Tuesday, 14 May 2024
Bills
Confiscation Amendment (Unexplained Wealth) Bill 2024
Confiscation Amendment (Unexplained Wealth) Bill 2024
Introduction and first reading
The PRESIDENT (20:10): I have received a third message from the Legislative Assembly:
The Legislative Assembly presents for the agreement of the Legislative Council ‘A Bill for an Act to amend the Confiscation Act 1997 in relation to unexplained wealth and for other purposes’.
That the bill be now read a first time.
Motion agreed to.
Read first time.
Harriet SHING: I move, by leave:
That the bill be read a second time forthwith.
Motion agreed to.
Statement of compatibility
Harriet SHING (Eastern Victoria – Minister for Housing, Minister for Water, Minister for Equality) (20:11): I lay on the table a statement of compatibility with the Charter of Human Rights and Responsibilities Act 2006:
Opening paragraphs
In accordance with section 28 of the Charter of Human Rights and Responsibilities Act 2006, (the Charter), I make this Statement of Compatibility with respect to the Confiscation Amendment (Unexplained Wealth) Bill 2024 (Bill).
In my opinion the Bill, as introduced to the Legislative Council, is compatible with human rights as set out in the Charter. I base my opinion on the reasons outlined in this statement.
Overview
The Bill amends the Confiscation Act 1997 to strengthen Victoria’s existing unexplained wealth laws by introducing a new unexplained wealth order that better targets unlawfully acquired wealth. The Bill also makes other miscellaneous amendments to that Act.
The Bill adds a new unexplained wealth order as a third pathway to Victoria’s existing unexplained wealth scheme. Under this new pathway, the Director of Public Prosecutions (DPP) may apply to a court for an unexplained wealth order if there are reasonable grounds to suspect that a person’s wealth exceeds their lawfully acquired wealth by at least $200,000. The person is then required to satisfy the court that their wealth was lawfully acquired. If they cannot do so, then the court may order the respondent to pay the State the value of any wealth the court is not satisfied was lawfully acquired.
The court may also exercise its discretion to reduce the amount payable under an order or refuse to make the order if it considers that making an order for the full amount of a person’s unexplained wealth, or making any unexplained wealth order, would be manifestly unjust. In addition, the Bill will extend the ability of a respondent to seek relief from undue hardship or forfeiture caused by an unexplained wealth order, through a reduction in the total debt payable or a payment from forfeited property, within 60 days of any order or forfeiture made.
If the debt is not paid within the time required by the order, being 90 days or as otherwise ordered by the court, the State may recover the amount as a judgment debt and any restrained property may be forfeited without the respondent’s consent to satisfy the debt.
Gaps in the current Victorian confiscation framework can impede unexplained wealth laws from capturing organised crime group members who distance themselves from offending. The creation of a new unexplained wealth pathway that removes the requirement for a nexus with serious criminal activity is essential to ensure law enforcement in Victoria can effectively target high-level organised crime figures who are able to distance themselves from criminal offending while reaping significant financial benefits.
The Australian Criminal Intelligence Commission has repeatedly emphasised the increasing sophistication of organised crime groups through complex money laundering activities that obscure the criminal offences that generate illicit gains, and the increasing infiltration of legitimate business resulting in commingling of lawful income and proceeds of crime.
In addition to providing that there is no requirement for a nexus with criminal activity under the new pathway, the Bill provides a definition of wealth that includes all interests in property owned by the person, under the effective control of the person, or expended, consumed or disposed of by the person whether by gift, sale or otherwise. It also includes any service, advantage or benefit provided to the person, or at the person’s request or direction. This expanded definition of wealth reflects the sophistication of organised criminals and ability to use wealth that appears legitimate to fund the purchase of assets while using unexplained wealth to fund significant consumable or lifestyle expenses.
