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[2025] NSWCA 260
respondent. Appeal dismissed. The appellant was ordered to pay the respondent's costs: [207].
The Court of Appeal upheld the proceeds assessment order. It held that Karout's possession of the drugs, without evidence that someone else owned them, supported including their full market value. His compulsory-examination transcript could prove the truth of his admission about maintenance payments, and that examination did not amount to giving evidence at the later hearing. The evidence supported the finding that he paid about $23,000 per month to Ms Taylor. The people who transferred money to him did not establish where that money came from, so he did not satisfy the statutory requirement to show the funds were unrelated to illegal activity. The Court found no material procedural unfairness in the primary judge's additional observation about possible beneficial ownership of a property. The appeal was dismissed with costs.
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Kaldon Karout appealed a proceeds assessment order made by Fagan J on 27 May 2025. The order required him to pay $4,602,659.91 to the NSW Treasurer. The amount was assessed as proceeds derived from illegal activity between 21 November 2012 and 27 October 2015. The Court of Appeal dismissed the appeal and ordered Karout to pay the New South Wales Crime Commission's costs [2]-[5], [207].
The criminal activity underlying the statutory assessment was not disputed for the appeal. A certificate of conviction established that Karout had been convicted of two offences of supplying heroin and cocaine, each involving not less than a large commercial quantity [9]. The accepted sentencing facts described a drug supply operation based at a factory in Kogarah, on property registered to Karout [10]. The assessment included $546,095 as the value of drugs found in his possession. It also treated expenditure as proceeds unless Karout established that it came from income or other sources unrelated to illegal activity, as required by s 28(3) of the Criminal Assets Recovery Act 1990 (NSW) [3], [25].
The appeal raised four main groups of issues. First, Karout argued that possession did not prove he owned the drugs outright. Secondly, he challenged the use of answers in a compulsory examination to establish that he paid his former partner Bernadette Taylor about $23,000 per month. Thirdly, he argued that the examination should count as him giving evidence in the proceedings, affecting the use of a Jones v Dunkel inference. Finally, he disputed the treatment of transfers from Hanan Elgammal, Joseph Samia and John Barton as unexplained, rather than as legitimate loans [5], [100]-[101], [122]-[124], [156]-[158].
On the drug-value issue, the Court reasoned that possession of personal property can provide prima facie evidence of ownership. Karout's conviction certificate established possession for the purpose of supply, and he did not adduce evidence that another person owned the drugs. The drugs were found at a factory he owned and controlled. In that evidentiary setting, an alternative arrangement such as consignment or bailment was speculative, and the full market value could be included [102]-[106]. The Court expressly left undecided whether prohibited drugs could have legal title, because it was unnecessary to resolve that question [105].
On the examination transcript, the Court separated two steps. Section 54(5) of the Criminal Assets Recovery Act says that the transcript is evidence of the answers given. The Court construed this as making the transcript first-hand hearsay evidence of what the examinee actually said. Since Karout's words were admissions, s 81 of the Evidence Act 1995 (NSW) allowed them to be used to prove their truth. Section 82 did not prevent that use merely because a transcript records oral words rather than being the document in which the admission itself was made [112]-[120]. The Court also noted that ss 135 and 136 of the Evidence Act remain potential safeguards against unfair prejudice or unfair use, although no appeal ground required it to revisit the primary judge's ruling under s 135 [121].
The examination did not, however, make Karout a witness at the later hearing. The Court treated the examination as a distinct stage, even though it occurred within the broader matter. The answers were previous representations, not evidence given at the hearing where the proceeds assessment was determined [125]-[133]. Because Karout did not testify at that hearing, the primary judge was entitled to consider a Jones v Dunkel inference in assessing the evidence [134].
The maintenance finding was upheld because the admission came from Karout, who was in a position to know the payments and whose admission was against his interest in the assessment. He had said that he dealt almost exclusively in cash. Taylor's affidavit described cash payments of $1,000 at a time but did not quantify monthly payments during the assessment period. The payments after his arrest supported the inference that he was willing and able to support Taylor and the children, while the suggested inference that Taylor herself made those transfers lacked evidentiary support [145]-[154].
The loan arguments failed under s 28(3). It was not enough to identify who transferred the funds. The witnesses did not establish where the funds came from or show they were unrelated to illegal activity [158]-[170]. The Court held that assessing whether the asserted loans were credible by reference to their documentation, terms, surrounding circumstances and objective probabilities was ordinary fact-finding, not improper judicial notice [183]-[192].
The judgment applied the existing statutory framework rather than announcing a general change to the law. Section 28(3) directs the Court to treat proved expenditure during the relevant six-year period as proceeds, except to the extent the Court is satisfied that it was funded from unrelated income or other money [25]. The Court followed its earlier explanation in New South Wales Crime Commission v Kelaita that the statutory assessment regime is comprehensive and that the words “is to treat” impose the prescribed consequence [159]. It also applied the approach to the onus described in New South Wales Crime Commission v Vu and considered the High Court's reasoning in Henderson v State of Queensland [159]-[166].
The practical clarification is how those provisions operate on evidence about transfers. Evidence that money came from a named person establishes a transfer, but it does not necessarily establish the source or lawful provenance of the money. Where the transfer is said to be a loan, evidence of the lender's identity and the recipient's bank records may not answer the distinct statutory question whether the funds came from sources unrelated to illegal activity [169], [205]-[206].
The judgment also clarifies the evidentiary operation of s 54(5). The provision does more than permit a transcript to show that an examination took place or that words were uttered. In the Court's construction, it supplies first-hand hearsay evidence of the examinee's answers. Whether the contents can prove their truth then depends on the Evidence Act, including the admissions exception in s 81 [116]-[120].
Finally, the Court distinguished a compulsory examination from giving evidence at the final hearing. A person examined under s 12 does not thereby become a witness at the hearing determining the proceeds assessment application. The examination answers can be previous representations, and the tender of their transcript does not itself amount to the examinee giving evidence in that hearing [125]-[134]. These are applications and explanations of the statutory text and existing authorities, not a replacement of the statutory test.
At [103], the Court states that possession “is sufficient, without more, to prove ownership” at a prima facie level in this context. In plain English, possession supported an inference that Karout owned the drugs unless he produced evidence pointing the other way. The Court relied not only on possession but also on the location of the drugs in a factory he owned and controlled [104].
At [116], the Court explains that s 54(5) makes the examination transcript “first-hand hearsay evidence of what the appellant actually said.” Put simply, the transcript could stand as evidence of Karout's own oral answers without calling someone separately to prove what he said. The Evidence Act then supplied the route for using an admission for its truth [116]-[120].
At [133], the Court says Karout “did not give evidence in the proceedings before the primary judge.” This does not mean his examination answers were irrelevant or inadmissible. It means the examination and the later hearing were distinct for the Evidence Act definition of a previous representation and for deciding whether he had testified at the hearing [125]-[134].
At [154], the Court concluded that Karout made cash payments of about $23,000 per month to Taylor. That conclusion rested on his own admission, the cash-based nature of his dealings, and the Court's assessment of the other evidence. The Court did not treat the later monthly payments of $3,500 as proving what was paid during the earlier assessment period [146]-[154].
At [188], the Court says the primary judge “had regard to the objective probabilities.” In plain English, a judge assessing whether witnesses are credible may compare their account with surrounding facts and ordinary experience. The Court treated the lack of written loan terms and other circumstances as evidence bearing on credibility, not as a judicially noticed rule that all loans must be documented [183]-[190].
At [202], the Court says procedural fairness is “no mere technical requirement” and focuses on practical injustice. The beneficial-ownership observation had not been put to Ms Elgammal, but the Court concluded that this did not affect the result because the operative finding was that the source of the funds had not been proved to be lawful [198]-[204].
The judgment is particularly relevant where a proceeds-assessment application relies on a defendant's expenditure and the defendant says that some expenditure came from legitimate sources. The statutory question under s 28(3) is not simply whether money was transferred or who transferred it. The person resisting treatment of expenditure as proceeds must establish to the Court's satisfaction that it was funded from unrelated income or other money [25], [158]-[170].
It is also relevant where prohibited goods are found in the defendant's possession, especially where the defendant does not provide evidence supporting another person's ownership. The Court's reasoning indicates that possession may supply prima facie proof of ownership, and that location in premises owned and controlled by the defendant may reinforce that inference [102]-[106]. The judgment does not decide how the inference would apply where there is evidence of a genuine consignment, bailment, shared control or another person's ownership.
The transcript ruling matters where answers from a compulsory examination under s 12 or s 31D are tendered in proceedings under the Act. The Court's construction supports use of the transcript as first-hand hearsay evidence of the answers and, where an answer is an admission, possible use of it for its truth under s 81 [110]-[121]. The judgment also makes clear that this does not automatically make the examinee a witness at a later merits hearing [125]-[134].
For maintenance or other cash expenditure, the decision illustrates that an admission may carry substantial weight even when contemporaneous records are absent. The surrounding evidence, the person's ability to know the facts, any inconsistent evidence and the availability of records may all matter [145]-[154]. The case does not establish that every unrecorded payment claim should be accepted, or that admissions are conclusive.
The supplied judgment contains no decisions issued after Karout that consider or apply its holding. It is therefore not possible, on the material provided, to describe subsequent treatment by later courts.
The Court itself relied on earlier authorities when explaining the rules it applied. It drew on The Prothonotary of the Supreme Court of New South Wales v Sukkar concerning the evidentiary effect of a conviction certificate and Russell v Wilson, Gatward v Alley and Hocking v Director-General of the National Archives of Australia concerning possession as evidence of ownership [102]-[104]. On the hearsay point, it considered Fortescue Metals Group, Daniel, Caterpillar and Nichia on the distinction between a document that records an admission and a document in which an admission is made [114]-[120].
For the statutory onus, the Court applied Vu and Kelaita and considered Henderson [159]-[166]. For the examination and Jones v Dunkel issue, it applied the approach in Hoy Mobile and distinguished Flack on its statutory and procedural context [131]-[141]. On credibility and objective probabilities, it relied on Effem Foods, Fox v Percy, Et-China.com, Wilcox v Chapple and Camden v McKenzie [184]-[190]. These are the authorities identified and treated in the judgment itself; they should not be confused with later judicial treatment of Karout.
Several questions were expressly left open or were not necessary to decide. The Court did not decide whether legal title can exist in prohibited drugs, because the appeal could be resolved through the evidentiary inference from possession and the absence of contrary evidence [105]. The judgment also does not determine how strong or what kind of evidence would be sufficient to displace that inference in a different case.
The Court did not need to decide the limits of judicial notice in detail. It concluded that the primary judge had assessed objective probabilities and that the reasoning was within the ordinary task of evaluating credibility [183]-[190]. A future case may raise a more specific question about when an asserted commercial practice is so general that it may be noticed without evidence, rather than treated as an inference from the evidence and surrounding circumstances.
The Court did not determine whether a House v The King error must be shown to challenge a finding of the kind made on maintenance expenditure, because it found no error on the evidence [155]. Nor did it examine further the operation of ss 135 and 136 of the Evidence Act, because the relevant challenge was not pursued on appeal [121].
Finally, the Court's procedural-fairness conclusion depended on the beneficial-ownership observation being unnecessary and incapable of affecting the outcome. It does not suggest that an unput adverse factual hypothesis will always be harmless. The Court's analysis asks whether the witness had a fair opportunity to address the point and whether the omission caused practical injustice in the particular statutory and evidentiary context [198]-[204].
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Karout v New South Wales Crime Commission [2025] NSWCA 260
Hearing dates: 1 December 2025
Decision date: 09 December 2025
Before: Kirk JA at [1]
Adamson JA at [2]
Griffiths AJA at [208]
Decision: (1) Dismiss the appeal.
(2) Order the appellant to pay the respondent’s costs.
Catchwords: CRIMINAL LAW — proceeds of crime — proceeds assessment order — assessment of expenditure under Criminal Assets Recovery Act 1990 (NSW) — whether market value of drugs in appellant’s possession properly included as proceeds — compulsory examination — maintenance payments — weight of admissions — credibility — objective probabilities — alleged loans — failure to discharge onus under s 28(3) — Browne v Dunn — alleged denial of procedural fairness — beneficial ownership of property — judicial notice — objective probabilities — whether inference open — appeal dismissed
EVIDENCE — compulsory examination — admissibility of transcript to prove truth of admissions — operation of ss 59, 81, 82 of the Evidence Act 1995 (NSW) — effect of s 54(5) of the Criminal Assets Recovery Act 1990 (NSW) — first-hand versus second-hand hearsay — probative value of admissions — use of admissions against interest — weight of evidence concerning maintenance payments — availability of Jones v Dunkel inference — whether appellant “gave evidence” by being examined under s 12
Legislation Cited: Criminal Assets Recovery Act 1990 (NSW), ss 4, 5, 10A, 12, 13, 13A, 27, 28, 28C, 31D, 54
Drug Misuse and Trafficking Act 1985 (NSW), s 25
Evidence Act 1995 (NSW), ss 59, 60, 63, 64, 81, 82, 92, 135, 136, 144, 178
Interpretation Act 1987 (NSW), ss 33, 34, 35
Cases Cited: Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation [1983] 1 NSWLR 1
Attorney General for New South Wales v Haines (BHT Barbara Ramjan) [2025] NSWCA 231
Australian Securities and Investments Commission v Fortescue Metals Group Ltd (No 2) (2009) 176 FCR 529; [2009] FCA 424
Blatch v Archer (1774) 1 Cowp 63
Bowes v Shand (1877) 2 App Cas 455
Browne v Dunn (1893) 6 R 67
Camden v McKenzie [2008] 1 Qd R 39; [2007] QCA 136
Caterpillar Inc v John Deere Ltd (No 2) [2000] FCA 1903; (2000) 181 ALR 108
Chairman, National Crime Authority & Anor v Flack (1998) 86 FCR 16
Clifton v Palumbo [1944] 2 All ER 497
Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389
Commissioner of Taxation v Bosanac (No 7) [2021] FCA 249; (2021) 390 ALR 74
Daniel v State of Western Australia [2001] FCA 223; (2001) 186 ALR 369
Effem Foods Pty Limited v Lake Cumbeline Pty Limited [1999] HCA 15; (1999) 161 ALR 599
El-Debel v Micheletto (Trustee) [2021] FCAFC 117; (2021) 153 ASCR 15
Et-China.com International Holdings Ltd v Cheung [2021] NSWCA 24; (2021) 388 ALR 128
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
Gatward v Alley (1940) 40 SR (NSW) 174
Hart v MacDonald (1910) 10 CLR 417 at 432; [1910] HCA 13
Henderson v State of Queensland (2014) 255 CLR 1; [2014] HCA 52
Hocking v Director-General of the National Archives of Australia (2020) 271 CLR 1; [2020] HCA 19
Holland v Jones (1917) 23 CLR 149; [2017] HCA 26
House v The King (1936) 55 CLR 499; [1936] HCA 40
Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (2008) 167 FCR 314; [2008] FCA 369
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11
Larkis v Larkis [2018] NSWCA 113
MWJ v The Queen (2005) 80 ALJR 329; [2005] HCA 74
New South Wales Crime Commission v Karout [2025] NSWSC 538
New South Wales Crime Commission v Kelaita (2008) 75 NSWLR 564; [2008] NSWCA 284
New South Wales Crime Commission v Vu [2012] NSWSC 129; (2012) 221 A Crim R 445
Nichia Corporation v Arrow Electronics Australia Pty Ltd (No 3) (2016) 240 FCR 13; [2016] FCA 466
Onassis v Vergottis [1968] 2 Lloyds Rep 403
Oneflare Pty Ltd v Chernih [2017] NSWCA 195
Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6
Rodden v R (2023) 112 NSWLR 162; [2023] NSWCCA 202
Russell v Wilson (1923) 33 CLR 538; [1923] HCA 60
Slatterie v Pooley (1840) 6 M & W 664; 151 ER 579
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247
Speight, In re; Speight v Gaunt (1883) 22 Ch D 727
SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152; [2006] HCA 63
The Prothonotary of the Supreme Court of New South Wales v Sukkar [2007] NSWCA 341
Vu v New South Wales Crime Commission [2013] NSWCA 282
Wilcox v Chapple [2025] NSWCA 155
Woon v The Queen (1964) 109 CLR 529; [1964] HCA 23
Texts Cited: Cross on Evidence (9th ed, 2012, LexisNexis Australia)
Category: Principal judgment
Parties: Kaldon Karout (Appellant)
New South Wales Crime Commission (Respondent)
Representation: Counsel:
G James KC / P Lange SC (Appellant)
P English / E Dunlop (Respondent)
Solicitors:
One Group Legal (Appellant)
New South Wales Crime Commission (Respondent)
File Number(s): 2025/205659
[This headnote is not to be read as part of the judgment]
The appellant, Kaldon Karout, appealed from a proceeds assessment order made by Fagan J in the Supreme Court on 27 May 2025 under s 27 of the Criminal Assets Recovery Act 1990 (NSW) (the Act), requiring him to pay $4,602,659.91 to the NSW Treasurer.
