Confiscation and human rights

While Victoria waits with general indifference for the commencement of the Confiscation Act 2010 (some time before January 2012), the Supreme Court has handed down DPP v Ali (No 2) [2010] VSC 503, concerning the operation of the current scheme and the effect of the Charter. Section 38 of the Confiscation Act 1997 allows the DPP to seek confiscation of restrained property if-

• The DPP has given notice under section 37
• At least 30 days have passed since the DPP gave notice, and
• There are no pending applications for exclusion of the restrained property

In this case, the appellant, Ms Ali, sought an exemption of the family home from civil forfeiture, which had previously been used by associates of her husband for producing methylamphetamine. Ms Ali sought exemption on two grounds. First, on the s38(2) remedial provision and second, under the s20 exemption provisions.

The structure of s38 is that under s38(1), if the three above conditions are met, the court must make a civil forfeiture order. Section 38(2) then provides the court a discretion to exclude property from an order 'if satisfied that otherwise hardship may reasonably be likely to be caused to any person by the order'. Section 45(1) provides a further remedial option, which is that the court orders the appellant receive a monetary payment to compensate for the hardship.

Hargrave J rejected Ms Ali's argument that the court must exercise the hardship discretion unless the forfeiture is 'demonstrably justified' in accordance with s7(2) of the Charter of Human Rights and Responsibilities Act 2005. His Honour states:

40 It was submitted on behalf of Mrs Ali and the Commission that the hardship discretion under s 38(2) is circumscribed by the relevant human rights and that, unless the making of a civil forfeiture order can be demonstrably justified under s 7(2) of the Charter, the Court must exclude the property from the operation of the civil forfeiture order which is mandated under s 38(1) of the Act. Alternatively, Mrs Ali and the Commission contend that the Charter requires the relevant human rights engaged in this case to be given significant weight in the exercise of the hardship discretion. This alternative submission was not in contest. The DPP and the State accept that the relevant Charter rights must be afforded considerable weight in the exercise of the Court’s discretion. However, they contest the principal submission that the Court must exercise its discretion to exclude the property from the operation of a civil forfeiture order unless they can satisfy the Court that a civil forfeiture order is demonstrably justified under s 7(2) of the Charter.
41 I reject the principal submission of Mrs Ali and the Commission. That submission is inconsistent with s 38(1) of the Act, which mandates the making of a civil forfeiture order where the Court is satisfied of the matters stated in paragraphs 38(1)(a), (b) and (c). If the Court was required to act in accordance with this submission, and exclude the property under s 38(2) unless forfeiture could be justified under s 7(2) of the Charter, that would be inconsistent with the express terms of s 38(1) and would, moreover, defeat its purpose. The effect of the submission is to ask the Court to re-write s 38(1) where hardship is established, to make it applicable only if the Court considers forfeiture to be justified under s 7(2) of the Charter. That suggested interpretation of s 38(2) is not possible in light of the clear words and purpose of s 38(1). Section 38(2) remains a purely ameliorative provision according to its terms. It does not limit any human right protected by the Charter. In these circumstances, s 7(2) of the Charter has no relevance.
42 Further, the principal submission would have the effect of imposing an obligation on the Court to act in a way that is compatible with human rights. The Charter does not impose this obligation on courts, only on public authorities.No party contended that the exception for courts acting in an administrative capacity has any relevance to this case.

Hargrave J sought to confine two earlier decisions by Bell J, which held that s32(1) of the Charter requires open-ended discretions must be exercised compatibly with human rights, as only applying to public authorities. This approach raises some interesting issues and, in some ways, is problematic.

First, because the conduct mandate, which requires public authorities to act compatibly with human rights, is found in section 38 and not section 32. It is true that the conduct mandate doesn't apply to courts in their judicial capacity. However, this is what section 32(1) says:

So far as it is possible to do so consistently with their purpose, all statutory provisions must be interpreted in a way that is compatible with human rights.

