Farah v Director General, Department of Finance and Services

Supreme Court of NSW|2013-04-04

reasons for decision 1GENERAL DIVISION (S MONTGOMERY, (JUDICIAL MEMBER)): This is an application for review of a determination by a delegate of the Director General, Department of Finance and Services ("the Respondent"). Glenn Farah ("the Applicant") was issued with a real estate agent licence under the Property, Stock and Business Agents Act 2002 ("the Act") in December 2009. In August 2012 the determination was made to cancel the Applicant's licence, to declare him to be a disqualified person until 9 September 2021 and to disqualify him from being involved in the direction, management or conduct of the business of a licensee until 9 September 2021.

Background. 2In September 2011 the Applicant pleaded guilty in the Sydney District Court to a charge under section 400.6(2) of the Schedule to the Commonwealth Criminal Code Act 1995 ("the Criminal Code") as follows: Between July 2007 and May 2009 at Sydney in the State of New South Wales did deal with money or other property which is the proceeds of crime and was reckless as to the fact that the money or property was the proceeds of crimes, and at the time of the dealing, the value of the money and other property was greater than $10,000, namely $46,500. 3Section 400.6(2) of the Schedule to the Criminal Code provides as follows: 400.6 Dealing in proceeds of crime etc.--money or property worth $10,000 or more (1) A person is guilty of an offence if: ... (2) A person is guilty of an offence if: (a) the person deals with money or other property; and (b) either: (i) the money or property is proceeds of crime; or (ii) there is a risk that the money or property will become an instrument of crime; and (c) the person is reckless as to the fact that the money or property is proceeds of crime or the fact that there is a risk that it will become an instrument of crime (as the case requires); and (d) at the time of the dealing, the value of the money and other property is $10,000 or more. 4Section 400.6(2) of the Criminal Code provides for a term of imprisonment for 5 years or 300 penalty units or both. 5The term "deals with money or property" is defined by section 400.2 of the Criminal Code and includes a situation where a person "receives, possess, conceals or disposes of money or property" or "engages in banking transaction relating to money or other property". 6The relevant background to the Applicant's conviction is summarised in the Australian Federal Police Statement of Facts as follows: The facts of the matter are: 1. AFP Operation LOMENT is an investigation into a series of narcotics importations onboard aircraft travelling between the United States of America and Sydney, Australia. The importations were facilitated by corrupt airside ground staff employed by Gate Gourmet, a catering company servicing various airlines at Sydney airport. 2. On 2 December 2007, United Airlines flight UA839 arrived in Sydney. Upon arrival Australian Customs and Border Protection Service (Customs) officers searched the aircraft; they opened the rubbish bin cabinet in the toilet and located a white plastic bag containing twelve blocks of compressed white powder in vacuum sealed, clear plastic bags. 3. The seizure consisted of a total net weight of off-white powder of 5,393.1 grams. Samples of the powder were analysed by the National Measurement Institute, percentages of cocaine were detected and a total weight of pure cocaine was calculated as 2,865.1 grams. A conservative estimate places the street value of these drugs close to one million dollars, 4. Following the seizure of cocaine on 2 December 2007, the AFP commenced an investigation into the persons involved in the importation syndicate. Wayne CLEVELAND (CLEVELAND), born 31 July 1971, has been identified as the Australian principal of the syndicate. CLEVELAND's stepfather Wayne Charles WILLIAMS (WILLIAMS), Gate Gourmet employees Craig Tire NICHOLSON (NICHOLSON), and Jose Arnel AQUILLERA (ALQUILLERA) were identified as syndicate members. Bra boy Jesse POLOCK (POLOCK) was also identified for his involvement in money remittances to the US. The investigation involved extensive electronic and physical surveillance of these persons over a period of 20 months. 5. Ryan WINGER (WINGER), born 11 April 1973, has been identified as an associate of CLEVELAND, and the United States (US) based supplier of Cocaine to this syndicate. 6. Glenn FARAH (FARAH), born 26 February 1962, is a real estate agent/auctioneer and CEO of the N G FARAH group of companies. FARAH is a lifetime resident of the Eastern suburbs and associate of CLEVELAND, whom he states he came to know in 2003 through fund raising activities on behalf of the ABBERTON family. 7. A document seized at WILLIAMS' home in September 2009 is a written reference, dated 2 June 1999, stating that CLEVELAND was then employed by South Eastern Home Maintenance. The document is signed by FARAH as Managing Director. 8. Over the course of the investigation CLEVELAND was not engaged in any form of regular employment, yet managed to sustain a lifestyle which included sending his children to exclusive private schools, and regular overseas travel. Throughout this period FARAH was in regular contact with CLEVELAND; their discussions often centred on money and cheques. 9. FARAH stated to Police that he had met Ryan WINGER once or twice down at the beach. FARAH has previously remitted over $10,000 into WINGER's US bank account. These payments aligned with travel undertaken by WINGER as follows: · On 17 April 2003, FARAH remitted AUD5972 to WINGER's US bank account. · On 19 April 2003, WINGER arrived In Sydney, Australia from the US on board United Airlines Flight UA816. · On 5 May 2003, FARAH remitted AUD7933 to WINGER's US bank account. · On 8 May 2003, WINGER departed Sydney, Australia for the US on board United Airlines Flight UA816. 10. On 26 February 2007, a cheque for $15,500, drawn on a Macquarie Bank account held by Glenn FARAH Real Estate, was used to pay school fees at Cranbrook school for CLEVELAND'S stepson ... 11. Two cheques totalling $11,000: one in July 2007 for $6,000 and one in September 2007 for $5,000, were drawn on a Macquarie Bank account held by Glenn Farah Real Estate, and deposited into a Suncorp Metway loan account held by Wayne WILLIAMS and Wayne CLEVELAND. 12. On 12 March 2008, CLEVELAND attended Cranbrook School and attempted to pay cash for school fees for his stepson in the amount of $40,000. The school declined to accept the full amount electing to receive $15,000. CLEVELAND was also advised by the school that they may be required to report the transaction as it was over $10,000. 