State of Queensland v Upson
[2015] QSC 33
•24 February 2015
SUPREME COURT OF QUEENSLAND
CITATION:
State of Queensland v Upson [2015] QSC 33
PARTIES:
STATE OF QUEENSLAND
(applicant)
v
ROBERT JAMES UPSON(respondent)
FILE NO/S:
SC No 8062 of 2007
DIVISION:
Trial Division
PROCEEDING:
Hearing
ORIGINATING COURT:
Supreme Court at Brisbane
DELIVERED ON:
24 February 2015
DELIVERED AT:
Brisbane
HEARING DATE:
1 October 2014
JUDGE:
Philip McMurdo J
ORDER:
Pursuant to s 78 of the Criminal Proceeds Confiscation Act 2002 (Qld), the respondent is ordered to pay to the State of Queensland the sum of $954,450.73, being the value of the proceeds derived from illegal activity.
CATCHWORDS:
CRIMINAL LAW — PROCEDURE — CONFISCATION OF PROCEEDS OF CRIME AND RELATED MATTERS — PECUNIARY PENALTY AND LIKE ORDERS — ASSESSMENT OF BENEFIT — application for a proceeds assessment order under s 78 of the Criminal Proceeds Confiscation Act 2002 (Qld) — quantification of proceeds —— matters to which the court must have regard when making a proceeds assessment order — quantification of the respondent’s expenditure — deductions under s 83 of the Criminal Proceeds Confiscation Act 2002 (Qld) — whether the respondent demonstrated income or other legitimate sources of funds not from illegal activity — where one category of expenditure ought not to be included in the proceeds assessment and the state’s claim was reduced —where the respondent was ordered to pay the sum of $954,450.73, being the value of the proceeds derived from illegal activity
CRIMINAL LAW — PROCEDURE — CONFISCATION OF PROCEEDS OF CRIME AND RELATED MATTERS — FORFEITURE OR CONFISCATION — SERIOUS CRIME RELATED ACTIVITY OR CONFISCATION OFFENCE — application for a proceeds assessment order under s 78 of the Criminal Proceeds Confiscation Act 2002 (Qld) — quantification of proceeds —— matters to which the court must have regard when making a proceeds assessment order — quantification of the respondent’s expenditure — deductions under s 83 of the Criminal Proceeds Confiscation Act 2002 (Qld) — whether the respondent demonstrated income or other legitimate sources of funds not from illegal activity — where one category of expenditure ought not to be included in the proceeds assessment and the state’s claim was reduced —where the respondent was ordered to pay the sum of $954,450.73, being the value of the proceeds derived from illegal activity
Criminal Proceeds Confiscation Act 2002 (Qld), s 17(1)(a), s 77, s 78, s 82, s 83
Financial Transaction Reports Act 1988 (Cth)
COUNSEL:
J B Rolls for the applicant
K C Kelso for the respondent
SOLICITORS:
Director of Public Prosecutions (Queensland) for the applicant
Woods & Prince Lawyers for the respondent
This is an application for a proceeds assessment order under s 78 of the Criminal Proceeds Confiscation Act 2002 (Qld) (“the Act”). The respondent, Mr Upson, was convicted of an offence of trafficking in a Schedule 2 drug in the period from 1 June 1997 to 30 September 2007.
By s 77(1) of the Act, the State may apply to this court for an order requiring a person to pay to the State the value of the proceeds derived from the person’s illegal activity that took place within six years before the date on which the application for the order is made. By s 78(1), the court must make a proceeds assessment order against a person if the court finds it is more probable than not that, at any time within the six years before the application was made, the person engaged in a serious crime related activity. The present proceeding was commenced on 12 September 2007. There is no issue in this proceeding as to the commission of the offence. A certificate of conviction proves the offence to which I have referred. It began at a time within six years before this proceeding was commenced. The offence constituted “a serious crime related activity”. By s 16(1) a “serious criminal offence” is a “serious crime related activity”. For the purposes of s 78(1) and by s 17(1)(a) of the Act, a “serious criminal offence” is an indictable offence for which the maximum penalty is at least five years imprisonment. The maximum penalty for this offence was 20 years imprisonment. Therefore, s 78(1) is engaged.
