Trafficking in illicit drugs requires the imposition of a full- time custodial penalty – are other penalties available?

Sentencing – penalties – intensive correction orders – whether available for offences found to constitute ‘substantial trafficking’ of prohibited drugs

Sentencing – appeal against sentence – general principles – drug offences – where ‘substantial trafficking’ in prohibited drugs found by sentencing judge – whether full-time custody mandated but for ‘exceptional circumstances’

Sentencing – appeal against sentence – general principles – consideration of sentencing discretion – consideration of judicially mandated sentencing ‘policy’ – consideration of the ‘policy’ in Clark

Robertson v The Queen [2017] NSWCCA 205 – 23 August 2017 Court of Criminal Appeal for New South Wales Simpson JA, Harrison, Davies JJ

Facts: The appellant pleaded guilty to 4 offences of supplying prohibited drugs over a period of approximately 2 weeks. In sentencing the appellant, the sentencing judge made a finding that the appellant had engaged in the supply of prohibited drugs in a substantial way. In reaching that decision, the judge found that the drug dealing outlined in the 4 charges for which the appellant pleaded guilty involved him dealing in drugs for a period of weeks, and also that messages on his phone indicated that he had supplied drugs on other occasions. The sentencing judge later referred to “the general principle that where someone has been supplying drugs in a substantial way, absent exceptional circumstances, a sentence of full time custody should be imposed” (Simpson JA at [26]).

As a consequence of these findings, and despite the subject circumstances of the offender which his Honour found were not exceptional, a full-time custodial penalty was applied.

The appellant then appealed on the basis that a sentence other than full-time custody should have been considered in the circumstances of the case.

Held: The New South Wales Court of Criminal Appeal upheld the appeal. The court found that the provisions in the Crimes (Sentencing Procedure) Act 1999 take precedence over any unlegislated constraint on the sentencing discretion provided by legal precedents. The court found that there were a number of difficulties with the “principle” (said to be derived from R v Clark (NSW Court of Criminal Appeal, 15 March 1990, unreported)) that drug trafficking to a substantial degree must involve a term of full-time custody unless exceptional circumstances are found to exist. The court found at [90] that, “[f]irst, there is no statutory warrant for any such prescription. Second, the prescription fails to define ‘drug dealing to a substantial degree’. Third, the prescription fails to define what might constitute ‘exceptional circumstances’. Fourth, the prescription fails to identify the source of the exception”.

The court found that if the “Clark principle” were to be literally applied, then the prescription provided in s 5 of the Act could not be complied with. Section 5 requires that a court not sentence an offender to imprisonment unless satisfied, after having considered all other possible alternatives to full-time imprisonment. There are a number of alternatives to full-time custody outlined in the Act and the court found that these could not be “airbrushed out of consideration” by judicial prescription: see [98].

Having regard to the facts in this case and the subjective circumstances of the appellant, a sentence of imprisonment was appropriate but alternatives to full-time custody should have been considered. Therefore, it would have been appropriate for the sentencing judge to have considered a full range of alternative sentences, including a bond under s 12 (suspended sentence) as well as an intensive corrections order (under s 7 and Pt 5), and home detention (s 6).

The court warned that the decision in this case should not be overestimated. Even though sentencing judges are freed of the judicially-imposed constraint imposed by the Clark principle, the sentencing court must nevertheless give proper consideration to the guidance provided by earlier Court of Criminal Appeal decisions, which provide a “yardstick” against which to measure any proposed sentence. It may ultimately be that a term of full-time custody is the only alternative available, after the proper consideration of all other alternatives.

Result: Appeal upheld. Taking into account the period of custody already served, the sentence imposed by the sentencing judge was quashed. In lieu thereof, a suspended sentence under s 12 was imposed, on condition that the appellant enter into a bond for a period of 12 months.

Comment: Taken to its logical conclusion, a sentencing court should, even where there is a finding of trafficking to a substantial extent, consider all alternatives available under the Act before concluding that no penalty other than imprisonment is appropriate. It may be, as the court noted in Robertson, that any alternative penalty would be unlikely when a finding is made that the offender has been trafficking in illicit drugs to a substantial extent, but s 5 mandates consideration of all available alternatives before a decision is made to imprison an offender.