13. Shortly after CLEVELAND telephoned FARAH, worried over the consequences of his attempt to pay the school $40,000 in cash. FARAH laughed and described it as ".., one of the most stupidest things you have ever done" ... and you just didn't think, you see, and I don't know why you weren't thinkin' cause you normally do. It's not like you." 14. Later in the conversation FARAH posed the question "... Well if the tax office are goin' to say what were you doin' with forty grand cash, what are you going to say?" when CLEVELAND said he was going to tell them he had been saving, FARAH laughed and said "Oh Mr CLEVELAND, what do you do for a living?" 15. The discussion continued with FARAH advising CLEVELAND that he should have contacted him so that he could give him a cheque or electronically transfer funds into the school account for CLEVELAND. 16. On 18 March 2008, CLEVELAND and FARAH were observed to meet at NG Farah Real Estate Agency 178 Marine Parade, Maroubra NSW. It is likely that a cheque for $8,000, made out to Cranbrook School, was given to CLEVELAND at this time. A copy of the cheque was seized from CLEVELAND'S home during the execution of search warrants in September 2009. A cheque butt dated 18 March 08, was subsequently seized from FARAH's office with the words W.Cleveland Loan' on it. 17. On 7 June 2008, CLEVELAND telephoned FARAH. CLEVELAND states he lost one of the cheques, they arrange to meet. 18. Over the next few weeks further phone conversations occurred regarding FARAH providing cheques to CLEVELAND. 19. On 26 June 2008, the cheque for $8,000, drawn on a Macquarie Bank account held by Glenn FARAH Real Estate, was used to pay school fees at Cranbrook school for CLEVELAND'S stepson ... 20. On 11 August 2008, a phone conversation occurred between CLEVELAND and FARAH during which CLEVELAND states "I want to get one back, I still haven't done those two." CLEVELAND and FARAH arrange to meet. 21. On 12 August 2008, FARAH attended the home of CLEVELAND at 45 French Street, Maroubra. Lawfully intercepted information revealed a conversation between CLEVELAND and FARAH where money was discussed. During the conversation, CLEVELAND brought up having lost a couple of eight grand cheques. FARAH tells him he can fix it before he goes away on Thursday, he also says "cause I know I owe you ten now" CLEVELAND later says to FARAH, "you gave me four eights ... and I kept two because we dated em later, remember, we dated em later ... had to wait a week to put in the other ones." Discussion continued regarding money, CLEVELAND needing cash and FARAH mentioning cash and cheques. 22. On 30 October 2008, CLEVELAND sent a text message to FARAH. The message read "Can I grab that money please mate". 23. On the same day a telephone conversation occurred between FARAH and CLEVELAND. FARAH asks "Can I drop that thing down on Saturday to you ... I'll drop it down Saturday I've got most of it but someone owes me a couple of K's and I just want to get it off him." CLEVELAND replied "Sweet as, I have only got fucking 400 bucks and that's it." 24. On 20 March 2009, FARAH electronically transferred $6000 from his Macquarie Bank account to Cranbrook School on behalf of CLEVELAND. 25. On 27 April 2009, during a telephone conversation, CLEVELAND says to FARAH that he got the receipt and it says only 6, FARAH told his personal assistant to just transfer another 6 on Wednesday. CLEVELAND said, "I was thinking what the fuck" and FARAH replies, "Nah, Nah, its all sweet, I didn't want to do 12 in one hit because then the Tax Office, any payments over 10 thousand." CLEVELAND says "Yeah, Yeah, I know, I remember in the." CLEVELAND then started talking about an unrelated matter. 26. On 19 May 2009, during a telephone conversation, CLEVELAND asks FARAH if the cheque had gone and FARAH replied that it had gone through via automatic transfer. FARAH then told CLEVELAND that he needed to take a whole heap of photos of CLEVELAND'S kids to have on record. FARAH said to CLEVELAND "At least I'll have something in my library to protect me and to use it as marketing down the track, because at the end of the day I have to justify everything". FARAH asked CLEVELAND to meet him regarding this and other matters. 27. On 20 May 2009, FARAH electronically transferred $6000 from his Macquarie Bank account to Cranbrook School on behalf of CLEVELAND. 28. About 10.50am on 14 June 2009, CLEVELAND left a voicemail message on FARAH's phone asking if FARAH had put the cheque in as he hadn't got a receipt from the school yet, CLEVELAND asked FARAH to call him. 29. About 11.15am on 14 June 2009, FARAH returned the call and confirmed he had already submitted the cheque. FARAH stated that he would print receipts for him; put them in an envelope and have then in the office for him to pick up from his Maroubra office the next day. 30. About 6.10am on 20 September 2009, United Airlines flight 839 from Los Angeles, USA arrived in Sydney, Australia. The AFP subsequently seized approximately 1kg of Cocaine from a catering truck that had serviced the aircraft immediately after landing. 31. About 7am on 20 September 2009, ALQUILLERA, HAY, NICHOLSON, CLEVELAND and WILLIAMS were arrested and charged with various importation offences relating to the two abovementioned seizures of Cocaine. 32. On 21 September 2009 members of the AFP attended Farah Real Estate offices located at 178 Marine Parade, Maroubra and seized a number of documents. 33. On Friday 28 May 2010, FARAH participated in a Digital Record of interview (DROI). During the interview FARAH made the following admissions/denials: · He has known Wayne CLEVELAND since 2003. · His relationship with Wayne CLEVELAND was mainly professional and revolved around the real estate business. · He paid school fees on behalf of Wayne CLEVELAND on at least two or possibly three occasions. · He paid these school fees as a favour to Wayne CLEVELAND and expected to receive cash in return. · He also recalled having previously paid money into a mortgage account held by Wayne CLEVELAND and Wayne and Diane WILLIAMS. · Wayne CLEVELAND has never worked for him. · He was not aware of Wayne CLEVELAND engaging in any form of employment. · He has never sent money overseas to anyone on behalf of Wayne CLEVELAND and could not specifically recall sending money to Ryan WINGER · He had doubts about the legitimacy of the $40,000 cash that Wayne CLEVELAND presented to Cranbrook school. · He was reckless in his financial dealings with Wayne CLEVELAND. 34. Between July 2007 and May 2009, FARAH made $46,500 worth of cheque and electronic payments on behalf of CLEVELAND and his family. 35. On 3 August 2010, CLEVELAND entered a plea of guilty to the charge of conspiracy to Import a commercial quantity of cocaine in December 2007. A further charge of conspiracy to import a marketable quantity of cocaine in September 2009 was scheduled under Section 1613A of the Crimes Act 1914. 7The Applicant pleaded guilty on these facts and was sentenced to a term of imprisonment of 1 year 9 months. The Court suspended the sentence and placed him on a good behaviour bond until 8 September 2013. 8The sentencing remarks of Judge Zahra are included in the material provided to the Tribunal pursuant to section 58 of the Administrative Decisions Tribunal Act 1997 ("the ADT Act").

