Director of Public Prosecutions (Commonwealth) v Sharon Lee Brown No. SCGRG 94/412 Judgment No. 4606 Number of Pages 17 Criminal Law and Procedure (1994) 72 a Crim R 527
[1994] SASC 4606
•10 June 1994
COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA OLSSON J
CWDS
Criminal law and procedure - proceeds of crime legislation offences - elements of offence - Prosecution appeal against acquittal of respondent of charges pursuant to s82(1) Proceeds of Crimes Act (Cwth) alleging she had possessed, disposed of and received money reasonably suspected of being proceeds of crime - respondent acquitted as trial court found that, pursuant to s82(2), she had no reasonable grounds for suspecting the property was derived from unlawful activity - appellant challenging that finding - observations as to reluctance of appellate courts to overturn acquittals and interfere with finding of facts turning on the assessment of a witness's credibility - "reasonable grounds for suspecting" - test in s82(2) not, as asserted by appellant a test of whether a reasonable person knowing what the accused knew, would not have been suspicious, but whether accused in fact had no such suspicion and whether that state of mind reasonably based - finding of magistrate that s82(2) defence made out unassailable - appeal dismissed. Proceeds of Crime Act, 1987 (Cwth) ss81, 82(1), 82(2) and Crimes Act, 1900 (NSW) s527c. Weinel v Rojas (Olsson J, 10 June 1994, unreported); SS Hontestroom v SS Sagaporack (1927) AC 37; Devries and Anor v Australian National Railways Commission and Anor (193) 112 ALR 641; Queensland Bacon Pty Ltd v Rees (1966) 155 CLR 266 and Anderson v Judges of the District Court of New South Wales and Anor (1992) 27 NSWLR 701, applied.
HRNG ADELAIDE, 10 June 1994 #DATE 10:6:1994
Counsel for appellant: Mr D J Chapman
Solicitors for appellant: Director Of Public Prosecutions
Counsel for respondent: Mr C J Caldicott
Solicitors for respondent: Caldicott and Co
ORDER
Appeal dismissed.
JUDGE1 OLSSON J This is a prosecution appeal against the dismissal, by a stipendiary magistrate, of nine separate counts charged against the respondent pursuant to section 82(1) of the Proceeds of Crime Act, 1987 (Cth) ("the Act"). They severally alleged that, on various dates over a period extending from 11 May 1992 to 7 July 1992, she possessed, disposed of, or received money reasonably suspected of being proceeds of crime. The notice of appeal essentially asserts that the learned magistrate misdirected himself as to and misapplied the law in relation to the correct interpretation of subsection (2) of section 82 of the Act.
2. It should be said at the outset that the respondent was, at the relevant dates, a young woman 20 years of age. She was then employed by the National Australia Bank in its Treasury Department. In his reasons for decision the learned magistrate said that, without hesitation, he accepted her as a witness of truth. He described her as an obviously intelligent and articulate witness who gave "a credible and honest account of the receipt ... and disposal of" the relevant monies "and of her state of mind at all relevant times". She was not, he considered, effectively challenged in cross examination as to that aspect. I therefore proceed to an assessment of the issues argued on this appeal on the basis of that summation.
3. As the learned magistrate pointed out, counts 1 to 5 inclusive related to the receipt and disposal of certain moneys which were utilised by the respondent to purchase a house property at 6 Rustic Grove, Andrews Farm ("the house"). Counts 6 to 9 inclusive involved the receipt and disposal of other moneys by the respondent to purchase a Nissan 300ZX motor vehicle ("the car").
4. The evidence led before the learned magistrate established the following factual situation:-
- From about the commencement of 1992, the Australian
Federal Police ("AFP") undertook an investigation into
the activities of one Lloyd Murray Reed ("Reed").
Information gleaned by the AFP indicated that Reed, in
concert with others, was a substantial trader in heroin.
- In 1986 Reed was charged with the murder of one
Wilson, who had also been reputed to have been involved
in the drug scene. He was ultimately convicted of
manslaughter and sentenced to 10 years' imprisonment.
- Reed was released from custody on 5 July 1991. By the
end of that year it appeared to AFP that he was
operating as a drug dealer in South Australia.
Surveillance of his activities indicated that he had
developed an association with Jennifer Anne Brown, the
mother of the respondent. At all times relevant to this
matter he was actually living in a defacto relationship
with the respondent's mother and was a permanent member
of the household, of which the respondent and her sister
were members.
- During the trial a substantial number of newspaper
articles dealing with Reed's background were tendered
over the objection of counsel for the respondent - who
contended that they were hearsay upon hearsay and not
admissible. However, the learned magistrate admitted
them as corroboration of the AFP evidence not only as to
their state of mind, but also as being relevant to the
suspicions which, it is said, fairly arose in relation
to Reed and his activities over a number of years, going
back to mid 1986. This material suggested that Reed had
a long history of substantial trading in heroin and that
he was, at one point, the South Australian agent for a
man known as the "Mr Big" in the national drug scene.
