Proceedings under the Confiscation of Proceeds of Crime Act 1989

[42-000] Introduction

In broad terms, the Confiscation of Proceeds of Crime Act 1989 (the Act) empowers a court, upon the conviction of a defendant, to make orders for the confiscation of property derived from or used to commit a “serious offence” within the meaning of the Act: see [42-020]. It also includes interim mechanisms for the preservation of property to prevent it from being disposed of prior to the making of a confiscation order.

Thus, the principal objects of the Act set out in s 3 relevantly include:

  • to deprive persons of the proceeds of, and benefits derived from, the commission of offences against certain laws of the State, and

  • to provide for the forfeiture of property used in or in connection with the commission of such offences.

All proceeds confiscated under the Act are directed into the Victims Support Fund: s 15 Victims Rights and Support Act 2013.

The majority of the Act’s provisions commenced on 11 January 1991, replacing the Crimes (Confiscation of Proceeds) Act 1995. Provisions for the making of drug proceeds orders under Div 4 Pt 2 of the Act and amendments to introduce freezing notices under Div 1A Pt 3 commenced on 1 January 2008.

For the purpose of this chapter, aspects of the legislation are described in general terms. For further detail, reference should be made to the Act.

[42-020] Definitions

The following definitions should be noted:

Appropriate officer

Section 4 defines the “appropriate officer” who is able to bring various applications under the Act, including:

  • in all matters before the Local Court — the Director of Public Prosecutions, the Chief Commissioner of the Law Enforcement Conduct Commission or the Commissioner of Police.

  • in relation to freezing notices — the Commissioner for the Independent Commission Against Corruption.

Rule 7.32(1) Uniform Civil Procedure Rules further provides that an appropriate officer may commence and carry on proceedings in the Local Court under the Act by a police prosecutor.

Conviction of a serious offence

Section 5 provides that a person is taken to have been convicted of a serious offence for the purposes of the Act if he or she has:

(a) 

been convicted, whether summarily or on indictment, by the court

(b) 

been dealt with by the court in relation to the offence under s 10 Crimes (Sentencing Procedure) Act 1999

(c) 

had the offence taken into account on a Form 1 under s 32 Crimes (Sentencing Procedure) Act 1999 when being sentenced for a principal offence

(d) 

been charged with the offence and has absconded before determination of the charge: see further, s 16 in relation to matters of which the court must be satisfied before making a confiscation order in these circumstances.

Serious offences

Section 7 provides that a “serious offence” is:

  • any offence under NSW law that may be prosecuted on indictment. Accordingly, this includes Table offences prosecuted in the Local Court

  • offences in relation to the supply of restricted substances under ss 16 and 18A Poisons and Therapeutic Goods Act 1966

  • any other offence prescribed by the regulations. Clause 14 presently prescribes:

    • certain offences in relation to unclassified films or computer games under the Classification (Publications, Films and Computer Games) Enforcement Act 1995

    • publishing an indecent article under s 578C Crimes Act 1900.

Tainted property

There are several limbs to the definition of “tainted property” under s 4. The phrase includes property that was:

  • used in or in connection with the commission of a serious offence. An example in relation to drug offences is a vehicle used to transport drugs to the point of sale

  • substantially derived or realised, whether directly or indirectly, by any person:

    • from property used in or in connection with the commission of a serious offence. This may include the monetary proceeds from the sale of an item such as a vehicle used in the commission of an offence, and extends to another item purchased with that money

    • as a result of the commission of a serious offence. This may include property taken in the commission of an offence, the proceeds from the sale of such property, and other items purchased with the proceeds of sale

  • substantially derived or realised, whether directly or indirectly, by any person for the depiction of a serious offence or the expression of the offender’s thoughts, opinions or emotions regarding the offence in any public promotion. Examples include paid interviews that the offender gives to a news media organisation, or royalties from the sale of a book by the offender about the offence.

For examples from case law regarding “tainted property”: see [42-100].

Property used in connection with the commission of an offence

The words “in connection with” have been described as being ordinary words of wide import in respect of which precise definition is undesirable. In a given case, the question of whether property is used in connection with the commission of offence will be a matter of fact and degree: see R v Sultana (1994) 74 A Crim R 27; Taylor v AG (SA) (1991) 53 A Crim R 166.

As an overarching principle, the mere fact that the property in question is the location where the offence was committed will not ordinarily be sufficient to result in it being tainted property. There must be some activity connected with the crime that has involved the utilisation of the property with the aim of committing or furthering the commission of the crime: DPP (NSW) v King (2000) 49 NSWLR 727 at 734 per O’Keefe J.

Thus, where the property is more than just the place where the offence is committed but is also an operating tool in the commission of the offence it will likely be tainted property: see for example, R v Hadad (1989) 16 NSWLR 476.

[42-040] An overview of applications under the Act

Subject to the limits on jurisdiction outlined below, the following applications under the Act may arise in the Local Court:

Freezing notices — Div 1A, Pt 3

A freezing notice may be sought as an interim measure prior to the making of a confiscation order where a defendant either has been or is to be charged with a serious offence, or upon the defendant’s conviction. It has the effect of directing, that specified property must not be disposed of or dealt with pending determination of an application to the court for confirmation of the notice, and is to be held in the custody of a specified person such as the Commissioner of Police. Contravention of a freezing notice is an offence under s 42O.

