AFP v Wang
[2016] VSC 243
•8 June 2016
| Not Restricted |
| IN THE SUPREME COURT OF VICTORIA |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2013 02407
IN THE MATTER of the Proceeds of Crime Act 2002 of the Commonwealth
- and –
IN THE MATTER of property suspected of being the proceeds of an indictable offence and or an instrument of a serious offence
- and –
IN THE MATTER of an Application by the COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE for Examination Orders
BETWEEN:
COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE
- and –
MING QING WANG
LANG TAO YING
PEI LIANG ZHANG
CHANG RONG ZHU
HENG JIE ZHANG
Respondent
JUDGE: | ZAMMIT J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 2 May 2016 |
DATE OF JUDGMENT: | 8 June 2016 |
CASE MAY BE CITED AS: | AFP v Wang & Ors |
MEDIUM NEUTRAL CITATION: | [2016] VSC 243 |
EXAMINATION ORDERS – Judicial discretion to grant examination orders – Proceeds of Crime Act 2002 (Cth) s 180.
APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr S McGregor of Counsel | Australian Federal Police |
| For the Third and Fifth Respondents | Mr C Juebner of Counsel | Tony Hargreaves and Partners |
HER HONOUR:
Examination order applications
By Amended application dated 23 September 2015, the applicant, the Commissioner of the Australian Federal Police (‘the Commissioner’), pursuant to s 180 of the Proceeds of Crime Act 2002 (Cth) (‘the Act’), seeks orders for the examination of:
(i) Mr Ming Qing Wang (‘Mr Wang’);
(ii) Mr Lang Tao Ying (‘Mr Ying’);
(iii) Mr Pei Liang Zhang (‘Pei Liang’);
(iv)Mr Chang Rong Zhu (‘Mr Zhu’); and
(v) Mr Heng Jie Zhang (‘Heng Jie’).[1]
[1]Pursuant to s 180 of the Proceeds of Crime Act 2002 (Cth) (‘the Act’)
The examination orders concern the purchase of a 2013 Lamborghini Aventador coupe (‘the Lamborghini’) in 2013. Specifically, the AFP seeks the following orders:
(a) Pursuant to s 180 of the Act, that the persons identified in paragraph 3 of this Application be examined about the Property [the Lamborghini] including the circumstances surrounding the acquisition of the Property, the nature (if any), of Ming Qing Wang’s interest in the Property and the origin of the monies used to purchase the Property.[2]
[2]AFP’s Amended Application for an Examination Order signed on the 23 September 2015, 4 [5].
Counsel for the Commissioner states that an examination order is already in place for Mr Wang. The Court has been informed that Mr Wang’s examination is scheduled for some time in July 2016.[3]
[3]Transcript of Proceedings, AFP v Ming Qing Wang & Ors (Supreme Court of Victoria, S CI 2013 02407, Zammit J, 2 May 2016) (‘T’) 41, Line (‘L’) 1.
Mr Ying is yet to be served in China, where he resides.
In relation to the examination order application for Mr Ying, the Commissioner states that it is important for the AFP to understand by examination the agreement between the two gamblers, Mr Wang and Mr Ying, because there are no written documents as evidence of such an agreement.
The Commissioner did not press the examination order application in relation to Mr Ying as Mr Ying resides in China and could not be served.
However, regarding the application for Mr Ying, the Commissioner states that he is a corroborator of the agreement between Mr Wang and Mr Ying to share gambling winnings and it is on this basis that an examination order was sought.
The Commissioner submits that all examinees are amenable to service of process, including examination orders, issued out of the Supreme Court of Victoria and that Order 6 (Confiscation of Property and Proceeds of Crime) of the Supreme Court (Criminal Procedure) Rules 2008 (Vic) provides that the application under the Act ‘shall be served personally or in such manner as the Court directs’.[4]
[4]Commissioner’s Outline in Support of an Application for Examination Orders dated 1 February 2016 (‘the Commissioner’s Outline of Submissions’), 9 [28].
The Commissioner does not at this stage press the application in relation to Heng Jie. Counsel for the Commissioner indicated that the application in relation to Heng Jie was not pressed because if the orders are granted in relation to Pie Liang and Mr Ying, that would affect whether the Commissioner will persist with the Heng Jie application. Counsel for Heng Jie submits that the Commissioner should elect whether the application in relation to Heng Jie is pressed. If not, then Heng Jie is entitled to his costs.
