Modern Criminal Property Confiscations and Proceeds of Crime legislation is designed to disgorge ill-gotten gains and is typically drafted broadly to achieve that objective. Specifically:
- Any property that is ‘derived’ from the commission of a wide category of offences is at least prima facie liable to confiscation or forfeiture,
- There will be provision to allow property to be traced, and
- Even if property is only partially derived from crime it will remain tainted and liable to forfeiture.
Statutory recognition of victims rights
Some legislation, such as the Confiscation Act 1997 (Vic), ((See for instance s 1(h).)) contemplates the obvious possibility that property may be both the proceeds of crime (ie derived from crime) and also property of an identifiable victim or group or class of victims. The Victorian Act allows the Director of Public Prosecutions to apply to restrain property of a suspect in order “to satisfy any order for restitution or compensation” that may be made under the Sentencing Act 1991 (Vic). ((See s 15(1)(e) of the Confiscation Act 1997 (Vic).))
Victims rights in Western Australia
In contrast, neither the Criminal Property Confiscation Act 2000 (WA) (CPCA) nor the Proceeds of Crime Act 2002 (Cth) (POCA) recognise victims.
In many cases common sense will prevail and the authorities will not, as a matter of public policy, take action that is prejudicial to a victim. History suggests that in some cases litigation between victims and the authorities will nevertheless occur.
Exclusion of property from proceeds of crime or confiscation actions
Where that occurs the following are capable of providing some relief to victims:
- The POCA provides that people with an interest in property can apply for exclusion of that property from restraint, ((See sections 29 – 31.)) and/or forfeiture. ((See sections 73, 94.))
- The CPCA provides for objections to confiscation. ((See sections 82 – 84.)) It also provides ((See section 152.)) that people with a charge over an asset may be compensated upon the sale of the asset by the State after confiscation. In the case of real property it may also be open to a person with an ‘interest’ in property to have that interest excluded from the declaration of confiscation. ((See section 30. Also note section 9(2) which on a literal interpretation provides that confiscated property vests in the State “free from all interests” (including registered interests). However in practice the State does not administer the Act in that fashion. See for instance Pellew v WA  WASCA 103 at  per Pullin JA: “By some method of interpretation the State in fact does not treat [s 9(2)] as terminating a mortgagee’s interests in property but, as in this case, allows the mortgagee’s interests to continue to be recognised and paid out if there is eventually a sale of the property by the State.”))
In each case there is a catch.
Interest in property liable to forfeiture
The victim will need to establish an interest in the property that is liable to confiscation or forfeiture. Merely establishing an in personam right to damages, whether in tort, contract, misleading and deceptive conduct or otherwise, against the offender will not provide the victim with an interest in any such property. Accordingly, the victim will not be able to defeat confiscation. As such damages are likely to be an inadequate remedy.
I suggest equitable interests, particularly constructive trusts but perhaps also equitable liens and charges, can in some cases provide the answer.
Scenarios in which victims’ rights may come into conflict with the Commonwealth or State include:
Bank victim scenario
A rogue employee of a bank steals from or defrauds the bank thus obtaining a sizeable sum. The funds are used to purchase an investment property which appreciates significantly in value. The State or Commonwealth ((Perhaps via an allegation of money laundering contrary to s 400.9 of the Criminal Code (Cth).)) pursues the property, including that part of its value derived from the appreciation, on the basis that it is all derived from the criminal offence.
The bank could argue that the employee, as a fiduciary, is liable to account for his profits made as a result of a breach of that duty. The bank could seek the imposition of a constructive trust, aided by equitable tracing, to make a claim over the property. The full value of the property can be excluded from confiscation and realised by the bank.
Casino victim scenario
A customer of a casino, by fraudulent means, makes sizeable winnings. The winnings are clearly the proceeds of the fraud and would be susceptible to confiscation.
The casino may have an action in breach of contract; namely that the customer has breached the gaming rules. However damages will not defeat confiscation.
Equitable relief, for instance a constructive trust, is also likely to be open. As in the first scenario, if the Court accepts this claim it will provide a defence to confiscation in favour of the victim.
In the vast majority of cases it will be possible to achieve a satisfactory outcome with the authorities either by public interest submission or negotiation. But before any such steps are taken expert advice should be sought on how to frame the client victim’s rights. If the claim is framed incorrectly (in terms that do not give rise to an interest in the subject property) there is a risk of failure.
Please note: While all care has been taken in the preparation of this information, nothing on this website constitutes legal advice and this blog post does not contemplate your specific circumstances.