New South Wales Supreme Court CITATION : DIRECTOR OF PUBLIC PROSECUTIONS v. DIEZ [2003] NSWSC 238 HEARING DATE(S) : 2/12/02; 4/12/02; 5/12/02; 6/12/02; 9/12/02 JUDGMENT DATE : 31 March 2003 JURISDICTION: Common Law JUDGMENT OF : Greg James J at 1 DECISION : Orders in accordance with short minutes varying restraining order to exclude defendant's property and declaring s.30 not to apply to that property. CATCHWORDS : Applications under s.48(3)(g) and s.48(4) of Proceeds of Crime Act granted - proceeds of crime - application to avoid forfeiture - monies expended on family home - monies obtained from overseas - whether derived from unlawful activity - not derived from unlawful activity and was lawfully acquired - liability to income tax - no report under Financial Transactions Reports Act - hardship - public interest that order not be made. LEGISLATION CITED : Proceeds of Crime Act 1987 (Cth) Jeffrey v. DPP (1992) 58 A. Crim. R. 310 Jeffrey v. DPP (1995) 79 A. Crim. R. 514 Brauer v. DPP (1989) 45 A. Crim. R. 109 Muschinski v. Dodds (1986) 160 CLR 583 CASES CITED : Narita v. DPP (CCA, unreported 7 March 1997) DPP v. Blake (1992) 60 A. Crim. R. 257 DPP v. Kovacs (Hansen, J., unreported, Victorian Supreme Court, 22 June 1995) Taylor v. Attorney General (1991) 53 A. Crim. R. 166 DPP (WA) v. Farley (unreported, Heenan, J. 17 September 1996) Regina v. Wealand [2002] NSWCCA 471 PARTIES : COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS v. MAXIMILLIANO DIEZ FILE NUMBER(S) : SC No. 10408 of 2000 COUNSEL : Plaintiff: K. Chapple Defendant: G. Jones SOLICITORS : Plaintiff: Commonwealth DPP Defendant: Freemans Solicitors IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION GREG JAMES, J. MONDAY 31 MARCH 2003 No. 10408 of 2000 COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTION v. MAXIMILLIANO DIEZ JUDGMENT 1 HIS HONOUR: At the end of a protracted hearing whilst sitting as duty judge at the end of last year, I made orders as sought by the applicant/defendant, Maximilliano Diez, under the Proceeds of Crime Act 1987 (Cth) (the Act) in respect of his interest in property. That interest was his joint tenancy in his family home. The orders were made under s.48(3)(g) and s.48(4) of the Act and had the effect of preventing a forfeiture of that property by the operation of s.30 of that Act, which, in the absence of such orders as I made, provides for an automatic forfeiture to the Commonwealth at the expiration of a period from the defendant's conviction of six months or an extended nine months period, provided for by s.30A. That latter extension applied to this case. 2 I held that I was satisfied the applicant's interest in property was not derived from unlawful activity and was lawfully acquired. I also held that it was in the public interest that the defendant's interest in his property should be excluded from the restraining order and hence from forfeiture, having regard to the consequences and the hardship to the defendant's wife and family that would be occasioned by forfeiture, even taking into account the seriousness of the offence. I held this particularly since I considered the property was not unlawfully acquired or derived from unlawful activity since, even if a proportion of the monies expended on the property, on the mortgage or on outgoings was not shown to be not derived from unlawful activity, that proportion was not of substantial significance. 3 I reserved the question of costs which is still to be determined. 4 Notwithstanding the volume of the evidentiary material and the complexity of the submissions, because of the imminence of the expiration of the time and the automatic effect of the s.30 mechanism, it became necessary the matter be disposed of as quickly as possible and before the end of term. Therefore the parties were agreed that I should make the relevant orders at once, providing these reasons later. Short minutes were provided to represent the effect of my views and orders made accordingly. I record my gratitude to counsel for their efficient and skilful conduct of the matter under the pressure of such urgency, even recognising that these matters often have to be dealt with in similar circumstances. I note the valuable written submissions with which I was provided and which I have placed on the file. 5 Counsel, having regard to the urgency of the matter and that the hearing, whilst it had covered a great deal of written evidence, had a limited scope for oral evidence, took into account that I expressed an adverse view as to the general credit of Mr. Diez wherever he was not corroborated, but that there was corroboration for much of his evidence. It was not regarded as necessary to proceed further with the oral evidence of the applicant. Although much of the corroborative material from overseas and in Spanish was objected to, having regard to the principles in Jeffrey v. Director of Public Prosecution (1992) 58 A. Crim. R. 310, and on appeal at (1995) 79 A. Crim. R. 514 and Brauer v. Director of Public Prosecutions (1989) 45 A. Crim. R. 109 to which I will later refer, since it seemed to me the material was the best that could be done in the circumstances, the plaintiff had the facilities and resources to deal with it and that its effect was sufficiently proved by the other evidence, I considered I could rely on it. 6 The matter proceeded on the affidavits and documents. 