Criminal Law - importation of heroin - action for pecuniary penalty - assessment of benefits derived from narcotics dealing - meaning of "benefits derived"

Customs Act 1901 (Cth) - ss. 219B, 243B, 243C

Counsel and Solicitors for appellant: Mr C.K. Stewart instructed by

Messrs Andrews

Counsel and Solicitors for respondent: Mr P. Roberts instructed by

Commonwealth Director of Public

Prosecutions

Orders 2, 7 and 8 made by the trial Judge be set aside and in lieu thereof it be ordered that the application to the Court in respect of Mrs Razzi be dismissed and that order 4 be varied by substituting for the words "and Second Defendants respectively" the word "Defendant".

The matter be remitted to the trial Judge to deal with the costs of the trial and with any matter arising out of the order made under s.243E with respect to Mrs Razzi's property.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

This is an appeal from orders made by a Judge of the Court under the provisions of s.243B and s.243C of the Customs Act 1901 (Cth) ("the Act") which read, inter alia:-

"(1) Subject to sub-section (7), the Minister, the Commissioner of Police

or the Comptroller may institute a proceeding in the Court, on behalf of

the Commonwealth, for an order that a person pay a pecuniary penalty to

the Commonwealth in respect of -

(a) a particular prescribed narcotics dealing engaged in by

him; or

(b) prescribed narcotics dealings engaged in by him during a particular

period.

(2) If, in a proceeding instituted under sub-section (1), the Court is

satisfied that the person in relation to whom the order is sought -

(a) has engaged in a particular prescribed narcotics dealing; or

(b) has, during a particular period, engaged in prescribed narcotics

dealings,

the Court shall assess, in accordance with section 243C, the value of the

benefits derived by the person by reason of his having engaged in that

dealing, or in prescribed narcotics dealings during that period, as the

may be, and order the person to pay to the Commonwealth a pecuniary

penalty equal to the value as so assessed.

(3) The Court may order a person to pay a pecuniary penalty under sub-

section (2) in relation to a particular prescribed narcotics dealing, or

prescribed narcotics dealings during a particular period, whether or not

the person has been convicted of an offence, or proceedings have been

instituted in respect of any offence, committed in relation to that

or any of those dealings and whether or not any moneys or other goods

have been seized under section 229A in relation to that dealing or any of

those dealings.

...

243C ...

(2) In a proceeding under section 243B, the value of the benefits derived

by the defendant by reason of his having engaged in a particular

prescribed narcotics dealing, or in prescribed narcotics dealings during a

particular period shall be assessed by the Court having regard to the

evidence before the Court concerning all or any of the following matters:

(a) the moneys, or the value of the property other than moneys, that came

into the possession or under the control of -

(i) the defendant; or

(ii) another person at the request or by the

direction of the defendant,

by reason of the defendant's having engaged in that dealing or in

prescribed narcotics dealings during that period;

(b) the value of any benefit, other than a benefit of the kind referred to

in paragraph (a) that was provided for -

(i) the defendant; or

(ii) another person at the request or by the

direction of the defendant,

by reason of the defendant's having engaged in that dealing or in

prescribed narcotics dealings during that period;

(c) in the case of a prescribed narcotics dealing that consisted of

otherwise dealing in narcotic goods - the market value, at the time of

the dealing, of similar or substantially similar narcotic goods;

...

(e) the value of the defendant's property before and after he engaged in

that dealing, or before and after the end of that period, as the case

be.

...

(6) In calculating, for the purposes of a proceeding under section 243B,

the value of benefits derived by the defendant by reason of his having

engaged in a particular prescribed narcotics dealing, or in prescribed

narcotics dealings during a particular period, any expenses or outgoings

the defendant in connection with that dealing, or those dealings, shall be

disregarded."

2. In the proceedings before the learned trial Judge, the applicant was the Commissioner of the Australian Federal Police ("the Commissioner") and the defendants were the appellant, Patricia Anne Razzi, her husband, Carlo Razzi, Allan Gregory McLean and Elvio Lorenzelli. No order was sought with respect to McLean. Razzi, McLean and Lorenzelli had earlier been convicted on charges involving importations of heroin into Australia in November 1986 and March 1987 and, at the time of the trial, each was serving a lengthy term of imprisonment. Mrs Razzi had not been convicted of any offence, but under s.243B(3) of the Act that was no bar to the proceedings.

