Author: Rozenes, M. Date: June 1993 Venue: NCA Proceeds of Crime Conference, Sydney
It is in the interest of the proper administration of justice that defendants facing serious criminal charges be properly represented. Dietrich's1 case has confirmed that in Australia there is no general right to legal representation at public expense. This case also established that where an indigent accused faces serious criminal charges without legal representation through no fault of their own, the case should, save in exceptional circumstances, be postponed or stayed until legal representation is available. Since 1985 the Commonwealth and all states and territories (except Tasmania)2 have enacted legislation directed at confiscating the proceeds of crime.3 This legislation originated from a resolutions passed by the Special Premiers Conference on Drugs in 1985 and a model Bill agreed to by the Standing Committee of Attorneys-General. While the legislation is not uniform, many of the principles in the various Acts are consistent because of the common origin. The main objects of confiscation legislation are expressed in similar terms. They include the removal of proceeds and benefits derived from, and the forfeiture of property used in connection with, the commission of indictable offences.4 Another object is to enable the tracing of such proceeds, benefits and property. One common feature essential to the effective working of this confiscation legislation is the ability to restrain property at an early stage in proceedings. Without restraining orders many who are charged with serious offences would ensure that their assets were not available to meet any final orders. Along with the power to restrain assets the legislatures have provided that a defendant's legal expenses may be paid out of restrained property.5 The payment of legal fees out of restrained property involves competing public interests. The task is to strike a balance between those interests. On the one hand defendants are presumed to be innocent and should have access to their property to enable their defence in a criminal matter to be prepared and conducted as they think appropriate. On the other hand a defendant has no right to illegally obtained assets to spend as he or she likes on a lavish defence of criminal charges. The community has an interest in preserving these assets intact to satisfy any confiscation order. In Australia these competing interests have been decided in favour of the defendant. United States legislation does not exempt legal fees from restraint and forfeiture.6 It has been found that the failure to provide such an exemption does not breach either the Sixth Amendment right to counsel or the guarantee of a balance of forces between prosecution and defence given by the due process clause of the Fifth Amendment.7 It is not suggested that the US model should necessarily be adopted here. It is suggested that more weight needs to be given to the community's interest in determining what are reasonable legal expenses. The community has a more direct interest in the recovery of criminal assets with the advent of confiscated assets trust funds. Recoveries are used for law enforcement purposes, drug rehabilitation and education and the compensation of the victims of crime.8 The expenditure of unreasonable amounts on legal expenses not only dissipates restrained property it also uses up scarce community resources in increased court time and expense as well as added prosecution costs. Legislation S43(3) of the Proceeds of Crime Act (Cth) provides that a restraining order against a person's property may be made subject to such conditions as the court thinks fit including making provision for meeting out of the property:
- the person's reasonable living expenses and reasonable business expenses;
- the person's reasonable expenses in defending a criminal charge;
- a specified debt incurred by the person in good faith (being a debt to which neither paragraph (a) nor (b) applies).
There is no specific provision covering expenses connected to the proceeds of crime hearing but it has never been suggested that the court's general discretion does not extend to covering these expenses. S43(4) provides that the court is not to release funds for expenses unless it is satisfied that the defendant cannot meet the expense out of property that is not subject to a restraining order. Apart from the requirement in s43(4) the only other guidance given by the Act is that the expenses must be "reasonable". There is provision in s48A for the court to order that legal expenses be taxed where they are to be paid out of property under the custody and control of the Official Trustee. The Queensland Crimes (Confiscation of Profits) Act 1989 provides that before the court can allow legal expenses out of restrained property it has to be satisfied that the property was not derived or realised, directly or indirectly, by any person as a result of the commission of the offence which is being defended. 9 No other state has a similar provision. In Victoria a Drugs Legislation Working Party recommended that a person, where property is restrained, should be automatically entitled to legal aid in a similar manner to any impecunious person, but that there would be no access to restrained property for legal expenses 10 The Working Party recommended that the Legal Aid Commission be given a charge over restrained property to be exercised only in the event of acquittal. A percentage of the accumulated fund of forfeited property would be used to provide extra resources to the Commission. In response to these recommendations a Bill was introduced into the Victorian Parliament in November 1991. Its effect was that no legal expenses could be paid out of restrained property. Where Legal Aid was granted to a defendant the Legal Aid Commission would be given a charge over restrained property to secure any contribution required from a defendant. The Bill was substantially amended in the Legislative Council with the effect that the main thrust of replacing access to restrained property with legal aid was removed. Under the Victorian Legislation a restraining order may now provide 11 for the payment of a reasonable amount (not exceeding that specified in the order) in respect of legal expenses incurred in defending any charge for an offence to which the order relates. In determining a maximum amount to be specified in the order the court must have regard to all relevant matters including:12
- the assets and financial circumstances of the person whose property the order applies to ; and
- the likely nature and extent of the prosecution's legal representation; and
- the complexity and estimated length of the proceedings.
