Shields & Ors v New South Wales Crime Commission [2007] NSWCA 309 (2 November 2007)

Last Updated: 5 November 2007

NEW SOUTH WALES COURT OF APPEAL

CITATION: Shields & Ors v New South Wales Crime Commission [2007] NSWCA 309


FILE NUMBER(S):
40270/06

HEARING DATE(S): 2 April 2007

JUDGMENT DATE: 2 November 2007

PARTIES:
Gail Anne Shields (First Appellant)
Aaron Gregory Lye (Second Appellant)
Christopher Lye (Third Appellant)
Koala Development Pty Ltd (Fourth Appellant)
Parkes Airport Business Centre Pty Ltd (Fifth Appellant)
Parkes Airport Construction Pty Ltd (Sixth Appellant)
New South Wales Crime Commission (Respondent)

JUDGMENT OF: Beazley JA Hodgson JA Tobias JA

LOWER COURT JURISDICTION: Supreme Court - Common Law Division

LOWER COURT FILE NUMBER(S): SC 10278/06

LOWER COURT JUDICIAL OFFICER: Sully J

LOWER COURT DATE OF DECISION: 19 January 2006


COUNSEL:
C J Dibb (Appellants)
I Temby QC; P Singleton (Respondent)


SOLICITORS:
Darryl Barlow & Co (Appellants)
New South Wales Crime Commission (Respondent)

CATCHWORDS:
CRIMINAL LAW – restraining order – s 10 Criminal Assets Recovery Act 1990 (NSW) – serious crime related activity – reasonable grounds for suspicion – larceny – money withdrawn from account after an automatic banking malfunction – knowledge of conditions placed on withdrawal and ban on account – elements of larceny satisfied – money withdrawn serious crime derived property
CRIMINAL LAW – restraining order – s 10 Criminal Assets Recovery Act 1990 (NSW) – serious crime derived property – reasonable grounds for suspicion – property in hands of other persons – person suspected of having engaged in serious crime related activity transferred money to partner, partner’s children and partner’s companies – application for restraining order not required to prove property has ceased to be serious crime derived property – whether sufficient evidence to establish reasonable grounds for suspecting claimants’ property was serious crime derived property
CRIMINAL LAW – restraining order – s 10 Criminal Assets Recovery Act 1990 (NSW) – orders restrained interests in property acquired directly or indirectly from funds drawn or provided by person suspected of having engaged in serious crime related activity – Commission may apply to restrain “specified interest” or “specified class of interests” in property of another person – “specified interest” is in narrower terms than “specified class of interests” – whether order of sufficient specificity for identifying property
WORDS AND PHRASES – “specified class of interests”, “specified interests”

LEGISLATION CITED:
Crimes Act 1900 (NSW) ss 117, 178A
Criminal Assets Recovery Act 1990 (NSW) ss 4, 5, 6, 7, 9, 10, 12, 16, 22, 23, 25, 27

CASES CITED:
Clyne & Anor v Deputy Commissioner of Taxation & Anor (1981) 150 CLR 1; [1981] HCA 40
Hunter Support Services Pty Ltd v The Children’s Guardian (2005) 192 FLR 239; [2005] NSWSC 616
Ilich v The Queen (1987) 162 CLR 110; [1987] HCA 1
Kennison v Daire (1986) 160 CLR 129; [1986] HCA 4
McGraw-Hinds (Aust) Proprietary Limited v Smith (1979) 144 CLR 633; [1979] HCA 19
Murphy v Farmer (1988) 165 CLR 19; [1988] HCA 31
New South Wales Crime Commission v Ollis (2006) 65 NSWLR 478; [2006] NSWCA 76
Sayegh v Australian Community Pharmacy Authority (2006) 155 FCR 324; [2006] FCA 1289

DECISION:
1. Extend the time in which to file the Summons for Leave to Appeal to 16 June 2006
2. Grant leave to appeal
3. Appeal dismissed
4. Claimants to pay the opponent’s costs of the Summons for Leave to Appeal and the appeal.


JUDGMENT:

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40270/06

BEAZLEY JA

HODGSON JA

TOBIAS JA

2 November 2007

Gail Anne Shields & Ors v New South Wales Crime Commission

Headnote

On the application of the New South Wales Crime Commission (the Commission), Sully J made ex parte restraining orders pursuant to the Criminal Assets Recovery Act 1990 (NSW) (the Criminal Assets Recovery Act) in respect of the claimants’ property on the basis that there were reasonable grounds for suspecting that the property restrained was serious crime derived property. The property subject of the restraining order included land, bank accounts and all interests in property acquired using funds directly or indirectly sourced from a Mr Victor Warren Ollis (Ollis).

The application to the Supreme Court was supported by an affidavit from the Commission’s Assistant Director, Financial Investigations, deposing that the claimants’ property was derived from the serious crime related activities of Ollis. Ollis was suspected of having engaged in larceny from the Westpac Banking Corporation contrary to s 117 of the Crimes Act 1900 (NSW). It was alleged he took advantage of a ‘glitch’ in the Auto Replenishment (ATR) function between his personal and business banking accounts by withdrawing money to which he was not entitled in the amount of approximately $11 million and thereafter provided part of this money to the claimants.

The claimants appealed from the orders of Sully J alleging, relevantly: that the property was not serious crime derived property in the hands of Ollis; even if the property was serious crime derived property, there was no evidence that there was a reasonable suspicion that it remained serious crime derived property in the claimants’ hands; and that the orders restraining the property were not specific enough so as to comply with the Criminal Assets Recovery Act.

Held per BEAZLEY JA (HODGSON AND TOBIAS JJA agreeing):

Was the property serious crime derived property?

(1) The evidence indicated that Ollis knew the conditions placed upon the operation of the ATR facility, that there was a ban placed on his personal account responding to this facility and that he decided to take advantage of a glitch in the facility by continuing to withdraw money: [48]

(2) The allegations contained in the affidavit constituted all of the elements of larceny. As a result, there were reasonable grounds upon which one could form a suspicion that Ollis engaged in a serious crime related activity for the purposes of the Criminal Assets Recovery Act: [49]

Ilich v The Queen (1987) 162 CLR 110; [1987] HCA 1 (cited); Kennison v Daire (1986) 160 CLR 129; [1986] HCA 4 (followed)

Did the property remain serious crime derived property in the hands of the claimants?

(3) It is not necessary for the purposes of s 10 of the Criminal Assets Recovery Act that the affidavit filed in support of an application for a restraining order, as well as establishing on reasonable grounds that there is a suspicion that the property sought to be restrained was serious crime derived property, also prove that that property has not ceased to be serious crime derived property in the hands of another person: [54]

(4) There was sufficient evidence to establish that there were reasonable grounds to suspect that the property in the hands of the claimants’ was serious crime derived property: [78], [84], [86], [87], [93], [96], [99]

Were the orders restraining the claimants’ property specific enough for the purposes of the Act?

(5) Whether the orders restrained “a specified class of interests” in property for the purposes s 10 of the Criminal Assets Recovery Act had to be determined having regard to the context and purposes of the Act as a whole: [102], [107]

(6) Where in s 10(2) of the Criminal Assets Recovery Act reference is made both to “specified interests” and “a specified class of interests” in relation to the imposition of a restraining order, the Criminal Assets Recovery Act is intending to cover different matters. A “specified interest” is in narrower terms than “a specified class of interests”: [115]-[116]

(7) The claimants’ property subject to restraint was property sourced from Ollis. That was sufficient identification of a “specified class of interests” in property for the purposes of ordering a restraining order under the Criminal Assets Recovery Act: [130]

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40270/06

BEAZLEY JA

HODGSON JA

TOBIAS JA

2 November 2007

Gail Anne Shields & Ors v New South Wales Crime Commission

Judgment

Introduction

1 BEAZLEY JA: On 19 January 2006, on the application of the New South Wales Crime Commission (the Commission), Sully J made orders, ex parte, pursuant to s 10 of the Criminal Assets Recovery Act 1990 (NSW) (the Act) restraining the disposal of or dealing with the claimants’ property on the basis that there were reasonable grounds for suspicion that the property restrained was “serious crime derived property” within the meaning of that section as defined in s 9 of the Act.

