New South Wales Crime Commission v Gardiner

[2001] NSWSC 350

CITATION:	New South Wales Crime Commission v Gardiner [2001] NSWSC 350
CURRENT JURISDICTION:	Common Law Division
FILE NUMBER(S):	SC S 14814/96
HEARING DATE(S):	28 February 2001 - 2 March 2001
JUDGMENT DATE:	8 May 2001
PARTIES :	New South Wales Crime Commission - Plaintiff Keith Anthony Gardiner - Second Defendant / Applicant Sharyn Allana Gardiner - First Defendant - N/A
JUDGMENT OF:	Dunford J

COUNSEL :	I Temby QC / P Singleton - Plaintiff C Steirn SC / G Jones - Second Defendant / Applicant
SOLICITORS:	JM Giorgiutti - Plaintiff Cater & Blumer - Second Defendant / Applicant
CATCHWORDS:	CRIMINAL LAW & PROCEDURE - criminal assets recovery
LEGISLATION CITED:	Criminal Assets Recovery Act 1990, ss 4, 9, 10, 21, 22, 25, 26 Drug Misuse and Trafficking Act 1985, s 23 Crimes Act 1900, ss 319, 327, 330
CASES CITED:	Jeffrey v Director of Public Prosecutions (Cth) (1995) 79 A Crim R 514 Director of Public Prosecutions v Logan Park Investments Pty Ltd (1995) 37 NSWLR 118 The Queen v Rogerson (1991) 174 CLR 268
DECISION:	See para 29.

THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
DUNFORD J
Tuesday, 8 MAY 2001
S 14814/96 NEW SOUTH WALES CRIME COMMISSION v SHARYN ALLANA GARDINER & ors
JUDGMENT

1 HIS HONOUR: On 12 December 1996 Newman J made a restraining order pursuant to s 10 of the Criminal Assets Recovery Act 1990 ("the Act") (then known as the Drug Trafficking (Civil Proceedings) Act 1990) in respect of a number of items of property set out in the schedule thereto because of a suspicion that Sharyn Allana Gardiner had engaged in "serious crime related activity", namely the possession and cultivation of a large number of cannabis plants.

2    On 20 May 1996, the said Sharyn Allana Gardiner was convicted of cultivating prohibited plants (56 plants) contrary to the Drug Misuse and Trafficking Act 1985, s 23(1)(a).

3    On 14 July 1997 the restraining order was varied to its present form and subsequently a number of consent orders have been made relating to all items the subject of the restraining order except for $40,700 found in the house of the applicant Keith Anthony Gardiner, the former husband of Sharyn Allana Gardiner, at "Lara", his farming property outside Deniliquin. It is conceded by the plaintiff that these moneys are in no way related or derived from the ex-wife's drug related activities and, although at one time there was a query whether any of the money belonged to their son, James Keith Gardiner, he has been made a defendant in the proceedings and been served with all relevant documents, but he has not appeared nor made any application in respect of any part of such money, and so the plaintiff is entitled to proceed in his absence.

4 Pursuant to paras 13, 14 and 15 of the Amended Summons filed 13 December 1996 as amended by the Second Amended Summons filed 15 July 1997, the plaintiff (the New South Wales Crime Commission) now seeks orders pursuant to s 22 of the Act forfeiting and vesting in the Crown the interests in property specified in the restraining order.

5 The only defendant who has opposed the making of the forfeiture orders is the applicant, and by Amended Notice of Motion filed in Court on 21 February 2001 he seeks exclusion orders pursuant to ss 25 or 26 in respect of the $40,700 seized from his house at "Lara" on 7 December 1996. This is the only interest in the property of the applicant which is still in dispute. All issues in respect of the other interests in property of his referred to in the restraining order have been resolved.

6 The plaintiff concedes that the $40,700 is the property of the applicant and that it is not in any way the proceeds of drug related activity, but opposes the making of the exclusion orders on the ground that although not the proceeds of "serious crime related activity" it is "illegally acquired property" within the meaning of the Act in that it is the proceeds of perverting the course of justice and perjury by the applicant in proceedings in the Equity Division of this Court.

7 Section 10 of the Act provides for the making of restraining orders if it is suspected that a person has engaged in a "serious crime related activity", not only against the property of such person but also against the property of a number of other people: s 10(2)(b). If there is a restraining order in force the court may make an assets forfeiture order: s 22; and must do so if it finds that the person whose "serious crime related activity" which formed the basis of the restraining order was at any time within 6 years before the making of the application convicted of a "serious crime related activity", which includes offences under s 23, Drug Misuse and Trafficking Act 1985. This condition has been satisfied in the present case and the plaintiff is entitled to an assets forfeiture order.

