Commissioner of the Australian Federal Police v Pharmacy Depot Hurstville Pty Ltd (in Liquidation)

[2022] NSWSC 1576

Supreme Court

New South Wales

Medium Neutral Citation:

Commissioner of the Australian Federal Police v Pharmacy Depot Hurstville Pty Ltd (in Liquidation) & Ors [2022] NSWSC 1576

Hearing dates:

11 November 2022

Date of orders:

11 November 2022

Decision date:

17 November 2022

Jurisdiction:

Common Law

Before:

Yehia J

Decision:

I make the orders as set out in the Short Minutes of Order, dated 11 November 2022

Catchwords:

PROCEEDS OF CRIME — Order seeking the application for restraining orders to be heard without notice — Orders restraining disposal of property — No question of principle

Legislation Cited:

Corporations Act 2001 (Cth) s 471B

Criminal Code (Cth) s 135.4(1)

Proceeds of Crime Act 2022 (Cth) ss 17, 18, 26, 39, 92, 180, 330, 338

Uniform Civil Procedure Rules 2005 (NSW) r 18.2(2)(c)

Category:

Principal judgment

Parties:

Commissioner of the Australian Federal Police (Plaintiff)
Pharmacy Dept Hurstville Pty Limited (ACN 163 892 939) (in Liquidation) (First Defendant)
Yaakop (Jacob) Youssef (Second Defendant)
Hamza Amin Zoghbi (Third Defendant)
Hussein Mohamad Ali Haidar (Fourth Respondent)
Khodr Mohamad Ali (Fifth Respondent)
H&J Property Holdings Pty Ltd (ACN 603 453 881) (in Liquidation) (Sixth Respondent)
Mohammad Youssef (Seventh Respondent)
Inaam Youssef (Eighth Respondent)

Representation:

Counsel:
D Tang (Plaintiff)

File Number(s):

2015/00114787

Judgment

1. The Commissioner of the Australian Federal Police (“the Commissioner”), moves on a Notice of Motion seeking a number of orders in relation to the Third Defendant, Hamza Amin Zoghbi.

2. Specifically, the Commissioner seeks the following orders:

1. The application for restraining orders be heard without notice to Mariam Fares, and the Notice of Motion be heard and determined without having been served on Mariam Fares.

2. Pursuant to section 471B of the Corporations Act 2001 (Cth), the Commissioner be granted leave to proceed to continue these proceedings against H & J Property Holdings Pty Ltd (AC 603 453 881) (in Liquidation) (“H & J Holdings”).

3. Restraining orders pursuant to ss 17 (2)(a), (2)(c), and (2)(d) of the Proceeds of Crime Act 2022 (Cth) (“the Act”) in relation to the Third Defendant (Hamza Amin Zoghbi). The property is specified in Schedules One, One A, One B, Two, Three and Three A.

4. Pursuant to s 38 of the Act, the Official Trustee in Bankruptcy take custody and control of two motor vehicles, a 2010 black Porsche and a 2009 silver Mercedes, both registered in the name of Hamza Amin Zoghbi.

3. In support of the Notice of Motion, the Commissioner reads three affidavits of Alexandra Navarrete: two affidavits sworn on 7 October 2022; and a further affidavit sworn on 2 November 2022. Alexandra Navarrete is a special member of the Australian Federal Police (“AFP”), and an “authorised officer” within the meaning of s 338 of the Act. The Commissioner also relies on the evidence contained in three volumes of Exhibit AN-1 (“the Exhibit”).

4. The Commissioner has also filed a number of affidavits of service confirming service on the various parties except for Mariam Fares. I am satisfied that other than Mariam Fares, sufficient notice has been provided, and notwithstanding the absence of any appearance on behalf of the Defendants and interested parties, I can proceed to hear this application.

