Crimes (Confiscation of Profits) Act 1988 (WA) s 6, s 15

Dietrich v The Queen [1992] HCA 57; (1992) 177 CLR 292

DPP v McConnell, unreported; DCt of WA; Library No 4466; 12 June 1995

Poole v The Queen [1999] WASCA 46

R v Allen (1989) 41 A Crim R 51

R v Bell (1981) 5 A Crim R 347

R v Hoar [1981] HCA 67; (1981) 148 CLR 32

R v Madigan, unreported; DCt of WA; Library No 3467; 7 August 1992

1 KENNEDY J: I have had the benefit of reading in draft the reasons to be published by Murray J. I am substantially in agreement with those reasons, in which the facts are set out, and I desire only to make some brief comments of my own.

2 The Proceeds of Crime Act 1987 (Cth) was developed in consultation with the States and internal Territories in what had been intended to form a consistent, if not uniform, Commonwealth-wide legislative package - see The Australian Law Reform Commission's Report No. 87, Confiscation that Counts, A Review of the Proceeds of Crime Act 1987 at 2.10. The Western Australian Crimes (Confiscation of Profits) Act 1988 has its origin in that Act. Unfortunately, over the years, the comparable legislation in the various jurisdictions has tended to diverge.

3 The applicant's first ground of appeal relates to the District Court Judge having allowed the hearing to proceed before him without the Crown first having supplied an outline of submissions and a summary of argument, as required by the practice directions issued by the court. This complaint relates to a procedural matter only and, having particular regard to the affidavits setting out the relevant facts upon which the Crown intended to rely, which had been filed on behalf of the Crown and served upon the applicant prior to the hearing in the District Court, it is not apparent to me that the applicant could have suffered any prejudice by reason of the absence of the outline and summary. Certainly, there was nothing advanced by him which would indicate that he was prejudiced in any material way by the Crown's failure to comply with the practice directions. The transcript of the argument in the District Court does not suggest to me that the applicant was deprived of any opportunity to understand the Crown case and to prepare an appropriate defence, as he contended.

4 The second ground of appeal complains that the learned District Court Judge erred in determining that no relevant hardship to the applicant had been demonstrated. The applicant has not provided any verified statement of assets and liabilities in support of his claim of hardship. He contended, however, that the pecuniary penalty order prevented his financing his High Court appeal against his convictions, upon which the order was based. The fact is, however, that in his unsuccessful application for leave to appeal to the High Court against his convictions, he had the advantage of Queen's Counsel appearing for him. No basis has been shown for questioning in any respect the quality of his representation. In this context it must also be appreciated that, as Kirby J pointed out in Sinanovic v R [1998] HCA 40; (1998) 154 ALR 702, there is no established principle of constitutional or general law which affords a prisoner a right to legal representation on an appeal.

5 Section 15(1) of the Crimes (Confiscation of Profits) Act 1988 confers upon the court a wide discretion to make a pecuniary penalty order if it considers it appropriate. However, although the Act expressly provides that, in considering whether to make a forfeiture order under s 10(1), the court may have regard to any hardship which may reasonably be likely to be caused to any person by the order (s 10(2)(b)), there is no equivalent provision to be found in the legislation in relation to pecuniary penalty orders. The omission must be taken to have been deliberate. There is a distinction to be drawn between the nature and purpose of a forfeiture order and the nature and purpose of a pecuniary penalty order, although each is described in the Act as a "confiscation order" - see definition in s 3(1). A pecuniary penalty order is directed at recovering the "benefit" derived from the offence, the expression "benefit" being defined in s 3(1). The principle underlying it has been described as the concept of denial of unjust enrichment from criminal activity. A forfeiture order is directed at property, and specifically at property used in, or in connection with, the commission of the offence, or which was derived or realized by the person convicted of the offence or another person, or is subject to the effective control of the person convicted of the offence, as a result of the commission of the offence or of any other unlawful act. The principles underlying forfeiture are, first, the need to deprive a person of the opportunity of further using the same property for criminal activity and, secondly, the punitive effect of confiscating the property. There is an absence from the legislation of any express guidance in relation to the implications that these distinctions might have in relation to discretionary forfeiture and sentencing. See generally the Australian Law Reform Commission report at 3.2 to 3.5.

6 The third ground of appeal complains of the District Court Judge having failed to consider the gravity of the offences and the penalties already imposed on the appellant, particularly when viewed in the context of parity in sentencing between the appellant and his co-accused.