3. Before the trial Judge, allegations were made that Razzi and McLean had conspired to import cannabis resin in September 1982, that Razzi, Lorenzelli and McLean had conspired to import cannabis in or about November 1984, that Razzi, Lorenzelli and McLean had conspired to import heroin in or about March 1986 and that Razzi, Lorenzelli and McLean had conspired with Mrs Razzi between July and November 1986 to import the heroin which was imported about 1 November 1986. It was only that latter transaction which was the subject of the claim made against Mrs Razzi.

4. In the proceedings before the trial Judge, statements which McLean had made to the Police in connection with the transactions in which he had been involved were admitted as evidence against Razzi and Lorenzelli. However, the statements were rejected as evidence against Mrs Razzi. It was not alleged in this appeal that the trial Judge took these statements into evidence against Mrs Razzi. Nevertheless, I should point out, though it is not the subject of challenge, that his Honour's findings on benefit accorded with and to some extent were based on the statements of McLean that he was paid for his services as courier and did not share in the proceeds or benefits of the importation. Thus, his Honour noted, in respect of the second transaction, that "According to his statement, McLean was paid in cash for his services", and "It is clear from McLean's statement that both Mr Razzi and Mr Lorenzelli were principals in the transaction. In the absence of any evidence to suggest that they shared the proceeds otherwise than equally, I apportion the benefit, and so the pecuniary penalty, equally between them." As to the third transaction, his Honour referred again to McLean's statement and said, "Once again Mr McLean received a cash fee for his services. The inference is that Mr Razzi and Mr Lorenzelli shared the proceeds of the sale of the heroin equally." In relation to the transaction in which Mrs Razzi was found to be involved, his Honour similarly, and in accordance with McLean's statement, said, "Once again Mr McLean was the courier, Mr Lorenzelli was involved in the purchase of the heroin in India, and delivery was made to Mr Razzi."

5. In the working out of the pecuniary penalties, his Honour necessarily disregarded the amounts paid to McLean. See s.243C(6).

6. Apart from the statements of McLean, the principal evidence comprised transcripts of interceptions made of telephone calls to and from the home of Mr and Mrs Razzi and from listening devices installed from time to time in their home. The telephone interceptions were made pursuant to warrants issued under the Telecommunications (Interception) Act 1979 (Cth). The listening devices were installed under s.219B of the Act. In the result, the evidence included transcripts of conversations which took place on the Razzis' telephone or within their home.

7. Although there was evidence implicating Mrs Razzi in the November 1986 importation, the last transaction, that evidence does not suggest that Mrs Razzi played a fundamentally different role in relation to that transaction than at any previous time. At all times, she was married to Razzi and lived with him. It was not suggested in relation to the fourth transaction that Mrs Razzi obtained a benefit or was entitled to a benefit of a type which had not flowed from the previous transactions. Yet, in relation to the earlier transactions, the penalty was assessed on the footing that Razzi and Lorenzelli shared the benefit equally, whereas in relation to the last transaction, penalties were imposed on the footing that Lorenzelli had been entitled to 50% of the benefits from the dealing and that Razzi and Mrs Razzi had shared equally the remaining 50% thereof.

8. In relation to the November 1986 importation, the trial Judge said, inter alia:-

"The final relevant transaction concerned five kilograms of heroin

imported into Australia from India in November 1986. Once again Mr

McLean was the courier, Mr Lorenzelli was involved in the purchase of

the heroin in India, and delivery was made to Mr Razzi.

...

All the defendants were arrested at that time, in March; but the

November importation was not then found. If the intention was to mix

the two importations (November and March), it is logical to conclude that

it was, at that time, secreted somewhere. It may have since been

disposed of by others, on their instructions. It may remain secreted. If

latter, although neither Mr Razzi nor Mr Lorenzelli presently has personal

access to this heroin, they could give instructions for its disposal for

benefit. Whether the heroin is still held or has been sold, the two men

have received a benefit from its importation.

...

I am not confident that the November heroin was in fact sold before

March 1987. It may have been. It may still have been retained at the

time of the arrests. In either event a benefit was derived by each of the

conspirators equal to his or her share in the proceeds of the enterprise.

...

It is clear that Mr Lorenzelli was heavily involved and it is reasonable

assume that he would have received half of the proceeds. As I have

come to the conclusion that Mrs Razzi was also involved in this

transaction, for reasons which I will set out, I will attribute only one

quarter of the proceeds of this transaction to Mr Razzi, that is $165,000.

...

I find it impossible to accept Mrs Razzi's evidence. I do accept that the

main organisers of the November importation were her husband, Mr

McLean and Mr Lorenzelli. She may not have been aware of all the

detail. But I have no doubt that Mrs Razzi was aware of the general

nature of the operation and, particularly, that it concerned the

of heroin.

