New South Wales Supreme Court CITATION : NSW Crime Commission v O B & Anor [2002] NSWSC 633 CURRENT JURISDICTION: Common Law Division FILE NUMBER(S) : SC 12571/01 HEARING DATE(S) : 3 - 5 July 2002 JUDGMENT DATE : 18 July 2002 New South Wales Crime Commission PARTIES : O B W B JUDGMENT OF : Sperling J at 1 COUNSEL : Mr I Temby QC with Mr R Bromwich for the Plaintiff (Respondent) Mr C Steirn SC with Mr G Jones for the First Defendant (Applicant) SOLICITORS : New South Wales Crime Commission for the Plaintiff (Respondent) Lough & Wells Lawyers for the First Defendant (Applicant) CATCHWORDS : Criminal Law - proceeds of crime - application to vary order by allowing withdrawal for legal defence costs - whether restrained property illegally acquired LEGISLATION CITED : Criminal Assets Recovery Act 1990, s5, s9, s10, s16A, s62 Drug Misuse and Trafficking Act 1985, Sch.1 Briginshaw v Briginshaw (1938) 60 CLR 336 CASES CITED : Jones v Dunkel (1959) 101 CLR 298 Sandford (1994) 72 A Crim R 160 DECISION : Application refused with costs. - 29 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Proceeds Of Crime List Sperling J Thursday, 18 July 2002 12571/01 NSW Crime Commission v O B & Anor Judgment 1 His Honour: On 16 August 2001, O B (hereafter "the applicant") was arrested and charged with the following offences: * Supply prohibited drug cocaine indictable quantity (x4); * Supply prohibited drug amphetamine indictable quantity; * Permit premises to be used as drug premises; * Organise conduct assist drug premises; * Goods in custody The applicant has been in custody since that time, bail refused. Committal proceedings are fixed to commence on 19 August 2002 at the Wollongong Local Court. 2 On the date of his arrest, a restraining order was made pursuant to s 10 of the Criminal Assets Recovery Act 1990 ("the Act") in relation to all interests in property of the applicant, including monies in account number 8114-102941-600 with the Arab Bank of Australia, Campsie, and account number 012-878 2597-28025 with the ANZ Bank, Wollongong. 3 The applicant has now applied for an order pursuant to s 10(5)b of the Act which provides that, subject to s 16A of the Act, a restraining order may, at the time it is made or at a later time, make provision for meeting out of the property or a specified part of the property to which the order applies the reasonable legal expenses of any person whose interests in the property are subject to the restraining order, being expenses incurred in defending a criminal charge. 4 Section 16A(1) provides as follows: The following restrictions apply to a restraining order making provision for the payment of any legal expenses of a person: (a) no provision is to be made except to the extent (if any) that the Supreme Court is satisfied that the person cannot meet the expenses concerned out of the person's unrestrained property, (b) no provision is to be made in relation to any particular interest in property if the Supreme Court is satisfied that the interest is illegally acquired property, (c) no provision is to be made unless a Statement of Affairs disclosing all the person's interests in property and liabilities and verified on oath by the person has been filed with the Supreme Court, (d) no provision is to be made unless the Supreme Court is satisfied that the person has taken all reasonable steps to bring all of the person's interests in property within the jurisdiction of the Court, (e) any such provision must specify the particular interest in property out of which the expenses concerned may be met. 5 "Unrestrained property" is defined in s 16A(2) as any interest in property of the person: (a) that is not subject to a restraining order under this Act, or (b) that the Supreme Court is satisfied is not within the Court's jurisdiction (whether or not it is subject to a restraining order under this Act), or (c) that the Supreme Court is satisfied would not be available to satisfy a proceeds assessment order against the person (assuming such an order were to be made against the person). 6 Section 9 of the Act includes the following definition of "illegally acquired property": (1) An interest in property is serious crime derived property if: (a) … (b) … (c) it was wholly or partly acquired using serious crime derived property. (2) … (3) … (4) The meaning of illegally acquired property is ascertained by substituting, in subsections (1)-(3), illegally acquired property for serious crime derived property and illegal activity for serious crime related activity. This means that, in the case of a bank account, if illegally obtained money has been contributed to the fund, the whole of it constitutes illegally acquired property. 7 On the hearing of the application before me, Mr Steirn SC and Mr Jones of counsel appeared for the applicant. Mr Temby QC and Mr Bromwich of counsel appeared for the respondent, NSW Crime Commission (hereafter "the Commission"). 8 A non-publication order pursuant to s 62 of the Act was sought by Mr Steirn SC on the first day of the hearing. I made an order prohibiting publication of the name of the applicant or of any evidence in the present proceedings or of any other matter relating to them which would tend to identify him. Thus, in this judgment, the applicant and members of his family are referred to by initials. 9 In the applicant's case, the affidavits sworn by the applicant and Mr William Stanley Whitby (the applicant's solicitor) were read. The applicant was cross-examined. 