Supreme Court of WA|2004-11-30|Before: Mr P, Adam P, Smith J

The Director of Public Prosecutions for Western Australia v Mansfield [2004] WASC 255 (30 November 2004)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : THE DIRECTOR OF PUBLIC PROSECUTIONS FOR WESTERN AUSTRALIA -v- MANSFIELD [2004] WASC 255

BETWEEN : THE DIRECTOR OF PUBLIC PROSECUTIONS FOR WESTERN AUSTRALIA

FITZROY ALL PTY LTD AS TRUSTEE FOR THE FA TRUST (ACN 093 308 724)

Criminal law - Confiscation of property - Freezing order - Applications to vary - Release of motor vehicles subject to hire purchase agreements - "Negative equity" - Debt increasing - Enforcement proceedings to be taken by finance company - Potential bankruptcy of respondent

Criminal law - Confiscation of property - Freezing order - Application for release of funds to pay credit card debt - Application for order that Director of Public Prosecutions be required to give undertaking as to damages as condition of continuation of freezing order - Whether principles and rules relating to injunctions apply to freezing orders - Release of funds to pay for defence of proceedings and for expert witness

Cross Respondent : State Director of Public Prosecutions

Cardile v LED Builders Pty Ltd (1999) 198 CLR 380

Director of Public Prosecutions for Western Australia v Mansfield [2004] WASC 116

Hayden v Teplitzky Co (1997) 74 FCR 7

Iraqi Ministry of Defence v Acrepey Shipping Co SA (The "Angel Bell") [1981] QB 65

Norilya Minerals Pty Ltd v Ireland (1994) 12 WAR 485

Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 209 ALR 271

Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170

Anderson Rice (a Firm) v Bride (1995) 61 FCR 529

Australian Competition and Consumer Commission v FFE Building Services Ltd [2003] FCAFC 132; (2003) 130 FCR 37

CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345

Director of Public Prosecutions for Western Australia v Mansfield [2003] WASC 186

Jindra v TechRentals Pty Ltd [2000] VSC 122

National Australia Bank Ltd v Bond Brewing Holdings Ltd [1990] HCA 10; (1990) 169 CLR 271

New South Wales v Canellis [1994] HCA 51; (1994) 181 CLR 309

Re Ousley; Ex parte Commissioner of Taxation [1994] FCA 883; (1994) 48 FCR 131

1 ROBERTS-SMITH J: These proceedings have already given rise to prolific interlocutory applications since the making of a freezing order under the Criminal Property Confiscation Act 2000 (WA) by McKechnie J on 12 July 2002 ("the freezing order").

2 A number of applications came before me in chambers on 20 October 2004.

3 The first was an application by the Director of Public Prosecutions for Western Australia ("the DPP") by chamber summons dated 28 April 2004 seeking a variation of the freezing order in that it be set aside to the extent it related to a 1998 Mazda MX5 coupe, registered no 1AHZ254 and a 2000 Jaguar S-type sedan, registered no 1ASH094.

4 That application was made by the DPP on the basis the two vehicles were the subject of hire purchase agreements with Australian Guarantee Corporation ("AGC") and as payments had not been maintained, it was understood there was "negative equity" in them - in other words the amount owing on the finance contract was greater than that likely to be realised on the sale of the vehicles.

5 The position of AGC, an objector, was that if the vehicles were released from the freezing order, it would take enforcement proceedings for recovery of them for sale. That was said to be satisfactory to AGC, although it would have preferred the course being proposed by the respondent, Mr Mansfield, which was that the freezing order be varied to enable payment out of the corpus of the frozen moneys, of all amounts owing to AGC. The property in the vehicles would then remain in Mansfield and subject to the freezing order.

6 Mr Mansfield's concern was said to be that the proceeds of the sale of the vehicles might not extinguish his liability to AGC (which was still accruing) with the consequence that AGC might commence recovery proceedings against him, leading to bankruptcy proceedings and the making of a sequestration order against him. The submission put by Mr Heath on his behalf was, in short, that it was not the purpose of a freezing order made under the Criminal Property Confiscation Act to impose a penalty nor to put a claimant in a position to bankrupt an individual (Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 209 ALR 271; Hayden v Teplitzky Co (1997) 74 FCR 7). An alternative submission put was that the Jaguar motor vehicle be sold and the proceeds of sale applied to Mr Mansfield's liability to AGC and that sufficient funds be released to enable his liability to AGC to be paid out in full, such that Mr Mansfield and his wife would continue to have the use of the Mazda motor vehicle.

