Director of Public Prosecutions (Cth) v Della-Vedova [2010] NSWSC 8 (27 January 2010)

Last Updated: 28 January 2010

NEW SOUTH WALES SUPREME COURT

CITATION:
Director of Public Prosecutions (Cth) v Della-Vedova [2010] NSWSC 8


JURISDICTION:


FILE NUMBER(S):
12440/2009

HEARING DATE(S):
1 October 2009, 4 December 2009, final submissions 18 December 2009

JUDGMENT DATE:
27 January 2010

PARTIES:
Director of Public Prosecutions (Cth) (Plaintiff)
Shane Malcolm Della-Vedova (Defendant)

JUDGMENT OF:
Harrison J

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable



COUNSEL:
C P O'Donnell (Plaintiff)
J P Lo Schiavo (Defendant)

SOLICITORS:
Commonwealth Director of Public Prosecutions (Plaintiff)
Thomas Henry Bray Lawyer (Defendant)


CATCHWORDS:
CRIMINAL ASSETS – Crimes (Superannuation Benefits) Act 1989 – where defendant employed by the Australian Defence Force in three separate and disconnected periods – defendant misappropriated rocket launchers from his employer during the third period of employment – where defendant's conduct amounted to the commission of corruption offences as defined in the Act – where the Commonwealth sought a superannuation order for the repayment to it of employer contributions or benefits paid to the defendant when so employed - whether the order could extend to recovery of such contributions or benefits made in the first or second periods of employment or was limited to those contributions or benefits received by the defendant in the third period – superannuation order made but limited to the contributions or benefits made during the period when the corruption offences were committed.

LEGISLATION CITED:
Australian Federal Police Act 1979
Crimes (Superannuation Benefits) Act 1989
Criminal Code Act 1995
Defence Force Retirement and Death Benefits Act 1973
Evidence Act 1995
Proceeds of Crime Act 1987
Superannuation Act 1990
Weapons Prohibition Act 1998

CATEGORY:
Principal judgment

CASES CITED:
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336
Director of Public Prosecutions v Logan Park Investments Pty Ltd (1995) 37 NSWLR 118
DPP v Pirone [1997] SASC 6051
Federal Commissioner of Taxation v Australia and New Zealand Banking Group Ltd [1979] HCA 67; (1979) 143 CLR 499
Harrison v Melhem [2008] NSWCA 67; (2008) 72 NSWLR 380
Lee v Director of Public Prosecutions (Cth) [2009] NSWCA 347
R v Tkacz [2001] WASCA 391
Theophanous v Commonwealth [2006] HCA 18; (2006) 225 CLR 101

TEXTS CITED:


DECISION:
The parties are directed to bring in short minutes of order.



JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

HARRISON J

27 January 2010

12440/2009 Director of Public Prosecutions (Cth) v Shane Malcolm Della-Vedova

JUDGMENT

1 HIS HONOUR: The plaintiff seeks a superannuation order against the defendant pursuant to s 19 of the Crimes (Superannuation Benefits) Act 1989 ("the Act"). This arises in the following circumstances.

2 On 15 May 2008 the defendant was sentenced in the District Court of New South Wales to terms of imprisonment following pleas of guilty entered on 28 November 2007 to the following offences. First, that between 1 June 2002 and 30 October 2003 he did possess prohibited weapons without being authorised to do so by permit contrary to s 7(1) of the Weapons Prohibition Act 1998. Secondly, that between 1 June 2001 and 10 February 2003 he did dishonestly appropriate property belonging to the Commonwealth with the intention of depriving the Commonwealth of the property contrary to s 131.1(1) of the Criminal Code Act 1995. The offences are acknowledged to be corruption offences within the meaning of the Act.

3 The defendant joined the Australian Defence Force on 6 June 1978 and resigned on 5 June 1984. He rejoined the ADF on 18 February 1985 and resigned on 20 February 1999. He rejoined the ADF on 21 June 1999 and resigned on 10 August 2008. The offences were committed during his third period of service with the ADF. He was during all of these periods an employee as defined in s 7(2)(c) of the Act, which in the defendant's case was engaged by his membership of the Defence Force.

4 By reason of these periods of service with the ADF, the defendant received or became entitled to be paid certain benefits under a superannuation scheme established by the Commonwealth of Australia pursuant to the Superannuation Act 1990 known as the Defence Force Retirement and Death Benefits Scheme ("the DFRDB scheme"). In these proceedings the plaintiff seeks a suite of declarations and orders, the effect of which is to require the defendant to repay to the Commonwealth the amount that reflects the value of the sum of the employer contributions or benefits made by the Commonwealth to the defendant under the DFRDB scheme during all three of his periods of service.

