New South Wales Crime Commission v Hindmarch

In a summons filed 23 March 2012 the plaintiff sought an order pursuant to s 27 of the Criminal Assets Recovery Act 1990 (NSW) that the defendant, Sean Robert Hindmarch, pay to the Treasurer an amount assessed by the Court as the value of the proceeds derived from the illegal activities of the defendant that took place not more than six years before the making of the application.

The plaintiff also seeks by notice of motion filed 3 December 2019 the following order:

On the day the summons was filed, ex parte restraining orders were made pursuant to s 10A of the Act and an order was made for the defendant to be examined on oath before a registrar of the Court concerning his affairs.

The basis for the restraining orders and for seeking an order under s 27 of the Act was a suspicion by an authorised officer of the plaintiff, Jonathan Lee Spark, that the defendant had engaged in serious crime related activities within the meaning of that term in s 6 of the Act. Those activities were the supply of a prohibited drug, namely methylamphetamine, of an amount greater than the indictable quantity contrary to s 25(1) of the Drug Misuse and Trafficking Act 1985 (NSW) and the supply of prohibited drugs, namely methylamphetamine, on an ongoing basis contrary to s 25A(1) of the DMT Act.

Ultimately the defendant was convicted on 9 June 2016 in the District Court New South Wales at Newcastle of two counts of supplying an indictable quantity of a prohibited drug (not cannabis) with one offence having been committed between 20 September 2011 and 13 January 2012 and the other offence being committed on 13 January 2012. The defendant was sentenced on 9 June 2016 to imprisonment for two years and six months with a non-parole period of one year and nine months.

The Act relevantly provides:

The expression “illegal activity” in s 28(3) has the following meaning by definition in s 4(1) of the Act:

In New South Wales Crime Commission v Vu [2012] NSWSC 129; (2012) 221 A Crim R 445 Johnson J said:

At the hearing of the proceeds assessment order there was no appearance for the defendant. Nor was there any appearance for the defendant when the matter was before the Registrar on 3 June 2019, on which day the matter was fixed for hearing on 10 December 2019. The Registrar directed that the plaintiff advise the defendant of the hearing date and the orders made.

On 5 June 2019 the plaintiff sent a letter by registered post to the defendant informing him of the hearing date and what, in substance, the plaintiff would be seeking at that hearing. There was evidence that the defendant signed a receipt for that letter.

On 5 December 2019 the defendant rang Mr Spark at the plaintiff and left a voicemail message for him. He provided his new phone number and said that he had been served with a brief on that day. He then made a number of complaints about what had been done to him. He said that he had doctors’ certificates concerning his medical conditions including anxiety and depression which were said to be a result of the legal proceedings. He said a number of times in that message that he had never had his day in court. Nevertheless, there was no appearance for the defendant at the hearing of the proceedings.

I was satisfied that he had been given appropriate notice of the proceedings and that the material relied upon by the plaintiff had been served upon him as long ago as 31 January 2019 as was attested to in an affidavit read at the hearing of Craig Sargent sworn 31 January 2019. In the circumstances, the proceedings were conducted in the absence of the defendant.

The defendant did not file any evidence in response to the summons or to the evidence served by the plaintiff.

The plaintiff relied principally on an affidavit of Ryan James Bull, senior forensic accountant at the plaintiff. Mr Bull calculated the expenditure of the defendant for the six years prior to the date of the filing of the summons in accordance with s 28(3) of the Act. He did so in reliance on the records of the plaintiff, on records obtained from the New South Wales Land Registry Services database, the SAI Global Property database, the Roads and Maritime Services of New South Wales database, documentation from the Australian Taxation Office, documents of the defendant seized at the execution of a search warrant at his home, and a reading of the transcript of the defendant’s examination in the Court on 19 March 2015.

Mr Bull also inspected documents and relied on affidavits from various persons at organisations such as building societies, banks and motor vehicle dealers in an endeavour to ascertain what income was unrelated to illegal activities. Although the onus was on the defendant to establish that matter, this was no doubt done by Mr Bull in accordance with what Johnson J said in Vu at [75].

The first issue requires the plaintiff to establish on the balance of probabilities that the defendant was knowingly engaged in serious crime related activity. A certificate of conviction dated 4 July 2018 shows that on 9 June 2016 the defendant was convicted of the following offences:

These offences constituted serious crime related activity under s 6 of the Act and, therefore, illegal activity under s 4, engaged in not more than six years before the filing of the summons.

The second issue involves assessing the value of the proceeds derived by the defendant from these illegal activities. Section 28(3) effectively involves a deeming provision, with the result that the amount of the defendant’s expenditure during the six year period prior to filing the summons is treated as proceeds derived by the defendant from the illegal activities.

Mr Bull ascertained that the defendant had purchased two properties within the six year period. On 17 November 2006 he settled on the purchase of a property at 17 Tenth Street, Weston at a purchase price of $167,000. Mr Bull concluded, from an examination of the documents and the affidavits of Michele Moloney from the Commonwealth Bank of Australia and Leo Pierroti of ING Bank, that the defendant paid the amount of $167,144.24 for the purchase of the Weston property. Further, a reading of the defendant’s examination before this Court led Mr Bull to conclude that he was unable to say that the ING loan fund expenditure was funded from income unrelated to an illegal activity or activities for the purpose of s 28(3) of the Act.

The other property purchased by the defendant was 9 Park Street, Arcadia Vale which settled on 11 September 2009. A settlement sheet enabled Mr Bull to conclude that the defendant paid $125,975.74 for the purchase of the property. In addition, he paid $1,060 in legal costs and $4,460 in stamp duty. Mr Bull similarly concluded from reading the examination transcript of the defendant that he was unable to say that the Westpac loan fund expenditure was funded from income unrelated to an illegal activity or activities.

