FRENCH CJ, HAYNE, CRENNAN, KIEFEL, BELL AND KEANE JJ. The sole ground in this appeal from the Court of Appeal of the Northern Territory (Kelly and Barr JJ, Riley CJ dissenting) is error in that Court in holding invalid a statutory scheme for the forfeiture of property, effected by the combined operation of s 36A of the Misuse of Drugs Act (NT) and s 94 of the Criminal Property Forfeiture Act (NT) ("the Forfeiture Act").
Section 36A of the Misuse of Drugs Act provides that the Supreme Court of the Northern Territory can declare that a person who, within a 10 year period, has been convicted three or more times of certain offences is a "drug trafficker". Section 94(1) of the Forfeiture Act provides for the forfeiture to the Northern Territory of property owned, effectively controlled or given away by that person without the need for further curial order.
The Director of Public Prosecutions ("the DPP") applied to the Supreme Court for a declaration that the first respondent was a drug trafficker. It was not contested that the relevant conditions specified in s 36A were satisfied, or that the property listed in an extant restraining order was owned or effectively controlled by the first respondent as required by s 94(1).
The questions
The principal questions raised in the appeal are whether the provisions are beyond the legislative power of the Northern Territory Legislative Assembly, and invalid, either for contravention of the principle first stated in Kable v Director of Public Prosecutions (NSW) or for contravention of the limitation on legislative power that the power does not extend to the making of laws with respect to the acquisition of property otherwise than on just terms.
Both questions should be answered "No". A subsidiary issue regarding the construction and application of s 52(3) of the Forfeiture Act, in the particular circumstances of the first respondent, should also be resolved against the first respondent and in favour of the appellants.
The course of proceedings
Between August 2007 and September 2011, the first respondent was convicted of a series of drug‑related offences. Two of those offences, the subject of charges laid on 21 February 2011, were the supply of 18.6646kg of cannabis and the possession of $70,050, which the first respondent was alleged to have obtained directly from the commission of offences under the Misuse of Drugs Act.
On 28 February 2011, the DPP applied to the Supreme Court for a restraining order pursuant to ss 41(2) and 44 of the Forfeiture Act on the basis that, if the first respondent were to be found guilty of the offence of supplying 18.6646kg of cannabis, his history of drug offences during the previous 10 years meant that he was likely to be declared a drug trafficker under s 36A(3) of the Misuse of Drugs Act. As a consequence, the first respondent's property would be forfeited to the Northern Territory (the second appellant) under s 94(1) of the Forfeiture Act.
On 2 March 2011, an interim restraining order was made over some of the first respondent's property. On 11 April 2011, the Supreme Court (Mildren J) made a further restraining order, by consent, in respect of all real and personal property owned or effectively controlled by the first respondent. It was common ground that, apart from the $70,050 seized from the first respondent, the rest of the property subject to the restraining order was not "crime-derived property", "crime-used property" or "unexplained wealth" within the meaning of those expressions in the Forfeiture Act. Rather, it was property (valued in excess of $850,000) which the first respondent had acquired through legitimate means, and which had no connection with any criminal offence.
On 22 September 2011, the first respondent was convicted of the offences charged on 21 February 2011. On 15 August 2012, the DPP's application to have the first respondent declared a drug trafficker (made on 13 February 2012) succeeded before the primary judge (Southwood J) and an application by the first respondent to have the restraining order set aside was dismissed.
Subsequently, the Court of Appeal allowed the first respondent's appeal and made orders which set aside the primary judge's declaration that the first respondent was a drug trafficker and dismissed the DPP's application for a declaration under s 36A of the Misuse of Drugs Act. In setting aside the declaration made by the primary judge, the majority in the Court of Appeal concluded that the statutory scheme effected by s 36A and s 94 was invalid because it required the Supreme Court to act in a manner incompatible with the proper discharge of the Court's function as a repository of federal jurisdiction, and with its institutional integrity. In dissenting reasons, Riley CJ found to the opposite effect, that the powers and functions reposed in the Court under s 36A required the resolution of a real justiciable controversy in accordance with ordinary judicial processes.
All members of the Court of Appeal rejected the first respondent's submission that the statutory scheme was invalid within the meaning of s 50(1) of the Northern Territory (Self‑Government) Act 1978 (Cth) as an acquisition of property otherwise than on just terms. Further, all members of the Court of Appeal rejected a construction of s 52(3) of the Forfeiture Act essayed by the first respondent, about which more will be said later.
Special leave to appeal was granted upon an undertaking by the appellants to pay the first respondent's costs of the appeal and of the special leave application. The Northern Territory has provided a written undertaking in those terms. The DPP (as second respondent) made a submitting appearance in this Court.
The appellants' case in this Court is that there is no feature in the operation of the statutory scheme which provides any foundation for the first respondent's various attacks on validity, described in more detail below, and that the first respondent's construction of s 52(3) is incorrect.
In this Court, the Attorneys‑General of the Commonwealth and the States of New South Wales, Queensland, South Australia and Western Australia intervened to support the appellants' case for validity. As foreshadowed, the reasons which follow explain why the appellants' case should be accepted and the appeal allowed.