2 The application was supported by the affidavit of Jonathan Lee Spark, the Assistant Director, Financial Investigations with the Commission dated 19 January 2006 (the affidavit) in which Mr Spark deposed that the property was derived from the suspected serious crime related activities of a Mr Victor Warren Ollis (Ollis). Ollis was suspected of having engaged in larceny from the Westpac Bank contrary to s 117 of the Crimes Act 1900 (NSW) (the Crimes Act) being an offence that is punishable by imprisonment for five years or more.

3 The claimants are Gail Shields (also known as Gail Lye and Gail Ollis) (Shields), who was a business partner of Ollis and was the recipient from Ollis of over $2.95m of the money he obtained from the bank; Aaron Lye, who from his surname is probably a relative of Shields; Christopher Lye, who is Shields’ son; and three companies of which Shields is a director, the secretary and a sole or major shareholder. The orders against the claimants are not based on any allegation that they have engaged in criminal activity, but on the suspicion that they have interests in property that are serious crime derived property.

4 The claimants now seek an order granting leave to appeal from the orders made by Sully J. The Summons for Leave to Appeal and the appeal were heard concurrently.

5 The Summons for Leave to Appeal was filed significantly out of time and the claimants, therefore, sought an extension of time in which to file it. In an affidavit supporting the application for extension of time, Shields blames her former solicitor for not filing the Summons within time. Leaving that aside, however, it is apparent from the Court’s records (both the file in the Court below and the file in the Court of Appeal) that the matter has had a somewhat complicated curial history. The Commission, although formally opposing the grant of an extension of time, did not advance any specific arguments as to why an extension ought not be granted.

6 The orders made by Sully J were serious orders depriving the claimants from dealing with property of substantial value and subsequently formed the basis of orders for forfeiture of that property. For that reason and given the matter has been fully argued without the Commission raising any matter of prejudice should an extension of time be granted, I am of the opinion that an order extending time should be made.

7 The Commission also, initially, opposed the grant of leave to appeal. The Court was informed that the Commission withdrew that opposition. As a result of the seriousness of the consequences of making the orders which are the subject of the appeal, and as there is now no opposition to the grant of leave, leave to appeal should be granted.

Issues on the appeal

8 The claimants raised three specific issues on this appeal (the first appeal). First, that the property restrained was not “serious crime derived property” within the meaning of the Act in the hands of Ollis, and therefore it was not serious crime derived property in the claimants’ hands when and if it came to them or to the extent that it may have come to them.

9 Secondly, even if the property was serious crime derived property in the hands of Ollis, there was no evidence before his Honour from which he could have concluded that there was a reasonable suspicion that it remained serious crime derived property in the hands of the claimants.

10 Thirdly, the orders made by Sully J did not specify “an interest in property” within the meaning of s 10 of the Act.

History of the proceedings

11 As I have indicated, this matter has had a complicated history. An overview of that history is of some assistance in understanding the nature of the appeals before the Court. Before dealing briefly with that history it should be observed that the first appeal is one of three appeals which have been heard together by the Court. The second appeal (CA 40404/06) has been brought by Ollis from orders made by Rothman J on 7 June 2006. The third appeal (CA 40435/06) has been brought by the claimants against assets forfeiture orders made by Rothman J on 19 June 2006 in SC 10278/06. There were no published reasons for judgment in that matter.

12 Sully J made the restraining orders the subject of the first appeal on 19 January 2006. At the same time that his Honour made those, he also made restraining orders under s 10 of the Act in respect of Ollis’ property.

13 In addition to making restraining orders under s 10, his Honour also made orders under s 12(1) of the Act for the examination on oath of Ollis and each of the persons on this appeal in respect of their personal affairs. In addition, he made orders under s 12(1) for the examination of Shields as well as a Mr Mark Smith in respect of the affairs of the corporate claimants. Mr Smith is no longer a relevant party in any of the proceedings.

14 The Commission also made an application on 19 January 2006 for assets forfeiture orders under s 22 of the Act in respect of the claimants as well as an application under s 27 of that Act seeking an order against Ollis that he pay to the Treasurer an amount assessed as the value of the proceeds derived from his illegal activities.

15 On 2 February 2006, the claimants filed a submitting appearance to that application save as to costs. That submitting appearance does not appear to have been formally withdrawn. However, given that the claimants have subsequently taken an adversarial stance in the proceedings, including by the filing of a Notice of Motion on the same date seeking a variation of the orders made by Sully J, the submitting appearance should be considered as being qualified and in my view, given the subsequent history of the proceedings, should be taken to have been withdrawn.

16 The variation of the orders sought in the Notice of Motion filed on 2 February 2006 was that the restraint on the dealing with property imposed by the orders made by Sully J only remain

“... pending a hearing as to the existence of a reasonable suspicion within the meaning of s10 as at the date of such hearing that the property [so restrained] is serious crime derived property within the meaning of s 9 of the Act.”

17 The Notice of Motion was subsequently varied in terms not relevant to the issues on the appeals.

18 The Commission also filed a Notice of Motion (subsequently amended) seeking orders for the separate determination of the question whether a single judge of the Supreme Court had the power to order that the orders made by Sully J on 19 January 2006 could be varied in the terms sought by the claimants. An order was made removing the Commission’s amended Notice of Motion into the Court of Appeal.

19 The Court of Appeal determined the separate question on 11 April 2006; New South Wales Crime Commission v Ollis (2006) 65 NSWLR 478; [2006] NSWCA 76, answering the question in the negative. Giles JA (Mason P agreeing) held at [34] that the only basis upon which the making of a restraining order could be challenged on appeal was

“... on the contention that the judge was in error in determining that there were reasonable grounds for the suspicion ...”

or alternatively, by establishing the basis for the making of an exclusion order under s 25 of the Act.

20 On 28 February 2006, the Commission sought summary judgment on its claim for a Proceeds Assessment Order under s 27 of the Act against Ollis and on 7 June 2006, Rothman J made an order that the Commission have judgment for its claim for an order under s 27 against Ollis for an amount to be assessed by the Court. That order is the subject of the second appeal.

21 The application made by the Commission under s 22 of the Act in respect of the property of the claimants was heard by Rothman J and determined on 19 June 2006, when his Honour made assets forfeiture orders in respect of property of each of the claimants. An appeal from those orders is the subject of the third appeal.

22 The position, therefore, at the commencement of the hearing of these appeals, was that restraining orders had been made under s 10 of the Act in respect of property of Ollis and the claimants. Those orders formed the foundation for assets forfeiture orders made in respect of property of the claimants pursuant to s 22 of the Act. In addition, an order had been made under s 27 against Ollis for the assessment of the amount that he was to pay to the Treasurer as the value of the proceeds derived from his illegal activities.

The Criminal Assets Recovery Act: statutory scheme

23 The Act provides for the confiscation of interests in property of a person engaged in serious crime related activities and enables the proceeds of serious crime related activities to be recovered as a debt due to the Crown. A principal object of the Act is to provide for the confiscation of property without requiring a conviction if the Supreme Court finds that a person more probably than not had engaged in serious crime related activities: s 3. Proceedings on an application for a restraining order or a confiscation order are not criminal proceedings: s 5(1); and the rules of evidence applicable to criminal proceedings do not apply to proceedings under the Act: s 5(2)(b).

