75 It is necessary to briefly summarise the events which occurred after the applicant had completed her evidence.
76 On Tuesday 5 September 2006, a raid by Victoria Police took place at premises situated at 14 Alma Road, Parkdale pursuant to a search warrant. An occupant of the residence, Mr Gary James Gibbs, is the applicant's uncle. During the raid a number of valuable items were found buried in pipes in the back yard, namely, $336,700 in cash, foreign currency notes of approximately US$1,000, and in excess of 100 items of jewellery, including 18 watches and 33 jewellery boxes valued for insurance purposes at about $185,000. Valuation certificates for a gold bracelet and gold earrings were also found. Mr Gibbs swore an affidavit and gave evidence. In substance, his evidence was that he visited the home of the applicant and her husband from time to time and that late last year, her husband asked him on a number of occasions to look after cash for him, as he evidently was sick of his brothers borrowing money from him. Mr Gibbs eventually took the cash and buried it in piping in his back yard.
77 Mr Gibbs also gave evidence that earlier in January or February last year, the applicant asked him to look after a large quantity of jewellery. According to his evidence, the applicant stated that after the police had raided her property a lot of jewellery had gone missing. He stated that he understood that this raid took place in the year 2000-2001. The reason given by the applicant to her uncle is unbelievable. If there was a concern over a raid in 2000-2001, then it seems surprising that some four years later the applicant was taking steps to protect against possible theft by police. What the events do demonstrate is that in 2005 and early 2006, both the applicant and her husband were anxious to hide their assets. It is inconceivable that the applicant did not know that her husband was requesting her uncle to hide his cash. These events also impact on the applicant's assets, income and outgoings as sworn by her in the first affidavit.
78 In her first affidavit, the applicant purported to list her assets and liabilities, her income and her outgoings. The statement of the assets and liabilities, which included the assets of JR Mokbel Pty Ltd, is wrong in that the applicant identified a liability without disclosing an asset of the same amount. More importantly, she made no mention of the cash found at Parkdale, nor did she make any mention of any jewellery. In a raid on the residential property in April this year, the police found large sums of cash in various places and the applicant's explanation for the cash was that her husband, who was unemployed and had been for a number of years, was a good gambler. The suggestion was laughable. The later events concerning Parkdale demonstrate the force of that observation. Her explanation was untrue. She knew it was untrue. Her affidavit concerning the financial position was false. Her failure to disclose the value of the jewellery was a deliberate attempt to hide her assets.
79 One of the two persons who could explain the activities was the applicant. The other, of course, was her husband. The applicant was given the opportunity to give her version of the events. The respondents sought to cross-examine her. She declined to give evidence. I upheld the objection to her being cross-examined. On the other hand, the Court made it very clear to the applicant's counsel that the Court may draw an adverse inference against her. I am satisfied that the applicant chose the well of the Court to the witness box, because she knew that if she gave evidence she would be exposed as a liar and, secondly, that her explanation would not assist her cause in respect to financial hardship - see Weissensteiner v The Queen[43] and O'Donnell v Reichard.[44]
80 In the affidavit the applicant stated what her assets were. Paragraph 42 is carefully drawn as it refers to what she describes as "my major assets" and the assets of JR Mokbel Pty Ltd. The phrase "my major assets" was employed to give her room to manoeuvre in cross-examination if other assets were found. The fact is that if a person is bound to reveal her assets, then this means all assets of substance. Jewellery valued in excess of $45,000 is an asset of substance. Her affidavit omitted to reveal that JR Mokbel Pty Ltd was a company that was the Trustee of the JR Mokbel Family Trust. However, it is clear that when she swore her affidavit on 15 June 2006, that was the position. She revealed her assets and liabilities, and those of JR Mokbel Pty Ltd, as being the residence at 9-11 Downs Street, Brunswick, which she valued at $1.1m, a property at 210 Quinns Road, Kilmore valued at $430,000, two Mercedes motor vehicles valued at approximately $155,000, and liabilities of $395,000. One of the liabilities was a loan obtained on the security of the property at Kilmore. The applicant said that the loan was obtained to assist a friend of her husband. However, the friend was in fact lent the money by the applicant and her husband. The loan should therefore have been disclosed as an asset. It appears that the loan was obtained and on-lent by the Family Trust. When corrected, the assets totalled in value $1,985,000, and the liabilities were $365,000.
