_{WHEN CAN THE STATE CLAIM YOUR ASSETS}

If you are convicted of a serious crime, or even just suspected of being involved in serious crime there are certain circumstances in which you can be forced to forfeit your assets or money to law enforcement agencies.

Various orders can be made and the type of order will depend on many factors, including whether or not you have been charged with an offence, and whether it is an offence under NSW or Commonwealth law. Assets may be forfeited to the Commonwealth Director of Public Prosecutions, the NSW Director of Public Prosecutions (DPP), or the NSW Police as well as to the NSW Crime Commission.

In this article we will discuss the different orders, procedures and circumstances in which your assets can be forfeited by looking at each of the agencies that can apply for such orders.

_{ASSET FORFEITURE BY THE NSW DIRECTOR OF PUBLIC PROSECUTIONS OR NSW POLICE}

In this section we will look at the 4 orders that the NSW DPP or the NSW Police can apply for to confiscate your assets.

1. A restraining order is an order stating that no-one is allowed to dispose of, or attempt to dispose of, the property specified in the order, in any manner other than specified in the restraining order.

An application for a restraining order can be made to the Supreme Court of NSW if:

• You have been charged with a serious offence, or
• You are about to be charged with a serious offence, or
• You have been convicted of a serious offence

The order can be made relating to property that the authorities suspect is tainted property. Property is regarded as “tainted” if it was used to commit an offence, or used in connection with the commission of an offence, or if it was obtained, directly or indirectly, as a result of the commission of a serious offence.

To obtain an order in the Supreme Court, the authority applying for such a restraining order must support their application by an affidavit that sets out the grounds for the applicant’s belief that:

• The person against whom the order is sought committed a serious offence, and
• The property for which the order is sought is tainted, and
• The property belongs to the person against whom the order is sought

The applicant must satisfy the court that these beliefs are based on reasonable grounds.

The Court can order the following with a restraining order

That you be questioned under oath about the nature and location of certain assets
That no one may dispose of, or otherwise deal with the said property, except in a manner as specified by the court.

That the property, or the interest in the property, be transferred to the Public Trustee.

Take note: If you are examined under oath as a result of a restraining order, you have no protection against self-incrimination during the examination. You have to answer all the questions and you have to produce all requested documents, even if such answers or documents will make you liable for forfeiture or a penalty. The answers or documents may however not be admissible in future criminal proceedings against you.

Once a restraining order is made, written notice must be given to all persons whose interests are be affected.

Contravening a restraining order (if the person was given notice that the property was subject to a retraining order) is a criminal offence, punishable by a fine equivalent to the value of the property, or the interest in such property, and/or imprisonment to a maximum of two years.

2. A forfeiture order is an order allowing the State to confiscate and dispose of property allegedly used in, or in connection with, committing a serious offence. A serious offence includes any offence against NSW laws that may be prosecuted on indictment.

An application for a forfeiture order must be made within 6 months from the conviction to the court that imposed the conviction. After 6 months an application will only be allowed with the leave of the Supreme Court.

What happens in the 6 months between conviction and the application?

If you have been convicted of a serious offence and it is likely that the state will bring an application for a forfeiture order, the Court can order that the property listed in the application may not be disposed of except in a manner specified by the court.

The forfeiture process

Once an application for a forfeiture order is made to the court, written notice must be given to any person believed to have an interest in the property. The order can only be granted after a hearing in court and any person claiming an interest in the property can appear and give evidence at the hearing. The court will presume that the property was used in, or in connection with, the commission of a serious crime, unless the contrary is proven.

Who bears the onus of proof?

The Crown must prove on a balance of probabilities that the property is tainted property.

During the forfeiture process the authorities can obtain a production order from the court to inspect any property-tracking documents. The production order must specify the time, the place and the person to whom documents must be produced.

