Re Sipser [2019] VSC 362 (31 May 2019)

1 The applicant is currently facing charges of importing a commercial quantity of a border controlled drug (cocaine), attempting to possess a commercial quantity of a border controlled drug (cocaine), trafficking a drug of dependence (two charges), possessing a drug of dependence (two charges), and dealing with property suspected of being the proceeds of crime (two charges).

2 The applicant was arrested on, and has been in custody since, 13 December 2018. On 10 May 2018, the applicant filed an application for bail in this Court. The applicant has previously been refused bail, in the Magistrates' Court, on 9 April 2019.

3 Having been accused of a Schedule 1 offence within the meaning of s 3 of the Bail Act 1977 ('the Act') - that is, importing a commercial quantity of a border controlled drug, and also attempting to possess a commercial quantity of a border controlled drug[1] - pursuant to s 4A of the Act, the Court must refuse bail 'unless satisfied that exceptional circumstances exist that justify the grant of bail'.

5 Between 15 June 2018 and 6 July 2018, the applicant imported and attempted to possess a consignment containing 120 kg of pure cocaine. The prosecution alleges that the estimated 'retail value' of the seized cocaine is $90 million.

6 On 23 June 2018, the applicant allegedly purchased 600 bottles of wine (750 ml), via eBay, from Johannesburg in South Africa ('the consignment'). On 26 June 2018, the consignment arrived in Sydney addressed to 'Warren' at an address in Victoria. Two documents were attached to the consignment, dated 15 and 20 June 2018 respectively (relevantly, pre-dating the purported purchase date), mirroring the consignment details.

7 On 27 June 2018, the consignment was inspected by the Australian Border Force ('ABF'). The contents of one of the bottles was tested and returned a positive presumptive test for cocaine. The consignment was seized by the ABF, and the matter was referred to the Australian Federal Police ('AFP') for investigation.

8 The AFP office in Sydney retained the original consignment, and forwarded the packaging to the AFP in Melbourne. Subsequent testing identified traces of cocaine in 343 out of the 600 bottles in the consignment. The net weight of pure cocaine found within the bottles is alleged to be 120 kg, with a 'wholesale value' of $25.2 million and a 'retail value' of $90 million.

9 On 28 June 2018, the AFP office in Melbourne reconstructed the consignment to replicate its original packaging and form, including by filling replica wine bottles with an inert substance imitating that of liquid cocaine ('the replacement consignment').

10 On 4 July 2018, the applicant made arrangements for the replacement consignment to be delivered to his chiropractic practice in Elwood, rather than the Victorian address that was originally organised.

11 At approximately 9.21am on 6 July 2018, the applicant was contacted and advised that the replacement consignment would be delivered to his business practice within the hour. The applicant, who was at the Crown Casino at the time, contacted his mother and step-father and requested that they receive the consignment on his behalf. It is the Crown case that the applicant was intentionally absent from his business practice at this time to distance himself from the replacement consignment. In oral argument, however, counsel for the applicant referred to the applicant's explanation in his record of interview that he was at the casino with his son, having been offered free accommodation - rather than to 'distance himself' from the delivery of the consignment.

12 At approximately 11.00am, the replacement consignment was delivered to the applicant's business address. On eight occasions between 12.30pm and 2.30pm, the applicant was observed by police inspecting the replacement consignment.

13 At approximately 6.03pm, the replacement consignment was collected and loaded into a vehicle by two men. At approximately 11.25pm, this vehicle was intercepted by police at a service station in Tallarook. The two men were arrested and released pending further enquiries.

14 On 17 October 2018, an AFP undercover operative made contact with the applicant while posing as an associate of a third-party contractor. During conversation, the undercover operative made an offer to alter or destroy documentation connecting the applicant to the consignment. The applicant is alleged to have accepted this offer and also to have stated that he had more cocaine, saying, 'yeah, I've got more - but you got to make this shit go away.' In argument, counsel for the applicant sought to diminish the effect of the evidence said to support these allegations by saying that, 'This was a ploy by the AFP' and that the applicant was talking to someone he thought was a patient.

15 On 13 December 2018, police executed a search warrant at the applicant's home and business premises. Items found included clip seal bags, empty capsules, scales, 79.3 grams of cocaine and $2,100 cash in Australian currency. A search of the applicant's vehicle was also conducted, which located 38 cocaine-filled capsules and $650 cash in Australian currency.