The Applicant's licence cancellation 9The Applicant's licence was due for renewal on 30 November 2011. The Applicant lodged an application for the renewal of his licence and as a result he was deemed to be licensed until that application was determined or disciplinary action was otherwise taken to cancel the licence. 10In January 2012 a Notice to Show Cause ("the Notice") was issued to the Applicant pursuant to section 195 of the Act. Under section 195, where a delegate is of the opinion that there is reasonable cause to believe that there are grounds for taking disciplinary action against a person, a notice may be served requiring that person to show cause why disciplinary action should not be taken against them. 11The Notice was issued because the delegate was of the opinion there was reasonable cause to believe that grounds existed under sections 191(d) and 191(e) of the Act for taking disciplinary action against the Applicant. 12The Notice alleged that the Applicant might be a disqualified person in terms of section 16(1)(a) of the Act. It also alleged that the Applicant might not be a fit and proper person to hold a licence within the meaning of section 14(1)(b) of the Act. 13Written and oral submissions were made on behalf of the Applicant in response to the Notice. The NSW Fair Trading's Principal investigator, Compliance and Enforcement Division was the delegate who dealt with the matter. The delegate summarised the Applicant's submissions as follows: Mr Farah is not a disqualified person for the purposes of the Act because the offence of which he was convicted does not involve 'dishonesty'. Dishonesty requires that an offender has knowledge, belief, intent or consciousness of wrong-doing, or alternatively is motivated by self-interest. Mr Farah was reckless, but not dishonest. He gained no personal interest or gain from facilitating the payments. Judge Zahra's findings in relation to the criminal conviction of Mr Farah were that Mr Farah's conduct was reckless; that there was no evidence inferring he was aware the money was derived from the importation or trafficking of drugs; and that on balance, he did not derive, or intend to derive any profit from dealing in the proceeds from crime. Mr Farah satisfies all three requirements for a person to be a fit and proper person as suggested in Hughes and Vale v NSW (No 2) (1955) 93 CLR 127, viz., honesty, knowledge, and ability. Mr Farah has not acted dishonestly as suggested in the following cases Hart v Federal Commissioner of Taxation (2003) 131 FCR 203, viz., "there is a line between recklessness and dishonesty; Royal Brunei v Tan (1995) 2 AC 378, viz., 'carelessness is not dishonesty. Thus for the most part dishonesty is to be equated with conscious impropriety"; R v Peters (1988) 192 CLR 493. Mr Farah has provided character references with respect to his standing within the industry and community. Mr Farah has completed a one day workshop titled "Ethical intelligence and good decision making" undertaken at the St James Ethics Centre on 28 March 2012. Mr Farah has already been adequately punished for what he's done and he has taken a step back from the business which has resulted in a substantial reduction in his income. Mr Farah's conduct occurred outside the real estate industry and has not adversely affected his customers or members of the public. Mr Farah's offence was an isolated incident, and apart from a number of traffic offences, he has no other offences. 14The delegate was reasonably satisfied that the Applicant had not shown cause as to why disciplinary action should not be taken against him on the grounds in sections 191(d) and 191(e) of the Act as contained in the Notice. Sections 191(d) and 191(e) provide: 191 Grounds for disciplinary action Disciplinary action under this Part can be taken against a person who is or was the holder of a licence or certificate of registration on any one or more of the following grounds: ... (d) the person is a disqualified person or is otherwise not eligible under section 14 to hold a licence or certificate of registration, (e) the person is not a fit and proper person to be involved in the direction, management or conduct of the business of a licensee, 15The delegate concluded: Mr Farah has been convicted of a serious criminal offence relating to dealing in proceeds of crime involving money worth $10,000 or more and contrary to section 400.6(2) of the Crimes Code Act (sic) 1995. For the reasons outlined throughout this determination, I am of the view that the conviction for the offence under the above Act concerning Mr Farah is an offence involving dishonesty with the meaning of section 16(1)(a) of the Property Stock and Business Agents Act 2002. In view of the foregoing, I also find that the provisions contained in section 14(1) of the Act apply to Mr Farah in that I am not satisfied that he: is a fit and proper person to hold a licence - section 14(1)(b) of the Act; and is not a disqualified person - section 14(1)(c) of the Act. I am of the opinion that the conduct of Mr Farah concerning this matter is at the high end of the scale of seriousness and warrants imposing a cancellation and disqualification of licence on Mr Farah. After having considered all of the available information in this matter, I am of the reasonable belief that the grounds in sections 191(d) and 191(e) of the Act have been established against Mr Farah and that disciplinary action can be taken against him on those grounds. 16The delegate then determined to cancel the Applicant's licence, declare him to be a disqualified person for the purposes of the Act and to disqualify him from being involved in the direction, management or conduct of the business of a licensee until 9 September 2021. 17That determination was affirmed after an internal review. The NSW Fair Trading's Manager, Enforcement Compliance and Enforcement Division conducted the internal review. Her determination was in the following terms: My decision on the outcome of the internal review is as follows:

In accordance with section 192(1)(g) of the Property, Stock and Business Agents Act 2002 Act (the Act'), I affirm the decision of the delegate made on 15 August 2021 to cancel the real estate licence number 116502 held by Glenn George Farah; and
In accordance with section 192(1)(h) of the Act, I affirm the decision of the delegate made on 15 August 2021 to declare Glenn George Farah to be a disqualified person for the purposes of the Act until 9 September 2021; and in accordance with section 192(1)(i) of the Act, I affirm the decision of the delegate made on 15 August 2012 to disqualify Glenn George Farah from being involved in the direction, management or conduct of the business of a licensee under the Act until 9 September 2021. 18The Applicant has applied to the Tribunal for external review of the determination.

