DPP (Cth) v Mylecharane

Financial Transaction Reports Act 1988 (Cth) LEGISLATION CITED : Proceeds of Crime Act 1987 (Cth) Proceeds of Crime Act 2002 (Cth)

Commonwealth Director of Public Prosecutions - re s 19 of the Proceeds of Crime Act 2002 [2005] 62 NSWLR 400 Director of Public Prosecutions (Commonwealth) v Ba Minh Duong (unreported County Court Victoria Judge Lewis 20/8/2003) CASES CITED : Director of Public Prosecutions (Commonwealth) v Jeffrey (unreported 15 January 1992) Director of Public Prosecutions (Commonwealth) v Ronen [2005] NSWSC 990 Director of Public Prosecutions v King (unreported O'Keefe J 5 May 2000) Ferusa (NSW District Court 12/12/1991)

PARTIES : Director of Public Prosecutions (Commonwealth) v Gregory Mylecharane & Anor

COUNSEL : MC Bracks - Plaintiff MR Pesman/DJ Jenkins - Second Defendant

SOLICITORS : Commonwealth Director of Public Prosecutions - Plaintiff Sage Solicitors - Second Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

11735/06 DIRECTOR OF PUBLIC PROSECUTIONS (CTH) v GREGORY MYLECHARANE & ANOR

JUDGMENT 1 HIS HONOUR: In these proceedings the Commonwealth Director of Public Prosecutions claimed an order pursuant to s 48 of the Proceeds of Crime Act 2002 (Cth) ("the Proceeds of Crime Act" or the "Act") that the property described in the schedule to the summons commencing the proceedings be forfeited to the Commonwealth. The property described in the schedule to the summons was:- "Cash in the sum of AU$286,900 seized by the Australian Federal Police during the execution of a search warrant on 1 April 2004 at Self-Storage Unit A24 Austral Self-Storage 74A Newland Street, Bondi Junction NSW." 2 By a cross-summons and notice of motion filed in the proceedings Mr Deryk Andrew, the trustee of the bankrupt estate of Ali Moussa, claimed an order pursuant to s 73 of the Act that the sum of $250,000, being part of the cash described in the schedule to the summons, be excluded from any forfeiture order. No claim was made by Mr Andrew to the balance of the sum of $286,900, being $36,900. 3 The proceedings under the Act were brought following the conviction of a man named Gregory Mylecharane on a charge of having committed an offence under s 400.9 of the Commonwealth Criminal Code. Section 400.9 of the Commonwealth Criminal Code provides, so far as is relevant, as follows:-

400.9 Possession etc. of property reasonably suspected of being proceeds of crime etc. (1) A person is guilty of an offence if: (a) the person: (i) … possesses … money or other property; or……. and (b) it is reasonable to suspect any of the following: (i) the money or property is proceeds of crime in relation to a Commonwealth indictable offence … Penalty: Imprisonment for 2 years, or 50 penalty units, or both. (2) Without limiting paragraph (1)(b), that paragraph is taken to be satisfied if: …………………………. (c) the value of the money and property involved in the conduct is, in the opinion of the trier of fact, grossly out of proportion to the defendant's income and expenditure; …………………………. (5) This section does not apply if the defendant proves that he or she had no reasonable grounds for suspecting that the money or property was derived or realised, directly or indirectly, from some form of unlawful activity. Note: A defendant bears a legal burden in relation to the matter in subsection (5) (see section 13.4). 4 The charge against Mylecharane under s 400.9 of the Code was based on the finding by the Australian Federal Police on 1 April 2004 of the sum of $286,900 in the storage unit at Bondi Junction, which was being used by Mylecharane. The prosecution relied on para (c) of sub-s (2) to establish the element of the offence stated in para (b) of sub-s(1). 5 Mylecharane stood trial in the District Court before his Honour Judge Nield and a jury in January 2004. At the trial the defence case was that the sum of $250,000 in cash had been lent by a man named Terrence Reddy to Ali Moussa and that Moussa had then provided the $250,000 to Mylecharane as his agent for the purpose of paying sub-contractors on a building development at Kyle Bay or Connells Point and that the balance of the sum of $286,900, that is $36,900, was Mylecharane's own money, which he had saved. Both Mylecharane and Moussa gave evidence in the defence case at the trial. Reddy did not give evidence at the trial. 6 At the conclusion of the trial the jury returned a verdict of guilty. On 29 June 2006 Judge Nield passed sentence on Mylecharane, delivering remarks on sentence. 7 The proceedings under the Proceeds of Crime Act were commenced on 12 April 2006. On 12 April 2006 a restraining order was made with respect to the entire sum of $286,900. 8 The Director of Public Prosecutions subsequently applied for the making of a forfeiture order. Mylecharane did not oppose the making of a forfeiture order and nor did Moussa or Reddy, to whom notice of the application for a forfeiture order had been given. 9 However, on 28 April 2006 Moussa had presented a debtor's petition in bankruptcy and had filed a statement of affairs. Mr Andrew was appointed Moussa's trustee in bankruptcy. Mr Andrew opposed the Director of Public Prosecutions' application for a forfeiture order in respect of the sum of $250,000 and himself made an application for the exclusion from any forfeiture order of the sum of $250,000. 10 It is convenient to set out the whole or part of some of the provisions of the Proceeds of Crime Act.