16 The applicant was arrested and during a record of interview denied involvement in, or knowledge of, the alleged offending. Particularly, the applicant denied knowledge of the consignment, purchasing the consignment on eBay, making contact with freight companies, arranging for his mother to receive the replacement consignment on his behalf, or being in the vicinity of his business practice on the date the replacement consignment was delivered. More particularly, the applicant denied knowledge of there being any cocaine in the original consignment.

17 The applicant is 42 years of age and has a nine-year-old son from a previous relationship. He has no criminal history, and there are no other outstanding charges against him.

18 The applicant was born in South Africa. He moved to Australia at the age of 22, and completed the necessary studies to allow him to practice as a chiropractor. In 2002, at age 25, the applicant established his own chiropractic practice. Between 2001 and 2015, the applicant was on the executive of the Chiropractors Association of Australia, and ultimately received a long-service award for his efforts in this capacity. At the time of his arrest, the applicant was practising as a chiropractor. His business, however, has since been sold, and his license to practice has been suspended by the Australian Health Practitioner Regulation Agency. This decision is presently the subject of an appeal to VCAT.

19 Prior to his arrest, the applicant was residing at his own premises in St Kilda. The applicant's mother was also residing at these premises, having moved from South Africa in 2015 due to health complications.

20 The application for bail is supported by an affidavit sworn by the applicant's solicitor, Paul Galbally. The affidavit deposes to the various background matters to which I have referred. Additionally, the affidavit discloses that the applicant had been assisting his mother (both financially and by way of care) prior to his arrest, as well as paying child support in respect of his son (which child support has been significantly reduced since his arrest).

21 Mr Galbally's affidavit identifies a combination of circumstances which are said to constitute exceptional circumstances within the meaning of the Act. The circumstances identified are:

• the applicant has no criminal convictions;
• he is at risk of defaulting on a mortgage held over his home and therefore at risk of losing his home;
• he assists with the care of his seriously ill mother;
• the AFP investigation in the matter is ongoing and it is not likely that this matter will reach trial in the County Court until the latter part of 2020 or early 2021;
• the applicant is not an unacceptable risk; and
• the applicant can provide a substantial surety.

22 Mr Galbally also deposed to being instructed that all of the applicant's significant family reside in Victoria and that the applicant would, if granted bail, have a permanent address at which he would reside. Additionally, the applicant, if granted bail, would report to police 'at times and in such frequencies as deemed appropriate [by this Court]'.

23 In relation to a surety, Mr Galbally deposed that on the bail application in the Magistrates' Court, a surety of $500,000 was available.

24 Finally, Mr Galbally's affidavit exhibited a medical report from the applicant's mother's general practitioner that briefly summarised the applicant's mother's significant medical issues.

25 During the hearing, counsel for the applicant tendered an up-to-date letter from the applicant's mother's general practitioner. The letter recorded the general practitioner's opinion as follows:

[The applicant] who is a health professional was a vital part of [the applicant's mother's] health care and day to day support. Her health has significantly declined since he has been in gaol. She now lives alone and struggles to complete ADLs and has had a decline in liver function and has suffered frequent infections. Her health will improve if [the applicant] returns to live with her and provide care.

26 Additionally, counsel for the applicant tendered a letter from the proprietors of a café (the family of the applicant's current partner) offering the applicant full-time employment as a manager of their café in the event that he is granted bail. From the terms of the letter, it is plain that the applicant's current partner's family is very supportive of the applicant.

27 In oral argument, counsel for the applicant expanded on the matters which were said to constitute (in combination) exceptional circumstances. In summary, the matters identified by counsel were:

• The applicant has a stable environment in which to reside at a fixed and known location.
• The applicant has significant family support, both from his own family (his mother, his mother's sisters, his son and other relatives) and his partner's family. That support includes the support that would be provided by his mother living with him, and his son living with him for 70 per cent of the time (that apparently being the shared custody arrangement that was in place prior to his arrest).
• A surety of $1 million is available from an appropriate person (being the same person who offered to provide a surety of $500,000 during the bail application made in the Magistrates' Court).
• The supportive relationship the applicant has with his partner (who has two young daughters and no prior convictions).
• The offer of employment at the café owned by the applicant's partner's family.
• The fact that the applicant has no prior convictions and, having never been on bail before, has never breached bail or committed any offence under the Act.
• The applicant's prior good (impeccable) character.
• The applicant's career as a chiropractor and his potential to return to that career in the event that bail is granted and his appeal to VCAT is accordingly successful.[2]
• The deterioration in the applicant's financial circumstances as a result of him being in custody. Specifically, the risk that the applicant would lose his home as a result of not being able to service his mortgage, the diminution in the amounts the applicant has been able to pay in respect of child support for his son, and the requirement for the applicant to sell his chiropractic business were all relied upon in relation to this issue.
• The applicant's prospects of employment, both in the café to which I have already referred, and also as a chiropractor (in the employ of another, identified and supportive, chiropractor) if the applicant's VCAT appeal is successful.
• The applicant's mother's serious medical condition, and need for her to receive care from him.
• The delay referred to by Mr Galbally in his affidavit.
• The impact that the applicant's time in custody has had on him. In relation to this matter, it was contended that the applicant, having experienced custody (including an assault), now had very significant incentives to comply with whatever stringent bail conditions this Court might impose.
• Stringent bail conditions could be imposed upon the applicant.

28 Next, counsel for the applicant referred to DPP v Ghiller,[3] in which Eames J held that under the former 'show cause' provisions of the Act, 'the primary question relevant to a grant of bail is whether a person will meet the conditions of bail and attend at trial, and as required'.[4]

29 Having submitted that exceptional circumstances were established, counsel for the applicant then submitted that the respondent had not established any of the risks referred to in s 4E(1)(a) of the Act, or that any risks that did exist were unacceptable. In essence, it was submitted that all of the matters relied upon by the applicant in relation to exceptional circumstances also negated the existence of any unacceptable risk - or at least risk that could not be managed by the imposition of stringent bail conditions. In this part of his argument, counsel for the applicant again made extensive reference to the applicant's prior history, previous good character and ties with this jurisdiction.

30 The Crown opposed bail, relying upon an affidavit of a federal agent of the AFP, Emanuel Leounakis. Mr Leounakis's affidavit contains a summary of the applicant's alleged offending and the procedural history of the matter. Specifically, Mr Leounakis deposed that on 18 April 2019, the applicant appeared before a magistrate and was granted leave to cross-examine two witnesses at a committal which has been fixed for hearing on 29 August 2019.

31 Counsel for the applicant cross-examined Mr Leounakis during the course of the hearing. Mr Leounakis was asked about the plastic bags found at the applicant's home. It was suggested to him that these were sandwich bags that may have been used for making lunches for the applicant's son. Mr Leounakis did not seek to cavil with that proposition.

32 Mr Leounakis was asked in cross-examination whether there was any evidence of actual sales of cocaine by the applicant. He accepted that there was no such specific evidence. The prosecution case is that paraphernalia traditionally associated with trafficking was found upon the execution of the search warrant at the applicant's premises.

33 Mr Leounakis was also cross-examined about whether there were any outstanding matters so far as the prosecution brief was concerned. He gave evidence that there was a 'mutual assistance request' in relation to the applicant's eBay account that was still outstanding. Later he said, however, that most of the material sought pursuant to this request had already been obtained.

34 As to the provision of telephone intercepts, Mr Leounakis gave evidence that those that had not been provided would be provided very shortly.[5]

35 The respondent opposed the application for bail on the primary basis that the applicant had not discharged the burden of satisfying the Court as to the existence of exceptional circumstances that justify a grant of bail. Additionally, in his affidavit, Mr Leounakis deposed that in his belief the applicant is an unacceptable risk of failing to surrender into custody in answer to bail, an unacceptable risk of interfering with witnesses or otherwise obstructing the course of justice and an unacceptable risk of committing offences while on bail. Mr Leounakis's affidavit sets out various allegations made in the Crown case as supporting the basis for his beliefs.

36 On the issue of whether the applicant is an unacceptable risk of failing to answer bail, the respondent emphasised that:

• if convicted, the applicant faces a maximum penalty of imprisonment for life;
• the applicant was born in South Africa and has ties to that jurisdiction; and
• the applicant has 'significant access to funds including $900,000 in solicitor loans and $500,000 which was deposited on a failed property development venture'.

37 In relation to the question of whether the applicant is an unacceptable risk of interfering with witnesses or otherwise obstructing the course of justice, the respondent placed emphasis on those parts of the Crown case relating to the alleged communications with the undercover operative about the destruction or alteration of documentation.