Despite what is said in Robertson, it should be noted that in a subsequent case, Kay v The Queen [2017] NSWCCA 218, Hoeben CJ at CL said:

[47] I respectfully agree with her Honour’s analysis [in Robertson] and with her observation that too rigid an application of what was said in Clark might well involve a two-stage sentencing process (see Robertson at [95]).

[48] Having said that, I would observe that once it has been established that an offender has engaged in substantial drug trafficking, compelling circumstances would need to be adduced on his or her behalf to bring about a result where a non-custodial sentence was imposed, albeit it is not necessary that those circumstances be “exceptional”. [emphasis added].

It is clear from the reasons of Hoeben CJ at CL in Kay that the reference to a non-custodial sentence is a reference to non-full-time custodial sentence, which includes penalties such as an intensive correction order or a suspended sentence.

In the circumstances, there appears to be tension between the two judgments of the court. At least in the judgment of Hoeben CJ at CL (supported by Davies and Bellew JJ), before an intensive corrections order could be made, in a case where the offender has been found to have trafficked in drugs to a substantial extent, compelling circumstances would need to be proved by the offender before such an order could be made. The same judicial constraint does not appear in the judgment of the court in Robertson.

The Court of Appeal (UK) held that subjective test for determining if an act was dishonest not required

Casinos – Cheating at gambling – Dishonesty – Interpretation – Payments – Refusal

Casinos – Cheating at gambling – Dishonesty – Interpretation

Gambling contracts – Implied terms – Cheating at gambling – Gambling – Casinos – Dishonesty

Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67; [2017] 3 WLR 1212 – 25 October 2017 Court of Appeal (UK) Lord Neuberger; Lady Hale; Lord Kerr; Lord Hughes; Lord Thomas JJSC

This case is a civil appeal from the United Kingdom. Normally, this is not the type of case that would have much relevance for Australian criminal law. However, this case is potentially different. Even though the case is a civil case, the full UK Court of Appeal appears to overturn the long standing decision of R v Ghosh [1982] QB 1053; [1982] 3 WLR 110; [1982] 2 All ER 689. That decision has been referred to and also widely applied in Australia. In Peters v The Queen (1998) 192 CLR 493; 96 A Crim R 250; [1998] HCA 7, a case concerning conspiracy to defraud the Commonwealth, the decision in Ghosh was reviewed, but was not followed.

The Ghosh test for dishonesty was summarised in the High Court judgment in Peters as requiring: (i) a finding that the allegedly fraudulent act was dishonest according to current standards of ordinary decent people (the first limb – the objective test); and (ii) that the accused must have realised that the act was dishonest by those standards (the second limb – the subjective test). In New South Wales, “dishonesty” is now defined in s 4B of the Crimes Act 1900 as meaning “dishonest according to the standards of ordinary people and known by the defendant to be dishonest to the standards of ordinary people”. In effect, the legislation in NSW represents a codification of the Ghosh test. However, the Court of Appeal in the UK has now questioned the correctness of the decision in Ghosh.

Facts (of Ivey): The appellant was a professional punter. He played a card game at the Crockfords Casino over a period of two days, and won, on paper, £7 million. Crockfords refused to pay on the basis that the appellant was cheating. The appellant gave evidence that was held by the trial judge to be honest. He admitted to using a method called “edge-sorting” to increase the likelihood of his winning. For this method to work, it required that the croupier be persuaded to reverse a number of cards in the pack of cards. Evidence was led by the respondent that the casino often agreed to idiosyncratic requests by punters and that included reversing cards if they were asked to do so. The casino was not aware that there were miniscule differences in the printing on the reverse of the cards such that if they were reversed it was clearly possible to discern the difference through very close observation, and if a player was aware that certain cards only have been reversed then those cards could thus be identified. Using this method, which was done without the croupier knowing, the appellant and his partner were able to successfully bet and win £7 million. After a review of the CCTV footage, the casino became aware of the nature of the betting undertaken by the appellant. It refused to pay the winnings on the basis that the appellant was cheating.

