R v Hall

12His Honour's conclusion was challenged by the Director in this Court. It was submitted that in his ERISP the respondent admitted that he had sold cannabis and had been selling "maybe" half an ounce a day which, having regard to the prices, may amount to $100 to $200 per day. Although he said that he did not keep records of his sales, he also said that he had been trying to cut down the amount he smoked. He said that he was financing his current habit from his sales. 13The amount originally claimed of $59,765 was calculated by the Director at $175 per day for 365 days being $63,875. From this sum was deducted $4,110 being the forfeited proceeds as required by s 29(2). During argument before his Honour the solicitor for the Director reduced the amount sought to $54,750 being $150 per day for 365 days. In making the calculations the concession was always made that, orders having been for the recovery of $4,110, this sum had to be deducted. It was submitted that because his Honour had declined to make a confiscation order in the sum of $25,000, no further deduction was required. 14The Director also submitted that s 30(6) of the Act provides that expenses or outgoings (being the purchase price of the drugs) are not to be deducted when assessing the benefit: see Director of Public Prosecutions v Nieves [1992] 1 VR 257. It was submitted that once an application had been made for the assessment of a Drug Proceeds Order the court was required to make an order. It was submitted that this could be contrasted with the Pecuniary Penalty provisions which are "arguably" discretionary. Section 24(1) of the Act provides that the court "may make the order sought." In contrast s 29(1) provides that if an application is made the court "must" proceed in accordance with the subsequent provisions of that section. 15It was submitted that although the primary judge may have believed that the application, if granted, would be unduly harsh on the respondent and, having regard to the respondent's personal circumstances, there was little chance of recovery, these matters were irrelevant to the decision that his Honour was required to make. 16The Director submitted that the relevant provisions of the Act operated so that his Honour was first required to determine whether the respondent had made a benefit (s 29(1)(a)) before moving to assess its value (s 29(1)(b)) and thereafter order that it be paid (s 29(1)(c)). It was submitted that his Honour did not engage with the question that he was required to determine pursuant to s 29(1)(a). It was submitted that if his Honour had considered that subsection he would inevitably have found that the respondent had derived a benefit in connection with drug trafficking. This followed from the fact that his Honour had already ordered forfeiture under s 13(2)(a) of the Act of $4,110 in cash, which his Honour had no difficulty in concluding was tainted property. Section 29(2) required this sum to be deducted from the value of any amount assessed under s 29(1). It follows that at least that sum was required to be assessed. 17With respect to the assessment process it was submitted that the reliability of the admissions in the ERISP had never been challenged by the respondent and provided ample detail to enable his Honour to determine a figure in accordance with s 29(1)(b). It was submitted that the comments by the Court in R v Fagher (1989) 16 NSWLR 67 reflect the reality, which was apparent in this case. When assessing the benefits derived from the illegal activity of drug taking there will normally be no records or at best very inadequate records unlike the evidence that may be available when the court is performing a conventional judicial task. It was submitted that provided there was at least some relevant information the court could never determine that it was "too hard" to make an assessment. That task was mandatory. It was further submitted that having regard to the information before the court in the present case it was not beyond his Honour's capacity to have made an assessment. 18It was further submitted in the appellant's written submissions that his Honour proceeded to judgment in the matter before the Director had formally closed its case and before there had been any address from either the Director or the respondent. It was submitted that after receiving the relevant material his Honour did not receive submissions that would have assisted him to a conclusion. However, no ground of appeal that relies upon a denial of procedural fairness was pursued. The appeal was confined to an argument that his Honour had erred in the construction and application of ss 29(1) and 30 of the Act.

