New South Wales
HEARING DATE(S): 26/04/07,27/04/07,30/04/07,01/05/07,02/05/07,03/05/07
JUDGMENT DATE: 4 May 2007
JUDGMENT OF: Murrell SC DCJ
DECISION: Application to exclude evidence refused
CATCHWORDS: Application to exclude evidence - llegality - Impropriety - Obtained - In Consequence of - Reasonable Excuse
Customs Act 1901
Crimes Act 1914
Drug Misuse and Trafficking Act 1985 and Regulation
Evidence Act 1995
Law Enforcement (Powers and Responsibilities) Act 2002
Law Enforcement (Controlled Operations) Act 1997
Police Special Provisions Act
R v Stevens (1991) 23 NSWLR 75
Robinson v Woolworths Ltd  64 NSWLR 612
Dowe and Ors v Commissioner of the New South Wales Crime
Commission and Anor  NSWSC 1312
He Kaw Teh v The Queen [1984-1985] 157 CLR 523 at 589
Medina (1995) 84 A Crim R 316 at 322
R v Cornwell  NSW SC 97 at para 25
R V Ladocki  NSWCCA 336 at para 50
PARTIES: Crown David Darley Dowe
COUNSEL: Mr D Staehli (Crown)
SOLICITORS: Mr R Mayne (Accused)
The Joint Task Force
1 In October 2004, a syndicate imported a large quantity of cocaine. The drug was buried. A criminal associate of the syndicate, "Tom", became a NSW Crime Commission registered informer. He told the Commission that 7kg of cocaine was buried at Wahroonga. He said that a further large importation was scheduled for February 2005. A joint task force was formed, comprising Commission officers, NSW police and Australian Federal police. The task force was co-ordinated by Mr Standen, Assistant Director of Investigations at the Commission. Mr Standen held appointments as a special Federal officer and as a special constable for NSW. He became "Tom's" principal handler.
2 On 2 February 2005, Mr Standen briefed a meeting of senior Commission and NSW police (including the NSW Police Commissioner) on his "preferred option" in relation to the buried cocaine. Mr Standen advocated that the cocaine be seized and that, if the syndicate from time to time directed Tom to sell the cocaine, then, in order to maintain his credibility with the syndicate pending the importation, Tom should do so. It was understood that the likely outcome was that the cocaine would reach street users. For this reason, the proposal was exceptional, if not unique, as far as State and Federal police practice was concerned. Nevertheless, the meeting adopted Mr Standen's "preferred option".
3 The AFP was not invited to the meeting on 2 February, ostensibly because the supply of drugs was a State matter and the AFP's primary focus was on the Federal issue of importation. When senior AFP officers learned of the supply plan, they conveyed the expected view to Mr Standen, ie that the AFP strongly disapproved of an operation which involved sales to end use. However, because of misunderstanding /miscommunication between senior and midlevel AFP officers and/or because of the blurred line between investigating the forthcoming importation and investigating supply of the already imported cocaine, when the "preferred option" was implemented, AFP officers attached to the joint task force did provide surveillance and other support.
4 On 7 February, the cocaine was removed from it's location at Wahroonga.
5 On 8 February, a controlled operation certificate was issued under the Law Enforcement (Controlled Operations) Act 1997 (NSW), purporting to authorise the sale of 2 kg of cocaine by Tom. A controlled operation authority renders authorised activities "not unlawful". On 8 February, the sale proceeded.
6 At 6.20pm on 22 February, a second NSW controlled operation authority was issued, purporting to authorise Mr Standen and "Tom" to sell 1 kg of cocaine at Newtown on 23 February.
7 It is the Crown case that, on 23 February, a Mr Finch and the accused Mr Dowe drove to Newtown, where they met with "Tom". Mr Finch had a large sum of money, which a co-accused, Mr Hamer, had entrusted to him. "Tom" placed a 1 kg package of cocaine into the boot and removed the money from the boot. The next day, Mr Finch handed the cocaine to Mr Hamer. On instructions from the syndicate, "Tom" handed some of the money to a co-offender. He was instructed to hold the remaining $50,000, and he gave that sum to Mr Standen.
8 The transaction on 23 February is the basis of the third count against Mr Dowe and Mr Hamer. In relation to the first two counts against each accused, the Crown proposes to lead evidence from "Tom" and Mr Finch that, on two earlier occasions, there were similar transactions.
9 Subsequently, the remaining cocaine was sold. Of the 7 kg, police recovered only 1 kg. I infer that the rest was sold to end use.
10 The Supreme Court rejected a challenge to the validity of the controlled operation authorities. That decision is under appeal.
The Drug Exhibits Issue
12 The accused contends that the drug should have been treated as a Federal police exhibit and the failure to deal with it in that way was unlawful and/or improper. Alternatively, the drug should have been treated as a State police exhibit and the failure to deal with it in that way was improper.
