MATTER : Crimes (Confiscation of Profits) Act 1988 (WA)

BETWEEN : DIRECTOR OF PUBLIC PROSECUTIONS FOR WESTERN AUSTRALIA

STUART ANTHONY SILBERT as Executor of the Estate of STEPHEN RETTEGHY (Dec)

Criminal law and procedure - Jurisdiction, practice and procedure - Pecuniary penalty order - Application for release of funds - Crimes (Confiscation of Profits) Act 1988 (WA) - Constitutional challenge - Person charged with criminal offences now deceased - Revelation of illegal drug sales - Funds required to meet costs of defending an action - Assets of deceased restrained - Reasonable costs and expenses of defending a criminal charge - Costs to be calculated by reference to the Rules of the Supreme Court - Liberty to apply

Crimes (Confiscation of Profits) Act 1988 (WA), s 3(2), s 3(5), s 6(1)(b), s 15(1), s 20(9), s 20(9a), s 22(1), s 22(4)

Release of reasonable funds to cover costs of civil trial

Commonwealth v John Fairfax & Sons Ltd [1980] HCA 44; (1980) 147 CLR 39

DPP v Vella [1993] SASC 4353; (1993) 70 A Crim R 241

Frank Robert Webb & Anor v The Commonwealth of Australia & Anor [1996] HCA 17; (1999) 10 Leg Rep 20

Union Bank of Australia v Harrison, Jones and Devlin Ltd [1910] HCA 44; (1910) 11 CLR 492

1 SCOTT J: The solicitors for the defendant in this application have applied for the sum of $65,304.20 to be released to the defendant. The purpose for the release of that money is so that the defendant can retain counsel and defend proceedings in another civil action between the parties. That action, CIV 1131 of 1988, is an action brought by the same plaintiff against the same defendant for a pecuniary penalty order. The basis upon which that order is sought will be discussed later in these reasons. Counsel for the defendant has indicated that in action CIV 1131 of 1988, he wishes to argue a constitutional point to challenge the constitutionality of the Crimes (Confiscation of Profits) Act 1988 (WA) ("the Confiscation Act").

2 To understand how this application is mounted, it is necessary to explain some of the background to the proceedings.

3 Stephen Retteghy ("Retteghy") was charged on indictment that:

"1 Between 1 September 1995 and 2 April 1996 at Guilderton he cultivated a quantity of cannabis plants with intent to sell or supply cannabis to another.

2 And further that on 2 April 1996 at Guilderton he had in his possession a quantity of cannabis with intent to sell or supply it to another."

4 It is common ground that Retteghy died prior to trial and that he left assets in Western Australia (being shares and real estate) valued at between $250,000 and $350,000.

5 Counsel for the plaintiff maintains that in the course of the police inquiry, a diary of Retteghy was uncovered which revealed sales of illegal drugs to the value of $265,000. It follows, so counsel contends, that the plaintiff seeks a pecuniary penalty order for that sum from the estate of the deceased.

6 Counsel for the defendant maintains that his instructions are to defend the civil action and to take the constitutional point. In that respect he has already briefed senior counsel who, subject to the estate being sufficiently funded, is instructed to defend the proceedings in CIV 1131 of 1998.

7 An order has been made by a Registrar of this Court permitting the solicitors for the defendant to apply the sum of $40,000 towards the payment of legal fees incurred to date. Included in those legal fees is an account from senior counsel which includes "my counsel fees on supplementary advice concerning validity of the provisions of Crimes (Confiscation of Profits) Act (1988)". It follows that senior counsel has already done some work in relation to the constitutional point which is proposed to be pursued in the civil proceedings.

8 To understand the way in which these proceedings have arisen, it is necessary to examine the provisions of the Confiscation Act.

9 Section 3 of the Confiscation Act provides:

"3(2) For the purposes of this Act, a person is to be taken to have been convicted of a serious offence if -

(d) the person has been charged with the offence but before the charge is finally determined, the person has absconded.

