Cornwell, B.R. v The Commissioner of the Australian Federal Police

No judgment structure available for this case.

Re: BRUCE RICHARD CORNWELL
And: THE COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE
No. G592 of 1989
FED No. 380
Customs
24 FCR 544/49 A Crim R 422

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Lockhart(1), Wilcox(2) and Pincus(3) JJ.

CATCHWORDS

Customs - Illegal importation of narcotics - Application for pecuniary penalty - Assessment of value of benefits derived by appellant from narcotics dealing - Claim that appellant denied natural justice because of lack of formal pleadings - Nature of the dealing relevant for the assessment of benefits - Whether matters specified in s.243C(2) are an exhaustive list of the considerations relevant to assessment - Significance of word "benefits" - Nature of expenses to be disregarded under s.243C(6) - Whether incorrect standard of proof adopted by trial judge - Use of accomplice's evidence - Use of diary kept by person not called at trial.

Customs Act 1901 - ss.243A, 243B, 243C

HEARING

SYDNEY

#DATE 30:7:1990

Counsel for the applicant: Mr G. Nicholson, QC

Solicitors for the applicant: J.J. Cullen and Associates

Counsel for the respondent: Mr D.F. Jackson, QC and Mr S.J. Rushton

Solicitors for the respondent: Director of Public Prosecutions

ORDER

The appeal be dismissed.

The appellant pay to the respondent his costs of the appeal.

The Official Trustee in Bankruptcy shall pay to the respondent upon demand by him, out of the moneys of the appellant held by the said Official Trustee pursuant to Division 3 of Part XIII of the Customs Act 1901 the amount of the taxed costs of the respondent ordered to be paid by order 2 hereof.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. (See also Order 37 rule 2(3)).

JUDGE1

I have had the benefit of reading the judgment of Wilcox J. I agree with it and have nothing to add.

JUDGE2

The matter before the Court is an appeal by Bruce Richard Cornwell against an assessment of a $6.9 million penalty made against him by Morling J under s.243C of the Customs Act 1901. This penalty was assessed in a proceeding brought against Mr Cornwell and a co-offender, Barry Richard Bull, by the Commissioner of the Australian Federal Police, the respondent to the appeal.

The statutory provisions

Section 243C appears in Division 3 of Part XIII of the Act, a Division which is entitled "Recovery of Pecuniary Penalties for Dealings in Narcotic Goods". The evident purpose of the Division is to deprive of their illicit gains persons who engage in narcotic dealings. It is desirable, at the outset, to refer to the relevant provisions of the Division.
Section 243A is an interpretation section. Sub-section (3) explains what is meant by engaging in "a prescribed narcotics dealing":

"(3) For the purposes of this Division, a person shall be taken to engage in a prescribed narcotics dealing if -

(a) he sells or otherwise deals in, or agree to sell or otherwise deal in, narcotic goods imported into Australia in contravention of this Act;

(b) he imports, or agrees to import, narcotic goods into Autralia in contravention of this Act;

(c) he exports, or agrees to export, narcotic goods from Australia in contravention of this Act;

(d) he keeps, or agrees to keep, in his possession narcotic goods imported into Australia in contravention of this Act;

(e) he conspires with another person or other persons to import any narcotic goods into Australia, or to export any narcotic goods from Australia, in contravention of this Act; or

(f) he aids, abets, counsels or procures, or is in any way knowingly concerned in, the sale of, or other dealing in, narcotic goods imported into Australia in contravention of this Act, the importation of narcotic goods into Australia, or the exportation of narcotic goods from Australia, in contravention of this Act, or the keeping in the possession of any person of narcotic goods imported into Australia in contravention of this Act."

Section 243B(1) authorises the Minister, the Commissioner of the Australian Federal Police and the Comptroller-General of Customs to institute a proceeding in this Court, on behalf of the Commonwealth, for an order that a person pay a pecuniary penalty to the Commonwealth in respect of a particular prescribed narcotics dealing engaged in by him or prescribed narcotics dealings engaged in by him during a particular period. Subsection (2) provides:

"(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 case may be, and order the person to pay to the Commonwealth a pecuniary penalty equal to the value as so assessed."

An order may be made for payment of a pecuniary penalty notwithstanding that the person has not been convicted or charged with any offence: see sub-s.(3). Any amount payable by a person to the Commonwealth in accordance with such an order is a civil debt due by that person to the Commonwealth and is enforceable as if it were an order made in civil proceedings: see subss.(4) and (5).
Section 243C deals with the assessment of pecuniary penalties. The provisions presently relevant are as follows:

"243C.(1) In this section, a reference to the defendant in relation to a proceeding under section 243B shall be read as a reference to a person against whom an order is sought in that proceeding.

(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 or 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.

(3) ...

(4) ...

(5) ...

(6) In calculating, for the purposes of a proceeding under section 243B, the value of benefits derived by theand '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."

Background facts

Early in May 1985 a quantity of cannabis was illegally imported into Australia. It is common ground that some 345 packets, each containing about five kilograms of cannabis, were transported in a vessel named the "Rau Kawa" from Thailand to a point off the Australian coast. The load was there transhipped into a yacht, the "Skylab", sailed by Mr Bull. The "Skylab" took the cannabis to a wharf at Iluka, on the north coast of New South Wales, where it was landed and packed into a vehicle driven by Mr Cornwell. It is common ground that Mr Cornwell took the cannabis from the wharf. But there is an issue between the parties as to whether he disposed of the whole consignment for his own benefit - this is the respondent's case - or whether, as Mr Cornwell claims, he retained only 10 percent of the shipment as a reward for his services.
Both Mr Cornwell and Mr Bull were subsequently apprehended and charged with conspiring with each other and with other persons to import into Australia prohibited imports to which s.233B of the Customs Act applied: namely, narcotic goods consisting of cannabis. Each of them pleaded guilty and was sentenced in the Supreme Court of New South Wales to a long term of imprisonment.
The present proceeding was commenced on 24 October, 1986 when the applicant filed an Application naming as defendants both Mr Cornwell and Mr Bull. Substantive orders were sought against each defendant. The substantive order sought against Mr Cornwell was in the following terms:

"1. An order that the First Defendant pay to the Commonwealth of Australia, a pecuniary penalty pursuant to the provisions of Section 243B of the Customs Act 1901 ("the Act") in such amount as may be assessed by the Court, in respect of

a) the importation by the First Defendant or his agreeing to import narcotic goods, namely cannabis into Australia in contravention of the Act between 30 June 1984 and 31 May 1985.

b) a conspiracy between the First Defendant, the Second Defendant and other persons to import the said narcotic goods into Australia, in contravention of the Act, between 30 June 1984 and 31 May 1985. c) the First Defendant's aiding, abetting, counselling or procuring or being knowingly concerned in the sale and other dealing in the said narcotic goods imported into Australia in contravention of the Act, between 30 June 1984 and 31 May 1985."

Ancillary orders against both defendants were also sought. Those orders included orders that the Official Trustee in Bankruptcy be directed to take control of the property of both defendants: see s.243E(1) of the Act. Orders were sought for the examination of each of the defendants pursuant to s.243F of the Act and for the Official Trustee in Bankruptcy to pay to the Commonwealth out of the property in his possession or under his control an amount equal of the amount of any pecuniary penalty which might be assessed: see s.243G.
Some ancillary orders were made by Sheppard J. But no steps were taken to bring on the substantive application for hearing until after the two defendants were sentenced on 16 September 1987. On 19 November 1987 Sheppard J made directions for the filing of affidavits on behalf of each of the parties, but those directions were subsequently suspended pending the hearing of applications that the Official Trustee release moneys to cover the defendants' legal costs.
On 26 May 1988, Sheppard J made directions requiring the applicant to file and serve on the defendants a document specifying the oral and documentary evidence, given in the Supreme Court at the time of sentence of the defendants, upon which he proposed to rely in support of the application for pecuniary penalties and also the place or places where any documentary evidence might be inspected and copies obtained. This summary was served on the defendants on 22 June 1988. On the following day, Sheppard J directed the defendants to file a document responding to the applicant's document by 4 August 1988. No such document was filed.
On 10 August 1988, Sheppard J directed that the applicant file and serve on or before 7 September all affidavits on which he proposed to rely at the hearing of the matter and that he file and serve, by the same date, a list of all documents which he proposed to tender in support of his case. The learned judge directed that the defendants file and serve all affidavits upon which they proposed to rely on or before 5 October. His Honour recognised that it might not be possible to obtain affidavits from all potential witnesses. So he directed that statements of the evidence of witnesses from whom affidavits could not be obtained should be filed and served by the same day as the affidavits of the party by whom those witnesses were to be called.
It appears that the applicant complied with these directions by filing and serving its affidavits and a list of documents on 7 September 1988. The defendants' affidavits were not filed by the due date, but Sheppard J granted an extension of time and they were eventually filed and served on 24 November 1988. The hearing of the matter commenced before Morling J on 5 December 1988. The trial occupied 11 hearing days in December 1988, April 1989 and June 1989. Judgment was delivered on 14 August 1989.
Denial of natural justice
I have recounted in detail these pre-trial directions because the first submission put on behalf of the appellant is that he was denied natural justice at the trial. It is said that the appellant was not adequately informed of the case to be made against him. Counsel correctly says that there were no formal pleadings and he claims that this omission occasioned prejudice to his client.
The complaint of denial of natural justice is untenable. The present proceeding is a civil proceeding in which, at all stages, the appellant has been legally represented. No objection was taken by the appellant to the directions, made by Sheppard J, which determined the procedure to be adopted at the hearing. The Summary of Evidence served upon the defendants on 22 June 1988 informed them of the nature of the case intended to be made against them with a degree of particularity far exceeding that usually provided by a Statement of Claim. Shortly after that date, they had the benefit of affidavits setting out the actual evidence upon which the present respondent proposed to rely.
During the course of submissions we were taken to the transcript of the first day's hearing before Morling J. At an early stage in the proceedings, his Honour invited counsel for each of the parties to summarise their respective cases. In the course of doing so, they crystalised the issue falling for determination. It was conceded on behalf of the appellant that he was a person to whom s.243B(2) applied and that the only question for determination was the value of the benefits he derived from having engaged in the relevant narcotics dealing: that is, the dealing which resulted in the landing of this load of cannabis at Iluka. Counsel for the appellant conceded that his client derived a benefit equal to 10 percent of the total volume of cannabis, but he said that this was the whole of the benefit derived.
Counsel for the present respondent contended that Mr Cornwell's derived benefit was 100 percent of the value of the shipment. But they conceded that this proportion might have to be reduced if the Court determined that Mr Bull was also a principal in the affair. Under those circumstances, it is not surprising that, at an early point in his reasons for judgment, Morling J stated the issue in these terms:

"The only question which falls to be decided is the amount of the penalties which should be imposed."

That was the issue which emerged from the pre-trial documents. It was the issue which the parties went to Court to litigate and it was the sole issue addressed by his Honour. There is no question of unfairness or denial of natural justice.