38 In relation to the issue of whether the applicant was an unacceptable risk of committing further offences while on bail, the respondent pointed to the conduct alleged against the applicant after the replacement consignment was intercepted on 6 July 2018.

39 Sections 4A and 4D of the Act require the Court, as step 1, to consider the exceptional circumstances test; and then to move, as step 2, to the unacceptable risk test.[6] More generally, s 1B of the Act requires this Court to interpret and apply the Act having regard to the guiding principles set out therein, namely:

(a) maximising the safety of the community and persons affected by crime to the greatest extent possible; and

(b) taking account of the presumption of innocence and the right to liberty; and

(c) promoting fairness, transparency and consistency in bail decision-making; and

(d) promoting public understanding of bail practices and procedures.

40 Understandably, counsel for the applicant emphasised during the course of his submissions that the Court was required to take account of the presumption of innocence, and the right to liberty, in construing and applying the Act in the present case.[7]

41 Section 4A of the Act requires this Court to refuse bail to the applicant unless 'satisfied that exceptional circumstances exist that justify the grant of bail'.[8] The applicant bears the burden of satisfying the Court as to the existence of exceptional circumstances.[9] In considering whether exceptional circumstances exist, the Court must take into account the 'surrounding circumstances' - being, among other things, the matters set out in s 3AAA of the Act.[10]

42 It is well established that exceptional circumstances within the meaning of the Act may, in an appropriate case, consist of a combination of a number of circumstances relating both to the personal circumstances of the applicant and the strength of the case against him.[11] On this application, the applicant confined his exceptional circumstances argument to matters personal to him, his background and family. Other than in response to submissions made on behalf of the respondent, the applicant did not seek to contend that the case against him lacked strength to a point that contributed to his contention that there are exceptional circumstances, within the meaning of the Act, which justify a grant of bail to the applicant.

43 Recently, in Re Reker,[12] Beale J, citing Kaye J in DPP v Muhaidat,[13] referred to the question of exceptional circumstances in the following terms:[14]

Effectively, the applicant has to establish circumstances right out of the ordinary. They have to be exceptional to the ordinary circumstances which would otherwise entitle the applicant to bail. Ordinary circumstances consist of circumstances such as hardship to the accused or to his family, disruption of his work and similar matters.[15]

44 One of the matters relied upon by the applicant to establish exceptional circumstances is that 'the applicant is not an unacceptable risk'. The issue of risk and any unacceptability is, of course, the subject of the step 2 unacceptable risk test.[16] Having regard to the scheme of the Act, it is difficult to see how the absence of unacceptable risk could, of itself, amount to exceptional circumstances. Such an approach would risk subsuming the step 1 exceptional circumstances test within the step 2 unacceptable risk test - notwithstanding that it is the applicant who bears the burden of establishing exceptional circumstances at the step 1 stage, and the prosecution who bears the burden of establishing a relevant risk and that the risk is unacceptable at the step 2 stage.

45 While unacceptability of a relevant risk is not a matter specifically referred to in s 3AAA(1) of the Act, I accept that proof by the applicant of the fact that he is not an unacceptable risk is a matter capable of being taken into account, in combination with other surrounding circumstances, for the purpose of attempting to establish exceptional circumstances within the meaning of the Act.

46 In relation to that issue, however, the applicant's reliance on Ghiller was misplaced. Three interrelated points may be made: first, Giller was a decision given under provisions of the Act that were significantly different from those currently in force;[17] secondly, Ghiller concerned the lesser 'show cause' provisions, and was not a case where exceptional circumstances were required to be shown; and thirdly, it is the statutory language of the current version of the Act that must be applied, not some parsing of a former version of the Act or proposition of broad application that does not form part of the Act.

47 Turning back to the statutory language, when one has regard to all of the surrounding circumstances of this matter, with particular reference to the matters set out in s 3AAA of the Act,[18] the combination of circumstances relied upon by the applicant in the present application, and the circumstances of the case more generally, are not exceptional. The issues of hardship to the applicant, his mother and his son relied upon by him are not out of the ordinary. They are circumstances of a kind which are all too common in cases where a person of previously unblemished character is alleged to have engaged in serious drug offending. Moreover, as has been observed before, it is not an uncommon circumstance for allegations of serious drug offending to be made (and ultimately proved) against people with no previous criminal records.