Some history
The statutory scheme in question exemplifies the acceptance by legislatures in Australia and elsewhere of the utility of the restraint and forfeiture of property, not only as a strong and drastic sanction vindicating a law and encouraging its observance, but also as a means of depriving criminals of profits and preventing the accumulation of significant assets by those involved in criminal activity, particularly in relation to drug offences.
Forfeiture or confiscation of property, in connection with the commission of serious crime, has a long history in English law. Until its abolition by statute in 1870, a felon incurred general forfeiture of property, a sanction stretching back to medieval times. Felony forfeiture provided Crown revenue and constituted the subject matter, at certain times, of Crown patronage. In distinguishing between a felon's forfeiture of land (strictly, escheat of land), a consequence of attainder following a judgment of death or outlawry, and the forfeiture of goods and chattels, a consequence of conviction and sentence, Blackstone noted the severe deterrent effect of forfeiture as a punishment for serious crime because it affected posterity as well as the individual offender.
In a parallel development, another long-standing species of forfeiture arose at common law, as Blackstone put it "from the misfortune rather than the crime of the owner" of a chattel. Until its abolition in 1846, a deodand - a personal chattel occasioning accidental death - was forfeit to the Crown, originally as "an accursed thing" which might fund pious acts of expiation and, later, compensation to relatives, but it came over time also to be part of the Crown's revenue. The abolition of the institution was part of the legislative reforms which included Lord Campbell's Act, placing on a modern footing compensation to relatives for wrongful death.
Further, there have been many historical instances of statutory forfeiture. To take a familiar example, procedures for the imposition of penalties and forfeiture of goods, in the context of customs and excise legislation, have a unique history. As explained by Hayne J in Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd, such procedures were founded upon proceedings in the Exchequer for the recovery of sums owed to the Crown. They were much affected by statute and were distinctly different from either proceedings brought in the Crown's name for the punishment of crime, or civil proceedings for the vindication of rights and duties between subjects. Despite common historical origins, in the United States of America procedures for forfeitures and penalties under customs and excise legislation do not engage the double jeopardy clause in the Constitution, or violate due process requirements, because the remedies available do not include conviction of a defendant. For that reason, one remedial purpose recognised as being secured by such forfeitures is the reimbursement of government losses accruing from the evasion of customs or excise duties.
Modern civil forfeiture laws for confiscating the proceeds of, or profits from, crime go beyond the condemnation of goods used in, or derived from, crime. Many are designed expressly to render a person's pursuit of certain crimes unprofitable in the economic sense. No single precept drawn from historical examples of forfeiture could be said to inform modern civil forfeiture laws. What the historical examples show, however, is that overlapping rationales underpinning forfeiture as a criminal or civil sanction, which include both strong deterrence and the protection of society, are not especially novel. Protection of the public is a familiar factor in judicial decision‑making in sentencing after the determination of criminal guilt. In the context of terrorism, it has been said that the protection of the public is a permissible legislative purpose, not alien to adjudicative processes.
As Dawson J observed in Re Director of Public Prosecutions; Ex parte Lawler, the rationale for employing forfeiture as a punishment may go beyond the common aims of deterrence and retribution, and involve "an element of incapacitation" (affecting even innocent holders of property), so as to ensure that an offence will not be repeated by the same means. Undoubtedly the aim of incapacitating an offender can inform sentencing and justify removal from society and detention in custody. It was not suggested, nor could it be, that economic incapacitation of a repeat offender of drug crimes may not inform a political decision resulting in an enactment imposing "an economic penalty" rendering such crime "unprofitable". This is particularly so given the incontestable proposition, stated in Wong v The Queen, that the commission of serious drug crime has "great social consequences". These might include significant social costs for a state, over and above the economic costs of law enforcement.
Whilst there are a number of important differences, statutes with objects not dissimilar to those under consideration in this appeal have been enacted throughout Australia.
The statutory scheme
Proceedings on applications made under the Forfeiture Act are taken to be civil proceedings for all purposes. The rules of evidence applicable to civil proceedings apply and any question of fact is to be decided in accordance with the civil standard of proof, on the balance of probabilities.
It is desirable to set out the critical provisions of the statutory scheme.
Section 36A of the Misuse of Drugs Act relevantly provides:
"(1) The Director of Public Prosecutions may apply to the Supreme Court for a declaration that a person is a drug trafficker.
(2) An application under subsection (1) may be made at the time of a hearing for an offence or at any other time.
(3) On hearing an application by the Director of Public Prosecutions under subsection (1), the court must declare a person to be a drug trafficker if:
(a) the person has been found guilty by the court of an offence referred to in subsection (6) that was committed after the commencement of this section; and
(b) subject to subsection (5), in the 10 years prior to the day on which the offence was committed (or the first day on which the offence was committed, as the case requires), the person has been found guilty:
(i) on 2 or more occasions of an offence corresponding to an offence referred to in subsection (6); or
(ii) on one occasion of 2 (or more) separate charges relating to separate offences of which 2 or more correspond to an offence or offences referred to in subsection (6)."
An offence referred to in sub-s (3)(b) may have been committed before or after the commencement of the section and may have been tried either summarily or on indictment.
As can be seen, establishing the statutory criteria to be satisfied requires reference to be made to sub-s (6). Sub-section (6) lists a series of offences relevant for the purposes of sub-s (3), and includes certain categories of cultivation and possession of drugs (which may involve minor quantities) as well as offences which might be commonly understood as directed to drug traffickers and cultivators of commercial or trafficable quantities of drugs.
