On 22 June 2023, Hussein Bazzi (the appellant) was convicted of an offence that he dealt with property, $41,840 of Australian currency, reasonably suspected of being proceeds of crime contrary to s 193C(2) Crimes Act 1900 by his Honour Magistrate Arms (the magistrate) sitting at Sydney Downing Centre Local Court. The appellant brings an appeal as of right against the conviction.
The appellant relied on the following grounds of appeal:
1. That the magistrate erred in finding the cash in the possession of the appellant was the proceeds of crime.
2. That there was sufficient evidence regarding the legitimate source of the money.
At the time of the hearing, the appellant also pleaded guilty to related drug supply charges and has since been sentenced for those offences. The related offences do not form a part of this appeal.
[2]
Factual Background
The parties provided the magistrate with Agreed Facts which set out the key factual background from which the offending arose. The following is a summary of the Agreed Facts.
In late 2021, police commenced an investigation into the sale of prohibited drugs involving a number of persons. The investigation occurred over a period of six months. The appellant was identified as a supplier of prohibited drugs approximately two months into the investigation.
The appellant supplied prohibited drugs on a number of occasions to Ria McGowan and a person by the name of Puna. Mr Puna then on-supplied a portion of the prohibited drugs which he had obtained from the appellant to his flatmate Glen Sharkey who would in turn supply it to others.
On 3 March 2022, the appellant and Mr Puna were arrested outside the Meriton World Square Hotel immediately after the appellant supplied 2.2 grams of methylamphetamine to Mr Puna.
Police executed a search warrant at the Meriton Hotel where the appellant was staying. The appellant was found to be in possession of 3.70 grams of methylamphetamine and $41,840 in cash, both of which were located in the safe within the appellant's room.
Monies paid by Mr Puna into the appellant's bank account are consistent with purchases of drugs in the range of 2 to 3 grams.
Apart from the $41,840 found in the hotel safe at the time of the appellant's arrest, there is no evidence of unexplained wealth or extravagant living.
[3]
The Crown case at hearing
The Crown relied on circumstantial evidence to establish that the currency located in the safe was the product of the appellant's involvement in the drug supply.
The Crown case comprised oral evidence of Senior Constable James Oxley, the second in charge of the investigation, along with the following four exhibits:
1. Exhibit 1 - Bendigo Bank Deposit History;
2. Exhibit 2 - ANZ Deposit History between 1 November 2021 and 3 March 2022;
3. Exhibit 3 - Size, Number and Reason for Deposits into Accounts under Sam Bazzi; and
4. Exhibit 4 - Telecommunication Intercept of communications between the appellant and Glen Sharkey.
Senior Constable Oxley gave short evidence in which the primary purpose was to tender the exhibits.
During cross examination Senior Constable Oxley confirmed that the police had been conducting electronic surveillance on a number of people as part of their investigation, including the appellant. Police were able to locate the appellant by monitoring Mr Puna's phone. He confirmed that Mr Puna and Mr Sharkey were roommates, and that Mr Puna would on-sell a portion of the drugs he obtained from the appellant to Mr Sharkey.
Senior Constable Oxley also gave evidence during cross examination that it was through the monitoring of Mr Puna that police became aware that the appellant was going to supply prohibited drugs to Mr Puna at the Meriton Hotel which was the catalyst for his arrest.
[4]
The Defence case at hearing
The defence case consisted of the oral evidence of three witnesses, being the appellant, his father Elly Bazzi and his partner Ria McGowan.
[5]
Evidence of the appellant
The appellant gave evidence that he was a drug user, his use escalating following the breakdown of his relationship with a long-term partner. He said that he had various jobs, primarily as an electrician but also as a handyman and earned a consistent income.
The appellant stated that he received $125,000 of settlement monies on trust from his father in approximately 1999 or 2000 following the settlement of a negligence claim after his mother's death. He gave evidence that the account had a balance of $99,830 in 2004.