24 “Serious crime related activity” is a reference to anything done by a person that was at the time a serious criminal offence, whether or not the person has been charged with the offence, or if charged has been tried, or tried and acquitted, or has been convicted, even if the conviction has been quashed or set aside: s 6(1).

25 Section 6(2)(d) provides that a reference to a “serious criminal offence” is a reference to:

“an offence that is punishable by imprisonment for 5 years or more and involves theft, fraud, obtaining financial benefit from the crime of another, money laundering, extortion, violence, bribery, corruption, harbouring criminals, blackmail, obtaining or offering a secret commission, perverting the course of justice, tax or revenue evasion, illegal gambling, forgery or homicide”

26 Section 7 relevantly defines “interest in property” for purposes of the Act as follows:

“(1) In this Act, a reference to an interest of a person in property is a reference to:

(a) an interest the person has in real or personal property, or

...

(c) an interest of the person that is within a class of interests prescribed as interests in property for the purposes of this Act.

(2) Without limiting the generality of subsection (1), a reference in this Act to an interest of a person in property includes a reference to:

(a) the person’s money ...”

27 Section 9 of the Act provides, relevantly:

“(1) An interest in property is serious crime derived property if:

(a) it is all or part of the proceeds of a serious crime related activity, or

(b) it is all or part of the proceeds of the disposal of or other dealing in serious crime derived property, or

(c) it was wholly or partly acquired using serious crime derived property.

...

(3) Once an interest in property becomes serious crime derived property it remains serious crime derived property even if the interest is disposed of or otherwise dealt with (including by being used to acquire an interest in property), but this is qualified by subsection (5).

(4) The meaning of illegally acquired property is ascertained by substituting, in subsections (1)–(3), illegally acquired property for serious crime derived property and illegal activity for serious crime related activity.

(5) An interest in property ceases to be serious crime derived property or illegally acquired property:

(a) when it is acquired by a person for sufficient consideration without knowing, and in circumstances that would not arouse a reasonable suspicion, that the interest was, at the time of acquisition, serious crime derived property or illegally acquired property ...”

28 “Illegal activity” and “illegally acquired property” are defined in s 4 as follows:

“illegal activity means:

(a) a serious crime related activity, or

(b) an act or omission that constitutes an offence (including a common law offence) against the laws of New South Wales or the Commonwealth, or

(c) an act or omission that occurs outside New South Wales, is an offence against the law of the place where it occurs and is of a kind that, if it had occurred in New South Wales, would have been an offence referred to in paragraph (b).

illegally acquired property means an interest in property that is illegally acquired property as provided by section 9.”

29 Part 2 of the Act provides for the making of restraining orders. A restraining order is defined in s 10 as:

“(1) ... an order that no person is to dispose of or attempt to dispose of, or to otherwise deal with or attempt to otherwise deal with, an interest in property to which the order applies except in such manner or in such circumstances (if any) as are specified in the order.”

30 Pursuant to s 10(2) of the Act, the Commission may apply to the Supreme Court, ex parte, for a restraining order in respect of:

“(a) specified interests, a specified class of interests or all the interests, in property of a person suspected of having engaged in a serious crime related activity or serious crime related activities, including interests acquired after the making of the order and before the making of an assets forfeiture order affecting the interests that are subject to the restraining order, or

(b) specified interests, or a specified class of interests, in property that are interests of any other person, or

(c) interests referred to in both paragraph (a) and (b).”

31 Section 10(3)(b) provides that the Supreme Court must make the order applied for under subs (2) if the application is supported by an affidavit of an authorised officer stating that:

“in the case of an application in respect of any other interest – the authorised officer suspects that the interest is serious crime derived property because of a serious crime related activity or serious crime related activities of a person and stating the grounds on which that suspicion is based and the Court considers that having regard to the matters contained in any such affidavit there are reasonable grounds for any such suspicion.”

32 A person who contravenes a restraining order is guilty of an offence punishable on conviction by a fine equivalent to the value of the interest that was dealt with, or attempted to be dealt with, in contravention of such order or by imprisonment for a period not exceeding two years or both. It is not an offence if the person who dealt with or attempted to deal with the property had no notice that the interest was subject to the restraining order and no reason to suspect that it was: s 16.

33 Part 3 of the Act makes provision for the confiscation of assets. Division 1 deals with assets forfeiture orders. Relevantly, s 22 governs the application for and making of assets forfeiture orders. It provides:

“(1) The Commission may apply to the Supreme Court for an order forfeiting to, and vesting in, the Crown all or any of the interests in property that are, or are proposed to be, subject to a restraining order when the assets forfeiture order takes effect.

(1A) An application may be made under subsection (1) before or after or at the same time as an application for the relevant restraining order but may not be determined before the restraining order is granted.

(2) The Supreme Court must make an assets forfeiture order if the Court finds it to be more probable than not that the person whose suspected serious crime related activity, or serious crime related activities, formed the basis of the restraining order was, at any time not more than 6 years before the making of the application for the assets forfeiture order, engaged in:

(a) a serious crime related activity involving an indictable quantity, or

(b) a serious crime related activity involving an offence punishable by imprisonment for 5 years or more.

...

(3) A finding of the Court for the purposes of subsection (2) need not be based on a finding as to the commission of a particular offence or a finding as to any particular quantity involved, and can be based:

(a) on a finding that some offence or other constituting a serious crime related activity and punishable by imprisonment for 5 years or more was committed, or

(b) on a finding that some offence or other constituting a serious crime related activity was committed involving some quantity or other that was an indictable quantity.

...

(4) When an assets forfeiture order is made it must be made so as to apply to specified interests in property.

...

(6) The raising of a doubt as to whether a person engaged in a serious crime related activity or whether a quantity is an indictable quantity is not of itself sufficient to avoid a finding by the Supreme Court under subsection (2).”

34 The effect of an assets forfeiture order is to forfeit the interest in property to the Crown: s 23.

35 Section 25(1) provides, relevantly, that if an assets forfeiture order has been made, a person whose interest in property was forfeited by the order may apply to the Supreme Court for an exclusion order, excluding the interest from the operation of the assets forfeiture order. Section 25(1) also extends to an application for an exclusion order where an assets forfeiture order has been applied for but not made. The Supreme Court must not make an exclusion order unless it is proved that it is more probable than not that, relevantly, the interest in property to which the application relates is not illegally acquired property: s 25(2)(b).

36 Division 2 makes provision for proceeds assessment orders. Section 27 provides that the Commission may apply to the Supreme Court for a proceeds assessment order requiring a person to pay to the Treasurer an amount assessed by the Court as the value of the proceeds derived by the person from an illegal activity of the person or of another person.

37 Section 27(2) provides that the Supreme Court must make a proceeds assessment order if it finds it to be more probable than not that the person against whom the order is sought was engaged in

“(b) a serious crime related activity involving an offence punishable by imprisonment for 5 years or more.”

Evidence in support of the application for a restraining order under s 10

38 As outlined above, in order to obtain restraining orders pursuant to s 10(2)(b) of the Act there must be an affidavit of an authorised officer deposing to a suspicion that the interest is serious crime derived property because of a serious crime related activity of a person and reasonable grounds for any such suspicion, on a consideration by the Court of the matters contained in the affidavit.

39 Mr Spark deposed that his suspicion that the property in respect of which restraining orders were sought was serious crime derived property was based on:

(a) an investigation report prepared by the Westpac Banking Corporation, provided to the Commission pursuant to s 51 of the Act;

(b) (i) a police event report, alleging that Ollis and Shields had used a credit card of a third party to obtain credit in an amount over $100,000 in circumstances where the third party had only consented to the use of the card for a single transaction of $1,000;

(ii) a second police event report relating to the fraudulent taking of money and other goods from a motel which Ollis and Shields managed;

(iii) an intelligence report which alleged Ollis and Shields had taken out $1m worth of funds from three other motel businesses that they managed and deposited the moneys into an account in the name of Christopher Lye; and

(c) Ollis’ conviction in Queensland for theft and fraud and a further conviction under the Corporations Act 2001 (Cth).

