The Commissioner of the Australian Federal Police v Dickson

Background

1. This overview is based upon the evidence that was placed before me at the hearing; matters that I was told without demurrer from the Bar table; and the summary of background contained at paragraphs [3] - [8] in the judgment of Bellew J in Commissioner of Australian Federal Police v Dickson [2012] NSWSC 1167.
2. On 5 May 2012, McCallum J made ex parte orders pursuant to the Act with regard to diverse property. An affidavit was read in the proceedings on behalf of the plaintiff in which an authorised officer deposed to a suspicion that each of the first defendant and the second defendant, one Michael Issakidis, had committed serious offences as defined in the Act.
3. On the same day, her Honour made orders against the first and fourth defendants. The order against the first defendant was made pursuant to s 39(1)(ca) of the Act. In short, it required the first defendant to provide a sworn statement setting out his assets and liabilities. The order against the fourth defendant was made pursuant to s 39(1)(d) of the Act, and it required her to provide a sworn statement setting out all of the particulars of her dealings with regard to certain specified property.
4. Subsequently, the first defendant and the second defendant were charged with committing two offences. The first, pursuant to s 135.4(3) of the Criminal Code Act 1995 (Cth) ("the Code"), alleged that each of them conspired with the intention of dishonestly causing a loss to the Australian Taxation Office ("the tax fraud offence"). Secondly, it was alleged that, pursuant to ss 11.5 and 400.3(1) of the Code, each of them conspired to deal with the proceeds of the tax fraud offence ("the money laundering offence").
5. In broad terms, the allegation is as follows. The first and second defendants were directors of a company. That company claimed losses in excess of $275 million with regard to the depreciation of rights in intellectual property. Those claims were fraudulent. Through a complex series of arrangements, the proceeds of the fraud were channelled overseas and then returned to Australia surreptitiously. The proceeds were used to obtain assets for the benefit of the first and second defendants. The allegation is that some of that property is owned nominally by the fourth defendant, but in truth is controlled by the first defendant. It is alleged that the estimated value of the proceeds of the offences is $63 million, and that the estimated value of the assets so far traced is $53 million, leaving an alleged $10 million still to be located.
6. Subsequently, by way of notices of motion, the first and fourth defendants sought to have the orders made against them by McCallum J revoked or, in the alternative, stayed. In the case of the first defendant, the application was founded on the submission that they be stayed until after the trial of the criminal offences had been conducted. In the case of the fourth defendant, the application was that they be stayed until after the prosecution brief of evidence in relation to the alleged offences against the first and second defendants had been served.
7. In the judgment of 5 October 2012 of Bellew J to which I have referred, those motions were dismissed with costs.
8. Thereafter, consent orders were made against the first and fourth defendants in the terms generally described above; that is, with regard to the first defendant, the provision of a sworn statement of assets and liabilities, and with regard to the fourth defendant, a sworn statement with regard to all of her dealings with regard to specified property.
9. Subsequently, the first defendant provided two statements in purported compliance with the consent orders. The fourth defendant originally provided an unsworn statement, and subsequently a sworn statement. An ongoing controversy developed between the solicitor for the plaintiff, the solicitors for the first defendant, and the unrepresented fourth defendant, as to the sufficiency of those statements.
10. Eventually, the plaintiff proposed to place the matter back before this Court in order to litigate by way of a summons the sufficiency of the compliance by the first defendant and the fourth defendant with the orders that had been made. Written submissions were filed by senior counsel for the plaintiff and senior counsel for the first defendant directed generally towards that question.
11. At the hearing before me, however, and having taken into account the written submissions of senior counsel for the first defendant, senior counsel for the plaintiff made it clear that she would not focus on the past, in the sense of calling upon me to judge the sufficiency or otherwise of compliance with the orders made some months previously. Rather, she submitted that I should make the orders contained in the draft minutes of order that were handed up at the start of the hearing. The sufficiency or otherwise of the compliance of the first defendant and the fourth defendant with regard to the orders previously made was only relied upon in an indirect way in support of the new orders, in that it was said to demonstrate the necessity for their greater specificity with regard to the obligations of the first defendant and the fourth defendant.

