MATTER : Section 57 and s 41(1) of the Criminal Property Confiscation Act 2000

DIRECTOR OF PUBLIC PROSECUTIONS OF WESTERN AUSTRALIA against PAOLO MUSARRI, also known as PAUL MUSARRI

DIRECTOR OF PUBLIC PROSECUTIONS OF WESTERN AUSTRALIA against MALAGA HOLDINGS PTY LTD

BETWEEN : WESTPAC BANKING CORPORATION (ABN 33 007 457 141)

Practice and procedure - Applications made for orders clarifying orders previously made - Applications not involving any new determination of the rights or obligations of the respondents - Turns on own facts

Criminal Property Confiscation Act 2000, s 91

of Western Australia : State Director of Public Prosecutions

1 WHITE AUJ: Before me there is an application by Citibank Limited and an application by Westpac Banking Corporation for certain orders pursuant to s 91 of the Criminal Property Confiscation Act 2000.

2 The orders sought by Citibank Limited are the following:

"3. The Bank, or Receivers as the case may be, be at liberty to take possession of all the following properties:

(a) Portion of Swan Location K and being Lot 103 on Plan 21707 and being all the land comprised in Certificate of Title Volume 2086 Folio 256 and known as 12 Commerce Street Malaga;

(b) Swan Location 5958 and being Lot 3 on Strata Plan 34101 and being all the land comprised in Certificate of Title Volume 2128 Folio 980 and known as Unit 3/20 Escot Road Innaloo;

(c) Portion of Swan Location T and being Lot 4 the subject of Diagram 51003 and being all the land comprised in Certificate of Title Volume 1507 Folio 972 and known as 38-40 Railway Parade Bayswater;

(d) Portion of Swan Location Q1 and being Lot 354 on Plan 2814 and being all that land in Certificate of Title Volume 1431 Folio 987 and known as 10 Old Perth Road Bassendean;

(e) Portion of Port Hedland Lot 5190 and being Lot 8 on Strata Plan 35861 and being all that land in Certificate of Title Volume 2156 Folio 35 and known as Unit 8, 2 Dempster Street Port Hedland;

(f) Portion of Port Hedland Lot 5190 and being Lot 11 on Strata Plan 35861 and being all that land in Certificate of Title Volume 2156 Folio 38 and known as Unit 11, 2 Dempster Street Port Hedland;

(g) Portion of Port Hedland Lot 5190 and being Lot 12 on Strata Plan 35861 and being all that land in Certificate of Title Volume 2156 Folio 39 and known as Unit 12, 2 Dempster Street Port Hedland;

(h) Portion of Port Hedland Lot 5190 and being Lot 13 on Strata Plan 35861 and being all that land in Certificate of Title Volume 2156 Folio 40 and known as Unit 13, 2 Dempster Street Port Hedland;

(i) Portion of Helena Location 20 and being Lot 70 on Plan 1541 and being all that land comprised in Certificate of Title Volume 2047 Folio 291 and known as 32 Queens Road Guildford."

3 The orders sought by Westpac Banking Corporation are the following:

"3. The Bank be at liberty to take possession of the property known as 32 Queens Road, South Guildford in the State of Western Australia more particularly described as Lot 70 on Plan 1541 (sheet 2), portion of Helen Location 20 being the whole of the land comprised in Certificate of Title Volume 2047 Folio 291.

4. The Bank be at liberty to exercise all such rights as are conferred by the Mortgages and the Guarantee (as defined in the Affidavit of Helen Margaret Lawless in support of Application for Orders pursuant to section 91 of the Act sworn 9 August 2001) so as to enable it to give effect to the Orders pursuant to section 91 of the Act made at the hearing on 18 December 2001 by the Honourable Justice Hasluck."

