Prosecutors cannot rely on tracing doctrines to establish that property derived from or substituted for stolen or unlawfully obtained property is itself a 'thing' reasonably suspected of being stolen or unlawfully obtained under goods-in-custody provisions; the charge must relate to the very physical object originally obtained.
Later decisions that cite Grant v R
Decisions cited by Grant v R
GRANT v. THE QUEEN [1981] HCA 32; (1981) 147 CLR 503
Criminal Law (N.S.W.)
High Court of Australia
Gibbs C.J.(1), Mason(1), Murphy(2), Aickin(1) and Wilson(1) JJ.
CATCHWORDS
Criminal Law (N.S.W.) - Summary offence - Custody of thing reasonably suspected of being stolen or otherwise unlawfully obtained - Cash obtained from bank account into &which proceeds of illegal sale of drugs reasonably suspected of being paid - Summary Offences Act 1970 (N.S.W.), s. 40 (1) (a).
HEARING
1980, November 7; 1981, June 18. 18:6:1981DECISION
1981, June 18.
2. On 23 May 1978 the applicant was convicted by a magistrate in petty
sessions upon an information to the effect that contrary
to s. 40 (1) (a) of
the Summary Offences Act 1970:
"That Phillip Allan Grant on the 24th day of March, 1978 at Silverwater in
the State of New South Wales, did have in his custody,
ten thousand dollars
($10,000) which may be reasonably suspected of being stolen or otherwise
unlawfully obtained."
He was fined $150, in default imprisonment for thirty days. (at p505)
3. The applicant then appealed to the District Court in its criminal and
special jurisdiction. At the conclusion of the evidence,
the judge (Judge
Shannon) stated a case, in which he posed as the question of law raised by the
case: -
"Whether upon the true construction of s. 40 of the Summary Offences Act
1970 once it is established that there is a reasonable
suspicion that the
original moneys had been unlawfully obtained,
(a) does the illegality under the section continue to attach to and taint
the proceeds of such money wherever found?
(b) specifically, does such illegality continue to attach to and taint the
$10,000 abovementioned?"
For the purpose of answering question (b), the Court of Criminal Appeal
interpreted it to mean -
"(b) Do the totality of the circumstances, as disclosed by the evidence,
enable me as a matter of law to make a finding that the
$10,000 found in the
custody of the appellant on 24th March 1978, may be reasonably suspected of
being stolen or otherwise unlawfully
obtained?"
The Court, by majority (Moffitt P. and Begg J., Cantor J. dissenting),
answered the question in the affirmative. The Court found
it unnecessary to
answer question (a). (at p506)
4. The stated case outlines the facts found by Judge Shannon. It will be sufficient to sketch them briefly. In March 1978, one Rodney Rowe had $35,470 in a savings bank account. With respect to the origin of this bank credit, the learned District Court judge expressed his finding in these words - "In the present case there is on the evidence presented to the Court a reasonable suspicion that such original moneys had been unlawfully obtained." The term "original moneys" is not elsewhere used in the case stated and it is not clear whether that finding is intended to refer to the credit balance in the savings bank account (with which the narrative begins) or to the cash or cheques paid into that account creating or leaving that credit balance. That finding is presumably based on the view that the "moneys" were obtained in the course of transactions relating to drugs. Rowe was also known as Errol Bural. On 21 March 1978 a solicitor, acting on instructions from Bural, withdrew $35,460 from the bank account and paid it into his trust account. On 22 and 23 March 1978, pursuant to a direction in writing from Bural, the solicitor drew two cheques on his trust account, each payable to cash, one for $17,000 and another for $15,000, and gave them to a man named Thom. Thom evidently cashed one or both of those cheques and on 24 March Thom gave to Bural $10,000 in banknotes of fifty and twenty dollar denomination. No details of the numbers in each denomination have been provided. On the same day those banknotes were handed to the applicant with instructions to take them to the Silverwater Prison Centre and to tender them as bail for a woman named Payne who was then being held at the Centre on charges relating to drugs. Her bail had been fixed at $10,000. According to the applicant, Bural had driven him to the Centre, and was to pay him $50 for his services. The applicant did as he was instructed, but instead of the plan resulting in the release of Payne on bail, the police retained the banknotes and charged the applicant with the offence with which we are now concerned. (at p506)
5. At the time that these events took place, s. 40 of the Summary Offences
Act 1970 read as follows:
"(1) A person who -
(a) has any thing in his custody;
(b) has any thing in the custody of another person;
(c) has any thing in or on premises, whether belonging to or occupied by
himself or not, or whether that thing is there for his own
use or the use of
another; or
(d) gives custody of any thing to a person who is not lawfully entitled to
possession of the thing,
which thing may be reasonably suspected of being stolen or otherwise
unlawfully obtained is guilty of an offence.
Penalty: Four hundred dollars or imprisonment for six months.
