Commonwealth DPP v Bowerman

Crimes Act 1914 Criminal Code, 1995 LEGISLATION CITED : Proceeds of Crime Act, 1987 Proceeds of Crime Act, 2002 Confiscation Act 1997 (Vic) Criminal Property Confiscation Act, 2000 (WA)

DPP v Logan Park Investments (1995) 37 NSWLR 118 Jeffrey v DPP (Cth) (1995) 79 A Crim R 514 Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672 CASES CITED : Anthony Hordern and Sons Ltd v Amalgamated Clothing and Allied Trades Union (1932) 47 CLR 1 Sypott v The Queen [2003] VSC 41 Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38 Della Patrona v DPP (C'th) [No2] (1995) 38 NSWLR 257

PARTIES : Commonwealth DPP (plaintiff/respondent) Paul Reginald Bowerman (defendant/applicant)

COUNSEL : I Temby AO QC with T Muir (plaintiff/respondent)) C Steirn SC with G Jones (defendant/applicant)

SOLICITORS : Commonwealth Director of Public Prosecutions (plaintiff/respondent) Bob Rosic & Kinchington (defendant/applicant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION CONFISCATION OF PROFITS AND RELATED LEGISLATION

14107/2004 Commonwealth Director of Public Prosecutions v Paul Reginald Bowerman

1 HIS HONOUR: The defendant, Paul Reginald Bowerman, pleaded guilty in the District Court to two Commonwealth offences: one of being knowingly concerned in defrauding the Commonwealth (ss5 and 29D of the Crimes Act, 1914) and the other of acting with the intention of dishonestly obtaining a gain from the Commissioner of Taxation (s135.1 of the Criminal Code, 1995). On 23 June 2005 he was sentenced to a term of imprisonment.

2 Proceedings were taken against him under the Proceeds of Crime Act, 2002 in December 2004, when a restraining order in respect of all his property was made under s17(2)(a) of the Act. There is no need to recount the subsequent history of those proceedings. It is sufficient to say that there remain restrained an amount of about $140,000 in superannuation funds and a further amount of $27,000 in his solicitors' trust account, that money having been intended for payment for his legal representation in the District Court. In the application with which I am dealing, he seeks an order that the fees of his solicitor and counsel in those proceedings, amounting to about $17,000, be paid out of those trust funds.

3 At the time I heard the application the plaintiff, the Commonwealth Director of Public Prosecutions, was contemplating applying for a pecuniary penalty order arising from the offences of which the defendant has been convicted. That is an order for which provision is made by s116 of the Proceeds of Crime Act, directed to the recovery of benefits derived from the commission of the offences. By s282 such an order may be satisfied from restrained money. If that were to occur, the restraining order would cease to be in force: s45(5). It may be that the defendant's superannuation fund is sufficient to satisfy any pecuniary penalty order which might be made, although that is not conceded by the plaintiff. However that may be, a question arises whether I have jurisdiction to make the order which the defendant seeks. This involves construction of relevant provisions of the Act, and reference to its legislative history.

4 The predecessor to the present Act was the Proceeds of Crime Act 1987. By s43(3)(b) of that Act, a restraining order could make provision for meeting out of restrained property a person's "reasonable expenses in defending a criminal charge". There is no express provision to that effect in the present Act. Mr Temby QC, for the plaintiff, argued that its omission was deliberate and is explained by Part 4-2 of the Act, headed "Legal assistance". Sections 292 and 293, contained in that Part, provide as follows: 292 Payments to legal aid commissions for representing suspects and other persons (1) The Official Trustee must pay to a legal aid commission, out of property of a suspect that is covered by a restraining order: (a) the commission's legal costs for representing the suspect in proceedings for defending any criminal charge against the suspect; and (b) the commission's legal costs for representing the suspect in proceedings under this Act. (2) The Official Trustee must pay to a legal aid commission, out of the property of a person (who is not the suspect) that is covered by a restraining order, the commission's legal costs for representing the person in proceedings under this Act. (3) However, this section only applies to the extent that the commission's representation of the suspect or other person is in accordance with guidelines included in an applicable agreement entered into with the Commonwealth relating to provision of legal assistance in Commonwealth matters.