As will be seen in due course, less than 12 months after
his release from prison, Reed was arrested for
trafficking in a substantial amount of heroin. He was
later also convicted of other drug offences under State
legislation.
- On 6 April 1992 premises occupied by the respondent's
mother at 34 Vincent Road, Smithfield Plains were
searched by the AFP in the presence of the mother, Reed,
and also the respondent and her sister - both of whom
were resident at, and in occupation of, the premises at
the time. This followed the seizure, earlier the same
day, of a quantity of heroin and about $40,000 cash
which had apparently been secreted by Reed (in three
parcels) in some bushes at Andrews Road, Penfield. Reed
and the respondent's mother had been intercepted at an
hotel car park on the Main North Road subsequent to the
discovery and came to the house with the police when it
was searched.
- The search of the Vincent Road premises revealed the
presence of $8,000 in bank notes secreted in the master
bedroom, as well as two packets containing small
quantities of heroin. Tape and other materials
consistent with the wrappings around the heroin and
money found in the bushes were also located in the home.
The respondent gave evidence that she was "pretty upset"
by the arrival of the police. Neither she nor her
sister were questioned by the AFP at the time and the
police raid came as a considerable shock to her. It was
not immediately apparent to her precisely what they had
discovered.
- The respondent further testified that she had spoken
with her mother on the following day. The latter told
her that a substantial sum of money had been found in a
paddock, together with some "rock" heroin; and that Reed
had been "set up" by the police. It is not entirely
clear to me as to whether or not the respondent
appreciated that some heroin had, allegedly, also been
found at the Smithfield Plain home at the time of the
AFP raid. (The transcript is somewhat confusing and
almost contradictory in parts on that score.) Certainly
she was not aware that any specific sum of money had
been found there. She did not ever know the precise
amount of the money found in the paddock. She only
appreciated that it had been a substantial sum and that
it had belonged to Reed, who had earlier expressed
himself as not being keen on banks. What is clear is
that the respondent had a close, loving relationship
with her mother and accepted, without question, what the
latter told her.
- On interview by the AFP on 6 April 1992 Reed admitted
ownership of the packages found in the bushes, but
claimed that the money was the product of legitimate
gambling activities at the Adelaide Casino.
- When she was interviewed, the respondent's mother
admitted having been party to the packaging and burying
of two parcels of money found in the bushes. She denied
having anything to do with the third package containing
heroin, which was found by the AFP in the same vicinity.
In the course of the interview Mrs Brown said that the
respondent then currently lived with her, but had
recently agreed to purchase the house, with the
assistance of a housing loan.
- With the aid of a police informant (and whilst Reed
was still on bail in respect of the heroin said to have
been found at Penfield), the police entered into a
controlled "buy" of heroin from Reed on 10 July 1992.
They purchased 27 grams of high grade heroin for a cash
payment of $10,000. When delivered, the package was in
wrappings similar to those around the packages found at
Andrews Road, Penfield.
- The lastmentioned transaction was deliberately entered
into as a precursor for setting up an even larger deal.
On 7 August 1992 a further controlled "buy" of 500
grams, for a consideration of $163,000 in bank notes,
was carried into effect. This led to Reed's re-arrest.
He received a custodial sentence for the two offences on
5 October 1993.
- Once more, objection was taken to evidence of that
narrative sequence of events, but it was admitted by the
learned magistrate as evidence of the receipt by Reed of
substantial moneys in respect of drug trafficking.
- Evidence was led to establish that, on 5 June 1992,
settlement took place for the house, pursuant to a
contract to purchase dated 9 May 1992. A deposit of
$2,000 was paid by the respondent's mother on her
daughter's behalf, on 13 May 1992. On the same date the
respondent applied to her employer bank for a housing
loan of $52,000. This was later granted. On 11 and 12
May 1992 cash sums totalling $17,000 were paid to the
credit of the respondent's bank account. Ultimately
$15,191.61 of this was used to complete the house
settlement and the balance was utilised by the
respondent for other purposes.
- On 6 July 1992 a cash sum of $7,500 was paid direct to
the credit of the respondent's bank account, by
remittance from Sydney.
The respondent was given to understand that this was the
proceeds of a betting transaction which were owed to
Reed. On the following day the respondent purchased the
car. The purchase price for it was $15,999, against
which $2,499 was allowed as a trade-in for her Nissan
Pulsar Hatchback. She paid an initial $6,000 cash
deposit and returned, later in the day, with a bank
cheque for $7,500, which she had purchased with the
moneys paid into her account the previous day.
There was a dispute, on the evidence, as to whether she
told the salesperson that her boyfriend was actually
buying the vehicle for her for her 21st birthday, or
whether she said that her mother's boyfriend was so
buying it for her. At any event the learned magistrate
obviously accepted the respondent's assertion that she
did not say that her boyfriend was buying the vehicle
for her.