4 On 18 December 2001, Hasluck J made the following orders:

"1. Pursuant to section 91(2) of the Criminal Property Confiscation Act 2000 and subject to the following terms of this order, Citibank Limited ACN 004 325 080 (Bank) have leave to sell the properties described as:

1.1 Portion of Swan Location K and being Lot 103 on Plan 21707 and being all the land comprised in Certificate of Title Volume 2086 Folio 256 and known as 12 Commerce Street Malaga (1st Property), pursuant to its powers under mortgage number G764273 (1st Mortgage); and

1.2 Swan Location 5958 and being Lot 3 on Strata Plan 34101 and being all the land comprised in Certificate of Title Volume 2128 Folio 980 and known as Unit 3/20 Escot Road Innaloo (2nd Property), pursuant to its powers under the 1st Mortgage; and

1.3 Portion of Swan Location T and being Lot 4 the subject of Diagram 51003 and being all the land comprised in Certificate of Title Volume 1507 Folio 972 and known as 38-40 Railway Parade Bayswater (3rd Property), pursuant to its powers under mortgage number G996713 (2nd Mortgage); and

1.4 Portion of Swan Location Q1 and being Lot 354 on Plan 2814 and being all that land in Certificate of Title Volume 1431 Folio 987 and known as 10 Old Perth Road Bassendean (4th Property), pursuant to its powers under mortgage number H409550 (3rd Mortgage);

(the 1st Property, the 2nd Property, the 3rd Property, and the 4th Property collectively the Properties)

(the 1st Mortgage, the 2nd Mortgage, and the 3rd Mortgage collectively the Mortgages)

2. Pursuant to section 91(2) of the Criminal Property Confiscation Act 2000 and subject to the following terms of this order, the Bank, pursuant to its powers under the Deed of Fixed and Floating Charge dated 8 September 1999 (Charge) numbered 714205 by the Australian Securities and Investment Commission (ASIC) granted in favour of the Bank by Malaga Holdings Pty Ltd ACN 077 497 931 (Malaga) over all its assets and undertaking, be at liberty to appoint a Receiver and Manager (Receiver) in order to sell the properties described as:

2.1 Portion of Port Hedland Lot 5190 and being Lot 8 on Strata Plan 35861 and being all that land in Certificate of Title Volume 2156 Folio 35 and known as Unit 8, 2 Dempster Street Port Hedland (1st Charged Property); and

2.2 Portion of Port Hedland Lot 5190 and being Lot 11 on Strata Plan 35861 and being all that land in Certificate of Title Volume 2156 Folio 38 and known as Unit 11, 2 Dempster Street Port Hedland (2nd Charged Property); and

2.3 Portion of Port Hedland Lot 5190 and being Lot 12 on Strata Plan 35861 and being all that land in Certificate of Title Volume 2156 Folio 39 and known as Unit 12, 2 Dempster Street Port Hedland (3rd Charged Property); and

2.4 Portion of Port Hedland Lot 5190 and being Lot 13 on Strata Plan 35861 and being all that land in Certificate of Title Volume 2156 Folio 40 and known as Unit 13, 2 Dempster Street Port Hedland (4th Charged Property); and

2.5 Portion of Helena Location 20 and being Lot 70 on Plan 1541 and being all that land comprised in Certificate of Title Volume 2047 Folio 291 and known as 32 Queens Road Guildford (5th Charged Property).

(the 1st Charged Property, 2nd Charged Property, 3rd Charged Property, 4th Charged Property and 5th Charged Property collectively the Charged Properties)

3. Pursuant to section 91(2) of the Criminal Property Confiscation Act 2000 and subject to the following terms of this order, the Bank, pursuant to its powers under the Charge, be at liberty to appoint a Receiver in order to sell all shares held by Malaga including but not limited to shares in the following companies:

(a) Charter Pacific Limited;

(b) Central Kalgoorlie Goldmines Limited;

(c) Telstra Ltd; and

(d) Metal Storm Ltd.

(the shares in the companies described in paragraph 3(a) to 3(d) inclusive collectively and severally the Charged Assets)

4. The Bank shall not exercise its rights in relation to the Charged Properties referred to at 2.1 to 2.5 inclusively and the Charged Assets referred to at 3(a) to 3(d) inclusive above subject to the following terms of this order and provided that:

4.1 No money remains owing to the Bank after sale of the Properties; and

4.2 Reasonable efforts have been made to sell the Properties without success in accordance with the requirements of paragraphs 5 to 7 below.