Initially, upon application by an authorised officer (such as a police officer), an authorised justice may issue a freezing notice in the circumstances set out in s 42C. In making the application, the authorised officer must, in broad terms, have reasonable grounds for believing the defendant has committed a serious offence (if the defendant is yet to be convicted) and that the specified property is tainted property: s 42B. The application may be made in relation to property that is in the possession of the defendant, or within the effective control of the defendant despite being in the possession of another person.

Upon application under ss 42I or 42K, the court is to review a freezing notice issued by an authorised justice, and may confirm or set aside the notice: s 42L(1). When confirming a freezing notice, the court must also make a property management order under s 42M that, in the usual course, directs the Commissioner of Police to take control of the property (if it is not already under the Commissioner’s control), dispose of it, and retain any proceeds until they become payable to another person or the State under the Act.

Proceedings for the review of freezing notices are discussed at [42-060].

Confiscation orders — Pt 2

The following types of confiscation order are available under the Act:

Forfeiture order An application for a forfeiture order can be made when the defendant is convicted of a serious offence: s 18. The order has the effect that specified property is forfeited to and vests in the State (subject to any charge, encumbrance or registered interest to which the property was subject at the time): s 19. The State may take possession of the property if it has not already done so, and may dispose of or otherwise deal with it subject to certain limitations in s 19.

Pecuniary penalty order An application for a pecuniary penalty order can be made when the defendant is convicted of a serious offence other than a drug trafficking offence (see below). Such an order requires the defendant to pay a pecuniary penalty to the State in the amount assessed by the court as being the value of the benefits derived by the person from the commission of the offence: s 24.

Drug proceeds order An application for a drug proceeds order may be made when the defendant is convicted of a drug trafficking offence: s 29. The court is required to determine whether the defendant has derived a benefit in connection with drug trafficking, and if so assess the value of the benefit and order the defendant to pay the State a pecuniary penalty in that amount. Currently, the only offence within the definition of “drug trafficking offence” in s 4 that may be prosecuted in the Local Court is possession of precursors for the manufacture or production of prohibited drugs under s 24A Drug Misuse and Trafficking Act 1985.

Proceedings in relation to applications for confiscation orders are discussed at [42-080].

Local Court jurisdiction

The Local Court has jurisdiction:

In respect of confiscation orders To determine applications for confiscation orders where it is the court before which the defendant was convicted. It follows that the court cannot make a confiscation order in instances where the offence to which the order relates is the subject of committal proceedings.

In respect of applications re freezing notices To determine applications in relation to freezing notices if proceedings, including committal proceedings, for the offence on which the notice is based are held before it.

See the definition of “appropriate court” in s 4.

Although the Act operates alongside criminal proceedings insofar as it is concerned with property that is the proceeds of, or used in the commission of, serious offences, proceedings under the Act are civil in nature.

Jurisdictional limits

Section 87 provides that applications to the Local Court are to be dealt with by the court sitting in its General Division (s 87(6)) as follows:

Confiscation orders When making a confiscation order following the conviction of a person, the court is not able to make an order unless satisfied that the value of property (as determined by the court) or amount payable under the order does not exceed its general civil jurisdictional limit (currently $100,000): ss 87(2), (3), (3A). The court is not able to make a forfeiture order in relation to land: s 87(4).

Applications in relation to freezing notices The jurisdictional limitations in relation to the value and nature of property that may be dealt with when making a confiscation order do not apply to the confirmation of a freezing notice: see s 87(6).

Form of applications

Rule 7.32(2) Uniform Civil Procedure Rules provides for applications under the Act to be made:

By summons Where proceedings under the Act are first commenced, or

By notice of motion For subsequent applications where proceedings under the Act have previously been commenced; for instance, when seeking a confiscation order following the confirmation of a freezing notice.

[42-060] Freezing notices

Applications in relation to freezing notices

The court will be required to review a freezing notice issued by an authorised justice in the following circumstances:

Upon an application to confirm a freezing notice Such an application must be made to the court by an authorised officer within 14 days of the notice being issued by an authorised justice: s 42I(1). Notice of the application must be given to the defendant and any owner of the property or other person affected by the notice, and any person who is given notice is entitled to appear and adduce evidence at the hearing of the application:ss 42I(3), (4).

  The application will typically be listed with the proceedings for the serious offence to which the notice relates. Section 42I(2) requires the application to be set down for hearing on the first date for the proceedings for the offence that occurs after the application is made, or as soon as practicable after the application is made.

  Accordingly, in matters where the application is listed prior to the disposition of the proceedings for the offence, the application need not be adjourned to await the outcome of those proceedings. If the freezing notice is confirmed but the court considers it is not appropriate to make an order for the disposal of the property at the time, a range of alternative orders for the management of the property concerned are available under s 42M: see Property management orders, below.

  If the application is not opposed by the defendant (or where applicable another interested party) and subject to an affidavit of an authorised officer being available, the court may determine the application on the first listing date where it can be satisfied of the matters set out in s 42L: see Determination of the application, below.

Upon an application to set aside/vary freezing notice Such an application may be made by a defendant, authorised officer or other person claiming an interest in the property at any time before the confirmation of a freezing notice: s 42K(1).

  This application may be heard before the day set down for hearing of any application to confirm the freezing notice, and must be dealt with by the court whether or not an application for confirmation is made within the 14-day period available under s 42I.

Determination of the application

Under ss 42L(2) and (3), before confirming a freezing notice, the court must be satisfied that:

  • The application is supported by an affidavit of an authorised officer that sets out the officer’s reasonable belief, and grounds for believing:

    • that the defendant has committed the serious offence concerned (including where relevant details of any conviction)

    • in relation to the property concerned, that:

      • the property is tainted property in relation to the offence

      • the property is the defendant’s proceeds of drug trafficking, or

      • the defendant has derived benefits (defined in s 4 to include services and advantages) from the commission of the offence. An example is where the commission of the offence has resulted in the defendant’s existing property increasing in value. If the property belongs to a person other than the defendant, it must be shown that the property is subject to the effective control of the defendant, within the meaning of s 10.

