New South Wales Crime Commission v Kelly and Ors

CATCHWORDS : Statutory Interpretation -confiscation LEGISLATION CITED : Criminal Assets Recovery Act 1990 Daniels Corporation International Pty Ltd v ACCC (2002) 77 ALJR 40; Jeffrey v DPP (Cth) (1995) 79 A Crim R 514; Johnson v D-G Social Welfare (Vic) (1976) 135 CLR 92; CASES CITED : Mabo v Queensland (No 2) (1992) 175 CLR 1; Newcrest Mining (WA) Ltd v Commonwealth (1997) 190 CLR 517; NSWCC v Kelly [2001] NSWSC 247; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; Timothy Fox v GIO Australia Ltd [2002] NSWIRComm 318; New South Wales Crime Commission -Plaintiff PARTIES : Lawrence Raymond Kelly - First Defendant Glenda Rangi - Second Defendant Lillian Rangi - Third Defendant FILE NUMBER(S) : SC 011044/98 COUNSEL : I Temby, QC with P Singleton - Plaintiff T Healey - Defendants SOLICITORS : New South Wales Crime Commission - Plaintiff

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

v Lawrence Raymond Kelly (First defendant);

JUDGMENT 1 Shaw J: This judgment involves an interpretation of the verb 'will', a word used to express simple future time and intention. 2 The Criminal Assets Recovery Act 1990 (NSW) ("the Act") established a radical regime for the confiscation of assets arising from criminal activity. It was directed to the confiscation of interests in property in relation to persons who were said to be engaged in serious crime and to enable the proceeds of crime to be recovered as a debt due to the Crown. I use the word 'radical' not in any pejorative sense but rather to note, as was observed by the Australian Law Reform Commission, the NSW Parliament established a 'non-conviction based confiscatory regime for a range of serious criminal activity' ['Confiscation that Counts', ALRC Report 87 at para 2.16]. 3 The statutory scheme provides a series of sequential steps. Section 10 of the Act enables property to be restrained and such a restraining order was made in this case on 4 April 1998. The next step is that an application for forfeiture is made and such an order was made by Greg James J [2001] NSWSC 247 on 4 April 2001. His Honour held that there was sufficient evidence that the defendants had engaged in the process of drug supply during the months preceding 1998 but also had engaged in actual transactions involving indictable quantities of illegal drugs in April of that year. Greg James J ordered that property be forfeited, but deferred the consideration of the assessment of the property to be confiscated. Initially, an application was made to set aside that judgment (against which no appeal was brought) but this has been abandoned. 4 The facts of this case are yet to be determined, and will be the subject of further evidence and submissions. However the New South Wales Crime Commission ("the NSWCC") alleges that Lawrence Raymond Kelly, or members of his family, who reside in the NSW western town of Boggabri, have been engaged in the sale of illegal drugs. It is asserted that drug users have regularly frequented his home in Brent St, Boggabri. On the other hand, Mr Kelly denies dealing with illegal drugs, says that he is living in a de facto relationship with the other defendant (Glenda Rangi), and has seven children, four of whom reside with him and the others being married or in other relationships. Mr Kelly says that he has had a variety of jobs, in particular, selling seafood, however the NSWCC alleges that there is unexplainable income which, bearing in mind the onus of proof lying upon Mr Kelly, could only have come from the proceeds of crime. The Court will, of course, hear further submissions and evidence in relation to these matters.

5 This application is made by the NSWCC for an assessment of the property to be confiscated pursuant to s 22 of the Act. 6 In response, the defendants have sought an order pursuant to s 24 of the Act seeking relief from the potential hardship incurred as a result of such an order. Section 24 of the Act provides: 24. Relief from hardship---spouses and dependants (1) If the Supreme Court is satisfied that an assets forfeiture order will operate to cause hardship to any dependant of the person who will forfeit an interest in property under the order, the Court: (a) may order that the dependant is entitled to be paid a specified amount out of the proceeds of sale of the interest, being an amount that the Court thinks is necessary to prevent hardship to the dependant, and (b) may make ancillary orders for the purpose of ensuring the proper application of an amount so paid to a person who is under 18 years of age. (2) The Court is not to make an order under this section in favour of the dependant of a person whose serious crime related activity formed the basis for the assets forfeiture order concerned unless the Court is satisfied that the dependant had no knowledge of any serious crime related activities of the person. (3) Subsection (2) does not apply if the dependant concerned is under 18 years of age. (4) In this section: "dependant" , in relation to a person, means: (a) a spouse or a de facto partner of the person, or (b) a child of the person, or a member of the household of the person, dependent for support on the person.

7 It is plain that the question of hardship only arises in relation to spouses and dependants, and not in relation to the individual accused of serious criminal activity. 8 It is submitted for the NSWCC that the particular section speaks in the future tense. It provides that 'if the Supreme Court is satisfied that an assets forfeiture order will operate to cause hardship to any dependant' the Court may alleviate such hardship. 9 I accept that the use of the future tense of the verb in the relevant section is of some significance. However, as revealed by the Macquarie Dictionary the word 'will' does not only indicate 'future likelihood' but can also indicate 'capability'. In these circumstances the future tense does not, in my opinion, preclude the capability of this Court to order, in appropriate circumstances, alleviation from hardship. The policy and intention of the Act allows this Court to deal with an application for relief from hardship, even when such application has not been made until after the date of the original application for forfeiture. Of course, practical difficulties which have obvious implications for the discretion of the court would arise if such a hardship application were made after the quantification of the amount of property to be forfeited or, more starkly, after the execution of any such order. But that is not the present case. 10 The contemporary approach to statutory construction is purposive, eschewing pedantry or medieval scholasticism. The view of the Court should be practical and realistic in assessing what the legislature intended. It includes a consideration of the policy underlying the statutory regime: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-382. Obviously the grammar (including the tense of the verb) is relevant to the task of construction, but it may not be decisive if at variance with the intention of the legislature, which is ascertained from the Act itself: Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 77 ALJR 40 at 55, 58 per Kirby J. 11 The applicable principles of statutory interpretation were crystallised in a judgment of the Vice President of the Industrial Relations Commission in Court Session, Walton J, in Timothy Fox v GIO Australia Limited [2002] NSWIRComm 318 to the effect that: (a) context should be considered in the first instance, not merely where there is ambiguity; and (b) context includes the 'mischief' which the statute was intended to remedy.