293 Payments made out of the Confiscated Assets Account (1) The Official Trustee must pay to a legal aid commission, out of the Confiscated Assets Account, legal costs mentioned in section 292 if: (a) the Official Trustee certifies that the costs exceed the value of the property of the person that is covered by the restraining order; and (b) the costs have been certified by: (i) the Attorney-General; or (ii) a senior Departmental officer authorised by the Attorney-General for the purposes of this section; and (c) the Minister consents to the payment. The amount that the Official Trustee must pay is the amount of the excess. (2) The Official Trustee must pay to a legal aid commission, out of the Confiscated Assets Account, legal costs mentioned in section 292 if: (a) the Official Trustee is satisfied that it will take considerable time to dispose of the property of the person that is covered by the restraining order in order to pay the costs; and (b) the value of the property has been assessed; and (c) the costs have been certified by: (i) the Attorney-General; or (ii) a senior Departmental officer authorised by the Attorney-General for the purposes of this section; and (d) the Minister consents to the payment. However, the Official Trustee must not pay the legal aid commission more than the assessed value of the property. (3) If the Commonwealth pays an amount to a legal aid commission under subsection (2), the person whose property is covered by the restraining order must pay to the Commonwealth an amount equal to that amount. (4) The person's obligation to pay the amount is discharged if there is forfeited to the Commonwealth under this Act: (a) all of the property that is covered by the restraining order; or (b) some of the property that is so covered, being property of a value that equals or exceeds the amount.

5 The defendant is a "suspect" in the relevant sense. The "Official Trustee" is the Official Trustee in Bankruptcy, who takes custody and control of restrained property by virtue of an order under s38, and whose powers and duties in respect of the property are to be found in Part 4-1. A "legal aid commission" is an authority established by a law of a State or a Territory for the purpose of providing legal assistance. The definitions of these expressions are to be found in s338. It is unnecessary for present purposes to examine the nature and operation of the Confiscated Assets Account, for which provision is made in Part 4-3.

6 By s24(1), a court may allow reasonable living expenses, reasonable business expenses or specified debts to be met out of restrained property. However, the court may make such an order only if it is satisfied (among other things) that the expense or debt does not relate to legal costs incurred in connection with proceedings for an offence or proceedings under the Act: s24(2)(ca).

7 In 1999 the Australian Law Reform Commission published a report on the operation of the 1987 Act, entitled "Confiscation that Counts". Chapter 15 of that report dealt with restrained assets and legal expenses. Very briefly, the Commission examined the power under s43 to make provision for the reasonable expenses of defending a criminal charge out of restrained property, in the light of the principal objectives of the 1987 Act to be found in s3. Those objectives were to ensure that people should not be allowed to be unjustly enriched through criminal conduct, that property used in connection with criminal offences should be available for confiscation so that it could not be used for similar purposes, and that confiscation of such property should be available as "a suitable punitive sanction" (in addition to fines and imprisonment) for engaging in criminal conduct (15.13). The Commission also identified as a further underlying principle the need to ensure that property liable to forfeiture was preserved for that purpose through the process of restraining orders (15.14).

8 The Commission recognised the risk that restrained assets might be dissipated by their being made available for legal expenses, and questioned the appropriateness and adequacy of existing means for determining the reasonableness of the legal expenses for which provision was sought. Nevertheless, it recognised that the risk of dissipation of the assets must be balanced against the interests of justice in ensuring that persons whose property was restrained should be able to "offer a proper defence" to the charges against them (15.95-6). It proposed a scheme the administration of which would be entrusted "to an authority independent of the courts and the DPP", but which had "the necessary experience and expertise to determine the appropriate level" of legal expenses. That body would be given "statutory authority for monitoring expenditure of defence funding…"(15.99).

