State of Queensland v Ricciardo
[2003] QSC 61
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- State of Queensland v Ricciardo[2003] QSC 61
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State of Queensland v Ricciardo[2003] QSC 61
State of Queensland v Ricciardo[2003] QSC 61
SUPREME COURT OF QUEENSLAND
CIVIL JURISDICTION
MULLINS J
No 8801 of 1999
THE STATE OF QUEENSLAND | Applicant |
and |
|
NUNZIO RICCIARDO | First Respondent |
and |
|
A CARDO NOMINEES PTY LTD | Second Respondent |
and |
|
FRANCESCO RICCIARDO | Third Respondent |
and |
|
MARIA RICCIARDO | Fourth Respondent |
BRISBANE
DATE 28/02/2003
JUDGMENT
HER HONOUR: On 28 September 1999, which was the day before Nunzio Ricciardo, also known as Nick Ricciardo (“the first respondent”) was arrested and charged with trafficking in heroin the Director of Public Prosecutions (“DPP”) obtained a restraining order under the Crimes (Confiscation) Act 1989 against the property of the first respondent, A Cardo Nominees Pty Ltd (“the second respondent”) and the first respondent's parents, Mr F S Ricciardo (“the third respondent”) and Mrs M R Ricciardo (“the fourth respondent”).
The restraining order specifically included the property situated at 25 Cadence Avenue, Mermaid Waters (“the Cadence property”) which is registered in the name of the second respondent. The restraining order has been extended by this Court from time to time and remains in force.
By application filed on 30 May 2002 the second, third and fourth respondents, to whom I shall refer collectively as “the respondents” seek that the restraining order be varied by deleting the Cadence property. Mr and Mrs Ricciardo have stated that if the application is successful they wish to sell or mortgage the Cadence property so that they can fund the first respondent's defence at his criminal trial.
In order to succeed on this application the respondents must satisfy the Court of the matters set out in section 140 subsection (2) of the Criminal Proceeds Confiscation Act 2002 the Act.
The evidence and the submissions in this application focussed on whether the Cadence property was not under the first respondent's effective control within the meaning of section 20 of the Act. The respondents bear the onus of establishing on the balance of probabilities that the Cadence property is not under the first respondent's effective control.
The definition of “effective control” in section 20 of the Act is not an exhaustive definition but sets out matters which are relevant in deciding that issue and circumstances when a property may be considered to be under a person's effective control.
Both parties relied on the decision in Director of Public Prosecutions (Victoria) v. Tat Sang Loo and Another (2002) VSC 231. That was concerned with the meaning of “effective control” in equivalent legislation. It was stated at paragraph 30—
“All in all, the Victorian legislation suggests, and the authorities dealing with like legislation show, that effective control means control which is practically effective, even though it is not supported by any proprietary interest or legally enforceable power; control de facto, not necessarily though it might also be - control de jure. Such control is not denied by the existence of trust arrangements which in ordinary circumstances would yield the trustee a bare legal interest in property.”
The respondents relied on affidavits of Mr and Mrs Ricciardo, the first respondent, Anthony Ricciardo and solicitor Mr Michael Bosscher. All but the solicitor were cross-examined. The applicant relied primarily on the affidavits of Mr DJ Ross, an investigative accountant with the Queensland Police Service, who was also cross-examined. Mr Ross exhibited a transcript of a Queensland Crime Commission hearing involving K A Rowe. As the respondents required Ms Rowe for cross-examination and she did not attend, I have taken no account whatsoever of the evidence from Ms Rowe.
Mr and Mrs Ricciardo, who are now in their early 70's, migrated to Australia in September 1964. Although Mr and Mrs Ricciardo speak English, they describe their English as limited and each required an interpreter when giving evidence on the hearing of this application. The first respondent was born on 5 November 1956 and his brother, Antonio, also known as Anthony Ricciardo, was born on 15 February 1959.
Upon arriving in Australia Mr and Mrs Ricciardo each worked in a factory and held a second job for over 20 years. They have always lived frugally. Mr Ricciardo ceased working in the factory in 1985 after an accident at work. He received payouts of approximately $73,500. He then continued working at his second job for a few years. Mr Ricciardo has received an Australian pension since 1985 and also an Italian pension. Mrs Ricciardo finished employment in about 1989 and has also been in receipt of an Australian pension and an Italian pension. The DPP has calculated the value of the Italian pension received by Mr and Mrs Ricciardo between 22 October 1992 and 1 October 1999 as $89,927.04.
