NSW Crime Commission v Mahoney

[2003] NSWSC 1030

Reported Decision: 142 A Crim R 409

Supreme Court

CITATION:	NSW Crime Commission v Mahoney [2003] NSWSC 1030
HEARING DATE(S):	11-14 August 2003
JUDGMENT DATE:	25 September 2003
JURISDICTION:	Common Law
JUDGMENT OF:	Michael Grove J at 1
DECISION:	PROCEEDS ASSESSMENT MADE; PARTIAL RELIEF FROM FORFEITURE
CATCHWORDS:	CRIMINAL ASSETS RECOVERY - PROCEEDS ASSESSMENT - CLAIMS FOR RELIEF FROM FORFEITURE - ONUS - EVIDENCE
LEGISLATION CITED:	Criminal Assets Recovery Act 1990
CASES CITED:	Australian Consumer & Competition Commission v Amcor Printing & Papers Group Ltd 2000 169 CLR 344 Briginshaw v Briginshaw 1938 60 CLR 336 DPP v Jeffrey 1992 58 A Crim R 310 NSW Crime Commission v Crotty [1999] NSWSC 146
PARTIES :	In the matter of the property of Robert Bradley Mahoney, Applicant, and in the matter of the Crimal Assets Recovery Act, the New South Wales Crime Commission, Respondent
FILE NUMBER(S):	SC 11437/00
COUNSEL:	I. Temby QC with R. Bromwich (Plaintiff/Respondent) R. Lovas (Defendant/Applicant)
SOLICITORS:	J. Giorgiutti (Plaintiff) Curtis Gant Irving (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

MICHAEL GROVE J

Thursday 25 September 2003

11437/00 - IN THE MATTER OF THE PROPERTY OF ROBERT BRADLEY MAHONEY, APPLICANT and IN THE MATTER OF THE CRIMINAL ASSETS RECOVERY ACT, THE NEW SOUTH WALES CRIME COMMISSION, RESPONDENT

JUDGMENT

1 HIS HONOUR: Before the Court are proceedings under the Criminal Assets Recovery Act 1990. Otherwise unreferenced sections pertain to that Act. On 2 June 2000 Robert Bradley Mahoney (the applicant) was arrested and charged with offences including offences referrable to a quantity of 476.7 grams of methylamphetamine. On 8 June 2000 the New South Wales Crime Commission (the Commission) obtained from this Court a restraining order pursuant to s10 in respect of the property of the applicant. On that date the Commission sought an assets forfeiture order pursuant to s22 and a proceeds assessment order pursuant to s27.

2 On 9 April 2001 an assets forfeiture order was made in respect of property scheduled as follows:

“ PART ONE
The whole of the property comprising of Lot 110 in the Deposited Plan 755260 at Browns Road, Blackhill, New South Wales, registered in the names of Sandra Dawn Maree Beldham and Robert Bradley Mahoney, as joint tenants.
PART TWO
1. The whole of the property comprising Lot 8 of Section E in the Deposited Plan 16054, also known as 27 Elizabeth Street, Cardiff South, New South Wales, registered in the names of Robert Bradley Mahoney and Sandra Dawn Maree Beldham, as joint tenants.
2. Funds held in bank account number 732-512-53-4210 being account in the name of Robert Bradley Mahoney at the Cardiff branch of Westpac Banking Corporation.
3. Funds held in bank account number 958 768 being investment account in the name of Robert Bradley Mahoney at Newcastle Permanent Building Society Limited.
4. Funds held in bank account number 016.65.82171/5 being investment account in the name of Mr R. Mahoney at Greater Building Society Limited.
5. Cash in the sum of $14,505 located by members of the New South Wales Police Service on the front passenger seat of motor vehicle registration TES-884 and handed to Police by Robert Bradley Mahoney on 18 November 1999 following a random breath test at the intersection of Pacific Highway and Redleaf Avenue, Warrawee, New South Wales.
6. Cash in the sum of $2,450 located by members of the New South Wales Police Service in the wallet of Robert Bradley Mahoney on 21 January 2000 following a search of his person.
7. 1991 Chevrolet Corvette US coupe registration number RAW-068 registered in the name of Robert Mahoney.
8. 1991 Harley Davidson model FXDB motorcycle registration number XDJ62 registered in the name of Robert Mahoney.
PART THREE
Cash in the sum of $4,800 located by members of the New South Wales Police in the execution of a search warrant at 27 Elizabeth Street, Cardiff South on 20 July 2000.”

3 The reasons for the divisions in the schedule are stated in the orders and need not be repeated. I will refer to the firstmentioned realty as “the Blackhill property” or “Blackhill”, the second as “the Cardiff property” and the other items in accordance with their respective descriptions.

