The Commissioner of the Australian Federal Police v Haddara
[2015] VCC 1425
•16 October 2015
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION CONFISCATION LIST | Revised Not Restricted Suitable for Publication |
Case No. CI-13-05420
IN THE MATTER of the Proceeds of Crime Act 2002 (Commonwealth)
-and-
IN THE MATTER of property suspected to be the proceeds of an indictable offence and or the instrument of a serious offence
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BETWEEN:
| THE COMMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE | Applicant |
| v | |
| LEAH GOLDSTEIN (a pseudonym) | Respondent |
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JUDGE: | HIS HONOUR JUDGE SACCARDO | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 19, 20 and 21 August 2015 | |
DATE OF JUDGMENT: | 16 October 2015 | |
CASE MAY BE CITED AS: | The Commissioner of the Australian Federal Police v Goldstein (a pseudonym) | |
MEDIUM NEUTRAL CITATION: | [2015] VCC 1425 | |
REASONS FOR JUDGMENT
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Subject: PROCEEDS OF CRIME
Catchwords: Application pursuant to s49(1) of the Proceeds of Crime Act 2002 (Cth) for a forfeiture order for the sum of $600,385.02 together with interest, representing the balance of the proceeds of sale of three subdivided lots of real property
Legislation Cited: Proceeds of Crimes Act 2002 (Cth), s49(1), s24, s72, s48
Cases Cited:Director of Public Prosecutions v Ali (No 2) [2010] VSC 503; Director of Public Prosecutions v Saxon (1992) 28 NSWLR 263; Re Georg (1991) 57 A Crim R 356
Judgment: Applications pursuant to s24 and s72 of the Act dismissed. Application pursuant to s49(1) of the Act granted.
Note:The Agreed Statement of Facts and Agreed Chronology has not been appended to this judgment for privacy reasons. Access may be applied for via written request to the Court.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Ms E Ruddle | Proceeds of Crime Litigation – Australian Federal Police |
| For the Respondent Ms Goldstein | Mr A Furstenberg | |
| For the Goldstein Children | Mr C Juebner |
HIS HONOUR:
1 In this matter, the Commissioner of the Australian Federal Police (“the Commissioner”) makes application for a forfeiture order pursuant to s49(1) of the Proceeds of Crimes Act 2002 (Cth) (“the Act”). The application relates to the sum of $600,385.02, together with interest, in respect of which a Restraining Order was made on 22 October 2013 pursuant to s19 of the Act. There is no issue that the subsequent variations to that Order operate such that the monies the subject of this application are governed by the Restraining Order. The monies represent the balance of the proceeds of sale of three subdivided lots of real property located at 10 Raglan Street, South Melbourne[1] (“Raglan Street”).
[1] This address has been anonymised.
2 There is no issue as to the entitlement of the Commissioner to the order pursuant to s49(1) of the Act which is sought in this instance.
3 Whilst the application under s49 involves a civil application which is not founded upon the basis of a criminal conviction, in this instance, there is no issue that the application is made on the basis of admissions by Leah Goldstein[2] that she was involved in two loan applications: the first to the National Australia Bank (“the NAB loan”), and the second to the Bank of Queensland (“the Bank of Queensland loan”), in the course of which she submitted false documents and false information for the purpose of securing each of the loans in order to gain the funds required to:
[2] ‘Leah Goldstein’ is a pseudonym.
· purchase a property in Raglan Street; and
· demolish the house situated on that land and construct three townhouses.
4 There is no issue that the relevant objects of the confiscation scheme established under the Act include:
(i)depriving persons of proceeds of offences and benefits derived from offences against the laws of the Commonwealth; and
(ii)punishing and deterring persons from breaching the laws of the Commonwealth; and
(iii)enabling the law enforcement authorities to effectively trace proceeds, benefits and unexplained wealth amounts;
and that it is in the furtherance of these objects that the current forfeiture application is made.
5 Before making the order, I am required in this instance to determine two applications which have been made; namely:
(i)An application by Ms Goldstein pursuant to s24 of the Act that a number of alleged specified debts which were incurred in good faith by her; namely:
(a)the sum of $50,000 owed by the applicant to Ryder Scantlebury[3];
[3] ‘Ryder Scantlebury’ is a pseudonym.
(b)the sum of $50,000 owed by the applicant to Gabrielle Murphy[4];
(c)the sum of $40,000 owed by the applicant to Nathan Browne[5];
(d)the sum of $30,000 owed by the applicant to Samantha Wallwork[6];
(e)the sum of $15,000 owed by the applicant to Bianca March[7]
be repaid out of the funds the subject of the current Restraining Order; and
(ii)An application under s72 of the Act that each of Ms Goldstein’s four children be paid a specified amount on the grounds of hardship.