40 The principal focus of the claimants’ argument on the appeal was on the contents of the Westpac investigation report. That report stated:

“Westpac Banking Corporation (the Bank) is conducting an investigation, and alleges that Victor Warren OLLIS (Ollis) knowingly and deliberately defrauded the Bank. The Bank alleges Ollis’ conduct has now caused a loss to the Bank in the excess of $11,000.000.00.

Ollis conducts the following accounts at Westpac

A/c Name A/c Number

1. Victor Warren Ollis T/as Country House & Land Sales 032523180123

2. Victor Warren Ollis T/as Country House & Land Sales 032523186322

3. Victor Warren Ollis T/as Country House & Land Sales 032523190495

4. Victor Warren Ollis T/as Bonaparts Accommodation 032523199641

5. Victor Warren Ollis T/as Country House & Land Sales Rentals 032523201633

6. Victor Warren Ollis Motel Account – Allenville Motel 032523206354

7. Victor Warren Ollis 732591541135

The alleged fraudulent activity was perpetrated as follows

On 21 August 2003 Ollis set up Auto Replenishment (ATR) functionality between his personal account (no 7. above) and company account (no. 1. above). What this entails is at the close of business each day any drawings that have been made from the business account is automatically replenished from funds held in his personal account to bring business account to a nil balance at the close of each business day.

On 17 February 2004 Ollis drew a cheque on his business account in the amount of $37,500.00. Despite there not being sufficient funds held in the personal account of Ollis the auto replenishment took place leaving a debt in the personal account in the amount of $36,536.29. In March 2004 the personal account came to the attention of the Bank’s ‘collections’ area and a status was placed on the account preventing any further drawings from that account. Ollis obviously discovered that despite this status being on the account he could write cheques from the business account and the replenishment would still take place.

Since 17 February 2004 that personal account has been continually overdrawn by no less than $24,000.00. Ollis has made some payments to a Collection House since January 2005 and was clearly aware of the amounts by which the No. 7 account was overdrawn.

At this time we have determined that since 19 August 2005 and from a zero (replenished) balance, 33 cheque drawings in the total amount of $10,480,000.00 have been made from the No. 1 account. Other than the daily replenishment by authority credits to the No. 1 account during that same period amount to only $4,660.00. There have also been a number of further drawings on the account during that period in the total amount of $387,663.32. The destinations of those funds are yet to be determined.

In respect of that $10,480,000.00 the Bank has identified the destinations of funds:

· 14 cheques in the total amount of $4,780,000.00 deposited directly into accounts conducted by Ollis with the Bendigo Bank.
· 19 cheques in the total amount of $5,700,000.00 deposited directly in Ollis’ No. 4 Westpac account then:
o Electronic transfers in the total amount of $4,445,000.00 to accounts conducted by Ollis with the Bendigo Bank.
o Electronic transfers in the total amount of $396,945.00 to accounts conducted by Gail Shields (his partner) with Westpac. We are in the process of tracing the destination of the subsequent removal of those funds from the Westpac account.
o Electronic transfers in the total amount of $60,000.00 to accounts conducted by G Shields with the Bendigo Bank.

...

Credits to the No. 1 account between 17 June 2005 and 19 August 2005 amount to only $4,420.00.

On Tuesday 17 January 2006, Mr Ollis and his legal representative met with a number of Bank representatives. During that meeting Mr Ollis, among other things, indicated:

· He became aware of a ‘computer glitch’ after discovering that the $37,500.00 cheque had not been dishonoured.
· He had taken advantage of that ‘computer glitch’ to utilise funds from his account.
· He does not believe he has committed fraud and has legal advice that had his intentions been different he would be in trouble.
· He utilised $8M of those funds to:
o Pay off his own loans in the amount of $2.5M.
o Lend $2.5M to Gail Shields. $1M to purchase property at Parkes and a further $1.5M for future development of that land.
o Lend $3M to Mark Smith to purchase 3000 acres for the purpose of the Parkes Airport redevelopment.
o Purchase a business ‘Styrocon’ for the amount of $500,000.00.
· He holds mortgages of $5.5M in respect of the funds to Shields and Smith.
· He was unable to account for the remaining funds at that time but in future will be able to identify, in writing, the source of all funds with the exception of about $200,000.00.
· His conditional preparedness to return the subject funds to the Bank in a plan that involved future development of the properties held by Shields and Smith – 12 months or more.

... We understand that both [Ollis and Shields] have an interest in a number of properties and we believe that some have probably been purchased with the proceeds of this alleged fraud particularly given that a recent transfer to the account of [Shields] has been utilised to fund such a purchase.”

First issue on the appeal: Did Ollis’ conduct amount to larceny?

41 The claimants submitted that although there was an affidavit of an authorised officer stating a suspicion that the interests of the claimants in the property sought to be restrained were serious crime derived property and specifying the grounds for that suspicion, those grounds were incapable of being rationally regarded as reasonable grounds for the suspicion. It followed that his Honour was in error in making restraining orders against the claimants’ property interests. The essence of this submission was that Ollis’ operations on his accounts as outlined in the Westpac investigation report could not, as a matter of law, amount to larceny and did not constitute any other serious criminal offence for the purposes of the Act.

42 On the appeal, the Commission submitted that alternatively, an offence under s 178A of the Crimes Act had been committed. Section 178A is the offence of fraudulent misappropriation of money. It was common ground that both the offences of larceny and misappropriation of money are offences which fall within the terms of s 6(2)(d) of the Act and are thus serious criminal offences for the purposes of the Act.

43 The claimants contended that as a matter of law, the conduct of Ollis could not amount to larceny, because it could not be established that the owner of the money had not consented to its taking. They argued that because of the operation of the ATR, the bank must be taken to have consented to the transfer of property and if the consent was given in error, consequent on the failure of some internal system of the bank, the mistake involved was not of the fundamental kind required to complete the offence of larceny, that is, as to the identity of the transferee or the nature of what is being transferred or the amount that was being transferred: see Ilich v The Queen (1987) 162 CLR 110; [1987] HCA 1 per Wilson and Dawson JJ at 126 [20].

44 Whilst the principle stated in Ilich is undoubted, I consider that little time needs to be given to the claimants' submission on this point. In Kennison v Daire (1986) 160 CLR 129; [1986] HCA 4 the Court dealt with a situation very similar to that which applies here. In that case, the appellant was convicted of larceny. He had been the holder of an EasyBank card which enabled him to access an automatic teller machine. It was a condition of the use of the card that the customer’s account could only be drawn against to the extent that there were funds available in the account. Prior to the date of the alleged offence, the appellant had withdrawn the total balance in the account and closed the account.

45 The appellant had, however, retained his EasyBank card and used it to withdraw $200. He was able to do so because the bank’s automatic teller machine was offline and remained programmed to facilitate withdrawals of up to $200 by any person who used the machine by inserting a card and entering their personal identification number relevant to that card. Whenever the machine was offline, it was incapable of determining whether the cardholder had any funds in the account or whether the account was current.

46 The appellant submitted that, although he had acted fraudulently with intent permanently to deprive the bank of the sum of $200, the bank at all times intended that the ATM would operate within the terms of its program and that when it did so it gave effect to the intention of the bank. The appellant contended it followed that as the bank intended to give him the money, it consented to the taking, so that there was no larceny.