The Commissioner submits that s 315A of the Act permits, but does not oblige, a court to hear and determine two or more applications under the Act at the same time.[5]
[5]Ibid 9 [27].
At the conclusion of the hearing I did not make a ruling in relation to the Heng Jie application and whether it should be dismissed with costs. I invited the parties to have further discussions and indicated that I would rule at the next hearing date.
Mr Zhu does not oppose or consent to the application and the orders sought. Mr Zhu has been personally served.[6] Mr Zhu did not appear at the hearing and was not represented.
[6]Affidavit of Service of Lieselotte Rosa Siebel sworn 5 April 2016.
Pei Liang objects to the application.
These reasons deal only with the application for examination of Pei Liang and Mr Zhu.
Background
On 31 May 2013, Hargrave J granted a restraining order on the Lamborghini owned by Mr Wang, who lives in Melbourne. On 6 June 2013, the Commissioner filed a further application seeking forfeiture of the Lamborghini on the basis that it is suspected to be proceeds or an instrument of the crimes of money laundering or tax avoidance occurring during gambling activity on casino junket tours.
On 10 October 2013, Mr Wang filed a summons pursuant to s 31 of the Act to exclude the Lamborghini from the operation of the restraining order.
Mr Wang submitted the following affidavits in support of the application for exclusion:
(a) First affidavit by Mr Wang, affirmed on 1 July 2013;
(b) Affidavit by Mr Ying, affirmed on 30 September 2013;
(c) Second affidavit by Mr Wang, affirmed on 15 November 2013;
(d) Affidavit by Mr Zhu, affirmed on 6 November 2013.
The parties to this examination order application now refer to the abovementioned affidavits from the exclusion order application. In addition, the Commissioner relies on:
a) Australian Federal Police (‘AFP’) officer Amanda Glover’s (‘Officer Glover’) affidavits sworn 13 May and 29 May 2013 in support of the restraining order application;
b) Officer Glover’s affidavit sworn 23 September 2015 in support of the application for the examination order; and
c) AFP officer Dean Barnes’ affidavit sworn 1 February 2016 in support of the application for an examination order.
Both parties relied on written submissions.
Officer Glover’s affidavit sworn 23 September 2015 states that the application for the restraining order was made on the suspicion that the Lamborghini was acquired with the proceeds of one or more indictable Commonwealth offences, namely:
(a) dealing with property worth $100,000 or more that is reasonably suspected of being proceeds of crime, contrary to s 400.9(1) of the Criminal Code; and
(b) dishonestly causing a loss to the Commonwealth, contrary to s 135.1(5) of the Criminal Code.
In 2015, the Commissioner sought examination orders for Messrs Wang, Ying, Zhu, Pei Liang and his son Heng Jie. The Commissioner submits that Mr Wang is a suspect and the ostensible owner of the restrained Lamborghini and that no other person is ‘more central to resolving whether the restrained properties are instruments of, or proceeds of, the suspected serious or indictable crimes’.[7]
[7]The Commissioner’s Outline of Submissions, 8 [22].
The Commissioner submits that Mr Ying, who lives in China, is a gambling friend of Mr Wang.
Mr Ying’s evidence is that in December 2012, he instructed the casino junket tour operator to issue a cheque for $AUD1.15m payable to Mr Wang pursuant to a private agreement they have about sharing casino winnings.[8] In another affidavit, Mr Wang states that this transaction was the source of the funds he used to purchase the Lamborghini.[9]
[8]Affidavit of Lang Tao Ying affirmed 30 September 2013, [9].
[9]Affidavit of Ming Qing Wang affirmed 15 November 2013 (‘Affidavit of Mr Wang affirmed 15 November 2013’), [14].
Pei Liang is purportedly a representative of the junket tour operator. Officer Glover deposes that Pei Liang:
….is authorised to operate the Song Zezhai Junket Account at Crown Casino Melbourne and it is from this account that the balance of the purchase price of the Lamborghini was paid [to] Zagame Automotive Group Pty Ltd on 16 December 2012.[10]
[10]Affidavit in support of an application for examination orders of Amanda Glover sworn 23 September 2015 (‘Affidavit of Officer Glover sworn 23 September 2015’), [12].
The Commissioner seeks an examination order for Pei Liang on the basis that it was possibly Pei Liang who sent funds from a junket account in the name of Mr Song Ze Zhai (‘Mr Song’) (‘the Song Junket Account’) to the car dealer Zagame Automotive Group (‘Zagame’).[11]
[11]T 14, L 22.
