Henderson v State of Queensland

[2014] HCATrans 229

[2014] HCATrans 229

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B22 of 2014

B e t w e e n -

JOHN WILLIAM HENDERSON

Appellant

and

STATE OF QUEENSLAND

Respondent

FRENCH CJ
KIEFEL J
BELL J
GAGELER J
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 16 OCTOBER 2014, AT 10.01 AM

Copyright in the High Court of Australia

MR S. GILLESPIE-JONES:   May it please your Honours, I appear with MS E. McKINNON for the appellant.  (instructed by Gary Prince)

MR M.D. HINSON, QC:   May it please the Court, I appear for the respondent.  (instructed by Director of Public Prosecutions (Qld))

FRENCH CJ:   Yes, Mr Gillespie‑Jones.

MR GILLESPIE-JONES:   Your Honours, with the exchange of papers in this case, the issue seems to have congealed around section 26, section 18 and section 22 of the Act.  I would take your Honours to the provisions of the Act themselves, it being referred to in various outlines that have been filed by both myself and Ms McKinnon and my learned friend ‑ ‑ ‑

BELL J:   Can I just confirm, Mr Gillespie‑Jones, that the correct reprint is Reprint 3D, as in force on 1 January 2011?

MR GILLESPIE-JONES:   At the time that the application was made, your Honour, it was the view taken by both parties that section 68(2) was the procedure that was to be adopted at that particular point in time.  Insofar as the accrued rights are concerned, nothing of significance has changed in this section since 2002, I think, when the ‑ ‑ ‑

BELL J:   For the purpose of the determination of the appeal, are the parties agreed that Reprint 3D contains the provisions ‑ ‑ ‑

MR GILLESPIE-JONES:   I believe so, your Honour.  Yes, that is correct.

FRENCH CJ:   Mr Hinson, you also agree with that?

MR HINSON:   I agree, your Honours, yes.

FRENCH CJ:   Yes, very well.

MR GILLESPIE-JONES:   Your Honours, going to section 68, you will see that for an exclusion application, the appellant must persuade the Tribunal that:

it is more probable than not that the property to which the application relates is not illegally acquired property.

If one goes to section 22:

Property is illegally acquired property if it is all or part of the proceeds of an illegal activity.

Now, it is our submission that here, Mr Henderson, the appellant, has proved that what property that he possessed was not the proceeds of illegal activity within the meaning of the Act, so far as he was concerned.

KIEFEL J:   Do you read section 68(2)(b) as requiring him to show that it is more probable than not that the property to which the application relates was not illegally acquired by him?

MR GILLESPIE-JONES:   I do.

KIEFEL J:   That is to say that what he has to show the Court is that, I did not illegally acquire this property.  I may have been involved in illegal activities but I did not illegally acquire this property.

MR GILLESPIE-JONES:   Indeed, your Honour, because of the wording of section 18 and the word “proceeds”, because there must be a causal connection between the acquiring and the ‑ ‑ ‑

KIEFEL J:   Well, section 22, to which you have taken us, you would read as property is illegally acquired if it is all or part of the proceeds of an illegal activity of his.

MR GILLESPIE-JONES:   Correct.

KIEFEL J:   “Proceeds” is defined by section 18 to include:

property and another benefit derived because of the activity‑

(a)by the person who engaged in the activity; or

(b)by any other person at the direction or request, directly or indirectly of the person, who engaged in the activity.

MR GILLESPIE-JONES:   Indeed.

KIEFEL J:   You say that supports your ‑ ‑ ‑

MR GILLESPIE-JONES:   I do, your Honour.

KIEFEL J:   Do you rely also on the objects section, section 4?

MR GILLESPIE-JONES:   I do. 

BELL J:   Mr Gillespie‑Jones, can I just direct your attention to section 13(2) which provides that the:

chapter enables proceedings to be taken to confiscate property derived from a serious crime related activity even though the person who engaged in the relevant activity has not been identified.

MR GILLESPIE‑JONES:   Yes.

BELL J:   So that the property may ‑ ‑ ‑

MR GILLESPIE‑JONES:   That stems, in my submission, from part of section 28 but here, in my submission, what has occurred is that he has put himself on his oath and he has established something positively and ‑ ‑ ‑

BELL J:   So your quarrel is with the factual finding made by the primary judge, not the construction of the Act.

MR GILLESPIE‑JONES:   I rely on his factual finding that his evidence was accepted with respect to - in receiving the goods from his – the jewellery from his father and in that ‑ ‑ ‑

KEANE J:   That was as far as it went, was it not, in terms of accepting his evidence.  It was accepted that he had received it from his father, but the judge did not go on to make any further finding that, for example, your client actually believed the story he was told about the provenance of the jewellery.

MR GILLESPIE‑JONES:   I think the original version – the original judgment I should say from the trial judge was that my client had no knowledge.  That could be inferred from that passage that I referred to perhaps at page 40 of the appeal book and at paragraph [65] about line 45:

However, it would appear to be anomalous that property may be confiscated, because the ultimate origin of the property is beyond the knowledge of, and means of proof available to, a prescribed respondent.  Such a case would appear to be well outside the intended scope of the legislation, as identified in s 13(1) and s 13(4) of the Confiscation Act.

So whilst, in our submission, it is implicit that in that passage that his Honour found that it was beyond Mr Henderson’s knowledge that is how it is put.

KEANE J:   Just in terms of the objects and so far as you rely on them, I take it you are relying on section 4(2)(b)?

MR GILLESPIE‑JONES:   Yes.

KEANE J:   Well, what there is not is a finding that your client honestly acquired from his father, or was innocent of illegal activity in the sense that there was not a finding that he actually believed his father’s account.

MR GILLESPIE‑JONES:   Your Honour, if one has a look at the findings at page ‑ ‑ ‑

KEANE J:   I mean, it is fair to say, is it not, that your client’s account, that there is no question so far as procedural fairness concerned that the State treated your client’s evidence and all of his evidence as being subject to challenge?

MR GILLESPIE‑JONES:   No doubt my learned friend challenged and said that he ought not be accepted and, in my submission, the judgment at page 39 of the appeal book shows that challenge to have failed to that degree.

KEANE J:   Which paragraph are we referring to?

MR GILLESPIE‑JONES:   If one has a look at paragraph [58], for example:

Similarly, I am prepared to accept that the jewellery was given to Mr Henderson by his father, and shown by him to his brothers and his sister shortly after his father’s death.  There is corroboration of Mr Henderson’s evidence to this effect ‑ ‑ ‑

KIEFEL J:   Do you say that finding is sufficient for your purposes and all the rest is surplusage?

MR GILLESPIE-JONES:   In my submission, if ‑ ‑ ‑

KIEFEL J:   Do you say that finding discharges the onus of showing that “I did not illegally acquire this property”?

MR GILLESPIE-JONES:   Yes.

KIEFEL J:   Do you say you do not have to show a nexus between his activities and the property.  You just have to show that the property, subject of the application for forfeiture, was not illegally acquired by him?

MR GILLESPIE-JONES:   Indeed.  It is a question of his activity within the meaning of the words “illegal activity” from which the property has been derived.  That is how we would be putting it.

FRENCH CJ:   In the statutory framework, is the case adverse to you any more complex than the application of section 68(2)(b) where it is said you failed to show that it was not illegally acquired property on the basis that illegally acquired property under section 22(2)(b) includes property:

acquired using illegally acquired property –

that then attaching to the jewellery.  Your failure to negative the proposition that the jewellery was illegally acquired property leads to the proceeds of the sale of the jewellery being treated as illegally acquired property, unless you show that the jewellery itself was not illegally acquired property, and you do not have the benefit of anything under section 26.

MR GILLESPIE-JONES:   The position so far as we are concerned, your Honour, is that insofar as the money is derived from the sale of the jewellery, we have no difficulty with what has fallen from your Honour.  With respect to section 26, there is no evidence that the jewellery was illegally acquired property, none.

FRENCH CJ:   The proposition against you is that you have to negative that.

MR GILLESPIE-JONES:   In my submission, were there to be some kind of deeming provision or something along those lines, my friend would be on firmer ground, but here, he starts with the proposition that there is jewellery, you have not proved that it was lawfully acquired.  That does not mean, in my submission, that that is proof that it was not lawfully acquired.

FRENCH CJ:   I just want to make sure that I have not oversimplified the statutory argument against you.

MR GILLESPIE-JONES:   The submission is that if one looks at section 26, and indeed section 24, “property” is defined as:

(a)       illegally acquired property;

(b)       serious crime derived property.

It retains its character, and then it is a question it stops being illegally acquired property.  But what it does not do is it does not say that by assertion from the State, property is illegally acquired property.  In my submission, the fact that the character is retained does not establish for the State that the property was illegally acquired.  For these sections to have any effect there has to be proof, or somehow, that the property was illegally acquired property.

BELL J:   What work does that give to section 68?

MR GILLESPIE‑JONES:   In my submission, they are quite ‑ ‑ ‑

BELL J:   Is not the starting point that you are seeking exclusion?

MR GILLESPIE‑JONES:   That is true.

BELL J:   In order to seek exclusion of property that includes this property you need establish the matters in 68(2)(b).

MR GILLESPIE‑JONES:   Indeed.

BELL J:   There is not a question of a starting point on your opponent’s part to establish the fact.

MR GILLESPIE‑JONES:   No, but it is put, your Honour, that if one has a look at section 18, what it is that my client has to prove, the relationship between my client and other people is specifically referred to in (b).

BELL J:   This is the meaning of “proceeds”?

MR GILLESPIE‑JONES:   This is the meaning of “proceeds”.  If we show that what we have is not proceeds of illegal activity, in my submission we have succeeded in meeting the test in section 68(b).

KIEFEL J:   Are you referring to section 18(b) because the respondent relies upon it in paragraph 20 of their written submissions?  It is said:

That is because, if the jewellery is the proceeds of illegal activity engaged in by another person, it retains that character notwithstanding a transfer of possession to the appellant.

MR GILLESPIE‑JONES:   In my submission, what there must be is a direction or request directly or indirectly from the appellant and, in my submission, his evidence in that regard has been accepted as ‑ ‑ ‑

FRENCH CJ:   But you do not have to go through the route of illegal activity to get to the characterisation of proceeds as illegally acquired property because section 22(2) tells us, does it not, that:

Property is also illegally acquired property if –

(a)      it is all or part of the proceeds of dealing with illegally acquired property ‑ ‑ ‑

MR GILLESPIE‑JONES:   That is true.

FRENCH CJ:   So the money would be – if the jewellery were illegally acquired property, the money derived from the sale of the jewellery would be proceeds of dealing with illegally acquired property, would it not?

MR GILLESPIE‑JONES:   Absolutely, I do not disagree with that.  But the question is is the jewellery illegally acquired property.  That is what it is.

KIEFEL J:   You say the primary judge’s finding that it was a gift negates that.

MR GILLESPIE‑JONES:   Indeed.

GAGELER J:   If the jewellery were illegally acquired property in the hands of the father, why does it not remain illegally acquired property when the father gives it to the son?

MR GILLESPIE‑JONES:   In my submission, if the jewellery is illegally acquired property in the hands of the father and if there was proof of that, because of section – because of a number of sections but because of section 22, if there was proof of that it would be illegally acquired property in the hands of the son if the son knew of that, or alternatively if the son ‑ ‑ ‑

BELL J:   Why are you injecting the son’s knowledge into this response?

MR GILLESPIE‑JONES:   It really falls into another different category, but if the son knew – I do so because of 18(b) – but it might be that if the situation were that it was established that it was illegally acquired property in the hands of the father there are different considerations and different rules but that, in my submission, is not this case.

GAGELER J:   Well, all we know about the father is that the father had possession of the jewellery.

MR GILLESPIE‑JONES:   True.

KIEFEL J:   I mean, on your approach to this matter all of this evidence about – all that was required was to establish what his Honour accepted, that the jewellery was received by the son on behalf of himself and the other children as a gift from the father.  What it was and what its provenance was before that was completely irrelevant.

MR GILLESPIE‑JONES:   Indeed, your Honour.

KIEFEL J:   One just wonders why it was led.  But what the primary judge could have done was to disbelieve the entire story as a sort of rather odd account, which it obviously is, but his Honour did not do that.

MR GILLESPIE‑JONES:   Indeed, that is correct, and that is something upon which I rely.  Were there to be evidence that this was ‑ just because it is an odd account does not mean that it is illegally acquired.

KIEFEL J:   That is putting it mildly, I think, but anyway.

GAGELER J:   In the absence of evidence about how the father acquired the property is it not just a question of the inference to be drawn as a matter of probability?

MR GILLESPIE‑JONES:   In my submission, when the father is dead and where there are years after the event, in my submission, there is no inference that ought be drawn, and I think I have referred to Steinberg and cases of that ilk.  Where there is no evidence, in my submission, you cannot just assume that the jewellery has been illegally acquired.

KIEFEL J:   That is because the way in which you approach section 68(2)(b), as we have discussed earlier, is that it requires, in effect, him to show that I did not ‑ that is, the appellant personally did not acquire this property illegally.

MR GILLESPIE‑JONES:   Indeed.

KIEFEL J:   If that is the case, you do not have to prove title, clear title not attached to any criminal activity before that point.

MR GILLESPIE‑JONES:   That is correct, that is how it is put.  The submission is to ‑ ‑ ‑

BELL J:   How is that based in the statute?

MR GILLESPIE‑JONES:   It is based in the statute by going directly to the – this sounds fatuous, but by going directly to the definitions.  If one applies the definitions to what it is that has to be proven, section 22 requires the appellant to prove that the property was not “illegally acquired property” and by doing that he has to prove that it is not “part of the proceeds of an illegal activity”.  If he says, I got it from my father and, in my submission, that is not an illegal activity within the meaning of section 15, and if he – and proceeds in relation to an activity includes property and another benefit derived because of that activity by the person who engaged in that activity.

BELL J:   Mr Gillespie‑Jones, you accept that if the jewellery in the hands of the father was illegally acquired property it retained that status in the hands of the son, it being a gift?

MR GILLESPIE-JONES:   True.

BELL J:   Now, the primary judge found that the:

account given . . . of the provenance of the jewellery, that account cannot be true. 

This is appeal book 38, paragraph [53].

MR GILLESPIE-JONES:   True.

BELL J:   So that one has an inference drawn by the primary judge, namely, that he cannot be satisfied on the balance of probability that the jewellery was not illegally acquired property in circumstances where jewellery worth of the order of $600,000 or so is given by the father to the son, giving the son an account of how he, the father, acquired it, but the judge accepts cannot be true.  In those circumstances, what is the flaw in the conclusion that the judge drew that he was not satisfied that more likely than not the property was not illegally acquired?

MR GILLESPIE-JONES:   In my submission, just because the account given by the father was not true you cannot draw an inference that the jewellery was illegally acquired.  In my submission, just because one does not accept that evidence, that does not prove the contrary and you cannot ‑ ‑ ‑

BELL J:   It fell to your client to establish the fact on the balance and some might think that the handing over of jewellery of a substantial value, with an account as to how one acquired it that could not be true, provides support for a conclusion that the property was illegally acquired within the meaning of the provision.

MR GILLESPIE-JONES:   In my submission, not, because what one has to, in the hands of the appellant - what is contemplated by section 18 is the acquisition of his property has to be known by a person engaged - derived because of his possession of the property from his father ‑ ‑ ‑

BELL J:   I thought we had already established that if the property was illegally acquired in the hands of the father, on the gift to the son it retained that status.

MR GILLESPIE-JONES:   Whilst that is true, in my submission – all I can say to refute that proposition, your Honour, is that the mere disbelief of an account given by the father to the son does not establish that it was illegally acquired property.  I cannot go any further than that.

FRENCH CJ:   But you say there is a disconnect – at least, it ceases to be illegally acquired property if the son acquires it lawfully, or otherwise than in the course of some illegal activity.  Is that right?

MR GILLESPIE-JONES:   Insofar as what it is that he proves, yes.  That is how I put it.

FRENCH CJ:   That is a general defence?

MR GILLESPIE-JONES:   That is a general defence because ‑ ‑ ‑

FRENCH CJ:   You do not need section 26?

MR GILLESPIE-JONES:   You do not need section 26 because that is what he has to prove.  That is how it is put.

FRENCH CJ:   Does it render section 26 otiose?

MR GILLESPIE-JONES:   No, because if were it, for example – it means that it is rendered otiose if there is an establishment that, for example, he knew that there was – it could be established that the jewellery was stolen, for example, it belonged to somebody else, and things of that nature then it would go to him and he would not succeed, in my submission, because of section 22.  But you have to start with the proposition that that has to be established before you can apply section 22.  That is how it is put.

It is put against me, your Honours, that those tests are referred to in other parts of the Act.  If one goes, for example, to section 48, there can be an exclusion of that material in relation to a restraining order, and the test is primarily the same.  There is always an out, as it were, if one can establish that the illegally acquired property, or the putative illegally acquired property, is not illegally acquired.  There is always that out, and the question is what does that out mean?  With the exchange of paper between both sides, your Honours, it congeals into that issue, in my submission.

I think really, your Honours, that is the point in this appeal.  It is a short point, and the papers have been exchanged and, as I would say, the pinnacle of it is that.  In my submission, to say that it is illegally acquired just because you disbelieve what the son said – what happened in Sarajevo was told to him by his grandfather or something like that – in my

submission, that is a brave inference to draw, even on the balance of probabilities.  I rely on the written submissions.

FRENCH CJ:   Yes, thank you.  Yes, Mr Hinson.

MR HINSON:   Your Honours, the central plank in the appellant’s argument is the proposition that section 68(2)(b) should be read down as if it read the property to which the application relates was not illegally acquired by the applicant.  Do your Honours have the respondent’s outline of propositions that was handed to the Court at the commencement of the hearing?  Your Honours, at paragraphs 10 and 11 on pages 2 and 3 of the respondent’s outline of propositions, I submit that that argument ought not be accepted for three reasons. 

First, it negates the operation of sections 24 to 26.  Secondly, it imports into section 68(2)(b) a concept which the legislature had no difficulty expressing elsewhere in the Act, and might I just briefly take your Honours if you do have those sections – I know they are not sections that were necessarily referred to in any of the outlines of argument. 

Section 29 is concerned with what has to be proved to obtain a restraining order and your Honours will see under section 29(1) the contents of an affidavit in support of an application vary according to which provision of section 28 the application is brought under.  Under section 29(1)(b), there is a requirement for an authorised officer to depose to a suspicion in paragraph (ii) that the prescribed respondent:

has derived proceeds from engaging in 1 or more . . . activities –

and in section 29(1)(c) there is a requirement for a suspicion that the property is “serious crime derived property”, that concept being defined in broad terms similar to section 22, that is some connection between the activity of a person and the proceeds. 

This was a section 29(1)(a) case which required only proof that the prescribed respondent, the appellant, was suspected of having engaged in one or more serious crime‑related activities which involved an offence stated in Schedule 2, Part 1 of the Act.  Your Honours will find reference to this being a section 29(1)(a) case in the appeal book at pages 2; 32, paragraph [19] of the reasons for judgment of the primary judge and at page 59 of the appeal book, paragraph [35] of the reasons of the Court of Appeal. 

Section 77 - the other provision which I have mistakenly described as section 71(1), if your Honours could correct the reference in paragraph 11(b) of my outline of propositions to make that 77(1) instead of 71(1) - section 77(1) is concerned with a different type of order that may be made under the Act, a proceeds assessment order, but again, your Honours will see from its terms it speaks of:

the proceeds derived from the person’s illegal activity that took place within 6 years before ‑ ‑ ‑

KIEFEL J:   I am sorry, I am a little confused, Mr Hinson.  Was it an application for a proceeds assessment order or a forfeiture order?

MR HINSON:   No, forfeiture.

KIEFEL J:   Why are we going to 77(1) then?

MR HINSON:   I am simply trying to illustrate the point that where the legislature saw fit to use language which describes a connection between property and a particular person they do so, and that a reason for not reading ‑ ‑ ‑

KIEFEL J:   But they also connected to the person’s illegal activity.

MR HINSON:   Activity, yes, and those elements are missing from section 68.

KIEFEL J:   Because the legislation is concerned with them benefiting from their illegal activity.

MR HINSON:   Yes, I appreciate in this context, section 77, that is a different context, but the connection between a person’s illegal activity and property is expressed in section 29 in dealing with restraining orders, which is ‑ ‑ ‑

FRENCH CJ:   Now, the property in this case, the money was the subject of a restraining order initially and that was amended when it was put into the account, and it was that that was then the subject of the forfeiture application.

MR HINSON:   Yes.

FRENCH CJ:   So the basis upon which a restraining order is obtained does require a demonstration of a link between the activity and the property, does it not, or a suspicion?

MR HINSON:   No, not in this case, your Honour.  That is the point that I wish to make.  This was a case under section 29(1)(a) where all that was required to be proved was the suspicion that Mr Henderson had engaged within the limitation period in a serious crime‑related activity.

FRENCH CJ:   That was enough?

MR HINSON:   That was enough, and, likewise, when it came to ‑ ‑ ‑

KIEFEL J:   But that is for the purpose of a restraining order.  What does that tell us about how he discharges the onus of proof?

MR HINSON:   It tells us nothing.

KIEFEL J:   No.

MR HINSON:   No, it tells us nothing, and that is my point, that they are unrelated.

BELL J:   This supports the order and then the application is made for exclusion from the order and that attracts the onus.

MR HINSON:   Yes, that attracts the obligation to prove that it is not illegally acquired.  The State on the forfeiture application has to prove something entirely different and unrelated, yes.  Your Honours, if you still have the outline of propositions could I take you back to paragraph 7 in which I submit that to discharge the onus under section 68(2)(b) proof is required that the property is not the proceeds of an illegal activity derived by the applicant from engagement in that activity, and that was this case. 

The court was satisfied that Mr Henderson acquired the property by way of a gift from his father and that that did not involve any illegality.  That by itself is insufficient.  What further has to be proved is where the property was otherwise acquired, that is, not as the result of some illegal activity of the applicant for exclusion, as in this case, that the property was so acquired was not, when acquired, illegally acquired property, and that is where Mr Henderson failed in this case, or, as an alternative, that it was acquired by means described in section 26 which resulted in the property losing its character as illegally acquired property.

KIEFEL J:   Well, the key there is 7(b)(i) in your outline ‑ ‑ ‑

MR HINSON:   Yes, that was the issue presented in this case.

KIEFEL J:   To that the appellant says that there is no presumption that property shown not to have been illegally acquired by him was before that illegally acquired by the person from whom he obtained it.

MR HINSON:   It was a positive obligation upon him to prove a negative, which is that it is not illegally acquired.  He sought to discharge that by giving an account of the age and the provenance of the jewellery, which was ‑ ‑ ‑

FRENCH CJ:   What he has to disprove is something which may have no connection at all with any activity of his or, indeed, with the objects of the Act.

MR HINSON:   With any activity of his, but the objects of the Act, your Honour, as I have said in the outline of proposition, do not use the expression “illegally acquired property”.  Nonetheless, it is a defined concept and it is a means by which - the provisions relating to “illegally acquired property” - a means by which the Act carries into the substantive provisions of the Act, carry into effect the objects.  So there is a danger, in my submission, in trying to draw too much out of the objects in this case.

KIEFEL J:   Well, that is true.  You should look at the definitions but section 22 defines “illegally acquired property” as:

all or part of the proceeds of an illegal activity.

MR HINSON:   Yes.

KIEFEL J:   So that fits with the object of trying to dis‑benefit proceeds of illegal activities.  Section 18 then defines “proceeds” as being, in relation to an activity, the benefit derived:

(a)by the person who engaged in the activity; or

(b)by another person at the direction or request ‑ ‑ ‑

MR HINSON:   Yes.

KIEFEL J:   You rely upon 18(b) in your paragraph 21, but there is no suggestion here that the father acted at the direction or request of the ‑ ‑ ‑

MR HINSON:   No, no, none at all.  The Act does not stop at 22 and 18.  It goes on to say in 25, if it is illegally acquired property, that is, if it is derived from an illegal activity by a particular person, but notwithstanding that that person disposes of it, that character continues unless the disposition is of one of a kind described in section 26, the first of which is a purchase for value or “for sufficient consideration” without grounds for suspecting that it is illegally acquired.

KIEFEL J:   So the point becomes whether the 7(b)(i) in your outline requires some kind of presumption to keep requiring the burden of proof to be discharged, otherwise a person is involved in establishing title ad infinitum.  I mean, how far back do they have to go?

MR HINSON:   Well, it will vary obviously, your Honour, from case to case, depending upon a range of variables ‑ ‑ ‑

KIEFEL J:   Sure.

MR HINSON:   ‑ ‑ ‑ the nature of the property, the value of the property, the relationship between the disponor and the acquirer.

KIEFEL J:   Quite so.  Sections 25 and 26 might be seen to have operation where it is more obvious that property is illegally acquired.

MR HINSON:   In my submission, that would be ‑ ‑ ‑

KIEFEL J:   There might be prime facie cases where property is illegally acquired and section 26 then operates to show when that is not the case but here we are concerned with the extent to which a person has to discharge a burden of proof in the negative.

MR HINSON:   Yes.

KIEFEL J:   I have forgotten the – Justice Brennan once said that a burden of proof once placed upon a person had to be capable of discharge.  You cannot have a burden of proof which becomes ridiculous.

MR HINSON:   No.

KIEFEL J:   That is the kind of territory we are in here, is it not, whether or not this is a burden of proof sufficient for the purposes of the Act or one which makes it almost impossible for some people to discharge?

MR HINSON:   The fact that it is ‑ ‑ ‑

KEANE J:   But this burden of proof could have been discharged, could it not?  They attempted to discharge it by giving this evidence which was accepted, even though it was hearsay, of the account as to how the father came by the property.  That account was demonstrated to be false.  It was not a question of difficulty of proof.

MR HINSON:   No, that left ‑ ‑ ‑

KEANE J:   It was just that what was sought to be adduced by way of proof was not true.

MR HINSON:   Yes.  A positive case was asserted as to the age and provenance of the jewellery which was not accepted as being truthful on the basis of expert evidence from a jeweller that the jewellery could not have been of that age and provenance.  It would be a quite different case, for example, your Honours, take another case.  Take a case where I am a prescribed respondent and a question arises as to whether an antique watch in my possession which I say was given to me by my father is illegally acquired property. 

There is a relationship between the parties – father and son – which might point to the gift being lawful.  If the watch is engraved with my father’s initials and the date of his 21st birthday one would readily draw the inference that his acquisition of it was by way of a gift from, one might think in the circumstances, his parents, that that was a lawful acquisition.  It is lawfully acquired property by him.  When it is transferred to me it is of that character. 

FRENCH CJ:   If it is not so engraved you have to negative the possibility that the father had received it as stolen goods.  I mean, that is really the implication of the construction, is it not?

MR HINSON:   Yes, but I ‑ ‑ ‑

GAGELER J:   What about the parents?  Do you not have to show that the parents also did not ‑ ‑ ‑

MR HINSON:   Perhaps so, and in some cases one may need to have evidence about financial circumstances, capacity to have purchased an object, the provenance of which is unknown, and one might draw inferences from those facts that point to a discharge of the onus of proof, saying, look, if there was evidence that Mr Henderson’s father was an extremely wealthy man who dealt in a professional sense with jewellery during the course of his lifetime, a very different outcome might have arisen in this case.

FRENCH CJ:   What is the temporal horizon for the illegal activity?  How far back – in relation to the meaning of illegal activity by reference to various offences, how far back does it bite in terms of dates at which such illegal activity might have been entered into?

MR HINSON:   That will very much depend upon the particular property in question but the Act is not confined to property which is the proceeds ‑ ‑ ‑

KIEFEL J:   It is a six‑year limitation period.

MR HINSON:   For activity by the prescribed respondent.

KIEFEL J:   But they still have to prove a chain of title, as the Chief Justice points ‑ ‑ ‑

MR HINSON:   Yes.

KIEFEL J:   Clear title.

FRENCH CJ:   So how far back does that go - Federation?

MR HINSON:   It will very much depend upon the type of the property, the nature of the property, and the particular circumstances of the case, your Honour.  Here ‑ ‑ ‑

KIEFEL J:   But, Mr Hinson – I am sorry, I did not mean to cut you off.

MR HINSON:   I was just going to say here the proof that was proffered was of acquisition at a particular time or a particular period in time.  Now, that will not be all cases.  In other cases an explanation proffered might go back in time 10 years, five years.  It will very much depend upon the individual facts.  I am sorry, your Honour.

KIEFEL J:   I was just going to say, but the point is the concern of the Act is to ensure that a person and the person whose property is sought to be forfeited is not going to benefit from illegal activity.  It is that person’s actions which are being penalised by the forfeiture of their property.  They are not supposed to suffer by reason of some forebear having engaged in some unknown activity.  I mean, that is the area we are in.

MR HINSON:   I would submit that the objects are wider than that.  The objects your Honours will find attached to the appellant’s submissions, and can I just briefly mention a couple of them?  The first, in section 4(1), is described as the “main object of the Act” and it speaks about the removal of the financial gain and increasing:

the financial loss associated with illegal activity, whether or not a particular person is convicted of an offence –

So that is, I submit, a broad expression ‑ ‑ ‑

KIEFEL J:   Yes.

MR HINSON:   ‑ ‑ ‑ associated with illegal activity, not necessarily confined to a person and that person’s illegal activity.

KEANE J:   It is actually concerned with preventing people enjoying the benefit of criminal activity engaged in by others, from which they might benefit.

MR HINSON:   That would - for example, assume I had stolen some property, it would seek to prevent me from enjoying the benefits of my crime and if I sought to pass that property on to my wife it would seek to prevent her from enjoying the benefits.

KEANE J:   Quite.  It is not a matter of punishing her; it is simply a matter of denying her the benefit of your criminal activity.

MR HINSON:   Yes.

KIEFEL J:   But there is a kind of temporal sense in which you have just discussed it though, and the possibility of knowledge which you have to negate under section 26.

MR HINSON:   Your Honours, section 4(2)(a) again speaks in what I submit are general terms.  It speaks about:

persons who may be affected by the orders are given a reasonable opportunity to establish the lawfulness of the activity through which they acquired the relevant property rights –

Now, that may not be simply their unlawful activity but, as we know, I would submit, from section 25, it may be the activity of somebody else who then disposes of the property to the person holding it at the time forfeiture is sought, or a proceeds assessment order or some other form of relief under the Act.

GAGELER J:   That is in the context where proceedings under the Act are civil proceedings ‑ ‑ ‑

MR HINSON:   Civil, yes.

GAGELER J:   ‑ ‑ ‑ and all questions of fact are to be decided on the balance of probabilities.

MR HINSON:   Balance of probabilities, yes, your Honour.

GAGELER J:   In ordinary civil proceedings, if you know nothing more than that property now held by B was given to B by A, there would be no basis for any inference that A acquired the property illegally.

MR HINSON:   The Act requires in those circumstances B to prove that the property is not illegally acquired.

GAGELER J:   Well, B – I am sorry, go ahead.

MR HINSON:   B will in the first instance, as in this case, point to the particular acquisition by B of the property and say, “It was by way of gift from my father”.  In my submission, that does not answer the question whether that property is of a particular character, whether it is illegally acquired property or not.

GAGELER J:   That being what is proved.

MR HINSON:   Yes.

GAGELER J:   Sorry, that being what the evidence is.

MR HINSON:   Yes.

GAGELER J:   Is it then not a question applying the ordinary rules of fact‑finding in civil proceedings ‑ ‑ ‑

MR HINSON:   Finding, yes.

GAGELER J:   ‑ ‑ ‑ what is the appropriate inference to be drawn in the absence of further evidence?

MR HINSON:   In the absence of further evidence, yes, and in the absence of further evidence, I would respectfully adopt what Justice Bell said before, that the learned trial judge was correct to draw the inference that it had not been established that this was not illegally acquired property.

GAGELER J:   The point being that there was an explanation ‑ ‑ ‑

MR HINSON:   There was an explanation, yes ‑ ‑ ‑

GAGELER J:   ‑ ‑ ‑ sought to be offered which was disbelieved.

MR HINSON:   ‑ ‑ ‑ which was rejected, yes.

GAGELER J:   That is the tipping point, in your submission, is it?

MR HINSON:   It is a factor.  Had there not been that explanation, I think is the situation your Honour is asking me to consider ‑ ‑ ‑

GAGELER J:   Yes.

MR HINSON:   ‑ ‑ ‑ simply nothing more than proof that B had acquired the property from A by way of a gift.  It would then depend to some extent on the factors I mentioned before - the nature of the property, the value of the property, the relationship between the disponor and the acquirer, and perhaps other things depending upon the nature of the property and the value of the property; the financial capacity of the disponor to have purchased it in a lawful way, a range of other circumstances – but absent proof of those things, mere proof, on my submission, that B has acquired title, possession of it from A, will satisfy 68(2)(a), but goes nowhere near satisfying 68(2)(b).

KIEFEL J:   Another way of viewing it might be to say that at that point in time, he has established that it is free of any taint of the character of a legally acquired property.  Is that not right?  At that point in time, the time of his receipt, so far as he is concerned, it is not illegally acquired property.

MR HINSON:   It is certainly not illegally acquired by him, but the character of illegally acquired property attaches to the property rather than the property in the hands of any particular individual.

KIEFEL J:   That is without a presumption.

MR HINSON:   That is on the basis of the operation of section 25.  I accept in the first instance, when one looks at section 22 and section 18, “illegally acquired property” is defined by reference to the derivation by a person ‑ ‑ ‑

KIEFEL J:   It does tend to suggest ‑ ‑ ‑

MR HINSON:   ‑ ‑ ‑ of the property from that person’s activity.

KIEFEL J:   They link into the objects, do they not?

MR HINSON:   They link into the objects, but then the concept of what is illegally acquired property is carried further than merely what section 22 and section 18 prescribe.  It has an enduring character, despite disposal, unless the disposal is of a particular kind under section 26.

BELL J:   Is that enduring character illustrated by the example in Schedule 1?

MR HINSON:   Yes.  Schedule 1 is meant to illustrate the operation of ‑ ‑ ‑

BELL J:   If one looks at example 1 and tracks through example 1, the car, by subparagraph (9), is still:

illegally acquired property, unless the purchase was for sufficient consideration ‑ ‑ ‑

MR HINSON:   Yes, which is one of the transactions described in section 26.

KIEFEL J:   But that is where it is shown that it is illegally acquired.

MR HINSON:   Yes, the example undoubtedly proceeds ‑ ‑ ‑

KIEFEL J:   As I said, there will be cases where it is obvious that - in the nature of an offence it will be obvious that something is illegally acquired.  That may be where sections 25 and 26 bite, but not to create a presumption.

MR HINSON:   No, they do not create a presumption.  They deal with an existing thing, illegally acquired property.  They proceed on the basis that there is property which is illegally acquired property, and they simply say it continues to have that character despite a disposal.  It does not create a presumption; I am not submitting that.  Your Honour is right; in example 1, the first paragraph states in unequivocal terms that A acquires $40,000 as the proceeds of an illegal activity.  It starts from an assumption that sections 22(1) and 18 have been satisfied, so far as that property, the sum of money, was concerned.  Your Honours, like my learned friend, we have ‑ ‑ ‑

KIEFEL J:   It is a short point.

MR HINSON:   It is a short point.  I do not think it improves by being repeated, and I am sure your Honours do not want me to repeat myself.  Unless your Honours had a further question, they are my submissions.

FRENCH CJ:   Thank you, Mr Hinson.  Yes, Mr Gillespie‑Jones.

MR GILLESPIE‑JONES:   Your Honours, there is a matter that I wish to raise with respect to the other members of the family.  Their evidence in fact was accepted at paragraph [58], referred to at page 39 of the appeal book.

KIEFEL J:   Is this merely to point out that the finding was based not only upon his evidence but his siblings as well?

MR GILLESPIE‑JONES:   That is correct.  We do not put forward the case that there were not difficulties with respect to the hearsay that came

and one would say it was the grandfather, one would say it was the grandfather and – but in that regard, insofar as Mr Henderson was concerned, the evidence was corroborated by other evidence and notwithstanding some qualifications his Honour had, there was no better explanation, and their evidence was accepted.  So that is the situation, your Honours.  That is all I wish to say.

FRENCH CJ:   Thank you.  The Court will reserve its decision.  The Court adjourns until 9.30 tomorrow morning in Sydney.

AT 10.56 AM THE MATTER WAS ADJOURNED