The appellant stated he withdrew money from his accounts in 2012, as he owned money to State Debt Recovery and they were garnishing his account. As a result of the debt, the appellant withdrew the money and put it into a safety deposit box. Exhibit 5 in the proceedings was a Commonwealth Bank Statement showing the withdrawal of $31,000 in cash. The balance of the account was $8,445.43.
The appellant gave evidence that in 2014 the money in his safety deposit box, totalling $39,700, was confiscated by the Australian Federal Police (AFP). The police subsequently returned the $39,700 later that year, as was shown in the receipt of the return of the money marked as Exhibit 6 in the proceedings.
Following this the appellant kept the cash at home. He gave evidence that he did not trust banks and that this was a view his father also shared.
He stated that at the time of his arrest he was staying in a hotel with his girlfriend, Ms McGowan, who had paid for the room with money she had won on online gambling.
The appellant said that he kept the safe containing the cash with him in his hotel room as his brother had just been released from gaol and broke into his house and stayed there. The appellant worried that his brother would have stolen the money.
He confirmed that he, Mr Puna and Ms McGowan would purchase prohibited drugs together and divvy it up between them.
During cross examination, the appellant confirmed that his brother had previously threatened to break into his house.
The appellant was challenged during cross examination in relation to payments made into his bank accounts as follows:
1. J Soriano on 20 August 2021 of $700;
2. Patricia Byrne on 21 August 2021 of $350; and
3. Chanratana Lach on 10 August 2021 of $500.
The appellant denied that these were persons to whom he was supplying prohibited drugs.
[6]
Evidence of Elly Bazzi
Mr Elly Bazzi gave evidence that he was awarded $640,000 in compensation from Southern Allied Health Service in around 1999 or 2000, following the death of his wife. He stated that he gave the appellant $125,000, $95,000 of which was deposited into an account with the Commonwealth Bank and the remainder given to the appellant in cash.
Mr Elly Bazzi gave further evidence that in 2016 he sold a house in Lebanon for $150,000 USD. He gave the appellant $10,000 from the proceeds of this sale.
He said that he went to the AFP with the appellant and his documentation to prove that the money seized was obtained legally. Following this Mr Elly Bazzi kept the money ($39,000) with him in his own safe for a period of four years before returning it to the appellant in early 2022. The appellant told Mr Elly Bazzi that he needed the money returned so that he could renovate his house.
Mr Elly Bazzi also stated in his evidence that the appellant's brother was a drug user, had been in gaol and had previously robbed him. Mr Elly Bazzi has an AVO against him.
[7]
Evidence of Ria McGowan
Ms McGowan gave evidence that she had been in a relationship with the appellant for a period of three to four months at the time of his arrest. She stated that during the course of their relationship they were living in various hotels, which she paid for with money she had won gambling online, in the sum of $8,800, which was deposited into her Commonwealth Bank account in instalments. Ms McGowan was unable to download a statement to verify this.
She confirmed that she was aware that the appellant carried cash. She knew about the safe and that the cash was in the hotel room as the appellant did not want to leave the money unattended as his brother had threatened to rob the appellant in the past.
Ms McGowan gave evidence that she was a drug user and would pool money with the appellant and Mr Puna to purchase drugs at cost.
During cross examination she denied being aware of the appellant supplying drugs to Mr Sharkey and confirmed that the $8,800 had been won through online gambling and deposited into her Commonwealth Bank account.
[8]
The Relevant Law
The applicable principles to be applied in the appeal are as follows.
[9]
Nature of the appeal pursuant to s 18 Crimes (Appeal and Review Act) 2001
Section 18(1) Crimes (Appeal and Review) Act 2001 provides that the appeal is a rehearing on the certified transcripts of evidence, obviously as supplemented by reference to the exhibits tendered in the Local Court and is not an appeal de novo: Gianoutsas v Glykis [2006] NSWCCA 137 at [24]-[31].
