Supreme Court New South Wales Medium Neutral Citation: Commissioner of the Australian Federal Police v Tradieh [2023] NSWSC 1131 Hearing dates: 12 September 2023 Date of orders: 15 September 2023 Decision date: 15 September 2023 Jurisdiction: Common Law Before: Walton J Decision: (1) Pursuant to rule 18.2(2)(a) of the Uniform Civil Procedure Rules 2005 (NSW), the Court dispenses the requirement for Westpac Banking Corporation (Westpac) to file an application under s 31 of the Proceeds of Crime Act 2002 (Cth) for an exclusion order pursuant to s 29 of the Act. (2) Pursuant to s 29 of the Act, the interest of Westpac as registered mortgagee of the property specified in Schedule One to these orders, be excluded from the Orders made by Davies J of the Supreme Court of New South Wales on 3 June 2022 (Restraining Orders). (3) Pursuant to ss 29 and 31(1) of the Act, the interest of Westpac as the financier of the property specified in Schedule Two to these orders, represented by registered security interest 201809250054080, be excluded from the Restraining Orders. (4) Costs reserved. SCHEDULE ONE Real Property at 192 The Inlet Road Bulga, NSW, being Lots 521 and 522 of Deposited Plan 1046535. SCHEDULE TWO White Toyota HiAce van bearings Vehicle Identification Number JTFHT02PX00244606. Catchwords: PROCEDURE – proceeds of crime – application for consent orders under s 316 of the Proceeds of Crime Act 2002 (Cth) by the registered mortgagee – who is a person affected by the making of the order - the court made orders pursuant to s 316(1) of the Proceeds of Crime Act 2002 (Cth) Legislation Cited: Acts Interpretation Act 1901 (Cth) s 2C Proceeds of Crime Act 2002 (Cth) ss 3, 17, 29, 92, 316 Real Property Act 1900 (NSW) ss 36, 57 Cases Cited: Chammas v Risk [2015] NSWSC 1213 Coco v R (1994) 179 CLR 427; [1994] HCA 15 Commissioner of the Australian Federal Police v Hart (2018) 262 CLR 76; [2018] HCA 1 Lordianto v Commissioner of the Australian Federal Police (2019) 266 CLR 273; [2019] HCA 39 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 Re Application by Commission of Australian Federal Police [2018] NSWSC 1302 SZTAL v Minister for Immigration and Border Protection (2017) 347 ALR 40; [2017] HCA 34 The King v Jacobs Group (Australia) Pty Ltd; (2023) 97 ALJR 595; [2023] HCA 23 Category: Principal judgment Parties: Commissioner of the Australia Federal Police (Plaintiff) Ammar Assad Tradieh (Defendant) Representation: Counsel: M Short (Plaintiff) B Walker (Defendant) Solicitors: Australian Federal Police (Plaintiff) Minter Ellison (Defendant) File Number(s): 2022/161182 JUDGMENT 1. On 3 June 2022, Davies J made restraining orders ("the orders"), pursuant to s 17 of the Proceeds of Crime Act 2002 (Cth) ("POC Act"), that the property of Ammar Assad Tradieh ("Mr Tradieh") must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in that order. Of that property only two items are the subject of this proceedings, which emerged in the Court's duty list. These are: 1. Real Property at 192 The Inlet Road Bulga, NSW, being Lots 521 and 522 of the Deposited Plan 1046535 ("the Bulga Property"); 2. Toyota HiAce Motor Vehicle being Vehicle Identification Number JTFHT02PX00244606 ("the HiAce Van") ("the properties"). 1. Mr Tradieh is the registered proprietor of the properties. 2. The orders sought by the Commissioner of the Australian Federal Police ("Commissioner") and Westpac Banking Corporation ("Westpac") were in respect of the exclusion from restraint of Westpac's interest in the property. Westpac is the registered mortgagee in respect of the properties. 3. By an Amended Notice of Motion filed on 28 February 2023, Mr Tradieh sought that, pursuant to ss 29 and 31 of the POC Act that, inter alia, the property be excluded. That exclusion application is listed for hearing before this Court on 3 and 4 October 2023. 4. In these proceedings, the Commissioner and Westpac sought consent orders pursuant to s 316(1) of the POC Act that the interest of Westpac as registered mortgagee of the properties be excluded from the orders. The consent orders were signed by the Commissioner and Westpac ("the Consent Orders"). 5. When the matter was called, Mr Walker, counsel for Mr Tradieh, opposed the Court making the consent orders. 