Mr Zhu allegedly witnessed Mr Wang and Mr Ying gambling at Crown Casino. In his affidavit, Mr Zhu states that Mr Wang told him that Mr Wang and Mr Ying had an agreement to share gambling winnings.[12]
[12]Affidavit of Chang Rong Zhu affirmed 6 November 2013, [5].
The Commissioner seeks an examination order for Mr Zhu on the basis he could corroborate the agreement between Mr Wang and Mr Ying to split gambling winnings.[13]
[13]T 6, L 11.
The AFP seized the Lamborghini from a Canterbury, Melbourne address registered to Heng Jie on 22 May 2013. The Commissioner submits that its decision as to whether it will press for the Heng Jie examination order will be made after it exhausts any opportunity to examine other respondents including Pei Liang.[14]
[14]The Commissioner’s Outline of Submissions, 9 [26], [27]; T 54, L 3.
Legislative scheme
Section 180 of the Act governs examination orders which relate to restraining orders. It provides that:
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).
The consequences of such an order for a person (‘examinee’) may be severe. It is an offence for, amongst other things, an examinee to refuse or fail to answer a question of the examiner or to leave the examination before being excused by the examiner.[15] A number of privileges to which a person may otherwise have recourse are abrogated for the purposes of an examination; for example, the privilege against self-incrimination,[16] legal professional privilege,[17] and professional confidential relationship privilege.[18]
[15]Proceeds of Crime Act 2002 (Cth) ss 196(b), (d).
[16]Ibid s 197(2)(a).
[17]Ibid s 197(2)(b).
[18]Ibid s 197(2)(ba).
While the Act provides an immunity against the direct use of information obtained in the course of an examination, there is no such protection against the indirect use of this information. Section 198 of the Act provides that an answer or document produced in an examination is not admissible in evidence in civil or criminal proceedings against the examinee who gave the answer or document, except those proceedings detailed in that provision, which include proceedings under the Act,[19] or in proceedings ancillary to an application under the Act.[20] Furthermore, s 266A of the Act establishes a disclosure regime whereby the Commissioner can share information obtained in an examination in accordance with that section.
[19]Ibid s 198(b).
[20]Ibid s 198(c).
These factors suggest that, while a Court should not hesitate to give an examination order in an appropriate case, the discretion to grant such an order should be exercised with caution.
The discretion to give an examination order was considered by John Dixon J extensively in AFP v Mah.[21] Justice John Dixon made the following observations about s 180 of the Act:
First, the parties accepted, correctly, that the word “may” shows legislative intent that whether such an order is made is in the discretion of the court. Second, any person may be the subject of an examination order, not just the persons specifically nominated in the subsection. Third, the examination order is dependent on the restraining order to which it relates and an examination order ceases to have effect if the related restraining order ceases to have effect. Fourth, although any person may be examined, the subject matter of the examination is the affairs of owners of restrained property, persons who claim or have an interest in the property, suspects, and the spouse or de facto partner of owners.[22]
[21][2014] VSC 262 (‘Mah’).
[22]Ibid [12] (citations omitted).
After considering the purpose and structure of the statutory scheme, John Dixon J considered that the following factors ‘conditioned’ the exercise of the discretion whether to grant an examination order:
(a) the proposed examinee and the subject matter of the proposed examination;
(b) whether there are material investigations to be carried out by that process that would inform applications under that Act;
(c) the circumstances of the restraining order that is in force;
(d) whether there is an application to set aside or revoke the restraining order and, if so, the basis for and merits of that application;
(e) the nature and basis for the suspicions that founded the application for the restraining order; and
(f) whether there are other applications, such as for forfeiture or exclusion.[23]
[23]Ibid [28].
These considerations are consistent with the considerations identified in DPP v Chan[24] by Crispin J:
It should be noted that the provisions governing an examination of that kind enable the person to be asked questions to which he or she may not be entitled to decline to answer on the ground of self-incrimination, and that such an investigation may therefore place that person in a position of considerable prejudice. It seems to me that it is incumbent upon the Director seeking an order of this kind to establish that there are adequate grounds for the order to be granted, and that those grounds should be established by sworn evidence. In the present case I am not satisfied that the evidence does disclose such grounds, and I accordingly dismiss that application.[25]
[24][2004] ACTSC 101 (‘Chan’).
[25]Ibid [27].
This analysis was approved in obiter in Lee v DPP.[26]
The position post-AFP v Zhang
[26](2009) 75 NSWLR 581, 593-594 [50]-[52] (‘Lee’).