The primary judge assessed that amount as the value of proceeds derived from the appellant’s illegal activities during the period 21 November 2012 to 27 October 2015 (the relevant period). It included $546,095 representing the value of drugs found in the appellant’s possession, with the balance calculated by deducting only proven legitimate expenditure from his total expenditure of $10,916,264.79, in accordance with s 28(3) of the Act.
The primary judge took into account, in assessing the appellant’s expenditure maintenance payments in the order of $23,000 per month for the relevant period made by the appellant to his former partner, Bernadette Taylor (now deceased), the mother of two of his children. This figure was based on admissions made by the appellant in a compulsory examination conducted by the NSW Crime Commission, the respondent to the appeal, which was ordered by the Supreme Court under s 12 of the Act.
The appellant submitted that the proceeds assessment order should have been $1,883,911.91. He contended that: (1) the $546,095 market value of the drugs should not have been included because it had not been shown he owned the drugs outright rather than merely possessing them; (2) the amount of $627,653 for maintenance payments ought not to have been allowed as his admission that he paid Ms Taylor about $23,000 per month, was inadmissible to prove its truth; and (3) various transfers of funds received from John Barton, Joseph Samia and Hanan Elgammal were legitimate loans and therefore constituted money unrelated to illegal activity for the purposes of s 28(3).
The Court held (Adamson JA, Kirk JA and Griffiths AJA agreeing) dismissing the appeal:
Alleged error in concluding that the total value of the prohibited drugs in the appellant’s possession at the time of his arrest, $546,095, ought be counted as proceeds (ground 1)
(1) The ground is not made out. The appellant’s possession of the drugs for the purposes of supply was established by the certificate of conviction. Possession is prima facie evidence of ownership. The appellant adduced no evidence to the contrary and the drugs were found in a factory he owned and controlled: [100]-[104].
(2) The primary judge was correct to include the full $546,095 in the assessment: [101]-[106].
The Prothonotary of the Supreme Court of New South Wales v Sukkar [2007] NSWCA 341; Russell v Wilson (1923) 33 CLR 538; [1923] HCA 60; Gatward v Alley (1940) 40 SR (NSW) 174; Hocking v Director-General of the National Archives of Australia (2020) 271 CLR 1; [2020] HCA 19, considered.
Alleged error in in calculating, as part of the appellant’s expenditure, the maintenance payments to Ms Taylor on the basis of statements made by the appellant in a compulsory examination conducted by the Commission and alleged failure to give reasons for the ruling (ground 2)
(3) The ground is not made out. Although the primary judge indicated that reasons would be given in the final judgment, it was not necessary to repeat reasons already exposed in the transcript of argument. The transcript shows that his Honour put to counsel the bases on which he considered the evidence admissible, and the appellant ultimately did not press the complaint about lack of reasons: [107]-[109].
(4) No error is demonstrated in the ruling that the appellant’s admissions were admissible to prove their truth. The statements were admissions within s 81 of the Evidence Act 1995 (NSW) and s 54(5) of the Act permitted the transcript to be tendered as first-hand hearsay of what the appellant said. Therefore the exclusion of second-hand hearsay to prove the truth of an admission in s 82 of the Evidence Act did not apply: [110]-[121].
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247; Australian Securities and Investments Commission v Fortescue Metals Group Ltd (2009) 176 FCR 529; [2009] FCA 424; Daniel v State of Western Australia [2001] FCA 223; (2001) 186 ALR 369; Caterpillar Inc v John Deere Ltd (No 2) [2000] FCA 1903; (2000) 181 ALR 108; Nichia Corporation v Arrow Electronics Australia Pty Ltd (No 3) (2016) 240 FCR 13; [2016] FCA 466; New South Wales Crime Commission v Vu [2012] NSWSC 129; (2012) 221 A Crim R 445, considered.
Whether the circumstance that the appellant gave answers to questions asked in his compulsory examination under s 12 has the effect that he gave evidence in the proceedings before the primary judge (grounds 9, 10 and 11)
(5) Ground 9 is not made out. The appellant did not give evidence in the proceedings before the primary judge by answering questions in a compulsory examination under s 12 of the Act. The examination was a distinct step ordered in the same proceeding but the answers given did not constitute evidence in the hearing in which the proceeds assessment order was determined. His statements in the examination were “previous representations” for the purposes of the Evidence Act: [125]-[133].
(6) The tender of the transcript of the appellant’s examination did not make him a witness in the proceedings for a proceeds assessment order. As the appellant did not give evidence in the proceedings, the primary judge was entitled to draw a Jones v Dunkel inference. Grounds 10 and 11 are not made out: [134]-[142].
Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (2008) 167 FCR 314; [2008] FCA 369*; Attorney General for New South Wales v Haines (BHT Barbara Ramjan)* [2025] NSWCA 231; Rodden v R (2023) 112 NSWLR 162; [2023] NSWCCA 202; Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8; Commissioner of Taxation v Bosanac (No 7) [2021] FCA 249; (2021) 390 ALR 74; Chairman, National Crime Authority & Anor v Flack (1998) 86 FCR 16; El-Debel v Micheletto (Trustee) [2021] FCAFC 117; (2021) 153 ASCR 15, considered.
Alleged error in calculating the amount of the appellant’s expenditure on Ms Taylor (ground 3)
(7) The ground is not made out. The primary judge was entitled to accept the appellant’s own admission in his compulsory examination that he paid Ms Taylor about $23,000 per month. The absence of records did not diminish its probative force, particularly given the appellant’s admission that he dealt almost exclusively in cash until his arrest: [143]-[146].
(8) Ms Taylor’s affidavit evidence in the Family Court proceedings did not contradict the admission; it was largely irrelevant, as it did not quantify monthly payments during the relevant period and was consistent with cash payments being made. The post-arrest transfers totalling $181,905 supported the inference that the appellant was willing and able to support her. It was not reasonable to infer that Ms Taylor made those transfers herself, given the lack of evidence that she could operate the account and the appellant’s admissions that Ms Karout had access to his accounts. The appellant’s failure to tender Ms Karout’s bank records for the relevant period also justified drawing an inference adverse to him: [147]-[153].
(9) On the whole of the evidence, the finding that the appellant paid Ms Taylor about $23,000 per month was open. No error is established, and ground 3 fails: [154]-[155].
Slatterie v Pooley (1840) 6 M & W 664; 151 ER 579; Hart v MacDonald (1910) 10 CLR 417; [1910] HCA 13; Blatch v Archer (1774) 1 Cowp 63; Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389; House v The King (1936) 55 CLR 499; [1936] HCA 40, considered.
Alleged error in findings relating to alleged loans from Ms Elgammal, Mr Sami, Mr Barton and Ms Sin (grounds 4-8)
(10) The grounds are not made out. Under s 28(3) the appellant bore the onus of proving that the expenditure was funded from sources unrelated to illegal activity. Identifying the persons who transferred money to him was insufficient; none of the witnesses established the source of the funds, and there was no evidence that the monies were not illegally acquired property in their hands. The primary judge was therefore correct to find that the onus had not been discharged: [158]-[170].
(11) The submissions based on Browne v Dunn do not assist; the Commission was not required to put to the witnesses that the transfers were related to illegal activity, as that was not its case: [167]-[168].
(12) The primary judge’s reasoning did not involve impermissible judicial notice. His Honour’s assessment of the alleged loans was based on objective probabilities, including the improbability of large undocumented, unsecured transfers being genuine loans. That approach was orthodox and supported by authority. Accordingly, grounds 4-8 fail: [173]-[192].
Vu v New South Wales Crime Commission [2013] NSWCA 282; New South Wales Crime Commission v Kelaita (2008) 75 NSWLR 564; [2008] NSWCA 284; Henderson v State of Queensland (2014) 255 CLR 1; [2014] HCA 52; Browne v Dunn (1893) 6 R 67; Oneflare Pty Ltd v Chernih [2017] NSWCA 195; Holland v Jones (1917) 23 CLR 149; [1917] HCA 26; Bowes v Shand (1877) 2 App Cas 455; Clifton v Palumbo [1944] 2 All ER 497; Speight, In re; Speight v Gaunt (1883) 22 Ch D 727; Onassis v Vergottis [1968] 2 Lloyds Rep 403; Effem Foods Pty Limited v Lake Cumbeline Pty Limited [1999] HCA 15; (1999) 161 ALR 599; Et-China.com International Holdings Ltd v Cheung [2021] NSWCA 24; (2021) 388 ALR 128; Fox v Percy (2003) 214 CLR 118; [2003] HCA 22; Wilcox v Chapple [2025] NSWCA 155; Camden v McKenzie [2008] 1 Qd R 39; [2007] QCA 136, considered.
Alleged denial of procedural fairness by alleged failure to comply with the rule in Browne v Dunn in finding that the appellant was the beneficial owner of the Hurstville property rather than, as deposed by Ms Elgammal, herself and her niece (ground 5)
(13) The ground is not made out. The primary judge’s operative finding was that, without credible evidence of the asserted character of the transfer, the $1,070,000 was unexplained, and the appellant had not proved that it was derived from lawful sources. His Honour’s additional observation, that the evidence tended towards a probability that the appellant had a beneficial interest in the Hurstville property, was unnecessary to the conclusion: [193]-[200].
(14) Although the hypothesis of beneficial ownership had not been put to Ms Elgammal, and in that sense raised a potential Browne v Dunn concern, no practical injustice arose. Even if asked, her answers could not have altered the outcome, given the unsatisfactory circumstances of the alleged loan and the appellant’s failure to discharge the onus under s 28(3). The Commission was not required to put the hypothesis to the witness, as it was no part of its case that the appellant owned the property; its case was that the appellant had not proved that the funds advanced were untainted: [200]-[203].
(15) Any procedural misstep was therefore immaterial. Ground 5 fails: [204].
Browne v Dunn (1893) 6 R 67; Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation [1983] 1 NSWLR 1; MWJ v The Queen (2005) 80 ALJR 329; [2005] HCA 74; Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11; SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152; [2006] HCA 63; Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6; Larkis v Larkis [2018] NSWCA 113, considered.
Alleged errors in findings relating to Ms Elgammal, Mr Samia and Mr Barton (ground 4)
(16) The ground is not made out. The primary judge was entitled to reject Ms Elgammal’s evidence: the transfer of $1,070,000 proved by bank records did not support her claim of a loan, nor establish that the funds were unconnected with unlawful activity. Having regard to the objective probabilities, her account was not credible: [205].
(17) The same reasoning applied to the alleged loans from Mr Samia and Mr Barton, and no error is shown in the primary judge’s rejection of their evidence. The appellant failed to discharge the onus under s 28(3). Ground 4 fails: [206].
KIRK JA: I agree with Adamson JA.
ADAMSON JA: Kaldon Karout (the appellant) appeals against the proceeds assessment order made by Fagan J (the primary judge) in the Supreme Court (the Court below) on 27 May 2025 pursuant to s 27 of the Criminal Assets Recovery Act 1990 (NSW) (the Act) that the appellant pay to the NSW Treasurer $4,602,659.91: New South Wales Crime Commission v Karout [2025] NSWSC 538.
This amount was the primary judge’s assessment of the value of the proceeds derived from the appellant’s illegal activities during the period 21 November 2012 to 27 October 2015 (the relevant period) and included the figure of $546,095, which was found to be the value of the drugs found in the appellant’s possession. The balance was derived by deducting from the appellant’s total expenditure during the relevant period ($10,916,264.79) the expenditure which had been established was legitimate, as provided for by s 28(3) of the Act.
The primary judge allowed each of the amounts for which the respondent, the NSW Crime Commission (the Commission), contended, in full, except for a single adjustment which was made to the figure for maintenance payments alleged to have been made by the appellant to his former partner Bernadette Taylor (now deceased), who was the mother of two children of whom the appellant is the father, the younger of whom was born in 2015.
