NSW Crime Commission v Sarikaya

Crimes Act 1900 LEGISLATION CITED : Criminal Assets Recovery Act 1990 Criminal Assets Recovery Amendment Act 2009 Uniform Civil Procedure Rules

International Finance Trust Company Limited & Anor v New South Wales Crime Commission [2008] NSWCA 291 CASES CITED : International Finance Trust Company Limited v New South Wales Crime Commission [2009] HCA 49 New South Wales Crime Commission v Quoc Hoi Vu [2009] NSWCA 349

PARTIES : NSW Crime Commission (Plaintiff) Ali Davut Sarikaya (Defendant)

COUNSEL : I Temby QC & R Bhalla (Plaintiff) D Marr (Defendant)

SOLICITORS : John M Giorgiutti, Solicitor to the Commission (Plaintiff) Richard Cummins, Solicitor (Defendant)

• 1 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

JUDGMENT 1 On 10 December 2009 the NSW Crime Commission applied ex parte under s 10A Criminal Assets Recovery Act 1990 to restrain the Defendant dealing with a number of specified assets being real property and a motor vehicle. Hislop J made the orders on that day and published his reasons for so doing on 15 December 2009. 2 On 5 January 2010 the Defendant by Notice of Motion sought to review the orders under s 10C of the Act. 3 Prior to that Notice of Motion being heard the Crime Commission applied by Motion filed 27 April 2010 to restrain the Defendant dealing with the same assets but on the basis of different criminal charges and information. 4 Both the Commission's Motion and the Defendant's Motion for review came before me for hearing. I heard the Commission's Motion first and indicated that I would give a decision on that Motion before proceeding to deal with the Defendant's Motion for review, on the basis that if the orders sought by the Commission were made it would not be necessary to deal with the Defendant's application for review. In any event, the Commission said if the further orders are made it will consent to a discharge of Hislop J's orders. The Commission's first application 5 This application was supported by an affidavit of Jonathan Lee Spark, the Assistant Director, Financial Investigations of the Commission. Mr Spark is an authorised officer within the meaning of s 4(1) of the Act. 6 Mr Spark deposed to a suspicion that Ali Davut Sarikaya (also known as David Kaye) had engaged in a serious crime related activity or serious crime related activities within the meaning of s 6 of the Act, namely: (a) making or using false instrument contrary to s 300 of the Crimes Act 1900;