7 At the conclusion of the hearing, I intimated to counsel the course I proposed to take, which was to find in favour of the defendant on both issues. Particularly because the defendant would not himself be deriving any benefit, whether financial or otherwise, from the orders, I considered it would not be in the public interest considering all the circumstances to deprive his family of the family home, it being a home of limited value such that if sold the 50% entitlement of the joint owner wife would appear insufficient to purchase or fund in the Sydney market for any substantial time, an alternative family home for herself and her three daughters as long as they might remain with her. Absent an order the family might eventually be thrown on public housing resources. Of course, the wife, had the applicant died, by reason of the right of survivorship inherent in the joint tenancy, would have acquired the whole estate including the property now liable for forfeiture. A forfeiture would have the gravest punitive consequences for the wife and daughters, notwithstanding no offence by them. I have not disregarded the seriousness of the offence, but I considered, when applying s.48(3)(g), an order should be made and particularly where, as here, I was satisfied of the matters required by s.48(4). 8 I concluded that the property was not derived directly or indirectly substantially by any person from unlawful activity, and I concluded that the defendant's interest in that property was lawfully acquired. 9 These are my further reasons for so concluding. 10 Mr. Diez, whose interests in property had been the subject of a restraining order made under the Act, on 22 February 2000, had been convicted on 13 September 2001 of an offence under s.233B of the Customs Act 1901, a serious offence under the Act. He has been sentenced to life imprisonment. It is not suggested that the property the subject of this application was concerned in that or any earlier of Mr. Diez's offences. It is not "tainted" property. He made application under s.48(3) and s.48(4). Applications were also made by his wife and daughters. As the restraining order related to his property and having regard to the provisions of the Act it was eventually common ground they could not succeed. 11 Although other property was affected by the restraining order, at this hearing it was possible to confine the dispute to the defendant/applicant's interest as joint tenant with his wife, subject, until its discharge in 1997, to a mortgage, in land on which is a renovated house at Lansvale on the flood plain (the property). The house and land are said to be worth about $270,000 to $280,000. It was not suggested that house and land or the mortgage was originally acquired unlawfully or used in any offence but issue was raised as to whether the property was derived from unlawful activity on the basis that the monies used to pay for renovations and to pay mortgage payments and outgoings had been so derived. It was submitted there was no such hardship consequent on a forfeiture as warranted an order preventing that occurring. 12 As well as the applications for orders under s.48(3)(g) and 48(4) of the Act, application had also been made for orders which could be made only post-forfeiture. Having regard to the conclusion to which I came, I need not consider these. 13 Section 48(4) provides:- "Where:- (a) a person (in this subjection called the 'defendant') has been convicted of, or has been charged or is about to be charged with , a serious offence; (b) a court, in reliance on the conviction, charging or proposed charging, makes a restraining order against property; (c) the defendant has an interest in the property; (d) the defendant applies to the court for a declaration under this subjection in relation to the interest; and (e) the court is satisfied that:- (i) the property was not used in, or in connection with, any unlawful activity and was not derived, directly or indirectly, by any person from any unlawful activity; and (ii) the defendant's interest in the property was lawfully acquired; the court may, by order, declare that the restraining order, to the extent to which it relates to the property, shall be disregarded for the purposes of s.30." 14 Pursuant to s.48(3)(g) the court is required to grant an application to exclude the defendant's interest from the restraining order in the circumstances set out in s.48(3)(g):- "In any case - the court is satisfied that it is in the public interest to do so having regard to all the circumstances including:- (i) any financial hardship or other consequence of the interest remaining subject to the order; (ii) the seriousness of the offence; and (iii) the likelihood that the interest will be:- (A) subject to a forfeiture order; (B) subject to s.30; or (C) required to satisfy a pecuniary penalty order." 