- On 10 August 1992 the AFP searched the house and
seized various banking and financial records belonging
to the respondent. When asked, with reference to the
$17,000 cash credit earlier mentioned, "Do you have any
bank books or statements relating to the accumulation of
this money?", the respondent replied, "No, Murray (i.e.
Reed) gave it to me". She later told the police
officers that she had believed Reed to be a professional
gambler. That assertion was lent colour by police
admissions in cross examination that they had
ascertained from Casino cash transaction reports (which
are raised for all transactions of $10,000 or above)
that $11,000 had been paid out to Reed by the Casino on
25 May 1992 and $18,000 had also been paid out by it to
him on the following day. The respondent gave evidence
on oath before the learned magistrate.
5. On the basis of her evidence, the learned magistrate accepted that the respondent knew nothing of Reed's unlawful activities and entertained no suspicions with regard to him, given that, in about June 1992, she became aware of his conviction for manslaughter. She conceded that (other than the $2,000 which had come from her mother) the various moneys which were used to finance the house and the car purchases emanated from Reed, but she testified that she believed that they were products of his gambling activities. He had, she said, offered to lend her the money to assist in buying the house (into which she moved with her boyfriend); and had also said that he wanted her to have the car for her then forthcoming 21st birthday.
6. It must be emphasized that there was significant evidence given by the respondent to justify her understanding of Reed's activities as a professional gambler. The highlights of this were:-
- He did not have regular employment but, almost on a
daily basis, went out (ostensibly to go to the Casino)
and often did not return home until almost the time when
she was due to leave for work.
- On one occasion she personally saw him at the Casino
when he was actually winning money.
- At times when he came home he would say that he had
lost, but, at other times, he claimed to the respondent
that he had won. She understood from comments made from
him, from time to time, that, overall, he won
substantial sums of money on a fairly regular basis.
- At times he made significant gifts, such as major
items of clothing, both to her mother and herself.
- She was not aware of any alleged illegal activities of
Reed subsequent to the AFP raid on 6 April 1992, which
could account for moneys possessed by him. He had
stated that he did not like banks and he clearly handled
large sums of cash on a quite regular ongoing basis. At
the conclusion of the evidence, counsel for the
prosecution urged upon the learned magistrate that,
notwithstanding that the respondent presented as a
witness of truth, the circumstances were such that she
must logically have suspected, at the time when she
received them, that the moneys in question came from
unlawful activities.
7. In the course of his reasons the learned magistrate dealt with that argument in these terms (at pp27-29):-
"... I have now had the opportunity of reading and
rereading on a number of occasions the transcript of
proceedings. That has only served to reinforce my
already positive views on the reliability of the
defendant's testimony. I look again to the extent of
information reasonably available to the defendant at the
time in issue. I cannot accept Mr Chapman's submissions
that she allowed herself to be borne away by the
largesse of the gifts and did not turn her mind to the
source of same. I have no doubt that her mind was
firmly fixed on the fact that Lloyd Murray Reed was a
professional gambler and a professional gambler of
success. I do not find she should have been surprised
that he was prepared to made (sic) such gifts. I also
have regard to the fact that Reed by this stage had
clearly entrenched himself in the defendant's family
life. He was effectively her mother's defacto.
Although the monies were clearly a generous benefaction
upon a young woman I do not believe that in the
circumstances (as the defendant honestly believed them
to be) she was called upon to make further enquiries as
to sources of those funds. The defendant had a belief
that Reed was a professional gambler and she had
evidence from her own knowledge to support that belief.
There is also substantial objective evidence available
to support the notion that Reed was a regular attender
at the casino. Ms Brown's belief was that he attended
almost on a nightly basis. The cash transaction reports
disclosed by the informant revealed during the relevant
period frequent visits and a number of significant
transactions above $10,000 (and I bear in mind that
there was no obligation to monitor amounts less than
$10,000) and Reed consistently throughout the
investigation leading to his trial alleged that the
monies he obtained were from gambling activities. ...
The fact that there is objective evidence to support the
defendant's state of knowledge of Reed's activities is
of some importance. I bear in mind that as Mr Chapman
argued, the mere existence of a cash transaction report
says nothing as to the state of whether the gambler was
winning or losing but it certainly does support the view
that Reed was a regular attender at the casino and was
leaving the casino on a number of occasions with
substantial cash amounts exceeding $10,000. I note also
that there is evidence to suggest that Reed was highly
unlikely to bank monies that he had received even from
lawful sources due to the previous forfeiture of a very
substantial sum by the Commonwealth. Despite Mr
Chapman's urging to the contrary, I cannot accept that
the defendant acted unreasonably in failing to question
her mother further as to Reed's activities or of the
circumstances of Reed's apprehension. Accepting as I do
her evidence that she accepted her mother's explanation
I do not believe it would be incumbent upon a 20 year
old woman in the defendant's position to go further and
make other enquiries of the mother she so obviously
loved and trusted."
