MATTER : Section 7, s 30 and s 57 of the Criminal Property Confiscation Act 2000

BETWEEN : DIRECTOR OF PUBLIC PROSECUTIONS FOR WESTERN AUSTRALIA

Constitutional law - Whether legislation confers functions on courts incompatible with status of courts which may exercise federal jurisdiction - Whether legislation confiscating property in another State is beyond the legislative competence of Parliament - Extra­territorial effect of State legislation

Criminal Property Confiscation Act 2000 (WA), s 8, s 9, s 10, s 30 and s 58

Misuse of Drugs Act 1981 (WA), s 32A(1)

Commonwealth v Queensland [1975] HCA 43; (1975) 134 CLR 298

Durham Holdings Pty Ltd v State of New South Wales (2001) 205 CLR 399

Grollo v Palmer [1995] HCA 26; (1995) 184 CLR 348

Re Wakim; Ex parte McNally [1999] HCA 27; (1999) 198 CLR 511

Silbert v Director of Public Prosecutions for Western Australia [2002] WASCA 12; (2002) 25 WAR 330

1 PULLIN J: In this case, the Director of Public Prosecutions applies for a declaration pursuant to s 30 of the Criminal Property Confiscation Act 2000 ("Act") that property has been confiscated to the State of Western Australia by the operation of s 8 and s 10 of the Act and an order that the respondent be examined pursuant to s 58 of the Act.

(a) section 32A(1) of the Misuse of Drugs Act 1981 and s 8 and s 10 of the Act are invalid as they confer functions on both the Supreme Court and the District Court of Western Australia that are "incompatible" with the status of those courts as courts in which federal jurisdiction is also vested under Ch III of the Commonwealth Constitution; and/or

(b) sections 8 and 10 of the Act to the extent that they purport to confiscate property outside the territorial limits of the State of Western Australia and vest it absolutely in the State, are invalid.

3 The respondent is normally a resident of the State of Victoria. At the time of this hearing, he was in prison in Western Australia.

4 On 21 January 2002, in the District Court of Western Australia, the respondent was convicted on his own plea of conspiracy to possess 244 grams of heroin with intent to sell or supply it to another, contrary to s 6(1) and s 33(2) of the Misuse of Drugs Act 1981 (WA). This is a "serious drug offence" within the meaning of s 32A of the Misuse of Drugs Act, and as such he was liable under s 32A to be declared a "drug trafficker" upon the application of the applicant made within six months of that conviction.

5 On 6 February 2002, O'Sullivan DCJ sentenced the respondent to imprisonment for a period of 7 years with eligibility for parole.

6 On 26 March 2002, on the application of the applicant, O'Sullivan DCJ declared the respondent to be a "drug trafficker" pursuant to s 32A of the Misuse of Drugs Act.

7 As a result of that declaration, certain provisions of the Act then applied.

8 Section 8(1) provides:

"When a person is declared to be a drug trafficker under section 32A(1) of the Misuse of Drugs Act 1981 as a result of being convicted of a confiscation offence that was committed after the commencement of this Act, the following property is confiscated −

(a) all the property that the person owns or effectively controls at the time the declaration is made;

(b) all property that the person gave away at any time before the declaration was made, whether the gift was made before or after the commencement of this Act."

9 The offence of which the applicant was convicted was a "confiscation offence" within the meaning of the Act.

10 Section 10(1) provides:

"Property (except registrable real property) that is confiscated under section ... 8 vests absolutely in the State when the section takes effect in relation to the property."

11 Section 30 of the Act provides:

"(1) The DPP may apply to the court for a declaration that property has been confiscated.

(2) On considering an application, if the court finds that the property described in the application has been confiscated under section ... 8, the court must make a declaration to that effect."

12 Any proceedings on an application under the Act, are taken to be civil proceedings (see s 102(1) of the Act). In any proceedings under the Act, the court may have regard to a transcript of the evidence given in any proceedings for the offence, along with the sentencing transcript (see s 107 of the Act).

13 The task of the court in an application under s 30 for a declaration must determine on the evidence what property has been confiscated. That requires proof:

(a) that the respondent has been declared to be a drug trafficker under s 32A(1) of the Misuse of Drugs Act as a result of being convicted of a confiscation offence that was committed after the commencement of this Act (as to which there is no dispute);

(b) identifying the property that the person owned or effectively controlled at the time the s 32A(1) declaration was made and the property that the person gave away at any time before the declaration was made whether the gift was made before or after the commencement of the Act.