48 Forfeiture orders - convictions for indictable offences (1) A court with * proceeds jurisdiction must make an order that property specified in the order is forfeited to the Commonwealth if: (a) the DPP applies for the order; and (b) a person has been convicted of one or more indictable offences; and (c) the court is satisfied that the property to be specified in the order is proceeds of one or more of the offences. (2) A court with proceeds jurisdiction may make an order that property specified in the order is forfeited to the Commonwealth if: (a) the DPP applies for the order; and (b) a person has been convicted of one or more indictable offences; and (c) subsection (1) does not apply; and (d) the court is satisfied that the property to be specified in the order is an instrument of one or more of the offences. (3) In considering whether it is appropriate to make an order under subsection (2) in respect of particular property, the court may have regard to: (a) any hardship that may reasonably be expected to be caused to any person by the operation of the order; and (b) the use that is ordinarily made, or was intended to be made, of the property to be specified in the order; and (c) the gravity of the offence or offences concerned.

64 Procedure on application (1) Any person who claims an interest in property covered by an application for a forfeiture order may appear and adduce evidence at the hearing of the application. (2) If the application relates to a person's conviction of an indictable offence, the court may, in determining the application, have regard to: (a) the transcript of any proceeding against the person for: (i) that offence; or (ii) if the person is taken to be convicted of that offence because of paragraph 331(1)(c) - the other offence referred to in that paragraph; and (b) the evidence given in any such proceeding. (3) The court may still make a forfeiture order if a person entitled to be given notice of the relevant application fails to appear at the hearing of the application.

73 Making exclusion orders (1) A court that made a forfeiture order, or that is hearing, or is to hear, an application (a forfeiture application ) for a forfeiture order, must make an order excluding property from forfeiture (an exclusion order ) if: (a) a person applies for the exclusion order; and (b) the forfeiture order, or the forfeiture application, specifies the applicant's property; and …………………………… (e) if the forfeiture order was (or the forfeiture order applied for would be) made under section 48 - the court is satisfied that: (i) the applicant was not, in any way, involved in the commission of any of the offences to which the forfeiture order or forfeiture application relates; and (ii) the property to be specified in the exclusion order is neither proceeds nor an instrument of any of those offences.

329 Meaning of proceeds and instrument (1) Property is proceeds of an offence if: (a) it is wholly derived or realised, whether directly or indirectly, from the commission of the offence; or (b) it is partly derived or realised, whether directly or indirectly, from the commission of the offence; whether the property is situated within or outside Australia. (2) Property is an instrument of an offence if: (a) the property is used in, or in connection with, the commission of an offence; or (b) the property is intended to be used in, or in connection with, the commission of an offence; whether the property is situated within or outside Australia. …………………………. 11 Evidence on the two applications before me included a certificate of the trial and conviction of Mylecharane, the transcript of the evidence and addresses at Mylecharane's trial and of Judge Nield's remarks on sentence, Moussa's debtor's petition and statement of affairs and a title search for a property at Connell's Park. 12 At the hearing of the applications it was common ground that the issues to be determined by me were:-