8. Against that background I next turn to the relevant provisions of the Act. Section 82 provides that:-
"(1) A person who ... receives, possesses, conceals,
disposes of or brings into Australia any money, or other
property, that may reasonably be suspected of being
proceeds of crime is guilty of an offence ... "
9. However, the section further stipulates that:-
"(2) Where a person is charged with an offence against
this section, it is a defence to the charge if the
person satisfies a court that he or she had no
reasonable grounds for suspecting that the property
referred to was derived or realised, directly or
indirectly, from some form of unlawful activity."
10. The nine counts asserted against the respondent were that she:-
"1. On about the 11th day of May 1992 at Adelaide in
the said State, did possess money reasonably suspected
of being proceeds of crime; contrary to Section 82(1) of
the Proceeds of Crime Act 1987. Particulars: The
defendant had in her possession cash monies in the sum
of $12,000 used to purchase a bank cheque at the
National Australia Bank, Adelaide Capital Office.
2. On about the 12th day of May 1992 at Adelaide in the
said State, did possess money reasonably suspected of
being proceeds of crime; contrary to Section 82(1) of
the Proceeds of Crime Act 1987. Particulars: The
defendant had in her possession cash monies in the sum
of $5,000 deposited into the National Australia Bank,
Adelaide Capital Office.
3. On about the 13th day of May 1992 at Gawler in the
said State, did possess money reasonably suspected of
being proceeds of crime; contrary to Section 82(1) of
the Proceeds of Crime Act 1987. Particulars: The
defendant had in her possession cash monies in the sum
of $2,000.
4. On about the 13th day of May 1992 at Gawler in the
said State, did dispose of money reasonably suspected of
being proceeds of crime, contrary to Section 82(1) of
the Proceeds of Crime Act 1987. Particulars: The
defendant paid cash monies in the sum of $2,000 to G J and
S L Raggio Pty Ltd Sales Trust Account.
5. Between about the 4th day of June 1992 and the 5th
day of June 1992 at Adelaide in the said State, did
dispose of money reasonably suspected of being proceeds
of crime, contrary to Section 82(1) of the Proceeds of
Crime Act 1987. Particulars: The defendant sold Bank
Bills Investments back to the National Australia Bank,
Adelaide Capital Office for $14,836.00, which monies at
the direction of the defendant were paid to Kevin R
Andrae, Licensed Land Broker for the purpose of
part-payment of property settlement.
6. On about the 6th day of July 1992 at Adelaide in the
said State, did receive money reasonably suspected of
being proceeds of crime, contrary to Section 82(1) of
the Proceeds of Crime Act 1987. Particulars: The
defendant received the sum of $7,500 paid into National
Australia Bank Cheque Account number 5-005 505 311445.
7. On about the 7th day of July 1992 at Blair Athol in
the said State, did possess money reasonably suspected
of being proceeds of crime, contrary to Section 82(1) of
the Proceeds of Crime Act 1987. Particulars: The
defendant had in her possession cash monies in the sum
of $6,000.
8. On about the 7th day of July 1992 at Blair Athol in
the said State, did dispose of money reasonably
suspected of being proceeds of crime, contrary to
Section 82(1) of the Proceeds of Crime Act 1987.
Particulars: The defendant paid cash monies in the sum
of $6,000 to Ken Bowey Car Sales.
9. On about the 7th day of July 1992 at Blair Athol in
the said State, did dispose of money reasonably
suspected of being proceeds of crime, contrary to
Section 82(1) of the Proceeds of Crime Act 1987.
Particulars: The defendant withdrew $7,500 from National
Australia Bank Cheque Account number 5-005 505 311445 in
favour of Ken Bowey Car Sales and paid that cheque to
Ken Bowey Car Sales."
11. In the case of each count, as I understand the reasons published by him, the learned magistrate accepted that the money referred to had, in fact, been shown to be reasonably suspected of being proceeds of crime within the meaning of subsection (1) of section 82 of the Act - a conclusion which was not placed in issue on this appeal. I therefore do not need to further discuss that aspect. However, he went on to make these express findings (at pp30-32):-
"The monies in issue in these proceedings were received
and disposed of at different times by the defendant. It
is necessary to examine whether different considerations
relate to each. The first two counts relate to the
receipt of sums of $12,000 and $5,000 which sums
together were paid into the National Australia Bank for
the purpose of purchasing a bank cheque and for
crediting the savings and master card accounts. Those
monies were of course subsequently withdrawn when the
bank bills were sold back to the bank on or about the
5th June 1992. Both of those bundles of monies were
cash sums. I am satisfied that in May 1992
notwithstanding Reed's arrest in April (for the reasons
given by Ms Brown) she had no grounds for suspecting
those monies were obtained from any purpose other than
from Reed's gambling activities at the Adelaide Casino.