15 Section 30 provides:- "(1) If:- (a) a person (in this subjection called the 'defendant') is convicted of a serious offence (otherwise than by reason of paragraph 5(1)(d)); (b) before the commencement of the Proceeds of Crime Act 2002, a restraining order is or was granted in respect of property (whether property of the defendant or of some other person( in reliance on:- (i) the defendant's conviction of that offence; or (ii) the charging or proposed charging of the defendant with that offence or a related offence; (c) the restraining order, to the extent to which it relates to the property, is not the subject of a declaration under s.48(4); and (d) the restraining order is in force at the end of:- (i) of the period of six months commencing on the day of the conviction; (ii) if an order under s.30A is in force at the end of that period – the end of the extended period; the property is, under this subjection, forfeited to the Commonwealth at the end of that period, or that extended period, as the case may be. 16 It was common ground that only the likelihood that the interest would be subject to s.30 of the three possibilities envisaged by s.48(3)(g) was possibly applicable. I concluded that it undoubtedly would apply unless an order under s.48(3)(g) was made or unless a declaration was made pursuant to s.48(4). 17 The mortgage on the property, although now discharged, had on occasion been extended. The defendant had repaid it for some years from family funds, the bulk of which plainly came from lawful sources and were mainly contributed by him, although the other members of the family had worked and contributed to the family resources from which outgoings on the property were met. The house had been improved from time to time. There was evidence of the improvements, their cost and the provenance of the monies used to pay for them. There was evidence of the family's expenditure including on a number of cars. 18 The monies provided by the defendant for the house and mortgage included monies relevantly from overseas. It was particularly in respect of those monies that the DPP raised an issue of unlawful acquisition and hence derivation. 19 As the property is a family home for the wife and her three daughters aged, at the time of trial, 21, 18 and 16, and was of the value to which I have referred it becomes apparent that the question of there being any forfeiture might work considerable financial hardship or other consequence. Thus the proper construction of those words as used in s.48(3)(g) assumes real significance in the matter. So also did the issues under s.48(4) of whether the property had been "derived, directly or indirectly by any person from any unlawful activity" since it was submitted on behalf of the DPP, that the money spent on the house and mortgage was so derived or was at least not shown not to be so derived; and whether the "the defendant's interest in the property was lawfully acquired". These issues were crucial in the light of the principles expressed by Hunt, CJ. at CL. in Jeffrey (supra) and on appeal in Jeffrey v. Director of Public Prosecutions (1995) 79 A. Crim. R. 514. It was not, however, suggested that the original acquisition was so to be characterised and so far as the use of the term "derived" refers to the original acquisition there can be no doubt the property was neither acquired nor derived directly or indirectly from any unlawful activity. 20 Detailed and voluminous evidence supporting lawful acquisition and denying derivation from unlawful activity was given both orally and in the affidavits by the applicant and his wife. It was supported by affidavits of members of his family in Australia and Columbia, voluminous financial records in English and Spanish and by the statements of numerous persons who could not be cross-examined because of the limited time and the fact that they were overseas. All of that evidence attempted to cover the whole of the applicant's and his family's financial circumstances in detail for many years and it was submitted it showed positively no substantial part of the monies of the applicant had been derived unlawfully. I am satisfied a genuine attempt was made to set out income and expenditure as exhaustively as possible. 21 The contended effect of that evidence was conveniently set out in the defendant's chronology. 22 I am satisfied on the balance of probabilities of the source of the sums as referred to therein. Although no concession was made, it was not so much the source that was challenged as the lawful character of the relevant activity from which the money came. Although it was submitted these transactions were at least suspicious, I considered the sworn oral and affidavit evidence and other material tendered sufficiently satisfies the applicant's burden, applying the principles in Jeffrey (supra) and Brauer (supra). 