(2) It is a sufficient defence to a prosecution for an offence under
sub-section one of this section if the defendant satisfies
the court that he
had no reasonable grounds for suspecting that the thing referred to in the
charge was stolen or otherwise unlawfully
obtained."
The offence has a long history. It was enacted as s. 1 of 19 Vict. No. 24
(following s. 24 of 2 & 3 Vict. c. 71 (U.K.)), and
later
as s. 27 of the
Police Offences Act 1901 (N.S.W.). Its reach has broadened somewhat since it
was originally enacted, but it
is unnecessary
for the purposes of this case to
examine the matter in any detail. It may be noted that with the enactment of
the
Summary Offences
Act in 1970 the word "otherwise" appeared before the
words "unlawfully obtained"; the effect of the change was discussed
in Purdon
v.
Dittmar (1972) 1 NSWLR 94 . In 1979 s. 40 was repealed and provision in
similar terms made in s. 527C of the Crimes
Act 1900:
see Crimes (Summary
Offences) Amendment Act 1979. (at p507)
6. From the history of this offence it is important to note the consistency with which courts, both in the United Kingdom and in Australia, have insisted upon a strict construction of the words outlining the elements of the offence, recognizing the extraordinarily serious character of a law which authorizes the arrest of a person on mere suspicion, to be followed by his conviction and possible imprisonment unless he satisfies the court that he had no reasonable grounds for suspicion that the thing in his custody bore the taint of illegality: Hadley v. Perks (1866) LR 1 QB 444 ; In re Keyes (1884) 5 NSWR 359 ; In re Frith (1896) 17 NSWR 421 ; Tatchell v. Lovett [1908] VicLawRp 91; (1908) VLR 645 ; Moors v. Burke [1919] HCA 32; (1919) 26 CLR 265 ; Aldridge v. Marks (1943) 44 SR (NSW) 69 ; Purdon v. Dittmar (1972) 1 NSWLR 94 ; Reg. v. Dittmar (1973) 1 NSWLR 722 . (at p507)
7. The question now to be answered falls within a short compass: it is whether in the circumstances of the case the banknotes, totalling $10,000, found in the custody of the applicant on 24 March 1978 can be reasonably suspected of having been unlawfully obtained. Let it be assumed that such a finding was made of the original cheques and/or banknotes totalling $35,470 before they were paid to the credit of Rowe's account in the savings bank. It appears that there was reason to suspect that those cheques and/or banknotes were the actual proceeds of the illegal sale of drugs. The question is whether the character of illegality attached to the banknotes handed by Thom to the applicant. (at p508)
8. Moffitt P. answered the question in the affirmative, holding that the "thing" in s. 40 (1) included money as currency. It was therefore sufficient if the banknotes the subject of the charge can be identified in "the same way as money is traced at common law, as where the money in one form has been substituted for the money in another form". Alternatively, Moffitt P. referred to the devices used by Bural to conceal the crime itself and its proceeds - the use of different names, the passage of money in a few days through various bank accounts and through various hands in cash - and found that it was open to infer directly that the banknotes actually handled by the applicant were the subject of a reasonable suspicion that they had been unlawfully obtained. (at p508)
9. Begg J. concluded that the original suspicion of illegality carried forward to attach to the banknotes in the applicant's custody notwithstanding the passing of the money through the savings bank account and the trust account. It was not the product of any lawful human activity, and remained on the 24 March money which had been unlawfully obtained, albeit reaching the applicant through circuitious routes. (at p508)
10. In our respectful opinion, these views reveal a mistaken application of s. 40. 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. As Jordan C.J., speaking for the Full Court of the Supreme Court of New South Wales said in Aldridge v. Marks (1944) 44 SR (NSW), at p 71 : "I think that the section is available only when there is a reasonable suspicion that there has been at least something unlawful in the obtaining of the very thing which the accused had in his custody". (at p508)
11. The Court of Criminal Appeal seems to have thought that this view ceased to apply once the expression "stolen or unlawfully obtained" became "stolen or otherwise unlawfully obtained". We do not agree. The amendment merely displaced one ground for the decision - the ejusdem generis construction of "unlawfully obtained". It did not affect the second ground which is expressed in Jordan C.J.'s insistence that "thing" means "very thing". See, also, Brebner v. Seager [1926] VicLawRp 21; (1926) VLR 166 . (at p509)
12. Of course, sub-s.(2) makes it clear, as Begg J. observed, that the section extends to a person who was not himself responsible for the unlawful obtaining, but this provision does not justify an extension of the reach of the section to embrace property other than the original thing actually obtained. 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. Bankers and individuals receiving cash, bank cheques or other cheques in the course of business would be obliged to satisfy themselves that each was not the ultimate product of illegal dealing or face the prospect of being arrested and charged. In such a case, it affords little comfort to reflect that it is a sufficient defence to a prosecution to satisfy the court that the alleged offender had no reasonable grounds for suspicion. If it was the intention of the legislature to expose law-abiding citizens to the risk of conviction in such circumstances, then in our opinion the legislature has failed to make its intent plain, and we can find no warrant for departing from the ordinary effect of the words used. (at p509)
13. The facts of this case supply the further ingredient that not only would
the original "thing" (the banknotes or cheques totalling
$35,470) have lost
its identity as the "thing" when it was converted into another form of
currency or exchanged for another thing,
but also it was paid into a bank
account. It then ceased to be a "thing" at all. As Barwick C.J. said in Croton
v. The Queen [1967]
HCA 48; (1967)
117 CLR 326, at p 330 :
"But, though in a popular sense it may be said that a depositor with a bank
has 'money in the bank', in law he has but a chose
in action, a right to
recover from the bank the balance standing to his credit in account with the
bank at the date of his demand,
or the commencement of action. That recovery
will be effected by an action for debt. But the money deposited becomes an
asset of
the bank which may use it as it pleases: see generally Nussbaum,
Money in the Law: s. 8, p. 103".
