CRIMINAL ASSET CONFISCATION PROCEEDINGS FOR CRIMINAL LAWYERS

ADVICE AND NEGOTIATIONS

 

INTRODUCTION – Overview
 

Civil Proceedings – Advice
Criminal Lawyers – likely to act
How to avoid Law Claims
How to serve your clients best interests and manage expectations

ADVICE

Initial advice

When you initially see clients charged with a “serious offence” consideration needs to be given to s 24 of the Criminal Asset Confiscation Act 2005 (SA) (“CAC”).

24—Restraining orders

                         (1)  A court must, on application by the DPP, make an order (a restraining order) that specified property must not be disposed of or otherwise dealt with by any person (except in the manner and circumstances, if any, specified in the order) if satisfied that—

                                      (a)     a person has been convicted of, or has been charged with, a serious offence, or it is proposed that the person be charged with a serious offence; or

                                      (b)     a person is suspected on reasonable grounds of having committed a serious offence; or

                                      (c)      there are reasonable grounds to suspect that the property is the proceeds of, or is an instrument of, a serious offence (whether or not the identity of the person who committed the offence is known); or

                                      (d)     there are reasonable grounds to suspect that a person has committed a serious offence and has derived literary proceeds in relation to the offence.

 

                         (2)  An application for an order under this section must specify the property to which the application relates.

 

                         (3)  The DPP may submit evidence in support of the application in the form of an affidavit.

 

                         (4)  Subject to subsection (5) and Division 3, the court must specify in the restraining order all property specified in the application for the order.

 

                         (5)  The court may only specify property in a restraining order made under subsection (1)(a),(b) or (d) if satisfied that there are reasonable grounds to suspect that the property is—

                                      (a)     in the case of a restraining order made under subsection (1)(a) or (b)—

                                                                (i)            property of the suspect; or

                                                               (ii)            property of another person (whether or not that other person's identity is known) that—

                                                                                (A)           is subject to the effective control of the suspect; or

                                                                                (B)           is proceeds of, or is an instrument of, the serious offence; or

                                                (b)     in the case of a restraining order made under subsection (1)(d)—

                                                                           (i)            property of the suspect; or

                                                            (ii)           property of another person (whether or not that other person's identity is known) that is subject to the effective control of the suspect.

 

(6) The court must make a restraining order even if there is no risk of the property being disposed of or otherwise dealt with.

 

(7)  The court may specify that a restraining order covers property that is acquired by the suspect after the court makes the order.

 

(8)  A restraining order may be made subject to conditions. 

In providing advice you cannot provide suggestions that would avoid assets being seized.

 But can advise:

Change in payments, pursuant to any mortgage, to interest only
Disable any offset accounts. It must be noted however;

Banks regularly, when served restraining order(s), freeze all facilities.
Consequently, to avoid difficulties in accessing funds etc/and further court applications and adjournments later on, if the offset function is disabled access to funds can be preserved.

Persons equitable interest will be taken into account:

 HOW TO PROTECT

Any person with an equitable interest place a Caveat on the property;
An Interested Party may become an action to the court proceedings;
Advantage:

Puts DPP on notice other interested parties; and
Makes negotiations easier (long run)

Once proceedings are served– criminal lawyers are likely to be instructed to act and must be mindful of the Civil Rules

Criteria for making Restraining Order; must (not may):

24—Restraining orders

(1) A court must, on application by the DPP, make an order (a restraining order) that specified property must not be disposed of or otherwise dealt with by any person (except in the manner and circumstances, if any, specified in the order) if satisfied that …

 The language utilised in s 24 (namely, “must”), allows no discretion once the criteria is satisfied.

Client must be advised that once an order is in place they are no longer able to deal with property and to do so is contempt of court (this includes anything that may affect the capital value. for example: demolition).

 TRAPS FOR CRIMINAL LAWYERS – HOW TO AVOID LAW CLAIMS

On most occasions CAC proceedings will not resolve until criminal proceedings resolve.

DPP are reluctant to engage in negotiations as:

Criminal proceedings can be relevant in ascertaining:

The proceeds from offending
Whether the property is an instrument of an offence

Not necessarily in the interest of the defendants to attempt to deal with the CAC proceedings (more on this later).

