Director of Public Prosecutions v Chan & Anor [2004] ACTSC 101

2. Section 17 of the Proceeds of Crime Act is in the following terms:

(1) A court with proceeds jurisdiction must order that:

(a) property must not be disposed of or otherwise dealt with by any person; or

(b) property must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in the order;

if:

(c) the (DPP) applies for the order; and

(d) a person has been convicted of, or has been charged with, an indictable offence, or it is proposed that he or she be charged with an indictable offence; and

(e) any affidavit requirements in subsection (3) for the application have been met; and

(f) (unless there are no such requirements) the court is satisfied that the authorised officer who made the affidavit holds the suspicion or suspicions stated in the affidavit on reasonable grounds.

3. The affidavit requirements referred to in subs (1) are set out in subs (3) of that section. They provide that:

(3) The application for the order must be supported by an affidavit of an authorised officer stating:

(a) if the suspect has not been convicted of an indictable offence - that the authorised officer suspects that the suspect committed the offence; and

(b) if the application is to restrain property of a person other than the suspect - that the authorised officer suspects that:

(i) the property is subject to the effective control of the suspect; or

(ii) the property is proceeds of the offence or an instrument of the offence.

The affidavit must include the grounds on which the authorised officer holds those suspicions.

4. The application for the restraining order is supported by two affidavits sworn by Detective Sergeant Barnicoat, the first on 3 August 2004 and the second, on 13 August 2004. In the earlier affidavit, which is the more substantive of the two, Detective Sergeant Barnicoat deposes to the fact that on 23 July 2004, a Mr Robert Habashi and the first respondent were each charged with one count of possessing a prohibited import, contrary to section 233B(1)(c) of the Customs Act 1901 (Cth).

5. The offence so described is an indictable offence within the meaning of the Act. Detective Sergeant Barnicoat deposes to the fact that she suspects that the respondent committed the offence and that her suspicion is based on certain factual matters set out in paragraphs 7 to 31 of her affidavit. She deposes that she suspects that the respondent owns the currency in the sum of $335 and provides grounds for that suspicion. She also deposes that she suspects that the motor vehicle was under the effective control of the respondent, within the meaning of the Act, for reasons which are set out in a subsequent paragraph in the affidavit.

6. Detective Sergeant Barnicoat's evidence reveals, in essence, that Dog Detection Unit officers attended the Marrickville Customs Examination Facility on 19 July 2004 and that a parcel in a TNT satchel addressed to a Dr Pascal Vicario at an address in the Australian Capital Territory was identified. The package was found to contain a new black vinyl compendium which appeared to be unused, but which was subsequently found to contain amounts of white powder apparently secreted within the lining. A presumptive test indicated that the white powder appeared to be cocaine. Some 20 grams of the substance was taken and placed into a small clip seal bag which was then put back into the cover of the compendium, in addition to an amount of an inert white powder. The compendium was then reconstructed, placed back into the TNT satchel it had been removed from and it was subsequently taken to the TNT depot located on Barrier Street, Fyshwick in the Australian Capital Territory. The remaining cocaine was seized and exhibited.

7. At 9.20 am on 22 July 2004 the TNT depot received a telephone call from a male person who identified himself as "Pascal" and enquired about the satchel. He indicated that he would arrange for it to be collected within the next few days and said that he was currently interstate. At about 11.10 am a person, who it subsequently emerged was Mr Habashi, attended to collect the TNT satchel. He walked out of the depot across Barrier Street to a vehicle waiting in Pirie Street, Fyshwick and got into it. The vehicle was subsequently identified as the Holden Barina hatch referred to in item 2 of the schedule to Detective Sergeant Barnicoat's affidavit. It was driven by the first respondent.

8. The vehicle left and drove to a location opposite an adult shop in Fyshwick. The first respondent and Mr Habashi both alighted from the vehicle and walked into the adult shop, remaining there for a period of about 5 minutes. The first respondent was then observed to walk behind a number of white garbage trucks. A later examination of one of them revealed the TNT satchel that had been torn into a number of pieces. The vehicle was driven away by the first respondent while Mr Habashi was in the front passenger seat. It was subsequently intercepted and the black compendium was located under the front passenger seat that had been occupied by Mr Habashi. The first respondent was duly interviewed and acknowledged that he was the owner and driver of the vehicle but claimed to have had no knowledge of items relating to the search warrant having been present in the vehicle.

9. The first respondent later told the police that Mr Habashi must have picked up the item from TNT, that the item was definitely not his, and that although Mr Habashi had left his vehicle and walked towards the TNT depot, he had been unable to see the depot from his position. He said that Mr Habashi had returned to the vehicle about 10 - 15 minutes later carrying an item contained within an orange bag. He had no knowledge of its contents, though he recalled Mr Habashi stating that they were to head to Sydney after picking an item up from TNT. He said that before entering the adult store in Fyshwick Mr Habashi had handed him the plastic packaging and indicated that he should dispose of it. They had remained in the store for a short time and he had discarded the wrapping into one of the garbage trucks before driving from the area.

