On 13 February 2019, the Victorian Court of Appeal (Maxwell P, Tate and Niall JJA) published reasons in Nguyen v Director of Public Prosecutions for Victoria [2019] VSCA 20.
The application for leave to appeal concerned a challenge to the constitution of validity of unexplained wealth restraining orders made under the Confiscation Act 1997.
The constitutional challenge was dismissed. The Court made some important observations about the power to set aside restraining orders.
In October 2015, an unexplained wealth restraining order was made over a number of properties upon the ex parte application of the Director of Public Prosecutions for Victoria (DPP). After the restraining order was made, it was served on the registered proprietors of the restrained real estate, including Ms Nguyen. Subsequently, Ms Nguyen made an exclusion application which required her to prove, on the balance of probabilities, that her interest in the restrained properties were lawfully acquired. A presumption operated to the effect that the restrained property was not lawfully acquired unless established otherwise by Ms Nguyen. The trial judge dismissed the exclusion application and made significant adverse credit findings against the witnesses who had been called, including Ms Nguyen.
Following the making of the final orders, one of those owners of the property, Ms Nguyen, sought leave to appeal against the restraining order and the final order made.
Constitutional challenge
Ms Nguyen’s challenge to the constitutional validity of the unexplained wealth provisions rested on a contention that it was fundamentally unfair that a Court could make a restraining order ex parte which resulted in forfeiture of property without the guarantee that the making of the restraining order could be revisited in a full inter partes hearing.
Ms Nguyen relied upon the decision of the High Court in International Finance, by which (in a 4:3 majority) the High Court had determined that the New South Wales analogue to the Confiscation Act 1997 was constitutionally invalid because it compelled a Court to make a restraining order in circumstances where an application for such restraining order had been made without reposing any discretion in the Court to require notice of that application to be given to affected persons.
In contrast, s.41H of the Confiscation Act 1997 reposes power in a Court hearing an ex parte application for a restraining order to require the DPP to give notice to affected persons. Tate JA stated (at [81]):
The Act expressly invests the Court with the discretion to determine if notice should be given to an affected person; there is no direction by the Executive to the Court as to how to conduct its proceedings. The Act does not deprive the Court of an essential incident of its judicial function of determining what procedural fairness requires.
In summary, although the DPP may apply for a restraining order without notice, it is for the Court to determine whether the application will in fact be heard and determined without notice (at [83]).
In seeking to contend that the Confiscation Act 1997 was not invalid, the DPP contended that there was inherent power within the Supreme Court of Victoria and implied power in the County Court of Victoria to set aside any restraining order, notwithstanding absence of any express power under the Act. That submission was accepted (see Tate JA at [89]-[100]).
Specifically, Tate JA relied upon s.40W of the Confiscation Act 1997, which provides for the making of ancillary orders, to confer power on the Court to set aside a restraining order. Her Honour observed (at [100]):
In my view, the language of s 40W, on its plain meaning, is sufficiently broad to extend to the making of orders setting aside an order obtained ex parte. An order setting aside a restraining order made ex parte is clearly an order ‘in relation to the property to which the unexplained wealth restraining order relates’ under s 40W(1) because its effect would be to lift the restraint over the property and permit dealings with that property. This construction is consistent with a scheme of the Act given that, as I have described, its provisions recognise the importance of procedural fairness and the scheme of the Act is sufficiently different from the scheme of the New South Wales Act, there being no scope for a mandatory directive by the Executive.
Tate JA stated (at [108]):
I also consider that, in any event, the inherent or implied power of a Court to set aside an order it has made ex parte has not been removed by the Act.
It follows from this that, where a restraining order is obtained ex parte, a person affected has a right to a re-hearing of that application and the Court has power to set aside the restraining order made under the ancillary powers.
Tate JA observed the distinction between seeking to set aside a restraining order made ex parte and pursuing an application for exclusion (at [109]):
Furthermore, I reject (Ms Nguyen’s) contention that construing the Act as permitting an inter partes hearing to determine if a restraining order should be discharged would render the exclusion application regime redundant. Exclusion orders under s 40S can be applied for, under s 40R, by ‘any person’ claiming an interest in the property. This typically extends to family members who have acquired their interest in the relevant property lawfully. Applications for exclusion orders are subject to a detailed set of rules. The order, as the name suggests, excludes or excises an interest from the restraint imposed and thereby from the other processes, including forfeiture, under the statutory scheme. The order removes an interest in the property from the operation of the statute. It allows the statutory scheme to continue to operate on any interest that has not been excised. By contrast, an application to discharge a restraining order seeks to impugn the making of the order in the first place; it seeks to demonstrate that the order should never have been made. The focus of the hearings, and the force of the orders made, are quite different. In my view, the postulated redundancy is unsupported by the Act.
In reaching that conclusion, Tate JA distinguished decisions under the Proceeds of Crime Act 2002 (Cth), which were to the effect that the rehearing right under s.42 of the Proceeds of Crime Act 2002 (Cth) was the only avenue by which a restraining order could be “reheard”: Director of Public Prosecutions (Cth) v Kamal (2011) 248 FLR 64.
Tate JA observed (at [123]):
In my view, it is not possible to apply the reasoning of either Kamal … here directly to determine whether s 40X is an exclusive source of power because, as noted, they concern different legislation with different terms.
Niall JA observed (at [170]):
The criteria to be applied in determining an application for a restraining order and applicable to an exclusion order under s 40S are different. Allowing an affected party to apply to the Court to review or reconsider the restraining order provides an additional means for that party to have property released in order to avoid forfeiture. This would not require the moving party to satisfy the Court that the property was lawfully acquired. However, the two types of applications (one to reconsider and the other for an exclusion order) serve different functions and it is not surprising that they have different criteria. The existence of one power does not render the other redundant.
Conclusion
The decision highlights yet again the constitutional validity of the Confiscation Act 1997.
However, the decision makes clear that a person who has had their property restrained in an ex parte application brought by the DPP is entitled to an inter parties rehearing of that application.
There had been considerable doubt about whether that right existed, particularly given the developments under analogous provisions under the Proceeds of Crime Act 2002 (Cth), which were to the effect that no such rehearing power existed absent express provision for it in the legislation.
Accordingly, practitioners advising in respect of proceedings under the Confiscation Act 1997 should carefully consider whether the evidence relied upon in support of applications for ex parte restraining orders (which occasionally contains inadmissible material) was sufficient to meet the statutory test, particularly in the context of civil forfeiture restraining orders and unexplained wealth restraining orders.
