Citation: R v Darko Delovski [2014] NSWDC 17
Court: District Court of New South Wales
Date: 21 March 2014
Judge: Haesler SC DCJ
Background
The defendant was convicted of supplying a commercial quantity of methylamphetamine following a controlled operation in October 2011. An undercover police operative arranged to purchase 280 grams of the drug for $45,000, with a middleman facilitating the initial transaction. A second payment brought the total received to $90,000.
On 13 March 2014, the defendant was sentenced to six years imprisonment with a non-parole period of four years and six months. The court then turned to an application for a drug proceeds order under the Confiscation of Proceeds of Crime Act 1989, requiring a separate assessment of the financial benefit derived from the trafficking.
At the sentence hearing, the defendant disputed several factual matters, including how much money he actually received, whether he was merely a low-level facilitator earning only $1,000, and whether the middleman had retained a portion of the funds. The court rejected the defendant's account and found he had received and controlled the full $90,000.
Legal Issues
- Whether the defendant had derived a "benefit" in connection with drug trafficking within the meaning of section 29 of the Act
- How the value of that benefit should be assessed, particularly whether the defendant's costs of acquiring the drugs could be deducted
- Whether the approach taken in comparable cases, where only net profit was assessed as the benefit, applied on the facts here
Decision
Issue 1: Whether a benefit was derived
The court had little difficulty finding that the defendant derived a benefit in connection with drug trafficking. He received $90,000 and organised the delivery of 279 grams of methylamphetamine through his employee in exchange for that sum. The factual foundation for the order was clearly established.
Issue 2: Assessing the value of the benefit
The court applied section 30 of the Act, which directs the court to have regard to "information before the court" rather than strictly proven facts or formal evidence. Two relevant matters were the money that came into the defendant's possession in connection with drug trafficking, and the market value of the drug at the time. Both pointed to $90,000.
Issue 3: Whether costs of acquisition could be deducted
Section 30(6) of the Act expressly prohibits deducting expenses or outgoings incurred in connection with the offence when assessing the value of drug trafficking proceeds. The court acknowledged the defendant must have incurred a cost or debt to obtain the drugs, but the Act is explicit: those amounts cannot be subtracted. The court therefore made no deduction for the unknown purchase price of the drugs.
Issue 4: Gross receipts versus profit, and the Staas approach
The court noted that in R v Staas (No 3) [2013] NSWDC 289, a different judge had assessed only the net profit where there was specific evidence identifying what portion of funds received represented the defendant's actual gain. Here, no such information existed. Even accepting that approach as potentially correct, the court found there was no reliable basis to conduct a similar calculation, because no evidence established what, if anything, the defendant paid for the drugs or retained as profit. The court also confirmed, following DPP v Nieves, that "benefit" is not synonymous with "profit": the receipt of money is itself the benefit, and its value is the amount received.
Orders Made
- The value of the benefits derived by the defendant in connection with drug trafficking was assessed at $90,000.
- The defendant was ordered to pay a pecuniary penalty to the State of $90,000, being the amount equal to the assessed value of the benefits.
Key Takeaways
- Under the Confiscation of Proceeds of Crime Act 1989, "benefit" derived from drug trafficking is not limited to profit: the gross amount of money received in connection with the offence represents the benefit, and its value is the sum received.
- Section 30(6) operates as an absolute prohibition on deducting expenses or outgoings incurred in committing the offence, even where it is obvious the defendant must have incurred costs to obtain the drugs supplied.
- Where there is insufficient information to identify a defendant's actual profit or retained share with any precision, a court cannot conduct a net-profit assessment of the kind available in cases where such evidence exists (as in Staas); the gross amount received becomes the assessed benefit.
- The District Court confirmed that section 29 assessments are made on the basis of "information before the court," a broader concept than formally proven facts or adduced evidence, consistent with the Court of Criminal Appeal's approach in R v Hall [2013] NSWCCA 47.
- A defendant who disputes the quantum of money received bears the risk of an adverse factual finding: the court rejected the defendant's account and relied on recorded evidence to find the full $90,000 came into his possession and control.
Legislation and Cases Referenced
Legislation
- Confiscation of Proceeds of Crime Act 1989
Cases
- R v Fagher (1989) 16 NSWLR 67
- R v Hall [2013] NSWCCA 47
- Lee v DPP (CTH) 75 NSWLR 581
- DPP v Nieves [1992] 1 VR 257
- Olbrich v The Queen (1999) 199 CLR 270
- R v Staas (No 3) [2013] NSWDC 289