Supreme Court New South Wales Medium Neutral Citation: The Commissioner of The Australian Federal Police v Halac [2015] NSWSC 520 Hearing dates: 9 February 2015 Date of orders: 06 May 2015 Decision date: 06 May 2015 Jurisdiction: Common Law Before: Hidden J Decision: Motion dismissed Catchwords: Proceeds of Crime – application by defendant for exclusion of property from automatic forfeiture and for extension of time in which to make the application – application made on the last day of the six month period before automatic forfeiture – property automatically forfeited – no power to make exclusion order – consideration of relevant provisions of Proceeds of Crime Act 2002 (Cth) Legislation Cited: Criminal Assets Confiscation Act 2005 (SA) Criminal Code 1995 (Cth) Limitations of Actions Act 1936 (SA) Proceeds of Crime Act 1987 (Cth) Proceeds of Crime Act 2002 (Cth) Cases Cited: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 Certain Lloyds Underwriters Subscribing to Contract No. IHOOAAQS v Cross (2012) 248 CLR 378 Director of Public Prosecutions (Cth) v Chan [2001] NSWCA 249, 52 NSWLR 56 Federal Commissioner of Taxation v Consolidated Media Holdings Limited (2012) 250 CLR 503 Hall v Director of Public Prosecutions [2015] SASCFC 19 Hird v Chief Executive Officer of the Australian Sports Anti-Doping Authority [2015] FCAFC 7 Plaintiff S4/2014 v Minister for Immigration and Border Protection [2014] HCA 34 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 Taylor v The Owners – Strata Plan 11564 (2014) 88 ALJR 473 The Commissioner of the Australian Federal Police v Klein and Hubble [2014] NSWSC 1638 Thiess v Collector of Customs (2014) 250 CLR 664 Category: Principal judgment Parties: The Commissioner of the Australian Federal Police (plaintiff) Sven Halac (1st defendant) David Christiaan Brooker (2nd defendant) Matthew John Fetzer (3rd defendant) Representation: Counsel: AJ Sullivan QC (plaintiff) A Radojev – amicus curiae (1st defendant) Solicitors: Australian Federal Police – Proceeds of Crime Litigation File Number(s): 2011/315809 Judgment 1. On 21 February 2014, the defendant, Sven Halac, was sentenced for an offence of drug trafficking under s 302.1 of the Criminal Code 1995 (Cth), having pleaded guilty to that offence. Earlier, on 4 October 2011, McCallum J had made a restraining order, under s 18 of the Proceeds of Crime Act 2002 (Cth), in respect of certain property. This included a boat, a 65 ft sloop called the "Velsheda II". 2. Following his conviction of the offence, on 10 April 2014, the defendant was served with a notice under s 92A of the Act, notifying him that on 20 August 2014, six months after his conviction, the restrained property would automatically be forfeited to the Commonwealth pursuant to s 92. On 20 August 2014 the defendant filed a notice of motion seeking exclusion of property the subject of the restraining order, pursuant to s 94, and an extension of time in which to do so, pursuant to s 93. He was not then legally represented. 3. The procedural steps which then ensued need not be recounted. The matter came before the court on several occasions, during which the defendant was still unrepresented. He clarified that the motion related only to the boat, and it later emerged that the boat had been sold and what he sought was the proceeds of that sale. Ultimately, the matter came before me on the question whether the court has jurisdiction to entertain the defendant's application. On this occasion he was represented by Mr Alex Radojev of counsel. Mr Alan Sullivan QC appeared for the Commissioner. To understand the issue it is necessary to set out certain provisions in Chapter 2, Part 2 – 3 of the Act. 4. Section 92 relevantly provides: "(1) Property is forfeited to the Commonwealth at the end of the period applying under subsection (3) if: (a) a person is convicted of a serious offence; and (b) either: (i) at the end of that period, the property is covered by a restraining order under section 17 or 18 against the person that relates to the offence; or (ii) the property was covered by such a restraining order against the person, but the order was revoked under section 44 or the property was excluded from the order under that section; and (c) the property is not subject to an order under section 94 excluding the property from forfeiture under this Part. … (3) The period at the end of which the property is forfeited is: (a) the 6 month period starting on the conviction day; or (b) if an extension order is in force at the end of that period--the extended period relating to that extension order." 1. The effect of s 92A is to require the defendant to be served with a written notice setting out, among other things, the date on which property would be forfeited under the Part unless excluded from forfeiture, the right to seek exclusion under s 94, and the right under s 93 to seek extension of the period of automatic forfeiture for that purpose. As I have said, in the present case the defendant was served with a notice under s 92A. 2. Section 93 (1) provides: "(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." 