Solicitors:
Criminal Assets Litigation, Australian Federal Police (Plaintiff / Respondent)
Murphy's Lawyers Inc (Applicants)
File Number(s): 2017/146280
[2]
Judgment
HIS HONOUR: By motions on notice the 57th and 58th defendants, in proceedings relating to the confiscation of proceeds of crime, seek orders excluding their property from the restraining orders and or forfeiture consequential thereon and, in the interim and in the alternative, seek an extension of time before the forfeiture occurs.
The Commissioner of the Australian Federal Police v Cranston [2021] NSWSC 1332 | Case summary | Zoe
The motion of the 57th defendant, Tepcorp Holdings Pty Ltd ("Tepcorp") was filed on 20 September 2021. The motion of the 58th defendant, SOFS Pty Ltd ("SOFS") was filed on 22 September 2021.
The proceedings have a long history and were initially managed by a judge of the Court and ultimately allocated to another judge of the Court, who is currently on leave. As a consequence, sitting as the Duty Judge, the Court has been asked to deal with the extension application as a matter of urgency.
The urgency arises as a result of the apparent effect of the statute, the Proceeds of Crime Act 2002 (Cth) (hereinafter "the Act"), which operates to effect the forfeiture of the property automatically. The parties accept that the forfeiture would occur on 1 October 2021, i.e. at the time of the drafting of these reasons, tomorrow.
One of the difficulties for the Court is that the submissions on behalf of the parties were filed or provided to the Court as presently constituted this morning at a time when the Court was otherwise engaged and there has been little or no time to read all of the significant documentation that has been provided by the parties and to understand fully the significant history of the proceedings.
It is sufficient for present purposes to note that the proceedings arise out of allegations of fraud involving a number of co-conspirators.
By operation of s 92 of the Act, property is forfeited to the Commonwealth at the end of the period prescribed by subsection 92(3), being the period of 6 months starting on the conviction of the relevant person or, if an extension order is in force, at the end of that period. The 6-month period dates from the conviction day, which is defined, in relation to a person who is sentenced for the offence, to be the day upon which the sentence was imposed. In the case of both Messers Rostankovski and Hausman, each was sentenced on 1 April 2021.
The parties submit to the Court that the forfeiture occurs immediately upon the commencement of 1 October 2021, being the end of the 6-month period starting on the conviction day. As I calculate, the operation of s 92(3) of the Act, forfeiture may occur at the commencement of 1 October 2021, or the very end of 30 September 2021; or, depending on how one calculates the period of 6 months, on 2 October 2021. For abundant caution, I accepted that the earlier date applied and issued orders today extending the time. The calculation is not without doubt and is the subject of comment below.
The provisions of s 36 of the Acts Interpretation Act 1901 (Cth) prescribe the method of calculating periods of time. The effect of the provisions of s 93(3) of the Act is that the property is forfeited at the end of the period of 6 months, starting on the conviction day (1 April). Item 5 in s 36(1) of the Acts Interpretation Act provides that a period that is said to start from a specific day does not include that day. As a consequence, if the period commences or starts from the conviction day, the period does not include that day, and the first day of the period is 2 April, with the period ending at the conclusion of 1 October.
However, the provisions of s 93(3) of the Act refer to the period commencing or starting on the conviction day: see Item 2 of s 36(1) of the Acts Interpretation Act. The period is not one specified to end on a particular date but is one that has effect at the end of the 6-month period, which starts on the conviction day.
If 1 April were included in that period and the property were forfeited on 1 October, then the period would only be 5 months and 29 days and possibly some hours (assuming for present purposes that the conviction would have been imposed sometime later than 12:01am on 1 April). It is unnecessary now to determine the issue. It would seem preferable for the construction to be that the period in this case commenced on 1 April, ended on 1 October and the forfeiture would then occur on 2 October.
As the parties were agreed as to the date on which forfeiture will occur, I have, as a matter of precaution, taken the view that the orders should issue before the beginning of 1 October 2021 and the orders issued on 30 September 2021.
