Legislative Council Fifty-First Parliament, Third Session (51-3) 51 3 Parliament of South Australia Legislative Council published Bills Serious and Organised Crime (Unexplained Wealth) Bill SERIOUS AND ORGANISED CRIME (UNEXPLAINED WEALTH) BILL Introduction and First Reading Introduction and First Reading Received from the House of Assembly and read a first time. Second Reading Second Reading The Hon. P. HOLLOWAY Legislative Council Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (00:23): I move: That this bill be now read a second time. I seek leave to have the second reading explanation inserted in Hansard without my reading it. Leave granted. The prosecution of the activities of serious and organised criminals and outlaw motor-cycle gangs and their members is a high priority for the Government. Outlaw motor-cycle gangs and their members are involved in drug trafficking and other profitable crimes. One of the most effective ways to counter serious criminal offending is to confiscate the proceeds of crime. The Criminal Assets Confiscation Act 2005 allows for the proceeds or instruments of crime to be forfeited to the State. However, forfeiture-related proceedings may occur only where it can be shown on the civil onus of proof that the person has been convicted of a serious offence, or that the person is suspected on reasonable grounds of having committed a serious offence, and the relevant property is either proceeds of, or an instrument of, that crime. The Government considers that the effectiveness of these provisions is limited by the need to prove that the defendant (or some other relevant person) has committed a serious offence. An important means of attack on the profits of organised crime, including the activities of outlaw-motor cycle gangs, lies in the introduction of unexplained wealth orders. In general terms these provisions will authorise the Crown to apply to a Court for a declaration that a person (including an incorporated body) has 'unexplained wealth'. A person has 'unexplained wealth' if the value of their proven wealth, calculated in accordance with the legislation, exceeds their lawfully-obtained wealth. Any wealth the defendant cannot explain will be assessed and form the basis of a civil judgment debt due from the defendant to the Government. The proposed Bill will authorise the Crown Solicitor to apply to a Court for a declaration that a person (including an incorporated body) has 'unexplained wealth'. Wealth is defined as everything that a person has ever owned or controlled, whether before or after the Act comes into force. The proposed amendments will have these key features: The process will usually begin by application for a restraining order made on application by the Commissioner of Police. The application will ask the Court to be satisfied that the order is reasonably necessary to ensure payment of an amount that is, or may become, payable under an unexplained wealth order. The application for the restraining order will specify the property that it will cover. There is no need to show that the property is crime derived or related in any way. The restraining order will last for 21 days unless an application for an unexplained wealth order is made. In that case, the restraining order will normally apply until the end of proceedings. Since there is no need to show that the property is crime derived or related in any way, safeguards are needed. A key safeguard is that the Court may refuse to make a restraining order if the Crown makes no appropriate undertaking for the payment of damages or costs or both, should the target satisfactorily explain his wealth. The applicant is obliged to notify any person who is known to be an owner of any property specified and restrained, or having an interest in this property, so that these people, and anyone else who hears of the matter, can make an application to have their lawful interest in any of the property excluded from the order. The police have been given other investigative powers. First, a police officer of or above the rank of Superintendent may issue a written notice to a deposit holder—that is, essentially, any organisation that holds money in accounts on behalf of other persons—requiring the provision of information about accounts held by a specified person. Second, a police officer of or above the rank of Superintendent may apply to a Court for an order that requires a deposit holder to report specified transactions on such an account. Third, the Commissioner of Police may apply to a Court for an order requiring a person to give evidence to the Court about his wealth or to produce documents or material about his wealth. Fourth, the Commissioner of Police may apply to a Court for a warrant authorising the search and seizure of anything relevant to identifying, tracing, locating or quantifying a person's wealth. Some of these provisions closely follow existing provisions in the Criminal Assets Confiscation Act 2005. These extensive powers proposed for the investigation of a person's means and wealth do not require any showing of criminality and so require a special safeguard. The Bill proposes that the powers be used only against those convicted of or found liable to supervision for a serious offence, those subject to a control order under the Serious and Organised Crime (Control) Act 2008, or those about whom the Crown Solicitor has reasonable grounds to suspect have engaged in serious criminal activity, regularly associate or have regularly associated with persons who engage, or have engaged, in serious criminal activity, are a member of a declared criminal organisation or who have acquired property as a gift from or from the deceased estate of such a person. The decision of the Crown Solicitor on this point is unreviewable by a Court and the Crown Solicitor is not required to