Just as moneys in a bankrupt’s superannuation fund can in certain cases be used to pay their creditors, under the Bankruptcy Act, so too would a criminal’s super fund be available to pay compensation to their victim, under changes proposed by the government to superannuation laws.
Treasury is canvassing views on whether a convicted criminal’s superannuation fund should be available to meet unpaid compensation orders for victims of their serious crime: Review of superannuation and victims of crime compensation – further consultation and draft proposals, May 2018.
The reality at present is that a criminal with a million dollars in super, but without ready cash or assets, may not be able to pay, or forced to pay, compensation to their victim.
The Treasury paper offers two draft proposals:
One, with an aim to prevent criminals from using their superannuation to ‘shield’ their assets from victims of crime. It would allow victims of crime to claw back ‘out of character’ contributions, in the same way that a trustee in bankruptcy can recover moneys paid into a super fund in evident concern to deny access to their super funds by their creditors: see s 128B Bankruptcy Act. This would only apply to particular contributions rather than the perpetrator’s entire superannuation balance.
Two, to allow victims of serious crimes with unpaid compensation orders to access a perpetrator’s entire superannuation balance where other assets have been exhausted. The policy is that the interests of uncompensated victims of crime should take priority over the retirement income needs of the perpetrator. This draft proposal includes safeguards to protect the interests of dependants of a perpetrator.
As the Treasury paper says, the States and Territories would need to ensure that the draft proposals can work given that victims compensation, and criminal laws, are state and territory based.
As to family law claims, they would prevail over any victim compensation payments.
Treasury seeks stakeholder feedback on the two draft proposals by 15 June 2018.
Victims of crime legislation
The background to victims of crime legislation is well explained in a decision in R K v Mirik & Mirik [2009] VSC 14. One purpose is to provide monetary compensation for the victim rather than leaving them to what might be the distressing experience of suing the perpetrator of the crime by civil action. The Court’s decision refers to the development in thinking in relation to victim compensation, prompted in particular by the United Nations Declaration of Basic Principles of Justice for Victims of Crime and Abuse of Power, of November 1985.
An issue in that case was the capacity of the perpetrators to pay. The Court ordered an amount of over $140,000 against them, rejecting their claim that there should be no compensation ordered because they had no assets, nor any likelihood of any. They were also in jail under long prison sentences for “horrible” crimes that caused extreme harm and suffering to the victim. Their sentences were increased on appeal. A challenge by one to a deportation order, back to Turkey, after having lived in Australia for over 40 years, was refused: Mirik and Minister for Immigration and Citizenship [2012] AATA 835.
In such cases of course there is no issue of any compensation, certainly no superannuation. That might be said to be more an asset of a white-collar criminal. Figures given to Treasury by AFSA show that only around 150 proofs of debt had been lodged by victims of crime over several years.
To what extent the reforms may assist is not known, but on paper they offer some sense of justice; or they seek to redress the sense of injustice when a perpetrator cannot pay compensation despite having access to significant superannuation. Pursuing the perpetrator into bankruptcy may provide more redress.
