DPP (Cth) v Helou, DPP

• 16 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION COMMON LAW LIST

JUDGMENT 1 SHAW J: These two proceedings have been heard jointly in order to determine a significant question of law which arises under the Proceeds of Crime Act 1987 (Cth) (the Act), and, in particular, whether the defendants, whose property has been forfeited to the Commonwealth under s 30 of the Act have "an interest" in the property and therefore whether they are able to apply pursuant to s 31 of the Act for certain ameliorative measures under the Act to which I shall turn. 2 There is no doubt that this is an important case concerning the construction of Commonwealth legislation conferring wide powers to confiscate the "proceeds of crime". 3 Any constitutional challenges which were tentatively advanced in relation to the Commonwealth legislative regime have been expressly abandoned. 4 In relation to one of the defendants (Mr Helou) the chronology is not in dispute: 30 March 2000 Restraining order issued over the Defendant's interest in property pursuant to the Proceeds of Crime Act 1987 (the Act). 7 February 2001 Restraining order extended to cover the Defendant's interest in $40,000.00 cash. 26 November 2001 Defendant enters a plea of guilty to possess prohibited import (cocaine).

26 May 2002 Defendant's property covered by the Restraining Order of 30 March as extended on 7 February 2001 forfeited to the Commonwealth pursuant to the provisions of section 30 of the Act. 13 August 2002 Defendant sentenced to five (5) years imprisonment. 12 February 2003 Motion filed seeking extension of time and orders pursuant to section 484 of the Act. 29 September 2003 Hearing before the Court of Appeal, on the question of the date of the Defendant's conviction. 16 October 2003 Judgment of the Court of Appeal, Director of Public Prosecutions v Elias Helou NSWCA 301 23 October 2003 Declaration made pursuant to section 30(8A) in respect of the property of the Defendant covered by the Restraining Order of 30 March (as extended). 23 October 2003 Amended Motion filed by the Defendant seeking relief pursuant to section 31(6)(b) of the Act and in the alternative section 31(7). 5 The first question which arises in these proceedings is whether the court has power to entertain the application by Mr Helou, the defendant in proceedings commenced by the (Cth) Director of Public Prosecutions (DPP) under the Act, providing for an automatic forfeiture of the property of the defendant, which is the subject of a restraining order, at the expiration of six months from the defendant's conviction, unless an extension obtainable under s 30A of the Act has been obtained, in which case automatic forfeiture will occur no later than fifteen months after the conviction. A relevant restraining order has been made here: see the judgment of Greg James J on 8 August 2003 in DPP v Helou [2003] NSWSC 301. Thus the question arose as to at which in point in time there was a conviction for the purposes of the Act. This question was resolved when the judgment of the Court of Appeal in DPP v Helou [2003] NSWCA 301 held that: the course taken by his Honour Judge Kinchington on 6 November 2001 of remanding Mr Helou in custody for sentence, was a conviction for the purposes of the Act. It matters not that there was not complete finality about the matter or that Mr Helou had an opportunity to seek to change his plea up until the time when he was formerly convicted and sentenced.

Hence, the court answered the question as to whether Mr Helou was convicted for the purposes of Act earlier than 13 August 2002 in the affirmative and determined that Mr Helou had been convicted for the purposes of the Act on 26 November 2001. As I understand it, a comparable position applies with respect to Mr Solomons, that is to say subject to questions of the locus standi , his application for relief from forfeiture under the Act is not debarred in relation to time limitation, and the court is empowered to deal with it. If there are said to be any material differences between the Helou case (determined by the Court of Criminal Appea) and the position of Mr Solomons in this respect, I would give leave to apply so that could be considered. As at present advised, it seems that the adjudication of the Court of Criminal Appeal applies to both cases before me. 6 The remaining question therefore is the correct interpretation of s 31 of the Act. 7 It is necessary to set out the relevant statutory provisions. Section 30 of the Act applies to the forfeiture of all restrained property of a person who is convicted of serious offences and provides as follows: 30. Forfeiture of all restrained property if person convicted of serious offence