81 In her affidavit, the applicant stated that the loan was taken out to assist the business of a friend of her husband. She named him as Brian Waikem. When cross-examined, she was extremely vague about her knowledge of this person and where he resided. The affidavit went on to assert that the debtor was paying $2,672.50 per month, which was used by her to pay household expenses and, in addition, interest on the loan. She was also extremely vague about the circumstances of the loan and, in particular, was unable to provide any information as to any security given by the alleged borrower or when the loan might be repaid. In her affidavit, the applicant observed that if there was a default by the borrower, the responsibility for payment of the loan would lie with JR Mokbel Pty Ltd. The affidavit refers to "the borrowers at present", which merely adds to the confusion. The property is owned by the Family Trust. The applicant controls the Trust. She knows much more about the Trust than she was prepared to reveal. I do not believe her evidence in relation to this transaction. Indeed it is difficult to say what is the true position.
82 What emerged in evidence was that JR Mokbel Pty Ltd is the Trustee of the Family Trust. The trust is called the JR Mokbel Family Trust. It is a typical discretionary family trust and was established on 12 July 1996. The sole shareholder and director of the company is the applicant. She is a discretionary beneficiary of the Trust, as are her husband and his family. The Trust estate includes the home at 9-11 Downs Street, Brunswick. As the person in control of the Trustee, it would be open to the applicant to cause the Trust to resolve that the property be transferred to her, as she is a beneficiary. Clause 6 of the Trust Deed empowers the Trustee to transfer part of the Trust fund to a beneficiary. By reason of clause 21, the appointor under the Deed has the power at any time to remove the Trustee. The appointor is the applicant's husband, Milad Mokbel. At present, so long as JR Mokbel Pty Ltd is the Trustee, and so long as the applicant is the sole director and shareholder of that company, the applicant could in the exercise of the powers given to the Trustee under the Deed resolve to transfer property to herself. However, it is clear that the ultimate control of the whole Trust is in the hands of her husband, who could take steps to remove the Trustee.
83 The Affidavit of Justification sworn by the applicant on 26 November 2004 is also false. The applicant swore that she has real property valued at not less than $1,000,000, that her real estate consists of the residential property, and that the value of her equity was $1,140,000. The true position is that the residential property is not owned by her and is instead owned by JR Mokbel Pty Ltd as a Trustee. Since the applicant is one of a number of beneficiaries and the Trust is a discretionary trust, she is not entitled as a beneficiary to demand that the estate be distributed to her. Until the Trustee resolves to transfer to her any property forming part of the Trust estate, she has no interest in the property. She gave evidence that her husband, Milad, requested that she become the surety for his brother back in November 2004. She knew at that stage that JR Mokbel Pty Ltd was the registered proprietor of the property, and that the property formed part of the Trust estate. She was the only shareholder and director of the company at that time, and it is difficult to accept that she swore the affidavit honestly believing that the home was hers.
84 The first affidavit of the applicant is wrong and misleading. It fails to disclose the true position so far as ownership of the residential property is concerned. The fact is that the applicant herself has very few assets. The Trustee owns both of the properties at Brunswick and Kilmore, which would mean that the assets in the applicant's own name, as revealed by her, total something in the order of perhaps $150,000. That is the value of the two cars. She omitted to reveal the jewellery that was found in the raid at Parkdale. The evidence before the Court shows that the jewellery was valued for insurance purposes at $185,000. The valuer, Michael Walsh, stated that the value on an auction basis would be about one quarter of that amount, which would mean that the jewellery had a value somewhere in the order of $45,000. Although some of the items could be worn by a male person and may not be the applicant's jewellery, she chose not to give evidence to clarify the position and, accordingly, I am prepared to draw the conclusion that the jewellery was, in the main, hers. This is based upon the facts that she requested her uncle to look after her jewellery, and that most of the items fit the description of female jewellery. The fact was that the value of the jewellery was not revealed. Whilst one would accept that if a person had a small amount of jewellery which was of little value, it would not appear in one's list of assets, the omission to reveal jewellery of this value shows a deliberate attempt to hide assets.
85 The applicant was cross-examined at some length as to certain financial transactions and her assets and liabilities. She was asked about obtaining financial assistance from her relatives and said that she had not asked any of them for help. She did not volunteer that her uncle had received a large sum of cash and jewellery to hide in his back yard. The evidence revealed that over the years, she had access to large sums of cash, some of which were secreted in a variety of places around her house. Her explanation for the money, being that her husband was a lucky gambler, defies belief and was a deliberate lie. She denied that she had any knowledge that the family wealth was derived from criminal activity, but the evidence revealed that she had every opportunity to come to that conclusion. There was evidence that certain items in the laundry were items which one might use in peddling drugs. The applicant is not stupid or naïve, and I do not believe her when she said she did not know that the cash was being generated by criminal activities.