14 The only evidence before the Court identifying the property owned or effectively controlled by the respondent, is via an affidavit sworn 12 July 2002, filed on behalf of the applicant. The deponent is Ian Steve Jones, a Crown Prosecutor employed by the applicant. The respondent has not filed any affidavits. The respondent has, instead, concentrated all his submissions on the two legal contentions set out above.

15 The affidavit of Ian Steve Jones was read and received into evidence without any objection to the hearsay evidence contained in it. I asked counsel for the respondent whether he had any submissions to make about the affidavit, and although reference was made to the hearsay elements, no objection was raised. The respondent's failure to object means that this evidence may be used as proof to the "extent of whatever rational persuasive power it may have": Jones v Sutherland Shire Council [1979] 2 NSWLR 206 at 219. The evidence so received is to be treated as if it were admissible evidence: "Cross on Evidence" [1650] and [1665].

16 At the time of the respondent's arrest on 7 June 2001, officers of the Victorian police searched his residence at 26 Swan Avenue, Westmeadows, in Victoria and seized property, and in particular the cash and chattels described in items (1) to (46) of par 1(c) of the notice of originating motion. There was no evidence of any other person being resident at the Westmeadows address, and I infer, as a result, that the respondent was the sole resident and was therefore in possession of the cash and chattels so described. Possession is prima facie proof of ownership. The police may have taken control of the property, but ownership remained with the respondent until 26 March 2002.

17 Mr Jones deposes to the fact that "enquiries by Western Australian Police have established that [the respondent] owned the following additional property as at 26 March 2002 ... 1990 Harley Davidson XLH120 Solo motorcycle Victorian registered number WY624". Exhibited to the affidavit was a true copy of an extract from the Victorian Registered Vehicle records in relation to the vehicle stating that the "Current Owner" of the motorcycle was the respondent as at 2 August 2001 and that this had been acquired on 13 October 1995. There was no objection to the form of any of this evidence, and from it I conclude that the respondent was the owner of the motorcycle at the time the s 32A declaration was made on 26 March 2002.

18 Paragraph 10 of the affidavit of Mr Jones deposes to the fact that "Enquires by Western Australian Police have established that [the respondent] operated [Australian and New Zealand Banking Group Access cheque account number 5586-28569] ..." as at 26 March 2002. There was no objection to this evidence, and from it I infer that the respondent owned, or effectively controlled, the chose in action relating to the account.

19 By this application, the applicant seeks a declaration that the Harley Davison motorcycle, the chattels and cash and the balance of the funds in the ANZ account, have been confiscated to the State of Western Australia under s 8 of the Act.

20 In addition, the applicant seeks an order pursuant to s 58 of the Act that the respondent be ordered to attend before the Supreme Court to be examined about the wealth, liabilities, income and expenditure of the respondent on the ground that he had been convicted of a confiscation offence or is a declared drug trafficker, and as to the nature, location and source of any property tracking documents - such order to be made pursuant to s 58(1)(c) and (f) and (g).

21 In addition, orders are sought that the applicant serve on the respondent, all documents necessary to effect a transfer of the motorcycle into the name of the State of Western Australia; that within seven days of service of the documents just referred to, the respondent execute or serve documents to effect the transfer of the motorcycle; and that the respondent deliver or cause to be delivered to the applicant, the registration papers for the motorcycle.

22 Further, an order is sought that the respondent advise in writing of the location of the motorcycle and the keys for the motorcycle, and that the respondent within seven days of the order deliver up, or cause to be delivered up, the Harley Davison motorcycle and associated keys.

(a) section 32A(1) of the Misuse of Drugs Act 1981 and s 8 and s 10 of the Act are invalid as they confer functions on both the Supreme Court and the District Court of Western Australia that are "incompatible" with the status of those courts as courts in which federal jurisdiction is also vested under Ch III of the Commonwealth Constitution; and/or

(b) sections 8 and 10 of the Act to the extent that they purport to confiscate property outside the territorial limits of the State of Western Australia and vest it absolutely in the State, are invalid.

24 The respondent's contentions begin with the proposition that while the State legislature, within the limits of its own Constitution, may confer non-judicial power and function on State courts, it is not free to confer power and functions that are in violation of the "principles that underlie Chapter III" of the Constitution or are incompatible with those principles: Kable v Director of Public Prosecutions for New South Wales [1996] HCA 24; (1996) 189 CLR 51 at 98, 102-104, 114-115, 133, 144. It has been held that incompatibility will occur if, for example, public confidence in the integrity of the judicial process is eroded (98 per Toohey J and 107 per Gaudron J), or State courts are perceived to have lost their institutional independence and impartiality from their own State legislature or executive government (116-117 and 121 per McHugh J and 133 per Gummow J), or, by reason of the nature of the function conferred, the court loses its identity as a court (117 and 122 per McHugh J).