It is necessary to deal, very briefly, with the structure of the Act. The Act deals with the property of persons convicted of serious criminal offences and property that is the proceeds of crime. The foregoing does not intend to limit that which may be the subject of orders.
Courts are empowered, on the application of authorised persons, to issue freezing orders in relation to bank accounts and accounts with other financial institutions and issue restraining orders. The Commissioner of the Australian Federal Police (hereinafter "AFP") is an authorised person.
The structure of the Act in relation to restraining orders provides the Court with limited discretion and requires the issuing of the restraining orders in circumstances where certain preconditions have been met. Where an authorised person applies for a restraining order in relation to property and satisfies the Court of the statutory preconditions, the Court issues a restraining order in relation to that property.
The most often controverted aspect of the preconditions is the existence of reasonable grounds to suspect that the property is the proceeds of a serious offence and depends upon reasonable grounds for the suspicion that the offences occurred. The making of restraining orders does not depend upon a conviction or satisfaction at the criminal standard.
Indeed, the issuing of restraining orders does not depend upon satisfaction of the Courts of the fact that the property was the proceeds of crime as a matter of fact. It only requires the Court to be satisfied that there is a suspicion and the suspicion is based upon reasonable grounds.
The Court has a residual discretion to refuse to make a restraining order, if the Court is satisfied that it is not in the public interest to make such an order. Once property is the subject of a restraining order, a party with an interest in the property has the capacity to apply to the Court for exclusion of the property from the restraining order and/or to vary the terms of the restraining order.
Thus, in the present case, one of the applicants on the motion had a restraining order against its real property, which order was varied to allow for the sale of the real property and the proceeds of that sale were then the subject of the restraining order. The details are set out below.
Exemption from restraining orders may be made under ss 30 or 31 of the Act. Such an application is made to exclude property from the restraining order and is unable to be heard until the responsible authority, in this case the AFP, has been given a reasonable opportunity to conduct examinations in relation to the application.
Ordinarily, when orders are made restraining a person from dealing with property, orders are also made allowing for the examination of persons of interest who, it may be said, have an interest in the property or may give information that would allow the responsible authority to determine the extent of the property held by a person or that forms the proceeds of crime.
It is unnecessary to deal extensively with all of the details of each of the provisions of the Act. It was necessary to set out the provisions relating restraining orders, because each of the applicants, Tepcorp and SOFS have interests in property that are the subject of restraining orders and the persons who are relevant to the offence and who were engaged in the conduct that gave rise to the reasonable suspicion were convicted on 1 April 2021.
Pursuant to the terms of the Act, to which reference has been made, the property that has been restrained by order of the Court pursuant to the Act is forfeited to the Commonwealth at the end of the 6-month period to which earlier reference has also been made. Thus, subject to the exclusion of the property from the restraining order under the provisions of s 94 of the Act with which the Court will shortly deal, the property will be forfeited automatically to the Commonwealth.
The provisions of s 93 of the Act permit the Court that made a restraining order to make an order (an extension order) specifying an extended period before which the automatic forfeiture can occur. There are preconditions to the making of that extension order. It is appropriate for the Court to set out the provisions of ss 93 and 94 of the Act, which are in the following terms:
"93 Making an extension order extending the period before property is forfeited
(1) The court that made the *restraining order referred to in paragraph 92(1)(b) may make an order (an extension order) specifying an extended period for the purposes of subsection 92(3) if:
(a) an application for the order is made within 6 months after the start of the *conviction day for the relevant conviction; and
(b) the applicant has also applied to the court under:
(i) section 30 or 31 to exclude property from the restraining order; or
(ii) section 94 to exclude the property that is covered by the restraining order from forfeiture under this Part; and
(c) the court is satisfied that the applicant made the application under section 30, 31 or 94 without undue delay, and has since diligently followed up that application.
The extended period specified must end no later than 15 months from the start of the conviction day for the relevant conviction.
(2) The *extension order stops being in force if the application under section 30, 31 or 94 is finally determined before the end of the 6-month period starting on the *conviction day for the relevant conviction.
