Director of Public Prosecutions v Kustic
[2023] ACTSC 368
•7 December 2023
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | DPP v Kustic |
Citation: | [2023] ACTSC 368 |
Hearing Date: | 7 December 2023 |
Decision Date: | 7 December 2023 |
Before: | McCallum CJ |
Decision: | See [29] |
Catchwords: | CRIMINAL LAW – CONFISCATION OF CRIMINAL ASSETS – Application for restraining orders – orders to restrain interest in real property – orders to restrain interest in stolen identity accounts – orders to restrain interest in property subject to the effective control of an offender – whether there are reasonable grounds for the beliefs and suspicions stated in affidavit |
Legislation Cited: | Confiscation of Criminal Assets Act 2003 (ACT) ss 3, 26, 31, 34(2), 39, 243, 250 |
Parties: | Director of Public Prosecutions ( Plaintiff) Michael Adam Kustic ( First Defendant) The Australia and New Zealand Banking Group Limited (Second Defendant) |
Representation: | Counsel V Griffin ( Plaintiff) None (ex parte) ( Defendants) |
| Solicitors ACT Director of Public Prosecutions ( Plaintiff) | |
File Number: | SCC 505 of 2023 |
McCALLUM CJ:
1․By amended originating application dated 7 December 2023 and filed in court today, the Director of Public Prosecutions seeks restraining orders and other orders against Michael Adam Kustic pursuant to the Confiscation of Criminal Assets Act 2003 (ACT). There is a second defendant to the application, the Australia and New Zealand Banking Group Limited, which is joined in its role as mortgagee of a property in Mr Kustic’s name.
2․An application for a restraining order under the Act is a restricted access proceeding within the meaning of s 243 of the Act. In short, what that means is that the application may be brought without notice to the defendant ex parte and heard in closed court. The Director indicated that he wished to have the application dealt with in that way and accordingly I closed the court prior to the commencement of the hearing.
3․The application relates to two series of offences, being offences punishable by imprisonment for five years or more, which Mr Kustic is suspected to have committed. The offences identified are an offence of supplying anabolic steroids contrary to s 171(2) of the Crimes Act 1900 (ACT), which carries a maximum penalty of imprisonment for five years, and offence of dealing with proceeds of crime contrary to s 400.41 of the Criminal Code 1995 (Cth), which carries a maximum penalty of imprisonment for 20 years.
4․The Act states as its purposes in s 3 the noble object of encouraging law-abiding behaviour by the community and, to that end, additional purposes which may be summarised in the proposition that persons who benefit from the commission of criminal offences will have the proceeds confiscated by the Territory. As (to my recollection) was stated in the explanatory material in relation to the equivalent New South Wales legislation, in short, the purpose of the legislation is to ensure that crime does not pay.
5․To that end, the Act is highly prescriptive as to the role of the court. Section 26 of the Act gives the DPP power to apply for a restraining order in specified circumstances. Section 31 provides that, if an application is made under s 26, the relevant court “must” make a restraining order if certain conditions are satisfied.
6․There are formal requirements which must be satisfied. In the present case, each of those is addressed in detail in the supporting affidavit and the written submissions helpfully provided by the legal practitioner appearing on the application. It is not necessary to record the detail of those matters. The principal task for the court is to consider whether to be satisfied in terms of s 31(2)(a) of the Act, namely, that there are reasonable grounds for the officer's beliefs and suspicions stated in the affidavit.
7․The present application was supported by the affidavit of Claire Lawlor, a member of the Australian Federal Police. Her affidavit sets out the serious offences she suspects have been committed by Mr Kustic. The grounds for her beliefs and suspicions are stated in the affidavit. The affidavit was accompanied by a large exhibit containing material in support of the beliefs and suspicions she has formed. It was made plain in the plaintiff's written submissions that that material is by way of example only and that police hold a significantly greater amount of material in relation to Mr Kustic.
8․In short, Constable Lawlor suspects that Mr Kustic has been selling anabolic steroids and dealing with the proceeds. The mechanism by which he has done so is that he has opened a number of accounts which police suspect he has done by using stolen identity information. He is suspected to operate those accounts by attending various ATMs in the Territory and withdrawing cash amounts. Constable Lawlor states that her best estimate as to the amounts he has withdrawn over the period since February 2022 is in the order of just over two and a half million dollars.
9․The exhibit to the affidavit annexed, by way of example, material showing the defendant photographed at various ATM machines. Possibly the most compelling part of that material in support of the application is that, if one compares the photographs of withdrawals from different accounts from the same ATM at around the same time, Mr Kustic can be seen holding a wallet which appears to contain a number of cards, in effect rifling through the wallet using each card in turn to make a cash withdrawal.
