Freckleton, I --- "Compensation Applications Require a Watching Brief" [2009] UMonashLRS 5

Last Updated: 20 April 2011

Compensation Applications Require a Watching Brief

Under the Sentencing Act 1991, victims of crime can seek compensation directly from offenders. Practitioners need to ensure that sufficient assets exist to make an application worthwhile, and also safeguard relevant assets from being dissipated. Ian Freckelton SC[1]

Introduction
In 1996 and again in 2000 the Sentencing Act 1991 (Vic) (“the Act”) was amended as part of a major realignment of the rights of victims of crime in Victoria away from financial awards from the state toward enabling victims to seek compensation directly from offenders.[2] The enhanced rights of victims implement Clause 8 of the 1985 United Nations Declaration of Basic Principles of Justice for Victims of Crime and Abuse of Power which provides that, where appropriate, offenders should make fair restitution to victims, including by payment for the harm and loss they have suffered. Section 16(1) of the Victims Charter Act 2006 (Vic) too provides that “a victim may apply to a court for an order that the person convicted of or found guilty of the criminal offence that gave rise to the injury suffered by the victim pay compensation to the victim.”

Sections 85A-M of the Act enable applications by victims of crime for a variety of forms of pecuniary compensation against perpetrators of criminal acts. Given the limited sums payable by the Victims of Crime Assistance Tribunal (VOCAT) to those adversely affected by criminal conduct, s85B applications, have come to play a vital role in providing redress for victims of crime against offenders who have, or may at some stage acquire, the means to satisfy compensation orders. However, utilisation of the provision by victims has been patchy, as victims’ rights in this regard are still comparatively little known and the practice involved sits uneasily between criminal and personal injury law. The extent of offenders’ assets has proved an important practical and legal issue in terms of the making of applications for s85B compensation by victims and the quantum of compensation awarded by courts.

This article reviews the significance and complexities of s85B applications. It addresses the substantial case law that has evolved and the ethical/disciplinary risks for legal practitioners who fail to assist victims to take suitable action both to make s85B applications professionally on their clients’ behalf and to preserve offenders’ assets against which s85B orders may need to be enforced.

Orders for Compensation Against Offenders
The purpose of conferring power under the Act on the criminal courts to order offenders to pay compensation is to give victims “ready access” to just compensation[3] without the rigours and expenses of pleadings, interrogatories and the usual concomitants of civil litigation.[4] An award of s85B compensation is not made as a form of punishment, but in an endeavour to address through the payment of money, the injury and loss sustained by the applicant.[5] The entitlements of victims to compensation from offenders can also be categorised as an incident of the changes to Victoria’s legislation to protect and enhance the dignity of victims of crime.[6] When an offender has been dealt with by a criminal court, the sentencing judge is often in an informed position to evaluate the merits of the claim by reason of what has already transpired during the criminal proceedings.”[7]

Forms of Available Compensation under s85B
Under s85B, upon a finding of guilt or conviction, on the application of a person who has suffered any injury as a direct result of the offence, a court (generally the sentencer) can order the offender to pay compensation of such amount as the court “thinks fit”:

(a) for pain and suffering experienced by the victim as a direct result of the offence;

(b) for some or all of any expenses actually incurred, or reasonably likely to be incurred, by the victim for reasonable counselling services as a direct result of the offence;

(c) for some or all of any medical expenses actually and reasonably incurred, or reasonably likely to be incurred, by the victim as a direct result of the offence;

(d) for some or all of any other expenses actually and reasonably incurred, or reasonably likely to be incurred, by the victim as a direct result of the offence, not including any expense arising from loss of or damage to property. (emphasis added)

A confidential agreement between the parties to a s85B application cannot avoid the operation and scheme of the Act. The decision upon eligibility and quantum always remains that of the court.[8]