Nature of the relevant dealing

The second proposition put on behalf of the appellant is that he was prejudiced by the failure of Morling J to confine himself to the issue of what benefits, if any, had been derived by the appellant by reason of the conspiracy between 30 June 1984 and 31 May 1985 to import prohibited imports, as distinct from the importation itself. It is said that the hearing proceeded on the basis that the relevant prescribed narcotic dealing, for the purpose of calculating any benefits derived by the appellant, was the conspiracy to import prohibited imports and that this is conceded in his Honour's reasons for judgment, but that, in calculating benefits, Morling J had regard to the appellant's importation, possession and sale of the cannabis.
There are several answers to this submission. In the first place, as appears in the extract from the Application quoted above, the applicant put his case upon three bases: importation, conspiracy, and aiding and abetting sale and other dealing in the goods. Nothing was said at any stage to indicate that the claim was confined to conspiracy alone. It is incorrect to say that his Honour approached the matter upon the basis that the relevant prescribed narcotic dealing was confined to conspiracy. In the passage from his reasons relied upon by counsel, his Honour merely noted that the offences to which the defendants had pleaded guilty - that is, the conspiracy charges - were prescribed narcotics dealings and he added: "Accordingly the applicant has brought this application seeking orders that the defendants pay to the Commonwealth pecuniary penalties in such amounts as may be assessed by the Court". Almost immediately after that statement his Honour adverted to the issue in the case, as already set out. There is nothing in the reasons to suggest an understanding that the applicant was confining his case to the conspiracy to import, as distinct from the importation itself.
In any event, the submission is misconceived in point of law. Section 243C(2) requires assessment of "the value of the benefits derived by the defendant by reason of his having engaged in a particular prescribed narcotics dealing". In that connection the Court is required by para (a) to have regard to the evidence concerning "the value of the property other than moneys, that came into the possession or under the control of ... the defendant ... by reason of the defendant's having engaged in that dealing". A person who conspires with others to import narcotic goods into Australia is a person who engages in a prescribed narcotics dealing. If, as a result of that conspiracy, property other than moneys comes into the possession of a defendant, para (a) applies. It does not matter that another element in the chain of causation is also a prescribed narcotic dealing.

Further, counsel's submission misunderstands the nature of the offence of conspiracy. As Lord Pearson pointed out in Director of Public Prosecutions v. Doot (1973) AC 807 at p 827, a conspiratorial agreement continues to operate until it is terminated by performance, abandonment or frustration. See also the judgment of Hope JA in Saffron v. the Queen (1989) 17 NSWLR 395 at pp 421-422 and the authorities there cited. Upon the findings made by Morling J, the conspiracy was still operating at the time when the cannabis was landed onto the wharf at Iluka and entered into the possession of Mr Cornwell.
Assessment of benefits: the construction of ss.243B and 243C
Sections 243B and 243C of the Customs Act present some difficulties of construction. One question, canvassed in argument, is whether the matters which are specified in s.243C(2) are an exhaustive list of the considerations to which the Court is entitled to have regard in assessing the value of benefits derived by a defendant. The Act does not say that the list is exhaustive and there are cases in which a statutory list such as this has been held not to exclude other relevant matters: see Re Hunt: Ex parte Sean Investments Pty Ltd (1979) 53 ALJR 552 at p 554; R. v Toohey: Ex parte Meneling Station Pty Ltd (1983) 158 CLR 327 at p 338. However, the question always depends upon the words of the particular statute. In the present case, s.243B(2) requires the Court to assess the value of the benefits "in accordance with section 243C". Section 243C(2) states that the value of the benefits "shall be assessed ... having regard to the evidence before the Court" upon the specified matters. There is, therefore, room for the view that, in this particular case, subs.(2) exhaustively states the relevant considerations. That view receives support from the circumstance that it is difficult to think of matters which might reasonably be regarded as relevant to the Court's task but which are not referred to in the subsection.
In this connection, I mention that reference was made in argument to the possible relevance of the degree of involvement of the defendant in the dealing. As will appear, this is a factor included in a similar list contained in comparable New South Wales legislation. However, provided that proper weight is given to the word "benefits", so that a defendant is only penalised in respect of property at his ultimate disposal, as distinct from property which passes transitorily through his hands, the degree of involvement of that defendant seems to be irrelevant. For example, it may happen that a minor participant in a drug importation scheme ends up with the whole of the money or property. This may result from an accident, the participant's cunning, or the intervention of the police. In such circumstances, there would be no inconsistency with the purpose of Division 3 if the Court inflicted upon that person a penalty equal to the value of the whole of the money or property which he or she received and retained. On the other hand, to penalise a courier - who temporarily had possession or control of the money or goods but passed them on to someone else who disposed of them for his or her own benefit - upon the basis of the value of the total property, would be to ignore the ordinary meaning of the word "benefits".
For the purposes of the present case it is not necessary to reach a final conclusion as to whether the list of matters specified by s.243C(2) is exhaustive. On any view, para (a) of that subsection applies to this case; the question is the extent of the benefits derived by Mr Cornwell. Accordingly, I prefer to leave the question of s.243C(2)'s exhaustiveness for consideration in a case where some other factor is argued to be relevant to the Court's assessment.
Any consideration of the word "benefits" immediately raises questions regarding the operation of s.243C(6) and, in particular, what is meant by the words "any expenses or outgoings of the defendant in connection with that dealing". One question is whether it is correct to disregard any proved expenditure in acquiring the relevant narcotics. Another concerns the effect of evidence that the proceeds of the transactions were shared with a co-offender. These questions do arise in the present case. His Honour found that Mr Cornwell made substantial payments to others involved in the importation, including $300,000 to Mr Bull. The relevant payments were all agreed money sums, as distinct from a division of the spoils on a partnership basis.
The starting point for consideration of these questions must be the decision of the High Court in The Queen v. Smithers; ex parte McMillan (1982) 152 CLR 477. That case involved a challenge, upon a number of separate grounds, to the constitutional validity of s.243B of the Customs Act. One of the submissions made by the prosecutor was that s.243B, read with s.243C, conferred an administrative function on a federal court in which the judicial power of the Commonwealth is reposed, contrary to the High Court's decision in Regina v. Kirby; ex parte Boilermakers' Society of Australia (1956) 94 CLR 254. In a unanimous judgment, the High Court rejected that submission. At pp 486-487, their Honours referred to the terms of subss.(2) and (6) of s.243C and proceeded:

"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. In this case the Court is required to assess benefits. Of course, it has been said that the assessment of damages involves the making of a sound discretionary judgment. No doubt the same comment may be made about the Court's function under s.243B(2). But the making of a sound discretionary judgment is entirely consistent with the exercise of judicial power. The exercise of that power often calls for the exercise of a judicial discretion. The absence of a limitation upon the amount of the pecuniary penalty for which the sections provide is of no significance. There is, of course, an implied limitation - the amount of the penalty is not to exceed the Court's assessment of the value of the gross benefits which the person has derived from engaging in the relevant transaction of transactions."

