The Director of Public Prosecutions v Mouroufas

[2010] SADC 91

District Court of South Australia

(Civil)

THE DIRECTOR OF PUBLIC PROSECUTIONS v MOUROUFAS

[2010] SADC 91

Judgment of His Honour Judge Boylan

19 July 2010

CRIMINAL LAW - PROCEDURE - CONFISCATION OF PROCEEDS OF CRIME AND RELATED MATTERS - PECUNIARY PENALTY AND LIKE ORDERS

Application by the DPP for pecuniary penalty pursuant to s95 Criminal Assets Confiscation Act 2005 (SA).

Was the respondent in "effective control" of the land at the relevant times?

Held: Application dismissed.

The respondent was not able to dispose of the land itself or otherwise treat it as his own.

Criminal Assets Confiscation Act 2005 (SA) sections 6, 95 and 99 , referred to.
Solicitor General v Bartlett [2008] 1 NZLR 87; DPP v Walsh [1990] WAR 25; Connell v Lavender (1991) 7 WAR 9; DPP v Green (unreported) Supreme ourt of the Northern Territory, judgment number 82 of 2008; Riley J., considered.

THE DIRECTOR OF PUBLIC PROSECUTIONS v MOUROUFAS
[2010] SADC 91

1. In January 2005, Christopher Mouroufas leased land at Virginia.  The lease was for a period of three years.  In March 2007, police officers attended at the land and found 160 mature cannabis plants growing there.  They charged Mr Mouroufas with the offence of cultivating a controlled substance.  In August 2007, Mr Mouroufas pleaded guilty to that charge and was sentenced to imprisonment. 

2. In December 2007, the Director of Public Prosecutions took out this application pursuant to the Criminal Assets Confiscation Act 2005 for an order that Mr Mouroufas pay to the Crown a pecuniary penalty in the sum of $370,000, being the capital value of the land at 1 January 2007.  The Crown argued that it is entitled to that order because the statutory preconditions have been established:  the offence is a serious one, the land at Virginia was an instrument of the offence and it was under Mr Mouroufas’s effective control at the relevant times.  I note here that the Director did not suggest that the instrument of Mr Mouroufas’s offending was his leasehold interest in the land.

3. The only question for me is whether or not Mr Mouroufas was in effective control of the land at the relevant time.  Originally, the Director argued that he was in such effective control of the land because the lease gave him the right to occupy and to use the land and, in many ways, to exercise control over it during the term of the lease.

4. Many months after I had originally reserved judgment, the Director referred me to a number of cases which deal with the meaning of the phrase ‘effective control’.  Although I called the matter back on for further submissions, the Director made no submission that there was any difference between this case and the cases to which he referred me. 

5. In those circumstances, the application must fail because the land was not under Mr Mouroufas’s effective control at the time.

6. The Director’s application is made pursuant to s 95 of the Act. The relevant parts of that section are:

   “(1)  A court must, on application by the DPP, make an order (a pecuniary penalty order) requiring a specified person to pay an amount determined under subdivision 2 to the Crown if satisfied that the person has been convicted of, or has committed, a serious offence and –

   (a)     …

   (b)an instrument of the offence is owned by the person or is under his or her effective control.”

7. The penalty amount is determined by s 99.

8. The Act does not define ‘effective control’ but s 6 sets out the principles which a court is to apply in determining whether property is subject to the effective control of a person.

9. Section 6 of the Criminal Assets Confiscation Act 2005 states:

   ‘6—Meaning of effective control

   (1)For the purposes of this Act, the following principles apply when determining whether property is subject to the effective control of a person:

   (a)property may be subject to the effective control of a person whether or not the person has an interest in the property;

   (b)property that is held on trust for the ultimate benefit of a person is taken to be under the effective control of the person;

   (c)if a person is one of 2 or more beneficiaries under a discretionary trust, the following undivided proportion of the trust property is taken to be under the effective control of the person:

   (d)if property is initially owned by a person and, within 6 years (whether before or after) of an application for a restraining order or a confiscation order being made, is disposed of to another person without sufficient consideration, then the property is taken still to be under the effective control of the first person;

   (e)property may be subject to the effective control of a person even if one or more other persons have joint control of the property.

   (2)In determining whether or not property is subject to the effective control of a person, regard may be had to—

   (a)shareholdings in, debentures over or directorships of a company that has an interest (whether direct or indirect) in the property; and

   (b)a trust that has a relationship to the property; and

   (c)family, domestic and business relationships between persons having an interest in the property, or in companies of the kind referred to in paragraph (a) or trusts of the kind referred to in paragraph (b), and other persons.’

10. It seems to me that, when those principles are applied and regardless of the way in which the property may be held or ‘disguised’ a person will be in effective control of the property if he is able to treat it as his own, to dispose of it as he wishes.  Such an interpretation is consistent with the objects of the Act and with the interpretation given to the phrase ‘effective control’ in other jurisdictions.

11. In the Second Reading Speech, the then Attorney-General introduced the Bill by saying:

    ‘It proposes the enactment of a comprehensive and extensive set of new powers targeting the assets and the profits of criminals.’

12. A little later in the speech, the Attorney, speaking of pecuniary penalty orders said:

    ‘These provisions provide an alternative to forfeiture orders.  In essence, a court is empowered to order the offender to pay a sum to the State equivalent to any benefit that the offender derived from the offence.’

13. It is clear from the speech that the Parliament intended to target the assets and profits of crime. 

14. The phrase ‘effective control’ has been considered in the context of similar, but not identical, legislation elsewhere.

15. In Solicitor-General v Bartlett[1], in the High Court of New Zealand, Stevens J considered two Western Australian cases[2] dealing with the phrase and then went on to say:

    ‘These cases support the proposition that, when considering the issue of tracing the proceeds of crime, the court is entitled to consider the real, de facto position of the respondent in relation to the property.  The intent is that the respondent should not profit from his crime purely because of the legal structure by which he chooses to organise his assets.  In order to determine whether the respondent had effective control of the property, the court must ask whether in fact the respondent had the capacity to control, use, dispose of or otherwise treat the property as his own.’

    [1] [2008] 1 NZLR 87

    [2]    DPP v Walsh [1990] WAR 25 and Connell v Lavender (1991) 7 WAR 9

16. Riley J, sitting in the Supreme Court of the Northern Territory, followed Bartlett and the Western Australian cases in DPP v Green[3].  That was an application by the Director of Public Prosecutions for the forfeiture of property used to grow cannabis.  The respondent had grown cannabis on land which he had leased for a fixed term.  Riley J was of the view that the land itself, not the respondent’s leasehold interest in it, was effectively what would be called in South Australia the instrument of the offence.  Further, he found that the respondent was not in effective control of the leased land at relevant times because ‘he was not able to dispose of the property, charge it, develop it or otherwise use it in such a manner as to treat it as his own’.  In my view, the same considerations apply here.  Mr Mouroufas was not in effective control of the land in the sense of his being able to dispose of the land itself or otherwise treat it as his own. 

    [3]    (unreported) Supreme Court of the Northern Territory number 82 of 2008

17. The Director accepted that, if I were not satisfied that Mr Mouroufas was in effective control of the land, the application could not succeed.  Accordingly, the application is dismissed.