13 Commonwealth provisions controlling the importation of narcotic goods complement NSW provisions controlling the possession and supply of such goods in NSW. Generally, the provisions are not inconsistent: R v Stevens (1991) 23 NSWLR 75. However, when police are simultaneously investigating both importers and domestic suppliers, there may be an overlap between the operation of Commonwealth and State provisions. This is such a case.
14 All cocaine within Australia has been imported. The subject cocaine must have been imported into Australia in contravention of the Customs Act 1901: see s233B(1)(a)(iv). At the very least, it was reasonably suspected of having been so imported: see s233B(1)(a)(vi). Therefore, it was a prohibited import to which s233B of the Act applied: s233B(1)(b).
15 As it was a prohibited import, by the operation of s229 (1)(b) of the Customs Act, it was forfeited to the Crown. Having been forfeited under s229(1)(b), it became "special forfeited goods" within the meaning of s183UA(1).
16 Section 203C(1)(a) of the Act empowers an "authorised person" who holds a reasonable suspicion to search for and seize special forfeited goods that are narcotic goods. "Authorised person" includes a police officer: s183UA (1) (d)(ii). If narcotic goods are seized by a person other than a member of the AFP, then that person must, as soon as practicable, deliver the goods into the custody of a member of the AFP: s204(4)(b).
17 In relation to exhibits held by the AFP, the AFP Exhibits Guidelines (Exhibit M) prescribe detailed procedures for handling the exhibits, particularly if the exhibits are drugs or money. Importantly, drug exhibits must be lodged with the AFP Drug Registry and must be destroyed after analysis.
18 On 7 February, when the cocaine was dug up, Mr Mansfield, an AFP officer, bagged it in AFP exhibit bags. A NSW police officer conveyed it to an analyst. Following analysis, it was stored in a safe in Mr Standen's office at the Commission. Other than coincidentally, it was treated neither as an AFP police exhibit nor as a NSW police exhibit. Nor was it logged into the Commission's exhibits register.
19 On and after 7 February, generally, the drug was in the possession and under the immediate control of an AFP officer. Mr Standen was a Federal police officer, as was Mr Mansfield. However, it was by happy coincidence rather than design that, after the drug was seized, it was delivered into the custody of an AFP officer. It was not considered to be goods which had been forfeited to the Commonwealth Crown and it was not treated as such. No consideration was given to following the AFP Exhibits Guidelines, although Mr Standen was aware of the Commonwealth legislation and guidelines.
20 When it came to applying for a controlled operation authority, according to Mr Standen, passing consideration was given to seeking a Commonwealth authority under Part 1AB of the Crimes Act 1914, but that option was rejected because the proposed controlled operation "had the flavour of a State supply". Given that, prior to applying for any controlled operation authority, the AFP had been excluded from the process of determining how to deal with the 7 kg of cocaine, I find that no serious consideration was given to seeking a Commonwealth authority. Had the matter been given serious consideration, then it would have become apparent that no Commonwealth authority could be granted because the cocaine was unlikely to remain under the control of police at the end of the operation: s15M(e) Crimes Act 1914.
21 In short, Mr Standen and other officers attached to the joint task failed to acknowledge that the drug was forfeited to the Commonwealth Crown and failed to treat it in accordance with the AFP Exhibits Guidelines, which apply to Commonwealth drug exhibits.
22 It was not submitted that Mr Standen or any other officer committed an offence by failing to acknowledge the Commonwealth legislation or failing to treat the drug in accordance with the AFP Exhibits Guidelines. At most, these failures constituted improprieties.
23 Prior to seizure of the drug, the decision was taken to deal with it in a way which did have "the flavour of a State supply". Any on-supply of the drug in February 2005, whether by “buy/bust” or otherwise, would have had "the flavour of a State supply" as the drug had been imported months before it came into police possession. Consequently, the NSW regime for handling drug exhibits may have been the more appropriate regime.
24 Under NSW law, police can seize and detain drugs which are prohibited drugs under the Drug Misuse and Trafficking Act: s21(2) (d) of the Law Enforcement (Powers and Responsibilities) Act 2002. If NSW police are in possession of not less than the trafficable quantity of a prohibited drug, the drug must be handled in accordance with Part 3 (now Part 4) of the DMT Regulation. Within 14 days, the drug must be delivered to an analyst: cl 9 (now cl 13). If no charge has been laid, within 21 days an application must be made for destruction of the drug: s39D of the DMT Act. Under s39RA of the DMT Act, the Commissioner may direct that the drug be retained for a controlled operation under the Law Enforcement (Controlled Operations) Act 1997.