[4] ‘Gabrielle Murphy’ is a pseudonym.
[5] ‘Nathan Browne’ is a pseudonym.
[6] ‘Samantha Wallwork’ is a pseudonym.
[7] ‘Bianca March’ is a pseudonym.
6 It is appropriate that I consider each of these applications prior to making the forfeiture order sought in this instance. I find it convenient to deal firstly, with the application made under s24 of the Act and subsequently, the application made under s72 of the Act.
The application under Section 24 of the Act
7 The evidence relevant to the application made under s24 of the Act was the subject of affidavits filed on behalf of each of the alleged lenders and viva voce evidence given by each of the alleged debtors and the applicant.
8 The common feature of each of the affidavits is that the deponents have received no refund of the loans allegedly made by them in this instance nor have they received the additional “cash gift” which they had been promised by Ms Golstein.
9 The evidence relevant to the application under s24 may be summarised as follows:[8]
[8]The evidence summarised by me should be considered in light of the agreed facts and chronology prepared for my assistance by the parties which are appended to my reasons.
The evidence of the alleged lenders
(i) Gabrielle Murphy
10 Gabrielle Murphy asserted that Ms Goldstein is indebted to her in the sum of $50,000 consisting of:
§ $40,000 which was the subject of a loan made by her to Ms Goldstein; and
§ $10,000 which was to be paid to her by Ms Goldstein by way of gift upon the repayment of the loan.
11 Ms Gabrielle Murphy gave evidence to the effect that:
·In the years immediately prior to the date upon which the alleged subject loan was made, she was employed by Corporate One[9], where her commencement wage of approximately $23,000 had, by 2010, risen to approximately $41,000.
[9] ‘Corporate One’ has been anonymised.
·She had:
(i)through the accumulation of cash gifts provided to her in association with birthdays, engagements and other special occasions, saved $40,000 in cash, which she kept at her house;
(ii)made a decision that she would put the money aside to apply it to her wedding and the establishment of her house. She said that in 2011, she had become the owner of an investment property, the purchase price for which had been secured by way of a loan guaranteed by her father. At that time, she was not willing to contribute any of her savings to that purchase:
Q:“Because you wanted to spend that on your big wedding?---
A:Correct.
Q:But your evidence is that just after that you gave $40,000 or lent that $40,000 to Mrs Goldstein?---
A:Correct. …
Basically my wedding was planned to be in 2012. So I had a year. I lent Ms [Goldstein] in 2011. So there was a year that basically potentially I lent the money to her and basically the agreement was, you know, I lent her $40,000; in return of we will get $50,000. So I’m like, sounds like a good deal. I guess 2012, end of 2012 is when my wedding day is. That will come perfect. So I’m like sitting there. I have a lot of trust by Ms [Goldstein]. So I’m like, you why not?”
(iii)been approached by Ms Goldstein at a family gathering, who “told me that she needed some money for her development at South Melbourne”;
·By reason of the failure of Ms Goldstein to repay the loan, she had been required to finance her wedding and the establishment of her house by a number of personal loans totalling between $40,000 and $50,000.
·She had prepared a letter which had been signed by Ms Goldstein acknowledging her indebtedness but had misplaced the letter in the course of moving house on a number of occasions.
(ii) Samantha Wallwork
12 Samantha Wallwork asserted that Ms Goldstein is indebted to her in the sum of $30,000 consisting of:
§ $20,000 which was the subject of a loan made by her to Ms Goldstein; and
§ $10,000 which was to be paid to her by Ms Goldstein by way of gift upon the repayment of the loan;
13 Ms Wallwork said that she had commenced work at an early age at IGA[10] and had continued working whilst at university at Haigh’s Chocolates[11] and through that work and the accumulation of gifts made to her to celebrate religious celebrations and birthdays, she had, by 2011, been able to save $20,000.
[10] ‘IGA’ has been anonymised.
[11] ‘Haigh’s Chocolates’ has been anonymised.
14 Ms Wallwork said that through personal choice, she kept this money secreted around her house but that she also used to lend money to friends and that she had assembled the $20,000 which she lent in this instance to Ms Goldstein by calling in loans which she had made to her friends and accessing money that she had around the house. She said that she made no formal agreement with Ms Goldstein as to the timing of the repayment of the loan, accepting Ms Goldstein’s position that:
“Just she said once everything was up and going and they sell the properties and everything, that was pretty much it.”
15 She said that during the 2010-2011 financial year, she earned approximately $16,000 before tax and in the two previous years, had earned similar amounts.
16 As to the purpose of the loan made by her to Ms Goldstein, Ms Wallwork commented:
A:“I knew that they wanted to build and she needed the money for the permits and plans.
