Supreme Court New South Wales Medium Neutral Citation: New South Wales Crime Commission v Subakti [2016] NSWSC 1421 Hearing dates: 9-10 February 2016; 8-9 March 2016 Decision date: 06 October 2016 Jurisdiction: Common Law Before: Hall J Decision: The application by notice of motion filed on 1 August 2014 for an exclusion order under s 25(1) of the Criminal Assets Recovery Act 1990 should be dismissed. Order to that effect to be made on the re-listing of the proceedings on a date to be fixed in the week commencing 24 October 2016. The plaintiff, the New South Wales Crime Commission, has established the basis for a Proceeds Assessment Order under s 27 of the Criminal Assets Recovery Act 1990. Subject to any further submissions by the parties an order under s 27 is to be made in favour of the plaintiff upon the re-listing of the proceedings on the date to be fixed in the week commencing 24 October 2016. Catchwords: CRIMINAL ASSETS – exclusion order application pursuant to s 25 of the Criminal Assets Recovery Act 1990 – two properties and other assets the subject of a forfeiture order made under s 22 – business of the applicant's company source of living expenses and of loan repayments in respect of properties the subject of the application – evidence of sale of prohibited substances (anabolic steroids) and prohibited drugs (cocaine) in the course of the business activities of the applicant's company – absence of evidence based on primary source records of the business or any expert analysis as to the income and expenses derived from lawful and/or crime related activity or activities – failure to discharge the onus of proof by the applicant – proceeds assessment order application pursuant to s 27 – defendant sentenced in relation to drug supply offences – expenditure to acquire cocaine and anabolic steroids – drug proceeds expended – expenditure on acquiring properties and mortgage payments – failure on behalf of the defendant to prove the extent of lawful income to be set against the expenditure – evidence established the basis for an order in accordance with s 27(2) Legislation Cited: Criminal Assets Recovery Act 1990 Cases Cited: New South Wales Crime Commission v Kelaita (2008) 75 NSWLR 564; NSWCA 284 New South Wales Crime Commission v Vu [2012] NSWSC 129 Category: Principal judgment Parties: New South Wales Crime Commission (Plaintiff) Wayan Arya Subakti (Defendant) Representation: Counsel: ID Temby QC (Plaintiff/Respondent) GD Wendler (Defendant/Applicant) Solicitors: New South Wales Crime Commission (Plaintiff/Respondent) AXL Legal (Defendant/Applicant) File Number(s): 2010/41388 Judgment 1. These proceedings arise under the Criminal Assets Recovery Act 1990 (referred to for convenience as "CARA"). 2. The principal objects of CARA are stated to be as follows: 3 Principal objects The principal objects of this Act are: (a) to provide for the confiscation, without requiring a conviction, of property of a person if the Supreme Court finds it to be more probable than not that the person has engaged in serious crime related activities, and (a1) to enable the current and past wealth of a person to be recovered as a debt due to the Crown if the Supreme Court finds there is a reasonable suspicion that the person has engaged in a serious crime related activity (or has acquired any of the proceeds of any such activity of another person) unless the person can establish that the wealth was lawfully acquired, and (b) to enable the proceeds of illegal activities of a person to be recovered as a debt due to the Crown if the Supreme Court finds it more probable than not the person has engaged in any serious crime related activity in the previous 6 years or acquired proceeds of the illegal activities of such a person, and (b1) to provide for the confiscation, without requiring a conviction, of property of a person that is illegally acquired property held in a false name or is not declared in confiscation proceedings, and (c) to enable law enforcement authorities effectively to identify and recover property. 1. The Commission commenced the proceedings by way of Summons filed 15 February 2010. The Summons was supported by affidavit evidence. On that date, this Court made a number of orders. They included a restraining order under the provisions of s 10A of CARA in respect of various items of property described in Schedules 1, 2 and 3 of the Summons. 2. The proceedings again came before the Court on 5 May 2014. On that occasion a number of orders were sought by the Commission including an order granting leave to the Commission to amend its Summons. An Amended Summons was filed on that date. It included a new paragraph, paragraph 7A, in which a forfeiture order was sought under s 22 of CARA, being an order that the interests of the applicant in property specified in Amended Schedule 1, be forfeited to, and vest in, the Crown. The Schedules previously included in the original Summons, Schedules 2, 3 and 4, were deleted. Consent Orders were made by the Court on 5 May 2014. Relevantly, orders 5 through 9 were in the following terms: 5. Leave is granted to the Plaintiff to amend its summons to seek an order pursuant to section 22 of the Act that the interest in property of the Defendant in the property specified in Schedule One hereto be forfeited to, and vest in, the Crown. 6. Pursuant to section 22 of the Act the interest in property of the Defendant in the property specified in Schedule One hereto be forfeited to, and vest in, the Crown. 7. Pursuant to section 27 of the Act the Defendant pay to the Treasurer an amount to be assessed by the Court as the value of the proceeds derived from the illegal activity of the Defendant that took place not more than six (6) years before the making of the application for the proceeds assessment order. 8. Leave is granted to the Defendant pursuant to sections 25(4)(a) and 26(4)(a) of the Act to make applications for exclusion orders within 6 months of the making of these orders. 9. Pursuant to section 23(4) of the Act, the New South Wales Trustee and Guardian is not to take possession of, or dispose of, the property specified in Schedule One hereto within 6 months of the making of these orders and in the event of application being made under either section 25 or section 26 of the Act (or both) until such applications are heard and determined or the Court otherwise orders. 1. The proceedings, in effect, consist of two parts in which Mr Subakti and the New South Wales Crime Commission ("the Commission") each seek orders respectively under ss 25 (exclusion order) and 27 (proceeds assessment order), each of those sections being contained within different Divisions in Part 3 of CARA entitled "Confiscation". 2. On 1 August 2014, Mr Subakti, as an applicant in the proceedings, sought by way of Notice of Motion, an order under s 25(1) of CARA for the exclusion of certain interests in property from the forfeiture order. When dealing with his application I will refer to him as "the applicant". 3. The exclusion application relates, in part, to real estate, namely, two properties referred to in evidence as the Glenwood property and another referred to as the Seven Hills property. The applicant asserts interests in property in both and seeks orders that those interests be excluded from the forfeiture order made on 5 May 2014. 4. The basis for the application for exclusion of the two properties is the applicant's contention that he contributed monies to the initial acquisition of the two properties and thereafter paid loan instalments in respect of loans secured by mortgage securities. All such monies, the applicant contends, were made from legitimate sources. That contention has been strongly contested by the Commission. 5. The Commission seeks an order pursuant to s 27(1) of CARA, namely a proceeds assessment order requiring Mr Subakti as defendant to the proceedings, to pay to the Treasurer an amount assessed by the Court as the value of proceeds it alleges were derived by him from an illegal activity, or illegal activities, that allegedly took place not more than six years before the making of the application for the order. The phrase "illegal activity" is a defined term in s 4(1) of CARA. 6. The plaintiff Commission was represented at the hearing by Mr ID Temby QC and the defendant/applicant by Mr GD Wendler of counsel. 7. A Joint Schedule of Issues was filed on 22 September 2015. The two primary issues set out in the Schedule are in the following terms: "1. Whether the Defendant's interests in property in the property specified in the Schedule hereto ("the forfeited property") are illegally acquired property (within the meaning of that term as defined by section 9 of the Act). In relation to this issue, the onus is on the Defendant to satisfy the Court, to the civil standard, that his interest in the forfeited property is not illegally acquired property. 2. The amount to be assessed by the Court, pursuant to s 28 of the Act, as the value of the proceeds derived by the Defendant, that took place not more than 6 years before the making of the application for the proceeds assessment order (namely 29 January 2010). The Plaintiff contends that, for the purposes of s 28(3) of the Act, the amount of the Defendant's expenditure during the period 30 January 2004 to 29 January 2010 was approximately $689,363. The onus is on the Defendant to satisfy the Court, to the civil standard, that his expenditure was funded by income, or money from other sources unrelated to illegal activity or activities (as defined by s 4 of the Act)." 1. The Schedule to the Joint Schedule of Issues identified property falling within three classes of interest in property. 2. The first part of this judgment deals with the application by the applicant for exclusion orders under s 25 of CARA. The Commission's application for a proceeds assessment order will be the subject of the second part of the judgment. Background Matters 1. In his affidavit sworn 7 November 2011, the applicant stated that he has been present in Australia since 1985 and has been in business, on his own account, since about the year 2000. The applicant stated that he set up a business under the name Bio Form Nutrition (Bio Form) in about late 2000 at Liverpool. 2. The applicant said Bio Form has been concerned with sports nutrition, sports clothing and a solarium. Australian Taxation Office (ATO) records establish that the business ran at a loss, or a very modest profit in some years thereafter up to the time the applicant commenced to serve a sentence of imprisonment for prohibited drug supply. The Commission contended that, on the evidence, income from the business was insufficient to finance the acquisition of the Glenwood and Seven Hills properties. 3. The applicant has a criminal history including offences of supplying illicit substances resulting in convictions in 2007, 2009 and 2010. Affidavit Evidence 1. The Commission relied upon the following affidavit evidence: 1. Affidavit of Inese Holz sworn 15 February 2010 in support of an application for a restraining order (first affidavit); 2. Affidavit of Jonathan Lee Spark sworn 28 April 2014 in support of an application for summary judgment; 3. Affidavit of Inese Holz sworn 30 January 2015 concerning forfeited assets (second affidavit); 4. Affidavit of Inese Holz sworn 30 January 2015 in support of summons as to assessment of proceeds assessment order pursuant to s 28(c) of CARA (third affidavit); 5. Affidavit of Gilbert Jean-Noel Laverdure sworn 13 February 2015 in support of summons as to assessment of proceeds assessment order pursuant to s 28(c) of CARA; 6. Affidavit of Kevin Forward affirmed 26 May 2015 in support of the Summons; 7. Affidavit of Inese Holz sworn 18 June 2015 (fourth affidavit); and 8. Affidavit of Inese Holz sworn 2 March 2016 (fifth affidavit). 1. The Commission's submissions are predominately supported by the affidavit evidence of Ms Holtz, who is an authorised officer within the meaning of CARA. Ms Holz is a forensic accountant employed by the Commission. She attended the hearing and was cross-examined on her affidavits. 2. The applicant relied upon the following affidavit evidence: 1. The applicant's affidavit sworn 7 November 2014; 2. The affidavit of Sheree Anne Subakti sworn 19 November 2015; 3. The applicant's affidavit sworn 5 May 2015; and 4. The affidavit of Nicolista Togias sworn 19 February 2016, together with Annexures A to O. The Annexures include voluminous documents contained within Volumes 1, 2 and 3 of Ms Togias' affidavit. PART I – EXCLUSION ORDER APPLICATION PART A: LEGISLATIVE PROVISIONS 1. Under Part 3 of CARA, Confiscation, the Commission is entitled to apply to the Supreme Court for an order forfeiting to, or vesting in, the Crown's specified interests, a specified class of interests or all the interests, in property of a person. Such an order is referred to as an assets forfeiture order: s 22(1). 2. Under s 22(2) the Supreme Court must make an assets forfeiture order in respect of an interest in property referred to in s 22(1A)(a) or (b): "… if the Court finds it to be more probable than not that the person whose suspected serious crime related activity, or serious crime related activities, formed the basis of the application for the assets forfeiture order was, at any time not more than 6 years before the making of the application, engaged in: (a) a serious crime related activity involving an indictable quantity, or (b) a serious crime related activity involving an offence punishable by imprisonment for 5 years or more." (s 22(2)) 1. Section 6 of CARA defines the expression "serious crime related activity" by reference to anything done by the person in question that was at the time a "serious crime offence". 2. By s 6(2) a reference to a serious criminal offence includes specified offences, including an offence of supplying any drug of addiction or prohibited drug within the meaning of the Poisons Act 1966, or "a drug trafficking offence" (which latter expression is defined by reference to specified sections of the Drugs Misuse and Trafficking Act 1985: s 6(3)). 3. Section 7 provides an extensive definition of the expression "interest in property". It includes an interest that the person in question has in real or personal property: s 7(1)(a). 4. The word "interest" in relation to property is defined as including "a legal or equitable estate or interest in the property": s (7)(4)(a). 5. The term "illegal activity" is defined at s 4(1) as: illegal activity means: (a) a serious crime related activity, or (b) an act or omission that constitutes an offence (including a common law offence) against the laws of New South Wales or the Commonwealth, or (c) an act or omission that occurs outside New South Wales, is an offence against the law of the place where it occurs and is of a kind that, if it had occurred in New South Wales, would have been an offence referred to in paragraph (b). 1. Section 25 is contained within Division 1 of Part 3, entitled Assets forfeiture orders. That Division makes provision for applications for the exclusion of property from restraining orders and asset forfeiture orders made under CARA. So far as is relevant to the present proceedings, s 25 includes the following provisions: 25 Exclusion of property from restraining order and assets forfeiture order (1) If an assets forfeiture order: (a) has been applied for but not made—a person whose interest in property might be subject to the order if made, or (b) has been made—a person whose interest in property was forfeited by the order, may apply to the Supreme Court for an order (in this section called an exclusion order) excluding the interest from the operation of the assets forfeiture order or any relevant restraining order. (2) The Supreme Court must not make the exclusion order applied for unless it is proved that it is more probable than not that: (a) in the case of an order relating to fraudulently acquired property—the interest in property to which the application relates is not fraudulently acquired property or is not illegally acquired property, or (b) in any other case—the interest in property to which the application relates is not illegally acquired property. … (6) The applicant for an exclusion order must give the Commission notice of the grounds on which the exclusion order is sought. (7) If the Commission proposes to contest an application for an exclusion order, it must give the applicant notice of the grounds on which the application is to be contested. In such a case, the Commission is not required to give the applicant notice of those grounds, and the application must not be heard, until the Commission has had a reasonable opportunity to conduct an examination of the applicant under section 12 or 31D. (8) An application may be made by a person under this section whether or not the person has also made an application under section 10C and whether or not any such application is successful. (emphasis added) 1. It is incumbent upon the applicant to prove, on the balance of probabilities, that each forfeited interest in property is not illegally acquired property: s 25(2)(b). 2. In that respect, by virtue of s 9 of CARA an interest in property is illegally acquired property if it is all or part of the proceeds of illegal activity or was wholly or partly acquired using illegally acquired property. 3. It is incumbent upon the applicant, accordingly to prove that a forfeited interest in property was not, even partly, derived or realised as a result, direct or indirect, of illegal activity as defined, whether by himself or by any other person. PART B: THE EXCLUSION APPLICATION 1. The applicant seeks by way of Notice of Motion, an order under s 25(1) of CARA for the exclusion of certain interests in property from a forfeiture order. The interests are as follows: 1. The Glenwood property registered in the name of the applicant; 2. The Seven Hills property registered in the name of the applicant; 3. An amount of approximately $4,615 cash seized by police from the applicant on 29 January 2010; 4. Amounts of cash identified as $1,790 and $31,620 respectively seized by police from the applicant on 29 January 2010; 5. Funds held in Westpac Banking Corporation accounts identified by account numbers ending in 3772, 2640 and 1801 in the name of the applicant; 6. Funds held by ASIC as unclaimed money being funds from St George Bank account number ending in 1178 in the name of the applicant; 7. Funds held in ANZ Banking Group account number ending in 7247 in the name of the applicant (the written submissions for the Commission note that this account number should end in 1368) (the ANZ account); 8. Funds held in Commonwealth Securities account number ending in 7247 in the name of the applicant; 9. Funds held by ASIC as unclaimed money being funds from Westpac Life Insurance Services policy number ending in 3770 in the name of the applicant; and 10. Funds held in Commonwealth Bank account number ending in 4705 held jointly in the names of the applicant and Ms Togias. (The written submissions for the Commission note that this interest was included in error as this account was not forfeited.) 