(a) a person (in this subsection called the defendant) is convicted of a serious offence (otherwise than by reason of paragraph 5(1)(d)); (b) before the commencement of the Proceeds of Crime Act 2002, a restraining order is or was granted in respect of property (whether property of the defendant or of some other person) in reliance on: (i) the defendant's conviction of that offence; or (ii) the charging or proposed charging of the defendant with that offence or a related offence; (c) the restraining order, to the extent to which it relates to the property, is not the subject of a declaration under subsection 48(4); and (d) the restraining order is in force at the end of: (i) the period of 6 months starting on the day of the conviction; or (ii) if an order under section 30A is in force at the end of that period; - the end of the extended period; the property is, under this subsection, forfeited to the Commonwealth at the end of that period, or that extended period, as the case may be. (2) Subject to subsection (3), where property is forfeited to the Commonwealth by virtue of subsection (1), the property vests absolutely in the Commonwealth. (3) Where registrable property is forfeited to the Commonwealth by virtue of subsection (1): (a) the property vests in equity in the Commonwealth but does not vest in the Commonwealth at law until the applicable registration requirements have been complied with; (b) the Commonwealth is entitled to be registered as owner of the property; and (c) the Minister has power, on behalf of the Commonwealth, to do, or to authorise the doing of, anything necessary or convenient to obtain the registration of the Commonwealth as owner, including, without limiting the generality of this, the execution of any instrument required to be executed by a person transferring an interest in property of that kind. (3A) If registrable property has been forfeited to the Commonwealth because of subsection (1): (a) the DPP has power, on behalf of the Commonwealth, to do anything necessary or convenient to give notice of, or otherwise protect, the equitable interest of the Commonwealth in the property; and (b) any such action by or on behalf of the Commonwealth is not a dealing for the purposes of paragraph (4)(a). (4) Where property is forfeited to the Commonwealth under this section in respect of a person's conviction of a serious offence: (a) the property shall not, except with the leave of the court that made the relevant restraining order and in accordance with any directions of the court, be disposed of, or otherwise dealt with, by or on behalf of the Commonwealth, before the end of the appeal period in respect of the conviction; and (b) if, at the end of the appeal period in respect of the conviction, the conviction has not been quashed, then, subject to any direction under subsection (4A), the Official Trustee must, as soon as practicable after the end of the appeal period: (i) if the property is money - after paying the Official Trustee's remuneration and other costs, charges and expenses of the kind referred to in subsection 55(1) payable to or incurred by it in connection with the restraining order, pay the remainder of the money to the Reserve as required by section 34B; and (ii) if the property is not money - sell or otherwise dispose of the property and, after paying the Official Trustee's remuneration and other costs, charges and expenses of the kind referred to in subsection 55(1) payable to or incurred by it in connection with the restraining order or the sale or disposition, pay the remainder of those proceeds to the Reserve as required by section 34B.26 Proceeds of Crime Act 1987 Part II Amended to: 1 January 2003 (4A) Where property is forfeited under this section because of a person's conviction of a serious offence, the Attorney-General, or a prescribed officer authorised by the Attorney-General for the purposes of this subsection, may, at or after the end of the appeal period in respect of the conviction but before the property is dealt with under paragraph (4)(b), direct that the property be disposed of, or otherwise dealt with, as specified in the direction. (5) Without limiting the generality of subsection (4A), the directions that may be given pursuant to that subsection include a direction that property is to be disposed of in accordance with the provisions of a law specified in the direction. (6) Where property is forfeited to the Commonwealth under subsection (1), the Minister may give all directions that are necessary or convenient to realise the Commonwealth's interest in the property. (7) Without limiting the generality of subsection (6), where registrable property is forfeited to the Commonwealth under subsection (1), the Minister may direct an officer of the Department or a police officer to do anything necessary and reasonable to obtain possession of any document necessary for the transfer of the property. (8) A reference in this section to the appeal period in relation to the conviction of a person of an offence is: (a) in a case where the person is to be taken to have been convicted of the offence by reason of paragraph 5(1) (b) - a reference to the appeal period in relation to the finding of the person guilty of the offence; and (b) in a case where the person is to be taken to have been convicted of the offence by reason of paragraph 5(1)(c) - a reference to the appeal period in relation to the conviction of the person of the other offence referred to in that paragraph. (8A) Where a court makes a restraining order in reliance on: (a) a person's conviction of a serious offence; or (b) the charging or proposed charging of a person with such an offence; a person may apply to the court for a declaration that property that was subject to the restraining order has been forfeited to the Commonwealth under subsection (1) and the court, if satisfied that the property has been forfeited to the Commonwealth under that subsection, shall make a declaration accordingly. (9) In this section: "appeal period", in relation to a person's conviction of an offence, means the period ending: (a) if the period provided for the lodging of an appeal against the conviction has ended without such an appeal having been lodged - at the end of that period; or (b) if an appeal against the conviction has been lodged - when the appeal lapses or is finally determined. As I have indicated, such forfeiture of restrained property has occurred and the question is whether there is some right of recovery under s 31 and in particular under ss (6) and (7) thereof. It is desirable to incorporate the whole of the section in this judgment. It provides: Recovery of property to which section 30 applies