5. On 11 November 2022, I made the orders sought. I publish my reasons.

Procedural History

6. These proceedings were commenced by way of summons filed on 17 April 2015 against Pharmacy Depot Hurstville Pty Ltd, Yaakop (“Jacob”) Youssef (“the Second Defendant”) and Hamza Amin Zoghbi (“the Third Defendant”). On that date, restraining orders were made over various properties on an ex parte basis pursuant to s 18 of the Act.

7. Mariam Fares (“Fares”) is the wife of the Second Defendant, Youssef. She is not herself a party to the proceedings. When the proceedings were commenced, Fares was residing in Australia, at an address in Turrella. On 18 April 2015, a number of documents were personally served on Fares at that address by Federal Agent James Cutler. The documents included the following:

1. Letter from the AFP to Fares, dated 17 April 2015;

2. Orders made on 17 April 2015;

3. Summons filed 17 April 2015; and

4. Affidavit of James Cutler sworn on 17 April 2015.

8. The documents were served on Fares on the basis that she may have an interest in certain property restrained pursuant to the orders made on 17 April 2015. That property includes a half share of a property located at 147 Forest Road, Arncliffe, New South Wales, and funds standing to the credit of Westpac Banking Corporation account number xxx-xxx xx-xxx (together, “Fares’ Property”).

9. The orders made on 17 April 2015 included orders for Fares to provide a sworn statement of assets and liabilities pursuant to s 39 of the Act, and for her to be examined pursuant to s 180 of the Act.

10. Fares provided a sworn statement, dated 14 May 2015, and was examined on 24 June 2015. She has not filed an appearance and is not an active party to the proceedings, despite being on notice of the proceedings since 18 April 2015.

11. The Commissioner does not know Fares’ current whereabouts. Travel movement records disclosed that Youssef and Fares departed Australia on 28 December 2017 and, as of 28 September 2022, had not returned to Australia. It is believed that they reside in Lebanon, although their precise whereabouts are unknown. I accept that there are no practicable searches which can be undertaken by the Commissioner to ascertain Fares’ current whereabouts overseas.

12. A Court Attendance Notice was filed on 5 July 2018 in relation to criminal charges against Youssef. The Court Attendance Notice has not been served given his precise whereabouts are unknown. It is suspected that Youssef has absconded and that he and Fares are unlikely to return to Australia or make their address known to the authorities.

13. On 10 October 2022, the Commissioner sent a letter enclosing a copy of the Notice of Motion filed on 7 October 2022 and supporting affidavits to Youssef by email to the last known email address and by express post to an address at Arncliffe.

14. On 27 October 2022, the Commissioner sent a letter enclosing a copy of the Notice of Motion dated 7 October 2022 and supporting affidavits to Fares at the last known email address for her husband, Youssef, and by registered post to an address at Turrella and an address at Arncliffe.

15. On 17 June 2022, Zoghbi was convicted of conspiring with Youssef to defraud the Commonwealth, contrary to section 135.4(1) of the Criminal Code (Cth). Zoghbi was sentenced to 6 years’ and four months’ imprisonment, with a non-parole period of four years’ imprisonment.

16. Zoghbi and Youssef were Directors of Pharmacy Depot Hurstville Pty Ltd. The criminal conduct relates to a total amount of $19,345,614.78 which was defrauded, and which related to approximately 5500 false prescriptions submitted in trenches of 29 false claim forms. The conspiracy related to products of Vitalfo Australia Pty Ltd (“Vitaflo products”), and other non-Vitalfo products. Vitalfo Australia has 54 products approved by the Pharmaceutical Benefits Advisory Committee for listing with the Pharmaceutical Benefits Scheme (“PBS”). Of the total amount of money defrauded during the course of the conspiracy, approximately $18.5 million related to Vitaflo products.

17. The Certificate of Conviction confirms that the Third Defendant was convicted of an offence that between about 30 November 2013 and 25 March 2015, at Hurstville, and elsewhere in the State of New South Wales, he did conspire with Yaakop Youssef and divers others with the intention of dishonestly obtaining a gain from a third person, namely, the Commonwealth, which is a Commonwealth entity: (Volume 1, Tab 7).

