Commissioner of the Australian Federal Police v Hart

The High Court of Australia considered appeals from companies associated with a convicted person concerning the forfeiture of property under the *Proceeds of Crime Act 2002* (Cth). The primary dispute involved applications by these companies for orders under s 102 of the Act to recover their interests in property that had automatically forfeited to the Commonwealth under s 92, following the conviction of an individual suspected of offences and believed to have effective control of the property. A separate issue concerned an application under s 141 of the Act for forfeited property to satisfy a pecuniary penalty order.

The Court was required to determine whether property forfeited to the Commonwealth was "not used in, or in connection with, any unlawful activity" and "not derived or realised, directly or indirectly, by any person from any unlawful activity" for the purposes of s 102(3)(a) of the Act. This involved considering the meaning of "use" and "derived," including whether a degree of use or derivation needed to be proportionate or substantial. The Court also had to determine whether, under s 102(3)(b), the applicant companies had proven that the forfeited property was "acquired ... lawfully," and specifically whether they needed to prove each step of the acquisition process and all consideration paid was lawful. Finally, the Court considered whether "effective control" for the purposes of s 141 was determined at the date of the restraining order or the date of the application.

The Court reasoned that for property to be considered "used in, or in connection with, any unlawful activity" under s 102(3)(a), the use must have a sufficient connection to the unlawful activity, but it does not require the property to be essential or to have made a unique contribution. Similarly, for property to be considered "derived or realised" from an unlawful activity, a substantial connection is required, and the derivation need not be the sole source. The Court clarified that proving lawful acquisition under s 102(3)(b) requires demonstrating that the property was acquired through lawful means, but not necessarily that every single step or all consideration was lawful if the overall acquisition was legitimate. Regarding s 141, the Court held that "effective control" is assessed at the time the property was forfeited.

In the result, the Commonwealth's appeal in relation to s 141 was dismissed. In other matters, the appeals were allowed in part, with specific declarations made regarding the legal ownership of a property and the entitlement of a company to any remaining proceeds of sale after satisfaction of secured liabilities, with each party to bear its own costs in those appeals.