Section 85B applications are “incidents of criminal proceedings”[9] and use “a summary procedure ancillary to criminal process.”[10] Applications are made in a relatively informal way without undue technicalities. The process is designed to be “speedy” and “low cost”.[11] The civil standard of proof on the balance of probabilities applies.[12] Compensation is calculated according to common law general damages principles[13] but in determining quantum the court is not limited to injuries for which damages at common law may be awarded nor constrained by concepts such as proximity and foresight.[14] It has been held that contributory negligence or fault of the victim might be a relevant factor be taken into account in the exercise of the making of an award and the subsequent determination of its amount, depending upon the nature of the common law relief available to the victim.”[15] Importantly, substantial compensation can be awarded for sequelae of criminal conduct beyond what can be classified as “psychiatric illnesses” or “psychiatric disorders” within the meaning of the generally accepted definitions in DSM-IV-TR or ICD-10).[16] This can be suitable for the symptomatology involved. As Cummins J noted in Robertson v Esso (Australia) Pty,[17] “Psychological injury often is developmental and longitudinal in its nature.”

This is not to say that quantification of compensation is straightforward - Vincent JA in DPP v Energy Brix Australia Corporation Pty Ltd observed that there cannot be a yardstick by which the extent of personal grief or distress can be measured, and no method of conversion of a human emotion or psychological reaction to an amount of money exists.[18] On occasion, sums of money awarded have been substantial. For instance, in Stevens v Baxter[19] Forrest J ordered a person to pay $240,000 to each of two children who had murdered their mother, reducing the sum only by the amount of $30,000 that each had already received from the VOCAT.

The factors which should be taken into account in assessing compensation for grief or trauma under s85B (in the context of another’s death) have been held by Neave JA to include:[20]

• the circumstances in which the death occurred;

• the effect on the applicant on hearing of the events causing loss;

• the closeness of the relationship between the person seeking compensation and the person who has been killed;

• the age of the person seeking compensation; and

• the extent of grief and psychological suffering experienced as a result of the loss.

The apparent stringency of the requirement of “direct” nexus between sequelae of criminal conduct and the criminal act has been moderated by some significant latitude. For instance, Buchanan JA in Kaplan v Lee- Archer[21] held that the requirement “does not mean that there can be no step between the cause and the consequence, or that the consequence must be solely due to the cause”:[22] “the introduction of the adjective ‘direct’ is intended to exclude those results which are but tenuously related to crimes in that their contribution is a minor factor in the production of the injury.”[23]

There is flexibility also in relation to the way in which a court can order compensation to be paid: the court may direct that the compensation be paid by instalments and that in default of payment of any one instalment the whole of the compensation remaining unpaid shall become due and payable (s85B(4)).

Criminal Acts Excluded from s85B Applications
There is an important limitation to entitlements to s85B compensation. Under s138B(1) of the Accident Compensation Act 1985 (Vic) and s107A of the Transport Accident Act 1986, s85B compensation cannot be awarded (a) arising from an injury or death in respect of which it appears to a court that the victim has an entitlement to any compensation under the Accident Compensation Act or the Transport Accident Act; and (b) arising from an event that constitutes an offence only against the Dangerous Goods Ac 1985, the Occupational Health and Safety Act 2004; the Equipment (Public Safety) Act 1994, the Transport Accident Act 1986 or any regulations made under such legislation.

Timing of Applications
Applications must be brought within 12 months of a finding of guilt or conviction (s85C(1)(a)), generally by the victim but can also be made on the victim's behalf by any person other than the offender if the victim is a child or is incapable of making the application by reason of injury, disease, senility, illness or physical or mental impairment (s85C(1)(b)(ii). They can also be made by the DPP in the County Court or Supreme Court or by the DPP, the informant or police prosecutor in a Magistrates’ Court. However, this is rare. Applications can be made out of time if leave is granted “in the interests of justice” after giving the offender an opportunity to be heard on the issue (s85D).[24] The usual kinds of factors are taken into account in this regard: the extent of lateness, any culpability of the victim for the dilatoriness, the reasons for the lateness, and any prejudice suffered by the offender.

Complexity of Cases
Historically, compensation orders were only made by criminal courts in straightforward cases.[25] However, in the most extensive analysis of s85B applications thus far, Bell J held in 2009 that “many fewer cases will be considered too complex for determination under the new provisions than under the former provisions.” More applications will be regarded as capable of being heard and determined by the criminal courts, “if the victim elects to pursue the right of easy access to civil justice which the legislation provides.”[26] This means that it will be a rare case in which a court declines to entertain a s85B application because of its complexity.