7 Ms Low, counsel for the DPP, opposed a course which would involve the release of frozen funds to pay out the accumulated debt to AGC, on the ground there was no evidence before the court as to the circumstances in which that debt had been allowed to accumulate, nor the amount of it. The position of the DPP was, as I apprehended it, that the vehicles could have been returned in April 2003, before the debt to AGC had grown to exceed their realisable value.

8 I gave extempore reasons on 20 October 2004 for my decision granting the application by the DPP. I ordered that the costs of that summons be costs in the cause.

9 I turn now to Mr Mansfield's chamber summons dated and filed 16 September 2004.

1. the freezing order made on 12 July 2002 and varied on 18 February 2004 be varied further to authorise the release of $47,688.07 to pay Citibank Pty Ltd;

2. that the applicant be required to provide an undertaking as to damages as a condition for the continuation of the freezing order (as varied) pending the final disposition of the proceedings;

3. directions with respect to the further conduct of the proceeding;

4. such further or other orders as the Court deems appropriate, and

11 In the applicant Mansfield's outline of submissions dated 18 October 2004, he indicated that he would be seeking a further order, namely that the freezing order be varied further to authorise the release of the funds to enable him to retain an expert and fund his defence of the proceedings generally.

12 That matter was not argued until a late stage in the hearing on 20 October and I reserved my ruling on the application for leave to amend the chamber summons to include it.

13 Mr Mansfield's application is supported by two affidavits of Michael Lawrence Tudori sworn 16 September and 18 October 2004 respectively.

14 It is necessary to say something briefly about the history of the matter.

15 As I have indicated, the freezing order was made by McKechnie J on 12 July 2002.

16 On the same day the DPP applied for a criminal benefits declaration against Mr Mansfield.

17 The freezing order was subsequently varied by me on 18 February 2004 to allow release of moneys from the frozen property to meet the reasonable living expenses of Mr Mansfield and his wife. The making of an order for payments to be made out of frozen funds for the reasonable living expenses of the owner or holder of them is specifically authorised by s 45 of the Criminal Property Confiscation Act (WA) ("the Criminal Confiscation Act").

18 The somewhat complicated progress of the matter thereafter to November 2003 is conveniently set out in the judgment of Le Miere J, delivered 2 June 2004 on various applications by Mr Mansfield, including one to strike-out the freezing order (Director of Public Prosecutions for Western Australia v Mansfield [2004] WASC 116). I respectfully adopt that outline of the history without repeating it.

19 The factual issue pertaining to the applications before me, as set out in Mr Tudori's affidavits on the basis of what he has been informed by Mr Mansfield, is as follows.

20 Prior to the release of moneys in accordance with the variation order made by me on 18 February 2004, Mr Mansfield and his wife had relied upon a Citibank Pty Ltd ("Citibank") credit facility to meet some living expenses for him and his wife. Based on his inability to repay Citibank in accordance with the terms of that credit facility, Citibank commenced recovery proceedings against Mr Mansfield in the District Court of New South Wales and obtained default judgment on or about 3 December 2003.

21 About 4 February 2004, Citibank served a bankruptcy notice on Mr Mansfield claiming $47,353.15.

22 Following service of the bankruptcy notice, Mr Mansfield had a number of discussions with Citibank representatives, in the course of which he explained the nature of his predicament - namely that he was unable to make any repayments because of the freezing order.

23 Citibank served a creditor's position on Mr Mansfield about 8 September 2004. It was presented to the court in Sydney, New South Wales, on 24 August 2004.

24 By letter dated 10 September 2004, Mr Tudori wrote to the DPP inviting him to consent to a variation of the freezing order to authorise the payment of $47,688.07 to Citibank. However, as at 15 September 2004, Mr Tudori had not received a response. On that date he wrote a further letter, but as at the swearing of his affidavit on 16 September 2004 he had not received a reply.

25 In his affidavit of 18 October, Mr Tudori deposes further that Citibank's Sydney solicitors wrote to him on 24 September advising that the Federal Magistrates' Court of Australia had adjourned the creditor's petition to 26 October 2004. As at 18 October he had not received a substantive response from the DPP in relation to this issue. He wrote again to the DPP by letter dated 8 October 2004 setting out Mr Mansfield's position with respect to the Citibank issue.

