The Commissioner of the Australian Federal Police v Cranston

Supreme Court of NSW|2021-11-03|Before: Wright J, Fullerton J

Solicitors: Criminal Assets Litigation, Australian Federal Police (Plaintiff) File Number(s): 2017/00146280

Background

The present application relates principally to whether the relief sought in prayer 208 of the fourth further amended summons filed on 6 July 2018 by the plaintiff, the Commissioner of the Australian Federal Police, should be granted.
By prayer 208, the plaintiff seeks an order under s 49(1) of the Proceeds of Crime Act 2002 (Cth) (POC Act) that the items of property, being the funds listed in Schedules 61, 69, 78, 79, 81, 85, 102 and 106 to that summons, be forfeited to the Commonwealth. If successful in that regard, the plaintiff also seeks leave of the Court pursuant to s 69(2) of the POC Act to deal immediately with the forfeited property.

Table of restrained property Sch Description of item of property Persons identified Amount Section 19 restraining order 61 The funds standing to the credit of Commonwealth Bank of Australia account 220410701998 held in the name of Your Book Keeping Pty Ltd, together with any interest earned on that account. Devyn Hammond and ASIC $25,533.49 Par 103 of the orders of Fullerton J of 16 May 2017. 69 The funds standing to the credit of National Australia Bank Ltd account 082055 650542741 held in the name of Daniel Hausman, together with any interest earned on that account. Daniel Hausman $960.37 Par 111 of the orders of Fullerton J of 16 May 2017. 78 The funds standing to the credit of Commonwealth Bank of Australia account 062156 10268803 held in the name of Boulevard HH Pty Ltd, together with any interest earned on that account. Daniel Hausman and ASIC $52.67 Par 131 of the orders of Fullerton J of 16 May 2017. 79 The funds standing to the credit of St George Bank Ltd account 112879477798267 held in the name of Cedars Capital Pty Ltd, together with any interest earned on that account. Daniel Hausman, Glen Saikali and ASIC $6.79 Par 132 of the orders of Fullerton J of 16 May 2017. 81 The funds standing to the credit of Westpac Banking Corporation account 032297 30 8191 held in the name of Felix Thompson Pty Ltd, together with any interest earned on that account. ASIC $6.71 Par 134 of the orders of Fullerton J of 16 May 2017. 85 The funds standing to the credit of Westpac Banking Corporation account 032010 338378 held in the name of Nicas Management Pty Ltd, together with any interest earned on that account. Jason Onley and ASIC $4,605.38 Par 138 of the orders of Fullerton J of 16 May 2017. 102 The funds standing to the credit of Westpac Banking Corporation account 032059 326845 held in the name of Goldcarz Pty Ltd. Adam Cranston and ASIC $341,870.77 Par 5 of the orders of Fullerton J of 24 May 2017. 106 The funds standing to the credit of Westpac Banking Corporation account 032023 392349 held in the name of Active Management Solutions Pty Ltd. Jason Onley and ASIC $208,638.40 Par 6 of the orders of Fullerton J of 31 May 2017.