provide procedural fairness while acting in this gate-keeper role. The discretion of the Crown Solicitor is an independent discretion and he does not act on instructions in exercising this function. There will be no criminal threshold of proof for the making of the application for the full unexplained wealth order. Instead, an application may be made if the Crown Solicitor reasonably suspects that a person has wealth that has not been lawfully acquired. An application may be brought against any person or body corporate (a small business, for example) irrespective of whether the person or body corporate has been convicted of an offence, has been charged with an offence or, indeed, is suspected for any reason of committing an offence. There is no obligation on the Crown to prove or even allege the person or body corporate is engaged in any sort of criminal activity. Although this represents a departure from the current criminal assets confiscation where the Court must be satisfied, either by conviction or on the civil burden of proof, that the respondent has committed a relevant criminal offence, the effectiveness of unexplained-wealth declarations rests on the Crown being relieved of the need to prove the defendant is, or has been, involved in criminal activity or that a particular asset is linked to a particular crime. Once an application is made against a person or body corporate, any part of the person or body's wealth (all property owned or effectively controlled by the person, all property the person has given away at any time, all property the person has acquired and discarded or used, all services a person has acquired, royalties etc.) is presumed not to have been lawfully acquired. Effectively, the legislation deems all private wealth to have been unlawfully acquired. The respondent (the person or body corporate who is the subject of the application) bears the onus of establishing that his or its wealth has been lawfully obtained. All the Crown is required to prove is that the respondent owns or effectively controls wealth. The Court hearing an application may declare that the respondent has unexplained wealth if the Court determines that it is more likely than not that the respondent's proven wealth is greater than his or its lawfully acquired wealth. The Court may refuse to make an order only if the Court is satisfied that it would be manifestly unjust to make the order. It should be made clear that the relevant question is whether it is manifestly unjust to make the order for payment of the sum of money—it is not relevant to consider whether it would be manifestly unjust to lose particular property or the consequences of making the order. This order is not a confiscation order—it is an order for the payment of a sum of money as a judgment debt only. The clear intention of the Bill is that it is to be presumed that the order will be made and that the order will be for the payment of a sum equalling the amount of unexplained wealth. Where the Court makes an unexplained-wealth declaration, the respondent is required to pay the amount found to be unexplained to the Crown. The specific property restrained is then available to meet the payment of the sum declared to be owing. The judgment is an ordinary civil judgment for a sum of money and is enforceable under the Enforcement of Judgments Act 1991. Interstate judgments are exclusively the subject of the Commonwealth Service and Execution of Process Act 1992. As the Crown does not have to establish criminality, or link a particular asset to a particular crime; unexplained-wealth proceedings allow the wealth of those who may not have directly participated in crime, but who have benefited financially from crime, to be attacked on the basis that the wealth exceeds that which they obtained through lawful means. This legislation will provide a mechanism by which the Government can take clear aim at those who direct and who profit from the activities of criminal organisations but who are, themselves, insulated from any direct criminal liability. Since this is an ordinary civil action, the ordinary rules of civil procedure apply. These include rules of discovery. As in other legislation of this kind, it is necessary to protect information that, as the Bill provides, 'relates to actual or suspected criminal activity (whether in this State or elsewhere) the disclosure of which could reasonably be expected to prejudice criminal investigations, to enable the discovery of the existence or identity of a confidential source of information relevant to law enforcement or to endanger a person's life or physical safety. This is the form of provision that was declared constitutional by the High Court in K Generation Pty Ltd v Liquor Licensing Court [2009] HCA 4. This kind of provision has attracted some unfairly harsh criticism. The High Court made it clear that the question of how the information is to be handled is up to the Court and not the Commissioner of Police. Further, the statutory provisions are similar to the common law concept of public interest immunity and no critic has taken the time to compare the two. There are ancillary provisions in the Bill, and perhaps the most important of these state that the proceeds must be credited to the Victims of Crime Fund and that providing for the awarding of costs in connection with proceedings. There are also extensive provisions for review of the operation of the Act. I commend the Bill to Members. Explanation of Clauses Explanation of Clauses Part 1—Preliminary 1—Short title 2—Commencement These clauses are formal. 3—Interpretation This clause defines certain terms used in the measure. In particular, wealth of a person is defined to consist of all property that the person owns or has previously owned (including before commencement of the measure); all other benefits that the person has at any time acquired (including before commencement of the measure); and all property that is, or has previously been, subject to the person's effective control (including before commencement of the measure). 