(3) The extended period ends if the application under section 30, 31 or 94 is finally determined before the end of that period.
(4) If the court makes the *extension order, the *responsible authority must take reasonable steps to give any person who has or claims, or whom the authority reasonably believes may have, an *interest in the property to which the order relates a written notice stating:
(a) the date on which the property will be forfeited under this Part, in accordance with the extension order, unless it is excluded from forfeiture; and
(b) the effect of subsections (2) and (3).
94 Excluding property from forfeiture under this Part
(1) The court that made a *restraining order referred to in paragraph 92(1)(b) must make an order excluding particular property from forfeiture under this Part if:
(a) a person (the applicant) has applied for an order under this section; and
(b) the court is satisfied that the applicant has an *interest in property covered by the restraining order; and
(d) a person has been convicted of a *serious offence to which the restraining order relates; and
(e) the court is satisfied that the applicant's interest in the property is neither *proceeds of *unlawful activity nor an *instrument of unlawful activity; and
(f) the court is satisfied that the applicant's interest in the property was lawfully acquired.
(2) To avoid doubt, an order under this section cannot be made in relation to property if the property has already been forfeited under this Part.
(3) The person must give written notice to the *responsible authority of both the application and the grounds on which the order is sought.
(4) The *responsible authority may appear and adduce evidence at the hearing of the application.
(5) The *responsible authority must give the applicant notice of any grounds on which it proposes to contest the application. However, the authority need not do so until it has had a reasonable opportunity to conduct *examinations in relation to the application.
(6) The application must not be heard until the *responsible authority has had a reasonable opportunity to conduct *examinations in relation to the application."
As can be seen from the foregoing, there are three conditions for the making of an extension order. First, the application of the order must be made within 6 months after the start of the conviction day for the relevant conviction. Secondly, the applicant must have applied to the Court for an order excluding the property from the restraining order or an order excluding the property from forfeiture, pursuant to the terms of s 94 of the Act.
Lastly, the Court is required to be satisfied that the applications that the party relies upon, being the applications under ss 30, 31 or 94 of the Act, were made "without undue delay" and have since "diligently [been] followed up". It is that last precondition which is the issue of controversy between the AFP, on the one hand, and the two applicants on the other.
Further, as can be seen from the foregoing recitation of the provisions, the applicant is capable of applying to the Court under s 94 of the Act to exclude restrained property from forfeiture under s 92 of the Act. That application, in order to be successful, requires certain preconditions.
However, if the preconditions are satisfied, the Court is required to exclude the property from forfeiture. Those conditions are partly procedural and otherwise substantive.
They require the Court to be satisfied that the person applying for the order under s 94 has applied under that section; that the person has an interest in property covered by the restraining order; that a person, not necessarily the applicant, has been convicted of a serious offence to which the restraining order relates; that the applicant's interest in the property is neither proceeds of unlawful activity nor an instrument of unlawful activity; and that the applicant's interest in the property was lawfully acquired.
Each of Tepcorp and SOFS has made application under s 94. That condition is uncontroversial. Secondly, each of the applicants has an interest in property covered by the restraining order. That second aspect is also uncontroversial.
Thirdly, a person or persons, being Messers Rostankovski and Hausman have been convicted of a serious offence to which the restraining orders relate. While that aspect will be the subject of further comment, in relation to a submission as to the operation of s 92 of the Act, the criterion there set out is also, in relative terms, uncontroversial.
Lastly, the Court is required to be satisfied that the applicant's interest in the property is, to use a general term, legitimate, by which I refer to the interest in the property not being the proceeds of unlawful activity or instrument of unlawful activity and being lawfully acquired by the applicant.
The Court is not, on this urgent application, dealing with the application under s 94 of the Act. The Court is required to deal with the application under s 93 of the Act. Again, the only issue of controversy is, as already stated, the satisfaction of the Court of that criterion prescribed by s 93(1)(c) of the Act.
It is necessary for the Court to deal with the conduct of the parties of this litigation. It is also necessary to deal with the purchase by SOFS of the property that was initially subject to the restraining order.