In Commissioner of Federal Police v. Curran (1984) 3 FCR 240, I had occasion to consider the meaning of "benefits" in s.243C and the significance of subs.(6). The view I formed at that time was expressed in the following words, at p 248:

"Section 243C(2) refers to the moneys that 'came' into the possession of the defendant. It does not, in terms, require that the defendant ultimately be advantaged to the extent of those moneys. Indeed, s.243C(6) expressly requires the court to disregard any expenses or outgoings incurred in connection with the dealing. As the High Court pointed out in McMillan, the section is concerned with the assessment of the gross proceeds of the crime, not the net proceeds after expenses. However, subject to one matter, s.243A(7), the assessment relates to the "value of the benefits" derived by a particular defendant. That must be his share of the gross proceeds. There is a difference between a division between individuals of gross proceeds and the deduction of an individual's expenses. It is not enough that at some stage, before division of the spoils, the particular defendant had in his hands a greater proportion of the gross proceeds."

I am not aware of any departure from the view expressed in Curran in any subsequent decision in this Court; although in no case has the correctness of my view been a matter of critical importance. The distinction made by me between a division of gross proceeds and a payment by way of expenses was adopted by Sweeney J in Commissioner of the Australian Federal Police v Lahood (23 May 1988, not reported); although that distinction was not essential to his Honour's decision, having regard to the facts of the case, and it was not referred to in the judgment of the Full Court on appeal (Morling, Burchett and Gummow JJ, 9 June 1989, not reported).
Curran was considered by the New South Wales Court of Criminal Appeal in R v Fagher (1989) 16 NSWLR 67. That case arose under State legislation, the Crimes (Confiscation of Profits) Act 1985 (NSW), the provisions of which are modelled upon Division 3 of Part XIII of the Customs Act. Section 10 of the Crimes (Confiscation of Profits) Act broadly corresponds with s.243B of the Customs Act and s.11 follows s.243C. However, there are significant differences between the two statutes. Section 10 of the Crimes (Confiscation of Profits) Act applies to a person who has been convicted of a "serious offence". The application of the section is not limited to narcotics offenders. Secondly, s.10 confers upon the State courts a discretion as to the making of an order, whereas s.243B requires this Court to make an order in an appropriate case. Thirdly, and perhaps most importantly in the present context, the list of relevant matters set out in s.11 of the New South Wales Act includes: "(c) the extent of the defendant's involvement in the commission of the offence or offences".
In Fagher Roden J, at p 74, referred to both Curran and the decision of Sweeney J in Lahood. In the latter case Sweeney J had held that moneys paid by the defendant to corrupt police to ensure that a planned importation would go through Customs unchecked constituted "expenses or outgoings", within the meaning of s.243C(6), and should be disregarded in assessing the value of the benefits the defendant derived. Roden J commented that, if one were to follow both Curran and Lahood -

"then deductibility of moneys paid to a co-offender would appear to depend upon whether what was paid was an agreed fee or a percentage of the proceeds. The lack of merit in the distinction, and the scope for shades of grey between the two classes of payment, make that an unattractive construction to put upon the provision".

His Honour went on to comment upon the differences in the wording of the two Acts. He expressed the opinion that these differences enabled a New South Wales Court to avoid the distinction between payment of an agreed fee and a percentage of the proceeds. At p 75, Roden J said:

"If it were shown that a particular offender played a limited role in the offence, so that only a small part of moneys handled by him could in any real sense be said to represent a benefit derived by him from the offence, then the 'extent of (his) involvement', as found, could have the effect of reducing the amount of pecuniary penalty that might be ordered against him".

His Honour proceeded to note evidence, accepted by the trial judge in that case, that, of the sum of $14,500 which the offender was paid for the narcotic, $12,500 went to the supplier of the drug. Accordingly, he held that the benefit should be assessed at $2,000 only.
The other members of the Court, Hunt and Allen JJ, came to similar conclusions, but by different routes. Hunt J was not persuaded that the differences in wording between the two statutes were significant. He thought that the interpretation given in this Court to the Commonwealth Act must also be applied to the State Act. He said, at p 78:

"On that basis, once the judge in the present case accepted the evidence of the respondent that his share of the gross proceeds was only $2,000, that was the value of the benefits which the respondent received".