10 In the Commission's case, affidavits sworn by the following persons were read: * Senior Constable B I Wyber, a plain clothes officer in the New South Wales Police Service; * Senior Constable D G Kelly, a plain clothes officer in the New South Wales Police Service; * Constable M R O'Sullivan, an officer in the New South Wales Police Service; * Ms T L Williamson; * Mr S Karakira, an interpreter / translator of Arabic - English; * Detective Senior Constable D J Fleming, an officer in the New South Wales Police Service. Of these persons, Detective Fleming gave short oral evidence by leave and was cross-examined. 11 Documents, transcripts of intercepted telephone calls and two video tape recordings were also tendered by the Commission. Extracts from the recordings of telephone conversations and from the video tapes were played over to the court. 12 It was the Commission's case that the court is precluded from making an order as sought by reason of the restrictions prescribed by s 16A(1). In particular, it was submitted that the court would not be satisfied that the applicant cannot meet the expenses concerned out of unrestrained property (which would have to be property outside the jurisdiction since property of the applicant within the jurisdiction is the subject of the restraining order) (para (a)), that the court would be satisfied that the interest in property the subject of the restraining order, in particular the money in the bank accounts, is illegally acquired property (para (b)), and that the court would not be satisfied that the applicant had taken all reasonable steps to bring all of his interests in property within the jurisdiction of the court (para (d)). 13 In relation to paras (a) and (d) of s 16A(1), concerning which the burden of proof was on the applicant, the Commission's case was that the court would not be satisfied that what the applicant said in those respects was true. It was asserted that the applicant was so discredited in the evidence which he gave that the court would not accept anything said by him in his own interests unless corroborated by objectively acceptable evidence. 14 In relation to paragraph (b) of s 16A(1), concerning which the Commission bore the burden of proof, the Commission's case was that the court would be affirmatively satisfied that money constituted by or at least contributed to the funds in the bank account was illegally acquired. 15 The applicant's evidence led in support of the application can be summarised as follows. For a time prior to his arrest, the applicant was living for part of the time at premises in Church Street, Wollongong, and for part of the time in a house property at Mount St Thomas (hereafter "the house"). The house was owned by the applicant's mother who resided at the property spasmodically during that period. The applicant's father had died some time earlier. The only other regular occupant of the house, on the evidence, was a nephew of the applicant, then aged about 13. It appears that other persons who were friends of the applicant and, perhaps, relatives were on these premises overnight from time to time. There was no evidence that any person other than the applicant, his mother and his nephew were regular occupants of the house. 16 In his affidavit in support of his application, the applicant said: 3. The monies that I seek access for my reasonable legal expenses are those currently held in my cash management account number 8114-102941-600 (Australian dollars) with the Arab Bank at Campsie. The balance of that account as at 31 December 2001 was $152,328.28. Annexed hereto and marked with the letter "A" is a copy of my bank account statements for account number 8114-102941-600 for the period 17 February 2000 to 31 December 2001. (Annexure A consisted of a series of monthly statements issued by the Arab Bank in relation to account number 8114-102941-600, from 17 February 2000 to 31 December 2001.) 4. The monies held in my account number 8114-102941-600 is made up substantially of two deposits of money I received from my brother [A B] of Syria. The first such deposit was on or about 22 February 1999 in the sum of US$34,875.00. These monies were sent to the Arab Bank of Australia by Mr Fadel Issa who is a friend of my brother's [A B]. Annexed hereto. Annexed hereto and marked with the letter "B" is a copy of Notice from the Arab Bank Australia confirming receipt of $34,875.00 by the Arab Bank Australia on my behalf. At that time I had a bank account number 8114-102941-457 with the Arab Bank in Australian dollars. Annexure B to the applicant's affidavit was a record of a SWIFT bank-to-bank transfer which gave the following action particulars: Value Date, Currency and Amt Date: 09 February 1999 Currency: USD (US DOLLAR) Amount:#34,875.# Ordering Customer MRS. W. B. Ordering Institution ARAB BANK PLC TRIPOLI LB [Lebanon] Account with Inst – Brch/Off CAMPSIE BRANCH Beneficiary Customer /102941-457 [The applicant's name] Details of Payment FUNDS ARE FROM MR. FADEL ISSA 17 The applicant's affidavit continued: 5. On or about 22 September 1999 I opened up an account in US dollars account number 8114-102941-450 into which the $US34,875.00 was deposited. Annexed hereto and marked with the letter "C" is a copy of my bank account records for the period 22 February 1999 to 13 July 1999. (Annexure C consisted of a series of monthly statements issued by the Arab Bank in relation to account number 8114-102941-450, starting from 22 February 1999, with an opening balance of US$34,875.00, and continuing through to 13 July 1999.) 6. On 13 July 1999 account number 8114-102941-450 was closed and the whole of my account balance was transferred to a US dollars statement account number 8114-102941-451. On or about 17 February 2000 I closed the US dollars statement account 8114-102941-451 and transferred the balance of the funds into an Australian dollar cash management account number 8114-102941-600 referred to in paragraph 3 herein. Annexed hereto and marked with the letter "D" is a copy of account statements for account number 8114-102941-451 for the period 13 July 1999 to 17 February 2000. (Annexure D consisted of a series of monthly statements issued by the Arab Bank in relation to account number 8114-102941-451 from 13 July 1999, with an opening balance of US$35,065.71 from closed account number 8114-102941-450, and continuing through to 17 February 2000.) 