1. As discussed below, following an adjournment on the second day of the hearing, further affidavit evidence and submissions were provided to the Court by the applicant. Mr Wendler in his undated written submissions emailed to the Court on 18 March 2016 conceded that a number of the interests outlined above could not be excluded from the operation of the forfeiture order. In respect of certain interests, he did not make submissions. Accordingly, the interests of the applicant that were specifically sought to be excluded are as follows: 1. The Glenwood property registered in the name of the applicant; 2. The Seven Hills property registered in the name of the applicant; 3. Amounts of cash identified as $1,790 and $31,620 respectively seized by police on 29 January 2010; 4. The Westpac account number ending in 1801 in the name of the applicant; and 5. The ANZ account. PART C: NOTICES OF GROUNDS AND ISSUES 1. The Commission relied upon the following matters in its Notice of Grounds of Opposition to the Exclusion Application filed 2 February 2015: 1. That the onus of satisfying the Court of the matters which must be established before an order is made under s 25 of CARA falls on the defendant/applicant. It was contended that he could not discharge that onus in respect of his forfeited interests in the specified property. 2. That the applicant had to prove that each forfeited interest in property was not, even partly, derived or realised as a result, direct or indirect, of illegal activity as defined in s 4(1) of CARA, whether by himself or by any other person. (3) That the applicant since commencing the business of trading in nutritional products in about 2000 had dealt in illegal drugs including anabolic steroids and narcotics. In respect of those illegal drugs it was contended that the defendant had been dealt with in the criminal courts for: (a) Possessing a steroidal agent, for which he was put on a good behaviour bond in February 2007; (b) Importing a prohibited drug, for which he was put on a good behaviour bond in November 2009; and (c) Sales of large quantities of cocaine, and of anabolic steroids, and other offences in 2009 including money laundering for which the defendant was imprisoned for several years. (4) That at the time the two properties were purchased the defendant's business did not appear to be operating profitably. Additionally, from 2007 onwards the defendant was suffering serious ill health culminating in a kidney transplant in late 2008. It was contended that these matters affected his ability to derive income. PART D - THE APPLICANT'S EVIDENTIARY CASE The Applicant's Evidence 1. The applicant read the affidavits referred to at para [19] above. He attended and was cross-examined on 9 February 2016: T 15-78. 2. In his affidavit sworn 7 November 2014, the applicant set out matters of personal history at [1]-[7]. He stated that in 1995 he was involved in an industrial accident which kept him off work for three years. He settled a 'compensation' claim in respect of his injuries for which he said he received $180,000 after legal fees and expenses. He said he used some of these monies as a deposit on a home unit in Wentworthville. The unit cost was $235,000. He said he obtained loan finance of $154,000 for the purchase. 3. As noted above, the applicant said that he commenced Bio Form in about late 2000. He said that the business is still in operation. He said that it was run by his partner whilst he was in custody for 4 years. 4. In about mid-2003 he said that he refinanced the Wentworthville property. He said he purchased the Glenwood property for $690,000. The deposit came from the sale and re-financing of the Wentworthville unit. He said he also used funds from the sale of a Grand Jeep Cherokee motor vehicle (the Jeep Cherokee) towards the purchase of the Glenwood property. This latter fact was challenged by the Commission. I note that the sale of that vehicle is the subject of documentary evidence relied upon by the Commission, the significance of which is discussed below. The applicant said that he pays $1,550 a fortnight in relation to the loan on Glenwood. 5. The applicant's evidence was that he purchased the Seven Hills property in or about 22 May 2008 for $342,000. He said he paid a deposit of $34,200. The balance came from a redraw facility provided by Perpetual Trustees Victoria Limited (Perpetual) in the amount of $106,000. 6. He said that $80,000 was transferred from Indonesia into his Westpac account, the account number ending in 1801. I note that the transfer of these monies is the subject of evidence adduced by the Commission. The significance of that evidence is also discussed below. 7. The applicant said that he deposited $75,000 into the redraw facility. He said that the money was "settlement money" following a commercial dispute. He did not provide any details as to the subject matter of the dispute or the settlement. 8. The applicant said that he pays $1,550 per month for the loan on Seven Hills and that he receives rent from that property of $1,973.62 per month. 9. Sharee Subakti, in her affidavit sworn 14 November 2014, stated that she withdrew a total of $40,000 from the Riverstone Branch of the Commonwealth Bank which she gave to the applicant in cash between 15 January 2010 and 28 January 2010. She said that the parcels of money represented the applicant's interest in the sale of a property they had purchased together and money that the applicant had lent her "from time to time over the years". 10. As to the cash amounts of $1,790 and $31,620 seized by police at the applicant's Glenwood home, his evidence was that the money "mostly comprised from my ex-wife Sharee Subakti" who he said had sold the property located at Riverstone, which property the applicant said he and his former wife had purchased together. He said it also came from money that he had previously lent her. He said that the amount of $1,790 was money from the previous night's sale of merchandise. 11. As to the funds held in the ANZ account, the applicant said that he understands this to contain $1,200 which is "money from sales at Bio Form". 12. The applicant annexed copies of several documents referred to this affidavit. 13. The applicant did not provide any evidence in his affidavits regarding the funds contained in the Westpac account number ending in 1801 sought to be excluded from the forfeiture order. Evidence regarding this interest was provided in the affidavit of his partner, Ms Togias, sworn 19 February 2016. 14. (First) Written Submissions for the Applicant 15. In undated submissions for the applicant, Mr Wendler stated that his client's case was that his interests in the Glenwood and Seven Hills properties were not interests illegally acquired. On that basis an exclusion order under s 25(1) of CARA was sought excluding his interest in those properties, to be quantified either wholly or partly, from the operation of the forfeiture order. 16. Mr Wendler's submission was that on the probabilities the monies expended on the purchase and the servicing of what was referred to as the "GWP mortgage" (the loan in respect of the Glenwood property) were not derived through illegal activity. In his Written Submissions at [9], he observed that: 1. The applicant and Ms Togias "lived off the earnings of the Bio Form business"; 2. The gross income as disclosed in the taxation return for any financial year was "not conclusive of whether the applicant used Bio Form income to episodically finance his everyday expenses"; 3. It was "obvious" from Bio Form's financial documents that it was "a mostly cash based business" that had a large turnover; and 4. The tax returns for the Bio Form business between the financial years 2006 and 2011 demonstrate income totalling over $2 million. 1. Mr Wendler submitted that while the applicant "is not the world's most sophisticated and erudite man", it would be wrong to approach his evidence from the perspective that because he has admitted criminal antecedents he should be disbelieved in every aspect of his evidence unless corroborated by documentary evidence. Mr Wendler added that it "needs to be remembered that the applicant's admitted criminal offences were committed in a very limited time frame July 2009 – January 2010" and it does not necessarily follow that the applicant must have engaged in criminal activity six years before January 2010. 2. In respect of the Glenwood property, Mr Wendler noted that the property was purchased for $690,000 and that the applicant contributed two parcels of money towards the deposit in the sums of $30,000 and $5,000. Mr Wendler submitted that the applicant received $35,000 for the sale of the Jeep Cherokee and that this is supported by an entry in the "Esander Account" of $20,000 being deposited into the account of the applicant. 3. These submissions were marked as "NOT COMPLETED". PART E – THE COMMISSION'S EVIDENCE 1. Ms Holz's second affidavit provided a detailed analysis regarding the interests in property of the applicant forming the basis of the assets forfeiture order. (i) The Declared Income of the Applicant and Ms Togias 1. The applicant was registered for income tax from 4 January 1989. His employer for the financial year 2006 to 2010 is recorded as Bio Form. He lodged income tax returns for the financial years 2003 to 2010 in which the total gross income declared was: Financial Year Total Gross Income 2004/2005 $35,665 2005/2006 $10,094 2006/2007 $6,150 2007/2008 $11,000 2008/2009 $18,500 2009/2010 $15,600 1. The applicant lodged an income tax return in respect of the 2011 financial year but did not have a taxable income in that financial year. 2. The evidence established that in the above years, according to ATO records, the applicant had declared no other or additional sources of income. 3. Ms Togias has been registered for income tax since 17 September 1993. She lodged income tax returns in respect of the 2010 and 2011 financial years in which the total gross income declared in both years was $0. In the 2008 financial year, Ms Togias declared interest income in the amount of $21.50 from a Commonwealth Bank account held jointly by her and the applicant. (ii) The Declared Income of Bio Form 1. Bio Form lodged income tax returns in respect of the years 2006 to 2011 and declared the following income and expenses: Financial Year Total Income Total Expenses 2006/2007 $358,997 $360,866 2007/2008 $442,992 $442,277 2008/2009 $494,679 $502,150 2009/2010 $409,729 $407,203 2010/2011 $295,479 $332,153 (iii) The Glenwood Property 1. The applicant, as previously noted, is the registered proprietor of the Glenwood property. It was purchased on 1 May 2003 for $690,000. Settlement of the purchase occurred on 24 July 2003. A transfer of title was registered on 14 August 2003. The property is subject to two mortgages, one to Perpetual and one to Westpac Banking Corporation. 2. A caveat was lodged by Ms Togias over the Glenwood and Seven Hills properties on 6 March 2012 in which she claims an interest based on having "paid considerable funds towards". Ms Holz noted the applicant's examination transcript where he stated that Ms Togias contributed no funds to the purchase of the Glenwood property. 3. Ms Holz had regard to the applicant's affidavit sworn 7 November 2014 and noted the following: 1. The applicant contributed two amounts of $5,000 and $32,011.11 to the purchase price of the Glenwood property; 2. The applicant stated that he "applied funds from the sale on 16 July 2003 of a Grand Jeep Cherokee motor vehicle towards the purchase of Glenwood"; and 3. Annexure C of the affidavit contained documents signed and dated 16 July 2003 purporting to be a sale receipt in relation to a white Jeep Cherokee for the sale price of $35,000. 1. In respect of paragraphs 60(2) and 60(3) above, Ms Holz said that she conducted a search of the RMS database in relation to the Jeep Cherokee and located RMS records showing that the applicant acquired the vehicle on 6 June 2000 and transferred the vehicle on 23 June 2004 for a value of $30,000. Having regard to paragraph 60(3), Ms Holz stated that she was unable to conclude the sale price of the Jeep Cherokee and she was unable to confirm when and how the applicant received any money for the vehicle. 2. In the written submissions for the Commission at [9], it is noted that the applicant contributed $37,011.11 towards the cost of initial acquisition of the Glenwood property. The Commission submitted that the applicant had not proven that any part of that sum arose from illegal activities and in particular, the Court would not be satisfied that the applicant was not in receipt of illegal proceeds in July 2003, or that he kept illegal proceeds separate and distinct from legal income at all times. 3. The Commission further submitted at [10] that the mortgage payments came out of the applicant's personal bank account. Funds were from time to time transferred to that account from the Bio Form business account. The Commission also submitted that the proposition that each of the accounts included illegal proceeds has not been shown to be wrong. (iv) The Seven Hills Property 1. Ms Holz noted that the applicant is the registered proprietor of the property. As earlier noted, it was purchased on 18 February 2008 for $376,200. Settlement of the purchase occurred on 29 May 2008. The property is subject to a mortgage to Westpac. 2. Ms Holz had regard to the applicant's affidavit sworn 7 November 2014 and noted his evidence that the purchase of the Seven Hills property comprised a deposit of $34,200; a balance which came from a redraw facility by Perpetual in the amount of $106,000; and a loan from Westpac secured by a registered mortgage over the property. 3. Ms Holz noted that on 12 December 2006, the amount of $75,000 was deposited into the Perpetual redraw account from a commercial settlement and that on 22 May 2008, the amount of $80,000 was deposited into the Westpac account number ending in numbers 1801 from Indonesia which was then transferred into a "Perpetual Transfer Vic account" on 26 May 2008. It was also noted that the applicant's affidavit annexed a document entitled "Declaration" by I Wayan Tresnanda stating that he (the applicant's father) remitted $80,000 to the applicant on 22 May 2008. 4. Ms Holz conducted further investigations as to the source of the $80,000 deposit referred to in the preceding paragraph. She deposed that she was present on 29 January 2010 when members of the NSW Police executed a search warrant on the Glenwood property during which three deposit slips were seized in relation to account number ending in the numbers 9763 held by a Commonwealth Bank branch in Denpasar, Bali, Indonesia in the name of "I Wayan Tresnanda" or "I Wyn Subakti". The deposit slips show three deposits totalling $41,450, two of which note the applicant as the depositor. Ms Holtz referred to information that she obtained from the Commonwealth Department of Immigration and Border Protection which confirmed that the applicant was present in Indonesia at the time these deposits were made. 5. Ms Holz had regard to documents produced to the Commission by Markham Geikie Farrugia Lawyers and Accountants (MGF) in relation to the Seven Hills property. These documents showed the total expenditure of the applicant on the purchase of the Seven Hills Property as follows: Deposit on exchange of contracts $34,200.00 Balance due on settlement $342,700.00 MGF fees and expenses $2,782.35 Stamp duty payable on the contract $12,423.00 Total expenditure amount needed for purchase $392,074.65 1. The MGF documents included a copy of a Westpac cheque dated 1 February 2008 drawn on the Westpac account ending in numbers 3772 in the amount of $34,200. The MGF documents also included a copy of a trust receipt dated 27 May 2008 in the amount of $106,000 received from "W. Subakti". 2. In respect of the MGF documents, Ms Holz had regard to the documents produced to the Commission by Westpac in respect of the Westpac account number ending in 3772 held in the name of the applicant trading as Bio-Form Nutrition Australia (the Bio Form account) including: 1. Statement number 190 showing a withdrawal in the amount of $34,200 on 25 February 2008; and 2. Statement number 195 showing a payment to MGF of $12,423 on 5 May 2008. 1. Ms Holz had regard to the applicant's ATO profile and deposed that in the financial years ending 30 June 2007 and 30 June 2008, being the financial years relevant to the purchase of the Seven Hills property, the total income declared by the applicant in those years was $6,150 and $11,000 respectively. 2. Ms Holz had further regard to Bio Form's ATO profile and deposed that: 1. The total income and expenses of Bio Form for the financial year ending 30 June 2007 was $442,992 and $442,277 respectively; and 2. The total income and expenses of Bio Form for the financial year ending 30 June 2008 was $494,679 and $502,150 respectively. 1. Ms Holz also had regard to the transcript dated 30 November 2009 in the matter of Australian Customs Service v Wayan Subakti at the Central Local Court and in particular to page 13 in which Mr Paneras for the applicant stated that: "…he's not working at all. In October last year, which is when this alleged importation was supposed to have taken place, he received a kidney transplant, he was in hospital for many months. Prior to that from 2007 until October 2008, he was on a dialysis machine seven hours a day". 1. In the written submissions for the Commission at [11], it is submitted that the applicant has failed to prove that any of the deposit monies ($34,200), or the $80,000 received from Indonesia, or the sum of $75,000 said to have been received as a result of settlement of a commercial dispute, were not or did not include proceeds of illegal activity. The Commission noted that the applicant failed to disclose in his affidavit the nature of the commercial dispute which he says resulted in a $75,000 receipt. (v) Cash seized from the Glenwood Property ($31,620) 1. Ms Holz had regard to the applicant's affidavit sworn 7 November 2014 in which he claims that the cash seized from the Glenwood property was given to him by his ex-wife, Sheree Subakti. Ms Holz also noted the affidavit evidence of Sheree Subakti sworn 14 November 2014 in which she stated that cash withdrawals from her bank account were repayments of unspecified loans owed by her to the applicant and also represented the applicant's interests in the proceeds of the sale of the Riverstone property. 2. Ms Holz conducted a search of the Land and Property Information of NSW (LPI) records and noted that: 1. The Riverstone property was purchased by the applicant and Sheree Subakti on 26 May 1995 for $155,000; 2. The applicant transferred his 50% interest in the Riverstone property pursuant to a court order to Sheree Subakti on 22 September 1998 for $5,000; and 3. On 1 October 1998, the original mortgage over the Riverstone property was discharged. A mortgage loan in the sum of $121,000 in the name of Sheree Subakti was recorded. 