R v Ferguson; R v Sadler; R v Cox [2009] VSCA 198

R v Ferguson; R v Sadler; R v Cox [2009] VSCA 198 - VSCA 2009 case summary — Zoe

[86]

The evidence now before me on the voir dire does, I consider, establish that the development and application of the criteria and assumptions by which to assess whether a cash payment or deposit is to be off-set against a cash withdrawal is the product of the expertise and experience of Mr Curtin as a certified practising accountant. On the first voir dire, Mr Curtin did not satisfy me that the exercise which he had then performed was derived from or related to his expertise as an accountant. However the evidence now before me, and to which I have referred earlier in these reasons, does satisfy me that, in seeking to "match" cash deposits and payments with cash withdrawals, Mr Curtin has brought to bear the expertise which he has gained through his training and qualification as an accountant. In other words in conducting cash flow analyses Mr Curtin, and indeed other accountants, are required to develop and apply criteria, based on the accounting concept of reasonableness. While in each case different criteria and assumptions may be developed, nevertheless the accountant calls upon his or her experience and expertise in developing and applying those criteria, informed as he or she must be by the requirement of reasonableness. Accordingly, I accept that Mr Curtin was acting as an expert accountant, and using his expertise as such, in developing and applying the criteria and assumptions set out in his report.

Counsel for the accused have contended that the criteria and assumptions developed by Mr Curtin are no more than principles relating to the normal spending habits of family units. However, on analysis, it is clear that the exercise conducted by Mr Curtin was based essentially on an accountant's methodology, and not based on any assumptions by him as to spending habits. For example, he was cross-examined as to why he would not off-set a smaller prior cash withdrawal against a larger subsequent cash deposit or cash payment in the same account. His response made it clear that as an accountant he would not off-set the two amounts without being provided with further information. Similarly, Mr Curtin stated that, in applying his criteria, he would not off-set a cash deposit against a cash withdrawal where both transactions occurred from the same bank account. As an accountant he considered he would not be at liberty to off-set the two transactions because they did not evidence a transfer of funds from one account to another. Each of those two responses, in my view, make it clear that, whatever similarity Mr Curtin's exercise bears to an assessment of the ordinary spending habits of a family unit, nonetheless the exercise performed by Mr Curtin was based on an accountant's methodology.

Thus, the giving of evidence by Mr Curtin as to the criteria and assumptions developed and applied by him would not usurp the role of the jury. This is because Mr Curtin would not be purporting to give evidence as to the normal spending habits of individuals. Rather, Mr Curtin's evidence would be confined to evidence that, as a forensic accountant, by applying criteria and assumptions developed by him, he is able to off-set particular withdrawals against other payments or deposits in the accounts. ...[30]

[106]

It is clear that the exercise undertaken by Mr Curtin has its limitations, deriving from the limited amount of information available to him. Further, it is evident that the accuracy and validity of Mr Curtin's analysis depends upon the appropriateness and validity of the criteria and assumptions utilised by him. Nonetheless, despite those limitations, the evidence does potentially have significant probative value. As I have already stated, a number of cash deposits and cash payments, characterised by Mr Curtin as "unsourced", are unaffected by the assumptions and criteria which he has adopted. In other words, in respect of those transactions, there is no available cash withdrawal, or other source of income, which could conceivably account for those transactions. Thus in each case the report of Mr Curtin does identify a significant amount of cash transactions which, on their face, do not seem to be affected by the limitations to which Mr Curtin has adverted. Further, the limitations of information available to Mr Curtin potentially can work in both directions. It is true that the limitations on information available to Mr Curtin may mean that he is not in possession of information which might account for otherwise unsourced cash payments or cash deposits. On the other hand the same limitations mean that he may not have identified a significant amount of unsourced cash payments.

On the matters which were revealed on the voir dire, and on the basis of matters put in cross-examination, I do not accept that the probative worth of Mr Curtin's evidence is slight or insignificant by virtue of the limitations and assumptions specified in his report. Ultimately an assessment of the weight of the evidence is a matter for the jury. However I do not conclude that the evidence can only be characterised as having slight probative worth. Further and importantly the evidence is directed to a central issue in the case. The Crown case against the accused is based on an allegation of a significant amount of trafficking in heroin over a three and a half year period. On the Crown case significant amounts of payments in cash were made to one or more of the accused Cox, Sadler and Ian Ferguson. In that context the identification by the accountant of cash payments and cash deposits, which are not accounted for by information available to him, or by cash withdrawals from the accounts of the accused, is particularly relevant.[49]

[297]

The cases to which I have referred show that it is necessary to determine whether there may be discerned from the evidence a common objective in the conspiracy alleged, together with a relevant nexus between the Lai and Le allegations, in order to determine whether the evidence relating to the Lai allegations is relevant to count as conspiracy alleged. To some extent, the task before me is different to that performed, for example, by the Court of Appeal in Saffron. There the question was whether the evidence, as led at trial, could establish the charge in the presentment. In the present case, the trial has not been commenced. It is necessary for me to assess, on the depositions, whether that evidence, if led, might be relevant to Count 1 of the presentment, as now particularised by the Crown.

