R v Staas

Judgment 1On 28 June 2012 I sentenced Brett Staas for a series of drug offences. The offences are set out in my remarks on sentence R v Brett STAAS [2012] NSWDC 287. A couple of months earlier, on 4 May 2012, the Director of Public Prosecutions (who had prosecuted Mr Staas) filed a notice of motion naming Mr Staas as respondent and seeking orders against him under the Confiscation of Proceeds of Crime Act 1989 (NSW). The orders the Director sought were two. The Director sought a "drugs proceeds order" of $62,000 and a "forfeiture order" in respect of a diamond ring. 2I embarked on a hearing of that notice of motion. The Director was represented by Mr M L Barr of counsel as Crown Prosecutor and Mr Staas was represented by Mr W Neild of counsel. In due course I will mention the appearance of another person. 3Briefly, the basis of the Director's case is this. When the police arrested Mr Staas, they found in the residence where he was arrested a diamond ring. The Director argues that that ring should be forfeited. In addition, as part of the evidence against Mr Staas, there was an account of a transaction between him and an undercover police operative. The evidence was to the effect that in various transactions the undercover police operative provided Mr Staas with amounts of money totalling $62,000 in exchange for drugs. The Director seeks the drugs proceeds order in respect of that cash that was handed over. 4Mr Barr tendered on behalf of his client a statement by the police officer in charge of the case, Sergeant De Bakker. She said in her statement that the $62,000 had not been recovered. She went on to say that Mr Staas "did not appear to hold any legitimate form of employment" during the police investigation. She also said she was "not aware of any legitimately obtained income" which Mr Staas could have used to buy a diamond ring. I will say more about the circumstances of the purchase shortly. Sergeant De Bakker was not aware of any income "which could be used to pay for the weekly rent" on the place where Mr Staas and his partner lived. 5Mr Barr tendered a photograph of the diamond ring and the transcript of a telephone conversation recorded about a month before Mr Staas was arrested. The phone call was between him and a man named Shaun Allingham. In the phone call they were discussing a ring. It was clear that Mr Staas wanted the ring from Mr Allingham and that Mr Allingham was going to supply it to him. Mr Allingham in the phone call said that the ring was valued at $25,000. 6I found in my remarks on sentence that for each of the transactions between Mr Staas and the undercover police operative he received $500 for each ounce of the drugs which he had sold. It is common ground that the amount of drugs sold at that valuation was worth to Mr Staas $3500. 7Mr Barr called Sergeant De Bakker to give evidence. She confirmed that she had made no observations "which would indicate that he was involved in or had any employment other than dealing in drugs", referring to Mr Staas. Nor was there anything to indicate that he was involved in any legitimate business activity. 8The person whose telephone conversation about the ring with Mr Staas was recorded was represented at the hearing by Mr P Murphy. Mr Murphy called his client, Mr Allingham. Mr Allingham confirmed that the photo of the diamond ring was the one that had been the subject of the conversation between him and Mr Staas and he produced a tax invoice from Midas Jewellery dated 13 October 2011 indicating that he had been sold a diamond ring for $13,600. 9Mr Allingham gave evidence that he had discussed with Mr Staas selling the ring to him. He said Mr Staas had agreed to buy the ring for $10,000. Mr Staas wanted to present the ring "to his then to be or future wife". Mr Allingham said that "on good faith I gave him the ring on the basis that he would pay the $10,000 within two weeks." 10Unfortunately for Mr Allingham, Mr Staas was arrested by the police before the two weeks were up which explains why the ring was found in the possession of Mr Staas. Mr Allingham said that Mr Staas never gave him any of the agreed money for the ring because Mr Staas had been arrested before that could happen. Mr Allingham said that he is the rightful owner of the ring to the extent of 100% and that it is worth $25,000. 11Mr Allingham was cross-examined by Mr Barr who further explored the fact that Mr Allingham himself had been arrested the following year (2010) and the offences that he had been arrested for. Mr Allingham confirmed - despite the suggestion from Mr Barr that some payment had been made to him - that no payment was made by Mr Staas in respect of the ring. Mr Allingham was cross examined by Mr Neild appearing for Mr Staas. Mr Neild suggested to Mr Allingham that his client, Mr Staas, had made a number of payments to Mr Allingham towards the ring but Mr Allingham denied any such payments. 12Mr Allingham confirmed in re-examination that he had never received any money from Mr Staas regarding the ring. 13Mr Barr recalled Sergeant De Bakker for further cross-examination by Mr Neild. Sergeant De Bakker confirmed that her knowledge of any employment by Mr Staas was simply that she was not aware of any. Nor was she aware of Exhibit A3 tendered by Mr Neild which indicated that Mr Staas had been paid almost $6500 by the insurance company in respect of the loss of his car. Nor was she aware of the significance of any of the deposits made to Mr Staas' bank accounts indulging one amount of over $5000. She confirmed that she was not interested in the financial circumstances of Mr Staas' wife and could not say who paid the rent on the premises which they occupied. 