Preparing affidavits in support of exclusion applications – defining the issues

Introduction

An applicant for exclusion orders under the Proceeds of Crime Act 2002 (POCA) bears the onus of demonstrating that their interest in property is neither “proceeds” of any offence nor an “instrument” of a serious offence.   

That onus must be discharged in the absence of pleadings and where, commonly, the allegations of unlawful activity made by the Commissioner of the Australian Federal Police (Commissioner) are insufficiently defined.  This poses particular practical difficulties for legal practitioners in preparing evidence in support of exclusion applications.

It is submitted that the absence of precision in defining the issues in dispute commonly gives rise to significant prejudice to an applicant for exclusion orders.

This article discusses how those difficulties can be managed to seek to achieve a fairer process.

What evidence is required?

Before commencing to prepare evidence in support of an exclusion application it is important to bear in mind that an applicant for exclusion orders need not negative every type of possible unlawful conduct.  Apart from a general denial of unlawful conduct, an applicant must only deal with unlawful activity squarely put in issue by the Commissioner.

Hunt CJ at CL in DPP v Jeffery (1992) 58 A Crim R 310 stated:

As a matter of practical reality, what [an applicant for exclusion orders] must do in most cases in order to establish the negative facts … is not only to deny on oath in general terms that the property was so used in or derived from any such unlawful activities but also to establish what activities it was in fact used in and derived from … However, in my view it is not necessary for the applicant – in addition to his sworn denial in general terms that the property had been so used in any unlawful activities – to deal specifically with every kind of unlawful activity which could be imagined in relation to the use of such property … therefore the applicant – in addition to his sworn denial in general terms that the property had been used in any unlawful activities … – need deal specifically only with inferences available from the evidence that his property had been used in particular unlawful activities and which tend to contradict his sworn denial.

[Emphasis added]

More recently, in Commissioner of the Australian Federal Police v Hart & Ors; Flying Fighters Pty Ltd v Commonwealth of Australia & Anor; Commonwealth of Australia v Yak 3 Investments Pty Ltd & Ors [2016] QCA 215, Douglas J stated (at [935]) (which was quoted with approval by the plurality in the High Court on appeal):

The [exclusion section] commits to a Court the task of determining whether or not [the exclusion grounds] have been established. By committing the task to a Court, absent some particular provision in the legislation, the legislature must be taken to expect that the application will be conducted adversarially; and that the Court will use its ordinary procedures to go about determining the relevant questions. A Court cannot be expected to conduct some wide-ranging commission of inquiry into matters relevant to the application. Moreover, it is implicit in the section that the legislature recognises that the proceedings are to be conducted fairly. Thus there is an acceptance that, in a Court where pleadings are common, issues will be defined by pleadings; or alternatively that directions might be given to ensure a fair hearing. The history of this matter reflects this course, the issues being defined by documents in the nature of pleadings. In those circumstances, the matters which the Hart companies had to address were those raised by the pleadings, save for any matter which might be regarded as fairly raised and accepted as relevant, by the manner in which the case was conducted, or which might for proper reason otherwise be determined as a matter which the Hart companies could reasonably be expected to deal with. In my view the learned primary Judge was right not to consider the possibility that property, the subject of the application under s 102, was relevantly associated with some form of illegal activity other than that raised by the Commonwealth parties, in their points of defence, or otherwise properly in issue in the proceedings before him.

[Emphasis added]

In Commissioner of the Australian Federal Police (2018) 262 CLR 76, Kiefel CJ, Bell, Gageler and Edelman JJ stated the following in relation to an exclusion test under the POCA (at [7]):

…an applicant need not negative possibilities which the Commonwealth does not raise in its defence.

Hence, the starting point is to identify the matters that the Commissioner puts in issue.

How are the issues identified?

The affidavit in support of an application for a restraining order commonly makes broad and unparticularised allegations of unlawful activity. Further, affidavits in support of exclusion applications are prepared to evidence a “suspicion” and much of the content of such affidavits will not be admissible at trial.  Suspicion falls short of a belief and, even more so, proof on the balance of probabilities.  In Hongjie Mah v Commissioner of the Australian Federal Police [2016] VSC 553, John Dixon J stated (at [34]):

The words ‘reasonable suspicion’ in s 19 do not require proof or admissible evidence. I would adopt, with respect, the analysis of Allanson J in Re Application Pursuant to Section 19 of Proceeds of Crime Act 2002 (Cth); Ex parte Commissioner of the Australian Federal Police.

