NSW Crime Commission v Ivanov & Ors

[2006] NSWSC 1361

CITATION:	NSW Crime Commission v Ivanov & Ors [2006] NSWSC 1361
HEARING DATE(S):	17/10/2005; 18/10/2005; 19/10/2005
JUDGMENT DATE :	12 December 2006
JURISDICTION:	Common Law Division
JUDGMENT OF:	Hidden J at 1
DECISION:	Application for exclusion dismissed
CATCHWORDS:	PROCEEDS OF CRIME: - application for exclusion under s25 of the Criminal Assets Recovery Act - large amount of cash - whether proved that none of it was ilegally acquired property.
LEGISLATION CITED:	Criminal Assets Recovery Act 1990
PARTIES:	NSW Crime Commission (applicant) George Ivanov (first respondent) Biljana Ivanov (second respondent)
FILE NUMBER(S):	SC 11445/2003
COUNSEL:	I Temby AO QC (applicant) S Russell (respondents)
SOLICITORS:	NSW Crime Commission (applicant) Peter Murphy (respondents)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
CONF LIST

HIDDEN J

Tuesday 12 December 2006

11445/2003
NEW SOUTH WALES CRIME COMMISSION v IVANOV

JUDGMENT

1 HIS HONOUR: In May 2003, the respondents, George and Biljana Ivanov, lived in a home unit at Punchbowl with their two sons, Peter and Risto. The respondents occupied the main bedroom in the unit. On 26 May 2003 police conducted a search of the unit. In the bedroom occupied by Peter Ivanov they found a large number of ecstasy tablets. They also found about $76,000 in cash in a safe in his bedroom. In a safe in the main bedroom, occupied by the respondents, they found $97,500 in cash.

2 On 4 June 2003 Peter Ivanov was arrested and charged with supplying a commercial quantity of a prohibited drug. About a year later he was sentenced in the District Court to a term of imprisonment.

3 On 11 June 2003, the applicant, the New South Wales Crime Commission, obtained a restraining order under s10 of the Criminal Assets Recovery Act, 1990 in respect of the property of Peter Ivanov, as well as the respondents’ interest in the $97,500 found in the safe in their bedroom. On 2 April 2004 an assets forfeiture order under s22 of the Act was made, unopposed, in respect of the money found in Peter Ivanov’s safe (as well as a sum of money found on his person at the time of his arrest). On 20 September 2004 an assets forfeiture order was made in respect of the respondents’ interest in the $97,500, with leave reserved to them to make an exclusion application under ss25 or 26 of the Act. Section 25 provides for an application in respect of the whole of the interest in property forfeited, whereas s26 enables an application in respect of a specified proportion of the interest.

4 Before me is their application under s25(1)(b) for the exclusion of their interest in the $97,500 from the operation of the assets forfeiture order. To succeed, they must establish on the balance of probabilities that the money was not illegally acquired: s25(2)(b). The effect of s9 and relevant definitions in s4(1) is that they must show that no part of the money was the product of an act or omission, by them or anyone else, constituting an offence against the laws of New South Wales or the Commonwealth.

5 It is their case that the money consisted of the proceeds of sale of a house in Macedonia and accumulated savings from legitimate sources. It is this which they undertake to prove. I am dealing with their application but it is convenient to refer to them, through their status in the proceedings generally, as “the respondents”.

6 Before me are affidavits of each respondent and of their son, Peter. All three gave oral evidence. The Crime Commission relied on affidavits of its financial investigator, Lou Novakovic, and Senior Constable Stephen Hungerford. Senior Const Hungerford gave oral evidence. The respondents and their son were cross-examined in some detail by Mr Temby QC, for the Crime Commission. However, a relatively brief summary of their evidence and the challenges to it will be sufficient to explain my conclusion that none of the three of them was a reliable witness.

7 The two respondents are of Macedonian origin. It is not in dispute that in the later 1980s the home of Mrs Ivanov’s deceased parents in that country was sold, and the proceeds were divided between her sister and her. Mrs Ivanov said that her share was about A$41,000. Their evidence was that Mr Ivanov travelled to Macedonia in 1987. He returned to Australia with part of his wife’s share of the proceeds of sale, about A$16,800. The rest of her share was left with her sister in Macedonia. In November of that year, Mrs Ivanov deposited that money into an account at the Commonwealth Bank.