Human Rights Issues
The following rights are engaged or limited by the Bill:
• right to a fair hearing (section 24);
• property rights(section 20);
• right to privacy (section 13(a));
• the protection of families and children (section 17(1)); and
• criminal process right – not to be compelled to testify against themselves or to confess guilt (section 25(2)(k)).
Under the Charter, rights may be subject under law only to such reasonable limits as can be demonstrably justified in a free and democratic society based on human dignity, equality and freedom.
Right to a fair hearing (section 24)
Nature of the right
Section 24 of the Charter provides that a party to civil proceeding, has the right to have the proceeding decided by a competent, independent and impartial court or tribunal after a fair and public hearing. This ensures that a party is not substantially disadvantaged compared to the opposing party when putting their case, commonly known as the principle of equality of arms.
As is the case under the existing unexplained wealth powers in Part 4A of the Confiscation Act, the Bill provides that once an application for an unexplained wealth order under the new pathway is made by the DPP or an appropriate officer, the respondent bears the onus of proving that their wealth was lawfully acquired. This amendment engages and limits the right to a fair hearing as the reverse onus of proof on a respondent may infringe the fairness of a hearing insofar as it can result in an unacceptable imbalance between the parties or inequality of arms.
Importance of the purpose of the limitation
The purpose of the limitation is as outlined when the existing unexplained wealth scheme was introduced, to address the fact that the information necessary to establish the acquisition of property is often information that is peculiarly within the knowledge of the owner of that property. A person who has lawfully acquired property ought to be able to readily point to information that supports that acquisition, whilst such information would often be difficult for the prosecution to establish.
Nature and extent of limitation
Whilst the reverse onus of proof requires the respondent to prove their wealth was lawfully acquired the Bill also establishes significant thresholds that must be met and safeguards available to a person who is subject to unexplained wealth proceedings under the new pathway. The DPP or an appropriate officer may only apply for an unexplained wealth order if a police officer suspects on reasonable grounds that a person has wealth that exceeds their lawfully acquired wealth and the total value of the wealth that is not lawfully acquired is $200,000 or more. In practice, such a suspicion is likely to require a forensic investigation of a person’s wealth.
In addition to meeting these substantial thresholds, the Bill provides that the court is not required to consider any wealth of which the DPP has not provided evidence, and provides that the court may accept non-documentary evidence if it is satisfied that it is not reasonable to expect documentary evidence to exist due to the nature of the transfer of wealth, the passage of time or any other reason. A privilege against self-incrimination also applies except in relation to a charge of perjury or a proceeding under the Confiscation Act. Any statement made or evidence given in response to an application for the unexplained wealth order, or any derivative evidence, is not admissible in evidence against that person.
In practical terms, once these requirements have been met, the respondent is then best placed to explain the origin of their own wealth, whereas the State is not.
The relationship between the limitation and its purpose
The limitation is consistent with the Bill’s purpose of depriving criminals or their associates of unlawfully acquired wealth. The importance of depriving criminals and their associates of unlawfully acquired wealth and removing the incentive to engage in criminal activity justifies imposing the burden on the applicant for exclusion to demonstrate that the property was lawfully acquired.
Less restrictive means reasonably available to achieve the purpose that the limitation seeks to achieve
It is possible that the burden of proof could instead rest with the prosecution. However this would require the prosecution to have access to the knowledge and records of the respondent, dating back many years of which there may be no documentary evidence. This information is peculiarly within the knowledge of that person and therefore it is appropriate that the burden of proof rests with the respondent to an unexplained wealth order.
Therefore, I consider that the limitation on the right to a fair hearing is reasonable and justified.
Property rights, right to privacy and protection of families and children
Property Rights (s 20)
Nature of the right
Section 20 of the Charter provides that a person must not be deprived of his or her property other than in accordance with the law. This right requires that powers which authorise the deprivation of property are conferred by legislation or common law, are confined and structured rather than unclear, and are accessible to the public and are formulated precisely.