By s 78(2) the court may refuse to make the order if it is satisfied it is not in the public interest to do so. There is no reason to refuse to make the order on that ground in the present case and none was suggested.
The value of the proceeds must be assessed under Division 2 of Part 5 of Chapter 2 of the Act, the relevant provisions of which are as follows:
“82 Matters to which Supreme Court must have regard
(1)The Supreme Court must have regard to the evidence before it about the following—
(a)the value of cash and other property that came into the possession or under the control of the relevant person or someone else at the request, or by the direction, of the relevant person, because of the illegal activity;
(b)the value of any benefit provided for the relevant person or someone else at the request, or by the direction, of the relevant person, because of the illegal activity;
(c) if the illegal activity involved a dangerous drug or controlled substance (the illegal drug)—
(i)the market value, when the illegal activity happened, of a dangerous drug or controlled substance similar, or substantially similar, to the illegal drug; and
(ii)the amount that was, or the range of amounts that were, ordinarily paid for an act similar, or substantially similar, to the illegal activity;
(d)the value of the relevant person’s property before, during and after the illegal activity;
(e)the relevant person’s income and expenditure before, during and after the illegal activity.
(2)The court—
(a)may treat as the value of the proceeds the value the proceeds would have had if derived when the valuation is being made; and
(b)without limiting paragraph (a), may have regard to any decline in the purchasing power of money between the time the proceeds were derived and the time the valuation is being made.
83 How particular amounts may be treated
(1)This section applies if the court makes a finding of serious crime related activity in relation to a person under section 78(1) and—
(a)evidence is given that the value of the relevant person’s property at the end of the period of 6 years mentioned in section 78(1) was more than the value of the relevant person’s property at the start of the period; or
(b)evidence is given of the amount of the relevant person’s expenditure within the 6 years before the day the application for the order was made.
(2)If subsection (1)(a) applies, the court must treat the difference as proceeds derived by the relevant person from illegal activity, other than to the extent the court is satisfied the reason for the difference was not related to illegal activity.
(3)If subsection (1)(b) applies, the court must treat the amount as proceeds derived by the relevant person from illegal activity, other than to the extent the court is satisfied the expenditure was funded from income, or amounts from other sources, not related to illegal activity.
(4)The court must not take expenditure into account under subsection (3) to the extent the court is satisfied it resulted in the acquisition of property the value of which is taken into account under subsection (2).”
The State does not seek to prove its case by evidence of the kind referred to in s 82(1)(a), (b), (c) or (d). It has tendered evidence of a kind within s 82(1)(e) but only because it seeks to prove its case under s 83(1)(b) and (3). In other words, it seeks to prove the amount of Mr Upson’s expenditure within a certain period before the day on which this proceeding was commenced. It concedes that the court should be satisfied that this expenditure was funded to an extent from income or other sources which were not related to illegal activity. It does not seek to prove Mr Upson’s expenditure for the entire six years prior to the commencement of the proceeding. It has limited its case to the period which commenced on 21 February 2002, a period of five years and approximately seven months.
The amount of the order ultimately sought by the State is $977,172.20. The State’s case relies upon the evidence of Mr C M Allan, an Investigative Accountant employed by the Queensland Police Service. He has undertaken an extensive analysis of documents which are said to be relevant to Mr Upson’s finances over the relevant period, particularly records of transactions on certain bank accounts and credit cards. He has endeavoured to calculate both the expenditure of Mr Upson and the amount of income or other sources of funds which were not related to illegal activity.
In Mr Allan’s affidavit of August 2008,[1] he assessed Mr Upson’s expenditure at $3,149,531.74 and his income or other sources of funds not related to illegal activity at $1,944,788.94. He therefore calculated what he described as the “excess expenditure” at $1,204,742.80.
[1] Court File No 40.
The respondent retained Ms Bundesen, a Forensic Accountant in private practice, to review the State’s evidence and in particular Mr Allan’s report. In her opinion,[2] Mr Allan had overstated the amount derived from illegal activity, by understating the amounts from sources not related to illegal activity by a total of $254,258.60. In her opinion, the “excess expenditure” should be assessed at $950,484.20. She did not suggest any adjustment to Mr Allan’s assessment of the relevant expenditure.
[2] Within her affidavit of June 2012, Court File No 93.
