Police v Leo - [2006] SASC 144

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Criminal)
POLICE v LEO
[2006] SASC 144
Judgment of The Honourable Chief Justice Doyle
17 May 2006
CRIMINAL LAW - PARTICULAR OFFENCES - PROPERTY OFFENCES - RECEIVING AND POSSESSION OF PROPERTY STOLEN OR REASONABLY SUSPECTED OF BEING STOLEN OR UNLAWFULLY OBTAINED - POSSESSION OF PROPERTY STOLEN OR SUSPECTED TO BE STOLEN OR UNLAWFULLY OBTAINED - SUSPECTED OR REASONABLY SUSPECTED OR SUPPOSED TO HAVE BEEN STOLEN OR UNLAWFULLY OBTAINED - BASIS AND REASONABLENESS OF SUSPICION
The respondent was charged with being in possession of property which was reasonably suspected of having been obtained by unlawful means contrary to s 41(1) of the Summary Offences Act 1953 (SA) - the property comprised bank notes - respondent acquitted in Magistrates Court after a finding that there was no case to answer - the appellant appealed to the Supreme Court - whether the Magistrate erred in law in finding no case to answer on the basis that the notes had come directly from a financial institution - error made out - Magistrate erred in finding that the appeal could be dismissed on the basis that the notes had come directly from a financial institution – whether the suspicion as to whether the notes were obtained by unlawful means was a reasonable suspicion - no reasonable suspicion - whether the respondent must elect to call no evidence at trial so as to make a no case submission - no such election required - appeal dismissed for lack of reasonable suspicion.
Summary Offences Act 1953 (SA) s 41(1), referred to.
O'Sullivan v Reedy (1953) 87 CLR 291, applied.
Grant v The Queen (1981) 147 CLR 503; The Queen v Bilick and Starke (1984) 36 SASR 321; Forrest v Normandale (1973) 5 SASR 524; Tepper v Di Francesco (1984) 38 SASR 256; Tepper v Kelly (1988) 47 SASR 271; Evgeniou v The Queen (1964) 37 ALJR 508; Fawkes v Schadwell [1966] Qld R 20; Gazepis v Police (1997) 70 SASR 121, discussed.

POLICE v LEO
[2006] SASC 144
Magistrates Appeal: Criminal

DOYLE CJ: Mr Leo was charged with being in possession of property which was reasonably suspected of having been obtained by unlawful means, contrary to s 41(1) of the Summary Offences Act 1953 (SA).
The property comprised bank notes to the sum of $510,440.
At the end of the prosecution case the Magistrate upheld a submission of no case to answer, and dismissed the charge. The Police appeal against that decision.
The Magistrate’s decision seems to have been that as a matter of law the bank notes could not have been unlawfully obtained, and so the relevant police officer could not reasonably have suspected that the money was obtained by unlawful means. The Magistrate based his decision on the decision of the High Court in Grant v The Queen (1981) 147 CLR 503.
On appeal it was more or less acknowledged by Ms Powell QC, counsel for Mr Leo, that the Magistrate’s reasoning was flawed. She supported the Magistrate’s decision on the basis that taking the evidence at its highest it was not capable of supporting a finding by the Magistrate that the police officer’s suspicion was reasonably entertained. The test to be applied to a no case submission was stated in The Queen v Bilick and Starke (1984) 36 SASR 321 at 337 by King CJ. That submission raises an issue not raised before the Magistrate, to which I will come in due course.
The law
Proof of the offence required the prosecutor to establish that Mr Leo was in possession of the bank notes. That was not disputed.
It was also necessary for the prosecutor to prove that a person, in this case, Sergeant Hastings, on reasonable grounds held an actual suspicion in relation to the money: O’Sullivan v Reedy (1953) 87 CLR 291 at 295-296. On that point, in Forrest v Normandale (1973) 5 SASR 524 at 543 Mitchell and Wells JJ said:
We assume, without deciding, that, in order to assess the reasonableness of the suspicion deposed to, a court is not entitled to look at facts and circumstances of which the suspecting officer was unaware, or which – if he was aware of them – he did not take into account in the course of forming his suspicion. But it must not be overlooked that, on this aspect of a case under s 41, the court is called on to answer the question, What were the facts or circumstances operating on the suspecting officer’s mind, and, having regard to those facts and circumstances, was that officer’s suspicion reasonable? It is to be observed that the question posed refers not to “grounds”, but to “facts and circumstances”.
