Commonwealth Director of Public Prosecutions v Ly - [2007] NSWSC 805

No judgment structure available for this case.

CITATION: Commonwealth Director of Public Prosecutions v Ly [2007] NSWSC 805

HEARING DATE(S): 19-20 July and 16 August 2007

JUDGMENT DATE :
21 August 2007

JUDGMENT OF: Harrison J

DECISION: (1) Declare that Julio Madrid is the joint owner of AUD$36,120 and US$30,000 (“the property”) seized by the Australian Federal Police on 7 December 2004 and forfeited to the Commonwealth on 9 March 2006 (“Julio Madrid’s interest”). (2) Declare that Julio Madrid’s interest in the property is AUD$36,120 and US$30,000. (3) Direct the Commonwealth to transfer Julio Madrid’s interest in the property to Julio Madrid. (4) With respect to the notice of motion dated 15 July 2005 I order the Applicant to pay the Respondent’s costs thrown away or occasioned by reason of the vacation of the hearing date on 9 March 2006 but that in all other respects the Respondent should pay 75 per cent of the Applicant’s costs of that motion. (5) I order the Respondent to pay the Applicant’s costs of the notice of motion dated 5 April 2006. (6) I grant a stay of my orders for a period of 28 days from today.

CATCHWORDS: PROCEEDS OF CRIME – application under s 104 Proceeds of Crime Act 2002 by lawful owner of property seized by Australian Federal Police and forfeited to Commonwealth – applicant not involved in commission of offence to which forfeiture related – applicant’s interest in the property not the proceeds of the offence – EVIDENCE - application pursuant to s 108A Evidence Act 1995 as to admissibility of evidence of credibility of person who has made a previous representation - CIVIL PROCEDURE – joinder of party to proceedings pursuant to rules 6.24 and 6.25 Uniform Civil Procedure Rules 2005

LEGISLATION CITED: Civil Procedure Act 2005 - s56(1)
Evidence Act 1995 - s 108A
Financial Transaction Reports Act 1988 - s 15(1)
Proceeds of Crime Act 2002 - ss 17, 39, 92, 102, 104, 180, 338,
Uniform Civil Procedure Rules 2005 - rules 6.24, 6.25

CASES CITED: Ardern v Bank of New South Wales [1956] CLR 569
Brewer v Westminster Bank Ltd [1952] 2 All ER 650
Catlin v Cyprus Finance Corporation (London) Ltd [1983] 1 QB 759

PARTIES: Commonwealth Director of Public Prosecutions (Plaintiff)
Hang Ly (Defendant)
Julio Madrid (Applicant)
Commonwealth Director of Public Prosecutions (Respondent)

FILE NUMBER(S): SC 10913 of 2005

COUNSEL: S J Odgers SC (Applicant)
M Buscombe and T Muir (Plaintiff/Respondent)

SOLICITORS: Randle Lawyers (Applicant)
P Musgrave for Commonwealth Director of Public Prosecutions (Plaintiff/Respondent)

- 32 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HARRISON J

21 August 2007

10913 of 2005 COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS v HANG LY

JUDGMENT

Introduction

1 On 7 December 2004, Hang Ly was apprehended and searched by Customs officers at Sydney Kingsford Smith Airport. Mr Ly was at that time an intending passenger on Qantas flight QF187. A search of Mr Ly revealed that he was carrying $36,120 in Australian currency and $30,000 in US currency ("the property").

2 On his passenger card in answer to the question: "Are you taking out of Australia AUD $10,000 or more in Australian or Foreign currency equivalent?” he had marked the answer "No". Mr Ly was charged with an offence under s 15(1) of the Financial Transaction Reports Act 1988 for failing to report the transfer out of Australia of currency over $10,000. Mr Ly subsequently pleaded guilty to that offence, and on 19 January 2005 was convicted and sentenced. It is unnecessary for present purposes to make further reference to the details of Mr Ly's conviction.

3 An offence under s 15(1) of the Financial Transaction Reports Act 1988 is a "serious offence" as defined by, and for the purposes of, the Proceeds of Crime Act 2002 (Cth) (“the Act”): see s 338. On 15 March 2004 the plaintiff obtained a restraining order under s 17 of the Act restraining dispositions and dealings in the property found in Mr Ly's possession. On 9 March 2006, by reason of the operation of s 92 of the Act, the property was forfeited to the Commonwealth.

4 By notice of motion filed 31 March 2006 Julio Madrid ("the Applicant") moved the Court for the following orders: -

Proceeds of Crime Act

5 The Applicant relied upon the following grounds for an order under s 102 of the Act: -

(b) The Applicant was not, in any way, involved in the commission of the offence to which the forfeiture relates;

(c) The Applicant's interest in the property is not subject to the effective control of the person whose conviction caused the forfeiture; and

6 The plaintiff is the Respondent to the motion. The proceedings were heard by me on 19 and 20 July 2007. Mr Odgers of Senior Counsel appeared for the Applicant. Mr Buscombe of counsel appeared for the Respondent.

Background

7 Division 3 of the Act is headed Recovery of forfeited property. It contains ss 102 and 104 of the Act. Those sections are in the following terms: -

" 102 Court may make orders relating to transfer of forfeited property etc .

(b) the court is satisfied that the grounds set out in subsection (2) or (3) exist;

(i) if the interest is still vested in the Commonwealth directing the Commonwealth to transfer the interest to the applicant; or

(ii) declaring that there is payable by the Commonwealth to the applicant an amount equal to the value declared under paragraph (c).

(a) the applicant was not, in any way, involved in the commission of the offence to which the forfeiture relates; and

(b) the applicant’s interest in the property is not subject to the effective control of the person whose conviction caused the forfeiture; and

(c) the applicant’s interest in the property is not proceeds of the offence or an instrument of the offence.

(a) the property was not used in, or in connection with, any unlawful activity and was not derived or realised, directly or indirectly, by any person from any unlawful activity; and

(b) the applicant acquired the property lawfully; and

(c) the applicant is not the person convicted of the offence to which the forfeiture relates."

