Citation: [2019] NSWDC 821
Court: District Court of NSW
Date: 25 November 2019
Judge(s): Haesler SC DCJ
Background
Between December 2017 and March 2018, the offender, a drug supplier, sold or agreed to sell illicit drugs to undercover police operatives on multiple occasions. He pleaded guilty to three counts of supplying prohibited drugs, with two further matters taken into account on a Form 1. On 15 November 2019, he was sentenced to an aggregate term of four years and two months' imprisonment.
Immediately after sentence was imposed, the Director of Public Prosecutions applied for a Drug Proceeds Order under the Confiscation of Proceeds of Crime Act 1989. The Director sought a pecuniary penalty of $20,800, representing the total purchase price paid by the undercover operative on 17 January 2018 for drugs supplied on that date. The offender opposed the order and gave evidence about the actual profits he received.
The offender operated as a mid-level dealer, purchasing drugs from upstream suppliers and on-selling them at a margin. He shared the financial risk and profits equally with an associate, and paid a modest amount to a third participant for his assistance. The core dispute concerned how the value of the "benefit" he derived should be calculated.
Legal Issues
- How should a court calculate the "benefit" or "proceeds" derived by an offender for the purposes of a Drug Proceeds Order under the Confiscation of Proceeds of Crime Act 1989?
- Whether the full sale price received from the undercover operative, or only the offender's net profit (after payments to upstream suppliers), constitutes the relevant "benefit" under the Act.
- Whether amounts paid by the offender to upstream suppliers are deductible when assessing the value of the proceeds of drug trafficking.
- What weight should be given to the offender's own evidence about his profits where that evidence was largely unchallenged?
Decision
Issue 1: The statutory framework and purpose
The principal object of the Confiscation of Proceeds of Crime Act 1989 is to deprive persons of the proceeds of, and benefits derived from, the commission of offences (at [21]). The court noted that the long title of the Act refers to the confiscation of the "profits of crime," and that the concepts of "benefit" and "proceeds" are separately defined in section 4 of the Act (at [25]). Parliamentary materials confirm that a Drug Proceeds Order should not deprive an offender of more than "the fruits of their crimes" (at [27]).
Issue 2: Deductibility of amounts paid to upstream suppliers
Following the Court of Criminal Appeal's decision in Colakoglu, the court held that money handed up the line by an accused to an upstream supplier is not an "expense or outgoing" made in connection with the commission of the offence, and therefore may be deducted when calculating the offender's proceeds (at [28]). The relevant expenses and outgoings for drug trafficking offences are limited to costs directly related to the particular transaction, such as payments to delivery persons or for transport (at [29]).
Issue 3: Assessing the value of the benefit on the available evidence
The court was required to make an assessment having regard to the information before it, including the agreed facts and the offender's testimony (at [31]). The offender gave evidence that he and his associate split profits equally, that he paid a modest sum to a third participant, and that his margin on each transaction was relatively small. That account was not substantially challenged in cross-examination and no evidence was called in reply (at [18]). The court accepted that the benefit received was the difference between the amount paid by the undercover operative and the amount paid by the offender to his upstream supplier (at [31]).
Issue 4: Quantum of the order
Applying those principles to the figures derived from the agreed facts and the offender's evidence, the court assessed the benefit derived by the offender from the transactions on 17 January 2018 and made a Drug Proceeds Order for $2,500, substantially less than the $20,800 sought by the Director (at [33]).
Orders Made
- Jamie Warren to pay to the State a pecuniary penalty of $2,500.
Key Takeaways
- Under the Confiscation of Proceeds of Crime Act 1989, the "benefit" subject to a Drug Proceeds Order is the offender's actual profit from the relevant transaction, not the gross sale price received from a buyer. The purpose of the legislation is to confiscate the fruits of crime, not to impose a penalty exceeding that amount (at [27]).
- Money paid by an offender to an upstream drug supplier is deductible when calculating the value of the proceeds of drug trafficking. Following the Court of Criminal Appeal's reasoning in Colakoglu, such payments are not "expenses or outgoings" within the meaning of section 30(6) of the Act (at [28]).
- For drug trafficking offences, deductible expenses and outgoings are confined to costs directly connected with the particular transaction, such as payments made to delivery persons or for transport. Costs arising prior to or independent of the specific offence do not qualify (at [29]).
- Where an offender gives unchallenged evidence about the profits actually derived from drug transactions, a court may rely on that evidence when assessing the quantum of a Drug Proceeds Order, even if the information before the court is incomplete (at [18], [31]).
- The consequences of a confiscation or proceeds order cannot be taken into account as a mitigating factor in sentencing an offender, by virtue of section 24B of the Confiscation of Proceeds of Crime Act 1989 (at [6]).
Legislation and Cases Referenced
Legislation
- Confiscation of Proceeds of Crime Act 1989
- Crimes (Sentencing Procedure) Amendment Act 2010
- Criminal Procedure Act 1986
- Drug Misuse and Trafficking Act 1985
Cases
- Director of Public Prosecutions (NSW) v Colakoglu;
- Director of Public Prosecutions (NSW) v Dodd; Director of Public Prosecutions (NSW) v Whitby; Director of Public Prosecutions (NSW) v EC [2015] NSWCCA 301
- R v Hall [2013] NSWCCA 47; 227 A Crim R 544
- R v Jose Degouveia; R v Joshua Degouveia [2019] NSWDC 161
- R v Rogerio, unreported NSWDC, 1/3/2019
- R v Warren [2019] NSWDC 820