4—Meaning of effective control This clause provides assistance in determining whether property can be said to be subject to a person's effective control. 5—Extra-territorial operation This clause provides for extra-territorial operation of the measure (to the fullest possible extent). 6—Criminal intelligence This clause contains measures for protection of the confidentiality of material classified by the Commissioner of Police as criminal intelligence. 7—Role of Crown Solicitor This clause makes it clear that, where the measure specifies that a power or function is to be exercised by the Crown Solicitor, the Crown Solicitor is to exercise an independent discretion and does not act on instruction. Part 2—Unexplained wealth orders 8—Determining the value of property and benefits This clause sets out provisions that apply when determining the value of any property or benefits for the purposes of the Part. 9—Unexplained wealth orders This clause provides for the making of an order (an unexplained wealth order) that a specified person pay to the Crown a specified amount if the Court finds, in accordance with the measure, that any components of the person's wealth the subject of the application for the order have not been lawfully acquired. In determining the proceedings, each component of a person's wealth specified in the application will be presumed not to have been lawfully acquired unless the person proves otherwise but if the Court is satisfied that it is not reasonably possible for a person to establish that a component of his or her wealth was lawfully acquired the Court may determine that the value of that component should not be taken into account in determining the person's total wealth. 10—Appeals to Supreme Court Appeals may be made to the Supreme Court by the Crown Solicitor or a person subject to an unexplained wealth order. Part 3—Investigative and enforcement powers Division 1—Preliminary 11—Application of Part Powers and functions under the Part may be exercised either before or after an unexplained wealth order, or an application for an unexplained wealth order, has been made against a person. 12—Limitation on exercise of powers and functions under Part This clause provides that where powers and functions are to be exercised before the making of an unexplained wealth order, the powers and functions must be authorised by the Crown Solicitor unless they are being exercised for the purpose of investigating or restraining the wealth of a person who has been convicted of, or declared liable to supervision in relation to, a charge of a serious offence or who is or has been subject to a control order under the Serious and Organised Crime (Control) Act 2008. The Crown Solicitor may not authorise the exercise of powers and functions unless satisfied that they are to be exercised to investigate, or restrain, wealth of a person who the Crown Solicitor reasonably suspects of being— a person who engages or has engaged in serious criminal activity; or a person who regularly associates with persons who engage, or have engaged, in serious criminal activity; or a person who is or has been a member of an organisation that is a declared organisation; or a person who has acquired property or a benefit as a gift from a person of a kind referred to in the preceding dot points or on the distribution of the estate of a deceased person who was such a person. The clause also makes other provisions relating to an authorisation by the Crown Solicitor. Division 2—Investigative notices, orders and warrants 13—Notices to deposit holders This clause sets out a process under which a police officer of or above the rank of Superintendent may give a deposit holder a notice requiring them to provide information or documents of a kind specified in the provision. This clause makes it an offence (punishable by a fine of $10,000 or imprisonment for 2 years) to disclose to a person the existence or nature of an order, or information from which the person could infer the existence or nature of the order, if the order specifies that information about the notice must not be disclosed. 14—Monitoring orders This clause allows a court, on application by the Commissioner of Police, to make orders requiring a deposit holder to report transactions of a kind specified in the order. 15—Orders for obtaining information This clause allows a court, on application by the Commissioner of Police, to make orders requiring the giving of evidence, or the production of documents or materials, relevant to identifying, tracing, locating or valuing a person's wealth. 16—Warrants This clause provides for the granting of warrants on application by the Commissioner of Police. 17—Powers conferred by warrant This clause sets out the powers conferred by a warrant. 18—Exercise of jurisdiction The jurisdiction of a court under this Division may be exercised by a judicial officer sitting in chambers. Division 3—Enforcement powers 19—Enforcement of unexplained wealth orders An unexplained wealth order is enforceable under the Enforcement of Judgments Act 1991 if not paid within 21 days. The clause also allows a court to declare that property that is subject to the effective control of a person in relation to whom an unexplained wealth order has been made is to be taken to be property of the person for the purposes of the Enforcement of Judgments Act 1991. 20—Restraining orders This clause allows the Commissioner of Police to apply to a court for an order preventing the disposal of specified property or preventing specified kinds of transactions involving safe custody facilities. The court may only make the restraining order if satisfied that it is reasonably necessary to ensure payment of an amount that is, or may become, payable under an unexplained wealth order. 