The Bill’s operation to facilitate the restraint and forfeiture of wealth is a deprivation of property and therefore a limitation on the right to property.
Nature and extent of limitation
As outlined above, the effect of an unexplained wealth order under the new pathway is to require the respondent to pay the State the value of any unexplained wealth as set out in the order. The DPP or an appropriate officer can also seek a restraining order over a person’s property, which possibly could include a person’s home, which prohibits the respondent from dealing with the restrained property in any way without the approval of the court. Such a restraining order may then be used to secure payment of a debt under an unexplained wealth order, and should a person be unable to satisfy payment of the debt, their property can be forfeited without their consent.
The right to privacy (section 13(a))
Nature of the right
Section 13(a) of the Charter protects every person’s right to privacy. The Charter provides that a person has a right not to have his or her privacy, family, home or correspondence unlawfully or arbitrarily interfered with. An interference with a person’s right to privacy should not be unlawful or arbitrary.
The Bill limits the right to privacy by interfering with a person’s ability to be left alone by making their wealth subject the surveillance of the State and interfering with their home.
Nature and extent of the limitation
The scrutiny of a person’s wealth, the burden on the person to prove its lawful acquisition and the imposition of a civil debt to the State will necessarily interfere with many elements of a person’s private life. The deprivation of that wealth has the potential to negatively affect a person’s integrity, identity, relationships and dignity, being characteristics of a person’s privacy.
The protection of families and children (section 17)
Nature of the right
Section 17 of the Charter provides that families are entitled to be protected by society and the State, and that every child has the right, without discrimination, to such protection as is in their best interests and is needed by them by reason of being a child.
The Bill limits the protection of families and children as any deprivation of explained wealth under the new pathway will impact on the maintenance of a person’s family or deprive a child of benefits from the unexplained wealth.
Nature and extent of the limitation
In providing for the restraint and forfeiture of property and the imposition of a civil debt to the state the Bill may impact families and children, particularly where the family’s principal residence or source of income becomes restrained or forfeited. However, the extent of the impact on families is confined as a result of various safeguards that protect those impacted by the operation of unexplained wealth restraining orders and unexplained wealth orders. Firstly, as with the existing pathways, anyone affected by the operation of an unexplained wealth restraining order may apply for reasonable living and reasonable business expenses to be paid from the restrained property. This continues to ensure that a person affected by a restraining order is able to provide or maintain reasonable standard of living for his or her dependants. Secondly persons with an interest in property other than a respondent to an unexplained wealth order are able to apply for exclusion from a restraining order or from forfeiture on the basis that the property is lawfully acquired. Thirdly in circumstances where a debt is imposed or forfeiture occurs, a person is entitled to apply for relief from undue hardship to reduce the debt or for a payment of a specified amount from forfeited property.
Importance of the purpose of the limitations
The purpose of the limitations discussed above are to provide the mechanism, through restraint, forfeiture and the imposition of a debt to deprive persons of the use and enjoyment of unlawfully acquired wealth. The deprivation of property and wealth from members of organised crime groups who are able to distance themselves from criminal offending, such as facilitators and organisers of organised crime, goes to the fundamental purpose of unexplained wealth laws and is a powerful tactic against organised crime. As outlined above, the increasing sophistication of organised crime networks, their ability to obfuscate the illicit nature of wealth, and infiltration of legitimate industries resulting in co-mingling of illicit and apparently legitimate wealth necessitates an adaptable approach to unexplained wealth.
The relationship between the limitations and their purpose
The operation of the restraint, forfeiture and debt imposition provisions is sufficiently confined to target serious organised crime figures who distance themselves from actual offending. The Bill includes safeguards to protect against arbitrary outcomes arising as a result of the removal of a nexus to criminal activity. Firstly, the minimum $200,000 threshold ensures that unexplained wealth orders are only targeted toward the most serious of cases and reduces the risk of targeting low level offending or other contexts where records of finances are less likely to be kept but are not related to organised crime. Secondly the discretion of the court to determine whether the order or the level of debt is manifestly unjust and either to refuse to make the order or direct a lesser payment. Thirdly a person may apply for relief from undue hardship through a reduction in the total debt payable or from forfeiture in the form of a payment.