9 The Commission saw the various requirements for such a scheme as "a framework for a state based scheme of legal assistance, albeit a specifically targeted one with special characteristics related to the circumstances of persons rendered technically indigent by reason of restraining orders imposed over their property" (15.100). The report continued: As such a state based scheme, and having regard to the existence of a national network of State and Territory Legal Aid Commissions meeting legal aid needs under both Commonwealth and local laws, the Commission is in no doubt that the various legal aid commissions would be the most appropriate and best qualified bodies to administer an alternative scheme of the kind that it contemplates (15.101).

10 Chapter 15 of the report concluded with recommendations 65 and 66, as follows: Recommendation 65 . The current scheme in section 43(3)(a) of the [1987] Act relating to the making of provision out of restrained property for meeting a person's reasonable expenses in defending a criminal charge is in conflict with the principles underlying the Act and should be discontinued. Recommendation 66 . That scheme should be replaced by a scheme having the following elements and characteristics · a person (`defendant') whose assets, or part of them, were subject to a restraining order would have a primary obligation to fund their own defence from unrestrained assets · where, by reason of the restraining order, the defendant was unable to provide a defence of the kind to which they would be entitled under the scheme (see) below), they would be entitled to apply to the relevant legal aid commission for assistance in the provision of their defence · assistance would be able to be granted in respect of the defence of a criminal charge in respect of which the restraining order had been made or the defence of the non-conviction based civil proceedings to which the order related · property the subject of the restraining order would be required to be disregarded for the purpose of assets testing of the defendant · the legal aid commission would be charged by statute with providing the defendant with a defence of the kind that an ordinary self-funded person could be expected to provide for themselves as an adequate defence, that is to say, a defence determined by reference to the objective criterion of adequacy to meet the charges or issues with which the defendant is confronted · the defendant would be entitled to seek review by the court of the adequacy of the defence based on the nature and content of that defence · where such a review was requested the legal aid commission would be required to provide a certificate to the court certifying as to the nature and content of the defence and the reasons why the commission regarded the defence as meeting the requirement of adequacy · in reviewing the nature and content of the defence proposed by the legal aid commission, the court would be required to have regard to Ø the nature and complexity of the issues to be tried Ø the level of representation ordinarily provided by the DPP for the prosecution of civil or criminal matters of a similar nature and complexity and the desirability of reasonable complementarity of representation Ø the need, in the case of criminal proceedings, for the defendant to be represented in reasonable bail applications and committal proceedings Ø the need for the defendant to be represented in any confiscation proceedings whether by way of civil or post-conviction proceedings Ø the need for expert evidence to be provided for the defence and Ø submissions put to it by the defendant and the legal aid commission's response thereto · assistance would not ordinarily be available for associated or collateral proceedings unless the legal aid commission was satisfied that such proceedings were such as a properly advised self-funded defendant might reasonably conclude were essential to the defence of the matters in issue in the criminal, or non-conviction based confiscation, proceedings · the legal aid commission would be entitled to draw down from the Confiscated Assets Reserve on a regular basis all funds necessary to meet assistance provided under the scheme and its administrative costs as and when incurred · in the event that application of the restraining order to the whole or any part of the defendant's property was reviewed, whether by reason of a successful application for release under the [Proceeds of Crime] Act, acquittal of the relevant criminal charge, successful defence of non-conviction based confiscation proceedings, or otherwise, the legal aid commission would be required to provide a certificate regarding the extent to which, in its opinion, an adjustment should be made to the level of assistance provided for the defence · the assets so released from the application of the restraining order would stand statutorily charged in favour of the Commonwealth to the amount of any assistance that had already been granted in excess of the reviewed level of assistance; an amount equal to the amount of any previously granted assistance so recovered would be required to be credited from consolidated revenue to the Confiscated Assets Reserve.