1. Ms Holz had further regard to documents seized by NSW Police pursuant to a search warrant including a document dated 23 November 2008 titled: "RE: Agreement between Sheree Anne Subakti and Wayan Arya Subakti" wherein the Sheree Subakti agreed, inter alia, to repay the applicant $20,000. (vi) The Bio Form Seized Cash ($1,790) 1. Ms Holz noted that the applicant claimed that the cash seized from Bio Form originated from business sales at Bio Form. Ms Holz deposed that she is unable to ascertain what portion of the cash sales are from the applicant's legitimate business activities and what portion are sources from the sale of prohibited drugs or prescribed restricted substances. (vii) The Westpac Account Number Ending in 1801 1. Ms Holz noted that the applicant does not provide any evidence regarding this account in his affidavit. (viii) The ANZ Account 1. Ms Holz had regard to documents produced to the Commission by ANZ in relation to this account and noted that there were two credits of $500 on 29 April 2008 and $700 on 15 August 2008. PART F – APPLICATION FOR AN ADJOURNMENT 1. On the second day of the hearing, 10 February 2016, Mr Temby objected to the affidavit of the applicant's partner, Ms Togias, sworn 9 February 2016 being read in the proceedings. Mr Temby noted that the Commission had no notice until that morning that Ms Togias was to be called and there certainly was no opportunity to examine any evidence contained within her affidavit (T89). 2. Mr Temby noted that there were orders made on 17 November 2014 that the applicant serve affidavit evidence on which he relied by 2 February 2015. Mr Temby further noted that the present proceedings were set down for hearing on 20 July 2015. 3. In reply, Mr Wendler submitted that "the issue at stake here is a family home involving not just this defendant but others who were held hostage to his circumstances, in particular his partner and some teenage children". Mr Wendler added that any such prejudice as suggested would be suffered by Commission "can be cured by an order for costs and a short adjournment to regularise the situation". Mr Wendler further submitted that "the evidence is of such a kind that fairness and justice dictates that it should be introduced". (T90) 4. Mr Temby objected to the application to adjourn. (T97) 5. In considering the principal objects of CARA, and in particular s 3(1a) which enable a person to establish that their wealth was lawfully acquired, I determined that I should adjourn the proceedings to enable the applicant to file an amended notice of grounds and all additional material by 4.00pm on 19 February 2016. PART G – FURTHER EVIDENCE AND SUBMISSIONS ON BEHALF OF THE APPLICANT AND THE COMMISSION 1. On 22 February 2016, the applicant's solicitor filed an Amended Notice of Grounds. The Amended Notice of Grounds provided particulars regarding the interests sought to be excluded from the operation of the forfeiture order. These particulars are expanded upon in the affidavit of the applicant sworn 7 November 2014 (as outlined above) and the affidavit of Ms Togias sworn 19 February 2016. Affidavit of Ms Togias sworn 19 February 2016 1. Annexed to the affidavit of Ms Togias sworn 19 February 2016 were Annexures "A" through "O" contained within three folders. 2. Ms Togias stated in her affidavit that she has resided with the applicant at the Glenwood property for a period of approximately in excess of 12 years. In relation to this property, she stated that in or about mid-2003 there was a refinancing of the unit at Wentworthville with Perpetual being the lender in order to purchase Glenwood. The purchase price of $690,000 with adjustments the balance due to the vendor amounted to $689,568.63. 3. In about late 2000 she said she was involved with the creation of Bio Form. She said that the business concerned sports nutrition and sports clothing. In the early stages of the development of the business she said that she was mostly involved with importing products from the United States and attended to import permits and general marketing. She said that she was responsible for record-keeping, banking and preparing summaries of Business Activity Statements (BAS) to be provided to their accountant, invoicing payments for business expenses and ordering products. 4. Ms Togias stated that she knew the financial history of the business because she had the day-to-day management of its finances. That evidence, as discussed below, is, however, to be read subject to concessions made by her in cross-examination. 5. Ms Togias annexed to her affidavit statements for the Westpac account number ending in 3772 in respect of Bio Form (Annexure "A"). She said that that account was the trading account for the business. 6. The documents comprising Annexure "A" are stated to relate to the period 24 March 2005 to 18 January 2016. These documents are in the nature of bank statements containing credit and debit entries in respect of the account with opening and closing balances. 7. Ms Togias identified the "source" of the credit entries in the account as, "credit card purchases, eftpos, gift card purchases, cash purchases and deposits by Bio Form from daily cash purchases by customers at the Bio Form Shop". 8. Ms Togias said that in broad terms the debit entries comprised "payment to suppliers for stock, business expenses such as telephone and internet, lease payments, electricity and personal living expenses for herself and Subakti regarded as income and credit card payments for living expenses". 9. She stated that monies received by Bio Form were "…source(d) by [the applicant] to service the Glenwood property". 10. Ms Togias' affidavit also referred to documents marked as Annexure "B". Those documents are contained within volume 2 of 3 to her affidavit. The large bundle of documents comprising Annexure "B", were described as "a further Bio Form Westpac account" number ending in 1544. They relate to the period commencing 5 January 2004 through to 27 February 2015 (between pages 483-703) incorrectly described in [5] of Ms Togias' affidavit as relating to the period "12 July 2006 – 31 March 2015". 11. According to Ms Togias the account was set up "…to service the Bio Form company credit card. Money was coming into this account from either a transfer from the Bio Form account or cash deposits from takings at the Bio Form shop". She stated that the Bio Form account number ending in 3772 was episodically used for day-to-day living expenses by the applicant and herself. 12. Ms Togias said she was not paid wages and that money to pay the home loan for Glenwood came from the Bio Form account. It was transferred to the applicant's account and was direct debited from there. Ms Togias referred to documents marked as Annexure "C" being a Statement of Account of Delta Home Loans stated to be the home loan account for the period dated 24 July 2003 to 9 February 2016. 13. Ms Togias' affidavit then dealt with matters concerning the Seven Hills property which she says was purchased on or about 22 May 2008 for a purchase price of $342,000 plus GST. She said that a deposit of $34,200 was paid by cheque drawn on the Bio Form Westpac trading account: at [6]. 14. Ms Togias prepared documents described as "Summary trace documents concerning all transactions applied to the Glenwood home loan mortgage and source of those funds": at [7]. 15. Annexure "D" is stated to be a summary of the home loan payments. Ms Togias said that in preparing Annexure "D" she referred and reconciled the source of the payments to the Delta Home Loan Account. 16. Ms Togias also stated that she prepared the documents marked as Annexure "E" which was described as a summary chart prepared by her for the period 1 February 2005 to 15 December 2010. This document was apparently prepared from entries in the Delta Account, the applicant's account, the Bio Form Trading Account and Ms Togias' ANZ account for the above period. She described it as a summary chart prepared by her whereby she reconciled funds coming from the Bio Form Trading Accounts to the Westpac account of the applicant (identified) and then going to the Delta Home Loan Account. The chart is also said to show a history of the use made of a redraw facility. 17. In respect of the Seven Hills property, Ms Togias prepared "… a summary trace document that shows the source of funds transferred by direct debit from the Bio Form account in the period 8 May 2008 to 15 August 2014 to Westpac Account [account number ending in 3282]": at [8]. 18. Annexed to Ms Togias' affidavit and marked as Annexures "F" and "G", are spreadsheets prepared relating to payments concerning the Seven Hills property. Annexure "H" contained Westpac Bank statements dated 6 January 2005 to 6 January 2016. 19. Ms Togias said that the Seven Hills property was leased from 12 April 2010. She stated that the income from that account was going to the Bio Form account from 31 May 2010 to 15 August 2014. She at some point then requested that the money be deposited direct to the applicant's Westpac account ending in 1801. This account received funds by way of the rental payments from 15 September 2014. 20. Ms Togias also completed a summary of what she described as the daily sales at Bio Form on the separate occasions that the applicant was said to have had contact with the undercover operative (Annexure "J") relevant to drug transactions involving the applicant. 21. Ms Togias said she was at home at the Glenwood property when police discovered cash money on the premises. She stated that there was an amount of $20,000 with Commonwealth Bank markings. There was other money seized in an office in the amount of $9,350. She stated that this amount was to "pay for some shutters coming funds [sic] given by Shree [sic]". There was an amount of $2,120 in her purse which was seized by police. Ms Togias stated that that amount represented takings from the Bio Form business. In that respect she referred to the daily sales document being part of Exhibit E. 22. In relation to the amount of $1,790 seized by police from the Bio Form shop on 29 January 2010, Ms Togias said she able to say that the source of that money "… comprised $500 float and the cash sales for that day up to the police seizing the money": at [11]. 23. Ms Togias referred to the ANZ account number ending in 1368 for which she is unable to find documents: at [14]. 24. Annexure "L" was said to be a copy of a bank statement for the Westpac account ending in 1801, the contents of which Ms Togias stated came from an insurance policy as "was a refund of insurance money owed to Subakti": at [16]. 25. Annexure "M" was said to include documents concerning the sale and lease of land in Indonesia by the Applicant's father for the period stated as including the period July 2005 to March 2012 and a separate period referred to as March 1994 to 5 July 2012. 26. Ms Togias stated that in the period 1 July 2005 and January 2010 she was responsible for keeping the sales records of Bio Form and the preparation of the monthly sales documents. She prepared a summary of sales information from the documentary material available to her in storage. She stated that the entries and the sales documents demonstrated the source of funds coming into Bio Form and can be traced to the Bio Form Westpac account which could then be traced to the "Subakti account ending in 801 and from there could be traced to the account servicing the mortgage". She annexed to her affidavit what was described as a Bio Form sales summary (Annexure "N"): at [18]. 27. Finally, Ms Togias annexed what was described as MYOB sales transaction documents for the period 19 April 2009 to 31 January 2010 (Annexure "O"). Cross-Examination of Ms Togias 1. Ms Togias was cross-examined on her affidavit on 8 March 2016: T 114-131. 2. She accepted that she commenced living with the applicant at or about late 1998-1999: T 114. 3. She confirmed that she was entirely reliant on the applicant for information as to sales at the shop: T 118:35-40. 4. She was cross-examined on a document being a New South Wales Police Property Seizure/Exhibit Form which related to the search of the Glenwood property by police on 29 January 2010. She agreed that a quantity of steroid material was seized by police: T 119. 5. She confirmed that all funds generated in the business were banked to Bio Form: T 124. 6. Mr Togias was cross-examined on her travel movements. She was taken to Exhibit 6 which showed her movements in and out of Australia in relation to visits to Bali. In that respect she was taken to entries dated 6 February 1999, 10 July 1999 and 9 August 1999 (all three relating to trips to Bali). 7. She was arrested on her return from Bali on 7 October 1999 and charged with being in possession of ecstasy tablets. She subsequently pleaded guilty to a drug importation charge in the District Court. The Remarks on Sentence dated 30 March 2001 related to a charge contrary to s 233B(1)(b) of the Customs Act 1901 (Cth) of importing 967.5 grams of MDMA or ecstasy. She was sentenced to a term of 3 years imprisonment to date from 30 March 2001. The District Court directed that she be released forthwith upon entering into a reconnaissance (Exhibit 7). 8. Affidavit of Ms Holz sworn 2 March 2016 9. The fifth affidavit of Ms Holz was provided in reply to the affidavit of Ms Togias sworn 19 February 2016. Declared income of the applicant, Ms Togias and Bio Form 1. Ms Holz reproduced the declared incomes of the applicant and Ms Togias, as provided in her second affidavit and summarised at [53] and noted at [56] above. Ms Holz noted the following: 1. In the financial years of 2006 to 2010, there is nil business income declared by the applicant; and 2. Ms Togias had nil salary and income declared to the ATO for the financial years of 2005 to 2012 inclusive. 1. Ms Holz created a table comparing the trading figures of Bio Form for the period between July 2005 and 30 June 2010 provided from: 1. The summary of sales figures provided by Westfield pursuant to a subpoena in relation to the monthly sales figures provided to Westfield by, or on behalf of, Bio Form located at Westfield Liverpool; 2. The total sales according to the BAS Summary Information provided to the ATO; 3. Funds credited into the Westpac account numbers ending in 3772 and 1544, which Ms Togias deposed were business income; and 4. The sales figures provided in Annexures "N" and "O" of Ms Togias' affidavit while noting that 1. the documents in those annexures are incomplete and not in chronological order; 2. there are no source records provided to verify the authenticity of the figures; and 3. there is a second summary on the second page of Annexure "N" for monthly sales from April 2009 to February 2016. 1. A copy of this comparison table is contained at Annexure 1 of this judgment. 2. In respect of the comparison table, Ms Holz stated at [13]: "Having reviewed my summary I cannot explain the discrepancies therein but the possibilities are that Bio Form has received proceeds from the illegal activity or illegal activities of the Defendant and that the income of Bio Form has been under reported to Westfield and the ATO." 1. In relation to supporting documentation Ms Holz noted at [14] that the tax agent for Bio Form for the financial years 2005 to 2010 was PCP Accounting. She inspected records produced by PCP Accounting on 10 March 2010 in relation to the applicant, Ms Togias and the related business for the 2008 financial year pursuant to the New South Wales Crime Commission Act 1985 (now repealed). Primary financial or accounting records as described at [16] in her affidavit were not produced. In particular, there had been no production of any general ledgers, journal entries, accounting ledgers, cash register tapes or other primary financial records utilised by PCP Accounting in the years 2005 to 2010. 2. Having reviewed the documents produced by PCP Accounting and the ATO records in respect of Bio Form, Ms Holz calculated the surplus funds for the business as follows: 1. Year ended 30 June 2006: $10,089; 2. Year ended 30 June 2007: $25,818; 3. Year ended 30 June 2008: $19,693; 4. Year ended 30 June 2009: $35,880; and 5. Year ended 30 June 2010: $6,959. The Glenwood property and the Jeep Cherokee 1. Ms Holz had regard to RMS records relating to the Jeep Cherokee and deposed at [26] that the declared sale price was $30,000 and not $35,000 as stated in the applicant's evidence. Ms Holz noted that the date of the purchase is handwritten as 23 June 2004 on the Certificate of Registration and not 16 July 2003 as stated at [7] of the applicant's affidavit sworn 7 November 2014. Home loan payments made in respect of the Glenwood property 1. Ms Holz had regard to the Annexures contained within Ms Togias' affidavit concerning home loan payments. 2. She summarised the credits and withdrawals in respect of the Delta home loan account and concluded at [28] that the applicant expended $318,025 on home loan repayments in respect of the Glenwood property. 3. Ms Holz noted that Ms Togias did not provide bank statements in respect of the Westpac account number ending in 1801. These statements were produced to the Commission by Westpac. Having reviewed the statements, Ms Holz summarised all credits into this account, including a total of $211,183 cash credits. Ms Holz deposed at [31] that in the absence of documentation from the applicant, she could not identify the source of the cash credits. Ms Holz repeated that the applicant has declared no business income or supplementary income from any other sources. Business records purportedly in relation to Bio Form 1. Ms Holz had regard to the bundle of documents annexed to Ms Togias' affidavit and marked "J" which appear to be business records purportedly in relation to Bio Form. She conducted a review of a number of the documents and noted at [33] that the dates the records were created or the source of the information used to create this record were not able to be verified. The Seven Hills property 1. Ms Holz had regard to the bank statements for the Westpac account number ending in 3282 covering the period 17 March 2008 to 25 February 2010. This account related to a loan secured against the Seven Hills property. Ms Holz deposed at [35] that there are no significant deposits or withdrawals by the applicant to or from this account since the initial drawdown. She noted that interest payable under this loan contract was debited to the business account of Bio Form. Further Submissions for the Applicant 1. On 18 March 2016, Mr Wendler provided further written submissions, some of which repeated his first set of undated submissions. 2. In respect of the Glenwood property, Mr Wendler stated that the applicant contributed two parcels of money towards the deposit for the property in the sums of $32,011.11 and $5,000 (rather than the previously stated figures of $30,000 and $5,000). Mr Wendler repeated the submission that the applicant received $35,000 for the sale of the Jeep Cherokee, which he submitted was supported by various bank statements for the Westpac account number ending in 1801. 