10. A number of notes were later found in the rear seat area of the vehicle. They stated, albeit somewhat cryptically, "Post for me $5.80 Regular post for brown one". Then "Drive or post the vi? 500g schrachel $4.10 Put in PO Box address. make it up N Defendant???. Liverpool 2170". And finally, "Buy me extra 500g Schetal bag $4.10". The respondent was asked about those notes and stated that he was the author of them and that they were in his vehicle. The evidence did not establish their meaning.

11. A search of the first respondent's wallet revealed the sum of $335 and he told the police that although the vehicle was registered in the name of his parents he had used it as his own for the past 5 years.

12. Enquiries by the police had revealed that the first respondent and Mr Habashi had made a number of transfers of money overseas in recent months. On 21 March 2004, Mr Habashi had transferred the sum of $2,755 to a Mr Fidelis A. Igwe in South Africa. On 16 May 2004, he had transferred the sum of $3,030 to a Lawrence Ajagu in an unknown country. On 30 May 2004, the respondent had transferred the sum of $3,574 to a Franco Smiller in Brazil. On 23 June 2004, the respondent had transferred the sum of $2,999 to Fidelis A. Igwe in South Africa, and on 30 June 2004, Mr Habashi had transferred the sum of $3,696 to Mr Henry Babatunde Fadayomi in Brazil. They were the factual matters upon which Detective Sergeant Barnicoat essentially relied in forming her suspicion.

13. Mr Walker, who appears on behalf of the first respondent, submits that, whilst Detective Sergeant Barnicoat no doubt genuinely holds that suspicion, it is not a suspicion that is objectively reasonable. Mr Walker argues that the standard for a reasonable suspicion should be set relatively highly in the context of a statute of this kind which can have draconian consequences for people who may well be innocent. In particular, it permits the restraining of property which belongs to people who have not been charged with any offence and, in some circumstances, Mr Walker suggested, may permit the restraining of property belonging to third parties, even though it was not used in any offence. It is certainly a statute which makes, and is intended to make, substantial inroads into the common law rights that people would otherwise enjoy in the circumstances set out in the statute. Accordingly, I accept that it should be construed with some measure of strictness. Nonetheless, it must be observed that s 17 does not require evidence of a prima facie case, but only evidence of reasonable suspicion.

14. Looked at objectively, the evidence disclosed in the affidavit is, in my opinion, less than compelling. It is true that there is evidence of the first respondent picking up Mr Habashi after he had collected a package which proved to contain cocaine, but that fact alone does not provide any basis for an assumption that he must have known what was in it. A taxi driver could have equally picked up Mr Habashi, and no doubt taxi drivers have innocently picked up people carrying drugs from time to time. The fact that he was asked to and did discard the package again fails to prove that he was aware of its contents. Finally, the fact that he had sent money overseas, even to one of the same people to whom Mr Habashi had sent money, is again far from compelling; especially when one takes into account the fact that the package which had been received had apparently emanated from Brazil, and Mr Igwe, to whom both Mr Habashi and the first respondent sent money, was located in a different continent.

15. The question is whether the inferences that can properly be drawn from these factors, insofar as they impinge upon the potential guilt of the first respondent, were factors sufficient to provide reasonable grounds for the opinion of Detective Sergeant Barnicoat. It must be borne in mind that what is required is only reasonable grounds for a suspicion and not, as I have mentioned, a prima facie case.

16. Counsel for the Director, drew my attention to the decision of Kitto J in Queensland Bacon Pty Ltd v Rees [1966] HCA 21; (1966) 115 CLR 266 at 303 where his Honour explained:

A suspicion that something exists is more than a mere idle wondering whether it exists or not; it is a positive feeling of actual apprehension or mistrust, amounting to "a slight opinion, but without sufficient evidence", as the Chambers' Dictionary expresses it. Consequently, a reason to suspect that a fact exists is more than a reason to consider or look into the possibility of its existence. The notion which "reason to suspect" expresses in subsection (4) is, I think, of something which in all the circumstances would create in the mind of a reasonable person in the position of the payee an actual apprehension or fear that the situation of the payer is in actual fact that which the subsection describes . . .

17. For present purposes it is unnecessary to consider in any detail the factual context in which that decision was made. However, as his Honour went on to point out, the suspicion involved a mistrust of a person's ability to pay his debts as they became due. That is a very different subject matter from a suspicion as to whether or not a member of the community has committed a serious criminal offence, and it may well be that a somewhat stronger level of factual material would be required to constitute reasonable grounds for a suspicion of that nature.

