45 Bonview Circuit Pty Ltd v Commissioner of the Australian Federal Police
[2024] VSC 180
•26 April 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
CONFISCATION AND PROCEEDS OF CRIME LIST
S ECI 2023 04939
| 45 BONVIEW CIRCUIT PTY LTD (ACN 656 766 077) and others according to the schedule attached | Applicants |
| v | |
| THE COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE | Respondent |
---
JUDGE: | Forbes J |
WHERE HELD: | Melbourne |
DATES OF HEARING: | 14, 19 and 20 December 2023 |
DATE OF RULING: | 26 April 2024 |
CASE MAY BE CITED AS: | 45 Bonview Circuit Pty Ltd & Ors v Commissioner of the Australian Federal Police |
MEDIUM NEUTRAL CITATION: | [2024] VSC 180 |
---
CONFISCATION AND PROCEEDS OF CRIME – Confiscation – Suspected proceeds of crime – Restraining order – Application to revoke restraint over real property and shareholdings – Whether no grounds to make order at time of revocation application – Whether authorised officer held suspicion on reasonable grounds – What constitutes reasonable grounds – Proceeds of Crime Act 2002 (Cth) ss 18 and 19 – Mai v Commissioner of the Australian Federal Police (2020) 62 VR 118 – George v Rockett (1990) 170 CLR 104.
WORDS AND PHRASES – ‘suspicion’ – ‘reasonable grounds’.
---
APPEARANCES: | Counsel | Solicitors |
| For the First to Third Applicants | T Mitchell SC M James | Moray & Agnew Lawyers |
| For the Respondent | S Ginsbourg K Farrell | Australian Federal Police |
TABLE OF CONTENTS
Background......................................................................................................................................... 1
The evidence....................................................................................................................................... 2
Legal principles: power to make and revoke restraining orders.............................................. 3
The basis upon which the property was restrained.................................................................. 10
The suspicions of Creighton and the grounds for those suspicions...................................... 12
(i) Suspected offending............................................................................................................... 12
(ii) Suspicion as to the properties in question......................................................................... 14
Bonview Circuit................................................................................................................. 16
Greens Road....................................................................................................................... 21
Shareholdings in Felixz..................................................................................................... 22
Creighton’s viva voce evidence....................................................................................... 23
Submissions...................................................................................................................................... 25
Consideration.................................................................................................................................... 26
(i) Real properties........................................................................................................................ 29
(ii) The shareholdings................................................................................................................. 38
HER HONOUR:
This is an application by the first to third applicants under s 42 of the Proceeds of Crime Act 2002 (Cth) (the POC Act) to revoke a restraining order made on 16 November 2023. The application was heard urgently on 14 and 19 December 2023 in respect of five items of property, each restrained under ss 18 and 19 of the POC Act:
(a) Real properties at 43 and 45 Bonview Circuit, Truganina (together Bonview Circuit);
(b) Real property at 35 Greens Road, Dandenong (Greens Road); and
(c) Shares in:
(i) Felixz Investments Pty Ltd (Felixz) held by Wenquian Ding (Ding);
(ii) 45 Bonview Circuit Pty Ltd (Bonview Pty Ltd) held by Felixz; and
(iii) Greens 35 Pty Ltd (Greens 35) held by Felixz;
(collectively, the shareholdings).
Given the urgency of the application, I informed the parties on 20 December 2023 of my decision to revoke the restraining orders over Bonview Circuit and Greens Road. I indicated that I would provide these reasons in due course and deal with the revocation application in respect of the shareholdings in doing so. For the reasons set out below the restraint over the shareholdings under s 19 only is also revoked.
Background
On 16 November 2023 on ex parte application by the Commissioner of the Australian Federal Police (the Commissioner, or the AFP) a restraining order was made by Justice Gorton (the November restraining order).[1] In total it restrained seven real properties and six shareholdings pursuant to ss 18 and 19 of the POC Act.
[1]Application pursuant to Proceeds of Crime Act 2002 (Cth) ss 25 and 26(4) (‘POC Act’).
Revocation is also sought in respect of other restrained property subject of the November restraining order. However there was no urgency in respect of that other property and the balance of the application remains pending. The balance of the November restraining order restrains:
(a) three separate parcels of land in Grosvenor Street, Abbotsford;
(b) a property at Gibraltar Drive, Surfers Paradise;
(c) shareholdings in Zhu Investments Pty Ltd (Zhu Investments); and
(d) shareholdings of Zhu Investments in:
(iv) Southlink Grosvenor Pty Ltd; and
(v) Southlink Grosvenor No 2 Pty Ltd.
The need for an expedited hearing came about because the properties at Bonview Circuit and Greens Road are commercial properties presently under development and expiry of existing financial arrangements was imminent for those developments. Bonview Circuit was financed by a facility extended by MCH Agency Services with a limit of approximately $21,679,000 secured by a registered mortgage against the property and guaranteed by three companies and two individuals.[2] The facility was due to mature on 28 December 2023 and refinancing was in the process of being negotiated with ANZ bank. Similarly the development of the property at Greens Road was financed by a facility with ANZ in the sum of $10,907,000 that had matured on 24 November 2023, again secured by a registered mortgage and guaranteed by three companies and one individual.[3] ANZ had given approval to new financing for both properties on 21 November 2023 but revoked approval upon learning of the restraining orders over the property.
[2]Applicants, ‘Affidavit of Sarwar (Sazz) Nasimi’ sworn 28 November 2023 in 45 Bonview Circuit Pty Ltd & Ors v Commissioner of the Australian Federal Police S ECI 2023 04939, [11] (‘First Affidavit of Sarwar (Sazz) Nasimi sworn 28 November 2023’).
[3]First Affidavit of Sarwar (Sazz) Nasimi sworn 28 November 2023, [12].
The evidence
The November restraining order was made in respect of a suspect Jing Zhu (Zhu). Earlier restraining orders had been made over other property on 25 October 2023 in relation to Zhu (the initial restraining order) as well as four other suspects. The initial restraining order and the November restraining order were made upon affidavits of AFP officer Mark Creighton (Creighton). His affidavit sworn on 24 October 2023 (the first affidavit) in relation to Zhu sets out the background of her suspected offending and the grounds for those suspicions along with matters relating to the properties relevant to the initial restraining order. Creighton’s second affidavit sworn on 10 November 2023 (the second affidavit) referenced the background of suspected offending and noted that on 25 October 2023 Zhu was charged with an offence contrary to ss 400.2B(1) and 11.5 of the Criminal Code Act1995 (Cth) (the Criminal Code). The second affidavit outlines the results of further investigations made since 24 October 2023. It sets out the substantive suspicions and grounds for holding those suspicions regarding the additional property subject to the November restraining order.
The applicants for revocation relied on an affidavit sworn on 28 November 2023 and a second one of 5 December 2023 by legal practitioner Sarwar Nasimi of Moray & Agnew Lawyers on instructions from Jonathon Yongyuan Ji (Jon Ji), director of Bonview Pty Ltd. The instructions provided by Jon Ji also include information about Greens 35, the sole director of which is Jon Ji’s wife U-Fhern Chang (Chang). The applicants also relied on the transcript of the ex parte hearing before Justice Gorton on 16 November 2023.[4]
[4]Transcript of Proceedings, An application by the Commissioner of the Australian Federal Police (Supreme Court of Victoria, S ECI 2023 04939, Justice Gorton, 16 November 2023) which forms part of exhibit bundle JL-1, Applicants, ‘Affidavit of James Christian Lazari’ affirmed on 12 December 2023 in 45 Bonview Circuit Pty Ltd & Ors v Commissioner of the Australian Federal Police S ECI 2023 04939, 4–28 (’16 November Transcript’).
Legal principles: power to make and revoke restraining orders
Under s 18 of the POC Act, a restraining order may be made in respect of a person suspected of committing certain offences. Section 18(1) provides:
(1) A court with proceeds jurisdiction must order that:
(a) property must not be disposed of or otherwise dealt with by any person; or
(b) property must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in the order;
if:
(c) a proceeds of crime authority applies for the order; and
(d) there are reasonable grounds to suspect that a person has committed a serious offence; and
(e) any affidavit requirements in subsection (3) for the application have been met; and
(f) the court is satisfied that the authorised officer who made the affidavit holds the suspicion or suspicions stated in the affidavit on reasonable grounds.
Subsection 18(3) deals with the affidavit requirements:
(3) The application for the order must be supported by an affidavit of an authorised officer stating:
(a) that the authorised officer suspects that the suspect committed the offence; and
(b) if the application is to restrain property of a person other than the suspect but not to restrain bankruptcy property of the suspect – that the authorised officer suspects that:
(i) the property is subject to the effective control of the suspect; or
(ii) in any case – the property is proceeds of the offence; or
(iii) if the offence to which the order relates is a serious offence – the property is an instrument of the offence.
The affidavit must include the grounds on which the authorised officer holds those suspicions.
Therefore, s 18 of the POC Act requires an authorised officer to have reasonable grounds to suspect that a person has committed a relevant offence and state those matters in an affidavit. In this case, because the property to be restrained is that of a person other than the suspect, the suspicion about the property and the grounds for that suspicion must also be set out in an affidavit. The relevant suspicions about the property will be that the property is proceeds of an offence; or, where factually relevant, is subject to effective control of the suspect; or, where relevant because of the type of offence suspected, is an instrument of a serious offence. If the Court is satisfied that the stated suspicions are in fact held, and held on reasonable grounds that are stated, then the order to restrain the property must be made.
Under s 19 of the POC Act, a restraining order may be made in respect of suspected property. Section 19(1) provides:
(1) A court with proceeds jurisdiction must order that:
(a) property must not be disposed of or otherwise dealt with by any person; or
(b) property must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in the order;
if:
(c) a proceeds of crime authority applies for the order; and
(d) there are reasonable grounds to suspect that the property is:
(i) the proceeds of a terrorism offence or any other indictable offence…(whether or not the identity of the person who committed the offence is known); or
(ii) an instrument of a serious offence; and
(e) the application for the order is supported by an affidavit of an authorised officer stating that the authorised officer suspects that:
(i) in any case – the property is proceeds of the offence; or
(ii) if the offence to which the order relates is a serious offence – the property is an instrument of the offence;
and including the grounds on which the authorised officer holds the suspicion; and
(f) the court is satisfied that the authorised officer who made the affidavit holds the suspicion stated in the affidavit on reasonable grounds.