Having regard to his acceptance of the applicability of the Curran distinction to the State Act, Hunt J must have seen Fagher as a case of division between individuals of gross proceeds rather than a case of payment of expenses.
Allen J placed emphasis on the inclusion in s.11 of the State Act of the reference to the extent of the defendant's involvement in the commission of the offence. He referred to the difficulty of obtaining reliable information about the disposal of the proceeds of crime and saw the reference to involvement as being a means of equating, even if only in a rough and ready way, the amount of the order to the amount of benefit actually received by a particular person.
Fagher is valuable for its discussion of the problems inherent in an assessment of the type required by s.243C. I respectfully agree with Roden J that a distinction between the distribution to individuals of the gross proceeds of a crime and the payment of an agreed sum as expenses will often be artificial, sometimes unsatisfactory. However, I remain of the opinion that this distinction is inherent in the words of s.243C. The essential problem is that Parliament has used the term "benefits", a word appropriate to describe the net proceeds of a transaction, in a context where "expenses and outgoings" of the transactions are expressly required to be disregarded.
Subsection (6) requires the Court to disregard "any expenses or outgoings of the defendant in connection with that dealing". The purchase of a narcotic, for importation into Australia, is clearly an "outgoing" incurred in connection with an agreement to import: compare the comment of Dixon CJ in John Fairfax and Sons Pty Ltd v. Federal Commissioner of Taxation (1959) 101 CLR 30 at p 35 that the purchase of trading stock involves an "outgoing" for the purposes of the Income Tax and Social Services Contribution Assessment Act 1936. It might be objected that a failure to take account of the purchase cost of a narcotic means that the amount of a penalty assessed by reference to the value of the narcotic upon importation into Australia will necessarily exceed the true benefit to the importer of the importation. I agree that this is so. But the objection equally applies to any expense occurred in the implementation of the transaction. Nonetheless, and notwithstanding the ordinary meaning of the word "benefits",the clear policy of subs.(6) is that such expenses are to be disregarded. Parliament accepted that, to this extent, the benefits assessed by the Court may exceed the actual benefits derived by the offender from the transaction. In my opinion, the consequence of subs.(6) is that expenditure incurred in the acquisition of the relevant narcotic must be disregarded by the Court in making its s.243C assessment. The same principle applies to payments to co-offenders, like Mr Bull, of agreed sums which may properly be described as "expenses or outgoings".
On the other hand, I see no reason to extend the principle of subs.(6) to a division of spoils with a co-offender who shares the financial risks of the undertaking and is paid a proportion of the proceeds rather than an agreed sum. The payment of moneys to a partner, calculated by reference to the success of an enterprise, is a payment not ordinarily encompassed by the words "expenses or outgoings". It is true that para (a) of subs.(2) requires the Court to have regard to the value of the property which came into the possession, or under the control, of the defendant by reason of his engagment in the dealing. But the section does not require that the assessment equal that value. Except to the extent that it is specifically commanded to do otherwise - as by subs.(6) - the Court should have regard to the ordinary meaning of the word "benefits", by determining how much the defendant gained from the transaction. As the High Court pointed out in McMillan, the function of the Court is to make "a sound discretionary judgment" about the amount of the benefits taken by the defendant.
Assessment of benefits: the trial judge's approach
These matters of construction are relevant to the submission made on behalf of the appellant that his Honour erred in assessing the benefits derived by Mr Cornwell by reference to the value of the property which passed through his hands. It is said that the logic of his Honour's approach is that, in a case where property which was worth, say, $10 million, was shared equally among 10 conspirators, and was at some particular time in the course of the transaction in the possession of each of them separately, a penalty of $10 million would be assessed against each of them; resulting in an aggregate of $100 million. It is said that such an approach is plainly inconsistent with the ordinary meaning of the word "benefits". I agree. I accept the appellant's submission as to the significance of the word "benefits", as explained above, and that an assessment as assumed by the hypothetical case would be erroneous. However, I do not believe that Morling J fell into the error attributed to him. This was not a case of one conspirator temporarily holding property on behalf of a number of conspirators. Morling J held that Mr Cornwell was "the Australian principal" in the conspiracy, Mr Bull being a lieutenant who was paid an agreed sum of $300,000 for his assistance. Moreover, according to his Honour's findings, Mr Cornwell received the cannabis on his own behalf. In his reasons for judgment the learned judge said:

" ... I think it is appropriate to assess the benefits derived by Cornwell from the Raukawa conspiracy by reference to the value of the cannabis that came into his possession by reason of him being the principal in the conspiracy. I conclude from the evidence that he became the owner of the cannabis after it was imported. I am satisfied that his possession of it was not temporary in the sense that it merely passed through his hands as a carrier employed by other persons. The cannabis was his to dispose of as he wished. I think he did indeed dispose of it and that he received large sums of money as a result of its disposition. In these circumstances, I think it is appropriate to assess the value of the benefits derived by him as being equivalent to the value of the cannabis itself. Of course, he did not profit from the conspiracy to that extent, since he incurred substantial expenses and outgoings. It is his misfortune that the application of s.243C(6) results in him being penalised in an amount in excess of his profits. But that is a misfortune which a person engages in a conspiracy to import narcotics is liable to suffer."

Morling J recognised that Mr Cornwell made certain payments to other participants in the transaction. It is apparent from the passage quoted that his Honour was of the view that these people were paid agreed sums of money, so that this was not a case of division between co-offenders of the gross proceeds of the transaction. This view of the matter is amply supported by the evidence. It leads inexorably to the conclusion that his Honour was correct in assessing the value of the benefits taken by Mr Cornwell by reference to the value of the whole of the property of which he took possession, disregarding the payments made by him to his fellow conspirators.
Standard of Proof

Counsel for the appellant submits that Morling J erred by failing to apply to the case the correct standard of proof. Counsel says that a central question was whether the appellant was engaged as a participant in an enterprise in which he was to share only 10 percent of the goods unlawfully imported or whether he was a principal having control of the whole cannabis. This question, says counsel, was a matter of extreme gravity to which it was appropriate to apply the standard required by Briginshaw v. Briginshaw (1938) 60 CLR 336 at pp 368-369. Counsel concedes that his Honour referred to Briginshaw in his reasons for judgment. But he says that a mere reference was insufficient; the judge failed to apply the standard "in a demonstrably precise or reasoned manner to the facts in dispute". Counsel goes on to say that, in order to meet the Briginshaw standard, it is not enough merely to prefer one view of the facts to another; the Court must feel an actual persuasion of the correctness of a particular view. It is said, further, that the Briginshaw standard is not met unless the Court is affirmatively satisfied of the truth of the evidence of any witness relied upon by the Court, considering that witness' evidence in isolation, and without forming any opinion about the credibility of other evidence.
I agree that the Briginshaw standard requires a feeling of actual persuasion but, in my view, there is no substance in any of counsel's other submissions. There may be a question whether a determination of the extent of the benefits derived by a defendant from a transaction, as distinct from the question whether the defendant participated in the transaction at all, is a matter which calls for the application of the Briginshaw standard. However, Morling J proceeded on the basis that this was the position. It is not necessary for me to express an opinion as to whether, in so doing, his Honour might have erred in favour of the present appellant. Accepting the relevance of the Briginshaw standard, it is clear that his Honour applied it. In his reasons for judgment Morling J said:

"The applicant carries the onus of proof in the proceedings. The proceedings are civil in nature: Kirk v. Commissioner of Australian Federal Police (1988) 81 ALR 321 at p 338. The degree of satisfaction for which the civil standard of proof calls may vary according to the gravity of the fact to be proved: Rejfek v. McElroy (1965) 112 CLR 517 at p 521 citing Briginshaw v. Briginshaw (1938) 60 CLR 336 at pp 368-369 and other authorities. I approached the resolution of the factual issues in the case with an appreciation that the allegations against the defendants are of a grave nature."

