Macpherson v The State of Western Australia - [2016] WASC 137

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: MACPHERSON -v- THE STATE OF WESTERN AUSTRALIA [2016] WASC 137

CORAM: TOTTLE J

HEARD: ON THE PAPERS

DELIVERED : 3 MAY 2016

FILE NO/S: CPCA 55 of 2014

BETWEEN: ROSS HADRILL MACPHERSON
First Plaintiff
MAUREEN LESLEY MACPHERSON
Second Plaintiff
AND
THE STATE OF WESTERN AUSTRALIA
Defendant

Catchwords:

Criminal Property Confiscation Act 2000 (WA) - Objection to freezing order - Whether a sum of cash was crime-used within the meaning of s 146 - Where cash was proceeds of selling cannabis - Whether cash was used in connection with offence of selling cannabis - Whether cash was used in connection with offence of cultivating cannabis - Whether cash was used in connection with offence of possessing unlawfully obtained property - Meaning of 'used' in s 146 - Meaning of 'in connection with' in s 146

Legislation:

Criminal Code (Cth)
Criminal Code (WA)
Criminal Property Confiscation Act 2000 (WA)
Proceeds of Crime Act 2002 (Cth)

Result:

Application allowed

Category: B

Representation:

Counsel:

First Plaintiff                :     No appearance
Second Plaintiff            :     No appearance
Defendant:     No appearance

Solicitors:

First Plaintiff                :     Bennett + Co
Second Plaintiff            :     Bennett + Co
Defendant:     Director of Public Prosecutions (WA)

Case(s) referred to in judgment(s):

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) [2009] HCA 41; (2009) 239 CLR 27
Coco v The Queen (1994) 179 CLR 427
Commissioner of Australian Federal Police v Vo [2015] NSWSC 1523; (2015) 302 FLR 209
Director of Public Prosecutions (Cth) v Mylecharane [2007] NSWSC 1174; (2007) 177 A Crim R 486
Director of Public Prosecutions (WA) v White [2009] WASC 62; (2009) 194 A Crim R 192
Director of Public Prosecutions (WA) v White [2010] WASCA 47; (2010) 41 WAR 249
Sultana v The Queen (1994) 74 A Crim R 27

TOTTLE J:

Introduction

These reasons relate to an application by the Director of Public Prosecutions (the applicant) to vary the terms of a freezing order made pursuant to s 43 of the Criminal Property Confiscation Act 2000 (WA) (CPCA).
On 4 November 2015 I made consent orders allowing some of the variations sought. The only remaining issue is whether a sum of cash should be frozen on the further ground that it is 'crime-used' property, as that term is defined in s 146 of the CPCA.
My orders of 4 November 2015 included an order that the matter should be dealt with on the papers unless either party requested an oral hearing in writing by 4 pm on 23 November 2015.
No request for a hearing was received by that time. Accordingly, I have decided the matter on the papers. The variations sought by the applicant will be allowed in full.

Background

Factual background

On 30 May 2014 police officers executed a search warrant pursuant to the Misuse of Drugs Act 1981 (WA) (MDA) at a residential property at 27 Shelburn Road, Thornlie (Lot 43 on Plan 9897 in Certificate of Title Volume 493, Folio 106A) (the Property). The Property was the home of the first and second objectors, Mr and Mrs Macpherson.
In a shed at the rear of the Property, the police discovered a sophisticated hydroponic cultivation system, consisting of lighting, irrigation and a cooling system, and some 22 cannabis plants at various stages of growth. The shed was powered by a cable attached to the mains electricity supply of the house, by‑passing the meter box.
In a safe in the main bedroom of the house, the police discovered $12,890 in cash (the Cash).
Following the search, Mr Macpherson was charged with cultivating a prohibited plant (namely cannabis) with intent to sell or supply, contrary to s 7(1)(a) MDA (the cultivation offence). He pleaded guilty and was sentenced on 17 April 2015 in the District Court to a term of 9 months' imprisonment.
He was also sentenced to shorter terms of imprisonment for two further offences, to be served concurrently with the sentence for the cultivation offence. The first offence was possession of unlawfully obtained property, contrary to s 417 of the Criminal Code (WA). The property in question was the Cash, which was suspected of having been obtained by selling cannabis. The second offence related to the by-passing of the meter box.