If you are served with such an order, you have to produce the property-tracking documents or make it available for inspection. The fact that such documents might be incriminating or that producing these documents might breach an obligation to another person not to disclose the existence or the content of the document, is not an excuse for non-compliance.

Failing to comply with a production order is an offence and you can be sentenced to a maximum of two years imprisonment and/or 100 penalty units. If you are a corporation it is 500 penalty units.

If the Court makes a forfeiture order, the following will happen.

The State will take, or retain, possession of the property, and the State may, after a certain period of time, dispose of such property. The State may not dispose of the property straight away.

Remedies against a forfeiture order

The convicted person may decide to appeal the conviction of the serious offence, or the forfeiture order; thus the property may not be disposed of until after the period given to appeal the conviction and/or the forfeiture order. This applies even if no appeal is actually lodged.

If an appeal is lodged against the conviction or forfeiture order, the property cannot be disposed of until the appeal is finalized.

Take note: Any person who has an interest in the property may lodge an appeal against the forfeiture order within 28 days of the making of the order.

An innocent third party who claims an interest in the property that is subjected to a forfeiture order, may within 6 months of the order being made, apply to the court to have the order set aside, at least to the extent that it applies to their interests. To succeed with such an application the court must be satisfied on a balance of probabilities, that:

The applicant was not in any way involved with the commission of the serious offence, and
The applicant had no reasonable suspicion that the property was tainted.

Do you need a lawyer?

Once you receive notice of an application for a forfeiture order against you, you need to get legal advice as soon as possible. The court always has a discretion whether or not to grant the forfeiture order. If you can show the normal and intended use of the asset and/or that any hardship might arise if the asset is forfeited, the court can decide not to grant the order. For example you used the family car in the commission of a serious offence and the police seeks a forfeiture order.

The car actually belongs to the father, who was completely unaware of the commission of the crime and the normal use of the car is to get the children to school and the father to work to support the family. In such circumstances the court might use its discretion and refuse the forfeiture order.

3. A Pecuniary Penalty Order is an order forcing an offender to pay an amount of money for the benefits derived from criminal activity.

It is not always easy to calculate the amount of money derived from criminal activity, the court will take a few factors into account:

• The money gained by the defendant as a result of criminal activity,
• The defendant’s income and expenditure before and after the criminal activity
• The street or market value of the “illegal items”.
• Any expenses incurred by the defendant in the commission of the crime will not be taken into account

The police can apply for a pecuniary penalty order as well as a forfeiture order. If the court grants both orders, the value of the forfeiture order will be taken into account and the amount of the pecuniary penalty order my be reduced accordingly. Payment of the pecuniary order amount is enforceable as a civil debt to the State under civil procedure law.

Take note: A pecuniary order is not available for drug trafficking offences, where drug trafficking is involved a drugs proceeds order may be obtained.

4. A Drugs Proceeds Order is an order forcing an offender to pay an amount of money for benefits derived from a drug trafficking offence.

In determining the amount of money derived from drug trafficking, the court takes a similar approach as to pecuniary penalty orders. The court will take the following factors into account:

• The money made by the defendant as a result of the drug trafficking,
• The market value of the drugs at the time, and
• The defendant’s income and expenses before and after the drug trafficking.

Again any expenses incurred by the defendant relating to the drug trafficking will not be taken into account. Whatever the defendant spent on buying or getting the drugs, is his loss.

A drugs proceeds order can also be made with a forfeiture order and the court will take into consideration the value of any forfeiture order when determining the amount of the drugs proceeds order. As above, the amount is seen as a civil debt to the State and payment can be enforced by civil proceedings.

_{Forfeiture to the NSW crime comission}

If you are suspected of being involved in serious criminal activity, even if you haven’t been convicted of a serious offence, you may be ordered to forfeit assets or money to the NSW Crime Commission under certain circumstances. A serious criminal offence includes an offence against NSW laws that is punishable by at least 5 years imprisonment.

The NSW Crime Commission has the following options available to get control over assets suspected of being the proceeds of serious crime.