Submissions of the plaintiff

1. The plaintiff submitted that that the orders should be made. In particular, it was contended that s 39 cannot be read down to permit respondents to such orders to respond with such generality that statements of assets and liabilities or of dealings are virtually worthless.
2. Emphasis was placed by the plaintiff on a number of aspects of the Act.
3. First, I am required to interpret s 39 of the Act in accordance with its purposes. It would hardly be consonant with the purposes of the Act to permit a generic response to an order for assets and liabilities.
4. Secondly, the definitions of "interest" and "property" in s 338 of the Act is notably detailed and precise. That definition is picked up by s 39 of the Act, and especially by s 39(1)(ca). It follows that what the defendants are called upon to provide must be detailed and precise with regard to that subject matter.
5. Thirdly, the purported previous compliance by the first defendant with the original orders may itself demonstrate the need for the more specific orders now sought by the plaintiff. To give but one example, the first defendant indicated, as item 5 of his statement of 31 January 2013, that he had an interest in "the interest of Dagmar Maxianova in" a piece of real property located in Northbridge. That response is virtually opaque and does nothing to advance the purposes of the Act. It demonstrates, it was submitted, the need for the greater specificity contained in the proposed orders sought before me.
6. As for the fourth defendant, it was submitted that her response to the previous orders demonstrated the need for more specific orders in the future. For example, the fourth defendant deposed that she has had "the following dealings" with the property at Northbridge, and subsequently lists two mortgages, one registered and one unregistered. Both mortgages are noted as purportedly "for the full value" of the Northbridge property and the status of the mortgage is noted as "Mortgage documentation seized by Australian Federal Police". No other details were provided.
7. In response to a submission of the first defendant that greater specificity may be futile, if it be the case that the first defendant has already provided all of the information available to him, the plaintiff accepted that all a person who is the object of such an order is required to do is to comply with it as best he or she can. However, it was emphasised that a person in the position of the first defendant cannot be permitted to hide behind a cloak of deliberate generality in his or her responses, thereby frustrating the effect and intention of the orders and the Act.
8. In response to a submission of the first defendant that s 39 speaks only of orders that are ancillary to a restraining order, the plaintiff accepted that proposition. Nevertheless, it was submitted that, even despite the ancillary nature of the orders, it could hardly be the case that a response could be so nebulous as to be worthless. And it was explicitly submitted that merely identifying the fact that a respondent has an interest in an asset without further delineation, does not accord with the orders themselves, s 39, s 338, or the overarching purposes of the Act.

Submissions of the first defendant

1. The first defendant made a number of discrete submissions.
2. First, making the more specific orders sought could well be futile. It could be the case that the first defendant has already done all he can to provide details of his assets and liabilities. In that regard, it was noted that a number of documents had been seized by officers of the plaintiff, and it was said that they were returned to the first defendant in disarray.
3. Secondly, it was submitted that s 39 is ancillary to the power to make a restraining order pursuant to the regime contained in Part 2-1 of Chapter 2 of the Act. It follows that there cannot be an order for a statement of assets and liabilities that goes beyond assisting in the making, or execution, or maintenance of such an order. It was submitted that the section does not stand alone in its own Part, authorising the ordering of detailed statements that are not designed generally to assist with regard to restraining orders.
4. Thirdly, it was originally submitted that a person who is subject to such an order could comply by way of a very broad response. In discussion, it was at first submitted that it would be sufficient compliance for a respondent simply to state that, with regard to (for example) a cheque account held at a bank, he or she had a 50 per cent interest in that account, without identifying in the slightest the credit or debit balance of that account. In other words, it would be incumbent upon the plaintiff to make his own enquiries as best he could as to whether the account was in credit in the sum of $10 or $10 million.
5. Later, senior counsel for the first defendant resiled from that position, and submitted that compliance would need to be judged by way of a detailed consideration of each asset. In other words, one would need to undertake an analysis of the kind of asset, and the kind of interest held in it, in order to determine the degree of specificity with which a respondent should be expected to respond. So, for example, as the first defendant has done in this case, it was submitted that it was sufficient compliance for him simply to refer to the ownership of a "Rolls-Royce Silver Ghost motor vehicle", without identifying in the slightest any valuation of that motor vehicle, its age, condition, and so forth. The submission was that, if the plaintiff wishes to make further enquiries, then it is perfectly open to him to do so.
6. In short, it was submitted that there was nothing to suggest that the first defendant has not made a bona fide attempt, as best he can, to comply with the pre-existing orders. Secondly, it was submitted that there is nothing to suggest that orders of greater specificity will have any utility. Thirdly, it was submitted that s 39 should be read strictly, in light of its position within the structure of the Act.

Submissions of the fourth defendant

1. The fourth defendant was content to adopt the submissions of senior counsel for the first defendant. In response to my enquiry "is there any problem on your part with doing the best you can to provide any information that would be ordered for you to provide?", the fourth defendant replied "No, I want to do best but what I can but I tried to give them what I could and that's all."