18. In the present case I have, with some hesitation, come to the conclusion that there are sufficient grounds for the reasonable suspicion. It follows that I am obliged to make the orders sought.

19. Before proceeding to make any orders as a consequence of that finding, however, I should point out that there is a further notice of motion before me which seeks to have the motor vehicle excluded from the restrained property on the grounds that it is neither a proceed of crime nor has been used as the instrument of a crime.

20. The power to so exclude property is provided by s 29 of the Act which provides in subsection (1):

A court to which an application for a restraining order under section 17, 18 or 19 was made may, when the order is made or at a later time, exclude specified property from the order if:

(a) an application is made under section 30 or 31; and

(b) the court is satisfied that the relevant reason under subsection (2) or (3) for excluding the property from the order exists.

The reasons for excluding specified property from a restraining order are:

(a) for a restraining order under section 17 if the offence, or any of the offences, to which the order relates is a serious offence - the property is neither proceeds nor an instrument of unlawful activity.

22. In the present case however, Ms Hooper submits that it is not open to me to make such an order because of the provisions of s 32. Section 32 provides:

The court must not hear an application to exclude specified property from the restraining order if:

(a) the restraining order is in force; and

(b) the DPP has not been given a reasonable opportunity to conduct an examination of the applicant.

23. It should be noted that the Act does not confer a power to conduct such an inquiry directly upon the Director of Public Prosecutions. The Director must apply for an order pursuant to s 180 of the Act. That order provides in sub (1):

If a restraining order is in force, the court that made the restraining order, or any other court that could have made the restraining order, may make an order (an examination order) for the examination of any person, including:

(a) a person whose property is, or a person who has or claims an interest in property that is, the subject of the restraining order, or

(b) a person whom the restraining order states to be a suspect for the offence to which the restraining order relates;

(c) the spouse (including de facto spouse) of a person referred to in paragraph (a) or (b);

(d) about the affairs (including the nature and location of any property) of a person referred to in paragraph (a), (b) or (c).

24. It is, I think, clear from the use of the verb "may make" that this is a discretionary power. That impression is confirmed by the fact that elsewhere in the Act language is employed which commands the court is to make orders when certain conditions are fulfilled. For example, in s 17 to which I have referred subs (1) provides that a court with proceeds jurisdiction must make an order if the conditions set out in the subsequent provisions of the section are satisfied.

25. As previously mentioned, the Director of Public Prosecutions has applied for such an order. It was submitted on behalf of the Director of Public Prosecutions essentially that I should make such an order by reason of the facts set out in the affidavits of Detective Sergeant Barnicoat and the fact that the Director wished to have the opportunity of conducting such an examination.

26. However, the affidavits of Ms Barnicoat, apart from adverting to the payments overseas, do not seem to substantially address the question of why an examination of this particular person is necessary. The material in the affidavits does not suggest any money laundering activity or an involved series of trusts or complicated transfers of monies from one account to another in an apparent attempt to conceal the true position from investigating authorities, and it is not easy to see what issue arises from the affairs of the first respondent that need to be investigated.

27. It should be noted that the provisions governing an examination of that kind enable the person to be asked questions to which he or she may not be entitled to decline to answer on the ground of self-incrimination, and that such an investigation may therefore place that person in a position of considerable prejudice. It seems to me that it is incumbent upon the Director seeking an order of this kind to establish that there are adequate grounds for the order to be granted, and that those grounds should be established by sworn evidence. In the present case I am not satisfied that the evidence does disclose such grounds, and I accordingly dismiss that application.

28. That then poses a question as to whether s 32 of the Act should be taken to prevent the court from hearing an application to exclude property from the ambit of a contemplated restraining order in circumstances where an application for an examination has been made but refused.

29. It seems clear that s 29 empowers the court, at least in some circumstances, to exclude specified property from the order at the time when the restraining order itself is made. Yet, as I have mentioned, s 32 provides that the court must not hear an application to exclude specified property from a restraining order that is in force unless the Director of Public Prosecutions has been given a reasonable opportunity to conduct an examination of the applicant. There is an issue as to whether this subsection can have any application at all if the application for an order excluding property is made contemporaneously with the application for a restraining order. However, no matter how that question is resolved, it seems to me that the requirement that the Director of Public Prosecutions have had a reasonable opportunity to conduct an examination of the applicant must be construed in the context of the statutory scheme which does not confer directly upon the Director such an entitlement to conduct an examination, but makes such an entitlement conditional upon an order being obtained pursuant to s 180. In these circumstances, I think that the section should be interpreted as providing that the Director must have a reasonable opportunity to seek such an order and, if such an order is granted, to conduct the examination, before any property is excluded from the ambit of the restraining order. I would not however construe s 32 as forever preventing an applicant from seeking to have property excluded from the ambit of a restraining order by reason of the fact that a court had found that there were no adequate grounds for the granting of an examination order. I do not accept that the legislature intended to create what might be colloquially described as a catch-22 situation.

