State of Queensland v King[2021] QSC 204

SUPREME COURT OF QUEENSLAND

1. [1]
   Three applications were brought under the provisions of the Criminal Proceeds Confiscation Act 2002 (Qld) (the CPCA) relating to $158,900 in cash located by police in a unit at the Q1 Building in Surfers Paradise.
2. [2]
   The State brings a forfeiture application seeking the forfeiture of the money to it.^[1]  That application is brought under s 56 of the CPCA and an order, if made, is authorised by s 58.  The two named respondents, Samuel King and Nikki Napier, bring a joint application seeking to exclude the money from forfeiture.^[2]  A third party, Rachel Clara Hobby, also brings an exclusion application.^[3]  The two exclusion applications are brought under s 65 of the CPCA seeking orders under s 68.

The circumstances of finding the money

3. [3]
   Detective Sergeant Richard Libke received information on 6 February 2016 concerning the activities of Mr King.  On the basis of that information, Detective Sergeant Libke obtained a search warrant authorising a search of a unit at the Q1 Resort, then temporarily occupied by Mr King and Ms Napier.
4. [4]
   During the search, various things were found.  Significantly:

1. a clip seal bag containing approximately six grams of a substance determined later to contain methylamphetamine;
2. another clip seal bag containing one gram of a substance, ultimately determined to contain methylamphetamine;
3. a small plastic container containing about 100 millilitres of a clear substance, ultimately found to be the dangerous drug “fantasy”;
4. several clip seal bags containing residue consistent with being methylamphetamine;
5. three glass pipes, commonly used to smoke methylamphetamine;
6. $158,050 in cash in plastic shopping bags on the bed in the main bedroom;
7. $850 in cash on Mr King’s person; and
8. various other contraband including a Ruger pistol and a can of mace.

5. [5]
   Detective Sergeant Libke’s discoveries led him to search a car which was associated with Mr King.  Found in the car were a set of scales and a set of knuckledusters.  A further search warrant was obtained to search the residence of Ms Napier and that located a number of items that were drug related and also a set of handcuffs and two sets of knuckledusters.  As a result of the searches both Mr King and Ms Napier faced various criminal charges.
6. [6]
   In due course, Mr David Leslie Goodie, the manager of the Proceeds of Crime section of the Crime and Corruption Commission (the CCC) swore an affidavit in support of an application for restraining orders^[4] over various property including, relevantly here, the sum of $158,900 cash.^[5]  A restraining order was made on 12 May 2016 by Applegarth J.^[6]  The restraining order was varied by me on 2 April 2020 but nothing turns on that variation.
7. [7]
   As already observed, an application for forfeiture was filed, as were applications for exclusion by Mr King, Ms Napier and Ms Hobby.  Each of those three parties swore affidavits in support of the applications.
8. [8]
   On 21 June 2019 Ms Hobby was examined on oath about her claims to the money.  That examination occurred pursuant to ss 37(1) and 38A(1)(a) of the CPCA and an order of Applegarth J made on 13 July 2018.^[7]
9. [9]
   Ms Hobby claimed ownership of the money.  Her evidence is as follows. 
10. [10]
    She is divorced.  Her marriage lasted only two years.  She married in 2001 but separated from her husband in 2003.  The couple did not divorce until 2013.  There are three children of that relationship now aged between 18 and 13. 
11. [11]
    In 2008, Ms Hobby was injured and brought a claim for damages.  She was ultimately successful in her claim and in June 2013 she received a part payment of the award namely, $30,000.  The balance of the money was paid later after an appeal by the insurer lead to a reduction of the damages award.
12. [12]
    Ms Hobby’s husband had been violent to her during the marriage and she was frightened of him.  She determined that the proceeds of her claim ought to be preserved as much as possible for the long-term benefit of her children and so she determined that she would place the money outside of her possession.  She explained that she was concerned that her husband may stand over her and force her to pay him the money.
13. [13]
    The $30,000, being the initial payment on the claim, was paid to her parents.  They betrayed her and took the money.  She had money stashed in a locked box at her parents’ house.  She did not though consider that the money was safe.
14. [14]
    Mr King had been known to Ms Hobby since childhood.  He is a colourful character who is known to police.  He has served a lengthy period of imprisonment.  However, Ms Hobby trusted him to look after the money.
15. [15]
    Over a period of time, Ms Hobby withdrew cash from her bank accounts in relatively large sums.  She then delivered that money in envelopes to Samuel and Elizabeth Jones to pass on to Mr King. 
16. [16]
    Ms Hobby’s version of events was supported by Mr King and by Mr and Mrs Jones.
17. [17]
    Mr and Mrs Jones are the parents of Mr King.  They swore that envelopes would be delivered to them by Ms Hobby and then collected by their son. 
18. [18]
    Mr King supports Ms Hobby’s claims.  He said, in his affidavit, that Ms Hobby would deliver money to him on the understanding that he could spend some of it provided that he ultimately paid it all back to her.  He swore that the sum of money found in the unit at Q1 was the total of $170,000 that had been paid by Ms Hobby over time, less some money that he had spent, about $11,000.  Both the money in the plastic bags and the money in Mr King’s pocket had been given to him by Ms Hobby, he said.
19. [19]
    Ms Napier knows little about the money and indeed knows little about Ms Hobby.  However, she said in her affidavit that before the search by police, she had seen Mr King with a large amount of cash. 
20. [20]
    There is one further complication.  In July 2014, Ms Hobby obtained a bank cheque for $12,000.  Her evidence was that the bank cheque was purchased to enable a friend of hers, Mr Burnett, to purchase a V8 Holden motorcar.  Ultimately, the car was registered in her name.  This was because Mr Burnett was a provisional driver and the Holden was a car that, by the law of New South Wales, could not be registered in his name or driven by him.  Mr Burnett later repaid Ms Hobby in cash and that $12,000 was passed on to Mr King.  It formed part of the $158,900 which was located in the Q1 unit.
21. [21]
    The circumstances of the search and seizure of the money was not in contest.  Detective Sergeant Libke was not required for cross-examination.  The real issue before me was the veracity of Ms Hobby’s account.  She was called and cross-examined, as were Mr King and Mr and Mrs Jones. 
22. [22]
    Ms Napier was not required for cross-examination presumably because, like Detective Sergeant Libke, she could only give evidence about the search, the circumstances of which were not in issue.
23. [23]
    An analysis of Ms Hobby’s bank accounts was conducted by a chartered accountant employed by the CCC, a Ms Raabe.  She provided affidavits and was called and cross-examined.  Much of her evidence was, frankly, unhelpful, but I will return to that shortly.