Procedures and Threshold Requirements
In an application for a s85B compensation order a party may appear personally or may be legally represented or, even, with leave, “by any other person” (s85E). There are anomalies in relation to the material which a court is permitted to take into account. A court must not refuse to hear and determine a s85B application unless, in its opinion, the “relevant facts” do not “sufficiently appear” from evidence given at the hearing of the charge: any statement of the material facts relevant to the charge given to a court in a proceeding for the offence by the prosecution and not disputed by or on behalf of the defendant; or the “available documents” (documents previously available to the sentencer - s85F), together with admissions made by or on behalf of any person in connection with the application (s85F(1)).

Thus, a threshold impediment exists to the hearing of an application if the relevant facts are not sufficiently apparent from information available at trial/sentencing. Generally, however, this is not problematic in practice and it is very rare indeed for a court to decline to hear a matter on s85F grounds.

The evidence which can be adduced in s85B applications is stipulated by s85G(1) to include, amongst other things, evidence from the victim, offender or “another person”. A court is precluded from making a compensation order without giving the offender a reasonable opportunity to be heard on the application for the order (s85G(2)).

So that natural justice is extended to the respondent, the practice has evolved in the Supreme Court that the applicant files an affidavit (over and above the victim impact statement likely already to have been filed), a suitable time prior to the hearing, explaining the impact that the criminal conduct has had upon him or her and exhibiting other material, including from experts, upon which he or she proposes to rely at the hearing. This enables the respondent to decide whether to exercise the right to cross-examine the authors of such material pursuant to s85G(b). It also enables the respondent to determine whether or not to require the applicant to be medically examined.[27]

Financial Circumstances of Offender
An important limiting factor is created by s85H(1) which allows a court, if it decides to make a s85B order, either in determining the amount or the method of payment of compensation, to take into account, as far as practicable, the financial circumstances of the offender and the nature of the burden that its payment will impose. However, a court is not prevented from making a compensation order only because it has been unable to find out the financial circumstances of the offender (s85H(2)).

Section s85H has been held only to be a “potential restriction upon the quantum of compensation where an offender has limited means”[28] (emphasis added), not a “controlling factor”.[29] An award of compensation in favour of an applicant may be able to be satisfied later, Buchanan JA holding that “the fact that an offender may lack capacity to pay a compensation order no more renders the order penal than does the fact that a judgment debtor lacks the wherewithal to pay a judgment debt render the debt a penalty”.[30]

For instance, in Stawenga v Gregory[31] and DPP v Parsons[32] Cummins J noted the tension between compensating the victim and rehabilitation of the offender by the avoidance of the imposition of a crushing financial burden. But, as the provision is (for adults) discretionary, it has been held not to be an error of principle for s85B compensation order to have the potential to affect the offender’s rehabilitation, as long as it is properly taken into account.[33] If a case does not involve a “youthful offender whose rehabilitation could be assisted by having resources available upon his or her release from custody”, it may be that courts will be loathe to make a s85H reduction.[34] In Nicholson v Kostov[35] Kellam J made a significant order against an offender whose means at the time could not fully cover it (only having at the time $3,500), stating that “there are a range of future possibilities which might change the situation and the financial circumstances of the respondent cannot be the final determinant of a sum of compensation to be ordered.”[36]

Bell J appears to have stated the law as it has evolved, holding that “there are cases where the court could exercise its discretion to order compensation despite the offender’s lack of means and the burden that payment of compensation would impose. In such cases, the interests of giving the victim just civil compensation will have priority over the interests of the offender in avoiding that result in criminal proceedings.”[37] Previously, Teague J in R v Scarborough[38] had ordered compensation some $74,000 in excess of the offender’s assets. In RK v Mirik & Mirik[39] Bell J accepted that the offenders had no assets with which to satisfy an order for compensation and were not likely to have them: “On their release from prison, if not deported, they will have income only from a disability support pension. An award of compensation, unless it was in only a token amount, could not be paid by them unless they were to come into a windfall gain.” However, in light of the crimes that the offenders had committed against the victim being described by Bell J as “horrible”, their impact on the victim as “terrible”, he decided to reduce what he would otherwise have awarded by 25%, and ordered the offenders ultimately to pay $113,600 and $26,525,