10․It is plain from a comparison of the photographs, the bank records and the amounts in question that there is more than a reasonable basis for the constable's suspicion that he is in those transactions dealing with the proceeds of his sale of anabolic steroids.
11․The proposed restraining orders are set out in orders one and two of the application. The property sought to be restrained falls into three categories. First, there is property in Mr Kustic's name, that is, one item of real property, three motor vehicles, four bank accounts and a cryptocurrency account. The application extends both to stated property and “all other property” of Mr Kustic, as allowed under s 26 of the Act.
12․One of the motor vehicles falls into a second category, namely, that while it is not currently registered in Mr Kustic's name, Constable Lawlor holds a suspicion that it is in his effective control. Indeed, she suspects that he owns it notwithstanding the fact that it is not in his name.
13․In addition to the information in her affidavit, Constable Lawlor provided further evidence orally in court this morning, as a result of which it is tolerably clear, and certainly there is a reasonable basis for suspecting, that the motor vehicle, a BMW M4 valued in the order of $170,000 to $180,000, was sold or transferred by [a named party] possibly to another person as an intermediary but then to Mr Kustic. Until recently, the former owner had the vehicle on his E-Toll account. It is no longer on that E-Toll account and has recently been seen being driven by Mr Kustic.
14․The third category of property the subject of the order sought is the stolen identity accounts. For the reasons I have given, I am satisfied that there is a reasonable basis for suspecting that Mr Kustic has those accounts in his effective control. That is significant for two reasons relied upon by Constable Lawlor. First, it is the basis for her suspicion that Mr Kustic committed a relevant stated offence of dealing with proceeds of crime. Secondly, it is the basis for her suspicion that those stolen identity accounts are under Mr Kustic's effective control.
15․As I have indicated, the Act is prescriptive as to the statutory requirements to be satisfied by the applicant and prescriptive as to what the court must do if satisfied that those requirements are met. I am satisfied that there are reasonable grounds for the beliefs and suspicions stated in Constable Lawlor's affidavit and that the formal requirements of the Act are met. It follows that I must make the two restraining orders reflected in proposed orders one and two in the application.
16․Section 39 of the Act confers authority on the court to make additional orders. Proposed orders three and four in the application fall in that category. Order three sought by the DPP is that Mr Kustic may deal with the Gordon property as is necessary to pay any debt owed to the second defendant which is secured by the mortgage over the Gordon property.
17․The reason for seeking an order in those terms is to address a difficulty apprehended by the DPP arising from the definition of the term “dealing with property” in the Act. The Act provides:
dealing, with property of a person, includes, for example—
(a) if a debt is owed to the person—making a payment to anyone in reduction of the debt; and
(b) disposing of the property (including, for example, making a gift of the property or removing the property from the ACT or Australia); and
(c) receiving the property, whether as a gift or otherwise; and
(d) creating or assigning an interest in the property; and
(e) using the property to obtain or extend credit; and
(f) using credit secured against the property.
18․The DPP apprehends that, if Mr Kustic were to seek to make repayments under the mortgage of the Gordon property, that might amount to dealing with the property, either because he would be making a payment in reduction of a debt, although it is not clear to me that that provision applies, but more importantly, because he may be using the property to obtain or extend credit in that any mortgage repayment would reduce the debt owed and potentially increase the security available for redraw. For that reason, the order is sought so as to permit Mr Kustic to make repayments to the ANZ should he wish to do so.
19․The DPP frankly acknowledges that the effect of the restraining order in proposed order one, which applies to all property of Mr Kustic, will be that he will not be able to use any of his own current funds, or indeed after-acquired funds, to make payments owing to ANZ. However, if some other person wished to keep the mortgage in compliance on his behalf, order three will ensure that that can be achieved. I am satisfied that it is appropriate to make that order for that reason.
20․Proposed order four seeks to exempt Australian Federal Police officers from the prohibition on dealing with the vehicles. The reason for that application is the apprehension that, upon the execution of search warrants, which is anticipated to happen very shortly, police may find that those items are required for the purposes of evidence. I am satisfied that it is appropriate to make that order.
21․Proposed order five asks that the application and supporting affidavit be kept confidential on the court file and that no inspection of that material be permitted without an order of the court. In circumstances where Mr Kustic has not yet been arrested in relation to the proposed charges, plainly that is appropriate.
22․Proposed order six would require the DPP to give notice of the orders to [the named party] within 60 days. He is the person to whom I have referred, who appears to remain the registered proprietor of the BMW M4. I am satisfied that is appropriate, although it would appear that he is unlikely to claim any beneficial interest in that vehicle.
23․Proposed orders seven and eight were deleted from the amended application during the course of the hearing.