Mr and Mrs Ricciardo have owned property since the late 1960's. At various times in Victoria they have owned property apart from their matrimonial home which property was purchased for modest prices. The summary of their Victorian property purchases indicates that they were successful in making profits when selling their Victorian properties. The profit from the sale of their property at Spotswood went into the purchase of their matrimonial home at Sunbury in which they still reside.
In August 1989 the first respondent was convicted of supplying heroin. He remained in prison until December 1992. Mr and Mrs Ricciardo undertook to pay to the Queensland Government the sum of $15,000 in respect of the grant of public defence for the first defendant. The letter, which is Exhibit 4, shows that in February 1991 the sum of $13,894 was owing by them for the public defence. Both Mr and Mrs Ricciardo stated in evidence that they paid that outstanding amount.
Until he died in 2000, Mr and Mrs Ricciardo used a Victorian solicitor, Mr Tom Scriva. Their relationship appears to have been close as Mr and Mrs Ricciardo gave Mr Scriva in total approximately $90,000 from the various payouts and profits from sales to invest on their behalf and would request that he return money to them as required and did not cause a fuss when he was unable to do so. Mr Ricciardo estimates that when Mr Scriva died he still owed them $30,000.
Both Mr and Mrs Ricciardo attributed Mr Scriva with advising them to set up a company for investment purposes. Mr and Mrs Ricciardo also took advice from their accountants, who were D P McMahon and Associates, in 1992. The second respondent was incorporated on 12 October 1992. Mr and Mrs Ricciardo are the directors and shareholders. Its registered office was care of the accountants until 31 October 1996 when it became the address of Mr and Mrs Ricciardo's matrimonial home.
Although no deed of trust for the Nick Ricciardo Trust has been located it can be inferred from the copy document entitled “Removal and Appointment of Trustee” (Exhibit 5) that the Nick Ricciardo Trust was established on 12 October 1992. That is supported by the express mention of that trust made in the second respondent's 1995 tax return which was also prepared by McMahon and Associates.
There is a contract dated 20 January 1993 for the first respondent and one K M Morgan to purchase the property at 61 Markeri Street, Mermaid Waters (“the Markeri property”). They were unsuccessful in obtaining approval for finance. The property was then purchased by the second respondent with the purchase being completed on 22 February 1993. The purchase price was $250,000.
Mr and Mrs Ricciardo obtained a loan in their names from the Commonwealth Bank in the sum of $60,000 expressly for the purpose of assisting their son in the purchase of this property. The sum of $100,000 was borrowed from a solicitor's mortgage company, Park Avenue Nominees Pty Ltd (“Park Avenue”). The first respondent undertook all the dealings in relation to that mortgage. According to the analysis undertaken by the DPP, that purchase was funded to the extent of $79,000 from unknown sources.
The first respondent resided in the Markeri property. The analysis of the DPP shows that the Commonwealth bank loan obtained by Mr and Mrs Ricciardo was repaid to the extent of $8,322.34 by the Italian pension, $730.00 from K M Morgan, and funds from unknown sources of $57,431.06.
The first respondent and Mr and Mrs Ricciardo stated that the first respondent did make some of the repayments of this Commonwealth bank loan to the extent of $13,894, being by way of repayment of that amount which Mr and Mrs Ricciardo had paid to the Queensland government on behalf of the first respondent. On that basis that leaves approximately $43,000 from unknown sources that was used to repay the Commonwealth bank loan.
The loan to Park Avenue was repaid within four months from funds of $21,266.66 provided by the first respondent. The balance of that loan was repaid from the proceeds of sale of the property at Uplands Drive, Mudgeeraba, being the sum of $80,000.
That property had been owned by Cardo Nominees Pty Ltd since January 1986, a company about which no evidence was given, and then by the first respondent as trustee for a short period at the commencement of 1993, about which no meaningful evidence was given. Mrs Ricciardo asserted that she had sent money for the purchase of this property.
