AFP v Li & Ors Ruling
[2022] VCC 868
•14 June 2022
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
CONFISCATION LIST
Case No. CI-20-05339
| IN THE MATTER of the Proceeds of Crime Act 2002 of the Commonwealth and IN THE MATTER of the suspect Fuhai LI and IN THE MATTER of property suspected to be the proceeds of an indictable offence and or the instrument of a serious offence and IN THE MATTER of an Application by the COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE |
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JUDGE: | HIS HONOUR JUDGE DYER | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 25 May 2021 | |
DATE OF RULING: | 14 June 2022 | |
CASE MAY BE CITED AS: | AFP v Li & Ors Ruling | |
MEDIUM NEUTRAL CITATION: | [2022] VCC 868 | |
RULING
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Subject:Asset confiscation
Catchwords: Applications for ancillary orders and examination; Conditions of dissemination of compulsorily required material;
Legislation Cited: Proceeds of Crime Act 2002 (Cth) sections 39, 180 and 266A
Cases Cited:Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46; Commissioner of the Australian Federal Police v Elzein (2017) NSWCA 142; R v Independent Broad-based Anti-Corruption Commissioner (2016) 256 CLR 459 (R v IBAC); Lee v The Queen (2014) 253 CLR 455; Commissioner of Australian Federal Police v Wen (2017) 322 FLR 32 (Wen); Australian Crime Commission v Stoddart (2001) 244 CLR 554; Commissioner of the Australian Federal Police v McGlone [2016] NSWCA 103
Ruling: Applications for ancillary orders and examination orders granted. Subject to quarantine provisions.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr D. McLure SC with Ms C. Ernst | Criminal Assets Litigation Australian Federal Police |
| For the Respondents | Mr C. Juebner | Juris Nexus Lawyers |
HIS HONOUR:
1On 19 January 2021 the Commissioner of the Australian Federal Police (“Commissioner”) applied for ancillary and examination orders in accordance with the provisions of sections 39 and 182 of the Proceeds of Crime Act 2002 (Cth) (“POCA”). The Commissioner sought orders as follows in relation to Xuan Yang (Mrs Yang):
1.1That Xuan Yang (Mrs Yang) provide a sworn statement setting out all of the particulars of her interest in, or dealings with, the property restrained pursuant to the restraining orders made on 8 December 2020 (Restraining Orders); and
1.2. an order that Ms Yang be examined about the affairs of:
1.2.1 her husband, Fuhai Li (“Mr Li”); and
1.2.2. Fanwei Meng(“Mr Meng”).
2Ms Yang agrees to provide a sworn statement setting out the particulars of her interest in the restrained property but opposes the order which seeks her to provide a sworn statement as to ‘dealings’.
3Ms Yang opposes the order on the grounds that it is:
(a) too vague; and
(b) too broad
in that it is not limited to any timeframe. Alternatively if an order were to be made it should only be made if concurrently a quarantining order was made restricting the use of the information contained in that sworn statement.
4Ms Yang consents to the Commissioner’s application for examination, but again subject to the quarantining order being made restricting the use of the information contained in that examination.
5The evidence relevant to this application is contained in an affidavit sworn by Detective Leading Senior Constable Joanne Ellen Hopkins on 4 December 2020 (“the Hopkins affidavit”), and an affidavit affirmed by Ms Yang on 12 April 2021 (“the Yang affidavit”).
6The parties each provided detailed outlines of their submissions and oral argument proceeded on 25 May 2021.
Factual background
7Ms Yang’s spouse, Mr Li, has been charged with money laundering offences contrary to s 400.9(1) of the Criminal Code Act 1995 (Cth) and with aiding, abetting, counselling or procuring the production of a false document to a bank contrary to s 137(1) of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (read with s 11.2(1) of the Criminal Code.