The Criminal Proceeds Confiscation Act 2002:  identification of the issues

24. [24]
    Apart from questions concerning the legal implications of the transaction with Mr Burnett, there was no dispute between the parties as to the operation of the various provisions of the CPCA.
25. [25]
    Prior to 2002, the Criminal Proceeds Confiscation Act 1989 was in force.  That provided for a scheme of confiscation dependent upon the conviction of an offender.  As a result of a Commonwealth Law Reform Commission report in 1999,^[8] the CPCA was enacted which retained a conviction based scheme of confiscation^[9] but also provided a scheme whereby civil proceedings could be brought to achieve confiscation independently of any convictions.^[10]  Both systems operate so that the property sought ultimately to be confiscated is restrained and then later an application for forfeiture is brought.^[11]  That is what occurred here.  The money was restrained pursuant to ss 28(3)(a)(i) and 31(1) as part of the non-conviction based regime of confiscation. 
26. [26]
    An application for a restraining order must be supported by an affidavit, here sworn by Mr Goodie, that the person swearing the affidavit holds a suspicion^[12] that the respondent (here, Mr King) has engaged in “serious crime related activity”.^[13]  “Serious crime related activity” is, in effect, the commission of a “serious criminal offence”.^[14]  Drug offences are “serious criminal offences”.^[15]  Mr Goodie swore to the relevant suspicion.  Where, as here, the court is satisfied that there are reasonable grounds for that suspicion a restraining order is made.  Here, as already observed, a restraining order was made over property including the $158,900.
27. [27]
    Section 58 of the CPCA provides, relevantly:

“58 Making forfeiture order

1. (1)
   The Supreme Court must make a forfeiture order if the court finds it is more probable than not that—

1. (a)
   for property restrained because of an application relating to property mentioned in section 28(3)(a) or (b)—the prescribed respondent mentioned in that application engaged during the limitation period in a serious crime related activity; or

2. (b)
   for property restrained because of an application relating to property mentioned in section 28(3)(c)—the property is serious crime derived property because of a serious crime related activity that happened during the limitation period.

…

4. (4)
   Also, the court may refuse to make the order if the court is satisfied it is not in the public interest to make the order.

5. (5)
   A finding of the court under subsection (1)—

1. (a)
   need not be based on a finding about the commission of a particular offence; and

2. (b)
   may be based on a finding that some offence that is a serious crime related activity was committed.

6. (6)
   Also, the raising of a doubt whether a person engaged in a serious crime related activity is not of itself enough to avoid a finding on which a forfeiture order may be made.

…

9. (9)
   In this section—

limitation period—

1. (a)
   means the period of 6 years before the day the application for the order is made; and

2. (b)
   includes periods before and after the commencement of this section.”

(emphasis added, legislative notes omitted)

28. [28]
    Where property is restrained, the court must^[16] make a forfeiture order if the respondent “engaged during the limitation period in a serious crime related activity”.^[17]  It is not incumbent upon the Crown to prove that the restrained property was the proceeds of the “serious crime related activity”.  Here, Mr King and Ms Napier have been convicted of drug offences and consequently, the Crown has proved the right to forfeiture subject to issues of exclusion.  There is no contest between the parties as to the operation of s 58 of the CPCA.
29. [29]
    Section 68 provides:

“68 Making of exclusion order

1. (1)
   The Supreme Court, on an application under section 65 or 66, may make an exclusion order.

2. (2)
   The Supreme Court must, and may only, make an exclusion order if it is satisfied—

1. (a)
   the applicant has or, apart from the forfeiture, would have, an interest in the property; and

2. (b)
   it is more probable than not that the property to which the application relates is not illegally acquired property.”