Applicable legislation 19Section 14(1)(d) of the Act provides that a person is eligible to hold a licence only if the Director-General is satisfied that the person: (a) ... (b) is a fit and proper person to hold a licence and each person with whom the person is in partnership in connection with the business concerned is a fit and proper person to hold a licence, and (c) ... (d) is not a disqualified person, and ... 20Section 16 of the Act defines a "disqualified person" as: (1) A person is a disqualified person for the purposes of this Act if the person: a. has a conviction in New South Wales or elsewhere for an offence involving dishonesty that was recorded in the last 10 years. 21The Respondent has deemed the Applicant to be a disqualified person under the Act as a result of his conviction. 22Section 16 (2) of the Act provides: (2) The Director-General may determine that an offence committed by a person should be ignored for the purposes of this section because of the time that has passed since the offence was committed or because of the triviality of the acts or omissions giving rise to the offence.

The issues 23As I understand it, there is common ground that there are four matters to be considered: a. Is a conviction under s. 400.6(2) of the Criminal Code an offence of dishonesty as set out in section 16 (1) of the Act? b. If not, should the offence be ignored on the basis that the offence was trivial - pursuant to section 16 (2) of the Act? c. If not, should the offence be ignored on the basis of the passage of time pursuant to section 16 (2) of the Act? d. Is the Applicant a fit and proper person to hold a licence - pursuant to section 14 of the Act?

Is a conviction under s. 400.6(2) of the Criminal Code an offence of dishonesty?

The Respondent's case 24The Respondent submitted that the offence of "dealing in proceeds of crime involving money or property" is an offence involving dishonesty. 25Mr Griffin, Counsel for the Respondent, referred to a number of authorities in support of that submission. 26Mr Griffin referred to comments made by Judge Zahra in the District Court Proceedings. He submitted that it should be noted that His Honour only had to consider whether the Applicant was reckless as to the fact that the money or property was the proceeds of crime. His Honour remarked that it could be inferred that the Applicant was aware of a substantial risk that the money was proceeds of crime. He was not satisfied that the Applicant was aware that the money was derived for the importation or sale of narcotics. Mr Griffin submitted that this is not a finding that the Applicant was not dishonest. That matter of the Applicant's honesty was not under consideration in the District Court proceedings. 27Further it is submitted that sentencing remarks of the Judge are not matters that must, or should, be considered given the Applicant's conviction in the matter. Mr Griffin relies on views expressed in Prothonotary of the Supreme Court of New South Wales v Livanes [2012] NSW Court of Appeal 325 at paragraph [10] where McColl JA cited with approval the decisions in Prothonotary of the Supreme Court of New South Wales v Sukkar and Gonzales v Claridades in which it was stated that a "conviction of the opponent is evidence of the elements of the offence with which he was convicted, but not of the detailed facts found by the sentencing judge ... [and could not] support findings by [the] Court as to what the opponent actually did, beyond the bare elements of the offence with which he was convicted". 28Mr Griffin submitted that the question for determination by the Tribunal is whether there can be found to be dishonesty for the purposes of the Act in the conduct of the Applicant. He noted that the question of whether an offence is an offence involving dishonesty has been the subject of consideration by the Tribunal in a number of cases. In this regard, he submitted that the following principles have been accepted: (a) The Tribunal's review is not limited by a consideration of the elements of the offence. 29In RTA v Sharp Towing Pty Ltd and Ors (GD) [2008] NSWADTAP 49, O'Connor DCJ held at paragraph [50]: an offence may be able to be shown to involve prescribed conduct, such as dishonesty, even though the offence itself is not an offence that directly refers in its terms to that kind of conduct or can be readily characterised as an offence about that kind of conduct. (b) A conduct founded on recklessness involves dishonesty. 30In Sharp Towing Pty Ltd, citing the cases of Doyle v Commissioner of Police [1999] NSWADT 84 and Pollard v Commonwealth DPP (1992) 28 NSWLR 659, O'Connor DCJ held at paragraph [34]: It would, I consider, be artificial to sub-divide this group of offences as between those that depended on proof of a positive criminal intent as against an intent based on reckless disregard for the consequences of conduct (as to which, see Smith [1982] 7 A Crim R 437 (Victorian Court of Criminal Appeal) and Stone's case (1955) 56 SR (NSW) 25). Whether the intent is actual or founded on reckless disregard for the consequences, it is reasonable, I consider, to describe the conduct involved as "dishonest". (c) In interpreting the meaning of an "offence involving dishonesty", the authorities have referred to the dictionary definition of the word dishonesty. 31In Joyce v Commissioner of Police, NSW Police Service [2000] NSWADT 17, Deputy President Hennessy held at paragraph [18]: "Dishonesty" is defined in the Concise Oxford Dictionary (7th edition, Oxford at the Clarendon Press 1982) as "lack of honesty; deceitfulness, fraud." ... The ordinary meaning of dishonesty does not require that the person engage in some positive act. It can include a situation where a person fails to act. (d) The offence of "goods in custody" under section 527C of the Crimes Act 1900 is an offence involving dishonesty. 32Mr Griffin submitted that the decisions of Deputy President Hennessy in Joyce v Commissioner of Police and the Appeal Panel in Joyce v Commissioner of Police, NSW Police Service [2000] NSWADTAP 17 provide valuable guidance. 33In Joyce v Commissioner of Police, Deputy President Hennessy considered the issue of whether a conviction for goods in custody was an offence involving "fraud, dishonesty or stealing", thereby making the Applicant before her ineligible for a licence under the Security Industry Act 1997. The applicant's submissions on this point were that the words "or otherwise unlawfully obtained" in section 527C mean that "the offence does not necessarily involve fraud dishonesty or stealing"; that "the goods in custody of the person could, for example, be money obtained from selling drugs"; that in that case, "while the money had been 'unlawfully obtained' it did not involve fraud, dishonesty or stealing". 34Deputy President Hennessy rejected the applicant's submissions and concluded at paragraphs [18] - [19]: [18] ... A person would be acting dishonestly or deceitfully where that person fails to disclose to police that goods have come into his or her custody in circumstances where that person has reasonable grounds for suspecting that the goods have been stolen or otherwise unlawfully obtained. ... [19] It does not make any difference to this conclusion whether the goods in the person's custody have been stolen or obtained by some other unlawful means. The person has still acted dishonestly or deceitfully by failing to take any action which would bring the situation to the attention of police. 35The Appeal Panel in Joyce v Commissioner of Police, NSW Police Service [2000] NSWADTAP 17 upheld Deputy President Hennessy's reasoning and also considered the decision of the Court of Appeal in Purdon v Dittmar [1972] 1 NSWLR 94. The Appeal Panel said at paragraphs [20] - [26]: 20 In this case the argument is that because the modern construction of s 527C allows for possession of a thing to be the subject of prosecution when the thing was derived from a transaction, admittedly unlawful but free of any dishonesty (or fraud or stealing), then s 527C could not be characterised as in all circumstances being one involving fraud, dishonesty or stealing.' 21 In our view this submission is flawed in that it seeks to shift the focus away from the object of s 527C to the prior transaction from which the thing now in the possession of a defendant has emanated. 22 The judgments in R v Chan (1992) 28 NSWLR 421 (Court of Appeal, Mahoney JA, Hunt CJ at CL and Abadee J) are, as the Tribunal noted, helpful. That case dealt what the issue of what is required to be proven before a thing can be reasonably suspected' to be stolen or otherwise unlawfully obtained. 23 The defendant was charged with the offence of goods in custody. Over 21,000 Australian bank notes totalling $621,000 were found in the possession of an unemployed defendant in a cupboard in his home unit. The Police led no evidence as to what prior transaction might have given rise to the defendant having this amount of cash in his possession. The Court ruled that there was no error in the course adopted by the Police. The Court emphasised that the essential focus of the offence was on the defendant's explanation. Moreover the trial court was not required to form the view that the most likely explanation was that the thing was stolen, merely that such a possibility could be reasonably entertained in the circumstances: see, for example, per Mahoney JA at 424. The central task before the trial court was to assess the plausibility of the explanation of the defendant as to how or she came into possession of the thing: see, for example, per Hunt CJ at CL at 426. 24 So the focus of the offence is on the candour, honesty and plausibility of the defendant's explanation. 25 The offence also needs to be seen in its wider social context. The core object of the goods in custody offence (s 527C) is to curtail unlawful activity by placing an impediment in the way of a secondary trade in the product of unlawful activity. In that way honest transactions and dealing are upheld. 26 For these reasons it is, in our view, appropriate as the Commissioner has done and as the Tribunal did in the decision under appeal, to treat the offence of goods in custody as one `involving dishonesty' within the meaning of cl 11 of the Regulation. 36In line with the above decisions of the Tribunal, Mr Griffin submitted that the offence of "dealing in proceeds of crime involving money or property" is an offence involving dishonesty.

