Markovski v DPP [2014] VSCA 35

STATUTORY INTERPRETATION - Principles applicable in circumstances of statutory confiscation considered - Use of extrinsic materials considered.

1 A party seeking the exclusion of property from the operation of a restraining order under s 22(a)(i) of the Confiscation Act 1997 (the Confiscation Act) must satisfy the court that the property was 'lawfully acquired' by him. I agree for the reasons given by Whelan JA and the further reasons of Santamaria JA that a property will not be 'lawfully acquired' if the funds used to acquire the property came from the proceeds of criminal activity.

2 I would make the following additional observations.

3 Sub-section (a)(i) focuses upon the appellant's conduct in acquiring the property. The second part of sub-s (a)(ii) upon which the appellant relies was concerned with whether the property had been 'derived or realised, directly or indirectly by any person' from unlawful activity. Its focus was different and broader.

4 During the oral hearing of the appeal, the parties' attention was directed to the 'Money Laundering' provisions of Part 1 Division 2A of the Crimes Act 1958 (Division 2A), and how that might bear upon the question of construction. Division 2A contains provisions that were formerly in Part 14 of the Confiscation Act and which were repealed and re-enacted[1] in a broadly similar form in the Crimes Act in 2004. As the parties were not in a position to address that question, they provided supplementary written submissions as to whether, having regard to Division 2A, the acquisition could be said to be lawful if the source of the funds used to acquire the property were the proceeds of crime.

5 The appellant contended that the application of Division 2A did not bear upon the construction of the term 'lawfully acquired' but went only to how the term, once construed, might be applied to the facts.[2] He submitted that this was a question which went beyond the bounds of the appeal. The respondent submitted that the operation of Division 2A did bear upon the question of construction and may for that reason be taken into account notwithstanding that it had not been the subject of any previous argument.

6 The various sub-sections of s 194 of Division 2A[3] make it an offence for a person to 'deal with proceeds of crime', knowingly, recklessly or negligently. Section 195 provides that a person will also commit an offence under that Division if there are reasonable grounds to suspect that the property is proceeds of crime.[4] 'Deal' includes 'receive', 'possess' or 'dispose of'. Thus to use proceeds of crime to acquire property is to 'deal' with those funds. Proceeds of crime is defined to mean property that is 'derived or realised directly or indirectly by any person from the commission of an offence.' Offences include an offence in Schedule 1 of the Confiscation Act.[5] The definition of 'tainted property' in the Confiscation Act refers specifically to the provisions of Division 2A.

7 The respondent contends that Division 2A of the Crimes Act and the Confiscation Act should be viewed as complementary legislation that are intended to operate together and support each other. They indicate a legislative intent that it is unlawful to acquire a property with the proceeds of crime and that a party who seeks exclusion of property from confiscation must exclude that possibility.

8 In my view, just as Part 14 of the Confiscation Act was relevant to the construction to be given to 'lawfully acquired' in s 22(a)(i) when it was enacted, Division 2A is now relevant to that construction. It lends further support to the conclusion that if the property is acquired by the use of funds that are the proceeds of criminal activity, the transaction by which the property was acquired will not be lawful. It would be inconsistent with those provisions were the term 'lawfully acquired' to be construed as excluding from consideration the source of the funds

and their effect upon the lawfulness of the transaction.

9 Giving the words 'lawfully acquired' their ordinary meaning, in the absence of evidence sufficient to satisfy the judge that the funds used to acquire the property did not come from the proceeds of crime, the property will not have been shown to be 'lawfully acquired'.

11 Under the Confiscation Act 1997 ('the Act') a court can make restraining orders over property where a person has been charged with certain drug trafficking offences and that person has an interest in the property.[6] If the person is convicted of the trafficking offence or offences, then the property over which the restraining order was made is automatically forfeited,[7] unless an order for exclusion of the property under s 22 of the Act has been made.

12 The appellant was charged with drug trafficking offences, and restraining orders were made over property in which he had an interest. On 5 November 2007 he pleaded guilty to two counts of drug trafficking over the period 9 December 2005 to 16 January 2006. He was sentenced to a term of imprisonment. The appellant had applied for exclusion of his property. By a judgment delivered on 18 July 2012 a judge in the County Court dismissed that application. He now appeals that dismissal.

13 The property which the appellant now contends should be excluded is the following:

1. A 1997 Audi Quattro sedan, which the appellant acquired from a car dealership in February 2004 for $47,800.

2. That component of the appellant's interest in a bank account in his name which represents the credit balance as at 9 December 2005. The credit balance that day was $778,162.34.

3. An apartment in a building in Exhibition Street, Melbourne which the appellant purchased in about 2003, which he transferred to his domestic partner shortly after his arrest, and which she holds as bare trustee for him.

14 An attempt was made before the County Court judge to explain the source of the deposits in the bank account and the source of the funds used to purchase the car and the apartment. That attempt was wholly unsuccessful and was rejected by the judge who found the appellant to be 'a thoroughly unsatisfactory witness'. The appellant declined to answer questions on the source of the larger deposits into the bank account. On the appeal, no attempt was made to address those issues, and no attack was made upon the judge's finding in that regard.

15 Pursuant to s 22 of the Act, the appellant was, amongst other things, required to satisfy the Court that his interest in the relevant property was 'lawfully acquired'. What was put on the appeal, and also argued below, was that this requirement was satisfied if it were proved that the transaction by which the appellant obtained his interest in the property was itself lawful. That is, the deposits into the bank and the sales and transfers of the car and the apartment were themselves lawful transactions. The appellant contends that this requirement will be met notwithstanding an inability, or failure, to prove that the funds deposited and the funds used to buy the car and the apartment were lawfully acquired. The judge below's rejection of this analysis is the sole ground of appeal.

16 The argument in support of the analysis for which the appellant contends is founded upon a submission as to what is said to be the ordinary meaning of the expression 'lawfully acquired', and upon the legislative history of the relevant provisions of s 22 of the Act. The appellant relies heavily upon the sequence and effect of amendments made to s 22. Before turning to the submissions put, it is necessary to review that legislative history.

17 Section 22(a) of the Act sets out circumstances in which a court may make an order excluding property from the operation of a restraining order. Section 22(b) deals with circumstances in which such an exclusion order can be made where the application is by a person other than the defendant, and s 22(c) sets out circumstances in which an order may be made where the applicant is an executor or administrator of the defendant's estate.

18 When enacted, s 22(a) required an applicant for exclusion to satisfy the court of three matters. One of those matters, that the property is not required to satisfy any pecuniary penalty order or an order for restitution or compensation, was uncontroversially satisfied in this case, and can be put to one side. The other two requirements in s 22(a), when enacted, were that the court had to be satisfied that:

(i) the property in which the applicant claims an interest was lawfully acquired by the applicant; and

(ii) 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.

19 As enacted, the term 'unlawful activity' was defined as an act or omission that constituted an offence against any law. In 1998 that definition was amended to add the requirement that the offence must be punishable by imprisonment.

