Methods of assessment
49 In relation to broadly analogous legislation, namely the Crimes (Confiscation of Profits) Act 1985 (NSW) Allen J said that the Court's assessment must necessarily be reached upon a 'rough and ready' approach: R v Fagher (1989) 16 NSWLR 67 at 80. The obvious point was made that people engaged in criminal activities do not ordinarily keep accounts or perhaps appropriate taxation records. There are difficulties of quantification and the Court will simply do its best to reach a reasonable result in all of the circumstances, bearing in mind the self-evident legislative intent that people should not profit from criminal activities.
50 The applicant presents a number of modes of calculation which, at least in their primary propositions, would result in a confiscation of approximately $1 million from both Mr Kelly and Ms Rangi. Indeed, it is suggested that something somewhat in excess of that figure should be the appropriate amount of confiscation.
51 The plaintiff called evidence from a Mr Robert Davis, a financial analyst with the NSWCC. Mr Davis outlined methods of assessing the gross income derived by the defendants from the alleged sales of illegal drugs.
52 The methods of assessment adopted by the plaintiff were as follows. First, the court could determine from four known sales of illegal drugs (two in 1995 to Mr Clarke and two in 1998 to Mr Parker) a series of daily transactions to multiple numbers of purchasers each at $200 per supply. At two sales per day over the period from 1993 to 1998 the plaintiff submits the proceeds would amount to $1,095,000 for Ms Rangi and $1,018,958.33 for Mr Kelly.
53 This method of assessment must be rejected. There is no simply evidence upon which the Court can be persuaded on the balance of probabilities that the defendants were engaged in the regular sale of illegal drugs in the order of those amounts. The observations of former police officers that members of the public would visit the defendants do not amount to proof of drug sales.
54 The second method of assessment urged by the NSWCC was to receive evidence of a diminution of the use of the needle exchange program at Boggabri District Hospital following a search of the defendants premises as indicative of the supply of illegal drugs by the defendants. Extrapolation of these figures generates figures of $1,125,000 for Ms Rangi and $1,031,250 for Mr Kelly.
55 This method of assessment must be rejected. There is plainly no evidence upon which the Court can proceed according to this methodology.
56 The third method offered by the NSWCC was to take the profits asserted by Mr Kelly on the seafood business as actually derived from the sale of illegal drugs. According to this method the NSWCC offers an assessment of $1,560,000 for Ms Rangi and $1,451,666,67 for Mr Kelly.
57 This method must similarly be rejected. Though the plaintiff drew some comfort for the fact that each method generated a similar figure the Court cannot rely on either method of assessment offered as reliable and based on actual evidence. Accordingly I am required to undertake my own assessment of the profits generated by the defendants, taking into account money acquired from Mr and Mrs Rangi and profits derived from the seafood business.
58 The final method of assessment asserted by the plaintiff was to compare the income generated by the defendants against their expenditure. Mr Davis concludes that Mr Kelly and Ms Rangi spent $161,782 more than they earned from 1993 to 1998. The plaintiff asserts that this figure represents the minimum figure for net profits since it assumes that there was no other expenditure and that drug sales account only for this deficit and were not responsible for generating a greater income.
59 Mr Davis gave this evidence about the amounts of expenditure for the seafood business according to receipts and documents provided to him. He concludes that the business had an approximate expenditure of $12,000 based on those documents. Mr Davis conceded that if further invoices existed, his figures would need to be adjusted.
60 In my opinion the most rigorous and methodologically correct evidence as to the comparison between the legitimate income of the defendants and known expenditure is to be obtained from the affidavit of Mr Robert Davis. Although the applicant suggests that that constitutes an 'underestimate', nevertheless, it seems to me that is the appropriate basis upon which the judgment and orders should be made and the conclusion of Mr Davis is that there was a deficit (that is a contrast between legitimate and illegitimate earnings) of $161,782.
61 The plaintiff contends that this figure is the 'absolute minimum' of net profits from drug sales. The plaintiff submits this figure makes a number of assumptions favourable to the defendants. Nonetheless I feel more confident in basing an assessment on expert analysis of the financial position of the defendants rather than some broad and perhaps excessive figure which might do injustice to the dependants. The applicant suggests that that figure should be doubled, as I understand it, because two people were involved. I do not regard that as compelling or even persuasive. Mr Davis does not suggest that the estimated deficit should be doubled in relation to an assessment of gross drug proceeds and therefore I would accord weight to his 'bottom line' figure.
62 The question then arises as to whether the figure calculated by Mr Davis should be discounted or ameliorated on any basis in accordance with to the statutory regime.
63 Mr Temby, QC, fairly conceded for the NSWCC, that it is distinctly possible that monies came in from New Zealand as a result of Ms Rangi's parents' contribution to the family in New South Wales.
64 Mr Davis has given evidence as to the amount of money that could have been brought into the country during the trips made by Mr and Mrs Rangi (and received by Mr Kelly and Ms Rangi on trips taken to New Zealand) according to the evidence of Mr Rangi before the Registrar. Mr Davis deposed that such figure amounts to a maximum of $58,090. In a comprehensive analysis of the possible amounts of money imported into Australia by Mr and Mrs Rangi from New Zealand Mr Davis' evidence reveals that at times Mr Kelly and Ms Rangi were up to $23,220 out of pocket though making cash transactions of up to $10,000 at the time.