1. Section 94 relevantly provides: "(1) The court that made a restraining order referred to in paragraph 92(1)(b) must make an order excluding particular property from forfeiture under this Part if: (a) a person (the applicant) has applied for an order under this section; and (b) the court is satisfied that the applicant has an interest in property covered by the restraining order; and (d) a person has been convicted of a serious offence to which the restraining order relates; and (e) the court is satisfied that the applicant's interest in the property is neither proceeds of unlawful activity nor an instrument of unlawful activity; and (f) the court is satisfied that the applicant's interest in the property was lawfully acquired. (2) To avoid doubt, an order under this section cannot be made in relation to property if the property has already been forfeited under this Part. … ." 1. Sections 30, 31 and 44, referred to ss 92 and 93, are not relevant for present purposes. Section 96 provides that property forfeited under s 92 vests absolutely in the Commonwealth at the time of forfeiture. 2. The issue which I must decide turns upon the construction of these provisions. Mr Sullivan's submissions contain a helpful summary of some relevant principles of statutory construction, with reference to authority. I am content to adopt that summary. 1. The task of statutory construction must begin with a consideration of the statutory text. So must the task of statutory construction end. This statutory text must be considered in its context. That context includes legislative history and extrinsic materials if, and in so far as, it assists in fixing the meaning of the statutory text (Federal Commissioner of Taxation v Consolidated Media Holdings Limited (2012) 250 CLR 503 at 519 [39]; Thiess v Collector of Customs (2014) 250 CLR 664 at 671-672 [22]-[23]); 2. But historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which actually has been employed in the text of the legislation is the surest guide to legislative intention (Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46-47 [47]; Certain Lloyds Underwriters Subscribing to Contract No. IHOOAAQS v Cross (2012) 248 CLR 378 at 388 [23], 405 [70]; Hird v Chief Executive Officer of the Australian Sports Anti-Doping Authority [2015] FCAFC 7 at [92]); 3. The meaning of a provision must be determined by reference to the language of the instrument viewed as a whole. An Act must be read as a whole on a prima facie basis that its provisions are intended to give effect to harmonious goals. Construction should favour coherence in the law (Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 [60]; Plaintiff S4/2014 v Minister for Immigration and Border Protection [2014] HCA 34 at [42]); 4. The question whether the court is justified in reading the statutory provision as if it contained additional words or omitted words involves a judgment of matters of degree. That judgment is readily answered in favour of addition or omission in the case of simple, grammatical drafting errors which if uncorrected would defeat the object of the provision. It is answered against a construction that fills gaps disclosed in legislation or makes an insertion which is too big or too much at variance with the language in fact used by the legislature (Taylor v The Owners – Strata Plan 11564 (2014) 88 ALJR 473 at [38]); 5. If the legislature uses language which covers only one state of affairs a court cannot legitimately construe the words of a section in a tortured and unrealistic manner to cover another set of circumstances (Taylor v The Owners – Strata Plan 11564 at [39]); 6. Ordinarily the proper legal construction of a statutory provision will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning (Project Blue Sky at 384 [78]; Certain Lloyds Underwriters etc at 389-390 [25], 404-405 [68]); 7. But the Court's task remains one of construction, not judicial legislation (Taylor v The Owners – Strata Plan 11564 at 483 [40]). 1. Applying the relevant provisions to the present case, the defendant's conviction on 21 February 2014 was for a serious offence for the purpose of s 92(1)(a). The six month period starting on the day of conviction, for the purpose of s 92(3)(a), expired at midnight on the 20 August 2014. As at that date the property was still covered by the restraining order: s 92(1)(b)(i). Accordingly, it would be automatically forfeited at that time unless the defendant could obtain an extension of the forfeiture period to pursue an exclusion application. 2. As I have said, the defendant's application for exclusion and extension of the period for automatic forfeiture was not made until 20 August, the day on which that period expired. In written submissions, Mr Sullivan argued that an application for an extension could not be entertained because of the terms of s 92(3). By that subsection forfeiture occurs automatically at the expiration of the six month period starting on the conviction day "or if an extension order is in force at the end of that period - the extended period relating to that extension order": par (b). (Mr Sullivan's emphasis) As an extension order had not been made by 20 August, forfeiture had occurred and the property had been vested in the Commonwealth by virtue of s 96. 