Section 94(1) of the Forfeiture Act provides:
"If a person is declared to be a drug trafficker under section 36A of the Misuse of Drugs Act:
(a) all property subject to a restraining order that is owned or effectively controlled by the person; and
(b) all property that was given away[] by the person, whether before or after the commencement of this Act;
is forfeited to the Territory."
Section 44 of the Forfeiture Act sets out the conditions under which a restraining order may be made and the property to which such an order may apply. It relevantly provides:
"(1) The Supreme Court may, on application by the DPP, make a restraining order in relation to the property of a person named in the application if:
(a) the person has been charged, or it is intended that within 21 days after the application the person will be charged, with an offence that, if the person is convicted of the offence, could lead to the person being declared to be a drug trafficker under section 36A of the Misuse of Drugs Act; or
…
(2) A restraining order under this section can apply to:
(a) all or any property that is owned or effectively controlled by the person at the time of the application for the restraining order, whether or not any of the property is described or identified in the application; and
(b) all property acquired:
(i) by the person; or
(ii) by another person at the request or direction of the person named in the application for the restraining order;
after the restraining order is issued."
The DPP is not bound (whether by the Forfeiture Act or otherwise) to make an application in every case in which there are reasonable grounds for believing that a restraining order would be made. However, it should be noted that the Forfeiture Act casts a duty on the DPP to apply to the Supreme Court to set aside a restraining order in certain circumstances.
Part 5 of the Forfeiture Act provides for "objection proceedings" whereby an order obtained in the circumstance covered by s 44(1)(a) may be set aside on limited grounds. A number of orders may be made by the Supreme Court in respect of property which is subject to a restraining order, including appointing the Public Trustee to manage the property. The effect of a restraining order, subject to Div 3 of Pt 4 (covering "permitted" as well as "prohibited" dealings), is that property subject to a restraining order cannot be dealt with, although the Court may release property to meet the "reasonable living and business expenses of the owner". Furthermore, the making and receiving of mortgage payments in respect of property subject to a restraining order is not prevented. As soon as practicable after a restraining order is made, a copy must be served personally on affected persons. It was accepted that, under the statutory scheme, persons who are innocent third parties in respect of restrained property are not excluded from any relevant adjudicative process.
Some parts of the Forfeiture Act plainly use the word "property" to refer to land and things which are the subject of property interests, even though "property" is defined to mean "real or personal property of any description, wherever situated and whether tangible or intangible" or "a legal or equitable interest" in the same, a not unfamiliar ambulatory definition.
Section 52 of the Forfeiture Act governs the cessation of a restraining order and relevantly states:
"(3) If a restraining order has been issued under section 44(1)(a) in relation to property of a person who has been charged, or who was to be charged and a charge has been laid within 21 days after the date of the order, the order ceases to have effect:
(a) if the charge is finally determined but the person is not declared under section 36A of the Misuse of Drugs Act to be a drug trafficker; or
(b) if the charge is disposed of without being determined."
As foreshadowed, the correct construction of sub-s (3) of s 52 is in issue.
Whilst not immediately relevant to the first respondent's challenge to the validity of the statutory scheme, as it operates in respect of a declared drug trafficker, it can be noted that property which is "crime‑used" or "crime‑derived" is also targeted under the Forfeiture Act, as is "unexplained wealth". Relevant declarations in respect of those categories of property may be sought by the DPP and made by the Supreme Court under the Forfeiture Act. Each category of targeted property is subject to separate forfeiture regimes, reflecting differences between forfeiture in rem, attaching to the property connected to an offence, and forfeiture in personam, applied to a particular person (here a declared drug trafficker) after criminal proceedings against that person.
Objectives of the statutory scheme
Section 3 of the Forfeiture Act provides:
"The objective of this Act is to target the proceeds of crime in general and drug-related crime in particular in order to prevent the unjust enrichment of persons involved in criminal activities."
In pursuit of the objective in s 3, s 10(2) provides that the Forfeiture Act is to apply to forfeit to the Territory property owned or effectively controlled by persons "involved or taken to be involved in criminal activities" so as "to compensate the Territory community for the costs of deterring, detecting and dealing with" those activities. Relevantly for present purposes, a person is "taken to be involved in criminal activities" if "the person is declared under section 36A of the Misuse of Drugs Act to be a drug trafficker".
Although there is no challenge in these proceedings to the statutory provisions concerning "crime-used" or "crime-derived" property, it can be noted that s 10(3) states that such property is also forfeit to the Territory so as "to deter criminal activity and prevent the unjust enrichment of persons involved in criminal activities."
That the stated objectives are penal, and additional to punishment imposed in criminal proceedings, was explained prior to the enactment of the statutory scheme. Section 36A was inserted into the Misuse of Drugs Act by the Criminal Property Forfeiture (Consequential Amendments) Act 2002 (NT). In the second reading speech for the Bill which became the amending Act, the Attorney‑General for the Northern Territory described the proposed legislation as "a mechanism outside the criminal jurisdiction for forfeiture of property". By reference to an Australian Law Reform Commission report, he stated that the objectives of laws for the forfeiture of proceeds of crime are threefold:
"(1) to deter those who may be contemplating criminal activity by reducing the possibility of gaining a profit from that activity;
(2) to prevent crime by diminishing the capacity of offenders to finance future criminal activities; and
(3) to remedy the unjust enrichment of criminals who profit at society's expense."
