Milk v The Queen [2017] VSCA 217

1 This is an application for leave to appeal against the making of a pecuniary penalty order ('PPO') under s 58 of the Confiscation Act 1997 ('the Act') by a judge of the County Court on 20 September 2016_._ Section 142(3) of the Act provides that an appeal against a PPO is made 'in the same manner as if it were, or were part of, the sentence imposed in respect of the offence in relation to which the order was made.'

2 On 4 May 2015, the applicant, Sarah Milk, was arraigned and pleaded guilty in the Bendigo County Court to trafficking in methylamphetamine between 1 January 2010 and 30 June 2014. She also pleaded guilty to other drug and dishonesty offences which are not relevant to this application.[1] A plea hearing was conducted the same day by counsel.

3 On 8 May 2015, the applicant was sentenced to four years and six months' imprisonment on the methylamphetamine trafficking charge, with a total effective sentence of five years and one month's imprisonment and a minimum non-parole period of three years and six months. Leave to appeal against that sentence was refused by this Court on 7 September 2015.[2]

4 It is not in dispute that the conviction on the methylamphetamine trafficking charge exposed the applicant to forfeiture of the value of the benefits derived by her as a result of the offence, upon application for a PPO by the Director of Public Prosecutions.[3]

5 The Director made a PPO application on 19 June 2015, claiming that the applicant derived a benefit of $1,582,000 from the methylamphetamine trafficking charge. The Director and the applicant - by now unrepresented - each filed an affidavit. The application was heard on 12 September 2016 by the judge who had sentenced the applicant. Judgment was delivered on 20 September 2016. The judge assessed the value of the benefits derived by the applicant in relation to the offence to be $452,000. The applicant was ordered to pay that sum to the State.

6 The applicant challenges the quantum of the assessment.

7 The judge rejected the Director's proposition that the applicant 'trafficked 7 grams of methylamphetamine per week for 226 weeks during the charged period.' He referred to the evidence relied upon by the Director, including the applicant's record of interview following her arrest on 7 July 2014, the summary of prosecution opening at the plea hearing and the transcript of the plea hearing on 4 May 2015.

8 The judge noted that the applicant in her record of interview had told police that:

(a) she started dealing ice[4] in March 2010;

(b) she bought and sold seven grams of ice a week; and

(c) most of her sales were in points (a 'point' is 0.1 of a gram), which gave the most profit, but she also sold in half and whole grams.

9 The judge noted the following from the prosecution opening:

(a) 12.3 grams of methylamphetamine were located at the applicant's premises;

(b) records kept by the applicant in an exercise book and other handwritten notes detailing her drug transactions showed trafficking activities between 18 March 2012 and 21 August 2013;

(c) other records showed trafficking activity dating to 12 January 2010;

(d) the applicant told police that she trafficked in methylamphetamine from March 2010 on a continuous basis until her arrest on 30 June 2014, except for a two-month period in April and May 2014;

(e) the applicant would purchase methylamphetamine in quarter ounces. On a few occasions, she purchased half-ounces and, on one occasion, an ounce; and

(f) the applicant estimated that she sold a quarter ounce a week, ie. 70 points or 7 grams, at $100 per point.

10 Turning to the counsel's submissions on behalf of the applicant at the plea, his Honour noted that:

(a) the applicant had instructed counsel that the period of trafficking stated in the prosecution summary was not in issue;

(b) referring to the records maintained by the applicant, counsel noted that they did not cover the entire period of offending - only a two-month period in 2010 and large parts of 2012 and 2013. Counsel conceded that the offending was continuous over the entire period of offending but submitted that the applicant's business had 'ebbs and flows' that could not be precisely quantified; and

(c) text messages in evidence established that the applicant was trafficking during a period where she asserted to police she was not.

11 The judge noted that $1,390 in cash was located at the applicant's premises and had been forfeited, so that any benefits assessed would have to be reduced by an equivalent amount.[5] Although not contested by the applicant, this amount does not appear to have been taken into account in the judge's final calculation.

12 The judge concluded that the evidence clearly did not support the Director's submission that the respondent sold seven grams of methylamphetamine per week at $100 per point.