25 The principle which may be derived from the majority judgments in Kable is that a State Supreme Court is one of the judicial institutions invested with federal jurisdiction, and it may not act in a manner inconsistent with the requirements of ch III of the Constitution: Re Criminal Proceeds Confiscation Act 2002 (Qld) [2003] QCA 249.

26 The respondent submits that a declaration under s 32A of the Misuse of Drugs Act and the consequences that flow from that declaration (via s 8, s 9, s 10 and s 30 of the Act) is entirely at the discretion of the executive government; that the court has no discretion but to make the appropriate declaration under s 32A; that the same applies to a declaration under s 30 of the Act; that the provisions do not provide for equality of treatment under the law; that the punishment imposed may adversely affect third parties in the absence of any judicial determination or process; that the court is apt to be seen as but an arm of the executive which implements the will of the legislature, sapping the appearance of institutional impartiality and maintenance of public confidence; and that, other than as acting as a rubber stamp for the executive government, the court serves no purpose.

27 The respondent further submits that the consequence of the requirement that State courts give effect to these provisions, means that public confidence in the integrity of the judicial process will be eroded and institutional independence and impartiality of the court will be lost, and the identity of the court is jeopardised. The respondent therefore submits that the court is required to exercise functions and powers that are incompatible with the principles to be found in ch III of the Constitution. As a result, it is submitted that the impugned provisions are invalid and the declaration and orders sought should be refused.

28 The Misuse of Drugs Act 1981 and the Act work in the following way. First, a declaration is made by the District Court under s 32A. If such a declaration is made, then confiscation occurs and property vests in the State, not as a result of any judicial act but by reason of the operation of the legislative provisions found in s 8 and s 10 of the Act. However, the operation of s 8 and s 10 does not identify the property which is confiscated. The final step involves the DPP seeking a declaration from this Court under s 30 of the Act to identify the property which has been confiscated.

29 Section 32A(1) of the Misuse of Drugs Act 1981 is, in all material respects, the same as it was when that section was considered in R v Rowe (1992) 5 WAR 491. The issue in that case was whether the section had retrospective effect or not. That is not an issue in this case. Under the present legislation, the court does not order the confiscation of property. At the time of R v Rowe (supra), the declaration that a person was a "drug trafficker" had no effect on the status or condition of a person, because nothing of consequence happened until a confiscation order was made by the court pursuant to s 10 of the Crimes (Confiscation of Profits) Act 1988. I should mention that an attack on the provisions of the latter Act by invoking the principles in Kable's case failed in this Court and a recent application for leave to appeal to the High Court failed: see Silbert v Director of Public Prosecutions for Western Australia [2004] HCA 9. Under the current legislation, while the declaration that a person is a "drug trafficker" itself has no effect on status or condition, there is, however, an immediate consequential effect by reason of s 8 of the Act.

30 Having noted the effect of s 32A, I move on to consider the attack which the respondent makes on the legislation. The respondent relies on Kable's case and points out that the reasoning of the majority in Kable was not confined to the character of the function or power conferred by a State law, and points to the fact that some of the reasoning refers to, and encompasses, the manner in which a function or power is to be performed. As to which, see John Fairfax Publications Pty Ltd v Attorney-General (NSW) [2000] NSWCA 198; (2000) 181 ALR 694.

31 In my opinion, the declaration which the District Court makes under s 32A is of a character or is a function known to the law. It authorises the court to make a declaration with reference to present or past facts and under laws already existing. The declaration is a conclusive or final decision based on a concrete and established or agreed situation which quells controversy. That is a judicial decision. See R v Davison [1954] HCA 46; (1954) 90 CLR 353 at 370; Huddart Parker & Co Pty Ltd & Appleton v Moorehead [1909] HCA 36; (1909) 8 CLR 330 at 357 and Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 at [45]. That was not disputed by the respondent.

32 The respondent, however, points to the manner of the exercise of the court's jurisdiction under s 32A(1). The respondent points to the fact that if the facts are established, the court is obliged to make the declaration sought. It is contended that this makes the District Court a rubber stamp for the executive government because the court has no task to perform other than making the declaration. I disagree with that submission. The court may not make the declaration unless the person has been convicted of the kind of offence described in s 32A(1). The respondent's submission boils down to a complaint that it is too easy for the DPP to establish that fact because it is a matter of court record. In my opinion, just because a fact is easy to establish does not meant that the court becomes a "rubber stamp".

