New South Wales Crime Commission v Karout

Case •

[2025] NSWSC 538

•

27 May 2025

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: New South Wales Crime Commission v Karout [2025] NSWSC 538
Hearing dates: 15-16 April 2025
Date of orders: 27 May 2025
Decision date: 27 May 2025
Jurisdiction:Common Law
Before: Fagan J
Decision:

1 Order pursuant to section 27 of the Criminal Assets Recovery Act 1990 that Kaldon Karout pay to the Treasurer the amount of $4,602,659.91 assessed by the Court as the value of the proceeds derived from the illegal activities of Kaldon Karout or another person that took place not more than six (6) years before the making of the plaintiff’s application on 27 October 2015.

2 Direct that if either party seeks an order for the costs of the proceeds assessment, that party is to file and serve submissions in support by 10 June 2025 and the opposing party is to file and serve any submissions in reply by 24 June 2025.

3 Order that any contested claim for a costs order is to be determined on papers.

Catchwords:

CRIMINAL LAW – proceeds of crime – proceeds assessment

Legislation Cited:

Criminal Assets Recovery Act 1990 (NSW)

Cases Cited:

Jones v Dunkel (1959) 101 CLR 298

Manly Council v Byrne [2004] NSWCA 123

New South Wales Crime Commission v Vu [2012] NSWSC 129

Vu v New South Wales Crime Commission [2013] NSWCCA 282

Category:Principal judgment
Parties: New South Wales Crime Commission (plaintiff)
Kaldon Karout (defendant)
Representation:

Counsel:
P English (plaintiff)
P Lange (defendant)

Solicitors:
Solicitor New South Wales Crime Commission (plaintiff)
Onegroup Legal (defendant)
File Number(s): 2015/316308
Publication restriction: No

JUDGMENT

  1. By summons filed on 27 October 2015 the plaintiff claims a proceeds assessment order against the defendant, Kaldon Karout, in the following terms:

6 An order pursuant to section 27 of the Criminal Assets Recovery Act 1990 that Kaldon Karout pay to the Treasurer an amount assessed by the Court as the value of the proceeds derived from the illegal activities of Kaldon Karout or another person that took place not more than six (6) years before the making of this application.

  1. In 2012 the defendant was charged with possession of a marketable quantity of a border controlled drug. He was on bail with respect to that charge during 2015 until his second arrest on 11 September 2015. In the period of six weeks from 27 July 2015 to 11 September 2015 the defendant’s activities in a factory unit that he occupied at Kogarah were under surveillance. During that time he received and handled quantities of cocaine and heroin in block form at relatively high purity. He broke up the blocks and blended the drugs with other materials. He then compacted the cut, or diluted, product into new blocks using a hydraulic press with dies and plates of various sizes. The factory unit in which this enterprise was carried out was also the depot for a building business that the offender carried on at the time through his company KK Industries Pty Ltd.

  2. The defendant was arrested outside the unit on 11 September 2015 and a search warrant was executed. In addition to the pressing equipment police located 1285.22 g of heroin and 1008.8 g of cocaine. Having regard to the nature of the defendant’s activities while under surveillance it is evident that during the six-week charge period he must have had significant quantities of drugs in his possession in addition to the quantities seized at the time of arrest.

  3. In July 2017 the defendant was sentenced for the 2012 offence. A term of 8 years and 6 months was imposed with a non-parole period of 5 years and 3 months. The commencement and expiry dates for that sentence are not clear from the evidence.

  4. On 1 June 2018 the defendant was convicted of the 2015 offences: two counts of supplying not less than a large commercial quantity of prohibited drug, one count in relation to heroin and one in relation to cocaine. He was sentenced to an effective overall term of 8 years and 3 months imprisonment with a non-parole period of 5 years and 7 months. That sentence commenced on 11 March 2016 and thus was made partly concurrent with his sentence for the 2012 offence. The defendant was released to parole on 10 October 2021.

  5. Arising out of the defendant’s offending in 2012, a proceeds assessment order was made for the value of proceeds derived by him in a period up to 20 November 2012. In the current proceedings the plaintiff therefore asks the Court to make an assessment for the period from 21 November 2012 up to the commencement of these proceedings. The Court is to assess the value of proceeds of the defendant’s illegal activity for a period two years and about 11 months, expiring on 27 October 2015.

  6. Relevant extracts of the sections of the Criminal Assets Recovery Act 1990 (NSW) that govern the making of a proceeds assessment order in the circumstances of the present case are as follows:

4 Definitions

(1) In this Act—

proceeds, in relation to an activity, includes any interest in property, and any service, advantage or benefit (including, without limitation, an increase in the value of an interest in property), that is derived or realised, directly or indirectly, as a result of the activity -

(a) by the person engaged in the activity, or

(b) by another person if the person engaged in the activity -

(i) intended for the other person to derive or realise (whether directly or indirectly) the interest, service, advantage or benefit, or

(ii) knew, or ought reasonably to have known, that the other person would be likely to derive or realise (whether directly or indirectly) the interest, service, advantage or benefit.

27 Making of proceeds assessment order

(1) The Commission may apply to the Supreme Court for a proceeds assessment order requiring a person to pay to the Treasurer an amount assessed by the Court as the value of the proceeds derived by the person from an illegal activity, or illegal activities, of the person or another person that took place not more than 6 years before the making of the application for the order, whether or not any such activity is an activity on which the application is based as required by subsection (2) or (2A).

(2) The Supreme Court must make a proceeds assessment order if the Court finds it to be more probable than not that the person against whom the order is sought was, at any time not more than 6 years before the making of the application for the order, engaged in -

(a) a serious crime related activity involving an indictable quantity, or

(b) a serious crime related activity involving an offence punishable by imprisonment for 5 years or more.

(2A) […]

(3) A finding of the Court for the purposes of subsection (2) or (2A) need not be based on a finding as to the commission of a particular offence or a finding as to any particular quantity involved, and can be based -

(a) on a finding that some offence or other constituting a serious crime related activity and punishable by imprisonment for 5 years or more was committed, or

(b) on a finding that some offence or other constituting a serious crime related activity was committed involving some quantity or other that was an indictable quantity.

(4) The references in subsections (1) and (2) to a period of 6 years include a reference to a period that began before the commencement of this section.

(4A) […]

28 Assessment for proceeds assessment order - illegal activity proceeds

(1) For the purpose of making an assessment for a proceeds assessment order under section 27 in relation to the proceeds derived by a person (in this section called the defendant) from an illegal activity, or illegal activities, of the person or another person the Supreme Court is to have regard to the following matters-

(a) the money, or the value of any interest in property other than money, directly or indirectly acquired by -

(i) the defendant, or

(ii) another person at the request, or by the direction, of the defendant,

because of the illegal activity or activities,

(b) the value of any service, benefit or advantage provided for—

(i) the defendant, or

(ii) another person at the request, or by the direction, of the defendant,

because of the illegal activity or activities,

(c) the market value, at the time of the illegal activity or of each illegal activity, of a plant or drug similar, or substantially similar, to any involved in the illegal activity or each illegal activity, and the amount that was, or the range of amounts that were, ordinarily paid for an act similar, or substantially similar, to the illegal activity or each illegal activity,

(d) the value of the defendant’s property before and after the illegal activity or each illegal activity,

(e) the defendant’s income and expenditure before and after the illegal activity or activities.