Counts three and four relate to the possession and
disposal of a sum of $2,000 which was paid as a deposit
on the house property. It is to be noted that those
monies did not come directly from Reed. Indeed the
evidence is that the monies were paid by the defendant's
mother. For the reasons I have given above in the point
of view of case to answer I was satisfied there were
grounds for suspecting that the monies had come
indirectly from Reed, but in the ultimate consideration
of this matter I am satisfied that the defendant
honestly believed that the monies came from her mother
and she had reasonable grounds for such belief. Further
even if she turned her mind to the fact that the monies
may have come indirectly from Reed she had no reason for
suspecting that the amount came from some unlawful
activity - the same considerations as apply to counts
one and two apply if a train of evidence exists to
establish that Reed had indirectly provided those funds.
Count five relates to the bank bill investment which was
sold back to the National Australia Bank. Those monies
were received by the defendant from Reed and are already
subject to counts one and two of the information.
Nothing that occurred between the 11th May when she
received those monies and the 5th of June when she
diposed (sic) of the monies could in any material way
have altered the position as to my acceptance of the
defendants state of belief and the reasonableness of
that belief that the monies were obtained from Reed's
gambling activities. The same consideration thus apply
in respect of count five. In respect to count six this
relates to the sum of $7,500 received into the
defendants account having been paid into that account at
a branch in Sydney New South Wales of the National
Australia Bank. The defendant's understanding of those
monies is that they were a gambling debt owed to Reed.
In my view given the defendants state of understanding
of Reed's activities there was no cause for her to
suspect the veracity or otherwise of that account and in
my view there was nothing logically requiring the
defendant to investigate the matter further. I do not
think having regard to the defendant's state of
knowledge of Reed's activities that circumstances
required her to suspect that the monies came from some
unlawful activity. The defendant has satisfied me she
has established her defence in respect of count six.
Similar considerations apply to the disposition of those
funds which is subject to count nine. Counts seven and
eight relate to the receipt of the sum of $6,000 in
cash. Nothing the defendant knew or could have known
that had occurred between May and July 1992 should have
altered her understanding that the monies Reed was
providing her were coming from his gambling activities.
The defendant could not possibly have known the extent
of Drug squad investigations that were occurring at that
time and were about to lead to Reed's entrapment on the
10th July 1992. The defendant has satisfied me as to
the defence in respect to count six and seven."
12. Accordingly, he dismissed the information. The prosecution appeals against that dismissal. It pleads the following grounds:-
"(i) That the Learned Special Magistrate erred in law in
directing himself that subsection (2) of Section 82 of
the Proceeds of Crime Act 'allow(ed) an acquittal where,
on the facts as (the defendant) subjectively believed
them to be, there were no reasonable grounds to suspect
that (s)he was dealing with proceeds of crime: a person
who takes an innocuous view of the facts does not
entertain any ground upon which he should reasonably
suspect connection with the proceeds of crime.' (Reasons
page 25)
(ii) That the Learned Special Magistrate ought to have
directed himself that sub-section (2) of Section 82 of
the Proceeds of Crime Act required the defendant to
satisfy the court that a reasonable person, with the
defendant's knowledge of the facts, would not suspect
that the monies were derived from some form of unlawful
activity.
(iii) That the Learned Special Magistrate ought to have
decided that the defendant had not made out a defence
under sub-section (2) of the Proceeds of Crime Act.
(iv) That the Learned Special Magistrate ought to have
convicted the defendant on each count."
13. Before proceeding to an examination of the contentions advanced on the appeal it is first necessary to revisit an aspect to which I referred in my recent reasons for decision in Weinel v Rojas (Olsson J, 10 June 1994, unreported). I there had this to say:-
"It must firmly be borne in mind that prosecution
appeals against dismissal are to be approached on a
basis different from that applicable to other appeals,
for several reasons. The first is that, as was pointed
out by Zelling J in Thorogood v Warren (1979) 20 SASR
156 at 159, appellate courts have always been reluctant
to interfere with a verdict of acquittal based upon a
reasonable doubt. As he there emphasised the finding of
a reasonable doubt owes much to the atmosphere of the
trial and the appraisal of the witnesses by the court at
first instance - neither of which are readily
susceptible to review by an appeal court. In my view
this problem is doubly compounded when an important area
of consideration is the resolution of conflicting views
of expert witnesses. Secondly, as was pointed out by
Dixon J (as he then was) in The King v Wilkes (1948) 77
CLR 511 at 516, the allowance of an appeal against an
acquittal has always been regarded as the exercise of an
exceptional discretionary power. This is essentially
because, as in the case of prosecution appeals against
sentence, what is involved is the undesirable placing of
an alleged offender in a situation of double jeopardy.