In September 2012, Mr Allan and Ms Bundesen provided a joint report, as ordered by the court. They agreed that there were certain items of income or sources of funds, to be deducted under s 83(3) further to those which had been deducted by Mr Allan. But Ms Bundesen contended that there were three further s 83(3) deductions which should be allowed, to which Mr Allan did not agree. Mr Allan conceded that the net figure should be reduced to $1,164.228.80. Ms Bundesen said that it should be reduced to $977,172.20.[3] At the commencement of the hearing, counsel for the State said that his case would be limited to the amount conceded by Ms Bundesen, $977,172.20. However, counsel for Mr Upson argued that this amount was excessive, mainly because it did not give credit under s 83(3) for another source of funds for Mr Upson’s expenditure, namely about $800,000 in cash from legitimate sources and which Mr Upson says was in his possession at the beginning of the relevant period.
[3] The joint report also recorded some consideration of what were described as “loan repayments to William Burns” totalling $58,950. At the hearing it was common ground that this amount was to be ignored.
Mr Upson’s expenditure
Although Ms Bundesen agreed with Mr Allan’s calculation of the expenditure, there is at least one respect in which it is apparently incorrect. To explain that, it is necessary to describe Mr Allan’s methodology. He identified several bank accounts and credit card accounts which he says were “operated by” Mr Upson during the subject period. I will call them the “Upson accounts”. Most of these accounts were in the joint names of Mr Upson and his wife Beryl (also called Sheryl) Upson. Two of these accounts were in his name alone. Three of the accounts were in her name alone. In his analysis, Mr Allan did not distinguish between those categories: in particular, he treated all transactions on her accounts, which he characterised as expenditure, as the expenditure of Mr Upson.
In his August 2008 affidavit, he referred to four categories of transaction which together comprised Mr Upson’s expenditure. One category was described as “living expenses”. Mr Allan looked at all of the Upson accounts and identified the withdrawals of cash including ATM withdrawals. Mr Allan inferred that all of this money was spent on what he described as “living expenses”. The total for this category was $129,848.28.
Another category of expenditure was described as “Cash Expenditure”. This was assessed from information upon receipts or other documentary records which were provided to Mr Allan by one of the officers investigating Mr Allan’s offence. The total of these transactions was $45,421.60, from which Mr Allan deducted $2,404.80 for what he believed were identifiable withdrawals from an Upson account to meet that particular expenditure. The net amount for this so-called “cash expenditure” was thereby $43,016.80.
Another category of expenditure was what Mr Allan described as “Movement in Bank Accounts”. This involved a comparison between the opening balance (or in total, the opening balances) of the Upson accounts with the closing balance. In Mr Allan’s opinion, an increase in the bank account balances from year to year should be characterised as an expenditure and a decrease should be characterised as “a source of funds”.[4] Those propositions were not challenged, either by Ms Bundesen or by the respondent’s counsel in cross-examining Mr Allan. But his proposition about expenditure is unpersuasive.
[4] Para 9 of his affidavit, Court File No 40.
Mr Allan’s task was to identify expenditure by Mr Upson. A person’s bank account would be expected to evidence at least some of his expenditure. But the state of the account at any time would be the result of both payments to and from the account. An increase in the bank balance would indicate a difference between the inflow and outflow (or expenditure) of funds over a period. But it would not be a measure of that expenditure. (An assessment under these provisions involves a two step process.) It is necessary to distinguish between the assessment of the relevant expenditure, upon which the State bears the onus of proof under s 83(1)(b), and the assessment of amounts of income or other funds to be deducted under s 83(3), for which there is a different onus.
A further category of expenditure was that described by Mr Allan as “bank account expenditure”. This had five sub-categories, the first of which was described as “EFTPOS/BPay/Netbank” in a total of $709,687.71. Mr Allan described these as transactions which “relate to withdrawals from bank accounts which were made by electronic funds transfer at point of sale”.
The second subcategory, described as “Direct Debit”, were “transactions [which] relate to withdrawals from bank accounts which were made via electronic funds transfer by direct debit transfer”. They totalled $69,627.49.
The third subcategory, described as “Cheque Withdrawal”, comprised transactions in which a payment was made from a relevant bank account by cheque. They totalled $1,385,156.29.
