The Supreme Court of Victoria has published a decision, Song v Commissioner of Australian Federal Police  VSC 465, considering the proper construction of s27 of the Proceeds of Crime Act 2002 (Cth) (POCA).
In summary, the Court has confirmed that the Commissioner of the AFP can apply under the Proceeds of Crime Act 2002 to freeze property both on an in rem basis, and also on an in personam basis.
The decision in Song v Commissioner of the Australian Federal Police
Specifically the Court has held that the same property can be frozen:
- Firstly, on suspicion that a person has ownership or control of that property, and that person is suspected of having committed a serious offence (under s18 of the POCA); and
- Secondly (and concurrently) on suspicion that the property is proceeds or an instrument of that same serious offence (under s19 of the POCA).
The Court’s reasoning is wider, and appears to also allow restraint under both sections 17 and 19, or any combination of 18, 19, and 20A. Section 20A is concerned with unexplained wealth.
Consequences of dual restraint
The Court held that the consequences of dual restraint of the same property were not significant, saying at : Restraint under any one provision is sufficient to preclude any dealings with or disposal of the property. Restraint under more than one provision imposes no greater prohibition on dealing with the property.
Presumably Mr Song brought the application (complaining that property has been frozen on both bases) motivated by a view (widely held) that it is preferable for a defendant to have their property frozen only under s18 rather than under s19 (or indeed under both sections).
The onus of proof
The conventional logic has been that if property was restrained under s19 the property owner had to ‘go first’ and mount an exclusion application (under s29, where the owner would bear the onus of proof that the property was not tainted). If the owner didn’t bring such an application, their property would in effect be automatically confiscated by operation of s49(3). Until Song it had been the generally accepted wisdom that if property was restrained only under s18, the owner could wait, not bring an exclusion application, and then oppose the Commissioner’s s47 forfeiture application. The Commissioner bares the onus on a s47 application. Song brings that into serious question.
The Court held that on a forfeiture application under s47 (following restraint under s18), the s73 exclusion application is to be determined before the s47 forfeiture application ((See  and  in particular.)). As such the Court has held that what might have been perceived as ‘advantages’ to a property owner in having their property frozen under s18 (rather than s19) are not actually advantages at all.
Rather, as the Court held at :
The exclusion of lawful interests are where possible, … always identified and excluded prior to ordering forfeiture with the onus resting on the person seeking to prove that lawful interest.
Whether [the restraining order is under s 18 or s19, and thus whether the forfeiture application is governed] by s 47 or s 49, property subject to forfeiture will have been narrowed by exclusion orders under s 31 or exclusion applications under s 73, if any, before a forfeiture order is made.
This decision could influence how matters under the POCA are litigated in future. The significance is perhaps best demonstrated as follows:
- Mr Smith owns a house. There is no mortgage on it.
- He bought the house in 2010.
- He is suspected to have defrauded the Commonwealth in 2019.
- The AFP has not investigated his financial affairs as far back as 2010 and can say nothing about how he purchased the house.
- The AFP successfully makes an ex parte application (ie an application without notice) under s18 of the POCA to restrain all property that Mr Smith owns; including his house.
Who goes first?
Prior to Song it had widely been thought that the AFP would have to prove (under s47) that Mr Smith committed the tax fraud, and then if the Court was satisfied that he had committed the offence, the Court would go on to consider (on a s73 exclusion application) whether the house was tainted (ie proceeds or an instrument of crime).
The decision in Song appears to lend support to the proposition that Mr Smith’s s73 application (to have the house excluded from forfeiture on the ground that it is not tainted) could be heard before the application for forfeiture is heard.
If that is so, Mr Smith will have to give evidence on his application (on which he bears the onus of proof: see s317) before the Commissioner has to discharge his onus on the s47 forfeiture application.
In other words, no matter whether property is restrained under s18 or s19, the owner of a lawful interest is likely going to have to mount their case before the Commissioner has to mount his. Forensically that can only assist the Commissioner.
Arguably Song was centrally concerned with the construction of s27 and the above is only obiter (passing comment) that does not bind other Courts. Nevertheless it is likely that other Courts will find Song persuasive and that Judges will be slow to depart from the above comments.
Time limits for revocation
Finally, in passing, at  the Court expressed the view that a person has 28 days from when they became aware of a restraining order in which to make an application to revoke the restraining order. Restraining orders are sometimes emailed to people (particularly overseas) or posted or left in mailboxes. In other instances people find out second hand that a restraining order has been made. In cases where the AFP has not personally served the restraining order on the person, it seems there is scope in the Act for the person to say ‘I only received notification of the restraining order on date X, and my 28 days runs from that date’. That will be a question of fact that is almost infinitely variable. In this sense, Song is also a potentially important decision on s42(1) and (1A) of the Proceeds of Crime Act.