An appeal should only be allowed in the clearest and
most compelling circumstances, for the purpose of
correcting manifest error. As I expressed the
proposition in Semple v Williams (1990) 156 LSJS 40, an
appellate court will be prepared to set aside an order
of dismissal based upon the impact of the evidence upon
the fact finder and remit a matter for retrial only
where it appears that the order of dismissal sought to
be impugned was plainly wrong on any reasonable
interpretation of the recorded evidence and (where
relevant) the inferences which patently arise from it."
14. From the appellant's point of view there is also a further difficulty to be borne in mind. The ultimate conclusion of the learned magistrate was very much the product of his assessment of the personality of the respondent in the witness box and of his assessment of her reliability and credibility. This court therefore stands in the acute position of disadvantage adverted to in the long line of authorities stemming from S S Hontestroom v S S Sagaporack
(1927) AC 37 at 47. Whilst it is true that, in Devries and Anor v Australian National Railways Commission and Anor (1993) 112 ALR 641, Deane and Dawson JJ pointed out that, even where credibility is a major issue, an appeal court cannot excuse itself from the task of weighing conflicting evidence and drawing its own inferences and conclusions, nevertheless, in a case such as this, an appellant - particularly a prosecution appellant - faces a truly formidable task in terms of onus. As the majority reiterated in Devries, at the end of the day the principle still remains that (at p646):-
"... if (a) trial judge's finding of fact depends to
any substantial degree on the credibility of a witness,
the finding must stand unless it can be shown that the
trial judge 'has failed to use or has palpably misused
(his or her) advantage' or has acted on evidence which
was 'inconsistent with facts incontrovertibly
established by the evidence' or which was 'glaringly
improbable'."
15. In all fairness, it must be recorded that, on the hearing of this appeal, Mr Chapman, of counsel for the DPP, acknowledged that difficulty and did not seek to impeach the findings of fact made by the learned magistrate as to the respondent's evidence and relevant states of mind.
16. Rather, it was his primary contention that the learned magistrate misconstrued the provisions of subsection (2) of section 82 of the Act and applied an erroneous test to the evidence; and that, even accepting the findings of the learned magistrate as to the respondent's states of mind at the times of the impugned transactions, such a situation did not properly lead to the conclusion that she had discharged the onus of proof which lay upon her.
17. Before I proceed to examine this contention I first turn to the vexed question of the proper construction of the subsection.
18. Sections 81 and 82 together comprise Division 1 of Part V of the Act. The global heading of that Division is "Money Laundering".
19. Section 81 also bears the same title. It enacts that a person who engages in money laundering is guilty of an offence. In the case of a natural person, the maximum penalty is a fine not exceeding $200,000, or imprisonment for a period not exceeding 20 years, or both. It is thus a very serious offence. The section goes on to stipulate that a person is to be taken to engage in money laundering if, and only if,
"(a) the person engages, directly or indirectly, in a
transaction that involves money, or other property, that
is proceeds of crime; or
(b) the person receives, possesses, conceals, disposes
of or brings into Australia any money, or other
property, that is proceeds of crime; and the person
knows, or ought reasonably to know, that the money or
other property is derived or realised, directly or
indirectly, from some form of unlawful activity."
20. By way of contrast, section 82, the content of which I have earlier cited, is titled "Possession etc of property suspected of being proceeds of crime". In the case of a natural person such an offence attracts a fine of up to $5,000, or imprisonment for not more than two years, or both.
21. Subsection (2) of section 82 clearly reverses the normal onus of proof once it is shown by the prosecution that the elements of subsection (1) have been proved beyond reasonable doubt. However an accused person merely bears the onus of proving the statutory defence on the balance of probabilities.
22. As has been pointed out by learned writers the actus reus of both the section 81 and 82 offences is extremely broad; and is capable of encompassing normal financial transactions carried out by banks, professional advisers and commercial entities. It is therefore of critical importance to determine the nature of the mens rea attaching to the offences in question.
23. There is no doubt that the prosecution bears a lower onus as to mens rea under section 82 than it does under section 81. In essence the evidentiary onus under the former section shifts to the accused once the prosecution establishes that there are objective indications of unlawful activity in relation to the money or property. At that point the accused must satisfy the Court "that he or she had no reasonable grounds for suspecting" the proscribed provenance of the money or property. It is important to note the use, in subsection (2), of the expression "he or she had no reasonable grounds for suspecting" rather than or phrase such as "there were no reasonable grounds for suspecting"; and also that the section does not employ a phrase such as "he or she did not suspect". The actual phraseology employed therefore gives rise to important issues of concept in endeavouring to place a proper construction on the exculpating provision.
24. As has, in effect, been held in Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266 at 303 the concept of having a reason to suspect something demands more than the existence of a mere reason to consider or look into the possibility, of the existence of that thing. It is more than a mere idle wondering whether it exists or not. There must be some solid basis of fact which fairly and necessarily gives rise to "a positive feeling of actual apprehension or mistrust", although full formal proof may be lacking. (See also Hughes v Dempsey (1915) 17 WALR 186.) Subsection (2) therefore contemplates a need to demonstrate that an accused had no reasonable grounds for arriving at the type of suspicion envisaged, in the sense which I have discussed.
