Director of Public Prosecutions (SA) v Tape - [2013] SADC 175

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
DIRECTOR OF PUBLIC PROSECUTIONS (SA) v TAPE
[2013] SADC 175
Judgment of His Honour Judge Tilmouth
20 December 2013
CRIMINAL LAW - PROCEDURE - CONFISCATION OF PROCEEDS OF CRIME AND RELATED MATTERS - RESTRAINING OR FREEZING ORDER - INVESTIGATION AND EXAMINATION
The Director of Public Prosecutions applied for a restraining order with respect to real and personal property owned by the respondent, following charges against him for serious offences within the meaning of s 24 of the Criminal Assets Confiscation Act 2005 (SA) (CAC Act). The respondent applied for an order excluding the real property from the restraining order under s 34 of the CAC Act.
It was submitted by the Director that since the respondent was liable to a pecuniary penalty order with respect to the personal property, it was not open to apply for exclusion of the real estate because s 34(2)(a) of the CAC Act prevented the exclusion of property when 'the person who owns the property' was liable to a primary penalty order. It was accepted by the Director that the real property was neither the proceeds nor an instrument of unlawful activity and that it was lawfully acquired.
Held: 1. Sections 24 and 34 should be read together as applying to the individual property specified in the restraining order, so that the owner had to be liable to a pecuniary penalty order with respect to that specific property before the court was precluded from making an exclusion order with respect to it.
2. Alternatively the same result would be achieved by reading into the words of s 34(2)(a) by necessary implication in order to give effect to the manifest intention of the legislature, such that it should be read 'the person who owns [that] property'.
3. Application for exclusion granted.
Criminal Assets Confiscation Act 2005 (SA) s 24, s 24(1)(a), s 34, s 95(1), s 218, s 227; Controlled Substances Act 1984 (SA) s 32(1), s 32(3); Studman v DPP (Cth) (2007) 177 A Crim R 34; New South Wales Crime Commission v Kelaita (2008) 216 FLR 147; Director of Public Prosecutions (NSW) v Xu (2010) 202 A Crim R 279; Department of Public Prosecutions (SA) v Dobie (2010) 203 A Crim R 52; Chief Executive Officer of Customs v Granite Arms Pty Ltd (2005) 222 CLR 149; Lee v New South Wales Crime Commission (2013) 87 ALJR 1082; F, BV v Magistrates Court of South Australia (2013) 115 SASR 232; Acts Interpretation Act 1915 s 22; Bailey v South Australia Planning Commission (1986) 58 LGRA 355, referred to.
Momcilovic v The Queen (2011) 245 CLR 1; Director of Public Prosecutions (Vic) v Ali (2009) 23 VR 203; Cooper Brookes (Wolding) Pty Ltd v Federal Commissioner of Taxation (Cth) (1981) 147 CLR 297; Reid v Director of Public Prosecutions (WA) (2012) 224 A Crim R 100; Director of Public Prosecutions v George (2008) 102 SASR 246, applied.

DIRECTOR OF PUBLIC PROSECUTIONS (SA) v TAPE
[2013] SADC 175
Introduction

The applicant Mr Tape is charged on Information filed by the Director of Public Prosecutions (‘the Director’) on one count of trafficking in a large quantity of cannabis and one of trafficking in cannabis, both allegedly committed on 17 February 2013. They are set for trial in this court during March of 2014. The charges are laid under s 32(1) and s 32(3) of the Controlled Substances Act 1984 (SA) respectively.
Pending trial, the Director applied for a restraining order within the meaning of s 24 of the Criminal Assets Confiscation Act 2005 (SA) (‘CAC Act’) with respect to real estate, a trailer and $75,000 of cash owned by Mr Tape. Such orders were made under s 24 thereof on 4 October 2013 with respect to the items of personal property. It was not necessary at the early stage of proceedings for the Director to establish any relationship between the offences and that property – the fact that Mr Tape was charged with a serious offence was enough: s 24(1)(a) CAC Act, DPP v George.[1] Mr Tape seeks an order for exclusion from the ambit of the restraining order of real property owned by him. These reasons deal with that issue.
