The High Court has allowed, and allowed in part, appeals from the Court of Appeal of the Supreme Court of Queensland concerning property that was forfeited to the Commonwealth under the Proceeds of Crime Act 2002 (Cth) (“the POCA”). The High Court made a number of different orders regarding the different pieces of property in question.
In May 2003, the Commonwealth Director of Public Prosecutions (“the CDPP”) obtained a number of restraining orders over property they suspected of being under the effective control of Mr Steven Irvine Hart, who they believed was operating tax minimisation schemes. Mr Hart was found guilty of nine offences of defrauding the Commonwealth under section 29D of the Crimes Act 1914 (Cth). The property subject to the restraining orders was automatically forfeited to the Commonwealth on 18 April 2006.
Following the forfeiture, two applications were filed with the District Court of Queensland. One application was filed by a number of companies (“the Companies”) affiliated with Mr Hart.
At  of her judgment, Justice Gordon explained:
“That application was made for orders under s 102 of the POCA to recover their respective interests, or an amount equal to the value of their interests, in some of the forfeited property ("the s 102 application"). In respect of each item of property, the Companies contended that the property was not used in, or in connection with, any unlawful activity; the property was not derived or realised, directly or indirectly, by any person from any unlawful activity; and the relevant Company had acquired the property lawfully.”
The CDPP also made an application, under s 141 of the POCA, for “a declaration that any property recovered by the Companies pursuant to the s 102 application was available to satisfy any pecuniary penalty order made against Mr Hart ("the s 141 application")” [at 40].
The primary judge granted the Companies making the s 102 application relief in relation to the assets. This relief was granted on the condition they pay the Commonwealth $1.6 million, in respect of charges that had been granted by the Companies to Merrell Associates Ltd, which had been forfeited to the Commonwealth. The s 141 application was dismissed.
The Commonwealth appealed to the Court of Appeal of the Supreme Court of Queensland against the dismissal of the s 141 application and separately against the orders made in respect of the s 102 application.
The Companies also appealed against the s 102 application orders.
The Court of Appeal dismissed both of the Commonwealth’s appeals and allowed the Companies’ appeal, finding that:
“none of the assets in the proceedings was used in, or in connection with, any unlawful activity or was derived or realised, directly or indirectly, by any person from any unlawful activity. An important step in the majority's reasoning was its approach to the phrase "derived or realised" in s 102(3)(a), which it construed as meaning "wholly derived" or "wholly realised".
In the Commonwealth's s 141 appeal, the majority held that effective control was to be assessed at the date of the determination of an application under s 141 and that, in this case, the Commonwealth could not establish that Mr Hart had effective control of the assets at that date.” [at 44]
The High Court issued separate but concurring judgements, with Chief Justice Kiefel and Justices Bell, Gageler and Edelman agreeing with Justice Gordon’s separate reasoning.
Justice Gordon dismissed the s 141 application, but allowed the Commonwealth’s appeal in relation to the s 102 application in part.
On section 102, Justice Gordon wrote:
“Paragraphs (a) and (b) provide, in effect, for three criteria or "limbs" that the applicant must address. The first is that the property was not used in, or in connection with, any unlawful activity (the "use limb"). The second is that the property was not derived or realised, directly or indirectly, by any person from any unlawful activity (the "source limb"). The third is that the applicant acquired the property lawfully (the "lawfully acquired limb").
The use limb and the source limb are negative – the applicant must establish that the property was not used in, or in connection with, any unlawful activity and the property was not derived or realised, directly or indirectly, by any person from any unlawful activity. The lawfully acquired limb is positive – the applicant must establish that they acquired the property (or their interest in the property) lawfully. Each limb presents a fact-specific and often fact-intensive inquiry. In each case, whether the criteria of the relevant limb are established will be a matter of fact and degree.” [at 51].
She found that the Companies had failed to establish a number of the limbs correctly for various pieces of properties.
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Commissioner of the Australian Federal Police v Hart  HCA 1 (7 February 2018) & judgment summary
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