23 When considered the contributions the impugned monies made to the value of the applicant's interest in the house, it was necessary to consider what proportion of that value might have been derived from monies not shown themselves to be lawfully acquired. It was also necessary to distinguish carefully between the defendant's interest as joint tenant in the fee simple and the financial advantage gained by payment off of the mortgage or the payment of moneys for the improvement of the property; see Muschinski v. Dodds (1986) 160 CLR 583. The property affected by the restraining order was the estate in the land. After considering all the financial evidence I concluded that I was satisfied that the property had had not been derived to any substantial extent from any unlawful activity. Nor was it not lawfully acquired applying these principles. But since a wider view said to be based on the views of Hunt, CJ. at CL. and the Court of Criminal Appeal in Jeffrey (supra) was said to be applicable to the construction of the provisions the evidence and submissions in the matter turned to a wider factual field. I shall now turn to this. 24 The applicant's written submissions, paragraphs one to eight, set out circumstances which, in my view, were established by the evidence and also pose the relevant issues of fact. 1. About February 1978, Max Diez migrated to Australia. About September 1978, Martha Diez migrated to Australia. They have three children, Karina, aged 21 years; Sandra, aged 18 years and Vanessa, aged 16 years. Martha and the three children reside in the family home located at 35 Knight Street, Lansvale. They are Australian citizens. 2. Max and Martha purchased the Lansvale property about February 1981 for $49,000. To fund the purchase they borrowed $45,000 from the United Permanent Building Society and contributed $4,000 from their savings. Over the years they have refinanced this home on various occasions to provide working capital. 3. The lengthy employment of history of Max and Martha is recorded in their affidavits and summarised in the chronology. The daughter Karina is now working and contributes to the cost of her living whilst at home. 4. Max has supplemented his income in Australia, from monies received overseas as either gifts from family or money from family investments overseas. Furthermore, on occasions, Max has sold jewellery purchased overseas, on what appears to be an ad hoc basis in Australia, for a modest profit on each occasion. 5. Martha has supplemented her income through her hobby of cooking South American food, a hobby that she is hoping to turn into a formal business venture. 6. Both Max and Martha have benefited from other cash windfalls such as insurance payouts and workers compensation payments. Their existence appears modest to say the least. The Lansvale property is valued at about $270,000, which includes renovation made in 1999 for approximately $90,000. These renovations were funded from monies received by Max from his father's estate. His father passed away in October 1999. 7. Max has been in custody on two occasions, about 1994 for two years and nine months for drug offences and in 2001 for life for further drug offences. It is not asserted by the Crown that Max profited from either of these offences and no proceedings under s.26 of the Proceeds of Crime Act 1987 have ever been commenced. 8. Whilst Max was in custody, his family's existence appears even more modest, even to such an extent that reliance was had upon family, friends and charitable organisations to support the family. 25 Paragraph 10 of those submissions poses the issue said to arise from asserted unexplained income. "10. On 22 February 2000 all property of Max Diez was restrained." 26 The submissions of the plaintiff focused on matters raising the relevant issues. They are as follows in paragraphs four to nine:- 4. The evidence discloses that the defendant's interest in real property located at 35 Knight Street, Lansvale, the family home was acquired with his wife subject to a mortgage in the early 1980's. Over some years the mortgage was increased in value until it was eventually discharged in 1997. Shortly before its discharge, three large payments totalling $55,783.80 were made on the mortgage from Columbia, said to be from the sale of a property owned by Mr. Diez in that country. 5. In 1999, Mr. Diez returned from Columbia with US$55,000 in cash and did not make any declaration of that amount of money on entering Australia. The majority of that money was applied to house renovations on the property at Lansvale. There area series of other renovations on the property at Lansvale between 1996 totalling in excess of $40,000. 6. Motor vehicles were purchased between 1997 and 1999, in particular two Pajero vehicles involving partial cash payments and repayments of loans in short periods. 7. Between about 1990 and 2000, following trips to Columbia, Mr. Diez brought back to Australia and sold jewellery at a minimum profit of $25,000 which was not declared on his income tax returns. 8. From 1989 to 1995 he received rent from a property in San Pablo, Columbia totalling about US$7,600 which was not disclosed on his income tax returns. Between May 1996 and August 1998, he owned a property Guayabal, Columbia which sold in August 1998 for US$55,000. The ownership of that property was not disclosed on his income tax returns. 9. From about 1995 to 1999, the defendant and his wife had negative cash flows into their household. These figures are established taken into account all amounts of money claimed to have been provided to the defendant as a result of sales of jewellery and gifts and other sources, some amounts for which there appears to be no evidence." 