Resolution of the appeal 19Two issues require resolution. Firstly, whether s 29 obliges the court to make a Drug Proceeds Order. Secondly, whether in the present case the court had sufficient information to enable an assessment to be made of the benefit that the respondent derived in connection with drug trafficking. 20The respondent submitted that s 29 should be understood as giving a discretion to a court as to whether or not to make an order. Reliance was placed upon a decision in relation to similar legislation in South Australia: Director of Public Prosecutions v George [2008] SASC 300; (2008) 102 SASR 246. Section 95 of the Criminal Assets Confiscation Act 2005 (SA) ("CAC Act") provides (in subs 1) that upon application by the Director Public Prosecutions, if certain conditions existed the Court "must" make a pecuniary penalty order. The Full Court of the South Australian Supreme Court held that having regard to its content the word "must" did not impose an obligation but vested a discretion in the Court to make an order. 21Section 95 relevantly provides: "(1) A court must, on application by the DPP, make an order (a pecuniary penalty order) requiring a specified person to pay an amount determined under Subdivision 2 to the Crown if satisfied that the person has been convicted of, or has committed, a serious offence and - (a) the person has derived benefits from the commission of the offence; or (b) an instrument of the offence is owned by the person or is under his or her effective control. (2) The court's power to make a pecuniary penalty order in relation to benefits derived from the commission of a serious offence is not affected by the existence of another confiscation order in relation to the offence (emphasis added). (3) The court cannot make a pecuniary penalty order in relation to an instrument of a serious offence if- (a) a pecuniary penalty has been imposed in respect of the instrument under this Act or any other law; or (b) the instrument has been forfeited, or an application has been made for a forfeiture order that would cover the instrument, under this Act or any other law in relation to the offence (emphasis added)." 22The provisions of the CAC Act are complex. They are summarized in George by Doyle CJ at [17]-[40] and White J at [197]-[201]. The CAC Act provides for restraining orders, freezing orders, forfeiture orders and pecuniary penalty orders. There are two kinds of forfeiture orders: court ordered forfeiture orders under s 47 and statutory forfeiture orders under s 74. Statutory forfeiture means forfeiture that will occur by operation of the provisions of the CAC Act unless a court orders that particular property be excluded: s 76. Two kinds of property may be forfeited: benefits derived from the commission of the offence (proceeds) and instruments of offences (property used in, or in connection with, the commission of an offence). 23In relation to instruments of offences, the court has a discretion whether to make a forfeiture order: s 47(3) of the CAC Act. In deciding whether it is appropriate to make this order the court may have regard to the hardship to any person (other than the suspect) and the ordinary use of the property. In this respect this provision is similar to s 18 of the NSW Act dealing with forfeiture orders, although hardship may be also considered in relation to the defendant under the NSW provision. 24In George a number of questions arose for consideration, one of which was whether a court must make a pecuniary penalty order under s 95 of the CAC Act in relation to an instrument of an offence even though the court had decided under s 47 that it was not appropriate to make a forfeiture order, or had decided under s 76 that the instrument should be excluded from statutory forfeiture, or had decided to exclude the instrument from a restraining order. This involved a consideration of whether "must" for the purpose of s 95(1) was to be interpreted as meaning "may" so as to confer on the Court a discretionary power not to make a pecuniary penalty order. 25White J, with whom Doyle CJ (at [80]) and Vanstone JJ (at [170]) agreed on this point, held that s 95 was not obligatory in nature and should be construed, in the statutory context, as vesting in the court a discretionary power to make a penalty order (at [239] and [245]). 26White J referred (at [187]) to Re Davis (1947) 75 CLR 409 where the High Court considered s 10 of the Legal Practitioners Act 1898-1936, which provided that every candidate approved by the admissions board "shall" be admitted as a barrister by the court. The majority of the High Court held that this provision did not create an obligation, and referred to the context of the Legal Practitioners Act and to the consequences of adopting such a literal construction of s 10. Starke J held at 418: "But the word "shall" does not always impose an absolute and imperative duty to do or omit the act prescribed. The word is facultative: it confers a faculty or power ... Apart from the word "shall" there is nothing in the Legal Practitioners Act which suggests an imperative and absolute duty upon the Court to exercise its authority to admit persons as barristers. Indeed the interposition of the Court would be merely ministerial if it were under an absolute duty to admit a person as a barrister upon approval of the Board. And the Court would be without jurisdiction to refuse admission to any person approved by the Board though information was before it that such person, though unknown to the Board, was a lunatic or a thief or otherwise disreputable or unfit to belong to the profession of a barrister." 27In George at [191] White J said: "The question of whether the word "must" in s 95 means "may" also involves the application of more general principles of statutory interpretation. The modern approach to statutory interpretation of a legislative provision requires the whole context of the legislation in question and its purpose to be considered. The provision should be construed so that it is consistent with the language and purpose of all the provisions in the statute. When this is done, it may indicate the words used in a statutory provision do not have the meaning which they appear, at first sight, to convey." 