R v Shane Norman Zerafa [2003] NSWCCA 101 | Case summary

(a) was used in, or in connection with, the commission of a serious offence, or (b) was derived or realised, directly or indirectly, by any person, from property used in, or in connection with, the commission of a serious offence, or (c) was derived or realised, directly or indirectly, by any person, as a result of the commission of a serious offence, or (d) was derived or realised, directly or indirectly, by any person for the depiction of a serious offence, or the expression of the offender's thoughts, opinions or emotions regarding the offence, in any public promotion. 5 Section 18 is relevantly in the following terms: 18. Forfeiture orders (1) If a person has been convicted of a serious offence and an application is made to a court under section 13 (1) (a) or (2) in relation to specified property and: (a) the court is satisfied that the property is tainted property in relation to the offence, and … (b) the court has taken into consideration (having regard to information before the court): (i) the use that is ordinarily or had been intended to be made of the property, and (ii) 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, the court may order that the property is forfeited to the State. … (4) If, at the hearing of an application made under section 13 (1) (a) or (2) in reliance on the conviction of a person for a serious offence, evidence is given that property to which the application relates was in the possession of the person at or immediately after the commission of the offence, then: (a) if there is no evidence given tending to show that the property was not used in, or in connection with, the commission of the offence---the court shall presume that the property was used in, or in connection with, the commission of the offence, or (b) in any other case---the court shall not make an order under this section in relation to the property unless it is satisfied, on the balance of probabilities, that the property was used in, or in connection with, the commission of the offence... 6 His Honour observed that the police obtained warrants to intercept calls made by the respondent on his mobile telephones. Although the police were initially investigating an unrelated offence, their inquiries led them to discover the respondent's involvement in "an on-going and sophisticated methylamphetamine manufacturing operation". His Honour continued: The respondent's involvement saw him ingratiating himself with the principal manufacturers by obtaining for them supplies of sudafed tablets to be used in the manufacture process. He also recruited "tasters" to sample the finished product, and involved himself in supplying the finished product. What was abundantly clear is that the operation upon which the police investigation stumbled had been on-going for a considerable period, and that substantial sums of money were involved. The respondent's supplying of the methylamphetamine was to several persons a number of whom were themselves on-supplying. The telephone taps revealed for instance, that the respondent supplied a man named Allison on 14th June, the 16th June, 17th June, 27th June, 5th August and 11th August. The amounts supplied on those occasions appear to range between 3.5 grams for about $500 through to "a quarter of pure" for $850, and 14.2 grams for an undisclosed sum. There is no reason to believe the sales to Allison or any of the respondent's dealers started on 2nd June 2000 when the telephone taps were put in place. 7 The respondent gave evidence before the primary judge. His Honour was clearly unimpressed with it. His Honour's review of the evidence, and his findings in relation to it, appear in the following passages from the judgment on the application for a forfeiture order: Police found $13,500 in a rear granny flat at 18 Melville Rd St Clair at the time of the respondent's arrest in connection with the offences with which I am dealing. The applicant claims the $13,500 constitutes a float being used by the respondent in the commission of one or other of the drug offences for which I sentenced him. The applicant can point to no specific evidence in the sentence proceedings or supplementary evidence which establishes such a proposition. In submissions the applicant's counsel asserted such a proposition is well nigh impossible to prove. The respondent's evidence was that the $13,500 was the residue of money he had earlier withdrawn from one of his bank accounts for the purchase of a utility. The sum he had set aside for the utility was approximately $17,000. It had been reduced to $13,500 because he had "eaten" into it when partying, gambling, and the like. I reject his evidence. The evidence establishes the $13,500 was found in three bundles. The first bundle was comprised of 50 x $100 ($5,000). The second bundle was comprised of 68 x $50 and 1 x $100 ($3,500). The third bundle was comprised of 44 x $50 and 28 x $100 ($5,000). If such money was the residue of cash withdrawn from the bank, then in my view the second and third bundles would not have been composed in the way they were. I would have expected 100 x $50 ($5,000) and 29 x $100 and 12 x $50 ($3,500) assuming the bank did not have 35 x $100. There was no evidence from the respondent that he particularly requested the configuration of $50 and $100 notes as were contained in his residue, or the earlier amounts from which the residue