20 The explanatory memorandum to the Confiscation Bill 1997[8] contained the following explanation of these provisions:

The onus is upon the applicant to satisfy the court on the balance of probabilities as to these matters. The applicant may be able to prove the lawful acquisition of all of their property, for instance, by the production of receipts concerning the purchase of goods and contract [sic] of sale for houses and properties owned. However, that will not satisfy the exclusion test. It would also be necessary for the applicant to prove that the property was not used in the connection [sic] with unlawful activity and was not derived from any unlawful activity. In such circumstances, it would be necessary for the applicant to prove how they acquired the assets or funds which enabled them to lawfully acquire the property which is the subject of the restraining order.[9]

21 There were a number of amendments made to the Act over subsequent years. For the purposes of this appeal, the critical amendment was one made in 2004 by the Major Crime Legislation (Seizure of Assets) Act 2004. That amending Act left sub-s (a)(i) unchanged but substituted a new sub-s (a)(ii). It read as follows:

22 The explanatory memorandum[10] stated:

Paragraph (b) of the clause substitutes a new provision for section 22(a)(ii).

Section 22 provides that the court may make an order excluding the property from the operation of the restraining order if the court is satisfied of certain matters.

One of those matters, which is currently set out in section 22(a)(ii), is that 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.

This does not include property that was not derived or realised, directly or indirectly, from property that was used in, or in connection with, any unlawful activity. In order to ensure that such property is addressed, the Bill substitutes for paragraph (a)(ii) a new provision that refers to whether the property is not tainted property. "Tainted property" is defined in section 3 of the Principal Act.[11]

23 The defined term 'tainted property' was one which had been in the Act from enactment. When enacted, the definition was as follows:

"tainted property", in relation to an offence, means property that -

(a) was used, or was intended by the defendant to be used in, or in connection with, the commission of the offence; or

(b) was derived or realised, or substantially derived or realised, directly or indirectly, from property referred to in paragraph (a); or

(c) was derived or realised, or substantially derived or realised, directly or indirectly, by any person from the commission of the offence;

Some additional provisions were added to the definition in 2003, which are not of relevance.

24 The 2004 amendment had the effect of extending the property covered by sub-s (a)(ii) to property derived from property used in the offence. But it also had another effect not referred to in either the explanatory memorandum or the second reading speech.[12] It narrowed the ambit of the criminal activity to which sub-s (a)(ii) applied because the definition of 'tainted property' was confined by reference to 'the commission of the offence'. It did not extend to property derived or realised directly or indirectly from 'any unlawful activity', as the previous sub-s (a)(ii) had done. The references to 'any unlawful activity' in the explanatory memorandum suggest this consequence was unintended.

25 The property which is the subject of the appellant's exclusion application does not fall within the definition of 'tainted property'. This is because it is not derived or realised from the offences to which the applicant pleaded guilty. The date selected as the date upon which the credit balance in the bank account is sought is the commencement date of the offences, and both the car and the apartment were acquired before that date.

26 It was accepted both on the appeal, and at first instance, that the version of the Act containing the 2004 amendment (Reprint 034 - which I will call the '2005 version') is the version under which this application is to be determined.

27 In 2007 the relevant provisions were further amended by the Confiscation Amendment Act 2007. Again, sub-s (a)(i) remained unchanged. Sub-section (a)(ii) was also unchanged, but a new additional requirement was added as sub-s (a)(iia). It read:

28 The definition of 'derived property' was as follows:

Derived property means property -

(a) used in, or in connection with, any unlawful activity by -

(i) the defendant; or

(ii) the person who is suspected of having committed a Schedule 2 offence; or

(iii) the applicant for an exclusion order; or

(b) derived or realised, or substantially derived or realised, directly or indirectly, from any unlawful activity by -

(i) the defendant; or

(ii) the person who is suspected of having committed a Schedule 2 offence; or

(iii) the applicant for an exclusion order; or

(c) derived or realised, or substantially derived or realised, directly or indirectly, from property of a kind referred to in paragraph (a) or (b).

29 The definition of 'tainted property' remained the same.

30 The explanatory memorandum to the Confiscation Amendment Bill[13] explained the amendment as follows:

[The bill] ensures that restraining orders for automatic or civil forfeiture (relating to a Schedule 2 offence, e.g. a serious drug trafficking or fraud offence) cannot be defeated by arguing that the property was not "tainted" in relation to the specific offence with which the defendant has been charged or a person is reasonably suspected of having committed. In other words, the applicant for the exclusion order will bear the onus of proving that the property itself was not used in, or acquired directly or indirectly through, any illegal activity.[14]

31 As indicated, it was accepted both in the court below and before us that the application is to be determined under the provisions in the 2005 version and that, under the 2005 version, the property in question is not 'tainted property' under sub-s (a)(ii). Thus, the only issue is whether the appellant satisfied the Court that the property was 'lawfully acquired' under sub-s (a)(i). It was also accepted that the appellant had not established that the funds deposited and used to acquire the car and the apartment were lawfully acquired and that the application had to fail unless the appellant's construction of sub-s (a)(i) was accepted.

32 The appellant contends that the ordinary meaning of the expression 'lawfully acquired' is that 'the transaction by which the interest was acquired was lawful'. The appellant says it is irrelevant, under this limb of the exclusion test, whether the consideration given to acquire the interest was itself lawfully acquired or not. The appellant contends that that is the plain meaning of the expression and submits that, whilst there is no authority directly on point, that construction is consistent with the analysis of the terms 'acquired' and 'acquire' in the judgment of Mildren J in DPP v Dickfoss.[15]

33 The appellant contends that this approach is powerfully supported by an analysis of the legislative history. When first enacted, sub-s (a)(ii) provided for an enquiry as to the use to which the property had been put and as to the source of the funds or other consideration used to acquire it. The appellant submits that sub-s (a)(i) - lawfully acquired - concerned the transaction of acquisition itself and nothing more. The submission was that if sub-s (a)(i) were given a wider operation it would have left sub-s (a)(ii) with 'no work to do'.

34 The appellant contends that the effect of the amendments in 2004 (embodied in the 2005 version) was to narrow the ambit of sub-s (a)(ii) without altering sub-s (a)(i). Sub-section (a)(ii) was made applicable only to 'tainted property'. It was accordingly confined to property used in, or derived or realised from, the offence itself. Sub-section (a)(i) remained the same and was still confined to the very transaction by which the interest was obtained.

35 The appellant submits that the amendments in 2007 recognise that the appellant's analysis of how the 2005 version operates is correct. The introduction of sub-s (a)(iia) and the definition of 'derived property', in effect, returned the Act to a position similar to that which had obtained when it was originally enacted by re-introducing a requirement to satisfy the Court that the property is not derived from any unlawful activity, as opposed to unlawful activity connected with the offence itself.

36 The appellant contends that the explanatory memoranda to both the bill as originally enacted and to the 2007 amending bill support and confirm the appellant's analysis of the position.

37 The appellant submits that the principles of statutory construction require penal statutes and statutes involving confiscation of property without compensation to be interpreted so as to prefer the more lenient of competing reasonable interpretations, and require that ambiguity be resolved by a construction which does not enable confiscation.[16]

1. The term 'lawfully acquired' is amenable to more than one meaning. As the statute provides for confiscation, the narrowest construction should be preferred. It should be confined to the immediate act of getting something into one's ownership, the very transaction whereby acquisition occurs.

2. This narrowest interpretation involves no disconformity or anomaly when reading s 22(a)(i) with s 22(a)(ii) as enacted, or with s 22(a)(ii) and (iia) after the 2007 amendments. Section 22(a)(i) can satisfactorily be read as addressing the transaction of acquisition - was the property stolen or obtained by fraud, for example - while the subsequent sub-sections address issues including the source of the funds used, being acquisition in a wider sense. The 2005 version constitutes a legislative narrowing of the source requirement which was either unintended, or embarked upon and then retracted.