The CPCA proceedings

Following the search of their house, Mr and Mrs Macpherson were detained by police officers from the Proceeds of Crime Squad, acting pursuant to s 73 of the CPCA. They were each interviewed (the CPCA interviews). The interviews took place separately. During the interviews, the officers imposed requirements on Mr and Mrs Macpherson under s 76 of the CPCA to answer questions relevant to determining whether any of their property was confiscable under the Act.
The same day (30 May 2014) a Justice of the Peace issued a freezing notice numbered WAPFN140068, pursuant to s 34 of the CPCA (the first freezing notice). The first freezing notice prohibited dealings with certain of the Macphersons' property, including the Property, the Cash, a Ford Falcon utility and money in Mr Macpherson's bank account.
The scheme of the CPCA is that frozen property is automatically confiscated unless the property owner files an objection within a limited period of time (s 7(1)).
On 26 June 2014 Mr and Mrs Macpherson commenced these proceedings, objecting to the confiscation of their property pursuant to the first freezing notice. The originating summons was later amended by consent to raise an objection in respect of a second freezing notice, numbered WAPFN140096.
On 17 November 2014 Principal Registrar Gething made consent orders in the proceedings by which:
(1)the applicant was added as a party;
(2)the title of the proceeding was amended to reflect the joinder of the applicant;
(3)a freezing order was made pursuant to s 43(5) of the CPCA, which had the effect of freezing all property owned or effectively controlled by Mr Macpherson (including the Property, the Cash and the Ford Falcon utility) and all property acquired by him or at his request after the making of the order;
(4)certain property was excluded from the freezing order, including Centrelink payments and income from a pension account;
(5)the originating summons of 26 June 2014 was made to stand as an objection to the new freezing order;
(6)pursuant to s 45 of the CPCA, Mr and Mrs Macpherson were appointed to control and manage the Property and Mr Macpherson was appointed to control and manage the Ford Falcon while the freezing order was in force.
There appears to be a discrepancy in the terms of the consent orders. Paragraph 3(f) of the orders refers to 'Cash in the sum of AUD $12,950.00'. All indications are that this is the same cash as was found in the safe in the main bedroom of the Property, however the transcript of the video recording of the search on 30 May 2014 indicates that the sum found was in fact $12,890. The sum of $12,890 is also referred to in all subsequent documents up until the consent orders of 17 November 2014 (including the first freezing notice and the transcript of Mr Macpherson's sentencing).
In preparing these reasons I have been unable to uncover any explanation for the discrepancy as to the amount of cash in question. I propose to deal with the issue by seeking comment from the parties before final orders are made.

The application to vary the freezing order

The sole ground for the freezing order made by the Principal Registrar was that Mr Macpherson had been charged with an offence and, if convicted, could be declared a drug trafficker under s 32A(1) MDA (see s 43(5) CPCA). The offence in question was not identified in the order, but it was presumably the cultivation offence. Mr Macpherson was subsequently convicted of that offence and a drug trafficker declaration was made at his sentencing.
On 27 March 2015 the applicant filed a summons (dated 25 March) seeking to vary the freezing order. The variations sought would have added further grounds for the freezing of the Property and the Cash. In summary, it was said that the Property was reasonably suspected of being crime‑used, and the Cash was reasonably suspected of being both crime‑used and crime‑derived (see s 43(8) CPCA).
Mr and Mrs Macpherson concede that the Property is crime-used and that the Cash is crime‑derived (the orders of 4 November 2015 gave effect to those concessions) but oppose the application to vary the freezing order in so far as it asserts the Cash is reasonably suspected of being crime‑used.
Accordingly, the sole issue for determination is whether there are reasonable grounds for suspecting the Cash is crime-used, as that term is defined in the CPCA.