A fourth subcategory was “Bank Fees/Charges/Taxes” in relation to the Upson accounts, totalling $2,566.61.
The fifth subcategory was entitled “Reduction in Credit Facilities”. This comprised transactions in which there were deposits made to a credit facility or loan account from moneys transferred from an Upson bank account which was not a credit facility or loan account. In the simplest case, this involved the payment of a regular mortgage instalment by a transfer from an Upson account. That would constitute an expenditure. The total for this subcategory, according to Mr Allan’s August 2008 analysis, was $686,907.09, of which $558,387.49 was paid by a bank transfer.
Mr Allan explained that he attempted to identify transactions of a kind which should be excluded from this analysis of “bank account expenditure”. In particular, he attempted to identify “all deposits which could be accounted for as re-deposits within seven days of the withdrawal of funds from other accounts” (“Redeposits”), entries which were subsequently reversed from the accounts (“Contras”), and any transfers between accounts (“Internal Transfers”)”. But in that last respect, as already noted, he treated transfers to a credit facility or loan account from another Upson account (which was not of that kind) as an expenditure.
As I have noted, Mr Allan did not distinguish between joint bank accounts, those in Mr Upson’s name alone and those in Mrs Upson’s name alone. Therefore, payments from accounts in Mrs Upson’s name were included in Mr Allan’s calculation of the so-called bank account expenditure. The basis for including payments which, prima facie, were made by Mrs Upson alone, was not apparent from Mr Allan’s affidavits. In his first affidavit, he listed her accounts amongst “bank accounts [which] were operated by [Mr] Upson during the period of the analysis …”.[5] In the same affidavit, Mr Allan said that he had analysed “monies deposited to and withdrawn from accounts held by [Mr] Upson”.[6] In his oral evidence, he sought to explain the inclusion of her accounts as follows:
“HIS HONOUR: … there were some accounts in her name alone?---Correct.
And did you include expenditure from those accounts in your calculated expenditure?---Yes.
And why did you do that?---Well, if I excluded all the wife accounts, then I could well be accused of saying, well, hang on, the wife has contributed a certain amount of cash to the relationship - shared income, shared expenditures. A husband and wife generally share all their accounts, and so they are treated to be a single entity.
MR KELSO: You’ve made that assumption off your own bat without any evidence to support it, haven’t you?---I suppose. Yes. if I went the opposite way, would you be asking me the same question: why did I exclude her, because she shared expenditures? So I don’t see how, one way or the other, I’m going to get it right, and I think that going by shared expenditures would probably be more correct, generally. It’s a generalisation, I suppose.”[7]
[5] Para 14 of affidavit, Court File No 32 (emphasis added).
[6] Court File No 32, para 15 (emphasis added).
[7] T 1-40.
Mr Allan’s notion of “shared expenditures” could be relevant for transactions in which payments were made from a joint account of Mr and Mrs Upson. Such payments could be characterised as part of Mr Upson’s expenditure although made from funds which he and Mrs Upson held jointly. Ultimately, there seemed to be no submission to the effect that his analysis was flawed for its inclusion of the joint bank accounts.
However, payments from the accounts of Mrs Upson alone were not, prima facie, the expenditure of Mr Upson. If he was authorised to operate her accounts, it would not follow that payments which he caused to be made from those accounts were his expenditure. More would need to be known of the relevant facts and in particular the purpose of the expenditure.
Mr Allan included the payments from Mrs Upson’s accounts as relevant expenditure. He treated none of the payments to Mrs Upson’s accounts as legitimate funds, to be deducted under s 83(3). This was consistent with his exclusion of all cash deposits to an Upson account from what he described as “sourced income”. There were some “redeposits” which he excluded but which totalled only $110.[8] The inclusion of Mrs Upson’s accounts in his analysis increased his overall assessment of the “unsourced income”, and thereby the amount of the State’s present claim, by $325,900 because he included that amount (or at least that amount) in his analysis of expenditure.[9]
[8] T 1-42.
[9] T 1-41.
I would not infer that the payments from Mrs Upson’s accounts were his expenditure simply from the fact, as proved by Mr Allan, that it was Mr Upson who deposited most of the funds to the account.