  • There are reasonable grounds to believe the matters set out in the affidavit. This may be on the basis of the contents of the affidavit or other evidence given in the proceedings.

  • Proceedings have been commenced against the defendant for, or the defendant has been convicted of, a serious offence. Although the initial freezing notice may be issued prior to the defendant being charged with a serious offence, upon the issue of the notice, a charge must be laid within 48 hours or the notice will cease to be in force: see ss 42C(1)(a), 42P(a).

  • The property concerned is not affected by a restraining order or application for a restraining order under the Act or the Criminal Assets Recovery Act 1990. A restraining order under either piece of legislation has substantially the same effect as a freezing notice and may be obtained on application to the Supreme Court, ordinarily on an ex parte basis.

  • It is appropriate in the circumstances to confirm the freezing notice.

Further issues that may be relevant to the determination of an application to confirm a freezing notice include:

Existence of a rebuttable presumption of tainted property in some instances Section 42L(6) provides for a presumption that property is tainted property in circumstances where evidence is given at the hearing that it was found in the possession of the defendant at or immediately after the commission of the offence.

  If no evidence to the contrary is given, the subsection provides that the court must presume the property was used in, or in connection with, the commission of the offence.

  If evidence to the contrary is given, the freezing notice must not be confirmed unless the court is satisfied, on the balance of probabilities, that the property was used in, or in connection with, the commission of the offence.

Provision of undertakings as to costs or damages on behalf of the State The court may in its discretion refuse to confirm a freezing notice unless appropriate undertakings are provided on behalf of the State by an appropriate officer in relation to the payment of costs or damages that may arise from the making or operation of the notice. Ordinarily, a signed undertaking will be provided to the court at the hearing of the application.

Upon determination of the application:

If the freezing notice is confirmed The court must make a property management order in relation to the property concerned, which is taken to be part of the freezing notice: s 42L(5).

If the freezing notice set aside The defendant or another person entitled to the property concerned may apply to the Attorney General for its return under s 42S.

Property management orders

A number of different orders are available to the court when making a property management order upon the confirmation of a freezing notice.

Section 42M(1) provides for the making of a standard property management order by which the Commissioner of Police is directed to:

  • take control of the property concerned (if it is not already under the Commissioner’s control) and dispose of it in the manner specified in the order, and

  • retain any proceeds until they become payable to another person or the State under the Act.

There may be matters where an alternative arrangement is appropriate; for instance, that the property be taken and held by another person but not disposed of, or remain frozen but in the possession of the defendant or another person. Accordingly, s 42M(2) goes on to set out the following alternative orders that the court may make if appropriate to do so:

  • that the defendant or another person not dispose of or otherwise deal with the property specified in the order, except to the extent and in the circumstances that may be set out in the order

  • that the NSW Trustee and Guardian or Commissioner of Police retain or take control of the property. Section 42M(4)(b) provides for additional orders that may be made in this circumstance

  • that the property be returned to the defendant or another person

  • that the defendant or another person be allowed to access the property specified in the order.

Considerations when making a property management order

Section 42M(3) sets out the matters the court is to consider when determining what property management order should be made:

(a) 

if the defendant is in custody — whether he or she is likely to be granted bail

(b) 

any hardship reasonably likely to be caused to the defendant or a third party

(c) 

if the defendant is an Aboriginal person or a Torres Strait Islander, when considering hardship — the responsibilities arising from the defendant’s ties to extended family and kinship

(d) 

the nature of the property and whether it is unique in nature

(e) 

the case against the defendant

(f) 

the expenses relating to storage and maintenance of the property

(g) 

the use that is ordinarily made or had been intended to be made of the property.

Content of a property management order

In making any of the above orders, the court:

  • must, in the case of any order directing the sale of the property concerned, require it to be sold for not less than its value at the time of sale

  • may include directions in relation to a particular part of the property concerned

  • may include provision for the defendant’s reasonable living expenses, business expenses, or reasonable expenses in defending a criminal charge

    There is no maximum limit set for the amount of legal expenses. The Act provides only that they must be reasonable, without further guidance or measure as to reasonableness. A defendant must establish on the balance of probabilities that they:

    (i) 

    will incur legal expenses in connection with defending the criminal charge, and

    (ii) 

    are not able to meet their reasonable expenses without resort to the tainted property. This will ordinarily require evidence of their other assets and whether legal aid is available. For consideration of “reasonable legal expenses” in case law: see [42-100].

  • may make other ancillary or consequential orders it thinks appropriate in the circumstances.

Power to make further orders

Under s 42V, a court that confirms a freezing notice or is dealing with proceedings for the serious offence to which the notice relates may, at any time, make any orders ancillary to the freezing notice that it considers appropriate. Without limitation, this includes an order:

  • to set aside the freezing notice in respect of all or part of the property to which it relates

  • to vary the terms of the freezing notice such as the property to which it relates and any conditions of the notice

  • relating to the carrying out of an undertaking given by the State in connection with the confirmation of the freezing notice in regard to the payment of costs or damages.

Pursuant to s 42V(3), such an order may be made upon application of an appropriate officer, the owner of the property, a person directed to take control of the property under the freezing notice, or any other person in respect of whom the court grants leave.