18. The circumstances giving rise to the conviction are set out in the remarks on sentence of Sutherland DCJ, dated 17 June 2022. The remarks on sentence do not establish the facts upon which the Commissioner relies in support of the Notice of Motion, but provide a useful outline or overview of the circumstances underpinning the conviction.

19. The Commissioner relies upon the evidence contained in the three volumes of the Exhibit to establish the facts. For instance, the statement of Robyn Walker, Director of Vitalfo Australia Pty Ltd, dated 5 January 2015, together with the accounts of Pharmacy Depot Hurstville Pty Ltd (the first Defendant), provides the analysis which identifies that the PBS payments were made into the First Defendant’s account.

20. The Notice of Motion is not an originating process. As indicated above, on 17 April 2015, restraining orders were made pursuant to s 18 of the Act in respect of the property set out in the schedules attached to the Notice of Motion.

21. Section 18 of the Act provides for the making of restraining orders where a proceeds of crime authority applies for the order and there are reasonable grounds to suspect that a person has committed a serious offence. In light of the fact that Mr Zoghbi has now been convicted, an application is made pursuant to s 17 of the Act.

22. In addition, s 92 of the Act provides that if a person is convicted of a serious offence, property that is covered by a restraining order under ss 17 or 18 of the Act against the person that relates to the offence, is forfeited to the Commonwealth six months after the conviction day. In this matter, the relevant date on which property will be forfeited is 17 December 2022.

23. Section 92A of the Act requires the Commissioner to take reasonable steps to notify persons who have an interest in the property before the forfeiture takes place.

24. The Commissioner is seeking to have the Notice of Motion dealt with as soon as possible to allow time for the Commissioner to provide any interested parties with reasonable notice of any additional restraining orders made and of the statutory forfeiture date (being 17 December 2022).

Orders 1 & 2

25. Section 26(1) of the Act provides that the responsible authority must give written notice of an application for a restraining order to the owner of the property, and must include with the notice a copy of the application and affidavit supporting the application. Subsection (4) provides:

The court must consider the application without notice having been given if the responsible authority requests the court to do so.

26. Rule 18.2(2)(c) of the Uniform Civil Procedure Rules 2005 (NSW) allows for a broad discretion to dispense with the service requirements. I am satisfied that I should dispense with the notice requirements and hear and determine this application without it having been served on Fares for the following reasons:

1. Fares was in Australia when the proceedings commenced, and was aware of them.

2. Fares participated in the proceedings as an interested party by swearing a statement, dated 14 May 2015, of her assets and liabilities. She was examined on 24 June 2015.

3. I accept that Fares and her husband, the Second Defendant, departed Australia on 28 December 2017, and, as of 28 September 2022, had not returned to Australia. It appears that Fares travelled to Lebanon, but the Commissioner does not know whether she remains in that country. A Court Attendance Notice was served on Youssef and there is a likelihood that he and his wife will not return to Australia or make their address known to the authorities.

Leave Pursuant to s 471B of the Corporations Act.

27. H & J Property Holdings Pty Ltd is the company which was the registered owner of a warehouse at xx/x Jindalee Place, Riverwood: (Schedule 1A, Item 3). The company was appointed a liquidator on 29 October 2019.

28. I am satisfied that leave should be granted pursuant to s 471B of the Corporations Act for the following reasons:

1. The proceedings are a statutory process that serve a public function of preventing individuals from dispensing with property being proceeds or an instrument of crime;

2. Restraining orders were in place before the company went into liquidation;

3. The Commissioner sought consent of the liquidators on 11 and 28 October 2022. No formal response has been received. However, informal contact has been made by the liquidator and I am satisfied that they are aware of the hearing before me on 11 November 2022.

Section 17 Orders.