26 As to Mr Mansfield's application for an order requiring the DPP to give an undertaking as to damages, Mr Tudori wrote to the DPP on 13 August 2004 noting that the freezing order had been made on an ex parte basis and that counsel for the DPP had not proffered "the usual undertaking as to damages". He referred to O 52 r 9 of the Rules of the Supreme Court which provides that:

"Unless the Court otherwise orders upon the grant of an interlocutory injunction the order shall include an undertaking to the Court on the part of the applicant that he will pay to any party restrained or affected by the restraints imposed by the interlocutory injunction or by any interim continuation of the interlocutory injunction, such compensation as the Court may in its discretion consider in the circumstances to be just ... "

27 In his letter Mr Tudori expressed the view that the freezing order is analogous to an interlocutory injunction, or that alternatively, the court has an inherent power to require the provision of an undertaking where a proposed freezing order has the potential to cause harm, pending the final disposition of any substantive application. He enquired whether the DPP was prepared to provide an undertaking as to damages and foreshadowed that in the absence of any positive response to that inquiry, he proposed to raise the matter in the context of the discovery application.

28 The DPP's response to this by letter dated 16 August 2004 was that the legislation does not envisage any undertaking for damages being sought or provided by the DPP or the State of Western Australia.

29 With respect to the issue that there be an order releasing funds to enable payment of Mr Mansfield's legal costs and the costs of any expert witnesses, Mr Tudori deposes that he wrote to the DPP on 8 October 2004 advising that Mr Mansfield would seek to amend the chamber summons on 20 October 2004 to seek an order that the freezing order be varied to enable further release of funds to his solicitors so that he could retain an expert and fund the prosecution of his defence generally.

31 Mr Tudori briefed Mr Garnsworthy of Garnsworthy Chambers to provide an opinion on the likely legal costs which Mr Mansfield would be likely to incur between October 2004 and the conclusion of the hearing of the DPP's substantive application.

32 By letter dated 18 October 2004, Mr Garnsworthy opined that on various assumptions expressed in his letter as to the conduct of the proceedings, he would estimate scale fees in the order of $253,000 and costs which he considered were "strongly arguable" under special costs orders, in the total sum of $404,650.

33 I shall deal first with the prayer for an order that the DPP be required to provide an undertaking as to damages as a condition for the continuation of the freezing order.

34 The argument first advanced on behalf of Mr Mansfield in his solicitor's letter to the DPP dated 13 August 2004 and now maintained, is that the freezing order is a form of statutory injunction analogous to a Mareva injunction (now better described as an asset preservation order) (Cardile v LED Builders Pty Ltd (1999) 198 CLR 380) which goes in aid of a legal right prior to the establishment of that right. It is submitted that like an asset preservation order, this freezing order imposes a severe restriction on Mr Mansfield's rights to deal with his assets. It is submitted that the purpose of an asset preservation order is to prevent the improper removal and dissipation of assets, not to affect otherwise the activities of a respondent nor to affect the priorities of bona fide creditors (see Iraqi Ministry of Defence v Acrepey Shipping Co SA ("The Angel Bell") [1981] QB 65 where an injunction was varied to enable a debt to a creditor to be paid. That decision was endorsed by Kennedy J in Norilya Minerals Pty Ltd v Ireland (1994) 12 WAR 485 at 487).

35 Mr Heath conceded that the Criminal Confiscation Act does not contemplate, nor envisage the provision or proffering of an undertaking as to damages, but in those circumstances s 21(3) and (4) of the Supreme Court Act 1935 (WA) are enlivened and empower the court to impose conditions on the granting or continuation of an injunction unless the contrary is provided by some other enactment. Mr Heath's submission was there is nothing in the Criminal Confiscation Act which would indicate the contrary.

36 For the DPP, Ms Low submitted that it is significant that the Criminal Confiscation Act does not envisage any undertaking for damages being sought nor provided by the DPP nor the State of Western Australia.

37 Mr Mansfield's argument on this issue turns entirely on acceptance of the proposition that a freezing order under s 43 of the Criminal Confiscation Act is a form of statutory injunction, analogous to an asset preservation order, and is therefore subject to the same legal principles and statutory rules as an injunction of that kind.

38 I have not been referred to any authority in support of that proposition.

39 Cardile, for example, concerned the power of the Federal Court of Australia under s 23 of the Federal Court Act 1976 (Cth) to make orders of such kinds as it thinks appropriate. The orders made were in the nature of interlocutory injunctions. That and the other authorities to which I have been referred, all concern the principles and rules which apply to injunctions. There is no dispute about those. The question is whether they apply to freezing orders under this statutory regime.

40 In my opinion they do not, and the argument that they do, is misconceived.

41 The purpose of the Act is to establish a quite specific and detailed regime for the freezing and subsequent disposition of unlawfully acquired property. The legislation states it to be an Act to provide (inter alia) for the confiscation of property acquired as a result of, or used for, criminal activity, or the profits of crime and other property.

42 There are provisions which enable the use of frozen property to meet liabilities (eg s 26 and s 52). Part 7 of the Act contains provisions relating to the management of seized, frozen and confiscation property.