28At [192] his Honour said: "The modern approach to statutory interpretation was stated by Brennan CJ, Dawson, Toohey and Gummow JJ in CIC Insurance Ltd v Bankstown Football Club Ltd in the following terms: 'It is well settled that at common law, apart from any reliance upon s 15AB of the Acts Interpretation Act 1901 (Cth), the court may have regard to reports of law reform bodies to ascertain the mischief which a statute is intended to cure. Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses "context" in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy. Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd (1986) 6 NSWLR 363 at 388, if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent (emphasis added footnotes omitted)'." 29The factors White J considered in finding that, in the context of s 95, "must" meant "may" were: Section 95(2) refers to the court's "power" to make a pecuniary penalty order under s 95(1). This indicated an understanding by Parliament that s 95(1) invests a power in the courts, rather than imposes an obligation: [217]. The role of pecuniary penalty orders within the statutory framework. Pecuniary penalty orders are subordinate to forfeiture orders in respect of the timing of their making and their availability. The fact that there was a prohibition in s 95(3)(b) on making a pecuniary penalty order where an instrument was forfeited or an application for forfeiture was pending indicated the primacy of forfeiture orders over pecuniary penalty orders. A pecuniary penalty order could only be made as an alternative to forfeiture of the same instrument as, if an instrument was forfeited, no application could be made for a pecuniary penalty order s 195(3). However, it did not follow that the Court's powers with respect to pecuniary penalty orders were subordinate: [222]-[229]. The Act contained a detailed regime for court ordered forfeiture, and applications for forfeiture under ss 47 and 76 may involve a substantial hearing. If the court determined under s 47(3) that a forfeiture order is inappropriate, it would be curious if this could be negated by the imposition of the alternative but subordinate sanction of a pecuniary penalty order. Accordingly, if a court was obliged by s 95(1) to make a pecuniary penalty order once satisfied of the specified matters, it would mean that the pecuniary penalty order would operate as the equivalent of a "trump card." Thus even where a person is successful in avoiding forfeiture orders under the other substantive provisions of the Act, the effect of that success could be "trumped" by a pecuniary penalty order application. This construction could not have been intended by Parliament, as it would render the substantive hearing provisions in respect of the forfeiture orders pointless: [230]-[234]. The obligatory construction had the potential to bring the administration of justice into disrepute, due to the lack of respect that would be accorded to the now-pointless proceedings in respect of the forfeiture provisions: [236]. 30Vanstone J said (at [170]) that the interpretation that s 95 confers a discretionary power was not only available, but also led to a result that "does no violence to the scheme of the Act." 31This Court is bound to follow a decision of the Full Court of another State Supreme Court unless persuaded that the decision is wrong: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89. We were urged to take that course by the respondent and determine that s 29 did not oblige the Court to make an order. 32As it happens, it is not strictly necessary to determine the question in this appeal. The trial judge did not decide that he was not obliged to make an order. Instead, his Honour concluded that the information that the court had was insufficient to enable an order to be made. As I will discuss below this must always be a possibility, the most obvious case (although I accept it is unlikely) being where there was no relevant information available to the judge at all. 33There are significant differences between the structure and words used in the CAC Act and the Act. The CAC Act is worded so that the making of an order is facilitated. The Act had been drafted to provide that if an application is made the court must undertake three tasks: (a) determine whether the defendant has derived any benefit; (b) assess its value; and (c) make an order. It is not possible to conclude that the court is not obliged to exercise the power in subsections (1)(a) and (b) in which case it must be obliged, if subsections (a) and (b) are satisfied, to make an order pursuant to subsection (1)(c). 34This position is confirmed by consideration of the legislation which preceded the Act. The Crimes (Confiscation of Profits) Act 1985 provided for a court to make a pecuniary penalty order. Section 10 stated that upon an application being made the court "may" order a person to pay a pecuniary penalty: s 19(1)(b). However, the language of obligation was deliberately adopted when the Act was being enacted. The Second Reading speech by the Attorney speaks in terms of a mandatory obligation without any suggestion that in the event that the precondition was fulfilled the making of an order is discretionary. 35The position under the Act is made plain by the contrast between the power in s 18 and s 24 and the power in s 29. Both s 18 and s 24 provide that in appropriate circumstances the court may make an order, clearly providing a discretion. By contrast s 29 provides that a court must undertake the task in subsections 29(1) (a), (b) and (c). The words of obligation in the preamble can only be understood as obliging an order to be made in accordance with s 29(1)(c) provided that the assessment contemplated by s 29(1)(b) has been made. 36The second issue is whether his Honour was, having regard to the information before the Court, correct to decline to make an order. Section 29(1)(a) requires the court to determine whether a defendant has derived any benefit in connection with drug trafficking at any time. If the court believes that a defendant has so benefited it must assess the value of that benefit (s 29(1)(b)) and order the defendant to pay a pecuniary penalty equal to the amount so assessed: s 29(1)(c). The assessment is to be made having regard to the information before the Court as to the matters identified in s 30(1) including:

• that the money came into the respondent's possession in connection with drug trafficking: s 30(1)(a);
• the value of any benefit provided for the respondent: s 30(1)(c);
• the market value of the drugs (s 30(1)(d)) disregarding any expenses as outgoings incurred by the respondent in connection with the commission of the offences: s 30(6). 37This Court recognised in Fagher that the task of a court in carrying out the assessment required by the Act may prove difficult. Fagher was concerned with the Crimes (Confiscation of Profits) Act, which relevantly adopted the same formulation as in the Act, the court being required to make an assessment "having regard to information before the court." 38We were urged by the respondent to adopt a stringent standard of proof when a court is carrying out the assessment task. As I understand the submission, it was that the correct approach required the Director to prove the case on the balance of probabilities "informed by the decision in Briginshaw v Briginshaw [(1938) 60 CLR 336]." However, as I understand that submission it is at odds with the words of the statute and the discussion of the task by this Court in Fagher. In Fagher Roden J said at 71-72: "Calculation or assessment of the value of the benefits derived by a particular offender from any criminal transaction, is likely to be difficult. There will be no audited accounts available, nor can one expect a contract or other documentation evidencing the nature of the dealings among the several participants who may be involved. Additionally, if the participants themselves give evidence of the details of those transactions, their evidence is unlikely to be the most reliable, and to the extent that it may be relied upon is unlikely to disclose clearly defined legal relationships." 39Allen J then said at 80: "In the construction of s 10 and s 11 the court should not lose sight of reality that the court, to fulfil its statutory obligation, often will have to assess the value of the benefits derived by the defendant on material which is far less satisfactory than what it normally would expect to have in litigation. It is not the nature of criminals to keep records of such a kind as to assist the court; nor is it the nature of criminals to tell the truth when telling a lie would seem more advantageous. The sections clearly recognise the difficulty of the task imposed upon the court and accept that the assessment of the value must in many cases be a somewhat rough and ready process. Section 11(2) does not speak of the facts proven or even of the 'evidence' adduced. It speaks of the 'information before the Court'. That the legislature envisaged such a roughness and readiness in assessment of the value is clear also from subs (3) and subs(4) of s 11 which provide an arbitrary method of assessment of the minimum value of the 'benefits derived' by comparing the value of the defendant's total assets before the commission of the offence with the value of them after the offence." 40The primary judge found, and indeed there was no dispute, that the cash sum of $4,110 should be forfeited pursuant to s 18(1), it being tainted property. Although his Honour did not articulate his reason it must be that his Honour concluded that the monies were realised in connection with, and as the result of, the commission of the relevant offence. The consequences of that finding must be that the only conclusion open to his Honour pursuant to s 29(1)(a) was that the respondent had derived a benefit in connection with drug trafficking, at least in the sum of $4,110. 41In the present case the information before the court did not otherwise enable the precise amount of the benefit to the respondent from his drug trafficking to be assessed. However, the admissions made by the respondent, which I have previously related, clearly provided information from which an assessment could be made. His Honour should have made that assessment. 42At first I was minded to order that the matter be remitted to the District Court for the appropriate assessment to be made. However having regard to the additional cost and inconvenience that would be involved I believe it appropriate that this Court exercise the power provided in s 92(4) of the Act and make the appropriate order. 43From the available information it is apparent, and I would on the balance of probabilities conclude, that the respondent was trafficking to at least the extent of $70 per day for nearly twelve months (being the $50 of cannabis he smoked plus an additional sale of at least $20). Accepting that period to be eleven months, I would assess the benefit at 330 days at $70 per day being $23,100. From that sum $4,110 would have to be deducted making $18,990. An order reflecting this assessment should be made. 44Before leaving the matter I should mention that the procedure provided by s 31 for the tender of statements by the prosecution from which an assessment of the benefit to an offender can be made would appear to be the preferable manner by which to prosecute this type of matter. By casting an onus upon the offender to respond, the court may be more comfortably able to make an assessment which must, of course, always be adverse to the interests of an offender. The procedure provided by s 31 appears to be that encouraged by Roden J in Fagher. Section 31A will also be of assistance to the prosecution in many cases.

1. Appeal upheld.
2. Order pursuant to s 29(1)(c) of the Confiscation of Proceeds of Crime Act 1989 that the respondent pay to the State of New South Wales the sum of $18,990. 45BELLEW J: I agree with McClellan CJ at CL. 46BUTTON J: I agree with McClellan CJ at CL.

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