Chairman, National Crime Auth & Anor v Flack

[1999] HCATrans 123

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S125 of 1998

B e t w e e n -

CHAIRMAN, NATIONAL CRIME AUTHORITY

First Applicant

COMMONWEALTH OF AUSTRALIA

Second Applicant

and

MARGARET ELIZABETH FLACK

Respondent

Application for special leave to appeal

GLEESON CJ
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 14 MAY 1999, AT 10.05 AM

Copyright in the High Court of Australia

MR C.A. PORTER, QC:   In this matter, if the Court pleases, I appear with my learned friend, MR R.J. BROMWICH, for the applicant.  (instructed by the Australian Government Solicitor)

MS E.L. FULLERTON:   May it please your Honours, I appear with MS S.J. GODDARD for the respondent.  (instructed by Watsons Solicitors)

GLEESON CJ:   Yes, Mr Porter.

MR PORTER:   The facts of this case are not devoid of interest, your Honours, but the issues of law are, we submit, a little more complicated.

GLEESON CJ:   It went off on the facts, though, did it not?

MR PORTER:   No.

GLEESON CJ:   I was looking at the dissenting judgment of Mr Justice Foster.

MR PORTER:   Yes, but, if your Honour pleases, in our submission there is a fundamental error made on the – it is a question of onus.  If there is one thing that is made perfectly clear in Parker’s Case, with which our submissions are not really in disagreement, it is that the onus is on the occupant to show, to prove, the manifest intention.  Whereas what the majority judgment in the Full Federal Court appears to have done, in our submission, is to reverse the onus upon us.

GLEESON CJ:   Can you just show us that?

MR PORTER:   Because they – and why I say they do that, if your Honours please, is because they start off with a presumption not of fact so much as a presumption of law, although this does not appear so clearly in the judgment of Mr Justice Tamberlin.  If I may come to the judgment, firstly, of Mr Justice Heerey, what he says at page 43, line 15, after in effect outlining the problem, he says:

Since Mrs Flack was the tenant of an ordinary residential house she had possession in law of those premises.  In the circumstances, that fact was sufficient to establish the requisite manifestation of intention to possess all chattels on the premises.

GLEESON CJ:   Yes.  The emphasis seems to be on “in the circumstances”.  And that was the point of departure, as I understand it, between the majority and the minority.

MR PORTER:   Yes.  But, if your Honours please, it has been put there, in effect, as a matter of law because what circumstances were there, other than her possession, which could possibly be in her favour in her claim for the money?  Every possible circumstance was against her.  So how could the words “in the circumstances” – if I may, without being tedious, put the substantial point in this case.  We are not seeking to forfeit the money; we are simply saying that this particular person was not a possessory owner dispossessed by the National Crime Authority and therefore entitled to claim it, even if she is not the true owner.  We are saying that she was the occupier of a house to which others, that is her son and her daughter, had access with or without her presence.  They had keys to the house.  So it was not the ordinary situation.

Secondly, we say that when the money was found she said, “My God” or various words to indicate her non-possession of the money.  Finally she is asked, “Do you own the money?” and she says, “I don’t.”  Now, how can any of those circumstances be a reinforcement of the simple proposition of her occupation.  The court has, in effect, laid down – the majority in the court – has laid down a proposition that if she is in possession of the premises, then she must have possession of the chattels therein, it being a dwelling house.

GLEESON CJ:   Is there anywhere where they expressly deal with this question of onus?

MR PORTER:   No.  But if there is one thing that is made perfectly clear in Parker’s Case it is the onus is on her.  See, we say that possession has two elements:  one, which might be summed up as the physical side, is summed up in the word “control”.  The second, which might be called the mental side, is summed up in the word “intention”.  In this particular case she had neither control nor intention.  No question about that.  So the court has said, in effect, that nevertheless, because she is the occupier of the premises, then she must own everything in the house – she must possess everything in the house.  Now, that is a proposition of law for which Parker’s Case is no authority at all.  There is no authority for that proposition.  The law is that the onus is upon her to prove that she had manifested an intention to possess everything in the house, including the chattel in question.

GLEESON CJ:   Is there anything wrong with the proposition on the top of page 43 in the first two sentences?

MR PORTER:   “The issue is whether the” ‑ ‑ ‑

GLEESON CJ:   The first sentence as to the time that is relevant.

