BETWEEN : DIRECTOR OF PUBLIC PROSECUTIONS FOR WESTERN AUSTRALIA

Criminal benefits declaration - Proceeds of crime received before commencement of Criminal Property Confiscation Act 2000 (WA) - Proceeds used to purchase other property - Whether a confiscation offence - Whether lawfully acquired property available to satisfy criminal benefits declaration - Whether property used to obtain other property is a constituent of a person's wealth

Criminal Property Confiscation Act 2000 (WA), s 4, s 8(1), s 13, s 15(1), s 17, s 17(1), s 18, s 19, s 20, s 25, s 26, s 43, s 142, s 143(1), s 145

Criminal benefit declaration in the sum of $100,000 granted

Respondent to the Objections : State Director of Public Prosecutions

Beckwith v The Queen [1976] HCA 55; (1976) 12 ALR 333

Director of Public Prosecutions v Logan Park Investments Pty Ltd (1995) 132 ALR 449

John Edward Currey (1995) 16 Cr App R 421

Palfrey v McPhail & Anor [2004] WASCA 257

R v Lewis [2000] WASCA 9; (2000) 111 A Crim R 1

Scott v Borsa, unreported; DCt of WA; MC56/90; 14 August 1990

Cheatley v The Queen [1972] HCA 63; (1972) 127 CLR 291

Director of Public Prosecutions v Nieves [1992] VicRp 15; [1992] 1 VR 257

Dossett v TKJ Nominees Pty Ltd [2003] HCA 69; (2003) 78 ALJR 161

Forbes (Collector of Customs, NSW) v Traders Finance Corporation Ltd [1971] HCA 60; (1971) 126 CLR 429

1 MCLURE J: The applicant, the Director of Public Prosecutions for Western Australia (DPP), applies for a declaration pursuant to s 17(1) of the Criminal Property Confiscation Act 2000 (WA) (Act) that the first respondent, Rodney Bridge (respondent), has acquired a criminal benefit and specifying the assessed value of the criminal benefit pursuant to s 18(2)(b) of the Act.

2 The respondent was convicted on 14 November 2003 of stealing a sum of money contrary to s 378 of the Criminal Code (offence). The offence was committed on a date unknown between 30 November 1999 and 3 February 2000. The Act came into operation on 1 January 2001. Thus, the offence was committed before the Act came into operation, but the respondent was convicted after that date.

3 The respondent received $100,000 as his share of the money stolen in the offence and of that sum he spent $10,000 on a business trip to Japan and invested $90,000 in a South African diamond venture. The evidence does not indicate whether the investment was by way of loan or shares (both of which constitute property as that term is defined in the glossary to the Act). I will refer to the investment as the substitute property. However, both parties accept that the substitute property is valueless.

4 An application for a criminal benefits declaration is taken to be a civil proceeding to be decided on the balance of probabilities (s 102).

5 The DPP is empowered to apply for a criminal benefits declaration (s 15(1)). Section 17 applies to criminal benefits declarations in respect of unlawfully acquired property. It provides:

"(1) On hearing an application under section 15(1), the court must declare that the respondent has acquired a criminal benefit if it is more likely than not that -

(a) the property, service, advantage or benefit described in the application is a constituent of the respondent's wealth; and

(b) the property, service, advantage or benefit was not lawfully acquired.

(2) If the respondent has been convicted of a confiscation offence, or it is more likely than not that the respondent is or has been involved in the commission of a confiscation offence, then it is presumed that the property, service, advantage or benefit was not lawfully acquired unless the respondent establishes the contrary."

6 A "confiscation offence" means, inter alia, an offence against a law in force anywhere in Australia that is punishable by imprisonment for 2 years or more (s 141(1)(a)). The offence is punishable by imprisonment for 7 years and is prima facie a confiscation offence.

7 Property is lawfully acquired only if the property itself is lawfully acquired and any consideration given for the property was lawfully acquired (s 149). Thus, in this context neither the stolen money nor the substitute property were lawfully acquired.