48 The most significant of the matters relied upon by the applicant in support of his case that there are exceptional circumstances is the fact that he may spend (if one accepts the estimate in the applicant's solicitor's affidavit) a little over two years in custody before trial if bail is not granted. A delay of this order 'if it occurs' is plainly less than desirable, and not at all satisfactory. Such a delay does not, however, constitute exceptional circumstances in this case - either when considered alone or in combination with the other matters relied upon by the applicant.[19] That said, all efforts need to be made to ensure that the prosecution of the applicant's trial proceeds in a timely fashion.

49 In argument, counsel for the respondent submitted that the Crown case was 'very strong'. Counsel for the applicant contested that submission, saying the case was going to be a contested case - 'contested at committal and contested at trial' in respect of whether the applicant 'knew of cocaine being involved in the consignment'. Counsel for the applicant, however, did not put any argument on this application that the case against his client was a weak one.

50 It is not necessary for me to resolve the debate between the parties on the issue of the precise strength of the Crown case. It is sufficient to say that the Crown case is not so weak that, having regard to all of the other matters the Court is required to take into account, exceptional circumstances have been made out. Having regard to the very serious nature of the charges the applicant is facing, and all of the other circumstances of the case, the applicant has not satisfied me that exceptional circumstances exist that justify the grant of bail - either generally or on any conditions that might lawfully be imposed.

51 The applicant has not established exceptional circumstances. Accordingly, bail must be refused.[20] Had it been necessary, I would also have concluded that there is an unacceptable risk that the applicant would, if released on bail, fail to surrender himself into custody, commit an offence while on bail and/or 'otherwise obstruct the course of justice'.[21] Notwithstanding all of the matters that were so ably put in submissions by counsel for the applicant, the respondent, who bears the burden of satisfying the Court of the existence of the risks referred to in s 4E(1)(a) of the Act and that they are unacceptable, has, on the material filed (and evidence given) in this application, met that burden.

52 The conduct alleged against the applicant, both in relation to the offending that is alleged to have occurred prior to 7 July 2018, and the conduct and offending that is alleged to have occurred after that date, satisfies me that there is an unacceptable risk that the applicant would, if released on bail, commit an offence while on bail, obstruct the course of justice, and/or fail to surrender into custody in accordance with any conditions of bail that I might otherwise have imposed.[22]

53 The applicant's application for bail will be refused.

[1] See items 9 and 12 of Schedule 1 of the Act.

[2] It was said in argument that AHPRA suspended the applicant's licence because of some belief it had that the applicant would not likely be granted bail. It was submitted that a grant of bail, and the presumption of innocence, enlivened a prospect that VCAT would allow the applicant's appeal and permit him to resume practise as a chiropractor.

[3] [2000] VSC 435 ('Ghiller').

[5] Mr Leounakis's evidence was that he expected the telephone intercepts to be provided later that afternoon.

[7] As to the existence of competing considerations in the guiding principles, see Re Ceylan [2018] VSC 361 [32].

[11] Re Ceylan [2018] VSC 361.

[12] [2019] VSC 81 ('Reker').

[13] [2004] VSC 17 ('Muhaidat').

[14] Reker [2019] VSC 81 [39].

[15] Muhaidat [2004] VCS 17 [13]-[14].

[17] For example, the Act now clearly mandates a two-step process in cases where an applicant for bail is required to satisfy the compelling reason or exceptional circumstances test (cf the approach taken by Eames J in Ghiller). See further, Robinson v The Queen (2015) 47 VR 226; [2015] VSCA 161.

[18] While a number of matters in s 3AAA(1) tell significantly in the applicant's favour (for example the absence of matters referred to in paragraphs (c), (e), (f) and (m), and presence of good material in relation to paragraphs (g) and (k)) and a number of other matters have no relevance to the applicant (for example the matters referred to in paragraphs (d), (h) and (j)), it must be said that the matters referred to in paragraphs (a) and (b), on the material filed in this application, do not assist the applicant.

[19] Cf Re Application for Bail by MO [2017] VSC 557 [6], [19], [21] in relation to a potential period of in excess of three years in custody prior to trial. See further, DPP v Barbaro [2009] VSCA 26; (2009) 20 VR 717, 726-728 [33]-[41]; [2009] VSCA 26.