DPP v Le
[2007] VSCA 18
•15 February 2007
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 3723 of 2006
| DIRECTOR OF PUBLIC PROSECUTIONS | |
| Appellant | |
| v | |
| PHAN THI LE | Respondent |
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JUDGES: | MAXWELL P, CHERNOV and NEAVE JJA | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 2 November 2006 | |
DATE OF JUDGMENT: | 15 February 2007 | |
MEDIUM NEUTRAL CITATION: | [2007] VSCA 18 | First revision – 19 March 2007 |
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CONFISCATION – Confiscation of property – application for exclusion from automatic forfeiture – whether reasonable suspicion that property is “tainted property” determined by reference to reasonable person in applicant’s circumstances or any reasonable person – whether “natural love and affection” constitutes “sufficient consideration” – whether exclusion order under s 52(1) extends to entire subject property or limited to applicant’s interest in the property – Confiscation Act 1997 (Vic), s 52(1).
CONFISCATION – Appeal – Confiscation Act 1997 (Vic) ss 52(1), 142 – whether implied exclusion of right of appeal by Director of Public Prosecutions from exclusion order made under s 52(1) – whether right of appeal under County Court Act s 74.
STATUTES – Statutory construction – Confiscation Act 1997 (Vic), s 52(1) – power to make exclusion order if court satisfied as to certain matters – whether power discretionary in nature – whether ambiguity in language of s 52(1) permitting reference to extrinsic materials.
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| APPEARANCES: | Counsel | Solicitors |
| For the Crown | Mr N J O’Bryan SC with Mr C G Juebner | Ms A Cannon, Solicitor for Public Prosecutions |
| For the Respondent | Mr D C Hallowes | Melinda Walker |
MAXWELL P,
CHERNOV JA:
Roy Le (“Le”) is a convicted drug trafficker. He is serving a sentence of four years’ imprisonment, with a non-parole period of two years. At the time the trafficking offence was committed, Le was living with his second wife, Phan Le (“Phan”), in an apartment in Sunshine (“the property”). Because Le used the property to store, and prepare, heroin for sale, the property is “tainted property” in relation to the offence, for the purposes of the Confiscation Act 1997 (Vic).[1]
[1]The property “was used ... in connection with the commission of the offence”: para (a) of definition of “tainted property” in s 3.
Le and Phan were married in Vietnam in September 1997. There are no children of the marriage. Phan came to Australia in July 1999. Le had purchased the property before she arrived. Until his imprisonment, Le and Phan lived together at the property. It is their family home.
After Le was charged (with trafficking in not less than a commercial quantity of heroin), the Director of Public Prosecutions applied to the County Court for a restraining order in respect of the property. The application was made under s 16(2)(c) of the Act. A restraining order was made, on 18 September 2003, pursuant to s 18(1)(a) of the Act. As required by s 15(3)(a), the court declared that the property had been restrained for the purpose, amongst others, of satisfying “automatic forfeiture of property that may occur under Division 2 of Part 3”.
The combined effect of s 35(1) and (2) was that the property would be forfeited to the Minister 60 days after Le’s conviction, unless within that period an application had been made for an exclusion order under s 22. Phan did make such an application but, apparently because of her solicitor’s misunderstanding of the time from which the 60 days was to be calculated, it was not made within the 60-day period. As a result, the property was forfeited to the Minister at the expiry of that period.
Application for exclusion from automatic forfeiture
Phan then made an application pursuant to s 51(1) for an order excluding the property from automatic forfeiture under s 35. It is not disputed that she had standing to make that application, being a person who –
“claim[ed] to have had an interest in the property immediately before it was forfeited.”
The Judge gave Phan leave (under s 51(3)) to make the application outside the statutory period,[2] being satisfied that the delay in making the application was not due to neglect on her part.
[2]Of 60 days commencing on the day on which the property was forfeited to the Minister: s 51(2).
After considering the evidence of both parties and after seeing and hearing Phan cross-examined on her affidavit, his Honour granted her application, and made an order excluding the property from the automatic forfeiture. The Director now appeals from that order.
Is there a right of appeal?
As respondent to the appeal, Phan argues that, on a proper construction of s 142 of the Act, the Director has no right of appeal from the making of an exclusion order under s 52(1) of the Act. For this purpose, it is necessary to set out the relevant parts of s 142:
“(142)(1) Without affecting any other right of appeal, a person who has an interest in property in respect of which –
(a) a forfeiture order is made; or
(b) the Supreme Court or the County Court has made, or refused to make, an exclusion order under section 22 or 52(1) –
may appeal against that order or refusal –
(c)in the case of a person convicted of an offence in reliance on which the order was made – in the same manner as if the order were, or were part of, the sentence imposed in respect of the offence; or
(d)in any other case – in the same manner as if the person had been convicted of the offence in reliance on which the order was made and the order were, or were part of, the sentence imposed in respect of the offence.
(2) Without affecting any other right of appeal, a person who has an interest in property in respect of which –
(a) a civil forfeiture order is made; or
(b)the Supreme Court or the County Court has made, or refused to make, an exclusion order under section 24 or 54(1) –
may appeal against that order or refusal in the same manner as if the person had been convicted of the Schedule 2 offence in relation to which the order was made and the order were, or were part of, the sentence imposed in respect of the offence.
...
(4)On appeal, a forfeiture order, a pecuniary penalty order, an exclusion order under section 22, 50(1), 52(1) or 54(1) or a refusal to make an exclusion order under section 22, 50(1), 52(1) or 54(1) may be confirmed discharged or varied or the matter may be remitted for re-hearing to the court which made the order, or refused to make the order, with or without any direction in law.