8The Commissioner relies principally on an affidavit sworn by Detective Leading Constable Joanne Ellen Hopkins on 4 December 2020.[1] That affidavit formed the basis of restraining orders made by this court on 8 December 2020 in accordance with s 18 of the POCA in respect of certain property owned by Mr Li and another person, Mr Fanwei Meng. The Hopkins affidavit sets out the relevant suspicions in relation to Mr Li as follows:
“71. On the basis of the above, in relation to LI, I suspect that:
a. LI committed the Money Laundering and AML/CTF Offences for which he is charged;
b. LI therefore committed serious and indictable offences as defined in the POC Act;
c. the property at paragraphs [17.c.] to [17.f.] and [17.i.] sought to be restrained pursuant to section 19 of the POC Act are instruments of the Money Laundering Offences;
d. the property at paragraphs [17.c.] to [17.f.] and [17.h.] to [17.j.] sought to be restrained pursuant to section 18 of the POC Act is the property of, or under effective control of, LI.”[2]
[1]Exhibit A
[2]Exhibit A at 71
9On 15 July 2020 the AFP executed a number of warrants to search persons and premises, including Mr Li, the property at 78 Surrey Road, Blackburn North, Victoria where Mr Li and Ms Yang resided (“Blackburn property”) and two vehicles, being a Lexus and a Toyota Kluger belonging to Mr Li.
10As a result of the searches performed in accordance with the warrants, cash totalling $522,350 in the possession of Mr Li or located within the Blackburn property or the Lexus motor vehicle was seized.
11In addition to the Li cash and the two motor vehicles (Lexus and Toyota), the restraining orders included a further property located at 13 Clifton Street, Box Hill South, Victoria (Box Hill South property) which was owned by Hengda Group Pty Ltd (“Hengda Group”). The Hopkins affidavit described the relationship between Mr Li and the Hengda Group as follows:
“Li operates a ‘daigou’ business, exporting infant formula/milk powder and health products to customers in China via the ‘TaoBao’ online shopping platform;
Li has been operating this business since about 2015 – he is currently operating the business with his wife, under the business name Hengda International Trade.”[3]
[3]Exhibit A [25]
The legislative framework
12The POCA makes provision for orders in the nature of those sought by the Commissioner. The statutory basis for requiring a person to provide a sworn statement is contained in s 39(1)(da) which provides:
“39 Ancillary orders
(1)The court that made a *restraining order, or any other court that could have made the restraining order, may make any ancillary orders that the court considers appropriate and, without limiting the generality of this, the court may make one or more of the following orders:
…
(da)if the court is satisfied that there are reasonable grounds to suspect that a person (other than the owner or a previous owner) has information relevant to identifying, locating or quantifying the property – an order directing the person to give a sworn statement to a specified person, within a specified period, setting out particulars of, or dealings with, the property.”
13The Act also provides for an examination order of the type sought by the Commissioner in s 180(1). This section provides:
“180 Examination orders relating to restraining orders
(1) If a *restraining order is in force, the court that made the restraining order, or any other court that could have made the restraining order, may make an order (an examination order) for the *examination of any person, including:
(a)a person whose property is, or a person who has or claims an *interest in property that is, the subject of the restraining order; or
(b) a person who is a *suspect in relation to the restraining order; or
(c) the spouse or *de facto partner of a person referred to in paragraph (a) or (b);
about the *affairs of a person referred to in paragraph (a), (b) or (c).”
The competing arguments
14The Commissioner submits that the orders sought sit clearly within the powers contemplated by the legislation in both sections 39 and 180 of the POCA.
15The submissions of the Commissioner made extensive reference to the Hopkins affidavit, which was tendered in evidence in this application.[4] In essence that affidavit referred to matters concerning Ms Yang that would justify a conclusion by the court that there are reasonable grounds to suspect that Ms Yang has information relevant to “identifying, locating or quantifying the property” as required to invoke the provisions of s39(1)(da).
[4]Exhibit A
16Insofar as the examination order was concerned, the Commissioner argued that the broad scope of s 180 permitting the court to order the examination of “any person” specifically included a provision for the spouse of a suspect to be the subject of the examination order sought.