30. [30]
    A party is entitled to an exclusion order and thereby avoid forfeiture of the property to the State if the party has an interest in the property and “it is more probable than not that the property to which the application relates is not illegally acquired property”.  The operation of ss 58 and 68 was analysed in State of Queensland v Hayes.^[18]  There was no dispute here as to the interaction of the various provisions.
31. [31]
    Ms Napier has no interest in the money.  Mr King has legal title to the cash while in his possession.  He though, on his and Ms Hobby’s version, held it on trust for Ms Hobby who is the true beneficial owner.  Mr King can only prove that the money was not illegally acquired property if Ms Hobby is the beneficial owner of it.  He puts up no other explanation.
32. [32]
    Consequently, subject to the issue about the purchase of the car for Mr Burnett, the only real question is whether I am satisfied that it was more probable than not that Ms Hobby delivered cash in the sum of at least $170,000 to Mr King and that the $158,900 found in the unit was part of that money.  Money received from a personal injuries claim is not properly derived from “serious crime related activity”.  Therefore, if the money found by Detective Sergeant Libke is more probably than not the money paid by Ms Hobby, she has discharged the onus cast upon her by s 68, as has Mr King.
33. [33]
    As earlier observed, the onus to prove the legitimacy of the cash is upon Ms Hobby.  The Crown is entitled to put her to proof of her case.  The Crown is not obliged, for instance, to prove that the cash is from some illegitimate source, although such an inquiry is clearly relevant.^[19]  The absence of a positive contrary case from the Crown leaves much of the evidence of Ms Hobby and Mr King uncontradicted.^[20]
34. [34]
    There is no suggestion of the Crown electing not to call evidence which was available to it and no suggestion then of the engagement of the principle in Jones v Dunkel.^[21]

Has Ms Hobby proved her case?

35. [35]
    The Crown submits that Ms Hobby’s account is inherently improbable.  In particular, the State submits that there are more logical means to protect the money from her ex-husband than giving it to Mr King: keep the money in her bank account, of which her ex-husband was ignorant; keep it stored in the locked box at her parents’ house.
36. [36]
    Ms Hobby’s account is a very unusual one.  That she would withdraw large sums of money and deliver them to Mr King with the unfortunate coincidence that Mr King would then be found with that money (and drugs) in his possession, on its face seems unlikely.  However, any assessment must be conducted against an analysis of the evidence.
37. [37]
    The Crown submits that on a proper understanding of the movement of money from Ms Hobby’s accounts, there was not $170,000 which was available to pay in cash to Mr King.  Ms Raabe’s evidence is relevant to this issue. 
38. [38]
    Ms Raabe’s evidence can be conveniently viewed in two parts.  Firstly, she did an analysis of the accounts.  That was a mechanical exercise in reviewing the accounts and extracting figures and totals.  None of that was the subject of any real contest.
39. [39]
    The second part of her evidence was the expression of various opinions and conclusions.  These were admitted without objection on the basis of being expert opinion evidence.
40. [40]
    Turning to Ms Raabe’s first affidavit:  the analysis of the accounts concern two Commonwealth Bank of Australia accounts and an ANZ bank account.  Ms Raabe analysed these accounts for the period 1 May 2013 to 1 March 2016.  She identified receipt of the compensation claim and identified cash withdrawals and various living expense payments.
41. [41]
    The cash bank withdrawals totalled $194,839.  That potentially corroborates Ms Hobby as she says that she paid $170,000 in cash to Mr King.
42. [42]
    Ms Raabe observed that if $170,000 of that figure of $194,839 was paid to Mr King, then $24,839 has been retained by Ms Hobby.
43. [43]
    Ms Raabe then identified $65,406.60 paid from the accounts for living expenses.  She added $65,406.60 to the cash withdrawals above the $170,000 allegedly paid to Mr King ($24,839) to get a figure of $90,245.60 available for living expenses between 1 May 2013 and March 2016, a period of just under three years; a weekly figure for living expenses of roughly $650. 
44. [44]
    Ms Raabe then compared that figure with some Australian Bureau of Statistics (ABS) material with a view to then concluding that it was unlikely that Ms Hobby and her children could have lived on that weekly sum.  The inference then is that she spent on living expenses a greater proportion of the cash withdrawals than $24,839, thus leading to the further inference that she did not give $170,000 to Mr King.
45. [45]
    Ms Raabe’s logic is in my view fundamentally and obviously flawed.  Ms Raabe relied on the table prepared by the ABS of the average weekly expenditure of families living in Sydney.  That figure was $1,337 per week.  That equates to a net yearly income of about $70,000, a gross yearly income of about $96,000. 
46. [46]
    She then observed:

“54.  … I have determined that based upon the information contained in Ms Hobby’s affidavit, the total funds which were available for Ms Hobby to pay for living expenditure during the analysis period was $90,245.60.  This amount is significantly less, a shortfall of $107,630.40 than the estimated average cost of living of $197,876 as calculated by reference of the ABS report as detailed in paragraph 52 above”.