The legislative scheme

5 Section 2 of the Act defines a series of terms used in the Act. The following ones are relevant:

"2 Interpretation

(1) In this Act, unless the contrary intention appears:

benefit means any benefit payable under a superannuation scheme, including a lump sum payment and a pension.

corruption offence means an offence by a person who was an employee at the time when it was committed, being an offence:

(a) whose commission involved an abuse by the person of his or her office as such an employee; or

(b) that, having regard to the powers and duties of such an employee, was committed for a purpose that involved corruption; or

(c) that was committed for the purpose of perverting, or attempting to pervert, the course of justice.

employee contributions, in relation to a person, includes:

(a) any amount paid or transferred into a fund, being an amount that is, under the person's superannuation scheme, to be taken to be employee contributions; and

(b) any other amount paid or transferred into a fund under the person's superannuation scheme, being an amount:

(i) attributable to employer contributions paid by the person's previous employer under another superannuation scheme (not being a superannuation scheme within the meaning of this Act) applicable to the person's previous employment by that employer; and

(ii) payable to the person as an additional lump sum benefit on his or her resignation or retirement.

fund includes the Consolidated Revenue Fund.

member, in relation to a superannuation scheme, includes a person who is eligible for a benefit (including a deferred benefit) under the scheme.

superannuation order means an order under section 19, and includes such an order as varied under section 22.

superannuation scheme, in relation to a person, means a superannuation scheme (other than a scheme established under a law of a State) under which employer contributions or benefits are paid or payable, or have at any time been paid, by the Commonwealth or a Commonwealth authority to or in respect of the person, and includes any scheme or arrangement under which such contributions are vested in the person."

6 An issue in these proceedings concerns the timing of the offences and their relationship to the defendant's periods of service with the ADF. Section 12 of the Act provides as follows:

"12 Application to convictions and offences

(1) This Act does not apply to a person's conviction of an offence if the conviction happened before the commencing day.

(2) This Act applies to an offence committed, or believed to have been committed, at any time, whether before, on or after the commencing day."

7 It is agreed that s 16 of the Act was complied with in this case. It is in these terms:

"16 Authority to apply for superannuation order

Where:

(a) a person who is or was (whether before, on or after the commencing day) an employee is convicted of an offence; and

(b) the Minister is of the opinion that the offence is a corruption offence;

the Minister may, by notice in writing, authorise the DPP to apply to the appropriate court for a superannuation order in respect of the person."

8 Sections 17 and 18 should also be noted:

"17 Application for superannuation order

(1) If the DPP is authorised to apply for a superannuation order in respect of a person who is taken to have been convicted of an offence because of paragraph 6(1)(b), the DPP must make that application to the appropriate court.

(1A) If:

(a) the DPP is authorised to apply for a superannuation order in respect of a person who is convicted of 1 or more offences; and

(b) the person is sentenced to imprisonment for life in respect of the offence, or any of the offences; or:

(i) if there is only 1 offence - to imprisonment for a term longer than 12 months; or

(ii) if there are 2 or more offences - to imprisonment for a single term longer than 12 months, or to cumulative terms that together add up to longer than 12 months, in respect of all or any of them;

the DPP must make that application to the appropriate court.

(2) The DPP must not make an application for a superannuation order otherwise than under this section.

(3) The DPP must take reasonable steps to give written notice of an application to the person in respect of whom the superannuation order is sought.

18 Application for superannuation order: evidence

(1) In determining an application for a superannuation order in respect of a person, the appropriate court may have regard to the transcript of any proceedings against the person for the offence to which the application relates and to the evidence given in any such proceedings.

(2) In an application for a superannuation order, any finding of fact made by a court in any proceedings for the offence to which the application relates, is prima facie evidence of that fact and the finding may be proved by the production of documents, under the seal of the court, in which the finding appears.

(3) In an application for a superannuation order in respect of a person, a certificate signed or sealed by the person's superannuation authority:

(a) stating that employer contributions or benefits made or payable by the Commonwealth or a specified Commonwealth authority in respect of the person are held in a specified fund under the relevant superannuation scheme; and

(b) stating the amount that equals the sum of those contributions or benefits as at the specified day plus the amount of interest on those contributions or benefits accrued under the scheme before that day;

is prima facie evidence of the matters stated in the certificate.

(4) In an application for a superannuation order in respect of the person, a certificate signed or sealed by the person's superannuation authority:

(a) stating that benefits have been paid to the person under the relevant superannuation scheme; and

(b) stating the amount that equals the sum of the benefits so paid as at the specified day; and

(c) stating another amount that equals the part of the amount referred to in paragraph (b) that is attributable to the sum of the employee contributions paid under the scheme by the person as at the specified day plus the amount of interest on those contributions accrued under the scheme before that day;

is prima facie evidence of the matters stated in the certificate.

(5) A document purporting to be sealed with the seal of a court is to be taken to have been lawfully sealed with the seal of that court unless the contrary is proved.

(6) A document purporting to be signed or sealed by a person's superannuation authority is to be taken to have been signed or duly sealed by that superannuation authority unless the contrary is proved."

9 Section 19 of the Act is at the centre of these proceedings and is relevantly as follows:

"19 Superannuation orders: making

(1) Subject to subsection (2), where an application is made for a superannuation order in respect of a person, the court must, if satisfied that the offence to which the application relates is a corruption offence, by order, declare:

(a) that the person was convicted of a corruption offence; and

(b) that this Part applies in relation to the rights of, and benefits paid or payable to or in respect of, the person under any superannuation scheme.

