Confiscation law changes in breach of “Charter”

Hansard: 23 August 2007 ASSEMBLY

Mr CLARK (Box Hill) — The Confiscation Amendment Bill makes a series of amendments to the Confiscation Act 1997, principally in relation to the exclusion of property from confiscation but also in relation to the way in which appeals can be conducted. The bulk of the amendments being made arise out of a case that was heard and decided by the Court of Appeal in Victoria on 15 February 2007, for which I understand the Director of Public Prosecutions is currently in the process of seeking leave to appeal in the High Court. The amendments made by the bill are intended to overcome what is considered by the government to be adverse, undesirable and unintended effects of the Court of Appeal decision.

It is worth making the point that this is considered by the government to be an important issue, but again we have had the Attorney-General taking from 15 February through to now to bring this legislation before the Parliament, notwithstanding the fact that this legislation is to have retrospective operation in many respects. This is yet again an example of how the Attorney-General is big on talk but is found to be sorely wanting when it comes to the nuts and bolts of delivering justice.

One could just imagine that this issue was sitting in the in-tray on his desk unattended for some considerable time before he managed to get himself organised to bring legislation before the house.

It is instructive to look at some recent evidence about what exactly has been happening with the confiscation regime in this state. The original confiscation regime in Victoria was introduced back in 1986. That regime had numerous problems. A new regime was introduced under the Kennett government by then Attorney-General Jan Wade in 1997 and, as was shown in a report by the Auditor-General on public sector agencies of May 2003, the reforms introduced by the then Attorney-General brought about a marked increase in the amount of revenue being confiscated under the program and in the numbers of restraining orders being issued under the program.

There was a further series of amendments to the legislation made in 2004 by the current Attorney-General. These were amendments which the Liberal Party opposed because of its concern that they extended the regime too far. The amendments being made today are in a sense technical in that it is said that they are not intended to alter the intention of the legislation as it has stood up until now, but of course that is the absolutely critical question that needs to be evaluated and assessed by this Parliament in considering the bill, particularly having regard to its retrospective operation.

The latest publicly available information that I can find in relation to what is actually happening with the asset confiscation regime is set out in the report Asset Confiscation Operations — Activities Summary 2005-06 and Report to the Attorney-General Pursuant to the Confiscation Act 1997, which was tabled in this house in June this year and was subject to a media release by the Attorney-General on 10 June this year headed ‘Asset confiscation recovers $6.6 million from criminals’, in which the Attorney-General boasted:

The Bracks government has introduced some of the toughest asset confiscation laws in Australia.

We have put the onus on offenders to prove their assets have not been illegally obtained or lose them.

Our laws also enable assets to be seized on suspicion of criminal activity, before criminal charges are laid.
The press release went on to say:

In 2005-06 $6.6 million was recovered from the confiscation and sale of criminals’ property or debt collected from convicted offenders.

The Attorney-General went on to claim:

This is up from 4.8 million in 2004-05 and is an eightfold increase since 1999. … Assets confiscated in 2005-06 include a silver SLK Mercedes Benz, whose sale netted $30 000 for the state. … A house used for cultivating cannabis was forfeited and sold at auction for $237 300.

He concluded by asserting:

The Bracks government is sending a clear message that crime does not pay in Victoria.
It is worth making a couple of observations. First of all, the figures cited by the Attorney-General and set out on page 6 of the actual report are somewhat at odds with the figures on pages 36 and 37 of the Auditor-General’s Report on Public Sector Agencies of May 2003.

Those figures show confiscation program revenue jumping from under $1 million in 1997-98, before the new regime, up to over $3 million in 1998-99. The text of the Auditor-General’s report says:

Revenue collected equates to an average of $3.2 million per annum compared with only $0.5 million per annum under the former legislation.

The claim of an eightfold increase compared with the previous regime is questionable, although it seems that there has been a continued increase in the amount confiscated under successive changes to the law.

I also make the further point that the report that was tabled by the Attorney-General gives no details on the number of confiscations that made up the $6.6 million. We know that, according to the Auditor-General, in 2001-02 around 45 restraining orders were made, yielding just under $2.5 million.

If you extrapolate forward from that, you find it may be that something of the order of 100 restraining orders were made in 2005-06 to give rise to the $6.6 million. If that is the case, you have to wonder what exactly were the sizes of the individual amounts that were being confiscated. They do not seem to have been particularly sizeable amounts.

In other words it seems pretty clear that, while this legislation is said to be aimed at the Mr Bigs of crime — and that is certainly what we want the legislation to be succeeding in — if it raised a total of $6.6 million on around 100 confiscation orders, it does not seem to be hitting that mark. The fact that the Attorney-General has singled out for attention the sale of a single Mercedes-Benz for $30 000 and the sale of a property for $237 000 certainly seems to suggest that we are not getting the palatial mansions or Lamborghinis or other extravagant proceeds of crime that one would expect the Mr Bigs to have obtained.

You may draw the conclusion that crime does not pay and that the amounts that criminals who engage in crime for the purposes of accumulating wealth manage to garner are relatively modest. I think that is a sizeable part of the truth of the matter. But another part of the truth of the matter is that there are people out there who have accumulated sizeable amounts of wealth, particularly through the drug trade, who are not being brought to justice in the sense that their assets are being successfully confiscated under this legislation. I do not say that solely as a point of criticism of the government, as confiscation has been a process that has been evolving over time. Whilst there have been some improvements, we need to ask ourselves whether we really are achieving what we are expecting to achieve from this confiscation regime.

Alongside that the point needs to be made that many of those who have been caught up with this legislation have come from the junior ranks of the drug trade, if I can put it that way.

They are the types of people who have perhaps fallen into serious debt through problem gambling, for example. Somebody from a criminal background they may know through family or social contacts may approach them and offer to assist them with their debt in exchange for their engaging in a certain amount of criminal activity in terms of growing cannabis or retailing heroin. Certainly that conduct is by no means to be condoned.

As legislators we should be doing all we can, and the government should be doing all it can, to send the message that people should not be engaging in that sort of crime, regardless of the personal circumstances and the distress in which they find themselves. But we do have to recognise that in practice this is the sort of person who is routinely caught up in the legislation we are dealing with.

That is perhaps illustrated by the facts of the case in Director of Public Prosecutions v. Phan Thi Le (2007) VSCA 18, which is the case I referred to earlier. I make the point that I have no direct knowledge of the facts of this case other than what is set out in the Court of Appeal decision, so my comments relating to it derive simply from that. According to the Court of Appeal Mr Le was convicted of drug trafficking and was serving four years imprisonment. He owned an apartment in Sunshine which he used to store and prepare heroin for sale. That made the property tainted property.

Mr Le had purchased the property before his second wife came to live with him in Australia. It was their family home. One of the disputes was whether the entirety of this family home should be excluded from confiscation or only Mrs Le’s interest in it.

According to the facts set out in the Court of Appeal, after Mr Le had been charged, Mrs Le, who denied any knowledge of the fact that the home was being used for trafficking, asked that she be given a share in the home because she was uncertain as to what might happen to Mr Le. She did not want the property ending up with the children of his first marriage rather than with her, so a 50 per cent interest in the property was transferred to Mrs Le.

According to the Court of Appeal judgement, the question as to Mrs Le’s knowledge and the issues as to whether or not this transfer was being undertaken to avoid the legislation were not put to her in the County Court. The Court of Appeal accepted her version of events that she was not aware of the home being used for criminal activity and that she wanted a share in the property simply for the reasons that she gave in terms of her own personal security for the future.

It is notable that in this case it was only a 50 per cent interest in the property that was transferred to Mrs Le rather than a 100 per cent interest, as one might think would have been the case if there had been an intention to try to avoid the application of the legislation. The factual circumstances of this case are an illustration of how this confiscation legislation is being applied out in the real world.

It is interesting to note the dramatic change of approach by the Attorney-General to this confiscation legislation, because when we go back to the introduction of the original Confiscation Bill in 1997 we find that the Attorney-General, who was then the shadow Attorney-General, viciously attacked the government and the then Attorney-General for introducing the legislation. According to the Hansard report, he accused the then Attorney-General, Mrs Wade, of being a fascist for bringing in this legislation. I am not one to use that sort of language loosely, because I think it degrades the seriousness of it very badly, but the Attorney-General extravagantly blackened the character of the Attorney-General of the day and abused her for not having consulted with the Law Institute of Victoria in relation to that legislation. I would be most interested to hear him inform the house, in concluding this debate, whether or not he consulted with the law institute on the bill before the house.
What has become clear is that the Attorney-General has taken this confiscation legislation far beyond the regime that was introduced by the previous government, which he condemned in those terms when he was shadow Attorney-General.

If you use the terminology that the Attorney-General likes to apply, he is now a self-labelled fascist, because he has adopted and extended legislation for which he labelled the then Attorney-General a fascist. The civil libertarian turned self-declared fascist has come a long way, and it will be most interesting to know exactly what he is saying to Liberty Victoria and other bodies about his conduct.

Indeed the opposition, as I said earlier in relation to the Attorney-General’s 2004 amendments, was very concerned about where he was taking this confiscation regime — notwithstanding the fact that, as I have already indicated, it very strongly supports the use of confiscation to extract from those who commit serious crimes the proceeds of those crimes and the property that they use in committing them.

The amendments that are being made in relation to exclusions are fourfold.

Firstly, they provide that property can be excluded from confiscation only to the extent of the applicant’s interest in the item of property and not the entire piece of property itself. This is, of course, in instances where a person other than the accused or the convicted person claims an interest in the property and seeks therefore to have the property excluded from confiscation.

Secondly, the bill introduces a definition of ‘derived property’, which is property derived from criminal activity, and it goes on to insert into the various provisions relating to exclusion a requirement that the applicant for exclusion be not only not aware that the property was tainted in the sense of being used in the commission of an offence but also not aware that it was property that was derived from crime.

Thirdly, the bill makes it clear that the test of whether or not a defendant has effective control of property that may be in the name of somebody else, and therefore that cannot be excluded from confiscation, is to be applied as at the time the defendant is charged or their property is restrained, whichever is the earlier. Obviously the intention of that is so that people who are charged cannot subsequently divest effective control of their property and thereby escape the operation of the regime.

The fourth area of amendment in relation to exclusions makes it clear that property which was previously owned by the defendant but which has been transferred to somebody else can be excluded from confiscation only if the property was transferred for a consideration that reflects market value. In the Le case that I referred to earlier, the transfer was expressed to be in consideration of natural love and affection — in other words, there was no consideration paid from Mrs Le to Mr Le.

In relation to appeals, the bill makes clear that appeals can be made against all aspects of decisions relating to exclusion orders. In the Le case there was an argument that the Director of Public Prosecutions had no right to bring the appeal he did because it was not specifically listed, and that argument is being overcome. Finally, provisions are being inserted in the legislation to make it clear that the procedures that apply to appeals under the act are the same as those that apply to appeals against sentences. I may say in relation to that that the Attorney-General has been less than forthcoming in his explanation to the house of this proposed amendment. The Court of Appeal made it clear that it did not think it was a good thing to have appeals under the act dealt with in the same way that appeals against sentences are dealt with. It stated:

… it may be thought appropriate, and practicable, for the court to treat the question — whether the forfeiture order was correctly made — as being equivalent to the question whether a sentence is ‘manifestly excessive’.

But the questions are obviously not the same, and the relevant considerations are unlikely to be the same.
I call on the Attorney-General to make clear why he is adopting this procedure, which is equivalent to the procedure for appeals against sentences, when the Court of Appeal made it pretty clear that it did not think it was a good analogy.

Returning to the changes relating to exclusions, at least in principle most of these make perfect sense, although there are some difficulties in the manner in which they have been drafted. It seems clear from the explanatory memorandum that was issued at the time of the 1997 bill, and indeed from a consideration of the entire logic of the situation, that property to be excluded from confiscation should be excluded only to the extent of the applicant’s interest and not to the extent of the entire property. Likewise it is reasonable that a person seeking to have property excluded should come with clean hands, as it were, and therefore not be aware that the property was derived from crime.
It is sensible to apply the test of effective control as at the time of the charge or at the time of a restraint order being made. In principle, where a property has been acquired from the defendant, it makes sense that that be done on a basis that reflects market value or full value. That is something that the then Attorney-General, Mrs Wade, made clear in her second-reading speech in 1997, when she said:

Experience has shown that persons can circumvent existing confiscation provisions by divesting themselves of their illegally acquired assets as ‘gifts’ to their family and friends or by making it appear that other people have control over those assets. The bill enables a court to restrain and confiscate tainted property that has been transferred for less than full value.
I should say that there seem to be some difficulties about the way that some of these provisions have been drafted. I particularly refer to the way that section 21 will operate if this amending bill is passed. Although the new provision applies the test of effective control as at the dates that I mentioned, it is unclear as to what is going to happen if the property is acquired by the applicant from the defendant for proper value — that is, market value — subsequent to the offender being charged.

There seems to be a possibility that a person can purchase an asset with clean hands for the full value after the defendant has been charged, but the effective control test would mean that at the time the defendant was charged the defendant of course had effective control of the property because they owned it at that time. Therefore the applicant would inadvertently fall foul of the legislation even though they had innocently bought the property for the full value. I ask the Attorney-General to consider that point.

However, the main issues and cause for concern about this bill are not the amendments themselves, but the fact that they are all being made to retrospectively apply to offences which took place prior to the amendments being made as well as subsequent to the amendments. This raises both the issues of principle in relation to retrospectivity and particularly the issue in relation to the Charter of Human Rights and Responsibilities Act.

We on this side of the house always approach retrospective legislation with a great deal of caution. In our view one of the tests that often needs to be satisfied in order to justify retrospective legislation is to be able to say that it is manifest to any fair-minded person addressing this legislation that it was intended to operate in a particular way even though a literal reading of it suggests it operates in a different way. This sets quite a high burden, but it is one that is probably satisfied in the case of these amendments for reasons of manifest common sense, or having regard to the second-reading debate or the explanatory memorandum that I referred to earlier.

However, there are two vital points that need to be recognised in terms of what the government is inviting this house to do. The first is that we are going squarely against a ruling of the Court of Appeal.

We are not only saying that the court’s interpretation of the law is an interpretation that we do not like and that we are going to change, we are saying that the court’s ruling is so manifestly out of step with the intentions of Parliament that the community should have recognised that Parliament intended something other than what the Court of Appeal said we intended, and therefore we are going to make this legislation retrospective — notwithstanding what the Court of Appeal said.

That is a very grave step that has a consequence that the Attorney-General needs to recognise. He is entitled to come out and say that, and we are entitled to reach that conclusion on the merits of the issue. However, the Attorney-General has to recognise that by taking a stand, overturning the Court of Appeal and saying that it got things so manifestly wrong and so badly misunderstood our Parliament’s intention that we are going to retrospectively change the law, he is taking a very grave step.

Having taken that step, the Attorney-General has to be careful about accusing other ministers who act in similar circumstances of improper conduct. I expect we will not see any attacks in the future by the Attorney-General on the commonwealth Attorney-General, Mr Ruddock, or on the commonwealth Minister for Immigration and Citizenship, Kevin Andrews, for exercising their rights to disagree with court decisions, just as the Attorney-General vehemently disagrees with the decision of the Court of Appeal in this case. In each instance the overturning of those decisions needs to be defended on its merits.

In the limited time I have available, I would like to refer to the Charter of Human Rights and Responsibilities Act. The way in which the government has handled the Confiscation Amendment Bill shows what a charade the charter is. Section 27(2) of the charter says:

A penalty must not be imposed on any person for a criminal offence that is greater than the penalty that applied to the offence when it was committed.

This bill clearly violates the charter in that respect so long as the decision of the Court of Appeal stands, which it does at present. The Court of Appeal has said that if an innocent party has an interest in an item of property, the entire item of property is to be excluded from confiscation, including of course the defendant’s interest in that item of property and not just the applicant’s interest. The way that this bill retrospectively amends legislation means that we are imposing penalties on persons who commit criminal offences that are greater than the penalty that applied to the offence when it was committed, which is in clear breach of the charter.

The statement of compatibility turns itself in convoluted loops to work its way through other aspects of the bill, but it is totally silent on this point, which is an absolute disgrace given that this is the Attorney-General’s bill.