...

There is no evidence of the extent to which the benefits of the November

1986 importation have been, or will be, shared between Mr and Mrs

Razzi. During 1986 a number of properties were purchased in their joint

names. I do not suggest that any of these purchases was financed from

the November 1986 importation. Having regard to the relevant dates, this

is unlikely. Given the fact that Mr Razzi was not then working, in any

lawful occupation, and that Mrs Razzi was only doing some part-time

coaching, it is probable that the properties were purchased from the

proceeds of earlier importations. But the fact that the properties were

purchased in the joint names indicates a readiness by Mr Razzi to share

his assets with his wife. If he was prepared to do that in respect of

purchases not emanating from importations with which she is shown to

have been concerned, it is reasonable to conclude that he would do the

same in relation to the proceeds of a crime in which she had been

involved. I think that the appropriate finding is that Mrs Razzi received

benefit in respect of the November 1986 importation equal to one quarter

of its value, namely $165,000. I assess a pecuniary penalty accordingly."

(the emphasis is mine).

9. Therefore, the penalty of $165,000 imposed on Mrs Razzi was assessed by reference to benefits considered to have been derived from the earlier importations of cannabis and heroin, in which Mrs Razzi was not alleged to be engaged, notwithstanding that, in relation to the importation of heroin in respect to which she was held to be engaged, no tangible benefit was traced to her hands.

10. The first question is whether the trial Judge was correct in finding that Mrs Razzi engaged in a prescribed narcotics dealing. His Honour correctly held that, as the proceeding was a civil proceeding, it was sufficient that the finding be made on the basis of clear and cogent evidence. See the discussion of standard of proof by Wilcox J., with whom Lockhart J. agreed, in Cornwell v. Commissioner of Australian Federal Police (1990) 94 ALR 495 at pp 507-8. Mrs Razzi gave evidence that the first occasion on which she became aware that Razzi was involved in the importation of heroin was during a conversation held on 6 February 1987. His Honour found it impossible to accept Mrs Razzi's evidence. In my view, his Honour's view was well-founded. I accept his finding that Mrs Razzi's evidence was improbable and untruthful. There was, in addition, much material demonstrating Mrs Razzi's involvement in a conspiracy to import heroin. Mrs Razzi herself collected $100,000 from Razzi's funds which, together with $100,000 contributed by Lorenzelli, constituted the moneys for the purchase of the heroin. Mrs Razzi sent a telegram to India dealing with the travel. The transcripts recorded Mrs Razzi's phone conversations with respect to the costs of the travel to Bombay and London, a phone call from Mrs Razzi to Lorenzelli just before he left for India, a phone call from McLean to Mrs Razzi just after he had gone through passport check on his way from Sydney to Bombay, a further call from McLean to Mrs Razzi when he arrived at London airport and other like conversations. On 2 December, Mrs Razzi read aloud to Razzi, McLean and Lorenzelli a letter which was to be written to the Indian supplier complaining of the quality of the heroin. There was other like evidence implicating Mrs Razzi. I see no error in the finding made by the trial Judge that Mrs Razzi was engaged in the November importation of heroin. I accept his Honour's finding that Razzi, McLean and Lorenzelli were the main organisers but that Mrs Razzi was aware of the general nature of the operation.

11. The finding as to pecuniary penalty has, however, given me more trouble. His Honour found that, in respect of the previous importations, Razzi and Lorenzelli were the principals in the transactions and shared the benefits equally. These findings were based on the view that Razzi and Lorenzelli were the owners of the imported drugs. In the present case, as the $200,000 which was made available for the purchase of the heroin came equally from the funds of Lorenzelli and Razzi and, as his Honour found that McLean was only a paid courier, it seems difficult to draw any conclusion other than that, in respect of this transaction also, Razzi and Lorenzelli were the owners of the heroin.

12. The task was to assess the value of the benefits derived by each of Mrs Razzi, Razzi and Lorenzelli. His Honour doubted that any tangible benefit had been derived by Mrs Razzi. His Honour said that there was no evidence of the extent to which the benefits of the November 1986 importation had been or would be shared between Mr and Mrs Razzi. There was no evidence of money or property coming into Mrs Razzi's hands as the result of the importation. The heroin was not found in the home.

13. In assessing the value of the benefit as far as Razzi and Lorenzelli were concerned, his Honour indicated that he was not confident that the heroin had been sold before March 1987. It may still have been retained at the time of the arrests and, I assume, at the time of the hearing before his Honour. If Razzi and Lorenzelli were the owners of the heroin, his Honour was entitled to find that each had received a benefit equal to one-half of the value of the heroin, whether sold or not. But that course of reasoning would not justify a finding that Mrs Razzi derived a relevant benefit.