********

104 Applying for orders under sections 102 and 103

(1) An application for an order under section 102 or 103 must, unless the court gives leave under subsection (2), be made before the end of the period of 6 months commencing on the day on which the property to which the application relates is forfeited to the Commonwealth.

(2) The court may give a person leave to apply after the end of that period if the court is satisfied that the delay in making the application is not due to neglect on the part of the applicant.

(3) A person who was given notice of:

(a) proceedings for the application for the restraining order by virtue of which the property is forfeited; or

must not apply for an order under section 102 or 103 relating to the property unless the court gives leave under subsection (4).

8 Counsel for the parties conducted the hearing in an extremely efficient manner. The significant product of this efficiency was the identification and isolation at an early stage of a single question for determination by me. That was whether or not the Applicant had an interest in the property, as defined in s 338 of the Act. It was conceded by Mr Buscombe that, even though the Applicant ordinarily bore the onus of establishing the matters set forth in s 102(2) of the Act, none of them was contested on the present application. The parties agreed that only the first of the Applicant’s specified grounds was in issue.

9 According to the Respondent’s submissions, this issue - referred to by counsel for the Respondent as the "threshold issue" - fell to be decided upon a consideration of the following four issues of fact: -

9.1 Was the Australian and US currency kept by the Applicant at his various residences in the manner described by him in his evidence?

9.2 If the first question is answered "yes”, was that currency given to Mr Ly as described by Mrs Madrid in her evidence?

9.3 If the answer to the first two questions is "yes", was the currency seized from Mr Ly the (same) money given to him by Mrs Madrid?

10 It is necessary to have regard to the evidence in order to decide these questions.

The evidence

11 The only evidence in the Applicant's case was given by him and his wife. Mr Madrid said that he was born in 1949 in Chile. He grew up in Santiago and migrated to Australia in 1988. He married his wife Maria Madrid and they have a son Julio Augusto Madrid Gomes born on 5 September 1983. The Applicant's son left Australia in 2003 and travelled overseas.

12 The Applicant gave evidence, in an affidavit sworn by him on 7 December 2005, that the money found in the possession of Mr Ly was his money. The Applicant said, further, that his wife wrongfully and without his consent or knowledge gave the money to Mr Ly. No objection was taken to that evidence. The Applicant gave further evidence in support of these contentions.

13 The Applicant said that until he retired early in 2004 he had worked for the previous 17 years in the building industry as a concrete renderer. His usual hours of work were from 5.00am until 6.00pm or 6.30pm. He always worked overtime when it was offered and said that he was regarded as a person who worked very hard. As a consequence of his work, which was very physical, he sustained injuries from which he still suffers. However, due to the long hours and hard work he was able to make good money.

14 The applicant gave evidence of his taxable income for the financial years ending 30 June 1998 until 30 June 2004 inclusive. He produced income tax returns for all these years. He was not cross-examined in any way upon this evidence.

15 The Applicant gave further evidence concerning workers compensation payments that he had received. On 23 April 1998 he received a lump sum of $1345 and weekly compensation of $1000 per week for the period from 7 November 1994 to 8 May 1995, and $364.10 per week for the period from 9 May 1995 on a continuing basis. A copy of the Compensation Court Order dated 23 April 1998 was tendered in evidence. On 16 July 2002 he received a lump sum of $20,000. A copy of the Workers’ Compensation Commission Registration of Section 66A Lump Sum Agreement dated 22 July 2002 was also tendered in evidence.

16 The Applicant gave further evidence of other payments received by way of workers compensation for injuries received by him over the years. On 18 September 2003 he received a lump sum of $5000. On 8 November 2002 a provisional weekly compensation payment of $695.60 was made in his favour for the period from 5 November 2002 to 30 November 2002. On 22 June 2005 he received a lump sum of $28,500. Documents evidencing these payments were tendered in evidence.

17 On 15 November 2004 the Applicant received a cheque in the sum of $52,797.06 representing his full entitlement from Construction & Building Industry Super after the deduction of PAYG tax. The Applicant said that his wife banked that cheque into her bank account on 19 November 2005.

18 On 3 September 2003 the Applicant received a redundancy payment of $18,001.40. He paid tax on that amount of $5,668.55.

19 The Applicant gave evidence that from about 1998 he fell into a practice of taking money from his bank accounts, which was derived from his wages, compensation payments and superannuation, and hid it in a number of different places at his home. He said that he thought that he was the only one who knew where the money was hidden. The Applicant provided details of the bank accounts he had at the time when he commenced this practice.

20 As a result, the Applicant saved a few thousand dollars. He said that at the time the American dollar was priced well and he started to exchange Australian dollars that he had saved for American dollars. The Applicant said that he would exchange the money whenever the exchange rate was favourable. He said he did this for about six years without spending any of the money that he had saved. When his son informed the Applicant and his wife that he was going to travel overseas, the Applicant gave him some of the money as spending money. The Applicant recalls that this was about $10,000.

21 From the time that the Applicant started to withdraw money from his bank account to keep at his home, he had two bank accounts. One account was in his name and one account was in the joint names of himself and his wife. He later opened an account with another bank in about 2000.

22 The Applicant's wife asked him on a number of occasions to forward money to their son. The Applicant said that he refused to do so. He said that he had not realised that his wife knew where he had hidden money in the house. It later came to his attention that almost all of the money that he had put aside was missing. The Applicant said he confronted his wife about this "and she then confessed to me that she had taken it and given it to someone to give to our son". The applicant said that he asked his wife to try to get the money back as he did not want her to do that. The Applicant said that his wife told him that it was too late and that the police had taken it.

23 On 12 January 2006 the Applicant swore a second affidavit. In that affidavit the Applicant set out in considerable detail a summary of his income for the period from 1998 to 2004, and the total amount of lump sum payments he received by way of workers compensation between April 1998 and November 2004 ($111,500).