Some argument was directed to whether, and how, the stated objectives cast light on the construction and application of the critical provisions of the Forfeiture Act. It is not necessary to resolve those issues. In particular, it is not necessary to decide whether a court asked to make a forfeiture order is permitted or required to examine whether, or to what extent, the particular order sought would, in some sense, either "prevent the unjust enrichment" of the offender whose property it is sought to forfeit or "compensate the Territory community for the costs of deterring, detecting and dealing with" the criminal activities of that person.
Kable
The error alleged by the appellants in the reasoning of the majority in the Court of Appeal is expressed in the notice of appeal as:
"holding that the statutory scheme comprised by the inter‑operation of s 36A ... and s 94 ... is invalid because the scheme enlists the Supreme Court of the Northern Territory to give effect to executive decisions and/or legislative policy in a manner which undermines its institutional integrity in a degree incompatible with its role as a repository of federal jurisdiction."
The incompatibility referred to is identified in Kable, a case which considered the involvement of a Supreme Court in a decision‑making process concerning detention. The principle for which Kable stands is that because the Constitution establishes an integrated court system, and contemplates the exercise of federal jurisdiction by State Supreme Courts, State legislation which purports to confer upon such a court a power or function which substantially impairs the court's institutional integrity, and which is therefore incompatible with that court's role as a repository of federal jurisdiction, is constitutionally invalid.
In Mistretta v United States, the fundamental nature of judicial independence and the relationship between institutional integrity and impartiality were identified by the Supreme Court of the United States:
"The legitimacy of the Judicial Branch ultimately depends on its reputation for impartiality and nonpartisanship. That reputation may not be borrowed by the political Branches to cloak their work in the neutral colors of judicial action."
Ultimately the inquiry in respect of a function or process bestowed upon, or required of, a court was "whether [it] undermines the integrity of the Judicial Branch."
The ad hominem legislation in Kable (the stated object of which was "to protect the community") authorised the Supreme Court of New South Wales to order preventive detention without any breach of the law being alleged or any adjudication of guilt. A majority of this Court found that task incompatible with the institutional integrity of the Supreme Court because the legislation drew the Court into implementing what was essentially a political decision or government policy that Mr Kable should be detained, without the benefit of ordinary judicial process. This Court has subsequently confirmed that Kable applies beyond its extraordinary circumstances to the Supreme Courts of the Territories and to all State and Territory courts as Ch III courts. Some mention should be made of the authorities in this Court, after Kable, which were relied upon in argument in this appeal.
By comparison with Kable, in Fardon v Attorney-General (Qld), legislation of general application authorising the continued detention or supervised release of prisoners who were "a serious danger to the community" was upheld as valid. This was because the adjudicative process required of the State Supreme Court in that case supported the maintenance of the institutional integrity of the Court and the adjudicative process required could be performed "independently of any instruction, advice or wish of the legislative or executive branches of government."
Since Kable, it has been stated often that a court must satisfy minimum requirements of independence and impartiality, even though it is not possible to make a single statement embracing all of the defining characteristics of a court. In the context of the arguments advanced in this appeal, it is worth repeating the well‑established proposition that independence and institutional impartiality mark a court apart from other decision‑making bodies. A legislature which imposes a judicial function or an adjudicative process on a court, whereby it is essentially directed or required to implement a political decision or a government policy without following ordinary judicial processes, deprives that court of its defining independence and institutional impartiality.
This was exemplified in International Finance Trust Co Ltd v New South Wales Crime Commission. Section 10 of the Criminal Assets Recovery Act 1990 (NSW) required the Supreme Court of New South Wales to hear and determine an application, made ex parte, for a restraining order in respect of property, if a law enforcement officer suspected that the owner of the property had committed one of a range of crimes or that the property in question derived from criminal activity. Members of the majority in this Court found that s 10 conscripted the Supreme Court into a process incompatible with, and repugnant in a fundamental degree to, the judicial function of the Court and ordinary judicial processes. That conclusion embraced a proposition established in Gypsy Jokers Motorcycle Club Inc v Commissioner of Police that legislation which purports to direct the courts as to the manner and outcome of any exercise of jurisdiction is apt to impair, impermissibly, the character of courts as independent and impartial tribunals.
In South Australia v Totani, the legislation under consideration was directed to the making of control orders. Section 14(1) of the Serious and Organised Crime (Control) Act 2008 (SA) provided that, on application by a member of the Executive (the Commissioner of Police), the Magistrates Court of South Australia was required to make a "control order" against a defendant if satisfied the defendant was a member of a "declared organisation", without the need to determine, by ordinary judicial processes, whether the defendant engaged in, or had engaged in, serious criminal activity. A "declared organisation" was an organisation that was subject to an anterior declaration by another member of the Executive (the Attorney‑General). By majority, s 14(1) was held invalid on the ground that it authorised the "enlistment" or "recruitment" of the Magistrates Court to implement the decisions of the Executive in a manner incompatible with the proper discharge of its federal judicial responsibilities and its institutional integrity.
