Latest word on stay of proceedings and examinations: Onley v Commissioner of the Australian Federal Police

On 10 May 2019, the NSW Court of Appeal delivered its decision in Onley v Commissioner of the Australian Federal Police; Menon v Commissioner of the Australian Federal Police; Anquetil v Commissioner of the Australian Federal Police [2019] NSWCA 101.

The decision (in excess of 140 pages) provides a detailed analysis of the law concerning stays of proceedings and examinations under the Proceeds of Crime Act 2002.

Since the decision has a headnote which provides a very useful summary of the reasons, the headnote is reproduced below:

Headnote:

The appellants sought leave to appeal from a decision of a judge of the Common Law Division refusing to set aside or stay examination orders made under s 180 of the Proceeds of Crime Act 2002 (Cth) (POC Act) and orders to supply sworn statements of assets.

In May 2017, the Commissioner of the Australian Federal Police commenced proceedings under the POC Act against 66 defendants of whom 23 were natural persons. Three of the defendants were the three appellants, Messrs Onley, Menon and Anquetil. The Commissioner alleged that the appellants were involved in a conspiracy to defraud the Australian Taxation Office (the ATO) with the intention of dishonestly causing a loss to the Commonwealth in the amount of over $83m contrary to s 135.4 of the Criminal Code Act 1995 (Cth) (Criminal Code) (the taxation fraud conspiracy).

The Commissioner sought orders that property identified in the summons be forfeited to the Commonwealth pursuant to ss 47 and 49 of the POC Act and orders that 8 of the 66 defendants, including the appellants, pay a pecuniary penalty to the Commonwealth, pursuant to s 116 of the POC Act. The pecuniary penalty sought against the appellants was referable to what the Commissioner alleged was the value of the benefits derived from their involvement in the taxation fraud conspiracy. The examination orders were made on an ex parte application by the Commissioner.

On 16 May 2017, the primary judge made ex parte orders restraining the appellants from dealing with itemised property and directed that the Official Trustee in Bankruptcy take custody and control of the property. The net value of the property under the custody and control of the Official Trustee was over $39.5m and, in addition, other property falling within the terms of the summons valued at a little under $2m. In addition, the ex parte orders included examination orders under s 180 and directions to supply sworn asset statements pursuant to s 39(1)(ca) of the POC Act.

On 17 May 2017, various persons, including Mr Onley and Mr Menon were arrested and charged with the taxation fraud conspiracy. Mr Anquetil was arrested and charged on 18 May 2017. On 5 and 6 June 2017, examination notices were issued under s 183 of the POC Act, requiring the appellants to attend for examination on 19 June (Mr Anquetil), 22 June (Mr Onley) and 27 June (Mr Menon).

On 15 June 2017, Mr Anquetil filed a notice of motion seeking orders staying the proceedings pending the finalisation of criminal proceedings commenced against him, or alternatively, staying the examination summons pending the finalisation of these proceedings. On 16 June 2017, Mr Onley and Mr Menon filed a notice of motion seeking relief broadly similar to that sought by Mr Anquetil.

On 22 March 2018, Fullerton J dismissed the notices of motion filed by the appellants.

There were five main issues on appeal:

  1. Whether the primary judge erred in concluding that Mr Anquetil bore the onus of showing that the restraining order should be revoked?
  2. Whether the primary judge erred in concluding that Mr Anquetil bore the onus of showing that the examination order should be stayed?
  3. Whether the primary judge erred in concluding that Mr Anquetil bore the onus of showing that the examination order should be revoked?
  4. Whether the primary judge erred in the exercise of her discretion in declining to stay the proceedings under s 319 :
  5. by requiring the appellants to demonstrate the loss of a legitimate forensic choice as a result of them being examined?
  6. by failing to properly consider the risk of disclosure of information provided by the appellants in the course of compulsory examinations?
  7. in taking into account prejudice to the Commissioner if the examinations were stayed?
  8. in failing to take into account material prejudice concerning future charges?
  9. Did the order requiring sworn statements as to assets and liabilities exceed the power conferred in s 39(1)(ca) of the POC Act?