3. True it is that s 93(1)(a) provides for a period of six months after conviction during which an application for extension of the period for automatic forfeiture might be made. Nevertheless, Mr Sullivan argued, the effect of the s 92(3)(b) is that, to avoid automatic forfeiture after six months by virtue of par (a), an application must have been made and favourably determined within that six month period. He also noted that by s 93(1)(c), a prerequisite for an extension order is the court's satisfaction that the application for exclusion, in this case under s 94, had been made without undue delay and had since been diligently followed up. Those requirements, Mr Sullivan said, had not been met in this case. 4. In support of this construction, Mr Sullivan noted s 94(2), providing that "to avoid doubt", an order for exclusion under the section could not be made "if the property has already been forfeited under this Part." He also referred to the judgment of Button J in The Commissioner of the Australian Federal Police v Klein and Hubble [2014] NSWSC 1638. In that case an application for extension under s 93 had been made before the expiration of the period of six months after conviction, and his Honour was giving judgment on the day before that period expired. Accordingly, his Honour was not called upon to decide the question raised in the present case, but expressed a view consistent with that propounded by Mr Sullivan at [2] of the judgment, as follows: "To 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." (His Honour's emphasis) 1. 14 Mr Sullivan acknowledged authority to a different effect in Director of Public Prosecutions (Cth) v Chan [2001] NSWCA 249, 52 NSWLR 56. That case was concerned with provisions of the predecessor of the current Act, the Proceeds of Crime Act 1987 (Cth), broadly to the same effect as the present provisions. In particular, s 30 of that Act provided for automatic forfeiture of property subject to a restraining order six months after the day of conviction or at the end of an extended period, provision for an application for extension of the period being made by s 30A. An application for extension had been made, but not decided, before the expiration of this six month period. The application did not come on for hearing until after that period, but a judge of this court made an extension order. 2. 15 The Court of Appeal dismissed an appeal by the Director against that order. Meagher JA, with whom Powell and Heydon JJA agreed, noted at [11] a submission by counsel for the respondent that, when an application under s 30A was made within the six months without undue delay and then diligently prosecuted (as required by s 30A(5)), but the court has not determined the application, "the property should not be forfeited automatically by operation of the statute and the power to extend the period must still subsist." His Honour accepted that submission, saying at [13] : "The question is really one of reasonableness. If the view contended for by the DPP is correct, one would have most unreasonable and unjust results flowing from it. … Parliament cannot, in my view, reasonably have meant to sanction the tree but not the fruit." 1. 16 Mr Radojev's argument on behalf of the defendant was to the same effect. He relied upon the fact that s 93(1)(a) of the Act permits an application for an extension order to be made within six months after a conviction. He referred to the notice under s 92A sent to the defendant, which informed him, among other things, that any application for an extension order must be made "before 20 August 2014", but did not expressly inform him that such an application would have to be determined no later than that date. Put shortly, his argument was that s 92(3)(b) is applicable if an extension order has been made during the six month period, but it does not require such an order to have been made within that period. The statutory scheme encompasses an extension order after that period has expired, provided it had been applied for within six months after conviction. 2. 17 Mr Sullivan submitted that I was not bound by the decision in Chan, because it was concerned with different legislation. Moreover, he pointed out that in the 1987 Act there was no equivalent to s 94(2) of the present Act, which emphasises that an exclusion order cannot be made in relation to property which has already been forfeited under the Part. Alternatively, he submitted that Chan was wrongly decided and is inconsistent with the contemporary principles of statutory interpretation set out above. 3. 18 After this matter was argued, the solicitor for the Commissioner brought to my attention the recent decision of the South Australian Full Court in Hall v Director of Public Prosecutions [2015] SASCFC 19. I Invited further written submissions from the parties in relation to that decision. Mr Sullivan did so, but Mr Radojev declined the invitation. The Full Court's decision, in my view, supports Mr Sullivan's argument and is decisive of the issue here. 4. 