27 In particular, the possible offences of failing to declare and pay income tax and under s.15 of the Financial Transactions Reporting Act 1988 were posited. 28 The focus was on the US$55,000 inheritance which is said to provide the funds for the renovations and which was brought into Australia without a report, on the proceeds of sale of the Columbia property and on the asserted taxable nature of other funds said to be income. It was further put that it was all too suspicious for me to be requisitely satisfied. 29 The applicant, as I have said, provided by way of exhibits, banking records, both as to the applicant's activities in Australia and as to the provenance of the monies obtained by him or brought by him from Columbia. There were also provided the financial records of the family. 30 It was common ground that under the provisions of the Act it was not possible for me, having regard to s.48(3) and s.48(4) to attempt to re-craft the interests in property, nor was it possible for me to forfeit part of an interest in property. Indeed, an open offer for the payment of monies to the Director of Public Prosecutions was made during the proceedings, and it was common ground that I was not entitled to require the Director to accept the money in lieu of the interest or anything of that nature. 31 It was put to me by both sides powerfully that these were proceedings in which it was "all or nothing" and that the effect of a failing to make an order under either provision was that the applicant's interest as joint tenant would be forfeited, the consequence being that his joint tenancy with his wife would be severed by operation of law, and the Commonwealth would then be able to proceed to the sale of the family home reserving to the wife of the applicant, 50% of the proceeds after deduction of the relevant costs. 32 I accept that the applicant as he said brought the proceedings so that his wife and children might have the benefit of the property as a family home. He is serving life imprisonment with a non-parole period of 25 years. He will have no personal use of the property. 33 When I look at the volume and detail of the material supporting the applicant's evidence of the obtaining of the funds, even if dealing with his contention on the basis that it required detailed corroboration. I consider that he has done the best he could, particularly since I considered that the plaintiff had, with its resources, ample opportunity to examine the applicant and his family under the provisions of the Act, to utilise the other information gathering powers provided by the Act, and to investigate the material provided by the applicant in the affidavits and statements. I had regard to the applicant, confined as he is, seeking to provide material from overseas with limited financial and other resources and that the proof offered was not merely a general assertion but appeared to condescend to such particularity and to provide such proof as best one could expect (See the discussion of such matters by Hunt, CJ. at CL. in Jeffrey (supra) and the Full Court of Queensland in Brauer (supra), particularly in the judgments of Thomas and Derrington, JJ.) 34 Application was made under both provisions. The relationship between s.30 and s.48(3) and s.48(4) is not at all clear. The language employed in the two subsections of s.48 is not consistent although both appear to be intended to provide mechanisms capable of excluding the operation of s.30. I do not consider that it is not possible to apply under both subsections of s.48 at the one time notwithstanding the variation in language. In any event, in the light of my findings of fact, any such question in this matter, although debated peripherally in argument, is not significant to my conclusion. My conclusion that the property was not unlawfully acquired nor derived from unlawful activity or to any substantial extent from any such activity, which provided the basis for the order under s.48(4) was also important to my finding of the extent of the hardship and consequences for the application of s.48(3), although I recognise that the making of a relevant order under the latter is not dependent on such a finding. Such a finding is important, however, to define the extent of any hardship in that the family could not expect to benefit from the application of unlawfully obtained money to the deriving of the property, or at least to any substantial extent. 35 Although the position as to onus under s.48(3)(g) has not been considered to the same extent in the authorities, I was of opinion I should, as to each provision, apply a similar onus to that enunciated in Jeffrey (supra) and should apply the standard provided for by s.99 of balance of probabilities. 