43 It would be entirely inconsistent with the purpose and objects of the Act and the detailed regime established by it, to regard freezing orders as merely a form of statutory injunction and subject to the same rules and principles as ordinarily apply to injunctions.

44 This conclusion gains further support from the fact the legislation which the Criminal Confiscation Act replaced, the Crimes (Confiscation of Profits) Act 1988 (WA), specifically required the DPP to provide an undertaking, but that provision was not included in the Criminal Confiscation Act. That omission must be taken to have been deliberate.

45 In reaching this conclusion, I do not overlook s 102 of the Criminal Confiscation Act which provides that proceedings on an application under it are taken to be civil proceedings for all purposes. That seems to me clearly to be directed only to the way in which applications under the Act are to be made, processed and dealt with in a procedural sense. Even then, for example, procedural rules which were expressly or implicitly in conflict with the provisions of the Act itself could not prevail over those provisions.

46 The application for an order that the DPP be required to provide an undertaking as to damages as a condition for the continuation of the freezing order pending the final disposition of the proceedings, will be dismissed.

47 In relation to the Citibank issue, the position of the DPP was that there was simply no information whatsoever before the court as to how that debt was made up. The only suggestion in the material before me was that it had been used for "living expenses". The DPP opposed the making of any order in the absence of affidavit or other evidence detailing how the money had been spent.

48 Mr Heath conceded that he was in no position to throw any light on that and accepted it ought to have been done by way of affidavit. He foreshadowed, but did not make, an application for an adjournment "if it were to be a problem". Ms Low made submissions opposing the application.

49 The application having been made and argued, I accepted the submission of the DPP that it should be dealt with on its merits.

50 In the absence of any evidence as to how the money was spent, and in light of the opposition by the DPP to the making of an order, I am of the view that it would be inappropriate to make one. The application in that regard must likewise be dismissed.

51 The next matter is the application on behalf of Mr Mansfield for leave to amend his chamber summons to include a prayer for an order that the freezing order be varied to authorise release of funds so that he can retain an expert and fund his defence to the proceedings generally.

52 The Criminal Confiscation Act expressly allows for variation of freezing orders to enable payments of specified kinds to be made out of otherwise frozen funds. The nature of orders which may be made with respect to property the subject of a freezing order is set out in s 45:

"In a freezing order, the court may do any or all of the following -

(a) direct that any income or other property derived from the property while the order is in force is to be treated as part of the property;

(b) if the property is moveable - direct that the property is not to be moved except in accordance with the order;

(c) appoint the DPP, the Public Trustee or the Commissioner of Police to manage the property while the order is in force;

(d) give any other directions necessary to provide for the security and management of the property while the order is in force;

(e) provide for meeting the reasonable living and business expenses of the owner of the property."

53 Given the express authorisation for the variation of freezing orders to enable expenditure to meet the reasonable living and business expenses of the owner of the property, I consider it follows inevitably that the legislature intended that the release of frozen funds be confined to matters of that kind.

54 To the extent the lack of any express reference in the legislation to the release of funds to be applied to payment of legal costs might be suggested to create an ambiguity in the legislation, the point is clearly disposed of by reference to the Second Reading Speech of Mr Barron-Sullivan in the Legislative Assembly on 29 June 2000 ("Hansard" p 8611 at p 8613) in which he expressly stated:

"... property frozen under a freezing order can be released by a court only for payment of living or business expenses. No frozen property can be released for payment of legal expenses."

56 There is simply no power under the Act enabling an order to be made for the release of funds for the purpose sought. That application must be refused.

57 The remaining order sought was somewhat ambiguously expressed as "directions with respect to the further conduct of the proceedings". It transpired in the course of argument that counsel for Mr Mansfield was seeking to argue that when programming orders are made for trial of the substantive application, they ought not include orders for discovery or interrogatories or the like which would involve requiring Mr Mansfield to give information or answers which might tend to incriminate him.

58 As no programming orders have yet been sought (although I understand there has been correspondence between the parties about them) it seems to me entirely impracticable and inappropriate for me to attempt to work through possible directions in the abstract, as it were, at the hearing, or at all in the absence of a detailed minute of proposed directions and I accordingly declined to do so.

59 For the reasons expressed above, Mr Mansfield's chamber summons dated 16 September 2004 must be dismissed.

Property Confiscation Act 2000

The Director of Public Prosecutions for Western Australia v Mansfield [2004] WASC 255

At a glance

Court

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Judgment (88 paragraphs)

The Director of Public Prosecutions for Western Australia v Mansfield [2004] WASC 255 (30 November 2004)

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Legislation Cited (3)

Cases Cited (11)