47. [47]
    The ABS figures are an average.  It is well known that there are suburbs of Sydney where the cost of living is notoriously high.  Ms Raabe, by inference, is suggesting that families living in Sydney are unlikely to exist on not less than about $1,337 a week.  Unless that is her assumption, there is no validity in the comparison between that figure and the figure that Ms Hobby says the family lived on.
48. [48]
    Ms Hobby did not live in one of the affluent suburbs of Sydney.  She is an uneducated woman in a compromised socioeconomic position living in the Western suburbs.  The evidence which was actually before Ms Raabe showed that in the period before receiving her claim payout, she was living on Commonwealth benefits far, far below the ABS average.  As can be seen, when the evidence is properly viewed, the figures extracted by Ms Raabe tend to corroborate, not detract, from Ms Hobby’s account.
49. [49]
    There are other opinions of Ms Raabe’s first affidavit which I would reject.  She formed the view that Ms Hobby was under “financial distress”.  The significance of that is that a person under financial distress would not stockpile money, but would spend it on living expenses.  In turn then, that would reduce the likelihood that she paid $170,000 to Mr King.
50. [50]
    However, there is no basis upon which Ms Raabe’s conclusion of “financial distress” can sensibly be maintained.
51. [51]
    Ms Raabe relied on two payments to short term money lending institutions.  The first payment was of $20.00 on 16 May 2015 to “Credit Corp Group Ltd Sydney” and the second was a withdrawal of $480 on 31 October 2014 to “Cash Stop”.
52. [52]
    Credit Corp is a debt collection company.  As was established in cross-examination, there was only one payment to Credit Corp and that was the payment of $20.00.  As Ms Raabe conceded, it was highly unlikely that Ms Hobby had been pursued for a debt of $20.00 and that the payment may very well have been made for another person.
53. [53]
    The payment to Cash Stop for $480 was unexplained but Ms Raabe conceded that at the time of that payment, there was a balance in the account of $3,469.03, a fact clearly inconsistent with Ms Hobby being in “financial distress”.
54. [54]
    The third matter relied upon by Ms Raabe was that there had been Centrelink payments received which were “emergency payments”, thus suggesting financial distress.  However, under cross-examination, it seemed likely that those payments were merely an advance of benefits to which Ms Hobby was entitled.^[22]
55. [55]
    Ms Raabe, in her second affidavit, revisited her calculations based on material filed by Ms Hobby and the results of the examination of Ms Hobby pursuant to s 38 of the CPCA.  She concluded that the cash withdrawals during the relevant period amounted to $195,009.  After deducting $28,710 for money paid by Ms Hobby to her parents for board and electricity, she concluded that the total amount available to pay to Mr King was $166,299, almost $4,000 less than the $170,000 said to have been paid to Mr King.  That figure though does not take into account the $12,000 cash which was paid back by Mr Burnett and it also doesn’t take into account an amount of $850 transferred and shown in the accounts for “electricity”.  Adding those amounts to Ms Raabe’s calculations increases the available sum to $189,400.
56. [56]
    Ms Raabe’s figures were calculated on the basis that the stockpiling commenced in May 2013.  In final submissions the Crown said that, based on answers given by Ms Hobby in her s 38 examination, the relevant period commenced on 28 June 2013 at the earliest.  If the stockpiling commenced on 28 June 2013 then the sums withdrawn fall to $187,389.  Taking into account money paid to Ms Hobby’s parents, the available amount, so submitted the Crown, fell to about $160,000 although added to that sum would be the $12,000 paid by Mr Burnett.
57. [57]
    The passage in the s 38 interview relevant to the Crown’s submissions is:

“So when did it occur to you that that scheme^[23] wasn’t going to work because your parents were going to take the money, not Jason?---When I asked them for money and they didn’t give it to me.

And when was that?---I don’t remember the exact dates. I don’t remember.

Well, you must have some idea?---I don’t remember exact dates, I’m sorry. I’ve had a lot go on in my life between now and then.

Yes. So is it true that it was after you realised that your parents wouldn’t return the money that you spoke to Mr King?---Yes.

So you spoke to Mr King about giving him the money some time after you realised that your parents weren’t going to return the money; is that right?---Well, when they weren’t giving me the money, yes, I decided that I was going to talk to Sam. Yes.

Okay. So that’s the sequence of events. The first plan was – with respect to the money – was to put it in your parents account; is that right?---Yes. They were taking the first initial lot of money. Yes.

Yes. And then – well, you didn’t know you were going to get a second lot because the appeal hadn’t been heard. You could have got – you didn’t know you were getting any further funds, did you?---Well, the – my lawyers were quite position that I was still going to get paid out. They thought I’d still get the same amount. If the lawyers were good on the day and didn’t stand there and go, “Mmm, ah, mmm, ah, mmm, ah,” and weren’t ready for the case then I would have won the whole lot. But they weren’t ready that day. They weren’t on the ball, and they just stood there and went, “Mmm, ah, mmm, ah, mmm, ah.”

Fair enough. Well, it’s a pretty terrifying place, the New South Wales Court of Appeal, I’ve heard. But, anyway, leaving that to one side, the – it was that – that was your initial intention, to give your parents the money to keep it away from Jason?---Yes.