We cannot perceive that any illegality attached to the transaction whereby
moneys were withdrawn from the savings bank account and
credited to the
solicitor's trust account. Nor can we see that there was anything unlawful
about the procedure by which Thom cashed
the two cheques payable to "cash"
which were legitimately in his possession, a procedure which brought within
the purview of this
case the actual banknotes which were found in the custody
of the applicant and to which the charge relates. There was no reason to
suspect that those banknotes were unlawfully obtained. (at p510)
14. We therefore respectfully agree with the reasons expressed in the Court of Appeal by Cantor J. We would grant special leave, allow the appeal and order that question (b) be answered "No". (at p510)
MURPHY J. The New South Wales "goods in custody" law (Summary Offences Act 1970, s. 40) is very severe, even when strictly construed. Its history until recently has been one of strict construction (see In re Frith (1896) 17 NSWR 421 ; Aldridge v. Marks (1943) 44 SR (NSW) 69 ). (at p510)
2. Briefly, the section provides that any person who had custody of any thing which may be reasonably suspected of being stolen or otherwise unlawfully obtained, is guilty of an offence. It is a defence if the defendant satisfies the court that he had no reasonable grounds for suspecting that the thing was stolen or otherwise unlawfully obtained. (at p510)
3. In this case, the Court of Criminal Appeal (by majority) has applied doctrines of tracing, so that whatever the thing may be converted into, whether money or other form of property (by purchase, banking transaction or other dealing) and however many times the process of conversion is carried out, the ultimate thing or things (and presumably each of the intermediate things) remains the "things" reasonably suspected of having been taken or unlawfully obtained. We live in a society with extensive unlawful activities. Apart from the traditional forms of stealing there are widespread illegal activities such as gambling, company frauds, deceptive commercial conduct, other white collar crimes, and drug trafficking which apparently come within the expression "otherwise unlawfully obtained" (see Purdon v. Dittmar (1972) 1 NSWLR 94 ) and the section applies to a person who has custody of a thing although he was not responsible for stealing or unlawfully obtaining it. Therefore the application of tracing doctrines would mean the contamination of a vast amount of property and an enormous increase in the numbers of persons exposed to prosecution. Such oppressive consequences could not have been intended. The doctrine of tracing should have no place in the application of this law. As the Solicitor-General conceded, the ruling of the New South Wales Court of Criminal Appeal, if allowed to stand, would tend to prove the validity of Proudhon's statement that "all property is theft". Perhaps in New South Wales it would be adapted to "all property has been stolen or unlawfully obtained". (at p511)
4. The appeal was conducted on the assumption of the correctness of the ruling in Reg. v. Dittmar (1973) 1 NSWLR 722 that a banknote can be a "thing" under the section. I doubt its correctness. If a banknote can be a "thing" within the section, oppressive consequences could still occur in relation to banknotes which have at any time been stolen or unlawfully obtained by anyone: in whosoever custody, they would be tainted, no matter how many intermediate transactions had occurred. It would, for example, be a hazard for a bank or a landlord or a shopkeeper to accept banknotes from a starting price bookmaker. Yet Australian notes (banknotes) are a legal tender throughout Australia (Reserve Bank Act 1959, s. 36 (1)). The implications of Reg. v. Dittmar (particularly the validity of the section so construed in the light of federal law relating to banknotes) were not explored in this case and its apparent approval is not necessary in order to allow this appeal. (at p511)
5. Special leave should be granted and the appeal allowed. (at p511)
ORDER
Grant application for extension of time to apply for special leave to appeal, and grant special leave to appeal.
Appeal allowed. Order of the Supreme Court of New South Wales (Court of
Criminal Appeal) answering question (b) set aside. In lieu
thereof order:
(1) that question (b) raised in the case stated, as amended, be answered: No,
and
(2) that the matter be remitted to the District Court to quash the conviction
and enter judgment of acquittal.