(5)The DPP or a prescribed person or a person belonging to a prescribed class of persons may appeal to the Court of Appeal against –
(a)a civil forfeiture order or against the refusal of the Supreme Court or the County Court to make a civil forfeiture order; or
(b)the making of an exclusion order under section 24 or 54(1); or
(c)the making of a pecuniary penalty order under Division 2 of Part 8 or against the refusal to make a pecuniary penalty order under Division 2 of Part 8 –
in the same manner as if the order or refusal were, or were part of, a sentence imposed in respect of the offence.
(6)On appeal, a civil forfeiture order, an exclusion order under section 24 or 54(1) or a refusal to make an exclusion order under section 24 or 54(1) may be confirmed, discharged or varied or the matter may be remitted for re-hearing to the Supreme Court or the County Court, as the case may be, with or without any direction in law.”
The following points may be noted about these provisions:
·The right of appeal conferred by s 142(1) and (2) is expressed not to affect any other right of appeal. No such reservation appears in subsection (5), dealing with appeals by the Director.
·Section 142(1)(b) provides for an appeal against the making of an exclusion order under s 52(1) by “a person who has an interest in property” the subject of the order. That provision also would have given Phan a right of appeal if the Judge had refused to make the exclusion order she sought.
·An appeal under s 142(1), by a person (not being the person convicted of the relevant offence) who has an interest in the relevant property, is deemed to be in the nature of a sentence appeal. The same provision is made in s 142(5) in relation to appeals by the Director.
·Subsection 142(4) sets out the orders which may be made on appeals from orders made (or refused to be made) under ss 22, 50(1), 52(1) and 54(1). Subsection (4) would appear to be ancillary to the rights of appeal conferred by subsections (1)-(3), but there are two curious anomalies, namely –
(i) while subsection (4) contemplates an appeal being brought from an exclusion order made (or refused to be made) under s 50(1), no such right of appeal is actually conferred by subsections (1) or (2);
(ii) subsection (4) makes no mention of s 24, a section specifically mentioned in subsection (3) as a source of orders which may be appealed.
·Of most relevance for present purposes, under s 142(5)(b) the Director is given an express right of appeal against the making of an exclusion order under s 24 or s 54(1), but no provision is made for a Director’s appeal from the making of an exclusion order under s 52(1), as occurred in the present case.
Counsel for Phan makes the perfectly valid point that Parliament could readily have made provision in s 142(5)(b) for the Director to appeal from the making of an exclusion order under s 52(1). He argues that we should infer, from Parliament’s not having done so, that it was intended that the Director should have no right of appeal from such an order. Senior counsel for the Director, on the other hand, argues that the right of appeal is a fundamental matter and that the Court should not impute to Parliament an intention to deny the Director a right of appeal against an exclusion order under s 52(1) unless we were satisfied that s 142 was intended to “cover the field”[3] with respect to appeals, including appeals by the Director. He draws attention to the general right of appeal conferred by s 74(1) of the County Court Act 1958 (Vic) (from any order made by the County Court in a civil proceeding) and points out that, by s 133(1) of the Confiscation Act, proceedings under the Act are civil in nature.
[3]See Re Macks & Ors; ex parte Saint (2000) 204 CLR 158, applying ex parte McLean (1930) 43 CLR 472 at 483 per Dixon J.
In our view, the Director’s submission must be upheld. It would be a very significant thing for Parliament to deny the Director a right of appeal from an exclusion order made under s 52(1). No such intention having been stated expressly, it is not to be implied, in our view. First, the appeal provisions lack the clarity and internal consistency which would be a pre-requisite before any inference could be drawn that Parliament had deliberately (rather than inadvertently) denied the Director a right of appeal from the making of an exclusion order under s 52. Secondly, we are unable to see – and neither counsel was able to suggest – any policy rationale which might explain the conferral of a right to appeal from the making of certain exclusion orders and the denial of a right to appeal from the making of other exclusion orders. Moreover, as we have pointed out, the reference to s 50(1) in s 142(4) makes it clear that s 142 does not cover the field with respect to rights of appeal. The right of appeal from an exclusion order made under s 50(1) – a right not conferred by s 142 itself, but clearly contemplated by s 142(4) – must be found elsewhere and the only source of that right is s 74(1) of the County Court Act.
Clearly, the position we have described is quite unsatisfactory. The appeal provisions need to be reviewed urgently. If s 142(5) is intended to define exhaustively the Director’s rights of appeal, the Act should say so explicitly. Consideration will need to be given to the very question with which we are dealing, namely, whether it is intended to deny the Director a right of appeal from the making of an exclusion order under s 52. Self-evidently, the position should not be allowed to continue where rights of appeal are derived partly from the County Court Act and partly from s 142 itself.
There was also discussion, in the course of argument, about whether the statutory analogy with sentence appeals was appropriate. Where the appeal is brought by the person convicted of the relevant offence,[4] 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. When (as here) the applicant is a person who has not been and will never be sentenced for the relevant offence – indeed, under s 52(1)(a)(i), she must establish that she was not in any way involved in the offence – there is no apparent reason in policy or logic why the appeal court should be required to deal with the appeal from the making of, or the refusal to make, an exclusion order as if it were an appeal against sentence.
[4]See s 142(1)(c).
If all that was intended by the statutory analogy was that the making, or the refusal to make, an exclusion order was to be treated as a decision made in the exercise of discretion, so as to attract the principles laid down in House v R[5] as governing discretionary appeals, then the Act should say so. For reasons which follow, however, we do not consider this to be an appeal from an exercise of discretion.
[5](1936) 55 CLR 499.
