The Commissioner of the Australian Federal Police v Klein and Hubble

Ex Tempore Judgment 1This is an application by the two defendants, Mr Klein and Ms Hubble, for me to make an extension order pursuant to s 93 of the Proceeds of Crime Act 2002 (Cth) (the Act). Factual and legislative background 2To state the procedural background succinctly, on 16 May 2014 Mr Klein was convicted of a serious offence of drug importation and sentenced to imprisonment. Prior to that time various pieces of real and personal property had been restrained. The result would be that, if no extension were granted, the restrained property would be forfeited, by way of the strict time limit of six months from the date of conviction contained in s 92(3) of the Act. The solicitor for the plaintiff (the AFP) submitted, correctly in my opinion, that it is not the filing of an application for an extension order that overrides the effluxion of time that underpins s 92(3); rather, it is the making of an extension order by the Court before that time. 3It is to be noted that six months from the date of conviction is 15 November 2014; that is, tomorrow. 4Section 93(1) of the Act is as follows: (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. 5There was no dispute that an application was made by the two defendants within six months of the conviction, thereby complying with s 93(1)(a). Nor was it disputed that s 93(1)(b) has been the subject of compliance. The real nub of the issue before me was whether or not there had been compliance with s 93(1)(c), in that I would be satisfied that the applications made by the two defendants had been made "without undue delay", and that since then each of the defendants had "diligently followed up that application". 6After a period of reflection and receipt of instructions, the solicitor for the AFP informed me that his client neither consented to nor opposed the application, having at first opposed it. Accordingly, because of the requirement that I be satisfied of the precondition contained in s 93(1)(c), extensive documentary evidence was required, supplemented by evidence from the Bar table, with regard to which counsel for Ms Hubble undertook that an affidavit would be supplied in due course. 7The subject matter of the restraining order consists of two pieces of real property that I infer must be worth over $1.5 million, along with two motor vehicles. It is noteworthy that I am prepared to accept that the effect of my failing to be satisfied of the contents of s 93(1)(c) would be that the two defendants would be completely shut out from litigating the question of whether in truth those items should be forfeited. 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 within the rigid statutory structure to which I have referred. 8It may be accepted that each of the applications was made very shortly before the mandatory period was to expire. But it is important, in assessing whether the test has been made out, to appreciate the subjective circumstances of each of the defendants. Position of Mr Klein 9Mr Klein was arrested after having been found in possession of a large quantity of cocaine and methylamphetamine that had been imported pursuant to a well-organised criminal conspiracy. He had abused his position as an aircraft engineer in order to facilitate that extremely serious crime. I infer that he was bail refused before conviction. He was facing a sentence of life imprisonment. He was a man with no relevant criminal history who had suffered from a difficult background, but nevertheless was assessed as well educated and intelligent. After the offence was detected, his marriage broke down, not only because of his own criminality, but also because of an affair in which he was engaging coming to light. He was significantly distressed by the ending of his marriage, and by the time of sentence in May 2014 had been diagnosed with a major depressive disorder. He had also come to realise that his career had been completely destroyed by his conduct. 10I accept the proposition that, up until May 2014, Mr Klein would have been completely focused upon preparation for his sentencing, not only intellectually but also emotionally. 11Furthermore, with regard to his mental and emotional state after conviction and the imposition of sentence, there are matters that appear at page 13 of the remarks on sentence (which were placed before me) that I shall not discuss at length. Suffice to say that they show that Mr Klein had and has every reason to continue to be distracted by aspects of the custodial and criminal justice system above and beyond this question of restraint and forfeiture. 12The affidavit evidence also demonstrates that the solicitor for Mr Klein was unaware of the mandatory cut-off point of 15 November 2014. Indeed his counsel continues to resist the proposition that that reading of the statute is correct. In May 2014, his solicitor had consented to these proceedings being stood over for mention on 25 November 2014. After receipt of a notice of 19 September 2014 from the AFP, the solicitor promptly sent a brief to counsel seeking advice with regard to the way forward. Thereafter in October he had a conference with counsel, and separately with his client in custody. A motion was filed as late as 10 November 2014, although a draft had been received from counsel one month before. The affidavit that became Exhibit B goes on to explain that, during October, the solicitor had been distracted by a criminal trial that extended through the whole of that month, including up until today. As well as that, his firm was involved in a coronial inquest at Katoomba. 