3(5) For the purposes of this Act a person shall be taken to abscond in connection with an offence if, and only if, -

(i) the person dies without the warrant being executed or after the execution of the warrant or in the case of a person arrested without warrant, after that arrest."

10 The effect of those provisions, as I understand them, is that in the present circumstances, where the deceased died after an order committing him for trial, he is, by that section, to be taken to have been convicted of a serious offence by reason of his death.

11 Under the provisions of s 6(1)(b) of the Confiscation Act, the Director of Public Prosecutions is seeking a pecuniary penalty order on the basis of the deemed conviction.

12 By s 15 of the Confiscation Act, provision is made for such an order:

"15(1) If an application is made to a court under section 6(1)(b), the court may if it considers it appropriate -

(a) assess the value of the benefits derived by the person against whom the application is made as a result of the commission of the serious offence in reliance on which the application is made or any other unlawful act."

13 It follows from these provisions, so counsel for the plaintiff argues, that the plaintiff is entitled to a pecuniary penalty order in the sum of $265,000, being the extent of the benefits obtained by the deceased as a result of his trading in illegal drugs.

14 It is common ground that an order has been obtained by the plaintiff restraining the whole of the assets of the deceased for the purpose of the confiscation proceedings. The sum of $40,000 has, however, already been released to the solicitors for the defendant in the course of the confiscation proceedings.

15 The solicitors for the defendant have deposed to the fact that the $40,000 released from the estate has been used to pay legal fees for the defendant's solicitors, together with counsel fees to senior counsel, referred to earlier. In addition, the sum of $24,528.46 has been used to defray the liabilities of the estate, which includes the expenses with respect to the maintenance of the estate and the legal costs occasioned by the administration of the estate.

16 The executor of the deceased's estate deposes that he is not in a position to fund the legal fees for the trial in CIV 1131 of 1998 without further moneys being released to him.

17 The civil proceedings have been set down for a period of three days and there is evidence that the fee for senior counsel for the three-day hearing will be $28,000. In addition, the solicitor's fee for getting up and attending the hearing are estimated at $12,000. There is a further account outstanding to the solicitors for the defendant in the sum of $21,235.20 for the services incurred by the defendant's solicitors between 30 September 1998 and 4 October 1999. That account has not been paid. In addition, a further sum of $7,069 has been incurred since that date and those fees remain outstanding. It follows that the defendant seeks the release of $65,000 to meet these costs.

18 The question that falls for consideration in this application is whether there is any power to release funds for this purpose.

19 Section 20(9) and s 20(9a) of the Confiscation Act provide:

"20(9) Subject to subsection (9a) a restraining order may provide for meeting the reasonable living and business expenses of the person whose property the order applies to, and the reasonable cost and expenses of the person defending any criminal charge.

(9a) A restraining order shall not make the provision referred to in subsection (9) unless the person against whom the restraining order is made satisfies the Supreme Court that he or she cannot meet the reasonable living and business expenses, and the reasonable cost and expenses, referred to in that subsection out of property to which the restraining order does not apply."

20 It is common ground that the whole of the assets of the deceased have been restrained and it is not in dispute that the estate is unable to meet the reasonable costs and expenses of defending CIV 1131 of 1998.

21 Because there is some dispute as to whether the civil proceeding in CIV 1131 of 1998 comes within the provisions of s 20(9) of the Confiscation Act, counsel for the defendant has referred the court to the provisions of s 22(1) of the Confiscation Act which it is contended gives the court wider powers. Before returning to that section, however, it should be pointed out that the plaintiff's submission in relation to s 20(9) of the Confiscation Act is that the release of funds for the purpose of defending civil proceedings, does not fall within the provisions of s 20(9) of the Confiscation Act because those expenses cannot be said to be "the reasonable cost and expenses of the person defending any criminal charge". The reason for that submission is that it is argued that civil proceedings are not part of the defence of a criminal charge.