[1] (2008) 102 SASR 246, [18].
Legislative Scheme
The CAC Act was enacted as part of a uniform Australia wide measure having the objective of seizing the profits or proceeds of crime, as well as the forfeiture of property used to facilitate crime. By s 24 thereof the court must make a restraining order with respect to specified property, once satisfied that a person has been charged with a serious offence and when there are reasonable grounds to suspect that specified property is either the proceeds of or an instrument used in the commission of a serious offence.
The two offences charged against Mr Tape are ‘serious offences’ within the meaning of this section. However the court to which such application is made, retains the power under s 34 of the CAC Act to make an order excluding a specified item or items of property from a restraining order. This is the section under which the application is made by Mr Tape. Sections 34(1) and (2) read:
34—Court may exclude property from a restraining order
(1)The court to which an application for a restraining order under section 24(1)(a) or (b) was made may, when the order is made or at a later time, exclude specified property from the order if—
(a)an application is made under section 35 or 36; and
(b)the court is satisfied that—
(i)the property is neither proceeds nor an instrument of unlawful activity; and
(ii)the owner's interest in the property was lawfully acquired; and
(iii)it would not be contrary to the public interest for the property to be excluded from the order.
(2)However—
(a)the court must not exclude property from a restraining order unless satisfied that neither a pecuniary penalty order nor a literary proceeds order could be made against—
(i)the person who owns the property; or
(ii)if the property is not owned by the suspect but is under his or her effective control—the suspect; and
(b)the court must not exclude property from a restraining order unless satisfied that the property could not be subject to an instrument substitution declaration if the suspect were convicted of the offence.
Background Facts
The underlying facts are that on 17 February 2013 police attended the Gepps Cross address over which the restraining order is sought, under the authority of a general search warrant. They located the trailer in a carport, to which the first of the restraining orders is subject. In a false bottom built into the trailer and between floor plates, they found a false floor compartment containing six ‘cryovac’ vacuum sealed parcels containing approximately one pound of dried cannabis bud. In another false compartment at the front of the trailer, they located a pot containing approximately three ounces of white paste believed to be amphetamine, also sealed. The $75,000 in cash, the subject of the second restraining order, was found in a plastic shopping bag hanging from a door to the laundry of the house.
In affidavit evidence filed by Mr Tape, it emerges that the real property was purchased in about 1972. There is no contention by the Director that this property was either an instrument of unlawful activity, or the proceeds of unlawful activity within the meaning of s 34(1)(b)(i) of the CAC Act. It is also accepted that Mr Tape’s interest in the property was lawfully acquired (as it indeed was). No suggestion is made that it would not be contrary to the public interests for the property to be excluded.
The application for exclusion
The application for exclusion is opposed on a decidedly simple point of statutory construction raised on behalf of the Director. It begins with the submission that restraining orders under s 24 of the CAC Act are made with respect to specified property. Sections 24(1) and (2) provide:
24—Restraining orders
(1)A court must, on application by the DPP, make an order (a restraining order) that specified property must not be disposed of or otherwise dealt with by any person (except in the manner and circumstances, if any, specified in the order) if satisfied that—
(a)a person has been convicted of, or has been charged with, a serious offence, or it is proposed that the person be charged with a serious offence; or
(b)a person is suspected on reasonable grounds of having committed a serious offence; or
(c)there are reasonable grounds to suspect that the property is the proceeds of, or is an instrument of, a serious offence (whether or not the identity of the person who committed the offence is known); or
(d)there are reasonable grounds to suspect that a person has committed a serious offence and has derived literary proceeds in relation to the offence.
(2)An application for an order under this section must specify the property to which the application relates.