Mr and Mrs Ricciardo did not use the second respondent to purchase the property at 19 Fairsky Avenue, Mermaid Waters (“the Fairsky property”) which was purchased by them in their own names pursuant to a contract dated 8 June 1994, in the sum of $180,000. Mr Ricciardo referred to this as buying an investment property in Queensland. According to the analysis by the DPP the purchase price of this property was provided from withdrawals from bank accounts as to $8,188, funds from unknown sources of $31,812 and a Commonwealth bank loan in the sum of $140,000.
Mr and Mrs Ricciardo lived in the Fairsky property themselves when they moved to Queensland between July 1997 and January 1998. They then sold that property under contract dated 2 June 1998. There was a redraw of $30,000 in relation to this Commonwealth Bank loan on 19 May 1998.
According to the DPP analysis the Commonwealth Bank loan in total was repaid from the Italian pension as to $21,574.55, from the sale of the Fairsky property as to $33,244.70, from the sale of the property at Rye in Victoria owned by Mr and Mrs Ricciardo as to $61,249.25 and from unknown sources as to $51,373.73.
In March and July 1996 the second respondent borrowed the sums of $50,000 and $100,000 respectively from Park Avenue on the security of the Markeri property. The proceeds of each of those loans was paid to Jinsen Pty Ltd, a company associated with the first respondent. Mr and Mrs Ricciardo had no knowledge of these transactions. They were organised by the first respondent. Those loans were repaid as to $150,000 from the sale of the Markeri property as to $5,163.93 by Jinsen Pty Ltd and as to $14,619.84 from unknown sources.
On 21 April 1997 the second respondent entered into a contract to sell the Markeri property. That sale was settled on 26 May 1997. The first respondent acted on behalf of the second respondent in this sale. The second respondent entered into a contract dated 7 June 1997 to purchase the property at 29 Sundowner Court, Mermaid Waters (“the Sundowner property”) for $245,000. Prior to the settlement of that purchase the removal of Mr Anthony Ricciardo as trustee of the Nick Ricciardo Trust and his replacement by the second respondent was effected by the documents dated 27 June 1997 (Exhibit 5).
At least for the years ended 30 June 1994, 1995 and 1996 when the only significant asset in the name of the second respondent was the Markeri property, the tax returns of the second respondent had shown unsecured loans of $269,130, whicr were split equally as loans owed by the second respondent to each of the Anthony Ricciardo Family Trust and the Nick Ricciardo Family Trust. The tax return for the year ended 30 June 1997 shows that in that year the second respondent had repaid the loan to the Anthony Ricciardo Family Trust and the amount of the loan owed to the Nick Ricciardo Family Trust was reduced to $118,732.
The Sundowner property was purchased by funds of $89,923.25 from the second respondent's bank account, which was part of the balance of the proceeds from the sale of the Markeri property that had been paid into that bank account and by a loan from the National Australia Bank in the sum of $155,000.
Although there are no documents whatsoever to show that the second respondent was acting as the trustee of the Nick Ricciardo Family Trust, curiously the guarantee and indemnity which the bank required from Mr and Mrs Ricciardo to support the loan refers to the second respondent as borrowing in that capacity. The first respondent was the contact for the solicitors acting on behalf of the second respondent in the purchase of the Sundowner property.
The Sundowner property was then sold under contract dated 4 February 1998 for the sum of $285,000. There was no explanation by Mr and Mrs Ricciardo or the first respondent as to why this property was sold so soon after it was purchased, although Mrs Ricciardo did recall making a profit of $40,000 on this sale.
The National Australia Bank loan for this property was repaid as to $151,666.46 from the proceeds of sale of the Sundowner property and $9,517.50 from unknown sources. The sale was settled on 18 February 1998.
The Cadence property was purchased under contract dated 30 January 1998 for the sum of $282,000. Mr and Mrs Ricciardo had looked at purchasing this property about nine months previously but had been unable to meet the conditions required by the vendor. They were prepared to purchase the property in January 1998 when the first respondent and Mr Anthony Ricciardo noticed that there was a for sale sign on the property. The first respondent paid the deposit of $20,000 and the stamp duty on the contract of $8,345. The redraw of $30,000 by Mr and Mrs Ricciardo on their Commonwealth Bank loan for the Fairsky property was used by them to reimburse the first respondent for these expenditures.