In relation to the decision of T Forrest J in AFP v Zhang,[27] the Commissioner submits:
the practical implications of the Zhang decision … have tilted the proper exercise of the s 180 statutory discretion from the neutrally balanced one described in Mah, toward the making of examination orders, lest the Applicant be denied the opportunity he needs to gather evidence before being put to proof in any forfeiture application.[28]
[27][2015] VSC 390 (‘Zhang’).
[28]The Commissioner’s Outline of Submissions, 10 [31].
Further, the Commissioner states:
it is in the interests of justice to make the examination orders sought here. The synthesis of the Mah factors, in circumstances where the Zhang ruling now oblige the AFP to obtain a forfeiture order before the respondents seek exclusion, require it [the AFP] to be allowed to exercise its coercive information gathering powers in relation to matters not demonstrable by recourse to objective record sources at the earliest possible opportunity, so that it may prepare for a fair trial in which it carries an affirmative burden of proof.[29]
[29]Ibid 11 [34].
The Commissioner submits that the decision in Zhang affected the way in which the AFP conducted matters under the Act, and states that Zhang:
had the effect of reversing the sequence and burden of proof under which these matters had previously been litigated. The gist of the Zhang ruling, is that where there has been no parallel criminal proceeding, the AFP must obtain a forfeiture order before the respondents to such an order are required to prove their case for exclusion from either restraint or forfeiture.[30]
[30]The Commissioner’s Outline of Submissions, 3 [9].
It was submitted that accordingly, the exercise of the discretion to grant examination orders is now even more important to the AFP, in order to satisfy what the Commissioner described as the ‘reversing’ of the burden of proof post-Zhang.[31]
[31]T 2, L 28.
I note, as did the parties, that Zhang is currently on appeal. However, it was not submitted that Zhang altered the analysis of Dixon J in Mah, nor am I able to see how it could do so. Essentially, the Commissioner seems to impliedly submit that, as post-Zhang it may now be more difficult for the AFP to satisfy the burden of proof to obtain forfeiture orders, the discretion to grant an examination order should now more readily be exercised in order to assist the AFP achieve its evidential burden in subsequent applications under the Act. If this was in fact what was implied by the Commissioner, it cannot be accepted. As has been observed, the Act gives a significant forensic advantage to the AFP.[32] The decision as to whether to exercise the discretion to grant an examination order must be made on the evidence presently before the Court having regard to the factors distilled in Mah. The discretion should not be affected by the AFP’s evidentiary concerns for future applications, beyond the extent to which such considerations are required by the Act.
[32]Mah [2014] VSC 262 [200].
Affidavit Evidence
Mr Wang
Mr Wang deposes that he is a successful businessman in China. He migrated to Melbourne after being granted permanent residency on 28 April 2012.[33]
[33]Affidavit of Mr Wang affirmed 15 November 2013, [3].
Mr Wang’s affidavits explain how the Lamborghini was purchased. Mr Wang states that he was gambling partners with Mr Ying. Mr Ying would take 70 per cent of any winnings and Mr Wang would take 30 per cent.[34]
[34]Affidavit of Ming Qing Wang affirmed 9 October 2013 (‘Affidavit of Mr Wang affirmed 9 October 2013’), [3].
Mr Wang states that he gambled with Mr Ying on 8 and 9 August 2012 and Mr Wang withdrew after winning $5m. Mr Wang received $1.5m as part of his 30 per cent share entitlement.
Mr Wang deposes that Mr Ying authorised the Song Junket Account to issue a Crown Casino cheque of $1.15m (paid on 13 August 2012) and balance of $350,000 in cash for Mr Wang’s share of the winnings on 9 August 2012.[35]
[35]Ibid [7].
Mr Wang said that he paid Zagame a $80,000 cash deposit for the Lamborghini on 10 August 2012. This was paid from the $350,000 cash portion of his casino winnings received on 9 August 2012.[36]
[36]Ibid [13].
Mr Wang says he then deposited the $1.15m cheque on 13 August 2012 into he and his wife Yong Mei Wang’s (‘Yong Mei’) joint bank account, a Westpac Rocket Deposit account (‘Account A’).
Mr Wang drew $700,000 in a bank cheque from account A. He also drew $300,000 in bank cheque from Yong Mei’s Commonwealth Bank Savings account, (‘Account B’).[37]
[37]Ibid [11], [12].