4 On 25 October 2002 the Public Trustee, in whose name a new Certificate of Title had been issued in respect of Blackhill was, by further order of this Court, restrained on an interlocutory basis from selling that property.

5 On 7 March 2003 the applicant was convicted of supplying more than a commercial quantity of the prohibited drug methylamphetamine.

THE LITIGATION

6 By motion the applicant seeks that the order restraining the sale of Blackhill be continued and/or made permanent and that the assets forfeiture order be set aside. The latter was abandoned at the hearing and the former adjourned to await the outcome of the matters next to be mentioned. By separate motion, the applicant seeks that the whole of the property scheduled be excluded from the restraining order pursuant to s25 and that a proportion of it be excluded from the forfeiture order pursuant to s26. During the hearing it appeared to me that exclusion from forfeiture as well was sought under s25 but as, at the conclusion, counsel stated that he was not instructed “to withdraw the claim for s25 relief” but that he would “say no more about it”, it suffices to record the observation. If it became relevant I would be prepared to extend the scope of the prayer to encompass s25 relief.

7 Sandra Dawn Maree Beldham, the applicant’s mother who was joint registered proprietor on the title of both Blackhill and the Cardiff property also seeks exclusion of her interests in those properties from the forfeiture orders.

8 The Commission pursues its claim for a proceeds assessment order pursuant to s27.

9 By consent, save the adjourned injunction issue, the hearings, that is to say the exclusion applications and proceeds assessment proceeded concurrently on the basis that I would make findings and defer the making of consequential orders until after publication of reasons and an opportunity to make further submissions, if that became appropriate.

AIM OF THE ACT

10 Section 3(a) specifies a principal object of the Act to provide for the confiscation without requiring a conviction of the property of a person who has, as a matter of probability, engaged in serious crime related acts as defined in s6. In parlance which counsel noted as having developed, property is forfeited unless it is shown to be “clean sourced”. Section 5 specifies that proceedings are civil as distinct from criminal and it is clear from the provisions in ss5 and 26 that the onus of proof rests upon an applicant for exclusion.

THE APPLICANT’S FINANCES

11 The applicant was born on 9 October 1962. From 15 December 1981 he worked at a brewery in Newcastle. He ceased that employment on 14 August 1987. Since that date he has largely been in receipt of social security benefits of one type or another. His only other assertions of earning nominated some months as a storeman in a factory at Brookvale, a few months in the Northern Territory, some rent when he was not occupying Blackhill and a sum of $5,000 from his girlfriend Denise Lewin, since deceased, for copying pornographic videos which she marketed through advertisement in magazines. He claimed that he had funds available as a result of gifts from family members and Miss Lewin and also from successful gambling. Whatever was available as nett from rental was, according to the applicant, spent on the purchase of the now missing Chevrolet Corvette.

12 Admitted facts include a table of taxable income returned to the Australian Tax Office between 1994 and 1998 consistent with the income of a social security recipient. Returns for 1999 and 2000 have not been lodged and there has been a waiver of requirement in respect of one year. The exception to the pattern is the year ending June 1995, but it is plain from the return that about two-thirds of the “income” is in fact the inclusion of a taxable termination payment.

13 The various funds and cash amounts and their claimed sources will be examined in relation to the express applications.

PROCEEDS ASSESSMENT

14 It is mandatory for the Court to make a proceeds assessment order where the person against whom the order is sought was engaged in serious crime related activity of a specified kind not more than six years before a determined date, relevantly in this case, 8 June 2000 (s27(2)). An order requires such a person to pay to the Treasurer an amount assessed as proceeds derived from illegal activity during that six year span (s27(1)). The illegal activity in respect of which the proceeds are assessed does not have to be serious crime related activity as specified in s27(2).

15 The conviction of the appellant has already been noted. No submission was made on his behalf suggesting that the evidence did not demonstrate his probable engagement in serious crime related activity within the meaning of the provision.

16 Section 28 facilitates methods of assessment. Attention was directed to:

“28. Assessment of proceeds of serious crime related activity
(1) For the purpose of making an assessment under section 27 in relation to an illegal activity, or illegal activities, of a person (in this section called the defendant ) 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. “

and:

“(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.”

17 Mr Temby QC for the Commission contended that, in the present case, the subsections of 28(1) other than subsection (a) were of little or no significance. He drew attention to the “broad brush” approach recognized as inevitable having regard to the rarity of those involved in criminal activity keeping books of account or similar documentation: New South Wales Crime Commission v Crotty [1999] NSWSC 146. I adopt such an approach.