7. On or about 24 April 2001 I received a further sum of $75,685.00 (Australian dollars) from my brother [A B] . These monies were sent through my sister [S B] on his behalf. Annexed hereto and marked with the letter "E" is a copy of a transaction report from the Arab Bank confirming the payment of those monies to my Arab Bank account. 18 Annexure E to the applicant's affidavit was a record of a SWIFT bank-to-bank transfer which gave the following action particulars: Value Date, Currency and Amt Date: 24 April 2001 Currency: AUD (AUSTRALIAN DOLLAR) Amount:#74,685.# Ordering Customer BARRI SANAA Ordering Institution BANQUE LIBANO FRANCAISE BEIRUIT LB [Lebanon] Account with Institution-Addr ARAB BANK AUSTRALIA LTD REPAIR BSB SYDNEY Beneficiary Customer /102941600 [The applicant's name] 19 The applicant's affidavit also stated that further, smaller sums of money deposited in Arab Bank account 8114-102941-600 came from a cheque drawn on the applicant's ANZ Bank account number 012-878 2597-28025 ($12,112.62), and money won through gambling ($4,500 and $7.15). Annexure F to the affidavit consisted of the monthly ANZ Bank statements from 1 December 200 to 2 August 2001. A cheque withdrawal for the amount stated was shown. A corresponding deposit of the total amount ($16,619.77) can be seen in the May statement for the Arab Bank account 8114-102941-600 found in Annexure A. 20 Leave was given to the applicant to amend the notice of motion so as to claim separately in relation to each deposit made into the fund ultimately constituted by the bank account at the Arab Bank. In view of the provisions of s 9 of the Act, to which I have referred, the amendment does not allow the bank account to be treated in such a segmented way. 21 The applicant stated that he could not afford to pay his legal representatives without the restrained funds. Mr Whitby, his solicitor, stated that the sum of $7,000 per day would be needed to have a solicitor, and junior and senior counsel at the committal hearing, which he expected to last a week, bringing the total cost to $35,000 for a five day hearing. The grand total sum for the committal hearing plus a trial of thirty days' duration would be $245,000. 22 The evidence led on behalf of the Commission fell, broadly speaking, into two categories. First, there were two discrete episodes which I will refer to as the Sergeant and the Gilchrist episodes. Secondly, there was other evidence which I can broadly describe as contextual. It was submitted on behalf of the Commission that the court would be satisfied on the totality of the evidence that an illicit drug dealing enterprise was carried on at the house for a time immediately prior to the applicant's arrest, being an enterprise in which the applicant was personally involved and which, on the probabilities – whether the applicant was personally involved in the enterprise or not – was the source of the money in the two bank accounts. The Sergeant episode 23 The evidence led by the Commission relating to this episode was as follows. Detective Fleming annexed a statement to his affidavit which he said was true. In that statement, he said that at 2 pm on 7 June 2001, during a surveillance operation, he observed a silver VT Commodore sedan driven by Olivia Sergeant arrive outside the house. The applicant's nephew, W H, left the house and approached the car, had a brief conversation with Ms Sergeant, and then appeared to hand her something. Ms Sergeant then drove off. Senior Constable Fleming stated that he then informed surveillance police of this and of the direction of travel of Ms Sergeant's vehicle. At 2.05 pm, he was informed that Senior Constables Kelly and Codey had stopped Ms Sergeant and conveyed her to Port Kembla Police Station where she was interviewed and issued with a drug diversion notice. Later, on 14 June 2001, he received an analyst's certificate relating to the drug seized from Ms Sergeant showing that the drug was 0.41 g cocaine of 24.5 per cent purity, the diluent being glucose. 24 Transcripts of eight intercepted telephone conversations between the applicant and Ms Sergeant on 7 June 2001 were tendered and became Exhibit 10. 25 Senior Constable Kelly annexed a statement to his affidavit which he said was true. In that statement, he said that, as a result of a radio message from Detective Fleming at 2 pm on 7 June 2001, he and a Senior Constable Codey went to Gladstone Avenue, Coniston, where they saw a silver VT Commodore driven by Olivia Sergeant. The vehicle was travelling at high speed. Senior Constables Kelly and Codey pursued it but were not able to stop the Commodore until Shellharbour Road, Warrawong. They informed Ms Sergeant that she had been stopped for speeding and, after making inquiries on the police radio, informed her that she would be searched. Senior Constable Codey searched her and found $702 in cash and a small, clear plastic pouch containing an off-white powder. Senior Constable Kelly then arrested Ms Sergeant and he and Codey took her to the Port Kembla Police Station. They interviewed Ms Sergeant. In the course of the interview, she admitted that the pouch contained cocaine but refused to say where she had obtained it. She informed them she had asked for 1 g but did not know what weight she had been given; she had paid $200 for it. (As indicated above, there was other evidence that the substance found on Ms Sergeant was cocaine.) 