Duration of orders

If the court proceeds to make a confiscation order following the defendant’s conviction of a serious offence in circumstances where a freezing notice is already in place, it may set aside or make any other order concerning the operation of the freezing notice that it considers appropriate: s 42Q(1).

A freezing notice otherwise remains in force until such time as it ceases upon one of the events listed in s 42P. In cases following the confirmation of the notice and making of a property management order by the court, this may be where:

  • the charge for the serious offence is withdrawn, and the defendant is not charged with a related offence by the time of the withdrawal

  • the defendant is acquitted of the charge or the charge is dismissed, and the defendant is not charged with a related offence by the time of the withdrawal

  • upon the conviction of the defendant, the court refuses to make a forfeiture order in relation to the property the subject of the freezing notice, and any appeal against the refusal is finalised or the appeal period expires without an appeal being made

  • at any time the court makes an order setting aside the freezing notice in relation to the whole of the property to which it relates.

Section 42S provides that when a freezing notice ceases to be in force, the defendant or other person lawfully entitled to the property may apply to the Attorney General for its return. If the property has already been sold pursuant to a property maintenance order, the defendant or other person is entitled to be paid an amount equal to the value of the property together with interest calculated from the date of disposal of the property.

[42-080] Confiscation orders

Procedural aspects

When an application may be made

Under s 13, upon a person’s conviction for a serious offence, an appropriate officer may apply to the court for:

  • a forfeiture order, and/or

  • a pecuniary penalty order, in the case of a serious offence other than a drug trafficking offence, or

  • a drug proceeds order, in the case of a drug trafficking offence.

Section 13(3) provides that unless leave is obtained from the Supreme Court, an application for a confiscation order must be made within the “relevant period”, defined in s 4 as 6 months after the day on which:

(a) 

the offender was sentenced for the serious offence, or

(b) 

an order was made in relation to the offence under s 10 of the Crimes (Sentencing Procedure) Act 1999, or

(c) 

the court took the offence into account under Pt 3, Div 3 of the Crimes (Sentencing Procedure) Act 1999, or

(d) 

the person is taken to have absconded under s 6.

Notice of application and standing

Notice of an application for a confiscation order against the property of a person convicted of a serious offence must be given by the appropriate officer to the person.

Where a forfeiture order is sought, s 14(1) also requires written notice to be given to any other person the appropriate officer has reason to believe may have an interest in the property.

A person to whom notice is given is entitled to appear and adduce evidence at the hearing of the application.

Amendment of application

Section 15 empowers the court to amend an application for a confiscation order at any time prior to determining the application either upon the request or with the approval of the appropriate officer.

However, if the amendment would have the effect of including additional property or benefits, it must not be made unless the court is satisfied that:

  • the property or benefit was not reasonably capable of identification at the time the original application was made, or

  • necessary evidence became available only after the application was made.

Further notice requirements apply: see ss 15(3), (5).

Forfeiture order

Under s 18(1), upon application following the conviction of a person for a serious offence, the court may make an order that specified property is forfeited to the State if it:

  • is satisfied the property is tainted property

  • in the case of property that is the proceeds of the depiction of the offence in a public promotion — is satisfied it is appropriate to treat the property as being derived or realised by the defendant because of the commission of the offence

    Subsection (1A) provides that in considering this, the court may have regard to any matter it thinks fit, including:

    • whether or not such treatment of the property it is in the public interest

    • whether the depiction of the offence has any general social or educational value

    • the nature and purposes of the public promotion, including its use for research, educational or rehabilitative purposes

  • has taken into consideration, having regard to the material before the court:

    • the use ordinarily made or intended to have been made of the property

    • any hardship to the defendant or any other person that is reasonably likely to arise following the making of the order. In considering hardship, the court:

      • is not to take into account any hardship to the defendant arising from the sentence imposed in respect of the offence: s 18(2)

      • must take into account hardship reasonably likely to arise in the case of an Aboriginal or Torres Strait Islander defendant arising from their ties to extended family and kinship: s 18(2A).

Consideration of “hardship” in case law

Much of the case law on the issue of hardship has arisen in circumstances where consideration has been given to whether property that has been used in or in connection with the commission of the offence should be subject to forfeiture. It has been noted that:

  • A purpose of the Act is to cause a measure of hardship in the deprivation of property; thus, consideration of hardship requires something more than “ordinary hardship in the operation of the Act”: R v Lake (1989) 44 A Crim R 63.

  • Hardship should be assessed in proportion to the offence in question: see R v Bolger (1989) 16 NSWLR 115 at 126–127. Ultimately, regard should be had to whether a forfeiture order would be severely disproportionate to the circumstances of the offence and the nature and degree of offending. If there is some disproportion, this of itself is not necessarily a reason to refuse an order in view of the intended deterrent purpose of the legislation: see Taylor v AG (SA) (1991) 53 A Crim R 166 at 179.

  • There is an “infinite variety of circumstances” that may affect the exercise of the discretion whether or not to order forfeiture, but in broad terms relevant considerations may include:

    • the circumstances of the offence

    • the extent to which the property was connected with the commission of the offence

    • the seriousness of the offending

    • the value of the property in relation to the offence

    • the likely consequences of an order on the defendant and others who may be affected by it

      See Taylor v AG (SA) (1991) 53 A Crim R 166 at 178.

More recently, the NSW Court of Criminal Appeal has said in Zahrooni v R [2010] NSWCCA 252 at [60]:

  • The primary purpose of the Act is to make crime unrewarding and unproductive.

