Commonwealth Director of Public Prosecutions v Sir Thomas Graham Fry and Anor [2009] NSWSC 261 | Case summary

JUDGMENT 1 HIDDEN J: These were proceedings under the Proceeds of Crime Act 1987(Cth), the predecessor of the current legislation. They were heard between 25 November and 6 December 2002. For reasons which I shall explain, it was necessary that orders disposing of the proceedings be made as a matter of urgency and I did so on 11 December 2002. On that day I also outlined brief reasons for those orders, undertaking to give fuller reasons in due course. 2 Unfortunately, that undertaking was overlooked and I neglected to provide those reasons. I was not approached by the parties to do so, no doubt because the matter had effectively been disposed of. However, in 2008 the first defendant, Mr Fry, lodged an appeal against my decision. It was when I was approached by the registrar of the Court of Appeal about the matter that I realised that I had failed to provide detailed reasons. Even more unfortunately, when my associate sought a transcript of the brief reasons I had given on 11 December, the court reporting service was unable to find any record of the matter on that day. However, my handwritten notes of that occasion have been found and from them I have reconstructed, albeit still briefly, the reasons for my decision. 3 In February 2000 Mr Fry and the second defendant, Russel Douglas Bateman, were arrested with others in connection with the importation into Australia of a commercial quantity of cocaine. In that same month restraining orders under s43(2)(a) of the 1987 Act were made against each defendant. In each case the order was directed to all of the property of the defendant excluding "any undertaking in any business" with which he was associated. The duration of each order was subsequently extended, so as to remain in force until further order of the Court. 4 The proceedings before me were concerned with a sailing vessel called the "Lonebird" which Mr Fry had acquired two years earlier. At issue was whether Mr Fry was the beneficial owner of the vessel, whether it was embraced by the terms of the restraining order and whether, pursuant to s30 of the Act, it had been forfeited to the Commonwealth. The case for the Director, as plaintiff, was that Mr Fry's interest in the vessel was only as trustee for Mr Bateman, who was its beneficial owner, that Mr Fry's interest in the vessel was subject to the restraining order and that Mr Bateman's beneficial interest in the vessel had been forfeited to the Commonwealth. The Director sought declarations to that effect. 5 It was Mr Fry's case that he was the beneficial owner of the vessel and that it was not embraced by the restraining order because it was excluded as an undertaking in a business with which he was associated. He sought a declaration to that effect. Alternatively, he sought a declaration, pursuant to s48(4) of the Act, that the vessel be disregarded for the purpose of the forfeiture provision, s30. As it happens, in or about September 2000 it had sunk in circumstances which need not be described and, in the event that I found that it was not excluded from the restraining order, Mr Fry also sought a declaration that he had sustained damage by reason of the restraining order and an order that the Director honour the undertaking as to damages furnished at the time the restraining order was sought. Given the view I formed of the matter, it is unnecessary to examine the basis of that claim for damages. 6 Mr Fry appeared before me unrepresented. Mr Bateman was joined as the second defendant because there was an issue about his interest in the vessel. He also was unrepresented, but he had no concern about the outcome and took no active part in the proceedings. On 11 December 2002 I made the declarations sought by the Director, but refused the declarations and the order sought by Mr Fry. I also made an order for costs against him. The terms of those declarations and orders are to be found in the short minutes which I signed that day. 7 On 13 September 2001, after a trial in the District Court, Mr Fry was found guilty of being knowingly concerned in the importation into Australia of a commercial quantity of cocaine. He was subsequently sentenced to a substantial term of imprisonment. By s30(1) of the Act, property the subject of the restraining order would have been automatically forfeited to the Commonwealth six months after the day of conviction if the restraining order remained in force at that time. By s30A(4), the Court could extend that six month waiting period by a further nine months. Such an order was made in the present case. 8 For the purpose of these provisions, the date of Mr Fry's conviction was the day on which he was found guilty by the jury and remanded for sentence, that is, 13 September 2001: Della Patrona v DPP (Cth) [No2] (1993) 38 NSWLR 257, per Kirby P at 263-266. The total waiting period before forfeiture under s30(1) would have occurred, after the extension under s30A(4), was 15 months. That period expired on 12 December 2002. It was for this reason that it was necessary that I give my decision no later than 11 December. 