The Applicant's case 37Mr Compton, solicitor for the Applicant, submitted that an offence under section 400.6 (2) of the Criminal Code is not an offence involving dishonesty. The elements of that offence are: (a) The person deals with money; and (b) The money is the proceeds of crime: and (c) The person is reckless as to the fact that the money is proceeds of crime; and (d) The amount of money is $10,000 or more 38Mr Compton referred to Supreme Court decisions relating to approaches in determining whether an offence is one involving dishonesty. The first approach is the dicta of Abadee J in Pollard v Commonwealth DPP (1992) 28 NSWLR 659, and the second is the decision of Bell J in Barber v Law Society of NSW (No 2) [2001] NSWSC 861. 39In Pollard the offence was under the then section 178BB of the Crimes Act: having, with intent to obtain a financial advantage made a statement that is false in a material particular with reckless disregard for the truth or falsity of the statement. 40The Court decided that the offence of obtaining a financial advantage was one that could be regarded as an offence 'involving', at the least, dishonesty. Because of this decision the Court did not need to rule on the point of considering whether the person's actual conduct needed to be considered but expressed the view that if fraud or dishonesty was involved in the commission of the offence, it would be seen as one of fraud or dishonesty. 41In Barber, Bell J adopted the narrower view, saying at paragraph [32]: 32 The conviction of which s 79A(2)(a) speaks is one for a crime or offence involving dishonesty. It seems to me that the crime or offence the subject of the conviction must be one which answers that description without further inquiry. Offences involving dishonesty embrace those such as stealing and robbery in which the property of another is taken with the intention thereby of permanently depriving the rightful owner of it and offences where property or some advantage is gained through indirect means such as false pretences, conspiracy to defraud and the like. Glanville Williams notes that while the great majority of offences of dishonesty relate to property it is not true to say that all do; Textbook of Criminal Law, 2nd Ed, Stevens, Lond. 1983, at p 699. He cites as an illustration of an offence of dishonesty not involving property the commission of perjury in order to avoid going to prison. 42Mr Compton also referred to the decision in Sharp Towing Pty Ltd in which O'Connor DCJ referred to the Pollard view as the wider view and the approach in Barber as the textual or narrow view. At paragraph [33] O'Connor DCJ observed that almost all of the cases in the Tribunal dealing with the approach to be taken to the interpretation of the word 'involving' in provisions in licensing schemes in similar terms and with an identical object (mandatory removal from the industry) have adopted the textual approach. 43Mr Compton's submission is that Barber is the more authoritative case. He noted that at paragraph [43] O'Connor DCJ stated that while Bell J had expressed a narrower view than Abadee J, neither judge went so far as to require that the specified conduct, that is "dishonesty" in this context, be an element of the offence. 44In Kerkham v Director General, Department of Fair Trading [2002] NSWADT 63 at paragraph [12] Deputy President Hennessy said the question the Tribunal must ask itself is whether the offences ... are offences involving dishonesty, without further inquiry. "Without further inquiry" means that the Tribunal cannot look behind the conviction to determine whether the particular acts or omissions ... involved dishonesty. The Tribunal is confined to looking at the terms of the offences themselves and determining whether those offences "involve dishonesty." For this reason I have not taken into account the evidence about the circumstances of the offence. 45Mr Compton's submission is that we cannot look to the circumstances of the conviction under question to determine if it involves dishonesty, we look to the terms of the offence. 46Mr Compton also referred to Deputy President Hennessy decision in Joyce v Commissioner of Police where at paragraph [18] she referred to the Concise Oxford Dictionary definition of dishonesty as "lack of honesty; deceitfulness, fraud" and held that the offence of "goods in custody" under section 527C of the Crimes Act 1900 was an offence involving dishonesty. 47In Mr Compton's submission, section 400.6 of the Criminal Code can be distinguished from a goods in custody offence under section 527C of the Crimes Act in that a conviction does not rely on a failed defence of "not having reasonable grounds" for suspecting the money to be the proceeds of crime. He conceded that a section 400.6(1) offence would be an offence involving dishonesty because the offence involves the person believing the money to be the proceeds of crime. 48He further submitted that for a conviction under section 400.6(3) the person must be shown to be negligent as to the fact that the money or property is the proceeds of crime and that negligence involves not giving the matter any thought at all. He submitted that this negligence does not involve dishonesty. 49Further, he submitted that for a conviction under section 400.6(2) the person must be shown to be reckless as to the fact that the money or property is the proceeds of crime. He argued that the legislature intended "reckless" to be one step up from negligence but that it still does not reach "involving dishonesty". It may involve not taking notice of warning signs or taking a slightly cavalier approach to what was happening but it is submitted this does not involve dishonesty. 50To involve dishonesty the person would have to have reasonable grounds for suspecting things were not quite right as per section 527C, and not taking notice of what might be warning signs or being cavalier does not go this far. 51Mr Compton referred to a number of decisions in which the Tribunal has found offences as ones involving dishonesty. These include Eleter v Director General, Department of Fair Trading [2002] NSWADT 138 which considered the offence of "receiving stolen goods knowing them to be stolen" under section 189 of the Crimes Act; Harries v Commissioner for Fair Trading, NSW Office of Fair Trading [2006] NSWADT 203 which considered the offence of "driver/rider state false name or address"; and Hunt v Director General, Department of Services Technology and Administration [2010] NSWADT 186 which considered the offence of "Obtaining money by deception". In Mr Compton's submission, all of these examples are to be distinguished from an offence under section 400.6(2) of the Criminal Code. 52In relation to the Applicant's conduct Mr Compton's submission is that on six occasions the Applicant paid by cheque or electronic funds transfers school fees on behalf of Mr Cleveland, for Mr Cleveland's son in return for cash. Mr Cleveland had said to the Applicant that the school would not take cash, and so asked the Applicant to write a cheque and in return he would give him the cash he had. The Applicant did so and it later transpired the cash was the proceeds of crime. The Applicant did not hide the transaction; he did not use the cash as such for spending, instead to place it in a bank account with a clear paper trail. The cheques were drawn on a business account and were later shown in the balance sheet as loans. 53In Mr Compton's submission, this is hardly an attempt at deception, in fact quite the opposite. The sums involved amounted to $46,500 over the six transactions. 54Mr Compton noted that Judge Zahra held the Applicant was reckless but explicitly declined to find that the Applicant knew the money was being given to him by Mr Cleveland was derived from proceeds of a crime. Also, Judge Zahra held the Applicant did not receive or intend to receive any profit from the transactions. 55He submitted that in order for there to be an offence of dishonesty there must at least be some decision or some mens rea component in relation to the commission of the offence. He argued that even following Deputy President Hennessy's viewpoint in Joyce that no action can also be a factor of dishonesty, it must be accepted that the omission must have some deliberate approach. To demonstrate the absurdity of not having that requirement, he suggests that we need only to look at the legal profession. He submits that every solicitor who accepts fees when defending a criminal for a narcotics breach may have breached the provisions currently being considered under the Criminal Code. 56In Mr Compton's submission, the Applicant took no deliberate action or omission in relation to the collection of the money. The District Court accepted that the Applicant did not know the monies were the proceeds of crime. It is also accepted that there is no deceit or fraud involved with this offence. In fact, the transactions were documented and declared. Hence, no deceit is present. 57It is submitted therefore, that section 400.6(2) of the Criminal Code offence is not an act of dishonesty.