13The motion was served upon the solicitor for the AFP on 10 November 2014. It was only at that stage that, having received the motion of Ms Hubble, the solicitor for Mr Klein began to suspect that it could very well be that the motion should be returnable far more urgently. 14In short, the submission of counsel for Mr Klein is, I apprehend, that there is no doubt that things could and perhaps should have been done more quickly. Nevertheless, in the circumstances I have outlined, I infer that his position is that there has not been an undue delay, and since the filing of the s 94 exclusion application it has been followed up with reasonable diligence. Position of Ms Hubble 15As for Ms Hubble, it was accepted between the parties that she has never been charged with any offence arising from the criminality of Mr Klein. It was also accepted that she has no criminal record. There was no dispute about the fact that within a very short space of time she came to appreciate that Mr Klein was a very serious and anti-social criminal, and as well as that that he had been engaging in a long-standing affair. She has a son who suffers from a serious physical illness. The events surrounding the arrest of Mr Klein markedly damaged her financial position. As one might expect, she developed depression and anxiety, and there is a medical report to that effect. The solicitor for the AFP did not seek to resist the characterisation of the events that I have described as having destroyed her life. 16Separately, her counsel explained that he had only been briefed last night, and had done his best to familiarise himself with the matter and the statutory background. He also explained that there had been a change of solicitors in the past which entailed the usual logistical problems in terms of transfer of documents and so forth. 17Again, I understand his implicit position to be that it would have been desirable if things had been done earlier. But his proposition as I understand it was that things have been done without undue delay and there has been reasonable diligence thereafter. Determination 18Turning to my determination, as I have said I think that as a matter of statutory interpretation the operative subsection should not be interpreted with excessive rigidity. I consider that one needs to make due allowance for the circumstances that litigants are in when they are placed in positions such as these by the commission of serious crimes and their consequences. I also think that one needs to take into account the irrevocable and incontrovertible effect of the effluxion of time by way of Part 2-3 of the Act. 19Furthermore, it is the case that each of the defendants was in a position to be represented by counsel at 10 AM this morning before me in the Duty List. That can be contrasted to the position of many people who seek to forestall, at the absolute last moment, such things as auctions, writs of possession, and so forth by way of the Common Law Duty Judge. 20In all of the circumstances, I consider that each defendant has established that each of them has complied with the entirety of s 93(1) of the Act. With regard to the point of contention, although there has been delay, undoubtedly, in the applications being made, in the circumstances that I have outlined I am satisfied on the balance of probabilities that they were made without undue delay. I am also prepared to accept that they have been followed up with sufficient diligence to comply with s 93(1)(c). 21As I foreshadowed to the parties during discussion, I am prepared to make a short extension order, being no more than three months. I think that the matter should return to the Registrar's list on Friday next at 9 AM, so that the parties can agree in a timetable for the expeditious resolution of the matter. 22I make the following orders: (1)The items referred to in Schedule 1 and Schedule 2 of the summons of the plaintiff filed on 13 December 2012 are the subject of an extension order for the purposes of subsection 92(3) of three months, to date from today 14 November 2014 and expire on 13 February 2015. (2)The matter is to be relisted before the Common Law Registrar at 9 AM on Friday, 21 November 2014. 23For reasons that do not require discussion, the Schedules will not appear in my published judgment. Costs 24[His Honour invited submissions about costs.] 25The AFP has been unsuccessful in resisting the motion brought by each defendant. In those circumstances it is hard to see how costs should not follow the event with regard to a motion that took quite some little court time. 26Having said that, at this stage it is not clear to me the degree to which the two defendants made apparent to their opponent the evidence upon which they relied, the submissions they would make as a result of it, and their general approach to this specific aspect of the litigation. 27In the circumstances, I think that the best course is for costs to be reserved. If it be the case that any party wishes to delve more deeply into those aspects of the matter, they may do so before the judge who determines the substantive question. (3)Costs of today reserved.