(1) Where property is forfeited to the Commonwealth under section 30, a person who claims an interest in the property may, subject to subsections (2) and (4), apply to the court that made the relevant restraining order for an order under subsection (6) or (7). (2) The application shall, subject to subsection (3), be made before the end of the period of 6 months commencing on the day on which the property is forfeited to the Commonwealth.

(3) The court may grant a person leave to apply after the end of the period referred to in subsection (2) if the court is satisfied that the delay in making the application is not due to neglect on the part of the applicant. (4) An application for an order under subsection (6) or (7) in relation to an interest in property shall not be made by a person who was given notice of: (a) proceedings on the application for the relevant restraining order; or (b) the making of the relevant restraining order; except with the leave of the court. (5) The court may grant a person leave to make an application if the court is satisfied that the person's failure to seek to have the property excluded from the relevant restraining order was not due to any neglect on the part of the applicant. (6) Where a person applies for an order under this subsection in respect of an interest in property, the court may: (a) if satisfied that: (i) the applicant was not, in any way, involved in the commission of the relevant serious offence; (ia) the applicant's interest in the property is not subject to the effective control of the defendant; and (ii) if the applicant acquired the interest at the time of or after the commission of the offence - the applicant acquired the interest: (A) for sufficient consideration; and (B) without knowing, and in circumstances such as not to arouse a reasonable suspicion, that the property was tainted property; or (b) if satisfied that: (i) 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 (ii) the applicant's interest in the property was lawfully acquired; make an order: (c) declaring the nature, extent and value of the applicant's interest in the property; and (d) either: (i) if the interest is still vested in the Commonwealth - directing the Commonwealth to transfer the interest to the applicant; or (ii) declaring that there is payable by the Commonwealth to the applicant an amount equal to the value declared under paragraph (c). (7) Where a person applies for an order under this subsection in respect of an interest in property, the court may, if satisfied that: (a) it would not be contrary to the public interest for the interest to be transferred to the person; and (b) there is no other reason why the interest should not be transferred to the person; by order: (c) declare the nature, extent and value (as at the time when the order is made) of the interest; and (d) declare that section 30 shall cease to operate in relation to the interest if payment is made in accordance with section 33. (7A) A person who makes an application under subsection (1) in respect of property shall give notice to the DPP and the Minister, as prescribed, of the making of the application. (7B) The DPP shall be a party to any proceedings upon an application under subsection (1) and the Minister may intervene in any such proceedings. (8) In this section: defendant , in relation to property forfeited to the Commonwealth under section 30, means the person by virtue of whose conviction the property is forfeited. relevant restraining order , in relation to property forfeited to the Commonwealth under section 30, means the restraining order by virtue of which the property is forfeited.