Relevant statutory provisions and related preliminary matters

Section 49 of the POC Act relates to the forfeiture of property which is subject to a restraining order under s 19 of that Act. The section requires the Court, in the circumstances set out in the section, to make a forfeiture order subject to a power in certain cases not to make such an order if the Court is satisfied that it is not in the public interest to do so. Section 49 is in the following terms: "49 Forfeiture orders - property suspected of being proceeds of indictable offences etc. (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 19 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 one or more of the following applies: (i) the property is *proceeds of one or more *indictable offences; (ii) the property is proceeds of one or more *foreign indictable offences; (iii) the property is proceeds of one or more *indictable offences of Commonwealth concern; (iv) the property is an instrument of one or more *serious offences; and [(d) repealed] (e) the court is satisfied that the authority has taken reasonable steps to identify and notify persons with an *interest in the property. (2) A finding of the court for the purposes of paragraph (1)(c): (a) need not be based on a finding that a particular person committed any offence; and (b) need not be based on a finding as to the commission of a particular offence, and can be based on a finding that some offence or other of a kind referred to in paragraph (1)(c) was committed. (3) Paragraph (1)(c) does not apply if the court is satisfied that: (a) no application has been made under Division 3 of Part 2‑1 for the property to be excluded from the *restraining order; or (b) any such application that has been made has been withdrawn. 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."
Whether this Court is a "court with proceeds jurisdiction" for the purposes of s 49(1) depends on s 335 of the POC Act, which relevantly provides: "(1) Whether a court has proceeds jurisdiction for an order … depends on the circumstances of the offence or offences to which the order would relate. General rules (2) If all or part of the conduct constituting an offence to which the order would relate: (a) occurred in a particular State or Territory; or (b) is reasonably suspected of having occurred in that State or Territory; the courts that have proceeds jurisdiction for the order are those with jurisdiction to deal with criminal matters on indictment in that State or Territory. …"
In the present case, it was beyond dispute that at least part of the conduct constituting offences to which the original restraining orders and the proposed forfeiture orders related occurred in New South Wales. Consequently, this Court, having jurisdiction to deal with criminal matters on indictment, is a "court with proceeds jurisdiction" in the present case.
Whether the plaintiff in this matter is "the *responsible authority for a *restraining order under section 19" depends on the definition of "responsible authority" in s 338 of the POC Act which is in the following terms: "responsible authority, in relation to an application for a *principal order, or a principal order, or to an application, proceedings, function, order, power or duty related to, or arising out of, such an application or order, means: (a) in the case of an application for a principal order: (i) the *proceeds of crime authority that made the application; or (ii) if responsibility for the application has been transferred under section 315B - the proceeds of crime authority to which responsibility has been transferred (or has been latest transferred) under that section; or (b) in the case of a principal order: (i) the proceeds of crime authority that made the application for the order; or (ii) if responsibility for that application, or the order, has been transferred under section 315B - the proceeds of crime authority to which responsibility has been transferred (or has been latest transferred) under that section."
"Principal order" is relevantly defined in the same section as including a restraining order.
Since the applications for the restraining orders under s 19, out of which this application for forfeiture orders under s 49 has arisen, were made by the plaintiff, he is the "responsible authority" for the purposes of the present application.
Any applications for property to be excluded from a restraining order made under Div 3 of Pt 2‑1 of the POC Act, as referred to in s 49(3), are applications made under ss 30 or 31.
Other, general provisions concerning applications for forfeiture orders are contained in ss 59 to 65 of the POC Act. In this regard, it can be noted that the present application is under s 49 of the POC Act and thus is not an application for a forfeiture order relating to a person's conviction of an offence, which would be made under s 48. So far as the general provisions are potentially relevant in the present case, they provide: "59 Proceeds of crime authority may apply for a forfeiture order (1) A *proceeds of crime authority may apply for a *forfeiture order. … 61 Notice of application (1) The *responsible authority must give written notice of an application for a *forfeiture order to: … (b) any person who claims an *interest in property covered by the application; and (c) any person whom the authority reasonably believes may have an interest in that property. (2) The court hearing the application 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. … 64 Procedure on application (1) Any person who claims an *interest in property covered by an application for a *forfeiture order may appear and adduce evidence at the hearing of the application. (2) The court may, in determining the application, have regard to: (a) the transcript of any proceeding against the person for an offence that constitutes *unlawful activity; and (b) the evidence given in any such proceeding. (3) The court may still make a *forfeiture order if a person entitled to be given notice of the relevant application fails to appear at the hearing of the application. 65 Applications to courts before which persons are convicted If an application for a *forfeiture order is made to a court before which a person was convicted of an *indictable offence: (a) the application may be dealt with by the court; and (b) any power in relation to the relevant order may be exercised by the court; whether or not the court is constituted in the same way in which it was constituted when the person was convicted of the indictable offence."
In addition, the Court which is hearing a forfeiture application is required to make an exclusion order in respect of specified property if an application for such an order is made under s 74 and the requirements of s 73 of the POC Act are met. Those sections relevantly provide: "73 Making exclusion orders (1) A court … that is hearing, or is to hear, an application (a forfeiture application) for a forfeiture order, must make an order excluding a specified *interest in property from forfeiture (an exclusion order) if: (a) a person applies for the exclusion order; and (b) the forfeiture order, or the forfeiture application, specifies property in which the applicant has an interest; and (c) if … the forfeiture order applied for would be … made under section …49 - the court is satisfied that the applicant's interest in the property is neither of the following: (i) *proceeds of *unlawful activity; (ii) if an offence on which the order was (or would be) based is a *serious offence - an instrument of any serious offence; and … 74 Applying for exclusion orders Before a forfeiture order has been made (1) A person may apply for an *exclusion order if a *forfeiture order that could specify property in which the person claims an *interest has been applied for, but is yet to be made. …"
No such applications under s 74(1) for exclusion orders under s 73 have been made in the present case.
Furthermore, by operation of s 317 of the POC Act, the plaintiff as the applicant in the present application bears the onus of proving the matters necessary to establish the grounds for make the orders sought and the relevant standard of proof is on the balance of probabilities.
The Commissioner submits that this Court can be satisfied that each of the requirements in s 49(1) is presently met in respect of each item of property identified in the table above. The matters will be considered in turn.