Whether a person has reasonable grounds to suspect something is to be judged on the facts known to that person at the time. The concept of reasonable suspicion is well known in the law. In George v Rockett, the High Court approved the definition of ‘suspicion’ given by Lord Devlin in Hussien v Chong Fook Kam:

in its ordinary meaning [suspicion] is a state of conjecture or surmise where proof is lacking: ‘I suspect but I cannot prove’.

For there to be reasonable grounds to suspect there must be material which is sufficient to induce the state of suspicion in a reasonable person. It is not, however, necessary that the material which establishes the reasonable grounds for suspicion be limited to admissible evidence: Walsh v Loughnan (Vincent J); Director of Public Prosecutions (SA) v Tregenza.

[Emphasis added]

It is often difficult to ascertain with precision the scope of the unlawful activity put in issue in such an affidavit, particularly when allegations relate to dealing in proceeds of crime without identifying with precision the underlying criminal activity or contain vague references to a failure to comply with taxation obligations.

However, the POCA provides that, if the Commissioner seeks to oppose an exclusion application, a notice of grounds of opposition must be served on the applicant.  The notice of grounds of opposition in central to defining the issues in dispute.

In Safadi & Anor v Commissioner of the Australian Federal Police (Ruling) [2018] VCC 1145, his Honour Judge Misso stated the following in relation to a notice of grounds of opposition (at [12]):

… it is clear from the authorities to which counsel took me that particulars are necessary where they will permit the parties to understand the grounds upon which an application will be made and opposed. Essentially, whether the requirements are contained in rules or in judicial pronouncements, the requirement for particulars serves the purpose of affording fairness to parties who then know what the battleground is to be, and for the proper and expeditious conduct of a trial.

A notice of grounds should specify the unlawful conduct upon which the Commissioner relies and the particular circumstances/acts that are alleged to constitute the unlawful activity.  For example, where the Commissioner points to unlawful conduct in connection with taxation obligations, the notice of grounds of opposition should specify:

  • who the relevant taxpayer is
  • the relevant financial years in respect of which the Commissioner contends unlawful tax related activity occurred
  • the nature of the alleged unlawful activity (i.e. whether it is alleged that there was a failure to file tax returns at all or whether it is alleged that the returns filed were false and, if so, how).

It is submitted in many instances the notices of grounds of opposition upon which the Commissioner relies do not sufficiently identify the issues in dispute and practitioners have to date commonly proceeded to hearing without a sufficient attempt to define such issues

The need for care in framing the issues was emphasised by Edelman J in Commissioner of the Australian Federal Police v Courtenay Investments Ltd [No 4] [2015] WASC 101 (at [492]) where his Honour considered whether certain property was an “instrument”:

The requirement that property be used ‘in’ or ‘in connection with’ the commission of an offence requires clarity in defining the alleged facts involved in the commission of the offence. This permits the relevant conduct to be assessed to determine whether it involves a use of the property ‘in’ or ‘in connection with’ the commission of that offence.

That clarity must come from the notice of grounds of opposition.

When is the notice of grounds of opposition required?

To date, there has not been a consistent approach in the making of directions for the provision of notices of grounds of opposition.  It is submitted that the lack of consistency arises from the failure to appreciate the significance of the notice of grounds of opposition.

The POCA does not prescribe a time for the provision of the notice. However, fairness dictates that the notice must be given by the Commissioner at a time when an applicant for exclusion still has the opportunity to put on evidence about matters put in issue by the Commissioner.

It is submitted that practitioners should seek that a notice of grounds of opposition be served together with the Commissioner’s evidence in opposition to an exclusion application, so that an exclusion applicant can then deal with any further matters raised by their reply evidence.

Too often, notices of grounds of opposition are provided too late; immediately prior to trial, when applicants have no further opportunity to address new matters raised in their affidavits.  This is unhelpful and places an applicant for exclusion orders at significant prejudice.

Practitioners acting for applicants for exclusion orders ought to press for a particularised notice of grounds of opposition to be served, at the latest, together with the Commissioner’s evidence in opposition.  If the notice of grounds of opposition does not adequately identify the matters in dispute, orders for particulars ought to be sought.

Only then can practitioners be confident that all relevant unlawful activity has been identified so that they can prepare affidavits to address these matters.