(b) obtaining money etc by deception contrary to s 178BA(1) of the Crimes Act 1900. 7 There were 20 charges under s 300 and 6 charges under s 178BA. 8 Ultimately, those charges were withdrawn. However, before that happened the Defendant was arrested on 4 February 2010 and charged with fresh offences, namely, attempting to obtain a benefit by deception contrary to ss 344A or 178BA Crimes Act 1900. 9 The circumstances giving rise to the new charges are unconnected with the circumstances giving rise to the old charges although they have a common source in the identity of, qualifications of, and work carried on by, the Defendant. 10 So that the background and the inter-relationship between the Motions can be better understood I will summarise some of the material which appears in the Police Facts Sheet prepared in relation to the first application. In doing so I make no findings about the correctness of the facts stated. It is appropriate to refer to this material because all that s 10A requires is that the Court conclude that there are reasonable grounds for the authorised officer having a suspicion that the Defendant has engaged in a serious crime related activity. The section does not require that any particular facts be found to be true. 11 The Defendant was born in Turkey on 20 January 1964 and was known as Ali Davut Sarikaya. He came to Australia in 1980 at the age of 16. He holds a Bachelor of Arts from Monash University and has a partially completed graduate diploma in counselling from RMIT. He was said to have been convicted of fraud offences in Victoria and declared bankrupt. After that time and since about November 1997 he has been establishing himself as Dr David Kaye. He claims to have a PhD but enquiries have indicated that this was purchased via the Internet from an organisation in Minnesota, USA. 12 He has apparently recorded his occupation as "psychologist" on the electoral roll and has referred to himself in that way on passenger departure cards at Sydney Airport. 13 The Facts Sheet also contained the following paragraph and, because much was made of it in the submissions on behalf of the Defendant, I shall set it out exactly as it appears. It is to be noted that an identical paragraph appears in the Facts Sheet in relation to the second application by the Commission. The paragraph reads: The accused has made claims to Police under caution that he trained under he had trained under Dr John CONE, MD. FRANZCP. MRCPhyh. For a period of 7 years. Inquiries conducted by Police indicate that KAYE was actually a patient and Dr CONE and his secretary had serious doubts about his claim to be a Doctor and the use of that title. (sic) 14 On 31 July 2006 the Defendant lodged an application with the New South Wales Department of Health in the name of "Dr David Kaye" to be included on the Official Visitors Program (OVP). On 1 March 2007 he was appointed an Official Visitor which entitled him to visit patients at Mental Health Facilities in the Northern Sydney Central Area Health Service. 15 The original charges against him concerned claims for reimbursement and payments for which he was said to be entitled through the OVP. As mentioned earlier, the Prosecution withdrew all of those charges. 16 The Defendant's solicitor swore 2 affidavits for the purposes of the review application. Those affidavits and a further affidavit by the solicitor were read also in relation to the Commission's second application. The first affidavit discloses that at various times the Defendant has been a manager of occupational rehabilitation for a private company, a provider of rehabilitation programs for Comcare and the Victorian WorkCover Authority and a member of the Australian Counselling Association, the Australian Institute of Professional Counsellors and the Australian Association of Career Counsellors. 17 The second affidavit, apart from containing statements of support from various people who have worked with or known the Defendant, contained a copy of the Death Certificate of the psychiatrist Dr John Cone. The date of death recorded in that Certificate is 16 January 2007. I shall return to the significance of that presently.

The Commission's second application 18 The new charges concern invoices which the Defendant is alleged to have forwarded to the New Zealand Inland Revenue (NZIR) in respect of "Confidential Professional Staff Support and EAP Counselling Services" between April 2002 and March 2009 totalling in excess of $100,000. Various emails that passed between the NZIR and the Defendant pointed to the fact that the NZIR knew nothing of the services in respect of which the amounts were claimed. 19 The background material set out in paras [11]-[14] above was also relied upon as part of the factual information provided to Mr Spark which resulted in him swearing a further affidavit on 23 April 2010 deposing to the suspicion that the Defendant had engaged in a serious crime related activity, being the new offences. 20 The affidavit set out the grounds upon which Mr Spark deposed to holding the suspicion. Those grounds included (a) reading the Facts Sheet (which contained, in greater detail, the matter I have set out in paras [11]-[14] above), (b) meeting with Detective Sergeant Brant James, the investigating officer, whom he knew, (c) ascertaining from him that Detective Sergeant James had prepared the Facts Sheet and believed in the truth of the material in it, and (d) ascertaining from him that the Facts Sheet was prepared on the basis of information obtained by the Police as a result of the investigation described in that Facts Sheet. Mr Spark further deposed to believing in the truth of the contents of the Facts Sheet, having read it, and to the fact that he had found through a search of the COPS database that the Defendant had been charged with the offences described in the Facts Sheet.

Legislative history 21 Until the amending Act of 2009 s 10 of the Criminal Assets Recovery Act relevantly provided: (1) A restraining order is an order that no person is to dispose of or attempt to dispose of, or to otherwise deal with or attempt to otherwise deal with, an interest in property to which the order applies except in such manner or in such circumstances (if any) as are specified in the order.

(2) The Commission may apply to the Supreme Court, ex parte, for a restraining order in respect of: (a) specified interests, a specified class of interests or all the interests, in property of a person suspected of having engaged in a serious crime related activity or serious crime related activities, including interests acquired after the making of the order and before the making of an assets forfeiture order affecting the interests that are subject to the restraining order, or (b) specified interests, or a specified class of interests, in property that are interests of any other person, or (c) interests referred to in both paragraph (a) and paragraph (b).