Such orders stand in contrast to pecuniary penalty orders made under s 95 of the CAC Act. Section 95 reads:
95—Making pecuniary penalty orders
(1)A court must, on application by the DPP, make an order ( a pecuniary penalty order) requiring a specified person to pay an amount determined under Subdivision 2 to the Crown if satisfied that the person has been convicted of, or has committed, a serious offence and—
(a)the person has derived benefits from the commission of the offence; or
(b)an instrument of the offence is owned by the person or is under his or her effective control.
According to the submissions of the Director, pecuniary penalty orders apply with respect to ‘specified persons’ rather than with respect to ‘specified property’, as is the case for restraining orders. Accordingly the court is precluded by s 34(2)(a) from excluding property otherwise amenable to a restraining order, when a pecuniary penalty order could be made against the person who owns that property. It follows on this construction that because a pecuniary penalty order could be made against Mr Tape under s 95(1) of the CAC Act with respect to the trailer and the cash, the court cannot then exclude the real property from the original restraining order.
Statutory framework
Being in the nature of a penal statute, one at times described as draconian, the CAC Act stands to be construed strictly so that any ambiguity should be interpreted to respect a citizen’s property rights: Studman v DPP (Cth),[2] New South Wales Crime Commission v Kelaita[3] and Director of Public Prosecutions (NSW) v Xu.[4] There is a presumption that Parliament does not intend to interfere with common law rights and interests except by clear and unequivocal language: Momcilovic v The Queen.[5]
[2] (2007) 177 A Crim R 34.
[3] (2008) 216 FLR 147: 189 A Crim R 474.
[4] (2010) 202 A Crim R 279.
[5] (2011) 245 CLR 1, [43].
On the other hand, where the CAC Act clearly interferes with property rights, the court must give effect to it: Director of Public Prosecutions (Vic) v Alli.[6] And there is also s 218 to bear in mind:
[6] (2009) 23 VR 203.
218—Certain proceedings to be civil
(1)Proceedings on an application for a freezing order, a restraining order or a confiscation order are civil proceedings.
(2)Except in relation to an offence under this Act—
(a)the rules of construction applicable only in relation to the criminal law do not apply in the interpretation of this Act; and
(b)the rules of evidence applicable in civil proceedings apply to proceedings under this Act.
The primary purposes of the CAC Act were detailed by Doyle CJ in Department of Public Prosecutions v George:[7]
[15] The CAC Act replaces earlier legislation that had the same aims. In his Second Reading speech on the Criminal Assets Confiscation Bill (Hansard, House of Assembly, 10 November 2004, p 843) the Attorney-General adopted remarks by the Commonwealth Attorney-General, to the effect that the aim of the legislation is to:
… strike at the heart of major organised crime by depriving persons involved of the profits and instrumentalities of their crimes. By so doing, it will suppress criminal activity by attacking the primary motive — profit — and prevent the reinvestment of that profit in further activity.
[16] … He referred to a statement by Professor Freiberg to the effect that the legislation aims to “incapacitate” by depriving persons of the means of offending, and to “prevent offenders from unjustly enriching themselves”, and to deter offenders from crime “by undermining the ultimate profitability of the venture”. In the same speech (p 844) the Attorney-General said that the key elements of the scheme were restraining orders, forfeiture orders, pecuniary penalty orders, literary proceeds orders, and information gathering.
[7] (2008) 102 SASR 246
Analysis of interpretation issue
Returning to the point of construction, the first point to observe is that restraining orders can only be made with respect to ‘specified property’ under ss 24(1) & (2) of the CAC Act. Pursuant to s 34(2) thereof, the court cannot exclude property when a pecuniary penalty order (or a literary proceeds order) could be made against the person who owns ‘the property’.