1. A Restraining order as described above can be applied for, but in this case it can be applied for in relation to property that is suspected that you have acquired through your suspected involvement in serious criminal activity.

The application must be supported by an affidavit and the Supreme Court must grant the order if the affidavit states the grounds for the applicant’s belief that:

• The person whose assets or interests are the subject of the application was engaged in serious criminal activity, or
• The person acquired the property due to his/her involvement in any serious criminal activity or due to the involvement of another person in such criminal activity, or
• The property has been acquired because of serious criminal activity

The Court can make the same restraining orders as discussed above in an application brought by the NSW DPP or NSW Police. The same rule against self-incrimination applies. Once an order is made, a written notice of the order must be given to any person whose interests are affected.

What can you do if a restraining order is made against you?

You may file an application for an exclusion order, applying to exclude all or some of the property from the order. To succeed you have to prove on a balance of probability that the property was not obtained illegally or fraudulently.

Any person with an interest in the property can lodge an appeal in the Supreme Court within 28 days from when the order was made, to have the restraining order set aside. To succeed with the appeal the applicant needs to satisfy the court that: 

The restraining order was obtained illegally or against good faith; or
The NSW Crime Commission failed to prove that there are reasonable grounds for believing that the person whose property is the subject of the restraining order was involved in serious criminal activity.

When lodging an appeal the applicant can present arguments/evidence to support the application.

Contravening a restraining order (if the person was given notice that the property was subject to a retraining order) is a criminal offence, punishable by a fine equivalent to the value of the property, or the interest in such property, and/or imprisonment to a maximum of two years.

Legal advice

Contact a lawyer as soon as you receive written notice of a restraining order application against you. If you are required to be examined under oath in terms of the restraining order, you need legal advice immediately. You have to attend the hearing and you have to give evidence. If you fail to appear, an order may be made in your absence. A lawyer will provide good advice on how to fight a restraining order, or assist in filing for an exclusion order or an appeal.

2. An Asset forfeiture order is another way for the NSW Crime Commission to obtain control over assets suspected of being the proceeds of serious crime. This order allows the State to confiscate and dispose of the property.

Usually the property under suspicion is already subject to a restraining order, but an asset forfeiture order can be made even if the property is not already under a restraining order.

An application for asset forfeiture must be filed in the Supreme Court within 6 years from the alleged serious criminal activity.

The asset forfeiture process

In most respects the process is the same as explained in the section above.

An order may only be made after a hearing, and any person with an interest in the asset may appear and offer evidence at the hearing. Failure to appear may result in the order being granted in that person’s absence.

In this situation the onus is on the Crown to prove on a balance of probabilities that the person was involved in serious crime within 6 years before the application was made. That is all that needs to be proved. The state does not need to prove a particular offence was committed, nor that the named assets derived from the alleged criminal activity.

Once a forfeiture order is made, the NSW Trustee and Guardian may take possession of the property on behalf of the Crown. No one may interfere with or dispose of property that is subject to the forfeiture order.

Contravening a forfeiture order is a criminal offence, punishable with a fine equivalent to the value of the property, and/or imprisonment up to 2 years. The Supreme Court will determine the value of the property.

_{What can you do against a forfeiture order?}

The person against whom the order is made may apply for an exclusion order to exclude some or all of the property.

You may apply for an exclusion order, before the forfeiture order is made, or once the application for forfeiture is made, but

If you wait till after the order is made, you have to lodge your application for exclusion within 6 months of the forfeiture order taking effect, and you need to apply for leave of the Supreme Court to lodge an application for an exclusion order.

To succeed with an exclusion order you have to prove on a balance of probabilities that your interest in the property was not obtained fraudulently or illegally.

The dependents and spouse of such a person may apply to the Supreme Court for relief against forfeiture. To succeed you have to satisfy the Court that:

• That the applicants will suffer hardship as a result of the assets being forfeited; and
• That they had no knowledge of any serious criminal activity or illegal activities by the person who is the subject of the forfeiture order.