3. The explanatory memoranda support the narrowest interpretation of s 22(a)(i). The 1997 explanatory memorandum gives examples, directed to (a)(i), of transactions of the narrowest kind (receipts and contracts). It then turns to a discussion of the effect of (a)(ii) after (a)(i) has been satisfied. It says that the applicant would have to prove ' ... how they acquired the ... funds which enabled them to lawfully acquire the property'. Thus, before proving how they acquired the funds, they will have proved the property was lawfully acquired. The explanatory memorandum to the 2007 bill pre-supposes that absent the additional new requirement constituted by (a)(iia), the postulated applicant would have succeeded. That could only be the case if (a)(i) had been satisfied.

39 The respondent contends that the ordinary meaning of the term 'lawfully acquired' necessarily involves consideration of the source of the deposits or the purchase money. In this respect it substantially relies upon authorities concerning similar or related legislative provisions. It submits that that has always been the proper interpretation of sub-s (a)(i); that that sub-section has never been altered; and that the provisions of, and amendments to sub-s (a)(ii), have not had the effect of limiting the ambit of sub-s (a)(i). Particular reliance was placed upon authorities concerning the term 'acquired lawfully' in s 5(2A) of the Sentencing Act 1991 and 'lawfully acquired' in the Proceeds of Crime Act 1987 (Cth). [17]

40 A review of the authorities appropriately begins with the decision of Hunt CJ at CL in the Supreme Court of New South Wales in Director of Public Prosecutions v Jeffrey.[18] The application before the court was for a declaration under s 48(4) of the Proceeds of Crime Act 1987 (Cth). Unless such a declaration was made, various items of property of a person who had been convicted of a drug trafficking offence would be forfeited. Relevantly, s 48(4)(e) provided that a declaration could be made if the court was satisfied that:

(i) the property was not used in, or in connection with, any unlawful activity and was not derived, directly or indirectly, by any person from any unlawful activity; and

(ii) the defendant's interest in the property was lawfully acquired.

41 The focus of attention both at first instance and, on the subsequent appeal, was on the provisions of sub-s (i) (not used or derived). Hunt CJ at CL did, however, make some observations about (ii) (lawfully acquired). He said:

As a matter of practical reality, what such an applicant must do in most cases in order to establish the negative facts stated in par (i) is not only to deny on oath in general terms that the property was so used in or derived from any such unlawful activities but also to establish what activities it was in fact used in and derived from: cf General Motors-Holden's Pty Ltd v Bowling (1976) 51 ALJR 235 at 241. To a large extent, the derivation of the property would ordinarily be proved by the same facts as an applicant must establish in relation to par (ii). [19]

42 In the emphasised passage Hunt CJ at CL suggests that there is substantial overlap between sub-s (i) and (ii), and that both involve consideration of derivation.

As the applicant has not succeeded in persuading me in relation to the matters stated in par (i) of s 48(4)(e) - except in relation to the Triumph Coupé - he must fail also to persuade me in relation to par (ii), that his interest in the property was lawfully acquired. [20]

44 In this passage Hunt CJ at CL states that a failure to discharge the obligation to prove the negative, namely that the property is not derived from unlawful activity, necessarily led to a failure to establish the positive, that the property was lawfully acquired.

45 In relation to the Triumph Coupé, referred to in the quoted passage above, Hunt CJ at CL referred to the evidence and submissions made about 'legitimate sources' and 'illegitimate sources' for the funds used to acquire it, and then said:

... The evidence is, however, that the applicant had been employed by the oil company for approximately 12 months. He received a group certificate, so he did not use funds which should have been paid in tax to acquire the vehicle. That evidence does not cause me to disbelieve either the applicant's denial in terms of par (i) in relation to this vehicle or his assertion in terms of par (ii). Accordingly, I am prepared to grant the relief sought pursuant to s 48(4) in relation to the Triumph Coupé. [21]

46 Hunt CJ at CL's decision was appealed to the Court of Appeal of New South Wales.[22] Save in relation to one item, Hunt CJ at CL's decision was upheld. There are some observations of the Court of Appeal which are of assistance. Cole JA, with whom Handley JA agreed, observed that (i) (not used or derived) stands in contrast to (ii) (lawfully acquired) as (i) requires the applicant to establish a negative. Cole JA continued:

Within s 48(4)(e), a distinction is drawn between a lawfully "acquired" interest in property and property "derived" directly or indirectly from an unlawful activity. "Derived" is thus different to "acquired". Derived involves a wider consideration than merely the specific circumstances involved in acquisition. [23]

Cole JA saw the 'derived' component as wider than 'acquired', but that 'acquired' did involve consideration of the specific circumstances involved in the acquisition. I think that is consistent with what Hunt CJ at CL had suggested about overlap and about both requirements involving some consideration of the sources of the acquisition, albeit a narrower consideration under (ii) than under (i).

47 In Victoria, Osborn J quoted and relied upon the judgments at first instance and on appeal in Jeffrey in Banda v DPP,[24] without making specific reference to the passages I have quoted.[25]

48 There are two interstate decisions which follow Jeffrey and which have potential relevance.

49 In Commonwealth Director of Public Prosecutions v Diez[26] Greg James J quoted the passage from Hunt CJ at CL where he said that ordinarily derivation would be proved by the same facts as an applicant must establish for lawful acquisition, and, in order to determine an application under s 48(4) of the Proceeds of Crimes Act 1987 (Cth), analysed the sources of funds which had been used for improvements to a family home, it having been established that the home had originally been lawfully acquired. His approach seems to me to be consistent with my reading of Jeffrey.[27]

50 In Studman v Commonwealth Director of Public Prosecution[28] the New South Wales Court of Appeal considered an exclusion application under the Proceeds of Crimes Act 2002 (Cth). Pursuant to s 94 of that Act an exclusion order could be made if the court was satisfied 'that the property is neither proceeds of unlawful activity nor an instrument of unlawful activity' (sub-s (e)) and 'was lawfully acquired' (sub-s (f)). The facts in that case were in some ways the converse of the facts in this appeal. The property in question was the credit balance in a bank account and certain shares. The shares had been acquired using funds from a stockbroker's account. Both the bank account and the stockbroker's account had been established unlawfully in contravention of the Financial Transaction Reports Act 1998 (Cth) because they were opened in a false name. The argument put by the applicant there was that the credit balance and the shares were lawfully acquired because the funds deposited and used to buy the shares had been lawfully acquired. McClellan CJ at CL, with whom Spigelman CJ and Handley AJA (as he then was) agreed, held that the relevant asset in relation to the bank account was the chose in action and that that asset had been unlawfully acquired notwithstanding that the funds deposited may have been lawfully acquired. The court also held that the shares acquired using funds from the unlawfully established stockbroker's account were also unlawfully acquired. The conclusion concerning the chose in action could be seen to be of assistance to the appellant in this case and the conclusion concerning the shares could be seen to be of assistance to the respondent. Upon analysis, I do not think that either conclusion is of assistance. The chose in action was unlawfully acquired because the act of depositing in a false name was itself unlawful. That conclusion does not suggest or imply that a lawful deposit of unlawfully obtained funds would constitute the lawful acquisition of the chose in action. Thus, it seems to me that the case does not assist the appellant. The appellant did not refer to or rely upon it. The conclusion concerning the shares does not, on analysis, assist the respondent because whilst in some places the discussion in McClellan CJ at CL's judgment does suggest the kind of analysis as to source which was referred to in Jeffrey, the express provisions of the Financial Transactions Report Act 1998 (Cth) themselves rendered the shares the proceeds of an unlawful activity and McClellan CJ at CL specifically referred to those provisions.[29]