12 In the present case, it is my view that in the context of the Act it is recognised that there may be circumstances in which it might be necessary to modify (with respect to innocent dependants) the potentially harsh consequences of confiscation orders. It is inconceivable that Parliament would have intended such a harsh result of precluding a person from applying to this Court to alleviate hardship once a forfeiture order had been made, at least in the absence of some clear, unequivocal provision precluding such an application.

13 Nothing in the statute expressly indicates such a prohibition. Ordinarily, to detract from the jurisdiction of a superior court of record to deal with a statutory provision for beneficial relief the Parliament would need to expressly or clearly indicate such an intention: Johnson v Director General of Social Welfare (Vic) (1976) 135 CLR 92. 14 Here, the legislature has provided for alleviation in situations which might otherwise create great hardship for innocent dependants and I am unable to discern any clear intention to preclude the hearing and adjudication of such an application in circumstances where the application is made belatedly. It seems to me that it is relevant that the order is discretionary and allows the Court considerable latitude to specify any amount out of the proceeds of the sale of the interest that are necessary to preclude hardship to the dependant. It follows that no unjust, untoward or irrational result arises from the fact that such an application may be made subsequent to the original application for forfeiture. On the contrary, one can readily contemplate a situation of real injustice to third parties which should be heard and determined in accordance with law notwithstanding procedural delay. Such an approach is more consistent with rights respecting access to justice and also property rights. Courts should strive to recognise the principles of internationally recognised human rights principles where possible: Newcrest Mining (WA) Limited v The Commonwealth (1997) 190 CLR 517 at 660 per Kirby J; Mabo v Queensland (No 2) (1992) 175 CLR 1 at 42 per Brennan J; see also the Hon J.J. Spigelman, "Access to Justice and Human Rights Treaties" (2000) 22 Sydney Law Review at 141. 15 I should give weight to the observations of the Court of Appeal in relation to the broadly analogous Commonwealth legislation in Jeffrey v DPP (Cth) (1995) 79 A Crim R 514 where the Court held that an intention to abrogate or curtail fundamental property rights will not be imputed by the courts, but rather must be clearly manifested by unmistakable and unambiguous language. It was further said that a legislative intention to take away property without compensation would require an expression of 'irresistible clearness'. I appreciate that those observations of the Court of Appeal are directed to the confiscation itself rather than to any set off arising from an allegation of hardship to a dependant. Nevertheless, they indicate, in my opinion, the clarity with which the legislature needs to specify any deprivation of rights in respect of the property of persons, a fortiori where those persons have not been convicted of any crime or where they are innocent third parties. 16 Furthermore, the legislature has gone to some detail in constraining the powers of the Court to make an order with respect to hardship in a particular circumstance. I refer to s 24(2) of the Act which requires that the Court is not to make an order in favour of a dependant 'unless the Court is satisfied that the dependant had no knowledge of any serious crime related activities of the person'. It would be incongruous that the legislature would specify such a particular restriction in relation to knowledge and yet leave the question of timing of the application (a matter of procedure) to be left as an implication to deny the right of a hardship application to the court. 17 I am informed by counsel appearing for both parties that there is no decision precisely in point and that there is no assistance to be gained in resolving any asserted ambiguity from extrinsic materials such as second reading debates or parliamentary memoranda. However, the second reading speech does record that there were provisions in the Act to 'safeguard the position of innocent third parties' (Hansard, Legislative Assembly, 8 May 1990 at 2531). The relevant minister, the then Premier, goes on to say:

First, as I have said, bona fide purchasers for value without notice will be protected. Money paid to lawyers in relation to criminal proceedings or proceedings under this legislation will be protected. Beneficiaries under a will or intestacy will also be protected. Regulations will be made to protect bona fide recipients of gifts and donations, such as charitable and religious organisations and political parties. Second, if a person can show that not all of an interest in property was illegally derived, and he or she can show, for example, that 50 per cent was originally acquired using innocent proceeds, then the court can order that only 50 per cent of the value of the property is to be confiscated. Third, there is special provision to allow the Supreme Court to made adequate provision to avoid hardship to the spouse, children and other dependants who are members of the person's household. I would, however, emphasise to honourable members that the intent of the legislation is to place the onus squarely on those who benefit indirectly from drug activities to show that they are bona fide and without notice. This is fundamental. 18 Accordingly, I am left to balance the grammatical point made to attack the capacity of the defendants to bring a hardship application against the policy grounds which presumably prompted the legislature to provide some modification of what might otherwise be regarded as a harsh regime which could affect the interests of innocent persons, that is to say the dependants who have no knowledge of the criminal activities and whose property is being confiscated, or, at least, whose financial position is being adversely affected. 19 I am of the view that the Court is not deprived of jurisdiction to hear an application based upon hardship visited upon dependants merely because the application has been made subsequently to the forfeiture order. It seems to me that such a conclusion would elevate procedure and form over substantive rights and is not dictated by any express or necessarily implied provision in the legislative scheme. 20 I determine that the defendants' notice of motion is competent and I will hear an application for an order pursuant to s 24 of the Act.

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