11 In his second reading speech in respect of the present Act, the then Attorney-General referred to the Commission's report. In relation to provision for legal representation, he said: The bill is underpinned by a comprehensive scheme of legal assistance for people whose assets are restrained. Legal assistance in confiscation proceedings will be made a Commonwealth priority under the Commonwealth legal aid guidelines and priorities. Restrained assets are to be ignored for the purposes of the means test. The bill enables legal aid commissions to be reimbursed for the provision of such legal assistance from the restrained assets of the person and, to the extent of any deficiency, from the confiscated assets account. In this way all persons the subject of proceedings under the bill will be able to seek assistance from commissions without impacting adversely on other legal aid priorities (Hansard, 13 March 2002, p1113). 12 The explanatory memorandum accompanying the Bill included the following: Clause 24 does not make provision for legal costs to be met from restrained assets, as legal assistance for proceedings under the Bill will be provided by legal aid commissions, who will be recompensed in accordance with Part 4-2 of the Bill. Legal assistance for criminal matters will be dealt with by Legal Aid Commissions in the normal way. Paragraph 24(2)(ca) ensures that living or business expenses or specified debts cannot be interpreted to include legal expenses for proceedings under the Bill or any criminal proceedings.

13 Sections 292 and 293 of the Act, quoted above, do not appear on their face to establish a comprehensive legal assistance scheme such as that recommended by the Law Reform Commission and referred to in the Attorney's second reading speech. Rather, they appear to be no more than provisions for funding legal aid commissions for the representation of people affected by proceedings under the Act. It may be that the sections need to be understood against the background of an existing administrative framework for the provision of legal assistance in Commonwealth cases. So much is suggested by s292(3). The matter was not developed in argument and, as Mr Temby rightly pointed out, it is not one with which I need be concerned in the task of statutory construction which I must undertake.

14 Mr Temby submitted that ss292 and 293, providing for the funding of legal aid commissions, and s24(2)(ca), prohibiting any allowance out of restrained property for legal expenses, evince a legislative intention that restrained funds should not be made available for private legal representation. Mr Steirn SC, who appeared with Mr Jones for the defendant, accepted that the present application could not be made under s24. However, he submitted that it could be under s39, which provides for orders ancillary to a restraining order. It is sufficient to set out subs (1) of that section: Ancillary orders (1) The court that made a restraining order, or any other court that could have made the restraining order, may make any ancillary orders that the court considers appropriate and, without limiting the generality of this, the court may make any one or more of the following orders: (a) an order varying the property covered by the restraining order; (b) an order varying a condition to which the restraining order is subject; (c) an order relating to an undertaking required under section 21; (d) an order directing the owner of the property (including, if the owner is a body corporate, a specified director of the body corporate) to give a sworn statement to a specified person, within a specified period, setting out particulars of, or dealings with, the property; (e) if the Official Trustee is ordered under section 38 to take custody and control of property: (i) an order regulating the manner in which the Official Trustee may exercise its powers or perform its duties under the restraining order; or (ii) an order determining any question relating to the property, including a question relating to the liabilities of the owner or the exercise of powers or the performance of duties of the Official Trustee; or (iii) an order directing any person to do anything necessary or convenient to enable the Official Trustee to take custody and control of the property; (f) an order giving directions about the operation of the restraining order and any one or more of the following: (i) a forfeiture order that covers the same property as the restraining order; (ii) a pecuniary penalty order or a literary proceeds order that relates to the same offence as the restraining order; (g) an order requiring a person whose property is covered by a restraining order to do anything necessary or convenient to bring the property within the jurisdiction.

(Section 21, referred to in par (c), relates to the Commonwealth's undertaking as to damages and costs when seeking a restraining order. A "literary proceeds order", referred to in par (f)(ii), is an expression which need not concern us.) 15 Mr Steirn argued that s39 is wide enough to embrace the defendant's application. He noted that subs (1) enables the making of "any ancillary orders that the court considers appropriate", and that the types of order then set out in the subsection are preceded by the words "without limiting the generality of this…". He relied on established authority that legislation of this kind must be strictly construed, and that any ambiguity in it should be resolved so as to respect a person's proprietary rights: DPP v Logan Park Investments (1995) 37 NSWLR 118, per Kirby A-CJ at 125-7; Jeffrey v DPP (Cth) (1995) 79 A Crim R 514, per Cole JA at 517-8.