The nature of the appeal
On the view we have taken, the Director’s appeal is a conventional appeal under s 74(1) of the County Court Act. The Judge made an order in a civil proceeding.
The power conferred by s 52(1) is exercisable upon the Court being satisfied as to various matters. The relevant introductory words are as follows:
“(1) On an application made under s 51, the Court may make an order excluding property in which the applicant claims an interest from the operation of [automatic forfeiture] –
(a) if the Court is not satisfied that the property in which the applicant claims an interest is not tainted property but is satisfied that –“
There follows a list of five matters. The applicant bears the onus of satisfying the Court on each matter. In the present appeal, only three are in issue, and we will refer to them in due course.
The power to make an exclusion order is only enlivened once the Court is satisfied as to each of the five matters. There was discussion in the course of argument as to whether the use of the word “may” gives the Court a discretion not to make an exclusion order even where satisfied as to those matters. We think, however, that there is no such discretion. In our view, the structure of the provision indicates that the word “may” is used -
“not to give a discretion, but to confer a power which is to be exercised upon the Court being satisfied of the matters described in the provision.”[6]
[6]Leach v The Queen [2007] HCA 3 at [38] per Gummow, Hayne, Heydon and Crennan JJ, citing Finance Facilities Pty Ltd v Federal Commissioner of Taxation (1971) 127 CLR 106 and Mitchell v The Queen (1996) 184 CLR 333.
The Director argues that he is entitled to ordinary appellate review of the judge’s state of satisfaction on the five matters. That is, it is for this Court to decide for itself whether the appellant has established those five matters to the Court’s satisfaction. The counter argument is that the appellant must establish what amounts to an error of law in the exercise of the power by the trial judge. So far as the state of satisfaction about a particular matter is concerned, relevant error would only be established if the appellant showed that –
(a) the judge below erred in principle; or
(b) there was no evidence to justify the Court’s state of satisfaction about that matter; or
(c) the conclusion reached by the Court was not reasonably open on the material before the Court.[7]
[7]cf. Australian Heritage Commission v Mt Isa Mines Limited (1997) 187 CLR 297 at 303; see also FCT v Linter Textiles Aust Limited (2005) 220 CLR 592 at 659 [215] per Kirby J.
Given what we have said about the nature of the power, it follows that on an appeal by way of rehearing – which this is – this Court has to decide whether it has the requisite satisfaction on each matter. We proceed on that basis. (The nature of the appeal to this Court is another matter to be considered when the appeal provisions are reviewed.)
As mentioned, in order to succeed in her application, Phan had to satisfy the Court of each of the five matters set out in s 52(1)(a), but only three are in issue. The Director submits that the learned Judge “could not have been satisfied” of any of those three matters, namely that:
·Phan acquired her interest in the property without knowing, and in circumstances such as not to arouse a reasonable suspicion, that the property was tainted property;[8]
·her interest in the property was not subject to the effective control of Le;[9] or
·she acquired her interest in the property “for sufficient consideration”.[10]
[8]Section 52(1)(a)(iii).
[9]Section 52(1)(a)(iv).
[10]Section 52(1)(a)(v).
We reject that submission. For the reasons which follow, we share his Honour’s state of satisfaction as to each of those matters.
“A reasonable suspicion that the property was tainted property”
Under s 52(1)(a)(iii), Phan had to satisfy the Court that she had acquired her interest in the property –
“without knowing, and in circumstances such as not to arouse a reasonable suspicion, that the property was tainted property.”
The knowledge/suspicion in question was that the property had been used in connection with the heroin trafficking.
It has not been contended by the Director that Phan had such knowledge. The Director maintains, however, that the trial Judge could not have been satisfied that Phan acquired her joint interest in the property “in circumstances such as not to arouse a reasonable suspicion.” Counsel for the Director rejected the suggestion that this phrase meant “arouse a reasonable suspicion in the applicant”, arguing instead that the court must be satisfied that the circumstances were such as not to arouse a suspicion in any reasonable person. The test should take no account, he argued, of the fact that the applicant in this case was a Vietnamese woman who could speak no English and who was (according to her unchallenged evidence) ill at the time of the police seizure of the drug-manufacturing equipment.
In supplementary submissions, the Director sought to draw an analogy with s 588G(1) of the Corporations Act 2001 (Cth). That provision makes a company director liable if, amongst other things, “there are reasonable grounds for suspecting that the company is insolvent”. Reliance is placed on the decision of Barrett J in Australian Securities and Investments Commission v Edwards,[11] where his Honour said that the inquiry relevant to that provision was –
“not an inquiry concerning the particular director whose conduct is under scrutiny. It is an inquiry into the objectively formed state of mind of a person of ordinary competence.”
[11](2005) 220 ALR 148 at [249].
In our view, the Director’s submission must be rejected. The “reasonable suspicion” provision in s 52(1)(a)(iii) is concerned with whether the circumstances in which the applicant acquired her interest in the property were such as to arouse in her a reasonable suspicion that the property had been used in connection with the trafficking. Plainly, the word “reasonable” imports an objective test. This means that it will not avail an applicant to say “I had no suspicion” if a reasonable person in her circumstances, and knowing what she knew, would have formed a suspicion. But if, in those circumstances and knowing what she knew, a reasonable person would not have formed a suspicion, that is the end of the matter. There is no warrant in the statutory language, or in authority, to import into the analysis some fictitious “reasonable person” to whom must be attributed some (arbitrary) state of knowledge of the relevant circumstances, on the basis of which it can be said that he/she would have formed a suspicion.