47 The Court, after referring to the “interesting argument” advanced on behalf of the appellant, stated at 132 [4]:

“... The fact that the Bank programmed the machine in a way that facilitated the commission of a fraud by a person holding a card did not mean that the Bank consented to the withdrawal of money by a person who had no account with the Bank. It is not suggested that any person, having the authority of the Bank to consent to the particular transaction, did so. The machine could not give the Bank's consent in fact and there is no principle of law that requires it to be treated as though it were a person with authority to decide and consent. The proper inference to be drawn from the facts is that the Bank consented to the withdrawal of up to $200 by a card-holder who presented his card and supplied his personal identification number, only if the card-holder had an account which was current. It would be quite unreal to infer that the Bank consented to the withdrawal by a card-holder whose account had been closed. The conditions of use of the card supplied by the Bank to its customers support the conclusion that no such inference can be drawn.”

48 This case is no different. The contents of the Westpac investigation report included information that Ollis knew the conditions of the operation of the ATR facility. He knew the collections area of the bank had placed a ban on his personal account responding to the ATR facility. He also knew that due to a “computer glitch” that ban was not recognised by the ATR facility and he decided to take advantage of that failure and continue to draw on the account in an amount totalling almost $11m.

49 Although the Westpac investigation report indicated that Ollis intended at some stage to repay the funds that he had withdrawn, he did not intend to repay the moneys that he withdrew on each occasion. Rather, he intended to repay other moneys so as to replenish his account. In my opinion, all the elements to constitute the offence of larceny have been alleged in one form or another in its report. The material, therefore, provided a sufficient basis upon which Mr Spark could form the suspicion to which he deposed in his affidavit. In other words, there were reasonable grounds upon which Mr Spark could form a suspicion that Ollis had engaged in a serious crime related activity or activities as required by s 10 of the Act.

Second issue on the appeal: Did the property remain serious crime derived property in the hands of the claimants?

50 Counsel for the claimants submitted that there was nothing in Mr Spark’s affidavit that would constitute reasonable grounds for suspicion that the property to which the orders were directed was serious crime derived property in the hands of the claimants, even if there were reasonable grounds for suspecting that that may have been the case in respect of the orders made in respect of Ollis’ property.

51 This submission had a number of bases. First, counsel for the claimants submitted that the Commission bore the onus of establishing under both ss 9(1) and (5) that the interest in property is referable to the serious crime related activity and that there is a reasonable suspicion that the interest in property has not ceased to become serious crime derived property.

52 The Commission accepted that it bore the onus under s 9(1), but contested that it did not carry an onus in relation to s 9(5). Senior counsel for the Commission pointed out that s 9(5) may not even arise on an application for a restraining order. In this case, the Commission submitted that if it arose, it did not do so with such force as to displace Mr Spark’s suspicion, because there was no basis for concluding that the property was acquired for sufficient consideration.

53 I am of the opinion that the claimants’ argument in respect of s 9(5) is misplaced. The Court may only make a restraining order in respect of property that is suspected on reasonable grounds to be serious crime derived property. Section 9 specifies what is “serious crime derived property”. If the material before the Court is not sufficient to establish the relevant suspicion on reasonable grounds, an order under s 10 cannot be made. Such a suspicion would not be excluded unless the evidence disclosed that the property was acquired for sufficient consideration without knowing, and in circumstances that would not arouse a reasonable suspicion, that the interest was at the time of acquisition, serious crime derived property or illegally acquired property. Pursuant to the provisions of s 9(5), such property would have ceased to be serious crime derived property.

54 In my opinion, it is not necessary for the purposes of s 10 that the affidavit filed in support of an application for a restraining order, as well as establishing on reasonable grounds that there is a suspicion that the property sought to be restrained is serious crime derived property, also prove that that property has not ceased to be serious crime derived property. There is nothing in the section which imposes that obligation.

55 Should the Commission be in the possession of such information, it would be under an obligation to disclose it to the court at the time that it made the application under s 10. However, that is quite different from stating that there is an initial onus on the Commission to establish that property has not ceased to be serious crime derived property.

56 It is also relevant to observe that the provisions of s 9 are not only relevant to the operation of s 10, but are also relevant to an application under s 25 for an exclusion order. If property had ceased to be serious crime derived property, that property could be made the subject of an exclusion order under that section.

57 Counsel for the claimants also relied upon the information contained in the Westpac investigation report to the effect that Ollis had loaned money not only to Shields but also to Mr Smith. It was submitted that it should be inferred that as no restraining order had been sought against the property of Mr Smith, there was no reasonable basis for a suspicion that the moneys so loaned or property acquired by utilising the loan moneys, was serious crime derived property. It was then submitted that a similar inference should be drawn in respect of Shields.

58 With respect, this argument involves a non-sequitur. It may be that restraining orders were not made in respect of the property of Mr Smith because the Commission did not have a reasonable basis for a suspicion that in his hands moneys loaned to him by Ollis, or property acquired from such loan, was serious crime derived property. It may also be that the Commission had not at that time moved to apply for a restraining order against Mr Smith. It may be that its investigations were continuing.

59 Counsel for the claimants next submitted in relation to Shields that none of the information contained in Mr Spark’s affidavit supported a reasonable suspicion that the property sought to be restrained was serious crime derived property in her hands. This submission involves a more detailed consideration of both the affidavit and the property restrained.

60 By order 2 made by Sully J on 19 January 2006, his Honour restrained dealing with property described in schedules 6-15 to the order. The property to which the present submission was directed was the property contained in schedules 6-11.

61 In his affidavit, Mr Spark set out the evidence that established that Shields was the registered owner of the property specified in each schedule; the date of acquisition; particulars of the vendors; the consideration paid; the history and present status of any encumbrance on the property. He stated that he suspected that the property specified in the schedules was serious crime derived property because of the serious crime related activity or activities of Ollis. The basis upon which that suspicion was based were the matters referred to in para 4 of his affidavit, including the Westpac investigation report (see [40] above), the facts relating to the ownership of the property and a history of allegations of fraud which had either been the subject of a complaint to police or subject of a criminal charge. Mr Spark revealed in his affidavit that no evidence had been offered when that matter was before the court. It should also be observed that the complaints to the police alleging fraud had been made in 1999 and 2000 and were unconnected with any of the transactions whereby Shields acquired the property subject of the restraining orders.

62 Counsel for the claimants submitted that the history of the allegations of fraud was irrelevant to the question whether there was a reasonable basis for the suspicion that the property was serious crime derived property. He submitted that an examination of the transactional history of the acquisition of the properties demonstrated that the acquisitions were regular on their face. The properties had been acquired for consideration and in some circumstances, were subject to third-party mortgages. Counsel sought to illustrate his point by reference to the property specified in schedules 6, 7, 8 and 11.

63 The property in schedule 6 (comprising six separate lots) had been acquired from Ollis on 6 December 2005 for a consideration of $150,000. Those lots are not subject to any mortgage. That in itself may appear to be regular. However, there are other factors relating to the relationship between Shields and Ollis which may be relevant to the transactional history between the parties and to which I refer below.

64 The property in schedule 7 had been acquired from Ollis on 11 November 2005 for a consideration of $400,000. There is no mortgage registered on the property. Counsel for the claimants submitted that that did not mean that the property was not the subject of a mortgage. It could mean that no mortgage was registered. He pointed out that in the Westpac investigation report Ollis had claimed that he had loaned $2.5m to Shields and that he held mortgages in respect of those funds. No other submission was advanced on behalf of Shields in respect of this property.

65 The property in schedule 8 was transferred from Ross and Suzanne Smith for a consideration of $385,000 on 3 August 2005. Prior to that, on 16 February 2005, Ollis had registered a caveat on the property. On the date of transfer, a mortgage was registered on the property securing an amount of $288,000, with a term of one month and with a minimum interest rate of 48 per cent. That mortgage was discharged on 5 October 2005 and a mortgage from Liberty Funding Pty Ltd was registered, securing an amount of $308,000.