Reasoning in the Court of Appeal
As noted earlier, the majority in the Court of Appeal held the statutory scheme invalid because it was said to enlist the Supreme Court to give effect to executive decisions or legislative policy (or both) in a manner which undermined that Court's institutional integrity. Using the language of Totani, and echoing Mistretta, Kelly J found that the statutory scheme represented "a substantial recruitment of the judicial function of [the Supreme Court] to an essentially executive process", thus giving "the neutral colour of a judicial decision" to the DPP's decision to make an application under s 36A. In agreeing that the statutory scheme engaged the Kable principle, Barr J was chiefly influenced by his view that a declaration under s 36A could be made "contrary to the actual facts", by which his Honour meant contrary to a common understanding of the expression "drug trafficker".
The parties' submissions
The appellants
The appellants submitted that such discretions as the Supreme Court has under both s 36A of the Misuse of Drugs Act and s 44 of the Forfeiture Act were to be exercised judicially in accordance with ordinary judicial processes without any government interference in respect of the outcome. It was contended that the role of the DPP in the statutory scheme was a familiar and unexceptional role, distinguishable from the role of the Attorney‑General which was critical to a finding of legislative invalidity in Totani. Forfeiture, said to operate by reference to the first respondent's status, did not engage the common law values encapsulated in the expressions "double jeopardy" or "double punishment". Further, it was submitted that forfeiture under the statutory scheme exacted or imposed punishment for breach of provisions prescribing a rule of conduct. Accordingly, it was said that the guarantee of just terms was incompatible with that exaction. Finally, the appellants contested the first respondent's construction of s 52(3) of the Forfeiture Act.
The first respondent
It is necessary to describe in a little more detail the first respondent's case that s 36A, and the statutory scheme comprising s 36A and s 94, involve an invalid exercise of the legislative power of the Northern Territory.
By way of response to the appeal, the first respondent sought to support the conclusion of the majority in the Court of Appeal by making three points. It was contended that the statutory scheme (1) contravened the Kable principle; (2) conferred an impermissible discretion on the DPP; and (3) effected an acquisition of property other than on just terms.
Relying on Kable, and focussing on the process of obtaining a declaration, it was contended that s 36A was incompatible with, and repugnant to, the institutional integrity of the Supreme Court because a function was conferred on the Court pursuant to which it was directed to make orders which "brand respondents pejoratively". More broadly, it was contended that the outcome of any proceedings under the statutory scheme, namely forfeiture by operation of s 94(1), was dominated impermissibly by decisions of the DPP to apply for a s 36A declaration and a restraining order. Subsumed into that complaint was a complaint that the Supreme Court's discretion under s 44 was limited, such that the Court could not remedy alleged "harshness" of any forfeiture worked by the statutory scheme, to the extent that it could encompass assets said to be lawfully acquired.
Next it was contended that the statutory scheme empowered a member of the Executive, the DPP, to impose a penalty constituting a "double punishment" on a declared drug trafficker without the benefit of ordinary judicial processes. It was asserted that the discretion of the DPP to make applications under the statutory scheme was "open‑ended, unconstrained and unreviewable". It was further contended that in making an application under the statutory scheme for either a restraining order or a drug trafficker declaration, the DPP exercised a discretion which was "impermissibly arbitrary in the constitutional sense."
These arguments appeared to evoke constitutional principles and common law values, rooted in British legal history, which preclude the arbitrary exercise of sovereign power. For example, a financial exaction imposed by a legislature, such as a tax, must be clear both as to the identification of the taxpayer and as to the taxpayer's liability to pay the tax. Delegation by a legislature to a member of the Executive of a discriminatory dispensing power in respect of such an exaction would offend against the separation of powers. Another example is that administrative decisions in respect of the issue of search warrants are subject to stringent limitations, imposed first by judges in the common law courts and often now found in statutes. Detention of a person in custody without just cause is also prohibited, which evokes the constitutional principle derived from Ch III of the Constitution stated in Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs and referred to in Kable: "adjudging and punishing criminal guilt" is an "exclusively judicial function", not to be delegated to the Executive.
The first respondent's next argument - that the statutory scheme effected an acquisition of property other than on just terms - depended on the proposition that the particular form of forfeiture imposed on a declared drug trafficker stood outside categories of forfeiture for which the requirement of just terms has been found by this Court not to apply. It was contended that the "reality and scale" of the forfeiture under the statutory scheme was such that a point was reached "where the law is no longer inconsistent or incongruous with the guarantee" of just terms.
Finally, the construction of s 52(3) of the Forfeiture Act accepted in the courts below was challenged by the first respondent.
Application of Kable
The impugned provisions are compatible with the constitutional requirements imposed on a Ch III court because they do not require the Northern Territory Supreme Court to give effect to any decision made by the Executive, here the DPP. This is demonstrated by the powers, and concomitant duties, conferred on the Supreme Court, the role of the DPP, and the judicial processes required to be undertaken to give effect to the statutory scheme.
Section 36A authorises and empowers the Supreme Court to make a declaration that a person is a drug trafficker if the conditions attached to the power are satisfied. It is well established that Australian legislatures can empower courts to make specified orders if certain conditions are satisfied, even if satisfaction of such conditions depends on a decision, or application, made by a member of the Executive. A statement of McHugh J in Fardon is apt:
"The exercise of judicial power often involves the making of orders upon determining that a particular fact or status exists. It does so, for example, in the cases of matrimonial causes, bankruptcy, probate and the winding up of companies."