24 The Applicant gave evidence that the sum of money that was found on Mr Ly when he was apprehended by the authorities was derived by the Applicant through his income, workers compensation payments, and redundancy and superannuation payments, the majority of which was deposited into a series of nominated bank accounts. An objection was taken to the paragraph of the Applicant’s second affidavit in which that evidence appeared, but I allowed it, not upon the basis that it was proof of the fact that the money found in the possession of Mr Ly was the Applicant's money but upon the basis of the Applicant’s assumption that the Applicant's money had in fact been given to Mr Ly by his wife. The Applicant annexed bank statements to his affidavit in support of the descriptions he gave of his dealings with his money. Except to the extent that the Applicant was cross-examined on part of this material, it is unnecessary in detail to refer to it.

25 With respect to that part of the property that consisted of US currency, the Applicant gave evidence that the money that was seized from Mr Ly was derived from a number of sources. Objection was also taken to the paragraph of the Applicant's second affidavit in which that evidence appeared. I also allowed that evidence, not upon the basis that it was proof of the fact that the money in US currency found in the possession of Mr Ly was the Applicant’s money, but upon the basis of the Applicant’s assumption that the Applicant’s money in US currency had in fact been given to Mr Ly by his wife. The Applicant said that between November 2002 and January 2003 he travelled overseas with his wife and son and mother-in-law and that he withdrew certain amounts of money and exchanged it for US dollars. The Applicant said that part of that money was left over upon his return from overseas although the Applicant was unable to say precisely how much that was.

26 The Applicant's wife Maria Madrid also gave evidence. She swore an affidavit on 28 February 2006. Mrs Madrid said she had lived in Australia since 1988 and became an Australian citizen in 1990.

27 Mrs Madrid said that the first time she could remember seeing money in their house was in 1998. She was unsure of the month. She said that they had just moved from Casula to Bass Hill. She said, "The boxes had not been unpacked. When I looked inside one of the boxes, which was OMO box I saw bundles of money. If I was to hazard a guess it was about $7000 to $10,000. I didn't say anything to my husband about seeing the money".

28 Mrs Madrid said that the next occasion that she remembered seeing money in their house was in 2000. She recalled this period because she had received $30,000 compensation for a broken leg that she sustained while working at the Homebush Bay Aquatic Centre. She had worked there for three years. She was off work for two months. She was subsequently made redundant. Her usual work at the aquatic centre was four hours per night, seven days per week.

29 Mrs Madrid said that she also remembered this period of time as she paid cash for a 1998 Green Ford Explorer 4-wheel-drive. She said that the Applicant told her that if she needed more money he would give it to her because they were going to an auction and needed to pay cash. Mrs Madrid told her husband that she didn't need more money because she had enough. She said she remembered that that was the first time her husband had told her about the money he had saved. She said the Applicant told her then about the box where he kept the money. They attended the auction together with their son.

30 Mrs Madrid gave evidence that some time in 1999 or 2000, she and her husband went to Victoria and visited the Casino. She said, "We won $8000". That amount was paid "to us" by cheque from the Casino which they cashed in Victoria. Mrs Madrid said that the cheque was paid into her personal account. She and her husband spent part of that money in Victoria and saved the balance.

31 In 2001 Mrs Madrid and her husband purchased a Holden car for $14,000 cash. Her husband supplied the money. Mrs Madrid said that when she bought the car, the Applicant said to her that he had money at home but that he didn't mention to her how much. She said, "I couldn't guess how much was in there, either". Mrs Madrid said that the Applicant told her before that, "that he hid $150 or $200 a week from money he took from the bank".

32 Mrs Madrid said that the next time she recalled seeing money in their house was in approximately 2003. She said her husband showed her "the box of money". She said, "The money was kept in a safe in the house". Mrs Madrid said that her husband lost the key to the safe and couldn't remember "the pin number" (meaning, presumably, the combination) at the time that he wanted to put money in it. Mrs Madrid said, "I knew this but didn't do anything as we were living separately due to problems in our marriage, namely arguments over our son".

33 By December 2004 Mrs Madrid was living at a new address with her husband and her 81-year-old mother. She gave evidence that "during this period" she took approximately $74,000-$75,000 in both Australian and US currency from the house. She said she thought that the money was from her husband's compensation and was in the box where he kept it. She said she counted the money and that there was approximately AUD$23,000-$24,000 and US$30,000.

34 Mrs Madrid gave evidence in her affidavit under a subheading, "Reason Why Our Money Was Stored in Our Home". For reasons which will emerge, this heading, and Mrs Madrid's evidence set out beneath it, lie at the heart of the Respondent’s submissions touching the question of the Applicant’s alleged ownership of the property, particularly having regard to his evidence that Mrs Madrid took it from him wrongfully and without either his consent or knowledge before giving it to Mr Ly. It will be necessary to return to this issue. Mrs Madrid's evidence upon this topic is relevantly set out in the following paragraph.

35 Paragraphs 14 and 15 of Mrs Madrid's affidavit are as follows: -

“14. We also didn't like putting money in the bank because sometimes it would cost us fees or we had trouble taking the money out. For example once we took out $5,000 when we wanted to travel overseas. We were told that was all we could take from that branch and we had to go to another [branch] and get another $5,000 because we couldn't get all the money out at once.

that is the way of life which my husband and I are used to.

36 Mrs Madrid then gave evidence about events in 2004. She said that her son would call her twice a week and sometimes ask her to send him money to pay bills. This could be as much as $1000. When Mrs Madrid went to Chile in 2004 she was supposed to see her son but he had already left. Mrs Madrid said that her son is still over in Chile but he got into trouble and is now in gaol. She said she was not sure whether or not her son told her the truth as to why he was there.

37 At one time Mrs Madrid's son called her asking for money so that he could start a business in Canada. She had only just come out of Liverpool Hospital where he had been for one week. She told him to wait about 15 to 20 days because his father was to receive some compensation money. Mrs Madrid said that she told her son when his father received the money she would bring him “as much money as [she] could find". Mrs Madrid later said, "I didn't need to search the house for the money as I knew where it was".