Similarly, at 530 Bray CJ said:
The reasonableness, in my view, must attach to the grounds on which the suspecter actually suspected, not to grounds on which he might have suspected but did not in fact suspect.
In Tepper v Kelly (1988) 47 SASR 271 White J, with whom Von Doussa J agreed, said at 276:
It is natural that the court should require that a police officer have an actual suspicion and that the suspicion should be a reasonable suspicion – no more, no less – at the time of the arrest or report or at the time of the laying of the complaint. The fact that some new evidence comes to light later which tends to undermine the reasonableness of the suspicion originally entertained, does not prevent the suspicion having the quality of reasonableness at the time of the making of the complaint.
It was also necessary for the prosecutor to establish that the suspicion attached to the particular bank notes in question. It was not enough to show that the suspicion attached to other bank notes or other valuable things possessed by Mr Leo at an earlier time and into which the bank notes in question had been converted. In Grant v The Queen, a case dealing with bank notes, Gibbs CJ, Mason, Aickin and Wilson JJ said at 508:
Having regard to the plain words of the section, together with its history, and its character as a penal provision, there is no warrant for resorting to the common law doctrine of following or tracing or to any other process of reasoning in order to give those words an extended meaning. The word “thing” in the section is a reference to the same physical object throughout, and it is that object to which the reasonable suspicion of being stolen or otherwise unlawfully obtained must attach.
They added at 509:
The section has been held to extend to a banknote (Reg v Dittmar [1973] 1 NSWLR 722), but in our opinion this means no more than that money in specie may be a thing. It does not extend to money as currency or to credits in bank accounts. If it were otherwise, the whole course of commercial dealing would be affected.
See also Gazepis v Police (1997) 70 SASR 121 at 125-126 Doyle CJ.
The facts
On 17 October 2003 Sergeant Hastings and other police officers went to a café owned by Mr Leo. They went there as a result of a complaint by Mrs Leo, arising out of a domestic dispute. Apparently one of the things she had complained about was that Mr Leo had taken from the matrimonial home about $100,000 in cash. Mrs Leo claimed the money was jointly owned and she wanted her share returned to her. There was another unrelated matter in which the police were interested.
Mr Leo was at the café. The police searched the premises. They found a green tin (when opened later that day it contained $385,000 in cash), a yellow tin (when opened later that day it contained $106,000 in cash), $16,240 cash in a black bag or satchel and $2,500 cash in Mr Leo’s wallet. Mr Leo was arrested on unrelated matters.
The money was ultimately taken that day to the police station and counted there. Most of the bank notes were $100 notes, but some were $50 notes. The evidence (from several persons involved in the counting) was that the bank notes were tightly packed in the tins. They were all facing the one way, indicating that they had been very neatly arranged. Of particular significance was evidence given by Ms Stevenson, the head teller of the Police Credit Union. She was experienced in counting and in dealing with bank notes. She helped count the money. She said that the notes appeared unused. They were unmarked and unwrinkled. They looked “very, very new”. It appeared to her that they had not even been through a counting machine. The notes looked the way bank notes look when the Credit Union receive new notes from a financial institution like Chubb or the Mint. She said the money did not appear to have been handled by a bank. She thought that even counting it would leave marks that she would have seen.
In one tin some of the notes did appear to have been circulated. Some of the notes in one tin were older paper notes, but I gather that most of the notes were the newer polymer notes.
Sergeant Hastings gave evidence that he checked the serial numbers of the notes, or a number of them. He did not find sequences of numbers suggesting that the notes had been printed and bundled together at the same time. The only sequences he found were quite short ones. He also said, by reference to the serial numbers, that the new notes had been issued not before 1995 and not after 1999.
The effect of the evidence was that the notes were in what some people referred to as “pristine condition”, and (although this is a little vague) appeared to have come directly from a “financial institution”.