The Victorian Legislation is the only confiscation Act which sets out any criteria for the Court to take into account in determining a reasonable amount for legal expenses. Background and Cases The DPP first had to consider the issue of the payment of legal fees out of restrained assets in relation to its civil remedies function and Mareva Injunctions. It was decided to deal with matters on a case by case basis. This policy is referred to in the Director of Public Prosecutions Annual Report 1985-86 at page 28: Because circumstances vary, the most appropriate way to deal with matters is on a case by case basis seeking to strike a balance between the competing interests involved. The factors to be considered include the strength of the prosecution's case, the circumstances of the particular alleged fraud and whether the defendant has access to other assets either within or outside the jurisdiction. Commonwealth of Australia v Jansenberger13 involved the use by the accused of 53 false names in a systematic Social Security fraud which netted the defendant approximately $380,000. Assets secured by Mareva Injunction amounted to some $355,000. In response to the application for the release of funds for legal costs of the criminal trial Southwell J stated14: In my view, the answer to that is simply this; there is, as I have said, a strong prima facie case that the defendant has obtained by fraud from the Commonwealth of Australia significantly more than the assets which now can be traced to him. In those circumstances, to narrow the injunction and thereby allow him to use part of those funds to pay to the solicitor of his choice is, in effect, to be giving back to him money to which prima facie he has no legal or moral right to enable him to spend as he pleases upon a private solicitor. Southwell J had earlier referred to the strong prima facie case that the plaintiff would recover more than the assets secured and also the fact that there was no evidence that any of the assets were obtained by lawful means or from lawful sources. He thought it preferable that the Legal Aid Commission should control the expenditure of funds. The initial approach in relation to the release of funds secured under the Proceeds of Crime Act and the Customs Act can best be described by reference to an address given by the then Director, Ian Temby QC, to the ACT branch of the Criminal Lawyers Association of Australia: 15 Particular difficulties can arise when the assets of alleged criminals are frozen prior to trial. Two principles can then be seen to be in conflict. On the one hand, persons accused of crime should be entitled to defend themselves through solicitors and counsel of their choice. On the other hand, the cost of that representation should not be met by society, as will be the case if stolen property is used for the purpose, or the profits of illegal drug activities - and so one could go on. The approach the DPP has adopted is to give a degree of primacy to the first of these principles. As a general rule, if the only funds available to an accused person are those which have been subjected to freezing orders, we will consent to sufficient funds being released to enable proper legal representation. There are many cases in which such consent has been given, before a court or otherwise. On a mere handful of occasions the DPP has resisted a claim for the release of funds to meet legal costs and ordinary living expenses, on the basis that there are other funds available which have not been disclosed or discovered, sometimes in the hands of others, and sometimes overseas. The best we can do is to assure the legal profession that we will always try to be reasonable in circumstances such as this, and we have a track record to rely upon in that regard. If that assurance be insufficient, as it may be, then resort to the courts in always available. In Director of Public Prosecutions v Ward16 John Henry Ward was charged in Western Australia under s29D of the Crimes Act 1914 with defrauding the Customs Service. While an employee of the service he obtained approximately $394,000 by claiming diesel fuel rebates for non existent farm properties. Ward sought a variation of the restraining order to require the Official Trustee to make provision out of the property restrained for his and his dependents living and legal expenses. This variation was opposed on the basis that Ward had failed to explain what had happened to an investment in Singapore of S$140,000. Ward claimed that he had no property or income not subject to the restraining order out of which he could meet these expenses and the court was satisfied that that was the case. The matter therefore fell to be dealt with pursuant to the discretion under s43(3) of the Proceeds of Crime Act. Ward had sought the payment of living expenses out of his entitlement to furlough pay owing to him pursuant to his employment with the Customs Service. In rejecting this part of Ward's application Kennedy J referred to three important factors in the exercise of her discretion. The first was that Ward had at all times admitted the offences and there was no suggestion that he would retreat from admissions made. The second was that the funds out of which living expenses were sought were monies due from the Department which had been defrauded by Ward. Third, in relation to benefits obtained there was likely to be a shortfall of some $120,000 even if all Ward's assets were applied to satisfy his liability for the monies defrauded. Kennedy J acknowledged that the consequences of not making the order sought would be that Ward and perhaps his dependents would be forced to