(3) The Supreme Court must make the order applied for under subsection (2) if the application is supported by an affidavit of an authorised officer stating that: (a) in the case of an application in respect of an interest referred to in subsection (2) (a) - the authorised officer suspects that the person has engaged in a serious crime related activity or serious crime related activities and stating the grounds on which that suspicion is based, and (b) in the case of an application in respect of any other interest - the authorised officer suspects that the interest is serious crime derived property because of a serious crime related activity or serious crime related activities of a person and stating the grounds on which that suspicion is based, and the Court considers that having regard to the matters contained in any such affidavit there are reasonable grounds for any such suspicion.

… 22 In International Finance Trust Company Limited v New South Wales Crime Commission [2009] HCA 49 the High Court, by majority, held that s 10 was invalid because what the Supreme Court was directed to do was incompatible with the judicial function of the Court. As French CJ put it at [56]: … It deprives the Court of the power to determine whether procedural fairness, judged by reference to practical considerations of the kind usually relevant to applications for interlocutory freezing orders, requires that notice be given to the party affected before an order is made. It deprives the Court of an essential incident of the judicial function. In that way, directing the Court as to the manner of the exercise of its jurisdiction, it distorts the institutional integrity of the Court and affects its capacity as a repository of federal jurisdiction. 23 To overcome the problem the NSW Parliament passed the Criminal Assets Recovery Amendment Act 2009 which commenced on 26 November 2009. Sections 10 to 10B were omitted and new sections 10 and 10A to 10D were inserted. The overall effect of the newly inserted parts of these sections is that notice may be given to the person against whom the order is to be made before the order is made if the Court thinks fit, and allowance is made for a review of an order made under s 10A on specified grounds which had been identified as concerns in the judgments in International Finance. 24 The key provision is s 10A which relevantly provides:

The Commission may apply to the Supreme Court, ex parte, for a restraining order in respect of:

(a) specified interests, a specified class of interests or all the interests, in property of a person suspected of having engaged in a serious crime related activity or serious crime related activities, including interests acquired after the making of the order and before the making of an assets forfeiture order affecting the interests that are subject to the restraining order, or … (4) Notice to affected person of application

Despite the application for a restraining order being made ex parte, the Supreme Court may, if it thinks fit, require the Commission to give notice of the application to a person who the Court has reason to believe has a sufficient interest in the application. A person who is required to be notified is entitled to appear and adduce evidence at the hearing of the application. (5) Determination of applications The Supreme Court must make a restraining order if the application for the order is supported by an affidavit of an authorised officer stating that: (a) in the case of an application in respect of an interest referred to in subsection (1) (a) - the authorised officer suspects that the person has engaged in a serious crime related activity or serious crime related activities and stating the grounds on which that suspicion is based, and

(b) in the case of an application in respect of an interest referred to in subsection (1) (b) - the authorised officer suspects that the interest is serious crime derived property because of a serious crime related activity or serious crime related activities of a person and stating the grounds on which that suspicion is based, and

(c) in the case of an application in respect of an interest referred to in subsection (2) - the authorised officer suspects that the interest is fraudulently acquired property that is illegally acquired property and stating the grounds on which that suspicion is based,

and the Court considers that, having regard to the matters contained in any such affidavit and any evidence adduced under subsection (4), there are reasonable grounds for any such suspicion.

… 25 Further, s 10C now provides for a review of restraining orders already obtained. That section provides: (1) The Supreme Court may, on the application of a person whose interest in property is affected by a restraining order, set aside the order on any of the following grounds: (a) that, having regard to the affidavit supporting the restraining order application and any other evidence adduced, the Commission has failed to satisfy the Court that there are reasonable grounds for the relevant suspicion referred to in section 10A (5), (b) that the applicant has established that the order was obtained illegally or against good faith. …

(3) If an application is made under this section, the restraining order concerned remains in force unless and until an order is made by the Supreme Court to set aside the order.