Q:Build what?---
A:Units or townhouses, something like that and she mentioned that she needed some money and that if I would help her, I would be investing in it and she can instead of – I would give her 20,000, she would give me 30,000 in return, so found the opportunity to make a bit of investment and I said, why not?
Q:When were you going to get it back?---
A:She said, well, we had just agreed that once they’re built, they will start selling and she gets her money made and will give me back the $30,000.”
(iii) Bianca March
17 Bianca March asserted that Ms Goldstein is indebted to her in the sum of $15,000 consisting of:
§ $10,000 which was the subject of a loan made by her to Ms Goldstein; and
§ $5,000 which was to be paid to her by Ms Goldstein by way of gift upon the repayment of the loan.
18 Ms March gave evidence that:
·She was a family day-care worker.
·She had saved $10,000 in cash for the purpose of taking her family to visit her mother in Greece[12].
·She kept her cash in her house because it was the best way to manage her money and she was precluded by her religion from earning interest.
·She had accumulated the $10,000 from her own savings and savings made from her husband’s wage.
·In early 2011, Ms Goldstein had told her “she needed some money for a housing project she was doing”.
·She had lent the money to Ms Goldstein because Ms Goldstein was really desperate for money and she considered it presented her with a good opportunity to increase her funds by $5,000.
[12] ‘Greece’ has been anonymised.
19 She was told by Ms Goldstein that it would take her six months or one year to sell the houses the subject of the housing project and pay the money back.
(iv) Nathan Browne
20 Nathan Browne asserts that Ms Goldstein is indebted to him in the sum of $40,000 consisting of:
§ $30,000 which was the subject of a loan made by him to Ms Goldstein; and
§ $10,000 which was to be paid to him by Ms Goldstein by way of gift upon the repayment of the loan.
21 Mr Browne gave evidence that:
· He was in receipt of a Carer’s Pension and had not worked since 2009, at which time he had made a before tax income of approximately $18,000;
·Ms Goldstein was a close friend of his wife and had approached her and told her that “she needed some money for her development at South Melbourne”;
·He had borrowed $20,000 from a close relative of his, which he supplemented with a further $10,000 of his own money, thinking that he could make a quick $10,000 in a couple of months;
·His contribution came from money which had been saved by his wife which was kept under his wife’s pillow, notwithstanding the fact that he told his wife to put the money in the bank;
·There had been no written confirmation with respect to the loan because it involved a community family thing and this felt degrading;
·He had repaid the bulk of the $20,000 he had borrowed but there was still $1,100 outstanding. The repayment of the monies had been made by regularly saving the Centrelink benefits which the family received, which involved a figure of approximately $2,300 a fortnight which supported he, his wife and his five children, who are aged between fourteen and one and seven months;
·It had been his understanding when he lent the money to Ms Goldstein that the project would be finished within approximately six months but he had allowed for a period of twelve months.
(v) Ryder Scantebury
22 Ryder Scantlebury asserts that Ms Goldstein is indebted to him in the sum of $50,000 consisting of:
§ $40,000 which was the subject of a loan made by him to Ms Goldstein; and
§ $10,000 which was to be paid to him by Ms Goldstein by way of a gift upon the repayment of the loan.
23 Mr Scantlebury gave evidence that:
· He had, for a number of years, worked for a transport company and that he had available to him $40,000 in cash which he lent to Ms Goldstein, which money had been generated from his pastime of fixing up off-road trail bikes and selling them for a profit which had he undertaken for a number of years.
· In 2011, he had sold a dirt bike for a profit of close to $10,000 and had received some money from the sale of a motor vehicle. He said he had a significant amount of cash-in-hand, between $20,000 and $30,000, which he described as being an absolute requirement to be successful in his hobby which involved buying, restoring and selling motorcycles. He said that he did not refer to this hobby in his affidavit because when he had been asked about what had occurred in 2011, his memory going back five years focussed upon the sale of one particular bike at that time.
· He had heard through the family that Ms Goldstein was wanting to be involved in a property development. He subsequently learned from family members that Ms Goldstein had purchased a property in South Melbourne, he had spoken to her and had been told she needed some money to complete the purchase.
· Ms Goldstein was a close relative and he had been confident in the project for which she was seeking investment monies because her brother-in-law, who was a builder, was guiding her through the project. He said the timeframe for the project was a year to a year-and-a-half, and that he had been expecting his debt would be repaid.
· Mr Scantlebury’s relevant income during the period 2007 to 2014 was consistently in excess of $60,000 per annum.
The evidence of Leah Goldstein
24 Ms Goldstein gave evidence, in the course of which she said:
·She had sold her house at Cole Court[13] because there was no yard at the house for her children to play in but when she had then looked around she found that she would have to spend approximately $450,000 to purchase such a house, which was clearly beyond her means.