22 Because of this difficulty, counsel for the defendant referred the court to the provisions of s 22 of the Confiscation Act which provides:

"22(1) The Supreme Court may, when it makes a restraining order or at any later time -

(a) on application made to it, make such orders in relation to the property to which the restraining order relates as it considers just;"

23 Section 22(4) provides:

"Examples of the kind of order that the Supreme Court may make under subsection (1) are -

(a) an order varying the property to which the restraining order relates;

(b) an order varying any condition to which the restraining order is subject;"

24 It is contended by counsel for the defendant that if the provisions of s 20(9) are to be construed narrowly, so as to prevent the release of funds for the present purpose, s 22(1) is a wider power which would authorise the making of such an order.

25 It was pointed out by counsel for the defendant that s 22(1) is not conditioned by any requirement that the amount to be released should be reasonable, as would be the case if the power was exercised under s 20(9).

26 There have been very few decisions under the corresponding provisions of such legislation that counsel have been able to uncover. However, those that they have been able to identify are of assistance.

27 In Parker v R (1994) 75 A Crim R 437, Beach J had occasion to consider the equivalent provisions of the Victorian legislation. That case involved money obtained when the respondent, following conviction, sold her story to a magazine and television channel. The respondent sought to use the funds so obtained to defend an application by the Director of Public Prosecutions for forfeiture. Beach J held at 446:

"In my opinion, the defence of applications for restraining orders or pecuniary penalty orders by an accused or convicted person are merely an extension of that person's defence to the actual charges themselves. If that view is erroneous I would make the orders I propose to make pursuant to the provisions of s 18(1) of the Act which reads:

'The Supreme Court may, when it makes a restraining order or at any later time -

(a) on application made to it, make such orders in relation to the property to which the restraining order relates as it considers just'."

28 Beach J also at 446 referred to the basis upon which the funds were obtained in that case and said:

"Finally, as to the suggestion that the case is analogous to the bank robber caught red-handed with the funds of others, I simply say that it is not. The moneys in question have not been stolen or unlawfully obtained by the respondent. They have been paid to her or are owing to her pursuant to the contracts lawfully entered into by the respondent and the proprietors of the magazine and TV channel in question."

29 The distinction between Parker's case and this is obvious. In this case, if the plaintiff's contentions are established then the pecuniary penalty order sought would directly apply to moneys which it is said the deceased obtained from the illegal sale of drugs. In Parker's case, no such consideration arose. The issue, however, is whether that distinction is sufficiently important in this case to distinguish Parker's case. I will return to that issue shortly.

30 In Duggan v R [1996] SASC 5546; (1996) 86 A Crim R 457, the Supreme Court of South Australia comprising Cox, Matheson and Debelle JJ, had occasion to consider the equivalent statutory provisions in South Australia.

31 The defendant in that case had been charged with drug offences and with having in her possession money reasonably suspected of having been stolen or unlawfully obtained. The money was restrained by order of the court and the defendant applied for access to the money for the purpose of applying it to her legal expenses. Cox and Matheson JJ held at 459:

"I have referred to the amplitude of the court's powers to make or modify a restraining order under s 6 of the Crimes (Confiscation of Profits) Act and I have indicated that, in my opinion, it would not normally be appropriate for the court to release property where it appears to the court that it was obtained by theft or fraud or other such means. I would not ordinarily include in that category property that appears to be the proceeds of illegal drug dealings. Even where a person's possession of such drug-related property has resulted in his being charged with unlawful possession, I would draw a distinction between such a case and the theft-type cases. In the latter there is a victim who will have a lively and enforceable interest, directly or indirectly, in the property in question."