The submission of counsel that the application of the Briginshaw standard requires the tribunal of fact to determine the credibility of a particular witness independently of its consideration of the other evidence in the case is not supported by anything said in Briginshaw, or in any other case of which I am aware. The proposition runs counter to usual judicial technique and to commonsense. In the course of hearing a case a judge will usually form tentative views about the credibility of particular witnesses or particular evidence. However, it is important that the judge retain an open mind as to the correctness of those tentative views until the evidence is complete and counsel have had the opportunity of putting their submissions as to the facts. A tentative view may be discarded in the light of later evidence or the arguments of counsel. In some cases a judge may be so impressed by a particular witness as to rely substantially upon the evidence of that witness when making final conclusions of fact. In other cases, the final conclusions may be derived from the whole mosaic of evidence, the judge finding that elements which were not decisive when considered in isolation interlock with other elements of the evidence in such a manner as to provide compelling conclusions. What is required by Briginshaw, in the words of Dixon J, is that, in the end, "the proofs survive a careful scrutiny and appear precise and not loose or inexact". The proof of one witness may achieve that standard because it is supported by evidence from another source. It does not have to do so in isolation.
The Evidence of Mr X
The evidence as to the appellant's involvement in the cannabis importation, adduced on behalf of the respondents, included testimony from three witnesses who were involved in the transaction in various capacities. By order of his Honour, the name of one of those persons was kept confidential. He was referred to at the trial, in both evidence and submissions, as "Mr X". His Honour's order continues to operate and I will adopt that same course.
Mr X was a skilled radio technician. It was common ground that he installed radio equipment on the "Skylab" at some stage. There was an issue whether this work was done before the end of 1984 or in 1985, following a meeting between Messrs Cornwell and Bull and an American citizen named Rogers who came to Australia in January 1985 to discuss the proposed importation. The date was significant because the case for Mr Cornwell was that his participation in the transaction arose only out of an invitation extended to him by Mr Rogers during the course of this visit; whereas the present respondent contended that Mr Cornwell was the instigator of the importation and had been preparing for it for some months before Mr Rogers' visit. It was also common ground that Mr X installed radio equipment in a house at Bangalow, on the north coast of New South Wales, occupied by one Rowell, who distributed some of the cannabis ultimately landed at Iluka. This work was done in mid-1984 when Mr Cornwell took Mr X to Bangalow; although Mr X said that the actual request to install the equipment was made to him by Mr Rowell rather than by Mr Cornwell.
The submission of counsel for the appellant is that the trial judge erred in failing to direct himself to the effect that Mr X was an accomplice whose evidence could not safely be accepted in the absence of corroboration. It is also said that, on the evidence before him, Morling J could not properly have found that Mr X was worthy of credit. Examples were cited of particular statements in the evidence of Mr X which were said to be contrary to clearly established facts.
As to the first matter, there is no rule of law which requires corroboration of the evidence of an accomplice in a proceeding like that presently before the Court. As a matter of commonsense, of course, the evidence of a person who has been involved in an unlawful narcotics dealing should be treated with great caution when reaching any conclusions about contested facts. Morling J was conscious of this need. In his reasons for judgment his Honour said:

"Most of the witnesses who were called to give evidence before me were involved in the conspiracy and their credibility as witnesses must therefore be suspect. Having said this, I prefer to accept the evidence of the defendants' co-conspirators when it conflicts with the evidence of the defendants themselves."

His Honour went on to give reasons why he was unable to accept the evidence of Mr Cornwell.

Three specific matters are raised by counsel for the appellant in relation to the evidence of Mr X. The first complaint is that, in his reasons for judgment, Morling J said: "I am also satisfied that it was Cornwell who arranged for Mr X to install compatible radio equipment on Rowell's property on the north coast of New South Wales in July/August 1984". As already mentioned, Mr X said in evidence that the actual request was made by Mr Rowell. However, I am unable to see that this derogates from the statement made by his Honour. It was common ground that Mr Cornwell was instrumental in taking Mr X, a radio expert, to Mr Rowell's property at the relevant time. There was no reason for Mr Cornwell to have done this unless he wished Mr X to be involved in installing radio equipment in Mr Rowell's house.
The next matter arises out of his Honour's finding that Mr Cornwell arranged for Mr X to open a bank account in Hong Kong in August 1984, and that Mr Cornwell bore the expenses of Mr X's travel to Hong Kong for that purpose. Mr X said in evidence that Mr Cornwell asked him to go to Hong Kong to open the account and that he did so, at Mr Cornwell's expense. Mr Cornwell conceded in his evidence that, at about that time, he arranged for the Hong Kong bank account to be opened. He did not agree that Mr X was involved in that step. But Morling J was entitled to prefer Mr X's evidence on the point, which was otherwise uncontradicted.
Finally, Mr X denied that he was paid any money for the work which he did on behalf of Mr Cornwell. There was no direct evidence to contradict that denial but, not surprisingly, Morling J was sceptical. Referring to the evidence of Mr Bull that Mr Cornwell had told him "that X received $50,000 for his services" Morling J commented: "I think it is a strong inference that this sum was paid by Cornwell to X".
In his reasons for judgment Morling J dealt with the evidence of Mr X at some length, setting out the salient points of that evidence insofar as it related to Mr X's involvement in the transaction. This summary included references to Mr Cornwell asking Mr X to go to Bangalow in July 1984 for the purpose of installing radio equipment at the premises of Mr Rowell, and Mr X's trip to Hong Kong to open the bank account. The summary did not include any reference to the payment of the $50,000. At the end of this summary Morling J said:

"I have formed the view that X's evidence was reliable and that he gave me an accurate account of his dealings with Cornwell and Bull".