51 Before the Act, provision was made for the forfeiture of property in relation to criminal activities under the Crimes (Confiscation of Profits) Act 1986. In 1991 sub-s (2A) was introduced into s 5 of the Sentencing Act 1991 providing that when sentencing an offender a court could have regard to certain forfeiture orders made under the Crimes (Confiscation of Profits) Act 1986. Amendments were made from time to time, such that by 2007 sub-s (2A) read as follows:

(2A) In sentencing an offender a court -

(a) may have regard to a forfeiture order made under the Confiscation Act 1997 in respect of property -

(i) that was used in, or in connection with, the commission of the offence;

(ii) that was intended to be used in, or in connection with, the commission of the offence;

(iii) that was derived or realised, or substantially derived or realised, directly or indirectly, from property referred to in subparagraph (i) or (ii);

(ab) if it is satisfied that property was acquired lawfully, may have regard to automatic forfeiture under the Confiscation Act 1997 in respect of property -

(i) that was used in, or in connection with, the commission of the offence;

(ii) that was intended to be used in, or in connection with, the commission of the offence;

(iii) that was derived or realised, or substantially derived or realised, directly or indirectly, from property referred to in subparagraph (i) or (ii);

(b) must not have regard to a forfeiture order made under that Act in respect of property that was derived or realised, or substantially derived or realised, directly or indirectly, by any person as a result of the commission of the offence;

(c) may have regard to a pecuniary penalty order made under that Act to the extent to which it relates to benefits in excess of profits derived from the commission of the offence;

(d) must not have regard to a pecuniary penalty order made under that Act to the extent to which relates to profits (as opposed to benefits) derived from the commission of the offence;

(e) subject to paragraph (ab), must not have regard to any property forfeited under automatic forfeiture or a pecuniary penalty order made in relation to a Schedule 2 offence under that Act.

52 In R v McLeod[30] this Court was required to consider whether a person convicted and sentenced for an offence, whose property was subsequently forfeited by reason of that conviction, could rely on that forfeiture in an appeal against sentence as a basis for reopening the sentencing discretion.

53 In McLeod the offender was convicted of drug trafficking offences and a dishonesty offence. Restraining orders had been made over his family home and other property. An application for exclusion had been made and the matter was then settled on the basis of a payment of a sum of money. The Court pointed out that a distinction was drawn in s 5(2A) between forfeiture which had to be disregarded and other forfeiture. Sub-s (ab) could operate only if the court was satisfied that the property had been 'acquired lawfully'. In that context the Court said:

An offender who relies on forfeiture (whether it has occurred or is anticipated) as a mitigating circumstance will ordinarily bear the onus of establishing that it should be so regarded. Where lawfully acquired property has been used in the commission of the crime and is "tainted" property, the punitive element in its forfeiture must be sufficiently identified for the sentencing judge. How much of it was lawfully acquired, the offender's interest in the property and the extent to which it was used to facilitate the commission of the crime may all require proof.

The sentencing judge is not required to speculate as to whether, or to what extent, the property in question was lawfully acquired or, alternatively, represented profit which the offender derived from his activities. It is for the offender to present "credible material" identifying the source of the property, so as to permit the sentencing judge to form a positive conclusion that at least some substantial portion of the property has been lawfully acquired. [31]

54 When considering the position of the family home in this particular case the Court said:

In this case the family home was subject to forfeiture because the appellant had between 1 December 2004 and 18 March 2005 used the house to facilitate his trafficking. Even if the proceeds of his unlawful activity were utilised to make mortgage payments, the majority of the payment made to the Crown by way of settlement should be viewed as a forfeiture of lawfully-acquired property. [32]

55 McLeod is potentially relevant because it establishes that, for sentencing purposes, the enquiry as to whether property had been 'acquired lawfully' involves consideration of 'the source'. Indeed, the decision proceeds on the basis that a single asset, such as a family home, might be lawfully acquired to the extent that funds not derived from unlawful activities were utilised in its acquisition.

56 There are many cases since McLeod, in the sentencing context, where this Court has adopted the same approach as it did in McLeod when considering whether property was 'acquired lawfully' (often also expressed the other way around as 'lawfully acquired') by enquiring into the sources of the funds used for the acquisition.[33]

57 In relation to the cases on s 5(2A) of the Sentencing Act 1991, counsel for the appellant submitted that they were not of assistance as it is clear that in s 5(2A) the expression 'acquired lawfully' encompasses the requirement that the property is not derived directly or indirectly from unlawful activities. It was submitted that this is clear from the fact that sub-s (a) and (ab) expressly deal with property used in the commission of the offence and sub-s (b) expressly deals with property derived or realised, directly or indirectly, from the commission of the offence. The submission was that the provisions of s 5(2A) clearly encompass the matters provided for in both sub-s(a)(i) and (a)(ii) (and after 2007 (a)(iia)) of the Act when using the term 'acquired lawfully'.

58 There is substance in this submission as a matter of analysis of the sub-sections, but the problem with it is that on my reading of the cases the term 'acquired lawfully' is treated as requiring consideration of the relevant source, not because the particular provisions of the statute require that but because that is the term's ordinary meaning.

59 Some of the matters raised in submissions can be put to one side.

60 The respondent relied upon the objects in s 3A of the Act. As the objects were introduced into the Act after the 2005 version, that submission is not of assistance in this case.[34]

61 The applicant relied upon the decision of Mildren J in Dickfoss. The issue there, under s 11 of the Criminal Property Forfeiture Act 2002 (NT), was whether certain cannabis had been acquired in the course of a 'forfeiture offence', as opposed to some lesser offence. There is a discussion of the terms 'acquire' and 'acquired' but it is in that specific context and it does not seem to me to be of assistance.

62 The appellant referred the Court to legislation in other States, in particular s 77 of the Criminal Property Forfeiture Act 2002 (NT), s 149 of the Criminal Property Confiscation Act 2000 (WA), and s 336A of the Proceeds of Crime Act 2002 (Cth). The submission made by reference to those provisions was that other legislatures have specifically provided that property will only be lawfully acquired if the property is lawfully acquired and any consideration given for it is also lawfully acquired. It does not seem to me that a consideration of what might have been done to make the position clear, or clearer, relevantly assists in determining what is the correct construction of the relevant provision.

63 Reference was made to the decision of Kyrou J in Grillo v DPP.[35] His Honour was there considering an exclusion application under the Act as it was after the 2007 amendments, in other words after the inclusion of sub-s (a)(iia). His Honour observes that all three relevant sub-sections are interrelated. He does not address the application of sub-s (a)(i) separately from the others, and it was unnecessary to do so in that case. Reference was also made to DPP v Cini[36] which does not seem to me to assist on the issue of concern in this case.

Applicable principles of statutory construction

64 There are three principles of statutory construction which have relevance here. They are:

1. Section 35(a) of the Interpretation of Legislation Act 1984 (Vic) directs that, in the interpretation of an Act, a construction which would promote the purpose or object underlying the Act, whether expressly stated or not, shall be preferred to a construction that would not promote that purpose or object.

2. Section 35(b) of the Interpretation of Legislation Act 1984 (Vic) provides that consideration may be given to any matter or document that is relevant including reports of Parliamentary proceedings and explanatory memoranda.

3. When construing the provisions of a statute which purports to effect confiscation, any statutory ambiguity should be interpreted so as to respect a person's property rights, and, if there are two reasonable interpretations, the more lenient of which will avoid the imposition of the confiscation, that more lenient construction must be adopted.[37]

65 As to the first principle, s 35(a) requires the purpose or object to be taken into account. This is not contingent on the existence of ambiguity, or upon the basis of the traditional mischief or purpose rule.[38]

66 As to the second principle, if the language used is not ambiguous or uncertain there is no need to have resort to extrinsic material unless the ordinary meaning will give the statute an operation which obviously was not intended.[39]

67 The fundamental task remains that of construing the words in the Act. In Alcan (NT) Pty Ltd v Commissioner of Territory Revenue (Northern Territory),[40] Hayne, Heydon, Crennan and Kiefel JJ said:

This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intent. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.[41]

68 Relevantly, similar observations were made by Brennan and Gaudron JJ 20 years earlier in Catlow v Accident Compensation Commission.[42]

69 The nature of extrinsic material, including ministerial speeches and explanatory memoranda, is such that caution is needed when relying upon it. This is particularly so where it is relied upon in support of a contention as to the meaning of a legislative provision as opposed to identification of the mischief sought to be addressed or the purpose.[43]

70 As to the third principle, this court emphasised in DPP v Ali,[44] in the context of this very Act, that where there is no ambiguity there is no room for the application of the principles dealing with strict interpretation of ambiguous legislative provisions concerning the forfeiture of property.

71 The purposes of the Act are set out in s 1. They are:

a. To provide for the forfeiture of the proceeds of certain offences, whatever the form into which they have been converted;

b. To provide for the automatic forfeiture of restrained property of persons convicted of certain offences in certain circumstances;

c. To provide for the forfeiture by the Supreme Court or the County Court of property retrained on suspicion that it is tainted property in relation to a Schedule 2 offence;

d. To provide for the forfeiture of property used in connection with the commission of certain offences;

f. To provide for the destruction or disposal of certain illegal goods;

g. To provide for the effective enforcement of this Act and the management of seized and restrained assets;

h. To preserve assets for the purpose of restitution or compensation to victims of crime;

i. To amend the Sentencing Act 1991 to provide for the sentencing of continuing criminal enterprise offenders;

j To repeal the Crimes (Confiscation of Profits) Act 1986;

k. To make consequential amendments to certain other acts.

72 I do not think that either construction of 'lawfully acquired' contended for in this appeal can be said to be clearly inconsistent with those purposes. No submissions were directed to the purposes in s 1.

73 The explanatory memoranda relied upon by the appellant, namely those in 1997 and 2007, are relied upon to elucidate meaning and must, I think, be approached with care. They cannot be substituted for the text of the Act. Whilst the respondent did not rely on the 2004 explanatory memorandum, that document does seem to me to reveal the 'mischief' to which the relevant 2004 amendment was directed. It was directed at expansion of the property potentially covered so as to include property derived from property used. It was not directed at a narrowing of the scope of the relevant unlawful activity.

74 The Macquarie Dictionary (5th edition) relevantly defines 'acquire' as:

(verb) 1. to come into possession of; get as one's own: *You must acquire property at once - DAVID FOSTER, 1981. 2. to gain for oneself through one's actions or efforts: *it is easier to acquire gentlemanly deportment than axe-man's muscle - JOSEPH FURPHY, 1903.

75 As these definitions reveal, 'acquire' can mean the act or process of getting something into one's ownership or possession, or it can mean a series of actions or processes which culminate in one attaining ownership or possession of something.

76 It seems to me that whether one takes a narrow or a broad view of the term 'lawfully acquired', the ordinary meaning of that term may properly involve consideration of the source of the funds used in the acquisition. The appellant could cite no decided case or other source which adopts a construction whereby consideration of the source of the funds used is precluded.

77 Sub-section (a)(ii) is not, and never has been, merely an extension of sub-s (a)(i). Sub-section (a)(i) concerns acquisition by the applicant. Sub-section (a)(ii) addresses other issues. In particular, it addresses the use of property, tracing, and the activities of persons other than the applicant. In many cases, there will be overlap. That is unsurprising and is not, in itself, a justification for limiting the ambit of sub-s (a)(i).

78 The authorities on similar and related legislation reveal that an enquiry as to lawful acquisition can involve consideration of the source, although that consideration would not extend as far as it might under sub-s (a)(ii).

79 It seems to me that in order to accept the appellant's approach an unreasonably narrow view of acquisition must be taken. This is most clearly demonstrated by the bank deposit. The appellant's construction means the mere act of depositing illegally obtained money in a bank renders it 'lawfully acquired'. I do not think that this is the ordinary meaning of the expression. This is not an issue of ambiguity or of competing reasonable interpretations. The construction contended for by the appellant is not reasonable.

80 On analysis, the appellant's argument is founded on three unarticulated, or not fully articulated, propositions. The first is that the ambit of sub-s (a)(ii) limits and confines the ambit of sub-s (a)(i). The second is that the true ambit of both provisions is best revealed by looking back from 2007, when the amendment introducing sub-s (a)(iia) was made, to the 'tainted property' version of sub-s (a)(ii) in 2004, and then to the prior, in some respects wider and in some respects narrower, version of sub-s (a)(ii) when it was enacted. The third is that the explanatory memoranda may be relied upon so as to narrow what would otherwise be the construction of sub-s (a)(i). I do not accept any of these propositions. Sub-sections (a)(i) and (a)(ii) do need to be read together, but they can and do overlap. They do not need to be construed so as to eliminate overlap. Retrospective analysis, and reliance upon the necessarily discursive and imprecise language of explanatory memoranda, requires caution, and should never divert attention from consideration of the words used in the relevant provisions.

81 The correct approach is to focus on the proper construction of the words used in sub-s (a)(i), as enacted and as it has always remained. In that respect I think Jeffrey reveals the correct conclusion. Sub-section (a)(i) overlaps with sub-s (a)(ii). They are to be distinguished from each other, but both may involve consideration of source, albeit not to the same extent. The authorities on s 5(2A) of the Sentencing Act 1991 also lend support to this approach.

82 The appellant contends that the exclusion test in s 22(a)(i) of the Act is satisfied if the court finds that the transaction by which that interest was acquired was lawful. The trial judge did not accept that and found that s 22(a)(i) was not satisfied because the applicant adduced either no evidence or evidence which lacked veracity as to the source of the funds used. It was accepted that if the narrow construction contended for by the appellant was not accepted then the trial judge was at liberty to reach the conclusion he did in the circumstances of the case.

83 In my view the construction contended for by the appellant was correctly rejected by the trial judge. That is not to say that evidence as to source of funds used is essential in every case, or to address how far such an enquiry might properly extend under sub-section (a)(i). The facts of this case were such that without any credible evidence as to source of the funds used the trial judge could properly conclude, as he did, that sub-section (a)(i) was not satisfied.