Mr Wang stated that on 1 and 2 October 2012, he handed over the two bank cheques in favour of Mr Zheng Fang Wu (‘Mr Wu’). Mr Wu managed Mr Wang’s account at the Crown Casino.[38] Exhibit MQW4 are copies of what are purportedly the bank cheques to the affidavit.
[38]Ibid [8].
Mr Wang said that Mr Wu then deposited both cheques into the Song Junket Account on 2 October 2012 and that these transactions are evidenced by Mr Wu’s Patron Activity Inquiry statement.[39]
[39]Affidavit of Mr Wang affirmed 15 November 2013, [13].
While Mr Wang was in China, he said he received an unexpected request from Zagame on 16 December 2012, asking for balance of payment.[40]
[40]Affidavit of Mr Wang affirmed 9 October 2013, [14]
Under Mr Wang’s instructions on 16 December 2012, Mr Wu’s principal at Crown Casino, Mr Song, sent the sum of $747,000 from the Song Junket Account to Zagame. This was payment for the Lamborghini.[41]
[41]Affidavit of Mr Wang affirmed 15 November 2013, [14].
Mr Wang explained he used the Song Junket Account for payment of the car in lieu of his own bank account because the request from Zagame seeking balance of payment had been unexpected.[42]
[42]Affidavit of Mr Wang affirmed 9 October 2013, [14]
Officer Glover deposes in her affidavit sworn 23 September 2015 that Mr Wang is the registered owner of the Lamborghini.[43]
[43]Affidavit of Officer Glover sworn 23 September 2015, [5].
Mr Wang and Yong Mei live in Balwyn North, Melbourne. Officer Glover states in her affidavit sworn 29 May 2013 that Mr Wang is registered for income tax purposes but he did not file a tax return between 2003 and 2012. Office Glover also deposes that Mrs Wang declared income in 2011 of $48,152, in 2010 of $45,240, in 2009 of $43,317, in 2008 of $41,860 and in 2007 of $13,685 from Dahu Holdings Pty Ltd, which is a company trading as Dahu Peking Duck Restaurant.[44] From 10 January 2012 to 6 May 2013 accounts held by Mr Wang and Yong Mei received 13 cash deposits for amounts greater than $10,000 and totalling $481,500. Additionally, on 6 February 2012 Mr Wang received a cheque from Crown Casino.[45]
[44]Affidavit in support of an application for restraining order of Amanda Glover sworn 29 May 2013 (‘Affidavit of Officer Glover sworn 29 May 2013’), [14].
[45]Ibid [14]-[15].
In Mr Wang’s affidavit affirmed 9 October 2013, he states that he never filed a tax return in Australia from 2003 to 2012 as he was only granted permanent residency on 28 April 2011. In that affidavit, Mr Wang states that he never worked in Australia prior to that and that he understood his Crown Casino winnings to be tax exempt.
Mr Ying
Mr Ying is yet to be served in China, where he resides. The Commissioner’s submissions dated 1 February 2016 state that no submissions have been received from Mr Ying.[46] Mr Ying previously swore an affidavit dated 30 September 2013 in support of Mr Wang’s application for an exclusion order to the restraining order on the Lamborghini.
[46]The Commissioner’s Outline of Submissions, 8 [21].
In his affidavit affirmed on 30 September 2013, Mr Ying stated that he is a successful businessman in China dealing in real estate development. Mr Ying stated that he has been friends with Mr Wang for 8 years, and they regularly gamble together at the Crown Casino as gaming partners whenever Mr Ying is in Melbourne on a tourist visa.[47]
[47]Affidavit of Lang Tao Ying affirmed 30 September 2013, [4].
Mr Ying said that on 8 August 2012 he used Mr Wang’s credit under the Song Junket Account. Mr Ying states that he and Mr Wang had an agreement to share their casino winnings based on each individual’s stakes played at the gaming table.[48]
[48]Ibid [5], [7].
On the weekend of 8 August 2012 to 11 August 2012, Mr Ying says he made gaming winnings of $11.992m at Crown Casino. Mr Ying exhibits in his affidavit what purports to be his Crown Southbank VIP Player Program Statement dated 28 May 2013 showing those winnings.[49]
[49]Ibid Exhibit LTY1.
Mr Ying states that he then authorised the Song Junket Account to issue a $1.15m cheque from Crown Casino to Mr Wang on 11 August 2012 for Mr Wang’s share of the casino winnings as Mr Ying’s gaming partner.[50]
[50]Ibid [9].
