Diez v DPP [2004] NSWCA 452 | Case summary

Diez v DPP [2004] NSWCA 452 | Case summary | Zoe

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9 DECEMBER 2004 Maximiliano DIEZ v DIRECTOR OF PUBLIC PROSECUTIONS Judgment 1 BEAZLEY JA: I agree with Santow JA. 2 SANTOW JA: INTRODUCTION This appeal raises a short legal point of deceptive simplicity. It breaks down into a series of questions. First, does s101 of the Proceeds of Crime Act 1987 (Cth) ("the Act") which provides for recovery of costs against the Commonwealth, have the effect of excluding the Supreme Court's wider power to order costs against a party including the Commonwealth in applications within the ambit of s101? Second, what is the scope of that ambit? Third, does s101 constitute an exclusive cost recovery code against the Commonwealth for applications to exempt property from forfeiture or restraint under the Act? Fourth, are applications under the Act of that character limited to those described in s101(1)(a), namely applications " to prevent a forfeiture or restraining order being made against property of the person ", or " to have property of the person excluded from a forfeiture order or restraining order "? Finally, is the Court's discretion to order costs against the Commonwealth in the present case wholly dependent on the applicant satisfying s101 and, therefore, the three conditions it lays down? 3 The trial judge, Greg James J, concluded in the present case that the appellant, Mr Diez, was wholly precluded by s101 from claiming costs against the Commonwealth, as its third condition had not been fulfilled. The Court was unable to be satisfied, in terms of s101(1)(c) of the Act, "that the person [the appellant] was not involved in any way in the commission of the offence in respect of which the forfeiture order or restraining order was sought or made". 4 The second question, that of the ambit of s101(1)(a), was raised by the appellant for the first time following an exchange with the Bench. Did the appellant's earlier proceedings in which he successfully applied to avoid property forfeiture or restraint under the Act, fall, in whole or part, outside the detailed description of "proceedings" found in the first condition in s101(1)(a) of the Act? If yes, that raises a further question. If it be the case that some such successful applications under the Act to free property from forfeiture or restraint ("property exempting applications") are capable of falling outside s101(1)(a), it must necessarily follow that s101 could not be an exclusive code governing recovery of costs from the Commonwealth. That is at least so far as that category of application is concerned but it may be that it is not an exclusive code at all. This is because it would be difficult to discern any rational legislative purpose in having s101 of the Act apply as an exclusive code for cost recovery against the Commonwealth to the category of property exempting applications against the Commonwealth that are covered by s101(1)(a), but not to the category of property exempting applications that fall outside s101(1)(a), though still covered by the Act. If correct, this would mean that even if the appellant's property exempting application fell in whole or part within s101(1)(a), the latter would not be an exclusive code governing cost orders against the Commonwealth even for it. 5 The respondent would take issue that there are two such categories as distinct from simply one. The respondent contends that in reality all such property exempting applications if they do come within the Act, must necessarily also come within s101(1)(a), though not necessarily within sub-paragraphs (b) and (c). Since s101(1)(c) (being involved in the commission of a relevant offence) was not satisfied, the respondent contends that the trial judge correctly concluded that there was no power to award costs against the Commonwealth in favour of the appellant. 6 Section 101 of the Act is in the following terms: "101. Costs (1) Where: (a) a person brings, or appears at, proceedings under this Act before a court in order:

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[14] I do not accept the submission that s 101 provides only for a right wider than that which might have been enjoyed under the general law such that it can be taken only to amplify the costs that might have been awarded. Further, accepting that the purpose of the provision was to allow the awarding of costs to innocent persons as is explained in Hansard and the explanatory memorandum, it does not follow that it left open the prospect of guilty persons receiving their costs in the circumstances to which the section speaks otherwise. Indeed, there would be little point to a specific express provision in favour of innocent persons if all persons including the guilty might receive costs." 26 Before turning to a closer exegesis of s101, a task not without complexity. I need to look beyond the Act and begin with the general statutory basis for making cost orders against the Commonwealth. These arise in relation to Commonwealth legislation dealt with in State courts. 27 In New South Wales, s76 of the Supreme Court Act provides as follows: " Costs 76 (1) Subject to this Act and the rules and subject to any other Act: (a) costs shall be in the discretion of the Court, (b) the Court shall have full power to determine by whom and to what extent costs are to be paid, and (c) the Court may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on an indemnity basis. ………" 28 Section 64 of the Judiciary Act 1903 (Cth) provides as follows: " 64 Rights of parties In any suit to which the Commonwealth or a State is a party, the rights of parties shall as nearly as possible be the same, and judgment may be given and costs awarded on either side, as in a suit between subject and subject." 29 The respondent did not ultimately press any argument to the effect that "the Commonwealth" in s64 quoted above did not comprehend the Director of Public Prosecutions. This is because, quite apart from s64, the respondent acknowledged that the Supreme Court's power to award costs in a proceeding under the Act did in any event derive from s79 of the Judiciary Act 1903 as well as the earlier quoted s76 of the Supreme Court Act 1970, though subject to the specific Commonwealth statutory provision in s101 of the Act. 30 Section 79 of the Judiciary Act 1903 provides as follows: " State or Territory laws to govern where applicable The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable." 31 Essentially the submission of the respondent is that even if s64 were assumed to apply to the case, it like s79 is subject to the qualifying effect of later enacted Commonwealth legislation, namely s101 of the Proceeds of Crime Act 1987; Deputy Commissioner of Taxation v Moorebank Pty Ltd (1988) 165 CLR 55. Thus, it was common ground that the interpretation of s101 would be ultimately determinative of the appeal. 32 Turning to s101 of the Act, it is at least clear and common ground between the parties that its effect is to confer a discretion upon the Court, where the conditions in paragraphs (a), (b) and (c) of s101(1) are satisfied. 33 In the operative expression "the Court may order" in s101(1), the word "may", depending on context, can either connote a discretion, or can actually mean "must". An example of the latter is to be found in Finance Facilities Pty Limited v the Federal Commissioner of Taxation (1970-71) 127 CLR 106 at 134-5. Windeyer J concluded that when a series of matters were set out in the relevant legislation about which the Commissioner of Taxation had to be satisfied before he "may" allow a tax rebate, in that "particular context of words and circumstances" the word "may" was "not only an empowering word but indicates circumstances in which the power is to be exercised - so that in those events the 'may' becomes a 'must'" (at 134). 34 Here, while the Court "may" order the Commonwealth to pay "all" costs incurred by the person in connection with the proceedings where the relevant conditions in paragraphs (a) to (c) have been satisfied, the Court is also expressly empowered to order less than all; that is to say, to order instead "such part of those costs as is determined by the Court". That clearly bespeaks a discretion as to the proportion of costs that may be allowed. Such costs allowed may be all, none, or some and may consist of indemnity costs or party and party costs. 35 Given then that s101 delineates a discretion, the question becomes whether that delineation is exhaustive of the discretion conferred upon the Court, or whether there remains still a residual discretion in the Court to exercise its discretion to award costs against the Commonwealth in a proper case, notwithstanding that the conditions in s101 were not satisfied. The appellant submits that there will be cases where the case for a cost order against the Commonwealth would be very strong indeed. Thus suppose the forfeiture would involve overwhelming hardship. Suppose it be against a person only peripherally "involved … in the commission of the offence in respect of which the forfeiture order or restraining order was sought or made", remembering that "involved" is not defined in the Act. Finally, suppose there is in any event other available property well able to meet any recovery envisaged in relation to the offence. If s101 were an absolute bar to cost recovery against the Commonwealth, that would effectively add a further heavy sanction against that person for involvement in the offence. This the appellant contends is so oppressive that the clearest of language would be required to bring about so unjust a result. 36 To this the respondent responds that s101(1) is wholly unambiguous. That "the plain meaning of s101 is that, where three conditions are satisfied (s101(1)(a)(b)(c)) the Court may make an order for indemnity costs". To this the appellant replies that "[T]he provision says nothing about the situation where the three conditions are not satisfied, leaving the general powers [to award less than indemnity costs] …. to apply"; appellant's written submission Orange, 5-6. 37 The appellant's submissions contend that this is not the plain meaning; that the trial judge has, in effect, imposed an impermissible gloss on s101. Quoting from those submissions he has interpolated words in bold to demonstrate what he considers is the gloss: "(1) Where:

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(2) The costs referred to in subsection (1) are not limited to costs of a kind that are normally recoverable by the successful party to civil proceedings." 38 I should add that the supposedly plain meaning appears to include at least one gloss, namely, that on the word "all" in the expression "all costs". This is as those words appear in the phrase "the Court may order the Commonwealth to pay all costs incurred" where the earlier conditions in s101 are fulfilled. "All costs" are not literally every cost incurred, but rather what are equivalent to indemnity costs. Indemnity costs are only those costs as were not unreasonably incurred. However, that gloss may be justified by the expression "all costs" being simply understood against long-settled legal background whereby indemnity costs are treated as the maximum costs recoverable, in that legal sense representing "all" costs. 39 Hayne J in Bissett v Commonwealth DPP (SC(Vic), 24 February 1993, unreported), after referring to the three conditions which needed to be met to allow a costs order to be made under s101, concluded as follows: "The evident legislative intention disclosed by s101 is that the Commonwealth should pay costs in cases where property is excluded from a restraining order and where the court is satisfied that the applicant was not involved in any way in the commission of the offence in respect of which that order was made. As I have said above, that is not this case. If there is a more general power to award costs, I do not consider that it should be exercised in favour of the applicant if all that is demonstrated is that the property in question was lawfully acquired . If Parliament had intended that costs should go to such an applicant there would seem no point in providing for an award of costs in the circumstances described in s101; it would have been enough for Parliament to say that an order for costs may go if an applicant succeeds in having property excluded from a restraining order because such an exclusion will be made only if the applicant's interest in the property was lawfully acquired. By going further, and in particular by providing that costs may be awarded if the applicant was not involved in the offence, Parliament has clearly indicated that the bare fact of lawful acquisition is not sufficient to warrant an order being made for costs." [emphasis added] 40 In that case, Hayne J found such a costs order was not available because Mr Bissett was involved in a commission of the offence in respect of which the restraining order was made. It is true that Hayne J left open the question of whether there was a more general power to award costs, simply concluding that if there were, any discretion should not be exercised in favour of the applicant if all that is demonstrated is that the property in question was lawfully acquired. However, the respondent presses that paragraphs (a) to (c) are indeed conditions forming part of an exhaustive statement of the circumstances in which costs may be ordered against the Commonwealth in connection with proceedings under the Act. Simpson J in Commonwealth DPP v Adjornay [2000] NSWSC 76 at [14] so concluded: "I am satisfied that, by reason of s101, the defendant is not entitled to an award of costs. I might add that that conclusion is also consistent with the general tenor of the Act. A restraining order may be made even before a person has been charged with an offence. Property of that person is restrained pending the procedures relevant to the charge and to the proceeds of crime legislation. Guilt of the offence precludes a costs order, even where an exclusion order is made; it cannot be thought that the legislature intended to, or did, leave open an avenue for an award of costs in the specific circumstances that here appertain." 41 It was common ground that if the appellant's submissions were to be accepted, this Court would have to overrule Commonwealth DPP v Adjornay (supra). 42 If it be accepted that s101 is not free of ambiguity, the appellant contends that the ambiguity should be resolved in favour of the view that s101 does not remove the Court's general power to award costs arising under s64 of the Judiciary Act and/or s76 of the Supreme Court Act. The argument is put in these terms: "(a) In accordance with general principles of statutory construction, it is desirable that the ambiguity should be resolved in a way that does not remove pre-existing rights to seek costs. Section 101 should be regarded as beneficial legislation and given an interpretation whereby "innocent" persons do not suffer financially at all in establishing their property rights. In Fowkes v DPP (1996) 88 A Crim R 166 the Victorian Court of Appeal observed at 184: "Section 101 should, we think, be regarded as beneficial legislation, designed in part to ensure that those whose property is put at risk by otherwise penal legislation ought not to suffer financially in establishing their. property rights." In FCT v Smorgon (1977) 16 ALR 721, Stephen J stated at 729 that "construction of a statute which interferes with the legal rights of a subject to a lesser extent and produces the less hardship is to be preferred to another, having the opposite effect." Finn J observed in Buck v Comcare (1996) 137 ALR 335 at 340 that, where there is doubt as to Parliament's intention, the courts should favour an interpretation which safeguards the individual against loss of a statutory right. (b) The purpose behind the Act as a whole is to confiscate criminals of the proceeds of their crime(s). It is not to punish them. If property is not the proceeds of crime then it should not be confiscated. Equally, an application to have such property excluded from confiscation or restraint should not be punished by removing a right to any costs simply on the basis that the applicant is a criminal (or, rather, is unable to prove he is not a criminal). It is submitted that the purpose of the provision is to extend otherwise existing rights of particular applicants to seek costs, not to remove pre-existing rights. Sub-section 101(2) supports this analysis, in that it makes clear that the reference to "all costs" in ss101(1) is not limited to all costs that are "normally" recoverable. (c) It is implausible that Parliament intended that a person who resists forfeiture by showing that his property was completely unconnected with an offence should never be able to recover any costs because he fails to establish the negative that he "was not involved in any way" in the commission of the offence. Such a manifestly unjust result should be avoided, if possible, in resolving the ambiguity. Gibbs J observed in Public Transport Commission of NSW v Murray More (NSW) Pty Ltd (1975) 6 ALR 271 at 282 that "where two meanings are open ... it is proper to adopt that meaning that will avoid consequences that appear irrational and unjust". The rationale of an order for costs is that "it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred" (per McHugh J in Latoudis v Casey (1990) 170 CLR 534 at 567). It is not just and reasonable to preclude recovery of any costs by a successful litigant simply on the basis that he is unable to satisfy the court that he was not involved in any way in the commission of an offence related to the litigation. It is not just and reasonable that an applicant, who has saved his family home from forfeiture, should then have to sell that home to pay the legal expenses he was forced to incur to prevent its unjust forfeiture. It is implausible that Parliament intended to produce such injustice (or produce a situation where applicants would be discouraged from obtaining legal representation in such a complex area of law with potentially drastic consequences for proprietary rights). (d) It is implausible that Parliament intended to prevent recovery of any costs (if condition (1)(c) is not met), even if the person seeks only some portion of his or her costs." 43 The appellant calls in aid the objects of the legislation in s3 of the Act, quoted earlier. The appellant contends that total preclusion of any ability to recover costs goes well beyond the contemplation of those objects. This is where, for example, the relevant property in no way represented the proceeds of crime or of any benefits therefrom. But because the person concerned was involved however peripherally in the commission of the offence in respect of which the forfeiture order or restraining order was sought or made, this forever precludes any cost order against the Commonwealth, no matter how misconceived the original restraining order. To deny costs in successfully resisting forfeiture or restraint in respect of that property would give the Act a penal character, thereby imposing a further sanction for the relevant offence. To attribute such an intention to Parliament is to ascribe a punitive purpose to the Proceeds of Crime Act nowhere to be found in its objects. Such an interpretation is not compelled by the clear language of s101. I would accept there is force in the contention that any ambiguity should be resolved so as to avoid such an oppressive result, outside the ambit of the objects of the legislation. But it cannot prevail if the language is sufficiently clear. 44 There is a further matter, raised in this Court for the first time. It is an argument based on the ambit of s101. Section s101(1)(a) is predicated on proceedings being before a court in order, relevantly to the present case, "to have property of the person excluded from the forfeiture order or restraining order". The appellant's argument is that the present proceedings are only partly within that ambit, so that it could not be the case that s101 is exhaustive. The mere potential for orders of that character, whether here made or not, is pressed as a reason for not finding s101 exhaustive. 45 To elaborate, the present proceedings, insofar as based upon an application pursuant to s48(4) of the Act, are for a declaration that the restraining order, to the extent to which it relates to the relevant property, shall be disregarded for the purposes of s30. The effect of such an order, if granted, is not to have property "excluded from a forfeiture order or restraining order". Rather the appellant argues, it is to prevent a condition laid down by s30(1)(c) for forfeiture of restrained property from being fulfilled. At the least, the argument runs, this must mean that s101, were it an exclusive code delineating exhaustively the right to order costs against the Commonwealth in relation to the Proceeds of Crime Act would necessarily exclude from its ambit s48(4) proceedings. On that basis, it would follow that at least costs so far as applicable to the s48(4) proceedings in the present case would be capable of being awarded against the Commonwealth, since s101 does not purport to deal with such costs at all. 46 However, if that be correct, a proposition denied by the respondent, the implication of giving limited scope to s101(1)(a) goes much further. It casts strong doubt on whether s101 could rationally constitute an exhaustive code for cost recovery against the Commonwealth, should there be a category of property exempting applications that come within the Act but not within s101(1)(a). No rational legislative purpose could then be discerned if s101(1)(a) property exempting applications were subject to the supposed exclusive code but not those other property exempting applications such as under s48(4) of the Act which fell outside s101(1)(a). 47 That rather suggests that there is no exhaustive code at all under s101 of the Act. Rather there is simply a non-exclusive delineation of a set of circumstances in which the court has a discretion to order all, some, or no costs against the Commonwealth. Bissett then points to the strong likelihood that even if s101 were not exhaustive, nonetheless courts would in practice rarely if ever award costs against the Commonwealth when the conditions in s101 were not made out. 48 However, that would still leave the court free in an appropriate case, exceptional as it may be, to exercise a discretion to order costs against the Commonwealth. This is so, even if the applicant had been involved "in any way in the commission of the offence in respect of which the forfeiture order or restraining order were sought or made". The breadth of the expression "involved in any way" militates against the court being denied the discretion it could otherwise exercise to award party and party costs to the successful party against the unsuccessful party, as for example where the successful applicant's involvement was wholly peripheral. This would, as with indemnity costs, reflect the wholly conventional position in civil litigation, here reflected in Part 52A r11 of the Supreme Court Rules. It provides that "if the court makes any order as to costs, the court shall, subject to this Part, order that the costs follow the event, except where it appears to the court that some other order should be made as to the whole or any part of the costs". 49 In Oshlack v Richmond River Council (1998) 193 CLR 72 at 67 McHugh J analysed the basis for the rule noting that: "[67] …. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.