[13] ‘Cole Court’ has been anonymised.
·The sale of the house at Cole Court produced approximately $100,000 after the bank had been paid out.
·The funds employed to purchase Raglan Street consisted of the following:
(i)each of the loans the subject of the application under s24 of the Act;
(ii)monies contributed by her, the source of which involved the capital gain she made on the sale of Cole Court, $30,000 which she had in cash, and $15,000 which was generated through the sale by her of her jewellery; and
(iii)the NAB loan.
·That her mother had previously gifted to her the sum of $250,000, of which only $30,000 was available to her to contribute to her development project, which contribution she made in cash.
·That upon establishing the NAB loan, her commitments at that time involved meeting interest payments of between $2,700 and $2,900 per month from her source of income which, at that time, comprised of Centrelink and child endowment payments and $700 monthly rent generated from leasing the dwelling at Raglan Street which was situated on the land, which tenancy continued for a period of approximately six months.
·That the purchase price for Raglan Street of $700,000 included an additional obligation to pay stamp duty of approximately $40,000.
·That in order to meet expenses which might arise in association with Raglan Street, she put aside some funds, the precise details of which she was unable to recall.
·That it had been her habit throughout the course of her married life to hold most of her money in cash because the receipt of bank interest was precluded to her through her religious beliefs.[14]
[14]It follows that at various times, sums of $250,000 or more were secreted by Ms Goldstein in her house in circumstances in which she was aware that her husband had a gambling habit and those funds could be accessed and used by him without her consent.
25 It was put by Mr Juebner, who appeared for the s72 applicants, that Ms Goldstein presented as a relatively unsophisticated witness. I agree that she sought to create that impression. Throughout her evidence, she presented herself as a simple naïve woman by making statements such as that at Transcript 116:
“Q:What was your reason for withdrawing the cash from the bank and hiding it at home?---
A:I felt more comfortable by doing that because I couldn’t believe that I’d sold the house. I got the money and to see them with my own eyes in … .”
26 In explaining the circumstances in which she submitted false documents to the National Australia Bank, Ms Goldstein stated:
“I have to go to a broker to facilitate the mortgage for me and the broker he is the one who told me I had to tell the bank that I’m working because – to be able to get the mortgage. He is the one who made all the papers and he said to me all what I have to do is just sign. I told him if this is going to get me a loan that will help me and assist me to make money at the end, you know, to – for me and my children to live. I think if I got nothing to harm me, I will do it. But I didn’t it’s a crime, I didn’t know this thing. All what I thought, it’s a lie, and you know, my aim is to make all my repayments and the bank will make money and I make money.”
27 When account is taken of the fact that Ms Goldstein embarked upon a process in which, with no experience in property development or building, and with a total access to assets limited to cash in the vicinity of $100,000, she:
(i)located a property with a “knockdown” building which she purchased for $700,000;
(ii)financed the above purchase and activity by allegedly assembling money from friends and family and creating a false work history and income system and false documents attesting to that history, in order to secure a loan from the NAB;
(iii)held herself as being capable of paying an exorbitant rate of return to each of her friends and family members from whom she allegedly borrowed funds, renegotiated the NAB loan by replicating the process she employed to obtain that loan and applying it to secure a loan with the Bank of Queensland for a figure in excess of $1,000,000;
(iv)successfully constructed three townhouses with such efficiency that she was able to make a profit after repayment of all bank debts upon the sale of those properties in the sum of $600,000;
I find it extremely unlikely that Ms Goldstein is, in reality, as she presented.
28 That a naïve simple woman would possess the confidence to approach and convince lending institutions to support her in such a speculative project, and expose herself to debt of those levels when, according to her evidence, she was unwilling to commit herself to borrowing of $450,000 to finance a suitable replacement home for Cole Court,[15] beggars belief.
[15]See the evidence at T118, L4-27
29 Finally, having regard to the fact that Ms Goldstein’s profit expectations were achieved, I find it more likely that her success in this regard was due to the presence of business and entrepreneurial acumen rather than naïvety.
30 In my opinion, the above finding as to the disingenuous nature of Ms Goldstein’s presentation infects all of her evidence.
31 Further, there was another aspect of her evidence which I found to be totally unconvincing; namely, her explanation when challenged as to her ability to meet not only the costs and interest payments associated with the NAB loan but also her living expenses by having put aside some additional funds. I found not only her evidence as to this issue at T126,L23 - T127, L24, but the manner in which she gave it in which she hesitated and presented herself to be confused to be totally disingenuous.
32 Further, the inconsistency in the evidence of Ms Goldstein as to her motivation for the alleged criminal activity in this instance as to which, in her viva voce evidence, she focussed upon her desire to fund a house for her children to live in and in her affidavit evidence, she included a desire to provide for the education and medical needs of her children is another factor which, in my opinion, calls into question her general veracity.