It will be seen at once that there are a number of factors that the court must be satisfied of before, declaring that there is payable by the Commonwealth to the applicant an amount equal to the value which has been declared, that is an amount which represents the nature, extent and value of the applicant's interest in the property. The court furthermore needs to be satisfied that it is not contrary to the public interest for that interest to be transferred to the person and that there is "no other reason" why the interest should not be transferred to the person. If those criteria are satisfied then the court can declare the nature, extent and value of the interest and go on to declare that s 30 shall cease to operate in relation to the interest if payment is made in accordance with s 33. Section 33 concerns the situation where there has been forfeiture, where the court makes an order under s 31(7) in relation to an interest of the property and where there is paid to the Commonwealth the amount specified in the order. In those circumstances, s 30 ceases to apply in relation to the interest. 8 The plaintiff submits that relief from forfeiture provided in s 31(6) and 31 (7) is unavailable to the defendants, as persons who were convicted of a "serious offence" as defined in s 7 of the Act. The submission focuses on the expression "a person who claims an interest in the property". This is the prerequisite for a competent application under the ameliorating provision. Thus, the question may simply be stated as whether a person who has been convicted of a serious crime and who applies within the prescribed period has the requisite interest in the property or who, at least claims an interest in the property, can make the application. 9 In approaching this question of construction I am bound by the principles applicable to the construction of the Act formulated by the Court of Appeal in this State in Jeffrey v DPP (Cth) (1995) 79 A Crim R 514 at 517. And I refer in particular to principles 3 and 4 articulated by Cole JA (with whom Handley JA and Giles AJA) agreed. These principles are as follows: Any statutory ambiguity should be interpreted so as to respect a person's property rights: DPP v Saxon (1992) 28 NSWLR 263 at 270; Saffron v DPP (Commonwealth ) (1989) 87 ALR 151 at 155. Unless no other interpretation is possible, justice requires that statutes should not be construed so as to enable the confiscation of an individual's property without payment of just compensation. A fortiori where the statute does not provide for any compensation: Attorney General v De Keyser's Royal Hotel Limited (1920) AC 508 at 576. In construing a penal statute, and confiscation of property without compensation constitutes a penalty, if there are two reasonable interpretations, the more lenient of which will avoid the imposition of the penalty, that more lenient construction must be adopted: Tuck and Sons v Priester (1887) 19 QBD 629 at 638 per Lord Esher MR.