live on social security benefits. She did not regard this as incongruous in the circumstances. In relation to the application for legal expenses the judge took a narrow view of the application in finding that the claim did not come within s43(3). This section authorises the meeting of "reasonable expenses in defending a criminal charge". Ward had simply applied for his "reasonable legal expenses". Ward had made full admissions and there was nothing before the court to indicate that he was seeking to defend the criminal charges. In the matter of Commissioner of Australian Federal Police v Malkoun and Others17 applications to vary restraining orders under the Customs Act to allow for the payment of legal fees were opposed. In the exercise of his discretion Ryan J was not prepared to leave the funding of the defence to the Legal Aid Commission. He was also not prepared to allow the defendants unrestricted access to the assets restrained "so as to allow a hopeless or extravagant defence to be mounted in the expectation that any funds left will inevitably be subsumed by orders for pecuniary penalties under s243B"18. He allowed each defendant up to an amount of $30,000 for the costs of the trial. This was a far more restrictive approach than the orders he made in respect of the committal proceedings which consumed some $250,000 in legal costs. In the majority of cases applicants are successful in having funds released for legal expenses either because the applications are not opposed or the court rules in their favour. Once orders are made the real difficulty is in ensuring that legal costs are reasonable. Operation Tableau involved the arrest of 12 persons in Queensland in 1987, there were nine US nationals and three Australians. They were charged with various offences arising out of two large importations of cannabis resin that took place in 1985 and 1986. The investigation revealed the existence of a large scale international drug smuggling syndicate led by a number of US nationals residing in Australia. All defendants were committed for trial. A nolle prosequi was entered with respect to one defendant while the remaining defendants pleaded guilty to various drug related charges. The four principals were sentenced to terms of imprisonment ranging from 18 to 25 years. In September 1987, shortly after the arrests, orders under the Customs Act were obtained in the Federal Court placing the property of all defendants under the control of the Official Trustee. The Official Trustee proceeded to collect assets, largely cash, to the value of approximately $160,000. At that stage it was not clear who owned which assets. Upon notification by solicitors for four defendants that their clients authorised the pooling of all funds and the payment of any accounts out of such common fund, the Official Trustee agreed to a pooling arrangement for the payment of legal fees. One account was subsequently paid pursuant to this arrangement. On 24 December 1987 Pincus J found that an amount of more than $1m in Vanuatu was subject to the restraining order.19 This application related to a claim for legal fees because this sum of money was a fund which Messrs Bailey & Bailey, Solicitors, arranged to be transferred from one account in Vanuatu to another belonging to a company in which one partner of the firm held an interest. When these funds were secured by an action in Vanuatu it was agreed that they be repatriated to Australia subject to any ruling as to ownership. Messrs Bailey & Bailey claimed that ownership of the funds of $1.2m had been transferred to them as payment in advance for them to act for their clients in all matters. Pincus J found that the money was transferred to have it in an account of which the defendants were not shown as beneficial owners and, secondly, to provide a fund out of which costs might be paid. He found that the money remained the property, beneficially, of two of the defendants and was therefore subject to the restraining orders. Solicitors for the defendants then applied to the court seeking orders directing the Official Trustee to pay all their clients' legal fees out of property controlled by the Official Trustee in which any of three of the defendants had a beneficial interest, subject to the written authorisation of those defendants or their solicitors. This variation to allow the pooling of resources was opposed but the order was made. A lengthy committal hearing followed. More than $1.3m was paid in legal fees in respect of the committal and applications in relation to the release of funds restrained under the Customs Act. Issues about the release of funds for legal fees came before the court on some 17 occasions. There was insufficient restrained property left to fund a trial of the same magnitude as the committal. All defendants pleaded guilty. In a later judgment20 Pincus J found that there was no power in the Customs Act to allow the payment of one defendant's legal fees out of the restrained assets of other defendants. In commenting on the case he said that he felt obliged to say that those who framed the legislation might not have contemplated the funds taken into control being so rapidly expended in litigation, as has happened in this case.21 He went on to say as follows:22 It should be added that if there were power to do so, I would, as a matter of prudence, require some evidence that those defendants whose property is proposed to be expropriated have given what might be called an informed consent to that course. It has been clear to me that some of the applications to this court have been in the interests of the solicitors as well as the clients, a