33 In circumstances in which there can be no issue that Ms Goldstein presents as a dishonest person who is prepared to make false statements to secure her own financial gain, I find myself in a position in which I have grave misgivings as to her evidence in this instance, and I am not satisfied that I should accept any of the evidence given by Ms Goldstein unless it is the subject of independent corroboration or contains an admission against interest.
Analysis and findings as to the Section 24 application
34 It is clear that in making an application under s24 of the Act, the onus is upon the applicant to establish, on the balance of probabilities, the factual basis of the application.
35 A common feature of each of the loans in this instance is that:
(i) Each loan involved payments by way of cash;
(ii) No documents are in existence which support the existence of the loan;
(iii) There is no paper trail which proves the existence of the funds the subject of the loans in the hands of each of the alleged debtors or the movement of those funds into the hands of the applicant;
(iv) There is no extrinsic evidence of any type which supports the existence of any of the alleged loans other than the verbal and affidavit evidence of the applicant and each of the alleged lenders;
(v) Each of the lenders, whilst being aware of the general reason for the loan, gave no evidence that they:
§ possessed any knowledge of the specifics of the project;
§ had made any independent enquiries as to the project itself, the basis upon which the completion date had been fixed or its likely profitability.
36 A feature of the evidence of each of the alleged debtors was that:
· Within the Lebanese Muslim culture, their exists an established practice of making cash gifts to young adults to recognise their passage through various stages of their life;
· The earning of bank interest is generally regarded as being forbidden on religious grounds;
· It is not uncommon that large quantities of cash is held within the household.
37 In making my findings in this instance, I do so on giving due weight to that evidence.
38 I am satisfied in this instance that, having regard to their personal relationship with the applicant, each of the debtors must have known that notwithstanding that she may have been supported by her brother-in-law,[16] the applicant was embarking on a complicated and speculative property development in circumstances in which she:
[16]It is relevant that only Ryder Scantlebury gave evidence that in making the alleged loan he was influenced by the fact that the applicant’s brother in law was a builder who may have been employed by the company engaged to undertake the development.
(i)spoke little English and had limited understanding of spoken English;
(ii)had no experience in property development or building;
(iii)had no legitimate means of accessing the very significant commercial loans which were required to finance the enterprise she was undertaking;
(iv)had no experience in supervising the construction of any property, much less three townhouses;
(v)had no experience in the sale of such properties;
(vi)had no basis upon which she could either predict the profit which might be generated from her venture or even guarantee a successful development and sale.
39 It follows, in my opinion, that each of the alleged lenders must have appreciated that, even with the best intentions, the applicant’s plan to:
§ raise the capital required;
§ build the units; and
§ sell the units for profit
carried with it a considerable risk of ending in financial disaster given her limited income in combination with her lack of both capital and experience.
40 Further, it remains completely unexplained on what basis the lenders took the view, given the applicant’s financial circumstances, that she would ever qualify for the finance she required to undertake the development.
41 In the presence of all these factors, that each of the lenders were prepared to hand over to the applicant large sums of money which they had accumulated over many years for specific purposes, which they really could not afford to lose, seems remarkable.[17]
[17]Notwithstanding that Ryder Scantlebury was better placed financially to accommodate a loss of his capital, nevertheless I am satisfied that this description applies to him.
42 In the circumstances, I find it quite improbable that each of the alleged debtors would have been prepared to lend the applicant large sums of money upon her assertion that the money would be:
(i) returned; and
(ii) augmented by way of a significant cash gift;
upon the applicant achieving a profit through the property development that she was undertaking.
43 Further, in my opinion, there were additional aspects of the viva voce evidence of some of the alleged debtors which gave rise to specific grounds to question reliability of that evidence; namely:
(i)With respect to the evidence of Ryder Scantlebury, in his viva voce evidence, he explained the basis upon which he had access to the cash which he made available to the applicant as being derived from the activity which he stated he had undertaken since a young man which involved him refurbishing motorbikes for a profit. He said that this activity required him always to have cash in his pocket and that, at this time, access to cash in the sum of $20,000 to $30,000 “was an absolute requirement to be successful in the hobby I was into”. I found Mr Scantlebury’s evidence on this point to be inconsistent with the evidence set out in his affidavit which made no mention of this hobby and his response that his affidavit was prepared with particular focus on 2011, not to be persuasive.
(ii)With respect to the evidence of Nathan Browne, I found Mr Browne’s explanation as to his access to $10,000 in cash, his preparedness to borrow $20,000 so that he could lend money to the applicant and his ability to repay $18,900 of the money which he had borrowed, to be unconvincing, having regard to his statement that, with five children to support and his sole income being derived from child endowment and social security payments, he was able to amass such levels of savings.