Proceeds of $112,000 from the sale of the Sundowner property were used to pay the purchase price. The balance of the purchase price for the Cadence property was provided by a loan of $150,000 from the National Australia Bank. This time that bank required a guarantee and indemnity from the first respondent in addition to Mr and Mrs Ricciardo. Again the guarantee and indemnity referred to the borrower as the second respondent as the trustee for the Nick Ricciardo Family Trust.
That National Australia Bank loan was repaid using primarily the proceeds of sale of the Fairsky property of $134,168 which settled on 29 June 1998. According to the DPP analysis the balance of the loan was repaid as to $3,650.04 from the Italian pension and as to $8,475.00 from inter bank account transfers.
The first respondent commenced to reside in the Cadence property in early June 1998 and has continued to reside there. The first respondent has renovated the kitchen at the Cadence property for the sum of $4,560, installed a pontoon for the sum of $2,305 and had some tiling work done. Effectively the Cadence property has been purchased utilising proceeds from the sale of the Markeri, Fairsky and Sundowner properties, each of which involved unknown funds in either the purchase of the repayment of a loan relating to that property.
Repayments attributable to the Italian pension have been identified in the DPP analysis relating to these properties to the extent of $33,546.93. The balance of the Italian pension received from the end of 1992 until June 1998 does not explain the funds from unknown sources of Mr and Mrs Ricciardo as set out above and totalling about $215,000.
Mr and Mrs Ricciardo assert that the second respondent always acted at their direction in relation to the purchase and sale of properties and that the first respondent acted at their direction and on their behalf. The first respondent asserted that none of his funds have found their way into the Cadence property and that all his financial dealings with his parents have been one way - they have given him money and paid his debts.
The first respondent stated that he had no knowledge of the Nick Ricciardo Family Trust. Mr Anthony Ricciardo offered as the explanation for the setting up of the second respondent to hold family properties was to ensure that the first respondent would not lose any of the properties should he have a break up with any of the women he was living with. Mr Anthony Ricciardo explained further that his parents considered that everything that they had was their sons or would be their sons ultimately and that the assets being protected by the second respondent were primarily those of the parents.
The assertions made on behalf of the respondents have to be evaluated in the light of all the evidence relevant to the activities of the second respondent and the dealings of the first respondent and Mr and Mrs Ricciardo. There are a number of matters which favour the position taken by the respondents, including:
- In the light of their successful investing in property in Victoria, it is explicable that Mr and Mrs Ricciardo would wish to invest in property on the Gold Coast when both their sons resided there.
- It makes sense that Mr and Mrs Ricciardo would take advice from the solicitor and accountant on the appropriate vehicle for investing in property in Queensland, having regard to their limited understanding of English and their need for assistance in undertaking financial dealings.
- The Cadence property was one that Mr and Mrs Ricciardo chose for the second respondent to purchase.
- They relied on the first respondent to act on their behalf and for the second respondent, because of their limited English, and the first respondent was living near where the transactions were being undertaken.
- It is incontrovertible that some of the funds attributable to Mr and Mrs Ricciardo were used by the second respondent in purchasing and then paying off the loan for the Cadence property.
- Mr and Mrs Ricciardo have natural affection for the first respondent and would do whatever was in their power to assist the first respondent, such as providing him with rent-free accommodation in the Cadence property.
- Anthony Ricciardo has a set of keys to the Cadence property and considers that it is only his parents' permission that he requires in order to stay there.
There are a number of matters which detract from the position of the respondents, including:
- The coincidence of the setting up of the second respondent and the Nick Ricciardo Trust about two months before the first respondent's release from prison.
- That Anthony Ricciardo understood that there was an element of Mr and Mrs Ricciardo wishing to protect the family assets as motivation for setting up the second respondent.
- That the first purchase undertaken by the second respondent was of the Markeri property which the first respondent had desired to purchase and then resided in, and the loan taken by Mr and Mrs Ricciardo personally in connection with this purchase was described to their bank as being to assist their son in the purchase of a home.
- The respondents cannot explain why the books of the second respondent show the purchase of the Markeri property as, in effect, being financed by loans to the second respondent from the Anthony Ricciardo Trust and the Nick Ricciardo Trust.