Preliminary matters - s 49(1)(a)

As explained above, this Court has "proceeds jurisdiction" and the plaintiff is the "responsible authority" in respect of each of the restraining orders under s 19 that cover each relevant item of property sought to be forfeited. Thus, the preliminary requirements in the chapeau to s 49(1) and in s 49(1)(a) are satisfied.

Restraining orders in force for at least 6 months - s 49(1)(b)

As set out in the table above, all of the relevant restraining orders were made in 2017. These orders have not been revoked or set aside and remain operative. Consequently, they have been in force for well over the minimum 6‑month period and the requirement in s 49(1)(b) is met.

Proceeds or instrument of offences and exclusion applications - s 49(1)(c) and (3)

Next, s 49(1)(c) requires that the Court must be satisfied that the property to be forfeited is either: 1. proceeds of one or more indictable offences, foreign indictable offences or indictable offences of Commonwealth concern; or 2. an instrument of one or more serious offences.
By virtue of s 49(3), however, this requirement in s 49(1)(c) does not apply if the Court is satisfied either that: 1. no exclusion application under ss 30 or 31 of the POC Act has been made in respect of the relevant property; or 2. if any such application has been made, that application has been withdrawn.
The plaintiff adduced evidence, which I accept, that no exclusion applications under ss 30 or 31, being the only relevant provisions of Div 3 of Pt 2-1 of the POC Act, had been filed in these proceedings in respect of any of the items of property identified in the table set out above.
Nonetheless, the plaintiff properly drew the Court's attention to the fact that on 23 June 2017, Glen Saikali, the 65th defendant in these proceedings, and Cedars Capital Pty Ltd, the 50th defendant, filed a notice of motion relevantly seeking the following relief: "1. The orders made on 16 May 2017 restraining the 50th Defendant, Cedars Capital Pty Ltd ACN 606 996 089 be revoked, and all other orders relating to the 50th Defendant be stayed. … 3. The orders made on 31 May 2017 relating to the 65th Defendant, Glen Saikali be stayed."
The orders of which revocation was sought in that notion of motion included the restraining orders concerning the property referred to in sch 79 of the fourth further amended summons. Such revocation order may be sought under s 42 of the POC Act, which is found in Div 6 of Pt 2-1 and not in Div 3 of Pt 2-1. Proceedings may be stayed under s 319 of the POC Act and an order prohibiting a person from taking any further action to enforce an order of the Court may be made under s 135(2)(c) of the Civil Procedure Act 2005 (NSW).
On 11 September 2017, however, Fullerton J made orders by consent which relevantly stated: "1. The notice of motion filed by the 50th … and 65th defendants on 23 June 2017 is withdrawn and dismissed. 2. No order as to costs."
Thus, even if the reference to an "application … for the property to be excluded from the *restraining order" in s 49(3)(a) could be construed as including the revocation or "stay" applications in the notice of motion of 23 June 2017: 1. the notice of motion did not involve an application that "has been made under Division 3 of Part 2-1" of the POC Act, within the meaning of s 49(3)(a); and 2. the application made by that notice of motion was, in any event, withdrawn.
Accordingly, the Court is satisfied of the matters set out in s 49(3) and, as a result, par (1)(c) of s 49 does not apply in this case.