Relevant statutory provisions

Section 102 of the CPCA provides that proceedings under the Act are taken to be civil proceedings, and the applicable standard of proof is the balance of probabilities.
Section 43 sets out the grounds on which freezing orders may be made. It provides, relevantly:
(5)The court may make a freezing order for all or any property that is owned or effectively controlled by a person… if –
(a)the person has been charged with an offence… and
(b)the person could be declared to be a drug trafficker under section 32A(1) of the Misuse of Drugs Act 1981 if he or she is convicted of the offence.
…
(8)The court may make a freezing order for property if there are reasonable grounds for suspecting that the property is crime-used or crime-derived.
The freezing order in its original form rested solely on the ground in s 43(5). The applicant's application to vary the order invokes the further ground provided for in s 43(8).
The term 'crime-used' is defined by s 146 of the CPCA. Subsections (1) and (2) of that section provide:

(1)For the purposes of this Act, property is crime-used if -
(a)the property is or was used, or intended for use, directly or indirectly, in or in connection with the commission of a confiscation offence, or in or in connection with facilitating the commission of a confiscation offence; or
(b)the property is or was used for storing property that was acquired unlawfully in the course of the commission of a confiscation offence; or
(c)any act or omission was done, omitted to be done or facilitated in or on the property in connection with the commission of a confiscation offence.

(2)Without limiting subsection (1), property described in that subsection is crime-used whether or not -
(a)the property is also used, or intended or able to be used, for another purpose; or
(b)anyone who used or intended to use the property as mentioned in subsection (1) has been identified; or
(c)anyone who did or omitted to do anything that constitutes all or part of the relevant confiscation offence has been identified; or
(d)anybody has been charged with or convicted of the relevant confiscation offence.

Section 146(3) is not presently relevant.
The term 'confiscation offence' is defined in s 141. That definition encompasses an offence against the law of any Australian jurisdiction which is punishable by imprisonment for 2 years or more.
The Act does not require that charges be laid or a conviction entered in respect of a confiscation offence. The effect of s 43(8) and s 146(2) read together is that it is sufficient for the applicant to show that there are reasonable grounds for suspecting that a confiscation offence was in fact committed, irrespective of the identity of the perpetrator or the existence of criminal proceedings.
I deal with the applicant's submissions in more detail later in these reasons. It is convenient at this stage to note that the applicant relies on the following confiscation offences.
(1)Cultivating cannabis with intent to sell or supply (s 7(1)(a) MDA). This offence is punishable, if the sentence is imposed by a court of summary jurisdiction, by a fine of $5,000 or 4 years' imprisonment or both (s 34(2)(b) MDA).
(2)The MDA also makes it an offence to sell cannabis (s 6(1)(c) MDA). This offence is punishable, before a court of summary jurisdiction, by a fine of $5,000 or 4 years' imprisonment or both (s 34(2)(b) MDA).
(3)Section 417 of the Criminal Code makes it an offence to be in possession of property which is capable of being stolen and is reasonably suspected of being unlawfully obtained. The penalty for a summary conviction is 2 years' imprisonment or a $24,000 fine.

The evidence

The applicant filed a number of affidavits in support of its application to vary the freezing order. They are (in chronological order):
(1)an affidavit of Katherine O'Hara, sworn 25 March 2015, which attaches the statement of material facts and prosecution notice relating to the cultivation offence;
(2)an affidavit of Didier Mayo, sworn 21 May 2015, which attaches DVD recordings of the CPCA interviews;
(3)an affidavit of John Andrew Daniels, sworn 8 June 2015, which attaches a transcript of a video recording of the search of the Property on 30 May 2014;
(4)a further affidavit of Ms O'Hara, sworn 22 June 2015 (the second O'Hara affidavit), which attaches:
(a)the First Freezing Notice;
(b)transcript of the CPCA interviews; and
(c)transcript of Mr Macpherson's sentencing.
I have not found it necessary to rely on any of the affidavit material other than the attachments to the second O'Hara affidavit, and in particular the transcript of Mr Macpherson's CPCA interview and the transcript of his sentencing.
Various provisions of the CPCA deal with the admissibility of that material.
Section 107 provides that where a person has been convicted of a confiscation offence, the court may have regard to, among other things, the sentencing transcript for that offence. As I have already noted, the cultivation offence was a confiscation offence. It follows that I may have regard to the transcript of Mr Macpherson's sentencing for that offence.
I have also had regard to statements made by Mr Macpherson in his CPCA interview and recorded in the transcript of that interview. Those statements are, prima facie, hearsay. However, s 109 of the CPCA provides that a decision under the Act (other than Pt 6) about the existence of grounds for doing or suspecting anything may be based on hearsay. The decision I must make is whether there exist reasonable grounds for suspecting that the Cash is crime‑used. I may therefore have regard to statements in the transcript as evidence of the truth of those statements.
In any case, the statements on which I have relied are also admissible at common law as admissions against interest: J D Heydon, Cross on Evidence (8th ed, 2010) [33425].

