Mortgages and CPCA Frozen Property

The Western Australian Court of Appeal has considered how the freezing of property under the Criminal Property Confiscation Act 2000 (CPCA) affects a bank’s mortgage. 

This issue has been the subject of several single judge decisions, which it must be said have produced inconsistent results.

It is a complex area, and this analysis includes several simplifications and assumptions. It should not be relied on as legal advice.

The Court of Appeal’s recent decision, in Nguyen v DPP (WA) [2026] WASCA 4, provides some clarity. It likely provides broad clarity for all people who interact with the CPCA. The decision is of course binding on all lower courts.

The decision at least largely brings the CPCA into line with other confiscation statutes such as the federal Proceeds of Crime Act 2002 (Cth).

The starting point

When a registered proprietor (homeowner) of land borrows from a lender (such as a bank) and the lender secures the debt via a registered mortgage, the lender (as mortgagee) acquires a legal right in respect of both the fee simple (the land) and also a legal interest in the homeowner’s interest.

The CPCA uses a simplified, but sometimes confusing, label of “owner” to describe a person with an interest in property. The full definition of “owner” (found in the glossary to the CPCA) is: owner, in relation to property, means a person who has a legal or equitable interest in the property.

A mortgagee (bank / lender) is thus an “owner” of the property for the purposes of the CPCA.

The consequence is that any application under the CPCA that can be made by an owner (in the ordinary meaning of that word) of frozen property can also be made by a mortgagee (bank / lender). The Court of Appeal recognised this at [1] of its decision.

Section 91 of the CPCA provides that an owner (and thus a bank) can apply to the Court for an order permitting the sale of frozen property. 

The central issue in Nguyen – the disbursement of the proceeds of sale

The Court of Appeal has confirmed in Nguyen that the Court also has an implied power to make orders dealing with disbursement or payment of the proceeds of the sale of the frozen property.

Section 91 operates in a context where sections 50 and 151 prohibit “dealing with” (which includes selling) frozen property. Section 91 is thus an exception to sections 50 and 151.

The Court of Appeal has confirmed that s 91 operates such that:

The court may, if it thinks fit, appoint the person to sell the property. The power to make a sale order is therefore a discretionary one. The section does not stipulate any factors that must be taken into account in deciding whether to make an order. The phrase ‘if it thinks fit’ are words of wide import, though it may be inferred that the exercise of that discretion will be informed by the objectives of the CPCA.¹

… It is not simply a binary question of ordering a sale or not ordering a sale. Whether the court will think fit to order a sale may depend on the terms and conditions of that sale. This implies that it will be open to the court to impose conditions that will make a sale of the property appropriate.² 

The Court of Appeal observed:

The objective of s 91 is to allow for frozen property to be sold without prejudicing the contingent interest of the State in that property. There are many reasons why an owner may wish to sell property that is frozen. For example, a registered owner may want to preserve value in a falling market, or take advantage of a high value in a buoyant market, or discharge a mortgage that is reducing the equity. A mortgagee may want to recover loan funds because a mortgage has fallen into default, as is the case here.³ 

Where the Court makes a s 91 sale order, the property will remain frozen up until settlement of the sale.⁴

Nguyen confirms⁵ that where the Court grants a sale order under s 91 the Court can use any ancillary power or procedure available, including making orders as to how the sale proceeds ought be disbursed. 

The nature of the freezing orders in Nguyen, and the scope of Nguyen

The land the subject of the applications in Nguyen was frozen by various freezing orders made by the Court. The land was not frozen on the drug-trafficker ground (which is the most common basis upon which property is frozen under the CPCA). 

In my view these details are not relevant to the Court’s reasoning, and the reasoning has general application across the whole of the CPCA. That is, I consider it doesn’t matter whether property is frozen by freezing order or freezing notice, and it doesn’t matter what ‘ground’ property is frozen on. If it is frozen under the CPCA, I consider Nguyen likely applies. 

However, there may be scope to argue (based on previous single judge authority) that Nguyen does not apply to mortgages over property frozen on the drug trafficker ground.

In NWC Finance Pty Ltd v WA [2019] WASC 485 at [38] (and earlier decisions cited in NWC) it had been held that only the interest of the registered proprietor (in plain English ‘the homeowner’) is frozen when property is frozen on the drug trafficker ground. 

The decision under appeal in Nguyen was delivered by Lemonis J in DPP (WA) v Nguyen [2025] WASC 3. Lemonis J had concluded at [162] and [163] that, despite NWC, because of the way a Transfer of Land Act mortgage works, the bank had a legal right in respect of both the land itself and also a legal interest in the homeowner’s interest in the land. 

At [32] and [33] the Court of Appeal noted that this aspect of the decision of Lemonis J was not challenged by the grounds of appeal. At [33] the Court of Appeal was prepared to “assume for the purposes of this appeal” that Westpac was an “owner” (in the statutory CPCA sense) of the homeowner’s interest in the land.

In my respectful view, the decision of Lemonis J on this aspect was plainly correct, and Nguyen therefore has general application across the CPCA.  

What Nguyen means for homeowners whose mortgaged properties are frozen

I expect Nguyen will embolden more banks to apply for orders permitting the sale of frozen land when the borrower / owner is in default under the mortgage. 

Subject to the possible question about the correctness of NWC, I expect Courts will now be more willing to make orders (at the request of banks) foreclosing on properties that are frozen under the CPCA. 

I expect that it will become more common for the Courts to order that mortgaged frozen properties be sold and that the proceeds of sale be distributed in the following order:

1. To meet the costs of sale;
2. To pay out the debt owed to the bank, including default interest and costs; and
3. That the net proceeds then be held by the Public Trustee as frozen property. 

For this reason, homeowners may wish to consider ensuring that they do not default on their home loans. In this regard, note s 52 of the CPCA provides that when mortgage property is frozen, the homeowner may continue to make loan repayments, and the bank may continue to receive them. 

Of course many homeowners whose property is frozen are under considerable financial pressure. Such homeowners may be well advised to seek financial advice and/or make an application to the bank for short term hardship relief. 

A final side issue considered in Nguyen

Everything I have said above about the decision relates to what was ground 1 in the appeal. 

By ground 2, the appellants appear to have attempted to argue that once property was frozen,Westpac could not continue to accrue interest and charges on the loan. 

The Court of Appeal found this argument was not central to the sale orders made by Lemonis J and thus refused leave to appeal. 

The Court of Appeal was however plainly unimpressed by the arguments, saying:

The appellants’ claim that Westpac engaged in a positive act by debiting the relevant mortgage accounts with interest and charges, is without merit. The obligation to pay interest and charges arose from the loan agreements and mortgages, and not by reason of any entry made in the books of the bank. The obligation existed independently of any act by Westpac during the currency of the freezing orders.⁶

As the primary judge correctly noted, the existence of s 52 acknowledges the continuation of a mortgagor’s obligations under a mortgage where property has been frozen.⁷ 

1. Reasons at [87]. Emphasis supplied in the reasons ↩︎
2. Reasons at [88] ↩︎
3. Reasons at [93] ↩︎
4. Reasons at [85] ↩︎
5. Reasons in particular at [89] to [92] and [95] ↩︎
6. Reasons at [120] ↩︎
7. Reasons at [123] ↩︎