(2) If evidence is given at the hearing of an application for a proceeds assessment order that the value of the defendant’s property after an illegal activity or illegal activities of the defendant exceeded the value of the defendant’s property before the activity or activities, the Supreme Court is to treat the excess as proceeds derived by the defendant from the activity or activities, except to the extent (if any) that the Supreme Court is satisfied the excess was due to causes unrelated to an illegal activity or activities.

(3) If evidence is given at the hearing of an application for a proceeds assessment order of the amount of the defendant’s expenditure during the period of 6 years before the making of the application for the order, the Supreme Court is to treat any such amount as proceeds derived by the defendant from an illegal activity or activities, except to the extent (if any) that the Supreme Court is satisfied the expenditure was funded from income, or money from other sources, unrelated to an illegal activity or activities.

(3A) The Supreme Court is not to take expenditure into account under subsection (3) to the extent that the Court is satisfied that it resulted in the acquisition of property the value of which is taken into account under subsection (2).

(4) In making an assessment as provided by this section, none of the following amounts are to be subtracted—

(a) expenses or outgoings incurred by the defendant in relation to the illegal activity or activities,

Note - For example, in the case of an illegal activity involving the sale of drugs, in determining the value of the proceeds derived by the defendant from the sale of drugs there is to be no reduction on account of any expenditure by the defendant in acquiring the drugs.

(b) the value of any proceeds derived as agent for or otherwise on behalf of some other person (whether or not any of the proceeds are received by that other person).

Note - For example, where the defendant is paid money for drugs in the course of a “controlled buy” but was acting merely as an agent or messenger for some other person (and gives the money to the other person), in calculating the proceeds derived by the defendant the amount given to the other person is not to be subtracted and the full amount is considered to have been derived by the defendant.

  1. The first prerequisite for making the order, as prescribed in s 27(2)(a), is clearly established by the evidence that the defendant was convicted on 1 June 2018 of offending with respect to prohibited drugs, as particularised in the statement of agreed facts on sentence. I have drawn upon that statement for the summary of events above. The offending occurred within six years before the application was brought by the filing of the statement of claim on 27 October 2015.

  2. Section 28(3) prescribes the means of assessment that is primarily relied upon by the plaintiff in this case. Once there is evidence before the Court of an amount of expenditure during the assessment period, the onus is on the defendant to establish that the expenditure, or some part of it, was funded from sources unrelated to illegal activity: New South Wales Crime Commission v Vu [2012] NSWSC 129 at [75] (Johnson J), upheld in Vu v New South Wales Crime Commission [2013] NSWCCA 282. To the extent that the expenditure is not shown to have been legitimately funded, it is to be treated as proceeds derived from illegal activity.

  3. Applying that provision, the plaintiff’s forensic accountant, Mr Bull, has added up the total sum expended by the defendant during the assessment period, according to the evidence before the Court. He has separately calculated how much appears to him to have been received by the defendant during the assessment period from income or sources unrelated to illegal activity. The figures Mr Bull initially reported in his affidavit of 31 July 2020 were subsequently adjusted as explained in his further affidavits of 20 April 2022 and 30 August 2022. The defendant’s forensic accountant, Mr Stone, then prepared a report dated 10 March 2025. He contended that certain further adjustments were required to the figures Mr Bull had derived up to that point.

  4. Mr Bull accepted some but not all of Mr Stone’s adjustments, as set out in a schedule at Tab 3 of the exhibit to Mr Bull’s 24 March 2025 affidavit. In that schedule, Mr Bull’s final figures are as follows:

1

Total expenditure

$10,916,264.79

2

Legitimately sourced funds

$6,221,425.88

3

Net assessment of proceeds in accordance with s 28(3)

$4,694,838.91

The plaintiff has urged the Court to accept those final figures in its opening written submissions of 4 April 2025 at pars 18 and 43 and in its closing written submissions of 1 May 2025 at par 46.

  1. Messrs Bull and Stone discussed their remaining differences in conclave on 28 March 2025. They produced a joint report dated 3 April 2025 concerning the results of their discussions. It is, with respect, a difficult document to follow. According to par 1.7, “the joint report is not exhaustive”. Mr Bull included in his calculation of expenditure an amount of $546,095 representing the value of the drugs that were in the defendant’s possession when he was arrested. The defendant disputes that that amount should be included in the proceeds assessment. That difference was not discussed by the forensic accountants and their report does not identify it as an issue. Apart from that, the joint report provides a listing of the disputed elements of Mr Bull’s calculations that have now been litigated in the final hearing of the summons.

  2. Tables appearing at pars 2.1 and 2.2 of the joint report and on the first page of Appendix A (Court Book 556) list, in a variety of configurations, seven potential adjustments. Items 2, 4, 5 and 7, are shown as agreed. Those items were taken into account by Mr Bull in his 24 March 2025 Tab 3 schedule and they have therefore been allowed for in the amount claimed by the plaintiff has shown at [11] above. Only three items, numbered 1, 3 and 6 are said to remain in dispute.

  3. Item 1 is in these terms:

Recalculation of bank account income – $13,870.

The breakdown of Mr Stone’s recalculation shows that it involves treating an amount of $123,000 paid to the defendant by Mr John Barton and Ms Gavra Sin in April and August 2014 as a loan from Mr Barton that should be included in legitimate income. The recalculation is also based upon inverting Mr Bull’s categorisation of several other deposits to the defendant’s personal accounts.

  1. Item 3 is as follows:

“3 Loans from associates – $1,337,000”.

Mr Stone contends that an additional $1,337,000 should be treated as legitimate income, thereby reducing the proceeds assessment. By reference to his report of 10 March 2025 at pars 2.5.5 - 2.5.10 and the fourth, fifth and sixth entries in Table 7, it is apparent that the amount of $1,337,000 represents an asserted loan to the defendant of $1,070,000 from Ms Hanna Elgammal, a payment of $17,000 from Mr Faraj Issa and an asserted loan of $250,000 from Mr Joseph Samia.

  1. Item 6 of the remaining disputed issues, as identified in the accountants’ joint report, is as follows:

6 Taylor living expenses – $719,832.

Mr Bull calculated that the defendant paid that sum to Ms B Taylor during the assessment period, based upon evidence that during the assessment period the defendant contributed to the maintenance of Ms Taylor and their two children at the rate of $23,000 per month. Mr Bull included that amount in his calculation of total expenditure but the defendant contends that the inclusion is not justified.

  1. The issues that the Court is required to resolve with respect to Mr Bull’s final calculation are therefore as follows:

A Whether the value of drugs, $546,095, should be included as proceeds of crime.

B Whether payments to Ms Taylor of $719,832 should be included as expenditure.

C Whether $1,070,000 received by the defendant from Ms Elgammal was a loan which should be added to legitimate income.

D Whether $17,000 paid by Mr Issa to the defendant should be added to legitimate income.

E Whether $250,000 received by the defendant from Mr Samia was a loan that should be added to legitimate income.

F Whether $123,000 received by the defendant from Mr Barton and Ms Sin was a loan that should be added to legitimate income and whether sundry other deposits to the defendant’s personal bank accounts should be reclassified.