Mr Zhu
Mr Zhu has affirmed an affidavit dated 6 November 2013, supporting Mr Wang’s application for an exclusion order in regards to the restraining order on the Lamborghini.
Mr Zhu deposes that:
(a) he is a travel agent and manages restaurants;
(b) that he has seen Mr Wang and Mr Ying gambling together at Crown Casino;
(c) that Mr Wang and Mr Ying gamble together whenever Mr Ying visits from China;[51]
(d) that Mr Wang told him that Mr Wang and Mr Ying gamble together as partners on a 70 per cent, 30 per cent share of winnings basis at Crown Casino;[52]
(e) and that from 8 August 2012 to 9 August 2012, he saw Mr Wang and Mr Ying gambling together at Crown Casino Melbourne, even though he was in the adjacent room.[53]
[51]Affidavit of Chang Rong Zhu affirmed 6 November 2013, [5].
[52]Ibid [6].
[53]Ibid [7].
The application against Pei Liang
The Commissioner’s submissions
The Commissioner submits that the Commissioner need not be satisfied with the information in the respondents’ affidavits and that the AFP may need to examine the statements further.[54] The Commissioner states that the transactions had been a ‘very complicated way of repaying a simple gambling debt’.[55]
[54]T 53, L 3.
[55]T 53, L 12.
The Commissioner relies on John Dixon J’s decision in Mah and His Honour’s consideration of the objects of the Act: to deprive persons of the proceeds of offences and instruments of offences and benefits derived from offences against the laws of the Commonwealth; to punish and deter persons from breaching laws of the Commonwealth, to enable law enforcement authorities to effectively trace proceeds and instruments to give effect to Australia's legal obligations under the Council of Europe's Convention on Laundering, and other international agreements in relation to the proceeds of crime.[56]
[56]T 3, L 19; Mah [2014] VSC 262 [19], [28].
The Commissioner refers to the factors that ‘conditioned’ the exercise of the discretion to issue an examination, as set out by John Dixon J in Mah. The Commissioner states that factor (f) as stated by John Dixon J is particularly relevant in this case, as ‘a forfeiture application is on foot and the examinations are important’.[57] The Commissioner submits that factors (a), (b), (c) and (e) are also worth considering in this case.
[57]T 4, L 23.
The Commissioner also refers to Chan and Lee in discussing a judge’s discretion to grant an examination order under s 180 of the Act. The Commissioner submits that in each case, the principles for exercising judicial discretion in relation to examination order applications was expressed in different terms. In Mah John Dixon J stated that there needs to be a legitimate forensic purpose for the examinations; in Chan, Crispin J stated that there needs to be adequate grounds; while in Lee the New South Wales Court of Appeal stated there needed to be real questions.[58]
[58]T 52, L 26.
The Commissioner submits that although different terms are used in the cases, including in the Zhang decision by T Forrest J, the test is not very different and that there needs to be a legitimate forensic purpose in order for judicial discretion to be used to grant an examination order.[59]
[59]T 53, L 30.
The Commissioner submits that in this instance, the real questions and the legitimate forensic purpose arises because the cost of the Lamborghini is grossly out of proportion with Mr Wang’s income. The Commissioner states that that is a sufficient basis to be guilty of the crime of handling property that's reasonably suspected to be proceeds of crime.[60]
[60]T 52, L 26.
The Commissioner states that money was authorised and sent from the Song Junket Account to Zagame. The Commissioner submits it was possibly Pei Liang who sent the funds from the Song Junket Account.[61]
[61]T 14, L 22.
In relation to Pei Liang, the Commissioner submits that money went in and out of different accounts to different places and ended up buying the Lamborghini. The Commissioner submits that Pei Liang, as a supervisor of the Crown Casino account that paid for the Lamborghini, and as father of Heng Jie, who kept the Lamborghini in his garage, had a forensic connection to the process whereby there are assets acquired.[62]
[62]T 53, L 20.
The respondent’s submissions
The respondents’ written submissions refer to Officer Glover’s affidavit and state that Pei Liang is sought to be examined because he is authorised to operate a particular account maintained at Crown Casino, which was used to pay the balance of the purchase price for the Lamborghini to Zagame on 16 December 2012.