9 Mr Bateman pleaded guilty to the same charge as Mr Fry on 30 August 2001, and was later sentenced by James J. In his case the date of conviction was the day on which he entered that plea: Commonwealth DPP v Webb [1999] NSWSC 405 (Greg James J), especially at [29]. Any of his property subject to the restraining order against him at the time specified by s30 has been forfeited to the Commonwealth. Subject to the exclusion in that restraining order also of an undertaking in business, this would include any interest he had in the Lonebird. 10 In preparing these reasons, I have been assisted by written submissions furnished by senior and junior counsel for the Director at the end of the hearing. They contain pertinent references to the evidence, the applicable provisions of the Act and the relevant law. I have also had regard to the transcript of Mr Fry's detailed oral arguments. Mr Bateman presented no evidence and made no submissions. However, in the Director's case I received the transcript of evidence Mr Bateman gave in the committal proceedings of Mr Fry and a number of other alleged co-offenders. That transcript was tendered only in Mr Bateman's case and was not evidence against Mr Fry. 11 There was a considerable body of evidence in the proceedings, both documentary and oral. As I have said, I propose to refer to it only briefly although, I trust, sufficiently to expose my findings of fact. There was in evidence a written agreement, made in New Zealand and dated 12 February 1998, whereby a certain family trust sold the Lonebird to Mr Fry, "trading as Ocean Homes Marine Services." Some repairs were done on it by a marine engineering business conducted by Mr Walter McCann, but it required further substantial work. Before turning to the case for and against Mr Fry, it is convenient to deal with Mr Bateman's committal evidence. 12 Put shortly, Mr Bateman had said that the Lonebird was to have been used for the importation. Mr Fry chose it but Mr Bateman supplied the money for it. Because Mr Fry was to captain the vessel and pay for moorings, it was easier for it to be in his name and for dealings concerning it to be conducted with him. Mr Bateman transferred to him a substantial sum of money for the purchase of the boat and, over a period, a further sum for repairs. He did so using false names, and in large part the money was the product of illicit drug distribution in which he had been involved. In the event, the vessel was not used for the planned importation as it was not seaworthy. 13 In these proceedings Mr Bateman did not claim any interest in the Lonebird but, as I have said, it was the Director's case that he was the beneficial owner of it. This was said to be the legal consequence of his dealings with Mr Fry, a matter to which I shall return. In cross examination at committal, Mr Bateman agreed that in the later 1990's he had discussed with Mr Fry buying a boat and doing it up for sale or for charter. Nevertheless, before me he did not claim that, for the purpose of the restraining order against him, the Lonebird was any part of an undertaking in business (that expression being confined, of course, to lawful business activity). Nor did his evidence suggest that it might have been. 14 Mr Fry's case, again put shortly, was that in the early 1990's he had obtained a large amount of money legitimately from the sale of boats and boat designs. In 1992 he was sentenced to a term of imprisonment, and he gave the money to his partner at that time, Ms Raemer to invest for him. He was released in 1997 and deported to New Zealand, his country of origin. It was this money which was used for the purchase and repair of the Lonebird, having being forwarded to him by Mr Bateman. The vessel was bought to be refitted and used for charter, through his business, Ocean Homes Marine Services. 15 Ms Raemer had died before the hearing, but Mr Fry relied upon the evidence of her two daughters, Danielle and Taryn Raemer. However, they were both of primary school age at the relevant time and their evidence fell well short of supporting his account of receiving a large sum of money in the circumstances which he described. 