- The one property on the Gold Coast in which Mr and Mrs Ricciardo resided for a period was purchased in their names and not in that of the second respondent.
- There are numerous letters in relation to the various sales, purchases and loans addressed to the second respondent at the address at which the first respondent was then residing.
- As Mr and Mrs Ricciardo have no knowledge of the Anthony Ricciardo Trust and the Nick Ricciardo Trust, someone else must have been able to provide the information to their accountants to enable movements in the loans from those trusts recorded in the second respondent's books to be reflected in the second respondent's balance sheet.
- Mr and Mrs Ricciardo had no knowledge of the use made of the Markeri property in providing funds to Jinsen Pty Ltd which was organised by the first respondent and which was primarily repaid from the proceeds of sale of the Markeri property.
- Significant funds from unknown sources can be traced into the purchase of the Cadence property and the repayment of the National Australia Bank loan that assisted in the purchase of that property through dealings with the Markeri, Sunburner and Fairsky properties.
- The National Australia Bank identified the borrower in respect of the loans for the Sundowner and the Cadence properties as the second respondent as the trustee of the Nick Ricciardo Family Trust and required the first respondent to provide a guarantee and indemnity in respect of the loan for the Cadence property.
(k)The first respondent resides in the Cadence property.
(l)The first respondent concedes that as he resides at the Cadence property, he occasionally makes payment of rates which is borne out by the rate notices found at the Cadence property, and, although the first respondent asserts that when he is not able to pay the rates, he forwards the account to his parents, there was no evidence of the payment of rates by Mr and Mrs Ricciardo in respect of the Markeri, Sundowner or Cadence properties.
(m)Mr Anthony Ricciardo has not sought to stay at the Cadence property.
Some of the factors detracting from the respondent's position may be negated to some extent by the factors in favour of the respondents' position, and on each side there are some factors that are equivocal. Overall however, there is a lack of detail supporting the respondents' position in relation to their decision-making in respect of and dealings, particularly with the Markeri, Sundowner and Cadence properties, which means that there is a lack of support for the assertions made by the witnesses for the respondents that the second respondent, and more particularly, Mr and Mrs Ricciardo, are in control of the Cadence property and that the first respondent is not in control of the Cadence property.
The scheme of the Act disadvantages the respondents. Because the DPP obtained the restraining order covering the Cadence property at the outset, the respondents bear the onus of showing that the Cadence property is not under the effective control of the first respondent.
Despite the fact that the first respondent has no direct or indirect interest in the second respondent, or what could be described as an acknowledged legal or equitable interest of any kind in the Cadence property, I am not satisfied that the history of the second respondent, the dealings with the Markeri, Sundowner and Cadence properties, and to a lesser extent the Fairsky property, the relationship between the first respondent and his parents and the connection between the first respondent and the Cadence property, allows for me to conclude that the Cadence property is not under the first respondent's effective control. The application is dismissed.
…
HER HONOUR: The applicant seeks costs. One of the reasons that Mr Conrick of counsel argues for costs is that he drew my attention to the fact that there had been an earlier application by Mr and Mrs Ricciardo for the release of the Cadence property from the restraining order that was dismissed by her Honour, Justice Atkinson, in June 2000. I do not have the advantage of a transcript of the reasons of her Honour in relation to the disposal of the application at that time.
Mr Bosscher, who is now the solicitor for the second, third and fourth respondents has indicated to me that it is his understanding that that application was brought in order to obtain funding for legal costs which does make it a different sort of application than that which was pursued before me. It is understandable why the respondents brought this application in view of the desire of Mr and Mrs Ricciardo to assist their son in funding his defence.
The applicant has the advantage of the legislative provisions which place the onus on the second, third and fourth respondents to satisfy the Court that the first respondent has no effective control of the subject property. In my reasons I concluded that I was satisfied that some of Mr and Mrs Ricciardo's funds have found their way into the Cadence property. That itself did not enable the application to be resolved in their favour because of the onus they bear under the Act and what has to be proved in order to satisfy that onus.
In the circumstances, I consider that an appropriate outcome in respect of costs is that there be no order as to costs and that is the order that I make.