26 The applicant's evidence in relation to that episode was as follows. He said that Olivia Sergeant was someone he had known for a long time. He knew she was a heavy cocaine user and he had tried to get her to stop. On 7 June 2001, she came to the house and he supplied her with a substance he referred to as "midnight blue" in powder form. He stated that "midnight blue" was not an illegal substance, but "stuff you take to make you feel relaxed after taking drugs". 27 The intercepted telephone conversations of which tapes and transcripts were in evidence included conversations on 7 June 2001 between Ms Sergeant and a male person. Detective Fleming deposed that he had spoken to the applicant numerous times prior to obtaining the intercept warrants, both in person and by phone to one of the numbers later intercepted. His affidavit continues: During the course of interception of the mentioned telephone services I reviewed call summaries and listened to a large number of recorded conversations. During the vast majority of the calls I identified the voice of [O B] , the defendant as being the person speaking on the mobile service. During calls that I personally reviewed the defendant [B] used his first name of [O] when asked by the caller identify himself. The defendant also on some occasions was referred to by the caller or referred to himself as [O B]. Also during a number of intercepted calls the defendant gave his address to callers as [street address] , Mount St Thomas. The mobile phones used for the relevant telephone conversations were found at the house during police searches on 16 and 24 August 2001. I do not doubt that the person Ms Sergeant spoke with in the telephone conversations intercepted on 7 June 2001 was the applicant. 28 Of these conversations, a number of them occurred prior to Ms Sergeant's arrival at the house that day. Cocaine was not mentioned. But Ms Sergeant was eager and persistent, phoning several times to see if she could come and pick up what she wanted. The applicant said he would have to get it in. There was a delay. Finally, the applicant said that he had what she wanted. 29 In a conversation after her apprehension, Ms Sergeant told the applicant that she had swallowed the substance he had given her in order to conceal it from the police. She said she was now feeling unwell. The applicant told her she would have to "shit it out". 30 In cross-examination, the applicant did not admit but did not deny that the relevant voice on the tape recordings of the telephone conversations was his. He denied that he had given Ms Sergeant cocaine, and said that the conversations related to the "midnight blue". He said that when he told her she had to "shit it out", he was referring to the plastic bag which the "midnight blue" had been in. 31 The applicant's account of the episode was implausible. A supply of "midnight blue" was inconsistent with the tenor of conversations with Ms Sergeant before her visit. In the recorded conversation after her apprehension, the applicant then took at face value Ms Sergeant's account of having swallowed the substance in order conceal it from the police. But that made no sense if the substance was not an illicit drug. On the other hand, the conversation was consistent with her having obtained from him the cocaine found on her by the police. True it is that she had not swallowed the cocaine, but it is quite plausible that she told the appellant she had done so in order to retain his good will and her source of supply. 32 The terminology used in the conversations was vague but both parties obviously knew what they were talking about. The tenor of the conversations with Ms Sergeant indicated that there had been earlier similar transactions. 33 The evidence in relation to this episode strongly suggested that there was an established relationship of illicit drug supplier and customer between the applicant and Ms Sergeant at the time of the episode and that this was an instance of such supply. The Gilchrist episode 34 The evidence led by the Commission relating to this episode was as follows. Detective Fleming annexed a statement to his affidavit which he said was true. In that statement, he said that, shortly after arranging for interception of the applicant's mobile phone on 16 March 2001, he became aware that there was an operation in progress at Tumut Police Station under the direction of a Detective Senior Constable Jason Hyatt in relation to suspect James Frederick Gilchrist. Mr Gilchrist was allegedly travelling to the Wollongong area to purchase drugs. At 12.40 pm on 7 June 2001, Detective Fleming, with Detective Sergeant Harbin, saw a silver Commodore Club Sport driven by Mr Gilchrist arrive at the house. Mr Gilchrist entered the house. Detective Fleming and Detective Harbin then had a radio conversation with Hyatt. About ten minutes later, a Danny Ayoub arrived at the house in another car. He too entered the house and just before 1 pm, he and Mr Gilchrist left the house in Mr Ayoub's car. Just after 1.20 pm, they returned, Mr Gilchrist left the vehicle and entered the house again. He then left again in his own car at 1.54 pm, travelling west. At 6.30 that evening, Detective Hyatt telephoned Detective Fleming to inform him that the vehicle driven by Mr Gilchrist had been stopped by police near Yass, and a Tammy Lee Williamson, a juvenile, had been found in possession of 100 orange tablets which the police believed to be ecstasy. At 7.30 that same evening, Detective Fleming was contacted by the police telephone intercept unit and was played a call between Mr Gilchrist and the applicant recorded at 7.13 pm. He later had this call transcribed, along with two earlier calls between Mr Gilchrist and the applicant prior to 12.40 pm. The transcripts were tendered in court and became Exhibit 11. The 7.13 pm call contains the following exchange: V1 [Applicant]: Does she [ie Tammy Lee Williamson] know where I am? V2 [Gilchrist]: No, no-one does. No. V1: That's good mate. V2: No, I, I you're all covered a hundred per cent… V1: Yeah, and they shouldn't know my name… … V1: Yeah well make sure no one (unintelligible) you are. V2: Yeah, no, no, no. … V2: No one knows, no one knows anything about… V1: Oh, okay that's good man. Detective Fleming identified the voice of the appellant on these tapes on substantially the same basis as he identified the appellant's voice in the Sergeant tapes. 