6. The issue raised by Mr Tradieh is whether he is 'a person who would be affected by the making of the order, as required by s 316(1)(b) of the POC Act. 7. I note, before considering the construction of s 316 that as of 12 September 2023, all property restrained by the orders under s 17 in the proceedings (which included the Bulga Property and the HiAce Van and – relevantly – Westpac's security interest in those properties) was liable to forfeit by operation of s 92 of the POC Act upon the earlier of 28 October 2023 or the dismissal of the defendant's extant exclusion application. That was because the defendant was convicted of a 'serious offence' for the purposes of the POC Act, namely, an offence in connection with the cultivation of illicit tobacco at the Bulga Property. The POC Act 1. Section 316 of the POC Act states that: Consent orders (1) A court may make an order in a proceeding under Chapter 2 with the consent of: (a) the applicant in the proceeding; and (b) everyone whom the court has reason to believe would be affected by the order. (2) The order may be made: (a) without consideration of the matters that the court would otherwise consider in the proceeding; and… 1. Section 29 of the POC Act relevantly provides: Excluding property from certain restraining orders (1) The court to which an application for a restraining order under section 17, 18 or 19 was made must, when the order is made or at a later time, exclude a specified * interest in property from the order if: (a) an application is made under section 30 or 31; and (b) the court is satisfied that the relevant reason under subsection (2) or (3) for excluding the interest from the order exists. Note: Section 32 may prevent the court from hearing the application until the responsible authority has had a reasonable opportunity to conduct an examination of the applicant. (2) The reasons for excluding a specified interest in property from a restraining order are: … (a) for a restraining order under section 17 if the offence, or any of the offences, to which the order relates is a serious offence--the interest is neither proceeds nor an instrument of unlawful activity; or (b) … (d) for a restraining order under section 19--the interest is neither: (i) in any case--proceeds of an indictable offence, a foreign indictable offence or an indictable offence of Commonwealth concern; nor (ii) if an offence to which the order relates is a serious offence--an instrument of any serious offence. … The Submissions of Mr Tradieh 1. In summary, the submissions of Mr Tradieh, in opposition to the orders, were as follows: 1. Mr Tradieh's submissions emphasised the principle of legality as reflected in Coco v R [1994] HCA 15 at [10]. 2. The broad definition provided by s 316(1)(b) of the POC Act is, in part, due to the devastating effects the POC Act can have in the adjustment of rights in relation to property 'homologous' with ex parte restraining orders. 3. Procedural fairness reflected in the POC Act permits interested parties to make applications pursuant to the POC Act. Section 316 of the POC Act permits the bypassing of requisite judicial considerations and timeframes to make orders effecting property rights if everyone whom the Court has reason to believe would be affected by the order consents. In the absence of this consent, any interested party is at liberty to make an application pursuant to the POC Act. A consent order without the consent of the registered proprietor is not the correct mechanism to enforce Westpac's purported rights. 4. The grant of the orders avoids due process and the consideration that the Court would ordinarily give as to an exclusion application. 5. If a mortgagee is permitted to deal with the property in question, it will affect the registered proprietor of the property, and as such a consent order pursuant to s 316 of the POC Act cannot be made. 6. Reliance was placed upon the decision of Davies J in Re Application by Commissioner of Australian Federal Police [2018] NSWSC 1302 ("Re Application by Commissioner") to support the construction of s 316 of the POC Act proposed by Mr Tradieh. It was submitted that inherent in Davies J's reasoning was that, inter alia, as Mr Haddleton had not made an application in respect of the property, his Honour did not have reason, therefore, to believe that Mr Haddleton would be "affected by the order." In comparison, because Mr Tradieh made an exclusion application, it was submitted that accordingly, he should be considered a person "affected by the order" under s 316(1)(b) of the POC Act . 1. I note, the judgment in Re Application by Commissioner [2018] NSWSC 1302 concerned cash seized by the Australian Federal Police, not real property. It is unclear where the cash was seized but Mr Haddleton is purported to have said it was not his cash, he was just an uber driver when he was served the Summons by a federal agent: Re Application by Commissioner (Davies J at [3]). 