38 Mrs Madrid said that the Applicant gave her a cheque for $52,797.06. She banked that cheque into her personal account on 19 November 2004. She subsequently withdrew $12,000.

39 The concluding paragraphs of Mrs Madrid's affidavit (pars 22-30) deal with the circumstances in which Mrs Madrid says that she gave the property to Mr Ly. Mr Buscombe objected to the first sentence of par 23 upon the basis that it was bad as to form and that it was hearsay. Mr Odgers did not press that sentence upon the basis that it proved the truth of the matters to which it referred. I granted leave to Mr Odgers to lead evidence from Mrs Madrid in relation to that sentence to overcome the formal objection if so advised.

40 Having regard to the potential significance of these paragraphs in Mrs Madrid's affidavit, it is appropriate to set them out in full: -

“22. After this I called Hang Ly and told him to one day come to the house. Hang Ly is my son's good friend. They have known each other since they were about 13 years old and went to school together at Chester Hill High School. He lived at Villawood.

23. Hang Ly told me that he needed some money for travelling so that he could give the money to my son. I called my son and my son told me to give him $1000 for travelling.

24. I handed over about $60,000 in two different currencies to Hang Ly. The US money was saved up over the years little by little because we knew it was a hard currency. I bought US dollars 3 times from St George Bank. I bought US dollars once at Commonwealth Bank. I bought US dollars at the airport. I do not have records of that. From St George I got $1500 US, from the Commonwealth Bank I got $1500 US and from the Airport I got $3000 US. I do not remember the dates that I purchased the US currency.

25. I gave the money to Hang Ly and I said "please give this money to Julio". He didn't have to pay anything at the airport. I counted the money before Hang Ly came. I knew when Hang Ly would come and see me as I had called him.

26. I did this as my son told me that his friend wanted to travel and they wanted to see each other and then I gave him the money so that he could give it to my son to start his new business.

27. On one occasion I had sent my son money through Western Union. I sent $8,000. They charged me around $600 for sending that money, that is why I arranged to give Hang Ly the money to give to him.

28. I gave Hang Ly the money in the same bag that my husband used to put the money in from the Commonwealth Bank. I also gave Hang Ly a letter from my son. In the letter I explained everything. My son was worried because I was going to send the money. I told him not to worry because his father would get some money in a month again.

41 At the commencement of the hearing before me, the Respondent produced a lever arch folder containing, inter alia, ten affidavits upon which it was proposed to rely. All of these affidavits were read. However, having regard to the agreement reached between the parties, referred to at paragraph [8] above, the significance of most of this material fell away.

42 It is necessary to refer to the affidavit of Jacqueline Anne Holz sworn on 17 February 2006. Ms Holz is a customs officer employed by the Australian Customs Service. On Sunday 7 December 2004 she was performing duties at the airport when Mr Ly was apprehended. She deposes to a series of conversations she had with Mr Ly. At one stage Mr Ly asked Ms Holz, "Is it illegal to take over $10,000 out of the country?" Ms Holz said that she replied, " It's not illegal as long as you declare it". Mr Ly replied, "So it's not a crime?" Ms Holz replied, "You can be charged under the Financial Transaction Reporting Act for not declaring the currency".

43 Mr Ly and his baggage were then searched and the property was discovered. Ms Holz then had the following conversation with Mr Ly:

44 The Respondent sought to rely upon this evidence as contradicting evidence given by Mr and Mrs Madrid as to ownership of the property. In particular, Mr Ly’s statement that the money was to help his brother was contrasted with earlier evidence that the money was destined for the Applicant’s son. Additionally, Mr Ly referred to the property as having been owned by "family”, although, to some extent, this evidence is ambiguous.

45 The Respondent also relied upon an affidavit of Glenn Tod sworn 22 February 2006. The Respondent, however, did not read paragraph 5(d) of that affidavit or rely upon the Department of Corrective Services Probation and Parole Presentence Report prepared in relation to Mr Ly dated 26 February 2005, referred to in that paragraph as annexure "E". That report contained the statement, "Mr Ly said the money was provided by his friend's mother who resides in Sydney. He added that he did not know what his friend intended to use the money for".

46 The Applicant sought to tender the report and relied upon s 108A of the Evidence Act 1995. The Applicant argued that the version attributed to Mr Ly in the Probation and Parole Service report concerning the source of the property was evidence upon which he could rely to rebut the version given by Mr Ly to Ms Holz in the passages quoted above. I rejected the application upon the basis that I was not satisfied that the report had substantial probative value within the meaning of s 108A(1). For reasons that will shortly emerge, this issue did not become controversial.

Consideration

47 In its original summons in these proceedings the Respondent sought, inter alia, the following orders: -

“1. Pursuant to section 17 of the Proceeds of Crime Act 2002 ("the Act"), that the property (within the meaning of the "property" as defined in section 338 of the Act) described in the First Schedule is not to be disposed of or otherwise dealt with by any person.

2. Pursuant to section 39 of the Act, that Hang Ly ("the Defendant") give to the Plaintiff within 21 days after service of this order, a statement sworn on oath setting out the particulars of and dealings with the property of the Defendant, as specified in the Second Schedule.

48 The First Schedule to the summons is as follows: -

“ FIRST SCHEDULE

Financial Transaction Reports Act

49 The Second Schedule is in what may be described as the "usual" form. It is unnecessary for present purposes to record it.

50 No part of the material upon which the Respondent relied before me was, or even referred to, a sworn statement given by Mr Ly of the type referred to in paragraph 2 of the summons. Nor did the Respondent seek to rely upon a transcript of any examination of Mr Ly conducted in accordance with paragraph 3 of the summons. This is so notwithstanding that this Court made orders in accordance with paragraph 3 of the summons on 15 March 2005 and in accordance with paragraph 2 of the summons on 14 April 2005. The evidence before me did not otherwise reveal whether or not Mr Ly gave a sworn statement or was examined about his affairs following the making of those orders. No explanation of this was given to me. To that extent, at least, the evidence before me was somewhat unsatisfactory.