13 Turning to the applicant's evidence, his Honour noted that the applicant deposed in her affidavit that:

(a) the records or 'tick sheets' relied upon by the Director at the criminal proceeding showed that her purchases of methylamphetamine occurred much less frequently than the Director claimed;

(b) the estimate she had given in her record of interview was completely inaccurate because she was drug-affected and severely traumatised at the time; and

(c) she commenced trafficking in methylamphetamine in March 2012, rather than March 2010. She only pleaded guilty to a four-and-a-half-year trafficking period for practical reasons.

14 Accepting the applicant's submission that the Director's calculation was 'unrealistic', the judge then gave his reasons for giving little weight to the applicant's evidence:

The [applicant] seeks to rely upon the tick sheets tendered at the plea and set out in the depositions as being complete records of her trafficking in methylamphetamine. She asserted that those records disclose that only $37,895 was derived by her from such trafficking.

I accept that the records tendered or tick sheets relied upon are not complete records of the trafficking activity. [Counsel] conceded as much during the plea. For obvious reasons, the [applicant] seeks to limit the extent of her trafficking activity and the position she now adopts is at odds with the stance taken by [her counsel] at her plea. I do accept that [counsel] did not admit that 7 grams were trafficked on each and every week. He did, however, concede substantial and continuous trafficking in large quantities.

satisfied on the balance of probabilities that:

(1) The [applicant] trafficked regularly in methylamphetamine in the period March 2010 to June 2014.

(2) There was a period during that time of eight weeks where the [applicant] did not so traffick.

(3) The [applicant] did not traffick 7 grams of methylamphetamine on each and every week in the period mentioned.

(4) It is impossible to determine precisely how much the [applicant] did sell during the relevant period.

(5) The [applicant] trafficked at least 2 ½ grams of methylamphetamine each week.

(6) The vast majority of sales of that methylamphetamine were in quantities of 0.1 of a gram.

(7) The [applicant] earned at least $2,000 a week from her business of trafficking in methylamphetamine.

The judge proceeded to calculate the benefits derived by the applicant based on his findings as to the period during which the applicant had engaged in trafficking and the value of methylamphetamine sold by the applicant in a given week. He concluded that:

(8) A pecuniary penalty in the sum of $452,000, being 226 weeks at $2,000 should be ordered in this case.

16 The applicant challenges the judge's calculation of the PPO sum on six grounds - ground 1 is headed 'Error in Quantities', ground 2 'Amount of Transactions', ground 3 'Time Period', ground 4 'Error in Amount of Weeks', ground 5 'Contradiction on Judge Chettle's Part', and ground 6 'Time Period of Selling Ice'.

17 Grounds 1, 2, 3 and 6 essentially traverse the same submissions put before the judge as to the quantity and value of methylamphetamine sold and the period of trafficking engaged in by the applicant.

18 Ground 4 alleges that the judge failed to take into account his finding that the applicant had not engaged in trafficking for eight weeks during the relevant period of the offence. This ground is conceded by the Director. As will appear, the concession is appropriately made. It is convenient that this ground be dealt with last.

19 Ground 5 challenges the judge's apparent acceptance of the applicant's counsel's concession at the plea that the applicant had engaged in 'substantial and continuous trafficking in large quantities'. She submits that that concession was contradicted by the judge's finding that the 'vast majority of sales ... were in quantities of 0.1 of a gram.'

20 The principles governing the court's assessment of the value of benefits derived from an applicable offence under the Act were described by Winneke P (with whom Charles and Chernov JJA agreed) in R v Motherwell.[6] The facts of that case are, in material aspects, similar to the present case. The applicant in that case had been convicted of trafficking in methylamphetamine over an 80-day period in 2002. At sentence, the judge made a PPO in the sum of $160,000. The judge inferred from the evidence that the applicant had sold, on average, half a gram of methylamphetamine at $120 to 16 people per day over the 80 days. The applicant challenged the judge's assessment of the sum on appeal. The applicant submitted that the only 'proper evidence' on which the judge could base an assessment was direct evidence of sales to a covert operative, plus the sales observed by the operative during the few days that he was at the applicant's premises. She argued that, based on that evidence, it was only open to the judge to assess a sum of $7,840. The figure of $160,000 received over the 80 days that the judge derived was merely an 'estimate' rather than an 'assessment of the benefits derived' from the evidence as required by s 59(1)(a) of the Act.