86 The applicant was asked about a property purchased by a company called Gannrf Investments Pty Ltd, and in particular was questioned about the source of funds advanced for the purchase of that property. She was a director and shareholder of the company at the time of acquisition, and signed documents seeking a loan for the company. She was vague and uncertain about the transaction and I do not accept for one moment that she did not have a good understanding of it. She was a witness who was vague when it suited her, and who hid behind a lack of memory of events that she should have known about.
87 The applicant is a wife and a mother. She is also a businesswoman. In the early years after leaving school, she assisted with the accounts in her father's business. She later conducted a pizza business and then a butcher's business, and in the last few years has been actively involved in businesses providing hairdressing goods and services to women. She is in partnership with the prisoner's female friend. She has been in control of the Trustee of the JR Mokbel Family Trust for about ten years. As noted above, evidence revealed that she was a director of Gannrf Pty Ltd, which was involved in the acquisition of real estate and was a signatory to the application to borrow funds in respect to it. She was cross-examined at length in relation to the activities of that company and also other financial transactions. She was extremely vague. In my opinion, her attempt to portray herself as somewhat naïve and ignorant of affairs business was deceitful. She set out to mislead the Court in relation to the various business activities. She is not naïve and she is not unworldly in relation to affairs business. Often, the applicant chose to answer in a way that suggested she did not have an understanding of what she was doing. She was cross-examined in relation to a number of other business activities. Whilst one would make allowances for some activities that may purely have been her husband's, I do not accept that she did not fully understand the business transactions that she was cross-examined on. In my opinion, she is a witness without credibility.
88 The fact is that the bulk of what the applicant has revealed as being her major assets and the assets of JR Mokbel Pty Ltd are not owned by her at all, but are owned by the Family Trust. As at today, she has control of the Family Trust. On the other hand, the main assets, being the properties at Brunswick and Kilmore, are the subject of confiscation orders freezing assets in respect to the prosecution of her husband. The criminal "Mareva-type orders" that have been made in the past deny the Family Trust, the applicant and her husband any right to deal with the property. The applicant has made an application on behalf of the Family Trust to the Court to exclude its properties from the effect of the orders made, but the proceedings have been adjourned sine die, and the reality is that they will not be heard until the end of the criminal proceedings against her husband. This could be well in excess of 12 months away.
89 I accept the submissions of counsel for the respondents. I found the applicant to be an unsatisfactory and vague witness. I am satisfied that the oath she took meant nothing to her. She falls into the category of witnesses whose evidence should not be believed on any important fact, unless it is supported by some independent evidence, is inherently probable, is admitted by the opposing parties, or amounts to an admission against interest.
90 The applicant gave evidence that the Mokbels constituted a close family, the members of which saw each other often, and that there were family functions every Sunday. She stated that her contact with the family, and in particular the prisoner, was almost daily. I do not accept that piece of evidence. Despite the fact that the applicant was aware by reading newspaper reports that the prisoner was involved in a number of court cases, she stated that she did not discuss with him in any detail any of the criminal matters. I am satisfied that she did have an excellent understanding of the charges that were brought against the prisoner, and a good understanding of the media coverage relating to him. The applicant gave evidence, which I do not accept, that she told the prisoner that since the residential property belonged to her children, she did not want him to do the wrong thing by absconding, and that he assured her he would not do so. She asserted that she often said to him he must do the right thing and comply with his bail conditions, and that he assured her he would. I do not accept that evidence. I do, however, accept her statement that compliance by the prisoner with the stringent conditions of his various bail orders provided her with some degree of comfort. The evidence was that the prisoner had complied over many years with the conditions, and the conditions were extremely strict when his bail was extended by me on 29 November 2005.