14. In the context of s.243B and s.243C, the term "benefits derived" refers to valuable benefits which have been gained by the person against whom an order is sought, by reason of engaging in the prescribed dealing. The term used by s.243B (2) is "derived". The provision does not refer to a benefit expected or likely to be derived. The benefit must have been derived. Moreover, the benefit derived must have a value, for it is at that value that the pecuniary penalty is calculated. The value of the benefit is to be assessed having regard to the evidence concerning all or any of the matters specified in s.243C(2). The paragraphs of s.243C(2) refer to matters of ascertainable value: "moneys", "the value of the property", "the market value", "the amount ... ordinarily paid" and so on. And the sub-section emphasises that that value should have been received or come to hand, for it uses expressions such as "that came into the possession or under the control of", "that was provided" and "the value of the defendant's property". Necessarily, those provisions import a degree of certainty. As Gibbs C.J., Mason, Murphy, Wilson, Brennan, Deane and Dawson JJ. said in R. v. Smithers; Ex parte McMillan [1982] HCA 76; (1982) 152 CLR 477 at p 487:-

"The statutory provisions, in requiring the Court to assess the value of the

benefits derived, do not impose upon the Court an administrative

discretion. The concept of gross benefits, like that of net benefits, is

sufficiently certain. In essence the function reposed in the Court is

closely analogous to the task undertaken by a court when, in the exercise

of judicial power, it is called upon to assess the damages sustained by a

plaintiff in tort or contract. In that case the court assesses detriment.

this case the Court is required to assess benefits."

15. In the circumstances of the present case, the evidence and his Honour's findings of fact do not establish that Mrs Razzi derived any such benefit from the 1986 importation of heroin. The trial Judge did not find that Mrs Razzi had possession or control of the heroin. The evidence showed no more than "a readiness by Mr Razzi to share his assets with his wife." That does not justify a finding that Mrs Razzi derived a valuable benefit from the importation, merely that she had grounds for expecting that she would derive a benefit if and when the heroin was disposed of. No paragraph of s.243C(2) was apposite to Mrs Razzi's circumstances.

16. It was additionally argued by counsel for Mrs Razzi that the heroin imported in November 1986 was of such poor quality that it was valueless. However, the trial Judge accepted the evidence of Detective Inspector Tunnicliffe on this point and was entitled to do so. Counsel for Mrs Razzi also submitted that, in calculating the value of any benefit derived from the dealing, the price of the heroin, $200,000, should have been deducted. However, since the appeal was argued, the contrary has been held in Cornwell v. Commissioner of Australian Federal Police, cited above, by Lockhart and Wilcox JJ., Pincus J. dissenting on this point. That decision must be applied. Counsel for Mrs Razzi also challenged an application by the trial Judge of the principle enunciated in Jones v. Dunkel [1959] HCA 8; (1959) 101 CLR 298. However, nothing appears to turn on this point.

17. For his part, counsel for the respondent submitted that the conspiracy was a joint enterprise involving Mrs Razzi, Razzi and Lorenzelli and that it was reasonable to assume that the possession or control by one of them was possession or control by them all. Counsel referred to R. v. Searle (1971) Crim LR 592; R. v. Van Swol [1975] VicRp 5; (1974) 4 ALR 386; Williams v. Douglas [1949] HCA 40; (1949) 78 CLR 521. However, the trial Judge found that Razzi and Lorenzelli were the principals in and the main organisers of the subject importation, as they were in the prior importations. His Honour's finding was that delivery of the heroin was made to Razzi. His Honour's findings against Mrs Razzi were that she had assisted with the criminal acts and that she was aware of the general nature of the operation. I accept his Honour's findings in this regard. They do not justify a finding that Mrs Razzi had or was entitled to possession or control of the heroin. Rather the inference is that, as Razzi and Lorenzelli equally contributed the funds for the purchase of the heroin and were the principals in this as in the prior dealings, they had ownership, possession and control of the heroin or its proceeds.

18. Counsel for the respondent also submitted that the trial Judge should have found that the heroin had been sold by the conspirators. However, there was no direct evidence to this effect. I would not disturb his Honour's finding which was reached after a lengthy hearing and a careful consideration of the evidence.