As I read his Honour's judgment, the passage just quoted, which is attacked by counsel for the appellant, only accepts those parts of Mr X's evidence which had been summarised up to that point. In particular, the passage does not amount to an acceptance of Mr X's denial that he received any money, a denial which his Honour plainly did not accept. I find nothing in the summarised material which is at odds with clearly established facts. It is true that Mr X was at issue with Mr Cornwell on material matters, but his Honour was not willing to accept Mr Cornwell's evidence. In that connection, his Honour had the considerable advantage of seeing both witnesses and hearing them give evidence under cross-examination over lengthy periods.
Onus of Proof
Counsel for the appellants submits that the onus of proof rested on the present respondent and he says that there was no evidence contrary to the appellant's evidence of his role in respect of the importation of the cannabis. There is no question but that the respondent carried the onus of proof throughout. But there was considerable evidence to contradict his account of his role. Morling J was entitled to accept that evidence.
Rowell's Diary
During the course of the trial the diary kept by Mr Rowell for the year 1985 was tendered on behalf of the appellant. At the time of the tender, there was discussion between his Honour and the solicitor for the appellant - who was then appearing without counsel - as to whether Mr Rowell was to be called. No undertaking to call Mr Rowell was given by the solicitor. However, apparently as a matter of convenience, his Honour agreed to accept the diary into evidence. But he did so upon the express basis that he would not have any regard to its contents unless Mr Rowell was called. Mr Rowell was not called.
It is not suggested that, at any time during the trial, his Honour changed his position as to the use to be made of Mr Rowell's diary. Notwithstanding this, references were made to the diary during the course of submissions. His Honour noted these references in his reasons for judgment, although he made no finding based on the diary entries.
Unembarrassed by the failure to call Mr Rowell, counsel for the appellant submits that the diary provides clear evidence in support of the appellant's case. It is submitted that a close analysis of entries made in May and June 1985 shows that, during this period, Mr Rowell disposed of a quantity of cannabis amounting to approximately 10 percent of the total cargo. It is said that this is consistent with Mr Cornwell's claim that he received only 10 percent of the cargo.
Having regard to the circumstances under which the diary was received into evidence and the failure of the appellant's solicitor to call Mr Rowell, I have difficulty accepting that the diary should be used for any purpose whatsoever. It seems to me that, if Morling J erred, it was in indulging the appellant. In the absence of Mr Rowell, the diary was inadmissible in evidence. The diary does not answer the description of a "business record", so as to be admissible under Part III A of the Evidence Act 1905. Under ordinary principles, the document would not be admissible unless the maker was called. Morling J made clear to the parties that the use of the diary for any evidentary purpose would depend upon Mr Rowell being called. As he was not called, the diary should not be regarded as being part of the evidence in the case.
However, even if the diary is treated as evidence, it does not significantly enhance the appellant's case. Many of the relevant diary entries are in abbreviated form. The abbreviations may bear the meaning which counsel for the appellant puts upon them, but this is by no means clear. Even accepting counsel's interpretation, all one can say is that they indicate that Mr Rowell disposed of some 10 percent of the shipment within a period of five or six weeks following the landing of the cannabis at Iluka. Such a position is not inconsistent with Mr Cornwell's claim that he took for himself only 10 percent of the shipment, upon the basis that he then entrusted the whole of it to Mr Rowell for sale. But this interpretation is equally consistent with the view, preferred by his Honour, that Mr Cornwell retained for his own benefit the whole of the shipment, disposing of it through various distributors, one of whom was Mr Rowell.
Orders
In my view there is no substance in any of the points argued on behalf of the appellant. The appeal should be dismissed with costs.

JUDGE3

I have read in draft the reason for judgment of my brother Wilcox. I agree with his Honour's views as the appellant's complaints that natural justice was denied, that the trial judge wrongly failed to confine himself to the question of what benefits were derived by reason of the conspiracy pleaded, that the Briginshaw test was not applied, that errors were made in the treatment of the witness referred to as Mr X and that the trial judge should have given weight to the diary said to have been kept by one Rowell: as to all these points, in my opinion, the attack on the judgment below fails.

I also agree with the conclusion that the trial judge was not shown to have erred in treating the appellant as having benefited to the extent of the whole value of the cannabis in question. My reasons for rejecting the contention that the appellant should have been regarded as having derived benefits of value less than $6.9 million differ from those of Wilcox J. What follows constitutes my opinion on the matters discussed by Wilcox J. under the headings "Assessment of benefits: the construction of ss.243B and 243C" and "Assessment of benefits: the trial judge's approach".
The trial judge found that it was the appellant "who was the Australian principal in the conspiracy". His Honour also described him as "the principal in the conspiracy" and found that "he became the owner of the cannabis after it was imported". His Honour further said that "the cannabis was (the appellant's) to dispose of as he wished".
It was suggested by counsel that the findings I have mentioned are inconsistent with views expressed earlier in the primary judge's reasons to the effect that there were not one but two Australian principals, namely the appellant and one Mr Bull. Although, in my respectful opinion, the contention on behalf of the appellant is not without substance, the finding ultimately made should not be set aside on the ground mentioned. I do not think that in expressing agreement with a submission that in some sense Mr Bull was a co-principal, his Honour adopted a view which was necessarily inconsistend with the proposition that the appellant ultimately owned all the cannabis and could dispose of it as he wished. The primary judge said that there was-

"abundant evidence that Bull's part in the conspiracy was more that of an assistant to Cornwell rather than that of a full partner in the enterprise."

