Research Paper no. 27 2007–08
Selling your story—literary proceeds orders under the Commonwealth
Proceeds of Crime Act 2002
Monica Biddington
Law and Bills Digest Section
11 April 2008
Contents
Introduction
Proceeds of Crime—restraint and confiscation
Literary proceeds orders
Unknown territory
Schapelle Corby
David Hicks
Conclusions
Introduction
The Commonwealth’s Proceeds of Crime Act 2002 (the Act) commenced
on 1 January 2003. The Act provides a scheme to trace, restrain and confiscate
the proceeds of certain classes of crime against Commonwealth law. In
some circumstances it can also be used to confiscate the proceeds of crime
against foreign law or the proceeds of crime against state law (if those
proceeds have been used in a way that contravenes Commonwealth law). Importantly,
confiscation does not always require that a person has been actually convicted
of a crime.
Recently, there has been significant interest in the provisions of the
Act that allow for the confiscation of profits made by a person for selling,
publishing or otherwise telling his or her story. Interest in the cases
of Mark ‘Chopper’ Reid, Schapelle Corby and David Hicks has raised questions
about the applicability of the existing proceeds of crime laws (including
state and territory laws) to people who have profited, or may profit in
the future, from their criminal notoriety through book, magazine, film
or television deals.[1]
This Background Note explores the provisions that allow for the confiscation
of profits that are obtained from a person’s sale or publication of his
or her story.
The Proceeds of Crime Act 1987 provided for the confiscation of
profits obtained by crimes such as drug trafficking prior to the enactment
of the Act in 2003.[2] The
more recent Act has expanded the confiscation regime to include non-conviction
based confiscation and now covers conduct such as money laundering and
terrorism activity.[3] One
of the new confiscation mechanisms in the Act is the literary proceeds
order.
A literary proceeds order is the mechanism in the Act which allows a
court to order payments to the Commonwealth of any proceeds that a person
has derived in relation to an indictable offence.[4] There is no requirement that a person has been
convicted of an offence, but the court hearing the application for the
order must be satisfied on the balance of probabilities that the person
has committed an offence.[5] It is a question for the court to decide whether
to confiscate such profits - it is not automatic.
Literary proceeds are defined as any benefit that a person derives from
the commercial exploitation of the person’s notoriety resulting, directly
or indirectly, from the person committing an indictable offence or a foreign
indictable offence.[6] The
commercial exploitation may be by any means. This includes publishing
any material in written or electronic form, or any use of media from which
visual images, words or sounds can be produced, or any live entertainment,
representation or interview.[7]
If the offence is an indictable offence, it does not matter whether the
benefits are derived within or outside Australia.[8] It is therefore conceivable that an Australian
could derive a benefit from a publication in America, even if those benefits
are retained in America. As Justice Keane of the Supreme Court of Queensland
recently noted, ‘the Act is not concerned with where the commercial exploitation
which has produced the benefit has occurred’.[9]
However, this principle does not apply in relation to a foreign indictable
offence where any benefit is not treated as literary proceeds unless the
benefit is derived in Australia or transferred to Australia.
The Australian Federal Police are responsible for investigating whether
or not a person has obtained literary benefits. If there is sufficient
evidence to indicate that the literary proceeds provisions in the Act
could capture a person’s profits, the matter will be referred to the Commonwealth
Director of Public Prosecutions. An application by the Commonwealth Director
of Public Prosecutions is then made for restraining orders over the profits
and then a literary proceeds order. The literary proceeds order will require
that payments, based on the literary proceeds that a person has derived,
are made to the Commonwealth.
What does a court have to consider when making a literary proceeds order?
Paragraph 154(a) of the Act outlines the factors that a court must consider
when making a literary proceeds order. These factors are:
(i) the nature and purpose
of the product or activity from which the literary proceeds were derived;
and
(ii) whether supplying the product or carrying
out the activity was in the public interest; and
(iii) the social, cultural or educational value of
the product or activity; and
(iv) the seriousness of the offence to which the product
or activity relates; and
(v) how long ago the offence was committed.
The court may also take into account such other matters as it thinks
fit.[10]
The explanatory memorandum to the Act does not shed any light on why
these particular factors were chosen and what circumstances they might
be envisaged to cover. Notably, what constitutes ‘in the public interest’
(subparagraph 154(a)(ii)), is ambiguous. As academics Simon Bronitt and
Bernadette McSherry note:
The difficulty with using concepts like public interest
is that it is neither neutral nor autonomous. It is highly contingent
upon historical, political and social contexts.[11]
What about if a family member or third party, including a charity, profits
from the sale?
In determining whether a person has derived literary proceeds, or the
value of those literary proceeds, the court may treat as property of the
person any property that is subject to the person’s effective control.[12]
Property might also include that which was not received by the person,
but was transferred to, or (in the case of money) paid to, another person
at the person’s direction.[13]
This would cover circumstances where a parent may receive money for selling
a story about their child’s notoriety and the money is paid to the child,
or into a trust for that child’s benefit.
Charities
If a person sells his or her story and offers a portion, or all of the
profits from that sale to a charity, those profits could be restrained
and confiscated. While the court would assess this on a case-by-case basis,
a charity would likely be considered a recipient of property that was
under the person’s effective control.
Unknown territory
The Australian literary proceeds orders provisions have not yet been
used by a court and overseas jurisdictions offer little insight in this
area. In the United Kingdom there has been no legislation specifically
targeting literary proceeds. However, there are legislative provisions
to allow for confiscation of the proceeds of crime.[14] The United States has provisions for confiscating the profits
that criminals have gained from their notoriety.[15]
The laws of the United States are different from the Australian laws in
that they require a person to be convicted of the offence before confiscation
can occur.
While Australian States and Territories have proceeds of crime legislation,
some with specific provision for literary proceeds orders, no confiscation
of literary proceeds has yet been ordered by a court.[16] Without a precedent, one can
only speculate how a court might exercise its discretion in making a literary
proceeds order.
Schapelle Corby was found guilty in Indonesia in August 2005 of drug
smuggling and is presently serving a 20 year prison sentence in Kerobokan
prison in Bali.[17] In
November 2006, the book My Story was published in Australia by
Pan Macmillan Australia. The book was
co-authored by Corby and former television producer Kathryn Bonella. Pacific
Magazines Pty Ltd separately published a New Idea article relating
to Corby’s experiences in late 2006.
Investigations by the Australian Federal Police revealed that, under
the contract relating to My Story, payments totalling $267 750
had been made by Pan Macmillan publishers to an Indonesian account held
in the name of Corby’s brother-in-law. Further payments were still to
be made depending on sales. A separate sum of $15 000 was to be paid
to the same bank account in relation to the New Idea article.
In this case, because the funds appear to be in an Indonesian bank account,
Australian authorities would seek the cooperation of the Indonesian authorities
to successfully forfeit the payments. This would be done under the provisions
of the Commonwealth’s Mutual Assistance in Criminal Matters Act 1987.
On 2 March 2007, the Supreme Court of Queensland made an order pursuant
to section 20 of the Proceeds of Crime Act restraining, or ‘freezing’
certain items of property, including future payments in respect to My
Story.[18] The Commonwealth
Director of Public Prosecutions has now filed an application for a literary
proceeds order against Schapelle Corby under section 152 of the Act. At
the time of this publication no date has been fixed for the hearing of
the application.
It is important to note that both the making of a literary proceeds order
in this matter, and the amount which Corby may be ordered to pay, are
at the discretion of the court, having regard to factors specified in
the Act (as noted above).
David Hicks[19]
In March 2007, David Hicks pleaded guilty in a United States Military
Commission to the offence of providing material support to terrorism.
He was convicted and sentenced to seven years imprisonment, which he mostly
served in Guantanamo Bay. However, under a pre-trial agreement with United
States authorities, six years and three months of the sentence were suspended,
and a transfer agreement allowed Hicks to serve out the remaining nine
months of the sentence in Adelaide’s Yatala Prison, from which he was
released on 29 December 2007.[20]
As part of the pre-trial agreement, a ‘gag’ order was placed on Mr Hicks,
prohibiting from telling his story until the end of March 2008.
Pre-trial agreement
Under the pre-trial agreement, Hicks has agreed to assign to the Australian
Government any profits or proceeds which he may be entitled to receive
in connection with any publication or dissemination of information relating
to the illegal conduct for which he has been convicted.[21] This agreement was made between
Hicks and the United States’ Government and failure to abide by its terms
and conditions (including the assignment mentioned above) could result
in the United States’ authorities asking the Australian Government to
return Hicks to the United States to serve the full term of his sentence.
However, this would be a complicated legal and political process. Given
the political and legal uncertainties of what would occur if the United
States’ Government demanded his return if he breached the pre-trial agreement,
this paper will only focus on the relevant issues of Australian law. It
does not take account of the enforceability of the pre-trial agreement.
Does the Military Commission fall within the meaning of that defined
in the Proceeds of Crime Act 2002?
Under section 20 of the Proceeds of Crime Act, the court only needs to
be satisfied that there are reasonable grounds to suspect that a person
has committed a foreign indictable offence. While a conviction is not
necessary, the court would first need to be satisfied that Hicks’ circumstances
fall within the scope of the definition of ‘foreign indictable offence’
under the Act. Only then could an application be made to confiscate the
profits of any publication.
Legislation was passed in 2004 that specifically amended the definition
of foreign indictable offence.[22] The key element of that amendment was:
[An] offence against a law of a foreign country includes
an offence triable by a Military Commission of the United States of
America established under a Military Order of 13 November 2001 made
by the President of the United States of America and entitled “Detention,
Treatment and Trial of Certain Non-Citizens in the War Against Terrorism”
[emphasis added]
This was added with the intention to cover the offences with which David
Hicks was charged. The amendment makes specific reference to the 2001
Military Commission which was later found to be invalid, and not the later
Commission before which Hicks was convicted.[23] However, because the definition above uses the term ‘includes’
(and therefore is not exhaustive), Hicks’ conviction would probably fall
within the above definition.[24]
Notwithstanding Hicks was convicted by the
United States Military Commission, would a court be
satisfied he actually committed the relevant foreign offence?
While the defence team and Hicks seem to accept the conviction and the
guilty plea, it is arguable that the circumstances under which Hicks was
tried and convicted make it difficult to confirm the due-process ‘legitimacy’
of the conviction. One commentator has noted that a ‘trial conducted
before a Military Commission established under the Military Commission
Act 2006 would contravene the standards for a fair trial’.[25] Australian courts will, in principle,
recognise the judgments of foreign jurisdictions.[26]
However, if the legitimacy of the conviction was challenged before an
Australian court, that court would not be obliged to recognise a foreign
country’s judicial decisions.[27]
South Australian legislation
In 2007, the South Australian Government passed legislation to cover
the circumstances of Hicks selling his story.[28] According to media reports, this is because
the South Australian Government sought to remove any doubt that Hicks
might legitimately retain the profits from the sale of his story.[29]
The amendments to the Criminal Assets Confiscation Act 2005
(SA) provide for the recognition of the renewed Military Commission
that was established following the invalidation of the 2001 Military Commission.[30]
However, it has been noted that ‘unless the proposed South Australian
legislation was replicated in every state and territory, it would easily
be bypassed.’[31] The
legislation could be bypassed by Hicks selling or otherwise publishing
his story in another state or territory, including New South Wales, where
Hicks is presently living.[32]
Conclusions
To date, there have not been any literary proceeds orders made by a court
and the provisions of the Act are surrounded by a number of issues and
questions – however the first indication of the courts’ application of
the literary proceeds provisions will be in the forthcoming Corby case.
In the case of David Hicks, there has not yet been any publication or
sale of a story that could be captured by the provisions. It is important
to note that the Proceeds of Crime Act will not prevent Hicks from telling
his story, but could be used to potentially confiscate any profits he
makes as a result of the sale of that story. Should Hicks sell his story,
it would be a matter for the Australian Federal Police to investigate
whether he has profited from the commercial exploitation of his criminal
notoriety and the Commonwealth Director of Public Prosecutions to seek
a literary proceeds order. Ultimately, it would be a decision of the courts
to grant such an order.
[19]. The following discussion
is based on the hypothetical situation that Hicks sells or otherwise publishes
his story.
[28]. http://parlinfoweb.aph.gov.au/piweb/TranslateWIPILink.aspx?Folder=pressclp&
Criteria=CITATION_ID:396P6%3B
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