19. For the reasons that I have given, the appeal should, in my opinion, be allowed with costs. I would set aside his Honour's orders in relation to Mrs Razzi. Accordingly, orders 2, 7 and 8 should be set aside and order 4 should be varied by substituting for the words "and Second Defendants respectively" the word "Defendant". In substitution therefor I would order that the application to the Court in respect of Mrs Razzi be dismissed. I would remit the matter to the trial Judge to deal with the costs of the trial and with any matter arising out of the order made under s.243E with respect to Mrs Razzi's property.

I have had the advantage of reading the reasons of Davies and of Hill JJ. for their conclusion that the appeal should be allowed. I respectfully agree in their conclusion, and in their reasons for the conclusion, that the learned trial judge did not err in finding the appellant was knowingly concerned in the importation of the heroin which came into this country in November 1986. But I am unable to accept as correct the assessment which the trial judge made in compliance with requirement imposed on him by s.243B(2).

2. The learned trial judge's reasons for his assessment contain no finding that any of the heroin imported in November 1986 had come into the possession, or under the control, of the appellant. And in my opinion the evidence did not justify any such a finding. There was no evidence that the appellant had received money by reason of her involvement in the importation. The question is whether any other kind of benefit was derived by her by reason of that involvement.

3. There is a good deal to be found in Division 3 of Part XIII of the Customs Act 1901 to incline the mind to a construction of the word "benefits" in that Division which would limit the meaning of the word to things ordinarily regarded as susceptible of valuation in money. The central concept of the Division is of a pecuniary penalty equal to the assessed "value of the benefits derived". And the "matter," to the evidence concerning which the Court is directed to have regard in making the assessment, are for the most part matters in connection with which pecuniary evaluation is common, or at least easily conceivable. But there are in my opinion other indications that the legislature did not intend to limit the assessment required of the Court by reference to conceptions closely analogous to those of lawful economic activity in the community. The person who in contravention of the Customs Act 1901 carries narcotic goods into this country for reward, or keeps in his possession for reward narcotic goods imported into this country in contravention of the Customs Act 1901, or for reward abets the sale of such goods by making premises available for the completion of such sales, no doubt has his reward commonly in money or other property. But paragraph 243C(2)(b) of the Act manifests a legislative recognition that other rewards may be current among those who are, by force of s.243A(3), to be taken to engage in prescribed narcotics dealings. These other rewards comprise any "benefit" which is not a benefit consisting in coming into possession of money or of any other kind of property, or consisting in getting money or any other kind of property under control. The language of paragraph 243C(2)(b) declares the legislature's conception of gaining possession or control of any kind of property as itself a "benefit", by referring to "a benefit of the kind referred to in paragraph (a)". It is not the value of that possession or control to evidence concerning which paragraph 243C(2)(a) directs the Court to have regard. Regard is to be had to evidence concerning the value of the property, not to evidence concerning the value of the "benefit" consisting in possession or control of the property. Paragraph 243C(2)(a) on the other hand, directs regard to evidence concerning the value of the benefit itself. In my opinion judicial notice may be taken that engagement in prescribed narcotics dealings sometimes yields benefits to which an economic value is infrequently assigned, as for example the promise of a regular and reliable supply of a narcotic substance, whether for consumption or for trafficking, or the promise of patronage or of protection from physical harm. If it be said that what the Oxford Dictionary call the ordinary sense of the word "benefit", namely "advantage, profit, good", should be discarded, in Division 3 of Part XIII, in favour of the more restricted sense of the word, "pecuniary profit", because pecuniary equivalents of some of the advantages and goods derived from engagement in prescribed narcotic dealings cannot, or cannot easily, be found and therefore cannot, or cannot easily, be included in the judicial assessment which s.243B(2) requires, the answer may in my opinion be found in two considerations.

4. In the first place the circumstance that something is not the subject of pecuniary valuation outside the courts has not precluded pecuniary valuation of that thing by the courts. The inclusion in an award of damages of a sum of money in respect of physical pain provides an example. Second, the operation of s.243C(6) produces the result, in any case in which the evidence discloses that an expense or outgoing was incurred by the defendant in connection with the dealing, or dealings, which is or are the occasion of assessment, that it is not profit which is the subject of assessment, but the advantages considered without regard to the cost of gaining those advantages. The impression which words such as "value", "property" and "market value" and the directions for computation in sub-sections 243C(3) and 243C(4) give of a coherent legislative scheme for an assessment analogous to that by which the product of lawful economic activity is measured in my opinion dissolves on examination. If, as the High Court observed in The Queen v. Smithers; Ex parte McMillan [1982] HCA 76; (1982) 152 CLR 477 at 487, the Court is "assessing gross, rather than net, benefits", there is no basis for a conception of the pecuniary penalty as a detriment having economic equivalence to the benefit derived. When that conception is put out of mind there is in my opinion no longer any compelling reason to understand the word "value" in sub-section 243B(2), or in s.243C(2)(b), as having reference only to the sum of money in exchange for which a particular benefit is commonly provided in the community, or to understand the word "benefit" as limited in meaning to an advantage for which a money sum is commonly paid in the community. When regard is had to the evident purpose of Division 3 of Part XIII - to discourage participation in prescribed narcotic dealings by subjecting to pecuniary penalties those whose participation can be established to the satisfaction of a judge on the civil standard of proof - the legislature might be expected to comprehend in the measure of the penalty a pecuniary addition in respect of every substantial advantage which appetite or fear induces those participants to seek, whether or not it be an advantage which has a money price either in the general community or in the underworld.