7 The material before us does not sustain any complaint on the ground of parity. The co-offender who, as Murray J has pointed out, pleaded guilty to some of the charges upon which the applicant was convicted, but also to some additional charges, was sentenced to an aggregate term of six years' imprisonment, as against the applicant's sentence of five and a half years' imprisonment. The applicant complained that some of the sentences imposed upon the co-offender had been made concurrent, while the sentences imposed upon him for the same offences had been made cumulative. But it is the effective head sentence which is presently material, not the manner in which it is constituted in order to give effect to the totality principle.

8 In its report, the Commission suggested that, based upon the decisions in R v McDermott (1990) 49 A Crim R 105 and Tapper v R [1992] FCA 600; (1992) 111 ALR 347, the prevailing view is that a pecuniary penalty order under the Act has punitive characteristics, notwithstanding that it may relate exclusively to profits and that, as such, it must be taken into account in sentencing. It went on to observe that it was not aware of any authoritative judicial pronouncements on the reciprocal issue of the extent to which the sentence should be taken into account in determining whether a confiscation order should be made.

9 The Western Australian legislation would not appear to countenance a pecuniary penalty order for anything less than the value of the benefit, as assessed in terms of s 15(1), except insofar as it requires the deduction from the assessed value of the benefit of the value of any property in respect of which a forfeiture order has been made in reliance on the unlawful act and, in addition, if the court thinks it desirable to take it into account, any amount payable by way of restitution or compensation in relation to the unlawful act - s 15(1)(b)(i) and (ii). There is nothing before us to indicate that any amount was payable by the applicant by way of restitution or compensation in relation to "the unlawful act".

10 On the basis of Director of Public Prosecutions (Vict) v Nieves [1992] VicRp 15; [1992] 1 VR 257 at 262, it is not the net profit from the criminal act which constitutes the benefit, it is the value of that which has improperly been taken. See also R v Peterson [1992] VicRp 20; [1992] 1 VR 297 at 302-303, R v Cornwell (1990) 49 A Crim R 122 and Razzi v Commissioner of Australian Federal Police [1990] FCA 431; (1990) 50 A Crim R 142 at 148.

11 The applicant claimed that, in calculating the benefit under the Act, allowances should have been made for the tax which was paid by the recipient of the moneys the subject of the pecuniary penalty order, amounting to approximately $28,500, together with the sum of approximately $60,000, representing the applicant's superannuation fund with his former employer, as well as the anticipated annual bonus of $9,000 which sums, as a result of his conduct as an employee, were not paid to him. In addition, he claimed that an allowance should have been made for the fact that he was sentenced to five and a half years' imprisonment for the offences of which he was convicted and the fact that he incurred legal fees of $100,000 in defending himself.

12 So far as tax is concerned, it is to be noted that any tax which was paid had been paid by the company, in which the applicant had an interest, to which he passed over the proceeds of his crimes. In any event, there is no equivalent in the Western Australian Act to s 26(4) of the Proceeds of Crime Act 1987 (Cth), upon which the applicant relied, which expressly permits tax, if paid by the offender, to be deducted from the relevant benefit. The applicant's contention that, from a reading of s 16(2) of the Act, it was clear that any tax paid on the moneys derived by him should have been taken into account, is not sustainable, s 16(2) and s 16(3) being concerned with what may be described as cases of betterment. The Crown did not seek to, nor did it, rely upon these provisions, the amount of the benefit being otherwise clearly ascertainable.

13 So far as the forfeiture of the applicant's superannuation benefits is concerned, the applicant's former employer, it would seem, had civil claims against him which related to matters which were not the subject of the criminal charges; but, in any event, no basis has been demonstrated for taking this into account in the process of assessing the value of the benefit under s 16 of the Act. There is nothing before us to indicate that any amount was payable by the applicant by way of compensation in relation to any "unlawful act" within the meaning of s 15(1)(b)(ii). The suggestion that the applicant's loss of an annual bonus of $9,000 should be taken into account in circumstances where he was defrauding his employer at the time is, to say the least, surprising. It is unsustainable. Nor is there any basis for taking into account the applicant's legal fees in unsuccessfully defending the charges on which he was convicted, for his unsuccessful appeal to this Court against his convictions and for his subsequent unsuccessful application for special leave to appeal to the High Court. To take them into account would be inconsistent with Director of Public Prosecutions (Vict) v Nieves (supra).