A Expenditure on illegal drugs: $546,095

  1. By force of s 28(1)(c) of the Act, in making the proceeds assessment the Court is required “to have regard to …the market value, at the time of the illegal activity …, of a … drug similar, or substantially similar, to any involved in the illegal activity”. The plaintiff adduced evidence from a police officer highly experienced in drug enforcement, Detective Inspector Paul O’Neill. He testified that in 2015, when the defendant was in possession of drugs at the time of his arrest, the value of a 1 kg unit of cocaine was between $185,000 and $240,000. The range for a 1 kg unit of heroin was $280,000 to $295,000. Mr Bull adopted the lower end of each of those ranges and applied the values to the precise quantities that were found in the offender’s factory unit. The result was a figure of $546,095. Mr Bull’s summing up of total expenditure includes that amount.

  2. The defendant made the following written submission:

[If] the Crime Commission seeks to rely upon the presumption under s 28(2), rather than proving the actual quantum of the proceeds derived from offending, it must prove the value of the defendant’s property. By its very terms, s 28(1)(c) requires the Court to take into account the value of the drugs used in the illegal activity, but it does not create a presumption that the drugs used in the illegal activity are owned by the defendant or, put differently, are part of the defendant’s property. However, the latter appears to form the basis of the plaintiff’s argument when it is suggested … that the value of the drugs are “proceeds derived by the defendant from an illegal activity …”.

  1. In response, the plaintiff relies upon the definition in s 4 of the Act of “proceeds, in relation to an activity”, which includes “any interest in property, and any … advantage or benefit (including, without limitation, an increase in the value of an interest in property), that is derived or realised, directly or indirectly, as a result of the activity … by the person engaged in the activity”. The plaintiff submits that the benefit to the defendant of having possession of drugs to a value of $546,095 must count as proceeds, in that amount, according to the definition.

  2. In assessing proceeds the Court is not confined to the calculus of total expenditure minus legitimate income as provided for in s 28(3) and as primarily relied upon by the plaintiff in this case. Relevantly to the requirement in s 28(1)(c) that the Court should “have regard to” the $546,095 market value of the drugs that were involved in the defendant’s illegal activity, the following extracts from s 28 must be considered:

28(1) For the purpose of making an assessment for a proceeds assessment order under section 27 in relation to the proceeds derived by a person (in this section called the defendant) from an illegal activity … of the person … the Supreme Court is to have regard to the following matters -

(a) the … value of any interest in property other than money, directly or indirectly acquired by -

(i) the defendant …

because of the illegal activity …

(b) the value of any … benefit or advantage provided for -

(i) the defendant …

because of the illegal activity …

(c) the market value, at the time of the illegal activity … of a … drug similar … to any involved in the illegal activity …

  1. Through his involvement in the illegal activity of which he was convicted on 1 June 2018, the defendant acquired an “interest” of possession in the drugs, or at least he obtained the “benefit” of that possession. The value of his interest or benefit was as calculated by Mr Bull, adopting the lower end of DI O’Neill’s value range. The amount calculated should more accurately be brought to account under s 28(1)(a)-(c), rather than in the summation of expenditure under s 28(3). That consideration makes no arithmetic difference. No reduction of the end result of Mr Bull’s analysis is required in relation to accounting for the value of the drugs.

B Maintenance payments to Ms B Taylor: $719,832

  1. Mr Bull included in his summation of expenditure an amount of $719,832 for payments made by the defendant to Ms B Taylor between 21 November 2012 and 30 June 2015. The plaintiff’s case is that that total amount was paid for maintenance of Ms Taylor and her two children, of whom the defendant is the father. The evidence upon which that expenditure has been counted by Mr Bull is as follows.

  2. Ms Taylor was in a relationship with the defendant from about late 2004. She gave birth to their first child in 2006. In early 2012 the defendant commenced a relationship with Ms Nariman Karout, whom he married in February of that year. Ms Taylor conceived again in 2014, by in vitro fertilisation, and gave birth to a second child of the defendant in mid-2015.

  3. The defendant was examined before a registrar of this Court on 4 February 2020 pursuant to an order of the Court made under s 12(1)(b) of the Criminal Assets Recovery Act. During that examination the defendant said he had paid expenses of Ms Taylor and their two children both before and after he was remanded in custody from 11 September 2015. The defendant gave the following answers:

Q. What about prior to your incarceration?

A. No, I've provided for my children prior to that.

[…]

Q. And how much did you provide per week-­

[…]

--for the support of those children?

A.· Whatever she needed.

Q. When you say "whatever she needed", are you referring to your former partner Bernadette Taylor?

A. That's correct, yes.

Q. And how often would she require money for the support of the children?

A. Once, twice a month, a fortnight.

Q. So it was intermittent? It wasn't a week by week--

A. No, no, no, company car, with a fuel card, bills were paid for, so she needed food and a phone bill.

Q. So is it the case that you would pay for her expenses and the children's expenses?

A. Yeah. That went on till probably 2017 that was going, approximately 23 and a half thousand a month. That was paid via my current partner to Ms Taylor.

Q. Is that paid via cash or via a direct transfer into her account?

A. A lot of it was account transactions.

Q. This was prior to your incarceration?

A. Prior and during.

Q. Thank you. And was that the same amount, approximately $23,000 per month?

A. Thereabouts, yes.

[...]

Q. And what account did that come out of at your end?

A. My partner's.

[…]

Q. And did you provide money to your partner to then send on to your ex?

A. Well, since 2015 no.

Q. Prior to that?

A. Prior to that I would, yes.

Q. And would you provide that to her in cash?

A. Some were transferred. So it was unspoken, I never had to-say to her it was done. She would transfer funds. She has all the - well, she's got more access than I do to the bank accounts, my bank accounts, company accounts and all, so.

Q . But there would be a record of telegraphic transfers-­

A. Yes, yes.

Q. --showing that approximate $23,000 a month?

A. Yes.

  1. Over objection from the defendant, I ruled the transcript of that evidence admissible pursuant to s 54(5) of the Act to prove the answers given by the defendant, which constitute admissions against his interest and are evidence of the truth of the matters he asserted.

  2. The defendant read an affidavit of Ms Nariman Karout sworn 10 March 2025, upon which she was cross-examined by counsel for the plaintiff. Ms Karout was the bookkeeper for KK Industries Pty Ltd. Both before their relationship commenced in early 2012 and thereafter, Ms Karout kept the defendant’s records and managed his bank accounts to some extent. Ms Karout continued to manage the defendant’s affairs after he was imprisoned from 11 September 2015.

  3. Ms Karout deposed that from about mid-2016 she acted upon a request from the defendant that she should transfer $3,500 per month to Ms Taylor for living expenses of Ms Taylor and the two children. Ms Karout identified banking records showing transfers that varied between $500 and $4000, commencing on 3 December 2016 and continuing to 1 April 2018. All transfers to Ms Taylor identified by Ms Karout, totalling $59,500 on the bank records, took place after the period in respect of which the Court is required to make its assessment of criminal proceeds. Ms Karout’s evidence in that respect does not invalidate the plaintiff’s reliance upon the defendant’s admissions before the registrar regarding maintenance payments that he made during the assessment period.

  4. Ms Karout deposed that she did not make any payments to Ms Taylor, in cash or otherwise, prior to those for which she identified banking transactions commencing in December 2016. She deposed that the defendant’s statement during his examination that payments of $23,500 per month to Ms Taylor “via my current partner” continued “till probably 2017” was incorrect. Her evidence is inconsistent with the defendant’s answers before the registrar to the effect that payments were made to Ms Taylor from Ms Karout’s bank account prior to his arrest on 11 September 2015.