30. In the present case the notice of motion seeking to have property excluded was made on 12 August 2004 and the notices of motion for the restraining orders were made even prior to that time. The Director has had ample opportunity to seek an order under s 180, and has had ample opportunity to support it by admissible evidence. An application has now been made and dismissed. In these circumstances, I am satisfied that s 32 does not create any barrier to the application under s 29.

31. The next question is whether I should accede to the application and that, in turn depends upon whether the motor vehicle can properly be regarded as property which is neither proceeds of nor an instrument of unlawful activity.

32. The term "proceeds" is defined by s 329 of the Act, subs (1) of which provides that:

(1) Property is proceeds of an offence if:

(a) it is wholly derived or realised, whether directly or indirectly, from the commission of the offence; or

(b) it is partly derived or realised, whether directly or indirectly, from the commission of the offence;

whether the property is situated within or outside Australia.

33. The motor vehicle was plainly not derived from the offence of possessing the cocaine that had been replaced in the item collected from the TNT depot.

34. The other question is whether or not it could be regarded as an instrument of unlawful activity. The term "instrument" is defined by subsection 329(2) which says:

(2) Property is an instrument of an offence if:

(a) the property is used in, or in connection with, the commission of an offence; or

(b) the property is intended to be used in, or in connection with, the commission of an offence;

whether the property is situated within or outside Australia.

35. Mr Walker submitted that, in the present case, it could not be said that the motor vehicle had been used in connection with the commission of an offence because the offence charged was the possession of something.

36. The concept of possession has been much discussed. It involves the right to exclude others not acting in concert with the person from interference with the property in question. A person who possesses a property must either have it in his or her manual possession or, in a place to which he or she may go in order to obtain manual possession of it. Hence, whilst a person's television set may remain in their lounge room, they nonetheless retain possession of it whilst they are at work. However, whilst the property is not within a person's manual possession it must remain in premises to which he or she has access, and from which he or she would have the right to exclude others. Furthermore, in a case where property is alleged, is alleged to be in the joint possession of two accused, the Crown must normally prove that both of them have such a legal right. Further complications may arise in cases where the Crown relies upon the concept of a joint criminal enterprise or a common purpose. Such a common purpose may involve one of them having sole possession, even though there is a common purpose in relation to some criminal activity or one of them having manual control pursuant to a common purpose involving joint possession.

37. In the present case, I have, albeit with some hesitation, come to the conclusion that the facts in this case provide reasonable grounds for a suspicion that, whilst the item was in the possession of Mr Habashi, it was nonetheless in his possession pursuant to a common purpose with the first respondent.

38. However, the mere fact that a person who possesses a parcel containing a prohibited import happens to be in a building or in a vehicle does not mean that the building or vehicle may be regarded as an instrument within the meaning of s 329 of the Proceeds of Crime Act. The question is whether the property is, or is intended, to be used in connection with that possession. As Mr Walker properly pointed out, Mr Habashi's possession of the parcel commenced as soon as he picked it up from the TNT depot and, even if the first respondent could be shown to have had joint possession of it by reason of a joint criminal enterprise or common purpose, such possession would also have commenced from that time. It would have made no difference to his possession of the property whether Mr Habashi had got into the vehicle with it or whether he had walked down the street and ignored the vehicle completely.

39. Had the offence been of a different character, such as one involving the further element of possession for the purpose of sale or supply to some other person, it seems to me that the motor vehicle may well have been, or at least there may have been adequate grounds for a suspicion that the motor vehicle was, in fact, an instrument because it could have been used in connection with the fulfilment of that purpose. In this case however the offence of which the applicant is suspected is merely of possessing a prohibited import, contrary to s 233B(1)(c) of the Customs Act. The parcel in which it was contained may well fulfil the test of being an instrument because it was by means of that parcel that it was conveyed into the possession of Mr Habashi, but I am not satisfied that the car could be regarded as an instrument. Accordingly, I propose to exclude the vehicle from the ambit of the order.

40. The order that I make therefore is that, pursuant to s 17 of the Proceeds of Crime Act, the property consisting of the sum of $335 in Australian currency taken from the first respondent by members of the Australian Federal Police on 22 July 2004 is not to be disposed of or otherwise dealt with by any person.

I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Crispin.

Solicitor for the applicant: Commonwealth Director of Public Prosecutions

Counsel for the first and second respondent: Mr Walker

Solicitor for the first and second respondent: Capital Lawyers