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[68] As a matter of policy, one beneficial by-product of this compensatory purpose may well be to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved. Large scale disregard of the principle of the usual order as to costs would inevitably lead to an increase in litigation with an increased, and often unnecessary, burden on the scarce resources of the publicly funded system of justice." 50 Hayne J in Bissett did not conclude that there was no general power to award costs left by s101. Rather he concluded that he did not consider that it should be exercised in favour of the applicant "if all that is demonstrated is that the property in question was lawfully acquired". But it does not follow that it is inconceivable there would not be proper cases for a favourable exercise of discretion as I have earlier explained. 51 In saying that, I express no view as to how the discretion to award costs ought to be exercised in this case, though acknowledging the force of what was said by Hayne J in Bissett. What I do conclude is that the case for that discretion being not wholly circumscribed by s101 is in the end convincing. First, s101(1)(a) is ambiguous in its ambit, affecting the ambit of s101 as a whole. The respondent now concedes that ambiguity exists in the expression in (ii), namely "to have property excluded from a … restraining order". However, it contends that it should not be resolved by treating s48(4) applications as falling outside s101(1)(a). However, the appellant's argument goes further than that in terms of identifying other property exempting applications under other provisions of the Act which are said to fall outside s101(1)(a)(ii). This the submissions quoted below make clear: "1. It is submitted that a person does not 'bring, or appear … at, proceedings under [the Proceeds of Crime Act 1987] before a court in order' to achieve any of the results referred to in s101(1)(a)(i) or (ii) where the person brings or appears at proceedings in order to: (a) pursuant to s48(4), have the court, by order, declare that a restraining order, to the extent to which it relates to particular property, shall be disregarded for the purposes of s30;

