fbpx

Proceeds of Crime – Pecuniary Penalty Orders (PPO)

0 Comments

Pecuniary Penalty Orders (PPO)

PPO’s are designed to create a civil debt or a judgment debt against an offender when there are not enough assets to satisfy a forfeiture order. It prevents a criminal who is currently relatively impecunious from being subject to proceeds of crime action in relation to future activities.

A court must make an order requiring a person to pay an amount to the Commonwealth if:

  • The AFP applies for the order; and
  • The court is satisfied that:
    • The person has been convicted of an indictable offence and has derived benefits[1] from the commission of the offence; or
    • The person has committed a serious offence.

In determining whether a person has derived a benefit, it is not necessary that the person has property contained within a legal and/or equitable interest. It is enough that the property is subject to the person’s effective control.[2]

The court’s power to make a PPO is not affected by the existence of another forfeiture order, pecuniary penalty order, literary proceeds order, or an unexplained wealth order in relation to the same offence.[3]

Generally, a court must not make a PPO in relation to a person’s conviction of a serious offence within 6 months[4] of the conviction day.[5]

Determining Penalty Amount of PPO’s

Serious Offence

The value of the benefits derived from the commission of the offence + the value of benefits derived from the commission of any other offence[6] that constitutes unlawful activity[7] – reductions = Amount

Not A Serious Offence

The value of the benefits derived from the commission of the offence – reductions = Amount

Value of the Benefits Derived (aka. Subdivision B)

In assessing the value of the benefits, the court is to consider any or all of the things listed in section 122(1) Proceeds of Crime Act 2002 (Cth). Generally the things listed concern the benefit a person has derived from illegal activity.[8] It also involves a comparison of a person’s property before, during, an after the illegal activity,[9] as well as the person’s income and expenditure, before, during and after the illegal activity.[10] If the illegal activity relates to narcotic substances,[11] then a police officer or a customs officer who is experienced in the investigation of narcotics offences may testify with respect to market rates of narcotic substance.[12] Interestingly, an officer’s testimony in this context is admissible at the hearing despite any rule of law or practice relating to hearsay evidence,[13] and the matter is prima facie evidence of the matters testified.[14]

Value of Benefits Derived – Non Serious Offences

For non-serious offences, the court is to treat the value of the benefits derived by the person from the commission of the illegal activity at a minimum level of the difference between the value of the person’s property during or after the illegal activity, and the value of the person’s property before the illegal activity.[15] The amount can be reduced if the court is satisfied that the excess was due to causes unrelated to the illegal activity.[16]

Value of Benefits Derived – Serious Offences

If the offence is a serious offence and evidence is given that the value of the person’s property during or after:

  • illegal activity being the subject of the PPO (no time limit);
  • other unlawful activity that constitutes a terrorism offence (no time limit);
  • any other unlawful activity that the person has engaged in within the preceding 6 years[17] (not being a terrorism offence);

exceeded the value of the person’s property before the illegal activity and unlawful activity, then the court is to treat the value of the benefits derived by the person from the commission of the illegal activity as being not less than the amount of the greatest excess.

Expenditure incurred during the preceding 6 years,[18] is presumed to be the value of a benefit because of illegal activity, unless the contrary is proved.

Reducing PPO’s

Forfeited (under a Commonwealth law) or property proposed to be forfeited (under POCA)[19]

If property has already been forfeited under a law of the Commonwealth (including under the POCA) in relation to the unlawful activity to which the order relates, or an application has been made for a forfeiture order that would cover the property, then the penalty amount of the PPO is reduced by the value of the property as at the time of making the PPO.

Taking account of tax paid

The court must reduce the penalty amount by the amount of tax paid (before the application for the PPO is made) which is attributable to the benefits to which the PPO relates.

If an amount of tax is paid (after the application for a PPO is made) which is attributable to the benefits to which the PPO relates, the court has a discretion to reduce the penalty amount under a PPO if it considers that it is in the interests of justice to do so.

Fines payable[20]

The court has a discretion to reduce the penalty amount under a PPO by an amount payable by way of fine, restitution, compensation or damages in relation to an offence to which the order relates.