The principles governing appeals from judges sitting without a jury apply in that the appellate judge is to form his or her own judgement of the facts while recognising the advantage enjoyed by the magistrate who saw and heard the witnesses called and observing the natural limitations stemming from proceeding wholly or substantially on the transcript record: Charara v R [2006] NSWCCA 244 at [17]-[22].
Whilst the magistrate's reasons are not part of the certified transcripts referred to in s 18(1), recourse may be had to them since the appellate function could not properly take place without reference to them: Charara [23]-[24].
The Court is obliged to give the judgment which, in its opinion, ought to have been given in the first instance: Fox v Percy (2003) 214 CLR 118 at [23].
An appeal to the District Court under s 18 requires the demonstration of factual, legal or discretionary error to succeed: McNab v Director of Public Prosecutions [2021] NSWCA 298 at [24] (Bell P) and [83]-[90] (Basten and McCallum JJA).
The term "error" has no precise meaning. It refers broadly to the satisfaction of the appellate judge that the trial judge was wrong and should be corrected. Put negatively, it means that the judgment of the trial judge will not be set aside unless the appellate judge is satisfied that the judgment is wrong. How that state of satisfaction is achieved will depend on a range of factors. A miscarriage of justice warranting intervention may occur in the absence of "error" in the ordinary meaning of that term: AG v Director of Public Prosecutions [2015] NSWCA 218 at [34] (Basten JA) and McNab at [88] (Basten and McCallum JJA).
The requirement that the appellant demonstrate error does not reverse the onus of proof in that the prosecution, at all material times, bears the onus of establishing guilt beyond reasonable doubt: McNab at [26] (Bell P) and [91] (Basten and McCallum JA).
An appeal under s 18 does not require the District Court to undertake a complete review of the whole of the evidence and form its own view as to the appellant's guilt regardless of the issues raised by the appellant. The extent of the review will depend on the circumstances of the case and the kind of error alleged: Lumney v Director of Public Prosecutions [2021] NSWCA 186 at [44] (McCallum JA).
[10]
The offence
Section 193C(2) Crimes Act 1900 provides:
A person is guilty of an offence if -
(a) the person deals with property, and
(b) there are reasonable grounds to suspect that the property is proceeds of crime, and
(c) at the time of the dealing, the value of the property is less than $100,000.
Maximum penalty - Imprisonment for 3 years.
Section 193C(4) Crimes Act 1900 provides:
It is a defence to a prosecution for an offence under this section if the defendant satisfies the court that the defendant had no reasonable grounds for suspecting that the property was substantially derived or realised, directly or indirectly, from an act or omission constituting an offence against a law in force in the Commonwealth, a State or a Territory or another country.
Section 193CA Crimes Act 1900 sets out a list of circumstances which amount to "reasonable grounds" to suspect property is the proceeds of crime. Relevantly, sub-s 193CA(1)(h) provides:
(h) the value of the property involved in the dealing is, in the opinion of the trier of fact, grossly out of proportion to the defendant's income and expenditure over a reasonable period within which the dealing occurs.
The words "deal with" in respect of the offence are defined in s 193A Crimes Act 1900 as follows:
deal with includes -
(a) receive, possess, conceal or dispose of, or
(b) bring or cause to be brought into New South Wales, including transfer or cause to be transferred by electronic communication, or
(b1) send or cause to be sent out of New South Wales, including transfer or cause to be transferred by electronic communication, or
(c) engage directly or indirectly in a transaction, including receiving or making a gift.
[11]
Analysis of the Magistrate's Reasons
The magistrate delivered oral reasons following the conclusion of the evidence and submissions of the parties.
The magistrate correctly identified the elements of the offence, noting that it was not in issue that the appellant dealt with the money by being in possession of it, and that the amount of the money was less than $100,000. The magistrate noted that the appellant conceded that there were also reasonable grounds to suspect that the money was the proceeds of crime.