As to the application for a forfeiture order under s 48 of the Act-

1. whether the court was satisfied that the sum of $250,000 was "proceeds" of the offence of which Mylecharane had been convicted (s 48(1)(c))
2. whether the sum of $250,000 was an "instrument" of the offence of which Mylecharane had been convicted (s 48(2)(d))
3. if the sum of $250,000 was an instrument of the offence, whether the court in the exercise of its discretion should make a forfeiture order (s 48(3))

As to the application for an exclusion order under s 73 of the Act-

1. whether the application for the forfeiture order "specifies the applicant's property", that is whether the sum of $250,000 was the property of Mr Andrew as Moussa's trustee in bankruptcy (s 73(1)(b))
2. whether the court was satisfied that the applicant was not in any way involved in the commission of the offence of which Mylecharane was convicted (s 73(1)(e)(i))
3. whether the court was satisfied that the sum of $250,000 was not "proceeds" of the offence of which Mylecharane was convicted (s 73(1)(e)(ii))
4. whether the court was satisfied that the sum of $250,000 was not an "instrument" of the offence of which Mylecharane was convicted (s 73(1)(e)(ii)) 13 It is convenient to consider first the issue of whether the sum of $250,000 was the property of Mr Andrew as Moussa's trustee in bankruptcy and to consider next the issues (disregarding, for the present, questions of onus) whether the sum of $250,000 was the "proceeds" of Mylecharane's offence or an "instrument" of Mylecharane's offence.

Whether the sum of $250,000 was the property of Mr Andrew as Moussa's trustee in bankruptcy 14 It was not disputed that Mr Andrew was the successor in title to Moussa and that whether the sum of $250,000 was the property of Mr Andrew as Moussa's trustee in bankruptcy depended on whether the sum of $250,000 had been the property of Moussa. 15 It was submitted for counsel for the trustee, and I accept, that this question should not be regarded as having been determined, adversely to the trustee, by the jury's verdict of guilty. All that can be inferred from the jury's verdict is that the jury was satisfied beyond reasonable doubt of the elements of the offence set out in sub-s (1) of s 400.9 of the Criminal Code and that the jury were not satisfied that Mylecharane had succeeded in establishing the defence in sub-s (5) of s 400.9. 16 It is clear that in determining whether the sum of $250,000 was the property of Mr Andrew the Court can have regard to the transcript of the evidence given at Mylecharane's trial (s 64(2)). 17 It was submitted by counsel for the Director of Public Prosecutions, but disputed by counsel for the trustee, that the Court could have regard to the transcript of the remarks on sentence of Judge Nield. I made a ruling that the court could have regard to the transcript of the remarks on sentence as being included in "the transcript of any proceeding" against Mylecharane for the offence. 18 Parts of the evidence given by Mylecharane and Moussa at Mylecharane's trial were summarised in counsel for the Director's written submissions, in a way which was not the subject of any criticism by counsel for the trustee and which I consider to be an accurate summary of those parts of the evidence. These parts of the summary included:-

Evidence by Mylecharane "He obtained $250,000 of the $286,900 from Moussa, with whom he was redeveloping a property owned by Moussa at 92 Greenacre Road, Kyle Bay. The money was to be used to encourage tradespeople to work on the project. Moussa was to manage the redevelopment and expected to receive a share of the profit.

He received the money from Moussa in a lump sum in March 2004 at the home of Moussa's mother in Kyle Bay.

Moussa later told him that he obtained the $250,000 from Terrence Reddy."

Evidence by Moussa "He was developing a property at 92 Greenacre Road, Connells Point and had arranged for Mylecharane to oversee construction at the site. Mylecharane knew construction workers, plumbers and electricians. Moussa dealt with Mylecharane in relation to the project in the months leading to April 2004. Consent for the development was obtained in September 2004.

The money seized from the storage unit included $250,000 that Moussa had given to Mylecharane in March 2004. That money was to be used to secure builders to work on the project. A scarcity of builders meant that cash incentives were necessary.

The money was required in March 2004 because Moussa expected to receive development consent at that time. Ultimately, consent was not obtained until September 2004.

Moussa borrowed the $250,000 from Reddy and collected it from Reddy's office in King Street, Sydney.

Mylecharane's involvement in the project was as a trainee project manager. It was not intended that he receive a share of the profit, although the possibility that he might receive a percentage of any profit was discussed.