The appellant challenged each of the figures (except the amount of $17,000 which related to Faraj Issa) which are included in the amount of the proceeds assessment order and maintained, as he did in the Court below, that the order should be in the amount of $1,883,911.91. He submitted that:
the market value of the drugs, $546,095, ought not be included in the amount of the proceeds assessment order as it had not been shown that the appellant owned the drugs outright, as opposed to having merely a possessory interest in them;
the figure allowed by the primary judge of $627,653 ought not to have been allowed because it which was based on the appellant’s admission in his compulsory examination that he gave Ms Taylor about $23,000 per month which was inadmissible to prove the truth of the contents; and
the transfers of funds which had been made to the appellant by John Barton, Joseph Samia, Hanan Elgammal ought not be included in the amount of the proceeds assessment order as they were loans which were legitimate transactions and therefore constituted money which was unrelated to an illegal activity or activities within the meaning of s 28(3) of the Act.
Ground 4b, which relates to transactions involving Mr Issa, was abandoned at the hearing of the appeal.
All references to legislation in these reasons are to the Act unless otherwise stated. All references to paragraphs in the judgment in the Court below will be prefixed with “J”.
The Commission filed a summons in the Supreme Court on 27 October 2015 seeking orders, including for an examination of the appellant pursuant to s 12(1)(b) and a proceeds assessment order pursuant to s 27. On that date, the Court made a restraining order against the appellant’s property pursuant to s 10A and ordered that the appellant be examined.
It was common ground, and the primary judge found, that the conditions for a proceeds assessment order in s 27(2)(a) had been fulfilled as the appellant had, during the 6 years before the Commission filed the summons, engaged in serious crime-related activity involving an indictable quantity of prohibited drugs. This was established by a certificate of conviction which proved that on 1 June 2018, the appellant was convicted of two offences committed on 27 July 2015 contrary to s 25(2) of the Drug Misuse and Trafficking Act 1985 (NSW) (the DMTA): the supply of prohibited drugs (heroin for the first offence and cocaine for the second offence) not less than a large commercial quantity.
The facts on sentence (which the appellant acknowledged were agreed and accepted by him for the purposes of these proceedings) were to the effect that the appellant participated in a large commercial drug supply operation from his factory located in Kogarah on property of which he was the registered proprietor and which was not subject to a registered mortgage. The processes involved included the breaking down of blocks of prohibited drugs using a grinder and blender and then combining them with other substances and re-pressing the new composite drugs into a block.
For the offence of supply of heroin, the appellant was sentenced to 7 years imprisonment with a non-parole period of 5 years and for the offence of supply of cocaine, to a term of imprisonment of 8 years with a non-parole period of 5 years and 4 months. The total effective sentence was 8 years and 3 months, commencing on 11 March 2016 and expiring on 10 June 2024, with a non-parole period of 5 years and 7 months. The appellant was first eligible for parole on 10 October 2021.
On 4 February 2020 (while the appellant was still in custody), the appellant was examined by the Commission before Senior Deputy Registrar Hedge of the Supreme Court pursuant to the order made on 27 October 2015.
In the course of that examination the appellant said that he had paid the expenses of Ms Taylor and their two children both before and after he was remanded in custody from 11 September 2015. The appellant said that payments of about $23,500 or $23,000 per month were made to Ms Taylor, either directly by him prior to 2015 or afterwards by his current partner (Nariman Karout). Of Ms Karout, the appellant said, “she has … more access than I do to the bank accounts, my bank accounts, company accounts and all …”. The appellant also said that during the relevant period he “[a]lways operate[d] in cash” and “always had cash in [his] pocket”. He said that he “[n]ever used tap-and-go. Wouldn’t know how to use it. Never had a credit card”.
The provisions of the Act which bear on the appeal are as follows.
Section 4 relevantly defines “proceeds, in relation to an activity” as including “any interest in property, and any … advantage or benefit (including, without limitation, an increase in the value of an interest in property), that is derived or realised, directly or indirectly, as a result of the activity … by the person engaged in the activity”.
Section 5(1) provides that proceedings on an application for a confiscation order (which is defined by s 4 to include a proceeds assessment order) are not criminal proceedings. The rules of evidence applicable in civil proceedings apply to proceedings such as the present: s 5(2)(b).
Section 10A provides that the Court must, in certain circumstances, make a restraining order in relation to property of any person.
Pursuant to s 12(1)(b), the Court may make an order for the examination on oath before the Court concerning the affairs of the owner of an interest in property that is subject to a restraining order.
Section 13(2) relevantly provides that a statement or disclosure made in answer to a question put in the course of an examination under s 12 is not admissible in civil proceedings, except proceedings on an application under the Act (which includes the present proceedings).
Section 13A provides:
13A Privilege against self-incrimination
(1) A person being examined under section 12 is not excused from answering any question, or from producing any document or other thing, on the ground that the answer or production might incriminate, or tend to incriminate, the person or make the person liable to forfeiture or penalty.
…
Pursuant to s 27(1), the Commission may apply to the Court for a proceeds assessment order in respect of the proceeds derived by a person from an illegal activity or activities, that took place not more than six years before the making of the application for the order. Such an order requires the person against whom it is made to pay to the Treasurer the amount assessed by the Court.
Section 27(2)(a) requires the Court to make a proceeds assessment order if it finds it to be more probable than not that the person against whom the order is sought was, at any time not more than 6 years before the making of the application for the order, engaged in, relevantly, a serious crime related activity involving an indictable quantity (which is relevantly defined in s 4 as an indictable quantity of a prohibited drug that is an indictable quantity under the DMTA).
Section 28(1) relevantly requires the Court to have regard to the following matters for the purposes of making a proceeds assessment order under s 27:
(a) the money, or the value of any interest in property other than money, directly or indirectly acquired by—
(i) the defendant, or
(ii) another person at the request, or by the direction, of the defendant, because of the illegal activity or activities,
(b) the value of any service, benefit or advantage provided for—
(i) the defendant, or
(ii) another person at the request, or by the direction, of the defendant, because of the illegal activity or activities
(c) the market value, at the time of the illegal activity or of each illegal activity, of a plant or drug similar, or substantially similar, to any involved in the illegal activity or each illegal activity, and the amount that was, or the range of amounts that were, ordinarily paid for an act similar, or substantially similar, to the illegal activity or each illegal activity,
…
(e) the defendant’s income and expenditure before and after the illegal activity or activities.
If evidence is given at the hearing of an application for a proceeds assessment order of the amount of the defendant’s expenditure during the period of 6 years before the making of the application for the order, the Supreme Court is to treat any such amount as proceeds derived by the defendant from an illegal activity or activities, except to the extent (if any) that the Supreme Court is satisfied the expenditure was funded from income, or money from other sources, unrelated to an illegal activity or activities.
(4) In making an assessment as provided by this section, none of the following amounts are to be subtracted—
(a) expenses or outgoings incurred by the defendant in relation to the illegal activity or activities,
Note.
For example, in the case of an illegal activity involving the sale of drugs, in determining the value of the proceeds derived by the defendant from the sale of drugs there is to be no reduction on account of any expenditure by the defendant in acquiring the drugs.
(b) the value of any proceeds derived as agent for or otherwise on behalf of some other person (whether or not any of the proceeds are received by that other person).
Note.
For example, where the defendant is paid money for drugs in the course of a “controlled buy” but was acting merely as an agent or messenger for some other person (and gives the money to the other person), in calculating the proceeds derived by the defendant the amount given to the other person is not to be subtracted and the full amount is considered to have been derived by the defendant.
Despite any rule of law, or any practice, relating to hearsay evidence, the Supreme Court may, for the purposes of an application for a proceeds assessment order or unexplained wealth order, receive evidence of the opinion of—
…
Section 31D provides that, in certain circumstances, the Court may make an order for examination of an “affected person” or spouse in relation to that person’s affairs, including the nature and location of property in which the affected person has an interest.
Section 54 makes provision for proof of certain matters, including the following:
(2) A certificate of conviction of an offence (being a certificate referred to in section 178 (Convictions, acquittals and other judicial proceedings) of the Evidence Act 1995) is admissible in any civil proceedings under this Act and is evidence of the commission of the offence by the person to whom it relates.
…
(5) In any proceedings on an application for an order under this Act, the transcript of any examination under section 12 or 31D is evidence of the answers given by a person to a question put to the person in the course of the examination.
…
Ground 2 challenges the primary judge’s ruling that the transcript of the appellant’s examination was admissible to prove the admissions he made in it. The following provisions of the Evidence Act 1995 (NSW) are relevant to that ground.
The Dictionary to the Evidence Act defines “admission” as meaning a previous representation by a party which is “adverse to the person’s interest in the outcome of the proceeding.”
The Dictionary defines “representation” as including “an express … representation (whether oral or in writing)”. It also defines “previous representation” as meaning “a representation made otherwise than in the course of giving evidence in the proceeding in which evidence of the representation is sought to be adduced.”
Clause 6 of Pt 2 of the Dictionary provides:
Representations in documents
For the purposes of this Act, a representation contained in a document is taken to have been made by a person if—
(a) the document was written, made or otherwise produced by the person, or
(b) the representation was recognised by the person as his or her representation by signing, initialling or otherwise marking the document.
Section 59(1) of the Evidence Act contains the hearsay rule (that evidence of a previous representation is not admissible to prove the truth of its contents).
Section 60(1) provides that “[t]he hearsay rule does not apply to evidence of a previous representation that is admitted because it is relevant for a purpose other than proof of an asserted fact.”
Division 2 (entitled “First-hand hearsay”) of Pt 3.2 (entitled “Hearsay”) of the Evidence Act provides that the Division applies to previous representations that were made by a person who had personal knowledge of an asserted fact. The headings (being headings of Parts and Divisions), which are part of the Act (s 35(1) of the Interpretation Act 1987 (NSW)), indicate that such representations constitute “first-hand hearsay”.
Division 2 of Pt 3.2 provides for various exceptions to the hearsay rule for first-hand hearsay. These include where a person who made a previous representation is not available to give evidence about an asserted fact (s 63); or in civil proceedings where a person who made a previous representation is available to give evidence but it would not be reasonably practical to call that person to give evidence or if the person does give evidence (s 64).
Part 3.4 of the Evidence Act, entitled “Admissions” provides, in s 81(1), that the hearsay rule does not apply to evidence of an admission or to a previous representation that was made in relation to the admission at, or shortly before or after, the time the admission was made and to which it is necessary to refer to understand the admission.
Section 82 provides:
82 Exclusion of evidence of admissions that is not first-hand
Section 81 does not prevent the application of the hearsay rule to evidence of an admission unless—
(a) it is given by a person who saw, heard or otherwise perceived the admission being made, or
(b) it is a document in which the admission is made.
The heading of s 82 is not part of the Act: s 35 of the Interpretation Act. However, it is extrinsic evidence which can be considered in its interpretation: s 34 of the Interpretation Act. Its effect is to confirm that s 81 applies to first-hand hearsay but not to second-hand hearsay. This is significant to ground 2, which concerns the interrelationship between s 54(5) of the Act and s 81 of the Evidence Act. For the reasons given below with respect to ground 2, I consider that the effect of s 54(5) of the Act is to render the transcript of an examination under the Act first-hand hearsay, with the consequence that an admission in a transcript is admissible to prove the truth of the contents under s 81 of the Evidence Act.
Section 135 confers a general discretion on the court to refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might be, relevantly, unfairly prejudicial to a party.
Section 136 provides that the court may limit the use to be made of evidence if there is a danger that a particular use of the evidence might be, relevantly, unfairly prejudicial to a party.
Section 144(1) provides:
144 Matters of common knowledge
(1) Proof is not required about knowledge that is not reasonably open to question and is—
(a) common knowledge in the locality in which the proceeding is being held or generally, or
(b) capable of verification by reference to a document the authority of which cannot reasonably be questioned.
The Commission relied on evidence given by affidavit which annexed relevant documents. It also qualified an expert forensic accountant, Ryan Bull, to analyse the figures in the documentary material. Mr Bull calculated the appellant’s total expenditure during the relevant period, as established by the evidence and deducted an amount which he considered to be referable to sources unrelated to his illegal activity.
Mr Bull’s final figures, at the conclusion of the hearing, were:
| Total expenditure | $10,916,264.79 | | Legitimately sourced funds | ($6,221,425.88) | | Net assessment of proceeds | $4,694,838.91 |
Mr Bull’s figure for total expenditure included a figure of $546,095, which was based on Detective Inspector Paul O’Neill’s evidence of the value of the drugs found in the appellant’s possession at the time of his arrest. The Commission adduced evidence from Detective Inspector O’Neill, who gave a range of figures for 1kg of each of heroin and cocaine. He adopted the lower end of each of the two ranges and applied the figure per kilogram to the precise quantities which were found in the appellant’s factory at the time of his arrest, which gave rise to a figure of $546,095. In cross-examination, Detective Inspector O’Neill accepted that there was no evidence that the appellant had paid for the drugs which were found in his possession.
Before the primary judge, the appellant argued that the presumption in s 28(2) did not create a presumption that the drugs in his possession were owned by him or constituted part of his property. He submitted that, accordingly, the figure of $546,095 was overstated because it was based on the assumption that he owned the drugs when his interest had not been shown to be more than a possessory interest.
In ground 2, the appellant challenged the primary judge’s ruling on two bases: that his Honour had not included reasons in the final judgment for the ruling and that the ruling was premised on an incorrect interpretation of s 54(5) of the Act and ss 59, 81 and 82 of the Evidence Act. Although ultimately the appellant did not press the challenge that no reasons had been given, it is useful to summarise how the question was dealt with in the Court below.
The Commission tendered the transcript of the compulsory examination of the appellant which was conducted on 4 February 2020 pursuant to an order made under s 12(1)(b). It relied on certain answers given by the appellant to the effect that he had paid, either directly or through Ms Karout, about $23,000 per month to Ms Taylor. The Commission submitted that the transcript was admissible under s 54(5), as the appellant’s statements about what he had paid Ms Taylor were admissions and therefore admissible under s 81 of the Evidence Act as an exception to the hearsay rule. The Commission also relied on the transcript for what it alleged were the appellant’s implied admissions as to the “loans”. It relied on the appellant’s inability to give any detail about the loans in his compulsory examination, which was inconsistent with the evidence he adduced from witnesses in his case about the transactions and therefore amounted to implied admissions in the sense considered in Woon v The Queen (1964) 109 CLR 529; [1964] HCA 23.
Mr Lange SC, who appeared on behalf of the appellant in the Court below and with Mr James KC in this Court, accepted that the answers given by the appellant which were recorded in the transcript were admissions as they were against interest but relied on s 59(1) of the Evidence Act, which contains the hearsay rule (that evidence of a previous representation is not admissible to prove the truth of its contents).
However, he objected on the basis that the transcript was “second-hand hearsay” under s 82 of the Evidence Act and that, accordingly, s 81 of the Evidence Act, which provides that admissions are an exception to the hearsay rule, does not apply. Mr Lange submitted that, putting aside s 54(5), the transcript would not be admissible against the appellant and that s 54(5) did not remedy the problem because it could not be established that the appellant wrote the transcript and therefore his answers are second-hand hearsay.
