Australia: The Proceeds Of Crime Act Shows Its Ambiguous Hand

The Supreme Court decision in Commonwealth of Australia v Lee [2008] NSWSC 1014 concerned a stay application by Mr Lee (the Applicant) to prevent the Commonwealth from disposing of his wife's share of their jointly owned property under the Proceeds of Crime Act 2002 (Cth) (the Act). The Applicant was in no way connected to the commission of his wife's offences. The collateral proceedings against the Commonwealth sought a stay, such that he might deal with his wife's share in the matrimonial home following the forfeit of his wife's interest to the Commonwealth.

The Court found that a stay would be warranted in the circumstances, however the basis of relief that would justify a stay was not presently contained in the summons in the collateral proceedings. The Applicant was granted a conditional stay upon his amendment of the relief he sought. His Honour then went on to criticise the Act for its wholly ambiguous wording.


On 23 November 2005, Mrs Maria Jung-Hee Lee was convicted of twelve offences against s 31(1) of the Financial Transaction Reports Act 1988 (Cth). Mrs Lee was also convicted of a serious offence within the meaning of s 92(1) the Act, and accordingly Mrs Lee's interest in the matrimonial property in Augusta Street, Strathfield, was automatically forfeited to the Commonwealth 6 months after her conviction. Upon forfeiture, the Commonwealth became a tenant-in-common in equal shares with the Applicant. The Commonwealth then sought to dispose of the property by commencing proceedings seeking the appointment of trustees for sale under s 66G of the Conveyancing Act 1919 (NSW).

On 8 August 2006, the Applicant and five other plaintiffs instituted collateral proceedings number 13862 of 2006 in the Common Law Division. These proceedings sought orders pursuant to ss 102 and 104 of the Act, the most relevant being that a declaration be made as to the nature of the Applicant's interest in his wife's share of the property, and directing the Commonwealth to transfer the interest in the property to him. These proceedings have not yet been determined.

Section 99 of the Act states that Commonwealth cannot dispose of any forfeited property until all avenues of appeal have been exhausted, and on that basis, the Applicant sought that the Commonwealth be stayed from disposing of Mrs Lee's share of the property until the determination of the collateral proceedings numbered 13862 of 2006. Further, the Applicant stated that he sought relief under s 103 of the Act (which provides the opportunity for a person with an interest in the forfeited property to purchase it), and asked that leave be granted such that the application for relief might be made.

Upon the information presented by the Applicant, White J could not see how an order would be made under ss 102 and 104, as it appeared that he would have no other interest in the property beyond his interest as tenant-in-common with the Commonwealth. White J posited, however, that the Applicant could amend his summons to seek an order under s 103 of the Act leading to the buyback of Mrs Lee's forfeited interest in the property.

This avenue was available in White J's opinion chiefly because the Applicant satisfied the criteria set out in s 103, namely that it would not be contrary to the public interest to allow him the opportunity to buy back Mrs Lee's share of the house to enable him and his son to continue to reside there.

White J found that if the Applicant proposed to pursue relief under s 103 of the Act in proceedings 13862 of 2006, then a stay of the Commonwealth's s 66G proceedings would be warranted.

Counsel for the Commonwealth went on to argue that such a stay would not give effect to the policy of s 100 of the Act, which states that forfeited property should be disposed of "as soon as practicable". Nor would a stay, he argued, give effect to the principal objectives of the Act, as found in s 5, namely to punish offenders and deprive them of the proceeds of their offences.

White J disagreed, finding that a stay in the current proceedings would not go against s 100, because the meaning of "as soon as practicable" should not be assessed in a fashion that might deny an interested party relief under s 103. Further, White J said that whilst a stay might be viewed as a delay in punishment when viewed in conjunction with s 5 of the Act, the countervailing consideration of the Applicant's claim and his son's potential homelessness was enough of a consideration to justify allowing the stay.

Finally and more importantly in the global scheme of the Act itself, we can understand his Honour's cautious approach upon encountering in his judgment a noteworthy criticism of the Act's ambiguous wording. White J expressed his difficulty in reconciling s 96, "which provides that property forfeited under s 92 vests at the time of forfeiture in the Commonwealth absolutely", with s 103, which:

"contemplates that an order may be made declaring the nature, extent and value, as at the time the order is made, of an interest claimed by a person in the property, being apparently the same property forfeited to the Commonwealth under s 92".

This is a crucial point, and one that the legislature may need to address.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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