Legal advice

If you receive written notice of asset forfeiture proceedings against you, get legal advice as soon as possible. If you can prove that you acquired the named property from legal funds the court has the discretion no to grant a forfeiture order. Your lawyer can provide you with advice and assistance throughout the process and fight to protect your rights.

3. The NSW Crime Commission can obtain a Proceeds Assessment Order compelling an offender to pay the amount of money received from illegal activity to the Treasurer. The application must be made to the Supreme Court within 6 years of the alleged serious criminal activity.

Normally a proceeds assessment order will relate to property already under a restraining order, but an order can be made regardless of whether the property is already under a restraining order or not.

_{The burden of proof is on the Crown.}

The Supreme Court must make a proceeds assessment order if the crown can prove on a balance of probabilities that:

• The person received proceeds from illegal activity of another person; and
• The person knew or should have reasonably known that the proceeds were derived from illegal activity of that other person; and
• The other person was engaged in illegal activity within 6 years before making the application for a proceeds assessment order,

How does the Court determine the amount of the proceeds from illegal activity?

The Court will take a number of factors into account when assessing the amount:

• The market value of the goods or drugs (if relevant) at the time of the crime
• The amount of money actually received by the defendant, and
• The defendant’s income and expenditure (lifestyle) before and after the illegal activity

The Court will not take any expenditure by the defendant in connection with committing the crime into account.

Legal advice

The court has a discretion whether or not to grant a Proceeds Assessment order, seek legal advice from a lawyer with experience in this field to assist you. If you can prove that the source of funds used to obtain the property was not illegal, you may convince the Court not to grant a Proceeds Assessment order against you.

4. An Unexplained Wealth Order is an order compelling a person to pay over an amount of unexplained wealth to the Treasurer.

An application for an unexplained wealth order can be made whether or not a restraint order has previously been made in relation to the property. Normally though the property will already be subject to a restraint order.

The application for an unexplained wealth order can be made to the Supreme Court at any time after the alleged serious criminal activity.

The burden of proof is on the Crown and the Supreme Court must grant the order if it finds that there is a reasonable suspicion that the person against whom the application is made, has:

• At any time before the application, engaged in serious crime related activity; or
• Acquired property from any serious crime related activity of another person.
• Take note: This applies whether or not you knew or suspected that the property was obtained from illegal activities.

How does the Court determine the amount of unexplained wealth?

If the court is not satisfied (on a balance or probabilities) that your current wealth, or a part of it, was not illegally obtained or the proceeds of illegal activity, it will be taken as unexplained wealth.  So any amount that the court is not satisfied (on a balance of probability) was obtained legally could be classified as unexplained wealth.

Take note: In determining your current wealth, the court will consider the value of your interests in properties owned and controlled by you, as well as interests in property that you have disposed of (as a gift or sold).

Legal assistance

If you receive notice of an unexplained wealth application, seek legal advice immediately, you have to attend the hearing and give evidence.  As discussed above the Crown only has to prove a reasonable suspicion of engagement in serious illegal activity to obtain an unexplained wealth order. This basically means that the burden of proof is on you to proof on a balance of probabilities that you obtained your wealth, or the property, lawfully and that your current wealth was not illegally acquired or the proceeds of illegal activity.

You will need a lawyer with knowledge and experience in this field. The court has the discretion not to grant the unexplained wealth order if you can satisfy the court that your wealth can be explained as the proceeds from legal activities.

Fortfeiture by the commonwelath director of public prosecution (DPP)

In this section we discuss the 4 orders available to the CDPP to freeze and confiscate property.

If you are convicted or suspected of involvement in a serious offence the CDPP can apply for one of the following orders to confiscate your assets. A serious offence includes an offence against Commonwealth laws that carries a penalty of at least 3 years imprisonment.

1. A Freezing Order is an order to a financial institution to not allow the balance of a specified financial account to be reduced in any manner.

Such an order can be made against a financial institution:

• If there are reasonable grounds to suspect that the account balance (or a part there of) is the result of proceeds obtained from a serious indictable offence, or is wholly or partly to be used for a serious offence; and
• The Magistrate is satisfied that there is a risk that the balance will be reduced if the order is not made.

The application for a freezing order must be supported by an affidavit stating the grounds for the applicant’s belief that the account balance, or a part thereof, is:

• The proceeds of an indictable offence, or
• To be used for a serious offence

If you are unfamiliar with legal language you might not know what an “indictable offence” is. In simple terms an indictable offence is an offence where the accused has the right to have the matter heard before a Judge and a jury in a higher court.

They are considered more serious offences.

The burden of proving the above grounds is on the Crown, however, the court does not have to find that a particular offence was or will be committed. It is sufficient to allege and satisfy the court that an indictable offence is involved.

If a person is suspected of serious criminal activity, the application can be brought to court ex parte in relation to an account at a financial institution. Ex Parte means it can be done in the absence of the person affected by the order, for example the account holder.

What happens once the freezing order is granted?

Written notice must be issued to the relevant financial institution and all parties in whose name the account is held. Once the order takes effect, no withdrawals may be allowed by the financial institution from that account at the institution, except in a manner and circumstances specified by the court.

Contravening such an order is a criminal offence, punishable by a fine equal to 300 penalty points and/or a maximum of 5 years imprisonment.

Duration of the order

A freezing order remains in force from when a copy of the order is given to the financial institution, until either the end of a period specified in the order, or when the court decides on an application for a restraining order relating to that account (whichever comes first).

The original application for the freezing order must specify a maximum of three working days, but it may be extended if an application for a restraining order is still pending before the court.

Legal advice

If you can satisfy the court that you cannot meet your reasonable living expenses of yourself and your dependents, or reasonable business expenses, the court has the discretion to alter the freezing order to accommodate your reasonable needs. The court can also revoke the freezing order if you can prove that it is in the interest of justice to do so.

As soon as you receive a notice of a freezing order, contact your lawyer immediately to assist you if you need to approach the court to alter or revoke the order.

2. The Commonwealth DPP can apply for a Restraining order under the following circumstances:

• If a person is charged with, or it is proposed that he/she is charged with, or has been convicted of an indictable offence, or
• A person is suspected of having committed a serious offence within the last 6 years, or
• There is reasonable grounds to suspect that a person has committed a terrorism offence
• An affidavit stating the grounds for the applicant’s belief that, the suspect has effective control over the asset, or the assets are proceeds of the offence, must be filed with the application for a restraining order.

The purpose of the order is to ensure that no one can dispose of, or interfere with (or attempt to dispose of or interfere with) the assets specified in the order, except in a manner or under circumstances as mentioned in the order.

To achieve this purpose the court will make a specific order that no one may dispose of or interfere with the specified property and it will set out very specific circumstances (if any) in which the property may be dealt with, or dispose of; it will also specify the manner in which the property may be dealt with.

Take note:  The court must grant a restraining order even if there is no risk at the time that the asset will be interfered with or disposed of.

Which assets may be included in the restraining order?

• All of the suspect’s assets,
• Specified assets,
• All of the assets, except for specified exclusions,
• Specified assets of another person, that is under the effective control of the accused,
• Specified property of another person that is proceeds of the offence

What can you do against a restraining order?

Once a restraining order is made, any person whose interests are affected by the order must be notified in writing.

Such a person may file an application for an exclusion order to exclude some or all of the assets from the restraining order. The court will only grant an exclusion order if it is satisfied that:

• The property was not used in connection with any unlawful activity, and
• The property was not derived directly or indirectly from any unlawful activity, and
• The property was acquired lawfully.

