International Finance Trust Company Limited v NSW Crime Commission & Ors [2009] HCATrans 47 (13 March 2009)

Last Updated: 16 March 2009

[2009] HCATrans 047

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S487 of 2008

B e t w e e n -

INTERNATIONAL FINANCE TRUST COMPANY LIMITED

First Applicant

IFTC BROKING SERVICES LIMITED

Second Applicant

and

NEW SOUTH WALES CRIME COMMISSION

First Respondent

THE BENEFICIAL OWNERS OF VARIOUS BANK AND SHARE TRADING ACCOUNTS

Second Respondent

THE BENEFICIAL OWNERS OF ANZ NATIONAL BANK LIMITED ACCOUNT NUMBER 201980-AUD-01 IN THE NAME OF CETERIS PARIBUS

Third Respondent

Application for special leave to appeal

GUMMOW J
HEYDON J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 13 MARCH 2009, AT 9.34 AM

Copyright in the High Court of Australia

__________________

MR T.E.F. HUGHES, QC: May it please the Court, I appear with my learned friends, MR G.J. JONES and MR G.A.F. CONNOLLY, for the applicants. (instructed by Atanaskovic Hartnell)

MR P.F. SINGLETON: May it please the Court, I appear for the first respondent. (instructed by New South Wales Crime Commission)

GUMMOW J: There is no appearance for the second and third respondent?

MR SINGLETON: No, there is an affidavit about that.

GUMMOW J: There is, yes. Yes, Mr Hughes.

MR HUGHES: A primary principle, your Honours, invoked for the purposes of this application, is that legislation which is compatible with the independence of the Supreme Court of New South Wales as a repository for the exercise of federal judicial power is invalid; that is Kable primarily

We say, turning to the Act in question – which if your Honours will permit, I will refer to as CARA – section 10(3) of CARA is incompatible, in our submission, with the independence of the Supreme Court in that sense because, as held by the Court of Appeal, President Allsop at application book 62, paragraph 2, Justice Beazley concurring, and Justice McClellan at application book 100, paragraph 104, it requires the Court that the option of the Crime Commission to hear and determine an application for a restraining order ex parte.

GUMMOW J: Mr Hughes, is there a point about section 27 as well?

MR HUGHES: No, your Honour, in our submission, although section 27 is mentioned in the respondent’s application. No application, your Honours, in the fourth amended summons, which was the relevant pleading, was made for such an order against my clients.

GUMMOW J: You had nevertheless a considerable measure of success in the Court of Appeal, so an appeal to us would be interlocutory, in a sense, would it not?

MR HUGHES: It is, but interlocutory in a case because of the structure of the Act has very grave consequences for my clients. These assets have been under restraint since May of last year and then there was a further restraining order made in late October at an ex parte hearing while the matter was under judgment by the Court of Appeal. We say that if the Court were to entertain this appeal and if it were to succeed, the result would have to be that the proceedings as against my clients would be dismissed, so that it would be a final outcome.

GUMMOW J: But if you failed here?

MR HUGHES: If we fail here we have to - - -

GUMMOW J: You would have a second chance, would you not, back at first instance?

MR HUGHES: Yes, but we would have to undergo a proceeding in the Court at the suit of the Crime Commission for an assets forfeiture order, also for the various ancillary orders as against our clients, the subject of the fourth amended summons. Your Honours, another statement of principle invoked in support of this application is that an invalidating impairment of the integrity of a court invested with federal judicial power occurs where legislation purposed to direct such a court as to the manner and outcome of the exercise of its jurisdiction. We rely on Gypsy Jokers at paragraph 39.

That principle is contravened by section 10(3), in our respectful submission, first of all because, as the Court of Appeal unanimously held, it directs the court to hear and determine an application for a restraining order ex parte if the Crime Commission chooses to insist on that course. The Supreme Court is deprived of any discretionary judgment as to the manner of hearing an application under section 10(3).

For example, the Court is deprived of power to adopt a usual course in the treatment of applications for urgent injunctive relief, which is to make an ex parte restraining order in the first instance for a limited period of time to be followed by an application on notice to continue the restraint on an interlocutory basis until a hearing on the merits; also because the principle is offended because the subsection requires the court to make a restraining order upon proof of a single jurisdictional fact, namely, that the authorised officer had reasonable grounds for suspicion, the holding of which he deposes that a person has engaged in serious crime related activity.

We submit that the result of requirements (a) and (b), the two requirements that I have itemised, is to negate the judicial independence of the Supreme Court in dealing with the application under section 10(3) despite the entrenched principle that any application for injunctive relief is ordinarily determined by reference to discretionary considerations such as full disclosure and balance of convenience.

