REPARATION ORDERS
13.1 Reparation orders fall into two categories:
- orders for restitution; and
- orders for compensation.
13.2 In DP 33 the Commission expressed the view that, while such orders could be said to be consistent with the traditional aims of sentencing and could also take into account some of the interests of victims of crime, reparation was not, of itself, an aim of sentencing and reparation orders were merely ancillary to the sentencing process.1 The Commission reaffirms this view.
Restitution
Recommendation 79
Section 438 of the Crimes Act 1900 (NSW) should be amended to clarify the power of Local Courts to make restitution orders.
Recommendation 80
Section 438 of the Crimes Act 1900 (NSW) should be amended to give the courts power to order the return of property to its rightful owner at the completion of the proceedings regardless of conviction.
13.3 At its simplest level, restitution involves the restoration of an item of property to its rightful owner. Section 438 of the Crimes Act 1900 (NSW) permits a court to order the restitution to its owner of property stolen, embezzled or received by an offender in contravention of the Crimes Act. Under s 438(2) the court has the discretion to order restitution even where a person indicted for an offence has been acquitted.
13.4 There are two issues in respect of s 438. First, it is ambiguous in that it might not extend to Local Courts the power to order restitution in cases of acquittal because of the requirement that the offender be “indicted”. Secondly, the section does not entirely cover all circumstances where the accused person in possession of the property belonging to another is acquitted, discharged, or the charge against the person was dismissed. In DP 33 the Commission invited submissions on a suggestion that the section be amended to overcome these problems by requiring only that charges be laid against the offender for the provision to have effect, and giving the courts broader powers to order the return of stolen property.2
13.5 Some submissions were generally in support of amending s 438 to clarify the position of the Local Courts.3 The Law Society endorsed the draft proposal. However, it noted that s 438 does not belong in the Crimes Act 1900 (NSW) and, recognising the need for courts to be able to restore property to its rightful owner, suggested the provision would be more appropriately placed in the Criminal Procedure Act 1986 (NSW) with the provisions in Part 11, which allow a court to order the return of property in police custody to its rightful owner. It also proposed that enforcement should be by a process similar to that provided for in Part 11 of the Criminal Procedure Act 1986 (NSW).4
13.6 The Senior Public Defender supported the existing s 438 as “a speedy and effective means of ensuring that the property is returned to its owner” but noted the undesirability of giving the courts power to make restitution orders before a trial or hearing is complete, considering it more appropriate that legislation should permit the making of restitution orders “after the hearing on the question of guilt is completed”. However, he also suggested that a return of property by consent of an accused before trial could be appropriate.5 One other submission also expressed concern about the extremely wide discretion which would be given to the courts by such an amendment.6
13.7 The Commission has decided, on balance, to recommend that the power of Local Courts to make restitution orders should be clarified. The Commission has also concluded that the powers of the courts to order the return of property, currently contained in s 438 of the Crimes Act 1900 (NSW) should be broadened. The draft provision included in the Discussion Paper adopted the commencement of proceedings as the trigger for the courts’ power to order restitution. In light of the concerns raised in submissions, yet balancing these with the need for some simple and inexpensive means for rightful owners to recover their property, the Commission recommends that the powers of courts to order restitution be limited to the conclusion of the criminal proceedings relating to the property in question.
Compensation
13.8 Compensation, for the purposes of this Chapter, involves the payment by an offender to a victim of an amount in “compensation for any injury or loss sustained through, or by reason of, the offence” or certain other offences taken into account at sentencing.7 DP 33 dealt with Part 6 of the Victims Compensation Act 1987 (NSW) which divides orders for compensation into two categories, namely major offences and minor offences. This division has led to a significant problem in the area of enforcement which was identified by DP 338 in that directions for compensation for major offences are enforced by civil means, whereas directions for compensation for minor offences are enforced in accordance with the Justices Act 1902 (NSW) which allows for the possibility that a person may be committed to prison for failure to pay in accordance with the terms of the order.9 The Commission therefore proposed that the current provisions for enforcement of compensation orders concerning minor offences in s 65 should be repealed and that the provisions for enforcement of major offences in s 57 be extended to cover minor offences.