  5. Mr Bull made his calculations by financial years. The assessment period comprised 222 days (from 21 November 2012 to 30 June 2013) in the financial year ended 30 June 2013 (FY13), the whole of FY14 and FY15 and 119 days in FY16 (from 1 July 2015 to 27 October 2015). Mr Bull converted $23,000 per month to a daily rate in order to calculate an amount for part of FY13. The disputed amount of $719,832 consists of the amount so calculated for FY13 and for the two full years FY14 and FY15. In the 119 days of FY16 bank records were found for total payments to Ms Taylor of $181,905. For those 119 days, $23,000 per month would have come to only $89,726. Mr Bull counted the higher figure, $181,905, towards total expenditure for the purposes of s 28(3) and there is no dispute about his having done so. He did not ascribe any additional expenditure for Ms Taylor’s maintenance at the rate of $23,000 per month for FY16.

  6. Ms Karout’s evidence does not contradict or qualify the essential admission by the defendant under examination that he paid Ms Taylor approximately $23,000 per month prior to his incarceration. His erroneous assertion that this continued up to 2017 does not detract from the essential admission. Nor is the admission of $23,000 per month negated by his incorrect statement that payments at that rate were made from Ms Karout’s bank account prior to his imprisonment. The defendant’s admission does not lose its evidentiary force from the circumstance that he appears to have confused the method of payment by which the reduced allowance of about $3,500 per month was made while he was in prison with the method of payment of the higher monthly amount at earlier times.

  7. There is every reason to treat what I call the defendant’s essential admission as reliable. His generosity to Ms Taylor and the two children is shown by the payments during the first four months of FY16, substantiated by bank transactions. The bulk of the FY16 payments, $119,400, were transferred from a personal Westpac bank account in the name of the defendant. The remaining $62,505 was constituted by the defendant’s half share of two transfers that were made from an account in the joint names of the defendant and Ms Taylor.

  8. Further, the defendant had the capacity to be as generous as his admissions indicated. Excluding the sum in issue with respect to Ms Taylor, his total expenditure over two years and 11 months was $10.2 million, a rate of about $3.4 million per annum. His admission that he paid Ms Taylor the equivalent of $276,000 per annum, for the support of herself and his two children, can readily be accepted. Ms Karout said she was unaware of the defendant’s dealings with illegal drugs and I infer that she would not have been privy to amounts of cash that were at his disposal from that source. Ms Karout said that the defendant took care of payments to Ms Taylor before he went to prison and I infer that they would likely have been in cash, of which Ms Karout would have been kept ignorant.

  9. The defendant was not called. The plaintiff relies upon the principle in Jones v Dunkel (1959) 101 CLR 298. The plaintiff submits that the Court should attach significance to the defendant’s failure to give evidence on matters that would be within his knowledge and would bear upon the issues that have been litigated. Generally with respect to evidence that the defendant called to disprove expenditure or to establish legitimacy of income, the plaintiff submits that the Court should accept documentary evidence that it has tendered and should discount the evidence of the defendant’s witnesses. The plaintiff’s reliance on the Jones v Dunkel principle extends to the defendant’s admissions against interest concerning maintenance payments to Ms Taylor, as made in his examination before the registrar. The plaintiff relies upon the defendant’s failure to enter the witness box to withdraw or qualify those admissions.

  10. In Manly Council v Byrne [2004] NSWCA 123 Campbell JA (with whom Beazley JA and Perlman AJA agreed) explained the limits of the effect of the Jones v Dunkel principle and the prerequisites of its application. It is sufficient to quote the following passages (with some internal citations omitted):

[50]   […] Later cases confirm that the fullest extent of the inference which can be drawn is that the evidence which was not called would not have helped the party who failed to call the witness: […].

[51]   Thus, if a witness is not called two different types of result might follow. The first is that the tribunal of fact might infer that the evidence of the absent witness, if called, would not have assisted the party who failed to call that witness. The second is that the tribunal of fact might draw with greater confidence any inference unfavourable to the party who failed to call the witness, if that witness seems to be in a position to cast light on whether that inference should properly be drawn.

[52]   Even though a jury should be directed about the availability of the inferences which are recognised by Jones v Dunkel, it is entirely a matter for the jury whether it actually draws one, or both, of those inferences: Cafe v Australian Portland Cement Co Pty Ltd (1965) 83 WN (NSW) (Pt 1) 280 at 286, 287. Applying this principle to the situation of a trial by judge alone, there is no compulsion on the trial judge to draw either of the Jones v Dunkel inferences.

[53]   In Payne v Parker [1976] 1 NSWLR 191 Glass JA dissented as to the application of the principles to the facts, but his judgment has been widely recognised as stating correct legal principles. He said, at 201-202:

(6) Whether the principle can or should be applied depends upon whether the conditions for its operation exist. These conditions are three in number: (a) the missing witness would be expected to be called by one party rather than the other, (b) his evidence would elucidate a particular matter, (c) his absence is unexplained.

(7) The first condition is also described as existing where it would be natural for one party to produce the witness […], or the witness would be expected to be available to one party rather than the other […], or where the circumstances excuse one party from calling the witness, but require the other party to call him ibid […], or where he might be regarded as in the camp of one party, so as to make it unrealistic for the other party to call him […], or where the witness’ knowledge may be regarded as the knowledge of one party rather than the other […], or where his absence should be regarded as adverse to the case of one party rather than the other […]. It has been observed that the higher the missing witness stands in the confidence of one party, the more reason there will be for thinking that his knowledge is available to that party rather than to his adversary: [Earle v Castlemaine District Community Hospital [1974] VR 722 at p. 728. If the witness is equally available to both parties, for example, a police officer, the condition, generally speaking, stands unsatisfied. There is, however, some judicial opinion that this is not necessarily so: ibid [1974] VR 722 at p. 728. […]

  1. In my view the pre-conditions for application of the principle are satisfied in the present case with respect to the defendant’s failure to give evidence in the final hearing of these proceedings concerning each of the expenditures and receipts that are in issue. The only pre-condition that is contested is whether his absence from the witness box is explained. His counsel submitted that an explanation lay in the circumstance that exposure to cross examination could lead to self-incrimination. I do not accept that submission. There does not appear to be any issue in the application for proceeds assessment upon which it would be relevant for the plaintiff’s counsel to cross-examine the defendant about criminal conduct beyond that for which he has already been sentenced.

  2. It was open to defendant to give evidence and for his counsel to object to any irrelevant cross-examination that might tend to incriminate him. In circumstances such as these a rigorous approach to disallowing irrelevant questions would have been adopted. The defendant’s counsel could have alerted the Court in advance to any perceived risk of cross-examination that would lead to self-incrimination. The Court would have required the plaintiff to commit itself with respect to the issues, to avert this. Further, if some questioning relevant to the proceeds assessment issues would unavoidably have posed a risk of self-incrimination, it would have been open to the defendant to invoke s 128 of the Evidence Act 1995 (NSW).

  3. Accordingly, the principles in Jones v Dunkel are operative. I infer that evidence from the defendant would not have assisted him with respect to rebutting conclusions about his maintenance payments to Ms Taylor and their children, which are otherwise to be drawn from his evidence under examination before the registrar.