Moussa asked Reddy for a loan of $250,000 in cash. Reddy undertook to obtain the money and asked for time to make the necessary arrangements. Moussa received $250,000 in cash from Reddy in late February 2004 on the understanding that he was required to repay that amount. The money was in $50 notes and was packed in bundles totalling $5,000 each. A week later, Moussa handed the money to Mylecharane so that it could be used in paying builders, electricians and plumbers. The handover occurred at the home of Moussa's mother. Mylecharane was to hold the money for a maximum of two weeks, before commencing those payments.

Moussa is required to repay the money to Reddy, who has asked for its return on many occasions. Moussa's main concern is to recover the money so as to repay Reddy." 19 The parts of Judge Nield's remarks on sentence which were referred to in argument on the hearing of the applications included para 19 of the remarks, which reads:- "The jury's verdict did not surprise me. The offender's explanation for his possession of the amount of $36,900 was, to my mind, unbelievable and his explanation for his possession of the amount of $250,000, albeit that his explanation was confirmed by Mr Moussa, was, to my mind, also unbelievable. Frankly, I formed the opinion, and I think that the jury formed the same opinion, that, notwithstanding that $250,000 part of $286,900 had been given by Mr Moussa to the offender, all of the money was derived or realised from some form of criminal activity." 20 His Honour virtually repeated in para 23 of his remarks on sentence what he had said in para 19. 21 It was submitted by counsel for the trustee, in support of his contention that the sum of $250,000 was Moussa's property, that the evidence given at the trial by Mylecharane and Moussa was that the $250,000 had been borrowed by Moussa from Reddy and had then been provided by Moussa to Mylecharane, as Moussa's agent, for the purpose of paying subcontractors; that that evidence had not really been challenged by the Crown prosecutor in his cross-examination of Mylecharane and Moussa; that the Crown prosecutor in his closing address had not submitted that the jury should not accept that the $250,000 had been provided by Moussa to Mylecharane as an agent for Moussa; that Judge Nield in his remarks on sentence had accepted that the $250,000 had been provided to Mylecharane by Moussa; that the evidence of Mylecharane and Moussa at the trial was supported by documentary evidence showing that Moussa had acquired a property at Connells Point; and that there was no evidence suggesting that the $250,000 belonged to anyone other than Moussa. 22 I have concluded that I am not satisfied that the $250,000 was Moussa's property. 23 The evidence given by Mylecharane and Moussa at the trial to the general effect that the amount of $250,000 in cash was provided by Moussa to Mylecharane for the purpose of paying subcontractors for a development was implausible. Its implausibility was increased by the circumstances that the cash was provided in March 2004, whereas the development was not granted approval by the Council until six months later in September 2004. 24 The improbability of the evidence of the witnesses being true was increased by the inconsistencies between the two witnesses' evidence, including inconsistencies about whether Mylecharane was to share in any profit from the development, about who was present at the time when the sum of $250,000 was allegedly provided and about whether there was any discussion between them about who had allegedly provided the $250,000 to Moussa. 25 I do not consider that it is accurate to say that the evidence of the witnesses was not challenged in cross-examination by the Crown prosecutor. The general tenor of the cross-examination of each witness was that the evidence he had given in chief should not be accepted. Nor is it accurate to say that the Crown prosecutor did not in his closing address challenge the evidence of Mylecharane and Moussa about the source of the $250,000. In his closing address the Crown prosecutor submitted that the jury should reject entirely as "an out and out lie", "what he and Mr Moussa really collectively have told you about the source of the money, that is, it's cash that came from another person through Mr Moussa, for a particular purpose, to the accused". 26 In his remarks on sentence the sentencing judge described Mylecharane's explanation for his possession of the amount of $250,000 as "unbelievable", "albeit that his explanation was confirmed by Mr Moussa" and I do not consider that what his Honour said in paras 19 and 23 of his remarks on sentence should be interpreted as including a positive acceptance by his Honour of the evidence that the amount of $250,000 had been provided by Moussa to Mylecharane. 27 Documentary evidence did, indeed, establish that Moussa had acquired a property at Connells Point but such evidence did not go very far in confirming the evidence of the two witnesses. 28 It is noteworthy that in his statement of affairs of 28 April 2006 Moussa did not show the $250,000 as an asset and did not show an obligation to repay $250,000 to Reddy as a debt. In his evidence at Mylecharane's trial in January 2006 Moussa had asserted that he was particularly concerned about repaying Reddy. 29 The conclusion I have reached that I am not satisfied that the sum of $250,000 was Moussa's property is sufficient to dispose of the trustee's application under s 73 of the Act. However, it is still necessary to determine whether a forfeiture order should be made under s 48 and it is desirable to determine whether there are any other reasons why the application under s 73 should not succeed.