17Ms Yang accepted the requirement that she be required to provide a sworn statement in relation to her interests in the restrained assets, but objected to making a sworn statement concerning “dealings”. Argument was advanced on behalf of Ms Yang that the precise terms of the orders sought by the Commissioner under s 39 were not limited temporarily and sufficiently vague that no discernible or legitimate forensic purpose could be inferred.
18Should the court be disposed to make the order sought by the Commissioner it was argued on behalf of Ms Yang that a quarantining order should be made in accordance with s 266A of the POCA.
19In relation to the examination order sought by the Commissioner, Ms Yang did not object to such an order being made, but again sought the making of a quarantining order so as to restrict the use of coercively obtained material to the proceedings under the POCA, and to prevent the use of such material in any prosecution, whether used directly or derivatively.
20In oral submissions Mr Juebner, who appeared on behalf of Mrs Yang, confirmed that the quarantining of information was essentially the real issue in dispute between the parties.
21He made reference to s 266A of the POCA, which provides guidance as to the circumstances in which material obtained coercively can be disclosed. Mr Juebner’s submissions sought a quarantine order initially on the basis that Ms Yang was herself at risk of prosecution. The second basis was that she should not be compelled to effectively provide the prosecution authorities with material that could be used against her husband.
22Mr Juebner accepted that the provisions of the Act did provide for the sharing of information, but that power should not be exercised where there was a real risk of Ms Yang herself being charged with offences on the basis of her alleged involvement with Mr Li.
23It was also submitted by Mr Juebner that the use of coercively obtained material from Ms Yang to further the prosecution of her husband, would amount to an abuse of process and would be contrary to the rights given to a spouse under s 18 of the Uniform Evidence Act to object to giving evidence in a criminal prosecution concerning her husband. Ms Yang’s affidavit confirms her intention in this regard.[5]
[5]Exhibit 1 [8] to [11]
24Mr McLure SC, who appeared with Ms Ernst on behalf of the Commissioner, opposed the quarantine orders sought on Ms Yang’s behalf, both in relation to the ancillary orders and examination orders sought.
25The Commissioner’s submissions referred to the legislative changes which inserted s 266A(2)(b) into the POCA following the High Court’s decision in Zhao.[6] Mr McLure submitted that whilst the insertion of that section into the legislation provided “a mechanism whereby disclosure to a prosecuting authority is prohibited during, for example, dependency of the criminal proceedings”[7], that provision did not require the quarantining of the relevantly acquired information in all cases. The rationale underpinning that legislative change was to make provision for the specific case where measures such as a stay or the quarantining of information was necessary to prevent prejudice in a criminal trial.
[6]Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46
[7]Commissioner of the Australian Federal Police v Elzein (2017) NSWCA 142
26Mr McLure SC also made reference to the fact that Ms Yang has not been charged with any criminal offence. In those circumstances common law principles would not permit the privilege against self-incrimination to be extended where no criminal charge has been laid. In an application for ancillary orders such as those sought under s 39 of the Act, the privilege against self-incrimination is expressly abrogated by s 39A of the POCA.
27Further, in circumstances where an examination is ordered, the Act creates an offence for a person attending an examination to refuse to answer a question, even in circumstances where such an answer would amount to self-incrimination.[8]
[8]POCA s 196(1) & s 197(2)(a)
28Mr McLure SC submitted that the legislative regime set out exhaustive statements as to the extent to which the common law privilege against self-incrimination was applicable.
29Reference was made to a number of authorities in support of this argument. The High Court in R v Independent Broad-based Anti-Corruption Commissioner[9] was cited as authority for the proposition that the privilege against self-incrimination, being a principle of common law, is susceptible to abrogation by statute. In the present case s 39A had clearly stated that such a privilege against self- incrimination would not apply. Mr McLure SC did concede that s 39A(2) did restrict the use to which such information contained in a sworn statement could be used in other proceedings.