33 The next submission was that the court has no discretion to decide whether or not it will make a declaration. True it is that under the general law a court does have a discretion about whether or not to make a declaration. However, there is no reason why Parliament may not remove that discretion. There is nothing surprising about legislative action of that kind. Further, the existence of a discretion is a limit on the court's power to make a declaration, rather than an essential condition which must exist before the power exists. See Lord Sterndale MR's judgment in Hanson v Radcliffe Urban District Council [1922] 2 Ch 490 at 507, where he said:

"In my opinion ... the power of the Court to make a declaration, where it is a question of defining the rights of two parties, is almost unlimited; I might say only limited by its own discretion."

34 See also Forster v Jododex Australia Pty Ltd [1972] HCA 61; (1972) 127 CLR 421 at 438. Thus, if s 32A of the Misuse of Drugs Act 1981 does remove the court's discretion to make a declaration, it merely removes a limit on the court's power.

35 In my view, if the court has no discretion to refuse to make the declaration once the necessary facts are proved, this does not make the exercise of its functions and powers incompatible with the principles under ch III of the Constitution.

36 The next submission was that the court is obliged to apply the law unequally. The submission that there was inequality was based on the submission that a first-time drug trafficker suffers the same confiscation as does a recidivist drug trafficker. In my opinion, there is no inequality. A person who is declared to be a drug trafficker is treated by the legislation in exactly the same way as another person who is declared to be a drug trafficker. The court does not by its judgment, bring about confiscation. That occurs by operation of the legislation.

37 A further submission was that an innocent person who is gifted property by a drug trafficker, which property was acquired by moneys lawfully earned by the drug trafficker after the commission of the offence, will suffer confiscation of that property. That may be so. However, a State legislature is able to confiscate property without compensation: New South Wales v Commonwealth [1915] HCA 17; (1915) 20 CLR 54.

38 My conclusion is that there is nothing in the Misuse of Drugs Act or, if it is permissible to look beyond that Act to the provisions of the Act which works confiscation, there is nothing in the combination of the two Acts which erodes public confidence in the integrity of the judicial process, which leads to the loss of institutional independence and impartiality of the District Court or whereby the identity of the District Court is jeopardised.

39 Similarly, there is nothing in the Kable principle which can support any attack on the role of the Supreme Court in making a declaration under s 30 of the Act. There is very good reason for legislation authorising a declaration to be made about the property confiscated as a result of the operation of s 8 and s 10 of the Act. A s 30 declaration identifies property which has been confiscated. A s 30 declaration declares what property has been confiscated by reference to past facts and under laws which already exist. For the reasons that I have mentioned in relation to the District Court declaration, the mere fact that the Court has no discretion to refuse to make a declaration, will not lead to the erosion of public confidence in the integrity of the judicial process and will lead to no loss of institutional independence or impartiality and will not jeopardise the identity of the court.

40 I would therefore reject the respondent's first contention.

41 This second contention is an attack on the provisions of s 8 and s 10 of the Act. It is submitted that these are beyond the legislative competence of the State.

42 There is a presumption that legislation does not have extra-territorial effect: R v Jameson [1896] 2 QB 425 at 430; Australian Securities Commission v Bank Leumi Le-Israel (1995) 134 ALR 101 at 123. On the other hand, there is no question that a State of the Commonwealth may legislate extra-territorially if it expressly, or by clear implication, states that it is doing so, and thereby displaces the presumption: s 2 of the Australia Act 1986; Union Steamship Co of Australia Pty Ltd v King [1988] HCA 55; (1988) 166 CLR 1 at 14; Parker v Tranfield [2001] WASCA 233; ASC v Bank Leumi case. There are, however, limits on the right to legislate extra-territorially because of s 5(a) of the Australia Act 1986, which provides that the law-making power of a State is subject to the Constitution. The High Court has held that a State may legislate extra-territorially only if there is some connection between the subject-matter of the legislation and the State. See Union Steamship at 14. However, once there is a sufficient connection, it is for the legislature to decide how far it will go: Union Steamship case (supra) at 14 and Broken Hill South Ltd v Deputy Commissioner of Taxation (NSW) [1937] HCA 4; (1937) 56 CLR 337 at 375.

43 Section 5(3) and s 128(1) of the Act make it clear beyond question that the Western Australian legislature intended that the Act should have extra-territorial effect to the fullest extent possible. In this case, the relevant subject of the legislation is the confiscation of property in another State of a person convicted of a serious offence and who has been declared a drug trafficker in the District Court of Western Australia. In my opinion, that provides sufficient connection to authorise the making of legislation which has the territorial effect of confiscating property of the drug trafficker. Whether the legislation does work such a confiscation is, however, a matter to be further considered.