21—Refusal to make an order for failure to give undertaking A court may refuse to make a restraining order if the Crown refuses or fails to give the Court an appropriate undertaking with respect to the payment of any costs that may be awarded against the Crown. 22—Form of restraining order This clause sets out the form of a restraining order. 23—Notice of restraining order This clause sets out who should be given notice of a restraining order. 24—Right of objection If a restraining order is made ex parte, a person who was, or should have been, given notice of the order may lodge a notice of objection with the court that made the order within 14 days after becoming aware of the making of the order (or such longer period as the court may allow). 25—Variation or revocation of restraining order This clause allows a court to vary or revoke a restraining order. If, however, a variation or revocation is sought to enable the payment of legal costs, the court can only make the order if satisfied that there is no other source of funds for the legal costs. 26—Appeals to Supreme Court This clause provides for appeals to the Supreme Court from a decision of a court under the Division. 27—Cessation of restraining order This clause sets out the circumstances in which a restraining order will automatically cease to operate. 28—Contravention of restraining order This clause sets out offences for contravention of a restraining order. Division 4—General provisions relating to investigative and enforcement powers 29—Representation of Commissioner of Police This clause allows the Commissioner of Police to be represented in proceedings under the Part by a police officer or by counsel. 30—Ex parte proceedings A court may make an order under the Part on an application made without notice to any person. 31—Immunity from liability This clause provides protection from liability for persons in taking action to comply with a notice or order under the Part. 32—Making false or misleading statements This clause makes it an offence (punishable by a fine of $5,000 or imprisonment for 1 year) to make a false or misleading statement in or in connection with a notice or order under the Part. 33—Failing to comply with notice or order This clause makes it an offence (punishable by a fine of $5,000 or imprisonment for 1 year) to refuse or fail to comply with a notice or order under the Part. Part 4—Reviews and expiry of Act 34—Annual review and report as to exercise of powers This clause requires the Attorney-General to appoint a retired judicial officer to conduct an annual review of the exercise of powers under the measure, to be presented to the Attorney-General by 30 September each year and laid before both Houses of Parliament. The Attorney-General, the Crown Solicitor and the Commissioner of Police must ensure that the reviewer is provided with such information as he or she requires to conduct the review. Any information that has been classified by the Commissioner as criminal intelligence must be kept confidential. 35—Review of operation of Act This clause provides that the Attorney-General must, as soon as practicable after the fourth anniversary of the commencement of the clause, conduct a review of the operation and effectiveness of the measure (the report of which must be tabled in both Houses of Parliament). Again, any information that has been classified by the Commissioner as criminal intelligence must be kept confidential. 36—Expiry of Act The measure will expire 10 years after commencement. Part 5—Miscellaneous 37—Manner of giving notices This clause sets out the manner of serving or giving notices, orders and other documents for the purposes of the measure. 38—Immunity from liability This clause provides immunity from liability for the Crown and persons exercising powers and functions under the measure. 39—Protection from proceedings etc This clause excludes judicial review and all other remedies in relation to certain matters under, or purportedly under, the measure. The clause also specifies that the Crown Solicitor is not required to provide procedural fairness in exercising a discretion under this Act. 40—Proceedings under Act are civil proceedings Proceedings (other than proceedings for an offence) under the measure are civil proceedings and are subject to the civil burden of proof and civil rules of construction and evidence. 41—Ancillary orders A court may make ancillary orders. 42—Consent orders This clause provides for the making of consent orders by a court dealing with a matter under the measure. 43—Costs This clause provides for an award of costs (on a solicitor/client basis) against the Crown. 44—Credits to Victims of Crime Fund This clause requires money recovered under an unexplained wealth order to be applied, in accordance with guidelines issued by the Treasurer, towards the costs of administering the measure and the Serious and Organised Crime (Control) Act 2008 and the balance must be paid into the Victims of Crime Fund. 45—Regulations This clause contains a regulation making power. Schedule 1—Related amendments The Schedule makes a related amendment to the Criminal Assets Confiscation Act 2005 to ensure that, where an unexplained wealth order has been made against a person, property and benefits taken into account as wealth of the person that was not lawfully acquired for the purposes of that order are not the subject of proceedings under that Act for a restraining order or a confiscation order (so that the person is not held to account twice for the same property or benefits). Debate adjourned on motion of Hon. R.D. Lawson. At 00:24 the council adjourned until Thursday 24 September 2009 at 11:00.