       AUTOMATIC FORFEITURE
 

            Tending to forget about CAC proceedings can lead to a trap.

 Section 34 allows for the exclusion of property from the Restraining Order upon an application being made.

34—Court may exclude property from restraining order

(1) The court to which an application for a restraining order under section 24(1)(a) or (b) was made may, when the order is made or at a later time, exclude specified property from the order if—

          (a)           an application is made under section 35 or 36; and

          (b)           the court is satisfied that—

                          (i)            the property is neither proceeds nor an instrument of unlawful activity; and

                          (ii)           the owner's interest in the property was lawfully acquired; and

                                               (iii)           it would not be contrary to the public interest for the property to be excluded from
the order.

 

                      (2) However—

                                         (a)           the court must not exclude property from a restraining order unless satisfied that neither a pecuniary penalty order nor a literary proceeds order could be made against—

                                                         (i)             the person who owns the property; or

                                                         (ii)            if the property is not owned by the suspect but is subject to his or her effective control—the suspect; and

                         (b)           the court must not exclude property from a restraining order unless satisfied that the property could not be subject to an instrument substitution declaration if the suspect were convicted of the offence.

 

(3) Despite any other provision of this section, if a court has, in determining sentence in respect of a person's conviction of a serious offence, taken into account any forfeiture of property under this Act that might result from conviction for the offence, the property cannot be excluded from a restraining order relating to the offence on application made by the convicted person.

 However, s 74(1) stipulates that automatic forfeiture may occur:

74—Forfeiting restrained property without forfeiture order if person convicted of serious offence

                      (1) Property is forfeited to the Crown at the end of the relevant period if—

                                (a)           a person is convicted of a serious offence; and

                                (b)           either—

(i)             at the end of the relevant period, the property is covered by a restraining order that relates to the offence; or

(ii)            the property was covered by a restraining order that relates to the offence, but the property was excluded, or the order revoked, under section 38 or section 44; and

                                (c)           the property is not subject to an order under section 76 excluding the property from forfeiture under this Division.

 

                      (2) For the purposes of this section, it does not matter whether—

                                (a)           the restraining order was made before or after the person's conviction of the serious offence; or

                                (b)           immediately before forfeiture, the property is the person's property or another person's property.

 

                      (3) However, this section does not apply if the person is taken to have been convicted under section 5(1)(d).

 

(4) A restraining order in relation to a related offence with which the person has been charged, or is proposed to be charged, is taken, for the purposes of this section, to be a restraining order in relation to the serious offence of which the person was convicted.

 

(5)     If—

(a)           particular property is excluded from a restraining order under section 38, or a restraining order that covered particular property is revoked under section 44; and

(b)           the security referred to in section 38(a)(iii) or section 44(a)(iii) (as the case requires) in connection with the exclusion or revocation is still in force,

the security is taken, for the purposes of this section and section 75, to be the property referred to in subsection (1).

  

(6)     In this section—

relevant period means—

       (a)        the 6 month period starting on the day of the conviction; or

       (b)        if, at the end of the 6 month period starting on the day of the conviction, an extended period applies in accordance with section 75—that extended period.
 

Consequently, if:
 

a.       Client is convicted of a “serious offence”; and

b.       Property is not excluded from Restraining Order (or the subject of an application for exclusion from the Restraining Order); then

c.       Property becomes liable to be automatically forfeited, 6 months from the date of conviction (which is the day the guilty plea is entered).

 

Unless:

An application under s 75 is made extending the period upon which automatic forfeiture occurs.

75—Extended period

(1) An extended period will apply for the purposes of the definition of relevant period in section 74 if the applicant has, not later than 6 months after the start of the day of the relevant conviction, applied to a court under this Act to exclude the property from the restraining order or to exclude the property from forfeiture and that application has not yet been finally determined.

 

(2) The extended period applying is the period ending when the application to exclude property from the restraining order or from forfeiture (as the case may be) is finally determined.

 

CRITERIA of s 75

Must be done within 6 months of conviction date
That is date that a guilty plea is entered

* as a side note DPP can only make application for automatic forfeiture if application made with 6 months of conviction day s47(6)CLCA.

