The Scheme Under the CAR Act
20Before moving to factual issues falling for determination, it is appropriate to refer to the relevant statutory scheme in the CAR Act.
21The CAR Act is far-reaching in its operation. Section 3 describes the principal objects of the CAR Act in the following way:
"3 Principal objects
The principal objects of this Act are:
(a) to provide for the confiscation, without requiring a conviction, of property of a person if the Supreme Court finds it to be more probable than not that the person has engaged in serious crime related activities, and
(a1) to enable the current and past wealth of a person to be recovered as a debt due to the Crown if the Supreme Court finds there is a reasonable suspicion that the person has engaged in a serious crime related activity (or has acquired any of the proceeds of any such activity of another person) unless the person can establish that the wealth was lawfully acquired, and
(b) to enable the proceeds of illegal activities of a person to be recovered as a debt due to the Crown if the Supreme Court finds it more probable than not the person has engaged in any serious crime related activity in the previous 6 years or acquired proceeds of the illegal activities of such a person, and
(b1) to provide for the confiscation, without requiring a conviction, of property of a person that is illegally acquired property held in a false name or is not declared in confiscation proceedings, and
(c) to enable law enforcement authorities effectively to identify and recover property."
22Proceedings under the CAR Act are civil, not criminal. Section 5 provides:
"5 Proceedings are civil, not criminal
(1) For the purposes of this Act, proceedings on an application for a restraining order or a confiscation order are not criminal proceedings.
(2) Except in relation to an offence under this Act:
(a) the rules of construction applicable only in relation to the criminal law do not apply in the interpretation of the provisions of this Act, and
(b) the rules of evidence applicable in civil proceedings apply, and those applicable only in criminal proceedings do not apply, to proceedings under this Act."
23A proceeds assessment order falls within the definition of a "confiscation order" in s.4(1) CAR Act.
24The term "proceeds assessment order" is defined in s.4(1) as meaning an order under s.27 and in force. Section 27 concerns the making of such an order, and relevantly provides:
"27 Making of proceeds assessment order
(1) The Commission may apply to the Supreme Court for a proceeds assessment order requiring a person to pay to the Treasurer an amount assessed by the Court as the value of the proceeds derived by the person from an illegal activity, or illegal activities, of the person or another person that took place not more than 6 years before the making of the application for the order, whether or not any such activity is an activity on which the application is based as required by subsection (2) or (2A).
(2) The Supreme Court must make a proceeds assessment order if the Court finds it to be more probable than not that the person against whom the order is sought was, at any time not more than 6 years before the making of the application for the order, engaged in:
(a) a serious crime related activity involving an indictable quantity, or
(b) a serious crime related activity involving an offence punishable by imprisonment for 5 years or more.
...
(3) A finding of the Court for the purposes of subsection (2) or (2A) need not be based on a finding as to the commission of a particular offence or a finding as to any particular quantity involved, and can be based:
(a) on a finding that some offence or other constituting a serious crime related activity and punishable by imprisonment for 5 years or more was committed, or
(b) on a finding that some offence or other constituting a serious crime related activity was committed involving some quantity or other that was an indictable quantity.
(4) The references in subsections (1) and (2) to a period of 6 years include a reference to a period that began before the commencement of this section.
... ."
25The term "illegal activity" is defined in s.4(1) as meaning, amongst other things, "a serious crime related activity" .
26Section 6(1) and (2)(d) are presently relevant to the question of "serious crime related activity" in this case:
"6 Meaning of 'serious crime related activity '
(1) In this Act, a reference to a serious crime related activity of a person is a reference to anything done by the person that was at the time a serious criminal offence, whether or not the person has been charged with the offence or, if charged:
...
(2)(d) an offence that is punishable by imprisonment for 5 years or more and involves theft, fraud, obtaining financial benefit from the crime of another, money laundering, extortion, violence, bribery, corruption, harbouring criminals, blackmail, obtaining or offering a secret commission, perverting the course of justice, tax or revenue evasion, illegal gambling, forgery or homicide, or
..."