Okay. So it was sometime that you can’t remember that you realised that your parents weren’t going to give you the money and it was then – after then – after that realisation that you then spoke to Mr King about giving him the money?---Yes.

Okay. So when did you – do you remember when you spoke to Mr King?---Not exact dates, no.

But it was – it would have been sometime after June of 2013?---June 2013. Why is that date – - –

Well, that’s – the 28^th of June 2013 is when your parents got the money?---Okay. So, yeah, it would have been after then. Yes.

And some time would have elapsed while you had this fight with them about the 30 – the return of the 30,000; is that right?---I don’t know. I was speaking to him when it was going on. I said to him, “I’ve asked them for the money.” I spoke to him about it – - –

Okay?--- – - – all the time, and let him know what was going on. And that’s why I come up to the conclusion that I was going to give him the money.

All right. So it was after he got the – so it was after the parents got the money. Now, how did you speak to him? Was it in person, telephone, letter, email?---I think it was in person.

You think?---Yeah. I’m sure it was in person.

Where was it?---At his mum and dad’s house.

58. [58]
    Ms Hobby was cross-examined about this issue before me.  Relevantly:

“And when did you reach that arrangement with Sam King?‑‑‑Pardon.

When did you reach that arrangements?‑‑‑It’s breaking up on my end.^[24]  When did I reach that arrangement?

Yes?‑‑‑Is that what you’re saying?

Yes?‑‑‑I can’t remember exact date what – but it was in the same time of when I was getting paid the money.  I had had money put into my parent’s account which I didn’t get back from them so I didn’t trust them anymore so I made arrangements with Sam that I would withdraw cash, he would hold it for me until further – later in my life when I wanted it back.

Had you thought about what you would do with the money before your arrangement with Mr King or how you would store it, how you would look after it?‑‑‑Well, in the beginning I thought I was going to give it to my parents to look after for me.  But when I got the first settlement from the ACL claim, which was $30,000, I couldn’t get it back off of them.  I had it transferred into their account and they wouldn’t give it to me.  So I then decided, okay, I would do it a completely different way and I sat down and spoke to Sam about it.

Do you remember when you gave the $30,000 to your parents, when that occurred?‑‑‑I beg your pardon.  You broke up.

Do you remember when you gave that money to your parents?  Do you remember when that occurred?‑‑‑Not the exact date, no.

Do you have an approximate date?‑‑‑It would be in my affidavit.  I don’t know the exact date, no.  Not [indistinct]

HIS HONOUR:   There would have been ‑ ‑ ‑

WITNESS:   Roughly 2013, I think, or ’14.

MR ROLLS:   I beg your pardon?‑‑‑Two thousand and thirteen, 2014.

Could it have been around about the 28^th of June 2013?‑‑‑If that’s what’s in the records, yes.

Well, it’s in your affidavit at court file index document 19 at paras 10 and 16?‑‑‑Okay.  Well, if it’s in my affidavit, that’s when I got it.

All right.  And then subsequently your parents refused to transfer those funds to you?‑‑‑That’s correct.  No, they wouldn’t [indistinct] they wouldn’t take it out in the bank.  Not transfer it to me, they just wouldn’t take it out of the bank and give it to me.

All right.  And do I understand it correctly that you took no steps against your parents to recover that $30,000?‑‑‑No.  I just argued with them about it.

So you lost that $30,000 from your personal injuries action?‑‑‑Yes.

Had you had any reason before that time to stockpile money?  You use the word “stockpile” in your affidavits.  Had you had any reason before that time to stockpile money?‑‑‑Well, I used to put money aside, yes, but I want to put – when I knew I was getting my claim I wanted it put aside for my children.

See, you say in paragraph 27 of your affidavit, which is your first affidavit – so that’s court file index document number 19 – paragraph 27 you said:

I began making withdrawals at various places around Sydney and suburbs from May of 2013. 

Why did you start doing that in May of 2013?‑‑‑Because I knew I was getting the claim come through and I wanted the money for my children.

But why were you making withdrawals at that stage?  Why not leave it in the bank?‑‑‑Why would I leave it the bank for my ex to get a hold of?

But you didn’t know – is that the reason you started – but you were going to give it to your parents, weren’t you?‑‑‑The amount of money I was going to stockpile and the amount of money that I was putting in my parents account is completely ‑ ‑ ‑

See, because you say that you put money in at various withdrawals around Sydney in May 2013?‑‑‑May 2013, yeah.

And yet, you pay your parents in order to apparently hide these funds in June of 2013?‑‑‑That’s when I was getting [indistinct] put in. 

So there is no reason, is there?‑‑‑I’d spoken to the lawyers and they had told me that I would be getting a claim, I would be getting the amount of funds.  I didn’t want my ex to get hold of them.

All right.  So that’s why you put it into your parents’ account?‑‑‑Correct.

So there was no need to stockpile the funds prior to the parents not refunding the money as they – as you thought they would do?‑‑‑But I still did get my money and stockpiled it anyway.