RECOMMENDATION TO AVOID AUTOMATIC FORFEITURE

Nothing prevents filing an “Application to Exclude Property” upon receiving summons

File Application and Affidavit simply asserting property is not the proceeds of an offence nor an instrument of offence.
Avoid being sued and law claims.

HOW BEST TO SERVE CLIENTS INTEREST OR MANAGE EXPECTIONATIONS

 Crossover between Criminal and Civil proceedings

How to deal with a client who wants property excluded prior to the finalisation of criminal proceedings

 Can it be done?

Simple answer: ‘yes’
DPP v Tape [2013] SADC 175
Judge Tilmouth

Should you do it?

The answer depends on the circumstances
Under s34 an application can be made to exclude generally. It can be granted if that property is not an instrument of the offence and was lawfully acquired.
The process of the Application involves filing an Affidavit to demonstrate it was lawfully acquired, and annexing supporting documents.
Option of excluding property more limited if property is an instrument of the offence.

Affidavit would have to demonstrate:

How the property was purchased;
Any loan applications; and
Tax returns etc.

The DPP has a general right to XXN on those affidavits in any hearing


Forensic Decisions:

As a criminal lawyer we don’t want client giving evidence/statement before the criminal trial.

By making application not only is evidence provided but the DPP have a chance to XXE the client, which could be most unhelpful to any criminal proceedings.
For example: drug trafficking charges - the defence is that the drugs were for his own personal use yet in an affidavit filed the client’s tax returns indicate no income for the past 5 years. Consequently, issues will arise as to how he afforded to purchase the drugs and property.
Circumstances where it might be suitable is where a third party claim a complete equitable interest in the property and can depose an affidavit.

ALTERNATIVE REMEDIES:

 

s 44: Security can be provided in lieu of property being excluded from Restraining Order

44—Giving security etc to revoke a restraining order

 A court may revoke a restraining order that covers property if—

 

(a)            in the case of a restraining order that covers the property of the suspect—

(i)            the suspect applies to the court to revoke the order; and

(ii)           the suspect gives written notice of the application to the DPP; and

(iii)          the suspect gives security that is satisfactory to the court to meet any liability that may be imposed on the suspect under this Act; or

 

(b)        in the case of a restraining order that covers the property of a person who is not the suspect—

(i)            the person applies to the court to revoke the order; and

(ii)           the person gives written notice of the application to the DPP; and

(iii)          the person gives an undertaking concerning the person's property that is satisfactory to the court.

            Benefits:

Allows to provide undertakings/security to recover property
Eg client has racing car – potentially not of much value generally but to them personally (objective or subjective value).

 Sale of Property – s 44

Client may not be able to afford their mortgage once proceedings commenced:

 Remedy:

Negotiate sell property.
Surplus funds paid into court
Has advantages and disadvantages:

Crystallises the amount the DPP are able to recover;
Generally, when negotiating a settlement with the DPP they work on Capital Value of the property, which is generally lower than the actual value, so in selling the property you may be doing your client a disservice.

Payment of Expenses:

27—Order allowing expenses to be paid out of restrained property

             (1) A court that has made a restraining order may (when the restraining order is made or at a later time) order that one or more of the following may be met out of property, or a specified part of property, covered by the restraining order:

                           (a)           the reasonable living expenses of the person whose property is restrained;

                           (b)           the reasonable living expenses of any of the dependants of that person;

                           (c)           the reasonable business expenses of that person;

                           (d)           a specified debt incurred in good faith by that person.

 

             (2) The court may only make an order under subsection (1) if—

                           (a)           the person whose property is restrained has applied for the order; and

(b)           the person has notified the DPP, in writing, of the application and the grounds for the application; and

(c)           the person has disclosed all of his or her interests in property, and his or her liabilities, in a statement on oath that has been filed in the court; and

(d)           the court is satisfied that the expense or debt does not, or will not, relate to legal costs that the person has incurred, or will incur, in connection with—

                (i)            proceedings under this Act; or

(ii)           proceedings for an offence against a law of the Commonwealth, a State or a Territory; and

(e)           the court is satisfied that the person cannot meet the expense or debt out of property that is not covered by—

                (i)             a restraining order; or

                (ii)            a recognised Australian restraining order; or

                (iii)           a foreign restraining order that is registered under the Mutual Assistance Act.

 

                  (3) Property that is covered by—

                                (a)           a restraining order; or

                                (b)           a recognised Australian restraining order; o

                                (c)           a foreign restraining order that is registered under the Mutual Assistance Act,

is taken, for the purposes of subsection (2)(e), not to be covered by the order if it would not be reasonably practicable for the Administrator to take custody and control of the property.

 

Allows orders to pay for the reasonable living expenses of a person (and their dependants) whose property is restrained. Unfortunately, legal; costs are not covered.
 

Examples

1.       Client had own money through a SMSF. The DPP releases proceeds allowing payment to outstanding accounts;

2.       In the event that bank accounts are frozen and application could be made seeking access to weekly reasonable living expenses;

3.       Unfortunately legal expenses are not included; and

4.       Money paid into trust can also be recovered.

 

 

 

 

Mortgagee Sale
 

S72 and 73 allow a defendant or interested party to purchase forfeited property.
Generally speaking – if a property is restrained and it’s an instrument of the offence in some capacity it will be forfeited.
Depending on your client’s circumstances, there may be little financial gain in paying the mortgage.
Risks with a mortgagee sale: can drive price down – nothing to stop non-family member purchasing at Auction.

72—A person may buy back interest in forfeited property

  (1) The payment to the Crown, while the property is still vested in the Crown, of an amount declared under section 55(c) to be the value of the person's interest, discharges the forfeiture order to the extent to which it relates to the interest and the Minister must cause the interest to be transferred to the person in whom it was vested immediately before the property was forfeited.

 

(2) The Minister may do or authorise the doing of anything necessary or convenient to effect a transfer, including—

                (a)           executing any instrument; and

                (b)           applying for registration of an interest in the property on an appropriate register.

73—A person may buy out another person's interest in forfeited property

The Minister must cause an interest in property to be transferred to a person if—

(a)       the property is forfeited to the Crown under this Division; and

(b)       the interest is required to be transferred to the person under section 71(1) or 72(1), or under a direction under section 59(2)(c); and

(c)       the person's interest in the property, immediately before the forfeiture, was not the only interest in the property; and

(d)       the person gives written notice to each other person who had an interest in the property immediately before the forfeiture that—

(i)                the person intends to purchase that other interest from the Crown; and

(ii)               the other person may, within 21 days after receiving the notice, lodge a written objection to the purchase of the interest with the Minister; and

(e)      no person served with a notice under paragraph (d) in relation to the interest lodges a written objection under that paragraph; and

(f)         the person pays to the Crown, while the property is still vested in the Crown, an amount equal to the value of the interest.

 SETTLEMENT NEGOTIATIONS AND PECUNIARY PENALTY ORDERS (PPO)

It is appropriate to consider those two aspects together as usually the DPP will file a PPO so as they can seek an order from the Court for a monetary amount normally being the amount the Defendant benefitted from the offending. Ultimately, they will secure that against any restrained property.

s 95 deals with PPOs

95—Making pecuniary penalty orders

  (1) A court must, on application by the DPP, make an order (a pecuniary penalty order) requiring a specified person to pay to the Crown an amount determined under Subdivision 2 if satisfied that—

                (a)           the person has been convicted of, or has committed, a serious offence; and

                (b)           the person derived benefits from the commission of the offence.

 

  (2) A court may, on application by the DPP, make an order (a pecuniary penalty order) requiring a specified person to pay to the Crown an amount determined under Subdivision 2 if satisfied that—

                (a)           the person has been convicted of, or has committed, a serious offence; and

                (b)           the person's property includes an instrument of the offence.

 

(3) In considering whether it is appropriate to make a pecuniary penalty order under subsection (2), the court may have regard to—

(a)           any hardship that may reasonably be expected to be caused to any person (other than the person against whom the order is sought) by the operation of the order; and

(b)           the use that is ordinarily made, or was intended to be made, of the property; and

(c)            the gravity of the offence or offences concerned; and

(d)           any other matter the court thinks fit.

 

(4) A court is not prevented from making a pecuniary penalty order in relation to a serious offence merely because of the existence of another confiscation order in relation to the offence.

 

(5) An application for a pecuniary penalty order must be made—

                                (a)           before the end of the period of 9 months commencing on the conviction day; or

(b)           if, at the end of the period of 9 months commencing on the conviction day, an extended period applies in accordance with section 75—before the end of the period of 3 months commencing on the day the extended period ends.

 

                  (6) An application for a pecuniary penalty order may be made in relation to one or more serious offences.

 

  (7) An application may be made for a pecuniary penalty order in relation to benefits derived from the commission of a serious offence even if—

(a)              a forfeiture order in relation to the offence, or an application for such a forfeiture order, has been made; or

(b)              Part 4 Division 2 applies to the offence.

 

  (8) A person who would be subject to a pecuniary penalty order if it were made may appear and adduce evidence at the hearing of the application.

 Conditions of granting a Pecuniary Penalty Order:

Must grant PPO if:  s 95(1)

Convicted of serious offence; and
Person derived a benefit from the offence.

 May grant Pecuniary Penalty Order if s95:

Convicted of a serious offence; and
Person’s property includes an instrument of the offence.

Application must be made within 9 months of conviction date.
S95(3) in making a Pecuniary Penalty Order court may consider hardship that may be caused to any person other than the defendant.

 Equitable Interests in Property

57—Relieving certain dependants from hardship

 

(1) A court making a forfeiture order specifying a person's property must make an order directing the Crown to pay a specified amount to a specified dependant, or dependants, of the person if—

(a)           the forfeiture order is not one to which section 47(1)(a) applies; and

(b)           the court is satisfied—

(i)            the forfeiture order would cause hardship to the dependant; and

(ii)           the specified amount would relieve that hardship; and

(iii)          if the dependant is aged at least 18 years—the dependant had no knowledge (at the time of the conduct) of the person's conduct that is the subject of the forfeiture order.

 

(2)The specified amount must not exceed the difference between—

(a)           the amount the court considers likely to be received from disposing of the person's property under the forfeiture order; and

(b)           the amount the court considers likely to be the costs of administering this Act (referred to in section 209(1)) in connection with the forfeiture order.

 

Court can make order directing Crown to pay specified amount to Dependents.
Can be desirable as an alternative to a forfeiture order if the restrained property is the family home.

 Section 57 does not take into account people who have an equitable interest in the property. This is dealt with in s 95(3). In dealing with that interest you can:

- file affidavit from persons with equitable interest;

- assert their interest;

- join them as interested parties to the action.

 Usually in this case one may receive instructions from Defendant and interested party. However, in certain instances preferable for a third party to independently represented.

 Must be careful to avoid conflicts.

 Instrument of Offence:

DPP now take the view that if a property is an instrument of the offence it must be forfeited.

Want to lessen equity in property belonging to Defendant and thus what can be forfeited.
Often people borrow money parents/receive assistance to pay mortgage.
De facto relationship, spouses all have equity in property by virtue of the relationship.
Can be utilised to reduce equity.
This in turn creates leverage for negotiations with the DPP.

 Proceeds from Criminal Activity

In this instance the criminal matter becomes significant

When dealing with the criminal proceedings one must have regard to the impact on the CAC proceedings.
In the normal course, sentencing remarks will form part of the affidavit material put before the court in CAC proceedings
Consequently, for example if a significant course of conduct is conceded, this will impact on what the DPP may accept through settlement negotiations in the CAC proceedings.

 However, “you can’t get blood out of a stone” so once again this is relevant in any interest held in property. If the defendant’s interest is small, even if the amount of proceeds from the criminal activity is substantial, leverage can be created in negotiations by outlining had the DPP will have limited assets in which to enforce PPO’s. They will not want to make a loss through forfeiting and disposing with property.

Pecuniary Penalty Order will survive bankruptcy.

Settlement Generally

 Is it a costs jurisdiction

Can affect risks you take

Going to Trial may cause more harm than good

Costs
Evidence available
Lower burden of proof
Matter considered afresh  
 

If fail to file your application to exclude: contact Law Claims

Future proceedings:
 

Bill tabled in Parliament, not passed

 Generally, suggest if person provides assistance to authorities’ property can be excluded.

Future Direction

 Bill tabled in Parliament, not passed.

Generally, suggest if person provides assistance to authorities’ property can be excluded.