8 The property the subject of a s 17 declaration is required to be a constituent of the respondent's wealth. That phrase is relevantly defined in s 143 as follows:

"(1) The following property, services, advantages and benefits together constitute a person's wealth -

(a) all property that the person owns, whether the property was acquired before or after the commencement of this Act;

(b) all property that the person effectively controls, whether the person acquired effective control of the property before or after the commencement of this Act;

(c) all property that the person has given away at any time, whether before or after the commencement of this Act;

(d) all other property acquired by the person at any time, whether before or after the commencement of this Act, including consumer goods and consumer durables that have been consumed or discarded."

9 Section 145 also deals with the concept of acquiring a criminal benefit. It materially provides:

"(1) For the purposes of this Act, a person has acquired a criminal benefit if -

(a) any property, service, advantage or benefit that is a constituent of the person's wealth was directly or indirectly acquired as a result of the person's involvement in the commission of a confiscation offence, whether or not the property, service, advantage or benefit was lawfully acquired; or

(b) the person has been involved in the commission of a confiscation offence, and any property, service, advantage or benefit that is a constituent of the person's wealth was not lawfully acquired, whether or not the property, service, advantage or benefit was acquired as a result of the person's involvement in the commission of the offence."

10 This definition covers criminal benefits declarations for crime derived property (s 16) and unlawfully acquired property (s 17).

11 Section 145(2) is also relevant to the analysis and materially provides:

"(2) Without limiting subsection (1), the person has acquired a criminal benefit -

(a) ...

(b) whether or not the property, service, advantage or benefit was acquired before or after the commencement of this Act; and

(c) whether or not the confiscation offence was committed before or after the commencement of this Act."

12 Section 19 deals with assessing the value of criminal benefits. It provides:

"(1) The value of any property, service, advantage or benefit that has been given away, used, consumed or discarded, or that is for any other reason no longer available, is the greater of -

(a) its value at the time that it was acquired; and

(b) its value at the time that it was given away, or was used, consumed or discarded, or stopped being available.

(2) The value of any other property, service, advantage or benefit is the greater of -

(a) its value at the time that it was acquired; and

(b) its value on the day that the application for the criminal benefits declaration was made."

13 When the Court makes a criminal benefits declaration, the respondent is liable to pay to the State an amount equal to the amount specified in the declaration as the assessed value of the criminal benefit (s 20). The amount payable by a respondent under s 20 is payable within one month after the date on which the criminal benefits declaration was made or such further time allowed by the Court (s 25(1)). If part or all of the amount is not paid within the time allowed, the unpaid amount is recoverable from the respondent by the State in a court of competent jurisdiction as a debt due to the State (s 25(3)).

14 If part or all of the amount payable by the respondent is not paid within the time allowed, any frozen property that is owned by the respondent is available for the purpose of satisfying the respondent's liability (s 26(2)).

15 The respondent opposed the application on three grounds. They are, firstly, that the offence is not a confiscation offence because it was committed before the Act came into operation; secondly, the intention of the legislature and purpose of the Act is only to deprive people of unlawfully acquired property. In this case the proceeds of crime had been used and the respondent's present property was lawfully acquired; thirdly, if the Act applies, the sum of $100,000 is not a constituent of the respondent's wealth, the DPP being confined to the value of the money spent on the Japanese trip and the value of the substitute property.

16 Statutory provisions dealing with confiscation of property in connection with criminal activity have been equated with penal provisions and thus any ambiguity remaining after the ordinary rules of construction have been applied ought therefore to be construed in favour of the owner of goods: Beckwith v The Queen [1976] HCA 55; (1976) 12 ALR 333 at 339; Palfrey v McPhail & Anor [2004] WASCA 257 at [34].

17 The respondent contends that the term "confiscation offence" in s 141(1)(a) of the Act is "cast in the form of a prospective offence, an offence that has occurred effectively at the time of the Act". There is no warrant in the language of the section for that limitation. Further, it is expressly contradicted elsewhere in the Act. For example, s 5(2)(b) provides:

(a) ...

(b) whether the relevant confiscation offence was committed before or after the commencement of this Act."

18 This is reinforced in s 145(2)(b) and (c) set out above which expressly provide that a person has acquired a criminal benefit, whether or not the property was acquired or the confiscation offence committed before or after the commencement of the Act.