2. It is well settled that legislative provisions must be construed in a manner consistent with the language, purpose, and context of the relevant statute as a whole: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69]-[70]; SZTAL v Minister for Immigration and Border Protection (2017) 347 ALR 405 at [14]. In this respect, the statutory purpose is discerned from the legislative text and structure: Lacey v Attorney-General (Qld) (2011) 242 CLR 573 at [44]. 3. The most recent exposition of the principles of statutory construction is found in The King v Jacobs Group (Australia) Pty Ltd [2023] HCA 23 at [23] (applying Project Blue Sky Inc v Australian Broadcasting Authority (1988) 194 CLR 355 at 381 [69])) as follows: [23] The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined 'by reference to the language of the instrument viewed as a whole' ... 'the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed'. Thus, the process of construction must always begin by examining the context of the provision that is being construed. 1. As the Commissioner correctly submitted, the legislature used the term "affected by the order" in s 316(1)(b) of the POC Act rather than "everyone whom the court has reason to believe claims an interest in the property the subject of the order". That imports a requirement that the making of the order must have a causative effect on such a person. The legislature has also chosen to use the word 'would' be affected, rather than 'may' be affected. I accept that the use of the words "everyone" and "has reason to believe" tend to indicate that the provision should be read widely but the subsection remains constrained in its operation by the words "be affected" and accordingly the identification of the specified interest so affected. 2. Consistent with the need to consider the legislative context, it is necessary to have regard to the overarching framework of the POC Act as well as the principal objects expressly stated: Commissioner of the Australian Federal Police v Hart (2018) 262 CLR 76 at [32]-[33], [35], [48]; Lordianto and Another v Commissioner of Australian Federal Police (Matter No S110 of 2019) (2019) 266 CLR 273; [2019] HCA 39 ("Lordianto") at [9]-[10], [62], [90]. The principal objects of the POC Act, stated in s 5, include the following: 1. to deprive persons of the proceeds of offences and benefits derived from offences; 2. to punish and deter persons from breaching laws of the Commonwealth; 3. to prevent the reinvestment of proceeds and benefits in further criminal activities; 4. to undermine the profitability of criminal enterprises; and 5. to enable to Commissioner effectively to trace such proceeds and benefits. 1. The POC Act's objectives are achieved by a confiscation scheme which includes, relevantly for present purposes, processes for the making of orders restraining the disposal of or other dealing with property, and automatic forfeiture of restrained property following conviction of a serious offence (see s 6 and Parts 2-1 and 2-3 of the POC Act, and Commissioner of AFP v Hart (2018) 262 CLR 76 at [33] (Gordon J)) 2. In Lordianto, Kiefel CJ, Bell, Keane and Gordon JJ (Edelman J agreeing) stated the following in respect of the POC Act: [9] The POCA is intended to deprive persons of the proceeds of offences and the instruments of offences, and to undermine the profitability of criminal enterprises. [10] The POCA achieves these objects, among others, through a confiscation scheme which provides for orders restraining the disposal of, or otherwise dealing with, particular property where there are reasonable grounds to suspect that the property is, among other things, the proceeds of an indictable offence or an instrument of a serious offence... … [15] It is important to emphasise some aspects of these provisions. First, the provisions speak of "dealing" with proceeds or an instrument of an offence. "[D]eal" is defined as "dealing with a person's property", including: (a) if a debt is owed to that person — making a payment to any person in reduction of the amount of the debt; and (b) removing the property from Australia; and (c) receiving or making a gift of the property … [16] … [17] Third, whether specific property has been wholly or partly derived or realised from the disposal or other dealing with proceeds, or an instrument, of an offence necessarily "turns on considerations of substance and economic reality which can be expected to vary in different factual settings. And the factual setting that may need to be considered includes a gift and any other dealing with the property. Thus, there can be no "detailed exposition in the abstract". [18] It is in that context that s 31 of the POCA provides that a person who claims an interest in property covered by a restraining order may apply for an exclusion order under s 29. The court to which an application for a restraining order is made must, in limited circumstances, exclude a specified interest in property from the restraining order, either at the time the restraining order is made, or at a later time. And the applicant for the exclusion order bears the onus of proving, on the balance of probabilities, the matters necessary to establish the grounds for an exclusion order. 