(4) A person who applies for an order is entitled to adduce evidence at the application. 26 It is to be noted that the review is not confined to orders obtained ex parte, but to some extent follows the wording contained in UCPR 36.15 which deals with setting aside judgments or orders obtained illegally or against good faith. One can foresee circumstances where an order may have been obtained on notice to the Defendant, and even with the Defendant present (pursuant to s 10(4)), but it is later ascertained that the order was obtained illegally or against good faith. Section 10C would operate in such circumstances.

The Defendant's submissions 27 The Defendant submits that, particularly in the light of the withdrawal of the previous charges against him, Mr Spark, the authorised officer who formed the suspicion, did not have reasonable grounds for doing so. It was said not to be reasonable because Mr Spark did not question the police officer further or make some further enquiry or investigation himself. This failure to make further enquiry was linked to the further submission that although Mr Spark was an authorised officer he was not qualified to swear the affidavit because he was not a lawyer nor a police officer with a sufficient understanding of the elements of the offences. 28 The Defendant said that Mr Spark was prepared to form the suspicion without examining the matter carefully because, knowing the previous charges had been dismissed, he was anxious to ensure that there was still a restraining order in place. 29 An example, it was said, of matters which should have put Mr Spark on notice that he could not rely without further enquiry on the material submitted to him, concerned the matter I have set out in para [13] above. Because the Death Certificate showed that Dr Cone died in January 2007 it was said that Mr Spark should have realised that Dr Cone could not have told the Police that he had serious doubts about the Defendant's claim to be a doctor. 30 The Defendant submitted that the order should not be made because there was no proper disclosure. What was said not to be disclosed was that the Principal Official Visitor said in a statement, prior to the time Mr Spark swore his affidavit of December 2009, that she knew the Defendant had no medical qualifications. 31 The Defendant submitted further that the test concerning the reasonableness of the suspicion is a completely objective test and is not directed to the reasonableness of the particular officer's suspicion.