Discussion 58I agree with the Respondent's submission that the question for determination by the Tribunal is whether there can be found to be dishonesty for the purposes of the Act in the conduct of the Applicant. 59In my view, it is not necessary that an act of dishonesty is an element of the offence under section 400.6(2) of the Criminal Code. This is consistent with the approach taken by the Appeal Panel in RTA v Sharp Towing Pty Ltd and ors (GD). 60I also agree with the views expressed by Deputy President Hennessy in Joyce v Commissioner of Police at paragraph [18] that dishonesty does not require that the person engage in some positive act. It can include a situation where a person fails to act. 61As Judge Zahra noted, the Criminal Code "provides for a number of different offences, the principle differentiating factors being the minimum value of the money or property and the state of mind of an offender. The sections variously provide for offences involving dealing with money or property believing the money or property to be proceeds of crime and those concerned in dealing in money or property intending the money or property to become an instrument of crime. The division provides for an important distinction between recklessness and belief. Clearly, an offence involving the intentional dealing with proceeds of crime or instruments of crime is more serious than one where the state of mind is recklessness as to the criminal nature of the property". 62The range of conduct caught by the money laundering provisions is quite broad. They comprehend a wide range of criminal activity. 63Judge Zahra also noted that the ability to launder proceeds of crime by those involved in criminal activity for profit is an essential part in facilitating that criminal behaviour. 64In Mr Compton's submission the Applicant's conduct should be seen as paying school fees on behalf of Mr Cleveland, in return for cash. I do not accept that assessment as it understates the extent of the Applicant's involvement. Further, even if Mr Compton is correct in his submission that in order to establish dishonesty it must be shown that the Applicant took some deliberate approach, in my view that factor is met by the Applicant's use of the accounts of his business. 65The Applicant was aware of the substantial risk that the money was proceeds of crime and yet he passed the proceeds of substantial criminal activity through the legitimate accounts of his business. In my view, such conduct is dishonesty for the purposes of the Act. 66Judge Zahra noted that: "[I]t can be inferred from the intercepted calls that the offender was aware of the substantial risk that the money was proceeds of crime ... The role of the offender was, however, a significant and crucial one in the laundering of the monies. The offender was able to pass the proceeds of substantial criminal activity through the legitimate accounts of his business. This would have provided significant cover for the laundering of the proceeds of the criminal activity engaged in by Cleveland and others in the syndicate. ... Offences of this kind are becoming increasingly prevalent. They are not always easy to detect. Offending of this kind has the effect of propagating serious criminal conduct." 67It is also apparent from the Australian Federal Police Statement of Facts set out above that both the Applicant and Mr Cleveland were anxious to avoid detection by the 'tax office'. 68I agree with the view expressed by the Respondent's internal reviewer: I agree he is a financially astute businessman with much experience in the real estate industry over a lengthy period of time. As such, I find it difficult to accept the Applicant did not have any suspicions about the questionable nature of Mr Cleveland's financial dealings given Mr Cleveland had not been worked (sic) in regular employment for some time. Further, the Applicant admitted in the Digital Record of Interview with AFP on Friday 28 May 2010 (see: [33] Statement of Facts) that he had doubts about the legitimacy of the $40,000 in cash that Mr Cleveland used to pay for the private school fees of his stepson. Irrespective of these suspicions, the Applicant volunteered to Mr Cleveland that he should have contacted him so that the Applicant could provide a cheque or electronically transfer the funds to pay for the school fees. Contrary to the Applicant's submissions, I consider the Applicant's conduct occurred generally within his activities in the real estate industry. The Applicant used the Macquarie bank account known as "Glenn Farah Real Estate Pty Ltd' through which to launder the money. This account was a real estate business overdraft account. I consider that the use of this account, with the reference to "real estate' in its title, was used in order to imply legitimacy to the financial transactions of Mr Cleveland. Relevantly, Judge Zahra found the Applicant passed proceeds of criminal activity through the "legitimate accounts of his business" (emphasis added). 69As the Appeal Panel in Joyce v Commissioner of Police noted at paragraphs [24] - [25], the focus of the offence is on the candour, honesty and plausibility of the defendant's explanation. The offence also needs to be seen in its wider social context. The core object of the Dealing in Proceeds of Crime offence is comparable to that of the goods in custody offence in that it places an impediment in the way of the laundering of the proceeds of crime. In that way honest transactions and dealing are upheld. 70The Applicant was aware of the substantial risk that the money that he received from Mr Cleveland was proceeds of crime. The Applicant ought to have either reported any suspicions he may have had about Mr Cleveland to the police or to have ended his financial association with him. He acted dishonestly when he failed to disclose that awareness to police and, instead, he passed the money through the legitimate accounts of his business. 71It does not make any difference to this conclusion whether the Applicant knew the money was proceeds of crime. He has still acted dishonestly by failing to take any action that would bring the situation to the attention of police. 72In my view, the Applicant has a conviction for an offence involving dishonesty that was recorded in the last 10 years for the purposes of section 16 of the Act. He is therefore a "disqualified person" under the Act as a result of his conviction.