35 Constable Marcus Ryan O'Sullivan annexed a statement to his affidavit which he said was true. In that statement, he said that, at 5.30 pm on 7 June 2001, he stopped a VT Commodore driven by an Anthony Belt, in which Tammy Lee Williamson and James Gilchrist were passengers, for a random breath test. After making enquiries on police radio, he prevented Mr Gilchrist from leaving the scene (ostensibly to go to the toilet); then, after another police radio conversation, he asked all the occupants to leave the car and move to the side of the road. Senior Constable Smith then arrived and Constable O'Sullivan questioned Mr Gilchrist, then searched the car for drugs. He found $2,000 in $50 notes in the middle console. Then Detective Senior Constable Chaplin and Senior Constable Kennedy arrived, and Detective Chaplin helped Constable O'Sullivan search the car. Constable O'Sullivan then searched Mr Gilchrist. Nothing was found. He drove Mr Gilchrist to Yass Police Station. At 8.45 pm he returned the money to Mr Belt. Then he drove Ms Williamson and exhibit number C564658 hundred (presumably, the orange tablets) to Goulburn Police Station. Ms Williamson was placed in custody and Constable Smith handed Sergeant Gray exhibit number C564658 in drug bag B112859 to be placed in the drug safe. 36 Tammy Lee Williamson annexed a statement to her affidavit which she said was true. In that statement, she said that she lived in Tumut and had known Mr Gilchrist, or "Fuchsey", for three years and had been "scoring drugs off him" throughout that time. At first it was marijuana, but from about February 2001, she started "scoring goey" from him. (I take "goey" to be another illicit drug.) About 7.30 am on 7 June 2001, she and Mr Gilchrist left Tumut by car for Wollongong with Anthony Belt to get some drugs. On the way home, Mr Gilchrist was in the back seat separating the tablets into two plastic bags, when they were pulled over by the police at Yass for a random breath test. Mr Belt put the tablets down his pants but Mr Gilchrist told him to give it to her instead. Mr Belt gave her the tablets and Mr Gilchrist told her to "Put them up ya". She tried to put them in her vagina but they would not fit. She put them in her underpants. She was searched and the tablets were found. At Yass Police Station she was charged with possession of the tablets. 37 The applicant's evidence in relation to that episode was as follows. He said that he had known Mr Gilchrist for several years, and that Mr Gilchrist was the uncle of his son. Mr Gilchrist came to the house on 7 June 2001 and went with Mr Ayoub to see about a jet ski. Later they returned and, some time after that, Mr Gilchrist left. The applicant had no memory of Mr Gilchrist calling him after being stopped by police. He agreed that the audio tapes played to the court could have been conversations between him and Mr Gilchrist, but he was not sure, as he had never heard his voice played back to him. The applicant denied that the recording of the telephone call made at 7.13 pm on 7 June 2001 was a conversation between himself and Mr Gilchrist. 38 I do not doubt that the recorded telephone conversations relating to this episode were between the applicant Mr Gilchrist. 39 The evidence in relation to this episode strongly suggested that there was an established relationship of illicit drug supplier and customer between the applicant and Mr Gilchrist and that this was an instance of such supply. Contextual evidence 40 Evidence adduced by the Commission at the hearing shows that the applicant has resided in Australia since July 1987. Before his arrest, he resided in a Department of Housing unit in Church Street, Wollongong, being the third Department of Housing unit he has lived in. He received social security benefits on and off for some years until December 2000. He worked part-time in a furniture and electrical business owned by his brother, receiving about $116 per week. 41 Apart from the applicant's mother (the registered proprietor of the house) and the applicant's brother who owns the furniture and electrical business mentioned above, another brother and two sisters also reside in Australia. Another brother, [A B] (the person whom the applicant alleged sent him the money which was found in his Arab Bank account), lives in Syria. Notwithstanding these relationships, under wills made in 1997 by the applicant's mother and late father, the applicant was named as executor and sole beneficiary. Mr Temby QC for the Commission submitted that this demonstrated the primacy of the applicant within the family after his father's death and would account for money from an illicit drug dealing enterprise, carried on at the house, being in the applicant's bank account even if he was not directly involved in the enterprise. 42 Detective Fleming gave oral evidence by leave about the nature of the telephone traffic to and from the mobile phones found in the house. He said that he had listened to in excess of 8,000 telephone calls over a period of about five months, and that about 90 to 95 per cent of them were incoming calls. Mr Temby QC for the Commission submitted that this indicated that a substantial business enterprise was being carried on at the house involving the supply of a commodity which, with other evidence, should be found to have been illicit drugs. 