Whether the sum of $250,000 was "proceeds" of Mylecharane's offence 30 It was submitted by counsel for the trustee that the sum of $250,000 was not proceeds of the offence of which Mylecharane had been convicted, on the grounds that any "proceeds" of an offence must result from the commission of the offence but in the present case possession by Mylecharane of the sum of $250,000 was an element of the offence. 31 In his submissions counsel for the trustee referred to Director of Public Prosecutions (Commonwealth) v Ronen [2005] NSWSC 990 (Whealy J) and Commonwealth Director of Public Prosecutions - re s 19 of the Proceeds of Crime Act 2002 [2005] 62 NSWLR 400 (Greg James J). 32 Counsel for the trustee explained Ronen, a case where the offence was a conspiracy to defraud, on the basis that in that case the commission of the offence was completed when the agreement was formed between the co-conspirators and money which was received in the course of carrying out the conspiracy and treated in such a way as to implement the objects of the conspiracy could properly be treated as both an instrument of the offence of conspiracy and as proceeds of the offence of conspiracy.

33 In Commonwealth Director of Public Prosecutions - re s 19 of the Proceeds of Crime Act 2002 Greg James J said in para 56 of his judgment: "After anxious consideration of the provisions of the Act and the Code, I can find no support for the applicant's submission that the same money or property cannot have both statutory characters of being proceeds and instrument at the one time. I do not see that one character excludes the other. They are not antithetical as the terms are used in the Act and the Code. In ordinary language both terms are capable of being applied to the same property as involved or connected with the same offence. It is the nature of the offence, for example,fraud, theft, money laundering, which defines the relationship of any money involved to the other elements of the offence. Depending on the nature of the offence, money may be used in or in connection with it, and derived or realised from it, including where it is derived from a disposal or other dealing with proceeds of an offence or an instrument of an offence (s 330) including because of a previous application of that section." 34 In para 59 of his judgment Greg James J said:- "That money might originally have been derived from another crime is essential for it to be the subject of a money laundering offence but that does not mean it is not derived also from a money laundering offence involving a dealing with the money, that is, the instrument of a money laundering offences does not mean, in the common use of language, nor the terms used and defined by application in the Act and the Code that it is not also properly described as proceeds of the offence." 35 Counsel for the trustee submitted that what Greg James J said in these paragraphs of his judgment was not correct or at least not entirely correct or, alternatively, whether under the Proceeds of Crime Act a sum of money can be both an instrument of an offence and proceeds of the same offence depends, as his Honour said, on the nature of the offence and, in the present case, the nature of the offence was such that it could not be said that the sum of $250,000 was proceeds of the offence. 36 Counsel for the Director of Public Prosecutions submitted that I should find that the sum of $250,000 was proceeds of the offence of which Mylecharane had been convicted and referred to Greg James J's judgment in Commonwealth Director of Public Prosecutions - re s19 of the Proceeds of Crime Act 2002 and particularly para 59. 37 I do not consider that it is necessary, in order to determine the issue of whether the sum of $250,000 was "proceeds" of Mylecharane's offence, to form any concluded view about the correctness of paras 56 and 59 of the judgment of Greg James J in Commonwealth Director of Public Prosecutions - re s19 of the Proceeds of Crime Act 2002. If his Honour is to be taken as asserting in para 59 of his judgment that it is generally true that, if a sum of money is an "instrument" of an offence within the statutory definition of "instrument", then it is also "proceeds" of the same offence within the statutory definition of "proceeds", then that would seem to be difficult to reconcile with the different definitions of "proceeds" and "instrument" in s 329 of the Act and the terms of s 48(1) and s 48(2), under which there are different consequences depending on whether property or money is "proceeds" of an offence or an "instrument" of an offence. 