Such provisions are not, for that reason alone, taken to trespass on the judicial function or to be impermissibly determinative of the outcome of an exercise of jurisdiction. In selecting the Supreme Court as the repository of a power to determine a particular fact or status, in the absence of any express or implicit contrary legislative intention, it can be inferred that Parliament accepts that the power will be exercised in accordance with standards characterising ordinary judicial processes.
In Silbert v Director of Public Prosecutions (WA), a statutory provision empowering a court to make forfeiture or pecuniary penalty orders, in circumstances where a person was "to be taken to have been convicted", was upheld by this Court as valid. Faced with the similarity between the operation of the relevant provisions in Silbert and the operation of s 36A, senior counsel for the first respondent acknowledged that the attack on the validity of s 36A was occasioned, in large part, by the circumstance that not all offences encompassed by the statutory criteria would be commonly understood to be drug trafficking offences.
That attack is based on a misconception of the Supreme Court's powers and duties under the statutory scheme. The Supreme Court is authorised to determine whether the statutory criteria set out are satisfied and, if they are, the Court must make the declaration sought. The Forfeiture Act provides the consequences which follow from the Supreme Court's declaration. Together, these steps are an unremarkable example of conferring jurisdiction on a court to determine a controversy between parties which, when determined, will engage stated statutory consequences.
That the controversy is initiated by an officer of the Executive, the DPP, does not deprive the Supreme Court of its independence. The DPP's decision to make an application to the Supreme Court in respect of an individual (whether under s 36A or s 44) is a discretionary decision, similar to the well‑recognised prosecutorial discretion to decide who is to be prosecuted and for what offences. As Menzies J observed in Palling v Corfield, in exercising a discretion to initiate judicial action (a common necessity in an adversarial system of justice, in which a court can only act if a party makes an application) a member of the Executive "makes no law". An executive or administrative decision which exposes an individual to a risk of conviction, or the imposition of a penalty, is not an adjudication of rights and liabilities and therefore not an exercise of judicial power. So much was recently confirmed by five members of this Court in declining to overrule Fraser Henleins Pty Ltd v Cody, the source of that proposition. The role of the DPP in the statutory scheme reflects no more than procedural necessity in the adversarial system.
Unlike the position in Kable, the statutory scheme is not directed ad hominem. The Supreme Court is not required to make any order providing for the further detention of any person who is alleged to meet the statutory criteria.
The DPP is a statutory officer. In representing the state in the prosecution of an accused person, the DPP is subject to what are sometimes called "traditional considerations" (or obligations) of fairness. Those obligations, and the standards of fairness which they entail, spring not so much from statute as from rules of practice; established by judges over the years, they are calculated to enhance the administration of justice by ensuring that an accused has a fair trial. Certain discretions exercised by a prosecutor in the initiation and conduct of criminal proceedings are not readily subject to review. Nonetheless, the fact that criminal proceedings in Australia are adversarial in character, and accusatorial by nature, obliges the maintenance of those standards of fairness. That maintenance has long rested on the powers of a trial judge, and appellate courts, in discharging their responsibilities to ensure that an accused has a fair trial and to prevent an abuse of the court's process in criminal proceedings.
The appellants and several interveners, particularly the Attorney‑General for the State of South Australia, sought to draw an analogy between the discretions a prosecutor has in criminal proceedings and the role of the DPP in the statutory scheme. The DPP commits to the Supreme Court for its decision, in civil forfeiture proceedings, the question of whether a person meets certain statutory criteria, the consequences of which are penal. It could not be doubted that the Supreme Court has an inherent power to prevent an abuse of process in respect of any decision of the DPP under that statutory scheme. The possibility that a member of the Executive may exercise an administrative discretion unfairly, or engage in some malpractice, does not, without more, enliven the constitutional implications recognised in Kable so as to narrow the scope of a grant of legislative power.
A declaration can only be made by the Supreme Court on receipt of evidence sufficient to satisfy the civil standard of proof in respect of a person's requisite number of past convictions. There is nothing in the statutory scheme which indicates that the determination to be made by the Supreme Court is to be undertaken other than in open court, in circumstances where an affected party has a right to be heard, may have legal representation, and may make submissions and receive reasons. That the determination of whether the statutory criteria are satisfied may readily be performed, because of the ease of proof of the criteria, does not deprive the process of its judicial character.
The effect of a declaration is the creation of a legal status for the purposes of the Misuse of Drugs Act, reflecting the satisfaction of the statutory criteria. As submitted by the Attorney‑General of the State of Queensland intervening, which submission should be accepted, there is nothing in the statutory scheme which would inhibit a judge making a declaration from treating the expression "drug trafficker" as the reflex of the statutory criteria set out, and recording that the declaration is made for the purposes of the Misuse of Drugs Act. The usual rights of appeal subsist in respect of the making of any declaration.
Equally, an application by the DPP for a restraining order under the statutory scheme involves a judicial assessment of the merits of the application, an exercise of discretion, and the making of a judgment. Such an application is also subject to reconsideration under the objection procedures and to the usual rights of appeal.