A person who was not notified of an application for a restraining order may apply to have the order revoked. The application to revoke must be filed within 28 days of receiving notice of the order.

The court will only set aside the order if it is satisfied that:

• At the time of considering the application to revoke the order, there are no grounds on which to make the original restraining order, or
• It is in the interest of justice to revoke the order

How long is a restraining order valid for?

The restraining order will lapse 28 days after the person’s charge is either withdrawn, or the person is acquitted or the conviction is quashed, unless a pecuniary penalty order or a forfeiture order was made or applied for.

Legal assistance

A lawyer will be able to advise and assist you to get some, or all, of your assets excluded from the restraining order.

Non-compliance with a restraining order is an offence, punishable by a fine equal to 300 penalty units and/or imprisonment up to 5 years.

3. The Commonwealth DPP can apply for a Pecuniary Penalty Order (see definition above) on its own, or alongside a forfeiture order, but if both orders are granted, the amount of the pecuniary order will be reduced by the value of the forfeiture order.

To succeed with a pecuniary penalty order application the Crown must prove the following:

• The person has been convicted of an indictable offence, and has gained benefits from the commission of the offence; and/or
• The person has committed a serious offence

To understand how the court will assess the value of the proceeds gained from criminal activity, see the section above about pecuniary penalty orders under the NSW Director of Public Prosecutions or NSW Police.

4. The Commonwealth may apply for a Forfeiture order to confiscate and dispose of property.

A forfeiture order can only be granted after a hearing in court. Once an application is made to the court notice must be given to the defendant and any other person believed to have an interest in the property mentioned in the application. All interested parties may appear at the hearing and present evidence to the court.

Take note: The court will presume that the property was used in, or in connection with, the commission of an offence, unless the contrary is proved.

When will the court grant a forfeiture order?

If the person has been convicted of an indictable offence, and the court is satisfied that the property mentioned in the application is proceeds of the offence
If the property is subject to a restraining order and the court is satisfied that the person was involved in a serious offence within the last 6 years, unless the defendant can show that the property was not obtained through criminal activity.

What happens after the forfeiture order is made?

The Commonwealth may take, or retain, possession of the property, and may, after a certain period, dispose of the property.

The State may not dispose of the property straight away. See the reasons why not in the section above.

If the Commonwealth succeeds with their application for a forfeiture order the following remedies are available:

• If the order is made against you, you may file for an exclusion order to exclude some or all of the property specified in the forfeiture order. To succeed you have to satisfy the court that the property, or your interest in it, is not derived from criminal activity.
• You may file an application for an exclusion order at any time before an asset forfeiture order is granted against you. If, however, you received notice of the application for the forfeiture order and you did not appear at the hearing, you cannot apply for an exclusion order without leave from the court.

An order can be made that the Commonwealth must pay an amount to dependents if:

• The forfeiture order will cause hardship to the dependents, and
• The specified amount would in fact relieve the hardship, and
• The dependent/s had no knowledge of the unlawful activity relating to the property under forfeiture

An appeal can be lodged against the forfeiture order within 28 days of the order being granted by anyone with an interest in the property.

Legal costs

Legal advice and assistance can be expensive. In some circumstances the court may provide for payment of reasonable legal costs in relation to certain orders and your legal expenses for defending your rights against the granting of such orders. For example, if the Supreme Court is satisfied that you will not be able to pay your legal costs out of your unrestrained assets, the court may provide in the restraining order for payment of reasonable legal costs. The court may even provide for legal costs for your defense against any other related criminal charges. However, the court must be satisfied that the only reason you cannot pay for your legal costs is because of the order imposed by the court.

When facing an application for any of the orders discussed in this article, you will need legal assistance to protect your rights.

Disclaimer : This article is just a summary of the subject matter being discussed and should not be regarded as a comprehensive legal advice for you to defend yourself alone. If you are charged with criminal offences, it is recommended that you seek legal assistance from criminal lawyers.