Zhuang v Director of Public Prosecutions

Court of Criminal Appeal (NSW)|2016-02-24|Before: Hoeben CJ, Johnson J, Davies J, Mr P

Solicitor: Korn MacDougall Legal (Applicant) Solicitor for Public Prosecutions (Respondent) File Number(s): 2013/57951 Decision under appeal Court or tribunal: District Court of New South Wales Date of Decision: 4 April 2014 Before: His Honour Acting Judge Williams File Number(s): 2013/57951

Judgment

HOEBEN CJ at CL: I agree with Johnson J.
JOHNSON J: The Applicant, Shelley Zhuang, seeks leave to appeal against a drug proceeds order under the Confiscation of Proceeds of Crime Act 1989 ("the Confiscation Act") made by Acting Judge Williams at the Sydney District Court on 4 April 2014. Following the Applicant's pleas of guilty and sentencing for drug supply offences, a drug proceeds order was made against her in the sum of $113,390.00.
The appeal is brought under s.92(1) of the Confiscation Act, which allows a convicted person to appeal against a drug proceeds order as if it were part of the sentence imposed for the offence in relation to which the order was made: s.92(2). On appeal to this Court, a drug proceeds orders may be confirmed, discharged or varied: s.92(3).

Offences and Sentences

On 22 October 2013, the Applicant was committed for sentence from the Central Local Court on serious drug supply charges. The sentencing hearing took place before Acting Judge Williams on 7 February 2014 and his Honour sentenced the Applicant on 4 April 2014.
The Applicant was sentenced for the following offences: 1. Count 1 - an offence of supplying not less than the commercial quantity of methylamphetamine (a total of 625 grams) between 25 July 2012 and 1 November 2012 at Sydney - an offence under s.25(2) Drug Misuse and Trafficking Act 1985, for which the maximum penalty was 20 years' imprisonment with a standard non-parole period of 10 years. 2. Count 2 - an offence of supplying heroin (10.5 grams) between 26 July 2012 and 31 July 2012 at Sydney - an offence under s.25(1) Drug Misuse and Trafficking Act 1985 for which the maximum penalty was 15 years' imprisonment.
In passing sentence on Count 1, the Applicant asked that six matters be taken into account on a Form 1, being knowingly dealing with the proceeds of crime ($4,790.00 in cash in the Applicant's possession at the time of arrest), possession of a prescribed restricted substance and four counts of goods in custody.
After applying a 25% discount for the Applicant's pleas of guilty, the Applicant was sentenced on 4 April 2014 as follows: 1. on Count 1, taking into account the matters on the Form 1, imprisonment comprising a non-parole period of three years and six months commencing on 31 October 2012 and expiring on 30 April 2016, with a balance of term of one year and six months expiring on 30 October 2017; 2. on Count 2 - imprisonment comprising a non-parole period of two years commencing on 1 May 2014 and expiring on 30 April 2016, with a balance of term of one year expiring on 30 April 2017.
On the same day, the sentencing Judge made the following additional orders: 1. the drug proceeds order in the sum of $113,390.00, pursuant to s.29(1)(c) of the Confiscation Act; 2. a forfeiture order in the sum of $4,790.00, pursuant to s.18(1) of the Confiscation Act.

Facts of Offences

The facts may be stated briefly. An Agreed Statement of Facts was before the sentencing Judge, with that document having been signed by the solicitor for the Applicant.
Over a period of three months between July and October 2012, police intercepted approximately 1,400 telephone calls and messages which showed the Applicant was involved in the supply of prohibited drugs. Based on the intercepted calls and messages in which the Applicant discussed the quantity of drugs to be supplied, she supplied 625 grams of methylamphetamine.
The intercepted calls revealed, as well, that the Applicant was involved in further methylamphetamine supply transactions where no quantity was mentioned. Accordingly, the quantity of 625 grams was the minimum quantity of methylamphetamine supplied by the Applicant.
The Applicant also supplied 10.5 grams of heroin in late July 2012.
In the majority of the transactions, the Applicant received a call from a customer and arranged to meet with him or her to supply the nominated drug.
The Agreed Statement of Facts revealed that the Applicant received money from the customer when she supplied the drugs. Between 26 July and 31 October 2012, based on the telephone intercepts, it was agreed that the Applicant "received at least $118,180.00 from the supply of prohibited drugs".
On 31 October 2012, the Applicant was arrested by police whilst she was negotiating with a customer to supply him with drugs. She was driving a vehicle with Queensland registration plates and was the sole occupant of the vehicle. She had parked in the vicinity of where she had agreed to meet him at a street corner.
Police apprehended her and searched the vehicle. They found a small set of scales, seven mobile telephones (one being the mobile telephone service that had been lawfully intercepted by police) and a purse containing items with her identification and the sum of $4,790.00 in cash, this sum being the subject of the unchallenged forfeiture order. The Agreed Statement of Facts stated that the $4,790.00 was possessed by her "knowing that it was the proceeds of crime, namely the supply of prohibited drugs".
There was nothing in the Agreed Statement of Facts that suggested the Applicant was supplying on behalf of any other person, or anything which could identify the source or sources of the drugs which she supplied to customers over that discrete three-month period.