14 It may be that, had the pecuniary penalty order been considered at the time of the applicant's sentencing, the fact that the benefit of his crimes would be taken away from him might have been taken into account in determining the appropriate sentences, as to which see R v Allen (1989) 41 A Crim R 51 at 57 and R v Thomas [1991] VicRp 60; [1991] 2 VR 207 at 208 - 209; but there has been no appeal against the sentences which have been imposed upon the applicant. Furthermore, R v Allen and R v Thomas provide authority for the proposition that sentences cannot be affected by the subsequent making of a pecuniary penalty order. Section 147 of the Sentencing Act 1995 provides that the imposition of a sentence or the making of any other order under that Act by a court does not affect the right or duty of the court under any other law to make any other order in respect of an offender.

15 It may have been appropriate in this case to have sought to defer sentencing under s 9(2) of the Act, but there is no ground of appeal which raises this issue and we do not have any material before us as to whether at the time of sentencing there was any suggestion of a pecuniary penalty order being sought against the application, an application for such an order being permissible within six months of conviction - see s 6(2) of the Act and the definition of "relevant period".

16 The fourth ground of appeal is that the District Court Judge erred in allowing the matter to proceed before him after the applicant had pointed out that he was not capable of defending himself in the matter, and that the Crown's actions in caveating his home and his investment property at Dunsborough had in effect prevented him from paying for proper representation. There may have been some substance in this ground had the applicant been able to satisfy us that there was some merit in the other proposed grounds of appeal. I am not persuaded that there is.

17 I agree with Murray J that the appeal should be dismissed.

18 WALLWORK J: I agree with the reasons for judgment of Kennedy and Murray JJ. There is nothing I wish to add.

19 MURRAY J: On 9 May 1997 the Applicant was convicted by a jury in the District Court of a number of offences committed in the latter part of 1988 and the early part of 1989 arising out of his employment by Custom Credit Corporation Ltd in a senior managerial capacity. He was convicted of an offence of stealing a sum of $152,819 as a servant, a further offence of stealing the sum of $185,824 as a servant, an offence of conspiracy to defraud Custom Credit Corporation so as to dishonestly receive the sum of $30,000, a further such conspiracy so as to dishonestly receive a sum of $40,000, a further conspiracy to defraud Custom Credit Corporation so as to cause them to make a payment of $50,000 which they were not obliged to make, a conspiracy to be provided with air conditioning to the value of $7,869 as a secret commission and two offences of fraudulent false accounting in respect of substantial loans provided by Custom Credit Corporation.

20 A co-offender, who pleaded guilty to some of the charges upon which the Applicant was convicted, but also to different charges, was sentenced to an aggregate term of 6 years imprisonment. On 20 June 1997 the Applicant was sentenced to a total term of 5-1/2 years imprisonment with eligibility for parole. He appealed against the convictions and that appeal was dismissed by the CCA on 26 June 1998. He made an application for special leave to appeal to the High Court and that application was refused on 6 August 1999.

21 In the meantime, on 23 October 1997 a restraining order was made pursuant to the Crimes (Confiscation of Profits) Act 1988 (WA), s 20, to prevent the Applicant from disposing of, or otherwise dealing with, his property, subject to conditions. There were later variations made to that order. An application for a pecuniary penalty order was made on 12 September 1997. The application was heard by Williams DCJ on 18 November 1998, and on 18 December 1998 his Honour ordered the payment to the Crown of a pecuniary penalty in the sum of $102,066.77.

22 The Crimes (Confiscation of Profits) Act, s 58 provides for appeals "in the same manner as if the order were, or were part of, the sentence imposed in respect of the offence" in relation to which or in reliance upon which the order was made. Having regard to the terms of the Criminal Code (WA), s 688(1a)(b), leave to appeal is required. Hence the application presently before the court. Reliance is placed upon four grounds. Summarising their effect they are as follows:

(1) Williams DCJ erred in allowing the matter to proceed without an outline of submissions as required by the relevant Practice Direction.

(2) His Honour erred in holding that no relevant hardship had been demonstrated. He failed to pay due regard to the applicant's need for funds to finance his application for special leave to appeal to the High Court against the convictions.

(3) His Honour erred by not considering the penalty already imposed upon the applicant, particularly from the point of view of parity between the disposition in respect of the applicant and that in respect of his co-offender.

(4) His Honour erred in proceeding to hear the Crown's application, although the applicant was unrepresented and could not afford legal representation.

23 As to the first ground of the application, it may be said immediately that it provides no basis upon which the order made by Williams DCJ might be overturned. The Practice Directions to which the applicant refers are of course simply that. They are designed to give to the respective parties and to the court advance notice of the matters to be raised in the proceeding in question. In this case the Crown's application was supported by two affidavits exposing the basis upon which the application was made and those documents had been served upon the applicant, who was thereby afforded the appropriate advance notice. In that situation it appears that neither party filed or exchanged an outline of submissions and list of authorities. There is nothing to support the suggestion that in the absence of those papers his Honour was deprived of appropriate information or argument in a way calculated to make his decision of the application miscarry.