1. The majority stated the following at [65] and [68] in respect of identifying the interest sought to be excluded from restraint: [65] ... As the applicant for the exclusion order bears the onus of satisfying a court, on the balance of probabilities, that specific property should be excluded from the order, the first step is to identify the "property" that the applicant seeks to have excluded. … [68] Identifying the property sought to be excluded, and the property said to be acquired (as they may be different), is a critical initial step. It ensures that the property sought to be excluded is the subject of the restraining order and, where relevant, that it is proceeds, or an instrument, of an offence (not disputed in these appeals). If the property is misdescribed, what an applicant needs to prove necessarily proceeds from the wrong starting point. 1. The majority stated the following in respect of the nature of interests held by different parties in respect of a bank account at [104]: In this context, it is necessary to consider the position of a bank. When receiving a deposit in cash or by way of bank transfer, the bank acquires that property for sufficient consideration. The sufficient consideration is the bank's promise to credit the account of the relevant account holder with the amount deposited or transferred. Absent any other information, the bank remains entitled to retain the cash or the benefit of the bank transfer by reason of s 330(4)(a). But the entitlement of the bank to that property says nothing about the entitlement of the account holder to retain and exercise their chose in action over the funds standing to the credit of the account, which is different property from that held by the bank. 1. Thus, the focus on an exclusion application is the 'specified interest' sought to be excluded. I agree with the submission for the Commissioner, this is contrasted, for example, with the broader focus on property sought to be restrained under an application under ss 17 or 19 of the POC Act. The broader application of ss 17 or 19 at restraint and, is reflected a restraining order in the form made by Davies J in this proceeding, captures any security interests such as a registered mortgage. Westpac's interest 1. A registered mortgage of Torrens title land takes effect as a statutory charge or security only, not as a conveyance or 'transfer' of the land: s 57 of the Real Property Act 1900 (NSW). Upon registration, the mortgage takes effect as a deed: s 36(11) of the Real Property Act 1900 (NSW). 2. Westpac's rights as registered mortgagee existed prior to, and regardless of, the restraining orders made under the POC Act in this proceeding. I agree with the Commissioner that Westpac's interest in that respect differs from the defendant's interest in the Bulga Property and the HiAce Van as the registered proprietor of each. 3. It follows that the making of an order excluding Westpac's interest as registered mortgagee would not affect the defendant in any relevant sense under the POC Act. The exclusion orders do not diminish the defendant's rights in respect of the Bulga Property. Westpac's interest was not a competing interest with the defendant's interest. 4. Similar principles and considerations apply in respect of Westpac's interest in the HiAce Van: s 12 of the Personal Property Security Act 2009 (Cth). 5. The Commissioner contended that the Court should have regard to the decision of Slattery J in Chammas v Risk [2015] NSWSC 1213. I agree that this is applicable. The following is extracted from [73] and [74] of that judgment: [73]…merely because a shareholder's interests may be indirectly affected by the entry of judgment against a corporation, does not mean that the shareholder has an immediate right to set aside the judgment. Re Octaviar gives effect to the general principle that a party should be heard before an order is made that directly effects his or her interests. But when the origins of that principle are examined the principle does not obviously apply to the shareholders of a company which was represented before a judgment was entered against it. The precise question which authority indicates should be posed for determining whether an absent person has