SOFS purchased a property at 117 Flinders Street Surry Hills on 9 May 2014, on which date contracts were exchanged. Settlement did not take place until 9 May 2015.
It is appropriate to point out that SOFS is a trustee for the SOFS unit trust in which there are 100 units held by NOCS Pty Ltd, which is a company under the effective control of Mr Teplitsky and a further 100 units held by the Dakaza Pty Ltd, being a company under the effective control of Mr Williamson. It is not alleged that Mr Williamson was involved in any unlawful activity.
On 26 October 2015, further units in the trust were issued to a company which is alleged to have a relationship with both Messers Hausman and Rostankovski. On 11 May 2017, development approval was granted for a residential development of the property by the Land and Environment Court. However, the development approval was never acted upon and the development never occurred.
On 16 May 2017, the AFP sought and obtained the restraining orders in relation to both SOFS and Tepcorp. The orders were made pursuant to s 18 of the Act and restrained the defendants from dealing with the property otherwise than in accordance with the orders.
Those orders prevented SOFS from developing the property pursuant to the approval that had been granted and, in the case of Tepcorp, restrained it from dealing with its interest in Luminous Investment Holdings Pty Ltd and real property at 2 Short Street Surry Hills.
On 9 October 2017, a caveat was lodged by the Official Trustee in Bankruptcy over the property restrained in relation to Tepcorp, being the property at Short Street. On 15 November 2017, Tepcorp, together with Citi 100 filed a motion seeking orders under s 31 of the Act, being an exclusion from the restraint orders. Other orders were sought at the time. Also, on 15 November 2017, SOFS filed an application for exclusion under s 31 of the Act.
On 22 November 2017, Bryan Wrench affirmed an affidavit in support of the Tepcorp application under ss 29 and 31 of the Act. On 27 June 2019, the Court varied the restraining order relating to the interest in property of SOFS, allowing the property to be sold and requiring that the net proceeds of sale, as defined, would be the subject of restraint. The orders made on that date by the Court permitted SOFS to file and serve an amended notice of motion seeking exclusion of the net proceeds of sale. No amended motion has been filed and no other steps were taken by SOFS, other than the application under s 94 of the Act and the extension of time, with which the Court is now dealing.
On 29 November 2017, the Court also varied the restraining order over the Short Street Property, which required Tepcorp to pay the Official Trustee the sum of $8.575 million within five business days to abide the outcome of the proceedings generally and confining the restraining order, or varying them, to apply to the $8.575 million paid, as distinct from the real property.
On 5 December 2019, the real property subject to the restraining order relating to SOFS was sold and the transfer was effected on 4 March 2020. Luminous Investment Holdings Pty Ltd, of which Mr Rostankovski was the sole director and shareholder, was deregistered under the Corporations Act 2001 (Cth) on 28 July 2019. There was some correspondence between one or other of the defendants and the AFP during the course of 2019 and 2020. However, no proceedings occurred and no application was made or progressed.
On 1 April 2021, as already stated, the convictions were recorded against Messers Hausman and Rostankovski. It was at that point in time that the period of 6 months after which forfeiture would occur commenced.
On 23 April 2021, the AFP served notice under s 92A of the Act that the forfeiture was to occur. This notice was served on SOFS in relation to its property restrained; on the Commonwealth and ASIC in respect to the deregistered companies including Luminous Investment; on the liquidators of Plutus Payroll Australia (in liquidation) and associated company; and on Tepcorp. The notice informed the parties that the AFP intended to press forfeiture of the property under s 47 of the Act if statutory forfeiture was not automatic.
On 3 June 2021, Plutus Payroll commenced proceedings in the Supreme Court against a number of parties including Mr Teplitsky and Tepcorp Holdings and Tepcorp Investment. On 17 September 2021, Tepcorp Holdings filed the motion seeking exclusion under ss 29 and/or 31 of the Act from the restrained orders and the s 94 exclusion from the forfeiture orders. It also sought compensation.