Therefore, s 19 of the POC Act requires an affidavit stating a suspicion that the property is proceeds of an indictable offence or, where relevant because of the type of offence suspected, is an instrument of an offence. The affidavit must include the grounds for those suspicions. As with s 18, where the Court is satisfied that the suspicions are in fact held, and held on reasonable grounds, where both are stated, then the restraining order must be made.
The Court has the power to revoke a restraining order when an application is made under s 42 of the POC Act. An application may be made by a person not notified of the application for the restraining order,[5] within 28 days after being notified of the order.[6] The application must be in writing and specify the grounds on which revocation is sought.[7] There is no issue that these requirements have been met. Section 42(5) sets out the circumstances in which a court may revoke a restraining order. It provides:
[5]POC Act s 42(1).
[6]POC Act s 42(1A)(a).
[7]POC Act s 42(2).
(5) The court may revoke the restraining order if satisfied that:
(a) there are no grounds on which to make the order at the time of considering the application to revoke the order; or
(b) it is otherwise in the interests of justice to do so.
The Commissioner may adduce additional material to the Court in an application to revoke an order.[8] In addition to the two affidavits relied on at the time of ex parte restraint, the Commissioner relied on two further affidavits sworn by Creighton, one on 11 December 2023 (the third affidavit) and another on 14 December 2023 (the fourth affidavit).
[8]POC Act s 42(4).
While the applicants rely on both grounds under s 42(5), the expedited hearing dealt only with subsection (a). The question of whether it was in the interests of justice to revoke the order under subsection (b) was not argued.
Mai v Commissioner of the Australian Federal Police[9] (‘Mai’) considered the ‘no grounds’ test for revocation in s 42(5)(a) of the POC Act and what is required by an applicant to discharge the onus of proving there are ‘no grounds on which to make the order’.[10] The Court said that s 42 did not require an applicant to prove the negative proposition that there are no circumstances that warrant making a restraining order. Instead, the question is whether, on the material before a court at the time of hearing the revocation application, the applicant has satisfied the Court on that material that a restraining order could not be made.[11]
[9](2020) 62 VR 118 (‘Mai’).
[10]Ibid 133, [44], citing Commissioner of the Australian Federal Police v Tjongosutiono (2018) 329 FLR 103; DPP (Cth) v Tan [2003] NSWSC 717 (‘Tan’).
[11]Mai (n 9) 133 [46].
This construction was consistent with approach of the Court in Director of Public Prosecutions (Cth) v Kamal,[12] where Martin CJ rejected the proposition that s 42(5) imposes a different test to that imposed for granting the restraining order. His Honour said:
Accordingly, if there are not “reasonable grounds to suspect that a person has committed a serious offence”, or if the court is not satisfied that the suspicion stated in the supporting affidavit is held on reasonable grounds, the requirements for the making of an order imposed by s 18 of the Act will not be made out, and the court will be empowered to revoke the order.[13]
[12](2011) 248 FLR 64 (‘Kamal’).
[13]Ibid [106] with reference to Tan (n 10); the Court in Mai (n 9) at 134 [48] observed this approach was also consistent with observations made by way of obiter in Lee v DPP (Cth) (2009) 75 NSWLR 581 at [30].
The Court in Mai considered that in this approach it may well be relevant to consider whether irrational, improper or unlikely grounds for suspicion suffice to permit a restraining order.[14] The onus in seeking a restraining order is on the proceeds authority, but on a revocation application it shifts to the applicant. The test to be applied, however, remains constant.
[14]A question that Shaw J found unnecessary to decide in Tan (n 10).
This construction of s 42(5) then led the Court in Mai to consider what is required for satisfaction that ‘the authorised officer holds the suspicion or suspicions stated in the affidavit on reasonable grounds’.[15] The Court concluded that the grounds identified for the suspicion are those of the deponent as identified in an affidavit. The Court is not permitted to identify for itself other grounds that had not suggested themselves to the authorised officer. The task for the Court is to decide for itself whether the grounds, as identified by the deponent for holding the relevant suspicion, are reasonable.[16]
[15]POC Act ss 18(1)(f) and 19(1)(f).
[16]Mai (n 9) 136 [58].
In Mai, the trial judge did not undertake the exercise of considering the grounds of the deponent for each suspicion and evaluating their reasonableness. It was not in issue that the deponent held identified suspicions but rather whether the grounds for holding them were reasonable. Instead of analysing the grounds relevant to each suspicion – as to offending, and as to characteristics of the relevant property – the trial judge wrongly approached the exercise on a global basis and so did not address all the relevant grounds.
Therefore the test focuses attention both on the nature of the suspicion as well as the grounds for having that state of mind.
In George v Rockett,[17] where the applicable test was also suspicion on reasonable grounds, a suspicion was described as ‘a state of conjecture or surmise where proof is lacking: I suspect but I cannot prove’.[18] The Court quoted with approval from the judgment of Kitto J in Queensland Bacon Pty Ltd v Rees:
A suspicion that something exists is more than a mere idle wondering whether it exists or not; it is a positive feeling of actual apprehension or mistrust, amounting to ‘a slight opinion but without sufficient evidence’, as Chambers’s Dictionary expresses it. Consequently, a reason to suspect that a fact exists is more than a reason to consider or look into the possibility of its existence.[19]
[17](1990) 170 CLR 104 (‘George v Rockett’).
[18]Ibid 115 citing Lord Devlin in Hussien v Chong Fook Kam [1970] AC 942, 948.
[19]Ibid 115–116 citing Kitto J in Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266, 303.
As to the grounds for a suspicion, the Court in George v Rockett said:
Where a statute prescribes that there must be “reasonable grounds” for a state of mind – including suspicion and belief – it requires the existence of facts which are sufficient to induce that state of mind in a reasonable person…Therefore it must appear to the issuing justice, not merely to the personal seeking the search warrant, that reasonable grounds for the relevant suspicion and belief exist… It follows that the issuing justice needs to be satisfied that there are sufficient grounds reasonably to induce that state of mind.[20]
[20]Ibid 112–113 (citations omitted) (emphasis added).
Although George v Rockett talks of ‘the existence of facts’, what is to be stated are the matters going to the reason for a state of mind, not to establish that those matters exist or are proved to some objective standard.[21]
[21]Ibid 112, 116.
Saad v Commissioner of the Australian Federal Police (‘Saad’)[22] makes this clear. Saad was an appeal from a revocation application under s 42(5) the POC Act. The appeal proceeded on the sole ground challenging the admissibility of parts of the affidavit in support of the application for the restraining orders. The reason for the alleged inadmissibility was that the source of the hearsay contained in the affidavit was not disclosed, and so did not fall within s 75 of the Evidence Act 2008 (Vic). The Court of Appeal concluded it was not necessary for the Commissioner to prove facts that underpin suspicions. Walker JA said:
Thus, what is being “proved” by the affidavit filed under s 18(3) is not the existence of the offending, or the asserted facts to which the authorised officer deposes, but the basis (ie grounds) on which he or she formed the relevant state of mind (ie suspicion). In that statutory context, if the affidavit includes hearsay evidence, that evidence is not deposed to for the existence of the asserted fact. It is for that reason that the “grounds” for a suspicion under s 18 (and related provisions) may include matters that subsequently are found to be false.
Put another way, if an authorised officer deposes that she holds a suspicion on grounds including, for example, that she obtained information from an officer of the ABF, the evidence is being adduced to show the reason for her suspicion.[23]
[22][2021] VSCA 246 (‘Saad’).
[23]Ibid [129]–[130].
There is a distinction to be drawn between the suspicion and the grounds for that suspicion. In drawing that distinction the judgment of the NSW Court of Appeal in International Finance Trust Company Ltd v NSW Crime Commission[24] is helpful, although dealing with the NSW legislation. It was also quoted extensively by Walker JA in Saad on the evidentiary question considered there. Allsop P said:
The facts that induce the state of mind of the person must be stated…In other words, the deponent must state why he or she has the suspicion that, for instance, the person in question has engaged in serious criminal activity.
What needs to be deposed to will depend upon why the suspicion is held. It may be held because of information received from a third party; it may be held because of what a colleague has said; it may be held because of observations that have been made by the deponent. There is no particular complexity or difficulty about this. However, a deponent does not state grounds of a suspicion that x has engaged in serious criminal conduct by merely asserting that x has engaged in serious criminal misconduct.[25]
[24](2008) 232 FLR 37.
[25]Ibid 44 [23]-[24], cited in Saad (n 22) at [105].
The basis upon which the property was restrained
The November restraining order was made on the basis that, as noted in ‘Other Matters’, the Court was satisfied that in respect of the properties the subject of the order Creighton held on reasonable grounds the following suspicions: they each are proceeds of and/or an instrument of the suspected offences, or are subject to the effective control of the suspect.
The AFP’s written submissions in support of restraint dated 13 November 2023 detail suspicions as to ‘ownership or effective control’ of relevant property, summarising in particular the use of family members and bank accounts involving Zhu’s mother and father, her three brothers and sister-in-law Ding among others as disclosed by the first Creighton affidavit. Turning to the relevant further properties, the written submission addressed the second Creighton affidavit and stated:
4.The grounds on which Zhu is suspected to have effective control of the properties that are the subject of the current application involve her use of the same methodology to conceal her financial interest in these assets. Further, the income declared by the relevant family members to the ATO fails to account for their acquisition of the property…This makes it reasonable to suspect that the properties are, at least in part, the proceeds of undeclared income…This provides further grounds that make it reasonable to suspect that the properties are proceeds of crime and instruments of crime.[26]
[26]Commissioner of the AFP, ‘Applicant’s Submissions in Support of the Application’, Submissions in An application by the Commissioner of the Australian Federal Police S ECI 2023 04939, 13 November 2023, [4] (footnotes omitted) (emphasis added). These were the submissions before Justice Gorton on 16 November 2023.