In my view the legislative scheme in question in this case is drastic in its impact upon persons whose property is seized or forfeited and it ought to be given a beneficial construction in favour of such a person who applies to a court for some measure of dispensation. Of course, that applicant must show that he or she meets the rigorous tests set out in the legislation before the court would grant relief in a particular case. The legislation has been stigmatised as "lamentable" by Allen J in R v Bolger (1982) 16 NSWLR 115, with whom Hope JA and Studdert J agreed. Similar comments have been made by the Court of Criminal Appeal in R v Lake (unreported, CCA, 26 May 1989). Academic commentators have complained about the haste with which the legislation was introduced and the lack of public scrutiny available: see per Kirby P in Saffron v Director of Public Prosecutions (1989) 96 FLR 196 at 200 with whom Clarke JA generally agreed and with whom Meagher JA agreed. 10 In the Ombudsman v Moroney (1983) 1 NSWLR 317 at 323, Street CJ extensively considered the legitimacy of referring to marginal notes, which he equated with section headings, as an aid to construction of a statute. The learned Chief Justice conceded that the weight of the authority precluded such a reference. However, upon analysis, his Honour asserted the "permissibility" of turning to an unauthenticated marginal note (by which, I infer, he included a sub-heading to a section of the statute) to assist in resolving in the interpretation of a doubtful or ambiguous section. His Honour did so in full recognition that the sub-heading or marginal note was not part of the Act itself and therefore that it could not control the meaning of the section (p 325). Moffitt P agreed with Street CJ who was following earlier decisions of his ancestors: Winkley v Paton (1943) 60 WN (NSW) 162 and Joyce v Paton (1941) 58 (NSW) 88 as well as the great Scottish jurist, Lord Reid in R v Shildkamp [1971] AC 1 at 10. (See , also, Collins MR in Bushell v Harmond [1904] 2 KB 563). 11 In my respectful view, the approach of Street CJ in this area of statutory interpretation is sensible and practicable, and moreover vindicated by legislative enactment ex post facto. Subsequent legislative enactment, namely s 34 of the Interpretation Act 1987 (NSW) made this explicitly clear in determining that consideration may be given to extrinsic material to ascertain the meaning of a statutory provision and that such material would include (see s 34(2)(a)) matters not forming part of the Act that are set out in the document as printed by the government printer. And more relevantly in the present case, see s 15AB of the Acts Interpretation Act 1901 (Cth).

In all of these circumstances, it seems to me that the heading of the relevant section, albeit not part of the Act itself, does lend some support to the conclusion to which I would have otherwise come. 12 In the Federal Court of Australia, Carr J considered this question of headings to legislative provisions in 'F' v Minister for Immigration and Multicultural Affairs (unreported, Federal Court of Australia, 23 March 2001). His Honour noted that the heading was not part of the Act but having regard to s 15AB of the Acts Interpretation Act the heading was nonetheless "capable of assisting" the resolution of the meaning of the provision and his Honour held that he could give consideration to it. It is the generality not only of the heading but the language in the section in question that emphasises, in my view, the right of the applicant to bring proceedings in this court. On these preliminary points, it is obvious that nothing I have said would or could indicate that the applicant is likely to succeed. But nonetheless I do not think the right of applicant to bring the proceedings, having regard to the proper construction of the statute, should be defeated in limine. On the contrary, the merits of the application should be heard and determined. 13 The other major authority concerning the construction of this Commonwealth legislation in this jurisdiction is Director of Public Prosecutions v Logan Park Investments Pty Ltd (1995) 37 NSWLR 118. That case determined that the forfeiture provisions in the relevant legislation should be "strictly construed" and that ambiguity should be resolved in favour of those whose property has been or would be forfeited. The court applied the judgment of the High Court in Murphy v Farmer [1988] 165 CLR 19 at 28 where Deane, Dawson and Gaudron JJ said: ….it seems to us to be more strongly arguable that clear words should be required before there is attributed to the Parliament an intention to take the draconian step of imposing automatic forfeiture as a penalty for "any" wrong "entry invoice declaration answer statement or representation" regardless of whether the wrong information was provided as the result of an innocent mistake or excusable ignorance.