On 20 September 2021, Tepcorp Holdings filed a motion seeking a s 93 extension order and, on 22 September 2021, Tepcorp Holdings filed a notice of grounds of opposition to forfeiture. Also on 22 September 2021, SOFS filed a motion seeking an extension order pursuant to the terms of s 93 of the Act.
On 24 September 2021, Mr Wrench affirmed an affidavit in support of the s 93 application by Tepcorp Holdings. It is necessary to deal with the requirements of the controversial precondition to an extension of time in light of the foregoing conduct.
[3]
Construction of precondition in s 93(1)(c) of the Act
The terms of s 93 of the Act have been recited above. It is appropriate, albeit repetitive, to note that the controversial aspect of the application for an extension order is whether the Court should be satisfied of that precondition, namely, that the application was made without undue delay and has since "diligently" been followed up. The parties have referred the Court to some judgments of this Court on those questions. The outcome of an application is not binding on the Court. That which is persuasive are the principles to be applied in determining the satisfaction of the precondition.
In The Commissioner of the Australian Federal Police v Klein and Hubble ("Klein") [2014] NSWSC 1638, Button J referred to taking an approach to the interpretation of the words "undue" and "diligently" so as to provide them "a reasonably liberal meaning". [1] His Honour referred to the necessity for the Court to appreciate the "subjective circumstances of each of the defendants".
His Honour took the foregoing approach in the knowledge, and informed by, the effect of the Act, which his Honour described as "irrevocable and incontrovertible effect of the effluxion of time" operating in a manner which may, from time to time, need amelioration. At [7] of the judgment in Klein, Button J said:
"No doubt Parliament intended that s 93(1)(c) would have work to do as an effective filter in applications for extension orders. Still and all, as a matter of statutory interpretation, I consider that the normative words 'undue' and 'diligently' contained in the subsection should be given a reasonably liberal meaning, bearing in mind their context not only with in s 93, but indeed with in [sic] the rigid statutory structure to which I have referred."
In The Commissioner of the Australian Federal Police v Rifai - Application by Njaima Kasmi ("Rifai") [2021] NSWSC 250, Lonergan J rejected a submission by the Commissioner that an application made near the end of the 6-month statutory limit is prima facie "undue delay". Her Honour said:
"[15] Counsel for the plaintiff, Mr Anderson, argued that given that six months is prescribed as the outer limit for such applications, this one, made very close to the end of that period, is prima facie not an application made without undue delay. He submitted that the explanations provided are unpersuasive and do not account for the whole period. Regard should be had to the fact that the application was heralded almost six months ago but nothing done until very late in that period.
[16] I am not persuaded that the delay was undue. In my view undue delay needs to be a delay that is not adequately explained. The explanations here in Mr Samin's affidavit are multi-faceted and do in my view well explain the delay."
The task of the Court in construing the statute is to give the words of the statute the meeting that the legislature is taken to have intended by them. Usually, but not always, the meaning given to the words will correspond with the grammatical meaning of the words.
Nevertheless, the Court is required to take into account the context of the words; the consequences of a literal or grammatical construction; the purpose of the statute; and the canons of construction, which, together or separately, may require that the Court give the provisions a meaning other than the grammatical meaning; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 at [78].
One of the tools in determining the purposes of any statutory regime is that the statute must be construed on the assumption or basis that its provisions give effect to harmonious goals. Where there appears to be a conflict between the provisions of the statute (and sometimes between the provisions of different statutes), the conflict should be ameliorated, to the extent possible, by adjusting the meaning of the different provisions to achieve a harmonious regime that gives effect to the purpose of the provisions: Project Blue Sky Inc, supra, at [70].
In the case of Commonwealth legislation, the provisions of s 15AB of the Acts Interpretation Act permit the Court to consider extraneous material for the purpose either of confirming the meaning of the provision that might otherwise be given; or to determine a different meaning of the provision when the provision is ambiguous or obscure or the ordinary meaning might lead to a result that is manifestly absurd or unreasonable.