38 I would accept counsel for the trustee's explanation of the decision of Whealy J in Ronen and, hence, that it is possible, in some cases, for the same sum of money to be both an instrument of an offence and the proceeds of the same offence. 39 I have referred to Ronen and Commonwealth Director of Public Prosecutions - re s19 of the Proceeds of Crime Act 2002, because they were referred to in counsel's submissions. However, I consider that I should determine the present question by myself interpreting and applying the statutory provisions. 40 Earlier in this judgment I set out the terms of s 329 of the Act, which provides that property is the proceeds of an offence, if it is wholly or partly derived or realised, whether directly or indirectly, from the commission of the offence. Section 336 of the Act provides that a reference in the Act to a person having "derived" proceeds includes a reference to a person having derived the proceeds directly or indirectly. There is no definition in the Act of the word "realised". 41 The meaning of the word "derived" in s 48(4)(e)(i) of the Proceeds of Crime Act 1987 (Cth) was discussed, to some extent, by Hunt CJ at CL in Director of Public Prosecutions (Commonwealth) v Jeffrey (unreported 15 January 1992). Under s 48(4) of the Proceeds of Crime Act 1987, as then in force, a convicted person could apply for a declaration that property be disregarded for the purposes of s 30 of the Act, which provided, in certain circumstances, for the automatic forfeiture of property subject to a restraining order, on a ground which included that "the property … was not derived by any person from any unlawful activity". 42 In his judgment in Jeffrey Hunt CJ at CL said:- "The word "derived" as used in s 48(4)(e)(i) is not defined in the statute. Its ordinary meaning is to show the origin or source of the thing said to have been derived … the word should be interpreted in its ordinary sense. It is significant, however, that the derivation may be either direct or indirect". 43 There was an appeal from Hunt CJ at CL's decision in Jeffrey. The leading judgment in the Court of Appeal was given by Cole JA, with whom Handley JA agreed. With respect to the word "derived", Cole JA merely observed that "whether property is derived directly or indirectly from any unlawful activity is a question of fact" and there was no basis for disturbing Hunt CJ at CL's finding of fact that the appellant had not satisfied him that the property in question was not derived directly or indirectly from any unlawful activity. 44 In the Court of Appeal Giles AJA gave a short concurring judgment. His Honour referred to what Hunt CJ at CL and Cole JA had said about the word "derived". His Honour added:- "While the concept of derivation has regard to the origin or source of the thing said to have been derived, I see no point in substituting for the legislature's word a collection of other words: in particular, I consider that reference to the origin or the source may unduly restrict the fact-finding exercise". 45 There are some differences between the statutory context of the word "derived" in s 48(4)(e)(i) of the Proceeds of Crime Act 1987 and the statutory context in the Proceeds of Crime Act 2002. Nevertheless, I consider that what was said in Jeffrey by Hunt CJ at CL, Cole JA (concurred in by Handley JA) and Giles AJA provides some guidance in the present case. 46 I note that dictionary definitions of the word "derive" include:- "Arise from, originating in, be descended or obtained from" (Oxford English Dictionary) and "receive or obtain from a source or origin" (Macquarie Dictionary) 47 Dictionary definitions of the word "realise" include:- "Convert into actuality" (Oxford English Dictionary) and "to make real, or give reality to" (Macquarie Dictionary)

A common meaning of the word "realised", that is "convert into money", is not applicable in the present case. 48 Applying the terms of the Act, what was said in Jeffrey about the meaning of the word "derived" and the dictionary definitions of "derive" and "realise" to which I have referred, it does not appear to me that the sum of money the possession of which by Mylecharane was an element of the offence of which Mylecharane was convicted can be said to have been "derived" or "realised" from the commission of the offence and, hence, I do not consider that the sum of $250,000 was "proceeds" of the offence. Consequently, the application by the Director of Public Prosecutions for forfeiture of the sum, insofar as the application is based on s 48(1) of the Act, cannot succeed.