3. Mr Wendler noted that the settlement letter dated 25 July 2003 from the solicitors acting on the conveyance of the Glenmore property identified settlement as occurring on 24 July 2003. Mr Wendler submitted that this corresponds to the debit amount of $32,017.61 in the Westpac account number ending in 1801 on the same date. Accordingly, Mr Wendler submitted that "Having regard to the banking documents concerning the deposit on [the Glenwood property] the applicant has demonstrated that it is more probable than not the deposit in respect of [the Glenwood property] was from untainted funds". 4. Mr Wendler provided further particulars regarding the Glenwood property at [16]. These included a summary of payments made in respect of the loan/mortgage in respect of the property. The summary records payments commencing on 22 August 2003 by direct debit from the Westpac account to the Delta Home loan account. The summary records payments made between the two accounts in respect of the loan on Glenwood between 19 September 2003 and 15 January 2010. The written submissions for the applicant records the following submission at [17]: "A scrutiny of the aforementioned break down of funds coming from Bio Form account ending in 3772 to the 1801 account and then being direct debited to the home loan account demonstrates on the probabilities that was the system applied to service the [Glenwood] mortgage. Further scrutiny of the Bio Form trading account and descriptions there of funds flowing into it eg 'merchant fees', 'merchant settlement', - terms appearing thousands of times in the Bio Form bank records clearly insinuates commercial transactions by Bio Form customers. Further the affidavit of Ms Togias, upon which she was not cross-examined, confirms funds going into Bio Form comprised eftpost [sic], gift card purchases, cash purchases and deposits by Bio Form from daily sales." 1. It may be observed at this point that details as to the "system", referred to in the above submissions, that operated in servicing the Glenwood mortgage and entries in the trading account of Bio Form recording funds such as "merchant fees" do not in themselves operate to establish that the payments made in respect of the Glenwood loan were not sourced, at least in part, in or from illegal activities. 2. Mr Wendler submitted at [19] that the inference drawn by Ms Holz in her fifth affidavit at [17] that surplus funds were inadequate to service the two properties is not convincing because the banking records disclose that Bio Form was in fact servicing the loans on the Glenwood and Seven Hills properties during the relevant periods. 3. In respect of the Seven Hills property, Mr Wendler noted that there is no dispute that a deposit of $34,200 was paid by cheque drawn on the Bio Form account and a balance of $106,000 came from a redraw facility provided by Perpetual. 4. Mr Wendler submitted for the applicant at [23]: "From the time of the purchase of [Seven Hills] the mortgage was serviced from the Bio Form account as an interest only loan no. XXX (see affidavit Togias ex "F" & "G" pp 826/830 & pp 123, 115, 106, 99, 91, 75, 65, 46, 31, 10 and Holz affidavit in reply 2/3/2016 at para 35). From 31 May 2010 the property was leased to XXX with rent being direct debited to Bio Form see affidavit Togias p 4. The applicant submits that given the way the [Seven Hills] was purchased and the mortgage serviced it is more probable than not that no tainted funds were used in respect to this property." 1. In respect of the sums of $1,760 and $31,620 cash seized by Police at Bio Form and the Glenwood property, Mr Wendler submitted at [25] that on the probabilities, the Court would find that these sums were not tainted property and an order should be made excluding the operation of the forfeiture order in respect to these interests. In support of this submission, Mr Wendler relied upon the affidavit evidence of the applicant and Sheree Subakti, the "Bio Form daily sales ledger and cash up banking summary", the police seizure record form and Ms Togias' affidavit. 2. Mr Wendler submitted at [27] that: The effect of the aforementioned evidence is that on the probabilities the cash money found at RCG, given the description of the banking identification on the $20,000 of it and the evidence of Shree [sic] Subakti supported by her banking documents coupled with the evidence of Togias it is more probable than not the RCG money was not tainted. In respect to the $1760 seized from the shop having regard to the evidence of Togias at para 11 of her affidavit and with reference to the Cash Up banking summary – part of Exhibit "E" aforementioned was shop takings comprising $1,116 and $500. There was no cross-examination about the provenance of this money. 1. In respect of the funds held in Westpac account number ending in 1801, Mr Wendler submitted at [29] that these funds have come since 31 May 2010 by direct debit from the lessee of the Seven Hills property and therefore such funds cannot be tainted property. Mr Wendler added that the funds in this account to date are "maybe less than $500 as the interest only amount has been debited monthly to the mortgage holder i.e. Westpac". 2. In respect of the funds held in the ANZ account, Mr Wendler submitted at [31] that on the probabilities this money should be excluded from the operation of the forfeiture order. In support of this submission, it is noted that the amount of $1,200 comprising of deposits of $500 and $700 in April and August of 2008 originated from Bio Form funds. Mr Wendler noted that the applicant was on dialysis during this time and had a kidney transplant in October 2008. Submissions in Reply on Behalf of the Commission 1. Mr Temby provided submissions in reply dated 23 March 2016 on behalf of the Commission. The Commission submitted that the submissions most recently filed for the applicant did not advance the matter as there "still appears to be a lack of appreciation of the fact that he bears the onus of proving that no proceeds of illegal activity went into the acquisition of each of the Glenwood property and the Seven Hills warehouse unit…": at [4] 2. The Commission submitted at [3] that the difficulties with the material that Ms Togias brought forward in her affidavit are twofold and fundamental. First, it was submitted that the bank statements "show what money came in and went out, but in the absence of primary business records say nothing as to whether, and if so the extent to which, proceeds of illegal activities found their way into the relevant accounts". Second, it was submitted that Ms Togias "was entirely reliant on [the applicant] for information as to the sales and the nature of them, and the Court knows that she was unaware of sales by him of cocaine or steroids obtained otherwise than on prescription". 3. The Commission submitted at [8] that if over the relevant six year period, the business had a total income in excess of $2 million, as Mr Wendler contended, then that was little enough given that: 1. The expenses each year were, according to the figures provided to the ATO, more or less the same as income; 2. The payments on the mortgage on the family home came to nearly $40,000 per annum; and 3. The applicant asserted in his submissions that the family was living off the business. 1. As to the applicant's submission that his admitted criminal past occurred in a confined period, from July 2009 to January 2010, the Commission submitted at [10] that it is clear that the applicant committed offences involving illegal drugs in 2006 (resulting in his conviction in 2007), 2009 (resulting in his conviction in November of that year) and in the latter part of that same year through to his arrest in early 2010, and that his drug dealing involved both cocaine and illegal steroids. The Commission added that these offences involved large sums of money. Given that the onus of proving the extent of the applicant's legal income rests on the applicant, the Commission contended that it cannot be said to have been discharged. 2. As to the applicant's submissions regarding the Glenwood property, the Commission submitted at [11] that two things are clear. 3. First, as the submissions for the applicant concede, $37,011.11 was paid by the applicant. Even if (contrary to the submissions for the Commission) the $35,000 or part of it resulted from the sale of the Jeep Cherokee, it remained the case that part of the deposit was not proven as having been from untainted funds. 4. Second, the mortgage payments are referrable to Bio Form business income which was not proven as having been generated only from legal sales. The Commission noted that money passed from the Bio Form to the Westpac account ending in 1801 and from there to the Delta Homes Account. The Commission's contention was that it had not been established that the Bio Form business did not receive proceeds of illegal activities. 5. As to the applicant's submissions regarding the income of Bio Form, the Commission conceded that it is evident that the business had lawful income. However, it submitted at [13] that the entries relied upon by Mr Wendler do not stipulate or help the Court in concluding, that the amounts involved resulted from the purchase of lawful substances only. Accordingly, in the Commission's submission, a matter that remains unproven is the extent to which or how much illegal income flowed through the Bio Form bank account. 6. In relation to the applicant's submission that the inference drawn by Ms Holz in her fifth affidavit to the effect that surplus funds were inadequate to service the two properties, was not convincing, the Commission submitted at [14] that there remains a discrepancy between sales figures that were submitted to the ATO and those advanced by Ms Togias in her affidavit. While it may be the case, it was submitted, that the mortgage payments on the Glenwood property largely came from the Bio Form account, that fact still begs the question as to whether the monies in that account resulted exclusively from legal sales. 7. The Commission noted that the Court had not been provided with either primary source records of the business or with any expert analysis as to the income and expenses associated with its operations. 8. The Commission further noted that the applicant has made no application under s 26 of CARA for a partial exclusion as was open to him in the consent orders made on 5 May 2014. Accordingly, it was submitted, the exclusion application with respect to each forfeited interest in property must succeed or fail wholly. 9. In relation to the applicant's submissions concerning the Seven Hills property, it was observed at [18] that it is clear that $34,200 (the deposit monies) came from the Bio Form business. It was submitted that accordingly the exclusion application must fail as it had not been proved that the business income was confined exclusively to the proceeds of lawful sales. Further, it was noted that the Seven Hills property was purchased in May 2008 and not leased until May 2010, and accordingly for two years the mortgage payments were made from the Bio Form business. 10. As to the applicant's submissions regarding the sums of $1,760 and $31,620 seized by police at the premises of Bio Form and at the Glenwood property, it was submitted at [27] that the difficulty with the figures put forward by Sheree Subakti in her affidavit is that they do not match up with the figures put forward by Ms Togias in her affidavit. Accordingly, it was submitted that the applicant had failed to prove that the monies seized at the time of the applicant's arrest were or included monies paid to him by his former wife. CONSIDERATION 1. The assets forfeiture order made on 5 May 2014 operated to forfeit to and vest in the Crown the specific interests in property specified in the Amended Summons. Those interests in property remain vested in the Crown unless and until the applicant proves that it is more probable than not that those interests in property are not illegally acquired property in accordance with s 25(2) of CARA. It is only if that fact is proved that this Court may make an exclusion order that declares the nature and extent of the interest in property. In such an event the Court would be required to make an order that requires the Crown to vest the interest in the claimant: s 25(3). 2. As the Commission in its submissions observed, underpinning the forfeiture order, being consent order 6 made on 5 May 2014, is the Commission's allegation that the defendant acquired his interest in the specified property (including in particular, the Glenwood and the Seven Hills properties) as a result of alleged serious crime-related activity or alleged illegal activities within the meaning of ss 4 and 6 of CARA. The serious crime-related activity nominated by the Commission was illegal drug trafficking offences in contravention of s 25 of the Drugs Misuse and Trafficking Act 1985. 3. Accordingly, in these proceedings the onus is placed upon the applicant to prove by evidence that each forfeited interest in property was not, even partly, obtained by him or another as a result, directly or indirectly, from illegal activity or illegal activities as defined. The onus of proving the nature and extent of any relevant interests in property not illegally acquired, is upon the applicant. 4. For that onus to be satisfied, it was incumbent for the applicant to prove, on the balance of probabilities, that the monies initially expended to acquire each of the relevant properties and/or monies expended with respect to loan monies advanced by a third party lender to fund the acquisition of such properties, were not derived from an illegal activity or from illegal activities as defined in CARA. 5. The applicant conducted his own business, Bio Form, over a number of years from about 2001 until his arrest in 2010. He was the person who made decisions in respect of the business. He was also the person who acted as the hands‑on operator of it. The evidence establishes that his only known source of income after the year 2000 was that derived through or from that business. Neither he, nor Ms Togias, had available in the relevant period, any known legitimate source or sources of income from which to pay ordinary living expenses for their household which, as at 2010, comprised four persons including himself, or to pay loan/mortgage instalments that were due and payable with respect to loan advances that were used to acquire the Glenwood and Seven Hills properties. 6. Identification of the source or sources of income or earnings of the Bio Form business is, as earlier discussed, a fundamental step in the process of establishing, if possible, that the relevant interests in property were not derived from illegal activities. To that end, the applicant was required to prove by cogent evidence, that in the relevant period the earnings of the Bio Form business were derived from identified lawful business activities. Where, as in this case, the business of Bio Form involved retail sales, proof of the nature and extent of any lawful earnings of the business would require admissible evidence both as to the cost to the business of its wholesale products, other expenses and comprehensive sales data. Based on such evidence, an analysis from the primary financial records of the business, as to the business operations in the relevant period, was essential in identifying the quantum of the legitimate earnings of the business. The approach taken by the applicant in support of the exclusion application made under s 25 of CARA did not, however, involve the production of evidence of that kind or any such analysis. 7. The evidence tendered in the Commission's case as to the earnings of the Bio Form business in the financial years ended 30 June 2006 to 30 June 2010, discloses: 1. A failure by the applicant to verify the true earnings (including all cash receipts) of the Bio Form business in each of those financial years. 2. In respect of each financial year in that period there were discrepancies between monies deposited to the Bio Form Westpac Business Accounts, the level of sales revenue provided by the applicant/Bio Form to the lessor, Westfield, and the total sales figures as per BAS figures disclosed to the ATO. (see Annexure "1" to this judgment.) 3. The absence of any explanation by the applicant as to the reasons for those discrepancies. 4. Earnings received by Bio Form over and above those disclosed to the ATO have not been shown by any evidence to have been earnings from the pursuit of lawful or legitimate trading activities by the applicant. 5. The amount of surplus funds resulting from Bio Form operations available after deduction of business expenses as disclosed to the ATO (and as summarised in Ms Holz's affidavit in reply sworn 2 March 2016 at [17]) were very limited. The evidence does not explain how the applicant managed to fund the living expenses each year for a household of four persons as well as make the loan/mortgage payments each year when, on the evidence, neither he nor his partner, Ms Togias, had available income from any other sources than that generated through Bio Form. 1. The proof of such matters would depend upon the accuracy, nature and content of the primary records of the Bio Form business. Such records would be expected to include the source material provided to the company's tax agent to prepare the annual returns for lodgement with the ATO, including records of the annual purchases and sales, expenditure and income, stock records, ledgers, invoices, sales records etc. 2. The affidavit of Ms Togias, as earlier discussed, contains a large volume of material, including copies of bank statements, BAS records and a limited number of reports on sales transactions. The material included does not include the primary business/financial records of the business referred to in the preceding paragraph for the years up to 2010. 3. The annual returns for the business lodged with the ATO, as earlier noted, were prepared by the applicant's accountant/tax agent of PCP Accountancy based upon the primary records of the business. It would be expected that the tax agent/accountant was in a position to provide information and an analysis of the company's business operations and the sources of its earnings. He was not called to give evidence. The net result is that no evidentiary foundation has been laid as to whether, and if so, how, much of the earnings of Bio Form in each year was derived from legitimate business activities. 