51 Cross-examination of the Applicant and his wife concentrated in large measure upon what was said to be conflicting versions given by them about the location of the property within the houses where they lived from time to time. Such concentration was not unreasonable. The affidavit material filed on behalf of the Applicant was indeed in significant conflict on this point.

52 For example, the Applicant's first affidavit described how his wife "wrongfully and without [his] consent and or knowledge" gave the property to Mr Ly. He said that he hid money in different amounts in a number of places at his home. He said he thought that he was the only one that knew where the money was hidden. When cross-examined about how he felt when he discovered that his wife had taken the money and given to Mr Ly, the Applicant described how he burnt a notebook in which he had recorded details of the money, referring to what his wife did as "treason". The passage of transcript where this colourful expression appears is as follows: -

“Q. When was the last time that you saw this cash money that you had at home in December 2004?
A. The last time that I saw it was after that we withdrew 10,000 cash money from the [bank]. Those $10,000, I put them together with my box, in those, among those, in between those cardboard boxes. I put them elastic, wrote it down in a little booklet like this one I have here, in the column where, in the column where I write the Australian dollars, then dollars more.

Q. The little booklet you're referring to where you record the money that you've just told us about, where's the booklet?
A. It was a booklet similar to this one but I burnt it.

53 Although the passage just quoted does not in terms include a statement by the Applicant that he regarded the actions of his wife as "treason", that was precisely the way in which the Applicant appeared to me to use the expression, with the benefit of the opportunity I had to observe the him in the witness box during the course of his evidence. In addition, the balance of the Applicant's evidence reveals that he considered that the property was his, and his alone.

54 Mrs Madrid, on the other hand, gave evidence which suggested both that she knew where her husband secreted the money, even before he became aware that she knew about it, and that, despite his protestations, or any contrary view about its ownership which he may have held, she at least considered that the money was hers as well. The passages of evidence quoted at paragraph [35] above support this. For example, "We also didn't like putting money in the bank" (emphasis added). It is also supported by her statement in paragraph 24 of her affidavit quoted at paragraph [40] above that, "The US money was saved up over the years little by little because we knew it was a hard currency" (emphasis added).

55 In my opinion the evidence reveals that the Applicant and his wife treated their money as jointly owned. This included the property. It has to be recalled that the evidence given at paragraphs 14 and 15 of Mrs Madrid's affidavit appears under the subheading that I have quoted at paragraph [34] above. That, it should be observed, was portion of an affidavit sworn by Mrs Madrid in support of a claim by her husband in the present proceedings. In my opinion, the Applicant must be taken to have known, and to have approved, of it as part of the evidence upon which he relied in support of his application. The Applicant was not cross-examined about it. It is clear to the point of demonstration that Mrs Madrid at all times apprehended that any money stored “secretly” by her husband in locations throughout their homes from time to time was money in which she had a joint interest. It will be recalled that Mrs Madrid gave evidence that her husband "hid $150 or $200 a week from money he took from the bank".

56 Another piece of evidence strongly supports the proposition that the Applicant and his wife treated their money jointly. Both the Applicant and his wife gave evidence that in November 2004 the Applicant received a cheque for $52,797.06 by way of a superannuation payment upon his retirement. The Applicant said that his wife banked that cheque into her account. Mrs Madrid gave the same evidence. Her evidence on this topic during cross-examination was as follows:-

“Q. In paragraphs 20 of your affidavit you tell us that your husband gave you a cheque for $52,797.06. Do you see that?
A. Yes.

Q. You tell us that on 19 November 2004 you put that cheque into your personal account, is that right?
A. Yes.

Q. Why was the cheque for your husband put into your personal account?
A. Because he gave it to me.

Q. There was a joint account operating for both of you at that time, wasn't there?
A. Yes, we had a visa card with our own money in there.

Q. Was there any reason in particular why it was put into your personal account?
A. Well because he gave it to me as a present and if they give it to you as a present, it is a present.

Q. It was given to you as a present, was it?
A. For me to be able to cash this cheque the bank required his signature, so I just didn't take it.

57 Mrs Madrid was re-examined briefly about this evidence. As the transcript reveals, some of it was objected to. The relevant portion of the evidence is as follows:-

“*Q. What do you mean by "he gave me the cheque as a present"?
A. He told me to put it in my account because anyway money that belonged to both of us, the only thing I put in my personal account.

Q. He wasn't saying to you that he was giving the money to you to keep for yourself?

BUSCOMBE: I object to that.

HIS HONOUR: Yes.

ODGERS: Because it is leading, I assume is that the objection?

QUESTION AND ANSWER MARKED WITH AN * READ

HIS HONOUR: Yes.

ODGERS:

Q. You said in your answer to me, I believe - do you say that "the money belonged to both of us", is that correct?
A. No.

WITNESS: Yes but because he was going to receive more money that money was for me.

INTERPRETER: I don't know what to - sorry, I must have to say Top Up, more money was going to come from - your Honour, am I allowed to ask it?

ODGERS: I've lost track.

HIS HONOUR: Okay.

58 Mrs Madrid also deposed to having subsequently withdrawn $12,000 of that money. There is no evidence that she was required to account to the Applicant for having done so. As the evidence reveals, Mrs Madrid was not further cross-examined on this topic.

59 Mrs Madrid was cross-examined about having given money in an envelope to Mr Ly. Part of that evidence is as follows:-

“Q. The money that you gave Mr Hang Ly you told the Court in answer to questions from Mr Odgers that you provided the money in a large envelope to Mr Ly, is that right?
A. Yes, in a yellow envelope.

Q. What did you put inside the envelope? Anything apart from the money?
A. A letter for my son, to my son.

Q. Nothing else, is that right?
A. No.

Q. Did you seal the envelope?
A. Yes, I just closed the envelope normally. There was not any security on it.

Q. So inside the envelope all there was was the American currency, is that right?
A. Yes, because anyway this boy had to remove the money from the envelope so.