13.9 The Victims Compensation Act 1996 (NSW), which was assented to on 2 December 1996, will repeal the Victims Compensation Act 1987 (NSW), and will eliminate the distinction between major and minor offences, treating them as one category. The procedure for enforcement of an order for compensation is outlined in s 75 of the 1996 Act. A sum which has been ordered to be paid is treated as a civil judgment. Imprisonment is not a final sanction for failure to pay.
13.10 The 1996 Act makes broadly the same provisions as those relating to major offences under the 1987 Act. Upon conviction of an offender, a court, may, on its own motion, or on application by a victim who has suffered injury or loss or a member of the immediate family of a person whose death has been caused, direct that a sum not exceeding $50,000 be paid out of the property of the offender to any aggrieved person or persons by way of compensation.10
13.11 Section 73 of the 1996 Act lists the factors which are to be taken into account in determining what sum should be paid in compensation:
(a) any behaviour (including past criminal activity), condition, attitude or disposition of the aggrieved person which directly or indirectly contributed to the injury or loss sustained by the aggrieved person,
(b) any amount which has been paid to the aggrieved person or which the aggrieved person is entitled to be paid by way of damages awarded in civil proceedings in respect of substantially the same facts as those on which the offender was convicted, and
(c) such other matters as it considers relevant.
13.12 The Commission supports the provisions outlined in s 70-77 of the Victims Compensation Act 1996 (NSW) in so far as they deal with the concerns addressed by Proposal 35 in the Discussion Paper.11
Offender’s ability to pay
13.13 Particular importance is attached to considering an offender’s ability to pay in cases of compensation to victims in order to achieve full justice between victims and offenders. Full justice may not be achieved because, if such factors are not considered, it will become a completely random matter whether a victim is paid or not.12 In addition, with respect to individual offenders, an order for an inappropriate amount of compensation might impede their rehabilitation.13
13.14 In New South Wales there is no specific requirement that courts consider an offender’s ability to pay, yet there is a trend towards the mandating of such considerations in other jurisdictions.14 The Commission has concluded that the requirement in s 73 of the Victims Compensation Act 1996 (NSW)15 that, in determining whether or not to give a direction for compensation and in determining the amount to be paid, a court should have regard to “such other matters as it considers relevant” is sufficient to allow consideration, in appropriate cases, of an offender’s ability to pay.
CONFISCATION ORDERS
13.15 DP 33 considered the rationale and effect of confiscation orders under the Confiscation of Proceeds of Crime Act 1989 (NSW). While most of the issues raised by this legislation fall outside the scope of our reference, confiscation has an ancillary effect upon sentencing, and does raise some issues that are relevant to this Report. We consider, first, the identification of the appropriate role for confiscation orders in the sentencing process; and secondly, partial forfeiture orders.
Relationship to sentencing
13.16 The Discussion Paper raised the issue whether confiscation orders should be seen as part of the sentencing process, or as a civil sanction ancillary to sentencing. The various jurisdictions in Australia and overseas have taken differing views of the issue. In Victoria, a form of integration of confiscation and sentencing has taken place. Section 5(2A) of the Sentencing Act 1991 (Vic) allows the court to have regard to forfeiture and pecuniary penalty orders when considering sentencing, but only in cases where the forfeiture relates to property used in connection with the commission of the offence,16 or the pecuniary penalty order relates to benefits in excess of profits derived from the offence.17 Judicial consideration of confiscation cases in Victoria has been supportive of some form of integration of confiscation and sentencing.18 The Proceeds of Crime Act 1987 (Cth), and legislation in several other State jurisdictions,19 specifically permit the gravity of the offence to be taken into account when considering confiscation. Other jurisdictions leave the question open. New South Wales is the only State explicitly to provide that, in considering the hardship likely to arise for a person convicted of a serious offence, the sentence received is not relevant to the hardship caused by forfeiture.20
13.17 The Commission is of the view that sentencing and confiscation are different processes. Confiscation orders are designed to eliminate the ability of offenders to derive benefit from their criminal ventures; as such, forfeiture and pecuniary penalty orders should not be viewed as punitive measures. It is difficult to see how confiscation serves the traditional objectives of punishment, especially when it is considered that the sum of confiscation is determined in relation to property used and acquired in connection with the offence, and not with any retributive or rehabilitative concern.