24 Ground 4 is supported by the applicant by quoting passages of the transcript of the hearing before Williams J in which his Honour is shown to be assisting the applicant to achieve a proper understanding of court procedure, particularly the need to give evidence if he wished to place factual material before the court which was not already in evidence, as opposed to simply making statements about such matters in his closing address to the court. What had to be done was made perfectly clear and yet the applicant declined the invitation to give evidence himself or to call any other evidence in support of his case. He does not appear to have sought an adjournment for that purpose. In my opinion he cannot now complain that his lack of representation before Williams J has been productive of any miscarriage of justice.

25 It is appropriate to deal first with ground 3 in considering the substantive matters raised by the applicant. As to the relationship between the sentence already imposed and the making of a pecuniary penalty order, the starting point is the Sentencing Act 1995 (WA), s 8(3), which provides that:

"The fact that property derived or realised, directly or indirectly, by the offender, or that is subject to the effective control of the offender, as a result of the commission of the offence is forfeited to the Crown under a written law is not a mitigating factor."

I would interpret that as a direction to the sentencing court that it may not have regard to the fact that such an order has been made in the sentencing process, to which the making of the order is irrelevant. But on the other hand, I note that under the Sentencing Act, s 16(1)(f), a court may adjourn the sentencing of an offender -

"for the making or determination of an application under a written law for the forfeiture to the Crown of property legitimately owned by the offender and used in, or in connection with, the commission of the offence."

It will be seen that in that way the legislation takes an approach in respect of property of an offender used in connection with the commission of the offence which is different from the approach taken in respect of property derived by the offender as a result of the commission of the offence and the divestment of that property from the offender. The decision of this Court in R v Rintel (1991) 3 WAR 527 was concerned with a house and land and motor vehicle legitimately owned by the offender and used by him in the commission of offences concerned with the illicit possession of drugs.

26 Returning to the Sentencing Act, s 8(3), it is, of course, the case that here sentence was passed before the making of an order under the Confiscation of Profits Act, but if the fact of forfeiture to the Crown is not relevant to the later sentencing of an offender as a matter in mitigation, it would seem to follow that unless the Confiscation of Profits Act provides to the contrary what was done by way of sentencing the offender should be regarded as immaterial to the later consideration of an application for an order under the Confiscation of Profits Act.

27 The Confiscation of Profits Act provides for two forms of what it describes as a "confiscation order". The first is a forfeiture order which may be made under s 10 of the Act and the second is a pecuniary penalty order made under s 15. Under s 10 a forfeiture order, as the name suggests, is designed to divest the owner of particular property used in or in connection with the commission of an offence, or derived or realised directly or indirectly as a result of the commission of the offence. Under s 11 the effect of the making of such an order is to vest the property in the Crown.

28 On the other hand the pecuniary penalty order is one which may be made, effectively when the benefit derived from the commission of an offence is not capable of being translated directly or indirectly into a particular item of property. By s 15(1), upon application:

"...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 of any other unlawful act; and

(b) order the person referred to in paragraph (a) to pay to the Crown a pecuniary penalty equal to the value of those benefits as assessed under this subsection, less -

(i) the value as at the time of the making of that order of any property in respect of which a forfeiture order has been made in reliance on; and

(ii) if the court thinks it desirable to take it into account, any amount payable by way of restitution or compensation in relation to,

29 The word "benefit" is defined in s 3(1) to include "service or advantage". In other words, it is something which has an assessable monetary value. In this case the matter was relatively simple. The assessment embarked upon by Williams J involved the determination of the present value of the monetary gain made by the applicant as a result of the commission of the offences. I should also add that, being indictable offences, the offences of which the applicant was convicted upon which reliance was placed in the application for the confiscation order, were serious offences within the meaning of the Act, s 3(1).

30 This provision is obviously part of the scheme of the Act designed to give effect to its general purpose that, in addition to any punishment or penalty which may be imposed, there is, as the long title to the Act puts it, to be "confiscation of the profits of crime and the forfeiture of property in certain circumstances". Both forms of confiscation order are directed to that end.