18 He then detailed evidenced facts from which he submitted that the cost of drugs obtained and/or used by the applicant could be calculated. Such expenditure could not be sourced from income or money unrelated to illegal activity and hence the derivative amount should be treated as proceeds from illegal activity as contemplated by s28(3).

19 Mr Lovas of counsel, for the applicant, submitted that the method contended by the Commission failed to “permit a reasonable and definite inference” as to the sums claimed. He pointed to the absence of direct quantification of expenditure by the applicant on drugs. This absence must be qualified by some evidence that the applicant spent about $500 for a quarter of an ounce or seven grams of drug on one occasion. Of course, the applicant admitted other acquisitions including the nearly half kilo of methylamphetamine at the time of his arrest but he gave no other evidence of expenditure and indeed claimed that he acquired drugs on credit but then defaulted on payment. The half kilo, he maintained, was a retaliatory confiscation which I will later describe.

20 The level submitted for proof of inference to a reasonable and definite standard was derived from a judgment of Sackville J in Australian Consumer & Competition Commission v Amcor Printing and Papers Group Limited 2000 169 ALR 344, where his Honour was dealing with recovery of civil penalty pursuant to the Trade Practices Act (Commonwealth). Mr Lovas noted that the civil standard of proof was to be applied and submitted that the specification in s5 abovementioned permitted analogy with the Trade Practices case. Sackville J had written:

“…… in determining in what inferences should be drawn from the primary facts, it is necessary to have regard to the seriousness of the allegations ….. and the gravity of the consequences of adverse finding …….”

21 His Honour referred to Briginshaw v Briginshaw 1938 60 CLR 336 and other authorities.

22 It was submitted that, for the purposes of construction, the Criminal Assets Recovery Act should be classified as a revenue statute. It is not a revenue statute in the conventional sense but, as it authorizes the expropriation by the State of the property of those who have engaged in serious crime related activity, I consider that the classification is apt. The circumstance that those whose property is liable to be expropriated might be considered undeserving is not a basis for finding otherwise. The consequence of that approach to statute and Sackville J’s dictum is that inferences against the applicant should not be drawn if there exist on the evidence, other inferences which are at least as likely as those contended for by the Commission.

23 Mr Lovas, however, developed his argument by reference to s28(1). As mentioned, Mr Temby QC had submitted that essentially s28(1)(a) was of present relevance. Mr Lovas contended that in considering the making of a proceeds assessment, the Court was obliged to have regard to all of the matters articulated in subsections (a) to (e) inclusive. He pointed to what he claimed was a prominent deficiency in that there was no evidence of the value of the applicant’s property before and after the illegal activity in the terms contemplated by s28(1)(d) and that, in its absence, the Court could not properly draw inferences so as to assess the value of proceeds derived from illegal activity. The requirement to have regard to all of the elements in the subsections of s28(1) was submitted to be a minimum requirement which would not conflict with any authority postulating a necessarily “broad brush” approach.

24 I do not construe s28(1) as obliging consideration, and therefore the tender of evidence enabling such consideration, all of the matters in the respective subsections. It is of interest to note the expression that the court “is to have regard” to the matters mentioned, in contrast with other expressions in the Act, for example in s22 where the court “must make an assets forfeiture order” and “must” make such an order to apply to specified interests in property. Similarly s27(2) provides that the court “must make a proceeds assessment order” upon relevant findings. The task of the court has been legislated by s27 whereas s28 is a facultative provision. Particularly s27(2) and s27(3) provide methods of calculating what will in effect be deemed to be the proceeds derived from illegal activity even though it is obvious that the results of authorized calculations do not derive from precise investigation and calculation of actual proceeds in the sense of an accountant’s audit.

25 I reject the construction argued for by Mr Lovas. The elements mentioned in s28(1) are scheduled in respect of an exercise, the purpose of which is to make an assessment under s27. It cannot have been the legislative intention that every one of the elements must be the subject of regard in order to make such an assessment. That this is so is plain, for example, by observing the terms of s28(1)(c) and that not every serious crime related activity involves plants or drugs. Nor is it necessary to have evidence of the elements mentioned in subsections (d) and (e) in order to determine an amount authorized to be treated as proceeds of illegal activity pursuant to s28(3).

THE CALCULATION OF PROCEEDS

26 I propose to adopt an approach to calculation in accordance with s28(3) and to determine the amount of the applicant’s expenditure over the six year span, noting that I should make a deduction if part of the expenditure was funded by “clean sourced” money. Such an approach is generally in accord with the submission on behalf of the Commission. Mr Lovas, subject to the contentions previously dealt with, did not contest the availability of the method but submitted that the Commission bore an onus to exclude “all other income forms from this theory that his purchase of drugs was funded by the source of illegally acquired funds”, that the Commission’s contentions were speculation rather than reasoning and that its case was not made out. I have already indicated the standard of proof that I would apply.

