PARTIES:	THE DIRECTOR OF PUBLIC PROSECUTIONS
V
KOSTADIN DURGUTOVSKI

TITLE OF COURT:	In the Supreme Court of the Northern
Territory of Australia

JURISDICTION:	Supreme Court of the Northern Territory of Australia exercising Territory jurisdiction

FILE W:	W 129 of 1993

DELIVERED:	Delivered at Darwin 8 June 1993 HEARING DATES:	Heard at Darwin 30 April 1993 JUDGMENT OF:	Mildren J
CATCHWORDS:

CRIMINAL LAW - Offences against property - Proceeds of sale tainted - Bank account personal property - Joint ownership
- Forfeiture

EQUITY - Equitable remedies- Irrelevant due to statute, "property"
Crimes (Forfeiture of Proceeds) Act,s5
Devaynes & Ors v Noble & Ors (1816) 1 Mer 572; 35 ER 781;
[1814-23] All ER Rep 1, discussed
Re Hallett's Estate (1880) 13 Ch D 696; [1874-80] All ER
Rep 793, discussed

GOVERNMENT AUTHORITY - Forfeiture to government - Authority part of government - Proceeds to Authority

Crimes (Forfeiture of Proceeds) Act,s6
Burgundy Royale Investments Pty Ltd & Ors v Westpac Banking Corporation & Ors (1987-88) 76 ALR 173, applied

REPRESENTATION:

Counsel Plaintiff: Defendant:

D Wallace P McQueen

Solicitors Plaintiff: Defendant:

OPP
Peter McQueen

Judgment Category classification: CAT A Court Computer Code: 9210105
Judgment ID Number: MIL93007 Number of pages: 11
General Publication

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY OF AUSTRALIA
AT DARWIN

N2 129 of 1992
(920105) BETWEEN:
THE	DIRECTOR	OF	PUBLIC PROSECUTIONS

Plaintiff
AND:

KOSTADIN DURGUTOVSKI
Defendant

CORAM: Mildren J

REASONS FOR JUDGMENT
(Delivered 8 June 1993)

This is an application commenced by Originating Motion whereby the plaintiff seeks an order pursuant to the Crimes (Forfeiture of Proceeds) Act  for the forfeiture to the Northern Territory of money standing in account N2 78529 of the Australian Central Credit Union.

This matter came on for hearing by Summons  on 30 April 1993. At the end of the hearing I ordered that the proceeds of the money standing in account N2 78529 of the Australian central Credit Union be forfeited to the Northern  Territory; that the proceeds of the account be vested  in the Power and Water Authority of the Northern Territory; that the restraining order made by Asche CJ on 15 November 1990 be set aside; and that the above orders take effect upon service of the orders on the Australian Central Credit Union. I now publish my reasons for the making of those orders.

On Tuesday 24 March 1992, the defendant pleaded guilty before Nader J to five counts of stealing contrary to s210(1) of the Criminal Code. In addition, the defendant

asked, pursuant to s396 of the Criminal Code, that fourteen similar offences be taken into account. Nader J took those similar offences into account when sentencing the defendant on Wednesday 25 March 1992.

The charges against the defendant arose out of a fraud perpetrated by him, Maurice James Cribb, Geoffrey Kenneth Parnell and Regina Gregorievna Bromberg upon the Power and Water Authority in respect of the disposal of the Power and Water Authority's used vehicles. The essence of the fraud was that twenty vehicles belonging to the Power and Water Authority, instead of going to public auction, were given into or held in the possession of Cribb, Bromberg and the defendant whilst Parnell, an auctioneer, prepared false paperwork going to show that the vehicles had  been regularly auctioned. The vehicles were thereby sold at low prices and subsequently re-sold for higher prices.  The fraud ran between 24 January 1990 and 24 October 1990.

Of the twenty vehicles so fraudulently dealt with, one was retained by Cribb. From the other nineteen, profits were made. In respect each of these nineteen vehicles, the defendant on 24 March 1992 either pleaded guilty to  stealing those vehicles or admitted his guilt to stealing those vehicles and had that offence taken into account.