8 Under s 25 a person whose interest in property is affected, or may be affected, by an assets forfeiture order, may apply for an “exclusion order” which has the effect of excluding the interest from the operation of the assets forfeiture order, but s 25(2) provides that the court must not make an exclusion order unless it is proved that it is more probable than not that the interest in property to which the application relates is not “illegally acquired property”; which means in effect that it is not the proceeds of an “illegal activity" or wholly or partly acquired using illegally acquired property: s 9; which includes an act or omission which constitutes an offence (including a common law offence) against the laws of New South Wales or the Commonwealth: s 4(1). So, although the making of a restraining order requires "serious crime related activity", the making of an exclusion order under s 25 will be defeated by "illegal activity", the onus being on the applicant to negative such illegal activity. Compare Jeffrey v Director of Public Prosecutions (Cth) (1995) 79 A Crim R 514, a case under the Proceeds of Crime Act 1987 (Cth), a statute with a somewhat similar structure although the language and the arrangement of the sections is different.

9    Reference should also be made to the definition of “proceeds” in s 4; where they are defined as including "any . . . advantage or benefit, that is derived or realised, directly or indirectly, as a result of the activity”.

10 Applying these various definitions, it can therefore be seen that an applicant for an exclusion order under s 25 must show on the balance of probabilities that the interest in property to which the application relates is not all or part of any advantage or benefit derived or realized, directly or indirectly, as a result of an act or omission which constituted an offence against a law of New South Wales or the Commonwealth, and that it was not wholly or partly acquired by using any advantage or benefit derived or realized, directly or indirectly, as a result of such activity.

11 Although exclusion orders under s 25 can be made before or (subject to certain restrictions) after the making of an assets forfeiture order, orders under s 26 can only be made after a forfeiture order. That section, so far as presently material, provides as follows:-

(1) If it is proved that it is more probable than not that a specified proportion of the value of an interest in property that has been forfeited under an assets forfeiture order is not attributable to the proceeds of an illegal activity, the Supreme Court may:
(a) make a declaration to that effect, and
(b) order that the person who has forfeited the interest is entitled to be paid the proportion of the proceeds of sale of the interest that is specified in the declaration.
(2) Any such declaration is to be made on the basis of the extent to which the interest in property concerned was not, when it first became illegally acquired property, acquired using the proceeds of an illegal activity.
(3) The Supreme Court may make a declaration and order under this section in relation to an interest in property on the application of the person whose interest it was when forfeited under an assets forfeiture order . . .

12    The principles by which legislation such as this is to be construed are set out in Director of Public Prosecutions v Logan Park Investments Pty Ltd (1995) 37 NSWLR 118 and Jeffrey v Director of Public Prosecutions supra, both cases under the Proceeds of Crime Act 1987 (Cth), and it is not necessary to repeat them here.

13    The applicant is the son of the late Wallace and Decima Gardiner who died on 30 March 1982 and 29 June 1987 respectively. Following his father's death he commenced proceedings in the Equity Division no. 2831 of 1987 seeking provision under the Testator's Family Maintenance Act 1916 out of his father's estate, and following the death of his mother he commenced proceedings in the same Division no. 2753 of 1988 seeking similar provision out of his mother's estate pursuant to the Family Provision Act 1982. Such proceedings were set down for hearing together on 7 February 1994, but on that day they were settled on terms favourable to the applicant.

14    Leading up to and during the course of such proceedings the applicant started accumulating cash funds in the safe in his house because (as he said in his Statement of Affairs, Ex. 1) "he did not want easily identifiable funds in bank accounts" during such proceedings. See also paragraph 14 of his affidavit of 19 August 1998.

15    Then on 19 November 1992 the money in the safe amounting to $85,000 was placed in a bank account with the Westpac Bank at Deniliquin, account no. 401365 in the name of the son, James Keith Gardiner, as trustee for the applicant.

16    In an affidavit in the Equity proceedings sworn 19 September 1988 the applicant purported to list his assets as at the dates of his father's death, his mother's death and the affidavit, but he made no reference to the money being accumulated in the safe or the other bank accounts from which it was over time accumulated, and on 4 February 1994 he caused his then solicitors to forward to the solicitors for the executors an unsworn draft affidavit (Ex. G) which the accompanying letter said would be sworn on the morning of the hearing. This draft affidavit made no reference to the trust account held in the name of his son to which I have referred which the relevant bank statements (Ex. K) show was at that time in credit in the sum of $118,024.49.

17 The proceedings were settled on terms favourable to the applicant and I am satisfied as a matter of inference that the terms of the settlement were more beneficial to the applicant than they would have been if the executors and those representing them had been aware of the applicant's true financial position. I am therefore satisfied that in swearing the affidavit of 19 September 1988 the applicant was guilty of either perjury or false swearing contrary to ss 327 or 330 of the Crimes Act 1900; and by deliberately "hiding" the money, firstly in the safe and subsequently in the trust account, by not disclosing such funds in the said affidavit, and by causing his solicitors to forward the draft affidavit which was likewise misleading in failing to disclose the funds in the trust account, I am satisfied that the applicant was guilty of perverting the course of justice contrary to s 319 of that Act, or at least of attempting to commit such offence - see The Queen v Rogerson (1991) 174 CLR 268 at 280.

18 The benefits which the applicant obtained out of the settlement over and above what he would have obtained if he had made full and honest disclosure of his assets were the proceeds of illegal activity and were therefore "illegally acquired property" within the meaning of s 9 of the Act. The extent to which he improperly benefited from the settlement cannot be precisely ascertained but it would have been at least tens of thousands of dollars.