27 For this purpose I am satisfied that the applicant spent considerable sums of money on the purchase of drugs to feed his desire for them. Such sums were not available from his social security income or from supplements from his mother and grandmother, his girlfriend or gambling. The extent of his “clean sourced” money was necessary to provide for the ordinary costs of living. That view is somewhat confirmed by the posture of the applicant which was, not that he had “clean sourced” money to buy drugs but that he had obtained drugs on credit and defaulted on payment. He agreed in cross examination that the money owed must have been many tens of thousands of dollars but benevolent drug suppliers kept supplying him on credit. The only repercussion of which he testified was that “a few people threatened me”. I do not accept the evidence that the applicant did not pay for drugs and I am satisfied that the probability is that he paid for them at a rate of something in the order of $70 to $80 per gram, a rate which he conceded he was aware of. His ability to pay was not able to be funded from sources other than illegal activity. The probability is that the applicant was, in a not untypical fashion, able to purchase drugs for himself out of the profits of trading in illicit substances with others. In any event, the money needed for drug purchase exceeded any income disclosed to revenue authority. Property acquired by the use of funds which are available by reason of a taxation offence such as understating income is itself deemed to come from illegal activity: DPP v Jeffrey 1992 58 A Crim R 310. That the applicant was a likely trader is supported by the quantity of nearly half a kilogram of methylamphetamine in his possession at the time of his arrest. It is convenient to record at this point that I reject the applicant’s story that he acquired that large quantity of drug as a serendipitous by-product of robbing a Mr Andrews in retaliation for stealing the applicant’s dog. The likely weight and consequence of the applicant’s being contradicted at trial about the date of this claimed encounter by evidence of Mr Andrew’s death previous to the acquisition of the half kilo of drug by him was explored and I do not accept the applicant’s proposition that he just “got the date wrong”. Counsel’s description of the applicant’s story as “cock and bull” was accurate.

28 I am conscious that the applicant has on occasions purported to admit, and on other occasions recanted, that he was the manufacturer of drug. Nor do I ignore the accoutrements in his possession at the time of arrest including an apparently downloaded hard copy of Uncle Fester’s Secrets of Methylamphetamine Manufacture, 4th Edition. At the hearing the applicant adhered to the “stolen from Mr Andrews” story and the probabilities are in my view against manufacture which, paradoxically, might on this methodology be of advantage to the applicant. The other alternative is possession of the drug in the course of trading or intended trading and I am satisfied to the appropriate degree that this was the case.

29 When interviewed by Dr Westmore the applicant acknowledged the consumption of five to six grams per day. At this hearing he conceded three to four grams per day. Over a period of about three years from the time of Ms Lewin’s suicide until his arrest the applicant said that he had been a heavy user for a period of “probably ten months out of the three years”. He said he was not on drugs for the whole of the three years but, obviously, in the balance of time outside of ten months, to the extent that he used drugs, it could be assessed as less than heavy use.

30 The mid point of the market cost recognized by the applicant is $75 per gram. Ten months of heavy usage might be formulated as three hundred daily usages of five grams (the lower figure of the range admitted to Dr Westmore) at $75 per gram. The requisite expenditure amounts to $112,500. If one were to deduct from the twenty six months remainder of the three years, two months of abstinence and then postulate a daily use at the rate of five grams for two days of each week, and further abstinence on the other five days, an expenditure requirement of 2 x 104 (weeks) x 5 x 75 = $78,000 is calculable. The applicant admitted in cross examination that he had heard that the “going rate” for half a kilogram for methylamphetamine was between $10,000 and $15,000. He did not turn his mind to variations on account of relative purity.

31 Thus can be formulated an expenditure well within the six year span on drugs of $112,500 during the “heavy” period, $78,000 for the “lighter” periods and, say, $10,000 to acquire the half kilogram seized at the time of arrest, a total of $200,500.

32 That total figure represents a bare minimum and, given that circumstance, I consider it reasonable and I draw a definite inference that it represents an amount to be treated as proceeds derived from illegal activity in accordance with an application of s28(3). It is not necessary for me to determine, as submitted on behalf of the applicant, that the onus of proving against the exception in the provision lies upon the Commission. My view is that the onus does not so lie, but determination is unnecessary because I am abundantly satisfied that the relevant expenditure as above calculated was not funded from sources unrelated to illegal activity.