25. As I understood him Mr Chapman contended that the subsection posed a purely objective test - that, to gain the benefit of the section, it was incumbent on an accused to demonstrate that a reasonable person, apprised of the facts which were actually known to the accused, would not have developed a positive feeling of actual apprehension or mistrust in relation to the subject property; and that the actual state of mind of the accused was largely irrelevant; and certainly not the critical test. So, he argued, that, in the instant case, the hypothetical reasonable person, knowing what the respondent knew at the relevant time, would surely have been suspicious of the provenance of the moneys in question.
26. Quite apart from the concept so espoused, this submission necessarily begs the question as to what were the relevant facts known to the respondent.
27. Both before the learned magistrate and on appeal considerable debate took place as to the tests to be applied under section 82. Reference was made to interesting academic dicta on the subject. Attention was, for example, drawn to the article "The Proceeds of Crime Act: The Rise of Money-laundering Offences and the Fall of Principle" published by Professor Brent Fisse in
(1989) 13 Crim LJ 5 in which, at pages 13 and 14, he speaks of the rigour of the section possibly being "alleviated to some extent by feats of restrictive judicial interpretation".
28. With all due respect, it seems to me that no great feats of judicial interpretation - restrictive or otherwise - as envisaged by him, are involved. The section falls to be interpreted according to well settled canons of construction and by giving the normal and usual meaning to the language employed. The section is, of course, a penal provision and, in accordance with settled principle, should be given a restrictive, rather than an expansive, interpretation, consistent with the obvious intendment of the legislation.
29. In my view the scheme of the Act is clear. Subsection (1) undoubtedly erects a purely objective test. Once it is shown that there has been a relevant receiving, possession, concealment or disposal of property that may reasonably be suspected of being proceeds of crime, then an offence has, prima facie, been committed. The Act clearly follows the same scheme as that found in section 527C of the Crimes Act, 1900 (NSW); and the reasoning enunciated in authorities such as Ex parte Patmoy; re Jack (1944) 44 SR (NSW) 351, R v English (1989) 17 NSWLR 149, and Anderson v Judges of the District Court of New South Wales and Anor (1992) 27 NSWLR 701 ("Anderson") is clearly applicable. The existence of the requisite suspicion is, of course, determined not by reference to the subjective beliefs of the police at the time, but according to an objective criterion of reasonableness applied by the court before whom the accused stands charged, in light of the proven facts and circumstances.
30. It is obvious that such a provision has a very clear potential to operate in a most draconian, if not unfair, manner in some circumstances, particularly having regard to the width of practical situations to which it can attach, as I have earlier pointed out. For that reason subsection (2) was included - to provide relief from such an outcome in proper circumstances. However, I unhesitatingly reject Mr Chapman's assertion that it, too, poses what is a purely objective test. If it did there would, in practical terms, be very limited relief indeed from the potential harshness of the operation of subsection (1). I entertain no doubt that it gives rise to a combination of both subjective and objective considerations.
31. As was indicated by Kirby P in Anderson, the initial focus of this type of provision is upon the what the accused's actual belief was, at the relevant time. A secondary question then arises, if it be found that a genuine, innocent belief was held, as to whether that belief was, in the objective sense, reasonably based.
32. The court must therefore successively pose to itself the questions - What was the state of mind of the accused? Did the accused genuinely deal with the property without, in fact, suspecting that the property was derived or realised, directly or indirectly, from some form of unlawful activity? If yes, was that state of mind reasonably arrived at, in the sense, were there no reasonable grounds for entertaining the suspicion referred to in the statute?
33. The enquiry here focuses on whether or not there were facts and circumstances, known to the accused at the time in question, which, fairly considered, were capable of leading a reasonable person, and should have led the accused, to entertain the type of suspicion envisaged by the subsection.
34. On any dispassionate reading of the language employed in the subsection what, clearly, is not envisaged is the purely objective consideration, on the established facts and circumstances (as they appeared to an accused) existing at the time of the relevant transaction, of whether the hypothetical reasonable person would necessarily have come to the same state of mind as the accused. The subsection could simply have said as much (by requiring an accused person to satisfy the court "that there were no reasonable grounds for suspecting"), had that been intended. It did not do so. The reference to a person satisfying the court that "he or she" had no reasonable grounds is a clear indication to the contrary. I am reinforced in that conclusion by the fact that it accords with notions of common sense and fairness.
35. On the one hand the primary emphasis is the actual possession of an innocent state of mind. On the other the subsection excludes the situation of purely idiosyncratic thinking, arising from, perhaps, undue naivety and/or a failure to consider and appreciate factual circumstances which ought, compellingly, to have excited suspicion.