However, Mr Upson’s own evidence proves this part of the State’s case. In his affidavit of 1 June 2012, he described his share trading undertaken by the use of what he described as “our E*Trade account”, being an ANZ bank account which he identified by the account number. It is clear enough that that is the ANZ “E*Trade account” which was in Mrs Upson’s name alone and the operation of which increased the amount of Mr Allan’s assessment as he described. Mr Upson there explained his practice of depositing cash into that account for trading or drawing down on the mortgage over the house of Mr and Mrs Upson in order to raise funds to pay into this account. In respect of that share trading, his affidavit then contained this evidence:
“80. I recall that I held shares Telstra 1, 2 and 3, Alinta Gas, Pacific Brands, Ruskin Industries, Sea Hatcheries and De Larauntis.
81. I can say that I made a substantial amount of money in the stock market however I cannot recall exactly how much. I did not keep any records as I did not believe I would one day be required to account for any of my property acquired over the years including the shares of Sheryl and me.”
By that evidence, Mr Upson has proved that the expenditures made from this ANZ E*Trade account were expenditures by him. I am fortified in that conclusion by the fact that he tendered the evidence of Ms Bundesen which did not challenge Mr Allan’s quantification of his expenditure. There is some evidence from Mrs Upson on the point but very little. In her affidavit of June 2012, she said that her husband invested in the stock market and engaged Duesbury Stockbrokers and later RBS Morgans. She added “that he opened an account for me to trade shares in also”. That evidence does not contradict his affidavit evidence to which I have referred.
The remaining component of Mr Allan’s assessment of expenditure is a sum of $100,000 which he describes as an “unknown source payment to Carl Robert Upson”. In his analysis of the Upson accounts, Mr Allan identified a deposit to one of those accounts of a sum of $100,000 on 14 September 2006. Mr Allan related this payment to evidence given in other proceedings by Mr Carl Upson (who is now deceased) and by the present respondent. Carl Upson was his son. The evidence was to the effect that he had lent his son $100,000 to fund a property settlement which his son had negotiated with his former wife, in November 2004. There was also evidence in that proceeding from Carl Upson that he repaid this debt on 14 September 2006.
But Mr Allan could not identify the loan made by Mr Upson to his son within the bank records. Mr Allan reasoned that this was a payment from “unsourced income” and for that reason should be included. It my view it was properly included by him as expenditure by Mr Upson, without it being necessary to consider the source of the funds. Mr Upson expended for present purposes the sum of $100,000 when he lent it to his son. For that reason it was rightly included as expenditure.
In summary, I accept the State’s case as to the total amount of the expenditure over the relevant period by Mr Upson, except for that component involving the sum of $22,721.47. The result is that the total expenditure, for the purposes of s 83(1)(b), is $3,126,810.27.
Sources of funds: s 83(3)
It is for Mr Upson to establish the extent to which his expenditure was funded from income or amounts from other sources, not related to illegal activity. He sought to discharge that burden by evidence that he had some legitimate income but more importantly, at the commencement of the subject period, a considerable accumulated wealth which was kept in cash. In his oral evidence he claimed that at the commencement of the relevant period, he had about $820,000 in cash which he kept at two places: his house in Loganholme and a farm near Esk. Mr Upson said that he regularly banked large amounts from cash these holdings to one or more of the Upson bank accounts.
Undoubtedly there were very large deposits of cash made to the Upson accounts. A total of $87,900 of cash deposits were made to accounts in reduction of credit facilities, and a total of $975,586 of cash deposits were made to other Upson bank accounts.[10] In his August 2008 analysis, Mr Allan identified 223 deposits that were “cash-related or had unconfirmed status”, of which only one deposit was over the $10,000 threshold for which a report of the deposit had to be given under the Financial Transaction Reports Act 1988 (Cth). Of the other 222 deposits, 213 were cash deposit transactions.
[10] Affidavit of Mr Allan, Court File No 40, Exhibit CMA-23.
Mr Upson’s case is, in effect, that these were deposits of his accumulated cash reserves. He also referred to his sources of income. But he effectively maintained that about $800,000 of his expenditure can be explained as the depletion of his accumulated capital.
It is necessary then to consider the evidence about Mr Upson’s work and financial history leading up to the period in question. The evidence in this respect comes mainly from Mr Upson and Mrs Upson.