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(d) pursuant to s43(3), have the court impose conditions on a restraining order and make provision for meeting certain expenses or debts." 52 Moreover, Courts of Appeal have considered themselves free to order costs against the Commonwealth in s48(3) and (4) appeals, as again the appellant brings out. Thus in DPP (Cth) v Saxon (1992) 28 NSWLR 263, the Court of Appeal considered an appeal by the Commonwealth DPP in proceedings where orders were made under s43(3). The appeal was dismissed with costs, notwithstanding the availability of an argument that s101 applied on the basis that the proceedings were brought to have some of the appellant's property excluded from a restraining order. 53 Similarly, in DPP (Cth) v Chan (2001) 52 NSWLR 56, the Court of Appeal considered an appeal in proceedings where orders were sought under s43(3) and s48(4), as well as an order for an extension of time under s30A. The appeal was dismissed with costs (payable to the applicant for the orders) without any limitation derived from the operation of s101. Costs were ordered even though, on the respondent's argument, the appeal was from proceedings where the appellant brought proceedings in order to have his property excluded from a restraining order. The fact that the Court of Appeal considered only the issue of whether there should have been an extension of time under s30A does not alter the fact that the proceedings were ones where the appellant was seeking orders under s43(3) and s48(4) (as well as an order under s30A). 54 I agree with the appellant's submission that a convicted defendant who brings or appears at proceedings in order to obtain such an order (an order declaring that a restraining order, to the extent to which it relates to particular property, shall be disregarded for the purposes of s30) has not sought to have the property "excluded from a … restraining order". Rather, under s48(3), the appellant sought to have the restraining order made the subject of a declaration that it is to be disregarded when determining whether the property is automatically forfeited to the Commonwealth under s30. 55 In so concluding I prefer this interpretation of the Act to that pressed by the respondent. Thus the DPP submits that "the true legal effect of making such a 'declaration' is more accurately characterised (or just as well characterised) as an exclusion of the property from the effect of the restraining order for s30 forfeiture purposes". The DPP seeks to call in aid what it describes as "an extraordinarily awkward use of concepts", said to arise from: "(a) providing for the alteration of an order's effect by making a declaration about it; and