21 Winneke P first noted a judge has wide discretion under the Act in assessing a pecuniary penalty order.[7] His Honour continued:

Notwithstanding the width of the judge's discretion, it must, nevertheless, be exercised judicially and consistently with the purposes of the statute. Thus, there must be sufficient material put before the judge to support his assessment, which is required to be determined on the balance of probabilities. ... As I see it, the type of material upon which the judge will normally be asked to act will not be very precise because it is unlikely to include any input from the traffickers themselves. I say that the judge's discretion must be exercised bearing in mind the purposes of the statute. Those purposes clearly include (at least in this case) the suppression of the drug trade and the removal of ill-gotten gains from those engaged in it; in other words, the statutory expression of the maxim that 'crime does not pay'.[8]

...

[T]he assessment has to be based on evidence. That evidence will not necessarily be precise, but will have to be of such a kind as to provide a sufficient basis for the assessment which is made. In this sense it seems to me to be similar to assessments frequently made by trial judges for past and future economic loss in personal injury claims. The basic premises upon which the assessment is to be founded must be supported by fact-finding on the balance of probabilities; and the processes of drawing inferences from those basic premises should be seen to be sound.[9]

22 In rejecting the applicant's submission, Winneke P said:

That submission seems to me to ignore the concessions made by the applicant in her record of interview with police that she was trafficking amphetamines on 'most days since 1 April 2002'. It further ignores the admission that she was using more than half a gram of heroin every day; and that she was trafficking amphetamine to feed that habit. ...[10]

I am of the view that his Honour's conclusions were open to him and properly founded upon evidence which he was entitled to adopt. ... [H]is Honour's ... approach, based on findings that the trafficking must have involved at least, on average, 16 people per day buying half a gram of amphetamine at $120, was well open to him on the evidence, including the surveillance (which itself included telephone intercepts), the observations of and statements made to the covert operative, and the admissions made by the applicant to the police. All of the basic facts from which his Honour drew inferences were well before him; and were not contested by any material from the applicant. The inferences which his Honour drew from these basic facts were, in my view, reasonable and conservative and open to him.[11]

23 The applicant in this case submits that the transactions recorded in the tick sheets do not support the judge's findings that the applicant sold at least 2.5 grams and earned at least $2,000 per week. Exhibited to her written case was a document said to be 'an explanation of the tick book in relation to quantities being sold'. It contained a table with three columns - date (by week), quantity sold (in points), and value (in dollars) - covering the period between 18 March to 6 December 2012 and between 21 May to 21 August 2013. With minor differences, the document appears to be a typed copy of a handwritten summary of the tick sheets, both of which were exhibited to the applicant's affidavit at the PPO application. The judge also had a complete copy of the applicant's accounting records from the depositions, which included the tick sheets and records from 2010. Any observations below have been drawn from the evidence before the judge.

24 The applicant points out that, over the period recorded in the tick sheets, sales during all but two weeks were below what the judge ultimately found to be the minimum quantity and value of methylamphetamine trafficked by the applicant.

25 The applicant also relies on the tick sheets to submit that the judge ought to have found that the applicant started trafficking in methylamphetamine in March 2012 instead of March 2010.

26 It must be remembered that it is for the applicant to establish on this appeal that the judge's factual findings were not open having regard to all of the relevant evidence.[12] This Court will not intervene unless such factual error has been shown. It is not sufficient that this Court might have taken a different assessment of the evidence and what it is capable of proving.[13]

27 Fundamental to the applicant's case is the assertion that the judge was bound to make his assessment only having regard to the tick sheets. As discussed above, a similar argument was rejected in R v Motherwell. Viewed in isolation, and assuming the accuracy and comprehensiveness of the records, it may have been open to the judge to find lower weekly sales figures. But as appears from the judge's reasons, his Honour specifically considered and rejected the submission that the tick sheets comprised the complete picture. When viewed in light of the applicant's admissions in the record of interview, the facts in the prosecution summary uncontested at the plea hearing, counsel's concessions at the plea hearing, and the entirety of the applicant's accounting records, his Honour's conclusions were properly founded upon on the evidence.

28 Moreover, although the applicant in her affidavit gave reasons why her admissions on the record of interview and concessions through her counsel at the plea overstated the true extent of her offending, the judge was plainly entitled to draw the inferences and attribute the weight that he did to that evidence, for the reasons that he gave.