We go on to say, your Honours, that the last two lines of section 10(3) make it clear that in considering an application for a restraining order the court would be confined to the evidence contained in the authorised officer’s affidavit. This would be so even if the Crime Commission were to waive its statutory entitlement to an ex parte hearing. Thus, even in such a case the subsection derogates from the independence of the court by precluding it from permitting a defendant to answer the authorised officer’s affidavit by an affidavit in response.

The exclusion of otherwise admissible material from the purview of the court’s consideration, we say, impairs its independence from external control by the Crime Commission, which is an entity endowed with executive authority so it is able to confine the totality of the evidence on an application for a restraining order by excluding any countervailing evidence.

The proposition, we would submit, enunciated at paragraph 39 of Gypsy Jokers was earlier expressed in Chu Kheng Lim (1992) 176 CLR 1 at page 37 in the joint judgment of Justices Brennan, Deane and Dawson. We say that in their context, your Honours, the expression “manner and outcome” referred to overlapping requirements, they apply to a statutory prescription precluding a person who would be affected by a restraining order from giving any evidence in opposition to an application for such an order.

Cases so far decided, your Honours, except the decision of the Queensland Court of Appeal in Re Criminal Proceeds Confiscation Act [2004] 1 Qd R do not cover this point. In that case there is an important passage in the judgment of Justice Williams, which we have set out, your Honours, at application book page 129. His Honour’s criticism of section 30 of the Queensland Act applies equally to section 10(3) of CARA. The inflexible confinement of evidence to that provided by the Crime Commission amounts in substance to a direction as to both the manner and outcome of an application.

The selection by section 10(3) of the manner in which an application for a restraining order is to be determined effectively ensures, to borrow the words of Justice Williams in the Queensland case, that the outcome will be adverse to the citizen, provided admissible evidence is given of the holding of a suspicion that the Supreme Court regards as based on reasonable grounds, as held by the authorised officer on grounds that are reasonable.

We go on to say, your Honours, that it is incontestable that it is within the permissible limits of the exercise of judicial power for a court to effect temporary abrogation of the audi alteram partem rule by making an ex parte order restraining the owner of property from dealing with it for a limited time, giving the moving party the opportunity to apply within that time on notice for a continuation of the order. That is not the present case. There is no provision in CARA for the adoption of that procedure unless, of course, the Commission were to itself ask the court for such adoption.

A special feature, we venture to say, of this case is the case in the Kable line of authority, which is closest to this on the facts, is the Queensland case, the 2004 case, as Justice Kirby announced in footnote 102, paragraph 158 of his concurring judgment in the recently decided K-Generation Case. That judgment was not the subject of any application for a special leave. Section 30 of the Queensland Act, which was declared invalid, was the subject of substantial amendments to make its provisions conform with the Court of Appeal’s judgment.

CARA stands alone in this area of statutory activity in the drastic nature of its provisions with respect to restraining orders. Legislation of the Commonwealth and of the States, other than New South Wales, gives ample scope for the operation of the audi alteram partem rule in relation to restraining orders. We have prepared a schedule of comparable statutory provisions in the States and the Commonwealth. It has not been handed in, your Honours.

GUMMOW J: Yes.

MR HUGHES: There is not time to go to it, obviously. Legislation, your Honours, in our submission, that directs the court as to the manner in which it exercises its jurisdiction will have the effect – this is arguable point we raise, we submit it is arguable – will have the effect of directing the outcome of such exercise if in substance the legislation operates to preclude any challenge to the relief sought once the prescribed jurisdictional fact has been established. This is the point made by Justice Williams on which he was concurred by the other judges of the Queensland Court of Appeal in the Queensland 2004 case.

Your Honours, it may be thought significant that CARA is a 1990 Act, it was therefore enacted before Kable and before Chu Kheng Lim. It was in Chu Kheng Lim that the concept adopted in paragraph 39 of the Gypsy Joker’s judgment first saw the light of day, in the joint judgment of Justices Brennan, Deane and Dawson.

Those are the submissions we make in support of special leave. It is an important point and it would be preferable to grant special leave at this stage even though the point arises in an interlocutory way because there are other proceedings on foot commenced by the Commission ex parte on 25 October in which an overlapping set of restraining orders was granted ex parte by another judge of the Supreme Court, that is to say, Justice Hoeben who heard the grant of the first restraining order. We do rely on what President Allsop said at paragraph 46 of his reasons at application book page 73 where he - - -

GUMMOW J: What paragraph, Mr Hughes?

MR HUGHES: Paragraph 46 where he emphasised the extreme gravity of a restraining order of the kind made under section 10(3). In all the circumstances we do submit that this is a case for special leave for the reasons I have endeavoured to give.

GUMMOW J: Thank you, Mr Hughes. Yes, Mr Singleton.