16 For his part, Mr Temby argued that there is no ambiguity here. The scheme of the Act, he said, is that s24 provides for the allowance out of restrained property of certain expenses other than legal costs, which are dealt with by ss292 and 293. Section 39 caters for the wide variety of ancillary orders which may need to be made, other than allowance for expenses. He referred to Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672 and, in particular, to the following statement of principle by Mason J at 678: It is accepted that when a statute confers both a general power, not subject to limitations and qualifications, and a special power, subject to limitations and qualifications, the general power cannot be exercised to do that which is the subject of the special power.

Mason J cited a passage from Anthony Hordern and Sons Ltd v Amalgamated Clothing and Allied Trades Union (1932) 47 CLR 1, in which Gavan Duffy CJ and Dixon J said (at 7): When the Legislature explicitly gives a power by a particular provision which prescribes the mode in which it shall be exercised and the conditions and restrictions which must be observed, it excludes the operation of general expressions in the same instrument which might otherwise have been relied upon for the same power.

17 Applying that principle to the present case, Mr Temby argued that s24 is intended to be an exhaustive provision concerning the allowance for expenses out of restrained property. To adopt the words of Mason J, it creates "a special power, subject to limitations and qualifications". One of those limitations is that created by s24(2)(ca). That limitation cannot be defeated by the exercise of the general power created by s39. In my view, this submission is sound.

18 Mr Steirn relied upon the decision of Redlich J in Sypott v The Queen [2003] VSC 41, in which his Honour examined some of the provisions of the Victorian Confiscation Act 1997. Section 14(5) of that Act provides: A court, in making a restraining order, must not provide for the payment of legal expenses in respect of any legal proceeding, whether civil or criminal, and whether in respect of a charge to which the restraining order relates or otherwise.

Section 20(1) relevantly provides: If a court makes a restraining order against property …, any person claiming an interest in the property (including the defendant) may apply to that court for an order under s21…

Section 21 provides that, where certain conditions are met, "the court may make an order excluding the property from the operation of the restraining order … ".

19 The defendant in that case had made an application under s21 for the release of sufficient restrained assets to provide for the legal expenses of his defending the charge brought against him. He may have been entitled to legal aid, because s143 of the Act enables the court to order the provision of legal aid where a defendant, because of a restraining order, does not have access to sufficient assets to afford private representation. However, he sought to be represented by counsel of his choice, rather than someone appointed by the legal aid authority.

20 Redlich J noted that the restriction upon provision for the payment of legal expenses created by s14(5) is imposed upon a court "in making a restraining order….". He observed that an application under s21, by the terms of the section, could be made only after a restraining order had been made, and that an order under that section is not itself a restraining order. The prohibition contained within s14(5) is not repeated in s21, and his Honour could see no basis for its being implied in that section: see the judgment at [18]. He held that the purpose of s14(5) is "to ensure that when the court makes the initial restraining order, it does not attempt to make provision for the payment of legal expenses": [24].

21 His Honour had regard to s143 of the Act and referred to the Attorney-General's second reading speech, in which concern was expressed about the dissipation of restrained property through provision for legal expenses and the view was expressed that there was no reason why a defendant "should receive a benefit from the crime in the form of a Rolls Royce defence funded by illegally acquired property". However, his Honour concluded at [25]: It is not clear from the Attorney-General's remarks that such a prohibition was intended when an application is subsequently made for exclusion of assets from a restraining order. In any event the provisions enacted do not have such an effect.

22 Redlich J's conclusion was founded upon the precise terms of s14(5) of the Victorian Act, which have no counterpart in the legislation with which I am dealing. The opening words of s24(1) of the Commonwealth Act are as follows: The court may allow any one or more of the following to be met out of property, or a specified part of property, covered by a restraining order:

There is nothing in those words, or elsewhere in the section, to suggest that it is confined to allowances made at the time the restraining order itself is made, as opposed to at some later time. Indeed, subs(2) provides (among other things) that the Court may make an order for the allowance of expenses only if "the person whose property is restrained has applied for the order" and has notified the DPP of the application. This suggests that the section is concerned with applications made after the restraining order has been made. What is significant for present purposes is that it is in s24 itself that the prohibition of allowance for legal costs is to be found.

