R v Cox & Sadler (No 2) [2006] VSC 55 (22 February 2006)

Last Updated: 23 October 2006

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

CRIMINAL DIVISION

No. 1453 of 2003

THE QUEEN
v
STEPHEN COX AND GLENN SADLER

---

JUDGE:	KAYE J
WHERE HELD:	Melbourne
DATE OF HEARING:	20 February 2006
DATE OF RULING:	22 February 2006
CASE MAY BE CITED AS:	R v Cox and Sadler (Ruling No. 2)
MEDIUM NEUTRAL CITATION:	[2006] VSC 55

---

CRIMINAL LAW – Conspiracy to traffick heroin – Admissibility of evidence – Admissibility of evidence of financial betterment of co-conspirator – Relevance – Discretion.

---

APPEARANCES:	Counsel	Solicitors
For the Crown	Mr M. Tovey QC with Mr D. Brown	Office of Public Prosecutions
For the Accused Cox	Mr B. Young	Tovey Hargreaves & Partners
For the Accused Sadler	Mr G.A. Georgiou with Ms H.P. Spowart	Victoria Legal Aid

HIS HONOUR:

1 The accused, Cox and Sadler, have objected to the admissibility of evidence relating to the "financial betterment" of Ian Ferguson in their forthcoming trial. In a previous ruling^[1] before the trial of Ferguson, I ruled that, in the exercise of my discretion, the evidence of the financial betterment of Sadler not be admitted in the trial of Ferguson. In the same ruling I deferred determination of the admissibility of evidence of Ferguson’s financial betterment in the trial of Cox and Sadler until completion of the trial against Ferguson. That trial has now been completed.

2 In the Ferguson trial, there were three principal parts of the evidence adduced by the Crown in relation to Ferguson’s financial betterment, namely –

(a) evidence as to asset betterment

(b) evidence as to cash deposits and cash payments by Ferguson, which were not matched with any known source of income or with any previous cash withdrawal from the accounts of Ferguson

(c) evidence relating to Ferguson’s household expenditure which could be attributed to credit card, cheque or similar payments. That evidence was adduced to show that in the relevant period of time the Ferguson household expenditures, to a significant degree, must have been paid in cash.

3 The Crown seeks to call evidence relating to Ferguson’s financial betterment on a more limited scale in the forthcoming trial. It does not propose to call evidence to demonstrate any increase in the assets of Ferguson and his wife. Nor does it propose to call evidence relating to Ferguson’s household expenditure. Rather it proposes to call evidence to establish the cash deposits and cash payments which were in evidence in Ferguson’s trial. It proposes to prove the assets of Ferguson at 30 June 1999 and Ferguson’s main sources of income, in order to establish that there were a significant volume of cash payments and cash deposits by Ferguson which could not be accounted for from existing funds or existing sources of income.

4 In Ferguson’s trial the evidence-in-chief of the forensic accountant, Mr Curtin, occupied in excess of three days. A large part of that evidence comprised proving the unsourced cash transactions upon which the Crown now seeks to rely. For that purpose there were a large number of exhibits (approximately 185) tendered through Mr Curtin, to prove each of the transactions relied upon. In argument before me, Mr Tovey told me that the Crown did not propose to lead Curtin’s evidence in the same way in the present trial if it is permitted to call that evidence. Mr Tovey told me that it is intended, if possible, to tender through Mr Curtin a list of relevant cash payments and cash deposits which the Crown relies upon. In that way it is anticipated by Mr Tovey that the evidence-in-chief of Mr Curtin will be of relatively short compass.

5 Mr Georgiou, who appears for Sadler, and Mr Young, who appears for Cox, have submitted that, in the exercise of my discretion, I should not admit the evidence as to the financial betterment of Ferguson. It was submitted that, although that evidence is relevant to the issues in the present trial, it is of peripheral relevance only, while its probative value is outweighed by its prejudicial effect to each accused.