The respondents’ submissions state that Mr Wang’s affidavit affirmed 15 November 2013 exhibits a letter from the junket tour operator, Mr Song, that shows that five persons are appointed as his representatives at Crown Casino. Mr Song’s letter states that all five representatives are authorised to withdraw and deposit from the Song Junket Account, including Mr Wu.[63]
[63]Outline of Submissions on Behalf of Pei Liang Zhang and Heng Jie Zhang dated 20 January 2016 (‘the Respondents’ Outline of Submissions’), 3 [9](b)]; Affidavit of Mr Wang affirmed 15 November 2013, Exhibit MQW-3.
The respondents submit that Mr Wang’s affidavit states that Mr Wang dealt with Mr Wu, not Pei Liang, in relation to the funds that were to be paid from the casino account to purchase the Lamborghini.[64] Further, Mr Wang deposes that he gave $1 million to Mr Wu and that the sum was banked by Mr Wu into the casino account on 2 October 2012.[65]
[64]The Respondents’ Outline of Submissions, [9](c).
[65]Affidavit of Mr Wang affirmed 15 November 2013, [13].
The submissions also highlight that Mr Wang’s affidavit states that Mr Song, not Pei Liang, at the request of Mr Wang, transferred $747,000 from the casino account to the car dealership on 16 December 2012, being the balance of the purchase price on the Lamborghini.
The respondents submit that Pei Liang’s only connection to the acquisition of the Lamborghini is that he is one of five persons authorised to operate the casino account from which the balance of the purchase price was paid. The respondents submit that there is no evidence that Pei Liang was in any way involved in the transaction.
Further, the respondent submits that there is no explanation as to why the Commissioner has not sought to examine those persons who are alleged to have been involved in the transaction, namely Mr Wu and/or Mr Song.
The respondents submit that the Court ought to refuse an examination order against Pei Liang because:
(a) there is insufficient evidence to support the making of such order;
(b) the Commissioner has not provided any explanation as to why he has not sought examination orders against those persons who had involvement in the purchase of the Lamborghini;
(c) Pei Liang has not made an affidavit in the proceeding;
(d) Pei Liang claims no interest in the Lamborghini (and it is not alleged that he has any interest in it); and
(e) a person ought only be ordered to attend an examination under the Act where a proper basis for doing so is established by cogent, admissible evidence. An examination under the Act is a serious matter. The examinee is deprived of common law rights (such as the privilege against self-incrimination). Hence such an order ought not be lightly made.
The respondents refer to the NSW Court of Appeal decision in Lee, which considered the Chan decision. In Lee, the Court of Appeal cited Crispin J’s decision in Chan for the proposition that a judge must be satisfied that the examination of the particular person is ‘necessary’ or that ‘there are adequate grounds’ for the order.[66] The respondents submit that, although the Court of Appeal’s decision was obiter, it confirms Crispin J’s decision.
[66]T 38, L 19.
The respondents submit that Mr Wang’s affidavit does not place Pei Liang as part of the transaction. Rather, Pei Liang is one of five people authorised to make transactions from the junket account and there is no evidence to suggest that Pei Liang played any part in transacting the funds.[67]
[67]T 43, L 27.
The respondents submit that previous cases set out that there must be a sufficient connection between the person sought to be examined and the relevant events, such that in the words of Crispin J in Chan it becomes necessary that they be examined.[68]
[68]T 46, L 9.
The respondents submit that the evidence is ‘completely lacking’ and ‘falls so far short’ of it being necessary to examine Pei Liang, because the only evidence is that he is one of the people authorised to transact the account.[69] The respondents submit that the only remaining connection is that the Lamborghini was found at his son Heng Jie’s house. However, in his affidavit affirmed 9 October 2013, Mr Wang explained that he had parked the Lamborghini on Heng Jie’s property the day it was seized because he did not have room for it on his own property. Mr Wang stated that he kept his Audi 4WD at his own property instead of the more expensive Lamborghini because his wife Yong Mei had just had a new born baby and the 4WD was more suitable for emergency medical transport than the Lamborghini.[70]
[69]T 46, LL 16-21, 28-29.
[70]Affidavit of Mr Wang affirmed 9 October 2013, [15].
The respondents point out that the restraining order on the Lamborghini was issued three years ago. Accordingly there has been ample opportunity to examine Mr Wang, and Mr Wang could have answered questions regarding the transaction, including regarding Pei Liang’s involvement.[71]
[71]T 40, L 25.
Ultimately, the respondents submit that an apparent lack of evidence of Pei Liang’s involvement in the transaction weighs in favour of the Court exercising discretion to refuse the Commissioner’s application for an examination order against Pei Liang.