derived. However, that is not the end of it. The onus is upon the applicant to satisfy me on the balance of probabilities that the $13,500 is "tainted property". Therefore the critical question concerns its connection with either drug offence the respondent was convicted of by me. As I said above I am satisfied the period specified in the indictment of the offences dealt with by me is but a snap shot of the respondent's drug dealings. True, it is a snap shot of the final phase of the respondent's drug dealings, but a snap shot nonetheless. I am satisfied the money is illegally or unlawfully obtained. It is to be remembered the respondent became aware the police were interested in him for the unrelated assault offence on 6th June. His conversations on the phone thereafter suggest he was genuinely concerned about going to gaol. On 5th June there is a withdrawal from account no 2294 0062 8838. However, from the 1st May there had only been $4,000 deposited in that account. The last deposit was on 5th June. I am satisfied he was not using this account to deposit his unlawfully obtained moneys. In account 2453 1007 5775 apart from the transfer of $10,000 referred to above, there were only monthly transfers of $100 and other inconsequential amounts credited during all of 2000. I am satisfied he was not using this account to deposit moneys unlawfully obtained. I accept it is possible that some or all of the $13,500 may be "tainted property". However, this is not enough. The applicant must prove on the balance of probabilities that it is "tainted property". It can point to no evidence that establishes this proposition. The applicant sought to rely upon s 18(4)(a) of the Act, inviting me to presume the $13,500 was used in, or in connection with, the commission of one or other or both of the drug offences. However, as I said above, the respondent gave evidence to show the property was not used in, or in connection with, the commission of the offence. As I said above I have rejected his evidence. Consequently, if his evidence were the only evidence I had to rely upon, the applicant would be successful in his submission. However, I have pointed to the bank accounts. They clearly show whatever moneys the respondent was receiving prior to the 6th June were not being channelled into the bank accounts exhibited before me. Consequently I cannot rule out that some or all of this money was money received prior to 6th June 2000. In those circumstances there is some evidence tending to show that the property was not [or at very least may not] have been used in, or in connection with, the commission of the offence. That being so, the onus falls upon the respondent to prove on the balance of probabilities that the money was used. Counsel for the applicant frankly conceded he could not point to evidence that established this proposition. 8 His Honour also referred to various bank statements relating to two separate bank accounts held by the respondent which had been tendered during the course of the confiscation proceedings. His Honour concluded that the statements did not "represent his complete banking facilities during the relevant time". His Honour rejected the respondent's evidence that a withdrawal of $25,229 from one of his accounts was used by him (in part) to purchase the Toyota Camry motor vehicle. The respondent claimed that he had spent $8,500 from that withdrawal to purchase the vehicle and that he had "pretty much wasted" the balance on "going out" and "buying new clothes". 9 In order to assist the primary judge to determine the question as to whether there was the necessary connection between the cash which was located at the respondent's premises and the offences of which he had been convicted, the Crown relied upon the principles which were enunciated by Gleeson CJ in R v Sultana (1992) 74 A Crim R 27. His Honour said: [a]s Cox J observed in R v Polain (1989) 52 SASR 526, at 532, a statutory reference to a connection between one thing and another poses questions of proximity and degree. It has been held that the connection required by the statutory provisions here in question need not be substantial or direct. ( R v Hadad (1989) 16 NSWLR 476, 42 A Crim R 304, R v Minienou (1989) 46 A Crim R 211.) Polain was a case similar to the present. The accused, when her premises were searched, was found to be in possession of two small bags of amphetamines and a sum of $1800 in bank notes. She was convicted of possessing the two bags for the purpose of supply. Cox J made an order forfeiting the $1800. The question he had to address was whether that money was used in connection with the offence of possessing the two bags (see 52 SASR at 531). His Honour resolved that question in the affirmative on the basis that the money, which represented the proceeds of past sales (see 530 and 532) constituted working capital of the accused's drug dealing business of which the possession of the two bags also found a part. This his Honour described as an "intimate relationship". One may have reservations about the adjective, but it was not essential to the conclusion, which was that there was at least such a relationship between the money and the bags as to constitute a use of the money in connection with the bags. The money and contents of the bags were both circulating capital of the same business, and there was therefore a connection between the use of the money and the possession of the bags. (at 31-2) (emphasis