The submissions set out a table identifying each of the six real properties. Extracting the relevant properties the table showed:[27]
[27]Ibid [5].
Property When acquired Value Interest held by family members Value of interest 43 Bonview Circuit, Truganina 2022 $6,674,382 10% through Felixz Investments $667,438 45 Bonview Circuit, Truganina 2022 $6,523,374 10% through Felixz Investments $652,337 35 Greens Rd, Dandenong South 2021 $16,780,000 10% through Felixz Investments $1,678,000
This table was in turn supplemented by a detailed table for the three properties which identified Zhu as the ‘Suspected Owner/Controller’, and included a column headed ‘Grounds for suspected ownership, control or instrument by [suspect]’ which paraphrased the affidavit material. In relation to Bonview Circuit it stated:
Mortgage to MCH Agency Services registered on 1 July 2022.
Zhu is suspected to own or control this property through 45 Bonview Circuit Pty Ltd. 700 of the 1000 shares in that company are held by Mercator Holdings Pty Ltd. Mercator Developments Pty Ltd (Mercator), a related entity, has received a total of $2,760,500.45 from entities connected to Zhu. Those funds are suspected to have been made for the purpose of funding the development of the property. Part of those funds are derived from the Distribution Funds which were paid to Zhu and her husband. It is suspected that the property was partly acquired using proceeds of crime or is an instrument of a serious offence.[28]
[28]Footnotes omitted.
A similar paragraph refers to Greens Road, noting instead an ANZ mortgage on title and also noting receipt of $2,760,500.45 by Mercator Developments Pty Ltd (Mercator Developments) suspected to have been made for the purpose of development of the property. The same analysis is undertaken in the table for Bonview Pty Ltd, Greens 35, and Felixz, all of which are suspected to be owned or controlled by Zhu, obtained using proceeds of or as an instrument of her offending.
As can be seen in particular from paragraph 4 of the AFP submissions, the question of effective control of the assets was central to the AFP’s application and relied on a similarity between ownership of these properties and the methodology of using family and trusted associates without income that would explain their ownership. Before Justice Gorton the AFP addressed the grounds for suspecting offending required by s 18 in some detail. As to the suspicions regarding the property itself required under ss 18 and 19, the oral submissions broadly identified that the property needed to fall into one of categories – it was property of the suspect, it was under effective control of the suspect, or it was proceeds of and/or an instrument of offending. None of the relevant property being property of the suspect, only the latter two categories were applicable.
The AFP’s oral submission before Justice Gorton, as supported by the table set out above at [29] was that it was reasonable to suspect that Zhu had contributed at least somewhere between 10% and 25% towards the purchase price of the properties and therefore the properties are proceeds.[29] Therefore, the AFP contended the suspect had acquired either ownership or effective control of enormously valuable assets without there being any legitimate explanation for their acquisition.[30]
[29]16 November Transcript 9.30-10.3.
[30]16 November Transcript 11.18-25.
Although, in general, the AFP identified both suspicion as to offending and suspicion as to the nature of the property as both relevant, His Honour was not taken in the oral hearing to any of the detail as to grounds for suspicions about the characteristics of the particular properties. He was not taken to the financial tracing exercise, nor the nature of the links between new companies and individuals that were not mentioned in the first affidavit. Rather the focus of the oral submissions was on the absence of a legitimate source of the funds in the hands of the suspect and her family, in particular Zhu’s mother (Fengchai Chen) and Ding.
The suspicions of Creighton and the grounds for those suspicions
(i) Suspected offending
It was not in dispute that Creighton held suspicions as to Zhu’s offending and that the grounds for those suspicions were reasonably held.[31] That concession involved to four offences initially suspected and the subsequently charged fifth offence:
[31]Transcript of Proceedings, 45 Bonview Circuit Pty Ltd & Ors v Commissioner of the Australian Federal Police (Supreme Court of Victoria, S ECI 2023 04939, Justice Forbes, 14, 19, 20 December 2023), 3.10–22 (‘T’).
(a) Dealing with money or other property that is reasonably suspected to be proceeds of crime and at the time of the dealing, the value of the money and other property was worth $100,000 or more, contrary to s 400.9(1) of the Criminal Code;
(b) Dishonestly causing a loss to the Commonwealth, contrary to s 135.1(3) of the Criminal Code;
(c) Two offences of obtaining a financial advantage by deception, one contrary to s 134.2 of the Criminal Code and the other contrary to s 82 of the Crimes Act 1958 (Vic); and
(d) Zhu was charged on 25 October 2023 with conspiring to deal in money or property that was or was believed to be proceeds of an indictable crime contrary to ss 400.2B(1) and 11.5 of the Criminal Code.
In his first affidavit, Creighton deposed to his suspicion that Zhu was involved in alleged money laundering activities through arrangements informally known as the ‘Long River Money Laundering Operation’ or ‘Long River MLO’. These suspicions were founded upon information produced by a joint agency investigation called Operation Avarus-Nightwolf. The first affidavit identified a complex structure in which Creighton suspected that Zhu was a key member of the Long River MLO who used trusted family members to hold real property and other assets as the registered owners on her behalf.[32] Creighton suspects that Zhu has sought to distance herself from ownership of the assets to disguise the source of funds used to acquire those assets, and in turn protect those assets from the operation of the POC Act.[33] This distance is achieved by the use of trusted family and associates to hold funds and assets.
[32]Commissioner of the AFP, ‘Affidavit of Mark Creighton’ sworn 24 October 2023 in 45 Bonview Circuit Pty Ltd & Ors v Commissioner of the Australian Federal Police S ECI 2023 04939, [94] (‘First Affidavit of Mark Creighton sworn 24 October 2023’).
[33]First Affidavit of Mark Creighton sworn 24 October 2023, [95].
All five offences are deposed to as being serious offences as defined by s 338 of the POC Act, and therefore it is relevant to both ss 18 and 19 restraint if Creighton holds suspicion that the property is an instrument of an offence, as well as proceeds of an offence. Nothing was said to turn on a distinction between proceeds and instruments in this application.[34]
[34]Each is defined in s 329 of the POC Act.
In relation to the property covered by the initial restraining order, the first affidavit set out the financial circumstances of the trusted family members as a ground for the suspicions held. The first affidavit stated that the limited financial circumstances of identified family members was the principal ground for suspecting that property held by them was proceeds of or an instrument of Zhu’s suspected offending, or was property under the effective control of Zhu.
(ii) Suspicion as to the properties in question
The second affidavit dealt with the relevant properties and sets out the substantive suspicions as to the characteristics of that property. Creighton relied on suspicions that each property is proceeds of, and/or are an instrument of, serious offences.[35]
[35]Commissioner of the AFP, ‘Affidavit of Mark Creighton’ sworn 10 November 2023 in 45 Bonview Circuit Pty Ltd & Ors v Commissioner of the Australian Federal Police S ECI 2023 04939, [4] (‘Second Affidavit of Mark Creighton sworn 10 November 2023’).
Three paragraphs are central. Paragraph 12 of the second affidavit summarises Creighton’s suspicions as to the characteristics of the properties in a section detailing the various property subject of the application:
Since the making of the Restraining Order and the execution of search warrants at various locations, further investigations have been conducted in relation to real property suspected to be under the effective control of Zhu. Based on the information obtained pursuant to these investigations I have formed the suspicion that the following property has been acquired using the proceeds derived by Zhu and her husband Qu from their involvement in the Long River MLO and furthermore, the following properties have been used as instruments in dealing with the proceeds of crime:
The real properties are then listed.
Next, paragraph 29 of the second affidavit deals with those properties that are commercial properties. In it, Creighton states:
The investigations I have undertaken in relation to financial interests in real property held by Zhu Investments and Felixz Investments has revealed the companies have a financial interest in the properties set out at paragraph 13 [noting this should be 12] of this affidavit, by means of their shareholdings in the registered proprietors. The properties are commercial properties and the registered proprietors are Southlink Grosvenor Pty Ltd, Southlink No 2 Pty Ltd, Mercator Holdings Pty Ltd, 45 Bonview Circuit Pty Ltd and Greens 35 Pty Ltd. The links between these companies and the ownership of the property the subject of this affidavit is described in more detail below and is set out in a chart which is Annexure 1 to this affidavit.
Finally Creighton states at paragraph 72:
Based upon the information I have received as part of my investigations, I suspect that significant amounts of funds have been transferred to Southlink, Southlink No.2, Mercator entities, Bonview Pty Ltd and Greens 35 Pty Ltd by Zhu family members and facilitator companies controlled by Zhu, at the direction of Zhu, for the purpose of securing the financial interest of Zhu in the properties.
The second affidavit also states a suspicion about the shareholdings. Creighton states at paragraph 15:
I suspect that Zhu holds her financial interest in certain real properties through [Zhu Investments] and [Felixz].
In the fourth affidavit Creighton states at paragraphs 11 and 12:
I also wish to clarify paragraph 15 of my 10 November affidavit. As stated, I suspect that Zhu holds her financial interest in the real properties listed at paragraph 12 of that affidavit through Zhu Investments and Felixz Investments. Specifically, I suspect that Zhu is in effective control of both Zhu Investments and Felixz Investments and their respective shares. I suspect that Zhu uses both companies to distribute funds derived from the Long River MLO and as those funds are the proceeds of crime, both companies are the instruments of crime.
…
I believe Zhu has effective control of the shares in … 45 Bonview and Greens 35 held by… Felixz Investments…
Before turning to consider each property in question, the second affidavit sets out information about the connections between the companies and individuals with interests in the various real properties over which restraint was sought. It identified two investment companies: Felixz and Zhu Investments, who are shareholders in one or more of the corporate titleholders of the real property. It identified three ‘facilitator companies’ suspected to be intermediaries used to transfer money derived from Long River MLO. It also identified four bank accounts in the name of family members. All of these companies and accounts were suspected of being under the effective control of Zhu.