Submissions

Written submissions were filed on behalf of the applicant and on behalf of the second objector, Mrs Macpherson. I note that the second objector's submissions refer in places to the first objector (see, for example, at [3]). I will therefore attribute the submissions to both objectors.
Both sets of submissions proceed on the basis that s 146(1)(a) is the only relevant part of the definition of 'crime-used' in the CPCA. The question is therefore whether the Cash was used, or intended to be used, directly or indirectly:
(1)in the commission of a confiscation offence;
(2)in connection with the commission of a confiscation offence;
(3)in facilitating the commission of a confiscation offence; or
(4)in connection with facilitating the commission of a confiscation offence.
The applicant makes three submissions, each of which takes as its starting point a different confiscation offence.
The first submission proceeds on the basis that the relevant confiscation offence is selling cannabis (s 6(1)(c) MDA). As I noted earlier, the fact that Mr Macpherson has not been charged with or convicted of selling cannabis is irrelevant (s 146(2)(d) CPCA). The argument runs as follows. There are reasonable grounds to suspect that the Cash is the proceeds of selling cannabis. Selling cannabis is a confiscation offence. Thus cash paid in exchange for cannabis is property that has been used directly in connection with the commission of a confiscation offence.
The second submission relies on the cultivation offence (s 7(1)(a) MDA). The applicant submits that the Cash was used in connection with the commission of the cultivation offence because it formed part of the 'circulating capital' of Mr Macpherson's 'drug-dealing business'.
The third submission takes as the relevant confiscation offence the offence of possession of unlawfully obtained property (s 417 Criminal Code). The unlawfully obtained property was the Cash itself. The applicant submits that to take possession of the Cash was to use it in connection with the offence of possessing it.

Legal principles

The starting point in all statutory construction is the ordinary and grammatical meaning of the statutory words, having regard to their context and purpose: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) [2009] HCA 41; (2009) 239 CLR 27 [4] and [47].
Courts will not read a statute as abrogating fundamental common law rights unless the legislature has clearly manifested an intention to do so, by way of unmistakable and unambiguous language: Coco v The Queen (1994) 179 CLR 427, 436 - 437.
That principle is engaged here because of the impact of the CPCA on property rights: Director of Public Prosecutions (WA) v White [2009] WASC 62; (2009) 194 A Crim R 192 [50] - [53]. If s 146(1)(a) were read so as to bring the Cash within the definition of 'crime‑used', the consequence would be to furnish a further ground for the expropriation by the State of Mr and Mrs Macpherson's property. The court should not read s 146(1)(a) in that way unless the statutory language is clear.
In large part, the applicant's submissions turn on the meaning of the phrase 'in connection with' in s 146(1)(a). The applicant correctly submits that it is a phrase 'of wide import'. The applicant refers to the leading case on s 146, Director of Public Prosecutions (WA) v White [2010] WASCA 47; (2010) 41 WAR 249. In that case, McLure P (with whom Owen & Buss JJA agreed) said:
The expression 'in connection with' requires that there be a link between the relevant use of … the property on the one hand and the commission or facilitating the commission of a confiscation offence on the other.
The words 'in connection with' are of wide import and, subject to the context in which they are used, are capable of describing a spectrum of relationships ranging from direct and immediate to tenuous and remote: Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 115 ALR 1, 2. They can readily extend to matters leading up to and after the confiscation offence …
It is clear from the statutory language that the relationship between the use of … the property and the confiscation offence does not have to be direct and immediate. However, having regard to the consequence of falling within the definition of crime-used, it is not sufficient if the relationship be merely tenuous and remote. The requisite relationship would fall between these two extremes and involve matters of degree and judgment. In considering whether the relationship is sufficiently proximate, the purpose and effect of the conduct would be relevant considerations [31] - [33].
It follows that in order for the applicant to succeed it must show a relationship between two things: on the one hand, a use of the Cash and, on the other, the commission or facilitation of a confiscation offence.
The relationship must be sufficiently proximate to satisfy the description 'in connection with'. Although those words are literally capable of describing a broad range of relationships, they must be construed, in this context, having regard to the principle of construction referred to above. That principle requires that the relationship be more than tenuous and remote.