Aspects of the Act

1. Generally, the Act provides a detailed and rigorous regime with regard to the confiscation of proceeds of crime. Section 39 is but one of many sections that goes to make up that regime. Furthermore, the Act specifically abolishes the privilege against self-incrimination with regard to s 39.
2. Separately, s 5 sets out the principal objects of the Act as follows: "(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 (b) to deprive persons of *literary proceeds derived from the commercial exploitation of their notoriety from having committed offences; and (ba) to deprive persons of *unexplained wealth amounts that the person cannot satisfy a court were not derived from certain offences; and (c) to punish and deter persons from breaching laws of the Commonwealth or the non-governing Territories; and (d) to prevent the reinvestment of proceeds, instruments, benefits, literary proceeds and unexplained wealth amounts in further criminal activities; and (e) to enable law enforcement authorities effectively to trace proceeds, instruments, benefits, literary proceeds and unexplained wealth amounts; and (f) to give effect to Australia's obligations under the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime, and other international agreements relating to proceeds of crime; 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." (emphasis added)
3. Section 39 is relevantly 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; (d) an order directing the owner or a previous owner of the property (including, if the owner or previous owner is a body corporate, a specified *director of the body corporate) to give a sworn statement to a specified person, within a specified period, setting out particulars of, or dealings with, the property; ... Note 1: If there is a pecuniary penalty order that relates to the same offence as a restraining order, the court may also order the Official Trustee to pay an amount equal to the relevant pecuniary penalty out of property covered by the restraining order: see section 282. Note 2: If there is an unexplained wealth order that relates to a restraining order under section 20A, the court may also order the Official Trustee to pay an amount equal to the unexplained wealth amount out of property covered by the restraining order: see section 282A. (2) The court can only make an ancillary order on the application of: (a) the *responsible authority; or (b) the owner of the property covered by the order; or(c) if the *Official Trustee was ordered to take custody and control of the property - the Official Trustee; or (d) any other person who has the leave of the court. (3) A person who applies for an ancillary order must give written notice of the application to all other persons entitled to make such an application. (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. (4) An ancillary order may be made: (a) if it is made by the court that made the *restraining order - when making the restraining order; or (b) in any case - at any time after the restraining order is made. ... (5) An order that is ancillary to a *restraining order does not cease to have effect merely because the restraining order, or part of it, ceases to be in force under subsection 45(4) or (5). Note: A restraining order ceases to be in force under those subsections if a confiscation order covering the same property or relating to the same offence is satisfied." (emphasis added).
4. Section 39A is as follows: "39A Privilege against self incrimination etc. does not apply (1) A person is not excused from giving a sworn statement under paragraph 39(1)(ca), (d) or (da) on the grounds that to do so would tend to incriminate the person or expose the person to a penalty. (2) However, in the case of a natural person, a sworn statement is not admissible in civil or criminal proceedings against the person who made the statement 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."
5. Section 338 is relevantly as follows: "338 Dictionary In this Act, unless the contrary intention appears: ... interest, in relation to property or a thing, means: (a) a legal or equitable estate or interest in the property or thing; or (b) a right, power or privilege in connection with the property or thing; whether present or future and whether vested or contingent. Note: For references to an interest in property of a person who has died, see subsection 325(2). ... property means real or personal property of every description, whether situated in *Australia or elsewhere and whether tangible or intangible, and includes an *interest in any such real or personal property."