Why?‑‑‑Why?  For my children.  For their future.”       (emphasis added)

59. [59]
    The bank statements showed that from May 2013 significant cash withdrawals were being made by Ms Hobby.  That was money which, if stockpiled, was available to pay to Mr King at some time after 28 June 2013.
60. [60]
    Ms Hobby was asked how much cash was contained in the envelopes given to Mr and Mrs Jones.  She said they were amounts of $5,000, $10,000 or $20,000.  She was asked in her s 38 examination how long it took her to stockpile those amounts.  She said “I don’t – maybe it could be a week maybe it could have been 2 weeks.  I am not 100% sure”.
61. [61]
    An analysis of the accounts show that it was often the case that withdrawals over a period of a fortnight exceeded $5,000; August 2013 (at least $11,400), July 2014 (at least $12,000), the first half of  October 2014 (at least $9,470), the second half of October 2014 (at least $10,920), December 2014 (at least $6,520), first half of January 2015 (at least $9,600), second half of January 2015 (at least $12,710), February 2015 (at least $12,992.50) and March 2015 (at least $5,690). 
62. [62]
    The Crown submits that Ms Hobby could not have accumulated up to $5,000 in other fortnights over the period under investigation.  That does not in my view undermine Ms Hobby’s credit.  She may well have stockpiled the money over periods longer than a fortnight.  The s 38 examination was conducted almost three-and-a-half years after the seizure of the money.  It is reasonable in my view to conclude that Ms Hobby could honestly be mistaken about some aspects of the stockpiling.  This is especially so when the objective evidence directly supports the fact that on many occasions there was much more than $5,000 withdrawn in cash over fortnightly periods.
63. [63]
    Mr King, as earlier observed, supported Ms Hobby’s version.  I approached Mr King’s evidence with some caution.  His evidence though was corroborated, at least in part, by both Ms Hobby’s evidence that she gave him the cash and by Mr and Mrs Jones’ evidence that envelopes had been given by Ms Hobby to them and passed on to Mr King.
64. [64]
    The Crown points to discrepancies between the evidence of the various witnesses as to the description of the envelopes which were delivered by Ms Hobby to Mr King through Mr and Mrs Jones.  Ms Hobby said that she would write on the inside of the envelopes noting the amount of money.  Her recollection was that the outside of the envelope was blank.  Mr King said that there were various amounts written on the envelopes and also there could have been the names of companies.  Mrs Jones could not recall whether there was anything written on the envelopes but conceded there may have been.  Mrs Jones thought there may have been numbers written on the envelope.
65. [65]
    These discrepancies are relied upon by the Crown as undermining the credit of Ms Hobby and her witnesses.  In my view, they don’t.  The transfer of the envelopes occurred now some five years ago.  It is understandable that there may be some difference of recollection as to what the envelopes looked like.
66. [66]
    The Crown also points to an apparent inconsistency between the witnesses in relation to the return of the envelopes.  Ms Hobby said that she would get the envelopes back from Mr King.  Mr King also said this.  Mr Jones said that after he gave the envelopes to Mr King, he did not know what became of them.  Mrs Jones said that the envelopes were not given back by her or Mr Jones to Ms Hobby.  The Crown did not explore with either Mr King or Ms Hobby how the envelopes were returned by Mr King to her.  The Crown can hardly elect not to explore that issue and then attack the credit of Ms Hobby and Mr King on an assumption that the envelopes would have to be returned to Ms Hobby through Mr and Mrs Jones. 
67. [67]
    Ms Hobby gave evidence that the payments to Mr King were tallied in a notebook which she could now not locate.  That, the Crown submitted, gave rise to suspicion.  Ms Hobby said that she had moved houses and lost the book.  That to me seemed plausible.  It is also highly unlikely in my view that Ms Hobby would invent a story of keeping a book which she could then not produce. 
68. [68]
    While the onus is firmly upon Ms Hobby to demonstrate that the cash came from withdrawals from her bank accounts (which contained legitimate funds), the fact remains that there is no evidence contradicting Mr King’s evidence.
69. [69]
    Any suggestion that the cash came from drug dealing, or other drug activity, seems highly unlikely.  Mr King’s evidence that he was a heavy methylamphetamine user was not contested.  It was not contested that the methylamphetamine found in the unit was for Mr King’s personal use.  The possession of scales is a neutral piece of evidence.  Sellers of illicit drugs often possess scales.  The purchasers of illicit drugs also often possess scales.  The fact is that as between drug dealers and customers, there is often very little trust and both parties are often armed with scales to weigh the product.
70. [70]
    There is no evidence of any supplies of drugs being made by Mr King and certainly no suggestion of him conducting the business of trafficking in drugs.
71. [71]
    The evidence of Mr and Mrs Jones about the envelopes was not contested and I accept their evidence.
72. [72]
    As already observed, Ms Hobby’s version at first glance seems unlikely.  However, I accept the evidence of Ms Hobby.  She obviously did receive a payment in relation to her compensation claim.  Her evidence that she was the subject of domestic violence was not contested.  She obviously did make significant cash withdrawals from her accounts.
73. [73]
    Once Mr and Mrs Jones’ evidence is accepted, it is clear that there were envelopes being delivered by Ms Hobby through Mr and Mrs Jones to Mr King.  There is no obvious hypothesis as to what would be in the envelopes if it wasn’t money.
74. [74]
    Again, I repeat that the onus remains upon Ms Hobby.  However, there is no obvious alternative hypothesis as to what she did with the significant cash withdrawals if she did not pay them to Mr King.  Ms Hobby was clearly concerned with the welfare of her children.  I accept her evidence when she said she wanted to preserve the money for their benefit.  Given Ms Hobby’s concern for her children, I doubt she would have just wasted the money.
75. [75]
    Ms Hobby was cross-examined with a view to establishing that there were various alternatives to protect the money rather than to pay it to Mr King.  It was suggested that a new bank account could be opened.  It was suggested that the money could have been left in the locked box at her parents’ house.  She answered these suggestions, I thought, well and logically.  She didn’t wish to leave the money at her parents’ house given that they had already betrayed her in relation to the initial $30,000.  She didn’t wish to open a new bank account because her ex-husband may learn of it and then stand over her.
76. [76]
    The arrangement with Mr King may have been odd and perhaps not desirable.  However, I appreciate Ms Hobby’s position.  The insurance claim was a significant sum.  She was desperate to preserve that money.  Mr King, no matter what his faults, was a lifelong friend and someone whom she trusted.  The alternatives were bleak; trusting her parents with part of the money had not worked.  If she was in direct control of the money, through a bank account for instance, she would be liable to violence at the hands of her ex-husband.
77. [77]
    The only obvious hypothesis contrary to Ms Hobby’s version of events is that Mr King has come into possession of the cash found at the unit by some means and has concocted a story with Ms Hobby to innocently explain the money. 
78. [78]
    It is highly unlikely in my view that, if the story was a concoction, it would be corroborated innocently and coincidentally in the way it is.  Ms Hobby did make large cash withdrawals in excess of the sum seized from Mr King.  That is evident from the bank statements. There is no explanation as to any alternative use that Ms Hobby put the money.  Mr and Mrs Jones, whose credibility was not challenged, said that envelopes were being passed from Ms Hobby, through them, to Mr King.
79. [79]
    I find Ms Hobby to be a credible witness.  Her answers to questions were always responsive and, in my view, she was trying to tell the court the truth.  I accept Mr King’s evidence as it is substantially supported by Ms Hobby’s evidence and the evidence of Mr and Mrs Jones. 
80. [80]
    I turn now to the $12,000 which was paid in cash by Mr Burnett to Ms  Hobby.  In cross-examination, Ms Hobby was asked whether she knew the source of that money and she said she did not.  The State submitted that she has therefore not discharged her onus by proving that the $12,000 is not illegally acquired property.
81. [81]
    Ms Hobby dealt with this transaction in her second affidavit in these terms:

“24.  As to this issue concerning the $12,000 withdrawal/bank cheque, I wish to state to the Court that:

1. (a)
   I have a long-time friend named Luke and he is now my flatmate in Sydney;

2. (b)
   Luke was on a provisional driver’s licence at that time;

3. (c)
   Luke wanted to buy a 2003 Club Sport HSV R8 car (‘the Club Sport’) that was for sale at Oz Corp Motors for $12,000 – this car was also a collector’s type vehicle;

4. (d)
   Luke had $12,000 in cash to buy the Club Sport but because Luke was on a provisional licence he could not own the high-powered Club Sport motorcar;

5. (e)
   Luke and I discussed and agreed that I would pay for the Club Sport with the bank cheque drawn from my account and in return he would give me the $12,000 cash he had;

6. (f)
   Luke knew the situation between Jason and myself and was happy to help me out because it meant that I would get the cash for stockpiling and make it look like I had bought the car;

7. (g)
   Also, for Luke’s benefit, this would allow me to buy and register the Club Sport in my name, although it was for Luke, and therefore get around the issue of Luke’s provisional licence;

8. (h)
   I recall that later on I transferred the registration of the Club Sport into Luke’s name.”

82. [82]
    She was cross-examined on this issue before me:

“MR ROLLS:   I’ll just find it in my chronology.  Twenty-third of July 2014 – do you agree that a 2003 Commodore – sorry – Holden HSV R8, New South Wales registration number CHC820, was registered in your name?‑‑‑That’s correct.

The price paid for that vehicle was $12,000?‑‑‑That was correct ‑ ‑ ‑

And ‑ ‑ ‑?‑‑‑ ‑ ‑ ‑ but that wasn’t ‑ ‑ ‑

And – sorry?‑‑‑But it wasn’t for me.

…

The $12,000 that was used to pay for that particular car came out of your ANZ account?‑‑‑I purchased a bank cheque for Luke, who gave me the cash for the car.

Okay.  So let’s take that step by step.  The $12,000 came out of your ANZ account, and you purchased a bank cheque with it?‑‑‑Yes.  That’s correct.

And that bank cheque was then used to buy the Holden motor vehicle?‑‑‑That’s correct.

And you say it was for a Luke?‑‑‑Yep.