23 That said, Mr Steirn sought to draw an analogy between Sypott and the present case in that the prohibition in s24 of the Commonwealth Act is not repeated in s39, the section upon which he relies for the purpose of the present application. I accept that it is not and that it cannot be imported into s39 by implication. However, that is so because, as Mr Temby rightly submitted, s39 does not deal with applications for allowance out of restrained property for expenses or debts. That is exclusively the province of s24.

24 In supplementary written submissions, Mr Steirn drew my attention to the decision of the High Court in Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38. The case was concerned with the Criminal Property Confiscation Act, 2000 (WA) and, in particular, a Part of that Act dealing with what is termed a "freezing order" (the equivalent of a restraining order). Section 45 provides that in a freezing order, the Court may (among other things) "provide for meeting the reasonable living and business expenses of the owner of the property". The majority of the Court held that those words are wide enough to embrace allowance for the payment of legal expenses.

25 In so doing, their Honours said in a joint judgment at [49] - [50]: The unique and essential function of the judicial branch of government is the quelling of controversies by the ascertainment of the facts and the application of the law. This is done by an adversarial system of litigation. It is plain that the operation of that system is assisted by the presence of legal representation, and may be severely impaired by its absence. In Dietrich v The Queen [(1992) 177 CLR 292 at 302], Mason CJ and McHugh J repeated the extrajudicial opinion of Lord Devlin that, save in the exceptional case of the skilled litigant, in practice the adversarial system breaks down where there is no legal representation. The Act, as remarked earlier in these reasons, is draconian in its operation and complex in various of its provisions. There is not readily to be implied a denial of the powers of the Supreme Court when making or varying a freezing order to mould its relief to permit the use of funds to obtain legal assistance. Such assistance is for the benefit not only of the individual but for the more effective exercise of the jurisdiction conferred by s101 of the Act with respect to proceedings under the Act. In that sense, it is also for the benefit of the State and the public.

26 With respect, the force of those observations cannot be denied. However, again, the case was dealing with legislation significantly different from the Commonwealth Act. Unlike s24 of that Act, s45 of the West Australian Act does not expressly prohibit the allowance for legal expenses out of frozen assets. Nor were their Honours examining a separate provision for ancillary orders, such as s39 of the Commonwealth Act.

27 Finally, also in supplementary written submissions, Mr Steirn raised a question of the constitutional validity of the relevant provisions of the Act if the interpretation for which Mr Temby contended were correct. On that interpretation, he argued, it might be said that the restraint of assets under the Act amounted to an acquisition of property other than on just terms: cf s51 (xxxi) of the Constitution. However, restraint of property interests does not amount to an acquisition in the relevant sense. Moreover, it is established that legislation of this kind is not a law for the acquisition of property within the terms of that placitum: Della Patrona v DPP (C'th) [No2] (1995) 38 NSWLR 257, per Kirby P at 270-2. Although that case was dealing with the 1987 Act, the relevant statements of principle are clearly applicable to the present Act.

28 The relevant provisions of the Act must be strictly construed, in accordance with the authorities to which I have earlier referred, and I am mindful of the considerations of policy expressed in the passage from the joint judgment in Mansfield quoted above. Nevertheless, the conclusion is inescapable that the Act does not permit provision for legal expenses out of restrained funds and, in particular, an application under s39 for that purpose cannot be entertained. Mr Steirn pointed out that it appears that the plaintiff does not dispute that the money in the superannuation fund and the solicitors' trust account was lawfully obtained by the defendant. As I understand it, the money continues to be restrained only for the purpose of satisfaction of any pecuniary penalty order which might be made. One can but hope, as Mr Steirn asserted, that satisfaction of such an order would leave sufficient funds for the defendant to pay for his legal representation.

29 The application must be dismissed. If necessary, I shall hear the parties on costs.

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