13.18 Submissions on this issue were generally in favour of keeping sentencing and confiscation separate.21 Two submissions agreed in stating that confiscation and sentencing should be kept totally separate,22 but one suggested that the prosecution be required to indicate at the time of sentencing whether confiscation orders will be sought.23 The rationale of this suggestion is fairness to offenders, by alerting them to ancillary orders which may be pending and not to introduce a mitigating factor in sentencing. The prosecution’s failure to indicate that confiscation orders will be sought will not prevent an application for such orders in the future if, for example, new evidence were to arise as to tainted property. The onus will, however, be on the prosecution to show why the action should now proceed.24 In the Commission’s view, while it is generally desirable that the prosecution should indicate that the Crown will seek confiscation orders where this is known at the time of sentencing, there should not be a legislative requirement to this effect.
Partial forfeiture
13.19 The Confiscation of Proceeds of Crime Act 1989 (NSW) has been strongly criticised for its “draconian” effects.25 While most of the reasons for this relate to the wide reach of the legislation,26 the Commission considers that some reform of the types of orders available would curb some of the legislation’s potentially harsh effects.
13.20 Confiscation legislation allows for two kinds of confiscation orders:
- a pecuniary penalty order, which is a financial sanction calculated by reference to the benefits derived from criminal actions; and
- a forfeiture order, which allows the court to forfeit to the State property deemed to be tainted.27
These orders are sought independently of the sentencing process by appropriate officers.28
13.21 A major difficulty with the legislation is that forfeiture orders operate on an “all or nothing” basis. This was a significant reason for the decision in R v Bolger,29 where it was considered appropriate for some degree of forfeiture to occur, but where it was considered that the confiscation of the entire interest in the property would amount to unjust hardship in all the circumstances of the case.30
13.22 In DP 33, the Commission proposed that the Confiscation of Proceeds of Crime Act 1989 (NSW) allow for partial confiscation orders, to provide for a balance between the need to confiscate proceeds of crime and to allow for a flexible system that will prevent excessive hardship which would be disproportionate to the circumstances of the case.31 This would remedy the present position, where, because of the “horrendous hardship” caused by full forfeiture, courts have been obliged not to allow forfeiture orders where arguably they would have been desirable and in the interests of the goals of the legislation. All the submissions received which considered this proposal were in favour of partial forfeiture.32 Accordingly, we recommend that the Confiscation of Proceeds of Crime Act 1989 (NSW) be amended to allow for the making of partial confiscation orders.
FOOTNOTES
1. DP 33 at paras 3.21 and 10.27-10.30.
2. DP 33 at para 10.33 citing D Lanham, “Restitution Orders” (1986) 10 Criminal Law Journal 394 at 408.
3. Confidential, Submission (22 May 1996) at 40; W D T Ward, Submission (25 July 1996) at 19.
4. Law Society of NSW, Submission (19 July 1996) at 44. Other proposals with respect to enforcement included that a higher penalty be imposed on those who fail to carry out an order: Confidential, Submission (22 May 1996); and retention of the current enforcement mechanisms: W D T Ward, Submission (25 July 1996) at 19.