The second affidavit also made reference to other companies who had an interest in the five parcels of real property. It set out the various directors and shareholders of those companies. Annexure 1 to the second affidavit is described as setting out the ‘links between these companies and the ownership of the property’.[36] Creighton deposes that Annexure 1 demonstrates that ‘there are various persons who are directors of multiple companies which in turn are the shareholders of the companies which are the registered proprietors of the property sought to be restrained’.[37]
[36]Second Affidavit of Mark Creighton sworn 10 November 2023, [29].
[37]Ibid [30].
Annexure 1 and the second affidavit identifies a person Yuan Tao (Tao), who is the sole director, secretary and shareholder of Jianhao Pty Ltd (Jianhao). Jianhao is a shareholder of companies that are the registered proprietor of all five commercial properties that were restrained on 16 November 2023. The second affidavit also sets out links between Tao and Chang Jiang Financial Pty Ltd, one of the companies used by Long River MLO in the suspected money laundering. However, no suspicions are stated about Tao or Jianhao.
The second affidavit also contains Annexure 2. This is a representation of five payments transferred by entities connected to Zhu and traced to a company called Mercator Developments. Annexure 2 is described in the second affidavit in paragraphs under the heading ‘Fund Flows to Mercator’. Creighton states a suspicion as to the use that is made of those funds by Mercator Developments as well as a suspicion that the funds are sourced from Zhu’s profits from Long River MLO.[38] Annexure 2 traces funds coming into Mercator Developments but does not address the use of funds traced or link them with any particular property over which restraint is sought. I will return to Annexure 2 and the revisions made to its content below.
[38]Relevantly stated at [58] and [59] of the Second Affidavit.
Within this broad context the affidavits address each particular property.
Bonview Circuit
Information about Bonview Circuit derived from ASIC searches is set out in the second, third and fourth affidavits. Bonview Pty Ltd was incorporated on 24 January 2022. Its sole director is Jon Ji. Bonview Pty Ltd has 1000 issued shares; 101 to Felixz, 199 to Jianhao and 700 to Mercator Holdings Pty Ltd (Mercator Holdings).
Bonview Pty Ltd was registered on the Bonview Circuit titles on 1 July 2022 with a mortgage to MCH Agency Services Pty Ltd. The total purchase price was $13,197,756.[39] The amount of the mortgage is not identified nor is any other information stated about funds used for the acquisition.
[39]Second Affidavit of Mark Creighton sworn 10 November 2023, [48].
Creighton states that the incorporation of Bonview Pty Ltd shortly prior to purchase of Bonview Circuit is the ground for his suspicion that Bonview Pty Ltd is a single purpose entity for holding the land.[40] The affidavit of Sarwar Nasimi sworn on 5 December 2023 states that Bonview Pty Ltd is a single purpose entity to hold the land.
[40]Commissioner of the AFP, ‘Affidavit of Mark Creighton’ sworn 11 December 2023 in 45 Bonview Circuit Pty Ltd & Ors v Commissioner of the Australian Federal Police S ECI 2023 04939, [7] (‘Third Affidavit of Mark Creighton sworn 11 December 2023’).
Creighton deposes that the company search of Mercator Holdings identified it was incorporated in January 2015 and its only shareholder is Mercator Nominees Pty Ltd (Mercator Nominees). Through two further company structures, the ultimate shareholders in the two parent companies are said to be four individuals: Dan Wen Zhang, Zhaoquing Ji, Jon Ji and Daoren Lai. According to the second affidavit, Mercator Developments has two directors – Jon Ji and Daoren Lai – and a common shareholder in the Lai Family 2 Pty Ltd. On this basis Mercator Developments is described by Creighton as a ‘related entity of Mercator Holdings’.[41] Annexure 1 of the second affidavit does not identify Mercator Developments.
[41]Second Affidavit of Mark Creighton sworn 10 November 2023, [50]–[53].
Creighton’s second affidavit deals with Mercator Holdings and its ‘related’ entities in the section dealing with Bonview Circuit, presumably because Mercator Holdings is a shareholder only in Bonview Pty Ltd and not any of the other landholding companies.
Creighton states his suspicion that Bonview Circuit has been acquired using the funds derived by Zhu and her husband from their involvement in Long River MLO.[42]
[42]Second Affidavit of Mark Creighton sworn 10 November 2023, [12](d).
Creighton’s suspicion articulated in paragraph 94 of the first affidavit is that Zhu holds assets using trusted family members as registered owners and bank accounts in the name of family members to receive income including money from Long River MLO (Distribution Funds). According to the second affidavit, this leads Creighton to suspect that Zhu controls Felixz, a shareholder of Bonview Pty Ltd and thereby Zhu holds a financial interest in Bonview Circuit.[43] Creighton suspects significant funds were transferred to Bonview Pty Ltd by Zhu family members and facilitator companies controlled by Zhu, at the direction of Zhu.[44]
[43]Second Affidavit of Mark Creighton sworn 10 November 2023, [15].
[44]Second Affidavit of Mark Creighton sworn 10 November 2023, [72].
Creighton’s second affidavit and the annexures explaining the tracing of funds do not trace any funds to Bonview Pty Ltd.
Creighton’s second affidavit identifies the funds totalling $2,760,500.45 that can be traced to Mercator Developments. He identifies five transfers set out in Annexure 2. These five transfers (generally rather than any particular one) are suspected have been made for the purpose of ‘funding the development of Bonview or the acquisition of further property’.[45]
[45]Second Affidavit of Mark Creighton sworn 10 November 2023, [58].
Before I set out the detail of the five transfers, Annexure 2 as originally exhibited to the second affidavit was subject to a number of corrections. They are first detailed in paragraph 9 of the third affidavit. Relevantly, the third affidavit corrects the destination of the transferred funds as going not to Mercator Developments, but to an account which Creighton is informed and believes is in the name of Mercator Holdings, an account ending in 793. A revised Annexure 2 is exhibited to the third affidavit reflecting this. The correction is explained in the third affidavit as arising from Creighton having sighted unspecified documents including the bank statement from a Bendigo Bank account ending in 986. This account was earlier incorrectly described as a Bank of Queensland account. It is an account in the name of Zhu’s mother, Fengchai Chen.
Further corrections to Annexure 2 are detailed in the fourth affidavit and a further revised annexure – titled Annexure A – exhibited. On this occasion there are two destinations rather than one for the five transfers: three to Mercator Developments and two to Mercator Holdings. Mercator Developments and Mercator Holdings each have different ANZ bank account numbers. The amounts and dates of the transfers remain unchanged.
The explanation given for the corrections in the fourth affidavit is again that the misidentification of Fengchai Chen’s bank account led ‘to errors in the description of certain transactions as recorded in the chart annexed to my [third] affidavit’.[46]
[46]Commissioner of the AFP, ‘Affidavit of Mark Creighton’ sworn 14 December 2023 in 45 Bonview Circuit Pty Ltd & Ors v Commissioner of the Australian Federal Police S ECI 2023 04939, [7] (‘Fourth Affidavit of Mark Creighton sworn 14 December 2023’), correcting the version of Annexure 2 exhibited to the Third Affidavit of Mark Creighton sworn 11 December 2023, 16.
The five transactions relied on are described in the second affidavit as transactions by entities connected to Zhu. They are:[47]
[47]As set out in Annexure A, Fourth Affidavit of Mark Creighton sworn 14 December 2023, 7, which is an amended version of Annexure 2 to the Second Affidavit of Mark Creighton sworn 10 November 2023.
(a) $241,000 from a joint account (ending in 987) of Zhu and her husband to Mercator Developments on 14 July 2022;
(b) $647,881.65 from Zhu’s Bank of Queensland account (ending in 498) to Mercator Developments on 14 June 2022;
(c) $1,111,196.40 from YC Group Investment Ltd to Mercator Developments on 29 July 2022;
(d) $335,037.20 from the Bendigo Bank account of Fengchai Chen (ending in 986) to Mercator Holdings on 11 April 2023; and
(e) $425,385.20 from Fengchai Chen’s account (as above) to Mercator Holdings also on 11 April 2023.
Creighton’s grounds for the suspicions as to Bonview Circuit as stated in the affidavits are:
(a) Bonview Pty Ltd was incorporated shortly prior to the acquisition of Bonview Circuit.[48]
[48]Third Affidavit of Mark Creighton sworn 11 December 2023, [7].
(b) Felixz owns 10.1% of shares in the company that is the registered proprietor of Bonview Circuit.[49]
[49]Second Affidavit of Mark Creighton sworn 10 November 2023, [49](a).
(c) Felixz is a company that has as its registered address the residential address of Zhu and her husband.[50]
[50]Second Affidavit of Mark Creighton sworn 10 November 2023, [15].
(d) Ding, Zhu’s sister-in-law, is the sole director and shareholder of Felixz. Ding resides in China and although she has status as a resident in Australia, she is not registered for income tax[51] nor is Felixz registered as a taxpayer with the ATO.[52] By reference to the first affidavit, Ding is considered a trusted family member being a registered proprietor of separately restrained property suspected of being under the effective control of Zhu.[53]
(e) Mercator Holdings is also a shareholder in Bonview Pty Ltd.[54]
(f) Annexure A of the fourth affidavit – being an updated Annexure 2 – identifies three payments totalling $2,000,078.05 made to Mercator Developments in June and July 2022. Apart from the identification of the transfers in Annexure A, the Creighton affidavits do not give any explanation as to why he suspects those three payments in particular are linked to the incorporation of Bonview Pty Ltd, the purchase of Bonview Circuit or the shareholding of Mercator Holdings or Felixz in Bonview Pty Ltd.
[51]Second Affidavit of Mark Creighton sworn 10 November 2023, [67].
[52]Second Affidavit of Mark Creighton sworn 10 November 2023, [69].
[53]First Affidavit of Mark Creighton sworn 24 October 2023, [126].
[54]Second Affidavit of Mark Creighton sworn 10 November 2023, [49](c).