Q. And also the Australian currency, of course?
A. Yes, it was all together.

Q. You knew that Mr Ly was going to travel out through the airport, is that right?
A. Of course.

Q. You knew that he would need to declare that money to the Customs officials, correct, when you gave it to him?
A. I suppose so but I didn't tell him anything.

Q. You didn't tell him to declare it, did you?
A. Supposedly he has to declare it because through the airport you can't even pass perfume so of course he had to declare the money.

Q. But you knew that he had to declare it in December 2004. You have told us that, correct?
A. Supposedly it has to be declared but I don't remember telling him that.

Q. You didn't tell him, did you?
A. No.

Q. Did you give him this money at all?
A. To this boy?

60 Mrs Madrid was not challenged on the evidence she gave about having given money in relatively large denominations and in two currencies to Mr Ly. The evidence she gave in her affidavit, in particular paragraph 25, and the evidence she gave during cross-examination, was consistent. She was certainly not challenged upon the basis of any alleged conflict that may have existed between the version she gave about having given the money to Mr Ly, and any material that may have been contained in a statement given to the respondent pursuant to s 39 of the Act or upon the basis of any material that may have been obtained as a result of an examination performed pursuant to s 180 of the Act.

61 Some cross-examination of the Applicant and Mrs Madrid was directed to the issue of whether or not some or any of the money was, or may have been, the proceeds of gambling from when the Applicant and his wife went to Victoria and visited the Crown Casino. Mrs Madrid recalled that they won about $8,000. This was sometime in 1999 or 2000. She also recalled that she was paid winnings on that occasion in the form of a cheque. She enthusiastically produced her Crown Club Card during cross-examination on the topic.

62 Mr Jacobus Troost swore an affidavit on 9 May 2007 on behalf of the Respondent. Mr Troost is the Corporate Solicitor - Compliance with Crown Ltd. He gave evidence confirming that Mrs Madrid became a Crown Club member on 3 January 2000. His search of the Patron Gaming Cheque Report, which ordinarily lists all cheques made out to a player by the casino, did not record any information of a cheque having been paid to Mrs Madrid.

63 The Applicant initially gave evidence that none of the moneys said to have been kept by him at his home consisted of the proceeds of gambling. He initially confirmed that in cross-examination but subsequently went on to assert that there had been winnings over the years on poker machines in New South Wales and in Victoria. He specifically claimed that the winnings at the casino in Victoria were from poker machines and had been paid in cash. The applicant disavowed payment of any winnings by way of cheque.

64 I do not think that it is possible, having regard to the state of the evidence on this topic, to draw any conclusions or make any relevant findings. It does not appear to me to be evidence of particular significance in any event.

Findings

65 In all of the circumstances I am satisfied of the following matters and I make the following findings:-

65.1 Australian and US currency was kept by the Applicant at his various residences in the manner described by him in his evidence.

65.2 That money became the property (as defined in paragraph [1] above) and was given to Mr Ly as described by Mrs Madrid in her evidence.

65.3 The property seized from Mr Ly was the money in the respective currencies and amounts given to him by Mrs Madrid.

66 Subject to one matter, therefore, it follows in my opinion that the Applicant is entitled to succeed. The outstanding matter arises as a consequence of my finding in paragraph [65.4].

67 The Applicant brings the present application in his name alone. It occurred to me during the course of the proceedings, that the application might be incompetent for want of a party - namely, Mrs Madrid. I raised this matter briefly with counsel in the course of their final addresses.

68 In the course of my own research I returned to the decision of McNair J in Brewer v Westminster Bank Ltd [1952] 2 All ER 650. In that case, two executors opened a joint account with a defendant bank to be operated upon both their signatures. One of the executors, forging the signature of his co-executor and fellow joint account holder, drew cheques on the account and applied the proceeds to his own use. The innocent executor sued the bank and her co-executor for a declaration that the bank had wrongly debited the joint account with the sum of the forged cheques. The judge dismissed the plaintiff's claim. His reasoning, which led to this conclusion, involved four steps. First, the obligation undertaken by the bank towards the joint account holder was a single obligation owed to them jointly to honour drawings signed by them both. Secondly, the single joint right of the account holders against the bank could be enforced only if both joint contractors were parties, the guilty joint contractor being joined as a defendant if he was unwilling to be joined as a plaintiff. Thirdly, it made no difference whether the guilty co-contractor were joined as plaintiff or defendant, since in either event the issue fell to be determined as if he were a plaintiff. Fourthly, if the guilty co-contractor had been joined as a plaintiff the claim would have been bound to fail, since a party may not found an action upon his own misconduct.

69 Three decades later, in the well-known case of Catlin v Cyprus Finance Corporation (London) Ltd [1983] 1 QB 759, the defendants sought to rely upon the decision in Brewer. The plaintiff and her husband deposited funds on call in a joint account with the defendants’ bank. At the request of the plaintiff's husband, the defendants transferred funds from the joint account to the use of the plaintiff's husband on instructions signed by him alone. The plaintiff claimed a declaration that the defendants had wrongly debited the joint account and damages.

70 On the plaintiff's claim and on the question whether the plaintiff should have joined her husband as a defendant to the action, Bingham J held that while the mandate clearly imposed an obligation on the defendants which was owed to the account holders jointly to honour instructions signed by them both, it also imposed an obligation which was owed separately to each of the account holders severally not to honour instructions unless they were signed by each of them. Accordingly, the plaintiff was entitled to sue the defendants in respect of the several obligation owed to her without joining her husband as a party. Further, since the defendants were in clear breach of the several obligation owed to the plaintiff, she was entitled to the relief claimed.

71 At page 770, Bingham J said, "The decision in Brewer's case has not been allowed to sleep in peace". He went on a page 770-771 as follows: -

72 Professor Glanville Williams criticised the decision in Brewer's case (see (1953) 16 M.L.R. 232) "suggesting that since payment to one joint contractor was not a performance of the bank's duty to pay both jointly, being something outside of and irrelevant to the contractual obligation, the proper solution was for both contractors to join in an action against the bank, which could counterclaim against the contractor who had received payment": see Catlin (ibid). See also Ardern v Bank of New South Wales [1956] VLR 569.