The Applicant's Subjective Case in the District Court

The Applicant gave evidence before the sentencing Judge. In evidence-in-chief, she said that she had become "quite a heavy user" of drugs when she was supplying drugs, with her habit being "between $700.00 to $800.00 a day" shortly before her apprehension. The Applicant said that that monetary amount equalled about one-and-a-half grams of Ice per day (T5, 7 February 2014; AB82).
Under cross-examination, she was asked (T8, 7 February 2014; AB85): "Q. Was it the case you were obtaining those drugs from the persons that you were purchasing the drugs to supply your customers, the drugs that you were using yourself? A. Yes."
There was no re-examination by the Applicant's counsel.
In a presentence report, the Applicant informed the author that "She had obtained the drug through boyfriends and associates, for whom she would also sell the drug" and that "She felt stupid because she was of the opinion that she was being used by the associates she was selling drugs for". (AB69).

Application for Drug Proceeds Order and Forfeiture Order

A Summons was filed by the Director of Public Prosecutions (NSW) ("the Director") in the District Court on 31 January 2014, seeking orders against the Applicant under the Confiscation Act in the terms which were ultimately made on 4 April 2014.
In addition, the prosecution trial advocate furnished written submissions dated 6 February 2014 outlining the basis upon which the orders were sought, with submissions of fact and law being made in support of the application.
At the sentencing hearing on 7 February 2014, counsel for the Applicant submitted (T9, 7 February 2014): "Effectively even when your Honour looks to the confiscation application and looks to the totality of the telephone intercept material that's referred to in the agreed statement of facts during the entire offending period the amount that is effectively the subject of the application is $120,000 odd, 116 less the amount that was found on the offender. Dividing that by the 90 days being the three month period which is captured by the offending conduct leaves us with a figure of effectively $1,288 per day as a potential profit margin."
Towards the end of the sentencing hearing, counsel for the Applicant made short submissions concerning the orders sought under the Confiscation Act. The forfeiture order in the sum of $4,790.00 was not opposed. With respect to the drug proceeds order, counsel for the Applicant did not challenge the law as advanced in the Director's written submissions. A short submission was made concerning hardship which it was said would flow from the making of the drug proceeds order.
In the course of the remarks on sentence, his Honour said (ROS2, AB11): "There can be little doubt that Ms Zhuang's offending would be categorised as dealing in drugs to a substantial degree. Whilst she was supporting her own significant habit of up to $800 per day she was also making about $500 per day profit as revealed by the facts."
A little later, his Honour said (ROS4; AB13): "As to the objective seriousness of the offence I note sequence 47 involved 388 separate transactions from which she received $116,580, although how much of that she retained is not known. I note her several boyfriends used her to run street deals to obtain drugs for herself and money for them. She supplied altogether 625 grams of methylamphetamine which is midway between a commercial quantity 250 grams and a large commercial quantity of 1,000 grams. She supplied 10.5 grams of heroin, the indictable quantity being 5 grams and the commercial quantity 250 grams."
In the remarks on sentence, the sentencing Judge addressed the orders sought under the Confiscation Act in the following way (ROS6-7; AB15-16): "I have also been asked to make some other orders. They are that pursuant to s 29(1) the respondent, Ms Zhuang, pay a pecuniary penalty of $113,390 and that pursuant to s [18(1)] the cash found on her of $4,790 be forfeited to the State. At the hearing of this matter there was submissions made in respect of both those issues. I think it is fair to say that Ms Paul for Ms Zhuang does not resist the order for the $4,790 but asks that consideration be given to assessing the amount of the pecuniary penalty. The Crown has made some helpful written submissions and has referred me to the case of R v Hall 2013 NSWCCA 47 in which an earlier case of Fagher was referred to. One of the things that this kind of legislation tends to do away with is considerations as regard to hardship and the like. As far as the application under s 29(1) is concerned what that section requires the Court to do is (a) determine whether the defendant has derived any benefit in connection with drug trafficking at any time. and (b) if the Court believes that the offender has so benefited assess the value of any such benefit. and (c) order the defendant to pay to the State a pecuniary penalty equal to the amount so assessed. The expression in the legislation of deriving any benefit in connection with the drug is fairly encompassing it seems to me. Whilst at first blush one could perhaps argue that the benefit that Ms Zhuang received from the sale of the drugs was the personal profit to her, the fact of the matter is that whilst there was a personal profit to her a benefit was also derived by the sale of the drugs, even if part of the proceeds of that sale were used to purchase drugs for herself. The provisions are fairly draconian, obviously meant to deal with situations of commercial drug activity which it would be hard not to classify this as and furthermore the legislation seems to be extremely incapable of a great deal of interpretation. Despite the arguments that have been made on her behalf I don't think that I have any alternative but to make the orders sought. So that I make an order under s 29(1) that she pay a pecuniary penalty in the amount indicated and that under s 18(1) the amount indicated to be forfeited to the State."