19 These provisions are to be contrasted with s 8(1) in Part 2 of the Act which refers to a person being declared a drug-trafficker as a result of a confiscation offence that was committed after the commencement of the Act.

21 The respondent relies on statements made in the second reading speech to the Criminal Property Confiscation Bill 2000 (which became the Act) in support of his contention that it is not the purpose of the legislature to deprive people of lawfully acquired property. The second reading speech states:

"The clear intention of the Bill is to deprive people of wealth which has been unlawfully acquired."

"The purpose of these provisions is to do no more than to ensure that a person is deprived of all unlawfully acquired property."

23 Those statements are made in the context of discussing the provisions of the Act relating to the confiscation of unexplained wealth, that is, when the value of a person's total wealth is more than the value of the wealth which has been lawfully acquired. However, in that context and generally the scheme of the Act is to identify and value the unlawfully acquired property and oblige the person to pay that amount to the State. All a person's assets, whether lawfully acquired or not, are available to satisfy this indebtedness.

24 The statutory scheme in relation to criminal benefits is illustrative. Section 4 deals with confiscable property. It is defined to include "certain property, services, advantages and benefits obtained by a person who has been involved in the commission of a confiscation offence ('criminal benefits' - see section 145)". Section 145(1) is set out earlier. Section 142(b) defines "confiscable property" as property owned or effectively controlled, or has at any time been given away, by a person who has acquired a criminal benefit. Based on ss 4, 142 and 145 of the Act, confiscable property includes property whether or not lawfully acquired or acquired as a result of a person's involvement in the commission of the confiscation offence.

25 This construction is supported by the scheme for freezing orders. The Court may make a freezing order for all or any property that is owned or effectively controlled by a person if an application has been made against that person for a criminal benefits declaration (s 43(3)(b)). To set aside such a freezing order the Court has to be satisfied that the person who is, or will be, the respondent to the criminal benefits declaration does not own or effectively control the property (s 84(1)). Any frozen property owned by a respondent is available to satisfy his liability under s 20 of the Act. Property is confiscated when it is taken or given in satisfaction of a person's liability under s 20 (s 6).

26 The clear legislative intention is that all property owned or controlled by the subject of a criminal benefits declaration is available to satisfy his indebtedness to the State under s 20 of the Act.

27 The issue is whether the DPP can claim a criminal benefits declaration in respect of the respondents' share of the proceeds of the offence in the sum of $100,000 (the money) when that money was used to acquire the substitute property.

28 The DPP contended that it was irrelevant what the respondent did with his share of the stolen money after he received it, relying on three cases: R v Lewis [2000] WASCA 9; (2000) 111 A Crim R 1 at 3, 4 and 9; Scott v Borsa, unreported; DCt of WA; MC56/90; 14 August 1990 at 4 and 5; John Edward Currey (1995) 16 Cr App R 421 at 424. None of these authorities are of any assistance in construing the relevant sections of the Act.

29 In order to obtain a criminal benefits declaration under s 17 of the Act, the DPP must prove that the property the subject of the application (namely, the money):

(a) is a constituent of the respondent's wealth; and

(b) was not lawfully acquired.

30 The second element is satisfied. As to the first element, the word "is" requires this Court to be satisfied that the money the subject of the application is, at the time of the declaration, a constituent of the respondent's wealth.

31 The consolidated explanatory notes to the Bill state it is essential for the effective operation of the Act that the constituents of a person's wealth is interpreted in the widest possible manner and without limitation on the manner in which wealth can be assessed and that s 143 "is necessary to achieve this end". While it is appropriate to have regard to this aid to interpretation, it cannot substitute for the language of the legislation (Director of Public Prosecutions v Logan Park Investments Pty Ltd (1995) 132 ALR 449 at 457).