EXCLUSION

33 Exclusion of property from the assets forfeiture order already made, in whole or in part, is facilitated by s25 and s26. As both sections make clear, and it is not in contest, the onus of proof that interest in property has not been illegally acquired or is not attributable to the proceeds of illegal activity lies on the applicant for exclusion. Mr Lovas submitted that no gloss on the civil standard of proof such as might be discernible in cases such as Briginshaw would be applicable and I approach the issues in accordance with that submission.

BLACKHILL

34 Blackhill was purchased in April 1995 in the names of the applicant, his mother and Denise Lewin as joint tenants. In January 1997 Ms Lewin transferred her title to the others. She died on 9 May of that year. In an affidavit sworn 27 May 2002 (Exhibit B) the applicant sourced the purchase price of $125,000 as the sale of a Harley Davidson motorcycle for approximately $20,000, a superannuation rollover at the GIO of $39,000 and $30,000 to $40,000 from Ms Lewin.

35 At the hearing he verified a statement (Exhibit A) in which he identified the purchase money as deriving from seven elements, namely:

(a) $10,000 State Bank cheque;
(b) $2,500 State Bank cheque;
(c) $500 cash;
(d) $39,500 GIO rollover;
(e) $47,700 from Newcastle Permanent Building Society;
(f) $11,000 State Bank cheque, and
(g) $16,074 Westpac Bank cheque.

36 The cheques totalling $12,500 in (a) and (b) were claimed to be derived from long term savings whilst working at the Bond Brewery. Confirmatory records are not available, however, in a claim for Jobsearch allowance lodged in May 1993 (Exhibit 10) the applicant represented that his credit in the State Bank was $116.76. No other State Bank account has been disclosed. I am not satisfied that the applicant had “long term savings” to source these amounts.

37 The applicant makes no assertion concerning the source of $500 cash mentioned in (c).

38 The Commission does not dispute that $39,500 ((d) above) contributing to the purchase of Blackhill came from the lawful source of superannuation funds following the applicant’s termination of employment at the brewery. The applicant is entitled to relief in this respect pursuant to s26.

39 The next sum of $47,700 taken from the Newcastle Permanent Building Society ((e) above) is itself said to have been derived from components, namely:

(i) $16,000 long term savings;
(ii) $18,000 consisting of two $9,000 deposits made on 17 March 1994, themselves part of $37,010 given to the applicant by Denise Lewin;
(iii) $10,000 given to the applicant by David Beldham his stepfather on 22 November 1994;
(iv) $2,000 deposited on 25 November 1994 also given by David Beldham, and
(v) $7,000 deposited on 20 February 1995 received out of the proceeds of sale of Harley Davidson YOO-56.

40 In regard to (i) above the applicant points to some records of the Building Society (Exhibit D) which show that in June 1993 there was a credit of nearly $16,000 to which interest was added. This credit is broadly consistent with a representation made by the applicant in the Jobsearch form (Exhibit 10). It is submitted that this longstanding account is corroborative of the applicant’s testimony that he had kept these savings and lived frugally in the sense that his mother fed him and she and others gave him money when he needed it. The Commission argues that this claim is dependent on the credibility of the applicant which has, in instance after instance, been undermined by material which is independent of him. Between 1991 and 1993 the applicant had made multiple purchases of motorcycles and motor vehicles and funds for these transactions had to come from somewhere. They could not be sourced from employment as the applicant had worked only for a total of about ten months between August 1987 and June 2000.

41 I do have significant reservations about the credibility of the applicant. I have already mentioned and will later mention instances where his assertions have been disproved by objective material. The impression I formed was that he was determined to see this matter to conclusion in the hope of favourable outcome, and, when he could not explain something, he would figuratively “shrug his shoulders”. In similar vein were his protestations of ignorance about the reporting of cash transactions exceeding $10,000. On one occasion he said it was a member of building society staff who suggested division into lesser amounts, but there are several instances of his conduct of this type. To the contrary of his evidence in these proceedings, I note that he had agreed in examination before a registrar that he knew that there was “some law that would cut in at $10,000” and that he wanted to evade it (transcript attached to Exhibit B at page 76).

42 The applicant bears the onus of proving that money is, in effect, “clean sourced”. The obvious inconsistency between his assertions in Exhibits A and B does not assist him and I find his explanation of the need for documentation and/or time for reflection, less than convincing. I have taken into account that the applicant may have some skills as a trader, particularly in Harley Davidson motorcycles but in my ultimate consideration the applicant fails to achieve the necessary persuasion on this item.