The Applicant's Ground of Appeal

The sole ground of appeal asserts that his Honour erred in failing to take into account relevant considerations when determining that he had no alternative but to make the orders sought by the Director pursuant to s.29(1) of the Confiscation Act, and that his Honour erred in his assessment of the amount that the Applicant ought be ordered to pay.

Submissions of the Parties The Applicant's Submissions

Mr Averre, counsel for the Applicant (who did not appear below), submitted that the sentencing Judge had failed to properly undertake the process of assessment required under ss.29 and 30 of the Confiscation Act where an assessment of a drug proceeds order is required. He submitted that his Honour did not address issues raised at the sentencing hearing which may bear upon that assessment, including the reference to other persons who were involved in the Applicant's drug supply activities.
Mr Averre referred to the decisions of this Court in R v Hall [2013] NSWCCA 47; 227 A Crim R 544 and Director of Public Prosecutions (NSW) v Colakoglu [2015] NSWCCA 301 in his submissions.
Mr Averre acknowledged that the argument he was advancing in this Court had not been made at first instance by counsel for the Applicant. He submitted, however, that the Court should approach the matter upon the basis that error had been demonstrated, and that the matter should be remitted to the District Court under s.12(2) Criminal Appeal Act 1912 so that the application for a drug proceeds order against the Applicant could be reheard. Submissions for the Director
The Director submitted that no error had been demonstrated in this case.
It was submitted that it was not open to the Applicant to seek to contest the application for a drug proceeds order in this Court upon a basis that was not run at first instance: Zreika v R [2012] NSWCCA 44; 223 A Crim R 460 at 477-478 [79]-[82].
The Director noted, in any event, that the quantum of the drug proceeds order in this case constituted a minimum figure based upon the quantified amounts of drugs referred to in intercepted conversations. It was noted that a complete assessment, which may be undertaken by reference to the further 40% of the Applicant's offences which were not included in the calculation, may see a gross claim against the Applicant in the order of $200,000.00 if the matter was to be reopened.

Decision

It is necessary for the Applicant to demonstrate error on the part of the primary Judge.
In considering whether error is demonstrated, it is appropriate to have regard to the manner in which the proceeding below was conducted on behalf of the Applicant, and to consider what issues were raised at first instance.
There is a practical expectation that an offender's legal representative will make submissions to the sentencing Judge at first instance by reference to the particular factors which are sought to be taken into account on sentence: Zreika v R at 478 [80]. Similar considerations arise with respect to an application for a drug proceeds order under the Confiscation Act.
In this case, the Director had filed a Summons notifying his intention to seek such an order and had made written submissions in support of the application.
The Agreed Statement of Facts provided a substantial foundation for the making of the order. The Agreed Statement of Facts in this case disclosed material which was pertinent for the purposes of ss.29, 30 and 31 of the Confiscation Act.
Although there was some reference in passing to the Applicant's male acquaintances who were, in some way, said to be involved in the drug supply activities, there was no identification of these persons nor any specification of their alleged roles. The observations of the sentencing Judge in the remarks on sentence (referred to at [28] above) appear to have been drawn from the presentence report.
The oral evidence of the Applicant did not provide a foundation for this aspect to be further explored on the application. Nor was any submission made on behalf of the Applicant that the issue should be explored on the Confiscation Act application.
It is not necessary to elaborate, on this application, upon the principles applicable under the Confiscation Act, as considered in cases such as R v Hall and Director of Public Prosecutions (NSW) v Colakoglu.
In my view, this case is far removed from that considered by this Court in Director of Public Prosecutions (NSW) v Colakoglu. In that case, there were several convicted co-offenders who had been involved in drug supply activity, and in relation to whom drug proceeds orders were sought. It was there observed (at [96]) that the Director had sought "drug proceeds orders against multiple co-offenders using a process of double counting". The process of assessment of the value of benefits in that case involved different considerations (and different evidence) to the present application.
In this case, a drug proceeds order was sought against a single offender. The Agreed Statement of Facts disclosed that the sum of at least $118,180.00 had been received by the Applicant in the course of her drug supply activities. Deducted from this figure was the sum of $4,790.00 in cash which was found in her possession.
In circumstances where there were, at best, vague references to the activities of the Applicant's unidentified male acquaintances in the drug supply activity, it could not be said that there was any real foundation to make an assessment under ss.29-31 of the Confiscation Act in a figure different to that ordered by the primary Judge.
The Applicant has not established that the primary Judge failed to have regard to relevant considerations in the circumstances of this case.
It should be observed that, even before this Court, there was no evidence from the Applicant, in the form of an affidavit or otherwise, which purported to set out what it was that she would have wished to say in the event that the Court acceded to the application to remit the matter to the District Court.
The primary Judge in this case undertook the assessment process in accordance with ss.29-30 of the Confiscation Act by reference to the evidence before the District Court. No error has been demonstrated on the part of the primary Judge in this respect.
I propose the following orders: 1. grant leave to appeal; 2. dismiss the appeal against the drug proceeds order made against the Applicant on 4 April 2014; 3. confirm the drug proceeds order made against the Applicant on 4 April 2014 in the District Court.
DAVIES J: I agree with Johnson J.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 March 2016

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