Less restrictive means reasonably available to achieve the purpose that the limitations seek to achieve
It is necessary to restrain property in advance of the making of an unexplained wealth order to secure payment of any debt imposed.
Appropriate procedures and robust tests are included in the Bill to ensure that these rights are only interfered with lawfully and consistently with the objectives of the Act. The new unexplained wealth pathway firstly requires a reasonable suspicion of unlawfully acquired wealth and secondly, a minimum threshold of $200,000. The respondent is then able to provide evidence to the Court to demonstrate the lawful acquisition of their wealth. The Bill provides for the acceptance of other types of evidence in addition to documentary evidence to account for evidence which may not be available due to the effluxion of time, the nature of the transfer of the property or any other reason.
As part of the Court’s determination, the Court may refuse to make or reduce the value of the unexplained wealth order if doing so would be manifestly unjust. This discretion will provide a critical safeguard in circumstances where a person is unable to satisfy the court on documentary or oral evidence that their wealth or property was lawfully obtained but the Court nonetheless considers it would be manifestly unjust to make the order. This discretion has been carefully considered to ensure it does not create uncertainty or erode the utility of the new unexplained wealth pathway.
Further, the Bill will extend the ability of a respondent to seek relief from undue hardship or forfeiture caused by an unexplained wealth order, through a reduction in the total debt payable or a payment from forfeited property.
Importantly, the Bill will also extend existing arrangements for third parties to apply to have their interest in property excluded from an unexplained wealth restraining order, or for exclusion from forfeiture, to the new pathway. The Bill will also provide the court with a discretion to make an exclusion order where it considers it would be manifestly unjust not to make the order.
A respondent’s restrained property will only be forfeited in circumstances where they are unable to satisfy the debt fixed by the unexplained wealth order.
As the unexplained wealth order seeks to remedy gaps in the existing unexplained wealth scheme it is not considered there are any less restrictive means available to achieve the intended purpose of this Bill.
Therefore, I consider the limitations on the property rights, right to privacy and protection of families and children are reasonable and justified in light of the rigorous tests, safeguards and opportunities to persuade the court not to make an unexplained wealth order.
Criminal Process Rights (sections 25(1), 25(2)(k) and section 27(1)
Nature of the rights
Criminal process rights under the Charter which may be relevant to discuss include the right to be presumed innocent until proven guilty at section 25(1), the right not to be compelled to testify against oneself or to confess guilt at section 25(2)(k) and rights with respect to retrospective criminal laws at section 27(1).
Nature and extent of the limitation
The expanded remit of the unexplained wealth scheme draws attention to utilising civil laws to target what is essentially criminal behaviour. The scheme includes a reverse onus of proof and enables consideration of past wealth now expended, consumed or disposed of. The Bill also preserves a privilege against self-incrimination for a respondent who gives evidence in a proceeding for an unexplained wealth order. These measures would engage criminal process rights if the unexplained wealth order pathway amounted to a criminal charge or criminal proceedings.
However, I do not consider that the criminal process rights are relevant as the unexplained wealth scheme can properly be regarded as a civil scheme and the amendments do not amount to the laying of a criminal charge. The Act states that proceedings on application under the Act are civil in nature and is subject to the civil standard of proof. Further, the Bill explicitly excludes any nexus to criminal activity as a basis for the making of an unexplained wealth order under the new pathway, and provides that it does not matter whether the police officer has a reasonable suspicion that the person has engaged in serious criminal activity. In addition, the Bill provides for the imposition of a civil debt which is not a criminal sanction or punishment.