MR PORTER:   Yes, that would be immediately prior to the seizure, we would say, rather than to the discovery.  I think the two things are probably simultaneously.  Then the issue is whether the occupier proves that she manifested “a sufficient intention to control all chattels, known and unknown, which were on the premises,” – there is something wrong with that, your Honour.  It would have to be lawfully on the premises, and that may be important in a case such as this.  I mean, a person may buy a house and may say, in effect, to all the world, whatever is in that house I possess.  But that would hardly manifest an intention to possess a secret heist of heroin or a murder weapon or so on.  It is something lawfully on the premises.

GLEESON CJ:   Just putting that “lawful” element to one side, if what was involved was not heroin or a murder weapon but just a bottle of whisky, and that had been left in my house before I bought it many years ago by the previous owner, then what appears in the second sentence is an accurate statement of what it is that gets me title to that bottle of whisky, is it not, or possession of that bottle of whisky?

MR PORTER:   Probably, because you may manifest your intention by taking possession of the house and excluding all other persons from it.  On the other hand, you may not manifest your ‑ ‑ ‑

GLEESON CJ:   But it does not hurt my case, it does not hurt my claim to be the person entitled to drink that whisky, if I say truthfully I had not the faintest idea it was here.

MR PORTER:   If your Honour pleases, we are not arguing that mere lack of knowledge of itself – see, a person may buy a garage which is full of tools and they buy the garage and the tools.  They buy the garage and its contents and they say, in effect, this garage and everything in it is mine.  That is a very different situation to the situation here where two people had access to the premises – and it is also a very different situation to the discovery of $433,000 in the place, because that is in fact something that prima facie, we would say, is not lawfully there.

See, if this lady had said to the police when the money was found, “That’s mine”, then of course she would have been charged immediately under section 527C of the Crimes Act with goods in custody and she would have had quite a job explaining that she had no reasonable ground for believing it had been unlawfully obtained.  But she did not.  What she has so far succeeded in doing is having the best of two worlds.  She has in effect said I had no possession for the purpose of the criminal law but, for the purpose of taking possession of the money under the civil law, I do have possession.

GLEESON CJ:   Now, there are statutory provisions, are there not, permitting the authorities to confiscate the proceeds of crime?

MR PORTER:   Yes, the Proceeds of Crime Act, but that is if you can prove that the moneys are the proceeds of crime, your Honour.

GLEESON CJ:   This seems to involve some kind of extension of that process.

MR PORTER:   No.  If your Honour pleases, what quite frequently happens in law enforcement – and this is particularly in the area of the drug world – is that a large sum of money is found in a house.  There may or may not be drugs found in addition.  In this particular case, no drugs were found.  But a large sum of money is found in a house and if the money is concealed and in a sufficiently large quantity, that of itself is sufficient to raise the 527C suspicion.  Then if the suspicion is not dispelled – and the onus of course is on the person who possesses the money – then two consequences follow.  Firstly, the possessor of the money may be sentenced to as much as six months imprisonment and, secondly, of course, the money is forfeited.  So that is a different way of forfeiting the money altogether, apart from the proceeds of crime.

Ever since the decision of Purdon v Dittmar moneys have been forfeited in this fashion.  Now, usually the problem that arises is not very great because someone is in possession of the money.  But it is not a rare situation to find that there will be a number of occupants of the house, none of whom will own up to the possession of the money.  In this particular case, I am not suggesting for one moment that the lady is not to be believed.  I am simply saying that she has behaved in a fashion that makes it impossible for her to discharge the onus of proof of the manifestation of intention to both control and to possess the money.  She has done just about everything she could possibly do to rebut that intention.  The only way the majority of the Federal Court found in her favour was in effect to promote a presumption of fact into a presumption of law and discard the fact that she carried the onus of proof.

Your Honours, might I say that this whole question of possession of items in houses, in private houses, is very much devoid of authority.  As you can see the authority largely relied upon in these cases are – one is a shop authority and the other is an airways lounge authority.  There are a couple of authorities about private houses but they are a very different item to these.  So that, in a way, everything that was said in Parker v British Airways as to – it would be likely to arise in a private home, they are obiter comments on matters of fact.  And those obiter comments on matters of fact have now been translated by the Full Court into pretty close to an irrebuttable presumption. 

In our submission, that is where there is a clear error of law and a matter of considerable public importance.  The result that has been produced, in our submission, is a ridiculous result which does bring the law into disrepute because it is perfectly obvious that this lady has had the best of two worlds.  She has dodged criminal responsibility, by simply telling the truth, and then she comes to, “Despite all the things I said, I am the possessor because I occupy the house.”  And for no other reason.  There is no other circumstance.  Every other circumstance in this case would suggest that she was not the possessor of this money.  The court has found in her favour solely on the basis that she was the occupier of the house.  There was no other base upon which they could find. 