Sergeant Hastings questioned Mr Leo at about 9.00 pm. Mr Leo, judging by the transcript, had a limited but reasonable command of English. Some of his answers were given through an interpreter. At the café Mr Leo said that the money was his and his wife’s “life savings”. I add that he was not a young man, but there was no direct evidence about his age. He had worked as a motor mechanic, and had apparently had a business in which he employed others. It appears that he had been in business for at least 20 years. In the course of the interview he said that over the 20 years he had kept his money mainly in cash, although he used bank accounts. He said that he had not put any money aside for about three years, because he had sold the mechanical or repair business in question about three years ago. That comment gets some support from the years in which the notes were printed. In relation to the newness of the notes, he said that a “few years back”, perhaps seven or eight years ago, he had changed all the notes “to the new ones”. He talked of going to shops and other places to make purchases and to get new notes in exchange for old ones. However, this topic was not explored thoroughly, and neither the questions nor the answers are entirely clear. Nor was he asked whether he had obtained any money directly from a financial institution. Mr Leo denied any involvement in drugs.
In his evidence Sergeant Hastings explained the suspicion that he entertained that day, having made certain enquiries.
In the course of the interview with Mr Leo, Sergeant Hastings referred to the amount of money found, and to the fact that it was much more than Mrs Leo had suggested. So his first point seems to have been the fact that a larger amount of money was involved than he had been told to expect.
He said that Mr Leo’s explanation for the “newness” of the notes “didn’t quite add up”. He doubted whether so much money could have been converted into notes that seemed uncirculated, in the manner described by Mr Leo. At another point he said that the “newness” of the notes itself made him suspect that they had been unlawfully obtained. This was never really explained.
As a result of enquiries he ascertained that Mr Leo’s son had been charged three times in relation to the manufacture or production of cannabis, between 1995 and 2002, and at three different addresses. None of the addresses included the family home, where the son had lived at one time. One of the charges related to a particular address, and on the day in question he ascertained that the son was still living there. He had information (apparently some kind of tip off) that there had been a marijuana crop at that address “ready to harvest” in June 2003. Sergeant Hastings seems to have believed that Mr Leo owned that property, but the basis for that belief was not strong.
Sergeant Hastings also ascertained that there had been some information given to police (unexplained) about drug related activity at Mr Leo’s home address. But this information seemed to be linked to Mr Leo’s son. This evidence, and some of the other evidence, is rather obscure, because Sergeant Hastings declined to provide further details, with a view to protecting sources of information. It may be that the Magistrate did not admit this evidence, because it was objected to on grounds of fairness. Unfortunately, the Magistrate did not deal clearly with the point.
Sergeant Hastings gave evidence of information that Mr Leo’s brother had been charged over a crop of marijuana plants in 1987. But it was agreed that this related to a property that Mr Leo had sold in 1984.
Sergeant Hastings appeared to sum up his suspicion as being that the money came from drug related activity, and was a payment for cannabis, and he seems to have said that he suspected that the money was obtained after June 2003. This suspicion appeared to relate to the property at which Mr Leo’s son was living because he referred to it several times in connection with “drug related activity”. However, as I have said, it is not clear that the house was owned by Mr Leo. Moreover, when police went to the house on the day in question nothing suspicious was found, although Mr Leo’s son was there. No action had been taken by police on the report of a crop at that address in June 2003.
In any event, Sergeant Hastings said that he suspected that the notes were obtained from a financial institution in payment for cannabis, probably a substantial amount, and probably after June 2003.
The Magistrate’s reasons
The Magistrate gave brief reasons for finding that there was no case to answer. He made no findings, other than that the money was found in Mr Leo’s possession. Having regard to the amount of money involved, it would have been better if the Magistrate had given somewhat more detailed reasons than he did.
The Magistrate accepted, as was inevitable, that nearly all of the notes were “… brand new notes that were uncirculated. The money had simply not been handled”. He went on to say that even though money previously banked might have been unlawfully possessed, once it had been banked and then withdrawn from the bank “it no longer was contaminated money”. He considered that the decision in Grant dictated this conclusion.
Submissions on appeal
I agree with the submission by Mr Soetratma, counsel for the appellant, that the Magistrate’s reasons reflect a misunderstanding of Grant.