Mr Upson was born in 1955 and left school at aged 14 to work on a farm. After a few years he left to take up other work as a storeman until he was about 20 years of age. Subsequently he worked on a production line for a brewery and then for a company doing landscaping and garden work. He then worked for a firm called Vegetation Mowing until about 1978, when he suffered serious injuries to his arms and legs during a work accident. His injuries resulted in permanent disabilities which put paid to his work of that kind and for which he received substantial compensation payments from the Accident Compensation Corporation of New Zealand (“the ACC”). Mr Upson said that his weekly payments from 1987 to 2007 totalled over $500,000.[11] He says that these payments were made by the ACC to a New Zealand bank account and then withdrawn by him in cash from ATM machines. He says that there were also three “lump sum payments of $19,957.12, $10,311.57 and $17,080.22” as well as another payment of $18,000.
[11] Affidavit of Mr Upson, Court File No, 154, para 6.
In his most recent affidavit, Mr Upson exhibited some documents evidencing payments from the ACC. Most significantly he exhibited a letter dated 7 May 2008 to him from the Inland Revenue Department (NZ) which set out details of Mr Upson’s income from the ACC for the years 1997 to 2008. Yearly payments were within a range of $20,847.92 (1997) to $27,431.96 (2008). This evidence provides some support for Mr Upson’s claim that his weekly payouts have totalled over $500,000 in the 20 years to 2007. It must be accepted that he had a regular income from these compensation payments of the order of $23,000 by the time of the commencement of the subject period for this case.
They migrated to Australia from New Zealand in 1986. In New Zealand, he says, they were successful property developers, selling 11 properties shortly before coming to Australia, for a total of $680,000.[12] They retained one property in New Zealand which they rented until it was sold in 1988 for $95,000. After payment of a mortgage debt on that property, a balance of $78,000 was received.[13] It would appear that these amounts were in New Zealand dollars. There is documentary evidence which appears to establish that they owned about that number of properties and which were sold in a period of 1983 - 1986 for prices of that order. What is not proved by independent evidence is the amount of the net proceeds of sale which the Upsons received.
[12] Affidavit of Mr Upson, Court File No 154, para 3.
[13] Ibid.
When the Upsons arrived in Australia, they brought “just under $40,000 … in cash in June 1986 and again in December or January 1987”.[14]
[14] Affidavit of Mr Upson, Court File No 154, para 4.
The Upsons established a share trading account with a broker in Sydney in 1985 and later used RBS Morgans. Mr Upson exhibited a bundle of documents about his share trading. One of those is a “portfolio transaction report” for the period of six years to March 2008. It proves some share trading over that period. But it does not prove even approximately the extent to which Mr Upson’s accumulated capital was in the form of shares. More importantly it does not evidence a source of any significant part of the substantial cash holdings which Mr Upson claims to have had at Loganholme and at his farm.
In his affidavit of June 2012, Mr Upson said that by about 1986 his share portfolio was worth “well in excess of $70,000”.[15] But that does not evidence the amount of any which his shareholding had contributed to his suggested cash holdings.
[15] Affidavit of Mr Upson, Court File No 92, para 13.
In her report of May 2012, Ms Bundesen considered the bank statements for a New Zealand bank account maintained by Mr Upson into which the ACC payments were made. She noted that after tax, there was a total of NZD209,763.04 paid in the period of 12 years ending on 31 March 2002. She also noted that a total of NZD102,791.27 was paid in the period 1 April 2002 to 30 April 2007. She estimated that (possibly) an amount of AUD42,700 was withdrawn by ATM withdrawals from this account in the period from January 1992 to January 2002. In the joint experts’ report there was some discussion about the extent to which there were legitimate sources of funds from the ATM withdrawals from this New Zealand account. The experts agreed to differ, Ms Bundesen saying that a further $24,200 should have been allowed by Mr Allan as a legitimate source of funds. As I have discussed, the State now concedes that that amount should be allowed. But there is no consensus about the extent to which, if at all, these ACC payments contributed to an accumulated cash holding by the commencement of the subject period.
To summarise thus far, his work and business history in New Zealand does not suggest that he had amassed a fortune by the time that he left that country. He did sell a number of pieces of real property although he has not demonstrated by documentary evidence, the amount of the net proceeds of sale. His income for many years prior to 1986 had been only from modest compensation payments.