5. Prior to the sale of the Properties and the Charged Properties, the Bank, or the Receiver appointed by the Bank as the case may be, must obtain 2 new formal valuation reports by Licensed Real Property Valuers (Valuations) nominated by the Bank in relation to each of the Properties and each of the Charged Properties and provide a copy to the Director of Public Prosecutions (DPP) not less than 7 days prior to offering the Properties and the Charged Properties for sale.

6. At any sale of any or all of the Properties or the Charged Properties by auction or otherwise a reserve price shall be set by agreement between the Bank or the Receiver appointed by the Bank and the DPP, and if no agreement is able to be reached a reserve price shall be set at 80% of the value of the Properties and the Charged Properties as determined by the average of the Valuations referred to in paragraph 5 of this order.

7. Should the Properties or the Charged Properties fail to sell at the reserve price referred to in paragraph 6 of this order, the Bank or the Receiver appointed by the Bank as the case may be, shall have the right and absolute discretion, pursuant to the terms of the Mortgages or the Charge, to sell the Properties or the Charged Properties at the best price it is reasonably able to obtain.

8. On the date of the settlement of the sale of the Properties (Properties Settlement Date), the Bank will apply the proceeds of sale in the following order:

8.1 First in payment of all proper and reasonable costs of sale of the Properties, including but not limited to agents commission, legal fees, settlement costs, and rates and taxes properly payable in respect of the Properties; and

8.2 Second in payment of all amounts due and owing to the Bank pursuant to the Mortgages and the Charge.

9. On the date of settlement of the sale of the Charged Properties (Charged Properties Settlement Date) the Bank will apply the proceeds of sale in the following order:

9.1 First in payment of all proper and reasonable costs of sale of the Charged Properties including but not limited to agents commission, legal fees, settlement costs, and rates and taxes properly payable in respect of the Charged Properties; and

9.2 Second in payment of all amounts secured by registrable interest on the Certificate of Title of any of the respective Charged Properties; and

9.3 Third in payment of all amounts due and owing to the Bank pursuant to the Mortgages and the Charge.

10. Prior to the sale of the Charged Assets the Bank or the Receiver appointed by the Bank as the case may be, shall be at liberty to appoint a licensed securities dealer to act as selling agent of the Charged Assets.

11. The Charged Assets shall be sold at the best price that can reasonably be secured on the day of sale.

12. On the date of settlement of the sale of the Charged Assets (Charged Assets Settlement Date) the Bank will apply the proceeds of sale in the following order:

12.1 First in payment of all proper and reasonable costs of sale of the Charged Assets including but not limited to brokers commission, legal fees, settlement costs, and taxes properly payable in respect of the Charged Assets; and

12.2 Second in payment of all amounts due and owing to the Bank pursuant to the Mortgages and the Charge.

13. Any remaining money from the sale of the Properties, the Charged Properties and the Charged Assets after making the payments provided for in paragraphs 8, 9 and 12 of this order (Surplus) are subject to the Freezing Order made Before The Honourable Justice Steytler on 22 January 2001 in this action, and in accordance with the Criminal Property Confiscation Act 2000.

14. On the Properties Settlement Date, the Charged Properties Settlement Date and the Charged Assets Settlement Date the Bank will pay the Surplus to the DPP. Such payment is to be made by the Bank authorising and requesting in writing the respective purchasers of the Properties, the Charged Properties and the Charged Assets or their respective agents to hand to a person employed by the DPP a bank cheque made payable to the Public Trustee for an amount equal to the Surplus.

15. Not less than 3 clear working days before the Properties Settlement Date, the Charged Properties Settlement Date and the Charged Assets Settlement Date the Bank will give to the office of the DPP written notice of such date together with a statement of the amounts payable under paragraphs 8, 9 and 12 of this order.

16. The DPP at its own cost prior to or on the Properties Settlement Date and the Charged Properties Settlement Date will do all things necessary to remove the memorial registered against any of the Properties or the Charged Properties.

17. On discharge of the Mortgage and satisfaction of the Charge the Bank will close the following accounts standing in the name of Malaga with the Bank:

(a) 810 992 222;

(b) 811 017 730;

(c) 811 414 416;

(d) 811 607 738.