Automatic forfeiture was characterised in that judgment as something that can be "devastating" and "quite disproportionate" in that it applies regardless of the value of the goods or the importance of the wrong which is said to have occurred. It was held in Logan Park that the provisions of s 31 of the Act should be construed in a way which enables successive rights of relief against forfeiture. In other words, the ameliorating provisions of s 31 were given a broad construction. Thus, Kirby A-CJ held that the entitlements provided by the provisions of s 31 were available at different points of time (pre and post forfeiture). His Honour held that although the conclusion was not entirely clear, there was ambiguity and obscurity arising from the terms of the Act, which had drastic consequences and so it was proper "to construe the Act in a way favourable to the provision of successive rights of relief against forfeiture" (p 128). Handley JA agreed with the orders proposed by the President, and Powell JA affirmed the principle that precedent seemed to indicate "that the ambiguity, or obscurity, which is inherit in the relevant provisions of the Act must be resolved in favour of the respondents" (p 130). 14 I agree with the defendants that the DPP must demonstrate a clear intention of the legislature if it is to persuade the Court that the remedies available under s 31 are confined to third parties, as distinct from the person whose property has been forfeited pursuant to the Act. In my view, it is difficult to see a sustainable argument that a person whose property has been forfeited is not a person who may claim an interest in the property and therefore would not be a person who can apply to the court to seek to persuade it that relief should be granted. There has been a general liberalisation of locus standi by the courts in recent times. Certainly the convicted person is not expressly excluded from bringing an application under the section. In my view, the generality of the language makes it tolerably clear that a person whose property has been forfeited can apply to the court, but if there is ambiguity, then it ought to be construed in favour of granting rather than denying a remedy. That conclusion is reinforced to some extent by the heading of s 31 of the Act which is "recovery of property to which s 30 applies". That heading seems to indicate a generality of approach as does the use of the word "claims". 15 It must be accepted, that in the Supreme Court of Western Australia in Lee v Director of Public Prosecutions (1991) 109 FLR 28, Walsh J in considering these statutory provisions held that it was intended that the power to make an application under forfeiture was limited to persons other than the defendants and that therefore the defendant did not have standing under s 31 of the Act to apply to the court. I respectfully disagree with the proposition advanced by his Honour (at p 233) that there was an unambiguous construction available to deny the convicted person to have a right to apply to the court.

In any event, I think it is appropriate that I should follow the reasoning of the courts in this State, notwithstanding the general desirability of Commonwealth legislation being given a uniform application throughout the country. Walsh J did not have the benefit of the reasoning of Logan Park . In NSW CC v Davies [1999] NSWSC 354 at [14], Studdert J applied the approach to construction articulated by the Court of Appeal in Logan Park saying that: "the provisions to such forfeiture are to be construed strictly against the plaintiff" (in that case, the NSW Crimes Commission). Furthermore his Honour saw that Court of Appeal judgment as indicating that legislation providing for relief against forfeiture is not to be construed narrowly against a person seeking such relief. 16 As the defendants point out, the Parliament could easily have expressly deleted the right of a person whose property had been confiscated, that is a convicted defendant, to make an application under s 31. Conspicuously, it did not do so. A competent applicant need only have a "claim" to the property. It is true that by reason of the forfeiture the relevant property has vested absolutely in the Commonwealth. To the extent that the DPP relies upon that provision, it seems to me that the argument begs the question and defeats the beneficial purposes of the relevant section of the Act. Furthermore, by logical extension, it might be said that such an argument means that no one can claim an interest in the property over and above an absolute interest. 17 On the contrary, I accept the submission of the defendants that the relevant interest with which s 31 of the Act is concerned is one which is to be demonstrated as legitimately existing prior to the forfeiture. The section provides an avenue of reinstatement of the former interest and a basis upon which the forfeiture can be set aside, in whole or in part. 18 Even a person convicted of a serious crime retains some legal rights in our community and given the barriers in the legislation facing such an application it seems to me reasonable to take the view that Parliament contemplated that such an application could be entertained by a court. The person whose property has been confiscated is the very person who has a primary interest in seeking to vary such an order - and it would neither be rational nor fair to deny such a right of application in the absence of express and clear legislative exclusion. For these reasons I would make:

(1) a declaration and/or order that the defendants have a right to apply for exclusion pursuant to s 31 of the Act.

(2) And, subject to any further argument, I am of the view that the plaintiff should pay the costs of the defendants in these proceedings to date. However, given that the question of costs in analogous circumstances is currently before the Court of Appeal, costs should be reserved subject to any further application.

(3) Lest there be any argument as to the applicability of the adjudication as to Mr Helou by the Court of Criminal Appeal to Mr Solomons, liberty to apply is given in that regard. **********

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