44 The respondent submits that s 8 and s 10 of the Act are beyond the legislative competence of the State because the Parliament has no capacity to confiscate property outside this State. In support of this submission, the respondent points to a passage in the reasons for decision of Brennan CJ in Newcrest Mining (WA) Ltd v The Commonwealth [1997] HCA 38; (1997) 190 CLR 513 at 543-545, where his Honour said at 543:

"The competent legislative authority of a law area is the authority which alone can enact a law which determines the ownership of property within that area ... [that] no legislature in an Australian State has power to enact laws for the compulsory acquisition of property in another State or Territory."

45 The respondent also refers to Attorney-General (NZ) v Ortiz [1984] 1 AC 1 and Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (No 2) [1988] HCA 25; (1988) 165 CLR 30.

46 These authorities do not support the respondent's submission.

47 Ortiz's and Heinemann's were cases concerning proceedings by a foreign State (New Zealand in Ortiz's case and the United Kingdom in Heinemann's case) to enforce legislation in another jurisdiction (England in Ortiz's case and Australia in Heinemann's case). They were not cases about the capacity of a legislature to legislate extra-territorially. In Heinemann's case at page 40, the High Court said:

"The principle that domestic courts will not enforce a foreign penal or public law (has been stated) in these terms: 'English courts have no jurisdiction to entertain an action: (1) for the enforcement, either directly or indirectly, of a penal, revenue or other public law of a foreign State; ...' The rule is associated with a related principle of international law, which has long been recognized, namely that, in general, courts will not adjudicate upon the validity of acts and transactions of a foreign sovereign State within that sovereign's own territory."

48 At page 41 in Heinemann's case the Court said:

"The jurisdictional origins of the rule are well illustrated by the distinction which underlies the line of cases concerning title to, or possession of, property the subject of confiscation or seizure by a foreign government. The principle denies jurisdiction in a court to determine a claim of title to the property based on the operation of a statute or executive act of the foreign State on that property outside the territory of the foreign State. It is otherwise when the claim of title is based on an exercise of sovereign authority with respect to the property within the territory of the foreign State."

49 It is clear also that Brennan CJ in the Newcrest Mining case was speaking of the refusal of courts to enforce foreign government interests. Immediately after the passage in Newcrest which is quoted above, his Honour referred to the principles of international law stated in Heinemann and referred to in the passages from that case which I have quoted above.

(a) The legislature is presumed not to intend to legislate extra-territorially.

(b) The legislature may, however, overcome the presumption by expressly, or by implication, legislating extra-territorially to confiscate property in a foreign jurisdiction. That has happened in this case.

(c) If an attempt is made to enforce the legislation in the court of a foreign jurisdiction, that court might not enforce it. I express no views about whether or not, within Australia, one State will apply that rule of international law. That is not in issue in this case. On this subject, see Nygh & Davies "Conflict of Laws in Australia", 7th Ed, 18.3.

51 I therefore conclude that the provisions of s 8 and s 10 of the Act are not beyond the legislative competence of the State.

52 The task before me is to decide whether or not property has been confiscated. "Confiscation" in its ordinary meaning is "to seize as forfeited" (Macquarie Dictionary).

53 Property is defined in the Act to mean:

"(a) real or personal property of any description, wherever situated, whether tangible or intangible; or

(b) a legal or equitable interest in any property referred to in paragraph (a)."

54 All of the property referred to in the amended originating motion is personal property. I find that the applicant was declared to be a drug trafficker under s 32A(1) of the Misuse of Drugs Act 1981 as a result of being convicted of a confiscation offence committed after the commencement of the Act. I also find that the property identified in pars 1(b), (c) and (d) of the amended originating motion was owned, or alternatively effectively controlled, by the applicant at the time the declaration was made on 26 March 2002. I will therefore declare that all of the property referred to in pars 1(b), (c) and (d) has been confiscated to the State of Western Australia by the operation of s 8 of the Act.

55 A declaration is also sought that "all other property not referred to in paragraphs 1... (b) to 1(d) inclusive hereof that [the respondent] owned or effectively controlled at the time he was declared to be a drug trafficker under section 32A(1) of the Misuse of Drugs Act 1988 on 26 March 2002 or given away by [the respondent] at any time prior to 26 March 2002", is confiscated. There was no separate issue raised about this latter proposed declaration or the other orders or declarations sought in the amended motion. I will make all of the orders and declarations sought by the applicant.