Chapter 2
Key issues
2.1
This chapter examines the proposed amendments contained in the bill that
attracted comment from stakeholders during the inquiry. The evidence received
by the committee related to the proposed amendments contained in Schedule 1 of
the bill. Specifically, the areas in Schedule 1 that attracted comment were the
proposed amendments to:
-
remove the discretion of the court to decide whether or not to
make an unexplained wealth order where certain criteria are satisfied;
-
prevent restrained assets from being used to meet legal expenses;
-
streamline affidavit provisions;
-
enable the making of an unexplained wealth order in the absence
of the person who is the subject of the order;
-
ensure evidence relevant to unexplained wealth proceedings can be
seized under a search warrant; and
-
extend the disclosure of information regime.
Removing the court's discretion to make an unexplained wealth order
2.2
Unexplained wealth provisions form one of five types of asset
confiscation proceedings provided for in the Proceeds of Crime Act 2002
(POC Act). There are three types of orders that can be sought in relation to
unexplained wealth:
-
unexplained wealth restraining orders (section 20A of the POC
Act);
-
preliminary unexplained wealth orders (section 179B of the POC
Act); and
-
unexplained wealth orders (section 179E of the POC Act).
2.3
Under the existing provisions, a court has discretion in deciding
whether to make an unexplained wealth restraining order, a preliminary
unexplained wealth order or an unexplained wealth order.
2.4
Items 2, 14 and 18 of Schedule 1 would remove this discretion. The bill
would, however, ensure that discretion is retained in cases where the person's
unexplained wealth is less than $100,000 (items 4, 17 and 20 of Schedule 1).
The bill would provide for an additional safeguard in cases concerning
unexplained wealth restraining orders[1]
and final unexplained wealth orders[2]
by providing that discretion can also be exercised where it would not be 'in
the public interest to make the order' (proposed new paragraph 20A(4)(b), item
4 of Schedule 1; and proposed new subsection 179E(6)(b), item 20 of Schedule
1).
2.5
Civil Liberties Australia (CLA) expressed concern in relation to the
amendments proposed by items 2, 14 and 18 of Schedule 1 stating that:
To remove this discretion is not in the interests of justice.
Such a change is inappropriate until such time as repeated applications have
found this discretion for judges is a problem.[3]
2.6
The Law Council of Australia (Law Council) was similarly concerned,
arguing that unexplained wealth orders have the 'potential to significantly
impact on a person's livelihood and accordingly, warrant judicial discretion in
the making of such an order'.[4]
2.7
In response to these concerns the Australian Federal Police (AFP)
explained that the:
[C]urrent unexplained-wealth provisions...essentially give a
court unfettered discretion to refuse any applications for an
unexplained-wealth order, regardless of the fact that the proceeds-of-crime
authority may have met all the prerequisites set out in the act for the making
of such an order.[5]
2.8
Further, the Explanatory Memorandum (EM) identified that the existing
provisions are:
[I]n contrast to most other types of proceeds of crime
orders, which a court must make if it is satisfied that the criteria have been
met [and that the current discretion] provides a disincentive for proceeds of
crime authorities to bring unexplained wealth proceedings, as there is greater
uncertainty of the outcome.[6]
2.9
Upon introducing the bill, the Minister for Justice the Hon Michael
Keenan MP stated:
Removing the general discretion will improve certainty for
all parties, while also maintaining appropriate protections for those subject
to unexplained wealth orders.[7]
Streamlining the affidavit requirements for preliminary unexplained wealth
orders
2.10
Unexplained wealth order proceedings can commence either with an
application for a restraining order followed by an application for a
preliminary unexplained wealth order, or with an application for a preliminary
unexplained wealth order.[8]
Where an unexplained wealth restraining order is obtained prior to, or at the
same time as a preliminary unexplained wealth order, and remains in force or
has been revoked (under section 44[9]
of the POC Act) at the time of applying for the preliminary unexplained wealth
order, authorised officers are required at two stages to provide affidavits
stating their reasonable grounds for the suspicions upon which the applications
are made (subsections 20A(3) and 179B(2) respectively).[10]
Similarly, the court is required at both stages to be satisfied that an
authorised officer has reasonable grounds to suspect that the person's total
wealth exceeds the value of the person's wealth that was lawfully acquired
(paragraphs 20A(1)(f) and 179B(1)(b) respectively).[11]
2.11
In its 2012 report, the PJC-LE identified that removing the requirement
to meet this evidence threshold twice could help improve the efficiency of the
unexplained wealth provisions and recommended that 'the duplication of the
evidence threshold test be eliminated'.[12]
2.12
Item 15 of Schedule 1 seeks to implement this recommendation[13]