So, in effect, they have translated – they have not only ignored the onus of proof, but they have translated what, at best, was a presumption of fact into an irrebuttable presumption of law.

GLEESON CJ:   Who has the money at the moment?

MR PORTER:   The money at the moment is banked in the name of the NCA, I believe.

GLEESON CJ:   So the National Crime Authority has the money?

MR PORTER:   That is right, yes.

GLEESON CJ:   You have indicated what you say are the weaknesses in the respondent’s claim to have it.  What is the basis of the National Crime Authority’s claim to keep it?

MR PORTER:   Your Honour, we have a duty to return it to the true owner and in certain circumstances it may be our duty would be to return it to the possessory as distinct from the true owner.  But we have no duty to return it to anyone else other than those persons.  Now, if your Honour pleases, if the true owner ‑ ‑ ‑

GLEESON CJ:   So the National Crime Authority does not claim to be the beneficial owner of it?

MR PORTER:   Oh no, I thought I made that very clear when I started.  We are saying, in effect, we are only too happy to hand this money over to the true owner.  We might well ask him a number of questions about how he acquired it, but we are only too happy to hand it to him.  Of course, the droll situation that existed at the time Mr Justice Hill heard the case was that had the plaintiff taken the money into her possession, and at that stage it was still in the same specie, then she might have had problems under section 527C of the Crimes Act.  Those problems do not arise now because it is in the bank.

GLEESON CJ:   Mr Porter, a useful way of testing the question of principle, if any, that a case gives rise to is to look at the dissenting judgment and see what was the point of departure between the dissentient from the majority.  Where do we see that in the judgment of Justice Foster?

MR PORTER:   I think, if your Honour pleases, page 36, line 45.

GLEESON CJ:   May I offer for your consideration the proposition that the key passage in his judgment is on page 37 at line 25.

MR PORTER:   Yes, but if your Honours’ please, he does not – what I draw attention to at page 36 is that he regards the presumption in favour of the householder as a presumption of fact, subject to rebuttal. 

GLEESON CJ:   He seems to have reasoned ‑ ‑ ‑

MR PORTER:   Whereas the majority of the court seems to have, although with some qualifications with regard to Mr Justice Tamberlin, the majority of the court seems to have regarded it as a presumption of law. 

GLEESON CJ:   I got the impression that Justice Foster thought that what brought Mrs Flack undone in the present case was the extent of access to which other people had been allowed.

MR PORTER:   Well, with respect, I would have thought that Mr Justice Foster in so far as he made a fact finding said, in effect, that having regard to the various statements she has made, the various statements of fact she has made, it is clear that had she known about it, she would not have possessed it.  That is what I would have thought that his – had she known about it, she would have not intentionally possessed it.  So you could not presume an intention in her favour because the facts clearly showed that had she known about it, she would not have possessed it.  That, in our submission, is the basis of Mr Justice Foster’s judgment.

But the fundamental – there are two fundamental questions.  One is who bears the onus of proof, and it is quite clear in Parker’s Case the plaintiff bears the onus of proof.  And on the matters that have been proved, in our submission, they call for only one answer but in any event there has been a clear error of fact by the court because they have, in effect, translated a presumption of fact, coming from Parker’s Case, into a presumption of law.  Also, of course, in our submission they have not paid due regard to the fact that this was not, to adopt your Honour’s example, a mere bottle of whisky or piece of furniture or something; this was an object reeking with suspicion from the word go.

GLEESON CJ:   It is what is sometimes called black money.

MR PORTER:   If your Honour pleases ‑ ‑ ‑

GLEESON CJ:   But that comes in various forms.

MR PORTER:   You see, if this were money that a successful merchant banker or what have you had stashed aside with a view to avoid paying tax on, that is one thing altogether.  But you see the facts in this case do not suggest any – in fact, the facts in this case belie any suggestion that anyone, whether the lady herself or her son, had any large source of income which would be a means whereby $433,000 could be syphoned off for tax avoidance.  Clearly, this was money that, in our submission, carried a clear suspicion of being the proceeds of crime.

GLEESON CJ:   Thank you, Mr Porter.  Yes, Ms Fullerton.

MS FULLERTON:   Your Honours, it is the respondent’s case that the decision of the primary judge and of the majority in the Full Court of the Federal Court was correct in finding in the respondent possessory title sufficient for her to ground her claim for recovery of the moneys.  In our submission, the application ‑ ‑ ‑

GUMMOW J:   One of the problems was there was no oral evidence.