36 Section 48(3)(g) and s.48(4) turn on whether the court is satisfied; under s.48(3)(g) that it is in the public interest to grant the application for a variation of the restraining order to exclude the person's interest from the order, having regard to the matters referred to in s.48(3)(g)(i), (ii) and (iii) and; under s.48(4), that the property was not used in or in connection with any unlawful activity nor derived directly or indirectly by any person for any unlawful activity and the defendant's interest in the property was lawfully acquired. It is only then that the otherwise automatic effect of s.30 on the property is avoided. 37 In each case, the onus is on the applicant, to so satisfy the court. The nature of that onus and the distinction between the legal and the evidentiary onus were discussed by Hunt, CJ. at CL. in Jeffrey (supra) and on appeal in Jeffrey (supra). I accepted his Honour's views and applied them. 38 In that judgment, his Honour concluded that the onus under s.48(4) was placed upon an applicant because the facts in relation to the property in which he has an interest are usually peculiarly within his knowledge even where he has to prove a negative. I interpolate, the same may be said of the facts to be provided to which s.48(3)(g)(i) might apply. His Honour held that if the applicant gives evidence by way of a general denial which is accepted, the onus in respect of that provision would be discharged. That is what occurred here. 39 His Honour pointed out that an applicant establishes a prima facie case once he has made such a sworn denial although, of course, it is wise for there to be corroborative evidence bearing in mind that an applicant almost by definition has a credibility problem. There was here, in my view, sufficient of that corroborative evidence. 40 At 313, his Honour said:- "As a matter of practical reality, what such an applicant must do in most cases in order to establish the negative facts stated in paragraph [1] is not only to deny on oath in general terms that the property was so used in or derived from any such unlawful activities but also to establish what activities it was in fact used in and derived from: cf. General Motors Holden's Pty. Limited v. Bowling (1976) 51 ALJR 235 at 241. To a large extent the derivation of the property would ordinarily be proved by the same facts as an applicant must establish in relation to paragraph [2]. So far as the first part of paragraph [1] is concerned however, in my view, it is not necessary for an applicant – in addition to his sworn denial in general terms that the property had been so used in any such unlawful activities – to deal specifically with every kind of unlawful activities which could be imagined in relation to the use of such property. His is like the onus which the Crown bears in a criminal trial (although the extent of the burden is obviously not the same) to meet any 'defence' of accident, provocation or self-defence etc. …" 41 His Honour continued in the following pertinent passages:- "In an application pursuant to s.48(4), therefore, the applicant – in addition to his sworn denial in general terms that the property had been used in ay unlawful activities in the manner described in par (i) – need deal specifically only with inferences available from the evidence that his property had been used in particular unlawful activities and which tend to contradict his sworn denial. … The Director, moreover, has the obligation to put an applicant for relief pursuant to s.48(4) on notice (usually by cross-examination) of his intention to rely upon such inferences from the evidence which contradict his denial on oath that the property had been used in any unlawful activities in the manner described in par (i): Browne v. Dunn (1893) 6 R 67; Allied Pastoral Holdings Pty. Limited v. Commissioner of Taxation (Cth) at 16-26. … As a matter of practical reality, the applicant will not discharge that onus unless he denies on oath in at least general terms the matters stated in par (i). … … there is realistically an obligation upon the applicant to deny on oath in general terms the matters stated in par (i) (thus providing a prima facie case), and that his obligation to deal specifically with particular matters thereafter arises only where there is available from the evidence inferences in relation to those particular matters which tend to contradict that denial. There is an obligation upon the Director to point to or to introduce evidence from which such inferences may become available. … Section 48(4) requires the applicant to satisfy me, first, that the property in question was not used in, or in connection with, any unlawful activity. Any act or omission constituting an offence against a law of the Commonwealth or of a State amounts to such an unlawful activity (s.4(1)). It need not be the offence of which the applicant has been convicted." 42 On the issue of how much of the contribution to the property must be shown to be innocent, his Honour later expressed a view. When referring to "use in connection with any unlawful activity within the meaning of s.48(4)" he held that the subsection:- "therefore requires a substantial connection between the activity in question and the use of the property; it is not sufficient for there to be a mere accidental or incidental connection. The unlawful activity must be related to, or dependent upon, or could not have been committed without, or have resulted directly from, the use of the property." 