5. In my opinion the qualification placed upon the command expressed in sub-section 243B(2), that the required assessment be "in accordance with section 243C", does not justify a conclusion that each step in the process of assessment must be one for which a provision in s.243C affords authority. And in particular, in my opinion, the conclusion is not justified that only evidence of a description contained in that section may ground the assessment. The section assumes, but nowhere states, that regard will be had to evidence by which a finding may be made that a benefit has been derived. Section 243C is not in my opinion an exhaustive statement of the considerations by reference to which the assessment directed by s.243B(2) should be made. If that be so, it may be the more readily accepted that the word "value" in those sections comprehends such a value as, in the absence of evidence and of judicial notice concerning any price assigned a particular benefit in the community, the Court assigns that benefit, and that the word "benefit" comprehends any advantage to which the Court thinks it right to assign a monetary value. In my opinion those are the respective meanings of the two words in those sections.

6. Upon that construction of those words, the evidence in this case might perhaps be said to have justified a conclusion that at the time when Wilcox J. gave judgment the appellant had derived a benefit by reason of her having engaged in the conspiracy to import the heroin which was in fact imported in November 1986. The benefit was her expectation of receiving by gift from her husband property which would have its source in money derived by him from his dealing in the imported heroin. I would not characterise as a "benefit", within the meaning of the word in s.243B(2), and in s.243C(2)(b), an expectation of gift which sprang merely from her past experience of receiving gifts having their source in money so derived. But if the learned trial judge had found, upon evidence which justified such a finding, a promise or a statement of intention to the appellant by her husband to make such a gift or such gifts, an expectation founded upon such a promise or statement would in my opinion fall within the meaning of "benefits derived", as being an advantage of sufficient substance to justify that description, and such an expectation would also fall within the meaning of the phrase, "benefit, other than a benefit of the kind referred to in paragraph (a), that was provided for" the appellant. But it does not appear that his Honour made that finding. His finding rather was that the husband "would" make to the appellant a gift or gifts. The finding may be said to declare his Honour's expectation, but he says nothing of promise by her husband to the appellant, nor of her expectation. Although I do not attribute to the word "derived" in s.243B(2) the significance in construction of Division 3 of the Part XIII which it is accorded by Davies J., I do think that it precludes inclusion, among the benefits the value of which is to be assessed, of a benefit concerning which the only finding is that the benefit will in the future be gained. Promises, understandings and expectations may in themselves constitute "benefits derived" in some circumstances, in my opinion, but a mere finding that a defendant will in the future gain a benefit does not in my opinion justify the conclusion that that benefit is a benefit derived. Whatever is to be characterised as a benefit derived must exist before judgment: that much the tense of the participle "derived" requires.

7. The evidence does not in my opinion justify a finding by this Court that would authorise a conclusion that the appellant had derived a benefit. Accordingly I agree that the appeal should be allowed. I would order that each of the orders contained in paragraphs 2, 7 and 8 of the order made on 24 August 1989 by Wilcox J. be set aside, that the order contained in paragraph 4 of the said order by varied by substituting for the words "and Second Defendants respectively" therein the word "Defendant", that the proceeding for an order that the appellant pay a pecuniary penalty to the Commonwealth be dismissed, and the respondent pay the appellant's costs of the appeal. I do not consider that in a proceeding of this kind a failure by a defendant on an issue ought to be regarded as a ground for depriving that defendant of an order for payment of her costs of the proceeding. Nor in such a case should a finding of untruthful testimony by a defendant afford such a ground, in my opinion. I would order that the appellant's costs of the proceeding in which the orders under appeal were made be paid by the respondent.