Whether the sum of $250,000 was an "instrument" of Mylecharane's offence 49 Earlier in this judgment I set out the terms of s 329 of the Act, which provide that property is an instrument of an offence, if the property is used in or in connection with the commission of the offence. 50 I was referred by counsel to a number of proceeds of crime or confiscation of assets cases in which the expression "used in or in connection with" has been interpreted. Not all of what was said in the judgments in those cases is applicable to the present case, because of the different statutory contexts in which the words appeared. For example, in Jeffrey Hunt CJ at CL held that under s 48(4) of the Proceeds of Crime Act 1987 it was necessary, in order that property should have been used in or in connection with unlawful activity, that the connection between the use of the property and the unlawful activity should have been "substantial". On the other hand, it was held that under the New South Wales Confiscation of Proceeds of Crime Act 1989 that the connection between the item of property in question and the commission of the offence did not have to be substantial or direct: see Director of Public Prosecutions v King (unreported O'Keefe J 5 May 2000) esp at [14] and the cases there cited). 51 Notwithstanding the different statutory contexts, I consider that, if the expression "the offence" is substituted for the expression "the unlawful activity", the test stated by Hunt CJ at CL in Jeffrey can be applied in the present case, so that the test would read:- "(the offence) must be related to or dependent upon or could not have been committed without or have resulted directly from the use of the property". 52 In applying this test the question arises whether there was any "use" of the sum of $250,000 by Mylecharane. The money was not "used" by Mylecharane in the sense of being applied by Mylecharane in the purchase of anything. Nevertheless, in my opinion, the having of the money in his possession amounted to a using of the money by Mylecharane. If it is accepted that the money was used by Mylecharane, then it was clearly "used in" or "in connection with" the commission of the offence. The use of the money was connected with the commission of the offence in all of the ways referred to in the test stated by Hunt CJ at CL in Jeffrey. Accordingly, I consider that the sum of $250,000 was an instrument of Mylecharane's offence. 53 The conclusion I have come to is in accordance with some decisions of inferior courts in which charges were brought under the Financial Transaction Reports Act 1988 (Cth). 54 The latest of these decisions to which I was referred was Director of Public Prosecutions (Commonwealth) v Ba Minh Duong (unreported County Court Victoria Judge Lewis 20/8/2003) in which the Court referred to earlier New South Wales District Court decisions. 55 In Duong the offender had been found in possession of a large amount of cash at an airport. He was charged with an offence under s 15 of the Financial Transaction Reports Act. In his judgment Judge Lewis quoted part of the judgment of his Honour Judge Shadbolt in Ferusa (NSW District Court 12/12/1991) in which Judge Shadbolt held that the sum of money in question in that case was property "used in the commission of the offence", on the grounds that "without it, there would have been no offence". Judge Lewis proceeded to hold that the sum of money which had been in the possession of the offender was an instrument of the offence within the Proceeds of Crime Act. 56 I have held that the sum of $250,000 was not proceeds of the offence of which Mylecharane was convicted but was an instrument of the offence and, consequently, as there was no issue that paras (a) and (b) of s 48(2) were satisfied, all of the paragraphs in s 48(2) are satisfied. However, under s 48(2), unlike s 48(1), a court has a discretion whether to make a forfeiture order. 57 The only matter advanced by counsel for the trustee as affecting the discretion under s 48(2) was that his client was a trustee in bankruptcy and, therefore, the persons who would benefit, if no order for forfeiture was made, would be Moussa's creditors and not Moussa himself. I accept that some hardship might reasonably be expected to be caused to Moussa's creditors by the making and operation of a forfeiture order but I consider that I should give this matter little weight. In my opinion, it would be consistent with the purposes of the Act to exercise my discretion in favour of making a forfeiture order and I make an order for the forfeiture of the entire sum of $286,900. 58 I have already held that the trustee's application under s 73 of the Act fails, because I am not satisfied that the sum of $250,000 was Moussa's property. The application fails for the further reasons that, having affirmatively found that the sum of $250,000 was an instrument of Mylecharane's offence, I am not satisfied that the $250,000 was not an instrument of Mylecharane's offence (s 73(1)(e)(ii)) and for the further reason that I am not satisfied that Moussa was not in any way involved in the commission of Mylecharane's offence (s 73(1)(e)(i)). I base this last reason on some of the same grounds that I gave for holding that I was not satisfied that the sum of $250,000 was Moussa's property. 59 I make an order that the sum of $286,900 be forfeited to the Commonwealth. I dismiss the application for an order that the sum of $250,000 be excluded from the forfeiture order.

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