(2) . . .

(3) Where:

(a) employer contributions or benefits made or payable by the Commonwealth or a Commonwealth authority in respect of the person under any superannuation scheme have been paid into, and are held in, a fund under the scheme; and

(b) the person would, but for subsection 21(1), become entitled, subject to and in accordance with the scheme, to the benefit, or to a benefit attributable to the employer contributions, as the case may be;

the court must:

(c) work out, and specify in the superannuation order, the amount that it thinks reflects the value of the sum of those contributions or benefits as at the day on which the order is made, plus the interest on those contributions or benefits accrued under the scheme before that day; and

(d) include in the superannuation order an order that the amount so specified be paid to the Commonwealth or Commonwealth authority, whichever the court considers appropriate.

(4) Where any benefits have been paid to the person under any superannuation scheme (whether before, on or after the commencing day), the court must:

(a) specify in the superannuation order the amount worked out using the formula:

AB - EC

where:

AB (amount of benefits) is the amount that the court thinks reflects the value of the sum of the benefits paid by the Commonwealth or Commonwealth authority to the person under the scheme as at the day on which the order is made.

EC (employee contributions) is the amount that the court thinks is equal to the part of AB that is attributable to the sum of the employee contributions paid under the scheme by the person as at that day plus the interest on those contributions accrued under the scheme before that day; and

(b) include in the superannuation order an order that the person pay the amount so specified to the Commonwealth or Commonwealth authority, whichever the court considers appropriate.

(5) For the purposes of subsection (4), the value of an amount of employer contributions or benefits, and of accrued interest, is their value worked out having regard to any decline in the purchasing power of money between the day on which the contributions or benefits were made or paid, or the interest accrued, as the case may be, and the day as at which their value must be worked out.

(6) The DPP must give written notice of a superannuation order to the person's superannuation authority."

10 Finally, s 41 should also be noted:

"41 Amounts payable under section 19, 21 or 23

(1) Where an amount is payable under an order made under subsection 19(3) in respect of employer contributions or benefits that are held in a fund other than the Consolidated Revenue Fund, the amount is payable out of the fund by the person responsible for the administration of the fund.

(2) Where an amount is payable under an order made under subsection 19(3) in respect of employer contributions or benefits that have been paid to the Commonwealth, the Minister for Finance is to make arrangements:

(a) for the payment of the amount out of the Consolidated Revenue Fund; or

(b) where it is not appropriate to make such a payment - for any other appropriate action to be taken;

and the order is to be taken to have been satisfied by the taking of any action that gives effect to the arrangements.

(3) An amount payable to a person under subsection 21(4) or (5) is payable:

(a) if the relevant superannuation scheme is established by an Act - by the Commonwealth; and

(b) in any other case - by the relevant superannuation authority out of the fund established under the relevant superannuation scheme.

(4) Where an amount mentioned in subsection (3) is payable by the Commonwealth, the amount is payable out of the fund established under the relevant Act or, if an amount attributable to the employee contributions of the person has been paid to the Commonwealth, out of the Consolidated Revenue Fund.

(5) An amount payable to a person under subsection 23(3) is payable by the Commonwealth out of the Consolidated Revenue Fund.

(6) The Consolidated Revenue Fund is appropriated to the extent necessary to pay any amount that is payable under this section out of that Fund."

11 According to the plaintiff, the DFRDB scheme was established under the Defence Force Retirement and Death Benefits Act 1973 ("the DFRDB Act"). The Superannuation Authority is the Defence Force Retirement and Death Benefits Authority ("the authority"). There was no relevant fund because all benefits are payable from the Commonwealth Consolidated Revenue Fund. The dates when the defendant's memberships of the scheme ended are respectively the dates when his employment came to an end in each of the three periods of employment referred to earlier.

Second reading speech

12 By reason of the way in which the defendant has formulated some of his arguments in this case, a reference to what was said in the second reading speech when the bill was before the Commonwealth Parliament on 6 October 1989 is instructive. It is relevantly in the following terms:

"The Crimes (Superannuation Benefits) Bill 1989 provides for the loss, or recovery, of government funded superannuation benefits payable, or paid, to existing or former employees of the Commonwealth or of a Commonwealth Authority who are convicted of a corruption offence and sentenced to imprisonment for life or for more than 12 months. These provisions do not, of course, affect the payment of the employee's own contributions and any interest on those contributions that may have accrued under a superannuation scheme.

The bill empowers a court, upon the application of the director of public prosecutions, when sentencing the person for a corruption offence to make a superannuation order. These orders provide that any future payments of government monies in respect of the person must cease and may, where appropriate, specify an amount that is to be recovered from a person who has already received payment of benefits as with the Proceeds of Crime Act 1987, the amount specified in the order may be recovered as if it were a debt and, as under that Act, there are sophisticated measures to ensure that payment is not avoided by the use of the corporate veil, unlawful disposal of property or by absconding.