a right to set aside a judgment or an order is: "will his rights against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action": Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52 ("Pegang") at 55-6 per Lord Diplock, delivering the opinion of the Privy Council. [74] The same principle has been expressed in Australian authority. In News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410; [1996] FCA 870 ("News Limited") at 524 the question was posed thus "[an order] which directly affects a third person's rights against or liabilities to a party should not be made unless the person is also joined as a party. If made, the order would be set aide". In The State of Victoria v Sutton (1998) 195 CLR 291; [1998] HCA 56 ("Sutton") McHugh J referred with approval, at [77] and [78], to both Pegang and News Limited. The High Court recently re-stated the law in John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [131] and [132] in similar terms, approving Sutton and News Limited and a submission which stated the test in terms that "where a court is invited to make, or proposes to make, orders directly affecting the rights or liabilities of a non-party, the non-party is a necessary party and ought be joined" 1. That matter concerned whether a party to proceedings was able to set aside an order made in its absence. I agree with the submissions for the Commissioner that in circumstances where principles of procedural fairness underpin this principle and s 316 of the POC Act, the Court should not afford an interpretation of s 316 of the POC Act which is relatively more generous to "a suspect" than the approach noted in the extract above in the context of applications to set aside orders. The clear purposes of the POC Act support that interpretation. 2. Mr Tradieh submitted that the broad definition provided by s 316(1)(b) of the POC Act is, in part, due to the devastating effects the POC Act can have in the adjustment of rights in relation to property 'homologous' with ex parte restraining orders. However, for the reasons given above, such an interpretation of s 316 of the POC Act is inconsistent with the objects and purposes of the POC Act, which expressly interferes with property rights of suspects. 3. There is a further consideration favouring the above construction. If the Court did construe s 316 of the POC Act as requiring the defendant's consent for the order to be made, the withholding of consent by the defendant would, in effect, provide a mechanism for the defendant to inhibit the registered mortgagee's legitimate rights that exist under contract and statute outside of the POC Act proceedings, which are not suspected to be the proceeds or instrument of crime. 4. The Commissioner raised an issue as to whether the defendant had standing to oppose an exclusion order in favour of Westpac. It is unnecessary to finally decide that question, particularly in duty list proceedings, but I shall briefly consider the grounds so far as it reflects on the question of construction. The Commissioner's submissions in this respect have some force for the following reasons: 1. Section 31 of the POC Act provides that: 1. The person who applies for an exclusion order must give written notice to the responsible authority (i.e. the Commissioner) of both the application and the grounds on which the exclusion is sought (subs (4)). 2. The responsible authority may appear and adduce evidence at the hearing of the application (subs (5)). 3. The responsible authority must give the person (i.e. the person who applied for the orders) notice of any grounds on which it proposes to contest the application (subs (6)). 1. There is no such requirement for the applicant or the Commissioner to provide notice to other persons who claim an interest in property the subject of the Consent Orders for exclusion. Similarly, there is no express provision permitting other persons who claim an interest in property the subject of the exclusion application to appear and adduce evidence at the hearing of the exclusion application brought by 'the person'. 2. In this matter, 'the person' for the purposes of s 31 of the POC Act in respect of the orders sought in the orders is Westpac: Acts Interpretation Act 1901 (Cth), s 2C(1). The specified interest Westpac sought to exclude was its interest as registered mortgagee in respect of the Bulga Property and the HiAce Van. Conclusion 1. In the circumstances, the Court makes the Consent Orders set out in the Short Minutes of Order, provided by the Commissioner. ********** Amendments 19 September 2023 - Typographical amendments 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: 19 September 2023