4. Although the applicant relied upon Ms Togias' evidence, she had no direct knowledge as to the sales of the Bio Form business, nor as to the full range of business activities that generated its earnings. In particular, she was unaware of cocaine or steroid sales (other than obtained on prescription) made by the applicant. As Ms Togias stated in cross-examination, she was essentially reliant upon the applicant for information about the business. (i) Glenwood Property 1. The evidence established that the only reasonably large deposits made to the accounts controlled by the applicant at the time of the alleged sale of the Jeep Cherokee in 2003, were deposits made on 18 July 2003 ($11,500) and 22 July 2003 ($20,000). There is, however, no evidence that links those deposits to the sale of the Jeep Cherokee. Further, there is no evidence that explains the documents at Commission's Tender Bundle, Vol 2, Tab 5. These refer to the sale of the Jeep Cherokee on a date approximately twelve months after the acquisition of the Glenwood property. The documents include an RTA "Ownership History". At page 145 of Vol 2, the named purchaser of the vehicle is shown to have acquired the Jeep Cherokee for $30,000 on 23 June 2004, the "transfer date" being shown as 24 June 2004. The applicant did not displace the effect of this evidence by any evidence that was corroborative of his own evidence as to a sale of the vehicle to a purchaser in 2003. 2. The evidence does not establish when the applicant commenced to engage in the sale of steroids and prohibited drugs. The evidence of his offending in the period from July 2009 to January 2010, as discussed above, was wholly related to controlled operation prohibited drug transactions. There is no onus of proof upon the Commission to establish whether and what or when or how long before that period the applicant was or was not engaged in any particular type of illegal activity. 3. As to any monies, including in part deposits paid by the applicant towards the purchase price of the Glenwood property there is no direct or primary evidence that establishes the source of any such monies applied by the applicant. At [7] of the applicant's affidavit sworn 7 November 2014, the applicant states, by way of assertion, that the "deposit money [for the purchase of Glenwood] came from the sale and re-financing of the Wentworthville unit". The Annexures to his affidavit, in particular the solicitor's statement in respect of the purchase refers to "Amount Contributed by You: $32,011.11". Without primary evidence as to the source of that amount or any monies paid towards the purchase of the property, the applicant has not discharged either an evidentiary or ultimate burden of proof that the monies were generated from lawful sources. 4. A basis for the forfeiture having been established, as earlier stated, the applicant in seeking to have excluded specified interests in property has the onus of establishing that monies invested or expended in or on the Glenwood property were not tainted by illegality. 5. The evidence establishes that the business of Bio Form was the source of funds to pay loan instalments in respect of the Glenwood property and, in respect of the two years after purchase of the Seven Hills property (funds having been transferred from the Bio Form account to the applicant's personal bank account). There was no evidence that established that funds (or any part of the funds) held in that account from which loan instalments were made had not been derived through illegal activities. 6. The same position applies to the $37,011.11 contributed to the purchase of the Glenwood Property. The evidence did not establish that that amount did not come from illegal activities. (ii) Seven Hills Property 1. As noted above, the applicant's evidence was that he purchased the Seven Hills property in or about 22 May 2008 for $342,000. He said he paid a deposit of $34,200 and the balance came from a redraw facility provided by Perpetual in the amount of $106,000. He deposed that he deposited two sums into the redraw facility in the amounts of $80,000 and $75,000 which originated from a transfer from Indonesia and settlement money following a commercial dispute. 2. As noted above, from the time of the purchase of the Seven Hills property until 31 May 2010, the loan on the property was serviced on the Bio Form account as an interest only loan. From 31 May 2010 the property was leased with rental monies being debited to Bio Form. 3. The evidence in the applicant's case failed to establish that the deposit of $34,200 contributed to the purchase of the Seven Hills Property, the $80,000 received from Indonesia or the sum of $75,000 said to have been as a result of the settlement of a commercial dispute were not derived from, in whole or in part, illegal activities. 4. On the question as to whether the applicant has an interest in the property which is capable of being excluded, so far as the Seven Hills property is concerned (and the same applies to other property the subject of the forfeiture order) an interest in property is illegally acquired property if it is all or part of the proceeds of illegal activity, or was wholly or partly acquired using illegally acquired property: see s 9 of CARA. That section provides, inter alia, that an interest in property is serious crime derived property if it "is all or part of the proceeds of a serious crime related activity". 5. In the Commission's Written Submissions in reply dated 23 March 2016, it was noted at [17] that the applicant had made no application under s 26 for partial exclusion made by him with respect to each forfeited interest in property must succeed or fail wholly. It was there noted that the consent orders made on 5 May 2014 stipulated the types of applications the applicant could make and he had chosen to apply under s 25 only. 6. The applicant having failed to establish that the funds used by him in the acquisition of the Seven Hills property were not derived from an illegal activity or activities, he has not, in my assessment, established an interest in the Seven Hills property that may be excluded under s 25 of CARA. (iii) Cash identified as $1,790 and $31,620 respectively seized by police on 29 January 2010 1. As noted above, the applicant's evidence regarding the cash amount of $31,620 seized by police was that the money "mostly comprised from my ex-wife Sharee Subakti" who had sold a property they purchased together and had owed him money that he had previously lent her. His evidence regarding the cash amount of $1,790 was that it was money from the previous night's sale of merchandise. 2. The principal evidence relied upon by the applicant, apart from his own evidence, consisted of the copies of the Commonwealth Bank statements relating to Sheree Subakti's account, which recorded withdrawals, in particular on 18 January 2010 in the amount of $32,000 and the statutory declaration of the Sheree Subakti sworn on 24 March 2011. 3. In her statutory declaration, it is stated that she gave her ex-husband, the applicant, cash totalling $40,000. These included three amounts of $5,000 said to have been paid on 28 January 2010, $32,000 said to have been paid on 18 January 2010 and $3,000 said to have been paid on 15 January 2010. 4. The search warrant was said to have been executed on 29 January 2010. 5. The police property seizure/exhibit form (Plaintiff's tender bundle vol. 3 at tab 6 pp 30-31) record seizure of a Commonwealth Bank envelope containing two bundles of Australian currency totalling $20,000. 6. As noted above, it was contended in the written submissions for the applicant that the effect of the evidence is that on the probabilities the cash money found at the Glenwood property during the execution of the search warrant renders it more probable than not that the money was not tainted: at [27]. 7. There is however an absence of evidence that establishes that either the whole or part of the cash seized comprised or was made up from any cash amounts the applicant's ex-wife paid to him on the occasions referred to in her statutory declaration. In circumstances in which there is evidence that the applicant had been engaged in the sale and supply of cocaine, the requirement that cogent evidence be adduced to establish that the cash was not in whole or in part related to an illegal activity or activities was in my assessment not met by the evidence upon which the applicant relied. Accordingly, the applicant in my opinion has failed to establish a basis for exclusion of the cash seized. 8. As to the amount of $1,790 seized by police (incorrectly stated at [24] of the applicant's Written Submissions as the amount of $1,760), I have referred to the evidence relied upon by the applicant at [182]. Such evidence amounts merely to assertion by the applicant unsupported by cogent evidence. Having regard to my assessment below as to the applicant's lack of reliability as a witness, I do not consider that that evidence discharges the applicant's onus of proof, that is, that the monies were not derived from an illegal activity or activities. (iv) Funds in the ANZ account and the Westpac account number ending in 1801 1. In respect of the funds in the ANZ account, in the amount of $1,200 comprising deposits of $500 and $700 in April and August of 2008, the applicant's written submissions at [31] refer to his affidavit sworn 7 November 2014 at [11]. In that paragraph, the applicant simply states that the ANZ account "…which I understand has an amount of about $1200 is money from sales at Bio Form". The applicant has not adduced evidence that establishes that the monies received from Bio Form and placed into the account were not monies received in whole or part from illegal activity by the applicant or any other person. 2. The funds in the Westpac account number ending in 1801 were the subject of written submissions on behalf of the applicant at [29]. There it was asserted that the funds represent monies that were received by the applicant from the lessee of the Seven Hills property. 3. At [8] of Ms Togias' affidavit sworn 19 February 2016, reference is made to income in respect of the Seven Hills property initially being deposits into the Bio Form account from 31 May 2010 to 15 August 2014 and that she then requested the monies be deposited into the Westpac account number ending in 1801 which received funds from the lessee of the Seven Hills property from 15 September 2014. Copies of bank statements for this account were annexed and marked with the letter "H". However, the entries in these statements do not contain entries referrable to rental payments from the Seven Hills property. 4. On the evidence, the applicant has not established that the balance held in the Westpac account number ending in 1801 comprised funds that originate from a lawful source. In other words, the applicant failed to establish that those funds were unrelated to illegal activities carried on by him or other persons. Conclusions 1. The applicant has, for reasons set out above, failed to prove that each forfeited interest in property was not, even partly, derived or realised as a result of, direct or indirect of illegal activity or activities as defined in s 4(1) of CARA. I am accordingly satisfied, on the evidence, that the application for an exclusion order under s 25(1) of CARA should be dismissed. PART II – PROCEEDS ASSESSMENT ORDER APPLICATION 1. This Part is concerned with the Commission's application under s 27 of CARA for a proceeds assessment order. I will refer to Mr Subakti in this Part as the 'defendant'. 2. On 15 February 2010, the Commission applied to the Court by way of Summons for an order pursuant to s 27(1) of CARA that the defendant pay to the Treasurer an amount assessed by the Court as the value of the proceeds derived from the illegal activity, or illegal activities, of the defendant that took place not more than six years before the making of the application. 3. On 5 May 2014 the Court made an order that judgment be given for the Commission, in an amount to be assessed, on its application for the proceeds assessment order. 4. In support of its application for a proceeds assessment order under s 28 of CARA, the Commission initially submitted that the defendant's expenditure during the relevant period, namely during the six years before 15 February 2010, is as follows: Mini Cooper – have, use false instrument $36,900 (not disputed) Cash seized – proceeds of crime $4,615 (not disputed) Acquisition of anabolic steroids $83,380 Acquisition of cocaine $96,000 Drug proceeds expended $103,750 (not disputed) Mortgage payments on Glenwood property $318,025 Paid to OSD Marketing $48,000 Paid to HVME $180,000 Expenditure on Peat Court property $36,648 TOTAL $907,318 1. In the further written submissions provided to the Court on 18 March 2016, Mr Wendler accepted that the following amounts (referred to in the preceding paragraph as "not disputed"), will be assessed as proceeds of illegal activity: 1. $103,750 (drug proceeds expended); 2. $4,615 (proceeds of crime); and 3. $36,900 (use, have false instrument). Part A: LEGISLATIVE PROVISIONS: PROCEEDS ASSESSMENT 1. Division 2 of Part 3 of CARA is concerned with proceeds assessment orders. Section 27 of CARA provides: (1) The Commission may apply to the Supreme Court for a proceeds assessment order requiring a person to pay to the Treasurer an amount assessed by the Court as the value of the proceeds derived by the person from an illegal activity, or illegal activities, of the person or another person that took place not more than 6 years before the making of the application for the order, whether or not any such activity is an activity on which the application is based as required by subsection (2) or (2A). (2) The Supreme Court must make a proceeds assessment order if the Court finds it to be more probable than not that the person against whom the order is sought was, at any time not more than 6 years before the making of the application for the order, engaged in: (a) a serious crime related activity involving an indictable quantity, or (b) a serious crime related activity involving an offence punishable by imprisonment for 5 years or more. (2A) The Supreme Court must make a proceeds assessment order against a person (other than an individual who is under the age of 18 years) if the Court finds it more probable than not that: (a) the person derived proceeds from an illegal activity or illegal activities of another person, and (b) the person knew or ought reasonably to have known that the proceeds were derived from an illegal activity or illegal activities of another person, and (c) the other person was, at any time not more than 6 years before the making of the application for the order, engaged in: (i) a serious crime related activity involving an indictable quantity, or (ii) a serious crime related activity involving an offence punishable by imprisonment for 5 years or more. (2B), (2C) (Repealed) (3) A finding of the Court for the purposes of subsection (2) or (2A) need not be based on a finding as to the commission of a particular offence or a finding as to any particular quantity involved, and can be based: (a) on a finding that some offence or other constituting a serious crime related activity and punishable by imprisonment for 5 years or more was committed, or (b) on a finding that some offence or other constituting a serious crime related activity was committed involving some quantity or other that was an indictable quantity. (4) The references in subsections (1) and (2) to a period of 6 years include a reference to a period that began before the commencement of this section. (4A) The reference in subsection (2A) to a period of 6 years includes a reference to a period that began before the commencement of that subsection. (5)–(12) (Repealed) 1. Once the Court has determined to make an order under s 27, it is required to assess the value of the proceeds derived from illegal activities that took place not more than 6 years before the making of the application for the order. In that respect it is noted that the term "proceeds" is defined in s 4(1) of CARA as follows: proceeds, in relation to an activity, includes any interest in property, and any service, advantage or benefit (including, without limitation, an increase in the value of an interest in property), that is derived or realised, directly or indirectly, as a result of the activity: (a) by the person engaged in the activity, or (b) by another person if the person engaged in the activity: (i) intended for the other person to derive or realise (whether directly or indirectly) the interest, service, advantage or benefit, or (ii) knew, or ought reasonably to have known, that the other person would be likely to derive or realise (whether directly or indirectly) the interest, service, advantage or benefit. 1. Section 28 prescribes that for the purpose of making an assessment for a proceeds assessment order under s 27 in relation to the proceeds derived by a person from an illegal activity or activities of the person or another person the Supreme Court is to have regard to the matters set out in s 28(1). 2. Section 28 of CARA is in the following terms: (1) For the purpose of making an assessment for a proceeds assessment order under section 27 in relation to the proceeds derived by a person (in this section called "the defendant" ) from an illegal activity, or illegal activities, of the person or another person the Supreme Court is to have regard to the following matters: (a) the money, or the value of any interest in property other than money, directly or indirectly acquired by: (i) the defendant, or (ii) another person at the request, or by the direction, of the defendant, because of the illegal activity or activities, (b) the value of any service, benefit or advantage provided for: (i) the defendant, or (ii) another person at the request, or by the direction, of the defendant, because of the illegal activity or activities, (c) the market value, at the time of the illegal activity or of each illegal activity, of a plant or drug similar, or substantially similar, to any involved in the illegal activity or each illegal activity, and the amount that was, or the range of amounts that were, ordinarily paid for an act similar, or substantially similar, to the illegal activity or each illegal activity, (d) the value of the defendant's property before and after the illegal activity or each illegal activity, (e) the defendant's income and expenditure before and after the illegal activity or activities. (2) If evidence is given at the hearing of an application for a proceeds assessment order that the value of the defendant's property after an illegal activity or illegal activities of the defendant exceeded the value of the defendant's property before the activity or activities, the Supreme Court is to treat the excess as proceeds derived by the defendant from the activity or activities, except to the extent (if any) that the Supreme Court is satisfied the excess was due to causes unrelated to an illegal activity or activities. (3) If evidence is given at the hearing of an application for a proceeds assessment order of the amount of the defendant's expenditure during the period of 6 years before the making of the application for the order, the Supreme Court is to treat any such amount as proceeds derived by the defendant from an illegal activity or activities, except to the extent (if any) that the Supreme Court is satisfied the expenditure was funded from income, or money from other sources, unrelated to an illegal activity or activities. (3A) The Supreme Court is not to take expenditure into account under subsection (3) to the extent that the Court is satisfied that it resulted in the acquisition of property the value of which is taken into account under subsection (2). (4) In making an assessment as provided by this section, none of the following amounts are to be subtracted: (a) expenses or outgoings incurred by the defendant in relation to the illegal activity or activities, Note: For example, in the case of an illegal activity involving the sale of drugs, in determining the value of the proceeds derived by the defendant from the sale of drugs there is to be no reduction on account of any expenditure by the defendant in acquiring the drugs. (b) the value of any proceeds derived as agent for or otherwise on behalf of some other person (whether or not any of the proceeds are received by that other person). Note: For example, where the defendant is paid money for drugs in the course of a "controlled buy" but was acting merely as an agent or messenger for some other person (and gives the money to the other person), in calculating the proceeds derived by the defendant the amount given to the other person is not to be subtracted and the full amount is considered to have been derived by the defendant. (5) This section applies to, and in relation to: (a) property that comes into the possession, or under the effective control, of a person either within or outside New South Wales, and (b) proceeds acquired either within or outside New South Wales in relation to an illegal activity. 