Part 1 Division 2A Crimes Act 1958

84 During the hearing the Court raised the issue whether the transactions whereby deposits were made and the car and the apartment were purchased were themselves unlawful transactions under Division 2A of Part 1 of the Crimes Act 1958 ("the money laundering provisions"). Further submissions on that issue were made in writing after the hearing. The appellant submitted that this was an issue not raised before, or considered by, the trial judge; not the subject of any contention by the respondent; and outside the mutually agreed ambit of the appeal. In the respondent's further submission, which was delivered after the appellant's, none of that was disputed. But the respondent did submit that the money laundering provisions were relevant to the construction of s.22(1)(a) of the Confiscation Act, and Redlich JA has addressed that submission.

85 Insofar as the money laundering provisions might be relied upon so as to conclude that this appellant had failed to establish what he needed to establish under s.22(1)(a) in this case, it seems to be accepted that that was not a matter relied upon by the respondent either in the application before the trial judge or on the appeal. I would have thought that in exclusion applications like this one, the money

laundering provisions could be significant. If a particular disposition were an offence under the money laundering provisions, the acquisition could not be lawful even if the narrow construction contended for by the appellant were accepted.

86 The issue was raised by the Court during argument. Written submissions were received after argument. The appellant submitted that the issue could not properly be considered, and the respondent made submissions as to construction which were entirely new. In the circumstances, given the conclusion I have reached on other grounds in any event, I prefer not to express any view on the respondent's submissions on this issue.

88 I have had the opportunity to read, in draft, the reasons of Whelan JA. I agree with his reasons for dismissing the appeal, and wish to add a few observations of my own.

89 In his judgment, Whelan JA has set out the relevant provisions of the Act, and shown how the appellant's argument has built on the original structure of s 22(a) and the subsequent amendments to it. When it was enacted, s 22(a) of the Act, required an applicant for an exclusion order to satisfy the court that:

(i) 'the property in which the applicant claims an interest was lawfully acquired by the applicant'; and

(ii) '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'.

Thus, the onus was on an applicant for an exclusion order to establish the

circumstances in which he or she came into ownership of the goods in question. When it was enacted, the Act required an applicant to establish that his or her ownership of goods did not arise from the proceeds of the applicant's or some other previous criminality. That requirement, so the appellant contends, was sourced solely from s 22(a)(ii), such that, if that provision were to be removed from the Act, that requirement would no longer exist: an applicant for an exclusion order, so the contention goes, could succeed even if he or she could not satisfy a court that the funds used to acquire the property had been come by lawfully. That particular obligation, it is said, is not inherent in the requirement imposed by s 22(a)(i) to satisfy the court that the property was 'lawfully acquired'. Section 22(a)(i) requires proof of matters other than those relating to the source of the funds used to acquire the property in question. The appellant then argued that, when s 22(a)(ii) was amended so that its existing test was removed and replaced by the requirement that an applicant for exclusion satisfy the court that the property was not 'tainted property',[45] an applicant for exclusion was no longer required to satisfy the court that his or her interest in the property did not derive from the proceeds of the applicant's or some other person's criminality. The appellant said that this interpretation was confirmed by the further amendment to the Act in 2007.[46] That amendment required an applicant for an order to satisfy the court that the property was not 'derived property'. The appellant said that the requirement that an applicant for exclusion must satisfy the court that the interest in the property did not arise from the proceeds of criminality had been reinstated. That requirement had been present when s 22(a) was originally enacted; it was not a requirement between 2004 and 2007; but, with the introduction of s 22(a)(iia), it had been reinstated.

90 For its part, the respondent said that an applicant for exclusion always had to satisfy the court that the acquisition of property was not sourced from the proceeds of criminality. That obligation, it was said, was always inherent in the requirement, imposed by s 22(a)(i), that an applicant satisfy the court that the property was 'lawfully acquired'.

91 In my opinion, there is nothing in the amendments that have been made to the Confiscation Act 1997 (Vic) since it was enacted that was intended to alter the meaning of the phrase 'lawfully acquired by the applicant' as it appears in s 22(a)(i).

92 In their joint judgment in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory),[47] Hayne, Heydon, Crennan and Kiefel JJ said:

This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.[48]

93 In Alcan, the majority rejected a proposed construction of a statutory provision on the basis that it was 'contrary both to the natural and ordinary meaning of the words and to considerations of grammar and syntax'.[49]

94 What, then, is the 'natural and ordinary meaning' of the phrase 'lawfully acquired'?

95 It seems to me that one would not say of a person who had acquired some asset with the proceeds of a crime that he or she had 'lawfully acquired' that asset, notwithstanding that the asset had been acquired pursuant to a formal contract.

96 One would not say that an interest in an asset had been lawfully acquired if the funds used to acquire that asset had not themselves been lawfully acquired. One would not say that the asset had been lawfully acquired whether the funds to acquire it had been unlawfully acquired by the owner or had been made available to the owner by a third party who had acquired them unlawfully.

97 It may depend on the circumstances. Were one to say of the assets of a notorious criminal that some of his assets have not been lawfully acquired, one would be understood to be referring to those of his assets that had been acquired with the proceeds of his criminality. Such an understanding would flow from the natural and ordinary meaning of the phrase 'lawfully acquired' in the circumstances in which it has been used. Were we to demand of such a person to prove that he had acquired a particular asset lawfully, we would not be satisfied that he had done so if he could not show that his acquisition of the asset was not the fruit of his criminality.

98 It may be different were we to ask the same question of a person with a good reputation. We may be satisfied that an asset was lawfully acquired if such a person could exclude the possibility of having stolen the asset or obtained it by deception. Or, if the only issue was whether the asset had been stolen, we might be satisfied that it had been lawfully acquired if we were shown a receipt from a major retailer. But, if the asset was acquired in a hotel notorious for being an exchange for stolen property, we would not be satisfied that the asset had been lawfully acquired without further evidence.

99 It depends, therefore, in what circumstances the question whether an interest in property has been lawfully acquired is being asked.

100 The question being asked, or, more accurately, the test that has been set by the Act is not asked or set in abstract circumstances. On the contrary, the Act uses the expression 'lawfully acquired' in two corresponding circumstances. Section 22 of the Act sets the test for an exclusion order where a person has been charged with an 'automatic forfeiture offence'. Section 24 sets the test for an exclusion order where a person has been charged with a 'civil forfeiture offence'.

101 At the time of its enactment, s 3 of the Act defined such offences as follows:

"automatic forfeiture offence" means an offence referred to in Schedule 2 and, in Parts 11, 13 and 14, includes an interstate offence.

1. An offence against any of the following provisions of the Drugs, Poisons and Controlled Substances Act 1981:

(a) section 71(1) (trafficking in a drug of dependence) in circumstances where the offence is committed in relation to a quantity of a drug of dependence that is not less than the commercial quantity applicable to that drug of dependence;

(b) section 72(1) (cultivation of narcotic plants) in circumstances where the offence is committed in relation to a quantity of a drug of dependence, being a narcotic plant, that is not less than the commercial quantity applicable to that narcotic plant;

(c) section 79(1) or 80(3)(a) (conspiracy) in circumstances where the conspiracy is to commit an offence referred to in paragraph (a) or (b);

(d) section 80(1) or 80(3)(b) (aiding and abetting etc.) in circumstances where the offence that is aided, abetted, counselled, procured, solicited or incited is an offence referred to in paragraph (a) or (b) or an offence committed in the circumstances referred to in paragraph (a) or (b) under a law in force in a place outside Victoria that is a corresponding law in relation to section 71(1) or 72(1), as the case requires.