The discussion between Mr Lange and the primary judge over the admissibility of the transcript to prove the truth of the admissions made by the appellant was recorded over ten pages of transcript.
Mr Lange submitted that the answers given by the appellant in the transcript of the examination were representations “contained in a document”. He relied on cl 6 of Pt 2 of the Dictionary to the to submit that a representation contained in a document is only “taken to have been made by the person if the document was written, made, or otherwise produced by the person”. Mr Lange further submitted that the only effect of s 54(5) was to enable the transcript to be tendered to prove that the words were said but that it was a separate question whether the representations were admissible to prove the truth of the contents.
… if you want to prove against a person an admission, you have to have [prove] that he … said it. In some cases, you might have evidence from someone in a prison who overhead him say it. You’d have to call that person to prove he said it. In another case, it might be something he said to a police officer during the execution of a warrant. You’d have to call the police officer to know he said it, or play back the crime scene video. But otherwise, you might prove that he said it in a letter and signed the thing, and bring in this definition. But here, you’ve got proof that he said it before the registrar, and 54(5) says that it is proof that he said it before the registrar.
… the transcript, once tendered to me, is evidence that he gave those answers.
LANGE: Similarly, if a person were to give second-hand hearsay - a witness comes to Court and says another person said that the defendant had said, “I pay $23,000” that’s evidence that the defendant said that he paid $23,000.
HIS HONOUR: That’s second-hand hearsay because the witness before the Court is saying “X told me that Mr Karout said this.”
… in accordance with s 54(5), the transcript is evidence of the representation. But that’s as far as it goes and one still needs to consider whether it is admissible notwithstanding s 59 [of the Evidence Act]. Section 59 prima facie makes the transcript inadmissible since there is a previous representation of the defendant. But for reasons I’ve explained beforehand, for the purpose of the Evidence Act, the transcript is not a previous representation made by the defendant because of what’s contained in the dictionary. Again, here, to look strictly at s 59; “evidence of a previous representation made by a person” picks up what I referred to earlier … “a representation contained in a document is taken to have been made by a person if” and neither of those subclauses [in s 82(a) or (b)] are satisfied …
one has to combine 81 with the dictionary which requires that there be a previous representation. What is that previous representation? If it is what’s contained in the transcript, although it proves that the defendant said it, that’s not his representation.
HIS HONOUR: No. The representation was oral. The section tells me that the transcript is evidence of it; I can receive that evidence of it. It simply has the effect, 54(5), as I would read it, that Mr English doesn’t need to call the stenographer, he doesn’t need to issue a subpoena to the Reporting Services Branch; I was there and I heard it. He doesn’t need to call counsel who asked the questions and made a note of the answers or the instructing solicitor. He can just tender the transcript and there it is, there is evidence that your client made these oral representations. That’s how it seems to me.
LANGE: Your Honour has my submission.
HIS HONOUR: Thank you, Mr Lange. I’m against you. I think that so far is what is said in the examination, as recorded in the transcript, can be proved by the transcript to the extent that it constitutes admissions against interest by Mr Karout. I’ll give reasons for that in my judgment on the whole case.
| Date | Amount | Account from which paid | Form of transfer | | 14 Sep 15 | $12,500 | Appellant and Ms Taylor’s joint account with ANZ | Electronic transfer of $25,000 | | 14 Sep 15 | $1,500 | Appellant’s Westpac account | Electronic transfer | | 14 Sep 15 | $117,900 | Appellant’s Westpac account | Bank cheque | | 2 Oct 15 | $50,005 | Appellant and Ms Taylor’s joint account with ANZ | Bank cheque for $100,010 | | TOTAL | $181,905 | | |
| Person | Amount | Alleged circumstances | | Mr Barton | $123,000 | Alleged loans. | | Mr Samia | $250,000 | Alleged loans. | | Ms Elgammal | $1,070,000 | Alleged loan. |
The appellant did not give evidence in the proceedings before Fagan J. He relied on evidence from Mr Barton, Mr Samia, Ms Elgammal as to these amounts. The appellant also relied on the evidence of Ms Karout (as to expenditure incurred by the appellant during the relevant period relating to maintenance payments made to Ms Taylor). Each of these witnesses was cross-examined.
The appellant also qualified an expert forensic accountant, Owain Stone, who prepared a joint report with Mr Bull and gave concurrent evidence.
Ms Karout gave evidence that she met the appellant in 2011. They married in February 2012 and had three children. From early 2012, she was the book-keeper for KK Industries Pty Ltd and was the appellant’s personal assistant. She had access to the books and records of the company and provided documents to the accountant for the preparation of the company’s tax returns. She said that she had no knowledge of the appellant’s commission of the offences of possession of border-controlled drugs (until after his arrest).
Ms Karout was asked about the payments to Ms Taylor in the following exchange:
Q. Yes, and you were aware from time to time he’d make payments in cash to Bernadette Taylor?
A. No. I’d - if he’d given her cash, or if he had or hadn’t, I wouldn’t have known. I never - I transferred money to her, but I don’t think so, because if he would have, then why would I be transferring money?
She said of transfers made from accounts in the name of the appellant or his company made after his arrest (on 11 September 2015) that she was making the payments because the appellant was in prison at the time. She agreed that, after the relevant period, she transferred $3,500 to Ms Taylor on the first of every month, as evident from the bank statements from 3 December 2016 to 1 April 2018, when the appellant was in custody.
Ms Karout was not asked whether she was authorised to operate the joint account held by the appellant and Ms Taylor at ANZ Bank or whether she had made the transfers in the period from 14 September 2015 to 2 October 2016 from that joint account or the Westpac bank account in the appellant’s name.
The appellant also tendered paragraphs 37-57 of an affidavit sworn on 14 June 2019 by Ms Taylor (who identified herself in that affidavit as Bernadette Karout) in Family Court proceedings against the appellant in which she deposed to the spousal maintenance that the appellant had paid her. The Commission was a party to those proceedings, which were commenced in 2019, because of the restraining order over the appellant’s property, which had been made on 27 October 2015.
In that affidavit, Ms Taylor deposed in paragraph 37:
Since November/December 2004 until September 2015, I have been solely reliant on Kaldon for mine and the children’s support. In or around November/December 2004, it was agreed between Kaldon and I that I would give up my employment. We had a conversation using words to the following affect:-
Kaldon said: *“*I want you to quit your job. I don ‘t like that you are working in a pub where men are staring at you all day.”
I said: “I enjoy working there. What will I do for money if I left?”
Kaldon said: “I will fully support you. Instead of working, you can help me with all the things I don’t have time to do because of my work”
I said: “Ok.”
Kaldon generally gave me $1,000 cash at a time whenever I ran out of money.
This is the only part of Ms Taylor’s affidavit that was in evidence before the primary judge which related to the relevant period.
Ms Taylor also deposed that in late 2016, early 2017, she told the appellant (who was then in custody) that she was running out of money. She deposed:
From 3 January 2017, Kaldon gave me $3,000 per month for the children and myself. Kaldon’s secretary Nari [Ms Karout], now his partner, transferred the money to me. Approximately 6 months later Kaldon said to me words to the effect of “I will increase it to $3,500 a month but now you will be responsible for paying electricity, gas and water.” Kaldon stopped paying the gas, water and electricity bills and arranged for Nari to change all the bills into my sole name. Kaldon did continue to pay the rates, expenses for my Porsche and our private health insurance.
… it was considered, but the direct evidence of Mr Karout was preferred over any of this which generally dealt with the period post the 27 October 2015 period.
HIS HONOUR: Both [Ms Taylor’s] evidence and the evidence of Nariman Karout, both seem to me really to be directed to a period after the close of the relevant period. All of the evidence of Mr Karout’s wife concerned payments out of $3,500 a month or so from various accounts after the close of the period that we’re looking at. Most of what Ms Taylor deposed to is about that, as well. She did say at the beginning - para 37 - that from about November or December 2004 right through until his arrest September 15, she’d been solely reliant upon Mr Karout, but that just started with a payment of $1,000 in cash, given it whenever he ran out of money. Then everything after that is about May 16 20 onwards, isn’t it?
LANGE: Correct, but the reason, in my submission, why this material is important is the following. Could I put aside for one moment para 37, but what I submit it there’s a consistency in accounts given by Ms [Taylor] and Ms Nariman [Karout]. That is, that there were payments of $3,000 initially, going up to $3,500. The timing matches, as does the date upon which the payments ceased. For that reason, your Honour, my submission ultimately would be the Court would accept the evidence of both of these witnesses. …
It’s, of course, upon my learned friend, Mr English, to establish on the balance the expenditure, and what one has is, on the one hand, the evidence of the defendant about whom, I’ll submit, had limited access to records; was being asked about matters years after the events and made complaint about that, and on the other hand, the evidence of the former wife who says that the defendant gave $1,000 cash whenever she ran out of money. It’s for my learned [friend], obviously, to prove what the extent of the expenditure is, and in my submission, when one considers para 37, there’s very little one can conclude other than that there was a payment in excess of $1,000, in [effect].
Whether it’s $2,000, $20,000 or $50,000 cannot be determined based on this evidence. In my submission, ultimately the Court, I will be arguing, will prefer this evidence, [Ms Taylor’s] account being entirely consistent with what happens after the incarceration of the defendants as explained by Ms Nariman.
Ms Elgammal’s affidavit was a short, typed document which included the typed date “7 March 2025” (being the date of the draft which was provided to Mr Stone). This date was struck through by hand and “7 April 2025” written in hand beside it.
Ms Elgammal deposed that she had known the appellant for about 20 years and that he was a family friend whom she met through her son. She deposed in the balance of her affidavit (which comprised her entire evidence in chief) as follows:
2 In about August 2015, my niece, Amanda Elgammal (Amanda) and I agreed to loan Kaldon the sum of $1,070,000 to assist him in purchasing a property at [Kogarah].
3. On 15 August 2014, Amanda and I settled on the sale of the property located at [Hurstville].
4. At the time of the settlement of the Hurstville Property, Amanda and I instructed our solicitors to pay the amount of $1,070,000 from the net sale proceeds of the Hurstville Property to Kaldon.
5 The amount of $1,070,000 remains owing by Kaldon to me and Amanda.
In cross-examination, Ms Elgammal corrected the spelling of her name as it appeared in her affidavit (and said it was “Hanan”, not “Hannan”). She was asked when she was first asked to swear an affidavit in the proceedings, to which she answered that she did not know. She then said that it was “two weeks ago”. She then said that she was looking for her “notebook” (she was giving evidence remotely) to see what she had written and then said that she had been asked at “the beginning of March”. It was revealed that the “notebook” to which she was referring appeared to be the affidavit itself.
Also in cross-examination, Ms Elgammal said that she was a director of a company called Beppercorn, which develops properties. Her children were involved in the companies. She said that in 2014 and 2015 she was working as a driver and had “a school run” for which she was paid a wage but said that she could not remember, even approximately, how much she earned. She said that in 2014, she and her husband, who worked as a taxi driver, owned their own home which was subject to a mortgage which her husband paid. She later said that the house was solely in her husband’s name and that he bought it 50 years ago when he first came to Australia.
She agreed that $1 million would have been enough to pay off her mortgage. Ms Elgammal said that she knew that her son was working with the appellant but said that she did not know “what happened between them”. She confirmed that she did not write anything down to record the loan she made to the appellant. She also said that she did not know whether any interest was going to be charged, but that the appellant said that he would pay interest to her when he repaid the loan in a year. She said that the loan had still not been repaid and that she did not know how much the interest was because she had not been repaid.
Ms Elgammal declined when she was asked whether there was anything she wanted to correct in her affidavit. However, she agreed that it contained a mistake in that she had advanced the funds to the appellant on 22 August 2014 rather than, as stated in her affidavit, August 2015. She admitted that she had purchased property with the appellant before but said that she had difficulty remembering the details of what it was sold for or for how long it had been held. She said that the money for the purchase of the Hurstville property came from the bank but then said that it came from her husband and her children. Ms Elgammal said that the loan to the appellant had nothing to do with her niece and that she did not tell her about the loan. She said that her niece was not involved in the negotiations, although she had owned the Hurstville property with her niece. She said she could not remember in what proportions she and the niece had owned the property.
Ms Elgammal said first that she had never discussed the loan to the appellant with her husband although she had discussed it with her son. Shortly after she had given these answers, the following exchange occurred:
Q. Have you never thought to raise it with your husband that maybe there might be a way to assist with repayment of the mortgage that’s on the house--
A. My husband, no, but I’m never discuss with my husband. My husband know all about it, but I’m not ever give him any detail extra because I don’t want to make him stress too much.
My submission is that even if your Honour is not satisfied about the loan arrangement, and when I say, “satisfied”, satisfied to the requisite standard again, that does not prove positively that there was an arrangement related to an illegal activity or activities. Rather, there’s an absence of evidence.
A Whether the value of drugs, $546,095, should be included as proceeds of crime.
B Whether payments to Ms Taylor of $719,832 should be included as expenditure.
C Whether $1,070,000 received by the defendant from Ms Elgammal was a loan which should be added to legitimate income.
D Whether $17,000 paid by Mr Issa to the defendant should be added to legitimate income [no longer relevant on appeal.]
E Whether $250,000 received by the defendant from Mr Samia was a loan that should be added to legitimate income.
F Whether $123,000 received by the defendant from Mr Barton and Ms Sin was a loan that should be added to legitimate income and whether sundry other deposits to the defendant’s personal bank accounts should be reclassified.
Through his involvement in the illegal activity of which he was convicted on 1 June 2018, the defendant acquired an “interest” of possession in the drugs, or at least he obtained the “benefit” of that possession. The value of his interest or benefit was as calculated by Mr Bull, adopting the lower end of DI O’Neill’s value range. The amount calculated should more accurately be brought to account under s 28(1)(a)-(c), rather than in the summation of expenditure under s 28(3). That consideration makes no arithmetic difference. No reduction of the end result of Mr Bull’s analysis is required in relation to accounting for the value of the drugs.
Over objection from the defendant, I ruled the transcript of that evidence admissible pursuant to s 54(5) of the Act to prove the answers given by the defendant, which constitute admissions against his interest and are evidence of the truth of the matters he asserted.
The primary judge accepted these admissions as reliable. His Honour found that Mr Bull’s assessment of the appellant’s expenditure related to Ms Taylor’s maintenance ought be accepted with an adjustment for the amount by which it exceeded $23,000 per month. The primary judge allowed an amount of $627,653 (Mr Bull’s figure of $719,832 for the appellant’s expenditure on Ms Taylor less the adjustment made by the primary judge of $92,179: J [39]). The appellant did not challenge this adjustment although he challenged the global figure.