43 I consider I should apply to the concept of derivation a similar test and require that I be satisfied that there is no substantial contribution from illegal activity. 44 In relation to the meaning of the word "derived" his Honour held:- "The word 'derived' as used in s.48(1)(e)(i) is not defined in the statute. Its ordinary English meaning is to show the origin or the source of the thing said to have been derived. I do not obtain any assistance from the decisions upon the use of the word in the taxation statutes. The word should be interpreted in its ordinary sense. It is significant, however, that the derivation may be either direct or indirect." 45 In the Court of Appeal, his Honour's views as to the meaning of the word "derived" and as to the onus of proof under s.48(4)(e)(i) were upheld in the light of an examination of principles which appears in the judgment of Cole, JA. (1995) 79 A. Crim. R. 514 at 517-518. Importantly, for the views I take, his Honour held:- "Depending upon the circumstances of each particular case, 'slender evidence may suffice to satisfy an evidential burden in relation to a negative state of affair': Brauer v. DPP (1989) 45 A. Crim. R. 109 at 113-114." 46 In Brauer v. Director of Public Prosecutions (supra), the Full Court of Queensland considered an application for an order declaring that the restraining order might be disregarded under s.48(4). It was held by the trial judge that the applicant had discharged the onus of proof. On appeal that conclusion was reversed. It was concluded by the Full Court on an application under s.48(4) the applicant must prove on the balance of probabilities the matters to which the section refers. Their Honours referred to s.99 of the Proceeds of Crime Act which provides that, subject to s.17 (not presently relevant) any question of fact to be decided by a court on an application under the Act is to be decided on the balance of probabilities. In looking at the issue of whether the property had been used in any unlawful activity, Thomas, J. considered the time that needed to be covered by the evidence, concluding that in that respect the statute refers to an indeterminate past period, the limits of which can only be determined from case to case on the basis of reasonableness. 47 His Honour considered, applying similar principles to those referred to by the Court of Criminal Appeal in Jeffrey (supra) that "it is not to be supposed in the context of a statute dealing with forfeiture that the only remedial procedure is nugatory". His Honour was there referring to the difficulties faced by a person who has to prove whether to prove a negative or otherwise, what has occurred with his property over an extensive period of time. His Honour held:- "The amount and quality of evidence required to discharge the evidential burden may be lessened where it may reasonably be supposed that the adversary is in a better position to know and prove the essential facts. Slender evidence may suffice to satisfy an evidential burden in relation to a negative state of affairs." 48 Derrington, J. also held:- "The court will take into account any difficulty which may exist in some cases in the proof of a negative and in other appropriate cases any difficulty in the person's capacity to lead suitable evidence to discharge his onus of proof. In the absence of any evidence or any suggestion (in a case of this class) that the property is tainted, the court may well find that the onus is discharged by even slight evidence. In this case, though, the circumstances raised a strong suspicion of connection of the use of the boat with the total enterprise, even though it may not have been directly involved in the immediate handling or transhipment of the cargo of illegal drugs." 49 Hunt, CJ. at CL. refers to these difficulties in Jeffrey (supra) cautioning parties to prepare detailed cases. As I have said, I have regard when considering whether I am satisfied of the necessary matters the plaintiff under the Act has available property tracking, information gathering and examination powers as to investigate and test in cross-examination the applicant's assertions or notice from affidavits of what is contended, whereas the applicant, in confinement and concerned to preserve an asset easily dissipated in costs must do what he can, his property restrained to provide such evidence as he can from overseas. 50 I consider the applicant has done all that could be reasonably expected to meet the burden on him with almost all amounts in issue. 