point which has been commented on by counsel. In view of the history of the matter, I would not, if I had power to do so, take away the property of any of the defendants to meet another defendant's costs merely on a statement from the Bar table. In DPP v Saxon and Another23 the judge was satisfied that the defendant could not meet the legal expenses contemplated out of property not subject to the restraining order. He was also satisfied that s43(3) of the Proceeds of Crime Act was wide enough to allow the payment of legal expenses in connection with the proceeds of crime application and the examination proceedings. He found that considerations relevant to the exercise of his discretion to release funds included: - the presumption of innocence in relation to the criminal charges; - the scheme of the Proceeds of Crime Act contemplates the payment of legal fees out of restrained property that is prima facie "tainted"; - it is impossible to determine whether the defendant will be convicted and if so how much of the restrained property will be confiscated; - the defendant is charged with very grave offences and proper legal representation is not only in his interests but in the public interest; - the defendant is in custody and is not in a position to earn money to provide for his defence. The fact that the defendant had not sought any declaration under s48(4) of the Proceeds of Crime Act or placed any evidence before the Court to prove the lawful acquisition of any of the restrained property were also factors the judge found relevant to the exercise of his discretion. However, these factors were not prerequisites to the release of funds for legal expenses. While there may be cases where the evidence is so compelling that particular property was acquired unlawfully that a court would consider it inappropriate to make an order for the payment of legal costs out of the property, this was not such a case. In Commissioner of AFP v Love and Others24 Pincus J with reference to Jansenbergers Case said:25 I agree that, in an appropriate case, a discretion to make provision for costs of a criminal defence out of "frozen" funds alleged to have been obtained by criminal activity may be exercised against a defendant, where there is a strong prima facie case that the funds have been so obtained. There was compelling evidence that part of cash seized was acquired unlawfully in the matter of State Drug Crime Commission of NSW v Egan.26 The money was found with drugs which the defendant had been selling. The court refused to make an order that this part of the cash be released for legal expenses. An order was made releasing other funds which the court was not satisfied were illegally obtained. The difficulty, in large and complex cases, of establishing at an interlocutory stage that there is compelling evidence that restrained property was unlawfully obtained is demonstrated by the case of DPP v Saxon.27 At first instance28 Hunt CJ at CL granted preliminary legal expenses of $118,200 out of restrained property for the defendant to make an application for legal expenses in respect of contempt charges. It was submitted that there was no jurisdiction to make a "preliminary costs" order without considering the evidence. The reasons why it was said that the application for legal expenses should fail included that the court should not be satisfied that there was no other source from which the costs could be obtained and that almost all the defendant's property was tainted. Hunt CJ at CL rejected these submissions as irrelevant in the particular circumstances of the case and in relation to the application for preliminary costs. He thought that the submissions would require him to examine fully the evidence as to the defendant's property and as to his guilt on drug charges and the contempt charges. He was not prepared to do so. The defendant had been committed for trial. The committal had lasted many months and there were thousands of pages of transcript. The Appeal Court found that Hunt CJ's discretion had not miscarried. The fact that the restraining order was expressed to cover all of the defendant's property meant that there could be no other property not subject to the restraining order which the defendant could use to meet his legal costs. It didn't matter that there may have been property outside the jurisdiction which was not "effectively" restrained. Hunt CJ at CL did not purport to lay down any principles of general application but specifically restricted his decision to the particular circumstances of the case. State Drug Commission v Fleming and Heal29 involved the release of restrained property for legal expenses under the Drug Trafficking (Civil Proceedings) Act. The Act contains a provision that the expenses be taxed. The question was the appropriate scale. The defendants claimed $200 per hour for a principal solicitor, $1200 for junior counsel and $3000 per day for senior counsel. The plaintiff referred to a number of possible scales and submitted that one of the Supreme Court scales was the most appropriate. The Court rejected this submission which involved payment on a party and party basis and held that the appropriate basis was a solicitor and client one. The decision of Mathews J was appealed and in New South Wales Crime Commission v Fleming and Heal30 the Court of Appeal ordered that the matter be returned to the Supreme Court for further evidence. The Court of Appeal confirmed that the judge releasing funds could set certain rates according to which the reasonableness of lawyer's charges were to be determined on taxation. However the orders for one fixed hourly rate for