The primary judge reviewed Ms Karout’s evidence about the payments to Ms Taylor. His Honour noted that Ms Karout was the book-keeper for KK Industries Pty Ltd (the company through which the appellant carried on a building business) and remained in that role after she commenced a relationship with the appellant in early 2012. She continued to manage his affairs after he went into custody following his arrest on 11 September 2015.
His Honour summarised the effect of her evidence and why he accepted the appellant’s admissions, as follows:
28 Ms Karout deposed that from about mid-2016 she acted upon a request from the defendant that she should transfer $3,500 per month to Ms Taylor for living expenses of Ms Taylor and the two children. Ms Karout identified banking records showing transfers that varied between $500 and $4000, commencing on 3 December 2016 and continuing to 1 April 2018. All transfers to Ms Taylor identified by Ms Karout, totalling $59,500 on the bank records, took place after the period in respect of which the Court is required to make its assessment of criminal proceeds. Ms Karout’s evidence in that respect does not invalidate the plaintiff’s reliance upon the defendant’s admissions before the registrar regarding maintenance payments that he made during the assessment period.
29 Ms Karout deposed that she did not make any payments to Ms Taylor, in cash or otherwise, prior to those for which she identified banking transactions commencing in December 2016. She deposed that the defendant’s statement during his examination that payments of $23,500 per month to Ms Taylor “via my current partner” continued “till probably 2017” was incorrect. Her evidence is inconsistent with the defendant’s answers before the registrar to the effect that payments were made to Ms Taylor from Ms Karout’s bank account prior to his arrest on 11 September 2015.
30 Mr Bull made his calculations by financial years. The assessment period comprised 222 days (from 21 November 2012 to 30 June 2013) in the financial year ended 30 June 2013 (FY13), the whole of FY14 and FY15 and 119 days in FY16 (from 1 July 2015 to 27 October 2015). Mr Bull converted $23,000 per month to a daily rate in order to calculate an amount for part of FY13. The disputed amount of $719,832 consists of the amount so calculated for FY13 and for the two full years FY14 and FY15. In the 119 days of FY16 bank records were found for total payments to Ms Taylor of $181,905. For those 119 days, $23,000 per month would have come to only $89,726. Mr Bull counted the higher figure, $181,905, towards total expenditure for the purposes of s 28(3) and there is no dispute about his having done so. He did not ascribe any additional expenditure for Ms Taylor’s maintenance at the rate of $23,000 per month for FY16.
31 Ms Karout’s evidence does not contradict or qualify the essential admission by the defendant under examination that he paid Ms Taylor approximately $23,000 per month prior to his incarceration. His erroneous assertion that this continued up to 2017 does not detract from the essential admission. Nor is the admission of $23,000 per month negated by his incorrect statement that payments at that rate were made from Ms Karout’s bank account prior to his imprisonment. The defendant’s admission does not lose its evidentiary force from the circumstance that he appears to have confused the method of payment by which the reduced allowance of about $3,500 per month was made while he was in prison with the method of payment of the higher monthly amount at earlier times.
32 There is every reason to treat what I call the defendant’s essential admission as reliable. His generosity to Ms Taylor and the two children is shown by the payments during the first four months of FY16, substantiated by bank transactions. The bulk of the FY16 payments, $119,400, were transferred from a personal Westpac bank account in the name of the defendant. The remaining $62,505 was constituted by the defendant’s half share of two transfers that were made from an account in the joint names of the defendant and Ms Taylor.
33 Further, the defendant had the capacity to be as generous as his admissions indicated. Excluding the sum in issue with respect to Ms Taylor, his total expenditure over two years and 11 months was $10.2 million, a rate of about $3.4 million per annum. His admission that he paid Ms Taylor the equivalent of $276,000 per annum, for the support of herself and his two children, can readily be accepted. Ms Karout said she was unaware of the defendant’s dealings with illegal drugs and I infer that she would not have been privy to amounts of cash that were at his disposal from that source. Ms Karout said that the defendant took care of payments to Ms Taylor before he went to prison and I infer that they would likely have been in cash, of which Ms Karout would have been kept ignorant.
…
39 However, whilst Mr Bull’s procedure of dividing the assessment period into financial years has been convenient for purposes of calculation, it has led to an overstatement. At its highest the defendant admitted under examination to an approximate amount of $23,000 per month. He did not say the amount paid was the same every month. It is consistent with his evidence that there would have been large and small payments from time to time, equating to the monthly amount on average. Recognising that limitation of his admissions, the amount by which the $181,905 in FY16 exceeded $23,000 per month for those 119 days should have been credited against the ascribed monthly expenditure overall. The excess is $181,905 - $89,726 = $92,179. Mr Bull’s total expenditure figure for the calculation under s 28(3) should be reduced by that amount. In other words, instead of crediting the $181,905 of documented payments only towards the $23,000 per month during the first four months of FY16, that sum should be credited towards the calculation of $23,000 per month for the whole of the assessment period. On that consideration, I will reduce Mr Bull’s total expenditure by $92,179.
The primary judge did not expressly address the affidavit evidence of Ms Taylor from the Family Court proceedings which the appellant had tendered.
The primary judge also drew a Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 inference against the appellant as he did not give evidence. His Honour rejected the submission made by Mr Lange on behalf of the appellant that his failure to give evidence was explained by the circumstance that, by subjecting himself to cross-examination, he would be exposed to self-incrimination. No challenge is made to that finding in the notice of appeal. However, the appellant now seeks (by an amended notice of appeal) to contend that the appellant did give evidence in the hearing before the primary judge because his admissions were tendered.
The answers given in cross-examination in my view only increased the implausibility of the witness’ evidence as deposed in her affidavit. Taken as a whole what Ms Elgammal said about the transfer of $1,070,000 being a loan to the defendant is fatuous and unacceptable. Without credible evidence of the asserted character of the transfer it is unexplained and the Court cannot be satisfied on the balance of probabilities that the money came from sources other than illegal activity.
However, where the bulk of the proceeds were so freely passed over to the first defendant, in circumstances that I am not persuaded gave rise to a loan, the evidence tends toward a probability that the property was the defendant**’s beneficially, at least as to $1,070,000 of its value. There is nothing in the evidence to persuade the Court that the circumstances of the defendant holding that interest in the property involved funds originating from legitimate activity**.
Again with respect to this issue, the principles in Jones v Dunkel are engaged. I infer that if the defendant had been called, his evidence would not have assisted his case that the $1,070,000 had a legitimate origin in a loan of funds belonging to Ms Elgammal. Further, the inference that the [Hurstville property], or at least $1,070,000 of its value, was beneficially owned by the defendant is the more readily drawn and leaves the proposition of derivation from legitimate sources unproven.
(Emphasis added to indicate the passages relied on for ground 5.)
The Court is asked to accept Mr Samia’s superficial affidavit evidence, of undocumented loans totalling $250,000 with no commercial terms, in the absence of any plausible explanation as to why he, a businessman and property developer, would have advanced this significant sum so improvidently, without agreement upon terms that are basic to the commercial interests of any lender. Mr Samia deposed that he has known the defendant for more than 20 years. That of itself provides no explanation that could give plausibility to the highly improbable transactions with the defendant that Mr Samia describes.
(Emphasis added to indicate the passage relied on by the appellant in support of ground 6.)
On appeal, the appellant submitted that the primary judge was in error in allowing the full value of the drugs in the appellant’s possession since there was no evidence that he actually owned, rather than merely possessed, them. He submitted that the primary judge’s reliance on s 28(1)(a) was misplaced because the value of an interest in property depends on the nature of the interest and that it ought not be assumed from possession that the appellant owned the drugs. Further, he submitted that the only effect of s 28(1)(c) was to facilitate proof of value by permitting the value to be proved by evidence of the value of a “similar” drug and that s 28(1)(c) did not authorise a finding that the value of a drug was its full market value in circumstances where the Commission could not show that the appellant actually owned it.
The appellant also argued that it was significant that the primary judge focussed on s 28(1)(a)-(c), rather than s 28(3) because it indicated that the primary judge rejected the suggestion that the appellant must have expended monies equivalent to the value of the prohibited drugs in order to gain possession. He argued that the value of the appellant’s interest in the drugs depended on whether the drugs were owned outright, had been received on consignment or as part of a bailment arrangement. He submitted that the Commission had failed to prove the extent of the appellant’s interest in the drugs and that, accordingly, the primary judge was in error in taking into account the $546,095 in the assessment.
The appellant pleaded guilty to two offences of supply. His conviction was established by a certificate of conviction pursuant to ss 178 and 92(2) of the Evidence Act and s 54(2) of the Act. This also established the elements of the offences: The Prothonotary of the Supreme Court of New South Wales v Sukkar [2007] NSWCA 341 at [9] (Hodgson JA, Tobias JA agreeing). The appellant accepted that he possessed the drugs for the purposes of supply.
Ownership of personal property can be proved to a prima facie level by proof of possession: Russell v Wilson (1923) 33 CLR 538 at 546 (Isaacs and Rich JJ); [1923] HCA 60; Cross on Evidence (9th ed, 2012, LexisNexis Australia) at [41125]; Gatward v Alley (1940) 40 SR (NSW) 174 at 179; Hocking v Director-General of the National Archives of Australia (2020) 271 CLR 1; [2020] HCA 19 at [91] (Edelman J). As the appellant’s possession of the drugs was proved by the certificate of conviction, it was for him to establish that someone else owned them since possession, in this context, is sufficient, without more, to prove ownership.
The appellant adduced no evidence to displace the presumption (which operates in the proceedings for a proceeds assessment order, which are civil proceedings) that, as the person in possession of the prohibited drugs, he was also their owner. Accordingly, the submission that his interest in the drugs amounted to less than full ownership was devoid of evidentiary foundation and, therefore, entirely speculative. Further, such evidence as was available tended to bolster the inference of ownership arising from possession since the drugs were found in a factory which the appellant owned and controlled which had been constructed on land of which he was the sole registered proprietor.
The appellant submitted that the primary judge was in error in admitting the appellant’s admissions in the transcript as truth of their contents and also that his Honour had failed to give reasons for the ruling, despite indicating that he would do so in the final judgment.
I understood the appellant to accept in oral argument in this Court that, since the correctness standard applies to the admissibility of the transcript to prove the content of the admissions made by the appellant which were recorded in it, it is not to the point that the primary judge did not give reasons in the final judgment for the ruling that the transcript was admissible for that purpose. Further, the primary judge was not obliged to give separate reasons for the ruling in the final judgment, since his Honour was entitled to say, as is a not uncommon practice, that the reasons for the ruling sufficiently appear from the transcript of argument. The extracts from the transcript of the hearing in the Court below which are reproduced above indicate that the primary judge put to Mr Lange each of the matters on the basis of which he considered the evidence admissible to prove the truth of the admissions and that Mr Lange’s submissions were insufficient to persuade the primary judge to the contrary.
The importance of the transcript of the examination to the Commission’s case and the length of the argument as to its admissibility was such that the primary judge was, in my view, required to give reasons for the ruling: cf. Soulemezis v Dudley *(*Holdings) Pty Ltd (1987) 10 NSWLR 247 at 279 (McHugh JA). However, his Honour sufficiently exposed the reasoning in the transcript of the proceedings and it was not necessary for his Honour to repeat these reasons in the final judgment. Ultimately, the appellant indicated that he did not press his complaint about lack of reasons.
The appellant argued that the transcript could only be tendered to prove that the statement was made but could not be tendered to prove the truth of its contents because, although the transcript contained admissions, s 82 prohibited its use to prove the truth of the contents of the appellant’s admissions because the transcript was, at best, second-hand hearsay. The appellant also argued that, if the legislature had intended to displace the Evidence Act, it would have used express language, as was used in s 28C(12) of the Act.
It is for this Court to determine whether the primary judge was in error in ruling that the transcript of the admissions made by the appellant in his examination was admissible to prove the truth of their contents. For the reasons which follow, I consider that the primary judge was correct to rule that the admissions in the transcript of the examination were admissible, substantially for the reasons his Honour gave in the course of debate, extracted above. My reasons for agreeing with, and finding no error in, the primary judge’s ruling are as follows.
The starting point is that the answers in the examination were previous representations by the appellant, which were prima facie inadmissible in so far as they were used for a hearsay purpose: s 59 of the Evidence Act. However, as they were statements against his interest, they fell within the exception to the hearsay rule because they constituted admissions: s 81 of the Evidence Act. This exception does not apply if the evidence is not first-hand hearsay: s 82 of the Evidence Act.
The distinction between first-hand hearsay and second-hand hearsay, which was important in the common law, has been maintained in the Evidence Act. The meaning of these terms can be illustrated by the following example. If X tells Y that she heard Z admitting to killing A, X’s evidence of what she heard is first-hand hearsay of Z’s admission and Y’s evidence of what X told her is second-hand hearsay of the admission. X’s evidence of what Z said is admissible to prove that Z said that he killed A. Y’s evidence of what X said is only admissible to prove that X told Y what she heard Z say. At common law, X’s evidence of Z’s admission would be admissible to prove the truth of its contents (that Z killed A) because first-hand hearsay of an admission was an exception to the rule against hearsay: Cross on Evidence, [33430]. The same position would apply under the Evidence Act because of s 81. Y’s evidence of what X told her would not be admissible to prove the truth of the contents of the admission as it would be second-hand hearsay and therefore excluded by s 82 of the Evidence Act.
Section 82(b) of the Evidence Act does not apply since the transcript is not “a document in which the admission is ” for the purposes of that section: (2009) 176 FCR 529; [2009] FCA 424 at [32] (Gilmour J). Rather, it is a document in which the admission was : [2001] FCA 223; (2001) 186 ALR 369 () at [8] (R D Nicholson J). In , it was held that field notes recording communications made to an anthropologist by members of an appellant group were not documents in which the admissions were made. Therefore, it is not to the point that the requirements in s 82(b) have not been met in the present case, as they would need to be if the representation was made (as distinct from recorded) in a document: *(* [2000] FCA 1903; (2000) 181 ALR 108 at [22] (Heerey J); cited with approval in *(* (2016) 240 FCR 13; [2016] FCA 466 at [19] (Yates J).
The Commission’s submission in writing to this Court – that the statements made by the appellant in his examination did not constitute “previous representations” within the meaning of the Evidence Act because they were made in the course of giving evidence in the proceeding, being the proceeding in which the proceeds assessment order was sought – was expressly abandoned at the commencement of the hearing of the appeal in this Court. Mr English, who appeared on behalf of the Commission in the Court below and in this Court with Ms Dunlop, indicated that the Commission accepted the correctness of authorities to the contrary, including Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (2008) 167 FCR 314; [2008] FCA 369 (Hoy Mobile).