A further question requiring consideration is whether the primary judge was in error in declining to deduct from the gross value of the cannabis the amount received by Mr Bull, namely $300,000. As is explained in the reasons of the primary judge, and in those of Wilcox J., Mr Bull assisted in the importation in question. The primary judge found that he was the appellant's "willing assistant rather than partner". His Honour futher found that the appellant "decided how much Bull would be paid". It was contended for the respondent that s.243C(6) of the Customs Act 1901 ("the Act"), which required that the primary judge disregard "any expenses or outgoings" of the appellant in connection with the narcotics dealing, obliged the judge to ignore the $300,000 payment, in dealing the value of the benefit to the appellant.
Wilcox J. discusses in his reasons his own decision in Commissioner of the Australian Federal Police v. Curran (1984) 3 FCR 240, dealing with the question whether a Court should, in applying s.243C(6), distinguish between two kinds of sums paid to a co-offender. The two kinds are, firstly, sums paid by way of a division of proceeds between partners or quasi-partners, and secondly sums paid for services rendered by a co-offender; it is said that the former, but not the latter, are properly deductible in assessing the value of the benefits under s.243C. Each may, of course, be described as an "outgoing", so that the distinction is, if valid, implicit rather than expressed in the Act.
Particularly because the arrangements made between the co-offenders are unlikely to be intended to create any relationships binding in law, I have had some anxiety as to whether the application of such a distinction can have been intended by the legislature; compare the remarks of Roden J. in R v. Fagher (1989) 16 NSWLR at P 74. Futher, there appears to me (as there did to Hunt J. in R v. Fagher) to be difficulty in distinguishing, for this purpose, the terms of the State legislation considered in that case from those of the statute here in question. There, the respondent sold cannabis oil for a sum of $14,500, but was ordered under the New South Wales statute to pay $2,000 only, on the basis that he had paid $12,500 to the person who supplied it to him. Here, there was no suggestion that the $300,000 paid to Mr Bull was the purchase price of the cannabis. If it is to be deducted, that must be on the basis that the words "expenses or outgoings" in s.243C(6) exclude payments to persons who assisted in the enterprise, as did Mr Bull.
Despite the difficulty of making the distinction, I have come to the conclusion that it is correct that one must discriminate between the distribution of gross proceeds among co-offenders and a payment to a co-offender by the principal for services rendered; only the former sort of payment is deductible. It follows that the primary judge was correct in declining to deduct the $300,000.

Another question raised at the hearing of this appeal was whether a defendant in proceedings of this Court may claim to deduct the purchase price of the goods, as was allowed in Fagher's case. If the answer to that question is in the negative, odd results may ensue. Material unlawfully imported and sold here two or three times at increasing prices may be held to have benefited the persons who dealt in it in sums which are, in total, considerably greater than the last and higher sale price. On the findings, the cannabis in question came from Thailand and, presumably, a substantial sum was paid for it.
The central provision relavant to the present case is s.243B(2), quoted in full in the reasons of Wilcox J. That requires the Court to assess the value of benefit derived by a person by reason of his having engaged in a "particular prescribed narcotics dealing" or "during a particular period, engaged in prescribed narcotics dealings". The definition of "a prescibed narcotics dealing" is to be found in s.243A(3), also set out in the reasons of Wilcox J. A person is taken to engage in such a dealing if, among other things, he "sells or otherwise deals in ... narcotic goods imported into Australia in contravention of this Act" or "imports, or agrees to imports, narcotic goods into Australia in contravention of this Act".
Keeping in mind that the legislation covers the case of a person who is found to have engaged in prescibed narcotics dealings during a particular period, it seems to me somewhat difficult to support the conclusion that the purchase price of narcotic goods is to be excluded. Suppose the role of a person who is found to have dealt in relevant narcotic goods during a period is that he acted as a link in a chain of distribution. Can it properly be said that the "value of the benefits derived" by him "by reason of his having engaged in ... prescribed narcotics dealings during that period" is not his gross profit - i.e. the difference between the price paid and that received - but the whole sum paid to the distributor by the person to whom the narcotic goods are passed on? Sums paid for goods may, in particular contexts, be described as "outgoings" but, particularly if the dealings alleged are a series of purchases and resales, it seems to me difficult to say that the payments of price are "in connection with" such dealings; rather they are components of the dealings.
Looking at the matter more broadly, although the pleas of those such as the appellant are not likely to evke much sympathy, it must be kept in mind that the purpose of the statute is one of a penal kind: see Murphy v. Farmer (1988) 165 CLR 19 at 28, 29. the High Court spoke of the relevant part of the statute, in R v. Smithers; Ex parte McMillan (1982) 152 CLR at 485, as follows:

"... it seeks to deprive the dealing in narcotic goods of the considerable financial rewards which are the chief inducement for importing them into Australia and for dealing in them".

The Court described the type of suit here in question as a "civil action for penalties" and as imposing "civil liability for pecuniary penalties" (487). Further, it is one which may deprive citizens who have been convicted of no offence of property they own.

It appears to me that the better view is that the payment of the price of the goods dealt in is not an expense or outgoing in connection with that dealing; paying the price in exchange for the goods is the dealing. I am encouraged to adopt this view, despite some difference in the language of the two statutes, by its consistency with the result arrived at in the New South Wales Court of Criminal Appeal in R v. Fagher (above).
The next question is whether some allowance should, on the evidence in the present case, have been made for the purchase price. The difficulty is that the appellant did not say that he paid a purchase price, his story was that he was not a principal at all, but merely a person hired to assist in the transport of the cannabis. There was, it was true, some evidence as to the value of cannabis in the Thai market for that substance, but what the appellant actually paid, and to whom, was not established. Those were matters within his knowledge and not within the knowledge of the applicant Commissioner; there was, in my opinion, an evidential burden on him as to that issue, which he failed to discharge. The ultimate conclusion at which I have arrived on this branch of this case therefore accords with that of Wilcox J., although I respectfully disagree with his Honour's view that what the appellant paid for the cannabis he acquired was immaterial.
In the result, I concur in the orders proposed by Wilcox J.

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Citations

Cornwell, B.R. v. The Commissioner of the Australian Federal Police [1990] FCA 380 (24 FCR 544; 49 A Crim R 422)

Cases Citing This Decision

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Cases Cited

12

Statutory Material Cited

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R v Anderson; Ex parte IPEC-Air Pty Ltd [1965] HCA 27

R v Toohey; Ex parte Meneling Station Pty Ltd [1982] HCA 69

[1990] FCA 380

30 JULY 1990