The application

I turn now to consider each of the applicant's three submissions.

The first submission

Mr Macpherson admitted in his CPCA interview that the Cash was the proceeds of selling cannabis (second O'Hara affidavit, 47). In light of that admission, the first submission must be accepted. Each sale of cannabis constituted a confiscation offence. The purchaser or purchasers of the cannabis used the Cash as consideration in each sale transaction. That was plainly a use of the Cash 'in connection with' the sale transactions and, hence, a use of the Cash 'in connection with' a confiscation offence. The relationship between the use of the Cash and the commission of the offence could hardly be closer.
The fact that, according to this argument, the Cash was used by the purchaser and not Mr and Mrs Macpherson is beside the point. There is nothing in the language of s 146(1)(a) to require that the property in question be used by anyone in particular. That conclusion is reinforced by s 146(2)(b), which provides that the person who used the property need not be identified.
I accept the applicant's first submission.

The second submission

The applicant's second submission draws heavily on the reasoning of Gleeson CJ in Sultana v The Queen (1994) 74 A Crim R 27, 31 - 32. The appellant in that case had been convicted of possessing 5.17g of heroin for the purpose of supply. A sum of $29,685 in cash was also found in his house. The relevant New South Wales legislation provided that the cash could be confiscated if it was property that had been used in, or in connection with, the drug offence of which the appellant had been convicted. Gleeson CJ (with whom Handley JA agreed) held that the cash could be confiscated.
Gleeson CJ reasoned that the money - which represented the proceeds of past drug sales - was part of the 'working capital' of the accused's 'drug-dealing business'. The possession of the drugs also formed a part of that business. That was enough to establish a relationship between the money and the drugs, which amounted to a use of the money 'in connection with' the drugs:
The money and [the drugs] were both circulating capital of the same business, and there was therefore a connection between the use of the money and the possession of the [drugs].
The sentencing remarks in relation to the cultivation offence indicate that, like the appellant in Sultana, Mr Macpherson was conducting a 'drug‑dealing business'. He was growing substantial quantities of cannabis and selling it for commercial gain (second O'Hara affidavit, 170). The Cash was the proceeds of those sales. It was the income of the business.
Once that is accepted, it can be seen that the use of the Cash and the cultivation offence were but two complementary aspects of a business. They represented opposite ends of the business's cash-flow. That is a relationship which is more than tenuous or distant. It is closely analogous to the economic relationship between the drugs and the cash in Sultana.
I therefore conclude that the Cash was used in connection with the commission of the cultivation offence. The connection between the use and the offence was the drug-dealing business.
I accept the applicant's second submission.