There were differences of views in the courts below as to the width of the discretion covered by the use of the word "may" in s 44 of the Forfeiture Act, governing the making of a restraining order. The condition upon which the discretion is granted under s 44(1)(a) arguably makes it clear that the discretion is of the type which must be exercised upon proof of the particular case to which the power to make a restraining order is directed. In the Court of Appeal, the appellants never contended otherwise. There is no challenge in this Court to the validity of s 44, or to the Court of Appeal's findings in respect of that provision. For the purposes of the first respondent's argument it may be assumed, without deciding, that the discretion given to the Supreme Court under s 44 is limited. Notwithstanding that circumstance, the Supreme Court is obliged to engage in orthodox adjudicative processes involving the hearing of evidence and the making of a determination which is subject to the usual processes of appeal.
Nothing in the detail of the statutory scheme supports the first respondent's submission that the scheme requires the Supreme Court to act at the behest of the Executive - the DPP - or to give effect to government policy without following ordinary judicial processes. Further, the authorities in this Court after Kable, including Totani, do not support any contrary conclusion.
DPP's discretion impermissible?
As already explained, the assertion that the statutory scheme conferred a discretion on the DPP which was constitutionally impermissible touched on a number of long-standing constitutional principles and common law values, particularly in respect of double punishment and double jeopardy, but never distinctly articulated why the discretion was impermissible.
Whilst the first respondent's submissions in respect of this branch of the argument were said to be distinct from his arguments based on Kable, the submissions depended equally on a misconception of the DPP's role in the statutory scheme.
First, as explained, the DPP's decision to make an application under the statutory scheme is a familiar procedural necessity in the adversarial system and is subject to the Supreme Court's inherent jurisdiction to take whatever steps are necessary to avoid any abuse of process. Further, senior counsel for the first respondent rightly accepted (as he was bound to do) that penal ends may be pursued in civil proceedings which result in additional punishment.
Second, this branch of the argument also critically turned on the proposition that the DPP's exercise of discretion to make an application under the statutory scheme (chiefly under s 36A, but also under s 44) was the operative decision determining which persons answering the statutory criteria would forfeit their property. For the reasons given, which do not need repeating, that proposition not only misconceives the DPP's role, it leaves out of account the statutory scheme's requirements that not one but two curial orders, following ordinary judicial processes, are the cumulative conditions stated as necessary for the operation of s 94(1) of the Forfeiture Act.
Acquisition of property
As has been explained, the relevant operation of the Forfeiture Act depends upon the Supreme Court making a declaration that a person is a drug trafficker. That is, the relevant operation of the Forfeiture Act depends upon the person's conviction for certain crimes within a specified time. The stated objectives of the statutory scheme, set out in ss 3 and 10 of the Forfeiture Act, must be read in the recognition that the Forfeiture Act prescribes penal consequences which flow from a person's conviction for crime. Two consequences follow from these observations.
First, because the forfeiture worked by the Forfeiture Act is imposed as punishment for crime, the impugned provisions do not amount to an acquisition of property other than on just terms. Second, whether that punishment fits the crime (in this case, the repeated commission of certain crimes) is a matter for the legislature. It is irrelevant (and wrong) for the courts to attempt to determine whether any forfeiture which may be worked by the Forfeiture Act (or which is worked in this particular case) is proportionate to the stated objectives.
Section 50(1) of the Northern Territory (Self-Government) Act restricts the power conferred on the Legislative Assembly to make laws "for the peace, order and good government" of the Territory, by providing that the power does not extend to "the making of laws with respect to the acquisition of property otherwise than on just terms." The contrast between the way in which the Northern Territory (Self-Government) Act confers legislative power on the Territory's Legislative Assembly and the way in which the Constitution confers powers upon the federal Parliament, by reference to the enumerated heads of power in s 51 of the Constitution, was acknowledged.
In relying on s 50(1), the first respondent referred to well‑established principles concerning s 51(xxxi) of the Constitution. It was accepted that several authorities in this Court have found, in s 51 of the Constitution, heads of legislative power in respect of which just terms "is an inconsistent or incongruous notion." This development was traced in Theophanous v The Commonwealth. Marking the boundary of "just terms", by reference to the application of a requirement that an exaction is "inconsistent" or "incongruous" with them, may admittedly involve difficult questions of degree and judgment. Notwithstanding such difficulties, marking the boundary in that way is:
"grounded in the realisation that to characterise certain exactions of government (such as levying of taxation, imposition of fines, exaction of penalties or forfeitures, or enforcement of a statutory lien) as an acquisition of property would be incompatible with the very nature of the exaction."
The first respondent did not urge any reconsideration or overruling of authorities illustrative of that proposition.
The first respondent's submissions sought to distinguish the statutory scheme from earlier statutory schemes for forfeiture, including forfeiture provisions fastening on property connected with an offence, or property used to commit an offence, or where property had been originally conferred so as to deter commission of an offence, or the value of property forfeited had a commensurate relationship with the offence. That effort turned on a distinction sometimes made between "forfeiture", directed to property used in or derived from crime, and "confiscation" of the proceeds or profits of crime made by a person from drug offences.
By reference to the statutory objectives "to compensate the Territory community for the costs of deterring, detecting and dealing with … criminal activities", the statutory scheme was then characterised by the first respondent as a non‑regulatory revenue‑raising scheme which played no legislative role in the enforcement of the criminal law in relation to drug offences or in the deterrence of such activities. The argument subsumed a complaint that the statutory scheme targeted "legitimately generated wealth", which suggested some want of proportion between the purposes of the statutory scheme and the possible adverse impacts on persons declared to be drug traffickers.