1. The first issue the Commission is required to establish, on the probabilities, is that the defendant was knowingly engaged in illegal activity as defined in s 4 of CARA. The Commission must also establish, for the purposes of s 28(3), the amount of the defendant's expenditure during the period of six years before 15 February 2010. 2. In the event that the Commission satisfies the Court on the civil standard of that expenditure, then it must treat that amount as proceeds derived by the defendant from an illegal activity or activities, except to the extent that the Court is satisfied by the defendant, on the balance of probabilities, that the expenditure was funded from income, or money from other sources, unrelated to an illegal activity or activities. 3. As has been observed, the assessment task under s 28 is "an apparently comprehensive and complete regime": New South Wales Crime Commission v Kelaita (2008) 75 NSWLR 564; NSWCA 284 at [38]. It is noted that s 28(3) (see above) provides that the Court: "…treat any such amount as proceeds derived by the defendant from an illegal activity or activities." 1. Attention is not confined to the alleged illegal activity which triggered the application in the present case. The Commission in these proceedings specifically relies upon the defendant's dealing in illegal drugs, in particular, anabolic steroids and narcotics, resulting in him having been dealt with in a criminal court. Accordingly, in the present proceedings it is necessary to have regard to the following matters: 1. Money directly or indirectly acquired by the defendant or at his direction from illegal activities: s 28(1)(a); 2. The defendant's expenditure during the six years before 15 February 2010 except to the extent that it is proved to be funded from money unrelated to any illegal activities: s 28(3); 3. What findings ought to be made concerning individual items of expenditure; and 4. There is not to be subtracted expenses or outgoings incurred by the defendant in relation to the illegal activities: s 28(4). PART B: OFFENCES COMMITTED BY THE DEFENDANT 1. On the evidence, Mr Subakti (who I will refer to in relation to the proceeds assessment order application as "the defendant") committed offences involving illegal drugs in 2006 (resulting in his conviction in 2007), 2008 (resulting in his conviction in November 2009) and in the latter part of 2009 until his arrest in early 2010. 2. In respect of his past offending, the evidence includes the Agreed Statement of Facts relating to the earlier offences and the offences charged in 2010. A copy of this Statement was included in the Commission's Tender Bundle Exhibit "IH-1" (Vol 2/4) at p 215-224. 3. The applicant was charged with three counts of drug supply contrary to s 25(2) of the Drugs Misuse and Trafficking Act 1985. Count 1 comprised the following offences that occurring as part of a NSW Police controlled operation in 2009 at Bio Form: 1. On 12 August 2009, the defendant negotiated the sale of one ounce of cocaine for $8,500. The plastic bag was analysed at the Division of Analytical Laboratories (DAL) and was confirmed to contain 27.4g of cocaine with a purity of 59.5%. 2. On 20 August 2009, the defendant negotiated the sale of one ounce of cocaine for $8,500. The plastic bag was analysed at DAL and was confirmed to contain 27.7g of cocaine with a purity of 60.5%. 3. On 25 August 2009, the defendant negotiated the sale of one ounce of cocaine for $8,500. The plastic bag was analysed at DAL and was confirmed to contain 28.1g of cocaine with a purity of 54.5%. 4. On 31 August 2009, the defendant negotiated the sale of one ounce of cocaine for $8,500. The plastic bag was analysed at DAL and was confirmed to contain 28.1g of cocaine with a purity of 60%. 5. On 16 September 2009, the defendant negotiated the sale of two ounce of cocaine for $17,000. This was supplied in two plastic bags which were analysed at DAL and confirmed to contain 55.7g of cocaine with a purity of 65.5%. 6. On 30 September 2009, the defendant negotiated the sale of two ounce of cocaine for $17,000. This was supplied in two plastic bags which were analysed at DAL and confirmed to contain 55.1g of cocaine with a purity of 61%. 7. On 4 November 2009, the defendant negotiated the sale of two ounce of cocaine for $17,000. This was supplied in two plastic bags which were analysed at DAL and confirmed to contain 55.8g of cocaine with a purity of 64.5% and 67.5%. 8. On 17 November 2009, the defendant negotiated the sale of two ounce of cocaine for $17,000. This was supplied in two plastic bags which were analysed at DAL and confirmed to contain 27.8g and 27.8g of cocaine with a purity of 69.5% and 70.5% respectively. 1. Count 2 related to a further offence of drug supply. On about 17 November 2009, in a controlled operation, the defendant offered to supply the undercover operative a commercial quantity of cocaine for $215,000. 2. Count 3 related to a further offence of drug supply. Between 27 and 29 January 2010, the defendant offered an undercover operative ten ounces of cocaine for a cost of $8,400 per ounce. The defendant and the undercover operative agreed to meet on 29 January 2010. The defendant was arrested at Bio Form around 11:45am on that date. A subsequent search warrant was executed on the Bio Form premises where ten packages containing white powder were found. These were subsequently analysed to be 279g of cocaine with a purity level of 83%. It was alleged that the defendant intended to supply these packages to the undercover operative. 3. The defendant was convicted of three counts of supply prohibited drug (namely cocaine), commercial quantity, contrary to s 25(2) of the Drug Misuse and Trafficking Act 1985. There were thirteen offences on a Form 1 being: * Three charges of supply restricted substance; * One charge of supply prohibited drug; * One charge of knowingly deal with proceeds of crime; * Two charges of possess prohibited drug; * Four charges of possess prescribed restricted substance; * One charge of false instrument with intent; and * One charge of false instrument with intent to use: (Plaintiff's Tender Bundle, Vol 1, Tab 10) 1. Particulars as to the three counts of supply prohibited drug (cocaine) are as follows: * 279 grams of cocaine being an amount not less than the commercial quantity ("the first drug supply offence"); * An amount of cocaine not less than the commercial quantity ("the second drug supply offence"); and * 333.5 grams of cocaine being an amount not less than the commercial quantity ("the third drug supply offence"). (Plaintiff's Tender Bundle, Vol 1, Tab 8) 1. The sentences imposed by the District Court were as follows: * In respect of the first count, to a term of imprisonment of 6 years commencing 29 January 2010 and expiring 28 January 2016 with a non-parole period of 3 years; * In respect of the second count, to a term of imprisonment of 4 years commencing 29 January 2011 and expiring 28 January 2015 with a non-parole period of 2 years; and * In respect of the third count, to a term of imprisonment of 7 years commencing 29 January 2011 with a non-parole period of 3 years. (Plaintiff's Tender Bundle, Vol 1, Tab 8) PART C: AFFIDAVIT EVIDENCE Affidavit of Ms Holz sworn 30 January 2015 1. The fifth affidavit of Ms Holz related to expenditure by the defendant in the period from 30 January 2004 to 29 January 2010, being the period in relation to which the Commission seeks a proceeds assessment order. 2. Ms Holz prepared a schedule summarising the known expenditure of the defendant for the relevant period, as follows: Description Amount Paragraph 2010 Criminal offences: 2010 expenditure to acquire anabolic steroids (758 vials x $175) $132,650 14 2010 expenditure to acquire cocaine $138,000 15 2010 Drug proceeds expended $103,750 13 2010 Form 1 – proceeds of crime $4,615 16(1) and 17 2010 Form 1 – use, have false instrument $36,900 16(2) and 17 Expenditure at Commonwealth Bank, Bali $41,450 19 and 20 Expenditure on Peat Court Property $36,648 25 Expenditure on Seven Hills Property $80,000 27 Expenditure on OSD Marketing Pty Ltd $48,000 32 Expenditure on Sheree Subakti Loan $20,000 34 Expenditure in HVME Pty Ltd $180,000 40 Total Expenditure $822,013.00 1. As noted above, a number of these expenses were conceded by the defendant to fall within the scope of the proceeds assessment order. The above schedule of alleged expenditure was subsequently revised in the manner referred to in the discussion below. (i) Expenditure to acquire cocaine and anabolic steroids ($138,000 and $132,650) 1. Having regard to the Agreed Statement of Facts, Ms Holz noted the following: 1. On three occasions between 15 July 2009 and 6 August 2009, the defendant supplied a total of five vials of anabolic steroids (namely testosterone in the amount of 44.33g) to an undercover operative for $350 per vial from Bio Form for a total amount of $1,750; 2. On eight occasions between 12 August 2009 and 17 November 2009, the defendant supplied prohibited drugs (namely cocaine in the amount of 333.5g or 12 ounces) to an undercover operative for $8,500 per ounce from Bio Form for a total amount of $102,000; and 3. On 29 January 2010: 1. The defendant agreed to meet with an undercover operative at Bio Form for the purpose of supplying 10 ounces of cocaine for $82,000 to the undercover operative; and 2. Pursuant to a search warrant, ten packages of white powder were located and seized at Bio Form. The packaged were analysed at DAL and confirmed to contain 279g of cocaine with a purity of 83%. 1. Ms Holz stated that she assumed that the defendant would, at the very least, have purchased 612.5g of cocaine or 22 ounces of cocaine (being the sum of the amount supplied to the undercover operative and 275g seized from Bio Form) to be able to on-sell the same amount. Assuming that the cost to the defendant of the cocaine was 75% of the final selling price, the total cost of the cocaine was estimated at $138,000. 2. Ms Holz deposed that she was present when police executed a search warrant at the Glenwood property on 29 January 2010. During this search 753 vials were seized from the property (erroneously recorded as 758 vials by Ms Holz). Ms Holz deposed that she has assumed that the defendant would have had to, at the very least, purchased 758 vials of anabolic steroids to be able to on-sell the same amount. She further assumed that the defendant expended a conservative amount of $132,650 on the purchase of the anabolic steroids, being half of the price paid by the undercover operative (per vial). (ii) Expenditure at Commonwealth Bank, Bali ($41,450) 1. Ms Holz noted her analysis regarding this expenditure contained within her second affidavit, as summarised at [67] above. (iii) Expenditure on Peat Court property ($36,648) 1. Ms Holz referred to her analysis regarding this expenditure contained within her first affidavit, as summarised at [66] above. In [7] of that affidavit, Ms Holz observed that on 29 January 2010 police executed a search warrant at the premises of Bio Form and located and seized a number of items, including a Declaration of Trust dated 8 May 2008. The Declaration specified the defendant's son as "Trustee" and the defendant as "beneficiary". 2. The Declaration referred in the recitals to a contract of sale whereby the trustee (the defendant's son) acquired the Peat Court property and that the trustee had secured a home loan for the property and for the construction of a house in the amount of $355,300. 3. Under recital (3), the parties agreed that the "beneficiary" (namely the defendant) would pay monthly repayments in respect of the loan and all other charges on the property. 4. Recital (4) stated that it was the intention of the parties that the trustee "…will hold the property pursuant to the Trust hereinafter created on trust for the BENEFICIARY". 5. Ms Holz also identified documents seized pursuant to the execution of the Glenwood search warrant. The documents included a "Settlement Statement" dated 21 April 2008 in respect of the Peat Court property and a Westpac bank deposit voucher attached to the statement recording a cash deposit of $36,648.90 on 18 April 2008. 6. Ms Holz also referred to her second affidavit, in particular, as to the ATO profile of Bio Form showing that the total salaries, wages and payments for the financial years of 2005 to 2008 was a total of $5,404. 7. Ms Holz stated that on the basis of the evidence to which she referred, she held the belief that the defendant's expenditure in relation to the Peat Court property was $36,648.90. (iv) Expenditure on Seven Hills property ($80,000) 1. Ms Holz referred to her analysis regarding this expenditure contained within her second affidavit as summarised at [65] and [66] above. 2. She deposed that having regard to the circumstances surrounding the acquisition of the Seven Hills property by the defendant, she concluded that his expenditure in relation to the property was $80,000 (representing monies sent from Indonesia). (v) Expenditure on OSD Marketing Pty Ltd ($48,000) 1. Ms Holz had regard to documents seized pursuant to the Glenwood search warrant and in particular to a document that appeared to be a payment receipt dated 22 October 2008 recording $48,000 received by OSD Marketing from the defendant. 2. Ms Holz had further regard to the transcript of the examination of the defendant before Deputy Registrar Durkin on 28 March 2013, and in particular to pages 43 to 47 where he gave evidence in relation to the OSD payment receipt. 3. Ms Holz deposed that having regard to this evidence, she concluded that the defendant's expenditure in relation to OSD was $48,000. (vi) Expenditure on loan to Sheree Subakti ($20,000) 1. Ms Holz referred to her analysis regarding this expenditure contained within her second affidavit as summarised at [77]. Ms Holz deposed that the defendant's expenditure in relation to this loan was $20,000. (vii) Expenditure in HVME Pty Ltd ($180,000) 1. The Hunter Valley Mining Equipment (HVME) matter was the subject of evidence in Ms Holz's first affidavit at [13] to [16]. In that affidavit Ms Holz deposed that she was informed by Detective Shaun Ryan of the NSW Police Force that he had listened to an intercepted telephone call on 4 November 2009. In this call, the defendant (using an intercepted mobile telephone) called a number in Badung, Bali and spoke to a male he referred to as "father". The defendant directed the male to go to the Commonwealth Bank the following day and transfer AUD$100,000 to Australia. The defendant told the male that he would send a text with the name of the company and the account number where the money was to be sent. 2. On that same day, the defendant sent a text message from his intercepted mobile telephone which stated: "tell Father to transfer the money to Hunter Valley Mining Equipment (NSW) Pty. Ltd. Westpac Cronulla Branch. Bsb [number provided] acc [number provided]. Please don't forget tomorrow". 3. Ms Holz further deposed that a Commonwealth Bank statement for an account ending in 9763 held in the name of "Wayan Tresnanda" and the defendant for the period 3 July 2007 to 31 July 2007 was located during the execution of the search warrant at the Glenwood property. 4. Ms Holz conducted a search of the records held by Australian Transaction Reports & Analysis Centre in relation to the defendant that show that: 1. On 23 May 2008 Wayan Tresnanda remitted $80,000 from the account number ending in 9763 to the defendant; and 2. On 6 November 2009 Wayan Tresnanda remitted $100,000 from the account number ending in 9763 to an account held by Hunter Valley Mining Equipment. 1. Ms Holz deposed that on 12 February 2010, she conducted an ASIC search in respect of HVME. Records located by her indicate that the defendant is not a director, secretary or shareholder in this company. 2. In her third affidavit, Ms Holz deposed that she has had regard to documents produced to the Commission on 2 March 2010 by Bilbie Dan Solicitors acting for HVME. Ms Holz further deposed that on 23 April 2010 she received a letter from Bilbie Dan Solicitors in which the following key statements are made: "Upon further enquiries made by the Managing Director of HVME, it is apparent that HVME has had the benefit of a further $80,000.00 in cash from Mr Subakti, paid to an employee of HVME. The source of these funds was not known to our Managing Director at the time, though upon investigation it is clear the monies have been applied to the payment of bills of the company and therefore for the benefit of the company. There are no records as such to produce as the monies received were in cash by the employee, except insofar as there are records of the bills these funds were applied to (which can be produced if necessary). In any event, HVME is prepared to acknowledge the further $80,000 amount received. … The only document that touches on the suggestion of re-payment of Mr Subakti's initial investment of $100,000.00 (refer to our initial correspondence to you dated 2 March 2010) is the draft letter provided at that time dated 23 November 2009. Our client is not sure whether or not this letter was formally provided to Mr Subakti, but contends it probably was. In any event the only investment made by Mr Subakti pursuant to that correspondence was the first initial investment of $100,000.00. There was not time between the 23rd of November 2009 and the time in February 2010 when Mr Subakti found himself in police trouble for, fortunately, any further investment in HVME to be undertaken by Mr Subakti or for there to be any return on investment paid by HVME." 1. Having regard to the above information, Ms Holz calculated the total expenditure of the defendant in HVME as $180,000 (consisting of an initial investment in HVME of $100,000 and cash provided to an employee of HVME of $80,000). Affidavit of the Defendant sworn 5 May 2015 1. The affidavit of the defendant sworn 5 May 2015 was relied upon by him in reply to the third affidavit of Ms Holz. 2. In respect of Ms Holz' evidence regarding the expenditure to acquire 758 vials of anabolic steroids amounting to $132,650, the defendant deposed that he was never charged in relation to the 758 vials. The defendant added that as best he can remember, he acquired the vials "on credit for $10 and the substance contained in them as best I understand was not an illegal substance". 