8 Their evidence continued that in 2000 they travelled to Macedonia with their two sons. In January 2001 they returned to Australia, bringing with them the balance of Mrs Ivanov’s share, which had been exchanged for A$24,000 in cash. She carried $12,000 in her wallet and her husband carried $12,000 in his. They said that the $24,000 cash was put into the safe in their bedroom.

9 As I understand it, it is their case that the money found in the safe included the whole of the proceeds of the sale of the home. However, it is not entirely clear from their evidence whether the sum of about $16,800 previously brought back to Australia was withdrawn and placed in the safe and, if so, when. Both of them had been working for some years prior to 2003, and they said that they had saved significant amounts from their wages and placed those savings in cash in the safe also. They were able to save as they did, they said, because they lived a very frugal lifestyle.

10 In cross-examination, it emerged that in completing immigration documents upon their return to Australia in 2001, both respondents answered “no” to a question whether they were carrying cash in an amount of $10,000 or more. Each of them sought to explain this in evidence by saying that they believed that they could notionally divide the $24,000 between themselves and their two sons, so that each of the four of them could be considered to have been carrying $6,000. I find this explanation far from convincing, and it casts doubt upon their account of bringing that amount of cash into Australia on that occasion. In addition, it is but one of a number of matters which call into question their credibility generally.

11 More importantly, the evidence of Snr Const Hungerford, which I have no reason not to accept, is that on the day of the search he had a conversation with Mrs Ivanov in which she provided a significantly different account of how the money in the safe came to be there. Before that safe was opened, he asked her what was in it. She said that it contained her jewellery, which is not in dispute, but she then said that there was also $85,000 in cash. That cash, she said, was hers and was the product of the sale of the house in Macedonia. She said that the house had been sold for $200,000 and that, after costs were deducted, her share of the proceeds was A$85,0000. Asked how that sum of money had been brought into Australia, she said that her sister had brought it in about six months previously (in German marks).

12 The inconsistency between this account and her evidence before me is obvious. It cannot stand with her evidence about the amount of her share of the proceeds of the sale of the home or about how that share was conveyed to this country. Nor can it stand with her evidence that the major proportion of the money in the safe was savings from her earnings and those of her husband.

13 On 4 June 2003 a further search was conducted at the respondents’ home, on this occasion for property tracking documents, by police and the Crime Commission investigator, Mr Novakovic. I have in evidence a videotape of that process, including a conversation between Mr Novakovic and the respondents. Mr Temby relied upon that conversation also as an inconsistent account of the origin of the money in the safe.

14 I have approached this evidence with some care, not only because English is not the first language of either of the respondents but also because there is some over-talking, carrying with it the danger that some of what was said might not be understood in its proper context. Nevertheless, what emerges clearly enough is that, asked about the money in both safes, Mr Ivanov said that some of it was the proceeds of the sale of the Macedonian house but that that money was transferred to Australia in relatively small amounts, $4,000 or $5,000. He also said that the rest of the money was his wife’s savings from her earnings, and Mrs Ivanov herself made comments to the same effect. Neither said anything about savings from Mr Ivanov’s earnings. Indeed, at one stage he appears to have said that he had no savings because he worked “for the government”.

15 Although Mr Novakovic introduced the topic of the money in both safes, I would accept that the respondents were speaking of the money in the safe in their bedroom. Nevertheless, this is yet another inconsistent account of its provenance. I do not consider that these inconsistencies are the result of mistake or failing memory. They can be explained only as the product of deliberate, albeit somewhat inept, falsehood on the part of both respondents.

16 In November 1994 they borrowed $23,000 from the National Australia Bank to buy a car. In September 1995 they sought a loan of $70,000 from the bank. At those times, according to them, they had a substantial sum in cash at their home. If their evidence were to be accepted, they had more than enough to buy the car. On neither occasion did they declare any cash in hand as an asset in the loan application. In January 1999 they sought a home loan of $200,000. When the loan was the granted, they used $150,000 to buy the unit at Punchbowl and paid the balance into a bank account. Again, they did not declare any cash in hand as an asset in the loan application, although they did reveal other assets, including a credit balance in their account.