The Court (Bathurst CJ, Basten JA and Meagher JA) held, granting leave to appeal to each applicant but dismissing the appeals with costs:

  1. Onus of showing that the restraining order should be revoked

(i) There is an express provision dealing with the revocation of a restraining order pursuant to s 42 of the POC Act: [210] (Bathurst CJ); [299] (Basten JA); [418] (Meagher JA).

David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265; [1995] HCA 43 referred to.

(ii) Proceedings invoking the power under s 42 of the POC Act to revoke a restraining order are proceedings under the POC Act: [210] (Bathurst CJ).

(iii) The applicant in proceedings to revoke a restraining order bears the onus of proving the matters necessary to establish the grounds for making the order by virtue of s 317 of the POC Act: [210] (Bathurst CJ).

(iv) It is unclear where the onus of proof lies in proceedings to revoke a restraining order under s 42 of the POC Act: [300] (Basten JA); [418] (Meagher JA).

  1. Onus of showing that the examination order should be stayed

(i) The power of the Court to stay the proceedings under the POC Act is conferred by s 319 of the Act and must be exercised subject to the conditions imposed by that provision: [216]-[217] (Bathurst CJ); [348] (Basten JA); [418] (Meagher JA).

Rizeq v The State of Western Australia (2017) 262 CLR 1; [2017] HCA 23 considered.

(ii) Section 317 of the POC Act would apply to impose upon the applicants for the stay the onus of establishing that the stay was justified: [213] (Bathurst CJ).

Jago v The District Court of New South Wales (1989) 168 CLR 23; [1989] HCA 46 referred to.

  1. Onus of showing that the examination order should be revoked

(i) There is no express power within the POC Act to revoke an examination order: [212] (Bathurst CJ).

(ii) There is no power within the POC Act to revoke an examination order: [309]-[312] (Basten JA); [418] (Meagher JA).

(iii) It may be inferred that the Commonwealth Parliament intended that the procedural scheme of the POC Act operate coherently without alteration or addition by the adoption of State laws allowing for the discharge or setting aside of examination orders when made ex parte, except to the extent that the standards and criteria to be applied by a court exercising discretionary powers will be informed by general law principles: [312] (Basten JA); [418] (Meagher JA).

Tan v Director of Public Prosecutions (Cth) [2004] NSWSC 952; Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9; [2006] NSWCA 238; Banerjee v Commissioner of Police [2018] NSWCA 283 referred to.

International Finance Trust Company Ltd v New South Wales Crime Commission (2009) 240 CLR 319; [2009] HCA 49; Rizeq v The State of Western Australia (2017) 262 CLR 1; [2017] HCA 23; Resort Hotels Management Pty Ltd v Resort Hotels of Australia Pty Ltd (1991) 22 NSWLR 730; Ruzehaji v Commissioner of the Australian Federal Police (2015) 124 SASR 355; [2015] SASCFC 182 considered.

(iv) Section 317 of the POC Act should not be read as having the effect of placing an onus on the respondent to an application for an examination order to demonstrate why it should be discharged, if made ex parte, but leaving the onus to establish a justification for the order on the Commissioner, if sought in the course of an inter partes hearing: [292] (Basten JA); [418] (Meagher JA).

(v) The primary judge did not determine the application for revocation on the basis that the appellants had failed to discharge any onus cast on them but rather expressed a positive satisfaction on the issue: [207] (Bathurst CJ).

(vi) To the extent that there is power to seek a revocation of an examination order, the onus of establishing whether the order should be revoked is borne by the applicant for such an order: contra [216] (Bathurst CJ).

Cameron v Cole (1944) 68 CLR 571; [1944] HCA 5; John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19; BP Australia Ltd v Brown (2003) 58 NSWLR 322; [2003] NSWCA 216 referred to.

Rizeq v Western Australia (2017) 262 CLR 1; [2017] HCA 23 applied.

  1. Did the primary judge err in the exercise of her discretion in declining to stay the proceedings under s 319:
  2. by requiring the appellants to demonstrate the loss of a legitimate forensic choice as a result of them being examined?