If a court decides to make a compensation order, it must take appropriate steps to avoid the victim “double-dipping” by reducing the amount of s85B compensation by the amount of any award made to the victim under the Victims of Crime Assistance Act 1996 for the expense or other matter for which compensation is being sought (s85I). Applicants for s85B compensation can still bring civil proceedings (s85L). However, if they do so, their damages will be reduced by what they have received by way of s85B compensation. Subject to s30 of the Confiscation Act 1997 (Vic), a s85B order, including costs ordered to be paid by the offender on the proceeding for that order, must be taken to be a judgment debt due by the offender to the person in whose favour the order is made and payment of any amount remaining unpaid under the order may be enforced in the court by which it was made (s85M).

When a court awards or declines to award s85B it must give its reasons in writing (s85J). Each party to an application must bear their own costs “unless the court otherwise determines.” (s85K) This creates a barrier to the award of costs. However, courts have awarded costs in a number of cases.[40] “Exceptional circumstances” need not be established.

Ethical Obligations of Practitioners
The decision as to whether to pursue a s85B application needs to be taken in an orthodox commercial fashion, taking into consideration realistically the prospects of there being assets against which to enforce an order, if granted.

Under s15 of the Confiscation Act 1997 (Vic) an application for a “restraining order” can be made, amongst other things, “to satisfy any order for restitution or compensation that may be made under the Sentencing Act 1991”. When a person has been, or within the next 48 hours will be, charged with or has been convicted of, eg, an indictable offence, the Director of Public Prosecutions (the DPP) may apply for a restraining order in respect of which the offender has an interest (s16(1)). It is incumbent upon legal practitioners representing a victim to alert the DPP to the interests of a victim and, if necessary, to inform the DPP of the timeframe within which an application should be made if there is reason to believe that an offender may disabuse himself or herself of assets. Another recourse available to a victim, in principle, is an application for a “freezing order” under O37A of the Supreme and County Court Rules. Such an order is made not in aid of existing legal or equitable rights but for the preservation of assets pending the determination of rights to prevent the frustration of court processes.[41] Failure to take due steps to attempt to preserve the offender’s assets for enforcement of a s85B order exposes the practitioner to a legitimate institution of complaint in relation to absence of proper diligence and competence and to civil action by the victim, the measure of damages being the compensation not obtained (and the costs) by reason of the failure to institute the application.

Conclusions
Applications for compensation under s85B of the Sentencing Act 1991 have become an important means of securing direct financial redress for victims against offenders. With the quantum of compensation being determined on common law principles and the scope of the injuries that are compensable being broader than in orthodox personal injury actions, s85B applications can be straightforward and highly advantageous for victims. However, it is essential to secure adequate expert evidence to establish the nature and extent of the injuries caused by the criminal conduct that is the subject of findings by a criminal court. It is important also to ascertain whether the offender has assets sufficient to make a s85B application commercially worthwhile and often it is necessary for those representing victims to take sufficient steps to secure the ongoing availability of such assets for meeting court orders.

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[1] IAN FRECKELTON SC is a barrister in Crockett Chambers, Melbourne. He is the author of I Freckelton, Criminal Injuries Compensation: Law, Practice and Policy (LBC Information Services, Sydney, 2001).
[2] See generally Bentley v Furlan [1999] VSC 481; [1999] 3 VR 63 at [22]- [35]; RK v Mirik & Mirik [2009] VSC 14; I Freckelton, Criminal Injuries Compensation: Law, Practice and Policy (LBC Information Services, Sydney, 2001).
[3] R v Oddy [1974] 2 All ER 666 at 670; R v Inwood (1974) 60 Cr App R 70 at 73; R v Braham [1977] VicRp 11; [1977] VR 104 at 108; DPP v Energy Brix Australia Corporation Pty Ltd [2006] VSCA 116; (2006) 14 VR 345, 346 per Buchanan JA; Kaplan v Lee-Archer [2007] VSCA 42; (2007) 15 VR 405 at 406-407; 410-411.

[4] DPP v Energy Brix Australia Corporation Pty Ltd, note 2 above, per Buchanan JA.
[5] DPP v Energy Brix Australia Corporation Pty Ltd [2006] VSCA 116 at [30]; see too R v Ross [2007] VSCA 213 at [17].