91 The applicant also gave evidence that she reminded the prisoner on a regular basis to comply with the curfew. I think that is fanciful and I do not accept the evidence. She also stated that during the trial she saw the prisoner every day. I also do not accept that evidence. The applicant stated that she had regular contact with the prisoner's partner, Danielle McGuire, which I accept because they were in partnership in business, but I do not accept that she regularly checked through her friend whether the prisoner was complying with the curfew. The evidence revealed that the applicant was in Court on Friday, 17 March 2006 when the application was made to revoke the bail. Her explanation for this was that her friend Ms McGuire had indicated concern because she had ascertained from some source that the Crown was proposing to apply to revoke the bail. The applicant did not attend at any stage until around that Friday and I do not accept her explanation for her presence in Court. There are real suspicions that she was present to later enable her to give evidence that she was performing her duties as a surety, and that she knew the prisoner was contemplating absconding. However, the Court does not act on suspicion.
92 The applicant gave evidence that on the Saturday morning, being 18 March 2006, the prisoner came to her home as he said he was going to see his mother. I have no reason to doubt that evidence. The applicant said she did not notice anything untoward about the meeting.
93 The applicant further gave evidence that she saw the prisoner for a short time on the Sunday.
94 The applicant has three children aged 13, 10 and 21/2 years respectively. The evidence revealed that she and her husband operated a butcher shop business at the Brunswick Market for about 18 months and that this was sold in May 2005. She stated she had done the bookwork for the business. The applicant then began a hair salon business, eventually in partnership with Ms McGuire, and she stated that it was during this period that her husband remained at home with the children. He was arrested on 25 April 2006.
95 In her first affidavit, the applicant deposed that "in the main our financial affairs are taken care of by my husband and there was money coming from the butcher shop and substantial amounts of money that came from horse racing." Other than I accept that there was income generated through the butcher business, I do not accept that evidence. The applicant was involved in the butcher business, she did the bookwork for the shop, she had previous experience doing bookwork, she was involved in the acquisition of the real estate by Gannrf Pty Ltd, and she was the controller of the Trustee of the Family Trust.
96 The applicant is presently self-employed in partnership with Danielle McGuire at a hair and beauty salon in Toorak Road, which opened in September 2005. She informed the Court that it was a good business and was slowly growing. Danielle McGuire left this country some months ago and has not returned.
97 The primary question is whether the applicant has established that she took all reasonable steps to ensure the attendance of the prisoner at trial? I do not accept that she took all reasonable steps to ensure the attendance of the prisoner at trial. First of all, I do not accept her evidence. She is a witness without credibility. Secondly, having sat through a trial involving the prisoner and observed him in Court, I do not believe that the applicant could ever have thought that the prisoner would comply with her request if he decided otherwise. He came across as a strong, arrogant and determined man, and a very dishonest criminal. Thirdly, her conduct after the flight of the prisoner indicates a person whose loyalty to the Mokbel family and the prisoner far outweighed any obligation she felt as a surety. The applicant gave evidence that she had not asked any of the family where he had gone, nor did she volunteer any information to the police that may have been of any assistance. More importantly, she did not alert the police to her friend going overseas. Fourthly, she was aware that the prisoner was facing a number of serious drug charges and that the cases brought against him were strong. She was aware that extremely stringent bail conditions had been imposed and that as from 29 November 2005, the curfew had been imposed. The evidence of the accounts relating to Hollywood Hair Extensions revealed that a large sum of money had passed from that business to Betfair, London. The applicant was aware that on 25 October 2005, the prisoner was arrested in relation to the attempts to import drugs into Australia. She was also aware that serious allegations were being made in the press about him. More importantly, she was aware that the trial was coming to an end and that he was an extremely wealthy man who seemed to be possessed of much cash. All of these matters should have alerted the applicant during the weekend of 18-19 March to the risk that the prisoner may abscond. She did not take any particular steps to ensure this did not happen. The steps she could have taken included going to the police, or seeking to be released from her undertaking.
98 For these reasons, in my opinion the application should be dismissed. However, there are a number of additional reasons why the application should be dismissed.
B. Financial Impact
99 The applicant gave evidence that the enforcement of the undertaking would have a serious impact upon her financial circumstances. She is 35 years of age, has three children, and her husband is the father of the three children. She and her husband conducted a butcher shop business for about 18 months at the Brunswick Market and the business was sold in the first week of May 2005. After selling the business in May last year, the applicant began a hair salon partnership business with Ms McGuire. She said that her husband remained at home looking after the children. Her husband is now in custody. Her mother assists in looking after her children, although her mother's health is not good.