(the accounts described in paragraph 17(a) to 17(d) inclusive collectively and severally the Accounts)

18. Any money remaining in the Accounts will be paid to the DPP in the manner set out in paragraph 14 of this order and will be dealt with by the DPP in the same manner as the Surplus as set out in paragraph 19 of this order.

19. The DPP will pay the Surplus into an interest bearing account with the Public Trustee in the name of the DPP and Malaga.

20. After the Bank has closed the Accounts all rental money from the Properties and Charged Properties to be paid into an interest bearing account with the Public Trustee.

21. The expenses of the Public Trustee and all other expenses associated with the investment of the Surplus by the Public Trustee are to be met out of the interest earned on the Surplus and, if that is insufficient, out of the Surplus.

22. In any application made pursuant to the Criminal Property Confiscation Act 2000 the moneys shall be dealt with as if they were the property the subject of the Freezing Order referred to at paragraph 13 above.

23. There be liberty to apply on 48 hours written notice."

2. In relation to claims by Westpac Banking Corporation:-

"1. Pursuant to section 91(2) of the Criminal Property Confiscation Act 2000 (Act) and subject to the following terms of this order, Westpac Banking Corporation ABN 33 007 457 141 (Bank):

1.1 have leave to sell the property being portion of Helena Location 20 and being Lot 70 on Plan 1541 (Sheet 2) and being all the land comprised in Certificate of Title Volume 2047 Folio 291 and known as 32 Queens Road, South Guilford [sic] (First Property), pursuant to its powers under mortgage number H509740 (First Mortgage); and

1.2 have leave to sell the property being portion of Swan Location K and being Lot 243 on Plan 8691 (Sheet 3) and being all the land comprised in Certificate of Title Volume 1773 Folio 453 and known as 128 Balga Avenue, Balga (Second Property), pursuant to its powers under mortgage number H509745 (Second Mortgage).

(the First Property and the Second Property collectively the Properties)

(the First Mortgage and the Second Mortgage collectively the Mortgages).

2. Prior to the sale of the Properties, the Bank, or the Receiver appointed by the Bank as the case may be, must obtain two new formal valuation reports by Licensed Real Property Valuers (Valuations) nominated by the Bank in relation to each of the Properties and provide a copy to the Director of Public Prosecutions (DPP) not less than 7 days prior to offering the Properties for sale.

3. At any sale of any or all of the Properties by auction or otherwise a reserve price shall be set by agreement between the Bank or the Receiver appointed by the Bank and the DPP, and if no agreement is able to be reached a reserve price shall be set at 80% of the value of the Properties as determined by the average of the Valuations referred to in paragraph 2 of this order.

4. Should the Properties fail to sell at the reserve price referred to in paragraph 2 of this order, the Bank or the Receiver appointed by the Bank as the case may be, shall have the right and absolute discretion, pursuant to the terms of the Mortgages, to sell the Properties at the best price it is reasonably able to obtain.

5. On the date of the settlement of the sale of the Properties (Properties Settlement Date) and if the settlement of the sale of the Properties occurs on different days then this paragraph will apply to settlement of the sale of each property individually, the Bank will apply the proceeds of sale in the following order:

5.1 first in payment of all proper and reasonably incurred costs, fees and expenses of sale of the Properties, including but not limited to agents commission, legal fees, settlement costs, and rates and taxes properly payable in respect of the Properties; and

5.2 second in payment of all amounts due and owing to the Bank pursuant to the Mortgages, including the Bank's costs of this Application and any other application made by it under the Act on a full indemnity basis.

6. Any remaining moneys from the sale of the Properties after making the payments provided for in paragraph 5 of this order (Surplus) are subject to the Freezing Order made by The Honourable Justice Steytler on 22 January 2001 in this action, and in accordance with the Act.

7. Not less than 3 clear working days before the Properties Settlement Date, the Bank will give to the office of the DPP written notice of such date together with a statement of the amounts payable under paragraph 5 of this order.

8. On the Properties Settlement Date, the Bank will pay the Surplus to the DPP. Such payment is to be made by the Bank authorising and requesting in writing the respective purchasers of the Properties or their respective agents to hand to a person employed by the DPP a bank cheque made payable to the Public Trustee for an amount equal to the Surplus.

