Citation: NSW Crime Commission v Mahoney [2002] NSWSC 1009
Court: Supreme Court of New South Wales, Common Law Division (Proceeds of Crime List)
Date: 29 October 2002
Judge(s): Sperling J
Background
The NSW Crime Commission obtained a restraining order in June 2000 over the property of the defendant, who at that time lived on a jointly owned farm at Black Hill, New South Wales. In April 2001, an assets forfeiture order was made by consent under the Criminal Assets Recovery Act 1990, covering the defendant's interest in the Black Hill property as well as other assets. A corresponding order was also made against the defendant's mother, who held the other joint interest in the property.
The defendant later claimed he had not understood, and had not instructed his lawyers, that the Black Hill property would be sold. He said he first learned of a prospective sale in August 2002 when he heard a Crown prosecutor refer to it at the Newcastle District Court. An auction of the property was scheduled for 26 October 2002.
On 21 October 2002, the defendant filed a notice of motion seeking to set aside the forfeiture order and to restrain the sale. The injunction application was heard on 25 October 2002, one day before the scheduled auction.
Legal Issues
- Whether an interim injunction should be granted to restrain the sale of the Black Hill property pending the determination of an application for an exclusion order under the Criminal Assets Recovery Act 1990
- Whether there was a serious issue to be tried as to whether the defendant's interest in the property had been acquired without the use of tainted funds
- How the balance of convenience should be assessed, including the significance of the property being the defendant's former home
Decision
Sperling J granted the injunction on 26 October 2002, the day before the scheduled auction, with reasons delivered on 29 October 2002. The application was ultimately decided on the basis of preserving the status quo pending the hearing of an exclusion order application listed for February 2003, making it unnecessary to resolve the alternative basis of setting aside the forfeiture order entirely.
On serious issue to be tried, Sperling J found there was evidence available to the defendant that his interest in the Black Hill property had been acquired without tainted funds. The Commission challenged that evidence, but the Court was satisfied there was at least a serious prospect the defendant's evidence would be accepted. That was sufficient to establish a serious issue to be tried.
On balance of convenience, the Court gave weight to the special value a home holds for a person, noting the Black Hill property had been the defendant's home until bail conditions prevented him from living there in about September 2000. Against that, the Court acknowledged that cancelling the auction would throw away the cost of mounting it, estimated at $2,000 to $3,000, and would further delay payment of approximately $1,500 owed to the defendant's former solicitor.
The Court accepted the defendant's undertaking as to damages, together with an additional undertaking that any property covered by the April 2001 orders would be applied to satisfy his undertaking before being returned to him or dealt with at his direction. Weighing all these considerations, Sperling J concluded the interests of justice required the injunction to be granted until further order.
Orders Made
- Injunction granted on 26 October 2002 restraining the sale of the Black Hill property, to operate until further order of the Court, with the intent of preserving the status quo pending determination of the exclusion order application.
Key Takeaways
- Under the Criminal Assets Recovery Act 1990, a defendant may seek an exclusion order to exempt property from a forfeiture order by establishing that the property was acquired without the use of tainted funds.
- A serious issue to be tried was established where the defendant had available evidence supporting that claim, notwithstanding that the Commission disputed it. The threshold did not require that the evidence be accepted at the interim stage.
- Where forfeited property constitutes a person's former home, that special character is a relevant factor in the balance of convenience analysis when assessing whether to restrain a sale.
- The anticipated financial cost of cancelling an auction (here estimated at $2,000 to $3,000) does not automatically weigh against granting an injunction, particularly where the balance of justice favours preservation of the status quo.
- An undertaking as to damages, supplemented by an undertaking that forfeited property would be applied to satisfy court obligations before being returned, formed part of the basis on which the injunction was granted.
Legislation and Cases Referenced
Legislation:
- Criminal Assets Recovery Act 1990 (NSW), ss 10, 22, 25, 26
Cases cited: None identified in the provided text.