(iii)With respect to the evidence of Samantha Wallwork, I found her evidence that she hid large amounts of cash around the house and did not deposit any of that cash into her bank accounts, to be inconsistent with the movement of money in and out of that account.
(iv)With respect to the evidence of Gabrielle Murphy, I found her evidence:
·that she had made a specific decision to put aside a sum which she identified as being close to $40,000 to finance her wedding and purchases associated with the wedding (which she regarded as being her first priority such that she was not prepared to make any contribution with that money to her housing loan in respect of which her father was a guarantor) but she was prepared to lend that money to Ms Goldstein; and
·that whilst she thought it appropriate to document the existence of that loan in a letter prepared by her and signed by the applicant, she had not considered it appropriate to place the letter in her safe at home with her money, and had subsequently misplaced it;
to be questionable.
44 For these reasons, whilst I give due weight to the fact that each of the witnesses gave sworn evidence in this application and subjected themselves to cross-examination in that process, I am not satisfied that in each instance the evidence given by the applicant and each of the alleged debtors is such that it is more probable than not that each of the alleged loans were made to the applicant in this instance.
45 For these reasons, I dismiss each of the applications made under s24 of the Act.
The application under Section 72 of the Act
46 The application under s72 of the Act is founded upon the application for a forfeiture order in this instance made by the Commissioner under s49 of the Act.
47 Relevantly, s49 of the Act provides that a court must make an order that property the subject of a restraining order under s19, which has been in force for at least six months,[18] be forfeited to the Commonwealth if the court is satisfied that one or more of the follows applies:
[18]In this instance there is no issue as to the existence of these pre-requisites
(i) the property is the proceeds of one or more indictable offences;
(ii) …
(iii) …
(iv) the property is an instrument of one serious offence.
48 There is no issue the prerequisites for the making of a forfeiture order under by s49 have been made out in this instance.
49 Section 72 of the Act provides as follows:
“(i) The court making a forfeiture order specifying a person’s property must make another order directing the Commonwealth to pay a specified amount to a dependent of that person if;
(a)…
(b)the court is satisfied that;
(i)the forfeiture order would cause hardship to the dependent; and
(ii)the specified amount would relieve that hardship
(iii)… .”
50 It can be seen that the prerequisites which must be established before a court is required to make another order pursuant to s72 are as follows:
(i) the forfeiture order to be made by the court must be an order specifying “a person’s property” as that term is defined by the Act;
(ii) the court must be satisfied:
· that the forfeiture order would cause hardship to a dependent; and
· that a specified amount would relieve that hardship.
51 In this instance:
· the property the subject of the proposed forfeiture order consists of the proceeds of the sale of Raglan Street; namely $600,385.02, together with interest.
· the parties are agreed that the total amount of the monies the subject of the restraining order should be regarded as constituting the property of Leah Goldstein pursuant to s72(i) of the Act.
52 The issue which arises for my determination in those circumstances, is whether the effect of the imposition of the forfeiture order would cause hardship to the applicants in this instance.
53 It is put on behalf of the Commissioner that the operation of s72 should be limited to orders requiring the forfeiture of an instrument of criminal activity as distinct from the proceeds of criminal activity.
54 Essentially, it is put on behalf of the Commissioner that:
(i) The concept of hardship under the Act must involve a position in which the imposition of a forfeiture order has the effect of depriving an innocent dependant of a benefit (potential or otherwise), the right to which existed prior to, and arose independently of, the alleged criminal activity; and accordingly, that hardship, as that term is employed by the Act, involves a change to the detriment of a position which pre-existed the commission of the alleged offending;
(ii) Such change in the status quo to the detriment could not arise when a forfeiture order is made with respect to the mere proceeds of criminal activity by reason of the fact that:
(a) Proceeds of crime come into existence and are generated by the criminal activity; and
(b) It could not be said that such proceeds provide any benefit which pre-existed the criminal activity or arose independently of that activity.
55 In my opinion, the above position put on behalf of the Commissioner is persuasive.
56 It is not in issue that there is no authority which deals specifically with the application of s72 of the Act and I accept the position put on behalf of the applicants that the structure of s72 is unique when considered in the context of other similar legislation, in that it applies only to applications made by or on behalf of innocent dependants.
57 I am satisfied, however, that there has been no instance in which a Court has recognised that it is appropriate to make an order by reason of which access is gained to property the subject of a restraining order, the effect of which would be to allow access to:
· the mere proceeds of criminal activity, as distinct from
· instruments of criminal activity;
and that this approach by the courts should provide some guidance for me in the approach which I should employ in this instance.