25 As a special officer for NSW, Mr Standen had the duties of a NSW police officer: s103 Police Special Provisions Act. From time to time, other NSW police officers handled the drug. Mr Standen was aware of the NSW legislation, but did not consider whether he should process the cocaine in accordance with that legislation. Nor, I infer, did the other NSW police officers who handled the drug. Coincidentally, the drug was delivered to an analyst within the 14 day period required by cl 9. However, no application was made under s39RA of the DMT Act.
26 The failure to process the drug in accordance with NSW drug exhibit procedures was not unlawful. At most, it constituted an impropriety.
27 An "impropriety" within the meaning of s138 of the Evidence Act 1995 involves conduct which is "clearly inconsistent with" "the minimum standards which a society such as ours should expect and require of those entrusted with the powers of law enforcement": Robinson v Woolworths Ltd  64 NSWLR 612.
28 In Robinson at para 23, Basten JA referred to the suggestion that there must also be "some level of encouragement, persuasion or importunity in relation to the commission of the offence" before there can be an "impropriety". I would have thought that such considerations were more appropriately taken into account under s138(3)(d) or (e), or when considering "minimum standards", but I acknowledge that the law is as Stated by His Honour.
29 It is impossible to apply the reference to "encouragement, persuasion or importunity in relation to the commission of the offence" to the circumstances of this case. In this case, the alleged improprieties are not directly related to the commission of the alleged offences, as was the case in Robinson and the other recent decisions to which I was referred, where the sequence of events was brief and relatively straightforward, and the alleged impropriety was closely associated with an arrest or entrapment. In the circumstances of this case, I assess whether an "impropriety" has occurred by determining whether the relevant conduct was deliberate and was clearly inconsistent with minimum standards.
30 Mr Standen effectively directed the operation. He was conversant with the State and Federal schemes for managing drug exhibits. In my view, his failure to consciously manage the 7 kg of cocaine under either scheme was deliberate conduct which was clearly inconsistent with the minimum standards which our society expects. Prohibited drugs are valuable commodities which are capable of causing great harm to the community. Federal and State schemes for auditing and managing such drugs are critical to the integrity of the criminal justice process and the health of the community. Consequently, there is a strong public interest in ensuring adherence to those schemes. The failure to consciously manage 7 kg of cocaine under one of the schemes is a matter of grave concern. That concern is not assuaged by knowing that, when the drug was seized, it was intended that it would be sold into the market in circumstances where police would lose control of it and it was likely to reach end users.
31 On the question of impropriety, it is not much to the point that Mr Standen was doing what he thought best, or that he utilised safeguards such as videotaping dealings with the cocaine. Unless law enforcement officers adhere to common procedures, the public cannot be assured that the movement of dangerous drugs is adequately supervised.
The Drug Offence Issue
32 The accused contended that, both prior to and after the issue of the controlled operation authority on 22 February, the possession and handling of the cocaine was unlawful under the Drug Misuse and Trafficking Act and/or the Customs Act.
33 The Crown conceded that, unless the police and "Tom" could establish a "reasonable excuse" for possession of the drug under s233B(1AAB) of the Customs Act, up until the issue of the authority, their possession contravened s233B (1) (iv) and/or (v) of the Act.
34 In Dowe and Ors v Commissioner of the New South Wales Crime Commission and Anor  NSWSC 1312 (in which the accused challenged the controlled operation authories) at para 104, Hall J summarised relevant authorities concerning the concept of "reasonable excuse". In relation to s233B, His Honour referred to the observation of Brennan J. in He Kaw Teh v The Queen [1984-1985] 157 CLR 523 at 589 that:
35 In Medina (1995) 84 A Crim R 316 at 322, the Court held that police officers had a "reasonable excuse" for possessing cocaine which was involved in a controlled delivery. The Court noted that the operation in question was not one of a kind which in any way threatened the integrity of the court's processes or the administration of criminal justice in the manner discussed in Ridgeway v The Queen (1995) 184 CLR 19.
36 The need for an exempting provision to excuse police conduct in the course of an investigation has been lessened by the introduction of controlled operation legislation at both State and Federal levels. Nevertheless, there remains some need for such a provision. For example, police need to be protected while they are waiting for a controlled operation authority to be issued. I conclude that, where police are expeditiously dealing with narcotic goods in accordance with appropriate Commonwealth and/or State legislative procedures/policing protocols, they have a "reasonable excuse" for conduct which would otherwise be unlawful.
37 In the present case, accepting that the "preferred option" had "the flavour of a State supply", the proper course was to manage the drug in accordance with the Drug Misuse and Trafficking Regulation and to seek a direction under s 39RA of the Drug Misuse and Trafficking Act 1985. That course was not followed. Prior to 22 February, there was no "reasonable excuse" for the conduct which was otherwise rendered unlawful by s 233B of the Customs Act.