A central purpose of the CAC Act is to prevent offenders from unjustly enriching themselves with the benefits or proceeds of serious offences. One key element in the enforcement scheme is the realisation of assets used as instruments of such crimes. The mechanism chosen by Parliament commences with the capacity to make restraining orders for the purpose of securing property intact, pending resolution of serious charges, so that such property cannot be wasted or alienated in the meantime and so that such property will be available for enforcement by way of forfeiture orders (s 47), pecuniary penalty orders (s 95), or a literary proceeds orders (s 110).
The flaw in the submission for the Director lies in the interrelation of s 24 and s 34. Restraining orders made with respect to property under s 24 relate to ‘specified property’, that is individually identifiable items of property. Applications for exclusion under s 34(2) of the CAC Act can, accordingly, only be made in respect of specified property over which a restraining order could be made in the first place. In other words s 34(2)(a) applies when a pecuniary penalty order could be made with respect to specified property that is subject to the making of a restraining order.
In this instance the real property could not be restrained because it was neither the proceeds nor the instrument of unlawful activity and it was lawfully acquired. The Director’s construction should therefore be rejected.
The same conclusion may be reached by an alternative line of reasoning. An important safeguard to the property rights of civilians is contained in their capacity to apply for the exclusion of property from the ambit of restraining orders, upon satisfying the court of the three matters set out in s 34(1)(b) of the CAC Act. That onus is satisfied by Mr Tape in these proceedings so far as the real estate is concerned.
The consequence that property which is neither an instrument of unlawful activity, nor unlawfully acquired, could be subject to a pecuniary penalty order is an unintended one. It would clearly work an injustice and hardship on the owner. On the Director’s construction, the words in s 34(2)(a) of the CAC Act ‘a pecuniary penalty order … could be made against … the owner’, overlooks the qualifying words ‘the person who owns the property’.[8] The definite article ‘the property’, identifies the property specified in the restraining order,[9] so that in effect the section should read:
the court must not exclude property from a restraining order when satisfied that neither a pecuniary penalty order nor a literary proceeds order could be made against the person who owns [that] property.
[8] Emphasis supplied.
[9] See for example Chief Executive Officer of Customs v Granite Arms Pty Ltd (2005) 222 CLR 149, [12], Bailey v South Australia Planning Commission (1986) 58 LGRA 355, 358.
This construction does no violence to the purpose of the legislation. It is entirely consistent with the intention of Parliament and it is one which serves to ‘avoid or minimise their encroachment upon rights and freedoms at common law’: Momcilovic v The Queen.[10] Accordingly, reading ‘that’ instead of ‘the’ in the passage ‘a person who owns the property’, arises as a matter of necessary implication in order to give effect to the manifest intent of Parliament and to ensure that intention does not miscarry: Acts Interpretation Act 1915 (SA), s 22, Cooper Brookes (Wolding) Pty Ltd v Federal Commissioner of Taxation (Cth),[11] Reid v Director of Public Prosecutions (WA).[12]Recent applications of this principle of statutory construction are to be found in Lee v New South Wales Crime Commission,[13] F, BV v Magistrates Court of South Australia.[14]
[10] (2011) 245 CLR 1 [2].
[11] (1981) 147 CLR 297, 304, 310-311, 320-321.
[12] (2012) 224 A Crim R 100, 117-118.
[13] (2013) 87 ALJR 1082, [3], [28]-[30], [42]-[50], [223].
[14] (2013) 115 SASR 232, [60], [71]-[79].
Conclusion and Orders
Either way, on the proper construction of s 24 and s 34 of the CAC Act, the application for exclusion of the real property is open and must succeed on the merits.
There will be an order that the real property being the whole of the land described in Certificate of Title Volume 5535 Folio 142 be excluded from the restraining order made on 4 October 2013. The parties should be heard on the question of costs, bearing in mind that a successful applicant for the exclusion of property from a restraining order is prima facie entitled to costs, pursuant to s 227(1)(c) of the CAC Act: Department of Public Prosecutions (SA) v Dobie.[15]
[15] (2010) 203 A Crim R 52.