19    That however was in 1994 and the issue on this application is not related to money in the trust account at that time, but to whether the money in the applicant's house ($40,000 in the safe and $700 in a bedroom) in December 1996 was illegally acquired property. The two amounts may be considered together because, according to the applicant, the $700 was the repayment of a loan to his daughter for the purchase of a car and the money for the loan had itself come from the safe.

20 As the Act makes clear, the onus is on the applicant of proving on the balance of probabilities that the money was not illegally acquired property or the proceeds of illegal activity, and the plaintiff submits that as the $85,000 or thereabouts originally deposited in the trust account was later used to acquire the particular bank notes amounting to $40,700 found in the applicant's house, these moneys were also "illegally acquired" property. It submits that it does not matter that there were numerous other transactions in the meantime; the applicant carries the onus of proof and has failed to prove that the bank notes in the house came wholly from legal activities, and not at least in part indirectly from the proceeds of the $85,000 transferred to the trust account some four years previously.

21    As the applicant carries the onus of proof (i.e. to prove the negative) it is necessary to make a finding on his credibility. Although he lied in his affidavit and proposed affidavit in the Equity proceedings, and although he declined to answer a number of questions because the answers may have tended to incriminate him, I am satisfied that when he did answer questions in these proceedings such answers were generally and substantially true, and I reach this conclusion largely because he did in his evidence make a number of concessions against his interest, although reluctantly, and his answers were generally consistent with his tax returns and bank statements.

22    The plaintiff points to three withdrawals from the trust account totalling $10,799 which the evidence discloses went directly into the safe; and also to two withdrawals from the trust account in 1994 totalling $60,000 which were deposited into the applicant's working account (no. 400610 at Westpac Bank, Deniliquin - Ex. J) out of which three withdrawals totalling $59,000 found their way into the safe at the applicant's house; and submits that I should therefore find that the $40,700 all came indirectly from the trust account and therefore from the illegal activities associated with the Equity proceedings.

23    In my opinion there are at least two problems with this approach; firstly, if the approach were correct there should have been $69,799 in the house, not $40,700; and secondly, the analysis ignores the fact that a lot of other money, including legitimate income from rice, wheat and wool growing was deposited to the appellant's working account (no. 400610), so that the $59,000 withdrawn from that account could have all come from legitimate sources.

24    Over many years the applicant has been a successful primary producer as shown by the income tax returns prepared by his accountant and the deposits to his working bank account no. 400610 at Westpac Bank, Deniliquin. He has had a lot of legitimate income passing through that account and I am satisfied that some of it has found its way into the safe in the house. His gross income from legitimate sources from 1991 to 1996 was $900,000 and his tax returns for 1995 and 1996 confirm gross income of over $150,000 per year; and although based on the tax returns his net income over expenditure appears small, this can be explained by the purchase of expensive farm machinery and such like which for taxation purposes had to be depreciated at a designated rate, and by other particular factors.

25 Taking all these matters into account I am satisfied that, subject to three amounts, it is more probable than not that the balance of the money in the house seized by police on December 1996 was the proceeds of legitimate farming activities and was not the "proceeds" as defined in s 4 of illegal activities.

26    However, in relation to the three amounts of $3,750 on 6 April 1994, $5,560 on 14 June 1995, and $1,489 on 28 June 1996, totalling $10,799, withdrawn from account no. 401365 (the trust account) which on the applicant's own evidence went directly into the safe, he has not so satisfied me. I realise there were other payments in and out of the safe between these withdrawals and the seizure of the money on 7 December 1996, but the applicant carries the onus, and in respect of these amounts he has failed to satisfy me that an amount in the safe equal to the total of these amounts was not a benefit derived directly or indirectly as a result of the illegal activity involved in hiding assets at the time of the Equity proceedings.

27 That however does not entitle the applicant to an exclusion order in respect of the balance pursuant to s 25(2). Not only does that section refer to interests in property without reference to parts or proportions of such interests, but when s 9(4) is applied to s 9(1)(c), and that provision is in turn applied to s 21(2), it becomes necessary for the applicant to prove on the balance of probabilities that the money in the house was not wholly or partly acquired using any advantage or benefit derived directly or indirectly from an illegal activity. As part of the money in the house was on my findings so derived the whole of the interest in property being the money in the house is "illegally acquired property" for the purposes of s 25(2).

28 But s 26 is in somewhat different terms. It refers specifically to a "specified proportion" of the value of an interest in property and authorises the making of an order under the section if it is proved that it is more probable than not that such a specified proportion is not attributable to the proceeds of an illegal activity. For the reasons already given I consider it more probable than not that, apart from the three amounts totalling $10,799 withdrawn from the trust account and placed directly into the safe, the moneys in the house were the proceeds of legitimate farming operations and not attributable to the proceeds of illegal activity.

29 It follows that the applicant is therefore entitled to a declaration and order under s 26(1) in respect of a specified proportion being the balance of the money in the house namely $29,901, but such declaration and order can only be made after the forfeiture order is made.

30    I shall stand the proceedings over for the parties to bring in short minutes of declarations and orders to give effect to this judgment.

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Last Modified: 05/14/2001