29. Section 17 provides:

17  Restraining orders—people convicted of or charged with indictable offences

When a restraining order must be made

(1)  A court with *proceeds jurisdiction must order that:

(a)  property must not be disposed of or otherwise dealt with by any person; or

(b)  property must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in the order;

if:

(c)  a *proceeds of crime authority applies for the order; and

(d)  a person has been convicted of, or has been charged with, an *indictable offence, or it is proposed that he or she be charged with an indictable offence;

(e)  any affidavit requirements in subsection (3) for the application have been met; and

(f)  (unless there are no such requirements) the court is satisfied that the *authorised officer who made the affidavit holds the suspicion or suspicions stated in the affidavit on reasonable grounds.

Property that a restraining order may cover

(2)  The order must specify, as property that must not be disposed of or otherwise dealt with, the property specified in the application for the order, to the extent that the court is satisfied that there are reasonable grounds to suspect that that property is any one or more of the following:

(a)  all or specified property of the *suspect;

(aa)  all or specified *bankruptcy property of the suspect;

(b)  all property of the suspect other than specified property;

(ba)  all bankruptcy property of the suspect other than specified bankruptcy property;

(c)  specified property of another person (whether or not that other person’s identity is known) that is subject to the *effective control of the suspect;

(d)  specified property of another person (whether or not that other person’s identity is known) that is *proceeds of the offence or an *instrument of the offence.

Affidavit requirements

(3)  The application for the order must be supported by an affidavit of an *authorised officer stating:

(a)  if the *suspect has not been convicted of an indictable offence—that the authorised officer suspects that the suspect committed the offence; and

(b)  if the application is to restrain property of a person other than the suspect but not to restrain *bankruptcy property of the suspect—that the authorised officer suspects that:

(i)  the property is subject to the *effective control of the suspect; or

(ii)  the property is *proceeds of the offence or an *instrument of the offence.

The affidavit must include the grounds on which the *authorised officer holds those suspicions.

Refusal to make a restraining order

(4)  Despite subsection (1), the court may refuse to make a *restraining order in relation to an *indictable offence that is not a *serious offence if the court is satisfied that it is not in the public interest to make the order.

Note:          A court can also refuse to make a restraining order if the Commonwealth refuses to give an undertaking: see section 21.

Risk of property being disposed of etc.

(5)  The court must make a *restraining order even if there is no risk of the property being disposed of or otherwise dealt with.

Later acquisitions of property

(6)  The court may specify that a *restraining order covers property that is acquired by the *suspect after the court makes the order. Otherwise, no property that is acquired after a court makes a restraining order is covered by the order.

Orders Pursuant to s 17(2)(a)

30. Items 1, 2, 3 and 4 of Schedule Three and items 1 and 2 of Schedule Three A identify the property of the Third Defendant over which the orders are sought. This property includes the following:

• Funds standing to the credit of a Bank West account, as of 17 April 2015, in the name of the Third Defendant, together with interest earned on that amount.

• Real property located at Holroyd, NSW. The property search documents disclosed that the Third Defendant is the registered owner: (Tab 70).

• A black Porsche and a silver Mercedes, both registered in the name of the Third Defendant (Tab 71).

• Funds standing to the credit of Commonwealth Bank of Australia, in the name of the Third Defendant as of 17 April 2015, together with any interest earned on that amount.

• Funds standing to the credit of Australia and New Zealand Banking Group Limited in the name of the Third Defendant and Naima Wahab (his wife) as of 17 April 2015, together with any interest earned on that amount.

31. I am satisfied that this property is that of the Third Defendant and that he is a person convicted of an indictable offence.

Orders Pursuant to s 17(2)(c)

32. An order is also sought in respect of property of the First Defendant, Pharmacy Depot Hurstville Pty Ltd (“Pharmacy Depot”), that is said to have been under the effective control of the Third Defendant. That property is:

• Funds standing to the credit of Australia and New Zealand Banking Group Limited in the name of Pharmacy Depot as at 17 April 2015, save for an amount of $50,000, together with any interest earned on that amount;

• Net proceeds of the sale of four vehicles, namely, three Toyota Hilux and one Toyota Hiace; and

• The cash amount of $732,420 seized by the AFP on 26 March 2015, together with any interest earned on that amount.

33. Five Toyota vehicles were registered in the name of Pharmacy Depot (Exhibit Tab 15). Four of those vehicles were subject to financing. Ms Navarrete deposes that based on evidence set out at paragraphs 43 and 44 of her first affidavit, the payments made between 22 April 2014 and 19 March 2015 for four of the vehicles were made from the Pharmacy Depot account to Toyota Finance.

34. The Pharmacy Depot bank account reveals repayments being made to “Toyota Finance”. That account was being used to make repayments for four of the vehicles. The fifth vehicle was not subject to finance but was registered to pharmacy Depot and under the effective control of the Third Defendant.

35. I am satisfied that this is property of the First Defendant, and was subject to the effective control of the Third Defendant. At the relevant time, the Third Defendant was a Director of Pharmacy Depot. The proceeds of the fraudulent conduct were deposited into the Pharmacy Depot bank account (Exhibit Tabs 11 and 12). Those funds were used to meet the repayments for four of the vehicles.

36. The sum of $732,420 was seized from the Third Defendant’s home. It was located in a shoebox at his residence. I am satisfied that the cash is the proceeds and/or instrument of an offence within the meaning of subss 330(1) and (2) of the Act. I note that the exclusion application made by Naima Wahab was dismissed on 28 October 2016.

Orders Pursuant to s 17(2)(d)

37. I have already dealt with items 1, 3, 4 and 5 of Schedule One. Items 2 and 3 of Schedule One A are properties at Arncliffe and Riverwood. The registered owners of the property at Arncliffe are Khodr Mohamad Ali and Mariam Fares. The property was purchased in November 2014 for an amount of $1.16 million. The deposit was paid from funds held in the Pharmacy Depot account. A number of cheques were drawn from the same account that constituted the balance of the amount owing. I am satisfied that the property was purchased from funds deposited into the Pharmacy Depot account.

38. The warehouse at Riverwood is held in the name of H & J Property Holdings Pty Ltd. The property was purchased in January 2015 and paid for from funds held in the Pharmacy Depot account. I am satisfied that the property was paid for from proceeds or an instrument of the offence for which the Third Defendant has been convicted.

39. A further property at Arncliffe (item 1 of Schedule One B), was purchased in October 2014 for $550,000. The funds for the purchase of the property were transferred from the Pharmacy Depot account into the account of one of the registered owners to affect the purchase. The Australian Taxation Office documents of the registered owners disclose that their declared income was insufficient to cover the purchase.

37. Items 1, 2, 3 and 6 of Schedule Two are funds held in a number of bank accounts. I am satisfied that they are funds that are wholly or partly derived from proceeds of crime. Funds were transferred from the Pharmacy Depot account to these accounts in the relevant period. Furthermore, Australian Taxation Office records in respect of each account holder disclosed no declared income from which these funds could have been obtained.

38. The property located at Sans Souci is held in the name of Naima Wahab (item 5, Schedule Three). The property was purchased in December 2014 for $3.125 million. There is no mortgage on the property. Ms Wahab had no declarable income between 2007 and 2014. Records reveal that on 21 October 2014, an amount of over $300,000 was withdrawn from Pharmacy Depot account. That is approximately 10% of the purchase price. In December 2014, an amount consistent with the balance of the purchase price was paid out from Pharmacy Depot account. I am satisfied that the purchase price of this property was paid from the Pharmacy Depot account during the relevant period, from monies that were proceeds and/or instrument of crime.

Conclusion

42. It follows that I am satisfied that the various orders pursuant to subss 17(2)(a), (c) and (d) of the Act should be made. The Third Defendant was convicted of conspiring to defraud the Commonwealth on 17 June 2022 and has been sentenced.

43. I am satisfied that the necessary requirements of the Act are made out and that the Short Minutes of Order properly reflect the orders that should be made under the Act. Accordingly, I make those orders in accordance with the legislation and in accordance with the Short Minutes of Order.

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Decision last updated: 17 November 2022