MR SINGLETON: Your Honours, the principal bases upon which we respectfully - - -

GUMMOW J: Are you still pressing this point about section 27?

MR SINGLETON: Yes, your Honours.

HEYDON J: Which paragraph of the summons claims relief under section 27 against the applicants?

MR SINGLETON: There is no claim for relief under section 27 against these applicants, which is the response that they make to our point, but the relief that they sought below was for the dismissal of the entire proceedings. There is no basis, as found below, for the dismissal of the entire proceedings. What they now seek is, in effect, for them to be removed as a party to the proceedings in circumstances where they originally were not parties but applied to become parties and they have not yet in any court sought to become removed as parties. So, in effect, they come to this Court for the first time to seek an order for removing themselves and, we respectfully submit, that that is an inappropriate vehicle for a grant of special leave or an inappropriate purpose for granting special leave.

HEYDON J: If they won, if special leave were granted and the appeal succeeded, would there be anything left in the case against them?

MR SINGLETON: Not as presently structured.

HEYDON J: This is the fourth further amended summons?

MR SINGLETON: This is the further and fourth amended summons. There have been several amendments.

HEYDON J: That is usually enough time to get the structure into a final and settled form.

MR SINGLETON: I do not wish to suggest that we rely on any future events, it must be judged on today’s circumstances, but the reason for the changes is not a refinement of a pleading in the usual fashion, but as new parties are brought into the proceedings and new causes of action arise amendments take place. We respectfully submit that - - -

GUMMOW J: What is the pleading structure, if I can use that expression, of these proceedings? It sounds like a vast oak tree at the moment.

MR SINGLETON: Firstly, the proceedings begin with a summons and in a summons a restraining order is sought against one or more persons and some confiscation relief is sought, typically either an assets forfeiture order or a proceeds assessment order.

GUMMOW J: Did it ever get beyond a summons?

MR SINGLETON: No. The way the Act works is the interlocutory application for a restraining order is dealt with first and later on an inter partes hearing would be held upon the question of whether there should be assets forfeited or - - -

GUMMOW J: Still on the summons?

MR SINGLETON: It is always on the summons. We respectfully submit that, although, if the appellants were to succeed on the appeal that would be given if leave were granted, they would be able to get out of the case because nothing further would be sought against them, that was not tainted by the constitutional point. It is an inappropriate vehicle to raise that constitutional point on an interlocutory hearing where, as my learned friend has just pointed out, there is now another set of orders. There is another appeal to the Court of Appeal arising out of this case, although different interlocutory orders, in which leave is sought to re-agitate this point and raise or advance a slightly re-crafted appeal proposition, as we understand it, or a slightly re-crafted constitutional point.

We could have a situation where special leave is granted in this case if the appeal fails and there is an application in, say, a few months’ time for another grant of special leave on a slightly different point. If there is going to be an interlocutory appeal on the Constitution, we would respectfully submit that both matters come up here at the same time.

GUMMOW J: It does sound though as if sooner or later someone is going to get to the High Court to challenge the validity of this provision.

MR SINGLETON: Assuming, I respectfully do say so, for a moment that there is sufficient merit in the argument, then eventually the matter would come before the High Court because eventually these defendants or some other defendant will have an assets forfeiture order made against them and they will choose to come to this place to challenge the constitutional validity of it, but that does not, with great respect, necessitate an interlocutory appeal now on a rather imperfect vehicle where the appeal is, in our respectful submission, essentially an appeal against reasons, not an appeal against the result.

We respectfully contend that the decision of the Court of Appeal was correct and not attended by any sufficient doubt. The propositions, of course, of this Court must be accepted and the proposition that a State Parliament may not invest in a State court exercising federal jurisdiction, a jurisdiction that is repugnant or inconsistent with the exercise of federal jurisdiction, is the baseline for this case. The legislation that is now challenged is not so repugnant nor so inconsistent. It is an adaptation of a well recognised set of judicial features. It is a statutory equivalent of a Mareva order, different rules, different tests to be applied, but a recognisable species of judicial proceeding.

BELL J: The point of distinction between section 10 of CARA and the Queensland Confiscation Act is that the Queensland Act provided that the applicant could require that the hearing be conducted ex parte. That is the only point of distinction, is it not?

MR SINGLETON: Another point of distinction is that the Queensland Act, as I call it, prohibited the court from having any but prescribed people present for the hearing, which is quite different from here where, although it was not the practice before this case, it is now the practice to have an open court application, any member of the public may be there. Admittedly it is going to be a remarkable coincidence if the defendant happens to be walking past, but it is quite a different regime to, in effect, compel a closed court. That is quite different from saying there may be an ex parte hearing.