added) 10 In that passage, reference is made to the earlier decision of this Court in R v Hadad (1989) 16 NSWLR 476. In that case McInerney J, with whom Enderby and Allen JJ agreed, said that: [h]aving regard to the ambit of the legislation and the discretion reposed in the Court on the question of whether or not an order should be made, the intention of the legislature is that a wide scope be given to the concept of tainted property. I do not accept that the legislature intended the courts to construe the section by requiring a substantial connection between the commission of the crime and the alleged tainted property. (at 482) 11 More recently in DPP v King (2000) 49 NSWLR 729, O'Keefe J observed that: The fact that the definition of tainted property deals with two different concepts, namely "used in the commission" and "used in connection with the commission" of a serious offence, indicates that the latter phrase has a wider connotation than the former. This view is supported by authority ( R v Polain ((1989) 52 SASR 526 at 531-532 per Cox J; Taylor v Attorney-General (SA) (1991) SASR 462 at 470-1 per Debelle J. (at 730) 12 The respondent referred the Court to a decision of the Tasmanian Court of Criminal Appeal in R v Steven Robert Devine [2001] TASSC 8. He is to be commended for his researches. Underwood J, who gave the leading judgment, observed that "[i]n this case there was plenty of evidence that the respondent intended to traffic in the narcotic, but there was no evidence that he had, at the date the crime was committed, sold any of the narcotic that he bought from another". (at para 23) That conclusion of his Honour is, of itself, sufficient reason to clearly distinguish that decision from the present case. Accordingly I derive no assistance from it for present purposes. 13 There was uncontroverted evidence before the primary judge that the offences to which the respondent pleaded guilty continued for a period in excess of two months. It is apparent from his Honour's Remarks on Sentence that the respondent's role in each of the offences was significant. Moreover his Honour was satisfied that "the financial returns to him…were substantial". This finding appears to be borne out by the transcripts of intercepted telephone calls to which the respondent was a party. Furthermore there was no evidence that the respondent was in gainful employment or that he had any other legitimate source of income or access to any other funds or accumulated savings at any time that was relevant to the period of time spanned by the counts in the indictment. In those circumstances, the Crown submits that the only reasonable inference available was that the money was "tainted property" in the sense in which that expression has been interpreted in the authorities to which reference has just been made. 14 It is to be recalled that his Honour made a number of specific findings of fact. His Honour concluded that the commencement of the respondent's drug dealing activities predated the dates in the indictment. His Honour also rejected the respondent's claim that the cash which was located had been withdrawn from the bank. In doing so his Honour specifically referred to the configuration of the notes and the way in which they were bundled. His Honour also found that the money was "illegally or unlawfully obtained". 15 In all the circumstances, the Crown submits that there was no proper basis upon which his Honour could have concluded that "there is some evidence tending to show that the property was not [or at the very least may not] have been used in, or in connection with, the commission of the offence". It also submits that there was simply no evidentiary foundation for his Honour's conclusion that "I cannot rule out that some or all of this money was money received prior to 6 June 2000". That being so, it is submitted that his Honour fell into error. 16 The Crown also submits that the primary judge misdirected himself in not applying the test propounded in Sultana, a case which it was noted, bore significant factual similarities to the present case. As a result, it is submitted that his Honour imposed upon the Crown a far more stringent test than was required and, in doing so, fell into error. It submitted that just as had been the case in Sultana, the funds presently under consideration, clearly represented, it may be inferred, "circulating capital" available to the respondent for use in his "drug business". 17 In light of the authorities to which reference has been made, and in view of the evidence which was before his Honour and particularly in the light of the specific findings of fact which his Honour made and to which I have referred, I accept the Crown's submission that it has established that errors of the relevant kind were made. See R v Galek (1993) 70 A Crim R 252 at 258. In doing so, I have proceeded upon the assumption that the operative provision for present purposes is s 18(4)(b) of the Act. In those circumstances, I propose that the appeal be allowed, the order made in the District Court be set aside, and an order made that the respondent forfeit the sum of $13,500. 18 HIDDEN J: I agree with the orders proposed by Buddin J and with his Honour's reasons. 19 BELL J: I also agree. **********

R v Shane Norman Zerafa

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Judgment (9 paragraphs)

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Cases Cited (4)