(i) The primary judge did not err by requiring the appellants to demonstrate the loss of a legitimate forensic choice as a result of them being examined. Section 319 of the POC Act makes it clear that prejudice arising from the fact of the examination that alters the accusatorial judicial process, even if kept secret (“systemic prejudice”) is not sufficient of itself to warrant the grant of stay. The primary judge was correct in concluding that something more was required to justify a stay than just that the examination was to take place while criminal proceedings were pending: [220]-[236] (Bathurst CJ); [369]-[372] (Basten JA); [418] (Meagher JA).

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27; [2009] HCA 41; X7 v Australian Crime Commission (2013) 248 CLR 92; [2013] HCA 29; Zhao v The Commissioner of the Australian Federal Police (2014) 43 VR 187; [2014] VSCA 137; Certain Lloyd’s Underwriters Pty Ltd v Cross (2012) 248 CLR 378; [2012] HCA 56; Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 93 ALJR 1; [2018] HCA 53; Commissioner of the Australian Federal Police v Elzein (2017) 94 NSWLR 700; [2017] NSWCA 142; Lee v New South Wales Crime Commission (2013) 251 CLR 196; [2013] HCA 39; X7 v The Queen (2014) 246 A Crim R 402; [2014] NSWCCA 273 referred to.

  1. by failing to properly consider the risk of disclosure of information provided by the appellants in the course of compulsory examinations?

(i) The primary judge did not err in declining to grant a stay based on the risk of disclosure of information provided by the appellants in the course of compulsory examinations to an authority investigating or prosecuting criminal charges (“disclosure prejudice”). The primary judge properly considered the strength of the protection mechanisms and the residual risk of leakage in determining whether or not to grant a stay. The measures taken by the Commissioner to protect against the risk of leakage of specific information were “significant” and provided “ample justification for the conclusion by the primary judge that the protection was adequate” and there was no error in discretion in her so finding: [237]-[240] (Bathurst CJ); [373]-[378], [389]-[393] (Basten JA); [418] (Meagher JA).

Lee v The Queen (2014) 253 CLR 455; [2014] HCA 20; Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 93 ALJR 1; [2018] HCA 53 referred to.

  1. in taking into account prejudice to the Commissioner if the examinations were stayed?

(i) The primary judge did not err in considering the risk of prejudice to the Commissioner if the examinations are stayed: [244]-[249] (Bathurst CJ).

(ii) The primary judge did not take into account what was said to be an improper purpose of the examination, that is the use of the power to ascertain if funds were available to satisfy a future pecuniary penalty order, nor was that purpose in any event improper: [244]-[249] (Bathurst CJ).

Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103 referred to.

(iii) The primary judge did not err in concluding that there would be a level of prejudice to the Commissioner if the proposed stay was granted: [406] (Basten JA); [418] (Meagher JA).

Zhao v The Commissioner of the Australian Federal Police (2014) 43 VR 187; [2014] VSCA 137; Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103 considered

(iv) The primary judge did not err in balancing competing interests in declining to stay the proceedings: [407]-[412] (Basten JA); [418] (Meagher JA).

  1. in failing to take into account material prejudice concerning future charges?

(i) There was no error of discretion in the manner in which the primary judge dealt with future charges. Section 319(2)(a) of the POC Act extends to criminal proceedings as proceedings that might be instituted and provides that possibility is not a ground for a stay: Bathurst CJ [241]-[243]; Basten JA [371]; Meagher JA [418].

R v Independent Broad-based Anti-corruption Commissioner (2016) 256 CLR 459; [2016] HCA 8; Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 93 ALJR 1; [2018] HCA 53; Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103; Commissioner of the Australian Federal Police v Elzein (2017) 94 NSWLR 700; [2017] NSWCA 142; X7 v Australian Crime Commission (2013) 248 CLR 92; [2013] HCA 29 referred to.

  1. Did the order requiring sworn statements as to assets and liabilities exceed the power conferred in s 39(1)(ca) of the POC Act?

(i) The sworn asset statement order did not exceed the power conferred on the Court by s 39(1)(ca) of the POC Act; s 39(1)(ca) of the POC Act extends to property held by a company of which the person is a director: Bathurst CJ [250]-[257]; Basten JA [324]-[331]; Meagher JA [418].

Commissioner of the Australian Federal Police v Cacu [2017] NSWCA 5; 264 A Crim R 427 considered.