Extraneous material includes the Second Reading Speech and any Explanatory Memorandum provided at the time of the promulgation of the statute. There is a relevant passage in the Explanatory Memorandum to the Bill that was ultimately promulgated as the Act. The Explanatory Memorandum refers, in particular, to the provisions of s 93 of the Bill (later to become s 93 of the Act) in the following terms:
"Clause 93 enables a person to apply for an order extending the six-month period after which automatic forfeiture will occur. The person must make an application within six months from the day of the conviction, must have applied to have the property excluded from the restraining order under clause 31, and must satisfy the court that he or she made the clause 31 application diligently and without undue delay. This requirement ensures that the provision is relied upon only where there is a genuine case for the exclusion of the property, rather than as a delaying tactic." [2]
The "gateway" requirement is plain. The relevant provisions of the Act were promulgated, as is clear from the comments in the Explanatory Memorandum, to ensure that such applications are not used to delay the effect of forfeiture by defendants who are not genuinely concerned to succeed in the application or have no reasonable prospects of success.
There is a slight tension between the mandatory requirement to make application within 6 months of a particular date and the requirement to be satisfied that the application has been made without undue delay. Little regard has been paid by the parties to the precise wording of the statutory provision.
The term "undue delay" is applied to the making of the application, not its progress; the term requiring an applicant to have "diligently followed up" the application applies not to the making of the application, but to progressing the application after it has been made.
The tension relates to the fact that the legislation allows for an application to be made within 6 months and then requires the Court to be satisfied that it has not been made with "undue delay". If the Act expressly provides for the making of an application within 6 months after the start of the conviction day (or, in the case of ss 30 and 31 sometime after the making of a restraining order), then how can it be contemplated that an application made within the 6-month period allowed by the legislation would be made with "undue delay"?
In other words, if the application for order under s 93 of the Act were made within the time allowed for such an application to be made, how is it consistent for the Court, independently, to arrive at a view that the application was made with "undue delay"? An application under s 93 of the Act that is made after the end of the 6-month period commencing on the conviction day would, without more, fail to satisfy the criteria that are necessary for the Court to be in a position, as a matter of jurisdiction, to make an extension order.
Not every passage of time is a "delay". The legislature has provided for a reasonable period in which to make an application under s 93 as being within 6 months after the start of the conviction day. No time limit is prescribed for an application under s 94 of the Act. Nor are time limits prescribed for applications under either ss 30 or 31 of the Act.
It seems consistent with the time limit provided for an application under s 93 of the Act for an application under any of ss 30, 31 or 94 to be made within 6 months, without a suggestion that there has been "undue delay" in the making of the application.
The other confusing aspect is the use of the disjunctive "or" when referring to "the application" under ss 30, 31 or 94. It seems that the applicant can, for the purposes of s 93 of the Act, rely upon any one of those applications to satisfy the criterion in s 93(1)(c) of the Act.
As a consequence, if an application under s 94 of the Act has been made "without undue delay", and it is the application under s 94 upon which the applicant relies for the purpose of obtaining an extension order under s 93 of the Act, it is the application under s 94 which must then be examined for the purpose of determining whether the Court is satisfied that that application has been followed up diligently since its making.
The foregoing approach is confirmed by the terms of s 93(1)(b) of the Act, which makes an application under ss 30 or 31 an alternative to an application under s 94. An application under ss 30 or 31 is an application to exclude property from the restraining order.
An application under s 94 is an application to exclude the property from forfeiture. They are different applications and are intended to have different effects.
By definition, in the ordinary course, a property that is to be forfeited will have been the subject of a restraining order at the time that it is sought to be excluded and for all the time since the restraining order. As a consequence, it is permissible under the Act for the Court to be satisfied of the provisions of s 93(1)(c) without a party having ever sought to exclude the property in question from the restraining order.
Further to the foregoing, the Court in dealing with the proper application of s 93(1)(c) of the Act should bear in mind that the extension order that would be granted by the Court is an "interlocutory" order in that it does not determine finally the rights of the parties. The effect of an order under s 93 of the Act is to extend the date of automatic forfeiture by up to 9 months and the extension order has effect only for a period of 9 months and can have no effect beyond that period. As a consequence, the satisfaction of the criteria in s 93(1) of the Act should be informed by the temporary nature and effect of the order that would be made.