by repealing existing subsection 179B(2) and replacing it with three new
subsections – 179B(1A), 179B(1B) and 179B(2).[14]
2.13
In its submission to the inquiry the Law Council was concerned that this
proposed amendment would 'reduce the amount of information required to be
included in an affidavit for a preliminary unexplained wealth order to that of
what appears to be a lower standard for an interim restraining order'.[15]
The Law Council explained:
[G]iven the impact of the preliminary order on the
individual, a higher standard of affidavit requirements for this stage of
proceedings seems entirely reasonable. Without clear evidence of the nature of
the administrative burden the existing requirements place on agencies, the
provisions designed to provide a degree of specificity, transparency and
oversight to the use of these orders should be retained.[16]
2.14
The Australian Customs and Border Protection Service (Customs) had a
contrary view and voiced its support for the amendments which are 'designed to
streamline processes and facilitate the obtaining of orders, particularly where
relevant criteria are met'.[17]
2.15
The minister explained that the amendments proposed in item 15 of
Schedule 1 were necessary as they would:
[R]educe unnecessary duplication in affidavit requirements by
repealing certain requirements where police have already presented the same
affidavit material to support an earlier related application.[18]
Extending the purposes for which information obtained under the coercive
powers of POC Act can be shared
2.16
Part 3-6 of the POC Act governs the disclosure of information obtained
under the coercive powers of the POC Act and identifies the authorities to whom
disclosure can be made in the table in section 266A.[19]
2.17
Under the existing provisions, information can only be disclosed to
Commonwealth, state or territory authorities 'for the purpose of assisting in
the prevention, investigation or prosecution of offences punishable by at least
three years imprisonment'.[20]
Currently, information cannot be disclosed to an authority for the 'purposes of
deciding whether to institute proceeds of crime proceedings under State and
Territory proceeds of crime laws'.[21]
2.18
Item 31 of Schedule 1 proposes amendments to the POC Act that would
extend the purposes for which information obtained under the coercive powers of
the POC Act can be shared with a state, territory or foreign authority to
include a proceeds of crime purpose.[22]
2.19
Some submitters expressed support for the amendments proposed in item 31
of Schedule 1;[23]
the Law Council, however, raised concerns suggesting that the amendment:
...significantly broadens the purposes for which information
can be shared with other agencies and jurisdictions, without ensuring that each
of the agencies authorised to receive such information have appropriate
safeguards to protect against unjustified intrusion into personal privacy, and
without imposing clear limits on the ability for foreign or State or Territory
authorities to further disclose information to other agencies and
jurisdictions.[24]
2.20
The Law Council pointed to the recent reports of the Senate Standing
Committee for the Scrutiny of Bills (Scrutiny of Bills Committee) and the
Parliamentary Joint Committee on Human Rights (PJCHR) which both commented on
the amendments proposed by item 31 of Schedule 1.
2.21
In its Alert Digest No. 3 of 2014, the Scrutiny of Bills Committee
explained that there was an 'apparent absence of adequate safeguards for the
process' and sought the minister's advice.[25]
2.22
In his response to the Scrutiny of Bills Committee's request, the
minister asserted:
All disclosures of information between foreign law
enforcement authorities and Australian law enforcement authorities involve
undertaking a broad assessment of whether the requesting country will treat
information for the limited purposes for which it is shared and how the
requesting country has previously dealt with information that has been
disclosed for similar purposes. It is open to Australia to reject the request
to provide specific assistance to the requesting foreign authority.
Given the increasingly international nature of many crimes,
including money laundering, drug trafficking and fraud, increased cooperation
between Australia and foreign counterparts to target the criminal economy is
required. To impose a requirement to undertake a detailed and specific
assessment in all circumstances about whether the requesting country's laws
prevent further disclosure of shared information and to put in place processes
to audit such an arrangement with respect to all requesting authorities is not
feasible.[26]
2.23
In its evidence to the committee, the AFP also responded to the concerns
of the Scrutiny of Bills Committee and the Law Council explaining:
...certainly we do not share information without actually
having established arrangements in place. Those arrangements actually talk
about making sure that information that we share is used appropriately. That is
just a procedural thing that we do regardless of what the legislation is. The
legislation may allow us to share, but we will not necessarily do that unless
we are satisfied that it is appropriate in the case to do so.
I think with the sorts of agencies that we are sharing with
generally, either domestically or internationally, the amendments actually set
out the purposes for which we can share the information...The reality is that the
types of agencies that we are sharing with are subject to their own strict
accountability regimes and requirements. So certainly, if they are doing the
wrong thing with their own information or information we have given to them,
that will have them come under scrutiny for that. Also, if they try to use it
in a court proceeding when it is not appropriate to do so, the judge has
discretion not to admit that evidence.[27]
Preventing restrained assets from being used to meet legal expenses
2.24
The existing unexplained wealth provisions under the POC Act enable a
court to order that 'specified property may be disposed of or otherwise dealt
with for the purposes of meeting a person's reasonable legal expenses'.[28]
Item 3 of Schedule 1 would repeal these provisions to 'harmonise the provisions
relating to the payment of legal expenses for unexplained wealth cases with
those for other proceedings under the POC Act' and implement recommendation 10
of the PJC-LE.[29]
The EM explained the rationale for the proposed amendments:
The ability of a person to dispose of restrained property [or
property subject to an order under subsection 179S(1)] to meet their legal
costs weakens the effectiveness of the unexplained wealth provisions by
allowing the wealth suspected to have been unlawfully acquired to be used to
contest proceedings. This may lead to fewer assets being available for
confiscation if an unexplained wealth order is successful and is likely to
cause more protracted litigation.[30]
2.25
The committee received evidence both in support of and in opposition to
this proposed change.[31]
2.26
Victoria Legal Aid (VLA) suggested that this proposed change would 'see
an increase in applications for aid for proceedings that are usually strongly
contested and involve protracted litigation with sizeable payments to legal
representatives and forensic experts'.[32]
In response, the department stated that when an order to restrain assets is
made for unexplained wealth purposes, that order may not affect all of a
person's assets:
... it is not always going to be the case that all of a
person's assets will be restrained. It is open to a person to use their
unrestrained assets to meet their legal costs. In a situation where the
entirety of a person's assets are restrained then there is a channel to seek
legal aid and there is also the provision that when legal aid is assessing an
application from a person the restrained assets are not taken into account in
the process. Then at the end of the process to ensure that legal aid commissions
are not out of pocket there is a mechanism for legal aid commissions to be
reimbursed from the confiscated assets account for the costs they have incurred
in the work that they do in the context of unexplained wealth proceedings or,
in fact, any proceedings under the Proceeds of Crime Act.[33]
2.27
The AFP, which has been responsible for managing unexplained wealth
litigation for the past two years, further explained that it is 'not expecting
a huge volume of unexplained wealth cases' and that 'if a person does need to
resort to legal aid there are ways for them to do that and for the legal aid
commission to recoup those costs'.[34]
2.28
In expressing its opposition to the proposed amendments the Law Council
stated that:
[T]here are adequate safeguards against dissipation of
restrained assets through the respondent's conduct of proceedings due to: the
court's discretion in relation to the release of restrained assets...; and the
court's ability to require certification of costs by a costs assessor and to
make any further orders it considers appropriate...'[35]
2.29
In response, the AFP explained that current safeguards identified by the
Law Council were unlikely to 'operate as a concrete safeguard':
One of the current safeguards that the Law Council may be
referring to is the fact that the court can appoint a cost assessor to make
sure that what the lawyer is charging is fair and reasonable. We had some
concerns around that ourselves, mainly the point that the judges are not
themselves trained to be cost assessors and it is not something that is their
bread and butter. They might be reluctant to award lesser costs to one person
knowing that it could mean that they have to make up the difference from the
assets. If someone is intent on frustrating the whole process, the cost
assessor will not necessarily be able to fight that because they will just keep
fighting the cost assessor's claims back and forth and that will use up even
more expenses. The accuracy of the whole picture is going to depend on the
quality of information that they get. It is a bit like saying that there is a
safeguard that someone can say that those costs are okay and those costs are
not, but it is not as black and white as that. We do not think that that in
fact will operate as a concrete safeguard in this case.[36]
2.30
The AFP added that the existing provisions, which provide for a person
to access restrained assets for the purpose of legal expenses, have been found
to be the 'type of provision [that] undermined the entire object of the act
because...people would rather spend their money on their lawyers than see the
money going to be confiscated by law enforcement'.[37]
Making an unexplained wealth order in the absence of the person subject to
the order
2.31
A preliminary unexplained wealth order requires a person to appear
before the court 'for the purpose of enabling the court to decide whether or
not to make an unexplained wealth order in relation to the person'.[38]
The amendments proposed in item 19 of Schedule 1 would amend subsection 179E(4)
of the POC Act to add an additional subparagraph 179E(4)(b) to provide that the
court is not prevented from making an unexplained wealth order under section
179E in relation to a person in circumstances where the person fails to appear
as required by a preliminary unexplained wealth order.[39]
2.32
The EM explained that the amendments proposed in item 19 of Schedule 1
'give effect to the original policy intent of unexplained wealth proceedings...It
[was] not intended that a person might frustrate unexplained wealth proceedings
by simply refusing to appear'.[40]
2.33
In its Fourth Report of the 44th Parliament, the
Parliamentary Joint Committee on Human Rights commented on this proposed
amendment raising concern 'regarding the compatibility of this measure with the
right to a fair hearing'.[41]
The Law Council shared this concern and suggested that:
[A] comprehensive review of this proposed amendment be
conducted as to whether it is necessary and proportionate when considered in
light of the impact on the right to a fair hearing, and what safeguards and
other provisions should be included in the POC Act to ensure that it does not
unduly burden individual rights, including the right to a fair hearing.[42]
2.34
The AFP explained the problem with the current provisions:
[I]f a person who is ordered by a court to appear before it for
the purposes of a preliminary unexplained wealth order refuses or fails to
appear, then the court cannot do anything more and neither can the proceeds of
crime authority. In other words, a person who is the subject of an application
can thwart the entire proceedings just by refusing to turn up.[43]
2.35
The AFP further advised the committee that the amendments would give the
court a choice as to whether or not it proceeds in the absence of the person:
At the moment, the court has no choice if the person does not
show up—that is it; that is the end of it. This [the proposed amendment] will
give them a specific basis to choose whether they feel comfortable proceeding
in the absence of the person having turned up or not.
...the way the amendments will work is they will give the court
an option. So the court can say: 'I ordered them to appear. The AFP served
notice on them. They have not appeared. There is evidence that they are not
trying to deliberately frustrate this. They are not lying in hospital or
something like that. I am convinced by the AFP's evidence that this person has
unlawful property.' The court will now have a choice to proceed and make the
final order, but the court is not required to; it just leaves it open for them
to actually have that discretion to keep going forward with the action.[44]
2.36
The minister stated that this amendment was necessary to close loopholes
in the POC Act which had been identified by the PJC-LE and to 'clarify that a
person whose property is subject to a preliminary unexplained wealth order is
prevented from frustrating unexplained wealth proceedings by simply failing to
appear when ordered to do so'.[45]
Ensuring evidence relevant to unexplained wealth proceedings can be seized
under a search warrant
2.37
Under the existing provisions of the POC Act, a magistrate may issue a
warrant to search premises if they are satisfied by information on oath that
there are reasonable grounds for suspecting there is 'tainted property' or
'evidential material' at the premises (or will be within 72 hours).[46]
Section 227 of the POC Act sets out the requirements for the 'content of
warrants' and section 228 sets out 'the things that are authorised by a search
warrant'.[47]
Although the current provisions allow for the collection of some evidence in
relation to property relevant to unexplained wealth proceedings, under the
current provisions it is not possible to seize all evidence that would be
relevant to an unexplained wealth investigation or proceeding.[48]
2.38
Items 27 and 28 of Schedule 1 propose amendments that would:
-
authorise the seizure of other things found at the premises in
the course of the search that the executing officer or a person assisting
believes on reasonable grounds to be things relevant to unexplained wealth
proceedings;[49]
and
-
authorise the authorised officer or a person assisting to seize other
things found at the premise in the course of the search that he or she believes
on reasonable grounds to be things relevant to unexplained wealth proceedings.[50]
2.39
The EM outlined that these amendments would ensure that material
relevant to unexplained wealth proceedings could be seized when searching
premises under a warrant, enhancing the investigation of unexplained wealth
matters and implementing recommendation 5 of the PJC-LE's report.[51]
2.40
In its submission to the committee, the Law Council commented on these proposed
amendments stating that they 'seek to expand the scope of intrusive search and
seizure powers that are already broad in scope, without clearly demonstrating
why such an expansion is necessary'.[52]
2.41
In response, the AFP explained that the proposed amendments were previously
recommended by the PJC-LE to close a gap in the unexplained wealth provisions:
This is one of the matters that was explored with the
Parliamentary Joint Committee on Law Enforcement...it has already been tested in
terms of its need. We can only get a search warrant for particular reasons and
on particular grounds and those have not changed at all. But, like other search
warrants, once you are on premises you are authorised, if you have reached
certain threshold tests, to seize other material that may be relevant. One of
those categories of material—which is things that are relevant to unexplained
wealth proceeding—was not available to us. So we could seize things that were
relevant to other proceeds, other actions, we could seize things relevant to
indictable crimes; but if there was evidence that would be quite useful in an
unexplained wealth case we would not be able seize it, even though it was right
there in front of us and we had entered lawfully. Our sense was that that was a
gap in the law and it meant that we were there for legitimate reasons and we
would not be able to pick up that particular information.[53]
2.42
In his second reading speech, the minister argued that the amendments
would address uncertainty:
This amendment will address some uncertainty that exists
under current arrangements and ensure that material relevant to unexplained
wealth proceedings can be seized when searching premises under a warrant.[54]
Committee view
2.43
The committee takes the view that serious and organised crime pose a
significant threat to Australian communities. The committee supports the
strengthening of the existing unexplained wealth provisions under the POC Act
through the amendments proposed by the bill.
2.44
The committee acknowledges that the amendments set out in the bill would
implement a number of the recommendations of the PJC-LE which examined these
issues at length in its report in 2012 on the Commonwealth unexplained wealth
legislation and arrangements.
2.45
In relation to concerns raised in respect of removing the court's
discretion to make an unexplained wealth order, the committee considers that
the safeguards provided by the bill to retain the discretion where the
unexplained wealth is less than $100,000 or where it is not in the public
interest to make the order are adequate and will reinforce the purpose of the
unexplained wealth provisions to target the "Mr and Mrs Big's" of
organised crime.
2.46
The committee acknowledges the Law Council's concern that the proposed
amendments to streamline the affidavit requirements would 'reduce the amount of
information required to be included in an affidavit for a preliminary
unexplained wealth order to that of what appears to be a lower standard for an
interim restraining order'.[55]
However, the committee agrees with recommendation 8 of the PJC-LE's 2012
report, that 'the duplication of the evidence threshold test be eliminated' to
improve the efficiency of the unexplained wealth provisions.[56]
2.47
A number of submitters were concerned about item 31 of Schedule 1 that
would extend the disclosure of information. The committee is reassured by the minister's
response to the Scrutiny of Bills Committee's concerns (see paragraph 2.22) and
takes the view that the amendment is necessary given the increasing
transnational nature of organised crime and that it will improve the
effectiveness of investigations.
2.48
The committee supports the amendments that would prevent restrained
assets from being used to meet legal expenses. The committee notes that
following a review by the ALRC, the POC Act was amended in 2002 to 'preclude
the use of restrained property to meet legal expenses incurred in connection
with the [POC Act] or criminal proceedings'.[57]
The committee recognises that these provisions were not extended to the
unexplained wealth regime when it was introduced in 2010; however, the
committee considers that the provisions should be harmonised with those in
relation to other proceedings under the POC Act.
2.49
The committee agrees with the policy decision to enable the making of an
unexplained wealth order in the absence of the person who is the subject of the
order so that such proceedings cannot be deliberately frustrated by that person.
The new provisions would allow the court to choose whether or not it proceeds with
making an order in the absence of the person and this is preferable to the
status quo.
2.50
The committee supports the amendments that would ensure evidence
relevant to unexplained wealth proceedings can be seized under a search
warrant. The committee is pleased that this is balanced by the consequential
amendments (item 30 of Schedule 1) that require the authorised officer
responsible for executing the warrant to 'take reasonable steps to return these
things where the reason that the thing was seized no longer exists or if it is
decided that the thing is not to be used in evidence'.[58]
Recommendation 1
2.51
The committee recommends that the Senate pass the bill.
Senator the Hon Ian Macdonald
Chair
Navigation: Previous Page | Contents | Next Page