36. In this regard I reject the declamation of Mr Chapman that such an approach would substantially emasculate the section. Patently it does not do so. It seems entirely proper that an accused, who had an innocent state of mind, reasonably arrived at, should not be subjected to the rigours of the section; but that the onus should nevertheless rest upon an accused to establish the existence of facts and circumstances which, on any fair appraisal, reasonably justified the existence of such a state of mind - to the exclusion of any other indications possibly arousing suspicion.
37. Whilst it is true that the learned magistrate did not expressly articulate the approach in the terms which I have above expressed, it seems to me, on a proper reading of the totality of his reasons, that that is essentially the concept which he applied. He concluded, in effect, that the existence of the requisite innocent states of mind had been demonstrated, the circumstances had been such that the accused had reasonably believed what she in fact believed, and that there were no compelling factors which should have aroused her suspicions, given the situations in which she found herself.
38. For reasons which I expressed to Mr Chapman arguendo, I also entertain no doubt that, contrary to his submissions, the learned magistrate obviously took into account all relevant facts.
39. At the end of the day the learned magistrate, on a basis which cannot now be impeached, consistently with authority, came to these critical conclusions of fact and circumstance:-
(1) That at no stage did the accused, in fact, suspect
that the relevant property was derived or realised,
directly or indirectly, from some form of unlawful
activity.
(2) That she had that state of mind against the
background (inter alia) of the facts that:-
(a) she was a member of a household in which Reed had,
in practical terms, become her stepfather. He had an
apparently happy, stable relationship with her mother.
(b) she knew nothing to his discredit until the AFP raid
on 6 April 1992. She later, incidentally, became aware,
in about June 1992, that he had, some years earlier,
been convicted of manslaughter, although it does not
appear that she became aware of the full circumstances.
(c) she quite properly had a loving and trusting
relationship with her mother.
(d) she accepted her mother's explanation to her that
Reed had, in effect, been "set up" by the police and,
indeed, had no independent reason to query such an
explanation. As she put it "Murray (i.e. Reed) had
been living with us. I saw Murray go to the Casino
every day. I would never in my wildest dreams expect
drugs of any sort to be found in our house. He was part
of our family. There was no way I could believe he
would have kept drugs and jeopardised our whole family."
Nothing like the police raid had ever occurred before
and the respondent had no prior reason to suspect Reed
of any illicit activity.
(e) there had never been any suggestion that any member
of the household was a drug user, or that the accused
had reason to suspect drugs either to have been on the
premises or handled by Reed or, for that matter, her
mother, on any other occasion.
(f) as earlier illustrated, the accused had very
positive grounds for concluding that Reed was a
professional gambler who, over time, had considerable
success in winning substantial sums of money. She had
never met any of his associates outside of the family.
(g) the money advanced by Reed to assist with the
purchase of the house was not a gift, but a loan 25
which eventually had to be repaid in the event that the
house was sold.
40. It must be remembered that, given the atmosphere generated at the trial, the learned magistrate not only unreservedly accepted the respondent as a frank, honest and accurate witness of truth - a conclusion which receives considerable support even from a bare reading of the transcript - but he also accepted both her description of the household in which she lived, the evidence of the factual relationships of the persons within it, and that it was - given the setting - not unsurprising that she accepted the apparent situation as to Reed's activities and sources of income, as well as her mother's explanation related to the AFP raid - which had come "out of the blue".
41. He accepted the respondent's evidence of her understanding of the apparent source of the funds made available to her, and he had no difficulty in finding that the facts and circumstances known to her at the relevant time founded a substantial basis for that understanding.
42. It is not to be forgotten that he assessed the respondent as an intelligent, articulate person; and as not merely some apparently naive, or perhaps even wilfully blind, person who, unrealistically, failed to see a situation for that which, on any objective view of the known circumstances, it patently was.
43. It cannot be stressed too strongly that what is not here in issue is the reasonableness of the reaction of some outsider looking at the whole scenario from a distance, but the reasonable impact of a known situation on the respondent in the circumstances in which she actually lived; having regard to her relationships with Reed and her mother. The subsection clearly implies that particular facts can and will take their flavour (and assume a particular significance) in light of the context in which they occur. Whether or not they constitute reasonable grounds for suspicion will necessarily depend on the setting and the totality of the relevant circumstances; and thus the net impact which they ought to have made upon the accused. It is not a question of simply extracting some facts and considering them in splendid isolation.
44. At the end of the day I am not persuaded that the appellant has come even close to discharging the heavy onus which lies upon him of demonstrating that the decision of the learned magistrate was wrong. On the contrary, given the findings of credibility and fact in this case, I am well satisfied that, however he may have expressed himself, he was plainly correct in the eventual outcome. The respondent manifestly discharged the onus which lay upon her, under subsection (2) of section 82 of the Act.
45. The appeal must be dismissed.
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