Greens Road
Information about Greens Road is set out in Creighton’s second affidavit. The registered proprietor of the property is Greens 35.[55] The property was acquired on 8 December 2021 for $16,780,000. There is a registered mortgage on title to ANZ Bank.[56] The amount of the mortgage is not stated by Creighton. In his second affidavit, Sarwar Nasimi deposes to an ANZ loan for the purchase of the property and sets out the current balance of that facility.[57]
[55]Second Affidavit of Mark Creighton sworn 10 November 2023, [29], [54].
[56]Second Affidavit of Mark Creighton sworn 10 November 2023, [54]–[55].
[57]Applicants, Second Affidavit of Sarwar (Sazz) Nasimi sworn 5 December 2023 in 45 Bonview Circuit Pty Ltd & Ors v Commissioner of the Australian Federal Police S ECI 2023 04939, [23] (‘Second Affidavit of Sarwar (Sazz) Nasimi) sworn 5 December 2023’).
Greens 35 was incorporated on 9 June 2021 and has 100 issued shares: 10 to Felixz , 40 to Jianhao and 50 to Uvin Pty Ltd. The director and a shareholder of Uvin Pty Ltd is Chang, wife of Jon Ji.
Creighton suspects:
(a) Greens Road has been acquired;[58]
[58]Second Affidavit of Mark Creighton sworn 10 November 2023, [12](e).
(b) that significant funds, derived from Zhu’s involvement in Long River MLO, have been transferred to Greens 35 by persons and companies at the direction of Zhu;[59]
(c) Greens 35 is associated with Mercator Holdings, to which significant funds have been transferred at the direction of Zhu;[60] and
(d) Greens Road is therefore proceeds or an instrument.
[59]Second Affidavit of Mark Creighton sworn 10 November 2023, [72].
[60]Second Affidavit of Mark Creighton sworn 10 November 2023, [57]–[58].
The matters Creighton sets out in his affidavits as grounding these suspicions are:
(a) Greens 35 was incorporated in June 2021, close in time to the acquisition of the property and is therefore suspected to be a single purpose vehicle for holding the land title;[61]
[61]Third Affidavit of Mark Creighton sworn 11 December 2023, [7].
(b) the fact of Felixz’s shareholdings in Greens 35;[62]
[62]Second Affidavit of Mark Creighton sworn 10 November 2023, [56].
(c) an association with Mercator Holdings is suspected because Jon Ji and Chang are married and is ‘based on a commonality of directorships and shareholdings’;[63] and
(d) money has been traced from Zhu or her mother, totalling $2,760,500.45, from accounts controlled by Zhu to Mercator Holdings and Mercator Developments.
Shareholdings in Felixz
[63]Second Affidavit of Mark Creighton sworn 10 November 2023, [57].
Creighton holds a suspicion that Zhu has a financial interest in Bonview Circuit and Greens Road through the Felixz shareholder interest,[64] which Zhu controls in turn through Ding.
[64]Second Affidavit of Mark Creighton sworn 10 November 2023, [29], [72].
Creighton grounds his suspicion of Zhu having effective control over Felixz, and in turn an interest in the corporate titleholder of the real properties, on two bases. The first is that Ding is a trusted family member. Ding, who sometimes resides in China and is the wife of Zhu’s brother, is the sole director, secretary and shareholder of Felixz.[65] The second is that Felixz has a registered company address of 8 Edward Street, Kew, being the address at which Zhu and her husband were living.[66]
[65]Second Affidavit of Mark Creighton sworn 10 November 2023, [17].
[66]Second Affidavit of Mark Creighton sworn 10 November 2023, [15].
In his fourth affidavit, Creighton confirms the suspicion that Zhu is in effective control of Felixz and its shareholdings. He suspects Zhu uses Felixz to distribute funds derived from Long River MLO.
He grounds this suspicion on the bank statement of Fengchai Chen’s bank account (ending in 986) which is exhibited to the fourth affidavit. The bank statement shows a transfer from the account of $335,037.20 on 11 April 2023 described as ‘Felixz’ to a destination bank account (ending in 793) that matches a Mercator Holdings account. The corresponding receiving account bank statement is also exhibited.
Zhu’s mother is described as an associate in the first affidavit and her financial circumstances, as disclosed by Australian Taxation Office records, record no Australian income greater than $600 per annum and no assets outside Australia with a total value of more than $50,000.[67] On this basis, as articulated in the fourth affidavit, Creighton suspects that funds in Fengchai Chen’s account were from Long River MLO and sent on to Mercator Holdings in April 2023.[68]
[67]First Affidavit of Mark Creighton sworn 24 October 2023, [93].
[68]Allowing that in the Fourth Affidavit of Mark Creighton sworn 14 December 2023, this was erroneously stated in [10(d)] as occurring on 11 April 2022.
Creighton’s viva voce evidence
Creighton gave evidence by audiovisual link on 14 December 2023. He had affirmed his fourth affidavit earlier the same day. He described the circumstances under which he came to affirm his fourth affidavit. He said he was not consulted about the contents of that affidavit but he understood that some further errors were identified in his earlier affidavits. He said the purpose was to give a better outline of how the money flow worked.[69] He read the document that had been drafted and was satisfied with its accuracy.
[69]T 32.21-29.
In cross-examination he said that the bank statement of the Bendigo Bank account in the name of Zhu’s mother shows a contact email that is Zhu’s and that the statement shows payments going into that account and straight out again to Felixz and Zhu Investments.[70] He said these matters caused him to suspect that the person who initiates the transfers is Zhu herself and not her mother.[71] He confirmed his suspicion that Zhu is in effective control of the Felixz shareholdings in Bonview Pty Ltd and Greens 35.
[70]T 38.23-30.
[71]T 38.23-39.6.
He was challenged on his answer that money went straight out to Felixz and Zhu Investments and corrected himself that those companies were not the destination of funds, but the narration of transfers that went to Mercator Holdings. Essentially his oral evidence – before it was corrected – erroneously attributed receipt of money by Felixz from Zhu’s mother, something that had also been wrongly stated in his second affidavit and subsequently corrected.[72] His affidavits eventually identified the destination of the two transfers on 11 April 2023 as being received by Mercator Holdings.
[72]As discussed at paragraph [90] below.
Creighton said he understood the distinction between owning an interest in the company and owning an interest in the assets of the company, but said that hiding behind a corporate veil was commonly utilised to launder money in order to make an investment appear legitimate.[73]
[73]T 42.17-23.
He said he did not, on present information, suspect that Zhu was wholly in control of either landholding company, but that it was something he described as ‘to be discovered’ as investments may prove to be under the control of someone who is either a minor shareholder or not represented at all.[74] He said of the companies Bonview Pty Ltd and Greens 35:
I also suspect that she [Zhu] may in fact be the entire controller of it. However, until we get further information, these are just suspicions.[75]
[74]T 41.2-22.
[75]T 41.19-22.
He was asked about the various versions of Annexure 2 (referred to as Annexure A in his fourth affidavit). He agreed that the chart was prepared by a forensic accountant and he relied on its accuracy without checking it. He was asked about the errors in the second version of Annexure 2 and said they were corrected following the review of bank statements of four accounts by him for the purpose of his fourth affidavit. He said that the AFP were not in possession of the Mercator Developments account statements from 2022 to confirm the receipt of transactions, but relied on the narration in the source accounts.
Submissions
In overview, the applicants’ written submissions contend:
(a) There was no relevant suspicion stated that the real properties were under the effective control of Zhu;
(b) There was no relevant suspicion stated as to the shareholdings in the affidavit material filed prior to 12 December 2023;[76]
[76]Being the date of the written submissions filed by the applicants.
(c) There is insufficient evidence to establish reasonable grounds for a suspicion that either Bonview Circuit or Greens Road has been acquired using proceeds derived from Long River MLO; and
(d) There is insufficient evidence to establish reasonable grounds for a suspicion that either real property is proceeds of an offence or an instrument of a serious offence by Zhu because, insofar as funds are traced flowing from Zhu to Mercator Developments or Mercator Holdings (together with Mercator Nominees, the Mercator companies), there are no grounds stated for any suspicion of financial dealing between the Mercator companies and the registered proprietor companies;
(e) The explanation for the correction of errors in the identified flow of funds is unsatisfactory and there is no statement as to financial dealings between Mercator Developments or Mercator Holdings on one hand and Bonview Pty Ltd or Greens 35 on the other.
In summary, the respondent’s written submissions contend that the combination of seven circumstances make it reasonable to suspect that the properties have been funded with funds that are proceeds of or an instrument of the suspected offences. Those seven factors are:
(a) Zhu is a principal of Long River;
(b) Long River was engaged in highly profitable money laundering;
(c) Assets owned or controlled by Zhu and her husband are grossly disproportionate to their income;
(d) Family members and trusted associated with no other identified source of income assisted Zhu by holding assets;
(e) Ding helped conceal another property restrained by the initial restraining order in October 2023;
(f) Ding is the sole officer and shareholder of Felixz. It may be inferred that Felixz partially funded the purchase and development of Bonview Circuit and Greens Road because it holds shares in both registered proprietor companies; and
(g) Between June 2022 and April 2023 $2,760,500 was transferred to the Mercator companies. Mercator Holdings owns 70% of the Bonview Pty Ltd shares.
The respondent’s written submissions dated 12 December 2023 point to the three payments to Mercator Developments proximate in time to Bonview Pty Ltd becoming the registered proprietor of Bonview Circuit[77] as supporting an inference that the shares were issued to Felixz as consideration for a contribution of funds toward the purchase and development of Bonview Circuit. Similarly the respondent submits that shares were issued to Felixz in Greens 35 as consideration for a contribution of funds by Felixz toward the purchase of Greens Road.[78] These submissions repeated those made to Justice Gorton on 16 November 2023.
[77]Those being 14 June 2022 and 29 July 2022 totalling $2,000,078.05, when Bonview Pty Ltd became registered proprietor on 1 July 2022.