27Once the Court has determined to make a s.27 order, s.28 operates concerning the assessment of the order. Section 28 relevantly provides:
"28 Assessment for proceeds assessment order - illegal activity proceeds
(1) For the purpose of making an assessment for a proceeds assessment order under section 27 in relation to the proceeds derived by a person (in this section called the defendant) from an illegal activity, or illegal activities, of the person or another person the Supreme Court is to have regard to the following matters:
(a) the money, or the value of any interest in property other than money, directly or indirectly acquired by:
(i) the defendant, or
(ii) another person at the request, or by the direction, of the defendant,
because of the illegal activity or activities,
(b) the value of any service, benefit or advantage provided for:
(i) the defendant, or
(ii) another person at the request, or by the direction, of the defendant,
because of the illegal activity or activities,
(c) the market value, at the time of the illegal activity or of each illegal activity, of a plant or drug similar, or substantially similar, to any involved in the illegal activity or each illegal activity, and the amount that was, or the range of amounts that were, ordinarily paid for an act similar, or substantially similar, to the illegal activity or each illegal activity,
(d) the value of the defendant's property before and after the illegal activity or each illegal activity,
(e) the defendant's income and expenditure before and after the illegal activity or activities.
(2) If evidence is given at the hearing of an application for a proceeds assessment order that the value of the defendant's property after an illegal activity or illegal activities of the defendant exceeded the value of the defendant's property before the activity or activities, the Supreme Court is to treat the excess as proceeds derived by the defendant from the activity or activities, except to the extent (if any) that the Supreme Court is satisfied the excess was due to causes unrelated to an illegal activity or activities.
(3) If evidence is given at the hearing of an application for a proceeds assessment order of the amount of the defendant's expenditure during the period of 6 years before the making of the application for the order, the Supreme Court is to treat any such amount as proceeds derived by the defendant from an illegal activity or activities, except to the extent (if any) that the Supreme Court is satisfied the expenditure was funded from income, or money from other sources, unrelated to an illegal activity or activities.
(3A) The Supreme Court is not to take expenditure into account under subsection (3) to the extent that the Court is satisfied that it resulted in the acquisition of property the value of which is taken into account under subsection (2).
(4) In making an assessment as provided by this section, none of the following amounts are to be subtracted:
(a) expenses or outgoings incurred by the defendant in relation to the illegal activity or activities,
Note. For example, in the case of an illegal activity involving the sale of drugs, in determining the value of the proceeds derived by the defendant from the sale of drugs there is to be no reduction on account of any expenditure by the defendant in acquiring the drugs.
(b) the value of any proceeds derived as agent for or otherwise on behalf of some other person (whether or not any of the proceeds are received by that other person).
Note. For example, where the defendant is paid money for drugs in the course of a 'controlled buy' but was acting merely as an agent or messenger for some other person (and gives the money to the other person), in calculating the proceeds derived by the defendant the amount given to the other person is not to be subtracted and the full amount is considered to have been derived by the defendant.
(5) This section applies to, and in relation to:
(a) property that comes into the possession, or under the effective control, of a person either within or outside New South Wales, and
(b) proceeds acquired either within or outside New South Wales in relation to an illegal activity.
... ."
28The background to, and operation of, the CAR Act was considered by the Court of Appeal in New South Wales Crime Commission v Kelaita [2008] NSWCA 284; 75 NSWLR 564. After reference to the second reading speech with respect to the legislation, Allsop P (Giles and Bell JJA agreeing) observed at 568 [12]:
"Further, the speech recognised that the legislation might be perceived to be unfair by some. It was certainly intended to be 'tough'. Again, these were rhetorical statements which do not assist in resolving questions about the precise linguistic content of the present text. They do, however, assist in appreciating that unless the express safeguards provided for in the Act (often resting on a reversed onus) are engaged, it may be seen as surprising to interpret or construe the Act in a way based on 'fairness' to the person proved to have been engaged in serious crime related activities. Indeed, as will be seen, the Act provides in terms for operation of the machinery of recovery in ways that, from one perspective, could be taken to display an element of unfairness."
29Allsop P touched upon the construction of s.28 CAR Act. The President said at 577 [38]-[40]:
"38 The assessment task set out in s 28 is an apparently comprehensive and complete regime. Section 28 sets out relevant considerations (s 28(1)) and the kinds of evidence that can be led with relevant consequences (s 28(2) and (3)). For instance, s 28(3) is clear that the Court 'is to treat' the amount of expenditure in the period as relevant proceeds. This is not an indication of flexibility as the primary judge thought.
39 It can also be seen that in s 28 the proceeds are calculated without regard to the costs or outgoings of the criminal operation: s 28(4)(a) and without regard whether proceeds are derived as an agent: s 28(4)(b). From one perspective, neither of these provisions is fair.
40 The terms and structure of Parts 2 and 3, and Divisions 1 and 2 of Part 3 in particular, do not display any intention to be fair beyond those specific provisions that deal with amelioration of the effects of the Act."
30Allsop P said at 578 [46]-[49]:
"46 Further, to make ss 22 and 27 complement each other through the word value, as her Honour did, may be unfair to the Crown. Unless it can be proved that the proceeds calculated under s 28 for the order under s 27 did purchase (in full) the forfeited asset and that there were no other illegally derived proceeds, the approach of the primary judge may limit the recovery of assets that may have been illegally derived. Unless the Court were satisfied that the value of proceeds proved under s 28 for the order under s 27, was the extent of illegally derived proceeds that had been generated by the person, some double counting under ss 22 and 27 may not be 'unjust'. The appellant proves what it can under s 28. It is then entitled to an order under s 27. That does not mean, however, that it can be assumed that all illegally derived proceeds have been identified. Double counting may be unfair, it may not be. To be concluded that it is, one would need to be satisfied of the full universe of illegally derived proceeds.
47 The kind of value judgements as to what is fair or not, what degree of precision is required and when double counting should be taken into account are all matters to which Parliament has directed itself expressly.
48 I see no ambiguity or lack of clarity in ss 27 and 28. The order under s 27 can be made even though an asset forfeiture order can also be made: s 27(6). The order under s 27 is in relation to the value of proceeds calculated by reference to s 28.
49 There is no basis to read into the word 'value' in s 27(1), or into any part of s 27 any authority to deduct from a calculation made under s 28, a sum referable to the value of assets forfeited under another section in another Division of Part 3."
31The first issue requires the Plaintiff to establish, on the balance of probabilities, that the Defendant was knowingly engaged in serious crime-related activity in the form of an offence that involves fraud, identified here as an offence under s.178BB Crimes Act 1900 .
32There was no issue before me that an offence under s.178BB Crimes Act 1900 was capable of falling within the general description in s.6(2)(d) CAR Act of "an offence that is punishable by imprisonment for 5 years or more and involves ... fraud" . This part of s.6(2)(d) refers generally to classes of crimes, without express reference being made to specific statutory provisions which create the offences. A wide variety of conduct is mentioned, including fraud, and an offence under s.178BB falls within that description: cf International Finance Trust Company Limited v New South Wales Crime Commission [2009] HCA 49; 240 CLR 319 at 358-359 [73], 368 [105].
33In determining whether the Plaintiff has discharged the civil standard of proof on the first issue, the Court should take into account the gravity of the matters alleged against the Defendant: s.140(2)(c) Evidence Act 1995 . Section 140(2) imports the principles in Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336 in requiring a court, when considering whether it is satisfied on the balance of probabilities, to take into account the gravity of the matters alleged in relation to the question: Amalgamated Television Services Pty Limited v Marsden [2002] NSWCA 419 at [61]; Palmer v Dorman [2005] NSWCA 361 at [40]-[47]; Director of Public Prosecutions (Cth) v Xu [2010] NSWSC 842; 202 A Crim R 279 at 285 [30]-[33].
34If the Plaintiff succeeds on the first issue, then it is for the Plaintiff to establish, on the balance of probabilities, for the purposes of s.28(3) CAR Act, the Defendant's expenditure during the period of six years before 28 October 2009. If the Plaintiff satisfies the Court on the civil standard of that expenditure, the Court is to treat that amount as proceeds derived by the Defendant from an illegal activity or activities, except to the extent that the Court is satisfied by the Defendant, on the balance of probabilities, that the expenditure was funded from income, or money from other sources, unrelated to an illegal activity or activities.
35The assessment task under s.28 is "an apparently comprehensive and complete regime" , with the Court required "to treat" the amount of expenditure in the period as relevant proceeds: New South Wales Crime Commission v Kelaita at 577 [38] (see [29] above). The method of assessment under s.28(3) is not confined, in the circumstances of this case, to the proceeds of the alleged s.178BB offence. Section 28(3) provides for the Court "to treat any such amount as proceeds derived by the defendant from an illegal activity or activities" . Attention is not confined to the alleged illegal activity which triggered the application in this case, being the alleged serious crime-related activity surrounding the use of false documents in support of the loan application.
36The statutory scheme contained in the CAR Act provides its own mechanisms which, as Allsop P observed in New South Wales Crime Commission v Kelaita at 568 [12] (see [28] above), at times involve reversed onus provisions.
37Further, the CAR Act has a number of provisions for the amelioration of the rigours of its application, including the avoidance of double counting under s.28: New South Wales Crime Commission v Kelaita at 577 [34].