In Grant the High Court did not decide that money that came directly from a bank or financial institution, or that was uncirculated, could not be obtained unlawfully. In that case there was reason to suspect that cheques or cash had been unlawfully obtained. But subsequently the cheques or cash had been paid into a bank account, then withdrawn and paid into a trust account, then drawn from that account using two cash cheques, the cash in question then having been given to Grant. The point made by the High Court was that the suspicion attached to the original cash and cheques. They had lost their identity when converted or exchanged into a bank credit, and then a cheque and then cash. The “thing” the subject of the suspicion no longer existed. It was because the suspicion attached to the cash or cheques at an earlier stage that the subsequent dealings with them meant that the relevant suspicion could no longer attach to the money in Grant’s possession.
A simple example will illustrate why the Magistrate’s reasons cannot be correct. If A agrees to sells drugs to B, accompanies B to the bank, B withdraws money (in uncirculated notes, if that matters) then hands the money to A in exchange for the drugs, the bank notes will have been unlawfully obtained. Other examples can easily be given.
The basis upon which the Magistrate dismissed the complaint cannot stand. Sergeant Hastings’ suspicion was not necessarily a suspicion that Mr Leo had obtained money unlawfully, and later converted that money into uncirculated bank notes. Sergeant Hastings’ suspicion included a suspicion that payment had been made to Mr Leo from a financial institution, using uncirculated notes, in exchange for cannabis. While that might seem unlikely, it was one of the ways in which he formulated his suspicion. On one occasion he said that he believed the money had been:
… a bulk payment obtained from the institution or bank in relation to a substantial cannabis crop or crops that was paid over very, very recently …
This statement appeared to relate to the address at which Mr Leo’s son was living. Not surprisingly, the Magistrate expressed some surprise that payment for drugs would have been made in such an easily traced manner, but the fact is that was the evidence given.
Accordingly, the basis upon which the Magistrate decided the case cannot stand, and it is necessary to consider Ms Powell’s alternative submission.
The submission is that taking the facts at their highest from the prosecution point of view, and taking into account the circumstances and matters considered by Sergeant Hastings, the evidence, even if all inferences most favourable to the prosecution which were reasonably open were drawn, was not capable of leading to a conclusion that the suspicion entertained by Sergeant Hastings was a reasonable suspicion: see The Queen v Bilick and Starke at 337 King CJ.
The submission was along these lines. Mr Leo had provided an explanation for the money, namely, the hoarding of cash over a substantial period of time from what seems to have been a substantial business. There are people in the community who, for a variety of reasons, prefer to keep their savings in that form. These are relevant circumstances, providing a context for Sergeant Hastings’ suspicion. The fact that there was more money in the tins than Mrs Leo had told police was neither here nor there. The newness of the money, and the manner in which it was packed, does not of itself raise or support any particular suspicion. It seems unlikely that the purchaser of drugs would hand over money in this state. A large withdrawal from a financial institution, or multiple smaller withdrawals, were likely to be more easily traced. There was no support for the suspicion of the involvement of Mr Leo in relation to drugs. The police had no evidence linking Mr Leo to trade in drugs. Any suspicion related to his home address was likely to be attributable to his son’s activities. (I add here that the status of this evidence also is unclear.) The prosecution of Mr Leo’s brother was irrelevant. The evidence in relation to his son was very vague. It was not even clear that Mr Leo was the owner of the property in which the son was living. There was at best an unsourced claim that there had been a crop at his address.
When it became apparent that the thrust of Ms Powell’s submission was that the proved facts and the other circumstances relied on by Sergeant Hastings could not, on the most favourable view, support a finding that his suspicion was reasonably entertained, I raised with Ms Powell the question of whether that was a submission that could properly be entertained by the Magistrate, and so be considered by me, unless Mr Leo elected to call no evidence at the trial. This matter was considered by the Full Court in Tepper v Di Francesco (1984) 38 SASR 256. In that case King CJ distinguished between a submission of no case to answer which requires an election not to call evidence before it is made, and a submission of no case to answer which does not give rise to the need to make such an election. He said at 267-268:
A submission that there is no evidence to support the charge, or, put another way, that the evidence adduced is legally incapable of proving the charge, is, of course, a submission on a matter of law. It is a true submission that there is no case to answer. The decision to be made by the magistrate on such a submission is whether “on the assumption that all the evidence of primary fact considered at its strongest from the point of view of the case for the prosecution, is accurate, and on the further assumption that all inferences most favourable to the prosecution which are reasonably open, are drawn, is the evidence capable of producing in the mind of a reasonable person satisfaction, beyond reasonable doubt, of the guilt of the accused?” (The Queen v Bilick and Starke (1984) 36 SASR 321). A defendant is not required to elect before making such a submission. A submission as to the weight of the evidence is of quite a different character. It is not a submission that the evidence is not in law capable of supporting a conviction. It is in reality an invitation to the magistrate as the tribunal of fact to say that he finds the evidence for the prosecution to be so unsatisfactory that, although it is legally capable of supporting a conviction, he is not prepared to accept it as possessing sufficient weight to justify proceeding further. He is invited to dismiss the charge without calling on the defence.