solicitors costs and fixed daily rates for counsels' fees were arbitrary and not "reasonable legal expenses" as provided by the section. Different rates should apply according to the seniority of the solicitor and the type of work being performed. The charge for example, for a junior solicitor travelling to and from jail to interview a prisoner should not be the same as for complex legal research by an experienced practitioner. The matter was referred back to the Supreme Court to take further evidence about the market rate for legal services and independent evidence that charges of the kind in question were usual and not excessive. Reference was made to the Supreme Court Rules which provide that costs shall not be allowed if they are unreasonably incurred or for an unreasonable amount, unless the approval of the client has been obtained. The court found that in the case of restrained property an agreement between solicitor and client would not be conclusive on the question of reasonableness because of the public interest in maintaining assets to meet any possible confiscation order. Kirby P examined the competing policies of the Act. It contains very strong civil based forfeiture provisions in relation to drug activities. This was recognised in the provisions of the Act and the second reading speech. The provisions allowing for the release of legal expenses fall within the class of provisions designed to qualify the severe consequences of the operative sections of the Act. It was not intended that an accused person should have unrestricted use of property which is the proceeds of drug-related activity to engage a team of expensive private lawyers paid at the full market rates of the private Bar. On the other hand the Act was enacted against a background of civil rights including the presumption of innocence and the right to use one's own property as one decides. He thought it unfortunate that the Act made provision for the compulsory taxation of legal expenses without providing the criteria by which such taxation would be determined by the taxing officer. There is no scale of fees, either for barristers or solicitors in criminal cases. At the request of all parties Kirby P set out a number of criteria for determining "reasonable legal expenses". These include: The issue of what is reasonable remains ultimately for determination by a judge. The opinion of the Commission, the person affected, their legal representatives or other witnesses called by them on the issue may be relevant but cannot be conclusive. If the Commission and the accused agree on the provision to be made for reasonable legal expenses the judge will normally be entitled to accept that agreement. Where there is no agreement, evidence should be called to address the costs incurred or likely to be incurred in the actual proceedings for which provision may be made for reasonable legal expenses. Ordinarily legal expenses of proceedings in the Local Court will be lower than in the District Court which in turn will be lower than those in the Supreme Court. The Legal Aid Commission scales and the amounts which an average barrister or solicitor accepts as daily fees will not be a sufficient basis to determine the reasonable legal expenses of a person under the Act. Average fees are set by market and other considerations. In the normal case, detailed evidence should be placed before the court concerning the anticipated duration of the proceedings, the issues that may be raised, the steps taken to retain counsel, the costs likely to be incurred by their solicitor and the opinion of the solicitor as to whether, in the circumstances of the particular case, such charges represent reasonable legal expenses. A court will be hesitant to determine, in advance, with precision, all of the expenses to be incurred which will constitute reasonable legal expenses. However some major items may properly be so determined to provide some certainty that certain expenses will be met. A later taxation will conform to any special provision made by the judge in the order providing for reasonable legal expenses. In concluding, Kirby P noted that the role of the judge and taxing officers in determining reasonable legal expenses, as a matter of fact or opinion, is an unwelcome one. He thought it possible that substantial justice would be achieved if a scale of fees were provided by reference to which the discretion to release funds could be readily determined. He thought that the desirability of adopting a more arbitrary criteria of reasonable legal expenses in order to avoid protracted litigation of that issue before a judge or taxing officers was a matter for others to decide. This matter came back before Studdert J in the Supreme Court 31 Prior to the hearing agreement had been reached on counsel's fees. The agreed rates were $1200 per day and $175 per hour for junior counsel and $2800 per day and $400 per hour for senior counsel. The judge set two rates for solicitor's work. He found that $200 per hour was reasonable for matters such as instructing counsel at any trial, attending conferences with counsel, attending on a view and interviewing and taking statements from the applicant and from witnesses. He found that $140 per hour was reasonable for such things as instructing counsel at committal proceedings, researching the law, perusal of statements, depositions and transcripts, preparation of affidavits and subpoena, travelling and waiting time, telephone attendances and other attendances in which the attention of a solicitor is required. These rates will probably set the benchmark for reasonable rates in NSW at least for a time.
