High Court affirms governments' power to pass 'draconian' seizure laws

In brief

The High Court recently handed down its decision in Attorney-General (NT) v Emmerson. Partner Peter O'Donahoo, Senior Associate Tim Maxwell and Lawyer Simone Kaser review the decision with respect to the court's analysis of the limits on Commonwealth and Territory legislative power under the doctrine of separation of powers and the 'just terms' guarantee.  

The statutory scheme

The statutory provisions considered in this case concerned the Northern Territory's forfeiture scheme with respect to persons declared a 'drug trafficker'. The combined operation of section 36A of the Misuse of Drugs Act (NT), and ss94 and 44 of the Criminal Property Forfeiture Act (NT), permits the forfeiture of a person's property to the Northern Territory without the need for a further court order if:

• the Director of Public Prosecutions (DPP) applies for a declaration from the Supreme Court that the person is a 'drug trafficker' under s36A of the Misuse of Drugs Act;
• the court provides the declaration sought, which it must do, if the person has been convicted of certain drug-related offences at least three times within a 10-year period; and
• the person's property is subject to a restraining order under s44 of the Criminal Property Forfeiture Act, or was given away by that person.

Under the scheme, all property that is owned or effectively controlled by the person is vulnerable to forfeiture and it is irrelevant whether the property forfeited was the product of, or used in, any criminal offence.

The objectives of the scheme are penal and 'to compensate the Territory community for the costs of deterring, detecting and dealing with the [person's] criminal activities'.²

Procedural history

The DPP successfully applied to the Supreme Court of the Northern Territory for a declaration that Mr Emmerson was a 'drug trafficker'. As a result of the declaration, Mr Emmerson's property was forfeited to the Northern Territory, including property that was not related to any criminal offence.

Mr Emmerson successfully appealed to the Northern Territory Court of Appeal. The majority concluded that the scheme was invalid because it breached the constitutional guarantee of separation of powers as expressed in Kable v Director of Public Prosecutions (NSW)³ (Kable) – the statutory scheme required the Supreme Court to act in a 'manner incompatible with the proper discharge of the Court's function as a repository of federal jurisdiction, and with its institutional integrity'.⁴ However, the Court of Appeal did not accept Mr Emmerson's submissions that the statutory scheme effected an acquisition of property otherwise than on just terms in breach of s50(1) of the Northern Territory (Self-Government) Act 1978 (Cth). The Attorney-General for the Northern Territory appealed the Court of Appeal's decision to the High Court.

Two issues were considered in the High Court.

• First, was the statutory scheme with respect to drug trafficking and forfeiture invalid for contravention of the Kable principle?
• Second, was the relevant statutory scheme invalid for contravention of legislative power by s50(1) of the Northern Territory (Self-Government) Act, which states that the Northern Territory's law-making power does not extend to making laws with respect to acquisition of property otherwise than on just terms?

The majority of the High Court answered 'No' in response to both. Justice Gageler issued the sole dissenting judgment. He did not address the first question and answered 'Yes' in response to the second.

Kable principle not offended

On the first issue, the majority in the High Court held that the forfeiture scheme was not invalid for contravention of the Kable principle. In doing so, the court reinforced the executive's power to enact legislation directing a court to make a declaration resulting in forfeiture of property on the application of a member of the executive, provided that certain conditions are satisfied. In this case, the scheme was valid, and the process was not deprived of its judicial character and independence simply because:

• the satisfaction of such conditions depended on an application made by a member of the executive, here the DPP; and
• it was easy to determine whether the statutory conditions were satisfied because of the ease of proof of the criteria.

In finding that the scheme did not undermine the institutional integrity of the court, the majority emphasised that the scheme still relied on ordinary judicial processes being performed, for the following reasons:

• the court's determination that a particular fact or status exists is made in an open court;
• a declaration can only be made on receipt of evidence sufficient to satisfy the civil standard of proof;
• the affected party has a right to be heard, may have legal representation, and may make submissions and receive reasons;
• there is judicial assessment of the merits of the application;
• there is an exercise of discretion; and
• the usual rights of appeal remain.