The bill has a comprehensive regime of restraining orders which enables property of a person who is convicted, charged or about to be charged with a corruption offence, to be frozen until the results of the criminal proceedings and any application for a superannuation order are known.

As under the Bankruptcy Act 1966, any property that has been disposed of by the person by way of gift can also be the subject of restraining orders. These provisions are designed to combat efforts by the offender to dispose of property by giving it to relatives or associates as soon as detection of the offence appears likely.

The government has rejected the approach taken by the Queensland Parliament in the Public Officers Superannuation Benefits Recovery Act 1988 whereby the courts are given the option of forfeiting only part of the person's superannuation entitlement where the offence is considered to be minor or where hardship may result from the order. Rather, minor offences are placed outside the scope of the Commonwealth Bill by the condition precedent that a sentence of more than 12 months imprisonment be imposed for the offence.

This government is firmly of the view that there is no scope for watering down the forfeiture in such cases as superannuation benefits should only be paid from public monies to persons who discharge their duties in a non-corrupt manner. The government views corruption of office as a failure to fulfil a condition of employment which should result in the disentitlement to publicly funded superannuation benefits. While the consequence of conviction for a corruption offence under the bill will be the loss of publicly funded superannuation benefits there may also be other remedies available under other legislation. For example, where a corruption offence involved the payment of a bribe to a public official, an amount equal to the bribe may be recoverable under the Proceeds of Crime Act 1987.

This government is determined to ensure that corruption does not infiltrate the Commonwealth or its instrumentalities and this bill will provide a strong financial disincentive to any who may be tempted to engage in corruption now or in the future."

13 The operation of the Act has also been discussed in Theophanous v Commonwealth [2006] HCA 18; (2006) 225 CLR 101 at [45] - [51] as follows:

"[45] Section 17 required the DPP in the present circumstances to make the application to the County Court. When authorised under s 16, the DPP "must make that application". Section 19(1) would oblige the County Court, if satisfied that the offences to which the application related were corruption offences, by order to make certain declarations. These declarations would establish first that the plaintiff was convicted of the corruption offences and secondly that Pt 2 of the CSB Act applied "in relation to the rights of, and benefits paid or payable to or in respect of, [the plaintiff] under any superannuation scheme".

[46] The term "superannuation scheme" is defined in s 2(1) as including that established under the Superannuation Act; the definition applies to a superannuation scheme under which employer contributions or benefits are paid or payable by the Commonwealth to or in respect of the plaintiff.

[47] If a court made a superannuation order in respect of the plaintiff then there would follow the consequences spelled out respectively in paras (a), (b) and (c) of s 21(1). First, as to para (a):

all rights of, and benefits payable to or in respect of, the person or a dependant of the person (being rights or benefits arising out of the person's membership of any superannuation scheme) cease, or cease to be payable, on the day on which the order takes effect, and the person ceases to be a member of the scheme on that day.

[48] Secondly, on the day the court made the superannuation order, there would cease to be vested in the plaintiff the benefit or a benefit attributable to employer contributions as identified in s 19(3).

[49] Thirdly, the Commonwealth would not be liable to pay any employer contribution or benefit in respect of the plaintiff on or after the day the superannuation order was made.

[50] Further, the court would be required to specify in its order and in accordance with the formula in s 19(4) the amount of benefits which have been paid which reflected the employer contributions plus interest and the amount so worked out would be payable as a debt due to the Commonwealth (s 21(2)).

[51] Finally, s 21(5) makes provision which would entitle a person such as the plaintiff to payment of an amount respecting employee contributions as determined in accordance with the formula set out in that subsection."

Submissions

14 The defendant commenced by making a series of detailed submissions concerning the standard of proof required of the plaintiff in this case. The defendant referred to s 140 of the Evidence Act 1995 and to Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 and subsequent cases that have considered them. This was all somewhat perplexing having regard to the fact that at the commencement of the proceedings I was provided with an agreed statement of facts that became the first exhibit in the proceedings. In the light of the 22 matters described as agreed facts in that document I am uncertain in precisely what context the defendant's standard of proof submissions are propounded. With the exception of a contest about whether or not the defendant is ultimately liable to the plaintiff as alleged, in support of which contest the defendant otherwise generated a series of detailed legal submissions, there was not to my observation a single fact that remained controversial.

15 As far as I am able to determine, the defendant's enthusiastic submissions on this topic appear to me to be somewhat misguided and ill-considered. Except to the extent that I deal below with matters of which I am required to be satisfied and which are not covered by the agreed facts, I propose to disregard these submissions.

16 The defendant next raised an argument based on or deriving from the terms of s 81 of the Constitution. The certificates provided in accordance with s 18(3) and 18(4) of the Act do not name a fund but refer to benefits being payable from the Commonwealth Consolidated Revenue Fund. Section 81 provides as follows:

"All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund, to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution."

17 The defendant offered the submission that the Commonwealth Consolidated Revenue Fund was not "a fund operating under any superannuation scheme" and in particular was not "under the control" of the DFRDB authority.