19 The court was concerned with provisions of Pt 4, Division 2 of the Criminal Assets Confiscation Act 2005 (SA), which are identical to, or relevantly similar to, the provisions of the Commonwealth Act with which I am concerned. Section 74 of the South Australian Act is the counterpart of s 92 of the Commonwealth Act, providing for the automatic forfeiture of restrained property following the expiration of a period after a conviction for a serious offence. Section 74(6), like s 92(3) of the Commonwealth Act, defines that period as the six month period from the day of conviction or, if an extension order is in force at the end of that period, that extended period. Section 75(1)(a) and (c), like s 93(1)(a) and (c) of the Commonwealth Act, require an application for an extension order to be made within six months of the conviction, and to be made without undue delay and to be diligently followed up. Section 76 empowers the court to make an exclusion order; and subsection (2) of that section, in virtually identical terms to s 94(2) of the Commonwealth Act, provides that such an order cannot be made in respect of property which has already been forfeited under the Division. 5. 20 The case was concerned with an application for extension of time in which to apply for exclusion of property which had been made outside the six month period prescribed by s 75(1)(a). The primary judge had refused to order an extension, and the Full Court upheld that decision. Gray J, with whom Stanley and Parker JJ agreed, summarised the effect of the relevant sections of the South Australian Act upon the case at hand at [29]-[31], as follows: "[29] Earlier, the terms of section 74 of the Criminal Assets Confiscation Act have been set out. Mr Hall was convicted of a serious offence on 9 April 2013. The subject property, namely the money in the Suitors' Fund, was covered by a restraining order that related to that offence. That restraining order continued until the end of the relevant period. The property was not, as at 9 October 2013, or at any prior time, the subject of an order under section 76 excluding the property from forfeiture. In these circumstances, it would appear that the property was forfeited to the Crown at the end of the relevant period. [30] It is to be recalled that the relevant period is defined to mean either the six month period starting on the day of conviction, or, alternatively, if an extension order is in force at the end of that period, the extended period related to the extension order. In the present proceeding, as earlier noted, the six month period commenced on 9 April 2013 and concluded on 9 October 2013. If this definition of relevant period applied then the property was forfeited to the Crown on 9 October 2013. [31] The alternative definition of relevant period requires an extension order to be in force at the end of the six month period; in the present case, by 9 October 2013. It was common ground that no such extension order was in force by that date." 1. 21 His Honour went on, at [32], to refer to the power of a court under s 75 to make an extension order provided application for such an order was made within six months of conviction. He also referred to s 75(2), which limits the length of an extended period to fifteen months from the day of conviction, a provision which has its counterpart in s 93(1) of the Commonwealth Act. That period expired on 9 July 2014, nine days before the proceedings at first instance were concluded. His Honour continued, at [33], "It is to be understood that if the regime set out in section 74(6) and 75(1) and (2) operates strictly, then Mr Hall has no entitlement to any relief." 2. 22 Gray J went on to consider the appellant's alternative application, which had been made under s 47 of the Limitations of Actions Act 1936 (SA). It is not necessary to examine this aspect of the judgment in any detail, because there is no provision of like effect bearing upon the present case. Put shortly, the effect of the section is to provide relief from any limitation period of less than twelve months by providing that, notwithstanding that limitation, an action may be brought within twelve months from the accrual of the cause of action. However, by subs (2)(d), the provision does not apply to any action "to the nature or purpose of which the limitation is, in the opinion of the court, essential." Gray J, at [51], found it unnecessary to resolve whether that section could have any application at all to the provisions of the Criminal Assets Confiscation Act. However, His Honour found, as had the primary judge, that the section would not apply to the provisions for the forfeiture of property, by virtue of subs (2)(d). 3. 