58 There have been instances in which Courts have recognised the right of an accused to have access to the alleged proceeds of alleged criminal activity in order to allow the accused to fund a defence, the end point of which may result in an accused being acquitted of the offence which generated the alleged proceeds. Decisions of which Director of Public Prosecutions v Saxon[19] is a typical example are illustrative of this point.
[19](1992) 28 NSWLR 263.
59 Even though the current Forfeiture Order in this instance arises in the absence of a conviction, I am of the opinion that such cases have little relevance in the current circumstances given that Ms Goldstein has admitted that she accessed the NAB funds and the Bank of Queensland funds through false statements, the effect of which is to give rise to contraventions of the relevant Criminal Code offences which are alleged against her.
60 I am satisfied that a finding that s72 of the Act should have application to a loss to an innocent dependent which arose by reason of the dependent being denied access to mere proceeds of crime, would result in a position which is contrary to one of the principle objects of the Act as set out in s5(a); namely “to deprive persons of the benefits derived from offences against the laws of the Commonwealth”.
61 In my opinion, were s72 to be applied to property consisting of the mere proceeds of criminal activity, the effect would be such as to result in persons entitled to relief under s72:
· being enriched from criminal activity by gaining access to the mere proceeds of that activity, rather than
· being exposed to hardship by the making of a forfeiture order which deprives them from access to an instrument of criminal activity from which a benefit arose independently of that criminal activity.
62 For these reasons I am satisfied that the discretion to be exercised under s72 of the Act is to be applied only with respect to property which is appropriately categorised as being an instrument of Ms Goldstein’s alleged criminal activity in this instance.
63 The issue which then arises for my consideration is whether or not any of the property the subject of the proposed Forfeiture Order can be appropriately identified as being an instrument of Ms Goldstein’s criminal activity and not the proceeds of that activity.
Analysis of the evidence as to source of the funds associated with the purchase and development of Raglan Street and the contribution to those funds by Ms Goldstein
64 Whilst it may be argued:
· that any contribution which I am satisfied Ms Goldstein made to the financing of Raglan Street (independent of the funds obtained through her deception of the NAB and the Bank of Queensland), should be regarded as being an instrument of the offending in this instance and not proceeds of that offending; and
· that such a finding should impact upon the issue as to whether the operation of s72 of the Act is enlivened in this instance;
the evidence in this instance is so nebulous as to the quantum and source of any of the personal funds contributed by Ms Goldstein to financing Raglan Street, that I find myself in a position in which I can make no finding, on the balance of probabilities, as to the source of any such funds.
65 I make this statement on the basis of my previous finding that I am not satisfied that I should accept any evidence given by Ms Goldstein unless that evidence is corroborated by independent and persuasive evidence.
66 It is the evidence of Ms Goldstein that, at the time of the offending in this instance, she had sold her house in Cole Court and was not in a position to fund the purchase of suitable alternative accommodation, her position in this regard being that this was the sole reason which motivated her wrongful behaviour in this instance. It was her evidence that she applied that money, together with a further sum of $45,000 (in in the form of savings and money generated from the sale of jewellery), to fund the purchase of Raglan Street.
67 The evidence that upon the sale of Cole Court, a sum in the vicinity of $98,000 was generated in the form of a capital gain to Ms Goldstein was not the subject of challenge in cross-examination.
68 The documented deposits by Ms Goldstein into her NAB account after that sale, being some $180,000 deposited between 19 April and 21 April, were the subject of cross-examination and are not readily reconciled with the alleged personal funds available to her at that time.
69 Given the fact that I am not satisfied for the reasons previously set out that the contributions the subject of the s24 application in this instance were received by Ms Goldstein, the source of the funding for the Raglan Street purchase which must, when stamp duty ($40,000) is taken into consideration, have involved an outlay in excess of $740,000, remains a mystery.
70 Even if the totality of the evidence of Ms Goldstein as to the funds available to her was to be accepted, that evidence establishes her access to the following funds:
Sale proceeds from Cole Court $98,000
Contribution by Ms Goldstein, both with respect
to the balance available to her of monies given to
her by her mother and the sale of jewellery $45,000
NAB loan $490,395[20]
[20]I have excluded the funds which were allegedly contributed from the s24 applicants given my findings as to those applications
71 Even ignoring all the evidence of Ms Goldstein that she withheld some monies to deal with ongoing expenses, the unexplained shortfall in the source of the funds necessary to finance the purchase of Raglan Street is exacerbated when account is taken of the fact that Ms Goldstein was also required to finance:
· the monthly interest payments associated with the NAB loan until it was refinanced; and
· the living expenses of her family.