As I recall it, and I do not wish to be too dogmatic, but the Federal Court following Russell in this case has held that a direction, I think in the Family Law Act, that a legislative direction that the Family Court had to be closed was beyond power because it interfered with the judicial power and the judicial function of a court. That happened in Queensland. I do not think that was a part of the argument as far as I can recall. But it is quite different simply to say, as we do in New South Wales, that there may be an ex parte hearing. Ex parte hearings are not an unusual feature of the judicial process and for Parliament to prescribe that in a certain circumstance there shall or may be one is not repugnant to ordinary notions of the judicial process, particularly where there is a good public policy reason for it.

It could well be imagined that if the Parliament had enacted slightly different legislation which gave the court the flexibility on the matter, nevertheless the Commission would regularly be able to have an ex parte hearing anyway because of the nature of the subject.

BELL J: In consequence of the Court of Appeal’s decision, do I understand now that these proceedings are conducted in open court?

MR SINGLETON: They are and that is the by-product principally of the ruling that reasons must be given, and if one applies the reasoning for that – it has always been a matter for the court that the judges in practice used to take the matters in chambers, occasionally they adjourned – I know of at least one case where a judge adjourned into open court to hear such an application, but the practice now is they are all done in open court. That is quite a different situation from the Queensland legislation.

GUMMOW J: Now, does your client accept the construction of the statute given by the Court of Appeal?

MR SINGLETON: We do. If your Honour is particularly referring – it may be presumptuous – to the question of whether the Attorney-General’s submission to read down the ex parte issue was a correct ruling, we would embrace the proposition of the Court of Appeal, but if this Court at an appeal were to hold that it would be unconstitutional to read it that way, then the authorities would, we respectfully say, indicate that this Court should reach a construction which is consistent with constitutional validity, not jump to invalidity without considering the alternative construction.

GUMMOW J: But do I understand that as saying that in this Court it would be seeking to uphold the validity by views as to construction which did not entirely accord with those of the Court of Appeal?

MR SINGLETON: No, we would seek to uphold the construction of the Court of Appeal wholly, but if that construction were rejected by this Court, we would press rather than hold the - - -

GUMMOW J: Well, you are not going to know, are you?

MR SINGLETON: No, so obviously we would frame our argument as an alternative. Our primary position will be that section 10 has been construed correctly below. In the alternative, it should be construed as the Attorney-General had proposed.

GUMMOW J: I see.

MR SINGLETON: As to whether or not the statutory provision is repugnant in the required constitutional way, we would respectfully draw attention to our contest with my learned friend’s characterisation with the proposition that there is only one thing that has to be determined. The statute prescribes, depending on how one dissects it, four or five different matters, all of which must be satisfied by the plaintiff.

It is true that most of them are easily satisfied, but they must be satisfied, and they are that the application is made, that it is supported by an affidavit, that the affidavit is by a prescribed person, that the affidavit proves that the person holds a prescribed suspicion, that the affidavit states the grounds for those suspicions and that the Court applying its independent mind and its judicial approach is satisfied that the grounds are a reasonable basis for the holding of the suspicion.

We accept that in most cases only the last of those things will be a difficulty, or potential difficulty, for the Commission, but there are many cases which come before courts in which there are several criteria, only one of which poses a real difficulty to a plaintiff. There is nothing unorthodox in the proposition that a court can have the function of determining whether

someone else’s belief or suspicion is reasonable, that is a routine matter, we respectfully submit, and there is nothing unorthodox in the proposition that the law, sometimes at common law and sometimes in statute, says if certain criteria are satisfied by a plaintiff, then the relief must flow.

So this is not a case in which the manner and outcome of an application are directed by the statute in an impermissible way and we respectfully construe what is meant by that phrase to be drawn from Chu Kheng Lim and that case speaks of a substantive manner and not mere procedural interference because this Court has upheld evidence of Act provisions. There are many Acts which prescribe civil procedure, for example, in New South Wales the Civil Procedure Act, so that legislative prescriptions of the way in which courts proceed are not per se impermissible.

It is only when the interference is such that the court loses its institutional character as an independent body and is no longer seen to be so that the Constitution is infringed. Nothing in the legislation now before the Court goes so far, in our respectful submission. Unless I can assist any further, those are the submissions.

GUMMOW J: Thank you, Mr Singleton. We do not need to call on you, Mr Hughes. There will be a grant of special leave in this matter. The draft notice of appeal appears at page 122. That seems to cover the ground adequately, does it not, gentlemen?

MR HUGHES: We have looked at it again and it seems, in our respectful submission, to do so.

GUMMOW J: Thank you. This will be a one-day appeal I would think?

MR HUGHES: Yes, your Honour.

GUMMOW J: Yes, thank you, gentlemen.

AT 10.05 AM THE MATTER WAS CONCLUDED