[78]Commissioner of the AFP, ‘Respondent’s Submissions against Revocation’, Submissions in 45 Bonview Circuit Pty Ltd & Ors v Commissioner of the Australian Federal Police S ECI 2023 04939, 12 December 2023, [18]–[19], [22].
Consideration
The issue before me is whether Creighton’s stated suspicions and the grounds identified by him are grounds that would create in the mind of a reasonable person an apprehension that each property was proceeds of or an instrument of Zhu’s offending or that the shareholdings are under the effective control of Zhu.
As part of that inquiry I need to be satisfied that the suspicions expressed in the affidavits are actually held by Creighton and that he has stated his grounds for holding them, in order to be satisfied that those grounds are reasonable.
The applicant urged me to conclude that Creighton was an unreliable witness in respect of both matters. In particular the applicants pointed to the circumstances in which he swore his fourth affidavit and submit this casts doubt on whether the suspicions articulated there are actually held by him.
I do not draw any adverse conclusion from the fact that errors were made and corrected in the affidavits. Clearly, grounds may change as the available information is gathered or as error in the description of that material is identified. Where this occurs the further information is identified and an explanation for any change in the suspicion or the grounds for having that suspicion is provided. In those circumstances, it is the quality of the explanation that informs reasonableness. However, I do have some caution when I consider the explanations for the changes given by Creighton.
First Creighton’s reliability as a witness generally was impacted by the abandonment at hearing of reliance on his suspicion of effective control of the real properties, confining the case to his suspicions as to the characteristic of the property as proceeds of or an instrument of an offence. This occurred during the cross examination of Creighton on the very issue of effective control of the property.[79] It was a forensic decision but tantamount to a concession that he had not stated reasonable grounds for that suspicion. This was important given the reliance on effective control was prominent in the restraint application and specifically contested as being an unstated suspicion in the applicant’s written submissions on revocation.
[79]T 44.6-21.
Creighton said he wished to look at Bonview Pty Ltd and Greens 35 beyond the interest held by Felixz to ensure that the rest of the investments also had not been funded by illicit activity. When asked if he had a basis to suspect this yet, he said:
I don’t have all the banking information as yet, Your Honour. All I’m saying is that there is a not insubstantial amount of money which has gone into the purchase of these two properties, and for the purposes of the Proceeds of Crime Act, we wish to restrain it so as to prevent the equity being taken out or someone else coming in to take over the shareholding. We wish to examine all of the circumstances of this money and its sources, and the rest of the source of the money which has been used to purchase these properties.
Q: So do you agree with me that that’s something you’d like to investigate, but about which you have no current suspicion?
I suspect that given Ms Zhu’s involvement, there may be other persons that have been involved with the placement of money, and at the moment we don’t have the banking records to show where the money has come from.[80]
[80]T 43.12-30.
This answer, and others in a similar vein,[81] reinforce the absence of grounds for a positive apprehension as to the ultimate use of funds provided to the Mercator companies. The power to restrain property of third parties gives a very broad power to a proceeds authority. Whilst objects of the POC Act include:
[81]See T 40.28-41.13.
(a) to deprive persons of the proceeds of offences, the instruments of offences, and benefits derived from offences, against the laws of the Commonwealth or the non‑governing Territories;[82] and
(b) to prevent the reinvestment of proceeds, instruments, benefits, literary proceeds and unexplained wealth amounts in further criminal activities;[83]
it does not authorise restraint for the purpose of investigation unless the statutory requirements for restraint have been met.
[82]POC Act s 5(a).
[83]POC Act s 5(d).
Second, Creighton’s explanation for the creation of the third and fourth affidavits was that they were needed to ‘clarify the record’,[84] to explain his suspicions to the court,[85] and to give a better outline of how the money flow worked.[86] However, apart from correcting an obvious misnomer of an account (Bank of Queensland instead of Bendigo Bank) the errors were stated without any substantive explanation. One might ask rhetorically, what difference does it make to the suspected use of the funds whether it went to Mercator Developments or Mercator Holdings? If it makes no difference, then why not? Similarly the fourth affidavit went to some detail to ‘confirm’ the destination of the fifth transfer wrongly identified as being received by Zhu Investments in the second affidavit,[87] and the fourth and fifth transfers as being received by Mercator Developments also as stated in the second affidavit.[88] Yet in his oral evidence only hours later, Creighton wrongly stated that the fourth and fifth transfers went to Felixz and Zhu Investments. He was unsure of the money flow that was the foundation for his suspicion and seemed to rely uncritically on the work of the forensic accountants.
[84]T 34.18.
[85]T 34.26-27.
[86]T 32.24-25.
[87]Second Affidavit of Mark Creighton sworn 10 November 2023, [40].
[88]Second Affidavit of Mark Creighton sworn 10 November 2023, [59].
In light of these concerns I do proceed with some caution as to what suspicions Creighton in fact holds as well as the sufficiency of the grounds he states for them.
(i) Real properties
The applicants made the submission that Creighton did not, at least not in paragraph 12 of the second affidavit, state his suspicion that the real properties were subject to the effective control of the suspect.[89] This is so. Paragraph 12 is set out above at [40] and, while the affidavit states investigations were conducted about unidentified property suspected to be under the effective control of Zhu, Creighton’s own suspicion is limited to suspicions as to proceeds and instruments in respect of the specifically identified properties. The second affidavit drew all sorts of links between corporate proprietors of real property and individuals, and the companies associated with those individuals, but the affidavit failed to address what is described as the ‘similar methodology’ of concealing a financial interest or that those entities had no demonstrable source of funds otherwise to hold properties. The detailed financial position as set out in the first affidavit as to the trusted family members or associates was largely absent from the second affidavit. No financial information was provided about the new companies or their directors appearing in the diagrams. While restraint on the basis of effective control is no longer pressed, it is worth recording the unsatisfactory state of the second affidavit in these ways.
[89]T 21.10-12.
The applicants confirm that each of Bonview Pty Ltd and Greens 35 are special purpose companies incorporated to hold title to property.[90] Creighton’s suspicion based upon the timing of incorporation[91] in this respect, stated after confirmation of that fact in the affidavit of Sarwar Nasimi, is therefore held on reasonable grounds. But what of the suspicion that the asset held by those companies is acquired or developed with proceeds of or used as an instrument of relevant offending?
[90]Second Affidavit of Sarwar (Sazz) Nasimi sworn 5 December 2023, [7], [9].
[91]As set out in the Fourth Affidavit of Mark Creighton sworn 14 December 2023.
I have concluded for the following reasons that Creighton’s affidavits do not sufficiently state the grounds for his stated suspicions in relation to Bonview Circuit or Greens Road as being proceeds of or instruments of the suspected offending. It is therefore not possible to be satisfied that the grounds for his suspicions are reasonable ones.
One difficulty is that while Creighton’s second affidavit (the substantive affidavit in relation to characteristics of the properties) states generally that the information obtained in the investigation is the basis for his suspicions,[92] the second affidavit does not anywhere use the word ‘grounds’.[93] It is perhaps not necessary to use the precise words of ss 18(3) and 19(1)(e) of the POC Act in order to demonstrate the basis for the suspicion. Grounds can be apparent from phrases such as ‘I hold this suspicion because I...’, ‘based upon x and y, I suspect…’ or ‘the reasons I suspect this are…’. However, the second affidavit whilst containing many suspicions, at least in relation to the property I am presently asked to deal with, contains little explanation as to his thought process that underpins those suspicions.
[92]Second Affidavit of Mark Creighton sworn 10 November 2023, [12].
[93]Save at [75] when stating the grounds for seeking restraint on an ex parte basis.
Another difficulty is that the suspicions themselves are expressed in a summary and compendious way. While this might be appropriate initially as a summary, as is done in paragraph 12 of the second affidavit and in the overview set out at paragraph 29 with the links as represented in Annexure 1, it does not then descend to specific suspicions in relation to each property being proceeds of or an instrument of offending. The connections between the persons and companies in Annexure 1 are not linked to any suspicion expressed by Creighton. As I observed during the hearing, in circumstances where the tracing of funds does not extend to the purchase funds or proprietor companies themselves, a central issue is to identify the grounds for suspecting that the property or the company holding the property are the ultimate destination of the funds.[94]
[94]T 73.2-11.
When dealing with Bonview Circuit specifically,[95] the second affidavit sets out information only; no suspicion and no grounds. When dealing with Greens 35 it details a suspicion of an association with Mercator Holdings on the basis of the marriage of Jon Ji and Chang but no other suspicion or grounds.
[95]As detailed in paragraphs [47]–[53].
To the extent that suspicions as to being proceeds or instruments relate to a specific property, the five transfers together are later suspected of being used for the purpose of development rather than purchase of Bonview Circuit, but without any elaboration.[96] As noted this stated suspicion was uncertain as to the use of the five transfers, being in the alternative used in the acquisition of further, unidentified property. Why either purpose is suspected is not elaborated. The tracing exercise, at least initially, went only as far as Mercator Developments.
[96]Second Affidavit of Mark Creighton sworn 10 November 2023, [58].
Finally, under the heading ‘Suspicion’, paragraph 72 of the second affidavit repeats the compound suspicion that funds have been transferred to Bonview Pty Ltd or Greens 35. In my view, this repetition of the suspicion without an intervening explanation is no more than a conclusionary assertion.
There are no grounds stated for the suspicion that funds have been transferred to Bonview Pty Ltd or Greens 35 by Zhu family members or otherwise.
The tracing of funds through entities or persons suspected of being under the effective control of Zhu is central to the suspicions of each property being proceeds of or an instrument of an offence.
The only statement connecting the five transfers to either of the restrained real property is:
I suspect these transfers have been made to Mercator Developments as a related entity of Mercator [Holdings] for the purpose of funding the development of Bonview [Circuit] or the acquisition of further property.[97]
[97]Second Affidavit of Mark Creighton sworn 10 November 2023, [58].
Creighton’s statement as to the ultimate destination or use of the funds by the Mercator companies, in my view, cannot be characterised as a ‘positive apprehension’ that those funds have be applied to the purchase or development of Bonview Circuit. He expresses no positive apprehension in relation to Greens 35 at all.