In our view, the language of s 52(1)(a)(iii) is in substance equivalent to the phrase “knew or had reason to suspect”, considered by the High Court in Queensland Bacon Pty Ltd v Rees.[12] Under the relevant provision of the Bankruptcy Act 1924-1960 (Cth), a creditor was deemed not to be acting in good faith if the relevant transaction took place –
[12](1966) 115 CLR 266.
“under such circumstances as to lead to the inference that the creditor knew or had reason to suspect that the debtor was unable to pay his debts as they became due...” (emphasis added)
Kitto J said:
“The notion which ‘reason to suspect’ expresses... is, I think, of something which in all the circumstances would create in the mind of a reasonable person in the position of the payee an actual apprehension or fear that the situation of the payer is in actual fact that which the situation describes – a mistrust of the payer’s ability to pay his debts as they become due...”[13]
Further:
“The character of the circumstances is what has to be decided: were they such as to lead to the specified inference? The inference is that the payee had cause to suspect the existence of two states of fact.”[14]
[13]At 303 (emphasis added).
[14]Ibid (emphasis added).
We consider that there is no analogy with s 588G(1) of the Corporations Act. That provision raises the – quite different – question whether “there are reasonable grounds for suspecting...”. With respect, what Barrett J said about the inquiry relevant to that question seems entirely correct. What underpins the more stringent language of that section is the recognition that there has been a “consistent legislative pattern … whereby the duties and obligations of directors [in respect of insolvent trading by the company] have been increased and made more onerous”.[15] No such policy consideration applies to s 52(1)(a)(iii) of the Act.
[15]Morley v Statewide Tobacco Services Ltd [1993] 1 VR 423 at 430 per Ormiston JA whose reasons were approved on appeal by the Full Court (Crockett, Southwell and Hedigan JJ).
In the present case, the question is: would a reasonable person in Phan’s position have had a suspicion?
What did the applicant know?
We turn to consider what the evidence showed as to the circumstances known to Phan. On 23 June 2003, the police conducted a search of the property. They located various items of equipment used in the pressing of heroin, including some packets of white powder. The following day, Le was charged with trafficking.
A month later, Le signed a document prepared by solicitors, transferring a half-interest in the property to Phan. On 29 August 2003, Phan became the joint registered proprietor of the property with her husband. In her affidavit in support of the application, Phan said:
“I had no knowledge that there was heroin bought (sic) to the house or that it remained in the house. I had no involvement with any heroin or drugs and I had no knowledge at the time that my husband was involved. I have never been charged with any offence.”
Cross-examined by counsel for the Director, Phan said that she recalled the police attending the flat but did not see them take any items from the flat –
“because on that day I was quite sick and I was just lying down.”
She was not challenged on this evidence. There was no challenge to the statement in her affidavit that she had no knowledge of the trafficking activity. She was asked no questions about her knowledge of the charges laid against her husband or about any enquiries she might have made of him as to what he had been doing.
As to the transfer to her of an interest in the property, she said in her affidavit:
“My husband has been married before and has older children to (sic) that marriage. I asked that my husband to put me on the Title of ‘the property’ because I was concerned that if something should happen to him and he should die before me, the house would pass onto his children and I would not have somewhere to live.
Some time in 23 July 2003 my husband went to a solicitor... I did not go but my husband bought (sic) home the paperwork which I signed.”
Under cross-examination, Phan said that she was sick on the day Le went to see the solicitor, and so had not been able to go with him. When asked whether she relied on her husband “to tell you what to do”, she answered:
“I did ask him to put my name onto the Title because I tell him that – so that because I have no relatives here so that in the future if something happened I would have a place to stay.”
There was no further cross-examination on this topic. In short, Phan’s viva voce evidence – as to the circumstances in which she came to acquire an interest in the property – was entirely consistent with the content of her affidavit. There was no challenge whatsoever to the truthfulness of her account.
In the relevant part of his reasons for judgment, the learned Judge said:
“It has to be said that the results of the search of the property create a climate of suspicion as to how one could not know that some sort of drug dealing was going on from the premises. The Applicant has sworn that she did not. Having regard to all the materials and having observed the Applicant in the witness box, I am not prepared to say that she should not be believed in that regard. Nor am I prepared to draw an inference against her as to the circumstances being such as to arouse in her reasonable suspicions that the property was ‘tainted’.”[16]
[16]Reasons at [35] (emphasis added).
In our opinion, his Honour’s conclusion is unimpeachable. Indeed, given the lack of any challenge to the account which Phan had given of her own state of knowledge, no other conclusion could properly have been drawn.
It was never put to Phan that she had – or must have had – such a suspicion. In the face of her unchallenged evidence that she knew nothing about her husband’s criminal activity, it would have been contrary to the principles of natural justice for the Judge to have concluded that the circumstances were such as to arouse in her a reasonable suspicion that the property had been used in connection with the heroin trafficking.[17] The fact of his being charged with trafficking would not – by itself – have justified any inference that she should have suspected that the property had been so used.
[17]cf Somaghi v Minister for Immigration (1991) 31 115 FCR 100 at 108-9 per Jenkinson J and at 119-120 per Gummow J; NIB Health Funds Ltd v Private Health Insurance Administration Council (2002) 115 FCR 561 at [133], [135] per Allsop J.
Counsel for the Director submit that, because Phan bore the burden of proof, her application should have been dismissed because she –
“did not adduce any evidence about her state of knowledge, her lack of suspicion or the reasonableness of her lack of suspicion at the time of the acquisition of her interest in the property.”[18]
[18]Outline at [15].
We reject this submission. As we have pointed out, Phan gave evidence, both in her affidavit and viva voce, about her state of knowledge and, by necessary implication, her lack of suspicion. That evidence was not challenged in cross-examination, or otherwise.