As the Court of Appeal in R v Momcilovic explained, this provision means that, if a rights-compatible interpretation is open, consistent with the provision's purpose, then the court must adopt that interpretation. When the court does so, it may well be that an open-ended discretion because one that must be exercised in a rights compatible manner. But that would be a function of identifying the correct interpretation of the discretion. The argument is that, just as an open-ended discretion must be exercised judicially, because that is read in as a requirement of exercising the discretion, so too is the obligation to exercise the discretion rights-compatibly, where it is possible to do so consistent with the purpose of the provision.

Secondly, the decision appears to draw out a distinction between the Victorian and UK interpretation mandates that is often overlooked. The UK mandate requires courts to 'read and give effect' to legislation in a rights-compatible manner, while the Victorian mandate requires courts to 'interpret' legislation compatibly. Regrettably, the Victorian interpretation mandate was originally proposed to follow the UK model, though it was changed by Parliamentary drafters without any explanation. Hargrave J, however, doesn't explore this difference.

Thirdly, Hargrave J suggests that an interpretation of s38(2) that requires that it be exercised rights-compatibly is not open due to the clear words of s38(1). Unlike Hargrave J, I'm not certain that imposing a human rights limitation would be inconsistent with the purpose of the provision. The purpose seems to be to require the court to make the order if the relevant procedure is followed and to place the burden of showing why the order shouldn't be made on the respondent, either by securing exemption of the property under section 20, or by persuading the court to exercise the hardship discretion. Giving content to the open ended discretion in s38(2) such that, in certain circumstances, the court must exercise the discretion is consistent with this purpose. It is also an interpretation that is consistent with the seeming purpose of s38(2), which is to function as a check on potentially unjust orders under s38(1) - a provision that contains no discretion and no limitations.

Fourthly, the court did not consider whether any guidance could be gained from the new civil forfeiture regime to be introduced by the Confiscation Amendment Act 2010. The scheme seems relevantly identical as it would apply to this case. As part of the statement of compatibility, the Attorney-General made these remarks concerning the potential inference with property and privacy rights:

Even where a person is unable to make out the grounds for exclusion in new sections 36V and 40B, the property may still be excluded where the court is satisfied that otherwise hardship would be reasonably likely to occur (new section 38). The fact that the property is a person's home will be relevant to the consideration of whether hardship would otherwise occur. However, the fact that the property is a person's home will not necessarily mean that the ground of hardship is made out. This is particularly the case where the home represents the proceeds of criminal activity.

Depriving a person of a home that they would not otherwise have had if it weren't for the criminal activity cannot be said to give rise to hardship. However, it cannot be said to be unlawful or arbitrary to deprive a person of their home in these circumstances. On the other hand, if the order has the effect of forcing a person to lose their family home and become dependent on the state for housing and financial support, the grounds for hardship may be made out, particularly where that person had no knowledge of the criminal activity and has not otherwise profited from it.

While the act does not provide absolute protection of a person's home, I consider that the interferences permitted by the act are reasonable and cannot be regarded as unlawful or arbitrary.

Ms Ali falls into an intermediate category, where the home was not gained by criminal activity, though losing the home will not force her to become dependent on the state for housing. Nevertheless, it is unfortunate that Hargrave J did not advert to the statement of compatibility and consider whether it shows making an exclusion order mandatory if the rights interference is not demonstrably justified would be inconsistent with the purpose of section 38.

Finally, it is not clear that Bell J's earlier decisions depended on a finding that VCAT was a public authority. In Lifestyle Communities (No 3), Bell J noted that an earlier decision by Judge Harbison in the Royal Victorian Bowls Association case where her Honour had not found it necessary to consider whether VCAT was a public authority, and concluded that the obligation to act rights-compatibly arose from the 'special interpretative obligation' in the interpretation mandate. Granted, the Court of Appeal in Momcilovic determined that the interpretation mandate did not impose a 'special' interpretative obligation. However, the same result would seem to apply if the relevant provision could be interpreted rights-compatibly through ordinary interpretation rules.

Given that everyone agreed that Ms Ali's human rights were an important consideration in the exercise of the discretion, the dispute ultimately boils down to just how much weight they must be given. In light of Hargrave J's finding concerning Mr Ali's close involement in the drug manufacturing operation, forfeiture may well have been demonstrably justified. It's unfortunate, though, that the court reached this result in the way that reduces the scope for the Charter to operate.