Nor is anything identified in the second affidavit as providing grounds to suspect whether the funds were provided to Bonview Pty Ltd or Greens 35. The tracing exercise identifies five relevant transfers to Mercator companies but does not identify any funds received by the purchasing companies. The link, or more accurately, the reason to suspect a link, is not articulated.
Taking the five transfers one at a time:
(a) $647,881.65 is a transfer not using any trusted associates but directly from Zhu’s account to Mercator Developments on 14 June 2022. There is nothing identified to ground a suspicion as to the purpose for which the funds were transferred to Mercator Developments, or that the funds were sent on to Mercator Holdings or Bonview Pty Ltd. The suspicion that the funds were sent on is grounded on no stronger a basis than the fact that the Mercator companies have common directors and Mercator Holdings is a shareholder of Bonview Pty Ltd. Creighton does not state, for example, that the proximity of the transfer to the settlement of Bonview Circuit is a ground for his suspicion that Bonview Pty Ltd is the ultimate destination of those funds rather than some other use. Similarly there is nothing stated that he suspects this amount was destined for Greens Road or why that might be.
(b) $241,000 is a direct transfer from Zhu and her husband’s joint account to Mercator Developments on 14 July 2022. Similar to the above, no reason is identified to suspect that funds sent to Mercator Developments were to be sent on to Mercator Holdings or to Bonview Pty Ltd, or for that matter to Greens 35. The transfer is not proximate in time to the purchase of Greens Road and the identified deficiency in the affidavit regarding the first transfer applies equally to this amount.
(c) $1,111,196.40 is transferred from a company YC Investments Pty Ltd to Mercator Developments on 29 July 2022. It is an international transfer from DBS Bank Hong Kong. The AUSTRAC report exhibited to the third and fourth affidavits identifies narration details of the payment as ‘Zhu Investment’. There is nothing else identified to ground the suspicion as to a link between this transfer and either Bonview Circuit or Greens 35. While Felixz is a shareholder in both companies, Zhu Investments has no shareholding in either company. The evidence is silent as to which property is suspected as the ultimate destination of those funds. Nothing connects the transfer to shareholdings in either Greens 35 or Bonview Pty Ltd. Nor is there anything to say whether Creighton suspects the narration describes an investment of Zhu herself or is a reference to the company Zhu Investments. Apart from appearing in Annexure 2 and a statement of the transfer, the significance of the transfer is not explained.
(d) $425,385.20 is a transfer from Fengchai Chen’s account on 11 April 2023 and is believed to go to Mercator Holdings. The outgoing bank statements identify the transfer as relating to ‘Zhu Investment’. Again, while Zhu Investments is a shareholder in other properties, there are no grounds identified to suspect the transferred funds as narrated were ultimately used in relation to Bonview Circuit or Greens Road. As stated below, at [110], this same transaction is elsewhere suspected to be implicated in one of the Grosvenor Street properties.
(e) Finally, $335,037.20 is transferred from Fengchai Chen’s account to Mercator Holdings on 11 April 2023, the same day as the previous transfer. This is associated with a descriptor ‘Felixz’. Nothing is said as to a connection with either Greens 35 or Bonview Pty Ltd or why either of them were suspected of being the ultimate destination of funds.
The role of Mercator Developments as some sort of intermediary for funds, if suspected, is not explained. Any such role is further obscured by the confusion in the Creighton material as between the two Mercator companies. Leaving aside the errors, Annexure 2 (labelled Annexure A in the fourth affidavit) does no more than identify suspected funds traced to Mercator companies based primarily upon bank records. Creighton conceded that the sum total of his knowledge about the financial links between Zhu and Mercator Developments is in his affidavits.[98] His suspicion that the funds are illicitly sourced and then transferred to Mercator companies does not provide an explanation as to why those funds are believed to have then been put in the hand of any particular company or its assets over which restraint was sought. None of the transfers place funds in the special purpose landholding companies and Creighton’s evidence does not address the reasons why he suspects that they are the ultimate destinations. Tellingly, Annexure 2 makes no mention of any of the special purpose landholding companies.
[98]T 51.30-52.2.
Annexure 1 to Creighton’s second affidavit identifies many interlinked individuals and companies. The only ones identified as ‘trusted associates’ or ‘straw directors’ are Zhu’s brother Jie Zhu and his wife Ding. No suspicions are stated as to the other individuals mentioned who are directors or shareholders. The ‘similar methodology’ alleged in seeking restraint does not extend beyond Ding to other participants in the diagram, nor is there financial information about the relevant companies that might demonstrate that undeclared income is funding the purchase or development of Bonview Circuit or Greens Road.
The AFP’s written submissions contend that because the timing of the first three payments to Mercator Developments in June and July 2022 is proximate to the settlement of Bonview Circuit, this supports an inference that the 101 shares in Bonview Pty Ltd issued to Felixz were consideration for a contribution of funds towards the purchase and development of Bonview Circuit. However, there are two problems with that submission. First, it invites the Court to go beyond the suspicions and relevant grounds stated by Creighton himself. Creighton does not identify a suspicion that shares in Bonview Pty Ltd were issued to Felixz in consideration for funds contributed. Nor does he state that the timing of the transfers are a reason for his stated suspicions. Even if it were a compelling inference to draw, it is not one that suggested itself to Creighton and so not one that the Court can entertain. Creighton conceded he did not have access to information about the funding of the purchase of either Bonview Circuit or Greens Road when he swore the second affidavit. Although he had subsequently received the conveyancing documents, which were voluminous, he does not refer to them in his subsequent affidavits and they have not informed his ongoing suspicions.[99] Coming into possession of relevant documents, but not relying on them to inform the grounds for continuing to hold suspicions, is a matter to be taken into account in assessing the objective reasonableness of a continuing suspicion that the properties in question have been acquired with the proceeds of or instrument of offending.
[99]T 53.24-29; 80.4-81.15.
Further, given that Mercator Holdings has been incorporated since January 2015,[100] and no other information is identified about its activities, the reason for suspecting a financial link or transfer of funds received by Mercator Holdings to Bonview Pty Ltd is left unexplained. There is nothing beyond the common shareholdings with Felixz to ground the suspicion that funds sent to Mercator Holdings have been used by it for the development of Bonview Circuit.
[100]Information obtained from the Second Affidavit of Sarwar (Sazz) Nasimi sworn 5 December 2023 and not information relied on by Creighton.
The closest that the second affidavit comes to stating grounds for a suspicion that Green 35 has received proceeds of or is an instrument of Zhu’s suspected offending is itself only identified as a suspicion – that of an association between Greens 35 and Mercator Holdings.[101] Tracing transfers of funds to Mercator Developments in June and July 2022 and Mercator Holdings in April 2023 are not accompanied by an explanation as to how or why some or all of the funds were suspected to be applied to Greens 35. The third and fourth affidavits shed no further light on the grounds for a suspicion in relation to Greens 35 being either proceeds of or an instrument of relevant offending.
[101]Second Affidavit of Mark Creighton sworn 10 November 2023, [57].
Ultimately only two of the transfers are identified as being received in an account owned by Mercator Holdings, a shareholder in Bonview Pty Ltd. Both transfers occurred on 11 April 2023, well after the purchase of Bonview Circuit. There is nothing to tie those transfers individually or together to any particular property. Indeed, the narrations – one referencing Felixz and the other Zhu Investments – would suggest different ultimate destinations and purposes, as the investment companies do not have a common shareholder interest in the identified properties. Creighton accepted that given the timing, the funds could not have been used in the acquisition of Bonview Circuit.[102] Elsewhere Creighton observes of one of these transfers:
Also of note is that on 11 April 2023, the sum of $425,385 was transferred from Fengchai Chen’s bank account ending in 986 to Zhu Investments.[103]
While this is later corrected in the third affidavit to be a transfer to Mercator Holdings, this reference in the second affidavit was noted, not in respect of Bonview Circuit or Greens Road, but in respect of other property at Grosvenor Street, Abbotsford, over which restraint was also sought. This reinforces the lack of grounds for a suspicion as to the use of funds by Mercator Holdings in relation to either Bonview Circuit or Greens Road specifically.
[102]T 53.11-20.
[103]Second Affidavit of Mark Creighton sworn 10 November 2023, [40].
Leaving to one side misstatement of dates or account details, not all of the more significant errors were corrected by Creighton in his third and fourth affidavits. This includes his identification of Mercator Holdings as a registered proprietor of a commercial property over which restraint was sought.[104]
[104]Second Affidavit of Mark Creighton sworn 10 November 2023, [29] which is set out above at [41].
Finally, the fourth affidavit in a number of ways raises more questions than it clarifies. First, the bank statements that are annexed contain two transfers relating to Mercator companies not referenced in the affidavit. They are a deposit in Fengchai Chen’s account on 14 February 2023[105] and a payment from Zhu’s joint account (account 876) to Mercator Developments (account 1082) on 7 July 2022. It is unclear why these transactions referencing the Mercator companies are not relied on as grounds for any suspicion when other transfers are. Also, the fourth affidavit deposes that a review of the identified bank statements confirms a transfer of funds on 14 June 2022 from account 498 to Mercator Developments (account 1082).[106] The identified bank statement for Zhu’s Bank of Queensland account (account 498) simply narrates a ‘Transfer to Other Bank’ without any identification or account number. Creighton deposes that this transfer is ‘consistent with Annexure A of 14 December 2023’.[107] The obvious problem with this statement is that Annexure A is a document intended to clarify the money flow as demonstrated by source documents. Annexure A is not a source document. It is diagram relied on to demonstrate what is known or suspected from a review of bank records.
[105]Transaction History dated 28 August 2023, which forms part of exhibit bundle MC in the Fourth Affidavit of Mark Creighton sworn 14 December 2023, exhibit page 18.
[106]Fourth Affidavit of Mark Creighton sworn 14 December 2023, [9].
[107]Fourth Affidavit of Mark Creighton sworn 14 December 2023, [10(c)].