Although the reasons of Prior J on this point are not completely clear, my impression is that he did not differ from King CJ. He referred with apparent approval to the same passage from The Queen v Bilick and Starke: at 270-271. He said that in the case at hand the defendant could make the submission of no case to answer only if he elected to call no evidence, but that, as I understand his reasons, is on the basis that the submission that was advanced was a submission as to the weight of the evidence: at 271-272. Millhouse J agreed with Prior J: at 269.

Ms Powell referred me to other case law suggesting that whichever of these two forms the submission took, no election was required. She referred in particular to the decision of the High Court in Evgeniou v The Queen (1964) 37 ALJR 508. That was a case of a trial by a judge sitting without a jury. At 510 McTiernan and Menzies JJ said that in a criminal case there was no basis for putting an accused to his election, even though the judge was the judge of fact as well as of law. Owen J made the same point at 515. Neither Taylor J nor Windeyer J made any comment on this point. A similar view was expressed by all members of the Full Court of the Supreme Court of Queensland in Fawkes v Schadwell [1966] Qld R 20 at 21 Gibbs J, at 22-23 Hart J and at 23 Lucas J.
I consider that I am bound by the decision in Tepper v Di Francesco. It is not clear to me that in Evgeniou the majority of the High Court were directing their mind to a case tried before a Magistrate. However, it is not necessary for me to decide this point, because if there is a divergence between the decisions in Tepper v Di Francesco and Evgeniou, the submission that Ms Powell advances in the present case is one which, applying Tepper v Di Francesco, can be advanced without Mr Leo having to make an election.
I say this because the submission is that taking the prosecution case at its strongest, and applying the principle as stated in Bilick & Starke, the evidence was not capable of supporting a conclusion that Sergeant Hastings’ suspicion was reasonably entertained.
In my opinion Ms Powell is right. The evidence was not capable of supporting a conclusion that Sergeant Hastings’ suspicion was reasonably entertained. At the end of the day the matter of fact upon which the suspicion rested was the large amount of money in question, and the newness of the notes. The large amount of money could raise a general suspicion. Sergeant Hastings’ suspicion crystallised around a suspicion that Mr Leo had been involved in some way in trading in drugs, and in particular, had possibly been involved in a crop produced by his son at the address at which his son was living. The evidence of Mr Leo’s brother having been involved with drugs in 1987 was irrelevant, and could lead nowhere at all. The evidence of other charges against Mr Leo’s son was relevant, because it supported the possibility that his son was involved in growing marijuana. But when the evidence is considered more broadly, my view is that it was incapable of providing reasonable grounds supporting Sergeant Hastings’ suspicion. Mr Leo’s link to the property where the son was living was tenuous. Involvement of a child in criminal conduct of this kind provides little support for a belief that the father is involved. The crop in which the son was involved must have been a very large crop to produce some $400,000 (the amount in excess of the amount identified by Mrs Leo), or something of that order. The age of the notes made it unlikely that they had been handed over recently (after June 2003), although not impossible. If they had been handed over, then they must have been hoarded by someone else in that unused state for quite some time. The report of a crop being ripe for harvest at the address where the son was living was unsubstantiated and when the police went to the house, nothing suspicious was found.
To my mind the circumstances on which Mr Hastings based his submission, coupled with the amount of money involved and the newness of the money, were incapable of supporting the conclusion that Sergeant Hastings’ drew. To my mind his suspicion was entirely speculative and lacked any foundation.
For those reasons, as distinct from the reasons that the Magistrate gave, the Magistrate should have ruled that there was no case to answer. Although the Magistrate erred, there is no point in sending the matter back to him for further consideration.
I dismiss the appeal.