“Acquired for sufficient consideration”
The consideration for the transfer was “natural love and affection”. In her affidavit, Phan said:
“I did not pay any money to my husband for the transfer because I am his wife.”
There was no cross-examination on this part of the affidavit.
In his reasons for judgment, the learned Judge said:
“The Applicant has given a reasonable, and in the circumstances, plausible, reason for ‘her’ requests as she put it. Whilst natural love and affection may not be sufficient to justify a commercial contract between people at arms length, it is a common ‘consideration’ in respect to the alteration of property interests between husband and wife, as is the case here. In any event, it would seem to me to be arguable that what Le was doing in transferring a moiety of his interest in the property was no more than fulfilling a matrimonial obligation. The implication that Mr Le did effect the transfer to avoid the consequences of his wrongdoing rests upon supposition, which supposition might have been more attractive had he sought to transfer the whole of his interest in the property to the Applicant.
I am satisfied, in the circumstances, that the Applicant, as his wife, acquired her interests in the property for a sufficient consideration.”[19]
[19]Reasons at [38]-[39].
Once again, in our opinion, his Honour’s conclusion, and the reasons for it, are unimpeachable. The reason which Phan had given in her affidavit, and which she repeated in her viva voce evidence, was that she, not Le, had proposed that she be given an interest in the property. She had given a reasonable explanation for proposing the transfer, namely, her anxiety that if anything happened to her husband she might have nowhere to live. In the absence of any challenge to that evidence, the making of the transfer in consideration of “love and affection”, rather than for a monetary sum, was wholly unsurprising.
The term “sufficient consideration” is not defined in the Act, although courts have sometimes used it as a synonym for adequate or “valuable” consideration.[20] Thus, for example, in describing as “sufficient” the valuable consideration given by the promisee in Wigan, Mason J meant no more than that the consideration was adequate to impose on the promisor an enforceable obligation. Such use of the term “sufficient consideration” is unsurprising given that the ordinary meaning of “sufficient” is “adequate”.[21] Similarly, the term “consideration” has had a recognised meaning at common law[22] for over two centuries. “Valuable consideration” ordinarily encompasses a benefit capable of being valued,[23] although it does not include “good consideration” which, in conveyancing transactions, includes natural love and affection. Thus, in the context of the transfer of an interest in land in Victoria, natural love and affection is regarded as “good consideration”, but would probably be insufficient to support a simple contract.[24]
[20]For example see Wigan v Edwards (1973) 1 ALR 497 at 512 per Mason J. See also, Combe v Combe [1951] 2 KB 215 at 220-221 per Denning LJ; Barba v Gas & Fuel Corporation of Victoria (1976) 136 CLR 120 at 132 per Gibbs J; Health Insurance Commission v Peverill (1993) 179 CLR 226 at 265 per McHugh J; McKay v National Australia Bank Ltd [1998] 1 VR 173 at 177 per Winneke P.
[21]See the Shorter Oxford Dictionary on Historical Principles (5th ed).
[22]We mention for completeness that consideration is also relevant in the context of equitable remedies. Thus, for example, it is well established that, ordinarily, equity will not assist a volunteer promisee by way of, say, the provision of the remedy of specific performance unless he or she has provided valuable consideration for the promise. In general, valuable consideration in equity is the same as valuable consideration at common law although, in most cases, equity requires the consideration to be adequate. See, for example, Ford and Lee, Principles of the Law of Trusts (2nd ed) at [321] and Chitty on Contracts (29th ed) at [3-021]. For present purposes, however, it is not necessary to analyse further the treatment of consideration by equity because it has not been suggested, appropriately, we think, that the circumstances here give rise to the application of equitable principles.
[23]For historical reasons, it included marriage.
[24]See, for example, Blackstone, Commentaries on the Laws of England, Book 2, Chapter 20, at 297; House v Caffyn [1922] VLR 67 at 75-76 per Cussen J; Archibald Howie Pty Ltd v Commissioner of Stamp Duty (NSW) (1948) 77 CLR 143 at 152 per Dixon J; Barton v Official Receiver (1986) 161 CLR 75 at 86 per Gibbs CJ, Mason, Wilson and Dawson JJ; Re Abbott [1983] 1 Ch 45 at 57 per Megarry VC; Robinson, The Property Law Act Victoria, at 438; and Stuckey, The Conveyancing Act at 18.
That “valuable consideration” and “good consideration” constitute different categories of consideration (and have different content) has been recognised, for example, by legislation concerned with fraudulent preferences which has its origins in the Fraudulent Conveyances Act 1571 (Imp). Thus, for example, s 172 of the Property Law Act1958 (Vic) treats both “valuable consideration” and “good consideration” as sufficient (if given in good faith and without relevant notice) for the purpose of taking the impugned transaction out of its operation. Section 172(3) provides:
“(3)This section shall not extend to any estate or interest in property alienated for valuable consideration and in good faith or upon good consideration and in good faith to any person not having, at the time of the alienation, notice of intent to defraud creditors.”
On the other hand, in order to exclude the operation of s 121 of the Bankruptcy Act1966 (Cth), which avoids certain transfers to creditors, it is necessary to establish, at least, that valuable consideration had been provided for the impugned transfer. “Good consideration” is not sufficient. In terms, s 121(4)(a) defines valuable consideration as consideration that is “at least as valuable as the market value of the property”. Sub-section (6)(d) declares that, for this purpose, “the transferee’s love or affection for the transferor” has no value as consideration.
Given the ordinary meaning of “sufficient”, and the recognised categories and meaning of “consideration”, it may be assumed that the term “sufficient consideration” in the Act was intended to encompass at least “valuable consideration” and “good consideration”. Ordinarily, where a word used in an Act - here, “consideration” - has acquired a legal meaning, the presumption is that Parliament intended the word to have that legal meaning unless the contrary intention appears.[25] In our view, no such contrary intention can be gleaned from the Act.
[25]Attorney-General (NSW) v Brewery Employees Union of NSW (1908) 6 CLR 469 at 531 per O’Connor J.
In the circumstances, we consider that the term “sufficient consideration” in s 52(1)(a)(v) includes both “valuable consideration” and “good consideration”, as those terms have been understood at common law.[26] In the circumstances of this case as found by his Honour, “natural love and affection”, stated to be the consideration for the transfer of Le’s half interest in the property to Phan, constituted “sufficient consideration” for the purposes of s 52(1)(a)(v) of the Act.
[26]Although it might be argued that the term may include consideration that is less than “valuable” or “good” consideration, in our view it does not encompass nominal consideration – see NSW Crime Commission v Mahoney (2003) 142 A Crim R 409 at 419 per M Grove J.
“Not subject to the effective control of the defendant”
In our opinion, the evidence given by Phan, in her affidavit and viva voce, established that her interest was what she described it to be, that is, that of a joint tenant. That evidence was sufficient, in our view, to establish that her interest was not subject to her husband’s effective control, and there was no evidence to the contrary. As we have pointed out, her unchallenged evidence was that it was at her initiative that she became a joint tenant. The fact that, according to her evidence, her husband complied with this request and arranged for the solicitor to prepare the appropriate documentation was inconsistent with the contention that her interest was subject to effective control by her husband.
It is now a matter of speculation as to what Phan might have said had she been cross-examined on this question. But she was not. No question was raised about whether, despite the legal formalities, Le was in effective control.
According to the reasons for judgment, no issue was raised on the hearing of the application that Phan’s interest in the property was subject to the effective control of Le, “other than by the assertion contained in the Amended Grounds of Opposition” filed by the Director. No doubt what his Honour was referring to was the failure by the Director to challenge Phan’s account. In the circumstances, although the Director’s brief closing submissions did identify this as a matter in issue, the Director’s opposition on this ground was no more than formal.
The extent of the exclusion
The power which the Judge exercised, under s 52(1), was the power to –
“make an order excluding property in which the applicant claims an interest from the operation of s 35”.
The Director submits that the word “property” in this statutory phrase is to be read down, so that the power can only be exercised to exclude “so much of the property as relates to the applicant’s interest”. Otherwise, the Director argues, a defendant’s interest in automatically-forfeited property could be excluded. The Director relies on the fact that “property” is defined in s 3 of the Act to include “any interest in ... real or personal property.”
In our opinion, this submission must be rejected. First and most importantly, the language of s 52(1) simply does not permit the construction for which the Director contends. What may be excluded under s 52(1) is “property in which the applicant claims an interest”. The property, and the applicant’s interest in the property, are thus separate and distinct. It is the property which the Court excludes. It is the applicant’s interest in the property which gives the applicant standing to seek that exclusion. Precisely the same distinction – between the property forfeited and the applicant’s interest in that property – is drawn in each of s 49(1), s 50(1), s 51(1), s 53(1) and s 54(1).
Secondly, it is plain enough that the legislation intends, in a case such as the present, that the property which is automatically forfeited to the Minister is the same property as has been made the subject of the relevant restraining order, and it is equally apparent that it is that property which is to be the subject of any exclusion order, whether made before the property is automatically forfeited or after forfeiture. When ss 22 and 52 of the Act speak respectively of excluding “the property”, or “property”, from the operation of the restraining order or the operation of s 35, they are referring to the property the subject of the restraining order or the automatic forfeiture, as the case may be. In either situation, it is that property which is to be “saved” from automatic forfeiture.
A restraining order can, of course, be made in respect of an interest in property. That follows from the definition of “property” in s 3. But once the restraining order has been made, that interest is “the property” to which the later provisions of the Act apply.
In short, the Director’s submission conflicts with the basic scheme of the Act. In the present case, the Court made a restraining order in respect of “property which is tainted property” (s 16(1)). It is an order which applies (in a case such as the present) to the whole of the property used in connection with the commission of the offence, even where only part of the property – such as a garage erected on it – was actually used in connection with the unlawful purpose.[27] It is the property thus restrained – the whole property – which is automatically forfeited under s 35 of the Act, unless the permitted course is taken to prevent that occurrence. If such a forfeiture occurs, s 52 provides the opportunity to “reverse” that seemingly draconian consequence. Where the requirements of s 52 are established, the Court has the power to order that the property that has been automatically forfeited to the Minister – being the property the subject of the original restraining order – be no longer forfeited.
[27]See definition of “tainted property” in s 3 of the Act, and s 16 of the Act.
Throughout the Act the clearest of distinctions is drawn between “the property”, on the one hand, and “an interest in the property”, on the other. Thus –
·section 10 distinguishes between “property in which the defendant has an interest” and “property that is ... subject to the effective control of the defendant”;
·the jurisdiction to make a restraining order is exercisable in respect of –
“property in which the defendant has an interest”;[28]
·under s 17(1), the Court may require an applicant for a restraining order to give notice of the application to –
“any person whom the Court has reason to believe has an interest in the property that is the subject of the application”;
·under s 20, where a restraining order is made under s 18 against property, any person claiming “an interest in the property” may apply under ss 21, 22 and 24, such sections (like s 52) empower the Court to make an order “excluding the property from the operation of the restraining order”;
·the general power under s 26(1), to make orders “in relation to the property to which the restraining order relates”, is exercisable on the application of, amongst others, a person –
“who has an interest in that property”.
[28]See s 16(1),(2)(b)(ii), (c) and (d).
It is unnecessary to multiply examples. It is clear, in our opinion, that when Parliament used the word “the property” in s 52(1) in connection with the power to make an exclusion order, the intention was to empower the Court to exclude the property in its entirety. There is nothing in the language of s 52(1) which would permit, let alone require, the Court to exclude anything less than the property the subject of the restraining order which was, in turn, the subject of the automatic forfeiture. This conclusion is confirmed by s 52(2), which empowers the Court, when making the order excluding the property, to declare “the nature, extent and value of the applicant’s interest in property”. There would be no occasion for such a declaration if all that was being excluded was the applicant’s interest.
As Neave JA points out, s 23 includes the phrase “if ... the interest [of the applicant] is not excluded from the operation of the restraining order...”. But this is a reference back to the power of exclusion in s 22, which is a power to exclude “the property” in which the applicant claims an interest. It is not a power to exclude that interest.
The real effect of an exclusion order under s 52(1) is to annul retrospectively the automatic forfeiture of the property to the Minister. Where such an order is made, the property nevertheless remains subject to the restraining order, and this will be relevant in the event that a pecuniary penalty order is made under the Act against Le.[29].
[29]See s 72.
As we have said, counsel for the Director argued that s 52(1) should be read as if it conferred power to –
“make an order excluding from the operation of s 35 the Applicant’s interest in the property”.
They rely for this purpose on the language of the Explanatory Memorandum circulated before the provisions dealing with exclusion orders were enacted. In its relevant parts the Memorandum stated:
“Clause 51 provides that an application for the exclusion of an interest in property from the process of automatic forfeiture may be made by a person other than the defendant, who claims to have an interest in the property immediately before it was forfeited...
Clause 52 deals with the determination of an application under clause 51. An interest in property may be excluded from the operation [of] automatic forfeiture in certain circumstances. Where the Court is satisfied that the property in which the person claims an interest is tainted property, it may exclude that interest from forfeiture if it is satisfied that ...” (emphases added)
The Memorandum thus clearly envisaged the making of an order which excluded only the interest claimed by the applicant. Counsel for the Director argued that we should give effect to the clear intention conveyed by the language of the Explanatory Memorandum. But the use to which extrinsic materials may be put does not – cannot – extend to substituting the words of an explanatory memorandum (or, for that matter, a second reading speech) for the words actually used in the enactment. As the High Court has said emphatically in recent years, the words of the statute govern.[30] There is no substitute for giving attention to the precise terms in which the relevant provision is expressed.[31]
[30]Weiss v The Queen (2005) 224 CLR 300 at [9]; Stingel v Clark (2006) 228 ALR 229 at [26] per Gleeson CJ, Callinan, Heydon and Crennan JJ; Central Bayside General Practice Association Ltd v Commissioner of State Revenue (2006) 229 ALR 1 and the cases there cited.
[31]Weiss at [31] citing Fleming v The Queen (1998) 197 CLR 250 at 256 [12].
Where, as here, there is a direct conflict between the wording of the statute and the wording of the Explanatory Memorandum, the words of the statute must prevail.[32] Axiomatically, it is the language of the statute which embodies the intention of Parliament. This is not a case of ambiguity, where the Explanatory Memorandum might help in determining the meaning of the provision. This is a flat contradiction.[33] The statute confers a power to exclude “property in which the applicant claims an interest”, whereas the Explanatory Memorandum contemplated power “to exclude that interest”.
[32]Re Bolton; ex parte Beane (1987) 162 CLR 514 at 518 per Mason CJ, Wilson and Dawson JJ.
[33]cf. Avel Pty Ltd v Attorney-General (NSW) (1987) 11 NSWLR 126 at 128B per Kirby P.
There was debate about whether it was, or was not, a sensible policy to give the Court an “all or nothing” power of this kind. Counsel for the Director argued that there could be “very curious results” if, upon the applicant establishing a small interest in forfeited property, the Court’s only choices were to exclude the property altogether from forfeiture, or to refuse the application. A possible counter view is that the process of compulsory forfeiture – that is, by operation of law, with no judicial consideration – is so drastic as to justify giving the Court power, upon the establishment of an interest by an innocent third party, to exclude the entirety of the property.
In the end, of course, the question of policy is for Parliament, not for this Court. Where, as here, the words used are clear and unambiguous, and maintain a distinction which is deployed consistently throughout the Act, the Court is bound to give effect to the language used.
We would therefore dismiss the appeal.
NEAVE JA:
I have read the draft judgment of Maxwell P and Chernov JA. But for one matter on which I differ from their Honours, I would agree that the appeal should be dismissed. In my opinion the power conferred on the Court by s 52(1) of the Confiscation Act1997 (“the Act”) can only be exercised so as to exclude the applicant’s interest in property which is automatically forfeited and not to exclude the whole of the property from forfeiture. I take this view for four reasons.
First, the word “property” is defined in s 3 of the Act as meaning
“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”.
This definition recognises that property is not a physical “thing” but is a bundle of rights which exists in relation to things – an “interest in property” is itself property. The terms “property” and “interest in property” are synonyms for each other. Even in the rare situation where a person owns the whole bundle of rights in property, he or she is more accurately described as having an interest in it.
Reading the definition in s 3 into the introductory words of s 52(1) produces the following
“On an application made under s 51, the court may make an order excluding real or personal property and any interest in any such real or personal property (italicised words inserted) in which the applicant claims an interest, from the operation of s 35.”