43 The next component is $18,000 described in (ii). The applicant said that the source was Ms Lewin and he points to two deposits of $9,000 both made on 17 March 1994. I have mentioned the alleged advice from the staff member of a financial institution. Even if such advice had been given, what the applicant did was to go to two different branches on the one day to make these deposits and his testimony that he did this to achieve some saving of time was quite implausible as were his assertions of large cash amounts emanating from Ms Lewin, who herself had no perceptible means of producing such amounts from legitimate sources. In the absence of any documentation at all I do not accept the arithmetical extrapolations submitted to be relevant to her pornographic video sales. In mentioning this I am not categorizing her activity in pornography and/or prostitution as illegal but I am not persuaded that such activity produced the substantial cash claimed by the applicant to have become available to him from her. I observe that the applicant asserted that Ms Lewin at one stage “dumped him” for another man but felt guilty about it, as a result of which she forewent any payment for yielding up her interest in Blackhill. Despite these circumstances she is later alleged to have given him large sums of money including an amount of about $27,000 a few days before she suicided. I find the applicant’s chronicle quite incredible. An order for exclusion of the component of $18,000 will not be made.

44 Items (iii) and (iv) are said to be gifts from the applicant’s stepfather. Mr Beldham was not called and no explanation for his absence was tendered. It was made clear that the Commission would, if neither witness nor explanation was forthcoming, contend that I should draw an inference that his evidence would not assist the applicant. I do draw that inference. I am not told of Mr Beldham’s occupation or anything else about any ability of his to give “clean sourced” money to his stepson. The circumstance, which I accept, that Mrs Beldham saw him write cheques tells me nothing about the sources of money against which the cheque would have been drawn. This aspect of the application must also fail.

45 The final component (v) is claimed to be part of the proceeds of the sale of Harley Davidson YOO-56. The Commission notes that this is one of sums of $7,000 deposited to each of three accounts on 20 February 1995. I have already commented on this style of activity. The Commission submits that the applicant’s evidence that he sold the cycle to a man in Queensland is dependent entirely upon the applicant’s word. It is an assertion which he has raised only recently. However, there are some RTA records (Exhibit D, tab 22) from which it can be discerned that the applicant was the owner of the cycle for less than a year. I am invited to infer that it probably remained under a current warranty and I accept that probability. The documentation further shows that registration in New South Wales did not simply run out but it was terminated about a week before the applicant made the relevant deposits. I am satisfied of the probability of sale. An interstate purchaser would be unlikely to, and in fact should not, re-register in this State.

46 I am conscious of the submissions by the Commission about tracing sources but the evidence does not enable me to make a sensible analysis of all of the applicant’s motor and motorcycle trading. This parcel of money probably came from sale of this machine and an exclusion order should be made to reflect this.

47 The next element of contribution to the purchase price was a State Bank cheque for $11,000 (item (f)). This is claimed to be made up of a gift from Ms Lewin and one of the $7,000 deposits from the proceeds of the sale of YOO-56. I need not repeat my reasons for rejecting the proposition that money from Ms Lewin (if that be the case) has not been shown to be “clean sourced” nor, on the other hand, my reasons for concluding that the applicant should have an exclusion order in respect of $7,000 proceeds from the sale of the motorcycle.

48 The final element of $16,074 Westpac Bank cheque (item (g)) is similarly claimed to be made up from gift of Ms Lewin and the sale of motorcycle YOO-56. Again I reject the claim for relief except to the extent of $7,000 derived from the sale.

49 In summary, including the matter not contested by the Commission, the applicant should have appropriate partial relief pursuant to s26 to the extent of the respective sums of $39,500 and $21,000 (3 x $7,000) but not otherwise.

BLACKHILL – THE CLAIM BY MRS BELDHAM

50 Mrs Beldham made no financial contribution towards the purchase of the property. She later assisted with minor improvements and maintenance.

51 It is submitted on her behalf that she had no reason to conclude that the property was in effect tainted. In order to succeed Mrs Beldham must bring her position within the terms of s9(5)(a), namely:

“9 (5) An interest in property ceases to be serious crime derived property or illegally acquired property:
(a) when it is acquired by a person for sufficient consideration without knowing, and in circumstances that would not arouse a reasonable suspicion, that the interest was, at the time of acquisition, serious crime derived property or illegally acquired property,……”

52 Mr Lovas argued that the phrase “sufficient consideration” should be construed in accordance with the general law of contract and he contended that, for example, a peppercorn would suffice. In my view if such, or merely nominal, consideration were contemplated by the legislature, the description “sufficient” would be surplus. As a matter of construction I am of opinion that it must be given meaning and, in context, this should be a sense of adequacy and reality, that is to say, something more than nominal.

53 Mrs Beldham gave no consideration for her interest, indeed it was explained that she was “put on the title” to secure inheritance should fatality overtake the applicant. Mrs Beldham’s application should be dismissed.

