A third party (i.e. a person other than the accused) can obtain an exclusion order in respect of restrained property under the Confiscation Act 1997 if they can demonstrate (among other things) that, where they acquired their interest in the property from the accused, it was acquired for “sufficient consideration”.
Sufficient consideration is defined in s.3 of the Confiscation Act 1997 as consideration that reflects the market value of the property and does not include—
- consideration arising from the fact of a family relationship between the transferor and transferee;
- if the transferor is the spouse or domestic partner of the transferee, the making of a deed in favour of the transferee;
- a promise by the transferee to become the spouse or domestic partner of the transferor;
- consideration arising from love and affection;
- transfer by way of gift;
Despite the focus on market value in the definition of “sufficient consideration”, two recent Victorian cases highlight the fact that non-financial contributions to the relationship are capable of satisfying the sufficient consideration test. One of those cases also suggests that the Court can make orders alleviating harsh outcomes by relying on the discretion to vary property the subject of restraint.
Azizi v Director of Public Prosecutions [2022] VSCA 71
In Azizi, Mrs Azizi, who was the joint registered proprietor of the family home with her husband, had not made any financial contributions to the purchase price of the family home. It was determined at first instance and on appeal that she had acquired her interest in the family home indirectly from her husband, by reason of the fact that he had paid the entire purchase price and notwithstanding the fact that he had not owned the property at any time before her.
Ms Azizi had not put on any evidence as to her significant non-financial contributions on the understanding that non-financial contributions could not amount to “sufficient consideration”. The Court of Appeal made the following obiter observation (at [74]):
We observe that it is by no means clear that non-financial contributions can never amount to ‘sufficient consideration’, as the applicant submitted. But that is a question for another day.
Cohrs v The Director of Public Prosecutions for Victoria [2022] VSC 695
In Cohrs, the former wife of the accused sought to exclude her interest in the net proceeds of sale of matrimonial assets. The Court observed (at [13]):
In an affidavit filed in this proceeding the applicant set out what she said was her very significant financial and non-financial contribution throughout her marriage to the accused. This included, in addition to her role as parent and homemaker, extensive work on properties owned by her and the accused, and work performed to the benefit of businesses within the Cohrs Group.
And (at [36]):
Second, the applicant’s evidence strongly supports the level of her contribution to a 40-year marriage. That evidence goes to the applicant’s contribution to the acquisition, improvement and maintenance of properties and businesses in the Cohrs Group. The evidence supports the applicant’s interest in assets acquired during the period of the marriage that were registered in the name of the accused. While the evidence may not provide a sufficient basis for a conclusion about the extent of the applicant’s equitable interest in the Swan Hill properties, it does support a conclusion that the applicant has an interest (as that term is more broadly defined in the Act) in funds held in trust as a result of the realisation of properties registered in the name of the accused during the period of the marriage. This includes the ACO funds.
In Cohrs, the exclusion application ultimately failed because there was insufficient evidence that the properties were not under the effective control of the accused.
However, the Court nevertheless released 50% of the relevant funds to the applicant under s.26 of the Confiscation Act 1997 (which was not opposed by the DPP), which confers a broad discretion to make orders that are “just”. As to that, the Court observed (at [35]) that the variation power under s.26 of the Confiscation Act 1997:
…gives the Court a broad power that can be used in an appropriate case to ameliorate what may otherwise be an arbitrary and harsh outcome resulting from the application of the provisions of the Act.
In essence, the Court conferred the benefit of an exclusion order by relying on the variation power.