[9](2016) 256 CLR 459 (R v IBAC)
30The High Court sets out in clear terms in R v IBAC the extent to which the companion principle can be used:
“The companion principle is, as its name suggests, an adjunct to the rights of an accused person within the system of criminal justice. Its application depends upon the judicial process having been engaged because it is an aspect of that process. … In Lee v The Queen[10] this court affirmed the fundamental principle of the common law that it is for the prosecution to prove the guilt of an accused person as ‘an aspect of the accusatorial nature of a criminal trial in our system of criminal justice.”
The court went on to say:
[10](2014) 253 CLR 455
“The companion rule to the fundamental principle is that an accused person cannot be required to testify. The prosecution cannot compel a person charged with a crime to assist in the discharge of its onus of proof.”
31The court in R v IBAC declined to extend the companion principle to circumstances where a person had not been charged and there was no prosecution pending.[11]
[11]R v Independent Broad-based Anti-Corruption Commissioner (2016) 256 CLR 459 (R v IBAC) at [48] to [51]
32In light of the clear statement by the High Court in R v IBAC Mr McLure SC submitted that the remarks of Riordan J in Commissioner of Australian Federal Police v Wen[12] which had been relied upon by Mr Juebner should not be followed. It was submitted on behalf of the Commissioner that it was incorrect to suggest that a quarantine order should be made in circumstances where “there is a real risk” of an examinee being charged. The clear statement from the High Court in R v IBAC render this court’s enquiry as to whether or not a person is likely to be charged an irrelevant consideration.
[12](2017) 322 FLR 32 (Wen)
33Mr McLure SC referred to further authority in Commissioner of Australian Federal Police v Elzein.[13] That case was referred to as authority for the proposition that the coercive powers in both s 39 and s 180 were available even where a person had been charged with a criminal offence, albeit that such power was subject to “appropriate protective orders.”[14]
[13](2017) NSWCA 142
[14]Ibid at [101]
34Mr McLure SC submitted that the position faced by Ms Yang was not enhanced by reliance upon s 18 of the Evidence Act 1995 (Cth) (“Evidence Act”). The High Court had concluded that the common law does not recognise a privilege against spousal incrimination by operation of s 18 of the Evidence Act.[15]
[15]Australian Crime Commission v Stoddart (2001) 244 CLR 554 esp at [41] and [231] to [232]
35Mr McLure SC submitted that the operation of s 18 of the Evidence Act was limited to enable a spouse to object to being called to give evidence against his or her spouse in a criminal prosecution. It did not serve any wider purpose such as immunising the spouse against compulsory examination in civil proceedings and limiting the derivative use of such information as was then obtained under compulsion.
36Finally, Mr McLure SC rejected an argument advanced on behalf of Ms Yang that there was in some way an abuse of process from exceeding to the orders sought on behalf of the Commissioner. The orders sought by the Commissioner should be made without quarantine orders, which were not appropriate in the present case.
37The Commissioner’s argument was that the abuse of process argument could not be made out in circumstances where s 266A expressly contemplated the possibility of material obtained under compulsion being disclosed to the relevant authorities and thereby being derivatively used in its criminal proceedings. This had been considered by the New South Wales Court of Appeal in Commissioner of the Australian Federal Police v McGlone[16]
[16][2016] NSWCA 103 at [92]
Analysis
38There was effectively no dispute between the parties that the POCA provides for ancillary orders and orders for examination of a person which would permit the Commissioner to obtain the orders sought in this application.
39There is also acceptance on behalf of the Commissioner that the POCA does provide a mechanism for compulsorily acquired information to be quarantined. The question of the application of the quarantine provisions in a particular case remains to be determined on the basis of the individual factual setting, and the application of the relevant legal principles.
40I am of the view that the Commissioner has established a basis upon which the ancillary orders and examination orders can be made.