6 Mr Georgiou, whose submissions were substantially supported by Mr Young, contended that the Ferguson betterment evidence is only indirectly relevant to the issues in the forthcoming trial against Sadler and Cox. He referred me to my previous ruling, in which I held that, while the Sadler betterment evidence was relevant to the issues in the Ferguson trial, nonetheless it lay near the outer borders of what is relevant to the issues in Ferguson’s trial. Mr Georgiou submitted that likewise the Ferguson financial betterment evidence resides closer to the periphery of what is relevant in the current case, and thus that its probative value would be limited.

7 In my previous ruling I noted that the evidence of Sadler‘s betterment of was relevant to the trial of Ferguson because it supported the evidence of Duy Le as to the trafficking of heroin by Sadler to Duy Le. In the Ferguson trial the Crown relied on evidence of Duy Le that Sadler trafficked heroin to him, as part of the overt acts from which the Crown invited the jury to infer the conspiracy alleged against Ferguson. Likewise in the forthcoming trial, the evidence of the financial betterment of Ferguson is relevant to the issues in the trial against Sadler and Cox. That evidence supports the evidence of Duy Le as to the trafficking of drugs by Ferguson to Duy Le. The Crown relies on the evidence of Ferguson trafficking heroin to Duy Le as part of the overt acts from which the conspiracy, alleged against Cox and Sadler, is to be inferred.

8 The scope and amount of betterment of Ferguson is substantial, totalling almost $700,000. A significant proportion of it was concentrated during the period of time in which Duy Le alleged that the trafficking by Ferguson to him of heroin was at its height. The betterment evidence which the Crown wishes to adduce consists of unsourced cash transactions by or on behalf of Ferguson. Not surprisingly the evidence of Duy Le was that he paid cash to Ferguson for the heroin supplied to him by Ferguson. In those respects, the evidence of cash betterment of Ferguson, which I have described above, does have logical cogency in supporting the evidence of Duy Le as to the trafficking of heroin to him by Ferguson.

9 In my previous ruling, I examined the steps which were necessary to render the evidence of Sadler’s financial betterment relevant to the issues in the case against Ferguson. I was particularly concerned with the methodology adopted by Mr Curtin in determining what he described as unsourced cash payments and cash deposits. As set out in my previous ruling, the methodology of Mr Curtin involved a number of assumptions and inferences by which he determined which cash payments and cash deposits were not accounted for by antecedent cash withdrawals from the accounts of Sadler.

10 In the trial of Ferguson, little if any issue was taken with Curtin’s methodology in determining what he described as cash payments and cash deposits. Little attention was paid to that question in cross-examination or in final address by counsel for Ferguson, and for good reason. When one examines the monthly transaction sheets relating to Ferguson tendered in evidence at trial (Exhibit P295), there were few if any cash payments or cash deposits, identified by Curtin, which could arguably have been offset against antecedent cash withdrawals, and which were not so offset by Curtin, applying his assumptions. In other words, the cash betterment evidence concerning Ferguson did not involve any serious issue relating to an important step in the chain of reasoning relied upon in the Crown case. The absence of any contention in relation to that step, in my view, renders the betterment evidence relating to Ferguson significantly less remote than Sadler’s financial betterment evidence might have been had it been admitted in evidence in the trial of Ferguson. Accordingly for the purposes of the exercise of my discretion, I do not consider that the financial betterment evidence relating to Ferguson lies as near to the periphery of what is relevant in the forthcoming trial against Cox and Sadler, as did the evidence of Sadler’s financial betterment to the issues which were at large in the trial of Ferguson.