18 This submission appears wholly to misconceive the position. The certificates issued for the purposes of s 18 do not have the effect that the Consolidated Revenue Fund is not a fund under a superannuation scheme or that there is no fund. The certificate simply indicates that there is no specified or unique fund with a name or description that identifies it separately from some other fund or funds. The Consolidated Revenue Fund is no less a "specified fund under the relevant superannuation scheme" as contemplated by s 18(3)(a).

19 The defendant appears also to contend that the word "under" must be read as "under the control of", so that in the present case he can argue that the Consolidated Revenue Fund is not "under the control of" the DFRDB scheme, but under the control of the Minister for Finance. He refers to R v Tkacz [2001] WASCA 391 in which Malcolm CJ said this about the word "under":

"[24] While the word "under" has a primary meaning in the sense of denoting a position beneath or below something which is overhead or above or covered by it, it also has a meaning as an adverb implying covered by or in accordance with some regulative power or principle: Shorter Oxford English Dictionary". [Emphasis added]

20 The defendant made these submissions on this point:

"33. To meet these requirements, the DFRDB Scheme would have to control the Consolidated Revenue Fund. The Consolidated Revenue Fund is controlled by the Commonwealth Government of Australia and this is clearly demonstrated by section 41(2) of the Act when referring to the making of payments out of the Consolidated Revenue Fund "...the Minister for Finance is to make arrangements:" It is clearly the case that the Minister for Finance controls the Consolidated Revenue Fund.

34. The DFRDB 'Authority' by section 130B(1) of the DFRDB Act (and Part II of the DFRDB Act) manages the Scheme. The Authority as constituted by section 8 of the DFRDB Act is not the Minister for Finance and therefore the Authority does not control the Consolidated Revenue Fund.

35. The current situation existing in the present matter does not meet the requirements of the Act in that the Consolidated Revenue Fund is not under the control of DFRDB scheme. Therefore, it does not meet the requirements of section 19 of the Act for the making of a Superannuation order, so no superannuation order can be made.

36. The CDPP would have to prove the control of the Fund was under the DFRDB Authority to the Briginshaw standard for an [sic] Superannuation order to be made under section 19(3)."

21 There is in my opinion no doubt that the Consolidated Revenue Fund is a fund that is covered by the scheme. The legislation to my mind speaks in terms of nomination or identification, and not in terms of control or management. This is a concept that the defendant has attempted to graft onto the relevant provision when there is no warrant for doing so. The Act appears clearly to be concerned with specifying the source of the funds, not with allocating responsibilities in terms of control or similar notions. The defendant's submissions seek somewhat awkwardly and opportunistically, and in my opinion illegitimately, to promote the concept of control as one having apparent significance in the circumstances, when there is no justification for such an approach.

22 I therefore reject the submission that the plaintiff somehow fails at the threshold because the Consolidated Revenue Fund is not under the DFRDB scheme or that it does not for that reason meet the requirements of s 19 of the Act for the making of a superannuation order in this case.

23 The defendant next argued that s 19(3)(a) of the Act required the employer to have paid contributions into the relevant fund but that in the present case there were actually no employer contributions and so there was nothing to which a superannuation order could attach. As unlikely as this argument appears, it was explained in the following way.

24 Paragraphs 46, 48 and 49 of the defendant's written submissions were as follows:

"46. The Act requires the employer contributions with respect to the person to "have been paid into, and held in ..." the relevant fund. Clearly, the notional nature of the contributions made (read paid into) by the employer means that no actual (as opposed to notional) contributions have been made to the Consolidated Revenue Fund. Similarly, it is relevant that the notional nature of the contributions means that there are no employer contributions actually "held in" the Consolidated Revenue Fund.

*****

48. If the DFRDB scheme holds no assets, then there can be no monies said to have employer contributions "held" in a fund.

49. As no employer contributions were actually made to the fund and no employer contributions are held in the fund, the requisite situation does not exist to meet the requirements of section 19(3)(a) and therefore no superannuation order can be made."

25 The basis for these submissions was a series of reports and documents that were never tendered by the defendant. These included a report on long-term costs carried out by the Australian Government Actuary in 2005 into the Military Superannuation and Benefits Scheme and the DFRDB scheme. The defendant contended that the report was a Commonwealth Record for the purposes of s 182(1) and s 147 of the Evidence Act 1995. Chapter 7 is headed "Unfunded Liabilities". It includes the following:

"7.1 The unfunded liabilities are the liabilities for superannuation entitlements in respect of service already rendered to the ADF and for which no assets are held. These liabilities do not fall due until the rules of the schemes provide for benefits to be payable, which is generally when members retire, and so they are spread over many years into the future. They have been calculated as the present value of all of the liabilities accrued in respect of past service less the value of the assets held. Since the DFRDB holds no assets, the latter term refers in practice to member contributions and productivity superannuation contributions in the MSBS, together with the investment return on them." [Emphasis added]

26 Apart from the fact that the defendant's argument fails to come to terms with the concept of a liability to pay benefits and the notional contributions to the DFRDB scheme by the employer in accordance with that liability, the s 18(3) and s 18(4) certificates admitted as part of the agreed statement of facts make it clear that the defendant's argument is misconceived. The defendant emphasises that all of the s 18(3) certificates that have been tendered have a $NIL entry in the relevant box. Under the heading "Statement pursuant to s 18(3) of the Act – Employer contributions or benefits held in the abovenamed fund in respect of the abovenamed person" the certificate says this:

"(a) Employer contributions or benefits made or payable by the Commonwealth, or the Commonwealth authority specified above, in respect of the person named above ARE NOT held in the fund specified above under the superannuation scheme named above.