41I am unable to accept the argument advanced by Mr Juebner that the ancillary order seeking the provision of a sworn statement in the terms requested by the Commissioner is fairly described as being too vague or too broad.
42The specific argument advanced on Ms Yang’s behalf concerns the use of the word “dealings” in the order proposed by the Commissioner. Notwithstanding the broad and non-exhaustive definition of “deal” contained in s 338 of the POCA, the factual scenario of the present case, the details of which are largely contained in Exhibit A, must lead to a conclusion that any ancillary order requiring a sworn statement as to interests and dealings would be concerned principally with Ms Yang’s knowledge of the restrained assets arising from her co-habitation with her husband and her interests and dealings arising from her role as sole director, secretary and shareholder of Hengda International Trade Pty Ltd.
43Ms Yang’s affidavit acknowledges her marriage to Mr Li and accepts that they live together at the Blackburn property, but does not depose further as to factual matters which may be relevant to the ancillary orders or examination orders sought. The substance of the affidavit is largely concerned with her unwillingness to be placed in a situation where she is seen to be assisting in a criminal prosecution against her husband.
44I cannot accept the submission that the ancillary order lacks a legitimate forensic purpose as any statement by Ms Yang concerning her interest in and dealing with the restrained property must have relevance to both a forfeiture application and any potential exclusion application. Should the Commissioner seek a forfeiture order, the court would be required to be satisfied as follows:
“(a)The property is the proceeds of one or more indictable offences, foreign indictable offences or indictable offences of Commonwealth concern, or the instrument or one or more serious offences.”
(b)The court is satisfied that the authority has taken reasonable steps to identify and notify persons with an interest in the property.”[17]
[17]POCA s 49(1)(c) & (e)
45I am also satisfied that there can be no residual principle of common law to displace the statutory provisions upon which the Commissioner’s application relies. I am therefore satisfied that the principal orders sought by the Commissioner pursuant to s 39 and s 180 should be granted.
46The appropriateness of limiting the disclosure of information obtained by reason of the ancillary orders or examination orders is ultimately determined by the provisions of s 266A.
47The schedule appended to s 266A specifically authorises disclosure of information received to an authority of the Commonwealth or a State or Territory exercising the function of prosecuting criminal offences if the purpose of the disclosure is made for “assisting in the prevent, investigation or prosecution of an offence against that law that is punishable on conviction by imprisonment for at least three years or for life.”[18]
[18]POCA Table appended to s 266A(2)
48The circumstances of the present application would authorise a disclosure absent the court making a quarantine order in accordance with s 266A(2)(b).
49A balancing exercise must weigh the negative impact of a quarantining order on the Commissioner’s ultimate pursuit of a forfeiture application as against the personal concerns of Ms Yang, as set out in her affidavit.
50In my view there are legitimate concerns raised by Ms Yang in her affidavit impacting on her personal relationship with her husband, her children and within the broader community.[19]
[19]Exhibit 1 [7] to [11]
51It is not relevant to the exercise of my discretion that there is a possibility or even a probability that she may at some future time face criminal prosecution. That is not a matter raised in her affidavit and is purely speculative.
52If no quarantine order is made, then such information as may be provided by Ms Yang can be used derivatively by prosecution authorities in the outstanding criminal proceeding concerning her husband. Notwithstanding that such broad disclosure may be of some assistance in the overall purposes of the POCA, the material contained in Ms Hopkin’s affidavit provides an extensive basis underpinning the suspicions which were relevant to the initial restraint of assets and must now provide, at the very least, a significant pathway towards any criminal prosecution.
53In balancing the two competing arguments, I am satisfied that both the ancillary orders and examination orders in relation to Ms Yang should be quarantined in accordance with s 266A(2)(b) so as to quarantine any information obtained by the Commissioner from either the ancillary orders or the examination orders from being used either directly or derivatively by the prosecuting authority in the criminal trial of Mr Li.
54I will hear from the parties in relation to the precise form of orders and the question of costs.
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