66 Counsel for the claimants submitted that this transactional history indicated that Shields was financing this purchase from sources other than Ollis. An immediate response to this is that there was a difference of almost $100,000 between the purchase price and the mortgage amount. There is also the admitted lending by Ollis to Shields. I deal with this further below.

67 The property in schedule 11 was acquired by Shields on 11 November 2005 from MCA Properties Pty Limited and Gizmo Properties Pty Limited for a consideration of $940,000. There is no mortgage on that property. Counsel for the claimants submitted that there was no evidence to indicate that Ollis was in any way connected with this property or with its purchase.

68 It may be that the transactional history, taken on its own, may not have been sufficient to establish, for the purposes of s 10, that the interests in the property of Shields that were made subject of the restraining orders, was serious crime derived property. However, that was not the only evidence.

69 It was apparent from Mr Spark’s affidavit that Ollis and Shields were in both a personal and business relationship, and had been for many years. In 1985, Ollis had been sentenced to 12 years imprisonment for theft and fraud. In 2000, a number of allegations of fraudulent conduct had been made to the police against Shields. The amounts involved were relatively small, from which a reasonable suspicion could be formed that Shields did not have substantial funds at her disposal at that time. In addition, there had been allegations of fraudulent activity by both Ollis and Shields together.

70 Westpac had, as at the date of the investigation report, traced payments of approximately $460,000 from Ollis’ accounts to Shields’ accounts.

71 Ollis had admitted to Westpac that he had lent $2.5m to Shields, $1m to purchase property and a further $1.5m for future development of that land. The Westpac investigation report does not specify the land to which reference was being made. However, it would seem that it was most likely the land specified in schedule 11.

72 The Westpac investigation report indicated that at least one of the properties had been purchased with funds transferred to Shields’ account from Ollis, the moneys in Ollis’ account having been acquired through the fraudulent use of the ATR facility.

73 Ollis had indicated to Westpac that he was prepared, subject to developing the properties held by himself and Shields, to repay the money. This in itself indicated that Ollis had an interest in or control over the property registered in Shields’ name.

74 I have already indicated that counsel for the claimants limited his submissions to the properties specified in schedules 6, 7, 8 and 11. The reason for his doing so is, perhaps, transparent. The property specified in schedule 9 was transferred from Ollis to Shields on 27 October 2005 for a consideration of $300,000 and there is no mortgage registered on that property. The properties specified in schedule 10, comprising three separate lots, were transferred from Ollis to Shields for a consideration of $50,000 each on 16 November 2005. There is no mortgage on those properties. Shields acquired the property specified in schedule 12 on 12 January 2006 from third parties for a consideration of $450,000. Ollis previously had a caveat over that property which he withdrew on the date of the transfer to Shields. There is no mortgage registered on that property.

75 I have earlier referred to the obligation on the Commission, in the making of an application for a restraining order under s 10, to accurately inform the Court of such information as it has in respect of the property that might indicate that the property sought to be restrained was not serious crime derived property. A failure to do so would constitute an abuse of process. There has been no suggestion in this case that there has been an abuse of process, so the Court was not required to confine its consideration to the affidavit material and to determine whether on that material it was satisfied that there was a reasonable suspicion that the property sought to be restrained was serious crime derived property.

76 The state of the evidence before the Court, therefore in relation to the property of Shields was that between August 2005 and January 2006 she acquired property for a total consideration of $2,775,000. The total amount secured by mortgage was initially $288,000, which subsequently increased to $308,000. The net acquisition cost of the properties was thus perilously close to $2,500,000, being in terms of quantum the same amount Ollis admitted he gave to Shields from his activities using the ATR facility. None of those properties are subject to a registered mortgage in favour of Ollis.

77 In addition, there was the evidence of transfers of moneys from Ollis’ bank accounts to Shields’ bank accounts. Ollis and Shields are personal and business partners, from which an inference could be drawn, sufficient for the purposes of there being a reasonable basis for suspicion, that Shields would know the source of the moneys that she received from him, or at least would know that those moneys could not have been honestly arrived.

78 In my opinion, the evidence was sufficient to establish that there were reasonable grounds for Mr Spark to have a suspicion that Shields’ property was serious crime derived property. In reaching this conclusion, I have not given any specific attention to the property specified in schedules 13, 14 and 15. The property specified in schedules 13 and 14 relate to bank accounts. The property specified in schedule 15 was a specification of ‘interests in property’ acquired as a result of using moneys derived from Ollis. No separate submissions were advanced on this issue in respect of these schedules. My reasons generally in respect of this issue are sufficient in these circumstances to also apply to those schedules.

Property of Aaron Lye

79 Counsel for the claimants next dealt with the orders made in respect of the property of Aaron Lye as specified in schedules 3, 14 and 16 and in two items in schedule 13.

80 Mr Spark deposed in his affidavit that Aaron Lye was a signatory of the bank accounts specified in items 2 and 3 of schedule 13, and was a signatory of the bank accounts in schedules 3 and 14. The bank accounts specified in schedule 3 are in the name of Ollis. The relevant bank accounts specified in schedule 13 and schedule 14 are all in the name of Shields, either as trustee of the Shields family trust, or on behalf of herself, trading as Fairway Lodge Motel Kempsey and Cash Flow Positive Investments. The interest in property specified in schedule 16 that was sought to be restrained was stated in general terms, being property acquired since 17 June 2005 by Aaron Lye from moneys sourced from Ollis.

81 The basis of Mr Spark’s belief that the property specified in these schedules was serious crime derived property was the information contained in para 4 of his affidavit, including the content of the Westpac investigation report and the fact that Aaron Lye was the signatory to the bank accounts.

82 Counsel for the claimants submitted that there is no reference in para 4 of Mr Spark’s affidavit to Aaron Lye, nor is there any reference to him in the Westpac investigation report. In particular, counsel submitted that there was no evidence showing that money or property flowed from Ollis, or for that matter, Shields, to Aaron Lye. It was submitted, therefore, that there could not have been any reasonable basis for Mr Spark’s suspicion in relation to property of Aaron Lye.

83 However, ‘interest in property’ is defined in s 7(4) of the Act to mean, for the purposes of that section, “a right, power or privilege in connection with the property”: s 7(4)(b). Being the signatory to an account is a right or power or privilege in connection with the property comprising that bank account. The bank accounts in question are those of Ollis and Shields, either personally, or in the capacity to which I have referred.

84 Given the evidence to which I have referred relating to the reasonable basis for the suspicion that property in the name of Shields is serious crime derived property, and as there was no dispute that there was a reasonable basis for suspicion that Ollis had engaged in a serious crime related activity or activities, there was a reasonable basis for the suspicion stated in respect of Aaron Lye, notwithstanding that there was no evidence that money or property had flowed to him. Having regard to the structure of the Act, being a signatory on the accounts, in conjunction with the evidence relating to Ollis and Shields, there was sufficient evidence for the purposes of making a restraining order against him.

85 It would also appear that Aaron Lye is a relative of Shields, although that of itself would not have been sufficient.

86 The property specified in schedule 16 was in general terms. If the Act permits the orders to be made in those terms, then, having regard to the affidavit evidence relating to Ollis, there was a sufficient basis on reasonable grounds for Mr Spark’s suspicion that any such property was serious crime derived property.

Property of Christopher Lye

87 The restraining order made in respect of Christopher Lye related to the property specified in schedule 17. That specification was in general terms, namely Christopher Lye's interests in property were restrained to the extent that those interests were acquired from funds sourced from Ollis. Subject to the question whether an order can be made in respect of property specified in those general terms, for the reasons I have given above in respect of schedule 16, there was a sufficient basis for an order to be made in respect of such property.