(b) The sum of the said EMPLOYER CONTRIBUTIONS OR BENEFITS as at the specified day plus the amount of interest on those contributions or benefits accrued under that scheme before that day is $0.00".

27 However, the defendant ignores that part of the certificate that provides the s 18(4) information. Under the heading "Statement pursuant to s 18(4) of the Act – Benefits paid from the abovenamed scheme to the abovenamed person" the certificate says this:

"(a) Benefits HAVE been paid to the person named above under the superannuation scheme named above.

(b) The sum of ALL BENEFITS so paid as at the specified day is $194,166.42.

(c) The part of the benefits so paid that is attributable to the sum of the EMPLOYEE CONTRIBUTIONS paid by the person named above as at the specified day plus the amount of interest that accrued on those contributions before that day is $61,919.12."

28 In this case the plaintiff seeks a superannuation order in respect of benefits that have been paid to the defendant pursuant to s 19(4) of the Act, not in respect of employer contributions that remain held in the fund under the DFRDB scheme pursuant to s 19(3) of the Act. The defendant's arguments about the DFRDB scheme holding no amounts that represent employer contributions is therefore without content or significance for present purposes, whatever might have been its fate in different circumstances. Moreover, it seems to me that the defendant cannot approbate the proposition that the DFRDB scheme holds no funds representing employer contributions that could be made the subject of a superannuation order, in an attempt to avoid any liability for the making of such an order, whilst simultaneously reprobating the application of the Act to payments that have actually been made to him for exactly the same purpose.

29 The defendant's principal argument was that the superannuation order could not extend to relevant employer contributions made during any period of employment other than the period when, or during which, the defendant committed the corruption offences. In this case the corruption offences were committed exclusively during the defendant's third period of employment between 21 June 1999 and 10 August 2008. The defendant's argument in this respect was as follows.

30 During the intervals between his periods of service, or employment, with the ADF the defendant was not an "eligible member of the Defence Force" as defined in s 3(1) of the DFRDB Act. However, upon re-enlisting for full-time service the defendant was required to elect to become a contributing member defined in s 3(1) to mean "a member of the Defence Force who is making, or is required to make, or, but for section 18 or 18A, would be required to make, contributions under section 17". This is what occurred.

31 The defendant argued further that a superannuation order should not be made so as to deprive the defendant of employer contributions or benefits already received by him except in the clearest of circumstances. He argued in the present case that the Act did not clearly manifest an intention to divest him of a right and that a strict approach to what are in effect forfeiture provisions ought to be adopted in construing the Act. In this respect the defendant embraced what was said in Director of Public Prosecutions v Logan Park Investments Pty Ltd (1995) 37 NSWLR 118. That was a case dealing with certain provisions of the Proceeds of Crime Act 1987. Kirby A-CJ said this at 125-126:

"[1] The Act establishes a scheme for depriving persons of property rights which they otherwise enjoy by law. This is as much true of a company as it is of an individual. The right to own and to control property is an important civic right in a society such as ours. Indeed, it is an attribute of economic liberty. The ownership of property is recognised in the Universal Declaration of Human Rights. Article 17 provides:

'17.1 Everyone has the right to own property alone as well as in association with others.

2. No one shall be arbitrarily deprived of his property.'

Although these provisions are not, as such, part of Australian municipal law, they reflect fundamental principles of the law of civilised countries, including principles upheld by the common law in Australia. To the extent that they state applicable principles of international law, they are available to assist in the construction of ambiguous Federal legislation. It will be presumed that such legislation is written against the background of an acceptance of such fundamental principles: see, eg, Minister for Immigration and Ethnic Affairs v Teoh [1995] HCA 20; (1995) 69 ALJR 423 at 430 and 447; [1995] HCA 20; 128 ALR 353 at 384; Wentworth v New South Wales Bar Association [1992] HCA 24; (1992) 176 CLR 239 at 252. Therefore, it can be accepted that the Act, in so far as it manifests ambiguity or obscurity, would have been intended to respect basic property rights: see Director of Public Prosecutions for Commonwealth v Saxon (at 266). To deprive property owners (and I would say property owners contingently divested of their rights) of such rights, clear legislation is required. Although in the present case, it is true that the respondents' property had been forfeited to, and vested in, the Commonwealth, a proper view of the scheme of the Act, including s 31, is that the forfeiture is not complete until all rights of the property owner (including any rights enjoyed under s 31) are exhausted;