The respondents submit that the AFP should either press the application against Heng Jie or abandon it. Counsel submits that the evidentiary basis of Heng Jie’s involvement in the transaction is ‘extremely thin’, being only that the Lamborghini was found garaged at Heng Jie’s property in Canterbury, Melbourne.
Counsel submits that it is inappropriate for the examination order application against Heng Jie to be put off in the ‘never-never’ and that it should be struck out.[72]
[72]T 49, L 9.
Analysis
Referring to the abovementioned cases, I am of the view that the discretion under
s 180 is to be used in favour of granting an examination order in circumstances where there is a connection between the proposed examinee and the process in attaining the alleged proceeds of crime.
Pei Liang’s connection to the attainment of the alleged proceeds of crime, the Lamborghini, is that:
(a) he was one of five people authorised to make transactions from the Song Junket Account;
(b) on 16 December 2012, $747,000 was transferred from the Song Junket Account to Zagame for the balance of the purchase price of the Lamborghini; and
(c) on 22 May 2013, the AFP seized the Lamborghini from a Canterbury, Melbourne address registered to Pei Liang’s son, Heng Jie.
Crispin J in Chan indicated that an examination order application must ‘substantially address the question of why an examination of this particular person is necessary’.[73] This is because an examination order may place a person in a position of ‘considerable prejudice’ as he or she may not be entitled to decline an answer on the ground of self-incrimination.[74] As such, his Honour stated there must be ‘adequate grounds’ for the order to be granted and that those grounds should be established by sworn evidence’.[75]
[73]Chan [2004] ACTSC 101 [26]
[74]Ibid.
[75]Ibid [27].
The fact that Pei Liang was one of five people authorised to make transactions from the Song Junket Account and the fact that $747,000 was transferred from that account to Zagame do not appear, in of themselves, to be ‘adequate’ grounds for the examination order to be granted for Pei Liang, given the prejudicial position that Pei Liang would be put in.
There is no evidence to indicate that Pei Liang was, in fact, the person that transferred $747,000 from the Song Junket Account to Zagame. Pei Liang was a supervisor of the Crown Casino account that paid for a car that was subsequently garaged at his son Heng Jie’s residence. This does not appear to be an ‘adequate’ ground for the order to be granted for Pei Liang, given the prejudicial position that Pei Liang would be put in.
As such, there is nothing to indicate that an examination order for Pei Liang would be ‘necessary’, particularly when considering that Mr Wang has sworn on oath that it was Mr Song who sent the sum of $747,000 from the Song Junket Account to Zagame.
The application against Mr Zhu
In relation to Mr Zhu, the Commissioner submits Mr Zhu’s connection to the attainment of the Lamborghini is that:
(a) he witnessed Mr Wang and Mr Ying gambling at Crown Casino and in particular from 7 to 9 August 2012; and
(b) Mr Wang told Mr Zhu that Mr Wang and Mr Ying had an agreement to share gambling winnings 70 per cent – 30 per cent.
It is submitted that this makes Mr Zhu at least a partial corroborator of Mr Wang and Mr Ying being gambling partners and having a gambling agreement in place. The Commissioner submits that in circumstances where Mr Ying lives in China and the Commissioner has not been able to serve Mr Ying and may not be able to serve him, it makes Mr Zhu’s evidence even more important. The Commissioner submits that Mr Zhu’s evidence goes to the relevant time when the proceeds from the gambling winnings of $5 million on 8 and 9 August 2012 and the instructions given to the junket tour operator to move money for the payment of the Lamborghini.
The Commissioner submits that in relation to Mr Zhu, it is necessary to examine him to determine if he can corroborate the evidence of Mr Ying and Mr Wang in their affidavits in relation to the said gambling agreement and the “very good night that leads to these big cheques”.[76]
[76]T 7, LL 30-31.
I consider that Mr Zhu’s evidence provides partial corroboration of the existence of a gambling agreement between Mr Wang and Mr Ying. This is a central issue in the Commissioner’s restraining order over the Lamborghini and forfeiture case. It is the gambling agreement which gives rise to the movement of money in August 2012, used in part by Mr Wang to purchase the Lamborghini. As such, I consider there is a legitimate forensic purpose to examine Mr Zhu.
Conclusion and Orders
I refuse to make an order for examination of Pei Liang. I will make the order sought in the Amended application dated 23 September 2015 in relation to Mr Zhu. I will hear the parties as to the form of order and costs.
I will hear the parties in relation to the Heng Jie application for an examination order.
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