  4. However, whilst Mr Bull’s procedure of dividing the assessment period into financial years has been convenient for purposes of calculation, it has led to an overstatement. At its highest the defendant admitted under examination to an approximate amount of $23,000 per month. He did not say the amount paid was the same every month. It is consistent with his evidence that there would have been large and small payments from time to time, equating to the monthly amount on average. Recognising that limitation of his admissions, the amount by which the $181,905 in FY16 exceeded $23,000 per month for those 119 days should have been credited against the ascribed monthly expenditure overall. The excess is $181,905 - $89,726 = $92,179. Mr Bull’s total expenditure figure for the calculation under s 28(3) should be reduced by that amount. In other words, instead of crediting the $181,905 of documented payments only towards the $23,000 per month during the first four months of FY16, that sum should be credited towards the calculation of $23,000 per month for the whole of the assessment period. On that consideration, I will reduce Mr Bull’s total expenditure by $92,179.

C Loan of $1,070,000 from Ms Hannan Elgammal

  1. The defendant contends that an amount of $1,070,000 received to his benefit during the assessment period was a loan from Ms Hannan Elgammal. Ms Elgammal and her niece were the registered proprietors of 127 Bassett Street, Hurstville. OneGroup Legal Pty Ltd acted for them to complete the sale of that property on 15 August 2014. On 22 August 2014 the firm wrote to Ms Elgammal advising that in accordance with her instructions $1,070,000 of the proceeds had been disbursed to the AHL Trust.

  2. The AHL Trust was constituted under a deed made on 10 January 2014, with GDF Nominees Pty Ltd as trustee and three of the defendant’s children named as the only general beneficiaries. Circumstantial evidence of dealings in the name of the Trust shows that it was under the control of the defendant. On 22 August 2014 OneGroup Legal settled the purchase, by GDF Nominees as trustee of the AHL Trust, of property at 9 Production Avenue, Kogarah. On 12 September 2014 OneGroup Legal settled another purchase by the AHL Trust, of property at 390 Pheasants Road, Pheasants Nest. The sums required for completion of those two purchases, after allowing for deposits already paid, were $605,299 and $414,094 respectively. The total of the two figures is $1,019,393. According to the report of Mr Stone, records relating to the defendant’s affairs include a “Bassett Street Ledger” showing that the $1,070,000 from the sale of 127 Bassett Street was applied to those two purchases by the AHL Trust.

  3. The defendant read an affidavit of Ms Elgammal sworn 7 April 2025 in which she deposed as follows:

1   I have known the defendant, Kaldon Karout (Kaldon) for about 20 years. Kaldon is a family friend who we met through my son […].

127 Bassett Street, Hurstville NSW 2220

2   In about August 2015 [sic], my niece […] and I agreed to loan Kaldon the sum of $1,070,000 to assist him in purchasing a property at 9 Production Avenue, Kogarah NSW 2217.

3   On 15 August 2014, [my niece] and I settled on the sale of the property located at 127 Bassett Street […].

4   At the time of the settlement of the Hurstville Property, [my niece] and I instructed our solicitors to pay the amount of $1,070,000 from the net sale proceeds of the Hurstville Property to Kaldon.

5   The amount of $1,070,000 remains owing by Kaldon to me and [my niece].

  1. That brief affidavit is the totality of evidence tendered by the defendant upon which he submits that the Court should be satisfied on the balance of probabilities that Ms Elgammal’s interest in the property at 127 Bassett Street was hers beneficially and that $1,070,000 of the proceeds was, likewise, her money and that the funds transferred to the AHL Trust constituted a loan. The affidavit makes no mention of the term of the putative loan, or of any agreement to pay interest, or of any security that was offered or given. The deponent does not state that any document was created to record that the money was a loan rather than a gift or a disposition of funds that belonged to the defendant beneficially.

  2. In cross-examination Ms Elgammal said that in 2014 and 2015 she had a full-time driving job, on “a school run”. Her husband was a taxi driver. She could not give any estimate of how much either of them earned in those capacities, despite being pressed and given every opportunity. From the job descriptions the Court can infer that the earnings of the couple would not have been sufficient to enable them to accumulate significant savings. She also spoke of a property development business carried on by her sons, with some involvement of her own, but she gave no information about profit or accumulation of wealth from that activity. Ms Elgammal said that the home in which she resided in 2014 (which was not the Bassett Street property) was owned by her husband and was mortgaged. She did not know the amount of the mortgage debt at any relevant date, nor what interest rate was payable.

  1. I cannot accept that a person in Ms Elgammal’s modest financial circumstances, as she described them, would have been in a position in 2014 to lend $1,070,000 of her own funds, without interest or security and without a clear agreement as to a date for repayment. Ms Elgammal said “I didn’t write any paper between me and him”. She had a solicitor acting on the sale of 127 Bassett Street. If this was a loan, it is highly improbable that the transfer of funds from the solicitor’s trust account to another client of the same firm would have occurred without a record of the loan being brought into existence.

  2. Under cross-examination Ms Elgammal said, variously, that the defendant had agreed orally to repay the money “in a couple of years or something or a couple of months” or “a couple of years, maximum one year”. The incoherence of those answers is not consistent with there having been any oral agreement about a loan term. Ms Elgammal gave evidence that the defendant said he would pay her interest at the time of return of the principal but she said she had never calculated how much that interest would be. She gave no evidence of a rate of interest having been discussed. As to the purpose of the loan, Ms Elgammal said that her son, who was a friend of the defendant, encouraged her to provide the money. The effect of her answers is that the son said the defendant would invest the money in a property development. The son worked with the defendant in the building industry. The only evidence given by Ms Elgammal of any request or demand for repayment was that “a few months ago” the defendant said he would repay the loan “when I have the money”. She said she had not discussed the outstanding debt with her husband.

  3. The answers given in cross-examination in my view only increased the implausibility of the witness’ evidence as deposed in her affidavit. Taken as a whole what Ms Elgammal said about the transfer of $1,070,000 being a loan to the defendant is fatuous and unacceptable. Without credible evidence of the asserted character of the transfer it is unexplained and the Court cannot be satisfied on the balance of probabilities that the money came from sources other than illegal activity.

  4. The defendant submits that whether or not the loan characterisation is accepted, the Court should regard the money as having come from a legitimate source by reason of it being the proceeds of sale of 127 Bassett Street. However, where the bulk of the proceeds were so freely passed over to the first defendant, in circumstances that I am not persuaded gave rise to a loan, the evidence tends toward a probability that the property was the defendant’s beneficially, at least as to $1,070,000 of its value. There is nothing in the evidence to persuade the Court that the circumstances of the defendant holding that interest in the property involved funds originating from legitimate activity.

  5. Again with respect to this issue, the principles in Jones v Dunkel are engaged. I infer that if the defendant had been called, his evidence would not have assisted his case that the $1,070,000 had a legitimate origin in a loan of funds belonging to Ms Elgammal. Further, the inference that the property at 127 Bassett Street, or at least $1,070,000 of its value, was beneficially owned by the defendant is the more readily drawn and leaves the proposition of derivation from legitimate sources unproven.

  6. Accordingly, I am not satisfied that the $1,070,000 to which Ms Elgammal’s evidence relates should be treated as legitimate income in the calculation to be made under s 28(3).

D Payment of $17,000 from Mr Faraj Issa

  1. The defendant asserts that a transfer of $17,000 on 31 January 2015 from Mr Faraj Issa to one of the defendant’s bank accounts should be characterised as a receipt from a legitimate source. The defendant relies upon an affidavit of Mr Issa dated 28 September 2022 in which he deposed that from about 2014 he conducted a business of designing and constructing residential buildings through his company Flissa Design and Construction Pty Ltd. The business continued until 23 November 2020 when the company was placed under external administration.