MS FULLERTON:   That is so.  That was a matter ‑ ‑ ‑

GUMMOW J:   When I say problem, but ‑ ‑ ‑

MS FULLERTON:   It was a matter considered by Justice Heerey, page 47 of the application book, by reason of the fact that there was in the appeal from the primary judge a complaint that the principle in Jones v Dunkel had not been respected and Justice Heerey, your Honours will note, took some exception, it would seem, to that principle being raised for consideration, taking the view that whilst she did not give evidence before the primary judge, in fact the applicant to this appeal had full opportunity, indeed an unbridled opportunity, to examine her and examine her at length in a private hearing convened by the National Crime Authority and, in those circumstances, and we say correctly, nothing can be drawn adverse to her possessory claim on the evidence and as she mounted it.

GLEESON CJ:   I notice that there is reference on page 47 to an affidavit from her solicitor that was relied on at first instance.  Was there any objection to the reading of that affidavit?

MS FULLERTON:   No, there was not, your Honour.  Your Honours would understand, of course, that the evidence the respondent gave before the National Crime Authority was before the primary judge by reason of the Authority’s waiver of privilege.  They put the material before the court and Justice Heerey took the view that they could not, in those circumstances, complain that her evidence was for some reason inadequate in the case she made before the primary judge and, your Honours, in our submission, to revisit that question on this application is no warrant for a grant of leave.

Your Honours, there are a number of proposition that the applicant does not appear to challenge the correctness of, it would seem.  One of them, and primarily, is the correctness of the legal principle applied by both the primary judge and the majority, that possessory title over goods located in a householder’s premises – and I underscore “householder’s” in that respect, of course – depends upon proof of the householder’s intention to exercise control over the goods.  That much appears not to be in contest. 

It similarly appears not to be the subject of any contest that there is a presumption that flows to the benefit, if you please, of the householder in that exclusive occupation of those premises exercised in the ordinary way by an intention to exclude unauthorised access manifests the intention to exercise control over the goods, there being no necessity at law that there be any express or declared intent to manifest control over particular goods in particular locations in a particular household.  Were it be otherwise, the Finders’ Cases, as they have come to be known, would not be that body of authority that they plainly have grown to be in the common law jurisdiction.

GLEESON CJ:   I had not thought that a householder’s right to possession of whatever is found in the house does not depend upon the assumption that the householder would have approved it being there if he or she had known about it.

MS FULLERTON:   Quite, that is right, your Honours, yes.

GLEESON CJ:   A person might, for example, own a house in which a pornographic magazine is discovered.  The person might say, I would never have permitted that onto the premises, but it does not affect the position.

MS FULLERTON:   That is quite so, your Honour.  And, your Honour, that principle is foundational to the law as it has been applied, at least by the majority of the Full Court in this particular case and at least, given en passant commentary by Justice Dixon is Willey v Synan which his Honour Justice Hill referred to in his judgment.  The Full Court of the Federal Court did not return to it, having no necessity to do so, it would appear, but your Honours will see that that principle – or that theory of possession, as your Honour the Chief Justice expresses it, is the subject of comment by Justice Hill at page 14 of the application book and over to page 15, from a consideration of what Justice Dixon said in Willey v Synan, which of course was obiter in that case, but not immaterial to the issues before the High Court in that case.

His Honour came firmly to the view – and may I read it to your Honours – and expressed plainly at page 15 of the application book at line 15, as it happens, namely that:

the theory of possession which Dixon J attributed to Holmes J, namely that the right of the owner/occupier depends upon the intention, express or implied, by circumstance to exclude others from the premises and things in it rather than intention to exercise dominion over the particular item.

If there was such an intent, it would be plain that there would need to be knowledge.  One could hardly express a manifest intent to exercise control over a hidden object, unless one knows it is there, and then of course it is no longer hidden.

GLEESON CJ:   It is my understanding that it is that principle that explains the importance that the dissenting judge in the court below attached to the other people who were permitted to come and go in the premises.

MS FULLERTON:   Your Honour, access, the fact of access and that circumstance is most material and the respondent sees it that way, as did both his Honour Justice Hill and as did Justices Tamberlin and Heerey.  Indeed, it is no surprise – and should come as no surprise to this Court – that the applicant had much to say about that in argument in the court below.

But, your Honours, it is not determinative and the way to test that proposition, if I may, is this:  assume for the sake of argument that the respondent had, at the direction of the Housing Commission, changed the locks on her front and rear door for security purposes and that she had no intention in so doing to exclude the access she had permitted by licence to her children but did so as a lessee and under obligation of the head lessor.  Could it be that by reason of that that nobody was in possession of the suitcase within the premise.

GLEESON CJ:   Yes, I would have thought a good example of a situation where ownership of the premises would be a very weak foundation for a conclusion of possession is in the case of somebody who runs a boarding house.

