The defendant, Mr Zhang, was tried on indictment and convicted of one offence of supply prohibited drug contrary to section 25(1) of the Drug Misuse and Trafficking Act 1985 (NSW).
On 28 March 2023, the Director of Public Prosecutions (NSW) filed a Summons seeking two orders under the Confiscation of Proceeds of Crimes Act 1989 (NSW) ('Act'): first, an order pursuant to section 18(1) of the Act that cash in the approximate sum of $10,000 found at Campsie on 25 November 2017, be forfeited to the State; and second, pursuant to section 29(1) of the Act, the defendant pay, to the State of New South Wales, a drug proceeds order in the sum of $150,000.
In the course of submissions at the hearing, Mr Poulos, who appeared for the Director, asked that, if order one be refused, the amount sought in order two be amended to $160,000. The basis and reason for that request will shortly become apparent. However, the application was withdrawn subsequent to the hearing in light of the operation of section 15 of the Act and it is unnecessary to consider it any further.
[2]
Background
It will be necessary, in due course, to make findings of fact for the purposes of this application. For present purposes, in order for the issues to be understood in their context, it suffices to set out the essential facts found by me when sentencing the defendant for the offence of supply prohibited drug. I note at this point that the process of fact-finding for present purposes is distinct from the process engaged in for the purposes of sentencing. That process is governed by the separate roles that a judge and jury perform in a trial which requires the judge, on sentence, to make findings consistent with the verdict of the jury: see, for example, Cheung v R [2001] HCA 67; 209 CLR 1 at [14]. While the power under the Act arises on the fact of conviction, subject to the question of any estoppel, there is no similar constraint on the Court in the performance of its duty to determine facts for the purposes of the Act. Neither party raised the question of an estoppel here and so it is inappropriate to consider it.
The main Crown witness at trial was Ms Tai Man Yu who said in her evidence that she was introduced to the defendant through a person at her work and started buying Methylamphetamine from him for the purpose of on selling it. The way in which Ms Tai bought the drugs from the defendant was that he would come to her unit or to her work, pick up the money and then return in about three to four hours with the drugs.
At some time in the day or two before 25 November 2017, Ms Tai communicated with the defendant, telling him that she wanted to buy $10,000 worth of ice; that is, Methylamphetamine. The defendant was not happy about this, saying to her that he would only sell if she wanted one kilogram. However, Ms Tai persisted and, on 25 November 2017, the defendant came to her unit and collected $10,000 from her for the drugs. However, he did not return with the drugs because he was arrested later that evening.
[3]
Statutory Scheme
Section 13(2) of the Act provides that, if a person is convicted of a drug trafficking offence, an appropriate officer may apply to an appropriate court for one or both of the following orders:
1. A forfeiture order against property that is tainted property in respect of any drug trafficking offences; and
2. A drug proceeds order against the person in respect of benefits derived by the person from the commission of any drug trafficking offences.
The offence of supply prohibited drug is a drug trafficking offence and the Director is an appropriate person: see section 4 of the Act. Likewise, as the defendant was convicted in this Court, this Court is an appropriate court.
[4]
Forfeiture order
Section 18 of the Act relevantly gives the Court power to make a forfeiture order if a person is convicted of a serious offence and an application under s 13(2)(a) is made in relation to specified property. Both of those conditions are satisfied here.
Section 18 imposes the further following relevant conditions on the Court's power to make a forfeiture order:
1. The Court is satisfied that the property is tainted property in relation to the offence; and
…
1. The Court has taken into consideration (having regard to information before the Court):
1. The use that is ordinarily or had been intended to be made of the property, and
2. Any hardship that may reasonably be likely to arise (whether on the part of that or any other person) following the making of the order.
"Tainted property" is defined in section 4 of the Act and relevantly means property that was used in, or in connection with, the commission of a serious offence, or was substantially derived or realised, directly or indirectly, by any person, as a result of the commission of a serious offence.
The Director asserts that the money specified in the order sought was clearly "tainted property" within the meaning of section 18(1)(a) of the Act because "it is accepted on the facts that the $10,000 seized from the defendant was specifically in relation to the offence of which the defendant was convicted": see written submissions at [24].
The difficulty with the Director's submission and, indeed with the Director's application for a forfeiture order, is that there is no evidence or indeed any other information properly before the Court connecting the money given by Ms Tai to the defendant in her unit on 25 November 2017 with the money specified in the application for a forfeiture order, namely, the money "found at Campsie." The reason for that is as follows.