73 The principles, which are to be applied in the present case, are clearly dissimilar to those to be applied in banking cases in which the right, of one only of two joint account owners to sue, has been considered. In the events that occurred, detailed submissions in the present case on the question of whether or not the Applicant had standing suing alone to “recover” the whole of the property were not provided. Accordingly, but not unreasonably, I was not referred to any decisions dealing with claims brought under the Act in which orders or declarations had been sought in respect of disputed property in which (arguably) someone other than the applicant for relief, who was not a party to the action, may have had a joint interest. I was informed by counsel that they were unaware of any such authorities.

74 However, it seems to me, having regard to the terms of s 56(1) of the Civil Procedure Act 2005, and for the avoidance of doubt, that Mrs Madrid ought to be joined as a party to the present application. Rule 6.24 Uniform Civil Procedure Rules2005 provides: -

75 Rule 6.25 provides that, "A person is not to be joined as a plaintiff in any proceedings except with his or her consent". The effect of this rule is that no order should be made adding a person as a plaintiff until his or her formal consent has been filed. Exposure to the possibility of an adverse costs order is one of the factors that may influence a decision about whether or not to give such consent. I am presently unaware of whether or not Mrs Madrid is, or would be, prepared to be joined as an applicant on her husband's notice of motion.

Further submissions

76 Having regard to the findings I made, I invited the parties to bring in a draft form of the orders and, if necessary, declarations, for which they respectively contended. I had indicated that, subject to Mrs Madrid's consent, and to consideration by me of any argument from either party to the contrary, it may be appropriate to make an order joining her as an applicant on the notice of motion. In this respect I indicated that the terms of s 104(1) of the Act would not appear to create any difficulties, but in either event the case would seem to be one in which a grant of leave in accordance with s 104(2) of the Act may be appropriate. I also indicated that any draft form of orders should deal with costs, including reserved costs, particularly having regard to the judgment of Hulme J delivered on 9 March 2006, by which the Applicant’s earlier notice of motion was dismissed.

77 In the events that occurred, the matter was listed for further argument on 16 August 2007. The parties each furnished written submissions to which I shall shortly refer. Two matters emerged very early. First, the Applicant indicated that he did not wish to apply to join Mrs Madrid as a plaintiff. This issue had the potential to become controversial, as the Respondent’s further submissions revealed. However, the Applicant’s attitude to the issue conveniently foreclosed on that controversy entirely.

78 Secondly, neither party suggested that the proceedings were incompetent in any way as the result of the absence of Mrs Madrid as a party. By way of example, the Respondent submitted that, “[a]s a joint owner Mrs Madrid [was] entitled to the use of 100% of the property”. It follows from this, and Mr Muir, who appeared for the Respondent to present further argument, conceded that the Applicant is in exactly the same position.

79 The Respondent proposed the following orders: -

1. Dismiss the Applicant’s notice of motion dated 31 March 2006 together with an order that the Applicant pay the costs of the Commonwealth.

80 Somewhat curiously, the Respondent maintained an entitlement to these orders notwithstanding the findings that I had earlier made. The Respondent’s submissions were to the following effect. Section 102(1)(c) required me to “declare the nature, extent and value of the applicant’s interest in the property” and then to make a direction or declaration under s 102(1)(d). The Respondent argued that the Applicant had contended throughout the proceedings that the money found in the possession of Mr Ly was his (i.e. the Applicant’s) money. The Respondent submitted that such a claim suggested that the money was the Applicant’s to the exclusion of all others. The Applicant had “failed in that claim”. In other words, according to this submission, the Applicant had not satisfied me that “the nature, extent and value” of his interest in the property was as he had originally claimed.

81 For the reasons set out par [8], I am satisfied, for the purposes of s 102(1)(b) of the Act, that the grounds set out in subsection (2) exist. Notwithstanding these matters, however, the Respondent sought to argue further before me that Mrs Madrid somehow passed a proprietary interest in the property to Mr Ly when she delivered it to him in the circumstances described earlier in these reasons. The Respondent further submitted that my earlier findings demonstrate that Mrs Madrid’s “interest” in the property was “used in or in connection with the offence”; that is, it is an “instrument” of the offence for which Mr Ly was convicted. This submission included the contention that Mrs Madrid willingly gave the property, “which by definition includes any interest“, to Mr Ly and that the property was used in the commission of the offence. It will be immediately apparent that these submissions, somewhat curiously, appear to draw upon the language of s 102(3) of the Act.

82 There is at least one significant problem with these submissions. As I have indicated, the case was conducted before me upon the basis of the agreement referred to in par [8]. That agreement would itself preclude the making of submissions of this type. That is to say, only the first of the Applicant’s specified grounds was in issue (see par [5] (a)), and the Respondent conceded that that issue fell to be decided upon a consideration of the four issues of fact set out in the Respondent’s original written submissions (see par [9]). No application was made on behalf of the Respondent at any time to vary, or to be released from, that agreement. Accordingly, it is not now open to the Respondent somehow to contend that one or some of the matters listed in s 102(2) remained to be contested. The agreement about those matters reached in this case made any reference to the terms of s 102(3) wholly irrelevant. In any event, I am satisfied on the evidence that the grounds set out in s 102(3) exist.

83 I should observe that counsel who appeared for the Respondent at the hearing was replaced by Mr Muir who appeared for the Respondent on 16 August 2007 for the purpose of further argument as to the appropriate form of orders that should be made. It seems to me that Mr Muir’s written submissions dated 15 August 2007, supplemented by his oral submissions on 16 August 2007, are the source of these problems. I can only assume that some inadvertent misunderstanding, which would explain the confusion inherent in Mr Muir’s further submissions, must have arisen in these circumstances.