Should the offence be ignored on the basis that the offence was trivial? 73The Respondent relies on the findings of Judge Zahra as support for its contention that the acts and omissions that gave rise to the offence committed by the Applicant were very serious. 74In contrast, while the Applicant accepts that seriousness is one of the indicators of triviality, Mr Compton argued that it should not be the only issue that gives rise to triviality. He submitted that the Act already ignores offences like murder or sexual assault as an offence that will disqualify a person from holding a license or certificate. Therefore, he submitted, other indicators should be considered. The other indicators which Mr Compton submitted the Tribunal should consider are: a. Whether the Applicant obtained a benefit from the commission of the offence; b. Whether the Applicant's offence is something that warrants public protection; c. Whether the commission of the offence itself impacts adversely on any individual. 75Mr Compton argued that the Applicant obtained no benefit from the commission of the offence. He submitted that the Applicant is applying for a real estate license, and this offence will not affect the Applicant from carrying out his functions lawfully. In fact, the Applicant has operated in the industry without blemish for three decades. 76In his submission, the Act is about protecting the public not punishing the individual and therefore the triviality can be looked at in relation to whether protection is desired. He noted that no individual was impacted by the Applicant's conduct. All of these things, he submitted, should give rise to the Applicant's conduct being trivial in relation to an act of dishonesty. 77He noted that the Applicant pleaded guilty to the offence and that Judge Zahra did not impose a custodial penalty or any fine. The judge could have imposed imprisonment for up to five years or three hundred penalty units or both. Instead Judge Zahra imposed a two-year good behaviour bond. Mr Compton submitted that the imposition of a good behaviour bond is indicative of the relative triviality of the acts or omissions giving rise to the offence. Accordingly it is submitted that the offence should be ignored under section 16 (2) of the Act because of the triviality of the acts or omissions giving rise to the offence.