31 Whether the court is contemplating the making of a forfeiture order or a pecuniary penalty order, the power is clearly discretionary, to be exercised by the court "if it considers it appropriate". Section 10(2) provides that in considering whether to make a forfeiture order the court may have regard to the use that is ordinarily made or was intended to be made of the property, and any hardship that may reasonably be likely to be caused to any person by the making of the order. Section 15 contains no such provision. In my opinion, the court ought to approach the making of such an order upon the basis that the policy of the Act is that, ordinarily, an offender is to be deprived of the assessable value of a benefit found to have resulted from the commission of the offence, to the extent that the value of such benefit has not already been taken into account in the making of a forfeiture order or by way of restitution or compensation payable to a victim of the crime. I note that in this case the victim of the offences, Custom Credit Corporation Ltd, informed the court that it did not propose to make any application for a compensation order.

32 Although s 15 contains no provision like s 10(2), I see no reason to suppose that the court might not decline to exercise its discretion in favour of the making of the order where the result would be to cause undue hardship, particularly to persons other than the offender, if the order was made, or where for some other good reason it appears that it would not be in the interests of justice in the particular case for the order to be made. That is not to say that the fact that appropriate punishment has been imposed on the offender who is to be the subject of a pecuniary penalty order will of itself be a material consideration. If that was a relevant consideration, then in a case such as this where the imposition of sentence preceded the determination of the application for a confiscation order, there being no suggestion that the discretion of the court in sentencing the applicant had miscarried, a pecuniary penalty order could never be made because it would always be argued that the offender had been sufficiently punished. It follows that I would not uphold the third ground of the application.

33 Under the head of this ground, the applicant argued a different point that Williams J erred in not taking into account the fact that taxation was paid on the benefits received directly as a result of the commission of the offences, treating them as declared income. I put to one side the fact that the particular facts in terms of the payment of taxation do not appear to have been established by evidence before Williams J. The short answer to the point raised is that the "benefit" to be assessed is that which is derived by the offender as a result of the commission of the offence; ie, the value of what has been taken from the victim. The court is not concerned to assess the profit which actually ensues or the net benefit or advantage received after the deduction of expenditure, including taxation, related to the acquisition of the benefit.

34 In R v Nieves [1992] VicRp 15; (1991) 51 A Crim R 350 the Court of Criminal Appeal of Victoria was concerned with the calculation of the benefit received for the purpose of making a pecuniary penalty order under the equivalent legislation of that State. The proposition under discussion was that in the assessment of the benefit derived by the offender from the unlawful possession of drugs with intent to sell or supply, there should be a deduction of the money expended by the offender in acquiring the drugs. The court rejected that proposition, saying at 355 that a court contemplating such an order was not concerned to assess the profit to the offender, but the benefit derived by him or her. It would therefore not be appropriate to take into account sums of money paid illegally to acquire the drugs and it was thought to be inconceivable that the court should calculate and set off against the benefit derived from the commission of the crime the expenditures incurred. Their Honours concluded that:

"The receipt of a sum of money is the benefit which a convicted person derives from the commission of the offence of which he or she has been convicted. The value of the benefit is the amount of money the convicted person has so received."

or, as assessed in this case, its present value at the time of making the order. The fact, if it be the case, that the receipt of the funds was ultimately declared as income and tax paid on it is, in my view, irrelevant to the assessment of the benefit derived from the commission of the offences in question. No other criticism is made of the process of assessment in this case and I therefore make no comment about it.

35 As to ground 2, the proposition advanced by the applicant is that the making of the order had the potential to prevent him from financing his application for special leave to appeal to the High Court. And yet that application was pursued and the applicant was represented by senior counsel. He says that he financed that representation by drawing upon a credit arrangement with his bank, but that is of no moment. For myself I am unable to see that the fact that the applicant required funds to pursue the application for special leave would constitute a ground for declining to exercise the court's discretion to make a pecuniary penalty order, although it might, in my opinion, be a ground upon which that application should be adjourned. By the Confiscation of Profits Act, s 18, a pecuniary penalty order, if made, is discharged if the conviction in reliance upon which the order was made is subsequently quashed. But, the application for special leave having been made, pursued, and ultimately refused, such a consideration is not presently material.

36 In argument the applicant raises a number of other matters which are concerned to establish the point that for a relatively small benefit derived from the commission of the offences he, and no doubt his family, have suffered much. But specifically in relation to the pecuniary penalty order he is, I think, unable to show any error by Williams J in respect of the consideration of hardship as a factor relevant to the exercise of his discretion. As his Honour put it, "...in this case no relevant hardship other than that which would ordinarily follow the event has been demonstrated."

37 In my view, for those reasons, the application for leave to appeal against the making of the pecuniary penalty order should be refused.