  2. Mr Issa deposed that in about 2014 the defendant agreed with him that he could purchase construction materials for his business on credit accounts that the defendant maintained with trade suppliers. He said that he made use of this arrangement by calling Ms Karout, as necessary, to advise what materials he required. Mr Issa explained the payment arrangements as follows:

After purchasing materials, [Ms Karout] would then advise me how much I owed [the defendant] in respect of the materials. [Ms Karout] would call me or send me a SMS text message to tell me how much I needed to pay. I can’t recall whether I would always attend to a bank transfer or give a cheque for the amount to [Ms Karout].

  1. Mr Issa deposed that Ms Karout terminated the arrangement sometime in 2016 on the grounds that she claimed Mr Issa was always late in making payment and that she had to chase him. Ms Karout’s affidavit and oral evidence did not in any respect confirm or corroborate the claimed arrangement between Mr Issa and the defendant or the implementation of it through herself.

  2. Mr Issa produced copies of bank statements for an account with the Commonwealth Bank of Australia in the name Flissa Designs recording transactions between 26 May 2014 and 25 May 2015. He deposed that these were the only “accounting records” that he had in his possession relating to repayment of amounts to the defendant in respect of materials purchased on the defendant’s trade accounts. He said that he had no other financial records of his business because the external administrator of Flissa Design and Construction Pty Ltd took possession of all such documents.

  3. In oral evidence Mr Issa said that the value of his company’s purchases through this arrangement was up to $40,000 on any single occasion. Large transactions of that order would include ready mixed concrete, for a large pour, and consignments of bricks. The frequency of transactions, he said, was between one and three per week over about two years. Mr Issa said that Ms Karout sometimes sent him an invoice for the amount owed and sometimes just advised the amount by text message. He said that he sometimes paid in cash, which he would give to either the defendant or Ms Karout.

  4. It was pointed out to Mr Issa in cross-examination that the Commonwealth Bank statements for the account in the name of Flissa Designs were addressed to himself and his wife and that despite his claim to have made some payments to the defendant by cheque he did not, in his affidavit, identify any such debits to the Flissa Designs account. He was not able to identify any such entries while in the witness box. With the respect to that anomaly he simply said, “I don’t know what to say, no”. When it was pointed out to Mr Issa that the deposit of $17,000 to a bank account under the control of the defendant on 31 January 2015 was recorded as a cash transaction, he asserted that he made some payments under his arrangement with the defendant in cash, rather than by bank transfer or cheque.

  5. In answer to questions from the bench, Mr Issa said that he commenced the design side of his business in about 2004 and the building side from about 2013. He said that he could not recall whether he had always obtained an invoice or similar documentation to record payments to the defendant for trade suppliers that the defendant or his company had purchased on Mr Issa’s behalf. Mr Issa said that he was “really bad” with his books but that from 2004 he had an accountant who assisted him with preparing tax returns. He said he would probably have given any invoices that he received from Ms Karout to his accountant but he was unsure.

  6. I find it inconceivable that a person such as Mr Issa who had been in business on his own account since 2004 and had an accountant for tax reporting purposes would not have kept invoices for expenditure on trade supplies, including payments to the defendant under the alleged arrangement. Those payments would have been substantial deductible expenses which it would have been in Mr Issa’s interests to document and record. I am unable to accept that the alleged arrangement with the defendant could have been made and implemented and yet Mr Issa should be unable, at the date of the trial, to produce invoices for at least some of the hundreds of transactions that he claims took place between his company and the defendant, up to three per week for two years. His evidence of the arrangement is inconsistent with his inability to identify any relevant transaction on any bank account or to produce any other kind of supporting document.

  7. The truthfulness or otherwise of Mr Issa’s evidence about the nature of the $17,000 cash payment on 31 January 2015 depends upon whether the Court accepts his evidence about the course of his dealings with the defendant in 2014 and 2015. Notwithstanding the intervention of external administrators, if there was such a course of dealings Mr Issa or the defendant’s solicitors could certainly have obtained copies of some such records from Mr Issa’s accountants and/or obtained statements from the relevant bank for the account or accounts upon which transfers or cheque payments were drawn. I am unable to accept that there was an arrangement such as he alleges in the absence of a single supporting contemporaneous business record and with no evidence from the defendant. The defendant’s failure to testify leads me to infer that his evidence would not have assisted his case on this issue. That is significant because Mr Issa has said that the defendant was the counterparty to the purported arrangement.

  8. I am unpersuaded as to Mr Issa’s explanation of the source and character of the $17,000 in question. The defendant has not proved on the balance of probabilities that the source was unrelated to illegal activity. The character and circumstances of the defendant’s receipt of the sum are simply unproven.

E Payments totalling $250,000 from Mr Joseph Samia

  1. In an affidavit sworn 28 September 2022 Mr Samia deposed that in June 2015 he agreed to lend to the defendant $50,000. In the same month he caused payment of that sum to be made from a bank account of Ezra Pty Ltd. Mr Samia’s wife, Ms Kak, was a director of Ezra Pty Ltd in June 2015 and Mr Samia has been a director of the company at other times. He deposed that the loan has not been repaid. His affidavit said nothing about interest, security or documentation in relation to this purported loan.

  2. In oral evidence Mr Samia said that Ezra Pty Ltd was engaged in the development of a single property and that it had borrowed money from a bank for the purpose of its business activities. He was not able to explain in what character the $50,000 had been withdrawn from Ezra Pty Ltd’s funds for his use but he insisted that the purported loan to the defendant was his personal loan. He said that if the $50,000 was repaid by the defendant he would put that sum back into the company and reduce Ezra Pty Ltd’s bank debt. He said that at the time of transferring the money to the defendant no agreement was made for payment of interest and he has not sought interest since then.

  3. Mr Samia also deposed to a second agreement with the defendant for a loan to him of $200,000. That agreement, according to Mr Samia’s affidavit, was also made in June 2015. In that month he caused two cheques, each for $100,000, to be drawn in favour of the defendant on a bank account of Styletech Pty Ltd. The sole director of that company in June 2015 was Ahmad Rachid Ahmad. In oral evidence Mr Samia said that Mr Ahmad was his business partner. A company search shows that Messrs Samia and Ahmad each held 50% of the issued ordinary shares in the company. Mr Samia said that the company was involved in property development and that he was entitled to dividends from it, of which the $200,000 that he paid to the defendant in June 2015 formed part.

  4. Mr Samia said that he did not make any written record of his agreement with the defendant for the loan of $200,000. He said that he could not remember what, if anything, the defendant stated about a repayment date. He understood that the defendant was “doing a few project”. The defendant said that when he sold one of the projects he would give the money back. Mr Samia could not recall what if anything the defendant said about the purpose for which he was borrowing money but Mr Samia understood the purpose was “property related”.

  5. According to Mr Samia, he thought he would probably be repaid in 6 to 12 months. As with the $50,000 loan, he did not discuss interest when he agreed to lend the $200,000 and he has not asked the defendant for interest during the period in which the principal has remained unpaid, as it has done for nearly 10 years. Mr Samia said that he has never taken any steps to recover the $200,000.

  6. The Court is asked to accept Mr Samia’s superficial affidavit evidence, of undocumented loans totalling $250,000 with no commercial terms, in the absence of any plausible explanation as to why he, a businessman and property developer, would have advanced this significant sum so improvidently, without agreement upon terms that are basic to the commercial interests of any lender. Mr Samia deposed that he has known the defendant for more than 20 years. That of itself provides no explanation that could give plausibility to the highly improbable transactions with the defendant that Mr Samia describes.