The DPP has developed guidelines for its approach to the payment of legal fees out of property restrained under the Proceeds of Crime Act. I refer to three principal guidelines: 2.2 Under the POC Act, the DPP is charged with responsibility for protecting the community interest in preserving the assets. In addition the DPP has a general interest in ensuring the proper administration of justice. It is also in the interests of the DPP as prosecuting authority, that defendants facing serious charges are properly represented. Trials where there is competent legal representation for the accused result in a more efficient use of resources, both of the courts and the DPP. Because circumstances vary, the most appropriate way to deal with matters is on a case by case basis seeking to discharge, in a fair and just manner, the responsibility to protect the community interest in preserving the assets while recognising that the court has to draw the line between the competing interests. 5.1 The court is only empowered to release funds to meet "reasonable" legal expenses. Uncontrolled access by the defendant to restrained funds to spend on legal representations as he or she pleases would not be reasonable. Regard must be had to the circumstances that the property from which the costs are to be paid is to be otherwise preserved against the possibility that it may later become the subject of a confiscation order. This warrants a conservative approach to what should be considered "reasonable expenses" 5.2 The reasonableness or otherwise of the expenses should be for the court to determine. Expenses should be reasonable in that the particular legal services are warranted, and the rates at which they are charged are reasonable. As the Prosecuting authority the DPP is in a difficult position to comment on the merits of defence action. The DPP should seek in appropriate matters to have incorporated into the order some mechanism aimed at ensuring that only funds for reasonable expenses are released. The guidelines recognise the competing interests involved and that it is the function of the court to draw the line between those interests. Matters are to be approached on a case-by-case basis. The DPP's response to an application for legal expenses is to be determined after examining all available information including material put forward in support of the defendant's application. The guidelines suggest some factors that may be relevant to the exercise of the court's discretion. These have been taken from the cases as there is no criteria laid down in the Act. The guidelines suggest a conservative approach to what should be considered "reasonable expenses" and suggest ways in which attempts may be made to restrict funds to what is reasonable. They address the sequence in which restrained property should be released for legal expenses beginning with overseas property and with tainted property being left till last. I believe that these guidelines attempt to address this very difficult problem in a fair and equitable manner although it is conceded that they do not provide any panacea for the difficulties caused by the present legislative provisions.
Options for Reform
In suggesting options for reform the two general criteria used are that there needs to be safeguards on the release of restrained property to ensure that only reasonable legal costs are met and that defendants facing serious criminal charges should have the opportunity of being legally represented. The possible roles of Legal Aid in satisfying either or both of these conditions is also discussed.
Preconditions to the Release of Funds
The present position under most confiscation legislation is that the only precondition to the release of funds is that the court be satisfied that the defendant cannot meet the debt out of property that is not subject to the restraining order. It is suggested that the court should not make provision for reasonable living expenses or reasonable legal expenses out of restrained property unless it is satisfied:
- that the applicant cannot meet the expenses concerned out of property that is not subject to a restraining order. In the case of all property restraining orders, the court should be required to distinguish property technically subject to the restraining order and property effectively subject to the restraining order. Overseas property, although technically restrained, should not be included as restrained unless it is subject to effective mutual assistance action;
- that the applicant has filed a statement of affairs verified on oath disclosing the nature, extent of interests and location of his or her property and also any liabilities. This latter requirement will make it more difficult for claimed interests such as unregistered mortgages to later appear;
- that the applicant has taken all reasonable steps to bring the applicant's property or property under their effective control of the applicant into the jurisdiction. Under present arrangements it has been possible to get the court to order that the payment of legal expenses should come first out of property overseas. It would be useful to have this requirement catered for in the legislation. The preferable course would be to have all overseas property brought within the jurisdiction where that is possible; and
- the applicant should be required to specify the interest in property out of which the expenses are sought.
Origin of the Restrained Property
The present provisions allow the payment of legal expenses out of restrained property that can be shown on a prima facie basis to be tainted. The most that can be said is that evidence about where the property came from may be a factor going to the exercise of the court's discretion to release restrained property for legal and living expenses. The highest the courts have put it is that where there is an overwhelming case that particular property was acquired unlawfully then a court could consider it inappropriate to make an order for the release of that property for legal and living expenses. In considering amendments in this area there are two main issues. The first is how wide should the test be in deciding that property is not available for legal expenses; should it relate only to property derived from the commission of the offence with which the defendant is charged or should it extend to any property acquired from any unlawful source. The second is who should bear the onus of proof in relation to the derivation of the property. The only current example dealing with this issue is s17(11)(b) of the Crimes (Confiscation of Profits) Act 1989, Queensland. It provides that the court shall not make provision for legal expenses out of property unless it is satisfied that the property was not derived from the commission of the offence which the person is seeking to defend. There the onus is on the defendant and it relates only to property derived from the particular offence. It may be preferable to have the onus on the DPP, but in line with the rest of the legislation the standard of proof would be on the balance of probabilities. To some extent the question of onus is related to what it is that has to be proved. The wider the test, the harder it may be to place the onus on the defendant. In looking at the width of the test there are three possibilities, each one being subsumed within the following one. They are
- There should be no access to property allegedly tainted as derived from an identifiable third party as a consequence of the offence. For example if money was paid into a bank account belonging to a defendant as a result of fraud on the Department of Social Security and it can be demonstrated that the Department has a strong claim to those funds, then the funds should not be used in legal fees; or
- There should be no access to property allegedly tainted in respect of the offence with which the person is charged regardless of whether there is an identifiable loss to any party. In other words it doesn't matter whether the property is derived from a social security offence with an identifiable claimant to the property or from a narcotics offence where there is no identifiable claimant to the property. This would be a useful provision in relation to many offences but would not cover the situation where a defendant is arrested and narcotics are recovered so that it could be said that there is no benefit from the actual offence with which the person is charged. However because of this person's past activities his or her property could be forfeited under s30 of the Proceeds of Crime Act because after conviction they cannot satisfy the test that the property was not derived from any unlawful activity; or
- There should be no access to property allegedly tainted in respect of any unlawful activity. This would cover the previous two categories but would also include property which can be shown to be derived from some other unlawful activity with which the person has not been charged.