On 5 May 2022, prior to the trial, Judge Coleman SC found that any evidence obtained as a result of an unlawful search of the defendant's car on 25 November 2017 was inadmissible by operation of section 138 of the Evidence Act 1995 (NSW). On the basis of that decision, the indictment was amended to include only one count and no evidence was led at trial in respect of any money seized from the defendant. Subsequently, although the Director originally brought this application on the basis of evidence of the amounts seized from the defendant's car, it ultimately did not put that information or evidence of that seizure before the Court.
For that reason, I cannot be satisfied that the money specified in the order sought was "tainted property" and so cannot make the orders sought. It was against this possibility that the Director initially sought to amend her application for the drugs proceeds order. As I have said, that application was withdrawn and I will not deal with it.
[5]
Drug proceeds order
Section 29(1) of the Act provides that, if an application is made for a drug proceeds order against a person convicted of a drug trafficking offence the Court must:
1. Determine whether the defendant has derived any benefit in connection with drug trafficking at any time;
2. If the Court believes the defendant has so benefited, assess the value of any such benefit; and
3. Order the defendant to pay to the State a pecuniary penalty equal to the amount so assessed.
The determination and assessment to be undertaken for the purposes of section 29(1) is to be undertaken by having regard to the information before the Court concerning all or any of the matters set out in section 30(1) of the Act. This includes, relevantly, the money that came into the possession or control of the defendant at any time in connection with drug trafficking by the defendant (section 30(1)(a)) and the market value at the time of the drug trafficking of substances similar or substantially similar to the prohibited drug involved in the drug trafficking offence (section 30(1)(d)).
Section 30(6) of the Act provides that, in assessing the value of the proceeds of drug trafficking of a defendant convicted of a drug trafficking offence or offences, any expenses or outgoings of the defendant in connection with the commission of the offence or offences must be deducted. The notes to this provision state, as an example, that the expenditure involved in acquiring the drugs in question are to be excluded from the assessment of the value of the proceeds. [1]
Section 31 of the Act makes provision for the assessment to be made on the basis of statements tendered by the prosecution. Although no such statement was tendered in these proceedings, the procedure confirms that the Court's consideration may be qualitatively different to the ordinary judicial process. Although the proceedings are governed by the Evidence Act 1995 (NSW) (see section 4 of that Act) the reference to "information" and the statement procedure in section 31 recognises the difficulty of proof that would ordinarily be faced by the applicant under the Act. It was for that reason, and by reference to the decision in R v Fagher (1989) 16 NSWLR 67, that it was held, in R v Hall [2013] NSWCCA 47, that there is no stringent standard of proof required for the purposes of the assessment under section 29 of the Act.
The "information" before the Court here included the transcript of the evidence given at the hearing by the informant, Ms Tai.
In her evidence, Ms Tai said that she was introduced to the defendant at work and that her interactions with him were the dealing and selling of Ice. She said that, at first, she bought small quantities of about 3.5 grams from him for about $500. She then began buying bigger amounts. The transactions occurred by her giving the defendant money and then he would return in about three to four hours and give her the drugs. She said that she bought a kilogram or half a kilogram of the drugs from the defendant on several occasions. She paid $50,000 for half a kilogram and $100,000 for one kilogram. The transaction that constituted the offence of which the offender was convicted concerned a much smaller amount. Ms Tai's evidence about this was that she told the defendant on the WeChat app that she wanted to buy $10,000 worth of drugs from him. She said that he replied that he would only sell one kilogram to her but she persisted with a smaller amount. He then came to her home and she gave him $10,000 and he put it in a small bag. However, the defendant did not return with any drugs. As I've mentioned, it turned out that this was because the defendant was arrested shortly after leaving Ms Tai's apartment.
The Director also relied upon a number of paragraphs of a statement by Senior Constable Anthony Pellinkhof. In particular, it relied upon the following paragraph:
[9] I made enquiries of internal police sources which disclose the market value of drugs. The market value of drugs are influenced by quantity of drugs sold, the availability of the drug, purity or quality of the drug and whether there is an ongoing customer/supplier relationship et cetera.