Thus the fourth affidavit calls into question the reliability of the earlier evidence about the transfer of funds. This conclusion can be reached simply on reading the affidavits. It is reinforced by my impression of Creighton’s viva voce evidence as set out earlier. As the Court noted in Mai, it may be relevant to consider whether the grounds of a suspicion are irrational, improper or unlikely. To the extent it may be relevant, some of Creighton’s suspicions as to the characteristics of the property, both as to effective control and as to being acquired with proceeds, at least on the presently articulated grounds, seem unlikely.
Whether as proceeds of or as an instrument of suspected offending, Creighton needed to identify reasons why he suspected funds from an illicit source have found their way into the registered proprietor companies. Apart from Zhu’s parents and sister-in-law Ding, the second, third and fourth affidavits do not suggest that any other individuals mentioned are trusted associates holding funds or assisting with money laundering activities. Both Bonview Pty Ltd and Greens 35 and the assets held by them are third parties whose proprietary interests are adversely affected by the November restraining order. As was said in George v Rockett:
…Nevertheless, in construing and applying such statutes, it needs to be kept in mind that they authorise the invasion of interests which the common law has always valued highly and which, through the writ of trespass, it went to great lengths to protect. Against that background, the enactment of conditions which must be fulfilled before a search warrant can be lawfully issued and executed is to be seen as a reflection of the legislature’s concern to give a measure of protection to these interests. To insist on strict compliance with the statutory conditions governing the issue of search warrants is simply to give effect to the purpose of the litigation.[108]
[108]George v Rockett (n 17) 110-1 (emphasis added).
Creighton’s viva voce evidence disclosed a desire to restrain third party assets to prevent dissipation of funds while investigation as to possible wrongdoing by others continued. A generic explanation that wrongdoers distance themselves from receipt of funds is not, on its own, sufficient to provide a basis to suspect that illicit funds have been applied to those properties over which restraint is sought.
For these reasons I was satisfied that the applicants had shown that there are no grounds on which to make the orders restraining Bonview Circuit and Greens Road.
(ii) The shareholdings
The applicants contend that the first three affidavits do not state any suspicions regarding the shareholdings. Creighton did not state a suspicion that the shareholdings are under the effective control of Zhu, or are proceeds of a crime or an instrument of a serious offence and states no grounds for such suspicions. All that was stated was a suspicion that Zhu ‘holds her financial interest’ in real properties ‘through Felixz’.[109]
[109]Second Affidavit of Mark Creighton sworn on 10 November 2023, [15].
The applicants submitted that the absence of any statement as to relevant suspicions until the fourth affidavit combined with the circumstances in which that affidavit was sworn indicated that Creighton’s evidence was generally unreliable.
Creighton said he was not involved in drafting the fourth affidavit but, when asked to swear the document, he was satisfied it was true and correct. This circumstance came about because he was on leave after swearing the third affidavit and was still on leave at the time he gave his evidence. I accept that, although there were no discussion with Creighton when preparing the fourth affidavit, Creighton’s evidence was that having read what was prepared by others for his signature, he believed the contents to be true.[110] However, as discussed above in relation to the tracing of funds, I found Creighton’s explanations in his oral evidence undermined the reliability of the statements in his affidavits. He said in his oral evidence describing a financial trail that went from Long River MLO through Fengchai Chen’s account to Felixz and then on to Mercator companies[111] created an additional transaction step not identified by the affidavits or having any basis as illustrated in the Annexures. He ultimately said that the ‘financial flows’ lead him to suspect that the funds have gone to repaying an unidentified person an unknown amount of money which requires further investigation.[112] Such evidence detracts from rather than clarifies the reasonableness of grounds insofar as they are set out in the affidavits.
[110]T 31.17-19.
[111]T 45.10-20.
[112]T 54.23-29.
The second affidavit sets out the information that Felixz holds shares in Bonview Pty Ltd and Greens 35 and says Felixz has a financial interest in the properties by reason of that shareholding.[113] It states Ding is the sole director, secretary and shareholder of Felixz.
[113]The company searches of Bonview Pty Ltd and Greens 35 which reveal the shareholders are exhibited to the Third Affidavit of Mark Creighton sworn 11 December 2023 at exhibit bundle MC 9-15.
The third affidavit made no reference to the shareholdings.
The fourth affidavit sought to ‘clarify’ the suspicions about Felixz’s shareholdings, making explicit the ground relied on for the suspicion that Zhu has effective control of Felixz and its shareholdings in Bonview Pty Ltd and Greens 35, stating that:
Specifically I suspect that Zhu is in effective control of both Zhu Investments and Felixz Investments and their respective shares. I suspect that Zhu uses both companies to distribute funds derived from Long River MLO and as those funds are the proceeds of crime, both companies are the instruments of crime.
I also suspect that Zhu,…through Felixz Investments, holds shares in 45 Bonview and Greens 35. I believe that Zhu has effective control of the shares in …45 Bonview and Greens 35 held by…Felixz Investments.[114]
[114]Fourth Affidavit of Mark Creighton sworn 14 December 2023, [11]–[12].
Creighton’s fourth affidavit also states his suspicion that Zhu’s shareholdings in those companies (relevantly Bonview Pty Ltd and Greens 35) were acquired by Zhu directing payment of Distribution Funds to those companies and therefore the shareholdings are proceeds of crime. He also states the suspicion that Zhu used her shareholdings in Felixz to conceal and distance herself from receipt of Distribution Funds such that the shareholdings are instruments of crime.[115] The error in describing Zhu’s shareholding may be an incorrect description of shares that she controls or it may be a factual error pointing to a misapprehension of the nature of the interest concerned. Either way it does not advance a conclusion of reasonable grounds.
[115]Fourth Affidavit of Mark Creighton sworn 14 December 2023, [13].
Accepting that the relevant suspicions regarding the shareholdings were not, or at least not adequately, stated in the earlier affidavits, the fourth affidavit sets out a suspicion about Zhu’s effective control of Felixz itself and its shareholdings in the Bonview Pty Ltd and Greens 35. Insofar as the suspicions are stated to be that the shareholdings are proceeds of or instruments of suspected offending, no grounds are stated as to funds distributed by Felixz. Indeed no financial information about Felixz was available.
The fourth affidavit exhibits a number of bank statements that are the basis for the movement of funds identified in Annexure A. There is only one transfer that potentially implicates Felixz, being the transfer on 11 April 2023 of $335,037.20. The descriptor for the transfer is ‘Felixz’.
By reference largely to his first affidavit, Creighton sets out grounds for his belief that Ding is a family member trusted to hold other assets suspected to be controlled by Zhu, including a bank account and residential property. The second affidavit sets out the relationship between Ding and Felixz. The grounds for suspicion as to Zhu’s effective control of Felixz are implicit in the second affidavit which built on matters regarding Ding set out in the first affidavit, including Zhu’s use of her sister in law as a trusted associate and the use of Zhu’s own residential address as the registered address of Felixz.[116] Creighton’s second affidavit also states his suspicion as to the illicit source of the funds including the 11 April 2023 transfers, albeit he incorrectly identifies the destination.[117]
[116]Second Affidavit of Mark Creighton sworn 10 November 2023, [14]-[15], [17] .
[117]Second Affidavit of Mark Creighton sworn 10 November 2023, [59].
Although the third and fourth affidavits correct the destination of this transfer, no explanation is provided as to why the 11 April 2023 transfer is suspected to relate Felixz, or its shareholdings in either Bonview Pty Ltd or Greens 35 or even to its director Ding.
One might think that the narration ‘Felixz’ was a reason to suspect a connection, but if so, this is not stated in any affidavit. The confusion in Creighton’s evidence as to whether Felixz received the funds underpins the speculative nature of his suspicion. There is no explanation offered for how Zhu’s mother or Mercator Holdings, neither of which is directly related to Felixz, fits with the transfer narration, nor how it might somehow be related to Felixz’s shareholdings in Bonview Pty Ltd or Greens 35. The bank statement alone does not provide a ground for suspecting that the shareholdings are either proceeds of or an instrument of a relevant offence. There are no grounds on which a restraining order under s 19 of the POC Act could be made on the present material.
I accept however, that the combination of family connections as described and the use of Zhu’s residential address as the registered address of Felixz, together with the lack of income disclosed in Ding’s taxation records as set out in the first and second affidavits, constitute reasonable grounds to suspect that Zhu is in effective control of Felixz and therefore the shareholdings of Felixz. As such, the applicants have failed to show that there are no grounds to make the restraining order over the shareholdings under s 18 of the POC Act.
I have already made orders revoking the restraining orders over the real property at Bonview Circuit and Greens Road. The only further order necessary is to revoke Order 3 of the orders of Justice Gorton dated 16 November 2023 restraining the shareholdings under s 19. The shareholdings remain restrained under s 18 by Order 2 of the November restraining orders. The balance of the application for revocation remains outstanding in two respects. First, in relation to the shareholdings dealt with by these reasons, whether the restraint should be revoked in the interests of justice and second, in relation to the balance of the real property and associated shareholdings restrained by the November restraining orders.
I invite the parties to provide a consent minute, or if agreement cannot be reached, submissions from both parties, as to any further orders sought at this time in respect of the expedited application.
SCHEDULE OF PARTIES
| 45 BONVIEW CIRCUIT PTY LTD (ACN 656 766 077) | First Applicant |
| - and - | |
| GREENS 35 PTY LTD (ACN 650 885 199) | Second Applicant |
| - and - | |
| FELIXZ INVESTMENTS PTY LTD (ACN 634 498 623) | Third Applicant |
| - and - | |
| ZHU INVESTMENTS PTY LTD (ACN 163 927 615) | Fourth Applicant |
| - and - | |
| SOUTHLINK GROSVENOR PTY LTD (ACN 629 396 229) | Fifth Applicant |
| - and - | |
| SOUTHLINK GROSVENOR NO 2 PTY LTD (ACN 631 590 175) | Sixth Applicant |
| v | |
| THE COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE | Respondent |
1
3
0