The Bill provides that the new unexplained wealth order is a civil order that results in the deprivation of wealth that is not lawfully acquired and the transfer of that wealth to consolidated revenue. The standard of proof for unexplained wealth proceedings is the civil standard being determination on the balance of probabilities.
Further, the purposes of the scheme are preventative and remedial rather than punitive. That is, the imposition of the new unexplained wealth order is aimed at the deprivation of unlawfully acquired property or wealth, thereby removing incentives to engage in serious and organised crime and preventing such wealth from being used to fund further such crime.
Right not to be compelled to testify against oneself or to confess guilt at section 25(2)(k)
To the extent that the right against self-incrimination under section 25(2)(k) of the Charter is engaged by requiring a person to provide information in a civil proceeding that may be relevant to criminal charges, I am satisfied that the right is not limited and any engagement is justified. The Bill provides an express safeguard that if a respondent to an unexplained wealth order makes a statement or gives evidence at the hearing of an application, the statement or evidence is not admissible against them except a proceeding for perjury or under the Confiscation Act.
Hon Jaclyn Symes MP
Attorney-General
Minister for Emergency Services
Second reading
That the bill be now read a second time.
Ordered that second-reading speech be incorporated into Hansard:
Money is often a primary motivating factor for those who engage in, or organise and facilitate, serious and organised crime. Confiscation powers, and unexplained wealth laws in particular, are therefore a powerful tactic to disrupt serious and organised crime because they provide a mechanism to deprive even the highest levels of serious organised crime groups of their unlawfully acquired wealth.
The Confiscation Amendment (Unexplained Wealth) Bill 2024 amends the Confiscation Act 1997 to strengthen and improve Victoria’s existing unexplained wealth laws by introducing a new unexplained wealth order that better targets unlawfully acquired wealth. The Bill also makes other minor amendments to give effect to the new pathway and improve the operation of the Confiscation Act 1997.
A new unexplained wealth order
Victoria’s existing unexplained wealth scheme currently enables the Director of Public Prosecutions or an appropriate officer to apply for the forfeiture of the property of a person who is reasonably suspected of criminal activity or who is reasonably suspected of owning property that they did not lawfully acquire. The person with an interest in the property must prove the property was lawfully acquired or it will be forfeited to the State.
The Bill adds an unexplained wealth order as a third pathway to Victoria’s existing unexplained wealth scheme. The new pathway proposed in this Bill can be differentiated from these existing unexplained wealth pathways as it will not require a connection to criminal activity to enable applications for an unexplained wealth order. Instead, all that is required to be shown is that there are reasonable grounds to suspect that a person’s wealth exceeds their lawfully acquired wealth by at least $200,000. The person is then required to satisfy the court that their wealth was lawfully acquired, and if they cannot do so the court may fix a debt requiring them to pay the State the value of any wealth the court is not satisfied was lawfully acquired.
The thresholds for existing unexplained wealth pathways, $50,000 in relation to property in which a person who has engaged in serious criminal activity has an interest, and no threshold for property that was not lawfully required, will be retained. This reflects the need to provide for these matters to progress in the Magistrates Court and the Court’s $100,000 jurisdictional limit in civil proceedings.
This reform will enhance the ability of Victoria Police and the Director of Public Prosecutions to target senior organised crime figures who distance themselves from actual offending but play a pivotal role in the movement of funds, property and favours in criminal organisations.
Definition of wealth
By contrast to the existing unexplained wealth pathways, the proposed new unexplained wealth pathway is not limited to property that a person currently owns or has an interest in. Rather a financial assessment would be conducted of a person’s wealth. The Bill includes a definition of wealth that captures all interests in property owned by a person, under the effective control of a person, or expended, consumed or disposed of by the person whether by gift, sale or otherwise. It also includes any service, advantage or benefit provided to the person, or at the person’s request or direction. This will allow the laws to target individuals who use their unexplained wealth to fund a lavish lifestyle while using legitimate income to fund property and other significant purchases. To avoid depreciation, wealth will be assessed according to its value either at the time of acquisition or at the making of an order, whichever is greater. This broad definition is vital to capturing the many currencies in which serious organised crime figures and groups trade in and the ways in which unlawfully acquired wealth is hidden from view.
Burden of proof
Consistent with Victoria’s existing unexplained wealth pathways, the burden of proof of explaining the lawful acquisition of wealth is placed on the person in respect of who an application for an unexplained wealth order is sought. The respondent to an unexplained wealth order will have to satisfy the court on the balance of probabilities. This is appropriate as the respondent to an application for an unexplained wealth order is best placed to account for their own holdings and that knowledge will uniquely be within their purview.
Court discretion to prevent manifest injustice
To balance the expansion of the unexplained wealth scheme, the Bill empowers the court to refuse to make or reduce the value of an unexplained wealth order if it considers doing so would be manifestly unjust. This will provide an important safeguard to ensure the scheme is used and applied consistently with the scheme’s purpose and to prevent unreasonable and disproportionate outcomes.
In addition, the Bill will extend the ability of a respondent to an unexplained wealth order to seek relief from undue hardship or forfeiture caused by an unexplained wealth order, through a reduction in the total debt payable or a payment from forfeited property, within 60 days of any order or forfeiture made.
Restraining orders and interests of other persons in restrained property
Consistent with the existing pathways, the DPP or an appropriate officer can seek a restraining order to prohibit the respondent to an application for an unexplained wealth order dealing with their property in any way without the approval of the court. The restraining order will also act as security for the payment of the debt if the order is granted. If the debt is not paid within the time allotted, either 90 days or otherwise as ordered by the court, the State may access and forfeit the respondent’s restrained property to satisfy the debt. The person whose wealth is suspected to exceed their lawfully acquired wealth will not be able to seek to exclude their interests from the restraining order, but instead will be required to prove to the Court how their wealth was lawfully acquired. Should they do so the restraining order will cease. Any other persons with an interest in restrained property will retain the ability to seek to exclude their interest in property from a restraining order under existing mechanisms in the Confiscation Act. The Court will have a discretion when hearing an exclusion order application, to refuse to make or reduce the amount of property restrained under an unexplained wealth restraining order under the new pathway if making the order would be manifestly unjust.
Evidentiary requirements
The Bill will protect a person’s right to silence and privilege against self-incrimination by providing that any statement made, or evidence given by a respondent to an unexplained wealth order and any derivative evidence, will not be admissible in evidence against that person except in a proceeding for perjury or in any other proceeding under the Confiscation Act. Therefore, the respondent’s rights when giving evidence to satisfy a court that their wealth was lawfully acquired are safeguarded. In addition, the Bill will extend the Court’s ability to accept other evidence if satisfied that it is not reasonable to expect documentary evidence to exist because of the nature of the transfer of any wealth or the effluxion of time or any other reason.
Other amendments to the Confiscation Act
The Bill will also make a range of other amendments to the Confiscation Act to improve and clarify the operation of the scheme as well as make consequential amendments that flow from the introduction of the new unexplained wealth pathway. These amendments include:
• ensuring freezing, production and monitoring orders – all court-based powers to prevent assets from being dissipated and to enable the gathering of financial information – are available under all unexplained wealth pathways and not only in particular pathways as is currently the case
• empowering the court with discretion when granting relief to a dependant of a serious drug offender upon the automatic forfeiture of their residence
• other technical amendments to confiscation procedures, including enabling the court to give all directions that are necessary to give effect to a restraining order.
Conclusion
These improvements to the unexplained wealth scheme are critical to disrupting serious and organised crime in Victoria and keep our community safe.
I commend the Bill to the house.
Evan MULHOLLAND (Northern Metropolitan) (20:11): I move:
That debate be adjourned for one week.
Motion agreed to and debate adjourned for one week.