Under this paragraph there is a table as follows:
Drug type Quantity sold Quality/type Price per unit
Methylamphetamine Half kilogram Not known $50,000
Methylamphetamine 1 kilogram Not known $100,000
Methylamphetamine 45 grams Not known $10,000
[6]
Although this part of the statement was purportedly tendered under section 31A of the Act, it does not refer to the market value of Methylamphetamine at any particular time, and in particular, does not refer to the value at or around 25 November 2017 when the transactions took place on Ms Tai's evidence. In any event, there was no objection to this part of the statement and I have had regard to it as part of the information before the Court. In addition, I note that the values in this table are consistent with Ms Tai's evidence about the amounts that she paid for half a kilogram and one kilogram lots of Methylamphetamine, although inconsistent in respect of how much she expected to get for the payment of $10,000 (she said that she expected to get around 100 grams).
On the basis of this information and the evidence of Ms Tai, the Director submits that I should find that the defendant obtained a benefit from drug trafficking and assess that benefit as being $150,000. That amount consists of the amount of cash given to the defendant by Ms Tai in respect of one transaction for half a kilogram and one transaction for one kilogram.
Counsel for the defendant submitted that I should not accept that the defendant received any benefit from drug trafficking at all. He submitted that Ms Tai's evidence should not be accepted as reliable for a number of reasons: first, she had a motive for lying because she thought that the defendant had tipped off the police about her; secondly, she received immunity in respect of her evidence; thirdly, she received a discount on her sentence for giving assistance to the Crown; fourthly, she has an Australian partner and was able to extend her stay in Australia by giving evidence against the defendant; fifthly, her evidence about quantities was vague and internally inconsistent; and sixthly, her evidence about whether she received drugs from the defendant was also inconsistent.
I accept the submission that each of these matters is a reason for which Ms Tai may be considered an unreliable witness. That is especially because she undeniably had a motive to give evidence against the defendant, both because she received a discount for her assistance and that she thought he might have told the police about her. However, in spite of those reasons, her evidence in my view was sufficient to leave me to believe, on the balance of probabilities, that the defendant had obtained benefits in connection with trafficking, namely, the receipt of cash. The reason for that is that, in spite of these motives, Ms Tai's evidence was internally consistent in essential respects and consistent with a common-sense view of all the evidence. Further, some of the internal inconsistencies, namely, as to how much Ms Tai bought from the defendant at a particular time, related only to very narrow periods of time prior to the offence of which the defendant was convicted. Otherwise, it is not at all surprising that she had no clear recollection of the number of transactions that she engaged in with the defendant or the particular amounts at any time that those transactions entailed. Further, as I have said, her evidence about the value of the transactions coincides largely with the information from Senior Constable Pellinkhof as to the street value of Methylamphetamine.
For those reasons, I am satisfied that the defendant received a benefit from drug trafficking and assess the value of the benefit as being $150,000. Accordingly, I will make an order under section 29 in the amount of $150,000.
The Director also seeks an order pursuant to section 32 of the Act, that property that she says is currently held by the police, having been seized from the defendant's motor vehicle on 25 November 2017, is available to satisfy the drug proceeds order. The condition of such a declaration is that the Court be of the opinion that that property is subject to the effective control of the defendant. There are two potential difficulties with this submission.
First, and critically, for the reasons I have already given, there is no evidence or other information before me other than the assertion in written submissions about any amounts purportedly seized by the police from the defendant.
Secondly, and in any event, the purpose of section 32 is to enable the Court, in the first place, to assess the value of benefits received by a defendant from drug trafficking even though, on their face, those benefits might be legally owned by another entity or person. Thus, section 10 of the Act provides that property or an interest in property may be the subject of effective control of a person within the meaning of the Act whether or not the person has a legal or equitable estate or interest in the property or a right, power or privilege in connection with the property and provides that, in determining whether there are reasonable grounds to believe that property, or an interest in property, is subject to the effective control of a person, the Court may have regard to a broad array of matters, including family, domestic and business relationships between persons having an interest in the property or companies or trusts. In other words, these are facilitative provisions which recognise that the proceeds of crime may be hidden by various means that give every appearance that a defendant to proceedings or the person involved in the commission of the crimes has received no benefit. That said, this analysis is not critical because, if it were established to my satisfaction that the police had wrongfully seized any amount of money from the defendant and, contrary to its obligation to return the money to the defendant, were still in possession of it, I would have little hesitation in concluding that the defendant had effective control over that money in the sense of that term in the Act. However, for the first reason I have stated, no declaration is available on the information before me.
For the reasons set out above I order as follows:
1. The defendant is to pay the State a pecuniary penalty in the amount of $150,000.
[7]
Endnote
See also, in a different context, The King v Jacobs Group (Australia) Pty Ltd [2023] HCA 23 especially at [27].
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Decision last updated: 11 August 2023