During the currency of the fraud, the defendant maintained (with Bromberg) an account at the Australian Central Credit Union, being account N2 78529. Monies from that account were used to finance the fictitious purchases of the vehicles at low prices and to bank the proceeds of the resales of the vehicles at higher prices. The profits were  then distributed from that account to Parnell and Cribb. The profits of the fraud were not less than $130,000. Parnell received not less than $15,000 and not more than $18,200 of the profits - being his remuneration for the part which he played in the fraud - and the remainder of the proceeds, a

sum in excess of $110,000, was divided equally between  Cribb on the one hand and the defendant and Bromberg on the other.

on 24 October 1990, the amount of $52,599.84 (an amount  less than the defendant and Bromberg's share of the profits from the fraud) stood to their credit in account N2 78529 at the Australian Central Credit Union. On that day, Bromberg converted that entire sum to a bank cheque and was attempting to cash that bank cheque at the Credit Society when she was arrested by detectives from the fraud squad.

On 15 November 1990, Asche CJ made restraining orders pursuant to the Crimes (Forfeiture of Proceeds) Act restraining the defendant from dealing with the abovementioned $52,599.84 or with the abovementioned  account to which the funds had been credited. Since that time the account has been accruing interest.

The defendant opposed the making of a forfeiture order. On
20 August 1990, solicitors acting on behalf of the defendant, settled the sale of a unit previously owned by the defendant who received the sum of $21,238.05 by way of proceeds of that sale. Those proceeds were deposited into the same account.

The statement of account shows that on the day that those funds were deposited into the defendant's acGount,  the total balance of the account had a credit sum of
$24,238.05.	The	evidence		before		me		was	that,	on		11 September 1990, a deposit  of $47,800 -  being the proceeds of the sale of three vehicles the subject of the fraud, and involved	in	counts	2	and	3	on		the	indictment	and	itern number 7 on the schedule of offences taken  into account - was deposited	into the account.	At that stage, the total amount of the funds credited to the account was $48,000.29. On 19 September 1990, a deposit of $36,950 - being the

proceeds of the sale of two vehicles the subject of the fraud, being the vehicles involved in items 8 and 9 on the said schedule - was deposited into the account. The total amount standing to the credit of the account on that date was $51,395.40. On 26 September 1990, a further deposit of
$33,000 - being the proceeds of the sale of two vehicles the subject of the fraud, being the vehicles involved in count 4 in the indictment and item 10 in the schedule - was made, and on that date the total amount standing to the account was $47,191.73.

On 3 October 1990, a deposit of $47,750 was made into the account. This deposit comprised the proceeds from the sale of three vehicles the subject of the fraud, being the vehicles involved in items numbered 11, 12 and 13 of the schedule. As at that date the total amount standing to the credit of the account was $77,358.88.

On 17 October 1990, a deposit of $36,000 was made into the account and that deposit comprised the proceeds from the sale of two vehicles the subject of the fraud, being the vehicles involved in count 5 on the indictment and item 14 on the schedule. As at that date, the total amount standing to the credit of the account was $68,924.86.

There have been no dealings with the account by the defendant or Ms Bromberg since 5 November 1990, when the
$52,599.84 was re-credited to the account, and the only debits and credits in the account have been for fees, government duties and interest.

Section 5 of the Crimes (Forfeiture of Proceeds) Act
provides as follows:
"5.	FORFEITURE ORDERS

Where a person has been convicted of a serious offence, an appropriate officer may, at any time before the expiration of the relevant period, apply to an appropriate court for an order under this

section in relation to specified property and if the court -
is satisfied	that the property	is tainted property in relation to the offence; and
has taken into consideration (having regard to information before it) -
the use that is ordinarily or had been intended to be made of the property; and

) any	hardship	that	 may	reasonably	be likely to arise (whether on the part of

that or any other person) following making of the order,

the

it may order that the property	is forfeited to the Territory."

Section 3(1) defines "serious offence" to mean an offence "against a law of the Territory, being an offence that may be prosecuted on indictment." The offences for which the defendant had been convicted were offences of that kind. "Appropriate officer" is defined by s3(1) to mean "the Director of Public Prosecutions," who is in fact the plaintiff in this action. The "relevant period" in relation to the conviction of a person for a serious offence, is defined to mean "the period of 6 months after" the person was convicted or after "the date on which the court took the offence into account pursuant to section 396 of the Criminal Code." It is plain that the proceedings were commenced within time. "Appropriate court" is defined to include this Court.