[2] Provisions for the forfeiture of property have conventionally been construed strictly. The Act contains an elaborate scheme, the predecessor of which was first introduced into Australian Federal law by the Customs Act 1901 (Cth). That Act contains a number of provisions for the forfeiture of goods. A strict approach to the construction of forfeiture provisions was endorsed by the majority of the High Court in Murphy v Farmer [1988] HCA 31; (1988) 165 CLR 19 affirming the decision in this Court: see Murphy v Farmer (1987) 87 FLR 149; 72 ALR 691. In the High Court (at 27f) Deane, Dawson and Gaudron JJ explained:

'... there were competing arguments which are based on the substantive content of [the section]. They point in opposite directions. On the one hand, it is arguable that the purpose of forfeiture provisions ... is 'to ensure the strict and complete observance of the Customs laws'... and that that purpose would be best served by the automatic forfeiture ... [o]n the other hand, it seems to us to be more strongly arguable that clear words should be required before there is attributed to the Parliament an intention to take the draconian step of imposing automatic forfeiture as a penalty for "any" wrong ... regardless of whether the wrong information was provided as the result of an innocent mistake or excusable ignorance. The effect of the penalty of automatic forfeiture ... can be devastating and quite disproportionate in that it applies regardless of the value of the goods or the importance or effect of the wrong statement which was made ... [i]t is... in our view, proper to approach the construction of the actual words of the Act on the basis that it is to be presumed that clear words would have been used if it were intended to impose automatic forfeiture.' ..."

32 In Lee v Director of Public Prosecutions (Cth) [2009] NSWCA 347 the judgment of the Court included the following:

"[17] An important aspect of such legislation, in which respect the Proceeds of Crime Act is not unique, is to provide for the confiscation of the proceeds of suspected crime, in the absence of criminal proceedings or conviction. Proceedings "on an application for a restraining order or a confiscation order are not criminal proceedings": s 315(1). Further, except in relation to offences under the Act, "the rules of construction applicable only in relation to the criminal law do not apply in the interpretation of this Act": s 315(2). To the extent that principles of construction relating to penal provisions have been applied in construing the Criminal Assets Recovery Act 1990 (NSW) that course is not available with respect to the Proceeds of Crime Act: cf New South Wales Crime Commission v Kelaita [2008] NSWCA 284 at [16] (Allsop P, Giles and Bell JJA agreeing). However, the constraint is of limited significance. As explained by Gibbs J in Beckwith v The Queen [1976] HCA 55; 135 CLR 569 at 576:

'The rule formerly accepted, that statutes creating offences are to be strictly construed, has lost much of its importance in modern times. In determining the meaning of a penal statute the ordinary rules of construction must be applied, but if the language of the statute remains ambiguous or doubtful the ambiguity or doubt may be resolved in favour of the subject by refusing to extend the category of criminal offences ... The rule is perhaps one of last resort.'

[18] There is, however, a more general principle of construction that denies a statutory intention to modify or abolish fundamental rights or freedoms absent clear and unambiguous language. That principle does not require express reference to the right or freedom which is diminished, but the intention to modify or abolish must arise by necessary implication from the terms of the statute: see generally Kelaita at [13]-[15]. The high store set by the preservation of such basic rights and freedoms is sometimes declared as requiring an intention to the contrary to be expressed with "irresistible clearness": see, eg, Studman v Director of Public Prosecutions (Cth) [2007] NSWCA 285; 177 A Crim R 34 at [35] (McLellan CJ at CL, Spigelman CJ and Handley AJA agreeing)."

33 The plaintiff argued that the words of s 19(1) of the Act contain no limitations upon their operation. The section refers in terms to "any superannuation scheme". It does not specifically limit recovery to benefits paid or contributions made by the Commonwealth to a specific superannuation scheme only during the period of employment when the corruption offences were committed. Section 19(4) is similarly unlimited, referring to benefits that have been paid to the person "under any superannuation scheme (whether before, on or after the commencing day)". Moreover, the definitions of "superannuation scheme" and "employee contributions" appear clearly to encompass contributions made by the Commonwealth or a Commonwealth authority in respect of a person at any time. The only relevant exclusion relates to employer contributions that have not been paid by the Commonwealth or a Commonwealth authority.

34 The plaintiff also submitted that the wording of s 21 made it clear that it was not limited to any particular period. Rather, the section operates and applies to all "rights or benefits arising out of the person's membership of any superannuation scheme". In this context I was referred to a decision of Doyle CJ in DPP v Pirone [1997] SASC 6051. His Honour was there required to consider ss 46 and 47 of the Australian Federal Police Act 1979, which were in identical terms to ss 19 and 21 of the Act. He referred to these provisions in the following passages:

"[29] ...In my opinion the application of s46 and s47 to such entitlements as Mr Pirone possessed at the time of the application to the Court or at the time of the making of an order does not involve the retrospective operation of those sections in a manner in which Parliament is presumed not to intend.