2. An offence against any of the following provisions of the Crimes Act 1958:

(a) section 81(1) (obtaining property by deception) where the value of the property in respect of which the offence is committed is $100 000 or more;

(b) section 82(1) (obtaining financial advantage by deception) where the value of the financial advantage obtained is $100 000 or more;

(c) section 321(1) where the conspiracy is to commit an offence referred to in paragraph (a) or (b).

1. An offence against section 122(1) of the Confiscation Act 1997 (money laundering) where the money or other property is proceeds of an offence referred to in item 1 or 2.

(b) aiding, abetting, counselling or procuring, or being in any way knowingly concerned in, the commission of -

5. An offence of attempting to commit any offence referred to in items 1 to 3.

1. A continuing criminal enterprise offence within the meaning of Part 2B of the Sentencing Act 1991 for which the offender is liable to be sentenced under that Part as a continuing criminal enterprise offender.

1. The common law offence of conspiracy to defraud where the property, financial advantage or economic loss in respect of which the offence is committed is $100 000 or more.

102 Similarly, at the time of its enactment, s 3 of the Act defined 'forfeiture offence' to mean 'an offence referred to in Schedule 1 and, in Parts 11, 13 and 14, includes an interstate offence.' Schedule 1 sets out a variety of offences that includes 'an indictable offence' and 'an automatic forfeiture offence'. It also includes offences against a series of particular enactments.[50]

103 There are other relevant provisions. Section 16 provides that an application for a restraining order could be made to a relevant court where 'a person has been, or within the next 48 hours will be, charged with or has been convicted of (a) a civil forfeiture offence .... (b) an automatic forfeiture offence ...'. Sections 17 to 19 deal with the procedure and determination of such applications. Section 22 confers jurisdiction on a court to make an exclusion order in respect of an automatic forfeiture offence; s 24 confers corresponding jurisdiction to make an exclusion order in respect of a civil forfeiture offence. Section 27 identifies the duration and the setting aside of restraining orders. In effect, if the person is not charged or is acquitted, the order is at an end.

104 It is in that context that the phrase 'lawfully acquired' is used in the Act. It is on the hypothesis that the applicant for an exclusion order has been charged with or convicted of either a 'civil forfeiture offence' or an 'automatic forfeiture offence'. In these circumstances, it seems to me that, using the words in their natural and ordinary meaning, an applicant for an exclusion order would not satisfy the test that an interest in property had been 'lawfully acquired' if the applicant could not exclude the possibility that the funds used to acquire the interest in the property were not the proceeds of some or other form of criminality.

The provisions with which s 22(a)(i) interacts

105 In Saeed v Minister for Immigration and Citizenship,[51] French CJ, Gummow, Hayne, Crennan and Kiefel JJ said that the meaning of a provision 'is to be answered by having regard, in the first place, to the text of (the provision) and the provisions with which it interacts'.[52]

106 Plainly, when it was enacted, s 22(a)(i) interacted with other provisions of the Act. But, what were the provisions with which it interacted, and what was the form of the interaction? Is its interaction to be confined to the provisions immediately adjacent to it?

107 The appellant assumes that the relevant interaction is solely with s 22(a)(ii). The appellant says that the relevant interaction was that each provision described wholly distinct ways of acquiring an interest in property such that, if the method of acquisition fell within s 22(a)(ii), it could not, for the purposes of the Act, fall under s 22(a)(i). More particularly, the appellant argued that, if it could be said of property that it had been 'derived or realised, directly or indirectly, by any person from any unlawful activity'[53] then, so far as the Act was concerned, it could not be said of that property that an interest in it was 'lawfully acquired by the applicant'.[54] In effect, s 22(a)(ii) operated to narrow the reach of s 22(a)(i) such that it related solely to the lawfulness of the formalities whereby an applicant had acquired an interest in the property.

108 The respondent says that, on the contrary, s 22(a)(ii) supplements s 22(a)(i), such that their provisions are not mutually exclusive of each other.

109 The argument outlined in [107] above should be rejected. It derives its plausibility only by narrowing the provisions with which s 22(a)(i) interacts to that which is immediately adjacent to it and by drawing attention away from the Act as a whole, and its evident purpose.

110 I have already discussed what I understand to be the other relevant provisions of the Act. The context of the Act merits a broader discussion.

111 In CIC Insurance Ltd v Bankstown Football Club Ltd,[55] Brennan CJ, Dawson, Toohey and Gummow JJ spoke of the significance of context in the interpretation of a statutory provision:

It is well settled that at common law, apart from any reliance upon s 15AB of the Acts Interpretation Act 1901 (Cth), the court may have regard to reports of law reform bodies to ascertain the mischief which a statute is intended to cure. Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses "context" in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy. Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent.[56]

112 The context of the Act is notorious. It has been described in DPP v Toro-Martinez,[57] a case which concerned the Proceeds of Crime Act 1987 (Cth).[58] In that case, Kirby P, having discussed the common law background to the forfeiture of property and to the laws that either repealed or modified the ancient notions of attainder, corruption of blood and forfeiture, identified what he described as the two sources that had stimulated the enactment of legislation such as the Proceeds of Crime Act 1987. He said:

The first was the series of Royal Commission reports in Australia in the 1980s drawing to public attention the perceived problems of organised crime, and calling to specific notice the large funds generated by it: see, eg, Australia, Royal Commission of Inquiry into Drug Trafficking, Report, February 1983, Canberra, AGPS. As one response to these reports, a Premier's Conference on Drugs was called in 1985. It proposed uniform legislation throughout Australia to confiscate the profits of drug dealing. Although uniform legislation did not ensue, all States of Australia, except Tasmania, have some form of property confiscation legislation. The fundamental principles governing the seizure and confiscation of assets are not dissimilar to those found in the Act: see, eg, Confiscation of Profits of Crime Act 1989 (NSW); Crimes (Confiscation of Profits) Act 1986 (Vic); Crimes (Confiscation of Profits) Act 1989 (Qld); Crimes (Confiscation of Profits) Act 1986 (SA); Crimes (Confiscation of Profits) Act 1988 (WA); and Crimes (Confiscation of Profits) Act 1988 (NT).

The second impetus for the enactment of legislation of this kind, including the Act, was the recognition of the international character of some organised crime. There was seen to be a need for worldwide legislative efforts to reduce the profitability and attractiveness of large-scale crime and to prevent profits derived from it from being used in further organised crime.[59]

113 So, those engaged in crimes from which large profits are derived have to contend with more than being charged with and convicted of specific offences. They subject themselves to the prospect of having their property confiscated. That confiscation is not confined to whatever implements they used in, or to whatever profits they derived from, their criminal activity. On the contrary, the Act permits a restraining order to be made in respect of all that person's property. The (unstated) presumption in the Act is that such a person has not come by his or her interest in property lawfully, and, for that reason, the property should be confiscated. The draconian nature of the Act is mitigated either (a) by those provisions which, by their own force, limit the duration of a restraining order or cause it to cease to be in force or (b) by the jurisdiction to make exclusion orders. The Act provides that the presumption of unlawful acquisition may be overcome by proof of lawful acquisition.