  • In accordance with the decisions in Lake and Bolger, this has the consequence that when considering the forfeiture of property that is used in or in connection with the commission of crime rather than being the proceeds of crime, a proper exercise of the discretion in s 18 of the Act requires consideration of the extent to which the property concerned was used in or in connection with the commission of the offence and the question of proportionality.

  • If the use of the property in connection with the commission of the offence is incidental, this will be a relevant consideration.

See further [42-100].

Rebuttable presumption

A rebuttable presumption that property is tainted applies in instances where there is evidence before the court that the property was in the possession of the person at or immediately after the commission of the offence: s 18(4). If no evidence to the contrary is given, the court must presume the property was used in, or in connection with, the commission of the offence. If evidence to the contrary is given, an order must not be made unless the court is satisfied, on the balance of probabilities, that the property was used in, or in connection with, the commission of the offence.

Content of orders

Further matters to be addressed where relevant include:

Property other than money Where a forfeiture order is made in relation to property other than money, the court must specify an amount in the order that it considers to be the present value of the property: s 18(3).

Third party interests A forfeiture order may be made where a third party has an interest in the property. If making an order in such circumstances, the court should specify the extent of the estate, interest or rights in the property that are affected by the order as contemplated by s 18(5)

  As the property only vests in the State to the extent specified in the order under s 19(1)(a), the third party may accordingly be compensated to the extent of their interest in the event the property is then sold or disposed of.

  In some instances, including in the event a third party without notice of an application for a forfeiture order subsequently becomes aware of the order, the third party may apply to the court for a declaration as to the nature, extent and value of their interest in the property and an order for the transfer of the property to them or the payment of an amount equal to the value of their interest. See s 20 in relation to the circumstances in which an application may be made and the considerations of the court in determining whether to make such an order.

Leave to dispose of property early

When a forfeiture order is made, unless the court grants leave, the State is not permitted to dispose or otherwise deal with the property until such time as the period for appealing the order or conviction for the serious offence lapses, or any appeal is finally determined or lapses (whichever is later): s 19(3).

The prosecutor will ordinarily seek leave to dispose of the property before the expiration of this period, particularly in instances where it is argued that the value of property such as a vehicle is likely to depreciate.

Pecuniary penalty order

Under s 24(1), upon application following the conviction of a person for a serious offence other than a drug trafficking offence, the court may assess the value of benefits derived by the person from the commission of the offence and order the person to pay an equivalent pecuniary penalty to the State. The order may apply to property in the possession or control of the person, as well as benefits provided for a person, either within or outside New South Wales: s 25(6).

Assessing the value of benefits

When assessing the value of the benefits, s 25(2) provides for the court to have regard to the information before it concerning:

  • The money or value of other property or other benefit that came into the possession or control of the defendant or another person at the defendant’s request or direction due to the commission of the offence: s 25(2)(a), (a1), (b)

  • In relation to drug offences, the market value of similar substances at the time of the offence and the amount or range of amounts ordinarily paid for the doing of an act (such as supplying): s 25(2)(c)

  • The value of the defendant’s property before and after the commission of the offence, or where the defendant has been convicted of more than one offence, at the time before, during and after the period of the offences: s 25(2)(d)

  • The defendant’s income and expenditure before and after the commission of the offence, or where the defendant has been convicted of more than one offence, at the time before, during and after the period of the offences: s 25(2)(e)

In arriving at a valuation of the benefits, the court:

  • is not to deduct any expenses or outgoings incurred by the defendant in the commission of the offence(s) when calculating the value of the benefits derived by the defendant: s 25(5)

  • is to reduce, where applicable, the pecuniary penalty to be paid by an amount equivalent to the value of any property in respect of which a forfeiture order is to be made: s 24(2)

  • may treat any property that is subject to the effective control of the defendant (within the meaning of s 10) as property of the defendant for the purpose of assessing the value of benefits derived by the defendant from the commission of the offence: see further, s 27.

Benefits from the depiction of the offence in a public promotion

When considering whether to treat a benefit provided for the depiction of an offence in a public promotion as a benefit derived by the defendant due to the commission of the offence, the court:

  • may have regard to any matter it thinks fit, including:

    • whether or not such treatment of the property it is in the public interest

    • whether the depiction of the offence has any general social or educational value

    • the nature and purposes of the public promotion, including its use for research, educational or rehabilitative purposes: s 25(2A)

  • may treat the value of the benefit derived by the defendant due to the commission of the offence as being a proportion of the total value of the benefit derived from the promotion as seems just and equitable in the circumstances, where satisfied that part but not all of the public promotion relates to the depiction of the offence: s 25(2B).

Rebuttable presumption

A rebuttable presumption applies where evidence is given that the value of the defendant’s property after the commission of the offence or at the end of the period of offences exceeds the value of the property beforehand. The court is to treat the value of benefits derived by the defendant due to the commission of the offence as being not less than the excess, unless the defendant satisfies the court that all or part of the excess was due to causes unrelated to the commission of the offence(s): see ss 25(3), (4).

Drug offences

Section 25(7) provides for a member of the Police Force or Australian Federal Police or a Customs officer who is experienced in the investigation of indictable offences to give evidence of the market value of a prohibited drug or plant, or the range of amounts payable for a performing an act in relation to a prohibited drug or plant, at a particular time or period. The subsection is expressed as applying despite any rules of law or practice in relation to hearsay evidence.

Drug proceeds order

Under s 29(1), upon application following the conviction of a person for a drug trafficking offence, the court is to determine whether a defendant has derived benefits at any time in connection with drug trafficking (within the meaning of s 4), and if so, assess the value of those benefits and order the person to pay an equivalent pecuniary penalty to the State.