At the very least amendments should cover category (i). Defendants who don't have access to their restrained property because they can't meet a precondition to release of the funds should be automatically entitled to Legal Aid with Legal Aid having first charge over the property.
Mechanism for Release of Funds
Once the preconditions for the release of funds for living and legal expenses have been satisfied then there are two main mechanisms by which the funds can be released. One is that the court may order the release of funds. Alternatively the court may certify that the preconditions have been met and the defendant makes application for release of funds through some administrative arrangement.
Release of Funds by the Court
If funds are to be released by the court then more guidance needs to be given in the legislation. First an appropriate criminal law scale of costs needs to be developed. This will have to be done whether the funds are released by order of the court or through some other mechanism. This might be done by reference to a current scale of fees or a variant thereof or a scale provided by regulation. Allowance needs to be made for actions taken in different levels of courts. Provision of a scale would prevent a lot of the current disputes and obviate the necessity for a number of interlocutory applications. It would also allow greater use of the taxation of costs provisions in the confiscation legislation. It should be a requirement that applications for the release of funds be accompanied by detailed evidence concerning the anticipated duration of the proceedings. This is in line with the suggestions by Kirby P in Fleming and Heal. 32 It should be a requirement that a maximum cap be placed on any order for the release of costs based on the scale of fees and the estimated duration of the proceedings. Similar requirements are included in s16 of the Crimes (Confiscation of Profits) Act 1986 (Vic). Such provisions would cover the rates at which funds are expended and attempt to place some control over the time taken to complete any action but do not address the question of the merits of any action taken. This is a far more difficult aspect of reasonableness to deal with. Apart from extremely bizarre defences, it will always be difficult to decide on the reasonableness of any proposed action. Neither the court nor the prosecution will ever be in an ideal position to make such an assessment. Nor, might it be argued, should the be placed into such a position. It may be that if rates and time taken are satisfactorily resolved, the third and most difficult aspect of reasonableness ie. the merits, will be of less significance.
Under this option once the preconditions are satisfied the court would give leave for the defendant to apply administratively for the release of property. Such an arrangement may involve Legal Aid Offices. Those offices would determine the rates at which expenses will be paid. They would also assess what would be a reasonable time to complete the proposed action. They would then determine the amount of funds to be released. It may be appropriate for an independent agency such as a Legal Aid Office to embark upon the process of considering the merits of any proposed action. At the very least a confidential inquiry might be made of the defendant as to what the defence was. Notwithstanding such an inquiry, it may still be the case that save for where a bizarre defence is raised, it may be difficult to refuse to allow funds to be released on the basis that an intended action was without merit. There may be a greater role in examining this aspect in the case of interlocutory procedures dealing with the proceeds action and release of funds rather than substantial proceeds of crime hearings or criminal hearings. It should be that with more guidance in the scheme for the release of funds there would be less need for such interlocutory applications. The minimum requirements for reform are those covered in the option dealing with the release of funds by the courts. The question of going further requires a closer examination of the details of the administrative scheme. Either option would be a large improvement on the present position.