100 Prior to 1997, she and her husband resided with her parents and after establishing the Family Trust and registering JR Mokbel Pty Ltd in 1997, they purchased the home at 11 Downs Street, Brunswick. The existing residence on the property was demolished and the applicant and her husband built a new home. The applicant and her three children currently live at the property. The applicant is presently self-employed, conducting the hair salon business in partnership with Danielle McGuire. She stated that the business is improving and paying its own way, but evidently there is money still owing on it. The business premises are leased. The applicant states that due to the legal costs of the present application, the restraining orders and her husband's legal bills, together with commitments such as mortgage and car payments, she would have to sell her share of the business, in the event that the application fails. Her partner, Ms McGuire, left Australia some time in July this year and has not returned. How this will impact upon the business was not explained. When she gave evidence, the applicant stated that she believed that Ms McGuire was to return to Australia some time in August.
101 There are currently a number of confiscation orders against property because of the charges brought against the applicant's husband. The property which has been restrained includes the residential property, the property at Kilmore, two Mercedes motor vehicles, a number of television sets, and the JR Mokbel Pty Ltd business cheque account. The applicant believes she is unable to borrow any money against any of the assets. She states that she is under considerable financial strain in attempting to support her family and meeting liabilities. Although her current weekly income is in the order of $700, her expenses, according to her affidavit, total approximately $5,895 per month. She also listed the expenses of JR Mokbel Pty Ltd, which apparently total approximately $1,801 per month.
102 The applicant was cross-examined about a number of financial transactions which involved her husband, herself and the trust. As found by the Court, she is not a credible witness. Her evidence given during cross-examination posed more questions as to the financial worth of the family and the Family Trust. It is not possible to say what the true financial position is. It is clear that the applicant has not made a full disclosure of all assets of the family and, in particular, her assets. Accordingly, it is not possible to say what is the true financial position, and what will be the financial impact on her if she pays the sum of $1m. If the impact on her financial position of the order requiring her to pay $1m is relevant on this application, the application also fails on this ground because the applicant has not fully revealed the true financial position.
103 However, in any event, there are no new circumstances relating to the applicant's financial position since she became a surety for the prisoner. The only change relates to the restraining orders, which interfere with the rights of the person or persons who have an interest in the property restrained to deal with it. The Trust has made an application to be excluded from the restraining orders, but the application has not yet been heard. The circumstances, in my opinion, do not constitute new circumstances which should be taken into account in considering the financial impact and whether it is unjust for the applicant to pay the sum of $1m.
C. Genuine Surety
104 It is incumbent upon a surety who seeks relief from forfeiture to establish that he or she is a genuine surety.
105 I am not persuaded that the applicant was a genuine surety. The evidence revealed that she has very few assets in her own name. The property that she identified as being of sufficient value to meeting the undertaking in her Affidavit of Justification is not owned by her and she has no interest in it. The property is owned by a trust company and is held for the benefit of contingent beneficiaries. Although the applicant is one of the contingent beneficiaries, until the Trustee resolves in her favour to provide her with any trust asset, she has no interest in any of the Trust assets. In giving the undertakings which she gave in the past, she was not putting at risk any asset to the value of $1m. On the evidence before the Court, the applicant has never had assets of $1,000,000. She misled the officers of both the Magistrates' Court and this Court as to her true interest in the residential property. Her failure to assist the authorities after the prisoner absconded is also relevant to the question of her being a genuine surety. She was not a genuine surety. The application should be refused on this ground also.
D. Criminal Source of Funds
106 The Court is not satisfied that the applicant has made a full disclosure of all of her assets, the family assets or the true financial position. The evidence before the Court leads to an inference that the acquisition of assets over the years by the Milad Mokbel family, which of course includes the applicant and the Trust, has in the main been financed through criminal activity. The applicant has not persuaded the Court that this is not so. When the applicant seeks to persuade the Court that she should not have to pay the $1m because it is unjust in all the circumstances, the fact that many of the family assets were derived from criminal activity is a relevant factor to take into account. It would not be unjust in the circumstances for her to have to pay the full amount of the surety undertaken by her, when the Court has been misled as to the true position of the assets of the Milad Mokbel family, the applicant's assets and the Trust's financial position, and when much of the accrued wealth of the family has, on the evidence, come from criminal activity. That conclusion is open on the evidence and the applicant has failed to prove that the assets have been accumulated lawfully. This is another reason why the application should be refused.
Conclusion
107 The applicant carries the burden of persuading the Court that it would be unjust to require her to pay the amount undertaken to be paid, having regard to all the circumstances of the case. She has failed to do this.
108 Subject to any submissions by counsel, I propose to order that the application be dismissed. I will hear the parties on the question of costs.