23 After considering the statutory scheme for forfeiture, his Honour said at [46]-[47]: "[46] It is apparent that Parliament, in enacting the Criminal Assets Confiscation Act was intending to enact a comprehensive and extensive set of new powers targeting the assets and profits of criminals. The proposed legislation was said to be comparable to the Proceeds of Crime Act 2002 (Cth). This was with a view to promoting consistency between State and Commonwealth provisions. This comparable legislation throughout Australia seeks to strike at the heart of major organised crime by depriving persons involved of the profits and instrumentalities of their crimes. The legislative intent is to suppress criminal activity by attacking the primary motive — profit — and to prevent the reinvestment of that profit in further activity. The legislation enacted by the States and Commonwealth parliaments is not identical, but the broad comparability of these provisions is plainly evident. [47] In my view, there is force in the submission of the Solicitor-General that, having regard to the comprehensive nature of the integrated scheme for the forfeiture of property set out in the Criminal Assets Confiscation Act, the time limits operating are essential to the effective operation of the scheme." 1. 24 Of course, the circumstances of the South Australian case are different from the present case, in that the application for extension of time was made after the expiration of the prescribed six month period and by the time the proceedings before the primary judge were concluded the permissible period of extension, fifteen months, had also expired. Nevertheless, what emerges from the decision is that the relevant provisions of the Criminal Assets Confiscation Act were to be applied strictly according to their terms. That necessarily included s 74(6), by which automatic forfeiture occurred six months after the day of conviction unless an extension order was in force by the end of that period. On that issue, Gray J at [11] referred, apparently with approval, to a statement to that effect by the primary judge: "[11] The Judge conducted a survey of the provisions of the Criminal Assets Confiscation Act and concluded that it followed '… that Parliament intended applications for exclusions of property from restraining orders under s 74, had to be brought without exception within the six month period immediately following conviction and correspondingly, that all orders extending that period made under s 75, had also to be brought within the same timeframe'." 1. 25 At [13], his Honour quoted another passage from the judgment of the primary judge, directed to the appellant's reliance upon s 47 of the Limitation of Actions Act, as follows: "[13] … 'The strict nature of the six month time limit prescribed by ss 74(1) and (6), the express and intractable words of s 76(2) 'to avoid doubt, an order … cannot be made', reinforcing as it does the absolute nature of the limitation, together with the outer limit of 15 months which pertained at relevant times for extension orders erected by s 75(2), serve to demonstrate Parliament's intention that the six month period was essential to the nature and purpose of the forfeiture mechanisms contained in Part 4 of the Criminal Assets Confiscation Act. There is little room for doubt that the six months period was designed to provide for expeditious determinations of forfeiture proceedings, following conviction'." 1. 26 In my view, the Full Court's analysis of the South Australian provisions should be accepted and applied to the virtually identical Commonwealth provisions. In particular, I would adopt the statements in the judgment of Gray J of the effect of s 74(6), the equivalent of s 92(3) of the Commonwealth Act, which is consistent with the view expressed by Button J in Klein and Hubble quoted above. The subsection cannot be read any other way, and Mr Radojev's attempt to do so is inconsistent with the canons of statutory construction earlier referred to. In my respectful opinion, Chan should not be followed in approaching the current legislation. 2. 27 As this case exemplifies, the effect of the provision can be draconian. Like it or not, that is a feature of legislation of this kind. Adapting one of the observations of the primary judge in Hall v Director of Public Prosecutions set out above, the provision is "designed to provide for expeditious determinations of forfeiture proceedings, following conviction." So much is spelled out in s 93(1)(c) of the Commonwealth Act, requiring an application for extension to be made without undue delay and to be followed up diligently. 3. 28 The notice under s 92A of the Act sent to the defendant was in accordance with the requirements set out in subs (1). However, it would be preferable if such a notice spelled out the terms of s 92(3), so that the recipient is aware that any application for extension of the six month forfeiture period must be made and determined before the expiration of that period. 4. 29 The defendant's motion was filed on the last day of the 6 month period prescribed by s 92(3). There was not then any order in force extending that period. Accordingly, at midnight on that day the property was forfeited the Commonwealth. By virtue of s 94(2), an order excluding any of the property from forfeiture could not be made. The motion must be dismissed. If necessary, I shall hear the parties on costs. ********* 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: 07 May 2015