Reasonable grounds for suspicion - the correct test 32 What must first be determined is the nature of the test the Court is required to apply in s 10A(5). What the Court is first required to do is to have regard to (a) the matters contained in the affidavit of the authorised officer, and (b) any evidence adduced by the person who is to be notified under sub-s (4). The Court is then required, having regard to those matters, to consider if there are reasonable grounds for the suspicion of the authorised officer. In that regard it is to be noted that each of paragraphs (a), (b) and (c) of sub-s (5) require the authorised officer to state "the grounds on which that suspicion is based". 33 It is those grounds to which the Court addresses its consideration of reasonableness. In other words, the officer is required to state the grounds for the suspicion that is held, and it is those grounds which must be seen to be reasonable. 34 In my opinion, the approach required by sub-s (5) was correctly set out by French CJ in International Finance at [47] where he was discussing what he envisaged if an application (now under s 10A) was made on notice. French CJ said: If the application were made on notice, the affected party would be able to cross-examine the authorised officer on his or her affidavit with a view to demonstrating that he or she does not hold the requisite suspicion, or that there are parts of the affidavit which are so inherently unreliable as not to form reasonable grounds for that suspicion. Evidence in rebuttal could be directed to the same propositions. The party, if given notice, could also make submissions to the Court about the existence of the conditions upon the Court's powers under s 10. 35 The explanation of what is required as the basis for the suspicion is also set out in the judgment of Allsop P (with whom Beazley JA agreed) in the Court of Appeal's decision in International Finance Trust Company Limited & Anor v New South Wales Crime Commission [2008] NSWCA 291 at [23] in a passage, the force and validity of which have not been affected by the High Court's judgment: The statement of the grounds needs to be approached with a recognition as to what is being stated. The statement does not require expression of, and admissible evidence to prove, the underlying facts constituting the elements of the serious crime related activity or as to the derivation of the property. What must be stated can be discerned from George v Rockett (1990) 170 CLR 104 at 112 and Queensland Bacon Proprietary Ltd v Rees (1966) 115 CLR 266 at 303. The facts that induce the state of mind of the person must be stated. Such facts are not necessarily the underlying facts which constitute the criminal conduct or the relevant derivation of property; they are the matters that have led to, or induced, the authorised officer to the "positive feeling of actual apprehension or mistrust amounting to a slight opinion … more than a reason to consider or look into the possibility of its existence": Queensland Bacon at 115-116. In other words, the deponent must state why he or she has the suspicion that, for instance, the person in question has engaged in serious criminal activity. 36 The test in sub-s (5) is not a wholly objective test. The enquiry is not whether the authorised officer behaved in a reasonable way, or made reasonable enquiry, or whether a reasonable person knowing all of the facts would have come to the view the authorised officer reached. The only objective aspect of the test is whether the grounds for the authorised officer holding the suspicion are reasonable grounds for the officer's holding of that suspicion on the material he had and with the knowledge he possessed. 37 The process adopted by Mr Spark in the present case would appear to have been approved by the Court of Appeal in New South Wales Crime Commission v Quoc Hoi Vu [2009] NSWCA 349 at [28] and [30]. The Court noted that the mere fact that the police charged somebody is not a basis for a suspicion of serious criminal activity and is not capable, of itself, of establishing that there is a proper basis for any suspicion. However, the ultimate source of information contained in the Facts Sheet is not required to be stated (see at [42]) but the extent of any failure to state the source will affect the determination of whether reasonable grounds for the suspicion have been made out (at [48]). Nothing said by the High Court in International Finance has diminished the standing of this decision. 38 It does not seem to me that the Defendant's attempts to resist the order on the basis of matters not disclosed or other matters which might be said to amount to illegality or lack of good faith can be brought into the exercise the Court is performing under s 10A(5). Although Mr Marr of counsel for the Defendant submitted that all of the matters referred to in s 10C(1) could be weighed up by the Court making an order under s 10A(5), I do not think that is correct. 39 First, all the Court can do is consider if there are reasonable grounds for the suspicion of the authorised officer. Secondly, the issue of illegality or lack of good faith only arise if an order has already been made and there is an application to set it aside. Certainly, s 10C(1) also envisages (by para (a)) revisiting the issue of whether there are reasonable grounds for the relevant suspicion but so much would be expected from what the majority judgments in the High Court said in International Finance if the legislation was to be valid in relation to a Ch III Court. 40 The question of non-disclosure (which might be thought to be either illegality or against good faith) is a non-disclosure by the authorised officer and/or the Commission when an ex parte order is obtained. It is not directed to what is contained in any Facts Sheet or factual information upon which the authorised officer bases his or her suspicion unless, to the knowledge of the authorised officer, there was such a non-disclosure. 41 On the other hand, if it could be shown by credible evidence that, for example, the whole of the factual material prepared by the investigating officer and presented to the authorised officer was false to the knowledge of the investigating officer but not the authorised officer, that would be an illegality which would justify overturning an order already made under s 10A. There is no such suggestion in the present case. 42 Although sub-s (5) envisages that the Court will have regard to evidence adduced by a defendant under sub-s (4), I do not consider that such a requirement alters the nature of the test the Court is required to apply. The enquiry remains the reasonableness of the grounds for the authorised officer's suspicion and not whether, for example, it was reasonable for the police officer to reach the view that an offence had been committed. 43 The reasonableness of the authorised officer's suspicion may be able to be attacked by pointing to obvious inconsistencies in the material upon which the authorised officer formed his or her suspicion. The officer's suspicion may be attacked by admissions that he or she had other information which would cause the officer to realise that some or all of the matter in the Facts Sheet was unreliable. If, however, the officer is found to hold the suspicion it will not be able to be shown that the officer does not have reasonable grounds for that suspicion because evidence can be brought to show that the factual material which the officer believed was true was not true or was otherwise unreliable, except for illegality as discussed above.