The appellant did not deny the method used. He called it “advantage play” and as far as he was concerned it was not cheating at all. The fact that he and his partner had persuaded the croupier to reverse the cards was merely part of the advantage they sought. There was no compulsion and the casino did not have to comply with their requests. The fact that the casino was unaware of the miniscule differences in the cards when they were reversed was submitted to not be relevant, as it was the casino that supplied the cards.

Further, it was argued that to be held to be a cheat, a person must be found to be dishonest. It was submitted that even if it could be found that the appellant had acted dishonestly, it could not be found that the appellant, an American professional punter, was aware that what he and his partner were doing was dishonest to the standards of ordinary people (applying the Ghosh test).

Held: The Court of Appeal considered the Ghosh test, focussing on the second limb (or the subjective element) of the test. At [59], the court said:

There is no reason why the law should excuse those who make a mistake about what contemporary standards of honesty are, whether in the context of insurance claims, high finance, market manipulation or tax evasion. The law does not, in principle, excuse those whose standards are criminal by the benchmarks set by society, nor ought it to do so. On the contrary, it is an important, even crucial, function of the criminal law to determine what is criminal and what is not; its purpose is to set the standards of behaviour which are acceptable. As it was put in Smith’s Law of Theft 9th ed (2007), para 2.296: “… the second limb allows the accused to escape liability where he has made a mistake of fact as to the contemporary standards of honesty. But why should that be an excuse?”

After reviewing a large number of authorities leading up to the decision in Ghosh, the Court of Appeal held that there was no basis for applying the second limb when determining whether an act was dishonest. The court said at [74]:

When dishonesty is in question the fact-finding tribunal must first ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts. The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact-finder by applying the (objective) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest.

Based on those findings, the court rejected the submission made by the appellant that he was not cheating because the procedure that he used to manipulate the croupier was legitimate game playing. The court found that his deliberate actions in fixing the deck of cards, in a game that depended on a random delivery of unknown cards, was inevitably cheating (see [50]). It was not a question of what the appellant believed as to the honesty of his actions, but whether, when viewed objectively, those actions were dishonest or not. The court confirmed the trial judge’s decision that the appellant’s manipulations were not honest.

Result: Appeal dismissed.

Comment: When s 4B was introduced into Parliament, it was said to be consistent with the decision of Peters v The Queen. Section 4B does not, in fact, represent the result in Peters (see [19] of the judgment). A reading of Peters makes it clear that the court there rejected a test that included a subjective element, at least for cases of conspiracy to defraud. The Court of Appeal in the UK has now reached the same decision with respect to all cases where the tribunal of fact is required to determine if an act is dishonest.

The fact that this was a civil case is interesting and how the decision will be adopted by criminal courts in the UK is yet to be known. Presumably, the decision would be binding on all lower courts, although arguably the decision is obiter, as the Court of Appeal reached its decision rejecting the appeal before going on to consider whether Ghosh was correctly decided. The Court of Appeal hears both civil and criminal cases, although the court is usually constituted differently for each division. The Court of Appeal is the second most senior court in the UK. The Supreme Court (formerly the House of Lords) is the highest court in the UK and cases can be appealed on questions of law to that court from decisions in the Court of Appeal. On any view, unless overturned on appeal, the decision in Ivey will be highly persuasive.

Does the decision in Ivey affect the law in NSW? Section 4B now codifies the meaning of dishonesty (as defined in the Ghosh test) for NSW, and in most of the cases involving fraud, that definition will prevail. The decision might be different if the case is a Commonwealth suit. A good analysis of the test in Ghosh, compared with the test in Peters, will be applied, appears in the decision of Whelan J in R v Smith (Ruling No 1) [2012] VSC 244. Having said that, it is interesting that the Court of Appeal in the UK has now questioned the whole foundation of the Ghosh test upon which s 4B was based. Perhaps it is an occasion for a review of the legislation?