In 1987 Mr and Mrs Upson purchased a house at 73 Timor Avenue, Loganholme which they occupied as their house. It was bought for $70,000, of which, Mr Upson says, $30,000 was borrowed from Heritage Building Society. In about 1988 they purchased a vacant block of land at 71 Timor Avenue for $27,500, of which none was borrowed.
In about 1997 Mr and Mrs Upson purchased a property at 178 Mt Mulgowie Road, Buaraba (near Esk) for $80,000, for which they borrowed the entire purchase price from Heritage Building Society.[16] In 1999 they purchased another property at 199 Mt Mulgowie Road, Buaraba for $95,000. Again it appears that the whole of the purchase price was borrowed from Heritage Building Society. They went to live at 178 Mt Mulgowie Road before moving to the other property at Buaraba. It was apparently at place property that Mr Upson claims he kept much of his cash. In his 2012 affidavit, Mr Upson described his unsuccessful attempts to conduct a farming enterprise at Buaraba.
[16] Affidavit of Mr Upson, Court File No 154, para 12.
In 2004, Mr and Mrs Upson purchased a unit at Tweed Heads for which they borrowed $180,000 from Heritage Building Society. Mr Upson says that they also borrowed a further $200,000 for this purchase from his sister and brother-in-law, Mr and Mrs Burns.
There is evidence of rental income received by the Upsons from renting, at various times, all or part of 73 Timor Avenue and 178 Mt Mulgowie Road. In their joint report, Mr Allan and Ms Bundesen made some allowance for rental from these properties. Ms Bundesen believed that there was “other potential rent” to be included as legitimate income, in an amount of $82,553.60. Again, the State has effectively conceded that such an amount should be allowed.
Another source of income prior to the commencement of the subject period was Mr Upson’s enterprise in retrieving golf balls at several courses at the Gold Coast. In his 2012 affidavit he described this venture as undertaken between 1987 and 1995. He does not have reliable records of his income in this respect. But in that affidavit he claimed that his income from 1987 to 1995 totalled $605,000. This included an income of $100,000 in each of the years 1992 and 1993. This evidence has little weight, unsupported as it is by any documentary evidence. Undoubtedly Mr Upson was involved in this enterprise but his estimate of income in this respect is likely to be exaggerated. He says that he ultimately abandoned this business because it was so profitable that he encountered too many competitors.
Mr Upson says that during the time he collected golf balls from the Helensvale Golf Club, he was also employed as a cleaner where he was paid $190 per week in cash. This was in the period 1987 to 1995.
A further source of income, Mr Upson claims, was from caring for foster children in the years 1994 to 1997. In that respect he exhibited Mrs Upson’s income tax return for the 1997 year,[17] showing a taxable income of $12,799.
[17] Affidavit of Mr Upson, Court File No 154, Exhibit RJU5.
Mr Upson claimed he preferred to keep his accumulated wealth in the form of cash, hidden in one or more of his houses because he “never trusted banks” and that he followed his parents’ example, which was to always keep their money in cash and keep it hidden in the house rather than banking it.[18]
[18] Affidavit of Mr Upson, Court File No 92, para 113.
In his 2012 affidavit, he said that he built a safe at 73 Timor Avenue which “stored over $200,000 cash”.[19] He there said that he would “only deposit cash into bank accounts as we needed it. Otherwise we generally lived on our American Express credit card and I would deposit cash onto the said credit card from the safe when required.”[20] He said that he built another safe in a shed at 178 Mt Mulgowie Road and he also dug a large hole in the ground there and placed cash in drink canisters which were then placed in the hole. He there estimated that the “most amount of cash I have ever held in the safe at 178 Mount Mulgowie Road is approximately $560,000”.[21]
[19] Ibid, para 115.
[20] Affidavit of Mr Upson, Court File No 92, para 118.
[21] Ibid, para 120.
In that same affidavit he sought to explain why he had borrowed $200,000 from Mr Burns, when he held such a substantial amount of cash, by saying simply that “I did not like to disturb the cash and preferred to use the borrowed funds from Mr Burns instead.”[22]
[22] Ibid, para 121.