38 Further, had police obtained a direction under s39RA, that direction would have rendered their possession and/or supply of the drug not unlawful under the DMT Act: s10(1)(b1), s25(4)(c) DMT Act.
39 The Crown argued that the police did not contravene the DMT Act by possessing the drug for the purpose of supply (see section 25(1) and the extended s3 definition of "supply") and they could establish a defence to any charge under s29 ("deemed supply" based on possession of a trafficable quantity) because they were in possession of the drug for the purpose of supply in the course of a controlled operation, and any such supply would be not unlawful.
40 In relation to s29, the argument may be sustainable. However, in relation to s25(1), it cannot be sustained. As at 7 February, it was not known whether any controlled operation authority would be sought or granted for 23 February. The authority was only sought after the syndicate instructed "Tom" to supply the drug at Newtown. Further, the argument does not address the fact that possession of the drug was contrary to s10 of the DMT Act.
41 Consistent with my finding that it was appropriate to deal with the drug under State legislation, I find that the existence of a valid NSW controlled operation authority not only provided protection in relation to conduct which would otherwise have involved State offences, but also provided a "reasonable excuse" for what would otherwise have been unlawful conduct under the Customs Act. Consequently, between 7 February and the grant of the controlled operation authority on 22 February, police possession and handling of the drug was illegal but from the grant of the authority it was not unlawful.
The Money Laundering Issue
42 Mr Dowe argued that evidence of the collection of money from the boot of the car and payment of the money to the syndicate should be excluded because the money was an "instrument of crime" or the "proceeds of crime" and, in dealing with the money, "Tom" committed an offence against s400.4 of the Criminal Code in relation to which the NSW controlled operation authority provided no protection.
43 The flaw in this argument is that the money was neither an "instrument of crime" nor the "proceeds of crime". The money could only have been an "instrument of crime" if it was used to facilitate the commission of an offence. It could only have been the "proceeds of crime" if it was derived from the commission of an offence. “Tom's” conduct in connection with supplying the cocaine on 23 February was not unlawful because, as far as the DMT Act was concerned, he was protected by the authority and, as far as s233B was concerned, he had a "reasonable excuse".
44 In relation to dealing with the money on 23 February, there was no illegality or impropriety.
What Evidence Was "Obtained" Illegally/Improperly Or "In Consequence Of" An Illegality/Impropriety?
45 Challenged evidence will be excluded only where there is a causal connection between the illegality/ impropriety and the obtaining of the impugned evidence or, in other words, the illegality/ impropriety "produced" the challenged evidence: R v Cornwell  NSWSC 97 at para 25, R v Ladocki  NSWCCA 336 at para 50.
46 The impropriety of failing to follow the Federal or State scheme for the management of drug exhibits did not impact upon the events of 23 February, let alone "produce" any significant evidence. On 2 February, the NSW Police Commissioner approved in principle the course of conduct which was followed on 23 February. I infer that, had a s39RA direction been sought, it would have been granted.
47 Nor did the offences against the Customs Act and the DMT Act impact upon the events of 23 February. For practical purposes, the events of 23 February and thereafter were unaffected by the preceding failure to adhere to the NSW scheme for dealing with drug exhibits, which was itself an impropriety, and which resulted in the police possession of drugs being illegal prior to the grant of the controlled operation authority.
48 The accused has not established that any relevant evidence was "obtained" improperly or in contravention of Australian law, or "in consequence of" an impropriety or contravention of an Australian law.
49 It is not necessary for me to consider the manner in which I might have exercised the discretion under s138 (1), had I been called upon to do so. However, there are many factors which may have militated in favour of admitting evidence of the events of 23 February and thereafter. Inter alia, the relevant offences are very serious and no mala fides has been demonstrated on the part of the police.
The Problematic s233B of the Customs Act 1901
DOWE and ANOR v COMMISSIONER OF THE NEW SOUTH WALES CRIME COMMISSION and ANOR  NSWSC 166 (6 March 2007)
Dowe v Commissioner of the New South Wales Crime Commission & Anor; Gedeon v Commissioner of the New South Wales Crime Commission & Anor  NSWCA 296 (19 October 2007)
DOWE v. COMMISSIONER OF THE NEW SOUTH WALES CRIME COMMISSION & ANOR; PAVAN v. COMMISSIONER OF THE NEW SOUTH WALES CRIME COMMISSION & ANOR; GEDEON v. COMMISSIONER OF THE NEW SOUTH WALES CRIME COMMISSION & ANOR; ZAITER & ANOR v. COMMISSIONER OF THE NEW SOUTH WALES CRIME COMMISSION & ANOR  NSWSC 1312
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.