[30] The provisions operate on offences committed and conduct which occurred after their enactment. They empower a forfeiture of entitlements to benefits which the person has at the time of the making of an order. In my opinion the fact that that entitlement arises by virtue of employment at earlier times and contributions paid by the Commonwealth at earlier times does not mean that the legislation has retrospective operation.

[31] The making of the order does not alter or affect the entitlements of Mr Pirone arising by virtue of or attributable to past events. It assumes the existence of those entitlements, but now terminates them and transfers them, or an entitlement to an amount equal to their value, to the Commonwealth."

35 It is plain that the Act undoubtedly manifests a statutory intention to modify or abolish the defendant's property rights in the employer superannuation contributions or benefits of which he presently stands possessed. In general terms it does so in clear and unambiguous language. The question is whether or not when one descends into an examination of the particular periods of the defendant's employment, and compares those periods with the date of commission of the corruption offences, there remains an intention to deprive the defendant of contributions and benefits paid during all three periods that is expressed with "irresistible clearness".

36 The second reading speech is of limited utility having regard to what was said by the Court of Appeal in Harrison v Melhem [2008] NSWCA 67; (2008) 72 NSWLR 380; at [12]–[14]. However, as appears from what is recorded above, on the introduction of the original bill the Minister spoke in terms of "a strong financial disincentive to any who may be tempted to engage in corruption". This was the purpose or mischief to which the proposals were directed. The speech also referred to the fact that "[t]he government view[ed] corruption of office as a failure to fulfil a condition of employment which should result in the disentitlement to publicly funded superannuation benefits". It should be recalled that the definition of "corruption offence" includes an offence by a person who was an employee at the time when it was committed, being an offence whose commission involved an abuse by the person of his or her office as such an employee.

37 It is patent that the defendant did not relevantly fail, during either of the first two periods of his employment with the ADF, to fulfil a condition of his employment. In the same way, even though the defendant was an employee when the corruption offences were committed, they were not committed at a time when the defendant was an employee in either of the first two periods. It may be assumed as a matter of timing and theory, if not of causation, that the defendant by definition during the first two periods of his employment succumbed to or was influenced by the "strong financial disincentive" to commit any relevant offences. The defendant quite simply did not during the first two periods of his employment commit any offence that involved a failure to conform to his conditions of employment or that involved an abuse by him of his office as such an employee during those periods.

38 The abuse of office in this case occurred during the final period of employment. That was the period during which the objects and purposes of the Act necessarily come into play. In colloquial terms, the defendant ought not be permitted to hold out one hand to receive his employer's contributions to his superannuation fund whilst simultaneously committing a fraud upon that employer with the other hand. The same cannot be said of the contributions and benefits received by the defendant from the Commonwealth during the times when his conduct as an employee was without fault.

39 In my opinion the Act does not in this last and particular respect speak with "irresistible clearness". Nothing said by Doyle CJ in DPP v Pirone leads me to hold a different view. If the intention to modify or abolish the defendant's fundamental rights or freedoms must arise by necessary implication from the terms of the statute, it has not in my view done so in the present case in a way that would extend to and therefore permit the interference with his employer's superannuation contributions and benefits that were made, and to which he became entitled, during any period or periods of faultless employment. I am comforted in this conclusion by the words of Stephen J in Federal Commissioner of Taxation v Australia and New Zealand Banking Group Ltd [1979] HCA 67; (1979) 143 CLR 499 at 508-509 as follows:

"As Danckwerts LJ reminds us in Allen v Thorn Electric Industries Ltd [1968] 1 QB 487 at 505, a construction of a statute which interferes with the legal rights of the subject to a lesser extent and produces the less hardship is to be preferred to another, having the opposite effect; and see per Winn LJ [1968] 1 QB 487 at 509; and also Colonial Sugar Refining Co Ltd v Melbourne Harbour Trust Commissioners [1927] AC 343 at 359."

Conclusions

40 I consider that the plaintiff has established that a superannuation order should be made against the defendant. However, I am of the opinion that such order should be limited to the employer contributions or benefits made by the Commonwealth during the defendant's period of employment with the ADF between 21 June 1999 and 10 August 2008.

Orders

41 I indicated to the parties during the course of argument that it would be necessary to revisit the statements pursuant to s 18(4) of the Act that were tendered in the proceedings. The passage of time since I reserved my decision will by now have caused the sums and calculations reflected in those statements to be out of date.

42 I can indicate that having regard to the relief sought in the amended statement of claim I propose to make the declarations as asked for in paragraphs 1, 2 and 3. Subject to what follows I also propose to make orders as asked in accordance with paragraphs 4 to 7 inclusive of that document. However, before doing so I would request the parties to bring in draft short minutes of order setting out the amounts that I am required by the Act to specify in the light of the foregoing reasons, which reflect the calculations and contain the amounts as at the date of my orders. In those circumstances I will list this matter for that purpose on some date convenient to the parties and to the Court to be arranged in consultation with my Associate.

**********

LAST UPDATED:
27 January 2010