16 There is no need for further examination of the evidence of Mr Fry or of other evidence produced in his case. It is sufficient to say that his account of the source of the funds for the Lonebird cannot stand with what he told federal police in a recorded interview in February 2000. That record of interview was received in evidence only in the Director's case against him. 17 He did tell the police that, after discussion with Mr Bateman, he selected the vessel to be done up and chartered. He also said that the money for the purchase and for repairs was supplied by Mr Bateman, as was money from which he could draw a weekly allowance while he was working on the boat. However, he said nothing about the source of any of this money being funds earlier invested on his behalf by Ms Raemer. Indeed, when he was asked in this context where he thought Mr Bateman was getting his money from, he said that it was obviously from selling drugs, although he did not think that "from the start." This account in the recorded interview is consistent with bank records which were in evidence of accounts held in false names by Mr Bateman, together with accounts held by Mr Fry in his own name, in the name of Ocean Homes Marine Services, and in a false name. 18 Mr Fry also told police that in 1999 he travelled to Panama on a false passport to meet the captain of a ship to arrange a meeting point for transferring drugs. He said that at that time he believed the drug involved to be marijuana, but over a period realised that it was cocaine. It was intended that he would be the captain of the Lonebird for the purpose of the importation and that he was to be rewarded by retaining the vessel, "as well as a million dollars." He acknowledged that Mr Bateman had paid for the vessel and considered that it still belonged to him, but added that it was really "in my name and the deal was…do this and it's your boat." Of course, that did not occur and, in the event, another boat was used for the importation. 19 It was in the light of this material that I rejected his account in evidence before me of his acquisition of the Lonebird. In fact, it was Mr Bateman who supplied the money for its purchase and its repair. That being so, Mr Fry had legal title to it but held it as a bare trustee, there being a resulting trust in favour of Mr Bateman. The principle is stated, with reference to authority, in Jacob's Law of Trusts in Australia (7thed) at [1210]. Accordingly, I was satisfied that Mr Bateman was the beneficial owner of the vessel. In s3 of the 1987 Act, "interest" in relation to property was broadly defined and included an equitable interest. 20 I was also satisfied, on the evidence admissible in the case of Mr Fry, that the Lonebird was not an undertaking in any business in which he or Mr Bateman had been involved. Whatever might have been the status and viability of the business called Ocean Homes Marine Services, it is clear that at the time the restraining orders were made there was no business relating to the vessel. Mr Fry acknowledged as much in evidence and, in any event, that conclusion is consistent with my finding as to the circumstances in which he acquired it. It is also consistent with the fact that for some time before the restraining orders were made and, indeed, thereafter, the boat had been unseaworthy. 21 I should add that I was also persuaded by the argument of counsel for the Director that, on any view of the facts, the Lonebird could not have amounted to an undertaking in business in the sense in which that expression was used in the restraining orders. The word "undertaking" can have a variety of meanings, depending on its context: Top of the Cross Pty Ltd v Federal Commissioner of Taxation (1980) 50 FLR 19 at 36 (Woodward J). In the present context, the exception in the restraining orders was clearly designed to ensure that any business in which either defendant was involved could continue to operate. To restrain the disposal of a capital asset of a business such as the vessel would not adversely affect that business because, in the ordinary course, such an asset would not be disposed of. At the same time, the object of the legislation to preserve property which might ultimately be forfeited to the Commonwealth would be achieved. 22 Finally, I was not persuaded, pursuant to s48(4) of the Act, that the restraining order against Mr Fry should be disregarded to the extent to which it related to the Lonebird. That subsection empowered the court to declare that property embraced by a restraining order should be disregarded for the purpose of s30 if, in the terms of subs(4)(e), the court was satisfied that: (i) the property was not used in, or in connection with, any unlawful activity and was not derived, directly or indirectly, by any person from any unlawful activity; and (ii) the defendant's interest in the property was lawfully acquired. 23 Mr Fry bore the onus of proof, on the balance of probabilities, of those matters: s99, Jeffrey v DPP (Cth) (1995) 79 A Crim R 514 at 518. It would be apparent from what I have already said that he could not discharge that onus. By his own admission to police, the Lonebird was to have been used in the cocaine importation and, in any event, had been purchased from the proceeds of the sale of illicit drugs. Whether or not he was aware of those matters from the outset is not to the point. 24 From my finding that Mr Bateman was beneficially entitled to the vessel it followed that Mr Fry's claim for damages could not be sustained.

Commonwealth Director of Public Prosecutions v Sir Thomas Graham Fry and Anor

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