43 On 16 August 2001, the date of the applicant's arrest and again on 24 August 2001, the house was searched by the police and items of property were seized. The property seized by the police included the following: Black leather shoulder bag containing a Bauer S205XL video camera Black square briefcase containing personal papers, including a one-page document headed "E-Z Test" (apparently information about a commercially available kit to test for the presence of ecstasy, a prohibited drug under the Drug Misuse and Trafficking Act 1985, Sch.1) Six mobile telephones Australian Passport K2046945 in the name of the applicant Australian Passport L9738901 in the name of D P Two Pacific Sky travel documents Piece of paper with numbers and the word "meth" written on it several times $1700 cash (34 x $50 notes) Small see-through vial of blue liquid $29,140 cash (various denominations) Two shoe boxes of 13 photo packets each 12 gauge double barrel shotgun, serial number 108150 Marlin 30/30 rifle, serial number 23075335 Laurona 12 gauge double barrel shotgun, serial number 152442 Aitor OSO Negro knife Five boxes of ammunition 21 shotgun shells Small plastic bag of 1.3 g white crystal substance Notepad containing written figures Brown box containing: o two small plastic bags of 0.2 g white powder each o one plastic bag of 2 g green vegetable matter o one plastic bag of two green tablets 0.6 g in total Black briefcase containing: o personal papers, including: o two page invoice from the Test Tube Factory in the applicant's name o piece of paper with handwriting on both sides headed "MDA pg1485 Tenamfetamine" o nine page photocopy document titled "MARTINDALE The Extra Pharmacopoeia" (this document related to pseudoephedrine, a precursor used in the manufacture of certain drugs prohibited under the Drug Misuse and Trafficking Act 1985, Sch 1) o five page internet download titled "Making LSD in your own kitchen" (LSD is a prohibited drug under the Drug Misuse and Trafficking Act 1985, Sch 1) o 13 page internet download titled "Manufacture of Ecstasy" (Ecstasy is a prohibited drug under the Drug Misuse and Trafficking Act 1985, Sch 1) o five page copy document titled "Methamphetamines - a growing epidemic?" (Methamphetamine is a prohibited drug under the Drug Misuse and Trafficking Act 1985, Sch 1) o two page American Express AMP statement o phone cards o six small videotapes o two large videotapes o nine bank books Brown leather wallet containing: o $167.20 cash; o licence in the name of Michael Luciano 17 packets of Sudafed (Sudafed contains pseudoephedrine which is a precursor used in the manufacture of several drugs prohibited under the Drug Misuse and Trafficking Act 1985, Sch 1) Three packets of Cold & Flu tablets (these tablets also contain pseudoephedrine) Piece of plastic wrap containing 0.2 g green powder Set of Tanika electronic scales Plastic cylinder containing white crystal substance, 42 g in total Box labelled "Andriol" Box labelled "Drive Injection" Box labelled "Spectriol Steroids" Set of white portion powder scales Four glass beakers Numerous plastic bags Jar of white powder Spoon containing white powder 44 Detective Fleming, in cross-examination, revealed that some of the documents found in the briefcases had been tested for fingerprints, and had been found to have the applicant's fingerprints on them, but he did not specify the documents to which he was referring. 45 The following items of seized property were tendered by the Commission at the hearing and became exhibits: Item Exhibit One-page document headed "E-Z Test" 8 Piece of paper with numbers and the word "meth" written on it several times 12 Two page invoice from the Test Tube Factory in the applicant's name 13 Piece of paper with handwriting on both sides headed "MDA pg1485 Tenamfetamine" 14 Nine page photocopy document titled "MARTINDALE The Extra Pharmacopoeia" 15 Five page internet download titled "Making LSD in your own kitchen" 16 13 page internet download titled "Manufacture of Ecstasy" 17 Five page copy document titled "Methamphetamines - a growing epidemic?" 18 Two page American Express AMP statement 9 A copy of one of the videotapes found in the black briefcase 7 46 The applicant denied knowing that sensitive electronic scales were found at the house. He admitted knowing of the mobile phones and guns. He said that he only became aware of the presence of the Sudafed and Cold and Flu tablets after being told by the police. He said he only became aware that they could be used in the manufacture of prohibited drugs after the police told him so. 47 The videotape which became Exhibit 7 was played to the Court. This was one of the tapes found in the briefcase during the police search of the house. There were several distinct segments, separated by periods of blank tape. Two segments showed a press. To my ear, the voice in one of the segments was the applicant's voice or very similar to it. The speech recorded on the tape indicated that the speaker intended to use the press for making tablets from some substance in powder form. The applicant denied having seen the machine before, denied knowing what it was for, and denied that the voice on the tape was his. No innocent explanation was offered for the press being depicted on the videotape. 