It was never explained how or why the concept of "proportionality", which may not be applicable to non‑purposive heads of legislative power enumerated in s 51 of the Constitution, confines the scope of the legislative powers granted to the Territory legislature. These arguments, raising issues of substance and form in relation to "property" that are familiar in the established doctrine concerning s 51(xxxi) of the Constitution, invite a speculative inquiry as to the topics which were the main preoccupation of the Territory's legislature in enacting the legislation. The proper inquiry, however, is the subject matter of the statutory scheme. The question is whether the statutory scheme can be properly characterised as a law with respect to forfeiture, that is, a law which exacts or imposes a penalty or sanction for breach of provisions which prescribe a rule of conduct. That inquiry must be answered positively, which precludes any inquiry into the proportionality, justice or wisdom of the legislature's chosen measures.
The provisions comprising the statutory scheme in respect of declared drug traffickers do not cease to be laws with respect to the punishment of crime because some may hold a view that civil forfeiture of legally acquired assets is a harsh or draconian punishment. As Dixon CJ said, concerning the customs legislation providing for forfeiture considered in Burton v Honan:
"once the subject matter is fairly within the province of the Federal legislature the justice and wisdom of the provisions which it makes in the exercise of its powers over the subject matter are matters entirely for the Legislature and not for the Judiciary."
More recently, in R v Smith (David), Lord Rodger of Earlsferry said:
"If in some circumstances [a confiscation scheme] can operate in a penal or even a draconian manner, then that may not be out of place in a scheme for stripping criminals of the benefits of their crimes. That is a matter for the judgment of the legislature".
The reference in the statutory objectives to the costs of "deterring" or "dealing with" the consequences of a drug trafficker's activities is not fairly to be read as restricted to the "costs" of law enforcement, capable of arithmetical calculation for the purposes of raising revenue. A remedial purpose confined thus might raise a question of proportionality, but the social consequences of drug crime referred to in Wong v The Queen are not so confined. Further, the legislative purpose of protecting society by incapacitating a drug trafficker through forfeiture or confiscation of his or her assets is a method of "dealing with" the consequences of such criminal activities.
The Territory legislature has determined that a person who is proven to have committed at least three qualifying drug offences within a specified period is liable to have his or her property forfeited or confiscated. Characterising those provisions as an acquisition of property without provision of just terms is erroneous. The requirement of just terms is "incompatible with the very nature of the exaction", being a punishment for crime.
It is within the province of a legislature to gauge the extent of the deleterious consequences of drug trafficking on the community and the soundness of measures, even measures some may consider to be harsh and draconian punishment, which are thought necessary to both "deter" and "deal with" such activities. The political assessments involved are matters for the elected Parliament of the Territory and complaints about the justice, wisdom, fairness or proportionality of the measures adopted are complaints of a political, rather than a legal, nature.
Construction of s 52(3)
The first respondent contended that s 52(3)(a) of the Forfeiture Act, set out above, contained a temporal limitation. The principle relied upon is the principle of legality. Shortly stated for present purposes, legislation affecting fundamental rights must be clear and unambiguous, and any ambiguity must be resolved in favour of the protection of those fundamental rights. Statutory forfeiture abrogates fundamental property rights. The next step in the argument involved construing s 52(3)(a) as though it were amended by addition and alteration to read "if at the time the charge is finally determined the person has not been declared under section 36A of the Misuse of Drugs Act to be a drug trafficker". The first respondent was convicted and sentenced in respect of the third relevant charge on 22 September 2011. The s 36A declaration was made on 15 August 2012. Applying the first respondent's construction, as set out immediately above, it was then contended that s 52(3)(a) operates so that the restraining order ceased to have effect on 22 September 2011. The consequence of applying that construction of s 52(3)(a) is that a necessary condition of forfeiture under s 94(1), namely an extant restraining order in respect of property, did not exist at the time of the making of the s 36A declaration.
The Court of Appeal rejected this construction. It held that s 52(3)(a) provides for the cessation of the effect of a restraining order without the need for further court order where the relevant charge is finally determined and the Supreme Court does not make a s 36A declaration. The circumstances in which this might occur could at least include a finding in the criminal proceedings that a person is not guilty, or a failure of the DPP to proceed, or to prove what is required, under s 36A. The Court of Appeal's construction accords with numerous textual considerations: the words used, the specified requirement that a s 36A declaration cannot be made until at least three relevant convictions have been recorded, and the provision that an application for such a declaration may be made "at the time of a hearing for an offence or at any other time."
Unlike the first respondent's proffered construction, the Court of Appeal's interpretation of s 52(3)(a) accords with, and does not frustrate, the stated objectives of the statutory scheme and must be upheld.
Conclusions
The result is that s 36A of the Misuse of Drugs Act and s 94(1) of the Forfeiture Act do not, singly or together, operate to deny the Supreme Court of the Northern Territory such independence and impartiality as is compatible with its constitutional role as a repository of federal jurisdiction. Further, the provisions do not effect an acquisition of property within the contemplation of the Northern Territory (Self-Government) Act.
Orders
For the reasons given the following orders should be made: