Azizi v Director of Public Prosecutions
[2022] VSCA 71
•20 April 2022
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S EAPCI 2021 0049
| ZARLASHT AZIZI | Applicant |
| v | |
| DIRECTOR OF PUBLIC PROSECUTIONS | Respondent |
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| JUDGES: | PRIEST, T FORREST and WALKER JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 25 March 2022 |
| DATE OF JUDGMENT: | 20 April 2022 |
| MEDIUM NEUTRAL CITATION: | [2022] VSCA 71 |
| JUDGMENT APPEALED FROM: | [2021] VCC 423 (Judge Dyer) |
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CONFISCATION – Real property – Serious drug offence restraining order – Exclusion application – Applicant wife and accused husband purchased land and registered as joint proprietors simultaneously – Where accused contributed entire purchase price – Whether applicant acquired interest in property from accused directly or indirectly – Whether accused required to have had prior interest in property – Applicant acquired property indirectly from accused – Confiscation Act 1997, s 22A – Lordianto v Commissioner of Australian Federal Police (2019) 266 CLR 273, discussed – Leave to appeal granted – Appeal refused.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr C G Juebner | Garde Wilson Lawyers |
| For the Respondent | Dr P T Vout QC with Ms J R Wang | Ms A Hogan, Solicitor for Public Prosecutions |
PRIEST JA
T FORREST JA
WALKER JA:
The applicant, Zarlasht Azizi, and her husband, Mohammad Osman (the ‘accused’), purchased a property in Wollert in October 2012. They were registered as joint proprietors of the property. The accused had paid the deposit and the balance of the purchase price. The applicant did not make any financial contribution to the purchase of the property. The property was the family home of the applicant, the accused, their two children, and the accused’s mother.
In December 2014 the accused was charged with a serious drug offence. On 3 March 2015 a serious drug offence restraining order (the ‘Restraining Order’) was made over the property under s 18(1) of the Confiscation Act 1997 (the ‘Act’). The accused was convicted of four serious drug offences, which were related offences to the serious drug offence in reliance on which the Restraining Order was made. The applicant was not in any way involved in the commission of the serious drug offence by the accused.
In April 2015 the applicant applied under s 20 of the Act to have her interest in the property excluded from the Restraining Order. Section 22A provides that the court may make an order excluding property from a serious drug offence restraining order if the court is satisfied of various matters. Relevantly for present purposes, those matters include that set out in s 22A(1)(c):
where the applicant acquired the interest from the accused, directly or indirectly, that it was acquired for sufficient consideration.
The issue in the present proceeding is whether the applicant acquired her interest in the property from the accused, directly or indirectly. If she did, there is no dispute between the parties that she did not acquire it for ‘sufficient consideration’, as that term is defined in the Act.
The trial judge held that the applicant had acquired her interest in the property from the accused, indirectly. The applicant seeks leave to appeal from the trial judge’s decision on the following proposed grounds:
(1) The learned judge erred (Reasons at [70]) in finding that the Applicant acquired her interest in the property at 10 Redrock Road, Wollert indirectly from the accused.
(2) The learned judge should have determined that:
a. the Applicant did not acquire her interest in the Property from the accused;
b. consequently, she was not obliged to demonstrate that she acquired her interest in the Property for sufficient consideration (as defined in s.3 of the Act).[1]
[1]Emphasis in original.
Although framed as two grounds, in essence they constitute a single ground, concerning the trial judge’s conclusion that the applicant acquired her interest in the property indirectly from the accused. The gravamen of the applicant’s argument was that, in order for a person (P) to have acquired an interest in property ‘from’ the accused (A), the accused must have had an interest in the property, which they transferred to the person, either directly (a transfer from A to P) or indirectly (for example, a transfer of an interest in property from A to B, and then a transfer of that interest from B to P). In contrast, the respondent contended that the concept of property being acquired ‘indirectly’ from a person is sufficiently broad to capture circumstances where a person receives their interest in property in substance as a gift from the accused, even if the accused never owned the property in question. That is, on the respondent’s case, although the term ‘indirectly’ captures the circumstances identified by the applicant, above, it also captures circumstances where A provides funds to property owner V, for the purchase of a property, and V then transfers the property into the name of A and P, where A did not, prior to the transfer, have an interest in the property.
For the reasons that follow, we would grant leave to appeal but dismiss the appeal.
In summary, in our opinion s 22A is intended to, and does, achieve the consequence that a person charged with, and later convicted of, serious drug offences cannot avoid the operation of the relevant provisions of the Act by using their own funds to purchase property for themselves and another person jointly, where that other person provides no consideration. We accept that, considered as a matter of substance, the other person has received the property ‘from’ the accused as a gift, even though the accused did not previously have an interest in the property that was transferred to the other person.
In our view use of the term ‘indirectly’ is sufficiently, and deliberately, broad enough to capture the circumstances where an accused pays for property but ensures that an interest in the property is vested in a third party. Further, the purpose of the conditions that are imposed on the otherwise broad power of a court to exclude from a restraining order property of a person who was not involved in the offending — including s 22A(1)(c) — is to ensure that the accused cannot avoid the operation of the Act by a device such as making a gift of an interest in property to a third party. Thus, in the present case we consider that the trial judge was correct to conclude that the applicant had obtained her interest in the property indirectly from the accused.
The legislative regime
The purposes of the Act are set out in s 1. They relevantly include the purpose of providing ‘for the automatic forfeiture of restrained property of persons convicted of certain offences in certain circumstances’. The main objects of the Act are set out in s 3A, as follows:
(a) to deprive persons of the proceeds of certain offences and of tainted property; and
(b) to deter persons from engaging in criminal activity; and
(c) to disrupt criminal activity by preventing the use of tainted property in further criminal activity; and
(d) to undermine the profitability of serious criminal activity.
In furtherance of those objects and purposes, the Act relevantly provides for a court to make restraining orders and for property so restrained to be subject to forfeiture. A ‘restraining order’ is an ‘order that no property or interest in property, that is property or an interest to which the order applies, is to be disposed of, or otherwise dealt with by any person except in the manner and circumstances (if any) specified in the order’ (s 14(1)). There are various pathways by which a restraining order may be sought and by which forfeiture may occur. For present purposes, it is sufficient to refer in detail to one such pathway, namely the provisions applicable to persons charged with serious drug offences.[2]
Provisions relevant to serious drug offence restraining orders
[2]‘Serious drug offence’ is defined in s 3 of the Act to mean an offence against ss 71, 72 and, in certain circumstances, ss 79(1), 80(1), 80(3)(a), or 80(3)(b) of the Drugs, Poisons and Controlled Substances Act 1981.
Section 15(1)(c) provides that a restraining order may be made ‘to preserve property or an interest in property in order that the property or interest will be available’ for the purpose of satisfying ‘automatic forfeiture of property that may occur under Division 4 of Part 3’. Division 4 of pt 3 provides for the automatic forfeiture of the property of serious drug offenders.
Under s 16(2A), relevantly, if a person has been (or is about to be) charged with a serious drug offence, the DPP may seek a restraining order in respect of property in which the person has an interest.[3] Under s 17(1) a court may direct an applicant for a serious drug offence restraining order to give notice of the application to any person whom the court has reason to believe has an interest in the property the subject of the application.
[3]Unlike some of the other pathways, it is not necessary for the property in question to be ‘tainted property’.
Section 18(1) provides that, on an application for a serious drug offence restraining order under s 16(2A), the court must make the order if it is satisfied that the accused has been, or within the next 48 hours will be, charged with or convicted of a serious drug offence and if it considers that there are reasonable grounds for making the restraining order.[4]
[4]If a restraining order is being sought for the purpose of satisfying an order for restitution or compensation under the Sentencing Act 1991, as set out in s 15(1)(e), then the court must also be satisfied that applications have been, or are likely to be made for such restitution or compensation, and the order of the court under that Act is likely to exceed $10,000.
Section 20(1)(b) provides that a person claiming an interest in the property (other than the accused) may apply to the court that made the order for an order under s 22A for the exclusion of property from the restraining order.
Section 22A provides as follows:
22A Determination of exclusion application—serious drug offence restraining order
(1) On an application made under section 20, the court may make an order excluding the applicant’s interest in property from the operation of a serious drug offence restraining order made in relation to a serious drug offence if the court is satisfied that—
(a) the applicant was not, in any way, involved in the commission of the serious drug offence; and
(b) the applicant’s interest in the property was not subject to the effective control of the accused on the earlier of—
(i) the date that the accused was charged with the serious drug offence; or
(ii) the date that the serious drug offence restraining order was made in relation to the property; and
(c) where the applicant acquired the interest from the accused, directly or indirectly, that it was acquired for sufficient consideration.
(2) If the court makes an order under subsection (1), the court may also make an order declaring the nature, extent and value of the applicant’s interest in the property.
Note
Property excluded from a serious drug offence restraining order may continue to be restrained if a restraining order has also been made in relation to the property for the purpose referred to in section 15(1)(b).
Various terms used in s 22A (and related sections) are defined in s 3 of the Act, as follows:
gift, in relation to property, includes a transfer for a consideration significantly less than the greater of—
(a) the prevailing market value of the property; or
(b) the consideration paid by the accused or, in relation to civil forfeiture or unexplained wealth forfeiture, the transferor of the property;
property means real or personal property of every description, whether situated within or outside Victoria and whether tangible or intangible, and includes any interest in any such real or personal property;
sufficient consideration, in relation to property, means consideration that reflects the market value of the property and does not include—
(a) consideration arising from the fact of a family relationship between the transferor and transferee;
(b) if the transferor is the spouse or domestic partner of the transferee, the making of a deed in favour of the transferee;
(c) a promise by the transferee to become the spouse or domestic partner of the transferor;
(d) consideration arising from love and affection;
(e) transfer by way of gift;
Section 24 provides that a restraining order made for the purposes of s 15(1)(c) — that is, to satisfy automatic forfeiture of property that may occur under div 4 of pt 3 — must not include property that is ‘protected property’. Protected property is defined as: property used by the accused or a dependent of the accused primarily as a means of transport; items of the accused or a dependent that are necessary clothing or ordinary household property; or tools of trade required by the accused or a dependent in earning income.
Section 26(1) provides that the court may, when it makes a restraining order or at any later time, make such orders in relation to the property to which the restraining order relates as it considers just.
Section 29 provides that a person who knowingly contravenes a restraining order by dealing with an interest in property to which the order applies is guilty of an indictable offence and liable to imprisonment for a maximum of 10 years and/or to a fine of 1,200 penalty units.
Division 4 of pt 3 of the Act provides for the automatic forfeiture of the property of a serious drug offender, as follows:
36GA Automatic forfeiture of restrained property on declaration that person is serious drug offender
(1) Property of a person that is the subject of a serious drug offence restraining order is forfeited to the Minister in accordance with this section if—
(a) a declaration is made under section 89DI of the Sentencing Act 1991 that the person is a serious drug offender consequent to the conviction of the person of a serious drug offence; and
(b) the serious drug offence restraining order is or was made under Part 2 in reliance on—
(i) the conviction of the person of that offence; or
(ii) the charging or proposed charging of the person with that offence or a related offence that is a serious drug offence; and
(c) the restrained property is not the subject of an exclusion order under section 22A; and
(d) the restrained property is not protected property.
(2) Unless an application under section 20 for an exclusion order in respect of the restrained property is still pending, the restrained property is forfeited to the Minister on the expiry of 60 days after the later of—
(a) the making of the restraining order; or
(b) the conviction of the accused.
(3) If, on the expiry of the 60 days referred to in subsection (2), an application under section 20 for an exclusion order in respect of the restrained property is still pending, the restrained property is forfeited to the Minister—
(a) if the application is refused or dismissed—
(i) at the end of the period during which the person may appeal against the refusal or dismissal; or
(ii) if an appeal against the refusal or dismissal is lodged—when the appeal is abandoned or finally determined without the order having been made; or
(b) if the application is withdrawn or struck out—on that withdrawal or striking out.
…
36GB Declaration that property has been forfeited
(1) If a court makes a serious drug offence restraining order, a person may apply to the court that made the order for a declaration that property that was subject to the serious drug offence restraining order has been forfeited to the Minister under section 36GA and the court, if satisfied that the property has been forfeited to the Minister under that section, must make a declaration accordingly.
(2) An applicant under this section for a declaration that property has been forfeited is not required to give notice of the application to any person who has an interest in the property.
Note
Section 14 provides that a restraining order may be made in respect of property or an interest in property.
Other provisions that use the same language as s 22A(1)(c)
Various pathways within the Act provide for restraining orders in relation to property in which the accused has an interest. In addition, however, a restraining order may be sought[5] and made[6] in relation to ‘tainted property’, whether or not the accused has an interest in the property. Tainted property is defined in s 3 of the Act; in summary, property is ‘tainted property‘ if it was used or intended to be used in the commission of an offence, was substantially derived from the commission of an offence, or is proceeds of crime or an instrument of crime within the meaning of s 193 of the Crimes Act 1958, or is referred to in s 195 of that Act.
[5]See ss 16(1) and 16(2).
[6]See s 18(1).
Relevantly for present purposes, where a restraining order has been made in relation to tainted property under s 18, a person other than the accused who claims an interest in the property may apply for an exclusion order under s 20. If the restraining order was made in relation to a sch 1 offence, then if the court is not satisfied that the property is not tainted property, it may nonetheless make an order excluding the person’s interest in the property from the restraining order if it is satisfied of various matters, including ‘where the applicant acquired the interest from the accused, directly or indirectly, that it was acquired for sufficient consideration’: s 21(1)(b)(i)(E).[7] As is apparent, that is the same language as that used in s 22A(1)(c) of the Act.
[7]A similar provision also appears in s 21(1)(b)(ii)(B).
In relation to sch 2 offences and tainted property, similar provisions appear in ss 22(1)(b)(i)(E) and 22(1)(b)(ii)(B). And the same language is also used in pts 4 (the civil forfeiture regime)[8] and 6 (concerning exclusion from forfeiture).[9]
[8]See, eg, s 36V(1)(b)(v)(A), s 40B(1)(b)(v)(A).
[9]See, eg, s 50(1)(a)(v), s 52(1)(a)(v).
The factual background
On 13 October 2012, the applicant and the accused signed a contract of sale to purchase the Wollert property for $422,500 from the Commonwealth Bank of Australia (as mortgagee in possession). Prior to that date, neither the applicant nor the accused had an interest in the property.
On 15 October 2012, the accused paid a deposit of $42,250 by means of a cheque drawn upon a Westpac Banking Corporation account held in his name, ‘t/as Tattan Import Export’ (the ‘First Westpac Account’). The amount standing to the credit of the accused in the First Westpac Account were funds of the accused in which the applicant had no legal or beneficial interest.
On 11 January 2013, the accused paid the balance of the purchase price for the property on settlement, by means of several Westpac Banking Corporation bank cheques. The funds used to purchase the bank cheques were drawn from the First Westpac Account and another Westpac Banking Corporation account held in the accused’s name (the ‘Second Westpac Account’). The amount standing to the credit of the accused in each of the First Westpac Account and the Second Westpac Account were funds of the accused in which the applicant had no legal or beneficial interest.
On 17 January 2013, the applicant and the accused were registered as joint proprietors of the property. Neither the applicant nor the accused took out a loan to purchase the property and no mortgage with respect to the property was registered. The applicant and the accused remain registered as joint proprietors of the property.
On 17 December 2014, the accused was charged with trafficking a drug of dependence, heroin, in a large commercial quantity, contrary to s 71 of the Drugs, Poisons and Controlled Substances Act 1981, which is a ‘serious drug offence’ within the meaning of s 3 of the Act.
On 2 March 2015, the respondent applied for a serious drug offence restraining order over the property, under s 16(2A) of the Act. On 3 March 2015, the County Court made the Restraining Order under s 18(1) of the Act. The basis for the order was that the accused had been charged with a serious drug offence and that he had an interest in the property.
On 1 April 2015, the applicant made an application to the County Court seeking to exclude her interest in the property from the Restraining Order, pursuant to s 20 of the Act. On 20 April 2020, the County Court dismissed that application.[10]
[10]The long delay between application and resolution was because the application was stayed until the criminal proceeding against the accused was finally determined or withdrawn.
Following a plea of guilty, the accused was convicted of serious drug offences, which were related offences to the serious drug offence in reliance on which the serious drug offence restraining order was made. On 19 May 2020, a declaration was made under s 89DI of the Sentencing Act 1991 (which enlivens the forfeiture provisions in div 4 of pt 3 of the Act).
The applicant was not, in any way, involved in the commission of the serious drug offence by the accused.
The property has been the family home of the applicant and (until his incarceration) the accused, their two children and the accused’s mother.
The applicant’s submissions
As noted above, there is no dispute that, if s 22A(1)(c) of the Act applies to the applicant, so that she is required to demonstrate sufficient consideration in order to enliven the Court’s power to exclude her interest in the property from the restraining order, she cannot do so. However, her argument is that she does not need to demonstrate that she acquired the property for sufficient consideration because she did not acquire the property ‘from’ the accused. In short, she contends that the payment of the purchase price by the accused did not result in her acquiring her interest in the property from him (whether directly or indirectly). Rather, she submitted, she acquired her interest in the property from the vendor of the property.
The applicant focused in particular on the word ‘from’ in s 22A(1)(c). She submitted that the word ‘from’ denotes the passing of something from one person to another. Thus, a property is purchased ‘from’ the vendor; it is not purchased ‘from’ the person who provides the purchase price and who is then jointly registered on title. The applicant submitted that it ‘impermissibly stretches’ the natural and ordinary meaning of the word ‘from’ to encompass the applicant’s acquisition of her interest in the property in this case.
In support of her argument, the applicant relied upon the proposition that:
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.[11]
[11]Markovski v DPP (2014) 41 VR 548, 561–2 [64(3)] (Whelan JA); [2014] VSCA 35, quoted with approval in Nguyen v DPP (2019) 59 VR 27, 62 [102] (Tate JA, Maxwell P agreeing at 30 [1], Niall JA agreeing at 74 [151]); [2019] VSCA 20.
In so far as s 22A(1)(c) refers to property being acquired from the accused ‘directly or indirectly’, the applicant contended that those words ‘are conditioned by the word “from” and cannot circumvent the statutory language’. The word ‘from’, she submits, requires that the interest passes from one person to another. In that regard she contended that the trial judge erred in concluding that the construction she advanced left the word ‘indirectly’ with no work to do’.[12] She gave as an example circumstances in which an accused provides cash to an intermediary, with a request that it be on-transferred to a third person. In that case, she submitted, the third person receives the cash directly from the intermediary but indirectly from the accused. (Presumably this example need not be confined to cash.)
[12]Azizi v DPP [2021] VCC 423, [67] (‘Reasons’).
She also contended that the statutory context supported her construction, because the sub-paragraphs of the definition of ‘sufficient consideration’ use the terms ‘transferor’, ‘transferee’ and ‘transfer’. This, she submitted, points to a ‘legislative intent that the definition is concerned with transfers of property, from the accused to the exclusion applicant’. She submitted that the payment of the purchase price by the accused to the vendor ‘cannot, without significant stretching of the language, be described as a transfer of an interest in the property by the accused to the applicant’.[13]
[13]Emphasis in original.
She also submitted that it is implicit in s 22A(1)(c) that the consideration to which the section refers must move from the exclusion applicant to the accused in exchange for the interest acquired. That, she submitted, is only consistent with a transaction where the accused disposes of their interest in property to the exclusion applicant. It is not consistent with the transaction in issue in this case.
As part of her construction argument, the applicant contended that the definition of ‘sufficient consideration’ does not recognise non-financial contributions, because it requires consideration that is commensurate with the market value of the interest acquired. She submitted that the consequence of this is that the broader construction of s 22A(1)(c) will have harsh consequences for many exclusion applicants, who may have pooled labour in a domestic relationship so as to give rise to an equitable interest in the property.[14] She submitted that, if the construction accepted by the judge below were correct then, in each instance where, for example, the husband contributes a greater share of the purchase price of the family home, which is conveyed into the joint names of husband and wife:
[14]Referring to Baumgartner v Baumgartner (1987) 164 CLR 137, 155–6 (Gaudron J); [1987] HCA 59.
(a) the wife would be regarded as having acquired (at least) part of her interest from the husband; and
(b) the wife would not be able to satisfy the sufficient consideration test, because in so far as her husband made any payment on her behalf, she would not have provided ‘market value consideration’ to him.
Thus in all such cases the wife’s application would be bound to fail in relation to her interest in the property.
By way of a more specific example, the applicant contended that if the wife had contributed 30 per cent of the purchase price of the home, and the husband 70 per cent, and the home was registered jointly in the names of the husband and wife, then the wife’s interest would be a 50 per cent share, based on equitable principles. Yet, she submitted, the wife would not have provided sufficient consideration for that 50 per cent share; thus her application for the entirety of her interest to be excluded would fail. Further, not even a 30 per cent interest, reflecting her contribution to the purchase price, could be excluded from the restraining order. She urged this Court not to adopt a construction that resulted in such an outcome.
Finally, the applicant contended that the language of s 22A(1)(c) is used elsewhere in the Act and that it should be given the same meaning throughout the Act. Thus, she submitted, the trial judge erred in focusing on the ‘stern regime’ applying in relation to serious drug offence restraining orders. She submitted that the judge adopted a strained construction of s 22A(1)(c) so as to prevent third parties taking the benefit of funds obtained by unlawful activity. However, she pointed out that the Act permits a third party to exclude their interest in restrained property even where that interest is ‘tainted property’ or ‘derived property’, so long as they were ‘not in any way involved’ in the offending (including that they were not wilfully blind to the offending). Thus, she submitted:
[A]lthough the Act creates a strict regime, it expressly permits exclusion of restrained property, even if it has been derived from unlawful activity, provided that the exclusion applicant is an innocent[15] third party. Hence, it was not necessary to (impermissibly) stretch the language of the word from in the exclusion test, as the judge did below, to seek to prevent third parties from taking the benefit of funds which may be regarded as having been sourced from unlawful sources.
[15]The expression ‘innocent’ is used to denote a third party who ‘is not in any way involved’ (including through wilful blindness), and did not know the relevant property would be used in connection with the commission of the offence (if so used) and acquired their interest without knowing, and in circumstances where a reasonable person would not have suspected, that the property is derived from or used in connection with the relevant unlawful activity (emphasis in original) (footnote in original).
The respondent’s submissions
The respondent contended that the applicant’s focus on the word ‘from’, with the conclusion that an exclusion applicant need only satisfy the requirement of sufficient consideration if the accused disposed of his or her interest in the property to the exclusion applicant, approached the question of the construction of s 22A(1)(c) ‘as if the paragraph comprised separate elements which are to be construed in isolation from one another’.[16] This, the respondent submitted, is impermissible. The respondent contended that the applicant’s construction is contrary to the text of the paragraph, to its statutory context, and to the purposes of the Act.
[16]Referring to Lordianto v Commissioner of the Australian Federal Police (2019) 266 CLR 273, 301 [61] (Kiefel CJ, Bell, Keane and Gordon JJ); [2019] HCA 39 (‘Lordianto’).
As to the text, the respondent submitted that the word ‘acquire’ means ‘to come into possession of’ and that the word ‘from’ can be used to express various concepts, including ‘source or origin’ and ‘cause or reason’ (relying on the Macquarie Dictionary). The respondent pointed to the decision of the Full Court of the Federal Court in Allina Pty Ltd v Commissioner of Taxation, where the Court was considering whether the taxpayer had ‘acquired [an] asset from another person and did not pay or give any consideration in respect of the acquisition’.[17] The Court held that property can be acquired by one person without there being any disposition of that property by another person.[18]
[17](1991) 28 FCR 203 (‘Allina’), considering the Income Tax Assessment Act 1936 (Cth) s 160ZH(9)(a).
[18]Allina (1991) 28 FCR 203, 211 (Lockhart, Burchett and Gummow JJ).
Further, the respondent submitted that the words ‘directly or indirectly’ in s 22A(1)(c) are words of wide import. They are used as adverbs, so that they qualify the word ‘acquired’. In particular, ‘indirect’ means ‘coming or resulting otherwise than directly or immediately, as effects, consequences etc’.
The respondent contended that there is nothing in the ordinary language of the provision to indicate that it is necessary for there to be a disposition of an interest in property by the accused to the exclusion applicant; and Allina is authority to the contrary.
As to the context, the respondent submitted that the applicant’s reliance on the words ‘transfer’, ‘transferor’ and ‘transferee’ in the definition of ‘sufficient consideration’ in support of her interpretation of s 22A(1)(c) is misplaced. First, sub-paragraph (d) of the definition does not make any reference to the concept of transfer, so it cannot be said the concept is any kind of unifying theme. Secondly, it is not appropriate to qualify the plain words of s 22A(1)(c) by reference to words that do not appear in the provision itself; and thirdly, the sub-paragraphs of the definition are only used in respect of identifying what does not constitute sufficient consideration (as opposed to what does).
As to purpose, the respondent submitted that the purpose of s 22A(1)(c) and its equivalents is to prevent those who have not paid sufficient consideration, including volunteers, from being able to keep an interest in property that is actually or presumptively tainted/derived or that is needed for another purpose such as restitution, compensation or a pecuniary penalty. The respondent submitted that an exclusion applicant cannot satisfy s 22A(1)(c) where they have been gifted an interest in property by an accused, whether that gift arises by way of transfer from the accused, by way of payment of the purchase price by the accused, or by some other means. To conclude otherwise would undermine the purpose of s 22A(1)(c) and of the serious drug offender regime as a whole.
As to the question of whether and how non-financial contributions may be taken into account under s 22A(1)(c), or whether and how a practical contribution to the purchase price of property might be dealt with under s 22A(1)(c), the respondent submitted that these issues did not arise on the facts of the present case and ought not be resolved.
Consideration
In our opinion the respondent’s submissions are to be accepted. A consideration of the text, context and purpose of s 22A(1)(c) reveals that the statutory language is sufficiently broad to capture the circumstances of the present case, where the accused contributed the entirety of the purchase price of the property, from funds in which the applicant had no legal or beneficial interest.
Legislation is to be interpreted by reference to its text, context and purpose.[19] And, of course, s 35(a) of the Interpretation of Legislation Act 1984 provides that a construction that would promote the purpose or object underlying the Act shall be preferred to a construction that would not promote that purpose or object. In Victoria it is also necessary to have regard to s 32(1) of the Charter of Human Rights and Responsibilities Act 2006 (the ‘Charter’), which provides that, so far as it is possible to do so consistently with its purpose, a statutory provision ‘must be interpreted in a way that is compatible with human rights’.
[19]See, eg, SAS Trustee Corporation v Miles (2018) 265 CLR 137, 149 [20] (Kiefel CJ, Bell and Nettle JJ), 157 [41] (Gageler J), 162–3 [64] (Edelman J); [2018] HCA 55; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27, 46–7 [47] (Hayne, Heydon, Crennan and Kiefel JJ); [2009] HCA 41.
Further, as the plurality observed in Lordianto, which concerned the Commonwealth analogue to the Act, the Proceeds of Crime Act 2002 (Cth) (‘POCA’), it is not appropriate to interpret a legislative provision as if it ‘comprised separate elements which are to be construed in isolation from one another’. Rather, a legislative provision should ‘be read as a whole and in the context provided by the whole of the statutory framework’.[20]
Text
[20]Lordianto (2019) 266 CLR 273, 301–2 [61]–[62] (Kiefel CJ, Bell, Keane and Gordon JJ); [2019] HCA 39. Although their Honours were considering a specific provision of the POCA, these statements reflect general principles of statutory interpretation.
While the applicant accepted those principles, her argument nonetheless focused in particular on the use of the word ‘from’ in s 22A(1)(c). She characterised the words ‘directly or indirectly’ as ‘conditioned by the word “from”’, and as thus not ‘circumventing’ the statutory language.
In our opinion the applicant’s submissions require interpreting s 22A(1)(c) in precisely the manner against which the plurality cautioned in Lordianto. Although the words ‘directly or indirectly’ appear after the words ‘acquired the interest from the accused’, it is plain that the words ‘directly or indirectly’ apply to the acquisition earlier referred to.
That is, read as a whole, rather than in a piecemeal fashion, s 22A(1)(c) applies in two distinct contexts:
(c) first, where the exclusion applicant acquired their interest in the property directly from the accused; and
(d) secondly, where the exclusion applicant acquired their interest in the property indirectly from the accused.
The first context has no relevance to the present case. The question in this case is whether the applicant acquired her interest in the property indirectly from the accused. That question is not answered simply by observing that the accused did not transfer his own interest in the property to the applicant, because he never had such an interest. Had he done so, that would have been a direct acquisition. Plainly the word ‘indirectly’ is intended to expand the scope of s 22A(1)(c) beyond that straightforward circumstance.
We accept the applicant’s argument that one circumstance in which an exclusion applicant could be said to have indirectly acquired an interest in property from an accused would be where the property has been transferred first to an intermediary and then to the exclusion applicant. And for that reason we accept that the trial judge erred when his Honour concluded that, on the applicant’s construction, the word ‘indirectly’ has no work to do.[21] However, the fact that that is one way in which an interest in property might be acquired indirectly does not mean that that circumstance exhausts the scope of s 22A(1)(c) in so far as the paragraph is concerned with indirect acquisition. The words ‘directly and indirectly’ are words of broad import.
Context
[21]Reasons, [67].
We accept the applicant’s submission that the definition of ‘sufficient consideration’ provides part of the statutory context in which s 22A(1)(c) is to be interpreted. However, we do not accept the submission that that definition supports (let alone compels) a construction that would deny the characterisation of the applicant’s interest in the property as one acquired indirectly from the accused. There are two reasons why that is so.
(e) First, while it may be accepted that sub-paragraphs (a), (b) and (c) of the definition contemplate (in the context of s 22A(1)(c)) a transfer from the accused (the transferor) to the exclusion applicant (the transferee), neither sub-paragraph (d) nor sub-paragraph (e) are so confined. In particular, sub-paragraph (d) does not make reference to ‘transfer’ at all.
(f) Second, the sub-paragraphs of the definition are by way of identifying what is not included in the concept of ‘sufficient consideration’. In our opinion it would be wrong to conclude from the exclusion of those matters from that concept that s 22A(1)(c) requires that the accused was the transferor of the interest in property that was acquired (directly or indirectly) by the exclusion applicant.
We also accept that the context includes other provisions in the Act that use the same language as s 22A(1)(c), such as those identified above at paragraphs [22]–[24], above. But there is no reason to think that those provisions use that language in any narrow way, so as to require a narrower construction of s 22A(1)(c). Indeed, the contrary is true in so far as tainted property is concerned.
Where a restraining order is made in relation to tainted property, an application for exclusion is to be dealt with under s 21 or s 22, each of which permits the exclusion of property of an innocent person, even if the court is not satisfied the property is not tainted property, subject to a condition in the same terms as s 22A(1)(c), namely that, if the innocent person acquired the property from the accused, they did so for sufficient consideration. Take the following example, under s 21.
(g) An accused used funds obtained from the commission of a sch 1 crime (ie tainted property) to purchase a property from a third party.
(h) The property was then registered solely in the accused’s partner’s name, in circumstances where the partner was not involved in or aware of the crime, and in circumstances where the partner made no financial contribution to the purchase.
(i) A restraining order was made in respect of the property.
(j) The partner then seeks to have the property excluded from the restraining order. She does not satisfy s 21(1)(a)(i), because the property is tainted property. But she may nonetheless be able to exclude her interest in the property from the restraining order if she can satisfy s 21(1)(b)(i).
(i) She satisfies s 21(1)(b)(i)(A): she was not involved in the commission of the offence.
(ii) She satisfies s 21(1)(b)(i)(C): she did not know, in circumstances that would arouse a reasonable suspicion, that the property was tainted property.
(iii) She satisfies s 21(1)(b)(i)(D): her interest in the property is not subject to the effective control of the accused.
(iv) As to s 21(1)(b)(i)(E) — which is the analogue to s 22A(1)(c) — on the applicant’s construction of this condition, she did not obtain her interest in the property ‘from the accused’, even indirectly.
Thus she would succeed in her application to exclude the property from the restraining order.
If that construction of s 21(1)(b)(i)(E) were correct, then in those circumstances an accused would be able to insulate his tainted property from the operation of the relevant provisions of the Act by the relatively simple expedient of using it to purchase property for an innocent third party. A construction that has that effect is not one that, in our view, was likely to have been intended by the legislature. Indeed, it seems to us that this kind of scenario reveals the reason for the inclusion of the word ‘indirectly’ in the statutory language.
Purpose
As noted above, it is appropriate to have regard to the purposes of the Act as a whole, and to the purpose of ss 22A and 22A(1)(c) specifically in construing that paragraph. As set out above, one of those purposes is to provide for the automatic forfeiture of restrained property of persons convicted of certain offences (s 1(b)). In the context of serious drug offences, the Act provides for the forfeiture of all property of a serious drug offender (as well as to provide for the forfeiture of tainted property and derived property). That purpose is furthered by providing, in the first instance, for the property of an accused person to be restrained for the later purpose of forfeiture. Recognising, however, that other persons may also have an interest in the property of an accused, s 22A (and its analogues) permit the exclusion of an interest in the property of an innocent person[22] from a restraining order and, consequentially, from forfeiture. Within that scheme, s 22A(1)(c) ensures that an accused person cannot avoid the operation of the restraining order, and ultimately the forfeiture of their property, by the simple expedient of giving an interest in the property to another person. Thus that paragraph plainly precludes the exclusion of an interest in property that was received by way of a direct transfer from the accused to the exclusion applicant, other than for sufficient consideration. But it is clear that the legislature intended to capture more than a direct gift; hence the use of the phrase ‘directly or indirectly’.
[22]That is, an interest in property of a person who was not in any way involved in the commission of the offence, and whose interest in the property is not subject to the control of the accused.
In our view the purpose of s 22A(1)(c) is best achieved if interpreted so as to apply to the circumstances of the present case. That is, in our opinion where, as here, the accused has paid for real property, and caused an interest in that real property to vest in the exclusion applicant, who has made no financial contribution either to the vendor (in payment of the purchase price) or by way of consideration to the accused, then it can properly be said that the exclusion applicant acquired her interest from the accused indirectly.
It is relevant to observe that a purpose of the Act, in particular in so far as it applies to serious drug offenders, is to achieve a harsh outcome: the confiscation of all property of a person convicted of a serious drug offence, including property received by a third party as a gift from the accused (subject only to a few limited exceptions). The legislature has recognised that that may operate to the prejudice of the dependants of the accused, including their spouse and children, by making separate and special provision for the dependants of a serious drug offender. Thus, for example, and relevantly for present purposes:
(k) Section 14(4) provides that a restraining order may provide for meeting the reasonable living expenses of any dependants.
(l) Section 24 provides that certain property of a dependant of the accused is not to be included in a serious drug offence restraining order.
(m) Section 45A of the Act provides for relief from automatic forfeiture of property of a serious drug offender in relation to the residence of the accused. Under that section, a court may order that an amount be paid to a dependant (as defined) of the accused from the proceeds of sale of the forfeited residence for the purpose of securing new accommodation, if certain criteria are satisfied.
This harsh outcome, and the relatively limited provision for dependants, was expressly referred to in the second reading speech for the Bill, where the Attorney-General said as follows:
The effect of a serious drug declaration will be the mandatory forfeiture to the state of almost all of the offender’s property. The offender and dependants will be able to retain household goods and clothing, and a modestly priced vehicle. Dependants of the offender will be able to seek relief from hardship caused by the forfeiture, to ensure they are not left homeless.[23]
The decision of the High Court in Lordianto
[23]Victoria, Parliamentary Debates, Legislative Assembly, 26 June 2014, 2384 (Robert Clark).