The magistrate then stated that the onus was on the prosecution to prove the offence and that the appellant did not have to prove anything. The magistrate stated that the appellant "chose to give evidence". The magistrate later appeared to caution himself against reversing the onus onto the appellant. In finding that the offence had been proven the magistrate stated, "…element 2 has been proven, and on that basis I find the [offence] against the accused proven beyond reasonable doubt".
It is clear from a fair reading of the whole ex tempore judgment that the magistrate did not comprehend that the appellant was seeking to establish the defence provided for by s 193C(4) Crimes Act 1900 and that the appellant bore the onus of establishing that defence on the balance of probabilities. I am satisfied that the magistrate fell into error in his reasons by failing to consider the s 193C(4) defence and by failing to apply the correct onus of proof.
The magistrate found that the appellant was not an impressive witness. The magistrate found that his version of events was inconsistent with his father's evidence. The magistrate accepted the appellant's evidence that as a long-term drug user that he had problems with his memory.
The magistrate accepted Elly Bazzi as a witness of truth, finding that he took the money returned by the AFP, held it and then returned it to the appellant in 2022.
The magistrate also accepted Ms McGowan's evidence.
[12]
Consideration
It is necessary for me to reconsider the evidence to determine if the s 193C(4) defence has been established by the appellant on the balance of probabilities, bearing in mind the credit findings made by the magistrate who was in the best position to assess the demeanour of the witnesses.
The starting point is that the magistrate expressly and unequivocally found Elly Bazzi to be a witness of truth and accepted that he had given the appellant the sum of $39,000 in cash at some point in 2022. I infer from his emphatic acceptance of Elly Bazzi's evidence that he also accepted that the cash was returned prior to it being seized in the hotel room. The amount seized was $41,840, which was only $2,840 more than Elly Bazzi gave him. In other words there was a legitimate explanation for at least $39,000 of the cash that was seized.
The magistrate found that the appellant's evidence was incomplete, but accepted a reason why that might be so, being the memory difficulties caused by his long-term drug use. I am also cautious of applying too much weight to the magistrate's credit finding about the appellant, when I am satisfied for the reasons given that the magistrate did not apply the correct test or the correct onus of proof.
The magistrate also failed to consider where the accounts of the appellant and Elly Bazzi supported each other. Both the appellant and Elly Bazzi gave evidence that the appellant's brother was a long-term drug user, had been in gaol and that he had tried to steal from his family members in the past. This added support to the reason why the appellant took the cash with him to the hotel.
The magistrate's concerns over the inconsistencies between the appellant's and Elly Bazzi's evidence did not lead him to reject the latter's evidence. In contrast, he glowingly accepted it to be the truth. In those circumstances, where he accepted the critical facts underlying the appellant's defence, the fact that there were inconsistencies between the evidence of the appellant and Elly Bazzi fell away.
There was other evidence that supported the conclusion that the money was not the proceeds of crime. This included:
1. Ms McGowan's evidence, which the magistrate accepted, about her gambling winnings;
2. the contemporaneous documentary evidence that supported the assertion that the person to whom the appellant supplied drugs on the night of the seizure had made a payment for the drugs into the appellant's bank account; and
3. the relatively small quantities of drugs being supplied, made it unlikely that the amount of cash in the possession of the appellant was obtained from the relevant transactions.
Having conducted an independent review of the evidence, I am satisfied on the balance of probabilities that the appellant has established that the money seized was from a legitimate source.
[13]
Orders
The orders I make are as follows:
1. Appeal against the conviction is allowed.
2. I set aside the conviction and penalty imposed by the magistrate for sequence 006.
3. I set aside the forfeiture order that applies to sequence 006.
4. I vary the aggregate term of imprisonment to 18 months to date from 15 September 2023 and conclude on 14 March 2025.
5. I confirm the magistrate's order that pursuant to s7(1) Crimes (Sentencing Procedure) Act 1999 that the aggregate term of imprisonment is to be served by way of an ICO, and the conditions of the ICO imposed by the magistrate.
[14]
Amendments
29 October 2024 - Order 4 - term of imprisonment amended.
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Decision last updated: 29 October 2024