Mr Bull ascertained from material attached to the affidavit of Victor Manuel Gomes from Westpac that the total of repayments made by the defendant to Westpac between 9 October 2009 and 23 March 2012 totalled $41,920.10

When a search warrant was executed at the defendant’s residential premises on 3 April 2012, one of the documents seized was what appeared to be a bill of sale dated 1 March 2008 describing the sale of an AC Cobra vehicle kit from John David Smit to the defendant for $15,000. Mr Smit swore an affidavit on 12 December 2018 in which he said that he sold the AC Cobra to the defendant for $15,000.

Another document seized at the execution of the search warrant was a receipt recording the sale of a Holden LJ Torana from Ronald Wayne Davies to the defendant dated 4 April 2008 for $2,500. Subsequently, Mr Davies swore a statutory declaration saying that he had sold the Torana, a Holden 1-tonne HX and a shipping container full of car parts to the defendant for $8,000 in cash.

On 28 February 2013 Chris Watson Motorcycles Pty Ltd produced documents to the plaintiff pursuant to a Notice to Attend and Produce Documents issued under s 29 of the Crime Commission Act 2012 (NSW), including a tax invoice showing the defendant’s purchase of a Yamaha YZF-R1W from that company on 21 February 2007. The purchase price of $19,900 was reduced by $4,900 for a trade in of a 2002 Honda CRF450 motorcycle. The documents also included in a banking book a receipt of a CBA cheque for $15,000 from “Local League Cleaning Service – Sean Hindmarch”.

Mr Bull inspected a number of records obtained from the RMS database which showed the following:

Other documents seized at the execution of the search warrant were receipts for the purchase of various goods and services between 29 March 2006 and 19 March 2012. These receipts totalled $77,413.75.

Mr Bull said that a number of the cash receipts could be explained by withdrawals of cash from bank accounts operated by the defendant. He completed an analysis of the cash receipts where he matched any cash withdrawals that were made from one of the defendant’s bank accounts within two business days prior to the date of the cash receipt being issued. Upon creating a match he then added together the lesser amount of either the value of the cash receipt or the value of the cash withdrawal. He calculated the total value of those matches to be $7,513.45. In that way he calculated a net figure of $69,750.30 as the net value of cash receipts.

Mr Bull had regard to an affidavit of Armanda Helen Rozario of Newcastle Permanent Building Society which annexed account documents for account which I will refer to as “Account 1” showing withdrawals from that account totalling $310,709.25. Mr Bull then compared the withdrawals with deposits to Westpac and ING. He deducted those totals from the total amount of the debits. In addition, he deducted three amounts, being cheques already taken into account for the purchase of the Arcadia Vale property. Mr Bull concluded that the net withdrawals from Newcastle Permanent, taking those matters into account, was $62,343.11.

Mr Bull calculated withdrawals from a second account (“Account 2”) at Newcastle Permanent in the sum of $2,878.48.

Mr Bull calculated repayments to a third account with Newcastle Permanent (“Account 3”). Those repayments totalled $2,327.29.

Mr Bull then considered the bank statements attached to Michele Moloney’s affidavit to calculate withdrawals from the defendant’s account with the CBA. The total withdrawals were $167,411.05. Mr Bull deducted from that figure matters that had already been taken into account for the purchase of motor vehicles and which went towards the purchase of the Weston property. He also credited three transaction reversals in the account. The net total of the withdrawals was $120,476.43.

The defendant had two loan accounts with ING. Repayments to those accounts totalled $20,951.96 and $180,677.30 after allowing for reversals and a rollover from an ING loan account.

The total of all of this expenditure was $864,394.95 shown as follows:

Mr Bull then went on to consider what expenditure which was shown in bank statements and other documents which might be considered to be expenditure funded from other sources unrelated to an illegal activity or activities. Mr Bull prepared a spreadsheet showing these amounts. It is not necessary to detail all of them. It is enough to note that the larger sums involved were from the sale of the property at 17 Tenth Street, Weston, the sale of various motor vehicles already referred to in calculating expenditure for their purchase, and rental income received from the Weston property.

The total of expenditure considered by Mr Bull to be unrelated to illegal activity was $474,258.02. Subtracting that figure from the total amount of the expenditure, Mr Bull concluded that during the relevant period the expenditure that was not funded from income or money from other sources unrelated to an illegal activity or activities of the defendant was $390,136.93.

In my opinion, the material upon which Mr Bull relied in carrying out his calculation of the expenditure in the first instance amply supported his conclusions to which I have referred. In relation to the smaller amounts for which credit is given to the defendant, I was not taken to documentary material providing the source for all of these amounts. However, strictly speaking, the onus was on the defendant to demonstrate that the expenditure was not funded from illegal activity. The total amount for which the defendant is given credit by Mr Bull is in his favour. I am satisfied that I should accept Mr Bull’s expert evidence in that regard.

The plaintiff seeks an order that the NSW Trustee and Guardian take control of a property owned by the defendant at 34 Ninth Street, Weston. The power to make such an order is found in s 10B of the Act which relevantly provides:

Under s 31 of the Act all the interests of the defendant in property are charged in favour of the Crown to the extent necessary to secure payment of the assessed amount whilstever it remains unpaid. Pursuant to s 30 of the Act the Court may, on the application of the NSW Trustee and Guardian, make an order, which includes an order for sale of any property held by it, to pay to the Treasurer an amount sufficient to discharge the debt created by the proceeds assessment order under s 27.

Particularly by reason of the absence of the defendant from the hearing of these proceedings, I consider it appropriate that an order should be made under s 10B so that a decision can be made in relation to a means of discharging the proceeds assessment order.

Accordingly, I make the following orders: