Henderson v Queensland [2014] HCA 52

HIGH COURT OF AUSTRALIA

FRENCH CJ, KIEFEL, BELL, GAGELER AND KEANE JJ

JOHN WILLIAM HENDERSON APPELLANT

AND

STATE OF QUEENSLAND RESPONDENT

Henderson v Queensland [2014] HCA 52 16 December 2014 B22/2014

ORDER

Appeal dismissed with costs.

On appeal from the Supreme Court of Queensland

Representation

S Gillespie-Jones with E McKinnon for the appellant (instructed by Gary Prince)

M D Hinson QC for the respondent (Director of Public Prosecutions (Qld))

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Henderson v Queensland

Criminal law – Confiscation of property – Exclusion order – Where State sought forfeiture of proceeds of sale of jewellery given to appellant by deceased father – Where appellant sought exclusion from forfeiture under s 68(2) of Criminal Proceeds Confiscation Act 2002 (Q) ("Act") on ground money not "illegally acquired property" – Where "illegally acquired property" defined by s 22(2)(a) of Act to include "proceeds of dealing with illegally acquired property" – Whether sufficient for appellant to prove money was not proceeds of illegal activity on his part – Whether appellant discharged onus placed upon him by s 68(2)(b) to prove jewellery not illegally acquired by father.

Words and phrases – "burden of proof", "civil standard of proof", "exclusion order", "forfeiture order", "illegally acquired property".

Criminal Proceeds Confiscation Act 2002 (Q), ss 4, 22, 25, 26, 58(1), 68(2).

FRENCH CJ. Introduction On 22 November 2011, the Supreme Court of Queensland made an order under the Criminal Proceeds Confiscation Act 2002 (Q) ("the CPCA") forfeiting cash to the value of $598,325 which had been found in the possession of the appellant, who was a person who had engaged in a serious crime related activity within the meaning of the CPCA. An application by the appellant for exclusion of the cash from forfeiture was dismissed. It was dismissed on the basis that although the cash was not itself the proceeds of any illegal activity, it was the proceeds of the sale of jewellery, given to the appellant to hold for himself and three of his siblings by their father, which itself was not shown not to have been illegally acquired property. An appeal to the Court of Appeal of the Supreme Court of Queensland was dismissed on 16 April 2013. The appellant appeals to this Court against that decision by special leave granted on 16 May 2014. The appeal turns critically upon the construction of s 68(2) of the CPCA, which provides: "The Supreme Court must, and may only, make an exclusion order if it is satisfied— (a) the applicant has or, apart from the forfeiture, would have, an interest in the property; and (b) it is more probable than not that the property to which the application relates is not illegally acquired property." The appellant challenges the decision of the Court of Appeal primarily by reference to what he had to prove in order to satisfy the criterion in s 68(2)(b). For the reasons that follow, the appeal should be dismissed. Factual background The factual circumstances are set out in detail in the reasons for judgment of Gageler and Keane JJ respectively. The essential facts as found by the primary judge were: • The appellant had engaged in a serious crime related activity within the meaning of the CPCA within a period of six years before the application for a forfeiture order. • The money the subject of the order was found in the appellant's possession. • The money was the proceeds of the sale of jewellery given to the appellant for the benefit of the appellant and his siblings by their now deceased father. • The jewellery had been said by the appellant's father to have been a gift to the appellant's great grandfather from Russian royalty in the late 19th or early 20th century. • The account given to the appellant and his siblings of the provenance of the jewellery was untrue. The jewellery had in fact been made some time after 1950. • It was not known how the appellant's father had come into possession of the jewellery. On the basis of the preceding findings, the primary judge held that the Court could not be satisfied, on the balance of probabilities, that the jewellery itself was not illegally acquired property. The term "illegally acquired property" includes all or part of the proceeds of dealing with illegally acquired property. It followed that the money the subject of the exclusion application had not been shown on the balance of probabilities not to be illegally acquired property. The exclusion order sought by the appellant was therefore refused. The Court of Appeal came to the same conclusion. It found no error in the primary judge's approach to the standard of proof. It found that on the evidence the primary judge was entitled to conclude that the appellant had not discharged the onus on him. Legislative framework A comprehensive overview of the CPCA and the text of relevant provisions are set out in the judgment of Keane J. What follows is an outline of salient features relevant to this appeal. The "main object" of the CPCA is to remove the financial gain and increase the financial loss connected with illegal activity, whether or not a particular person is convicted of an offence because of the activity. Other "important" objects are protective of property rights. One of those is to protect property honestly acquired by persons innocent of illegal activity from forfeiture and other orders affecting property. Nevertheless, the text of s 68(2)(b) of the Act, as construed by the primary judge and the Court of Appeal, does not, as in the circumstances of this case, protect from characterisation as "illegally acquired" property received as a gift from another unless it is also shown not to have been illegally acquired by that other. At the commencement of Ch 2 of the CPCA, which contains the substantive provisions directly relevant to this appeal, s 13 explains its operation. Chapter 2 enables proceedings to be started to confiscate property derived from illegal activity whether or not a person who engaged in the relevant activity has been convicted of any offence. It requires the Supreme Court to make a forfeiture order confiscating property if it finds it more probable than not that the property is serious crime derived property because of a serious crime related activity of a person, even though a particular person suspected of having engaged in the serious crime related activity can not be identified. The Chapter is also described as containing ancillary provisions: "including provisions giving persons opportunities to have lawfully acquired property excluded from the effect of restraining orders and forfeiture orders." The substantive provisions of Ch 2 of the CPCA provide for the State to apply for a restraining order in respect of property of a person suspected of having engaged in one or more serious crime related activities (a "prescribed respondent"). Property the subject of a restraining order may then be the subject of a forfeiture application by the State. The Supreme Court must make a forfeiture order if it finds it more probable than not that the prescribed respondent engaged in a serious crime related activity during a six year period prior to the application. There is a discretion to refuse, on public interest grounds, to make the order. A doubt as to whether a person engaged in a serious crime related activity does not suffice to avoid a finding on which a forfeiture order may be made. On the making of the order the property the subject of the order is forfeited to the State and vests absolutely in the State. An application for an exclusion order in relation to property the subject of a forfeiture application may be made by the prescribed respondent. Pursuant to s 68(2)(b), the order cannot be made unless the Court is satisfied that "it is more probable than not that the property to which the application relates is not illegally acquired property". The effect of an exclusion order is to exclude the applicant's property from the forfeiture application. The property is also freed from the effect of the restraining order otherwise applicable to it. The term "illegally acquired property" is central to s 68(2)(b). The money the subject of this appeal is property. Pursuant to s 22(1), property is "illegally acquired property" if it is all or part of the proceeds of an "illegal activity". An "illegal activity" is defined by reference to the commission of various classes of criminal offence. Section 22(2) provides that property is also "illegally acquired property" if: "(a) it is all or part of the proceeds of dealing with illegally acquired property; or (b) all or part of it was acquired using illegally acquired property." By virtue of s 25, illegally acquired property retains its character as such even if it is disposed of, including by using it to acquire other property, until it stops being property of that character by virtue of one or more of the circumstances set out in s 26. They include acquisition of the property by a person for sufficient consideration, without knowing, and in circumstances not likely to arouse a reasonable suspicion, that the property was illegally acquired property. The jewellery was a gift to the appellant for the benefit of the appellant and his siblings and was not acquired for any consideration. None of the circumstances set out in s 26 was applicable to it or the money the subject of these proceedings. Contentions and conclusions On the facts as found by the primary judge and not in dispute before the Court of Appeal, the money the subject of the exclusion application was not "all or part of the proceeds of an illegal activity" within the meaning of s 22(1) of the CPCA. The question is whether it was nevertheless "illegally acquired property" within the meaning of s 22(2)(a) as "all or part of the proceeds of dealing with illegally acquired property". The appellant's principal contention was that in order to satisfy the requirements of s 68(2)(b), he needed to prove no more than that the jewellery, sold for the money the subject of his application, was not the proceeds of any illegal activity on his part. That submission could find no footing in the text of s 68(2)(b) read with that of s 22(2). Pursuant to s 22(2), property is characterised as illegally acquired if it is all or part of the proceeds of dealing with illegally acquired property or was acquired using such property. Given that none of the circumstances set out in s 26 was applicable to the jewellery, if it had been illegally acquired by the appellant's father it would still have been illegally acquired property after being given to the appellant. On its face, s 68(2)(b) read with s 22(2) required the appellant to negative that proposition. The appellant would read s 68(2)(b) as requiring an applicant for an exclusion order to satisfy the Supreme Court that it was "more probable than not that the property to which the application relates was not acquired by illegal activity on the part of the applicant". That construction involves a judicial interpolation in the text of the statute. It is not a construction which the text permits. It may be argued that the construction adopted by the primary judge and the Court of Appeal is in tension with the protective objectives of the Act because the applicant for an exclusion order may have to prove not only that the property was honestly acquired by him or her, when s 26 is not applicable, but also that it is not tainted by its ancestry. The primary judge observed: "it would appear to be anomalous that property may be confiscated, because the ultimate origin of the property is beyond the knowledge of, and means of proof available to, a prescribed respondent. Such a case would appear to be well outside the intended scope of the legislation, as identified in s 13(1) and (4) of the Confiscation Act." The tension thus indicated cannot be resolved by widening the scope of the protection effected by exclusion orders beyond the limits imposed by the text of the Act. The appellant fails in his primary argument in this Court. In order to discharge the burden imposed by s 68(2)(b) it was necessary for the appellant to satisfy the Supreme Court that it was more probable than not that the jewellery was not illegally acquired in his father's hands at the time that the appellant received it. The placement of the burden of proof is uncompromising and unable to be ameliorated by any "conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct". On the facts found by the primary judge, there was no available hypothesis to explain how the appellant's father acquired the jewellery. The appellant failed to discharge the onus placed upon him. The appellant further complained of the way in which the Court of Appeal referred to the hearsay testimony of the account given by the appellant's father of how he came by the jewellery. In this respect I agree with the reasoning of Bell J. In the end what was left after the rejection of that evidence as a true account of the provenance of the jewellery was a want of evidence about it. Conclusion For the preceding reasons, the appeal should be dismissed with costs.