However, the appellant chose to adopt the submission and filed an amended notice of appeal which included three new grounds as follows:
9 His Honour erred in concluding that the assertions made by the appellant during his compulsory examination under s 12 [of the Act] were admissible, since they did not amount to “previous representations”, as that expression is defined by the Evidence Act 1995.
10 If the transcript of the appellant’s compulsory examination was admissible, then his Honour erred in directing himself in accordance with the principles expressed in Jones v. Dunkel.
11 His Honour misused his advantage by taking into account, when assessing the credit of the appellant’s witnesses, the appellant’s asserted failure to give evidence.
I reject the submission that the appellant gave evidence in the proceedings before the primary judge. The circumstance that a person is examined before a Registrar pursuant to an order made under ss 12 or 31D in proceedings does not make the answers given, evidence in the proceedings for a proceeds assessment order before the primary judge. Nor does it have the effect that, by answering questions put to him in the examination, the appellant has become a witness in the proceedings before the primary judge. My reasons for this conclusion are as follows.
The question whether the appellant’s answers in the examination are “previous representations” turns on whether his being examined had the effect that he gave evidence in the proceeding, being the proceeding in which the proceeds assessment order was sought.
The word “proceedings” is capable of various meanings. As Kirk JA said in Attorney General for New South Wales v Haines *(*BHT Barbara Ramjan) [2025] NSWCA 231:
The word “proceedings” is capable of applying to the matter, so as to encompass any appeal. The word “proceeding” can also be used so as to mean “merely some method permitted by law for moving a Court or judicial officer to some authorized act, or some act of the Court or judicial officer”: Cheney v Spooner (1929) 41 CLR 532 at 536-537; [1929] HCA 12. Thus in various other contexts it has been held by this Court that an appeal is a separate “proceeding”: Distinctive FX 9 Pty Limited v Statewide Developments Pty Limited [2012] NSWCA 393 at [11]; Diveva Pty Limited v Nominal Defendant [2013] NSWCA 325 at [90]; Taouk v Assure (NSW) Pty Ltd [2019] NSWCA 224 at [3]; Keynes Capital Global Limited v Guo (No 2) [2020] NSWCA 336 at [9].
Thus, for example, it was held in Rodden v R (2023) 112 NSWLR 162; [2023] NSWCCA 202 that an application for a costs certificate under the Costs in Criminal Cases Act 1967 (NSW) fell within the description of a “method permitted by law for moving a Court or judicial officer to some authorized act” but that the order to dismiss the application was one that was given or made in the proceedings for the prosecution of the offender on indictment: [86] and [97].
While the examination was, in a broad sense, conducted in the same proceeding as the application for the proceeds assessment order, the answers given by the appellant in the course of the examination did not amount to his giving evidence in the proceeding in which evidence of the representation was sought to be adduced. His answers were given in a compulsory examination ordered by the Court under s 12 in which he was required to answer questions put to him by counsel for the Commission.
Even if the appellant had given evidence in an interlocutory hearing in the same proceedings, representations made by him in evidence given on that interlocutory application would not be a representation made in the course of giving evidence in the proceeding in which evidence of the representation is sought to be adduced.
In Hoy Mobile, Rares J was required to determine whether an affidavit read in an interlocutory hearing would be a previous representation within the definition in the Evidence Act. His Honour found at [27] that it would be:
I am of opinion that the proper construction of the definition of ‘previous representation’ in the Act requires that the expression “in the course of giving evidence in the proceeding in which evidence of the representation is sought to be adduced” be treated as a reference to the hearing before the judge, as defined, in which the evidence is sought to be adduced. It does not extend to other hearings or phases, including any interlocutory proceeding, in which the parties have been engaged prior to that hearing. Of course, if a matter is part heard, on the resumption of hearing it is the same proceeding for the purposes of the definition of ‘previous representation’. But where one can readily segregate the interlocutory or other phases of a matter from the trial, proceeding or phase in which the evidence is sought to be adduced, I am of opinion that a representation made before the current hearing is capable of being a previous representation within the meaning of that term in the Act.
… the contents of an affidavit is not evidence adduced in the Court until such time as it has been formally read. That is, the “giving” of the evidence occurs not at the time of swearing or affirming the affidavit, but at the time of being “read” at the hearing of the proceeding, being in this case the hearing of the final relief and not any previous interlocutory stage. Until that time, it remains a previous representation subject both to the hearsay rule and the exception to that rule in the case of admissions.
Grounds 10 and 11 appear to be premised on the assumption that if the admissions in the transcript of the appellant’s compulsory examination were admissible, it had the effect that the appellant had actually given evidence in the proceedings before his Honour and, in that event, no Jones v Dunkel inference (that his evidence would not have assisted his case) was available against him. That the Commission tendered the transcript which contained sworn admissions by the appellant (made in his capacity as an examinee in a compulsory examination ordered by the Court) in support of its application did not make the appellant a witness in the proceedings or constitute his giving evidence in the proceedings before the primary judge. As the appellant was not a witness in the proceedings before the primary judge, his Honour was entitled to draw a Jones v Dunkel inference against him. It was open to his Honour to draw the inference in his consideration of the evidence as a whole, including the evidence adduced by the appellant through witnesses he called. For these reasons, grounds 10 and 11 have not been made out.
Somewhat curiously, the appellant also submitted in his reply submissions that if the statements in the examination were admissible, this would be a reason why the appellant chose not to give evidence before the primary judge. He sought to rely on Chairman*, National Crime Authority & Anor v Flack* (1998) 86 FCR 16 (Flack) in circumstances where the National Crime Authority (NCA) had tendered a transcript of Ms Flack’s compulsory examination at first instance, and had sought to have a Jones v Dunkel inference drawn against her because she had not given evidence.
In Flack, the sum of $433,000 in cash was found secreted in Ms Flack’s residence during the execution of a search warrant. At the time of the discovery of the cash, Ms Flack said that she knew nothing about the money. She was subjected to compulsory examination by the NCA at which she repeated that she knew nothing about the money. A direction was made under s 25(9) of the National Crime Authority Act 1984 (Cth) that the compulsory examination was not to be published. The direction was varied without Ms Flack’s consent and without her having been informed of the proposed variation. Ms Flack commenced civil proceedings against the Chairman of the NCA to establish that, as the money was found in her residence, she had a possessory interest in it which was superior to that of the NCA. To prove her case, Ms Flack tendered her tenancy agreement of her residence and read an affidavit sworn by her solicitor which exhibited the warrant and correspondence with the NCA. It was no part of her case that she had prior knowledge of the presence of the cash in her residence prior to its discovery by the NCA. She did not give evidence in her case.
When the NCA sought to tender the transcript of her compulsory examination in its defence, Ms Flack objected. The trial judge rejected the tender. The Full Federal Court dismissed an appeal by the Chairman of the NCA against the ruling.
Thus the appellants used in civil proceedings against Mrs Flack evidence extracted from her under compulsion of legal powers conferred for a different purpose. In the course of that questioning the NCA could have asked her any questions it wished in relation to the goods in question. The appellants’ argument that it should now get some forensic advantage from Mrs Flack’s declining to submit herself gratuitously to a second examination is not a particularly attractive one.
Flack is distinguishable from the present case in several respects. First, the present case is a proceeding under the Act, whereas Ms Flack’s proceeding was a civil proceeding in which she was the plaintiff. Secondly, the tender of the transcript in proceedings under the Act, such as the present case, was expressly authorised by s 54(5), whereas the tender of the transcript of Ms Flack’s examination was, at best, questionable, if not illegal. In Flack, there were significant limitations on the use that could be made of any information which was revealed in the course of an examination conducted under the National Crime Authority Act (s 25), breach of which amounted to a criminal offence: s 25(12). Thirdly, in Flack there was no relevant inference sought to be drawn in any event which made Jones v Dunkel academic. By contrast, in the present case, the Jones v Dunkel inference arose in circumstances where the appellant adduced evidence from Ms Karout, with a view to contradicting the effect of his admissions in the transcript. The appellant also called evidence from witnesses in his case as to transactions to which he was the counterparty, which was inconsistent with the answers he had given in his compulsory examination.
Further, Flack turned on its particular facts and does not establish any limitation on Jones v Dunkel. In El-Debel v Micheletto *(*Trustee) [2021] FCAFC 117; (2021) 153 ASCR 15, the Full Federal Court (Markovic, Derrington and Colvin JJ), at [216], considered, in the context of bankruptcy proceedings, that while the observations made by Heerey J in Flack were “understandable”, any “absolute” limitation on the application of Jones v Dunkel would be inconsistent with principle.
I do not regard Flack as providing any reason why a Jones v Dunkel inference was not available in the present case. I reject the appellant’s submission that the effect of the Commission’s examination of him resulted in its not being entitled to invite the primary judge to draw a Jones v Dunkel inference against him for not giving evidence in the proceedings for a proceeds assessment order.
The appellant sought to argue orally on appeal that no Jones v Dunkel inference was available against him because he had a reason not to give evidence as he would have subjected himself to the risk of self-incrimination. The primary judge rejected that submission. There is no ground of appeal which challenges this finding. Accordingly, it does not arise for the consideration of this Court.
The appellant submitted that the primary judge’s reasoning amounted to the following: because the appellant admitted to having Ms Karout transfer about $23,000 to Ms Taylor every month, he must have paid her an average amount in that order in cash every month, with some smaller amounts being transferred by Ms Karout. The appellant submitted that, given the absence of evidence of regular cash payments, and given the evidence to the contrary, the primary judge should not have accepted the appellant’s admissions as to the amounts paid to Ms Taylor. The appellant also submitted that the errors in the appellant’s recollection (referred to by the primary judge in J [31]) affected the weight which could be given to the appellant’s alleged admissions in his examination, particularly when he was being asked in 2020 (the time of his examination) about what took place between 2012 and 2015, without resort to his records. He submitted further that the appellant’s suggestion that Ms Karout had transferred about $23,000 to Ms Taylor (after the appellant was taken into custody) was contradicted by Ms Karout and not supported by banking records.
The appellant also submitted that the primary judge’s view that the appellant was, and could afford to be, generous to, Ms Taylor ought to have been affected by the circumstance that three out of the four transfers referred to in J [32] took place within a matter of days of the appellant’s arrest. He submitted that the inference was open that these transactions were carried out by Ms Taylor herself (this proposition could not be put to Ms Taylor, who died before the hearing and could, therefore, not give evidence). Further, he submitted that the appellant’s admissions were contrary to the sworn affidavit evidence given by Ms Taylor in Family Court proceedings (to which the primary judge did not refer in his Honour’s reasons) which he submitted was consistent with Ms Karout’s evidence. The appellant submitted that the evidence of what Ms Karout was paying Ms Taylor from 2016 onwards (after the relevant period) of $3,500 per month was an indication of what Ms Taylor’s expenses were and that there was no reason to suppose that they were greater when the appellant was at liberty (tr 25).
It has long been recognised that the probative value of admissions derives from the circumstance that they are, by definition, statements against the interest of their maker. Parke B said in Slatterie v Pooley (1840) 6 M & W 664 at 669; 151 ER 579 at 580–1 (Exch) (approved in Hart v MacDonald (1910) 10 CLR 417 at 432; [1910] HCA 13):
The reason why such parol statements are admissible, without notice to produce, or accounting for the absence of the written instrument, is, that they are not open to the same objection which belongs to parol evidence from other sources, where the written evidence might have been produced; for such evidence is excluded from the presumption of its untruth, arising from the very nature of the case, where better evidence is withheld; whereas what a party himself admits to be true, may reasonably be presumed to be so.
(Emphasis added.)
The primary judge was, in my view, correct to accept the appellant’s admission that he paid Ms Taylor in the order of $23,000 a month. It was “volunteered” in the sense that, in answering questions in the compulsory examination, he could have said that he needed access to records to determine how much he paid her, but, rather, he was the source of the figure. Therefore the figure of about $23,000 per month had the probative force of being given by the only survivor of the two people who were in a position to know and also being against the interests of that person in the context of the proceedings. Further as, prior to his arrest on 11 September 2015, the appellant dealt almost exclusively in cash (as he admitted in his examination), no one else was in a position to say how much he had paid Ms Taylor in the relevant period.
Importantly, as the primary judge noted in the exchange with Mr Lange shortly prior to the Court adjourning after the close of evidence (set out above), Ms Taylor’s affidavit evidence in the Family Court proceedings that the appellant would give her $1,000 in cash whenever she needed it for the period from 2004 to 2015 did not advance the position since it was consistent, or not inconsistent, with his admission that he paid her about $23,000 per month. In so far as she purported to specify the monthly amount that he paid to her, this post-dated the relevant period. Although the primary judge did not expressly address Ms Taylor’s affidavit in the reasons, it is plain from the transcript that his Honour regarded it as irrelevant. I agree that it was largely irrelevant: it corroborated the appellant’s admission that he paid her in cash until his arrest but did not quantify the payments in the relevant period, saying only that they were paid in amounts of $1,000 at a time.
The figure of $23,000 also derived some support from the fact that a total of $181,905 (comprising $12,500, $1,500, $117,900 and $50,005) was paid to Ms Taylor from 14 September 2015 to 2 October 2015 in that these payments tended to show the appellant’s concern for Ms Taylor’s and his children’s financial position following his arrest. That they were made by electronic transfer and bank cheque can be explained by the circumstance that, as he was in custody, he could not continue the system of paying Ms Taylor from cash in his possession.
It is not reasonable to draw the inference that Ms Taylor herself effected these transfers since there was no evidence that she could operate the joint account but there was evidence (through the appellant’s admissions at the compulsory examination) that Ms Karout (who was not only his partner but also his book-keeper) had access to all of his accounts. Although Ms Karout denied making payments to Ms Taylor other than the payments of $3,500 a month to her from late 2016 to 2018, her evidence (“I never – I transferred money to her, but I don’t think so, because if he would have, then why would I be transferring money”) was equivocal. Further, the appellant’s statement in his compulsory examination that Ms Karout transferred money to Ms Taylor was somewhat ambiguous and inconsistent with his other statements that he always dealt in cash and Ms Taylor’s affidavit evidence that he had always given her money in cash (until his arrest which rendered that method impossible).
Grounds 4-8 can be dealt with together because they each relate to the primary judge’s findings relating to transfers of funds to the appellant by the named individuals.