From the materials contained in the depositions, it is evident that there is a significant nexus between, on the one hand, the Lai allegations, and, on the other hand, the Le allegations. The approach to Lai, and the recruitment of Le by Cox, was directed to the same objective, namely the trafficking of heroin by or through a Drug Squad informer. Each of the three accused charged on Count 1 were members of one of the two units of the Victorian Drug Squad responsible for investigating heroin trafficking. In each instance, the approach was made to a person initially recruited as an informer after the arrest of that person. The corrupt approach was only made after the recruitment of, respectively, Lai and Le as informers, and after they had each performed legitimate roles as informers. Further, I consider that there is a relevant connection in time between the two approaches. Conversely, there is not such a sufficient element of disconnection, that the two transactions should not be seen to be part of the one overall conspiracy. It is alleged that the initial overture to Lai by Cox and Sadler was made in about May 1999. The incident in which Cox and Sadler are alleged to have stolen money from Lai is alleged to have occurred on 21 May 1999. Lai states that before that incident occurred he had decided that he did not want to deal drugs with Cox and Sadler. In the meantime, based on information supplied by Lai, Le was arrested by the Drug Squad in April 1999. After his remand into custody he was recruited as an informer by Sadler and by his superior, Hill. The first corrupt approach by Cox to Le was made on 3 August 1999. Thus, while there is a period of time between the successful attempt to recruit Lai, and the first corrupt approach to Le, the relevant time gap is not substantial. During that period Le had been recruited, and was acting, as an informer for the Drug Squad.

Each of the above matters are capable of establishing a nexus between the Le allegations and the Lai allegations. There are, of course, some factors which are dissimilar in the two allegations. For example, the type of transaction which was proposed to Lai (profit sharing) was different to the transaction that was proposed to Le (a sale to the informer). The initial recruitment as an informer of Lai was by Cox and Sadler, and of Le was by Hill and Sadler. However, those factors are not, in my view, of such moment that a jury could not properly infer that the two transactions sprang from the one common origin, namely, a corrupt scheme to traffick heroin through persons arrested as drug traffickers and later cultivated as informers to the Drug Squad.

There is no direct evidence which implicates Ian Ferguson in the unsuccessful attempt to recruit Lai as the person through whom to traffick heroin. That circumstance may, ultimately, persuade a jury that there was not on foot the one continuing conspiracy throughout the period charged. However, that factor does not necessarily lead to the conclusion that there was not the one conspiracy in existence. As I have stated, the authorities make it plain that the same conspiracy can subsist, notwithstanding that one or more members of it are not parties to the conspiracy throughout the whole of its duration. A member of the conspiracy can join it after its inception, and another member can leave it while the underlying combination is still on foot.[109]

[558]

The object and purpose of the conspiracy of which you were convicted, the trafficking of heroin in more than a commercial quantity, is of itself a most serious crime carrying a maximum of 25 years' imprisonment. Illicit drugs such as heroin are an abominable social evil. They have a cruel and destructive impact on lives, on families and on society. The trafficking of drugs preys on the young, the weak and the vulnerable. It warps and degrades standards of decent civilised behaviour. It is a thoroughly twisted and despicable enterprise, conducted by greedy and callous individuals who have no regard for the trail of human misery which their trade creates.

Heroin is an addictive and potentially lethal substance. Its effects can be, and commonly are, devastating. It has been the melancholy experience of courts to witness all too frequently the tragic and appalling consequences arising from its consumption and abuse. As a member of the Drug Squad, you must have been fully aware of the suffering and harm which would be caused by the drugs which you conspired to traffick.

The crime of conspiracy to traffick heroin is every bit as heinous as the crime of trafficking itself. Indeed, this is reflected by the fact that the legislation prescribes the same maximum penalty as it does for the act of trafficking. The vice and gravity of the conspiracy lies, at least in substantial measure, in the combination by you with your fellow conspirators to achieve your nefarious end.