First defendant

1. As I have indicated, both the plaintiff and the first defendant made it clear that they were not seeking a judgment as to the degree of compliance with the orders previously made, and accordingly my judgment will not deal with that topic.
2. Section 39(1) of the Act does not envisage that the making of orders contained in that provision is mandatory; rather this Court has a power (not obligation) to make orders in accordance with s 39. Whether the orders sought by the plaintiff are within the ambit of the empowering provisions of the Act is, of course, to be resolved by way of the principles of statutory construction: see Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355. Furthermore, whether this Court should make the orders sought by the plaintiff (on the assumption that they are within the ambit of s 39) is a separate question that requires determination, although senior counsel for the first defendant did not make any submissions about it above and beyond those that I have discussed.
3. Focusing on the orders sought, I respectfully reject the proposition that s 39 does not permit the making of orders that are highly specific. The language of s 39, especially s 39(ca), and the definition of "property" and "interest" in s 338 argue strongly to the contrary. So do the overarching purposes of the Act in s 5.
4. Furthermore, as Hoeben J (as his Honour then was) said at [34] in Commonwealth Director of Public Prosecutions v Xu [2005] NSWSC 191; (2005) 154 A Crim R 173: "For the purpose of preventing criminals from benefiting from the proceeds of crime the Act provides a significant inroad into fundamental property rights. As part of that purpose the Act provides for the obtaining of information before any confiscation or forfeiture of property occurs. Subsection 39 is part of Chapter 2 which sets out the confiscation scheme. It makes provision for orders in relation to specific matters there referred to and generally, which are ancillary to the primary restraining order in respect of property. Subsection 39(1)(d) needs to be interpreted against that background and against the background of the principal purpose of the Act (s5(e))."
5. It is noteworthy that that judgment was discussing the Act as it was even before s39A was inserted into it.
6. I also respectfully reject the proposition that there can be sufficient compliance with an order pursuant to s 39(1)(ca) simply to identify property without providing the slightest detail as to its actual or estimated value. To permit such a course would, to my mind, defeat the whole purpose of the section, and the Act as a whole more generally.
7. I accept that, structurally, the section is to be regarded as ancillary to the making of restraining orders. But that does not mean that, as a matter of statutory interpretation, orders pursuant to the section can only be highly generic. If that were the case, I consider that the system whereby the plaintiff is empowered to obtain restraining orders would become unworkable. The two examples I have given of the purported compliance of the first defendant with the original orders are demonstrative of that proposition.
8. There is no need for me to discuss in detail the possible sanctions or procedures that could be applied to the first defendant if he does not comply with the proposed orders. It is self-evidently not for me at this stage to determine whether or not the first defendant can or will comply with orders to which he is not yet subject.
9. In short I consider that, as a general matter, the order sought can be made against the first defendant. As a particular matter, I consider that the proposed order does not possess inappropriate specificity.
10. Separately, I consider that the order should be made. No submissions beyond those I have discussed were addressed to this question, and in the past an order to the same effect (albeit a less specific order) was made by consent.
11. It follows that I propose to make the order sought by the plaintiff against the first defendant, subject to altering the time within which compliance with the orders from one week to two weeks may occur. That is in order to ensure that the first defendant is fully able to comply with them.

Fourth defendant

1. As for the fourth defendant, I have rejected all the arguments of senior counsel for the first defendant upon which she relied. As I have noted, in discussion she informed me that she is quite prepared to do the best she can to comply with any order made calling upon her to disclose dealings with property. I can see no further reason why the orders sought with regard to the fourth defendant should not be made. Again, the time for compliance will be extended from one week to two weeks.

Conclusion

1. In short, I propose to make the orders sought against both defendants.

Costs

1. The plaintiff has been successful against the first defendant and the fourth defendant. I have considered whether, in light of the fact that she was unrepresented, and that the bulk of the argument resisting the orders sought was made by the first defendant, costs should not be ordered against the fourth defendant. However, in light of the evidence to which I have referred to the effect that the fourth defendant had ample notice of these proceedings, and her lack of consent to them, I consider that an order for costs should be made against her. In the circumstances, I consider that the first defendant should pay two-thirds of the cost of the plaintiff of the hearing, and the fourth defendant should pay one-third of those costs.

Orders

1. I make the following orders: 1. Pursuant to s 39(1)(ca) of the Proceeds of Crime Act 2002, the first defendant is directed to give the plaintiff by 14 November 2013 a sworn statement setting out: 1. All of his interests in property within the meaning of the Act, worldwide, not including any asset or interest in property with a value less than AUD $5,000 as at the date of these orders; and 2. All of his liabilities, worldwide, not including any liability with a value less than AUD $5,000 as at the date of these orders. 1. Pursuant to s 39(1)(d) of the Act, the fourth defendant is directed to give to the plaintiff by 14 November 2013 a sworn statement setting out all of her dealings with the item of property specified at Item 10a of Schedule One to the amended summons filed by the plaintiff on 8 May 2012. 2. The first defendant to pay two-thirds of the plaintiff's costs of the hearing of 9 April 2013. 3. The fourth defendant to pay one-third of the plaintiff's costs of the hearing of 9 April 2013.

Amendments 06 November 2013 - "plaintiff" amended to "first defendant" Amended paragraphs: 29 28 August 2014 - Publication withdrawn by order of Beech-Jones J on 28.08.14. Amended paragraphs: Cover sheet - publication restriction 20 June 2024 - Publication restriction lifted.

6 November 2013 - "plaintiff" amended to "first defendant" Amended paragraphs: 29 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: 20 June 2024