51 It is to be noted that the bringing in to Australia of the US$50,000 derived from the applicant's father's inheritance is not to be equated with the buying of American currency to which Hunt, CJ. at CL. referred when considering the application of the Financial Transactions Reports Act 1988 in Jeffrey (supra), nor are the occasional sales of jewellery to be equated with the monies earned by Mr. Jeffrey which attracted taxation liability. Despite the lack of reference to the ownership of the Columbia property in income tax returns and the lack of a report, I conclude that I am satisfied as to the monies brought in from overseas and in particular as to the proceedings of the Columbia property and the US$50,000 inheritance that those monies were not subject to income tax nor otherwise unlawfully derived, and hence the property was not unlawfully derived, nor were the monies used in or in connection with an unlawful activity, having regard to the principles expressed by the Court of Criminal Appeal in Narita v. DPP (unreported 7 March 1997). The relevant provisions of the Financial Transactions Reports Act 1988 requires a report of funds being brought in. With respect to what was said by their Honours in Narita (supra), I do not understand them as suggesting, contrary to the plain language of the Act, that it prohibits the import of money. The offence lies in failing to report. See s.15(1)(a)(ii) of that Act. It would be a peculiar use of language to conclude that the money was used in or in connection with the failure to report, particularly having regard to the use of the preposition "in". 52 Nor am I prepared to hold that the failure to make report of this or the other sums brought in including the proceedings of sale of the Columbia property should cast such doubt upon the other evidence that I should conclude other unspecified illegality was being conceded or that the applicant has not shouldered the requisite burden under both subsections. 53 An analysis of the family's income and expenditure by Mr. Cassaniti suggested an unaccounted for expenditure of $100,000 above disclosed income but the analysis by Mr. Sneddon did not support that contention. 54 I could not conclude on the evidence before me of analyses by the financial analysts Mr. Sneddon and Mr. Cassaniti, accountant, that there was expenditure by the family over and above the detailed records provided which exceeded income to such an extent that I should conclude those monies paid on the property were obtained by evading income tax liability or from other unspecified unlawful activity. The analyses differ substantially in their conclusions. On one view, that I am unable to reject there was little if any surplus. To the extent the analyses showed there was, the more probable explanation is simply that when an attempted audit over so long of the disparate sources of the family's finances was conducted, it failed to identify all relevant expenditure, not that there was any substantial unlawfulness. 55 I have dealt with the issues arsing under the Financial Transactions Reporting Act. As to the acquisition by the applicant of most of the other sums, including those from sale of the jewellery, I am not able to see, on the evidence, that these were affected by a liability for income tax or to be declared as income such as to produce from that use a possible derivation from unlawful activity as Hunt, CJ. at CL. referred to in Jeffrey (supra). I am not similarly satisfied, considering the failure to declare and pay tax of the lawful character of the foreign rents. This means that I should treat those monies or more precisely the contribution arising from them, embarking on a quasi-tracking, as not lawfully derived. I do consider, however, when I have regard to the whole of the property and what went into it, that the contribution made by those sums is not such that I should hold the property was directly or indirectly so derived. See DPP v. Blake (1992) 60 A. Crim. R. 257 at 261 and DPP v. Kovacs (unreported, Hansen, J. Victorian Supreme Court, 22 June 1995). 56 When considering the applicability of s.48(3)(g), I accept the applicant's submissions:- "17. 'Public interest' invokes considerations of hardship to the defendant and others ( Blake (supra at 262). 18. 'The inevitable and intended consequence of the operation of the Act is that it will have a punitive consequence. However, the Act must operate and have its deterrent effect according to its terms. Those terms give relief if the sentencing judge considers that, in all the circumstances, hardship would be occasioned by on order under the Act. Therefore the fact that allowing hardship will, to that extent, reduce the deterrent impact of the Act, is simply part and parcel of the ordinary operation of the Act, according to the language which Parliament has used. IT is not a frustration of that operation, but a fulfilment, as Parliament intended' ( Christopher David Lake (1989) 44 A. Crim. R. 63 at 69)." 57 To those authorities there cited I should add Taylor v. Attorney General (1991) 53 A. Crim. R. 166; DPP (WA) v. Farley (unreported WASC Heenan, J., 17 September 1996) and Regina v. Wealand [2002] NSWCCA 471 and the authorities cited in it. Applying Wealand (supra) in particular, I conclude that the forfeiture in all the circumstances of this case would have an entirely disproportionate consequence for them, imposing great hardship on the wife and daughters, where there has been proportionately little if any contribution to the applicant's property arising from any unlawful activity by him, nor any involvement in unlawful activity by them. 58 It is for these reasons that I made the orders herein. ********** Last Modified: 04/04/2003 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.