17 Despite their asserted access to a substantial amount of cash, Mr Ivanov frequently obtained cash advances on his credit card, sometimes to pay bills. As to this, and as to the borrowings to which I have referred, he asserted in his affidavit that he “did not mind” paying interest. Their evidence was that people in Macedonia commonly keep large amounts of cash in their homes, and they were storing the money in their safe with a view to eventually buying a home in Macedonia. I do not find this explanation convincing. The evidence of their borrowings in the 1990’s casts real doubt upon their assertion that they had substantial sums in cash at home during that period.

18 Counsel for the respondent, Mr Russell, submitted that I should accept their evidence and should not place undue weight upon might be seen as their unusual financial practices. He noted that the Crime Commission did not dispute that the house in Macedonia had been sold and that Mrs Ivanov had received a share of the proceeds. Nor was it in dispute that both of them had been earning income and had the capacity to save. Nevertheless, allowing for those matters, I have said enough to show that I do not accept their evidence of how the $97,500 came to be in their safe. It follows that they have failed to discharge their burden of proving that the whole of that money was acquired lawfully.

19 That said, the evidence also admits of a finding that at least some of the money in their safe was, to their knowledge, the proceeds of Peter Ivanov’s drug dealing. Although such a finding is unnecessary to dispose of the matter, it is appropriate that I set out the basis for it. These aspects of the evidence also reflect poorly upon their credibility, particularly that of Mrs Ivanov.

20 Both denied in evidence having had any knowledge of their son’s criminal activity prior to the day of the search. However, evidence connected with the search on 26 May 2003, which also was videotaped, suggests otherwise. After police found the ecstasy tablets in Peter Ivanov’s bedroom, they show them to Mrs Ivanov. Later, when Mr Ivanov arrived home, she said to him, “They found the drugs.” This can be heard clearly on the videotape.

21 Of itself, that might be susceptible of an innocent explanation. However, the matter does not end there. Although both of the respondents knew how to open the safe in their bedroom, it appears from the videotape of the search and from the evidence of Det. Hungerford that each of them initially told police that only their son knew the combination. While this denial might also be seen as an inept falsehood, it points to guilty knowledge on their part about the contents of the safe. Perhaps more importantly, during the search Det. Hungerford found text messages on Mrs Ivanov’s mobile phone to her son telling him that police were searching the unit and advising him not to come home.

22 This evidence points to their awareness of Peter’s drug dealing and to their fear, if not their actual knowledge, that some of the proceeds of that activity was in their safe. It must be said, in fairness, that that inference is more readily available against Mrs Ivanov than it is against her husband. However that may be, I find the whole of their evidence unsatisfactory for the reasons I have expressed. It may be that some of the money in the safe, perhaps a significant proportion of it, was not obtained illegally. However, having made their application under s25 of the Act rather than s26, the respondents must establish on the balance of probabilities that none of it was. This they have failed to do.

23 It remains to refer, albeit briefly, to the evidence of Peter Ivanov himself. He generally supported his parents as to the source of the money in their safe, and asserted that none of it was derived from his drug dealing. Like his parents, his credibility did not survive cross-examination.

24 He said in oral evidence that all of the 790 ecstasy tablets found in his room had been for his personal consumption. He had said the same on his oath in an examination under the Act before a registrar. From this he quickly resiled when he was taken to the course of his sentence proceedings, in which he had acknowledged that some of the tablets were intended for sale. He claimed that this was the first and only time that he had bought ecstasy tablets in bulk. However, cross-examination revealed that he had had a substantial drug habit over a period of several years, which could not be financed from legitimate sources and which was supported by a pattern of drug dealing.

25 In his affidavit he also claimed that the amount of over $76,000 found in his own safe had been his “life savings”, the implication being that it had all been lawfully obtained. Not surprisingly, he retreated from that proposition also, albeit to a limited extent. Although agreeing that some of it might have been the proceeds of drug dealing, he maintained that most of it was legitimate. This also cannot be accepted, in the light of what emerged in cross-examination about his lifestyle and his limited legitimate income. He was an unimpressive witness, whose evidence provided no support for that of his parents.

26 The application must be dismissed. If necessary, I shall hear the parties on costs.

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