Scale of Legal Costs in Criminal Matters
Under the present system much time, effort and dispute revolves around the appropriate rate of fees for legal costs. As was pointed out in Fleming and Heal it is not appropriate that the same rate be charged for different categories of work. Without a scale, if agreement cannot be reached, evidence will have to be brought in each case as to what is a reasonable figure. This one off approach is cumbersome, time consuming and expensive. Regardless of whether restrained property is released for legal fees by the courts or through an administrative arrangement, a scale of costs will have to be developed. It needs to make provision for the different levels of courts and also for different categories of work. Provision will also have to be made for counsel's fees. Without such a scale the provisions already in the legislation for the taxation of costs are largely ineffective. Legal Aid Consistent with the premise of the paper that all defendants facing serious criminal charges should have the opportunity to be legally represented then wherever access to restrained property is refused, defendants should have legal aid. This would include persons refused access to restrained property on the basis that they could not meet the preconditions for release in the legislation. It would also include people with restrained property who do not apply for the release of that property for legal expenses provided they can satisfy the Legal Aid Commission that, apart from their ownership of restrained property, they meet the Commission's normal conditions for grant of legal aid. Legal aid would also be available to persons to make the initial application for the release of restrained property for legal expenses. This access to legal aid should be only to the extent of the restrained property. If that was exhausted then the defendant should have to revert to the ordinary conditions applying to a grant of legal aid. The Legal Aid Commission should be entitled to a first charge over all the property of the person on whose behalf funds are expended to secure:
- the amount expended on any application for release of restrained property; and - the amount expended in defending criminal charges or proceeds of crime applications.
This charge would only be to the extent of the value of the property and would have priority over any confiscation orders. The charge should apply whether or not the property is subsequently confiscated. In satisfying the charge resort should have to be had first to assets which are not the subject of a subsequent confiscation order.
The present arrangements for the release of funds are very much in favour of the defendant. The scope for abuse means that the present arrangements may be exploited to the extent that they endanger the whole proceeds of crime initiative. More weight needs to be given to the community's interest. There is no easy answer or perfect solution. However the problem has reached the stage where it is imperative that changes be made.
1 (1992) 67 ALJR 1. 2 Tasmania has introduced a bill into Parliament but at the date of writing it has not been passed. 3 Proceeds of Crime Act 1987 (Cth); Confiscation of Proceeds of Crime Act 1989 (NSW); Crimes (Confiscation of Profits) Act 1986 (Vic); Crimes (Confiscation of Profits) Act 1986 (SA); Crimes (Confiscation of Profits) Act 1989 (Qld); Crimes (Confiscation of Profits) Act 1988 (WA); Proceeds of Crime Act 1991 (ACT); Crimes (Forfeiture of Profits) Act 1988 (NT). See also Drug Trafficking (Civil Proceedings) Act 1990 (NSW). 4 Cth s3, VIC s1, NSW s3; Drug Trafficking (Civil Proceedings) Act (NSW) s3; ACT s3. 5 Cth s43, NSW s43; Drug Trafficking (Civil Proceedings) Act (NSW) s10; VIC s16, SA s6; QLD s17; WA s20; ACT s45, NT s 14 6 Chaplin and Drysdale, Chartered v US (1989) 57 L.W. 4836; US v Monsanto (1989) 57 L.W. 4826. 7 Ibid 8 Cth Part II A; Drug Trafficking (Civil Proceedings) Act 1990 (NSW) Division 3; VIC Part 2A; ACT Part III; SA s10. In other jurisdictions recoveries are paid into consolidated revenue. 9 Crimes (Confiscation of Profits) Act 1989 (QLD) s17 (11) (b) 10 Director of Public Prosecutions Victoria, Drugs Legislation Working Party, Issues Paper on Confiscation of Proceeds of Crime, November 1990. 11 Crimes (Confiscation of Profits) Act 1986 (VIC) s16(6). 12 Ibid s16(7). 13 Unreported, Supreme Court of Victoria, per Southwell J, 3 October 1985. 14 Ibid 7. 15 Reported in Australian Law News (1988) Vol 23 No 3 p.10. 16 Unreported, Supreme Court of WA, per Kennedy J, 23 December 1988. 17 (1989) 58 A Crim R 366. 18 Ibid 387. 19 Commissioner of AFP v Kirk and Others. Unreported, Federal Court, per Pincus J, 24 December 1987. Upheld on appeal, 81 ALR 321. 20 Commissioner of AFP v Kirk and Others 86 ALR 383. 21 Ibid 384. 22 Ibid 385. 23 Unreported, Supreme Court of NSW, per Studdert J, 3 August 1990. 24 (1991) 105 ALR 123. 25 Ibid 141. 26 Unreported, Supreme Court of NSW, per Bruce AJ, 17 July 1991. 27 (1992) 28 NSWLR 263. 28 Unreported, Supreme Court of NSW, 28 May 1992. 29 Unreported, Supreme Court of NSW, per Mathews J, 16 May 1991. 30 (1991) 24 NSWLR 116. 31 State Drug Crime Commission v Fleming and Heal, Unreported, NSW Supreme Court, per Studdert J, 21 December 1992. 32 (1991) 24 NSWLR 116 at 144.