The process for making a drug proceeds order and the matters for consideration in assessing the value of any benefits are substantially similar to those that apply in relation to pecuniary penalty orders: see further, ss 29, 30. Differences include:

When assessing the value of benefits derived by the defendant The court may consider the value of the defendant’s property, income and expenditure that appears to have been held since the defendant’s conviction, or to have been transferred to the defendant at any time within a period of 6 years prior to the date when proceedings against the defendant were commenced: ss 30(1)(f), (1)(g).

Provision for statements relating to drug trafficking Section 31 provides for the prosecution to tender a statement to the court that sets out any matters relevant to determining whether the defendant has derived benefits from drug trafficking or the assessment of the amount of those benefits.

  Where the statement has been served on the defendant, the court can require the defendant to indicate the extent to which he or she accepts each allegation contained in the statement: s 31(2).

  If the defendant accepts an allegation to any extent, it is to be treated as conclusive of the matter to which it relates: s 31(1)(b).

  If the defendant does not indicate the extent to which he or she accepts an allegation, it may be treated as an acceptance of the allegation (except where the allegation in question is that the defendant has benefited or has derived a benefit from drug trafficking carried on by the defendant or another person): s 31(3).

[42-100] Relevant case law

Tainted property

Case name Offence Property Relevance to offence Reasoning
DPP v King (2000) 49 NSWLR 727 Aggravated indecent assault against a minor Boat Sexual offences committed on the boat

O’Keefe J held that the boat was not tainted as it was no more than the place in which the offences occurred. It was not in any relevant sense used in connection with the commission of the offence.

In reviewing a number of authorities his Honour stated at 734:

the nature of the nexus between the property in question and the commission of the crime has been the primary focus of attention. In others, the nature of the criminal activity and its relationship to the subject property has been the primary focus. This has come about because of the particular facts in each of the different cases. However the overarching principle that in my opinion can be extracted from the cases … is that some activity connected with the relevant crime must have involved the utilisation or employment of the property with the aim or purpose of committing or furthering the commission of the crime in question. In none of the cases referred to has the mere fact that the property in question has been the place of commission of the crime and nothing more been held to result in the property being tainted property within the meaning of the forfeiture statutes.

DPP v Garner (unrep, 26/4/99, VCC) Sexual offences against minors, possession of child pornography House boat A series of sexual offences on young males were committed on the boat This case contrasts with the decision of King. The court found that the boat was not a mere location of the crime but rather the defendant had used the boat to provide the young males with “a pleasurable environment and exciting activities” and the use was not “a mere incident of the crimes or as providing a locus for them but as an efficient tool for seduction of the boys”.
DPP v Farley (unrep, 17/9/96, WASC) Sexual offences against minors House and land Boys lured to house to fix bicycles, woodwork, etc with the intention of luring them into sexual activity Similar to the Victorian case of Garner, the premises were held to be a tool or a lure for the boys for the purposes of committing the offences so therefore tainted
R v Sultana (1994) 74 A Crim R 27 Supply heroin Large amount of cash hidden in three different places in defendant’s premises. Defendant was an established drug dealer so cash was alleged proceeds of sale of drugs

The court found the money represented the proceeds of drug trafficking and therefore connected with the drug offences.

Per Sully J at 39: (although in the minority there was agreement on this point) the words “in connection with” are of wide import and

it is not desirable to attempt to define them with hyper-refined exactness; and their effect and practical application in any given case and context will be a question of fact and degree … there must be demonstrated in a real sense some connection between the particular offence of which the offender has been convicted, and the particular property in respect of which the confiscation order is sought.

Gleeson CJ and Handley J, in agreeing property was tainted, adopted and approved the approach of Cox J in Polain (below).

Rintel v R (1991) 3 WAR 527 Drug offences Motor vehicle and real estate

Car was used to transport and conceal drugs.

House used to store, prepare and supply drugs.

Car held to be tainted, but contrasted the situation where drugs concealed by a passenger, in which case the relationship between the car and offence would be indirect.

House held not to be tainted. Pidgeon J at 543 noted:

“the ordinary meaning of the verb to use is to employ for a purpose” and set out the limitation in terms of use of land as:

… in my view it would be going beyond the intent of the legislation to adopt an interpretation that would result in liability to forfeiture every time an activity is carried out on that land when in ordinary speak it would not be regarded as being so carried out. The position can be contrasted if it was shown that the land or house was used in a way equivalent to a warehouse or possibly if the house was used as a safe house. Cultivation would be clear use of the land. The mere presence of the drug on the land would not in my view be sufficient to regard the land as being used.

Taylor v AG (SA) (1991) 53 A Crim R 166 Cultivate and supply cannabis House and land

Premises in which and from which drugs had been traded

Per Millhouse J at 170:

“In connection with” are ordinary words and there is no point trying to define them precisely. However, widely or narrowly the phrase is construed, the appellant was using the shack “in connection with” selling cannabis.

Per Debelle J at 175–176:

If a small crop of cannabis is grown on a large farming property, it might be said that there is no substantial connection between the use of the property and the commission of the offence. However, it is clear that the property has been used in connection with the commission of the offence: absent the property, that crop would not have been grown. The farming property is thus liable to forfeiture: whether forfeiture will be ordered will be determined by the court in the exercise of its discretion.