THE CARDIFF PROPERTY

54 This property was purchased for $104,000 in 1998 and title was recorded in the names of the applicant and his mother. The applicant specified the makeup of the elements of the purchase price as coming from the following:

(a) $500 in cash;
(b) $9,900 withdrawn from Newcastle Permanent Building Society on 1 April 1998;

(c) $2,530

(d) $75,625 withdrawn from Newcastle Permanent Building Society on 10 June 1998, and
(e) $19,384 borrowed from Newcastle Permanent Building Society.

55 The applicant offers no explanation for the source of the sums of $500 and $2,530 ((a) and (c)) and no relief in respect thereof should be granted.

56 There is an unusual aspect to the loan (item (e)) from the Building Society. The applicant conceded in cross examination that he “told lies to get the loan”. He had in filling out the necessary forms asserted that he had been unemployed for one year (as at March 1998) but immediately before that claimed to have been employed for two and half years as a plumber’s assistant. The minimal employment in fact engaged in by the applicant since 1987 has been mentioned. The Commission argues that the amount of loan ($19,384) was therefore obtained by the applicant pursuant to a false statement contrary to s178BB of the Crimes Act and it was not “lawfully obtained funds towards the purchase of the property”. Mr Lovas argues that the funds towards the purchase actually came from a “clean source” (the lender) and that the Commission could conceivably attack amounts used to repay the loan by way of a proceeds assessment order but could not contend that this elemental contribution to the purchase price was tainted.

57 The issue is whether the applicant has proved that a specified proportion of the value of his interest was not attributable to an illegal activity. Illegal activity in this context is not limited to defined serious crime related activity. Thus, if the applicant’s approach to the lender was not corrupted by false representation, I apprehend that he would be entitled to exclusion but, as I find that it was, the consequence must be otherwise. The applicant has not shown that his interest represented by this contribution to the purchase price was not attributable to the proceeds of an illegal activity.

58 The sums of $9,900 and $75,625 (items (b) and (d)) were claimed by the applicant to have been sourced as follows:

(i) $40,000 from the sale of Land Cruiser TW 232;
(ii) $9,250 from the sale of a boat;
(iii) $10,000 deposited on 26 February 1998 received from David Beldham;
(iv) $8,000 deposited on 27 February 1998;
(v) $8,000 deposited on 28 February 1998, and
(vi) $10,275 the source of which is no longer recalled.

59 The sale of the Land Cruiser ((i)) followed its acquisition from sale of other vehicles and the significant sum of $23,500 is sourced by the applicant to Ms Lewin. According to him, ten days before she died she gave him $27,000 in cash “to mind” and after her death he used about $1,000 to travel to New Zealand for the funeral and kept the balance for himself. I have already commented on absence of credible evidence of how Ms Lewin might come by large cash sums lawfully in the first place. I note that she had in fact served imprisonment for an offence of drug supply. I do not consider it material if “deeming” provisions of drug offence legislation happened to have been applicable. I have already mentioned obscurity surrounding the applicant’s vehicle trading. I am not satisfied that this amount has been shown to be “clean sourced”.

60 The applicant stated in the witness box that he would produce a picture of the boat (item (ii)). He recognized that this would not demonstrate anything about how he obtained it. In any event, no picture was produced nor was any documentation about such a craft. The applicant has not discharged his onus in regard to this claim.

61 A further $10,000 (item (iii)) is claimed to have come from the applicant’s stepfather. That mere circumstance does not, for the reasons given in respect of similar advances, demonstrate that it is not attributable to the proceeds of illegal activity.

62 Examination of the deposits of $8,000 on succeeding days items (iv) and (v)) provided telling evidence to confirm my poor opinion of the applicant’s credit. The applicant refers to deposits in February 1998 which necessarily preceded completion of the purchase in June 1998. There is evidence which I accept, of an acknowledgment of purchase by one Peter Brown specifying the sale date of the relevant motorcycle as 6 November 1998 and in addition to this, RTA documentation showing transfer to Mr Brown some days later. The applicant’s claims are rejected.

63 No submission was made by the applicant with reference to the unexplained fund item (vi) of $10,275.

64 The applicant is entitled to no order in respect of the Cardiff property.

CARDIFF PROPERTY – THE CLAIM BY MRS BELDHAM

65 Mrs Beldham did not make any financial contribution towards the purchase of the Cardiff property. She later purchased concrete for a driveway and painting and decorating materials which the applicant used to renovate the house.

66 As with the Blackhill property it is necessary for Mrs Beldham to bring her situation within the terms of s9(5)(a). The evidence does not enable her so to do and her claim should be dismissed.