14So far as the diamond ring is concerned, Mr Barr argues that it is "tainted property" and should be forfeited to the State under s 18 of the Confiscation of Proceeds of Crime Act. Mr Barr relied upon the definition of "tainted property" in s 4(1) of that Act, specifically the meaning of that expression described as "substantially derived or realised, directly or indirectly, by any person, as a result of the commission of a serious offence." 15It is clear from s 18(1)(a) that I must be "satisfied that the property is tainted property in relation to the offence" before I can make a forfeiture order in respect of the ring. 16When I look at the evidence I find a record of a transaction whereby Mr Allingham purchased the ring from jewellers. I find a telephone conversation between Mr Allingham and Mr Staas which is clearly about Mr Allingham providing Mr Staas with a ring. I have evidence from Mr Allingham that he has not been paid any money for the ring. Despite what was suggested to Mr Allingham about payments made to him there is before me no evidence that any payment was made to Mr Allingham regarding the provision of the ring. Despite Mr Allingham being in custody it was not suggested that I should reject his evidence completely as unreliable. I would have been disinclined to do that because his evidence was consistent with the recorded telephone conversation and with the receipt for the ring. 17I am simply not satisfied on the evidence before me that the ring which the Director of Public Prosecutions seeks to make the subject of the forfeiture order is tainted property and in due course I will refuse the order in respect of the ring. 18As I have said, the Director also seeks what the Confiscation of Proceeds of Crime Act calls a drug proceeds order. That is an order which I can make under s 29 of the Confiscation of Proceeds of Crime Act. Under that Act I must, before making the order, "determine whether the defendant has derived any benefit in connection with drug trafficking at any time" and if I believe that the defendant has so benefited "assess the value of any such benefit". If I am so satisfied I must "order the defendant to pay to the State a pecuniary penalty equal to the amount so assessed." 19Mr Barr's case is that I should order Mr Staas to repay the $62,000 which was provided to him by the undercover operative. It is common ground that that money was provided as part of a supposed drug supply transaction. 20Mr Neild cross-examined Sergeant De Bakker to the effect that the money for the transactions was passed on, on two of the occasions, to a specific person and on the third occasion probably to another person. It also appears to be common ground - and I so found in my remarks on sentence - that the extent of Mr Staas' profit was $500 an ounce and, as I said, it is not contested that the total value to him of the transactions with the undercover operative was some $3500. 21I am satisfied that I can determine that Mr Staas has derived a benefit in connection with drug trafficking. However I do not assess the value of that benefit at $62,000 because Mr Staas was the middle man. I also am aware of the vagueness of the estimate of the amount actually taken as profit by him and I would assess the value of the benefit to Mr Staas as $2000. In due course I will order him to pay that as a pecuniary penalty to the State. 22These are the formal orders I make. Under s 29(1) of the Confiscation of Proceeds of Crime Act, I order Mr Staas to pay to the State of New South Wales a pecuniary penalty of $2000. The Director's application for a forfeiture order under s 18 of the Confiscation of Proceeds of Crime Act is refused. HIS HONOUR: They are the orders so far. Now what Mr Murphy? Do you need to be heard on anything? MURPHY: As I foreshadowed earlier your Honour. HIS HONOUR: You're not seeking anything. I mean what was that section? 41? MURPHY: Section 41(3). I'm seeking that your Honour direct that the subject property, being the ring, be returned to Mr Allingham as the person-- HIS HONOUR: Where can I give that direction? It looks as though the Commission is obliged to arrange for the property to be returned, but where do I come into it, unless you point me to a provision? The statute obliges the Commission to arrange for the property to be returned but I'm not sure that it obliges me to make any - unless you help me with it. MURPHY: The Commissioner of Police is obliged to arrange for the property to be returned to the person from whose possession it was seized as soon as possible after the relevant time. When one reads subs (7), a reference to a person from whom whose possession property was seized includes a reference to any person who is entitled to the property. So I'm asking your Honour to make a direction that Mr Allingham is the person who is entitled to the property and is-- HIS HONOUR: Where do I make that direction? It sounds like a declaration. MURPHY: A declaration, yes. HIS HONOUR: Where do I make it, where's the power for me? MURPHY: Well I can't do anything your Honour. HIS HONOUR: I've refused the order. "The Commissioner shall arrange for property to be returned to the person from whose possession it was seized". That's Mr Staas. MURPHY: Yes but then when one reads subs (7)-- HIS HONOUR: It includes a reference to who is entitled. Okay. I thought there might have been something here about entitlement. MURPHY: Well if your Honour was to make a declaration that Mr Allingham is the person-- HIS HONOUR: I agree but where's my power to do that? MURPHY: Yes, well. HIS HONOUR: I mean I'll consider it if you can take me to the power. I'm not the Supreme Court. I can't just make declarations particularly