5. M L Sides and Bar Association, Submission (24 June 1996) at 72-73.
6. NSW Young Lawyers, Criminal Law Committee, Submission (19 July 1996) at 29.
7. Victims Compensation Act 1987 (NSW) s 53; Victims Compensation Act 1996 (NSW) s 71.
8. DP 33 at para 10.41.
9. Justices Act 1902 (NSW) s 87(1) and (2).
10. Victims Compensation Act 1996 (NSW) s 71.
11. See para 13.8; DP 33 at para 10.41.
12. D R Miers, Compensation for Criminal Injuries (Butterworths, London, 1990) at 320.
13. D Lanham, “Criminal Fraud and Compensation Orders” (1986) 10 Criminal Law Journal 297 at 313.
14. See Criminal Justice Act 1972 (Eng) s 1; Powers of Criminal Courts Act 1973 (Eng) s 35; Sentencing Act 1991 (Vic) s 86(2); Criminal Law (Sentencing) Act 1988 (SA) s 13; Sentencing Act 1995 (WA) s 112(3).
15. Formerly s 55 of the Victims Compensation Act 1987 (NSW).
16. Sentencing Act 1991 (Vic) s 5(2A)(b).
17. Sentencing Act 1991 (Vic) s 5(2A)(d).
18. See R v Allen (1989) 41 A Crim R 51; R v Winand (1994) 73 A Crim R 497; DPP v Nieves [1992] 1 VR 257. See also Crimes (Confiscation of Profits) Act 1986 (Vic) s 5(3), which allows for the passing of sentence to be deferred subject to confiscation proceedings.
19. Proceeds of Crime Act 1987 (Cth) s 19(4); Proceeds of Crime Act 1991 (ACT) s 19(4); Crimes (Confiscation) Act 1991 (Qld) s 23(3).
20. Confiscation of Proceeds of Crime Act 1989 (NSW) s 18(2).
21. NSW Council for Civil Liberties, Submission (28 June 1996) at 6 suggested that confiscation, compensation and restitution all be integrated into the sentencing process.
22. Law Society of NSW, Submission (19 July 1996) at 44-45; N R Cowdery, Submission (17 June 1996) at 15-16.
23. Law Society of NSW, Submission (19 July 1996) at 44-45.
24. Note also that s 13(3) of the Confiscation of Proceeds of Crime Act 1989 (NSW) requires that the application be made before the end of the relevant period in relation to the conviction.
25. R v Galek (1993) 70 A Crim R 252; R v Bolger (1989) 16 NSWLR 115; DPP v Milienou (1991) 22 NSWLR 497.
26. Particularly due to the definition of “tainted property,” which includes any property used in, or in connection with, the commission of the offence, and also including property realised or derived, directly or indirectly, in connection with or as a result of the offence. See Confiscation of Proceeds of Crime Act 1989 (NSW) s 4(1); R v Hadad (1989) 16 NSWLR 476; DPP v Milienou (1991) 22 NSWLR 489. The broad definition has also contributed to vagueness about the aim of the legislation, it being unclear whether the Act is meant to apply just to “profit” or to benefits, proceeds or any item related to an offence.
27. Restraining orders are also available under s 43 of the Act, but as these usually have effect at the pre-trial or trial stages, they have little relevance to sentencing.
28. Usually the DPP or, in drug cases, the NSW Crime Commission.
29. R v Bolger (1989) 16 NSWLR 115 especially at 124.
30. R v Bolger at 126-127. See also R v Galek (1993) 70 A Crim R 252 per Hunt CJ at CL.
31. DP 33 at paras 10.56-10.57.
32. NSW Council for Civil Liberties, Submission (28 June 1996) at 5; M L Sides and Bar Association, Submission (24 June 1996) at 73; N R Cowdery, Submission (17 June 1996) at 15; Law Society of NSW, Submission (19 July 1996) at 45; Legal Aid Commission of NSW, Submission (18 July 1996) at 18; NSW Young Lawyers, Criminal Law Committee, Submission (19 July 1996) at 29.