Reasonable steps taken to notify affected persons

The final requirement in s 49(1)(e) is that the Court must be satisfied that the plaintiff has taken reasonable steps to identify and notify persons with an interest in each item of property. This requirement should be considered together with, and in light of, the relevant obligation found in s 61(1) of the POC Act on the plaintiff to give written notice of an application for a forfeiture order to: "(b) any person who claims an *interest in property covered by the application; and (c) any person whom the authority reasonably believes may have an interest in that property."
Based on the evidence in pars 14 to 69 of the affidavit of Adrian Edwards sworn on 23 August 2021 and the evidence of Darren Burtenshaw referred to in those paragraphs, which I accept, I am satisfied that the plaintiff has taken reasonable steps to identify persons with an interest in each of the items of property identified in the table set out above. Apart from the persons identified, no other person has claimed an interest in any of the items of property.
Furthermore, the evidence of Emilia Cvetanovski in pars 4 to 65 of her affidavit affirmed on 16 September 2021 establishes that the plaintiff has taken steps to notify the natural persons whom the plaintiff reasonably believes may have an interest in any of the items of property set out in the table, as well as ASIC in respect of the property of the deregistered companies and the solicitors of the liquidators of the other companies identified as having a possible interest in the items of property.
As indicated above, I am also satisfied that the plaintiff has given notice in accordance with s 61(1) of the POC Act.
It can be noted here that none of the persons identified as having a possible interest in any of the items of property appeared at the hearing of this application on 3 November 2021. This was so, notwithstanding that some of those persons had appeared previously in these proceedings generally or in relation to other applications in these proceedings and even though notice of the present application has been given to each person relevantly identified.

Should a forfeiture order be made?

For the reasons set out above, each of the applicable requirements of s 49(1) of the POC Act has been satisfied. In these circumstances, the Court must make an order that the property specified is forfeited to the Commonwealth, subject only to consideration of s 49(4).
The power conferred by s 49(4) to refuse to make a forfeiture order under s 49(1) is only enlivened, however, if the preconditions specified in s 49(4)(a) and (b) are met. If so, the exercise of that power is conditioned upon the Court's satisfaction that it is not in the public interest to make the order. This type of power appears to me to be analogous to the powers considered by the High Court in Hogan v Hinch (2011) 243 CLR 506; [2011] HCA 4 at [68] (French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ) and Hogan v Australian Crime Commission (2010) 240 CLR 651; [2010] HCA 21 at [32]‑[33] (French CJ, Gummow, Hayne, Heydon and Kiefel JJ). If the Court is satisfied that a forfeiture order is not in the public interest, then the Court is to implement that satisfaction by not making the order. The phrase "the court may refuse to make an order under [subs (1)]" is accordingly to be read as not conferring a further discretion to make a forfeiture order in those circumstances.
On the material available, however, I am not satisfied that the property in the present case is not the proceeds of an offence. As a result, s 49(4) is not engaged in this case. Further, on that material I would also not be satisfied that it is not in the public interest to make the order.
For all these reasons, I am of the view that the forfeiture orders sought in the present case should be made.