32 The phrase "constituents of a person's wealth" is defined in s 143 as set out above. The State relies on s 143(1)(d). Pursuant to paragraph (d) the constituents of a person's wealth includes "all other property acquired by the person at any time, whether before or after the commencement of this Act, including consumer goods and consumer durables that have been consumed or discarded". The meaning of this paragraph is to be derived from its context. Paragraph (a) of s 143(1) refers to all property the person owns; par (b) to all property the person effectively controls; and par (c) to all property the person has given away. In that context, par (d) must be intended to cover property that is not at the relevant time owned or controlled by the person but which was owned or controlled by him at some earlier time, including, but not limited to, property that has been consumed or discarded. Prima facie par (d) is wide enough to include the money. This construction is supported by s 19(1) which provides a mechanism for assessing the value of property that has been "given away, used, consumed or discarded, or that is for any other reason no longer available".

33 Notwithstanding that s 17(1)(a) is cast in the present tense, it is clear from the statutory context that property no longer owned or controlled by the respondent at the relevant time is a constituent of his wealth. However, the respondent contended that par (d) is confined to property that has ceased to exist without its value or any part thereof being reflected in other property which would otherwise fall with par (a) to (d).

34 It is said this is necessary to avoid multiple counting of the value of property in its different exchange forms. This potential problem does not directly arise in the context of a criminal benefits declaration. However, valuing a person's total wealth (and their total lawfully acquired wealth) is part of the process of calculating a person's unexplained wealth under s 144 of the Act. The assessment of value of unexplained wealth is governed by s 13. Section 13(2) and (3) are in the same terms as s 19(1) and (2). It cannot be the legislature's intention that regard be had to property in its many exchange manifestations ("related property") in calculating a person's wealth. On the other hand, there is no reason in principle or policy to give primacy to property owned at the time of the declaration over previously owned property. To the contrary, to adopt the respondents' construction would exclude from the wealth calculus property that had been transferred for inadequate consideration.

35 It is against that background that the wide language of s 13(2) and (3) (and s 19(2) and (3) and s 143(1)(d)) fall to be construed. In my view, where specified property is no longer available but can be traced to related property owned by the respondent at the time of the declaration, the State can select the property to be valued and that will determine whether s 13(2) or (3) (or s 19(1) or (2)) applies. However, no account should be taken of the value of related property in the calculation of the value of unexplained wealth if that would lead to multiple counting of the same value. The selection of the property will be affected by whether the related property is of a lesser or greater value than the original property.

36 Finally, double recovery under a criminal benefits declaration is foreclosed by s 18 of the Act which materially provides:

"(1) The court is not to make a criminal benefits declaration in relation to any property, service, advantage or benefit if -

(a) a criminal benefits declaration has already been made in relation to the property, service, advantage or benefit."

37 The phrase "in relation to the property" is wide enough to preclude a criminal benefits declaration in respect of related property; that is, the DPP could not obtain a declaration in relation to both the money and (if it had a value) the substitute property. It was conceded by the respondent that s 18 was not an impediment to the grant of a s 17 declaration on the facts in this case.

38 In summary, I am not persuaded that a literal construction of s 143(1)(d) produces the result contended for. I see no justification for reading down the very wide language of s 13(2), s 19(1) and s 143(1)(d) to exclude property that has been used to acquire other (exchange) property. Further, it would be an odd result if the State was confined to recovering the reduced value of the exchange property (because, for example, the proceeds of crime were badly invested or disposed of at an undervalue) rather than the value of the proceeds of the crime. It should be noted I do not accept the DPP's submission that the prima facie value of the investment at the time it was acquired was the amount the respondent paid for it.

39 It was also contended for the respondent that this Court had a discretion as to whether or not to make a criminal benefits declaration. As is clear from the terms of s 17(1) of the Act, that is patently not so. If the material facts are proven to the requisite standard, a declaration must be made.

40 I am satisfied on the balance of probabilities that the sum of $100,000 is a constituent of the respondent's wealth and was not lawfully acquired. There is no evidence as to value of the money at the time it was used to purchase the substitute property. Accordingly, I declare pursuant to s 17(1) of the Act that the respondent has acquired a criminal benefit which I assess as being valued at $100,000.

41 At the hearing, the DPP made an oral application to dismiss an objection filed by the respondent to the confiscation of frozen property. It is said the respondent had not filed an affidavit in support. The objection may be linked with his submissions in this application. However, the matter was not addressed by the respondent before me. He should have the opportunity to consider his position on the objection in the light of these reasons. Accordingly, I do not propose to rule on that application.