Property of the corporate claimants

88 The corporate claimants subject to the orders of Sully J are Koala Development Pty Ltd, Parkes Airport Business Centre Pty Ltd, and Parkes Airport Construction Pty Ltd.

Property of Koala Developments Pty Ltd

89 The order made in respect of Koala Development Pty Ltd related to the property specified in schedules 18, 19 and 20. Schedules 18 and 19 identified the property to be restrained as the funds in specified bank accounts in the company’s name. Schedule 20 was another of the schedules in general terms, namely the company’s interests in property acquired since 17 June 2005 that was acquired from funds sourced from Ollis.

90 Mr Spark’s belief that Koala Development Pty Ltd has interests in property as defined in s 7 of the Act in the property described in schedules 18 to 20 was based upon: information provided to the Commission by Bendigo Bank that an account in the name of Koala Development Pty Ltd as at 18 January 2006 had a balance of $68,855.76; information provided to the Commission by the Australian and New Zealand Banking Group Limited that an account held in the name of Koala Development Pty Ltd, of which Shields was the signatory, had as at 18 January 2006 an account balance of $125,020; a search of the records of the Australian Securities and Investment Commission (ASIC) database that revealed that Koala Development Pty Ltd was incorporated on 17 October 2005 with Shields as sole director, secretary and shareholder of the company.

91 The suspicion that the interests held by Koala Development Pty Ltd are serious crime derived property, as defined by s 9 of the Act, was based upon the serious crime related activity or serious crime related activities of Ollis.

92 The claimants submitted that the paragraphs relied on within the Westpac investigation report relating to Koala Development Pty Ltd (and the other corporate claimants) do not say anything at all about the source of any interests in the property sought to be restrained. It was submitted, therefore, that Mr Spark’s basis for holding his suspicion fell far short of ‘reasonable’ and his Honour was thereby in error in making the restraining orders.

93 In my opinion, subject to the general nature of the specification of property in schedule 20, for the reasons already given in respect of the other claimants, there was a sufficient basis for the making of the restraining order. The company had only been incorporated in 2005, during the period in which Ollis was utilising the ATR facility. Shields was the sole shareholder and only office bearer. There was evidence that Shields, in a personal capacity, was the recipient of moneys from Ollis and that she was Ollis’ business partner. The company had within a short period of time accumulated a credit balance which was not insubstantial in the bank accounts specified in schedules 18 and 19. Those matters were sufficient for there to be reasonable grounds of suspicion that the moneys in those accounts was serious crime derived property.

The property of Parkes Airport Business Centre Pty Ltd

94 The order made in respect of Parkes Airport Business Centre Pty Ltd related to the property specified in schedule 21, which identified the property to be restrained in general terms, namely the company’s interests in property acquired since 17 June 2005 that were acquired from funds sourced from Ollis.

95 In his affidavit, Mr Spark deposed that his belief that Parkes Airport Business Centre Pty Ltd has an “interest in property”, within the meaning of the Act, in the property described in schedule 21 of the affidavit, was based on the following matters: the contents of the Westpac investigation report; and a search of ASIC records which revealed that Parkes Airport Business Centre was incorporated on 16 September 2005 with Shields as sole director, secretary and shareholder of the company and that the property in schedule 21 is serious crime derived property, because of the serious crime related activity or activities of Ollis.

96 Subject to the question whether restraining orders can be made in general terms, the reasons given above in respect of Koala Development Pty Ltd as to the nature of the relationship between Shields and Ollis applies in respect of this claimant.

Parkes Airport Construction Pty Ltd

97 The order made in respect of Parkes Airport Construction Pty Ltd related to the property specified in schedule 22 which again identified the property to be restrained in general terms, namely the company’s interests in property acquired since 17 June 2005 that were acquired from funds sourced from Ollis.

98 Mr Spark based his belief on the same information as in respect of the previous corporate claimant, namely the Westpac investigation report; a search of ASIC, which in this case revealed that Parkes Airport Construction Pty Ltd was incorporated on 11 November 2005 and since incorporation Shields had been the secretary and one of the directors of the company, as well as holding 90 per cent of the shares. The other director was Mark Smith, who held 100 shares in the company.

99 Subject to the question whether restraining orders can be made in general terms, the reasons given above in respect of Parkes Airport Construction Pty Ltd as to the nature of the relationship between Shields and Ollis applies in respect of this claimant.

Were the orders of Sully J specific enough in reference to the property restrained so as to comply with s 10 of the Act?

100 In the alternative to the above two arguments; that the property in the hands of Ollis was not serious crime derived property and that there was no reasonable suspicion that it remained serious crime derived property in the hands of the claimants, the claimants argue that the orders made by Sully J on 19 January 2006 are not within power and should be set aside in so far as they purport to restrain the interests in property set out in schedules 15, 16, 17, 20, 21 and 22. The schedules are in the same terms save for the name of the person said to have acquired the property. It is helpful at this point to set out the relevant interests in property which the above schedules relate to:

“All interests in property acquired by ... since 17 June 2005 using funds directly or indirectly sourced from:

1. funds drawn from Westpac Banking Corporation account number 032523 180123 held in the name of Victor Warren Ollis [Ollis’ business bank account]; or

2. funds provided by Victor Warren Ollis.”

101 The claimants submit that an order restraining dealing with property described in these general terms is not a proper order under s 10 of the Act because it is not a class of interests and does not relate to ‘specified’ interests as required by s 10. In particular, they submitted that the property specified in the schedules was so indefinite that nobody could know what assets fell within their terms. This was relevant because a breach of a restraining order had criminal consequences: see s 16.

102 This submission involves a consideration of the meaning of the phrase “a specified class of interests in property” in s 10(2)(b). That phrase of course has to be considered in context, not only of s 10(2)(b), but of the Act as a whole.

103 As I have already explained, s 10 specifies the interests in property that may be made the subject of a restraining order. An “interest in property” is itself defined in s 7, although it should be said immediately, if the general description of property in these schedules may be made the subject of a restraint, there is no separate argument that such property does not constitute an “interest in property” within the meaning of s 7.

104 Section 10(2) provides that the Commission may apply to the Supreme Court for a restraining order in respect of property, either of the person who is suspected of having engaged in serious crime related activities: para (a); or of any other person: para (b). The property that may be restrained differs as between (a) and (b) in one relevant respect. In the case of the person who is suspected of having engaged in serious crime related activities, an order may be made in respect of “all the interests in property” of that person.

105 That is not the case in respect of orders made under para (b) in respect of the property of any other person. Rather, in a case of such person, the interests which may be restrained are “specified interests” and “a specified class of interests”. Both those categories of property may also be restrained under para (a) in the case of the person who is suspected of having engaged in serious crime related activities.

106 The meaning of “specified interests” in property was not in dispute and the restraining orders sought by the Commission in respect of property the subject of the other schedules, were orders sought in respect of “specified interests”, such as particularised real estate and nominated bank accounts. The question for determination is whether property acquired by a person using funds directly or indirectly sourced from a particular bank account of Ollis, or funds provided by Ollis, falls within the meaning of “a specified class of interests in property”.

107 Other provisions of the Act are relevant to the determination of that question, including the sections that relate to the purposes of the Act and the manner in which the Act operates.

108 First, a restraining order is made ex parte: s 10(2). It is usual that the Commission give an undertaking as to damages at the time that the restraining order is made. The Supreme Court may refuse to make an order if the

“State refuses or fails to give to the Court such undertakings as the Court considers appropriate with respect to the payment of damages or costs, or both in relation to the making an operation of the order”: s 10(6).

The Commission, on behalf of the State, may give the undertaking: s 10(7).