3. In respect of Ms Holz' evidence regarding the expenditure on cocaine amounting to $138,000, the defendant deposed that prior to his arrest he sold cocaine on eight occasions for $8,500 per ounce and made $500 per ounce. He further deposed that he arranged for this cocaine only after receiving an order from the undercover operative and that he "merely transferred this money to the seller subtracting $500 on each occasion". 4. In respect of Ms Holz' evidence regarding the agreement on behalf of the defendant to meet an undercover operative at Bio Form for the purpose of supplying 10 ounce of cocaine for $82,000, the defendant deposed that he never received money in exchange for this agreement as he was arrested by police before the transaction was completed. He noted that the 10 ounces of cocaine was seized by police during the arrest. 5. In respect of Ms Holz' evidence regarding the expenditure at the Commonwealth Bank in Bali amounting to $41,450, the defendant deposed that as best he can remember, he travelled to Bali with his family on or about 2 July 2007. He further deposed that this bank account is a joint account with his father and that he would "always attend" the Commonwealth Bank in Bali with his father. He gave the following evidence regarding this expenditure: "I only now have a vague recollection now of visiting Bali in October 2007 however during this time I was assisting my father with sales of land in Bali. The usual practice in Bali is to approach a money changer and convert Indonesian currency to either American or Australian dollars before depositing the money in the bank this would also attract a better interest rate on the deposit." 1. In respect of Ms Holz' evidence regarding the expenditure on the Peat Court property amounting to $36,648, the defendant deposed that this money was deposited by his son, Craig Subakti, and was money applied towards the purchase of the property. He deposed that this money was part of a compensation payout arising from the Bali Bombing in which both his sons were injured. 2. In respect of Ms Holz' evidence regarding the expenditure on the Seven Hills property amounting to $80,000, the defendant deposed that this was addressed by him in his affidavit sworn 7 November 2014, as summarised at [38] to [41] above. 3. In respect of Ms Holz' evidence regarding the expenditure on OSD Marketing amounting to $48,000, the defendant deposed that OSD Marketing was a mixed business concerned with sports car rental. The defendant deposed that he provided three sports cars to OSD which would rent them to customers mostly for weddings, drive days and airport pickups. In relation to the sum of $48,000 he deposed that he paid it to OSD for what he believed to be shares in OSD and the purchase of a Hummer vehicle. He added that he had made that sum of money through renting his sports cars and reinvesting the money with OSD. 4. In respect of Ms Holz' evidence regarding the expenditure on Sheree Subakti amounting to $20,000, the defendant deposed that he never gave Sheree Subakti $20,000 in a single lump sum. His evidence was that he accepted that "over many years I gave Sheree discrete amounts of money which she and I treated as loans with the intention of the money being re-paid when she was able". The defendant added that the two of them eventually agreed that the amounts of the loans had totalled $20,000 and they made an agreement in writing that she would repay that figure once the house at Riverstone had sold. 5. In respect of Ms Holz' evidence regarding the expenditure on HVME amounting to $180,000, the defendant deposed that $100,000 of this figure was direct deposited into the HVME Wespac account by his father and that the remaining $80,000 was paid by him (the defendant) on the understanding that the money was for shares. He added that the $80,000 was his father's money and had previously been transferred to the defendant for the purpose of investment in "Rhino Energy drinks", a venture which did not go ahead. The defendant annexed copies of a declaration signed by his father and banking documents concerning these transfers. 6. It is noted at this point that there was no evidence called from the father other than documentation as attached to the defendant's second affidavit. Affidavit of Ms Holz sworn 18 June 2015 1. The fourth affidavit of Ms Holz was provided in reply to the affidavit of the defendant sworn 5 May 2015. 2. In respect of the defendant's evidence regarding the Peat Court property, Ms Holz referred to her analysis regarding this expenditure contained within her third affidavit, as summarised at [227] above. At [22] of that affidavit, Ms Holz deposed that the relevant date in respect of the deposit of $36,648 paid for the Peat Court property is 16 April 2008. She noted that the Bali Bombing occurred on 12 October 2002. Ms Holz had further regard to information concerning the travel movements of the defendant's two sons and compensation payments to Australian victims of the Bali bombings. 3. In respect of the defendant's evidence regarding the investment in OSD Marketing, Ms Holz noted that the relevant date in respect of the $48,000 investment is 22 October 2008. She deposed that she conducted a search of the RMS database in relation to vehicles owned by the defendant around the time of 22 October 2008 which recorded the defendant being the registered owner of one vehicle and Bio Form as the registered owner of another vehicle. Ms Holz repeated that the only income received by the defendant in the financial years of 2007 to 2010 inclusive was income received from salary and wage income. No supplementary income was declared. PART D: SUBMISSIONS FOR THE COMMISSION AND DEFENDANT Initial Submissions for the Commission dated 8 March 2016 1. In support of its application for a proceeds assessment order under s 28 of CARA, the Commission initially submitted that the defendant's expenditure during the relevant period, namely during the six years before 15 February 2010, alleged to be unrelated to any illegal activities, is as set out at [198] above. 2. As noted above, the submissions for the defendant conceded that the Mini Cooper, the cash seized and the drug proceeds expended items (in the amounts of $36,900, $4,615 and $103,750 respectively) are proceeds of illegal activity. 3. I note that the Commission submitted that the defendant's expenditure alleged to be unrelated to any illegal activity is formulated in different terms and amounts to the affidavit evidence of Ms Holz as summarised at [217] above. 4. In respect of the expenditure on the acquisition of anabolic steroids, the Commission initially assessed claimed expenditure in respect of the acquisition of anabolic steroids at $83,380. In relation to this item of expenditure the Commission referred to the evidence of the defendant (T 27) that the substances he sold to undercover police officers cost him $10 per millilitre, or $110 per vial. The five vials that he sold cost him $550 and by calculation 753 vials found on the date of his arrest cost him $82,830. Total expenditure under this head was assessed at $83,380. 5. In respect of the expenditure on the acquisition of cocaine, the Commission relied upon the defendant's evidence in his second affidavit at [4] that the cocaine he sold cost him $8,000 per ounce. The total amount sold was twelve ounces. On this basis the expenditure on acquiring cocaine was the above amount of $96,000. 6. In respect of the expenditure on the mortgage payments on the Glenwood property, the Commission submitted that payments totalling $318,025 made in respect of the loan/mortgage over the property were made out of the defendant's bank account. Accordingly, they represent expenditure by him. It was submitted by the Commission that it is not to the point that those payments were covered (if they were) by payments being made from the Bio-Form business account, it being noted that that account has not been proved to contain only proceeds of legal activities. 7. In respect of the expenditure to OSD Marketing, the Commission submitted that the defendant "concedes that he paid $48,000 to OSD Marketing, this being expenditure by him". 8. In respect of the expenditure to HVME, the Commission submitted that the amount of $180,000 paid to HVME was expenditure by the defendant and that it was not to the point that some of it may have come from his father in Indonesia. The Commission relied upon the material behind Tabs 15 and 16 and the affidavit of Ms Holz as evidence that was sufficient to establish the expenditure by him. Submissions for the Defendant 1. The initial submissions for the defendant did not contain any submissions in respect of the proceeds assessment order. The second set of submissions for the defendant received on 18 March 2016 made submissions in this regard but were directed to the terms and amounts of expenditure as set out in Ms Holz' third affidavit rather than the final formulation of the proceeds application by the Commission. 2. In respect of the expenditure on the acquisition of anabolic steroids, Mr Wendler submitted that the sum of $132,650 should be reduced given the "concession made by the plaintiff and conjecture the sum of $132,650 was arrived at by conjecture namely; that if the applicant was buying the steroids at $175 he must have been doubling his money thus the quantum of $132,650". 3. In respect of the expenditure on the acquisition of cocaine amounting to $138,000, Mr Wendler did not present any argument as to the amount of expenditure but contended that the only money expended was by police in the controlled operation and that the defendant was "a bailee of police money". 4. In respect of the expenditure at the Commonwealth Bank in Bali amounting to $41,450, Mr Wendler submitted that on the probabilities this money belonged to his father and was separately deposited in three units at the Bank. Mr Wendler submitted that the evidence from the defendant suggests that he accompanied his parents to the Bank in Bali and the teller "simply put his name on the deposit slips because he was the son of the depositor". Mr Wendler relied upon the affidavit of Ms Togias which he submitted contains documents capable of supporting an inference that the defendant's father has historically engaged in land sales and is a person of some means. Mr Wendler noted that this material was not cross-examined and submitted that the absence of the defendant's father as a witness does not mean the applicant should not be believed concerning the circumstances of the deposits. 5. In respect of the expenditure on the Peat Court property amounting to $36,648.90, Mr Wendler stated that expenditure came from Bio Form funds in the sum of about $5,000. The balance, it was contended, contributed by the defendant's son. Mr Wendler submitted that while the defendant was vague as to the proposition that his son received compensation from an Australian authority, the compensation "may well have been via another authority as it was notorious the Red Cross also dispensed compensation to the victims of the Bali bombing". 6. In respect of the expenditure to OSD Marketing amounting to $48,000, Mr Wendler noted that the defendant said this money came from Bio Form and was deposited to OSD Marketing on 22 October 2008. No further information about this money was provided by the defendant beyond the fact that he paid for a share of a Hummer motor vehicle. 7. In respect of the expenditure on the Sheree Subakti loan amounting to $20,000, Mr Wendler relied upon the affidavit of Sheree Subakti sworn 14 November 2014 and the affidavit of the defendant sworn 5 May 2015 as support for the submission that, on the probabilities, the expenditure was not tainted property. 8. In respect of the expenditure to HVME amounting to $180,000, Mr Wendler relied upon the affidavit of the defendant sworn 5 May 2015 to support the submission that on the probabilities the defendant's father was the source of these funds. Mr Wendler noted that the Commission has alleged that a person was detected leaving Australia with money that police had used in the controlled undercover purchase of cocaine. It was submitted that there is "no evidence that this money was the defendant's money rather the evidence suggests it was police money given first to the applicant and then transferred by the applicant to that person as payment for cocaine". Submissions in Reply on Behalf of the Commission 1. As noted above, the Commission provided a set of submissions in reply dated 23 March 2016. 2. As to the defendant's submissions regarding the expenditure on the acquisition of steroids, the Commission submitted that the correct figure for this expenditure is $75,800, in lieu of the figure of $83,380. The revised figure was assessed on the basis of $100 per vial, multiplied by 758 vials and equalling a total of $75,800. 3. As to the defendant's submissions regarding the expenditure on the acquisition of cocaine, the Commission submitted that: "…it is clear that an undercover police office (UCO) paid the amount in question to Subakti, and that he spent it, perhaps on cocaine for the next supply whether to that UCO or another. But in any event, the amount received was spent, and is expenditure. And there can be no reduction by reason of the fact that this was a cost of doing business: CARA s 28(4)(b)." 1. As to the defendant's submissions regarding the expenditure at the Commonwealth Bank in Bali, the Commission submitted that the better view is that the sum of $41,450 paid into this account was expenditure by the defendant. 2. As to the defendant's submissions regarding the expenditure on the Peat Court property, the Commission submitted that the defendant "was tripped up because the compensation scheme authorised by the former Prime Minister was many years after the sum of $36,648.90 was deposited, with the deposit slip being retained by [the defendant]". In reply to the defendant's suggestion that the compensation may have been via another authority such as the Red Cross, the Commission submitted that it does not know it to be the case that the Red Cross was such an authority which "dispensed compensation" to victims of the Bali bombing and this fact has not been proven by the defendant. 3. As to the defendant's submissions regarding the expenditure on the Sheree Subakti loan, the Commission submitted that it matters not whether the $20,000 received from the defendant's former wife comprised or included tainted funds. The question is, the Commission submitted, whether it was expended by the defendant and this must be answered in the affirmative. 4. As to the defendant's submissions regarding the expenditure to HVME, the Commission stated that it is known that police "buy money" was found on an associate of the defendant who was on his way out from Sydney Airport. That fact, it was submitted, decreases the prospect that all or any of the $180,000 which went to HVME emanated from the defendant's father and it was expenditure by him and not the defendant. It was submitted that it was expenditure which is to be brought into account in assessing proceedings. Reliance in this respect was placed upon Ms Holz's third affidavit at [36]-[40] and the documents under Tab 16 of IH-2. 5. The Commission concluded with the following submissions: 1. The exclusion application under s 25 must necessarily fail absent convincing evidence from the defendant himself that only the proceeds of lawful sales went through the Bio Form business, which evidence is entirely lacking; 2. There is no partial exclusion application under s 26, and the submissions on the defendant's behalf proceed to a considerable extent as if there were; 3. Expenditure by the defendant has been proven to the extent stated in the principal submissions on behalf of the Commission as summarised at [257] above; and 4. The defendant has not proven the extent of his lawful income to be set against such expenditure. PART E: CREDIBILITY 1. The submissions made on behalf of the defendant depend, in part, upon acceptance of him as a truthful and reliable witness. The Commission's submission was that, unless supported by reliable documentation, the Court would not accept the defendant's evidence. The reasons for that submission were set out in the Commission's written submissions of 8 March 2016, including in particular the following: "(i) he was, even allowing for (perhaps exaggerated – he has been in Australia since 1985, ie 30+ years, and in business on his own account since about 2000) language difficulties, a poor witness – given to convenient lapses of memory, and obfuscation including a strong disinclination to answer questions; (ii) affidavits in support are not forthcoming from his accountant, or his father, and neither is available for cross-examination; (iii) he has a criminal history, including similar offences in 2007, 2009 and 2010 – he has dealt with illicit substances for many years past; (iv) the idea that he first dealt in unprescribed steroids and in cocaine (T 55.35, 56.32 and 56.47 – 57.2) in 2009-2010 is silly; (v) he did not disclose the 2009 convictions to Dr Furst – see 1H1 at 210, 213; (vi) he held false identity documents in the name of Mark Zadel, and used the same to raise $36,900 by fraud; (vii) his evidence concerning the OSD Marketing $48,000 payment differed between examination T 44, when he referred to pulling money out of the shop, his affidavit of 5 May 2015 at [12] where he said the money was made by renting out sports cars, and his evidence at the hearing (T 39) where he was driven to say it was a bit of both; (viii) the document of 16 July 2003 (see his 7 November 2014 affidavit at [7], Ex C) is clearly false, by reason of the RTA records, at 1H3, Tab 9. (ix) no reasonable explanation is forthcoming as to how, given the modest incomes disclosed to the ATO by him, and by Bio-Form, the mortgage expenses on the Glenwood property (more than $40,000 per annum), and leasing expenses on three Mercedes Benz and one Porsche motor vehicles were met; (x) nor does he satisfactorily explain the $31,620 seized by police on 29 January 2010 – the idea it came from Sheree because it was not given to Nikki to bank is improbable, as the amounts she says she gave him were $3,000 on 15 January, $32,000 on 18 January, and $5,000 on 28 January, as appears from the affidavit, and hence the figure of $31,620 makes no sense. Nor is the position assisted by the affidavit by Togias sworn 19 February 2010 at [10]; (xi) he having conceded through his counsel the $4,615 was proceeds of crime, his affidavit of 7 November 2014 at [9] is false; (xii) he failed to disclose his drug activities in his affidavits." CONSIDERATION 1. As has been noted, where there is evidence as to the amount of the defendant's expenditure during the period of six years before the making of the application for the proceeds assessment order, the Court is to treat any such amount as proceeds derived by the defendant from an illegal activity or activities except to the extent (if any) that the Supreme Court is satisfied that the expenditure was funded from income or money other than sources unrelated to an illegal activity or activities: s 28(3). 