Proposed examinees are entitled to notice of applications for compulsory examination orders

The WA Court of Appeal has provided perhaps the clearest warning yet that orders for compulsory examination under the Proceeds of Crime Act 2002 (Cth) should not ordinarily be made without notice to the proposed examinee. 

In a unanimous decision just published, Ng v Cmnr AFP [2022] WASCA 48, the Court of Appeal held that two examination orders made without notice to the examinees should be set aside.

The Court’s concern was with the way the application of the orders was dealt with, not the making of the orders themselves. 

After hearing from the examinees, the Court decided that examination orders were appropriate. But as a mark of its disapproval of the process, the Court quashed the examination order made by the judge at first instance and then remade examination orders in the same terms. 

Background

In what was in many respects a very common application, the Commissioner of the Australian Federal Police (AFP) applied ex parte (without notice) to the Supreme Court for orders for the restraint of property and the compulsory examination of the owners of that property.  The Court made both the restraining order and the examination orders before the property owners were aware of the proceedings. 

The Court of Appeal’s approach

The Court of Appeal held in an orthodox fashion at [130] that the risk of dissipation of assets is justification for making restraining orders without notice:

It is fundamental to a court's exercise of its judicial power that a party whose rights or interests will be affected by an order of the court is entitled to be heard. … Ordinarily, a court should only exercise the power to proceed without notice in exceptional or special cases; for example, where there is some extraordinary hazard or compelling urgency. A risk that property may be dissipated so as to frustrate the objects of the law will usually be an exceptional or special case. 
(emphasis added)

The Court held that logic does not justify the making of examination orders ex parte. Even though the cases and s182(2) contemplate the possibility of an application for an examination order being made without notice to the examinee, the Court reasoned at [135]:

A court’s power under s 180(1) to make an examination order is discretionary in character. The making of an examination order, pursuant to an application made under s 182(1), does not follow as of course if a restraining order has been made and is in force.

There was criticism made of the primary judge’s lack of adequate reasons for proceeding to deal with the examination application ex parte. The strongest words from the Court of Appeal were in these terms:

[142]   In any event, on the evidence before the Primary Judge, there was no justification for making the examination orders on an ex parte basis and, consequently, satisfactory (as distinct from adequate) reasons for making those orders on that basis could not be given.

[143]   The examination orders should not have been made until the appellants and Mr Mehmood had been served with the restraining orders and had been given an opportunity to be heard on the respondent’s application for those orders, further or alternatively, an opportunity to make an application under s 42 to revoke the restraining orders.

[144]   The examination orders made by his Honour in relation to the appellants should be set aside. …

What does it mean for future cases

I view Ng v Commissioner of the AFP as further confirmation that the proper course for law enforcement to follow will usually be:

1. Apply for restraining (freezing) orders ex parte;
2. If the restraining (freezing) order is made, serve that order on the property owner;
3. File and serve an application for examination orders; and
4. Have that application heard on notice to the proposed examinee. 

A succinct explanation of why this is the proper course is found in Commissioner of the AFP v Steffan Treptower (a pseudonym) [2018] NSWSC 677 and the cases discussed in that decision. See also more generally Onley v Commissioner of the AFP [2019] NSWCA 101, [310].

I suggest this reasoning applies with equal force to examination under other confiscation and proceeds of crime statutes such as the Criminal Property Confiscation Act 2000 (WA). 

If, despite these warnings, authorities seek ex parte examination orders from the Court they should adduce evidence to justify the ‘extraordinary hazard or compelling urgency’ that would justify the making of an examination order ex parte. I would respectfully suggest it is hard to conceive that ‘urgency’ would be a proper basis for an ex parte examination application. An examinee needs to be told of the examination and be given time to attend. Ordinarily one would expect that there would be time to allow the examinee to also attend (even on short notice) before a Judge before the examination order is made.