I have had the advantage of reading in draft form the judgment of Davies J. and I agree for the reasons there stated that the learned trial judge did not err in holding that the appellant, Mrs Patricia Anne Razzi, engaged in prescribed narcotics dealing.

2. Like Davies J., I find the issue of the assessment of the pecuniary penalty on the facts of the case difficult.

3. By virtue of s.243B of the Customs Act 1901 (Cth) ("the Act") once the Court is, as here, satisfied that a person has engaged in a prescribed narcotics dealing, the Court is then directed to "assess, in accordance with section 243C, the value of the benefits derived by the person by reason of his having engaged in that dealing ...". The pecuniary penalty, if any, which is to be imposed is to be an amount equal to the value so assessed.

4. Section 243B does not require that the Court should first find there to be a benefit derived by the dealing and then assess the value of the benefit; the statutory requirement is to make the assessment which is provided for by s.243C. That section is in the following terms, so far as is presently relevant:

"(2) In a proceeding under section 243B, the value of the

benefits derived by the defendant by reason of his

having engaged in a particular prescribed narcotics

dealing, or in prescribed narcotics dealings during a

particular period shall be assessed by the Court having

regard to the evidence before the Court concerning all

or any of the following matters:

(a) the moneys, or the value of the property other

than moneys, that came into the possession or under

the control of-

(i) the defendant; or

(ii) another person at the request or by the direction

of the defendant.

by reason of the defendant's having engaged in that

dealing or in prescribed narcotics dealings during

that period;

(b) the value of any benefit, other than a benefit of

the kind referred to in paragraph (a) that was

provided for-

(i) the defendant; or

(ii) another person at the request or by the

direction of the defendant,

by reason of the defendant's having engaged in that

dealing or in prescribed narcotics dealings during

that period;

(c) in the case of a prescribed narcotics dealing

that consisted of selling or otherwise dealing

in narcotic goods - the market value, at the

time of the dealing, of similar or substantially

similar narcotic goods;

(d) in the case of a prescribed narcotics dealing

that consisted of the doing of any act or thing

other than selling or otherwise dealing in

narcotic goods - the amount that was, or the

range of amounts that were, at the time the

dealing occurred, ordinarily paid for the doing

of a similar or substantially similar act or

thing; and

(e) the value of the defendant's property before

and after he engaged in that dealing, or

before and after the end of that period, as

the case may be.

...

(6) In calculating, for the purposes of a proceeding under

section 243B, the value of benefits derived by the

defendant by reason of his having engaged in a

particular prescribed narcotics dealing, or in

prescribed narcotics dealings during a particular

period, any expenses or outgoings of the defendant

in connection with that dealing, or those dealings,

shall be disregarded."

5. A perusal of s.243C(6) makes it clear that there may be a value of benefit derived that can be determined under the section notwithstanding that in ordinary English language it can be argued that no real benefit is derived at all. The most obvious example would be where a person who had engaged in a prescribed narcotics dealing imported narcotics which were sold for a cash consideration but had expenses or outgoings which by force of s.243C(6) must be disregarded in making the assessment.

6. Similarly, the Court does not approach the task of assessment by determining, without reference to the statutory formula in s.243C, the real value of the benefit derived by the dealing, which would require the Court first to determine whether a benefit was derived from the dealing and that benefit being identified, then proceed to value it in accordance with ordinary principles. Thus in Commissioner of Australian Federal Police v Butler [1989] FCA 408; (1989) 91 ALR 293 an argument to this effect was rejected with the consequence that while the evidence may have suggested in that case that the real benefit of the prescribed dealing was much less, the assessment of benefit made under s.243C(3) and (4) by reference to evidence of the increase of assets over the period of the dealing was, in the absence of evidence explaining that increase, the assessment required to be made by the Court. It had no necessary relation to the real value of any benefit that may in fact have been derived.

7. However, with these possible exceptions, s.243C in setting out the matters which the Court will have regard to, proceeds on the assumption that there will in fact be a benefit which the defendant will have derived. Thus, for example, if the prescribed narcotics dealing consisted of selling the narcotic goods, s.243C(2)(a) will require the Court to have regard to the moneys that come into the possession of the defendant by reason of the dealing and s.243C(2)(c) will permit regard to be had to the market value at the time of the dealing of similar or substantially similar narcotic goods.