The grounds are:
4 His Honour erred in failing to be satisfied that the following amounts were monies from other sources, unrelated to an illegal activity or activities, in circumstances where those monies were transferred to the appellant as loans by the witnesses, and, despite the rule in Browne v. Dunn (1893) 6 R 67, it was not suggested to the witnesses by the respondent that they had been involved in any illegal activity:
a. Loan of $1,070,000 from Ms. Hannan [sic, Hanan] Elgammal (at [50]);
b. Payment of $17,000 from Mr Faraj Issa (at [60]) (not pressed);
c. Payments totalling $250,000 from Mr Joseph Samia (at [67]);
d. Payments of $123,000 from Mr Barton/Ms Sin and other transactions (at [86]).
5 His Honour erred (at [48]) in failing to be satisfied that the monies directed to be transferred to the appellant were monies from other sources, unrelated to an illegal activity or activities, in circumstances where those monies were lawfully transferred at the direction of Ms. Elgammal and it was not suggested in evidence that the appellant was the beneficial owner of the property, this despite the rule in Browne v. Dunn (1893) 6 R 67 and in the absence of any evidence that the property had been beneficially owned by the appellant, and in the absence of such a submission by the respondent.
6 In rejecting the evidence of the witnesses Elgammal (at [45]-[47]), Issa (at [58]), Samia (at [66]) and Barton (at [83]), his Honour erred by having regard to supposed practices concerning inter alia loans, their documentation and their repayment, in circumstances where, in accordance with s. 144 Evidence Act 1995 and the principles explained in Holland v. Jones (1917) 23 CLR 149, it was not open to his Honour to take judicial notice of such supposed practices.
7 His Honour mistook the onus, which rested upon the appellant in accordance with s. 28(3) Criminal Assets Recovery Act 1990, as clarified in Vu v. New South Wales Crime Commission [2013] NSWCA 282, as the basis for rejecting the case for the appellant.
8 His Honour erred in failing to accept the evidence of the witnesses Elgammal, Issa, Samia and Barton, and in using the evidence given by the appellant during his compulsory examination held in accordance with s. 12(1) Criminal Assets Recovery Act 1990 only adversely to his case.
The appellant submitted that the primary judge imposed too great a burden on the appellant by requiring him to prove, on the balance of probabilities, the purposes of the various transfers to him. He submitted that the effect of s 28(3) was more limited and required him only to prove the source of the income or money. The appellant submitted that he had discharged this onus by calling the persons who had made the payments to him and showing that that those sources were unrelated to “illegal activity or activities.” Further, the appellant relied on the circumstance that Mr English did not suggest to any of the witnesses that the monies they had transferred to the appellant were in some way related to illegal activity. The appellant submitted that, in those circumstances, the primary judge ought to have accepted that they were not related to any illegal activity.
The effect of s 28(3) is that the Commission’s evidence of a defendant’s expenditure must be treated as proceeds derived from a defendant’s expenditure unless a defendant proves to the Court’s satisfaction that the expenditure was funded from sources unrelated to illegal activity: New South Wales Crime Commission v Vu [2012] NSWSC 129; (2012) 221 A Crim R 445 at [75], [79] (Johnson J); upheld on appeal in Vu v New South Wales Crime Commission [2013] NSWCA 282 (McColl JA, Meagher and Emmett JJA agreeing). In New South Wales Crime Commission v Kelaita (2008) 75 NSWLR 564; [2008] NSWCA 284 at [38], this Court (Allsop P, Giles and Bell JJA agreeing) said:
The assessment task set out in s 28 is an apparently comprehensive and complete regime. Section 28 sets out relevant considerations (s 28(1)) and the kinds of evidence that can be led with relevant consequences (s 28, subss (2) and (3)). For instance, s 28(3) is clear that the Court “is to treat” the amount of expenditure in the period as relevant proceeds. This is not an indication of flexibility as the primary judge thought.
Allsop P further observed, at [40], that the terms and structure of Parts 2 and 3 of the Act (including ss 27 and 28) do not evince an intention that they be applied or interpreted fairly in favour of a defendant, except where this is provided for expressly.
The question of onus was addressed in Henderson v State of Queensland (2014) 255 CLR 1; [2014] HCA 52 (Henderson). The High Court considered s 68(2)(b) of the Criminal Proceeds Confiscation Act 2002 (Qld) (the Qld Act), which is an equivalent provision to s 25 of the Act, which provides that the Court must not make an exclusion order (excluding property from forfeiture) unless it was satisfied that it was more probable than not that the property was not illegally acquired property. Section 22 of the Qld Act provided that property is “illegally acquired property” if it is “all or part of the proceeds of an illegal activity” or “part of the proceeds or dealing with illegally acquired property” or “all or part of it was acquired using illegally acquired property”.
The State applied for a forfeiture order in respect of money found in the possession of Mr Henderson, who had previously engaged in a serious crime related activity. He applied for the exclusion of that money from forfeiture on the basis that it comprised the proceeds of the sale of jewellery that his deceased father had given him and was therefore not illegally acquired property. The issue was whether it was enough for him to show that he had not illegally acquired the property or whether he had to show that it was more probable than not that the jewellery was not illegally acquired property in his father’s hands and, if the latter, whether he had discharged that onus. Although the first instance judge accepted that Mr Henderson’s father had given him the proceeds of sale of the jewellery, his Honour did not accept the evidence given by Mr Henderson and his siblings as to the provenance of the jewellery (that the jewellery constituted “longstanding family heirlooms”: [26]).
The High Court found that the latter was the applicable test. Their Honours found, by majority (French CJ, Kiefel, Bell, Keane JJ, Gageler J dissenting), that there was no evidence of how the jewellery had been acquired (since the primary judge did not accept the evidence which was given), with the result that Mr Henderson could not discharge the burden of proving that it was not illegally acquired property: [15] (French CJ); [28] (Bell J, Kiefel J agreeing); and [170] (Keane J). As Bell J said, at [28]:
It was not a question of making a finding that Mr Henderson’s father came into possession of the jewellery as the result of criminal activity.
To have posed the question thus would have reversed the onus in s 68(2)(b) of the Qld Act.
The appellant sought to distinguish Henderson in oral submissions on the basis that evidence called by Mr Henderson as to the provenance of the jewellery had been found to be a lie. I reject this submission. In Henderson, the first instance judge did not accept Mr Henderson’s father’s evidence as to provenance, which meant that there was no evidence of how his father had come into possession of jewellery worth a substantial sum. It was only this basis that the first instance judge considered that Mr Henderson had failed to discharge the onus that s 68(2) of the Qld Act imposed on him.
The appellant also sought to distinguish Henderson on the basis that s 22 of the Qld Act was worded differently to the definition in the Act. While the wording is different, I do not consider that this affects the outcome. As in the Qld Act, the Act casts the burden of proving that the particular amount was not derived from an illegal activity or activities on the person seeking the exclusion, in this case, the appellant.
Further, it was not necessary for Mr English to put to the relevant witnesses that the monies they had transferred to the appellant were in some way related to illegal activity since this was not the Commission’s case. The rule in Browne v Dunn (1893) 6 R 67 did not require it to be put. The Commission’s case was that the appellant had not proved, to use the statutory words, that “the expenditure was funded from income, or money from other sources, unrelated to an illegal activity or activities”: s 28(3). The Commission did not need to take on an onus which was not its to discharge.
In oral submissions, the appellant sought to argue that the Commission had not complied with the rule in Browne v Dunn because it had not put squarely or in express terms to any of the appellant’s witnesses that the transfers were not in fact loans. This was neither raised as an objection in the Court below nor has it been alleged as a ground of appeal. Accordingly, it does not arise for consideration. In any event, Mr English put to the witnesses, in substance, that their evidence was not credible and that, had the transfers actually been loans, there would have been some documentation, agreement as to the time of repayment, interest rate or demand for repayment. I regard this as sufficient compliance: Oneflare Pty Ltd v Chernih [2017] NSWCA 195 at [39]-[42] (Meagher JA, Gleeson and Leeming JJA agreeing).
In the present case, the primary judge was not persuaded that the monies paid to the appellant by Ms Elgammal, Mr Sami and Mr Barton were loans. None of these witnesses addressed the source of the money that they had transferred to the appellant and therefore there was no evidence that the funds were not illegally acquired property in their hands. In these circumstances, the primary judge was correct to find that the appellant had not discharged his onus of proof under s 28(3) of the Act that “the expenditure was funded from income, or money from other sources, unrelated to an illegal activity or activities.”
The appellant’s submissions in support of this ground merely repeat his submissions in support of grounds 4-7. It is, accordingly, not necessary to address this ground separately, which has not been made out. In any event, there was nothing that assisted the appellant in his examination. Rather, his answers to questions about particular transactions either lacked any detail of the transaction or did not accord with the evidence of witnesses he called to establish the provenance of the payments to his accounts. In these circumstances, I reject the appellant’s submission that these statements were “exculpatory”.
Ground 8 has not been made out.
Without credible evidence of the asserted character of the transfer it is unexplained and the Court cannot be satisfied on the balance of probabilities that the money came from sources other than illegal activity.
The appellant also relied on what his Honour said at J [66] (with respect to Mr Samia); and J [83] (with respect to Mr Barton). Each of these paragraphs are reproduced above in the summary of the primary judge’s reasons.
The appellant submitted that “the primary judge brought to bear his own understanding of how commercial transactions would be conducted, irrespective of any friendship that might have existed between Mr. Samia and the appellant. In determining that the transactions were ‘highly improbable’, his Honour must have employed his own esoteric knowledge or understanding of what was commercially probable, since there was no evidence from any witness about the improbability, or otherwise, of the transactions”.
The appellant submitted that the primary judge’s reasoning on this basis was in breach of the common law pre-conditions for judicial notice as outlined in Holland v Jones (1917) 23 CLR 149 at 153 (Isaacs J); [2017] HCA 26 and s 144(1) of the Evidence Act:
The only guiding principle—apart from Statute—as to judicial notice which emerges from the various recorded cases, appears to be that wherever a fact is so generally known that every ordinary person may be reasonably presumed to be aware of it, the Court “notices” it, either simpliciter if it is at once satisfied of the fact without more, or after such information or investigation as it considers reliable and necessary in order to eliminate any reasonable doubt.
The basic essential is that the fact is to be of a class that is so generally known as to give rise to the presumption that all persons are aware of it.
In the present case, it could scarcely be said that the commercial practices between two friends was a matter of “common knowledge”, nor was a matter capable of verification by reference to a document. Therefore, it was not open to Fagan J. to take judicial notice of what was commercially improbable, in the absence of evidence.
This is arguably all the more the case, when the ethnicity of the appellant and the witnesses was different from that of his Honour.
There are various categories and sub-categories of judicial notice: see the discussion in Cross on Evidence, [3010] and [3020]. The category which is presently relevant is notorious facts and the relevant sub-categories, according to the analysis in Cross on Evidence ([3020]) are “ordinary human behaviour” and “economics and business”.
Judicial notice has been taken of “general knowledge of dealings and of what takes place which Judges judicially possess and take notice of”: Bowes v Shand (1877) 2 App Cas 455 at 481 per Lord Blackburn. An example of this is that judicial notice was taken of the fact that it is not consistent with the “habits of people in this country [the United Kingdom]” to contract to sell a complicated estate on half a sheet of note paper in informal terms: Clifton v Palumbo [1944] 2 All ER 497 at 502.
However, as was also said in Cross on Evidence at [3200]:
Much empirical material is employed in decision making by courts without evidence being received, without judicial notice being taken, without admissions being made, and without any specific warning being given to the party against whom that empirical material is used (though commonly the opposing party or the court will, in final addresses or otherwise, indicate how it may be used). It is material which is part of the make-up of the human beings who form courts arising out of their general common experience of life.
Judging from the words of the document, and from the appearance of it, and bringing to bear upon it the knowledge which every one has of the ordinary transactions of business, I confess this document would have completely misled me. I could not possibly, looking at it with the utmost care and vigilance, such as an ordinary man would exercise, extract from this document the slightest information or notice that this was a purchase other than in the ordinary course of business upon the Stock Exchange. If it would mislead a person like myself, why should it not mislead others?
In Speight, it was also held that a trustee may follow the ordinary course of business by using an agent in circumstances where it involves no delegation of trust. This was said to be based on “reason and common sense”, at 763 (Bowen LJ).
The primary judge’s reasoning as to the character of the transfers to the appellant was based on general experience and common sense rather than resort to the concepts of judicial notice. However this reasoning processes is characterised, the question for this Court is whether the primary judge went beyond the boundaries of what was open to him in terms of inferential reasoning. For the reasons that follow, I am not satisfied that there was any error in the primary judge’s processes of fact-finding as alleged in ground 6.
In substance, the primary judge was required, as a part of his Honour’s consideration of whether the appellant had discharged his onus of proof, to assess the credibility of the witnesses. This, in turn, required the primary judge to have regard to the “objective probabilities” of the transactions of which they gave evidence. So much has been established by authority. In the process of assessing credibility, “contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part”: Onassis v Vergottis [1968] 2 Lloyds Rep 403 at 431 (Lord Pearce).
In Effem Foods Pty Limited v Lake Cumbeline Pty Limited [1999] HCA 15; (1999) 161 ALR 599 at [16], the High Court (Gleeson CJ, Gaudron, Kirby and Hayne JJ) described the trial judge’s approach of considering “the objective factual surrounding material and the inherent commercial probabilities, together with the documentation tendered in evidence” as “an orthodox and sensible approach to the matter”: see also the discussion in Et-China.com International Holdings Ltd v Cheung [2021] NSWCA 24; (2021) 388 ALR 128 at [25]-[29] (Bell P, Bathurst CJ and Leeming JA agreeing).
In Fox v Percy (2003) 214 CLR 118; [2003] HCA 22, Gleeson CJ, Gummow and Kirby JJ said at [31], that “[c]onsiderations such as these [the difficulty of discerning truthful evidence on the basis of demeanour] have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events.” (Emphasis added.)
In Wilcox v Chapple [2025] NSWCA 155, this Court (Leeming and Ball JJA, Griffiths AJA), citing Fox v Percy at [31], described the trial judge’s preference for contemporaneous objective evidence over testimonial evidence as “orthodox”: [110]. The Court also referred to the use by trial judges of “‘any evidence independent of the parties which is apt to cast light on the probabilities of the situation’ to resolve an issue involving the credibility of witnesses”, quoting Keane JA in [2008] 1 Qd R 39; [2007] QCA 136 at [34].
Ground 5 relates to the transfer by Ms Elgammal and the primary judge’s statements in J [48]-[49] that “the evidence tends towards a probability that the property was the [appellant’s] beneficially, at least as to $1,070,000 of its value” and that the inference that the appellant beneficially owned the Hurstville property was more readily drawn as he did not give evidence.
The appellant submitted that this finding revealed error and amounted to a breach of the rule in Browne v Dunn since the Commission’s counsel had not suggested to Ms Elgammal that the appellant had an interest in the Hurstville property, nor was there any evidence that he did have such an interest.
