High Court considers the validity of NSW Criminal Assets Recovery Act

27 November 2009

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In a decision published earlier this month the High Court, in International Finance Trust Company Limited v New South Wales Crime Commission [2009] HCA 49, held that section 10 of the Criminal Assets Recovery Act 1990 (NSW) (the Act) is invalid.

Section 10 empowers the NSW Crime Commission (Commission) to apply to the Supreme Court for a restraining order in respect of the property of a person suspected of having committed a serious offence. There is similar legislation in other States and Territories allowing the State/Territory to apply to restrain or confiscate certain assets acquired or connected with criminal activity.

Facts

The Commission had obtained a number of restraining orders and ancillary orders from the New South Wales Supreme Court to restrain bank and share trading accounts of International Finance Trust Company Limited (IFTC) and its related broking services company. The orders were made ex parte, and on the suspicion that the senior partner of IFTC’s parent company had engaged in fraud offences under the Crimes Act 1900 (NSW).

Basis for appeal to the High Court

ITFC challenged the validity of section 10 of the Act on the basis that section 10 requires the Supreme Court to make a restraining order, without notice to the persons affected, if the affidavit relied on by the Commission in its application satisfies stipulated conditions.

Decision

In the High Court, French CJ and Gummow and Bell JJ found section 10 to be invalid. Their reasoning was that a direction by the executive branch of government to the judicial branch to exercise its powers in a particular manner which is incompatible with procedural fairness deprives the court of an essential incident of the judicial function. Heydon J also found section 10 to be invalid because the Act does not allow defendants the facility to apply for speedy dissolution of the ex parte restraining order.

The minority (Hayne, Crennan and Kiefel JJ) found that an order under section 10 is an ordinary and unremarkable performance of the judicial function and is not invalid.

A challenge was also made to the assets forfeiture provisions (section 22) on the basis that it is a bill of pains and penalties. The court rejected this argument, essentially because section 22 did not operate independently of a judicial determination of liability.

Significance

The invalidity of section 10 affects the entire structure of the Act because the making of exclusion orders and assets forfeiture orders presupposes the valid making of a restraining order.

The decision may result in challenges being made to similar acts in other jurisdictions. However, it should be noted that while the Commonwealth, Queensland, Victorian and South Australian legislation provides for an ex parte hearing, the legislation also empowers the courts to direct that notice be given to the affected parties before the application is fully determined. Additionally, the Criminal Property Confiscation Act 2000 (WA) provides for freezing orders to confiscable property to be made ex parte and contains no express provision for the court to require that notice be given to any party. However, the Western Australian statute grants a discretion to the court in that the court “may” make the freezing order if the required conditions are met. A discretion rather than a direction may be sufficient to distinguish a similar invalidity challenge.

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