MS FULLERTON:   Quite.  Where the rights to access are rights not granted by licence and determinable at will but by reason of some contractual right, an enforceable contractual right, which of course neither of those in possession of keys to the respondent’s premises had.

GLEESON CJ:   Then you may get a borderline situation, of which the present may be an example, where some person who has the right to come and go as he pleases in those premises is also a person who is likely to bring on to them substantial amounts of money or whatever the case may be, but that is a factual consideration.

MS FULLERTON:   Quite so.  See, your Honours, it is plain that the person who deposited the bag surrendered custody of it.  That is plain, because that person no longer had it in their de facto possession, and custody, of course, is an incident of de facto possession.  It may well be that that person did not intend, if you please, to part with possession of it but by reason of the fact that the occupier had the right to exclude that person, the occupier’s right was the superior right.

Now, there may have been, of course – and one can again move to the realms of the hypothetical – there may well have been dispute between the occupier and the depositor, but that dispute does not arise here.  Here it is a dispute as to who has the better right to possession – no, I withdraw that.  Here the dispute is, has Mrs Flack established a superior right to possession, because we hear the applicant say, as the applicant was bound, of course, to say ultimately before the primary judge, that no longer was title asserted by the National Crime Authority.  They would, it would appear, seek the benefits without any of the pain associated with it.

But, your Honours, my learned friend Mr Porter says that this result brings the law into disrepute.  The reality is this, with respect, for purposes of criminal law knowledge is essential.  For the purposes of possession at civil law, knowledge is not.  The respondent falls between the stones and this Court, with respect, ought not grant special leave to undo findings of

fact, supportable on the evidence, and indeed it might be said no other finding of fact was open.  She had the benefit of the presumption.  The presumption was not rebutted, in our submission, by the circumstances and neither it could be and that, with every respect, is that.

In our respectful submission, your Honours, given the correctness of that finding, it is not for this Court to revisit it, although of course there is clear mandate for this Court to do so, if that was their wish, but in our submission, nothing arises sufficiently to concern this Court and the grant of special leave ought be refused.

GLEESON CJ:   Thank you.  Yes, Mr Porter.

MR PORTER:   There was no surrender of custody.  Of course the new bank notes have been put into the bag very shortly before – in April – and of course the search warrant was executed on 13 April 1994.  So no surrender of custody.

Your Honour, my learned friend draws attention to Mr Justice Heerey’s comments about Jones v Dunkel.  In our submission, that illustrates very clearly the point we are making.  The onus was on the plaintiff to show what her intention was.  It was not a question of Jones v Dunkel at all.  It was a question of the onus being on her to show what her intention was and nowhere in the judgments does - any of the majority judgment pay due regard to that.

Of course, the other matter that we raise is this:  to what extent is there any presumption with regard to an item that is illegally on the premises?  In our submission, it would only be to items that were lawfully on the premises.  Your Honour gave the example of a pornographic magazine.  Of course, that could be perfectly lawfully on the premises.  If you took it a stage further and said it was a child pornography or paedophilia magazine, then of course it is unlawfully on the premises. 

GLEESON CJ:   Suppose it was an unlicensed weapon.  I, as the owner of the house, might want to exercise the right to decide what would then happen to that and destroy it.

MR PORTER:   Well, if your Honour pleases, but in my submission, if you do not even know it is there you could hardly say that you possess something that it would be unlawful for you to possess.  Your Honour does appreciate that unlike the laws of England, there is no protection for the person who finds drugs or firearms and takes them to the police station or intends to destroy them.  On the way to the police station he is illegally in possession of them.

GLEESON CJ:   So is the judge’s associate, according to the literal reading of some of the ‑ ‑ ‑

MR PORTER:   When I prosecuted for the task force, I have held heroin in my hand.  But, if your Honours please, in my submission you cannot just simply say there is a presumption of possession in the case of an illegal object. 

GLEESON CJ:   Thank you, Mr Porter.

This case turned upon the application of well settled and, indeed, ancient principles of law to the facts and circumstances of what might well have been regarded as a borderline case.  The Court is of the view that it is not a proper case for the grant of special leave to appeal.  The application is dismissed.

Does any question of costs arise, Ms Fullerton?

MS FULLERTON:   Yes.  We seek an order for costs, your Honour.

GLEESON CJ:   Mr Porter.

MR PORTER:   It is not a criminal matter, your Honour.  We cannot oppose it.

GLEESON CJ:   The applicant must pay the respondent’s costs.

AT 10.41 AM THE MATTER WAS CONCLUDED