8. The trial judge found, in my view correctly, that Mrs Razzi had been engaged in a prescribed narcotics dealing that being a conspiracy between her husband, Mr Lorenzelli and Mr McLean and herself between July and November 1986 to import heroin, that heroin having been imported about 1 November 1986. The prescribed dealing as originally particularised included the involvement by Mrs Razzi in the sale of the heroin after importation. His Honour found that delivery of the heroin was made to Mr Razzi. As at mid-January 1987 it was found that the heroin was still available to Mr Razzi and Mr Lorenzelli who at that time were complaining to each other and to Mr McLean about its quality. They spoke about importing further heroin and His Honour suggested that they may have had the idea of mixing this purchase with the old. Be that as it may, when the defendants were arrested in March 1987, the November importation was not found. The evidence did not permit of a conclusion being reached as to what had happened to it. As the trial judge observed:

"It may have since been disposed of by others, on their

instructions. It may remain secreted. If the latter,

although neither Mr Razzi nor Mr Lorenzelli presently

has personal access to this heroin, they could give

instructions for its disposal for their benefit."

9. His Honour rejected a submission that he should find that the heroin was discarded as valueless. His Honour then continued:

"I am not confident that the November heroin was in fact

sold before March 1987. It may have been. It may still

have been retained at the time of the arrests. In either

event a benefit was derived by each of the conspirators

equal to his or her share in the proceeds of the enterprise."

10. By reference to evidence of sale prices of heroin having a purity as low as 15% to 20% (the imported heroin had a purity level of 25%) His Honour concluded that the importation was saleable for a price of not less than $60,000 per pound.

11. There was no evidence that Mrs Razzi had in any way shared in the benefits of the November purchase. However, His Honour concluded from the fact that Mr Razzi had purchased a number of properties in the joint names of his wife and himself that there was a "readiness" by Mr Razzi to share his assets with his wife. From this fact His Honour concluded that "it was reasonable to conclude that he would do the same in relation to the proceeds of a crime in which she had been involved". Accordingly, he attributed to Mrs Razzi a benefit of one quarter of the value of the November importation that value being derived in the manner already mentioned and one quarter to Mr Razzi. The remaining one half was attributed to Mr Lorenzelli.

12. It is difficult to determine under which paragraph of s.243C(2) the assessment was made.

13. Paragraph (a) directs the Court to have regard to money or property other than money that came into the possession or under the control of the defendant or another person at the request or by the direction of the defendant.

14. There are two problems about applying paragraph (a) to the present facts. The first is that when paragraphs (a) and (b) are read together it seems tolerably clear that the "property" of which the paragraph speaks is not the narcotics the subject of the dealing but other property which by reason of the dealing have been obtained. In other words paragraph (a) will generally bring into the assessment the actual proceeds of sale of the narcotics in cash or in kind. It may well be that pragraph (a) could have a wider application to bring into the assessment more indirect non-cash benefits but it is limited by the requirement that the money or other property came into the defendant's possession or control by reason of the defendant's engaging in the relevant dealing.

15. But even if paragraph (a) could be read as encompassing the actual narcotics themselves it is still necessary that it be proved to the requisite standard that the narcotics came into the possession or control either of the defendant or some person at the request or by the direction of the defendant. There is no finding to this effect. All that the evidence disclosed was that the heroin was in the possession and control of Mr Razzi and Mr Lorenzelli. The evidence did not disclose that it came so to be at the request or by the direction of Mrs Razzi and such a conclusion could not be readily inferred.

16. The same difficulties confront the respondent in seeking to apply paragraph (b).

17. The respondent then sought to rely upon paragraph (c), that being perhaps the paragraph applied by His Honour. But although the dealing particularised included the sale of the heroin imported pursuant to the conspiracy, His Honour declined to find that there was a sale of the heroin. Thus the relevant prescribed narcotics dealing as found did not include sale of the heroin or any dealing in the heroin after importation. It must follow that paragraph (c) has no application. On their face neither paragraphs (d) nor (e) can have any application on the facts as found.

18. It follows that while in ordinary language it might be said that Mrs Razzi derived a benefit from the conspiracy to import heroin in having the heroin available for sale, absent a finding of sale, there can be no assessment of that benefit under s.243(c) and accordingly no pecuniary penalty.

19. This conclusion is not inconsistent with the general legislative purpose that being to strip a person who has engaged in prescribed narcotics dealings of the gross benefit derived from thos dealings; cf Butler's case (supra) at 295. An opposite conclusion would mean that if a person imported narcotics for sale but before sale those narcotics were seized by the police at the time of arrest, that person could, additionally to losing the narcotics by seizure be directed to pay a pecuniary penalty equal to the value of the narcotics. That would not be stripping that person of the gross benefits derived from the crime he or she has committed; it would be imposing a fine as a consequence of committing the crime in addition to that which the ordinary criminal law might exact. That is not, in my view, what the provisions do.