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Having regard to the central importance of s30 statutory forfeiture as a consequence of a restraining order continuing in force, the effect of a s48(4) ' declaration ' that the order be ' disregarded ' for s30 purposes ' to the extent to which it relates to ' certain property is, in a real and practical sense, an exclusion of the property from the operative effect of the order. That is, it is a form of 'exclusion' assuming that word not to have any special connotation in the Act." 56 The respondent then advances a number of reasons for giving "excluded" in s101(1)(a) of the Act a "wide and encompassing sense". This is to accommodate not only actual exclusions of property under s48(3) from a forfeiture or restraining order, but also that which, under s48(4) has the same substantive effect on the applicant's property. This is in having the restraining order "disregarded" under s48(4) for "its principal purpose, s30 forfeiture insofar as it relates to the relevant property". 57 However, I do not consider that any ambiguity, if such there be, in s101(1) in referring to "excluded" can properly be so resolved by some doctrine of functional equivalence. Moreover, the sections in addition to s48(4) cited by the appellant involve such a degree of contortion to accommodate the result pressed by the respondent as to be unconvincing in that assertion. I refer here to s21(6), s23A(7), s31(6)(a), s31(6)(b) and the provision dealing with buying back forfeited property (s19(5), s31(7) and s33). Each of these in different ways operate to enable the applicant's property or its equivalent to be freed from any Commonwealth interest or to bring about the cessation of that interest. 58 Take s21(6) as an example, though it applies to third parties rather than a person in Mr Diez' position. Where its conditions are made out, an order can be made directing the Commonwealth to transfer an interest to those parties. That does not fit within s101(1)(a) at all. Or take s23A(7) applications, which again fall outside s101(1)(a). The latter refers to "a forfeiture order" whereas s23A(7) concerns foreign or international forfeiture orders, not coming within the definition of "forfeiture order". 59 Concededly, in each case the relief is only available to someone not "involved" in the commission of a relevant offence. That would satisfy s101(1)(c) were it applicable; it is not, as s21(6) and s23A(7) applications are in each case outside s101(1)(a). But the notion of this category of application being consistent with s101 as an exclusive code becomes less plausible. 60 Moreover that requirement of non-involvement does not operate at all with respect to s31(6), which governs retrieval of property from statutory forfeiture. Such an application does not fall within s101(1)(a) at all so it is outside the ambit of s101. Yet it is clearly an application under the Act directed to avoiding statutory forfeiture of property. As the respondent acknowledges "it appears anomalous that such a person should be able to invoke the general discretion of the Court as to costs (as would be the case, because the application is not within … s101(1)(a)." However, anomaly or not, that result cannot be reconciled with s101 as an exclusive code. I do not agree that it "is relatively insignificant on the whole scheme of the Act". It is not so easily explained away.