Discussion 78In my opinion, the acts or omissions giving rise to the offence are not trivial in nature. I consider that the conduct is high on the scale of seriousness. The offence for which the Applicant was convicted is an offence that carries a period of imprisonment of up to five years. Judge Zahra was satisfied that the Applicant played a significant and crucial role in the laundering of monies. The Applicant was able to pass the proceeds of substantial criminal activity through the legitimate accounts of his business. This resulted in providing Mr Cleveland and others in the syndicate with significant cover for the laundering of the proceeds of the criminal activity. His Honour considered that money laundering is "serious criminal activity" and that such offences are at the heart of organised crime syndicates. 79I agree with Mr Compton's submission that other indicators should be considered in determining triviality. However, in this matter those factors do not assist the Applicant. 80While the Applicant may not have obtained any financial benefit from the commission of the offence, it is possible that he may have obtained some other intangible benefit or kudos. 81The provisions under consideration in this case are designed to protect the public from persons who have conducted themselves in a dishonest or fraudulent way. It is significant that the Applicant's conduct occurred generally within his activities in the real estate industry in that he passed proceeds of criminal activity through his real estate business account. In my view, protection of the public from dishonesty in relation to financial transactions is warranted. 82Further, I do not agree that an offence that has the effect of propagating serious criminal conduct can be described as not impacting adversely on any individual. 83In the circumstances, I do not agree that the offence should be ignored on the basis that the offence was trivial for the purposes of section 16(2) of the Act.

Should the offence be ignored on the basis of a passage of time? 84The Applicant committed these offences over four years ago. He was convicted in September 2011. However, the conduct occurred between July 2007 and May 2009. 85Mr Griffin has referred me to a number of Tribunal decisions that have dealt with the issue of whether an offence should be ignored on the basis of a passage of time. 86In Bek v Commissioner for Fair Trading [2004] NSWADT 149 I held the view that the period of time that is necessary to have passed must be linked to the offence for which an applicant has been convicted. Mr Bek was convicted of "Driver/Rider State False Name or Address" and was fined $300. I agreed that it was an offence at the lower end of the scale and that three and a half years was sufficient to warrant ignoring the offence. 87In Hunt v Director General, Department of Services Technology and Administration [2010] NSWADT 186, Judicial Member Higgins considered the offences of obtaining money by deception involving the amount of $6,957.08 as serious and that a period of 5 years since the offences were committed was not sufficient time so as to make a determination that the offences should be ignored. She considered that a period of 8 years from the date the offences were committed was the appropriate time given that the offences had occurred in the course of the licensed activity. 88In Parvin v Commissioner· for Fair Trading [2005] NSWADT 34, Mr Parvin was convicted of traffic offences of dishonesty including producing someone else's licence to police when stopped in circumstances where he did not possess a licence. He received a sentence of home detention. O'Connor DCJ was of the opinion that 2 years was insufficient time to exercise the discretion under section 16(2) of the Act. 89In Yelland v Commissioner for Fair Trading [2005] NSWADT 293 I was of the view that the 14 months that had passed since Mr Yelland gave false information to police in order to avoid the consequences of his action was not sufficient to warrant ignoring the offence. 90In Eleter v Director-General, Department of Fair Trading [2002] NSWADT 138 Judicial Member Lees considered that the nearly four and a half years that had passed since Mr Eleter's offence of receiving stolen property was an insufficient period for the discretion to be exercised in Mr Eleter's favour. 91In Nizhnikov v Commissioner for Fair Trading [2006] NSWADT 284, Judicial Member Handley considered the seriousness of the offence, the time which had elapsed since his conviction, and the fact that he was on a good behaviour bond. The Judicial Member considered that the 15 months since the conviction for two serious offences, of "assault actual bodily harm" was an insufficient period for the discretion to be exercised. 92In Song v Commissioner for Fair Trading, NSW Office of Fair Trading [2006] NSWADT 218, Judicial Member Molony considered the period of less than two years which had lapsed since Mr Song was convicted of "Goods in personal custody suspected of being stolen" was insufficient. 93In Hadroj v Director General, Department of Fair Trading [2002] NSWADT 95 Deputy President Hennessy considered the 12 months which had lapsed since Mr Hadroj was convicted of four offences: three counts of goods in custody winch may be reasonably suspected of being stolen or otherwise unlawfully obtained and one count of selling second-hand goods without holding a licence was insufficient to warrant ignoring the offence. 94I agree with Mr Compton that these decisions show that the question of the amount of time that must have passed before the section 16(2) exemptions are utilized has been determined on a case-by-case basis. 95The Applicant relies on a number of character references and also relies on the fact that he has completed a workshop on "Ethical intelligence and good decision making" through the St James Ethics Centre. I have taken these into account in reaching my decision. 96Mr Compton submitted that the exemption should be utilized where sufficient passage of time has lapsed that demonstrates that the person is no longer a danger to the industry. I agree with that submission. 97In the present matter Mr Compton argued that the offence should be ignored because of the effluxion of time. In the alternative, he submitted that the Applicant should have his licence re-instated when his good behaviour bond has expired. 98Of those offences considered in other Tribunal matters the Applicant's offences are, to an extent, comparable to the goods in custody offences. As I have indicated, the offences occurred in the course of the licensed activity to the extent that they involved use of the business account. While each of the matters referred to can be distinguished on its facts, it is my view a similar approach is warranted to that adopted by Judicial Member Higgins in Hunt v Director General, Department of Services Technology and Administration. In that matter, the Judicial Member considered that a period of 5 years since the offences were committed was not sufficient time to exercise the discretion under section 16(2) of the Act. 99Similarly, in the present case I consider that the period since the offences were committed is not sufficient time to exercise the discretion under section 16(2) of the Act. 100I note that the Applicant has already taken some steps towards reformation of character and behaviour. Should he reapply in the future, further steps that he takes in regard to that reformation will be relevant considerations in regard to the determination of whether sufficient time has passed to warrant the exercise the discretion under section 16(2) of the Act.

Is the Applicant a fit and proper person to hold a licence? 101In the circumstances, I do not need to determine whether the Applicant is a fit and proper person to hold a licence under the Act. However, I note that in Hughes and Vale Pty Ltd v The State of New South Wales [1955] HCA 28; (1955) 93 CLR 127 the characteristics of fitness and propriety were said to be knowledge, honesty and ability. 102In light of my findings in regard to the honesty of the Applicant I am inclined to agree with the Respondent's submission that at this time the Applicant is not a fit and proper person to hold a licence. 103It follows, in my view, that the Respondent's determination is the correct and preferable decision and therefore it should be affirmed.

Order The decision under review is affirmed 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: 03 September 2013

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