9. The DPP at its own cost prior to or on the Properties Settlement Date will do all things necessary to remove the memorial registered against any of the Properties.

10. The DPP will pay the Surplus into an interest bearing account with the Public Trustee in the name of the DPP and Malaga.

11. On discharge of the Mortgages, the Bank will close the following accounts standing in the name of Malaga Holdings Pty Ltd (Malaga) with the Bank:

(i) 036 045 145750;

(ii) 036 045 151907;

(the accounts described at subparagraphs 11(i) to 11(ii) inclusive collectively and severally the Accounts)

12. Any money remaining in the Accounts will be paid to the DPP in the manner set out in paragraph 8 of this order and will be dealt with by the DPP in the same manner as the Surplus as set out in paragraph 10 of this Order.

13. The expenses of the Public Trustee and all other expenses associated with the investment of the Surplus by the Public Trustee are to be met out of the interest earned on the Surplus and, if that is insufficient, out of the Surplus.

14. In any application made pursuant to the Act, the Surplus shall be deemed to be and shall be dealt with as if it was the Properties.

15. There be liberty to apply on 48 hours written notice."

5 I am informed that an appeal has been lodged on behalf of Mr Musarri and Malaga Holdings Pty Ltd (to whom I shall refer together as "the respondents") against these orders and that the respondents applied before McKechnie J for a stay of execution of the orders pending the determination of the appeal. McKechnie J dismissed that application.

6 On 24 January 2002, McKechnie J made the following further orders upon the application of Westpac Banking Corporation:

"1. The time for this hearing be abridged.

2. Within 24 hours, Paolo Musarri and Malaga Holdings Pty Ltd:

(a) take all reasonable steps to deliver up the keys to the property at 128 Balga Road, Balga in the State of Western Australia ('Property'), to the applicant's solicitors; and

(b) instruct any person or persons who may be occupying the Property to permit valuers as nominated by the Applicant reasonable access to the Property for the purposes of valuing the Property.

3. In default of compliance with paragraph two hereof, the applicant be at liberty to enter into possession of the Property.

4. Paolo Musarri and Malaga Holdings Pty Ltd pay the applicants' costs of this application in any event on a full indemnity basis."

7 Citibank Limited has appointed receivers and managers to Malaga Holdings Pty Ltd and Mr Vaughan, of counsel, appeared on their behalf.

8 Mr Wells, counsel for Mr Musarri and claiming also to represent Malaga Holdings Pty Ltd, sought an adjournment of the applications to enable him to consider more deeply the legal issues and, particularly, his entitlement in the circumstances to represent Malaga Holdings Pty Ltd. When the parties were before McLure J, her Honour informed Mr Wells that he must be ready to argue the matter on 1 February 2002, when the matter was brought on before me.

9 The applicants submitted that the orders now sought are simply to clarify the orders made by Hasluck J on 18 December 2001, to ensure, from an abundance of caution, that neither bank does anything contrary to the provisions of the Criminal Property Confiscation Act 2000.

10 Mr Jones, of counsel representing the Director of Public Prosecutions, supported the applications, as did Mr Vaughan on behalf of the receivers and managers of Malaga Holdings Pty Ltd.

11 The applications now before me do not involve any new determination of the rights or obligations of the respondents, nor do they impinge upon the appeal presently pending against the orders of Hasluck J, in the circumstances that the respondents' application for a stay of those orders failed before McKechnie J. In the result, I am unable to detect any useful purpose to be served by allowing Mr Wells further time to consider the legal position. He was not able to suggest any identified matter of dispute arising from the present applications and I am unable to discern any such matter. It seems to me that, in relation to the present applications, Mr Wells' retainer to act on behalf of Malaga Holdings Pty Ltd, save in relation to the appeal, as to which I say nothing, has been terminated by the appointment of the receivers and managers to that Company.

12 I am persuaded that the orders now sought should be made in order to clarify the rights of the applicants flowing from the orders of Hasluck J to which I have referred above.

13 Accordingly, I shall make orders in accordance with each chamber summons. I note that there is no application for an order for costs and I consider that it is appropriate that there be no order as to the costs of the applications in the circumstances.