109 The restraining order only remains in effect for two working days unless there is pending before the Supreme Court, relevantly, an application for an assets forfeiture order: s 10(9)(a). Pursuant to s 12 the Court may make a variety of orders including, an order varying the interests in property to which the restraining order relates: para (a). An application for an order under subs (1) may be made by, relevantly the Commission, the owner of the property or, with the leave of the Court any other person: s 12(2). Orders may also be made under s 12 for the examination on oath of “the owner of an interest in property that is subject to the restraining order”; s 12(1)(b)(i), or “another person”: s 12(1)(b)(ii).

110 Section 15 provides for the registration of the restraining order if there is any provision which provides for the registration of title to, and interest in or a charge over property of that kind or, for the lodging of a caveat under the Real Property Act 1900 (NSW).

111 Section 16 provides for an offence should a person contravene a restraining order or ancillary order made under s 12.

112 The existence of a restraining order provides one of the foundational bases for making an assets forfeiture order under s 22. Importantly, an assets forfeiture order can only be made in respect of “specified interests in property”: s 22(4).

113 In McGraw-Hinds (Aust) Proprietary Limited v Smith (1979) 144 CLR 633; [1979] HCA 19, Gibbs J at 643 [4] stated

“The rule that the same words which occur in different parts of a statute have the same meaning is one which ‘must yield to the requirements of the context’: Madras Electric Supply Corporation Ltd v Boarland [1955] AC 667 at 685. It is well recognised that a word may be used in two different senses in the same section of the one Act ...”

114 Clyne & Anor v Deputy Commissioner of Taxation & Anor [1981] HCA 40; (1981) 150 CLR 1 at 10; [1981] HCA 40 [6] reaffirmed the use of this presumption when construing a statute:

“No doubt there is a presumption that where the same word is used on more than one occasion in a section it is intended to have the same meaning in each case, but this is not a presumption of very much weight; there is no rigid rule; it all depends on the context.” (Citations omitted)

See also Murphy v Farmer [1988] HCA 31; (1988) 165 CLR 19 at 27; [1988] HCA 31 [7] per Deane, Dawson and Gaudron JJ; Hunter Support Services Pty Ltd v The Children’s Guardian (2005) 192 FLR 239; [2005] NSWSC 616 per Palmer J at 243 [17]; and Sayegh v Australian Community Pharmacy Authority (2006) 155 FCR 324; [2006] FCA 1289.

115 In my opinion, by using the phrase “specified interests in property” in subs (4), the legislature was intending that the operation of s 22 be so confined. Although s 22(1) provides that the Commission may apply for an assets forfeiture order in respect of all or any of the interests in property that are or proposed to be subject of a restraining order, subs (4) then provides a specific direction as to what may be the subject of an assets forfeiture order, which is not only in different terms to subs (1), but is in narrower terms than s 10(2).

116 It follows therefore, that when in s 10(2) reference is made both to “specified interests” or “a specified class of interests” in property, the Act is intended to cover different matters. Thus, when in s 22(4) the legislature provides that when an assets forfeiture order is made, “it must be made so as to apply to specified interests in property”, the court is being directed to make an order in respect of specified interests in property and not in respect of “a specified class of interest in property”.

117 The reason for this is obvious enough. An assets forfeiture order, in order to be effective, is to operate upon specific property. I say “to be effective”, because, pursuant to s 23, the effect of an assets forfeiture order is to forfeit that interest to the Crown, the property vesting in the Public Trustee for that purpose. The court may also make ancillary orders to facilitate the transfer to the Crown of the interests in the property so forfeited: s 23(4). In my opinion, an assets forfeiture order could not operate upon a “specified class of interests in property” because it would not necessarily be apparent as to what was to be forfeited.

118 Although the same may be said in relation to a restraining order the position is different. First, the purpose in making a restraining order and the processes involved in doing so are different. As already explained, a restraining order is made upon an ex parte application and acts as a foundation for the making of an assets forfeiture order. At the time the restraining order is made, the court only has available to it evidence specified by s 10(3) which is based upon the affidavit evidence. The restraining order only remains in place for two working days unless, relevantly, there is an application for an assets forfeiture order pending before the Supreme Court in respect of the interest.

119 It is quite possible that at such an early stage of an investigation, the Commission may not have available to it precise details of property which is serious crime derived property, notwithstanding that there may be reasonable grounds for a suspicion that a person has come into possession of property that is serious crime derived property. An example of this could occur where the Commission had reasonable grounds to suspect that a sum of money had been transferred from the bank account of the person engaged in serious crime related activity to a third party, but did not have precise information as to how the third party held the moneys so transferred.

120 This is not an idle example. In this case, there was information contained in the Westpac investigation report that Ollis had transferred $2.5m of the moneys he had obtained from Westpac to Shields. However, there was no precise evidence as to how those funds were held by Shields. It was known that Shields had acquired significant parcels of land. However, there was no information in Mr Spark’s affidavit as to whether the funds for the acquisition of those properties derived from that $2.5m, notwithstanding that I have indicated above there was a reasonable basis for an inference to that effect.

121 However, there may have been other sources for the funding of those purchases, or alternatively they may not have been funded out of the $2.5m that Ollis had allegedly “loaned” to Shields, but some other portion of the moneys that he had obtained from Westpac.

122 The purpose of the making of a restraining order is to permit the restraint of property of a person received from, or acquired as the result of obtaining funds from a person engaged in serious crime related activities. The procedure can thus be seen as an urgent procedure which favours the making of an order on material which rises no higher than the grounding of a reasonable suspicion.

123 There are then other provisions in the Act which enable enquiries to be made as to a person’s assets. In particular, an order may be made under s 12 for the examination on oath of a person whose interests in property have been restrained or any other person “concerning the affairs of the owner, including the nature and location of any property in which the owner has an interest”: s 12(1)(b).

124 By contrast, an application for an assets forfeiture order is made upon notice to the person to whom the application relates and that person may appear and adduce evidence at the hearing of the application: s 22(9). The application must also apply to specified interests in property: s 22(4). Accordingly, if the Commission wished to obtain an assets forfeiture order in respect of property which had been restrained in terms of “a specified class of interests in property”, it could only do so if it was in a position to identify for the court, “specified interests” in respect of that property.

125 By the time an application for an assets forfeiture order was made, the Commission could have utilised the procedures for examination for which provision is made in s 12, which would be one likely source of information for the precise specification of interests required for the purposes of s 22(4).

126 That same source of information could be used so as to obtain a variation of the restraining order as permitted by s 12(1)(a). Indeed, it may be that, if a restraining order had been made in respect of a specified class of interests in property, then, if it was intended that an assets forfeiture order was to be made in respect of property comprised in that specified class of interests, an order varying the interests in property so as to identify the specified property would need to be made. However, it is not necessary to decide this point.

127 There is also provision in the Act for the making of exclusion orders as has been discussed at [35] above.

128 Accordingly, the scheme of the Act is to require increasing specificity in relation to the orders that may be made.

129 That then leads to the question whether the form of the orders made in respect of property identified in schedules 15, 16, 17, 20, 21 and 22 is properly described as “a specified class of interest in property” within the meaning of s 10(2).

130 What is sought to be restrained is not ‘the property’ of the person concerned. Rather, what is identified is property which has been sourced from Ollis. In my opinion, that is sufficient identification of “a specified class of interests in property”.

131 Accordingly, I propose the following orders:

1. Extend the time in which to file the Summons for Leave to Appeal to 16 June 2006;

2. Grant leave to appeal;

3. Appeal dismissed;

4. Claimants to pay the opponent’s costs of the Summons for Leave to Appeal and the appeal.

132 HODGSON JA: I agree with Beazley JA.

133 TOBIAS JA: I agree with Beazley JA.

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LAST UPDATED: 2 November 2007