  7. Applying Jones v Dunkel I infer that if the defendant had been called his evidence would not have assisted his case that the $250,000 from Mr Samia was a legitimate loan. His absence from the witness box leaves Mr Samia’s evidence unsupported, in circumstances where it is so improbable that I am unable to accept it without corroboration from the putative counterparty. I find no basis for adding the $250,000 to the legitimate income that is to be brought to account in assessing proceeds of crime.

F Payments of $123,000 from Mr Barton/Ms Sin and other transactions

  1. Mr John Barton is a lifelong friend of the defendant, being of similar age and having known the defendant since Mr Barton was 13. The defendant asserts that a series of funds transfers from Mr Barton and his wife, Ms Sin, to a bank account in the defendant’s name were loans and were unrelated to illegal activity. The relevant transfers are as follows:

From Mr Barton:

1 Apr 2014

9,000

2 Apr 2014

10,000

3 Apr 2014

9,000

4 Apr 2014

9,000

7 Apr 2014

9,500

7 Apr 2014

9,500

7 Apr 2014

9,500

8 Apr 2014

10,000

11 Apr 2014

4,000

79,500

From Ms Sin:

13 Aug 2014

5,000

15 Aug 2014

9,500

15 Aug 2014

10,000

21 Aug 2014

10,000

27 Aug 2014

9,000

43,500

$123,000

Issues concerning deposits to the defendant’s personal bank accounts

  1. The Barton/Sin transfers were all made to a Commonwealth Bank of Australia (CBA) account in the name of the defendant, with account number ending 2502. Mr Bull’s affidavit of 31 July 2020 verified a breakdown of what he accepted as legitimate income in a schedule at Tab 21 of Ex RB-1 (Court Book 250). It can be seen at lines 7 and 8 of the figures in that schedule that Mr Bull included annual totals of net deposits to CBA account 2502 and to another personal account of the defendant, at Westpac Bank, with account number ending 0434. The individual credits to those two personal bank accounts that Mr Bull included in his totals are not fully itemised in the evidence. However, from the controversy between Mr Bull and Mr Stone that has followed, it is apparent that Mr Bull did not include as legitimate income the transfers to CBA account 2502 from Barton/Sin totalling $123,000.

  2. On the schedule at Tab 21 of Ex RB-1 (prepared on 31 July 2020), the sum of the yearly totals of legitimate income received into CBA account 2502 was $464,467.45. That was added to other amounts on the schedule to derive a total of all legitimate income in the sum of $7,352,936.99. Mr Bull has subsequently revised that figure, by adjustments that do not involve any change to Mr Bull’s non-inclusion of the Barton/Sin deposits to the CBA account.

  3. At par 2.3.6(b) of Mr Stone’s report of 10 March 2025 he made a “recalculation” of the net credit movements on CBA account 2502 and on Westpac account 0434. It is not clear from his report which individual transactions on those bank accounts Mr Stone thought should be treated differently for the purposes of assessing legitimate income. However, by some means Mr Bull ascertained which of the transactions Mr Stone sought to put in issue and he set them out on schedules at Tabs 1 and 2 of an exhibit to his affidavit of 24 March 2025.

  4. On the schedule at Tab 1 for the CBA account, the first line is “Opening Balance per First Bull Affidavit – $464,467.45”. That is a reference to the total of credits to the CBA account that Mr Bull allowed as legitimate income at line 7 of his schedule of 31 July 2020. On Tab 1 of 24 March 2025 there follow details of the amounts that Mr Stone has apparently contended should be added to or subtracted from Mr Bull’s total of legitimate income deposited to the CBA account.

  5. Tab 2 of Mr Bull’s 24 March 2025 exhibit, concerning Westpac account 0434, commences with the line “Opening Balance per First Bull Affidavit – $962,027”. That is the total of Mr Bull’s year by year amounts of legitimate income received into the Westpac account as recorded at line 8 of Tab 21 dated 31 July 2020. Again, on Mr Bull’s 24 March 2025 schedule (Tab 2) he lists the transactions on that account that Mr Stone has apparently contended should be added to or subtracted from legitimate income.

  6. The two schedules of 24 March 2025, Tabs 1 and 2, also record which of Mr Stone’s proposed variations are accepted by Mr Bull. He has agreed that two credits to the CBA account totalling $30,000 and one credit to the Westpac account for $12,000 should not be counted as legitimate income. At Tab 3 of the exhibit to Mr Bull’s 24 March 2025 affidavit, being the final adjustment sheet that has been referred to earlier in these reasons and from which the plaintiff seeks to quantify the proceeds assessment that it now claims, Mr Bull deducted the agreed amounts totalling $42,000 from legitimate income. Mr Bull did not make any other change to his treatment of credits to the CBA and Westpac accounts.

  7. According to the experts’ joint report following their conclave, Mr Stone contends that the amount of legitimate income received into the CBA and Westpac accounts should be reduced by only $13,870, rather than $42,000, calculated as follows (from a table on the first page of Appendix A to the joint report, Court Book 556):

1

Agreed reduction for three deposits to CBA and Westpac accounts

(42,000)

2

Loans from associates (Barton/Sin)

123,000

3

Receipts from Auto Motori

85,000

4

Receipt from KK Industries

(52,000)

5

Receipt from Hazem Karout

(100,000)

6

Other cheque/cash deposits

(130)

Net/total

(13,870)

  1. As they appear in the joint report, figures shown in parentheses are those that Mr Stone contends should be in reduction of legitimate income, leading to a corresponding increase in the assessment of proceeds of crime. Figures not in parentheses are those that Mr Stone contends should be added to legitimate income, thereby reducing net proceeds of crime.

Line 1: agreed reduction of legitimate income by $42,000

  1. Line 1 in Mr Stone’s calculation is the $42,000 that Mr Bull has agreed and which he has incorporated in deriving final figures, as recorded in his affidavit of 24 March 2025 and as relied upon by the plaintiff for its quantification of proceeds.

Line 2: Barton/Sin transfers totalling $123,000

  1. With respect to line 2 Mr Stone’s claimed addition of $123,000 of legitimate income, the defendant relies upon an affidavit of Mr Barton. He has deposed that in early 2014 the defendant asked him for a loan of $200,000. Mr Barton told the defendant that he did not have that sum but could lend $130,000. In his affidavit Mr Barton gave no evidence of having asked the defendant how soon he would require the advance, or when he would repay it, or whether interest would be paid or security given, or the purpose for which the loan was required. The minimal conversation deposed to by Mr Barton is deficient and incomplete as an oral agreement for a significant personal transaction, to such an extent that I find it inherently implausible.

  2. In oral evidence Mr Barton gave varying answers about the purpose of the loan.

Q. Did he tell you what he needed the money for?

A. No, he didn't, actually. I didn't ask.

Then at T 65 he said that the defendant may have told him the money was for “property tax” but he was unsure about that. His contradiction and uncertainty about this impresses me as another improbable feature of the claimed oral loan agreement.

  1. In early 2014 the defendant was conducting a construction business whereas Mr Barton had been unemployed for six months, having previously worked in his family’s businesses which included construction, a building materials supply yard and hotels. Mr Barton had recently divorced and had received, or expected to receive, between $230,000 and $240,000 out of the matrimonial property. His new wife, Ms Sin, managed a chain of nine hotels (not for Mr Barton’s family).