Section 3(1) defines "tainted property" to mean: "property -
used in or in connection with; or
derived or realized, directly or indirectly, by a person as a result of,
the commission of a serious offence."

Section 3(2) of the Act provides that a person shall be taken to have been convicted of a serious offence if the person has been convicted whether summarily or on indictment - of the offence; or has been sentenced for another offence and the court has, in passing sentence on the person, taken the offence into account pursuant to s396 of the Criminal Code.

Mr McQueen, who appeared for the defendant, submitted that I ought not be satisfied that the property was tainted property within the meaning of the Act. His submission rested upon s5(3) of the Act wh±ch provides as follows:
" (3) Where, at the hearing of an application made under subsection (1), evidence is given that property to which the application relates was in the possession of the person at or immediately after the commission of the serious offence, then -
if there is no evidence given tending to show that the property was not used in, or in connection with, the commission of the offence - the court shall presume that the property was used in, or in connection with, the commission of the offence; or
in any other case - the court shall not make an order under this section in relation to the property unless it is satisfied, on the balance of probabilities, that the property was used in, or in connection with, the commission of that offence."

Mr McQueen submitted that, as the amount of $21,238.05 deposited into the account by Mr Durgutovski on 20 August 1990 has been shown to be the legitimate proceeds of a sale unconnected with the offences, the Crown could not rely upon the presumption raised by s5(3)(a) and therefore the court could not make an order under the section in relation to the money standing in the account unless the court was satisfied, on the balance of probabilities, that the property was "used in, or in connection with, the commission of the offences."

In my opinion, s5(3) has no bearing on a case where the plaintiff establishes that the property is tainted because it is "derived or realized, directly or indirectly, by a person as a result of the commission of a serious offence." Section 5(3) is directed only to the alternative means by which proof that the property is tainted may be established, namely that the property was used in, or in connection with, the commission of a serious offence. The purpose of s5(3) is to facilitate proof that the property was tainted because the property was used in, or in connection with, a commission of an offence, and to provide for the standard of proof if evidence is lead in relation to that matter. Section 5(3) has no application if the plaintiff seeks to prove that the property was tainted because it was derived or realized directly or indirectly by a person as a result of a commission of a serious offence.

There is no doubt in my opinion that each of the deposits referred to above which went into the account, and which were the proceeds of the sale of the vehicles, was property derived or realized by the defendant as a result of the commission of the offences. The definition of "property" in the Act includes "an estate or interest in real or personal property, money, a debt, ... and any other chose in action, right or interest."

So far as the proceeds of the sale of the flat is concerned, it is apparent that those proceeds had been largely dissipated before the first of the deposits of the proceeds of the fraudulent sales was made. By the time the first deposit of $47,8OO was made into . the account on 11 September 1990, the defendant had expended all but $200.29 of the monies standing to the credit of the account. By the time the second deposit of $36,950 was made on 19 September, the defendant had expended all but $14,445.50 standing to the credit of the account. To the extent that

as at 11 September 1990 of the sum of $48,000.29, $200.29 was property belonging to the defendant, the rule in Clayton's case (Devaynes & Ors v Noble & Ors (1816) 1 Mer 572; 35 ER 781; [1814-23] All ER Rep 1) has the effect that as between the Credit Society and the defendant the $200.29 is expended first. Applying that rule to all deposits made after 11 September 1990, the end result is, as at 24 October   1990   when   there   was   $52,599.84   standing   to    the credit of the account, save for an amount of something less than $1,400, the remaining sum represented the proceeds of the sales of the stolen motor vehicles.

In this case, the same result is reached if the rule in Re Hallett's Estate (1880) 13 Ch D 696; (1874-80] All ER Rep 793 is applied. The property having been given into the possession of Cribb, Bromberg and the defendant for the purposes of sale for the benefit of the Power and Water Authority, the proceeds of sale may be followed even though the proceeds may have been mixed with other monies. The  rule in Re Hallett's Estate, supra, would enable the Power and Water Authority therefore to trace the monies held in the account and Durgutovski would be deemed to have drawn  on his own money first, even if it was the most recently paid in, and to draw on the trust funds only after his own money had gone. However, the rule is subject to the limitation that where the defendant had paid in a sum of money, as happened in this case, shortly before the injunction was granted by Asche CJ, and that sum of money came from his own funds, the Power and Water Authority  could not claim more than the last balance in the account  at the time when that pay-in was made unless they  could also show that the payment in was intended to replace the trust money: see Snell's Equity 29ili ed (1990) at 301.

