A The Primary Judge erred in finding that s.319 POCA applied to the application to a) set aside the examination order and b) to stay the examination order.
Conclusion
17 The conclusions of the Primary Judge in declining to stay the examination until the conclusion of the criminal proceedings and in declining to limit the scope of the examination were not reasonably open.
Sworn Statements
18 The Primary Judge erred by failing to address the submission, and in failing to find, that the order made in these proceedings for a sworn statement went beyond what is permitted by s.39 of the POCA: Commissioner of the Australian Federal Police v Cacu [2017] NSWCA 5 at [31]-[35]."
I have not set out the orders sought. In granting leave to amend, the Court indicated that should the appeals be allowed, the Court would hear argument on the appropriate orders.
The Notice of Appeal filed on behalf of Mr Anquetil was in similar terms to the amended Notice of Appeal of Mr Menon and Mr Onley, save for the omission of Ground 16A and reliance on the following additional grounds:
"1 The Primary Judge erred in holding that, before the examination order could be set aside, it was incumbent upon the applicant to show either a defect in the evidence relied upon by the Commissioner, or an error in the reasoning leading to the granting of the examination order ex parte.
2 The Primary Judge erred in holding that the applicant carried the burden of demonstrating that the examination order should be set aside.
3 The Primary Judge erred in finding that s.319 POCA applied to the application to a) set aside the examination order, and b) to stay the examination order.
4 The Primary Judge erred in failing to take into account the fact that the adversarial nature of the applicant's criminal trial would be affected."
It should be noted that Ground 3 of Mr Anquetil's Notice of Appeal mirrored Ground 16A of the amended Notices of Appeal filed by Mr Menon and Mr Onley.
The grounds of appeal, whilst perhaps not prolix, certainly overlap with each other. The joint submissions of Mr Menon and Mr Onley (the joint submissions) submitted that their appeals raised the following questions:
"A. Prejudice to accused examinees if examination is not stayed
(i) What relevance does the stage of the criminal justice process have to the stay discretion informed by s.319 of the Proceeds of Crime Act 2002 (Cth) (POCA)?
(ii) What is the scheme of POCA in respect of prejudice to an accused arising from overlap between the subject matter of an examination under POCA and the subject matter of pending criminal proceedings?
(iii) Is an order under s.266A of POCA, and a procedure designed to ensure compliance with such an order, an answer to risk of prejudice to an accused?
(iv) What onus is on an accused to point to forensic decisions in an upcoming criminal trial affected by a POCA examination on subject matter substantially similar to the matter at issue in the criminal trial, and did the accused meet it?
(v) Can material prejudice exist in respect of charges that may be laid in the future?
B. Prejudice to the AFP if examination of an accused examinee is stayed
(vi) Can material prejudice to the respondent (AFP) arise by reason of a putative pecuniary order and, if so, did material prejudice arise in this case?
(vii) Does material prejudice to the AFP arise from the ordinary operation of POCA and what 'practical prejudice' to the AFP is of 'any significance'?.
C. Parenthetical matter
(viii) What is the scope of the authorisation of POCA to require statements on oath or affirmation as to assets and liabilities?"
The matters in A(i), A(ii) and A(iv) overlap essentially. They involve the question of whether the primary judge misconstrued s 319 of the Act, and related thereto, whether her Honour was in error in concluding that to be able to obtain a stay, the appellants had to demonstrate what she described as "the loss of a 'legitimate forensic choice'" in the conduct of their defence as a result of the examination (see [85] above).
The matters in A(iii), A(v), B(vi) and (vii) and C(viii) are self-explanatory.
In these circumstances it is convenient to deal first with the submissions made in relation to A(i), A(ii) and A(iv), then A(iii), A(v), B(vi) and (vii) and C(viii). It will be necessary to deal with Grounds 1 to 4 of Mr Anquetil's Notice of Appeal which effectively raised the question of who bore the onus of proof in the proceedings.
[7]
a The appellants' submissions
Counsel for Mr Menon referred to the conclusion of the primary judge, which I have set out at [104]. He submitted that standing behind that conclusion was the rejection of the submission that the appellant suffered prejudice of the nature of that referred to in the reasoning of Hayne and Bell JJ in X7 at [124]. It is convenient to set that paragraph because of the importance it assumed in the appellants' submissions:
"[124] Even if the answers given at a compulsory examination are kept secret, and therefore cannot be used directly or indirectly by those responsible for investigating and prosecuting the matters charged, the requirement to give answers, after being charged, would fundamentally alter the accusatorial judicial process that begins with the laying of a charge and culminates in the accusatorial (and adversarial) trial in the courtroom. No longer could the accused person decide the course which he or she should adopt at trial, in answer to the charge, according only to the strength of the prosecution's case as revealed by the material provided by the prosecution before trial, or to the strength of the evidence led by the prosecution at the trial. The accused person would have to decide the course to be followed in light of that material and in light of any self-incriminatory answers which he or she had been compelled to give at an examination conducted after the charge was laid. That is, the accused person would have to decide what plea to enter, what evidence to challenge and what evidence to give or lead at trial according to what answers he or she had given at the examination. The accused person is thus prejudiced in his or her defence of the charge that has been laid by being required to answer questions about the subject matter of the pending charge [emphasis in original]."
Counsel for Mr Menon submitted that although Meagher JA described the potential prejudicial effect referred to in that paragraph as controversial in Cacu at [67], it constituted potential prejudice in the present case. He said that his submission was not affected by decisions in cases such as X7 v The Queen (2014) 246 A Crim R 402; [2014] NSWCCA 273 (X7 No 2) where a stay of criminal proceedings was refused in circumstances where material derived from a compulsory examination had not been disseminated. He submitted that it did not follow that such prejudice should not be taken into account in considering whether the proceeds of crime proceedings should be stayed. The joint submissions of Mr Onley and Mr Menon referred to Zhao v Commissioner of Australian Federal Police (2014) 43 VR 187; [2014] VSCA 137 and pointed out that an accused cannot know with precision what would ultimately impact the conduct of a future criminal trial, and the unknown should be assumed in favour of the accused in considering whether or not to grant a stay.
Counsel for Mr Menon submitted that the statement in Lee No 2 at [41], which referred to the passage from X7, which I have cited above, was an acknowledgement by five Justices of the High Court that "an accused person may be prejudiced in his or her defence because he or she can no longer determine the course to take to trial accordingly only to the strength of the prosecution case". He further submitted that what was said by Gageler and Keane JJ in Lee No 1 was not inconsistent with that reasoning, referring to what was said in X7 No 2 at [108].
In further support of his submissions, counsel for Mr Menon referred to the decision of Brereton J (as his Honour then was) in In the matter of Plutus Payroll Australia Pty Ltd [2017] NSWSC 1854, in which his Honour stayed statutory demand proceedings pending the conclusion of related criminal proceedings arising out of the conspiracy the subject of the present case. Counsel for Mr Menon referred to the remarks by Brereton J that it would be unjust to require a company to defend winding-up proceedings when criminal proceedings were pending against its directors who would either have to waive their right to silence and potentially prejudice their defence in the criminal proceedings, or the company would have to defend the proceedings without relevant evidence. Counsel for Mr Menon referred to the review of the relevant authorities by Brereton J including X7, Zhao and two first instance decisions of the Federal Court of Australia, Seller v Commissioner of Taxation (2013) 308 ALR 376; [2017] FCA 1373 and Ransley v Commissioner of Taxation [2016] FCA 778, and his conclusion at [39] that the latter two decisions manifested a principle that there is relevant prejudice from the continuation of civil proceedings if their defence would, as a matter of practicality, require the criminally accused to confine or constrain the way in which his or her defence might be conducted, or expose him or her to cross-examination on matters which might directly or indirectly assist the prosecution or expose further lines of investigation and inquiry against the accused.
It must be remembered however, that these cases did not concern the statutory regime the subject of the present proceedings. Counsel for Mr Menon accepted that there were three main protections in the POC Act, namely that the examination occurs in private, the possibility of an order under s 266A and in the present case, the existence of the SOP. However, he submitted that unlike the legislation considered by this Court in NSW Crime Commission v Lee (2012) 84 NSWLR 1; [2012] NSWCA 276 and IBAC, the examiner did not have power to control the questions.
Counsel for Mr Menon submitted that the primary judge fell into error in holding that the appellants had not demonstrated any material prejudice because they had not shown the loss of a legitimate forensic choice as she failed to recognise the prejudice referred to in X7.
In the joint submissions it was stated correctly that the 2016 Amendments to the POC Act were introduced following the decision of the High Court in Zhao. It was submitted that the Court in that case endorsed the view that protective orders would not suffice to remove the risk of prejudice: Zhao at [46]. It was submitted that this decision informs the exercise of the statutory discretion in the current s 319 of the POC Act. It was submitted that s 319 was designed to protect the fair trial of a person in circumstances where the subject matter in issue in the criminal proceeding is the same or substantially similar to the subject matter of the examination.
Counsel for Mr Menon pointed to what he described as the contradistinction in the language in s 319(2)(a) and s 319(2)(b) of the POC Act and the contradistinction in s 319(3) and s 319(4). He submitted that s 319(3), whilst contemplating a wider possible connection, is not directed to circumstances where there is a direct overlap but rather only a "tangential connection" or "only a bit of a connection". In that context, it was submitted that s 319 had the effect of ensuring that the court, in performing a statutory balancing exercise, paid regard to the particular circumstances of the case and where criminal proceedings had been commenced, the applicant must show more than just that the circumstances pertaining to the two sets of proceedings are similar, but must demonstrate that they are the same or substantially similar to the matter in the court proceedings to show there is a risk of prejudice. Counsel for Mr Menon submitted that this distinction was supported by what was said in Elzein by Beazley ACJ at [8] and by Basten JA at [89].
In submissions in reply, counsel for Mr Menon submitted that his preferred construction was logical because it gave wider protection to an accused person rather than to a person who has not been accused. He submitted that what was said by Basten JA in Elzein at [98]-[101], to the extent that it was contrary to his proposition, was not an authoritative statement of the Court.
In the joint submissions, it was submitted that her Honour did not deal with the construction issue but asked a different question, namely, whether the appellants had demonstrated prejudice. This was said to be an error.
Counsel for Mr Onley adopted the submissions of Mr Menon.
Mr Anquetil also relied on what was said by Hayne and Bell JJ in X7 at [124] in demonstrating prejudice. He submitted that the reasoning in that case applied not simply to the actual examination, but also to the proceedings which precede the examination.
[8]
b The respondent's submissions
In his written submissions the respondent contended that the ordinary meaning of the expression "circumstances pertaining to" was broad enough to capture the subject matter of the proceedings. The respondent submitted that this construction was consistent with the object and legislative history of the provision.
The respondent submitted that in its present form s 319 was introduced by the 2016 Amendments following the decision in Zhao. He pointed to paragraphs 46-49 and 156 of the Explanatory Memorandum to which I referred to at [42] above, and submitted that the legislative purpose as there expressed was consistent with the construction placed on legislation by all members of the Court in Elzein, referring to the judgment of Beazley ACJ at [10], Basten JA at [62]-[89], Simpson JA at [156]-[162].
The respondent submitted that the construction for which he contended gave the provisions a harmonious operation with other parts of s 319.
So far as the appellants' reliance on the "inchoate prejudice" arising out of the proposed examination and what was said by Hayne and Bell JJ in X7, counsel for the respondent submitted that a conscientious and ethical lawyer could not put a positive defence contrary to sworn evidence in an examination if he or she knew that it was a fabrication and that it was not clear why anything else would prejudice a positive defence being put. The submission was evidently based on what was said by Gageler and Keane JJ in Lee No 1 at [323]-[324]. He accepted that it was contrary to what was said by Hayne and Bell JJ in X7.
Senior counsel for the respondent referred to the provisions of s 183(3) and s 186(4) of the POC Act which expressly provide that criminal proceedings do not prevent examinations from continuing and submitted that provisions including s 266A and s 319(6) are designed to prevent information falling into the public domain. He submitted that the practical reality was that there was a real risk of dissipation if the collection of information must await the conclusion of criminal proceedings.
Senior counsel for the respondent submitted that the correct statement of the meaning of the provision was that set out by Basten JA in Elzein at [98]-[101]. In relation to X7, he adopted the proposition that all Hayne and Bell JJ were doing was indicating a principle of statutory construction in dealing with the interpretation of a provision which appeared to interfere with the general administration of the criminal law.
[9]
c Strickland (a pseudonym) v Director of Public Prosecutions (Cth)
Following the conclusion of argument in this case, the High Court handed down its decision in Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 93 ALJR 1; [2018] HCA 53 (Strickland) by majority allowing an appeal from the decision of the Court of Appeal in Victoria, Director of Public Prosecutions (Cth) v Galloway [2017] VSCA 120.
In those proceedings, the appellants had sought a stay of criminal proceedings resulting from circumstances surrounding their compulsory examination by the Australian Crime Commission (ACC) prior to their being charged. The plurality described the principal issue as "whether the ACC acted so much in disregard of the requirements of Div 2 of Part II of the Australian Crime Commission Act 2012 (Cth)…and therefore in unlawful violation of each appellant's common law right to silence, that the prosecutions should be stayed" (2018) HCA 53 at [1].
The appellants in that case were examined under the provisions of the ACC Act in respect of certain money laundering offences. Unknown to the appellants the appellants' examination was witnessed by several AFP Officers.
At the conclusion of the examination, directions were made under s 25A(9) of the Australian Crime Commission Act 2012 (Cth) (ACC Act), permitting the dissemination of examined material to the AFP and the Commonwealth Director of Public Prosecutions (CDPP).
The primary judge found that the examiner, who was charged with responsibility for deciding whether the appellants were to be examined, did not make any decision but that the decisions were made by the AFP. He found that the AFP officer who made the decision considered that forcing the appellants to answer the AFP's questions would yield the prosecution both a forensic advantage by locking the appellants into a story from which they could not credibly depart, and a tactical advantage that the answers given could be used to persuade or induce the appellants to make a statement in an admissible form. The primary judge also found that the examiner knew this in relation to the two appellants and entirely abrogated his statutory responsibilities.
The primary judge found that information obtained from the examination was used to obtain evidence against the appellants where the AFP had no entitlement to it and thereby gained an unfair advantage.
The primary judge found that it was practically impossible to "unscramble the egg" so as to remove the forensic advantage.
The primary judge granted a stay. The Victorian Court of Appeal reversed the decision.
In upholding the appeal, the plurality held that the Court of Appeal erred in rejecting the contention that the prosecution derived a forensic advantage from the examinations by the appellants being locked into a version of events from which they could not credibly depart at trial. In that context, the plurality cited the observations of Hayne and Bell JJ in X7 at [124] with approval: 218 HCA 23 at [75]-[78], [101].
However, the plurality emphasised on a number of occasions that they were dealing with a case where a person was unlawfully subjected to a pre-charge examination. Thus, referring to X7 at [124], the plurality made the following remarks at [77]:
"[77] Similar considerations apply where, as here, a person is unlawfully subjected to a pre-charge compulsory examination conducted for the extraneous, unlawful purpose of assisting the AFP to compel the person to give answers to questions about offences of which he or she is suspected and in respect of which he or she has declined to be interviewed. Even if the answers given at such a compulsory examination are kept secret, the unlawful requirement to give answers in respect of an offence of which a person is suspected, or in relation to which he or she is a person of interest, fundamentally alters the accusatorial process for the investigation, prosecution and trial of that offence by unlawfully compelling the person to provide the prosecution with information."
Further, they emphasised that in the circumstances of that case, the forensic disadvantage could not be overcome by the appointment of prosecutors who knew nothing of the examination, nor was it necessary for the appellants to demonstrate otherwise that the prosecution had been advantaged. They made the following comments:
"[80] In the particular circumstances of these cases, it is also no answer to the forensic disadvantage thus created to say that it may be overcome by the appointment of prosecutors who know nothing of the examinations. As the primary judge stated, compared to previous cases in which the effects of unlawful examination and dissemination of examination product have been considered, these cases involve an extraordinarily wide-ranging, undocumented dissemination of examination product to AFP officers involved in the investigation process, including to those who would be required to give evidence at trial. The lack of clear records of dissemination makes it extremely difficult to assess how and by whom the examination product has been used to build the prosecution case or how it might inform prosecution witnesses' responses to questions asked in cross-examination at trial.
…
[84] Nor is it an answer to the forensic disadvantage identified to say, as the Court of Appeal considered it to be, that it was incumbent on the appellants to demonstrate the respects in which the prosecution had been thereby advantaged. After all, how were the appellants practically to go about that? Where, as here, there were some tens of millions of relevant documents and no documentary record of the distribution of examination product within the AFP and the Office of the CDPP and the manner in which it was used to inform prosecutorial decisions, it would surely have been extremely difficult. And it would have been potentially dangerous for the appellants to make a serious attempt at discrediting the perfunctory denials of use which appeared in several prosecution witnesses' affidavits, as it would have risked exacerbating the prejudice to the appellants by potentially exposing perceived weaknesses in the prosecution case and possible paths of available defences."
The plurality also rejected the proposition that what was said in IBAC, was in any way contrary to what was said in X7. They dealt with that issue as follows (at [95]):
"[95] In this Court, the Solicitor-General of the Commonwealth argued to the contrary that such reasoning was influenced by an understanding of authorities concerning the accusatorial system of justice which was rejected by this Court in R v Independent Broad-Based Anti-Corruption Commissioner ('IBAC'). But that submission misconceives the effect of IBAC. In substance, IBAC held that, where compulsory powers were exercised lawfully in accordance with the statute under which they were conferred for the purpose for which they were conferred, the examiner was not prevented by the fundamental principle (scil that it is for the prosecution to prove the guilt of an accused person) or the companion rule (scil that an accused person cannot be required to testify to the commission of a charged offence) from compelling persons suspected of offences who had not been charged to answer questions concerning the offences of which they were suspected. That was so, however, because the companion rule is a principle which governs the conduct of curial criminal proceedings and is thus not engaged until and unless an accused is charged. Nothing said in IBAC runs counter to the learning explicated by the majority of this Court in X7 (No 1) that the process for the investigation, prosecution and trial of an indictable Commonwealth offence is entirely accusatorial or, consequently, counter to the precept that, subject to statute, an accused is not to be called upon to answer an allegation of wrongdoing until presented with particulars of the evidence on which it is proposed to rely in proof of a charge and then only to enter a plea of guilty or not guilty when and if charged. As was made plain by the majority in X7 (No 1), those fundaments of the criminal justice system comprise the common law 'right to silence', which includes the substantive right of any person to refuse to answer any question except under legal compulsion and the privilege of any person to refuse to answer any question, and which, subject to statute, applies at all stages of the process to all persons suspected of an offence whether charged or not yet charged as well as at trial."
However, the plurality emphasised that the legislature could lawfully legislate to detract from the principle in X7 at [94], and that it was not in all cases where there had been an unauthorised dissemination of material which would warrant a stay of prosecution being granted. In relation to the latter matters, they made the following comments:
"[98] The circumstances here, however, are very different from those in X7 (No 2) and in previous authorities to which Bathurst CJ referred. Here, as has been explained, with the possible exception of Galloway, there is an indeterminate element of incurable prejudice as a consequence of the ACC's widespread, uncontrolled dissemination of the examination product to and within the AFP and the Office of the CDPP. More fundamentally and more significantly, far from there being no suggestion that the ACC acted otherwise than in the bona fide belief that what was done was lawful, in each of these cases the ACC through Sage acted in disregard of the stringent statutory requirements mandated by the Parliament for the protection of the liberty of the subject and to prevent prejudice to the subject's fair trial.
…
[101] As was remarked by Hayne and Bell JJ in X7 (No 1), the common law right to silence is a fundament of the criminal justice system that applies at all stages of the process to all persons suspected of an offence, whether charged or not yet charged, and also at trial. But it is not constitutionally entrenched. Those who framed the Constitution conceived of parliamentary supremacy and the rule of law as administered through the courts as better protecting traditional freedoms than a bill of rights limiting legislative power. Hence, the right to silence may be restricted by statute. Inasmuch, however, as any restriction of the right to silence is pro tanto a denial of liberty, the rule of law, and in particular the principle of legality, mandates that any statutory provision that purports to restrict the common law right to silence must be perspicuously expressed and strictly construed. Accordingly, a statute such as the ACC Act may confer power on an identified recipient to compel a person to answer questions for a specific, identified purpose and, if the exercise of the power is undertaken strictly in accordance with the statute, it is lawful for the recipient to require the person to answer questions despite that doing so may infringe upon the person's right to silence. By contrast, invocation of the power for a purpose other than the specific, identified purpose, or that otherwise does not accord strictly with the statute, flouts the will of the Parliament as expressed through the statute and as such is an unlawful infraction of the common law right to silence that cuts deep against the grain of the accusatorial nature of the criminal justice system. It follows that, whether such an unlawful infraction of the will of the Parliament and the right to silence is intentional, or the result of advertent recklessness, or, as here, the consequence of grossly negligent abrogation of statutory responsibilities, its condonation is apt to bring the administration of justice into disrepute.
[102] Admittedly, as has been recognised in cases such as X7 (No 2), an infraction is less likely to bring the administration of justice into disrepute where it is the result of an honest and reasonable mistake. But the unlawful exercise of compulsive powers in these cases was carried out in blatant disregard of the protections conferred by the ACC Act. The departures from those requirements infected the exercise of compulsive power with illegality at every stage of the process."
Keane J agreed with the orders proposed by the plurality, emphasising the unlawfulness of the conduct which occurred. In dealing with Lee No 2 he made the following comments:
"[186] It is important to appreciate that the appeals to this Court in Lee (No 2) were not 'decided by reference to whether there can be shown to be some 'practical unfairness' in the conduct of the appellants' defence affecting the result of the trial.' Rather, it was held that '[w]hat occurred … affected this criminal trial in a fundamental respect, because it altered the position of the prosecution vis-à-vis the accused.' For this alteration in the respective positions of accuser and accused at trial there was no legislative authority. The alteration occurred in defiance of the legislation. As the Court in Lee (No 2) explained:
'Indeed, [the alteration] occurred contrary to the evident purpose of [the analogue to s 25A(9)], directed to protecting the fair trial of examined persons.'
[187] The same may be said here. As in Lee (No 2), the prosecution unlawfully ascertained the appellants' defences by reason of the disregard of the requirements of the Act. The unlawful disregard by the ACC and Sage of the requirements of the Act was not only inexcusable; it was also apt to defeat the legislative purpose that the criminal trial of an examinee should not be affected by lawless conduct which occurred in pretended compliance with the Act. A conviction obtained at such a trial would inevitably be set aside as a miscarriage of justice, irrespective of whether a particular forensic disadvantage to the accused were able to be demonstrated. The concern is not with whether the accused has been disadvantaged, but with the preservation of the integrity of the trial process that the Act has in view."
Edelman J, the other judge in the majority, made the following remarks:
"[254] For the reasons below, the primary judge was correct to order that the proceedings be permanently stayed. The serious nature of the charges is subordinated to the potential damage to the integrity of the court if a trial were to proceed. A permanent stay of proceedings is necessary as it is the only response that can adequately protect the integrity of the court. The appeals to this Court should be allowed, and orders made as proposed in the joint judgment of Kiefel CJ, Bell and Nettle JJ.
[255] During the course of preparing and writing these reasons, I have had the benefit of reading the joint judgment and the reasons of Keane J. In these reasons I agree with, and gratefully adopt, various sections of the joint judgment. I also agree with the reasons of Keane J. However, in light of (i) the importance of the power to stay proceedings as an abuse of process, and (ii) the divergence of views about its scope and application, this is an instance where the expression of separate reasons may help the common law to 'work itself pure'."
Otherwise he did not deal with the issue raised by X7.
Gageler J in dissent, stated at [140] that he adhered to the views he expressed with Keane J in Lee No 1 at [323]. He also said that he did not consider his observations in that case to be inconsistent with the reasoning or the result in Lee No 2 at [140]-[142].
Gordon J who also dissented took the view that the disadvantage identified would have in any event been incurred had the examinations been lawful and any disadvantage was capable of being removed.
I have dealt with the decision in some detail in deference to the submissions of the parties to which I refer below. However, it must be remembered that the present case does not concern a stay of the criminal prosecution but rather whether it is appropriate to stay an examination pending the finalisation of the criminal proceedings. That must in large part depend on the construction of a statute, which at the very least, envisages that an examination can lawfully take place notwithstanding pending criminal proceedings against the examinee.
In submissions filed on behalf of Mr Menon and Mr Onley, three points were made. The first related to comments by Edelman J at [290] of the difficulty of a person looking into their mind as to what decision he or she made subsequent to hearing a compulsory examination. It was submitted that to allow the examination brings the administration of justice into disrepute where it is impossible for an examiner to consult his or her mind as to what caused the examiner to ask a subsequent question of a witness or why further inquiries are made by others within CAL or CACT.
It was submitted that this made it "impossible to ensure that subsequent steps are not assisted by the compulsorily acquired material". It must be remembered however, that the remarks of Edelman J were made in the context of an unauthorised dissemination of what his Honour described as "tens of millions of available documents" and "many hours of examinations".
Second, referring to the judgment of Keane J at [182], Mr Menon and Mr Onley submitted that the relevant question was whether the POC Act was intending to alter the nature of a trial of an accused person to, rather than whether any prejudice could be addressed.
Finally, Mr Menon and Mr Onley noted the remarks of the plurality concerning IBAC which they submitted were consistent with the submissions made in this Court.
The respondent emphasised the unlawful nature of what occurred in Strickland. He also referred to the fact that the scheme of the ACC Act differed to that of the POC Act. He emphasised that the significance of any forensic disadvantage necessarily depends on the statutory context, which critically in the present case includes s 319.
The respondent also submitted that Keane, Nettle and Edelman JJ, the other members of the majority in Strickland, and Gordon J in dissent, did not address the question of forensic disadvantage, whilst Gageler J adhered to the views he expressed in Lee No 1.
[10]
A(iii) - Is an order under s 266A of the POC Act and a procedure designed to ensure compliance with such an order an answer to the risk of prejudice to the accused?
This question was principally directed to what might be described as the risk of leakage of Coercive Material. The principal submission of the appellants was that the primary judge did not consider the issue.
[11]
a The appellants' submissions
Counsel for Mr Menon referred to the finding by the primary judge to which I have referred at [102]. He submitted, however, that there was no assessment of the evidence or the submissions in relation to the SOP and its effectiveness in protecting the accused from the possibility of derivative use in particular from mistake or inadvertent disclosure.
Counsel for Mr Menon referred to his submission that her Honour erred in finding the appellant had not identified any relevant risk of prejudice. He submitted that the relevant risk of prejudice had been identified and the Court needed to consider the risk of derivative use or assistance to the prosecution arising from risk of leakage.
Counsel for Mr Menon accepted that the submissions made were set out by the primary judge but stated they were not addressed. However, he did not challenge the finding that the s 266A orders and the SOP ameliorated the risk of dissemination to a significant degree. In relation to the suggestion from the bench that the effect of her Honour's findings was that the risk was identified and addressed by the systems which were in place and which were rational and enforceable, he submitted that it was still necessary to consider what risks remained in what he described as a "balancing exercise" required by s 319.
Counsel for Mr Menon submitted that what could have been done but was not done was to put "a complete barrier between the proceeds of crime people and the prosecutors". He submitted that instead what the respondent chose to do was to provide that any material which was not identified as derivative could be passed to prosecutors, which he submitted "effectively meant that there was no real protection from derivative use" given the impossible task of identifying what was or was not derivative.
Counsel for Mr Menon referred to clauses 15, 16 and 17 of the SOP. He submitted that although clause 17 of the SOP indicated that disclosure must be refused if prohibited by an order made pursuant to s 266A, he pointed out that the order did not prohibit disclosure to the public at large. However, that ignores the fact that it is implicit in s 266A(2)(a) that disclosure can only be made to the authorities named in the table contained in that section where there are reasonable grounds that the disclosure will achieve the purpose set out in the table. Further, it should be noted that s 193 of the POC Act empowers the examiner to give directions preventing or restricting disclosure to the public of answers given or documents produced.
In that context, counsel for Mr Menon referred to the cross-examination of Assistant Commissioner Gaughan. He referred to his evidence that material would be produced if the decision-maker believed that the information was not in fact Coercive Material or derived therefrom. He also referred to the fact there were no requirements that persons within the Criminal Assets Litigation team record what they say to other members of the CACT team. He also submitted there was no way of knowing whether a question asked of a person in a voluntary examination was asked with an enhanced understanding arising from Coercive Material.
Counsel for Mr Onley also made the submission that the primary judge erred in concluding that the SOP was effective in preventing dissemination of Coercive Material.
Counsel for Mr Onley referred to clause 15 of the SOP (see [56] above). He submitted the regime for the making of applications to disclose Coercive Material only related to the exception in clause 15(e) of the SOP. He submitted that on its face the SOP was capable of being interpreted to allow disclosure of Coercive Material, including information about that material without any application for permission to disclose, provided that it was disclosed in relation to an application under the POC Act. He submitted that such an application did not necessarily have to bear any relationship to the proceedings in which the Coercive Material was obtained.
So far as training was concerned, counsel for Mr Onley referred to the evidence of Mr Forno (as to which see [167] below) that the training took about 45 minutes and to the evidence of Agent Burtenshaw that he had not received training and that the CACT had a high personnel turnover and those responsible for the training would wait until there were enough people who were new in order for them to conduct the training.
[12]
b The respondent's submissions
Counsel for the respondent referred to the primary judge's summary of Mr Menon's submissions, which he submitted made it clear that her Honour grasped the submission being put was that the systems were ineffective to manage the risk of leakage. He emphasised her Honour's findings that she was satisfied that the SOP had "comprehensively addressed" the risk. He submitted that it was not put to any of the respondent's witnesses that it was an impossible task to reliably identify derivative information.
Senior counsel for the respondent referred to the evidence of Assistant Commissioner Gaughan, to which I have referred at [45]-[53]. He also referred to the evidence of Mr Forno, a senior partner of MinterEllison, who was engaged to conduct a review of the SOP. Mr Forno's opinion evidence was rejected by the primary judge but his factual observations were admitted.
Senior counsel for the respondent referred to the fact that Mr Forno had interviewed a number of key personnel at the AFP and the fact that he had attended a training session. He referred to the following observations of Mr Forno concerning the storage of Coercive Material:
"(c) Storage of and access to information
(i) CAL uses software called 'WorkSite' (now known as 'iManage') to manage electronic documents and emails. Only AFP Appointees within CAL have a WorkSite account along with members of ICT who provide support for this application. This means that WorkSite can only be opened by an AFP Appointee within CAL and the relevant ICT support person. Additionally, approval is required to be sent to the AFP ICT Support team in order to be added to an access group on WorkSite. This provides the person with the ability to see files on WorkSite that are unlocked. Certain files, such as Operation Elbrus, are locked down so that only the lawyers who have been granted specific access to the file by the lawyer with carriage of the matter can search for and access the file. The documents within the file for Operation Elbrus do not appear within any search results on WorkSite. There appears to be a sound practice of lawyers filing emails and documents from their inbox into the appropriate WorkSite file as soon as they are received.
(ii) Each document on WorkSite has its own 'history', allowing an AFP Appointee with access to that document to see when the document was accessed, by whom, at what time and what action was taken (for example whether it was modified, emailed or printed).
(iii) WorkSite cannot be accessed on any other device, other than the desktop computer of an AFP Appointee within CAL or one of the laptops available for use by AFP Appointees within CAL which has the relevant software. Emails can be accessed remotely on a CAL member's phone or AFP issued iPad once passing through two levels of security, namely:
(A) entering a passcode to unlock the phone or iPad; and
(b) entering their AFP account username and password to unlock the 'Good' application where emails are located.
A forgotten password can only be restored by an AFP Appointee within the ICT Support team upon the AFP Appointee within CAL successfully answering a number of personal questions.
(iv) Coercive Material in relation to Operation Elbrus is generally only received by Lynne Booth as her contact details are provided to the defendants' solicitors (and other relevant people). Ms Booth often provides this Coercive Material to Daniel Qualischefski as he is heavily involved in the matter. Ms Booth occasionally provides Coercive Material to Darren Burtenshaw and Scott Murphy solely for the purpose of cross-referencing the information with the CACT proceeds of crime investigation.
(v) The printing of any information, including Coercive Material, is to one of the two printers located within CAL. It would be very unusual for anyone to be in the print room who is not part of CAL and questions would likely be asked of that person if that were to happen.
(vi) All hard copy Coercive Material is stored in locked cabinets located within the office of Ms Booth, which is locked each evening,. Only Ms Booth and Erica Last have a key to the office and the cabinet.
(vii) CACT uses a 'CACT drive' to manage electronic documents. Only AFP Appointees within CACT have access to the CACT drive. Documents related to Operation Elbrus are stored in a separate 'Elbrus CACT' folder file that is restricted to the 18 AFP Appointees within CACT who are working on Operation Elbrus and who are not part of the criminal investigation. Access to this folder can only be granted by an AFP Appointee within ICT Support, upon a request from Scott Murphy."
He submitted that although Ms Booth was no longer working at CAL, another lawyer had taken her place and it could be inferred that the process was the same.
Senior counsel for the respondent submitted that where a statement under s 39 or a transcript of an examination under s 180 of the POC Act was provided to persons who were trained in the area, he or she would be able to identify it as Coercive Material.
Senior counsel for the respondent also pointed out that Assistant Commissioner Gaughan gave evidence that after receiving Mr Forno's report, the respondent initiated a review of the SOP and made some changes to it.
Senior counsel for the respondent referred to paragraph 20(b) of the SOP which required that there be a record of anyone who gained access to any item of Coercive Material. He referred to the requirements of storage of electronic and physical material contained in clauses 23 and 24 of the SOP and the requirements for receipt, custody and use of Coercive Material contained in paragraphs 28 to 31, emphasising that where such material is provided to a CACT member, that member must provide it to CAL. He also referred to the restriction on the use of such material to conduct other inquiries contained in clause 30.
In relation to the submission by counsel for Mr Onley concerning paragraph 15(e), to the effect that there were no internal controls on the disclosure of Coercive Material when an application was made under the POC Act, he submitted that that submission does not take into account the Commissioner's obligation to obey the Court's prohibition order.
Senior counsel for the respondent submitted that an order prohibiting communication between CACT personnel and anyone else in connection with the subject matter of the operation was superfluous to the extent it was designed to prohibit the disclosure of Coercive Material to people involved in the investigation and prosecution of criminal offences because that was what was required by the Court order and the SOP. He further stated that there was no reason at all to prohibit any communication to CACT concerning Operation Elbrus.
[13]
A(v) - Can material prejudice exist in respect of charges that may be laid in the future?
Counsel for the appellant submitted that her Honour erred in failing to take into account the possibility of future charges in respect of which prejudice might operate as a relevant consideration (see [92]-[93] above). He said that was contrary to what was said in R v Seller; R v McCarthy (2015) 89 NSWLR 155; [2015] NSWCCA 76 at [120]-[123] and R v Seller; R v McCarthy (2013) 273 FLR 155; [2013] NSWCCA 42 at [99]. Although the latter case provided limited support for the proposition, the former does not. The passage cited merely states that prejudice can arise from an examination of matters which formed part of the background to the offence which had been charged, whilst not directly relating to the charged offence.
Senior counsel for the respondent submitted that what was said by the primary judge accorded with what was said in McGlone at [125]-[126] and Elzein at [98]-[101]. He submitted that it was unclear what the future charges added to the factual matrix as the appellants contended that the criminality overlapped the proceeds of crime proceedings. Third he noted the decision relied on by the primary judge, IBAC, post-dated both of the Seller cases.
[14]
B(vi) and (vii) - Prejudice to the respondent if the examinations are stayed
Counsel for Mr Menon submitted, referring to McGlone at [105], that the primary judge failed to distinguish between benefits to the Commissioner arising from an examination for the ordinary purpose of the Act and "practical prejudice of significance" if the examination was delayed. He referred to the conclusion of the primary judge at [287] of her judgment which I have set out at [83]. He accepted that he could not say that the examination was inutile but submitted that the finding was "effectively putting the shoe on the other foot as to real prejudice".
Counsel for Mr Menon pointed to the finding by the primary judge at [287] that she was prepared to accept that the tax liability of the various corporations implicated in the fraud (calculated at $159,759,306.93, see [80]), did not represent the value of the benefits the appellants derived. He submitted the reference at [2] of her Honour's judgment that the loss occasioned by taxation fraud conspiracy was $83,735,535.28, was merely an allegation with no evidence to support it.
Counsel for Mr Menon submitted that having regard to the manner the case was conducted in the Court below, it was not open to the respondent to argue that the potential prejudice was the inability to investigate whether there were further funds available, although he seemed to accept with a qualification that "would be practical prejudice of some significance". However, he submitted, relying on McGlone at [105], that that was not prescribed prejudice beyond the ordinary operation of the Act.
Counsel for Mr Menon accepted that the primary judge found that Agent Burtenshaw had the concerns expressed in [279] of her judgment, but submitted that notwithstanding, the Commissioner did not lead evidence as to why the examination could be useful. He accepted, however, that Agent Burtenshaw was not cross-examined on paragraph 788 of his affidavit which her Honour summarised in the primary judgment at [279] (see [84] above).
In the joint submissions, it was submitted that the primary judge was in error in concluding the examination power could be used to ensure that a pecuniary penalty order was satisfied. It was submitted that there was no power to order an examination to support the effectiveness of a pecuniary penalty order. It was submitted that even if it was accepted that the purpose of a restraining order was to freeze property to prevent assets being dissipated and to provide a fund from which a forfeiture order or pecuniary penalty order may be enforced, that is not to say an examination order pertains to all such matters.
Senior counsel for the respondent, in addition to relying on the evidence of Agent Burtenshaw, referred to the concerns expressed in similar terms in paragraphs 103-106 of the affidavit of Assistant Commissioner Gaughan of 22 August 2017.
Senior counsel for the respondent submitted that a proper basis for the examination simply would be to test whether what was said in the sworn assets statements was complete. However, he submitted that the respondent went further, submitting that the $159 million referred to in the Operation Crocodile Report was "real money", that is cash that was observed to go through the bank accounts of the companies in the Plutus Group in a short period of time, although he accepted that there might be overlap between the companies in the Group.
Senior counsel for the respondent submitted that the primary judge did not make a finding that the amount of unremitted tax was equal to the amount which was restrained. He referred to the exercise undertaken in relation to each company in the Group as part of Operation Crocodile. He pointed to the analysis in respect of one company where $202,551,000 was deposited into the account, out of which PAYG monthly instalments were to be paid. He noted that in respect to that company, the unremitted PAYG liability was $47 million. He submitted that similar exercises were carried out in respect of other companies and the difference between the amount of unremitted PAYG withholding payments and the amount currently restrained, overwhelmingly demonstrated the utility of the examinations.
In his written submissions the respondent submitted the primary judge was correct in concluding that an examination under s 180 could be used for the purpose of identifying and restraining property that might satisfy a future pecuniary penalty order. It was submitted that the appellants' contention that the statutory context indicated that the limitation on the purpose for which an examination could be made did not exist. The submission pointed to the fact that the objects of the Act included depriving persons of benefits derived from offences against laws of the Commonwealth which it was stated, referring to s 116(1) of the POC Act, was the object of pecuniary penalty orders.
The written submissions also referred to the fact that s 142 of the POC Act creates an automatic charge over restrained property to secure payment of pecuniary penalty orders.
[15]
C(viii) - What is the scope of the authorisation of the POC Act to require statements on oath or affirmation as to assets and liabilities?
Counsel for Mr Onley submitted that the orders that Mr Onley provide full particulars of the nature and extent of any property of a company of which he was a director, went beyond the power conferred in s 39(1)(ca) of the POC Act. He referred in that context to the comments by Meagher JA in Cacu at [31]-[34], that an order requiring particulars of assets owned by any company of which the applicant was a director goes beyond s 39(1)(ca). He acknowledged that the question was not the subject of argument in that case and accepted that the order could be amended by having a separate schedule, naming the company and directing it to the director.
The respondent submitted that the statutory context supports a broad construction of the reference in s 39(1)(ca)to "setting out all of his or her interests in property". He submitted that the provision of particulars such as the location of property and liabilities relating to the property, should be regarded as falling within the ambit of "setting out" the relevant interests. It was submitted that the property of a company over which a director has control should also be regarded as falling within the scope.
Alternatively, it was submitted that the order was an ancillary order within the meaning of s 39(1).
[16]
The additional grounds raised by Mr Anquetil
In addition to the grounds raised by Mr Menon and Mr Onley, Mr Anquetil raised the additional grounds of appeal that I have referred to at [107] above.
[17]
The submissions
Counsel for Mr Anquetil submitted that Ground 2 of the grounds of appeal dealt with the applicability of s 317 to the application, Ground 3 asserted that the making of an examination order and giving effect to it was not a proceeding under the Act and s 319 had no application. He accepted that the latter proposition may be contrary to what was said by Basten JA in NSW Crime Commission v Lee (2012) 84 NSWLR 1; [2012] NSWCA 276 at [47].
Counsel for Mr Anquetil pointed out that the proceedings were commenced by way of an ex parte application. He pointed out that it was not mandatory for the primary judge to have made the orders ex parte and the question of burden of proof ought not to depend on whether the original order was ex parte or made inter partes.
Both in written submissions and at the hearing, it was submitted on behalf of Mr Anquetil that where an injunction is obtained ex parte, the burden falls upon the person who obtained the injunction to make good that the injunction should continue when the matter comes before the Court inter partes: Minister for Local Government v Blue Mountains City Council [2018] NSWCA 133 at [47]. He submitted that s 317 should be construed consistently with this principle. He submitted that the applicant in s 317 is the responsible authority who makes the initial application under the Act.
Counsel for Mr Anquetil submitted that this approach provides procedural fairness to persons the subject of a restraining or examination order. He also submitted that it is consistent with the approach in UCPR rule 36.16(2)(b) which provides that a court may set aside a judgment or order after it has been entered if it has been made in the absence of a party. That rule is silent on the question of onus.
Counsel for Mr Anquetil made reference to s 42 of the Act which entitles a person to apply to revoke a restraining order. He submitted that that section largely mirrors r 36.16. He submitted that it was not clear whether this provision was sufficient to impose a burden of proof on the person seeking to revoke the order but stated that if it did it was because of an express provision in the Act.
Counsel for Mr Anquetil submitted that the importance of the question of the onus of proof was demonstrated by the conclusion of the primary judge that the respondent had failed to identify the loss of a legitimate forensic choice. He stated that satisfying such an onus would be particularly difficult where the restraining order and examination order are sought either immediately prior to or at the commencement of the criminal proceedings. He submitted that the volume of material served in the present case, which the respondent to the application may or may not be able to challenge, demonstrates why the legislation should not be constructed to impose a positive burden on the criminal accused at such an early stage of criminal proceedings.
Counsel for Mr Anquetil appeared to accept that if there was an application for a stay under s 319(1), it would be an application under the Act and s 317 would apply. He submitted however, that his client's application was not for a stay under that section.
That submission as articulated in Mr Anquetil's written submissions involved the proposition that s 319(1) of the POC Act applied only to proceedings and not to orders made in such proceedings. It was submitted that the section does not purport to cover a case where a respondent seeks to set aside an order made ex parte. Notwithstanding that the notice of motion upon which Mr Anquetil moved sought as alternatives orders that the examination summons be revoked under the POC Act or set aside under r 36.16(2)(b) or stayed, counsel for Mr Anquetil submitted that s 319 had no application to any of the three alternatives because "the proceedings [to] which s 319 would apply have already concluded".
Counsel for Mr Anquetil submitted that this construction was supported by the provisions of s 319(2)(c)(i), submitting that an examination was not a proceeding where a witness can be called on behalf of a person subject to an examination order.
Counsel for Mr Anquetil also submitted that as s 180 of the POC Act does not impose any limit on the court's discretion in ordering an examination, it would be surprising if the limitations in s 319 would apply on an application to stay or set aside such an order. He submitted that the limits on the court's discretion should not depend on whether the application for an examination order was made ex parte or in contested proceedings.
Counsel for Mr Anquetil accepted that these submissions were inconsistent with what was said by Basten JA in Elzein, but submitted that in considering the issue, his Honour was not referred to s 315(2) which provides that the rules of evidence in civil proceedings apply to proceedings under the Act. He submitted that it was clear that the rules of evidence in civil proceedings did not apply in an examination. He also submitted that the arguments were not directly considered by the Court in Lee v NSW Crime Commission.
Senior counsel for the respondent submitted, having regard to what was said by the primary judge at [256] of her judgment (see [95] above), showed that on the evidence before her on the stay application, her Honour remained satisfied that the orders were appropriate.
Finally, senior counsel for the respondent contended that the submission concerning the operation of s 319 mischaracterised what was sought to be stayed. He submitted that an application to stay a court order made under the POC Act was a proceeding under the Act.
[18]
a The additional grounds raised by Mr Anquetil
Grounds 1-3 of the additional grounds of appeal are all underpinned by the proposition that the primary judge erroneously concluded that Mr Anquetil bore the onus of showing that the examination order should be set aside, an onus which he had not discharged.
It is convenient to deal with these grounds of appeal at the outset as if it were demonstrated that the primary judge erred in the manner asserted in these grounds, it would have significant consequences to the ultimate disposition of the appeals, irrespective of the other grounds which have been raised.
It is correct, as this Court pointed out in Minister for Local Government v Blue Mountains City Council [2018] NSWCA 133 at [47] that the party the subject of ex parte relief should not be placed in a position of being required to move for the dissolution of an injunction which had been made in his or her absence and without notice, and that the onus to renew the order at all times lay with the applicant. This is so, even if the order was expressed to be until further order. Thus in Ross v Internet Wines Pty Ltd (2004) 60 NSWLR 436; [2004] NSWCA 195, which concerned Mareva type relief, including an order that the party the subject of the injunction disclose certain financial details, Giles JA at [109] pointed to the undesirability of making ex parte orders until further order.
In the present case, the amended notice of motion filed on behalf of Mr Anquetil in the Court below did not seek the restraining orders be set aside to the extent that such orders had been made. Rather, it sought the examination summons be revoked under the POC Act or set aside under UCPR r 36.16(2)(b) (Prayer 2) and in the alternative to those orders, that the examination summons be stayed pending the finalisation of the current proceedings or until further order.
Absent the statutory provisions to which I refer below, it may be that her Honour would have been in error had she proceeded on the basis that the onus lay on the appellants seeking to set aside the orders to demonstrate it was appropriate to do so. However, her Honour did not decide the case on the basis that the appellants had failed to discharge any onus cast on them. That is clear from the passage of her judgment to which I have referred at [95]. After noting that no reason was given as to why the examination order should be revoked (as distinct from stayed), and no suggestion was made directed to an inadequacy in the grounds relied on by the respondent for the issue of the orders, she expressly stated that on the material before her the application was justified. In the primary judgment at [256], she expressed a positive satisfaction on this issue. For this reason alone, Grounds 1-3 of Mr Anquetil's grounds of appeal have not been made out.
Notwithstanding this, it is convenient to deal with the submissions made by counsel for Mr Anquetil on the question of onus and the interaction between UCPR r 36.16(2)(b) and the POC Act.
No submissions were made below as to whether the provisions of UCPR r 36.16(2)(b) had any application as the proceedings were in federal jurisdiction. Because I have concluded that the motion to set aside the examination orders are proceedings under the POC Act to which s 317 applies, UCPR r 36.16(2)(b) has no application, at least so far as the question of onus is concerned.
As I have pointed out, s 42 of the POC Act makes express provision for an application to revoke a restraining order. It sets out the time limits within which such an application must be made and certain notice requirements. Whether or not compliance with these conditions is a pre-condition to the court having jurisdiction to make the order, see David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 277; [1995] HCA 43, proceedings invoking the power under s 42 are, in my view, proceedings under the Act. The applicant in such proceedings would bear the onus of proving the matters necessary to establish the grounds for making the order by virtue of s 317. The same may be said of an application to set aside or revoke an ancillary order made pursuant to s 39B of the Act.
Section 180 deals with examination orders. I have set it out above but it is important to note that a pre-condition of the making of an order is that a restraining order is in force. Section 182(2) requires the court to consider the application without notice being given, if the responsible authority requests that occur. No submission was made concerning the constitutional validity of this provision.
There is no express power to revoke an examination order, but it was not in contest that the Court had power under s 319 to stay the proceedings and it was argued power under UCPR r 36.16(2)(b) (presumably picked up by s 79 of the Judiciary Act 1903 (Cth)) to set aside the order. It is in that context that the question arises as to whether the applicant, for either a stay or revocation of an examination order, bears the onus of demonstrating that the order should be stayed or set aside.
Section 319 of the POC Act confers power on the court to grant a stay but imposes certain requirements and limitations on the exercise of the power. As a matter of general law, the applicant for a stay of proceedings bears the onus of establishing that it is in the interests of justice to grant a stay: see for example, Jago v The District Court of New South Wales (1989) 168 CLR 23 at 34; [1989] HCA 46. Further, to the extent that an application for a stay calls in aid the power of the court granted by s 319, it is in my opinion, an application under the POC Act, such that s 317 would apply to impose upon the applicants for the stay the onus of establishing that the stay was justified.
The position is more difficult to the extent that an order was sought under UCPR r 36.16(2)(b) revoking the order. It is well established that a person affected by an order in respect of which he or she has not been heard as a matter of general law is entitled as of right to have such order set aside: Cameron v Cole (1944) 68 CLR 571 at 589; [1944] HCA 5; BP Australia Ltd v Brown (2003) 58 NSWLR 322; [2003] NSWCA 216 at [132]-[134]; John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [132]. It would follow that unless the POC Act provided to the contrary, that on any application made under UCPR r 36.16(2)(b) to set aside the order, the onus would be on the applicant for the order (the respondent in the present proceedings) to establish that the orders should be continued.
As I have stated this Court and the Court below were exercising Federal jurisdiction. However, unlike cases such as Rizeq v The State of Western Australia (2017) 262 CLR 1; [2017] HCA 23 (Rizeq) (a case involving Federal diversity jurisdiction), the substantive rights in issue are to be determined by the application of a Commonwealth statute. If that statute, either expressly, or by necessary implication, provides that the respondents to the examination order bear the onus of establishing that it should be set aside, then any State provisions to the contrary effect will not be picked up by s 79 of the Judiciary Act and thus will have no application in the proceedings: Rizeq at [92].
In the present case, it does seem to me that the effect of the POC Act is to place the onus on the party seeking to have the order revoked. It is correct that the Act is silent as to the procedure for the revocation of examination orders, in contrast to the specific provisions relating to the revocation of restraining orders and ancillary orders (s 42 and s 39B respectively). However, it seems to me that such an application is a proceeding under the Act to which s 317 applies, with the result that the onus of proving the matters necessary to show the order should be revoked falls on the applicant for such an order.
This is so for the following reasons. First, as a matter of language it seems to me that the expression "any proceedings under this Act" in s 317 is wide enough to include an application to set aside an order made under the Act. Second, although the word "applicant" in s 317 is not defined, its use in contrast to "proceeds of crime authority" in s 19 and s 25 and the expression "responsible authority for the principal order" in s 182 indicates that the applicant in s 317 does not necessarily refer to the applicant for a restraining order or examination order. Third, as I have indicated, applications for the revocation of restraining orders and ancillary orders and for a stay under s 319 are proceedings under the POC Act and it would be anomalous if an application to set aside an examination order was subject to a different onus to that imposed for the revocation or stay of orders made pursuant to particular provisions of the Act.
It should also be noted that the making of examination orders do not, without more, lead to the person the subject of the order being examined. Section 183 requires an application for an examination to be made by the responsible authority to the approved examiner who is required not to give the examination notice if an application for revocation of the restraining order is made under s 42 of the POC Act and the court to which the application is made orders the examination not proceed. In my opinion this lends further support to the proposition that applications relating to examination orders including an order that it be set aside are proceedings under the Act to which s 317 would apply.
It follows that even if, contrary to my view, the primary judge concluded on the material before her that she was satisfied that the orders should continue irrespective of any question of onus, in the circumstances of the present legislation any onus to stay or set aside the orders was borne by the appellants. In these circumstances, these grounds of appeal have not been made out.
[19]
b A(i), A(ii) and A(iv)
As is apparent from the submissions, the matters raised under these headings involved the construction of s 319 and whether her Honour erred in the exercise of her discretion in requiring the appellants to demonstrate the loss of a legitimate forensic choice as a result of them being examined.
Although much emphasis was placed on the effect of the decision in X7, it is convenient to first consider the construction of s 319 of the POC Act.
I have set out s 319 above. As with any legislative provision, the task of statutory construction must begin with a consideration of the text itself, which may involve the consideration of the context including the general purpose and policy of the provision, in particular the mischief it is seeking to remedy: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27; [2009] HCA 41 at [4], [47]. As the provision forms part of a scheme which affects the rights of an accused person to remain silent, it should be construed by reference to the principle that such rights should only be abrogated by clear words or necessary implication: X7 at [86]-[87] and the cases there cited.
However, it must be remembered that the legislature has stated in the clearest terms that an examination can take place notwithstanding the institution of criminal proceedings (s 183(3)). Further, it is also important to bear in mind the principal object of the Act, namely, to deprive persons of the proceeds of offences. The requirement for the provision of sworn statements of the accused person's interest in property (s 39(1)(ca)) and the examination of the person the subject of a restraining order, are plainly designed to achieve this object.
Section 319(1) provides that a court may grant a stay of POCA proceedings if it is in the interests of justice to do so. That includes balancing the right of the person, the subject of the criminal proceedings, to remain silent and the fact that the examination will alter the accusatorial process in the manner described by Hayne and Bell JJ in X7 at [124], with the object of the Act in securing from offenders and their associates the proceeds of their criminal activities. Section 319(6) sets out in a non-exhaustive fashion what the court must take into account, which includes the risk of a proceeds of crime authority suffering any prejudice.
Section 319(2) sets out the grounds on which POCA proceedings must not be stayed. That does not mean that prejudice to the accused arising from (in this case) an examination cannot be taken into account. However, if all that can be pointed to in the case of an examination of a person to whom s 319(2)(a) applies is that the circumstances pertaining to the POCA proceedings are the same or substantially similar to the circumstances pertaining to the criminal proceedings, then that of itself will not be sufficient for a stay to be granted.
As I have pointed out, the appellants submitted that the use of the words "circumstances pertaining to the POCA proceedings are or may be the same as, or substantially similar, to the circumstances pertaining to the criminal proceedings" in s 319(3) is in contradistinction to the words "the subject matter of the POCA proceedings is the same as, or substantially similar to, the matter at issue in the criminal proceedings" in s 319(4), meant that s 319(2)(a) did not apply to an examination where the subject matter of the POCA proceedings is the same or substantially similar to the matter in issue in the criminal proceedings.
I am unable to agree with this contention. Section 319(2)(a) precludes the court from granting a stay on the ground that criminal proceedings are or may be instituted against the person concerned. Section 319(3) does not operate to limit the section in any way, rather it makes it clear that s 319(2)(a) applies even if the circumstances of the proceedings are the same or substantially similar. In that context, "circumstances" means, in my opinion, the factual circumstances underlying the two sets of proceedings.
By contrast s 319(2)(b) deals with circumstances where criminal proceedings have been commenced against a third party in respect of matters relating to the subject matter of the POCA proceedings. The limitation "in respect of matters relating to the subject matter of the POCA proceedings" in s 319(2)(b) does not appear in s 319(2)(a). In that context, s 319(4) makes it clear that the expression "relating to the subject matter of the POCA proceedings" includes circumstances where the subject matter is the same as, or substantially similar to the matter in issue in the POCA proceedings. Thus, to take the case where POCA proceedings are brought against one of two co-conspirators but not the other, s 319(2)(a) and s 319(3) would apply to the examination of the person the subject of the POCA proceedings who has been charged with a criminal offence, whilst s 319(2)(b) and s 319(4) would apply to an examination of the co-conspirator who has not been charged. In each case the provisions in question would extend to the factual circumstances of the conspiracy.
That construction is consistent with the legislative history which I have set out at [39]-[43] above. The amended legislation was passed following the decision in Zhao, and was designed to overcome the conclusion reached by the High Court in that case to which I referred at [41]. Significantly paragraphs 157 and 158 of the Explanatory Memorandum to which I have referred at [42], draw no distinction between the operation of s 319(3) and s 319(4). Although it would be erroneous to interpret the provision by seeking to ascertain the subjective intention of the legislature from a consideration of extrinsic material, Certain Lloyd's Underwriters Pty Ltd v Cross (2012) 248 CLR 378; [2012] HCA 56 at [23]-[25], a consideration of that material does support the conclusion I have reached having regard to the text and purpose of the provision.
It is in this context that the reliance on what has been described as "inchoate prejudice" falls to be considered. Consistently with what was said in X7 at [124], Lee No 2 at [31]-[38] and [42] and most recently in Strickland at [75]-[78], [101], the fact of the examination, even if kept secret, fundamentally alters the accusatorial judicial process and is thus prejudicial to the accused person. There is thus prejudice in the present case.
However, s 319 makes it clear that such "inchoate prejudice" is not sufficient of itself to warrant the grant of a stay. As was pointed out in Strickland at [101], the right to silence is not constitutionally entrenched and may be abrogated by the legislature provided that any statutory provision which purports to do so is "perspicuously expressed and strictly construed". Section 319 is a statutory provision which falls within this category. That is further supported by the express provision in s 183(3), which provides that the commencement of criminal proceedings does not prevent the making of an examination order.
That construction of the legislation is consistent with the conclusion reached by Basten JA in Elzein at [101] to which I referred at [44].
Beazley ACJ, whilst agreeing with Basten JA's conclusion, at [8] seemed to go further in stating that none of the matters in s 319(2) are relevant considerations to the exercise of the discretion. With respect to her Honour, I do not think that the section excludes the matters from consideration, as distinct from making it clear that standing alone, they would not justify a stay.
Simpson JA at [162] reached a conclusion similar to that reached by Basten JA.
It follows that the primary judge was correct in concluding that something more was required to justify a stay than just that the examination was to take place while criminal proceedings were pending. That is why her Honour referred to the need to identify the loss of a legitimate forensic choice. It was in that context that her Honour (at [308]) made reference to the judgment of Gageler and Keane JJ in Lee No 1 at [323]-[324]. As I pointed out in X7 No 2 at [108], these remarks were not inconsistent with what was said in X7 but merely explained that the conduct of an examination may have different consequences in any given case: see also Strickland at [142]-[143].
It follows that in the circumstances of the present case, her Honour did not err in stating that it was necessary for the appellants to show the loss of a legitimate forensic choice as a result of the examination. Whether they lost such a choice or whether the examination was likely to lead to that occurring are the matters dealt with in A(iii) and A(v) with which I deal below.
[20]
c A(iii) - Is the Court order under s 266A of the POC Act and the SOP an answer to the risk of prejudice to the accused?
As I have indicated, this question was addressed to the risk of leakage and the appellants' primary submission was that the primary judge did not consider the issue.
With respect to the appellants' submissions, this issue was dealt with comprehensively by the primary judge. She referred to the order made by her under s 266A of the Act, which she noted prohibited disclosure of any information obtained from the appellants to any person associated with the investigation and prosecution of the appellants. She rejected the possibility that the information might be disclosed as a result of a notice sent by the ATO (see [78] above). She also noted that the measures taken to protect against disclosure identified by the Commissioner (see [79] above) and reached the conclusion on the risk of inadvertent disclosure to which I have referred at [102]. In reaching that conclusion, she recognised that the disclosure of information might prejudice a fair trial in accordance with adversarial principles, but concluded that the order made by her and the SOP were effective to ameliorate the risk. She reached that conclusion after reviewing the internal governance procedures and the evidence of Assistant Commissioner Gaughan, including a potential problem which may have arisen by reason of Sworn Assets Statements being capable of being accessed by persons not involved in the POC proceedings (see [74]-[75] above), and accepting that there could be no absolute guarantee of inadvertent disclosure.
In these circumstances it seems to me the primary judge properly considered the risk of leakage in determining whether or not to grant a stay. The fact that she did not put "a complete barrier between the proceeds of crime people and the prosecution" did not constitute an error, particularly having regard to the order she made under s 266A(2)(b). The submission that the order made by her Honour did not prohibit disclosure to the public at large took no account of the limitations on disclosure contained in s 266A(2), irrespective of a court order.
So far as counsel for Mr Onley submitted that the primary judge erred in concluding that the SOP was effective in preventing dissemination of Coercive Material, this ignores the fact that the SOP was considered by her Honour in conjunction with the order made by her under s 266A. It was open to her Honour to conclude that the protection was adequate and there was no error in discretion in her doing so. The specific submissions of counsel for Mr Onley which I have set out at [163], failed to take into account the provisions of the SOP prohibiting disclosure contrary to a court order, the provisions concerning the maintenance of a register of Coercive Material, and the provisions relating to storage, printing, receipt and custody of such material (see [57]-[60] above). This material provided ample justification for the conclusion of the primary judge that the protection was adequate.
[21]
d A(v) - Can material prejudice exist in respect of charges that may be laid in the future?
It is difficult to see what the submissions made under this head add to the earlier submissions which were made in the context of an actual charge being laid.
Section 319(2)(a) of the POC Act, in its terms, extends to charges that might be instituted and provides that possibility is not a ground for a stay. Further, once it is accepted that the examination is lawful IBAC establishes that an examiner is not prevented by either the fundamental principle (it is for the prosecution to prove the guilt of an accused person) or the companion rule (that an accused person cannot be required to testify to the commission of a charged offence) from asking questions concerning the offences: see IBAC at [43]-[44]; Strickland at [95]; McGlone at [120]-[125].
It follows that there was no error of discretion in the manner in which the primary judge dealt with future charges.
[22]
e B(vi) and (vii) Prejudice to the respondent if the examinations are stayed
The first error said to be made was a failure to distinguish between what was described as an examination for the ordinary purpose of the Act and practical prejudice if the examination was delayed. The distinction referred to was drawn by Beazley P in McGlone at [105].
However, this submission ignores the concerns expressed by Agent Burtenshaw accepted by the primary judge (see [67] above) that if the examination was to wait until the conclusion of the criminal proceedings, there was a risk of dissipation of assets that the respondent had not identified at the date of the order. Her Honour evidently took that into account in determining what was practical prejudice. Counsel for Mr Menon, who made this submission, accepted that her Honour found that Agent Burtenshaw had the concerns expressed, but submitted that the respondent did not adduce evidence as to why the examination might be useful. The actual benefits to be derived from an examination cannot be determined until after it has taken place, but it was not suggested to Agent Burtenshaw that his concerns, including potential dissipation of property, were not real and would not be alleviated by a prompt examination.
The appellants argued that the case was not put below on the basis that the potential prejudice was the inability to investigate whether there were further funds available. That is by no means clear having regard to the evidence of Agent Burtenshaw to which I have referred. In any event, no prejudice was suggested by it being raised on appeal.
It was also submitted that it would be an improper use of the power to use it to ascertain if funds were available to satisfy a future pecuniary penalty order. Notwithstanding the fact that this was one of the concerns expressed by Agent Burtenshaw, it does not seem to be one of the reasons for her Honour's conclusions (see primary judgment at [287]; see [83] above).
Further, as the respondent pointed out, s 142 of the POC Act imposes a charge on property the subject of a restraining order to secure a pecuniary penalty order. In that context, an examination to see if there was property falling with the scope of the restraining order which would be the subject of such a charge, would not be an improper exercise of the power conferred by s 180 of the Act.
In these circumstances her Honour, in concluding that a stay should not be granted, did not take into account what was said to be an improper purpose of the examination, nor was that purpose in any event improper.
[23]
f C(viii) The scope of the authorisation of the POC Act to require statements on oath or affirmation as to assets and liabilities
One of the orders made by the primary judge was in the following terms:
"[174] Pursuant to section 39(1) of the Proceeds of Crime Act 2002 (Cth), Jason Cornell Onley is directed to provide to the Commissioner of the Australian Federal Police or his delegate within seven (7) days of the service of these orders, a sworn statement, in the form set out in Schedule 101 to this summons setting out:
(a) all of his interests in property valued at AUD5,000 or more; and
(b) all of his liabilities valued at AUD5,000 or more."
Schedule 101 so far as relevant provided as follows:
"SCHEDULE 101
1. Provide full particulars of the nature and extent of your property and where applicable, the property of any company of which you are a director, including in relation to each item of property:
a) description of the property, including the nature of your interest in it and, where possible, the estimated value;
b) the location of the property;
c) the name of the person or institution in whose custody title documents in respect of the property are believed to be;
d) the approximate date of acquisition of the property;
e) income earned from the property;
f) a full description of any liability in relation to the property and the amount of the liability;
g) the amount and date of payments made to discharge any liability in relation to the property;
h) the source of the payments referred to in subparagraph 1(g) above; and
i) the name of the person or institution to which the liability is owed.
2. Provide full particulars of your current liabilities or where applicable, the liabilities of any company of which you are a director, including, in relation to each liability:
a) full description of each liability including the nature of the liability and the amount of the liability; and
b) the name of the person or institution to which the liability is owed."
Mr Onley submitted that the power to require particulars of property of a company of which he was a director goes beyond the powers conferred by s 39(1)(ca).
In Cacu Meagher JA in dealing with an order in similar terms to the one in the present case, expressed the view that the form of statement required by the orders went beyond what can be sought in an order under s 39(1)(ca) in two respects. First, it required particulars of property owned by any company of which the person required to make the sworn statement is a director and, second, the particulars required by subparagraphs (b)-(i) of paragraph 1 of Schedule 1 go beyond what is necessary to identify any interest of the respondent in property.
It is correct that seeking information concerning the property of a company of which Mr Onley was a director goes beyond information in respect of property in which he has a legal or equitable interest. However, s 338 defines interest in relation to property as including a right, power or privilege in connection with the property or thing. A director of the company has, in conjunction with others and subject to his or her fiduciary obligations, the power to control property owned by the company. In those circumstances it seems to me that an order made under s 39(1)(ca) would extend to requiring the specification of property of a company of which the person required to give the sworn statement is a director.
Further, unlike the order in Cacu it is not said to be made pursuant to s 39(1)(ca) but rather pursuant to s 39(1). This gives the court a general power to make any ancillary order that it considers appropriate. Although ancillary order is not defined, in my opinion it refers to an order ancillary to a restraining order which, in the present case, was made under s 18 of the POC Act. Section 18(2)(c) provides that the order can cover specified property of another person that is subject to the effective control of the suspect. Section 337 defines the meaning of "effective control". It states that in determining whether or not property is subject to the effective control of a person, regard may be had to directorships of a company that has an interest in the property: s 337(5)(a).
Having regard to these provisions, it seems to me that an ancillary order may include providing details of property of a company of which the person concerned is the director as a prelude to ascertaining whether it could properly be the subject of the restraining order pursuant to s 18(2)(c) of the POC Act.
The second matter referred to by Meagher JA was not raised on the appeal and thus no argument was directed to it. In these circumstances, it is not necessary to deal with it.
[24]
Conclusion
In the result, it has not been made out that the primary judge erred in the exercise of her discretion in making the orders complained of. There should be a grant of leave to each applicant, but the appeals should be dismissed with costs.
BASTEN JA: In May 2017 the Commissioner, Australian Federal Police, commenced proceedings under the Proceeds of Crime Act 2002 (Cth) against 66 defendants of whom 23 were natural persons. Three of the defendants were the three applicants before this Court.
The Commissioner sought forfeiture orders and pecuniary penalties with respect to an alleged conspiracy to defraud the Australian Taxation Office of an amount in excess of $80 million. The Commissioner also sought interlocutory and ancillary relief in the form of orders (i) restraining disposal of property, (ii) for the provision of sworn statements as to assets and liabilities, and (iii) requiring that persons attend to be examined as to their affairs. Orders were made ex parte on 16 May 2017. The ex parte orders required that they be served on the applicants at 10 am on 17 May 2017.
On 17 May 2017 various persons, including the applicants Jason Cornell Onley and Dev Menon, were arrested and charged with conspiracy to dishonestly cause a loss, pursuant to s 135.4(3) of the Criminal Code (Cth). Simon Paul Anquetil was arrested and charged the following day. Each was released on bail. It is inferred that they were served with the ex parte orders as required by those orders.
On 5 and 6 June 2017 notices were issued under s 183 of the Act requiring that each of the applicants attend for examination on 19 June (Anquetil), 22 June (Onley) and 27 June (Menon). The applicants, by notices of motion filed on 15 and 16 June, sought stays of their respective examination orders. Each notice of motion was amended before the hearing; the Commissioner agreed to defer the examinations until seven days after determination of the stay applications.
The stay applications (including applications for other relief identified below) were heard by Fullerton J in the Common Law Division in September and November 2017. On 22 March 2018 Fullerton J delivered judgment refusing the stay applications. [1] Further consequential relief was addressed in a judgment delivered on 27 April 2018. [2] The orders being interlocutory, each applicant filed a summons seeking leave to appeal in July or August 2018. No issue was raised as to delay in the commencement of the proceedings in this Court.
The grounds in the draft notices of appeal were, in each case, amended and subsequently amended at the combined hearing of the applications for leave and the appeals on 29 and 30 October 2018. In their final form, the notices of appeal filed for Messrs Onley and Menon were in identical terms. That filed for Mr Anquetil differed in one respect noted below.
With respect to the challenges to the refusal to stay the examinations until after the criminal trials, the primary matters relied upon for the applicants were the manner in which the primary judge:
1. applied s 319 of the Proceeds of Crime Act (dealing with stays of proceedings);
2. addressed prejudice to the applicants with respect to the extant criminal proceedings, should the stays be refused;
3. addressed the countervailing prejudice to the Commissioner, should the stays be granted, and
4. balanced the respective elements of prejudice.
The parties raised two other issues, namely whether:
(5) the judge erred in finding that s 319 applied with respect to the applications to "set aside" the examination orders under s 180; [3] and
(6) the order for sworn assets statements exceeded the power to order such a statement under s 39 of the Act. [4]
As the primary judge noted, each applicant had filed a sworn assets statement prior to the hearing of the motions. [5] As these issues were logically antecedent to the challenges to the refusal to stay the examinations, they will be addressed before the stay issues.
The Commissioner took no objection to a grant of leave to appeal in each case. Because the proposed appeals related to contestable issues as to the operation of the Proceeds of Crime Act, as amended in 2016, it is appropriate that leave be granted in each case. Nevertheless, for the reasons explained below, the appeals should be dismissed.
[25]
Proceeds of Crime Act - statutory scheme
Although it will be necessary to have regard to the history of earlier forms of key aspects of the Act, and the case-law which those provisions generated, the proper starting point is the current legislative scheme.
The general structure and purposes of the Proceeds of Crime Act have been considered in numerous cases and may be briefly recounted here. The key provisions in their current form were addressed by this Court in Commissioner of the Australian Federal Police v Elzein, [6] referred to and followed by the primary judge.
The primary object of the Proceeds of Crime Act is to deprive persons of the proceeds of offences, and more generally benefits derived from the commission of offences, against laws of the Commonwealth: s 5(a). An underlying purpose is the deterrent effect of undermining the profitability of criminal enterprises: s 5(da). A further object is to confer powers on law enforcement authorities to enable them effectively to trace the proceeds of crime: s 5(e).
The confiscation scheme provided in Ch 2 confers powers to make freezing orders, restraining orders and, ultimately, orders by which property is forfeited to the Commonwealth. There is also power to make pecuniary penalty orders in respect of amounts reflecting the benefits derived from committing offences, [7] and other forms of ancillary orders, including orders directing a person (referred to as a "suspect", a term which includes a person who has been convicted of, or charged with, a relevant offence [8] ) to make a sworn statement setting out all of his or her interests in property: s 39(1)(ca). Chapter 3, headed "Information gathering", provides for a number of powers to assist in the location and identification of relevant property. These powers include examination orders: s 180 and Pt 3-1 generally. The orders made ex parte on 16 May 2017 included orders under s 39(1)(ca) and s 180.
Disclosure of information by a person who has obtained a sworn assets statement, or information provided as a result of the conduct of an examination, is constrained by reference to the persons to whom he or she may disclose the information, in accordance with s 266A of the Act. Section 266A is both permissive and restrictive; however, its effect may be varied by a court order prohibiting the disclosure of information even to a permitted authority: s 266A(2)(b). Although that provision envisages a court making an order prohibiting disclosure of information, it does not expressly confer jurisdiction on any court to make such an order. Nevertheless, by implication, it should be construed as having that function and should be read together with s 314(1), which confers jurisdiction on, relevantly, the Supreme Court, "with respect to matters arising under this Act."
Finally, in this outline of the legislative scheme, the court has an express power to stay proceedings under the Proceeds of Crime Act (other than criminal proceedings) if satisfied that it is "in the interests of justice" to do so: s 319(1). The exercise of that power is central to the primary submissions in the present case.
[26]
(a) nature of jurisdiction
The jurisdiction of the Supreme Court is conferred by s 314 of the Proceeds of Crime Act, which relevantly provides:
314 State and Territory courts to have jurisdiction
(1) Jurisdiction is vested in the several courts of the States and Territories with respect to matters arising under this Act.
(2) Subject to section 53, the jurisdiction vested in a court by virtue of subsection (1) is not limited by any limits to which any other jurisdiction of the court may be subject. [9]
The orders made by the primary judge on 16 May 2017 involved an exercise of power under a Commonwealth statute. It follows that the proceedings before the primary judge, and in this Court, involve an exercise of federal jurisdiction. To the extent that the parties sought to rely upon the power to set aside an ex parte order, after it has been entered, pursuant to Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), r 36.16(2)(b), that provision must be engaged by the operation of s 79(1) of the Judiciary Act 1903 (Cth). However, State laws will not be picked up and applied in federal jurisdiction where the laws of the Commonwealth otherwise provide. It is therefore necessary to consider whether any provision of the Proceeds of Crime Act provides otherwise, that is, operates inconsistently with the UCPR.
[27]
(b) relevant principles of State law - discharging ex parte orders
The history of interim or interlocutory restraining orders or orders freezing assets, as explained by French CJ in International Finance Trust Co Ltd v New South Wales Crime Commission, [10] goes "hand-in-hand with assets forfeiture." The rationale for seeking such orders ex parte was explained in the same case by Heydon J:
"[154] Practical utility. It is understandable that the Act places a high significance on the importance of obtaining a restraining order without notice to defendants. No doubt many potential defendants are able to dispose of their assets very speedily, and would do so, if given notice of the application before the restraining order is made. A duty in the Supreme Court to grant an ex parte restraining order for a short period pending an application by the defendant to oppose its continuation, or dissolve it, is not repugnant to the judicial process in a fundamental degree. But the practical desirability of ensuring that assets not be disposed of before an application for a restraining order comes to court is one thing. Creating a capacity in the Commission to retain a restraining order it has obtained ex parte without there being any procedure by which the defendant may apply to have it speedily dissolved is another."
In International Finance, the scheme for ex parte orders under the Criminal Assets Recovery Act 1990 (NSW) was held to be invalid because it required the Court to consider a matter ex parte in circumstances where no opportunity was provided to the respondent to seek to have the order discharged.
The dissentients in International Finance upheld the validity of the legislation on the basis that it did not purport to remove general law principles permitting a party affected by an order made ex parte to apply to the court to seek its discharge. [11] Such a general law principle, operating despite the order having been entered, was identified by Griffith CJ in Owners of SS Kalibia v Wilson [12] and is reflected in r 36.16(2)(b) of the UCPR.
In Resort Hotels Management Pty Ltd v Resort Hotels of Australia Pty Ltd, [13] McLelland J referred to an interlocutory injunction which had been expressed to operate "until further order". [14] He stated:
"It is sometimes convenient, for a variety of reasons, for the court, when granting an ex parte injunction, to express the injunction to operate 'until further order' rather than, as is the more usual practice, up to and including the date of return of the summons or notice of motion as the case may be. However, when that occurs the practice of the court is ordinarily that on the return of the summons or notice of motion the injunction should be discharged unless the plaintiff shows sufficient reason for its continuation. In other words, the mode in which the duration of the ex parte injunction is expressed should not be allowed to affect the substance of the matter, or the onus, on the first occasion on which the defendant has any opportunity at all to put its case to the court."
The reason for preferring an ex parte order that is expressed to operate only until the return date on the summons is to emphasise the fact that the further (inter partes) hearing will involve the applicant seeking to justify the relief originally sought, as opposed to the respondent seeking to establish error in order to discharge an existing order. For this reason, the present applicants were correct to submit that, under general law principles, the Commissioner should have borne the onus of establishing an entitlement to the orders made ex parte when the motion for their discharge came on for hearing.
[28]
(c) exercise of federal jurisdiction
To the extent that it is necessary for the applicants to rely upon State procedural rules (whether statutory or under the general law) to provide power to set aside examination orders made ex parte, there is a question as to whether those laws apply as State laws or whether they are laws adopted by s 79 (or, to the extent that the general law is relied upon, s 80) of the Judiciary Act. Whether, and why, this should matter may appear obscure. The answer turns upon the fact that if State law is applicable as such, its operation will depend on whether there is inconsistency with any Commonwealth law, for the purposes of s 109 of the Constitution. If the relevant State law will only operate if picked up by s 79(1), or s 80, of the Judiciary Act, the operation of the State law will depend upon whether or not Commonwealth law has "otherwise provided", to adopt the language of s 79(1).
On one view, the same tests of inconsistency will be adopted in each case. On the alternative view, s 109 inconsistency involves the conferral of paramountcy upon the laws of one legislature which are inconsistent with the laws of another, whereas s 79, if engaged, may be treated as identifying two laws made by the one legislature, in which case the court will seek to achieve an harmonious operation of the respective laws, rather than requiring that one prevail to the extent of any inconsistency. (If identification of the relevant law turned on the operation of s 109, this case could not proceed absent the giving of notices of a Constitutional issue pursuant to s 78B of the Judiciary Act.)
Section 80 of the Judiciary Act adopts as federal law the common law of Australia. As explained by Geoffrey Lindell, the preferred reading of s 79 is that it is confined to the application of State legislation. [15] On that view, if the right of the person subject to an ex parte order to have the order discharged arises under the general law, then it may be necessary to rely upon s 80. On the other hand, to the extent that the right is part of the procedural rules governing the exercise of jurisdiction, it arguably falls within the express language of s 79. [16] It is perhaps unnecessary to resolve the issue for present purposes because, although the wording of s 80 of the Judiciary Act (which refers to a law which is "not inconsistent" with laws of the Commonwealth) is not identical to that of s 79, it is not suggested that a different test should be applied. Reliance on s 80 of the Judiciary Act may be put to one side.
Whether s 79 of the Judiciary Act is engaged in the present circumstances depends upon the authoritative analysis provided in the joint reasons in Rizeq v Western Australia. [17] The issue in Rizeq was whether s 80 of the Constitution (requiring a unanimous jury verdict for an indictable offence against a law of the Commonwealth) prevailed over a State law permitting majority verdicts. The High Court unanimously held that a prosecution for a drug offence under Western Australian law did not attract s 80 of the Constitution where the Western Australian Court was exercising federal jurisdiction because the accused was a resident of another State. [18]
The reasoning of the joint judgment in Rizeq turned upon the accepted premise that no State legislature could pass laws governing the exercise of federal jurisdiction and that, accordingly, the purpose of s 79 of the Judiciary Act was to fill "the gap in the law governing the exercise of federal jurisdiction which exists absent other applicable Commonwealth law by reason of the absence of State legislative power to govern what a court does in the exercise of federal jurisdiction." [19] The joint reasons then concluded:
"[92] The resulting confinement of the operation of s 79 to an area in which there is an absence of State legislative power also provides a straightforward answer to the vexed question of the relationship between s 79 of the Judiciary Act and s 109 of the Constitution [20] . Within the field in which s 79 of the Judiciary Act operates, State laws have no valid application and s 109 of the Constitution for that reason simply has no operation." [21]
Thus the offence creating provision of the State law continued to operate as State law; s 80 of the Constitution was therefore not engaged because there was no charge for an offence under a law of the Commonwealth.
The critical conclusion was expressed in the following terms:
"[103] Within the limits of State legislative capacity, State laws apply in federal jurisdiction as valid State laws unless and to the extent that they are rendered invalid by reason of inconsistency with Commonwealth laws. What State laws relevantly cannot do within the limits of State legislative capacity is govern the exercise by a court of federal jurisdiction. A State law can determine neither the powers that a court has in the exercise of federal jurisdiction nor how or in what circumstances those powers are to be exercised. A State law cannot in that sense 'bind' a court in the exercise of federal jurisdiction, and that is the sense in which that word is used in s 79 of the Judiciary Act. The operation of s 79 is limited to making the text of the State laws of that nature apply as Commonwealth law to bind a court in the exercise of federal jurisdiction.
…
[105] Section 6(1)(a) of the Misuse of Drugs Act, in contrast, is a law having application independently of anything done by a court. It is squarely within State legislative competence and outside the operation of s 79 of the Judiciary Act. It applied in the trial of Mr Rizeq as Western Australian law just as it applied to him before any court was called upon to exercise jurisdiction in relation to the charges brought against him [22] ."
The distinction between the two categories of laws is not "the difficult and sometimes elusive distinction between 'substance' and 'procedure'." [23] Rather, it is a distinction (which may also at times be elusive) between laws which bind a court in the exercise of federal jurisdiction and those which do not have that effect. The result would appear to be clear in the present case: a State law conferring power to set aside or discharge an ex parte order would govern the exercise of federal jurisdiction and could therefore only apply if adopted by s 79 as a federal law. Accordingly its application in the present case will turn not upon the operation of s 109 of the Constitution, but rather on the operation of s 79 of the Judiciary Act. [24]
The next question is whether the State law is not picked up because a Commonwealth law otherwise provides. Arguably the answer to that question depends not on the test of inconsistency under s 109 (being an objective test of whether the State law alters, impairs or detracts from a Commonwealth law) but rather involves "the reconciliation of two conflicting laws of the one legislature". [25] That approach would require the court to seek to avoid findings of inconsistency, on the basis of "a very strong presumption that the [single] legislature did not intend to contradict itself, but intended that both Acts should operate." [26] Reconciliation may be achieved by having regard to the interplay between specific and general provisions, and the point in time at which each was enacted. [27] However, that approach cannot be applied without qualification to an ambulatory law such as s 79 of the Judiciary Act, which may adopt unknown State laws, as they exist from time to time, and which then require reconciliation with the provisions of a specific Commonwealth statute. It is artificial to impute an intention for two such laws to operate harmoniously. Indeed, in Northern Territory v GPAO Gleeson CJ and Gummow J spoke of an exercise "akin to that" involving two laws of the same legislature. [28]
The basis of the operation of State laws governing the exercise of federal jurisdiction is sometimes disregarded. In the present case submissions sought to invoke both s 23 of the Supreme Court Act 1970 (NSW) and the inherent powers of the Court without regard to how they were said to operate in federal jurisdiction. In Ruzehaji v Commissioner of the Australian Federal Police [29] the Full Court of the South Australian Supreme Court referred to a passage in Northern Territory v GPAO involving the operation of s 79, noting that the parties had accepted that s 79 operated "to apply State provisions to extend time." [30] The Full Court referred in a footnote to Gordon v Tolcher, [31] a case dealing with a claim for relief under s 588FF(1) of the Corporations Act 2001 (Cth) and procedural rules of the District Court of New South Wales permitting an extension of time. [32] The parties' assumption in Ruzehaji that a provision of the Limitation of Actions Act 1936 (SA) could be relied upon to extend the time within which to review a restraining order under s 42 of the Proceeds of Crime Act was also accepted. For reasons which will be explored below, the correctness of the concession should be doubted. However, because the case did no more than adopt a concession, it is not authority for the proposition that State law will govern the exercise of jurisdiction in any particular respect under the Proceeds of Crime Act, contrary to the submissions for the applicants.
[29]
(d) approach of trial judge: Proceeds of Crime Act - s 317
The primary judge found that the Proceeds of Crime Act contained an express provision which governed the approach to this issue, namely s 317, which reads as follows:
317 Onus and standard of proof
(1) The applicant in any proceedings under this Act bears the onus of proving the matters necessary to establish the grounds for making the order applied for.
(2) Subject to sections 52 and 118, any question of fact to be decided by a court on an application under this Act is to be decided on the balance of probabilities.
After hearing submissions for Mr Onley, the judge ruled that the onus was on the applicant "as the moving party for the setting aside [or] revocation … of the order for examination" [33] to establish grounds for setting aside or discharging the ex parte order.
This construction of s 317 contained an implicit finding of inconsistency with the general law noted above, namely that a respondent who is the subject of an ex parte order is entitled to be heard in opposition to the continuation of the order without bearing an onus of proving that the order was wrongly made. While it is possible that s 317 was intended to vary that general law principle, it does not expressly purport to do so. Further, with specific exceptions, the applicant for restraining orders, forfeiture orders and other orders for related purposes, will be the Commissioner, Australian Federal Police. It would be a somewhat arbitrary result if s 317 placed an onus on the respondent to an application for an examination order to demonstrate why it should be discharged, if made ex parte, but left the onus to establish a justification for the order on the Commissioner, if sought in the course of an inter partes hearing. Examination orders are not always made ex parte. One would not readily construe a statutory provision of this kind as conferring a benefit on the Commonwealth officer based on obtaining an ex parte order, whether it was properly available or not. Section 317 should not be read as having this effect.
[30]
(e) Proceeds of Crime Act - s 14A
Putting s 317 to one side, there is contextual support within the Proceeds of Crime Act for the view that State law is not excluded by implication. Part 1-4, headed "Application", addresses the question of the inter-relationship between State and Commonwealth laws in the following terms: [34]
14A Concurrent operation of State and Territory laws
(1) This Act does not exclude or limit the operation of a law of a State or Territory to the extent that the law is capable of operating concurrently with this Act.
There are two issues as to the application of this provision. The first concerns the kind of State laws which are "capable" of operating concurrently with the Proceeds of Crime Act. Must the law be one which falls within the scope of State laws which can be applied as such in federal jurisdiction (in accordance with the reasoning in Rizeq) because they do not govern the exercise of the court's jurisdiction? Or may the law fall within a broader class, including laws which bind the court in the exercise of its jurisdiction, but which are not inconsistent with provisions of the Proceeds of Crime Act?
In circumstances where the Proceeds of Crime Act includes laws imposing substantive legal obligations and liabilities (and defining correlative rights and powers) and also prescribing the manner in which proceedings arising under the Act should be determined, the broader operation of s 14A should be accepted. That approach has the benefit of avoiding the need to draw awkward distinctions between those parts of the Act which govern jurisdiction and those which do not.
The second issue raised by s 14A is identification of its intended effect. Such provisions are sometimes described as removing the basis for an implication that the Commonwealth law is intended as an exclusive statement of the law regarding a particular matter and, even where it appears to leave gaps, does not permit the gaps to be filled by State law. This latter implication is sometimes described as a "covering the field" test and gives rise to "indirect inconsistency" between a Commonwealth law and State laws.
In Banerjee v Commissioner of Police [35] this Court suggested that it is unhelpful to identify categories of inconsistency and preferable to understand inconsistency as arising where "either expressly or by implication, the Commonwealth law provides for an immunity from a class of State laws, which immunity would be qualified, altered or impaired by, and is therefore inconsistent with, the operation of a State law within that class." [36] Because tests of inconsistency, both under s 109 of the Constitution and the test of otherwise providing under s 79 of the Judiciary Act, operate by reference to legislative intention, as derived from the text of the statute, a similar approach should apply in each situation. The approach will, of course, vary depending on the nature of the laws in question at the point at which inconsistency is asserted. Like any other statutory provision, s 14A should not be applied without consideration of its statutory context.
[31]
(f) Proceeds of Crime Act - other provisions
In considering the scheme of the Proceeds of Crime Act more broadly, the critical question is whether the scheme reveals an intention inconsistent with the operation of the general law principles reflected in UCPR, r 36.16(2)(b).
Relevantly, there are express powers dealing with the setting aside of restraining orders and ancillary orders, though not examination orders. First, there is express power with respect to the revocation of a restraining order:
42 Application to revoke a restraining order
(1) A person who was not notified of the application for a *restraining order may apply to the court to revoke the order.
(1A) The application must be made:
(a) within 28 days after the person is notified of the order; or
(b) if the person applies to the court, within that period of 28 days, for an extension of the time for applying for revocation - within such longer period, not exceeding 3 months, as the court allows.
(2) The applicant must give written notice to the *responsible authority and the *Official Trustee of both the application and the grounds on which the revocation is sought.
(3) However, the *restraining order remains in force until the court revokes the order.
(4) The *responsible authority may adduce additional material to the court relating to the application to revoke the *restraining order.
(5) The court may revoke the *restraining order if satisfied that:
(a) there are no grounds on which to make the order at the time of considering the application to revoke the order; or
(b) it is otherwise in the interests of justice to do so.
Section 42(1) is directed to orders made ex parte and, it may be inferred, only orders made ex parte. The timing of an application is prescribed, as is the procedure. The applicant for revocation must give notice of "the grounds" on which revocation is sought. One precondition of the power to revoke, is that the court be satisfied that there are "no grounds" to make the order. It is unclear where the onus of proof lies. The second criterion ("the interests of justice") may well include general law principles, such as the failure of an applicant for an ex parte order to make full disclosure of adverse circumstances known to it, as explained in Thomas A Edison Ltd v Bullock. [37]
Within a tightly controlled statutory scheme, the limitation period in s 42(1A) is a precondition to the exercise of the Court's jurisdiction conferred by s 314(1). It would not, therefore, be open to a State court to invoke powers under its own procedural rules to extend time within which to make an application. [38] That approach is consistent with the approach to a similar provision in the Corporations Act 2001 (Cth), s 588FF(3), considered by the High Court in Grant Samuel Corporate Finance Pty Ltd v Fletcher. [39]
In Tan v Director of Public Prosecutions (Cth), [40] Shaw J held that there was no residual general law power to revoke an ex parte order. He also held that "there is an onus upon the applicant to persuade the Court on the balance of probabilities that the discretion should be exercised in favour of the applicant." [41] Those conclusions depended on the adoption of a submission made on behalf of the Director that the Proceeds of Crime Act "covers the field and there is no residual 'common law' inherent power or other statutory power to revoke a Restraining Order." No attention appears to have been paid to the terms of (then) s 15. However, it is not necessary to reconsider the reasoning in Tan; no application was pursued in this Court with respect to the restraining orders. Nevertheless, the existence of the limitation period (arguably exclusive of State law) and the use of the broad criterion "otherwise in the interests of justice" (arguably given meaning by State law) suggest that a nuanced approach may be required.
Secondly, there are powers of revocation with respect to ancillary orders, expressed somewhat differently from s 42 with respect to restraining orders. However, it should be noted that although two of the applicants sought to revoke or set aside the asset statements in their notices of motion, these orders were not pressed at trial, all applicants being content to seek orders restraining the use of the asset statements which had, by the time the motions were heard, been provided to the Commissioner.
Revocation of ancillary orders, including orders to provide asset statements under s 39(1)(ca), are provided for in s 39B, which states:
39B Application to revoke ancillary order
(1) A person may apply to the court that made an ancillary order under section 39 to revoke the order if:
(a) the person is affected by the order; and
(b) the application for the ancillary order was heard without notice having been given under subsection 39(3) following a request under subsection 39(3A).
(2) The application must be made within 14 days after the person was notified of the ancillary order.
(3) The applicant must give written notice of the application, and the grounds on which the revocation is sought, to any person who was entitled to make the application for the ancillary order (see subsection 39(2)).
(4) The effect of the ancillary order is stayed until the court determines the application.
(5) The court may revoke the ancillary order on application under subsection (1) if it considers it appropriate to do so.
(6) The court may have regard to any matter it considers appropriate in determining the application.
(7) If:
(a) the ancillary order directed a person to do a thing within a particular period; and
(b) an application is made to revoke the order under this section;
the court may, if it considers it appropriate to do so, vary the order to extend that period by a specified period.
It is clear that the power to apply for revocation of an ancillary order arises only if the application for the order was heard without notice, and, it may be inferred, was made ex parte. In many respects the underlying scheme appears to follow that of s 42, although the language is, in part, significantly different. The time limit for making an application is a brief period of 14 days after notification. The applicant is required to give notice of the grounds on which revocation is sought. The power of the Court to revoke is expressed in broad discretionary language. In these circumstances, it is difficult to imply the operation of a general law power to revoke an ex parte order, but general law principles may inform the exercise of the statutory power.
Thirdly, it is necessary to have regard to any power of revocation with respect to an examination order, which does not fall within the category of "ancillary orders". All three applicants sought in their notices of motion to have the ex parte examination orders applicable to them revoked or set aside. However, only Mr Anquetil pressed that relief at trial, [42] and maintained the application on appeal.
Provisions with respect to examination orders fall within Ch 3, whereas restraining orders and ancillary orders, together with forfeiture orders, fall within Ch 2. Whereas Ch 2 is headed "The confiscation scheme", Ch 3 is headed "Information gathering". An examination order is made under s 180 which provides:
180 Examination orders relating to restraining orders
(1) If a *restraining order is in force, the court that made the restraining order, or any other court that could have made the restraining order, may make an order (an examination order) for the *examination of any person, including:
(a) a person whose property is, or a person who has or claims an *interest in property that is, the subject of the restraining order; or
(b) a person who is a *suspect in relation to the restraining order; or
(c) the spouse or *de facto partner of a person referred to in paragraph (a) or (b);
about the *affairs of a person referred to in paragraph (a), (b) or (c).
(2) The *examination order ceases to have effect if the *restraining order to which it relates ceases to have effect.
Apart from the scope of the order, the only precondition to the power to make an examination order is a restraining order in force. A restraining order is "in force" from the time at which it is made: s 41. It follows that the power to make an examination order is engaged immediately a restraining order is made, even if ex parte and before notice of the restraining order has been given to the persons affected. Examination orders may be made in a range of situations, as set out in Pt 3-1.
There is no express power within the Proceeds of Crime Act for the setting aside or revocation of an examination order. Apart from satisfying the circumstances in which an order can be made (relevantly the existence of a restraining order) and the requirement that the application be made by the authority which obtained the restraining order, [43] there are no criteria to be satisfied to obtain such an order.
There may be a question as to the need for an examination order to be made ex parte, rather than on notice. Section 182(2) requires the court to consider an application for an examination order made without notice, if the authority seeking the order requests the court to do so. However, circumstances which justify the making of an order will not necessarily justify the making of an order ex parte. Further, and consistently with this framework, an examination order made under s 180(1) ceases to have effect if the restraining order to which it relates ceases to have effect: s 180(2).
On one view, the absence of any specific power to seek the revocation of an examination order made ex parte suggests that there is room for the operation of a State law permitting review of an ex parte order by the person affected, after it comes to his or her notice. Mere silence in the Commonwealth legislation would appear not to give rise to inconsistency.
However, even the combination of silence in relation to discharge or revocation of an examination order made ex parte, and s 14A of the Proceeds of Crime Act, do not necessarily reveal a legislative intention that allows room for the concurrent operation of State procedural laws with respect to ex parte examination orders. A contrary conclusion may be derived from the following considerations:
1. the Proceeds of Crime Act expressly envisages that restraining orders, ancillary orders and examination orders may all be made ex parte;
2. it expressly provides for the circumstances (including time limits) in which ex parte restraining orders and ancillary orders may be reviewed, but makes no such provision with respect to an examination order;
3. an examination order is, however, dependent upon the existence of a restraining order, and
4. an examination order will have no immediate effect except to authorise the fixing of a time and place for an examination, a consequence which can readily be averted by the grant of a stay.
Accordingly, it may be inferred that the Commonwealth Parliament intended that the procedural scheme of the Proceeds of Crime Act operate coherently without alteration or addition by the adoption of State laws allowing for the discharge or setting aside of examination orders when made ex parte, except to the extent that the standards and criteria to be applied by a court exercising discretionary powers will be informed by general law principles.
[32]
(g) vacating ex parte orders
As noted at [266] above, there were two issues raised on the appeal which variously suggested that the ex parte orders for examination and the delivery of sworn statements of assets should be set aside or revoked because they should not have been made. They will be addressed separately.
[33]
(i) orders for examination
In his amended notice of motion filed on 26 June 2017, Mr Anquetil sought an order that "the examination summons [sic] … made in the Proceeds of Crime Act proceedings ex parte and without notice on 16 May 2017 … (a) be revoked under the Proceeds of Crime Act 2002 (Cth) …; or (b) be set aside under r 36.16(2)(b) [of the UCPR]."
Although a similar order had been sought on behalf of Mr Onley, the primary judge noted that the only counsel who sought revocation of an examination order was counsel for Mr Anquetil, [44] noting that counsel for Mr Onley had abandoned that aspect of his application. [45]
In this Court, Mr Anquetil addressed this issue in the following grounds:
"(1) The primary judge erred in holding that, before the examination order could be set aside, it was incumbent upon the applicant to show either a defect in the evidence relied upon by the Commissioner, or an error in the reasoning leading to the granting of the examination order ex parte.
(2) The primary judge erred in holding that the applicant carried the burden of demonstrating that the examination order should be set aside.
(3) The primary judge erred in finding that s 319 … applied to the application to a) set aside the examination order, and b) to stay the examination order."
It follows from the analysis of the Proceeds of Crime Act set out above that there is no power to set aside or vacate an order for examination, whether made ex parte or not. The undoubted power to stay the operation of such an order will be addressed below.
If that analysis be wrong, and as grounds (1) and (2) relied on by Mr Anquetil accepted, the primary judge did indeed deal with the question as to whether the examination order should be set aside. As may be seen from the reasons of the primary judge set out below, she did not determine the issue on the basis that the applicants bore the burden of demonstrating error, nor did she rely on s 319 in declining to set the examination order aside. Rather, the reasoning of the primary judge was as follows:
"[253] Issues of onus aside, because Mr Ahmad sought revocation of the examination order (or more precisely an order setting aside the order under the UCPR) it is necessary to deal with that basis upon which that relief is sought.
[254] Insofar as r 36.16(2)(b) is concerned, in his written submissions Mr Ahmad cited Cameron v Cole (1944) 68 CLR 571, where Rich J said [at 589]:
'… It is a fundamental principle of natural justice, applicable to all courts whether superior or inferior, that a person against whom a claim or charge is made must be given a reasonable opportunity of appearing and presenting his case. If this principle be not observed, the person affected is entitled, ex debito justitiae, to have any determination which affects him set aside ... The setting aside of the invalid determination lays the ghost of the simulacrum of a trial, and leaves the field open for a real trial …'.
[255] Beyond citing that authority, no submission orally or in writing was advanced as to why I would revoke or set aside the ex parte examination order made on 16 May 2017. That is, no submission was directed to any suggested inadequacy in the grounds upon which the Commissioner relied for the issue of the examination order, or any inadequacy in the evidence in support of the making of the order, or any error in the approach I took [to] the Commissioner's application for the issue of an examination order and the principles I applied in granting the application.
[256] I was then and remain satisfied now that the application by the Commissioner to examine the third defendant was justified. Having regard to the purpose and structure of the statutory scheme in the POC Act and the various matters conditioning the exercise of the discretion to grant the application, I was satisfied that the order should be made. The matters I took into consideration then and, to the extent necessary, the matters that I take into consideration now include, without being exhaustive, the identity of the third defendant as a person suspected of complicity in the taxation fraud as the proposed examinee and the subject matter of the proposed examination into his affairs including the circumstances in which the restraining orders were made and the nature and basis of the suspicions that founded the Commissioner's application for the restraining orders. I also take into account the fact that both in May 2017 and currently there are legitimate questions as to the source and ownership of the property the subject of restraint, as there is in relation to other property over which the third defendant might exercise effective control, whether on his own behalf or on behalf of named others. These matters, in combination, are material features of the third defendant's examinable affairs into which I am satisfied the Commissioner has a legitimate right to enquire for the purposes of the POC Act proceedings."
The reference in ground (3) to reliance on s 319 in this context is obscure; it will, however, be addressed with respect to the second limb of the ground, namely the stay of the examination order.
It is not necessary to consider whether the applicants Onley and Menon, having apparently abandoned the point below, can rely on ground 16A (added in their further amended notices of appeal), which mirrored ground 3 in Mr Anquetil's notice. It is sufficient to find that the grounds in each notice of appeal dealing with issue (5) set out at [266] above must be rejected.
[34]
(ii) sworn assets statement orders
The relevant ground in the notices of appeal of Messrs Onley and Menon was in the following terms: [46]
"The primary judge erred by failing to address the submission, and in failing to find, that the order made in these proceedings for a sworn statement went beyond what is permitted by s 39 of [the Proceeds of Crime Act]: Commissioner of the Australian Federal Police v Cacu [47] … at [31]-[35]."
The submissions asserted reliance upon the statements in the judgment of Meagher JA in Cacu at the paragraphs identified in the ground. Neither in writing, nor orally, was the ground expanded upon and the point may be dealt with briefly.
The order made under s 39(1) in issue in Cacu, and in identical terms in this case, was:
"Pursuant to s 39(1)(ca) of the Act, [the named person] is directed to give to the Commissioner of the Australian Federal Police or his nominated delegate within 28 days of the date of service of these orders a sworn statement, in the form set out in Schedule Four to these orders setting out:
a. all of his interests in property within the meaning of the Act, worldwide, not including any asset or interest in property with a value of less than AUD5,000 as at the date of these orders …."
The first issue raised in Cacu was whether the order went further than permitted by s 39(1)(ca) in requiring particulars in relation to property owned by any company of which the person was a director.
Paragraph (ca) permits orders directing a person to give a statement "setting out all of his or her *interests in property". There are a number of reasons for concluding that the provision extends to property held by a company of which the person is a director. First, "interest" in relation to property is defined to include not only a legal or equitable estate or interest in property, but also "a right, power or privilege in connection with the property". [48] It is an available construction that "interest" would include the powers of a director in connection with the company's property and thus permit an order which extended to property held by a body corporate of which the person was a director.
Further, par (d), immediately following par (ca), expressly identifies an owner of property as including a director of a body corporate which is the owner of the property. Although par (d) is explicit in this respect, there is no reason to suppose that a point of distinction was being drawn between the scope of par (ca) and par (d). Section 39(1) should not be read restrictively. As explained in the chapeau of s 39(1), the orders listed in the lettered paragraphs exemplify, without limiting the generality of, the power to make ancillary orders which the court considers appropriate.
The second issue raised in Cacu related to the requirements as to the form of the sworn statement set out in Schedule Four to the orders. Paragraph 1 of the Schedule was in the following terms:
"1. Provide full particulars of the nature and extent of your property or where applicable, the property of the company of which you are a director, including in relation to each item of property:
a. description of the property, including the nature of your interest in it and, where possible, the estimated value;
b. the location of the property;
c. the name of the person or institution in whose custody title documents in respect of the property are believed to be;
d. the approximate date of acquisition of the property;
e. income earned from the property;
f. a full description of any liability in relation to the property and the amount of the liability;
g. the amount and date of payments made to discharge any liability in relation to the property;
h. the source of the payments referred to in subparagraph (1)(g) above; and
i. the name of the person or institution to which the liability is owed."
Cacu queried whether the information set out in subpars (b)-(i) of par 1 would be necessary "to describe any interest of the respondent in property." [49] However, the purpose of a sworn assets statement is not limited to describing an interest in property. That is indicated by par (da), which allows the court to make a similar order for a sworn statement directed to any person where there are "reasonable grounds to suspect that a person (other than the owner or a previous owner) has information relevant to identifying, locating or quantifying the property". Section 38 of the Proceeds of Crime Act provides for the court to order the Official Trustee to take custody and control of specified property covered by a restraining order. It would be necessary for the court to have information as to the location of the property (which might be a vehicle) and the name of a person holding title documents (in the case of real property). Information as to date of acquisition may be relevant to determining the value of the property and the nature of the interest held by the respondent; income earned from the property may itself constitute relevant property within the terms of s 17(2). Paragraph (ca) expressly permits an order to require the specification of the person's liabilities, which could well involve a description of any liability in relation to the property; and any discharge of liability may involve the disposal of property which might otherwise fall within the scope of the general powers to make restraining orders under Pt 2-1. Finally, the power to require statements as to assets and liabilities should be understood as a step in the information gathering process, which includes the use of an examination which may be conducted "about the affairs of a person", in accordance with s 180(1). The definition of "affairs" is in the following terms:
338 Dictionary
In this Act, unless the contrary intention appears:
…
affairs of a person includes, but is not limited to:
(a) the nature and location of property of the person or property in which the person has an interest; and
(b) any activities of the person that are, or may be, relevant to whether or not the person has engaged in unlawful activity of a kind relevant to the making of an order under this Act.
The third concern expressed in Cacu was that the order sought particulars of the liabilities of any company of which the person subject to the order was a director. If the term "owner" in s 39(1)(ca) extends to a director of a body corporate which is an owner of property, then the statement may extend to property and liabilities of a company of which the examinee is a director: see [325] above. Similar considerations may apply with respect to an order relating to property which has been disposed of, par (d) permitting an order "setting out particulars of, or dealings with, the property".
The observations were expressed tentatively in Cacu, were not dispositive of any issue in that case and were not, it appears, the subject of submissions. No arguments were presented in these proceedings to justify the observations; the Commissioner submitted that they should not be adopted. That submission should be accepted.
There is no basis to set aside the sworn asset statement orders as exceeding the power conferred on the Court by s 39(1) of the Proceeds of Crime Act.
[35]
Stay of examination orders
The remaining bases of challenge related to the primary judge's dismissal of the motion for a stay of the examination orders, pending disposal of the criminal proceedings. The question before the judge was whether a stay was required in the interests of justice. The applicants Onley and Menon commenced their submissions with an analysis of the prejudice they asserted they would face in relation to the conduct of their criminal trial if the examinations went ahead in advance of the trial. However, before considering those submissions, it is necessary to deal with an issue addressed in argument only by counsel for Mr Anquetil, but raised in the additional grounds of appeal by the other applicants, as to the source of the power to stay an order for an examination.
[36]
(a) source of power to stay
The central plank of the submission was that the power to stay the examination order was not to be found in s 319 of the Proceeds of Crime Act, but in "the general law" which was identified as s 23 of the Supreme Court Act and r 36.16 of the UCPR. The effect of the submission, if accepted, would be to engage an unfettered discretionary power, thus avoiding the apparent constraints imposed by s 319.
Although the focus of this submission was on the chapeau to s 319(1), it is convenient to set out the whole of that provision, the operation of which is at the heart of each of the remaining issues in the case. Section 319 now reads:
319 Stay of proceedings
(1) A court may stay proceedings (the POCA proceedings) under this Act that are not criminal proceedings if the court considers that it is in the interests of justice to do so.
(2) The court must not stay the POCA proceedings on any or all of the following grounds:
(a) on the ground that criminal proceedings have been, are proposed to be or may be instituted or commenced (whether or not under this Act) against the person subject to the POCA proceedings;
(b) the ground that criminal proceedings have been, are proposed to be or may be instituted or commenced (whether or not under this Act) against another person in respect of matters relating to the subject matter of the POCA proceedings;
(c) on the ground that:
(i) a person may consider it necessary to give evidence, or to call evidence from another person, in the POCA proceedings; and
(ii) the evidence is or may be relevant (to whatever extent) to a matter that is, or may be, at issue in criminal proceedings that have been, are proposed to be or may be instituted or commenced (whether or not under this Act) against the person or any other person;
(d) on the ground that POCA proceedings in relation to another person have been, are to be or may be stayed.
(3) Paragraph (2)(a) applies even if the circumstances pertaining to the POCA proceedings are or may be the same as, or substantially similar to, the circumstances pertaining to the criminal proceedings.
(4) Paragraph (2)(b) applies even if the subject matter of the POCA proceedings is the same as, or substantially similar to, the matter at issue in the criminal proceedings.
(5) Paragraph (2)(d) applies even if the staying of the POCA proceedings would avoid a multiplicity of POCA proceedings.
(6) In considering whether a stay of the POCA proceedings is in the interests of justice, the court must have regard to the following matters:
(a) that the POCA proceedings, and any criminal proceedings of a kind referred to in paragraph (2)(a) or (b), should proceed as expeditiously as possible;
(b) the cost and inconvenience to the Commonwealth of retaining property to which the POCA proceeding relates and being unable to expeditiously realise its proceeds;
(c) the risk of a *proceeds of crime authority suffering any prejudice (whether general or specific) in relation to the conduct of the POCA proceedings if the proceedings were stayed;
(d) whether any prejudice that a person (other than a proceeds of crime authority) would suffer if the POCA proceedings were not stayed may be addressed by the court by means other than a stay of the proceedings;
(e) any orders (other than an order for the stay of the POCA proceedings) that the court could make to address any prejudice that a person (other than a proceeds of crime authority) would suffer if the proceedings were not stayed.
Note: Examples of orders the court could make to address any prejudice that a person (other than a proceeds of crime authority) would suffer if the POCA proceedings were not stayed include an order under section 319A (closed court) or an order prohibiting the disclosure of information.
The submission that s 319 was not engaged had three limbs. First, it was said that what the applicants sought was a stay of an order, not a stay of "proceedings". Secondly, it was submitted that, while the application by the Commissioner for an examination order was part of a proceeding "under" the Act, the carrying out of the examination, which was sought to be stayed, was not. Thirdly, it was contended that because the very same arguments which could be raised on an inter partes hearing resisting the making of an examination order, and on a stay application with respect to an ex parte order, the result should not depend upon the "happenstance" (counsel's word) that the order had been sought and made ex parte, rather than in the course of an inter partes hearing.
These arguments were not, it would appear, developed before the primary judge, who was meticulous in identifying the matters which needed to be addressed and those which did not. Noting that there were competing submissions as to the operation of s 319, the primary judge also noted that there was "some common ground on how s 319 should be construed": at [65]. She continued:
"[66] In common with the submitted position of the Commissioner, the final submissions of the first, second and fourth defendant proceeded on the basis that 'POC Act proceedings', as that term is used in s 319(1), includes examination proceedings authorised under s 180. That is, those parties were agreed that s 319 is the source of statutory power in the POC Act to both stay the examination orders until the conclusion of the criminal proceedings (the application of the second and fourth defendants) or to stay the proceedings temporarily referable to some other time frame (the application of the first defendant). It may also be a source of power to limit the scope of the examination proceedings by an appropriately framed order. …"
In Elzein, albeit dealing with a different issue, namely the exclusion of criminal proceedings from the operation of s 319, I said: [50]
"Accordingly, it should be accepted that s 319 has operation with respect to proceedings for examination orders and the conduct of examinations. The submissions in this Court did not address that question, but assumed that was so."
The primary judge noted that conclusion and continued:
"[67] … Mr Ahmad, counsel for the third defendant, made no reference to his Honour's approach when he questioned whether s 319 had any application to the relief he sought on behalf of the third defendant. In circumstances where Mr Ahmad's submission was not developed, I propose to take the same approach as taken by Basten JA in Elzein (neither Beazley P or Simpson JA considered the question)."
Counsel for Mr Anquetil expressly referred to the reasoning of the primary judge in the passages set out above and did not suggest that there was any error in the statements as to how the matter had proceeded before her. Perhaps because the issue was raised for the first time in this Court, the possible consequences of success were not addressed. There can be no doubt that the power to order a stay of any aspect of proceedings, including the specification of criteria upon which a stay may issue, is a part of the law governing the exercise of the Court's jurisdiction. Such procedural powers readily fall within that category of laws identified in Rizeq. It follows that whether a State procedural law applies will depend upon the operation of s 79 of the Judiciary Act, applied in the context of the Proceeds of Crime Act. It would then be necessary to consider whether a State law conferring a power to stay proceedings, unfettered by express conditions set out in s 319, would be consistent with the apparent intention and scope of s 319. It would follow that there must at least be serious doubt as to the power of this Court to grant a stay of the examination order, being the relief sought by the applicants in this proceeding, in disregard of the s 319 conditions. This difficulty was not addressed by any party in submissions, the significance of the fact that the court was exercising federal jurisdiction not having been identified.
The three arguments presented on behalf of Mr Anquetil should not be accepted. Indeed, the three limbs of the argument are not readily severable. It is convenient to consider first the scope of the phrase "proceedings … under this Act that are not criminal proceedings". Counsel accepted that the phrase covered the Commissioner's application before the Supreme Court for various orders, including examination orders. [51] However, the order having been made, it was said that the conduct of an examination was not a proceeding under the Act, and that all that was sought to be stayed was the carrying out of the examination. There was a tension between the last proposition and the relief sought, which was the stay of the examination order, being a court order made in the proceedings. Thus, even if the examination itself was not a proceeding under the Act, the applicant needed to succeed on both its first two propositions in order to obtain the relief sought otherwise than under s 319.
The argument that s 319(1) covers a stay of proceedings in circumstances where no order has been made, but does not cover further proceedings following an interlocutory order, is not tenable. There is nothing in the Act which would support such an approach. Rather the legislative scheme supports the opposite position. There are various circumstances identified in ss 180A-181 in which examination orders may be made in relation to various steps which may be taken under the Act; they form an integral part of the process. The conduct of examinations is dealt with in Pt 3-1, Div 3. These sections include provisions governing the role of the lawyer for the examinee (s 189), the preparation of a record of the examination (s 191), the referral of questions of law to the court that made the examination order (s 192), and directions restricting publication of certain material (s 193). There is provision for the examiner to have the protections and immunities which attach to a justice of the High Court; a lawyer appearing at the examination has the protections and immunities of a barrister appearing for a party in proceedings in the High Court, and an examinee has the protections enjoyed by a witness in such proceedings (s 194). There are further provisions relating to the admissibility of answers or documents given or provided at an examination (s 198).
It is true that provisions conferring an immunity of the kind which would automatically operate in judicial proceedings demonstrate that an examination is not a judicial proceeding. However, it is commonplace for the term "proceedings" to be applied to the processes of an administrative tribunal. By contrast, none of these features applies to the conduct, say, of a police interview with a suspect. Given the statutory context, the conduct of an examination would readily qualify as a proceeding under the Act.
The same conclusion may be reached by other routes. The substantive proceedings under the Act will routinely commence with a single application, as in the present case, designed to lead, ultimately, to orders for the forfeiture of property. The first step taken by the Commissioner will usually be to obtain a restraining order, preventing a person disposing of, or otherwise dealing with, specified property. Contemporaneously, or shortly thereafter, the Commissioner will seek orders for the compulsory disclosure of documents and information. On the other hand, a person whose property is subject to a restraining order may seek an exclusion order on the basis that he or she is not a suspect and is not under the effective control of a suspect: s 29A. While, if so satisfied, the court must make such an order, it cannot make such an order until the Commissioner has had an opportunity to conduct an examination: s 32. There is, therefore, a close inter-relationship between what may be described as the dispositive orders, restraining and forfeiting property (which must be made by a court) and the information gathering, pursuant to a court order, which is conducted by an examiner. While s 319 will undoubtedly operate with respect to a dispositive order, [52] it would be anomalous if it did not apply to the compulsory process of examination, which may occur in circumstances where the Commissioner does not pursue an immediate forfeiture order in respect of restrained property. Similarly, it would be anomalous if it did not apply to prevent further steps being taken under the Act in relation to information supplied by way of a statement of assets and liabilities.
The same conclusion can be reached by considering the meaning of a "stay". Whether the power to order a stay is found in the inherent jurisdiction of a court or in a statutory provision, the underlying purpose will be the same. It is to provide a form of relief, usually, though not necessarily, temporarily, to prevent a misuse of the court's jurisdiction, an abuse of process by a party, or merely to maintain the status quo. That will often be manifest in the staying of an order; at least where the order is interlocutory, that will usually involve a staying of the proceedings, or part thereof. Even where the order is final, a stay preventing the enforcement of the order will be a stay of the enforcement proceedings even if not themselves requiring steps taken in court. In describing the effect of a stay, there is no reason to distinguish between a stay of proceedings and a stay of orders made in proceedings; nor is there any reason to treat a stay of steps to be taken by a third party, such as a sheriff, as otherwise than a stay of the proceedings. [53]
It follows that s 319 empowers the court to stay particular steps taken in pursuit of proceedings under the Act, which are not criminal proceedings.
It remains to consider the submission that the issue of a stay only arises because the Court made orders ex parte, so that the applicants did not have the opportunity to argue in opposition to the making of the examination orders at the time they were sought.
That submission was relevant to whether the order made ex parte should nevertheless have been discharged; it has no force in circumstances where the order has not been discharged and the relief sought by the applicant is a stay of the operation of the order.
For these reasons, and applying the principles in Rizeq, the power of the Court to grant a stay of orders under the Proceeds of Crime Act is conferred by s 319 of the Act and must be exercised subject to the conditions imposed by that provision.
[37]
(b) characterising prejudice
There were in effect two separate limbs to the applicants' claims of prejudice, which may broadly be described as "systemic prejudice" and "disclosure prejudice". In each case, the applicants identified a risk rather than an actuality. That must necessarily be so because the court considering a stay of the examination order will have no knowledge of the specific questions which may be asked in the course of the examination, nor the answers which are likely to be given. It may be accepted, however, that the questions may extend to matters in issue in the criminal proceedings and that to compel answers to such questions may result in the applicants giving evidence adverse to their interests.
The concept of "systemic prejudice" does not depend upon disclosure of compelled answers to questions or provision of documents; rather, it relies upon a principle identified by Hayne and Bell JJ in X7 v Australian Crime Commission: [54]
"[124] Even if the answers given at a compulsory examination are kept secret, and therefore cannot be used directly or indirectly by those responsible for investigating and prosecuting the matters charged, the requirement to give answers, after being charged, would fundamentally alter the accusatorial judicial process that begins with the laying of a charge and culminates in the accusatorial (and adversarial) trial in the courtroom. No longer could the accused person decide the course which he or she should adopt at trial, in answer to the charge, according only to the strength of the prosecution's case as revealed by the material provided by the prosecution before trial, or to the strength of the evidence led by the prosecution at the trial. The accused person would have to decide the course to be followed in light of that material and in light of any self‑incriminatory answers which he or she had been compelled to give at an examination conducted after the charge was laid. That is, the accused person would have to decide what plea to enter, what evidence to challenge and what evidence to give or lead at trial according to what answers he or she had given at the examination. The accused person is thus prejudiced in his or her defence of the charge that has been laid by being required to answer questions about the subject matter of the pending charge."
The existence of such prejudice must be assumed in every case in which the preconditions are satisfied, namely that a compulsory examination is authorised with respect to issues which will or may arise in the course of pending criminal proceedings. It is, as the applicants correctly stated, not possible to require from them demonstration that such a risk is real in the particular circumstances of the case, or that the particular prejudice may be weighty rather than slight. That is so because, first, the questions are not known in advance of the examination and, secondly, even if they were known, to reveal the likely answers would be to create the very prejudice which is sought to be avoided.
Nevertheless, it does not follow that systemic prejudice is a factor to be taken into account. As Hayne and Bell JJ explained in X7, although compulsory examination in such circumstances would involve an alteration to the system of criminal justice, such an alteration can be made by statute so long as that consequence is "made clearly by express words or by necessary intendment." [55] The critical issue, therefore, is whether the Proceeds of Crime Act, and in particular s 319 (headed "Stay of proceedings") has now made such provision by way of a sufficiently clear statement.
One further point should be noted in this respect. Shortly after judgment was reserved in this case, the High Court handed down Strickland (A pseudonym) v Director of Public Prosecutions (Cth), namely on 8 November 2018. [56] Brief written submissions were filed by the parties with respect to the effect of that decision. The applicants relied upon the joint reasons of Kiefel CJ, Bell and Nettle JJ, affirming the observation in X7 discussed above, "in relation to an unlawful compulsory examination conducted post charge". [57] The fundamental alteration of the accusatorial judicial process was said to arise also with respect to a person who is "unlawfully subjected to a pre-charge compulsory examination conducted for the extraneous, unlawful purpose of assisting the AFP to compel the person to give answers to questions about offences of which he or she is suspected". [58] The joint reasons noted that "[e]ven if the answers given at such a compulsory examination are kept secret, the unlawful requirement to give answers … fundamentally alters the accusatorial process". [59]
This reasoning does not advance the applicants' reliance on the reasoning in X7 considered above. As explained in X7, there was no statutory overriding of the "companion rule" of the general law, by which an accused person could not be compelled to answer questions regarding his or her involvement in alleged criminal conduct. As in X7, so in Strickland, there was no statutory equivalent to s 319 of the Proceeds of Crime Act. At least for this purpose, Strickland does not affect the outcome of this case. (It will be considered further below in relation to questions of disclosure prejudice.)
The second category, "disclosure prejudice", will arise where the information provided by the applicants in the course of their examinations becomes known to those investigating or prosecuting the criminal charges. Although the answers given or the documents produced in an examination will not be admissible in the criminal proceedings (s 198) it is not difficult to envisage circumstances in which the prosecution might benefit from knowledge of the answer which had been given. It was to minimise the risk of contamination occurring that the Commissioner adopted a protocol, known as the "Standard Operating Procedure on the Management and Disclosure of Proceeds of Crime Act 2002 (Cth) Information" ("the protocol"). [60] However, there remained what was described as "the risk of leakage", that is of disclosure despite various protective measures, "through misunderstanding, inadvertence or mishap, to those involved in the prosecution." [61]
These submissions require consideration of the powers of the Court to restrict disclosure of information acquired pursuant to an examination, in accordance with s 266A, in combination with the protocol put in place by the Commissioner. As will be seen, the risk of disclosure is the critical factor in assessing whether a stay is required, in the interests of justice.
The current statutory provisions took effect on 1 March 2016. Authorities dealing with earlier forms of these sections must be read with the subsequent amendments in mind. The present form of the provisions was considered by this Court in Commissioner of the Australian Federal Police v Elzein, [62] which distinguished a number of the earlier authorities relied on by the applicants. The legal principles addressed in Elzein were not challenged in the present appeal, nor does it appear that there has been any subsequent consideration of the key statutory provisions by intermediate appellate courts.
The protocol adopted by the Commissioner has not been subject to prior judicial consideration.
[38]
(c) the statutory scheme - protection of compelled disclosures
The applications before the primary judge for restraining orders, ancillary orders and examination orders fell within the concept of "POCA proceedings" as identified in s 319(1) of the Proceeds of Crime Act. That provision gives power to the court to stay such proceedings if the court thinks that it is in the interests of justice to do so. However, the section also qualifies that conferral of power in a manner which requires consideration of the provision as a whole.
At the time the restraining orders and the other interlocutory orders were made (16 May 2017), the applicants had not been charged with criminal offences. However, it was proposed to charge them and, as noted above, arrests took place very shortly after the orders were made. The stay was sought after the criminal proceedings had been instituted. It was therefore not in doubt that subs (2)(a), read in combination with subs (3), was engaged. The stay could not issue on that ground alone.
To the extent that the orders were sought against, for example, the first applicant, the fact the second applicant might be (and has now been) charged could not justify a stay, by reason of subs (2)(b), read in combination with subs (4). Similarly, subs (2)(c) might be engaged with respect to the questioning which took place during an examination.
Nevertheless, the factors to which the Court was required to have regard included all those matters set out in subs (6), with the possible exception of par (b). Of these, pars (d) and (e) would require the court to consider any prejudice which could arise by reason of the insufficient grounds listed in subs (2).
The question of possible prejudice, and the protections which might be given to a person subject to examination, as required by pars (d) and (e), will involve consideration of orders which might appropriately be made pursuant to s 266A of the Proceeds of Crime Act. That section relevantly provides: [63]
266A Disclosure
(1) This section applies if a person obtains information:
(a) as a direct result of:
(i) the person being given a sworn statement under an order made under paragraph 39(1)(ca), (d) or (da); or
(ii) the exercise of a power (by the person or someone else), or performance (by the person) of a function, under Part 3‑1, 3‑2, 3‑3, 3‑4 or 3‑5; or
(b) as a result of a disclosure, or a series of disclosures, under this section or clause 18 of Schedule 1.
(2) The person may disclose the information to an authority described in an item of the following table for a purpose described in that item if:
(a) the person believes on reasonable grounds that the disclosure will serve that purpose; and
(b) a court has not made an order prohibiting the disclosure of the information to the authority for that purpose.
[Table of authorities and purposes omitted]
Limits on use of information disclosed
(3) In civil or *criminal proceedings against a person who gave an answer or produced a document in an *examination, none of the following that is disclosed under this section is admissible in evidence against the person:
(a) the answer or document;
(b) information contained in the answer or document.
(4) Subsection (3) does not apply in:
(a) *criminal proceedings for giving false or misleading information; or
(b) proceedings on an application under this Act; or
(c) proceedings ancillary to an application under this Act; or
(d) proceedings for enforcement of a *confiscation order; or
(e) civil proceedings for or in respect of a right or liability the document confers or imposes.
Note: Subsections (3) and (4) reflect section 198.
(5) In a *criminal proceeding against a person who produced or made available a document under a *production order, none of the following that is disclosed under this section is admissible in evidence against the person:
(a) the document;
(b) information contained in the document.
(6) Subsection (5) does not apply in a proceeding under, or arising out of, section 137.1 or 137.2 of the Criminal Code (false or misleading information or documents) in relation to producing the document or making it available.
Note: (5) and (6) reflect subsection 206(2).
(7) To avoid doubt, this section does not affect the admissibility in evidence of any information, document or thing obtained as an indirect consequence of a disclosure under this section.
It should be noted that s 266A is structured in a permissive form; that is, it provides authority for the disclosure of compelled information to various authorities identified in the omitted table for a purpose specified in the table. It includes an authority of the Commonwealth or a State or Territory that has the function of investigating or prosecuting offences, for the purpose of assisting in the prevention, investigation or prosecution of an offence. The importance of the provision in the present context is that subs (2)(b) impliedly confers power on a court to make an order prohibiting disclosure of the information "to the authority for that purpose", language which may be taken to refer to any authority falling within the items in the table and for the purposes identified in the table. The scope of the Court's powers was therefore sufficient for the presently relevant purpose of prohibiting disclosure to an authority investigating or prosecuting offences against an Australian law.
Subsections (3)-(5) give a form of use immunity, not to the compelled information as such, but only to so much of it as is disclosed under s 266A. However, as the notes state, use immunity for the purposes of criminal proceedings is provided with respect to any answer given or document produced in a s 180 examination (s 198) and with respect to production orders under Pt 3-2 (s 206). As subs (7) makes clear, there is no use immunity with respect to derivative information, that is information obtained indirectly as a consequence of a disclosure. Nor is such a derivative immunity conferred under s 198. Nevertheless, the protocol developed by the Commissioner was intended to secure from disclosure to investigating police or prosecutors derivative information resulting indirectly from a compelled disclosure.
As will be explained below, the issue at the heart of the present case was whether a stay was required in the interests of justice because the procedures put in place by the Commissioner could not guarantee that derivative information in particular would not be supplied to investigators and prosecutors, absent a complete ban on communication of information between those involved in identifying property which might be the proceeds of crime and those involved in the criminal prosecutions. The primary judge was satisfied that the protections put in place by the Commissioner were sufficient, without the need for a blanket ban on the passing of any information between the two groups of Commonwealth officers.
[39]
(d) quarantining from disclosure - the protocol
The importance of quarantining information obtained through procedures under the Proceeds of Crime Act was accepted by the Commissioner. The Australian Federal Police established separate units dealing with such compulsorily acquired information (including that obtained through the preparation of sworn asset statements and from the answers given in the course of examinations). A protocol was prepared and the evidence at trial covered its scope and operation, steps which had been taken to test its effectiveness, and changes which had been made when possible weaknesses were identified.
One aspect of the case relating to prejudice to the applicants involved an alleged failure by the primary judge to assess to the extent to which risk of inadvertent dissemination of information to prosecutors remained, with a consequent risk of prejudice to the applicants. It will be necessary to address that factual assessment below.
[40]
(e) systemic prejudice
The Proceeds of Crime Act differs in precisely this respect from the legislation considered in X7. As was explained in Elzein, s 319(2)(a) provides that the court "must not stay" proceedings, for example, pursuant to examination orders, "on the ground that criminal proceedings have been … instituted … against the person subject to the POCA proceedings". That prohibition applies "even if the circumstances pertaining to the POCA proceedings are … the same as, or substantially similar to, the circumstances pertaining to the criminal proceedings": s 319(3). That is to say, a characteristic form of prejudice (systemic prejudice) which is a universal characteristic of the circumstances identified in s 319(2), must not constitute the ground of a stay. Thus, in its present form, s 319(2) provides a clear statement in precisely the terms which might have been envisaged in order to comply with the condition explained at [125] in X7.
That is not to say the fact of systemic prejudice may not be a factor to be considered in having regard to the mandatory considerations in subs (6).
The applicants sought to give special weight to the risk of systemic prejudice on the basis that they might yet face further criminal charges relating to proceeds of crime, in respect of which an accused person may bear an onus of proof. Accepting the factual premise, it is not possible to read s 319(2) as not operating with respect to systemic prejudice in such a case. In most cases, where proceedings are brought under the Proceeds of Crime Act, there will be a possibility (and perhaps a probability) that criminal charges may be laid with respect to those proceeds of crime which are identified. The prohibition on staying proceedings under the Act because criminal proceedings may be instituted with respect to which the accused will bear a burden, being proceedings relating to proceeds of crime, is inevitably engaged. It is not possible to read a reference to "criminal proceedings" in s 319(2)(a) as not including such patently likely proceedings.
There was no error on the part of the primary judge in declining to grant a stay based on systemic prejudice.
[41]
(f) disclosure prejudice
The applicants correctly placed reliance upon the reasoning on the High Court in Lee v The Queen. [64] A miscarriage of justice arose in that case because the transcripts of compulsory examinations of the accused had been made available to the prosecutor prior to the criminal trial. The Court held that it was not relevant to consider whether "practical unfairness" had been occasioned by the disclosure; rather the disclosure itself altered the very nature of the criminal trial in a fundamental respect. [65]
The circumstances of actual disclosure which arose in Lee were revealed in even more dramatic terms in Strickland. Not only was the investigation undertaken by the Australian Crime Commission unlawful, because not established in accordance with the statutory requirements, but, involved "an extraordinarily wide-ranging, undocumented dissemination of examination product to AFP officers involved in the investigation process, including to those who would be required to give evidence at trial." [66] The majority [67] concluded that the course accepted in Lee, of requiring a fresh prosecution team with no knowledge of the contents of the compelled examinations, was not feasible, [68] or the continued prosecution would bring the administration of criminal justice into disrepute. [69]
Extraordinary as the circumstances of Strickland appear to be in the light of Lee, it should be noted that the examinations occurred in 2010 and dissemination of the examination transcripts to the prosecutor appears to have occurred in April 2012, [70] well before Lee was decided.
No such circumstances arose in the present case. Significant steps had been taken by the Commissioner to ensure that the product of compelled examination, whether oral or documentary, not be disclosed to any person not involved in the Criminal Asset Confiscation Taskforce. Further, the officers constituting that taskforce were not to have involvement in the investigation or prosecution of the criminal charges. The focus was on the effectiveness of that arrangement.
The risk of leakage of specific information, adverse to the interests of the applicants, depends on different considerations from systemic prejudice. That such prejudice may arise and may ground a stay is implicit within the terms of s 319(6). Thus it is necessary for the Court to consider whether any prejudice that the person the subject of the criminal proceedings would suffer were the examination not stayed "may be addressed by the court by means other than a stay of proceedings" (subs (6)(d)), and the requirement to take into account orders, other than a stay, "that the court could make to address any prejudice that a person … would suffer if the proceedings were not stayed": subs (6)(e).
It was therefore necessary for the Court to have regard to the very real prejudice which might be caused if compelled answers were made known to those involved in the criminal prosecutions. To minimise that risk two steps were required. One was the making of appropriate non-disclosure orders under s 266A; the other was for the Court to be satisfied that the protocol put in place by the Commissioner would be effective in giving protection against disclosure. That practical consideration was important in circumstances where the number of officers within the Australian Federal Police and the Australian Taxation Office involved in both the confiscation of assets and the prosecution of the criminal charges was considerable. In such circumstances, the applicants were entitled to require that the Court consider the practical effectiveness of the protocol and, if not satisfied, either require a complete division of functions, or grant the proposed stay.
[42]
(i) onus of proof
It was acceptance of that course which led the Commissioner to call extensive evidence as to the formulation and testing of the protocol. It was potentially important to decide upon which party lay the onus of establishing a risk of prejudice, and to what degree. After noting that s 319 operates with respect to a stay of the conduct of examinations and ancillary orders requiring the furnishing of sworn asset statements, the primary judge stated:
"[68] It was also accepted by the first, second and fourth defendants (cf the third defendant to whom I will separately refer) that they bear the evidential and persuasive onus of establishing, on the balance of probabilities, that a stay of the examination orders (and ancillary orders) is in the interests of justice (see ss 317(1) and (2) of the POC Act). They also accepted (with some qualification in the case of the first defendant) that to attract the power to stay the examinations, or to qualify the obligation of the defendants to otherwise submit to a compulsory process of questioning by limiting the scope of the examinations, they were obliged to demonstrate a real, as opposed to a speculative or theoretical, risk of prejudice to the conduct of their defences to the taxation fraud conspiracy. They also accepted that the prejudice needed to be for reasons other than the mere pendency of the criminal trial and the bare fact of a coincidence or similarity in the circumstances pertaining to each proceedings, or a substantial similarity in the subject matter of both proceedings. [71] "
This passage, in so far as it related to disclosure prejudice, was not challenged on the appeal.
[43]
(ii) further charges
However, the applicants submitted that the primary judge had disregarded the further potential prejudice which could arise if they were charged with offences under the Criminal Code (Cth) with respect to proceeds of crime. That possibility had been identified in the Commissioner's evidence before the primary judge; subsequently a court attendance notice was issued alleging that each had conspired to deal with money believed to be the proceeds of crime, contrary to ss 11.5(1) and 400.3(1) of the Criminal Code (Cth).
It is true that the primary judge dismissed this potential element of prejudice on the basis that a stay could not be supported by the mere possibility of prejudice as a result of a charge which had not been laid. It is not necessary to determine whether that reasoning was correct; this being an appeal by way of rehearing, the applicants are entitled to rely upon the fact that the foreshadowed charge has now been laid. However, the question remains whether the new charge requires a different understanding of the relevant prejudice. The applicants submitted that the risk was magnified by the fact that the defence of such a charge would probably require a person accused to give evidence. Reliance was placed upon reasoning in this Court in Commissioner of the Australian Federal Police v McGlone, [72] Cacu and R v Schmidt. [73]
Cacu and McGlone may be considered together. McGlone was an appeal from the refusal by a judge in the Common Law Division (Button J) to make an examination order. Cacu involved a challenge to the refusal of a judge in the Common Law Division (N Adams J) to stay an examination order, adopting in part the reasoning of this Court in McGlone. The Commissioner sought to distinguish McGlone on a number of grounds. As Meagher JA noted in Cacu, by reference to the Commissioner's second proposed point of distinction:
"[77] The second difference is that, as Beazley P explained in McGlone at [118], to defend a charge under s 400.9 the accused will generally need to adduce evidence to prove that there were no reasonable grounds for suspecting that the money or property was derived or realised from some form of unlawful activity. For that reason it was said that the respondent's position is to be distinguished because there is no similar onus on the respondent making it likely that he would have to give evidence. Again that may be so. However in each case the prejudice is that material may become available to the prosecutor by the compulsory process of examination. That material may be used in either of the ways suggested by the respondent in his affidavit …. That is so notwithstanding that the respondent may not have to give evidence. As Beazley P observed in McGlone at [119] that circumstance may render the risk of prejudice 'more substantial'. However its absence does not mean that there is no prejudice."
In other words, the further charge provides a further example of the potential prejudice flowing from disclosure, but not a separate form of prejudice.
[44]
(iii) risk of disclosure - findings of primary judge
The evidence as to the steps taken by the Commissioner to quarantine compelled disclosures was extensively reviewed by the primary judge. The evidence was provided by Assistant Commissioner Gaughan. In the discussion below, the protocol was described as "the SOP" and the compelled disclosures were described as "Coercive Material". The issue raised by counsel for Mr Menon was identified in the following terms:
"[111] … Mr Bruckner submitted that despite the design and implementation of the SOP as the regime currently in place for the quarantining of Coercive Material obtained under the POC Act, there remains a continuing risk of leakage of that material to the investigative and prosecutorial arms of the AFP (and from there to the CDPP as prosecutor) which is productive of a real risk of prejudice to the defendants in the conduct of their criminal proceedings."
The primary judge undertook a careful analysis of the evidence, but it is sufficient for present purposes to set out the summary provided as to the operation of the protocol:
"[139] The following aspects of the SOP warrant emphasis:
(a) The SOP distinguishes between Coercive Material and POC Act information. POC Act information is a broader term that in addition to Coercive Material includes information obtained from search warrants, production orders, notices to a financial institution and monitoring orders.
(b) In the most recent form of the SOP (current as at 8 September 2017), Coercive Material is defined as:
Any of the following information obtained under the Proceeds of Crime Act 2002 (Cth), including information derived from that information:
a. a sworn statement provided by a person pursuant to an order under s 39;
b. information obtained during an examination conducted under Part 3-1 of the POC Act, defined for the purposes of this document to mean the following:
i. any audio / visual recording of the examination;
ii. a transcript of the examination;
iii. any notes made by a person attending any such examination;
iv. any information given or documents produced by an examinee at any such examination pursuant to s 185(2) of the POC Act.
(c) Coercive Material (including derivative information) must not be disclosed to or received by any person outside of CACT other than legal practitioners engaged by CAL without the written authority of the Manager of CAL (MCAL).
(d) Such authority can only be obtained through a written application setting out the details of the material proposed to be disclosed; the reasons why disclosure is sought, any applicable court orders under s 266A(2)(b), and any other factors relevant to the application for the proposed disclosure, such as the sensitivity of the material.
(e) Authority for the disclosure must be refused if the disclosure would be inconsistent with the terms of a court order (including an order under s 266A(2)(b) of the POC Act) or in circumstances where the Commissioner or an AFP appointee has given an undertaking that disclosure will not be made at all, or not without notice having been given to the persons affected.
(f) In the event that disclosure is authorised, the disclosed material (whether in electronic or hard copy form) must be marked as being disclosed pursuant to s 266A of the POC Act and is only to be used in accordance with the terms of disclosure. The disclosed material must also have attached a coversheet outlining the purposes of the disclosure and the limitations on the disclosure. The person making the disclosure must complete a case note or database entry containing particulars of the disclosure. Additionally, a complete electronic copy of the disclosed material (together with coversheets, the request for disclosure and the written authority for disclosure) must be retained.
(g) CAL must maintain a register of all Coercive Material that has been disclosed outside of CACT, including details of the person who disclosed the information, the authority to whom the disclosure was made (and corresponding contact person), the person who authorised the disclosure, the date and purpose of the disclosure, and the format of the disclosed information. A full record of the decision to authorise disclosure must be retained.
(h) CAL must also maintain a record specifying each individual item of Coercive Material and each person who has permission to access it.
(i) Coercive Material in electronic form must be stored such that access is password protected and limited to members of CACT (and supporting IT personnel). In particular, it must not be placed on AFP shared drives or any other location accessible by members of criminal investigation teams. It must also be possible to audit access to such material and determine who has accessed it and when.
Note: The Coercive Material that has been provided in the form of the Sworn Asset Statement of the four defendants (and others) to date, together with the examination of some defendants to the POC Act proceedings that have taken place to date, has been received by Ms Lynne Booth, a solicitor in CAL. That information is shared via the Worksite system with Daniel Qualischefski, solicitor, and with Federal Agents Burtenshaw and Murphy for the purpose of cross-referencing information with the proceeds of crime investigation conducted by CACT. Hard copy material is kept in Ms Booth's office, which is locked each evening. Access to electronic documents are kept on a 'CACT drive', access to which is restricted to the employees within CACT working on Operation Elbrus.
(j) Coercive Material in physical form must be stored in a location with access limited to members of CACT. Wherever possible it must be stored in folders or containers marked with a warning that access is restricted to approved CACT personnel.
(k) Coercive Material may only be printed on a printer with access limited to CACT members.
(l) The custody and control of all Coercive Material must remain with CAL, except where that material has been provided by CAL to another member of CACT or has been disclosed outside CACT in accordance with the SOP.
(m) The storage procedures and restrictions on disclosure apply not only to Coercive Material in the direct sense but also to derivative material such as enquiries undertaken based on compulsorily obtained material and the results of such enquiries. They also apply to documents directly citing Coercive Material.
(n) Any person who has received Coercive Material must not have any role in a related criminal investigation or prosecution without the express written authority of MCAL or the Manager, Criminal Assets, Fraud and Anti-Corruption as the manager.
(o) All CACT personnel must receive annual training on their obligations under the SOP. In the case of personnel new to CACT, they must receive such training prior to or upon commencing duty and the training must emphasise the importance of strict compliance with the SOP.
(p) A senior member of CAL designated by MCAL must conduct an audit at least every 12 months to determine whether there has been effective compliance with the SOP.
(q) Any AFP personnel who become aware of a breach of the SOP must notify MCAL within 24 hours.
[140] Mr Gaughan gave evidence that:
(a) the SOP has been implemented in the Sydney office of CAL and CACT;
(b) the SOP is being "rolled out" to all other CAL/CACT offices;
(c) training sessions have recently been conducted for all members of CACT and CAL in accordance with the SOP, with the exception of one team member who will receive training as soon as practicable."
After summarising the submissions of the parties, the judge noted the following explanation, given by the Commissioner, as to the operation of the scheme:
"[155] In summary, in the Commissioner's submission, there are four mechanisms established by the evidence according to which it is open to the Court to assess the realistic risk of the leakage of Coercive Material to the prosecuting or investigating authorities. In the Commissioner's submission, each of these mechanisms individually, and all of which in combination, will allow the Court to conclude that the risk of unintended or accidental disclosure has been mitigated to such an extent that, while it is not neutralised in absolute terms (and neither, realistically, could it be), there remains no real or demonstrable risk of unauthorised disclosure of Coercive Material to the prosecuting or investigating arm of the AFP of a kind which would satisfy the Court that the interests of justice require a stay of the examination proceedings, or that any of the related relief sought by the defendant's notice of motion should be granted.
[156] The first of the four mechanisms is the disclosure prohibition order made on 21 June 2017, already discussed above. Secondly, evidence of the rigorous system that has been implemented under the Commissioner's initiative to prevent, manage and detect the disclosure of Coercive Material that is in the possession of the Commissioner, the ongoing management of which is supervised by A/Commissioner Gaughan as his delegate. Thirdly, even were an unauthorised disclosure to occur, the Court would not immediately conclude it would be unlawful, or that it would result in unfair prejudice to a criminal trial, in circumstances where derivative use of Coercive Material is expressly permitted by the POC Act. Fourthly, even were unauthorised disclosure to occur, given the rigours of the SOP that disclosure is likely to be detected either within CACT or in the process of the AFP discharging its investigative and prosecutorial functions as the criminal proceedings are processed through the courts and, in that way, brought to the attention of the CDPP as the prosecutor and, ultimately, if necessary, to the attention of the trial Court. Mr McLure submitted that the Prosecutor's ongoing duty of disclosure is one of a raft of protective measures that are available to address any prejudice that may result from unauthorised disclosure should it occur.
[157] The Commissioner acknowledged that despite the rigour inherent in those four interconnected mechanisms, there is no absolute guarantee that there will not be the disclosure of derivative information which has been so subtly interwoven with the authorised disclosure of Coercive Material as to be practically undetectable. He submitted, however, that the defendants' failure to give a tangible example of how that might occur in this case and, equally as critically, to demonstrate in a practical and informed way how, were that to occur, that it would be to the disadvantage or prejudice of these particular defendants in the conduct of their defence to the criminal proceedings, allows for a finding, consistent with the settled authorities, that it is not a risk of a kind which would warrant a stay of the examination proceedings in the interests of justice or the making of orders of a similar kind with respect to the information in the Sworn Asset Statements."
The judge further noted, in addressing any orders that the Court could make with respect to prejudice, pursuant to s 319(6)(e):
[291] In addition to the submissions the Commissioner advanced concerning the scope of the non-disclosure order already in place, in final submissions the Commissioner consented to a further order expressly prohibiting disclosure within the AFP to any person involved in the criminal investigation or prosecution of the defendants (if such further order be thought necessary to clarify the application of the existing order to the AFP)."
The judge's conclusions as to the effectiveness of the arrangements undertaken and proposed by the Commissioner were expressed in the following terms:
"[293] The Commissioner has separately addressed what I am satisfied is the considerable weight that should be attributed to the terms of the non-disclosure order already made in the proceedings and the regime in place to manage Coercive Material. In my view the combined effect of this evidence ameliorates to a very significant degree the risk of the disclosure of information that may adversely impact on the defendant's right to a fair trial conducted in accordance with adversarial principles.
[294] The Commissioner further submitted that the prosecutor's duty of disclosure, which is binding through all phases, allows this Court to be satisfied that any inadvertent disclosure by CACT or CAL of the information obtained from the compulsory examination of the defendants would, in all likelihood, come to the attention of the prosecuting authorities as the preparations for trial continue. …
…
[296] Whilst it is true that the SOP is a new initiative and to that extent untested, I am well satisfied that the Commissioner has comprehensively addressed the risks associated with the management of Coercive Material and the risks associated with the leakage of that material by the rigour of the procedures specifically designed to protect against that risk. I am also well satisfied that the systems that are currently in place to militate against the risk of the leakage of Coercive Material already in the Commissioner's possession and the information that is likely to come into his possession are both rational and enforceable."
[45]
(iv) risk of disclosure - challenge on appeal
The challenge to these findings in the notices of appeal was expressed in somewhat broad terms under the heading "Leakage and use". Grounds 4 and 5 were expressed as follows:
"4 Leakage and use. The Primary Judge, having found, as was common ground, that risks of dissemination and use by prosecutors were reduced by:
a. an order under s 266A of POCA;
b. a procedure ("Standard Operating Procedure") designed to address the risk of dissemination to prosecutors of the content of an examination and material obtained derivatively therefrom, insofar as information is identified as derivative;
erred by failing to make findings on the submissions made as to the risks that remained, and in failing to assess the risks that remained, of compulsorily acquired information assisting a prosecution.
5 The Primary Judge should have found that, despite the s 266A order and the Standard Operating Procedure and prosecutor duties where prosecutors identify what they receive as derivative material, there remained a relevant risk of disclosure and use in a prosecution of derivative material, heightened where 'the subject matter' of the [two] proceedings is the same or substantially similar..."
The written submissions did little more in this respect than note that the judge's findings were careful not to suggest a guarantee of non-disclosure, with the consequence that an acknowledged risk of disclosure remained.
In oral submissions, counsel conceded that there were a number of protections in place, but submitted that one mechanism which was absent was the ability of the examiner to "curtail questions". [74] That contention, did not, however, go to the question of leakage or inadvertent disclosure. Counsel dealt separately with the complaint that his submissions at trial had not been addressed by the primary judge. However, the judge summarised the submissions of both parties and, evidently taking them into account, accepted that there was no guarantee of non-disclosure and that a risk, albeit much diminished, remained. If the submission were pressed, it should be rejected. However, it appeared to be recast in the course of discussion to a complaint that the level of risk, however described, was not fed into the balancing exercise. [75]
The substantive complaint about the mechanisms put in place was expressed as follows: [76]
"…[U]nless staff within the proceeds of crime area identify material as derivative there is no basis upon which they would ask to even make an application for disclosure to prosecutors. All of this policy is premised upon persons within the proceeds of crime section identifying material as derivative, effectively an impossible task. What could have occurred, but didn't, is putting a complete barrier between the proceeds of crime people and prosecutors."
Counsel accepted however that sufficient protection would be accorded if there were "a complete barrier between the proceeds of crime section of the AFP and prosecutors." It was said to be supported by the reasoning of the majority in Strickland. This submission will be addressed in considering the balancing exercise; there was no error in the judge's assessment of the strength of the protocol and the residual risks of leakage.
[46]
(g) prejudice to Commissioner if stay granted
It is clear that the Court is required to have regard to the risk of the Commissioner suffering prejudice if the proceedings are not stayed: s 319(6)(c). This led to a dispute before the primary judge as to whether there was utility in the conduct of an examination at the present time, rather than after the criminal proceedings had been concluded.
For this purpose, the Commissioner relied upon two propositions in favour of a demonstrable utility in conducting the examinations, namely, first, that the property which had been located and was the subject of restraining orders amounted to some $42 million, whereas the amount identified as the subject of the conspiracy charge was in the order of $89 million. [77] Secondly, Mr Menon alleged a failure on the part of the primary judge to reject the Commissioner's submission that an examination might permit the identification of further property from which a pecuniary penalty order might be met. It was said to be an "improper use of the examination power" to seek such information "merely for the purposes of a putative [pecuniary penalty order]." [78]
In addition, some little time was spent at the hearing before the primary judge dealing with evidence called by the Commissioner of an audit by the Australian Taxation Office of the outstanding tax liabilities of companies involved in the alleged conspiracy, which identified an amount of $160 million as the total outstanding tax liabilities. [79] The primary judge accepted Mr Menon's submission that "the tax liability of the various corporations implicated in the taxation fraud does not represent the value of the benefits the defendants derived from what is alleged [to be] their criminal involvement in the fraud." [80]
Unsurprisingly, the applicants did not complain about that finding; they did, however, challenge the consequential finding that "it does not follow that the examinations into their affairs would be inutile." [81] The criticism of the finding was that it did not address the correct test, which was that the Commissioner had to establish material or significant prejudice resulting from delay in examining the applications "for purposes of locating and restraining additional assets which have not already been restrained." [82]
In assessing the applicants' submissions, it is necessary to distinguish two considerations. The first is whether there was any reason to suppose that examinations of the applicants would not provide the Commissioner with information which would allow the identification and restraint of property for the purposes of the Act. The second consideration is whether, assuming the possibility of additional information is accepted, the Commissioner might suffer prejudice if the examination were to be delayed until after completion of the criminal proceedings.
These questions raise different issues, which will affect the way in which questions of utility and prejudice are to be addressed. For this purpose, it was not the applicants' case that the examination orders could not, or should not have been made. Indeed, examinations have been carried out, albeit on a limited basis, the Commissioner agreeing not to pursue questions with respect to issues which would or might arise in the course of the criminal proceedings. To avoid, or set aside, examination orders, otherwise pursued within the structure and for the purposes of the Act, there may have been an onus on the applicants to demonstrate inutility. There was no evidence called or relied upon by the applicants in the present case in pursuit of that object.
So far as the question of delay was concerned, and on the assumption that information might be obtained pursuant to a further examination of the applicants, which might in turn lead to the location of property in which they had some interest or over which they had some control, it may be inferred that the risk of dissipation or removal of property from the jurisdiction will continue unless and until a restraining order is in place. The difference between the value of the property restrained and the amount allegedly obtained through the fraudulent scheme demonstrates that a large proportion of the proceeds of the alleged fraud have not been identified. Whether the balance has been entirely dissipated and is beyond recovery is not known. An examination into the "affairs" of a person may include, but will not be limited to, "the nature and location of property of the person or property in which the person has an interest" and "any activities of the person that are, or may be, relevant to whether or not the person has engaged in unlawful activity of a kind relevant to the making of an order under this Act." [83]
There may be practical difficulties in a person the subject of an examination order demonstrating to a court that there is no utility in conducting an examination. Equally, it would not be easy for the Commissioner to establish that an examination will provide relevant information, in circumstances where that information is unknown. Nevertheless, it would undermine the purpose of the information gathering process provided by s 180 if the court were to act on the assumption that, absent specific evidence of prejudice to the Commissioner, the conduct of the proposed examinations should be stayed.
The applicants referred to the fact that in Zhao [84] the High Court, in concluding that a stay had properly been granted, noted that the person sought to be examined could point to a risk of prejudice, while the Commissioner could not. [85] However, the stay in Zhao was directed to the continuation of proceedings for the forfeiture of property until relevant criminal proceedings had been completed. The case was not concerned with the preliminary steps of information gathering for the purposes of obtaining restraining orders.
The applicants also called in aid a finding by this Court in McGlone, [86] approving a factual finding "that there was no practical prejudice of any significance to [the Commissioner] if the examinations were delayed." That finding was based on the fact that cash suspected of being the proceeds of drug dealing, which had been found at the premises of the two accused, had been seized and was in the Commissioner's possession. [87] Thus, while forfeiture might be delayed, the primary judge found that "that was not practical prejudice."
The language used in particular cases will often reflect the circumstances specific to that case. Caution may be required before inferring that particular terms were intended to encapsulate a legal principle. It is by no means clear that in McGlone the reference to "practical prejudice of any significance" was intended to exclude, as immaterial, the possibility that information might be obtained with respect to, for example, moneys which were believed to have been fraudulently misappropriated and which had not been located.
So far as delay was concerned, it was not anticipated at the time of the hearing before the primary judge that a trial would be listed to take place within one year. At the time of the hearing of the appeal, the criminal proceedings remained in the Local Court pending completion of a committal hearing. It is still not anticipated that the criminal trial will commence within 12 months. Although there has been further delay caused by the appeal process, that is not a delay for which the Commissioner is responsible.
In the circumstances set out above, the primary judge was correct to conclude that there would be a level of prejudice to the Commissioner if the proposed stay were granted.
[47]
(h) balancing exercise - interests of justice
The final challenge by the applicants was error by the primary judge in failing to conduct a "balancing exercise" between the risks of prejudice to the respective parties.
Section 319 does not suggest that a balancing exercise is required. Rather, it requires that the Court determine whether it is "in the interests of justice" that a stay be granted. To speak of a balancing exercise suggests that there is a criterion of comparison, such as the degree of disadvantage to the respective interests. However, that is only partly true. The interests themselves are not of a kind. It is likely that the Court will be less solicitous of a significant risk to the Commissioner's ability to recover proceeds of crime if there is some risk of prejudice to the conduct of a criminal trial. What is required is an evaluative judgment which will depend upon the circumstances of the case.
The standard to be applied, namely the interests of justice, is informed by both general law principles and the statutory context. The primary consideration to be taken into account is the protection of the forthcoming trial (or trials) with respect to the criminal charges involving the applicants. While the expeditious pursuit of the forfeiture of assets under the Proceeds of Crime Act is an important consideration, careful attention should be given, consistently with the terms of s 319, to the avoidance of orders under the Act which might render a later criminal trial unfair. On the basis that the existence of systemic prejudice would be insufficient to warrant a stay, the applicants contended that a complete barrier to non-disclosure was required. This was because of the significant difficulties in determining what steps may have been taken by the prosecution team, even inadvertently, on the basis of information obtained through compulsory disclosures if there were to be any communication between the two teams.
The judge accepted the detailed evidence given on behalf of the Commissioner as to the practical limits on establishing a "complete barrier", while noting the very considerable efforts which were being taken to avoid leakage of compelled disclosures and derivative information.
On the appeal, the applicants did not demonstrate that the approach of the trial judge was erroneous in any specific respect, nor that, on the evidence, any other conclusion should have been reached in exercise of a discretionary power, even in the absence of identifiable error.
It would have been a legitimate complaint if the judge had failed to take into account the mandatory considerations identified in s 319(6), or had failed to give appropriate weight, for example, to the interests of the applicants and the community in a fair trial. Undoubtedly there were competing interests; but none was ignored or given inappropriate weight in reaching the conclusion that neither a stay of the examinations, nor an order limiting the use to which the sworn assets statements might be put, should be made.
[48]
Conclusions
In the result, no material error has been demonstrated in the reasoning of the primary judge. No alternative form of relief need be addressed, but one further matter may be noted.
To the extent that it might become necessary for the Court to consider the form of an additional non-communication order under s 266A, the applicants proffered a draft order in the following terms:
"Draft order in respect of a barrier
1. Until further order, and subject to any order of a court with jurisdiction under the Proceeds of Crime Act 2002 (Cth) (POCA court), any person who, at any time after the date of commencement of any examination of Mr Onley, Mr Anquetil or Mr Menon, is within the Criminal Assets Confiscation Taskforce (including secondees) or who is present at such examination (CACT Personnel) is prohibited from communicating with any person who is not a CACT Personnel (other persons) in connection with the subject matter of Operation Elbrus, except on an application under the Proceeds of Crime Act 2002 (Cth) provided that the CACT Personnel first brings this order to such court's attention for consideration as to the making of suitable orders as to confidentiality or otherwise.
2. For clarity:
a. Other Persons includes any person connected with the prosecution of either Mr Onley, Mr Anquetil or Mr Menon, liquidators of entities connected with Operation Elbrus and any member of any other state, commonwealth or foreign agency.
b. CACT Personnel who are secondees from the Australian Taxation Office are prohibited from being involved in audits or taxation assessments in connection with the subject matter of Operation Elbrus."
Both the structure and language of this draft order could be improved and some amendments were made in the course of submissions; the broad purpose is reasonably clear. That purpose is to quarantine information obtained in the course of an examination of each and all of the applicants so that it is used only for purposes relating to the confiscation of assets and is unavailable to any person associated with the prosecution of the criminal proceedings. There was discussion of similar proposals in the court below; the primary judge rejected them as impractical, unnecessary, or both.
Because no error has been identified in the conclusion reached by the primary judge, it is not necessary or appropriate to address these proposed orders. However, they illustrate the point of departure between the parties on the primary matter in dispute on the appeal.
There should be a grant to each applicant of leave to appeal, but the appeals should be dismissed. The applicants must pay the respondent Commissioner's costs in this Court.
MEAGHER JA: I agree with the orders proposed by Basten JA and, subject to one matter, with his reasons for the making of those orders. What follows adopts the abbreviations used by his Honour. That matter concerns the issue raised by ground 18 of Onley and Menon's proposed amended notice of appeal and its reliance on what I wrote in Commissioner of the Australian Federal Police v Cacu [2017] NSWCA 5 at [31]-[35]; 264 A Crim R 427. Those tentative observations were dicta, made without the benefit of any argument on the relevant question, and in circumstances where the Commissioner's application for leave to appeal was made in the absence of a contradictor. They were also directed to a particular understanding as to the form of the statement to be sworn, based on an interpretation of the schedule attached to the orders. That schedule was in the same terms as schedule 101 in the present case.
Ground 18 is directed to orders 174, 175 and 176 made by the primary judge on 16 May 2017. In terms that ground is broad enough to raise the three issues to which I referred in Cacu at [34]. However in argument before this Court, the scope of the challenge to the validity of those orders was restricted to the first of those issues, namely whether an order under s 39(1)(ca) could require not only the provision of particulars in relation to property owned by the person but also property owned by any company of which he or she was a director. No challenge was directed to the second and third of the matters to which I referred.
In those circumstances I agree with the Chief Justice that notwithstanding the breadth of this ground as formulated, it is to be addressed only by reference to the matter identified in argument. For the reasons given by the Chief Justice at [253]-[256] and by Basten JA at [325]-[326] that argument should be rejected. My observations in Cacu did not have regard to the extended definition of "interest, in relation to property" in s 338 of the Act which is sufficient to extend the potential application of s 39(1)(ca) to property of a company of which the relevant person is a director. Where the remaining matters to which I made reference in Cacu are not pressed and those matters have not been the subject of any argument or analysis by either party to the appeal, I do not propose to join in Basten JA's observations about them.
[49]
Endnotes
The Commissioner of the Australian Federal Police v Cranston and 65 Ors (No 8) [2018] NSWSC 365 ("primary judgment").
The Commissioner of the Australian Federal Police v Cranston and 65 Ors (No 10) [2018] NSWSC 542 ("supplementary judgment").
Further amended notices of appeal filed for Onley and Menon, ground 16A.
Proceeds of Crime Act, s 338, Dictionary, suspect.
Section 53 is concerned with forfeiture orders and is not presently relevant.
(2009) 240 CLR 319; [2009] HCA 49 at [33].
International Finance at [134] (Hayne, Crennan and Kiefel JJ).
(1910) 11 CLR 689 at 694; [1910] HCA 77.
(1991) 22 NSWLR 730.
Resort Hotels at 731A-B.
G Lindell, Cowen and Zines's Federal Jurisdiction in Australia (4th ed, 2016, The Federation Press) at 357-358.
Commonwealth v Mewett (1997) 191 CLR 471 at 492-493 (Brennan CJ); [1997] HCA 29.
(2017) 262 CLR 1; [2017] HCA 23 (Bell, Gageler, Keane, Nettle and Gordon JJ).
Constitution, s 75(iv).
Rizeq at [90]; see also [91]; see also Brewster v BMW Australia Ltd [2019] NSWCA 35 at [90] (Meagher, Ward and Leeming JJA).
cf Northern Territory v GPAO (1999) 196 CLR 553 at 576 [38], 586 [76]; Agtrack (NT) Pty Ltd v Hatfield (2005) 223 CLR 251 at 271 [61]-[63].
See also Kiefel CJ at [32].
cf Solomons v District Court (NSW) (2002) 211 CLR 119 at 134 [23].
Rizeq at [83].
For one kind of difficulty with the operation of this dichotomy, see Rizeq at [118] (Edelman J).
Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9; [2006] NSWCA 238 at [123], see also [121]-[123]; see also Northern Territory of Australia v GPAO (1999) 196 CLR 553; [1999] HCA 8 at [80] (Gleeson CJ and Gummow J); Lindell, op cit, at 369-370; M Leeming, Resolving Conflicts of Laws (2011, The Federation Press) at 80-81.
Butler v Attorney-General (Vic) (1961) 106 CLR 268 at 276 (Fullagar J); [1961] HCA 32.
University of Wollongong v Metwally (1984) 158 CLR 447 at 463 (Mason J); [1984] HCA 74.
GPAO at [80].
(2015) 124 SASR 355; [2015] SASCFC 182.
Ruzehaji at [57].
(2006) 231 CLR 334; [2006] HCA 62.
See now, Grant Samuel Corporate Finance Pty Ltd v Fletcher (2015) 254 CLR 477; [2015] HCA 8 referred to at [301] below.
Tcpt, 12/09/17, p 25(40)-(45).
Prior to 10 December 2018, the equivalent provision was s 15; s 14A was inserted by the Unexplained Wealth Legislation Amendment Act 2018 (Cth), Sch 1, s 2; the wording has changed, but not the effect: see Explanatory Memorandum, p 26, Item 4.
[2018] NSWCA 283 (Bathurst CJ, Beazley P and Basten JA).
Banerjee at [22], citing M Leeming, op cit, fn 25 above, at 141-142; Ansett Transport Industries (Operations) Pty Ltd v Wardley (1980) 142 CLR 237 at 259-260, 265 (Mason J); [1980] HCA 8, adopted in Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2011) 244 CLR 508; [2011] HCA 33 at [42] (French CJ, Gummow, Heydon, Crennan, Kiefel and Bell JJ).
(1912) 15 CLR 679; [1912] HCA 72 (Isaacs J).
Cf Ruzehaji discussed at [289] above.
(2015) 254 CLR 477; [2015] HCA 8 at [17].
[2004] NSWSC 952 at [16].
Tan at [7].
Primary judgment at [250].
Proceeds of Crime Act, s 182(1).
Primary judgment at [250].
Primary judgment at [251].
Further amended notices of appeal, ground 18.
[2017] NSWCA 5; 264 A Crim R 427.
Proceeds of Crime Act, s 338, Dictionary, interest.
Cacu at [34].
Elzein at [49].
Tcpt 29/10/18, p 67(1).
As occurred in Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46; [2015] HCA 5.
See, eg, L Joseph Pty Ltd v Gray (1939) 56 WN (NSW) 190.
(2013) 248 CLR 92; [2013] HCA 29.
X7 at [125]; see also Kiefel J at [160], [162].
(2018) 93 ALJR 1; [2018] HCA 53.
Strickland at [76].
Strickland at [77].
Ibid.
See further at [367]ff below.
Commissioner of the Australian Federal Police v W [2016] NSWSC 683 at [59] (Adamson J).
See fn 6 above.
Subsection (1)(b) was amended by the Unexplained Wealth Legislation Amendment Act 2018 (Cth) in 2018.
(2014) 253 CLR 455; [2014] HCA 20.
Lee at [43].
Strickland at [80].
Kiefel CJ, Bell, Keane, Nettle and Edelman JJ.
Strickland at [85].
Strickland at [169] (Keane J), [297] (Edelman J).
Strickland at [46] and [51].
See generally Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103 at [59]; Elzein; and Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46; [2015] HCA 5 and Zhao v The Commissioner of the Australian Federal Police [2014] VSCA 137.
[2016] NSWCA 103 at [118], [119] (Beazley P, Ward and Gleeson JJA).
[2018] QCA 59 at [92]-[93]. (The last reference appears to have been a mistake.)
Tcpt, 29/10/18, p 6(15).
Tcpt, p 25(45).
Tcpt, p 27(30).
Primary judgment at [285].
Written submissions (Menon and Onley) 7 October 2018, par 93.
Primary judgment at [172].
Primary judgment at [287].
Written submissions (Menon and Onley), 7 October 2018, par 96.
Ibid.
Proceeds of Crime Act, s 338, Dictionary, affairs.
See fn 71 above.
Zhao at [47].
See fn 71 above.
McGlone at [38(3)].
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.
Decision last updated: 10 May 2019
Legislation Cited (15)
(Cth), Pt V Australian Crime Commission Act 2012(Cth)
Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Act 2016(Cth)
tralian Federal Police v Cacu (2017) 264 A Crim R 427; [2017] NSWCA 5;
Commissioner of the Australian Federal Police v Elzein (2017) 94 NSWLR 700; [2017] NSWCA 142
Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103
Commissioner of the Australian Federal Police v W [2016] NSWSC 683
Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46; [2015] HCA 5
Commonwealth v Mewett (1997) 191 CLR 471; [1997] HCA 29
David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265; [1995] HCA 43
Director of Public Prosecutions (Cth) v Galloway [2017] VSCA 120
Gordon v Tolcher (2006) 231 CLR 334; [2006] HCA 62
Grant Samuel Corporate Finance Pty Ltd v Fletcher (2015) 254 CLR 477; [2015] HCA 8
In the matter of Plutus Payroll Australia Pty Ltd [2017] NSWSC 1854
International Finance Trust Company Ltd v New South Wales Crime Commission (2009) 240 CLR 319; [2009] HCA 49
Jago v The District Court of New South Wales (1989) 168 CLR 23; [1989] HCA 46
Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2011) 244 CLR 508; [2011] HCA 33
John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19
L Joseph Pty Ltd v Gray (1939) 56 WN (NSW) 190
Lee v New South Wales Crime Commission (2013) 251 CLR 196; [2013] HCA 39
Lee v The Queen (2014) 253 CLR 455; [2014] HCA 20
Minister for Local Government v Blue Mountains City Council [2018] NSWCA 133
Northern Territory of Australia v GPAO (1999) 196 CLR 553; [1999] HCA 8
NSW Crime Commission v Lee (2012) 84 NSWLR 1; [2012] NSWCA 276
Owners of SS Kalibia v Wilson (1910) 11 CLR 689; [1910] HCA 77
R v Independent Broad-based Anti-corruption Commissioner (2016) 256 CLR 459; [2016] HCA 8
R v Schmidt [2018] QCA 59
R v Seller; R v McCarthy (2013) 273 FLR 155; [2013] NSWCCA 42
R v Seller; R v McCarthy (2015) 89 NSWLR 155; [2015] NSWCCA 76
Ransley v Commissioner of Taxation [2016] FCA 778
Resort Hotels Management Pty Ltd v Resort Hotels of Australia Pty Ltd (1991) 22 NSWLR 730
Rizeq v Western Australia (2017) 262 CLR 1; [2017] HCA 23
Ross v Internet Wines Pty Ltd (2004) 60 NSWLR 436; [2004] NSWCA 195
Ruzehaji v Commissioner of the Australian Federal Police (2015) 124 SASR 355; [2015] SASCFC 182
Seller v Commissioner of Taxation (2013) 308 ALR 376; [2017] FCA 1373
Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 93 ALJR 1; [2018] HCA 53
Tan v Director of Public Prosecutions (Cth) [2004] NSWSC 952
The Commissioner of the Australian Federal Police v Cranston and 65 Ors (No 8) [2018] NSWSC 365
The Commissioner of the Australian Federal Police v Cranston and 65 Ors (No 10) [2018] NSWSC 542
Thomas A Edison Ltd v Bullock (1912) 15 CLR 679; [1912] HCA 72
University of Wollongong v Metwally (1984) 158 CLR 447; [1984] HCA 74
X7 v Australian Crime Commission (2013) 248 CLR 92; [2013] HCA 29
X7 v The Queen (2014) 246 A Crim R 402; [2014] NSWCCA 273
Zhao v The Commissioner of the Australian Federal Police (2014) 43 VR 187; [2014] VSCA 137
Texts Cited: G Lindell, Cowen and Zines's Federal Jurisdiction in Australia (4th ed, 2016, The Federation Press)
M Leeming, Resolving Conflicts of Laws (2011, The Federation Press)
Category: Principal judgment
Parties: Jason Cornell Onley (first applicant)
Dev Menon (second applicant)
Simon Paul Anquetil (third applicant)
The Commissioner of the Australian Federal Police (respondent)
Representation: Counsel:
R Johnson (first applicant)
P Bruckner with E Bishop (second applicant)
P Lange with A Ahmad (third applicant)
D McLure SC with G O'Mahoney and K Anderson (respondent)
Solicitors:
Pure Legal (first applicant)
Hardinlaw (second applicant)
Hanna Legal (third applicant)
Proceeds of Crime Unit, Australian Federal Police (respondent)
File Number(s): 2018/1236942018/1236992018/1243632018/2300172018/2346582018/251007
Publication restriction: Nil
Decision under appeal Court or tribunal: Supreme Court of NSW
Jurisdiction: Common Law
Citation: [2018] NSWSC 365
Date of Decision: 22 March 2018
Before: Fullerton J
File Number(s): 2017/146280
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
HEADNOTE
[This headnote is not to be read as part of the judgment]
The appellants sought leave to appeal from a decision of a judge of the Common Law Division refusing to set aside or stay examination orders made under s 180 of the Proceeds of Crime Act 2002 (Cth) (POC Act) and orders to supply sworn statements of assets.
In May 2017, the Commissioner of the Australian Federal Police commenced proceedings under the POC Act against 66 defendants of whom 23 were natural persons. Three of the defendants were the three appellants, Messrs Onley, Menon and Anquetil. The Commissioner alleged that the appellants were involved in a conspiracy to defraud the Australian Taxation Office (the ATO) with the intention of dishonestly causing a loss to the Commonwealth in the amount of over $83m contrary to s 135.4 of the Criminal Code Act 1995 (Cth) (Criminal Code) (the taxation fraud conspiracy).
The Commissioner sought orders that property identified in the summons be forfeited to the Commonwealth pursuant to ss 47 and 49 of the POC Act and orders that 8 of the 66 defendants, including the appellants, pay a pecuniary penalty to the Commonwealth, pursuant to s 116 of the POC Act. The pecuniary penalty sought against the appellants was referable to what the Commissioner alleged was the value of the benefits derived from their involvement in the taxation fraud conspiracy. The examination orders were made on an ex parte application by the Commissioner.
On 16 May 2017, the primary judge made ex parte orders restraining the appellants from dealing with itemised property and directed that the Official Trustee in Bankruptcy take custody and control of the property. The net value of the property under the custody and control of the Official Trustee was over $39.5m and, in addition, other property falling within the terms of the summons valued at a little under $2m. In addition, the ex parte orders included examination orders under s 180 and directions to supply sworn asset statements pursuant to s 39(1)(ca) of the POC Act.
On 17 May 2017, various persons, including Mr Onley and Mr Menon were arrested and charged with the taxation fraud conspiracy. Mr Anquetil was arrested and charged on 18 May 2017. On 5 and 6 June 2017, examination notices were issued under s 183 of the POC Act, requiring the appellants to attend for examination on 19 June (Mr Anquetil), 22 June (Mr Onley) and 27 June (Mr Menon).
On 15 June 2017, Mr Anquetil filed a notice of motion seeking orders staying the proceedings pending the finalisation of criminal proceedings commenced against him, or alternatively, staying the examination summons pending the finalisation of these proceedings. On 16 June 2017, Mr Onley and Mr Menon filed a notice of motion seeking relief broadly similar to that sought by Mr Anquetil.
On 22 March 2018, Fullerton J dismissed the notices of motion filed by the appellants.
There were five main issues on appeal:
Whether the primary judge erred in concluding that Mr Anquetil bore the onus of showing that the restraining order should be revoked?
Whether the primary judge erred in concluding that Mr Anquetil bore the onus of showing that the examination order should be stayed?
Whether the primary judge erred in concluding that Mr Anquetil bore the onus of showing that the examination order should be revoked?
Whether the primary judge erred in the exercise of her discretion in declining to stay the proceedings under s 319 :
a. by requiring the appellants to demonstrate the loss of a legitimate forensic choice as a result of them being examined?
b. by failing to properly consider the risk of disclosure of information provided by the appellants in the course of compulsory examinations?
c. in taking into account prejudice to the Commissioner if the examinations were stayed?
d. in failing to take into account material prejudice concerning future charges?
Did the order requiring sworn statements as to assets and liabilities exceed the power conferred in s 39(1)(ca) of the POC Act?
The Court (Bathurst CJ, Basten JA and Meagher JA) held, granting leave to appeal to each applicant but dismissing the appeals with costs:
Onus of showing that the restraining order should be revoked
(i) There is an express provision dealing with the revocation of a restraining order pursuant to s 42 of the POC Act: [210] (Bathurst CJ); [299] (Basten JA); [418] (Meagher JA).
David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265; [1995] HCA 43 referred to.
(ii) Proceedings invoking the power under s 42 of the POC Act to revoke a restraining order are proceedings under the POC Act: [210] (Bathurst CJ).
(iii) The applicant in proceedings to revoke a restraining order bears the onus of proving the matters necessary to establish the grounds for making the order by virtue of s 317 of the POC Act: [210] (Bathurst CJ).
(iv) It is unclear where the onus of proof lies in proceedings to revoke a restraining order under s 42 of the POC Act: [300] (Basten JA); [418] (Meagher JA).
Onus of showing that the examination order should be stayed
(i) The power of the Court to stay the proceedings under the POC Act is conferred by s 319 of the Act and must be exercised subject to the conditions imposed by that provision: [216]-[217] (Bathurst CJ); [348] (Basten JA); [418] (Meagher JA).
Rizeq v The State of Western Australia (2017) 262 CLR 1; [2017] HCA 23 considered.
(ii) Section 317 of the POC Act would apply to impose upon the applicants for the stay the onus of establishing that the stay was justified: [213] (Bathurst CJ).
Jago v The District Court of New South Wales (1989) 168 CLR 23; [1989] HCA 46 referred to.
Onus of showing that the examination order should be revoked
(i) There is no express power within the POC Act to revoke an examination order: [212] (Bathurst CJ).
(ii) There is no power within the POC Act to revoke an examination order: [309]-[312] (Basten JA); [418] (Meagher JA).
(iii) It may be inferred that the Commonwealth Parliament intended that the procedural scheme of the POC Act operate coherently without alteration or addition by the adoption of State laws allowing for the discharge or setting aside of examination orders when made ex parte, except to the extent that the standards and criteria to be applied by a court exercising discretionary powers will be informed by general law principles: [312] (Basten JA); [418] (Meagher JA).
Tan v Director of Public Prosecutions (Cth) [2004] NSWSC 952; Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9; [2006] NSWCA 238; Banerjee v Commissioner of Police [2018] NSWCA 283 referred to.
International Finance Trust Company Ltd v New South Wales Crime Commission (2009) 240 CLR 319; [2009] HCA 49; Rizeq v The State of Western Australia (2017) 262 CLR 1; [2017] HCA 23; Resort Hotels Management Pty Ltd v Resort Hotels of Australia Pty Ltd (1991) 22 NSWLR 730; Ruzehaji v Commissioner of the Australian Federal Police (2015) 124 SASR 355; [2015] SASCFC 182 considered.
(iv) Section 317 of the POC Act should not be read as having the effect of placing an onus on the respondent to an application for an examination order to demonstrate why it should be discharged, if made ex parte, but leaving the onus to establish a justification for the order on the Commissioner, if sought in the course of an inter partes hearing: [292] (Basten JA); [418] (Meagher JA).
(v) The primary judge did not determine the application for revocation on the basis that the appellants had failed to discharge any onus cast on them but rather expressed a positive satisfaction on the issue: [207] (Bathurst CJ).
(vi) To the extent that there is power to seek a revocation of an examination order, the onus of establishing whether the order should be revoked is borne by the applicant for such an order: contra [216] (Bathurst CJ).
Cameron v Cole (1944) 68 CLR 571; [1944] HCA 5; John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19; BP Australia Ltd v Brown (2003) 58 NSWLR 322; [2003] NSWCA 216 referred to.
Rizeq v Western Australia (2017) 262 CLR 1; [2017] HCA 23 applied.
Did the primary judge err in the exercise of her discretion in declining to stay the proceedings under s 319:
a. by requiring the appellants to demonstrate the loss of a legitimate forensic choice as a result of them being examined?
(i) The primary judge did not err by requiring the appellants to demonstrate the loss of a legitimate forensic choice as a result of them being examined. Section 319 of the POC Act makes it clear that prejudice arising from the fact of the examination that alters the accusatorial judicial process, even if kept secret ("systemic prejudice") is not sufficient of itself to warrant the grant of stay. The primary judge was correct in concluding that something more was required to justify a stay than just that the examination was to take place while criminal proceedings were pending: [220]-[236] (Bathurst CJ); [369]-[372] (Basten JA); [418] (Meagher JA).
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27; [2009] HCA 41; X7 v Australian Crime Commission (2013) 248 CLR 92; [2013] HCA 29; Zhao v The Commissioner of the Australian Federal Police (2014) 43 VR 187; [2014] VSCA 137; Certain Lloyd's Underwriters Pty Ltd v Cross (2012) 248 CLR 378; [2012] HCA 56; Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 93 ALJR 1; [2018] HCA 53; Commissioner of the Australian Federal Police v Elzein (2017) 94 NSWLR 700; [2017] NSWCA 142; Lee v New South Wales Crime Commission (2013) 251 CLR 196; [2013] HCA 39; X7 v The Queen (2014) 246 A Crim R 402; [2014] NSWCCA 273 referred to.
b. by failing to properly consider the risk of disclosure of information provided by the appellants in the course of compulsory examinations?
(i) The primary judge did not err in declining to grant a stay based on the risk of disclosure of information provided by the appellants in the course of compulsory examinations to an authority investigating or prosecuting criminal charges ("disclosure prejudice"). The primary judge properly considered the strength of the protection mechanisms and the residual risk of leakage in determining whether or not to grant a stay. The measures taken by the Commissioner to protect against the risk of leakage of specific information were "significant" and provided "ample justification for the conclusion by the primary judge that the protection was adequate" and there was no error in discretion in her so finding: [237]-[240] (Bathurst CJ); [373]-[378], [389]-[393] (Basten JA); [418] (Meagher JA).
Lee v The Queen (2014) 253 CLR 455; [2014] HCA 20; Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 93 ALJR 1; [2018] HCA 53 referred to.
c. in taking into account prejudice to the Commissioner if the examinations were stayed?
(i) The primary judge did not err in considering the risk of prejudice to the Commissioner if the examinations are stayed: [244]-[249] (Bathurst CJ).
(ii) The primary judge did not take into account what was said to be an improper purpose of the examination, that is the use of the power to ascertain if funds were available to satisfy a future pecuniary penalty order, nor was that purpose in any event improper: [244]-[249] (Bathurst CJ).
Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103 referred to.
(iii) The primary judge did not err in concluding that there would be a level of prejudice to the Commissioner if the proposed stay was granted: [406] (Basten JA); [418] (Meagher JA).
Zhao v The Commissioner of the Australian Federal Police (2014) 43 VR 187; [2014] VSCA 137; Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103 considered
(iv) The primary judge did not err in balancing competing interests in declining to stay the proceedings: [407]-[412] (Basten JA); [418] (Meagher JA).
d. in failing to take into account material prejudice concerning future charges?
(i) There was no error of discretion in the manner in which the primary judge dealt with future charges. Section 319(2)(a) of the POC Act extends to criminal proceedings as proceedings that might be instituted and provides that possibility is not a ground for a stay: Bathurst CJ [241]-[243]; Basten JA [371]; Meagher JA [418].
R v Independent Broad-based Anti-corruption Commissioner (2016) 256 CLR 459; [2016] HCA 8; Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 93 ALJR 1; [2018] HCA 53; Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103; Commissioner of the Australian Federal Police v Elzein (2017) 94 NSWLR 700; [2017] NSWCA 142; X7 v Australian Crime Commission (2013) 248 CLR 92; [2013] HCA 29 referred to.
Did the order requiring sworn statements as to assets and liabilities exceed the power conferred in s 39(1)(ca) of the POC Act?
(i) The sworn asset statement order did not exceed the power conferred on the Court by s 39(1)(ca) of the POC Act; s 39(1)(ca) of the POC Act extends to property held by a company of which the person is a director: Bathurst CJ [250]-[257]; Basten JA [324]-[331]; Meagher JA [418].
Commissioner of the Australian Federal Police v Cacu [2017] NSWCA 5; 264 A Crim R 427 considered.