regarding the ownership of property although it's personal property. Can you help me? NEILD: No I was just going to suggest your Honour can make a finding on the fact and that could be conveyed to the Commissioner as opposed to a declaration. HIS HONOUR: All right I'll return to my judgment. MURPHY: I apologise for interrupting but-- HIS HONOUR: No you say you gave him money. MURPHY: Well look that's right. And there is some complication and some complexity at a level of contract law in his entitlement to property where there's a contract that has been executed entirely by one party and either in part or not at all depending upon the evidence by another and then there's a question as to, in whom the entitlement is-- HIS HONOUR: Yes I'm not sure I can interfere with this Mr Murphy. MURPHY: Well I think that's the difficulty your Honour and there's also a need for applications being made pursuant to subs (6) for notice to be given. There's form that needs to be-- HIS HONOUR: Subs (6) of? MURPHY: Section 41 your Honour. HIS HONOUR: Yes I see what you mean. Mr Murphy I don't think I can do anything. MURPHY: Well your Honour my friend Mr Neild has raised the issue of complexity, conflicting situations and contract but the only evidence before your Honour in his application is that of Mr Allingham. The proposition is put, yes, but no evidence of any payment from Mr Staas and therefore the only evidence of ownership and entitlement before the Court on this application is that of Mr Allingham. Turning to subs (6) the person who applies to a Court for an order under subs (5), subs (5) commences "If the Court is satisfied that neither it nor any other court having jurisdiction to do so would make a forfeiture order in respect of the property". That's not the order that your Honour has made. Your Honour has refused the Crown's application for a forfeiture order which is the situation provided for under subs (3). HIS HONOUR: It seems to me that the best you can hope for is, as Mr Barr said, a finding or an opinion by me that based on the evidence before me your client's rightful owner, do you seek any more than that? MURPHY: No your Honour I don't think I can there is no-- HIS HONOUR: In that case I'll stop you there. Mr Neild you haven't called your client and the only evidence before is - I'm just interrupting myself to say I'm not giving any direction or making any declaration, I don't have the power to do that - but I've been invited to find on the limited evidence before me that, on that evidence it seems that Mr Allingham is the rightful owner, why shouldn't I do that? NEILD: Three reasons your Honour. The first is that in my submission that would be tantamount to your Honour being invited to make a declaration if that finding of fact is then going to be used as a lever to prise the ring loose from the Commissioner. It's not a finding of fact that your Honour needed to make nor did your Honour make in coming to a determination of the application that was before your Honour. What your Honour did do, and I don't take any issue with this obviously, was set out in your Honour's judgment that there was no evidence other than the evidence given by Mr Allingham. Now I can't take any issue with that and my learned friend Mr Murphy is of course at liberty to draw that finding made by your Honour to the police if and when the matter of the ring was taken up in correspondence in the police. But to ask your Honour to make a finding of fact beyond a finding that your Honour has made or has required to make for the purpose of-- HIS HONOUR: I think you're right, I won't hear any more. Mr Murphy, I think Mr Neild's right. I think I've made the findings that I need to make under the statute and I wasn't satisfied that the ring was tainted property. The order is being sought against Mr Staas, not against your client, so I would have to have found in order for it to be tainted property that it was derived as a result of the commission of a serious offence. There's no suggestion or evidence that it was derived by your client as a result of a serious offence. The case is against Mr Staas and I've made the findings that I need to make, namely that I wasn't satisfied that it was realised directly or indirectly, I have found that the only evidence before me was that of your client. And I accept that no payments were made, or I wasn't satisfied that payments were made. So I think Mr Neild is right. I don't think I can, in this case, go on and make a finding tantamount to a declaration that your client's the rightful owner. MURPHY: Well given the way these proceeding unfolded, my client was served with a copy of the application and came to Court represented as an interested party. We have the situation in subs (3) which is clearly, and it's not contested-- HIS HONOUR: Subs (3) of 41? MURPHY: Subs (3) of s 41. Well we have this, on one hand the person HIS HONOUR: Well you then would rely on section-- MURPHY: Subs (7), yes. HIS HONOUR: But then I think the best you can do is wait for my judgment. 23And I will now direct that a transcript of my judgment will be taken out and made available to me for revision. HIS HONOUR: As soon as it is revised my associate will pass it on to you and Mr Neild and Mr Barr and then you do your best and I guess you draw the Commissioner's attention to s 41(3) and subs (7) and argue that your client's the entitled person and entitled to the property. Now do I need to make any other orders, Mr Barr, Mr Neild, Mr Murphy? I don't think so, I think I've disposed of the motion. MURPHY: I believe so your Honour. NEILD: So I agree with that your Honour. HIS HONOUR: All right thank you all three of you for your assistance.