Increasing Penalty Amount

If a penalty amount was reduced because of forfeiture or a proposed forfeiture order, and an appeal against forfeiture is allowed, or the proceedings terminate without forfeiture being ordered, the penalty amount of the PPO can be increased by the amount equal to the value of the property.[21]

Likewise if there is a successful exclusion order from forfeiture (section 73 or 94 POCA), a compensation order (under section 77 or 94A POCA), or an order relating to the transfer of property (under section 102 POCA – on the basis that the interest is neither proceeds, nor an instrument, and the interest was lawfully acquired), the penalty amount of the PPO can be increased by an amount as the court considers appropriate.[22]

If a penalty amount was reduced by an amount of tax paid (pursuant to section 131 POCA), and the amount is repaid or refunded to the person in relation to that tax, then the penalty amount can be increased by an amount equal to the amount repaid or refunded.[23]

General Provisions relating to PPO’s

If the application relates to a person’s conviction of a serious offence, the application must be made within 9 months of the conviction day.[24] If the application relates to a person’s conviction of an indictable offence that is not a serious offence, the application must be made before the end of the period of 6 months after the conviction day.[25] The court may give leave to dispense with the above-mentioned time requirements in relation to applying for a PPO, it the court is satisfied that it would be in the interests of justice to allow the application.[26]

As a matter of practice, PPO’s are often applied for in the initiating Summons to forgo any issues about time limits regarding applying for PPO’s. The requested order in the Summons is then not pressed until the appropriate time period, usually being after conviction and/or determination that there are not enough assets forfeited to cover the benefit derived from the illegal activity.

The AFP must give written notice of the application for a PPO to a person who would be subject to the PPO if it were made.[27] The notice must include a copy of the application and supporting affidavit.[28] A person who would be subject to the PPO if it were made, may appear and adduce evidence at the hearing of the application.[29]

A PPO is a civil debt due by the person to the Commonwealth.[30] A PPO may be enforced as if it were made in civil proceedings instituted by the Commonwealth against the person to recover a debt due by the person to the Commonwealth.[31] The debt arising from the order is regarded as a judgment debt.[32]

A court may make an order that property subject to a person’s effective control[33] (that being a person who is the subject of a PPO), can be used to satisfy the PPO, if the AFP applies for such an order.[34]

Automatic charge on property

If a PPO is made against a person in relation to an indictable offence, and a restraining order has been made against the person’s property (including property subject to the person’s effective control which has been made the subject of an order under s 141 POCA to satisfy the PPO), and the restraining order relates to the indictable offence the subject of the PPO or a ‘related offence’[35]; then upon the making of the later of the orders, an automatic charge is created against the property.[36]

The charge is subject to every encumbrance[37] on the property (other than an encumbrance in which the person the subject of the PPO has an interest) that came into existence before the charge and that would have priority over the charge.[38]

Discharge of PPO upon quashing of conviction

If a person’s PPO is based upon committing a serious offence,[39] and the person is subsequently convicted of the offence, and then the conviction is squashed, the PPO is not affected.

If a person’s PPO is based upon conviction of an indictable offence,[40] and the conviction is subsequently quashed, then the AFP need to apply within 14 days to have the PPO confirmed or varied, otherwise the PPO is taken to be discharged.[41]

The court may confirm the PPO if the court is satisfied that when the AFP applied for the PPO, the court could have made the order without relying on the person’s conviction that was quashed.[42] That is, the court is satisfied that it could have made the PPO on the basis that there were reasonable grounds to suspect that the person committed the offence within the six years prior to the application for the PPO. If the relevant offence is a terrorism offence, then there is no six year time limit, and there is no time limit. The court must be satisfied that it could have made the order only on the reasonable grounds test, and without any reliance on the fact of the person’s conviction for that offence.[43]

If the PPO related to more than one offence, and the court could have made the PPO in relation to at least one of the offences, the court can reduce the penalty amount of the PPO by the amount that the court reasonably believes is attributable to the offence which was quashed.[44]

If the court confirms the order pursuant to section 149 Proceeds of Crime Act 2002 (Cth), or varies the order pursuant to section 149A Proceeds of Crime Act 2002 (Cth), then the order is taken not to be affected by the quashing of the person’s conviction of the offence.[45]


[1] Includes service or advantage – see s 338 Proceeds of Crime Act 2002 (Cth).

[2] Refer to glossary, ss 338 & 337 Proceeds of Crime Act 2002 (Cth).

[3] S 116(4) Proceeds of Crime Act 2002 (Cth).

[4] See ss 117 – 118 Proceeds of Crime Act 2002 (Cth).