48 Another segment of the video tape showed a room with a bed. On the bed was a large quantity of money in various denominations of Australian banknotes, I would estimate something in excess of $100,000. The next segment showed apparently the same room and bed, without the money. The applicant identified the room and bed as "looking like" a bed and bedroom at the house. In his closing address, Mr Steirn SC for the applicant accepted – very properly – that, on the balance of probabilities, the money was on a bed in the house. 49 The final segment from the video tape was of a group of young people. A girl's voice could be heard saying "Hey, [O]!" The applicant identified some of the people as his friends. He said he was there at that time. He said he could not remember operating the video camera but he might have done. This was further evidence linking the applicant with the videotape found in the briefcase at the house. 50 As regards the other exhibits, the applicant's evidence was as follows: * He said he did not know where Exhibit 12 (the piece of paper with numbers and the word "meth" written on it several times) came from, that the handwriting on it was not his. * He said someone had given him Exhibit 8 (the document headed "E-Z Test" which apparently described a commercially available test kit for the drug ecstasy). * He said he had never seen Exhibit 13 (the invoice from the Test Tube Factory in the applicant's name) before. * He said he had never seen Exhibit 14 (the piece of paper with handwriting on both sides headed "MDA pg1485 Tenamfetamine") before. * He said he had never seen Exhibit 15 (the photocopy document titled "MARTINDALE The Extra Pharmacopoeia", relating to pseudoephedrine) before. * He denied having seen Exhibit 16 (the internet download titled "Making LSD in your own kitchen") before, and further denied knowing what "LSD" was. * He denied having seen Exhibit 17 (the internet download titled "Manufacture of Ecstasy") before, although he admitted having used ecstasy. * He did not specifically deny having seen Exhibit 18 (the copy document titled "Methamphetamines - a growing epidemic?"), but he said that the briefcases found during the police searches only contained "family documents". I take this to imply that he had not seen the document before. He admitted having used methamphetamine. 51 Towards the end of the cross-examination of the applicant, Mr Temby QC put the following questions. Q. Mr [B] I suggest to you the truth is that you have been buying and selling illegal drugs for the past several years. A. Is that what you think? Q. What do you say to that? A. No. Q. I suggest to you that you had many drug customers of whom Olivia Sergeant and James Gilchrist are only two, what do you say to that? A. No. Q. And I suggest to you that you arranged for moneys which you obtained from your drug dealing to go out of Australia so that they could be sent back to you in Australia. A. No I didn't. Q. And the money on the bed that we saw in the video, it's yours, isn't it? A. I've never seen it before. Q. Whose is it? A. I don't know. The applicant's credit 52 This is material for two principal reasons. First, there is the question of what weight the court would give to the applicant's denial of any illicit drug enterprise being carried on at the house. Secondly, there is the need for the applicant to satisfy the court affirmatively of matters which depend upon his sworn evidence as necessary conditions for the making of an order as sought. 53 As to the applicant's credit, the Commission made the following submissions. The evidence of the Sergeant episode was consistent with a relationship between the applicant and Ms Sergeant of drug supplier and drug user. Affidavit evidence of police officers Fleming and Kelly showed that, on 7 June 2001, Olivia Sergeant had driven to the house, had been supplied with something by an occupant of the house, was then stopped and searched and was found to possess an amount of cocaine. Her admission that the substance was cocaine, and that she had paid $200 for it, was against interests and thus reliable. Telephone intercept evidence confirmed that she had rung the applicant and agreed to pick something up before arriving at the house, and after being arrested, she had rung the applicant to tell him she had swallowed something rather than have the police find it, and it had made her sick. The applicant's response was to tell her she had to "shit it out". The Commission's submission was the applicant's suggestion that he was referring to the plastic bag was "silly", he had clearly supplied her with an illegal substance, and he was therefore lying under oath. This, the Commission submitted, meant that he was a witness of low credibility and the Court should not accept any of his evidence without corroboration. 54 Similarly, the Commission submitted that, in relation to the Gilchrist episode, affidavit evidence of police officers Fleming and Ryan confirm that a car containing Gilchrist, Belt and Williamson was stopped on the Hume Highway near Yass. Gilchrist had earlier been seen at the house. Williamson was found with the ecstasy tablets on her person. Telephone intercept evidence showed that Gilchrist and the applicant had had conversations before Gilchrist had arrived at the house and after the car had been stopped. Gilchrist had told the applicant that no-one knew who the applicant was. The applicant's only response was to deny that he took part in this conversation. Again, the Commission argues that this shows that he lied under oath and that, therefore, the Court would not accept anything he said without corroboration. 55 In regard to the contextual evidence, the Commission submitted, again, that the applicant had no credibility. The applicant's fingerprints were found on certain documents which he claimed never to have seen. The Commission again argued that this showed he lied under oath, and his evidence was not to be believed without corroboration. 