Is that Luke Burnett?‑‑‑Yep.  Luke Burnett.

And was he in a relationship with you at the time?‑‑‑No.

Had he been ‑ ‑ ‑?‑‑‑We were friends.

‑ ‑ ‑ in a relationship with you?‑‑‑I have – I did – we did start a relationship but it – it didn’t work as a relationship.  We were better as friends than what we were partners.

And Mr Burnett apparently paid you back the funds?‑‑‑Yes.  That’s correct.

And how did he pay you back?‑‑‑In cash.

And what happened to that cash?‑‑‑It went into the stockpile that I was putting towards my children.

And do you know where Mr Burnett got that cash from?‑‑‑Not up to me where he got the cash from.

So the answer is no, you don’t?‑‑‑No.” (emphasis added)

83. [83]
    The legal effect of the bargain with Mr Burnett was that Ms Hobby would pay $12,000 to the owner of the car in exchange for legal title which she held beneficially for Mr Burnett.  Mr Burnett then paid Ms Hobby the purchase price and she later transferred legal title in the car to him.
84. [84]
    The State relies on Henderson v Queensland.^[25]  There police located a large sum of cash in Mr Henderson’s possession.  A restraining order was made over the money and he brought an application for exclusion of the cash from forfeiture.  Mr Henderson’s case was that the cash was from the sale of jewellery which had been given to him by his father and which was to benefit Mr Henderson and his siblings.  Therefore, Mr Henderson argued, the cash was the proceeds of the sale of jewellery not the proceeds of illegal activity.
85. [85]
    The State contested Mr Henderson’s version that the cash was the proceeds of the sale of jewellery.  Mr Henderson gave evidence that his father had told him that the jewellery had been given to his father or grandfather in the late 1800’s or early 1900’s and was of Russian origin.  The expert evidence though dated the jewellery as probably post 1950’s.
86. [86]
    The trial judge accepted, and was upheld on appeal, an argument by the State that in order to prove that the cash was not illegally acquired property it was necessary for Mr Henderson to prove that the jewellery was not illegally acquired property.  As there was no evidence to that effect the exclusion application failed.
87. [87]
    It may be that Henderson is distinguishable in that there, unlike here, an issue was raised as to the provenance of the jewellery.  Here, there is no evidence casting any doubt on Mr Burnett or his $12,000 cash.  However, it is unnecessary to decide that issue. 
88. [88]
    Section 26 of the Confiscation Act provides relevantly as follows:

“26  When property stops being illegally acquired property or serious crime derived property

Property stops being illegally acquired property or serious crime derived property—

1. (a)
   when it is acquired by a person for sufficient consideration, without knowing, and in circumstances not likely to arouse a reasonable suspicion, that the property was illegally acquired property or serious crime derived property; or …”

89. [89]
    Here, Mr Burnett’s $12,000 in cash was acquired by Ms Hobby “for sufficient consideration”.  She expended $12,000 (the bank cheque) and acquired legal title in the vehicle which she then held for Mr Burnett.  The $12,000 was reimbursement to her.
90. [90]
    If the $12,000 cash was illegally acquired property, she clearly did not know it.  There was a reason for the transaction, namely that Mr Burnett could not legally own the car and those circumstances are not likely to arouse a reasonable suspicion that the $12,000 was illegally acquired.
91. [91]
    Consequently, Ms Hobby must show that the $158,900 cash found in the possession of Mr King was not illegally acquired property.  To do that, she would have to prove that the $12,000 was not illegally acquired property.  However, proof of that fact is not necessary if the $12,000 has ceased to be illegally acquired property (if it ever was) and, for the reasons I have given, that is the case. 

Conclusions and Orders

92. [92]
    Ms Napier has no interest in the cash.
93. [93]
    Mr King, as the person who had possession of the money has legal title to it.^[26]  He, having proved that the cash was not illegally acquired property, is entitled to an order excluding the property from forfeiture.  His interests though will be subject to the beneficial interest of Ms Hobby.
94. [94]
    Ms Hobby held the beneficial ownership of the money which she has proved was not illegally acquired property.  She is entitled to an order excluding the property from forfeiture.
95. [95]
    As the property has been excluded from forfeiture, the Crown’s application should be dismissed.
96. [96]
    The Crown properly accepted that if Ms Hobby was successful in her application she should have the benefit of a costs order. 
97. [97]
    The position of Mr King is more complicated.  He was legally represented early in the proceedings but not in the hearing before me.  He brought a joint application with Ms Napier, who has no interest in the cash.
98. [98]
    Mr King should have his costs of legal representation (including outlays) but not any other costs or expenses.^[27]  Further, Ms Napier has not sought any costs order, so the only recoverable costs in relation to the joint exclusion application are Mr King’s costs.  The order I shall make ought to be understood in that light.
99. [99]
    I order that:

1. Property being $158,900 cash found by police on 6 February 2016 is excluded from forfeiture.

2. The application for forfeiture of the money is dismissed.
3. The State of Queensland is to pay the costs of Samuel King and Rachel Hobby of the forfeiture application and their respective applications for exclusion, including reserved costs.