84 The Applicant proposed the following orders: -

1. Declare that Julio Madrid is the joint owner of AUD $36,120 and US $30,000 (“the property”) seized by the Australian Federal Police on 7 December 2004 and forfeited to the Commonwealth on 9 March 2006 (“Julio Madrid’s interest”).

2. Declare that Julio Madrid’s interest in the property is AUD $36,120 and US $30,000.

85 The Applicant has succeeded in the proceedings before me. I have had regard to the parties’ further submissions. For the reasons explained above, I propose to make the orders set forth in the preceding paragraph.

Costs

86 With respect to the question of costs, the Applicant sought an order for costs in relation to both the present application dated 31 March 2006 and the application dated 15 July 2005, dismissed by Hulme J on 9 March 2006, less the costs thrown away or occasioned by reason of the vacated hearing on 9 March 2006.

87 The Respondent submitted that he should be entitled to his costs of the notice of motion dated 15 July 2005 because the Applicant abandoned those proceedings and could not have succeeded in obtaining the relief that he sought. The Respondent submitted that even though some of the evidence may have been relied upon by the Applicant in the later application, the Applicant should not be entitled to costs of any of the mentions or directions hearings between 15 July 2005 and 9 March 2006.

88 With respect to the notice of motion dated 5 April 2006 the Respondent submitted that no costs order should be made against him. This submission proceeded not on any basis clearly connected to a particular result in the proceedings but upon the basis that the present Respondent had no “interest” in the property that was the subject matter of the dispute. Instead, the Respondent submitted that in matters which are heard post-forfeiture, the Respondent represents the Commonwealth and that the Respondent is an unnecessary party to the proceedings.

89 I must confess that once again I found Mr Muir’s argument in this respect somewhat surprising. At no time during the course of the proceedings before me was there even as much as a hint that the Applicant’s proceedings had been commenced against a wrong party. Such a submission was only made in supplementary written submissions received by me on the morning of the further hearing. I propose to have no regard to the submission. Indeed, in his judgment on 9 March 2006, Hulme J observed, in a related context, that he did “not find that argument appealing”.

90 In the same judgment, his Honour proceeded to make the following observations: -

91 It was in those circumstances that his Honour reserved costs “to the intent that they can be dealt with when the costs of the foreshadowed application are being dealt with”. His Honour offered the following additional remarks:-

*****

92 I have also had regard to the parties’ further submissions on costs and to the matters referred to by Hulme J in his judgment of 9 March 2006. In my opinion, the following are the appropriate costs orders that should be made: -

1. With respect to the notice of motion dated 15 July 2005 I order the Applicant to pay the Respondent’s costs thrown away or occasioned by reason of the vacation of the hearing date on 9 March 2006 but that in all other respects the Respondent should pay 75 per cent of the Applicant’s costs of that motion.

Orders

93 Accordingly, the orders I make are as set out in pars [84] and [92].

94 Mr Muir foreshadowed that he would seek a stay of my orders for 28 days in the event that they were in or to the effect of the orders that I have now made. Mr Odgers did not oppose that course. Accordingly, I grant a stay of my orders for a period of 28 days from today.

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Commonwealth Director of Public Prosecutions v Ly [2007] NSWSC 805

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CITATION:	Commonwealth Director of Public Prosecutions v Ly [2007] NSWSC 805
HEARING DATE(S):	19-20 July and 16 August 2007
JUDGMENT DATE :	21 August 2007
JUDGMENT OF:	Harrison J
DECISION:	(1) Declare that Julio Madrid is the joint owner of AUD$36,120 and US$30,000 (“the property”) seized by the Australian Federal Police on 7 December 2004 and forfeited to the Commonwealth on 9 March 2006 (“Julio Madrid’s interest”). (2) Declare that Julio Madrid’s interest in the property is AUD$36,120 and US$30,000. (3) Direct the Commonwealth to transfer Julio Madrid’s interest in the property to Julio Madrid. (4) With respect to the notice of motion dated 15 July 2005 I order the Applicant to pay the Respondent’s costs thrown away or occasioned by reason of the vacation of the hearing date on 9 March 2006 but that in all other respects the Respondent should pay 75 per cent of the Applicant’s costs of that motion. (5) I order the Respondent to pay the Applicant’s costs of the notice of motion dated 5 April 2006. (6) I grant a stay of my orders for a period of 28 days from today.
CATCHWORDS:	PROCEEDS OF CRIME – application under s 104 Proceeds of Crime Act 2002 by lawful owner of property seized by Australian Federal Police and forfeited to Commonwealth – applicant not involved in commission of offence to which forfeiture related – applicant’s interest in the property not the proceeds of the offence – EVIDENCE - application pursuant to s 108A Evidence Act 1995 as to admissibility of evidence of credibility of person who has made a previous representation - CIVIL PROCEDURE – joinder of party to proceedings pursuant to rules 6.24 and 6.25 Uniform Civil Procedure Rules 2005
LEGISLATION CITED:	Civil Procedure Act 2005 - s56(1) Evidence Act 1995 - s 108A Financial Transaction Reports Act 1988 - s 15(1) Proceeds of Crime Act 2002 - ss 17, 39, 92, 102, 104, 180, 338, Uniform Civil Procedure Rules 2005 - rules 6.24, 6.25
CASES CITED:	Ardern v Bank of New South Wales [1956] CLR 569 Brewer v Westminster Bank Ltd [1952] 2 All ER 650 Catlin v Cyprus Finance Corporation (London) Ltd [1983] 1 QB 759
PARTIES:	Commonwealth Director of Public Prosecutions (Plaintiff) Hang Ly (Defendant) Julio Madrid (Applicant) Commonwealth Director of Public Prosecutions (Respondent)
FILE NUMBER(S):	SC 10913 of 2005
COUNSEL:	S J Odgers SC (Applicant) M Buscombe and T Muir (Plaintiff/Respondent)
SOLICITORS:	Randle Lawyers (Applicant) P Musgrave for Commonwealth Director of Public Prosecutions (Plaintiff/Respondent)