While the insertion of the definition creates an inelegantly worded provision, clumsiness of expression is not, in itself, a reason for failing to apply this definition. In my opinion the definition makes it clear that the courts power to exclude “property” is limited to excluding the applicant’s interest in the property which has been automatically forfeited.
Secondly, once the definition of property is read into s 52(1), comparison between the language of s 52(1) and other sections of the Act, does not, in my view, provide a compelling basis for reading s 52 in a way which confines the power of the court to making an order which excludes the whole of the property. As the High Court has recognised, the maxim that a term included in a document impliedly excludes what is omitted,[34] is not a strong principle of statutory interpretation.
[34]In Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 560 per Gleeson, CJ Gaudron, Gummow and Hayne JJ, it was said that it is “a maxim upon which, it has often been pointed out, it is dangerous to rely.” Cited with approval by this Court in Davidson v Victorian Institute of Teaching [2006] VSCA 193 at [13].
Although there are a number of sections in the Act which refer explicitly to an “an interest in property” rather than to “property”, these provisions are apparently designed to make the application of the particular provision clear, in situations where either the defendant or another person does not have the whole bundle of rights in the property. For example -
·Section 16 enables an application to be made to the court for a restraining order in respect of property in which the defendant has an interest or which is tainted property in relation to the offence. The reference to property in which the defendant has an interest puts it beyond doubt that a restraining order can be made even if other persons also have interests in that property.[35]
·The complementary provision in s 26, which allows the court to make further orders in respect of the property over which a restraining order has been made, similarly makes it clear that a person other than the defendant, who has an interest in property which has been restrained, has standing to make an application for such an order.
·Section 17(1), under which the Court may require an applicant for a restraining order to notify a person who may have an interest in the property, is intended to ensure that this power extends to people who do not have the whole bundle of rights in the relevant property.
[35]This is also the purpose of s 16 (b)(ii) and (c), and (d).
Section 22 allows the court to exclude “the property” from a restraining order made for the purposes of automatic forfeiture, if certain conditions are satisfied. But s 23 provides that if “the interest is not excluded from the operation of the restraining order” despite the fact that the conditions in s 22 have been satisfied, the court has power to make a declaration that a restraining order is to be disregarded for the purposes of automatic forfeiture. The fact that s 22 apparently refers to “the interest” rather than to the property as a whole, fortifies my conclusion that the expression “property” in s 52(1) means an interest in property.
In my opinion the fact that s 52(2) allows the court to
“make an order declaring the nature, extent and value of the applicant’s interest in the property.”
does not detract from the conclusion that s 52(1) is confined to excluding the applicant’s interest from forfeiture. The power conferred by s 52(2) enables the court to determine the nature and extent of an interest claimed by an applicant, where this is necessary. For example the applicant may be registered as a co-owner of land, but may claim that he or she has a larger equitable interest in the property which arises under a constructive trust. Under s 52(2) the Court may declare the extent of the applicant’s interest as part of the process of excluding the applicant’s interest from forfeiture.
Thirdly, an interpretation of s 52(1) which requires exclusion of the whole of the property, rather than the applicant’s interest in it, produces an absurd result.
An applicant who has a restrictive covenant or an easement over property or a small undivided interest as tenant-in-common may apply for an exclusion order under s 51. Maxwell P and Chernov JA have said that if the court is satisfied as to the five matters in s 52(1) it has no discretion to decline to make an order. This is because the words “may make an order” confers authority on the court to order exclusion if the five conditions in s 52(1) are satisfied, rather than giving the Court a discretion to make or refuse to make an exclusion order.[36]
[36]For a recent example of a provision with similar effect see the joint judgement of Gummow, Hayne, Heydon and Crennan JJ in Leach v The Queen [2007] HCA 3 at [38] and the cases therein cited.
According to this interpretation of s 52, the Court would be required to order exclusion of the whole of the property, even though the applicant’s interest in the property was of insignificant value compared with the interest of the person convicted of an offence attracting automatic forfeiture. The exclusion of the whole of the property would undermine the policy goal of the Act, which is intended to prevent people convicted of serious offences from profiting from the fruits of their crime. This would be the case even though the property may remain available to satisfy a pecuniary penalty order made against an offender.[37]
[37]Confiscation Act1997, s 72.
It is arguable that, contrary to the view expressed by Maxwell P and Chernov JA, the court has a discretion under s 52 to decline to make an order, where the applicant has only a small interest in the property. In those circumstances person who had an interest in the property would lose that interest, even though the requirements of the section were satisfied.
In my view the absurdity of this “all or nothing” result compels an interpretation of the section which enables the Court to exclude only the interest of the applicant from automatic forfeiture. In CIC Insurance Ltd v Bankstown Football Club, Brennan CJ, Dawson, Toohey and Gummow JJ said:
“the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses ‘context’ in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy. Instances of general words in a statute being so constrained by their context are numerous… if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent.”[38]
[38]CIC Insurance Ltd v Bankstown Football ClubLtd (1995) 187 CLR 384 at 408.
Finally, my view is supported by the words of the explanatory memorandum, which are set out in paragraph [58] of the joint judgment of Maxwell P and Chernov JA. I note that s 35(b) of the Interpretation of Legislation Act1984 permits consideration of any relevant document including explanatory memoranda. In my view an interpretation of the legislation which provides for the whole of the property to be forfeited leads to an absurd result. It is appropriate, and is not inconsistent with the approach of the High Court in Stingel,[39] to be guided by the explanatory memoranda in the circumstances of this case.
[39]Stingel v Clark (2006) 228 ALR 229.
I would therefore allow the appeal.
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