72 Whilst the evidence is not precise as to these issues, Ms Goldstein accepted:
· that her obligation to meet the interest payments relevant to the NAB loan involved a payment of between $2,700 and $2,900 per month and that this obligation persisted from the date upon which the monies were advanced on 29 April 2011 until the mortgage was refinanced via the Bank of Queensland loan on 6 February 2012; and
· that the only income generated from Raglan Street was monthly rent of $900 per month for a period of approximately six months; and
· that she was required to meet her living expenses and those of her children, together with the rent payments associated with the house in which they were living in Bowden[21] Street (the quantum of which was not the subject of any evidence) [22]
in circumstances in which her only source of income at the time was Centrelink payments.
[21] ‘Bowden Street’ is anonymised.
[22] There is no evidence which adequately particularises these costs or how those costs were met
73 I find myself in the position in which, whilst I am satisfied that significant funds were injected from some source into Raglan Street other than those made available by the NAB loan, I am unable to fix, with any degree of precision, the source of any of those funds and in particular, the contribution, if any, by Ms Goldstein from her own assets to those funds, in the circumstances in which I do not accept the evidence of Ms Goldstein other than in circumstances in which her evidence is corroborated through a reliable source.
74 For the reasons indicated above, I am not satisfied that:
· the applicants have established that the proposed forfeiture order in this instance involves the making of an order specifying any property which can be appropriately identified as being an instrument of the criminal activity in this instance; or
· the applicants have established their entitlement to the relief they seek in this instance.
75 Whilst given the findings which I have made, it is not necessary to deal with the position put on behalf of the Commissioner that by reason of their pre-existing disabilities, the applicants are not entitled to the relief sought in this instance, I will, for the sake of certainty, make findings as to that issue.
The causal relationship between the making of a forfeiture order and the occasioning of hardship
76 In order to qualify for relief under s72 of the Act, an applicant must establish, on the balance of probabilities, that the making of the forfeiture order “would cause hardship” to the applicant.
77 Issue is taken on behalf of the Commissioner as to this point.
78 Effectively, it is the Commissioner’s position that each of the applicants presented with a pre-existing disability, the existence of which has no relationship with the making of a forfeiture order and upon which the making of a forfeiture order will have no impact.
79 In my opinion, the circumstances in the present case are to be distinguished from those which typically arise in applications for relief from a forfeiture order under the various statutory schemes by which such orders are made.
80 Illustrative of this point are the circumstances which arose in:
· Director of Public Prosecutions v Khodiale and Dounia Ali,[23] in which the applicant in that instance – the innocent wife of the accused – whose house which the applicant and her children shared with the accused, was the subject of a forfeiture order. As observed by Justice Hargraves, the effect of the making of the forfeiture order would be the loss of the primary residence of the applicant and her children in the circumstances in which there were real issues as to whether the family would have the ability to find the funds to meet the cost of rental accommodation; and
· Paul John George,[24] the effect of the order sought in that instance being related to the applicant’s land and a motor vehicle, the latter of which was considered by the Court only as being incidental to the criminal activity involved.
[23]Director of Public Prosecutions v Ali (No 2) [2010] VSC 503
[24]Re Georg (1991) 57 A Crim R 356
81 In each case, the effect of the making of the forfeiture order was to give rise to an alteration in the status quo of the applicant to the detriment in a cause and effect sense, in that the position of the applicant which pertained at the time of the offending was altered to the detriment by the making of the forfeiture order.
82 In my view, the position of the present applicants is in no way analogous to the above situation.
83 The effect of the making of a forfeiture order in this instance would not be to expose any of the applicants to hardship which arises by reason of the making of the order rather than independently of the making of the order.
84 At the time of the making of the order, the children were living in rented accommodation.
85 At least three of the applicants present with health problems and or disabilities which clearly pre-existed the criminal activity which gave rise to the making of the Restraining Order and subsequent application by the Commissioner in this instance.
86 Whilst the effect of the forfeiture order would clearly be to deny the applicants access to the fruits of the wrongful behaviour in this instance and to funds which may ameliorate their pre-existing situations, by enabling them:
· to find more comfortable accommodation; or
· to obtain access to therapy, treatment or education which may ameliorate the impact of their pre-existing conditions;
in my opinion, it could not be said that the making of the order in any way gives rise to an alteration to the detriment in the pre-existing position of each of the applicants in a cause and effect sense.
87 For the reasons set out above, I am satisfied that:
· it could not be said that were the subject forfeiture order to be imposed, the making of that order would cause hardship to any of the dependent applicants; and accordingly
· that the applicants are not entitled to the relief which they seek, namely the making of an order under s72 of the Act.
Conclusion
88 I propose, given my findings in this instance, only to make the forfeiture order sought by the Commissioner pursuant to s49(1) of the Act. I will hear the parties as to the precise form of the order which should be made.
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