Our conclusion that the applicant in the present case acquired her interest in the property from the accused indirectly (in substance as a gift from him) is consistent with the reasoning of the plurality in Lordianto.That case concerned the POCA, which is in some respects analogous to the Act. However, it is necessary to observe that the provision in issue in Lordianto — s 330(4)(a) of the POCA — was relevantly different from s 22A(1)(c). Section 330(4)(a) provided as follows:
(4) Property only ceases to be proceeds of an offence or an instrument of an offence:
(a) if it is acquired by a third party for sufficient consideration without the third party knowing, and in circumstances that would not arouse a reasonable suspicion, that the property was proceeds of an offence or an instrument of an offence (as the case requires); …
As is apparent, s 330(4)(a) does not contain any analogue to the words ‘from the accused’, nor any reference to ‘directly or indirectly’.[24] It simply focuses on the acquisition by the third party. Thus it is not the case that the circumstances to which s 22A(1)(c) applies are necessarily the same as the circumstances to which s 330(4)(a) applies.
[24]In Lordianto, Kiefel CJ, Bell, Keane and Gordon JJ observed that ‘a construction that focuses attention away from whether consideration has been paid and instead towards whether the relevant relationships are direct or indirect diverts attention from the fact that a purpose of the provision is to exclude those who have not paid sufficient consideration, including volunteers, from being able to keep proceeds, or an instrument, of an offence’: (2019) 266 CLR 273, 306 [81]; [2019] HCA 39. However, that statement has no application to the present context, where the statute requires attention to whether the exclusion applicant acquired their interest in the property ‘directly or indirectly’ from the accused.
However, an example addressed by the plurality is illustrative of a more general proposition, namely that it is appropriate to regard the purchase of an item by one person in the name of another person as a gift of the property ‘from’ the first person to the second person:
In the course of argument, the AFP used an example of a mother and her drug dealing son where the drug dealer gives cash from the sale of the drugs to his mother and the mother uses the cash to buy a car. The example is illustrative of the objective inquiry that must be undertaken in response to an application for an exclusion order. The property the mother has as a result of the gift (the cash she has been given) is, by reason of s 330(1)(a), wholly derived from the disposal of, or other dealing with, the proceeds of an offence and remains proceeds of an offence. And the car remains proceeds of an offence by reason of the operation of s 330(1)(b) and (3)(b). But does the car cease to be proceeds under s 330(4)(a)? There is a distinction to be drawn. If, objectively, the purchase is seen as the mother buying the car with the money provided by the son (which is purchased by the son in the name of the mother or, more accurately, the mother acquiring the car as a gift from the son), then the mother is a volunteer.[25]
Construction of confiscation legislation in cases of ambiguity
[25]Lordianto (2019) 266 CLR 273, 307 [86]; [2019] HCA 39 (emphasis added) (citations omitted).
As noted above, the applicant urged us to adopt a narrower construction of s 22A(1)(c) because of the principles relevant to the construction of confiscation legislation. We accept that, as a general proposition, where there is an ambiguity, confiscation legislation is to be construed narrowly, or leniently, so as to avoid confiscation. However, as this Court observed in Coleman v Director of Public Prosecutions:
The search is not for ambiguity in order to construe penal or confiscatory legislation in a particular way. Rather, orthodox construction of such statutes is required; and ambiguity is not to be discerned where, in truth, it does not exist.[26]
[26][2018] VSCA 264, [178] (Ashley and Weinberg JJA, Kaye JA agreeing at [1]).
We do not consider that there is any ambiguity in the present context, when s 22A(1)(c) is construed by reference to its text, context and purpose.
The Charter
As noted above, it is necessary also to have regard to the Charter in construing Victorian legislation. Relevantly, s 20 of the Charter provides that a person ‘must not be deprived of his or her property other than in accordance with law’.
In the present case no party made submissions on the effect of ss 20 and 32 of the Charter on the construction of s 22A(1)(c) of the Act. Nor were Charter notices given under s 35 of the Charter. In those circumstances we do no more than observe that the construction that we prefer is, in our opinion, consistent with s 32. In particular, we observe that the rule of construction expressed in s 32 is expressly qualified by its opening words, namely that a statutory provision is to be interpreted in a manner that is compatible with human rights only ‘so far as it is possible to do so consistently with’ the purpose of the statutory provision. In the present case, as explained above, we consider that the applicant’s proposed construction would undermine the purpose of s 22A(1)(c) (and related provisions). Thus we do not consider that that construction is required by s 32.
The hypothetical scenarios raised in argument
As to the question of non-financial contributions to property, we accept the respondent’s submission that that issue does not arise in the present case. That is because the applicant’s case below was not based on substantial non-financial contributions to the acquisition, improvement or maintenance of the property. Her claim was squarely based on her interest as a joint registered proprietor of the property. In those circumstances it would be inappropriate to embark on a consideration of the manner in which s 22A(1)(c) might operate if a person had made such contributions. (We observe that it is by no means clear that non-financial contributions can never amount to ‘sufficient consideration’, as the applicant submitted. But that is a question for another day.)
Similarly, it is not necessary to resolve the hypothetical scenario in which a wife provided 30 per cent of the purchase price but received a 50 per cent (or joint) interest in the property, as that is not this case. (Again, however, it is by no means clear that, in such a circumstance, the court would have no option but to reject an exclusion application in its entirety, and could not exclude a 30 per cent interest in the property from the restraining order. One or both of s 22A(2) and s 26(1) may have work to do in such a context. But again, those are questions for another day.)
Conclusion
For these reasons, leave to appeal is granted, but the appeal is dismissed.
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