He also said that in 1988 or 1989, he began:
“swapping the paper notes for plastic notes to prevent the paper notes from deteriorating [and] [e]ach morning I would go for a walk to buy a newspaper and take approximately $1,000 in paper notes with me. I would then stop at a bank on my way to or from buying the newspaper and swap the notes for plastic.”[23]
Again in that affidavit, he said that on moving from 73 Timor Avenue to 178 Mt Mulgowie Road, he started transferring cash from the safe at Timor Avenue to the safe at his new house, transporting about $10,000 at a time.
[23] Ibid, para 122.
In his affidavit of September 2014, he did not give evidence of the amount of cash which he held at any time at either or both of these properties. He said only that he “generally placed cash in safes which I would make around the home”, the location of which he would divulge to his mother. Mrs Upson Snr swore an affidavit in 2012. Her evidence supports that of her son that it was not the practice of Upsons to bank money. In her case the funds were kept in “a desk draw[er] or in a sock hidden in our house.” But she also recalled at some stage coming to Australia and going to the property at 178 Mulgowie Road where she was shown some cash kept in a brick wall against the shed.
However, in his oral evidence, Mr Upson gave an estimate of $820,000 held in cash as at February 2002. He also claimed that he had about the same amount in November 2004,[24] before withdrawing that evidence and saying that he could not recall how much cash he held in that year.[25]
[24] T 1-66.
[25] Ibid.
In cross-examination, Mr Upson was taken to part of Mr Allan’s analysis of August 2008. He could offer no satisfactory explanation as to why he deposited sums of nearly $10,000, several times within the same day but at different financial institutions, on 38 days.[26] That analysis and Mr Upson’s failure to explain the frequency and size of his cash deposits shows the falsity of Mr Upson’s assertion that he did not believe in banks. And his contention that there was as much as $820,000 held at the beginning of the subject period has less weight for the fact that it was an amount which had not been mentioned in any of his affidavits filed over the years.
[26] T 1-71.
I accept that Mr Upson did have safes at places where he lived and that from time to time he kept large amounts of cash there. But he did bank, sometimes very frequently, large amounts of cash as I have detailed. There is an obvious alternative explanation for his having large amounts of cash.
The essential question is whether he has demonstrated that he had income or other legitimate sources of funds, beyond the amounts which had been allowed in his favour by the State in the ultimate quantification of its claim. That quantification allows deductions under s 83(3) which total $2,172,359.54.[27] I have to say that having regard to the evidence of Mr Upson work and business history, this is a surprisingly high figure for Mr Upson to have had from legitimate sources in the subject period. Mr Upson had not worked for many years before coming to Australia in 1986. His income until then was from workers’ compensation payments. The only indication of any substantial accumulated wealth is his evidence that several real properties had been sold, yielding more than $500,000. But it is improbable that a property investor, with no regular income apart from compensation payments, had managed to accumulate that property portfolio with only one of the properties being mortgaged. It is more probable that the Upsons’ net receipts from these sales were a fraction of the sale prices.
[27] Mr Allan’s assessed expenditure of $3,149,531.74, less the amount ultimately sought by the State of $977,172.20.
On each occasion when the Upsons purchased real property in Australia, they borrowed either the whole or a substantial part of the price. There is no explanation for why they chose to do that, and pay interest on that borrowing, whilst they held such large amounts of cash as Mr Upson claims.
Various sources of income from the years in Australia do not demonstrate a likelihood that by the beginning of the subject period, substantial amounts of cash had been accumulated in that way. There is Mr Upson’s claim that he was making very large amounts from retrieving golf balls, but this is unsupported by any documentary evidence. Otherwise their income from caring for children or cleaning at a golf club would not have added to their accumulated capital. Mr Upson must prove that in addition to the amounts which have been conceded in his favour for the purposes of s 83(3), there were further sources of funds not from illegal activity and he must demonstrate the extent of them. In my conclusion he has failed to demonstrate any such further sources of funds.
Conclusion
The outcome is that save in one respect, the State has proved its case. That exception is the deduction which I have made from the assessed expenditure. The result is that the State’s claim should be reduced by $22,721.47, resulting in assessed proceeds of $954,450.73.
It will be ordered that pursuant to s 78 of the Criminal Proceeds Confiscation Act 2002 (Qld), the respondent pay to the State of Queensland the sum of $954,450.73, being the value of the proceeds derived from illegal activity.
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