The court distinguished this case from International Finance Trust Co Ltd v NSW Crime Commission ⁵ and South Australia v Totani.⁶ In International Finance, the court was required to determine an application, made ex parte, for a restraining order in respect of property if a law enforcement officer suspected that the owner of the property had committed a certain crime or that the property was the product of criminal activity. The legislation in that case was invalid because it purported to direct the court as to the manner and outcome of its exercise of jurisdiction. Here, although the regime set a low bar for the exercise of the court's discretion, there was no such impermissible direction.

In Totani, the court was required, on application of the Commissioner of Police, to make a 'control order' against a defendant if satisfied the defendant was a member of a 'declared organisation' without needing to determine, by ordinary judicial processes, whether the defendant had engaged in serious criminal activity. The legislation in that case was invalid because it effectively 'enlisted' or 'recruited' the court to implement decisions of the executive. Here, the DPP's decision to apply for forfeiture was not the operative decision that imposed the penalty – that decision remained the court's exercise of discretion.

Acquisition of property otherwise than on just terms

On the second issue, the majority held that the scheme, being properly characterised as laws with respect to forfeiture, provided for a valid acquisition of property. First, application of the just terms guarantee to such laws, imposing a punishment for crime, would be incongruous. Second, whether the punishment fits the crime is a matter for the legislature. It is not for the courts to determine whether any forfeiture worked by the Criminal Property Forfeiture Act is proportionate to the stated objectives.

Further, that all of a person's property may be subject to forfeiture achieves the scheme's legislative purpose of protecting society by incapacitating a drug trafficker through forfeiture of their assets, and falls under the scheme's statutory objectives of 'dealing with' the consequences of such criminal activity.

The newest member of the court, Justice Gageler, dissented on this issue. He held that the scheme contravened the property guarantee because its provisions were not consonant with the constitutional purpose of the just terms guarantee, which is to prevent arbitrary acquisition of property. For a law to escape the just terms guarantee as a law providing for forfeiture, it must have the general characteristics of a law which acquires property without attracting that guarantee:

• the objective of the law must be within power;
• the acquisition must be a necessary feature of the means the law selects to achieve that objective; and
• the means must be appropriate and adapted to achieving that objective.

A law forfeiting property will usually have the first characteristic. The objectives of the scheme in this case were to compensate the Territory for the costs of deterring, detecting and dealing with criminal activities, and punishing those activities. However, it will not necessarily have the second and third features. Justice Gageler held that the scheme failed to satisfy the second and third characteristics for two reasons. First, no attempt had been made in the scheme to link the value of the property forfeited to the amount of the costs identified for deterring, detecting and dealing with the person's criminal activities. It could not, therefore, be said to be 'appropriate and adapted' to the purpose of recovering those costs.

Second, forfeiture of property only took effect on the decision of the DPP to exercise his or her discretion. This conferral of power to the DPP to impose civil forfeiture was not a necessary or characteristic feature of penal forfeiture, and was not appropriate and adapted to achieving an objective of imposing a penalty or sanction for breach of a norm of conduct. Justice Gageler found that laws providing for penal forfeiture had the necessary relationship to their purpose where forfeiture is automatic on conviction, or where the court's power to order forfeiture arises automatically on conviction. Here, the DPP's discretion in applying for the relevant orders broke that relationship.

Justice Gageler held that since the scheme did not escape the just terms guarantee, its provisions were laws with respect to the acquisition of property otherwise than on just terms.

Implications of the case

As the Kable test of 'institutional integrity' is necessarily general⁷, Emmerson helpfully provides further clarity as to the legislative schemes likely to contravene the constitutional guarantee of separation of powers. This case supports the approach that in determining whether the 'institutional integrity' of the court has been compromised, a central consideration is whether the court is required to follow certain processes, such as applying the rules of evidence and whether there is a right to appeal.

In relation to the acquisition of property otherwise than on just terms, s50(1) of the Northern Territory (Self-Government) Act is similar to the constitutional guarantee of property rights found in s51(xxxi) of the Commonwealth Constitution. As a result, the analysis in this case is relevant to any consideration of the federal constitutional guarantee of property rights, in particular, the extent to which s51(xxxi) may apply to laws relating to penalties and forfeiture. The majority's decision reaffirms the accepted position that it would be incongruous to apply the property guarantee to laws requiring forfeiture.