56 I have no confidence in the applicant's credibility. Primary finding 57 There is the issue as to whether an illicit drug dealing enterprise in which the applicant was involved was being carried out at the Ocean St house for some time prior to the applicant's arrest. 58 Evidence adduced by the Commissioner strongly suggests that there was. The applicant admits that there is a strong Crown case. 59 This matter, although involving evidence of criminal activity, is a civil action brought in the Common Law Division of this Court, according to the terms of s 5 of the Act. As Dixon J made clear in Briginshaw v Briginshaw (1938) 60 CLR 336, except in criminal matters, it is enough if an allegation is proved to the "reasonable satisfaction of the tribunal" (at 362). He then went on to say: But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. … This does not mean that some standard of persuasion is fixed intermediate between the satisfaction beyond reasonable doubt required upon a criminal inquest and the reasonable satisfaction which in a civil issue may, not must, be based on a preponderance of probability. It means that the nature of the issue necessarily affects the process by which reasonable satisfaction is attained. 60 Notwithstanding that principle, the evidence of the Sergeant episode and of the Gilchrist episode and of the contextual matters to which I have referred leaves me in no doubt that an illicit drug dealing enterprise, involving the applicant, was carried on at the house. I find that this was so and that the applicant's denial of that on oath was knowingly false. 61 On the evidence, the enterprise carried on at the house was likely to have been highly remunerative. The applicant had no other means of accumulating a large sum of money. Absent explanation, I would infer that the money in the bank account came from the illicit drug dealing enterprise in which the applicant was involved. The fact that a substantial part of the funds in the bank account was sent from overseas is not inconsistent with that, since money could have been taken out of Australia in cash by the applicant, by relatives or by associates on one or more of their trips to the Middle East and returned to Australia under the guise of a legitimate transaction. 62 The applicant's case is that the transfers from Lebanon were pursuant to a legitimate transaction, namely, a loan by the applicant's brother of moneys from the brother's his own resources. There was no explanation as to why the transfers were made through intermediaries in that event. 63 More importantly, there was no evidence from the applicant's brother or the intermediaries that the money sent to Australia was from him, and from his own resources. The only explanation offered for the absence of such evidence was cost. That is not a satisfactory explanation for the absence of a short affidavit, albeit from overseas, in the context of the other legal work carried out on behalf of the applicant in the present proceedings. 64 It was submitted on behalf of the applicant that it was for the Commission to adduce evidence that the money did not come from the applicant's brother; or, at least, that it was as much for the Commission to adduce evidence on this topic as it was for the applicant. True it is that the burden of proof of an illicit source is on the Commission, but, there has been a shift of the evidentiary burden of proof in view of the evidence to which I have referred. It was for the applicant to dispel the implication which otherwise arose from the evidence that the moneys in the bank account came from an illicit drug dealing enterprise in which the applicant was involved. 65 Burden of proof aside, the persons involved in the transmission of the funds were "in the applicant's camp" per Hunt CJ at CL in Sandford (1994) 72 A Crim R 160 at 185. If they were to be called at all, it was the applicant who could reasonably be expected to call them. On the applicant's account of events, one of those persons was his brother and the others were persons known to him and / or his brother. 66 By contrast, it was not shown that it would have been practicable for the Commission to investigate the source of the funds. There was nothing to suggest that the transmitting bank would have revealed the whereabouts of the parties who deposited the funds in Lebanon and who ordered the transfers, nor that the Commission could, by servants or agents, have readily located and interviewed the intermediaries in Lebanon and the applicant's brother in Syria. It was not to be expected that the Commission would be in a position to adduce direct evidence that the money was taken overseas and returned under the guise of a legitimate transaction if that were the fact. 67 The principle in Jones v Dunkel (1959) 101 CLR 298 runs against the applicant rather than the Commission in the circumstances. The absence of evidence authenticating the applicant's explanation for having such a large sum of money in his bank account enables the court to give greater weight to the inference that the true source of the money was the illicit drug dealing enterprise carried on at the house for a time prior to the applicant's arrest. 68 I am persuaded that, substantially, the funds in the applicant's bank account were the product of an illicit drug dealing operation, and were, accordingly, illegally acquired property within the meaning of s 16A(1)(b) of the Act. An order as sought is accordingly proscribed by the subsection. 69 It is unnecessary in these circumstances to deal with the other ways in which the Commission says that an order in favour of the applicant is proscribed by s 16A(1). 70 For these reasons, the application is refused with costs. -o0o- Last Modified: 07/19/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.