11 Mr Georgiou then submitted that the evidence of financial betterment of Ferguson would be unfairly prejudicial in the trial of Sadler. He submitted that the magnitude of the betterment figure was overwhelming, so there was a danger that a jury would become distracted by the size of Ferguson’s betterment. He submitted that the jury might reason irrationally that, given the size of Ferguson’s betterment, he must be guilty of conspiring with Sadler and Cox. Mr Georgiou correctly conceded that this was not his strongest point. The jury would be directed as to the relevance of the allegations of trafficking by Duy Le to Ferguson, and as to the relevance of the financial betterment evidence of Ferguson to corroborating that aspect of Duy Le’s evidence. Such a direction would be simple and logical, and would be capable of being readily understood and followed by a jury.

12 It was next submitted that the accused would not be able to deal effectively with Ferguson’s financial matters in cross-examination of witnesses and calling evidence. It was submitted that in the forthcoming trial the accused would therefore be at a significant disadvantage in endeavouring to make answer to that aspect of the Crown case.

13 In ruling that the Sadler financial betterment evidence was inadmissible in the trial of Ferguson, I was concerned with the inability of Ferguson’s counsel to deal adequately with the evidence of Sadler’s financial betterment. I had conducted two voir dires in relation to the admissibility of Curtin’s evidence, and during that process it was clear that there were issues relating to Sadler’s financial betterment which might need to be explored. At that stage it could not realistically expected that counsel for Ferguson could adequately expose those issues.

14 On the other hand, the trial of Ferguson has been completed. He has been convicted. Ferguson gave evidence at his trial. His counsel cross-examined Curtin. In the forthcoming trial the accused are not in the same position of disadvantage concerning Ferguson’s financial betterment as was, potentially, Ferguson’s counsel in relation to Sadler’s financial betterment. In the forthcoming trial the accused have the advantage of the transcript of the evidence of Curtin, of the cross-examination of Curtin, and of Ferguson’s own evidence. It is not suggested that, if Sadler or Cox desire to call him, Ferguson would be unable or indeed unwilling to give evidence on their behalf.

15 In the forthcoming trial, any evidence which peculiarly involves Ferguson may involve some forensic difficulty for Cox and Sadler. However that is not a valid reason to exclude the evidence if it is otherwise relevant and probative of a fact in issue. Certainly, however, Cox and Sadler do not face the same degree of difficulty in dealing with the foreshadowed Curtin evidence relating to financial betterment, that would have been confronted by Ferguson had I admitted the Sadler financial betterment evidence in his trial.

16 It was further submitted to me that in any event it would be oppressive for the defence to deal with a large body of financial information pertaining to the Fergusons, when there is other evidence which the Crown can rely on to support the evidence of Duy Le of trafficking heroin to Ferguson. In particular, Mr Georgiou pointed to the evidence of the telephone communications between Duy Le and Ferguson, evidence of the LEAP enquiries undertaken by Ferguson in relation to Duy Le, and other post-warrant contacts such as the dealings with McCabe. However, as pointed out by Mr Tovey QC, who appears with Mr Brown for the Crown, the evidence of financial betterment of Ferguson is important corroborative evidence of Duy Le’s testimony relating to the trafficking of heroin by Ferguson to him. The financial evidence which Mr Tovey now proposes to call is in shorter compass, and less substantial, than the evidence which was adduced in Ferguson’s trial. In my view it would not be oppressive for the Crown to call that evidence in the forthcoming trial. The fact that separate trials have been ordered should not disentitle the Crown to call evidence otherwise relevant, which supports an important part of its proof.

17 As I have already noted, the evidence-in-chief of Mr Curtin occupied some three days. However, much of that time was spent addressing formal proofs of the transaction referred to in Curtin’s monthly transaction sheets. By contrast his cross-examination by both accused lasted short of one day. The cross-examination revealed that little issue was taken with the primary evidence of Mr Curtin but, rather, was directed to the matters in respect of which Mr Ferguson proposed to provide an explanation. On its face, it would seem to me that the methodology proposed by Mr Tovey is sensible and workable, provided that the accused in the upcoming trial do not require formal proofs of the transaction which are the subject of Mr Curtin’s evidence. Those proofs were adduced in Ferguson’s trial, and are available to the accused in this trial. As few, if any, were the subject of any debate in Ferguson’s trial, there would seem to be no reason why the accused should need to insist on those proofs being adduced in the present case. In those circumstances, I do not expect that, were the evidence admitted, it would occupy other than a relatively short part of the forthcoming trial.