24․Proposed order nine is a further additional order pursuant to s 39 of the Act, permitting Mr Kustic to deal with cryptocurrency accounts by directing the Public Trustee and Guardian to sell any cryptocurrency held in that account. The purpose for seeking that order is to obviate the risk of the value of that account fluctuating during the currency of the orders in a way that would be adverse to Mr Kustic's interests. It is a matter of notoriety that the value of cryptocurrency fluctuates, at times wildly.
25․I am satisfied that it is appropriate to make the order permitting Mr Kustic to give the Public Trustee and Guardian a direction to deal with the cryptocurrency for that reason. It would follow that the proceeds would also fall within the scope of the “all other property” restraining order in order 1(h).
26․One concern I have is around the timing by which Mr Kustic will be made aware of the present orders. At the moment that is designated to be, I think, until further order. It may be that there should be some shorter time frame, depending on the timing of Mr Kustic's arrest, for him to be made aware of the fact that that account is frozen.
27․Proposed order 10 is linked to proposed order 9 and would authorise the Public Trustee and Guardian to deal with the Cointree Account, which is the cryptocurrency account, as soon as reasonably practicable after receiving a direction to that effect from Mr Kustic. Plainly, it is appropriate to make that additional order to supplement the efficacy of order nine.
28․The Act provides that the court can refuse to make a restraining order if the director does not give an undertaking in appropriate terms. That undertaking is given.
Orders
29․For those reasons, I make orders 1 to 6 and 9 and 10 in the amended originating application. I state the matters set out in the general form of order provided by the DPP and note the matters noted on the last two pages of that document. The orders that I make are:
(1)That pursuant to s 31(2) of the Act, the following property of the First Defendant (The Property) be restrained:
(a)The First Defendant’s interest in the Crown lease over land described as Gordon Section 527 Block 3 on Deposited Plan 8190 recorded in Volume 1267 Folio 78 of the register kept by the Registrar General of the Australian Capital Territory, otherwise known as 136 Knoke Avenue Gordon ACT 2903 (Gordon Property);
(b)2022 BMW G82 - M4 Competition Coupe bearing NSW registration ‘EWU11J’, Vehicle Identification Number WBS42AZ010CJ38111 (BMW M4);
(c)2014 BMW X5 bearing ACT registration ‘YNS59F’, Vehicle Identification Number WBAKS620200K77555 (BMW X5);
(d)Harley Davidson motorcycle bearing NSW registration ‘BNZ34’, Vehicle Identification Number 5HD1HHHG1EC802034 (Harley Davidson);
(e)Indian FTR19 motorcycle bearing NSW registration ‘GUL70’, Vehicle Identification Number 56KRTE255N3005344 (Indian motorcycle);
(f)All funds standing to the credit of accounts held with the financial institutions identified in Schedule A; [to the orders as filed];
(g)All cryptocurrency or funds standing to the credit of accounts held with Cointree Pty Ltd ACN 167 203 303 with account identifiers [REDACTED] (Cointree Account); and
(h)All other property of the First Defendant (including any property acquired after the making of the order).
(2)Pursuant to s 31(3)(a) of the Act, the Public Trustee and Guardian for the Australian Capital Territory is directed take control of The Property.
(3)Pursuant to s 39 of the Act, the First Defendant may deal with the Gordon Property as is necessary to pay any debt owed to the Second Defendant which is secured by the mortgage over the Gordon Property.
(4)Pursuant to s 39 of the Act, the Australian Federal Police and its employees and agents may deal with the BMW M4, BMW X5, Harley Davidson and Indian Motorcycle as is necessary for the conduct of any criminal proceeding against the First Defendant for which they may be relevant.
(5)Pursuant to s 250 of the Act, the Plaintiff’s application and supporting affidavits relating to this order are to be kept confidential on the Court file in a sealed envelope and no inspection of them is permitted without an order of the Court.
(6)Pursuant to s 34(2) of the Act, the Court orders the Plaintiff to give notice of Orders 1(b) and 6 of these orders to [the named party] within 60 days from the date of this order (on or before 4 February 2024).
(7)Pursuant to s 39 of the Act, the First Defendant may deal with the Cointree Account by directing the Public Trustee and Guardian for the Australian Capital Territory, in writing, to sell any cryptocurrency held with that account.
(8)Pursuant to s 39 of the Act, the Public Trustee and Guardian for the Australian Capital Territory may deal with the Cointree Account by selling any cryptocurrency as directed by the First Defendant in writing, as soon as reasonably practicable after receipt of the direction.
(9)The plaintiff, as soon as practicable, having regard to the dealings with the first defendant but no later than three months from today (on or before 6 March 2024), inform the court when the judgment can be published and whether the orders have been served on Mr Kustic.
(10)Allocate the pseudonym NL to the first defendant [this order was vacated on 11 December 2023].
| I certify that the preceding twenty-nine [29] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice McCallum Associate: Date: 17 April 2024 |
0
0
3