R v Bolger (1989) 16 NSWLR 115 Drug offences Motor vehicle Vehicle used to take drug to point of sale. The car was used to transport the drugs and therefore used in connection with the offence (this was not disputed by the appellant).
R v Polain (1989) 52 SASR 526 Drug possession (speed) Cash and set of scales

Documents found suggestive of drug transaction records.

Cash for float and working capital.

Cox J (at 532) found the money was:

not just working capital in some vague or remote manner but as a fund, kept close by, which was constituted by some or all of the proceeds of the sales of identical gram bags that derived from the same wholesale consignment as the two bags in the defendant’s possession … There was such an intimate relationship therefore, between the money and the possession of the bags as to constitute a use of the money “in connection with” [the offence].

R v Hadad (1989) 16 NSWLR 476 Drug offences Motor vehicle Drug offences

The car was found to be an operating tool in the commission of the offence. Per McInerney J at 482:

The meeting between Hadad and the proposed purchaser of the drugs was pre-arranged; it was to take place in a public street; it was essential for a person involved in such a transaction that he minimise the risk of being caught with the drug or the proceeds in his possession; and that the use of a motor car was not incidental to such transaction.

His Honour quoted United States v One 1941 Pontiac Sedan 83 F Supp 999 at 1002 (1948):

The automobile enables the dope seller to make himself more elusive in travelling to places where he meets his customers or his confederates … He can travel greater distances, follow less frequented streets or roads, move about at will and alone, and be completely independent of public means of conveyance. The automobile helps him escape observation, detection and capture. It is an operating tool of the dope peddler’s trade.

Reasonable legal expenses

Relevant considerations

In NSW Crime Commission v Younan (1993) 31 NSWLR 44, in considering the discretion to provide for reasonable legal expenses when making of a restraining order under what is now the Criminal Assets Recovery Act 1990, the court set out four factors that need to be considered:

1. 

the strength of the prosecution case

2. 

the size of the fund of the property involved

3. 

the probable amount of the legal expense, and

4. 

the effect of any exemption upon the achievement of the purposes of the Act.

In R v Weightman (unrep, 23/06/04, NSWSC), Studdert J added a fifth factor:

5. 

the source of the funds.

The defendant in Weightman was charged with murder of his parents. The property he inherited under their will was the subject of a restraining order, from which the defendant sought provision for his reasonable legal expenses in defending the murder charges. In refusing the defendant’s application, Studdert J noted comments in Younan that:

the notion that a thief … might use the actual funds taken from another for the payment of the lawyers of either of both of them so that, at the end of the proceedings there would be no real prospect of recovery by the owner is self evidently objectionable. It would have the effect of defeating the purpose of legislation such as the Act.

The outcome in Weightman can be contrasted with DPP v Brown [2005] NSWSC 870, where the funds the subject of a freezing notice were profits from a media interview rather than being the alleged proceeds of crime. The defendant, a security officer, was charged with murder after shooting a man who had attempted to rob her. Prior to being interviewed and charged by the police, a news and current affairs program paid the defendant for an interview in which she gave her version of events.

Evidence was given that the defendant would not likely be entitled to legal aid and would therefore need to fund her defence. As the application for access to the funds was made prior to the committal hearing, it was difficult to assess the strength of the case. In apparently reluctantly allowing the defendant access to the funds for the purpose of her defence, Howie J stated at [20], [25], [28]:

The general policy behind the Act is that persons should not be able to profit from their criminal behaviour either directly or indirectly. That policy applies with considerable force to the money obtained by, or promised to, the applicant by selling her story to the media. To engage in that activity while at the same time avoiding assisting the police with their investigations was morally reprehensible.

The difficulty in the present application is that, had the restrained funds not been available, the applicant would be in the position faced by most person who find themselves in the predicament of defending a prosecution for a serious criminal offence without funds to engage counsel let alone experienced senior and junior counsel. She may not have been entitled to legal aid because of the constraints imposed in relation to committal proceedings. Yet … having regard to the seriousness of the allegation, the state of the evidence and the need to cross-examine two vitally important witnesses, it would not be inappropriate for the applicant to be represented by those who seek to act for her.

I was initially of a mind to refuse the application so strong is the policy inherent in the legislation against persons, such as the appellant, selling their version of events to the media and the deterrence aspect of depriving such persons of the benefit obtained from allegedly criminal activity … Had the charge been less serious, had the committal proceedings not involved the cross-examination of witnesses, and had I been in a better position to assess the strength of the prosecution case, I would have found … the balance to be in favour of refusing the application notwithstanding that it might have had the effect of depriving the applicant of legal representation, or at least her preferred legal representation. However, for the reasons above, I ultimately formed the view that the public interest was that some of the funds be released to the applicant for her defence of the charge of murder at committal proceedings.

Tension between objects of the Act and right to legal representation

It is evident from the case law that there is a conflict between the objects of legislation that has the effect of preventing a person from dealing with an asset, and a person’s right to legal representation, particularly the best legal representation they can afford.

In NSW Crime Commission v Fleming (1991) 24 NSWLR 116, Kirby P observed in relation to restraining orders at 136 [References omitted]:

3. 

Given the objects of the Act… it is scarcely likely that Parliament would have intended that a person, securing provision for “reasonable legal expenses”, should have a complete free hand in that regard to the extent that the person expends funds upon legal expenses, the property of that person is diminished … It would be especially surprising, given the objects of the Act, to adopt a construction of its provision which would permit an accused person unrestricted use of property which is clearly the proceeds of drug-related activity to engage a team of expensive private lawyers paid at the full market rates of the private Bar …

4. 