The Power and Water Authority is incorporated  pursuant to s4 of the Power and Water Authority Act 1987. In the exercise of its powers and in the performance of its

functions it is subject to the directions of the Minister. Its members are appointed by the Administrator and it is a prescribed statutory corporation within the meaning of and for the purposes of the Financial  Administration   Audit   Act.  In consequence it is undoubtedly the Northern Territory in another  guise:  see Burgundy  Royale   Investments   Pty   Ltd   & Ors v Westpac Banking Corporation & Ors (1987-88) 76 ALR
173 at 178. To that extent it may be thought appropriate to order that the property be forfeited to the Territory under the Crimes (Forfeiture of  Proceeds)  Act,  at least  to the extent to which the Power and Water Authority would be able, in a civi1 court, to trace those funds: see the definition of "interest" in relation to property, which includes "a legal or equitable estate or interest in; or a right, power or privilege over, or in connection with, the property."

However, I do not think it is necessary to rely upon equitable doctrines to support the making of a forfeiture order in this case. The definition of "property" includes "money, a debt, ... and any other chose in action, right or interest." The account which the defendant had with the Australian Central Credit Union was clearly "property." The account was used in order to deposit the proceeds of the crimes and to disperse therefrom monies to finance the fictitious purchases of vehicles involved in the fraud, and to distribute the profits to Parnell and Cribb. The profits of the fraud were not less than $130,000 and the amount of
$52,599.84 standing to the credit of the account on 24 October 1990 was less than the amount of the defendant's share of the profits. The total amount of the monies paid in, being the proceeds of the realization of the sale of the stolen vehicles,  also vastly exceeded  the amount of
$52,599.84. The fact that the account was used to finance the fraudulent purchase of vehicles and their subsequent resale, means that the funds also became "tainted property" within the first part of the definition in that they were

"used in, or in connection with" the offences. On any basis, therefore it is clear that the amount standing to the credit of the account  as at 22 October  1990, namely
$50,600.21,  is "tainted  property."  As to the  credit of
$1,500 on 23 October 1990, those funds came from a credit line account; but the last deposit made into that account on 19 October 1990, an amount of $3,528.71, was withdrawn from account N2 78529 and was in itself tainted property. Consequently, the credit of $1,500 must also be seen as tainted property - bearing in mind that only a little over
$500 had been withdrawn from the credit line account, between the date of the deposit of the $3,528.71 into the credit line account and the withdrawal of the $1,500 from that account and its transfer to account 78529.

Accordingly I am satisfied that the funds standing to the credit of account 78529 is tainted property.

Section 5 requires the court to take into consideration, before making a forfeiture order, the use that was ordinarily made or intended to be made of the property and any hardship that may reasonably be likely to arise to the defendant or to any other person following the making of the order. I find that the use ordinarily made or intended to be made of the property was to finance the fraudulent scheme, to receive the proceeds of the fraud and to disburse the proceeds to those involved. Having regard to the fact that all bar $200.29 of the proceeds of the sale of the unit had been expended before the account received the first of the relevant cheques, and that cash withdrawals far in excess of that sum had been made shortly thereafter, I am unable to see that any hardship would flow to the defendant if the order was made.

The account was in the joint names of the defendant and Regina Bromberg. Ms Bromberg was in part a party to the frauds, but in any event had no personal interest of an

-10-

honest kind in the monies. Pursuant to s5(2) of the Act, notice of this application was given to Ms Bromberg and Mr McQueen - who she apparently consulted - advised the court that she did not wish to be heard. I do not, therefore, consider that any hardship would flow to her by the making of the order.

Section 6 entitles the court, where property is forfeited to the Territory under a forfeiture order, to order that the property vests in such Territory authority as is specified in the order. There is no definition in the Act of 'Territory authority.' In my opinion those words are apt to describe the Power and Water Authority, given that it is an agent or emanation of the Territory. Having regard to the fact that the stolen vehicles belonged to the Power and Water Authority, I consider that it is appropriate to make an order vesting the property in the Power and Water Authority.

-11-