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