114 That, it seems to me, is the context of the Act, in general, and s 22(a), in particular. The context means that s 22(a)(i) interacts not only with 22(a)(ii), but with every other provision in the Act. That context also suggests that, when the Act was enacted, Parliament did not intend that the phrase 'lawfully acquired' in s 22(a)(i) was to have its meaning restricted by the use of the phrase 'not derived or realised, directly or indirectly, by any person from any unlawful activity' in s 22(a)(ii).

[1] Crimes (Money Laundering) Act 2003.

[2] The question posed by the Court did not, as the appellant suggests, seek submissions as to how the exclusion application ought to be determined if the appellant's construction were correct.

[3] It is in very similar terms to what was s 122 of the Confiscation Act.

[4] It is in very similar terms to what was s 123 of the Confiscation Act.

[5] The appellant was convicted of offences in Schedule 2. Item 2 of Schedule 1 includes Schedule 2 offences.

[6] Sections 16, 18 and Schedule 2.

[7] Section 35.

[8] Explanatory Memorandum, Confiscation Bill 1997 (Vic).

[10] Explanatory Memorandum, Major Crime Legislation (Seizure of Assets) Bill 2004.

[11] Ibid 4. The second 'not' in the first sentence of the third paragraph quoted is presumably a mistake.

[12] Victoria, Parliamentary Debates, Legislative Assembly, 5 October 2004, 620-1 (Rob Hulls, Attorney General).

[13] Explanatory Memorandum, Confiscation Amendment Bill 2007 (Vic).

[15] [2011] NTSC 4; (2011) 28 NTLR 71, 97 ('Dickfoss').

[16] The appellant relied upon Commissioner of the Australian Federal Police v Fysh [2013] NSWSC 81 (15 February 2013) [7]-[12]; New South Wales Crime Commission v Kelaita (2008) NSWLR 564, [57]-[59] and [62]-[63]; DPP v Logan Park Investments Pty Ltd (1995) 37 NSWLR 118, 125-127; Jeffrey v DPP (1995) 121 FLR 16, 19.

[17] The respondent relied upon DPP v Jeffrey (1992) 58 A Crim R 310; on appeal: (1995) 121 FLR 16; Banda v DPP [2003] VSC 272 (28 July 2003); R v McLeod [2007] VSCA 183; (2007) 16 VR 682, [30]; R v McKittrick [2008] VSCA 69 (29 April 2008) [30]-[32]; R v Filipovic [2008] VSCA 14 (15 February 2008) [65]f; HAT v The Queen [2011] VSCA 427 (20 December 2011) [63]f; Grillo and Ors v Director of Public Prosecutions for Victoria [2011] VSC 575 (14 November 2011) [50]f, per Kyrou J; Rajic v R [2011] VSCA 51 (3 March 2011) [18]; Vassilios Kapkidis v R [2013] VSCA 35 (1 March 2013) [46]-[49]; DPP v Cini [2013] VSCA 103 (9 May 2013) [29].

[18] (1992) 58 A Crim R 310 ('Jeffrey').

[19] Ibid 313 - the underlined emphasis is mine.

[20] Ibid 326 - the underlined emphasis is mine.

[21] Ibid - the underlined emphasis is mine.

[22] Jeffrey v Director of Public Prosecutions (1995) 79 A Crim R 514.

[23] Ibid 523 - the underlined emphasis is mine.

[24] [2003] VSC 272 (28 July 2003).

[26] [2003] NSWSC 238 (31 March 2003).

[27] The passage from Hunt CJ at CL is quoted by Greg James J at [40]. Greg James J also made reference to the Court of Appeal judgment in Jeffrey and to a decision of the Full Court of Queensland in Brauer v DPP (1989) 45 A Crim R 109. In Brauer the issue was use, it being conceded that the relevant property had been lawfully acquired.

[28] [2007] NSWCA 285 (17 October 2007).

[30] [2007] VSCA 183; (2007) 16 VR 682 ('McLeod').

[31] Ibid 689 - the underlined emphasis is mine.

[33] The cases to which I refer are: R v Filipovic [2008] VSCA 14 (15 February 2008) [81]-[82] and [106]; R v McKittrick [2008] VSCA 69 (29 April 2008) [30]-[32]; Rajic v The Queen [2011] VSCA 51 (31 March 2011) [18] and [22]; Tan v The Queen [2011] VSCA 427 (20 December 2011) [63]-[66]; and Vassilios Kapkidis v The Queen [2013] VSCA 35 (1 March 2013) (First Revision) [46]-[49].

[34] Section 3A was inserted by Act No 68 of 2010.

[35] [2011] VSC 575 (14 November 2011).

[36] [2013] VSCA 103 (9 May 2013).

[37] These are principles 3 and 4 articulated by Cole JA in the Court of Appeal judgment in Jeffrey at (1995) 79 A Crim R 514, 517-8. They were the principles quoted and relied upon by the appellant in his written submission, and accepted by the respondent in oral argument while submitting there was no ambiguity and no competing reasonable interpretations here.

[38] Mills v Meeking [1990] HCA 6; (1990) 169 CLR 214 ('Mills v Meeking'), 235, (Dawson J) quoted and adopted in Director of Public Prosecutions v Ali & Another [2009] VSCA 162; (2009) 23 VR 203, 216 ('DPP v Ali').

[39] Mills v Meeking, 223 (Mason CJ and Toohey J).

[40] [2009] HCA 41; (2009) 239 CLR 27.

[42] [1989] HCA 43; (1989) 167 CLR 543, 549-50.

[43] See the discussion and cases cited in Pearce and Geddes, Statutory Interpretation in Australia (LexisNexis Butterworths Australia, 7th ed, 2011) [3.24]-[3.26], and Mills v Meeking, 236-7 per Dawson J.

[45] Major Crime Legislation (Seizure of Assets) Act 2004 (Vic).

[46] Confiscation Amendment Act 2007 (Vic).

[47] [2009] HCA 41; (2009) 239 CLR 27 ('Alcan').

[48] Ibid 46-47 [47] (citations omitted).

[50] Those enactments were: the Archaeological and Aboriginal Relics Preservation Act 1972, the Casino Control Act 1991, the Classification (Publications, Films and Computer Games) (Enforcement) Act 1995, the Fisheries Act 1968, the Fisheries Act 1995, the Flora and Fauna Guarantee Act 1988, the Forests Act 1958, the Gaming and Betting Act 1994, the Gaming Machine Control Act 1991, the Gaming No. 2 Act 1997, the Lotteries Gaming and Betting Act 1966, the Racing Act 1958 and the Wildlife Act 1975.

[51] [2010] HCA 23; (2010) 241 CLR 252.

[53] Section 22(a)(ii).

[54] Section 22(a)(i).

[57] (1993) 33 NSWLR 82.

[58] See also DPP (Cth) v Saxon (1992) 28 NSWLR 263; Arie Freiberg and Richard Fox, 'Fighting crime with forfeiture: lessons from history' (2000) 6 Australian Journal of Legal History 1.

[59] DPP v Toro-Martinez (1993) 33 NSWLR 82, 86-87.