(per Debelle J) Criminal law - Proceeds of crime - defendant charged with possession of drugs for sale - related charge of unlawful possession of substantial sum of cash found with drugs in defendant's house - restraining order in respect of cash - application by defendant for access to cash to pay legal expenses - whether charge of unlawful possession is bar to access to the cash - other factors affecting decision - charge of unlawful possession is not in itself a bar to the application. Crimes (Confiscation of Profits) Act 1986 s6; Summary Offences Act 1953s41, referred to. Director of Public Prosecutions v Vella [1993] SASC 4353; (1993) 61 SASR 379; New South Wales Crime Commission v Younan (1993) 31 NSWLR 44; Gollan v Nugent [1988] HCA 59; (1988) 166 CLR 18; Bowmakers Ltd v Barnett Instruments Ltd (1945) KB 65; Gordon v Chief Commissioner of Metropolitan Police (1910) 2 KB 1080; Russell v Wilson [1923] HCA 60; (1923) 33 CLR 538, applied. Director of Public Prosecutions v Saxon (1992) 28 NSWLR 263; Palaniappa Chettiar v Arunasalam Chettiar [1962] UKPC 1; (1962) AC 294; Ison v Australian Wheat Board (1967) 68 SR (NSW) 102; Thomas Brown and Sons Ltd v Fazal Deen (1962)108 CLR 391, discussed.

HRNG ADELAIDE, 5 February 1996 #DATE 10:4:1996 #ADD 20:5:1996

Counsel for defendant: Mr W J Wells QC with him Mr H I Patsouris

Solicitors for defendant: Patsouris and Associates

ORDER Questions reserved answered as follows: 1. Not necessary to answer.

JUDGE1 COX J Questions reserved under s49 of the Supreme Court Act.

The circumstances giving rise to this reference are set out in the reasons of Debelle J which I have had the advantage of reading.

The money that the defendant is asking the Court to release from the restraint order are the subject of an unlawful possession charge. The police say that on 7 December 1994 they raided the defendant's premises at Christies Downs and found evidence of drug dealing including $27,833.20 in cash. They seized the money. On 9 December 1994 they laid an information charging the defendant with six counts of possessing drugs for sale. On a separate complaint they charged her with a number of summary offences including the unlawful possession of $27,833.20: Summary Offences Act 1953s41. The unlawful possession charge simply stated that the money "was reasonably suspected of having been stolen or obtained by unlawful means." Evidently the charges on the information and the complaint have not yet been tried. We were told by Mr Hinton, for the DPP, that the police will say that the money was the proceeds of the defendant's drug dealing. No charge has been laid against the defendant for the alleged drug offences that led to her possession of the money, but the DPP's case is that this was forfeitable property in the effective control of the defendant and so, by the combined effect of subss(1) and (1)(a) of s6 and subs(3) of s4 of the Crimes (Confiscation of Profits) Act 1986, amenable to a restraining order. Such an order was in fact made in this Court with respect to the money on 20 January 1995 and the validity and propriety of that order are not challenged. However, there is power under subs(5) of s6 for the Court to vary a restraining order at any time and the defendant has applied to have access to the money seized by the police and restrained under the order for the purpose of funding her defence to the criminal charges that I have described. The DPP opposes the application. He does not say that he wants the cash preserved as an intended exhibit. His case is that the defendant simply has no legal right to it.

The questions that had been reserved for the consideration of the Full Court are - (1) Does a Court have power pursuant to any statute or at common law to order that, upon conviction of a charge of unlawful possession under Section 41 of the Summary Offences Act 1953, the property the subject of that charge should not be returned to a defendant?

(2) Does the Court have power under the Crimes (Confiscation of Profits) Act 1986 to grant access to "restrained property" within the meaning of that Act for the purposes of payment of an accused's legal expenses when such restrained property or part thereof is the subject matter of or evidence in a charge of unlawful possession under Section 41 of the Summary Offences Act 1953?

The second question does not pose any difficulty. I notice that the corresponding New South Wales Act, discussed in New South Wales Crime Commission v Younan (1993) 31 NSWLR 44, provides expressly for the release from a restraining order of the affected person's reasonable legal expenses, but the more general words of subs(3)(c) of s6 of our Act adequately achieves the same purpose. See also subs(5). I am in general agreement with Debelle J's discussion of this topic. While counsel's submissions were made in the context of the particular issues arising in this case, it would seem that the Court's powers under s6 with respect to property that is subject to a restraining order are very wide. Certainly they are not negated or limited by reason merely of the fact that the property in question happens to be the subject of an unlawful possession charge. Whether, in fact, an order should be made will be a matter for the Court's judgment after weighing the competing interests of the parties and, in some cases perhaps, of any interested third person. If it appears to the Court that the property is stolen property or was obtained by fraud or in some other dishonest way (using that term in its narrower sense of conduct akin to stealing and fraud), so that it is likely that some innocent third party has a legitimate claim on or with respect to it, then the Court will hardly be disposed to exercise its discretion in the defendant's favour. Compare New South Wales Crime Commission v Younan, at 46-7 and 49-50; Director of Public Prosecutions (SA) v Vella [1993] SASC 4353; (1993) 61 SASR 379, at 381 and 388. But the second question is posed in general terms and I would answer it - Yes.

The first question is more difficult. It raises the broad question of a person's entitlement to property in respect of which he has been convicted of unlawful possession under s41 of the Summary Offences Act. Mr Wells QC, for the defendant, preferred not to argue this matter - his submission was that an answer to the second question will satisfy the needs of the defendant's application - but he did hand us a memorandum that examined such cases as Gordon v Chief Commissioner of Metropolitan Police (1910) 2 KB 1080 and Russell v Wilson [1923] HCA 60; (1923) 33 CLR 538 and Gollan v Nugent [1988] HCA 59; (1988) 166 CLR 18 that emphasize that a person may have a good possessory title to property (including money) notwithstanding that it is the product of illegal transactions. It was pointed out that there is no forfeiture provision in s41 of the Summary Offences Act. Mr Hinton's response was that no forfeiture provision is needed. If a person's possession of property is shown, as a consequence of his conviction under s41, to have been contrary to law, any claim he may have had to a possessory or other title must evaporate. The cases about street betting and the like are distinguishable because, while the relevant legislation made particular transactions unlawful, it did not make it unlawful for the offender to be in possession of the proceeds of those transactions. So (the submission ran) if the present defendant is convicted under s41 of the Summary Offences Act in respect of this large sum of money, because it is proved to have been in her possession and to have been the subject of a reasonable suspicion that it was the proceeds of dealing in drugs and she fails to prove that she obtained possession of the money honestly (in the wider s41 sense of that word), she will be shown to have no title to the money and it will fall to the Crown as bona vacantia.

We did not hear full argument on this interesting question and in those circumstances I am reluctant to express a view of my own about it. I do not think it necessary to do so in order to provide the practical guidance that the s49 reference seeks. I have referred to the amplitude of the Court's powers to make or modify a restraining order under s6 of the Crimes (Confiscation of Profits) Act and I have indicated that, in my opinion, it would not normally be appropriate for the Court to release property where it appears to the Court that it was obtained by theft or fraud or other such means. I would not ordinarily include in that category property that appears to be the proceeds of illegal drug dealings. Even where a person's possession of such drug- related property has resulted in his being charged with unlawful possession, I would draw a distinction between such a case and the theft-type cases. In the latter there is a victim who will have a lively and enforceable interest, directly or indirectly, in the property in question. However, the Court is not obliged to be specially solicitous of the possible interests either of a drug buyer who has freely entered into an agreement with the seller that is illegal and unenforceable only by reason of its subject matter, or of the Crown which claims the property as the proceeds of an illegal transaction. Such cases should be dealt with, in my view, in accordance with the general principles laid down in DPP v Vella. In other words, the circumstance that a defendant's alleged possession of the proceeds of drug trading has led to his prosecution for unlawful possession will not in itself

• any possible question of evidence preservation apart
• have any bearing on the exercise of the Court's discretion when called upon to release property for the purpose of funding the defendant's legal defence to that or other criminal charges.

I would answer the questions reserved as follows - 1. Not necessary to answer. 2. Yes.

JUDGE2 MATHESON J I agree with the judgment of Cox J.

JUDGE3 DEBELLE J The events which gave rise the questions in this case stated may be summarised in the following terms. The summary is based on the facts as recited in the case stated and in the documents attached to it. 1. On 7 December 1994 the defendant was arrested in Victoria by members of the Australian Federal Police and charged with breaches of the Customs Act 1901 (Commonwealth) and of the Drugs, Poisons and Controlled Substances Act 1981 (Vic) and the Firearms Act 1958 (Vic).

The defendant was released on bail and returned to Adelaide.

Upon her return to Adelaide the defendant was on 8 December 1994 arrested by a member of the South Australian Police Drug Task Force. She was charged on information and complaint with breaches of the Controlled Substances Act 1984, the Summary Offences Act 1953 and the Firearms Act

1977. For present purposes, it is sufficient to note that she was charged on information with six counts of having in her possession a drug of dependence for sale contrary to s32(1)(e) of the Controlled Substances Act. She was also charged on information that on 7 December 1994 at Christie Downs she had in her possession personal property, namely $27,833.20 which either at the time of such possession, or at a subsequent time before the making of this complaint in respect of such possession, was reasonably suspected of having been stolen or obtained by unlawful means contrary to s41 of the Summary Offences Act

On 20 January 1995 the plaintiff obtained a restraining order against the property of the defendant pursuant to s6 of the Crimes (Confiscation of Profits) Act 1986 ("the Confiscation of Profits Act"). One of the items of property the subject of that order was cash in the sum of $27,833.20, the subject of the complaint for the charge of unlawful possession.

On 26 May 1995 and on 10 August 1995 orders were made varying the terms of the restraining order to enable property previously restrained to be available to the defendant for the purpose of applying it towards payment of her legal expenses in respect of the criminal offences with which she had been charged and the confiscation proceedings.

On 20 January 1995 the defendant applied for access to the sum of $27,833.20 for the purpose of applying it towards her legal expenses.

The plaintiff opposed the application on the grounds that the funds were the subject of a charge of unlawful possession.

The defendant contended that, notwithstanding the charge of unlawful possession, she is entitled to have recourse to the sum of $27,833.20 to pay her legal expenses.

The questions reserved for this Court are: (1) Does a Court have power pursuant to any statute or at common law to order that, upon conviction of a charge of unlawful possession under Section 41 of the Summary Offences Act 1953, the property the subject of that charge should not be returned to a defendant?

(2) Does the Court have power under the Crimes (Confiscation of Profits) Act 1986 to grant access to "restrained property" within the meaning of that Act for the purposes of payment of an accused's legal expenses when such restrained property or part thereof is the subject matter of or evidence in a charge of unlawful possession under Section 41 of the Summary Offences Act 1953?

It is convenient to deal first with the second question. The question has two aspects. The first concerns the power of the Court to vary a restraining order to permit payment of legal expenses. The second goes to the discretion to make such an order and involves consideration of the factors likely to affect the exercise of that discretion. POWER TO MAKE THE ORDER

This Court has power to make orders for payment of the legal expenses of an accused person out of restrained property: see s6(3) of the Confiscation of Profits Act and in Director of Public Prosecutions v Vella [1993] SASC 4353; (1993) 61 SASR 379. Section 6(5) of the Act authorises the Court at any time to vary or revoke a restraining order. Section 6(3) of the Act deals with the orders which might be included in a restraining order. Having decided in DPP v Vella (supra) that s6(3)(c) conferred power to authorise the payment of legal expenses, the Court then considered whether there was some rate at which legal expenses should be allowed. It was held that it was not the role of the Court to regulate the fees charged on the basis of what it considered reasonable. Instead, its role was restricted to ensuring that the property potentially liable to forfeiture is not depleted wastefully or dishonestly.

In reaching this decision, the majority (King CJ and Millhouse J) held (at 381) that it was a fundamental principle that a person accused of a crime is entitled to employ, out of his own resources, the legal representation of his choice: see also Director of Public Prosecutions v Saxon (1992) 28 NSWLR 263 per Kirby P at 274. The majority went on to note that different considerations would, however, apply where the property the subject of the restraining order can be identified, at least prima facie, as property which was obtained by theft or in other circumstances which left the victim's title to the property intact. Olsson J was the third member of the Court. He would have gone further. In his view it was unthinkable that the Court would countenance the making of substantial inroads into assets patently derived, wholly or substantially, from criminal activities to defray the legal costs of an alleged offender: see DPP v Vella (supra) at 388. The proposition that it is quite objectionable for a thief to use stolen money for the purpose of defending the charges against him has been affirmed twice by the Court of Criminal Appeal in New South Wales in Director of Public Prosecutions v Saxon (supra) and New South Wales Crime Commission v Younan (1993) 31 NSWLR 44.

Thus, a power is vested in a court to grant access to restrained property for payment of legal expenses. The question whether that power should be employed involves an exercise of discretion. The question in this case is whether in the exercise of its discretion the Court should have regard to the fact that the restrained property is the subject of a charge of unlawful possession. As the reasons in DPP v Vella indicate, one relevant factor is how the accused person obtained possession of the restrained property. I will return to that question.

WHEN ARE GOODS FORFEIT? 7. Forfeiture or escheat following the conviction for a felony was abolished in South Australia by s1 of the Act Number 25 of 1874 entitled "An Act to Abolish Forfeitures for Treason and Felony". That provision is now contained in s295 of the Criminal Law Consolidation Act 1935. There was no forfeiture at common law for convictions for a misdemeanour. In the case of conviction for statutory offences, there is no forfeiture unless the statute so provides. Thus, in the absence of any statutory provision, a person convicted of a crime is not liable to forfeiture of his property. The Confiscation of Profits Act is an example of a statutory provision for forfeiture. Some other examples are s46 of the Controlled Substances Act 1984, s299a of the Criminal Law Consolidation Act 1935 and s34A of the Firearms Act 1977 but none of these provisions apply to the issues in this special case. There is no provision in the Summary Offences Act providing that a person convicted of unlawful possession of goods must forfeit those goods following conviction for that offence. There is, therefore, no common law rule of forfeiture which bars the defendant's application nor any statutory bar to it other than the terms of the Confiscation of Profits Act.

THE EXERCISE OF DISCRETION: THE DEFENDANT'S POSSESSION 8. Section 41 of the Summary Offences Act makes it an offence for a person to have possession of personal property which, either at the time of possession or any subsequent time before the making of a complaint under the section in respect to the possession, is reasonably suspected of having been stolen or obtained by unlawful means whatsoever. There is little evidence of the grounds on which it is alleged that the defendant had unlawful possession of the cash totalling $27,833. The complaint alleging the offence does not give any particulars. The affidavit filed in support of the application for the restraining order alleges that the cash was found by police officers in three places in a room in a house owned by the defendant which had been set up as an office. One amount was on a table in a cardboard box in bundles of $50 and $100 notes. Two further amounts were found under a computer desk. They were also in bundles of $50 and $100 notes. The police officers also located at those premises quantities of different kinds of drugs as well as a pistol and silencer. The drugs seized were said to have a street value of approximately $100,000. The defendant has not given any evidence as to how she acquired this substantial amount of cash.

Mr Hinton, who appeared for the Director of Public Prosecutions, expressly stated that it is not alleged that the defendant had stolen the money. He submitted that it is reasonable to infer that the defendant had obtained possession of such a large cash sum as a result of trading in illicit drugs. The defendant has not been charged with participating in the sale of drugs. Instead, she is charged with several offences of possessing prohibited substances for sale contrary to s32(1)(e) of the Controlled Substances Act 1984. There are at least three inferences as to how the defendant came to possess the cash. The first is that it was obtained lawfully. In that case, the defendant is entitled to the cash. Two other inferences are that the cash was obtained by selling drugs or that it was money provided by another person dealing in drugs as a kind of cash float to enable such dealings. If it is the latter alternative, the defendant may have been some kind of bailee and it is not clear that it was obtained unlawfully. But even if it is assumed that the cash was derived in either of the last two ways and the money was obtained by unlawful means, it does not follow that, on that ground alone, the defendant is not entitled to part or all of the cash.