  2. Despite having deposed in his affidavit nothing concerning the term of the loan, Mr Barton gave these answers in cross-examination:

A. He just [said] to me he'd get it back to me as soon as possible and I said, "How long would that be?" and he said, "It could be up to five years" and I said, "Okay."

Q. You were happy to loan him the money knowing that it might not be returned for five years?

A. Yeah. Yeah, I was.

  1. In cross-examination Mr Barton said that in early 2014 he did not ask the defendant for interest to be paid, or for security. According to Mr Barton the loan has now been outstanding for 11 years but he has at no time asked for interest or security. He said he has never calculated what interest might have accrued if he had required it. Mr Barton said that he has at some undefined time or times told the defendant that he needed the money repaid but he has accepted the defendant’s answer that “he’s in court and that’s it”.

  2. I do not find it credible that the money paid by Mr Barton and Ms Sin was a loan. The looseness of the arrangement is implausible for a person in Mr Barton’s financial position. He said that he had on previous occasions been asked by associates for loans in the order of $50,000, which he had refused. He said that the difference with the defendant was that he had grown up with him and regarded him as a friend and in a special category. I am not persuaded that the personal connection adds any credence to Mr Barton’s account of having made a loan on a basis devoid of any terms protective of his own basic interests, as he described the arrangement.

  3. Mr Barton said that he advanced the loan in instalments as listed in the table at [68] above because the terms of his bank account did not permit withdrawal of more than $10,000 per day. That explanation is contradicted by the three payments, each of $9,500, all made on 7 April 2010. The transfer of the purported loan by instalments is thus not explained and remains a point of doubt concerning Mr Barton’s evidence as to the nature of the transaction.

  4. Mr Barton said that the reason he ceased making instalment transfers from his bank account after the total had reached $79,500 on 11 April 2014 was that he had “other things to pay for”. He said that the other things included house and car but he could not remember anything else. He said that no further transfers to the defendant occurred until August 2014 because “I had to see how much money I needed”. If that was the case, it adds to the improbability of Mr Barton having agreed in early 2014 to lend $130,000 in the first place. He was in no position to do so.

  5. Overall, I find Mr Barton’s evidence inherently improbable, affected by internal inconsistencies and generally unconvincing. Here again the principles in Jones v Dunkel are applicable. I infer that evidence from the defendant, if he had been called, would not have assisted his case that the $123,000 of deposits from Barton/Sin to his CBA personal account constituted a legitimate loan from Mr Barton. No alternative innocent explanation for the deposits is available on the evidence. The Court is left unsatisfied, on the balance of probabilities, that the proceeds assessment should be adjusted by treating the $123,000 as unrelated to criminal activity.

Line 3: Auto Motori deposits totalling $85,000

  1. The $85,000 at line 3 of Mr Stone’s table at [73] above comprises, first, a credit to the defendant’s CBA account 2502 of $50,000 on 7 February 2014, narrated on the bank statement as “Direct credit 301500 Auto Motori Pty Loan Repayment”. Secondly there is a credit of $35,000 on 17 September 2014 narrated as “Direct credit 301500 Auto Motori Pty 911”.

  2. The Court has no evidence about the reasons for these payments. No documentation has been tendered by either party from which the Court could discern the nature of any underlying transaction. Mr Stone contends that the deposits should be treated as legitimate income because a third bank transaction in which the depositor was named as Auto Motori was so treated by Mr Bull. However, Mr Bull gave evidence that he had information concerning an underlying transaction to which that third credit related. He said he was prohibited from disclosing the additional information by force of what he termed “secrecy provisions” of the Crime Commission Act 2012 (NSW). The defendant’s counsel accepted that position and did not press for revelation of the additional information. Mr Bull’s distinction of the third transaction therefore stands unchallenged and it is not a basis for imputing to the deposits of 7 February and 17 September 2014 that they must have been unrelated to criminal activity.

Lines 4, 5 and 6: sundry deposits totalling $152,130

  1. At lines 4, 5 and 6 of Mr Stone’s recalculation table he identified $152,130 in deposits to the defendant’s personal accounts that Mr Bull counted as legitimate income but for which Mr Stone could see no supporting documentation to justify that treatment. In submissions to the Court counsel for the plaintiff recognised that Mr Bull’s treatment of the three items is favourable to the defendant’s position and stated, with respect to each, that he had no instructions to withdraw the concession. Accordingly, there is no basis upon which I could depart from the plaintiff’s position of including those three deposits within the total of legitimate income as calculated by Mr Bull.

Conclusion on Mr Stone’s adjustments to CBA and Westpac deposits

  1. The result of the above conclusions on Mr Stone’s table of proposed adjustments to transactions on the defendant’s personal bank accounts at CBA and Westpac (see [75] above) is that none of them, including the $123,000 from Barton/Sin, has been shown to warrant any change to M Bull’s final calculation, beyond the $42,000 decrease in legitimate income that M Bull agreed and that has been taken into account in the plaintiff’s claim.

Orders

  1. Mr Bull’s figure for expenditure, for the purpose of the estimate of proceeds under the calculation prescribed in s 28(3), is to be reduced by $92,179 in relation to maintenance payments for Ms Taylor, as I have calculated at [39] above. The value of the drugs that were in the defendant’s possession upon arrest is a component of the assessable proceeds of crime separate from the expenditure/legitimate income calculation that is undertaken pursuant to s 28(3). The value of the drugs is assessed pursuant to s 28(1)(a)-(c). Those considerations give rise to the following figures:

Expenditure assessed by Mr Bull

10,916,264.79

Less adjustment to maintenance payments for Ms Taylor

92,179 .00

10,824,085.79

Value of drugs taken into account under s 28(1)(a)-(c)

546,095.00

Adjusted expenditure for assessment under s 28(3)

10,277,990.79

  1. The result of those figures is as follows:

Value of drugs, of which possession was obtained through the unlawful activity - pursuant to s 28(1)(a)-(c)

 546,095.00

Adjusted expenditure assessed by Mr Bull (excluding the value of the drugs)


10,277,990.79

Less income from sources unrelated to criminal activity, to derive difference between expenditure and legitimate income pursuant to s 28(3)

6,221,425.88 4,056,564.91

Proceeds of crime under ss 28(1)(a)-(c) and 28(3)


4,602,659.91

  1. An order for costs is claimed in the summons but it is not clear whether the plaintiff now claims costs in respect of the final hearing of the proceeds assessment. If a costs order in relation to this aspect of the litigation is sought by either party, it will have to be the subject of submissions made after publication of this judgment.

  2. The following orders will be entered:

  1. Order pursuant to section 27 of the Criminal Assets Recovery Act 1990 that Kaldon Karout pay to the Treasurer the amount of $4,602,659.91 assessed by the Court as the value of the proceeds derived from the illegal activities of Kaldon Karout or another person that took place not more than six (6) years before the making of the plaintiff’s application on 27 October 2015.

  2. Direct that if either party seeks an order for the costs of the proceeds assessment, that party is to file and serve submissions in support by 10 June 2025 and the opposing party is to file and serve any submissions in reply by 24 June 2025.

  3. Order that any contested claim for a costs order is to be determined on papers.

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Decision last updated: 27 May 2025

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Cases Cited

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Statutory Material Cited

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Luxton v Vines [1952] HCA 19
Jones v Dunkel [1959] HCA 9
Manly Council v Byrne [2004] NSWCA 123