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II. Restraining Orders 1. Restraint/ Application · A restraining order can be sought under s43 if charges have been laid, or will be laid within 48 hours. · Under s44 the grounds upon which a restraining order can be made and the evidence required vary according to o the stage of the criminal prosecution process; o the "ordinary' or "serious" classification of the offence; o whether it is sought to restrain all property or only specified property of a person and o whether the person is the defendant or a third party. · Section 44(10) gives the court power to require the DPP to give an undertaking as to costs and damages on behalf of the Commonwealth · The application can be made ex parte or on notice (s45). · If a restraining order is made ex parte, s45(2) provides that the order can only remain in force for an initial period of 14 days. A person who claims an interest in the property affected by the order can appear to oppose an extension of the order. · Section 57(6) has the effect that a restraining order that is made on notice, or a restraining order made after an initial interim order, can only remain in force for a maximum of six months unless it is extended. A person whose interests are affected by the order can appear to oppose an extension. · If a restraining order is made in advance of charges being laid, the order will lapse unless charges are laid within 48 hours (s57(1)). 2 Variation of Restraining Orders · Section 43(3) provides that a person whose property has been restrained can apply to a court for a variation to the restraining order to exclude the person's interest from the operation of the order. · Sections 48(3)(d) to (g) set out the tests the applicant must meet. The tests vary according to whether the applicant is the defendant or a third party and whether the relevant offence is an ordinary indictable offence or a serious offence. · Under s48(3) a defendant charged with or convicted of a serious offence could only invoke the public interest ground, paragraph (g). Consideration (iii)(C) would enable the Court to refuse exclusion of the subject property (or interest) should it appear likely to be required to satisfy a pecuniary penalty order. · Section 48(4) provides the only basis (apart from s48(3)(g)) upon which a "serious" offender may prevent forfeiture of restrained property. Namely, by establishing its lawful derivation and use and, on that basis, obtaining an order that it be "disregarded" for the purposes of s30. · If property of a "serious" offender remains under a restraining order, although "disregarded" so as not to be forfeited under s30, the continuing restraint is only of consequence in the event of a pecuniary penalty order being made against the defendant (see heading V below). In that case, the restraining order acts as a charge to secure payment to the Commonwealth of the debt created by the pecuniary penalty order. · In the absence of any pecuniary penalty order, it would seem that a restraining order in respect of which a s48(4) "disregarding" order had been made would continue until brought to an end by order under s57(4) (if it was a restraint "until further order"). · If a pecuniary penalty order should be made, the restraint would be wholly or partly terminated upon application of restrained property to satisfy the pecuniary penalty (s57(2)(e))

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III. Automatic forfeiture following conviction (s30) 1 Defendant's position. · Automatic forfeiture only applies when a person has been convicted of a serious offence, as defined in s7; see s30(1)(a). · Section 30(1) provides that if a person has been convicted of a serious offence and property has been restrained, the property will be automatically forfeited at the end of the waiting period unless a declaration has been made under s48(4). · The normal waiting period is six months from the date of conviction, but there is provision in s30A under which it can be extended for up to a further nine months. The application for an extension must be made within the initial six month period (s30A(3)). 2 Protection for third parties and others · Section 31 gives a right to a third party to apply for the release of property after it has been forfeited, or to apply for compensation if the property has already been disposed of. · Section 31(6) sets out two alternative tests that the applicant must meet: o The applicant was not, in any way, involved in the commission of the relevant offence, and the applicant's interest is not subject to the effective control of the defendant, and, if the applicant acquired the interest at the time of or after the offence, the applicant paid sufficient consideration and did not know, and had no reason to suspect, that the property was tainted property. o Alternatively, the property was not used in, or in connection with, any unlawful activity, and was not derived or realised, directly or indirectly, by any person from any unlawful activity, and the applicant's interest in the property was lawfully acquired. · Nothing in s31 says that a defendant can not apply for an order under s31, even if that means re-running issues that have already been run in a s48(4) application. This has been judicially recognised in NSW although there is a contrary judgment of the Supreme Court of Western Australia - both single judge decisions. 3 Buy back orders and buy outs · Sections 33 and 31(7) give the court power to make an order allowing a person to buy back an interest in forfeited property if that would not be contrary to the public interest. · Section 34 gives a person who gets an order under s33 power to buy out other interests in the forfeited property. 4 Effect of conviction being quashed (Prior to 01.01.03) · Section 32 provides for applications for transfer of property back to owner. 5 Declaratory orders Section 30(8A) gives a court power to declare that particular property has been forfeited under s30.