65 I accept Mrs Rangi's evidence (the mother of the second defendant) that some monies were brought in, although I acknowledge the difficulties arising from the incapacity of her husband (on medical grounds, accepted by all parties) to give evidence before this Court. Doing the best I can, I think the calculations in relation to money which came in from New Zealand relatives result in a figure of $50,000 and therefore this should be deducted from the figure of confiscation I have otherwise indicated.
66 In addition, I think that it is undoubted that some profits were raised from the fishmongering business although it is my view that the defendants' evidence as to the quantum of those profits is grossly exaggerated. In the inflation of figures from $1,000 per week profit to $10,000 it is difficult to assess a proper figure. The Court is willing to give weight to the evidence of Mr Evans that he would could generate approximately 25 per cent profit on expenditure. Taking an expenditure of approximately $12,000 the Court will consider a profit from the seafood business in the amount of $4,000. Accordingly, I would deduct $4,000 from the figure as being a rough and ready estimate of the amount that might have been earned form the sale of fish and prawns.
67 Thus, the Court can make an assessment that the amount of income generated by the defendants from criminal related activity in the amount of $96,000.
68 It is difficult to assess the amount that should be set aside from the sale of any interests forfeited for the hardship that may be suffered by the dependants of the defendants. The reliability of Mr Kelly and Ms Rangi as witnesses was not impressive. However, when speaking of their children, the evidence was clear, cogent and corroborative.
69 In an earlier judgment in this case ([2003] NSWSC 56) I have held that account may be taken of the hardship to any dependant of a person who will forfeit an interest in property under an order made by the Court in accordance with s 24 of the Act. This is subject to a limitation that the Court must be satisfied that the dependant had no knowledge of any serious crime related activities in relation to the person who was the subject of the forfeiture order. I am so satisfied. The details of the dependants in the present case, their age and their schooling are as follows:
· Jason, 13, the son of Mr Kelly and Ms Cynthia Price; attending Gunnedah High School in year 8; expectations of completing High School and entering into the Air Force; Jason receives an Abstudy allowance and ATSIC contributes to the costs of schooling and some extra-curricular activities;
· Raelene, 8, the daughter of Mr Kelly and Ms Rangi; in year 3 at Boggabri Primary School; performing well at school and in sporting activities; and
· Jess, 6, the son of Mr Kelly and Ms Rangi; in kindergarten at Boggabri Primary School; also performing well at school and in sporting activities.
70 Mr Kelly and Ms Rangi gave evidence that it would be difficult to keep the children at their current levels of academic and physical commitment if they were required to sell the Boggabri residence. Mr Kelly and Ms Rangi gave evidence, that was not challenged by the plaintiff, that they would have to rent a property in that circumstance and that the availability of housing in the Boggabri region was limited and that prices in the Gunnedah area are much higher than those in Boggabri. Ms Rangi also gave evidence that the Boggabri residence was of a higher standard than that which they would probably lease if it were sold.
71 The evidence of hardship led by the defendants on behalf of their children was restricted. However, there was sufficient evidence led for me to be able to find that if the Boggabri residence needs to be sold this will cause hardship to the dependants of Mr Kelly and Ms Rangi and I should take this hardship into consideration after I have reached a conclusion on the assessment of the proceeds of crime.
72 However, Mr Temby, QC, submits that a pre-requisite of any order for amelioration from hardship is dependant upon the 'sale of the interest', and being an amount that the Court thinks is necessary to prevent hardship to the dependant. Although Mr Temby asserts to the contrary, it is my view not inevitable that the property must be sold. It may be that the defendants can raise the monies to satisfy the order of assets forfeiture in some other way, whether by way of mortgage, assistance from New Zealand or otherwise. But if there is a 'sale of the interest' I think the innocent dependants should be accommodated to some extent.
73 It is difficult to assess what amount should be allocated to their welfare in terms of their future education and progress, but I would suggest that if there is a sale of the relevant interest, then an amount resulting from that sale of $20,000 for the three dependant children should be allocated for that purpose pursuant to s 24 of the Act.
74 The Court is empowered to make ancillary orders for the purpose of ensuring the proper application of such an amount so allocated pursuant to s 24(1)(b) of the Act and I would direct that contingent upon the property being sold that the amount that I have determined should be allocated for the welfare of the dependants should be held on trust by the solicitors for the defendants (or such other person as may be agreed between the parties) and should be used in their discretion for the welfare of the children.
75 I exercise my discretion in this regard on the basis of the uncontradicted evidence that it would be in the interests of the children to remain in Boggabri and to continue their current schooling and social, educational and sporting relationships in that town.
76 I direct the applicant to bring in short minutes of orders to give effect to this judgment on Monday 24 March 2003 at 10am, and, subject to any further argument, take the view that the costs of the application must be paid by the defendants.