32 The argument in Duggan's case arose because it was contended by the Director of Public Prosecutions that the defendant had no right to the money concerned. It was contended that the money in that case was obtained from the sale of illegal drugs, although no charges directly relating to those sales were laid against the defendant. Cox and Matheson JJ held at 459:

"Whether, in fact, an order should be made will be a matter for the court's judgment after weighing the competing interests of the parties and, in some cases perhaps, of any interested third person. If it appears to the court that the property is stolen property or was obtained by fraud or in some other dishonest way (using that term in its narrower sense of conduct akin to stealing and fraud), so that it is likely that some innocent third party has a legitimate claim on or with respect to it, then the court will hardly be disposed to exercise its discretion in the defendant's favour:"

33 Debelle J, in separate reasons, dealt with the matter in more detail at 465:

"The conclusion that the complaint for unlawful possession is not a bar to the defendant's application does not, of course, mean that the application should necessarily be granted. It will be relevant for the court to examine other relevant factors. In NSW Criminal Commission v Younan, [(1993) 31 NSWLR 44; 68 A Crim R 225] the Court of Criminal Appeal in New South Wales identified some of the factors which, according to the circumstances of each individual case, could be relevant in the exercise of the discretion whether or not to order the release of moneys or other assets to fund the defence of the defendant. They include:

1 The purposes of the Act including the preservation of property allegedly derived in whole or in part from criminal activities;

2 The reasonable demands of a person for access to that person's own property for legal expenses incurred in defending the criminal charges;

6 The effect of any exemption upon the achievement of the purposes of the Act which is to restrain the disposable property to abide orders under the Act following the completion of the proceedings."

"However, there may be factors which affect the discretion whether to exercise the power. In the exercise of its discretion, the court will not make such an order where the property is stolen and may not be inclined to make an order where the property in question might be used as evidence. When considering how it should exercise its discretion, the court is at liberty to have regard to other factors including, but not necessarily limited to, those identified by the Court of Criminal Appeal of New South Wales in NSW Crime Commission v Younan."

35 As I have already indicated, this matter is not without its difficulties. On the face of it, the words "reasonable cost and expenses of the person defending any criminal charge" in s 20(9) are not apposite to the defence of civil proceedings.

36 Beach J in Parker's case was clearly conscious of that problem in the passage to which I have earlier referred. On the other hand, the powers contained in s 22(1) of the Confiscation Act when examined in their totality appear to be machinery provisions to enable the court to deal with the problems that arise from time to time after restraining orders are made, rather than provisions of general application.

37 On balance, although with some hesitation, I have come to the conclusion that the appropriate course is to grant the defendant an order under s 20(9) of the Confiscation Act on the basis that the expenses of defending the proceedings in CIV 1131 of 1998 are sufficiently analogous to the expenses of defending a criminal charge to enable the application to fall within that section. I am not persuaded that s 22 of the Confiscation Act set out earlier in these reasons is, or is intended to be, a section of general application to enable the court to deal with property restrained in an unfettered manner. I have reached that conclusion because of the detailed provisions in s 22(4) which provides for examples of the kinds of order that may be made under that subsection.

38 It follows that any amount released to the defendant must be conditioned by the requirement that the payment is only for reasonable costs and expenses, as referred to in s 20(9) of the Confiscation Act. As I have indicated, the civil action is listed for three days and I am told by counsel that the hearing is due to commence on 19 June 2000. As a constitutional issue is to be raised in those proceedings, it is not unreasonable that the defendant should have the services of senior counsel to conduct the defence. As I have indicated, counsel's fees in that respect are estimated at $28,000. The claim for $14,000 of the first day of trial is in accordance with item 14(b) of the scale of costs in the schedule to the Rules of the Supreme Court. The second or subsequent days are shown in the same schedule at $3,500 per day. In the circumstances of this case, I can see no reason why the allowances should exceed the scheduled item. It follows, in my opinion, that senior counsel should be allowed the sum of $21,000 for the three-day trial. In addition, some allowance needs to be made for the solicitors' costs and the other necessary costs that will be involved in the preparation of the matter for trial.

39 Taking all of the matters into account, I am of the view that a sum of $40,000 should be released to the defendant to fund the costs of the forthcoming trial in the Supreme Court. I will, however, grant liberty to apply to the defendant in the event that the trial runs beyond the scheduled three days or that for some unforeseen reason the expenses exceed those that can be reasonably anticipated.

40 I will hear the parties as to any further orders necessary to enable the funds to be released.