The rule in Browne v Dunn is, primarily a rule of fairness. Hunt J in Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation [1983] 1 NSWLR 1 described it, at 16, as follows:
It has in my experience always been a rule of professional practice that, unless notice has already clearly been given of the cross-examiner’s intention to rely upon such matters, it is necessary to put to an opponent’s witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of his evidence, particularly where that case relies upon inferences to be drawn from other evidence in the proceedings. Such a rule of practice is necessary both to give the witness the opportunity to deal with that other evidence, or the inferences to be drawn from it, and to allow the other party the opportunity to call evidence either to corroborate that explanation or to contradict the inference sought to be drawn. That rule of practice follows from what I have always believed to be rules of conduct which are essential to fair play at the trial and which are generally regarded as being established by the decision of the House of Lords in Browne v Dunn (1894) 6 R 67.
… The rule is essentially that a party is obliged to give appropriate notice to the other party, and any of that person’s witnesses, of any imputation that the former intends to make against either of the latter about his or her conduct relevant to the case, or a party’s or a witness’ credit.
One corollary of the rule is that judges should in general abstain from making adverse findings about parties and witnesses in respect of whom there has been non-compliance with it. …
It is necessary to read the primary judge’s reasons fairly and as a whole. The operative finding made by his Honour was that “[w]ithout credible evidence of the asserted character of the transfer it is unexplained and the Court cannot be satisfied on the balance of probabilities that the money came from sources other than illegal activity”: J [47]. In addressing the appellant’s submission that, because the money came from the proceeds of the Hurstville property which was owned by Ms Elgammal and her niece, his Honour postulated the hypothesis that the appellant had a beneficial interest in the property, at least to the extent of $1,070,000 of its value and said that the evidence “tends towards the probability” of that being so.
This observation was unnecessary since the finding that the appellant had not proved that the $1,070,000 was not derived from unlawful activity was sufficient to dispose of the matter. The possibility that the appellant had an interest in the Hurstville property was open on the evidence although it had not been put as such by the Commission (that being unnecessary having regard to the onus of proof). The Commission’s counsel had no interest in asking a question, the answer to which had at least the potential to assist the appellant to discharge his onus of proof. His decision not to cross-examine on that topic may well have been “tactical” and “shrewd”: see the discussion in Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 (Kuhl) at [74] (Heydon, Crennan and Bell JJ).
In the present case, there has been no breach of the rule in Browne v Dunn by the Commission because it was no part of its case that the appellant had a beneficial interest in the Hurstville property: its case was that the appellant had not proved that the proceeds of the property which were advanced to the appellant were not derived from unlawful activity or activities. The Commission relied on the apparent impecuniosity of Ms Elgammal; her modest financial circumstances; the fact that the house in which she lived which her husband owned was still subject to a mortgage; and the lack of documentation of the loan or agreement about a specified repayment date or rate of interest. All of these matters were canvassed with Ms Elgammal in cross-examination. The Commission had no interest in propounding a hypothesis as to how or in what way the $1,070,000 was derived from unlawful activity or activities since the onus was on the appellant to prove that it was not.
The hypothesis which was postulated by the trial judge was not put by the Commission and was not explored with Ms Elgammal. In that sense, there was an arguable denial of procedural fairness since the appellant’s witness, Ms Elgammal, was not given the opportunity to address this hypothesis in her evidence. The corollary referred to in MWJ at [39] (that judges should refrain from making findings where a proposition has not been put to a witness) has been arguably breached.
For the reasons given above, I propose the following orders:
Dismiss the appeal.
Order the appellant to pay the respondent’s costs.
GRIFFITHS AJA: I agree with Adamson JA.
**********
[167] - "the appellant's counsel" replaced by "Mr English"
Karout
New South Wales Crime Commission [2025] NSWCA 260
(2009) 176 FCR 529
(2000) 181 ALR 108
(1998) 86 FCR 16
(1991) 22 NSWLR 389
(2021) 390 ALR 74
(2001) 186 ALR 369
(1999) 161 ALR 599
(2021) 388 ALR 128
(2003) 214 CLR 118
(1910) 10 CLR 417
(2014) 255 CLR 1
(2020) 271 CLR 1
(1917) 23 CLR 149
(1936) 55 CLR 499
(2008) 167 FCR 314
(1959) 101 CLR 298
(2011) 243 CLR 361
(2005) 80 ALJR 329
(2008) 75 NSWLR 564
(2016) 240 FCR 13
(2003) 214 CLR 1
(2023) 112 NSWLR 162
(1923) 33 CLR 538
(1987) 10 NSWLR 247
(2006) 228 CLR 152
(1964) 109 CLR 529
(1929) 41 CLR 532
Appeal dismissed. The appellant was ordered to pay the respondent's costs: [207].
The appellant was also asked about various amounts which he had received during the relevant period. When asked whether he had received money by way of loans in that period, the appellant confirmed he had received loans from friends. When pressed for details, he could name only “Joe Harp and John Barton”. The appellant said that there was documentation available to support these transactions, but that, because he was in gaol, it was not available to him at the time of the examination. The appellant could not explain why he received a payment in the order of $130,000 from Mr Barton. Nor could he provide any explanation for receiving a total of $250,000 from Ezra 1 Pty Ltd and Styletech Pty Ltd or any information as to these company’s principals. He volunteered that he believed that Ezra 1 Pty Ltd was linked to Joe Harp (which was incorrect as these companies were associated with Mr Issa). He could not provide any information as to who he believed was linked to Auto Motori Pty Ltd.
In answering Mr Lange’s submission that the transcript was second-hand hearsay of the admissions, the primary judge said:
The Commission raised in argument the proposition that it is not possible to have a legal title to property, such as prohibited drugs, which is unlawful. It is not necessary for the purposes of the present case, to address that question.
For these reasons, I consider that the primary judge was correct to include the full market value of the drugs in the appellant’s possession in his assessment for the purposes of a proceeds assessment order. Ground 1 has not been made out.
As the appellant’s admissions were oral, it would have been necessary, but for s 54(5) of the Act, for evidence of the answers which the appellant gave to be given by a person who saw, heard or otherwise perceived the admission being made (s 82(a)), since the transcript would amount to no more than second-hand hearsay.
The effect of s 54(5) of the Act, according to its express words, is to permit the transcript of a compulsory examination to be tendered to prove, in the present case, what the appellant said (that he paid Ms Taylor about $23,000 per month). Thus s 54(5) makes the transcript first-hand hearsay evidence of what the appellant actually said. Thus the transcript can be tendered to prove the truth of admissions made by an examinee, such as the appellant.
This construction tends to promote the legislative purpose of the provision. This Court is required, by s 33 of the Interpretation Act, to prefer a construction that would promote the purpose or object underlying the Act to one which would not promote that purpose or object. The appellant accepted that the purpose of s 54(5) was to facilitate the proof of what was said in a compulsory examination under the Act, whether pursuant to s 12 or s 31D. Thus, it was submitted, it was not necessary for the Commission to call the stenographer who took the transcript, to tender the tape of the recording or to adduce evidence from those otherwise present at the examination. However the appellant submitted that, although s 54(5) was facultative, it did not convert what was second-hand hearsay into first-hand hearsay for the purposes of the Evidence Act. The consequence of the construction for which the appellant contended would be that the transcript could be tendered in proceedings to prove that the statement was made but it could not be used to prove the truth of its contents under ss 63, 64 or 81, each of which is confined to “first-hand hearsay”. Thus, if the legislative intention was to facilitate proof (that a statement was made), it did not achieve this intention in any meaningful way (because the truth of the contents of the statement could not be proved by the tender of the transcript).
It is difficult to conceive of a legislative intention whereby proof that a statement was made could be achieved by the tender of a transcript and yet proof of the truth of the statement, even if it were an admission under s 81 or a prior representation under ss 63 or 64, would require a person who heard the statement being made to be called or the recording of the statement to be played. I reject the construction for which the appellant contended.
The argument that the method used in s 28C(12) would have been used if the Evidence Act was sought to be displaced must also be rejected. Section 54(5) does not displace the Evidence Act. Its effect is to elevate the transcript to first-hand hearsay evidence of a statement made in a compulsory examination. The admissibility of such evidence to prove the truth of the contents of the statement depends on the provisions of the Evidence Act, including those referred to above. As such, if the transcript contains admissions, they are admissible under s 81 of the Evidence Act.
For these reasons, the primary judge was correct to rule the transcript of the examination admissible.
I note for completeness that the Commission accepted that s 135 of the Evidence Act provided an important overriding safeguard against unfairness, including in the context of proceedings under the Act such as the present, and that s 136, which permitted a judge to limit the use to which evidence could be put, would also apply, in an appropriate case, to prevent any unfairness which might otherwise arise. As no challenge was made by the appellant to the primary judge’s rejection of the appellant’s objection under s 135 of the Evidence Act to the appellant’s admissions in the transcript on the basis that the evidence might be “unfairly prejudicial” to him, it is not necessary to address these provisions further.
Heerey J (Tamberlin J agreeing) said at 28:
It is also significant that the appellant failed to tender Ms Karout’s bank accounts for the relevant period but limited his tender to bank accounts which post-dated this period. It was in the appellant’s power to prove that Ms Karout had transferred money to Ms Taylor during the relevant period and he chose not to tender the documents which might have established such payments had they been made. This can be taken into account in weighing Ms Karout’s evidence in so far as she deposed to the contrary: Blatch v Archer (1774) 1 Cowp 63 at 65 (evidence is to be weighed according to the proof which was in the power of one side to have produced, and in the power of the other to have contradicted) and Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 (the inference arises that these documents were not tendered because they would not have assisted the appellant’s case).
Further, if Ms Taylor had been authorised to operate the joint account, it would have been odd for her not to make a withdrawal when she needed money. The appellant did not suggest that this ever occurred.
I reject the appellant’s submission that it ought be inferred that Ms Taylor received the same amount from Ms Karout while the appellant was in custody as she had received from him in cash while he was at liberty. This submission is wholly at odds with the appellant’s admissions in his compulsory examination and fails to take account of the fact that Ms Karout was not, according to the evidence, involved in the payments to Ms Taylor before the appellant was incarcerated but was the agent through which payments were made to Ms Taylor after his arrest.
There was no challenge to the deduction which the primary judge made from the calculations made by Mr Bull as to the appellant’s expenditure on Ms Taylor and their two children.
Having regard to the whole of the evidence as to the appellant’s expenditure on Ms Taylor and their children, I am satisfied that the appellant made payments in cash of about $23,000 per month to Ms Taylor. Ms Taylor’s evidence in the Family Court proceedings was not inconsistent with the appellant’s admissions and Ms Karout was not in a position to know how much the appellant paid Ms Taylor. Further, as the primary judge pointed out, there was plenty of cash available to the appellant, which permitted him to make these payments.
For these reasons, ground 3 has not been made out. As no error has been established, it is not necessary to address whether a House v The King (1936) 55 CLR 499; [1936] HCA 40 error is required to be shown for this ground to be made out.
For these reasons, ground 7 has not been made out.
I consider that, properly analysed, the primary judge had regard to the objective probabilities, as his Honour was entitled to do. There has been no unauthorised taking judicial notice of a matter which does not fall within s 144 of the Evidence Act. His Honour was entitled to reason, for example, that it was objectively improbable that Ms Elgammal, whose own home was still subject to a mortgage which was being paid from her husband’s earnings as a taxi driver would sell a property; hand over $1,070,000 of the proceeds to the appellant, whose only connection to her was that he was associated with her son; fail to agree on an interest rate; and have no document setting out any agreement between them as to receipt or the terms of the loan.
His Honour was entitled to regard her evidence that there was a legitimate loan which was entirely undocumented as having more than an air of unreality about it. The absence of loan documentation was, to say the least, curious in circumstances where, as his Honour noted at J [45], where the solicitor, who acted for Ms Elgammal on the sale of the Hurstville property, transferred the funds (which constituted the alleged loan) from his trust account to the appellant, who was also a client of the firm. To add to the air of unreality, the solicitor also acted for the appellant in the proceedings before Fagan J.
The primary judge used similar reasoning in the analysis of the alleged loans to Mr Samia (at J [66]) and to Mr Barton (at J [83]). Each of the passages relied on by the appellant falls into this category. His Honour’s reasoning was orthodox and, in my view, unassailable. In these circumstances, it is not necessary to address the limits of judicial notice since, if that concept arises at all, the matters taken into account by his Honour fell well within the limits. Ground 6 has not been made out.
As to the appellant’s submission that there was a difference between the ethnicity of the judge on the one hand and that of the appellant and the persons who advanced money to the appellant on the other, this submission was without evidentiary foundation. The appellant said in his compulsory transcript that he had migrated from Lebanon when he was 10 years old (a matter which was not referred to in the Court below). Ms Elgammal’s husband had come to Australia 50 years ago. No evidence was given as to any factor which may have given rise to a practice which did not accord with general commercial practice. The appellant was plainly on notice from the cross-examination of his witnesses that the Commission would submit that the purported loans or credit arrangements were not the subject of credible evidence.
In any event, the appellant made no attempt to prove that the monies which had been transferred to him had not been derived from unlawful activity or activities. His case appears to have been conducted without regard for what Henderson established as to the onus in this context.
However, procedural fairness is no mere technical requirement. The requirements of procedural fairness depend on the particular factual and, in this case, statutory context and are flexible: SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152; [2006] HCA 63 at [26] (Gleeson CJ, Kirby, Hayne, Callinan and Heydon JJ). Whether there has been a denial of procedural fairness is a question of “practical injustice”: Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 at [38] (Gleeson CJ).
In the present case, had Ms Elgammal been asked whether the appellant had provided funds for the purchase of the Hurstville property, she would have said “yes”, “no”, “I can’t remember” or “I don’t know”. Each of these answers are possible, having regard to the way in which she gave her evidence. None of these answers had any capacity to affect the result since the circumstances of the alleged loan were so unsatisfactory that it was open to his Honour, and his Honour was, in my view, correct, to find that the appellant had not shown that the $1,070,000 alleged to have been advanced as a loan from Ms Elgammal was not derived by unlawful activity or activities. The hypothesis raised by his Honour was, in these circumstances, superfluous to his reasoning and had no material bearing on the result: see also Larkis v Larkis [2018] NSWCA 113 at [47]-[48] and [57]-[61] (Meagher JA, Macfarlan and White JJA agreeing). This is to be contrasted with the finding in Kuhl, where the trial judge made an adverse finding about a witness’ credit where it had not been challenged in cross-examination: see [75]-[76].
For these reasons, ground 5 has not been made out.