18 It is accepted that, on any view, I will need to direct the jury that it would be dangerous for the jury to act on the uncorroborated evidence of Duy Le.^[2] It is accepted that that financial betterment evidence relating to Ferguson is evidence capable of corroborating that aspect of Duy Le’s evidence which relates to the trafficking of heroin by Ferguson to him. It would be unfair to the Crown to exclude that evidence from its proofs, unless there was some significant unfairness to be occasioned to the accused by its admission.

19 For those reasons, I do not consider that the accused have demonstrated the existence of any particular prejudice or unfairness which would outweigh the probative value of the Ferguson betterment evidence should it be admitted at the trial. Thus I do not consider there is any appropriate basis for me to exercise my discretion to exclude it from the evidence in the trial.

20 Mr Young and Mr Georgiou have both raised a further consideration which they contended was relevant to the question of whether the evidence of Ferguson’s betterment should be admitted in the trial of Cox and Sadler. Originally Ferguson was charged on one count alleging that, on 30 August 2000, he stole a quantity of cash belonging to Giac Nguyen ("Giac"). The circumstances relating to that count are summarised in a previous ruling by me in this matter.^[3] In substance, it was alleged that on 30 August 2000, while Giac was present at premises in Braebrook, the Major Drug Squad conducted a raid at those premises. Giac was arrested. He alleged that shortly after his arrest he observed Ferguson and another unidentified officer taking bundles of cash from a bag which contained money, and stuffing those bundles down their socks. The Crown alleged that Ferguson stole $350,000 during the raid. Originally the charge of theft against Ferguson formed one of the counts on the presentment. By the same ruling I directed that that count (and other counts) be severed, so that it be tried separately. Subsequent to that ruling I was informed that the Crown intended to enter a nolle prosequi in relation to that count.

21 Mr Young and Mr Georgiou both submitted that the existence of the charge against Ferguson, and of the Giac allegation, is relevant to the question of whether and how the evidence of Ferguson’s financial betterment should be admitted in the current trial. It was submitted that the existence of that allegation left open a possible explanation for approximately one half of the cash betterment identified by Curtin. In particular it was submitted that the date of the alleged theft was relevant, occurring shortly before the period in which the Crown alleges that the cash transaction of Ferguson reached their peak.

22 In response, Mr Tovey confirmed to me that the Crown will be entering a nolle prosequi in relation to the matter. Mr Tovey advised me that the Crown does not accept Giac’s allegation, and does not accept him as an honest witness in relation to this matter.

23 The issue of the relevance of Giac’s allegation against Ferguson was previously raised in relation to a different issue, and I dealt with it in a previous ruling.^[4] As I then noted, the count on the previous presentment was no more than an unproven allegation against Ferguson, in respect of which Ferguson is and was presumed innocent. The fact that the Crown charged Ferguson with the theft does not, accordingly, affect the admissibility of the Ferguson financial betterment evidence in the forthcoming trial, nor the manner in which the Crown would seek to rely on it.

24 For those reasons, I do not accept the submission by the accused that, if the Ferguson financial betterment evidence were admitted, there would be prejudice to the accused which outweighs the potential probative value of the evidence in the trial. Accordingly I rule that the evidence, as outlined by Mr Tovey, is admissible in the forthcoming trial.

^[1] R v Cox and ors (Ruling No. 8) [2005] VSC 368R.

^[2] See Director of Public Prosecutions v Faure [2000] VSCA 170; [1993] 2 VR 497.

^[3] R v Cox and ors (Ruling No. 4) [2005] VSC 225R at para [118].

^[4] R v Cox and ors (Ruling No. 8) [2005] VSC 368R at para [15].