[6] RK v Mirik & Mirik, note 1 above at [5] – [11] per Bell J.
[7] RK v Mirik & Mirik, note 1 above at [11].

[8] DPP v Esso Australia Pty Ltd [2001] VSC 401 at [15].
[9] DPP v Esso Australia Pty Ltd (No 2) [2001] VSC 401; (2001) 126 A Crim R 13, at 16 per Cummins J.

[10] DPP v Gardner and Coates [2004] VSCA 119 at [29] per Winneke P.

[11] See R v Ross , note 4 above at [19].

[12] RK v Mirik & Mirik, note 1 above at [14].
[13] DPP v Esso Australia Pty Ltd, note 7 above at [10]; Esso A ustralia Pty Ltd v Robertson [2005] VSCA 138.
[14] DPP v Energy Brix Australia Corporation Pty Ltd, note 4 above. Notably, compensation though is for “injury”, not for criminal act: see H v Crimes Compensation Tribunal [1993] 1 VR 608.
[15] Dura Constructions (Aust) Pty Ltd v Dovigi [2004] VSC 252 at [73] per Williams J, applying R v MacGowan [1979] 1 NSWLR 451 and R v McDonald [1984] 3 NSWLR 440. See generally I Freckelton, Criminal Injuries Compensation: Law, Practice and Policy (LBC Information Services, Sydney, 2001), pp150-156.
[16] Ie American Psychiatric Association, Diagnostic and Statistical Manual of Mental Disorders (4th edn, text revised, APA: Washington DC, 2000) (DSM-IV-TR); World Health Organisation, International Classification of Diseases (10th edn, WHO, Geneva, 1992) (ICD-10). See DPP v Farquharson, ex parte Gambino [2009] VSC 186 at [5] per Cummins J.
[17] [2004] VSC 101 at [8].

[18] [2006] VSCA 116 at [36].
[19] [2009] VSC 257.
[20] DPP v Energy Brix Australia Corporation Pty Ltd, note 4 above, at [50] per Neave JA.

[21] [2007] VSCA 42 at [24].
[22] At [25].

[23] See too Nettle JA at [28]-[53].
[24] See Robertson v Esso (Australia) Pty Ltd [2004] VSC 101.
[25] See R v Braham note 2 above; R v Kneeshaw [1975] 1 QB 57; R v Aitken [1981] VicRp 27; [1981] VR 241 at 245.
[26] RK v Mirik & Mirik, note 1 above at [67]-[68].
[27] Pursuant to the rights articulated by Smith J in Bakic v Yamasa Seafood Aust Pty Ltd [2003] VSC 309.
[28] DPP v Parsons [2000] VSC 327 at [27].
[29] Stevens v Baxter [2009] VSC 257 at [5] per Forrest J.
[30] Josefski v Donnelly [2007] VSCA 6 at [13]; see too R v Ross, note 4 above at [17].
[31] [2000] VSC 190 at [27]. See too Dura Constructions (Aust) Pty Ltd v Dovigi [2000] VSC 327 at [25].
[32] [2000] VSC 327 at [25].
[33] Josefski v Donnelly, note 29 above at [17]-[19].
[34] Stevens v Baxter, note 28 above at [35] per Forrest J.
[35] [2006] VSC 328.
[36] Note 34 above at [20]. In Josefski v Donnelly, note 29 above, [18] Nettle JA (Buchanan and Vincent JJA concurring) cited with approval the trial judge’s remarks that it was “appropriate although not determinative to take into account the respondent’s ability to meet any compensation order...”

[37] RK v Mirik & Mirik, note 1 above at [138].
[38] [2000] VSC 255. In R v Watson [2000] VSC 411 at [3] too Teague J ordered the offender to pay $80,000 compensation even though he inferred from payment, even in part, was highly unlikely. See too In Re Wathen [2007] VSC 80 at [22] per Teague J.
[39] [2009] VSC 14 at [94].
[40] See eg R v Scarborough [2000] VSC 255; Gregory & Stawenga v Gregory [2000] VSC 190.
[41] Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Aust (No 3) (1998) 195 CLR.