The third submission

The applicant's third submission is that Mr Macpherson used the Cash in connection with the offence which he committed by having possession of the Cash.
The objectors counter that Mr Macpherson did not 'use' the Cash by having possession of it. Possession, they say, is not the same as use.
The applicant refers at this point to a number of cases involving Commonwealth legislation. The first is Director of Public Prosecutions (Cth) v Mylecharane [2007] NSWSC 1174; (2007) 177 A Crim R 486, in which James J held that the defendant had 'used' a sum of money simply by having it in his possession. His Honour said:
[T]he question arises whether there was any 'use' of the sum of $250,000 by Mylecharane. The money was not 'used' by Mylecharane in the sense of having been applied by Mylecharane in the purchase of anything. Nevertheless, in my opinion, the having of the money in his possession amounted to a using of the money by Mylecharane. If it is accepted that the money was used by Mylecharane, then it was clearly 'used in' or 'in connection with' the commission of the offence [52].
Somewhat different reasoning was employed by Schmidt J in Commissioner of Australian Federal Police v Vo [2015] NSWSC 1523; (2015) 302 FLR 209. The defendant had been apprehended at Sydney Airport and found to be in possession of $449,000 in cash, stored in a suitcase. In the circumstances, Schmidt J held that it was reasonable to suspect that the cash was the proceeds of crime.
Section 400.9(1) of the Criminal Code (Cth) provides:
A person commits an offence if:
(a)the person deals with money or other property;
(b)it is reasonable to suspect that the money or property is proceeds of crime; and
(c)at the time of the dealing, the value of the money and other property is $100,000 or more.
Section 400.2 provides that a person is taken to deal with money or other property if the person possesses the money or other property. Unsurprisingly, there was little controversy that the defendant had committed the offence set out in s 400.9.
Schmidt J then had to determine whether the cash was an 'instrument' of the s 400.9 offence. Section 329(2)(a) of the Proceeds of Crime Act 2002 (Cth) provides that property is an instrument of an offence if it is used in, or in connection with, the commission of an offence.
Schmidt J observed that the s 400.9 offence was constituted when the defendant took possession of the cash (at [99]). Her Honour then concluded:
In such a case there is not 'a mere counterfactual connection' between the cash and the offending. It is the use which the offender makes of the cash, by taking possession of it, while having the necessary intention, which results in the commission of the s 400.9(1) offence.
In an offence which results from conduct of that kind, it is unarguable [sc. indisputable], it seems to me, that the cash is an instrument of that offence, as that term is defined in s 329(2)(a), it having been used as it was, in the commission of the offence [100] - [101].
Of the two approaches, I prefer Schmidt J's. James J's approach involves the conclusion that mere possession of property in itself amounts to 'use' of that property. In my view, that does not accord with the ordinary meaning of the statutory language. I agree, in this respect, with the objectors' submissions.
The Macquarie Dictionary (6th ed) defines the verb 'to use' as follows: 'to employ for some purpose; put into service; turn to account'. The common theme is that the user must do something active with or to the property. To keep property passively in possession is not to use that property.
I am fortified in that conclusion by the principle of construction referred to earlier. There is nothing unambiguous and unmistakable in the statutory language which would justify a more expansive reading of the words of s 146(1)(a).
As I understand his submissions, however, the applicant does not contend that Mr Macpherson used the Cash simply by having it in his possession. Instead, the applicant relies on the act of taking the Cash into possession as the relevant 'use' for the purposes of s 146(1)(a).
That is essentially the argument accepted by Schmidt J in Vo, in relation to the analogous statutory provisions there under consideration. As a matter of ordinary language, I accept that the Cash was 'used' when it was given to Mr Macpherson in exchange for drugs. Either Mr Macpherson made use of the cash by taking it (the applicant's submission) or the purchaser made use of it by offering it as consideration in the transaction.
I further accept that that use was a use 'in connection with' the offence of possessing the Cash. The use, however it is characterised, resulted in the Cash being transferred to Mr Macpherson's possession. It thus resulted directly in the commission of the s 417 offence. The relationship between the use of the property and the commission of the offence was more than adequate to satisfy the description 'in connection with'.
I accept the applicant's third submission.

Conclusion

For the above reasons, there are reasonable grounds for suspecting that the Cash was used in connection with the commission of at least three confiscation offences. It follows that there are reasonable grounds for suspecting that it is crime‑used property as defined by s 146(1)(a). That provides a further ground for freezing the Cash, pursuant to s 43(8) of the CPCA.
Section 44 of the CPCA provides that a court considering an application for a freezing order must set out each ground that the court finds is a ground on which the order may be made. The proper course is, therefore, to amend the freezing order made by the Principal Registrar on 17 November 2014 to reflect this further ground for the freezing of the Cash.
As indicated earlier in these reasons, I will hear the parties as to the issue regarding the amount of the cash, as well as the precise terms of the order to be made and costs.

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Citations

Macpherson v The State of Western Australia [2016] WASC 137

Cases Citing This Decision

0

Cases Cited

10

Statutory Material Cited

4

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41

Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49