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IV. Forfeiture orders (section 19) 1 Steps · A restraining order is not a formal precondition for a forfeiture order. · The effect of s14(1) is that the DPP can only apply for a forfeiture order against property if a person has been convicted of an indictable offence, or an absconder is deemed to have been convicted by operation of s5. · The application for a forfeiture order must be made within six month from the date of conviction (s14(2)). · The DPP can apply for a forfeiture order over "tainted property". That term is defined in s5(1) to mean property used in, or in connection with, the commission of the offence or proceeds of the offence. · Section 19 gives the court power to make a forfeiture order in respect of tainted property. · The court has a discretion about whether to make a forfeiture order. Section 19(3) directs the court to have regard to hardship and the use that is normally made of the relevant property. · Section 20 provides that the effect of a forfeiture order is that property specified in the order vests in the Commonwealth when the order is made. 2 Protection for third parties: exclusion orders · Section 21 provides a mechanism for a third party to avoid the effect of a forfeiture order by applying for an exclusion order. · A person can apply for an exclusion order before forfeiture occurs (s21(1)). · A person can also apply for an exclusion order after forfeiture. However, a person who had notice of the application for a forfeiture order, or who appeared at the hearing of the application for a forfeiture order, must obtain leave (s21(3)). · The person applying for the exclusion order must show that: o The person was not, in any way, involved in the commission of any offence to which the order, or the application for the order, relates and o if the person acquired his or her interest after the commission of the relevant offence, the acquisition was for sufficient consideration and without knowing, or having reason to suspect, that the property was tainted property (s21(6). 3 Buy back orders · Sections 33 and 19(5) give the court power to make an order allowing a person to buy back an interest in forfeited property if that would not be contrary to the public interest. · Section 34 gives a person who gets an order under s33 power to buy out other interests in the forfeited property. 4 Effect of conviction being quashed (Prior to 01.01.03) · A forfeiture order lapses if the conviction is set aside on appeal (section 22).

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V. Pecuniary Penalty Orders (section 26) 1. Obtaining a PPO · A restraining order is not a formal precondition to the making of a PPO. However, in many cases, there may be little prospect of executing a PPO unless property has been restrained. · The effect of s14(1) is that the DPP can only apply for a PPO against a person if the person has been convicted of an indictable offence (or has absconded and is deemed to have been convicted by operation of s5). · The application for a PPO must be made within six months from the date of conviction (s14(2)). · Section 25 provides that if the defendant has been convicted of a serious offence the court cannot make a PPO until at least six months after the date of conviction (except where the person is a deemed offender). · The court has a discretion under s26 whether to make a PPO when the preconditions have been satisfied. It must be proved that the convicted person derived benefits from the commission of the offence. The benefits must be assessed by the court and the penalty is to be equal to the assessed value. · Section 27 sets put the basis on which the court must assess the benefits (and hence the penalty amount). 2 Enforcing a PPO · Sections 26(8) and (9) provide that a PPO is a civil debt payable to the Commonwealth and is enforceable as a judgment debt. · Section 50 provides that there is a charge on property to pay the PPO if there is a restraining order in force against the property. In the case of third party property, there must also be an order under s28(3) in relation to the property. · Section 57(2)(e) provides that, where a PPO is made, a restraining order ceases to be in force with respect to property that is sold to satisfy the PPO, upon the PPO being satisfied. · Section 28(3) gives the court power to make a declaration to the effect that property which is held by a third party but which is under the effective control of a person is available to satisfy a PPO made against that person. 3 Effect of conviction being quashed (Prior to 01.01.03) · A PPO lapses if the conviction is set aside on appeal.

Diez v DPP

At a glance

Court

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Judgment (53 paragraphs)

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Legislation Cited (3)

Cases Cited (9)

Cited By (4)