In Commissioner of the Australian Federal Police v Zhao  HCA 5 the High Court has dismissed an appeal against a decision of the Court of Appeal (Vic) which had stayed proceedings for the forfeiture of property of the second respondent and his wife as proceeds of crime, pending determination of a criminal charge against the second respondent. Both the underlying offence from which the proceeds of crime arose for the purposes of the forfeiture proceedings and the criminal offence for which the second respondent had been committed to stand trial was the offence of living on the earnings of sex workers contrary to s 10 of the Sex Work Act 1994 (Vic).
The High Court said that it was clear that the matters which would be gone into in the two proceedings would be the same, or substantially the same and that the issue in the two proceedings would be identical.
The first respondent, the wife, had not been charged with any offence, but was registered as the proprietor of a residential property which was their family home, a subject of the forfeiture proceedings.
The second respondent’s affidavit in support of the stay application stated that if “I have to make a detailed affidavit or be cross-examined regarding the purchase of the Restrained Property and source of any relevant funds … there is a real risk that any such evidence will prejudice my criminal case”.
The Court of Appeal considered that if the proceedings were not stayed, the prosecution would be informed, in advance of the second respondent’s trial, of his defence because he could not realistically defend the forfeiture proceedings without telegraphing his likely defence. The result would be that the prosecution would be advantaged in a manner which fundamentally altered its position vis-a-vis the second respondent and would render the trial unfair. The High Court upheld that reasoning and added: “The risk of prejudice to the second respondent if a stay is not granted in the forfeiture proceedings and the exclusion proceedings is plain. It is not necessary for the second respondent to say any more than he did on the application for a stay in order to identify that risk, given that the offences and the circumstances relevant to both proceedings are substantially identical.”
The High Court also made the following points:
• “Courts will not grant a stay of civil proceedings merely because related charges have been brought against a person and criminal proceedings are pending. More is required. To warrant a stay of the forfeiture proceedings, it must be apparent that the person whose property is in question is at risk of prejudice in the conduct of his or her defence in the criminal trial.”
• “It may be accepted that forfeiture proceedings should not be unduly delayed. … On the other hand nothing in the Proceeds of Crime Act 2002 (Cth), or in the nature of forfeiture proceedings under the Act suggests that they must proceed at all costs. It could hardly be said, from any point of view, that they are more important than criminal proceedings and should be given priority.”
• As to the Commissioner’s contention that it was necessary that the second respondent state the specific matters of prejudice before a stay could be contemplated, the High Court said that “ to require the second respondent to do so would be to make the risk of prejudice a reality by requiring him to reveal information about his defence, the very situation which an order for a stay was seeking to avoid.”
This article first appeared in the Australian Commonwealth Courts and Family Law Tracker. The cases will be discussed in more detail in the CCH Australian High Court and Federal Court Reporter. Written by Christine Henchman, Senior Writer.