The offence of conspiracy to traffick drugs is fundamentally born of ruthless and callous greed. Those who embark on such enterprises expect to make significant profits. The role of the courts is to ensure that those persons are left in no doubt that when they are brought before the court for their crimes, they can expect no mercy whatsoever. The duty of the court is to impose a sentence of sufficient severity that it sends a clear message to the community that activity such as yours will not be tolerated. The principle of general deterrence is especially prominent in offences involving drug trafficking and it requires the courts to impose sentences which are sufficiently severe to deter would-be drug traffickers from succumbing to the lure of the profits of that trade.[165]

[581]

Throughout the relevant period Ferguson and his wife were living at 130 Branch Road, Lara, which they had purchased in December 1993. Until February 2001 that property was the subject of a mortgage to the Bank of Melbourne. At that time the debt, secured by the mortgage, amounted to $200,000. In late January 2001 Ferguson inspected the property at Bambra, and negotiated the purchase of it for the sum of $335,000. A contract was signed by Joanne Ferguson, in her maiden name Joanne Barrett, for the acquisition of the property on 1 February 2001. In February 2001 Ferguson applied to the Commonwealth Bank for a loan of $353,000 to fund the purchase (including the costs of purchase) of the Bambra property. The application for the loan was successful, and a mortgage was executed by the Fergusons to secure it over both the Bambra and Lara properties. In order to obtain that loan, Ferguson, on 8 February 2001, paid off the Bank of Melbourne mortgage debt over the Lara property, which then amounted to $199,218.

It is clear that Ferguson was able to pay off the Lara mortgage by accessing and using proceeds of the conspiracy. Between October 2000 and February 2001 cash deposits were made into the various bank accounts of the Fergusons totalling $350,000. At that time the trafficking of heroin to Duy Le reached its peak. That sum included $56,100 cash deposited in January 2001,and $221,393 cash deposited in February 2001. Between February 2001 and April 2001 Ferguson carried out a complicated series of transfers of funds, which had been deposited by him into those accounts, between the various bank accounts. Those transfers are depicted in a chart prepared by Mr Curtin. The effect of the transfers was to effect the discharge of the Bank of Melbourne mortgage over Lara. The purchase of Bambra settled on 31 March 2001. For that purpose Ferguson had obtained a loan, secured by mortgages over Bambra and Lara, in the sum of $353,000, from the Commonwealth Bank. The loan consisted of two components, a fixed loan for $200,000, and a home loan of $153,000. In April 2001 Ferguson transferred $140,000 from the Commonwealth Bank Streamline account, in the name of his wife and himself to the home loan account, thereby reducing the debt to some $13,000.

[588]

Self-evidently, the construction contended for by [defence counsel] involves a restructuring of the sub-section (c), so as to transplant the temporal phrase, which I have quoted above, from its present position in the sub-section to a position immediately after the words "any increase". There is no warrant for such a re-writing of s 67(1)(c). Further, such a restructuring of the sub-section would offend the clear purpose of s 67(1)(c). Section 67(1) is, on its face, designed to treat, as benefits derived by a defendant from an offence, not only direct funds received by the defendant, but also other consequential profits and benefits derived by the defendant. That is the clear purpose of sub-paragraph (a) (which treats as benefits any property derived or realised directly or indirectly as a result of the commission of the offence) and sub-s (b) (which treats as benefits any benefits, service or financial advantage provided for the defendant or any other person as a result of the commission of the offence). In that context s 67(1)(c) is designed to treat as benefits any increase in the value of the property in which the defendant has an interest in the period described in the sub-section, unless the defendant is able to establish that the increase in value was due to causes unrelated to the commission of the offence. In other words sub-s (c) creates, as it were, a presumption that the increase in the value of any property held by the defendant during the relevant period has resulted from the offending for which the defendant has been convicted. In that light it would make no sense for s 67(1)(c) to limit the increase in value, treated as benefits, to any increase sustained during the period offending.

Indeed, the construction contended for by [defence counsel] would render s 67(1)(c) nugatory in relation to any offending consisting of a single act occurring on one particular date, such as one large drug trafficking transaction. If [defence counsel's] construction were accepted, then s 67(1)(c) would have no effect in such a case, since any increase in the value of the property of the defendant, in which the defendant then had an interest, could only occur after the completion of the offence. Accordingly I consider that, on its proper construction, s 67(1)(c) operates to treat as benefits the increase in the property in Bambra, as assessed by Mr Peart and Mr Blincoe, since Bambra was a property in which the defendant had an interest in the period beginning immediately before the commission of the offence and ending at some time after the commission of the offence.[172]

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