State of Queensland v Brooks and McCabe

[2007] QCA 18

[2007] QCA 18

COURT OF APPEAL

HOLMES JA

Appeal No 446 of 2006
DC No 1763 of 2005

STATE OF QUEENSLAND  Applicant/Respondent

v

DALE RICHARD BROOKS  First Respondent/First Appellant

&

LEE PATRICIA McCABE  Second Respondent/Second Appellant

BRISBANE

DATE 02/02/2007

JUDGMENT

HER HONOUR: The applicant seeks a stay of enforcement of a judgment varied by a decision of this Court. By the judgment at first instance, after a finding that he had been engaged in trafficking and production of drugs, he was ordered to pay some $35,000, the amount of a proceeds assessment order under the Criminal Proceeds Confiscation Act 2002 (Qld), with further orders made for forfeiture of monies held in bank accounts.

A further finding was made that he had committed a single offence of dishonestly obtaining credit contrary to s 408C of the Criminal Code by misrepresenting his true income so as to obtain a loan of $631,000 which he used to buy a unit at Toowong and to pay acquisition costs; but no order resulted from that finding.

On appeal, the State of Queensland succeeded in having the amount of the proceeds assessment order increased by $85,000, reflecting the difference between the purchase and re‑sale prices of the apartment, allowing for an amount attributable to the sale of furniture in it.  All members of the Court of Appeal concurred in concluding that the capital gain on the unit constituted proceeds derived from an illegal activity liable to the making of a proceeds assessment order under s 78.

The majority held that in assessing the quantum of those proceeds no allowance should be made for the interest paid on the loan or the legal costs of buying and selling the apartment, because it regarded them as "expenses or outgoings incurred...in relation to the illegal activity" which, under s 84 of the Act, were accordingly to be disregarded.

Justice Jerrard, on the other hand, regarded the expenses and outgoings as relating to the proceeds derived, not to the illegal activity itself, which was the fraudulent misrepresentation.  The proceeds of that illegal activity were the profit made on the sale of the unit, net of expenses and outgoings, an amount of $11,999.

The applicant has applied for special leave, arguing that the making of a proceeds assessment order on the basis of one isolated incident of illegal activity is contrary to the objectives of the Act which is directed at major crime and sustained illegal activity.  I think it suffices to say that I do not find that argument well-supported by the language of the Act.

An alternative argument, that Jerrard JA's construction of the Act, which would, in effect, limit proceeds to the actual profit derived, is correct, has, I think, some real prospect of success and as a question of some importance may attract a grant of special leave.

Since I consider that the applicant has an arguable case, at least on the construction point as to determination of proceeds which would reduce dramatically the amount to be recovered, it is appropriate to consider the balance of convenience.

The respondent has obtained an enforcement warrant in respect of the sum of $84,999 added to the proceeds assessment order, identifying in it a motor vehicle, a boat - which, as it turns out, has already been sold - and the applicant's interest in real property at Goodna.

The applicant says his home and panelbeating business is situated on this property and that the latter is the main source of income for him and his wife and the vehicle is used in the business.  Accordingly, he says, if the Court of Appeal's order is enforced he is at risk of losing both home and business.

The enforcement warrant will remain valid until December 2007, by which time the special leave application would, one would expect, be resolved. 

The interests of the State can be given some protection by making conditions of stay: not only that the applicant deal with the property described in the enforcement warrant, but that another property owned by his wife, Ms McCabe, also not be disposed with or encumbered, or that an undertaking be required of her to that effect, if she is prepared to give it.

There is another aspect to the matter, and that is, that there has been delay in the special leave application to date.  There were to be a summary of argument and draft notice of appeal filed by the 29th of December.  That has not happened.  It seems to me that provision needs to be made in that respect, too, in order to protect the State's interests.

But I am satisfied that the applicant will suffer irretrievable damage if enforcement of the judgment of the Court of Appeal order proceeds at this time and that the effect is likely to be the loss of his house and business.  The balance of convenience favours the making of a stay.

I order that enforcement of the judgment of this Court delivered on 30th of November 2006, so far as it requires the payment of the sum of $84,999 and payment of the State's costs of the appeal, be stayed pending the determination of this matter by the High Court of Australia, conditional on the applicant's expeditiously prosecuting his appeal and in particular on his filing of a summary of argument and a draft notice of appeal within 14 days of today's date; further conditional on his not encumbering or disposing of his interest in the property located at 14-15 Lower Cross Street, Goodna or the 2005 Nissan X-Trail vehicle, registration number 643-JTJ; his giving a written undertaking to the effect that he will not encumber or dispose of the interest or vehicle that I have just described, that undertaking to be given by close of business on Monday, the 5th of February.

HER HONOUR:  All right.  Continuing with these conditions:

That Lee Patricia McCabe not encumber or dispose of her interest in the property at Lot 393 Iron Pot Creek Road, Kyogle;

That Ms McCabe provide a written undertaking not to encumber or dispose of that property by close of business on 5th of February 2007.

HER HONOUR:  The 3rd of November.  All right.  Thank you.

MR ROLLS:  Other than that, there is no other issue.  The only other matter is costs.

HER HONOUR:  They're probably better reserved, I think, loathe though I am.

MR ROLLS:  Yes; that was‑‑‑‑‑

HER HONOUR:  And you'll just have to come before me at some time and tell me what's happened and we'll sort it out then.

MR ROLLS:  Thank you, your Honour.

HER HONOUR:  And liberty to apply to either party on three days' notice

Keep in mind that if your client deviates from any of those conditions the State can apply to have the stay set aside, Mr Di Carlo.

MR DI CARLO:  Thank you, your Honour.

HER HONOUR:  Thank you.  We'll adjourn.