Requirement to specify value of forfeited property

It can be noted here that s 56 of the POC Act imposes a general requirement in relation to any forfeiture order, including one under s 49, that it specify a value for forfeited property. Section 56 is in the following terms: "56 Forfeiture orders must specify the value of forfeited property The court must specify, in any *forfeiture order it makes, the amount it considers to be the value, at the time the order is made, of the property (other than money) specified in the order."
In the present case, however, the forfeiture orders sought all related to funds held in, or credited to, specified accounts with various Australian banks. In The Commissioner of Australian Federal Police v Omar [2020] NSWSC 418, Beech‑Jones J (as his Honour then was) held, at [23], that funds held in bank accounts were "clearly not caught by s 56", presumably on the basis that they were "money" within the meaning of that section. "Money" is not defined in the POC Act. Nonetheless, it is well established that "money" may, depending on the context in which it is used, denote more than mere cash or notes which are legal tender and may include credit balances at a bank, whether in a current account or a deposit account: Conley v Commissioner of Taxation (1998) 81 FCR 24 at 27; [1998] FCA 110 (Davies J) citing Manning v Purcell (1855) 7 De MG&G 55; 44 ER 21; In re Collings [1933] Ch 920 at 927. In the context of s 56 of the POC Act, in my view "money" includes funds standing to the credit of the specified bank accounts. Accordingly, s 56 does not in the present case apply since all of the property sought to be forfeited falls within the description "money".

Leave to deal with property

When a forfeiture order is made, s 69(1) of the POC Act prevents the Commonwealth dealing with forfeited property for certain periods. That section relevantly provides: "69 When can the Commonwealth begin dealing with forfeited property? (1) The Commonwealth, and persons acting on its behalf, can only dispose of, or otherwise deal with, property specified in a *forfeiture order after, and only if the order is still in force at, the later of the following times: (a) when: (i) if the period provided for lodging an appeal against the order has ended without such an appeal having been lodged - that period ends; or (ii) if an appeal against the order has been lodged - the appeal lapses or is finally determined; … (2) However, such disposals and dealings may occur earlier with the leave of the court and in accordance with any directions of the court. …"
Consequently, one of the orders sought on the present application was an order under s 69(2) to the effect of allowing the plaintiff to deal with the property immediately.
Since there has been no opposition to the making of the orders in the present case and they involve only sums of money which could be refunded, should circumstances make that necessary and appropriate, it appears to me that the Commonwealth should be given leave under s 69(2) to deal with the forfeited property immediately upon the making of the orders.

Orders

For all the reasons set out above, the Court makes the following orders: 1. Pursuant to s 49 of the Proceeds of Crime Act 2002 (Cth), the property listed in schedules 1 to 8 of these orders (the forfeited property) is forfeited to the Commonwealth. 2. Pursuant to s 69(2) of the Proceeds of Crime Act 2002 (Cth), the Commonwealth be given leave to deal immediately with the forfeited property. Schedule 1 Funds standing to the credit of Commonwealth Bank of Australia account 2204 10701998 held in the name of Your Book Keeping Pty Ltd, together with any interest earned on that account. Schedule 2 Funds standing to the credit of National Australia Bank Ltd account 082055 650542741 held in the name of Daniel Hausman, together with any interest earned on that account. Schedule 3 Funds standing to the credit of Commonwealth Bank of Australia account 062156 10268803 held in the name of Boulevard HH Pty Ltd, together with any interest earned on that account. Schedule 4 Funds standing to the credit of St George Bank Ltd account 112879 477798267 held in the name of Cedars Capital Pty Ltd, together with any interest earned on that account. Schedule 5 Funds standing to the credit of Westpac Banking Corporation account 032297 30-8191 held in the name of Felix Thompson Pty Ltd, together with any interest earned on that account. Schedule 6 Funds standing to the credit of Westpac Banking Corporation account 032010 338378 held in the name of Nicas Management Pty Ltd, together with any interest earned on that account. Schedule 7 Funds standing to the credit of Westpac Banking Corporation account 032059 326845 held in the name of Goldcarz Pty Ltd. Schedule 8 Funds standing to the credit of Westpac Banking Corporation account 032023 392349 held in the name of Active Management Solutions Pty Ltd.

Endnotes

As at 27 October 2021 and as specified in the Interim Report of the Official Trustee who has custody and control of all the relevant funds pursuant to other orders in these proceedings: see Affidavit, Rebekah Radic, 2 November 2021 at pars 4-7.
Affidavit, Adrian Linus Edwards, 23 August 2021 at par 14. 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: 23 November 2021

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