2. The nature and operation of the provisions of CARA were the subject of examination by Allsop P (as his Honour then was) in Kelaita, supra. In Kelaita, the President (Giles and Bell JJA agreeing) addressed the proceeds assessment provisions in CARA, stating at [12]: "Further, the speech recognised that the legislation might be perceived to be unfair by some. It was certainly intended to be 'tough'. Again, these were rhetorical statements which do not assist in resolving questions about the precise linguistic content of the present text. They do, however, assist in appreciating that unless the express safeguards provided for in the Act (often resting on a reversed onus) are engaged, it may be seen as surprising to interpret or construe the Act in a way based on 'fairness' to the person proved to have been engaged in serious crime related activities. Indeed, as will be seen, the Act provides in terms for operation of the machinery of recovery in ways that, from one perspective, could be taken to display an element of unfairness." 1. In that case, the Court considered the content and operation of the provisions of CARA concerned with (i) forfeiture orders; and (ii) proceeds assessment orders. In relation to proceeds assessment orders, the Court considered whether a defendant has a right to reduction by value of the assets forfeited under a forfeiture order made under s 22 of CARA, at least in circumstances where the two orders are made substantially contemporaneously. 2. In determining the proper construction of CARA it was noted that a matter of importance in the structure of the Act is that orders under s 22 (assets forfeiture orders) and s 27 (proceeds assessment orders) are made by reference to different criteria. A forfeiture order must be made by the court under s 22(2) in relation to any property in respect of which the relevant person the subject of suspicion and of proof has a specified interest. In that respect, Allsop P at [29] observed that if the Court finds it more probable than not that that person (whose suspected serious crime-related activity formed the basis of the restraining order under s 10) was, in the last six years, engaged in a relevant serious crime-related activity, it must make an assets forfeiture order against the person's property, to the extent it can be identified: s 22(4). The President observed at [29]-[31]: "…Such property may have been purchased at any time. It may have been given to the person. The basis for the order under s 22(2) is not that it is proven that proceeds of crime have funded its acquisition, either in whole or in part. The order under s 27, on the other hand, is made by reference to the value of proceeds derived from an illegal activity in the prior six years. It is based on a calculation (such as can be proved by the appellant) as to the proceeds in that period. The forfeiture order under s 22(2) is as to property that may have not been purchased directly or indirectly by the proceeds that the appellant can prove were illegally derived in the six years. The Act calls for no investigation of that issue …" 1. The President further observed at [33], [38]-[40] and [46]-[49]: "33. Sections 22(8) and 27(6), though not directed to calculation of value in s 28, are a clear indication of the independent operation of the two orders, the statutory bases for which are in separate Divisions of Part 3. No attempt was made in this context to express any regime for their complementary or contemporaneous operation. … 38 The assessment task set out in s 28 is an apparently comprehensive and complete regime. Section 28 sets out relevant considerations (s 28(1)) and the kinds of evidence that can be led with relevant consequences (s 28(2) and (3)). For instance, s 28(3) is clear that the Court "is to treat" the amount of expenditure in the period as relevant proceeds. This is not an indication of flexibility as the primary judge thought. 39 It can also be seen that in s 28 the proceeds are calculated without regard to the costs or outgoings of the criminal operation: s 28(4)(a) and without regard whether proceeds are derived as an agent: s 28(4)(b). From one perspective, neither of these provisions is fair. 40 The terms and structure of Parts 2 and 3, and Divisions 1 and 2 of Part 3 in particular, do not display any intention to be fair beyond those specific provisions that deal with amelioration of the effects of the Act. … 46 Further, to make ss 22 and 27 complement each other through the word value, as her Honour did, may be unfair to the Crown. Unless it can be proved that the proceeds calculated under s 28 for the order under s 27 did purchase (in full) the forfeited asset and that there were no other illegally derived proceeds, the approach of the primary judge may limit the recovery of assets that may have been illegally derived. Unless the Court were satisfied that the value of proceeds proved under s 28 for the order under s 27, was the extent of illegally derived proceeds that had been generated by the person, some double counting under ss 22 and 27 may not be "unjust". The appellant proves what it can under s 28. It is then entitled to an order under s 27. That does not mean, however, that it can be assumed that all illegally derived proceeds have been identified. Double counting may be unfair, it may not be. To be concluded that it is, one would need to be satisfied of the full universe of illegally derived proceeds. 47 The kind of value judgments as to what is fair or not, what degree of precision is required and when double counting should be taken into account are all matters to which Parliament has directed itself expressly. 48 I see no ambiguity or lack of clarity in ss 27 and 28. The order under s 27 can be made even though an asset forfeiture order can also be made: s 27(6). The order under s 27 is in relation to the value of proceeds calculated by reference to s 28. 49 There is no basis to read into the word "value" in s 27(1), or into any part of s 27 any authority to deduct from a calculation made under s 28, a sum referable to the value of assets forfeited under another section in another Division of Part 3. 1. See also New South Wales Crime Commission v Vu [2012] NSWSC 129 (Johnson J). 2. I assess and determine the Commission's application under s 27 of CARA upon the following bases: (i) Mini Cooper – have, use false instrument ($36,900) 1. As noted above, Mr Wendler conceded in his second set of submissions that this amount will be assessed as proceeds of illegal activity. (ii) Cash seized – proceeds of crime ($4,615) 1. As noted above, Mr Wendler conceded in his second set of submissions that this amount will be assessed as proceeds of illegal activity. (iii) Acquisition of anabolic steroids ($75,800) 1. As noted above at [274] the Commission revised this figure from $83,380 to $75,800 on the basis of the defendant's evidence at T27. (iv) Acquisition of cocaine ($96,000) 1. As noted above at [245], the defendant stated in his affidavit sworn 5 May 2015 that the undercover operative provided the purchase money in respect of the relevant transaction referred to in para [3] of his affidavit. He stated at [4] "I merely transferred this money to the seller subtracting $500 on each occasion". The strong inference from the evidence as to the supply of cocaine by the defendant is that he was in the business of cocaine supply by an upstream supplier(s). 2. There is no evidence that supports the above submission made as to the absence of any expenditure incurred by the defendant. 3. In the latter respect I accept the Commission's submission as noted at extracted at [275] above. The monies having been paid by the undercover officer to the defendant in exchange for the cocaine, the defendant then being in possession of the monies, said that he then paid it to the supplier, the person who allegedly supplied the prohibited drug (cocaine), less, he said, of an amount of $500 in each transaction. Whatever be the true position, the fact remains that the monies he achieved from his sales to the undercover officer can, and should, be regarded as money received by him and subsequently used or expended by him, probably for acquiring cocaine to effect further supplies. (v) Drug proceeds expended ($103,750) 1. As noted above, Mr Wendler conceded in his second set of submissions that this amount will be assessed as proceeds of illegal activity. (vi) Mortgage payments on Glenwood property ($318,025) 1. The system referred to in the defendant's submissions as noted at [137] above, as to the making of loan payments in respect of the Glenwood property, is only evidence as to the mechanics or process by which the payments were made. The fact that payments were made from Bio Form accounts is not in itself sufficient to establish that the funds of the Bio Form business were not proceeds of illegal activities. The defendant has not established by evidence that the Bio Form business did not receive proceeds of illegal activities. 2. I have earlier referred to the judgment in Kelaita. For the reasons stated in that case, the assessment of an amount of money ordered to be paid by a proceeds assessment order pursuant to s 27 of CARA should not take into account, by way of reduction, the value of property or properties the subject of a forfeiture order under s 22. (vii) Paid to OSD Marketing ($48,000) 1. As noted above, the defendant conceded that he paid $48,000 to OSD Marketing representing expenditure by him as noted in the Commission's submissions at [21]. 2. I note that the evidence does not establish that the amount of $48,000 was paid from funds unrelated to illegal activities. (viii) Paid to HVME ($180,000) 1. In respect of the two amounts of $100,000 and $80,000 said to be expenditure by the defendant, I accept, as the Commission submitted, that it is not to the point that some of the monies may have been provided by the defendant's father in Indonesia. 2. The evidence is, in accordance with the letter from Bilbie Dan, that the amount described as "Mr Subakti's initial investment of $100,000" was made on or about 23 November 2009. 3. As to the amount of $80,000, the letter from Bilbie Dan states that that amount was paid in cash by the defendant to an employee of HVME. Annexure A to the defendant's affidavit sworn 5 May 2015, being a copy of a declaration made by his father, refers to an amount said to have been transmitted to the defendant by his father on 22 May 2008, long before the transaction was effected with HVME. 4. The evidence does not establish that the amount of $80,000 paid to the employee of HVME by the defendant in cash, was derived from any monies transmitted by his father to him in May 2008. The letter from Bilbie Dan noted that there are no records as to the cash monies that were received by the employee of HVME. 5. In the circumstances, I do not consider that the defendant has discharged the onus of establishing on the probabilities that the monies paid to HVME were not monies unrelated to an illegal activity or activities for the purposes of s 28(3) of CARA. (ix) Expenditure on Peat Court property ($36,648) 1. The defendant has not established that the amount of $36,648 in respect of the Peat Court property was unrelated to an illegal activity or activities for the purpose of s 28(3) of CARA. Assessment of Defendant's Expenditure 1. In accordance with the provisions of s 27(1) of the CARA I am satisfied that the defendant derived proceeds from an illegal activity, or illegal activities, that took place not more than 6 years before the making of the application by the Commission for the proceeds assessment order sought in these proceedings. 2. Accordingly, the basis has been established for the making of a proceeds assessment order in favour of the Commission against the defendant pursuant to that provision. An order under s 27 may be made even though an asset forfeiture order can also be made: s 27(6) of the CARA: New South Wales Crime Commission v Kelaita, supra, at [48]. 3. The order to be made under the provisions of s 27 in relation to the value of the proceeds derived by the defendant referred to in the preceding paragraph is to be calculated by reference to s 27 of the CARA. 4. There is no basis to read into the word "value" in s 27(1), or into any part of s 27 any authority to deduct from a calculation made under s 28, a sum referable to the value of the assets forfeited under another section in another Division of Part 3 of the CARA: New South Wales Crime Commission v Kelaita, supra at [49]. 5. Expenditure by the defendant within s 28(3) of CARA has been proven in the amount of $899,738. 6. On a hearing of an application for a proceeds assessment order, as earlier noted, the amount to be included is as prescribed in s 28(3): "… except to the extent (if any) that the Supreme Court is satisfied the expenditure was funded from income, or money from other sources, unrelated to an illegal activity or activities." 1. I have concluded that there is no evidence that establishes that any of the relevant expenditure referred to above was funded from income, or money from other sources, unrelated to an illegal activity or activities. Accordingly the exception under s 28(3) of CARA does not have any operative effect in the assessment of the proceeds assessment order sought by the Commission in the proceedings. Conclusions regarding credibility 1. I have earlier referred to the absence of confirmatory contemporaneous records, including the primary financial and other business records of Bio Form. The defendant's case in respect of the Commission's application for a proceeds assessment order depended to a significant degree upon an acceptance of him as a reliable and truthful witness. 2. In the defendant's written submissions at [11] it was submitted that it would be a wrong approach to his evidence to reason that due to his admitted criminal antecedents, he should be disbelieved in every respect of his testimony unless corroborated by documentary evidence. It was emphasised that his admitted criminal offences were committed in a confined timeframe, namely, July 2009 to January 2010. Accordingly, it was submitted that it does not follow that because of his admitted criminality in that period, that he must have also been engaged in criminal activity six years before January 2010. 3. I accept that submission that the defendant's criminal antecedents do not in itself or alone form a basis upon which the veracity of his evidence depends. 4. However, in relation to the proceeds assessment order, the defendant carries an evidentiary onus to adduce evidence that establishes on the probabilities that the expenditure items were funded from income or money from other sources unrelated to an illegal activity or activities. This means that, especially where there is an absence of corroboration, his truthfulness is of central importance. 5. I, of course, carefully observed the defendant whilst he gave evidence. He did not present as an impressive witness. I allow for the fact that he has a limited command of the English language. That, of course, does not constitute a basis for not accepting his evidence. The failure, without explanation, to call corroborative evidence from material sources such as his accountant and oral evidence from his father is significant. An inference is available that if called their evidence would not be likely to have assisted him. His involvement in producing false identity documents, referred to above, being a badge of dishonesty is not to be overlooked. Further, his evidence that he applied funds from the sale of the Jeep Cherokee towards the purchase of the Glenwood property was plainly a false account for reasons discussed above. 6. Finally, whilst the defendant gave evidence and made concessions in relation to his activities in the period July 2009 to January 2010, his affidavit evidence failed to provide information in relation to his involvement in the supply of steroids on the business premises of Bio Form or as to the level or extent of his involvement with prohibited drugs in the six-year period prior to the Commission's application for a proceeds assessment order, notwithstanding his admitted involvement in the supply of cocaine to the undercover operative. 7. In the circumstances to which I have referred in these reasons, the defendant did not discharge the evidentiary burden to which I have earlier referred. 8. I am satisfied, as I have indicated, that the Commission has established a basis for the making of a proceeds assessment order under s 28(1) of CARA. 9. Subject to any application in relation to any ancillary matters, I propose to make a proceeds assessment order pursuant to s 27 of CARA, and in accordance with s 28(3) of that Act as sought by the Commission in the amount of $899,738. 10. Before making an order under s 27 of the CARA I propose to allow the parties the opportunity to make any submissions in relation to the assessment or calculation of the items of expenditure constituting or forming part of the above assessment the sum of $899,738. 11. I propose that these proceedings be relisted at the time and date referred to below for the purpose of dealing with any further submissions and to make orders on the exclusion application and in the proceeds of crime proceedings. As to the former I propose on that date to make an order that the applicant's Notice of Motion filed 1 August 2014 seeking exclusion of interests in property under s 25 of the Criminal Assets Recovery Act 1990, be dismissed. 12. In the event that either party seeks leave to make submissions in relation to the calculation or amount of any item of expenditure sought by the Commission in its proceeds assessment application, the parties are to confer on a timetable for exchange of written submissions prior to the relisting of the proceedings and to advise my associate upon the agreed timetable. 13. I propose to relist the proceedings at 9.30am in the week commencing 24 October 2016. The parties are to advise my associate as to an agreed date in that week for the relisting of the proceedings. ********** 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. Decision last updated: 07 October 2016