Was the Officer's suspicion held on reasonable grounds? 44 The substance of the attack on Mr Spark was that the same police officer had provided him with material at an earlier time on which Mr Spark had formed the suspicion that the Defendant was engaged in serious crime related activity in circumstances where all of the earlier charges were withdrawn, and this was known to Mr Spark before he swore his second affidavit. Subsidiary matters were raised including the paragraph concerning enquiries relating to Dr Cone, and the matter of what was said by the Principal Official Visitor that was not disclosed in the Statement of Facts. 45 The last of these matters can be dealt with shortly. It was not shown that Mr Spark was aware of any statement made by the Principal Official Visitor to the Police on 17 November 2009 (as asserted in cross-examination) stating that she was aware the Defendant was not a qualified medical practitioner when he applied to be part of the OVP. Indeed, no evidence was led by the Defendant in relation to that statement. The fact, however, that the Police Officer may not have disclosed that statement to Mr Spark (on the assumption that that is the case) cannot mean that Mr Spark's suspicion was not held on reasonable grounds nor that there was the sort of non-disclosure that might be picked up in s 10C on a review application. 46 Mr Spark was cross-examined at some length by Mr Marr to suggest that his suspicion was not reasonably held in the light of what had happened with the earlier charges. At the conclusion of that cross-examination I asked Mr Spark a number of questions about whether he had any concerns about the reliability of the Facts Sheet bearing in mind what had taken place in relation to the earlier charges particularly when it was the same Police Officer who had presented him with both of the Facts Sheets. 47 One reason offered by Mr Spark for not having doubts about the reliability of the material in the second Facts Sheet was that on an objective assessment of the material in it he formed the suspicion required by s 10A. Having observed Mr Spark give his evidence and having re-read his evidence on the transcript, I am satisfied that his evidence was truthful and that I can rely upon it. The objective material in the Facts Sheet which includes copies of the invoices sent by the Defendant, the location of copies of these invoices on a USB lawfully seized from the Defendant by the Police, and the copy of the emails which passed between the NZIRD and the Defendant, are sufficient to ground a suspicion that the offences charged had been committed. There was nothing inherently unlikely about Mr Spark's evidence that his suspicion was formed on the basis of a belief in the truth of the Facts Sheet, nor that what had previously happened in relation to the earlier charges did not cause him concern to doubt the truth of the matters in the second Facts Sheet. I accept his evidence in that regard. 48 In relation to the particular paragraph concerning Dr Cone, the Defendant submitted that the only realistic reading of the paragraph was that the Police had enquired of Dr Cone and had been told that he had serious doubts about the Defendant. Whilst that is one possible reading of the paragraph it is certainly not the only one. The paragraph does not say of whom the enquiries was made, but it is more than possible that they were made of Dr Cone's secretary or even of other people who had the information contained in the paragraph. There is nothing in this paragraph that stands out significantly to cause a reasonable person in the position of Mr Spark to doubt the material generally contained in the Facts Sheet. But even if that was so, the true enquiry is whether I accept that Mr Spark's suspicion was held on reasonable grounds. I do so because I accept Mr Spark's evidence. 49 I do not accept the Defendant's submission that Mr Spark was not in a position where he could form an appropriate suspicion about the truth of the matters in the Facts Sheet because he was neither a lawyer nor a police officer. It does not seem to me that he needs to have a complete understanding of the elements of the offences charged, although his explanations given in answer to questions by Mr Marr satisfied me that he had quite a sufficient understanding of the offences to justify his suspicion. The authorised officer is not required to second guess what the investigating police officer has done or the conclusions he has reached in general terms. All that is required is a suspicion (as explained by the Court of Appeal in International Finance (para [35] above)) that the Defendant has engaged in a serious crime related activity.

Conclusion 50 In the circumstances, I make the following orders:

(1) The orders of Hislop J made 10 December 2009 are set aside;

(2) Upon the Plaintiff giving the usual undertaking as to damages (the giving of which by its counsel being noted) and considering that, having had regard to the matters contained in the affidavit of Jonathan Lee Spark dated 23 April 2010 and the affidavits of Richard Cummins sworn 5 January 2010, 25 January 2010 and 10 May 2010, there are reasonable grounds for the suspicion contained in the affidavit of Jonathan Lee Spark I make orders in terms of paragraphs 1 to 6 in the Notice of Motion filed 27 April 2010. **********

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