[5] Defined in section 333 Proceeds of Crime Act 2002 (Cth), from section 338 Proceeds of Crime Act 2002 (Cth).

[6] Any other offence must have been committed within the period of 6 years preceding the application for a restraining order, or otherwise 6 years preceding the application for a PPO, or during the period after an application for a restraining order or PPO was made. No time limits apply if the offence was a ‘terrorism offence’. ‘Terrorism offence’ is defined at s 338 Proceeds of Crime Act 2002 (Cth).

[7] Means an act or omission that constitutes an offence against a law of the Commonwealth, State or Territory or of a foreign country – see s 338 Proceeds of Crime Act 2002 (Cth).

[8] S 122(1) (a)-(b) Proceeds of Crime Act 2002 (Cth).

[9] S 122(1)(d) Proceeds of Crime Act 2002 (Cth).

[10] S 122(1)(e) Proceeds of Crime Act 2002 (Cth).

[11] Defined in s 338 Proceeds of Crime Act 2002 (Cth).

[12] S 122(2) Proceeds of Crime Act 2002 (Cth).

[13] S 122(3)(a) Proceeds of Crime Act 2002 (Cth).

[14] S 122(3)(b) Proceeds of Crime Act 2002 (Cth).

[15] S 123(1) Proceeds of Crime Act 2002 (Cth).

[16] S 123(2) Proceeds of Crime Act 2002 (Cth).

[17] 6 years preceding the application for a restraining order, or otherwise 6 years preceding the application for a PPO.

[18] 6 years preceding the application for a restraining order, or otherwise 6 years preceding the application for a PPO.

[19] S 130 Proceeds of Crime Act 2002 (Cth).

[20] S 132 Proceeds of Crime Act 2002 (Cth).

[21] S 133(2) Proceeds of Crime Act 2002 (Cth).

[22] S 133(2A) Proceeds of Crime Act 2002 (Cth).

[23] S 133(3) Proceeds of Crime Act 2002 (Cth).

[24] Defined in section 333 Proceeds of Crime Act 2002 (Cth), from section 338 Proceeds of Crime Act 2002 (Cth).

[25] Defined in section 333 Proceeds of Crime Act 2002 (Cth), from section 338 Proceeds of Crime Act 2002 (Cth).

[26] S 134(6) Proceeds of Crime Act 2002 (Cth).

[27] S 136(1) Proceeds of Crime Act 2002 (Cth).

[28] S 136(2)-(3) Proceeds of Crime Act 2002 (Cth).

[29] S 138(1) Proceeds of Crime Act 2002 (Cth).

[30] S 140(1) Proceeds of Crime Act 2002 (Cth).

[31] S 140(2) Proceeds of Crime Act 2002 (Cth).

[32] S 140(4) Proceeds of Crime Act 2002 (Cth).

[33] See definition in glossary.

[34] S 141(1) Proceeds of Crime Act 2002 (Cth).

[35] Defined in s 338 Proceeds of Crime Act 2002 (Cth).

[36] S 142(1) Proceeds of Crime Act 2002 (Cth).

[37] Defined in s 338 Proceeds of Crime Act 2002 (Cth).

[38] S 142(3)(a) Proceeds of Crime Act 2002 (Cth).

[39] S 116(1)(b)(ii) Proceeds of Crime Act 2002 (Cth).

[40] S 116(1)(b)(i) Proceeds of Crime Act 2002 (Cth).

[41] S 146 Proceeds of Crime Act 2002 (Cth).

[42] S 149 Proceeds of Crime Act 2002 (Cth).

[43] Proceeds of Crime Bill 2002 Revised Explanatory Memorandum.

[44] S 149A Proceeds of Crime Act 2002 (Cth).

[45] S 150 Proceeds of Crime Act 2002 (Cth).


* Information contained in this article is of a general nature only and should not be relied upon as concise legal advice.
Please contact us for legal advice tailored to your situation. *


0
blank

About Brian Walker

B.Acc., GradDipLegPrac, Juris Dr Barrister & Accountant. Former Criminal Defence Solicitor. Former Federal Prosecutor for the Commonwealth Director of Public Prosecutions prosecuting Commonwealth crimes relating to drugs and child exploitation. Former Australian Federal Police member litigating proceeds of crime matters. Former Australian Taxation Office employee investigating offshore tax evasion matters.

    You May Also Like

    Leave a Reply

    Your email address will not be published.