The relevant principles are restated in Gollan v Nugent [1988] HCA 59; (1988) 166 CLR 18. Although the Court will not lend its aid to a person who founds his cause of action upon an immoral or illegal act: Palaniappa Chettiar v Arunasalam Chettiar [1962] UKPC 1; (1962) AC 294, 303; Ison v Australian Wheat Board (1967) 68 SR (NSW) 102 at 113; Gollan v Nugent (supra) at 27, 47, that general proposition is subject to qualification. It does not apply where a right to recovery is founded on possession and the plaintiff does not have to rely upon an unlawful or immoral transaction to establish his cause of action: Bowmakers Ltd v Barnett Instruments Ltd (1945) KB 65, 71; Thomas Brown and Sons Ltd v Fazal Deen [1962] HCA 59; (1962) 108 CLR 391; Gollan v Nugent (supra) at 28, 47. The principle is expressed in these terms in Bowmakers Ltd v Barnett Instruments Ltd at 71: "In our opinion, a man's right to possess his own chattels will as a general rule be enforced against one who, without

any claim of right, is detaining them, or has converted them to his own use, even though it may appear either from the

pleadings, or in the course of the trial, that the chattels in question came into the defendant's possession by reason of an illegal contract between himself and the plaintiff, provided that the plaintiff does not seek, and is not forced, either to found his claim on the illegal contract or to plead its illegality in order to support his claim."

Thus, where a plaintiff is in possession of money acquired in the course of gambling transactions made illegal by statute and the statute does not render the money so acquired forfeit, the plaintiff is entitled to recover that money from police officers who have seized it: Gordon v Chief Commissioner of Metropolitan Police (1910) 2 KB 1080; Russell v Wilson [1923] HCA 60; (1923) 33 CLR 538. In such a case, notwithstanding that the plaintiff is guilty of an offence and liable to punishment, there is nothing which affects the property in the money received. It is as if the money had been lawfully acquired: Gordon v Chief Commissioner of Metropolitan Police (supra) at 1095, 1099; Russell v Wilson (supra) at 550, 554. In Gordon v Chief Commissioner of Metropolitan Police the money was recoverable because the legislation did not render forfeit money which changes hands in the course of illegal gambling transactions. The plaintiff was seeking to recover money which was his and nonetheless his because it was acquired by virtue of a gambling transaction and he was not enforcing any rights directly resulting from his carrying on business as a bookmaker: see Buckley LJ in Gordon v Chief Commissioner of Metropolitan Police (supra) at 1099. As Fletcher Moulton LJ said at 1095: "There being no forfeiture of the money under the Street Betting Act, 1906, and the property in the coins having passed out of the payer by his own voluntary act of payment, that property must be in the receiver, and whatever punishments and liabilities he may incur through his wrongful action in frequenting the streets for the purpose of betting, there is nothing that affects his property in

the money received by him. It stands exactly in the same position as any other money that belongs to him, and his paying it into his account at his bank or his changing it for other moneys of an equal amount would be absolutely without effect on his legal position with regard to it."

Similarly, in Russell v Wilson (supra) the plaintiff, who conducted sweeps on horse races, was entitled to recover money seized by the police which had been received by the plaintiff in connection with his business. The plaintiff was convicted of an offence under the Gambling and Betting Act 1912 (NSW) but although that Act provided for forfeiture, no order for forfeiture of the money was made. The possession entitled the plaintiff to the money which was held to be good against all but a superior title such as that of the two owners. Once the proceedings against the plaintiff had terminated, no order for forfeiture having been made, the power of seizure and retention by the police was exhausted. The decisions to which I have referred were all affirmed and applied in Gollan v Nugent (supra) at 46-47.

In this case, the Court is asked to infer that the cash was obtained by the defendant in the course of her illegal dealings in drugs. Assuming that to be so and assuming that the defendant is guilty of unlawful possession, she is, nevertheless, entitled to apply for access to the cash or part of it for payment of her legal expenses. It may be that the defendant should never have acquired the cash by engaging in illegal dealings in drugs but, having acquired it and having it in her possession when it was seized by the police, her claim to recover it does not require her to rely on the illegal conduct. She had a possessory title which is superior to that of those who took the cash from her. Whether she is entitled to access to part or all of the cash is governed by the provisions of the Confiscation of Crimes Act. A conviction on the charge of unlawful possession is not of itself a bar to an exercise of the discretion conferred to s6(3) of the Confiscation of Profits Act.

THE CASH IS NOT BONA VACANTIA 14. Mr Hinton submitted that a conviction for unlawful possession amounts to a finding that the defendant does not have a right to the property that is enforceable at law. Thus, he contends, the title to the property is automatically vested in the Crown as trustee for the rightful owner or passes to the Crown as bona vacantia. When stated in those broad terms, the submission must fail for it fails to have regard to the different kinds of circumstances which might constitute the offence of unlawful possession. In the particular circumstances of this case, the submission overlooks the question whether the defendant has any title to the cash which was found in her possession. Whatever application the principles relating to bona vacantia might have where a conviction for the offence of unlawful possession concerns goods which are reasonably suspected of being stolen and no-one claims those goods, those principles do not have any application in the circumstances of the present case.

OTHER FACTORS AFFECTING THE DISCRETION 15. The conclusion that the complaint for unlawful possession is not a bar to the defendant's application does not, of course, mean that the application should necessarily be granted. It will be relevant for the Court to examine other relevant factors. In New South Wales Criminal Commission v Younan (supra), the Court of Criminal Appeal in New South Wales identified some of the factors which, according the circumstances of each individual case, could be relevant in the exercise of the discretion whether or not to order the release of monies or other assets to fund the defence of the defendant. They include 1. The purposes of the Act including the preservation of property allegedly derived in whole or in part from criminal activities;

2. The reasonable demands of a person for access to that person's own property for legal expenses incurred in defending the criminal charges;

6. The effect of any exemption upon the achievement of the purposes of the Act which is to restrain the disposable property to abide orders under the Act following the completion of the proceedings.

16. There may be other factors which will emerge on the hearing of the defendant's application.

17. One relevant factor is whether the cash must be retained as evidence. In this case an order was made on 20 January 1995 that the cash which was found in the possession of the defendant be paid into an interest bearing account. But it does not necessarily follow that the cash has lost its identity by being mixed with other cash at the bank or other financial institution into whose interest bearing account the cash was paid. Paragraph 4 of the order is in these terms: "That the Commissioner of the South Australian Police Force pay the aforementioned sum of $27,833.20 into an interest bearing account and there hold the same until further order save insofar as it is required as an exhibit in any criminal proceeding against the defendant."

18. As I understand the order, it is the intention to preserve the identify of the cash. It will be relevant, therefore, to consider whether it is appropriate to make an order which would effectively dispose of part of the whole of the evidence, at least in the absence of some unequivocal agreed fact.

CONCLUSION 19. It is possible to give a short, unqualified answer to the second question. Section 6(3) of the Confiscation of Profits Act invests the Court with power to grant access to restrained property the subject matter of or evidence in a charge of unlawful possession. However, there may be factors which affect the discretion whether to exercise the power. In the exercise of its discretion, the Court will not make such an order where the property is stolen and may not be inclined to make an order where the property in question might be used as evidence. When considering how it should exercise its discretion, the Court is at liberty to have regard to other factors including, but not necessarily limited to, those identified by the Court of Criminal Appeal of New South Wales in New South Wales Crime Commission v Younan (supra). There may be other factors which in the particular circumstances of this case preclude the discretion being exercised in favour of the defendant. For these reasons, the appropriate answer to the second question is:- Yes. The fact that the restrained property is the subject of a charge of unlawful possession under s41 of the Summary Offences Act 1953 is not in itself a bar to the making of an order granting access to the restrained property for payment of an accused person's legal expenses but when considering, in the exercise of its discretion whether, to make such an order the Court should have regard to the factors identified in these reasons and any other relevant factor.

20. It is not, I think, appropriate to seek to answer the first question, at least in its present form. Some difficulties with the question were identified in the course of argument. It is not clear which court is the subject of the question. In addition, the variety of circumstances which might constitute the charge of unlawful possession make it undesirable to seek to answer in any general form. In any event, if the defendant is convicted, that part of her property which is still subject to the restraining order will be forfeitable and will include the cash which is found in her possession unless it has been already released to her. The answer to the second question appears to be sufficient for present purposes. No satisfactory reason was advanced in the course of argument for requiring an answer the first question. It should, therefore, be answered: Not necessary to answer.

21. For these reasons, the questions in the case stated should be answered: 1. Not necessary to answer.

2. Yes. The fact that the restrained property is the subject of a charge of unlawful possession under s41 of the Summary Offences Act 1953 is not in itself a bar to the making of an order granting access to the restrained property for payment of an accused person's legal expenses but when considering, in the exercise of its discretion whether, to make such an order the Court should have regard to the factors identified in these reasons and any other relevant factor.