[4]
Application of principles and decision
As already stated, the Court, because of the urgency of the matter, issued orders on 30 September 2021, the effect of which was to extend the period specified in s 92 to the date immediately before 1 July 2022. In that respect, the order extended the period so that it ended no later than 15 months from the start of the conviction day for the relevant conviction. The Court did so because the Court was satisfied of the criteria prescribed in s 93(1) of the Act.
On one view, given the construction earlier adumbrated, it is unnecessary for the Court to determine whether the applications under ss 30 or 31 had been followed up diligently since their filing. The parties rely upon the applications under s 94. The application under s 94 was made within 6 months after the start of the conviction day, which, in accordance with the scheme of the Act is made without "undue delay".
The application under s 94 of the Act was, as is clear from the foregoing reasons, made on 20 September 2021 and this hearing occurred on 30 September 2021. The application is being followed up diligently and the Court is satisfied of the criterion in s 93(1)(c) of the Act in so far as it applies to the application under s 94.
Lest the construction of the Act in that regard be incorrect, the Court will deal with the issues associated with the applications under ss 30 or 31 of the Act. Each was filed within 6 months of the restraining order having been made on the property in question. The restraining order was made ex parte.
The application was made only just before the 6-month period to which the Court has referred. Nevertheless, I do not consider an application made within 6 months to be an application made in a delayed fashion or with undue delay. The same analysis applies to the application and its timing made under s 94 of the Act.
In relation to the applications under s 31 of the Act, no substantive conduct occurred to seek the exclusion of the property from the restraint orders between the making of the applications on about 15 November 2017 and the date on which the applications under ss 93 or 94 were made. The Court has outlined that conduct that did occur, but none of that, in the view of the Court, was substantial.
Nevertheless, the Act operates to effect the forfeiture of the property automatically at the conclusion of the 6-month period that starts on the conviction day. In these matters, the conviction day was 1 April 2021.
The defendants, none of whom were the subject of criminal proceedings, on the material before the Court, awaited the outcome of the criminal proceedings in order to determine whether s 92 of the Act would operate to cause the property to be forfeited.
On 23 April 2021, the AFP served s 92A notices on the defendants, being the applicants for the extension of time, and within 5 months of that date applications were made under s 94 of the Act. The applications under s 94 of the Act were applications that, necessarily, followed up the application under ss 30 or 31 of the Act.
To require a party, who cannot be aware of the ultimate outcome of a criminal conviction, to expend costs on proceeding in this Court with an application to exclude property from a restraining order, in circumstances where the party may have good reason to believe that the forfeiture will never occur and is, in any event, covered by an undertaking as to damages, is to require a party to undertake what may otherwise be unnecessary litigation.
The delay in these proceedings, occasioned largely by the complexity of the criminal proceedings, is that the restraining order was made in 2017, but the relevant convictions and sentence were not imposed until 2021. The 4-year delay was the result of the time taken for the criminal proceedings to be completed.
Over and above the foregoing, for the reasons given in the affidavits upon which each of the applicants for an extension relies, I, otherwise, would have extended the time in the manner sought for the factors to which each of the applicants refer combined with the time taken for the criminal prosecution.
Lastly, in the course of the submissions on behalf of the 58th defendant, SOFS, counsel submitted that s 92 of the Act does not operate to forfeit the proceeds of the sale of the property because the property is not "against the person that relates to the offence". This is because the property restrained is property of a third party who has not been tried or convicted. Indeed, the parties to this proceeding, being the applicants for the extension of time, have not been charged with any offence.
The submission refers to the terms of s 92(1) of the Act. It is appropriate to recite that subsection, which is in the following terms:
"92 Forfeiting restrained property without a forfeiture order if a person has been convicted of a serious offence
(1) Property is forfeited to the Commonwealth at the end of the period applying under subsection (3) if:
(a) a person is convicted of a *serious offence; and
(b) either:
(i) at the end of that period, the property is covered by a *restraining order under section 17 or 18 against the person that relates to the offence; or
(ii) the property was covered by such a restraining order against the person, but the order was revoked under section 44 or the property was excluded from the order under that section; and
(c) the property is not subject to an order under section 94 excluding the property from forfeiture under this Part."