CREDIT BALANCES – WESTPAC, NEWCASTLE PERMANENT BUILDING SOCIETY, GREATER BUILDING SOCIETY

67 It is convenient to deal with these items in the schedule together. Credits in accounts were forfeited in the sums of $1,504.12 (Westpac); $747.93 (Newcastle Permanent Building Society) and $588 (Greater Building Society). The applicant sourced these in that order as coming from Centrelink payments, rental income (Blackhill was let for a period) and the sale of a Holden car. The Commission did not make contesting submissions about these amounts and the applicant is entitled to appropriate orders for relief.

CASH SEIZED ON 18 NOVEMBER 1999

68 The applicant was stopped while driving a vehicle on the Pacific Highway at Warrawee for the purpose of random breath testing. $14,505 cash was located on the front passenger’s seat. This amount was seized. The seizure preceded the applicant being arrested and charged with the drug offence in respect of which I have mentioned his conviction by some six months.

69 By reference to his affidavit (Exhibit B) the applicant stated:

“This money consisted of approximately $3,000 from a bank account withdrawal and the sum of $3,000 was the proceeds of gambling on roulette at the Western Suburbs Leagues Club. The sum of $8,500 came from the sale of my girlfriend’s Harley Davidson Sportster motorcycle on 22 January 2000. I intended to use the money to come to Sydney and purchase another motorcycle.”

70 Such a bank account was unidentified and I cannot link this amount to any record in the evidence. My estimate of the applicant’s credit does not lead to my acceptance of the probability of winnings amounting to $3,000 on the stated gambling. As deposed, the sale of the particular motorcycle took place on 22 January 2000. The seizure of cash took place on 18 November 1999. The applicant, when confronted with the impossibility of that to which he had deposed, suggested that some error had been made but offered nothing to alleviate the vagueness of that response. No exclusion should be made in respect of this.

$2,450

71 This sum was seized on 21 January 2000 in the course of a personal search of the applicant. His explanation is that it was a gift from his stepfather in order to enable him to go on holiday and for detoxification treatment. Mrs Beldham corroborated the payment but, as noted, Mr Beldham did not give any evidence. The applicant gave no evidence of any intended destination or any arrangements or cancellation of them or what effect the seizure had in terms of what he then did. If indeed police had taken money from the applicant which his stepfather had given him to enable him to undergo treatment for drug addiction I would have expected some protest from Mr Beldham. There was no evidence of his having made any protest nor did he come forward to make one now. The applicant’s claim should be rejected.

CHEVROLET CORVETTE

72 It is common ground that the whereabouts of this vehicle is unknown as it has apparently been stolen.

73 In the statement (Exhibit A) the applicant described his purchase funding as $10,020 borrowing from Greater Building Society, $23,500 essentially from rental income for Blackhill and the remainder from gambling. The applicant accepted in cross examination that the total rental was calculable as $17,160 less expenses. The discrepancy must be at least $6,340 which remains unaccounted for. The Commission submits that therefore the s25 application cannot succeed. The submission is correct.

74 Mr Lovas recognized that in the circumstances the matter may be somewhat academic but, given forfeiture, he submitted that there should be exclusion to the extent of $10,020 to accommodate the event of the vehicle ever being recovered. The Commission made no submission about this and I would accede to that made by Mr Lovas. Such order should be made.

HARLEY DAVIDSON XDJ-62

75 The applicant contends that this was a gift from Ms Lewin purchased by her in 1992 for $20,000 out of her own funds. The only available documentary records indicate that this motorcycle was acquired by the applicant after her death. I am, to put it mildly, not persuaded that the applicant has discharged the necessary onus of proof.

CASH $4,800

76 On search of the Cardiff property on 20 July 2000 police located and seized $4,800 in cash.

77 The submission on behalf of the applicant was that I should accept that this money, or the bulk of it, came from Ms Lewin. The applicant said he received $27,000 in cash from her shortly before her death. On his own figures, he spent $23,500 towards acquiring the Land Cruiser and $1,000 on fares etc to attend her funeral. The balance on that accounting is only $2,500. This is not just an arithmetical error, but, in my view, a demonstration of the applicant’s attempts at imaginative reconstruction to explain how he, a recipient of social security for the most part, had large amounts of cash pass through his hands and was able to fund many purchases of expensive items. This claim is rejected.

PROCEDURE

78 As was indicated and agreed at the close of the hearing, I publish these reasons and adjourn to a date now to be fixed for the purpose of making orders and entering any formalities of judgment, on which occasion I will hear submissions, if desired, in respect thereof and in respect of questions of costs. To facilitate this I direct the parties to prepare short minutes of orders congruent with these reasons for presentation on the adjourned date.

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Last Modified: 11/19/2003