29 Acknowledging that a precise figure was impossible to determine, the judge took the finding that the applicant sold at least 2.5 grams of methylamphetamine per week, made an adjustment in the applicant's favour to allow for the fact that not every sale was a $100 point sale and derived a weekly sales figure of $2,000. This approach is orthodox and a similar approach was endorsed in R v Motherwell.

30 The applicant has not established any error in the judge's methodology and factual findings under grounds 1, 2, 3 and 6.

31 Ground 5 asserts that the judge's reference to counsel's concession at the plea of 'substantial and continuous trafficking in large quantities' contradicted his later finding that the 'vast majority of sales ... were in quantities of 0.1 of a gram'.

32 First, the judge was in that passage of his reasons, see [14] above, pointing to inconsistencies between the applicant's position at the plea hearing (via her counsel) and at the PPO application hearing about the extent of her trafficking activity. It was entirely proper for his Honour to refer to counsel's concession in that context.

33 Secondly, there was ample evidence for the judge to reach the same conclusion independent of that concession.

34 Thirdly, as a matter of logic, there is no inherent contradiction between the two propositions. Self-evidently, sales of small quantities of drugs may, given sufficient time and volume, amount to 'substantial and continuous trafficking in large quantities', qualitatively speaking.

36 Dealing, lastly, with ground 4. The applicant had pleaded guilty on the indictment to trafficking in methylamphetamine between 1 January 2010 and 30 June 2014. At the hearing of the PPO application, however, counsel for the Director was prepared to concede that, for the purpose of assessment of benefits under the Act, the applicant's offending commenced in March 2010. The judge ultimately accepted that the applicant had trafficked continuously from March 2010 to June 2014 - a period spanning 226 weeks - except for an 8-week period between April and May 2014. In effect, the judge found that the applicant had trafficked for 218 weeks.

37 Having also found that the applicant sold at least $2,000 of methylamphetamine per week, the judge purported to multiply the weekly figure by the number of weeks of offending - 226 - to arrive at the final sum of $452,000.

38 The applicant submits, and the Director concedes, that the judge ought to have calculated the final sum by reference to 218 weeks, rather than 226, and his failure to do so constituted error.

39 The applicant's submission must be accepted. Plainly, it was a material miscalculation. Undoubtedly, the judge would have corrected it had his attention been drawn to it.

40 Having established specific error on this ground, the applicant is entitled to have the sum of the PPO re-calculated by reference to the appropriate period of offending.

41 Section 142(4) of the Act confers upon this Court the power to confirm, discharge or vary the PPO, or remit the matter for rehearing.

42 Counsel for the Director submits that the appropriate course, if the appeal was successful solely on ground 4, would be to reduce the sum ordered by $16,000, being an amount that would take into account the error. That submission should be accepted. In addition, the sum of $1,390, being the cash already forfeited by the applicant, should be taken into account.

43 For these reasons, leave to appeal will granted on ground 4, and the appeal allowed on that ground. The sum of $452,000 in the PPO made by the judge in the County Court on 20 September 2016 is varied to $434,610. The PPO is otherwise confirmed. Leave to appeal on grounds 1, 2, 3, 5, and 6 is refused.

[1] Two charges of trafficking in cannabis and amphetamine, two charges of possession of a drug of dependence (Alprazolam and MDMA), one charge of handling stolen goods and a summary charge of dealing with property suspected to be the proceeds of crime.

[2] Milk v The Queen [2015] VSCA 237.

[3] Confiscation Act 1997 ss 3 (definition of 'automatic forfeiture', 'Schedule 2 offence'), 58(1), 59(1), 67, 68, sch 2 cl 1(ad); Drugs, Poisons and Controlled Substances Act 1981 sch 11 pt 3 column 2B.

[5] Confiscation Act 1997 s 67(1).

[6] [2004] VSCA 241; (2004) 150 A Crim R 445.

[12] See House v The King [1936] HCA 40; (1936) 55 CLR 499.

[13] See Kozarov v Director of Public Prosecutions [2007] VSCA 74; (2007) 47 MVR 498, 500 [9] (Maxwell P, Eames and Nettle JJA agreeing) in the context of a forfeiture order.