There are a number of aspects of the foregoing provision to which it is necessary to refer. First, s 92(1)(a) refers to "a person" convicted of a serious offence. In these reasons, the offences for which the relevant persons were convicted were serious offences. That which is noteworthy is the use of the indefinite article.
Secondly, s 92(1)(b) refers to one of two circumstances. It refers to "the property" being covered by a restraining order against "the person that relates to the offence". It is necessary, in relation to s 92(1)(b)(i) of the Act, to note that the definite article is utilised and the reference to "the person that relates to the offence" is a reference to the person convicted of a serious offence to which s 92(1)(a) refers. Further, it is the property covered by the restraining order that is the subject of the provisions of s 92(1)(b)(i) of the Act.
The provisions of s 92(1)(b)(ii) of the Act do not need analysis and are not applicable to the circumstances of this case. Nevertheless, those provisions do not alter the analysis that now follows.
The term in s 92(1)(b)(i), being "the person that relates to the offence", is not a reference to the person that owns or has an interest in the property. It is a reference to the person convicted to which, as earlier stated, the provisions of s 92(1)(a) refer. It is necessary to refer to the provisions of ss 17 and 18 of the Act. The restraining order in relation to each of these applicants' property was issued pursuant to the terms of s 18 of the Act.
Section 17 allows a restraining order to cover property of the suspect (being the person who is suspected of committing a serious criminal offence) together with specified property of another person (whether or not that other person's identity is known) that is subject to effective control of the suspect or that is proceeds of the offence or an instrument of the offence.
Similarly, where an appropriate authority, in this case the AFP, satisfies the Court of the reasonably based suspicions in relation to the commission of a serious offence of a particular person, hereinafter the suspect, the provision allows the making of restraining orders on all of the property of the suspect, including bankruptcy property, and whether or not specified; specified property of another person that is subject to the effective control of the suspect; and specified property of another person that is proceeds of the offence; or an instrument of the offence, if the offence is serious.
Further, that which is required to be shown to the Court is a reasonable suspicion that the suspect has effective control of the property to be restrained or that the property is the proceeds of the offence or an instrument of the offence.
Property may be restrained as a result of separate proceedings. However, regardless of the owner of the property, the property that is subject to a restraining order, must relate, in the way s 18 of the Act describes, to a particular suspect. The phrase in s 92 of the Act to which this submission relates, being the phrase "against the person that relates to the offence", is not intended and does not have the effect of confining forfeiture to the property of the person convicted of the offence. Rather, it identifies the property by reference to the property that was restrained as a result of orders under ss 17 or 18 in relation to a particular suspect.
The convictions on 1 April 2021 were in relation to charges that arose from conduct that was said to be suspected, or reasonably suspected, on reasonable grounds, of being a serious criminal offence. That offence is the offence which forms the basis of the restraining orders against the suspect and any other person who has an interest in property defined by ss 17 and/or 18 of the Act.
As a consequence, s 92(1)(b)(i) of the Act identifies the property covered by a particular restraining order by reference to the offence which gave rise to the restraining order (or the suspicion of which gave rise to the restraining order) and operates to forfeit that property automatically when the suspect, identified as the basis for the restraining order, is convicted.
The submission that s 92 of the Act does not operate to effect the forfeiture of the property of either the 57th or 58th defendant, the applicants in these proceedings, is rejected.
For the foregoing reasons, on 30 September 2021, the Court issued the orders, pursuant to s 93 of the Act, extending the period before which the property would be forfeited to no later than immediately before the start of 1 July 2022.
[5]
Endnotes
Klein at [7].
Explanatory Memorandum, Proceeds of Crime Bill 2002 (Cth), p 37.
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Decision last updated: 19 October 2021