On the other hand, the Act is not written on a blank page. It was enacted against a background of settled civil rights. These include the presumption of innocence in criminal proceedings; the presumption that a person may use his or her property as that person decides, and specifically may use that property to defend serious legal proceedings. It is not only in the interests of the individual that such property should be used for the last-mentioned purpose. It is also in the interests of society in at least three respects. It helps to ensure both the reality and appearance of a fair trial of issues seriously in contest (as cases involving drugs often are). It may assist in the provision of considered legal advice which may result, in proper cases, in a plea of guilty to serious criminal charges which may save significant court time and public cost. And it may ensure that a person is not thrown upon public legal assistance in resisting serious actions of the State which threaten that person’s property, livelihood, reputation and even liberty. It is clearly undesirable, in at least most cases, that people without knowledge of legal procedure should be forced to defend their interests without legal assistance. This is why it is repeatedly stressed that there is a public as well as an individual interest in the competent legal representation of persons before the courts.

Hardship

Case name Offence Property Relevance to offence Reasoning
Taylor v AG (SA) (1991) 53 A Crim R 166 Cultivate and supply cannabis House and land

Profit from drugs less than equity in the house

Hardship to family

Rights of third party mortgagor

Per Millhouse J at 466:

The property is said to be worth about $30,000 and the appellant’s equity is about $20,000. His profit from the transactions is very much less than $20,000.

The detriment therefore, to the appellant of losing the property would be very much greater than any gain from his crimes …

Perhaps even more significant … [is] that the shack is the family home for the appellant, his wife and their nine-year old child. To lose it would be, one imagines, a heavy burden upon them and, in addition to the other penalties imposed, altogether too much of a hardship, taking into account the seriousness of their offending, the value of the property and the party it played in the commission of the offences.

Further at 467 [emphasis added]:

The mortgagee [a credit union] was apparently given no notice of the application for forfeiture and certainly did not appear at the hearing of it. The order made by his Honour did not protect the mortgagee’s interest in the property. There is no power to forfeit the property of a person who is innocent of complicity in the offending, as one may assume the credit union is innocent.

R v Lake (1989) 44 A Crim R 63 Drug cultivation Land (used to cultivate cannabis) The ordinary intended use of the property was to graze sheep. The accused grew cannabis and did not graze sheep for an interim period to get out of financial trouble.

Hardship means something more than ordinary hardship arising from confiscation of an asset (otherwise the Act would be self-defeating). The Act will cause a measure of hardship:

Indeed that is its intention. It is not that kind of hardship, therefore, that can give rise to the relief under s 5(1)(b)(ii). The provision for relief on that ground must not be so interpreted as to frustrate the achieving of the purpose of Parliament in enacting the exceptional provisions of the Act. Something more than ordinary hardship in the operation of the Act is therefore meant. Otherwise the Act would have, within it, the seeds of its own ineffectiveness in every case.

R v Turnbull (unrep, 25/2/92, NSWCCA) Drug cultivation House (cannabis cultivated in attic) The home was paid off and had not been bought with the proceeds of crime. It had been owned for 12 years and used for drug cultivation for 4 years.

The argument that loss of the home would be disproportionate to the offences was not accepted, as hardship beyond loss of the property itself was not established. The court noted:

One matter of particular significance is that at no stage did the applicant lead evidence as to what his assets were … The applicant produced no evidence of his financial position which would demonstrate any particular matter of hardship beyond the loss of the property itself.

R v Bolger (1989) 16 NSWLR 115 Drug offences Motor vehicle

Disproportionate to the offence

Car was subject to consumer mortgage contract

In considering hardship Allen J (with whom Studdert J agreed) commented at 126:

The loss of the value of the forfeited property, if a forfeiture order is made, could be hardship, which is disproportionate to the offence which was committed.

Further, in relation to third parties (at 128):

If, for example, the forfeiture order would be in respect of a family home the hardship which would follow to innocent persons who lived in the home, albeit that they had no interest in the property in law or in equity, would be material. Likewise it would be material if the tainted property were a car which the wife of the offender could not do without if she were to be able to get her children to and from school. The hardship might not be decisive. But clearly it would be relevant to the exercise of the discretion.

R v Galek (1993) 70 A Crim R 252 Cultivation of 72 cannabis plants Church and surrounding land purchased in separate lots. Intention was to eventually convert surrounding lots and church into a home. Only one lot, on which the church was located, was used for growing cannabis.

The CCA found hardship was made out, stating at 259:

This is a Draconian statute, and the operation of what may be called its “all or nothing” interpretation will produce in this case a consequence which is either one of horrendous hardship which, in my view, would be disproportionate to the nature of the offence which was committed, or none at all. I am satisfied that the latter is that which should be appropriate here ….

R v Hadad (1989) 16 NSWLR 476 Drug offences Motor vehicle Motor vehicle owned by innocent third party

Per McInerney J (with whom the court agreed) at 484:

The circumstances here are somewhat unusual. Any hardship that would flow from the forfeiture of this vehicle would not flow to Hadad. Whilst he had possession of the vehicle, he had obtained that possession fraudulently from Mr Cardile without payment. Further, it cannot be said that the ordinary and intended use of the vehicle by Mr Cardile was for drug dealing. The ordinary and intended use, whilst in his possession, was, of course, for the normal everyday use of a motor vehicle.

If we were to make an order undoubtedly considerable hardship would arise upon Mr Cardile who, in my view, is completely innocent of any wrongdoing. I do not believe that the legislature contemplated such a result and having regard ss 5(b)(i) and 5(b)(ii) I would refuse the application to forfeit the vehicle in question. In my opinion the appeal should be dismissed.